Sunday, March 27, 2011

Fat Cows, Skinny Cows. Thoughts on economic cycles.

Originally written in February 2008.

I am no economist.

But one does not need expertise in order to observe that good times and bad times have spelled each other off all through history. This is a world of contrasts and cycles. The tide can’t always be in.

When a Pharaoh dreams of fat cows and skinny cows the answer is clear.

Cycles will occur, good years will be followed by bad ones. Build a little nest egg during the good times, OK? It’s not rocket science!

The economy appears to be slowing down. So it goes. Only cancer cells grow forever, or rather till the host dies, but that is another topic.

Now here is what always gets my goat when politicians talk about the economy. It is a stupid, dishonest game and they all play it.

It goes more or less like this:

Bad Economy, party in power:
“The Economic cycle is against us right now, but that is not our fault.”

Bad Economy, party in opposition:
The Economy is doing poorly, and it is the fault of sitting government.”

Good Economy, party in power:
“Look at how well we have managed the Economy! Vote for us again!”

Good Economy, party in opposition:
“Sure, the Economy is good right now, but they are just being lucky!”

In other words, power to manage the economy is either claimed or denied depending on where the advantage lies. Could we get some honesty please?

The reality appears to be that cycles will happen, no matter what governments do. But societies can choose ways to take the edge off.

To get back to the biblical example: Fourteen years of fat cows is not an option. But Pharaoh still has choices. He can choose to use the good years to build himself a bigger palace or he can fill the granaries so the people won’t starve during the lean years.

Oops, is that interference with the sacred cow of the free market?


Jacqui Binford-Bell said...

Like your cows. Cows eat grass. And the history of the west is the assumption, almost always wrong, that a good grass year heralds the good times which will last. Cattle and sheep men of the past have always stocked (as in livestock) up after a good grass year thinking their pastures can support twice the cows forever.

And hence overgrazing. The Texans overgrazed in the late 1800's and just moved their livestock via the new railroads to grass that had not been grazed in New Mexico and assumed the grass would last forever. When it didn't there was Wyoming.

Well, we are out of new land. Out of seas of grass. We have two many cows (people) on this pasture and too many greedy ranchers who seek economists to tell them there are better pastures ahead. Put 3 economists in a room and you get 5 opinions. .. 6 if one doesn't go for coffee.

So was 2008 a good grass year? I know for me it was the year I saw a shift in buying habits of others, and the year that while I tried to save something always ate up the stock pile.

Ien in the Kootenays said...

Great comment. My formative years were European, so I don't have that mentality that there is always a new valley across the next range. Thanks for the history lesson. I am more concerned with Peak Soil than with Peak Oil.

Jacqui Binford-Bell said...

After the Dust Bowl days in Oklahoma a lot was information about keeping peak soil as you put it was developed and taught to small farmers and ranchers that were committed to their land.

I find myself doubting that the large corporate farms and ranches are as careful about that. You can depreciate the land on your taxes and maybe that is more profitable than keeping it productive.

Greed and excess profit taking will be our downfall be it oil or soil or souls.

Thank you for a very thought provoking blog.