Sores Around Piercing

Men do not foresee the future (and certainly not economists)
crisis feared has come, and nobody knows when it will end. Unthinkable things are happening, one after another they churn out the structural plans of American intervention in the economy. We talk about the U.S. Treasury, not the Soviet Politburo! We are at a turning point?
To begin with, this will be neither the first nor the last crisis of the capitalist system. Our current economic system is not perfect, but it works incredibly better than any alternative (Feudalism? Collectivism?). History shows us that economic development in the past two centuries has been prodigious in absolute terms. World GDP per capita was in 1998, 850% of that of 1820; the mythical thousand years to 1820, world GDP grew by only 50%. The trouble with capitalism is that it involves, during its development, "tearing" whirling enrichment of some and the impoverishment of others, setbacks or leaps forward, expansions patchy. Periodically, through dramatic crisis. Why? Well, nobody knows. Underlying everything is the fact that men are not machines: wrong, especially in predicting the future (interesting Luke 12.16-21). Maybe the wrong choices are unaware: we invest in areas that seem to offer good opportunities for profit (real estate? Financial?), Sure to be able to go out for a moment before the bubble bursts. Some do it on purpose, knowing full well the risks they face, and their business. Others do not understand him, or involuntarily (Argentina, Parmalat, Lehman Brothers tell you something ..?). Some of these errors is physiological: in any business activity there is a risk against a possible profit. If the economy grows much is "too hot": it is natural to have short-term crises, from which emerge the most innovative companies. Perhaps, these are areas that are sized correctly. Other errors, in contrast, are avoidable. How? We pick the state out of the corner where we had sent a hurry! The State has three key tasks. First of all, to market rules (and make sure that someone respects): among other things, ensure transparency and reduce information asymmetries, the mechanisms limiting speculation were talking about a moment ago. Of course, those who rule must be as independent as possible from those who are regulated. Second, he must provide an amount of money that suits the economic situation, paying attention to over-investment (and inflation, but that is another story). Third, it needs to ensure that these safety nets that enable social groups affected by the crisis to keep from going under. Warning: it means delivering an unemployment benefit, not to keep with inefficient public money a company to save jobs. It means giving all deserving the chance to emerge: the ruling classes in casts and closed to maintain secure forever their status, are likely to be mediocre. A closer look at the basis of the current crisis there are deficiencies in these areas: the weakness of Supervisors and the collusion between politics and financial system have made the explosive untouchable system of public guarantees to mortgage lenders institutions, the expansion Monetary exuberant era of Alan Greenspan at the Fed, the fears about the impact of crack on a company with fairly weak social safety nets. The state can then take action, perhaps even nationalizing banks and insurance, the important thing is not to put himself as an entrepreneur in a permanent position. The state should not get to make panettone or tomatoes, as in Italy at the time of IRI, the effects on public finances are almost always deleterious. Must regulate markets, with special attention to factors of production: labor and capital (capital market, incidentally, is finance: it can become very bad ... if not set). You should not act, but to prepare the recommended: leaving the players to launch the egg, or more thunderous applause.

Alberto Ricci
alberto.ricci @ studbocconi.it