The Economy and The Dam

CATASTROPHE: To the right of the steep Interstate 5 grade that takes us out of the Los Angeles basin and over the Sierra Pelona Mountains of northwestern Los Angeles County, toward Gorman Pass, looms a massive concrete and earthen dam high above the freeway. When traffic slows up the grade, I often get the creeps pondering the fact we are all sitting ducks here. If this dam forming Castaic Lake were ever to burst, there is no place to turn around and flee, no place to go, and we and everything around and below us would all be swept away by a wall of water nearly 200 feet high. Of course the communities below would be wiped out.

They would build a new dam, and they would wait for it to fill up.

But as it turns out, this already happened before.

In 1928, one year before the 1929 Great Depression, the old St. Francis Dam failed catastrophically, killing 600 people in the flood.

When an economy breaks completely as it did in 2008, there are only a few things the government can do to stimulate demand, promote hiring, and get businesses going again. It is a slow process. And most of those things are against the political philosophy of half of the country, anyway. Like that new dam filling with water, there is just so much engineers and hydrologists can do to increase the flow of the water that fills the dam. You can dredge the feeder creek.  You can try to remove obstacles to smooth water flow. There’s no magic wand to boost the flow of water that gradually refills the dam. Most of it is up to processes that occur naturally. An economy works the same way.

But you can bet the folks in the wealthy homes high above the dam were anxious to see their Lake Castaic Reservoir refilled. “Make the river flow faster!” they’d have shouted. “Make it rain!” And they’d vote for the magician who promises he can wave his magic wand and make all that unpleasantness go away.

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