The Risks of Economic Compartmentalization

Synopsis:

Some of the most concerning issues with coordinating economics and finance with the sciences appear to be language barriers; as much as methodological ones. It stands to reason that this could be a serious issue with addressing many of the challenges that we face. For instance, coordinating economic policy with climate science has proven to fall short; as the approaches are methodologically incompatible. The terms used in economics and finance differ from scientific terms; and even from each other. This issue in essence compartmentalizes them; and hinders effective coordination.

Mediation:

Since the issues are both methodological and termonological, reducing them for solutions appears to require some form of translation. A mediator with knowledge of the relevant disciplines might be capable of translating between.

Gains Costs and Risks:

Advantages and disadvantages, unfavorable and favorable outcomes and normative and entropic share similar context to gains, costs and risks. Translation may be a bit fuzzy; however there tends to be monetary costs in lack of coordination. It’s not only translation. It’s more direct influence as well.

Short and Long Term:

Many of the economic and financial costs of lack of coordination are long term costs. Ecological costs have accrued over centuries and are putting established complexity at risk. This is expected to have high monetary costs; as well as ecological ones.

Though the markets are likely to address them and monetize them; the capital gains cannot be considered gains in general. This is where the issues create serious dissonance. The costs would go toward GDP as gains; when the resources could be going toward innovation and productive markets, as opposed to corrective ones. This is a temporal issue as well; as advancement is slowed, by the leveraging of resources toward solutions to issues created by focus on short term gains.

The scopes between short and long term in economics and finance differ; and the differences become much more dramatic, when considering the scientific disciplines. For instance, the 2 to 5 year focus of finance is dwarfed by the spans of time considered in Climatology. Promoting much longer term gains could be extremely difficult when trying to coordinate with financial institutions; as the difference between their scopes is so dramatic.

Closing:

It’s observed that economic policy that promotes short term gains with rigid growth incentives creates crises at scale. From financial downturns, to economic collapses, to ecological crises and even existential risks to the entire biosphere, the risks increase in seriousness; the longer the length of time is considered. The most likely influence appears to be focus on very short term financial gains. At this point in time, the projections are of high corrective costs, slowing of the advancement of humanity and very serious risk factors.