What I’m about to write is probably all screamingly obvious and simplistic, but nevertheless I would argue the complexity of our system is what’s leading to so much trouble recently (unless you’re someone who appreciates the volatility as something akin to a natural weather system–whereas I would prefer our system worked more predictably like man-made things ought). It’s funny how irrational our international political economy has become–a small nation like Greece has budget issues, and the DOW Industrials plummets a thousand points. I fully understand all the intervening concerns about a cooling European economy, frozen credit, and the rest, but sometimes you need to look at the larger picture. How removed has the DOW become from the performance of American industry? Europe is a huge market, but this panic underscores how American competitiveness relies on quantity of product and not quality. And how removed is financial investment from productivity? How sound is the political basis of the EU?
It all sort of reminds me of how Archduke Ferdinand is shot in Sarajevo, and suddenly the whole complicated peace in Europe between the great powers collapsed. If the stability (peace) of our economic system can depend so heavily on small events in southeastern Europe, how overly complex is this financial system? It doesn’t have enough redundancy, and the abstractions of dependencies, sort of like the ententes and alliances in pre-WWI Europe, has become over-wrought and prone to failure. If the EU really does collapse, will it ever be possible to stack the pieces of Europe together again, or is the concept fundamentally unsound?