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Raffique Shah


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Collapse of 'Reaganomics' and 'Thatcherism'

By Raffique Shah
September 28, 2008

Over the six decades I've been on this here Earth, more so during the latter four, I have learned to be wary of the very wealthy. Not all, mark you, but most. Some decent people earned their millions through sheer hard work and wise choices. Others educated themselves and used their professions to become rich. Among the aforementioned, you usually encounter nice men and women who just happen to be rich, and who see their wealth as a means to live comfortably, even to help the less fortunate in their communities and countries.

I detest those who, by whatever means, usually foul, found themselves swimming in money, and who generally have much more dollars than they do sense. They believe their wealth automatically elevates them to fountainheads of knowledge and wisdom. They behave boorish when they are drunk, which is most times. Worst of all, they feel their money gives them the right to urinate or defecate on us lesser mortals. I tended to react quite violently to this lot, as those I encountered over the years, especially during my earlier life, will admit.

I got around to thinking about the local "Dollarati" as I watch with great interest developments in the global financial crisis. In the USA, where the free market system was proclaimed the unholy grail to capitalist growth, big bankers are begging the government to bail them out to the tune of hundreds of billions of dollars. In Britain, a few smaller banks have collapsed, but fears are rising that many more could go down the drain soon. The dollar-plague has also infected Europe. I read today (Friday) where Ireland, which was seen as a model of capitalist-steriod-super-growth, has fallen into recession. The latter is pronounced after two quarters of negative growth-don't ask me how the economists worked out that formula.

I know this is a serious crisis. It has the potential to affect the world, T&T included. Still, I can't help but burst into guffaws when I reflect on the genesis of the crisis, which did not begin last year. It was Ronald Reagan who invented "reaganomics", and Margaret Thatcher, whose showpiece came to be named "thatcherism". What these two promoted when they ruled the world, almost literally, was privatisation as the panacea to all their countries' economic woes. They all but formed a club of free-enterprise acolytes around the world, including here in the Caribbean.

In both cases, Reagan and Thatcher sold off everything the state owned. In Britain Thatcher privatised the postal service, schools, public transport, hospitals, airports, airlines. If she'd had a few more years in office, she might have privatised the monarchy! Reagan, meanwhile, was busy dismantling the health system that had served Americans well. He sold off any and every thing the government owned. The mad selling-spree was inherited by their successors, the most startling being George W privatising warfare! Truly! There are more mercenaries (they call them contractors, but what's the difference?) in Iraq and Afghanistan than there are men and women in uniform.

Blackwater's mercenaries earn many times what regular soldiers do, they are not restrained by military codes, they cannot be court-martialled, and they can fire the job whenever they choose to.

While all of this load shedding of state enterprises was taking place merrily, across the globe, everyone, especially the wealthy, swore that Reagan and Thatcher were godsends. Our Caribbean leaders became not acolytes, but bishops of free enterprise. They wanted to outdo the architects of this system, especially after the Soviet Union collapsed, and socialism was classified a cuss-word that went extinct with the fall of the Berlin Wall.

Now capitalism has turned upside down: mega-banks, the very symbols of free enterprise, are collapsing like ninepins all around us. Worse, they are begging the very people they fleeced as they enriched themselves, to rescue them. In America's case, Bush wants US$700 billion to bail out bankers who, up to a few months ago, earned many millions a year in salaries, and even as they led the institutions down the path-of-no-return, got bonuses that boggled the ordinary mind. "Help!" they bellow. "If we go down the drain, you do, too!"

As I write (Friday), I don't know if the lawmakers Bush summoned to Washington will agree on the gargantuan bailout he is seeking. Ordinary Americans are understandably angry. When you were making your millions off us, they scream, you gouged out our eyes, charged us all kinds of spurious fees, and now you want us to help you? Madness, they shout, from all sides of the political fence. Barack Obama and John McCain are in a pickle. If they support the bailout, they will alienate more voters than they will win. If they allow market forces to work, and the institutions collapse, America will plunge into depression.

No new president wants to start his term in office labouring to lift his country from its knees. In the UK, Gordon Brown faces political death. Europe is trembling with fear. The Far East is buckling at the knees. Only the smart will survive this crisis.


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