Countervailing Sense

Countervailing power - The Boston Globe

Citizens need to act more vigorously to restore Galbraith’s countervailing power. Otherwise, private business acting in its short run self interest will ruin us twice — once when private markets pay no heed to the risks they are imposing, and a second time when they corrupt our regulatory institutions.

When your conclusion is "citizens need to act more vigorously", you don't say how, but you fairly clearly call out "private business" as the thing to "react to", your column is pretty questionable on value. Let's try to save it a bit.

First "short run self interest". What is a typical prudent investment horizon? Answer, 10 years+. What is the longest elected term in the US government? Answer: Senator, 6 years. Representatives are 2. It is THE GOVERNMENT, not business that has a short term view. Even beyond this, Government operates on a cash accounting basis, so long term obligations like Social Security, Medicare, now Health Care, etc are not evaluated in the yearly financial statements.

Business is required YEARLY to evaluate the present value of assets, income streams and obligations, as well as futures risks and potentials. Investors make those evaluations on a daily and even hourly basis. Government does NOT, and has a MUCH more short term "next election" view of the future that completely fails to keep contact with the big picture of a "going concern".

Does this mean that business doesn't "fail", "have disasters", etc? No, of course not -- just like Government, it is run by humans. The Challenger and the Columbia both failed very publicly and with great expense, loss of life and national prestige, yet both were under the control of NASA, an agency of the US Government.

Just as NASA had no intent of multi-billion dollar space shuttles being destroyed along with the astronauts on board, BP had absolutely no intent to lose a half billion dollar oil drilling rig, eleven people, and have to deal with the loss of millions of gallons of crude and the damages caused by it. To err is human -- especially when technology is being advanced and important tasks are being carried out. Failures, even catastrophic failures are part of human life in this universe. "We" have to deal with it, but "vigor" is about as useful as a direction as "hope".

So what can we do? Can we help salvage some value from a lost effort at a column here? I believe so:

• Government sets a STABLE, PREDICTABLE playing field by the rule of law. It IS NOT "activist" -- activism is unpredictable, and just like playing baseball, football, or anything else with unpredictable rules, activist government is like the officials deciding the game. It is to be avoided. There are enough unknowns ... weather, injury and illness, etc. Government needs to avoid being one more large unpredictable element.
• Business, including suppliers, customers, investors, competitors, interacts with the exceedingly broad unpredictable nature of any production -- especially things like oil, with the daily speed of markets rather than the months and years required for political action. Disasters create losses -- as they should. Losses are just as important as gains in making sure that the best businesses survive and those that fail to deal with the reality of the real world and the markets fail. There is no such thing as "too big to fail", and the government that claims there is has signed it's own likely death warrant in finding that even that government is not "too big to fail".
• Citizens. The US is expected to be a country where citizens realize that a government big enough to give you what you want is big enough to take everything you have. Mostly we have a responsibility to educate ourselves about the wonderful construction known as "The Constitution" and the government structures it specified, realize that the "progressive" monster that has mutated from the rape of our nation by the progressives must be exposed to radical surgery if we are to survive as anything that might be called "America". "Vote the bums out" would be an excellent start -- but learning what kind of bum to elect in the future so that our future is one of growth and improvement rather than rot and decline would be an even better second step.

Simple enough, but like many simple and needful things, very very difficult in execution. The "progressive" heresy has been insinuated deeply into our nation by socialists, communists, "liberals", academics, unions, the media and of course the politicians of BOTH PARTIES (Teddy Roosevelt was a huge "progressive", Bush very much so as well -- "No Child" and Drug Benefit). While many of their motives have been "good" at times at least from the limited view of "wishful thinking", we are now in the midst of reaping the grim effluent of their misplaced efforts ... the politicization of all parts of life, the loss of meaning, the debt, the sense of malaise and hopelessness and the vacuousness of their "leadership". "Hope and change" are not leadership, they are free of any content beyond instability which is "leadership" to chaos only.

Potentially there are some limited signs that a few of the leftward middle are beginning to wake up from the hypnotism of '08, if only to realize that there is a lot of pain going around. Pray that we survive the BO hangover.