“If you want a vision of the future, imagine a boot stamping on a human face — forever.”
— George Orwell, “Nineteen-eighty-four”
Physical oppression is one thing, but it is the unchecked indulgence of human greed that is at the root of most of the world’s woes.
And that includes the relentless lobby of wealthy financiers to protect their reckless ways, even in the wake of the 2008 economic meltdown.
Feels like a constant kick in the head, sometimes.
First, the problem, best exemplified not by the notorious shenanigans of American banks and investment firms, but by those on the tiny island nation of Iceland.
Iceland was doing quite well during the 1990s. It had built a comfortable economy based primarily on resources, and it was living within its means. It was touted as a model of success, particularly by former premier Danny Williams, who felt Newfoundland could learn from Iceland in its own efforts to gain more economic self-sufficiency.
When Iceland’s banking sector went up in smoke in 2008, Williams’ critics wasted no time rubbing it in his face. It didn’t help that Williams, like Iceland’s politicians, was exceptionally boastful about the ability of such small economies to thrive in an era of radical globalization.
But Iceland’s woes were not caused by its core economic policies prior to 2001. They were caused by the abandonment of government control over financial investment when banks were deregulated in that year.
To read the glowing reviews of Iceland’s subsequent boom, you’d think the new banking structure was a raving success. In fact, it was a ticking time bomb.
Free of restrictions and full of hubris, the country’s banks took advantage of low interest rates to borrow billions from foreign sources, artificially bloating the nation’s wealth and creating a new generation of young fat cats who felt they were invincible.
When the house of cards tumbled down in 2008, Iceland’s collapse would become the most dramatic in history for an industrialized nation.
Iceland, therefore, is like a microcosm of the world’s economic woes. It’s like a passion play, spelling out in two short acts how an unregulated financial system can literally destroy a country.
In the U.S., despite being plunged into its own major recession and still foundering in a sea of debt, that lesson still escapes many of those in power. And the forces of resistance against stricter controls are stronger than ever.
Last month was the first anniversary of the so-called Dodd-Frank bill being passed into law. The lengthy act was supposed to implement wide-ranging restrictions to protect consumers from irresponsible investment practices.
As it turns out, the wording of the act is plagued with vague language and regulators have missed countless deadlines for setting up watchdog agencies and establishing rules.
According to the New York Times, 90 per cent of the regulations remain incomplete.
To complicate matters, banks and investment firms are still fiercely lobbying Washington insiders in an attempt to water down any new regulations.
And Republican lawmakers have been pushing to keep the Securities and Exchange Commission on a shoestring budget, further hindering its efforts to keep up with the vast requirements of Dodd-Frank.
To concerned citizens, it must surely feel like yet another boot to the face.
And, as the debt ceiling showdown last week demonstrated, it’s not only U.S. citizens that should be concerned. The sabre-rattling in Washington caused markets to ripple the world over.
The perils of greed come in all shapes and sizes, from island nations to world superpowers. But the solution is always the same: don’t give it free rein.
If we do, we have only ourselves to blame.
Peter Jackson is The Telegram’s commentary editor, email: firstname.lastname@example.org.