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We need to be wary of narratives of economic catastrophe (aeon.co)
34 points by jonbaer 25 days ago | hide | past | web | favorite | 46 comments

I feel like in our attempt to predict the next recession we'll inadvertently end up causing one / cause it to occur earlier, but maybe that's just inevitable

I'd say the opposite. As long as everyone remains vigilant and looking for catastrophe in every shadow we should be less likely to have another 2008 sneak up on us.

There was plenty of forecasted doom and gloom in 2005-2006. It was still an extreme minority, as it is now, and when the next recession comes it will blindside most people all the same. Remember how many more don't have any savings and are living paycheck to paycheck today than before 08.

What makes you think you or I have any say in this?

Recessions happen naturally as part of the business cycle, but are exacerbated by risky practices at major financial institutions that take on insanely leveraged bets in order to churn out a tiny profit that when summed up, becomes a huge profit.

The problem is that when average people go to political representatives to push for regulation of the markets, they are drowned out by corporate lobbyists who fill reps' pockets and fill the airwaves talking about and "class envy" and "socialist takeover".

Naturally? Is it a law of physics?

Where did this idea of recessions being required come from? Business cycle is a reflection of human psychology. It's possible for that to change.

I have noticed the words recession and housing crash in the news a lot lately. It is almost as if some people are hoping for it.

That is because some people are hoping for it, in particular, home buyers.

If the price os something goes too high, it is a good thing that it goes down to levels in which they are affordable again for those that need it for living on them and not for speculating.

==It is almost as if some people are hoping for it.==

It's also possible that the data is implying it. Not everything needs to be a conspiracy.

The market has set a record for the longest bull run in history. It would be naive and neglect the history of markets to expect that to continue. That's just not how markets work.

Depends on what kind of a life phase you are in. If you are doing insanely well at this point in time, a recession would reset and good days could come to an end.

If you are having a bad time already, you would be hoping for a some turnaround moment to see if it changes anything.

Basically its the It will pass frustration/joy applied to scenarios. If you are having a good time now, being told It will pass will likely sadden you. If you are having a bad time, being told It will pass will cheer you up.

We need to be wary of narratives.

Well, narratives are enormously powerful. We need to be wary of false narratives; it might well be that we must employ narratives to communicate with everyone that doesn't have the time, patience, or otherwise capacity to dig through statistics and do a proper analysis.

All narratives are false sooner or later. I think that's the parents' point.

No narrative last forever. The globalist narrative for instance is now finding it's limited.

It's a long but worthwhile reading; a TL;DR for those who don't have the time: excessive optimism and excessive pessimism are both bad for us; we need to go back to building narratives that include complex solutions for complex global(ised) problems, which is something that we were able to do in the past - after all, we went through much worse periods (eg the 1930s, WWII) and the World didn't end.

Personal comment: I can relate very much to this, but I also find that building those complex narratives - or even finding them - is incredibly difficult. I don't know how much this difficulty is related to the new media landscape (especially social media), but the net effect is that, apparently, only simple solutions (which will never work) seem to be gaining steam.


It's hard to build up to complex solutions when we (society, broadly defined) seem unable to agree on the basic facts.

I don't know for sure if the past was better or worse when it came to reporting the truth. Given the limited number of news outlets, radio stations and tv stations historically, there were at least a limited set of reporting to agree on (independent of the accuracy of that reporting). This was probably very helpful in enabling more complex solutions.

100 years ago, mass media was still in it's infancy. They had printed media and occasional radio coverage and in many parts of the world media was extremely regulated. Now, we have a large number of different channels with much less regulation, and many more people with their own agendas.

Every complex solution will add an additional layer of complexity on top of everything, thereby making the problem worse. If society, as a whole, becomes so complex that the processes that keep it rolling are no longer transparent, then we'd end up in a situation where we can't see the forest for the trees.

The problem is that both sides of any big issue think they have the "facts" and refuse to compromise or engage with the facts from the other side.

The list of objective facts regarding any major issue is short. The list of subjective facts is infinite. When anyone can blast the world with their subjective facts, the objective facts are lost in the noise.

The deeper problem is "option consequences" - what is doing X likely to result in? It's hard to call statements about the future "facts", but we can't plan without them. QV the Brexit debate upthread.

If economics were a hard science, then we could focus on the objective facts.

It's not one, though.

If the science was hard then then we'd just abuse statistics and anecdotes (like we do to promote gun control and deny climate change).

That doesn't sound right to me.

I just read "The end of Alchemy" which goes through the history of our financial system and how it came to be and it doesn't sound like we historically were any better off. So not sure exactly what they are referring to with regards to these narratives.

Furthermore, I wouldn't agree that complex solutions are needed for complex problems unless we talk technically.

A big part of the issues we are having is that the policies we do have are so complex that they can be used by those who have enough money to speculate and interpret against the intent of the laws.

If anything we need simple rules and a system of ongoing interpretation on top which ensures that interpretations the law stay within the spirit of the law.

Also it wasn't a long read at all :)

  much worse periods
It’s worth looking at those periods, to understand that economic, financial, social, cultural factors brought people into that period, and changes in technology, radical advancements caused unexpected results.

Do pay attention to that.

>...we need to go back to building narratives that include complex solutions for complex global(ised) problems...

Whilst I agree, one thing that the author doesn't address is that people were very worried after the collapse of the market (Reconstruction), after WWII (the spread of communism, McCarthysim), and other such calamities.

The difference betwixt those times and now is fundamentality societally-based and the nature of the calamity.

Almost no one works at a company for twenty years, anymore; which means reliance on things like 401ks (in the states). When the crash hit in 2008, it wiped a large portion (if not almost all) of their life's savings. So, for people to be especially worried going forward isn't without merit.

The problem is that the complex solutions, these days, haven't even considered, much less addressed, the working class heroes.

I cannt blame people, one bit, for being more prone to being receptive to the narratives of another economic collapse; especially, if you've ascribed your personal losses to not listening the first go-round.

Of course, most countries came up with differing solutions for the crash, and that's one thing to consider: Even though the impact was global, the response was more local (country versus world). Iceland, for example, jailed the bankers[0]. The states bailed them out[1].

I don't have an answer and I don't even presume to begin to have a notion of what to do; however, telling people that they should just wait for a complex solution isn't going to go very far, when the solutions proferred so far haven't positively affected them in the slightest.

(Apologies for the rant.)

[0] - https://www.huffingtonpost.com/stefan-simanowitz/iceland-has...

[1] - https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-...

>When the crash hit in 2008, it wiped a large portion (if not almost all) of their life's savings. So, for people to be especially worried going forward isn't without merit.

only if they panic sold. if they held for a few more years, they would have recovered most, if not all of their losses.

Yup still waiting for my Lehman Brother's shares to go to the moon in value, any day now.

As a Brit, I find it weird to see an article about economic catastrophe that doesn't even mention Brexit: the world's first self-inflicted economic omnicatastroshambles.

It's not the first self-inflicted and won't be the last.

I wouldn't call it self inflicted with all the Russian social media trolling other countries. It's just pushed a bit past the tipping point.

Probably because it would fall in the too extreme negative narrative.

What brings you to this assessment? Your gut feeling? Just came across this: https://twitter.com/faisalislam/status/1087425506931294209 today, that would be pretty serious indeed for a country that relies on so much imported food.

Edit: Ah, sneak edit. Carry on.

The fact that other countries manage to be outside the EU and do just fine.

This kind of catastrophist thinking is exactly the wrong way to think about things.

Yes it has conequences some negative and some positive. The world will go on.

> The fact that other countries manage to be outside the EU and do just fine.

1991: "Russia needn't worry, lots of countries have market economies and do just fine."

As though the structure of the British economy and trade activity hasn't been shaped by decades of EU membership.

Things won't be as they were in 90s Russia, but living standards will drop once exports are priced with WTO tariffs, and ditto for imports.

I agree, the world will carry on. It's just a very heavy systemic shock switching your economic system from one set of conditions to a completely different set of conditions, from one day to another. So the question is: is the benefit greater than the cost? I'm pretty sure that the voters have not received the necessary information to really assess this question.

So? There's plenty of money to be lost for the people who depended too much on the specific conditions of the old system and plenty of money to be gained by people who are in a position to exploit the conditions of the new system. It might not be a net wash but the net effect will probably not be as extreme (positive or negative) as either side is saying.

The UK have had several years to adjust.

I am unconvinced it's going to be a major issue and I have yet to see any evidence of the contrary.

> The fact that other countries manage to be outside the EU and do just fine.

This is the wrong way of thinking about things. Yes, other countries manage to be outside the EU, and do fine (albeit, at least in Europe, most of those doing fine have close links to the EU). But, those countries don't start from a position of being tightly integrated into the European economic system.

Indeed. You can have computers running Linux and computers running Windows. What you can't do is just come into work one day, reformat the Active Directory server and boot into RedHat, and declare all the problems to have been solved. Which is the problem we're facing: no transition planning, because there's no realistic discussion of even what the objectives are, let alone the consequential tradeoffs.

Neither is the UK.

I grew up in Denmark who also aren't fully members of the EU either. Every time we voted it was claimed to be the end of the world. It turned out to be just fine in fact mostly better than had we joined.

So I am pretty immune to these the sky is falling claims. The UK is an important country in the world, they will do just fine.

> Denmark who also aren't fully members of the EU either

False since 1973. http://um.dk/en/foreign-policy/denmark-in-the-eu/

It's complicated. See the Edinburgh Agreement of 1992:


Given that it's not unreasonable to see Denmark as an "active" but not "full" EU member.

By those metrics the UK isn't a full member either, since we have derivations - and Denmark is in Schengen!

That's the point.

If we were full members we would have the EURO and no derivations.

The fact that the UK has kept their own currency is itself making it less of a headache to untangle from the EU.

> The fact that other countries manage to be outside the EU and do just fine.

True, but in the immediate the UK seems to be in a somewhat alarming position. None of these other countries have ever needed to re-organize over half of their food supply chain overnight.

Other countries outside the EU had lots and lots of time to develop their supply lines.

Brexit is pretty much an "immediate change". That makes a huge difference.

>>The world will go on.

Not with the same configuration. And not with the players remaining in the same positions they are.

The sun always rises tomorrow, just not on the same world that was yesterday.

> the world's first

Unless applied to technological advancement, this statement is usually false. Human behavior is astonishingly repetitive.

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