Why Obama’s Regulators Let Wall Street Bankers Off Easy
If there’s anything more maddening than the sheer scale of the financial fraud that sent America and the rest the planet spiraling into the economic abyss in 2008, it’s the fact that no Wall Street bankers have gone to jail for causing the mess. As in zero, zilch, none at all.
So at his farewell party last month to celebrate a lengthy career at the Securities and Exchange Commission (SEC)—the US regulatory agency that supposedly keeps Wall Street in check—James Kidney, a trial attorney who had been hamstrung for years by indifferent bosses, broke his silence and went off on an awesome rant about how no one in the financial sector fears the body supposedly policing their behavior. The SEC, in essence, is a joke.
Describing it as “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney told an audience of fellow employees that they had dropped the ball because of a revolving door of corruption between the SEC and Wall Street megabanks. “I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket. They mouthed serious regard for the mission of the Commission, but their actions were tentative and fearful in many instances,” he said.
The research project is based on a new cross-disciplinary ‘Human And Nature DYnamical’ (HANDY) model, led by applied mathematician Safa Motesharri of the US National Science Foundation-supported National Socio-Environmental Synthesis Center, in association with a team of natural and social scientists. The study based on the HANDY model has been accepted for publication in the peer-reviewed Elsevier journal, Ecological Economics.
It finds that according to the historical record even advanced, complex civilisations are susceptible to collapse, raising questions about the sustainability of modern civilisation:
“The fall of the Roman Empire, and the equally (if not more) advanced Han, Mauryan, and Gupta Empires, as well as so many advanced Mesopotamian Empires, are all testimony to the fact that advanced, sophisticated, complex, and creative civilizations can be both fragile and impermanent.”
Evolution of Civilisations: Prelude to Collapse (1)
By investigating the human-nature dynamics of these past cases of collapse, the project identifies the most salient interrelated factors which explain civilisational decline, and which may help determine the risk of collapse today: namely, Population, Climate, Water, Agriculture, and Energy.
These factors can lead to collapse when they converge to generate two crucial social features: “the stretching of resources due to the strain placed on the ecological carrying capacity”; and “the economic stratification of society into Elites [rich] and Masses (or “Commoners”) [poor]” These social phenomena have played “a central role in the character or in the process of the collapse,” in all such cases over “the last five thousand years.”
Evolution of Civilisations: Prelude to Collapse (2)
Currently, high levels of economic stratification are linked directly to overconsumption of resources, with “Elites” based largely in industrialised countries responsible for both:
“… accumulated surplus is not evenly distributed throughout society, but rather has been controlled by an elite. The mass of the population, while producing the wealth, is only allocated a small portion of it by elites, usually at or just above subsistence levels.”
The study challenges those who argue that technology will resolve these challenges by increasing efficiency:
“Technological change can raise the efficiency of resource use, but it also tends to raise both per capita resource consumption and the scale of resource extraction, so that, absent policy effects, the increases in consumption often compensate for the increased efficiency of resource use.”
Productivity increases in agriculture and industry over the last two centuries has come from “increased (rather than decreased) resource throughput,” despite dramatic efficiency gains over the same period.
Modelling a range of different scenarios, Motesharri and his colleagues conclude that under conditions “closely reflecting the reality of the world today… we find that collapse is difficult to avoid.” In the first of these scenarios, civilisation:
“…. appears to be on a sustainable path for quite a long time, but even using an optimal depletion rate and starting with a very small number of Elites, the Elites eventually consume too much, resulting in a famine among Commoners that eventually causes the collapse of society. It is important to note that this Type-L collapse is due to an inequality-induced famine that causes a loss of workers, rather than a collapse of Nature.”
Another scenario focuses on the role of continued resource exploitation, finding that “with a larger depletion rate, the decline of the Commoners occurs faster, while the Elites are still thriving, but eventually the Commoners collapse completely, followed by the Elites.”
In both scenarios, Elite wealth monopolies mean that they are buffered from the most “detrimental effects of the environmental collapse until much later than the Commoners”, allowing them to “continue ‘business as usual’ despite the impending catastrophe.” The same mechanism, they argue, could explain how “historical collapses were allowed to occur by elites who appear to be oblivious to the catastrophic trajectory (most clearly apparent in the Roman and Mayan cases).”
Applying this lesson to our contemporary predicament, the study warns that:
“While some members of society might raise the alarm that the system is moving towards an impending collapse and therefore advocate structural changes to society in order to avoid it, Elites and their supporters, who opposed making these changes, could point to the long sustainable trajectory ‘so far’ in support of doing nothing.”
However, the scientists point out that the worst-case scenarios are by no means inevitable, and suggest that appropriate policy and structural changes could avoid collapse, if not pave the way toward a more stable civilisation.
The two key solutions are to reduce economic inequality so as to ensure fairer distribution of resources, and to dramatically reduce resource consumption by relying on less intensive renewable resources and reducing population growth:
“Collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion.”
The NASA-funded HANDY model offers a highly credible wake-up call to governments, corporations and business – and consumers – to recognise that ‘business as usual’ cannot be sustained, and that policy and structural changes are required immediately.
Although the study is largely theoretical, a number of other more empirically-focused studies – by KPMG and the UK Government Office of Science for instance – have warned that the convergence of food, water and energy crises could create a ‘perfect storm’ within about fifteen years. But these ‘business as usual’ forecasts could be very conservative.
“"The New World Order under the UN will reduce everything to one common denominator. The system will be made up of a single currency, single centrally financed government, single tax system, single language, single political system, single world court of justice, single state religion…Each person will have a registered number, without which he will not be allowed to buy or sell; and there will be one universal world church. Anyone who refuses to take part in the universal system will have no right to exist.”
Hlebo explores manifold incidences of crisis in a globalized society: insurrection, economic collapse, the Anthropocene and authoritarian control. With urgency befitting of the subject matter, Hlebo interrogates the media’s role in crisis creation and propagation, whilst highlighting possible trajectories from our present course.
Courtesy the artist and Edel Assanti, London.
See Jesse Hlebo’s SculptureNotebook Featured Artist posts here.
When you total up all forms of debt including government debt, business debt, mortgage debt and consumer debt, we are 59.4 trillion dollars in debt. That is an amount of money so large that it is difficult to describe it with words. For example, if you were alive when Jesus Christ was born and you had spent 80 million dollars every single day since then, you still would not have spent 59.4 trillion dollars by now. And most of this debt has been accumulated in recent decades. If you go back 40 years ago, total debt in America was sitting at about 2.2 trillion dollars. Somehow over the past four decades we have allowed the total amount of debt in the United States to get approximately 27 times larger. This is utter insanity, and anyone that thinks this is sustainable is completely deluded. We are living in the greatest debt bubble of all time, and there is no way that this is going to end well.