In the comments on my post on Rall, below, Demosthenes takes exception to my position:
AL: I think you’re glossing over Andy’s valid point, and missing the fact that this is neither the Harding administration, and historical comparisons are limited by other, differing factors. At this point, we’ve got a combination of factors that hasn’t really happened in history: we’ve got a tightly integrated worldwide system of capital flows, a lot of “rank and file” investors, the presence of an abundance of other ways of capitalizing companies, and proof that corporate bosses were playing around with the numbers in an attempt to make themselves look good. Some of these have been present before (Harding administration, for some, 1929 for others) but I believe the combination is unique, as are all the other social, political, etc. forces involved nowadays. (Hell, this is happening in the middle of a war… isn’t that new?)
Well, one could argue that every historic moment is different from every other moment; there’s truth in that. I’m suggesting that the current situation has more in common with similar situations in the past than not; that’s partly my philosophical approach to life…I learned early on that the exceptionalist argument made by my generation didn’t hold much water. I think we’re in for an interesting time of it on a lot of fronts, but don’t believe that the current round of market scandals nor the (to me inevitible, if only I’d had the nerve and cash to back it up…) decline in the markets represents The End Of Things As We Know Them (or as my gun nut friends are fond of discussing TEOTWAWKI – The End Of The World As We Know It). I’m actually more interested in why it is that so many people seem to long for the Catastrophe, and wonder if that’s somehow unique or related to the philosophical crises I’ve tried to discuss before.
As for that silly bit against Rall… I realize you don’t like the guy, but dislike doesn’t mean dismissable. I think Rall had a valid point in that this could mean a significantly lowered role for stock markets for a long time to come, and it plays into the hands of those young protestor critics of global capitalism awfully well. I think the only reason they haven’t had a bigger presence is because of the WoT, but if that changes, they’ve got ready-made examples for their charges.
I don’t dislike the guy, I’ve never met him. I think that he tends to write stupid things, and since he nominally plays on my team (liberals) that annoys me. I think that markets will play a lower role in corporate capital formation than before, but that’s a good thing, because five clowns and a Yugo can no longer go public at an immense market cap. There’s a reason old-fashioned investment and lending strategies tend to survive: they work pretty well.
Date: 07/25/2002 00:00:00 AM
>because five clowns and a Yugo can >no longer go public at an immense >market cap. a good line, and entirely appropriate. In 1999 a group of people I know managed to acquire a name, an office, and a slew of vice-presidents before they had a business plan and even before they had hired anyone with any real technical knowledge
Date: 07/25/2002 00:00:00 AM
That “aura of triumphalism” that certain pundits find so distasteful may stem from the empirical fact that free-market capitalism is the most successful and most robust economic system the world has ever seen. The poor in the US are far better off than the poor in China or even in the heavily socialized economy of Sweden. Korea was a third-world country a couple generations ago.The “soft, pink underbelly” of capitalism is the fact that it assumes that almost all economic activity is motivated by greed. A morally uncomfortable proposition, to be sure, but the results as seen around the world make clear that it is safer to assume greed in everyone than to assume atruism.My two-cents’ worth in the current business crisis is that we desperately need to remove the incentive for accounting firms to lie on behalf of their clients. Easier said than done, but accomplishing this will do much to remove the cloud of BS that currently hangs over Wall Street.
Date: 07/25/2002 00:00:00 AM
ack… sentence screwup. Should have been:” think people long for the Catastrophe because some sense that the aura of triumphalism and organic myths that surrounded the market has seriously perverted politics and society and want both to end.
Date: 07/25/2002 00:00:00 AM
I think people long for the Catastrophe because some sense that the aura of triumphalism and organic myths that surrounded the market and want both to end. It might also be a sense of purpose and meaning… those who critique liberal democratic capitalist societies might be reacting to the “End of History” thesis… to many, that’s a profoundly disturbing and threatening idea, yet one that was practically unassailable in the 1990’s. Now, of course, capitalism has shown its soft, pink underbelly- and everyone who’s been chipping away at its scales is driving their verbal lances in as best they can. Whether the thing is actually deserving of such treatment is a valid question, but almost immaterial… it was unquestionable before, and now is in deep trouble.