Where is rationality?

Governments everywhere are struggling to restore a semblance of stability to their economies but since regimes in the developed economies remain hostage to big businesses that finance their electoral campaigns, rationality won't prevail (eg invading Libya to protect BP and Eni interests). No wonder, corrosive mistrust of the state is touching new heights everywhere.
Politicians (the 'democratic' brand) continue to defend free markets to promote 'innovation' and 'enterprise' because limiting market freedom (ie volatility) could endanger both, but the argument is a cover for sustaining speculation as the key mechanism for 'wealth creation' - a lethal tendency crippling the global economy.
Currency and commodity prices skyrocket suddenly (courtesy deceptive forecasts) but punitive action against players in the currency and commodity exchanges is only symbolic. Yet politicians can't see that price instability created by the free markets triggers economic chaos, people-crippling bailouts, and swift exit of governments.
During the 1990s, oil-producing states stopped exploration work since oil wasn't yielding 'enough' profit. The developed oil-consuming states didn't foresee that, with rising consumption, there would eventually be dearth of oil if the producer states aspired recklessly for profit at the cost of slowing global growth and spurring chaos.
The flawed (on purpose) business philosophies that the US universities kept churning out during the past four decades epitomised profit as 'the' aim of economic activity, and changed the concept of competition from a race for excellence in delivering ever-better value, to a race, tragically, for decimating the adversaries.
But the state didn't check the slide of rationality that this trend in education implied. Until the late 1960s, the values taught didn't inculcate sidelining ethics while competing because enterprises, efficient as well as inefficient, had to survive and improve to contribute to the economic growth that businesses were collectively obliged to deliver.
Delivering fair value was the route to growth, not wiping out adversaries or acquiring them. That's how efficient businesses prodded their inefficient adversaries to improve; a killer profile of competition was bound to create what we now call 'too big to fail' monstrosities that finally failed courtesy intoxication by power.
China caused an industrial meltdown in the West by producing everything cheaper and exporting it to the West, while greedy banks in the West kept financing over-consumption. Within a decade, while the West is on the verge of bankruptcy, China has accumulated reserves that nearly equals the fiscal deficits of the EU states.
In the race for decimating adversaries in trade, countries played havoc with the global environment by polluting it at a pace never witnessed before. Environmental degradation is triggering disasters that wipe out the wealth amassed by polluting the environment as well as the chances of earning it again, but we refuse to learn.
Afghanistan manifests a different profile of the quest for decimating adversaries that demonises us, especially if it is at the cost of third parties. In 1998, UN Secretary General Kofi Annan foresaw the regionalization of this conflict and Afghanistan's becoming the "stage for [launching] a new version of the Great Game".
US-trained Mujahidin and Taliban now challenge the state everywhere. Greed-driven take-over of banks by their adversaries heralded chaos of a different kind because the monstrosities so created became unmanageable, they sacked thousands of their employees, and yet collapsed; the grand example thereof was the Royal Bank of Scotland.
Such take-overs were applauded as rational and ethical. Now the politicians regret towing this line; while allowing such mergers and acquisitions, they didn't consider the optimal size of an entity given its existing managerial capacities, supervisory skills and tools for securely accessing the markets that the mergers implied.
No government explicitly promises to undo the flawed deregulatory practices inspired by the private sector's greed. Politicians still don't require businesses to prioritise delivering optimal value for the price, which is the ethical route to profiting and building lasting institutions. Tragically, the state no longer insists on it.
If states continue to allow management of even key economic activities by the 'fly-by-night' types (CEOs on contract), the slide will continue because such contractual appointments don't build organisational loyalty. Won't such CEOs make the most for themselves out of their brief tenors? Didn't it happen time and again?
In Pakistan, mega state-owned enterprises have been the killers that collapsed steadily courtesy their prolonged management by the bureaucrats. While one set of politicians wanted to palm them off to their cronies at throwaway prices, the one in power now wants to retain them to load them with party-workers and cronies.
People everywhere now wonder whether it is love for power that makes politicians bow to the private sector, or the lack of grasp over macroeconomics makes them commit policy blunders. In reality, they suffer from both but a shield called 'democracy' keeps them in power to go on wrecking their economies.
In Pakistan, largely, the politicians' lack of grasp over macroeconomics causes policy-making gaffes but the love for power too leads politicians into the traps set by businesses. Don't be surprised if the regime agrees to lower corporate tax rate from 35 to 20 percent, as reportedly sought by the newly formed Pakistan Business Council.
An Australian 'consultant' of the Planning Commission has proposed imposition of 10 percent import tariff across the board to check smuggling that Custom Authorities can't. This is dumb logic; a uniform tax levy defies the principle of taxing according to the ability to pay because no two businesses are equally profitable.
That consultant didn't advocate mandating a self-regulatory code for the trade associations that do little except seeking tax relieves. For the state, the ultimate irrationality would be to assume that, after deregulation, self-regulation becomes irrelevant although it then becomes vitally important. Yet, you see it nowhere.
The havoc the credit rating agencies caused by awarding triple 'A' ratings to the sub-prime mortgages-backed CDOs owes itself to the non-regulation of the credit rating agencies. Yet this laxity continues. All that the Basle Accords ask of banks is higher capital to go on incurring losses (and keep serving the vested interests).
In the collapse of the largest Afghan bank soon after its audit by an affiliate of PricewaterhouseCoopers, according to the New York Times, while US officials suspect that the bank's shareholders bribed the auditors, they blame the Afghans for the disaster, not the PricewaterhouseCoopers affiliate that accepted the bribe for lying. This pervasive slide of rationality conveys a message - doomsday is not too far.