About this whole Economic Thing
February 22, 2009
Like every other sentient being in America, I have some opinions on how we got here, based on close observation of America's professional management class. I believe our troubles stem, as they always have, mostly from ego, greed and hubris. Alas, these are also the sources of our political problems and most of our personal problems as well. They are natural attributes of human beings. But since we can't wipe them out, how about a system of checks and balances that at least keeps them under control?
As you'll recall, I teach 8th grade history, so the phrase "checks and balances" has a special resonance for me. Our founding fathers, or rather the framers of the constitution--quite possible the 55 smartest men ever to gather in one room--distrusted power. They established a government in which it was separated among multiple branches, to prevent any one branch from overpowering the others. You call this a recipe for stalemate; I call it a recipe for deliberation and moderation. It is difficult to be extreme in the government.
Alas, we have a history in this country of cycles in which we try extreme capitalism. It never works, but we always drift towards it because it is the economic equivalent of our republican political system. What happened here is that the management class got caught up, once again, in the idea that "everything is different now, everything has changed, the old rules don't apply, the system will police itself." History does, indeed, repeat itself. For those who weren't paying attention, let me simply point out: everything is not different--almost everything is the same. Human nature has not changed. The old rules--at least the best of them--always apply (including "what goes up must come down," viz Sir Isaac Newton). And the system never polices itself. Why should it? Where is its motive to do so?
There is plenty of blame to go around, although the GOP deserves a slightly larger share, in my opinion. We passed Glass-Steagall (the law which separated investment from banking) in the 1930s for a good reason. We repealed it for no good reason in the 1990s, and now we're paying the piper.
The best analogy, I think is this. Capitalism is a football game. Alas, it is a game with more than two teams, but for the sake of analogy, let's leave out that aspect. Capitalism, like football, is a game of rules. Most of the players follow most of the rules most of the time. In that sense, it is self-policing. But sometimes the players violate the rules. This is not fair to the players who are playing fair. What ever shall we do? In football, we put referees on the field, who throw flags and penalize those who violate the rules. Prior to the 20th century, there were no referees in the game of capitalism. Starting with Teddy Roosevelt, we added refs. Starting with Ronald Reagan, we began taking refs off the field. I believe the results of that decision are blindingly obvious and trivially predictable. Let's put some refs back on the field.