Farewell then, wimps of America

Posted December 4th, 2007 by Jerry Ravetz and filed in Living in Post-Normal Times

All of a sudden, the wimps of America aren’t there. Now that they’re gone, we miss them. Come back please, we really do love you. After the wimps, it won’t ever be the same again.
What is a wimp? It’s one of those funny people who doesn’t sincerely believe that Greed Is Good. Or someone who knows about Adam Smith’s other book, the sentimental one about morals.
The wimps in America were the self-appointed guardians of our standards. They took pride in quaint things like ‘integrity’, even though it kept them poor. When the gave an AA rating to a financial product, it used to mean just that and no more, no less. We didn’t need to know what sort of junk had been chopped up and repackaged inside. We could just buy them cheap and sell them dear in confidence, knowing that what the wimps said was true.
Then something happened. The American wimps wised up. Perhaps they had heard all those students asking, “If you’re so smart, why ain’t you rich?” Or they realised that they were behaving like irrational actors in the paradigm. So they joined the game. In addition to derivatives and SIV’s, their ratings went for sale too. What could be more natural?
Noone told us that that was happening. In fact we hadn’t even known that the American wimps were there. That’s not really our fault; who ever learned about Regulation? Only the people who took courses with numbers like 327, in other words the wimps themselves. The rest of us just learned how to make with the curves, so as to get our ticket for the professional gravy train.
But now the wimps are gone, and in New York another show is beginning. This is called ‘Mister District Attorney’. It involves exposing a scandal, getting newspaper headlines, sending a few guys to jail, and then going for a Governorship and beyond. Over there, the wimps have been replaced by the sharks.
After the sharks comes the outraged Great American Public, and their legislators. They want to make a Prohibition of sin in finance. So first we had Sarbanes-Oxley and now it’s to be FAS 157, standards for evaluating assets. Never mind that it’s all bad for business; the Great American Conscience will have been appeased.
But back here in Olde England, the horizon is still clear. We have really nice wimpy wimps for regulators. Normally they just murmur, “wonderful, wonderful.” When something really atrocious happens they whisper, “naughty, naughty”. For them it would be simply inconceivable for a city gent to do anything so vulgar as to go to jail.
So it’s very likely that in the present Puritanical reaction in the States, London will soon take an even bigger piece of the action from The Big Apple. Then with our own dear wimpy wimps as regulators, it will be like the kids taking over the candy store. ‘Anything goes’ will be the new theme song in The Square Mile. And it doesn’t need much history of economics to know that eventually, as night follows day, we’ll all be using that old American saying, “Buddy, could you spare a dime?”.

3 Responses to “Farewell then, wimps of America”

  1. David Harley says:

    Regulators do often lack teeth, or the will to bite with such teeth as they have. However, where there are regulators and regulations, they can be held to account by the public. Their decisions, or lack of them, can be challenged.
    Of course, if the body that is threatening a community is the government itself or a quasi-nongovernmental organization, even a public enquiry system can be hard for protestors to influence. When the Sizewell B nuclear power station and the Newbury bypass were proposed, the public enquiries were deluged with expert witnesses and the compendious work of technical research teams, hired to support the proposal. The protestors could not match the level of detailed evidence — the claim that Sizewell was not on a geologically active location or the claim that the bypass would reduce traffic, for example — nor could they challenge the underlying assumptions.
    Nevertheless, there did have to be a detailed analysis of the arguments in public. Sometimes, such proposals fail.
    However, when private companies wish to unleash environmental destruction or pollution, the government’s own machinery will scrutinize the proposal. Nowadays, it is less likely that such devastation could be wreaked in Britain as has been wrought in the mountains of Virginia, where there was hardly any scrutiny of the proposals for mountain removal. The effects on the local population, on the natural environment and on the historic landscape were never considered.
    This is why environmental lawyers, tort lawyers and district attorneys are needed in the US, if anything is to be done. It is tragic that such action can usually only be taken years after the harm has been done.
    There aren’t enough active regulatory systems in the US. The use of the regulations is controlled by political appointees, who are often very sympathetic to the polluters. If they are insufficiently interested in abolishing regulation, they may be hung out to dry, like Christine Todd Whitman. Insufficiently compliant permanent officials, such as Eric Schaeffer, will disappear without trace.
    The politicians in Congress, who should be supervising the government departments, are often in the pocket of the industries being regulated. If they are honest, they stay bought. Senator Inhofe is, at least, consistent.
    This federal failure, all too evident at the EPA, is reproduced at local level in ways that it could not be reproduced in many European countries. Can one imagine a local politician lifting all the pollution regulations that were a nuisance to his friends, as Governor George Bush did?
    Not only the lives of the working poor living near polluting plants were blighted. The Middle Bosque River alongside his Prairie Chapel ranch is too polluted to provide good fishing, so poor George had to go to the expense of creating his own 11-acre bass pond, to show off to visiting politicians and environmentalists.
    Regulation may be run by wimps, but an independent civil service and an independent judiciary can make regulations bite sometimes. Independent media organs and politicians who are not reliant on large campaign donations from industry can hold the feet of ministers to the fire. As long as the elected government cannot openly abolish regulation without an outcry, there remains hope.

  2. Jerry Ravetz says:

    Of course I agree with David Harley’s comments. The way I see it is that we have always had inequalities in power, profit and privilege. In the good old days these could be expressed in all sorts of ways, such as the lord of the manor providing a wedding feast for his subjects and then raping the virgin bride as his ‘right of the first night’ (see Mozart’s Marriage of Figaro). Or there was the world’s largest death-camp, the Belgian Congo, the private property of King Leopold; from there came the rubber for our first bicycle tires, bought at a hideous human cost.
    In modern societies, we have a ‘commonwealth’, and all sorts of checks and balances on power, profit and privilege. So these old pressures must be exerted largely by the corruption of the governmental system. Sometimes there is hardly anything outside the corrupted system, where everything is for sale, as in many ex-colonial countries. Sometimes there are pockets of integrity (as the British left behind a good judicial system in some of their colonies).
    It’s all a matter of degree; you may have seen that in Naples the racketeers are so strong that the garbage collection system has collapsed. And the interactions between ‘straight’ governments and the extra-legal sector are far more pervasive than is commonly acknowledged.
    Now that the whole banking system is revealed as infected with greed to the point of (or including) criminal folly, we get a better measure of what we are up against in trying to protect modern civilization from its real enemies.
    The relevant question for PNT is the extent to which the scientific-technical system has been corrupted by the pressures from its commercial context. The integrity of science can no longer be taken for granted, and those who believe in science as a civilizing force must now recognize these new perils. Science is certainly a very long way from traversing the same path as the Church, from the Twelve Apostles to the Borgia Popes; but it would be foolish to ignore the tendencies to corruption that are there and growing all the time.

  3. David Harley says:

    You have a surprisingly short perspective on our modern woes, Jerry. Surely, not everyone at Leeds was as contemporary in interests as you.
    Was there a droit de seigneur, in the specific sense of a ius primæ noctis, in the Middle Ages? Probably not. It appears to be an early modern popular belief about “the bad old days”. Was this a practice current in France, when Beaumarchais wrote Le Mariage de Figaro in 1778? No, of course not. It was the means for Beaumarchais to mount his revolutionary critique of the Ancien Régime.
    If there ever had been such a law, in what sense would the exercise of the feudal lord’s right be a rape? Not in our modern sense, certainly. Crimes and criminals are created by legal prohibitions, are they not?
    As for the appalling system of Leopold’s Congo, that is only one example among many. Where did the silver of Spain’s greatness originate? Where did the sugar and tobacco of Amsterdam and London come from? How did the cotton of the Lancashire manufacturers get to Liverpool?
    The checks and balances of the American political system, based on Locke and Montesquieu, are remnants of the efforts of the Founders to restrict the influence of the rabble of free white male property-owners, who could only vote for the House of Representatives. It was the quasi-monarchical President and the elected aristocracy in the Senate who had most of the power.
    As for the corrupt associations of our governors, this is an ancient practice. Thomas More and Francis Bacon were charged with corruption, even though they were probably the most honest judges or Lord Chancellors of their times. The Whig governments of the 18th century and the British army in the heyday of liberal imperialism were corrupt as a matter of course. It was Andrew Jackson who not only extended the franchise but also encouraged the American spoils system.
    More recently, we can look at a host of scandals in almost every Western democracy, from the oil industry’s influence over Warren Harding and the sale of peerages under Lloyd George, to the oil industry’s influence over the Bush administration and the sale of peerages under Tony Blair.
    Organized cartels exist because our governors connive at them. Organized crime exists because our governments connive at them. Indeed, the two often overlap, in the US, or Italy, or Russia, or wherever.
    The banking system is about greed? Who would have thought it? I always imagined that the Fuggers and the Medici were plaster saints.
    “trying to protect modern civilization from its real enemies” — I don’t have the time or space to pull apart the concept of “civilization” and its various uses over time, which have always been political and exclusionary since the English and French invented it in the 18th century.
    “The integrity of science can no longer be taken for granted, and those who believe in science as a civilizing force must now recognize these new perils.”
    Did you take it for granted? It what distant time was that? Ever since its invention in the early 19th century, “Science” has always been complicit in the purposes of those who pay for it. Is that a surprise?
    Which people are going to experience the “civilizing force” of science? French peasants, native American peoples, colonized Hindus, “medieval” Muslims?
    Let them eat telegraph wires and railroads. If they won’t be civilized, we can shoot the bison and put them onto reservations.
    Hurrah for agriculture, the banking system and science!

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