The Corpus Callosum

Greenspan is SHOCKED

This little (19-second) gem is from Calculated
(the other video there, Greenspan and The
, is good too):

That says it all.  It is the short version.

The longer armchair version is this:

All economic activity is composed of four basic elements, or “atoms” is
the Lucretian sense.  Granted, this is not the most modern of
theories, being based upon
Rerum Natura
(On the nature of things; ProjectGetenberg
).  This was written in the year 50 BCE
(Before the common era).

Bodies, again, Are partly primal germs of things, and
partly Unions deriving from the primal germs. And those which are the
primal germs of things No power can quench; for in the end they conquer

Lucretius was perhaps the first to conceptualize matter as being
composed of atoms and empty space.  He did not have the
technology to understand atoms, or even to prove their existence, but
he was correct about some things.  Matter is composed of
elements, which can be combined in different proportions to make
different things.

Of course, economic activity is not composed of chemical elements.
 Rather, the four elements of economic activity are:

1. Things we need
2. Things we want
3. Risk
4. Deception

All financial innovation consists of finding different ways of mixing
these four elements, in various proportions.

For example, the greatest innovation of the first half of the 20th
century was the work of Edward
.  Bernays figured out how to blend the
element of things-we-want, with the element of deception.
 This influences people to believe that things-we-want are
really things-we-need.

The outcome was the greatest economic expansion that ever was, and ever
will be.  It was based upon the production and purchase of
things we don’t need.  There was only one problem: it led to
an economy that is inherently fragile and unsustainable.  The
problem stems from the simple fact that, if it ever happens that people
cannot afford all that stuff, AND they realize that they don’t really
need it, then they will stop buying it.
 Then everything falls apart.

That is what is happening now.  Not that it is the entire
explanation for the economic stagnation-deflation
we are seeing, but it is a part of the cascade of events that took us
past a tipping point.

In the 21st century, the great innovation was a peculiarly diabolical
blend of risk and deception.  You’re gambling without knowing
it. And someone else is pocketing the money.

“I’m shocked, SHOCKED, by the gambling that is going on here!”
“Your winnings, sir.”
“Thank you very much”

This of course highlights the biggest lie of all.  The firms
that say they are in the “financial services” business have nothing
to do with service.  To the extent that
they appear to provide service, it is only to pick your pocket.
 Ever see a tapeworm
grab your wallet
?  It happens all the time.


  1. #1 John S. Wilkins
    October 26, 2008

    Actually, Lucretius was reporting Epicurus’ philosophy, and he wasn’t the first to conceptualise the void and atoms (I think Democritus was, but I’m too lazy to look it up).

    I cimpletely agree about Bernays. He is responsible for the decline of western civilisation. Singlehandedly.

  2. #2 Novalis
    October 26, 2008

    I’m no fan of the overheated capitalism we’ve had lately, but people have been into superfluity for millenia, not just a few decades. What do we really “need?” A hut, a pelt, food, water, maybe a mate. Anything else, from jewelry to opera, is stuff we want but can of course, do without. The question is how much of what we want can we reasonably manage given limited resources. We’re getting an education about that.

  3. #3 abb3w
    October 26, 2008

    While it’s impolite to admit it, there is at least a fifth economic element: coercive force. While socially desirable to minimize it, economic models neglecting that are incomplete.

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