On Friday, the U.S. Treasury took some extraordinary, extraordinarily risky, and probably doomed to failure, steps to bailout the financial institutions and speculators that dominate the U.S. economy. As with the previous and ever more panicked bailouts, these were aimed at preserving liquidity at the largest financial firms at an incredible cost to the U.S. taxpayers.
When considering such complicated phenomenon, metaphors and analogies can help. I think of the situation as an ecosystem in collapse. In any ecosystem the peak organisms such as sharks and whales are dependent upon an entire food pyramid that extends ultimately down to the plants and plankton that fix energy (do work and create value). In the U.S., but also in the global economy, we are seeing the peak organisms in sectors such as the finance, insurance, and real estate in severe convulsions and even dying. Firms in whole sectors such as the investment banks are no longer viable. In response, the U.S. government is plying them with bailouts and other measures to keep them on life support. The U.S. Treasury is openly manipulating the economy’s fever chart, the stock market. In each and every case, this has provided temporary relief, but not addressed any of the crises. This is not surprising because the decisions are being made behind closed doors by a small group of insiders whose whole experience is in the peak organisms. They cannot accept that the model that made them wealthy and successful has ended up destroying the plankton. So their response in every one of these ever larger and more frequent bailouts has been to transfer from the plankton to the peak organisms.
A more creative way of thinking is to recognize that what must be recuperated is the plankton. This will have to be funded by dramatic increases in taxation of the wealthy and a carbon tax to reduce energy usage to be transferred to the poor and middle classes. It is not too early to begin thinking about programs such as a new environmentally oriented Civilian Conservation Corps that would install energy efficiency and solar energy devices on new homes. A Works Progress Administration would undertake similar programs for public buildings and transit – this could be combined with a public arts program. Given the shocking lack of educational attainment in the U.S., another program could be to educate America. These programs would be labor-intensive and funnel U.S. dollars into the U.S. rather than being spent on imports from abroad. Programs spent on assisting the plankton and, at least, partially paid for by those to which so much was given is a far more creative solution than one that only bailouts the banks.
I believe fashioning an affirmative and creative response to the current financial disorder requires understanding where the problems are located and fashioning responses that target those locations. So far, I have heard nothing from either of the two leading candidates that they have an inkling of profoundness of the situation.
I would be interested to hear what have you folks have been thinking about the current crisis?