If you haven’t already, you might want to read Captain Kirk and the Unintended Consequence of Compassion and Captain Kirk and the Unintended Consequence of Compassion (Part II). They tell the story of “A Taste of Armageddon”–a first season Star Trek classic. Captain Kirk encounters a civilization that is marred in a 500 year war–but one that is fought through computer simulation. This feat of social engineering prevents the painful death and massive destruction of a real war. But it doesn’t prevent the killing itself–for if your number comes up at the end of the computer game, your duty is to report to a death chamber for your humane elimination. Kirk ends the war by destroying the computer. Faced with the prospect of a real war, the arch rivals make peace and their 500 year war ends. Start to finish, the multi-century problem was solved in 1 hour, including commercials.
The moral of the story: the unintended consequence of compassion was that the war continued for generations.
What does this have to do with America circa 2009? A lot. Market corrections are ugly. People lose jobs. Life savings evaporate. Homes are foreclosed. Businesses go bankrupt.
It is ugly and painful.
But it is necessary ingredient to a prosperous long-term economy.
Why can I say this with conviction? If you have any sense of history, you know that the prosperity created by the American free market system is without precedence. This is especially true as it pertains to the middle class. Never has a society created such a large and prosperous middle class.
Also unique in the American society is how often an individual can start poor and end up wealthy. Regardless of where you grew up, what color your skin is, or what you believe in, you have a bonafide opportunity to achieve wealth. Is it harder on some than others? Of course, but less so as every year ticks by. We have chipped away from the unlevel playing field and, over a period of just a handful of decades, the field is noticably more level.
The destruction of the economy forces society to adjust. Get smarter with investing. Hold corporations more accountable. Be more responsible with personal financial management. Or face the consequences.
But what happens if we dampen the consequences? What happens if we don’t let businesses fail? What happens if we protect salaries and pensions, even as we watch an industry such as auto die a slow death? What happens if we take too much money from those who achieved success and give it to those who haven’t? At what point are we hurting society by misplaced compassion? When do we cross the line where we are doing great harm to those people that we think we are helping?
I’ll end this post here. But I’ll pick it up tomorrow witht the question: “Can we do better?”.
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Thank you for addressing this critical issue Dan.
I could not agree more with your position to date on this and am anxious to see how you end this topic later this week. To address your question “Can we do better?” ABSOLUTELY! Seems like many have forgotten that you cannot simply spend your way out of problems in the long term. That at various points in our economic history short term pain is required and necessary to clear out the underperformers for long term gain and prosperity. (See the Telecom industry meltdown of ~2000-2004…no bailout money going to those folks and the industry is better for it.)
There seems to be an entire generation of politicians (on both sides of the aisle) as well as a critical mass of people that seem to forget that equal opportunity does not guarantee equal results; that if left alone innovation and long term growth are achieved thru a series of failures.
Hallelujah! Refreshing post. Send this to Obama and his team.
the first rule of faith based charity(outside of the collection plate) is simple and why guvvie does not understand it is beyond me.
If a person in need comes to a faith organization for monetary assistance because they cannot feed their kids, pay the heating bill, need gas in the car or need new clothes.
Step one: You buy them groceries(Milk, Bread, eggs protien, etc no soda, snack items, etc Cookies are decent, because the kids need a treat), you never buy them cgiarettes, alcohol or medicines of any kind, sadly that also goes for baby formula. You go to the energy company and ask them to be placed on average based billingor get them on the list for payment assistance you pay the energy bill once, through faith based means(benevolence funds) you fill up their tank and ask for clothes donations from your congregation or take the individual to a local faith based or private owneed thrift store. At our Church we have something called Love Wraps it is a free standing building that we give clothes, shoes , etc for free, no strings attached. Come as much as you like, etc. Folks donate to us all the time. Ladies in the church wash them and merchandise them, etc in the “store”
The simple rule is you NEVER give them cash. You never give them cash because they will continue to come back and and come to think of your charity as a “expectation” and/or “entitlement”, that and you can never know what the cash actually was used to pay for, could be drugs, alcohol, gambling, including lottery tickets, etc.
We see very oor folks where I am at that claim to pay for food for the kids, but the wife or husband or new boyfriend, etc use it for the casino, drug habit, etc.
The simple rule keeps from creating an etitlement mindset and keeps the beneficary of your charity honest about their need. Our church goes one step further(we are in a ver large rural county in rural Oklahoma, where Meth is very serious challenge and poverty is way of life) we teach gardening, basic cooking skills food shopping and nutrional classes, once folks ahve taken those classes we give them free seeds and plants, all donated by local COOP’s, farmers, etc. We also teach personal finance classes on basic budget strategy, how to purchase money orders, mail in payments, and even how to read a bill(yes this is something many of take for granted, but that some have no idea about) we advise them to stay clear of check cashing/pay check advance places and instead use the grocery stores, etc. Notice I did not say checking accounts, most folks that come to us cannot get a checking account, etc and live check to check on cash or have no idea what a checking account is or what a debit card is. We also advise them to steer clear of pre-paid debit cards, etc. We also teach about cleaning the home, etc. We also have an alliane wiht the local County Health offic and refer them there for medical/dental.
At the end of the day, we not only give in dire situations, but longer term we seek w/o any strings attached(you must now become a member of our chruch and other silly legalistic Chritian dogma, etc)to teach folks self reliance, confidence, and most important to ahve trust and faith in others w/o second guessing them or looking back to see if their any strings attached or how will they take advantage of me, or OK thnaks for all this, but what is the catch.
The government, politicians, Wall Street,etc are not going to pull us out of this mess, it will take random & senseless acts of kindness.
My wife and I we give back a lot of time and money, and not because of a tax break, etc. but because it is really what life is about. My Dad always taught me that it is never what you get, it is ALWAYS about what you give.
Our charity doctrine follows the age old saying, give a man a fish and he will eat for a day, teach a man to fish and he will never go hungry.
It would seem to me the current administration prefers to let the entitlements, bailouts keep coming and believe that they and the guvvie can do better than anyone in solving our issues.
It would seem to me the left is running towards and embracing the very ideals that Europe is fleeing or now have abandoned outright.
I will not bet against our citizens, but we need a wake up call and a return to our values.
and yes you can count me amongst a large growing movement that are mad as hell and not going to take it anymore!, from the current administration or any political or market force that keep taking and taking and taking.
When is enough , enough and when will we let the banks that need to die, die, the same for Auto makers, etc. The real issue of the day is that we ahve a hand full of politicians and market makers that reject the diea of free markets and true capitalsim, because they have never seen really work in the last 20 years or have a clue about it.
the spending and bailouts have to stop…If this is change, keep in your pocket Mr. Obama or spend it elsewhere.
Gene Roddenberry was a thoughtful guy.
There’s a term that sorta sums this up as well: “Moral Hazard”. There’s also the old theory of “Creative Destruction” from which turned into the term “disruptive innovation” in the 1990’s.
I’m 100% with ya. But, I am going to sound like a demagogue here…
I’d argue that those in power aren’t facing a situation of moral hazard with or without any kind of bailout. The vast majority of executives in our corporate world are not faced with “pain” or poverty even after their companies fail.
Instead of making hundreds of millions over the next 10-20 years, the “people in charge” are going to have to somehow make due with multi-million dollar golden parachute packages. Wow, they are really hurting! How will they send their kids to school or make it through retirement? Ha! Ha!
Will that kind of “pain and suffering” change their behavior?
In the 1920’s, the fed didn’t do anything. Their fault or not, unemployment was over 30% and it’s estimated between 30-50% or more of people in the US were living below the poverty line. Now that’s pain and suffering.
This post feels like part of a process whereby someone comes to the slow conclusion that they are regretting putting in office the person they voted for. Smaller government is good. Obama did not run on that platform.