The word “economy” comes from the ancient Greek word meaning “household management.” It is hardly surprising that so much of our lives – from the means to make a living to civil order and social stability – depends on a well-functioning economy.
Yet, who exactly is managing this “household”?
We need governance that is geared to serving the best interests of society. And while our ‘best interests’ may be a matter of debate, we depend on those people in positions of responsibility for honesty and foresight.
The nature and functioning of a civilized society depend on trust. And trust appears to be in short supply in the digital systems and human thinking that facilitate global finance today.
Americans cannot raise families or plan for the future without consistent and dependable conditions, whether physical, social, or economic.
Businesses cannot expand or take on risks without confidence in the consistency of law and government policies, and in the unhindered price-discovery mechanism of the marketplace.
In short, we need our economy to be managed in the interests of the American people as a whole, rather than for certain groups.
However, the difficulties we face involve more than a simple problem of personal and institutional trust.
Leadership needs to acknowledge the uncomfortable fact that it is not possible to control everything in reality, even with the best of intentions. Indeed, growing complexity leaves little possibility for constructive change without new thinking.
Economist John Taylor’s 2012 book, “First Principles”, argues persuasively that the arbitrary application of discretionary policies has led to inevitable economic imbalances and distortions that feed upon themselves.
However, it appears his recommendations will not protect us from the current anarchy of global finance or the massive distortions that now prevail. It is difficult to see how the economy can escape the control of people who cannot admit their errors or bear to face the pain of changing course.
Short of another major financial crisis, I do not see this changing.
Central bankers will either abandon the illusion of control and the hubris of the past, or their assurance will be wrenched from their hands when reality reasserts itself.
Leaders of government will either awake to the truth or they will find themselves helpless before a calamity of unprecedented proportions.
The coming transition will be painful and frightening, because great destabilized forces must rebalance themselves. The extraordinary excesses of recent decades will be wrung from a shuddering world.
An instability reaped by ego, greed, and massive indebtedness has infected both the mind and spirit of the nation.
What does this mean for ordinary Americans?
Americans do have recourse, but let’s be realistic: We will not be saved by self-styled leaders who think they know it all. We’ve been there and done that. Rather, we must rise above our differences as individuals, build local community, and commit ourselves to a principled integrity.
And, when the ground moves beneath our feet we must trust in the decision-making structure of the Constitution of the United States.
The national economy, when understood as “household management”, involves far more than budgeting and finances. It requires leadership with a conscious attitude of responsibility, who care about the “household” and the people in it.
It calls for freedoms that are obstructed or denied to real people – citizens of limited means.
Some readers will be uncomfortable with the concept of “love” when applied to economics. OK; so let’s call it respectful caring or compassionate understanding or common decency.
Whatever we call it, nothing else will guide us home.
The principles to provide the foundation for the future will be those that facilitate both respectfulness and problem-solving. Genuine community can only be based on the values of true civilization: honesty, trustworthiness, ethical integrity and moral responsibility.
When we fully embrace these values, the economy will reconfigure itself according to just principles. Only then will our lives find stability and renewal.
Healing will take time. But rest assured: the economy will reboot.
Note to readers: I will be taking a brief break to travel in the coming weeks. Please watch for the next post after February 7. Drafts of two additional chapters of the coming book have been posted on this site. Please see links at the top of the homepage.