Legend of the Sinking Economy

“The fundamentals of the Economy are sound,” the captain had said. “She is unsinkable.”

opaOnce upon a time, there was a great passen- ger ship, the U.S.S. Economy. This venerable vessel had been at sea for a very long time — longer in fact, without being substantially overhauled and refitted with modern refine- ments than many other of the world’s passenger ships. She was much larger than all the others and still fast. Although other ships were faster, none were as capable in terms of tonnage per sailing time. The current captain, Captain Commerce, had little experience, but he looked good in his uniform and had the confidence of the ship’s owners; they knew he would do as they expected.

The owners of the Economy considered her design to be the best possible — unsurpassable, unsinkable in fact.  And because of this, they decided to remove most of the lifeboats on board. There were only enough for less than half the total number of passengers. Better, her owners felt, to keep the decks tidy and spacious so that the wealthy passengers could move around more freely. Why, the ship, they thought, could almost sail herself. Little did they know what a titanic mistake this would become.

There were many decks on the ship. Twenty percent of the passengers enjoyed eighty percent of the space and relative comfort with accommodations well above the water line. Nearly a fourth of these better-off passengers had staterooms with private access to spacious balconies. These passengers were afforded complimentary access to all the ship’s “finer” facilities: the grand theater and ballroom, the casino and the largest pool, this one being on the forward deck. The rest of this upper class had comfortable cabins in the ship’s interior spaces, though all were pretty much alike with limited space. These passengers were allotted separate, limited times for access to the finer facilities, but on a pay-as-you-go basis. Eighty percent of the passengers had only twenty percent of the space, and while most of this was still above the water line, large numbers of this group were relegated to accommodations below the water line and in steerage. Those in the lowest bowls of the ship were only allowed on deck for brief periods of time each day, scheduled by section. But none were ever allowed anywhere near the forward areas. Meals for these passengers were not served; they were delivered cafeteria style, dished-out on plastic trays by staff members who had lost favor with the ship’s purser.

There was icy fog one night. Nevertheless, the captain ordered full-speed ahead. This is what he knew the ship’s owners would want; a speedy crossing, after all, would mean higher profit. Then, sometime after midnight, while most of the crew on-duty was either dozing-off or playing cards, the Economy struck an iceberg a glancing blow. This caused a huge gash below the waterline amidships. There was panic among those in the lower cabins as icy water began to pour-in. But, above the water line, there was relative calm. The captain had proclaimed to the crew, who in-turn had passed the word along to all the better people on board, that all was well. “The fundamentals of the Economy are sound,” the captain had said. “She is unsinkable.” Notwithstanding, the ship began to list as it continued along at a declining pace.

As the ship rode lower and lower in the water, some of the crew and passengers began to question whether they shouldn’t go let the people below decks come up where it was dry and assist the crew in helping to repair the damage and stop the flooding. “No!” shouted the most elite, “That wouldn’t be fair. We paid big bucks for this voyage and we’re not going to share our space with the likes of those people. They made their choice; let them get what they deserve.”

Listening only to the passengers who had purchased the better accommodations, the brave captain steamed on into the night ordering ever increasing reserves of fuel into the ship’s boilers.

This, of course, is not how the story ends. You are invited to write your own ending and post for the rest of us to read as a comment below. Will the Economy survive?

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Published in: on February 21, 2009 at 12:13 pm  Comments (12)  

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  1. I’m a new wordpress user(and having a terrible time of it with the interface) and as such, have tried to stay focused on our economic problems and avoid getting into, or more specifically, commenting about politics, because I tend to get worked up, angry, and sometimes go a bit over-the-top on my posts and then regret ny outbursts after I finally calm back down, but when I saw your analogy, I just had to comment;-p

    I’ve long ago posted a somewhat similar analogy from time to time where(to be brief;) I compared the Bush Administration (I’m a Libertarian and supported Ron Paul) to a US Ship of State, where drunks have locked themselves in the wheelhouse, arguing over only WHICH reef to aim for next, while the sheeple(in steerage, of course) are the passengers along for the ride, wether they like it or not. I`ve also compared the inaugeration of Obama as little more than window dressing – like re-arranging the deck chairs of the Titanic – as she takes on water.

    It’s really sad and frustrating the situation we now find ourselves in, even more so because so many people are going to be hurt by this unfolding and growing eonomic disaster that had nothing to do with it’s creation, and people who acted reponsibly all their lives are now going to be forced to pay for the irresponsible folks(and the fraudsters who made things
    even worse).

  2. Those of us who voted for President Obama pray that you are wrong, Soeren. Only time will tell.

    The inspiration for my U.S.S. Economy story came after I allowed my AP Macroeconomics students last Friday to debate the merits of the President’s mortgage rescue plan. Following several minutes of discussion, during which I offered no opinion, there wasn’t one of my students in dissent that the plan may be unfair — unfair but necessary. In my regular classes, the debate was more heated with a few unwilling to accept the majority view that we’re all in the same sinking ship together. Regardless of who was to blame for the situation, and there’s lots of blame to go around, we must all now do what we can to keep the economy afloat.

    So, as I interpret your response, you would have Captain Commerce let the “bilge rats” drown, ignore the water pouring-in below and just keep steam’n on as though nothing had happened. Is that right?

  3. Tis a sad state of affairs we are in, though I think all of our efforts to fix it thus far are going to have no effect.

    Given that your an economy teacher (and I am not), how effective do you think we could be at fixing the economy without generating more jobs?

    I have heard everyone talking about how the stimulus is going to help create more jobs – but I dont see how since it doesnt actually generate anything.

    Wouldnt we need to move industry back onto American soil?
    If not, how would we be able make more jobs?

    I’m not trying to come off as confrontational, I’m just curious as to your opinion because from my (limited) point of view I’m not sure that anything the Government has done will actually help, or stop this from happening again.

  4. Dear Squiggle,
    There is no chance whatsoever, in my opinion, that we can ever hope to fix the economy without creating jobs and stemming the current rate of lost employment opportunities.

    You say the Economic Recover and Investment Act of 2009 isn’t going to help create jobs – that you don’t see how actually generates anything. Well, in my opinion again… helping states with their deficits is preventing the layoff of public servants, policemen, teachers, etc. And, when contracts are let for public projects like restoring roads, bridges and levees, people must be hired to do the work. These people hired will have jobs they didn’t have before.

    You ask, “Don’t we need to move industry back onto American soil?” Yes, we do need to reclaim jobs that have been shipped overseas. But we must do this in a way that doesn’t discourage international trade. The President wants to start by encouraging businesses to hire Americans back with tax incentives. But, in the long run, we’ve got to make our products and services more competitive. That’s why we can’t fix the near term without fixing the long term, and that means fixing education so that future generations of Americans can stand shoulder to shoulder with our competition. Did you not listen to the President’s address last night?

  5. I love how you used this analogy. I am seriously hoping that Obama will be able to bring us out of this slum before we sink into the icy waters, only time will tell, but do we have time?

  6. Yes, I believe we will survive, Terri. If we are to survive, we must believe that we can.

  7. As the U.S.S. Economy began to sink further under into the sea, where it would be hard to recover it back, the elite had a decision to make: Should we let people below deck come up on our level or should we meet them in the middle and go down together? The decision seemed very simple to decide on, but the actual task was a bit harder because their were many obstacles standing in the way between the elite and the people below deck. Once the people below deck rose to the top of the ship, the U.S.S Economy began again to float (although a little shaky) and they all survived! 🙂

  8. This is how I think the story should end:

    Whilst the captain was barking orders to add more fuel, the Economy was sinking lower and lower into the water. Although the captain did not know this, a wise, older man knew what was going on even before the ship hit the iceberg, and although disappointed, felt some pity for the unfortunate fellow. He had been helping those below the water line, and he took them up to the middle decks, where he convinced the others to help. “If we do not want to possibly live and help each other out, we may surely die.” he told them. The wealthy on the upper deck shouted back, “Why? They chose to live on the lower decks! Why are you doing this?” The old man looked up at them with a stern look in his eyes, and said, “Because everyone, regardless of wealth or class, deserves to live. You, being wealthy, have a choice: you can remain on the upper deck and allow more water to seep in the lower the ship sinks, or you can follow my lead.” Everyone was quiet for a moment, then suddenly, everyone heard the captain call, “He’s right! We must escape! I was wrong into putting the ship in full speed, and for adding more fuel when I wasn’t supposed to. Please, let me help.” The old man smiled broadly, and allowed him. Once he and the captain got everybody to the front of the ship, they realized that it was sinking way lower than before! “We’ve got to escape this ship,” the old man said a little worriedly.
    “But how?” one of the cafeteria cooks shouted. “The captain previously ordered most of the lifeboats be thrown away! How are we supposed to escape?” Everyone thought about this for a minute or so, then the captain suggested, “There is an island ten miles away from Hawaii. We must try to steer the ship towards it.”
    “Are you sure about that?” called out another cafeteria cook, one of the many who showed no trust towards the captain previously.
    “Trust him,” answered the old man. “At least he’ll try.” Even though steering the ship with only less than half of it deep in the ocean was difficult, the captain managed to get it halfway towards the island before it began to sink deeper. He told everyone, “We must jump off; it’s the only way we can survive.” No one dared to argue. After all, everyone wanted to get to the island badly, so with the help of the captain and the old man, all the passengers, cooks, sailors, and everybody else jumped off the Economy, and headed straight for the island. Once everyone got there, the old man led the group to a ferry that took them to Hawaii. The captain looked back sadly at his sinking Economy, but inside he knew that once this night was over, he would never make the same mistake again. And guess what? He never did.

    This story applies to our own way of dealing with economy as well. Whenever there are no jobs, no goods, no services, the economy will sink away into obscurity, and that is what is happening right now.

    –Ending written by Sharilyn Mutulo
    For A1-Economics

    🙂

  9. the economey kept sinking. it was not possible that they would live through what they were going through. the boat was totaly ruined, and they would not have enough time to escape the boat. hours pasted and the boat was totaly was consummed by water and was never heard of again.

  10. The ship’s captain faced a challenging decision: let the lower class bob above water? or honor the elites’ wishes to keep them below? In Captain Commerce’s quick rise to fame, he had almost forgotten that even he, the captain of the greatest ship in the world, was once too, a lowly worker. At this time, he now remembered his humble beginnings. After telling the crew to continue trying to keep the Economy afloat, he told his decision to the passengers. “The lower class shall come up to the upper decks.” Some were furious, others were understanding. Those with arguements against it felt that the lower class had put themselves in that position, and wondered why they should be offered help for their poor choices. Despite the protests, the captain ordered that the lower class be allowed on the upper deck. Once everyone was in safer waters, the next step was to figure out a way to get safely away. Commerce stayed on the radio for as long as he could, but he was getting no response, flares had been shot off, but nothing was coming. Life boats were out of the question, because, there weren’t enough. Once again, the elite stepped in with their opinion, “I think the people who paid the most should get the life boats!” one man shouted. Captain Commerce, wanting to assauge the disgruntled passengers, gave them permission to take one. But, as they began sailing away, the movement in the boat caused by the rowdy cheering, led it to collapse. They had wasted an important asset that was given to them. They quickly got the passengers back on to the Economy, and tried to come up with a new plan. Suddenly, in the distance, they saw a shadow, it was another boat! Commerce ran to the radio, and began trying to make contact, but no one answered. He shot off two more flares, and suddenly, the radio came to life. Someone was answering! He informed them of cargo ship of their position. Shortly, the ship was along side the hull of the cruise liner, passengers, both poor and wealthy alike were helped on. Captain Commerce turned to the passenger who had been so unkind to the lower class passengers and said, “See, with faith, preserverance, and breaks for those less fortunate than ourselves, we made it out alive, all of us.”. The passenger just grunted and walked away. As the cargo ship pulled away, Captain Commerce looked back and saw his beloved Economy get pulled into the abyss of the black waters. He knew he would not forget this night, nor would he ever let himself forget his past. Mistakes were made that would never be made again. Because of the Economy’s sinking, regulations were put into place to ensure that another disaster like this would never happen again.

    The End

  11. Hi, Opa. I also referred to my grandfather as “Opa” so I can appreciate the meaning associated with it.

    Anyway, I enjoyed this post and was interested to know if there were any websites, PDFs, Books, etc that you recommend for those of us wishing to get gain a greater understanding of how the economy and also goverment works (a.k.a. “Intro to…”). I tried to locate a direct link to contact you, but I couldn’t find one. It’s easy enough to do some quick research online and find something, but I enjoyed several of your posts and hoped you might know of some resources that explain things as well as you tend to. Online and digital resources would be great, but I would choose quality over accessibility.

    Russ

  12. What a nice complement. Thank you, Russ.

    I don’t know how serious you are about wanting to understand economics. Many have tried and many have failed… inticed away from mainline thinking by politically-oriented, fringe schools of thought. However, there are any number of good entry-level college texts that do a good job of explaining the various legitimate persuasions: classical, monetarist, and Keynesian. At the college entry level, “micro” and “macro” economics, two halves of the whole subject, are almost always taught as separate one-semester courses. For these, you can probably find any number of good textbooks at your local library. Beyond that, Prof. Paul Krugman, a Nobel Prize-winning economist, has written several good books, mostly about international trade though. His latest is “Return of Depression Economics.” It’s on my reading list for this summer.

    I’ve not read it yet, but there is a book review avaiable on-line called “Principles of Economics, Shaum’s Easy Outline (A Crash Course). It’s written by a couple of Ph.Ds. You can check it out at http://books.google.com/books?id=IvB349nn6oYC&dq=easy+economics&printsec=frontcover&source=in&hl=en&ei=hsHSSavwO8zrnQeFvZzSBQ&sa=X&oi=book_result&resnum=13&ct=result#PPA8,M1.

    Opa


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