Wednesday, September 17, 2008

"On Wall Street..."

(Sung to the tune of "On Broadway"...
From Dave the Justus

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
Adam Smith

Extreme valuation of ’service’ and a denigration of the private sector is something that bothers me about both McCain and Obama.
The is, of course, nothing wrong with charitable acts and serving one’s fellow man. It is extremely laudatory and certainly we should encourage it. However, it is capitalism and the free market, not public charity that it the engine for generating growth, raising living standards and yes, increasing equality. Both McCain and Obama lack experience in the private sector, which isn’t necessarily disqualifing, but when it contributes to the distain of the private sector that I have seen from both camps this campaign season it is troubling.
I wish that both McCain and Obama would take a little time to read Adam Smith and Milton Friedman.
The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system.
Milton Friedman

Dave the Justus posted this up Monday. His extremely efficient spam filter has been “fixed” yet again or so he informs another making comment on a different post.

But, given the impossibilities, I shall post here (what I can remember) of my comment made Tuesday perhaps brought up to date in the light of the events of Tuesday on Wall St.

I have little time for Friedman. His purity of Capitalism has no consideration of the fact that to operate the system must have human participation, and that that brings with it the weaknesses that saw the failure of so many economic, and political, systems in the past (going right back here to the Greeks, the Romans and beyond.).

So, Tuesday’s comment ran along these lines –
Let us just suppose for the moment that Friedman is right.

If the current “meltdown” of the US economy is the result of greed, what was capitalism doing to countervail?

If the current “meltdown” of the US economy is the failure of capitalism, what might replace it?

There was a bit more, but my recall does not do the original words justus.

What is becoming apparent, in the commentaries coming out of NY and Washington over the news down this way at least (and it seems the FT and others read it the same way) is that “greed is good” as the foundation for the global economy is about as sustainable as the war in Iraq. It might sputter on for another twenty years without really solving the problem. Then like the old worn-out Vespa, it will have to be pushed to the top of the hill so that it can be given a suitable farewell as it is pushed off the cliff.

Now, before you get in to me for being “anti-capitalist” consider this. I am not proposing any solutions. As I intimated when I responded to Al’s “greed is good” post some months back there is some truth to that sentiment. It does not, any more than Rand or like true communism (not the American hate word but the actual system), make a sound basis for an honest and fruitful economic system. So I can not promote either of those as a replacement. As I have said, the fundamental capitalist system is sound. It is in the nature of humans to exploit systemic weaknesses and opportunities to maximise their individual wealth – and that can only happen at the expense of others.

That of itself creates a conflict between those who promote American Capitalism as the global economic wonderland, and those who do not believe it to be the “God-given freedom”. For some, that is their justification for protesting (in some cases violently) at meetings of G8, WTO, and other fora.

But can I leave you with this thought -

Is there any difference between the failure of Enron, Globaldotcom, and the rest when compared with the strife of Freddie Mac, Fannie Mae, Lehman, Merrill Lynch, and all...

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