Governing and the Economy

Regardless of how we got to this point, everyone agrees that the government should be taking some action to get us our of the hole we're in. Great care must be taken to avoid "tinkering" lest we find ourselves even worse off.

In any complex situation (We agree that this is one of the more complex ones, right?), the first thing that comes to mind will virtually never be the way out. If we don't know where we are or how we got there we're most likely to do the thing we're able to do and that thing will hardly ever apply to the situation.

Think lost in the woods. We know how we got to the woods and we may not have even wanted to come along. So now we're lost. Our first problem is that we don't want to believe that we're lost so we keep on going in the direction we're sure will take us back to the car. We all know that when lost, the best thing to do is to avoid panic and stay put until someone comes along. We know that--and still people walk away from their cars, their campsites and become hopelessly lost. Once you're lost, being sure that you know where you are or where you're headed only makes the situation worse.

This pretty much describes the situation we're in now. Sure, we've been through recessions--even depressions--as a nation and emerged whole on the other side. This one may be different though because it involves a complete lack of confidence in institutions in which confidence is essential. Moreover, the lack of confidence is world-wide.

In this situation, the handy "solutions" that are being trotted out are prescriptions for disaster. Market analysts are fond of talking about confidence in the market. When confidence is high it's a growth market. When low it's a preservation market.

What gives confidence to individuals and markets alike is predictability. What we lack most of all right now is predictability. Every last shred of predictability (and therefore confidence) is being eroded away as we listen to the power struggles from Washington. Let's be generous and allow that all the various players really do believe that their approach is the right one for the country and its people. If the solutions are from another era, they should be suspect.

There is no upside to staying lost and quarreling among ourselves when we should be discussing the nature of the situation, the resources at our disposal and the hearts and wills of those affected seems to be a sure way to stay lost. Elected leaders who would rather be right than get their constituents to a place of safety do not deserve to be called leaders and should be disposed of at the earliest opportunity.