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Having the Wrong Debate

By Henri - Posted on 20 April 2009

There are a lot of debates going on around the nation and the world related to the financial crisis or crises if you would have it so. The world is debating everything about this mess from how it was caused to how to end it. The debate is couched in simple terms and rare jargon complete with complex equations. All of this may be necessary but it is also mostly useless.

Rational approaches to economics and financial systems have been proposed by every generation of human beings since wealth and ownership were invented. Rationality works fine some of the time, but every market has an emotional component. Right now emotions are in the driver seat.

How much to believe of what you hear is always challenging. When lying is as much a part of discussing how the system works as telling the best truth you can perceive it gets even more difficult.

The cult of the Market is Always Right is quieter right now. They are busy pointing fingers at everyone else. As they descend into every tiny detail of what was said and when in order to hide the part they played in this debacle they continue to lose credibility.

Economics was invented to create a basis for discussions about the wealth of nations. We are now rapidly consuming the wealth of our planet; far more rapidly than we are capable of replenishing it. The issue of how we manage our wealth is of immense importance. Wasting less of it will quite possible help some of us survive this century.

The concept of waste has disappeared from our discussions of what has just happened to wealth around the world. This latest financial disaster is worse than any historic event; except possibly the appearance of the Mongol horde at your city’s gates in centuries long past. In defining the debate around how to get back to things as they were we are missing an essential point.

The Mongols will be back if we do not fix the system of capitalism at its core. The core of capitalism is the broad and constant distribution and redistribution of wealth among all participants in the economy. If wealth stops moving capitalism ceases to have any meaning.

That our model of capitalism has been broken for many years is evident in the ongoing failure of our wealth distribution structures. Consumption based economic growth depends on the constant growth of wealth in the hands of consumers in our middle and lower class working population.

Growth in wealth has not occurred recently below the top ten percent of the income groups in this nation; that is a clear fact. On the other hand declines in asset values have hit the lower income classes’ pension funds and home values much harder than any time in recent history.

Until we can keep systemic failure from destroying wealth we cannot grow wealthier as a nation. If we want to survive and even thrive we need to address the issue of wealth destruction by Financial Intermediaries. We also need to look at why wealth redistribution is so tilted toward transferring wealth into the hands of those same Financial Intermediaries. That is the debate we need to be developing into a source of solutions for this systemic problem

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