Historically speaking, most political revolutions do not end well. They create violent, bloody counter-revolutions in reaction. The American Revolution (1775-1783) was highly unusual. We didn’t have a counter-revolution. There are other kinds of revolutions too, revolutions in ideas. When humans finally faced the fact that the earth revolves around the sun instead of the other way around, it was a big change. People died fighting for that revolution, the one recognizing that we aren’t the geographic center of all that exists. Now we just think we are the most important beings in the universe, even if it doesn’t revolve around us.
If a nation grows large and powerful it becomes more difficult to maneuver quickly. I’m guessing that’s part of our current gridlock in government. There’s considerable piddling and twiddling over how to deal with our large national debt, and not much boldness in evidence. At times like this I wish we were a small, nimble ship of state like, oh, Iceland. I’m really inspired by learning how their citizens have reacted to the global financial problems since 2008.
Iceland is a magic island with volcanoes, great storytelling traditions and pragmatic attitudes that are probably a genetic gift from their Viking ancestors. People have lived there since the 9th Century, but they were passed around as a colony by bigger Scandinavian countries for most of their history, only becoming an independent republic in 1944. The land mass is about the size of Kentucky, and the population is 320 thousand, 90% of whom live in two cities. Their financial system was heavily regulated well into the 1990s.
The Independence Party held power in Iceland for a long time. They had won majorities in every election from 1929-2009. It’s a center-right party, comparable to our GOP as they used to be in the 1960s. Unfortunately, greed is a dire and pervasive human character failing. When members of the Independence Party observed how much money was being made in the U.S. after our banks were deregulated by 1999, they were seduced by the desire to get in on some of that action. They prevailed upon Parliament to cut corporate tax rates and deregulate their banks, which they did in 2001.
The newly unfettered big commercial banks expanded rapidly. By 2007 the three largest banks held assets 10 times the size of the GDP of Iceland. They opened a lot of branches in the UK, offering favorable rates, buying up foreign companies and taking on debt to finance continued expansion. But when the mortgage bubble burst in the U.S. the UK banksters called in their debt. The Icelandic home banks said “Sorry. We don’t have that much liquid capital available.”
Gordon Brown, PM of the UK, declared Iceland to be a “terrorist state”, froze the assets of the Icelandic banks, and in 10 days they all went bankrupt. Iceland endured the largest, fastest banking collapse in the history of economics. To try and prevent national bankruptcy, which might have occurred on top of the banks’ collapse, the government nationalized the banks. Still, the Icelandic stock market dropped 90%, their currency lost 35% of its value against the euro, unemployment rose ninefold, and interest rates and prices shot up.
The revolution began on a Saturday in October of 2008 with one man named Hördur Torfason. He took his microphone and amp out to Austurvöllur, the public square near Parliament, and invited people to express their opinions about the situation. The following Saturday brought a more organized protest, and the participants decided to call themselves Raddir fólksins (Voices in Action). They vowed to hold a rally each Saturday until the government that had gotten Iceland into this culture of high-risk banking stepped down. You see, the citizens of Iceland hadn’t been asked whether or not they wanted their national banks to be involved in all these international loans, and they didn’t profit from it, and now they were paying dearly for mistakes made by the elite.
On January 20th 2009, 1,000-2,000 peaceful protestors were pepper-sprayed by riot police. In response they went home and came back as 3,000 armed with pots and pans, made a lot of noise, threw rocks and food at the Parliament building and the politicians, and made a general disruption of business as usual. The press dubbed it the “Kitchenware Revolution”. It didn’t stop there. When the government asked the citizens to accept responsibility for their misdeeds and pay back the debt to the UK and elsewhere (FOR THE NEXT 30 YEARS), they said no, voting against two versions of repayment plans by wide margins.
Not only did the ordinary people of Iceland say it wasn’t their fault, but they kept up the pressure and brought down the ruling party AND the financiers responsible. They re-opened a special court for high crimes not used since 1905, and in October 2011 convicted former Prime Minister Geir Haarde of misconduct in office. Many former bankers have left the country to avoid prosecution. Business leaders tied to the financial crises are keeping a very low profile.
Iceland is not out of the woods yet, but they’ve made up a lot of ground since 2008. They have a 2.5% annual growth rate, and their unemployment is now down to 6.5%. Because the people as a whole took a sober look at how power is distributed, they’ve taken the truly remarkable step of choosing to rewrite their entire Constitution, a new work produced using Twitter and Facebook for ideas and input from ordinary people in all walks of life. The first act was to choose 25 citizens not aligned with any political party to work as a council making recommendations, which were then voted upon by the nation. It’s been passed and is awaiting acceptance by Parliament. Here’s a link if you want to read Iceland’s proposed new constitution.