American Issues Project Column: The Complicated Economy
June 2, 2009 / 10:32 am • By Dr. Melissa ClouthierIs there a simple solution to our complex economic problems? I don’t know, but I see parallels to the complexity of the human body and the United States economy:
The biggest problem with the current financial mess the United States faces is that it’s not simple. The United States economy, the slow, crawling, sprawling recession, makes no sense to the average person.
The U.S. economy makes little sense to experts either. That’s a problem.
When I was up in Chicago for a family gathering, I danced with a relative of my uncle who happened to to be a financial guy and trader. Please explain what is going on, I asked him. He just laughed and said that no one knew what was going on–not even the guys in the business. Why try to figure it out anyway?
How do you respond to that? I was rather stunned and took in the implications of his statement. A smart guy whose whole job was to trade on the stock exchange could not explain what was happening to the U.S. economy. Further, he told me that no one understood it. It’s too big. It’s too complicated.
What does a doctor do when a patient with crazy and varied symptoms comes in that no one can diagnose? Well, the solution might be the same for the U.S. economy. Please go read the whole thing.
One Response to “American Issues Project Column: The Complicated Economy”
June 2 2009 / 11:51 am
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An economy contains many time lags and both negative and positive feedback loops…people aren’t very good at comprehending and controlling such systems, even ones much less complicated than the human body.
In his book The Logic of Failure, Dietrich Doerner describes a simple experiment in which subject were asked to control the temperature of a supermarket freezer case. The thermostat had broken, and they had to directly control the cooling mechanism by observing the actual temperature and adjusting the cooling rate as required. Most couldn’t do it, and some of the strategies employed were truly bizarre.
This for a very simple system, with one time lag and one operator-controlled feedback loop.