Market Farces

ECONOMISTS are steeped in elasticity, supply, demand, price, markets, perfection and those niceties that provide economic order.

They, of course have been totally outsmarted by clever guys who realise that economics had nothing to do with market openness, social responsibility and competition; the real world is about creating imperfection, manipulation, oligarchy and monopoly, having regulators, academics and politicians in your pocket, utilising different regulatory schemes and tax avoidance.Use of ‘tit for tat’ tax avoidance, laundering of the proceeds of ‘organised crime’, insider trading, transaction skimming, corruption of the basics of risk management, creation of volatile market conditions fed by compliant financial journalists and insider dependant ‘experts’ is their grist; add to this the billions conned out of governments fuelling their success and putting grandchildren into permanent debt and the enormous bonuses paid, even in abject failure, to fund their nefarious fixers and hangers on.The perfect pyramid scheme. All based, they say, upon economic theory, forgetting conveniently that Economics started as social theory to progress the general wellbeing. So much for social conscience and Adam Smith’s ‘Invisible Hand’.The real clever act has been to separate the ‘Real Economy’ where production of goods and services are created, where real people live, from the ‘Virtual Economy’ of money whereby what was a medium of exchange has been perverted to a ‘commodity’ in it’s own right by feeding the money loop with fraudulent assets, creating virtual credit by ‘adapting’ capital adequacy common sense to insane levels of leverage supported by fictitious insurance.The world now has a situation of production levels rebased at some 25% below the levels of mid 2008, unemployment in developed countries up by 40 million, migrant ‘make up’ labour (like slavery) has gone home, bulk shipping is 40% down; major productive capacity is idle. In this real world there has been a major shift in consumer behaviour, save rather than spend, go hungry to survive and the people are becoming more and more aware of the iniquities that their leaders, both political and economic, have inflicted upon them.Financial markets through clever high speed trading, excess government gambling money, consumer debt reduction swelling their vaults and the opportunities that cool heads reap from panic and despair let financial gurus make another killing as intended while G20 leaders fumble in the dark over bankers bonuses, developing coherent financial regulation in a world they do not understand, let alone have any capacity to control. Indeed their ignorance and division provides just the fuel needed for the geeks to prosper further; transparency fades in inverse proportion to understanding.I do not understand everything but symbolism, often underwritten by malicious stupidity, often gives clues. Look at the ‘Cash for Clunkers’ programmes where car producing nations boosted their sales by blatant subsidy and then claim a reversal of recession! Idiots; of course people will buy more cars if you pay them just as very low housing loan interest rates will get people to buy houses. But benefiting the needy?Three basic lessons from this; markets that benefit all are transparent, understandable and not monopolistic; financial incentives can work; and, regulatory bodies inevitably fail due to capacity and resource shortages – there are other ways.Namibia, now in election mode, has a chance. Our new MP’s must have intellectual capacity to take us forward plus a willingness to hear others. The next Parliament is a turning point. We either innovate and change or end up on the rubbish dump of African debt. The rabble are already roused. They deserve a fair Market Place driven by Forces, not Farces.csmith@mweb.com.na