26 March 2009
Several economic publications have been attempting to make sense of the latest economic crisis; two of the most reliable are the Wall Street Journal and Economist magazine. That, of course, does not preclude everyone else who considers himself/herself qualified to weigh in as well from doing so. Unfortunately the lure of sensationalism is too great for most, and it’s preferable for them to predict the end of the world than gradual return to “normal.” My hope is that we won’t return to “normal,” which is excessive debt and spending beyond means. But we probably will – we like to. As a gentleman was quoted long ago saying, why should I live like a poor man when I can live like a rich man? Meaning credit.
But back to WSJ and the Economist. In recent articles a WSJ editorialist wrote straight out that the current government leadership had absolutely no understanding of free markets. And the Economist suggested that the future is much more dependent upon politics than economics. Put that together and it could be worrisome. But then, we have been through this before (the country that is) and survived; though perhaps not quite as complicated, and never on a global scale, but long term, people are not likely to just roll over and give up.
How about short term? That’s a little more concerning for two basic reasons: politicians don’t understand and don’t want to understand since they are focusing on their own power and its expansion; and the people are ignorant and emotional. One, however, can forgive the people, at least in the short term, because they have to make monthly payments to live. Forgiving the politicians is more difficult. But it is the aggregate that is short term worrisome. People, who don’t really understand what’s happening and feel powerless anyway, are attacking the officials of companies who are being forced to make layoffs to keep their companies afloat. These are the very same people who we count on to get it straightened out again. But politicians, in order to shift blame from themselves, are encouraging it, and these are the people who are really to blame for it all. One is reminded of the French Revolution. That’s scary, short term, because the French Revolution was not a pretty sight.
So what to do? Theoretically, let the economists do what they have to do to smooth the waves. But economists don’t control, politicians do. And there is the real challenge. First, we have to be patient; but second, and while being patient, we need to rid the government of ignorant politicians unwilling to listen to economic reason. We have lived beyond our means and must now learn to deal with the consequences; we must understand that and live with it, and dump politicians that cannot, will not, do so. If you are reading this (don’t laugh) you know who they are.
