Recently, the Mayor of London, Boris Johnson, penned an article bemoaning the
greed of bankers and hatred of politicians. Indeed, it has been a widely popular argument that many commentators from around the world have put forward as an explanation for why we currently face such a tough recession -- that "greed" is a major culprit.
However, it is striking that while it is certainly the case that increasingly complex financial instruments were used to make a profit, blaming "greed" does not really clarify what the problem is. What it does do, though, is reinforce an already strong opinion that something about human nature is at root of the where the real problem is.
Once we had competing ideas -- some referred to them as "grand narratives" -- however there were loudly differing views as to how to organise the world, the market, society generally. The end of the Cold War also saw off the end of most left-wing alternatives. The Age of TINA (There Is No Alternative) to the market, so loved by Margaret Thatcher and Ronald Reagan, did not, however, resolve some of the tough questions that inevitably raise their heads. How to solve ongoing poverty, improve housing, prevent infant mortality and avoid the damaging impact of recession on jobs, families and individuals.
The eras of John Maynard Keynes and Milton Friedman were defined by the attempt to battle out the ideas of how best to organise society and its resources. As Bruce Bartlett points out in his latest book, he only realised was a pro-capitalist anti-Socialist when he read The General Theory of Empolyment, Interest and Money. It seems that while there has been so much discussion about the recession, there has been very little theoretical clarity -- and increasingly a tendency not to discuss critical issues such as real investment in infrastructure and how we address the long term trend of decreasing manufacturing in an ageing western world versus increasing manufacturing in Asia, particularly China.
It seemed as though the election of President Obama, with all the enthusiasm that went along with it, may have introduced a new era. "Yes we can!" Although not so long after, it appears that perhaps it was a little more "Yes he can" with the "we" part no longer so necessary. Or as Anna Quindlen put it in Newsweek recently: campaigns are one thing, politics when in power (apparently) quite another. We all projected our hopes on to a new comer who only actually promised "hope" and "change," she reflects.
However, with Ben Bernanke declaring that the recession is likely over and some celebrating the stock market rallies, it begs the question to what extent are we goint to see and experience real change? Sean Collins, a New York writer for Spiked Online suggests that the problem is a lack in productive investment in infrastructure and long term development. So "cash for clunkers" and housing rebates do not an increase in productivity make. Further, he argues the lack of investment will mean fewer jobs in the future and more problems, and that " In the second quarter of 2009, net private investment fell off the cliff to a nearly non-existent 0.1 per cent of the total economy (gross domestic product or GDP), the lowest level since modern records started in 1947." Justin Fox, the "curious capitalist," also asks whether the financial sector can become too big, while Robert Samuelson has writtten regularly in The Washington Post and elsewhere about President Obama's escalating debt problem. Nouriel Roubini, economics professor at NYU, put it more bluntly when he said that the recession will be "long and painful" and could place the US more in a position like Japan.
Paul Krugman has noted several times that he believes it will take a long time to recover and even then that may look very different to what went previously.
As Daniel Gross points out in Slate though, maybe we should not jump to conclusions just yet prior to the entire spending of the Stimulus money, however, it has been noted that the former pariah toxic assets are now making JP Morgan Chase and Citigroup billions on securitisation.
The thing is, of course, President Obama and his team, a long way from being stupid, realise much of this. Therein lies the rub. We have a situation today however where really unpopular measures, such as allowing some things to fail and transforming our relationship to others (whether by investing heavily in infrastructure, rather than simply allowing reflation in private finance or creating a truly free universal health care for all), are seen as "unrealistic" or not viable politically.
Sadly, in spite of all the enthusiasm behind the election of President Obama, particularly from younger people, we live in an age where TINA dominates not only our outlook re the market -- but it seems bold, challenging, controversial ideas that have to be won politically and argued out and possibly lost -- are just off the agenda. While the new health bill passed just passed in the House, it seems certain limitations always need to be assumed, rather than fought out.
On Monday evening, I shall be moderating a panel in New York City with a title similar to the one above where a panel of esteemed thinkers will be putting their views forward and where an audience will be able to thrash out some of these views together. It will probably raise far more questions than it will answer, for surely that is the precursor to real change -- to ask the difficult questions, not to immediately make policy, but perhaps to get a handle on how we can truly understand the current situation. With so many experts and pundits clearly in the dark, having citizens discussing what they think about these political issues would seem to be the first step to any type of real change. Rather than blaming a broad and unspecific notion of human greed or dodgy bankers (which is really an attack on human aspiration), we would be better placed getting to the heart of where the core of the problem lies.
Then, maybe us humans could do something positive about it.