What Elephant?

Tom Lane
March 2009

Why was Galileo threatened by the Inquisition when he offered observations showing the Earth was not the centre of the universe? Why do many scientists refuse to examine data that can potentially upend existing theories? Why were all warnings about the impending collapse of the Global Financial System ignored? And, most critically at this time, why are we bailing out the banks, instead of addressing the systemic causes of the credit crunch?

To understand the reasons, it is useful to imagine a seemingly invisible "elephant in the room". It is causing a lot of trouble but nobody seems to notice it or name it. We just don't want to see it. We say, "What elephant? There is no elephant. If you mention that elephant one more time I will make you sorry you ever opened your mouth." But most elephants cause so much mayhem that they are eventually acknowledged. And with hindsight we say, "Of course there was an elephant. Of course the sun is the centre of the Solar System. How backward and ignorant people were to deny it". And then another elephant comes along and we say, "What elephant? Don't talk to me about elephants".

So what makes us want to ignore the elephant rampaging through the financial system? I don't presume to know all the reasons, but two factors seem relevant to me here: maintenance of our sense of identity and maintenance of existing power/privilege structures.

Identity

The tendency to accept and amplify evidence that strengthens preconceived belief systems and to reject or devalue contrary evidence is well known. It is called 'confirmation bias'. We like to think of ourselves as rational beings, but in truth we are deeply attached to our belief systems and will often sacrifice rationality to preserve them. We mostly are not even aware of our belief systems until they are challenged. They are closely related to who we think we are. If these belief systems are challenged then our sense of identity can be threatened.

Many people's sense of identity and self-worth are closely identified with their career. Society treats us differently if we are 'professional', wear expensive clothes or drive a fancy car. Being a professional means being valued by society and possessing some kind of expertise. And top of this pyramid of status, up to recently, have been the "Masters of the Universe", as they call themselves, of the financial sector. Egos, financial benefits and lifestyles have been inflated to such an extent that any acknowledgment or acceptance of a possible elephant could destroy their sense of self-worth and identity. It is simply not possible for them to contemplate this, because the bursting of this bubble would have devastating psychological consequences. So the majority of high-ranking financial professionals will naturally close ranks in a form of 'groupthink', and do their utmost to avoid taking responsibility for the economic meltdown. [1]

The current banking collapse is the result of a very large elephant that was, and still is, being ignored. Most of us now know that the banks took reckless risks in a profit-seeking bubble that could not be sustained. Why didn't they realise the dangers? Simply because they didn't want to. Everybody was enjoying the party and nobody wanted to hear from party poopers. For example, those employees of RBS who questioned the prevailing culture of expansion and excessive risk were ridiculed as the "Business Prevention Unit". Even today, when the effects are only too obvious, employees fear that, if they speak out, they will never be able to work in the banking sector again. The bank executives' apologies sound hollow because these executives still really refuse to acknowledge they were wrong.

The vast majority of politicians, commentators and economists will not question the fundamental systemic issues and instead accept that bailouts and the creation of the next bubble is the only option. One reason is that to inquire into systemic issues and dominant belief systems would call into question their sense of expertise and competence, and therefore threaten their self-worth and sense of identity.

Power and Privilege

Elephant denial also has a darker side, relating to power and privilege. Those who believe they benefit most from the status quo will do almost anything to deny the elephant. And the more they think they have to lose, the more they will punish those who try to name the elephant.

The Roman Catholic Church was not predisposed to ceding power through the challenge that Science offered to its dogma and authority. So the evidence had to be suppressed. The banking and financial elites are certainly not going to give up their power and wealth without a fight. The power of money creation and the control of money distribution are in private hands. We should not underestimate the influence they hold over politicians, the media, academia and business, or the lengths to which they will go to maintain this control. They will most likely stop at nothing, including bringing the world's economy to ruin, to hold onto what they have.

Power and privilege over others usually depends on illusion and deception. If we believe what the holders of power tell us then they can continue to wield it. Truth is the enemy of this kind of power.  So we should not expect to hear much truth coming from the financial sector. Nor, unfortunately, should we expect it from mainstream sources. Relative privilege of 'lesser beings', such as economists, academics, commentators and politicians, is meted out in proportion to their accepting and repeating the prevailing wisdom. And the mantra is that there is no alternative to the banking system. The banking system cannot be allowed to fail, no matter what the cost to society. Anyone who questions this will be punished, in subtle or not so subtle ways. Commentators who challenge this assumption are likely to find it difficult to find media willing to publish their views. Academics and economists who question standard economic dogma won't go very far in their careers. Independent-minded politicians will lose campaign funding and will be subject to misinformation smears. Governments who attempt unorthodox policies will be attacked internationally and find their efforts sabotaged by 'the market'. There is potentially a lot to lose for people who challenge this power.

But fear is no reason to continue to be subjects. It is only when we lose our fear that the power of privilege dissolves. When enough people speak their truth without fear then the emergence of something new becomes possible. As Franklin D Roosevelt said, "the only thing we have to fear is fear itself", because power of privilege depends on keeping people in the dark and on people being in fear. The power of privilege is not real. It relies, for its continued existence, on keeping the elephant unacknowledged.

Here is the elephant I see: The international financial and banking system controls the world economy. Through its control of the money power every government in the world is in permanent debt to private interests - a debt that cannot and is never meant to be paid off. Through the interest it collects on this debt, it forces us ever deeper into debt. It thereby relentlessly transfers wealth from the majority to the minority, impoverishing billions of people in the process. It produces little or nothing of value to humanity that could not be provided by other means, at a tiny percentage of the cost. It leads to an inevitable recurring cycle of bubble and recession, through the expansion and contraction of the money supply that it controls. Through its siphoning off money from productive sources it forces the world economy into an unsustainable cycle of growth that is destroying our natural habitat.

Let's acknowledge there is an elephant and use our energy creating a better alternative rather than a futile attempt to repair the damage. We should not expect bankers, or existing vested interests, to acknowledge and take responsibility for their errors. We should rather expect the power brokers behind the banking system to resist (through misinformation, economic sabotage, political destabilisation and all available means) [2] any fundamental reforms to the system. We need to see this elephant for ourselves, and then name it loud and clear. When a sufficient number of us across the globe see it and demand change, then the old power structures will be unable to resist the creation of a new, more just alternative.