Max Rashbrooke is a researcher at Victoria University, perhaps best known to a wider audience through his influential look at the ills brought about as a result of inequality. Now he widens his scope to include New Zealand society as a whole. Besides a greater equality of situation, he argues, we could all do with a greater respect for the role of governments, institutions which exist for the public good.

Rashbrooke's sub-title, "The Surprising Science Of Large-Scale Collective Action", captures his intent, which is to sing the praises of "group collective intelligence", the dynamic which public government facilitates. He compares its social blending of impulses and skills to the market, which is an imperfect mechanism. In a market the wishes of individuals might not have been tested against facts, and a lack of money or resources means human needs are not always met.

Governments command whatever resources might be needed and they can apply them flexibly, adapting and changing as necessary. Compare this to the present-day expression of the privatised alternative, a public private partnership (PPP) contract, which locks in one way of spending for 30 years and provides no motivation to the contractor to change or adapt as circumstances might otherwise suggest.

Privatisation can weaken cooperative impulses. Rashbrooke discusses an Israeli kindergarten which charged parents for being late, but rather than the intended result of mums and dads hurrying to get the kids, they got later. Parents no longer felt an obligation to be on time. That's a small detail, a glimpse at an often perverse human nature.

Big Market Failures

Rashbrooke cites a study which adjudges "the biggest market failure the world has ever seen" to be polluters dumping carbon into our world without either paying for the damage or correcting it. Some activities are inherently best managed by agencies responsible to society as a whole. Besides the environment, obvious examples discussed are prisons and anything to do with climate.

It is not always apparent, but the world's governments can act decisively. The example we're given is the 1987 Montreal Protocol banning chlorofluorocarbons, which were damaging the ozone layer, our protection from the Sun's ultra-violet radiation. Immediate success has continued, with none of the rearguard subversion from polluters that might be expected.

With our geothermal and hydro power, New Zealand has a lucky 80% of its energy renewable, compared to around 14% in the UK and the US. America and Australia use twice as much energy per person as do Europe and Japan. Cities, Rashbrooke says, need to be compact. Urban sprawl, often the result of lax social control, costs us in many ways, through increased pollution from cars, more expensive infrastructure, and poorer overall health. Tighter cities mean fewer deaths in accidents.

To aid this, governments need to invest in housing. We are reminded that New Zealand was the first national government to build State houses (the gift of the first Labour administration, from 1935), while London was the first city government to do so. Comparing health outcomes of eleven comparable countries, New Zealand is ranked seventh but when it comes to "equity" and "healthy lives" it is tenth and ninth, the poor ranking being the rotten fruit of inequality. A long way last is the United States, where corporate lobbies ensure good health care is unavailable for millions.

Unfortunately, as we know only too well, in the 1980s and 90s New Zealand joined a global fad to flog off public assets. A prime motivation was the wish of the rich and powerful to lower their taxes and to weaken trade unions. These aims achieved, inequality soared, while a deprived public sector faced increased demand for prison cells and hospital beds, threatening to crowd out positive investments in society.

To promote sales prices were set artificially low, a gambit which created an international class of instant billionaires. To aid the transfer of wealth from productive, social use to this parasite economy the ideology of managerialism was introduced to narrow choices that would be available to politicians - to citizens prepared to represent citizens' interests. Rashbrooke reports Australian statistics revealing that between 1997 and 2012, "managers" of electricity, gas and wastewater increased their numbers by 217%, while "sales workers" increased 500% (other job numbers were up 86%).

Measuring mania, a product of the managerial ethos, extended to education. Internationally Finland is regarded as having perhaps the world's best public system. There they rely on teaching rather than constant testing and reporting, on collaboration rather than national standards. In NZ, Rashbrooke adds, (after controlling for socio-economic factors) Treasury assesses public schools as being better than private schools. He notes that purely online schools, a target for many privatisers, have been deemed "disastrous" in America.

Rashbrooke's important analysis shows that public enterprise should be superior to private enterprise in providing inclusive, egalitarian, accessible and universal quality. That this might not always seem to be the case is due to a lack of investment or to a lack of social confidence. We just do not get to hear it said.

Tax The Rich

Consider, for example, the usual national conversation about tax policy, in which it is said that corporate tax rates need to be further reduced as an incentive. Tax the rich and they'll mope in a corner. We will all be better off if business is happy. Talk of this kind, a variant of "trickle-down", is always humming in the background. It is constant, yes, but it is inaccurate. There is, on the contrary, a historic correlation between higher taxes and higher growth. Rashbrooke cites the US economist Joseph Stiglitz to the effect that there is "o empirical or theoretical basis" for saying lower taxes mean more growth.

New Zealand society is being starved through lack of money. One obvious way to expand social enterprise would be to increase New Zealand's currently top rate of income tax of 30%, which is reached at just $70,000. Lots of the really rich make a whole lot more than that and could readily contribute more. Even Australia, a nirvana for the wealthy, taxes its richest at 45%. And yes, all the other "Anglosphere" countries include a capital gains tax. Another misconception, as fostered by these usual suspects, is that pensions will soon be unaffordable. No, they won't, not if we take a fresh look at priorities.

FAHRENHEIT 11/9
A Film By Michael Moore

Aristotle and Shakespeare thought that tragedy could be defined as what happens when great and good men (women rarely featured) fall. Great men they understood to be those with power and reputation. In terms of worldly power Donald Trump is possibly great, but in terms of mana he scrapes the bottom of the barrel. Accused by Michael Cohen, his long-time lawyer and "fixer" of being a cheat, a racist, a conman and a crook, Trump's ridiculous humiliation is scarcely tragic. It's more like farce. He's a figure of fun.

Michael Moore's doco about him predates the latest shenanigans, which is not a problem as Moore is interested in what Trumpery represents rather than wanting to spend too much time worrying about the clownish front man. "Fahrenheit 451", whose title Moore wants us to recognise, was a sci fi novel about censorship, 451 degrees being the temperature at which paper burns. Fahrenheit 11/9 is not asking us to think in terms of 9/11, the date when the planes flew into the towers in New York.

Moore does not want to accuse Trump of exploiting fears of Arab hijackers as a primary tactic, and he is not saying that foreign policy is front and centre in motivating the American President. 11/9 is the day after Trump won the 2016 election (i.e. November 9th). Decent America crashed and burned as soon as The Donald moved into the White House. Foreign policy, domestic policy? It's all been absurd but it's also all been bad.

Privatisation

With Trumpian folly so swift and often unpredictable, guessing the ultimate significance of events and remarks and trying to assess what will be ultimately seen as important, is a mug's game, so it's good that Moore avoids getting trapped in what might turn out to be ephemera. Within the chaos the almost daily Trumpian excesses have crowded out reporting on what goes on where there are no news cameras. But themes and patterns emerge, and Moore chooses well. One Republican obsession, brought to light by the heightened attention that the Trump show has generated, has been privatisation. No-one should be surprised by this or by its often-grotesque extremes. They predate Trump.

Moore introduces one typical example, the drive to exclude the Government from weather forecasting. The front man in this particular folly was Rick Santorum, a former Senator and one of Trump's rivals for the GOP (Grand Old Party i.e., Republican) nomination. Evangelical Santorum is now a media commentator, called in to "balance" coverage by defending The Donald.

In 2005 he introduced a bill that would prevent public authorities from delivering forecasts, allowing the Weather Service to warn people about the weather just before it was about to kill them, but at no other time. The need was to protect a constituent, Barry Myers, and his company Accuweather. "The National Weather Service does not need to have the final say on warnings", Myers told consultants. "The customer and the private sector should be able to sort that out. The Government should get out of the forecasting business".

On one occasion Accuweather fluked finding an impending hurricane which the National Weather Service had missed. Myers warned only his paying customers that they might be blown away within minutes. So, a private company riding on the back of previous billions of taxpayer dollars was asking for people to pay again for what they could already get for free. Santorum's bill failed. Since then Myers has lobbied to achieve his aim of monopolising US weather forecasting.

And now? Trump appointed Myers as the federal official tasked with regulating policy. He would have to leave Accuweather - but several family members remained with the company. How very Trumpian. Myers joined Rick Perry, Trump's Energy Secretary, and another former GOP Presidential would-have-been, who notoriously let it be known that he did not know what his department did.

And the Department of Agriculture administers $US3 billion a year for academic research. To run it Trump installed a Rightwing radio jock. It's an aspect of the well documented Trumpian attempt to remove accountable, institutional and expert knowledge from federal activities. Trump does not know anything much and he wants to keep it that way. As the cliché has it, you don't know what you don't know and Trump, notably lacking any curiosity, has no concept that needs exist other than his own. A millionaire as a child through his father's gifts, he is depicted as a spoilt baby by cartoonists, which intellectually and morally he is. His ego must be fed.

Case Study: Flint, Michigan

Moore does look at aspects of Trump that help explain his behaviour. For instance, he looks back to the time when another character was voted more popular than Trump on a TV show. The President-to-be wasn't getting attention, the one thing he craves above all else. So, he staged a fake Presidential bid to get attention. His popularity numbers went up but NBC fired him anyway because of some outrageous remarks.

During a 1998 Roseanne Barr talk show Trump had let it be known that he liked "Roger And Me", Moore's early film about the relationship between General Motors (GM) and Moore's hometown of Flint, in Michigan, a Great Lakes state that later happened to be one of several Democratic strongholds that unexpectedly (at least to Hillary Clinton) flipped to Trump, giving him his win.

Is this an insight into the Trumpian mind? Moore detests Trump and is politically as far from him as you get in America. Trump might not notice this, and not care anyway. Moore's persona, relentlessly fashioned, is of a working class battler who likes his burgers and fries. Culturally he's a deplorable - or wants to look like one. Trump sees his kind of guy. It's similar to his professed liking these days for "crazy" Bernie Sanders, another who likes to give the liberal elites a shake up. Trump, that is, might not have the ability to think beyond personalities and stereotypes.

So, Moore, competing with the faux populist for the nod from Johnny Lunchbucket (America's version of the "Kiwi bloke" persona), was not going to play up the "culture wars" aspect of Trumpdom. There is nothing in his film to suggest it is the work of a "liberal" or that it is tainted by any of the demagogic putdowns favoured by the President. This might be why Trump has not tried to ridicule Moore. Basing the narrative on Flint is a happy choice. No city could be less "elitist".

But if Moore, wisely, does not allow the deplorable gallery to charge him with snobbery, it is nevertheless interesting to note that the orange buffoon has long been a figure of fun. In 1990 Walter Truett Anderson wrote "Reality Isn't What It Used To Be", a look at the then emerging post-modern world. In a discussion of "camp", the ironic style of late 20th Century urbanites, Anderson refers to Doonesbury, a liberal satirical comic strip. In one edition JJ, a trendy character, boards the private yacht of a certain New York tycoon, "whose life and consciousness appear to be that of plain old American big bucks":

"Trump points to a ceiling and tells JJ he wants her to decorate it with about 50 Greek gods and a bunch of swans - 'in the Michelangelo style of course'. 'Okay', says JJ, 'I think I finally get it, Mr Trump. You're looking for neo-classical kitsch, a kind of grand comment on bad taste! What a hoot. Ha! Ha! Ha!' Trump gives her a frosty look. 'Or GOOD taste', she decides quickly. 'You're commenting on good taste!' 'No', says Trump, 'I'm just paying for it, and I want it by Monday!'".

The Great Vulgarian

Thirty years ago, that is, the current President was selected as the best available stand in for "Trump's - and America's - fantasies of vulgar excess. JJ, the post-modern, wants to play a game. Trump wants to play it for real". Moore knows that any Doonesburyesque attack on Trump would fire up the "base". If, beyond its shores, America is often seen as lacking a spirit of irony, the "fly-over states" of Trumpian America are an entirely irony-free zone and any suggestion that his upcoming Democratic opponent is an egghead might result in Trump's re-election.

So, it is apposite that this time round Moore goes back to Flint, where the city's river, the source of its water, is hugely polluted, and injustice and corruption have meant that irony would be tastelessly inappropriate. Flint deserves simple responses: anger for the politicians and support for its citizens. All Flint children are subjected to lead poisoning; there is an epidemic of Legionnaires' disease, and officials don't care.

The city's hospital uses this dirty water, but GM doesn't, the Governor, Rick Snyder, having provided them with cleaner water from Lake Huron. At the hospital staff were ordered to falsify results to cover up the facts. Snyder, inevitably, is a mate of Trump's, though Moore shows the previous President, a certain Barack Obama, was also keen to absolve state and city. We're shown Obama (that liberal elitist) posing before the TV cameras, drinking a glass of Flint water to show he's sure it's pure (Obama, Moore wants us to know, was the most favoured recipient of Goldman Sachs cash).

Snyder of course talks of his "customers", explaining to residents that he needed to run the Government as a business. As we used to say, the record needle is stuck. Concurrently Michigan invented "Emergency Management", a policing control policy - sorry, business - to which 50% of customer blacks are subjected, but only 3% of customer whites. Flint, with its population of auto workers, and a large proportion of African-Americans, serves as a dumping ground for Government and corporate experiments. Moore tells us that the US Army bombed it in tests. There was no previous citizen input, not even "consultation".

Elsewhere in Johnny Lunchbucket states there is gratuitous bloody-mindedness. We're shown teachers in West Virginia, where the state Government has forced them to do a Fitbits exercise routine in order to get health coverage. If Flint's water debacle is brought about by a simple, brutal greed, it would seem the teachers - a demographic closely associated with a liberal and Democratic disposition - are being humiliated because they're the wrong sort of people (West Virginia went for Trump largely because he told them he would boost its coal mines).

How many Americans, let alone the rest of us, knew any of these grassroots manifestations? The big media outlets, far from being the "fake news" distributors of Trump's childish rants, are in fact biased the other way, usually ignoring the rumblings that have begun to shift the conventional wisdom. Moore shows massive marches and displays of solidarity by teachers, and other workers, often those in insurance, that never feature in the pontifications on the news channels.

As I wrote this paragraph, I put on the TV to check for any updates and there was a panel pondering Bernie Sanders - who has just announced his candidacy - and his use of the "socialist" label, which is replacing "liberal" as an expression of the unthinkable in the thesaurus of the Right. There is the usual nonsensical talk from the GOP of how Sanders wants to bring North Korea and Venezuela to America, but then a surprise: Democrats have been polled and by a wide margin they are said to prefer "socialism" to "capitalism". None of us saw that coming.

(Other news that day featured an ex-FBI chief revealing that Trump was being investigated as a Russian "asset" - and well before public knowledge of all the probes. Meanwhile Trump was disputing the CIA's intelligence about North Korean weaponry, because Putin had told him otherwise...). Trump might last two more years, and it's good that Moore spends much of his movie emphasising the problems with the American system that both enabled Trump's rise and will outlive his time in office, enabling future Presidents of yet unknown dispositions.

Film Resists Too Many Easy Gibes

In some of his earlier films Moore took the occasional cheap shot to score easy points, but here he is focused and disciplined, resisting too many gibes at the all too hittable target of the Trump persona. Because beyond his cartoonish villainy lie the permanent blocks to a fully functioning democracy. These days the Electoral College, an anonymous selection in each state, rubber stamps the electorate's choice, with the winning candidate automatically awarded all of each state's votes in proportion to its population.

It wasn't always that way, the "college" having been set up to allow its supposedly wise men - make that rich and white men - to ignore, if necessary, the vulgar impulses of the vulgar herd. Moore says the College was there to appease the fears of the slave states. The constitutional insistence on the much-touted separation of powers was similarly motivated by a fear of too much direct democracy, just as was the Constitution's granting of any powers not specifically granted to the federal Government to be delegated to the states.

We've seen the result of states being privileged in recent elections, in 2000, when Dubya Bush squeaked out his win over Al Gore - with additional help from the Supreme Court's ruling over which ballots to allow in Florida - and in the 2016 election, in which Clinton got millions of votes more than Trump. It is likely that next time round some of the more populous and liberal blue states, like California and New York, will lean more heavily than usual towards the Democratic candidate, but that won't be reflected in the outcome. Because of the electoral college system, a majority of one earns you as much as a majority of millions.

Moore looks at language, the phrases that colour our impression of what's going on. Whenever a mass shooting occurs, we can be sure that the National Rifle Association (NRA), a vastly wealthy propaganda outfit for the gun lobby, will offer its "thoughts and prayers" to the families affected, but will assert individual freedoms. "Thoughts and prayers" are private things which do nothing to reduce the mayhem, while "freedom" is like "states' rights", a way of ensuring there won't be any new rules to restrict the ability of the shooters to keep mowing people down. The issue, they say each time, again steering the conversation to meaninglessness, is "mental health".

Trump of course favours cruder formulations. The NRA might well have gone to a PR company to advise on soothing evasion, but the President prefers a full frontal assault on reality. He likes to tell it like it isn't. His favourite quips, that the conventional media dispenses "fake news", that they are "enemies of the people", are depressingly familiar.

But where did these phrases come from? Trump has a tiny vocabulary. Things he doesn't like are "horrible"; people he likes are those he "gets on" with; someone he doesn't like is a "low IQ person" (it's common that men who secretly suspect they might be challenged intellectually assess people in terms of their alleged intelligence - or lack thereof).

If his vocabulary is limited, his curiosity is non-existent. A man who is supposed to choose policy options for the most powerful nation in the world but does not read one-page summaries of them is not a man who reads books or talks about ideas. Ever. For a man trapped within a needy present tense, historical perspectives are unimaginable.

Yet Trump picks up on "enemies of the people", a formulation expressed early on by Lenin, and subsequently a favourite of Stalin and Mao, employed to indicate someone was about to be killed, and "false news", borrowed from Goebbels, Hitler's propaganda minister. This is a quartet about whom Trump would know nothing. (The origin of the former phrase was probably Norwegian playwright Henrik Ibsen's 1882 play of that name; which Lenin would have known).

One Big Infomercial

So, who put the words into Trump's oblivious mouth? Steve Bannon, that self-described "Bolshevik of the Right"? How many presidents and prime ministers would repeatedly quote from the four historical figures who might well be polite company's four most hated figures from the bloody 20th Century? Cohen told Congress that Trump viewed his Presidential campaign as a hugely successful "infomercial" to publicise his ventures and get him attention and money, confirming that Trump never expected to win the election.

The great comic characters are always predictably petty in their motivations. Unlike tragic heroes, they never learn from their mistakes because they have no idea that they are one big mistake. As we go to press the Mueller report on Russia and all that is due out but when you read this it is likely that we won't know much more than we did before about who did what with Russians.

Nearly all - all? - Trump's closest political and business associates have been charged as liars and crooks, so whether the creepy Putin shadow is the residue of fraud, theft or blackmail might not be known, perhaps ever. It does not, however, follow that a good idea would be impeachment or imprisonment. Accession of the current Vice-President, Mike Pence, would be worse news. A Pence Presidency would be neither tragic nor comic. It would just be reactionary. But that's another story, one that might or might not have to be told.

VICE
A Film By Adam McKay

Dick Cheney was Vice-President for the second George Bush - Dubya - from 2001 to 09. The general view is that he has been the most powerful Vice ever, largely because Dubya was bored by government, never keen on looking closely at details of policy. When Bush approached Cheney to join his ticket, Cheney assessed this disposition. We see him at his job interview, at which he told his nominal boss that he would accept a role as Vice so long as Dubya left him free to deal with the stuff that interested him. Bush was relaxed about that from the start.

Another reason for Cheney's prominence was his ability to exploit the vast Washington bureaucracy. Even Presidents (like Barack Obama) who pay attention to who was doing what within the federal network know only a few of the functionaries tasked with enacting policy and only a little about what they're doing all day. Cheney made a point of locating key staffers and dealing directly with them.

Cheney routinely chatted to Bush about what they should do next. The best estimate is that he ensured the appointment of over two dozen people who were personally loyal to him to policy-making positions in many agencies. He then exercised control over many agency policy decisions by calling one of his people at an agency and persuading him or her to make a decision.

A typical example was Cheney's interest in how dams operate in order to balance the wishes of farming and fisheries, something that Dubya neither knew about nor would have wanted to know about. Most of Cheney's successful efforts to control agency policy decisions were also unknown to the head of the agency involved. In the example of dams, Cheney intervened decisively by chatting with the person who was 19th most senior in the federal department concerned (this is the analysis of an academic researcher).

Bush's inattention was not just the result of his lack of curiosity. President and Vice-President had a common need to not know what was going on in the country over which they presided. They wouldn't have needed to talk about this approach, both taking it for granted that the role of the Government was to do as little as possible. That was why Bush picked Cheney in the first place. He was a maverick from deep red Nebraska.

The whole Washington apparatus exists historically as the enabler of public activity. The federal Government is the means by which American social values can be expressed. This frustrates modern day Republicans, who want the Government to get lost. They see it as needing to boost the military, cut taxes for billionaires, and outlaw abortions, but doing as little else as they can get away with. Health care? Education? Public transport? Not so much. Anything that could be privatised, Bush and Cheney wanted to privatise. They set the stage for the even cruder manifestations of the last two years under Trump.

Denier In Chief

Cheney's strongest impulse was probably his need to deny climate change so that the extractive elite - coal and oil - and automobiles and agribusiness were free to go on polluting. Avoiding action that would allow the Earth to remain habitable was the chief motivation of Bush's two terms. Cheney was effective as his denier in chief.

Truth was never an issue, Cheney being able to say whatever might work at any given time. In that he was worryingly successful. Apart from Dubya's dad, who was denied a second term by Bill Clinton, the last GOP (Grand Old Party) President had been Ronald Reagan (1981-89). Reagan ran huge deficits by cutting taxes on the rich and throwing vast sums at the military. This does not prevent Republicans from telling America that Reagan was a "fiscal conservative", a paragon of restraint, of "small Government".

They do so even today, despite their story reversing the facts. As Noam Chomsky reminds us, Cheney said: "Ronald Reagan showed us that deficits don't matter. He meant deficits that Republicans create to get popular support but are then blamed on someone else - on Democrats, if possible. When Democrats are in power, deficits are a horror story" (the quote is from Noam Chomsky's "Global Discontents", reviewed below).

As one journalist puts it: "Cheney had the ability of making wild and extreme ideas sound measured". McKay includes an assertion that one such linguistic success was Cheney's managing to change talk of "global warming" to "climate change". Where is the evidence for this? There are multiple examples of the more likely gambit; the Bush Administration doing all it could to suppress both phrases (and currently there are allegations around Washington that Trump has issued such a ban).

Disaster Capitalism: 9/11 An "Opportunity"

In a classic - and totally unsurprising - example of disaster capitalism's penchant for wishing crises on societies so that rich privateers can take advantage of chaos to grab ever more, Cheney urged his colleagues to see 9/11 as an "opportunity" to extend America's global reach. You can't do better than exploit sympathy.

Cheney's political life began in 1968, when he got to Washington as a Congressman. McKay emphasises his relationship with that other Donald, Rumsfeld, whose amoral opportunist style Cheney admired. Rumsfeld served as Dubya's hawkish Defense Secretary. As played here by Steve Carrell, he thought that any notion of putting consistency and principle ahead of self-serving opportunity was absurd. From 1975, when the White House Chief of Staff still functioned as a conventional executive - that is in pre-Trumpian times - Cheney did the job for President Gerald Ford (1974-76).

Roger Ailes, one of the legions of disgraced sexual predators in powerful positions, founded and was for years the boss at the rabid Fox News. Ailes was a Cheneyesque cynic, but here he is only mentioned. Whatever schemes he might have concocted with Cheney are not touched on. This might be because during the 1968-74 Nixon Administration, at the start of Cheney's public life, the two did not meet, so it's not clear why he's here at all (Russell Crowe plays Ailes in another current movie).

Obama's Vice, Joe Biden, has said that Cheney was "the most dangerous Vice-President we've had in American history" because of his constant manoeuvring to get the system to accept his theory of the "unitary executive", an evasive way of saying that Dubya should have been able to do whatever he wanted.

The shock doctrine pretext was usually the "war on terror", with Bush's lawyers arguing that the President could do anything he wanted to do in this context, including authorising the torture of prisoners. Constitutional scholars have no doubt these claims are bogus, totally unrelated to the real unitary executive theory. Within a tradition that's always lauding the "separation of powers", the phrase does sound suspect.

McKay told an interviewer that Cheney was "a symbol of an era where a lot of powerful messaging was put forth that Government doesn't solve things. School shootings, the opioid crisis, global warming - there doesn't seem to be any even remotely serious effort to deal with these problems". That's one way of putting it, but it is more accurate to say that Republicanism exists in order to make sure nothing is done about these vital concerns.

Drifting into senility, Reagan, with his insistence that Government was the "problem", the cause of whatever worried American neo-liberalism, had set the tone. The much worse and stupider Donald Trump is the current expression of the malady. Cheney links the two epochs. He has been the wiliest conniver. Importantly, for all the pretence that he was nothing but a good old boy, he was the ultimate insider. He knew the system and had the energy and the personality to make it work for the Know-Nothing* GOP.

* The Native American Party, renamed the American Party in 1855 and commonly known as the Know-Nothing movement, was an American nativist political party that operated nationally in the mid-1850s. It was primarily anti-Catholic, xenophobic, and hostile to immigration, starting originally as a secret society. They were called Know-Nothings because members of the Party were told to say "I know nothing" when asked about it. They were also called "nativists" because they believed that foreign-born Americans should not be allowed to hold Government posts. Wikipedia

Dark Comedy

Some critics have panned McKay's comic approach on the grounds that the Bush-Cheney Administration was anything but funny. McKay, who's previously written for TV's Saturday Night Live, has always had an eye for the absurd, but if his movie is comedy, it's dark comedy. He told an interviewer that the Bush-Cheney tag team was "ridiculous" - as is, even more crudely, the Trumpian bunch. Cheney orchestrated a farcical burlesque show. The movie never goes deep or serious because Dubya and Dick were never deep or serious. As much as it is dark comedy, the movie is improvisational comedy and Christian Bale as Cheney is spot on in his rendering of it.

Cheney made it up as he went along, living in a permanent present tense, reading the needs of those he needed to manipulate. He was smart enough, but given to neither introspection nor systemic analysis. That extended to how he lived his own life. McKay shows his series of heart attacks. From each one he bounced back like Abbott and Costello bouncing back from a pie in the face.

THE GLOBAL MINOTAUR:
America, Europe And The Future Of The Global Economy
by Yanis Varoufakis, Zed Books, London, 2015

When Greece's dire economic situation was in the news, you might have seen pictures of the Greek Finance Minister hopping onto his motorbike after yet another negotiation with German bankers and zoom angrily off down the road. To those who expect money minders to be besuited old men of generous bulk it might well have seemed that the wiry motorcyclist was a rebel with a weak cause, the conventional wisdom generally holding that the Greeks had themselves to blame for their predicament.

To an extent, they were indeed, the national economy having for decades borrowed what it could not hope to repay. Without urgent reforms of a political culture which failed to collect taxes from the moneyed and connected and allowed waste and corruption to drain public revenues, a lasting resolution wasn't on. Greece, it seemed to the bankers in Frankfurt, needed some tough love.

Yanis Varoufakis and his Syriza Party were not to blame for this, the country having been governed for many years by either a very Rightist conservative party or by Pasok, a social democratic party which did little to curb the culture of unmerited entitlement. On the contrary: Syriza was the reaction. Varoufakis joined a Government pledged to deliver accountability. In this analysis he spends no time settling scores with rivals domestic or German. The global minotaur of his title is the United States and the financial system it has imposed on Europe. Only by changing the rules governing finance and trade can countries like Greece hope to solve their problems.

Keeping The Minotaur Well Nourished

In Greek mythology the Minotaur, half human and half a bull, (the latter being American policymakers and their allies in the German State) terrorised Crete, needing to be fed with human sacrifices. In the Varoufakis summary, "a Pax Cretana was established across the known lands and seas on the basis of regular foreign tribute that kept the Minotaur well nourished".

Another important difference between Varoufakis and the popular image of a finance minister is that he is not just an economist, but one who thinks for himself. As an academic he worked critically, probing the boundaries of neoliberal hegemony. More unusually still, he is a writer and intellectual. Most books from politicians of all stripes are justifications of their careers. Varoufakis is advancing ideas.

Yet more unusually, he doesn't mind admitting to us that he might not have been right about everything all the time. "Global Minotaur" first came out in 2011, before much of the ensuing chaos and, in this edition, he updates his thinking, discussing how the Greek economy has done since in the context of the contemporary world order. Before he gets to the details, Varoufakis provides a summary of economic policies, putting his country's difficulties into a context.

Media reports, always keen to be superficial and personal, blamed profligate Greeks for the mess; Varoufakis looks at the underlying issues, at the core of which are the debt, both public and private, that set off the 2008 collapse, the GFC (global financial crisis) as it came to be dubbed. He blames the "Anglo-Celtic" economic model, adding the "Celtic" to the usual "Anglo" to include Ireland, with its housing bubble. He looks at US trade and budget deficits, why they developed, and why they matter.US debt, he suggests, is the minotaur, whose tribute of incoming ended with the banking and investment collapses.

To set the recent scene Varoufakis takes us back to the immediate post-World War 2 period, when the US and its main mates set up a new economic dispensation, marked by forging common liberal capitalist relationships. He quotes President Franklin Roosevelt to the effect that "[t]he economic health of every country is a proper matter of concern to all its neighbours, near and far". The US emerged in 1945 as the one dominant superpower, using its influence to - as Varoufakis puts it - "manufacture consent and surpluses". America and Europe did well until about 1973, when the system started to splutter, leading to neoliberalism and (in the case of NZ) Rogernomics.

What tripped it in 1971 was a lack of self-restraint from the US government, which abused its ability as custodian of the global "reserve currency to print global public money at will", a foreshadowing of the 2008 lack of restraint from banks in "printing global private money at will". As the economy morphed from creating goods to puffing up finance values, incomes for middle and - especially - lower paid workers lagged. From the 1970s to 2010 US wages stagnated, though productivity doubled. The trends have continued since.

During the 30 post-war years the US used its domination and manufacturing muscle to build trade surpluses. Varoufakis says that at the pivotal 1944 conference the British delegate, John Maynard Keynes, had pressed for a "surplus recycling mechanism" so that trade imbalances between countries would be automatically smoothed over. The US rejected that.

Germany now, Varoufakis reckons, is doing what America did then: "Just as the Americans insisted on their right to run large surpluses, so Germany demanded that the Maastricht Treaty (which set up current European Union arrangements) should not include any explicit surplus recycling mechanism". Why did Germany follow the earlier American lead? It was "[t]o use the creation of the Eurozone as a mechanism by which to cast in stone the 'obligation' of the debtor countries (plus France) to provide Germany with net effective demand for its exports".

Interestingly, the former Finance Minister holds that world capitalism's finest hour came when the policy makers of the strongest political unit on the planet decided to play a hegemonic role. US power was not projected just through military and political might but by "the kind of massive redistribution of surpluses across the globe that the market mechanism is utterly incapable of delivering".

Book Is New European Economic Manifesto

Varoufakis is no friend of neoliberalism, but he recognises the comparative virtues of the capitalism that preceded it, which allowed increasing equality and wealth in the Western world. American "leadership", as polite society calls US power, was widely accepted in (Western) Europe. To mainstream opinion the US was the hegemon, the source not just of money and the military, but of legitimacy.

"Hegemony differs from domination, or from vulgar exploitation, in that the true hegemon understands that its power must be replenished not through further extraction from its subjects but from investment into their capacity to generate surpluses. To take from its subjects, the hegemon must master the art of giving in return. To maintain power, it needs to bolster its surpluses; but to do this, it must redirect large parts of it to its underlings." The tensions within Europe now are deepened by the fact that countries with varying needs are bound by a common currency.

Greece has been hit hardest by this, Euro membership preventing indebted counties from devaluing, so they bore the brunt of indebtedness. Varoufakis' book is essentially a manifesto for a new economic dispensation in the European Union, through which trade would adopt the Keynesian project of recycling surpluses between member states, and currencies would reflect the needs of sovereign economies. He's calling for a tighter, cooperative union. Readers will note that, in Donald Trump's "America First" ideology and Britain's Brexit shambles, events are moving the other way fast.

GLOBAL DISCONTENTS
by Noam Chomsky, Penguin, UK, US, 2017

Noam Chomsky, who's been around forever, has combined with David Barsamian, a younger writer, in what they call "conversations" about topical issues. As conversations, they are notably one-sided. Barsamian is there not to expound his own views but to put questions that allow the great man to hold forth. They obviously have identical attitudes, with Barsamian helping to get the point across more briskly than a conventional approach might allow. He tosses what in America they call "batting practice fast balls". He lobs a pitch; Chomsky smites it into the stands.

Chomsky has been probably the most consistent and prolific critic of US policy for decades and it's hard not to agree with pretty much everything here. As a retired linguist of international repute, his huge range of knowledge of global politics - never his main job - is daunting. He's always sharp, and the "conversational" approach allows him to make some arguments that would not be possible in a book focusing on particular topics. Reading this is like being at a question and answer session. The format works, even if only a person with a big reputation could get away with it.

Some Answers

Echoing Adam McKay in "Vice" (reviewed above) the US Republicans exist only for their own wealth and power: "They have to get votes somehow, so they've mobilised sections of the population that they hope will be irrational and extremist". The US now has but "one party with one faction. They're called Democrats but they used to be moderate Republicans, since everything has shifted to the Right".

"There is also another political organisation, the Republicans, but they are barely making a pretense of being a normal parliamentary party". On the public relations industry: PR exists to undermine markets: "Business doesn't want markets. Markets are supposed to be based on informed consumers making rational choices. That's the last thing businesses want".

Some Opinions

Bernie Sanders is by far the most popular politician in the US but is "ignored or derided" by the media. He is advocating policies that were once Centrist. Brexit is a big mistake, with an electorate having been misdirected, largely by the Rightwing of the Tories. And there's a general confusion about how history happened. The UK sponsored central European Union policies.

Chomsky attacks austerity in Europe, the UK government being one of the worst offenders. He discusses in some detail climate change - an impending disaster - and refugees - rich world countries could readily absorb them. He looks at the Middle East, of course, and talks about Israel and Palestine, but his argument hasn't changed during Chomsky's long adult life because the situation there hasn't changed either.

Next question (referencing the 2016 US election): "How do you respond to people who say: 'I want to vote my conscience'? Or, conversely: 'Bring it on. I'm going to vote for Trump. Because that will break the system and speed up the revolution'?" Answer: 'If you put one less vote in the Clinton column, you're making it easier for Trump to win. If you think you're voting your conscience when you vote for Jill Stein (who ran as a Green candidate in 2016), what you're saying is: 'My conscience prefers Trump'".

Reform Or Revolution?

Chomsky explains that, when voting, the question to answer is: "Do you care about what happens in the world, or do you really only care about what you feel?" This is excellently sensible, as is his response to those who over the years always ask him to "tell us how to do it". The answer: "Nobody can tell you how to do it. It's your situation. Outsiders can't know better than you". There is some general advice, however, that always holds true. Chomsky urges people to get active in local organisations. To those impatient enough to hope for revolution, he suggests it might be more responsible to forsake rhetoric and instead "press the options within the system as far as you can".

--------------------------

Hans-Jurgen Geese has published "1984: The Year New Zealanders Became Slaves".

A sub-subtitle: "The Sale Of A Nation And Its People".

Hans-Jurgen looks at Rogernomics and after.

For copies contact the author at h-ageese@xtra.co.nz

REVIEWS

- Greg Waite

THE FINANCE CURSE:
How Global Finance Is Making Us All Poorer
by Nicholas Shaxson, Bodley Head, London, 2018

Shaxson's subheading - "how global finance is making us all poorer" - sums up this essential read perfectly. No other book will take you so clearly into the reality of today's crazy global economy. Even experienced activists may be surprised to learn that the UK financial sector carries more responsibility for global villainy than American corporations. Finishing "The Finance Curse" I came to a novel conclusion: "Oh, so Europe will be a much better place after Brexit".

The book begins by revealing the financial complexity behind the everyday task of buying a train ticket in London. "Trainline.com Ltd" runs the service but is owned by Trainline Holdings Limited. Five more companies up the chain, your booking fee crosses the English Channel to the British dependency and tax haven of Jersey, then back to London and back through five more companies and once more returns to Jersey, before migrating to two companies in Luxembourg, another tax haven.

And along the way, all sorts of other cashflows join our simple fee as different countries in this hierarchy borrow money from banks, or from each other, or inject and lend cash back and forth, sometimes at rates well above the market. From Luxembourg our brave little 75 pence enter a financial tunnel which is harder track, emerging in the Caribbean where it travels through three or four more impenetrable Cayman Islands companies.

There it joins a multitude of other financial streams from around the world to flow into KKR, a giant investment company in the United States. This river of money then flows into the accounts of KKR's shareholders: the world's biggest banks, investment funds and rich individuals. KKR makes its money by re-engineering companies for profit, and if they haven't gone bankrupt, selling them off. None of this is illegal: in fact, this is increasingly the way business is done. The first question is why - and the answer is found by understanding financialisation, which emerged in the 1970s and has slowly, silently, crept up on us all.

Trainline's corporate structure is typical, where a business shifts its focus from the hard slog of boosting productivity and entrepreneurship, towards the more profitable sugar rush of financial manipulation to tease out higher profits for the owners. The purpose of financialised businesses has been whittled down to little more than a single-minded focus on maximising the wealth of shareholders.

Wealth Extraction, Not Wealth Creation

The second question is if all this complexity is efficient, and the answer is an unequivocal no. The financialisation of Trainline creates a hidden tax on British rail travellers. Corporate bosses, their consultant advisors, and the financial sector have moved decisively away from creating wealth for the economy, and towards extracting wealth from the economy. Financialisation has unleashed gushers of profits for the owners and bosses of these firms, while the underlying economy - the place where most of us live and work - has stagnated. The profits, and the stagnation, are two sides of the same coin: wealth extraction.

This is a central part of what Shaxson calls the finance curse. "The concept is simple: it's the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role servicing society and creating wealth, and toward often more profitable activities to extract wealth from other parts of the economy".

"It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and society".

The "finance curse" is a new twist on the now well-documented "resource curse", where developing countries with rich natural resources actually underdeliver to their citizens due to the capture of local elites by global corporations, leading to their exclusive focus on extraction of easy wealth from the resource sector.

"It is no coincidence that the decline of British manufacturing since the 1970s has been so much faster than in other industrial economies, at the same time as Britain's financial sector assets have grown so much larger as a share of the economy than in comparable Western nations. To compensate for this sluggishness, successive governments have filled the holes with policies of financial loosening, which has allowed bank credit to grow three times as fast as the underlying economy since the 1960s. And yet most of this credit has been circulating in the financial sector, unmoored, disconnected from the real economy and the people it is supposed to serve".

Shaxson goes on to trace the rapid rise of finance-serving anti-State neoliberal economics, then the emergence of the competitiveness agenda and its consultants, a race to the bottom where towns, regions and nations are portrayed as in competition to extract concessions which maximise profit extraction. He notes "companies nearly always decide where they want to relocate to before they start playing the states off against each other, but the consultants, who extract up to 30% of the value of the subsidy package, have every incentive to deceive and exert undue pressure".

London Leads The Way

A very telling story emerges as Britain's colonies break away. In 1956 a new financial market began in the City of London. The Midland Bank began taking US dollar deposits unrelated to any commercial or trade deals. Under the Bretton Woods Agreement, this was speculative activity and prohibited - but at the same time the Bank of England required reserves to defend the currency and Midland's currency trades generated dollar fees, so the Bank of England looked the other way.

In effect, this meant a decision to host, but not regulate, a new market for dollars in London. American, Soviet and Chinese banks realised they could come to London and do things they weren't allowed to do at home. The City had quietly turned Britain into an offshore tax and financial haven. This is the beginning of a long and sad story where the City financial lobby continually expanded the envelope of legal financial manipulation and deception, resistance to regulation and accountability, and co-option of the political elite. For example:

"The twin oil price shocks of the 1970s accelerated the flows, generating giant new surges of petrodollars which the large banks recycled through the City of London back into disastrous, criminalised cycles of Third World lending. These loans were often looted by national elites through bogus development schemes or outright theft, and sent back for safekeeping into the same Euromarkets where nobody asked questions about the money's origins".

"Like a slow-motion nuclear explosion, the Euromarkets began to give financial globalisation a life force of its own. They metastasised beyond Britain, beyond dollars and beyond anyone's control to become a frenzied battering ram, to smash holes in exchange controls and the cooperative international infrastructure. Major currencies were allowed to float against each other and the Bretton Woods architecture was rubble".

Undermining Democracy

And: "Crafting a national economic strategy that relies on offshore finance creates an inevitable blowback, which has criminalised Britain's own elites in four main ways: it brings the wealthiest and most powerful into close proximity with criminals; it offers the elites permanent temptations to criminality; it makes criminals rich, enabling them to join the ranks of the elites; and by making it easy to escape rules and laws, it creates a culture of impunity and a real sense of being above the law".

And critically, the finance sector's argument that to remain nationally competitive, we should allow effective monopolies to dominate markets and undermine real competition: "Who killed anti-monopoly? There is a clear answer to this question. The Chicago School of economists developed the proposition that if mergers didn't result in higher prices, what's the problem? Laws should be subject to a sort of cost-benefit analysis. It doesn't take a genius to see how elevating easy-to-massage numbers above the rule of law was likely to boost lawbreaking everywhere, not least in the financial system".

Magnifying Systemic Risk

There is a particularly clear section on "repo", which is now central to the plumbing of global finance. On face value, this is a way for corporations to deposit short term money, receiving collateral as security, with a contract for repurchase very soon for a tiny premium. "Repo is everywhere now. It interconnects most financial markets in trillion-dollar webs of tightly coupled relationships, making repo a transmission mechanism for shocks".

"A corporation which receives a government bond in exchange for cash in a repo can pass that bond on to others in a second repo transaction. US rules restricted this practice, but Lehman (now failed) and others were able to do it without limit in London, with market players taking spreads and fees at each juncture. The longer the chain the greater the risks".

"Legally, repo hinges on a question: is the transfer of cash for collateral a true sale? If so, then the asset that a bank 'sells' in a repo is no longer the property of the bank, while the cash can be used to flatter the bank's balance sheet. By now it won't be hard to guess where Lehman went to find the opinion it wanted: the London law firm of Linklaters".

There is so much more in this book. The dominance of financialised corporations in England's aged-care sector makes sure that this globalised story comes closer to home through the personal stories of aged care workers. The documentation here on all the many ways finance extracts money is amazing: from small and large businesses, from taxes to tax havens, from government services to outsourcing, from regions into the centre, from developing nations to rich nations, from production to finance, through reinvestment in share buybacks into executive bonuses, and always from workers to the globally mobile ultra-rich, typically via trusts which hide their true wealth and avoid taxes.

Shaxson concludes: "The time for timidity has passed. It is no longer good enough to be a Facebook warrior, sending out messages to people who already agree with you. In today's Britain, one of the greatest political divisions is between those who support financialisation and the finance curse, and those who want to return finance to its proper place, serving society. Which side are you on?" Or as Financial Times columnist Rana Foroohar once asked pointedly: "Which country will be better able to control its moneyed elites?" Read this book, reflect, then act now before it's too late!

BEAN COUNTERS:
The Triumph Of The Accountants And How They Broke Capitalism
by Richard Brooks, Atlantic Books, London, 2018

This book will really open your mind to the fragility and corruption of modern corporations. Brooks traces the path of today's Big Four accounting firms - who audit nearly all of today's top 100 UK-listed firms - from their humble origins as honest external auditors for business to today's role as the drivers of corporate tax avoidance, shareholder wealth maximisation, and the race to the bottom called national competitiveness.

The first Western ancestor of today's accountants was the Italian mathematician Fibonacci, who brought Arabic counting methods to the West in his "Book Of Calculation" published in 1202. This led to the development of double-entry bookkeeping, improved management of large Florentine merchant houses and ultimately underpinned the Italian Renaissance.

The next big historic change-point was the 1720 collapse of the UK's South Sea Company, a Ponzi* scheme based on fraud which resulted in a recession more violent than the 2008 financial crash. In its wake, accounting academies sprang up across the UK, particularly in Scottish cities, and bookkeeping spread rapidly, developing into a sophisticated tool for understanding and managing the performance of large-scale enterprises. * A pyramid scheme whereby original investors are paid beguiling dividends from new advances. These scams are still called Ponzi schemes, after Charles Ponzi, who provoked the 1925 Florida real estate bubble. Ed.

Next stop, the frantic 1840s' railways boom, when huge amounts of wealth were up for grabs and fraud again became commonplace. The man who gave his name to the world's largest accountancy firm today, William Welch Deloitte, uncovered the dodgy dealings which sent the self-styled "Railway King", George Hudson, to a debtors' jail. Four years later, he was called in by concerned shareholders in the Great Western Railway to become the first independent auditor of a major company.

From Great Beginnings To - Enron

Sadly, 150 years later, the Deloitte's name was on the audit of Royal Bank of Scotland just before its £45 billion bailout by the UK taxpayer. A lot had changed, beginning with the 1856 Act to create limited liability companies, which led to 25,000 new incorporations in six years, and the 1879 Act which made bank audits compulsory.

Next came the shift of economic focus to the New World. American accountants on the fast-changing frontier saw their role more as diagnosing problems, compared to the traditional British focus on assessing the soundness of a company's affairs. And in the wake of the 1929 Depression's company collapses, President Franklin Roosevelt brought in the Truth In Securities legislation which demanded regular balance sheets and profit-and-loss accounts for shareholders. Surprisingly, this is where modern accountancy started to go off the rails.

Accountancy's intimate involvement in the challenges and innovations of leading companies provided American accountants with inside knowledge which they used to develop lucrative consultancy work. This was both a conflict of interest, and an incentive towards deceptive practices to please fee-paying business owners, both reinforced by the convenient American shift to self-regulation of the profession.

Brooks details a very long chain of these "innovations": abuse of "goodwill" costs to hide the true cost of mergers (and support those lucrative consultancy fees on mergers), "scientific management" systems and the ever-increasing scale of consultancy, organisational restructuring, executive pay and appointments advice, government consultancy and contracting out, selling expensive and sometimes inappropriate computer system commitments to their clients, and on it goes.

A Theme Park For Falsehoods

By the 1980s, consultancy revenues were larger than auditing and growing faster too, so the biggest bonuses and highest salaries went to consultants, which diminished the role and prospects of auditors in accountancy - and businesses were getting smarter at hiding the truth to pursue what they wanted, more money for the already-rich. Politically, with the election of Margaret Thatcher and Ronald Reagan, capitalism fell under the spell of Chicago School* economics.

First, restricting the money supply to cure inflation caused by oil price rises kicked off a radical weakening of unions. Then, deregulation of banking and cross-border financial flows from the system of exchange controls exponentially widened the scope for deceptive business reporting. For Brooks "the financialised world economy would become a theme park for false accounting, tax avoidance and regulation-dodging, with the bean counters marshalling the customers from one ride to another". *The best known of the Chicago School is Milton Friedman (1912-2006), the father of neo-liberal economics. Ed.

Ultimately, crises will expose dodgy accounts even if politicians won't, and the 15% inflation of the late 1970s certainly did that for American savings and loans "mutuals" (companies that are similar to commercial banks). In order to survive with their long-term mortgages fixed at lower rates, they had taken full advantage of deregulation to indulge in a predictable orgy of over-leverage, investment in junk bonds, riskier lending, theft and fraud. Over 1,000 failed - the main difference to 2008 being that back then, over 3,000 bankers were sent to jail!

The dramatically higher levels of debt and financial complexity in the age of financial freedom meant that accountancy distortions now posed serious systemic risks for the global economy - so, accountants responded by protecting themselves via a concerted campaign to limit their liabilities in the event of more corporate disasters. Many US state legislatures succumbed to finance's now-familiar (empty) threats of relocation by introducing "limited liability partnerships", capping each partner's liability for failings in the firm to what they had put into the firm - the much larger private wealth they skimmed off would now remain safe.

The collapse of Enron* and WorldCom revealed the next stage of accountancy innovation - special purpose vehicles to hide risky or unprofitable assets off the balance sheet and overstate reported profits. Notably, both of these cases were exposed by female auditors who reached the limits of their conscience before the rest of the boys' club. * Jeremy Agar reviewed the movie "Enron: The Smartest Guys In The Room", in Watchdog 111, April 2006, Ed.

And Then - Crash!

"Not long after most of the world's largest banks had been bailed out with trillions of dollars of taxpayer money, one old lady (the Queen) wondered out loud: why had nobody seen the September 2008 financial crash coming?". It's now well documented that predicting this crisis was easy. There's even a highly entertaining movie about it, "The Big Short" (reviewed by Jeremy Agar in Watchdog 141, April 2016. Ed).

Several groups of small investors, pushed by the financial incentive of contractual bets against American loan company solvency, had no trouble identifying the rising risk of defaults in widely-sold packages of American loans. And that's the point - they had incentives to find the problem, auditors had incentives to hide it (their consultancies to package and resell loans). Ethics and standards had long since fled the scene. Only this time, just a few small players went to jail. How times change.

And then there's accountancy's central role in hiding developing world corruption, or the "legendarily corrupt privatisations" after the fall of the Soviet Union, which pulled apart the social fabric so much that average life expectancy fell a full ten years - not to mention the incalculable national, regional and global cost of undermining prospects for legitimate business and government way into Russia's future...

Brooks' conclusion: "Around the world, the accountancy Establishment will, before long, be controlled by men and women who have been recruited to become not expert auditors but profit-driven 'professional services' providers. Its leaders will have no memory of a time when auditing was their main task".

"History shows that the Big Four accountancy firms have prospered by avoiding accountability for their part in false accounting, financial crises and the plundering of economies while paying more attention to ever-expanding commercial opportunities. The difficult question is: what will change that?" His recommendations:

1. The separation of accounting and consultancy into separate firms
2. Publicly funded auditing of systemically important institutions
3. Independent regulation of accounting
4. Accountability of auditors for failure to meet standards
5. Breaking up the quadropoly of the Big Four firms
6. Transparent auditing and ethical business practices within accountancy firms
7. Greater openness in the secretive consultancy industry

THE PRODUCTION OF MONEY:
How To Break The Power Of Bankers
by Ann Pettifor, Verso, London, 2017

This is a short and unusual book, very down to earth, while aiming to provide a concise and coherent explanation of today's complex global banking system. For political analysts, her comparative analysis of the UK's many weird alternative proposals for quantitative easing* is particularly interesting - it seems that in the UK everyone would like a piece of the "free" money. And she manages to connect banking reform to global development, feminism and climate change! * Quantitative easing is an expansionary monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to stimulate the economy and increase liquidity. Wikipedia.

Pettifor begins with this summary: "So what is to be done by the forces of good - progressive forces - to stabilise the global financial system and restore employment, political stability and social justice? First, we need wider public understanding of where money comes from and how the financial system operates. Second... channel the public anger generated by bankers and politicians into a progressive and positive alternative". And ... "For a regulatory democracy to manage a financial system in the interests of the population as a whole, and not just the mobile, globalised few, requires that offshore capital be brought back onshore by means of capital control".

There's no beating around the bush here: "The global finance sector today exercises extraordinary power over society and in particular over governments, industry and labour. Players in financial markets dominate economic policy-making, undermine democratic decision-making, and have helped financialise almost all sectors of the economy. The financial sector's aim is not to minimise the cost of roads, electric power, transportation, water or education, but to maximise what can be charged as monopoly rent". And that's the real, hidden truth - see my review of "The Finance Curse" review, above, for more detail.

First, she traces the academic suppression of Keynesian* economics by monetarist ideology through the funding of hundreds of think tanks, journals and junkets; their fixation on unrealistic competitive market modelling; then she puts the boot into the huge hole in their models, excluding the role of private credit as the dominant creator of new money. *John Maynard Keynes (1863-1946) advocated government spending on public works to stimulate the economy and provide employment. He was the most influential Western economist for several decades after World War 2, until he was supplanted by the monetarists. Ed.

This "power to create money 'out of thin air' should not be used for their own self-enrichment. Nor should banks use retail customer deposits or loans as collateral for the bank's own borrowing and speculation. That much is common sense, and should inform a democratic society's regulatory oversight of the banks".

The Return Of The Robber Barons

Under the Conservative government, credit creation in the UK was deregulated in 1971 . The size and recipients of bank lending would now be determined by banks on the basis of cost, i.e. through capacity to pay higher interest rates. Loans would be granted to companies and individuals that could pay the highest rate, rather than those that fulfilled qualitative criteria like increasing productivity and enhancing the long-term viability of a business. This change created huge debt flows to international speculation and national property booms; the UK money supply grew by 72% and interest rates peaked at 26.9%!

Unregulated bankers were now free to create easy credit, fuelling consumption and inflation, raising the share of high-risk assets held by banks, and incentivising hidden leverage (debt-to-asset ratios). The cost of UK debt remained high well into the 1980s, and this ongoing bubble of unregulated credit was the ultimate cause of the 2008 financial crisis. Credit-fuelled asset price inflation has also been a major contributor to rising inequality, since more assets are owned by the rich.

Wealth Extraction Retards Development

"Low income countries have been encouraged to open up their capital and trade markets and invite in private wealth, but discouraged or blocked outright in their efforts to build sound public institutions and policies to manage their monetary and taxation systems. Above all, they have been discouraged from regulating the creation of credit at affordable rates of interest, or managing financial flows in and out of their economy".

"As a result of the need to borrow in foreign currency, a poor country's innovative sectors can be held back, unemployment and under-employment will remain high, and poverty can become entrenched. Monetary systems and financial markets have been cut loose from the ties that bind them to the real economy, and to society's relationships, its values and needs. Yet it does not have to be this way. This is largely because monetary systems have been captured by wealthy elites who, with the collusion of regulators and elected politicians, have undermined society's democratic institutions and now govern the financial system in their own narrow and perverse interests...".

Money For Bailouts But Not For Social Services

The cry "there is no money" for social projects is epidemic in the media today, yet central bankers found trillions to bail out the global banking system. Pettifor argues that many economists, as well as the public, confuse public and private debt. In times of economic weakness, public debt should be created to support public investment.

The value of money and the rate of interest are not set and simple - they are a social construct, and can rise or fall as trust in the system changes. From this starting point, Pettifor concludes that if well managed, there need never be a shortage of money for society's most urgent projects (author's italics) provided they are sustainable, income-generating projects and interest rates are managed to remain affordable. This was the successful Keynesian solution after the Second World War which created a stable expansion right up to the 1970s' war on unions.

Closing The Door On Speculative Capital

Pettifor argues for a financial transaction tax or Tobin* tax to slow the international flows of short-term capital. Today's rich nation governments and institutions that oppose capital controls were often the beneficiaries of earlier controls on "hot money" as they successfully pursued domestic economic development. * Named after its proponent, American economist James Tobin, (1918-2002). Ed.

She also advocates managing exchange rates by buying and selling currency rather than by manipulating interest rates upwards to retain or attract foreign capital. An International Clearing Union was Keynes' proposal - a solution would require much greater international cooperation than we currently see today.

People's Leadership

Pettifor concludes that given the capitulation and collaboration of world leaders with finance, people need to take the lead and leaders will follow. She identifies feminists and environmentalists as key contributors to this revival because they have the most to gain; women, because they have been most affected by rising inequality and the decline of social services, and environmentalists because the deregulated expansion of credit, unthinking consumption and ever-rising greenhouse gases has pushed exploitation of our environment so far beyond sustainable limits.

And critically, we must also "build an alliance between labour and industry. The interests of both would be served by subordinating finance to its proper role as servant, not master of the real, productive economy", and "reinvigorate our political and democratic institutions because they are the vehicles by which society collectively and democratically agrees to legislative and regulatory change".

THE END OF ALCHEMY:
Money, Banking And The Future Of The Global Economy
by Mervyn King, WW Norton & Co, New York, 2016

King wrote his book immediately after retiring as Governor of the Bank of England. He sets the tone on page one with an evocative quote: "Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?" (TS Eliot). Despite - or because? - he was so close to the London financial sector's undermining of corporate productivity and pillaging of global government tax revenues, his proposals for new central bank approaches are both practical and egalitarian.

Changing The Banking Rules

A central recommendation is for the reserve bank to guarantee short term bank deposits, backed by pledges of bank collateral against bankruptcy, and with that collateral assessed by the reserve bank at a safe proportion of its nominal value to cover cyclical price drops. This avoids bank runs on cash since the deposits of savers and retirees are protected, while also leveraging today's reserves created by quantitative easing and the assessment infrastructure created by central banks to hold and manage at-risk collateral held after the global financial crisis.

Rules for banking leverage would be more transparent and harder to evade; the pledged value of assets at the central bank must remain above the value of liquid liabilities (defined as loans of a year's maturity or less), and a safer maximum leverage ratio of, at most, ten to one. Reflecting on the global financial crisis, he says the UK's central bank had intense internal debate about how to deal with sluggish growth and a large trade deficit from the late 1990s. With a choice between steady growth but increasing imbalances and a slowdown to a more sustainable path for domestic demand at the cost of rising unemployment, they chose growth and pushed the risk of a sharper downturn into the future.

In his final chapter, "The Audacity Of Pessimism: The Prisoner's Dilemma And The Coming Crisis", he argues we now need to face up realistically to the deep hole which we are in and its parallels to the 1930s' slide from crisis into fascism. "Without reform of the financial system, another crisis is certain, and the failure to tackle disequilibrium in the world economy makes it likely that it will come sooner rather than later".

The Need for Debt Forgiveness

He argues "the situation in Greece encapsulates the problems of external indebtedness in a monetary union. GDP (gross domestic product) in Greece has collapsed by more than in the United States during the Great Depression. Despite an enormous fiscal (spending) contraction, the ratio of government debt to GDP has continued to rise, and is now almost 200%, denominated in a currency that is likely to rise in value relative to Greek incomes. The longer the austerity programme continues, the worse becomes the ability of Greece to repay".

And: "The inevitability of restructuring Greek debt means that taxpayers in Germany and elsewhere will have to absorb substantial losses. It was more than a little depressing to see the countries of the euro area haggling over how much to lend to Greece so that it would be able to pay them back some of the earlier loans".

"Such a circular flow of payments made little difference to the health, or lack of it, of the Greek economy. It is particularly unfortunate that Germany seemed to have forgotten its own history" (of unpayable debt after the First World War leading to fascism). King concludes that the best solution may be for Germany to exit the euro, lowering the exchange rate and making remaining countries more competitive.

Global Institutions Need To "Lift Their Game"

He argues strongly for democratisation of the International Monetary Fund (IMF), change which has been undermined by the US to preserve its veto - particularly because global rebalancing between surplus and debtor countries will need a globally acceptable coordinating body with cooperative swap funds available to support the difficult transition to normal interest rates and balanced global exchange rates. In relation to creating jobs, King has less practical experience and excludes many of the critical issues raised by writers reviewed above while including, for example, lowering the cost of public services. He does argue for reducing monopolies to increase competition and improving public infrastructure to support the economy.

And the final conclusion of this ex-Governor of the Bank of England? "For many centuries, money and banking were financial alchemy, seen as a source of strength when in fact they were the weak link of a capitalist economy. A long-term programme for the reform of money and banking and the institutions of the global economy will be driven only by an intellectual revolution. It is the young of today who will suffer from the next crisis - and without reform the economic and human costs of that crisis will be bigger than last time. That is why, more than ever, we need the audacity of pessimism. It is our best hope."

MONEY AND GOVERNMENT:
A Challenge To Mainstream Economics
by Robert Skidelsky, Allen Lane/Penguin, London, 2018

This is an excellent, if dry book, but it suffers in comparison to the more politically focused books reviewed above because it aims for a new understanding of Keynesian economics as an antidote to failed neoliberalism. Reading economics, even good economics, just reminds me how general economics is, how easy it is for models to be more linked to currently fashionable ideologies then the messy complexity of our real world. Still, someday, perhaps economics departments may again include significant sections which are not dependent on consultancy to business and which focus on supporting best business practice and regulatory balance.

If that change happens, this book will be an excellent resource as it traces the deliberate burial of Keynes' ideas by anti-State neoclassical economists, then clarifies and highlights the continuing relevance of Keynesian approaches today. Skidelsky does this not with the idea of promoting old solutions to new problems, but with lifting the level of debate around possible new alternatives to our failed dependence on ultra-low interest rates. Here are a few quotable quotes to give you a flavour of his perspective:

On the world economy: "Surveying the whole scene, it is hard to avoid the conclusion that, in the advanced world at any rate, governments had surrendered to bankers the job of keeping their economies afloat. They allowed money to be pumped from one centre to another in a widening circle of financial betting, convincing themselves that if the money wheel could be kept spinning, nothing much could go wrong".

On the rise of Rightwing nationalism: "The working of the economic machine needs to be drastically improved and the rate of disruptive change slowed down to societies' (considerable) capacity for adaptation if a decent political system is to be maintained". On new economic policies: "The essential requirement is to reverse the current balance of fiscal and monetary policy. The focus should shift from fighting inflation to fighting stagnation. This means using the budget to revive growth, and monetary policy to support fiscal policy".

On banking: "The financial system caused the Great Recession, but it was allowed to. Its faults were licensed. Reform of banking that does not include regulating what banks are allowed to do will miss the point". On the State: "There is a permanent role for public investment to keep a growing economy at full employment. It may also be the case that public investment will need to expand to fill the growing gap between private saving and investment as economies become richer".

On globalisation: "A market system, to be generally acceptable, requires a state to curb its excesses, distribute its fruits in a reasonable way, and mitigate its hardships. National states were created to do this; they, in turn, created and enable unified domestic markets. We have been trying to create a unified global market by diminishing national states without setting up a global state, or even recognising the need for one. No wonder there has been an explosion of popular resistance".

On trading and monetary systems: "What would be best is an agreed set of rules allowing different types of restriction on cross-border capital flows under specified conditions". On protection: "The general assumption in favour of free trade has rarely been questioned since the nineteenth century. This is bad history, since many nations have prospered under protection".

On migration: "There are limits to the rule of profit-maximising capitalism which we ignore at our peril. Economics can help us understand what those limits are. But it has to be a different type of economics. Specifically, those who think about economics should spell out the economic conditions for a decent migration policy".

On housing: "Compelling banks to hold mortgages for a period of years, plus a big boost to social housing, would cool this particular inflammation". On inequality, he offers only the compensation of a guaranteed unemployment income financed by taxes. Even this progressive economist seems blind to the need to rebalance today's radical weakening of labour by capital.

And on reforming economics: "Keynes argued repeatedly that the future was radically uncertain. In contrast, orthodox economics abstracts from uncertainty by claiming that the economy is as predictable as the natural world. The reinvention of macroeconomics requires (re)inserting society into the study of economics".

WAR ON PEACE:
The End of Diplomacy And The Decline Of American Influence
Ronan Farrow, WW Norton & Co, New York, 2018

"War On Peace" isn't just a great title, it's a great book - a very readable combination of telling smaller stories with excellent research and insightful interviews with experienced diplomats. It follows the undermining of diplomacy through successive governments from Bush to Obama to Trump, which by default has led the United States closer to total reliance on military intelligence and military solutions for international conflicts.

Even the conservative New York Times praised the book, noting "when the Trump Administration has called for gutting the State Department's budget and filled foreign policy jobs with military officers, Farrow draws on both Government experience and fresh reporting to offer a lament for the plight of America's diplomats - and an argument for why it matters" .

To give just one particularly telling story about the risks of military solutions, he describes the case of two young backpackers who were picked up by South American paramilitaries in the "war on drugs" and narrowly escaped being murdered. Local units got incentives to produce evidence of captured drug runners, so they had taken to random killings (usually locals; these two were just unlucky), presenting the bodies alongside planted drugs and guns to feed the news media and justify continuing military aid.

The diplomat's job, as described by Farrow from direct experience as a staffer, is often difficult, tedious and infuriating: "Hammering out deals between governments... can sometimes give the job the feel of Thanksgiving dinner with your most difficult relatives, only lasting a lifetime and taking place in the most dangerous locations on Earth".

He emphasises though that while diplomacy is imperfect and negotiated solutions often have a negative impact on the Government's popularity, they are essential. "The point," concludes Farrow, "is not that the old institutions of traditional diplomacy can solve today's crises. The point is that we are witnessing the destruction of these institutions, with little thought to engineering modern replacements".