Keith Hudson’s Lesson on the Present Crisis

I am privileged to be on Keith Hudson’s mailing list. He is an English polymath, a Renaissance Man in the strictest sense of the term. With his permission I am quoting from one of his musings on the present financial crisis. He quickly hones in on the systemic trouble at the base of the problem: that those who are in charge are incapable of comprehending the system, and the lag between the institutions of yesterday and today’s technical and scientifically advanced world.

Here, for the record, is an excerpt from Keith’s recent observations.

It has not been a breakdown of the basics of the market system that has caused the present crisis. Nor will it have been the greed of the bankers. Everybody is as selfish as everybody else and can be as potentially greedy — for cash, status goods, security, food, what-have-you — as anybody else. You might as well blame the next person you meet on the street who maybe has a debt of £2,000 on his credit card as the bankers.

What ought to be pilloried is stupidity and/or lack of courage by bankers and governments alike — those who tell us they are financial experts and those who say they are protecting us. The Bank of England knew in 2002 that there was something badly wrong with what the banks and other financial institutions were doing. Even before then there had been serious doubts and this is why the Financial Services Authority had been set up — spineless though it’s been. If these bodies didn’t know what was going wrong they should have investigated. And if they did know, then the politicians should have acted in order to protect the financial system and, in turn, the public. Similar suspicions must have been rising in all the countries of the Western world but they were smothered because politicians didn’t dare stop the spending spree that was also going on.

No one can possibly forecast what is going to happen in the coming months — even in the most general of terms. But I’m pretty certain about one thing. The present sort of episodic electoral democracy that we have now is going to have to change. We already had one warning of this when a German Nazi government was voted in by entirely democratic procedures in the 1930s — and brought us World War II as a result.

While many of our present type of politicians are honest and conscientious, they, as a generality, are largely untrained and inexperienced in important matters of the real world. We live in a world of business yet hardly any politicians have any experience of business at all. Our business today, and economic prosperity, is mainly based on science and technology yet hardly any politicians have any clue about science. Our present governmental institutions, as always throughout history, are at least one generation, and more like two or three, away from the real world that is actually working beneath them, around them and paying for their existence.

Author: Atanu Dey

Economist. View all posts by Atanu Dey