The Failure of Capitalism, Bad Economies And NASCAR
I’ve read lots of articles and editorials suggesting that capitalism has failed and that it is dead.
It may be dead. But it hasn’t failed.
Market-based theory never predicts the eternal growth of economies. The market pitches up and down, in reaction to supply and demand, greed and fear and other factors that influence vibrant markets.
The market self-regulates. In the last six or seven months we’ve seen an example of that self-regulation. Oil prices bubbled and popped. Weird mortgages that tried to bend the laws of finance imploded. Businesses that chased growth over common sense, disappeared over night.
Nobody said self-regulation would be easy, or without pain.
But to say capitalism was a failure is incorrect. It would be like blaming buoyancy or ice formation for the sinking of the Titanic. It wasn’t the principles of buoyancy that crippled and then sunk the ship, it was the myriad of problems and hubris… and bad luck… that sank the boat. The physical properties of buoyancy and ice formation worked in stunning and deadly precision.
I believe this relates, believe it or not, to NASCAR. People attend races to see bunches of juiced-up piles of metal and fiberglass speeding along tracks at breakneck paces. Wrecks are bound to happen and I daresay some people even go to see a wreck or two, just like a few people today wouldn’t mind seeing a couple of those mean financiers get theirs.
Suddenly, though, when someone gets hurt during a race, a cry of anguish is heard and people immediately want answers on how to make the sport safer. How could someone get hurt? Who is responsible? Someone must pay!
It’s a typical reaction and I don’t want to sound callous, but no one can eliminate risk and pain without also altering the potential of better performance.
The recent economic crash may keep people on the investment and innovation sideline forever. The more intrepid financiers, innovators, traders, investors and smart government leaders, however, will learn these lessons and create a better and stronger market.
Related posts:
- The Changing TV Technology and Advancing Capitalism
- The Myth Of Limited Regulation And Limited Rewards
- Top Investing Mistake #2: Failure to Launch
- Investment Success Lesson: Failure Isn’t Fatal
- Regulation Strangulation–The Risk of Conventional Wisdom
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
Great comparison between the Nascar and the economy. Yes, a lot of people do love to go on NASCAR, watch cars get junked and then their initial reaction would be anguish.