I’ve been doing a lot of reading and rereading of economics books as I follow the course of the current US recession. Like everyone else, I’m thinking about how we got here and how the rest of the world got where they are today. The more I learn, the less sure I feel about anything. Having said that, the one branch of science that gives me comfort is psychology… what we know about how the human mind works, alone and in groups.
Rather than continuing to work out that train of thought any further at the moment, a timely article appeared in last Sunday’s Boston Globe: http://tinyurl.com/qsmke9
Interesting article titled “Why Capitalism Fails” and interesting comments. I’ve been reading the John C. Bogle (founder of Vanguard) 2009 book ENOUGH this weekend. (Highly recommended) Bogle also mentions Hyman Minsky, so this was a very timely article for me. Communism, socialism, and capitalism are all interesting ideas, each founded on flawed views of human nature as I see it. For the most part people are good and well-meaning. But there’s always going to be a Madoff, a Ponzi, a management team like Enron or AIG, profiteers like Merrill Lynch or Putnam Funds, and so on.
Government is not an economic system, it is a cooperative means of achieving safety and stability for people who have banded together in a common geography. As such, ours in the US hasn’t been working all that well lately. It would appear that some sort of capitalistic system is, overall, better suited to achieve human advances, given human nature. (For example: Humans are competitive. Humans enjoy advancing their own interests and those of their friends and family. ) But that capitalistic system needs a lot of regulation and oversight. There is an unholy alliance between capitalism and democracy revolving around money and elections. The US founding fathers recognized that more than we do today, because they actually discussed and understood the economy and politics of their day. Our current citizens clearly do not. Life is very complex today and that complexity is not taught in schools nor is it “covered” in the media. The media are complicit in the problem.
Economics is a lot like biology in that everywhere you look, an economic niche is filled. At any given snapshot in time, the economic system is what it is. When the system is threatened, those who are doing well will fight like crazy to keep it as is. Without enough enforced regulation some people will crowd out more than their share of the economy. That is what has happened.
As a country we need to rethink the nature of our economy, our industry, our commerce, and our financial system. If a system costs more than it contributes in benefits to the society it needs serious modification or at least regulation. Part of me fears there’s a fat chance that’ll happen with the “right wing” having captured the market on fear and mistrust to keep a stranglehold on the USA. Part of me hopes that our government can develop a bipartisan regulation of our financial system. I want my country back.
If you read this, please share your thoughts. Thanks.
(New title in response to Lin Dolin!)