...For the source is quite visual indeed, and my counselor pointed out the mobile hanging in the corner of her office, more than twenty years ago. She set it into motion, and the brightly colored pieces circled around one another in a myriad of ways. Then she reached for it again, stopped the motion, and the pieces slowly settled into place. "This is what happens to a family whenever each member takes certain roles for granted, and assumes they cannot be changed", my new friend told me. "Eventually, the family members forget how to act otherwise".
Back then, the idea of dysfunctional behavior created quite a stir, and it didn't take long for the concept to move well beyond family definitions and into the public at large. However, something must have gotten lost in translation, and that something was also missing from the definitions I found in Google search, Wikipedia and the pocket American Heritage dictionary in the office. Of course the standard "Not operating normally or properly" tended to be mentioned first, along with "deviations from the norms" and somewhat dated mentions of co-dependent behavior which can nonetheless apply. There were plenty of definitions as to how dysfunction might appear or manifest, but not a potential "why" in sight! Interestingly enough, the definition of dysfunctional bureaucracy was not among these, although group systems were mentioned and that's certainly close enough.
So now I consider myself fortunate indeed for the example of the mobile, the first time I was introduced to this expression. Somehow, it's not hard to imagine Adam Smith smiling in agreement as to the motion itself. In terms of one's body, freedom of spontaneous movement is certainly a definition of health. So it is that the marketplace can be equivalent, at least when both public and private interests don't reach out to stop the moving parts of the mobile. Smith certainly understood the civilizing and positive effects of spontaneous and ongoing activity, which he was able to observe around him and also in his travels. Just the image of internal flexibilities in one's mind can be powerful protection against the demoralizing effects of individuals and systems which try to lock us into highly specific roles. How, then, did this powerful aspect of dysfunctional relationships become lost in translation?
Years ago, a writer told me of her day job in a government office, "It feels just like high school, with the same kinds of relationships, as if one was frozen in time". While this was a strong individual who had the tenacity to rise above the fray, the job nonetheless took its toll on her. Her creativity and spontaneity was to be reserved for the long awaited evening hours, when she could become the person she wanted to be. How did so many of the same individuals who value these traits make the mistake, over time, of removing them from their own workplaces? Likewise, how do so many who clearly value free markets nonetheless take actions which routinely make those markets less free?
Whenever the mobile gets stopped, one's aspirations can be frozen with it, even if only for a limited time frame. Besides the personal aspects of dysfunction already described, markets become rigid, hoarding becomes evident as money gets stashed away into hiding places, or a house may become so full of things that one can scarcely even move around to use the space as it was originally intended. Every time someone gains the ability to touch the mobile in order to secure a long term "regular" gain, the colorful floating pieces become immobilized in their turn and slowly stop. In conversation, one mistakenly gets the idea that savings as "freezing" liquidity in place is a rational safety measure in uncertain economic times, but locking the money away as in Hume's chest is only more uncertainty, not less. All too often when liquidity is lost, it does not come back with the same strength and vitality which people imagine it can. Velocity is like the circulation in one's bloodstream, in that it needs to maintain at least a relative degree of constancy.
This is also why a nominal targeting rule could go far in the present, to regain the confidence of a public which believes recent economic gains could just as easily be lost. When markets hear of Bernanke "tapering off" recent QE, it's as though we are being told the way back to "health" is to put one's body into a suboptimal state! The frame of reference has itself become the problem, as no one knows whether the mobile will be stopped or allowed to keep moving. NGDPLT has the capacity to provide confidence that liquidity would be able to freely circulate in ways no longer possible with interest rate targeting, which only jerks circulation first one way, and then the other. Let's keep the moving parts free.
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