Thursday, March 26, 2009

"Open Up, It's the Law!"

The giant hedge fund Long-Term Capital Management came to a disastrous end, like most of its peers. It, however, was run by Economics Nobel Laureates (named Merton and Scholes)! Former Texas Senator Phil Gramm has a doctorate in economics, and we have his expertise to thank for the gutting of financial services regulation which had kept us on course since the epochal 1933 banking act. Implementation of conservative fixed ideas such as Gramm's does not seem to be in accordance with any kind of reality, but his ilk passionately believe in things that just aren't so.
Since these geniuses don't seem to have a clue, allow your humble author to offer what experience seems to indicate are the Basic Laws of the Universe (I can't be more wrong than they are):
1. We learned the First Law of Thermodynamics in school: matter and energy cannot be created or destroyed. Although we try heartily to destroy most everything, this may be beyond us. "Everything dies and that's a fact, but everything that dies one day comes back."
Bruce Springsteen and Isaac Newton, pretty reliable guides. You don't know where it all came from or where it's going; all you know is that it will transform.
2. The Second Law of Thermodynamics is just the bomb; it explains everything: an isolated system not in equilibrium will increase in entropy; all natural processes are irreversible; there is no 100% efficiency, the trend is from order to disorder; usable free energy tends to disperse or become lost in the form of bound energy.
Bringing economics back into the picture, you thus cannot make more and more of something from nothing, unlimited input and endless growth are not possible, resource overuse will hasten entropy while we ignore that equilibrium means survival of the system.
Economist Nicholas Georgescu-Roegen wrote on how entropy relates to economics in a 1971 book: "The entropic nature of the economic process, which degrades natural resources and pollutes the environment, constitutes the present danger...economic advance accelerates the process." If you eat all the cookies today, there won't be any tomorrow. Which leads us to the third Law of the Universe:
3. Magical thinking aside, Law Three states: Wherever You're Headed, That's Where You'll Be. Someone once said that if you do the hard things first, the rest gets easier. Look back at your own life and you may be shocked to find that taking the easy way, avoiding the hard challenges, doesn't pay, it costs. Yikes.
4. Most People Are About as Happy as They Decide To Be. Old Abe Lincoln said that, and it's all you need to know about mental health. Maybe he was the first existentialist.
5. The Law of Unintended Consequences. This one will get you, and all of us, every time. Here is an offbeat example:
Fetching water from the village pump in water jars is one of the few occasions a girl has to be seen out in public in Muslim traditional society. An aid group providing running water to every house would derail the marriage process within that society.
This can also be stated as the Law of Perverse Outcomes. Almost makes you afraid to make a move; the consequences of actions sometimes can't be imagined.
6. The Unforgiving Law of Balance. I could write a book about this, if I wanted to do the hard thing. Maybe someday. Coming across the yin-yang symbol early on, I thought about it in the typical dualistic manner: light or good chases darkness or evil, you can choose to do the right thing (as often as your equivocal human nature cooperates). Lately, though, I have come to a more onimous understanding: the universe is all about balance, not about your good intentions; it is not a moral lesson. Equilibrium in the Second Law, again. What our moral sense is, where it originates and for what purpose, is the great mystery (not that there is any lack of imaginative stories to explain it). We know it is not a necessary human component: there are and have been many sociopaths, just as successful or not as the rest of us. Populations of hares and wolves in Alaska rise and fall, maintaining balance; natural systems such as maturing forests develop equilibrium; the water cycle moves around and through the planet, never losing or gaining, always seeking its balanced level. These processes are not conscious or morally good; they just work very well.
Now here is the unforgiving part I've been thinking about: we are over 6 billion people, heading for 7 billion. The pre-industrial world, at 1 billion people, would never have run out of resources. We're way out of balance, which will be achieved whether we like it or not.
7. Everything in the Universe is On Its Way to Someplace Else. Down to the tiniest subatomic level or up to the inconceivably huge universe, nothing stands still. Time or events may not even exist; maybe everything is just spinning like a gyroscope in a whirling circle without beginning or end. Within you, and without you.

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