WELCOME

The Visible Hand

As I write this, there is panic on Wall Street

despite Washington’s $700 billion rescue

attempt. The crisis is not contained by U.S.

borders, but extends to Europe and Asia. Like many

people, I’m incredulous. How could this happen?

Wall Street hired the best and the brightest,

paid them handsomely, and gave them unlimited

resources and technology. It turns out they were

building enormously complicated castles made of

sand. A great wave washed them away, astounding

all the smart people who devoted their lives to

speculation, not production. Their models based on

historical data predicted future profits, not collapse.

Few people saw this coming until it hit.

“It was the triumph of data over common sense,”

said reporter Adam Davidson on the excellent episode

of This American Life called “The Giant Pool of Money.”

Economist Michael Lehmann in the San Francisco

Chronicle called it “the triumph of ideology over

common sense.” It’s obvious both common sense

and the common man have taken a beating.

It’s hard to stomach that our government must

bail out Wall Street. It really means we’ve bet our

future on the same people who created the pres-

ent situation. To paraphrase a joke I’ve heard: It’s

like going to a casino in Vegas and rooting for the

house. One New York Times reader expressed the

frustration that many feel: “Why can’t we take half

of the $700 billion and just build something?”

These events shake our belief that free markets

work to the benefit of all. The fundamental tenet

of capitalism is the “invisible hand”: Adam Smith

wrote that “by pursuing his own interest [each

person] frequently promotes that of the society.”

This year, Nobel Prize-winning economist Joseph

Stiglitz said: “In this sense, the fall of Wall Street

is for market fundamentalism what the fall of the

Berlin Wall was for communism — it tells the world

that this way of economic organization turns out

not to be sustainable.”

A headline in the Christian Science Monitor

says: “With finance crisis, hands-off era over.”

Government will need to be more assertive in regu-

lating Wall Street. But I think it goes beyond that.

I wonder if we, as individuals, have been living in

BY DALE DOUGHERTY

our own era of hands-off. Have Americans become so disengaged that we’ve become dependent on some invisible force to provide what we need? Have we gotten used to leaving important matters to experts, until they turn out to be wrong?

Isn’t it time for us to become hands-on again?

We, the people, face enormous challenges. Apart from the economic mess, we know fundamental changes are coming because of global warming. Our dependence on fossil fuels is not sustainable. Change is coming, whether we want it or not.

Better we meet the challenges head-on rather than hide. New York Times columnist Thomas Friedman

The DIY mindset must again become an essential life skill.

summed it up: “We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a ‘liar loan.’ ... The American Dream is an aspiration, not an entitlement.”

We have to believe it starts with each of us — not some faceless government or corporate bureaucracy. It’s time for us, individually and working together in business, to reconsider what it means to be productive, not just profitable. It’s time for us to reengage in how our government sets priorities for education, health care, housing, and transportation.

The DIY mindset celebrated in this magazine must again become an essential life skill, rooted once again in necessity and practicality. Our future security lies in knowing what we’re capable of creating, and how we can adapt to change by being resourceful.

A challenge this great can bring out the best in us. We need everyone, because every person has something to contribute. We need a showing of all hands.

Dale Dougherty is the editor and publisher of MAKE and CRAFT magazines.

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