In his book of the same name, Thomas Sowell argues that all men are guided in their thoughts and actions by an underlying set of visions which explain to them how the world, in its various facets, operates. The book, in the main, goes on to examine the inescapable conflict between what he terms the "unconstrained" and the "constrained" vision. These terms are very nearly self-explanatory. The unconstrained vision takes human nature as a promising raw material which can, by relatively straightforward measures, be molded to a variety of desirable human ends. The constrained vision sees human nature as largely fixed, morally suspect, and sometimes blindly destructive, even toward its own apparent interests. The unconstrained vision promises us emotional well-being via the guidance of qualified psychological experts who seek only to help us better ourselves, and the world around us. The constrained vision sees man as a wolf to man, and hopes that his most selfish and anarchic instincts might somehow be muted by shame, or moderated by mutal affection, or at least channelled into relatively more tolerable pursuits.
The unconstrained vision is lyrical; the constrained is tragic. The unconstrained is youthful; the constrained middle-aged. The unconstrained inspires; the constrained cautions. "'Most men look at things as they are and wonder why. I dream of things that never were and ask: Why not?'" mused Bobby Kennedy. "In the sweat of thy face shalt thou eat bread, till thou return unto the ground; for out of it wast thou taken: for dust thou art, and unto dust shalt thou return," Genesis replies. The first vision is linear, spring-like, we might say, "Faustian." The second is circular, autumnal, humbling.
Both the constrained and the unconstrained vision inhabit every human psyche, in varying ways at varying times. But Sowell's apparent purpose in writing his book is to caution us against the siren song of the unconstrained vision, and to remind us of the damage that its excesses so often engender. More specifically, he sees our political and economic choices as emerging from a conflict between these two visions of the human state. For those who bother to think, aging is, in some measure, a transit from one vision to the other.
This brings us to the upcoming election. We do not now have, nor have we had, so far as I can remember during my lifetime, any sustained political conflict between the constrained and the unconstrained vision. In short, what we have, and have had, is simply a rhetorical competition between two versions of the unconstrained vision. In effect, the unconstrained vision has long since won the day. Hence, my reluctance to enter into the political process (i.e. to vote).
For the entirety of my adulthood (and I'm now well into my forties) we have evaded the constraints on our income and our consumption, both as individuals and as a society, by borrowing against our own or our children's - and grand children's - future prosperity, such as they may ever enjoy. This evasion has been engaged in enthusiastically, even optimistically, but with next to no regard as to its long-term effects. There is no point here, so far as I am concerned, in apportioning blame to a particular politician, or party, or economic class of society. We've given ourselves license to do this, and we've given others license to do this in our name.
I don't know what the ultimate outcome of the current Wall Street tribulation may be, but I suspect that, in the much broader sense, the way that we have been living, and the vision which has underpinned the choices we have made, will eventually, inevitably, and not in the too far distant future, encounter a very stiff and unyielding wall. Things will then change, as things always do. The outcome will probably be sobering, and for many, tragic. And of course, it could always be even worse.
A few points to consider, none of which require an advanced understanding of economics.
1. The era of cheap oil is over. This does not mean that we, or the world, will ruin out of oil this year, or this decade. But we will be paying more for oil now and into the future than we paid up to the recent past, and that change will be permanent. The price of oil will only decline, long term, when (if) humanity hits upon something cost-effective that operates more or less as oil does. There is currently nothing on the horizon, that I know of, that fits that description.
2. Our fueling of ever-increasing consumer spending through ever-increasing debt is about to be re-examined. We rely on people elsewhere to loan us money, and those people are currently, for good reason, somewhat wary of our ability to repay. Again, this is true on both the individual and the national level. I don't pretend to have any esoteric understanding of our capital markets, but I think I am correct in assuming that when you take on debt, every year, and neglect ever to pay down the principal, and finance the interest on the accumulating debt through taking on more debt, you eventually find yourself deep in a hole you cannot crawl out of.
3. Our economic growth over the past twenty years has not been limited to, but has been characterized by, bubbles. According to economist Thomas Palley:
"The business cycles of Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush share strong similarities and are different from pre-1980 cycles. The similarities are large trade deficits, manufacturing job loss, asset price inflation, rising debt-to-income ratios, and detachment of wages from productivity growth.
The new cycle rests on financial booms and cheap imports. Financial booms provide collateral that supports debt-financed spending. Borrowing is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against."
When markets are on an upswing, those raking it in are hardcore free-marketeers. Even those who know that such markets are overvalued cannot resist the temptation to "make hay while the sun shines." When markets are collapsing, we discover that these same people are somehow integral to the salvaging of our financial system, and that the entities with which they are affiliated are "too big to fail." This may not have been true of the tech bubble, but it certainly characterized the S&L debacle of the 80s, and of course we hear the same rationalizations, or if you prefer, rationales, now.
4. Social Security. In about two years, the baby boomers will begin to reach retirement age. This will entitle them (and me, eventually) to Social Security. What's worse, it will entitle them to Medicare. This is like one of those satellite photographs of one of those many hurricanes sweeping through the Caribbean a few weeks ago. This storm will not be diverted. Obviously, accomodations to reality can - and will eventually have to - be made. These accomodations will not make the baby boomers richer. The necessary adjustments will be played out on the field of inter-generational, ethnic, and class rivalry.
5. The underclass in America is growing larger. It both reproduces more, and reproduces faster (children at 18 instead of 30, grand kids in one's 30s, not one's 60s). Women receiving public assistance have, on average, three times the number of children of women who aren't on the dole. The expansion of the underclass is also attributable to unbridled and unselective immigration, much of it illegal. People don't like to talk about this in polite society. Politicians who wish to remain in office don't talk about it at all. Hence, nothing will be done to curtail the rise in the numbers of young people who will struggle through school, vent their frustration in various socially destructive ways, drop out or graduate at best marginally educated, and then struggle to find an entre into the legitimate economy. Many of them won't even bother to try. The upper middle class will avail itself of gated communities and private schools, and continue to lie to itself for as long as it can. Those below will have to fend for themselves on the streets. For them, lies will not prove so consoling.
As the factors above coalesce, plus those I'm too lazy or ignorant to write about now, our political discourse will become ever more riven with jealousy and accusation, suspicion, envy, and fear. Our politicians will continue to promise us more and better, better and more, for they know that we are children who wish only to be comforted, which, as our circumstances decline, will mean only to be deceived. They will accommodate us, and we will accommodate them. And we will all fall down together. Want examples? Look to the campaign promises of McCain and Obama. Or just click on this article.
By the way. I am, as I've said, well into my forties, with a wife and two kids. But I've never in my life owned a house. I used to feel kind of bad, or guilty, or inadequate about this, like I'd neglected to do something that was expected of me.
I don't feel so bad about it now.
PS: If you,re pondering the merits of the Wall Street bailout, you might want to click here.