With all due respect to Karl Marx, there is one situation in which the tragic history of the past does not repeat itself as farce; and that is in the annual cycle of meetings of the World Economic Forum. Every year there are a few voices that try to call attention to the repeating tragedy. Last year one of those voices even had the privileged position of being the final speaker on the agenda. Archbishop Desmond Tutu used this particular bully pulpit to instill this congregation of the rich and mighty with at least an iota of shame:
We spend billions on banks when we know that a fraction of this money could save all the children in the world.
A year on probably the only thing that has changed is that there are more needy children in the world, and the same is likely to be true of the adult population. So what, then, is on the minds of the rich and mighty as the start to pack their bags for Davos? As usual, one can expect a reasonably good "insider's view" from the Financial Times; and yesterday offered a report complied by Chrystia Freeland in New York, Gillian Tett in London, and Tom Braithwaite in Washington. Unfortunately, the opening paragraphs tell us all we need to know:
Senior Wall Street bankers heading to the World Economic Forum will use the meeting in Davos to lobby regulators against a rigorous implementation of Barack Obama’s plan to cap the size and trading activity of banks.
They will also oppose the break-up of large financial institutions and insist there should be a concerted effort to tackle the “too big to fail” issue by other regulatory means.
“It’s not about being too big but about the interconnections,” said one banker. Executives said they would push quietly against the reforms to avoid giving the US president the “fight” he promised last week.
Even the current Chancellor of the United Kingdom, almost in defiance of the very name of his political party, seems to be siding with the banks on this issue.
Still, that quote from the anonymous banker gets to the heart of the matter. When things are good, people enjoy the benefits of those "interconnections," even if they appreciate them only at the lowest level of paying bills through the computer. When things go bad, however, people are only satisfied when they can engage with other people; and being connected by telephone to a call center operator reading from a script in a language that (s)he may not understand very well is not just a poor excuse for engagement, it is a disgusting one.
Recently The Nation ran an editorial inspiring us all to close our accounts in these mega-banks and move our business to the local level. This was a nice bit of out-of-the-box thinking; and I wish it could be followed. When we moved to Palo Alto our first mortgage was with a California-based bank. This bank was definitely on a scale larger than that of our neighborhood, but the individual branch offices were still highly personalized. In a few years, however, that bank was absorbed into a larger one, which was, itself, absorbed when the economic crisis was at its worst. Not only is it hard to follow The Nation's advice; but, even if you can find such a local bank, can you count on it still managing your assets a year from now?
The idea that current economic problems reside in most of the underlying institutions and that only wholesale reform of those institutions can get us out of the woods has few supporters. (In other words the move towards economic reform is in the same dire straits as the move to reform health care.) The one voice that defends reform seems to come from George Soros, quoted in the Financial Times report as supporting change that "would certainly mean the end of Goldman Sachs as we know it." Presumably, Soros will be in Davos this year; but it is hard to imagine that anything he would say would succeed where Tutu failed to register. The risk that "business as usual" may very well lead to "no business at all" if corrective measures are not applied is simply not part of the mathematical models that are served up as the Kool-Aid of the World Economic Forum.