Enemy Action

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I found this article, Three Times is Enemy Action, a very thought provoking perspective on the current financial crisis that has been building for years with little action by the government to stop it.

In fact, our government caused this mess by removing check and balances on the finance industry. Free from government limitations, executives played Russian roulette with their companies, earning tens of millions of dollars in compensation while driving their companies into the ground. Of course, they didn’t care too much about long term gains because their paycheck was tied to short term progress. And the more they could cook the books the better.

This behavior is well known in evolutionary biology.

Although some economists and Libertarians often use evolution as a model for why an unregulated economy is optimal, they rarely consider evolutionary consequences. In other words, they take the big lessons of evolutionary biology, but skip the details.

Evolving systems are susceptible to cheaters and parasites. Maximum short term gains can lead to long term deficits. They also lack stability, often showing drastic cyclic behavior.

Long story short, the evolutionary implication for economies is that unregulation makes markets unstable, allowing parasites and cheaters to grow unchecked until the market crashes and the country loses everything. Eventually, innovation and competition will bring the economy out of the crash, but that could take decades and simply not worth prince we have to pay during the crash.

Our Founding Fathers were enlightened enough to realize that a powerful government needed checks and balances to protect the People. We need to be enlightened enough to realize that powerful companies also need checks and balances to protect the People. Get out and vote this year, and give the do-nothing incumbents a hard time.

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This page contains a single entry by Reed A. Cartwright published on September 22, 2008 2:30 AM.

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