Something is wrong with the world – it is not working. But when I mention this obvious fact to people, all I get is blank looks, and I am forced to recognize something even more shocking – that the people in that world are not working either! And they are incapable of realizing this.
A big part of the problem is economic. People do recognize this, if dimly. But their solution is the same – to act stupid. Or to put it even more bluntly – to be ignorant, stupid, and helpless. And even worse than that – to set about destroying their world – something they know how to do instinctively.
Perhaps eventually historians will be able to understand this destructive sequence – but I am skeptical, they still have not yet settled on the reasons for the Fall of the Roman Empire. But both societies, however, have one thing in common – they were BIG. And determined to get even bigger.
We should be in better shape because we have Science and Technology to help us. But we are rejecting the findings of one of those sciences – Economics. Or it would be more accurate to say that we are incapable of distinguishing bad economics from the good.
Good economics is a science – it check its theories against the behavior of the real world. And it can make reasonable forecasts – as any science can. It can point to its track record – something bad economics does not even try. It simply has The Truth, and applies it mercilessly, regardless of the consequences.
It’s worth quoting Krugman’s article:
As I’ve written many times in various contexts since the crisis began, being in a liquidity trap reverses many of the usual rules of economic policy. Virtue becomes vice: attempts to save more actually make us poorer, in both the short and the long run. Prudence becomes folly: a stern determination to balance budgets and avoid any risk of inflation is the road to disaster. Mercantilism works: countries that subsidize exports and restrict imports actually do gain at their trading partners’ expense. For the moment — or more likely for the next several years — we’re living in a world in which none of what you learned in Econ 101 applies.
I think there is more too it than this. Industrial society, based on manufacturing, is no longer. And the Computer society cannot employ many people. Human society has reached its ultimate crisis and a collapse is inevitable. What will happen is anyone’s guess – but it will not be pretty.
The Wikipedia article is also excellent – and I like its graph particularly. It’s a good example of using a model to explain the world.
But people cannot understand what is going on – or want to understand it. If the world falls down around their heads – good riddance!