- I'm sitting in an economics class in my early twenties listening to a VP with the local Security Bank in Billings Montana explain how our economy must grow at an annual rate of at least 1-2%. I asked why can't an economy be developed that simply sustains itself, i.e. assumes no growth rate. It seemed to me (still does), mathematically, that at some point the growth model simply must collapse in on itself. In so many words I was dismissed as ignorant. "In order to have prosperity and increase our standard of living the economy must grow". In the nearly fifty years since, I'm not sure I was ever satisfied with any answer to my question. The only explanation that seemed to make sense to me was that the economy must grow at least a rate equal to the increase in population. OK. We must somehow limit our population growth and be satisfied with a constant standard of living which is defined by some matrix other than increased consumption. Don't get me started on incorporating some "social and spiritual awareness" into our standard of living. I've always had a problem with the concept.
- I'm sitting in my study carol at Arizona State University reading literature on the accounting implications of large off-shore corporations. Two thoughts at the time were, 1. is it fair that large corporations can somehow reorganize off shore to escape taxation? and 2. can't corporations simply become too large? Corporations can become too large, lose efficiencies, lose all sense of communication internally, and eventually implode. If you look at the free market model (a model that was almost religion like during the sixties) where corporations are allowed to purchase one another uncontrolled, in theory at least, you could end up with one corporation. Or perhaps, more realistically, you have large corporations that are so large that they are nations in of themselves and able to tax themselves as they see fit.
- Once again I'm sitting in my study carol studying the accounting for pension plans thinking this is absolutely crazy. Corporations don't have to report their "unfunded" pension obligations? It dawned on me that when it came to the really large issues accounting practices were not the result of good accounting theory, but rather the political climate at a particular point in time. I wondered what was going to happen fifty years from now when all these obligations become a reality when cash flow considerations are going to make you recognize the obligations you got yourself into? Business's should be required to report according to good accounting/financial theory, not on the basis of political pressures and whims. At least some level of consistency would exist if this were required. It is insane as it is now. (I'll leave it to the reader to determine verb tenses here. Doesn't seem to me that much has changed.)
So here we are!
- We have decided that some corporations are simply too large to let fail. Well, duh, why let them get so large? I actually heard a politician the other day say that we have to limit the size of financial institutions because we can't afford to allow the collapse of one financial corporation jeopardize the well being of the economy. "Barn door" comes to mind.
- We are hearing that there are cases where the free market doesn't always operation in the best interests of our economy. There is a case for government regulation, i.e. save us from our own greed and stupidity! Yep. We haven't heard to much from the conservatives on this issue other than "let em fail". To a degree I agree. But let's not let them get so large that their failure brings the nation down. It's only the "survival of the fittest" at a certain level. After that level is reached the fittest and weakest all die upon failure.
- We haven't heard the last of the pension fund problem. As a retiree I'm concerned. Thank God my retirement funds were given to me to manage as I saw fit. But I did purchase our annuity contract from a corporation, TIAA/CREF. How about all the public and private entities that supposedly were investing funds to provide for their employees retirements? When I left Illinois State University which had a state sponsored retirement plan, the state had yet to contribute one dime to its share of the retirement plan as the employees had, let alone invest the funds to provide for future obligations. I suspect few states actually have fully funded pension plans let alone pensions that are statistically correct - and they can't print the money to meet their obligations.
Oh, we are not through this mess yet. Interesting times ahead. Save us from our own greed and stupidity!
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