The Big Global Screw-up certainly exists, a massive global system-wide failure to understand the nature of the global financial and currency systems. So long as the political structure seeks to lay the blame for the current crisis on the private markets, the banks and the greed of individuals and corporate leaders, the chance of continued screw-ups is immense.
Massive government spending and bailouts of institutions, coupled with attempts to punish the markets with new regulation, can only add to the crisis. The root of the problem is now clearly not one of market failures and CEO compensation, but regulatory and policy failure on a global scale. If these efforts to repair the problem are based on a faulty understanding of the causes of the problem, then more failure is likely.
And this is the biggest danger of Obama’s jihad against bankers, CEOs, and capitalism in general. It obscures the fact that government regulation has become so pervasive that the socialist whims of a Chris Dodd or a Barney Frank become a major part of the business environment itself, and that for corporate executives to simply ignore them would be as impossible as ignoring a run on a bank itself.
This was a failure of socialism, of an attempt to create a command economy based on the fantasies of economically illiterate socialist politicians and bureaucrats. This was an unintended consequence - which would be marginally acceptable but for the fact that even a cursory glance at economics and history would reveal that socialism is always little more than a mass of unintended consequences arising from the hubris that central planners can make better decisions than billions of consumers buying and selling every day.
Our problem now is that most of the First World is run by partly, or wholly, socialist governments, and as such, they cannot afford to take any responsibility for the disasters, lest their own power be compromised. And since the bulk of the media in these countries also supports socialism, there is little pressure on them to do so. In fact, the pressure is to actively seek other objects of blame than socialism itself.
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