21 August 2012

Gambling politics and political gambling

Poor people buy lotteries.  Poverty can also be measured by the bets placed on horses or, in these match-fixing, spot-fixing times, on what might transpire in a cricket match: the poor bet less, the less poor, more.  The rich also speculate. Their horses and cricket-outcomes are stocks and shares.  The richer bet more and the less rich, less.  At the bottom end of things it is about helplessness.  At the top end it is unadulterated greed.  

People gamble.  They like to beat the odds.  They do it in investment and they do it when trying to beat a red light.  And when road rules are not obeyed, there are accidents.  Crashes.   The key word, then, is regulation.  Too often those who champion or are fascinated by the idea of ‘free markets’ think or try to make it out that they imply absolutely free and unregulated play.  ‘No Rules’ then is what is thought to be the Golden Rule.  Observers, leash-holders, those who make line-calls and consequently seek to penalize are therefore considered to be spoil sports or worse, rule-breakers (of the Golden Rule, above). 

Now we all know that the word ‘free’ is highly overvalued and when it comes to ‘free markets’ it has a nauseatingly sanitizing flavor.  We know there is no such thing as economy and that the correct term is ‘political economy’.  We know that the law is the will of the ruling class.  What all this means is that unless there are institutional arrangements that ensure that even the given (and naturally flawed/slanted) rules upheld, the power arrangement will determine outcomes. Bucks will flow into pockets preferred for one reason or the other. 

We are not talking about the street-corner lottery seller involved in the political economy of hope, though.  We are talking about the Colombo Stock Exchange and the Securities Exchange Commission.  And we are talking about allegations of insider deals, a down-in-the-mouth bourse, multiple resignations of SEC chairpersons and other senior officials and whispers of speculator-driven policy preferences in a context of exchange rate anxieties, trade deficits and multiple scandals in key sectors of the economy. 

We are talking about an element of the economy which provides companies with access to capital and investors with slices of ownership with potential for profit based on the particular companies’ performance.  Skewed as these processes are in favor of the rich and powerful, delivery of the above in a sustainable manner (i.e. where the predictability so necessary for informed and sensible investment decisions is ensured) requires robust procedural rules and strict regulation. 

We are talking about speculators looking for quick and big bucks dressing up and being treated as serious investors who understand the importance of solidity for long term engagement and profit-making. We are talking about ample examples of quick-buck czars running riot, artificial booms, natural deflation, disturbing levels of foreign outflows and severe cash shortage.  Sobriety clearly was the need of the hour.  Pandering to gamblers was not. 

Where disputes arise between player and umpire, and where the umpire has unimpeachable integrity, the third umpire or match referee must err on the side of the latter.  The gamblers appear to have won the day.  The political has sidelined the economic in the overall political economy of speculation/investment.  Not seasoned and far thinking politics but politics of the eda-vela type, i.e. ‘today’s mean’, one might add.

The management of the economy is more serious than a matter of tiding over bad times by any means necessary.  Indeed this ‘waiting till the proverbial rahu kaalaya is over’ business is quickly becoming the signature of policy design in all sectors. 

There is no getting away from the fact that capitalism is about theft and preying on vulnerabilities.  The political problem here is not about the relative worth of economy systems but the danger of giving a free hand to two-bit gamblers to engage in legalized theft and plunder.  It is a political gamble by the Government.   And that is not ‘speculation’; it is staring-in-the-face fact.   

[The Nation Editorial, August 19, 2012]