Bretton Woulds: The G-20 In Inaction
There is an old song by Richard Newell, alias King Biscuit Boy of Crowbar sort-of fame, called “You Done Tore Your Playhouse Down Again” which comes to mind frequently in the current climate of economic upset as the chickens of greed come home to roost. The leaders of the World’s twenty largest economies are converging on Washington, D.C. today to set up some sort of apparatus to re-establish some semblance of order in the world’s trade relationships, but this may be more about appearing to be addressing the problems than about actually bringing about a great deal of change in the way the markets are actually governed.
President Sarkozy of France apparently expressed some interest in an overhaul of the financial system without, however, actually positing what that might resemble. Outgoing U.S. president Bush talks about not throwing the baby out with the bath water. Our own Stephen Harper notes that the Canadian banking system appears to be weathering the storm better than others and that we should hold ourselves up as an example of how a well-run and well-regulated financial system can stand up to world crises. He also seems to feel that problems of this nature can best be addressed by relying on the regulatory regimes of individual countries.
Relying on Einstein’s notion that we can’t solve current dilemmas by applying greater amounts of the same thinking that created the dilemna in the first place, there should be room for some fresh thoughts on how our trade relations might be structured. The problem with relying on regulatory mechanisms in individual states is that capital is allowed to flow freely and without fetters wherever it wishes to go, and experience has taught us that it will eventually find its way to the jurisdiction of lowest regulation and greatest influence. In fact, a good part of the current difficulties result from capital playing a disproportionate role in the formation of fiscal policy in most jurisdictions, a result of the willingness of elected or installed officials to feather their own nests by bowing down before the golden calf of free-market fundamentalism. At minimum, there must be some restraint on the influence that capital can exert on governmental affairs, and likely some level of common regulation across all jurisdictions.
That Canada’s finances have better weathered the storm than those of other countries is a proposition that bears some scrutiny, and whose degree of acceptance will depend to a great extent on the perch from which it is viewed. Canadian investments have evaporated at about the same rate as they have in the U.S., but we have fewer banks and more regulation than in some other places, so our financial institutions may be better prepared to absorb the shock, though we won’t really know until all the fallout has fallen out. Canadian financial institutions are tied into the World system, and, while they may not have written a lot of sub-prime mortgages, it would be surprising to learn that they hadn’t acquired large quantities of the same asset-backed commercial paper that has been the downfall of vast swaths of the financial community. So the banks and insurance companies may be well-placed to weather the storm, as may also be our deficit-free federal government, but that doesn’t mean that parts of the population haven’t already felt considerable pain, and it seems more than likely that that same segment of the population will continue to feel the pain, and that their pain will be deeper and more wrenching than that felt in the heart of the financial community and of the government that represents that community first and foremost. Our budget surpluses have come at the cost of large reductions in public services and of a tax system that largely favours the acquisition of wealth through capital manipulation over labour. Openings have been created for private, for-profit health care, regulatory régimes have been cut back, often with fatal consequences for ordinary citizens, and trade agreements have been written to ensure that there be no brake on corporate profitability, even where the public health and welfare may be compromised by the creation of these profits. Our infrastructure is, in many cases, old and falling into disrepair as tax dollars cease to flow to public coffers because of tax cuts to the wealthy and corporations, and the reduced expenditures are increasingly being spend on security and the armed forces, then frittered away in repressive schemes at home and pointless and costly wars abroad. Canadians may feel somewhat smug about our preparedness for hard times, but that smugness would be more due to what they’re being told by their leaders and the media than to any actual set of factual circumstances.
At this weekend’s summit, there is likely to be a lot of rear-guard posturing to ensure that the current and past beneficiaries of the the social pyramid continue to maintain their position while at the same time putting on a face that will calm the bewildered masses into thinking that everything is under control. It is also likely, as at most summits, that the words spoken in closed-door sessions will have little to do with the sound bites issued by the attendees or with the final communiqué issued by the whole of the committee. Beyond that, there are a legion of academics and press experts already spinning all angles of the summit to ensure that the appearance of something being done works to assure us all that we have been right to put our fate in the hands of so august and just a group of leaders. And yet I can’t help but be reminded of the following King Biscuit Boy lines when I think of the drunken orgy of consumption led by the people who pull the strings behind these same leaders:
Your eyeballs look like a roadmap,
And they’re lookin’ in two different ways,
You got your wig in one hand and your teeth in another
And you haven’t looked this good in days.
I asked you to take out the garbage can.
You took out the garbage man.
You were last seen heading down Highway 97
With a bottle of gin in your right hand.