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No one has epitomized our yo-yo economic thinking lately than Thomas Friedman, who followed a column urging let’s go shopping with another urging thrift. This is the dilemma du jour: which companies do we bail out, and which do we leave to drown?

Make every recession a smart one

Make every recession a smart one

Phrased another way, how do we have a smart recession?

The answer I think is pretty commonsensically clear: we bail out those things that lead to the future we want to have, and let the others paddle on their own.

Case in point: U.S. automakers. Are they leading us to the future? This is a no-brainer: one glance at their sales figures answers this question. If any question remains, consult The Economist, which states flatly that the future for automakers are how well they sell in India and China. Bad news, Ford and GM: China has fuel efficiency standards and India is implementing them. Turns out the years the Big Three spent opposing fuel efficiency standards in the U.S. were a bad career move and the argument that they needed low standards to be competitive was exactly wrong.

There’s a crowdsourced component to this as well. In these econocalyptic times, people are being more cautious with their money. There’s a commonsense logic at work, which is why people aren’t buying gas-guzzling American cars or cheap lead-encrusted Chinese cra- uh, goods. The econocalypse has forced people to begin thinking ahead and making the future part of their calculations. Now, if we can just extend this thinking into what sort of economy we stimulate going forward (and what kind we don’t waste our dollars on), the recession will not be another example of “a crisis is a terrible thing to waste.” Photo by oxmour via Flickr.

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the risk is socialized

Oil drilling: the risk is socialized

“Privatize the profit, but socialize the risk” is the meme of the moment: it’s what happens when you let a company take home the benefit from operations but bail it out with public money when times turn bad, and as we all know it leads to heedless corporate behavior and eventually, to tears. You would think that now of all times our government would reject deals of this sort. But the House quietly passed yet another “privatize the profit, socialize the risk” scheme yesterday: it opened up both coasts to oil drilling.

This, despite Exxon’s successful legal action culminating earlier this year to reduce its payments on the Exxon Valdez disaster from its original $5 billion. (If you don’t remember the Exxon Valdez oil spill, you can be forgiven; it might have happened before you were born; the ship went aground back in 1989.) So, despite the most open-and-shut culpability imaginable, Exxon successfully managed to socialize the risks of oil production in Alaska, using their privatized profit to fund a 19-year delay and, eventually, bailout. We all ended up paying for the Exxon Valdez; can we really expect anything better when oil rigs start appearing off our beaches and in our fisheries? The risks are great, which is why the coasts were put off limits in the first place, and now they are yours and mine. Photo by ingridtaylar via Flickr.

It was the world's first serious alternate reality game, a cooperative pre-imagining of a global oil crisis. Over 1900 players collaborated in May 2007 to chronicle the oil crisis with their own personal blog posts, videos, images and voicemails. The game ended after simulating the first 32 weeks of the oil shock, but its effects continue, as game designers analyze its unique gameplay and we all watch the continuing drama with global oil prices and supply.