“May you live in interesting times” is a phrase that has been bouncing around in my brain the last few weeks.  This quote, attributed to an ancient Chinese wise man, is often described as a curse –the Confucian equivalent of a Jewish mother’s exclamation “you should only be so lucky to have a son like you.”  As I watch the news reports about our government’s actions regarding the financial crisis and the economy, I often ask myself “What did we do to deserve this mess?  Are the politicians paying attention to what’s going on outside of Washington?”

After reflecting on this, I have decided that the politicians are paying attention.  Perhaps too closely.  More on this later.  In the meantime, here’s a little quiz for you:

Which of the following statements are true?

Answer: All of them are true. 

Now, let me ask you some other questions.  Which column of statements seemed more true to you?  Right or left?  It was one side or the other, wasn’t it?  Not much mixing between the rows was there?  Didn’t think so.

One final question. Which of the foregoing statements made you angry?  At least some of them, I suspect.  And, probably, some of them made you very angry. 

And that sums up the state of the US right now.  How you see the world depends upon whether you are on the right or the left, but either way you are probably pissed off and angry. Most likely, angrier by the day, as the economy continues to decline and you worry about your own financial condition.  Without a doubt, this is one of the most frightening and stressful economies most of us have ever experienced. 

But all that Americans seem to agree on right now is how angry they are.  What they angry about is affected more by their individual economic circumstances (what political scientists call their social class), than by their political view on social issues like abortion or gay marriage.  This poses a very significant challenge to how Americans and their elected representatives deal with the current economic crisis.  In many ways, the country is in the midst of a profound crisis about how to define and determine “fairness” in the economy, or put another way, how to fairly allocate wealth and opportunity in our society.  That’s really what all the yelling in Congress is about.

The problem is that in the US, the political party system has come to be much more about social issues than about economic issues.  We don’t have the vocabulary to properly discuss, let alone, analyze these issues in an objective way.  There are historical reasons for this lack – the backlash against “socialism” and “fascism” in the 1930s and “communism” in the 1950s.  Each of these world views has at its core a belief that politics and economics are counterparts of the same question – how do you allocate wealth and the government’s role in that allocation.  Or, what is “fair.”

The US political vocabulary as expressed today rejects that viewpoint, and treats politics and economics as being separate – that the free market allocates in accordance with rational commercial purpose and that, left alone, it will be best able determine fairness.  Therefore, politics should not involve questions of wealth creation and allocation.  Put another way, if the market determines a result, then the result is “fair,” whatever the individual consequences.  Market results cannot be improved by tinkering.  Fairness is not a relevant value, as it is irrelevant to a free market economy.  Since under prevailing political dogma, the economy and politics (the customary place where citizens debate fairness) are not coupled, questions of fairness are never economic discussions and politics cannot determine economic fairness. 

Unfortunately, the world of economics and politics is much more interrelated than our standard political dogma allows us to admit.  Many people do worry about economic fairness as a value, with fairness largely evaluated by their own economic circumstances.  For that reason, questions of fairness become more important during times of economic stress, particularly when an increased role for government in the economy is being contemplated.  Right now, we have two big arguments going on in the US.  The first is an argument about allocation – who should get and keep wealth and who should get government assistance. That discussion is being well documented and spurring a great deal of public discussion and media reportage.  The second argument is getting much less coverage because it is discussed less freely: are politics and economics really distinct and is a free market the best arbiter of what is “fair?” 

Where we get caught up in the United States is that we confuse a way of explaining the world (what political scientists call a paradigm) with a desire to destroy what is functioning and productive.  Think about it this way: when you hear the term “socialist,” is it used as a compliment?  Or as a descriptor of someone who is not embracing “American values?”  The level of consensus surrounding the conventional dogma – the separation of politics and economics – is a fundamental fact of the US political experience.  It’s unquestioned and unquestionable.

Now, what is a professional venture capitalist doing raising this point?  How can someone who believes in the importance of free choice and free markets use a word like “socialist” as if it were a legitimate economic paradigm?  I can because I am using it not as a description of values, but as a means to prove a point.  You can ask legitimate questions about the functioning of politics, the future of the economy and the allocation of wealth without presupposing that you are for or against any of those things.  We don’t do that enough during times of economic plenty.

But these are exactly the questions that individual Americans ask during tense and stressful economic times.  Prior to today, the 1930s was the last time the US population was as angry and concerned about issues of economic fairness.  That was a period of profound economic stress and changes.  We tend to remember the achievements of the time, the largest being the overall preservation of the US political system.  It’s hard to appreciate this now, but there was a time in the 1930s when things we take for granted, like a largely free market economy and individual rights, were seriously at risk.  When Roosevelt took over the country, its future was much, much more in doubt than it is today. There was much less consensus on questions of wealth and allocation, and there was a greater willingness to try new economic models (socialism, communism and fascism) out of a growing sense of desperation.

How the country survived this challenge is a story for another day, but the overall theme was that Roosevelt co-opted, “Americanized,” enough of the benefits being offered by competing economic models to preserve the political and economic system we have today. But the process of Americanization had a second, quieter result.  As the country moved forward through the 1940s and 1950s and was threatened militarily by countries that did adopt these other systems (systems where economics and politics were heavily connected, such as German Fascism or Soviet Communism), the parts of our own economic system that we had co-opted became frightening.  If we were like our enemies, then weren’t we in danger of being conquered by them? 

Fast forward to today, and we have a significant problem on our hands.  As we speak, we have a population that is angry and in some ways alienated from its government.  The anger is being very well expressed by our politicians – perhaps too well in some circumstances – whether it’s a Congressman suggesting that it’s appropriate behavior for defaulting mortgagees to squat in their homes or a Senator railing about too much spending on the TARP plan.  However, what our politicians are not doing is having a conversation about what is really going on here – a debate about the role of government in the United States economy today and tomorrow and the best way for politics and economics to interact to provide for fairness.  As the role of the government in our economy has increased, from 2007 as the Federal Reserve Board and the Treasury began to shore up the banking system, to the first tranche of the TARP fund, continuing through the auto manufacturers coming on bended knee and private jet to Washington, and today’s debates about the Stimulus Package, the need to have a real conversation about these issues is essential. 

What worries me is that, in the absence of a means to explain and discuss issues of allocation and fairness, we are moving through a major change in our society without a clearly understood set of shared ideals or guiding principles.  Let’s stop pretending that discussions about allocation of wealth are somehow un-American. Instead let’s have a conversation where the question of economic fairness is fully aired.  This issue underlies how the banking system should be fixed, which industries will receive government support, and where stimulus dollars are spent.  If instead of a conversation that includes both economics and politics, we have a conversation about how angry everyone is, we are likely to have a very bad result, and quite possibly a result that will make the US population angrier.  We are at a time where Washington is going to profoundly affect the economy and what makes the US a viable nation. Isn’t that worth a discussion without name calling?