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The economy is not a machine - it's an ecosystem.

Bullseye

Bullseye

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Came across this this morning and found its premise very interesting.
Comparing the economy to an engine means that it's made up of parts that interact in precise ways and that, if they break down, can easily be fixed by smart technicians. It suggests that pushing the right buttons and flipping the right switches, adding the right mix of fuel in the proper amounts will keep it running smoothly.

The metaphor ends up driving reality, and economic policy prescriptions. Yet these policy prescriptions almost never work as intended. Stimulus plans don't stimulate. Fed rate hikes often cause the recessions they're supposed to prevent. As Paul Krugman put it, "bad metaphors make for bad policy."
The more accurate metaphor for the economy is an ecosystem.

"The economy is too complex to be engineered," noted Max Borders in an article for the Library of Economics and Liberty. "It is dynamic and organic. "

"We can no more fix an economy," he says, "than we can fix a rain forest or a coral reef. At best, we can leave it alone."

Andrew Coyne, writing in Canada's National Post, makes the same point. "Leave its self-equilibrating processes to work, and watch it flourish. Start monkeying about at one end, on the other hand, and be prepared for all sorts of unintended effects to spread throughout."
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Now, if we just introduce some rabbits into this flourishing ecosystem, I'm sure things would go better. :mrgreen:
 
This article is about an argument for hands off market economics, why is this in the "government spending and debt" area of the forums?
 
The engine metaphor may be lousy, but history has already proved that ignoring the economy completely doesn't work either.

You left out a key point, that the article opened by complaining about the Fed's rate hikes. Right or wrong, these are the only tools available to a nation to curtail inflation pressures.
 
OrphanSlug said:
This article is about an argument for hands off market economics, why is this in the "government spending and debt" area of the forums?
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Because it refers to an alternative to government intervention for every little hiccup in the economy.
 
The first step in making people believe they need a magician, is convince them what they are scared of is magic.

every bad thing that's happened in the economy has been predicted and warned of, and the warning ignored.

The housing bubble? Someone totally saw that coming. Showed everyone, this is what's going to happen. They ignored him, and he shorted them, and he's ****ing wealthy now. And also investing in water. So maybe, people should stop complaining about the educated elite, and maybe consider they aren't full of ****. When they tell you, you are full of ****.

The founding fathers themselves predicted alot of this ****. Instead of getting butthurt that your whole worldview is wrong, maybe pick up a book, and try and figure out where you got it wrong.
 
DifferentDrummr said:
The engine metaphor may be lousy, but history has already proved that ignoring the economy completely doesn't work either.
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When?

DifferentDrummer said:
You left out a key point, that the article opened by complaining about the Fed's rate hikes. Right or wrong, these are the only tools available to a nation to curtail inflation pressures.
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Possibly but we've had inflation and recessions with the Fed trying to use those tools.
 
Bullseye said:
Because it refers to an alternative to government intervention for every little hiccup in the economy.
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"Ecosystem" is a bad metaphor for neocons to be enamored with since even ecosystems can become deserts without man.
 
Bullseye said:
Came across this morning and found its premise very interesting.
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Ummmm... We engineer ecosystems all the time. We farm, we cut down trees, we build dams and levees, we create global warming, we manage hunting seasons. There are a number of different endangered species that we've been able to bring back from the brink of destruction by managing our ecosystem. In truth, an ecosystem is a machine so the supposed distinction between these two analogies is idiotic. The fact that some of the things we try don't work doesn't mean it isn't possible. Just because something is complex doesn't mean it can't be understood. It can take longer, but we can still study it, and better understand it all the time.

Libertarians want economic chaos because almost all of them are upper-class white men who stand to benefit the most from that chaos. They are already in positions of power and see the government as they only check to their power. They'll believe any dumb argument that supports that position regardless of how nonsensical it is. This analogy is no better.

The analogy that I prefer best and have been using a lot lately is that of a doctor's patient. When a patient comes in with certain symptoms there are generally things the doctor knows he can do to try and make you better, but they don't always work. No matter good your doctor is, they can't always prevent you from doing dumb things to yourself that get you hurt or make you sick. That doesn't mean there aren't good choices or better choices that can improve our odds of success, and that doesn't mean we can't continue to re-evaluate them over time.
 
MrWonka said:
Ummmm... We engineer ecosystems all the time. We farm, we cut down trees, we build dams and levees, we create global warming, we manage hunting seasons. There are a number of different endangered species that we've been able to bring back from the brink of destruction by managing our ecosystem. In truth, an ecosystem is a machine so the supposed distinction between these two analogies is idiotic. The fact that some of the things we try don't work doesn't mean it isn't possible. Just because something is complex doesn't mean it can't be understood. It can take longer, but we can still study it, and better understand it all the time.

Libertarians want economic chaos because almost all of them are upper-class white men who stand to benefit the most from that chaos. They are already in positions of power and see the government as they only check to their power. They'll believe any dumb argument that supports that position regardless of how nonsensical it is. This analogy is no better.

The analogy that I prefer best and have been using a lot lately is that of a doctor's patient. When a patient comes in with certain symptoms there are generally things the doctor knows he can do to try and make you better, but they don't always work. No matter good your doctor is, they can't always prevent you from doing dumb things to yourself that get you hurt or make you sick. That doesn't mean there aren't good choices or better choices that can improve our odds of success, and that doesn't mean we can't continue to re-evaluate them over time.
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I made that analogy to Bulls years ago on another forum when I compared the US economy during the crash to a patient having a heart attack and the need to provide care, not simply to expect the patient to improve by being left alone on a streacher.
 
MrWonka said:
Ummmm... We engineer ecosystems all the time. We farm, we cut down trees, we build dams and levees, we create global warming, we manage hunting seasons. There are a number of different endangered species that we've been able to bring back from the brink of destruction by managing our ecosystem. In truth, an ecosystem is a machine so the supposed distinction between these two analogies is idiotic.
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Nonsense. Ecosystems are so complex and interconnected that no machine could ever approach.


MrWonka said:
The fact that some of the things we try don't work doesn't mean it isn't possible. Just because something is complex doesn't mean it can't be understood. It can take longer, but we can still study it, and better understand it all the time.
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Actually, in most cases we just create environment for the ecosystem to heal itself and flourish.
MrWonka said:
Libertarians want economic chaos because almost all of them are upper-class white men who stand to benefit the most from that chaos. They are already in positions of power and see the government as they only check to their power. They'll believe any dumb argument that supports that position regardless of how nonsensical it is. This analogy is no better.
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Yet you claim to lean libertarian.
MrWonka said:
The analogy that I prefer best and have been using a lot lately is that of a doctor's patient. When a patient comes in with certain symptoms there are generally things the doctor knows he can do to try and make you better, but they don't always work. No matter good your doctor is, they can't always prevent you from doing dumb things to yourself that get you hurt or make you sick. That doesn't mean there aren't good choices or better choices that can improve our odds of success, and that doesn't mean we can't continue to re-evaluate them over time.
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But that doctor analogy is just a subset of the economy as a machine mindset. Both are far more progressive than libertarian. Change you lean choice immediately. :lol:
 
Winston said:
How does Trump imposing tariffs fit into your hands-off approach?
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Don't care, this thread is about the nature of the economy.
 
MrWonka said:
Ummmm... We engineer ecosystems all the time.
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No, we don't.

Do you remember that isolation dome experiment? It failed badly.

Local ecosytems will fail at times. They will be replaced from critters from other areas.

When we try to build an ecosystem, we can't build in the same level of complexity or resilience. What you need to do is avoid cascade failure, and at the present time we have no idea how to do that. Build a colony on Mars or the Moon, and it will need regular inputs from Earth to avoid collapse. If you don't catch the cascade early, but size of the input can be considerable.

One of the fun parts to this is that predicting a casacde failure seems to be impossible. It's not the intial failure that kills you, it's the cascade. And that gets us into what used to be called chaos theory.

Now, about the thread topic, first, a little history. Governments got involved in their economies because they had to get involved. It's one of the defining characteristics of a modern economy, as opposed to the mercantilism (or some other primitive arrgangement) that some here argue for (although they clearly don't realise that's what they are doing).


Second, an economy is an artifact. Evolution metaphors are quite handy, you can find them everywhere. But they can be overused. Economies are artificial, and like an artificial ecosytem, they will need inputs that you wouldn't see in Nature.
 
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Bullseye said:
Because it refers to an alternative to government intervention for every little hiccup in the economy.
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If the calculation for GDP = C + I + G + (X – M) and "G" is government spending, what do you guys think will happen if G disappears?

Between government spending going up or down as a means to help with aggregate demand, or using interest rate to handle economic conditions contributing to inflation or recessions there are few other tools to be used to handle the economic cycle. What do you guys think will happen with a completely hands off model?
 
danielpalos said:
I agree to completely disagree.

Trade wars are one prime example of public sector interference. Yet, the right wing only refers to social services when they want cuts in spending.
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This has nothing to do with right wing vs left wing, or trade wars.
 
OrphanSlug said:
If the calculation for GDP = C + I + G + (X – M) and "G" is government spending, what do you guys think will happen if G disappears?

Between government spending going up or down as a means to help with aggregate demand, or using interest rate to handle economic conditions contributing to inflation or recessions there are few other tools to be used to handle the economic cycle. What do you guys think will happen with a completely hands off model?
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Which has nothing to do with the nature of the economy. Whether it's a machine or an ecosystem or some other model, the government is still going to spend in order to perform its functions. What you do see is that "G" is taken out of the economy from entities who would put that money back into GDP more effectively and efficiently than the government.
 
Bullseye said:
Don't care, this thread is about the nature of the economy.
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Not really, it a pedantic argument about how the US economy is described in simplified terms, not about its inherent features.
 
Bullseye said:
Which has nothing to do with the nature of the economy.
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Wrong again, that IS a description of its inherent features. Get a dictionary and stop using the bullsictionary.
 
Bullseye said:
Don't care, this thread is about the nature of the economy.
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Why support a man who is in opposition to your viewpoint on the nature of the economy?
 
Bullseye said:
Which has nothing to do with the nature of the economy. Whether it's a machine or an ecosystem or some other model, the government is still going to spend in order to perform its functions. What you do see is that "G" is taken out of the economy from entities who would put that money back into GDP more effectively and efficiently than the government.
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Actually it does, the nature of the economy is driven by multiple components and indicators as to its strength.
 
Winston said:
Why support a man who is in opposition to your viewpoint on the nature of the economy?
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what part of "this thread is about the nature of the economy" do you find hard to grasp?
 
late said:
No, we don't.

Do you remember that isolation dome experiment? It failed badly.
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Ummm...no it didn't. And that's just one small example. The army core of engineers regularly builds and maintains all kinds of dams and levies that manipulate our rivers for beneficial reasons. ****, the Chicago River now flows in the opposite direction thanks to engineering.

late said:
When we try to build an ecosystem, we can't build in the same level of complexity or resilience.
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Sure we can, but we're not really trying, and that's not the point. The point is that we can use engineering to manipulate the environment for our own benefit. Another good example is the reintroduction of wolves into Yellowstone national park. The resurgence of the bald eagle.
 
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