[lit-ideas] Economics - Not
- From: Andy <mimi.erva@xxxxxxxxx>
- To: lit-ideas <lit-ideas@xxxxxxxxxxxxx>
- Date: Thu, 29 Sep 2011 06:13:56 -0700 (PDT)
I know the last few posts on the economy seemed a bit concentrated. I spent
the last couple of years following it, and it was all more or less compressed
into two posts. I want to mention though, that the field of economics itself
is a bogus science. It's just a measure of fossil fuel energy, although no
economist will ever admit it. It's no coincidence there was no economics until
the field was born with classical economics after the industrial revolution
began, which is to say, the steam engine, etc., all made possible with the
discovery of coal in England. Adam Smith, one of the quintessential classical
economists, wrote his famous treatise Wealth of Nations in 1776. No fossil
fuel powered industry, no need for economics.
Before that the only energy was human and animal energy, although much was done
with even that limited energy over time, the pyramids for example. When oil
was discovered, the industrial revolution went into overdrive, and the
consumption economy was created, literally created, people sat down and thought
it up, early in the 1900's, bringing it into full swing by mid century. When
economics was born, more or less with Adam Smith, it was called political
economics, later to be referred to as macroeconomics. Macroeconomics at least
codified how an industrial civilization works. Then along came microeconomics,
the MBA's. Microeconomics was total utter nonsense, pure hocus pocus alchemy.
Supposedly they were hiring physicists to program computers to figure out
derivatives (oooo, derivatives), when nobody understands derivatives, not even
the physicists programming the computers. Unlike quantum theory or classical
mechanics, there's no there
there with derivatives.
Derivatives were, if not the foundation, then a large part of the
financialization of the economy. They're held by banks, they're betted for and
against by big money, but it all boils down to "let's assume a can opener".
Even money itself. Once upon a time people put real earnings into banks.
Today (and for decades really) banks, the Federal Reserve at any rate, create
money out of thin air, literally, enter a number into a computer and lend it
out. Banks then engage in "fractional banking", i.e., they're allowed to loan
up to nine times the amount they have. In reality they were lending up to 30
(or more) times what they had in reserves. They were lending money to people
who had no prayer of repayment. It was all fantasy. The mortgage bubble was
all fantasy. Our economic system is all fantasy, which really makes me wonder
why they don't scrap it and start over. Right. Jamie Diamond (Chase) is going
admit his bank and his power are
based in fantasy. I don't think so. If there was a run on his bank though,
like in the 30's, that would be a different story. The bank would fold.
Depression is to be avoided at all costs. Interestingly, for all our hyper
power, our collective happiness quotient is very low.
The limits to growth idea first came out in the 1970's, that there were limits
to growth, literally, that economic growth had to be bounded by natural
resources on a finite planet. That idea was attacked by, yes, economists and
forced out off the radar. Why? Because without growth there is no economics
and no need for economists. Sounds incredible, but it's the identical line of
'reasoning' that humans have used eternally. Live in the moment, which
apparently, some say, is evolutionarily selected for since when the saber tooth
tiger wasn't around there wasn't much reason to worry about it. (Presumably
pessimists are the recessive genes, just kidding.) Plus the world is so big,
who cares? In the long run we're all dead said Keynes.
At any rate, the good news is that even though things are changing, as they did
when sliding into the industrial revolution, barring a black swan event such as
Fukushima, most change happens at the speed of grass growing. Most likely
events will unfold as they always do, a creeping normal, and most people won't
even notice. The really good news is that the artificially hyped up energy
levels, while having some advantages, brought many disadvantages. Once things
become less hyper-powered, life really should get much better. That may be the
subject of other posts, or not, depending on interest.
In the meantime, here's a song to wish you a nice fossil fuel powered day:
http://www.youtube.com/watch?v=tnpLI2fJDfU&feature=related
Andy
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