Tuesday, April 27, 2021 – 7:45pm
Today’s global casino is now experiencing yet another step change, as central banks shift their focus from austerity and debt to stimulus to cope with pandemics and climate crises and fending off Facebook‘s competitive “Libra” and other cryptos. As the rules change in finance and money, they are also changing in markets, as they adapt to ecological limits, consumer pressures, and shareholders’ changing values. Key public intellectuals have emerged who are facing down all the old verities in textbook economics and over-averaged macroeconomic statistics and models, including GDP, still driving societies into unsustainable paths. These pioneer thinkers are re-shaping policies and challenging incumbent, fossilized corporations which, since the 19th and 20th centuries have dominated politics in many countries and steered the narrow forms of globalization that have led to today’s widespread political backlashes.
In our bi-polar 21st century, the best way for China and the USA to share their pre-dominant positions is to compete in accelerating the global transition to science-based, cleaner, more inclusive paths to human development while continuing their collaboration with all the United Nations (UN) agencies in promoting the Sustainable Development Goals (SDGs), ratified in 2015 together with 191 countries, as I advocate in “China: Key Player in a New World Game”. On Earth Day, 2021, US President Joe Biden convened over 40 world leaders for a 2-day summit on accelerating the already evolving global transition from fossilized economies to renewably-resourced, circular, more equitable societies and the knowledge-rich, green infrastructure and millions of jobs for the next stage of human development. Yet investments and use of fossil fuels continues, still adding CO2 emissions as Fatih Birol, IEA & The International Energy Agency warns.
Some of today’s most courageous intellectuals are also watchdogs, as for example, financial expert Karen Petrou in “Engines of Inequality: The Fed and the Future of Wealth in America” (2021) and Dorothy A. Brown’s examination of systemic racism in the USA in “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It“ (2021). Others are academics, notably Professor Stephanie Kelton, author of “The Deficit Myth” (2020), who is the most lucid explainer of the school of Modern Monetary Theory (MMT), now sweeping the parliaments of many democratic countries. Another is political economist Mariana Mazzucato, whose earlier books “The Enterprising State“ (2013) and “The Value of Everything” (2018) I have reviewed, and whose latest “ Mission Economy: A Moonshot Guide to Changing Capitalism “(2021) leads the current debate on re-defining infrastructure and how best to steer the evolving transition to renewably-resourced, circular economies, which we cover in our annual Green Transition Scoreboard® reports (2009-2020). I have also reviewed renegade economist Kate Raworth’s “Doughnut Economics“ (2017).
Each of these books dive into the workings of all the operating sub-systems of our global financial casino, and the many cognitive biases at all levels in the mature industrialized countries. Their venerable Organization for Economic Cooperation & Development (OECD) advocates the famous “Washington Consensus” worldviews shared by the international financial institutions: the World Bank, the International Monetary Fund (IMF); the World Trade Organization (WTO), and the Bank for International Settlements (BIS). Since all these legacy organizations are now under attack from many sides, let’s examine them in further detail through the lenses of these leading authors and advocates of radical new approaches to sustainable paths to our human future on this planet. These international bodies suffer from Daniel Kahneman’s famous list of humanity’s cognitive biases in “Thinking Fast and Slow” (2013), particularly our propensity for “theory-induced blindness“. Our research and reports have found such biases embedded in decision-algorithms and policies, as described by mathematician Cathy O’Neil in “Weapons of Math Destruction” (2016). These algorithms for engagement and recommendations are designed by social media giants to keep us addicted or outraged, often spreading conspiracy theories now threatening our democracies, as I report in “Steering Social Media Toward Sanity”.
All these human cognitive limitations and perverse subsidies to fossil fuels are now preventing our progress to a saner, sustainable future and the goals outlined by 193 countries in the UN Sustainable Development Goals (SDGs). Meanwhile, fighting money-laundering and tax havens in the global casino is failing, with the cost of such crimes in 2018 of $5.8 trillion, according to The Economist, April 17, 2021. At last, 139 rich and poor nations losing all these revenues due from multinational corporations, are banding together. They are determined to place an enforceable global floor of minimum corporate taxes as basic for global sustainability. This effort is spearheaded by Janet Yellen, Secretary of Treasury in the US administration of Joe Biden, reported by Peter Coy in “Stopping the Race to the Bottom on Taxes“, Bloomberg Business Week, April 19, 2021.
Let’s first look at Karen Petrou’s case against the Federal Reserve in the USA, taking us through the politics of money-creation and credit allocation, which we covered in our TV Special “The Money Fix“. She shows how well-intentioned regulations and Fed policies after the meltdown of 2008 exacerbated inequality. Petrou’s keen expertise critically assesses the Fed’s long underperformance and many failures to exercise its mandate. She faults its blind acceptance of obsolete, over-aggregated economic statistics and provides new clarity on these models. Petrou takes us through the history and purpose of the Fed since its founding in 1913. She shows how its dominance by private interests and banks, its policy mistakes exacerbated the agonies of so many citizens during the Great Depression and how the Fed de-railed many of the initiatives of FDR’s New Deal. Fast forward, Petrou offers a look at the future of cryptocurrencies, the power grabs by social media monopolies, including Facebook’s Libra global crypto, which challenges all central banks and sovereign fiat money. This book is a tour de force and required reading by policy-makers, academics, and concerned citizens in the USA and beyond.
Law Professor Dorothy A. Brown further explains additional hidden flaws in “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How To Fix It“ (2021). She shows how conscious and unconscious biases since the Jim Crow era, have skewed seemingly neutral, progressive tax policies such as “ability to pay” and “horizontal equity“ since 1948, allowing married couples to file joint income tax returns. These penalize African-American couples, since their respective incomes are more likely equal than those of white citizens. Such seemingly innocuous tax rules interact with similar inequities in housing policies, zoning, college loans, and access to farmland. Even the Homestead Act of 1872 famously offering citizens “40 acres and a mule” excluded Black Americans. Professor Brown highlights these inequities, advocating systemic changes: including tax rebates for these unequal outcomes, as well as reparation tax rebates based on 1.) clear metrics on race from the IRS along with its data on gender and age; 2.) return to the progressive tax system with no exclusions and a single deduction and 3.) a tax credit compensating for documented cases of legally-sanctioned racism perpetuated in tax laws. This book is also required reading to address inequality.
At last, we now see a few “mea culpas” from economists whose disastrous advice led politicians and private decision-makers astray. Economists obsessively focus on money-based statistics, cash flows and price movements. They focus on inflation, debt, and market risks, instead of seeing all the physical global risks economists helped create in the real world, culminating in today’s species extinction, climate crises and pandemics. I describe ways out of these errors in “Pandemics: Looking Back from 2050“. Two British economists, Paul Collier and John Kay in “Greed is Dead: Politics After Individualism” (2020) identify all their professions’ mistakes, including their narrow focus on individual actors in private markets. They now reaffirm the values of mutuality and social cooperation. They even embrace the ecosystem values vital for human survival, albeit almost 50 years after my “Economists versus Ecologists” speech to US economists, New York Times, Business Section, October 24, 1971. Co-author Paul Collier, a former World Bank economist, further nailed the case against economists: “The profession has been unprofessional …….to re-establish credibility we must provide a more balanced analysis in which the downsides are acknowledged … rather than by further indignant defenses of globalization“. Most of Collier’s and Kay’s fellow economists remain silent, with notable exception of Australia’s Steve Keen in his “Debunking Economics“ (2001). Most economists continue science-denying and fronting for the greenwashing efforts of their corporate or government clients.
An example of outright conceptual hijacking and usurping of ecological sciences is “The Economics of Biodiversity“ February 2021, by brahmin economist Partha Dasgupta, a review funded by the British government. Dasgupta reiterates the view that individuals must take responsibility for protecting the Earth, concluding that citizens, rather than economists, must be educated! The greatest hijack is that by Sweden’s central bank in lobbying the Nobel committee to set up the “Riksbank Prize in Economic Science (sic) in Memory of Alfred Nobel”, in an attempt to legitimize economics as science, rather than acknowledge this discipline as a powerful profession. This 20th century intellectual scandal was exposed by Nobel descendent, lawyer Peter Nobel and the Nobel family have denounced this prize as copyright infringement, as reported in my articles co-authored with Peter Nobel at www.hazelhenderson.com.
Published in 3BL MEDIA