One of the most delightful "finds" we made during our many summers cruising on our boat in Canadian waters was the writings of Canadian author and historian, Pierre Berton. Over time, we ended up purchasing and reading some 30 of his works.
Berton often wrote about what he perceived as a fundamental cultural difference between Canada and its neighbor to the south, a difference which he considered profound. America, he wrote, was born by an act of violence (The Revolution) and in the founding document, The Declaration of Independence, expressed that government existed to preserve certain inalienable rights, chief among which are "Life, Liberty and the Pursuit of Happiness". In short, Berton posits, a society where the sovereignty of the individual trumps the collective well being.
Canada, on the other hand, came into being some 100 years later by a rational and peaceful act of Parliament (The North America Act of 1867), and in that Act, it is stated that the purpose of the government was to ensure "Peace, Order and Good Government". Berton held that this reflects a society where the collective well being trumps the desires of the individual.
Briefly here, let me address the business of "Trickle Down Economics", also known as "The Horse and Sparrow Paradigm". This view holds that if the privileged are allowed to satisfy their desires for "Life, Liberty and Happiness", the lot of the underprivileged will rise as a byproduct, whether the wealthy want this or not. If we allow the rich to get even richer, the additional money they spend and/or invest will ultimately trickle down to the benefit of everyone. Similarly, overfeeding a horse benefits the sparrow, who will find more undigested oats in the horse's feces than it would if the horse were simply fed an adequate diet. The horse need not care about the well being of the sparrow, and indeed it doesn't. The more gluttonous the horse's behavior, the more the sparrow will benefit every time the horse shits. Greed and gluttony become suitable replacements for good intentions and human caring. Two of the "Seven Deadly Sins" are thereby redeemed and become virtues. In fact, envy, pride, lust and wrath can also be redeemed by this mindset, leaving sloth as the only real "Deadly Sin". And, the lazy deserve to suffer, don't they?
Whether or not Berton is totally accurate in his assessment of the two countries, he does make a very interesting point, and events of the past several years could readily be described as reflecting his characterization of the US. One could readily say that the excesses of the financial markets, mortgage markets and real estate markets ran unchecked because certain individuals did indeed benefit. Not every American, but enough to keep the wheels spinning as they did. During the past 7+ years, more and more Americans lost health care coverage, and more and more Americans fell into poverty. But also during those years, enough Americans acquired enough wealth and "toys" to ensure a majority that was enjoying enough "Life, Liberty and the Pursuit of Happiness" to hungrily encourage the economy and financial institutions to run higher and higher risks.
So, after 7+ years of virtually unregulated activity, the financial institutions of the US have finally screwed the pooch too much and are in desperate straits. And the general reaction? "What, use my tax dollars to bail out those greedy Wall Street pigs? Bail out people who took out mortgages they couldn't afford? They made their beds, now they can sleep in them! " Except it is not the bed that is ill made. It's a major part of the foundation of the house itself. And who will bear the greatest burden of a financial collapse? Not the rich. Not the upper middle class. Those with considerable means may suffer a lifestyle adjustment, but those of little means will find their very lives imperiled. We have devolved into a society where the least among us are dependent upon the fecal oats, and the horses' diets are about to be cut. The problem with the foundation is more rooted in culture than economics. Greed was fully acceptable to many as long as the debt creation machine catered to enough folks.
I find it interesting to see that Paulson's initial proposal was to simply burden us all to feed the horse. While I am sure he "believed" this would result in more fecal oats for the sparrows, the sparrows' well being still remains a byproduct and is totally dependent upon the horses' metabolism being over served. If you think about it, in its totality, it isn't even an efficient model, no less an effective one. At least in terms of the "common good". Resources that could directly address human needs are not available at the outset, but only after being passed through the colons of the rich. And this waste has to be picked through to find the nutrition. But then, it is not the rich that have to pick through this waste, is it?
I do not claim to know what the financial answer to the melt down might be. But I do know that the culture shift necessary for tending to the common good would be a total shock to American society. Sharing some of the oats before they are ingested by the gluttonous horse is totally inconsistent with "Life, Liberty and the Pursuit of Happiness" as we perceive it. The least of us should be thankful that oat rich feces are available for them. And if the horse suddenly has to cut its dietary intake to a simply adequate nutritional level for himself, eliminating the nutritious content of his feces, isn't the horse "sharing the pain"? I'm sure the horse sees it that way. And the sparrows can always go to the emergency room.