The fallacy at the heart of this crisis is that every financial problem has a political solution.
– Jeff Randall He’s talking about the euro’s problems, but the same fallacy is at work nearly everywhere.
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Samidata quote of the daySeptember 26th, 2011 |
 11 comments to Samidata quote of the day |
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Er… no. Of course, I agree that financial problems ought not to be solved by political means, but the Euro’s crisis is not purely financial in nature – and to call it that is a mistake. The crisis is political in the sense that the monetary and banking systems in Europe have been saturated by political intervention. Indeed the motivation behind the establishment of the Euro itself was political.
Randall is trying to say the right thing, but out of the wrong orifice.
It has been the nature of elected legislators to demonstrate their theoretical “value” by composing actions to address (if not resolve) issues of every sort, and to give those of the most public prominence the most extensive interventions (to use the Itlaian for “invasive surgery’).
More troublesome: Developing “issues” to require “action” in order to sustain the appearances of legislative importance.
Well, maybe. But when the “financial” problem was caused by political actions the solution will necessarily be political, too (although probably not one the politicians will like). In fact, the distinction between “financial” and “political” is, in large measure, essentially an arbitrary one.
The fallacy that caused this crisis is that every political problem (including invented ones) has a financial solution: additional cost for taxpayers.
Best regards
An even deeper underlying fallacy is that these serial recessions/depressions are economic in nature—they are not.
These are symptoms of unrealistic, and often irrational, political policies which cause repeated economic disruptions as their lack of workability manifests itself through the economy.
There was no incentive in rational economic practice to lend enormous sums of money to people who were not capable of paying it back. That course of action was dictated by political demands, not economic ones.
And, of course, when the political causes an economic collapse, it is the evil capitalists who are to blame, and the knights of the state who will save the day.
How are the knights doing in your neck of the woods?
Changing the subject somewhat, I love the bit where Randall quotes Johann Hari. Talking nonsense, I need hardly add.
This can’t be – and isn’t – repeated often enough. It’s taken as read that “reckless bankers” blithely lent out billions that could never be paid back, simply for kicks or something. Nobody in the MSM ever stops to ask why anyone, given the complete, unfettered freedom that they claim the banks were, would ever embark on such an obviously self-destructive enterprise.
If politicians caused the crisis, then politicians should be required to fix it!
Otherwise, the politicians should actively embrace the political philosophy of Laissez-faire, and let the economy sort itself out!
“Nobody in the MSM ever stops to ask why”
I’d say the logic the left are using is that it was for their own short term benefit, they spend ten years getting fat bonuses and left the others in the lurch when the SH%t hit the fan
The talk over the weekend (of extra TRILLIONS in bailouts – on top of the vast bailouts that have already taken place) shocked even me – and I had, mistakenly, thought I could no longer be shocked by these antics.
The problems of the Western world – the fiat money, the creidt bubble financial system, the out of control Welfare States were NOT fatal problems, the West could have survived and recovered.
What has happened is that (at each turn) the political, academic, media and (yes) finanical elite have made the wrong CHOICE. They choose the path of refusing to suffer real pain – of doing ANYTHING (no matter the scale of the monetary and fiscal folly) to avoid real pain.
What is now to happen is what they (in their folly) have MADE happen.
It was not inevitable – and we must never allow ourselves (or others – if we can reach them) be fooled into thinking it was inevitable.
The West may still survive and recover – but the pain now will be vastly worse than it need have been.
That is the real point – by seeking to avoid real pain, the elite have made everything (in the end) much worse.
To be fair, ManikMonkee, that probably is what happened on the level of individual bank employees. But it doesn’t explain why the banks – the boards and shareholders – rewarded their self-destructive investment in the first place. The answer being multifold, but most obviously the fact that there was no such thing as “self-destructive”: for purely political reasons, they were literally indestructible, Too Big To Fail.