Yesterday I mentioned a summary of the latest John Boyd conference, which included the argument that today's lean, hyper-efficient, "just in time" economy was magnifying the effects of today's economic collapse. Problems in one sector instantly become problems in another, since so many businesses were fine-tuned to await the next order, the next payment, the next shipment from someone else.
Via reader Evan Oxhorn, I learn that the novelist David Brin has recently expanded on just this theme. Anyone interested in the first dispatch will find it worth reading Brin's thoughts, here. As a preview:
I refer to a brittle weakness in our economy, courtesy of the same smartaleck caste of MBAs who brought us derivatives and hyper-leveraged finance. A frailty that could, potentially, turn some short-term crisis into full-scale disaster -- and all because of a good theory that's been taken way too far.
For decades, we've been told -- by the same fellows who brought us "efficient finance" -- that manufacturing and commerce should be fine-tuned to squeeze every penny of profit, by trimming away all "fat." ... Under this principle, any reserves that are kept on-premises will only encourage sloppy management and incur unnecessary storage costs -- a calculation that has long been exacerbated by shortsighted tax policies that punish warehousing and inventory-keeping.
This approach, called "Just-In-Time," is based upon ... a wholly unjustified wager that the economy and its supporting systems will always remain stable and never experience disruption.
The whole question of what today's economic seize-up does to comfortable, accepted economic creeds -- from management theory, as above; to the pluses and minuses of full globalization; to the role of regulators; to theories of trade -- will be with us for many years. I do not remember a time when so many ideas seemed to be pressed so hard by fast-breaking events. Probably the last time it happened quite this way was in the 1930s.
I am enough of an optimist to think that the process of working out new ideas won't be as protracted as that last time, and that it need not end in world war. My cheering thought for the day.
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