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April 13, 2009

The Gambler’s Fix: The Story of the U.S. Economy


In the end, the house always wins. Do we really want to return to an economy that in the end is built on a gamble that can only win in a final, losing hand?


There are disturbing signs that the Obama Administration thinks that we ought to. Reports surfaced late last week that the man tapped by the administration to help reform Wall Street isn’t going to have a great deal of luck doing so. Is anyone surprised by this?


The idea, at least toyed with by supporters of the administration, is that Wall Street’s firms aren’t just too big to fail, but so is Wall Street itself. If the nation is to recover its economy, then it must let Wall Street pick itself up after last year’s near-collapse of the nation’s banking apparatus, dust itself off and go back to business largely as it was conducted in the run-up to near catastrophe.


It’s the same kind of behavior you see in gambling junkies headed to rock bottom – it’s always a matter of playing just one more hand of cards. The junkie is certain that the next hand will come up four aces, which will give him enough money – and more – to straighten things out. The formula works like a charm in movie scripts. In real life, the house gets your kid’s college fund.


At stake is whether the administration will push for the kind of regulatory atmosphere that will prevent the unrestricted, untracked trading of the same kinds of products that created the giant pile of toxic assets whose sale is being subsidized by the American taxpayer. Last year, Congress shouted in unison – while giving the green light to the TARP program – that we needed an updated, 21st Century regulatory apparatus to watch 21st Century financial transactions. Now, Wall Street is pushing back against the idea, saying that the answer isn’t updated regulation but just one more hand of cards, with taxpayers anteing up on their behalf with their watches and wedding rings.


Junkie-like behavior isn’t unusual as it relates to the American economy. Our entire system of transportation is currently based on the nation’s most prominent addiction – to petroleum. When confronted with this, our most shouted solution isn’t to get off the junk, but to find new and ever more inventive ways of getting our fix. Addiction is a broad disease, after all, and it shouldn’t surprise us that gambling addiction and substance abuse go hand in hand.


Like all junkies, feeding failure means repeating failure. There is no reason to believe that, absent additional oversight and regulation, the financial firms won’t be coming back in several years to complain that they’d again lost the college fund and the house on a bad bet. In fact, it’s an entirely predictable outcome.


The problem is that everyone likes a get-rich-quick scheme. An economy with finance as its focus is precisely that, an economy where the ability to become wealthy without doing any real work is prized above all.


Change we could believe in, and should believe in, is an economy that prides itself on making things. It is an economy in which wealth is based on something doing something tangible. The problem is that such an economy is always inherently an economy based on deferred gratitude. Those prospects have become increasingly unpopular as the American Dream is further perverted, from being about creating something durable and lasting, to living a life secure from discomfort.


Until we fix that misperception of what we ought to be doing, we can expect to sputter along from bubble to bubble, an economy that leaves more and more people behind with each successive burst. That’s the trajectory of the failed gambler – a slow decline punctuated every so often by a hot streak to keep his hopes alive. It’s a streak that never ends well, except in the movies.


© 2009 North Star Writers Group. May not be republished without permission.


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