For bystanders, debates in the West on how to fix its financial industry's problems smack of those in the final days of the former Soviet Union, on how to engineer its systematic shift.
The old debates were about how to transform a bureaucratically controlled but failing economy to a new economy flourishing with plenty of private enterprize and abundant supplies.
Unfortunately, all people could hear were just plans - all given as the best philosophy, the best strategy, and the roadmap for the best future. Few pointed out back then that such plans were, in their ultimate logic, attempts to create a market economy with a planned-economy approach.
The fact is that if no room and no time are budgeted for things that have not been planned for - from new ideas to new products to new ways to break the rules and therefore new regulations - no market economy can exist.
Nowadays, people sitting on an increasingly contaminated pile of assets are making lots of debates, too. Some are ideologically charged, such as whether the word nationalization should remain a taboo, and whether the government can do things better than private institutions.
Some dwell on impossible details, such as how to calculate and price the bad assets when nobody is sure how many of them there are (and chance is they may still keep piling up), and how much to pay for someone - if ever there would be anyone - to move the bad assets away.
Debates all have their interesting points, of course. But as a whole, they can also reflect a society's leadership and readiness for action. The reality is that people are slow to adapt when things change - even if part of the change is the consequence of their own doings.
Given a moral commitment, the more effective way to start a society-wide reform is always to avoid, rather than to decide on, any given model, or any would-be comprehensive solution package.
From time to time, an economy does need the government's power to protect its experiments. There was in fact plenty of government protection (or leniency, or lack of regulation) for the much hyped financial innovations in the recent past, although they fared miserably in the end.
If that part of the financial institution is sick, and is still in the infectious stage, it should be duly replaced by something healthy. At least some new experiment should start.
Many economists have concurred that the global financial system, first of all that of the US, and including every major country's, is not going to remain the same after this crisis. By logic, that would mean a time of not just new international partnerships and new regulations, but new institutions and new business practices as well.
It is hard to understand - since the government's role is inseparable from economy, and since the world will need many new institutions in the next years anyway - why Americans are still hesitating about an institutional experiment, be it a new bank, a new fund, or a new layer of market.
I tend to believe that lenders from all over the world would be more encouraged by seeing something like that (a real thing, I mean, not just a plan) rather than seeing their credit being flushed down the expensively decorated toilet from the executive offices of the dangerously sick old financial institutions.
When talking about infectious diseases, all Chinese can remember what happened in 2003, during the breakout of SARS (caused by a previously unknown killer virus).
When the civilian hospitals were almost crushed by the influx of patients, the army's medical troops were mobilized to look after the victims in a massive temporary in-patient hospital built in Beijing suburbs, modeled on wartime treatment center for frontline casualties.
Nobody was saying that the military setup would remain permanent, nor that the army medical staff were superior to the civilian doctors. But they were up to the task of isolating the problem.
In the US, as the center of the world economic crisis, it is hard to think how the problem that is still growing and threatening more and more healthy businesses could be effectively isolated without having an institutional substitution.
E-mail: younuo@chinadaily.com.cn
(China Daily 02/23/2009 page4)
