The twitter financial reforms

From Egypt to Italy, autocrats in the Mediterranean fringe are being challenged by risings dubbed  by the media the “Twitter revolutions”. I, for one, have serious doubts about the decisiveness of Twitter and the social networks in organizing these movements. First of all, because it is difficult to imagine these gentlemen got wind of today’s demonstration at a cyber-café rather than at a regular café, smoking a shisha. Somehow, one imagines this to be a more powerful communication device than twitter, but it might be part of one’s westerner’s prejudices.

And wouldn’t it be great news if Twitter had in fact played a crucial role in shaping the protests. It could only mean that here are at last the bourgeois revolutions that the Middle East has never had, that a middle class has finally formed with a powerful voice and the capacity to organize themselves out of the Mosque.

But, what about the harshest and most inhumane dictatorships in the world, those places where a revolution through the Internet is an outlandish possibility because of lack of access to communications or strict control of it? Is boss Kim, like Doonesbury would put it, one step ahead of Gaddafi, who claims to have shut down twitter,  or lagging events?

And doesn’t the kind of mass murder taking place in Libya now call for intervention from our side of the world? Maybe we can get away with praising Twitter when locals brave bullets in the streets and just call for better Internet access when they get mercilessly murdered… Freedom fighting has gotten easy (for us) in this Internet age.

One  aspect of revolutions of striking interest (pun intended) to the investor is the resemblance of a bank run to a dictatorship’s collapse. Let’s work through this crazy analogy at the risk of offending the capitalist world, revolutionaries and, god forbid, Twitter alike. Please remember that I am only referring to the dynamics of both situations, not trying to put the fight for freedom on par with financial regulation, nor the interests of investors with the suffering of oppressed people.

So, just for the hell of it, let’s compare the position of the citizenry of a given country who endures a dictatorship with that of a bank’s clientèle: admittedly, extrajudicial executions, torture and disappearances will be kept at a minimum as long as it is not the Vatican we are talking here: the financial sector of advanced societies has often to make do instead with the meagre tools of deception,  lobbying and collusion. There are, however, some similarities: access to public funds is almost equally free for both banks and autocratic elites and regulations do suspiciously tend to fall in line with both groups’ interests. When in distress, the State will come to their rescue.

The populace stoically puts up with the situation because there are some necessary public goods that, seemingly, can only be supplied by these elites: peace, order and an institutional framework are things without which societies cannot survive.

Both the oppressed citizenry and the clients of a financial system feel that a fairer arrangement could be worked, but they only know the one in place and are scared to push for change without a clear alternative. They know that too often, resolute action without a clear goal leads to chaos.

Finally something happens, however. A critical saturation point is reached and an unpredictable motive propels the populace in an uncontainable tsunami of anger. A point of recognition is reached in the collective mind that the system is inherently weak and can be toppled easily. Everybody tries to get their savings out of their trap. Governments are ousted, banks bankrupted.

Just in the same way that fractional reserve banking is supported by the notion that anything necessary will be done to preserve the system, a dictatorship maintains its unstable (?) equilibrium by balancing the numerical superiority of the oppressed with fear of personal retribution for the first ones to come to the fore demanding change.

In a bank panic, a client must ponder fear of losing his money if the system crumbles with the inconvenience and minor losses of cashing in his accounts. His motivation is not as strong as that of the individual fighting for his freedom, but nor is his risk, since in all likelihood he won’t be shot at in either case. In terms of relative motivation, a similar balance is struck.

At the start of a revolution, a dictator’s entourage has a very tough call to make: they need to decide whether the insurgents’ determination is strong enough to brave the repression machinery to the bitter end.If it’s the former case, they will join the freedom movement, if the latter, fight it.

Paradoxically, if rebels are willing to die for their cause, many less will: police and army are but a small fraction of the population and they can’t just shoot everyone dead. When a revolution gains momentum, the chain of command disintegrates and loyalty has to be chosen at increasingly lower hierarchical levels, as the higher ones forfeit their chance to jump on the wagon of freedom. It is the lack of trust in the will or ability of a dictator to cling to power that fells him.

In case of a bank panic, there is no clear flag to run under except that of fear. The populace will be much more reluctant to follow it since there are no obvious dictators to topple and the lack of an alternative program becomes much more apparent. However, when rescue operations reinstate the same clique in power as they sometimes do, it tends to go badly with the peasantry who’s financing its own re-enslavement. Concessions have to be done, since the mob is angry and has momentum (such a dangerous thing for stability)  Once danger is gone, though, the old power equilibrium is reproduced and promises for change are quick forgotten (anyone, financial reform?)

A political revolution entails some blood shedding and, for the reasons mentioned, is an incomparably more powerful movement. This might be why often times it succeeds in toppling a tyrant without counting on a viable alternative or a plan to produce it. But lack of legitimacy is the cause of a population’s discontent  as well as the root of mistrust of the financial system.

Let’s hope that the strength of these risings is not exhausted in the struggle phase but proceeds to shape fairer systems. And let’s also hope that inspiration can be taken at home from their daring impulse to build some checks and balances that make us too, a little bit freer.


About Outis

Nobody is cooler than you
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