Robert L. Sharp: Hammering Wall St. meltdown
11/29/2008 12:07 AM
11/29/2008 12:11 AM
There is a saying, perhaps attributable to Mark Twain, that in my experience seems to relate to medical specialists: "To the man with a hammer, everything looks like a nail."
Those in charge of dealing with the current financial meltdown appear to be suggesting solutions solely from their area of specialty, and more specifically from their experience with financial engineering at Goldman Sachs.
Treasury Secretary Paulson was Goldman's CEO, Neel Kashkari -- in charge of which banks get to benefit from the U.S. Treasury's $700 billion bailout fund -- worked there, and even Edward Liddy was on Goldman's board until taking over insurance giant AIG. Several such others involved have their hand on the throttle.
However, it seems the Obama administration-elect is going to consider aiming some of the stimulus efforts at infrastructure projects, getting past Wall Street and moving to Main Street.
Finally someone remembered British economist John Maynard Keynes, who posited that "priming the pump" through government spending, could help an economy through difficult times. Thus was inspired many programs of the Franklin Delano Roosevelt era, such as the Works Progress Administration -- the largest New Deal agency that gave us many of today's post offices -- and murals inside and outside of public buildings.
We know that years of deferred maintenance have left our national infrastructure -- dams, bridges, airports and seaports -- falling apart. Even if such projects are considered a slower stimulus than sending everyone a check, we would end up with longer-lasting benefits.
Washington and Wall Street are alike in addressing every problem by throwing money at it. Throwing it where is the question.
There is a fascinating computer game called SimCity, a city-building enterprise in which the player is given the task of founding a city, while maintaining the happiness of the citizens and keeping a stable budget.
The player must lay down zones, each having a specific kind of building that will be built there. The residential zones provide housing for Sims; the commercial zones provide shops and offices; and the industrial zones provide factories, laboratories and farms.
The player is given a blank map to start with and must expand his city with the budget he has. As the city matures, the player may get to place government and other special buildings (Mayor's House, Courthouse, etc.), depending on how large is his city. The player must supply services to his citizens. These include health, education, safety, parks and leisure. They come in the form of different buildings, where each building covers a circular "range" of service. Inadequate funding of these services can lead to strikes. Cities must also provide basic utilities, such as electricity, and water.
The primary source of SimCity income is taxation, which can be altered by 1 percent increments. With too much taxation, citizens riot. Too few utilities, roads, etc., and the city can't grow.
It's just a game, but like real-life governance, a delicate balancing act.
When I was young the only north-south California highway was State Route 99. Some time later, Interstate 5 was built, joining the rest of California's remarkably smooth and well-maintained roads. The last time I traveled I-5, it was like a washboard. Schools that once were top-notch are now rated somewhere near Mississippi.
I'm all for infrastructure projects. Funding public art wouldn't be bad either.
Robert L. Sharp grew up in Linden and spent most of the following 30 years as an international banker in Asia including four years as a Naval officer in that part of the world.
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