Hell is full of good intentions or desires. Saint Bernard of Clairvaux
In a recent post at The Baseline Scenario, a blog by Simon Johnson I find most interesting- gotta love financial blogs that reference Baudrillard, I came across the following:
I don’t know Tim Geithner. But I have no reason to believe he is corrupt. Instead, the simplest explanation of the Times article is that he has internalized a worldview in which Wall Street is the central pillar of the American economy, the health of the economy depends on the health of a few major Wall Street banks, the importance of those banks justifies virtually any measures to protect them in their current form, large taxpayer subsidies to banks (and to bankers) are a necessary cost of those measures - and anyone who doesn’t understand these principles is a simple populist who just doesn’t understand the way the world really works.
In other words, according to the author, with whom I agree on this point, Mr. Geithner is well intentioned. Sadly, as St. Bernard, in more modern vernacular would say, "the road to hell is paved with good intentions."
Mr. Geithner suffers from a common phenomenon observed by William James who famously quipped, "most people think they are thinking when they are merely rearranging their prejudices."
Reasoning, or the generation and affirmation of propositions (perhaps induction would be more apt), differs from rationalizing, or the defense, explanation or excuse of an already accepted proposition. To paraphrase Mr. James, most people confuse rationalizing with reasoning in part because rationalizing and deductive reasoning- the type of reasoning most easily and thus often taught in schools- are often indistinguishable....until you wonder if the given propositions are, indeed, true.
Deduction, as the word implies, assumes the truth of given propositions and logically infers, or takes from them, other, non-contradictory propositions as in the classic- if you ever found yourself in a logic class, that is- all men are mortal, Socrates is a man, therefore Socrates is mortal.
Deducers tend to do well in school, and work well in institutions, like banking, where the given truths are not questioned. Inducers, like myself, who question tenets, do not work well in institutions. We wear pajamas all day and blog.
But, enough pedantry. The reason for the post was to suggest, assuming Mr. Geithner's prejudice is wrong, that we stand at the precipice of a Kuhnian revolution.
There are a great many people who believe propositions about political economy which, in my view, are not supported by the facts nor by theories of Capitalism itself, to wit, when did finance become exempt from creative destruction?, but as there are far fewer inducers than deducers, especially in long extant institutions, these propositions will not die easily.
The likelihood of a graceful resolution- say by putting most of insolvent Wall St. in receivership and granting more power in international finance to China, et. al.- to the current financial crisis has, in my view, became very small indeed. Substantial, discontinuous changes in financial prices are the fruit of non-graceful resolutions.
Hang on to your hats (and wallets).