The Economics of the Blind - How Deep Do Models Need to Go?

Daniel W. Rasmus writes: I'm cross posting here with my future of work blog because I think this is an important question for the IIIP's audience. I look forward to your opinions.

 

When it comes to economics, we act like the proverbial blind men and the elephant.  Eric Kristoff block about a new London Business School & Nokia/Siemens study on connectivity that points to being connected as a key to innovation and productivity (read his post here).

No single metric is sufficient, but at the risk of building highly complex simulations of interactions, from personal to global, how do we get a handle on what will provide us with insights into the levers of prosperity for the 21st century. Pure growth models ruin the environment and are ultimately unsustainable, and more sustainable models will take years to develop - in the meantime, we need to run this planet on more than intuition. Perhaps we should spend more to understand the cause and effect of our inventions than what we do now, rather than focus on innovation, which leads to more variables.

New is good is the new credo of the knowledge economy, but that credo runs the risk of creating a chaotic economy that will be known not for sustained growth, but for rapid cycles of prosperity and decline (very rapid) defined by our inability to grasp what is happening or where. Like physicists tracking a particle's position and velocity, we will be able to tell where something happened, but by the time we arrive it will be over.

So how deep should our models go? - And how deep our pockets. If change is the only constant, should we not be spending as much to understand change, as we do to bring it about?