A Homeostatic Look at the Economy

Received the following from my registered nurse cousin Nancy in response to the “Obama’s not the problem, Romney’s not the solution” posting:

As far as the economy (is concerned), all these attempts at regulation are in response to people making selfish, manipulative, immoral decisions. I’ve worked in healthcare which is highly regulated, and I have seen the regulations pile on and on over the years. I’ve also seen how easily people circumvent them, in the spirit if not the letter. I don’t think there’s any external substitute for people who have learned integrity from childhood.

I’ve been thinking of the economy as much like a human body: very complex with many interactions and systems to maintain homeostasis when one thing changes. Like the economy, there can be a lot of compensation over a long time before the ability to compensate runs out and there is some form of collapse. I’ve seen a person gradually put on hundreds of pounds of fluid before going in to acute heart failure and then wonder how that could happen so suddenly. I’ve also seen people get unusually thirsty and drink sugared pop for months til they were “suddenly” in a coma from a blood sugar of 1200.

OK. You have the collapse, and you do all the things that have worked in the past: drugs, IV’s, education. You get the patient stabilized (Low interest rates, stimulus, recapitalizing banks, etc.) Now, unless you can fix the underlying problem (reform labor markets, wean the system off being so dependent on credit, allow bankruptcies and foreclosures to proceed expeditiously), you’re left with giving drugs (more stimulus, low interest rates for an extended time), some of which cause side effects that create more problems and require more intervention. If the patient doesn’t take the medicine the right way, or refuses to follow advice about diet, exercise, etc, things gradually get worse and it’s more and more difficult to stabilize the patient. Death ensues.

I see the economy being at the stage of compensation using a lot of interventions that will cause more and more problems if they are maintained long-term, and no willingness to do the things that will improve things in the long run. In other words, I’m as pessimistic as you and have been ever since I first did research to try to understand what was happening in ’07.

The “death ensues” bit is a nice touch. Guess pessimism runs in the family. Even so, there comes a time when resuscitation attempts will probably prove futile.

“Are we there yet, Daddy?”


This entry was posted in Uncategorized. Bookmark the permalink.