March 18, 2008
Bears, Bulls, and other Animals in our Forest
It's Spring break, but I'm already planning my next week's classes! See what some free time does to me... (looking for trouble). It's fun, coming up with stories and exam questions..
Class exam: Analyze the concept: socializing the risk and privatizing the profit. Include examples. You should also reference the ideological framework as to the role of the state (gov) in a modern capitalist system. Does the marketplace need the government to operate, or does the latter function as an impediment to the former?
Now, the following is a story I just made up but will use in class to ease the students back into rigorous learning, and, of course, to ..indoctrinate them.
Once upon a time, there was a small club of friends who dined and played (golf, bridge, etc) together no matter what happened in the world. They were considered wise men by their peers, and had advised other people to be aggressive in their investments--normally with other people's money!
They all made millions in salaries & bonuses, because they deserved it--and because a small group of their peers agreed that those who move lots of money around have lots of stress. Money always shows how much a person is appreciated was the dictum.
There are certain story tellers who convinced the majority of the village people that welfare--often called, the social safety net--for the working & indigent classes is a very bad thing. They also said that the government is a necessary evil and that, for our sake, it should be so small as to be drowned in a bathtub... Private companies, usually after huge over runs of the original estimate, would provide the bathtub and the taxpayers would gladly buy it.
On the other hand, assisting the hard-working and money-making businesses (ie, corporate welfare) was is a good thing they told us. The preferred to be mum, retreating in the quiet of the backrooms as they made their deals. After all, who needs all those statistics, numbers (oh, the horrors of ..math), and the legaleze--all very boring. Who could argue against this: American companies are patriotic and would never deliver inferior products, waste taxpayers money, put any American in danger, and charge us higher prices through no-bid contracts. The free market would never allow that, would it?
Those who have more money, wealth and power got even more money & legal benefits since apparently they deserve it. They owed their success to their own efforts alone, something like pulling their own bootstraps. Of course, they needed bigger tax breaks too! They had more expenses you know!... End of this little story.
So to better understand all this, I brushed up on Adam Smith recently. I had to discuss his ideas in class too--Moral Sentiment, and Wealth of Nations. I understand that profit is the engine of capitalism. Smith said something about competition and how it's good for the marketplace, but measures had to be taken to prevent predatory markets and companies. Ah, well. I'm sure the modern capitalists and those in power know that.
I also read, Free Lunch by David Cay Johnston, and watched him on Bill Moyers Journal. [here's a clip on YouTube]. I suggest you check those short videos. Very informative. Anyway, I'm wondering why those who demonize the (our) governmnet often turn to it for help & salvation when they screw up?
Do you have an answer?