Creative Destruction

Economists talk about a concept they call "creative destruction." Essentially it says that cyclical movement in the economy does not lend itself well to evolution. As a society (race) we seem to like to maintain a comfort zone and resist change, yet forces far beyond our control force change upon us. The greater the change, the greater the upheaval. The NY Times recently published an article that talks about the severe and sudden job loss as being a harbinger of a fundamental economic shift in the U.S. Perhaps not only in the U.S. but the world. I graduated with a BA in Economics. I am not an economist, I do not pretend to know the models used by economists in trying to understand market forces. However one thing I do remember is that all of the economic models I studied did not function well in extreme conditions. There was always a tendency that moderation seemed to work best. The current economy is due an adjustment. The extremes in this economy generated by an overheated housing market, lack of restraint in money creation, and our focus on technology moved our economy to an extreme edge that is simply not sustainable.

Now comes creative destruction. The old will be destroyed. The automotive market in the U.S. must under go fundamental change. If another plant opens to produce SUV', large vans, or these tricked out pick'em up trucks we have not learned our lesson. GM is facing bankruptcy and frankly I think it should be allowed to go bankrupt. It will generate huge "creative destruction" forces in the U.S. as parts suppliers are suddenly put into severe production under capacity situations. The market will have to adjust. People will be hurt, those who husband their resources and are capable of doing for themselves will survive. Others who rode the wave without a foundation will founder. So it is with the nature of things.

I say bring it on. I'm excited to see what happens. I hope I live long enough to see a fundamental shift away from gadget technology, away from over priced homes and under supported lending institutions, I hope to see a strong move toward alternate forms of energy. I do not like governement interference because the fundamental purpose of government is to preserve the status quo. I do not believe the government will be able to stem the tidal forces about to over take us because the world is involved and there is now a player in the world with more economic clout than the U.S., namely China. We cannot act solely in our best interests, and perhaps this is a step that will start us down the road to world peace. Otherwise it will end in world war and the destruction of mankind will result in either case, from the consumption of all of our resources or we will blow ourselves to smitherens.