President Bush assures us that he is "an optimist" and that
"the fundamentals of the American economy are strong." It is
all too reminiscent of what President Hoover told us in 1929. The
"fundamentals" were strong then too, just as the American and
world economies were collapsing into a financial, industrial and
agricultural abyss, with unemployment rising, even in the richest
countries, to peaks of 25 or 30 per cent.
But this isn't 1929. This is 2002. Things are different now.
President Bush knows much more than President Hoover in 1929. He is, we
are told, the first President of the United States to hold an MBA.
Alan Greenspan and other central bankers around the world, are much
more knowledgeable and have much more effective instruments of control
than their equivalents in 1929.
We are all much more knowledgeable, more "sophisticated,"
more able to manage our economic affairs than we were then.
Is any of this true?
Or, in reciting these comforting thoughts, are we just whistling to
keep our spirits up? Perhaps we are exercising one last option to shore
up our stock markets, because we don't know what else we can do.
Certainly, we can't claim to be more ethical in our conduct now than
seventy years ago. Indeed, the corporate buccaneers of those days were
amateurs compared with the professionals of today.
"The Fabric of Economic Trust"
UPI Correspondent, Dr Sam Vaknin, has recently reminded us that the
"entire edifice of the market and price mechanism critically
depends on trust. If people do not trust each other or the economic
'envelope' within which they interact, economic activity gradually
grinds to a halt."
Earlier, many of us thought that Enron and Anderson Accounting might
be exceptions to the generally trustworthy character of business
institutions. We now realise that their conduct permeates much if not
most of the economy. Rather than the exception, it may be much closer to
It is also clear that knowledge of and participation in that
behaviour run deep. Distinguished economist and former high-level
international civil servant, Gunnar Tomasson, asks "Where have all
the flowers gone?" He goes on to say, "It is impossible to
exaggerate the supermarket of [corporate] crime. It's greed on steroids.
Why didn't we know about it sooner? What amazes me is that there are
thousands of people who could have been whistle-blowers, from the boards
of directors to corporate insiders, to the accounting firms, to the
lawyers working for these firms, to the credit-rating agencies. All
these people! Would a despotic dictatorship have been more efficient in
silencing them and producing the perverse incentives for them all to
We're told that some miscreants will pay heavy penalties for their
crimes. Some have already been charged. Some might be jailed.
Less attention has been given to the clear implication that the
stockmarket boom of the 1990s was based, if not wholly, at least in
large part, on fraud and so was largely a myth.
That is a crucial "fundamental." No jailing of however many
perpetrators will alter such a basic fact.
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