C. Ikehara: Economic mumbo-jumbo, or, The Bigger They Are, The Harder They Fail
[C. Ikehara has been a Librarian for over ten years. His Masters Degree in Library Science is from the University of Michigan at Ann Arbor.]
"History repeats itself' and 'History never repeats itself' are about equally true ... We never know enough about the infinitely complex circumstances of any past event to prophesy the future by analogy." (G.M. Trevelyan)
Although making predictions is now riskier because the pace of change is accelerating, we still need to remind ourselves there are Cassandras out there who shouldn't be ignored. Concerning the megabanks that are in trouble today, Senator Dorgan said the following in 1999:
"I think we will look back in 10 years' time and say we should not have done [away with regulations which prevented banks from merging to make risky investments] but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010."
Pretty eerie, isn't it?
I have no economics background, but when it comes to solving problems of any kind, doesn't the cause (or causes) have to be identified first before proceeding to find a solution?:
"There are a thousand hacking at the branches of evil to one who is striking at the root." (Thoreau)
In March, Business Week reported that Senator Dorgan has "...issued a bipartisan call for the establishment of a special Senate committee to investigate the causes of the financial crisis." He said, "...There's much we don't know. Even actions of the government are not fully understood."
When you consider that there are successful car makers that happen to be small, and that the smallest of the "Big Three", i.e., Ford) has not asked for a bailout, shouldn't the government determine an optimum company size and then threaten to dissolve any company that exceeds that optimum size if it becomes dysfunctional?
Aren't many of the economic problems of our times due to the fact that the stakes have never been higher because things have never been bigger?:
"As great edifices collapse of their own weight, so Heaven sets a similar limit to the growth of prosperous states." (Lucan)
"Expansion means complexity and complexity decay." (C. Northcote Parkinson)
And isn't there a reason why no one seems to know what to do (or even what's really going on)?:
"Small rooms discipline the mind; large ones distract it." (Da Vinci)
"Complexity creates confusion, simplicity focus." (Edward de Bono)
On 60 MINUTES earlier this year, Sheila Bair, chairman of the FDIC, said, "I think taxpayers rightfully should ask that if an institution has become so large that there is no alternative except for the taxpayers to provide support, should we allow so many institutions to exceed that kind of threshold."
A few days later on THE RACHEL MADDOW SHOW, Elizabeth Warren, who chairs the panel that's monitoring bailout spending on behalf of Congress, said, "I think [controlling the size of banks] not only makes sense, it‘s absolutely essential....If it's too big to fail, then break it apart so you can let it fail. We got—we cannot be in a position where the American taxpayer is essentially the implicit insurer for anyone who gets big and complicated and can‘t be regulated. That just can‘t be how we run our economy. If we do, then the taxpayer is hostage to every large institution in America."
Isn't the implication that creating and then trying to maintain the monolithic over time begins to enslave us? Could those gigantic carved stone statues on Easter Island have been built unless there was a society where the privileged few could command the labor of the masses? And when the burden became too great, didn't the masses eventually revolt?
Getting back to breaking apart conglomerates, has this ever happened in the past? According to the Kodansha Encyclopedia of Japan, the Allied Occupation authorities in Japan after World War II were involved in just that:
"...The program substantially increased market competition. This increased market rivalry was a major factor in Japan's remarkable postwar economic growth."
When it comes to benefitting from the government, isn't it time to stop treating the small potatoes as if they only exist to try to figure out a way to get into bed with the big cheeses--that are full of holes?
"History repeats itself' and 'History never repeats itself' are about equally true ... We never know enough about the infinitely complex circumstances of any past event to prophesy the future by analogy." (G.M. Trevelyan)
Although making predictions is now riskier because the pace of change is accelerating, we still need to remind ourselves there are Cassandras out there who shouldn't be ignored. Concerning the megabanks that are in trouble today, Senator Dorgan said the following in 1999:
"I think we will look back in 10 years' time and say we should not have done [away with regulations which prevented banks from merging to make risky investments] but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010."
Pretty eerie, isn't it?
I have no economics background, but when it comes to solving problems of any kind, doesn't the cause (or causes) have to be identified first before proceeding to find a solution?:
"There are a thousand hacking at the branches of evil to one who is striking at the root." (Thoreau)
In March, Business Week reported that Senator Dorgan has "...issued a bipartisan call for the establishment of a special Senate committee to investigate the causes of the financial crisis." He said, "...There's much we don't know. Even actions of the government are not fully understood."
When you consider that there are successful car makers that happen to be small, and that the smallest of the "Big Three", i.e., Ford) has not asked for a bailout, shouldn't the government determine an optimum company size and then threaten to dissolve any company that exceeds that optimum size if it becomes dysfunctional?
Aren't many of the economic problems of our times due to the fact that the stakes have never been higher because things have never been bigger?:
"As great edifices collapse of their own weight, so Heaven sets a similar limit to the growth of prosperous states." (Lucan)
"Expansion means complexity and complexity decay." (C. Northcote Parkinson)
And isn't there a reason why no one seems to know what to do (or even what's really going on)?:
"Small rooms discipline the mind; large ones distract it." (Da Vinci)
"Complexity creates confusion, simplicity focus." (Edward de Bono)
On 60 MINUTES earlier this year, Sheila Bair, chairman of the FDIC, said, "I think taxpayers rightfully should ask that if an institution has become so large that there is no alternative except for the taxpayers to provide support, should we allow so many institutions to exceed that kind of threshold."
A few days later on THE RACHEL MADDOW SHOW, Elizabeth Warren, who chairs the panel that's monitoring bailout spending on behalf of Congress, said, "I think [controlling the size of banks] not only makes sense, it‘s absolutely essential....If it's too big to fail, then break it apart so you can let it fail. We got—we cannot be in a position where the American taxpayer is essentially the implicit insurer for anyone who gets big and complicated and can‘t be regulated. That just can‘t be how we run our economy. If we do, then the taxpayer is hostage to every large institution in America."
Isn't the implication that creating and then trying to maintain the monolithic over time begins to enslave us? Could those gigantic carved stone statues on Easter Island have been built unless there was a society where the privileged few could command the labor of the masses? And when the burden became too great, didn't the masses eventually revolt?
Getting back to breaking apart conglomerates, has this ever happened in the past? According to the Kodansha Encyclopedia of Japan, the Allied Occupation authorities in Japan after World War II were involved in just that:
"...The program substantially increased market competition. This increased market rivalry was a major factor in Japan's remarkable postwar economic growth."
When it comes to benefitting from the government, isn't it time to stop treating the small potatoes as if they only exist to try to figure out a way to get into bed with the big cheeses--that are full of holes?