Thursday, January 5, 2023

"Simply put, the global economy is like a Rube Goldberg machine"

 

That's the opinion of Bruce Wilds, who expands on his point at some length.  He also links to a spectacular video of a Rube Goldberg machine to make his point (embedded below).


Overall, the global financial system is not a well-designed efficient machine. Instead, it is a cobbled-together mess all glued together in a haphazard way to get the job done. To make matters worse, this system is greased by the greed of those who benefit from stealing a little from here and there. In the real world, things are usually not intentionally designed to be complicated but the reality is that they just are.

. . .

Simply put, the global economy is like a Rube Goldberg machine. These are "goal-oriented" contraptions built in a ridiculously complicated way to perform what would normally be a simple task. History shows we often have no idea what is driving events until long after they have transpired and even then the picture is blurred by interpretation. The lens by which we peer at events is firmly controlled by those with an agenda. These people control our government, big business, and mainstream media. When we look at the individuals leading these various factions we should feel little reason for faith or calm.

. . .

We have become very complacent and accepted the idea those in power will continue being creative enough to keep the economy moving forward. This includes thinking they can prolong current trends. Like a complicated Rube Goldberg machine with many moving parts, the failure of just one piece to perform as expected can alter the way events unfold.


There's more at the link.  It's worth reading in full.

Here's his exemplar of a Rube Goldberg machine.  Daft, yes, but entertaining!




Looking at our economy today, that's a pretty good comparison . . .




Peter


7 comments:

PeterW. said...

Millions of people acting independently and on their own is inevitably chaotic……
But even worse is the kind of “machine” with centralised control. That’s what Socialism requires and it inevitably fails because those who make the decisions are not in touch with the vast variety of wants, needs and conditions that exist in the world.

It also fails because those who make the decisions pay no price for getting them wrong.

It’s easy to criticise, but the critics have no better solution.

Xoph said...

People satisfice, they take the first solution that solves a problem and move on. When I did process improvement it was frankly using a process map to think about what you wanted versus what you actually had.

Our system has to be complex, watch Milton Friedman's youtube on what it takes to make a pencil.

What we have done is pared out robustness. Just in time inventory allows for no disruptions. Inventory is a buffer. Also, by outsourcing so much of our raw materials overseas we now depend on very long (in miles) supply lines. We have been very stupid with our industry and infrastructure. I was trying to scrap some very large equipment from the 1960's and could not even move it to a scrap yard, the rail roads would no longer take the weight. No longer is the important phrase. We have cut costs without actually understanding the impact of what we were doing, nor are we rallying to revitalize industry in our own country.

The piper is knocking on the door, he wants to present his bill.

Divemedic said...

Of course it's chaotic. It's a free market. What you have is millions of individuals, each doing whatever it is that they want to do. The alternative is a central authority telling everyone what to do.

No thanks.

Ozborn said...

The housing market (all inputs and maintenance) is approximately 15-18%. Nationally sales transactions have stalled, although prices have not taken a notable tumble, this seems inevitable. A 25% fall in home values to pre-pandemic levels would chop $10T of the national net worth.

Auto loan delinquencies are rising (3.89%), credit card debt is WAY up ($925B, a statistical tie with the 4Q2019 record). At the current interest rates, presumably this is taking a bigger bite out of consumer budgets than ever before. Consumer credit drives a significant portion of the US economy, and most indicators are negative.

Locally I'm hearing of increased need at food banks, am not seeing as many help-wanted signs, and watched heavily-discounted seasonal merchandise linger that in prior years vanished in a day.

Further indicators I'm watching for - falling rents, tax delinquency rates on RE, and used car lot inventory levels.

Rick T said...

We have overly complex systems because the VAST majority of the world cannot analyze beyond a single step. They make 'just one change' to fix a problem and never consider the possible affects because they are unable to think that far. That change spans another change but the older changes are never removed so the system grows and grows and grows. Constant shoplifting or looting and burning a store down feels good during a riot but nobody things about not having a neighborhood store and having to spend hours on a bus to buy food.

Case in point is China. Having a "One Child" policy in a culture where boys are your legacy and a girl is lost to the family when she gets married all but guaranteed sex selective abortions (legal or not) and the current lack of women there. A "One Son" policy would have been as effective but that wasn't the choice the CCP made. Now they are stuck with legions of young men who will never get an ethnic Han wife.

Same thing with banning IQ tests for employment: companies found an another way to do the same thing (a college degree) with MASSIVE secondary costs. The legal system doesn't care because their gatekeeping function is still in place. We are just starting to see the roll-back to having applicable experience so corrections can be made. Inside my company I've told HR and management where to recruit my replacement and having a degree is not a requirement or even a preference.

For the majority, slippery slope arguments are a logical fallacy because they cannot (or sometimes will not) see a progression. For those who can actual reason out two or three steps they are a tautology.

PeterW. said...

Maybe too many do not think far into the future, because they have lived their whole lives with a relative lack of consequences.

Someone once suggested removing all safety signs, stickers and regulations would have the issue sorted PDQ.
Stupid should hurt

Poppop said...

@ PeterW -- Stupid _does_ hurt -- oftentimes, the wrong people. Heads I win, tails you lose, and all.