I had the chance to talk to writer Michael Goodwin about his latest book ‘Economix’.
This excellent graphic novel blows away the fog that surrounds this dense subject bringing clarity and humour and making it accessible to anyone. Recommended.
Congratulations on Economix, with it you seem to have abridged the complex and opaque world of Western economic principles into a manageable format that is actually as fun as it is enlightening.
It’s a timely piece of work; do you think the apparent failures of our economic model have made more people interested in learning about its machinations?
Certainly they have. Back when I started on this project (long before the 2008 crash) a lot of people thought that the people in charge of the economy understood it in the same way doctors understand medicine. Now we’ve learned that the people in charge don’t know what’s going on, which raises the question: what *is* going on?
You wrote much of the work whilst overseas in India, although it’s a country that seems to be avidly adopting capitalism, did stepping out of your own country give you a clearer view on what’s going on?
Being somewhat isolated certainly helped; when you’re cut off from the news cycle, you still get the essentials of what’s happening, but without the day-to-day distractions. You wind up getting less information while being much better informed. And India is practically an econ text made real; you can see serfdom, entrepreneurship, giant industries, high-tech startups, sometimes all on the same block.
Author Charles Eisenstein in his work ‘Sacred Economics’, likened today’s economists to the priestly castes of the Middle Ages; a sect with their own beliefs, doctrines and specialized lingo incomprehensible to the uninitiated. Was lifting the veil on economics part of your motivation for writing the book?
Absolutely. Although one of the big surprises of my research was that the field of economics is far broader and more nuanced than I’d thought. Still, there are far too many who set themselves up as smug wizards, and another of the big revelations of my research was that the smugness is an almost infallible sign that the economist in question actually knows *less* about the economy than you or I do.
In a recent blog post (about economist Steve Keens kickstarter campaign), you mentioned that ‘the entire idea of economic models, as currently practiced, is flawed’. Would you care to say a little about why?
That ties into your last question. Basically, since the early 1800s most economists have imitated Euclid; they start with a few principles and build logically on those until they have a model of the economy or a part of it. Some models become very subtle and elaborate.
So far, that’s fine. But then economists “test” their model by checking whether it’s logically and mathematically consistent with the original principles. But these principles are, at best, oversimplifications. What they should be doing is checking whether their model works in the real world. But all too often they don’t, so they wind up “knowing” something that’s not actually true, and they’re smug about it to boot, because the math and logic they used to reach their error is beyond the layperson’s grasp.
Here’s an analogy–heavy things are harder to transport, right? Everyone agrees on that. But then, doesn’t adding wheels to a piece of luggage makes it heavier, and therefore harder to transport? That’s logical, but it’s also absurd. Too many economists stop after they’ve reached a logical conclusion—or worse, they keep building on it—and wind up believing absurdities.
We hear a lot of talk about sustainability, but is it possible in our current paradigm? What would be the best economic model for a society which wishes to base itself on natural limits such as an ecosystems carrying capacity?
Well, our current paradigm can be defined as leaving people free to make their own choices but within a context of rules. So today, I’m not free to dump my garbage in the street or to hire eight-year-olds to work in my factory, and that’s good. So if we changed the rules to encourage sustainability, we could keep the essentials of our current paradigm—our ability to make free choices—while ensuring that our grandchildren could enjoy it too.
Yes, changing the rules to encourage sustainability probably means that we’d have to make do with fewer consumer goods. But that’s not necessarily bad. Think about how frantically advertisers try to convince us to buy all the crap we buy. Clearly, we don’t even want a lot of the stuff we buy until it’s advertised, so we wouldn’t be any worse off if we didn’t have it, as long as we didn’t have the ads telling us to want it.
In fact, restricting advertising would be one rules change to start with; we’d make less stuff, produce less waste, and use fewer resources, and the “lost” goods would be entirely things we no longer wanted anyway. Not to mention that we’d have more “mindshare” for our own thoughts.
Finally, what of the future? Will the current policy of printing money and pretending save the day eventually or are we delaying the inevitable?
Well, I’m pretty convinced there’s another crash coming, soon. It’s sort of like with an avalanche–you can’t say exactly when it will happen, but you can look at all that snow resting on too little rock and know that it’s going to come down sooner rather than later. We can’t say exactly when the next crash will come, but we can look at all that paper wealth resting on a base of real wealth that’s too small to sustain it and know that it’s going to crash sooner rather than later. (For the record, I’m betting on the next crash coming this fall, or possibly fall 2014; for some reason financial crashes seem to happen in the fall).