I'm frustrated by the antics of self-appointed thugs who hijack worthy causes like 'make poverty history'. I wish they'd acknowledge the efforts governments do make to improve the world. And I wish they'd pause to consider the complexity of the issues. I'm a little embarrassed for their sins of rational thought as much as for their acts of mindless criminality. A few thoughts that spilled from my de-radicalised fingers follow.....
Sweet democracy. Quietly it knits a web from our individual preferences to manage our complex societies. We get consulted from time to time, and do our best to appoint professionals to manage things in between. There are flaws, but its our least-worst option.
Democracy allows us to protest freely whenever we disagree - and whenever a flotilla of men in dark suits float into harbour. The wearing of suits is apparently secret code for "we want to crush the world's poor under the mighty fist of unrestrained capitalism." I have serious issues with such simplistic nonsense - just because it sounds good coming from a megaphone doesn't mean its right.
On Central Banks and democracy: I'm not alone in noting the central fallacy of the last federal election - the debate on which party would keep interest rates lower. Alas, the buck actually stops with the Reserve Bank Board - appointed men in dark suits. What does this mean for democracy? Should Central Banks be independent? And further, should we object when independent central banks meet alongside elected treasurers to discuss global issues? And what on earth does this have to do with throwing urine-filled water bombs at police outside a McDonalds restaurant?
There are a variety of views on Central banks independence. Perhaps the most persuasive argument in favour is in order to prevent elected governments from manipulating interest rates around election time. Studies of non-independent central banks showed a correlation between cuts in interest rates and elections. A cut a year out from an election would stimulate the economy, create more jobs, and reduce the size of mortgage repayments. It was also inflationary - but this was OK because the bad effects would only kick in after the election. But the punters are cleverer than governments. They came to expect a pre-election cut to rates, as well as the inflationary aftertaste and pegged wage claims accordingly. Wage claims offset the 'surprise stimulus' by introducing earlier inflation, making the whole process a little pointless - but that didn't remove the temptation.
So central banks were separated from the mothership and we all lived happily ever after, safe in the knowledge that 'long-termism' drives our monetary policy. Critics would have it that in this long-term planning, central bankers are biased by the aversion of their banking chums to inflation (it erodes the value of loans, the backbone of private banking profits). Fair enough, but without the capital in the first place we'd all be living in shacks and eating grass for dinner. Central banking is an arcane and intricate business. Decisions are made quietly, beyond the understanding of punters like me. Data gets crunched and decisions get made. What better target for the megaphoned claims of 'secrecy' 'conspiracy' and 'the slaughter of african babies.'
On the G20 Meeting: Should they be allowed to meet? Absolutely. The global depression in the 1930s came about in part through a lack of policy coordination between central banks and governments. Old recipes failed. New ones needed to be discovered. More talking, and more agreed cooperation may have averted the economic calamity that beset the world. The G20 grew out of the 1997 Asian financial crisis suggesting its intentions are generally honourable. 1997 caused great damage to the economies of South Korea, Indonesia, Thailand and beyond. And the people who paid the price were the poor, the unskilled and the vulnerable. Private money took on central bank money and won. Learning from this event, and planning for the next time private money loses faith in a developing country economy, seems eminently sensible.
So how to persuade Melbourne's missile throwing protesters that the G-20 meeting is virtuous. Perhaps Oxfam, (that supremely sensible NGO) could use its research nous to demonstrate the importance of central bank independence and coordination, particularly for the world's poor. Perhaps a counter-rally could remind the particularly violent protesters that they live in a democracy, a democracy (whatever its flaws) that elected the current Treasurer. Further, that the people of Soweto elected the Finance Minister who is representing South Africa at the G20 Meeting by a 67% majority - and they adore him because he is pro-growth and job creation. And that the Reserve Bank governor of South Africa was St Mandela's economic advisor. Complex issues deserve considered responses, not simple 'men in suits are bad' jingoism.
Throwing things at McDonalds was cool in Seattle a decade ago. In 2006 Bono wears a dark suit and engages world leaders in rational discussion. Same argument, different method - I know which I prefer.
Sweet democracy. Quietly it knits a web from our individual preferences to manage our complex societies. We get consulted from time to time, and do our best to appoint professionals to manage things in between. There are flaws, but its our least-worst option.
Democracy allows us to protest freely whenever we disagree - and whenever a flotilla of men in dark suits float into harbour. The wearing of suits is apparently secret code for "we want to crush the world's poor under the mighty fist of unrestrained capitalism." I have serious issues with such simplistic nonsense - just because it sounds good coming from a megaphone doesn't mean its right.
On Central Banks and democracy: I'm not alone in noting the central fallacy of the last federal election - the debate on which party would keep interest rates lower. Alas, the buck actually stops with the Reserve Bank Board - appointed men in dark suits. What does this mean for democracy? Should Central Banks be independent? And further, should we object when independent central banks meet alongside elected treasurers to discuss global issues? And what on earth does this have to do with throwing urine-filled water bombs at police outside a McDonalds restaurant?
There are a variety of views on Central banks independence. Perhaps the most persuasive argument in favour is in order to prevent elected governments from manipulating interest rates around election time. Studies of non-independent central banks showed a correlation between cuts in interest rates and elections. A cut a year out from an election would stimulate the economy, create more jobs, and reduce the size of mortgage repayments. It was also inflationary - but this was OK because the bad effects would only kick in after the election. But the punters are cleverer than governments. They came to expect a pre-election cut to rates, as well as the inflationary aftertaste and pegged wage claims accordingly. Wage claims offset the 'surprise stimulus' by introducing earlier inflation, making the whole process a little pointless - but that didn't remove the temptation.
So central banks were separated from the mothership and we all lived happily ever after, safe in the knowledge that 'long-termism' drives our monetary policy. Critics would have it that in this long-term planning, central bankers are biased by the aversion of their banking chums to inflation (it erodes the value of loans, the backbone of private banking profits). Fair enough, but without the capital in the first place we'd all be living in shacks and eating grass for dinner. Central banking is an arcane and intricate business. Decisions are made quietly, beyond the understanding of punters like me. Data gets crunched and decisions get made. What better target for the megaphoned claims of 'secrecy' 'conspiracy' and 'the slaughter of african babies.'
On the G20 Meeting: Should they be allowed to meet? Absolutely. The global depression in the 1930s came about in part through a lack of policy coordination between central banks and governments. Old recipes failed. New ones needed to be discovered. More talking, and more agreed cooperation may have averted the economic calamity that beset the world. The G20 grew out of the 1997 Asian financial crisis suggesting its intentions are generally honourable. 1997 caused great damage to the economies of South Korea, Indonesia, Thailand and beyond. And the people who paid the price were the poor, the unskilled and the vulnerable. Private money took on central bank money and won. Learning from this event, and planning for the next time private money loses faith in a developing country economy, seems eminently sensible.
So how to persuade Melbourne's missile throwing protesters that the G-20 meeting is virtuous. Perhaps Oxfam, (that supremely sensible NGO) could use its research nous to demonstrate the importance of central bank independence and coordination, particularly for the world's poor. Perhaps a counter-rally could remind the particularly violent protesters that they live in a democracy, a democracy (whatever its flaws) that elected the current Treasurer. Further, that the people of Soweto elected the Finance Minister who is representing South Africa at the G20 Meeting by a 67% majority - and they adore him because he is pro-growth and job creation. And that the Reserve Bank governor of South Africa was St Mandela's economic advisor. Complex issues deserve considered responses, not simple 'men in suits are bad' jingoism.
Throwing things at McDonalds was cool in Seattle a decade ago. In 2006 Bono wears a dark suit and engages world leaders in rational discussion. Same argument, different method - I know which I prefer.
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