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| AT THE SWAP MEET |
I love these events - not just for the camaraderie - but
because they are proof positive that economic activity does NOT have to be
convoluted and incomprehensible. It can
be honest and fair and beneficial. This
face-to-face, no middleman type of commerce is such an abnormality in our world,
that it got me pondering the nature and purpose of modern economics. In order to make this complex topic more
understandable, I decided to frame this essay as an open letter to the Nobel
Prize for Economics Committee.
Before getting into my actual communiqué to the jurors, the
back-story of the award itself should be shared with you. Alfred Nobel did not establish a Nobel Prize for Economics. The fields of human endeavor that he wished
to applaud and encourage were Peace, Literature, Medicine, Physics and Chemistry. The award for economics is an “add-on.” Its formal name is The Sveriges Riksbank
Prize in Economic Sciences in Memory of Alfred Nobel. And guess what the Sveriges Riksbank is? If you answered “the Swedish Central Bank”
then you passed your Econ pop quiz.
Now a skeptic might contend that this award is riding on the
coattails of the Nobel Prize reputation.
And a cynic might add that the glorified phrase “Economic Sciences”
indicates profound self-doubt as to the genuine merit of this field of study. A quick glance at the 2013 prize tarnishes the
image of this prestigious award even further.
The committee described it in this language: “The recipients were
honored for their empirical analysis of asset prices.” But amazingly, two of the 2013 laureates have
completely opposing theories on asset prices.
It is like awarding the physics prize to someone who argues that gravity
forces objects downwards and then sharing that award with a scientist claiming
that gravity propels them upwards.
In the world of common sense this is absurd, but in the kingdom
of academia it appears to be meritorious.
It certainly seems like the goal of many scientists and academics is not
to simplify and clarify, but to complicate and confuse – perhaps as a way of
protecting their profitable fiefdoms from those who do not possess their
specialized knowledge. My suggestion to
the Committee is that if they truly wish to legitimize and ennoble the study of
economics, they need to reward research and theories that are understandable
and also valuable to the society as a whole.
Dear Nobel Prize for Economics Committee,
Let me begin by commending you for encouraging insightful thinking and writing in the field of economics. The lives of everyday people are greatly affected by both politics and economics; but the more dominant influence is that which you survey – economics. To a certain extent politics can be ignored or avoided, but economics is all-pervasive in our daily lives. So it should be unceasingly examined and analyzed.
My purpose in writing to you is to suggest that perhaps the
committee’s perspective has become too narrow.
The broad river of any discipline tends to branch off into tiny
meandering tributaries of specialization.
This creates battalions of experts who cannot see the forest because
they are looking at one leaf on a single tree.
Perhaps this is an appropriate time for you to seek out and
encourage economists who are generalists and not specialists. Here are some bullet point observations about
the impact of economics on our planet and its creatures. Most of these conclusions are obvious to the
average person in the street, but somehow they are imperceptible to those in
the ivory towers.
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CAPITALISM HAS MUTATED INTO PREDATORY CAPITALISM A system that once encouraged individual creativity and hard work, is now so totally ruled by those at the top that it has become a private club for the uber-elite, who suppress opportunities for all others. A perfect example is the gargantuan chain stores that bulldoze their way into community after community destroying small local businesses wherever they go. In biology they would be deemed an “invasive species” but in contemporary economics they are honored and forgiven on the grounds that they are a “good business model.”
CAPITALISM HAS MUTATED INTO PREDATORY CAPITALISM A system that once encouraged individual creativity and hard work, is now so totally ruled by those at the top that it has become a private club for the uber-elite, who suppress opportunities for all others. A perfect example is the gargantuan chain stores that bulldoze their way into community after community destroying small local businesses wherever they go. In biology they would be deemed an “invasive species” but in contemporary economics they are honored and forgiven on the grounds that they are a “good business model.”
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TOO MUCH OF OUR COMMERCE NO LONGER INVOLVES GOODS OR SERVICES The so-called “financial sector” has metastasized from a tiny portion of the economy into a Godzilla-like dominator of global markets. But the “products” that they market have almost no intrinsic or tangible value. The bankers and hedge fund managers who rule these kingdoms are sleazy conjurers who merchandise worthless “financial instruments” that are so esoteric that even their creators barely understand them. The world simply does not need “credit default swaps.” But it does need rice in the bowls of the starving millions.
TOO MUCH OF OUR COMMERCE NO LONGER INVOLVES GOODS OR SERVICES The so-called “financial sector” has metastasized from a tiny portion of the economy into a Godzilla-like dominator of global markets. But the “products” that they market have almost no intrinsic or tangible value. The bankers and hedge fund managers who rule these kingdoms are sleazy conjurers who merchandise worthless “financial instruments” that are so esoteric that even their creators barely understand them. The world simply does not need “credit default swaps.” But it does need rice in the bowls of the starving millions.
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THE THREE “P”s OF ECONOMICS ARE BACKWARDS We currently live in a Darwinian “survival of the most ruthless” economic system. Under an Ethical Economics, the three “P”s would be reversed. Profits would be subservient to People and the Planet. This would mean that workers jobs could not be taken away from them by robots or “off-shored” to laborers working for slave wages in Dickensian conditions somewhere in China or Bangladesh. And the wonders of our miracle planet are not simply commodities. Forests are not just “board feet” and rivers are not latent “hydro-eledctric power.” Worshipping “profit” is worshipping Greed.
THE THREE “P”s OF ECONOMICS ARE BACKWARDS We currently live in a Darwinian “survival of the most ruthless” economic system. Under an Ethical Economics, the three “P”s would be reversed. Profits would be subservient to People and the Planet. This would mean that workers jobs could not be taken away from them by robots or “off-shored” to laborers working for slave wages in Dickensian conditions somewhere in China or Bangladesh. And the wonders of our miracle planet are not simply commodities. Forests are not just “board feet” and rivers are not latent “hydro-eledctric power.” Worshipping “profit” is worshipping Greed.
TOO BIG TO FAIL” ARE FOUR DIRTY WORDS The most enormous and powerful banks are allowed to reap obscene profits when one of their endeavors succeeds, but when one of their programs fails, the taxpayer bails them out and eliminates or minimizes their losses. This situation is so perverse that it could only have been conceived by the lobbyists for the banks. But our politicians are also complicit since they pass the legislation that allows it. They do so after receiving huge “campaign contributions” which is the deceitful way of saying “bribes.” And the regulatory agencies, which should be overseeing such malfeasance, are packed with former executives of the very banks that they supposedly monitor.
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UNLIMITED MONEY PRINTING WILL LEAD TO UNLIMITED AGONY Despite the fact that every single fiat currency in history has failed miserably, the Central Bankers of the world are engaged in this practice once again. But this time the consequences will be far more catastrophic because our economies are so interlinked globally that a sneeze in Brazil can lead to pneumonia for the whole world. Anyone who lived through the horror of the Weimar hyper-inflation would cringe at the possibility of such a plague spreading across the entire planet.
UNLIMITED MONEY PRINTING WILL LEAD TO UNLIMITED AGONY Despite the fact that every single fiat currency in history has failed miserably, the Central Bankers of the world are engaged in this practice once again. But this time the consequences will be far more catastrophic because our economies are so interlinked globally that a sneeze in Brazil can lead to pneumonia for the whole world. Anyone who lived through the horror of the Weimar hyper-inflation would cringe at the possibility of such a plague spreading across the entire planet.
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INFINITE GROWTH ON A FINITE PLANET IS NOT JUST LUDICROUS - IT IS GENOCIDAL In human biology unlimited growth is known as Cancer, but in economics it is considered Nirvana. Petroleum is the best example of the destructive consequences of unchecked growth. The world has become utterly dependent on affordable petroleum products for transportation, agriculture, manufacturing etc. As the supply and affordability of oil reaches critical levels the entire panorama of modern techno-industrial society will change and probably crash. And this “threshold of collapse” scenario is also playing out in many other areas such as oceanic fish stocks, drinking water, the desertification of former farmland and many other resources. Ignoring these problems does not solve them. In fact it exacerbates them. The consequences might not be just terrible but genocidal.
INFINITE GROWTH ON A FINITE PLANET IS NOT JUST LUDICROUS - IT IS GENOCIDAL In human biology unlimited growth is known as Cancer, but in economics it is considered Nirvana. Petroleum is the best example of the destructive consequences of unchecked growth. The world has become utterly dependent on affordable petroleum products for transportation, agriculture, manufacturing etc. As the supply and affordability of oil reaches critical levels the entire panorama of modern techno-industrial society will change and probably crash. And this “threshold of collapse” scenario is also playing out in many other areas such as oceanic fish stocks, drinking water, the desertification of former farmland and many other resources. Ignoring these problems does not solve them. In fact it exacerbates them. The consequences might not be just terrible but genocidal.
And so, in conclusion, as you search for future laureates for the Nobel Economics Prize, perhaps there are candidates out there who are less focused on the minutiae of the subject and are instead more conversant with the bigger picture and with its consequences. If the everyday Jane and Joe in the street can perceive the aberrations and injustices of the current economic template, surely there are experts who can also do so - and who can offer meaningful and wide-ranging improvements.