“Out of financial crisis comes historic opportunity”
by Zach Hindin
During a speech in Indianapolis on April 12, 1959, John F. Kennedy noted, “The Chinese use two brush strokes to write the word for ‘crisis.’ One brush stroke stands for danger; the other for opportunity.” Faced with economic turmoil, the proportions of which have been unseen in this country for generations, the pressing financial crisis has put people on a high-speed ideological collision course. This upwelling of contention must not leave the table of the national dialogue after policymakers address the most immediate effects of the crisis. Rather, the differences in our economic values, all equally American, must find coherent articulation and serious focus by the news media and political leaders. The magnitude of the present financial crisis represents nothing short of an epochal opportunity to redefine America’s priorities.
There are three principle ways in which the average American will respond to the market crashes witnessed all over the world this past month, here described as “the bad hand,” “the finger-pointing,” and “the other hand” approaches. Regardless of what approach one decides to take, there are at least several premises we can all agree on. First, what we have on our hands is a bona fide crisis: the present financial situation has severely abbreviated the time frame for policymakers to respond and take further preventative measures against market failure. Second, this abbreviation has, as is the classic case in any crisis, reduced the reasonable discussion of nuanced perspectives to a raw clash of political powers over moral high grounds. One need not look further than last week’s Congressional record of the proposed bailout of the U.S. financial system for proof of this. Finally, even with Congress set to approve some kind of negotiated plan of action by deadline (hopefully well before your reading of this editorial), the ensuing consequences of this crisis will manifest themselves for a long time to come. From these assumptions, we can proceed to look at the various responses of American citizens.
In the first approach, the individual willfully neglects to address the deep structural and ideological forces that brought about this mess because they are too preoccupied with addressing their personal (i.e. financial) concerns. Many Americans, particularly those in younger generations, do not have a clear conception of the larger forces at play in this crisis. This is not entirely their fault. Between an education system that fails to teach the basic operational components of economics (knowledge of neoclassical macroeconomic theory doesn’t help much when deciding whether to start a 401K) and a 24-hour television media rife with talking heads for every topic in the news cycle, there is an underlying message: One needs to be a political scientist to understand politics, an economist to understand economics, and so on. This puts an intellectual straitjacket on many Americans that are perfectly capable of forming their own opinions, if only they had the confidence necessary. For many of these people, it is as if Adam Smith’s fabled invisible hand just dealt them a bad set of cards and now it’s time to cut their losses. During Hurricanes Gustav and Ike, the “hunker down and wait till it’s over” approach may have been for the best, but today’s social and economic storms must be met by a more engaging, ingenious and indeed riskier approach.
The second approach, the favorite of bloggers, talking heads, and political demagogues, is to place blame on individuals. They take up Plato’s mantle and demand to know, “Who will protect us from the protectors?!” For these folks, greedy corporate fat cats, irresponsible bureaucrats, and unethical politicians form an iron trinity of deceit that can only lead to periodic system failure. Ideas like “free markets” and “open economies” are not up for discussion because they cannot be fired as easily as people. Habitual thinking has transformed these ideas into principles to be served by a revolving door of corporate and political leaders that are ostensibly free of the despicable ethical foibles of the last batch. While finger-pointers’ words are often spoken loudest, they are spoken as weapons against enemies and not, to borrow Max Weber’s language, as “plowshares to loosen the soil of contemplative thought.” Moreover, finger-pointers fail to see larger forces at play by falling prey to Francis Fukuyama’s now canonized logical fallacy that the apparent synthesis of democracy and capitalism represents the “End of History.”
The last approach takes such absolute declarations and begins by saying, “On the other hand…” Of the three approaches, this last one is, by far, the most politically unsound and likely the most unpopular. One would be hard-pressed to find a sizeable constituency, let alone a democratic majority that would let a politician go unscathed should he or she mention updating neoclassical economic theories for the challenges of the twenty-first century. Indeed, the last politician to do so was Franklin Delano Roosevelt in the 1930s. Political ideologues (not least Herbert Hoover) stirred the media into frenzy over FDR’s New Deal, calling it everything from “communism” to “fascism.” In retrospect, FDR arguably did more than anyone else in American history to save capitalism from a socialism that may well have been appetizing during the Great Depression. Be that as it may, this is not a call for a nationwide move towards socialism. However, we ought to recognize that the recent cascade of events – from the nigh simultaneous collapse of Bear Stearns, Lehman Brothers, AIG, and Merill Lynch to the historic takeover of Fannie Mae and Freddie Mac – bodes more than just reiterations of history’s dynamics. We are now standing on the precipice of a new economic epoch.
It is now every American’s mandate to look into the opaque face of uncertainty and independently articulate the foundations upon which his or her government ought to stand. What do we think about a heavy progressive income tax? Better yet, how many of us know what that even means? Do we believe in free education for all children in public schools? To what extent are we aware of the societal phenomena that make us confuse symbol with reality, occupation with identity, money with wealth, and natural resources with nature? To answer these questions, people at every rung of society need to cast aside the seductively simple binary arithmetic (e.g. cause/effect or capitalism/communism) that politicians and media have long reinforced. Such essential openness in the national dialogue has scarcely been seen since the Constitutional Convention of 1787. If we were to ask our Founding Fathers whether or not the people should take a sober look at what the grounds of their government are when the forces of history spell a new era, what would they say?
There is great danger in the task that lies before us. There is also monumental opportunity.
Zach Hindin is on the Executive Board of Banaa.org and is currently a junior in the Columbian College of Arts and Sciences pursuing a major in Philosophy and Global Politics.
