Generally, I think it's a good idea not to read too much in the way of financial news these days. If everyone in America spent more time selling and less time fretting, we could probably work our way out of this financial mess. I learned this here on the farm over the past few weeks; this market is something like selling peanuts at a baseball game where everyone in the stadium is fixated by the sight of two airplanes appearing to collide in the distant sky. Most of the stadium-hawkers are looking up at the spectacle, but a few keep pitching , and they find out most of the crowd is still hungry.
Nevertheless, completely avoiding what qualifies as "news of the century" is something like jumping in a sail boat without pondering the clouds on the horizon. CNBC put together a nice little slide show of "famous last words." It underscores a point I find fascinating: not even the people who claim to know what they are doing, know what they are doing. Why do I find that intriguing? Well, economics, really, is the study of sentient, communicative human beings attending to their rational self-interest. It's the study, in other words, of populations making financial decisions. The mal-functioning sub-structures of a kidney cell can't look up to the scientist peering through the electron microscope and scream: "heah, we're experiencing some surface membrane polarity down here brought on by ATP depletion!"
People, on the other hand, can talk. They buy. They sell. They balance check books, apply for unemployment, purchase insurance, deliberate over car warranties. They answer surveys. They make their financial decisions known by where they sign their names and when they pay their bills. They decide that a doctor's services are worth $300,000 a year and a file clerk's are worth $22,000. The stock market mirrors, over time, the collective sense of what everything is worth. I say, "over time," because this morning's good news can make something really worthless seem really valuable, and "over time," the market comes to know the broad, long-term truths. We've got LOTS of data on what people do financially and--unlike basolateral membrane domains--they can tell us why they do it.
So why can't we study the global financial system with the same accuracy a microbiologist studies proximal tubular cells?
Because people lie. We are gross, calculating, depraved sinners who--without fear of God--are willing to put any face necessary on the story of our financial affairs so as to maximize our take. Of course the lies can be as simple as embellishing the language on a resume or as baroque as conducting a mega-billion dollar swindle, but a failure to be honest about our intentions, and our actions, is at the root of what makes economics so inscrutable. If Kidney cells could lie, we might never have invented the dialysis machine.
The temptation, on the policy level, is to assume that only people directly involved in commerce are the potential liars, but ponder the Madoff mess: Madoff is accused of lying, but so are the regulators themselves; if you take taxpayer money to regulate the securities market, and you don't do your job, you're telling your employer one thing and doing another. If Congress complains about CEO salaries and hides their own automatic pay increases, and travel benefits, how can anyone really trust the dialogue going on between deceptive businessmen and deceptive politicians?
We keep talking about spending more money to "stimulate" the economy, but what we really need is a hell fire and damnation pastor scolding us, collectively and individually, for our sins.
Can you imagine what we could do, as a people, if we realized how much we need God?
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