Ancient History

I was going to call this piece ‘Das Kapital’, because of all the questions of capital controls, and the general Cypriot mayhem. But it’s pointless to flog a dead horse: the banks are open, but hardly in the normal sense of the word—your money is not yours to spend, it’s the banks’ to hold, essentially because it isn’t there.

This attests to the ecological analogy I’ve used before, or to basic thermodynamics: matter (or energy) is neither created nor destroyed, it just shifts in state. In this case, the money lost through sovereign bond haircuts or whatever else is simply not available. It’s just thermodynamics. It’s also ancient history.

In this case, history of economics. All this stuff has happened before. Many times. Out of all the disciplines of economics, history is the most important. Economic theory doesn’t work. Well, it works in theory, but Yogi Berra was at his very best when he said ‘in theory, theory is like practice; in practice it isn’t.’ If cars worked like economics, at certain times they’d be driving madly, steam pouring from radiators, until the giant clouds created would pour down upon them and skid them all off the road. Central bank tow trucks slowly pull up and start fixing the mess.

The fact that expressions like overheating, cooling, economic boom, recession, dowturn, or double-dip are part of everyday language means only one thing: real-world economics is empirical: management by practical adjustment. This worked here, let’s try it there. The extension of German austerity to the EU is a good example of the law of unintended consequences. The Japanese didn’t invent QE (Quantitative Easing, the ancient art of printing funny money) but they turned it from thief to Samaritan in the 1990s. Now we’re all at it.

Economics is in that respect very much like medicine—no one talks about the theory of medicine.

Is there one? Of course, not just one, but many. You can think of it in two tiers: the first is the underlying biology, and biomedical science is full of ‘models’ of how parts of your body work. More and more, these models are turning quantitative. Doing this at the lowest levels, i.e. within cells and for whole cells, is the least complicated. Extending it to rogue cells, i.e. cancers, seems to me a very interesting application.

The second tier of theoretical medicine is the general abstraction about how the mind and body work, and here you have all sorts of historical precedent, such as the concept of humors. Hippocratic medicine identified and treated four humors, or fluids. This quote from the Science Museum has wonderful connotations, except none of them are correct.

Blood was the humour of spring, passion, air and childhood

Yellow bile belonged to summer, anger, fire and youth

Black bile was linked to a sluggish personality, autumn, earth and adulthood

Phlegm was associated with winter, melancholy, water and old age.

The eastern concept of body and mind, with opposing forces of yin and yang, and points of influence or pressure, provides an alternative paradigm to the Western approach.

But despite the theories, the essence is practice. When there is only a little wrong with you, getting specialist treatment works fine, since the rest of the body compensates for particular changes to one of its parts, and adjusts for medicines that can cause ill effects elsewhere. So it is for economics. Small corrections are absorbed by the system’s buffering capacity, and things improve.

As you age, the progress of a natural lifespan is exceeded. This is another artifact of modern life, along with computer viruses and QE. Humans were not designed to live as long as we now do in the West. And they certainly weren’t designed to eat as much. As a consequence, we have all sorts of new illnesses, symptomatic of these twin excesses. Cancers of the breat and prostate, diabetes, atherosclerosis….

Relation between heart rate and lifespan. The slower your heart beats,the longer you live.

Relation between heart rate and lifespan. The slower your heart beats,the longer you live.

I’ve heard for years that, all other things being equal, animals live a certain number of heartbeats. I decided to check it out. After a few tries, I found a site, decidedly not of the Web 2.0 persuasion, that listed the data I needed. The numbers seem fine, but the analysis was decidely flaky.

In Atmos Fear I quote an Israeli prime minister as saying “the Americans give us money, weapons, and advice. We keep the money and the weapons.”

I did much the same, and re-worked the data. Turns out to be a pretty good fit, but like life, it ain’t linear. I’m sure there’s nothing original in my workup, and there must surely be  a paper on this in the Journal of Ecology dating back to the 1920s or so, but I couldn’t find it. The relationship between lifespan and heartbeat is logarithmic, and the statistical significance (the probability the two variables are related) exceeds 99%.

You can’t help noticing that of all the animals shown, humans are furthest off the curve. They should be quite a way down—if you apply the equation to the human heartbeat (the data refer 60 bpm, which seems a little low to me), we should live about thirty years—in the days of The India Road, many people didn’t live much beyond that. According to this model, my heart rate would need to be about twenty to allow me to reach the ripe old age of seventy-five. I’d be real sloooowwww.

As we get older, more stuff is wrong with us. Getting old means having more than one thing wrong with us at any one time, taking more than two weeks to cure it, and carrying pills (illegal drugs and birth control are exempted). The list might also include not liking at least two types of music on the radio, and wearing a watch.

A number of doctors address our various malaises—they use a fragmented approach, and as other bits of your body become frail, it can no longer deal with the various ‘cures’. So it appears to be with the economy; once the equilibrium goes, the sectorial measures have all manner of effects elsewhere—these are by no means unpredictable, but they’re almost impossible to quantify: a recession is defined as two consecutive quarters of negative growth. There’s no legitimacy whatsoever in the definition. It is in fact bollocks.

However, humans defined it so humans stick to it. You grow the economy out of recession, and that may mean increasing productivity. Produce more for less, compete better. Sell more, that’s good for GDP. But if you increase productivity by replacing people with machines, then those people are left without a job. The same happens if you make things elsewhere with lower labor costs.

Companies deal only with productivity, society has to deal with unemployment as well.

This is all ancient history, which seems fitting for the time of year. Easter is the most symbolic festival of all—out of all religions, and all celebrations, this is the moment with most historical significance. You may be the most hardened atheist, but the narrative of Easter is so compelling that there’s no doubt in my mind that Christ died on the cross. You couldn’t make it up.

Atmos Fear and The India Road. Quick links for smartphones.

Atmos Fear and The India Road. Quick links for smartphones.


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