Saturday, February 16, 2013

How Do You Solve A Problem Like Our Economy?

Austerity?  Doesn't seem to be helping us.

Could it possibly be time to try something else?  An approach that trusts the private sector less, and the public sector more?

Maybe.  It's working in Iceland, where they went after the banks and the economy has bounced back.  And in Japan, where the Prime Minister decided that inflation and stimulus are not as frightening as doing nothing.

But, most of all, we need to stop thinking about economics in black-and-white terms.  There is no such thing as an all-private economy, except perhaps on a desert island.  And even in the most governmentally oppressive countries, no government is big enough to control all economic activity.  That's why they have "black markets."  Individual needs--for comforts or profit--are like water; they will always find a way.

Instead, we need to talk about the proper mix of public and private activity in this country.  And we're going to have to be very comfortable doing so, because that's a constantly moving target.  We have to be prepared to move in either direction, and sometimes fairly quickly.  The kind of balanced approach to capitalism is well described in this book, among others.  In fact, it's reflected in policies from the past.  So, once again, it's not just me saying this.

How do we get there?  As always, and as our President has told us more than once, it's up to us.  Perhaps a good start would involve bringing back Glass-Steagall, so that banks are once again divided between those that take risks and those that hedge against them.  It worked when it was law; it could be a big step forward to try it again.

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