Our economic black hole
In recent months economist and former Labor Secretary Robert Reich has been saying that the American economy is “in the gravitational pull of the Great Recession”. It’s an interesting metaphor. The U.S. economy is assumed to be a satellite of some heavy object, and just needs a little more push (in the form of Federal stimulus) in order to achieve escape velocity and go on its merry way.
Perhaps the metaphor makes more sense if it’s reframed slightly. Maybe it is more accurate to think of the economy itself as the black hole. At its heart is a great sucking void created in 2008 by the destruction of trillions of dollars’ worth of capital. The economy used to be a star, spewing out light and heat (profits and consumer goods), but it imploded on itself. Now its gaping maw will inevitably draw all surrounding matter into itself.
You can’t see the black hole, of course; it’s invisible. It is composed largely of unrepayable debt in the form of mortgages, and of toxic assets (mortgage-backed securities and related derivatives) on the books of major financial institutions, all of which are carefully hidden from view not just by the institutions themselves but by the Treasury and the Fed. Added to those there is also a growing super-gravitational field of resource depletion—which is again invisible to nearly everyone, though it does create noticeable secondary effects in the form of rising energy and food prices.
The Treasury and Fed are perhaps best thought of as a pair of powerful Battlestars orbiting just outside the singularity, zapping propulsive jolts of energy (in the forms of stimulus packages, bailouts, and quantitative easing programs) at hapless spaceships (banks and businesses) in the vicinity in order to keep them from falling into default, bankruptcy, and foreclosure. Unfortunately, the Battlestars—with their limited and depleting energy sources—are ultimately no match for the black hole, whose power grows silently and invisibly with every further addition to its hidden mass. The Battlestars will themselves eventually be assimilated.
What are we puny, rank-and-file space voyagers to do? Sadly, we must resign ourselves to being absorbed by the black hole at some point. There’s at least the theoretical possibility, though, that at the heart of the singularity there exists a wormhole—a magical pathway to some other reality. In that alternate universe the economic rules are entirely different: money is not based on interest-bearing debt, and the economy is assumed to be a subset of the ecosystem, rather than the other way around. Unfortunately, it is impossible to get to this through-the-looking-glass world without passing through the singularity.
However, what we do now may have some bearing on our prospects: a few physicists reportedly believe that there are many alternate realities, and by visualizing and acting according to the rules of the reality we prefer, we might be attracted toward it rather than some other.
At least that’s the way it works in science fiction.
image credit: NASA
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