"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Thursday, June 25, 2009

Isopetroleum Projection


Via Andrew Sullivan; the Atlantic. Sullivan's blog is an amazingly prolific and interesting source of news from Iran, Iraq and Pakistan.

Unstated and so far unexamined: the oil from Iran is still flowing. Discontinuing engagement with Iran would require worldwide participation and would cause a huge price spike. I suspect Eisenhower or Kennedy in a comparable situation would not hesitate to lead the world to embargo Iran.

Sullivan implies that the belligerent "neocons" are talking embargo. It's very odd for me to be inclined to agree with them on anything. But the negative impact on the fragile economy would be very substantial. I think Obama's realpolitik puts relative economic calm ahead of any other goal. And oil being what it is, it requires universal participation by all major economies to make an embargo bite.

But it's not as if we had no influence on the situation. And the economic disruptions, which are likely to come anyway, embargo or no, could be blamed on external events.

1 comment:

John Mashey said...

Kennedy: maybe.

Eisenhower: I'm not so sure.
Among other things, senior military folks tend to know "don't give orders you know won't be obeyed."