Nature Calls

Mr Miyagi: You remember lesson about balance?
Daniel LaRusso: Yeah
Mr Miyagi: Lesson not just karate only. Lesson for whole life. Whole life have a balance. Everything be better. Understand?
--The Karate Kid

Buried in this piece critiquing Paul Krugman, who by the day seems to be bidding to be remembered as the greatest fool ever to win a Nobel Prize, was this simple explanation of what an economy is:

"In the real world, an economy is the social organization that comes about when large numbers of people act to alleviate scarcity."

Nice. Because resources are necessarily scarce, people naturally organize in a manner that facilitates exchange.

Like any natural system, economies works best in a free, unimpeded state. However, natural systems contain buffers that help make them robust to intervention (otherwise they couldn't evolve). If messed with to the extreme, however, they'll push back with a vengeance in order to re-establish balance.

It's difficult for even dedicated interventionists like Mr Krugman to argue that our current approaches are not extreme. In response, our economic system is building up forces in kind. An important question involves the nature of these counterbalancing forces. Will they be long and shallow? Or will they be swift and deep?

It's impossible to know with certainty. However, given just how much we've messed with the system, it's easy to imagine that the push back will be equally severe in order to re-establish natural balance.