The Economist may be showing suprising deference to French dirigisme (see my previous post), but it hasn't given up on the American model. This weeks's contribution from the Economist editorialists is:
In his zeal to fix capitalism, Barack Obama must not stifle America’s dynamism
http://www.economist.com/printedition/displayStory.cfm?Story_ID=13740170
Here is an extract from the opening paragraphs:
DEFENDING American capitalism these days is a thankless job. Reckless lending by American financiers produced a crisis that has pushed the world into its worst recession since the 1930s. Tales of greed and fraud during the boom years abound. Small wonder that although Americans still prefer their government neat and local, they are a little less hostile to federal activism these days... [But Obama] and Congress risk overreaching. America has experienced a failure of finance, not of capitalism. Its broader economy remains an astonishing Petri dish of creative destruction. Even in boom times, 15% of American jobs disappear each year. Their places are taken by new ones created by start-ups and expansions. This dynamism remains evident today, amid the most crushing economic conditions most businesses have encountered (see our special report in this issue).
John C
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I rather belatedly posted a comment to Tamara’s excellent post “Of Tragedies and Statistics” in which she questions whether democracy is a one-size-fits-all proposition.
ReplyDeleteIn that comment I pointed to a transcript of some comments made by the democracy-promoting financier George Soros.
http://www.tcf.org/publications/internationalaffairs/sorostranscript.pdf
Soros raises some interesting issues relating to the financial meltdown and democracy that I think are relevant to this post as well.
Regarding the Economist article, yes, unintended consequences are something we should be wary of (although by definition something that is unintended may be hard to foresee.) However, stating our commitment to capitalism has led to “government policies that make America, according to the World Bank, consistently one of the best places to do business” ignores the fact that it has also created an economic situation that is fairly untenable.
And the Pew survey only proves that Americans are particularly devoted to our myth of “pulling oneself up by one’s bootstraps.” Yes, many people can do well in America through hard work (Justice Sotomayor) But statistically it is a very small percentage of people that pull themselves out of poverty into the upper strata of society. I’m not sure of the current statistic, but a few years ago the numbers were 40% of those born into poverty remain in poverty, and only seven percent move to the upper 20 percent of earners in the country. It is wonderful that those seven percent can have such dramatic upward mobility, but it is a myth that you can do it “if you just want it bad enough.”
http://www.tcf.org/Publications/EconomicsInequality/ragrichrc.pdf
I believe the failure of finance the Economist piece speaks to is a larger systemic problem that does incorporate capitalism. Can you separate out issues such as the gross overpayment of senior management in US corporations and the short-sighted management policies that sacrifice the long-term health of corporations to the short-term alter of profits and dividend payments and place them squarely in finance and ignore the concept of unfettered capitalism?
Carol Starmack