To clarify what I’m searching for, I’m looking for what level or rate of economic change would precipitate a global disaster.
Back in the 70s, I was a huge fan of Milton Friedman, Von Mises, and the Austrian school of economic thought, in addition to most of the libertarian philosophy. So I know how a free-market economy is supposed to wo…
To clarify what I’m searching for, I’m looking for what level or rate of economic change would precipitate a global disaster.
Back in the 70s, I was a huge fan of Milton Friedman, Von Mises, and the Austrian school of economic thought, in addition to most of the libertarian philosophy. So I know how a free-market economy is supposed to work. But that’s not what we have, right? And in the intervening decades since, the world’s economies have become far more polluted with government interference of all kinds. The global financial instruments have become so interdependent that they seem to be a thousand balls being juggled in the air, ready to fall at the slightest mistake of the juggler. I’m surprised that it’s all held together thus far.
You have the kind of extraordinary mind that can perceive the way dozens of complex factors are coming together, so that’s why I am frequently looking for your insights and your measured predictions. Thanks in advance for whatever speculation you’d like to write, Peter.
The metaphor is perhaps less that of a juggler and more that of the classic party game "Jenga".
Globalization has, among other things, resulted in a measure of hyper-specialization, such that there are few ready alternatives for a wide range of both final demand goods and intermediate goods. There tends to be one major supplier for this component or that, and that supplier sends its product to another producer even in another country.
As the world found out in the Pandemic Panic nonsense of 2020, where lockdowns when global, the lack of available alternatives, and even the lack of a ready supply of parts or ingredients, ruptured supply chains for products around the world. What was made plain about the world economy was that it was unexpectedly brittle and inflexible. Global supply chains had (and arguably still have) virtually no capacity to adapt to exogenous supply shocks such as a lockdown.
As you point out, ours is not a free-market economy (nor has it been really at any time since the mid-19th century). Rather, our is more of a neo-mercantilist economy very much like that rebuked by Adam Smith in "Wealth of Nations". The collusions between Big Business and Big Government that are the hallmark of the permanent regulatory State and which are essential for companies such as Apple, Amazon, and even WalMart to function at their behmoth sizes are also the very thing Adam Smith argued was most economically destructive.
With free-market principles being honored more in the breach than in the observance, the nature of the globalized and highly interconnected/integrated economy is that it lacks resilience and fault tolerance. One disruption in just one part of the world is enough to upend the entire system--and this has not changed in most regards.
Just like the previously mentioned "Jenga" puzzle, the global economy remains seemingly functional and orderly only until that one crucial support is removed, at which time everything comes crashing down.
To clarify what I’m searching for, I’m looking for what level or rate of economic change would precipitate a global disaster.
Back in the 70s, I was a huge fan of Milton Friedman, Von Mises, and the Austrian school of economic thought, in addition to most of the libertarian philosophy. So I know how a free-market economy is supposed to work. But that’s not what we have, right? And in the intervening decades since, the world’s economies have become far more polluted with government interference of all kinds. The global financial instruments have become so interdependent that they seem to be a thousand balls being juggled in the air, ready to fall at the slightest mistake of the juggler. I’m surprised that it’s all held together thus far.
You have the kind of extraordinary mind that can perceive the way dozens of complex factors are coming together, so that’s why I am frequently looking for your insights and your measured predictions. Thanks in advance for whatever speculation you’d like to write, Peter.
The metaphor is perhaps less that of a juggler and more that of the classic party game "Jenga".
Globalization has, among other things, resulted in a measure of hyper-specialization, such that there are few ready alternatives for a wide range of both final demand goods and intermediate goods. There tends to be one major supplier for this component or that, and that supplier sends its product to another producer even in another country.
As the world found out in the Pandemic Panic nonsense of 2020, where lockdowns when global, the lack of available alternatives, and even the lack of a ready supply of parts or ingredients, ruptured supply chains for products around the world. What was made plain about the world economy was that it was unexpectedly brittle and inflexible. Global supply chains had (and arguably still have) virtually no capacity to adapt to exogenous supply shocks such as a lockdown.
As you point out, ours is not a free-market economy (nor has it been really at any time since the mid-19th century). Rather, our is more of a neo-mercantilist economy very much like that rebuked by Adam Smith in "Wealth of Nations". The collusions between Big Business and Big Government that are the hallmark of the permanent regulatory State and which are essential for companies such as Apple, Amazon, and even WalMart to function at their behmoth sizes are also the very thing Adam Smith argued was most economically destructive.
With free-market principles being honored more in the breach than in the observance, the nature of the globalized and highly interconnected/integrated economy is that it lacks resilience and fault tolerance. One disruption in just one part of the world is enough to upend the entire system--and this has not changed in most regards.
Just like the previously mentioned "Jenga" puzzle, the global economy remains seemingly functional and orderly only until that one crucial support is removed, at which time everything comes crashing down.
Brilliant analogy!
Metaphor.