Or: Chaos is good for you
Spot wants some of whatever Davey Strom is smoking:
Can the Economy be Too Stable?
. . .
History has shown that the price of economic stability is usually economic stagnation. The price for economic growth is allowing for "creative destruction" which breeds a certain level of instability. Stability and predictability are the enemies of dynamism, and countries which seek them ultimately pay with slower economic growth. Until recently it seemed impossible to have both a dynamic economy with strong growth and a stable economy with relative predictability and security.
During the "great moderation" it seemed that we could have our cake and eat it too—dynamic economic growth and relative stability and predictability in the economy. It seemed that the Federal Reserve had found the magic formula for sustaining economic growth while avoiding serious dislocations in the economy.
But now it seems that the very success of these policies imposed an unseen cost—the creation of a new kind of moral hazard. The very success of the Fed invited investors to assume that economy could bear almost any shock and keep right on humming, as it had during the financial crises that hit during this 25 year period. The apparent success of the Fed in moderating economic swings seemed to mean reduced risk for investors. The apparent reduction in risk in turn fed an appetite for what in earlier times seemed to be high-risk investments.
Davey is, naturally, channeling Uncle Milty: The Man from Chaos:
Milton Friedman, Nobel Economics Prize winner, has left a trail of death and destruction wherever he, his students or admirers advised countries to implement his plan that involved privatization, government deregulation and deep social spending cuts. Advocating a free market economy, he thought that an unregulated market would maximize freedom and prosperity. Although he wrote a book in 1962, Capitalism and Freedom, he found no democratically elected government, including President Richard Nixon’s administration, would implement his program. The Keynesian model including a safety net, unions, workers protections and government spending helped the United States and other countries recover from the Great Depression and continue prosperity after the Second World War. Milton Friedman and his Chicago Boys (former students at the University of Chicago economics department) found that they could only persuade dictatorships or democracies in crisis to adopt his planned misery program. [italics are Spot's]
Davey sees an opening now.
But listen to the author of the above comment on Naomi Klein's take on Friedman's disaster capitalism:
Naomi Klein in The Shock Doctrine: The Rise of Disaster Capitalism analyzes the Friedman program and its results. The Friedman program has a three part formula: 1) removing any regulations that inhibit business growth, 2) selling any public corporation that runs a profit, and, 3) making deep cuts in social spending. Taxes must be low and everyone (rich and poor) pays the same flat rate. Governments would make no effort to protect their industries or citizens. Market forces would set all prices. There would be no minimum wage nor any use for unions. Friedman offered health care, the post office, education, retirement pensions and national parks as privatization targets. In the United States, this would mean a completely reversing the New Deal.
She presented the universal ghastly results for countries forced into the Friedman program:
"…an urban bubble of frenetic speculation and dubious accounting fueling superprofits and frantic consumerism, ringed by ghostly factories and rotting infrastructure of a development past; roughly half the population excluded from the economy altogether; out-of-control corruption and cronyism; decimation of nationally owned small and medium-sized businesses; a huge transfer of wealth from public to private hands, followed by a huge transfer of private debts into public hands." [italics are Spot's]
Western governments and banks colluded with this pauperization. Our corporate media portrayed dissidents as reactionaries, old guard, Russians who preferred Stalin or Iraqis who preferred Saddam Hussein and did an excellent job shooting the messenger. The corporate media ignored the people who were being pauperized to enrich an elite. Western governments and banks gave virtually no assistance to countries recovering from dictatorships or Communist rule, unless they submitted to shock therapy. For example, Gorbachev was moving to a mixture of a free and socialist market with a strong safety net. All he got at the 1991 G7 meeting was a demand for shock treatment.
Golly, Spotty, isn't that kind of what we've got now?
That's affirmative, grasshopper. Chilie, Bolivia, Russia, Iraq [under the American Viceroy Paul Bremer], and Argentina have all had their shot at "creative destruction" with woeful results. God save us from Uncle Milty's mayhem.