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Like an overflowing pitcher

January 21, 2013

Systems can be judged by how closely they represent reality.  That’s how scientific theories are judged.  You take a set of ideas like Newton’s ideas about gravity, and they work together as a system that tells us how to think about the universe.  But we have experiences of the universe also.  If Newton’s system of ideas says that the moon will appear in the sky at a certain time, but the moon doesn’t appear then, we would know there was something wrong with Newton’s system.

 

We know that there’s a lot wrong with our economic system.  It’s a set of ideas that work together to give us a way of thinking about the world.  But the things it predicts don’t happen around us.  This is so well known that economics students aren’t given any real examples of real countries to work with.  The theories are tought in reference to “Country A” and “Country B,” or similar.  It’s very obvious that the system only works in a fairytale reality, but that isn’t a concern of the people teaching it.  The point is not to teach ordinary people how economics really works.  The point is to tell them what is useful for them to believe, and then reward the ones who demonstrate that they’ve learned the ideology and can apply it.  Those are the ones who will say things that benefit the rich, and say it in a way that sounds convincing.  It may be worth hiring them, which means they may be able to pay off their student loans, which means they are the best students.  That is why they deserve A’s.

 

So alright, it’s a corrupt system.  That in itself isn’t worrying.  People lie, people pursue their own interests, such is the world.  Economists are priests of a new materialistic religion, and they do what priests do: teach the faith to the flock, so that they’ll keep on quietly growing wool and being fleesed by the shepherds.  Looked at from one viewpoint it may be unjust; but from another, the sheep may be happy with it, and the shepherds may be happy with it, so it isn’t important whether or not the faith is true.

 

However, there is a world outside of the fantasies of people, and if our fantasies diverge from it too far we’re eventually confronted with consequences.  You can believe that wearing a certain amulet makes you invulnerable to fire, for example, and the belief is just fine as long as you aren’t near any fires.  Maybe the amulet helps you sleep.  You used to have trouble falling asleep at night because you worried about the house catching fire at night.  Now you just wear your amulet to bed and don’t worry, and you sleep great.  You’re happy, and the guy who sold you the amulet is happy, so what’s the problem, right?  There isn’t a problem, as far as it goes.  We can cherish unrealistic beliefs our whole lives without suffering any consequences.  But if one day there is a fire, and we stroll confidently into it because we’re wearing our fire-protecting amulet, suddenly the belief is no longer enough.  We can have such utter faith in our amulet that we ignore even the sensation of burning, but when our skin blackens and falls off our ignorance doesn’t keep us alive.

 

So we have an economic system founded on paper money.  We have a lot of faith in this system, and with some justification.  Most people spend most of their lives doing work, and being rewarded for it with paper money.  And that is working reasonably well.  You hand your paper to people at cash registers, and they don’t try to stop you from walking out of the store with real solid objects.  So it works.

 

People don’t talk about why most paper is nearly worthless, but the bits that have the money symbols printed on them are a matter of life and death.  We don’t talk about who gets to print those money symbols on bits of paper, thereby spinning wood pulp into gold.  We talk constantly about how to get the paper money once it’s printed up — “What do you do for a living?” — but the printing itself, and the managing of it, is generally ignored.  As long as inflation isn’t too bad, that makes a kind of sense.  Whoever’s playing God — creating out of thin air what most people have to devote most of their lives to aquiring — the pseudo-God must not be taking all that much for itself.  If it went wild and printed up lots of money, there could be cause for concern; but as long as it’s a well-behaved pseudo-God, we needn’t worry.

 

Einstein reportedly said that he studied physics because he wanted to know the mind of God.  If you want to know the mind of the pseudo-God that creates our money, and which people worship by working in order to earn it, you could study economics.  It’s all there.  It’s concealed by being written in a lot of jargon, like most religions.  The priests normally interpret it for ordinary mortals, because it sounds very complicated — you may be puzzled about how a piece of bread takes on the substance of the body of someone who died two thousand years ago, but that’s because you never learned to read Latin.  Similarly, it’s hard for you to understand why the paper in your wallet is worth so much — the sacrament by which paper is transubstantiated into money takes a lot of specialized training and mastery of certain jargon in order to grasp.  But if you have time, and nearly superhuman patience, you can slog through the doctrines that guide the pseudo-God we worship.  His mind is pretty clearly written down, though in so much jargon that it may as well be Latin.

 

Our pseudo-god believes that the only value anything has is the value set for it by a market.  In other words, the price tag is the value of the thing.  Maybe it’s a warm jacket manufactured in China, on sale for $30.  Its value is therefore $30.  If tomorrow it isn’t on sale, and its price tag says $60, then it became twice as valuable overnight.  You may wonder how that could be, since it’s the same jacket as yesterday, but mainstream economics only concerns itself with right now, and it has absolute faith in the ability of markets to determine the value of things.  Planning is for communists.  There is no past, there is no future, there is only right now.  There are no values that aren’t expressed by price tags.  Air is free, for example, so air is valueless.  You might think it’s important; you might think that keeping it breatheable is important.  But that’s thinking about the future; that’s planning ahead.  The pseudo-god believes that clean air won’t be worth anything until you have to pay for it, and then it will be worth whatever the market makes you pay.

 

In general the well-trained economists do believe that only now matters, and planning leads to inefficiency.  They’re also trained not to think about politics.  Free trade is good because it reduces the ability of governments to control their economies.  Privately-owned central banks are good for the same reason.  Whoever has money should be free to spend it as they like, no matter how many people are effected by those decisions — political interference is bad.  Regulation is bad.  The price tag of a thing expresses its real and only value, and thinking about the future is generally a waste of time.

 

This is the creed of our priests.  This is the guiding wisdom of our society.  That the rich must be left alone to do as they like, and their decisions will be correct by definition.  There are other societies in which the government is expected to play a more active role in the economy, but those are misguided communists.  This is not a thing we need to prove, because economic theory doesn’t concern itself with real countries: but you can deduce by studying country A and country B, taking for granted a few unimportant assumptions, that countries in which the government is allowed to play a role in the economy are bound to fail.  The wisdom is so comprehensively tought, and so useful to rich people in North America and Europe, that I don’t think it’s going to change quickly enough to make a difference.  Lots of people have tried to change the thinking by publishing articles and books, and so on.  But this worldview has proven its usefulness to the people who set agendas here, and clearly it will take more than just a public bailout of the whole system to make them admit that the pseudo-god they’ve erected might not be omniscient.

 

I do expect our economic system to go the way of the Soviet one.  It’s just as unwilling to confront reality as the USSR’s system was.  It’s up to the people lending money to our system to decide when to quit lending, and how quickly.  Hopefully the results will be peaceful; hopefully the American political class will allow itself to be bought off, like the Soviet one did, and be content to go be oligarches somewhere.

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One Comment
  1. i’m very glad you started a new blog. I’ve enjoyed reading it so far.

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