Every so often a book comes along of such importance that everyone who cares about the world we live in, and the state of modern society as it affects our lives and well-being, should read. Such a one is ‘Freefall’ by the Nobel Prize winning economist Joseph Stiglitz, who prior to becoming an academic was Chief Economist at the World Bank.
This is important new book not only gives the lie to all the nonsense that is being spouted in Britain prior to election-day, but makes it clear that not only is a return to the supposed but illusionary prosperity of recent decades impossible, but that we are only at the beginning of a long and painful depression that only strong and well-informed government might eventually bring to an end, and to do this it must return to all the regulations of banking and financial interests that have been sabotaged and abandoned over the last few years. Deregulation is the principal cause of all our problems: it has allowed massive theft of tax money, the building of dishonest edifices for as long as those responsible could enrich themselves at public expense, and a massive transfer of the savings and security of those at the bottom of society to those at the top.
Although Stiglitz is writing primarily about America, his words apply equally to Britain and much of Europe where de-regulated banking, a housing boom based on sharp practise and irresponsible lending, has led to millions losing their homes, an educational future for their children, and a comfortable retirement. The cronyism between those in power such ads the two George Bushes, Blair and Brown and those in a position to control the economysuch as Allan Greenspan and Ben Bernanke in America, and the top officials of the Bank of England has led to the biggest banks, and some industries such as General Motors being bailed out by tax-payers money, much of which went to pay large bonuses and increase salaries to those responsible for the losses, even while they were continuing. American public money was taken out personally by nine lenders to the tune of $33 billion out of the $175 billion put in by the American government and one million apiece went to five thousand bank employees. This money was to cover $100 billion in losses. In addition dividends were paid to shareholders although there were only losses. During this time millions had lost homes, jobs and everything else in a country that had little social or medical security and where ignorance about economic affairs or anything much else was the general condition. Obama has changed nothing effective. He has his own cronies, sometimes the same as with Bush. The bail-outs for failure have continued.
Much of the Toxic loss on sub-prime mortgages has been exported to other countries, as well as the consequences of deregulation, which is why we have a deepening depression here, which will soon effect everyone once the election is over. Our national debt will poison life for decades ahead, and the services we have taken for granted for many years such as health, education, travel, cheap food etc will quickly diminish. Not a single politician, and they cannot all be so stupid as not to know the truth, dares speak out, not even Vince Cable, the most intelligent of them. But it must all come out eventually, and hopefully we will have to change society totally to what it was immediately after the war, boring, simple, but equal, with rationing, tight controls and regulation over nearly everything.
Stiglitz’s book suffers from having no index. He offers some hope for reform through our coming to our senses, knowing that civilisation will cease if we do not. Although he must end his analysis with some hope, one senses that he does not believe that there is much.
John Calder 19/04/2010