Articles

Financial Regulations, Markets and World Domination

The society we have described can never grow into a reality or see the light of day, and there will be no end to the troubles of states, or indeed, my dear Glaucon, of humanity itself, till philosophers are kings in this world, or till those we now call kings and rulers really and truly become philosophers, and political power and philosophy thus come into the same hands, while the many natures now content to follow either to the exclusion of the other are forcibly debarred from doing so. This is what I have hesitated to say so long, knowing what a paradox it would sound; for it is not easy to see that there is no other road to happiness, either for society or the individual. (Source: Plato, The Republic, page 263)

Caveat Lector: I have not vetted each and every detail Related to the references and links in this article, although I try to find the best and most authoritative references. I have used several links to Wikipedia, contrary to conventional research principles. This is based on my belief that there is no absolute truth in this world. Wikipedia is an interesting analogy to the scientific concept of convergence. I interpret this to mean that the truth is never reached but we move ever closer to it through iterative processes. For further details I had pleasure reading "Loopy belief propagation for approximate inference", found at http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.32.5538&rep=rep1&type=pdf

Wall Street Reform Revives the Bull?

In the past week the Dodd - Frank Wall Street Reform and Consumer Protection Bill was approved by the US House of Representatives. Details of the proposed Act are contained on the following link: http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/Financial_Regulatory_Reform062410.html

A number of changes have been proposed to financial institution's trading activities, limiting their activities and exposure and separating derivative trading from mainstream banking, amongst others. It appears a substantial part of the proposed Bill concerns the establishment of additional watchdogs or investment in studies on the establishment of such watchdogs. These include a Consumer Financial Protection Bureau, the Financial Stability Oversight Council, broadened supervisory powers of the Federal Reserve, a study to determine if rating agencies require a Supervisory Board, and a Federal Insurance Office. http://www.bloomberg.com/news/2010-06-25/lawmakers-reach-compromise-on-financial-regulation.html

(Source: Ji Lee's photo illustration for Michael Lewis' "The End" on Portfolio.com

Similar legislative responses were enacted in 1933, after the Wall Street crash of 1929, which contained many good measures. A large number of these were repealed during the past decades. Those measures then introduced and subsequently repealed through, amongst others, the Graham - Leach - Bliley Act (1999), have apparently not been included in the Dodd - Frank Act. This is an interesting development which raises questions on the sincerity of lawmakers to address fundamental issues which caused the global financial crisis (GFC). Refer to http://www.ft.com/cms/s/0/e355c680-8212-11df-938f-00144feabdc0.html. The article is titled 'Dodd - Frank Bill is no Glass Steagall". Another article related to the efficiency and effectiveness of the Glass Steagall Act is contained on http://seekingalpha.com/article/181141-should-glass-steagall-return?source=feed. Several senators proposed a reintroduction of the Act to address the challenges we now face in the financial system.

Articles against reintroduction of the Act's main measures claim a negative impact on the currently weak economic recovery process. This is in my opinion no argument. It smacks of short term focus rather than a long term vision. It will have unintended consequences for future generations. I will describe possible reasons for these unintended consequences in this article, with reference to historical context and possible unintended consequences using historical examples. As the author of "Should Glass Steagall return?" notes, "It is easy to forget how much common sense and logic were embodied in this law."

I couldn't help but inject a reference to some common sense in this debate. My good friend David in Penang writes: "Once upon a time in Dingly Dell under the shade of the old oak tree, the barber/surgeon put up a striped pole to advertise his trade. The publican hung a bush, the pawnbroker 3 balls etc., etc. So when you wanted a haircut you knew where to go; today it is no longer the case. I used to believe in high street banks, and merchant banks, and was quite happy when Leeson lost money and bankrupted the bank, because the cash wasn't mine; now it is. Why on earth would my dear old granny save her pension and put it in her local Natwest, to have a Delboy street trader in RBS invest it for her in dodgy deals because the bonus he gets is so great. She doesn't mind if she only gets 4%. What she minds is that he rakes off millions busily losing her money. I would like to see the two types of bank totally separated. Let the rich screw around with the merchant banks, finance houses etc., whilst granny nips down to put another fiver into her friendly high street retail bank. But I guess that we are all too clever for that. I am glad David raises the topic of "haircuts" as it seems to me to sum up our current predicament very well. George F Burns, the American comedian (1896 - 1996) supports me in this observation: "Too bad all the people who know how to run this country are busy running taxicabs or cutting hair."

Effectiveness of Regulatory Oversight?

I have written previously on the potential ineffectiveness and unintended consequences of watchdogs and regulators, such as the Securities and Exchange Commission (SEC) in relation to the Sarbanes Oxley Act (2002), for example in Greed is not for the Greater Good Part II. Those writings are in a large part based on my professional experiences and observations, augmented with research and readings.

The question for me is therefore how effective these latest proposed watchdogs will be. Will the underlying principles of financial markets and overarching strategies that appear to be driving the quest for financial market dominance ultimately render those initiatives inadequate? After all, what is how simple and effective would reinstating the Glass Steagall Act be, with whatever modifications are deemed reasonable and appropriate to address current day issues? How much of a haircut are we getting, and are we being scalped in the process?

History of Financial Markets and Geopolitical Domination

To support the thrust of this article, a historic review and summary is appropriate, to put the latest US regulatory initiative to "control" excessive financial market behaviour in context. As Edmund Burke (1729 - 1797) stated: "Those who don't know history are destined to repeat it."

The early financial instruments were apparently created in Europe from the 13th Century onwards and included the Société des Moulins du Bazacle or Bazacle Milling company in Toulouse (1250). These early and subsequent joint stock companies attempted to reduce risk where a group of people would insure a cargo or buys a segment of that cargo or productive output. A good example is shipping where it was recognized that sailing ships sank with regularity on the long voyages to the colonies and back. A good research paper from the University of Utrecht (my hometown) is linked here, and describes the evolution of derivatives and financial and commodity markets. http://www.lowcountries.nl/papers/2003-9_gelderblom.pdf . Particularly interesting is their comment "Traditionally, economic historians have equated trade in derivatives with straight bets, and condemned them as wind handel" An interesting turn of phrase, directly translated as Trading in Wind. An appropriate term if you build and operate windmills, or convert methane gas to energy, but not so much in other domains.

To facilitate trading of interests in risky ventures, the earliest recorded share market was created in 1602 in Amsterdam, Holland, for the purpose of trading such investments. This had one of several impacts, the first being the possibility to trade risky investments without taking ownership of cargoes being traded.

The financial markets created a demand from investors and speculators for increasingly complex derivatives that could pay above average returns and drew in investors from across the continent. While countries such as France stayed on the sidelines due to royal fiat, their nobility were investing (often by proxy) as they also wanted to get in on the act.

An interesting research paper on French capital markets and their historical context leaves out personal preferences of King Louis XIV of France, who apparently had a private antagonism towards financial markets. (http://www.cepr.org/meets/wkcn/5/597/papers/murphy.pdf.) On page 7 of the paper, the following comment is made by the author; "Renaissance Italy, seventeenth century Holland and Sweden, and belatedly England, with the establishment of the Bank of England in 1694, grew through the establishment and development of their respective banking systems. While the English banking system grew (sic Similar to the Dutch and Swedish) and helped to finance the wars against Louis XIV, the French banking system remained underdeveloped …………Louis XIV had to rely on the protestant Genevan bankers…….." An interesting hypothesis, which has helped me substantially in formulating my thoughts and theories, is contained in the three books of the Baroque Cycle, authored by Neal Stephenson. I assume is also an interesting clue to the position Swiss bankers have long held, based on their cast iron discretion.

As a result of the growth of the nascent banking systems, the Dutch realized they had a potent tool to maintain their independence and their dominance beyond the use of cannon, foot soldiers and the defensive flooding of large parts of the country. No one in his right mind would have wanted the markets in Amsterdam to be really disrupted (or inundated), and the finances available from those markets were very useful to support the on going wars in Europe and the colonialization of Indonesia and other dominions. Amsterdam prospered, selling supplies to any buyers, regardless of race or creed, and created a great environment for conducting commerce, a fact still appreciated by international visitors, although the famed Walletjes have unfortunately disappeared, as an indirect result of the European Union and the Schengen Treaty. One could argue that the Amsterdam markets maintained Dutch independence very successfully, but I assume this was an unintended consequence when the stock exchange was first established. However, Joseph De La Vega, architect of the Amsterdam Stock Exchange, may well have been prescient considering his background and education.

As an example of the importance of financing wars, during the Wars of Spanish Succession, John Churchill, the Duke of Marlborough, wrote a letter dated august 26, 1706, which contained the following text: "If we succeed at Dendermonde, and can in time have more ammunition from Holland, we shall then make the siege of Ath, which will be a security to our winter quarters, notwithstanding the Duke of Vendome's army………………..I give you the trouble of all this that you may see I should have preferred Ypres before Ath, but the Dutch like Dendermonde and Ath much the best; so that I hope they will not let us want ammunition from them…………." (Source: Marlborough, his life and times, Volume II. Sir Winston Churchill). The ammunition was no doubt financed through the Amsterdam financial markets, and indirectly, paradoxically, by French nobility investing their money there. I picked the Siege of Dendermonde as it has a historical connection to the De Bethunes, Balfour Beaton and the Scottish regiments of the Dutch Republic which were commanded by Balfours. There is nothing like a bit of historical re looping to confirm re iteration towards convergence occurs as much in genealogy as it does in financial history.

The financial and commodities markets model was exported to England during the reign of James II, but was pretty moribund until the Duke of Marlborough and King William of Orange made a strategic deal which saw William become King of England. The architect of the Amsterdam Stock Exchange, De La Vega, or his disciples, followed to London to create the real impetus for the British Empire and the Industrial Revolution. The expanded and improved capital markets in England drove the availability of finances for the large investments required for the Empire and the Industrial Revolution. Without such finance, steam engines may have never been commercially built and we would still be walking on clogs.

I believe it is around that time that governments and rulers started to realize that financial market domination is also very much likely to support geopolitical domination. In this manner, based on his experience in Holland, King William of Orange, William III of England, saw that he needed an effective market to finance the on-going wars in Europe. Not surprisingly, the New York Stock Exchange (essentially Capital Markets v 3.0) was set up very soon after US Independence in 1792. With this act I suspect the seeds of the reduction of the might and power of the British Empire were being planted, similar to the sun that set on the Dutch Golden Age at the end of the 18th Century due to nascent British domination.

Philosophy Challenges Financial Market driven Realpolitik

An interesting battle of philosophies on financial markets is described on http://www.vanityfair.com/online/daily/2009/04/what-would-thomas-jefferson-do.html. It recounts the debate and philosophical differences between Thomas Jefferson and Alexander Hamilton shortly after the US War of Independence, over the raising of finances to pay of war debt through a process then called "Assumption".

In summary, many friends of Hamilton, then US Treasury Secretary, became rich or substantially richer, on buying up IOU's issued by state and federal government for services performed by soldiers and others during the War of Independence. A lot of these IOU's were bought up as low as at 15 cents in the dollar from unsuspecting citizens, trying to make their own ends meet in those unruly times, and essentially selling out their sweat equity much too cheaply. A number of the buyers were congressmen or senators who must have had inside information. Jefferson, supported by Adams, was furious and wanted to cancel the deal, as he was much opposed to speculation. Hamilton won the argument based on the precarious existence and dire financial situation of the new country.

In some ways, this disagreement and the final outcome have set the USA on the uneasy course it has had for the next more than 200 years, with principles and ethics fighting for supremacy with mercantilism. In my opinion, this battle has been won in favour of excessive mercantilism, something echoed in the books written by John Perkins who uses the term "Mutant Capitalism". (www.johnperkins.org). In related articles on our website I discuss Insider Trading, a good example of such mutancy. The role of banks in this process is well explained in chronological order on http://www.iamthewitness.com/books/Andrew.Carrington.Hitchcock/The.History.of.the.Money.Changers.htm. I found it an interesting read and perspective. Caveat Lector.

Thomas Jefferson wrote: "I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." (Letter to John Taylor, 1816. http://etext.virginia.edu/jefferson/quotations/jeff1325.htm). On this site there are many quotes identifying the concerns Jefferson had regarding paper money, credit and banks. Based on these I think we can conclude he was no great fan of banks.

It is interesting to note what happened to Senator Robert Morris in the end, after making yet more money from the misery of others. He was imprisoned for debt in 1798, due to unsuccessful land speculations. Released in 1801, he died shortly after in 1805. He is buried in another's family vault. I guess he couldn't pay the rent on his own. Refer my article "Dishonesty doesn't pay" for a modern parallel.

Reviving the Bull with Derivatives.

Based on the analysis so far, one can conclude that the first demand factor for derivatives/ financial instruments, is an underlying need directly related to the production of a product or service. The second demand factor that drives the markets is the opportunity for higher or super profits, subject to higher risk. The more esoteric instruments, when first "invented", create super profits for the early adopters until the market is saturated with entrants, spurred on by a desire to beat the market. Paul the Octopus is a good esoteric example of this type of behaviour. He had been a reasonably accurate forecaster of World Cup games outcomes, and therefore possibly a good bet. Below is Paul during the good times, snacking on exotic treats. If one were creative one could place a bet on which tentacle Paul would use to indicate the winner at any particular moment, an interesting derivative twice removed from the actual service provided, which is off course pure entertainment involving a leather ball and 22 players.

US Senator Robert Morris had his tentacles everywhere and sent agents scurrying around to "buy up cheap paper from unsuspecting citizens" in the aftermath of the US War of Independence, and consequently made millions. This is in direct contravention of Plato's admonition for leaders to distance themselves from worldly desires as much as possible, and an ongoing problem we see with persons in positions of authority to this day. It raises questions on the fine line between mitigating trading or operational risk on the one hand, and straight betting or games of chance, and what constitutes ethical behaviour in the pursuit of returns. This last matter in particular has been considered historically, including by the Romans. Another example is the requirements and prohibitions contained in the Quran against usury, resulting in the upsurge of interest in the application of Shari'a principles to Islamic Banking.

Goldman Sachs, as well as others of that ilk, elevated this type of excess to an art form. They were instrumental in first creating the financial instruments, and then timing exit strategies perfectly by offloading their holdings based on the second demand factor. An alternative strategy was by stimulating demand through selective information, if recent court proceedings in the USA are to be correctly interpreted. They reconfirmed that to make the demand side work you also need a lot of actors (patsies) in the market. Patsies firmly believe they will make extraordinary profits. In reality the "bank" always has the advantage, and only few speculators actually make profits over the long run, something I have observed first hand. This is the latest picture of Paul the Octopus, who had a reasonable run of picking winners to his own detriment apparently. I clear case of damned if you do and damned if you don't.

I could not leave this subject without a quotation from De La Vega's book Confusion de Confusiones (1688), which contains four basic rules of the share market. The last rule reads: "He who wishes to become rich from this game must have both money and patience." De La Vega's fourth rule has apparently been ignored by millions of market players who neither have the money nor the patience, but hope to create these two factors by betting on the markets. Maybe he shouldn't have called his book Confusion of Confusions, as the title is a misdirection, or is it? My conclusion here is that at a micro level, most actors in the market have an unswerving belief in their ability to create money and patience from nothing, a sure sign of Wind Handel. Be warned, you may get fried. It is an analogy to stimulus debt being considered the palliative for excessive debt burdens, or bottles of Vodka as a cure for a serious alcoholic. They are all apparently not the cures they are thought to be. I believe the cyclical nature of individual earnings and losses eventually converges to zero, in the same way as described in the study of Loopy Belief Propagation. Goldman Sachs and their brethren probably run internal induction courses to explain the finer details and strategies for Loopy Belief Propagation to new hires.

Notwithstanding my rather negative commentary so far, on the supply side I fully subscribe to the idea that a farmer, with a longer term horizon to delivery, or a gold miner, in a similar situation, would want to have certainty of revenues, and create a forward sale. Another great example is dried herring trades. There is an additional peculiarity with that commodity which Dutch are well familiar with and which relates to fecundity. I use fecundity in a different sense to denote the propensity of small organism to procreate in the herrings and generate bad smells. A good reason to close out your position if you happen to live in your herring warehouse, as we know many Dutch burghers were doing.

Physical trade was therefore very much the original driver for markets at the time of their establishment and evolution from the 13th Century towards the 17th. The challenge appears to be that between production and delivery of the good or service, the instrument may be broken down further, linked to more remote derivatives or sold many times over in between date of production and final delivery or change of title. The traders in the instrument are thus very far removed from the moment of production and usually not at all interested in taking delivery at any time (especially dried fish).

(Source: http://www.contracts-for-difference.com/Managing-risk-derivatives.html )

An interesting way to curtail market excesses is to put regulations in place to limit the number of trades beyond an underlying delivery. I have read previously that such a cap on the number of trades between physical production and delivery could work to reduce excessive speculation. An interesting theory which would be a great project to research as it has corporate governance and civil society angles. Unfortunately I could not find the reference to that idea at the time of writing this article. What I did find was an informative item on "Naked Derivatives" which the author defined as "Speculative Bets with no Higher Purpose". In the article, the author quotes George Soros as stating "It (sic - the transaction) involved a complex synthetic security that was derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals". http://www.dailyfinance.com/story/nyse/naked-derivatives-speculative-bets-with-no-higher-purpose/19453362/

Financial Market Regulation and Global Realpolitik

The challenge with any regulatory or legal solutions is that they will be at odds with the geo political objective I have identified. The hypothesis so far is that financial market dominance drives geopolitical dominance. On the basis of the above historic overview it is clear that financial instrument demand needs to be maintained and preferably increased to maintain capital markets domination. This naturally leads to a never ending search for new and exotic derivatives, supported by speculators. It is unlikely that any politician would be interested in the idea of introducing regulations that would shrink financial markets, although the UK has recently introduced bonus related limits which may just do that. The US Financial sector's share of domestic corporate profits "has ballooned to 41% from just 16% during the 1980's", as noted in the previously referred to article. This is a sure indicator that financial sector growth is of material importance to any nation with global aspirations.

The proposed Dodd-Frank Act highlights the challenge of doing something politically attractive in the eyes of the public, by creating more regulations and additional regulatory agencies, which are in effect most likely not workable. In the accounting profession this is called creating Form over Substance. Regulatory agencies, beyond creating employment, do not work effectively because very few except for the general tax paying public appear to want them to work. I have recently read an article regarding the SEC which is headlined "US SEC staffers watched porn as economy crashed", based on a formal investigation. And before you think it was just an isolated exception, please read the story:
http://thestar.com.my/news/story.asp?file=/2010/4/23/nation/20100423091106&sec=nation

Global Realpolitik and Star Trek

Besides the drive to increase the number of watchdogs and regulatory bodies nationally, there has also been an increasing demand for a global regulating agency. This sounds something like the United Earth, represented by the Federation Council, if you remember your Star Trek episodes. Commentators have referred to this as one of the outcomes of one of the first G 20 meetings after the GFC was recognized, held in London. In this manner, the GFC appears to me to be the equivalent of a 9/11 for the financial sector. While imposing physical edifices crumbled during 9/11 however, it appears that financial institutions are too big to fail. As the fight against terrorism has reduced civil liberties and made life generally more complicated for ordinary citizens, the on going fight against the GFC appears to increase regulatory clutter and the number of "professional" watchers populating watchdogs. This appears to exclude those watchers who spend their time downloading porn and burning CDs for their private collections. Or maybe watching too much Star Trek?

Apart from Star Trek, the first episode of which featured in 1966, one of the more scientific approaches to such a World Council, or a Planetary Regime, was floated in 1977, in a policy text book describing its essential functions and outcomes. The book is titled Ecoscience, Population, Resources, Environment. It was written by John Holdren, currently President Obama's Director of the White House Office of Science and Technology policy, and co authored with Paul and Anne Ehrlich. Incidentally, two of the co authors also wrote an article on overpopulation in 1969, around the time of the Club of Rome announcements. From a historic perspective I wish the gentlemen in question had gone to Woodstock instead, as an antidote to their morbidity.

According to the book, "a comprehensive Planetary Regime could control the development, administration, conservation, and distribution of all natural resources, renewable or non renewable...not only in the atmosphere and oceans, but in such freshwater bodies as rivers and lakes...The Regime might also be a logical central agency for regulating all international trade...The Planetary Regime might be given responsibility for determining the optimum population for the world and for each region and for arbitrating various countries' shares within their regional limits...the Regime would have some power to enforce the agreed limits." (p. 943.) For more discussion and analysis on John Holdren's book please follow the following link. Many other sites where I have tried to get access to the book have been disabled. http://www.prisonplanet.com/obama-science-advisor-called-for-planetary-regime-to-enforce-totalitarian-population-control-measures.html . There is a current debate on the contents and thoughts contained in the book, with claims that certain comments have been quoted out of context. After reading sections of the book I cannot avoid a certain uncomfortable feeling. I never had this with Star Trek.

It appears a coincidence that a book written in 1977, 11 years after star Trek was launched, advocates a global regime and authority to address global issues; then followed by a period of creation of some of the largest global corporations, which we have been told are too big to fail. It is also possibly coincidental that the GFC resulting from the misbehaviour of global corporations in turn re-activated calls for such a supra national body during G 20 meetings and in public comments from politicians and regulators. It is interesting that one of the authors of the original work advocating such a body has found himself in a position of authority and power in US government at this time. Finally, similar calls are being made regarding the powers of the European Union and EU Central Bank.

Who Guards the Watchdogs?

I have a doubt about the prudence of creating an increasing number of regulatory agencies in response to market excesses. Many such agencies are being created to take on responsibilities that should previously have been discharged by existing agencies. I cannot find any comments or indications related to a possible review of such agencies and watchdogs to determine what went wrong during and in the lead up to the GFC. Bernie Madoff is an interesting example of watchdogs sleeping on the job. What are the sanctions being applied in this and many other cases? Will the SEC executives be called to justice for excessive porn watching, or will they escape with a slap on the hand?

I am even more doubtful on the effectiveness of a global or supra regional governing body as it will simply amplify the weaknesses found in national agencies. Such a global agency would no doubt be populated by a group of officials selected from national governments and administrations. The rash of expense scandals related to government ministers globally, the latest involving the French government, (Euro 12,000 of public monies spent on Cuban cigars and a private plane for a sole minister to visit Haiti at a cost of Euro 116,000) is a bad indicator. A global regulatory body would potentially see such morally deficient characters having even greater opportunity to enrich themselves at the expense of those they are supposed to serve, with possibly less oversight.

I note in this context the situation concerning the Assistant Auditor of the European Commission some years ago. He was dismissed, for doing his job. Paul van Buitenen, http://en.wikipedia.org/wiki/Paul_van_Buitenen paid the price for whistle blowing on the excesses at the European Commission and wrote: "I found strong indications that . . . auditors have been hindered in their investigations and that officials received instructions to obstruct the audit examinations . . . The commission is a closed culture and they want to keep it that way, and my objective is to open it up, to create more transparency and to put power where it belongs - and that's in the democratically-elected European Parliament." Also note similar comments on accounting controls made by Marta Andreasen, former chief Accountant for the European Commission. http://en.wikipedia.org/wiki/Marta_Andreasen

How to Determine Cost Benefit?

The expense will be great, and much of it wasted, if my fellow auditors referred to are to be believed. Increasing complexity of regulations most often hits those who can least afford it. Some commentators suggest that as a result one aspect of the economy will continue to grow, that being the vampire economy. Besides the vampire economy I also foresee a material growth in professional advisory services. According to the comments from analysts, industry will pay additional compliance costs estimated of around US$ 20 billion. This sum is estimated for compliance in establishing the act's provisions and its workings, without regard to the costs of actual complying resulting from reporting and setting up internal control systems. http://blogs.forbes.com/streettalk/2010/06/25/dodd-frank-bill-complete-bankers-react/ . As an analogy, compliance costs related to addressing Sarbanes Oxley Act 2002 requirements increased by 62% since the introduction of the Act in 2002, based on research conducted in 2004. http://www.allbusiness.com/management/business-process-analysis/240907-1.html . The final estimated bill was up to US$ 1.4 trillion, depending on measurement techniques (http://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act ) The level of diversion from risk management and internal audit, as noted in other articles on this site, is possibly the cause of much greater financial costs including the financial damage caused by the GFC.

Conclusions

More regulation and more watchdogs are not an effective answer. Making organizations bigger when they fail at a smaller level does not solve their inherent problems. Small inherent weaknesses in those who lead us will simply amplify on a greater scale.

It is very important that the underlying causes of current global issue are well communicated and understood by the public at large. It seems to me that this is not the case currently. Discussion and critique of proposed government solutions cannot be effective in this situation.

When it comes to leadership and decision making, ethical and philosophical concerns should not play second fiddle to reality, as it is so often the case. As historical examples in this article show, one action usually leads to an equal and opposite reaction, and the impact can be felt generations from now, both at individual, national and global levels.

Finally, as Plato suggested, until and unless rulers start to speak, think and lead as philosophers or even with a limited amount of philosophy as a start, on a national and global level, there will be no other road to happiness, either for society or the individual.