DISASTER CAPITALISM AS A DRIVER OF PUBLIC DEFICIT & DEBT
Despite the hand wringing and distress over the federal deﬁcit and mounting publicdebt, the larger deﬁcits and mounting off balance sheet debts are being generatedby the private sector in the United States via disaster capitalism. Disaster capitalismis a particularly pernicious form of aberrant capitalism that is dis-economic (wealthdestroying) rather than wealth producing. This form of capitalism is often rationalizedby the myth of free markets unencumbered by government regulations.
But, unfor-tunately, the end-result of disaster capitalism is market inefﬁciencies that radicallymisprice the economic costs of inputs and outputs to the economy. When theseparticular markets fail (which they always will), often the economic costs of marketfailure are accounted for by the public sector. Essentially, the private risk from disas-ter capitalism is socialized to the public sector.Presently, for example, markets under disaster capitalism are not prone to efﬁcientlypricing systemic risk.
Fundamental and structural inefﬁciencies in the market pric-ing mechanism enable domestic (and global) markets to misprice inputs to and out-puts of the economy by either deferring known economic costs to the future (exter-nalities) or failing to account for known economic costs in the current period andpushing these costs to public taxpayers (contingent liabilities).If markets were efﬁcient in pricing systemic risk and/or government regulations wereactually effective, by deﬁnition, there would be no threats from anthropogenic cli-mate change due to excess carbon emissions to the earth’s atmosphere, the na-tion’s groundwater resources would not be depleted, the global destruction of eco-systems, and the extinction of species due to anthropogenic causes, etc. would notbe occurring.
For all these consequents of not managing the systemic risks of mar-ket transactions are dis-economic. That is, the economic costs for not managingthese risks are greater than the proﬁts derived by pushing the economic costs ofthese risks to the future or to public taxpayers. These systemic market risks are amuch, much larger economic problem than the federal deﬁcit and growing publicdebt. Not only are they larger, but these private sector unaccounted for real eco-nomic market costs are growing much faster than the federal deﬁcit and public debt.
The universe in its persistent becoming is richer than all our dreamings.
DISASTER CAPITALISM, THE DEFICIT & THE NATIONAL DEBT
Lyle Brecht DRAFT 1.3 -- Friday, July 16, 2010
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If on a Winter’s Night a Traveler
(1979) inWilliam Poundstone,
Prisoner’s Di- lemma
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Nick Bostrom and Milan M. Cirkovic, “Introduction,” Nick Bostrom and Milan M. Cirkovic,eds.,
Global Catastrophic Risks
(Oxford: Oxford University Press, 2008), 28.
AmericaReport: A Common Sense Report to the Citizens of the United States
for addi-tional detail. Athttp://www.scribd.com/doc/9717658/AmericaReport.
Private Sector versus Government: Which is Better