Mechanical engineers seem to have a way with many things. For one there was the young Nigerian bomber recently. The other is of course the more well-known World Economic Forum (WEF) which was also founded by a mechanical engineer. The similarity though is that both the WEF and Abdulmutallab are intimately related. The former has exacerbated economic inequity and the latter is fighting to correct it. Both their methods are wrong. The former is powerful and the latter is powerless.
The WEF crowd actually blew up the global economy in flight. Abdulmutallab’s more successful former colleagues crashed it on 9/11 by crashing a flight into global trade which had enriched the WEF members more so since than before 9/11, despite the global economic slowdown. The reason for the blowing up of the global economy is that those attending WEF on their corporate jets like to think that their ‘God’s work’ will eventually trickle down to the Abdulmutallab-types. Some patience is necessary, they say. After all, even the Irish needed it. The world simply has to get used to the ups and downs caused by economic liberty. So, they buy government help with their money, including justice from the highest courts in their lands. It is an investment that usually does not show up in national income accounting. Voting in democratic societies makes the people feel good. It long ago had stopped doing good.
Some of that government help had materialized magically just before Davos in the form of the Volcker Rule. The only credible face remaining in the Obama administration, including the president himself, given his poll numbers and the associated social discontent, had agreed to attach his name to separate financial markets speculation from commercial banking. It does not really solve the problem of regulating the financial markets because of the new structure of the financial markets that came into being since the ‘80s.
More must be done, but the rest of the world appears to be following the self-serving ingenuity of American bankers makes for good public diplomacy. Ironically, the Volcker Rule could help continental Europeans more than the United States: at least they have stronger regulations on finance. It only makes one wonder if the Obama administration is making policy for Europe, for America to catch up later: we could get the rule first and European-type regulations later because ‘it works in Europe.’ It will be missed on many that it will not work for us unless our regulatory system becomes similar to that of Europe.
Much has been made about the recent credit card reform legislation and the associated regulations by the Federal Reserve. Quite necessarily, both these changes attempt to institute fair lending practices through more transparent disclosure requirements and curbs on lax lending through income verification. Still, Washington lacks clear thinking on the issue even though, at least for the purposes of rhetorical acknowledgement, the elected representatives are realizing that the lobbying power of the special interests in has gone awry because the issue is not only imposing discipline on consumer borrowing and lending but doing the same for financial markets institutions.
If indeed American ingenuity is to be applied to making policy for the United States without setting up the cue ball each time a policy proposal is unveiled by the administration to take the country one step closer to Europe across the board on many issues ― from health care to regulations and taxes ― the old wisdom that what is good for the goose is also good for the gander applies well. The goose is consumer credit. The gander is the financial markets. Except that the tragedy is that the gander decides what’s good for both itself and the goose and the government has gone AWOL.
The price for a dinner with the President at a New York fundraiser is $30,000. It is the about the same for membership at Davos. Both of these are about $10,000 shy of the average gross American income but more important as the election seasons arrive, like clockwork, every two years. And the United States Supreme Court thinks that this is okay.