March 11, 2017

Moving is most often aversion to the risk of staying. More important, is the willingness to take risks upon arrival.

Sir, Gillian Tett, referring to “Little House on the Prairie” and Tyler Cowen’s “The Complacent Class”, discusses that decline in the “mobility [which] was considered synonymous with the American dream”, “How America’s pioneering spirit disappeared” March 17.

Tett quotes Cowen with “What I find striking about contemporary America is how much we are slowing things down . . . and how much we are investing in stability”; and she concludes recommending: “the next time the Trump team talks about making America great again, maybe somebody should ask how to make America mobile again”

But are those who fled famine, religious or political persecutions, or simply the lack of jobs, all risk-takers? No! What was really important for making America great was that fresh opportunities, like land and bank credit, awaited those who, upon their arrival, were willing to put in the job and take the risks needed.

Sir, let me, for the umpteenth time, quote from John Kenneth Galbraith’s “Money: Whence it came where it went” 1975. “For the new parts of the country [USA’s West]… there was the right to create banks at will and therewith the notes and deposits that resulted from their loans…[if] the bank failed…someone was left holding the worthless notes… but some borrowers from this bank were now in business...[jobs created]”

So, if we are to talk about some diminishing risk-taking affecting the economy, and that blocks the pioneering spirit, then what most clearly stands out is the risk-weighted capital requirement for banks imposed by bank regulators.

Ms. Tett, can you imagine families arriving to a land governed by such like a Financial Stability Board, whose function is to keep banks from failing and do not care one iota about petty little things like banks allocating credit efficiently to the real economy? Would the Ingalls have thrived in such a land?

But Sir, I know, you don’t want to talk about this.