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Laws of Physics Don’t Rule the Economy (Unfortunately)

12/09/2008 04:52:00 AM

Today, I’d like to talk about Physics, the economy, Black Friday and President-Elect Barack Obama. As a geek whose educational background is Physics, I must admit that economics is not something that I understand completely. Unlike the field of Physics, which is governed by a few relatively simple and straightforward laws, to me economic issues are often bizarrely complex and frustrating – at least it’s frustrating to look at the effect that the present corrosive economic cycle has had on my 401K! 

Nonetheless, when I think of today’s economic situation, I tend to put it into a Physics 101 context, for example, in the context of the laws for energy conservation and energy balance. Thus, I know that the earth is nourished by a more or less constant supply of energy from the Sun. And that this relatively stable source of nourishment sustains the earth and the world’s population, which itself is relatively stable. So, at first approximation I would have expected the world economy, i.e., the world’s consumption of goods and services, would also be stable, or even slightly growing to accommodate our growing population.   Hence, the physicist in me tells me that even when consumption seems to decline, I should have confidence that such decline is only temporary. 

Indeed, contrary to all the predictors of doom, this Black Friday weekend’s strong results, with consumer electronics leading the way to a very robust sales increase over last year, seem to bear out this conclusion.

Of course, upon even the most superficial reflection, one realizes that our economy is far more complex. It is dependent on a multitude of factors that go well beyond any simple consideration of the conservation of energy. Of these factors, perhaps the most important is human intention. The force of human sentiment is what really differentiates a failing and declining vs. a robust and growing economy.

It is through our collective actions and intentions, that the world becomes more productive and organized – seemingly reversing the inexorable increase in entropy that is embodied in the Second Law of Thermodynamics. This ability to continually build and improve has even caused some to claim that life itself may violate the Second Law of Thermodynamics. While not strictly true (those claims fail to consider the entropy of the entire closed system of life and the environment that supports it), it is undeniable that our actions, and not some mysterious and theoretical economic cycle, are what creates the difference between economic success and economic failure.

With his great oratorical gifts, many are looking to President-elect Barak Obama to lift American spirits. And, I join that call for him to help the country see beyond our current difficulties. I am personally encouraged by the rapid progress he has made in establishing his administration and setting its tone. But, all of us can and should join him and encourage consumers to get on with their lives and invest in the reinvigoration of the economy.

We in the Consumer Electronics industry can be proud of the value that our products bring to consumers’ daily lives.   Whether at home, at work, or while traveling, families find enjoyment and satisfaction through the use of our products – products that have evolved and changed to provide ever increasing value to consumers. Furthermore, as inevitable as it is that today’s economic turmoil will engender still more changes, if we focus on those that maximize value to consumers, we can be assured that the success of this past Black Friday weekend will multiply and continue.

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