Prosperity Like Sunshine: What a decades-old Russian children's song can teach us about the bailout mentality

Originally Published In:

Fairfield County Weekly (1/22/09) Link

A four-year-old Russian boy composed four lines in 1928 that have become so permanently popular, your grandchildren will sing them decades from now. "May there always be sunshine," the translated lyrics begin.

The song itself was written by Soviet songwriters nearly four decades later and became one of the world's most popular and translated children's songs. It describes a boy who has painted a crude picture of a sun on a blue sky. And just to make sure you understand what he drew, he has also written — according to that now-famous chorus — "May there always be mama."

On its own, the drawing in the song represents a fantasy, a goal, a desire. A warm sun, a clear sky, a loving family, economic prosperity.


How can you guarantee there will always be sunshine?

The government could pass a law, you might shrug. To wit: "There must always be sunshine." Then, there is the question of nighttime. Who will provide a replacement sun between dusk and dawn? How will money be collected to pay for it? What if there is not enough light to convince people it is still daytime?

We could add tax breaks for those who provide alternative illumination. We could collect flashlights to hand out on a moment's notice. We could even pass laws that give light to those who sleep at night anyway and wouldn't use it if it weren't so cheap.

But the Earth would keep rotating, and eventually it would be too dark for so long that all of our batteries and candles won't keep dusk at bay any longer.


Think of light as economic booms. Suppose for every boom, there are eventual recessions. And suppose we passed this law: "There must always be booms." And suppose we made that law and never got around to making it much better — we never realized that there will sometimes be night.

One of the best professors of finance I ever had described arbitrage, or the activities that hedge funds and other global institutional investors pursue, as plumbing: They observe the square-peg regulations of one country and the round holes allowed by another country and they create fittings that allow one to be shoved into the other. Another professor once claimed that any finite tax code generates zero revenues. The implication of both statements is the same: People will engineer their way around government limitations.

The Depression-era law that prevents individual investors from borrowing more than half of the value of their stocks was supposed to prevent the overleverage that was thought to be partially to blame for the great stock market crash that happened just a year after the Russian boy composed these lines. So what did people do? We created companies, funded by sophisticated investors, that are exempt from such restrictions.

Government is run by laws that are written down and static. But the real world is dynamic and fluid, and creative people can and should find legal ways to make money. Often that will create a disconnect between the goal of the law — to prevent recessions — and its particular implementations. Then new laws will get passed and new loopholes will be found.

And that is the difference between finance and economics as prescribed by law — the text of the song — and as actually occurs in the real world — the drawing.

There's a reason this famous children's tune has a mournful, bittersweet melody: If it were sung in an upbeat way, it would lose all its meaning. The song is a lament of big government. Ironically, it was a song that came from one of the biggest governments ever (not counting America in 2009), and one of the few Soviet songs to remain popular after the collapse.

Some things should not be made into laws. Some things die when they are codified, like love and warmth and growth. Some things the law and the government should not be mixed up with. Sunshine and blue skies are some of them. Banking and economics are some others.