Oct 21, 2016 09:17 PM
The economy is more a messy, fractal living thing than a machine
https://aeon.co/ideas/the-economy-is-mor...-a-machine
EXCERPTS: Mainstream economics is built on the premise that the economy is a machine-like system operating at equilibrium. According to this idea, individual actors – such as companies, government departments and consumers – behave in a rational way. The system might experience shocks, but the result of all these minute decisions is that the economy eventually works its way back to a stable state. Unfortunately, this naive approach prevents us from coming to terms with the profound consequences of machine learning, robotics and artificial intelligence. Most economists’ predictions in the area are wildly unrealistic. [...] There’s a stark contrast between the classical notion of equilibrium and the complex-systems perspective. The former assumes rational agents with near-perfect knowledge, while the latter recognises that agents are limited in various ways, and that their behaviour is contingent on the outcomes of their previous actions. Most significantly, complexity economics recognises that the system itself constantly changes and evolves – including when new technologies upend the rules of the game....
In a highly indebted world, austerity is a permanent state of affairs
https://aeon.co/ideas/in-a-highly-indebt...of-affairs
EXCERPTS: [...] Meanwhile, those whose assets the public bailed out – those with investible wealth, those who hold ‘all that debt’ and make money from it – do not suffer from the decline in public spending. Since they are net lenders, the hike in personal indebtedness does not trouble them either.
The result, and the situation in which we find ourselves, is a classic bad equilibrium. Those who can’t pay, and don’t earn enough, are being asked to pay the most to service debt, from which they do not and will not benefit. Those who can pay, and earn almost all the income, both contribute the least and benefit the most from ‘all that debt’.
Strip away all the electoral politics at the moment in the US, the UK, Italy, Spain and elsewhere, and that’s the underlying political economy. It’s a creditor/debtor stand-off where the creditors have the whip hand.
And yet, the more they crack the whip, the more the backlash against austerity, in all its forms, gains strength. Donald Trump, Jeremy Corbyn, Marine Le Pen, Pablo Iglesias: Left or Right, they are all riding debtor anger against creditor strength. It might be expressed as anger against, variously, ‘trade’ or ‘the elite’ or the ‘EU’. But what’s underneath all that is the politics of debt.
This is the ‘new normal’. It’s not about flat interest rates or anaemic growth rates. They are the consequences of austerity, not its causes. The new normal is the new politics of debtors versus creditors. It’s here to stay. As we already can see, it’s going to be anything but normal....
https://aeon.co/ideas/the-economy-is-mor...-a-machine
EXCERPTS: Mainstream economics is built on the premise that the economy is a machine-like system operating at equilibrium. According to this idea, individual actors – such as companies, government departments and consumers – behave in a rational way. The system might experience shocks, but the result of all these minute decisions is that the economy eventually works its way back to a stable state. Unfortunately, this naive approach prevents us from coming to terms with the profound consequences of machine learning, robotics and artificial intelligence. Most economists’ predictions in the area are wildly unrealistic. [...] There’s a stark contrast between the classical notion of equilibrium and the complex-systems perspective. The former assumes rational agents with near-perfect knowledge, while the latter recognises that agents are limited in various ways, and that their behaviour is contingent on the outcomes of their previous actions. Most significantly, complexity economics recognises that the system itself constantly changes and evolves – including when new technologies upend the rules of the game....
In a highly indebted world, austerity is a permanent state of affairs
https://aeon.co/ideas/in-a-highly-indebt...of-affairs
EXCERPTS: [...] Meanwhile, those whose assets the public bailed out – those with investible wealth, those who hold ‘all that debt’ and make money from it – do not suffer from the decline in public spending. Since they are net lenders, the hike in personal indebtedness does not trouble them either.
The result, and the situation in which we find ourselves, is a classic bad equilibrium. Those who can’t pay, and don’t earn enough, are being asked to pay the most to service debt, from which they do not and will not benefit. Those who can pay, and earn almost all the income, both contribute the least and benefit the most from ‘all that debt’.
Strip away all the electoral politics at the moment in the US, the UK, Italy, Spain and elsewhere, and that’s the underlying political economy. It’s a creditor/debtor stand-off where the creditors have the whip hand.
And yet, the more they crack the whip, the more the backlash against austerity, in all its forms, gains strength. Donald Trump, Jeremy Corbyn, Marine Le Pen, Pablo Iglesias: Left or Right, they are all riding debtor anger against creditor strength. It might be expressed as anger against, variously, ‘trade’ or ‘the elite’ or the ‘EU’. But what’s underneath all that is the politics of debt.
This is the ‘new normal’. It’s not about flat interest rates or anaemic growth rates. They are the consequences of austerity, not its causes. The new normal is the new politics of debtors versus creditors. It’s here to stay. As we already can see, it’s going to be anything but normal....
