Paul Krugman is not sleeping well. He is dreaming about the dragon at the gate. His column today predicts “The Third Depression” in which a deflationary spiral leads to prolonged unemployment that will relegate millions of young Americans to lives of hopelessness — a generation of the hopeless.
Krugman is a classic “liberal Capitalist”. His vision is one in which market forces are the natural order of things, but that we must manage that order to avoid undesirable excesses. In the current situation, he believes, government must redistribute wealth in order to keep the market system alive. The medicine he prescribes makes perfect sense as far as it goes. It’s the back to normal part that haunts my dreams.
It seems to me that there are two ways of looking at our situation. Either we view the law of the jungle as natural and desirable, but exercise constant vigilance to hold the voracious beasts of the jungle at bay, or we rid the jungle of the voracious beasts by finding another way to keep everyone safe, happy and well fed.
I am reminded of the villagers who invited a fierce dragon to reside in a cave near the village gates in exchange for his protection and largess. Once ensconced in the cave, the dragon began making demands that the villagers set aside a dragon’s portion of their harvest in exchange for services rendered. To the villagers’ dismay, a vicious cycle ensued. As the villagers and the dragon prospered, the dragon’s appetite grew ever greater. With each passing year the dragon grew bigger and stronger and still more hungry. Soon, even the gratuitous sacrifice of the village’s young and innocent virgins was not enough to sate his hunger and temper his predacious instincts.
Given the dragon’s nature, many villagers realized that the day had come when they must slay the dragon or both the villagers and the dragon would die. When faced with this unpleasant prediction, the majority of villagers remained reluctant to undertake such a perilous task, preferring instead to round up more virgins.
And so it goes.
