A fresh perspective on politics and society from the internet generation.

Economic Darwinism and the Recession

Posted by politicizer on June 14, 2009

Michele Walk, Staff Writer

It is no news that our nation, and the rest of the world, is currently experiencing one of the most severe economic downturns in recent times. In 2009 alone, almost 3 million jobs have been lost in the United States already. It is truly an unfortunate occurrence.

That, however, bothers me – the fact that the recession, and its effects, are regarded as “unfortunate;” it implies that we are entitled to having fortunate things happen to us, all the time, which is hardly the case. Yes, I agree, the job losses and other effects on the economy are perhaps not the most pleasant occurrences; on the other hand, we as a nation – whether we are blue-collar workers, Wall Street bankers, middle-class families or politicians – must keep our heads about us.

It also bothers me how everyone is content running around acting as if the sky is falling, acting as if we will never, ever, ever be able to get out of this recession and recover – that is, unless the government pours money into businesses. I would like to offer an alternate perspective: we should let failing companies fail, and we should let the economy recover on its own; the economy will turn around. It will be brutal for a few years – especially in the beginning, with job losses and the like – but new businesses will open, and the economy will go on.

The fact that we find it proper to support failing businesses goes against the natural flow of economies, and in general, the flow of life. Some businesses, like some people/insert basically any noun here, fail, and some succeed. Let’s say Little Johnny consistently fails his math quizzes, no matter how much he studies; he simply is not good at math. We could get him an expensive, highly-educated math tutor; however, even with extraordinary help, it is more than likely that he will barely pull C’s and never become a Nobel Prize-winning mathematician. Sure, his low math SAT scores might drag down his district’s averages, but the fact of the matter is, math just isn’t his thing, and attempting to force him to be a gifted math student is counterproductive. This – expensive help for otherwise failing entities – is exactly what our government is doing right now. People, much like businesses, should do what they are good at; if they aren’t good at what they do, they shouldn’t be doing it.

Similarly, if a business produces goods that consumers do not want to buy, that business should not be in business (auto industry/banks). If their product is not rooted in basic economic principles, namely the exchange of property rights for a good or service, that company should no longer sell that product (‘Wall Street’ and credit default swaps). We also like to pride ourselves on living in a meritocracy; a place where people are rewarded for hard work and intelligence. Then how would it follow that we should give loans out to people who can’t afford them? This finger, it is important to note, points at both the lenders and the borrowers – the lenders shouldn’t have been using dubious practices, and people shouldn’t have been attempting to buy things that they didn’t have the money for.

Please note I do not intend to point out all of the troubles in the economy right now; rather, a few of the most prominent for illustrative purposes. My point is that it is the natural flow to have some businesses succeed and some fail. That is simply how it works. The way our government, and our nation’s populist sentiments are pointing, however, suggest that we are full and willing to abandon sound economic principles that have been shown time and time again for careless quick-fixes. On another note, it also points to the underlying leanings of the people: we pride ourselves on living in a meritocracy, but how is it that businesses with no merit are continuing to function, with our tax money, no less? Instead of a meritocracy, it seems that the bailouts, absurd financial products, illegitimate loans, etc, suggest instead to a spoilocracy: a nation that is ruled by what we think we deserve, and not what we have actually worked for. Many of the firms propped up by TARP and the Stimulus deserve to fail. “But they’re too big to fail!” says the little piggy as the Big Bad Economic Facts wolf swings by his house. Economic sense? No. Evidence that our nation has become obsessed with what it thinks it deserves? Absolutely.

Back on the theme, the mere fact that we are buoying up businesses – buoying up businesses that could not have survived otherwise – should have caused a light to go off in someone’s head. Perhaps that business, and all of its unprofitability, should have been wiped off the face of our economy. But nooo, Mr. Populist Politician says. These failing businesses are just poor, poor victims of a general economic downturn and are too important to our economy to fail, for all of the poor widdle people (note: voters in swing states) will lose their jobs. I’m paraphrasing, but that has been basically what we’ve been hearing from the government. What if our economy was, say, restructuring? (It is.) What if, say, important industries of yore are going to the wayside for the important industries of tomorrow? (They are.) Can you imagine if the Wilson Administration had decided to prop up the carriage industry in the wake of the success of Ford’s Model T?

I don’t mean to paint this “economic Darwinism,” however, as entirely rosy. True, today’s automobile companies and banks had practices that, quite clearly, were not economically viable, and for that, they should not continue to be in business. And yes, jobs would be lost if we allowed them to fail – many more than right now. But in propping up failing industries, we are hurting our economy more in the long run, and on a slightly different note, strangling the economic creativity of the American people. It is always sad when people lose jobs, but the economy will recover, and new businesses will sprout up in their wake. Motivated, innovative people will find ways to make money in the new economic landscape, and in turn hire people to aid in their new businesses. Case in point: Monopoly, the world’s best-selling board game, was created by a bored, jobless man at his dining room table during the Great Depression. If the government continues to be set on injecting money into the economy, as it would seem, then they should put that money towards loans for new businesses. The current policies of throwing money into the economy are only leading to inflation (six months to a year, mark my word, it will be a huge problem), and are not revitalizing the economy in any way.

Unfortunately, I have no idea of what those new businesses and industries will be, and wouldn’t want to build a sort of Economic Future of Tomorrow as stands in Epcot. However, it is important for us to keep in mind that we will recover. We may not be able to predict exactly how or when it will happen, but it will. I know this because history has shown it time and time again, and because people are infinitely inventive. I’m excited for what our economic future holds, and I don’t care if I’m the only one with the guts to say it.


2 Responses to “Economic Darwinism and the Recession”

  1. […] Economic Darwinism and the Recession […]

  2. […] liberal response to Michele Walk’s recent post entitled “Economic Darwinism and the Recession” Noah Baron, Staff […]

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