Prof. John Kozy: Governments Exist to Further the Interests of "Favored Groups"

Governments have never existed to solve problems domestic or international. Governments and their institutions exist merely to further and secure the interests of favored groups, but We the People are never the favored group. Paul Krugman recently wrote that The fact is that the Fed, like the European Central Bank, like the US Congress, like the government of Germany, has decided that avoiding economic disaster is somebody else's responsibility. None of this should be happening. As in 1931, Western nations have the resources they need to avoid catastrophe, and indeed to restore prosperity , and we have the added advantage of knowing much more than our great-grandparents did about how depressions happen, and how to end them. But knowledge and resources do no good, if those who possess them refuse to use them. And that's what seems to be happening. The fundamentals of the world economy aren't, in themselves, all that scary. Its the almost universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread. Krugman and most other Americans are fond of blaming social problems on the personal failings of individuals rather than on the systemic failings of institutions. It is people borrowing more than they can afford, rather than banks lending too loosely, or consumers saving too little, rather than businesses paying too little to enable consumers to save, that causes all of the problems. But borrowing and lending and saving and income are not independent variables. People are persons with personal failures, but banks are institutions with systemic failures, and the systemic failures can entice people to engage in activities that may look like personal failures but are not.