What most men don’t understand is that most of our beliefs about the economy — and everything else — are forms of self-medication — "Stocks for the long run," "Globalization is good," "Dow 36,000." We repeat slogans to ourselves because everyone else does. Man is first of all a herd animal and fears nothing more than not being part of the herd.
In fact, the reason lies even deeper, in the deceptive nature of thought itself, even for instance, in the way we think about risk. Our thinking seems to be skewed only to certain sorts of risk — where what ends up happening depends only on a few stable factors. But often the abnormal event is the one that happens so rarely that it isn’t even reckoned with most of the time.
What we are talking about here is fat tails — events that lie so far outside the normal course of events that we tend to push them equally far away in our consciousness, events that are so devastating that when they do occur, they cancel out every other consideration. There may be only a very slim chance that the human race will be wiped off the face of the earth, it is true. But it would probably pay us to take that slim chance very seriously.
And here we run into the problem with slogans about something like global trade in genetically modified food, for example. Just because a fat-tail disaster might smack us in the face at any moment, does that mean we are in favor of more, say, government regulations on food production?
Here, we are forced to hem and haw. Government regulation tends to be ineffective, in many cases. And since regulators are frequently drawn from the same industries they are supposed to be regulating, we think they tend to be counterproductive in all the others.
So, we are neither prescribing policy nor proscribing it. We are merely grumbling in our curmudgeonly way that we liked the old genetically unmodified world better. We have no desire to eat strawberries armed against frostbite with herring genes or cauliflower with an IQ higher than ours. We like our food au naturel, unrefurbished, unhedged, and in default drive. Unless it is communion wine, any transformations of nature need to pass the smell test first. We need to be protected from them, as surely as we need to be protected from bad checks, assault, murder, and another Michael Jackson trial.
You see our problem, dear reader? We would like the state to stop telling us what to do — whether it is in airports, in our schools, or in our bedrooms — but we dig in our heels equally at efforts by global corporations to improve our water, our potatoes, or our boeuf bourguignon at the expense of our local culture and with subsidies from our tax dollars.
This is unlikely to win us any popularity contests today when there are only two acceptable positions on globalization: It is A Very Good Thing. Or, it is A Very Bad Thing. But slogans don’t always do the trick. Each problem has to be thought through in its own terms. Not only is globalization neither entirely good nor entirely bad, it is not even one single thing. It is several. It is about free trade and costly subsidies, about gourmet water and junk food, about hard capital and soft drinks — all of which have their own reasons for being and their own consequences, and all of which are mislabeled, poorly understood, and constantly confused. In fact, the only thing you can be sure of about globalization is that it provokes extremes of two emotions in the mob — greed and fear. In other words, the only thing that is certain about it is that it is a public spectacle.
Naturally, like all public spectacles, globalization is wrapped up in a huge amount of cant. For instance, if you are a poor country, you are supposed to take to the thing as eagerly as a diabetic to insulin.
Now, if it was just a matter of freeing up trade between countries, we would nod our heads in agreement. The exchange of goods and services between people is, and always has been, a good thing. It is, so far as we can see, a far better way of getting what you want than hitting your fellow man over the head. But for it to really work, trade — like driving — needs a set of rules everyone follows; otherwise you are liable to crash or be run over.
And this is where it gets complicated. Because it turns out that many of the rules of global trade are set by the very people who are weighing down the market with all sorts of subsidies, sweetheart deals, perks, pork, and privileges, in the first place.
Take the World Bank, which is in the business of telling countries what they need to do to play the global trade game. In the lumpen imagination, the World Bank is not too different from the local neighborhood savings and loan — a kind of multicultural version of the friendly bank in "It’s a Wonderful Life." But the real World Bank is headed up not by Jimmy Stewart, but by people like Paul Wolfowitz, a man whom his best friend wouldn’t call a soft touch. Confirmed as the bank’s boss in 2005, Wolfowitz immediately proclaimed he was on a mission of mercy:
“Helping the poorest of the world to lift themselves out of poverty is a noble mission or, as former Secretary of State George Shultz said, ‘a beautiful mission.’”
But, the Sisters of Charity do not have to worry about the competition. Wolfowitz has been one of Washington’s biggest hawks, ever since the days when he argued for the use of tactical nuclear weapons in Europe. To this day, he likes to praise Indonesia’s Suharto, who in his 32-year reign looted $30 billion from the public treasury and turned his country into one of the most corrupt in the world.
Of course, on second thought, that might be the perfect rsum for the World Bank….
This article is excerpted from Mobs, Messiahs, and Markets, by William R. Bonner and Lila Rajiva (Wiley, August 31, 2007).
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis. Lila Rajiva [send her mail] is the author of the ground-breaking study, The Language of Empire: Abu Ghraib and the American Media (MR Press, 2005), and the co-author with Bill Bonner of Mobs, Messiahs and Markets (Wiley, 2007). Visit her blog.