 By "the mess" he meant of course the various different issues which have come together to form what is being commonly referred to as "the financial crisis". I found myself starting to explain how it was really more of an economic and political crisis, and had started much longer ago than people generally recognised. As the explanation and the afternoon wore on we had another couple of beers, and then he lit a cigarette, stared intently at the sea and said "you should write a book about this, you know".
In fact I had already been researching this area for some time, and my thoughts had already been turning in such a direction. I had not, however, been prepared for everything that I discovered. For example, I had no idea that there was a whole school of economics which was viewed as subversive and had been hidden away out of view by those who followed the Keynesian path. Nor, indeed, that those who claimed to be following in the great man's footsteps were in fact practising a deeply perverted version of what Keynes had preached.
Most of all I was surprise and infinitely depressed to discover that successive governments of every conceivable political hue had, with the partial exception only of the Thatcher administration, spurned chance after chance to change the course of history and send us off down the path of long term sustainable growth and economic prosperity. The sad truth is, as the sub-title of my book makes clear, that not only can politicians and central bankers not solve financial crises, they actually cause them in the first place. In just about every instance of financial crises, an area which has been studied widely by academics around the world over the last few years, bad policy decisions crop up time after time as one of their prime causes.
For politicians are asked to operate in a system within which they are asked to make decisions which have hugely important long term implications, and yet are judged only on short term outcomes. Given that they are driven by the desire to be re-elected every few years, little wonder that they consistently put their own personal interests as career politicians before the long term interests of the country as a whole. Financial crises can only be tackled if we first fix the political system.
My book, "The Mess We're In: why politicians can't fix financial crises" advances various suggestions as to how this might be done. Briefly, it would seem sensible to limit politicians' freedom of action, perhaps by changing the way in which bonds can be issued, and introducing a written constitution which would enshrine the right (for us) or the obligation (for them) that government should only be allowed to run a budget deficit to the extent that they have run a corresponding surplus in previous years.
It also explores why we are faced with a crisis in pension funding, what to do about the banks, and how we should approach perils such as recession and inflation. Along the way it explains basic economic theory, links historical events to their consequences in the present, and shows how our politicians have consistently let us down. The pension funding problem, in particular, is a sad catalogue of appalling policy decisions.
I genuinely believe that there has ever been another book quite like this one. People all over the country share a deep, instinctive belief that our politicians have somehow lied to us and failed us, but they lack the specific knowledge of the how, when and why. "The Mess We're In" provides all the gruesome detail.
Guy Fraser-Sampson is a Senior Fellow at Cass Business School in the City of London, and formerly occupied a number of senior investment positions, including as Investment Controller with the Abu Dhabi Investment Authority. He has written widely on many aspects of finance and investment, and has been interviewed frequently on radio and television about the current crisis.
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