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April 13, 2009
The Gambler’s Fix: The
Story of the U.S. Economy
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.
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
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.
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