the economics of equilibrium

While I would never have had a hope of passing any economics class quoting wikipedia, I’ll start off this post this way: “In economics, the term equilibrium is used to suggest a state of “balance” between supply forces and demand forces.”

And that ever so delicate state of balance is something that painfully evades us. We seem to think of a “healthy” economy as only being measured by a healthy profit. Nuhuh. Not true. That assumption is way out of whack. Disequilibrium is not a good thing. And to quote the internet again disequilibrium is “a loss or absence of equilibrium, especially in an economy“.

So much is said and written about people finding balance in their lives. A work life balance. But equilibrium doesn’t and shouldn’t just apply to a new age approach to living. It applies to the economy as well. Yet the business reports never mentions economic equilibrium. It only speaks of profit and loss. Of risks taken and rewards gained. And it’s misleading on so many levels.

When a big bank or a large oil company or a giant corporation is celebrated for records profits what it really shows us is a huge disequilibrium in the economy. No more than a community should be celebrated for starving poor children because the bank account runneth over. When a government tries to repair disequilibrium with a jobs program or an infrastructure program it’s seen as an economic weakness. Again, trying to feed your children should not be seen as a weakness. It should be seen as an absolutely necessary correction to achieve equilibrium.

The capitalist economy is structured for profit and not for equilibrium. And therein lies the major economic problem of the last decade. Since 9/11 – we have spent our way into a recession and lined a few pockets along the way – but we’ve also emptied far more in doing so. To the point of economic collapse.

The real question is, can we elect leaders who see the importance of equilibrium in an economy rather than leaders who live and die by the support of the wealthy few. Other civilizations have fallen victim to this trap – Spain used to be the richest country in the world if history serves me well – and at this rate, we’ll be saying the same thing about the United States in our lifetime.

To achieve equilibrium is the ultimate goal of a healthy economy. And we have much work to do. Every decision is an opportunity to re-balance the economy for ourselves and for one another. Where you buy, what you buy. What you sell and how you sell it. How we tax and whom we tax. And ultimately, whom we elect and whom we reward. That power belongs to each of us. Let’s not sell it off to the highest or lowest bid. No balance will ever come of that.

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3 Responses

  1. Your absolutely right…you would never pass economics. Fortunetly most of us don’t need to attend a business college, we just turn on the television and see how Europes “something for nothing” socialist policies has led to their economic collapse > http://floridapundit.com/2010/11/americas-future-collapse-of-the-european-welfare-state/ . A lesson we need to learn fast.

    • Thanks for your comment. I hope we can agree to disagree. Our free market friend former President Bush did plenty of damage on the economic front. You needn’t look as far as Europe for looming disaster. And for the record, I said I’d never pass an economics course using wikipedia. That’s why I have a degree in it from Ottawa U. And I only mention it because I think it unnecessary to start a discussion with someone by insulting them first. Nothing comes of that, either, in my humble opinion.

  2. Economists have warned Europes budget busting entitlement programs were unsustainable and doomed to collapse over 20 years ago, way before Bush entered office. Too bad it took 50 years of financial mismanagement of the failed social-economic experiment to wake the europeans up.Now only 4 socialist governments out of the 27 european countries remain, but unfortunetly it’s too late. Everyday europes economic woes make the headline news. What simply amazes me is… there are some people who still want to follow them over the cliff.

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