Tuesday, March 23, 2010
A Sad, Sad Day
The thing is, we know how this movie ends. Think Greece, because that’s where we’re seeing the final act play out. Everyone feeds off the government, there’s no one left to tax, and lenders pull the plug. Meltdown follows. Public rioting. No one wants to actually work hard for a living because they’ve become quite used to 35 hour work weeks, thank you, plus twelve weeks of vacation, retiring on three quarters benefits, etc.
But hey, Scott, what about all of capitalism’s problems! Didn’t capitalism get us in this mess?
I have two responses to this. First, many of our recessions were the direct result of bad government policy, not unfettered markets. The latest recession is no different with the federal government – via Fannie and Freddie – actively trying to extend home loans to those who couldn’t afford them. The history of the last century or so with examples of the government creating bad laws that lead to crises, and then "riding to the rescue" with more bad laws. Obamacare is a classic example.
Second, no one ever said capitalism was supposed to produce unwaveringly consistent growth. American history is littered with financial panics, recessions, and depressions. Ever hear of the panic of 1893? No? I didn’t think so. It led to the second worst depression in U.S. history with one in six Americans unemployed. How about the Panic of 1907? The stock market dropped 50% and banks failed across the nation.
And yet…and yet, we emerged ever stronger as a nation each time, with growth rates that no country in the world could match. And it was a moral growth, not simply one for rich men. As a nation, we practically invented the concept of a middle class, and it grew relentlessly for two centuries as the poor bootstrapped their way up the ladder.
Most significantly, the world’s poor all wanted to be here. They voted, by the millions, with their feet. Some of my own ancestors made the trip from Ireland in the 19th century by boat to New York. Did they do it because they knew a vast social safety net awaited them? Of course not, because no such thing existed. They did it for the opportunity reap the benefits of their own hard work in a place where no one told you what you couldn’t be.
I am an optimist by nature, but I find myself harboring a greater level of unease about our future than ever before. There’s much more to say on this, but for the moment I’d rather focus on things that don’t depress me so much.