ECONOMICS
Economics pretends dismally to be a science governing the phenomenon of trade and the accumulation of wealth through the sale of goods and services. Like all social sciences it has embellished its claims with mathematics that is often structured to avoid a direct unambiguous test and repeatedly fails to reliably predict the outcome of capital investment. Contrary to theory, there is no ideally perfect self-correcting market where facts are available transparently and immediately, because market behavior is profoundly irrational. All slumps and crashes and burst bubbles are incontrovertible evidence that beside fraud and profit-taking, the major factors operating are greed, fear and panic.
These ubiquitous factors create the need for a regulatory body to prevent cheating, a phenomenon that demolishes Adam Smith’s euphoric notion that unobstructed capitalism is the most reliable road to the wealth of nations. Most expert at flim-flamming, flip-flopping and menacing paranoid back-biting, economics once awarded a Nobel Prize to a couple of its favorite sons for advancing the notion that a risk-free equation they had labored over into the delusional mists of many a weary night had allowed an investment strategy by which the shrewd application of large doses of capital would produce for its participants vast and continually increasing fortunes. They retired from academia and hired their services out a top dollar to parties limited to antes of fifty million dollars.
Since the market is far more exquisitely sensitive to perceptions and fears than it is to the fundamentals or market prospects of its listed companies, initially the investors did so well that it looked as if everyone could apply the B-S equation. Then all clients of all investment advisories would be able to put a goose in their portfolio, Tiny Tim could throw away his crutch, Bob Cratchit salt away an elephantine four-storey manse in the Hamptons. At the closing bell it would be a Merry, Merry Christmas with a capital M as in Money for all, ad infinitum. Scarlet O’Hara would never go hungry again and lead the Thanksgiving Macy’s Day Parade, a trend setter in the march on obesity.
Then came the ooops point in the lauded equation, where the factor for risk, which had been by self-deceiving mathematics allegedly been reduced to zero, was...guess what? Not. And despite a common sense among investors who would never leap into a backyard swimming pool without checking the water with their toe, everyone closed their eyes and took the plunge on faith. In the end this is what economist offer: faith, the one intangible need without which no one could continue.
It takes bizarre forms. Fashioned after Gordon Gekko, that politically seduced maven of economics, Alan Greenspan, overturned years of good judgment in order to remain at the apex of the ape order, announcing to all the “Debt is good,” even while the ghostly tag team of Maynard Keynes and Adam Smith chalked their cold, dead hands for Black Friday Night Smackdown. Also lining up in the booster show for the likes of Kenny Boy Lay and a weekend with Bernie Madoff were pundits whispering their nonconcern as the 2008 market began a downward tail spin that audibly whined with the plunge.
For every increasing woe, the amateurs turned to the filtered religion of free market guys. To wit, what was happening post Lehman brothers was just a mild downturn, a much needed market correction that would soon rebound, like New Orleans after Katrina, stronger than ever before.
Faced by the incontrovertible error of retirement accounts that had been flattened by more than three trillion dollars in irrecoverable losses (these people are, remember, retired; they counted on this money to live) and faced with carrying foreclosures on and abandonments of houses that were deeper under water than the Titanic, Alan Greenspan finally had run out of corners in which to hide and confessed, too late to save anything, that he “had been wrong.” Then, as the most respected expert in the field of economics declared, “Nobody knows what’s going on. The old rules don’t seem to apply.”
The dismal science gets darker.
But to use the word “science” for economics is oxymoronic. Economics repeatedly fails the most central litmus test of quantitative sciences like physics and chemistry, which is: If given an initial set of measurable parameters and a valid mathematically expressed theory, the final situation is always determinable, and the result experimentally confirmable anywhere on Earth.
In economics, for all of its quantities of price/earnings ratios, capital reserves, liquid debt, losses from law suits and quarterly profits from new products, there is not a single economist in the history of their putative science who has always predicted correctly.
In their hemming and hawing and feeling sorry for themselves and – yes – basic arrogance and greed, economist have eternally taken refuge in the excuse that the systems that they deal with are vast, complex and dynamically interactive, forbidding accuracy in anything more than trends.
If true, this would be a great excuse, since their followers would not have lost their shirts, wallets and hopes – per Scarlet O’Hara – of never going hungry again. But, as often in economics, this is a flimsy excuse.
In other systems vast, complex and dynamically interactive systems, true sciences have often defined and controlled outcomes. An illustrative example is the separation of recoverable fissile and fertile isotopes from discharged nuclear reactor fuel. Aside from the mechanical shearing and dissolution of the discharged reactor fuel, itself a triumph of efficiency, the process following chemical reaction and dissolution requires the transfer of the resulting solution into mixed phase pulse separation solvent extraction columns, multiple streams using multiple pipes and simultaneously operative re-run systems, to several continuous unit operations including recovered product purification and waste stream for storage and eventual treatment.
The complexities only begin with estimating the composition of the discharged fuel as a function of – right again – its radiation history, an estimate that may be supported by measuring radiation levels but is largely a function of complete understanding of what occurs to uranium dioxide when it is exposed to a continuous high energy neutron flux. The equations used allow an accurate estimate of the isotopic composition of the fuel, so accurate that the rest of the process has a good chance of working.
These operations are vast, the size of several football fields in area and four-deep in floor, containing hundreds of thousands of yards of piping designed to be accessible to remote robotic repair. They are complex in that the following parameters are continually changing as the dissolved material flows: (1) the chemical identity of the elements present, due to the radioactive decay of the fuel material, which requires that (2) the chemical composition of the solvents and phases needs to be continuously adjusted to create the proper reactions that allow the dynamic separations into various streams which (3) if incorrect by gauged measurement are diverted in whole or part to re-run stations to add chemical reactants that are themselves undergoing continual decomposition by radiation, meaning that (4) the chemicals themselves must be regenerated or added fresh and (5) their decomposition products removed and recycled in highly acidic solutions where corrosion and acid attack on the pipes themselves must be known and compensated, all within a system of piping that must accommodate the dynamic coexistence of solids dissolving or undissolved, liquids decomposing, corroding or reacting, and gases, like radioactive xenon, that must be captured and stored in a way that does not interrupt the continuous operation of other solvent recovery systems in a total array in which everything needs monitoring and measuring to ensure occupational safety.
Yes, this has been done, and even done using several chemical methods, each and every one capable of handling the size, complexity and dynamic nature of the system. So, please, Dr. Economics, no hand waving excuses. Complexities of any number or nature can be accommodated if and only if the behavior of each contributing aspect of the system can actually be expressed in a valid mathematical way.
If the composition and exposure of the irradiated fuel is known, so will be half lives are of the isotopes entering the reprocessing stream. From this the number and type of daughter radionuclides are knowns, as well as their time-variable contributions via alpha, beta, positron and x-ray emissions, determining what shielding is necessary for workers, machines and instruments, and how solvents decompose. The fact that hot nitric acid is an oxidant and likely to react under radiation with the tri-butyl phosphate in the organic phase of the pulse columns and on and on is known, each simultaneously occurring reality recognized and accounted for in a system that works each and every time, exactly the way it was designed by scientists and engineers different from economists. The difference is that they really understand what is going on, down to the last isotope of the last trace element in the waste stream.
Prediction is possible and reproducible because understanding is comprehensive and real. Only in economics and meteorology can the “experienced” shamans reappear with a cumulatively crushing burden of repeated error, lacking the honesty to say, “In my line nobody really has any idea of what tomorrow will bring. In a system with two few regulators, and without management support to meaningfully punish offenders, nothing is really ever transparent, because knowledge is power and free information distributes knowledge rather than concentrating it. What I actually do is a lot of hand-waving and mumbo-jumbo using concepts that are unproven and equations that are unreliable. The truth is that if you want to get rich on the market, you need to be an insider trading on information that is concealed from or delayed in arrival from the investor. The investor is just a way of finding a large number of sheep willing to be fleeced, who come blindly back hoping that the pot of gold will be a little brighter and more visible next time. The investor community is a ship of fools piloted by a crew of cutthroats, and if the crash of 2008 failed to convince you of that, then you deserve to lose every penny you invest from now on. Any other questions?”
But then we would all learn the truth, which is often a tough nut. In the global economy, nobody knows much more than the fact that the Chinese are holding all the bananas and that the American service industry, the only industry we have, is outsourcing to Bangalore. And yes, that oil futures is a good choice, even if it’s one that will certainly kill the planet. Why not? An underused, undepreciated planet has no place in any profit-driven economic system that is likely to be pandered.
Yes, you heard that right. Pandered. What else did you think we were doing between 1929 and 2008? History has in common with economics this: no one wants to remember the inescapable lessons could otherwise spare us repeating disasters.
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