If a massive traffic accident involving dozens of cars kills, maims, injures hundreds of people, there would be a serious inquiry into why it happened, what can be done about it, and maybe even prosecutions laid if someone fell asleep at the wheel or failed to take due diligence.
Why is it that we have no similar response the world’s biggest economic meltdown?
Reading this you are likely a middle class professional much like me. I’ll admit as much as the next reader, life is pretty darn good in Canada. I didn’t buy into the sub prime mortgage, my portfolio is back up, retail spending is back up, so what is there to worry about? What is to worry about is that the systemic issues that caused the original crash hasn’t been fixed and the people and companies responsible for it have not been held to account.
When an airplane crashes, the airline industry doesn’t just say this component failed or scapegoat the pilot. They look at what made the error possible to begin with. Was it the positioning of the landing gear switch next to the flap controls? Was it the language barrier between the control tower and international flight? They take a deep look at it because otherwise there’d be more plane crashes over time.
When it comes to the economy we want to look for the simple proximate answer. Somebody bought a loan they couldn’t repay. Ha! Dumb person for trusting the banks. The fact that many of these investment banks knowingly exploited, lied, repackaged those assets, bet against it, sold it around the world and made billions doing it is ignored. In this situation, you arrest the con man, not the victim.
Jeffery Sachs, a renown economist, in the following video describes the systemic problem with the global economy today. What’s ironic is that
in the following video says, “It’s not a free market; it’s a game” and a rigged one at that.
Even if you only follow the cursory headline news, you’d know that banks like Goldman Sachs were bailed out with billions or dollars of tax money all while paying themselves handsome bonuses and lobbying against any form of regulation that would restrict their profligate spending.
But a few things get in the way of understanding. First, it’s hard to hear the reality when our portfolio, our retirement savings, our investments depend on the success of the current system. That trillions of dollars evaporated during the financial crisis because most of the wealth “created” was phantom wealth is of no concern to us… as long as we get our returns.
Second, those that make billions have a vested interested in fighting any sort of regulation or control. Any responsible regulatory measure is fought because it’s against the “free-market” or it’s all about “government interference.” There is nothing “free” or fair in letting the elite players set the rules of the games. And a nation without a government is… well likely to be taken over my private, corporate interests. Hardly the American Dream. Unfortunately, while no one has an interest in letting traffic accidents happen, lots of keen individuals have an interest in keeping the money flowing to the top.
Perhaps the most insidious barrier to understanding would be our tendency to react to the words and not their meaning or implication. The knee-jerk reaction in the States to taxation or regulatory control is often accusations of being communist or anti-free-market. Invoke those words, and you stir the passions of an ideology without any investigation into what they mean and if they are in fact served by those who profess it.
The antidote? I think we should be more like CSI but in life. It’s not that I think we can solve cases in a single day (or look so good doing it). However, I do think the ability to investigate the case, put together the pieces, test stories and theories against evidence despite people actively trying to confuse or delude you… it’s a useful skill.
And we can’t afford not to be curious, not to question our assumptions, or challenge those with formal authority and power. Otherwise, they will be happy to structure our assumptions for us.