Let the world change you... and you can change the world

Treating The Symptom, Not The Cause

It’s nice to see all the furor that has ensued over the AIG bonuses, but one has to wonder if maybe everyone is losing sight of the bigger issue here. The bonuses are no more than a minor symptom of what the real problem is — how do you avoid future AIGs and all the other similar situations like Bear-Stearns, Citigroup, Bank of America, et al? We seem to keep pushing that discussion off the table, but that’s what needs to be addressed and the sooner the better. As much as the right-wing doth protest, just letting monster companies like these fail is not something the American people seem to want to tolerate. Apparently 28 years of Reaganomics have finally convinced the majority of Americans they don’t want anything to do with living in a banana republic. But given that, how do you avoid these problems in the future? I don’t see any easy answers. Stronger government regulation and oversight seems to be the popular prescription — but haven’t we been down that road before? Won’t that be just a temporary fix until the more selfish and greedy amongst us figure out yet another way to game the system?

One possibility that I find intriguing is that you somehow just limit the size of big corporations, or at the least come up with some way of insuring that there is enough competition in any given industry that the failure of one company won’t lead to a major economic crisis. I was surprised last week on 60 Minutes when Sheila Bair, the head of the FDIC and a life-long Republican no less, actually suggested this very solution for the banking industry. When you think about it, it’s quite sensible to apply this strategy to American industry as a whole. And one has to wonder what the Grand Poobah of capitalism, Adam Smith, would think about the idea. After all, the theories he espoused in Wealth Of Nations were strictly limited to small, independent businessmen doing business in small, localized markets. He never envisioned the world in which we live today — with monster international corporations doing business all over the world. Indeed what we call “capitalism” today is quite a stretch from what Adam Smith wrote about.

Bottom line here is that if capitalism is to survive, it needs a major overhaul. What we have today bears very little resemblance to what Adam Smith proposed. For all the right-wing whiners who are carrying on about “socialism”, you all need to step up to the plate with your own solutions. Capitalism in it’s 20th century incarnation has crashed and burned in the 21st century — it’s desperately in need of a major overhaul if you want it to survive.