What to do when a particular cocktail of medicines doesn't work? Give massively more of the same!

Since the growing global economic crisis started, the authorities have (as in previous cases) first tried hard to ignore the signs that things are going wrong and then, when the sound of the oncoming train has become unbearable, swung round and tried frantically to stop it.

So interest rates have been repeatedly slashed, hundreds of billions of dollars have been given one way or another to financial firms, new lending programs have been pondered for non-financial firms, debt issued by industrial corporations such as General Electric has been bought by the government, and distressed mortgage assets have even been taken over by the Fed. Nearly all pretty unprecedented.

Yet none of these bitter medicines is working - individually or collectively.

Why are these medicines not working? Because they are addressing the wrong problem. If I have a headache and you start operating my little finger, the result will probably simply be more pain for me - now in my finger as well as in my head.

What is the fundamental problem with the world economy? Briefly: no one knows who can be trusted in terms of ability to pay (as times are tough and may become unpredictably tougher) or, perhaps more important, in terms of willingness to pay (as the going will almost certainly get tougher - but will bring unprecedented opportunities for those who have cash).

The first (ability to pay) is a matter of what's in your pocket - or likely to be in your pocket. That can be remedied by measures such as the governments of the world have enacted.

The second (willingness to pay) is a matter of what's inside You. In other words, your character. For better and for worse, that can't usually be changed much.

On the first matter: if you don't have the ability today, but are committed to working as hard as you can to rebuild your ability to meet your commitments, and will do your utmost to fulfill your commitments as soon as you can, that is one thing. And I *might* sign a contract with you or lend you some money.

But that's where the second matter kicks in: if I don't trust your character, there is no way I'm going to lend you money or sign a contract with you. Is there?

What has caused today's lack of means by which to pay? Essentially the decision of US legislators and regulators to avoid regulating creative financial activity (some of it related to good ways of meeting insurance needs, but most of it pure speculation or gambling - more on that elsewhere in my Blog!).

That legislative decision, in turn, was the result of the influence of certain economic philosophies and arguments.

We all know that most human beings are not really in search of the truth, whichever direction it may lead and however costly it might be. No, most human beings tend to accept arguments we like, because the arguments suit our temperament or the choices we wish to make.

That is why that legislative attitude and action was at least partly a result of rise of the Baby Boomer Generation which rejected both Biblical morality and traditional social structures, preferring to cater (or pander) to I, me and myself. That is why the economic approach that held sway was one which was conducive to the selfish preferences of the "Me Generation": leave everyone alone and everything will work out; we're all basically good and what creates a mess is formal official structures given by tradition, and moral and spiritual guidelines given by God.

Here was an entire culture in denial of the realities of human nature, and in denial of what had up to then constrained the weaknesses, foibles and wickedness of human nature. As the bonds of tradition, God and conscience were thrown off to dance around the throne of money, there was huge celebration. Money may still not have grown on trees, but it seemed to rain down from the sky! We didn't have to be very clever or work very hard, but we could still do very well, thank you. We were all, simply, "lucky".

Well, we all knew that "luck" sometimes runs out. Everyone who had their eyes open could see that luck was going to run out. And we should have known that a generation brought up on theories of everything working out, would have a tough time if luck ran out. Why? Because such a generation does not have the internal (spiritual?) capabilities with which to counter the harshness of the new realities.

So what are the medicine that are needed - and will work?:

First, a fresh investigation of the spiritual resources which lifted the West from its historic poverty to an economic level far above that created by the spiritualities and cultures of the East and the South. The spirituality of the USA created all that was good about the American experiment (though misunderstanding of it also created much that was downright evil). But what did Biblical spirituality create that was different from Roman Catholic, Eastern Orthodox, Muslim, Hindu, Buddhist and other Southern or Eastern cultuers? Among other things:
- education (which is more than literacy - though even literacy was hard to come by in other cultures!)
- knowledge (which can only grow if you are willing to share what you know on the basis that knowledge is meant to bless the whole of the world, rather than hoard it because you believe that knowledge is power and is meant for individuals, families or cliques to acquire or maintain power, prestige and perquisites)
- science (which is more than mere technology)
- the rule of law
- respect for the views of others
- morality
- hard work, specially when no one is watching over you
- frugality, rather than conspicuous consumption
- philanthropy, rather than mere charity
- trustworthiness, which comes from the belief that you must keep your word no matter how costly it is, because God is like that - and expects you to be like that too.
We could go on and on.

Second, a fresh examination of the kinds of sensible financial, economic, social and cultural policies that are needed for a globalising world. It would take too long to discuss all these right here. But my thoughts on these subjects are publicly accessible - e.g. in my Open Letter to President-Elect Obama (in this Blog) and in papers on the current economic crisis that are or should be available shortly on my website - and are certainly available if you care to write to me. Sphere: Related Content