More than a decade ago, Ben Bernanke famously argued that a ballooning U.S. trade deficit was the result, not of domestic factors, but of a “global saving glut”: a huge excess of savings over investment in China and other developing nations, driven in part by policy reactions to the Asian crisis of the 1990s, which was flowing to the United States in search of returns. He worried a bit about the fact that the inflow of capital was being channeled, not into business investment, but into housing; obviously he should have worried much more. (Some of us did.) But his suggestion that the U.S. housing boom was in part caused by weakness in foreign economies still looks valid.
Of course, the boom became a bubble, which inflicted immense damage when it burst. Furthermore, that wasn’t the end of the story. There was also a flood of capital from Germany and other northern European countries to Spain, Portugal, and Greece. This too turned out to be a bubble, and the bursting of that bubble in 2009-2010 precipitated the euro crisis.
If I could distill all the criticisms of capitalism about which I know into one single statement, it's this: investors put their money into stupid shit.
I mean, obviously, it's far more complicated than that, but as a rough description, it serves pretty well. From refusing to pay fair wages for fair work and pocketing the money instead, to getting caught up in psycho-bubble mania, to dumbass get-rich-quick schemes, to refusing to consider environmental impacts on the environment in which they do business, and on and on, capitalists, as a class of people, always have their eye on nothing but the big score, while seeing very little else.
This isn't always apparent, though. Usually we have enough capitalists making good decisions to sort of offset the bad decisions. After all, this is capitalism we're talking about, you know, competition; there are winners and losers. Ultimately, however, and invariably, the stupid decisions will come to outnumber the smarter decisions, and economic crisis must necessarily result. That's the history of capitalism in a nutshell, from its very beginnings during the first industrial revolution through today.
I mean, there's some "market discipline" for you. Eventually, always, the "discipline" becomes so severe that it brings down the entire shithouse. That is, there is no "market discipline." Just a bunch of greedy assholes swarming all over each other like snakes trying to get to the top of the pile, which then collapses on itself. Greed is NOT good. It infects and addles the brain.
It is clearly way past time for us all to stop believing the bullshit mythology capitalists have created to justify their wild and brain-damaged excesses, and move on to getting real about economics, establishing rules and regulations to protect us all from the self-destructive mania inherent in the capitalist class. Seriously. Civilization is at stake.
Monday, August 24, 2015
Posted by Ron at 7:23 PM