Regular people don’t feel so bad anymore about not knowing exactly how the economy works; the stock markets, commodities markets, money markets, futures (!) markets, the role of the Federal Reserve Bank, crises of confidence and all sorts of intangible “market forces.” Most of us figured, well, fine, if we don’t know exactly how all this stuff works, then the trained professionals running these various industries and markets have to know. We don’t know how to remove gall bladders either but have faith that our physicians do.
So if we were puzzled as to why one day a company is worth $300 billion and a week later is only worth one hundredth of that even though nothing has changed about the company, we just assumed there was a good reason for that and we just didn’t understand it but the financial professionals did. Well, the joke sure was on us, eh? These doctors didn’t even know where the gall ladder is located! Not a one of them has stepped up and explained exactly how trillions of dollars just disappeared overnight. It seems that nobody understands the economy anymore, not even Secretary of the Treasury Henry Paulson, who’s bailout plan needs a bailout plan. That’s not good.
Is there anybody out there who can fix this mess, or even understand it? Or maybe just explain to the rest of us how having faith in something makes it worth a lot of dough but having no faith in it makes the identical item nearly worthless. What is this, economics or religion? Whether or not you have faith that your voice can be carried to the other side of the world through a telephone wire doesn’t stop the person on the other end from hearing you just fine. And if you have all the faith in the world that very thin ice will hold your fat ass, you’re still going to get soaking wet. That’s just common sense. Why is big business any different?
A bird isn’t a bird just because somebody tells you it’s a bird, and it’s no less a bird if they tell you that it is definitely not a bird, no matter what their alleged credentials in ornithology. It’s a bird because that’s what the hell it is and it’s damned obvious. And the bird sure doesn’t give a rat’s ass one way or the next what anybody thinks. It knows it was a bird both before and after anybody identified it as such. And so does anybody else with a lick of sense. So how did we get to the point where people can define the economy only by their guesses about it, or their faith in it or lack of same. Is this how we built the most prosperous nation in history?
When you knock all those zeros off the dollar signs, everybody knows exactly what the deal is with economics. If you have twenty bucks and want to see a movie, the ticket eats up ten dollars, the subway ride back and forth costs another four, so you’re left with six dollars for popcorn and Milk Duds. If those items cost you a 5 spot you go home with one dollar. That’s pretty simple, no? If the movie was great or if it sucked, it was still a commodity worth the $10 dollar ticket, so your faith in that film doesn’t mean you really spent twelve for admission, or your lack of faith in a crappy movie doesn’t get you two bucks back. And when word gets out that one movie is great and another one sucks, it’s still ten bucks apiece to see them. Of course one will attract a lot more business than the other but that’s how going to the movies works. Successful films make the big dough on sheer volume, with a whole lot more of those ten dollar tickets sold than the crappy films.
When you buy a coat, a leather one costs more that a cotton one, a well-made one more than a poorly made one. A Cadillac costs more than a Mini Cooper because you get more car and more comfort and performance. Steak costs more than hamburger, butter more than margarine. Everybody understands this and the reasons why. But somewhere on the way from small sums of money to hundreds of billions of dollars the rules of mathematics apparently change radically and common sense is not necessarily an asset. Somehow General Motors, a company in possession of 100,000 Cadillacs, is begging Uncle Sam for a bailout. Somehow Washington Mutual Bank with its $300 billion in assets gets sold to J.P. Morgan-Chase for less than 3 billion dollars in the middle of the night and nobody gets arrested.
And nobody can explain any of these things. Not the Treasury Secretary, not the Chairman of the Federal Reserve and none of the CEO’s who rose to the very pinnacles of their professions. Our current president Bush The Younger sure doesn’t have a clue. He’s still trying to figure out long division without much luck. Could it be incompetence, greed and larceny on a grand scale? You think? The flaw in any system is, after all, people. Capitalism built this nation and gave the people in it a pretty decent standard of living and made a great many of us wealthy. It couldn’t always have been so mysterious or we’d have abandoned it long ago.
Maybe the answer here is to beat the current crop of top executives about the head and neck with blunt objects and fire their asses for screwing up such a good thing. You can’t be put in charge of the goose that lays the golden eggs and cook it for dinner too. That’s not just outrageously greedy, it’s insane. Artists can be insane, actors can be insane, movie producers and directors can be as loony as they come. Writers and musicians are pretty much all nuts. That’s how it is in the arts and we can all thank a lot if whacky people for some beautiful and interesting works of art and performances. Test pilots, astronauts and rugby players have to have a couple of screws loose to do what they do and that’s also acceptable. But bankers? Bankers? Since when did bankers and business executives think they could get away with going nuts?
Money and business are not creative arts or daredevil high wire acts. This is other people’s money you’re dealing with here, their hard-earned that they work all their lives for and would like to have something to show for their efforts. They trust banks and businesses and the people who run them with the fruit of their life’s labors. Madmen need not apply. If that’s how you want to roll, fine, just stay away from everybody’s money. You want to be a wild man? Join the circus and fly on a trapeze. Start a motorcycle gang or something. Meanwhile, release the boring, cautious, tubby old guys with the rimless spectacles that you corporate pirates have been holding hostage somewhere. You know, the guys that used to run the economy and understood it and knew how to explain it and never shit where they eat. Those people. They weren’t exciting and dynamic and maybe they were a little rigid when they were in the house but at least they painted the place once in a while and didn’t steal the chandeliers or the knobs off the doors. The jig’s up, and you people can leave now.