Accountability in economics and finance

Imagine the possibilities.

I’ve been looking for the story behind the stories under the headlines of the economic crisis, and someone who understands it from the inside. Found both in Lydia Fisher, author of  Cinderella of Wall Street.

The day she was on my radio show, she posted this on HuffPo:

Meanwhile, in the real world of non-billionaires, we’re dealing with absolutely untenable U.S. joblessness — a 25% unemployment rate for the young (last I read). That’s robbing someone’s dreams, not to mention a deep hurt to the innate desire, we, as human beings feel, to be valued, to succeed, to care for ourselves and our families.

Stubborn joblessness is symptomatic, of the pernicious hollowing out of the US economy over decades through conglomeration, globalization and technological automation — the morphing into a services and consumption based economy, one increasingly driven by financial bubbles.

So, what’s the deal here.

Throughout the ages things don’t seem to change, they just play out through a different forum. Romans conquered, then taxed to get bigger and wealthier. In the process they took people into bondage, who toiled for the economic and military success of the empire. That’s what happens when person-to-person reciprocity is removed.

Debt is a form of bondage and servitude. Someone’s got to pay for it, in some way or another.

We’re paying now, but our children and their children will be paying heavily. This is so important right now. Again.

Listen up.

A leadership vacuum characterized the mid-third century, leaving Roman Army generals jousting for Imperial power, rather than governing. Ever increasing military conquests drained resources, created a need for money. Story has it that the silver coin currency was devalued through a metal dilution to meet the funding needs. The chain of events — runaway inflation, currency collapse, civil unrest…

Debt, if big enough, is a shackle. Being shackled brings fear and anguish, certainly not freedom.

One can’t move.

So, as I watch the headlines, the human crisis unfold worldwide — the job, foreclosure, and debt disaster here at home juxtaposed against the recent headline “Bank Chiefs Enjoy 36% Jump in Pay” — I scratch my head, in wonder, is there something deeply, deeply…?

Disordered? Yes, obvious on a global scale. We’ve moved away from community orientation and subsidiarity. But crisis provide opportunities. Right now, tough as they are, we have plenty of both.


‘Think globally, act locally’ says the bumper sticker. It certainly applies to this issue.

It’s not just one nation’s problem.

The global issue of unemployment points to a structural problem that was identified well before the onset of the world financial crisis, according to the Holy See. But its consequence is a scenario that “we must do our very best to avoid.”

Archbishop Silvano Tomasi, permanent representative of the Holy See to the U.N. offices in Geneva, made this observation last Wednesday at the 100th Session of the International Labour Conference.

The archbishop noted how “sovereign governments in most instances have not been able to find a formula for economic growth that restores jobs and includes new employment opportunities for the millions who are looking for work.”

Thus, “unemployment rates remain high and show no sign of recovery in the short term and the long term prognosis is uneven.”

This is a terrible human problem across the globe, hard to assess as worse for one demographic over another. However…

The problem of youth unemployment “has a wider and deeper impact that affects society as a whole,” the prelate explained, noting the tendency of the under- or unemployed to lose confidence and eventually drop out of the job market. The uncertainty over working opportunities and conditions creates psychological instability, he cautioned, meaning life-plans such as marriage become increasingly difficult.

“This leads to situations of human decline, to say nothing of the waste of social resources,” the prelate said, quoting “Caritas in Veritate.”

Women, too, are facing a particularly difficult employment situation, the Holy See representative noted.

Among other factors, Archbishop Tomasi pointed to a “cross cutting discrimination” reality — “the fact that labour markets remain so inflexible and find it difficult to reconcile the work model and schedule with the responsibilities for childcare and the care of other dependents that many in the workforce carry.”

“Generating and taking care of new generations is the human activity which is closest to economic investment, and the family itself is a sort of ‘relational’ investment,” he proposed.

To be clear…the family pre-exists the state. The family is pre-eminent. But it’s the foundation of society.

…as it is well known that families play a crucial role in providing social capital for human and economic development, especially in low-income countries.”

Archbishop Tomasi recalled Blessed John Paul II’s definition of work as a “hard good.”

“It is good not only in the sense that it is useful or something to enjoy; it is also good as being something worthy, that is to say, something that corresponds to man’s dignity, that expresses this dignity and increases it,” he explained.

Whatever we can do to foster a family and work environment, we’d better find it. Fast.

Obama and jobs

All the news stories seem to be about his.

It’s natural that a president seeking re-election would be the center of scrutiny when the economy is so down and unemployment so high. But the story of how tough times are impacting Americans is buried under the headlines of what impact it all has on President Obama’s political future.

Like this Reuters story.

Most polls have shown Obama defeating any of the current Republican White House contenders next year, but the continuing fiscal woes are cutting into his lead. A Reuters/Ipsos survey this month showed 60 percent of Americans think the country is on the wrong track, amid higher gasoline prices, stubbornly high joblessness and a weak housing market.

“Despite his or his handlers’ rhetoric, the electorate — if the various polls are an indication — has given plenty of feedback that it wants specifics and definitive action, not pablum, and most definitely not the ‘I feel your pain’ response to the seeming endless stream of negative economic news,” said Gerald Shuster, a political communications expert at the University of Pittsburgh.

See, this is what bothers me, even while I understand political news coverage and especially as the campaign starts to heat up. The stories are quoting political communications experts and spin doctors. And they wind up with bottom lines like these:

Mayer suggested Obama’s best strategy might be to sidestep Congress and work directly with state governors, many of them Republicans, on a stimulus plan targeting state governments, given steep budget cuts and layoffs at the local level.

“The numbers coming out of state capitals are looking pretty horrendous,” he said. “These are very significant job losses and if you could save some of those jobs, that would have some positive outcomes for Obama.”

Not to mention the individual people and their families.

Who are otherwise known as voters. This piece edges closer to considering them as more than just that…barely.

In 2008 Mr Obama represented change. This time he will have to fend off charges that he is to blame for the achingly slow recovery by arguing that it would have been worse without his actions, such as his $800 billion stimulus package and the takeover of GM and Chrysler. That may be true but it is not easy to sell a counterfactual on the stump

a counterfactual“?

(as the first President Bush learned). And there are other holes in Mr Obama’s record. What happened to his promises to do something about the environment or immigration or Guantánamo? Why should any businessman support a chief executive who has let his friends in the labour movement run amok and who let his health-care bill be written by Democrats in Congress? Above all, why has he never produced a credible plan to tackle the budget deficit, currently close to 10% of GDP?

Now they’re thinking outside the 2008 media box.

A serious Republican candidate must come up with answers to the two big problems facing America’s economy: how to get more people back to work, and how to fix the deficit.

Yes. How to get more people back to work, that’s the point.

And raising taxes means taxing individual citizens and families already hurting in their homes, if they still have them. So if it must be done, people must be convinced and brought on board a tough reform program.

An honest Republican candidate would acknowledge this and lay out the right way to do so—for instance, by eliminating distorting loopholes and thus allowing revenues to rise. He (or she) would also come up with a more systematic plan on the spending side. No Republican seems to understand the difference between good spending and bad. Investment in roads and education, for instance, ought not to be lumped in with costly and unreformed entitlements, like Social Security and Medicare. Defence should not be sacrosanct. That Mr Obama has no strategy either is not an excuse.

Thanks for the honesty, finally.

In most elections promising toughness is not a successful tactic; but this time Americans know that their country has huge problems and that their nation’s finances are the biggest problem of all. In Britain the Conservatives made the incumbent Gordon Brown seem ridiculous by spelling out the austerity that he at first barely dared mention; now another tough-talking centre-right party has won in Portugal (see article). If ever there was a time for pragmatic conservative realism, it is now.

How about that…realism as a tactic. It sure beats the alternative.