Mark GB — The British Government is not fit for purpose – and this is why

'Government' in the UK...and elsewhere...is a function of a corrupt relationship between politicians and vested interests from the corporate sector and foreign lobbyists. Mark GB highlights the depths of the systemic problem.

*******

You won’t find accountability on an organisational chart; because it is a function of character: it’s not about how ‘smart’ you are, it cannot be ‘bought’, and you’ve either led a life that has nourished it…or you haven’t.

Clearly, this is not just a business thing – people from all walks of life will know exactly what I’m talking about…or they won’t. It’s the same if you’re an academic, a journalist, a craftsman, a manual worker, or if you’ve raised a family. It’s human:

If you believe that conducting yourself with integrity is MORE important than ‘winning’ or ‘getting away with it’…if you believe that ‘means justify ends’ rather than ‘ends justify means’…if you can be counted upon to be true to your word…if you will hold up your hands unprompted when you’ve screwed up…then you know exactly what I’m talking about.

I can say without any doubt in my mind that the British Government is bereft of this quality.

I can say with equal certainty that the leadership of many large corporations in this country, and around the world, are also a few sandwiches short of a joyful picnic in this department. I know this because I have worked closely with more than a few, and observed many others. The good ones are outnumbered....

Renegade, Inc.
The British Government is not fit for purpose – and this is why

Mark GB

Ted Galen Carpenter — The Real Problem with Gina Haspel's CIA Nomination

The German philosopher Friedrich Nietzsche expressed the cautionaryadmonition: “Beware that, when fighting monsters, you yourself do not become a monster.” Too often, we have ignored that warning. Gina Haspel’s defenders assert that her behavior conformed to procedures that senior CIA officials (and presumably the Bush White House) had approved. The international community rejected the “just following orders” defense that defendants invoked at the Nuremberg trials. Haspel’s defense is no more valid or persuasive. We should not accept a female version of the Marquis de Sade to lead the CIA. A refusal to do so would be a modest, but important, first step in reclaiming America’s soul.

The foundation of liberalism is the rule of law regarding human rights and constitutional liberties. I would say that the real problem with respect to liberalism is failure to observe the rule of law, along with failure to hold those violating the law to account.

Liberalism is idealistic, whereas politics and economics are realistic. This leads to paradoxes of liberalism that affect liberal democracy.

Good article. Worth reading the whole thing.

The National Interest
The Real Problem with Gina Haspel's CIA Nomination

Ted Galen Carpenter | senior fellow in defense and foreign policy studies at the Cato Institute and a contributing editor at the National Interest

Also

A Chilean reports on women torturers under Pinochet.

Counterpunch
It’s Time the United States Accounts for Its History of Torture

Ariel Dorfman

Article originally appeared in the Los Angeles Times

Mary Dejevsky — The British Government’s response to Sergei Skripal proves we’ve learnt nothing from the Iraq War

On Iraq, the UK’s version of “the facts” was embraced by pretty much all our political establishment and many of our allies – with the honourable exception of the French, the Germans, the late Charles Kennedy and his little band of Lib Dems, and – yes, let it not be forgotten – the leader of today’s Labour opposition, Jeremy Corbyn. It was a version that proved to be disastrously wrong. Yet a combination of Tony Blair’s persuasive powers, naïve acceptance of the need for national unity, and an exaggerated sense of the UK’s importance led us down this fatal path. Those who dared to object – including the million who took to the streets – were dismissed as deluded and unpatriotic.

Tony Blair is still walking free and thumbing his nose at the world with no show of remorse over the havoc that he and G. W. Bush wreaked.

Now they want to do it again?

This is what happens when there is no accountability.

Independent (UK)
The British Government’s response to Sergei Skripal proves we’ve learnt nothing from the Iraq War

Mary Dejevsky 

Brian Romanchuk — Comments On "Skin In The Game"

Skin in the Game: Hidden Asymmetries in Daily Life is the latest instalment of Nassim Nicholas Taleb's Incerto series, which is "a combination of a) practical discussions b) philosophical tales, and c) scientific and analytical commentary on the problems of randomness, and how to live, eat, sleep, argue, fight, befriend, work, have fun, and make decisions under uncertainty" (description from the Introduction). This article is a limited review of some of the aspects of the discussion of the book that relates to economics and finance. My beat is bond market economics, I am not here to offer advice on how to live, eat, sleep, etc. As a result, my discussion here is not really enough information to decide whether to buy the book or not, instead, I am just discussing a few points that intersect with the subjects I normally discuss....

Bond Economics
Comments On "Skin In The Game"
Brian Romanchuk

The Rutherford Institute — U.S. Supreme Court Rules 8-1 that Citizens Have No Protection Against Fourth Amendment

In a blow to the constitutional rights of citizens, the U.S. Supreme Court ruled 8-1 in Heien v. State of North Carolina that police officers are permitted to violate American citizens’ Fourth Amendment rights if the violation results from a “reasonable” mistake about the law on the part of police. Acting contrary to the venerable principle that “ignorance of the law is no excuse,” the Court ruled that evidence obtained by police during a traffic stop that was not legally justified can be used to prosecute the person if police were reasonably mistaken that the person had violated the law. The Rutherford Institute had asked the U.S. Supreme Court to hold law enforcement officials accountable to knowing and abiding by the rule of law. Justice Sonia Sotomayor, the Court’s lone dissenter, warned that the court’s ruling “means further eroding the Fourth Amendment’s protection of civil liberties in a context where that protection has already been worn down.” 

The Rutherford Institute’s amicus brief in Heien v. North Carolina is available at www.rutherford.org. 

“By refusing to hold police accountable to knowing and abiding by the rule of law, the Supreme Court has given government officials a green light to routinely violate the law,” said John W. Whitehead, president of The Rutherford Institute and author of the award-winning book A Government of Wolves: The Emerging American Police State. “This case may have started out with an improper traffic stop, but where it will end—given the turbulence of our age, with its police overreach, military training drills on American soil, domestic surveillance, SWAT team raids, asset forfeiture, wrongful convictions, and corporate corruption—is not hard to predict. This ruling is what I would call a one-way, nonrefundable ticket to the police state.”

What would possibly count as "unreasonable" if then police discovery something "by chance." This is carte blanche, or even an invitation to abuse.

The Rutherford Institute — On the Front Lines
U.S. Supreme Court Rules 8-1 that Citizens Have No Protection Against Fourth Amendment Violations by Police Officers Ignorant of the Law

Press Release

Paula Dwyer — Here's Why No Bankers Go to Jail

No simple explanation. Read Bill Black instead.

The Huffington Post
Here's Why No Bankers Go to Jail
 | Bloomberg View

Bill Black — How to Prosecute the Elite Bank CEO that Led the Frauds that Drove the Crisis

Step one: Understand the three “control fraud” epidemics that drove the crisis....

There is no fraud exorcist, so fraudulently originated loans stay fraudulent and can only be sold to the secondary market through fraud....

Step 2: Restore the destroyed criminal referral process, restore the partnership with the banking regulatory agencies, and end the partnership with the “perps”....

To produce over 1,000 felony convictions in cases the Department of Justice (DOJ) designated as “major” during the S&L debacle, the Office of Thrift Supervision (OTS) made over 30,000 criminal referrals. In this crisis, which is over 70 times larger than the debacle in terms of losses and fraud, OTS made zero criminal referrals, as did the Office of the Comptroller of the Currency and the Federal Reserve. (The FDIC is smart enough to refuse to answer how many referrals it made.)

New Economic Perspectives
How to Prosecute the Elite Bank CEO that Led the Frauds that Drove the Crisis
William K. Black | Associate Professor of Economics and Law at the University of Missouri-Kansas City in the Department of Economics and the School of Law

Like Sen. Durbin said, "The banks own the place."

Shahien Nasiripou — New York Fed Chief Levels Explosive Charge Against Big Banks

The head of the Federal Reserve Bank of New York said Thursday that some of America’s largest financial institutions appear to lack respect for the law, a potentially explosive charge against an industry already roiling from numerous government investigations into alleged wrongdoing.

William Dudley, one of the nation’s top banking regulators whose organization helps oversee Wall Street banks including JPMorgan Chase and Citigroup, made the comment during a speech focused on the problems posed by banks perceived to be “too big to fail,” and possible solutions to correct them.

But in an abrupt turn, Dudley suggested that regulators may be stymied by "cultural" issues that have negatively affected the nation's biggest banks.

“Collectively, these enhancements to our current regime may not solve another important problem evident within some large financial institutions -- the apparent lack of respect for law, regulation and the public trust," he said.

“There is evidence of deep-seated cultural and ethical failures at many large financial institutions,” he continued. “Whether this is due to size and complexity, bad incentives, or some other issues is difficult to judge, but it is another critical problem that needs to be addressed.”

Is Bill Dudley finally reading Bill Black?

The Huffington Post
New York Fed Chief Levels Explosive Charge Against Big Banks
Shahien Nasiripour

Brad Wieners interviews Michael Lewis — Michael Lewis on the Next Crisis

What surprised you most while reporting on the crisis?

The realization that it had actually paid for everyone to behave the way they behaved. Working on The Big Short, I first thought of it as this bet, and there were winners and losers on both sides of the bet. In one sense there was—but on Wall Street, even the losers got rich. So that was the thing I couldn’t get out of my head: that failure was so well-rewarded. It wasn’t that they’d been foolish and idiotic. They’d been incentivized to do disastrous things.

Henry Paulson, the man behind the bank bailouts, recently said, “The root cause of every financial crisis is flawed government policies.” Is that fair?

Some of the government’s policies have been idiotic. But the idea that the story begins and ends with government policy is insane. Wall Street, all by itself, orchestrated the crisis by a web of deceit that was breathtaking. If Wall Street continues to operate in that spirit, I would argue that there’s almost nothing the government can do to prevent them from doing bad things. Incentives are at the bottom of it all. At the gambling end of Wall Street, the people who are making decisions are making decisions not with their money, but with other people’s money, [so] they themselves are not personally responsible.

Bloomberg Businessweek
Michael Lewis on the Next Crisis
Brad Wieners

William K. Black — Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure

Bill Black's posts are always must-reads at New Economics Perspectives for those into following the money, but some stand out. Today's post is one of those that goes to the core of the problem.

Bill attacks the rational that the "job creators" are chiefly responsible for creating wealth, so they should be untethered to do so. Bill points out that the argument rest on the false assumption that what is rational is ethical. This permits the rise of criminogenic environments that result in mayhem, which the elite responsible for the problem can largely avoid accountability, in that they control the system.

Once it is admitted that science is positive rather than normative and that economics is a science, then rational choice and action are considered always to be positive. Criminogenic environments are ruled out of economic theory, and so far only a very few people, and fewer academic economists, have been mentioning the primary role played by unethical and likely illegal behavior in the global financial crisis, at least in the United States. However, there is good reason to think that this was the case elsewhere as well, especially with TBTF/TBTJ financial institutions were involved.

So we hear that "no one predicted the crisis," and when it is objected that some did foresee and warn about it, the retort if "no model." Well, if crime and unethical behavior are rule out, how could a model acceptable to the mainstream get any traction there?

New Economic Perspectives
Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure
William K. Black | Associate Professor of Economics and Law, UKMC

The game theoretic Laureates I criticize carefully avoid discussing the plutocrats’ political power...

Re-read Michael Perelman, The Power of Economics vs. The Economics of Power.

I recently attended an important conference in which virtually all of the participants were very market friendly. Their papers were all very thoughtful and made a great deal of sense. Besides being very intelligent, I was pleasantly surprised to learn that the presenters were unusually open to exchanges with people whose ideas differed from their own. 

One extraordinary paper gave an in-depth analysis of the development of Ronald Coase's influential suggestion for environmental regulation through negotiation. I found nothing in the paper with which to disagree: so long as all affected parties could negotiate a mutually satisfactory solution, Coase's procedure seemed thoroughly unobjectionable. Besides the obvious problem of identifying who should have standing to enter into such negotiations, one serious problem remained: the absence of any consideration of power. 

If I have a beef with a company that wants to locate a toxic waste dump that will affect my property values or even my health, it might be conceivable (though unlikely) that a mutually acceptable solution might exist. In reality, lacking power, I would be unlikely to get major corporations to sit down to negotiate with me, let alone receive satisfactorily compensation for their destructive activities. 

Even taking such businesses to court is virtually impossible. In the unlikely case that I would be able to get a hearing at court, any legal help that I might afford is almost certain to be outgunned by the corporation's powerful legal team. 
Most of the other papers at the conference were of a similar bent, showing how markets evolve naturally and work efficiently. Nowhere was there any consideration of power. The participants clearly understood the discipline of economics very well, but that was their problem. Part of the training of economists is the development of an instinct to avoid any consideration of power, other than presumptive abuses of government, which interfere with the functioning of markets. In conventional economics, power is reduced to a metaphor. We have the power of the market or the power of competition, but corporate power is nowhere to be found.

Ann Pettifor — The power to create money 'out of thin air'

Happy New Year to all PRIME readers, and welcome to my latest PRIME publication, The power to create money out of thin air. At first sight, this is a long-delayed review of Geoffrey Ingham’s book, Capitalism (Polity Press, first published 2008). However like all the best reviews, it has become a hook on which to hang discussion of the author’s contemporary pet themes. Here, these include primarily, capitalism’s ‘elastic production of money’. However, I also take the opportunity of explaining why misunderstanding about the creation of money out of thin air is so widespread, and why orthodox economists are mainly responsible for the confusion.

Out of this discussion arises a further one about ‘fractional reserve banking’ – currently at the heart of debate surrounding an IMF Working Paper by Kumhof and Benes. Then I take a pop at the theory and policy frameworks that prevent (or claim to prevent) co-ordination between monetary and fiscal authorities.
The review challenges, too, the widespread assumption (long promulgated by the enemies of labour, but also held by others) that wage claims by trade unionists caused, or led to, the inflation of the 1970s.

But Ingham’s book raises important issues which are and will be at the heart of politics and economics in 2013: with a deeper understanding of capitalism’s ability to create ever expanding amounts of credit-money, how does a democratic society once again rein in, regulate and subordinate the private finance sector to the wider public interest? How does society regain control over the public good that is credit and a sound banking system, and use both for financing society’s most important needs – including the need to tackle the threat of climate change?

And finally, how can public goods (including liquidity) avoid being confiscated by the finance economy? And how can they be restored to public accountability?

PRIME — Policy Research in Macroeconomics
The power to create money 'out of thin air'
Ann Pettifor | Director of Policy Research in Macroeconomics (PRIME) and a fellow of the New Economics Foundation, London

Note: Geoffrey Ingham is also the author of The Nature of Money.

From the comments there:

Andi
: So is PRIME advocating MMT?


Ann Pettifor: 
Andi, thanks for your query. First, this analysis is mine, and does not represent the views of all the network of economists linked to PRIME. Indeed we disagree on some points. Second, as a network we have many good friends in the MMT community, have great respect for their work, and many of our approaches are aligned. But cannot say that PRIME as a network of economists is ‘advocating MMT’. But we sure are closer to them than to the orthodox community…


Washington's Blog — The Lie that Prosecuting Bank Fraud Will Destabilize the Economy Is What Is REALLY Destroying the Economy

Good summary linking to principal critics like Joe Stiglitz, Jamie Galbraith, George Akerlof, Robert Shiller, and Bill Black.

What is often not mentioned and passed over in silence is that a double standard of justice, one for the privileged and another for "the little people" lowers the moral tone of the society and results in increased disregard for law and authority as being illegitimate. This is destabilizing for society.

Washington's Blog
The Lie that Prosecuting Bank Fraud Will Destabilize the Economy Is What Is REALLY Destroying the Economy

Harry Bradford — Cheaters Get 'High' From Breaking The Rules: Study

Why law, regulation PLUS oversight and accountability are required to address the free rider problem.

The Huffington Post
Cheaters Get 'High' From Breaking The Rules: Study
Harry Bradford

Bill Black at Alternet — What If the “Broken Windows” Theory Were Applied to Wall Street?

James Q. Wilson's famous “broken windows” theory led to strict policing of working class behavior. What if his ideas were applied to Wall Street?

Read it at Alternet
What If the “Broken Windows” Theory Were Applied to Wall Street?
by William K. Black

This article first appeared at New Economic Perspectives and has been crossposted at AlterNet. More evidence that MMTers are getting out there.

UPDATE:

Bill Black interview (beginning 1h0m30s) for the entire hour. (h/t Clonal in the comments)

Konczal — How Privatizing Government Shovels Cash to Parasitic Corporations and Undermines Democracy

From schools to prisons, outsourcing government's works typically ends with cronyism, waste and unaccountability

Read it at Alternet
How Privatizing Government Shovels Cash to Parasitic Corporations and Undermines Democracy
by Mike Konczal

This is what accountability looks like — in India

Six senior executives were charged on Saturday with culpable homicide and violating safety rules over a hospital fire in Kolkata that killed at least 90 people.

The six executives are from two companies that co-own the hospital where poisonous fumes spread from a blaze in the building’s basement. The charges, if proved, could result in a maximum 10-year imprisonment.

Read the rest at Raw Story
Executives charged over deadly India hospital fire
by Agence France-Presse