We hear these words today: tipping point. We hear a similar phrase: inflection point. These are two names for the same process.
There are two versions of this process. One points to a lift-off. The other points to a crash.
The lift-off version relies on the image of the exponential curve. At some point, it shoots upward. That is a tipping point. I find the most compelling one these days is this Ray Kurzweil’s discussion of Moore’s law and the law of accelerating returns.
The crash version relies on the image of two trend lines crossing. One or both of these must end. An example: the unfunded liabilities of the U.S. government (rising fast) and the expected revenues of the U.S. government (not rising fast). This outlook is best expressed by Stein’s law: “When something cannot go on, it has a tendency to stop.” That is a tipping point, in the way that a train wreck is a tipping point.
I think both trends are in operation today. One has to do with compound economic growth. In the long run, it prevails. The other has to do with the expansion of the state. It has to do with the short run. The model is the train wreck.
THE GODS OF THE COPYBOOK HEADINGS
My favorite poem is Kipling’s The Gods of the Copybook Headings. It is about the permanent war between permanent truth — original sin and scarcity — and the latest fad, which he called the gods of the market place. He meant the market place of public opinion.
AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
You get the idea. This is the idea: there are no free lunches.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
Then comes the stanza that applies to today’s little lesson.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: “Stick to the Devil you know.”
Stick to the devil you know. Then work steadily to replace the gods of the market place — public opinion — with the gods of the copybook headings.
THE DEVILS WE KNOW
There are two ideological outlooks today that officially hold to this. In politics, conservatism. In economics, rational expectations. The rat-ex people are not laissez-faire: “Leave us alone.” They are realists: “Leave it alone.” Don’t mess with the system’s laws. The market will respond. Stop futzing with it. But economists just cannot quit recommending reforms. The rat-ex movement is doomed. Economists are tinkerers. So are political reformers. So are power-seekers.
(For the rest of my article, click the link.)