The Wall Street Journal: "Crisis Compels Economists To Reach for New Paradigm"
"'We could be looking at a paradigm shift," says [Prince?] Frederic Mishkin, a former Federal Reserve governor now at Columbia University.George Soros:
In response to the policy challenges presented by the economic crisis and the need to develop fresh approaches to economic theory, a group of top academics, policy-makers, and private sector leaders today announced the creation of the Institute for New Economic Thinking (INET).David Leonhardt in the New York Times Magazine, August 2008:
The second point Obama wanted to make was about sustainability. The current concerns about the state of the planet, he said, required something of a paradigm shift for economics. If we don’t make serious changes soon, probably in the next 10 or 15 years, we may find that it’s too late.Gabriel Garcia Marquez, The Autumn of the Patriarch:
Over the weekend the vultures got into the presidential palace by pecking through the screens on the balcony windows and the flapping of their wings stirred up the stagnant time inside, and at dawn on Monday the city awoke out of its lethargy of centuries with the warm, soft breeze of a great man dead and rotting grandeur....Hans Christian Andersen, The Emperor's New Clothes:
MANY, many years ago lived an emperor, who thought so much of new clothes that he spent all his money in order to obtain them; his only ambition was to be always well dressed. He did not care for his soldiers, and the theatre did not amuse him; the only thing, in fact, he thought anything of was to drive out and show a new suit of clothes. He had a coat for every hour of the day; and as one would say of a king "He is in his cabinet," so one could say of him, "The emperor is in his dressing-room."Problem is, the pursuit of the new paradigm is being conducted in the same way the King's son searched for Cinderella.
"No one shall be my wife but she whose foot this golden slipper fits."No one shall be the new paradigm but he whose epistemologically-vapid rational actor microfoundations this stultifying, putrefying growth imperative fits.
...for the only thing that gave us security on earth was the certainty that he was there, invulnerable to plague and hurricane, invulnerable to Manuela Sanchez's trick, invulnerable to time, dedicated to the messianic happiness of thinking for us, knowing that we knew that he would not take any decision for us that did not have our measure, for he had not survived everything because of his inconceivable courage or his infinite prudence but because he was the only one among us who knew the real size of our destiny...
Economics rests atop the existence of scarcity, I believe. Its stark definition of scarcity is: infinite wants versus finite resources, which sure sounds like a tough nut to crack. But to my mind infinite wants are impossible. Sure, wants are ever shifting and changing, but infinite? Impossible!
So if wants are not infinite, they must therefore be finite. Hence scarcity becomes: finite wants versus finite resources. Don't sound like such a challenge anymore. I think this is where the paradigm shift needs to begin. Humans are not insatiably greedy. I know no one who is, and even obese people, or obsessive car collectors, or scrooges etc., all die before they have acquired an infinite amount of whatever it is they want.
Wants are not infinite. Scarcity is not inevitable. Economics needs a redesign.
"They used to tell me I was building a dream, and so I followed the mob,"
Buddy, can you paradigm?
Word inflation: A paradigm used to be a nickel's worth of free advice.
If the paradigm is going to shift, it had better be soon: We have now experienced the first back to back YOY decline in service sector employment since 1939.
In the past 70 years, there have only been four instances where YOY service sector employment fell: 1949 (-1.3%), 1954 (-0.1%), 1958 (-0.2%), and 1982 (-0.5%).
In the past two year employment in the sector has fallen a total of -2.8%.
So, one or the other: we need to greatly increase our demand for nail salons, or find a better way to spend our spare time...
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