Adonis Diaries

The prognosis for the next few years is bad with a chance of worse. And the economic conditions are not even the scary part. The scary part is the political class’s inability to think about the economy in a realistic way.”

This crisis has many currents, which merge and feed off each other. There is the lack of consumer demand, the credit crunch, the continuing slide in housing prices, the freeze in business investment, the still hefty consumer debt levels and the skills mismatch, regulatory burdens, the business class utter lack of confidence in the White House, the looming explosion of entitlement costs, the public’s lack of confidence in institutions across the board…

No single one of these “currents” prolongs the crisis: It is the product of the complex interplay between them. The crisis is an emergent condition, even more terrible than the sum of its parts.

The “ideologues” who dominate the political conversation are unable to think in holistic, emergent ways: They pick out the one factor that best conforms to their preformed prejudices and, like blind men grabbing a piece of the elephant, they persuade themselves they understand the entire problem.

Many Democrats are predisposed to want more government spending. So they pick up on the low consumer demand factor: Increase government spending and that will pump up consumer spending.  When President Obama’s stimulus package produced insufficient results, they didn’t concede that maybe there are other factors at play, which mitigated the effects. They just called for more government spending. To a man in love with his hammer, every problem requires a nail.

Many Republicans, meanwhile, are predisposed to want lower taxes and less regulation. So they pick up on the low business investment factor:  Cut taxes and Reduce regulation… (but don’t touch the military budget)…And All will be well.

Both orthodoxies take a constricted, mechanistic view of the situation. If we’re stuck with these two mentalities, we will be forever presented with proposals that are incommensurate with the problem at hand. Look at the recent Obama stimulus proposal. You may like it or not, but it’s trivial. It’s simply not significant enough to make a difference, given the size of the global mess.

We need an approach that is both grander and more modest. When you are confronted by a complex, emergent problem, don’t try to pick out the one lever that (you think) is the key to the whole thing. There is no one lever. You wouldn’t be smart enough to find it even if there was one.

Instead, try to reform whole institutions and hope that by getting the long-term fundamentals right, you’ll set off a positive cascade to reverse the negative ones.  (How about we endeavor to) simplify the tax code; end corporate taxes, and create a consumption tax?

Reshape the European Union to make it (either more unified or less), but not halfway as it is now. Reduce the barriers to business formation. Reform Medicare so it is fiscally sustainable. Break up the banks and increase capital requirements. Lighten debt burdens even if it means hitting the institutional creditors.

There are six or seven big institutions that are fundamentally diseased, from government to banking to housing to entitlements and the tax code.

The Simpson-Bowles report on the deficit was an opportunity to begin a wave of institutional reform. But that proposal died because our political leaders are too ideologically rigid to take on big subjects like tax reform, which involve combining Republican and Democratic ideas. The failure to seize that moment was one of the Obama administration’s gravest errors.” End of article

The article approached the financial missed opportunities for serious reforms, and this crisis didn’t emerge in the last decades, but at least three decades ago.  The developed States knew the seriousness of the fast arriving economic and financial crises, and all they did was launching preemptive wars to throw dense smokescreens on the real monster trouble facing world community, and mainly to taking the lower middle class people off the unemployment streets and into the military… 

What was supposed to be “fighting terrorism” turned out something different altogether: Instead of eradicating the basic factors that initiated and encouraged “terrorist activities”, mainly illiteracy, poor economic development, lack of investing in human development indicators of infantile mortality…and cleaning up the growing environmental degradation, water pollution, and nuclear disasters…, endemic famine plaguing many regions in the worlds, focusing on taming curable deseases…the US went on a “quick preemptive war” in Iraq that dragged on for a decade, leaving behind it over one million of Iraqis dead and severely injured and plaguing the “Greater Middle East” in greater instability…

Instead of focusing on the factors that hurt world community, the US wanted to blackmail China by physically occupying the oil fields in Iraq…

The European Union had to hastily agree on the common Euro currency because it knew that the timing for declaring the world financial crisis was in the hand of the US, and it wanted not to be harassed one individual State at a time when the US blow the cover…

Europe is taking things seriously and agreeing on difficult medicines to taking: Nuclear power plants are being phased out, environmental problems are tackled in earnest, and frequent meetings among their leaders are common events…, but what the US and China have been doing?

China and India are polluting the environment, water sources, and ocean bays, consumer cars… to unprecedented levels, and still claiming to be treated as developing countries in order to catching up with the developed nations in pollution conditions…

The US is trying hard to throwing more smokescreens in order to avoid dealing with its “liberal capitalist” system: Occupy Wall Street protest came to dismiss focusing on further creation of smokescreens and tackling the main problems for serious resolutions…