Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Monday, August 14, 2006

Fooled By Economics

"...America put Japanese in concentration camps and confiscated their homes during WWII. Yet, Japenese Americans are some of the most assimilated and prosperous Americans in the nation today. History then does not demonstate that such actions are counterproductive."


A vivid demonstration of the overweening economistic emphasis dominating American society and culture. The dominant power in the world today isn't the States, or even corporation - unfortunately for 99% of the world's population, it's the economics cooked up by academics in ivory towers.

Consider the frame of this comment. The commenter makes a simple argument: the human costs paid yesterday are more than outbalanced by the financial benefits realized today.

In other words, the fact that today Japanese Americans are "prosperous" in any way erases the massive human costs paid by their parents and grandparents. It's the kind of naively simplistic accounting argument would-be economist (and even real ones) love to make: the "account" is in debit, not credit.

Should we balance today's prosperity against yesterday's suffering?

Of course, the most obvious flaw in the argument is that it is two different parties who bear costs and realize benefits. The second most obvious flaw is that the costs and benefits are different in kind - the gains are financial, the costs are human. The third most obvious flaw is that of the disproof of some kind nebulous causality. Should we then assume the same conclusion for Jews - Israel is a prosperous country, so the Holocuast doesn't matter?

Preposterous reasoning, to be sure.

Which brings us to the crux of the matter. The simplistic assumptions and conclusions economics leads us to make are helping make a world where human life only has value in aggregates and averages. But surely we can do better.

After all, this is just the same argument made at the dawn of insurance at Lloyd's. Then, it was revolutionary - because we couldn't assign a time value to life at all. Today, we can and should be doing so in many innovative ways. Why should war or internment camps happen when we can manipulate costs and benefits in such complex ways? Why can't I offset these risks (death, interment camps, etc) with a well placed hedge?

This is a huge market gap which the next wave of social entrepreneurs would do well to focus on.

-- umair // 1:09 PM // 2 comments


You are my hero. Damn well said.
// Blogger Jim // 8:20 PM

I agree with the thrust of what you're saying, but it could be that the other side started the economic abuse.

Your argument is ultimately moral. We shouldn't intern people based on racial profiling because it's unjust and causes suffering.

But there are definitely people who argue against interning people based on racial profiling because it will have bad consequences for *us* down the line.

They argue that those who are victims of profiling will dislike us more for it and be more sympathetic to enemies etc. Hell, I've done this myself, implicitly, when I argue that the conditions that the Palestinians are in contributes to antipathy to Israel.

But once you're arguing that line, you're open to the counter that, some groups were interned and didn't turn against the US.

Ultimately, internment is wrong because it's wrong. End of story. But I'm not sure one side is more guilty of trying to argue from economic consequences than the other.
// Blogger phil jones // 7:00 PM

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