Nakasone: Crisis shows need for humane capitalism

[FarCenter]

The Yomiuri Shimbun - Yasuhiro Nakasone - http://www.yomiuri.co.jp/dy/business/20090119TDY01301.htm

This is the final installment in a series of Yomiuri Shimbun interviews with leading intellectuals about the present state of world affairs and potential solutions to challenges facing the world in 2009. The following excerpts are from an interview with former Prime Minister Yasuhiro Nakasone.

Following the start of the 21st century, we are at a major historical turning point with a financial crisis affecting countries around the world.

The financial crisis originating in the United States has revealed the weak points of the U.S. models of capitalism and market fundamentalism. As a result, even the United States itself has adopted policies that run counter to the traditional laissez-faire approach. This change in U.S. policy is symbolized by the huge amount of funds Uncle Sam has provided the Big Three automakers to help prevent them from going under. Engagement by the U.S. government will become even greater after the incoming Democratic administration takes over from the Republicans.

With Barack Obama's victory in the U.S. Presidential election, it is believed that the United States will switch to a multipolar approach away from the unipolar approach taken by the administration of George W. Bush.

U.S. world leadership, cultivated since the end of World War II, is in decline as a result of the financial crisis. While global support for the United States is expected to decline, Asia, Europe, the Middle East and South America, in addition to major countries, are likely to become more vocal on international issues. The international community will thus shift to a new phase in which regional individuality is respected.

The laissez-faire principle of U.S. economic policy has lacked humanity. It was "heartless capitalism." The current financial crisis has revealed that this U.S.-style capitalism has its limits. This may encourage European countries, Japan and China to go their own way and adopt policies guided by their specific histories, cultures and traditions.

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[shintao]

1. Ahh, the Sun Rises on Socialism

I have been saying since GATT that capitalism cannot compete with socialism in a global out-of-the-box system. Perhaps by luck I am being proved right. It has driven off our corporations, out sourced our employment, drove us into debt & wars with loans, and cost trillions in bailouts trying to prove capitalism can succeed. Well, it can't, and we are going to feel the pain until we socialize or isolate ourselves again.

I know you know about a few recent bailouts, but here is a list just since Bush was in office, back to 2001. People, we are losing our arse, and have billions in losses in the trade deficit, billions in fines, billions in corporate handouts, and we are still sinking and unable to compete. Does capitalism have to drown you, in order to get the message through??

$15 billion bailout US Airlines

$20 million bailout Vanguard, Midway, Reliant airlines

$165 million bailout package-delivery companies

$10 million bailout freight forwarders

$5 million bailout helicopter companies

$3.5 million bail out Vacation tour company

$18.6 billion bailout federal credit instruments

$85 Billion bailout insurance

$234 billion bailout Banks

$205-700 billion bailout Fannie Freddie

$29 billion bailout Bear Stearns

$85 billion bailout Maurice Greenberg American International Group

$1.8 Billion bailout LTV Pensions

$3.6 Billion bailout Bethlehem Steel Pensions

(Coming Bailout). Now General Motors (NYSE: GM) wants a $50 billion bailout (in the form of loan guarantees).

[FarCenter]

3. Capitalism as a financial system probably doesn't work well

Capitalism as an economic system, with private enterprises and open markets, provides a set of useful and effective mechanisms. It's Achilles Heel is the fact that most large, important transactions are not open market transactions. They are "deals" between buyers and sellers who have unequal information and unequal relative power, and who are attempting earnestly to screw each other. Deals, not market transactions, are the hallmark of capitalism. They span the gamut from the $500 used car to the $50 billion corporate acquisition.

Futhermore, capitalism as a financial system trading in money and paper instruments of various kinds, limited in complexity and riskiness only by the creativity of lawyers, is inefficient and unstable.

[justsomeguy1973]

2. As usual, somewhere in the middle is the best place to be.

Capitalism doesn't work. Communism doesn't work. At least not on the scale needed to cover the entire U.S. and/or world markets. Strongly regulated capitalism will eventually shine through. And a grasp that you can't trust markets and privatize products that are needed for a normal life in your respective society (aka, power, water, health care).