Back to Basics

(*I first wrote this back in October, 2008, when the world was still intact.)

The White House and the US Congress have handed over billions of dollars to the ailing financial industry and is getting ready to pass on billions more to the auto industry. Many argue that these bailouts are necessary to prevent further damage, to stop the loss of millions of jobs. Henry Paulson’s moving plea to House Leader Nancy Pelosi (is there not a picture of that anywhere?) was grounded on such fears. If AIG was allowed to failed the international ramifications would have been catastrophic.
What does this mean for the state of our economy? Does it represent a major turning point or has the volume just been turned up on a policy pattern long since in practice? My gut feeling is that something radical is changing. On the other hand one doesn’t have to look far to find examples of government bailing out big biz when it’s in troubled waters. For me it brings the myth of free market capitalism into the light. Milton Friedman and his Chicago School were not as successful as they are made out to be. Who can honestly argue that the US economic system over the past 30 years has been allowed to run free of government intervention? The Chrysler bailout of ’79 and the S&L crisis of the 1980s are glaring examples of government jumping in to save the sinking ship. We could take a look at NAFTA to again clearly demonstrate governments biased role in US and world economics.
Take a look at US military intervention and try to figure what that has to do with “free market” capitalism. Were US and international food distributors vying for contracts in Iraq after 2003 have a level playing field? Could it possibly be that certain companies like Halliburton and KBR had preferential treatment?
What sort of a predicament are we in? We are living through a phase of capitalistic growth financed and defended by the public sector and payed for by the private sector. The tragic consequences are felt by many, speculated upon by some and concealed by a few. Are we all just a bunch of lemmings heading for the cliff? Do we want to blindly stand around and watch Washington bury the last hopes of a healthy future?
The US government, opinion makers, elite and the populace in general needs to reorient priorities. We need to ask ourselves what it it that we really need? What is enough? This is, of course, a gigantic issue and there are no easy answers. Let us look, however, at a simple issue to try frame this shift in consciousness.
Boots. Boots are an easy topic. Not very controversial. Unless you live in the tropics or the desert, everyone needs a good pair of boots. The boots should keep you warm and dry and be relatively comfortable. If you were to take an opinion poll I bet that the vast majority would say that they want a pair of boots that will last a long time. So why do so many US Americans buy boots that either don’t keep them warm or don’t keep them dry or don’t last very long? Advertising, commercialism, consumerism? Stupidity? I would argue that it’s a mixture. Intelligence plays a role. I you’re smart enough you don’t get sucked into a consumer trip that is damaging to yourself. In certain environments, though, it’s hard for anyone to avoid the appeal of consumerism and marketing.
Certainly if you take a typical consumer and let him choose between two pairs of boots and provide him with sufficient information, you will find her making a reasonable decision. Boot pair A is 20% cheaper, is warm but doesn’t repel water effectively and has been know to not last more that a couple years. Boot pair B is not as pretty, doesn’t have a brand name, is more durable but more expensive. Pair B is known to last for over ten years. Take away the commercials, take away peer pressure (no teenagers allowed in this experience) and I bet our consumer will make a reasonable decision.