From Tunisia to America - From Jasmine to Rose?

A confession upfront - the title is not an original one. In fact it is an inspiration from a provocative piece titled Is America the New Russia in the Financial Times by Martin Wolf on April 14, 2009.

In turn, this article was extending the debate initiated by Simon Johnson, former chief economist at the IMF and a professor at the prestigious MIT in May 2009, issue of Atlantic Monthly.

Commenting on the 2008 financial crisis in the US, Johnson had warned that "elite business interests - financiers, in the case of the US - played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse".

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"More alarming," he points out as how "they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive".

Needless to emphasize, "they" refers to the US financial sector.

Finding fault with both sides of the political divide in the US, Johnson adds: "Even though some are traditionally associated with Democrats and some with Republicans, they all benefited from the financial sector."

Again, "all" refers to the ruling elites within the US.

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No wonder, Obama or Bush, senior or junior, Clinton or Reagan or for that matter Democrats or Republicans make no difference to this oligarchy.

Simply put, the US financial sector not only dominates the US economy, it also in effect controls the US politics, policies and programmes.

It is in this connection Johnson adds: "Several other factors helped fuel the financial industry's ascent. Paul Volcker's monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative."

In short, at every turn of the policy initiative by the US government during the past three decades, it would seem that there was one single beneficiary - its financial sector.

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Johnson adds "the invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on."

Succinctly defining the entire paradigm as a "policy by deal," Johnson charges the financial sector of conspiring to even have acquired "a veto over public policy" in US.

Naturally, when Bear Stearns was sold to JP Morgan Chase, Johnson calls it "a gift to JP Morgan" by the US establishment.

And for the uninitiated, the New York Federal Reserve (which had the CEO of JP Morgan as a Board member) along with US Treasury brokered that deal.

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And remember, we are not talking about a banana republic - we are talking about the US.

Obviously, all this has extraordinary ramifications not only for the US but to the entire world.

Despite overwhelming evidence that it is the global financial system - read US financial system - that is at the root of the extant global economic crisis, we are sceptical even in critiquing it, much less blaming it.

Instead, we invariably end talking of autocrats in the Middle East, of totalitarian regime in China, of failing democracies in South Asia, of crony capitalism in Far East, of despots in Latin America, dictators Africa and of rogue regimes elsewhere.

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In the process little do we realize that democracy in US has been completely hijacked by its financial sector - so much so it can well be described as one that is by financial sector, for financial sector and of the financial sector.

The Jasmine revolution, if one may recall, refers to the mass-uprising in Tunisia which ultimately led to the fall of its President Ben Ali.

Simultaneously, it spread to several Arab countries including Egypt, Algeria, Bahrain, Syria, Yemen, Morocco and a host of other countries, including according to some, parts of China.

Recent protests against corruption in India were also seen as a version of Jasmine revolution sweeping the world.

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Last week it claimed yet another victim in the Arab world - the Libyan dictator, Gaddafi.

The Jasmine revolution (Jasmine is the national flower of Tunisia) was sparked by the self-immolation of a street vendor in December 2010 in Tunisia which ultimately led to the collapse of the Ben Ali regime there.

What went wrong in Tunisia or for that matter in the Arab world? Is it a question of suppressing individual liberty or bad economics?

Perhaps both.

Sara Hanafi, an associate professor of sociology at the American University of Beirut, captures the entire issue in the proper perspective when he states that the issue of unemployment and skewed economic growth in Tunisia was interlinked to a host of issues including dignity and freedom of its citizens.

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Quite rightly he points out is that there is a close relationship between bread and freedom.

No wonder, Tunisian youth considered their livelihoods to be connected to freedom of expression.

Crucially, all this lead to a huge disparity of wealth and living standards in Tunisia - where northern Tunisia and its capital was prosperous (referred to as Tunisian economic miracle by the western media) in stark contrast to interior and southern Tunisia.

"We are mainly protesting social and economic inequality, corporate greed, and the power and influence of corporations, particularly from the financial service sector, and of lobbyists, over government."

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"We are the 99 per cent" they say referring to the difference in wealth between the top one per cent and the other citizens.

And if you thought I am quoting someone from Tunisia or Arab world, hang on. I am speaking of the latest protests in the US aptly christened "Occupy Wall Street" or simply OWS.

From Jasmine to Rose?

According to Adbusters - a Canadian Activist group - a primary protest organizer, the central demand of the protesters is that Obama should "ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington".

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In short, it is all about excessive influence of big business and the wealthiest one per cent on US economics and politics.

Some protesters go to the extent to say that the office of the President of US has become irrelevant, and that the "99 per cent" should lead and inspire change.

And if you thought that the protests were limited to the Wall Street, kindly think again.

These protests have got the imagination of people from London to Rome and from Athens to Frankfurt.

And believe me; these are advanced countries where the standard of living is infinitely better than in any developing economies.

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But why are they protesting?

Let me put the entire issue in proper perspective. If the US financial sector never earned more than one-sixth of the entire domestic profits till the 80s it averaged more than 40 per cent in the first decade of this century.

This disproportionate level of profits meant it wielded enormous clout over American politics and economics.

That meant, economic prosperity at a national level did not necessarily translate into prosperity at an individual level.

And therein lies the rub.

Often it was commented that what was good for General Motors was good for America.

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That was long back.

Now what is good for Wall Street is good for America. Ergo, OWS is not merely a protest against Wall Street or for that matter the firms that dominate the US financial sector, it is in effect against the American system - one where the entire system is corrupt.

What has incensed the average American is that the system is extremely skewed in favour of Wall Street - where players take extraordinary risks using the money of the average American where profits are privatized and losses nationalized.

Subsequently, bailouts are orchestrated by those who caused the losses in first place.

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Americans who were swayed by the eloquence of Obama now realize that he was extraordinarily eloquent, no doubt, but without any grand ideas to fix the US economy or its financial sector.

When quizzed by the press as to why none of the Wall Street executives were prosecuted by his administration, Obama is reported to have quipped: "One of the biggest problems about the collapse of Lehman's and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn't necessarily illegal; it was just immoral or inappropriate or reckless."

Dr Manmohan Singh seems to be made of sterner stuff.

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Well the person who promised to fix the system instead seems to have been fixed by the system.

Obama the lion who roared and promised to set right things is seen increasingly as a pussy cat who is now an unabashed apologist for the US financial sector.

And that explains why people have taken to the streets even in US.

But are comparisons between Tunisia and America odious? Possibly yes.

But that is on a superficial examination of issues. Scratch the surface, one can find remarkable similarities.

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If the insensitivity of the despots triggered the Jasmine revolution in the Arab world, OWS is a protest against the oppression, tyranny and domination of the global financial system.

And both are unaccountable, and make merry on ordinary people's money till people decide otherwise.

Only time will tell whether OWS would become a full-fledged revolution. Should it happen we can christen it as the rose revolution.

Incidentally rose is the flower of US.

The author is a Chennai-based Chartered Accountant. Comments can be sent to mrv@mrv.net.in