First utopian world communism fell. Now, the utopian vision of supply-side economics has fallen too. And fallen very hard, when the U.S. government rode in to save our financial institutions from failure.
If you adopt a Transcendentalist point of view, you will see that the partial nationalization of our banks speaks volumes about all the problems that intrude when a government and influential individuals apply a "one-size-fits-all" dogma to a range of problems that exceeds the scope of what that dogma can logically contain.
There was never any logical reason to believe that simply allowing American business to self-limit and self-regulate would cure all problems, if given the time. But instead of monitoring lending activitity, the government failed to intrude, because doing so would violate the utopian belief that the market will always cure itself if left unregulated. And now we see the results. Faced with catastrophe, the government had to act, in a way that bordered on socialism, to save the system from itself. Instead of acting in countless small ways, case by case, every day, a vast remedial cure was needed in 72 hours.
What a government should do is to monitor lending and enforce regulations (which were already present in this case) to halt irresponsible lending. But instead, our government adhered to the promises of a false authority - non-intervention - and believed that that authority would work in every case. So what if banks were writing mortgage loans to individuals who had no hope of repaying them? The economic engine would self-correct and heal itself.
The only problem is, it didn't work.
Emerson could have told us that such practices were distorted and ill-informed, counting as they did on a utopian belief system that lacked the specificity to address individual actions and practices.
As always, blind adherence to an authority blinded those in power. It happened to Lenin, Stalin and their successors. And how it has happened to us. In our case, a limited economic conceit convinced our elected officials that there was no need to act to save our financial system.
Now I realize tht this post is not the most sizzling or interesting. It reads like a lecture in a freshman course on utopian thinking. And I apologize for that. Yet the fact remains that blind belief in a questionable authority always results in bad outcomes. When people are losing their homes because the government allowed itself to be deluded by a far-reaching dogma, the words "bad outcomes" fall far, far short.
