What's Broken?

There is a line of reasoning that claims that the economy is all in our heads. According to the subscribers bad news breeds fear which negatively affects investment patterns, which leads to more bad news. Good news works in precisely the opposite manner...

The people would have you believe that you can walk into a burning building and ask, "Fire? What fire? Everything is excellent!" and suddenly... poof... the buildign would cease to burn.

I can hardly imagine a more childish or... simplistic... view of the world around us.

But... since it is simplisity that is desired... I have desided to provide it. Tonight... I should very much like to take the opertunity to explain what's broken in terms everyone can grasp.

Imagine if, you will, an island. On this island are several cast aways. There is japanese man, a chinese man, a french man, a german, an indian, and an american.

Each morning the Japanese man goes fishing. He fishes all day. The chinaman gathers fruits and nuts. The german crafts utensils. The indian hunts wild game for meat. The frenchman cooks all day.

At the end of each day... all of them present their well crafted products to the American who has done nothing all day. The American eats virtually all of it... leaving only the barest scraps for the others.

The next day it starts over.

Now... Keynesian economic theory... or... as you may prefer to think of it... American economic theory... the economic theory that our government has used to make all of its decisions for the last hundred years or so... would have you believe that the American is vital to that island's economic stability.

I mean... Look at all the jobs the American is creating by providing all that consumption.

Only a harvard educated politician would actually believe such insanity... but believe it they do. With such faith that they risk the very survival of their nation upon it.

Any idiot can see the American is a drag on the economy of the island... The other castaways would be far better off without the american at all. There would be more for them. They would have more wealth... and more free time.

And you wonder why the world loathes Americans?

The problem is not perception. The problem is not in our heads. We are not facing tough economic times because we're not happy enough.

We are facing tough economic times because we've stopped producing. No. The problem is not in our heads.

Its in our hands.