Grandinite

It is somewhat sobering and sad to think that, some time in the future, I may look back on the present times as “The Good Old Days”, when everything was somehow better, neighborhoods safer, streets cleaner, the economy more sound, the standard of living higher, when people were more polite and considerate, and teenagers more respectful of their elders.

That said, each crisis brings forth a “New Normal”, where views that were once on the sidelines become mainstream. It’s Shoepenhauer’s quote at work:

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Based on what The Media tells me, I am luck to have a job, having lived through “The worst economic crisis since the Great Depression“. I am supposed to jump for joy when government spending distorts the GDP accounts to make it appear there’s a recovery going on, when there’s growing evidence that the crisis, like the flu, has mutated into another variant, and that the proposed economic vaccines are only setting the stage for a much bigger crisis coming down the pipe. If you think Canada is immune, think again.

The Global Economic Crisis has a lot in common with the present H1N1 crisis, and the former can inform us of the latter. How? By considering the warnings of people who are not part of the mainstream thinking. In the years leading up to our now ongoing Economic 9/11, there were signs of impending doom amongst Dismal Scientists, but these economists were not necessarily the core of mainstream economic thought. These economists, Michael Hudson, Marc Faber, Nouriel Roubini, Peter Schiff, William White and Dean Baker, were not given the airtime they perhaps deserved. Since then, these economists have gone from the ‘Boys who Cried Wolf” to the boys who said “The Emperor has no clothes”. They’re now economic rock stars.

Why were they not given as much airtime as the gravity of their warnings may have merited? It’s partly because economics undermines itself. The economic interests of economists can determine which economic doctrines and positions they advance. Think about this: Many economists have retirement portfolios tied to the market’s performance, or perhaps they work for banks or securities firms with investments tied directly to the market. If one credible economist comes out with a large enough prognostication of doom, their forecast could wipe out several billion dollars worth of virtual wealth from the marketplace casino. As a result of this underlying economic reality, economists have an upward bias to their projections.

As Dirk Bezemer, professor of Economics at the University of Groningen has documented, there were at least a dozen economists who saw the impending crash, tried to warn people of it, and were proven right. But most interestingly, all these economists had one thing in common: they did not use the ubiquitous General Equilibrium models of the economy, and instead used accounting-based Flow-of-Funds models. I’m not going to get into it too much other than to point out that in order to see that the Emperor has no clothes, you need a different set of eyes from what everyone else is using.

How does this all relate to the H1N1 pandemic that’s sweeping the globe? It tells me to look to the sidelines of mainstream thought. When the herd is swept up in some sort of madness, whether it’s subprime lending, real estate speculation or pandemic preparedness, it’s no use to look to the herd to form one’s opinion if they’re all running off the cliff, too. Consensus is pretty good at defining perceived truths rather than real ones.

So I wonder if, one day, I’ll look back at this swine flu stuff as I did Avian Flu, or SARS or anthrax, or any other biological threat that’s scared the bejeezus out of society before quickly disappearing down the Memory Hole. Or will it be a game changer? Will it be THE ONE – the existential angst-inducing pandemic that makes us conteplate the fragility and ephemeral nature of life?