In our last episode, I discussed losing my job because of (ominous musical fanfare): The Great Recession. I pointed out that this was/is, generally speaking, a fact. However, I went on and on (you know how I get...) to demonstrate that specifically speaking, the particular reason was/is hard to pin down.
This is true because if I look at what happened via a big picture view, and strive for objectivity, I can observe any number of seemingly concrete facts. But which particular combination of concrete facts resulted in my losing the last real job I had is nothing more than a best guess. And what about facts that I may be completely unaware of? Sheesh, it would seem that economics, like everything else in life, is mostly just a best guess, based on (hopefully) known facts, and subject to our built-in biases.
Macroeconomists, like all social scientists, are much better at explaining things afterward than in making predictions. Why? variables. Just like the weatherman, they have to deal with myriad known unknowns, and, unknown unknowns. Which is a very fancy way of saying they try and make predictions about systems that are so complex in nature that an educated guess is as good as it gets.
This is why a minimally regulated market works better than a highly regulated market. This is why when you go to the supermarket most of the thousands of competitively priced products they carry are always in stock -- literally millions of specialists pursuing their own self-interest and freely trading with each other. This is why communism and strict versions of socialism don't work, it's physically impossible for politicians and bureaucrats to efficiently do what the market does effortlessly.
If we’re truly free, we’re free to trade. Common sense suggests that both sides in a given transaction are getting something they want out of it or it wouldn’t happen. Life on Earth being what it is, in spite of what we would like it to be, there’s no guarantee the result of a given transaction is going to be completely fair and equitable for both sides. Let the buyer beware, but let the buyer buy, if they want to. Prosecute the weasels, enforce the contracts, read Consumer Reports and ask dad, mom or your dutch uncle what they think. Secure your _______ and jump.
More than a few thought they might also enjoy eating regularly and being able to seal the couch in plastic to keep it nice. Liberty might be nice too but that proved to be a lot harder and much more complicated. Life on Earth being what it is, instead of what we would like it to be (a phrase that bears repeating), there’s always gonna’ be bullies that embrace their inner chimpanzee - bullies need victims.
And if that ain’t bad enough, now we have to deal with a communication/high tech revolution. It’s like the industrial revolution on steroids (and there still isn’t much work for saddle makers) in that the rules of the game keep changing and nobody on the rules committee has a clue what the final draft is going to be.
And if that ain’t bad enough it turns out there is no rules committee, there are just H. sapiens hoping it all works out somehow, and that the civilization ending sized meteors keep missing the mother ship. It may be the best of times, but it might be the worst of times. As noted in part six, not even the experts of Federal Reserve can be relied upon to accurately tell us what's next. Also, they’re acutely aware that throwing the wrong lever at the wrong time, considering how complex and interconnected the global economy is, can easily set off a cascade of unexpected and unwelcome consequences.
But I've gotten ahead of myself, and I've exceeded my words quota, and I've sorta jumped from 1776 to the present, and I've gotta go. Stay tuned for part eight, the season finale.
Have an OK day.
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