As I’ve expressed herein ad nauseam, loss is an all-important economic concept. Loss teaches the losers, and the observers, how not to do things. Loss clears markets of excesses born of gluttony and greed.

Nature forever offers the best metaphors for life, and, as follows, for business and economics as well.

Here are a few excerpts from Science Daily’s April 2012 article Loss of Predators in Northern Hemisphere Effecting Ecosystem Health—each followed by my analogy…

“A survey on the loss in the Northern Hemisphere of large predators, particularly wolves, concludes that current populations of moose, deer, and other large herbivores far exceed their historic levels and are contributing to disrupted ecosystems.”

Modern-day fiscal and monetary policies are designed to neutralize the natural culling effect of economic contractions—plausibly leading to the disruption of the naturally-cyclical economic system.

“The research, published recently by scientists from Oregon State University, examined 42 studies done over the past 50 years. It found that the loss of major predators in forest ecosystems has allowed game animal populations to greatly increase, crippling the growth of young trees and reducing biodiversity.”

With loss out of the equation (via subsidies and bailouts), we effectively mitigate creative destruction. We, in essence, severely limit the opportunities for nimbler competitors—and the consequent benefits to consumers—that would otherwise occur during economic contractions.

“In recent years, OSU researchers have helped lead efforts to understand how major predators help to reduce herbivore population levels, improve ecosystem function and even change how herbivores behave when they feel threatened by predation — an important aspect they call the “ecology of fear.””

The threat of loss, the “ecology of fear”, engenders thoughtful calculation. Knowing there’ll be no compromising the taxpayer to rescue them from their mistakes, corporate execs would painstakingly assess the risks of their prospective ventures.

“In systems where large predators remain, they appear to have a major role in sustaining the diversity and productivity of native plant communities, thus maintaining healthy ecosystems.”

A truly healthy economy is dependent upon the knowledge among all players that regardless of how deep into woods they venture, they’re entirely on their own.