Sunday, November 15, 2009

Sinners repent

An IMF chief economist says nationalise the US banking system and break it up.

From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response.

...there’s a deeper and more disturbing similarity:elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

The LSE Fred Halliday sums up Communism's relevance amid a welter of triumphalist clap-trap:

Communism was not just a utopian project: it was a dramatic response to the inequalities and conflicts generated by capitalist modernity. The continuation of many of these same inequalities and conflicts today suggests that further challenges, of an as yet indeterminate nature, will result.

Time for us all to reset our internal political compasses.

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