If there’s a limit to a fraud (like Enron), it’s not simply because a swindler is discovered; it’s because some swindles (Ponzi schemes, for example) are impossible to sustain everlastingly.
Cleverness doesn’t matter – there are structural limitations that cannot be overcome (only so many people, only so many future victims, only so much money from those victims, etc.).
Limits apply even for the honest (in fact, they apply more so).
All people live in conditions of economic scarcity. Capitalism manages those conditions more productively and efficiently than any command-system alternative, but it does not eliminate them. Humanity has no ability to eliminate conditions of scarcity, properly defined. (That would be a divine, not human, power.)
About debt, generally, consider these remarks from Michael Pettis (writing with Chinese state-capitalism in mind, but applicable generally):
….Debt always matters. Either it must be repaid out of the proceeds of the investment that was funded by the debt, or – if the debt funded consumption or was misallocated into insufficiently productive investments – it must be repaid by transfers from some other sector of the economy, and these transfers reduce growth by reducing real demand….
And Pettis again, on sound economic predictions:
….Those who worried about rising consumer credit in the US were not wrong every single year until 2007-8, when they accidentally became right. They were right every single year, and were proven right in 2007. Those who have been arguing that China is experiencing an unsustainable increase in debt have not been wrong every quarter that China has not collapsed. They are almost certainly right and it is hard even for the most foolish of bulls any longer to deny it.
An analysis that points to an unsustainable trend is always right if the trend turned out indeed to be unsustainable. The fact that it may have taken many years before the limits were reached is not an indication that the model was wrong. It is simply how the economy works….
In a place like Whitewater, one sees so much talk about the need for marketing plans, how to market the city, etc. There are few places as small as Whitewater with this much big talk about the need for marketing the community.
There’s a place for marketing (it’s a legitimate field) but it’s wildly over-used here. (See, along these lines, The Failure of Marketing (and the Marketing of Failure).)
Mediocre leaders rely on the talk of marketing to conceal their structural failures, or to convince residents that there are no structural limits (and so can be no failures).
We’ve wasted millions of others’ earnings on empty promises and lies. We can spend millions more now, too.
Doubt not, though, that we’ll have to pay it all back, one way or another.
