Tuesday, December 9, 2008

An Economic Conundrum?

Well, we might be on the brink of a depression, and, then again, we might not. What depresses me is how people are talking about some "New Economics" as if things had really changed in how numbers add up, overnight. This little bit of blather is not here to propose any radical new calisthenics, only "thinking out loud," to try and put my finger on the problem.

Perhaps everyone has that nagging sense that things aren't quite right with the current model. I saw Michael Kinsley (pushing his new book, Creative Capitalism: A Conversation with, etc.) talking about our policy being a paradoxical "spend, then save, then spend" on Charlie Rose the other night. I haven't read the book yet, so I don't have any criticism in my mind, but the economics in this book is, Michael Kinsley will be able to make some scratch when other journalists are out of work, or merely blogging for nothing (ahem...).

I don't think that Economics, in and of itself, can be "re-invented." Simply stated, economics is the flow of goods and services throughout the population/world/universe. We can measure it; we can (and do) make some rules about how goods and services can flow, and who gets what, whether bridges or hospitals or monuments to Great Statesmen are built; but these are not economics - they are politics, and power. The "economic model" that we call Capitalism is, in fact, a set of political rules on how the flow is managed. Who gets what, and when.

Most folks like to call ours a "market economy." What is a market economy? Well, it depends on what channel you are tuned to, but it appears to be one where people are free to make choices about the things they need and want. I can live in a dump and buy a BMW, or live in a mini-palace and walk. Folks (consumers) get "votes" and go out and "vote" for the stuff that they want. People who have what they want (suppliers) get "votes" for the stuff they provide. All this voting stuff is done with money.

Now, what is an example of non-market economics? You have been seeing and complaining about several good examples - war (pick one); the bank/mortgage bailout; the Big 3 automotive bailout. What characterizes these economic decisions is that they are (usually) made by a few people, with a lot of "votes" in the bank. Mostly, these are decided with tax dollars. There are more subtle non-market decisions to be made, like health care, welfare, transportation, parks, libraries, zoning regulations, environment. If Mr. Gates makes a decision to try and beat AIDS in Sub-Saharan Africa and to ignore water projects in North Africa, this, too, is a non-market decision. I am not here to argue for or against them as a group, I'm just describing them.

What is actually wrong today? What is hidden, and what is visible? Where, in fact, is the problem? We seem to have enough things, enough food. There are hungry children, according to charities that help them, but we have food enough to give; no breadlines. The shelves are not empty. We are not in Dickens' England. In fact, we have plenty, and at pretty good prices. Most middle-class households might take a good look at their closets & storage bins and decide that they had too much. I definitely could lay back on the clothes buying for a few years, and the holiday accoutrements in FX-ville are crowding out of their alloted space under the stairs. If I got any new toys, I would have to stop playing with the perfectly good ones that I haven't broken. I don't have enough leisure time to own more stuff. My neighbor has rebuilt his kitchen three times over the past 10 years.

In spite of all of this, the little tickets we use to measure the market economy (money) are finding themselves, like salmon, swimming upstream against a powerful current, to get where they need to be. There is something wrong, but we are having a heck of a time figuring out precisely what it is. The government wants us to spend like mad on the one hand, but then we have to save like misers on the other. Like Michael Kinsley hinted, we seem to be being forced to have our cake and eat it, too, and we just can't do the math.

Wordle: Talk of the Town 2009...

No comments: