Extreme Economics

In The Watchman’s Rattle: A Radical New Theory of Collapse by Rebecca D. Costa, she outlines five supermemes that lead to the stagnation and collapse of civilizations: Irrational Opposition, The Personalization of Blame, Counterfeit Correlation, Silo Thinking, and Extreme Economics. This healthymemory blog post will address the supermeme Extreme Economics. According to Costa (p. 138) “The economics supermeme occurs when simple principles in business, such as risk/reward and profit/loss, become the litmus test for determining the value of people and priorities, initiatives and institutions.

The reason that extreme economics is so dangerous is that profit can prevent or retard technological solutions. (p.140) That’s because broad systemic solutions that benefit humankind don’t always fit accepted economic models. And when they don’t, progress is inhibited.

The emphasis on short-term returns can preclude a technological solution that in the long term would be both more profitable and beneficial. Extreme economics has increased educational costs and resulted in an inefficient delivering of medical and pharmaceutical services. Wherever one looks, college athletics, for example, one finds the adverse effects of extreme economics. I have read that Alan Greenspan, a former Chairman of the Federal Reserve had the phrase, “Greed is good,” posted in his office. I shall remind the reader that greed is one of the seven deadly sins. Moreover, Greenspan’s policies and lack of action helped lay the groundwork for the economic crisis. Sometimes I think the world has become one enormous whorehouse.

It is actually somewhat worse than Costa portrays. Research has indicated that the predominant model in economics is obsolete. Humans cannot be entirely rational because our information processing limitations allow us only to process only a minute amount of data bearing on a decision. Behavioral economics has indicted that the decisions humans make are not always in accordance with the rational paradigm. Yet the majority of economists, and unfortunately those in key positions, still cling to an obsolete model.

There have been a number of healthymemory blog posts bearing on this issue. See the following healthymemory blog posts: “Thinking Fast and Slow,” “Happy Labor Day: Why Are We Working so Hard?” “Why With All This Technology, Are We Working so Hard?” and “Gross National Happiness.” This last post discussed a substitute metric to the Gross National Product (GNP), one that is much more directly related to human needs and human happiness. Another metric that has been proposed as a replacement to the GNP and is discussed in the same healthymemory blog post is the Inclusive Wealth Index (IWI). Relevant and effective metrics would be valuable in addressing the world’s economic problems.

© Douglas Griffith and healthymemory.wordpress.com, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

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