New Economics: Is a Good Economy a Good thing?

This is just a corollary to the previous posts.

The best economy is the freest economy. In other words if we allows the drug trade, sex trade, slavery and basically removed all restrictions then the economy then it would boom.

Obviously then a booming economy is not always a good economy. Like nuclear power, technology like economics, does not tell you how to use it. You can use it for good as well as bad.

I am reminded of the British Navy's first foray into A.I. A program was developed to work out the optimum battle strategy. The results were impressive. It out played all the Navy's top strategists.

When they analysed the battle strategies though it was not so impressive. The rules of the game had dictated that a flotilla of ships travels at the speed of the slowest ship. This meant that when a ship was damaged the whole flotilla was slowed. The winning innovation of the A.I. was to turn its guns on the weakest ship to keep the flotilla at maximum speed, thus out manoeuvring its "human" assailants.

Economies similarly are unintelligent, and we do not know what emergent patterns may occur. Adam Smith, like the entire Enlightenment, was unaware of non-linear dynamics. For them small things had small effects, and big things gave big effects. The idea that systems could suddenly show big effects from small over looked dynamics is a very new observation. It means we can never be sure what a system will do. It means that economics is potentially very dangerous, and politicians blindly looking at macro economic metrics like GDP can easily miss what is really going on just as Naval strategists did in the early says of A.I.