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Re: the Current Economic Crisis
Jason
God EmperorArrakis Moderator
Partially due to being bombarded by the corporate media's coverage of the current economic crisis, the one that people in the know have been warning ... Continue reading
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What do I mean by better? Here's where I prefer the Marxist view where ideally everyone should be economically equal. However that may be too radical a stand, so I look at capitalist concepts of a "basic income" etc., stuff that can be done within our lifetimes without some crazy revolution. Sadly, anything marginally socialist in modern economic study, as well as historical, seems to point towards the "lack of incentive to work" argument against and the like.
I read more left-wing socialist economic literature than capitalist ones in my private time; might be a good explanation for why my college economics isn't fantastic as a result.
I never understand why we should have "financial capitalism" anyway; or what I like to call bourgeois capitalism, befitting the idea that such wealth from such capitalism comes not from labour, but by ownership, lest one can enlighten me otherwise on how financial capitalism works other than under the theory of "trickle-down economics". Theory, theory, theory - all that doesn't work.
Unfortunately speaking of which, there is a phenomena in the literature called embourgeoisment which I thought would pose severe problems if we tried to move away from financial capitalism; where the working class is being increasingly involved in bourgeois-like lifestyles and culture. In this case, to quote some relatively common examples nowadays, where a working adult would be convinced by insurers and bankers to pool their savings into stocks and shares or bonds to build up a retirement fund. In my country as a result of this crisis now, there are some less-educated senior citizens who spent their earlier time in labour-intensive jobs, coming forth to claim that they were misled by the bankers into investing their life savings in some "low-risk funds", which now we know were actually quite volatile and linked to the Lehman Brothers.
Okay, some could say that it's a problem with the ethic of the banking institutions; but I would say it's the capitalist system we have - this profit-driven "rational" ethic. Ugh, I don't know - I have too staccato a perspective on the issue, and right now I think I should go and read some Islamic economics. The latter, at times, makes me feel like the right system to go.
Hey Jason!
I'd add another role for government(s): To be (a) responsible trustee(s) for our (global) resources and environment.
It seems to me that this GREED that continual economic growth entails and propagates stands diametrically opposed to sound global ecology and sustainability. Incentives for responsibly shepherding and controlling a healthy world economy should be sought, studied, and economically rewarded. That would mean a revolution in the way money is currently made and valued. However that should not really be out of the question for nations whose very survival and well-being depends on continued life-friendly conditions on this our "fragile island home," as the Prayer Book calls our planet Earth. Add to that the fact that money in our modern financial systems has become digitized, has become information rather than the sound currency of days gone by.
In other words, what I am saying is that the basic idea of HOMEOSTASIS rather than continued accelerated growth needs to be included in the economic models of the future. In sophisticated life forms such as our own, some form of homeostasis is needed to keep the body in health, whereas it's only in lower life forms such as bacteria that exponential growth is sustainable in any quarter for any meaningful length of time.
As time goes on I believe that cooperation between civil governments will be an essential part of planning ways to reward efforts that maintain homeostasis of security and health for all peoples everywhere. I believe it's the wave of the future and will draw us all in.
Sure, but capitalism itself often fosters greed in the way that it is structured, especially considering the fact that profit is the bottom line.
Bushi: one of the problems inherent in the US capitalist system arises from the fact that the Founding Fathers failed to realise that some individuals would accumulate wealth and resources to the exclusion of others. The Americas appeared unlimited in scope at the time and the revolutionaries were set on protecting their holdings against punitive taxation. Vast fortunes such as those of the railway barons or the Trumps of this world inevitably create imbalances.
The result has been that 'socialist' principles such as nationalisation and state funding become the only way to attempt to repair a system which is flawed from the start.
The real risk is that an increasingly disaffected middle class and a growing pool of the indigent appear to lead to violent revolt. We seem to learn nothing from history.
Before Sarkozy, I think France was more on the philosophy that everyone should only spend as little time on work as possible and receive yet a decent level of income to live with. I once read an argument for this too being an economic solution to unemployment - by ensuring that bosses cannot squeeze too much a workload on limited workers, the boss must employ more workers for the same workload as would have been carried out elsewhere, say America. I liked that - sure, it wasn't economic so as to speak, without the perfect resource allocation logic of mainstream economic thinking, but I thought it did enough to maintain a decent resource allocation, and did not make a country out to be an economy; refusing the usual arguments that such would make one uncompetitive and lose out etc. etc. because what really mattered most was perhaps the quality of life as lived itself, than say, the productive capacity of a country and its GDP.
It is unfortunate today, when economic profit and growth has become the raison d'etre of governments, above other issues that matter most to the individual people themselves.
I think it would be fair to say the same thing about capitalism as well. It is the worst kind of economic idea, except for all the rest.
I don't accept such vague criticisms of capitalism like, "Rich get richer" and "Wealth in the hands of the few" mantras. Be specific.
I consider myself a republican. Not only in the sense of the party, but republicanism, the idea that an individual can and should be self-reliant. Marxism sounds appealing. After all, who could be against equality? But that utopian equality comes with a price. Big government, higher taxes, and the inching closer to a welfare/nanny state. I'm the first to admit that I'm afraid of that.
Don't get me wrong, I despise these incompetent bankers and the "Big 3" CEOs. But rather than letting them all get their up and comings (as would happen if capitalism were allowed to do its thing), everybody wants to bail them out. Automakers? Banks? Whose next in line for handouts?
In the summer, I am a loyal worker for a small business. I want the business I work for to be successful. I want us to compete strongly and be profitable in the market. If my business makes profits, then I make profits too. What is so sinister about that? If you tax my employer to death (since you know how much is too much when it comes to profits), then he'll have to cut back on something. Advertising or employees.
The biggest difference between capitalism and socialism is the notion of choice. In socialism, the government chooses how much is too much for you to make in your business. In capitalism, you choose where to spend your money. If you don't like a particular company or business for instance, you simply don't spend your money there. Capitalistic business can't force you to buy their products.
We won't see any violent uprising of the "proletariat", at least in America. Instead, we'll see the ever-growing behemoth of a government that is constantly seeking to absolve people of any personal responsibility.
Oh well, try Nietzsche
"Wen hasse ich unter dem Gesindel von heute am besten? Das Sozialisten-Gesindel, die Tschandala-Apostel, die den Instinkt, die Lust, das Genügsamkeits-Gefühl des Arbeiters mit seinem kleinen Sein untergraben, - die ihn neidisch machen, die ihn Rache lehren. Das Unrecht liegt niemals in ungleichen, es liegt im Anspruch auf "gleiche" Rechte"
Who out of the scum of today I hate most? The socialist scum, the chandala-apostles who undermine the instinct, the lust, frugality of the working class in his small being, who make him jealous and who teach him revenge. Injustice never lies in unequal rights, it lies in the claim of "equal" rights.
- Nietzsche, the Antichrist, § 57
forgive my bad translation, KoB, but since you speak German also, you will understand it I guess:)
It's definitely an interesting thought to ponder. I haven't read as much Nietzsche as I would like. unfortunately.
You are young and healthy, as well as having, apparently, a part-year job.
Pray that you do not get old, unemployed and sick in a country that has no 'safety net' of benefits and free medical care.
The attitude of "it couldn't happen here" will lead, as in 1789 France, to trouble. A revolt? "Non, Sire, une revolution" Does the Enron collapse teach us nothing? It is no more than the tip of the iceberg of greed and self-serving because the whole system is based on the fantasy lie that there is a Self which must be served.
Part of our problem is that the powers-that-be pretend that there are only two options: capitalism or socialism. Both are in the same box....
Palzang
That's the thing I like about Capitalism, is that it rewards innovation and ingenuity. Build a better mousetrap and the world will beat a path to your doorway.
Simon, in another thread, you said you loved my optimism. You're right, I'm an optimist. I say let this depression hit, destroy the banking, auto, and oil industries, and bring back the balance. A depression is just the opportunity some people need to find their own way to wealth and power.
Ultimately, I look at Capitalism as a "form" of Buddhist economics, in that what you gain or lose is directly related to your actions. These big companies acted out of arrogance and greed for fifty years, let them pay for what they've done.
The way I see socialism, is about giving the billions to the people - demand economics, bottom-down; not trickle-down as bailouts do.
I understand where you are coming from; I also held similar views at one time. Nevertheless, coming from a family that has seen its fair share of hard times, I grow more and more concerned with the plight of the average wage worker, and I have to agree with Thomas Jefferson on the dangers of the inequal distribution of wealth (e.g., Thomas Jefferson Letter to Rev. James Madison).
I never thought I'd hear "trickle down" again. How long do we have to starve the poor before it is realised that the only thing that trickles down is sh*t?
Sorry, Bushi, it just doesn't work. What is more, if you really believe in trickle down, you have to remove all constraints on business and simply allow 'market forces' to dictate. The result? Well, even with the US's light controls, we got Enron.
In addition, there is a problem with 'short term' controls. They tend to last and last. Income Tax is a perfect example: just look at when and why it was brought in.
In terms of a household budget, if wqe can't afford something we don't get it and we cancel all the subscriptions so that we can feed the kids. Isn't it time we cancelled our subscription to the War On Terror Fiction Club?
I disagree. This model failed in the early 1900s, and it failed again in the 1980s. Plus, we've seen that those in favor of this model are also the ones in favor of little to no regulation and oversight. Besides, not much wealth actually trickles down.
As for the cost of the GWOT, we do need to restructure the overall strategy, favor diplomacy and joint operations with the governments of states that have terror problems, learn something about the cultures that are cultivating terrorists, and start dropping the extra money into hometown business grants for small businesses.
The problem we have, is that theory doesn't work - we have failed theories which no longer work, leading to people who continue to follow them as theoretically rational, practically irrational. If we want to start talking about non-economically based legislation, protectionism and the like, we are moving away from economic capitalist theory to more humanistic views of labour and resource allocation.
Palzang
I just might go into politics after all.
Palzang
Do you have a roof over your head and food to eat Pally? Can you pay your bills? I hope so. I also hope that if you don't have enough to get by that your situation changes. I will be thinking of you.
Whenever I am inclined to worry about how our income is shrinking due to the Old Feller's pension being paid in pounds and suffering due to the pound / euro conversion (we have lost 25% of our income in the last year) .... I count my blessings - I am warm and dry and fed. People are dying on the streets of Paris now the temperature has dropped and I am ashamed.
So it'll work out. If things get really bad, I'll go ask for help, though it really runs against the grain. I've got my sangha family to help too, and they have been. I'm living with another monk whose family bought him a condo, so if I can't make rent on the first, there's not really any pressure. One of our sangha members is taking me grocery shopping this evening. I have to swallow my pride as I resist being taken care of, but I guess there comes a point...
Just another exercise in impermanence. I'm sure a job will surface sooner or later. Thanks for caring tho.
Palzang
Hi Palzang,
I wish you luck with your search for work. The only Tibetan monks I've yet met are supported by their communities and are full-time sangha.
How is it in your case? Are you a 'semi' lay person or is the community too sparse to support full-timers?
Just curious.
Kris
I don't know about in DC but when I was in Florida almost everyone I saw working anywhere seemed to be about 90.
In the UK a lot of big stores have realised that older people are more reliable, have better people skills and a lifetime of experience on which to draw. One big DIY chain made a policy of going out of their way to employ the over 50s simply because they put more effort into it than the youngsters.
I will be praying for you Pally and of course I care. Two things are awful - being in a job you hate and not being able to get out of it and not having a job when you really want one.
Knitty - well, that's because everyone in Florida is about 90! I did find a website that claimed to find jobs for seniors. I thought, oh boy, now I'll find something! About the only jobs they had though were things like character actors at Chucky Cheese's and buffet jobs at Holiday Inn, that sort of thing. Oy! If that's all I'm good for, I'll just pack it in! Just have to keep on plugging away at it. It's all just phenomena.
Palzang
Hi Palzang,
I guess that makes you more yogi than monk in one sense, as you are very much in the world. I have known tantrika who kind of live an outwardly conventional life.
No temple could tie Tilopa and Naropa down after all...
This what used to be called a "mixed economy" and is what we aim at, more or less, in Europe.
I'm sure I have recommended reflection on the difference between "guardian" and "trader" organisations.
But there is also the factor of non-material living standards at stake, KoB. Do you wish to include these subjective, but yet important judgement criteria into deciding which system be the best?
Country ≠ Economy
Palzang
In my opinion, the problem is not with all the various economic systems, including capitalism, as much as it is with the inclination of people to abuse them.
Jason
Ok.
But almost everyone has pointed out the evils of capitalism (curiously no mention of the even more horrifying ills of communism) without offering a better solution. Essentially what I am hearing is "Yep, this sucks, people suck, can you believe how much this all sucks?" Yet I hear no mention of even a slightly less evil way of running economies.
Samsara, yes, I know. But we shouldn't be content to just say 'woe is us' without trying to point to better way.
Well, as I said in the original post, there is no perfect system, and the reason I limited my thoughts to capitalism and socialism is because they are the two main economic systems at play in the United States. While capitalism has been the dominant model in the Untied States since its founding, many of the labor reforms that have been adopted by the Democrats and Republicans since the early 1900s were initially part of the Socialist Party platform. As the Socialist and Populaist agendas became more popular with working-class Americans, the two main parties began adopting more and more of their platforms.
Communism never caught on in the United States the way socialism did, partially due to their more radical nature, and therefore I did not mention it specifically; although, it was indirectly referenced when I mentioned "more radical groups." That being said, my idea is to promote a stronger mixed economy, having a mixture of nationalized industries that are economically vital while at the same time permitting a free market to continue in the rest. As I said before, this is not a perfect system either, but it seem to be more flexible and pragmatic when faced with such economic difficulties as we are facing today.
Jason
To take the more obvious observation first, the bill is a monstrosity of allocations and I think that the bill should be streamlined, or at the very least, broken up into separate bills. In the present bill, for example, there is an allocation of $25 million dollars for ATV trails. There is also $650 million set aside to continue the coupon program for the transition to digital television. Now, compared to the $800 billion dollar total, $675 million does not seem all that much, but honestly, how will this stimulate the economy in any meaningful way? There are things in this bill that I think are helpful, such as money meant to be spent on ready-to-go infrastructure projects and unemployment benefits, but I think this $675 million is a waste of money and I am sure that there are more allocations such as these hidden throughout the bill.
As for the idea that this plan is not entirely sincere in its aim to stimulate the economy, I partially agree. I think that the people writing this bill hope it will, but I do not think that they are all that confident about what they are doing. As with the last bill, there is no guarantee that the money will be spent the way they want it to be unless there is more government interference. Look at what happened with the last $700 billion dollar bailout.
The government funnelled massive amounts of tax-payer money to the major banks while slashing interest rates in the hope that this would stimulate more lending. But what really happened? The banks (e.g., Bank of America, Citigroup, etc.), full of bad assets and basically insolvent, hoarded the money instead. My guess is that the same will happen with any new influx of capital unless the government takes a more hands on approach by either temporarily nationalizing the banks, finding out how bad their bad assets really are and begin lending again, or by including specific guidelines on how the money should be spent by banks who solicit government help and assigning government accountants to these institutions to make sure that the money is used accordingly.
One of the main problems with this situation, however, is that the government is loathe to do anything that looks "socialist" because this is still a bad word in America. I find it funny, though, that the free marketeers of the the previous administration who advocated a market with little regulation or oversight were happy with the status quo when the market was strong and the economy stable, but as soon as the massive amount of corruption and mismanagement eroded the free market into a cesspit of credit-based consumerism that no longer had the ability to live beyond its means, those same free marketeers demanded swift and decisive action from the government in the form of using tax-payer money to shore up the weakened economy by buying bad assets from failing companies, guarantying bad debts acquired by failing companies, helping failing companies merge, etc. etc. The problem is that they simply gave the money to these companies with little to no strings attached.
The previous bailout plan, as well as the unprecedented authority given to the Treasury and the Federal Reserve, was one step closer to nationalizing certain sectors without actually nationalizing them. In my opinion, this was a slight of hand that simply added an extra layer of bureaucracy to the process of stabilizing the economy, which ultimately left the tax-payer even more unprotected. The reason is that without directly nationalizing these industries or at least including specific guidelines on how the money should be spent, and leaving them in the hands of the very same corrupt, greedy or just incompetent CEOs that have time and again proven to be unreliable, much of our money has be squandered (e.g., After Bailout, AIG Execs Head to California Resort) or simply hoarded (Some Banks Hoarding Bailout Money). I am not a big fan of nationalizing certain sectors and leaving the rest to sink or swim in the shark infested ocean that is the free market, but if that is the direction we are heading in, why not do it right? Why just give these companies another huge infusion of cash when we have no control over how they spend it, no means of tracking how they spend it, etc.?
I am somewhat hopeful in that I have heard Congressman Barney Frank say that the money will be tracked this time around, but I have not heard anything about how they plan to make sure that all of this money will be used appropriately, whether by the states, or the private financial institutions, etc. As for the entire financial sector, well, it is an absolute mess that needs to be cleaned up. For starters, I think that the Glass-Steagall Act should be reinstated. It was a good idea then, and it is an even better idea now. I also think that this supposed "shadow economy" created by hedge funds and investment banks needs to be investigated by federal regulators (that is, of course, assuming that there are any true regulators left seeing as how all of this managed to slip past most of them over the past decade).
And this is only one part of the problem! I wish I had the time to get into the credit card industry and the high rates of interest they charge (I think we should consider new usury laws targeting credit card companies, "national" banks, etc.), not to mention our manufacturing and trade difficulties. But the main point is that if nothing is done to fix the present system and provide protections from further abuse and mismanagement, we are definitely going to compound the real problems for a much, much worse future. I just hope Congress gets their collective heads out of their asses long enough to figure this out.
The beginning of chapter three, for example, provides a simple yet excellent overview of the main causes contributing to the current world-wide economic crisis. In regard to credit, he notes that, "Credit is ... much more sensitive than commerce to any disturbance. Every shock it receives is felt throughout the economic organization" (47). Besides making a strong argument for why this type of system makes it increasingly more difficult for small production (e.g., small farmers, small business owners, etc.) to succeed, he stresses that this credit based system ultimately renders modern industry "more and more complicated and liable to disturbance, to carry the feeling of uncertainty into the ranks of the capitalists themselves and to make the ground upon which they move ever more uncertain" (48).
But the type of careful direction that is needed to insure the uninterrupted operation of this modern system of production is hindered by the very institution of private property on which it is founded. As Kautsky summarizes: "While the several industries become, in point of fact, more and more dependent upon one another, in point of law, they remain wholly independent. The means of production in every single industry are private property; their owner can do with them as he pleases" (50-1).
It has become increasingly apparent to me that to be able to effectively manage a world-wide, credit based economy, a certain amount of outside interference is unavoidable. In the United States, however, this leaves us with quite a dilemma. On the one hand, "socialism" is often distrusted and seen as an enemy of capitalism and democracy. The word itself usually invokes authoritarian and oppressive examples of institutionalized socialism such as the Communist Party of the Soviet Union, Socialist Unity Party of Germany, etc. But as we have seen, without a certain amount of intervention, whether in the form of stricter regulations and oversight or outright nationalization, the system is extremely vulnerable to abuse, disruption, etc.
Every day I am becoming more and more convinced that the United States must adopt an economic model similar to those that have taken shape in Europe — with a mishmash of capitalist and socialist ideologies — out of sheer pragmatism. I truly believe that we have to do something drastic about this growing economic crisis or else our economy may very well crash even harder than it did in the 1930s. And even though I realize this is not a perfect system either, I not only think that it will be more flexible and pragmatic when faced with such economic difficulties, but I think this is where we are already headed. I am just afraid that we will make it unnecessarily complicated in order to disguise this fact from ourselves, thereby making it less efficient and, ultimately, ineffective.
Also from there:
But although the several functions of the capitalist thus become the functions of separate undertakings, they do not become independent of each other except in appearance and legal form; economically, they remain as closely bound to and dependent upon each other as ever. The functions of any of these undertakings could not continue if those of any of the others with which they are connected were to be interrupted.
It's terrible, Jason, how our government let all this happen. Those derivatives that Wall Street pushed were really nothing more than mere contrivances. Nobody understood what good these things were and they turned out to be very bad indeed. I think the fact that they got such high ratings by the financial "experts" and that everybody wanted them is analogous to "everybody" using blocks of ice as foundation stones for their edifices, and turning around when the buildings fall, asking "why?".
Things are gonna get real bad. Just look at the signs. Businesses are beginning to close down en masse.
Nobody was left watching the store. Everybody was just watching everybody else and making comparisons while the edifice was sinking into the sands.
It's a mad, mad world!
I hear you, Nirvy. Two weeks ago, my company restricted everyone to 32 hours a week. Last week, they announced that are going to start letting people go this week. Seeing as how I have Mondays off, I will have to wait until tomorrow to find out what has happened. Thus far, I think that I am safe; but if business does not pick up soon, it is only a matter if time.
Palzang
Ditto Kiddo.
You know, though, I think any talk of deflation is misplaced reality. I mean, prices just keep going way up. It's amazing how much food prices went up when gas prices were leaping. Food prices have stayed up despite the decline in fuel prices. Nobody's taking these marketeers on. Everybody needs to eat, so if you're in the supermarket business you're doing very well indeed.
The very thought of deflation, of prices keeping going down and people deferring their purchases until they get a rock-bottom price, resulting in a freeze in trade, is just a theoretical thing. I just don't see it happening.
Right now I think the government needs to throw the baby out with the bathwater. I believe now is not the time for "responsible spending." All this mess came about through utter irresponsibility and its cure is not an abrupt change in course, but a remedial one.