The Destructive Creation of Flows
By Chance Murray
The rising flow of goods, people, and capital have led to industrial and technological developments throughout the world. However, flows left unattended or without buffers can be enormously destructive, contended economist Bill Janeway at his speech today.
Governments worldwide have experienced increases in the magnitude of flows, and now face a political trilemma. They can choose to have only two of the three aims of deep economic integration, national autonomy, and democratic policies. Over the past two decades, the flow of goods, capital, and people has increased dramatically, largely improving commerce and quality of life worldwide. Accompanying this globalization of flows are risks derived from instability inherent with flows. Janeway mentioned the rise of capital flows in the years leading up to the great recession and the inherent financial instability of such flows as an example.
One of the consequences of dealing with flows is the tradeoff between efficiency and stability. Janeway stated that as the efficiency and magnitude of flows rises, so does the level of instability. Conversely, as stability rises, the level of efficiency and flows decreases. In this context, there needs to be a buffer within flows to create such stability.
“Buffers, reservoirs, etc., are places where flows can accumulate and enable people to make decisions,” Janeway said.
Otherwise, flows will continue to expand and accelerate toward collapse. Stocks, inventories, etc., though oft times viewed as inefficient within capital markets, play a critical role in providing stability to markets worldwide. Without them, nations are faced with reconstructing their economies and people’s trust via a long arduous effort.
Janeway further elaborated his point by mentioning the current decision regarding the flow of CO2 emissions. As the flow of emissions continues to rise, the evidence of climate change becomes more and more clear. Unless we decouple the flow and create a dam, the flow will overwhelm human capacities.
One possible solution is graphene, an allotrope of carbon 100 times stronger than the strongest steel capable of efficiently conducting heat and electricity. Drawing upon historical precedence, Janeway pointed out that the U.S. has always taken a new material like aluminum or silicon to market and made it the status quo. Graphene is projected to grow in demand exponentially over the next decade.
“Graphene has unique qualities that can potentially slow the destructive flow of CO2 emissions,” Janeway said.
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