May 4th, 2009
Letter to The Economist sent 2009-05-03. I’m guessing they won’t print it – it’s too far from the mainstream. (Also, my Hayekian slant is showing; few people get it.) We’ll see.
Update May 25 – I was wrong. They printed it in the May 14 issue, with some unfortunate editing.
You say (Briefing – Central Banks, 25 April) “The business cycle was supposedly subdued, yet the world is in the deepest recession since the 1930s.”
Indeed. Perhaps there is a connection.
For many decades, forest fires were suppressed by well-meaning officials. Fuel was allowed to build up, eventually resulting in far more devastating fires than would have occurred naturally. Today we allow fires to serve their necessary functions, while making efforts to limit damage to people and property.
I suspect the business cycle, and attempts to subdue it, are much the same – deadwood must be cleared out, inefficient practices curbed. The economy, like an ecology, is far more complex than we can comprehend; attempts to control it are more than likely to produce unintended results.