So is the great recession finally over?
Responding to a question about the employment outlook Federal Reserve Chairman Ben Bernanke said “I’ve seen some agreement among the forecasting community that at this point we are in recovery.” He later stated that “From a technical perspective, the recession is very likely over.”
However there is also speculation that the worst is not behind us as the nation will struggle to pay off masses of accumulated debt. Of course there is a brief surge with all the money that has been pumped into the economy, but will the stimulus generate long term economic stability and security?
A brief disclaimer; I am by no means an expert on economics and have no academic or institutional experience in the field. However lessons for the world of macro economics may be gleaned from some of our micro economic endeavors and research.
An astronomical amount of U.S taxpayers money has been thrown into rebuilding economic establishments that were deemed “to big to fail” such as AIG, GE, Fannie Mae and Freddie Mac and a number of banks.
In his first column for Slate.com entitled Too Big Not to Fail former New York Governor Elliot Spitzer argues that it is a mistake to rebuild such institutions for a number of reasons, primarily because one of the main reasons for their downfall is foreign competition. He writes “current bailouts—a remarkable $7.8 trillion in equity, loans, and guarantees so far—may merely perpetuate a fundamentally flawed status quo. So far, at least, we are simply rebuilding the same edifice that just collapsed. None of the investments has even begun to address the underlying structural problems that are causing economic power to shift away from the United States”
So what policy or system would allow us to compete better in a global market, and ensure that we are not repeating the same mistakes?
In his book The Dignity of Difference Britain’s chief Rabbi Jonathan sacks writes:
“Of any economic system we must ask: does it enhance human dignity? Does it create self-respect? Does it encourage creativity? Does it allow everyone to participate in the material blessings of this created world? Does it sustain a climate of equal regard – for employees as well as employers, the poor no less than the rich? Does it protect the vulnerable and help those in need to escape the trap of need? Does it ensure that that no one lacks the means for a dignified existence? Do those who succeed share their blessings with those that have less? Does the economic system strengthen the bonds of human solidarity?”
He goes on to explain that “The Hebrew Bible is an extended critique of what we would today call big government.” He continues “the Rabbis favored markets and competition because they generated wealth, lowered prices, increased choice, reduced absolute levels of poverty, and release energy and creativity.”
In solving the dilemma that Spitzer brings up, applying these moral criteria of ancient Jewish wisdom may go a long way in finding a practical solution. So here is an idea that incorporates many of the elements mentioned above.
The government should seek out budding entrepreneurs, with business acumen and clever concepts, fund their development, track their progress and increase investment as they prove themselves. Not only would this create a smarter economy that is better equipped to deal with global competition but would answer affirmatively many of the Chief Rabbi’s searching questions, giving opportunity to young bright minds that may otherwise not have the appropriate support, encouraging creativity and self-respect.
As Spitzer concludes “The better policy is to return to an era of vibrant competition among multiple, smaller entities—none so essential to the entire structure that it is indispensable.”
Along the same lines, in observing the demise of the New York Sun newspaper, some financial commentators concluded that it was precisely the all star cast of heavy hitting financial backers that contributed to its failure. The paper attempted to start from the top, throwing money at every problem, instead of allowing incremental and organic growth, eventually arriving at a point where they tripped over themselves, closing in the week of their highest advertising revenue!
By investing smarter the government can save money while encouraging ingenuity and creativity, forcing people to rely on each other, and create an environment of enhanced co-operation and solidarity. Perhaps it is not too late to incorporate this as an additional initiative in ensuring our economic future as we climb out of the ravine.
The Author is the director of the Algemeiner and the GJCF and can be e-mailed at email@example.com