Economist With Too Much Times Does Economic Analysis On The Death Star read the full study below.
Washington University in St. Louis
December 1, 2015
The Death Star Abstract
In this paper we study the financial repercussions of the destruction of two fully armed and operational moon-sized battle stations (“Death Stars”) in a 4-year period and the dissolution of the galactic government in Star Wars. The emphasis of this work is to calibrate and simulate a model of the banking and financial systems within the galaxy. Along these lines, we measure the level of systemic risk that may have been generated by the death of Emperor Palpatine and the destruction of the second Death Star. We conclude by finding the economic resources the Rebel Alliance would need to have in reserve in order to prevent a financial crisis from gripping the galaxy through an optimally allocated banking bailout.
The Death Star – Introduction
Economics and finance, much like the Force as explained by Jedi Master Obi-Wan Kenobi, is “created by all living things. It surrounds us and penetrates us; it binds the galaxy together” (Lucas (1977)). Emperor Palpatine, as a ruler of multiple decades, understands this concept as well as any other successful politician must. Further, as he demonstrated by successfully playing both sides during the Clone Wars, Emperor Palpatine must assuredly be able to create contingency plans. As such, Emperor Palpatine would have had a plan in case he were going to be defeated. This paper focuses on the logic that Emperor Palpatine would have considered in order to avoid the outcome of the Battle of Endor in 4ABY (Star Wars: Episode VI – Return of the Jedi), i.e., in which Emperor Palpatine and Sith Lord Darth Vader have been killed and a massive government project (the second Death Star) has been destroyed via mutually assured destruction with the Rebel Alliance.
In fact, Darth Vader recognized that moon-sized space stations were not as all-powerful as the force-insensitive believed; he quipped in response to the first Death Star, “Don’t be too proud of this technological terror you’ve constructed. The ability to destroy a planet is insignificant next to the power of the Force” (Lucas (1977)). Lord Vader’s logic can be taken further, as we conjecture Emperor Palpatine considered and we will show, to prove that the true power of the technological terror is from the power of economic terror unleashed in the case of its failing; i.e., in case of the Rebel Alliance succeeding, an automatic financial attack on the entire Galaxy would be realized.
Emperor Palpatine misjudged one point in his strategy of mutually assured destruction: the Rebel Alliance, while trusting in the power of the Force, never placed importance on long-term planning. As General Han Solo of the Rebel Alliance, well-known for shooting first,3 once famously said, “Never tell me the odds” (Kershner (1980)). As a high-ranking official, this viewpoint would have been widespread within the Rebel Alliance. Since mutually assured destruction relies on both parties recognizing it as such, and because the Rebels do not recognize it as such due to their own poor long-term thinking, Emperor Palpatine’s economic warfare strategy is an ineffective deterrent.
The analysis of this paper is as follows. First, we calibrate a model of the economic health and financial system in the galaxy during the Imperial Period. Second, we consider a distribution of economic losses in the Imperial banking system following the events of the Battle of Endor to find the risks that the Rebel Alliance has created. Finally, we use these results to deduce the size and composition of a bailout necessary that the new rulers of the galaxy, i.e., the Rebel Alliance, would need to allocate to stave off a galaxy-wide financial crisis and economic depression.
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