In some ways the blogosphere has "moved on" from the intensity of the Greece austerity debate, which is probably a good thing at least in terms of the unfortunate gloating that happened, as to Greece getting its "just desserts". As Simon Wren-Lewis indicated, Greece definitely made its share of fiscal mistakes (his post How a Greek Drama Became A Global Tragedy). Wren-Lewis adds, "As most reasonable people now recognize that the global move to austerity was a terrible mistake, understanding what went wrong in Greece is important." He pointed out how the Eurozone, along with the IMF, helped turn a Greek crisis into a Eurozone crises as well.
All too often, the austerity debate gets framed too simply: "Just let free markets work." Sadly, it has become apparent that the kinds of free markets many libertarians would want, don't simply "materialize" just because government services get "knocked out" and budgets reduced. Or...has such a realization even taken place? Yes there are certainly ways in which private monies "fill in" when public money becomes less of a factor. But the bigger question remains: how are the things that people actually need being brought about, as a result? What are the kinds of restrictions that prevent the free market we imagine from materializing, even when government budgets are cut? Chances are, the free markets - which we want - have already been stopped in their tracks, by the favors that government has already handed out in regulations, restrictions and product definitions, to practically everyone who had the money to go to Washington and just ask.
What, then, might we take away from what Greece has had to endure? How has their situation resembled that of other nations, which could eventually suffer a similar fate? Even when no words are spoken, the very image of their current circumstance tears any pure argument for unthinking austerity to shreds, as its youth now look for departures, on the heels of a largely departed business class. In terms of wealth creation and loss, people are discovering it's not so much a matter of who holds the wealth when others cannot, but how wealth - which sometimes "unexpectedly" turns cold - is envisioned in the first place. Yes of course, some of their services also needed to evolve as well, instead of taking a stubborn last stand...
How about the markets that do work - that is - the tradable goods which are widely available and well in the range of affordability for many citizens? This is the aspect of the marketplace which makes the "free markets work" argument extremely plausible. The problems materialize when non-tradable goods at local levels do not utilize free markets in the same way, yet still use the idea of a free market as a "cover" for what is a purposely limited (thus protected) good in some context: health care by knowledge use limitations, and construction by highly specific low tech requirements. These are not free markets, but the fact that they use the name of free markets in their defense unfortunately causes people to doubt free markets and capitalism, because of those who use both to perpetuate non competitive economic scenarios. What's more, they use government to do so, and yet some among them denigrate the inefficiencies of government so that others will not realize how they used government to their own ends in the first place!
So it is that many outdated ideas of wealth creation need to evolve. Wherever local economies continue to hold their wealth in protectionist ways, the idea of protectionism only continues to grow - just as it so often does when economic access becomes further limited. Hand in hand with the local protectionism that finally goes global, is the struggle to keep new immigrants out. Nations don't realize that protectionism isn't going to help them in the long run, and could save themselves a lot of war and strife, if only they realized that when local power tightly defines the economic activity which is allowed to takes place, the process only escalates beyond borders if such power is unchecked. While the ultimate journey to gridlock may be slow, we still see definite signs of it in the present, especially in developed nations.
There's just not a lot of point in gloating when government bureaucracies fail, let alone when in fact a populace has not stopped to consider what might more reasonably take their place. Even as more cuts are debated in Washington now, for instance, little of substance has materialized for services restructure...just talk of privatization. People reason that we have still have plenty of time and resources, so there is little need to worry about the future. But if we don't begin the process of changing course now, such reassurances don't mean much in the long run. When a nation goes too long to decide how it can evolve, bad deflation is sometimes the result, in that people cannot readily hold on to traditional, more solid forms of wealth when the social structures around that wealth disappear. What's more, when austerity takes hold, the chains that bind together services and the solid assets of local wealth are often forgotten - or at the very least, scaled back to such a degree that services may become mostly for the rich.
Some think that it's just a matter of time before disruptive technologies make a difference for developed nations. In fact, some of the battle lines are being drawn to some degree for the digital realm, as people struggle to make technology a bigger part of wealth capture. However, one important aspect of disruptive technology remains untouched: countless forms of local protectionism, which have seen to it that almost no technological disruption has occurred in the structures we live and work in, or the infrastructures that we rely upon. Free marketers who gain protection by counting on government to perpetuate their restrictions and outdated expectations only do everyone a disservice in the long run, as people lose faith in free markets to provide their needs.
More than anything else, this kind of protectionism continues to threaten global stability, not just in the monetary policy problems this creates through ongoing unnecessary risks, but the unemployment that nations struggle with as a result. As long as services are mandated to take place in highly limited, high cost, low technology environments, only a fraction of any public can expect to partake of those services in the long run, or in the employment for that such services could provide for that matter.
This bloated definition of low tech wealth and its associated limitations on service wealth are what hold us back - like the Fleetwood Mac song, they are the chains that keep us "running in the shadows" with forms of finance that should not even be necessary for the incremental growth of the future. Greece should be the example that prompts those of us in the U.S. to take heed, for their irresponsibility mostly reflects the same irresponsibility too many of us still mistakenly follow, of protecting the powers that be. Truly free markets need to be loosed of such restrictions on economic access of every kind, so that economic growth can once again see the light of day,
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