Our Economy: The Headless Chicken

When I was a lad, my summer camp took us to a farm. We were mostly city kids with a few suburban nerds like me thrown in. We petted the goats. We took a look at the cows being milked by huge machines. Some of us even got to ride on a pony. And then, for the piece de resistance, they took us all back behind the barn to watch a chicken get its head cut off. Why? You tell me.

The farmer explained to us that even after its head was cut off, the chicken wouldn't know its basic status, and would continue to run around for a while. He seemed to feel this was interesting, if not amusing. So he lined the chicken up on a very scary, very scarred block, and chopped its head off.

Boom! There was a mighty fountain of blood and, as foretold, the surprised chicken hopped to its feet and began to run around the yard. Some people laughed to see such sport. Others simply watched in amazement. After a while the erstwhile chicken stopped running, stood still for a while, then simply tipped over onto one side and, after twitching for a couple of seconds, lay still. Its body had finally recognized its true condition. An organism can live without a brain for only so long.

Which brings me to our economy. About 18 months ago, it seems to have lost its head. Who chopped it off is a matter of conjecture, although all those sharp financial instruments invented by Wall Street were certainly on the scene. One thing is for sure, though: the poor thing is still running around the farmyard without one.

Every day I get to work and see a bunch of news stories from august business magazines, Web sites and papers, tracking various developments, and several dozen chattering analysts reports, all of this activity attesting to the fact that the bloody victim is still racing around as if its head were still on its shoulders. Right now, at this writing, I believe it may be possible that we're in the phase where the thing is just standing there in shocked stasis, preparing to keel over. It certainly feels that way.

On the bright side, history shows us that it is possible for a chicken to live a long time without its head, as long as a tiny portion of its autonomic system remains intact. It's never really healthy again, but it can hang around a long time in that condition. So maybe all is not lost.

There is no record, however, of a chicken in this extreme state having its head actually replaced. Who knows, though? If some of our best minds put their heads to the task, maybe it can be done.

We can always, I suppose, enjoy the audacity of hope.

Comments

[tjfxh]

The analogy is apt because the financial system is the head of the economy, and the financial system is insolvent in the US ( and the UK, and EU) as was Japan's some time ago. Look at Japan -- a chicken with its head cut off for over a decade -- for a peek at what's to come.

[TJCole]

Maybe President Obama should declare an "Emergency" under the provision contained within NSPD-51 and HSPD-20 and Nationalize all major Banks so there is "continuity" with our banking system and our economy...­!

He could then also Nationalize our Health Care system and also all major Energy also under NSPD-51 and HSPD-20 if this isn't an Emergency what is..?

I know if Roosevelt had this baby in his arsenal he'd ave used it in a NY minute..!

NSPD-51 that's the ticket..!

Thank you G.W. Bush it's just what we needed to save America...

[DuganS1]

Nationalize the banks so govt can force them to make loans for political rather than sound economic reasons.??­? Nationalize the energy sector so they can ruin it like Venezuela and Iran did..??

[marijam]

Don't freak out or get bent. Once these institutions are back on their feet, they can go public again, when they're healthy.

[JoeBlough]

There will be plenty of money to be made making chicken soup.

[JBS]

Probably appropriate since so many appear destined for soup kitchens.

[flatus]

Sorry, but it wasn't "all those sharp financial instruments". It was the failure to detect "all those sharp financial instruments " . A living body will always be attacked by pathogens. If the antibodies are willing to ignore the attack the host will suffer the consequences.

[Camel54]

That's like blaming a doctor when a patient dies of an undetected cancer. Yes, there is fault in the failure of oversight even when many, many progressive economists were warning this was going to happen. But the brunt of the blame lies squarely on the spastic, greedy, self-serving, morons running our financial industry in the tradition of Thatcher and Reagan and running it into the same delirious, disconnected deathbed as those esteemed leaders.

[paixa3]

Do you realize that instead of giving wall street and banks the 700+ billion dollars that EVERY HOUSEHOLD in the USA could have received 5000 and the bill would have been less. Had that been done with a mandatory re-write of mortgages (fixed lengths, fixed interest at 2 points above prime) and a 10% maximum interest law and reversal of bush's tax cuts, the majority of the problems would have been solved. In the meantime, outlaw all derivative instructs, credit default swaps et al too.

Lastly, tax USA Businesses a heft price for moving jobs overseas. Implement a strong stimulus for the infrastructure, new energy and transportation to the amount of about a trillion dollars. Eliminate ALL oil tax breaks and give them to the new energy initiative.

Just a few ideas. If some of these ideas are NOT implemented, your economy will NEVER SURVIVE. You will be a confirmed 3rd world country (you nearly are now).

Let wall street and banks fail, PERIOD. New, honest ones will be created.

[DuganS1]

Everyone in the US getting a $5000 check wouldn't help an economy that has no functioning financial system. Re-writing of mortgages would take too long and wouldn't solve the problem. About two-thirds of the people who've had their mortgages reworked in the past year have missed payments again. the 10% interest law doesn't even make sense. The Bush tax cuts have in no way led to the current problems in the financial system. Limited US corporations ability to expand would limit economic growth, not increase it. Infrastructure spending has already been at very high levels for the past three years and new govt spending would only compensate for the spending of reductions by private and state and local sources which is typical in economic downturns. Letting wall street and banks fail would put us into a deep depression bringing unemployment to 1930s levels and putting millions into poverty.

[marijam]

$5,000 would help me. $500 won't.

[TakeNoNeoConPrisoners]

Let's face reality. Laissez fair capitalism is our chicken without its head. In fact, the chicken cutoff it's own head to spite its body out of ravenous greed . How long it continues to run around is conjecture. But the bottom line to use a pun is the chicken will eventually be dead. So the real question is what will replace that chicken b/c it will be extremely hard to impossible to put its head back on and expect it to live. We must be in the discussion stages of how we can restructure and realign our economy for the future based on the realities we are all facing. We are not that far from socialism, nationalizing the banking system and the last bastions of our anemic manufacturing base - the auto industry. So you economists out there "got some splain' to do" of why it failed and lots of work to be done to invent a new economy for the USA in the 21-st century. Raising the chicken from the dead is not an option.

[DuganS1]

It's a good thing we don't have laissez fair capitalism in the US, or anything close.

[marijam]

It's the trying to have it that got us into this mess.

[joebaggadonuts]

The chicken lost it's head when Reagan was elected. Failure to have industrial policy is like being a headless chicken, economically speaking.

[NYCPub]

Beginning in the early 80's our country began to move away from producing anything tangible. That is when our economy should have begun to dip, but Ronnie went ahead and deregulated whole sectors of the economy and reduced taxes on corporations and made it easier for those companies still producing something to show growth and when the financial industry starting to come up with all their fun instruments that shuffled around numbers and called it economic growth. And then came the early 90's when we started to drift into a recession after companies and the economy just couldn't justify the shell game anymore, and voila! the internet comes along and creates the new wild west where companies were worth billions based on having zero income, and housing prices kept rising. Then that fell apart in the early 2000's but then we got a nice little war started and were encouraged go go out and shop and buy homes we couldn't afford, and by then, most everything we bought was made overseas, and then last year we find that all those fancy financial instruments weren't really producing growth but was in fact a shell game without the marble, and so our little house of cards fell apart. Typically we should be looking to rebuild our economy on some type of foundation, but whoops, we have no foundation and haven't had a solid one since the 80's. Once your manufacturing base has disappeared, what are you going to rebuild your economy on?

[joebaggadonuts]

Foundation comes through purposeful building.

Kennedy purposed the economy toward space and the future and scientific development. Johnson toward raising the bar for the lower classes, bringing society together etc. Nixon, well, he just wanted to be famous and expand trade and show how tough America was because he was President. Carter wanted to right wrongs, and lost the national will because he could not defeat the oil cartel, but he did try. Reagan wanted us to dream and let the invisible hand give us the invisible middle finger.

A foundation comes through industrial policy, which the readers of Ayn Rand confuse with socialism. China has had an industrial policy which brought it years of double digit growth - together with incredible and unsustainable pollution, human rights issues, etc. America can do better than that with industrial policy. And under Obama we will, if those idjit libertarian and neocon ideologs will get out of the way.

At one company trying to save itself in the 80's they used to say, "Lead, Follow or Get Out of The Way!" I want to say that to the R's today, but it didn't work then either. So what I will say is drop the ideology and do what works. Open your minds and try to get over the tribalism and cheerleader mentality and do something right for a change.

[DuganS1]

I agree we need to focus on strengthening the manufacturing base in America, but at the same time don't ignore the fact that industrial production -of which manufacturing is 3/4s of- was at all time highs as recently as spring 2008. Also, economic growth involved a heck of a lot more than the internet in the 1990s. There was growth in personal computers, semiconductors, telecommunications, and even manufacturing.

[Thermodynamics]

We are the only major country not on the metric system. When Reagan came in he stopped metrification. I remember tanking up on liters of gas in the US just before Reagan.

You have to use the other guy's units to sell. Its like the Reagan people did not want us to have an export business.

[dwmulenex]

cluck, cluck! take $30 trillion and divide it by 300 million. That gives you 100K. Divide that by three--the cost so far of the Treasury and Fed bailout, $10 trillion, and you get a smidge more than $33,000 a head for the American chickens stuck in the coop,or some $66,000 per working hen and rooster laying nest eggs. Why is that kind of money being paid to Barney Less-than-Frank's favorite bank, or Doddering Chris Dodd's housing rescue schemes? Why can't the government give the taxpayers the money, let them bail themselves out, pay themselves back in higher taxes at less than Citi/HSBC/Morgan Chase fox in the henshouse rates, and let the banks, who are sitting on the eggs like hens who don't know what a rooster does, be next on the chopping block and first in the fricassee pot? After all, if you want to make an omelette, you have to break some eggs.

[SisterAnn]

While being held on the chopping block, the head has already sent the signal to the body to get up and run like hell. There is probably more action going on inside the detached head worrying about how it is going to get out of that situation.

We do have a new head for America, Obama, but the old head, Bush, has already put a lot of situations in place, like wars, the failing economy and lay offs.

Obama needs to proceed with caution. There was a snippit of a video on TV, showing the Bush men saying to Obama that they did what was right for the country, not what was popular. They lied.

Obama needs to slow down and decide what is best for the middle class, not Wall Street. And forget the idea that what is good for Wall Street is good for the middle class.

[RetireGreen]

Very nice metaphor. Humpty Dumpty also works. Having predicted the collapse several years ago, here is what worries me now, the world will soon figure out that Obama is clueless when it comes to economics - and then the chicken will tip over.

The question Obama, and his group of kleptoconimsts need to ask themselves is, who is going to buy $2 trillion of junk U.S. Govt. debt paying less than 1%? Answer: No one. Not the Chinese who lost $10 billion on Bear Stearns, the Saudis who lost $10 billion on Citigroup, or the American people who lost $1.2 trillion on the bank bailout.

Obama has to choose between Peace and Prosperity or War and Poverty. Here is a plan, the only plan, that creates jobs and lowers the deficit. http://inspiredeconomist.com/2008/12/16/obamas-green-job-plan-x-10/ The world will not finance our stupidity forever.

[texastrixie]

I clicked on your link thinking I was going to read it and think it was written by a dolt. However, I agree with most of it, especially training prisoners to do green jobs that pay a decent wage. We have simply abandoned most of the people in prison, many of whom we would forgive if they were our brothers, our fathers, our husbands. Its only the other person's father, brother, or husband who is truly evil, our loved ones deserve a second chance. I even agree with the gas tax hike, although many people are in such desperate financial circumstances that any tax hike will lower their standard of living.

[RoloTomassi]

Two points:

1) The prison population could actually be reduced by about two-thirds if we were to release all those convicted for minor, non-violent drug charges. The down side of this is that prisons have become a privatized business, and therefore a player in the arena of employment.

2) Both wars do indeed need to end, but there again the down side will be with thousands of former troops returning with predominantly low-level job skills to an already depressed economy, and the down-sizing of employment levels within the military industrial complex and other war-based military contractors.

Not addressed in this plan are key issues grounded in the financial industry, and those must be addressed; it would be pure folly to work towards recovery and not focus on and redefine financial industry rules and regulations. For the last 30 years we've left the henhouse door open, and within the last eight the foxes have created havoc with unbridled greed.

Ignoring the history of how we got here will only ensure that we'll be here again.

[joebaggadonuts]

Easy solution: GI and former prison guard bill. Pay for college education for all of these folks returning to the private sector looking for work. After two or four years they will be ready for a growing economy.

[DuganS1]

Very few people are in "prison" for "minor non-violent drug" charges, although a lot depends on what you consider minor and how much consideration you give to long rap sheets.

[CaptainVideo]

The chicken got a new head on January 20.

[mdavidson]

An un-insightful waste of words closed with an anti-climactic cheap shot?
Get over it - you lost. The chicken you speak of is the financial gravy train you and your ilk ran off the tracks.
The audacity of greed.

[RoloTomassi]

Indeed; snark and arrogance are all that's left to the free market fundies. I find it humorous that so many of them are convinced that they'll be able to regain control by sheer nonsensical bravado alone.

[Montanus]

Seems to me there's a new "head" already in place in Washington. Like the millions of heads in millions of locales around this country and around the world, it is joining in the constantly on-going work of designing and creating new, sustainable "chickens.­"

[americaforme]

Wow great Post! You explained it all, the headless chicken aptly describes our state. I cant believe the chicken can last so long too. I'm in wonder every day.

[Punkynsnow]

Well what a little cheer-you-upper of an article... as if we weren't already depressed enough about the economy.