Our economic system has four principal characteristics. I will not give a name to that system as it tends to inflame the discussion. The four characteristics are: 1) it produces a great deal of wealth; 2) it distributes that wealth very unevenly (This is due to the differential value given to different kinds of labor and to the legal protection given to personal assets.); 3) it periodically produces wealth destruction -- euphemistically referred to as the “business cycle;” 4) there is very strong agreement among citizens that the system is legitimate. I realize that this simple model ignores the social, cultural, and psychological impact of economic change but I am not reaching for a Nobel Prize.

While the economic system is considered legitimate, it is not always considered fair. When the business cycle turns downward, revealing some of the more unfair ways in which wealth is created and distributed, it turns out that while victims are aplenty, those responsible cannot be found. Professors, pundits and regulators point to different culprits each of which is heavily camouflaged by a series of “causes” and “forces” and inexorable laws. As the system is legitimate, it cannot as a whole be responsible; but neither can any of the actors, all of whom seem to be in the grip of those inexorable laws.

One of these fruitless searches for culprits concerns the price of oil. While citizens shrink before the spinning numbers on the gas pump, they are told that: prices are not out of line with _______ (fill in another product or time period); that they represent only ___% of household income; which is __% less than in ____ (some other country). Or that greedy Arab oil moguls and instability in the Middle East push up oil prices. Or we have reached “Peak oil.” Or, simply, that it’s all a matter of supply and demand. None of this would matter if we could “kick our dependence on oil.” This could be accomplished if: we drove small cars, or if Detroit (or whoever makes cars these days) built them.

Again, none of this would matter if we invested in alternative sources of energy. Or if we gave the oil companies incentives to drill for more petroleum. Or if we would stop being hung up on the existence of species other than our own. Or if, like market cycles, we would just learn to live (more or less) with climate cycles. True, oil companies make obscene profits. But adjusted for _____ they are not that high. Anyway, that money is helping to bring petroleum to the market more efficiently. Anyway, it’s all the fault of the Chinese who want their own chance at petroleum dependence and air pollution. Amidst all of this finger pointing only the airlines have offered a constructive proposal: half-price tickets for air travelers who will book flights with no leg room -- seats only!

If we cannot pin down responsibility for the cost of petroleum, how can we ever explain the macro stuff like economic recession? Though we are taught that producers and consumers make reasonable decisions and that markets are large-scale reflections of the logic of those decisions, it turns out that producers and consumers (and as a result markets) are subject to “panics” and “bubbles.” Moreover, despite the logic of the market, beliefs about the state of the economy can affect the economy. That is, the use of the word “recession” can help produce one. The problem of naming the beast is compounded by the need of the media to appear informed. We are regularly told that we are “possibly heading for,” “unlikely to fall into,” or “technically in,” a recession. Tuesday’s headlines explain that “Dow rises 100 points as it shrugs off bad economic news.” Wednesday’s headlines tell us that “Dow drops by 100 points despite good economic news.” As befits a democracy, we can also rely on the “consumer confidence index” that registers the level of popular economic anxiety. Here we learn that many people are, well, anxious. Thus we are stuck within an economic system with neither clear victims nor beneficiaries; that while supposedly rational is subject to emotional breakdown as a result of causes unknown.

Though it may seem to violate fundamental economic laws, this mortgage based recession while it leaves us with mountains of debt (especially in the U.S.) leaves standing even larger piles of private and “sovereign” money. While highly leveraged investment houses must write off billions of paper profits, other wealth holders that were less exposed to the U.S. sub-prime virus now sit around with vaults overflowing with cash moved to higher ground above the red ink flood plain. What will these lucky money managers do?

Well, they are unlikely to buy Mary’s mortgage. Instead they may become attracted to investments in sectors unharmed by Mary’s reach for middle class bliss. These can now be bought on favorable terms.

The flight from bad paper leads refugee assets to find a home in markets for “real” goods such as tangible corporate assets, solid currencies and raw materials. If consumers stop feeding their plastic into the digital readers, these money managers will increase their positions in global markets for durable goods such as metals, minerals and, humble as it may seems, food. Mary does not need to be encouraged to eat.

Some of the new speculative cash helps to push up the price of oil. (Why was this one overlooked while the gas pumps whirled?) U.S. legislators now make grand populist promises: windfall profits taxes; alternative energy subsidies; tax holidays, rebates; oil from the strategic petroleum reserve, etc.

Such threats only lead oil companies and assorted Sheiks to find useful places to empty out their overflowing baskets of currencies. While much of this oil wealth builds artificial islands in the Persian Gulf and office towers in East Asia, investment also flows to the lowly bean and corn kernel.

This process raises the price of food stuffs. While Mary waits to discover the terms of her new “securitized instrument,” more than a thousand miles away, Maria is being priced out of the tortilla market. In desperation, she and her husband Juan say goodbye to their village way of life (of a mere eon’s duration) and head for factory work in the city. They arrive in time to see the sewing machines and mother boards on semis heading for a nearby Pacific port. Most cruelly, at just the time that globalization orients them northward; earlier victims across the border are building a wall to keep them out. They retrace their steps and join the mass demonstrations against the rising price of corn. (Their act of rebellion is actually a contribution to the global economy; in this instance as an uptick in tear gas sales.) In some inexplicable manner, Mary has added to Maria’s misery.

It would appear that a failing economy is just as uneven in its distribution of sacrifice as a booming one is in its distribution of gain.