Re-Cycling When We Shouldn't

Robert Reich had an interesting blog posting on Christmas eve:

(http://robertreich.blogspot.com/).

“The Debate to Come over Wall Street, Autos, and Everything Else: Cyclical or Structural?”

The crux of the post is summarized in the last lines:

---whether the economic crisis we're experiencing is basically cyclical (in which case, nothing really needs to change over the long term, after the economy gets back on track) or structural (in which case, many aspects of our economy and society will needs to change permanently).

Above these lines, Reich talks about the basic contradiction which exists in the thinking of the old-time Wall Streeters, that this economic mess we are in is “cyclical”, that soon things will be back to normal (in effect, telling the public…you me and us… to “get over it”) and the more radical thinking that says this nightmare is “structural” and cannot be counted upon. That is what he referring to in that quote above, about matters that will need “to change permanently”.
Reich is being immensely politic and enormously polite. As long as the financial powers that be can continue to convince us that this is an acceptable “cyclical” condition, they can maintain the stranglehold on the world’s money supply. It should be abundantly clear to almost everyone right now that the “structure’ of how we have been managing and mismanaging our money does not work any more. And it needs to be changed. And will make every mogul in the history of money manipulation and how wealth is accumulated damned unhappy.

Here is where I see a great irony posed by this (now worldwide) economic disaster and the natural resource stewardship we talk about so often today. If we accept the proposition that we should stand back and allow the existing monetary structure (and its’ practices) to “cycle over” again, as it done so often in the past, we will be “re-cycling” NOT a resource but a bad and deleterious habit. To put it even more succinctly, when I bemoaned this paradoxical dilemma to a good friend last night, she reminded of one of our favorite syllogisms (attributed to Einstein): Insanity is when you keep doing the same things you have always done and expect to get different results. Duh.

At that point I began to look at the existing monetary infrastructure that we have in play as a piece of the fabric of our society. S cloth, we have used it, worn it, laundered it, dry-cleaned it, heaped praise upon it and re-used it, soiled it, re-laundered it and used it again. And after every use and re-use, it has become thinner and more difficult to maintain. And the majority of the world’s wealth has continued to accumulate in the hands of fewer and fewer people at the top of the economic (pardon the terminology) “pyramid”. We have, in effect, “re-cycled” the very financial structure which does the least to provide for those who move the stones that build the pyramid. I am reminded of slaves in ancient Egypt and the Pharos who wore the golden adornments. And Henry Paulson does sort of remind me of Yule Brenner and AIG certainly has the festivity angle down cold.

Now before anyone jumps all over me for advocating of “spreading the wealth” and short-changing Joe the Plumber, or hyping Karl Marx, urging a revitalization of hippie communes or taking out the “fascist pigs” of high finance, I have to say that I am far more inclined to maintain the more measured “Reichean” overview and to think about this somewhat logically.
The system we have in place, the “structure’ as Reich refers to it in this recent post, is broken. The TARP sins that have been committed in the name of bail-out and the ugly and counter-productive results of those sins should be obvious to everyone. $350B has already been “thrown at” the banks, and virtually none of it has spurred the economy or stopped the foreclosure debacle. The AP reported that financial institutions have refused to account for how they allocated and spent at least $1.6B of that money. Sec. Paulson is now talking about dispersing the next $350B and no one seems to know what for. Jobless rates are skyrocketing on a monthly basis, and the generally held opinion is that the big real estate, medical groups and others will be close on the heels of Detroit for bail-out money. Meanwhile Chrysler has halted all production for at last 30 days, GM has closed the last of its plants that produce SUVs and word on the street is that General Electric is in as much trouble and General Motors. I don’t see how anyone can that what we have been doing financially for the last two decades has been for the “good of the many”, but has rather (and most recently and obscenely) been for the greater good of the “the few”. I wish someone would explain to me (and to everyone else) the contorted logic that promotes multi-million dollar year-end bonuses for Wall Street execs, only because “things could have been worse” without their leadership? Is someone daft?

No one disputes our need to recycle. We need to recycle wood, paper, plastic, water and virtually every natural resource at our disposal if we are to survive, as a world of bipeds, into the coming centuries. But the one central feature of our existence that we DO NOT need to recycle is the way we have come to handle and manage money and accumulate wealth.
There are some who believe this current phase will “cycle through” and there will indeed be a recovery. But any hope of another “re-cycle” beyond that is very doubtful. We may have washed this cloth, re-cycled this fabric, so often that it is simply “used up” and we need a new one. You can choose to get on this bandwagon or choose insanity. Your call.