Dunce Confederacy

A grand theory of everything: the invisible hand strikes back – and why we shouldn’t blow it up.

Posted in Climate Change, Dunce 1, Economics, United Nations by Dunce Confederate on January 6, 2010

This is definitely a good idea.

You may have recently come across the most monstrously conceived and dangerous communist plot we have had to face in several decades – the news that Russia is planning to launch an attack against the majesty of the Universe itself.

There is an undeniably maddening order to the Universe that is both cruel and transcendentally spectacular; it is composed of an infinite combination of battling forces (matter v antimatter, men v women, pinkos v capitalists) that somehow manage to overcome their brutal differences with one another, and create what we broadly regard as life. It is quite a beautiful process really – particularly if you’re into that sort of thing.

Despite our seeming inability to perform actions which don’t carry inevitably negative externalities (i.e. you want a hamburger and the amazon dies, you want air conditioning and the atmosphere dies, you want to watch youtube instead of do your f*cking job and you get fired…), life goes on.  It’s a happy coincidence that by and large, there’s always some entrepreneur who discovers a way to monetise the externality and the next thing you know, major problem solved. Consider this brightspark, who appears to have a businessplan that will allow him to make a few hundred million dollars by ending corruption in India.

In short, much like the Universe has an odd way of working itself out, so too does the human universe, which in turn can be broken down to the market – “it is as if everything is led by an invisible hand to promote an end which was no part of its intention”. That’s a quote by Agent Smith, or something.

Enter the Global Financial Crisis and Global Warming; vindication at last, it seemed, for those who believed that Capitalism was a systemically dysfunctional system from day one.

Prior to the GFC, many well-meaning Economists had come to the conclusion that the Efficient Markets hypothesis was basically correct. For the uninitiated, the EMH can be summarised as ‘hang the sense of it, this whole market thing seems to be sorting itself out ok without us, so why don’t we all just go and have a drink or several’. During the subsequent twenty years of American economic expansion (lets call it ‘happy hour’) Economists largely gave up on devising strategies for equitable growth and instead went down the behavouralist and experimentalist route that reached its zenith with Freakonomics.

I found Freakonomics a fun read, but there’s no denying that it was a complete prostitution and debasement of Economic theory; asking a respectable Economist (of which there are now around four in the world) about Freakonomics is like asking a heart surgeon to discuss the merits of botox. Dubner and Levitt perfectly but unintentionally demonstrated that the non-interventionist nature of the EMH had allowed Economists to trade in the generally boring topic of Economic development for jobs on Wall St and, courtesy of Freakonomics, to believe that they were genuinely interesting people to talk to at parties.

It was never going to last.

Unsurprisingly, before the market had even had time to call the Economists in for last drinks, the pub had been repossessed and set alight by angry citizenry demanding to know why they were being lumped with the gargantuan bar tab. And as it emerged from a decade of incestuous backslapping and self-congratulatory toasting into the cold and smoky daylight of the post-GFC world, the profession of Economics found it had become about as popular as a deceased bloated cow that was hit by a truck several years ago, left to rot in the ditch, and whose only remaining purpose is to be occasionally prodded by curious children (politicians) who have come into the inheritance of a curiously pointy stick (popular mandate), such that when the cow is asked to explain itself, all it can do is let off a tremendous stench (bailout hearings) and deposit a pile of infested pungent gunk (Toxic Securities) into the dank gutter (Government).

But wasn’t it Ken Arrow’s work on choice theory that definitively proved that Socialism was an impossible concept and that Western Economics could only ever be correct? How could the most glorious of social sciences have got it so wrong? How could a major market failure like Global Warming continue unabated, without the market stepping in to save the planet from melting?

Here’s what I propose: maybe, just maybe, the free marketeers were blind to their own brilliance…perhaps their only problem was that they didn’t have the full courage of their convictions to take their theory to its logical conclusion.

You see, overhyped physicists have been racking their brains for a number of decades now trying to develop the ‘grand unified theory of everything’. But the problem with physics is that its just your regular run of the mill verifiable science. Economics on the other hand, is a glorious combination of Science AND a branch of philosophy.

I propose that the only problem with the ‘efficient markets hypothesis’ is that it’s actually a misspecified theory – having run an experiment on the global economy, we can now reject our null hypothesis and defer to the alternative hypothesis that rather than the simplicity of the EMH, what we really are seeing is the ‘Efficient Universe hypothesis’ in action. The EUH.

Apophis (The Asteroid that the Russians have in their sights – rather optimistically named after the Egyptian god for eternal darkness) is really just the EUH revealing itself to humanity. At 390m wide, Apophis could hit Earth in 29 years time and, if it does, it will have an impact more than 100,000 times the size of the Nuke that was dropped on Hiroshima.

But equipped with the framework of the EUH, I now see that the asteroid is in fact, just the Universe’s way natural way of sorting itself out.

Global Warming? Not a problem! Thanks to Apophis, the Earth should be knocked back a few hundred kilometeres and, with any luck, it will add an extra layer of insulation to the atmosphere to limit the amount of sunlight that gets to earth, like…say…all of it.

Mmmm, I can feel those icy summers already. Tony Abbot you sly genius, you knew this would happen all along! And just think how much easier finding a partner will be, not to mention the savings on clothing, when you don’t have to worry about looking at each other!

That’s right, this whole asteroid business is the blind watchmaker at his very best! And yet here we are resorting to our old state-run interventionist past of distortive government practices, trying to move asteroids out of the way when really it’s just the gender-neutral-parent of nature doing what it does best to help us out. We know that earth has dealt with asteroids in the past and it will inevitably have to deal with them again, so what’s the fuss?

Dare I say what nobody else is willing to say, and note the attempt to create a global government by the Russians, as they try to work with the Americans and Chinese on bringing this project to fruition?

Besides, there’s evidence to suggest that life on Earth began BECAUSE we were hit by an Asteroid several billion years ago. If it weren’t for Asteroids, we wouldn’t even be here today – we need Asteroids TO LIVE. And if asteroids were supposedly dangerous enough to cause a mass extinction of earthly species, then why haven’t we seen an increase in apocalyptic asteroid extinctions in the last ten years? Records show that the medieval comet period of 1491 saw an equivalent risk of hitting Earth (if not greater) and it passed by just fine.

They could even see it from England.

Indeed, if the risk was as great as it’s been painted out to be by this cabal of government funded scientists, then why not just let the market sort itself out? What’s to lose? Even in the unlikely event that the comet hits, there’s no proof that we’ll actually ALL be worse off as a result, indeed, there’s reason to suggest that effects will be quite variable and some countries might even be BETTER off. And if it doesn’t hit, well we’ll have avoided a massive tax-grab initiative by our domestic governments as they attempt to fall in line to their Communist paymasters in Moscow.

I won’t allow it. I’ve read enough Wikipedia articles and blog entries to know the invisible hand knows what’s best. Peace be upon the invisible hand.

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