Now that we're coming (we hope) to the end of the recession, let's give thanks for the economic down-turn—for being worried and broke, getting fired, and having the value of our investment portfolio reduced to the point that when our stockbroker calls to suggest a trade, he means grocery-store coupons. "It's part of the genius of capitalism," said the Secretary of the Treasury, Paul O'Neill, in January. "People get to make good decisions or bad decisions, and they get to pay the consequences or to enjoy the fruits of their decisions. That's the way the system works."
Of course, O'Neill wasn't talking about the recession. He was talking about Enron. And the system to which he referred is, mainly, the Bush Administration's system of getting off the hook for its involvement with Enron. The Secretary of the Treasury was blowing PR out the seat of his political pants. But truths are sometimes told thus. Rotting dot-coms are a good example—we don't want an economy in which stumbling businesses, intoxicated with bad ideas and blinded by the flash of MBA degrees, aren't permitted to fall down the manhole of Chapter 11.
The Communist bloc of old was a study in the failure of failure. Losers in the Soviet economy were the people at the end of the long lines for consumer goods. Worse losers were the people who had spent hours getting to the head of the line, only to be told that the goods were unavailable. In the Soviet Union no industry went under until they all did.
"The Social Contradictions of Japanese Capitalism" (June 1998)
The economic woes of Asia have been much written about—in purely economic terms. But behind many of those woes lies a social crisis in Japan, whose modern young people inhabit a pre-modern society. By Murray Sayle
This can happen in free societies. In little more than a decade the Japanese economy has gone from frightening powerhouse to frightening, period. Japanese corporations that should be bankrupt continue to receive loans from Japanese banks that actually are bankrupt, owing to a Japanese government that is, politically speaking, bankrupt. The results are a shrinking gross domestic product, enormous public debt, a stock market that has lost three quarters of its value since 1990, and the highest rate of unemployment since World War II.
Not that we want the Japanese to be employed as they were during World War II—conquering Asia, attacking Pearl Harbor, and so on. They were working too hard back then. And this is another reason to keep governments from helping enterprises to avoid death by folly. Compare the learning curves of the private sector and the U.S. government by placing a graph of the NASDAQ stock prices after December of 2000 over a graph of American troop strength in Vietnam after the Tet Offensive. Jeffrey Skilling himself might have been leery of a partnership with Nguyen Van Thieu.
"Will America Grow Up Before It Grows Old?" (May 1996)
The long gray wave of Baby Boomers retiring could lead to an all-engulfing economic crisis—unless we balance the budget, rein in senior entitlements, raise retirement ages, and boost individual and pension savings. By Peter G. Peterson
Even in peacetime and under the aegis of supposed believers in marketplace triage, the business of government is hardly folly-proof. By 2030 America is going to have a very large number of retirees living on Social Security. Government subsidies produce—as they did with wheat and cheese—surpluses that do not respond to the usual methods of clearing markets. What will we do with all the old people? We may have to donate them overseas in the hope of aiding developing countries that lack age, wisdom, and bingo.
Fortunately, most of America is still allowed to flop. Otherwise Vanilla Sky would still be in the theaters. Instead Tom Cruise, Penélope Cruz, and Cameron Diaz are fascinating again. "There is nobody more boring than the undefeated," Tina Brown once said. If failure didn't matter, Brown's own editing career, from Vanity Fair to The New Yorker to Talk, might have kept going, until at last she was editing the Encyclopædia Britannica. Article on quantum mechanics by Cameron Diaz.
Economic failure, however, harms good businesses as well as bad, and we should be grateful for that. The arrogant and greedy come a cropper, and so do the innovators and visionaries. Icarus sees all sorts of possibilities in flight. These elude his task-oriented, linear-minded father, Daedalus, who just wants to get out of Crete. Icarus takes off on his own. He experiences the thrill of a soaring venture, briefly becomes a hot property, gets singed, has a meltdown, and undergoes a rapid decline in personal fortune.