Recently by Thomas Luongo: How I Learned to Stop Worrying and RespecttheChicken
The consequences of the division of labor are difficult to predict and a wonder to behold. As humans, we have the capacity to see advantages to our future selves in nearly every natural resource. This ability first domesticated the goat, lo some 10,000 years ago, creating a symbiotic relationship with this versatile and ingenious creation of the natural world. That relationship continues making the goat one of the most successful species on the planet, much like the other animals we have "domesticated" for our use. In short, they trade the uncertainty of the wild for the certainty of protection, food, a safe place to reproduce and, for many, death at an early age as food for us. That’s our end of the bargain. As a newly minted goat rancher, I can tell you that the foremost thing on my mind besides the twists and turns of my daughter’s childhood is the health of our herd, lest anyone think me callous. Our investment of time and money will only be worth it if we can produce an ever-improving animal at an ever-decreasing price.
So, through the alchemy of human needs fulfillment and selective breeding there are now hundreds of breeds of goats optimized along multiple vectors such as conformation, coat composition, milk production, carcass weight, parasite resistance, and cuteness, cf. the pygmy goat. But, as livestock, they are harder to keep than other species as you have to free range them. They’re smart little buggers who can climb, pick at or wallow down fencing and the bucks well, frankly, stink to high heaven.
This brings me to the myotonic goat, or more commonly, the fainting goat. For an introduction, see this video. In short, these goats seize up when they get excited due to a quirk in their genetics, called myotonia congenita. Thankfully, it’s mostly harmless, if a bit embarrassing. Though I’m not sure for whom, the goat or the rancher. This is a catastrophic mutation, which, in the wild, would be fatal and winnowed out of the gene pool almost immediately upon its expression that has survived because some humans saw value where others did not. In fact, the earliest uses of myotonics was as herd protection for more valuable sheep, the sacrificial goat to the attacking canine or feline. On the best of days, the goat doesn’t hold a high place in American culture, no less the even lowlier fainter.
It has come a long way from its nigh-mythical introduction to the world from the mountains of Tennessee in the 1870’s so that now the myotonic goat is recognized as an excellent meat goat, capable of producing higher carcass percentages than other breeds. Every time you snicker or giggle at a video on YouTube realize that that goat just had an intense isometric workout, which is the optimal path, other than anabolic steroids, to building dense muscle fiber. Moreover, these goats are generally easier to handle than other breeds as rambunctious behavior results in unintended comedy. I own myotonics goats. They get stiff-legged for practically no reason. They are also the calmest, tamest goats I’ve been around, almost depressingly so. The breeder I got them from has all of her bucks in one pasture. Fights between them don’t last very long.
This evolutionary dead-end has become something to cultivate in the drive to perfectly match the demand of humans for chevon. It’s too bad such similar evolutions in the marketplace didn’t produce such results with money.
Central banking was sold to us as the next evolutionary step in banking, the panacea for correcting the excessive risk-taking of individual banks’ fractional reserve lending, believed necessary to fund the new forms of industry demanded by industrialization. The lender of last resort would be able to provide liquidity to a market that had seized up due to the whims of us unpredictable animals as well as the well-intended miscalculations of the bankers themselves. In conjunction with legal tender, it would normalize our collective irrationality and set the macro economy on a path to constant prosperity and peace, making history the conflicts over flows of gold from one country to another.
Of course, the Austrian school of economics disagrees and with good reason, all puns intended.
In essence, one bank to rule them all is/was the argument. But, anyone with a shred of intelligence knows that concentration of power is the surest path to instability. Cut off the head and the body dies, goes the aphorism. What is more capable of withstanding the loss of a worker, the business which is organized in cells of cross-trained equals or one in which each person is capable of only one task? Data and electrical networks that are interconnected can work around the loss of any one node on that network and your Facebook page will still update. Our brains are a cross-linked series of neurons capable of re-mapping functions lost to trauma. Think of how a spider constructs its web or a tree plants roots in the ground. Even a species itself, seen from that level, is a distributed network capable of individual response to localized stimuli. The loss of one, while regrettable, does not have much effect overall.
As the division of labor increases, the structure of the economy should be reinforced, building webs and networks of connections between people to alleviate shortages because of localized increases in demand, due to natural disaster, changes in local regulations, population influx, etc. As well, a greater variety of skills is needed to fulfill these tasks, granting opportunity to people of different levels of ability.
But, in this distributed network of information that is an economy, accuracy of that information is essential to its proper function. GIGO is the law of the land, it does not matter the context. If the prices paid for goods and services carry no meaning, then humans cannot make coherent decisions between the value of potential choices. To invoke Hayek, it is not possible for the central bank to know what amount of money the economy needs or what the rate of interest should be any more than they can know what I want for dinner tomorrow. Nevertheless, they decide so anyways. In addition, we have let them, for some unfathomable reason, even though they are telling us things that are counter-intuitive to our own experience. That flaw compounds itself, propagating itself like a virus and infecting every single decision made by the people who use the central bank’s currency. While we may predictably respond to stimuli, as we are rational actors, the central bank cannot possibly know the details of those responses and that is where the irrationality lies.
Why, then, should we be surprised when their mistakes, inherent to their being human rather than godly, create chaos instead of order?
Rather than stable prices and full employment, our central bank has devalued the dollar by over 95% since its inception and pushed more people onto the welfare roles. Since losing convertibility of the dollar to gold, we have been subject to shock after shock, economic incidents of myotonia, of increasing rate and severity. These "Black Swans" or "Rogue Waves" hit more frequently than our masters would like us to remember. They are not isolated events, but rather currents, forever changing the course of our economic choices.
The Crash of ’87, Long Term Capital Management, The Mexican Bailout, The Asian Crisis, Y2K, 9-11, Bear Stearns, Lehman Brothers, Fannie and Freddie, AIG, Citigroup, Bank of America, 41 million Americans on Food Stamps… When will the next one happen? Tomorrow? Next week? Before the mid-term elections? With Bernanke’s current policy of holding the monetary base flat and propping up the balance sheets of banks with reserves held at the Fed, it could easily be said that we’ve been in a constant state of paralysis since October of 2008, waiting for the next big shock to come. If the economy were a goat it would have starved to death by now, and looking at the current indicators, that may be true. Companies and banks flush with cash, scared stiff to invest in new technology and new projects.
Instead of smoothing out the shocks, the Fed has given us an economy in a constant state of it.
The truth is that central banking has destroyed the relationship between us and the banks; turning us into the goat to be sacrificed in order to protect the more valuable sheep from attack. When it’s obvious, as well, that the central banks are the predators inciting the attacks, well, the metaphor no longer looks so strained, at least from where I’m sitting. Thanks to the mass acceptance of central banking, the division of labor is contracting, at least here in the U.S. How long this goes on depends on how long the Fed will continue to deny reality. It seems to me that if we don’t want the next generation to go through this again we should hear the bleating of our goats as warnings rather than as cries for help.
Thomas Luongo [send him email] is a professional chemist, amateur economist and obstreperous recovering Yankee residing in North Florida.