25 April 2009

crisis and mythology

It's really strange to see the takes on the crisis, we must be carefull with our personal and societial blame games.... This was a wonderfull peice...brilliant..

David goldman wrote this piece for asia times back in january, but it may be the best one-stop-shop for understanding the nature of the global crisis.

i noted it while reading his... evisceration of simon johnson, who has now rather famously been establishing the meme of a conspiracy of bankers in the public eye, more particularly the conspiracy of goldman sachs.

Economists like Prof. Johnson are experiencing a dreadful sense of powerlessness. There must be a conspiracy to explain why our policy prescriptions don’t work any more. Perhaps a witch has conjured Satan to sour our cow’s milk, or Goldman Sachs is secretly controlling the government.

Whether or not the government bails out banks, the crisis will continue. One school of thought, represented by San Francisco Federal Reserve Bank President Janet Yellen, insists that the crisis occurred because the government let Lehman Brothers fail last fall. Another school, represented by Prof. Johnson (and New York Times columnist Paul Krugman) believes that the problem is that the government didn’t allow all the other banks to fail. Both schools are wrong. The banking crisis is merely a surface manifestation of a deeper problem. The West failed to produce a new generation large enough to buy the existing housing stock, or fund existing pension programs, or maintain the wealth that the West thought it had. That is why we are poorer, as I show in the current issue of First Things.

goldman then further clarifies.

What I object to in Prof. Johnson’s article is the notion that if only the banks hadn’t wielded all that undue influence, things would have been better. That simply is not true. The public was speculating with all the leverage it could obtain, just like the bankers. Leverage was available because of a global savings/investment imbalance ultimately arising from demographic causes.

Of course I was unfair to him — I made fun of him the way an opinion journalist is supposed to. But my point stands. I don’t want to let the public off the hook by hanging bankers from street lamps. The roots of the crisis go deep, as I argued in my First Things essay, Demographics and Depression.

that is a quite salient and wise critique of a point of view being set out not only by johnson and krugman but yves smith, rolfe winkler, dean baker and many other of the crisis' best interpreters who favor (or perhaps better said do not see an alternative to) nationalization.

the vital counterpoint has arisen, forwarded by goldman, richard koo, john hempton and at times it seems jck of alea -- one which has won me as a convert. in many respects, it is a yet more dour outlook than that being put forward by either the nationalization school or the obama administration precisely because fixing the banks is seen to be the easy part, not to mention completely insufficient as an avenue to ending the depression.

i have recently taken time to revisit the work of jack lule, "daily news, eternal stories: the mythological role of journalism". in it lule, a former journalist, analyzes a set of news articles from the new york times in the context of an academic understanding of mythology and its role in society. few books one can read will more thoroughly upend the way one approaches the news, for lule makes all too clear how information is but a secondary pretense for the retelling of age-old stories which serve to reinforce social norms and mores.

this is perhaps obvious on consideration, but the ramifications are profound -- most of us tell ourselves that the fourth estate of journalism serves the public to keep it informed of reality so as to dispose it to make the reasoned public decisions which are the backbone of the democratic concept. while some measure of information conveyance may be a secondary function, lule sees something very different in the news: information is selected and in fact often distorted in order to make it a proper conveyor of what was folklorists might call morality plays. this is of course the understood function of myth among anthropologists, which is why lule sees the mythology of postmodern society in the news. lule goes so far as to outline seven master myths which are so common across disparate cultures and civilizations in both space and time that their foundation must be something beyond a long-lost shared experience.

taken through the lens provided by lule, it at once becomes apparent that the mythologizing of the crisis is in full swing and has been for some time. incarnations of 'the victim', for example, are too many to enumerate or exemplify. but there are other more interesting myths at work to recast events in a moral light.


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