Saturday, June 16, 2012

The Fire Triangle: Basic Economics and Firefighting

There is a basic philosophical and scientific principle that when a very complex situation begins to resolve into simplicity you are on the right path to an answer that works. This principal is called Ockham’s Razor. According to the dictionary here in Microsoft Word it is: “The philosophical and scientific rule that simple explanations should be preferred to more complicated ones, and that the explanation of a new phenomenon should be based on what is already known.” I’ve also heard it expressed as “All things being equal, the simplest explanation is most likely to be the most accurate one.” Even more simplified than that, not to mention very popular among engineers is a little thing called “The Scotty Factor” which is stated as “The more they overthink the plumbing the easier it is to stop up the drain.”

There are an awful lot of words there to express a very simple concept. I prefer to break that down even further to just plain old “Keep it simple stupid.”

I get a kick out of all of these debates in the world of politics regarding the economy and what to do about it. It’s no wonder the subject is so confusing. It’s based on the longest of explanations and most complex ideas, which are only opinions of experts based on opinions of other experts, who wrote books about the other expert’s opinions and won Nobel Prizes for their writings. Since none of their theories lead to any practical understanding or resolution of any problems that anybody can measure, and their predictions of what is going on in the world are mostly wrong, I can only assume that most of these guys know nothing about anything other than how good their voices sound when broadcast on national television.

In attempt to help simplify the subject for the readers who may be interested, I wrote some of the basic understandings I’ve observed regarding money on this blog some number of months ago. It's appropriately titled The Rules of Money. That post only covers what money is and how it acts, but is not really designed around the idea of economics involving the establishment of jobs and companies and yes, the dreaded (rightfully so) labor unions.