August 10, 2015
Crisis: Nature's Wrath, CEO Pay, Corbyn & Banks

"They who can give up essential 
   liberty to obtain a little temporary
   safety, deserve neither liberty
   nor safety."
   -- Benjamin Franklin
   "All governments lie and nothing
   they say should be believed.
   -- I.F. Stone
   "Power tends to corrupt, and   
   absolute power corrupts
   absolutely. Great men are        
   almost always bad men."
   -- Lord Acton

Prev- crisis -Next


Evoking the Wrath of Nature
The Outrageous Ascent of CEO Pay
3. Jeremy Corbyn is right to blame the banks, not Labour,
     for the financial crisis

This is a Nederlog of Monday August 10, 2015.

This is a crisis blog. There are 3 items with 3 dotted links: Item 1 is about an article by Chris Hedges.  The article is fairly philosophical/religious, and since
I am a philosopher, I took some trouble over it, but you can skip it if it is too much (though I am not as pessimistic as Chris Hedges seems to be); item 2 is
about a fine article by Robert Reich who discusses the - lately obscenely raised - payments to CEOs, and ends with a question of mine: Why not limit payments
to anyone to $ 250,000 a year, seeing this would only diminish the incomes of
maximally 5%?; while item 3 is about a fairly long article in which Larry Elliott
- the economical editor of The Guardian - explains that only Jeremy Corbyn - of all English political leaders and want-to-be leaders - seems to understand macroeconomics.

Finally, I should also say that I diminished the number of items, simply because the present three items are nearly 40 Kb.

1. Evoking the Wrath of Nature

The first article of today is by Chris Hedges on Truthdig:
I like Chris Hedges, but one of several considerable differences between him and me is that he is religious, indeed currently a minister, while I am not religious at all. (And I am a philosopher, who has seriously considered the more fundamental issues - I am not the average know-little with strong opinions based on ignorance, stupidity, greed and hypocrisy.)

His current column seems to be a bit more inspired by religion than other ones, and indeed he reflects on the differences between the many - hoi polloi, the ancient Greeks said - of our modern Western mostly white world, and the outlook of those the Westerners "replaced", largely by killing them, such as the American indians.

I will try to follow and comment on him, though I suppose that, since he is religious and I am not, I may miss some of the things he said. On the other
hand, I also plainly disagree with him on some fairly fundamental points.

Also to end this brief introduction: I think my answers to many of the points Chris Hedges raises are both fair and skeptical, but in case you really do not like philosophy, I suppose it is wise to skip the rest of this first section.

This is from the beginning (and I quote in the order of appearance in the column):

Those whose lives pay homage to the sacred are considered by many in the modern world to be eccentrics and cranks. On the other hand, those who live disconnected from the sources of life, who neither fear nor honor nor understand the power of nature, who place their faith in human technology and human power, are celebrated and rewarded with power as they propel the planet and the species toward extinction. The natural world, if we do not radically reconfigure our relationships with each other and the ecosystem, will soon teach us a severe lesson about unbridled hubris.

“The fate of our times is characterized by rationalization and intellectualization, and, above all, by the ‘disenchantment of the world,’ ” Max Weber wrote. “Precisely the ultimate and most sublime values have retreated from public life either into the transcendental realm of mystic life or into the brotherliness of direct and personal human relations.”

Hannah Arendt called our malaise “world alienation.” She warned that it leads to contempt for all forms of life.

My problems with this are considerable. I take them up per paragraph.

The first paragraph draws a fairly arbitrary distinction between religious believers in the sacred, and non-religious believers in "
human technology and human power", and warns the latter that they don't understand reality nor nature, and will soon be taught "a severe lesson about unbridled hubris".

I observe that the real distinctions are far more pluriform than between having and lacking religion: Most of the very rich, who do plunder the earth to enrich themselves further, are or pretend to be religious, for example, while I'd say that those who put their faith in some religion in fact build consciously on a system of unreason, though again there are very many such distinct systems of faith, and some are a whole lot worse than others.

Now you may well say that I am attacking one paragraph only, and that Chris Hedges cannot be fairly required to make all distinctions that are needed in a single column, all of which is more true than not - but then again he chose to
draw only one distinction, and that distinction is religion.

And this distinction leads to a fundamental question, that also bothered Hume (who was a religious skeptic): Why bother, if your faith assures you of an infinite time of happiness, at the side of the Lord, in your very own heaven of bliss and everlasting joy (that is: provided you qualify, but most believers seem to hold they qualify)?! [1]

This seems a fair question to me, were it only because I believe all of my life amounts to (maximally) "four score and ten" years on this earth, after which I will be definitely finished forever, and will neither see the Lord, nor enjoy an infinity of heavenly bliss, nor indeed suffer an infinity of hellish pains.

Again, there are various answers to this, but it really is a question: Why bother about the injustices, inequities, unfairness, stupidity and ignorance of the many, when you feel sure that your faith will give you everlasting and infinitely long bliss, after you have died?

The next paragraph does not mention that Max Weber (whom I admire) died in
1920, for which reason the "
rationalization and intellectualization" of culture he discerned must be at least 100 years old - and that is apart from my own conviction that Weber was mistaken (though he would have been a lot more right if he had diagnosed it as mechanization and uniformization).

The third paragraph fails to mention that "alienation" was a very prominent concept in leftist German philosophy, and fails to mention that it never was analyzed well according to a majority of thinkers, and also fails to mention
that most rdinary men and women, although they might be, in some not very precisely articulated sense, "alienated" from much, they certainly did (and do)
not feel as if they are. [2]

Then there is this:
Land, timber, minerals, animals and mountains—as well as human beings—had no intrinsic value to the Europeans. Nature existed only to make money.
The Europeans of the era ridiculed the beliefs of the American Indians, along with their communal structures, in which everything was shared and all had a voice in tribal decisions.
I agree both points are important for capitalism: That all that matters, in the end, is whether you made a monetary profit (no matter how, nor what you wasted or destroyed while making it: merely whether you made it), and that private property is the firm foundation of - capitalist, but that qualification tends to be left out - human society.

And I agree with Chris Hedges that both ideas are mistaken: There are many more human ends than making a monetary profit, while private property can (and should) be qualified in quite a few ways (such as: a top income, progressive taxes, the norm that it is much more important that all should have decent lives than that a few can get incredibly rich at the cost of the majority, who live in squalid poverty, etc.)

Then there is this:
Last year was the hottest since we began scientifically tracking weather, and 2015 is expected to top 2014. Glaciers and ice sheets are melting at an accelerated rate, causing the oceans to rise. Even if we stop all carbon emissions today, some scientists say, sea levels will rise by 10 feet by 2065 and as much as 70 feet over the next couple of centuries. Major coastal cities such as Miami and New York will be underwater. Droughts plague huge swaths of the planet. Wildfires, fueled by parched forests, have been burning out of control in Southern California, Canada and Alaska. Monster cyclones and hurricanes, fed by warming air currents, are proliferating, ripping apart whole cities. Massive species extinction is underway. And we could face a planetary societal collapse due to catastrophic food shortages within the next three decades (...)
Well... yes and no.

First yes: I agree we live in fearful times, and seem to be destroying the natural habitat in which men lived for at least 100,000 years, and seem to be doing that very quickly, in part moved by monetary profits, in part by willful blindness, in part by a capitalist mode of production, and in part by sheer numbers (7 billion men and women, and still growing).

Next no: This paragraph is too vague to be considered good rational evidence, were it only because no human being since 1900 or before has been able to correctly predict more than a few aspects of how life would be a mere 25 years in the future. I am certainly not going to worry now about the height of the sea in 2265, even if the predictions of 2015 say they may be 70 feet higher, and even the fate of Amsterdam (that is situated at over 2 yards below the current sea level) in 2065 doesn't bother me much (and not because I do not care, but because very many other events, most of which are imponderables now, enter into it [3]).

Then there is this:
The blind, self-destructive exploitation that lies at the heart of capitalism, the placing of monetary profit above the maintenance of life, the refusal to understand and accept limits, have turned the victimizers into the victims. Ignoring the warnings of native communities, we have evoked the deadly wrath of nature. And I fear we may not be able to find our way back.
My reply to this is: yes, but. More precisely, while I agree mostly with Chris Hedges fairly pessimistic attitude, I disbelieve in a "deadly wrath of nature",
and that not because nature may not destroy most or all of mankind, but because I think nature doesn't work that way (in wrath, or joy) and because an earth without humans and without much of nature is just as "natural" as an earth with billions of humans and a rich nature. (Incidentally, here is another point of view, also by a fierce critic of capitalism: George Carlin's
Saving the Planet.)

Besides, my former question pops up: Why bother, if your faith has convinced you that you (and many of your family and friends) will go to heaven, and enjoy not (maximally) "four score plus ten" years of life, in most cases mostly made up of disappointments, failures, pains, and troubles, with some brief periods of joys, and perhaps some rare bursts of ecstasy, but an infinitude of sheer joy and bliss?

It really beats me, though I have sketched fairly satisfactory answers for non-believers in footnotes [1] and [3].

Finally, there is this:
The world does not fit into the rational boxes we construct. It is beyond our control and finally our comprehension. Human beings are not the measure of all things. Existence is a mystery. All life is finite. All life is fragile. The ecosystem on Earth will die. It will be slain by our failure to protect it, or it will succumb to the vast array of natural forces, from colliding asteroids to exploding stars — including, one day, our sun — which turn into supernovas and throw out high-energy radiation that have doomed countless planets in the 100 billion galaxies beyond ours. We have lost the capacity for reverence. We slew those who tried to warn us. Now we slay ourselves.

This seems much too apodictic to me. To illustrate, here is a correction with my qualifications in bold:
The world does neither fully nor properly fit into the rational boxes we construct now. It is in good part beyond our control and [..] in part also beyond our comprehension. Human beings are not the only measure of all things. Existence is in part a mystery. All life is finite. All life is fragile. The ecosystem on Earth will die, eventually. [...] We have lost the capacity for reverence, though reverence without real understanding is blind. We slew those who tried to warn us. Now we may slay ourselves.
That is a much more correct version - it seems to me - of what Chris Hedges is saying, but indeed while it retains many of his statements, it also makes them considerably less certain and apodictic.

2. The Outrageous Ascent of CEO Pay

The next article is by Robert Reich on his site:

This starts as follows:

The Securities and Exchange Commission just ruled that large publicly held corporations must disclose the ratios of the pay of their top CEOs to the pay of their median workers.

About time.

For the last thirty years almost all incentives operating on American corporations have resulted in lower pay for average workers and higher pay for CEOs and other top executives.

Consider that in 1965, CEOs of America’s largest corporations were paid, on average, 20 times the pay of average workers. 

Now, the ratio is over 300 to 1.

Yes, and I find that quite obscene: to give mere CEOs 15 times as much as they got in 1965 (when the economy was booming!), in a mere 50 years (of which indeed the last 35 were given to deregulating the legal ties that bound CEOs to practice some decency).

Indeed, here is what the deregulators achieved in a mere 22 years:

The share of corporate income devoted to compensating the five highest-paid executives of large corporations ballooned from an average of 5 percent in 1993 to more than 15 percent by 2005 (the latest data available).

Corporations might otherwise have devoted this sizable sum to research and development, additional jobs, higher wages for average workers, or dividends to shareholders – who, not incidentally, are supposed to be the owners of the firm.
That is, the CEOs took ten percent of the wage costs, and paid it to themselves. Because - they claim, almost always falsely - to be such
incredibly superior people.

Indeed, as to these claims of CEOs (and their lawyers):

Corporate apologists say CEOs and other top executives are worth these amounts because their corporations have performed so well over the last three decades that CEOs are like star baseball players or movie stars.

Baloney. Most CEOs haven’t done anything special. The entire stock market surged over this time.

Precisely. And in fact (and this has been researched: check out the article)

It turns out the higher the CEO pay, the worse the firm does.
Here is one illustration:
Larry Ellison, the CEO of Oracle, received a pay package in 2013 valued at $78.4 million, a sum so stunning that Oracle shareholders rejected it. That made no difference because Ellison controlled the board.

This means Larry Ellison believes he is worth $ 214,794.52 each day. That is also considerably more money - each day! - than I received the first 50
of my life...[4]

You can find the calculations in note [4], for which reasons I say that I might seem to be an incredible radical, but I think very much would be gained if no
one had the right to earn more than $ 250,000 a year
, which also is a measure that could be reached by a parliamentary decision... [5]

3. Jeremy Corbyn is right to blame the banks, not Labour, for the financial crisis

The last article of today is by Larry Elliott on The Guardian:

This starts as follows:

Here’s a question for you. Consider the following statement: “We must live within our means, so cutting the deficit is the top priority.” Do you agree?

If you said yes, you are with the majority. If you said no and are a member of the Labour party, you are almost certainly planning to vote for Jeremy Corbyn to be its next leader.

To answer the question: (1) it is - unnecessarily - vague (who are "we" for example), but (2) clearly all large projects of anyone need financing, that is: borrowing, from buying a house or a car to starting a new business or implementing a large project with an old busines, while also (3) banks exist
(or so it seemed) to supply loans to individuals and firms that qualify (by
being likely to pay back the loan + interest), so clearly the answer is No:

We do not need to live within our means, we need merely to be able to pay
back what we must loan to enable our large projects.

Anybody who argues differently (that is, most politicians in Great Britain)
either doesn't know economics or believes in false propaganda.

I thought I explain this first, because Larry Elliott does the same, but with more words and more graphics. He does this because he wants to show this:

Corbyn is the only candidate sticking to the line that the banks were to blame and he is reaping the benefit. Not least because he is absolutely right.

And that he is absolutely right can be seen from the graphics that Elliott provides, for which you have to click the last dotted link.

Here is the last paragraph of Larry Elliott's article:

There are plenty of legitimate reasons for Corbyn’s rivals to attack him, for which there is not room in this column, but his approach to austerity is not one of them. Instead, he has come up with a version of the old political maxim – never apologise, never explain – that makes macroeconomic sense and is resonating with Labour supporters. He has explained what he would do – borrow to invest and have no set timetable for deficit reduction – while apologising for the right thing: Labour’s over-lax financial regulation. It is proving a better strategy than apologising for the wrong thing and not explaining.

Quite so - which is also to say: Jeremy Corbyn is the only one of Labour's candidates for leadership who has credible macro-economic ideas: The others
are merely parrotting the falsehoods they learned from the Tories.


[1] I am not one of those who disbelieve in atheists (I am one), and also not one who disbelieves in people of religious faith, but I do want to suggest that this suggests - at least - that the faiths of the true believers in their God and in the blessings He - in His infinite wisdom - would shower on those who believed in Him (and behaved well, by His criterions), in fact seems to be a lot less than in the faith that they are alive in a real world.

[2] "Alienation" also provides a tie to psychiatry - around 1900 quite a few of those who are now called "psychiatrists" called themselves "alienists" - and also to psychology. (But it remains a rather vague concept.)

[3] The dictionary definition of "imponderable" is something like this (I give one): "an imponderable" is something that "
cannot be weighed or measured; that cannot be conclusively determined or explained".

I think there are far more imponderables than most men believe there are, and indeed future history is one of them (even though I agree some of it can also be fairly safely predicted).

Put otherwise, I think that - from a rational point of view - far more is fundamentally uncertain (here and now) than most people - and especially those of a political or religious faith - believe.

[4] Because I was and am ill since I was 28, I have never earned a minimal income, and indeed did not earn as a student as much as the sub-minimal income provided by "the social services" (the dole), and therefore I earned less than 10,000 guilders a year, which comes out, when rounded off to 10,000 guilders (which is too much, for most years), for 1967-2000 to 330,000 guilders, which must be divided by around 2 to get my income in dollars: 165,000 dollars in 33 years. (After the introduction of the euro it is less clear, in part because this is supposed to be worth 2 guilders 20, but is worth in buying power less than 1 guilder).

Even so, I did live, ate well, made 2 academic degrees, have at least one computer since 1987, and was not unhappy, except for being discriminated for my opinions, and for not getting my legal rights, and for being ill since 1.1.1979 (which got a lot worse after 1990, because I had been discriminated for my opinions and because I could not get my legal rights against drugsdealers protected by Amsterdam's mayors).

[5] Will this ever happen? No, not with the ordinary men and ordinary CEOs there are. But it is technically, financially, and economically quite feasible, and it would not set back more than 2-5% of the total adult population...

Where are you, all you supposedly egalitarian democrats?!

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