Smouldering embers of a Fireside Chat | Sunday Observer

Smouldering embers of a Fireside Chat

9 September, 2018

“To the well-fed it seems cowardly to complain of tight boots, because the well-fed live in a different world, a world where, if your boots are tight, you can change them; their minds are not warped by petty discomfort.” -George Orwell

At the Fireside Chat at the Hilton the well fed and the fat, complained about their tight boots. The poor who could not go to the Hilton in their serenity read about it the next day or watched them on YouTube.

Six of our country’s rich, famous and successful plutocrats took turns in informing and explaining the pitfalls and the price of amassing amazing wealth.

Some called it an oligarch’s chat. Oligarchs are those who receive and exist on state patronage. This lot claimed that instead of patronage the State had abandoned them. They relied on their own devices. Hence, the label plutocrat. Plutocrats are the unbelievably rich or more accurately- the filthily rich.

What mattered most was not what they said. What really mattered were the approving guffaws, the encouraging laughter and the mesmeric mirth generated by the witticisms and preposterously pseudo profundities of the plutocrats.

The audience reactions sent a clear and loud message. Our private sector needs some urgent reorientation. It must be made to differentiate the distinction between wealth creation and wealth extraction. Making money is something that every money lender can do. Money lenders don’t create wealth. They do not create jobs. They do not make people happy – the goal of sensible economics.

The Fireside Chat of the Plutocrats was a watershed event. All participants are post - 1977 billionaires. They did not represent old money. They are the quintessential nouveau riche of the JRJ economic liberalization and Chandrika’s free market with a human face. Two of them were certain and sure oligarchic products of the Rajapaksa autocracy. The composition of the panel therefore reflected the political process.

Let’s go back and start at the very beginning, the best point to start as Julie Andrews said in the musical.

The term ‘Fireside Chat’ originated with President Franklin Roosevelt engaging the people of America to explain the banking crisis and the great crash of 1933. His opening lines of the first fireside chat has lessons for us today. Our Fireside Chat had its share of Bankers and Financiers.

“First of all, let me state the simple fact that when you deposit money in a bank, the bank does not put the money into a safe deposit vault. It invests your money in many different forms of credit—in bonds, in commercial paper, in mortgages, and in many other kinds of loans. In other words, the bank puts your money to work to keep the wheels of industry and of agriculture turning around. A comparatively small part of the money that you put into the bank is kept in currency—an amount which in normal times is wholly enough to cover the cash needs of the average citizen. In other words, the total amount of all the currency in the country is only a comparatively small proportion of the total deposits in all the banks of the country.”

As I said before, the event was a timely reminder for us to realize the urgency of course correction. Minister Mangala Samaraweera and State Minister Eran Wickremeratne should take note of their hour-glass. It is fast running out of time. This writer does not hold a candle for this current crazy government. That said, the immediate imperative is to forestall the return to Gotabaya’s Gulag or Mahinda Mafiosi.

We must address these serious questions. Who creates value? Who extracts value? Who destroys value?

If we confuse creators of wealth with extractors of wealth we will remain where we are. If we allow free reign to those who destroy wealth we will be impoverished more.

Classical economists from Adam Smith and David Ricardo to Karl Marx have taken great pains to explain to us the distinction between those who created value and those who specialized in moving around value created by others. Karl Marx, as we all know was quite precise about those who parasitically lived on the efforts of others. These are not only economic distinctions. They are moral distinctions.

Let us focus on the real. None in the panel can claim proprietary rights on the distillation process of Gal or Pol Arrack. No one in the panel held a patent on pile-driving systems or in making pre-stressed concrete. None had perfected the mindlogy systems of retailing in malls or in hospice care. None can claim the distinction of discovering the water sealed commode. None can claim the distinction of discovering value addition with a thread and a needle. The one exception is the gracious grand old man who has indeed created a global brand for our Ceylon Tea.

So by and large, they don’t qualify to come near Steve Jobsor Nandan Nilekani. They are not per se creators of wealth. They are enormously successful extractors of wealth.

Finance is not a productive industry. Karl Marx was right. Finance performs a function. It circulates value created by labour and in the digital age from other productive activities. Banks and Credit systems don’t produce wealth or create value. People create value.

Gotabaya Rajapaksa knows it very well. He has outsourced the mobilization of people to the monks. He himself is wooing the oligarchs with ‘Eliya’ and ‘Viyathmaga’.

Some Fireside Chatterers had uncompromising views about the world and their place in it. The private sector was efficient. The state sector was inefficient. Why take from the efficient to sustain the inefficient? The complainant went further. The Rs.10,000 salary hike and the reduction of fuel prices was something nobody wanted. The government arbitrarily decided on the fuel price reduction and the salary hike for public servants. By doing so, the state penalized the private sector by raising taxes to pay for those benefits to the ordinary folk who were quite happy to manage on their meagre incomes and never demanded fuel price adjustments in keeping with reduced world market prices.

The Magnate of malls and hospices was sick with the slow pace of progress and wanted a speedier smoother business operation under the benign care of a little dictatorship.

The overarching plea was for a true and genuine Laissez faire economics ecology that assured pro-business, or more precisely more pro big business decision-making.

The theory that markets are good and governments are bad is outdated bunkum. Markets do not regulate by themselves. There is no market mechanism that corrects itself. Human greed has to be regulated by collective societal intervention.

Economic elite domination is nothing new. The timing of the fireside chat and the remarkably candid opinions of the affluent influential of our body politic call for our urgent immediate attention. We ignore them at our peril.

All these plutocrats or oligarchs occupied the front row at the Shindig at the Shangri-La a few months ago. The Call for decisive policy shifts for a growth oriented economic surge is no empty rhetoric.

The government that replaced the autocracy on the promise of a reform agenda is crippled by the boondoggle linked to treasury bonds. It cannot match or has so far failed to match the ‘Spinfluence’ of the dictator waiting on the wings.

Nothing said at the fireside chat should surprise the average citizen. The political preferences of the wealthy transcend party allegiances and all participants were happy campers under the earlier dispensation.

Free speech was not their priority. The call for a dictator is no slip of the tongue. To them a strong man at the helm is not only business as usual but business getting better than before.

The anguished call for a little dictator by the fireside chattering class is not unusual. History offers us precedents. Karl Polyani the Economic Historian and sociologist predicted it in his classic work ‘The Great Transformation’ which has now been reprinted with a foreword by Joseph Stieglitz and an introduction by Fred Black, Professor of Sociology, University of California-Davis. Karl Polyani has said it for all time.

“The moment would come when both the economic and the political systems were threatened by complete paralysis. Fear would grip the people, and leadership would be thrust upon those who offered an easy way out at whatever ultimate price. The time was ripe for the fascist solution.”

That is what the fireside chat revealed. The plutocrats wept over the paralysis of the political and economic systems. Are they right? Is the time ripe for a fascist solution?