A plea for a symmetric economics

- Posted by - 11 agosto 2013 - Blog Print This Post

We are living a devastating public debt crisis: this is what the newspapers keep repeating, echoing the analysis of some economists. The word “debt” is proposed in an absolute and obsessive way (the debt, the debt, the debt…), it gains an autonomous life, and it becomes the token of the failure of a governance system, of the defeat of entire generations, it becomes a totem to which offer sacrifices, it assumes uncountable meanings (political, ethical, psychoanalytical ones).

As a result, an essential point, and one that is confirmed by the personal life experience of most of us, goes quickly out of sight: you cannot have a debt if you do not have a creditor, you cannot borrow if someone does not decide to lend.
Is that a trivial statement? It may well be, but let us look at its consequences. First of all, even admitting that our problems were generated by profligate public finance (but on this point there is a heated debate), one thing is certain: since nobody lends to itself, the creditors of the public sector will generally belong to the private sector. All in all, this means that what is described as a “public debt crisis” in the media, a crisis to be solved by punishing and restricting the State that “borrowed too much”, is at the same time, at least in part, a “private credit crisis”, that could have been avoided by regulating and monitoring the Markets, that “lent too much” (i.e., unwisely).

To describe the relationship between two economic agents by insisting on only one side of the transaction (e.g., to mention only the “debt”, as if any liabilities of someone would not be the asset of someone else), is an example of asymmetric representation of an economic fact. In short: an example of asymmetry. The asymmetry in the representation, in the analysis, brings naturally to an asymmetry in the policy proposals, that do not always determine a net benefit for the society as a whole. To make a simple example, austerity policies, nowadays widely blamed as a cause of the persistent recession, were adopted a few months ago on the basis of an “asymmetric” analysis, one that attributed to the State all the responsibilities for the crisis, and saw, as a consequence, as intrinsically positive any policy aimed at restricting the “perimeter” of the public sector.

This analysis finds now less supporters than one year ago.
To remind that each debt is also a credit, to stick to our example, is not that trivial: rather, it is the removal of an analytic asymmetry. This removal, in turn, is not a mere intellectual exercise: it is a genuine contribution to the opening of the political debate towards more efficient and articulated spaces of problem solving.
These reflections are still uncommon in our country, but they are gaining momentum in the international press, as well as in the international scientific literature, that features journals devoted to the study of economic asymmetries. It is a vast and wide field of research, that each economist crosses at least once in his/her learning experience, by studying the informational asymmetries, namely, the market failures produced by the imperfect information of at least one contractor.

It sounds very exoteric, but it is as old as the world (typically, the husband and the lover have asymmetric information). A distinguished case of asymmetric information is the moral hazard, namely, a situation in which a party is willing to take large risks because it will not bear the full consequences of its behavior – a phenomenon brought to the attention of the public at large by Oliver Stone’s “Money never sleeps”. It is worth remembering that moral hazard is widely acknowledged as one of the main causes of the crisis we are living: the (private) financial sector has lent without exercising its due diligence, because it knew that the public sector would intervene and rescue it.
 Many other asymmetries deserve further research, and can be taken as a starting point for a political proposal (in the precise meaning of “proposal to the polis”). Most of them have a more or less immediate, but always very penetrating, impact on everyday life.

There is the asymmetry in the international monetary system, which is still based on the money of one nation state (the US dollar), that becomes the money of the world, thereby inducing a fundamental imbalance in the US external account, that concurs to the cyclical outbreak of global financial crises, along a pattern set out by Triffin in 1960. An asymmetry to which several decades of reflections (re-opened by the 2008 global financial crisis) have failed to find any solution.

There is the asymmetry of some policy rules, whereby fixed parameters are imposed, with Ptolemaic stubbornness, to dynamic economic systems in perennial evolution. The resulting tensions are unavoidable, hence not unpredictable, and their consequences on the populations involved are quite asymmetric too, leading to increase in inequality, in poverty, and in an immeasurable, but perceptible, variable: despair.
And we should never forget that we are not alone: there is the asymmetry between the North and the South of the world, that South to which the emerging economies still belong (perhaps for a short while).

How asymmetric (or even schizophrenic) is the representation of the emerging economies in the media! Sometimes acclaimed as our saviors, when the media can attribute them the role of global growth engine (a role that perhaps they are still not able to sustain), sometimes blamed as the villain of the global economy tale, when the media need to suggest that the relative worsening of our conditions be a direct consequence of the relative improvement of theirs (a reasoning that would be much more convincing, were the evidence on our mismanagement of our economies less overwhelming).
And there is the South which is still falling behind, and from which so many human beings are trying to escape, looking for prosperity in our countries.

This leads us naturally to consider what is perhaps the fundamental asymmetry, that between capital and labor. In the theoretical models, two letters, K and L, featuring in a symmetric way as arguments of the aggregate production function (the mathematical relationship that describes a country’s aggregate supply of goods and services).

In practice, those two “factors of production” differ in a very radical way: think for instance to the efforts that are done in order to encourage the afflux of the first one (often very unwisely), as well as to hinder the afflux of the second one (always very heartlessly).
These are the themes that we wish to bring to the attention of the general public, the themes on which we intend to promote the reflections of economists, jurists, political scientists, as well as to any other intellectual willing to reckon with reality and to venture to elaborate concrete proposals. a/simmetrie lends itself as a forum to their reflections, as a support to their initiatives, as an instrument of dissemination and verification of their researches, without any ideological or methodological orientation, in order to contribute to a genuine advance in the democratic and social awareness in our country.


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