I somewhat famously declared November 7, 2007 as the first day of the new depression. I now find myself loathe to be perceived as gloating as the chaos surrounding us today further confirms my statement at that time. But a couple of months later, the developing circumstances have brought to mind the sensibilities, nay, the religious indoctrination of a nation of faithful economics postulates and those of another time and place came to mind.
Thirty years ago, my university economics professors referred to him as “Uncle Miltie,” though they might as well have said “Saint Milton of Chicago” because Mr. Friedman’s every word and theory had already become the Gospel of American university economics syllabi. Thus it has remained for three decades, as hundreds of thousands of economics majors and MBAs have been pumped through the system in that time, taught – or preached – into an absolute cult of deregulated free-market capitalists. The installation of one of their own into the White House, and, simultaneously, a slavishly complicit Congress enable the elimination of government oversight, banking regulation, and pesky anti-trust laws gave them the environment in which the (now) late Mr. Friedman’s utopia would flourish: with chaos, ruthlessness, legal maneuvering, even law itself altered, they reached the endgame of their purpose. But what happens when, given all that, they find that one day they awaken to find their beliefs shattered. It was all a lie. Ayn Rand’s wet dream led to a hideously deformed stillborn.
But it’s happened before, and quite recently, too. What of those economists who toiled away studying the singular theories taught in Moscow and Leipzig in the 70s and 80s, and awoke in the dawn of the 90s to discover that what they had learned and practiced and genuinely believed was gone? Some of them adapted very quickly to the new paradigm (such an MBA word, that) in which they now had to function. Ironically, now, many of them flooded into Western economics schools to learn the system. Meanwhile, others are probably – to this day – driving taxis or teaching French, either too disgusted or too confused by the change.
In Russia, the total lack of direction led to an unregulated gangster economy run completely amok. So much black market cash is circulating in Moscow that people are paying millions of dollars for the airspace where a condominium will be built in three years. Millions of others struggle to make ends meet. East Germans had their share of growing pains, but had West Germany with which to reincorporate, smoothing the path to European regulated capitalism.
But what now – what wrath surrounds them as they ride the Path train to their condo in Jersey City, the one that was a bargain at $2 million when they played the system so right? So right, as they were indoctrinated to believe. By the time you read this, they may well be broke. Monday, the international markets crashed, and Tuesday, the fail safe system will no doubt cut off the trading on the NYSE. But when does the rage hit? Does it come when they find that the brokerage house they work at is being sold off bit-by-bit to some mid-level Arab monarch? Or will they only get it when the pink slip comes? Maybe it won’t be until the default notice for the homeowners association fees comes, or the foreclosure notice.
Wasn’t that just a word, foreclosure, for other, faceless, immaterial little people, the ones who aren’t in the game? Those they could classify as sub-prime (like sub-human) Is that when the wrath of the system summons the rage of the “Masters of the Universe”? Or will it just be despair, because - like for the Muscovites of the early 90s - the day has come when the whole reality has been blown, and that’s a sad, disorienting day, indeed.
Finally, a note of thanks to those who have written wondering where my columns have been as I was laid up with the flu and a surgery that kept me rather unable to proceed for several weeks.