THE SKY IS FALLING! On some, on others... not so much. Many have debated whether or not there is a recession- in America, abroad or both. Certainly, after the collapse of Lehman Brothers, Merrill Lynch and AIG this week many agree that there is a crisis of some sort. I am particularly fond of President Bush's choice of words: painful adjustments.
The choice of words is, I feel, very apt. Certainly, the sky will continue to float above. Certainly, the economy will persevere. Most importantly, crises are a great time to make a fortune and/or enact systemic "painful adjustments". The process may, quite reasonably, sound fearful. However, there is a long tradition of crisis driven change. One may argue that this is a reactionary approach, commentators on the current situation have referred to the management system as being "defensive". Realistically, or optimistically, we should regard this "once in a century" breakdown as an opportunity to put in place much needed reforms.
Our economic system, as leftist critics have justly observed for a long time, has been based around a non-productive consumerist paradigm. We, as a nation and state, have borrowed huge amounts of capital and invested it in artificial economic constructions that would provide short term profits through the speculation of market bubbles. Bubbles are indeed meant to be speculated, but not lived in. We know this from the long series of similar 'catastrophes' throughout our economic history. Having restructured our economy toward the fabled service-sector, we ceased to produce. When international loans are given to third-world economies those countries are expected, at times naively, to invest them in infrastructure and industry- sectors that are productive. In a period where blind consumerism has reached a critical point of environmental destruction and separation from the real world problems of other nations, it is only natural that there be an adjustment.
In Europe such adjustments have been part of the blueprinting process through the 90's. Cheap energy, recycling, so called "alternative lifestyles" are not eccentric attitudes but at least pursued goals and public policy if not concrete fact. European countries have had to deal with financial market restructuring due to the integration project. In America we act on the motto "don't fix what ain't broke" (if it's squeaky, buy a new one). Such as in the face of technological advancement, we waited for our Pearl Harbor in order to enact the Patriot Act to update our security systems (the appropriateness of this legislation is debatable regarding certain portions).
The trend has been to centralize authority, to increase regulatory authority and to heighten the Executive's role during the Bush Administration. The Financial Regulatory Reform project, begun in March of 2007, previewed one year later and enacted during the next administration is modeled partly on the UK's reforms and follows the above trend. Establishing a tripartite bureaucracy that would hold the reigns of American finances under control, in a manner most likely similar to our national defense organisms, it would have been unpalatable before this week. After a number of billions of dollars are lost, reform sounds rather tasty. So the Democrats revamp their cry for reform and regulation and the Republicans stumble between constituency key-words.
Palin's war-cry is "let's shake things up", a phrase patently stomach churning to anyone with a vested interest in order and prosperity during transitional eras. The populist message does not imply anything concrete, while McCain's own stance on market reform is confusing, thusly irrelevant. To our comfort, the bureaucracy has been working for at least a year on Financial Regulatory Reform and things will be settled. For now, heads are falling. This is progressive, because others are picking up the pieces, merging- and growing bigger. The US government has essentially nationalized a number of the country's largest financial institutions. While this sounds bad from the classical liberal standpoint, it isn't... necessarily.
We are once more in a period of Cold War. This time, the parties involved may be divided in between Authoritarian Capitalism and Corporate Democracies. Authoritarian Capitalism is exemplified by Putin's Russia and post-Nixon China (especially as experienced today). On a side-note, I might add that this term resembles the economic structure of Fascism, centrally coordinated/privately operated. The Corporate Democracy is a modern, capitalist reinvention of the Greek city-state. Based on functional efficiency, ruled by the landed-citizenry, representative of its component parts. Efficiency is profit, the parts are the stock-holders, the elite are the members of the board. This body is transnational with expansionist tendencies. These may seem like built-in self-destruct mechanisms, but at the dawn of the Green era there is the opportunity to reform the fundamental "greed" paradigms that have defined these organisms. A corporation that makes its profit from the existence of a river cannot, as an organism interested in its own survival, destroy the said river. We therefore are gaining the concept of "corporate responsibility". The business model will serve as a form of new self-governing entities, as cells of larger bodies (e.g. EU, NAFTA, ASEAN). I have no doubt that we will see 'corporate cities' within a few decades, similar in some ways to parts of Silicon Valley.
The death of the dinosaurs will allow for the birth of new reptiles. I am eager to observe the amount of foreign direct investment that will arrive at Wall Street's gates, in a fashion similar to that of Barclay's late and strategic acquisition of North American departments of Lehman Brothers. The nationalized elements (AIG, Sterns, McFannie) of the economy will, as has already been announced, be sold on the market. Will sovereign funds bite? The US dollar is low, assets are cheap. Who will become, even more, vested in the welfare of the American economy?
The game is afoot, my dear Watson.
