For much of the developed world, the "credit crunch", the debt burden, and the rest are not part of a cyclical economic downturn but the first manifestations of an existential crisis.Joseph Schumpeter argued that even though capitalism is economically successful, it might not be socially successful. However, his story of decline does not seem to be what is happening. If we wanted to re-make his story for the decline of capitalism, we could argue that only a heavy reliance on markets creates wealth, but once people are wealthy, they increasingly worry about risk. To some extent private markets, including insurance markets and financial markets, allow them to reduce risk, but people also use the political process to try to reduce risk, which creates the welfare state. Wealth plus the welfare state then create the incentives that reduce fertility rates below replacement, making the welfare state, and perhaps wealth itself, unsustainable in the long run.
Why aren't people more worried about the long-run demographic trends? Why are there people still running around worrying about overpopulation in the developed world? My guess is that one reason, but an important reason, is that part of the intellectual elite is unable to process numerical data, that is, they do not "get" numbers. It is mastery of verbal skills, not of numerical skills, that makes one a member of the intellectual elite. I have met enough Ph.D.s in the humanities who have a hard time reading a graph to make me suspect that a lot of people we think are very intelligent are lost when it comes to anything involving interpretation of numbers.
(Related--people judge the intelligence of politicians largely on their verbal skill. George Bush was judged a bozo and Barack Obama a genius because of the way they spoke. I wonder what they and other politicians would look like if we could see them trying to do a variety of numerical tasks.)
1 comment:
If judged on numbers, Bush would still be a bozo (even though there are no Bozos). But...
You make an interesting point relevant to last year's discussion of a quantitative literacy requirement. The most repeated objection to such a requirement seemed to be something like "an art/philosophy/theater major never uses math." Never mind the confusion over quantitative literacy vs. math, the basic idea in that argument here simply is not true. Using numbers, their relationships, and the analytics involved is a part of everyone's daily lives. Not recognizing that is why it is a potent argument that the housing crisis was all the fault of lenders' complex loan contracts.
You need a masters degree to see that 50% of your income going to a mortgage payment is not such a good idea?
And why isn't this proposition - A business/chemistry major never uses literature - regarded as the equal to what the humanities people argue?
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