The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

The Economic Kabuki Is A Bigger Problem Than The Political

Posted on | July 25, 2011 | 8 Comments

by Smitty

Via the ever-upbeat Monty at Ace of Spades, this Hernando de Soto article is worth your time. He outlines six specific developments that have destroyed the clarity and reliability of information in the global economy, and then concludes:

If we can agree that the recession wasn’t about bubbles but about the organization of knowledge, we can move on to restoring the systems that allowed the global economy to expand more in the last 60 years than in the previous 2,000.
We are now staring at a legal and political challenge. A legal challenge because American and European governments allowed economic activity to cross the line from the rule-bound system of property rights, where facts can be established, into an anarchic legal space, where arbitrary interests can trump facts and paper swirls out of control. The rule of law is much more than a dull body of norms: It is a huge, thriving information and management system that filters and processes local data until it is transformed into facts organized in a way that allows us to infer if they hang together and make sense.

Mainly, though, it’s a political challenge. Politicians must raise the financial crisis to commanding heights, where the entrenched institutional problems of a failing order can be addressed. Markets were never intended to be anarchic: It has always been government’s role to police standards, weights and measures, and records, and not condone legalized sleight of hand in the shadows of the informal economy. To understand and repair one of mankind’s greatest achievements—the creation of economic facts through public memory—is the stuff of nation-builders.

I’ve seen up close what this economic confusion looks like. An Afghan government entity wants some construction done, and has a project with a U.S. entity. At a meeting, the U.S. representative states that there are some approval hoops for the project funding that are delaying commencement. The Afghan rep. says, ‘Fine, but could you at least put a ditch at the property boundary? If you don’t then locals will move in, park livestock, and commence to make ownership claims.’
Not only should we avoid investing in things we don’t understand, we should identify politicians trying to do incomprehensible things and run them out on their ear the next election cycle. Stated another way: go write some software. You’ll appreciate immediately the need to remove complexity wherever possible. Complexity is not your friend, though it may be the business model of someone else.

Update: linked at The NeoSexist.


8 Responses to “The Economic Kabuki Is A Bigger Problem Than The Political”

  1. Anonymous
    July 27th, 2011 @ 4:48 am

    Stated another way: go write some software. You’ll appreciate immediately the need to remove complexity wherever possible.

    Speaking as someone who’s been slinging code since 1981: truer words never spoken; amen, brother.