Corporate Bailouts And Common Sense Sustainability

Note:  the following post started in concept when I responded to a few recent posts on my friend Anoka Flash's "Centrisity" blog.  His blog can be accessed by clicking on the link provided in the "Good Blogs" section, located in the left-hand column of this site.

AVOIDING CLOSE ANALYSIS OF THE CONTRIBUTING FACTORS IS NOT THE WAY TO FIX THIS TRICKY PROBLEM

Given the recent volatility of various stock markets (both inside and outside of the U.S.), it's understandable--and ultimately a good thing--that some folks are enjoying discussing the minutiae of geo-finances.  But there's also a broader point that needs to be discussed regarding the situation in the United States and increasingly elsewhere in the world.  The broader point is this:  it's not a "free market" when corporations run roughshod over mainstreet America's (or mainstreet-Britain's, or mainstreet-fill-in-the-blank's) mom-and-pop businesses. And it's not a "free market" when the rest of us have to bail-out these enormously-influential, so-called "free-marketers." That scenario has a different name: it's called "global corporate financial strangle-hold."

Generally speaking, we've got a good economic system in both the U.S. and many other Western countries (as well as in several other emerging markets elsewhere in the world), but increasingly these economic systems are tilted in a direction that one can only truthfully call way, way out of whack. When corporate Goliaths get too bulky for their own good by forgetting how they got so big in the first place (which happens when they make a series of incredibly stupid financial maneuvers given the economic conditions of the day, these maneuvers indicating that they have become less independent of thought and therefore less able to adjust properly to trends that demand innovative thinking), we ought not let them off the hook.

The point of a "free market" is to let small businesses have a fairly even, fairly incentive-laden starting-point so that each can grow according to their talents.  But when they're consistently crowded-out by ueber-corporations, that cannot happen. And when these huge corporations inevitably lose their edge through intellectual laziness and corporate insulation from reality--which is often due to start-ups lacking any sort of leverage to compete with them, and which often manifests itself in the aforementioned lock-step thinking within these huge corporations--the best thing a truly free market can do is let them die so that new mom-and-pop operations (and the like) can replace them and start the process of building wealth and market diversification again.  Yet so often we find ourselves propping these Goliaths up with money that could go into other activities, such as investing in new ideas and new businesses, solving health care problems, and the like.

What about our retirement money, you ask? Well, at the risk of sounding overly glib, that's why there's this thing called "saving money" and this thing called a "social safety net." In America, for instance, our affluence has allowed us to rather blindly and irrationally assume that we can buy endlessly on credit--houses, cabins, multiple cars per family, boats, motorcycles, another car, etc., etc., etc., etc.--and still save money "down the line...somewhere." My suggestion is that we perhaps buy just a few of those things, skip the rest, save some money, and create a stronger, more flexible social safety net--the last of which suggests first and foremost that we solve our metastacizing health care problems through creative, hybridizing, incentive-based means, as well as find a way to keep social security solvent and strong.  If this means tightening the proverbial belt elsewhere, which it most likely does, then so be it.  Hence, though in many ways it would be painful, we would create down-to-earth, realistic solutions to the pressing problems of the day without eradicating the economic system that creates wealth and jobs.

Much (though not all) can be said of many other wealthy countries throughout the world regarding this type of financial scenario....

Of course, as I've already stated, this is not an easy thing to do.  Indeed, with jobs eroding worldwide and the cost of living rising, this will be a difficult thing to pull off, particularly given the more comfortable scenario to which many of us have grown accustomed.  But while I do not advocate anything so regressive as tossing the stock market out the window (which would be like throwing the baby out with the bath water, as the old saying goes), I do advocate a shift in focus and mindset away from "I want all of this now" and toward "I need to plan for what I want, and I need to plan for acquiring what I need in order to get by should the plan for what I want fall through."  So while we might want these financial giants to be propped-up by taxpayer money so that they can carry on for another half-dozen years before the next (perhaps bigger) crisis occurs, we might be better served if we let the more disastrous financial giants wither away while we find a common-sense, streamlined-yet-effective method of non-stifling regulation that will hopefully help lessen the global impact of future corporate meltdowns.

It's one of the least amusing economic ironies of the past few decades that many so-called "conservative free-marketers" immediately rip into the more left-leaning portions of arguments like mine (creating a stronger and more updated social safety net; finding streamlined oversight methods) and miss the more classically conservative portions of these same arguments (stop bailing out mega-corporations; support innovation more broadly), many of which would help save money that could be used elsewhere.  Yet many folks would simplistically term what I and others are suggesting "liberalism" or "big-government nonsense."

I would ask such skeptics to read what I am suggesting once again, minus the personal agendas so many folks impress upon just about everything they read.  I believe that if they do this, they would find that I for one am willing to find common-sense, compromise solutions to the crises that so many folks still refuse to accept as reality.  In fact, I'd prefer compromise solutions, because such a scenario suggests that, since we're all in this together, as many of us as possible should be heard insofar as solutions are concerned.