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COMPASSION MATTERS? October 13, 2011

Posted by wmmbb in Humankind/Planet Earth, Social Environment.
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David Korten argues that Wall Street is superfluous and that the economic problems are structural.

He sets out his case in the following you tube video:

Joseph Stilitz has a similar analysis to the extent he suggests the US economy is sick and that austerity will not fix it. At Economy Watch he argues:

The financial sector’s inexcusable recklessness, given free rein by mindless deregulation, was the obvious precipitating factor of the crisis. The legacy of excess real-estate capacity and over-leveraged households makes recovery all the more difficult.

[Related: Remedies for an ailing economy – How to avert a crisis: Nouriel Roubini]

But the economy was very sick before the crisis; the housing bubble merely papered over its weaknesses. Without bubble-supported consumption, there would have been a massive shortfall in aggregate demand. Instead, the personal saving rate plunged to 1%, and the bottom 80% of Americans were spending, every year, roughly 110% of their income. Even if the financial sector were fully repaired, and even if these profligate Americans hadn’t learned a lesson about the importance of saving, their consumption would be limited to 100% of their income. So anyone who talks about the consumer “coming back” – even after deleveraging – is living in a fantasy world.

At Salon, Alice Karekezi talks to Jeffrey Sachs posing the question what caused the wealth gap? So what could compassion and social responsibility have to do with economics or the market?

What are our deeper economic objectives? Among these is a sense of well-being, of life satisfaction. Income can play a role in that, but so do things like social trust and honest government – and compassion for other people. This kind of discussion is considered odd and I think that is part of our problem right now. We don’t have effective ways to discuss these things in our society.

Instead, we have people who represent a cult of selfishness, what I would consider Ayn Rand libertarianism. They are political figures who say that the goal of America is to leave [people] alone, and that ideas like compassion and so on are dangerous. What the Republicans have on offer – which is based on this 30-year misdiagnosis – is cruel and deeply wrong, because they express disdain for the idea that people are suffering and they need help.

We’ve arrived at a crossroads about the real meaning of our civilization. I think that we will need to reflect on how to achieve a higher level of happiness in this country — [and think about] issues of social trust, social connectedness, decency, compassion.

I am surprised that every economist would not treat compassion as an externality, much like the environment. Maybe, we are operating within a cultural paradigm. For example, according to Wikipedia, Thomas Szasz in Cruel Compassion suggests:

“Greek and Roman philosophers distrusted (feeling) compassion. In their view, reason alone was the proper guide to conduct. They regarded compassion ( a virtue) as an affect, neither admirable nor contemptible.”

Comments»

1. LIES AND POLITICAL ECONOMY « DUCKPOND - October 14, 2011

[…] David Korten suggested that the economy could do without Wall Street, if it returned to the golden age of local-based, often cooperative banking institutions. So what would happen to international trade? The Occupy Wall Street movement, which has spread beyound New York raises broader questions. […]


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