August 07, 2011

About the economy

"It was the best of times, it was the worst of times." This is the starting quote from Charles Dickens' classic masterpiece "A Tale of Two Cities". The cities are London and Paris, or maybe metaphorically the old Paris and the new Paris, before and after the French revolution of 1789. It is the story of how the privileges of the wealthy and politically powerful, their pride and sense of entitlement, and not least their abject disgust of the less fortunate, who are unable to lift themselves up from poverty, brought about a revolution and all the horror that followed in its wake. It is a cautionary tale about how ugly, emotional, and violent things can get, if the majority of the people in a country is continuously disregarded and feels neglected by their entitled leadership. Of course, there are no parallels to our modern enlightened democracies, where people choose their leaders themselves. Or are there?

I just came across this documentary involving the statements of some politicians and economists done by Al Jazeera English, that makes an excellent case, that there is a growing disconnect between the politically and economically powerful and the majority of Americans.

Although this report is specifically describing the American situation, it is not an American problem. The gap between the rich and the poor is widening or already as wide as it gets in many countries of this world. I could cite GINI coefficients or top tax rates to make this point, but the sad thing is that we are all already very aware of the inequality in the world.

But there are two very different outlooks on the problem and how to solve it. Some say: "Well, if we could only get the world economy on it's feet again and finally relax those trade rules to get government out of the way and stop pussy-footing around who is really creating value on this planet.", while others say "We are in a desperate situation, where the rich control politics through money. Trickle down economy has been proven wrong, but they try to keep people oblivious. If we could only get the rich to pay their fair share, maybe through a global tax on financial transactions, or there will be hell to pay."

I personally believe in the democratic process of debate and compromise. I also have a high opinion of meritocracy, when it comes to economic issues, but not when it comes to social class. You should not have to earn your right to speak by having enough money, but every voice should be represented independent of its weight in gold. Politicians who do not follow this guideline of balancing the interests of all members of society, irrespective of economic power, but based on their human value as citizens, are making a devil's bargain. They are becoming puppets of interests other than the common good.

I happen to agree with the rating agency Standard & Poors on their assessment of "America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed." I think one way out of this mess is to re-establish reliability and accountability in politics. Not by "brinksmanship", as the Republicans have shown by holding the country's future hostage, but by putting every opinion out there and having an unemotional and reasonable debate that does not negate any of the facts. A compromise is when all sides give a little and everybody albeit grudgingly still supports the final deal. It would definitely make policymaking a lot more predictable and effective! And, hopeless idealist that I am, I think also a little more just...

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