Friday 15 May 2009

The melt down

I don't pretend to be a financial expert or understand the machinations of local or international economic and social and or political theories that we are governed by. In their simplest forms there are two main systems - capitalism and Communism.


The lines between these two main economic systems are blurred these days, and maybe they always have been. Capitalism in it's purest form is all about the market regulating itself and communism is all about central planning.

In the last 20 years we have seen both these systems fail to one extent or the other and seen them for what they really are-they're both about a small group of people imposing their will at the expense of everybody else. Neither systems work in their purest form because when they or components of them fail everyone looks to someone else for a bailout.

There are variants of these systems of course, many of us live in societies that to pin a label on them are socialist or social democratic. Either communism with a degree of choice and private ownership or capitalism with a degree of government intervention and support for those that cannot help themselves.

The current meltdown of the global financial system shows us that a degree of regulation is required to protect people from themselves and the unscrupulous, to protect the life savings of the man on the street and their jobs. Bailouts should be focused on keeping people in work, not shoring up dodgy institutions that should be allowed to fail.

The fall of Communism in Eastern Europe and the breakup of the old Soviet Union prove that the old central command economic theories didn't work either and in fact was a poorer system in terms of improving the standard of living for the people living under its thrall. Communism is just another way of the few imposing their will on the masses.

Of course all of us are experts and seek to blame someone else for their problems. I have seen the value of the house I bought two years ago plummet-but nobody made me buy it. Except she who must be obeyed.

So it is with not a little cynicism that I read the reports of banks holding their hands out for money and large corporations hanging out for cash to keep their unsustainable business models going. I can feel some sympathy for those that have been fleeced of their life savings but little for those that thought that a diversified portfolio meant spreading their wealth between different finance companies or investments banks or thought that house prices could only rise.

At the end of the day it is as much our fault as individuals as it is the perpetrators of the various financial instruments and get rich schemes when things go wrong. By participating, buying houses at over inflated prices, chasing higher interest rates, or voting based on an ideology that appeals to us we perpetrate the institutions that from time to time will melt down.

Until we collectively develop and support a political system that supports and encourages and rewards entrepreneurial endeavour while also ensuring the protection of those that can't help themselves we will continue to experience the the fallout and roller coaster of boom and bust.

On a more positive note I recently travelled up the road to the Jolly Roosta trail ride organised by the good people from the Kawasaki Sandpit.

No sign of the recession here with 400 plus riders enjoying a blast through the northern part of Woodhill Forest. The great thing about the rides organised by this team is that they make the effort to set up virgin trails where they can so that riders don't have to endure lots of strength sapping whooped out tracks.

I have been to all three of the rides that this team have organised and am a regular at the Sandpit, the revamped Bike Park. This team provides a service that people want to avail themselves of not a product or service that someone thinks that we need.

Maybe this kind of motivation should be used as a model for the future?