Economics from a non-Economist: Why
It has been few years since I grew my interest in Economics. It probably started with a growing curiosity, stemming from reading books on innovation like AT&T Bell labs or probably from reading Postcapitalism. Then it just cascaded and demanded me to find answers on how the most largest single system works, manages and affects everyone. I read ranges of books like freakonomics, how AI and robots will affect the world (this was where I actually found out about universal basic income), public funding and how it affects disruptive technology development, on value, on good economics (that we always thought was bad for the economic growth), on top of some online classes on economics here and there.
I am really glad that economics has been my point of interest. It is relevant to my career, it has some maths and it is a good transition from my geosciences background, which I left in 2016. The key takeaway from what I read and learned about economics is how it is shaped around capitalism, as a panacea to the problems we have. Capitalism improves lives as it gives fair access by merit to education and business opportunities… or does it? The world has never been as prosperous as it is now but not without the cost of inequality and imminent problems of aggravating climate change.
This is where we get heavy…
In hindsight, my major was taught in a similar fashion. I took Econs 101 and a 400-level economics geology and other geosciences subject geared to relevant fields of industry. The emphasis of those geology courses that I took is the emphasis on industry-relevant matter. How do you manage resources so you can get a better output? The questions of how the side effects of the exploration, i.e. the pollution and expenses to other living things were only noted as an afterthought.
Why?
Consequences as an afterthought
I found the answer in economics. Because the risk is calculated and it can be mitigated. Because the risks, reduced to monetary value, could actually contribute to the economy by having other companies or consultants managing it. There is even an industry built around these externalities. The mantra is simple, as long as you don’t get caught then it’s okay. The effect is much worse when it is happening in developing countries due to lax in regulations.
Let us look at a contrasting example from the oil industry. Remember when BP caused the irreversible oil spills at US coast? The US government sued BP for almost USD20 billion, and BP has to rake out up to USD6 Billion for clean-up of the oil spill. Seemed good, right? Looks like the system works and those who was irresponsible paid heavy price. But oil spillage and its affect doesn’t only impact those in the US. In Nigeria where, oil spillage has always been a problem and was attributed to the infant deaths and plethora of environmental damages. The consequence wasn’t as bad as in US because of the relatively robust regulatory framework. Billions has been poured in to repair and remediate the situation in the Niger Delta, after 12,000 reported death of babies in 2012 and ongoing heightened risk of kidney damage cancer, diabetes, Alzheimer’s and Parkinson’s. Citizens still have to pay for the consequences.
This is scary as universities that are supposed to shape the minds of the young engineers and scientists who maximize the output of exploitation failed to have the consequences of the externalities to be ingrained in their pursuit.
More recent (and relevant) example?
And we can see it becomes more apparent during the rise of the big tech companies to a level was never achieved before. The pandemic that manages to shut down global economy seem to bring little effect to these tech companies but breathes death to many traditional economies. In fact, these companies become more prosperous than ever due to the drastic change of norms where everyone and every enterprises up themselves into digital manoeuvring. All big tech companies that dominate the US stock market increase valuation on average of 16% (while Amazon got a whopping 70%) from Jan-June 2020, reported Quartz.
If you are a Schumpeterian, with a belief that creative disruption will destruct and destroy what we perceive as old, traditional economies anyway, you maybe think this is way overdue. While this is true, don’t forget inequality is in all time high now, with the ultra rich has more, way more that anyone at any point of our recorded history. Money begets money, they say.
Don’t forget that as someone who worth USD200 billion with a company worth over a trillion dollar (that’s a 1 followed by 12 zeros), the employees in his warehouse were really in unsafe working conditions (managed by AI to improve movement in the warehouse with little or no time for break. Some repeatedly has to pee in the bottle). This is exactly what expected from an economic vantage point of “managing resources to maximize output”. It is easy to manage humans once we are reduced to nothing but numbers and KPIs.
If the old/traditional economic activities exploit resources and implicate human in the process, the more cutting-edge economic activities with their disruption and all just exploit humans by controlling and predicting our behavior. One cannot stop to draw parallels to the human slavery and colonialist exploitation. History seems to come in a full circle.
