Financial crisis in the US hit economies all across the globe. A crisis which started off with subprime has bullwhip effect on the other sectors of the economy as well as on other countries. With everyday passage, despite government efforts, a meager crisis – subprime loans reflect roughly 4-5% of total advances - is substantially impacting the global financial architecture. In the US, Government resolves for ‘Change’ as people all around the world visualized greatest change in American history with a prolific speech by first ever black president. Living in economies thousands miles away, we are also hoping for change, at least in economic well being. We believe that the US has a capacity to handle the crises but does the US has a resolute to fight against financial crisis? The basic assumption of ‘self-interest’ is working against them.
Self-interest simply means doing what is in the best interests of one’s self. People argue that there is absolutely nothing wrong in advancing one’s self-interest. This is the fundamental principle of free market capitalism, personal responsibility, and even presented as law of nature. Economics of competition has enhanced the means of living for a few around the globe, rest are the victims. Principle of self-interest has devastated the vary nature of human existence. Lobbyism or you can say cartelism is the key in politics and economic decision making everywhere. Sitting at the public offices, group of policymakers responsible for devising strategy and policy for the nation are working for their own benefits. Which, at times cascade down to the general public but the intentions are otherwise. Building better societies may not be made without self-sacrifice and non cummunal behavior.
Recent financial crisis in America and other parts of world is a classic example of human greed. Despite knowing that we are in the middle of the crisis, policymakers and powerful elite are still trying to get the most out of it and filling-up their stomachs. American financial crisis is becoming even worst after the government decision to bail out key financial institutions. Where is America’s intellectual capital? Why the policy makers did not respond once they knew that the crisis was imminent? Why to bailout? Why they never talked about the solution other than nationalization of bank, increasing government holding in capital etc.? Where are the proponents of ‘invisible hand’? Why they wasted resource on the philosophies and ideologies which are of no practical use? Where is private sector role and capitalist economic system? Financial crises in the US categorically revealed that the world is governed by a few, without a principle standing and without an ideology.
World War II clearly divided nations between the ideology of economic systems under capitalism and socialism. By the western hemisphere, era of socialism was presented as fiasco to the world. Paper, arms, ammunitions and intellectual bent were wasted to prove the ‘absolute right’. Gruesome Cold war divide was merely an illusion to keep the larger interest of the mighty powers to support their taxpayers’ money on the unlikely military expenditures and to create a reason for that. Both sides were successful in developing the interest of the general public in ‘right’ and ‘wrong’ viewpoint to support their ulterior motives. If that was the ideology of their existence then what is the viewpoint across Atlantic and St. Petersburg now. If both are moving to the centre point, then where is the divide which was once larger than life, caused lives in Vietnam, Afghanistan and Eastern Europe?
Government for the people, by the people slogan has a long way to go. There are good time principles; there are bad time principles. Good time principles like survival of the fittest; private sector can only provide economic efficiencies etc. are the basis of capitalist economic system. On the contrary, these big notions are nowhere in financial distress. Why to ask help from the government? Even if we can negate the capitalist viewpoint for the time being, we can visualize that government is supporting and safeguarding the few ‘Big’. There might have other solutions to the problems. Government should adequately penalize the one’s whose individual greed has led the world to a bigger crisis. Nobel Prize winning research on ‘moral hazard’ is of no use to economic system. These are just to be taught to the students inside the classroom, mesmerizing young minds with the intellectual capabilities of their earlier generation to be proud on.
In the US, they can fix the problem by allowing the banks and financial institution to fail. How many times will the US government bail out AIG and Citicorp? Government can provide liquidity loans to the institution till they should be restructured and sold out in bits and pieces. I have full conviction that private equity around the globe has financial muscle as well as expertise to run smaller business rather than large MNCs. I surmise, where is America’s intellectual capital?
This is not about intellectual capacity, but its utilization and usage in practical environment. America is excellent source of learning for all disciplines. But if the system serves to a few men in charge, economic problems won’t be sorted out. It is needed that the US policymakers should leave a few to drown in order to safe larger number of the populace. And, there must be universal principles to follow, right in the west - wrong in the east will be of no use e.g. financial regulators globally considers money laundering a serious criminal act but the Swiss banking system has every right to hide the source of the money black or white. Immoral activities are taking place right front of our eyes but we save them by making simpler world into a complex substance. There are numerous example of dichotomy of ethics and morality as you travel from east to west.
The world has again reached to a level where it has to seek new leaders, new nations, a simpler system, a simpler life and level playing field. America despite its military and academic might could not fulfilled its promise to solve its problems, not because of its lack of capacity but because of the strength of the elite, ruling class and corrupt scheme of capitalist economic system. A system which provided equality and opportunities to the people all across the world has now failed to keep the promise, because choices are not made on the basis justice, equality and communal well-being.
Asif Idrees Agha
Lahore
Pakistan
Turkey-Japan Relations: The Need to Think Beyond Trade
