The Tiger's Right Paw

When I hear people speak about human systems in terms of science or nature, I think “no.” The “social sciences” took their name as an homage to the real deal, a quaint way for, say, sociology to sneak in there next to the branches that de-code chromosomes and build rocket ships. Economics is the most aggressive social science. Capitalists claim the system is as natural as evolution and that the free-market is an intricate, self-perfecting coral reef. Hands off.

Evan Newmark of the Wall Street Journal sums up the dominant free-market language: “The laws of capitalism … are unyielding. The strongest companies survive. The weak and infirm die. And the economy moves forward.” Or, sections of the economy are already dead but pretend to be virile and flourishing. It’s like a possum in reverse. Good trick!

Economics is not science; it’s people and money, and the laws are flexible and theoretical. Science is what’s spanning the Rocky Mountains right now. Pine beetles are killing off millions of acres of lodgepoles. They bore through the tree’s bark, scratch a spot for their larvae and lay eggs. Young beetles eat the lodgepole’s nutrients and, to defend themselves from life-threatening sap flows, inject a fungus that stops the movement of liquid and kills the tree. The lodgepole’s lifesaving ally — cold winters — is gone, so eventually the brittle red trees will be swept away by conflagration. Then, LodgePole 2.0 will evolve with its competition in mind, outperform the pine beetle, take back its market share and send the beetles back to the boardroom with weak excuses for investors. 

Economic competition is competition, not Darwinism — which doesn’t factor in human emotions, errors and speculation, Fed statements, holidays and last night’s binge. The notion that the market corrects itself is another mistaken ecological comparison that, as we just found out, applies only to certain sections of the market. Where the market connects with buyers, it is self-correcting. Constant consumer engagement allows products to thrive (iPod) or die (Reebok Pumps), and no matter how attractive the advertisements (Zune) and publicity (XFL), the buyers decide what they want. But, there are no innate guarantees to success — "American Idol" was not genetically engineered to flourish. No one is recommending federal intervention to prop up TV.

Government oversight is required, though, when economics don’t even act like markets. The “toxic” (“Well, gee, there ya go talkin’ about ecology again, Joe”) lending system has played out entirely disconnected from the Friedmanian trust bestowed on the aggregate of buyers. Technically, it’s up to internal regulators to figure out risk, but as Brian Calame told us during a visit to Mizzou last year, he got flack simply for fulfilling his role as New York Times ombudsman. Objectivity in the land of six-figure bonuses is not possible and shouldn’t be expected. The subprime gambling racked up $625 billion in bad loans by ’05. That’s not natural; it’s Chernobyl. “Credit is the air that financial markets breathe, and when the air is poisoned, there’s no place to hide,” writes Charles Morris.

Government regulators keep watch over retail banks, restaurants, bars, schools, streets, forests and just about anywhere else. Economic institutions don't have natural rights that free them from oversight. They'll adapt to operate successfully with the regulation; we can be confident about that. Right now, shipping companies are insisting a coalition of governments protect their coral. Business sharks can't deal with pirates on the high seas.

— Greg

American business goes by the libertarian principles of "no government is good government." Allow competition to run its course, de-regulate industries and the market will correct itself. Competition is good for the economy, good for individuals and good for the common good. Fine.

It's unacceptable then for the same businesses to come to Washington and ask for a bailout. Detroit Three got beat at their own game: capitalism. They haven't been running good businesses for a decade, show no innovation or flexibility and have done only one thing well: hire solid advertising firms. Chrysler's cars look like boats, Ford forgot how to make a sedan, and G.M. thought it'd be a good idea to gobble up every auto-maker under the sun. The New York Times reports that "executives seemed stunned by the general lack of confidence that lawmakers showed in their companies."

Stunned? Let's not be silly. Detroit Three haven't secured confidence from their own constituents: consumers. Volkswagon revolutionized the mid-priced sedan. Honda builds long-term, reliable coupes. No one is interested in the Malibu or Five Hundred. There are no American cars in Europe or Asia or South America. Detroit Three don't make the best cars (BMW), the cheapest (KIA) or the most personal (Scion/Toyota). All they do is make big luggers.

I empathize with auto employees. The economy will take a huge hit. But, why would the U.S. Government be expected to hold up a non-competitive deadweight? No one's buying stock in G.M., Chrysler or Ford.

So. Goodbye, Detroit. The market has spoken.

— Greg

Don't you wish Barack Obama was on the Republican ticket?

I do.

It would be the best of both worlds: Young, diverse, hopeful Obama and experienced, white, economically sound Mitt Romney. There would be no Sarah Palin to dilute the strength of John McCain. Our candidates wouldn't have to resort to negative campaigning and catchphrases.

The Republican Party is running on the same platform as the Bush administration in '04: Fear and identification. Obama's not a terrorist. Or a socialist. Both candidates represent Joe Six-Pack and Joe the Plumber.

Due largely to Palin's inexperience and shifty past (she wanted to charge rape victims for their evidence kits!), I can't have faith in her as a leader. She is the best campaigner in the election, drawing thousands of electrified Americans to her rallies. This is wonderful. But not substance.

Palin, of course, was picked because she is a young(er), pretty woman. That's fine, but image only goes so far. Barack Obama on the Republican ticket would have made perfect sense. He wants to practice compassionate conservatism. Cut out poor government spending and make sure the middle class don't get screwed. Isn't this the trademark of a Republican? All the while, Romney would present an air of middle-aged authenticity, which to many is so important to picking a president.

Romney's presence could town down the racial and "name" — Barack Hussein Obama? — fears some Americans have. Then, who would the Dems be left with?

Hillary? HA

— Greg