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Why Financial Bailouts Will Fail
The whole point of the financial bailout is to restore people’s confidence in the machinery of business, the economic system itself. But there is a logical flaw at the center of it as a mechanism to shore up public trust: the very concept of “the system” or the corporations of which it is composed needing to be bailed out in the first place just makes the whole thing look bad. It exposes certain paradigms of business practice as being unstable, unsustainable and unsuitable for the modern condition. A system that works doesn’t need to be bailed out in order for it to keep functioning properly. You don’t end up trusting someone who you keep bailing out: you expect more of the same from them.
Which is why radical thinking is needed. Shift the paradigm completely. Set what people are thinking about money and economics on its ear. Restore confidence through broad sweeping measures nobody is expecting, but which aren’t ahistorical. For example, the ancient Hebrews held a “jubilee” every fifty years, in which debts were forgiven.
Want to fix the economy? Want to make people believe in the system? Give them a way out of all the bullshit and a chance to start over again. What would happen if all credit card debts were suddenly and permanently rescinded as an emergency measure to stave off economic crisis? It would certainly lift people’s spirits and inspire them to try out new methods and new ways of living which are rooted in positive change and new beginnings. Bailouts and bailouts are more of the same. It’s just the wealthy giving each other money so they can flush out their assets and rearrange their holdings.
October 11th, 2008 at 9:34 pm
I think the bailout itself is a sign that people, even the people doing the bailing and those being bailed out, want the system to fail. We’re dealing with a mass flux on the collective unconscious level.
The question is, are we throwing away the old to make way for something new, or just giving up on things entirely? One thrills me, the other is terrifying.
October 12th, 2008 at 6:58 pm
Hi Ian (and Tim, long time!). I agree that what’s happening is a mass reshuffling of the collective unconscious, and I share your question and concern for whether we’re actually learning to move on or just giving up. However, I see the bailout as more of a sign that people are willing to take whatever measures they have to in order to keep the familiar way of life–not even necessarily because they enjoy it, but only because it’s familiar! Some of the goings on in the financial world right now are very surreal. Like this: http://www.bloomberg.com/apps/news?pid=20601087&sid=aP5mpMUORBWM
It seems that those playing the financial game are taking more and more absurd measures in order to keep their game running. It presents an interesting opportunity for us regular folk: it’s becoming increasingly apparent how little “the Economy” has in common with daily life. It’s a game. A few people got really good at the game, and invested so much time and energy into it, that even as the game ends, they try to write and rewrite new rules to keep it going.
I can’t pretend to know ANYTHING about economics, but what Charles Eisenstein (and Silvio Gesell) calls demurrage money sounds like a step up from what we have. Instead of money based on accumulating interest and power over time that draws more and more of the real world into the economic game due to the artificial scarcity of such a system, we could have money that depreciates in value over time, increasing its circulation and availability and encouraging lifestyles motivated from love instead of doing things we hate so we can have enough money to live and spending the rest on numbing drugs and passive entertainment.
It’s a step, one I don’t fully understand, and what I think we really need (as a species) is to relearn how to navigate between artificial constructs of the world, and the world itself. What’s interesting about watching the US economy crumble is that it becomes more obvious how disconnected it is from reality, giving people an opportunity to bridge the semantic gap between map and territory.
I’ve always thought that a generational jubilee (wealth and debt can’t carry on to someone’s children) would be a great thing, too, but socially we’re too stuck in a way of living that pits us against each other, without enough community to fall back on when we need it. So the debtors won’t get off easy because their banking overlords want leverage over other people just to ensure the long term security and safety of their own families.
October 13th, 2008 at 9:16 am
This is exactly what I mean. Although those in “control” of this whole trainwreck don’t realize it, they’re just acting out everyone’s desires to see the truth of this. It’s a play that we’re all acting in and directing at the same time.
Demurrage or gift economy or any other kind of economy, it’s still a system. We need to stop trying to make a better map. As we get in touch with reality, it gives us all the map we need. We do not have to create one on our own, no plans ahead of time. The more we tell reality what we want, and stay open to it moment to moment, the more we get what we need.
October 13th, 2008 at 1:35 pm
Oh, how Mr. Wilson must be spinning in his grave….
But in all honesty, I truly hope that this bailout does fail. I view this systemic failure of our way of banking and economics (and to a larger degree, our way of life) as one of the few chances we have to wake up. We’ve been asleep for so long, dreaming and imagining many of our successes, while allowing our bodies and the spaces they inhabit to fall into disrepair. One of my greatest fears is that if we continue to ignore and/or dismiss other equally viable modes of living, we will continue to sleep until the next great catashtrophe, that our dream will deepen and become a nightmare, and that the future of humanity will be relegated to “a boot stamping on a human face - forever”.
October 15th, 2008 at 5:57 pm
[…] I already talked about why I think bank bailouts will fail. And I don’t see this new European whopper of a €1.5 trillion one being any different - if anything, it’s likely to be even more destructive. Aside from novel financial approaches, like debt jubilees, I thought of another concept which I think would surely put everyone on their toes and maybe help take us out of this hairier-than-hairy situation. […]