I started blogging a little over a year ago. Last night over dinner, a friend asked me why I do it. The answers I gave him were: I love to write and I want to be part of the really exciting conversation about economics and economic thought that has been a byproduct of the financial sector's mismanagement of risk.
I didn't say it last night, but I think I also started blogging because I grew up in a family business and have become increasingly appalled over the last 10 years or so by what seems to me to be a very limited view of the duties, obligations, and responsibilities of business.
I remember the sense of incompleteness and confusion I felt when first exposed to the theory of the firm. You see, in our business we were not profit maximizers. We were business men and women, embedded in a community, our fate intertwined with that of the community. We had to make enough money to stay in business for the long-haul. That meant that our customers had to keep coming back, we had to provide value, and we had to work, to sell. No one who walked into our business was greeted with "Let me know if I can help you." The customer was like a sacred guest. Our job was to find out what she needed, to tell him as much as we could about the merits of our merchandise, to help them identify and purchase the best match for their preferences and their pocketbook, or to send them to a competitor, with directions on how to get there, if we didn't have and couldn't get what they were looking for.
Our long-term survival depended on some amount of profits, but equally important were reputation and civic responsibility. These three are what we optimized over, not profits alone. We viewed all of these as interdependent. That meant that sometimes reputation and civic obligation were a constraint on profits.
We were also a small firm. The kind of firm economists like to imagine populates the ideal of a competitive market. And so they do. And our market was local, better suited to enhancing our moral sentiments about and our ethical commitments to our customers. our employees, and our community than global markets are, perhaps.
Now, after a year of blogging, I'm discouraged and puzzled.
I can understand that someone who has managed to capture a privileged economic and political position, one where they are backed by US taxpayers as they gamble for personal gain in financial casinos, will do whatever they must to maintain it. And I expect that over time, if unchecked and unchastized, they will take on increasing amounts of risk, underwritten by the rest of us. What I didn't expect was the magnitude of the moral failure: that financiers would help to create securities designed to fail, sell them to clients, and then bet against them.
What I can't understand is the willingness of the citizenry to protect and reward someone who has harmed or is continung to harm them. I do not understand voting for politicians who support tax cuts for and neutered regulation of these same destructive speculators. Nor do I understand voters' apparent willingness to eviscerate all of the social programs and safety nets that are all that stand between them and what can only be regarded as neo-feudalism. I conjecture that the reason for this counterintuitive behavior is that the moral narrative that accompanies a technocratic tax cut for the wealthy is more compelling that the moral narrative that accompanies a technocratic stimulus of aggregate demand or support for families harmed by the financial sector's market and moral failures.
If you had told me 10 years ago that I would become a critic of investment bankers and an advocate for labor, I would have said that you were crazy. I was weaned on horror stories about the New Deal, the WPA and CCC, wage and price controls, and the horror of unions. (And, if we ever return to a point where unions become so powerful that they impede business, I will blog against them.)
I grew up in relatively egalitarian (at the time) Appalachia. My family had more money than most. I had two best friends. One friend's father was a (union member) coal miner who died of black lung disease when he was in his sixties. The other's father pumped gas at the local gas station, while his wife baked the most delicious bread and sold it to her neighbors. There was a compression that occurred in coal-mining and steel-producing towns. I think it's something about the landscape and the drear tar-paper brick houses and the fact that we all lived so close to each other. It causes those at the top of the income distribution to want not to seem too far above. But it may also be that money just isn't that important when most people don't have much of it. It also helps that the most you can spend on a dinner out is $20 per person (with wine) because that is the most the best restaurant in town charges for the top-of-the-menu T-bone steak with two vegetables (where mac and cheese and jello are both considered vegetables) and a glass of the "house wine."
I remember thinking until I was about 8 years old, that my only job options would be five and dime store clerk or bookkeeper, because those were the jobs women seemed to hold in my town. Mercifully, I didn't have to become a store clerk (although I've worked as one and was darn good at it, too) or a bookkeeper, but I remember feeling despair at the prospect even as an 8 year old. Maybe that is why I care so much about educational opportunity for anyone, anyone, who wants it.
And I remember that nearly every strikingly beautiful mountain vista was marred by a gas well or a coal tipple or a boney pile. It was the price, I told myself, of progress and the American dream. They kept my friends' fathers employed and my family in business.
Now I find myself wondering if the price is becoming too high, paid by those who can least afford it, and collected disproportionately by those who no longer generate the jobs or the universal opulence that used to be justification for that disproportionate allocation. I'm also increasingly concerned about how that price is set and the one-sided and self-serving (for those at the top) discourse that surrounds it.
I got into this conversation because I felt I might be able to contribute clarity for those not trained in economics and a different perspective. It has been an exciting and stimulating conversation. I've thought and read more about macroeconomics than I ever did in grad school. I have developed a real fondness and respect for my readers and their very thoughtful comments and for my fellow economics, anthropology, sociology, and biology bloggers, especially Mark Thoma, without whom only five people would ever have read this blog.
Now I find myself in need a a break, partly because I feel so discouraged by recent political events and the apparent triumph of zombie economics; partly because I have a paper and a grant proposal that need my attention. Barring some major new development, I'm going to take some time between now and New Years to reflect on what I've learned this past year and on the conversation we have had. I'll be back online around the New Year. In the meantime, if you're in the mood for a more seasonal essay, you might want to read my winter solstice post on my other blog. It contains the words "GDP" and "incentives," but is more in the spirit of the holiday season than this blog has been.
Happy Holidays and Best Wishes for a prosperous, opulent, full-employment, non-volatile, no negative externalities New Year for us all!