Have you noticed that people only give economic explanations for the current economic crisis? Well, actually a few people give non-economic explanations, like greed, for instance.

            Likewise, in trying to predict our economic future, have you noticed that mostly the arguments are grounded in economics, politics, and a little bit of psychology?

            Put on a lens of a sociologist or anthropologist for a few moments to see things a bit differently. Enter, Karen Ho, an anthropology professor at the U of M. Dr. Ho got a job on Wall Street in an investment bank for nearly a year in order to study the culture and organization of Wall Street, particularly with regard to dealing with financial crises.

            You can read some of her views in a Star Tribune interview, and a more in-depth analysis of her research in the academic journal, Cultural Anthropology (Vol. 20, #1, pp. 68-96, 2005). Or you can wait for her book to be published in July 2009.

            In her article, her interviews and public presentations, Karen Ho gives a compelling description of how Wall Street (the network of financial institutions) beginning about 1980, transformed and dominated American business by successfully campaigning for what she calls a “culture of liquidity,” by which she means organizational turnover and instability. A common tactic was takeover in order to liquidate a company’s assets. She concludes that Wall Street, with the control of capital, forced American businesses to continually restructure, downsize, outsource, and otherwise focus on short term planning, and the bottom line.

            Furthermore, Wall Street followed its own liquidity prescription for American business. In addition, Wall Street in its excitement took the primrose but deadly path of hedge funds, derivatives, securitizations, credit default swaps, and other elements of shadow banking.

            In her scenario, little by little the global economic system bought into the Wall Street model, seduced by the overvalued financial instruments and financial culture that appeared to be economic nirvana. Wall Street shadow banks marketed giant ponzi schemes and the remainder of the world didn’t want to lose out on the party.

            The tragedy of the culture of liquidity was the corporate sell off and neglect of organizational capital, human capital, research and development, and other resources with long-term value.

            Her view, and I subscribe to it, is that Wall Street has left us with a bankrupt financial sector and ailing manufacturing industries with greatly eroded capacity and value. Professor Karen Ho points out that companies like GM were the darling of Wall Street while they were downsizing, buying mortgage businesses, and designing bigger and bigger SUVs. GM and other such American businesses are now left with a relatively uneducated, poorly skilled workforce, and little capacity to innovate.

            The state of education and job training in American cannot be blamed on corporate America alone.  The politics of unequal, discriminatory financing of K-12 education have done much to hold it hostage, while the quality of learning in our trading-partner nations improves.

            Karen Ho does not argue this, but I think it follows that to compete in the global economy over the long-term, Americans and American businesses need a financial 12-step program to overcome addiction to self-centered consumption and investment growth-at-any-cost.

            Corporate America needs some time to reflect on what it can do best, do it with impeccable quality, and give good jobs and benefits to as many Americans as possible. Corporate America cannot do that with Wall Street breathing down its neck, so to speak. From their self-serving behavior in the past six months, it is clear that neither Wall Street nor Corporate America will reform on their own. It is up to the Federal Government to exert new leadership.

            Ironically, the Secretary of the Treasury for the first two years of the last Bush Administration, Paul O’Neill, holds a similar view of the Wall Street. On CNN’s GPS Program he recently called for truth and transparency on Wall Street. He would order the top 19 financial institutions to put the ratings classes of all their assets on the Internet for the public to see. He then would create quarantine accounts for the bad assets, only allowing public funds to be spent on the non-quarantined assets.

            Even if such reforms were made, the road to recovery will be rocky because we have come to expect the material comforts of living in financial bubbles. As millions of pensions have been converted to individual 401k accounts, the majority of Americans have a finger in Wall Street. Even if our daily moods don’t swing with the markets, we still pray for our retirement accounts to soar again.

            How then do we get out of the spiraling culture of corporate liquidity?  Establishing a modern, effective regulation system and other reforms in Washington DC will help. However, it is doubtful that we can successfully complete its financial addiction recovery program without learning to live with less, without accepting the need to sacrifice for the greater good. It is the perfect time to study Marc Lesser’s 2009 book, Less: Accomplishing More by Doing Less.

            Those with jobs and a retirement fund can afford to allow the economy to slowly recover from its ailments. But those unemployed, underemployed, or otherwise suffering from the lack of means to acquire necessities, cannot afford the luxury of a long, slow recovery. The rest of us must empathize with them and be generous, both personally and through public policy.

            For long-term prosperity, we need to work for the economy to stabilize itself without depending on another big bubble. This is the time to re-define patriotism to include sacrifice, modest lifestyles, and acting as a “Good Samaritan” to those around the world who are truly in pain and suffering.

            Should you be skeptical of my advice on returning to the ethics of the Good Samaritan, read the wonderful 2008 book by Deborah Stone, The Samaritan’s Dilemma: Should Government Help Your Neighbor? Professor of government Deborah Stone began advocating for an altruistic government long before the latest financial bubble burst. With the deep recession leaving so many jobless, hungry, and otherwise suffering, her powerful call for a moral awakening is even more urgent.

The $700 billion bailout for “financial institutions” requested by Treasury Secretary Henry Paulson amounts to $6,300 per household. Fortunately, we will not have to pay it off this year, but the amount with interest will be spread across several years.

            Many expert economists question whether the bailout will solve the economy’s problem. An even larger share, believe the bailout should not be approved without a variety of constraints on how the money is spent. Many also question the degree of urgency and the need to act right away.

            Not surprisingly, Secretary Paulson claims the sky is falling and he needs the $700 billion this week. Two years ago he made $37 million a year as CEO of a now-vulnerable investment bank. Then President Bush asked him to head the nation’s Treasury Department.

            On the other hand, some economists argue that the economy would be better off  without unregulated investment banking, and that real estate values would settle down faster without a bailout of the type demanded. After all, investment banking has become a collection of unregulated casinos that keep coming up with new games investors can play.

            In a political system such as ours that asks individuals to stand on their own and pay for their own welfare, shouldn’t corporations be allowed to fail if they take huge risks without insurance or collateral?

            For the sake of argument, let’s assume that the economy really has to be bailed out by the government. In a democracy like ours shouldn’t the people rather than Congress be asked to pull out their check books and pay for the bailout? They are asked to pay for our society’s social charity, why not economic charity?

            Individual Americans already write checks for charity for about $230 billion a year according to Giving USA. And according to the Independent Sector, last year American volunteers gave 8.1 billion hours of free labor worth $162 billion dollars  through formal organizations. On the basis of the American Time Use, I estimate that that Americans volunteered an additional $345 billion worth of free informal community service. Compare this huge value of charitable donations to last year’s United States Federal budget allocation of $294 billion for unemployment and welfare.

            Americans could do the same for the Investment Banking  industry if they thought it was important enough. Why should the  American people be given the option to be charitable to their fellow human beings, but forced to be charitable to the financial sector? Why should charity to businesses be determined by Congress and lobbyists but charity to the people left largely to private donations?

            Rather than buying assets of failing banks at inflated prices, the economy would be better served by loans to small as well as large businesses, and to home owners facing foreclosure as well as to businesses facing bankruptcy.

            Then the public should be asked to double their charitable donations this year and write checks to funds for ailing businesses. People should be given the choice as to which type of business receives their donation. This would be true economic democracy.

            The Bush administration’s enacted concept of democracy continues to be freedom for economic institutions with little regard to freedom for individuals. What is your conception of how democracy should deal with financial institutions?

Governor Sarah Palin, in her acceptance speech for Vice Presidential Republican Candidate, fired the following political shot at Senator Obama: “I guess being the mayor of a small town is similar to being a community organizer, except that a mayor has actual responsibilities.”

            The media, especially Internet bloggers, loved the quote because it was a surprise attack on Senator Obama, in the tradition of borderline dirty politics. In the same speech she likened herself to a pit bull.

            With her vicious remark denigrating community service, she “shot herself in the foot” because a major theme of the RNC was service. Hundreds of Republican delegates waved placards saying nothing but “SERVICE.”

            In his own acceptance speech, John McCain loudly stated “We believe in a strong defense, work, faith, service, a culture of life, personal responsibility, the rule of law, and judges who dispense justice impartially and don’t legislate from the bench. We believe in the values of families, neighborhoods and communities.”

            While most people only heard the impassioned plea for impartial judges, he actually included community and service in the same sentence. Community service is a Republican priority but very low on the list of priorities. Sara Palin only used the word “service” once when she referred military service.

            George H. W. Bush in his 1988 inaugural address placed community service as one of his highest priorities with his catchy phrase “a thousand points of light.” He explicitly stated that these points of light were community organizations and he promised to go to all members of his government and the entire public to try to get them to participate in these community organizations. Twenty years later he is still setting a wonderful example, but his party’s latest candidates have mostly forgotten his message.

            Why does community service deserve a higher priority among Republicans? Well, duh, it is the only way to keep a society functioning if you cut taxes and cut government spending. 

            The United States already depends mightily upon community volunteers and the more we trim government services the more we need volunteer services. The Current Population Survey of the U.S. Census found that in 2007 one in four (26%) of Americans 16 and older volunteered with one or more organizations.

            Sixty-one million Americans gave 8.1 billion hours of time to their communities. For those who volunteered, they each worked an average of 133 hours per year or 22 minutes per day. Volunteers made a most impressive contribution to their country; they deserve applause, not sneers.

            Each year the Independent Sector estimates the economic value of the free hours put in by community volunteers. For 2007 they concluded that volunteer hours were worth on average $19.50, which adds up to a total economic value of $162 billion in free labor. If volunteering for sports and churches is dropped from this total, then we can say that volunteers contributed $90 billion of their time to community organizations last year.

            The Bureau of Labor Statistic’s American Time Use Survey also found that Americans volunteered an additional 19.8 billion free hours for their communities without going through an organization. Using the same hourly rate and adjustment factor, the total value of informal community service last year was $206 billion. Adding together both types of community service or volunteering, we get a total of $296 billion in free community service.

            Why is this so significant? If American adults were to have to pay to get that work done in their communities, it would cost every tax payer about $2,600 more in taxes per year. The average household would pay $5,570 more per year in taxes.

            Look at this another way. Community volunteers every year are giving each tax-paying household a free rebate of $2,672.

            Suppose in the interest of reducing the size of government, more cuts were made in services for vulnerable groups such as hurricane victims, the elderly, the disabled, and the very poor. Such a policy would make the need for community volunteers even greater than now. But community volunteers are not going to come to the aid of those who need help, unless their free time and effort are appreciated.

            The Republican Vice-Presidential Candidate got political mileage by putting down the work of “community organizers,” but at great expense to the well-being of society. Barack Obama in the 1980s worked for several years as a “community organizer” in the equivalent of a ghetto in Chicago’s south side. He worked more than full time at such a low salary that he essentially was giving most of his time free to the community. In that sense he was a community volunteer.

            Most community volunteers work for private, non-profit organizations like food shelves, nursing homes, and hospitals. But the governmental sector can play a role too. The Peace Corps and AmeriCorps are two very successful examples of government sponsored programs that coordinate the services of community organizers. Such organizers typically receive so little pay that they are for the most part community volunteers.

            From his experience in working in the “trenches” of urban Chicago, Barack Obama dreamt up similar service corps that could solve social problems at a very low cost. Combining his ideas with those of Joe Biden, they drafted the “Plan for Universal Voluntary Citizen Service.”

            The Obama-Biden plan would not only expand AmeriCorps and the Peace Corps, but would integrate service-learning into schools and universities. Ways would be explored to engage diverse groups including retirees and disadvantaged youth in community service programs. The price tag would be low but the social and economic benefits far reaching.

            Do you want a national leader who denigrates volunteering or one who knows how to capitalize on volunteers?