I tend to be more pragmatic than ideological but there are limitations to that. Pragmatism is very useful in solving problems but first the problems and the goals need to be defined. It is our human values that help to define the problems and the goals.
So it is with me. I have been a spectator to the slow motion train wreck that is minimally regulated American capitalism. That train wreck is observable fact. First, the lively interplay between wealth and politics made for some questionable decisions, particularly, in globalizing the race to the bottom with respect to cheap labor. That caused many of our manufacturers to fold their tents and silently steal away across the Pacific or South of the border. Slowly at first but then at an increasing pace, the USA has lost much of its manufacturing capacity. Also, the taxes on the wealthy were reduced so that an ever greater fraction of the nation's wealth has been concentrated in a few hands.
The globalization of financial transactions and international banking paralleled these developments. More recently, we have been told that we now have the "ownership society," meaning, I suppose, that if you must actually work for a living then you are on your own.
None of this matters much unless you care.
The key to stabilizing capitalism has not yet been discovered. It seems to progress by means of a sequence of "bubbles" followed by crashes. Peoples' lives are seriously disrupted when they lose their jobs, lose their homes, or lack medical care, or cannot afford their children's education. It has happened before and now it has happened again.
Well, we humans sure have got rhythm but the best and the brightest can't manage an economy in the common interest.
These truths are self evident. The gecko knows.
The latest crash is more severe than most. It came at a time when the government had been deprived of revenues by massive tax cuts and bled white by wars, when the physical infrastructure of the nation had been long neglected and was crumbling, when fossil energy was peaking and needed rapid replacement, and when many of our institutional traditions were antiquated and failing.
The cruelest cut of all was not something I had expected. I have long been aware that when torrents of money pass through human hands the owners of those hands develop sticky fingers. I had not believed that it could get so bad. Some members of that highly respected and magnificently rewarded class, the top level bankers and investment bankers have engaged in a reckless race to the bottom with respect to risk management. They fouled their own nests and, with that, they sabotaged the entire international financial machinery. Even the gecko knows that.
Now, we are told that those same great guys trust our common treasury to save them and they will tell us how. That's where the gecko comes in.
The gecko is an animated figure, just a few inches tall, who appears in various entertaining commercials for the GEICO auto insurance company. In the latest of these we see the gecko's boss (a middle aged white male, of course) telling him about the importance of trust to their business. The boss suggests a new commercial in which he will fall backward and trust the gecko to catch him. He then stands up and begins to fall backwards toward the gecko, who is visibly in fear of being crushed. The commercial ends at that point.
It seems to me that the gecko is a very clever fellow and that this is an allegory about saving the really big, very insolvent banks. Can our treasury save them or will it be crushed. Are they too big to fail or too insolvent to save? Will we be left with "zombie banks" that persist but cannot do much lending?
No need to speculate. Like it or not, we shall see. The psychological economists have pointed out that markets are not entirely rational and will not therefore be acceptably self regulating. To put it another way, hog farms have a bad smell, even on wall street.
Stretching it a bit, there is also an allegory about the recent behavior of our financial bigwigs based upon drunk driving.
Wreck on the Highway
Since this was written I have heard President Obama's speech to the joint session of Congress and to the nation. I have also heard Bobby Jindal's response. Obama's speech was highly optimistic but he had a lot to say. Will some friend of Bobby Jindal please suggest to him that if one has nothing even remotely useful to say it might be best to shut up.