Every once in a while, some personality who has little sense other than a basic understanding of economics gives a rationale that is so absolutely appalling, that it requires one to filter out everything they say after that point.
Maria Bartiromo is one such person after her tirade on Tech Ticker.
She says “I don’t think there’s anything wrong with boom-bust economies, personally.”
Well, Maria, if I have to tell you, I’m sure you’ll have little understanding of it.
From a technical STRICTLY ECONOMICS perspective, she may be right. Bubbles, which are primarily made of excesses, produce something of substantial value to many over the medium or longer run. Unfortunately, you can’t feed your families, clothe them, or tell them bedtime stories with economic growth. The fundamental mismatch between Ms. Bartiromo’s understanding of how the world works in economics and GDP growth with boots-on-the-ground economic realities of individuals is fundamentally flawed. You see, this is about HUMAN SUFFERING, not about a few percentage points of output. You see, happiness is not measured in economics by the average, but rather by the disparity.
In fact, consider the tale of 2 countries
Consider Country A, whose GDP is $1Trillion, but 95% of that goes to 1 single person with the remainder shared among the the rest of society who lives in abject poverty compared with Country B with an equal number of people with only $800Billion GDP shared almost equally with a large and stable middle class. Would you say there is more human suffering in Country A or Country B? It’s clear that while these are caricatures of economies, I can’t imagine anyone concluding that people in country A are happier with a higher GDP per capita than Country B. It’s all about access to opportunity and a level playing field. We are looking less and less like B and more and more like A.
You see, Ms. Bartiromo, it’s not about the level of economic output, it’s about economic inequality. If there is any morality in the world (and I believe there is), it should be to provide opportunity for ALL to build wealth. This isn’t about socialism or capitalism, there is sufficient abundance in this world for ALL to have an excellent quality of life, excellent education, and access to redress for harm. Unfortunately, the middle class has been under assail for too long in this country. Economic equality equals more political stability, and the key to economic equality is protection for the poor, and limits for the rich.
Her galling out-of-touchness with America is appalling. It’s the modern-day equivalent of Marie Antoinette’s famous “if they have not bread, let them eat cake”.
“Economic equality equals more political stability, and the key to economic equality is protection for the poor, and limits for the rich.”
I love the blog man. But i have to disagree on part of this one. What you just described IS Socialism.
And Socialism fails because not everyone is willing to signup.
I agree that boom-and-bust isn’t ideal, but it is reality. We’ve always had them; we will always have them.
The reason the money goes to the rich is because our GOVERNMENT has engineered it that way through bailouts.
Allowing the banks to go under would have been REAL economic equality…the freedom for big companies to fail like small businesses.
And I believe that is the boom-and-bust Maria Bartiromo was referring to.
I stand by my assertion, as history has proven that when opportunity abounds, disparity decreases. We provided for protections of the common man and equality of opportunity during the 1940′s through the 1970′s. It was the free-for-all looting and dismantling of regulation in the financial services area of the 80s and 90s that allowed for both the technology stock bubble and the housing bubble that followed.
There is such a thing as a compassionate conservative, though that person has been in hiding in the US for at least the last 20 years.
The best way to describe that is we will not allow the idle to eat the bread of the laborer. We will not allow the rich to be above the law such as Bernie Madoff and Sir Stanford.
We can protect shareholder rights and the person who does not have millions while still allowing people to suffer the consequences of their own actions.
He is not describing socialism. Socialism is a political-economic structure. It can be used to try to achieve those results however so can a free market is the appropriate tax structure is used along with many other tweeks to prevent fraud, extortion, and along with effective regulation rather than special interest regulation. There could be strategies between the two as well that may lead to a large middle class or even strategies no one has completely thought of yet.
We in the U.S. actually used to have a much larger middle class before Reagan drastically reduced taxes on the rich while raising the payroll tax which mostly affects the middle class and the poor. Before Reagan we had a pretty good system going.
“…it should provide the opportunity for all to build wealth.” The United State still does provide that opportunity, far better than any other nation. I am living proof. My grandfather was an illiterate coal miner. My mother had to drop out of school at age 16, to help support her family.My father finished high school.
I worked my way through college, as my family could not afford it. When we got married, my wife and I had a combined income of $17,000. a year.
We saved, and started our own business. For 10 years, we made sacrafices that 99.9999% of all Americans would not do- no vacations, late hours, working Saturdays, and sometimes Sundays.
We sold our business a few years ago, for low 7 figures. We have a net worth of perhaps 6 to 7 million dollars. We are not geniuses, and had no unique skills.
This country only provides the OPPORTUNITY. That does not mean everyone ENDS UP equal. I wish that I could throw a football 60 yards, or had the talent to write hit songs, as our journey might have been easier. Very, very few people work up to their potential. Success is life is like running a marathon, not a short sprint.There are no shorcuts.
I’d love to show HER some boom and bust ;-P
aksteve,
Your grandfather, your father, and yourself were able to succeed through a combination of hard work and opportunities. However, your son and your son’s son probably will not continue on the same curve. Why? Not because they are lazy, but because the rug has now been pulled out from under their future. The looting of their future has already happened. You may think of yourself as special, but the truth is, we all are bound to the human condition. When opportunities are looted along with wealth, servitude begins. period. end of story. peace
I made a tongue in cheek semi-sexist remark. I agree with your above statement fully. But why was your comment directed at me?
I think it was at Bob.
Kobio is right. Bob was a product of a unique set of circumstances and timing.
Demand has been pulled forward through fiscal leverage. We can reach the level where fiscal receipts can only cover interest payments, and if you want to know what that looks like, you only need look at Greece.
However, the trajectory is not assured and many circumstances are different. However, if unheeded, the financial future of the country is ruin and social instability.
Chuck
Also, the 60s through the 70s was the tail end of America’s golden age. There was simply more opportunity because middle class wages were quite high by today’s standards. That equated to higher profit margins for small businesses… and lower profit margins for large businesses.
Today, things are different. The middle class is in decline. The economy is globalized, and workers here are in competition with workers in other countries. Profit margins and executive compensation are very high. Small business seems a lot riskier than in years past, but I may be wrong. I see a lot more franchises, and a lot less “Joe’s Auto” or “Dinah’s Kitchen” signs.
I had the same reaction to maria bartiromo back in 2001, when she and the afternoon crew on CNBC were laughing and joking and mentioned off-handedly that the tech bust was obvious and they all knew it would happen.
I think she was a big part of the pump in pump&dump, and the smug way she said it was obvious killed any interest in what she had to say.
the other talking heads on CNBC seem much worse to me than Maria. her comment here doesn’t seem so bad. yes, many people are getting decimated right now, and this bust is terrible. But as Shiff says in the new video – this is the cleansing. Trying to be optimistic here – I think American’s will learn from this collosul mess that they have to save, that they have to go back to working hard and living frugally. I’m certainly learning that lesson – I’ve lost a lot in this mess, but I’m actually fairly optimistic because I’ve learned from my mistakes and think I can pull myself up by my boot straps and be one of the “new” people who actually profits from whatever is to come next. The question is – how many Americans will learn similar lessons? Or will they just continue to over consume, over eat, and do it all on credit? I hope more learn than don’t. Time will tell.
Well anyone who knows the backstory to how she got her (ahem) position won’t be surprised. The casting couch is alive and well, and apparently she doesn’t respect the concept of marriage either.
Way to go, cow.
I think your blog is good but I have to let you know the cutting edge and correct you minutely. GDP is not an accurate measurement of prosperity. A far better measure of prosperity would be the CPI which allows you to see the mean american spending habit.
Some groundbreaking economists have already attested to this (i.e. Krugman, Stiglitz).
Now for the even more sake of accuracy we would have to factor in the reality that there is currently a very large unequal distribution of wealth so the mean that the CPI uses (in my opinion) does disclude the outliers (i.e. Vanderbilts, Bushes, Warren Buffets).
Justin