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The Age Of Freakonomics

Motto: „Critics, in accordance with prevalent opinion, exclude all moral forces from theory, and will not allow it to be concerned with anything but the material forces, so that all must be confined to a few mathematical relations of equilibrium and preponderance, of time and space, and a few lines and angles. If it were nothing more than this, then there would not be a scientific problem for even a schoolboy” – General Carl von Clausewitz

Both the present day economic crisis and the exuberance of the 2004-2007 years are far too complex things to be left to such lowly beings as traditional economists. The basic flaw of economic science of the last few centuries lies in the fact it has not been a true science, more a mathematical reflection on an idealized reality.

Science Sucks

Science, generally, is unpleasant. Even from the moment you rub noses with it in grade school. It takes years to master, it takes energy and devotion, incessant reading and analysis, poor social life. It feels much better to be the football field star instead of the nerdy bastard from the darker corner. Until you find yourself working for the said nerd, at least. Take the general unpleasantness and esoteric character of science and add the next unpleasant thing, try to explain it to some pointy haired boss who has a migraine. And who holds the power of life and death over you.

So if you want to have a long and prosperous career, you need to keep the science under the carpet and obey the rules. Which means to support what the official ideology has to say. Just as advocating free market in Stalin’s Soviet Union usually cut your career short. With a Nagant bullet to the back of the head.

Therefore economic thought followed the same tortuous paths as physics in the Middle Ages, as the people tried to reconcile the accepted outlook of life with logic and research, accomplishing nothing. Official economic theories say little to nothing of the black markets, for example… which becomes obviously disconnected from reality when the black market has a large percent of all goods traded in the country. As it is customary in totalitarian states.

Social And Economic Thought Runs On Belief, Like Religion

KiplingWhich brings us to the point where the leadership claims absolute control over economy, and yet they barely know the existence of entire branches of it. (Non-totalitarian example: the illegal drug market in the Western countries amounts to billions. How much do Government people know about it? Does it count as part of the national GDP, or not? The fact you’ve made it illegal does not mean it does no longer exist, you know.) Yet, they run it. Judge via false and biased reporting, take biased and misguided decisions, vote laws which diverge from social reality. And the social mechanism runs forward, wages and taxes are paid, goods bought, investments made, statistics published. As Rudyard Kipling used to say, „if the Government’s Financial Statement is not magic, I don’t know what it is”.

Was life better in the pre-1990s Communist regime, and if so, why? Were the people on the opposite, free side, better a few decades ago, and if so, what was the reason? After all, the most elementary way of doing statistics shows in most material and technical issues the present day is incomparable. Even the decline of crime followed the trend, 2011 was the year with least number of violent crimes in history. And yet the reaction of people was absurd, everyone seems to desire a tightening of the laws and surveillance, like we are in the middle of a war.

The Glory And Death Of Socialism

In practice, the amount of power wielded by the State, Big Brother surveillance notwithstanding, has mellowed itself over time, while the amount of power wielded by a private citizen, either in the West or the newly-developed countries like China, has increased exponentially throughout the last 30 years.

Generally, from 1945 to 1980, the power, be it financial, military, scientific or propagandistic, relied on centralized control, government or corporate authority, state investments, long term objectives. Broadcasting TV could be done only by the State or large corporations simply because nobody else had the resources to do it, scientific research was outside the reach of the general public for the same reasons (who could build a mainframe computer or nuclear reactor?), the regime of wages, salaries, taxation and public services was established by negotiations between State, corporations, conglomerates, trade unions. A trade union in a large market economy had more members and wielded more power than entire national armed forces together.

The difference between Eastern Bloc and free market economies stood in methods, visibly brutal in one place and more civilized in the other. Not in the basic principles. During Cold War, schooling, building a career, family structure, military service, cultural life were barely different. Judging with a cool head, the Cold War was a dispute between a „capitalism” where every business was run (indirectly) by the State and another one where every business was owned by the State. The State and the military were those who flew men in space and on the Moon. On both sides. And people believed in it. They expected it. There was no need to punish those who asked questions, because too few people dissented to matter.

For these reasons, even crime followed the trend, being the province of millionaire crime lords dictating their own conditions. Authorities could afford to be lax to a citizen in matters of social disturbances (illegal car racing, unregistered gun ownership, building illegally, small time smuggling) because they were fully conscious his or her power was too limited to matter.

The trend broke abruptly due to a combination of factors which nobody could control. Starting with the oil and resource crisis, misguided environmental policies, the fall of the Communist Bloc and moving into electronics and computer science. A new trend emerged, where the power is easily available due to both increase in wages, schooling and career opportunities of the average population and decrease in the price of technology. A mainframe computer of 1980 is hopelessly outclassed by a humble smartphone. A complex Betacam owned by public TV stations has poorer performance than a cellphone camera of today. The average car in „the happy Sixties and Seventies” could have mean a BMW 1500, VW Beetle, an infamous Pinto or a Mustang II and a dream car was a Ferrari BB – nowadays you get more horsepower and infinitely more refined chassis in a freakin’ hot hatchback. The peak of technology decades ago was a dial-up modem, nowadays you get broadband for a few dollars per month. Drugs were the province of complex labs and ruthless armed mafias, nowadays much more potent and toxic meth is done by barely literate people in plastic bottles.

So the trend empowers each person in the material and technical sense. An atomization of power happened – material resources which only the State or mega corporations working with the State could command are now everywhere. People have built jet aircraft, armored personnel carriers and and drug-carrying submarines in garages. Launched digital cameras into space or at the edge of space. Computer hackers have crippled governments’ servers. Bitcoins issued by private people are traded by banks. Untaxed services are outsourced over thousands of miles.

FreakonomicsAs we deal with a mass empowerment, the traditional economic thought sucks even more visibly, since it provides no logical way to understand it. One needs a freaky way of analysis to explore the previously ignored parts of the economic machine. Even a freaky analysis can be countered and debated and therefore is better than total ignorance.

Ignoring them as before would yield no sound response, just an ostrich-like gesture in front of new challenges.

Anunțuri
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