In international relations there's this theory about what causes wars.
A lot of theories, actually. But I wanted to talk about one in particular. There's a theory that the nations at the top want to keep their status. So they do things to try to make themselves feel more secure. Like England before WWI, insisting that they should have the largest navy in the world. Meanwhile, up and coming nations are asserting themselves andwanting to have a say that is commensurate with their power. So there's a desire to disrupt the status quo, especially if that status quo fails to recognize their gains. (Germany, deciding to build a larger navy...which England felt threatened by, so you had a bit of a naval arms race. Obviously a lot more went into WWI than that, but once Germany became a united country and started asserting themselves as the powerhouse they were on continental Europe it caused tension with England.)
This theory fits with a psychological study...namely that we tend to exaggerate how much something hurts us and minimize how much our actions hurt others. Someone takes out your eye, you round up a couple of buddies to go kill the other. Escalating the response, even though it felt natural and right to you. Hence the reason why "an eye for an eye" was a way of limiting responses and preventing an escalation into a blood feud.
I brought it up because, bloodiness aside, I think the same feelings affect the quest for economic security. Someone who is near the top (but not totally at the top) will do what they can to try to feel more secure. Find some measure of safety in the world. This gets even more confusing and messy when you consider the quite natural desire to take care of your family. To pass the benefits on to your children. The janissaries were a big deal partly because they were forbidden to have families. It gave the Ottoman Turks a force that was dedicated to the state and less likely to abuse their power for selfish interests. But it's not normal or natural for people to do that, so eventually they wound up having families anyway...and the normal incentives came into effect. Janissaries would try to let their sons join, too. Natural...and turned it into something that was hereditary. Corrupt. And an obstrution to reform.
The quest for security is sometimes at odds with what we claim are economic efficiency. Or rather, it can create situations that make it harder and harder for those not already born to privilege to gain access to it.
This isn't meant to say it's good or bad. For example, the book on economics I've been reading talked about sticky prices...sticky wages, more specifically. From a human perspective it makes perfect sense to want this. I have a mortgage. Bills. It would be hard to pay those if I couldn't count on at least a certain minimum income, so if my wages adjusted regularly I couldn't plan for anything.
From an employer side, 'perfect' economics aren't always so good either. The author brought up the economic situation in Detriot before Ford decided to raise wages for his employees. It was a 'perfect' economy in which labor could move around as needed to where the work was...except that the business paid a lot when there was high turnover. Constant loss of resources as you had to train new people, for example.
Heck, Rockefeller became a big deal because he tried bringing some stability to the oil industry. The constant boom and bust made life very uncertain, you never knew if you were going to make it or implode.
So some stability is necessary...and too much can make a system ossify. Harden the control those on the top have, prevent up and comers from having a chance. (It really is Hope for the Flowers all over again.)
This is pretty important for some of the things I want to explore. Do all the hedges and securities people put in place to maintain their wealth and status have a side effect of locking into place the status quo? Does doing so open us up to greater disruption on a larger scale?
The Black Swan theory, in a nutshell. All the efforts at creating security actually reduce our resilience and the robustness of the system, making people feel more safe while actually creating a system at greater risk than ever.
Again, it's not that some group is 'good' and another is 'bad'...it's that the decisions each individual makes, the ones that seem good and appear likely to promote security in the long run...all of them can actually create risks that catch us off guard, and make things instable in the long run.
A lot of theories, actually. But I wanted to talk about one in particular. There's a theory that the nations at the top want to keep their status. So they do things to try to make themselves feel more secure. Like England before WWI, insisting that they should have the largest navy in the world. Meanwhile, up and coming nations are asserting themselves andwanting to have a say that is commensurate with their power. So there's a desire to disrupt the status quo, especially if that status quo fails to recognize their gains. (Germany, deciding to build a larger navy...which England felt threatened by, so you had a bit of a naval arms race. Obviously a lot more went into WWI than that, but once Germany became a united country and started asserting themselves as the powerhouse they were on continental Europe it caused tension with England.)
This theory fits with a psychological study...namely that we tend to exaggerate how much something hurts us and minimize how much our actions hurt others. Someone takes out your eye, you round up a couple of buddies to go kill the other. Escalating the response, even though it felt natural and right to you. Hence the reason why "an eye for an eye" was a way of limiting responses and preventing an escalation into a blood feud.
I brought it up because, bloodiness aside, I think the same feelings affect the quest for economic security. Someone who is near the top (but not totally at the top) will do what they can to try to feel more secure. Find some measure of safety in the world. This gets even more confusing and messy when you consider the quite natural desire to take care of your family. To pass the benefits on to your children. The janissaries were a big deal partly because they were forbidden to have families. It gave the Ottoman Turks a force that was dedicated to the state and less likely to abuse their power for selfish interests. But it's not normal or natural for people to do that, so eventually they wound up having families anyway...and the normal incentives came into effect. Janissaries would try to let their sons join, too. Natural...and turned it into something that was hereditary. Corrupt. And an obstrution to reform.
The quest for security is sometimes at odds with what we claim are economic efficiency. Or rather, it can create situations that make it harder and harder for those not already born to privilege to gain access to it.
This isn't meant to say it's good or bad. For example, the book on economics I've been reading talked about sticky prices...sticky wages, more specifically. From a human perspective it makes perfect sense to want this. I have a mortgage. Bills. It would be hard to pay those if I couldn't count on at least a certain minimum income, so if my wages adjusted regularly I couldn't plan for anything.
From an employer side, 'perfect' economics aren't always so good either. The author brought up the economic situation in Detriot before Ford decided to raise wages for his employees. It was a 'perfect' economy in which labor could move around as needed to where the work was...except that the business paid a lot when there was high turnover. Constant loss of resources as you had to train new people, for example.
Heck, Rockefeller became a big deal because he tried bringing some stability to the oil industry. The constant boom and bust made life very uncertain, you never knew if you were going to make it or implode.
So some stability is necessary...and too much can make a system ossify. Harden the control those on the top have, prevent up and comers from having a chance. (It really is Hope for the Flowers all over again.)
This is pretty important for some of the things I want to explore. Do all the hedges and securities people put in place to maintain their wealth and status have a side effect of locking into place the status quo? Does doing so open us up to greater disruption on a larger scale?
The Black Swan theory, in a nutshell. All the efforts at creating security actually reduce our resilience and the robustness of the system, making people feel more safe while actually creating a system at greater risk than ever.
Again, it's not that some group is 'good' and another is 'bad'...it's that the decisions each individual makes, the ones that seem good and appear likely to promote security in the long run...all of them can actually create risks that catch us off guard, and make things instable in the long run.
