Are we in for another crash?

Marc Friedrich and Matthias Weik

Back in the day when I knew nothing about economics and saw no reason to apologize for that fact, I had a friend who was being trained as an economist at Tokyo University who thought I ought to be embarrassed about my ignorance. “Nobody can claim to know anything about the world today if they don’t have a basic knowledge of economics,” he declared.  That was in the day when everybody was proclaiming the right to do their own thing, and the most important thing was that we all exercise our right to make personal choices.

I had grown up in a much more restricted world, in New England, where shame was a useful tool in education. “What!? You don’t know that? How come?” was a common question.

After I got out of the army, I moved to San Francisco and got a job to hold me over until I could go back to school and get an M.A. in English so I could get a job I wanted that required one. I had filled up with literature courses in French, German and Russian while an undergraduate, but nothing in English. Fine, I said, I’ll take a Shakespeare course. A whole new world for me, but an adventure I looked forward to.

“What were Shakespeare’s years?” was the professor’s first question. Hands went up all over the place, and I suddenly felt like I was in over my head. I could guess it was in the 1600s somewhere, but I couldn’t possibly answer that question with any precision. “1600 to 1650” somebody says. “No much earlier, probably 1550 to 1600” says somebody else. “I think it’s more like the late 1700s,” says a third person. 

“Jesus,” I thought. What morons. Here I thought I was too dumb for this class. Turns out I’m too smart. These people are not only clueless; they don’t even know they’re clueless.

That was the beginning of a long learning curve for me in which I had to learn to disassociate knowledge and learning from attitude toward learning. I was raised in an environment where one was supposed to be modest about what one knew and ashamed about what one didn’t know. And suddenly I was in a world of “I gotta be me!” and everybody spoke less of responsibilities and more of rights. Less of living up to community standards, more of cultivating the self. These kids were simply showing they were unafraid of showing ignorance, confident that that’s what they were in school for - to tack on some more knowledge. In time I began to love this “California” learning style, as I came to call it.

And that’s what I was reflecting when a few years later I told my friend Yusuke that “I don’t care about economics very much.” I thought I had a right to choose what, if any, “academic” topics I would study, and what I would leave for another day, if ever. He thought the choice to be uninformed about his chosen field was a really bad one. I called him a New Englander held captive in a Japanese body.

These days, it’s a different ballgame. I’ve long since shed the oversimplified view of how Californians differ from New Englanders. I’ve also picked up some rudimentary understanding of economics. And I’m even more acutely aware of how terribly limited my knowledge of economics continues to be. I have embraced Karl Marx’s notion that our world view is colored by where we sit in society, that our life experiences are a lens for viewing the world, but that doesn’t mean I can sit in a circle with folk and have an intelligent conversation about the pros and cons of capitalism. I’ve read Thomas Piketty’s Capital in the 21st Century (more “read about” than “read” if I’m being honest) and I know that he is both highly praised and roundly criticized by other economists for his thesis that the main problem of the day is income inequality and the problem stems from investment (financial) growth outpacing production. We're good at generating wealth, and poor at distributing it equitably.

 But I support that thesis more at a gut level than out of any deep understanding of economics. As an American, I’m persuaded that there is something tragically wrong with our democratic project, and what’s wrong is reflected in the fact that the rich have for a long time now been getting richer as the poor get poorer. I think the Trump phenomenon is a distraction. He’s a wretched creature, to be sure, but he’s not the problem. The problem is that we’ve come to accept the right-wing claim that truth is whatever they declare it to be, not what is empirically verifiable. What I naively labeled and embraced as "the California approach to knowledge," as opposed to "the New England approach," is now everywhere evident in a seriously toxic form. Moreover, those who have become the ruling class no longer seem to share any concern about the general welfare, if they ever did. Once the leading American narrative was about building a new Zion, something we like to call "the American Dream," available to anybody willing to work for it. We've given that up as naive. Today we live in an “I’ve got mine” and “Devil take the hindmost” society.

I ache with frustration at the media circus over the impeachment hearings and the noble but inadequate attempts to right the American imbalance. The big questions - can we survive climate change, can we survive the ever growing gap between rich and poor, can we survive another crash like the one we experienced in 2008? These are the questions I want answered, even though I fuss as much as anyone over the lesser question of whether the democrats can agree on the candidate most likely to defeat Trump in 2020.

I think it’s a lesser question. Maybe it’s not. Maybe the big questions are directly related to who the Americans put in the Oval Office in 2021. I just don’t know.

I think the American media, like American democracy itself, has been savaged, and most of what we get to hear is determined by its entertainment value. "News" is what the mob is willing to pay for, not information of critical importance to our long-term well-being. So I search for supplemental information in the foreign press, much of which I think puts American political discourse to shame. The Brits do a good job, and in my view the Germans do, as well. I’ve been listening this past week to the views of two German economists who maintain that we’re heading for another crash like the one in 2008. This time, these guys claim, we’re heading for the mother of all economic crashes, because we papered over instead of fixing the problems of the 2008 bubble. 

I’m talking about Marc Friedrich and Matthias Weik, two best buddies who met in kindergarten and have now written at least four books together, the latest being Der größte Crash aller Zeiten (The biggest crash of all times), just out in October. They are near-native speakers of English and much of their work is available in English. Here’s an interview with them if you want to get a taste of what they’re all about.  

I’m still trying to figure out whether these guys are the real deal, or whether I’m being sucked into their work because I’m no better than anyone else at ignoring alarmist cries of coming death and destruction.

To be fair, despite their predictions of impending doom, they are still young (barely in their 40s), and optimistic. They see the crash as an opportunity to get things right this time. It will take longer than anybody would like, but ultimately we still have time to fix things. Marc loves whisky, and they both love to laugh. I’ve heard Marc on several German talk shows now and he’s singularly impressive. 

In my next life, I’ll take up economics much earlier on.


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