The Real Reason for the Global Crisis

The pittance made by millions of people in poor countries frying goreng pisang or cha kiw tiu are accumulated together in taxes and license fees, paid to cronies in monopolized contracts and tenders and then spent on expensive luxury goods from rich countries – hence subsidizing the people and economy of rich countries. 

By batsman

Forget the convoluted economic and financial theories advanced for the current global economic crisis. Let’s get back to basic tacks and nails. 

For ages now, companies compete by computerizing and mechanizing. This is because computers and machines are cheaper, more powerful, more productive, faster, more reliable and give less problems compared to human labour, with the proviso that there are a few very talented and very smart people looking after these machines. 

This should not be a surprise since even people need very smart and very talented others looking after them and if you still think that machines lose out by being less flexible than humans, try talking to a tough trade union boss. 

With the strong trend that world population keeps ever increasing and capitalist competition pushing production to use more machines and less people (even China is reported to be running short of labour and may be forced to rely more on machines), the rich countries have huge sections of their population who are redundant or under-employed including some who do very little except attend tennis tournaments and watch yacht races even in this climate of global gloom. I am not surprised if only 10% of the people of rich countries are really productive. 

This is becoming more apparent as industries and farms of the rich countries now need more and more subsidies while in the finance and hi-tech sectors, people demand and get bigger and bigger bonuses and other perks. Yet all people in the rich countries spend beyond their productive capacities. 

This situation can only exist if the poor countries are willing to be ripped off and be exploited not only in terms of humans trafficked (legally or illegally) to the west and working in the filthiest and most dangerous jobs and illicit trades but also in terms of legitimate trade. A pair of shoes made in the US costs 10 – 50 times that made in a poor country even if roughly the same quality (though perhaps better looking) while a banana (of equal quality) may actually be cheaper in the US than in the country where it is grown. 

Of course not everything is expensive. Massive factories are capable of producing goods dirt cheap. In the old days, some of the manufactures of the rich countries were so cheap that poorer countries were no longer able to compete and had to de-industrialize – retreat back into backward agriculture and grow rubber, bananas or indigo to supply both factories and people in the west as well as export humans as servants and low paid labour. (In some places, poor people even kill their own and boil down the fat of the dead and sell the fat for a few thousands of dollars a kilo to the rich west to make cosmetics and beauty creams – apparently these poor people are worth more dead than alive.) However, with the rise of China and India, the tables seem to be turned somewhat which makes even more people in the rich countries redundant or under-employed. 

Still, the rich countries control finance. Countries such as Iceland which have refused to honour their debts manage to ward off the vultures. On the other hand, imagine Malaysia being unable to pay its debts. What miseries await! Britain is printing money yet is able to defend its currency against a run. All this is possible because they control and monopolise international finance. 

Imagine a fanciful scenario where if subject to free market forces, the British pound is worth RM2.00, but owing to their influence and control of international finance, British banks are able to ask for RM4.53. This means that countries which wish to trade with Britain are screwed RM2.53 in every British pound especially when they demand to be paid in their currency while they pay you in yours. In a sense this makes real the virtual and imaginary value demanded for the British pound. Is this also one of the ways in which poor countries subsidise the rich while the rich connive and help each other out? Is this what the Chancellor of the Exchequer talks about when he visits the Finance Minister of Germany? You scratch my back now and I will scratch yours at a future date? You help me and I will help you? Unfortunately this may also mean that Iceland will have to re-pay favours – perhaps by admitting defeat in the Cod Wars. 

You might well ask why people in poor countries are so stupid. Consider that there is almost always an oppressive comprador class in poor countries propped up by western interests. These people are corrupt, sinful, abusive and arrogant and are inevitably the ones that buy shoes made in the US as well as submarines made in France and fighter jets made in Russia and the US while doing a trade in old jet engines with countries such as Uruguay and centrifuge parts with Libya. Not only that, quite a few will never be seen dead except in a Mercedes Benz or BMW while their wives and children never shop locally but organize shopping trips to Singapore, Dubai, Hong Kong, London and Paris. 

Imagine a humble leader who not only uses locally made products and eats in the corner nasi padang gerai but encourages his people to do the same. Western interests will not only not prop him up but may even boycott him and there have been worse things done to less humble, bloody-minded and independent leaders. Of course those who are dead (such a Gandhi) will be honoured in a hypocritical way, but their values and what they fought for will be ignored and silenced. 

So it is that the pittance made by millions of people in poor countries frying goreng pisang or cha kiw tiu are accumulated together in taxes and license fees, paid to cronies in monopolized contracts and tenders and then spent on expensive luxury goods from rich countries – hence subsidizing the people and economy of rich countries. 

These are some of the reasons why the global crisis is proving so reluctant to go away. The western economies are subsidized by poor countries and many of the poor countries can no longer cope with the load. The world is turning more violent with the desperation of the poor and starving and this has disrupted the gravy trains heading towards the west to a large extent. This has happened before – notably just before the 2 world wars and dozens of colonial wars before that on more or less a bigger or smaller scale. 

At the same time, some poor countries have now become very rich and are actually sucking out wealth from the older rich countries. This creates even more problems for the old rich countries since not only are the formerly poor countries no longer subsidizing the economies of the rich countries, they are actually sucking out wealth from the older rich countries. At this time, however, some form of subsidy or trade-off still exists and these formerly poor but now rich countries try to buy treasury bonds of the old rich countries and thus continue to subsidise some of the spending of these countries (both on development and social welfare as well as waging brutal war in Afghanistan and Iraq). These newly rich countries are being drawn into the exclusive “You help me, I help you” culture, doubtless having to tolerate some ragging or hazing in the process. 

In addition some middle income countries such as Greece and Spain which tried to copy blindly the methods of the rich countries and got into trouble are now unable to contribute to the gravy train. 

This does not mean that everyone in rich countries is unproductive. There are lots of very talented, very skilled, very hard-working and very smart people still (including some very smart ones trafficked out of poor countries for their brains). However the global crisis is a reflection of the fact that the extra weight pulled by these smart people no longer compensate for the dead weight of the people who have to be subsidized. 

This phenomenon raises another big problem – that of stratification of society into smart and stupid people. New classes are being formed and the smart are forming into a new elite class. Many studies have been done in Britain that show there is very little social mobility in Britain. In the US too, I suspect social mobility created by its past raw productivity has slowed a great deal. 

The world is not equal and not democratic because smart people will always be able to get more than stupid people even if the stupid people are more numerous and have more votes. E.g. 40% voter turnout is a good figure in the west. This just means that many poor and marginalized people (yes, even in the west) no longer bother to vote. In addition there are plenty of poor people willing to put their support behind corrupt, sinful and abusive but relatively smart people in the hope of getting more subsidies and jobs as is common in all countries including ours. 

This problem of dissuading smart people from forming into a new class of elites divorced and alienated from the poor and stupid at the same time looking down upon and manipulating them is a very big one. People who claim to be leaders and Tuan must wrestle with this problem. Trying to be Tuan in the old mould that UMNO promotes is being domineering, bullying and arrogant – grabbing riches by force and corruption. Being Tuan who wrestles with the problems of society and doing one’s best for the country and what’s right for the people is another matter. 

It may be said that sacrificing one’s own self-interest and helping others may be a stupid act, but consider this – how much more stupid one is to subsidize the people of the rich world by creating a ruling elite that goes for status and arrogance? 

I suppose this is still OK if the westerners are grateful, but instead they instinctively recognize stupidity (this ability of the westerners include recognising other clues such as hiring Zionist consultants to make tin pot dictators and their wives look as if they have arrived and are on par with the other rich of the world) and the west thus feel free to denigrate Muslims, forcefully use their laws to stop Muslims from practicing their own culture and blockade Gaza. As RPK says – it is not only the non-Malays who prostitute themselves and enjoy being screwed (while wearing jewels and clutching Luis Vuitton bags – my additions heeheehee) who are bodoh, but some Melayu UMNO are really bodoh as well.