#08: Can deregulation, banks, and money help me to find happiness?

What happened before: After their unexpected encounter on a dark, cold night in Toronto, Cheeky C and Great G decided to embark on a journey, each unknowingly with different destinations in mind. Cheeky C wants to discover her identity and purpose, while Great G aims to realize a vision of global health through the world of finance. The next day, they wander through Toronto, hoping to find initial clues. Bewildered, Cheeky C begins to question things that seem natural to us. At the lakeshore of Lake Ontario, she learns some facts about the power of banks and money that she had never considered before…

During her talk, Great G suddenly remembers the days when she learned about the global political economy as a student during her exchange semester in Toronto, at York University. The university’s colours were red and white, just as the colors of the sunken paper ship minutes ago. Those days were mind-blowing for me, she thinks. If you can understand the international monetary system and its changes in history, you can understand a lot more in this world.

She pulls herself back to reality, Cheeky C’s expectant eyes on her, thirsty for knowledge. ‘The collapse of the Bretton Woods system in the 1970s – the US-led institutional setup for a stable monetary order after WWII – marked a drastic change in the global economy and international monetary system. Both have been increasingly deregulated since then, under the ideological umbrella of what scientists call neoliberalism and the Washington Consensus.[1] At the same time, the economic system was put in a privileged position through changes in national and international law that should protect the financial and economic order from any disturbances from outside.’[2]

She shakes her head in amusement. ‘And that’s so ironic – the post-Bretton Woods global economy became deregulated while becoming more deeply embedded in law at the same time… This contradiction can be resolved when we understand that “deregulation” is a myth. In fact, the economy is always heavily regulated – in times of globalization more by international not national law – to make sure it functions for a specific ideologic goal. Currently, this goal is profit maximization of individuals justified as increasing society’s wealth. This argument is questionable and heavily debated among different social groups and players, but let’s keep that discussion aside for another Beaver Tail.’

That’s so ironic – the post-Bretton Woods global economy became deregulated while becoming more deeply embedded in law at the same time… This contradiction can be resolved when we understand that ‘deregulation’ is a myth.

She raises her right hand, as if she was conducting the volume of an invisible orchestra, playing the melodramatic music of world’s past and present in the background. ‘One example of “deregulation” is the market of speculative financial products such as derivatives, the trading of goods based on their estimated future value. The US government deregulated profit-making through speculation on commodity prices (enabled by so-called derivatives) in 2000, when Congress passed the ‘Commodity Futures Modernization Act’. As a result, the derivative market grew massively. Between 1995 and 2012, the total amount of financial derivatives increased by 1700%!’[3]

Great G raises her other hand, increasing the volume and melodrama of the invisible orchestra. ‘And one example of investors’ privilege by law is the extended legal protection of private property. Through the use of patents, companies can now even declare basic goods for human survival, such as seeds or medicines, as their property, strictly controlling who can access and produce them and who not. That power was created through the US-led establishment of the World Trade Organization (WTO) and the Trade-related Aspects of Intellectual Property Rights (TRIPS) Agreement as part of it, criticized for locking in special rights of private capital.’

She pauses and looks at Cheeky C, understanding. ‘Your confused look is okay. Lots of intelligent fancy words, I know.’

‘Well, you said a lot of cool stuff, but you didn’t answer the question.’

‘Yes, because I pretty much enjoy sharing all my fascinating political science knowledge that could make Earth a better place if more people would know and understand it. But we are getting closer, no worries. Pause for a dramatic rise in tension.’

She pauses and brings the palms of her hands together – now it was her turn to smile cheekily. ‘The point is that neither is more powerful per se. It depends. And I encourage you on our journey to look closely at how it really is. Whenever we encounter money and the financial system in our traveling through everyday life, ask yourself where power, most of all the power of change, truly lies. I am sure you will find an answer someday, and I hope world societies will – all our wealth and health are dependent on it.’

‘Wow. I should name you Drama G.’ Cheeky C suddenly looks gloomy, fighting back tears. ‘Right now, I just want to find out who I am in this world… But all we found so far is banks.’

‘And Beaver Tails… Isn’t that something?’ Great G, feeling the sadness of Cheeky C as if it was her own, tries to cheer her small companion up.

‘All the money in this world, all banks together, can’t replace what it means to know yourself. Because they are things from the outside world. But what I need is inside. To know myself, to understand what’s going on inside myself, to believe in myself. To find peace within myself. I wish we could reach that point on our journey.’

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Sources:

[1] Williamson, John. 2002. “What Washington Means by Policy Reform”. Available online from: https://www.piie.com/commentary/speeches-papers/what-washington-means-policy-reform; accessed 01 April 2024.

[2] See Slobodian, Quinn. 2018. Globalists: The End of Empire and the Birth of Neoliberalism. Harvard University Press. http://www.jstor.org/stable/j.ctv24trb5n.

[3] Cf. Abdel-khalik, Rashad, and Po-Chang Chen. “Growth in financial derivatives: The public policy and accounting incentives”, Journal of Accounting and Public Policy, 34(3), 2015, pp. 291–318.