how much of the global economy is useless friction?

oftwominds | There is no way that printing money or standard "austerity" measures can overcome the structural friction crippling economies such as Greece and Italy--or those of the U.S., the rest of the E.U. and China.

If we set aside the absurdist headlines about various "rescues" of insolvent governments, we might focus instead on a larger question: how much of the Greek and Italian economies is useless friction? How much of the U.S. economy is useless friction? How about economies like China and India that are rife with corruption at every level?

The question matters because friction will seize up a machine once the energy devoted to overcoming it drops below a critical threshold. It seems painfully obvious that Europe is about to reach that threshold, the U.S. is getting close and China is teetering on the precipice. Once those three seize up, then the rest of the world will follow.

Behind all the headlines of rescues, bailouts, austerity packages and all the rest of the propaganda spewed out by eurocrats and their media lackeys, let's ask the question no one dares ask: what if the entire European Union bureaucracy is nothing but friction? If so, then the E.U. isn't the "savior" of the Eurozone economies, it is the cause of their systemic ills.

Let's explore the analogy of friction a bit.

Friction is the resistance between moving parts that cause a bicycle in motion to come to a stop once you stop pedaling. If you flatten the bike’s tires, increasing the resistance between the rubber and the road, that increase in friction causes the bike to slow far more quickly than a bicycle with inflated tires. Increase the friction enough, and you can barely push the bike forward.

Though friction cannot be eliminated entirely, it can be reduced to the point that very modest amounts of energy create substantial results. Alternatively, friction can increase to the point that the energy input required to maintain output rises far beyond the value of the output. At that juncture, the system freezes up. The returns are so marginal that they no longer justify the energy and expense needed to maintain the machine.

A bicycle with wheels that barely turn will be tossed aside when the rider realizes he can go faster by walking -- and with much less effort.

How Much of the US Economy is Friction?

Economies have friction, too. When the friction increases to the point that much of the economy’s energy and surplus are being consumed in overcoming systemic friction, then the system will eventually freeze up and be abandoned.

How much of the U.S. and other global economies is friction? It is a difficult question, as we’ve grown so accustomed to our way of doing things that we tend to assume that the present system is the most efficient one possible. If it is visibly inefficient, that we assume it serves a social need so vital that its maintenance overrides the high costs of maintaining the system.

Much of our faith is based on the belief that because we live in a market economy, the efficiencies intrinsic to a market economy -- such as customers gravitating toward the goods and services that offer the lowest costs and highest benefits -- are being effectively captured by the US economy.

But this is mostly wishful thinking, the net result of ceaseless self-promotion by the Status Quo that benefits from the enormous friction that is, in fact, grinding down the US economy. In actuality, market forces influence very little of the US economy, and what they do influence is a series of carefully limited false choices constructed by non-market forces and the immense powers of marketing.