(A slightly different take on Tom Friedman, the meltdown, quantitative easing, the Age of Awareness, Jewish history, Purim, Pesach, Zipcar and birkat hachamah.)
Dear All,
Tom Friedman’s piece in the New York Times this week (The Inflection Is Near?) provides a clear summation of how most environmentalists understand our current financial crisis, and if you haven’t yet read it I recommend it – You can read the article here. My one sentence precis: we’ve been overconsuming the world, and our behaviors are no more sustainable, in aggregate, than Bernie Madoff’s investment strategy.
I want to argue that he’s right, but that we’re not properly following what should be the policy implications of what he argues; and, further, that Jewish history provides a particularly cautionary note on some of where we now might be headed.
The backdrop is that people are freaked out, so they spend less and save more, and that in turn makes the contraction worse. Governments act in a Keynesian fashion (spending more despite a decline in their own revenues) because when, in the 1930s, they initially did the opposite, they did far worse damage. No-one wants to revive Herbert Hoover.
But a traditional Keynesian response nevertheless fails to recognize the world we’re really now in. It fails to acknowledge how radically we’ve been overconsuming, and thus how traditional Keynesian measures are misdirected, at best. Understanding this requires placing where we now stand in wider context.
With hindsight we can now see that the period from the end of the Second World War to 9/11 was the Age of Affluence. A period of disruption and uncertainty ran from 9/11 to the collapse of Lehman Brothers; that, to me, was really the Great Disruption, because it was a period in which we started to lose our sense of safety, in lots of different ways.
Now we’re in the beginnings of what I think of as the Age of Awareness. We’re much more aware of how we’ve been overconsuming the world, and much more aware of how our behaviors need to shift. Mishael Zion last week said to me that the Jewish understanding of teshuvah was that one first needed to become aware of one’s behavior – and ashamed by it – and that that was the first step towards changing and improving our behavior and repairing the damage we’d done. We’re now in the early phases of societal teshuvah: that’s exactly what the Age of Awareness is about.
But if we’re living in the Age of Awareness then there are two very different reasons to be cautious about the direction governments are now moving in: as it were, an “environmental” reason and a “Jewish” one.
The environmental reason is that it makes no sense to recognize that we’re overconsuming, and then scatter money to encourage further overconsumption. The Big Three don’t need a bailout because, frankly, we have more than enough cars. The employees of the Big Three, and their suppliers’ employees, and their communities, all need help. You could create tax-free zones for new investment, and credits for education and retraining, and rebuild every single school and college in Michigan, and offer free tuition for everyone, and help found a hundred new clean tech businesses. That would make sense. And it would cost less, and do much more good, than bailing out GM.
The Jewish reason is not about bailouts in general but about how they’re funded. The British government last week announced that it would introduce “quantitative easing.” In plain English that means printing money; and printing money sooner or later leads to inflation. Governments are starting to seem willing to risk that now because it looks like we’re in a period of deflation, and also because the original bailout has proven insufficient. (It was sufficient to sort out the 10% of banks’ balance sheets that had been corrupted by dodgy mortgage-backed loans. But financial contraction – people losing money and losing confidence – led to economic contraction, which in turn damaged otherwise sound businesses. So now the other 90% of the banks’ balance sheets are starting to look dodgy, too, and way more ammunition is thus needed.)
So I understand the fear that stands behind the Bank of England’s decision last week. But we still have to ask if the medicine will in due course do further damage to the patient.
We don’t know what our multicultural multiethnic western world will look like if we have 12% unemployment and rising inflation – which is where we might be a year or two from now, at this rate.
On Sunday morning I went to church; a church I rather like, in Harlem, and one whose politics I broadly endorse and trust. But it’s a church whose emotional choreography is always powerful. On this occasion the preacher used a text from Jeremiah to rail at the false gods of consumerism, and though I agreed with what she said, I was actually a little rattled by how intensely she whipped up the congregation. Had the church’s politics been less sound it could have been really scary. All of the Western economies have more immigrants today than they had in the 1930s. Mass unemployment, destabilizing inflation and a loss of faith in established leadership structures (including those of the business community and the financial markets) is a scenario that should cause concern.
Anyone who’s read things I’ve written knows that I’m constitutively hopeful. It’s one of the reasons Hazon is called “hazon,” which means “vision.” But I want to draw two conclusions from all this.
First: I think the organized Jewish community should distinguish between generalized governmental responses and targeted ones. Printing money to fund broad-based stimulus packages I think is wrong, a) because it ultimately stimulates general overconsumption of a type we simply no longer need, and b) it can probably only be accomplished by printing money on a scale large enough that it runs the risk of triggering significant inflation and far worse societal tensions in consequence.
And secondly: this is the time of the year when the tradition invites us individually to reflect on the stuff we don’t need. I’m writing this on the morning of Purim. I heard the megillah last night and will do so again in an hour’s time. It’s the story of how the world turned upside down. The hangman is hanged; the man outside the gate becomes the right hand to the King. The hidden hand of the unnamed G!d is revealed. This story of the world turning upside down comes to shake us up, to remind us that things can be other. And it does so right now so that we can start to get rid of our chametz; not just literal breadcrumbs, but also the fluff and superfluity that we don’t need; stuff whose whose acquisition has been doing damage to the world and not just cluttering up our homes and our heads. This is the four-week preparation our tradition encourages so that we can be truly free on seder night.
And this year we have birkat hachamah, on the morning we burn our chametz – a once in every 28 years blessing of the sun. (I’m sending out a great article next week by Rabbi Julian Sinclair specifically about this.) So these next four weeks is a once-in-28-years opportunity to really spring clean. To clear out stuff we don’t need – and figure out the things we’ve been overconsuming in the last 28 years that we, and thus the world, do not need in the next 28. With thought and determination the Age of Awareness will inaugurate not only a healthier and more sustainable Jewish community, but genuinely a healthier and more sustainable world for all.
Chag sameach,
Nigel
P.S. Hazon has been a member of Zipcar since first it started in NY and we love it – read the great piece on it also last week in the NYT. Especially if you’d like to own one less car, save $600 a month by doing so, and yet retain the benefits of access to a car… ).