Spending big in a crisis

Spending big in a crisis

Governments are schizophrenic. 

Casual observation over time suggests they are characterized by inconsistent or contradictory elements. One minute they are persuading us of the necessity of fiscal frugality, that money doesn’t grow on trees, and a balanced budget is the desire of all sensible governments. 

The next minute they spend up big to bail out ailing economies that would fail without a subsidy borrowed against the future.

They have been having these ‘breakdowns in the relation between thought, emotion, and behaviour, leading to faulty perception, inappropriate actions and feelings, withdrawal from reality and personal relationships into fantasy and delusion’ for quite a while.

Over two centuries ago, the Panic of 1792 was the first time the U.S. federal government intervened to prop up the markets. During that crisis, Treasury Secretary Alexander Hamilton authorized purchases to prevent the collapse of the securities market.

The Great Depression between 1929 and 1941 began with the stock market crash of 1929 and included banking panics in 1930 and 1931, included a government program to buy and refinance defaulted mortgages that kept a million families in their homes.

The Savings & Loan crisis between 1986 and 1995, when nearly a third of the 3,234 savings and loan associations in the United States failed, cost the government $160 billion (in 1990 dollars) to clean up.

In response to the COVID-19 pandemic, the U.S. government authorized more than $2 trillion in assistance including direct cash payments to citizens in April and December 2020, and again in March 2021.

In between these moments of apparent madness, the modern neoliberal mantra is fiscal conservatism — small government, small spending, deregulation and an unencumbered faith that the market will save everyone.

What this history tells us is that what gets done in a crisis is very different to business-as-usual and could even be the exact opposite of it. Interventions that save people from tragedy are necessary and moral.

And for the most part, the madness works. Excessive bonuses to executives notwithstanding, bailouts do seem to save economies and reduce impacts on communities.  

At least for a time.


Environmental crisis

Most environmentalists will tell you that the environment is in trouble and has been ever since the industrial revolution changed the way humans interact with nature.

There are many posts over on sustainably FED and on Alloporus | Ideas for healthy thinking that point this out. Indeed some commentators have dedicated their careers to persuading us that the environment is in crisis.

So this question from one of those advocates, George Monbiot, is a conundrum.

Quote by George Monbiot asking why governments save banks and not the environment

Why do nations rescue banks and other financial institutions but not the planet?


Why not save the planet?

Well, perhaps the answer to the central question stems from the biblical notions of dominion. 

Why save something that humanity was designed to exploit?

Maybe it is because nature has been through troubles before and shown remarkable resilience. Over geological time climate changes, massive atmospheric disruption and even meteorite strikes have come and gone with nature none the worse. Admittedly she takes time to recover from shocks but is still remarkably resilient. 

It is worth remembering that there was more biological diversity on the planet a hundred years ago than at any other time in the history of life on earth—biodiversity is a consequence of time, disturbance and a replicator molecule.

No need to spend money on a rescue because nature will recover herself.

Perhaps it is ignorance of the crisis itself. People with spending power have no vision of the environmental crisis. They are, after all, more likely to be focused on the banks when they look up from their single bottom line. Plus nature is the perennial provider of goods and services that humans have a right and moral responsibility to exploit.

No vision of the problem so there is no problem.

It could be that money can’t buy nature’s happiness because no matter what is spent, nature would not notice. Why spend vast sums on the environment when she has no ability to respond to the spending. Anyway, there is nothing to see if the food keeps growing and the people keep spending.

No use throwing good money on something that can’t be fixed.

It could be that money could buy nature her happiness but she is a fickle thing and it is not clear what to spend the money on. In the financial crises the ailments were obvious and the salve equally so. Other than emission reduction that may or may not reverse climate changes, spending on the environment to save nature is a mystery with no obvious return on investment.

No point in spending on random actions.

Cognitive dissonance is a possibility. This intriguing explanation from psychology says that when two actions or ideas are not psychologically consistent with each other, people do all in their power to change them until they become consistent. Rather than accept an inconsistency we look for ways to resolve the conflict to reduce our emotional discomfort. The easy option, call it fake news and decide that the garden remains full of roses.

No environmental problem can exist if it makes me feel bad.

And finally, in this incomplete list, it could also be that the planet is not in need of rescue. Nature isn’t sentient and couldn’t care less what happens. The planet is a small blue ball in a vast universe that happens to have organic life that persists in spite of drastic perturbations. No matter what life does, the rock will continue to fly across space until the sun grows to consume it. Such an opinion is heresy but it does fit the evidence.

There is no Gaia to save.

So there we have it. A preliminary list of reasons why humans save banks and not the planet. No doubt I have missed many others and will be reminded of them in the comments.

We do know this… 

Whatever humans do over the next hundred years or so, 100,000 years from now the planet will still be here.

Humanity, however, is in deep shit.

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