Over the past few months, the so-called "private sector" has completely failed to act to avert a crisis of confidence. The time has come for us to realize that this is merely a privileged group that has no particular 'right' in a legal or moral sense to set policy at these organizations. It's time for the federal government to step in and "own it" because it already does.
We've come to that inevitable point in the business cycle where we realize we don't really have as much money as we thought we did. In the end, many good people here and elsewhere will delay retirement, take paycuts, not buy houses and lose the houses they had.
Of course, this happens all of the time. It's a part of the weird structure of our political-economic system. Ownership of the means of production in this country is based on the corporate model, which separates ownership (stockholders) from control (managers). As a result, one can imagine what tends to happen. It is the 21st century version of the "tragedy of the commons": it is everyone's problem so it is no one's problem. Managers are given a free hand to do whatever they wish with huge amounts of resources. On the whole, they tend to run them in keeping with the law and an eye to long-term stability. There are, however, two ways that this can go wrong. The first is illustrated by the auto industry. The second is illustrated by the financial industry.
The auto industry has been suffering for years and we could go on about it at length. Whatever explanation you might want to pick, the fact is that these are not NEW issues. They've been around for ages. This screams complacency. I refuse to believe that any enterprise with billions of dollars in assets is incapable of making money.
Then look at the financial sector. They sure haven't been complacent. Rather, they've been engineering a very profitable (and apparently unstable) enterprise. But now that the bubble has burst, these people who once prided themselves on their "innovative" ways, don't seem to have any bold moves. Once again, the most charitable thing that you can say is that the key players in these industries have fallen into serious group-think. In the case of the financial sector, we may be dealing with fraud. Unfortunately, when everyone involved is a co-conspirator, it becomes impossible to shake things up.
In either case, I would argue that there is simply no one in these industries with the moral authority to force the concessions that need to be made. When you think of the CEOs at these companies, do you think of self-sacrifice, hard work, and patriotism? I know I don't. I can't get past John Thain's (Merrill Lynch) $30,000 toilet and that series of New York times articles filled with these people's whining.
I could go on, but I've read so many good rants from other diarists that I'll just ask a simple question: have you seen someone you trust to rescue our banking and auto industries? If not, do you think anyone else has?
This is going to be really painful. It turns out that the economy under Bush was a lot worse than we thought but that it was covered up by really clever accounting. Now the truth is going to come out and we're not going to be happy. We're going to be terrified.
I really hope that Obama is thinking about this as he considers his speech and his course of action in the coming months. He will be judged on how he handles the economy. He needs to make clear to everyone that he has accepted the responsibility that has been foisted upon him by a combination of events and a democratic election. He can nationalize strategic industries and he needs to start doing it.
I know Obama doesn't want to deal with this. It seems like he ran for president to heal our racial wounds, end the war in Iraq and fix health care. I'm sorry to say it, but he doesn't have a choice in the matter. He's an agent of history now. He accepted that role (knowingly or unknowingly) when he sought the office of the presidency. If you aren't swayed by the argument that he has a moral responsibility, think of the national security side of this. How can we fight a war without industry at home and a strong currency (don't even get me started on buying weapons from other countries)?
UPDATE: The comments are cool. I'm getting eviscerated for being simultaneously too naive and trusting on the one side and too cynical on the other. These are exactly the kinds of conversations we need to be having. This is our government. It is ultimately largely symbolic and that's the assumption of the article: people's behavior is heavily influenced by the behavior of famous people (like CEOs and politicians). We pretend to be more sophisticated, but at the end of the day, we're all emotionally invested. Otherwise, why are you here on Monday afternoon?