June 22, 2009

No matter which economics analysis I read, the consensus is the same: the economy has mostly bottomed out, and by the end of the next two quarters, we should start seeing a turnaround. It is a very solid consensus. That six-month just-beyond-the-horizon has held firm through the past two years.

Sometimes it seems almost as though there are two different recessions: the one measured by the economists, and the one experienced by the majority of people. Job figures stubbornly continue to refuse to do what they are supposed to do. California continues to pay its government workers in state scrip: which has immediately created a new form of underground economy on E-Bay. The official jobless rate in the United States is some 9-odd percent, but if you count in the workers forced to part-time hours and status who specifically want a full-time job, it jumps to over 20% -- and no one knows just how many are no longer even counted, who have fallen between the cracks entirely. Statistics are a strange species of beast.

I find it particularly darkly amusing that so many economists are pointing to the rising price of oil as an indicator that the current economic depression is coming to an end. Exxon, of course, has never ceased making profits throughout.

There is a very deep belief among economists that in a mature marketplace, basic consumption patterns don't change. At most, the rate of consumption only swings back and forth within those patterns. Within this belief structure, any lull in spending is only a marker of pent-up demand waiting to burst forth the moment the price drops to the appropriate level. Even Barack Obama has stated as fact that there had been 15 million cars sold annually in the United States before, and in time there would be again.

When Franklin Delano Roosevelt was elected during the Great Depression, he immediately began pumping stimulus money into the economy. Within two years, the economy was showing weak signs of recovery, so -- operating within exactly the same belief -- the stimulus money was withdrawn. As it turned out, those weak signs had been almost entirely due to federal stimulus money. When it was removed, the economy collapsed anew, even worse than before. It took a world war to bring us out of that one.

But what if demand for non-necessary goods is not an absolute?

When Seoul mayor (now president) Lee Myung-bak decided to tear up its city-centre elevated highway, a 1976 model of "successful industrialisation and modernisation," to uncover and restore Cheonggyecheon as a viable city-centre river, there was an immediate outcry that the remaining traffic system would no longer be able to handle the volume of Seoul traffic. To everyone's surprise, what ended up happening was that the downtown traffic volume actually decreased by 2.3%. It is not that fewer people are going downtown: the use of subways increased by 4.3%. Lee speculates that traffic is like a gas, expanding to fill the available space. When the space is less, the traffic is also less.

(The analogy does not allow for Boyle's relationship between volume, pressure, and temperature, although it works well enough if the vessel is not assumed to be closed with a fixed amount of gas ... which, come to think of it, is also appropriate for the marketplace. The credit-based economic system is anything but a closed system. As a further real-world ironic comment on the ideal gas law, areas surrounding the stream are also cooler than other parts of Seoul by an average of 3.6°C.)

Instead of the "modern" city-centre elevated highway, Seoul now has a natural river-park environment running through the centre of the city, used by thousands of people every day. As eco-projects go, it doesn't have all that much of an impact on Seoul's environmental imprint as a whole, not by itself. However, it is a start ... and in the meantime, it has brought back into the open another layer of Seoul's soul.

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