Communion Of Dreams


“Hand over the money and no one gets hurt.”
December 17, 2010, 1:24 pm
Filed under: Brave New World, Emergency, Failure, General Musings, Predictions, Science Fiction, Society

It’s been a while since I’ve written much of anything about economic conditions; frankly, the whole mess was just too depressing no matter how I looked at it, and I knew (and said) that the end result was going to be that we would wind up transferring more of our wealth to the bastards who caused the economic collapse.

But it is worthwhile to look at what happened and why. And this is perhaps the best examination I’ve found yet of the systemic, structural problems which are behind the latest mess. It’s a somewhat dense and jargon-packed piece on finance, but here’s the money quote:

For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.

Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy. More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking. Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense. They still have millions in the bank, lots of human capital and plenty of social status. We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.

“Too soft and cushy,” indeed. I must admit (and have before) that one of the reasons that I wrote the backstory to Communion of Dreams the way I did was, as Umberto Eco said so well, “I wanted to poison a monk.” A certain part of me thinks that a good round of ‘off with their heads’ would be really healthy for our society overall, though somewhat less so for Wall Street.

Jim Downey

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