The lesson I got from it is we’ve been through this before and we’ll pick up the pieces and go on. But it will shake up the world order. And we’re extremely short-sighted about these “crises.” Historically, greed has tended to eventually overcome good sense.
We appreciate the kind words and are pleased to know we have helped Professor Novak’s policy class. We need good policy very much so if we can make a contribution that is terrific.
We haven’t read Professor Ferguson’s new book, but the comments Professor Novak makes reminds us of two things:
First, there is a hint of some of the work of Columbia University’s Joseph E. Stiglitz, a Nobel Prize-winning economist whose work has revolved around “Information Economics” and specifically the notion that markets operate with imperfect information and imperfect competition. He suggests that capitalism has a tendency toward instability, because during the good times people are prepared to assume greater and greater risks. The longer the good times last, the more risk they are willing to assume, until it all comes crashing down. But rather than attributing this to greed, as Professor Novak implies, Stiglitz attributes it to imperfect information. Much of the presentation the Pundit gave on food safety at Cornell University at the very first Produce Executive Development Program drew on the thought of George Akerlof, whose seminal work, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism," dealt not with the fruit but second-hand cars and evaluated a market in which asymmetrical information is typical, specifically that sellers know more about the product than buyers. It was this work that really launched the whole field of thought.
Second, Professor Novak’s comment about “shaking up the world order” reminds us of a scene from the Rodgers and Hammerstein musical South Pacific, based on James A. Michener’s Tales of the South Pacific.
The Jr. Pundit Primo, aka William, age 7, has been appearing in a school production of South Pacific, so we’ve been watching the classic film version of South Pacific. There is a scene in which the Mitzi Gaynor character (Mary Martin in the Broadway show) explains that she just can’t buy into the notion that the war is the end of the world, and she goes on to sing A Cockeyed Optimist. The more worldly character of Emile De Becque, a French plantation owner, played on Broadway by Metropolitan Opera star Ezio Pinza and in the film by Rossano Brazzi, enjoys her exuberance but knows the truth. When she says that she refuses to believe it is the end of the world, he responds with agreement but qualifies it by saying: “The end of some worlds, perhaps.”
So it strikes us that the world doesn’t end, but many worlds do end in a crisis, such as this financial experience. Hopes and dreams of individual people and families, maybe whole countries, are shattered and changed forever.
Long after the recovery comes and overall levels of prosperity may be as high as ever, there will be dreams stolen, hopes crushed and people forgotten.
As we said, good policy is very important. We wish Professor Novak and his students well.
Of course, getting all maudlin doesn’t help either, so we leave you with Ezio Pinza and Mary Martin in a 1954 television special sponsored by General Foods reviving their classic Broadway rendition of Some Enchanted Evening: