The Broader Market

by Andrew Trueblood

Recently, BM sent me an interesting opinion piece about the Anglo political-economic dilemma, which happens to parallel rather closely the American one:

http://www.prospectmagazine.co.uk/2009/02/riseoftheredtories/

As far as a political analysis goes, Mr. Blond lets his ideas wallow under the constraints of the conservative-liberal divide.  Instead of letting the debate define the sides, he does just the opposite.  As the industrialized world and the U.S. face some of their most economically existential questions, I have been disappointed by the retrenchment of failed ideologies on both sides of the aisle.  Social welfarists and public sector idealists, you failed (1972).  Free marketers and private sector fanatics, you failed (2008).  Mr. Blond touches on this point when he talks about a modal monopoly in which “the current political consensus is left-liberal in culture and right-liberal in economics.”  So what do we have other than relativism and consumerism?

Here is where Mr. Blond begins to address the fact that we are a bit anchorless, stuck in a system that deifies private capital on one hand and individual people and companies on the other.  So we get each individual and each company profit maximizing.  Great.  One can buy mortgages that are too large while the other can become so large and offer so much credit that such consumption is made possible.  Until the enabling cycle of excesses comes crashing down. 

Mr. Blond’s solution, a return to the community banking model, seems to grasp that we have lost the value of the local, of the relationship.  Through social capital layered on top of political capital, we can gain back some of the core of society that has been lost to globalization, capitalization, and individualization.  It is in this way that Mr. Blond tacitly acknowledges the deeper reality that society has atomized into individual people and businesses that do not so much engage beyond that boundary.  We live in our detached houses in the suburbs and drive our cars to work and the grocery store, never needing to engage.  Meanwhile, businesses grow through a laser focus on profits and efficiency, regardless of how it impacts our lives.  In other words, our social capital, both personally and professionally, is pretty depleted.  If we can engage better with other people and businesses in a real and meaningful way, we can not only address some of the most salient issues of the day (education comes to mind first) we can also prevent the type of economic and political mania that we are currently witnessing.

True person to person contact or person to business contact is valuable on a number of levels.  Businesses that foster strong relationships with customers (such as those that are part of the “buy local” movement) are better poised to serve the customers and understand the particular needs and wants of their communities.  They are less likely to provide oversized loans in the name of an origination fee, since they have a deeper stake in their community.  As individuals, we can work together to address the problems we face.  This empowers us to address the particularities of our community’s problems (foreclosure in Las Vegas looks very different than in Detroit) but it also gives us a much better sense of what it really takes to address our problems.  No longer would we simply offload all of the problem solving to the market or the government, setting them up for failure (as we have seen time and time again).  And in many ways, engaging each other actually promotes the type of liberty and freedoms the U.S. is founded on.  After all, it is through engaging each other and working together that true individualism can prosper.

So let’s break down the barriers created by the modal monopolies.  We can do it through the avenues of community and connections.  Such an undertaking requires more energy than the current system, but it is also more rewarding and can allow us to re-establish the kind of balanced and prosperous society we once had.

The author works in the public finance and economic development arena. He is currently working on a longer version of ideas presented in this article in a book entitled The Neglected Sector, for which he is currently seeking a publisher.  He completed his undergraduate studies at Princeton University’s Woodrow Wilson School and his graduate studies in urban planning at MIT. 

Expect to see more articles on urban planning, housing finance and general economic policy from this author at thebroadermarket.com