David Brooks writes an insightful column about the underlying problem of the economic crisis. He points out that three groups decided that they could control the future.
First came the genius banker quants who thought that their mathematical models would take the risk out of investing and thus they would control the future and make fortunes. Of course, many of them made huge fortunes but that was by selling toxic securities to suckers who were conned into thinking that the quants knew what they were doing, while these banker quants almost destroyed their banks, the financial industry, and the economy of the U.S. and the world - but that is a different discussion.
Second came the true believer Democrat Keynesian economists and politicians who thought that massive stimulus spending would employ people by providing government demand and thus stimulating an economic recovery. It may have helped a bit, but certainly not as the Keynesians predicted, and I don’t think it helped very much at all, but it certainly did add to the deficit and the debt.
Third, now comes the tax cutting true believers who think that the way to reduce the deficit is to stimulate the economy by cutting taxes and government regulation and thus allowing the always powerful and ready to rumble economy to take off and generate millions of jobs and prosperity for all. These folks are looking at Reaganomics and overvaluing the effect of untrammeled markets and undervaluing the necessity of government regulation of those markets - which is needed to keep them competitive rather than letting them become forms of theft, corruption, and plunder.
Brooks’ recommendation is a cautious, conservative one: control both debt and entitlements and “keep tax levels reasonable and the tax code simple.” Most of all, he cautions against the arrogance of thinking that we have figured out how to control the uncontrollable: the future.
I think that what is happening is that the world is in a state of chaos, and is now obviously uncontrollable. It is always uncontrollable, of course, but maybe it takes chaos from time to time to remind us of that fact. And the way people who are afraid of the chaos react to the chaos is to revert to some form of fundamentalism as an attempt to control it. The right wing goes for tax cuts, the left wing goes for Keynesian government spending, the fundamentalist religious believers, whether Christian or Muslim, look to apocalyptic visions and calls for purity, etc.
The idea is to try to find a simple formula to control the explosive complexity of chaos. It never works.