Sunday, April 13, 2014

Economic Collapse - A Black Hole Syndrome

Economic Collapse – A Black Hole Syndrome


Dejenie Alemayehu Lakew
Mathematics justifies that greed and extreme selfishness: causes economic collapse of societies.
Any system that is established from  relations between different groups in the system and the forces created there off, continues to exist if the relations remain fair and forces that are created from the relations remain on balance and valid to all parts. When one of the forces dominate to the extent of  diminishing the strength or eliminating powers of others, then only a force of pulling towards the dominant group remains and that leads to the collapse of the system.
I have few examples to validate this fact.
Example 1.  Black hole - galactic giant star that loses it’s force of balance against it’s own gravity. The only force left that acts on it,  is its own gravity and the forces of pulling outward that emanate from itself and from its surroundings that keep the balance of forces,  in order the structure ( star)  to exist,  disappear due to its immense weight. The star then collapses to either a mini size star or ultimately goes  to its demise to a formation of a dark matter of infinite density called a black hole  where nothing escapes from it, and everything around sucked and devoured including light. Therefore the shining star of a galaxy disappears from its starhood existence due to imbalance of forces that holds it.  
Example 2Preys  – predators in an ecosystem. We create an ecosystem of the following things: grass, rabbits and foxes. Rabbits eat grass and foxes consume rabbits and therefore rabbits are preys to foxes and foxes are predators on rabbits. We can write mathematical models that studies this system and consider different scenarios  Their continuous co-existence is guaranteed only if they keep their desires in balance and greed in control. That is, the rabbits should not eat all the grasses available and run out of food and there by endanger their existence and  threatens the existence of the foxes as well  since foxes consume rabbits. Similarly if the foxes get extremely greedy and selfish and eat all the rabbits in certain time interval, then that is again a recipe for destruction of foxes as they will not have any thing to eat after sometime as no rabbits left to live, reproduce and multiply. Therefore, greed and extreme selfishness of the predators lead to the destruction of the vibrant ecosystem of the two living species.
A mathematical model called Lotka- Volterra of differential equations studies such relations and some other similar systems in which species compete for resources, living areas, etc. or others cooperate and live together creating a vibrant system that works for all involved. But in the prey – predator model,  the extreme case scenarios are that when foxes are increasing in huge amounts and eat more rabbits, then the rabbits number decreases considerably to the point of disappearance. But there is always a perfect condition in which the two species live together indefinitely, by keeping selfish desires in check and live for ever or be greedy and extreme selfish but disappear together for ever.
Example 3Economic systems -  systems formed from fiscal relations between different sectors of a human society. In such systems, there are groups called consumers that purchase services  products and utilities and companies that produces them, and the  the fiscal/financial relations created between them should indeed be healthy, honest, fair, ethical and above all humane so that the economic relations formed and the forces of the financial transactions created, stay on balance and remain valid for all participants so that the economic structure created  exists indefinitely.
Here we can look at two kinds of relations that are prevalent in such systems:
(I) Type I : Relations within companies or intra companies in which companies  compete to get more markets and more customers – their relations can be considered as competition to annihilate, in which the existence of one is a treat to the growth and welfare of the other and therefore working hard and playing any tricks  to  eliminate the other is the motto of the game. Here is  what capital theorists call it monopoly comes to play.
(II) Type II : Relations between the populus or majority consumers and companies – this relation is similar to the prey - predator model in which companies play as predators while the majority consumers as preys – they need each other but for wrong goals, from each sides perspective. However, the economic relations created between these two groups, consumers and companies, should again be healthy, fair, truthful or honest and above all ethical and humane. If companies develop extreme greed and selfish trends, losing sights of connecting to their consumers as their humane benefit partners, and completely disregarding the difficulty of financial resources and fiscals troubles of working people, taking an imaginable and unreasonable amount of profits from these consumers, then a black hole syndrome will be created between these two partners of the economy, which eventually lead to the collapse of the economic system they created.

Case in point: The demise of real estate in America – real estate companies and banks related to real estate business that offer loans for home buyers,  were blinded by extreme profit making to an unbearable height, wiping out the financial capabilities of their customers to the point of being  unable to pay their timely bills,  resulted in the abandoning of homes by huge numbers and led to the complete collapse of the real estate business itself and bankings associated with it. The actual mathematical justification here is very trivial. If a company uses a profit maximizing function in which the inputs are from variables that are available based on the input-response systems of the state of the economy, then trivially, one or more of the inputs were put falsified, such as the capability of the consumers to sustain paying bills, while their income was dwindling by the day. Thus, the calculations lack honesty,  not being truthful and therefore violates few of the fundamental rules of credit – trust and  the ethics of reporting facts truthfully.

This again is a an example of a system that loses its stability by loosing the forces of balance and fairness  that form the system and thereby creates its own destruction.
Lesson learnt: Although we do not have control over things that exist outside of our power, such as stars changed to black holes, but we can avoid catastrophes on things we humans created to serve our selves and can have a control over and make them function properly as needed in a robust way and make them exist indefinitely. This is possible by keeping the forces that form the system in balance and making human transactions ethical, fair, honest and trustworthy.
Conclusion: In relational existence, such as an economy, or other social matters,  the innate behavior of species to damage self to the welfare of others  called altruism/selfless is a very remote possible antithesis  of what is termed as  selfishness/extreme greed - benefiting self on the welfare of others. But between the two extremes, selfless and selfishness, there is a golden mean –  virtues of cooperation to the welfare of all and  even in some sense of positive competition for betterment and growth, as long as the games are played by ethics and correct rules, following principles of trust, honesty and responsibility, so that the forces involved remain operational, valid and on balance so that all parties involved  remain partners of the process/system and the system continues to exist indefinitely – with no black hole syndrome.  


[1] Rees M. J., Volonteri M. Massive black holes: Formation and Evolution (2007).
[2] Dennis G. Zill, A First Course in Differential Equations with Modeling Applications, 9th ed.
[3] Aristotle, Ethics (1976).
[4] Fehr E., Fischbacher U., The Nature of Human Altruism, Nature 425 (2003).

[5] Axelrod R. and Hamilton W D., The Evolution of Cooperation, Science 1981.

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