Now that we've established that the principle of personal responsibility is at the core of any equitable economic program, we need to extend that principle upward from the individual consumer to the corporate sector, the non-profit sector, international organizations and government regulators.
Here again, we encounter a basic reality. Small is good. Big is bad.
Big Labor, Big Companies, Big Government, even Big Universities -- they're all corrupt. They're all wasteful, inefficient units that suppress innovation, experimentation, and creativity. They all become Orwellian bureaucracies, with so many rules, policies, prohibitions, and contradictions that one can be forgiven for regarding them as nothing more than elaborate human inventions to avoid all personal liability.
I once worked in middle-management in a company where the main preoccupation for executives at my level was to compel those who reported to us to iterate on an endless series of power point presentations, which we would duly review and send up to the next layer of the company's hierarchy.
They, in turn sent it to their superiors, who then reported to the Board. For around six months, the same set of power point slides circulated first up, and then back down, this corporate ladder. Nobody was ever satisfied so we all just iterating. When I left that company, that preso still wasn't finished -- but the company, for all intents and purposes, was.
A year later it was bankrupt.
The fundamentals of our national economy rest on competition, innovation, the public markets, supply and demand. But our national economy has lost much of its significance in the globalized economy that now drives every aspect of our lives as producers and consumers.
As our national economies become ever more interlocked and inter-dependent, we need a new set of understandings to guide our decision-making. Although it may satisfy certain nostalgic urges in parts of our citizenry, complaining about outsourcing, or jobs going overseas, or foreign ownership of American companies is, excuse my French, pissing into the wind.
It's way too late to stop globalization, which even if we could (and we are not that powerful), would have disastrous consequences. Rather, our urgent need is to embrace the global changes and play a leadership role in promoting the most equitable distribution and use of resources possible.
Free trade is not an option, it is the only option. There should be no barriers, no subsidies, no tariffs except in a slender number of cases involving the externalities that our free-market economy cannot handle. This means in the area of environmental, safety and health protections, where mitigation is necessary.
Later in this series, I'll consider Energy and the Environment, and how they fit into the case I am making. The above paragraph hints at where I'm going...
The foreclosure situation in America raises another fascinating aspect of where personal responsibility is strong and where it is weak. In the American middle class, it is weak. Among the poorest of the world's women, in Third World countries, it is strong.
As all academic studies of the "Bottom of the Pyramid" illustrate, micro-loans to Third World women are re-paid at a rate way over 99%. Now that is a good business -- lending to poor people. Too bad U.S. banks pursue bloated margins by feasting on the "dumb and dumber" types who sign on for sub-prime loans.
Finally, I do not support government bailouts for anybody. Not for consumers, not for lending organizations, not for Fannie Mae or Freddie Mac. Our short-term pain would be great, but if we discarded this bailout philosophy, and concentrated on some of the principles enunciated above and in Part One of this series, we could get our piece of the global economy back on track.
While we're at it, let's eliminate entitlements of the type that have locked California's state budget into an endless game of chicken by political partisans. Starting back at the individual and family levels, it would be irresponsible for us to overspend when our income is low. Promises of all sorts turn into welfare, which rots the cycle of innovation and competition that fuels growth.
Thus, we have a rotten mess in California's state government, which needs to be cracked up so it can start over.
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