If jean Jacques Rousseau was living today how would he analyses the current fiscal situation public policies perspective and how any would historical decide the current financial crisis in America today?
What would Rousseau do with today financial crisis
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In 1755, Jean-Jacques Rousseau published an essay titled Discourse on the Origin of Inequality that expresses his view that society cannot help being corrupt. The kind of inequality he wrote about, moral inequality (as opposed to natural inequality) is what we generate by the way in which we relate to one another. Poverty, wealth, level of education, social status,...all of the ways in which we like to distinguish ourselves from each other, leading to jealousy and envy, criminality and violence, all of these generate moral inequality.
So, Rousseau's analysis of the financial/economic crisis would probably be that it was to be expected that someone would NOT ONLY try to manipulate the economy the way it has been manipulated (by persuading our politicians to abolish the separation between ordinary banking and investment/speculative banking AND not regulating exotic speculative financial instruments such as credit default swaps), BUT ALSO come out ahead by getting our politicians to bail them out when their companies began to lose spectacular amounts of money. Of course, the money the politicians used to bail them out was money we all pay in taxes. This means that what we thought was a free market, in which bad businesses are punished by disappearing, is not true. Persuading people to sign mortgages for which they could not pay, speculating (betting!) that they would not be able to pay, charging extravagantly for financial services to towns and cities with giant pensions,... Raping and pillaging our economic system in these ways AND making all of us believe that we are in a free-market economy is the height of corruption.
To make matters worse, those businesses who bankrupted our economy but were still bailed out claiming they were too big to fail did nothing to reassure us, taxpayers, that they would do things right going forward, or that they would be very strict and frugal during the crisis. They continued to pay million-dollar bonuses to their executive employees and go on fancy spa retreats (insurance company AIG infamously did so a few weeks after receiving bailout money!). Nothing changed, and Rousseau would not have been surprised. When commentators talked about the 'too-big-to-fail' situation as a moral hazard because those businesses had to be bailed out, they were speaking Rousseau's language. They were talking about macro-level, society-wide moral inequality.
It is a reasonable supposition, given what he wrote, to think Rousseau's solution would be very radical, and that he would prefer to abolish the entire social, economic and governmental structure to remake it in a simpler manner, taking his cue from that episode in Book 2 of Plato's Republic when Socrates imagines what a simple city would be like.
But let's suppose Rousseau was more willing to help to restructure things instead. It would still be radical for us. We would have to imagine that not only would he want to chop up the offending businesses that received bailouts (no more 'too big to fail'!); and not only would he think it a smart idea to reinstitute the financial barriers to speculating with ordinary banking money; and not only would he want to bailout many of the individual homeowners who actually live in houses with 'underwater' mortgages (mortgages that had to be paid at the contracted price but with home values lower than before the crisis); but that he would want to completely abolish large commercial/investment banking in favor of small savings and loans in neighborhoods. This would be a way to minimize big corruption and keep neighborhoods and communities in closer contact with individual homebuyers and small businessfolk, so things would be relatively more transparent, in keeping with his idea that "the fruits of the earth belong to us all, and the earth itself to nobody."
But for that, Rousseau would have to have really calmed down! Maybe 235 years since the last solitary reverie he enjoyed has been enough time? Now the only thing left to do is do a séance and see if he answers (in a mellow manner!) from beyond the beyond!