In the End, the Hole Is Deeper

The article in this week’s edition of Veja (“The Question that Matters” by Giulano Guandalini) is accurate on the subject of the economic agendas and philosophy of government in the American election. In the campaign, the Democrats want “more taxes, more public spending and more regulation — more government, ultimately.” Now the Republicans insist that taking this path will be the end of “economic prosperity.” They want less government, ultimately.

Regarding the future, Veja concludes that “whoever emerges victorious at the polls will have a hard time making his vision prevail in Congress and managing to lift the largest economy on the planet out of its lost decade.” At the Democratic convention this week, Barack Obama will be asking for a second chance. At the Republican convention of last week, Mitt Romney said that Obama already had his chance and squandered it.

The Veja article provides the context, remembering that “in 2009, when Obama took over the leadership of the country, the country was on the brink of economic depression.” By using measures which were in large part a continuation of what had been done by the Bush government, Obama “avoided a repeat of the Great Depression.” The price of success: A public debt that has doubled.

In an essay this past weekend in the newspaper Valor entitled “The Direction of Capitalism,” the economist Andre Lara Resende added to the debate by showing how deep the hole is; a new Great Depression was avoided, but excessive indebtedness continues. In an apt but terrifying phrase, Lara Resende said, “A horror film was exchanged for a horror without end.” He notices that in the crisis, which is global, there is no “solution in sight or even a consensus on how to proceed.”

The erudite Lara Resende brings to the debate mentions of Adam Smith, Mark, Schumpeter, Keynes, both the Austrian and Frankfurt schools. (In sum, criticisms and proposals of solutions from the left and the right.) Don’t get bogged down looking, but on looking, one can see deeper reflections from this group within the conversation about cyclical adjustments and the creative destruction of capitalism: How does one resolve a crisis — and lower the social cost to the population — without curbing the spirit of innovation of capitalism? The duel between justice and liberty — or liberty and justice.

For Lara Resende, in these terms, the two great questions of our time are: 1) Reducing the disparity between standards of living without continuing to increase state intervention and restricting individual liberties and 2) Reversing consumerism and material insatiability without curbing the perception of well-being.

These are big questions and to find answers will require rising above the deep ditch of ideological bias. The electoral polarization in the U.S. shows that we are not close to there (overcoming this gap).