Ayn Rand and the Elephants

CSGnet Archive CSG2004
21

[From Rick Marken (2004.01.18.1320)]

Bruce Gregory 92004.01.18.1540)--

Do you really see no difference between "grouchy" and "asshole"?

Not in terms of the intent of the name calling.

I can't believe that you believe that. Suppose I called you testy,
would that be equivalent in your view?

I think you and Marc and Bill W. should be ashamed of yourselves, Bill
W. for insulting Bill P. by calling him a crank and you and Marc for
ignoring it or trying to make believe there was no insult. A _sincere_
apology would probably make us all feel better. But, of course, you
will do what you want to do.

Best regards

Rick

···

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Richard S. Marken
marken@mindreadings.com
Home 310 474-0313
Cell 310 729-1400

22

[From Bruce Gregory (2004.01.18.1638)]

[From Rick Marken (2004.01.18.1320)]

Bruce Gregory 92004.01.18.1540)--

Do you really see no difference between "grouchy" and "asshole"?

Not in terms of the intent of the name calling.

I can't believe that you believe that. Suppose I called you testy,
would that be equivalent in your view?

I think you and Marc and Bill W. should be ashamed of yourselves, Bill
W. for insulting Bill P. by calling him a crank and you and Marc for
ignoring it or trying to make believe there was no insult.

I'm not sure why I have to comment on someone else's post that is not
directed toward me, but if it will make you feel better I apologize for
not commenting on someone's else's post that was not directed toward
me. Mea culpa. Mea culpa. Mea maxima culpa.

Bruce Gregory

A _sincere_
apology would probably make us all feel better. But, of course, you
will do what you want to do.

And of course you will interpret whatever I do in whatever way you want
to, n'est ce pas?

Best regards

Is that sincere? I'm not so sure...

Bruce Gregory

"Everyone is entitled to his or her own opinions; everyone is not
entitled to his or her own facts."

Daniel Patrick Moynihan

"Everything that needs to be said has already been said. But since no
one was listening, everything must be said again."
                                                                                Andre Gide

23

[From Bruce Gregory (2004.01.18.1640)]

[Martin Taylor 2004.01.18.1546 EST]

"Godwin 's Law

As an online discussion grows longer, the probability of a comparison
involving Nazis or Hitler approaches one. "

From <http://www.edge.org/q2004/q04_print.html&gt;

It's a corollary of the conflict theorem of PCT, isn't it? A is
controlling for B's perceptin of B's actions or personality to be the
same as A's perceptin of those variables, whereas B has a different
reference level for those same variables--and symmetrically,
substituting B for A and vice-versa.

It's not a winnable pair of conflicts. So why bother?

Since you are disinterested, perhaps you can tell we what the conflict
is here. Frankly, I have no idea. Clearly Rick feels he is being
insulted by almost everyone. Should we stop posting?

Bruce Gregory

"Everyone is entitled to his or her own opinions; everyone is not
entitled to his or her own facts."

Daniel Patrick Moynihan

"Everything that needs to be said has already been said. But since no
one was listening, everything must be said again."
                                                                                Andre Gide

24

[From Bill Williams 18 January 2004 3:20 PM CST]

Martin,

Thanks for the comment and the link. Having recently been described as a facist ( This for criticizing behaviorism, so it was in a good cause.), think your prediction is a distinct possiblity.

But, who says the conflicts such as the the one being expressed in the "Ayn Rand and the Elephants" can't be won? I At least, am in no doubt concerning the possiblity that they can be lost. You say "Why bother?" But, win, lose, or whatever, things can be learned-- like I never would have thought that Rick would find the argument that the way to prevent the elephants from being exterminated by poachers was to kill even more elephants so appealing.

However, until we have expressed the relationships involved in a PCT or HPCT simulation I don't think the causal pathways involved will be clear. It seems to me that the proposed solutions, so far, to the elephant problem 1) shoot the poachers,or 2) shoot the elephants are the result of a too narrow minded non-PCT approach to the problem. There are I think other alternatives which would only occur to those who have mastered the question of emotions based upon a quantum mechanics foundation, hereafter (QHPCT). Strangely, the alternatives haven't been considered in the rapidly lengthing "Elephants" thread. It apparently it hasn't occured to anyone, aside from myself, how the problem has arise. And, in the absence of a QHPCT informed analysis the disucssins so far have-- as could have been expected, despite the use of the seven letter theorms, and other methodologies. Having applied a QHPCT methodology to the problem the answer I have concluded is that: that the real author of the infamous "Elephants" paper is Bruce Gregory. And, this ought to clarify the issues. Everyone I trust is familiar with the Sokal Hoax? (If not email me directly I will provide references to the relevant literature in complete confidentiality.) For those who _are_ familiar with the Sokal hoax, does anyone see any commonalities between Professor Stanley Fish and a fellow we all know? Would it help if I remind folks that Fish used an analogy from baseball in his explaination/defense of his being taken in by Sokal?

Just a moment ago, I was going to propose a third solution to the elephants problem. But, I was mometarily distracted-- doesn't anyone else hear this enormous sucking sound?

Bill Williams

25

[From Rick Marken (2004.01.18.1450)]

Bruce Gregory (2004.01.18.1535)--

Rick Marken (2004.01.18.1205)

How about some substantive comments on the Test Bed as described in
Bill Powers (2004.01.15.1314 MST).

Sorry, I don't even pretend to know that much economics.

Just enough to know that Keen knows a lot more about economics than I
do?

Best

Rick

···

---
Richard S. Marken
marken@mindreadings.com
Home 310 474-0313
Cell 310 729-1400

26

[From Rick Marken (2004.01.18.1500)]

Bill Williams (18 January 2004 3:20 PM CST) --

However, until we have expressed the relationships involved in a PCT
or HPCT simulation I don't think the causal pathways involved will be
clear.

I agree with this but wonder how it squares with your earlier warning
[Bill Willliams 14 January 2003 3:00 AM CST] about the dangers of
using math in economics and your sarcastic scoffing (in that same post)
at the Test Bed model.

Best

Rick

···

---
Richard S. Marken
marken@mindreadings.com
Home 310 474-0313
Cell 310 729-1400

27

[From Bruce Gregory (2003.01.18.1818)]

Rick Marken (2004.01.18.1450)

Just enough to know that Keen knows a lot more about economics than I
do?

what can I say, Rick. Of course you are right. Who am i to suggest
otherwise? When you say something that seems totally uniformed (such as
the question about the assumption of homogeneity of aggregates) you are
simply setting a trap. And I like a fool fell into it! I will never
question your superior knowledge again. I humbly beg your forgiveness.
PCT is indeed fortunate to have such an all-knowing champion. On that
I'm sure we all better agree.

Bruce Gregory

"Everyone is entitled to his or her own opinions; everyone is not
entitled to his or her own facts."

Daniel Patrick Moynihan

"Everything that needs to be said has already been said. But since no
one was listening, everything must be said again."
                                                                                Andre Gide

28

[From Bill Williams 18 January 2003 5:10 PM CST]

Rick,

[From Rick Marken (2004.01.18.1450)]

Bruce Gregory (2004.01.18.1535)--

Rick Marken (2004.01.18.1205)

How about some substantive comments on the Test Bed as described in
Bill Powers (2004.01.15.1314 MST).

Sorry, I don't even pretend to know that much economics.

Just enough to know that Keen knows a lot more about economics than I
do?

There's no doubt that Keen knows a lot more about economics than you do.

I was again talking to people here about CSGnet and the economics thread. One of the guys said he'd met Keen at a conference recently and that Keen made a very favorable impression upon him.

By-the-way, have you been experiencing pains in your shoulder? Bill Powers you might remember has warned you about the dangers of patting yourself on the back. The other thing to watch out for is the possiblity that your chain might get jerked.

As far as "substansive comments" on the first posting of the Test Bend I thought Bill did fine. I've never understood why the past efforts always went in the ditch.

As I've gotten tired of repeating, when I first read Powers senor's _Leakages_ it was readily apparent that Powers senior had confused capital purchases with capital expenditures. No wonder everything was all screwed up. Bill still doesn't have this stuff straight. Neither do you. I can provide an explaination, but he goes right back to grumping about Keynes. There seems to be a preconception involved which is too powerful to overturn. Just like the miskake that is at the core of you H. Economicus thing. Well, not really. The Leakages mistake goes back to debates in economics that are pre-WW II. What you do in the H. Economicus paper is a result of a misconception regarding the process of modeling.

Bill Williams

29

[From Bill Williams 18 January 2004 5:30 PM CST]

Rick,

You completely misunderstood what I intended to say.

I agree with this but wonder how it squares with your earlier warning
[Bill Willliams 14 January 2003 3:00 AM CST] about the dangers of
using math in economics

What I intended to communicate was how badly confused people had become on the heterodox side in economics, when some key people have gotten the idea that math is a great vampire the use of which neccesarily generates pernicious results. One of the merits I potentially see in Keen's book is that at least according to extended chapter titles he denies that the problem in economics is a result of math.

and your sarcastic scoffing (in that same post) at the Test Bed model.

I thought what I said was that Bill's first posting of the Test Bed was just fine. One of the things that impressed me from the first was that Bill knows how to set up a model properly so that time relationships are handled correctly. This isn't always evident when he is discussing things verbally, but the appendix to BCP describes behavior in time correctly. I haven't seen that done before-- not outside electrical engineering anyway. I'll repeat myself, but its been a mystery to me why Bill hasn't gotten the economics modeling to work. My best guess is that he is retaining a mistake that his dad made in defining income. At least the recent post, as I read in which he absurdly attributes shady motives to Keynes in regard to capital depreciation practices might so indicate. Search the CSGnet Archive using H. Economiucs-- as best I can judge the whole thing is, or at least ought to be resolved, by that discussion. What's the point of my repeating the arguments?

Bill Williams

30

[From Rick Marken (2004.01.18.1550)]

Bruce Gregory (2003.01.18.1818)--

what can I say, Rick.

Nothing is always a possible option.

When you say something that seems totally uniformed (such as
the question about the assumption of homogeneity of aggregates) you are
simply setting a trap.

How am I setting a trap by asking whether assuming non-homogeneity would fix the problem of assuming homogeneity? If the question seems uninformed, why not just explain what seems uninformed about it. Instead of replying to what seems to you to be totally uninformed question with things like:

What impresses me least about CSGnet is the way that some participants
feel no compunction about pontificating on topics they are quite willing
to admit they know virtually nothing about.

why not just explain what I am uninformed about? Explain, for example, why a model that takes consumer income distribution into account is no better than one that assumes all consumers have the same average income.

And I like a fool fell into it!

There was no trap, Bruce. I think what you fell into was simply your desire to put me down. I certainly didn't trap you into saying that I was "pontificating".

I will never question your superior knowledge again. I humbly beg your forgiveness.
PCT is indeed fortunate to have such an all-knowing champion. On that I'm sure we
all better agree.

Well, if you can live with yourself I suppose I can.

Best regards

Rick

···

---

Richard S. Marken
marken@mindreadings.com
Home 310 474-0313
Cell 310 729-1400

31

[From Rick Marken (2004.01.18.1605)]

Bill Williams (18 January 2003 5:10 PM CST)--

There's no doubt that Keen knows a lot more about economics than you
do.

Well, that's the way it goes.

As far as "substansive comments" on the first posting of the Test Bend
I thought Bill did fine. I've never understood why the past efforts
always went in the ditch.

I think "substantive comments" like this might have had something to do
with it. I think what would keep the on the Test Bed efforts going
would be some help with those efforts.

As I've gotten tired of repeating, when I first read Powers senor's
_Leakages_ it was readily apparent that Powers senior had confused
capital purchases with capital expenditures.

What is the difference between capital expenditures and capital
purchases? Are there different measures of the two in the statistical
index? I would guess that all that is measured is capital
expenditures: the dollar amount spent each year for purchase of capital
goods and services.

Bill still doesn't have this stuff straight. Neither do you. I can
provide an explaination, but he goes right back to grumping about
Keynes.

Why not explain it and show how to incorporate it into the model?

There seems to be a preconception involved which is too powerful to
overturn. Just like the miskake that is at the core of you H.
Economicus thing. Well, not really. The Leakages mistake goes back to
debates in economics that are pre-WW II. What you do in the H.
Economicus paper is a result of a misconception regarding the process
of modeling.

Could you explain what that misconception is or, better still, show me
how to do the modeling correctly?

Best regards

Rick

···

---
Richard S. Marken
marken@mindreadings.com
Home 310 474-0313
Cell 310 729-1400

32

[From Bruce Gregory (2004.01.18.1925)]

[From Rick Marken (2004.01.18.1550)]

Bruce Gregory (2003.01.18.1818)--

what can I say, Rick.

Nothing is always a possible option.

If you will take that course, so will I.

Well, if you can live with yourself I suppose I can.

Weak, Rick, very weak. Perhaps you're just tired. You'll be your usual
self in the morning, I'm sure. Sorry I don't have the time or knowledge
to educate about economics, but I feel that would be a waste of both
our times, considering you are already an expert.

Best regards

Rick

Still sarcastic, I see.

Bruce Gregory

"Everyone is entitled to his or her own opinions; everyone is not
entitled to his or her own facts."

Daniel Patrick Moynihan

"Everything that needs to be said has already been said. But since no
one was listening, everything must be said again."
                                                                                Andre Gide

33

[Martin Taylor 2003.01.18.2148]

[From Bruce Gregory (2004.01.18.1640)]

[Martin Taylor 2004.01.18.1546 EST]

"Godwin 's Law

As an online discussion grows longer, the probability of a comparison
involving Nazis or Hitler approaches one. "

From <http://www.edge.org/q2004/q04_print.html&gt;

It's a corollary of the conflict theorem of PCT, isn't it? A is
controlling for B's perceptin of B's actions or personality to be the
same as A's perceptin of those variables, whereas B has a different
reference level for those same variables--and symmetrically,
substituting B for A and vice-versa.

It's not a winnable pair of conflicts. So why bother?

Since you are disinterested, perhaps you can tell we what the conflict
is here.

I hesitate, based on Godwin's Law. But I'll try.

As you know, according to LPT a third party cannot readily detect the
messages that are being sent, or the messages that are being received
(they are rarely the same) in a dialogue. However, the third party
can make some guesses.

In looking at the dialogues among Bill W and Bill P, Bill W and Rick,
Bruce G and Rick, Marc Abrams and Bill P, etc., etc,. I have read
quite a few comments, words, and paragraphs that I interpreted as
having been intended as indicating the sender's evaluation of some
aspect of the other's intentions or competence. If that was the
intent, it seems likely that on at least some of these occasions, the
sender wanted the recipient to perceive that the sender evaluated the
recipient's intentions or competence in the manner described.

On at least some of _those_ occasions, it has seemed to me that the
recipient would prefer that the sender had a different perception of
his intentions or competence, and in a return message, let that fact
be known. The original sender gave the impression that he wanted the
recipient to evaluate his (the recipient's) intentions or compentence
as the sender did. Behold--two different reference levels forthe same
variable. In other words, conflict.

I know the above is quite verbose, but try diagramming it. It's
really quite simple. And in some of these cases, the original
recipient started another conflict in respect of perceptions of the
original sender's intentions or competence.

Anyway, I suspect that "why bother" is the appropriate answer,
because if one does not try to present one's evaluation of the
other's competence or intentions, there's less opportunity for
conflict. Of course, conflict can still occur on perceptions of
technical matters, but those can be resolved by recourse to new data,
unlike the perceptions that support one's one perception of
self-worth.

Martin

34

[From Bill Williams 18 January 2004 11:15 PM CST]

Martin,

You say,

Anyway, I suspect that "why bother" is the appropriate answer,
because if one does not try to present one's evaluation of the
other's competence or intentions, there's less opportunity for
conflict. Of course, conflict can still occur on perceptions of
technical matters, but those can be resolved by recourse to new data,
unlike the perceptions that support one's one perception of
self-worth.

I think this describes much of what has and is going on. However, may I point out that the notion of "self-worth" is often defined socially and relatively. This creates the possiblity for a self-confirming loop in which someone else's opinion that one is unworthly is obvious evidence of their their unworthiness.
This is a bit different than a self-confirming prophecy because it is the "other's inadaquacy" -- that is their inability to appreciate what ought to be the undenighable worth of myself that confirms the initial assumption that the other is unworthy.

So, while I agree in part with your perspective on the nature of the process, I don't entirely agree with your "why bother" conclusion. The reason that I don't entirely agree is that there is beyond the two or more sides to the conflict an audience. And, while the audience may sometimes have a difficult time understanding what is going on as the two sides wrangle with each other, the audience is a pool from which recruits are potentially drawn as the conflict continues. So, if you want to sell your position you have to take your goods to the market and let people see them. And, you can expect the guy in the next stall to run your goods down. He'll tell people that the only reason that your tomatoes look good is that they were dosed with pesticides. And, then you have to tell people that while your good friend in the next stall is a great guy, though not much good with tomatoes, but he is also well known for being a pathological liar. So, you mustn't believe him if he tells you that he has only fucked one pig. And, if it works out as planned when they ask him, about whether he's "only fucked one pig." he will make a bad mistake and tell them that it is a lie that he has "only fucked one pig." Like Rick deciding that if I am criticial of something then whatever it is must be right-- so he decides that there really is merit in the argument that if the elephants are in danger of extinction and your government is so weak that it can't field a force capable of killing the poachers, then -- the obvious answer is to kill more elephants.

At least in my judgement there are going to be people in the audience that are going to find the argument about "saving elephants by killing more of them" at the very least extremely doubtful. It the sort of argument that ordinarily might be attributed to a "crank" or a "crack-pot." But, these are terms that in economics have undergone something of a transformation, so "dubious" will have to do for the moment. So, I think there is a genuine sense in which it is likely that I am "winning" the elephants thread. If I'm not, maybe I should go and look for a better audience.

Bill Williams

35

[From Bill Williams 19 January 2004 5:48 AM CST]

[From Rick Marken (2004.01.18.1605)]

Could you explain what that misconception is or, better still, show me
how to do the modeling correctly?

Actually, the first thing I recomend is that you re-read what Bill Powers said about your attempt to do economic modeling the H. Econimucus paper as being a "Giant leap-- in the wrong direction.

Second thing is to read up on the literature a bit. Not much sense reinventing the wheel, if you can borrow the idea for free.

To start with there is a recent paper (last 18 months or so) in the Journal of Economic Issues which presents a computer model of the Keynesian system. As I remember it, the thing is written in Vensim.

Third) after you are familiar with the paper, I'm know that John Harvey wouldn't mind at all discussing the model online at the Heterodox Economics Pluralism site. In fact he would be grateful to have somebody to talk to about his model.

I am not going to claim Harvey's done everythihg correcly. I read it and wasn't that interested in it, but the thing is in print, and it is a place to start.

Bill Williams

36

As far as “substansive
comments” on the first posting of the Test Bend I thought Bill did
fine. I’ve never understood why the past efforts always went in the
ditch.
[From Bill Powers (2004.01.19.0735 EST)]

[Hiltom Head]

Bill Williams 18 January 2003 5:10 PM CST==

The main reason is my ignorance. I actually had a model running, but
since it included only a few of the possible features of a full model I
couldn’t say it was a finished product. The sketch I posted a week or two
ago needs fleshing out, and particularly a few other sectors of the
economy such as banks and government need to be added. Of course we want
to add only what is essential to get a preliminary model operating, but
it would be nice to have some expert opinions on what is essential, even
for a minimal model.

As I’ve gotten tired
of repeating, when I first read Powers senor’s Leakages it was readily
apparent that Powers senior had confused capital purchases with capital
expenditures. No wonder everything was all screwed up. Bill still doesn’t
have this stuff straight.

It would be useful if you could straighten me out. I wasn’t aware that
there is anything in the model so far relating to either capital
expenditures or purchases – all that I see in the model is
“I”, a place where money can be set aside for capital purchases
or expenditures. Of course I hope to add the actual purchases and
expenditures – or I hope that someone else will.

I can provide an
explaination, but he goes right back to grumping about
Keynes.

Please do – I’ll be happy to stop grumping about Keynes if my remarks
are irrelevant. I can’t quite figure out your views on Keynes – at one
point you were saying it was the worst book ever written, which surprised
me since you started out recommending that I read it, which I
did.

There seems to be a
preconception involved which is too powerful to
overturn.

Please tell me what it is! It’s very tantalizing to be told I have a
preconception when I don’t know what it is, or what I should replace it
with.

Also (for Bill and others), I remind everyone that my access to reference
works is most often through interlibrary loan, a process that can take
three or four weeks. When reference is made to someone’s writing which
which I am not familiar, I can’t comment on it for several weeks, which
slows down contributions from me considerably. Also, when reference is
made to a book without saying which of the hundreds or thousands of
statements in it is thought important, I’m left in the dark about just
which ideas the citer agrees with and which are disagreed with, if any.
Once I had Keynes, for example, I started asking questions about early
chapters, but Bill W. told me that nobody pays attention to them and that
I should skip to Chapter 6. That saved a good deal of pointless
discussion.

Discussions would be considerably speeded up if instead of just citing a
whole book or paper, the person could simply outline the ideas that are
considered important and any supporting data or arguments offered by the
author. After all, if the ideas are important enough to cite, you must
know what they are! Why make the poor reader (me) wait weeks to find out,
and then have to wade through hundreds of pages and try to guess what was
intended to be cited?

Best,

Bill P.

37

[From Bill Williams 19 January 2004 6:10 AM CST]

[From Rick Marken (2004.01.18.1320)]

I think you and Marc and Bill W. should be ashamed of yourselves, Bill
W. for insulting Bill P. by calling him a crank...

Hey, Bill Powers thinks it is just friendly conversation to call me,
"bent." I think Bill's excuse for doing so was pathological. I am
not going to say it was dishonest, but it wasn't the truth. Is Bill
Powers ashamed? Nooo. And, for your information _the New college
standard dictionary_ lists "twist" and "bend" in their
interpretation of "crank."

But, in regard to economics Bill really is a crank, and not just
in the honorary sense either. After the Saturday seminar ( Yes
the economics department here runs six days a week if the schedule
gets crowded.) I asked "How do you figure someone could come up
with what Powers said about Keynes?

The answer I got was this, 1) The guy has been brighter than
the people around him much of his life, so he has a swelled
head, 2) He's gotten most of his ideas about ecnomics from
the finacial pages, 3) he resents not gaining academic recognition
so he distrusts academic work-- even if it is heterodox. ( At this
point the guy sighed, and rolled his eyes. ) I thought he had
it scoped out pretty well-- he didn't know about Bill's and his
dad's conflict over economics so he didn't catch that angle.

I'll tell you one thing, this exercise has given me something of
a new understanding, or new depth of understanding, of the role
that preconceptions can sometimes have in preventing learning.
Somehow you managed to publish the H. Econimcus paper, and then
given it at two CSG conferences, and then have it subjected to
a Very through criticism, a negative and destructive criticism,
by Bill Powers, and the result is that you still think it was a
good piece of work. ( Just to keep the record straight, Bill
Powers thought it was a giant leap in the wrong direction. )
You think you understand "a lot" about economics. I'd wait to
say that untill you have your first economic model working.
All you've done so far is get in the way.

Bill Williams

38

I’ll repeat myself, but its been a
mystery to me why Bill hasn’t gotten the economics modeling to
work. My best guess is that he is retaining a mistake that his dad
made in defining income. At least the recent post, as I read in
which he absurdly attributes shady motives to Keynes in regard to capital
depreciation practices might so indicate.
Search the CSGnet Archive using H.
Economiucs-- as best I can judge the whole thing is, or at least ought to
be resolved, by that discussion. What’s the point of my repeating
the arguments?
[From Bill Powers (2004.01.19.0928 EST)]

[Hilton Head]

Bill Williams 18 January 2004 5:30 PM CST–

It would help if you could pause to explain what you mean here. What is
the mistake in defining income that I am repeating? So far I have defined
consumer income as wages and capital income distributions. One household
could, of course, receive both kinds. The plant income is simply proceeds
from sales. The model does not currently provide for investment money as
another source of income, though that would be easy to do, by allowing
for direct transfers from household reserves to plant reserves. Borrowing
is allowed, in that household and plant monetary reserves are allowed to
go negative, but no interest is charged. Interestingly, when borrowing is
allowed, the whole system comes to equilibrium from the initial
conditions, passing through stages where the household consumer, then the
plant, goes through a period of deficit spending. When deficit spending
is not allowed, the system halts because one or another party doesn’t
have enough money to maintain savings or replace goods used up (as for
eating). The periods of indebtedness are transient; the final steady
state involves all parties having some monetary reserves, as the
parameters are set right now.

In its present state, with only ond consumer and one plant, the model
does not allow for transactions between plants. Keynes also treated an
aggregate plant and noted that transactions among entrepreneurs, in which
producers sell to each other, are a wash in the aggregate (though of
course there are still costs of producing and maintaining capital
equipment). We can gradually introduce such complications as the model
develops, My preference is to get a simple version of the model working
(which we have), test it and make sure it works properly, and only then
go on to add another complication and test again.

It would save me considerable work if you would repeat the arguments, and
maybe in repeating them you might find even clearer ways to state them.
If we adopt a policy of never saying the same thing twice, we’ll run out
of conversation pretty rapidly. I notice that there are some things you
don’t mind repeating, such as comments about my father’s work.

Best,

Bill P.

39

[From Rick Marken (2004.01.19.1000)]

Bill Williams (19 January 2004 6:10 AM CST) --

Hey, Bill Powers thinks it is just friendly conversation to call me,
"bent."

I don't know that that's true. But it still seems like there are better ways
to handle insults than by insulting back.

But, in regard to economics Bill really is a crank

Somehow you managed to publish the H. Econimcus paper, and then
given it at two CSG conferences, and then have it subjected to
a Very through criticism, a negative and destructive criticism,
by Bill Powers, and the result is that you still think it was a
good piece of work.

Why should I take to heart the criticism of a "crank"? Why would you, the
person who says Bill's a crank, think such criticism is worth considering?

Actually, I do take Bill's criticism very seriously. Many of his criticisms
were very reasonable. But I do still think the paper is worthwhile. The
model described in the paper is a working implementation of TCP's circular
flow model of the macro economy. By making the model work as a dynamic
computer program (using difference rather than TCP's differential equations)
I had to make some assumptions that were not obvious in the TCPs analytical
model. For example, because it is a closed loop model I had to implement it
using two control systems, one a system controlling consumption and the
other controlling for a balance of income and expenditures.

The implementation of the model showed clearly that the effect of leakage on
GDP growth rate was not part of the model. Leakage affects the ratio of real
to potential output (Q/Qo) but not the rate of growth in Q (dQ/dt). So TCPs
conclusion that leakage affects growth rate was put in as an assumption of
his analysis, not derived from the behavior of the model. Apparently WTP
came to the same conclusion without the benefit of simulation but the
simulation helped me see it.

The model also illustrated what I think is a useful way of looking at the
big picture of macro economics. It shows that the macro economy can be
viewed as an aggregate control system, producing goods and services for it's
own consumption and using money as the basis of purchasing the specialized
outputs of the production process. It shows, I believe, that an economy can
be viewed as human nature writ large, as a collective of control of input
systems.

I believe that the H. economicus model was a faithful computer
implementation of TCP's circular flow model of the economy. I think Bill's
criticisms, which were, indeed, harsh, relate to TCP's approach as much as
to mine since H. economicus is an implementation of TCP's model. The article
on H. economicus shows data that I used to make sure the the program
produces the same output as TCP's equations. As I recall, Bill's criticism's
had to do with the fact that my model of the "economic environment" was too
simple. Money, for example, simply appears when it is needed. There is no
mechanism built into the model that represents the mechanisms (banks,
international loans, etc) that constrain economic activities in the real
world. I accept all these criticisms. The model was just meant to be a very
high level illustration of how a closed loop economy works according to TCPs
analysis. I view it as kind of an illustrative demonstration of principle --
a "toy model" of the macro economy -- like my hierarchical control
spreadsheet.

Now that demonstration is a fait accompli. I agree that Bill didn't like it
much but it helped me see the big picture (just as TCP's work did). So I
still consider it worthwhile and that's why I put it in my book. Perhaps
someday, someone will see the value in it that I see. But by then it may be
beside the point since we will have more detailed models, like the Test Bed
model, when it includes active control agents, of the general, circular flow
model I describe in the H. economicus paper.

( Just to keep the record straight, Bill
Powers thought it was a giant leap in the wrong direction. )

Again, why listen to a crank? But I don't know if he thought it was quite
that bad. I agree that he was pretty negative about it. I agreed with many
of his criticisms and disagreed with others. But I'm happy to discuss it
again. I was just trying to make a start a macro economic modeling. I think
the Test Bed approach, with control agents, will basically be an improved,
though far more detailed, version of what I was doing with H. economicus.

You think you understand "a lot" about economics. I'd wait to
say that untill you have your first economic model working.
All you've done so far is get in the way.

H. economicus did work. I have also looked at a lot of macro economic data
in terms of the relationship between things like discount rate, inflation
rate, tax rate, growth rate and so on. So I think I know a bit about macro
economics in terms of the data as well. I discovered the strong, positive
correlation between Fed rates and inflation by plotting the raw data myself.
The exact same relationship was independently reported by E. Ray Canterbery
(a real economist) in _Wall Street Capitalism_, which also refers favorably
to TCP's work. I also discovered an error made by Canterbury in that book.
He shows a plot of Fed rate and growth rate (dQ/dt) and, based on it's
appearance, concludes that there is a negative relationship between Fed rate
and growth rate. I got the raw data and found that the graphical appearance
is an _illusion_. The actual correlation between Fed rate and growth rate is
~0.0, which is what is qualitatively predicted by the H. economicus model if
Fed rate is assumed to be a component of leakage.

Best regards

Rick

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MindReadings.com
Home: 310 474 0313
Cell: 310 729 1400

40

[From Rick Marken (2004.01.20.0930)]

Bill Williams (19 January 2004 12:30 PM CST)

First, I'd suggest that you take a recent tip from Richard Kennaway
(2004.01.20.1026 GMT) and figure out how to format your replies so that it's
clear who has said what. Second, I suggest that you take a recent tip from
Bill Powers and explain the arguments to which you refer rather than just
saying that those arguments were "devastating" or "convincing" or whatever.

But, it isn't an insult. Bill Powers really is a crank when it comes to
economic issue. Runs in the family.

You and Bruce G. and Marc were really made for each other.

This is a contradiction in terms--- working model, TCP's model.

Why is it a contradiction in terms?

Income and expenditures are equal by definition.

Not in my world. In my household, Income is, thank heaven, slightly greater
than expenditures. In the state of California, expenditures exceed income by
about $15 billion. At the federal level, expenditures exceed income by
about $500 billion.

The implementation of the model showed clearly that the effect of leakage on
GDP growth rate was not part of the model....

I'm doubtful that this is in fact what happened.

I'll send you the spreadsheet if you like.

The model also illustrated what I think is a useful way of looking at the
big picture of macro economics.

Useful as compared to what? And, useful for what?

Compared to other conceptions of economics I'd heard. It was useful to me as
a way of understanding the big picture of how the macro economy works, as a
closed loop control system.

I believe that the H. economicus model was a faithful computer
implementation of TCP's circular flow model of the economy.

In the sense that both are fundamentally mistaken, I would agree with you.

Could you explain why they are fundamentally in error? How can I improve my
understanding unless you explain my mistakes and the correct way to
understand things?

As I recall, Bill's criticism's had to do with the fact that my model of the
"economic environment" was too simple.

An excess of simplicity wasn't the problem that concerned Bill. The question
that really got Bill's attention was the possiblity that you would make
the same mistakes in the future.

What were those mistakes?

Again "Works" and TCP's analysis amounts to a contradiction in terms.

Why?

I view it as kind of an illustrative demonstration of principle --
a "toy model" of the macro economy -- like my hierarchical control
spreadsheet.

In that case it is a broken toy-- and it always has been.

All right, already. I know you think my model is terrible. How about
explaining what's wrong with it.

Yes. "Bill [really] didn't like much" what he said was it is a "a giant leap
in the wrong direction." You do have a way with words.

Can you explain why the model was a giant leap in the wrong direction? You
have the article, apparently. Why not just explain what is wrong with it.

Perhaps someday, someone will see the value in it that I see.

I really do think there is hope, as Mr. Barnum said, "There's one born every
minute."

Can you argue with nothing but insults?

Yes, Bill has his own way with words. The subtle nuances contained in his
expression "a giant leap in the wrong direction" fill me with envy.

Geez.

I agreed with many of his criticisms and disagreed with others.
But I'm happy to discuss it again.

Rick, we are well aware that you are always happy to discuss Rick.

No, Bill. The model, not myself. I am happy to discuss the model again.

H. economicus did work.

You really do need to talk this over with Powers.

Why not with you? But if Bill P. wants to discuss it again that would be
great. But why not take Bill P.'s advice and just tell me what _he_ said
instead of making me go search through the archives.

I also discovered an error made by Canterbury in that book.
He shows a plot of Fed rate and growth rate (dQ/dt) and, based on it's
appearance, concludes that there is a negative relationship between Fed rate
and growth rate. I got the raw data and found that the graphical appearance
is an _illusion_.

Good work. Wonder how he made such a mistake. Have you pointed it out to him?

By looking only at the graph of the relationship between growth rate and
discount rate over years. It looks like the curves move in opposite
directions -- when the fed rate go up the growth rate seem to go down, and
vice versa. But it's a graphical illusion. When you computer the correlation
between these two variables it actually comes out close to 0.0. I discussed
this at the St. Louis meeting. It's probably on the tapes. I have not
pointed the mistake out to Canterbury yet. I should. Thanks for reminding
me.

If I remember, Powers attempted to explain to you how it was that your model
generated an output that matched the value you inserted into it.

I think I know how my model works. But if you think Bill caught some flaw
then why not explain it to me.

I have to admit I had been puzzled-- puzzled about where the
model was. Maybe it was where ever the leakages went.

The model is in a folder on my hard drive. You (and anyone else who would
like one) are welcome to a copy. It's an Excel file.

I'm a bit puzzled here, about how the Fed rate-- which I thought I understood,
could be a part of leakage-- which well anyway.

TCP saw the Fed rate as one component of leakage since, by raising the
rates, the Fed is purposefully removing money from circulation.

I guess you really aren't interested in how capital costs may be mistaken for
capital expenditures.

Of course I am. What makes you think I'm not?

I can't tell you how much I've enjoyed this, and how much I've learned too.

Whatever turns you on.

Best regards

Rick

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Richard S. Marken
MindReadings.com
Home: 310 474 0313
Cell: 310 729 1400