Thursday, January 15, 2009

The economy as an ecosystem rather than a machine.

Max Borders gets it right when he says, "The Economy is not a Machine." Too many people treat the economy as a simple machine that can be fixed by government. Often, the "fixes" hurt rather than help.

Borders provides a very interesting quote:
As the late naturalist Stephen Jay Gould wrote, "the theory of natural selection
is a creative transfer to biology of Adam Smith's basic argument for a rational
economy: the balance and order of nature does not arise from a higher, external
(divine) control, or from the existence of laws operating directly upon the
whole, but from struggle among individuals for their own benefits."

Yet those who see the validity of evolution would impose their rules on the economy just as believers in Intelligent Design see order being imposed on nature by God. The economy is the sum total of all the efforts of people working to advance their own interests, much as the ecosystem is the sum total of the earth with all animals and plants.

The fixers' imposition of rules may impact the economy in ways unforeseen with massive unintended consequences. Many economists now see that Roosevelt's attempts to fix the depression may have added years more to the downturn than if he had taken no action at all. One may see this as Australians' introduction of bunnies into the Australian ecosystem.

The new administration in Washington may see the economy as a machine that merely needs some tweaking by the superior intellects in the Democratic Party. The tweaking may easily impact the economy as the bunnies did Australia.

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