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Archive for August 21st, 2010

Not just rotten eggs

Robert Reich thinks the recent recall of hundreds of millions of salmonella infected eggs is just the result of some “rotten apples” in the industry.  It’s the same argument we heard after the Massey Energy mine explosion, the BP oil spill, and the Wall Street banks bringing on the financial crisis. Every week, more stories emerge of cases where companies are not looking out for their workers, customers, or their surrounding communities.

As long as thinking remains contained within this narrow  “rotten apple” framework, the systemic problem will never be addressed. Hyman Minsky looked at the financial system through a different lens, and realized that as the markets became more complex, a financial crisis became inevitable. His theory proved remarkably accurate in 2007 (although it still has not receive much attention within the economics profession). If we can also overcome the narrowing “rotten apple” thinking for non-financial markets, we might actually be able to build an economy that works for consumers, workers, and the environment.

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