The way we live these days
Assumptions are tricky little buggers. Just when you think you know what you believe, you find out that you believe more than you know. And Bruce Schneier is right, you have to trust even if you don’t know everything in order to live in our modern world. Why? Because none of us have the capacity to figure out all of the risks involved in what we do. We have to trust in models that other smart folks worked out and improved on. For example, when we step on a commercial aircraft, we just have to trust the system that reduces the risk that it will suddenly take an unwelcome nose dive. Passengers don’t debate on the plane whether wing de-icing is needed.
That is what makes debates about fundamental beliefs difficult. Like whether we are slowly strangling ourselves by injecting too much carbon into the atmosphere. We don’t usually do this sort of thing. And we do it only reluctantly. But …. and this is a really big but, why would we throw overboard a model that we know works? A model that saved our parents or grandparents from unnecessary hardship? Like suddenly shouting out from the passenger seat that de-icing is a waste of time. That is really hard to figure out. But that is just what our fearless leaders have done recently. Go figure.
What am I talking about? I refer to the learning from the great depression. Economists learned back then that cutting government spending to reduce deficits during a recession can lead to worse recession and bigger deficits. It is called a liquidity trap. Very simple. The reason is also simple. In a deflationary setting (when prices are falling or stable at lower than perceived normal levels) it makes more sense for actors in the private sector to hold onto cash than to spend it. Somebody needs to start spending to get things moving, and that somebody is government. No one else has the motivation.
So let’s see. We are in an extended recession. Check. So why do we hear endless prattle these days about the supposed benefits of austerity? It has nothing to do with economic theory. Krugman has dubunked this myth again and again, and he does so again today. It has everything to do with our politics.
A long time ago, people got fed up with the idea that kings and dukes knew better. So with some difficulty, our forebears got rid of that lot and took a shot at figuring out self-governance. As Churchill said, this is the worst form of government except for all the alternatives. Why? Because we don’t have a way to discipline political chit chat to adopt and implement learning. And apparently, while we now have a lot of media and the internet to boot, we still do not have this.
This is not a rant against democracy. To the contrary. It is a complaint that the public needs better tools to keep our leaders in line. Letting them stray too far from wisdom can get dangerous when they tinker with models that work. Like they are doing now.