Lessons from the Economic Wreck-covery


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Thus, on the fear side, we have businesses disinclined to hire due to the uncertainty created by massive government distortion of the marketplace. On the greed side, we have substantial numbers of Americans disinclined to work, due to massive government distortion of the social contract, in which one used to expected to have a degree of personal responsibility.

How bad is this distortion? The same fear that is supposed to temper greed has been used to facilitate it. Americans, who have been inundated with a “never let a crisis go to waste” mentality from the beginning of the economic meltdown until now, will never know for certain whether the $700 billion in taxpayer money used to bailout the banking system was absolutely necessary to prevent systemic failure. All we know for certain is that those who had the most to lose as a result of their greed instilled a coordinated and unrelenting sense of fear into the entire nation. Remarkably, most of those people remain in the same or similar power positions that they enjoyed before the crisis. In retrospect, mass resignations of such people should have been demanded as an integral part of the bailout. At the very least, a modicum of fear would have been reintroduced where it is needed the most.

Instead that fear was leveraged. A largely center-right nation handed the reins of power to the most progressive elements of our society in the form of the Obama administration and a throughly radicalized Democrat party. For the better part of five years, greed and fear have been filtered through the progressive lens.

Unfortunately, progressives completely misunderstand human nature. They truly believe that mankind will aspire to its higher instincts, simply because it is the right thing to do. “Enlightened” corporations will ignore their bottom lines and simply hire for the sake of hiring. “Enlightened” individuals will pursue work immediately, casting aside their government-subsidized lifestyle as quickly as possible. Everyone will work for the “greater good” if given the opportunity to do so. In short, progressives believe greed and fear can be mandated — by those who profess to know more about “what people want” than the people themselves.

This is the essence of hubris, and it is underlined by every “unexpected” development that comes down the pike. It is aided and abetted by the Egotist-in-Chief, who can look at almost three years of economic reality and, as evidenced by his speech on Friday, conclude that more of the same is the answer. Only a man thoroughly beholden to rigid ideology could still be touting “investing in rebuilding our roads and our bridges and our railways and our infrastructure,” as in the very same “shovel-ready jobs” he himself admitted last October didn’t exist.

Lost in last week’s hand-wringing about the number of jobs created was a far more salient fact. Even as the dismal total 18,000 jobs was announced, it was also announced that the job totals for April and May had to be revised downward by 44,000. Thus, it is quite possible that next moth, June’s job totals will also be revised downward — perhaps revealing a net loss of jobs, when a more accurate picture emerges.

Is there a way out of the mess we’ve created? Starting at the top, Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, offers the obvious solution. He wants to “reduce the scope and size of banks, combined with legislatively mandated debt-to-equity requirements,” in order to “restore the integrity of the financial system[.]” He further notes that ”[financial institutions] reached their present size through the [government] subsidies they received because they were too big to fail. Therefore, diminishing their size and scope, thereby reducing or removing this subsidy and the competitive advantage it provides, would restore competitive balance to our economic system.”

That’s a banker’s way of saying we need to restore the proper balance between greed and fear. It is the same relationship which must be repaired within the government as well, as $14.4 trillion of national debt indicates. This may be a far more difficult task, since spending trillions of dollars we don’t have has been portrayed as “compassion.” In reality it is the greed of today’s generation of Americans stealing from subsequent generations absent the fear of consequences — based on the idea that America itself is “too big to fail.”

It’s not. And either the proper relationship between greed and fear will be re-established by cooler heads addressing the genuine distortions of our entitlement-run-amok culture, or it will be re-established by entities with little or no sympathy for the richest nation in the world. Either way, it will be re-established. Neither the laws of economics — nor human nature — can be suspended indefinitely.

Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.com.

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  • Amused

    Greed and Fear …..indeed are the engines of Wall Street .However , neither is "good " for any recovering economy ." Greed is good " ? Yea for the GREEDY , and the "Fear " of losing ill-gained fortunes ,tempers that Greed ? So how did that fear get mitigated , so that it no longer was a factor in the economic debacle we find ourselves in ? Derivatives , Vics , and other "guarantees for reckless gamblers , and it worked so well that the stalwarts of the American economy – Savings and Commercial banks could no longer resist the temptations of "easy money " , thus the lobbying began to repeal the act , that worked so well since the '30's , seperating them from investment banks .A feeding frenzy ensued .The only problem was , that the so- called "insurance " was that in name only , not DEFINITION ,and were not required to have the liquidity that insurance companies are required to have . And they get around it by calling themselves something else .

  • Amused

    Unfortunately , any legislation correcting this , is presently being blocked and lobbied against by the same "greedy " people who got us into this mess to begin with , with little concern over whether it causes another melt down .. I wonder what the un-employment percentage on Wall Street is ? Well we're headed there again ., and unless legislation like that of the 30's , [I believe it was the Glas-Steigel Act ] is reinstituted , that GREED the author says is "GOOD " will again destroy any confidence that small investors may have left .
    Sorry Arnold , but Greed is NOT good , greed is destructive , as we have so clearly seen . Not to mention , greed is simply not good buisiness .Capitalism is a great system , but not when it is based on legalized or protected GREED .

    • davarino

      Didnt you read the article numbnuts. He said that greed is only good when balanced with fear. He talked about undoing the unbridaled greed the bankers had previous to the meltdown. If you dont have greed, people wont take the risk to make money, which creates jobs. I think what you are talking about is people investing just because they are good people. If you read the article, Arnold talked about that attitude also.

      • Amused

        Didn't I say greed is destructive ? Did I qualify that ? Greed is a bad motivator , and many,many fortunes have been made WITHOUT IT . With GREED comes it's cousin -AVARICE . Oh ,and THOSE should "be tempered with fear " ? People like you give Capitalism a bad name .

        Get your head out from up your arse Davarino

  • palidin 911

    Greed is not good, my opinion only, But why does all entrepreneurship have to be described as greed? It sounds like a definition made up by liberals.

    • nightspore

      Exactly. This is a ten-cent analysis of motivation in the business world. In business as elsewhere, Aristotelian moderation is always best, and it's only partly approximated by balancing greed and fear, although that may be necessary in the real world. I also agree with Amused that greed in itself is generally destructive. (A good case in point is found in Michael Lewis' account of the bankers at Anglo Irish running amuck.)

      There's also a problem of individual differences here; there aren't that many people who have the talent and can carry out the balancing act that goes into performing successfully as a businessman. So we see a lot of aberrant action. Which can be partly controlled by fear.

    • Amused

      Oh , you're so full of SH_T , that it's coming out of your ears . They are two different things .A juvenile like you will attemp any half-arsed comparison to suit your idiuot -ideology . Grow up .

  • Jim_C

    There is a reason greed is a sin–it is only destructive. Greed is not good. Gambling and playing complicated mathematical games with money is not "good."

    But that is not the same as accepting risk. That is not the same as growing your business. Those are healthy. Those are creative, not destructive.

    Fear is also not good. Fear causes people to act irrationally.

    Caution, however is good. People act prudently.

    Let's get our terms right.

  • Jim_C

    "Americans…will never know for certain whether the $700 billion in taxpayer money used to bailout the banking system was absolutely necessary to prevent systemic failure. All we know for certain is that those who had the most to lose as a result of their greed instilled a coordinated and unrelenting sense of fear into the entire nation."

    This is one of the good points the TEA party makes, I think. The only problem is that those who had the most to lose would have simply lost the upper end of their lifestyle, while those whose life savings were tied the the former's fortunes could potentially have suffered catastrophically.

    On the other hand, "Nothing is 'too big to fail'" is a pretty good slogan, and the fellow at the bank mentioned above is right on.

  • Michael Shaw

    18000 jobs created in the U.S. in June is really pathetic considering that just one Canadian province, Alberta, did better than that in the same month.

  • Amused

    The buisinesses have the Capitol to hire , but they're not going to , until the present pissing contest in Congress is settled .