We are in trouble, the entire west is in trouble, in substantial part because the financial system has been leaking a lot of money. So has every other part of the governing apparatus, but the financial system is the biggest hole in the bucket.
Now a lot of people are saying that this is a revolutionary election, it is about fundamental change. Thomas Sowell, a man I enormously respect, tells us this is a crossroads election. But is not. The Democrats are driving the bus towards the precipice in top gear with the pedal flat to the metal, the Republicans propose to proceed with the pedal not quite flat to the metal. Some of the unelectably extreme elements of the Tea Party are suggesting a lower gear. In Britain, they applied supposedly radical cuts – which “cuts” some how result in a substantial increase in government spending. Before the “cuts”, an ordinary Briton had to be crazy if he planned to work, marry, have kids, and support his own kids. After the “cuts”, he still had to be crazy if he planned to work, marry, have kids, and support his own kids.
But let us focus on the biggest single money leak: The financial system, for all the other problems resemble that. If we had the will to fix the financial system, we would have the will to fix all the other problems.
The Market Ticker proposes a general audit of the banks: Shut down the insolvent banks, and remove their management permanently from the banking industry. This seemingly addresses the problem of crooked financiers. If we cannot jail them, we can at least fire them. Unfortunately, it does not ask why we are overrun with crooked bankers.
In America, the problem was the CRA and affirmative action lending. The regulators required a banker to make loans to certain voting blocks that there was no way could legitimately be made – so only crooked bankers survived. If a banker is still in business, he is a criminal. But world wide, we saw a similar outbreak of crooked lending, often with very different beneficiaries.
The common factor in all this crooked lending was Basel: Basel means that regulators are the ultimate decision makers as to what is a risky loan and what is a safe loan – which means that politically correct loans are necessarily supposedly safe, and politically incorrect loans are necessarily supposedly unsafe – which means that a banker has to be corrupt.
So to fix the banking system, have to undo Basel. This sounds easy. The left claims that Basel is deregulation, therefore extremely bad and the big cause of our financial troubles; The right claims that Basel is regulation, an explosive expansion of regulation, therefore extremely bad and the big cause of our financial troubles – except however that only one minor candidate, widely viewed as ludicrously extreme, proposes to undo Basel.
Every candidate claims to hate the banksters twice as much as every other other candidate – but again only one candidate proposes to purge the banking system of zombie banks and crooked bankers.
You will notice the the fix for the financial system is the wholesale rollback of thirty years of financial regulation (or, as the left call it, deregulation), the mass firing of the good and the great, the powerful, the important and the influential, a large portion of the most eminent graduates of our most eminent universities, and the imprisonment of a significant fraction of them. Simply apply a similar fix to every part of our society, and the problem is solved.
We have a society that believes that children should not be spanked, that thieves should not be flogged, that women should not suffer adverse consequences for bearing children by men other than their husbands – and that graduates for the most eminent universities should not lose their jobs for corruption or incompetence.