Pur Autre Vie

I'm not wrong, I'm just an asshole

Tuesday, June 14, 2016


When you read monetary history you get a sense of just how unstable the world used to be.  Of course monetary history is the least of it—the 19th and 20th centuries were marked by cataclysmic wars, genocides, and communist revolutions involving mass confiscation of private property.  There were also large technological shifts that left entire industries to rot while generating mad, chaotic growth in others.

Some of that is ongoing, but one of the signal accomplishments of the 20th century was that it developed the institutions and forged the compromises necessary to stave off mass violence among its most powerful nations.  You can take a cynical view of this—plenty of violence and suffering were tolerated/created in poorer countries—but the result for North America, Europe, and the antipodes has been decades of uninterrupted peace.  Meanwhile our economic arrangements became more stable and predictable.  Even inflation settled into a narrow range, at least for the major currencies.  We built this baseline stability into our expectations and focused on small-scale tinkering.  Metaphorically speaking, the climate stabilized and our attention turned to the weather.

Now I don't want to portray this as a bad thing!  Even if we focus exclusively on the economy, stability fosters all kinds of positive developments.  It facilitates long-term investment and "capital deepening."  It gives people more control over their lives.  Probably most importantly, it helps avoid the extreme suffering that so often accompanies massive dislocations.

On the other hand, there are major downsides that might generally be described by the term "ossification."  When things are predictable, the incumbent elites find it easy to perpetuate their wealth.  They obtain control of the key institutions and use them to enrich and protect themselves.  The channels of upward mobility are choked off and restricted to system-embracing company men.  The class system hardens.

On the third hand, "stable" is not the word I'd use to describe the world over the last 10-15 years.  The slow-moving train wreck of the European economy, the rise of the tech sector, massive swings in energy prices, massively disruptive political developments... and of course the tremendous amount of war and terror that has been unleashed on large areas of the world.  Meanwhile you can argue that secular changes over the last 50-60 years mean that our long stability should really be seen as a period of stable but inexorable monotonic decline for many areas, which is not quite the same thing as stasis.

Anyway it is interesting to ask which of our economic problems stem from instability (as in the decline of the Midwest and the rise of tech/finance in coastal cities, or the travails of Puerto Rico) and which of our economic problems stem from stability (as in the "efficient" pricing of housing so that it is cripplingly expensive to live near good jobs).  Of course the answer is almost certainly "some combination of both" for almost any problem you can identify.  So in a way these thoughts are too abstract and unfocused to yield much insight.  Sad!  I'll write a post later about the interactions among our housing markets, land-use policies, legacy mass transit systems, federal system of taxation, and shift from blue-collar to white-collar jobs.


Blogger Zed said...

You put the Stasi in stasis.

I think there are two frames here, "the social democracy of fear" that Tony Judt has talked about and the social democracy of complacency. The former take is that extreme instability and unpredictability should encourage people who are doing well in the moment to support social insurance. The latter take is that fear makes people mean-spirited and nasty, so less likely to support anything universalistic -- so the only solution is a social democracy of (mostly) complacency, driven to some extent by the benevolence of the rich and to some extent by their self-interest (in keeping the pitchforks away). I think both have elements that apply but at different times, and also imply somewhat different flavors of social democracy. (The social democracy of fear probably has quasi-fascist populist tendencies...)

12:29 PM  
Anonymous Anonymous said...

I think stability is on some level illusory. For some periods of time you had competent people in power and things got better. Then something changed and incompetent people were put in power. The terror, war, and violence in the Middle East are not inherent instability, GWB created much of that. That blood is on American hands, not on inexorable forces of history.

The slow motion train wreck of the EU is incompetence on behalf of officials. People know how to deal with this; the IMF knows how to deal with this. Here, the incompetence of officials is married to the venality of the populace. But even without getting better voters, eurocrats could have steered the situation to a better outcome had they been willing to listen to experts.

7:42 AM  

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