time to strip the rich of their assets?

Statistics has a long and disreputable history outside science and mathematics.  The word is from the Greek meaning ‘numbers of the State’.  The first notable stats I know of concern the Athenian treasury – where the actual and claimed deposits were out by several decimal points (needless to say this was not an error of surplus).  The response of the Athenian Democracy was genocide; not of those with fingers in the till, but some poor sods elsewhere whose grain was considered more important than their lives.

The Greek treasury is empty again, though quite how empty we don’t know.  Accounts no longer tally or account, but hide.    This is true of performance management everywhere – and what ‘performances’ they are!  British crime statistics are considered as though they represent all crime, yet are only the tip of an iceberg (Steve Bennett‘s blog has all you need – http://thinbluelineuk.blogspot.com/).  The questions we need to get at concern why we have become so deceitful and have ‘scientised’ the deceit.  We need better explanations of actual behaviour, of theories-in-practice rather than what is espoused.

No amount of postmodern pisswitter is going to get to the truth.  In one sense the truth is already out there.  We know this is a rotten world and we should be doing better.  I think a WB Yeates poem hits the rub – the one which starts and ends with a beggar being lashed by a horseman.  Revolution has left all the same except who does the lashing.  Inherent in all social critique is that we can bureaucratise power through government and yet who do we mistrust more than politicians and bureaucrats?  They are standardly the vile creatures of our literature, from The Frogs to Dirty Harry.  Power cannot be trusted to look after itself.  All the communist experiments failed with a combination of the iron cage of bureaucracy and mad despotism.

There’s a need to understand our bureaucracies in terms of the real actions of such as scumbag politicians feeding at the trough and cleaning up on insider trading, down to lowly cops nodding and cuffing crime (approved by bosses in everything except a paper trail) and social workers doing anything but visit their clients.  And we have to understand that we bend to the same winds and are part of what is rotten in the State of Denmark.

In economics and finance, stuff like the Black-Scholes equation, Gaussian single and multiple copula and all kinds of chaos modelling would make any cop already pissed to despair on multivariate statistics weep.  Just as there can be a point in predictive policing, there could be one in market analysis.  Questions arise about what outcomes make the kind of point we want.  It’s easy enough to state some on policing – crime prevention, villains nicked, communities safeguarded … all hard to quantify.  I have used such criteria in EU bids (plus jobs created and safeguarded) and one uses a spreadsheet to produce the ‘outcomes’ as do the bureaucrats.  No one checks on the ground – and thank god for that as by the time you have battled the bureaucracy for the money (which may arrive two years late) and persuaded a couple of dozen staff to lie in the accounts (owing to perverse fractional funding), there is little energy left to actually do anything.  Add central accounts’ stealing half the money (via transfer pricing) and you can find yourself with none to pay for the work that needs doing.  The EU funds end up doing a fraction of the good they would if the money was handed over in full and on time.  But this is one of the only games in town so you have to play.  Projects that promise much really do little more than keep a few middle-class flunkies in work until the funds run out.

Finance is considered a cost in the value chain, a term that means a business must make money faster than it consumes costs.  One generally tries to reduce costs to a minimum, so how has finance become so bloated it now dwarfs the real economy, and how have top managers ‘managed’ to become such a massive cost?  Clues may lie in looking at the books of Porsche at the height of their market dominance through superb engineering – they were making more money from their currency hedging.

We talk of getting rid of (useless) backroom staff in business and policing.  What could be more backroom than finance?  Like many successful parasites, finance has learned to make its host feel it gets benefits.  It’s hard to turn down profits from ‘money making money’ – but in the end this is not essential work and a drain on real effort to building purpose.  We should be designing systems to get what needs doing gone as efficiently as possible.  Finance could only be a utility in such design.

In fact, we can’t even design police forces that operate effectively.  We choose instead to manage the appearance of doing so through statistics.  The question on bwanker bonuses is not if they are worth it – but whether we can afford finance other than as a utility at all.  I’m sure, from a scientific view point, that we can’t – it’s a tail wagging the dog.  This is now dawning on some who need reality to be a slap in the face from a wet fish – pensions down by 50% and more in the UK for some.  In Greece, maybe 50% are smashed to poverty – more if it goes tits-up.  We are much closer to this across Europe and the USA than most think.  And all this has happened in my lifetime as agricultural and manufacturing and service productivity has risen in powers of ten.

We know where the swag is and it’s time we took it into public control.  Designing this public control is the problem.  The ideological game played on us is ‘better the Devil you know’, demonising change as bringing something worse – this, of course, is also fair comment.  The deep question is why leadership is so bad almost everywhere under the corrupting forces of self-interest and power.  So how do we design the corruption out?  bill Braxton is inclined to the view that anti-corruption design had left the NewYork force cumbersome and inefficient.  Plato wrote seven books on the matter without letting his gaze slip from his own navel.

It’s clear that if we allow wealth to accumulate as we do now, the wealthy take political and economic control.  The claim is this is a meritocracy, almost as the best soccer players gravitate to the top clubs.  I don’t want to work to their ends.  Yet I know this is driven by my own interests.  Complex as this is, I don’t believe the choice is between herding cats and despotic power.  Even if Dominic Strauss Kahn can’t work out that young women shagging old men at parties are likely to be prostitutes, most of the rest of   us can!

I can baffle you with maths that predicts the past (really) but can’t predict the future it is part of in trading.  This is the stuff of invisible cloth and a language of pseudo science (‘fat tails’ and ‘decay’).  One theory after another (Laffer curves were a fairly recent example) is used to demonstrate corporate tax evasion is really are good thing (because governments are so useless); they are killed off in peer review, but remain co-opted into the ideology.  We need more direct meaning than such stuff can provide.  Why can we not afford public services when a tiny few are holding such a big bag of swag?  Why, with all the increases in productivity can we not afford much bigger social provision?  In the past, the vast majority of us worked the land.  This land now provides massively more food with a tiny fraction of workers.  How much work do we need to do to give all a healthy standard of living?  My guess as an economist is it isn’t much more than a 20 hour week over 20 years.  Set against these and further questions the financial services industry in no more than a massive fraud to redistribute our hard work instead of efficiently organising it.


One thought on “time to strip the rich of their assets?

  1. Pingback: a simple explanation of why so many economists are so often surprised (by “trends” AKA “fat tails”) « JRFibonacci's blog: partnering with reality

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