One of my granddaughters just came back from spending time in England and France. She traveled with a group called People to People. It is a student ambassador program which allows young people to experience other countries and cultures. It was an incredible experience for her.
What I found interesting in my reading this morning is that Colin Powell has an opinion on these programs. “Student exchange programs are wonderful things. Sending young Americans overseas, if only for a few days, opens their eyes to new experiences and gives them an understanding of the world that is not America – and a greater appreciation of what it means to be a citizen of this country.” With Gracie, mission accomplished.
America is currently reinventing itself, at least economically. You can do that when capitalism is the foundation of your economic system. Allan Meltzer, a professor of Economics at Carnegie Mellon University discusses this in his book, “Why Capitalism?” “Capitalism’s core defense, is that it is the only system that leads to freedom and economic growth.” In other words, it is a system that is utilitarian enough to respond to market dynamics.
The current financial crisis has led many of us to questions the validity of our system. Even as recent as the JP Morgan fiasco we cry out for more regulation and protection for the investor, creating larger government control. However, in India, Cuba, Russia and China the appeal of state controlled economies is withering.
Meltzer makes a very interesting point in his book about the self-correcting system we call capitalism. “Capitalism without failure is like religion without sin. It does work well.” When corruption occurs, and it does, the system exposes and rectifies itself, much more efficiently then the government controlled version.
Luigi Zingales, a professor at Chicago’s Booth School of Business, also discusses this topic in “A Capitalism for the People.” He discusses the cronyism, that I have mentioned before, and the anti-competitive tax systems, etc, which I have also discussed. However, he focuses on something that I think is a critical point. In discussing the government’s interaction with the economy he states, “it is all too often pro-business rather than pro-market, meaning that favorable conditions are provided for particular institutions, rather than institutions broadly. This distorts the system, resulting in precisely the problem of select companies making profits while imposing costs on society that is at the core of what regulation should be designed to prevent.”
Zingales then ends his argument by emphasizing a closer relationship between capitalism and morality. “He wants to extend the public shaming of corporate crooks to people who take actions that are legal, but damaging to society, such as borrowers who walk away from mortgages.” Thus the exercising of strategic defaults will no longer be an accepted recourse, but one of shame. I think this is just a simple example of the perceptive expansion from major crimes to the little endeavors that we used to think were wrong.
As much as I whine about our politicians, lack of leadership, and managerial stupidity I have to say I would not want to live anywhere else. We are reinventing ourselves once again, and because of our history and our freedoms we are able to accomplish this feat.
And that is my thought for the day!