Balloon Economies (Part 1)

What do you see here? Three work in progress paper mache projects? I see that too, but I also see something more. I see the balloon pasted paper mache as a metaphors that explain economic booms and busts and economic policies.

While I do not know why the artist (who uploaded this picture) wanted big paper mache domes, I do know why politicians want big economies. Big economies empower countries, bolster support, and provide better livelihoods. Especially on the last point, whether motivated by love, duty, power, or pride, politicians strive to improve their countrymen’s economic well-being. Some may say that the pie is big enough and society needs more re-distributive policies to address inequalities. However, given the high political cost and the economic inefficiencies, I believe politicians still see making the economic pie bigger as the simpler policy choice.

As a result, no different from the artist who used the balloon to prop up the paper mache dome, politicians also look for ways to build the economy as big and as quickly as possible. In the picture’s case, the third largest balloon allows the economy to have the biggest GDP and its people the highest GDP per capita. In this scenario, people’s material wealth increases, the government fulfills its promises, and everyone is happy. Here, politicians and entrepreneurs are lionized as geniuses and saviors.

However, the paper mache dome and the economy dome comparison now ends here. While the artist has complete control over when to lift the solidified dome off the balloon or even burst the balloon intentionally to remove the dome, the government does not. The government did not know whether the San Francisco economy is able to wean itself off the dependence on the Tech bubble. The government did not know whether the US economy could hold up if the housing bubble burst. In the end, the ordinary folks who the government sought to help in the beginning are hurt the most. Seemingly overnight, 401Ks are reduced, home equity are halved, and entire departments are laid off. The US economy went through this bubble bursting in 2008. Seven years later, the economy is now finally starting to pick up.