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John Simkin

A Corrupt Democracy

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My dictionary defines a democracy as “a government in which the supreme power is exercised by the people directly or indirectly through a system of representation involving free elections… the absence of class distinctions or privileges”.

It is true that in most advanced industrialized countries free elections take place. However, I am not convinced that the electoral systems employed by many countries ensures that election results in parliament reflects the political opinions of the electorate. See:

Do we live in a Democracy?

http://educationforum.ipbhost.com/index.php?showtopic=243

I am also concerned that economic factors are playing a far too important role in the election of politicians of Britain and the United States (as someone living in England who feels our rulers are living in Washington as well as London, I am particularly concerned about the way political decisions are being made in the United States).

In both Britain and the United States you have two-party states. The reason for this is that both countries employ the first past the post system. People who are interested in a career in politics usually decide to join one of these two parties. These parties New Labour/Conservative and Democratic/Republican attract large donations from wealthy individuals and large corporations. It is human nature that these individuals and organizations will want something back in return for their donation (investment).

Large investors in political parties therefore have the power to shape political policy. This undermines the original definition of democracy “the absence of class distinctions or privileges”. This money is used during the political campaign and helps to buy votes in the election. Afterwards, the investor will seek to be rewarded for the money given to the party. This might take the form of being granted some title or honour. More dangerously, it will also involve the shaping of policy. We have seen this recently with the policies of George Bush. It is also true of the policies of Tony Blair. The most obvious example is with the policy of privatising public services. There has been some strange cases of companies being given contracts in areas where they either have no expertise or in areas where they have terrible records of delivering a good service. It is noticeable that in all such cases the company concerned is a generous donor to New Labour.

It seems to me that the only way we will end this corruption of public office is to limit the size of donations and to introduce public funding of political parties.

Is this a problem that exists in countries other than Britain and the United States?

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We have multi party system, but even here with a lot of parties problems as funding occur. Not on the scale as in the USA or Britain. I think economic factors are important but we have a much bigger problem: people no longer care to vote.

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Like the correspondents I too hoped for a more transparent system of government when I first became interested in politics. Even if we allow for it then being a 'simpler era' in which to live I can only submit my disappointment with the antics of politicians on both sides of the 'pond'. Listening to John Kerry speak of the 'interest groups' was interesting, as Republicans normally accuse the Democrats of being run by interest groups! Perhaps the latter tend to be people-bsed, whilst the former are now obviously driven by profits and regime control.

In the UK we seem to have gone from the 'Patrician' style of one nation Tory (perhaps Douglas Hurd was the last of these?) to full-time members of parliament - many of whom are little more than market boys. They need to make as much money as they can before either their constituency or the electorate at large decide they can go and be directors of privatised industries. Alas, the traditional Labour MP, who was mainly driven by a desire to see a fairer society is now in decline. The newer arrivals seem to lack principles and a background that knew just what it was to be a wage earner in one of the big industries. The new breed know that compliance with party policies and the machinery that drives them is the only way to climb the greasy pole of politics.

If we add to these observations on changes in both society and personality 24 hour media coverage and its need to 'create' news then those now thinking about what kind of society they want for the future will face little that really excites or inspires them. Just where are the Benns, Powells, Shinwells etc? The main parties now fight for the middle ground and the magic number of 44% of the electorate which gains them a working majority in Parliament. Their 'spin' machines distort information and has even lied to itself e.g the Blairs and the Bristol flats. The arrival of the Euro means that governments have less room within which to manipulate economies via the levers of macro policy and global trade means that if one is not efficient, productive and competitive then maintaining current standards of living becomes increasingly difficult.

None of us can hide from some of the blame of creating a political syatem in which increasing numbers are not interested in. The general populace has also altered its core values - hence we demand better public services but will not pay more in tax.

Those of us charged with teaching the coming generations can only hope we can inspire them to have some sense of public service and an awareness of society - alas, I feel less than confident that I for one can encourage able young minds to enter politics. The lure of money, which affords them not only high levels of current materialism but the chance to actually save for a reasonable pension and engage in selective private health care provision is too great for the majority I teach.

I just wonder if those of us who opposed Vietnam, felt saddened when Heath won in 1970 etc will be the last of the breed that wanted genuine change and was prepared to both work and pay for it?

John Birchall

www.johnbirchall-economist.net

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Each week I produce a Letter from an Economist. It is published in various parts of the world. This week I have turned my attention to food and political power. It might encourage some inter changes of ideas.

Best wishes,

John

www.johnbirchall-economist.net

Letter from an Economist – 26th January 2004.

Food for thought?’ ‘

Whatever ones political opinions the coming week will be one of enormous importance in the life of the Blair Experiment. It might even be that the Bush Administration feels some of the draught from the Kelly Report, as Democrat candidates begin to question the grounds on which the Commander in Chief took the US people and its army to war.

Despite the focus on Westminster and maybe Washington I thought that the matter of food and how much we eat would be a topic worth analysing this week. We all know that to lose weight we have to eat less and exercise more. When addressing the first part of this somewhat obvious statement we have to ask ‘eat less of what’ and if the WHO and other nutritionists are to be believed that means ‘sugars’. Alas, some of the US food giants seem to be in disagreement with this statement. In a special report produced by both the WHO and FAO that was published last spring the combined wisdom of the two bodies suggested that governments in developed economies should produce a strategy for improving the health of their citizens. The focus of such a strategy should be to both encourage less consumption of sugars and develop well-publicised ways of introducing the electorate to healthier life styles.

One might have thought that the US Health Department would applaud such a report but it issued a 28 page critique of the document. Its criticisms focused on it lacking transparency and scientific authenticity. Such was the ferocity of the attack made on the report that some observers wondered if the authors had been working to a different agenda – that of the high-calories, high profit making soda, chips and fast food giants that contribute much to the political process in the US. So powerful is this lobby that the proposals of the report have been downgraded and will not be binding if accepted by the WHO General Council in May.

Obesity is now a global epidemic with estimates of one billion people being significantly overweight. In all but the poorest countries obesity and its consequences is overtaking malnutrition as the major health problem of this generation. Diseases such as Type 2 diabetes, coronary failures and certain forms of cancer are all known to be more prevalent in economies where high calorie intake is now a significant health issue. With calorie filled snacks almost impossible to avoid the application of a healthy eating programme is very difficult in a large number of developed economies.

The food industry pointed to poor scientific research and conclusions as being a major fault of the WHO/FAO Report. Yet it suggested such radical changes in diet as eating more fruit and vegetables and limiting the intake of fats and sugars. Such proposals first began to appear in government literature as far back as the 1950’s.

One recommendation in the report that raised the temperature of reactions was that people should limit ‘free’ sugars. This category includes products that have sugar added to those where we probably do not expect to be eating sugar e.g. mayonnaise and peanut butter. The WHO suggested an upper limit of 100 calories per product from added sugars. This is broadly in line with the US Agriculture Department’s recommendation that a daily intake of 2200 calories should contain no more than 12 teaspoons of sugar. Current estimates in the US put this at over 20 teaspoons per day per person. Added sugars made up 11% of the calories intake of someone living in the US in the 1970’s but that has now reached 16% and is rising.

The food industry is very anxious about all this talk to cut sugars in such products as soft drinks and certain fast foods. One pressure group which is financed by the food and drink industry lobbied that the US Administration to think carefully about the real value of contributing its annual payment to the WHO of $406 million.

Some of us will remember the defence mounted by the tobacco industry in response to the cancer correlation that first appeared nearly forty years ago. To this day the major cigarette manufacturers have yet to accept a proven connection between their products and the various diseases science links with them. Within Congress some Senators, often known as the Sweetener Caucus, called for the Administration to push for less promotion of such reports by the WHO and questioned the adverse publicity now being levelled against those who produce the corn syrups, vegetable fats and sugar products that so many young people consume.

It seems that the Bush Administration has accepted the word of the food industry and paid little attention to the section of the industry that tries to develop more ‘forward-thinking’ products.

For some the scenario that appears in this all too brief analysis of what science considered to be a responsible report is a symptom of the global power of some corporations. They wonder why bird flu has suddenly appeared in economies that few even thought of as producers of chicken meat. Indeed, one wonders if many UK citizens knew that 10% of chicken consumed in the UK originated from Thailand. Some are asking if pressure on costs and the need to deliver ‘just-in-time’ mean that risks are being taken with the very food that we eat.

Surely it is time for the consumer to begin to ask some serious questions about what they eat! How is it prepared, what does it contain and do we safe guard those producing the products at standards we would expect for ourselves?

Clinton said ‘it’s the economy you fool’ when addressing his team in the 1992 Presidential Elections, well it might just be time for other subjects to consider just where and when the economy enters their lives and especially their stomachs!

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After some thirty years of teaching political ideologies and concepts of democracy, both ideal and real as played out in U.S. government and law, I have come to the realization that the fabric of democracy has weakened to the point of disintegration. The problem stems not only from the “tweedle-dee. tweedle-dum” nature of two major political parties, observed already by several correspondents, but also by the increasing power of pressure groups, corporations and moneyed classes in the U.S. These special interests have taken over all three branches of government as well as the Fourth Estate and media. The result is that average folks become cynical and apathetic, not even bothering to vote in elections.

I suppose one could argue that this industrial/military complex is not different from the l950’s, or early 20th century for that matter. However, in both those periods, labor unions did provide a real or potential counterweight to the robber barons. Unions are dead today. Newspapers were many and varied; today they are owned by media giants that make no distinction between news and entertainment.

In addition, a sense of community, noblesse oblige, and even guilt that encouraged the likes of Andrew Carnegie to donate millions of dollars for libraries, concert halls, and schools no longer exists. In contrast, billionaires today take their money to off-shore islands to avoid taxes, outsource jobs to third world and emerging global economies, and cut employees and benefits to pay higher dividends to their stockholders. Cheating, cooking the books, and inside trading are so common that "ethics" is a fantasy with no basis in corporate behavior.

Sadly, the most victimized in this cruel system are not just the poor and disadvantaged, but also the American middle class that lives under the illusion that their kids might someday be able to live like sports professionals and vulgar celebrities that flash across our TV and movie screens. Even if not that starry-eyed, they presume their children will have all the advantages they enjoyed – low cost college education, two vehicles (one a SUV) in the garage, and a yearly trip to Disneyland. Ah, Disneyland, the place of dreams and fairy-tales….the perfect escape for us who have no health insurance and little access to reasonably cost medicine. The other escape is gambling at one of the many casinos cropping up all over the landscape.

In the days when I taught high school students that the middle class and a high literacy rate were basic to a democratic society, I had no idea that so many U.S. citizens of the 21st century would be lobotomized by inane, mindless media, formulated to “dumb-down” the citizenry. Given this mess here at home, with what conscience can the Bushies say we are going to bring democracy to Iraq!

:blink:

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Sadly, the most victimized in this cruel system are not just the poor and disadvantaged, but also the American middle class that lives under the illusion that their kids might someday be able to live like sports professionals and vulgar celebrities that flash across our TV and movie screens.  Even if not that starry-eyed, they presume their children will have all the advantages they enjoyed – low cost college education, two vehicles (one a SUV) in the garage, and a yearly trip to Disneyland.

You have provided a great analysis of democracy in the United States. Much of what you say is also true of Britain and other countries in Europe. The most depressing factor in the changes that have taken place is the growth of political apathy. I suspect that the average 19th century industrial worker had a greater understanding of politics than a person in a similar situation today. You are right to say that the decline in trade unionism is partly to blame for this. The control of the mass media is another major factor in this.

However, I am still optimistic for the future. The reason being that the wealthy and powerful members of society have an insatiable desire for even more power and wealth. For example, take the way media moguls use their power to persuade governments to maintain low tax rates on high incomes. Governments have gone along with this over the last 25 years. It is now causing serious problems for governments as a lack of revenue is causing a dramatic decline in the public services.

As you rightly pointed out, the middle classes are also suffering now. They have reached the stage where they (and the state) cannot provide their children with what they enjoyed themselves when they were young. This decline in the standard of living will hopefully create a new interest in politics. Maybe, at the same time, it will see the emergence of new political parties, fully committed to changing the system. Or are all political parties, like our Labour Party, corruptible?

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I believe Britain is one of the most defective democracies in the western world. The main problem we have is that the vast majority of the population refuse to accept we have a problem. A major reason for this is that we are brought up to believe we pioneered the idea of democracy and that somehow the rest of the world followed our example.

I have already mentioned the problems with our first past the post system. However, this is not the major reason why our democracy is so flawed. The real problem is that over the last 200 years we have allowed the prime minister to obtain too much power. Unlike in many European countries, our prime minister does not have to share power with a president. We do have a monarch, but all her power is handed over to the prime minister.

We do not have an elected second chamber. At one time the House of Lords had a permanent Conservative majority. Blair promised to give the British people an elected second chamber. However, it is another promise he has broken. He has reduced it in size and increased the importance of new peers. He of course, has tremendous power over deciding who goes to the Lords. A recent leak revealed the types of people he wants in the House of Lords. Blair is particularly opposed to “controversial” figures (in other words people who are likely to criticise him).

A prime minister’s main power comes from his party. In theory, they have the ability to remove him from power. In reality, this is highly unlikely to happen. The reason is that the prime minister has total control over MPs political career’s. He decides who will fill the hundreds of jobs to be filled in government. In previous times, Prime Ministers attempted to create governments that represented all opinions within the party. Tony Blair has abandoned this policy. Ministers know that if they imply criticism of their leader they will be demoted. Unless a young MP shows complete loyalty to the prime minister’s policies, they will not even reach junior ranks in the ladder of success. If someone criticises him too much, such as George Galloway, he will be removed from the party.

The main abuse of power concerns his control over the information that the public receives. Several journalists have pointed out that the government have developed very sophisticated methods of controlling the media coverage they receive. The BBC case is just one extreme cases of this. Journalists claim the only way they can counteract this is by relying on “unauthorized sources”. These whistleblowers, once identified, are sacked, and sometimes, prosecuted.

Despite all this power, the Prime Minister is still vulnerable to the journalist who has decided he/she has no desire for a knighthood or some other honour given out by the government. Of course, recently, some journalists have been able to show that Blair misled the British public about the most important issue possible: the reasons why the government had decided to break international law by invading another country.

However, this does not mean instant dismissal. Instead the Prime Minister has the power to decide on who is going to be his judge and jury. He can also decide on the offence he has been charged with (known as the inquiry remit). What is more, he can even decide that he can decide the charge is not even against him but some other individual or group of individuals (in the latest case, the Security Services).

I am interested in hearing from people living in other countries about what would have happened if your prime minister/president, had misled the population about such an important issue. Do you have the mechanism to get rid of them? Or do you have to wait until the next election?

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Eliot Janeway wrote a wonderful book called the Unseen Revolution.In this work he opened several doors.

It would be wise for many people in this discussion to reread this work since it clearly shows how problems arise without the intervention of malicious greed.

Most questions surround a conflict over who should guarantee the security of the poor,sick and tired old men and women. Should it be private insurers or public insurers? In our world of longer lives,and more positive beliefs concerning our wealth and its ability to ease pain and suffering we should be clearer in our goals.

Certainly another problem in all discussions lies within the corruption and inscrutability of the accounting profession. How can we even estimate what is wrong with the country when our accountants will not refrain from voodoo procedures?

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However, I am still optimistic for the future. The reason being that the wealthy and powerful members of society have an insatiable desire for even more power and wealth. For example, take the way media moguls use their power to persuade governments to maintain low tax rates on high incomes. Governments have gone along with this over the last 25 years. It is now causing serious problems for governments as a lack of revenue is causing a dramatic decline in the public services.

As you rightly pointed out, the middle classes are also suffering now. They have reached the stage where they (and the state) cannot provide their children with what they enjoyed themselves when they were young. This decline in the standard of living will hopefully create a new interest in politics. Maybe, at the same time, it will see the emergence of new political parties, fully committed to changing the system. Or are all political parties, like our Labour Party, corruptible?

Don't get too optimistic, folks...

Stocks & Economy

• Trade troubles

Nov. 19: Federal Reserve Chairman Alan Greenspan's comments about the trade gap sent the dollar reeling Friday. CNBC's Steve Liesman reports.

CNBC

Greenspan warns trade gap cannot grow 'forever'

Fed chief's remarks send dollar, stocks tumbling

MSNBC News Services

Updated: 5:08 p.m. ET Nov. 19, 2004Federal Reserve Chairman Alan Greenspan sent global financial markets reeling Friday with an unusually direct reminder that the massive U.S. trade deficit "cannot continue to increase forever."

Greenspan's remarks to a conference of bankers in Frankfurt, Germany, pushed the dollar sharply lower against other major currencies. For many traders, the comments confirmed the widely held view that U.S. policy-makers favor a weaker dollar, which should help prevent the trade deficit from growing even more rapidly.

Stock and bond prices fell on the view that Greenspan's warning implies that higher interest rates will be required to continue attracting the overseas investment needed to finance the twin U.S. trade and budget deficits.

Related stories

Stocks tumble after Greenspan remarks

Dollar sinks further against euro, yen

“We see only limited indications that the large U.S. current account deficit is meeting financing resistance," Greenspan said.

"Yet net claims against residents of the United States cannot continue to increase forever in international portfolios at their recent pace,” he said. "It seems persuasive that, given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point."

Greenspan's comments triggered another round of dollar selling by currency traders. The U.S. currency fell to its lowest level in four and a half years against the Japanese yen and nearly nine years against the Swiss franc. It also fell to a near record low against the euro, which was up 0.8 percent to $1.3055.

Treasuries sold off further after Greenspan essentially confirmed the Fed's intention to continue raising short-term interest rates, as it has been doing steadily since June.

"Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged his position by now, obviously, is desirous of losing money," Greenspan said in response to a question after his speech.

Greenspan's speech came on the eve of the annual meeting of finance ministers and central bank governors from the G20 group of rich and emerging market nations in Berlin, which will focus on issues of financial stability. While the falling dollar helps the prospects of U.S. producers, it makes life more difficult for export-reliant European businesses.

The dollar’s 30 percent tumble over the past few years has stirred concern about a potential dollar rout that could destabilize the global economy. That dollar has fallen sharply since the Nov. 2 election on concern about the U.S. current account deficit, now running at an annual rate of $664 billion, or 5 percent of gross domestic product.

Financial stability is on the agenda of the G20 meetings and would provide a forum for the major economies — United States, the euro zone, Japan and China — to hammer out any deal.

Currency issues are not on the formal agenda, though officials said they could be discussed on the sidelines.

While the dollar’s drop is heightening risks for the euro zone’s economic recovery, European Central Bank President Jean-Claude Trichet, speaking at the same session as Greenspan, steered clear of addressing the euro’s climb. He merely repeated his usual line that “brutal” foreign exchange rate moves are unwelcome.

Greenspan's speech was all the more remarkable because officials of the Fed, which is independent, generally refrain from commenting on currency policy, which is the province of the U.S. Treasury.

"It’s remarkable," said Jason Bonanca, director of foreign exchange research at Credit Suisse First Boston in New York. “In the short term, I think what he’s calling for here is a weaker dollar, even though he’s tightening (monetary policy). I think this is a watershed.”

Treasury Secretary John Snow and other officials have said repeatedly that the U.S. favors a “strong dollar” whose exchange rate should be set by flexible, free markets. Currency market participants generally ignore the "strong dollar" mantra, noting that the administration has done nothing to prevent the dollar's fall.

“I think it’s clear, given the language Snow is using while the dollar’s falling, that the (Bush) administration tacitly approves of a weaker dollar,” said Todd Elmer, currency strategist at Barclays Capital in New York.

Greenspan's address "makes it clear that U.S. policy-makers do not want to stand in the way of market adjustment that leads to a lower dollar," said Greg Anderson, senior foreign exchange strategist with ABN AMRO bank in Chicago. “This really lays it out. It makes it clear that all of the policy-makers in the U.S. are on the same page about it."

Reuters contributed to this report

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