The Economic Crisis:

A community presentation by Chuck Willer

The full presentation is approximately 50 slides and requires at least 60 minutes. If you wish to host

a presentation in your community write me at <chuckw@coastrange.org>

 

1. This presentation draws on the work of economists Hyman Minsky, Steve Keen and James K. Galbraith.

 

2. A sensible model of the economy is described. Ownership is made up of

private wealth and the common wealth. Productive enterprise, the material units

that produce goods and services, is distinguished from firms and governments

who manage or own such units. When government or nonprofit entities own

productive enterprise, that enterprise is part of society's common wealth.

Ecosystems (biodiversity) and natural resources are also part of the common wealth

along with the air, land and water they inhabit.

Every household and business firm has a balance sheet that accounts for its assets and obligations.

The economic crisis is the outcome of financial forces that paid little attention tobalance sheets

weighed down with a historically high level of debt. No balance sheet exists for the whole U.S. economy.

National accounting fails to record the loss of biodiversity,the use of exhaustible resources, soil loss,

fisheries collapse, and scores of other commonwealth assets that provide ecosystem services.

The economy is described as dynamic and made up of a complex system of markets.

The financial system of banks and wealth management firms is characterized as potentially unstable

as it goes about its business of money and debt creation, insurance, and wealth management.

It is noted that firms and government engage in a constant struggle for control and influence over each other.

 

3. The economy is now explored by visiting the issues of uncertainty and the ordinary market

tendency to concentrate. Concentration is illustrated through:

a. Wealth and income distribution data from the Economic Policy Institute. The data describes large
concentration of wealth and income in a small percentage of the households.

b. Market domination by large firms who have the power to effect price and exclude competition.

c. The tendency of most firms, due to technical considerations, to locate in urban areas.

Examples from the Coast Range region are used to illustrate the issue of market concentration.

Uncertainty is discussed first, then market concentration.

 

Uncertainty

People involved in financial markets often believe they see down the road of life.

Most of what they know, however, is the result of a rear-view image of the past.

In fact, the future is highly uncertain. But the uncertainty of future conditions in financial

markets, or any market, is further complicated because private firms create a fieldof noise

over society through advertizing and the media. This noise (information without a concern for truth)

increases the uncertainty that we can know the future. As such, people involved in financial markets are,
for the most part, noise traders riding the tide of money (liquidity). When the tide rolls in it appears THEY are successful.

When the tide rolls out they lose. In financial markets very few traders, if any, know when the tide will turn.