Back to Entropy

I've been reading about estimates of wealth destruction in the crisis, and I must say that this whole wealth destruction thing is indeed very confusing. On the one hand, it's hard to see how even 20% can disappear if there's anything resembling a zero sum game going on: value exiting one medium of exchange should be realized in another. Even leveraged assets shouldn't be entirely spectral. Entities shouldn't be lending but so much money that they don't have (that's one thing that confuses me).

Then again, it's too facile to posit an easy dichotomy between real and imagined value. An object's value is what someone's willing to pay for it, and right now everyone's hesitant to buy anything, reducing turnover. That's what's killing us.

In the contemporary debate on value destruction in the current crisis, lots of people point out that we do still have houses, roads, bridges, and whatnot, rightly invoking the Marxist concept of "use value," which declares that things values are equal to the use we can put them to. The problem, as we are seeing, is that these assets are subject to entropy, and without capital to maintain them they will give us less use value. The real problem is that the culture and tax structure of the last decade have encouraged the storage of value in the private domain: homes, cars, luxury goods, the markers of status. These are even more volatile and subject to entropy than public works.

Put that in your pipe and smoke it.