Treat the Disease

When financial markets, arguably the global economy’s most vital organ, failed last fall they were resuscitated by government-powered defibrillators, but not before some near-fatal fumbling. Now the markets lie barely conscious in the ICU while world and national leaders ponder and debate courses of treatment that will result in “recovery”.

The symptoms are being dissected ad nauseam in the press, the halls of government and other august forums including the kitchen table. But, while “recovery” is a freely used term, seldom does the discussion include either its definition or, worse, that of the disease we need to treat.

• Does “recovery” mean restoration of bubble-driven economies of the recent and distant past, so aptly described by Eric Janszen in the June 2008 Harpers; or does it mean an environment of sustainable growth and balanced expectations?
• Is the disease a virus transmitted only through the financial community’s unsupervised greed; or is it a global pandemic of highly contagious self-indulgence and instant gratification that originated in the developed world?

These are questions that need to be answered in order to put policy and its objectives into the proper perspective.