This is the second in a series of posts on the economy. The first is here.
If democratic capitalism is an economic system that hinges on the future and taking the long view, then it is also a system—like any economic system—that requires a very clear sense of numbers, and of what numbers mean. If the current financial crisis represents a failure of imagination where time is concerned, then it represents an even more staggering failure of numerical imagination.
Some of Religion Dispatches’s readers will surely recall Carl Sagan’s masterful PBS series, “Cosmos,” with its mantra-like invocation of the phrase “billions and billions.” What the theoretical physicist meant by that phrase was “impossibly and unimaginably large.” But what makes a pretty point in the realm of cosmology makes a mess in real-world economic systems. The current administration now proposes throwing “billions and billions” of dollars at a problem in the hopes that it will shore up an equally elusive entity: market confidence.
When we begin to deal with numbers so large that we cannot imagine what they mean, then we are in real, not potential, trouble. As we witness the economic crisis currently unfolding before our wondering eyes and ears, as well as political attempts to respond to it that range from the sober (Bush’s invitation to both presidential candidates to return immediately to Washington, DC, for bipartisan consultation with the Congress) to the surreal (John McCain suspending all televison ads currently running, as well as Friday’s presidential debate), one thing grows increasingly apparent: When the numbers get this large, they cease to be meaningful. And no one, no matter how seasoned or expert or well meaning, can communicate a clear sense of what these numbers mean.
Take the difference between a million and a billion. And use time as a way to illustrate the difference:
One million seconds amounts to roughly ten days.
One billion seconds comes to thirty-two years.
And that is one way to express the difference between a million and a billion, one which makes clear the enormous difference three zeroes can make. It is a profound, virtually an existential difference; the difference between a generous vacation, and the half-span of many human lives. Yet for some reason, it is hard it keep that vast difference clearly in view. When the lines of zeroes reach a certain length, our ability to grasp the places they are keeping fails us.
Now try to imagine this number: 1,000,000,000,000. One trillion seconds adds up to a whopping thirty-two thousand years. Let’s put that another way. If I were to move back one million seconds in time, I’d actually be back at the beginning of the current financial crisis. If I were to move back one trillion seconds in time, I’d be meeting my Cro-Magnon forebears and dining, if lucky, on grilled mastodon. Has anyone speaking to the current anxieties and the current crisis spoken about the numbers involved as if they comprehend this difference?
So, how large is 700 billion, and how reasonable is it to speak in such terms?
President Bush’s speech, intended to outline this administration’s seriousness about these issues, as well as its active intention to “fix” them, lasted less than fifteen minutes in total. That’s nine hundred seconds.
The speech was designed to answer three questions:
First, how did this happen?
Second, how will the proposed rescue work?
And third, what does this mean for the future?
I did not need this president to answer the first question for me, though he spent nearly half of this short speech doing so. He told a now well-known story about the US being an attractive location for foreign investment, about the influx of capital making loans too easy to secure, about the collapse of the housing bubble bleeding into bundled “mortgage backed securities,” and the sudden realization on Wall Street that they were in roughly the same leaky boat as the at-risk homeowners they’d bankrolled.
So what to do about it? Question two was the only question of importance in the speech. It was the whole reason for the speech, a speech designed to sell the administration’s bailout proposal to an increasingly angry and uncertain public.
It lasted roughly 200 seconds. And it offered no explanation whatsoever. Instead, it offered a set of promises and bullet points that would be scarcely believable coming from the lips of someone whose word (and practical wisdom) you could trust. He proposes to “reduce risky investments.” He proposes to “protect taxpayers.” He insists that there will be no golden parachutes for the social elites who created this mess in the first place.
The heart of the president’s proposal is the following: “We need big money to solve a serious problem.” Er, how much money? His answer? “700 billion dollars of taxpayer money is on the line.” Now that’s big money, though he demonstrated no sense that he understands this fact. For how serious a problem? No one knows.
And what does this mean for the future? The president’s answer was truly mystifying: “democratic capitalism is the best system ever devised.” That’s a statement of faith, not a reflection on the future. Here yet again, the US president speaks as if there is no tomorrow, answering a question about the future with an expression of faith about the present. It’s not only vacuous; it’s dangerous.
And there is the whole problem, the reason this proposal as currently presented cannot succeed. There is a reason so many banks have words like ‘trust’ and ‘fidelity’ in their names. And there is a reason bundled investments are called “securities.”
Without trust, there is no security; that’s the system. That’s democracy, too.
There is no security because there is so little trust for a president who demonstrates no sense of awareness of the difference between the twenty million dollars he needed to bail out of his previous failed business ventures and the seven hundred billion dollars he’s requesting to borrow now, for purposes that have yet to be explained.
So it boils down to faith, as it always does with this president, the third category that is now in play in this deeply worrisome moment in our economic and political history. But religion is not economics, and it is not mathematics either. Faith has no direct relation to numbers or to time.
More on that in the next column.