The Other I

November 12, 2012

The Problem vs the Solution

Filed under: The Economy: a Neophyte's View — theotheri @ 4:51 pm

After my last post on capitalism, comments made to me privately have made me think that when some progressive Americans say they are against capitalism, what they really mean is that they are against capitalism as it is practiced in America.

The influence of moneyed interests is a recurring problem, whether it be through the military-industrial complex and its influence in Congress, the recent Supreme Court ruling giving corporations the right to make unlimited donations to political figures or that super-wealthy 1% given prominence by the Occupy Wall Street movement.

At the same time, there is the stagnation of social mobility — it is lower in the United States now than in Britain — and many workers are becoming quite rightly cynical about the American dream.  They no longer believe if they are willing to work hard, that they can improve the standard of living for themselves and their families.  Many cannot even get a job.  Up until now, Americans generally did not have a problem with huge disparities of wealth.  We believed we all had a chance if we were willing to work for it.  Now it is simply looking more and more unfair.

Meanwhile, America is slamming the door on immigrants, traditionally one of the most creative and hard-working sources of America’s economic superiority for so long.   Businesses, especially small and medium-sized businesses are often cramped by stifling bureaucratic regulations that big business can handle but are serious burdens for smaller businesses.  And we are among the most prolific environmental polluters on earth, and can’t agree that we are even doing it.

My problem, though, is that because I can see the problems with so little difficulty, I am tempted to think I obviously know the solutions.  But I don’t.  Understanding economic systems in a world as complex as ours is not easy.  In fact, to some extent it is impossible.  Human behavior is too unpredictable, the systems are too intertwined, various cultures too different from each other.  In some ways, – and I say this with some seriousness – quantum mechanics is simpler than economics, a system laced through with human ingenuity, human greed, the basic need for survival, human ignorance, human generosity, human idealism.  It is fundamentally by nature not predictable the way a chemical reaction is predictable.  It’s easier to figure out how to get to Mars.

In addition, every culture, every country, each economic system is a little different.  Versions of capitalism that might work quite well in Scandinavia cannot be applied in identical ways in the United States or Latin American  or African or Asian countries.

We need to know an awful lot to find solutions that might work.  Even then, we could, with all the good will and study we can muster, still make things worse rather than better.  We have a lot of examples of having done just that.

So should we just wring our hands in helpless despair and give up?

No.  I think we’ve got to try, each of us needs to utilize whatever talents we have, however small they may be, to tackle these problems.

So yesterday I asked my nephew who has his Ph.D in economics to recommend a good introduction to economics for me to read.  I know smatterings and spikes of economic theory and research.  But it’s just enough to know that it’s not nearly enough.

I do promise not to turn this blog into my study guide in economics.  Unless, of course, I discover that the Law of Supply and Demand really is a fascinating and life-changing concept.

But I doubt it.



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