HUMAN ECONOMICS – EUROEXIT

I have not touch about my traditional subject, which is economics. Of interest is the subject of BREXIT, and then now NEXIT, and maybe later on EUROEXIT; we wouldn’t know for sure how these “exits” going to turn into.

Before going deeper into all sorts of “politicking reasoning” of British, Netherlands or others – I would like to quickly delve into the basic issue of economics – it is more about human than about sciences of any sorts or kind. Economics is about human behavior or predicting them, if we may – and we would say “Humanomics”as the appropriate term to describe it.

Human beings are “fragile”, driven by factors that are beyond what the “normal” rational mind would predict. If human are rational and the rationality could be relied on, then we would have no wars and no “human made disasters”; but history told us that human could not overcome these two evils. In fact, we tend to march towards “foolish conclusions or ends” despite that we claim to be rational in our thinking. Fragility is the problem. Being fragile, we tend to be short sighted, looking at short term advantage, against a very much better long term gains. It is almost impossible to convince people about the long term, as the immediate concerns always dominate the mind of even most rational people. In short, fragility, myopic, and other short coming – cause any forms of so called rational behavior to be bounded and limited. Hence, we could see lot of human actions – especially in economics, to be against the grain of long term economic advantages. These “EXITS” is a clear example of this fact.

The EURO is a fragile institutions – developed based on myopic reasoning, and it is against the basic foundations of economic arguments, from its very own inception. It starts as a reaction against the domination of the US Dollar, and the weakening of Deutsche Mark, French Frank, Italian Lira and other major European currencies. The lure of common market among its members, and unifying the continental Europe – had been a theme that was there from Napoleonic times, right to Hitler. It failed before, and it would fail again.

The old “Ricardian” competitive advantage of nations of Mercantilism, is known to be flawed and unsustainable. Nations should not compete or gain advantage in terms of trade through its currencies – but through increase of domestic productivity, and through improvement of purchasing power parity due to that, and not that of national currency. Because, once currency could be used as a tool of trade competitiveness, the lure to use it is so great that any nation would tempt to use it.

England does not gain much from staying in the EURO ZONE, as to go independent; and hence it would use it to gain advantage over the EURO. As would other nations within the EURO ZONE would. And thus, we see this BREXIT, followed by the Netherlands’s NEXIT. But we would see France, Germany, Italy and Spain to resist any such moves. That means, we see the “old fault lines” in Europe to redrawn again, as it happened so many times before in other forms.

In short, the human behavior, despite all the advances of technology, communications, global integration of economies, etc..etc..would always fall back to where it were before. And thus, it is about “Human Economics” rather than pure economics in its truest sense.

This, in my view, will be what we will keep on seeing again and again, as the so-called capitalistic economy gains its maturity. Truly, if we claim that we had gained so much, in terms advancement in human sciences in the last few hundred years – we are wrong. We probably would be repeating age old “mistakes” again and again – albeit in new forms, which fooled us to believe that this is new. My hypothesis is – as human – we had not progressed much, despite the thousands of years of our existence on this Earth.

God knows the best.

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