The Hindu Business Line : New market structures

Can we solve the present economic crisis by launching ‘a new moral crusade to shame corporations into social responsibility,’ or by building ‘big bureaucracies to micromanage them’? No, we can’t, says Daniel Friedman in Morals and Markets: An Evolutionary Account of the Modern World ( www.landmarkonthenet.com ).

Neither is the answer simply to let the global markets rip, he adds.

“There is a better way forward: to experiment, test, and build new market structures on proper moral foundations.”

Friedman is positive that morals and markets are adaptable and, with some patience and care, they can accommodate each other.

“Morals have already undergone two major transitions, at the dawn of civilisation and again at the dawn of the modern era. The transitions wove new elements into the moral code but did not eliminate the old – for instance, egalitarian impulses remained even as we became civilised.”

So, to solve the financial meltdown, do we need a third moral transformation? No, a little readjustment of existing elements should do just fine, advises the author.

Remaining elements of honour – especially young people’s eagerness to fight corruption and willingness to sacrifice for greater good – are tremendous resources that could be better brought to bear on our problems, he guides.

The author cautions that profit motive, which is like an ever-flowing stream, can, if unattended, erode the social fabric and the environment, whereas good ground rules can channel competition to serve the public purpose.

“The rules must be readily enforceable by the rule of law (or nearly so, with a nudge from conscience or peers), and ensure that everyone profits most by creating value.”

Imperative read, to rekindle hopes of healthy recovery.

Take control

Shazam! Abracadabra! These may be the words that magicians use for introducing an extraordinary deed, story or transformation, but if you are in a financial mess, with debt sharks in hot pursuit, the two magic words you would need are ‘take control,’ counsels Kevin Trudeau in Debt Cures (Equity Press).

“We get angry, and the two words that we want to say cannot be printed in this book. Swearing at your banker or creditors may release some tension, but it does not have any real effect on improving your finances. The way to take charge is take control,” he elaborates.

At times, your debt can be due to identity theft – a real threat, as the author observes. His suggestion, apart from the obvious tips, is to invest in an inexpensive home shredder.

“Any receipt or statement with your personal information should be shredded.”

And to those who do online commerce, his nuggets of advice include: “Always log off when you have finished your online banking or credit card transaction. Only use your own computer to do your personal financial business. Do not use the computer at the public library; do not use your laptop on the free wireless network at the coffee shop or the bookstore. Don’t click on pop-ups…”

Ready takeaways.

Battered ‘bullnomics’

Looking back at the ruins of the financial world, Kevin Phillips wonders if the US could have had less bull, less bubble, and certainly a less complete breakthrough of its financial sector into its twenty-first century digitalised nirvana.

“But so promoted, and in less than half a century, finance has ascended from its image as a mistrusted casino (a memory from 1929) to secular altar, from emotional cockpit to Efficient Market… Hedge funds were useful participants, erudite citadels of PhDs and professors. Derivatives, even though mere fifteen- to twenty-year-old conceptual adolescents, were, well… as safe as houses,” recounts Phillips in Bad Money: Reckless finance, failed politics, and the global crisis of American capitalism ( www.penguin.com ). ‘Bullnomics’ is the name he gives to ‘the exaltation of financial markets as a rational and safe underpinning for public well-being and the stewardship of a leading world economic power, and then as a millennial rainbow’s end.’

To him, `bullnomics' is the pied-piping of America toward a misleading financial ideology (the efficiency and reliability of markets), buttressed by a spectrum of dubious thinkers, doctrines, and enablers: `Monetarist economists with their dismissal of government; economic-deregulation enthusiasts; and gurus of the Efficient Market Hypothesis, with its validation of speculators, corporate raiders, assets shuffling, debt, and derivative instruments.'

In a concluding section of the book, the author expects that the `road ahead' will see New York lose ground as an international financial centre, falling behind London. "Over the next two decades, the biggest gainers are foreseen to be Asian, but great expectations are divided among Singapore, Hong Kong, Tokyo, and Shanghai."

Should the US decide to imitate the commitments of high-value-added manufacturers and exporters like Germany, Japan, and Switzerland, some success would be likely, especially given dollar weakness, forecasts Phillips.

Engaging account.

BookPeek.blogspot.com

D. Murali

More Stories on : Books | Book Value | Financial Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page