Through the years, one thing has made America’s economy unique in the world. It’s not free market capitalism – many other economic powers rely on the invisible hand. It’s not even the good fortune we have had in terms of English being the universal language of business and the dollar being the international currency of choice. Those two happy historical accidents have certainly helped immensely, however it is our relatively low avoidance of uncertainty that has helped propel us into the economic stratosphere. (The cultural assumptions are based on work done by Geert Hofstede, a Dutch writer whose work on cultural differences was very important to me in college as an international business student.) As Americans we are brought up to have firm resolve in the face of failure. Some of our greatest heroes would have never made it to the history books had we not been so willing to accept failure and give someone a second chance. (Lincoln lost several elections, Edison was called “too stupid to learn anything” by his teachers, Henry Ford went broke five times before starting his motor company, and the list goes on).
So what does this have to do with either bailouts or ballparks. Well, for more than a few decades now, ballparks and stadiums have been built partially or entirely using public money in the form of direct payments, low-interest loans, tax credits, or other such means. This has placed the burden on the tax payers and socialized risk, while allowing the sports owners to reap the majority of the profits, thereby privatizing profits. This is the core of what is being proposed with the Wall Street bailouts. The one heartening aspect of this new round of talks, is that there may be a clause in the legislation that allows a portion of any recouped costs to be returned to the government and the taxpayers. The attitude that permits this sort of arrangement, however, is the same that allowed Lincoln, Edison, and Ford to succeed. We are willing to take risks for the possibility of huge rewards. In the case of Wall Street, though the bailout plan is unpopular, a plan will be implemented because ultimately the citizens will choose economic success over increased risk.
This post is a little scattered, but let me know what you think.