Socialism for the rich

A tiny Wall Street cabal which gave itself bonuses worth billions of dollars just weeks before the crash gets a bailout of Rs.1,19,520 crore(million). Almost double the Rs.60,000 crore that millions of farmers in dire straits got

The bailout of Bear Stearns by the U.S. Federal Reserve was worth $30 billion. That is roughly twice the “loan waiver” given to millions of Indian farmers. The latter move was scorched by the ideologues of the free market and neo-liberalism as “fiscal insanity” or “irreversible damage.” The media — even those mildly critical — have been far more muted in their criticism of the ‘rescue’ of Bear Stearns. That is, one of the biggest global investment banks and securities trading and brokerage firms anywhere on the planet.

Think of it: a tiny Wall Street cabal which gave itself bonuses worth billions of dollars just weeks before the crash gets a bailout of Rs.1,19,520 crore. That’s almost double the Rs.60,000 crore given to tens of millions of farmers in dire straits in this country. A country where one farmer kills himself every 30 minutes in despair. The problems of farmers do not even begin to end with that waiver.

On the other hand, a bunch of thugs in tuxedos who did pretty much whatever they wanted, laying a minefield across the world, have got the waiver of a lifetime (or many lifetimes). The lifejacket for the bank does not require the return of their bonuses. So much so that Jim Rogers, CEO of Rogers Holdings and a staunch free marketer, calls it “Socialism for the rich.” In his words “the Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders’ Maseratis.” He points out that hundreds of billions of dollars are being spent to bail out Wall Street as a whole. The theologians of the global market are between a rock and a hard place. Hypocrisy has rammed into reality.

Three of the basic principles the believers of corporate-led globalisation swear by have been so eloquently summed by Professor James Galbraith Jr of the University of Texas at Austin. One: all successes are global. Two: all failures are national. Three: the market is beyond reproach.
For over a decade, we were assured that everything good that ever happened was because we had embraced corporate-led globalisation. All the negative effects visible were the result of our own national inertia and corruption. And of course, the market would heal all wounds. The notion of state meddling in economic matters was blasphemy. Now the nations feeding us this rot — which we recite by rote — are nationalising banks, bailing out brigands and pouring in funds to stop factories from closing down.

Now having to blame ‘global factors’ for the price rise at home must seem a bit galling. Failures at home? Er, well, you see, let’s not go there now. This is election year. So we see Minister after Minister, the latest being Kapil Sibal, tell us that the price rise and food shortages in India are the “result of global factors.” Nothing to do with us. No less amusing to see the World Bank and the IMF warn of starvation and riots. It’s hard to think of anyone who has contributed more to those phenomena than they have.

India has also nurtured the commodities futures market despite its clear links to speculation and price rise. It’s odd how every other small trader will brief you at length on this — but you won’t see much of that story in the media. In fact, with markets tanking around the world, more speculators have seized on foodgrain as a good bet. Which it is.Through the reforms period, we have pushed millions of small farmers to shift from foodcrop to cash crops. The acreage under foodcrop has reduced across these years. And we also exported millions of tonnes of grain — as in 2002 and 2003. What’s more, we exported at prices cheaper than those we charged poor people in this country for the same grain. The idea was that we had a “huge surplus” of grain and could well afford to export. The truth was that the massive pileup of unsold stock arose from a surplus of hunger rather than of grain. The purchasing power of the poor had collapsed. But the fake “surplus” story came in handy. It allowed the export of grain — heavily subsidised by us — to be consumed by European cattle.

The present mess is no surprise. For years, economists such as Utsa Patnaik have warned strongly that we would arrive at where we are now. As she repeatedly pointed out, the effects of all our actions could be seen in the plummeting net per capita availability of foodgrain. From 510 grams per Indian in 1991 to 422 grams by 2005. With the top fifth of Indians doing better than ever before, this meant that those below were eating far less than they did just a few years ago.
Meanwhile, each budget takes further the process of “growth” driven by the consumption of the rich. Tax breaks at the top, cuts in state spending, all these too have a major role in making life unbearable below. Yet, even as the edifice crumbles, a few true believers hold out for the Second Coming. “Price rise reflects scarcity,” says one editorial, “and at no time is free trade more effective as a welfare enhancer than when it combats scarcity by quickly getting supplies where the demand is.” But governments are “denying free trade this role.” Well, get set for the global contagion.

Source: http://www.worldsikhnews.com, 21 May, 2008