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The pirates of high finance

Mohammad Badrul Ahsan
W” w w economist Joseph Stiglitz arrived in London to launch his new book The Price of Inequality, Barclays Bank’s Libor-fixing scandal had just hit the fan. It was a coincidence that these two events happened within the same week, but Stiglitz already saw it coming. He has reasons to believe that some bankers should go to jail.
The recent spate of financial scandals involving British banks has reminded many of the swashbuckling pirates, a long British tradition stretching back 400 years. Britain’s merchant class created the largest empire in history using the techniques learned on the high seas. The East India Company led the way and successive British governments followed in its footsteps.
A BBC4 documentary recently claimed that the British history has been a tension between roundheads and cavaliers. Cavaliers live on a determination to go by their wits and deploy every tactic in their bag of tricks to get what they want. Then there are the roundheads: the civil servants, farmers, and people who work hard to hold together and maintain the business and social fabrics of their nation.
Many Brits are now caught in that tension. As a trading nation they understand they have to live on wits. But is it necessary to get dirty? Financial services, the arms industry
and the pharmaceuticals business are the UK's biggest net exporters. The citizens know their country's balance of payments is bad at the moment and it would be much worse if they have to withdraw from these businesses.
This is where comes in Joseph Stiglitz, whose theory of "asymmetric information" won him the Nobel Prize for economics in 2001. He is known for his critical view of the management of globalisation, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the
International Monetary Fund and the World Bank. But most of all he has launched a crusade against the economic and political power that has been amassed by the financial sector in recent decades, especially in the US and the UK. He strongly believes that this power needs to be broken if we are to build a more just and prosperous society.
Stiglitz wrote a series of articles in the 1970s and 1980s arguing that when some individuals have access to privileged knowledge that others do not, free markets do more harm than
good to the larger society. If we are talking about political clout, license, permits, nepotism and favouritism, the root of all evil lies in the privilege that some people have more access to information and business contracts than others by dint of money, family connection or political influence.
It is in the name of creating wealth and employment that the rich amass their incredible fortune, while the rest of the country is taught to count its blessings for being able to live on the breadcrumbs falling off their tables. But these rich people never feel safe because they always have to worry if
social dynamics might come after them anytime and use state power to redistribute their wealth. They are, therefore, inclined to restrict that power and keep the state in a weak condition.
The most recent proof of that anxiety was clearly visible in the Hamptons, New York. Republican presidential candidate Mitt Romney raised more than $3 million over one weekend from the terrified rich. They gave generously because they believe that president Barack Obama is a communist who is out there to
destroy them.
That is more or less the story of modern states. In some countries governments still show semblance of control, but overall choose to look the other way. The number of financial scams that rocked the USA should have filled its jails with bankers, auditors and credit rating agents. Instead the government chose to offer money to restore their institutions to original health. It is as impossible to think of a capitalist country without these crooks as the Vatican without the Pope, cardinals, patriarchs and diocesan bishops.
History has been dominated by various professions at various times, hunters in the pre-historic days, gladiators in the ancient days, ecclesiasts in the Middle Ages, scholars during the Renaissance, scientists in the 20Ih century, and businesses in the modern days. If you are a movie buff, you will know it. In Shutter Island starring Leonardo DiCaprio, the warden says: "There’s no moral order as pure as this storm. There's no moral order at all. There's just this: can my violence conquer yours?"
Our new moral order has only chaos in it. It's just a storm where everybody thinks if his greed can conquer mine or yours. A pickpocket cleaning unsuspecting passengers in a bus shows as much conviction to ride out that storm as a banker in Armani suit. Moral dilemma is to wish they weren't the same.
The writer is Editor, First News and an opinion writer for The Daily Star.
Email: badrull51@yahoo.com