Bonfire of the Vanities

[BOG PERSON]

The impetus for both fire suppression and macroeconomic stabilisation came from a crisis. In economics, this crisis was the Great Depression which highlighted the need for stabilising fiscal and monetary policy during a crisis. Out of all the initiatives, the most crucial from a systems viewpoint was the expansion of lender-of-last-resort operations and bank bailouts which tried to eliminate all disturbances at their source. In [Hyram] Minsky’s words: “The need for lender-of-Iast-resort operations will often occur before income falls steeply and before the well nigh automatic income and financial stabilizing effects of Big Government come into play.” (Stabilizing an Unstable Economy pg 46)

Similarly, the battle for complete fire suppression was won after the Great Idaho Fires of 1910. “The Great Idaho Fires of August 1910 were a defining event for fire policy and management, indeed for the policy and management of all natural resources in the United States. Often called the Big Blowup, the complex of fires consumed 3 million acres of valuable timber in northern Idaho and western Montana…..The battle cry of foresters and philosophers that year was simple and compelling: fires are evil, and they must be banished from the earth. The federal Weeks Act, which had been stalled in Congress for years, passed in February 1911. This law drastically expanded the Forest Service and established cooperative federal-state programs in fire control. It marked the beginning of federal fire-suppression efforts and effectively brought an end to light burning practices across most of the country. The prompt suppression of wildland fires by government agencies became a national paradigm and a national policy” (Sara Jensen and Guy McPherson). In 1935, the Forest Service implemented the ‘10 AM policy’, a goal to extinguish every new fire by 10 AM the day after it was reported.

In both cases, the trauma of a catastrophic disaster triggered a new policy that would try to stamp out all disturbances at the source, no matter how small.

http://www.thatsmags.com/shanghai/article/1777/bonfire-of-the-vanities

some of the article is iffy, some of it is interesting. what do u think.

[limpyhobbler]

1. Interesting analogy.

It makes a good point that our forest management policy failed and has only led to an accumulation of increasingly dangerous risk over time. And by analogy our "Prime Directive" policy of disaster avoidance has done the same with our economy.

But does he jump to conclusions a bit?

He says...

"Stability degrades resilience, and preventing the catastrophe-to-come becomes increasingly expensive and uncertain, even as the importance of prevention rises. By the penultimate stage of this process, crisis management has engineered an impending apocalypse: a disastrous event that simply cannot possibly be allowed to happen (although it surely will)."

Does failure of one economic management philosophy necessarily mean the failure of the concept of economic management? Might not some other form of management allow for stability without degraded resilience? For example breaking up the banks and putting "fire breaks" between them, and other similar tools. Maybe that is what the author intends but I'm not sure.

I wish he would have offered more in terms of recommenations, so we could see where he is coming from, maybe such as allowing some "controlled burns" and "clearing the underbrush". He hinted at it when he mentioned the Native American forestry techniques, but didn't seem to extend that part of the analogy to the economy, and then backed away from it when he got to "Stability degrades resilience" and "this plane is going down" (not a direct quote).