Difficulty in Overcoming Ignorance!

I make a valiant attempt to learn as much as I can about many things. One reason for my pursuit is my awareness of the degree of my ignorance. I just know little about much. For all I know, that which I don't know is impressive!

During this past few years and last year in particular, I have been trying to remedy my marked deficits in economics. There is much written about our economic disaster that it reminds me of what I think HBS' strategy is in teaching business through the case method. The current case is the financial meltdown and there are many attempting to explain it and some who are trying to establish methods to prevent its recurrence.

Given that the economic gurus are not dumb bells, we start with the hypothesis that there must be some validity in the perspective. Yet, realizing that many of these gurus differ, we also know that they cannot all be right. It does leave the likes of myself in a quandary.

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Today newspapers capture the problem.

Tyler Cowen, a professor at an acclaimed university advocating market economics (George Mason), depicts clearly the problems associated with government intervention driven by political issues. While attempting to address a set of problems, it engenders more! To the degree that we avoid the market's response to economic conditions, we become enablers of future disasters.

Then, Hyman Minsky is an economist that I never heard of. That he is now dead has not kept this writings to take on more pertinence in light of our current fiscal crisis. According to Stephen Mihm, Minsky thought that capitalism is inherently unstable and tends to collapse periodically. Conservative responses to crises yields over time to more risky lending practices when the economy is doing well, until it ends in some sort of disaster. But, compared with Cowen, Minsky gloomy prognosis of the inherent instability of capitalism, he felt that the answer was heavy investment by the government to address the concurrent of loss of jobs and depressed consumerism.

And the very next day (14 Sept 09), James Galibraith thinks that

the U.S. "could use a decade of public capital investment to rebuilt common infrastructure." Furthermore, we need to "mobilize and direct resources" to tackle the twin challenges of energy independence and global climate change.

These gurus have some validity, but how does it help someone like me?

In spite of all that has occurred and all that I have read, my initial economic philosophy remains generally in tact.

1. Capitalism is the best economic system known to mankind, but it is inherently prone to excess and inequities that lead to significant problems.

2. Government is necessary to provide regulations and oversight (albeit, never enough to prevent those wanting more than the system permits) and to intervene when fiscal disasters occur.

3. It would help if elements of the common good were weaved into the fabric of capitalism to ensure that economic inequities would be ameliorated.