Lessons From a Financial Crisis
The points lessons that are apparent from where I'm sitting are as follows:
- Deregulation is evil. This lesson isn't news to anyone who's been paying attention, but I should point out that tighter and more rigourous regulation would have prevented many of these problems from existing. Predatory lending and entirely speculative leveraging methods can only flourish in an unregulated, non-transparent environment.
- Speculation is equally evil, and needs to be replaced with saner, sounder investment. We as a culture need to return to market fundamentals, like actually investing in companies over a long period of time, rather than just trying to flip stocks and forex to make a quick profit.
- It's time for a Tobin tax, and a small surcharge on all stock trades. Even something as miniscule as a quarter of a percent would wipe out much "stock churning" (because it would effectively eliminate its exceedingly narrow profit margin), thereby reducing market volatility and removing the temptation for professionally high-strung traders to stampede in one direction or the other.
- The credit-dependent economy needs to shrink, and badly. There is no earthly reason why the world in general needs to be that dependent on credit.
Businesses need to learn how to buy in cash again, like Granddad did, and citizens need to stop feeling like their personhood is defined by their credit cards, and/or debt level, and the culture at large needs to stop encouraging people to be in debt.1 (As this article demonstrates, there are a substantial number of credit card companies whose revenue stream depends on people not paying off their card balances. Do I actually need to mention how fundamentally broken that system is?)
For that matter, corporations in general need to stop acting like consumers' cash money is no good -- ever tried to get an ISP account (for example) without a credit card?! Marginalisation and penalisation should not be the default response to someone who wants to deal in cash (read: prefers to use their money unmediated by a giant transnational corporation); that response is symptomatic of a big big problem and needs to go away.
- The business culture in general needs to start making longer term plans than "close of trading today," and "next quarter." I don't mean to harp on the "back to basics" idea too much, but Granddad and Grandma really did have the right idea there as well.
- SUPPORT YOUR LOCAL SMALL, INDEPENDENT RETAILERS. Unless I completely miss my guess, large corporations are going to get hit far more by this than the mom-and-pop shop at the corner, unless Mom and Pop's statistics pan out very badly (they had all their money wrapped up in investments, for instance).
For those of you inclined to go the extra 1.609344km, I would add a seventh point: If you haven't started already, now is the time to begin decoupling from the mainstream economy. Stop shopping at chain stores, or transnationals; cut down your discretionary spending; if you're in debt, make getting out of it a priority; find out who speaks barter in your local area; join a Freecycle group or swap meet; join or support a co-op or farm basket programme in your area; look for alternate employment, that kind of thing.
Maybe it's too late for some people to learn from their mistakes, and I'm not expecting a business culture revolution, but if small and micro businesspeople implemented changes like these, North America might be a very different -- and better -- place in ten or fifteen years. We can hope, right?
1 Companies that depend on their clients maintaining a debt balance in order to derive revenue refer to frustrating people like me (who pay off their balance on time or ahead of time) as "deadbeats." Spot the dysfunction, boys and girls!