Controlling other people (was Positive Feedback...

[rsmarken]

from Rick Marken via iPhone (2011.06.28.1150)

[From Adam Matic (2011.06.29 2030 gmt+1)]

Rick Marken (2011.06.29.1030)

I've managed to lose Internet connection at my home (bad modem) but I just
had to say Thank You! for this wonderful post. Finally my beloved humanist
shows up.
Love
Rick

Now, now, you payed a lot for that "despising free marketeers"
therapy, don't you be going the other way again.

And the therapy was completely successful. I now feel no conflict at
all about my despising;-)

Best

Rick

[amatic]

[From Adam Matic 2011.06.29.2115gmt+1]

Rick Marken via iPhone (2011.06.28.1150)

Now, now, you payed a lot for that "despising free marketeers"
therapy, don't you be going the other way again.

And the therapy was completely successful. I now feel no conflict at
all about my despising;-)

AM:
Yeah, I know. It was nice talking to you for the past few days.

Best
Adam

[MartinT]

[Martin Taylor 2011.06.29.15.24]

[From Adam Matic (2011.06.29 1915 gmt+1)]

Bill Powers (2011.06.29.0719 MDT)
BP: The heartless cruelty of this reasoning is matched only by its
inventiveness.

AM:

I would appreciate if you would not call me cruel or heartless for no reason.

"Appreciate it" implies that to call you cruel or heartless for no reason would increase error in some perception you are controlling. Would that still be the case if there were some reason for calling you cruel or heartless?

It would be interesting to know which aspect of Bill's comment led to your "I would appreciate ...", whether it was that it affected how you perceive yourself when you do not wish to perceive yourself that way, or that it was an unreasonable assessment of your posting, or that it led you to perceive that not everybody perceives you as the rational, gentle, and kind person you would like them to perceive you to be.

The PCT question is about what perception you are controlling, in which error is increased by calling you cruel and heartless for no reason.

Are you controlling for perceiving yourself not be cruel or heartless, for perceiving that others do not perceive you to be cruel and heartless, or for perceiving that others use correct logic when they perceive you to be cruel and heartless? Or something quite different?

Martin

[Bill_Powers1]

[From Bill Powers (2011.06.29.1451 MDT)]

Adam Matic (2011.06.29 1915 gmt+1) –

Bill Powers (2011.06.29.0719
MDT)

BP: The heartless cruelty of this reasoning is matched only by
its

inventiveness. The employee wants to work for a low pay? Why of
course. The

person could easily find a job with higher pay, but is simply too
lazy to

look for it or train for it. Isn’t that how the story goes?

AM:

No, actually, that’s not at all how the story goes.

I would appreciate if you would not call me cruel or heartless for no
reason.

BP: The reasoning is heartless and cruel; I don’t know if you are, but
suspect not. I would encourage you not to reason that way.

AM: I don’t know why an exact
someone would want to take a low payed job.

There could be a lot of reasons. They might be very poor and any pay

is better than none for them, so they agree to work for a low pay.
I’m

happy to work for 4$ per hour as a bartender and with that money I
can

buy a lot of things that I need. It would be a disaster if someone

would punish my employer for giving me a “low wage”. It’s quite
high

for me. It would also be a disaster if someone would set a minimum

wage above that level because then I would have to work on the black

market.

BP: It’s amazing to me that you can pay all your school expenses plus
food and a place to live, as well as health insurance, vehicle licensing,
insurance, maintenance, and registration, utilities, clothing, and even a
rare dinner out or a movie, all on $4 per hour. If you work 40 hours per
week bartending, you will make about $693 a month, very substantially
less than the US minimum wage for a single person. Surely you couldn’t
plan on getting married, or even less possible, having children. Most
people who have to accept even the much larger minimum wage of $7.25 have
continuous money anxiety and have to give up all but the basic
necessities of life for themselves and their families. Either that,
or turn to crime, as many do.

BP: If that story

were the truth, we could all relax – those low-paid workers are
just

getting what they asked for, and certainly what they deserve. They
have a

free choice – they could choose not to take a job with such low
pay. It’s

their own fault that they are poor in this great land of
opportunity. Let

them suffer the consequences; that’s the only way some people can
learn. If

they starve to death, that will be a valuable lesson for others of
their

kind. Look at the suffering they cause for their own children! When
other

parents see that, they will think twice about insisting on a right
to live

in luxury. Of course if we step in and rescue the parents or the
children

that will weaken the point, so we mustn’t do that. Behavior must
have real

consequences.

AM:

Well, I certainly don’t think like that.

I’m saying that setting a law that fixes a price of unskilled work

does not help the poor and that they should be helped in some other

way.

I am simply repeating arguments and observations I have heard from people
who are uncomprisingly supportive of the free market system (sometimes,
of course, without their knowing I was paying attention). I know you
didn’t say such things – but you left that door open for those who
do.

If the minimum wage did help the
poor, then it should be set at 100$

for sure. Or why not make it 500$. Then everyone will have enough to

live.

BP: The minimum wage helps people who otherwise would have to work for
much less because employers looking for cheap labor would, as they have
in the past, offer much less (adjusted for inflation). That’s only
rational economic thinking. The affected people may be only a small part
of the population – a few tens of millions – but to those who are
concerned for the welfare of human beings, even a paltry few million
hungry miserable people are troublesome. Some people (like me) think that
even people who got into poverty through laziness, lack of persistence,
or silly mistakes should be helped; extremes of despair do not built
character; they tear it down.

AM: I don’t think it’s fair,
good, or moral for an employer to have 50

times as much as an employee for himself. I just think that setting
a

minimum wage is the wrong way of preventing that.

BP: What’s wrong with rescuing people from abysmal living conditions that
you or I would detest? Do you not feed the hungry because that isn’t a
long-term solution to hunger? Don’t you try to alleviate the misery
first, and only then look for ways to prevent its return? We’re talking
about living people here, people who are just like you and me. If you
treat people as abstractions, you simply won’t understand the nature of
the problem.

BP: "Oct 19, 2006 ­
The average small business owner or chief executive brings

home an annual salary of $233600, according to Salary.com."
(Google on small

business owner income).

AM:

So, apparently, the minimum wage laws didn’t help with that
inequality.

No. But it helped a lot of hungry people eat instead of making them wait
for a permanent solution. They’d be dead of starvation if we had done
that.

Simply saying "you have to
pay someone more than 7$ per hour or

else…" will not necessarily lead to people actually paying
workers

more than that.

True. But many will be deterred because there are penalties for getting
caught, and of course those who are caught will have to ante
up.

AM:

Right. And he comes to some, dirty smelly warehouse and begs to work

for as much as they will give them and they say - "Sorry. Can’t
hire

you. The federal government says I’d have to pay you double what you

ask for and I just don’t have the money." And the person goes on
to

sell drugs.

If the business can survive only if it pays slave wages, then it’s best
that it not survive. If there’s a niche for that kind of business,
someone with some ethics will take the place of the failed one, and
figure put how to runt he business at a profit while paying people enough
to live on. Lots of businesspeople do manage to do that. Those who can’t
figure out how should really look for some other kind of
occupation.

BP: That leaves the
employer in a very satisfactory position. About all he has

to offer such workers is enough money to barely make it from one day
to the

next so they can show up for work again.

AM:

There is competition between employers. One day, a company opens
next

door and say “we pay more than this guy”. And people go working
for

him. That’s exactly how wages rise in a free market. Not because
someone

says - “hey, you’re too greedy, pay your workers
more”.

It seems to me that workers didn’t get too far under that approach, which
is why the unions came into existence. There is plenty of slop in the
free market for paying workers more – all that it would cost would be to
reduce the share of profits that goes to owners and investors. There is a
vast surplus of profit, far more than needed just to keep a company
going. But of course owners and investors are very fond of their life
styles and will defend them in any way they can. That battle has been
going on for a very long time.

BP: Those bleeding hearts
who keep

telling him he ought to pay them more just don’t get it. If he paid
them

more, they’d be full of energy and hope and would be out looking for
better

pay, and where would that leave the employer? He’s be cutting his
own

throat. The trick is to pay just enough so they can keep working,
but not so

much that they can get all independent and think they deserve more.
You have

to teach them to be grateful for what they get and not rock the boat
–

after all, complainers can easily be replaced. That’s just good
business

strategy.

AM:

At the same time, the employer has to offer his product to the
market

for a price as low as he can manage.

BP: That depends on what goes on in the interlocking directorates. If
nobody tries too hard to undercut the competition, everyone has a better
chance of maintaining a high level of income. The gas station operators
discovered that long ago, which is why in my town, competing gas stations
along one stretch of road adjust their competitive prices over a range of
about 3 cents per gallon, out of $3.50. Hardly worth changing lanes
for.

AM:

That’s not what I’m saying. The employee has every right to ask for

more money. On the other hand, he does not have the right to force
the

employer to give him more money. If the business is profitable, he

could try opening one on his own. There are people willing to invest

in things like that.

BP: Tell that to the migrant worker with life savings of $37. You’re
speaking of a tiny population, not most of the people in the world.
“Let them eat cake” is not an option.

BP earlier:It’s about some
people stacking the deck so they know what hand the other people are
playing and they can force their opponents to make choices that aren’t
choices at all. “If you don’t want to do this job for this wage, I
can always find someone who does want to do it.”

AM:

There is a catch - not always can you find a person who wants to
work

for as low wage as you set. In fact, that’s rarely the case. I could

go yelling that I’ll pay a dollar an hour to anyone who will work
for.

No one would want that.

BP: Then how about $4 per hour? That’s in the same range below a living
wage. If there is collusion (i.e., wage fixing), it can be arranged that
for large numbers of people there is no alternative: it’s either take the
dollar or starve. I have heard pundits with pious demeanor and straight
faces discussing what the ideal level of unemployment would be. They
obviously can’t even imagine what it’s like to be involuntarily
unemployed. Or if they can imagine it, they just don’t care.

AM:

In short, minimum wage laws don’t work because they are price
fixing.

Drop the price of bread by law and soon, there will be a chaos in
the

bread market. Just like there is chaos in unskilled labor market.

Why wouldn’t you simply be forced to pay your taxi driver 50$ per

hour? He’s doing work for you and he’s poor. You’re his employer. I

think it’s not fair that you two should agree on some arbitrary
price.

You’d end up exploiting him by paying him as low as he would
accept.

BP: The problem here is that you’re treating a special case as if it’s
the general rule. Most people earn far more than the minimum wage, and
most employers of all kinds survive perfectly well without paying anyone
anywhere near the legal minimum. It’s just a small fraction of
employed people who need the ultimate safety net, a floor under wages.
Those employers who are the most opposed to the minimum wage, other than
theoreticians, are those who see a financial advantage in hiring the
workers with the least skill and the least chance of successfully
complaining about their pay, and who therefore make possible the greatest
profit margins.

As I said yesterday, the greatest flaw in economic theory is its failure
to consider human beings. Market forces and balances of trade and game
theory do not lie awake at night worrying about how to feed their kids.

Best,

Bill P.

[amatic]

[From Adam Matic 2011.06.30.1100gmt+1]

Bill Powers (2011.06.29.1451 MDT)

BP: The reasoning is heartless and cruel; I don’t know if you are, but
suspect not. I would encourage you not to reason that way.

AM:
The usual reasoning might be cruel, sure, but it seems to me that you’re presupposing my arguments. There is nothing cruel in eliminating the minimum wage laws, and I intend to show that. In fact, I think it’s cruel to prevent two consenting adults in engaging in a contract of mutual benefit, and I suspect you might agree with that if we took some other example, like a homosexual relationship. They seem to like it, so why tamper with it.

So, that’s the moral side. There really are people so poor that they would work for less then minimum wage and they are prevented from working by these laws.

I know that the law is intended as protection for those people, but it’s effects are quite the opposite.

From what I understand, you seem to think that all employers get a lot of profit from paying people the minimum wage. The situation is usually quite the opposite in the unskilled labor market. It’s precisely because they don’t make a lot of profit that they can’t afford to pay their workers more. I know that from first hand experience - I’ve worked for honest and decent people who simply couldn’t afford to pay workers more, and people called them “exploiters”.

BP: It’s amazing to me that you can pay all your school expenses plus food
and a place to live, as well as health insurance, vehicle licensing,
insurance, maintenance, and registration, utilities, clothing, and even a

rare dinner out or a movie, all on $4 per hour. If you work 40 hours per
week bartending, you will make about $693 a month, very substantially less
than the US minimum wage for a single person. Surely you couldn’t plan on

getting married, or even less possible, having children. Most people who
have to accept even the much larger minimum wage of $7.25 have continuous
money anxiety and have to give up all but the basic necessities of life for

themselves and their families. Either that, or turn to crime, as many do.

AM:

I don’t work year-long and I still get money from my parents. Combined, I have the equivalent of about $400 per month. Last time I checked, that was spot on average for students over here. I certainly can’t afford all those things you mentioned, but I don’t need them and I think I live great. I’d love better, but why would anyone hire me if they lose money doing that?

BP: The minimum wage helps people who otherwise would have to work for much
less because employers looking for cheap labor would, as they have in the
past, offer much less (adjusted for inflation). That’s only rational

economic thinking. The affected people may be only a small part of the
population – a few tens of millions – but to those who are concerned for
the welfare of human beings, even a paltry few million hungry miserable

people are troublesome. Some people (like me) think that even people who got
into poverty through laziness, lack of persistence, or silly mistakes should
be helped; extremes of despair do not built character; they tear it down.

AM:

The minimum wage is intended to help, but it does not. I absolutely agree that people should be helped when in need, but disagree with the means of achieving that, not just for moral reasons, but also for economic reasons.

What you call rational economic thinking is simple price fixing and it has been shown over and over that price fixing does not do what it was intended for.

AM: I don’t think it’s fair, good, or moral for an employer to have 50

times as much as an employee for himself. I just think that setting a
minimum wage is the wrong way of preventing that.

BP: What’s wrong with rescuing people from abysmal living conditions that

you or I would detest? Do you not feed the hungry because that isn’t a
long-term solution to hunger? Don’t you try to alleviate the misery first,
and only then look for ways to prevent its return? We’re talking about

living people here, people who are just like you and me. If you treat people
as abstractions, you simply won’t understand the nature of the problem.

AM:

I’m talking about “scientifically wrong” here. There is everything right and good about rescuing people and feeding the hungry. But the means chosen do not lead to ends intended.

BP: “Oct 19, 2006 ­ The average small business owner or chief executive
brings
home an annual salary of $233600, according to Salary.com.” (Google on
small

business owner income).

AM:
So, apparently, the minimum wage laws didn’t help with that inequality.

No. But it helped a lot of hungry people eat instead of making them wait for

a permanent solution. They’d be dead of starvation if we had done that.

AM:

I disagree that it were the laws that helped. It was competing businesses that needed workers that offered more and more money that rose the price of labor. It’s like you think that as soon as someone becomes “the employer” he looses all humanity and starts exploiting.

Simply saying “you have to pay someone more than 7$ per hour or
else…” will not necessarily lead to people actually paying workers
more than that.

True. But many will be deterred because there are penalties for getting

caught, and of course those who are caught will have to ante up.

AM:

Right, many will be deterred. So no workplaces will be created. That’s why teenagers can’t find a job. There’s also the child labor laws. So poor kids can just join the dealer crew since there are no lawns in the neighborhood and hardly anyone reads newspaper.

It’s child labor laws combined with wage laws and the prohibition of drugs that cause children to work for dealers. It’s very low pay and high risk. They just don’t have any other options but to work illegally.

Why not give them an opportunity to earn their own wages in a legit way instead of breaking up families and sending them to homes.

I’m not against charity to the poor. There is no buts here. It’s a nice and human thing to do.

AM:

Right. And he comes to some, dirty smelly warehouse and begs to work
for as much as they will give them and they say - "Sorry. Can’t hire
you. The federal government says I’d have to pay you double what you

ask for and I just don’t have the money." And the person goes on to
sell drugs.

If the business can survive only if it pays slave wages, then it’s best that
it not survive. If there’s a niche for that kind of business, someone with

some ethics will take the place of the failed one, and figure put how to
runt he business at a profit while paying people enough to live on. Lots of
businesspeople do manage to do that. Those who can’t figure out how should

really look for some other kind of occupation.

AM:

Absolutely. I completely agree with that reasoning. If no one will work for how much you pay, well, go find yourself a job and quit trying to be a business man.

BP: It seems to me that workers didn’t get too far under that approach, which is
why the unions came into existence.

AM:

Sure, the unions were the first ones to lobby for minimum wage laws. It’s good business to prevent teenagers and immigrants in competing for a job.

Most workers were being payed more than the minimum wage required, but suddenly some Chinese folks wanted to work for less. Oh, let’s just increase the minimum wage by law and we’ll keep our jobs.

The wages for skilled work were already high. The unions didn’t do that. The employers offered more and people went there.

BP: There is plenty of slop in the free
market for paying workers more – all that it would cost would be to reduce

the share of profits that goes to owners and investors. There is a vast
surplus of profit, far more than needed just to keep a company going. But of
course owners and investors are very fond of their life styles and will

defend them in any way they can. That battle has been going on for a very
long time.

AM:

I’m talking about unskilled labor. There’s no big profits in that area.

The other thing is that, with competition, there are no big profits for a long time. You give me any case of long-term high profits and I’ll show you either a company that improves constantly giving better and better service, higher and higher wages, or a monopoly granted by the government.

If there is so much profit, how come so many companies fail? One in ten succeeds, was it?

The profit margin is less then 10% in the USA, even for the big corporations. It’s usually about 3-4%, and that is only for the businesses that succeed.

AM:
At the same time, the employer has to offer his product to the market
for a price as low as he can manage.

BP: That depends on what goes on in the interlocking directorates. If nobody

tries too hard to undercut the competition, everyone has a better chance of
maintaining a high level of income. The gas station operators discovered
that long ago, which is why in my town, competing gas stations along one

stretch of road adjust their competitive prices over a range of about 3
cents per gallon, out of $3.50. Hardly worth changing lanes for.

AM:

If the profit is high enough, then there is lots of reason for a random someone to try to make a living by trying really hard to undermine the competition. He’s doing a public service by offering the gas lower then other people.

AM:

That’s not what I’m saying. The employee has every right to ask for
more money. On the other hand, he does not have the right to force the
employer to give him more money. If the business is profitable, he

could try opening one on his own. There are people willing to invest
in things like that.

BP: Tell that to the migrant worker with life savings of $37. You’re
speaking of a tiny population, not most of the people in the world. "Let

them eat cake" is not an option.

AM:

The migrant workers with big families and no savings are exactly the right people to tell that to. They are the ones that made all the prosperity in USA. The ability to do that is what made it “the land of opportunity”. If the person had an idea for a profitable business, he could find people to invest in his idea. The banks would do it, and if they wouldn’t the loan sharks would.

One person like that opens a few workplaces, makes a profit, repays his loans and everyone is better off.

Of course it’s a small population of people that would do that and succeed, but they did it in the past and the system works for the betterment of everyone.

BP: Then how about $4 per hour? That’s in the same range below a living
wage. If there is collusion (i.e., wage fixing), it can be arranged that for
large numbers of people there is no alternative: it’s either take the dollar

or starve. I have heard pundits with pious demeanor and straight faces
discussing what the ideal level of unemployment would be. They obviously
can’t even imagine what it’s like to be involuntarily unemployed. Or if they

can imagine it, they just don’t care.

AM:

Exactly.

And minimum wage laws don’t help with that problem. There is lots of poor people who would like to get a job, but they can’t.

AM:
In short, minimum wage laws don’t work because they are price fixing.
Drop the price of bread by law and soon, there will be a chaos in the
bread market. Just like there is chaos in unskilled labor market.

Why wouldn’t you simply be forced to pay your taxi driver 50$ per
hour? He’s doing work for you and he’s poor. You’re his employer. I
think it’s not fair that you two should agree on some arbitrary price.

You’d end up exploiting him by paying him as low as he would accept.

BP: The problem here is that you’re treating a special case as if it’s the
general rule. Most people earn far more than the minimum wage, and most

employers of all kinds survive perfectly well without paying anyone anywhere
near the legal minimum. It’s just a small fraction of employed people who
need the ultimate safety net, a floor under wages. Those employers who are

the most opposed to the minimum wage, other than theoreticians, are those
who see a financial advantage in hiring the workers with the least skill and
the least chance of successfully complaining about their pay, and who

therefore make possible the greatest profit margins.

AM:

Oh, you think it’s just employers opposed to minimum wage laws. How about workers who are opposed, the poor, the immigrants, are they crazy? What’s with those people?

How is this a special case?

I can make more examples of price fixing, the result is always the same.

As I said yesterday, the greatest flaw in economic theory is its failure to

consider human beings. Market forces and balances of trade and game theory
do not lie awake at night worrying about how to feed their kids.

And I completely agree. The only two theories I know that consider human beings are PCT and Austrian Economics. There are great differences between schools of economics and non but the Austrian considers human beings. The Austrian economics theory does not say “free markets are good”, but shows what happens in them.

The similarity with PCT is why I started studying it.

Best, Adam

[Bill_Powers1]

AM: The usual reasoning might be
cruel, sure, but it seems to me that you’re presupposing my arguments.
There is nothing cruel in eliminating the minimum wage laws, and I intend
to show that. In fact, I think it’s cruel to prevent two consenting
adults in engaging in a contract of mutual benefit, and I suspect you
might agree with that if we took some other example, like a homosexual
relationship. They seem to like it, so why tamper with it.

So, that’s the moral side. There really are people so poor that they
would work for less then minimum wage and they are prevented from working
by these laws.

BP: Adam, that’s just silly. Are you saying that poor people are
competing to see who can work for the lowest wage? Because they seem to
like it?

Your premise is that if we eliminated the minimum wage there would be
work for more poor people because there would be more jobs. But the total
amount paid in wages can’t immediately be increased, because first
production must be increased and then the increased amount of product
must be sold in order to generate the income with which to pay any added
wages. New employees, of course, are expected to work for nothing for a
week or a month, so that helps. So it’s a little hard to imagine who is
going to buy the increased production before wages eventually start to
get paid. But sooner or later there must be additional wage payments.
Borrowing can tide the employer over during expansion, but then the loans
must be repaid with interest, so unless there is unending expansion with
indefinitely repeated borrowing, the equations won’t balance. The
relationships here are very complex with lots of closed loops and no
simple causation, and I doubt that anyone at all, in the absence of a
working model, understands the first thing about this system.

And we mustn’t overlook the fact that the owner of the business expects
to be paid much more than any of his employees. His argument is that he
has organized the business and taken the risks and owns the means of
production, and therefore contributes far more to the company than any
one employee does.

In fact, isn’t this the main attraction of owning a business? A person
who is satisfied to work for someone else can get by with ordinary wages,
but a person who goes to all the trouble of starting a business is not:
he expects to make a much better living than if he were a wage earner,
and to be the one in control, not the one who has to live by some other
person’s rules. That’s why some people will risk all that money (usually
someone else’s money) and work long hours to make a go of the company.
They don’t expect minimum wage for all that effort. They expect to
average $230,000 a year, not $23,000.

Going into business is not done out of altruism, not often enough to make
a difference. It is done in order to get a MUCH larger share of the
available purchasing power for oneself. I know that businessmen like to
portrary themselves as doing the rest of us a favor, but the biggest
favor is the one they do for themselves. We allow them to take advantage
of us, and then we help them do it by working for peanuts. It’s our own
fault, of course, for admiring greed and wealth.

MA: From what I understand, you
seem to think that all employers get a lot of profit from paying people
the minimum wage. The situation is usually quite the opposite in the
unskilled labor market. It’s precisely because they don’t make a lot of
profit that they can’t afford to pay their workers more. I know that from
first hand experience - I’ve worked for honest and decent people who
simply couldn’t afford to pay workers more, and people called them
“exploiters”.

I have no doubt that there are plenty of honest, decent businessmen. I
have met a few of them. But even among those, the subject of their income
and what they can “afford” is not considered suitable for
polite conversation. Anyway, what is “profit?” It’s what is
left over after all expenses have been subtracted from all income. And
what is an “expense?” Practically anything you can claim is
done for the good of the business, such as adding a swimming pool for
entertaining potential customers, or doing a Louis XIV remodel of one’s
office,m or leasing a car for the use of the CEO in attending board
meetings at Disneyworld.

BP: It’s amazing to me that
you can pay all your school expenses plus food

and a place to live, as well as health insurance, vehicle
licensing,

insurance, maintenance, and registration, utilities, clothing, and
even a

rare dinner out or a movie, all on $4 per hour. If you work 40 hours
per

week bartending, you will make about $693 a month, very
substantially less

than the US minimum wage for a single person. Surely you couldn’t
plan on

getting married, or even less possible, having children. Most people
who

have to accept even the much larger minimum wage of $7.25 have
continuous

money anxiety and have to give up all but the basic necessities of
life for

themselves and their families. Either that, or turn to crime,
as many do.

AM:

I don’t work year-long and I still get money from my parents. Combined, I
have the equivalent of about $400 per month.

BP: In the US, that would buy you a one-room “apartment” and
nothing else, not even utilities – heat, electricity, telphone. You
would have to beg for food and clothing, you’d have no car, and you
certainly couldn’t go to college or trade school. Health insurance? No
way.

AM: Last time I checked,
that was spot on average for students over here. I certainly can’t afford
all those things you mentioned, but I don’t need them and I think I live
great. I’d love better, but why would anyone hire me if they lose money
doing that?

BP: You’re comparing students being supported by parents and public money
to adults trying to support a family. You aren’t desperate and
despondent; they are. You don’t have to save for retirement, or pay for
health insurance, or license and operate a car, or simply buy a coat for
a child. The world you live in is small and safe and rescue is at hand if
troubles come. The man working for minimum wage is on his own, and that,
Adam, is frightening in a free economy – that is, what people
call a free economy.

AM: The minimum wage is intended
to help, but it does not. I absolutely agree that people should be helped
when in need, but disagree with the means of achieving that, not just for
moral reasons, but also for economic reasons.

What you call rational economic thinking is simple price fixing and it
has been shown over and over that price fixing does not do what it was
intended for.

BP: You’re confusing long-term systemic changes with handling problems in
the here and now. If you have any regard for your fellow human beings,
you may withhold minimum wages, but to live with yourself you will have
to spend at least that amount of money from public funds – to which we
all contribute – to prevent misery, starvation, illness, and
desperation. Of course welfare support is not a long-term solution, but
people have to live right now, today, this week, this month – they have
to eat at least once every few days and have a warm place to sleep in the
winter. Telling them to go out and start their own businesses is a cruel
mockery of their plight. It suggests that your view of the real world is
somewhat sheltered. If they complain about not having any bread on the
table, why can’t they eat cake for a while? Innocent ignorance is still
ignorance.

BP: What’s wrong with
rescuing people from abysmal living conditions that

you or I would detest? Do you not feed the hungry because that isn’t
a

long-term solution to hunger? Don’t you try to alleviate the misery
first,

and only then look for ways to prevent its return? We’re talking
about

living people here, people who are just like you and me. If you
treat

people as abstractions, you simply won’t understand the nature of
the

problem.

AM:

I’m talking about “scientifically wrong” here. There is
everything right and good about rescuing people and feeding the hungry.
But the means chosen do not lead to ends intended.

BP: You keep saying that, but you haven’t shown your grounds for saying
it. Isn’t this where one puts one’s model where one’s mouth is? Show me
that what you say is true; I’m not going to accept it just because you
say it. Convince me. If I see a working model behaving in the way you say
it will, and I agree that the model is correct and your other premises
are sound, I will have to give in and believe you. Look at the trouble I
have taken to learn things and acquire programming skills and the
hundreds of hours, maybe thousands, I have devoted to developing working
models with all their innards exposed to public view – look at all that
and try to tell me you can give a description of how a whole economy
works without any model at all. You can’t. You can’t even come close.
Without the models, I couldn’t even come close to showing why I believe
PCT is a viable theory.
If Austrian Economics has merit, why not start with that and put its
premises and assertions into a model and see what it does? Just telling
me how great it is doesn’t accomplish a thing. Demonstrate that,
don’t just say it.

Best,

Bill P.

[amatic]

BP: Adam, that’s just silly. Are you saying that poor people are
competing to see who can work for the lowest wage? Because they seem to
like it?

AM:

What’s silly about it?

I am saying that if more people need a single job, they will compete for it by either offering to work for less money or demonstrating that they will do a better job for the same money then their competitors. Not because they like it, they would like more money as much as anyone, but because some money is better than no money. This is readily observable in any job market.

Try taxis for example. In some countries taxi drivers stand in front of airports any yell out prices to tourists or give some special benefits for driving in his car. This is the same as people offering to do a better job for the same price.

There is a limit to this competing at it’s usually higher then expected costs.

Any work is simply providing a service for money, so the law of supply and demand that is observed for other goods and services applies to wages as well.

Conversely, if there are many employers, but only one worker who can do the job, the employers will compete by offering him more money or some other benefits that he might want. There is also a limit to this competing and it’s lower then how much is expected that the worker will benefit the company.

BP: Your premise is that if we eliminated the minimum wage there would be
work for more poor people because there would be more jobs. But the total
amount paid in wages can’t immediately be increased, because first
production must be increased and then the increased amount of product
must be sold in order to generate the income with which to pay any added
wages.

AM:

I don’t follow that reasoning. If you find a 16 year old kid and pay him to wash your car for $10 per hour instead of doing it yourself; and you use that saved time to do something more productive then washing a car, say teaching in a class for $50 per hour, you will earn more money then not employing the kid. It’s the same with any company. The boss can hire new work force that pays themselves off.

BP: New employees, of course, are expected to work for nothing for a
week or a month, so that helps. So it’s a little hard to imagine who is
going to buy the increased production before wages eventually start to
get paid. But sooner or later there must be additional wage payments.
Borrowing can tide the employer over during expansion, but then the loans
must be repaid with interest, so unless there is unending expansion with
indefinitely repeated borrowing, the equations won’t balance. The
relationships here are very complex with lots of closed loops and no
simple causation, and I doubt that anyone at all, in the absence of a
working model, understands the first thing about this system.

AM: OK, sure, there’s lot of complicated relationships and I agree that there is a need for a working model.

BP: And we mustn’t overlook the fact that the owner of the business expects
to be paid much more than any of his employees. His argument is that he
has organized the business and taken the risks and owns the means of
production, and therefore contributes far more to the company than any
one employee does.

In fact, isn’t this the main attraction of owning a business? A person
who is satisfied to work for someone else can get by with ordinary wages,
but a person who goes to all the trouble of starting a business is not:
he expects to make a much better living than if he were a wage earner,
and to be the one in control, not the one who has to live by some other
person’s rules. That’s why some people will risk all that money (usually
someone else’s money) and work long hours to make a go of the company.
They don’t expect minimum wage for all that effort. They expect to
average $230,000 a year, not $23,000.

Going into business is not done out of altruism, not often enough to make a difference. It is done in order to get a MUCH larger share of the available purchasing power for oneself. I know that businessmen like to portrary themselves as doing the rest of us a favor, but the biggest favor is the one they do for themselves. We allow them to take advantage of us, and then we help them do it by working for peanuts. It’s our own fault, of course, for admiring greed and wealth.

AM: Well, that’s the whole beauty of capitalism - the greed of entrepreneurs is countered by the greed of their competitors. If there are two competing factories that employ people in one town and bosses have both the need for more workers and more pay for themselves, they can only achieve that by raising wages for workers and lowering their own wages. That is very obvious, for example, in the computer industry in Silicon Valley. Computer programmers are in great demand and their wages are very high.

The system of capitalism is set up so that in order to make money, a person has to make a public service. He has to produce something that people want to buy and he has to pay his workers as much as he can. Sure, he can take a lot of money to himself, but if there is competition, he’ll just be forced to cut that or go out of business.

He can be the worst selfish scumbag in the world without a tad of altruism and love for people, and in order to make money, he’ll have to provide something to the people. I find that beautiful.

BP: I have no doubt that there are plenty of honest, decent businessmen. I
have met a few of them. But even among those, the subject of their income
and what they can “afford” is not considered suitable for
polite conversation. Anyway, what is “profit?” It’s what is
left over after all expenses have been subtracted from all income. And
what is an “expense?” Practically anything you can claim is
done for the good of the business, such as adding a swimming pool for
entertaining potential customers, or doing a Louis XIV remodel of one’s
office,m or leasing a car for the use of the CEO in attending board
meetings at Disneyworld.

AM:

Sure. Why not. As long as everyone is doing better, that’s fine. From the beginnings of capitalism, the rich became richer and the poor became richer too. There are no more people dying of hunger in capitalist societies. People are less poor on average. There is certainly income inequality, but so what? Most kids don’t have to work anymore, but can go to school. People before couldn’t afford to send kids to school.

BP: You’re comparing students being supported by parents and public money
to adults trying to support a family. You aren’t desperate and
despondent; they are. You don’t have to save for retirement, or pay for
health insurance, or license and operate a car, or simply buy a coat for
a child. The world you live in is small and safe and rescue is at hand if
troubles come. The man working for minimum wage is on his own, and that,
Adam, is frightening in a free economy – that is, what people
call a free economy.

AM:

I’ll use the taxis again: I, as governor set the price of taxis at $50 per hour. That is what I think they are worth and that is how much money is fair and right and that’s what the union asked and anyone who works for less will go to jail. I mean, those Arabs just keep stealing American jobs, that should be stopped.

And what’s a guy to do if he can’t work legally for less than $50 per hour?

AM: The minimum wage is intended
to help, but it does not. I absolutely agree that people should be helped
when in need, but disagree with the means of achieving that, not just for
moral reasons, but also for economic reasons.

What you call rational economic thinking is simple price fixing and it
has been shown over and over that price fixing does not do what it was
intended for.

BP: You’re confusing long-term systemic changes with handling problems in
the here and now. If you have any regard for your fellow human beings,
you may withhold minimum wages, but to live with yourself you will have
to spend at least that amount of money from public funds – to which we
all contribute – to prevent misery, starvation, illness, and
desperation. Of course welfare support is not a long-term solution, but
people have to live right now, today, this week, this month – they have
to eat at least once every few days and have a warm place to sleep in the
winter.

AM:

Sure, no problem with helping the poor.

BP: Telling them to go out and start their own businesses is a cruel
mockery of their plight. It suggests that your view of the real world is
somewhat sheltered. If they complain about not having any bread on the
table, why can’t they eat cake for a while? Innocent ignorance is still
ignorance.

AM: Removing minimum wages is not a solution for all the problems, but it just might help a small segment of the population that can’t work right now because of them.

The laws never helped anyone in getting a higher wage, they just prevented the ones who would work for a smaller wage to enter the job market. These laws don’t make business people suddenly want lower wages for themselves and higher ones for their employees. Everything stays the same, they just work around this problem.

These laws are arbitrary control. They don’t take wants of those influenced by them into account. They don’t work.

AM:

I’m talking about “scientifically wrong” here. There is
everything right and good about rescuing people and feeding the hungry.
But the means chosen do not lead to ends intended.

BP: You keep saying that, but you haven’t shown your grounds for saying
it. Isn’t this where one puts one’s model where one’s mouth is? Show me
that what you say is true; I’m not going to accept it just because you
say it. Convince me. If I see a working model behaving in the way you say
it will, and I agree that the model is correct and your other premises
are sound, I will have to give in and believe you. Look at the trouble I
have taken to learn things and acquire programming skills and the
hundreds of hours, maybe thousands, I have devoted to developing working
models with all their innards exposed to public view – look at all that
and try to tell me you can give a description of how a whole economy
works without any model at all. You can’t. You can’t even come close.
Without the models, I couldn’t even come close to showing why I believe
PCT is a viable theory.
If Austrian Economics has merit, why not start with that and put its
premises and assertions into a model and see what it does? Just telling
me how great it is doesn’t accomplish a thing. Demonstrate that,
don’t just say it.

AM: Sure. I’ll do that. I’m working on a model of market exchange.

Is this discussion not about concepts already proven and demonstrated?

I mean, controlling how much business people will pay their workers is just not possible with some arbitrary minimum wage law.

If someone controls for having a paycheck of $230000 then simply making a law that says their lowest payed employee will be payed $7 per hour, and he’s got 100 people working for $3.5 on payroll - will do precisely nothing to how much money he is controlling for. He can just work around that law and lay off half of his workers. He will still get his $230000 because that’s what he’s controlling for, the law is just a disturbance.

And if there are decent people barely making ends meet and paying their workers $5 per hour, then they will just go out of business.

Best, Adam

[Bill_Powers1]

[From Bill Powers (2011.06.30.1145 MDT)]

BP: Adam, that’s just silly. Are you saying that poor people are
competing to see who can work for the lowest wage? Because they seem to
like it?

AM:

What’s silly about it?

This is what I mean by economics leaving out the human factor. The worker
has vital interests other than work. Work, in many cases if not most, is
simply a means of making money. For a consumer, money is a means of
reaching goals for goods and services and for free time and for money in
bank accounts and cash. Competing for work is a great inconvenience
because it’s based on several conflicts. First, there’s a multi-way
conflict among people vying for the same job. If I get the job, someone
else doesn’t. And second, there’s a conflict between employer and
employed: the employee wants more money for the same work or less, and
the employer wants more work for the same money or less. Neither party to
a wage agreement is satisfied, because neither is seeing the situation as
the other sees it, and neither is sympathetic to the goals of the other.
The employer would prefer to offer $1 per hour if that could attract a
worker; a worker would prefer to demand $50 per hour if there were any
chance of getting it. Neither side gets what it really wants.

This is not a basis for a sane society. It’s a time bomb, a recipe for
violence, as history has proven time and time again.

PCT tells us that conflict in any organization involving control systems
is a malfunction. It effectively removes the capacity to control whatever
variable the conflict is about. It prevents higher-order control from
working because it paralyzes the means of control. It wastes resources
and energy to the extent that actions are exerted only to cancel and
frustrate the actions on the other side of the conflict. As our
experience with MOL accumulates, it’s becoming clearer all the time that
most human psychopathology occurs because of conflicts and the
concomitant loss of control.

It took a doped-up loser named Rodney King to name the obvious solution
to all this conflict. Can’t we all just get along? Is it really
inevitable that each person struggle against everyone else just to
survive? Does my gain always have to entail someone else’s loss? Is
everyone around me really an enemy?

Apparently, the free market answer to all those questions is exactly the
one I don’t want to hear. The result is to convince everyone that it
really is a jungle out there, other people really are all against you,
you really do have to fight tooth and nail just to get something like
your share, and if you don’t fight for your own goals, nobody else will.
A view of human nature is being promoted that makes it embarrassing to be
human. What’s even more embarrassing is that these dismal assessments are
somehow dressed up to look like advantages of the system as it stands
now. Perhaps they are advantages, for some of the people. For the rest,
they are obstacles to be overcome.

One of the things any economic model must have in it is a model of human
beings with purposes, intentions, desires, preferences, goals. To the
late Bill Williams, a PhD economist who made it about halfway into PCT,
saying the word “individual” was like swearing aloud in front
of the Pope. He pronounced the word with a sneer.
“Indiviiiidual.” Indiviiiidual characteristics have nothing to
do with economics, he said to me. And social sciences everywhere, before
PCT, mostly believed that. Kent McClelland has turned that idea around
using PCT in sociology, but PCT has not yet reached economics.

AM: I am saying that if more
people need a single job, they will compete for it by either offering to
work for less money or demonstrating that they will do a better job for
the same money then their competitors. Not because they like it, they
would like more money as much as anyone, but because some money is better
than no money. This is readily observable in any job market.

Try taxis for example. In some countries taxi drivers stand in front of
airports any yell out prices to tourists or give some special benefits
for driving in his car. This is the same as people offering to do a
better job for the same price.

There is a limit to this competing at it’s usually higher then expected
costs.

You make my case for me.

Best,

Bill P.

[amatic]

[From Adam Matic 2011.06.30 2146 gmt+1]

BP: PCT tells us that conflict in any organization involving control systems
is a malfunction.

It effectively removes the capacity to control whatever
variable the conflict is about. It prevents higher-order control from
working because it paralyzes the means of control. It wastes resources
and energy to the extent that actions are exerted only to cancel and
frustrate the actions on the other side of the conflict. As our
experience with MOL accumulates, it’s becoming clearer all the time that
most human psychopathology occurs because of conflicts and the
concomitant loss of control.

AM: If there is no higher-level system between two people; no system that sets their respective refference levels for the same variable at different values; then why would conflict between two people be the same as conflict between two control loops?

In a market exchange between two people, they are not controling for the same thing or the same variable, Two people can agree on how much money for how much goods or services should exchange hands and they can both be satisfied about it. If I come to a bakery and buy bread, I say “Thank you!” sincerely, I’m satisfied, and so is the baker, for he also sais “Thank you!” and is happy to see me. He is controling for how much money he needs, and I’m controling for how much bread I need. He set his prices as he thinks is good. I choose the bread I think is good. So we have compatible goals and we both go out of the exchange happy and willing to repeat the process.

In a way, I’m his employer, and he’s my employee for a short time. I don’t see the conflict.

Adam

[Bill_Powers1]

[From Bill Powers (2011.06.30.1605 MDT)]

Adam Matic 2011.06.30 2146 gmt+1 --

AM: If there is no higher-level system between two people; no system that sets their respective refference levels for the same variable at different values; then why would conflict between two people be the same as conflict between two control loops?

BP: There is a conflict if the two systems are trying to control the same environmental variable at two different reference levels. The context of my comment was people competing for the same job, when only one of them can get it. The same goes for two companies competing for display space or customers. Look at the ads for Tylenol and Alleve on TV. "Competition" is just another word for conflict. Conflicts on TV are very expensive -- the political ads are just starting up. The aim of each side is to make the other's vote-getting efforts fail. Aleve shows customers examining labels and rejecting Tylenol because it requires taking more pills. Tylenol promises fast relief without mentioning how long it lasts.

AM: In a market exchange between two people, they are not controling for the same thing or the same variable, Two people can agree on how much money for how much goods or services should exchange hands and they can both be satisfied about it.

BP: Yes, I agree. Both can be satisfied and if that's true there's no conflict. It's possible for both to be dissatisfied also without conflict. The customer may be buying day-old bread to get a bargain, and to get rid of the bread the baker might take less than the amount he would like to get. Neither is happy about his end of the bargain -- some moderate error remains -- but it's not a conflict.

True conflict occurs only when two control systems are trying to control the same variable and only one can succeed. Lack of success might occur because at least one system comes up against its limits of output and is simply outmuscled by the other system. Or it can be that by definition, for one to get what he wants is for the other to fail -- a game of chess, for example. Only a game is lost, but dreams of winning the tournament prize come to an end. Losing can still be very unpleasant and frustrate the achievement of other goals. If both systems reach their output limits, neither one gets what is wanted.

Best,

Bill P.

[amatic]

[Bill Powers (2011.06.30.1605 MDT)]

Adam Matic 2011.06.30 2146 gmt+1 –

AM: If there is no higher-level system between two people; no system that sets their respective refference levels for the same variable at different values; then why would conflict between two people be the same as conflict between two control loops?

BP: There is a conflict if the two systems are trying to control the same environmental variable at two different reference levels. The context of my comment was people competing for the same job, when only one of them can get it. The same goes for two companies competing for display space or customers. Look at the ads for Tylenol and Alleve on TV. “Competition” is just another word for conflict. Conflicts on TV are very expensive – the political ads are just starting up. The aim of each side is to make the other’s vote-getting efforts fail. Aleve shows customers examining labels and rejecting Tylenol because it requires taking more pills. Tylenol promises fast relief without mentioning how long it lasts.

AM:

Well, let’s say that there are ten jobs and ten people. One way to find out who is the best at each job is to compete. They can agree without any internal conflict that they would compete for each job.

You mention wasting resources and I agree that political ads are a waste of taxes, but that’s just because I don’t like some people forcing other people to give them money they claim will be used “for the greater good”, while they only do it for their own good.

On the other hand, the person who bought adds for his company on TV is investing his own money by hiring people to make something interesting so that customers find out his product is on the market. If two companies have similar products, that does not mean they are controlling the same variable. They are controlling for their own sales and they can have two separate markets. Some people may like Aleve because they last, and other people may like Tylenol because it’s fast. One person can buy both drugs for different purposes.

In both cases, I don’t see why would call this “waste of resources” since they employed an add company and perhaps the investment returned. That looks like well invested resource to me.

I hate TV adds, I don’t watch TV and I think it’s a terrible that people lie about their products, but I still seems to me that people rarely control the same environmental variable in situations like that. This is not a situation where only one can win, but both can find their customers.

It’s like that with the taxi drivers too. When one goes away driving, the rest of them have a chance. Obviously, since they are working and living, all of them can manage to find enough work. They might all be friends, even though they compete for work. The ones that can’t manage to find enough work are not as fit for the job as the others are, but there is probably some other field of work they haven’t tried.

AM: In a market exchange between two people, they are not controling for the same thing or the same variable, Two people can agree on how much money for how much goods or services should exchange hands and they can both be satisfied about it.

BP: Yes, I agree. Both can be satisfied and if that’s true there’s no conflict. It’s possible for both to be dissatisfied also without conflict. The customer may be buying day-old bread to get a bargain, and to get rid of the bread the baker might take less than the amount he would like to get. Neither is happy about his end of the bargain – some moderate error remains – but it’s not a conflict.
True conflict occurs only when two control systems are trying to control the same variable and only one can succeed. Lack of success might occur because at least one system comes up against its limits of output and is simply outmuscled by the other system. Or it can be that by definition, for one to get what he wants is for the other to fail – a game of chess, for example. Only a game is lost, but dreams of winning the tournament prize come to an end. Losing can still be very unpleasant and frustrate the achievement of other goals. If both systems reach their output limits, neither one gets what is wanted.

AM:

So, are you saying that people shouldn’t play chess?

What if they are OK with competing in games or in the market?

Best

Adam

[amatic]

[From Adam Matic 2011.07.1 1100 gmt+1]

There are no laws saying what the minimum wage for computer programmers should be. How is it possible that they get payed so much if there is this eternal inherent conflict between employees and employers? There is no such thing. There is a process of coming to agreement between two people. If they come to an agreement, well, then there is no conflict. If they don’t come to an agreement, they walk away from each other, and again, there is no conflict. The only time conflict happens is when one of them wishes to force the other one to do things his way.

That’s why price fixing does not work. That’s why minimum wage laws should be abolished. If two people come to an agreement over which services they will do for each other, then there is only conflict when a third person comes along and tries to force what he thinks is right and fair.

The pay of unskilled work goes up with progress of society. And I’m not talking about the pay of a single person - his pay goes up with his skills. I’m talking about the fact that an hour of unskilled work in the USA can buy you ten times the goods it can buy in China. That didn’t happen because some union leaders decided to intervene. That was happening long before the first union was formed. Long before the first min. wage law was made. There is no proof whatsoever that the law had any good effect. It simply prevented immigrants and teenagers from legally working.

Bill, you accuse me of being cruel and wanting the poor people be payed below min. wage. This is not true. I do not want anyone to be payed such a low amount of money, but it’s not my choice how much anyone is going to be payed if it isn’t me paying them. I simply can’t control for how much work for how much money some two people will agree to be a fair deal. By voting, I can make the police forcibly prevent any two people from coming to such agreements and by doing that I make it harder for them to survive.

When I was 15, I worked for about $2 per hour the whole summer. It was a good deal to me because I could buy cigarettes and act all important in front of the girls because I’ve got my own job. I was proud to be contributing to the family budget. There are actually many laws forbidding me to do that - the min. wage law and the child labor law and who knows what else. If they were enforced, I’d just be home kicking a bucket or throwing sticky things at my little brother. I’d get no experience in work (or love :).

How is it that when a kid growing up on a farm helps his father with cows, they are considered a great example, “all kids should have experiences like that”. But when the kid is in the city and does some work for someone, his employer is considered an exploiter and a criminal. Is it the clean air? Is it because of money?

You say “why can’t we all just get along”? Well, we can, we got along, it’s you people with all your rules and regulations that try to control us the way you want us to behave; and if we object, well we can just happily go to jail. We’re bad and a menace to society and should be punished. How is it menace to society if two people agree on something and both want the exchange? How does punishing make it better?

Best, Adam

[Kenneth_Kitzke_Value]

[From Kenny Kitzke (2011.07.01)]

I don’t perceive your views about minimum wage laws as “silly.” My Silly Meter reads higher when considering Bill’s views. And, your position does not make you a cruel person. Such statements can be perceived as insulting but you have not retaliated in kind. Good for you.

However, I am in favor of a minimum wage—set by the worker; not by congress or governmental agencies. The latter is coercive. You would think that anyone understanding PCT/HPCT would applaud a person’s ability to establish their own purpose and control for it. Who is hurt or put in conflict when a worker says “I’ll do that work for X but not for a penny less?”

Most of your economic beliefs are also reasonable but there is a lot of data to analyze and it sounds like you are intending to make some models to test them. Again, I applaud you.

Best wishes,

Kenny

In a message dated 7/1/2011 5:48:13 A.M. Eastern Daylight Time, adam.matic@GMAIL.COM writes:

···

There are no laws saying what the minimum wage for computer programmers should be. How is it possible that they get payed so much if there is this eternal inherent conflict between employees and employers? There is no such thing. There is a process of coming to agreement between two people. If they come to an agreement, well, then there is no conflict. If they don’t come to an agreement, they walk away from each other, and again, there is no conflict. The only time conflict happens is when one of them wishes to force the other one to do things his way.

That’s why price fixing does not work. That’s why minimum wage laws should be abolished. If two people come to an agreement over which services they will do for each other, then there is only conflict when a third person comes along and tries to force what he thinks is right and fair.

The pay of unskilled work goes up with progress of society. And I’m not talking about the pay of a single person - his pay goes up with his skills. I’m talking about the fact that an hour of unskilled work in the USA can buy you ten times the goods it can buy in China. That didn’t happen because some union leaders decided to intervene. That was happening long before the first union was formed. Long before the first min. wage law was made. There is no proof whatsoever that the law had any good effect. It simply prevented immigrants and teenagers from legally working.

Bill, you accuse me of being cruel and wanting the poor people be payed below min. wage. This is not true. I do not want anyone to be payed such a low amount of money, but it’s not my choice how much anyone is going to be payed if it isn’t me paying them. I simply can’t control for how much work for how much money some two people will agree to be a fair deal. By voting, I can make the police forcibly prevent any two people from coming to such agreements and by doing that I make it harder for them to survive.

When I was 15, I worked for about $2 per hour the whole summer. It was a good deal to me because I could buy cigarettes and act all important in front of the girls because I’ve got my own job. I was proud to be contributing to the family budget. There are actually many laws forbidding me to do that - the min. wage law and the child labor law and who knows what else. If they were enforced, I’d just be home kicking a bucket or throwing sticky things at my little brother. I’d get no experience in work (or love :).

How is it that when a kid growing up on a farm helps his father with cows, they are considered a great example, “all kids should have experiences like that”. But when the kid is in the city and does some work for someone, his employer is considered an exploiter and a criminal. Is it the clean air? Is it because of money?

You say “why can’t we all just get along”? Well, we can, we got along, it’s you people with all your rules and regulations that try to control us the way you want us to behave; and if we object, well we can just happily go to jail. We’re bad and a menace to society and should be punished. How is it menace to society if two people agree on something and both want the exchange? How does punishing make it better?

Best, Adam

[From Adam Matic 2011.07.1 1100 gmt+1]

[Bill_Powers1]

[From Bill Powers (2011.07.01.0630 MDT)]

AM: Well, let's say that there are ten jobs and ten people. One way to find out who is the best at each job is to compete. They can agree without any internal conflict that they would compete for each job.

BP: Yes, this would work out quite neatly, because everyone who wants a job would get one, if not the one they trained for. At least they'll have some income. But suppose there are ten people and nine jobs. After eight of the jobs are sorted out by negotiation, you now have two people trying to get the remaining one job. That is a conflict between the two people, because if either one of them gets the job, the other one doesn't. What does the other one do now?

Come to think of it, what happens if nine jobs are filled and there are one job and one applicant left? How would you like to be that applicant? The interviewer says, "OK, you're the last one, and we're offering $3 per hour. Take it or leave it." If you leave it, there is no other job to get. Your income will be zero. The employer says that's all he can afford, and if necessary he'll just get his other 99 workers to work 1% harder and not fill the position. So make up your mind, I don't have all day.

When new businesses open in the area where I live, they advertise for workers. They may plan to hire 100 people, but typically they get 2000 applications. This, of course, delights the people starting the business because they will be able to select the 100 best-qualified people in this large pool. This is definitely an incentive for the business community to make sure there is always substantial unemployment; they speak of the optimum level of unemployment, by which they don't mean the natural minimum below which people aren't looking for jobs or are between jobs. They mean a pool of people who are likely to work for the lowest possible wage because they have no choice if they want their families to eat. This is, of course, just as much coercion as if they held a gun to the worker's head. Unemploymnent is good news for the businessman who hires workers. That's why so little is being done about it. It's just the good old law of supply and demand. If you want the price of something to come down, stop demanding so much of it. If you want to pay lower wages, lay people off and make the remaining ones work harder or longer for the same pay, then less pay. That's how it's done. It's quite popular nowadays. And of course you explain that you have to lay people off to reduce expenses and "make ends meet." So sad.

This is not done because businessmen are evil. As Martin Taylor, our Gibsonian, would put it, it's just a matter of affordances. The current system is organized so that what's good for business is bad for a lot of individuals. All it takes is for one businessman to discover that sending his manufacturing overseas does wonders for his bottom line. As soon as he does that he can lower his prices and take business away from his competitors. When they wake up and see what he has done, they hurry to do the same thing to get back into the game. It's not long before everything is being made overseas -- and guess what? All those people who lost jobs over here have no money with which to buy this influx of cheap goods. Their wages have gone to zero and they're thinking about staying alive, not about buying cheap lawn furniture.

You know the story. The stock market rises on bad news -- bad for consumers, that is. A hurricane means a huge market for construction materials, a crop failure means lower inventories, less cost for shipping grain, and higher prices and profits. The greater the need, the harder it gets for the consumer to fill it. Supply and demand again. The US is in a recession right now and producers are sitting on record profits. Why should they spend those profits to create more jobs? They'd have to hire more people (making wages rise), producing more would eliminate a lot of the demand, and down would go the profits. Not only that, but as things are now they can blame Obama for not creating more jobs, and given a friendly Court, spend all the money they want to to elect a president who thinks profits are the main thing in life. The recession is a great opportunity.

Apparently, the human race has not yet developed very far at the level of system concepts. When people speak of "us", they do not mean all of us, but just the small group they might invite into their living rooms or back yards for a barbeque. The rest of us are just some vague mass in the background, crowds you see milling around and burning cars and buildings on TV (good market for replacements there). They aren't real.

The economic system will reform itself once people get the idea that we are all really here, and we all really do need to "just get along" with each other. You don't compete with your friends and family except in fun, never seriously and for real. And when you get to know people, it's hard not to see that they belong in the friends and family category, too, most of them. One day we will look at those big houses built along the ridges above town and see them as sad remnants of hypertrophied acquisitiveness, built by people who really didn't want to just get along; they wanted to be better and more important than everybody else including each other, and thereby excuse themselves from being part of the human race which they really don't much like. All those sweaty dirty masses. School children will be taken on field trips to see those decaying monstrosities and be glad they don't live in those times.

It looks as if the internet is going to do something about the problem of capitalism. Eventually.

AM: So, are you saying that people shouldn't play chess?
What if they are OK with competing in games or in the market?

BP: Fine by me, as long as no one gets hurt and you don't make survival contingent on winning the game, and everyone can get back to real life afterward.

Best,

Bill P.

[Bill_Powers1]

[From Bill Powers (2011.07.01.0900 MDT)]

Adam Matic 2011.07.1 1100 gmt+1 --

There are no laws saying what the minimum wage for computer programmers should be. How is it possible that they get payed so much if there is this eternal inherent conflict between employees and employers? There is no such thing. There is a process of coming to agreement between two people. If they come to an agreement, well, then there is no conflict. If they don't come to an agreement, they walk away from each other, and again, there is no conflict. The only time conflict happens is when one of them wishes to force the other one to do things his way.

There is conflict if the best efforts of each party to achieve a goal are almost canceled by the best efforts of the other party to achieve a different goal. In that case, unless one party is effectively destroyed, neither party gets to satisfy his or her goal. The deal may still be struck, because at higher level the parties both realize that they are not going to get what they want, and they judge that a little is better than nothing. But the ability to get what they want at the higher level has been impaired. This is a malfunction.

You can't take the mere reaching of an agreement to mean that the parties are satisfied with the result and it's the best of all possible worlds. People are party to bad agreements all the time, just because they can't find anything better to do about the situation. This is not achieving one's goals, it's making do with less than you hoped to achieve, often just a tiny bit of it. If I ask you whether you'd rather have the nail on your little finger pulled out or be blinded in one eye, and you pick the former because there's no other choice, this is not "agreement." I can't brush your objection aside because I didn't try to influence your choice, and tell you it was your decision and not my fault. That's just sophistry.

The only way to measure successful control is in terms of achieving your inner goals. You get as close as you can to zero error. If the error stays too large, whatever you hoped to achieve as a higher-order goal will not be achieved. That means you are not functioning successfully.

AM: If two people come to an agreement over which services they will do for each other, then there is only conflict when a third person comes along and tries to force what he thinks is right and fair.

BP: That's just not true. An agreement says only that the parties will stop negotiating; by itself it's not an indication that either of them is satisfied, that there is no conflict. The human measure of agreement is achievement of goals on both sides. Only that outcome can be called successful. Your definition just provides excuses for bullying, deception, and exertion of power, and takes no account of the costs to either party. I don't accept it.

I think that this brings us to the core of our disagreement, and I thank you for finally making it clear. Now I realize that this is the same argument I see over and over from libertarians, free-marketeers, and all that sort of grim get-off-my-back-and-don't-ask-me-for-help approach to life. They say that if you agreed to something you have nothing to complain about, no matter what kinds of dirty tricks got you to agree. They say that your inner satisfaction is irrelevant; a deal is a deal. If I cheated you, you can go deal with someone else -- nobody made you accept the bargain, and you'll know better next time so I did you a favor. And get off my back.

This is a hostile, me-first, concept of social life and it's a recipe for violence and cruelty. It's also primitive; this is pretty much how history books describe our past. In small groups, among family and friends, we don't work by those rules. We do love people and hope they get what they want, sometimes even more than we demand it for ourselves. But not very many people, certainly not everybody. Really, it seems to be more fear than anger at work. If I don't try to get as much as I can for myself, others will take it and leave nothing for me. They don't care what I want; why should I care what they want? Grab the money and run; a deal is a deal.

AM: Bill, you accuse me of being cruel and wanting the poor people be payed below min. wage. This is not true. I do not want anyone to be payed such a low amount of money, but it's not my choice how much anyone is going to be payed if it isn't me paying them. I simply can't control for how much work for how much money some two people will agree to be a fair deal. By voting, I can make the police forcibly prevent any two people from coming to such agreements and by doing that I make it harder for them to survive.

BP: If you have any influence in the world, or hope to have it, then it is your fault if you don't speak up. If you defend a system that leads to cruelty, that is your fault, too. But to say it is your "fault" isn't what I really mean. I mean you are having effects that you don't realize, you are supporting things that you would not consciously or directly choose to support.

AM: You say "why can't we all just get along"? Well, we can, we got along, it's you people with all your rules and regulations that try to control us the way you want us to behave; and if we object, well we can just happily go to jail. We're bad and a menace to society and should be punished. How is it menace to society if two people agree on something and both want the exchange? How does punishing make it better?

I thought there must be some personal problem behind this. I felt the same way about The System when I was around your age. All those rules and expectations, people evaluating you, telling you what to do. I hated it. It took me a long time to get past that, and I won't tell you how to do it. You have to find your own way.

Now I just think that people are doing the best they can. Things used to be much worse than they are now; there are many forces at work to correct the injustices and other mistakes that go on. Nobody has an instruction book telling how to do it, though some people claim they have one. We have to work it all out ourselves. That's what we're all doing in PCT-world, and it's why I got started on the PCT trail so long ago. You and I now, arguing about economics, are trying to make things better. If we keep going that way, things will get better, a little bit at a time, eventually.

You see, my objection to your economic arguments is not that the free-market view is too free; it's that it isn't free enough. It works through subtle means of reward and punishment, it encourages deceit and selfishness and hostility and me-first-ism, and it's indifferent to the actual wishes and intentions of individual people. There is no provision for human mistakes, no sympathy for another person's plight, no wish for others to prosper as well as oneself. And no hope that others will grant similar favors to you. It's a cold, lonely, nasty world, the world of free markets. That's why I reject it.

Best,

Bill P.

[amatic]

[From Adam Matic 2011.07.02 0000gmt+1]

Bill Powers (2011.07.01.0630 MDT)

AM: Well, let’s say that there are ten jobs and ten people. One way to find out who is the best at each job is to compete. They can agree without any internal conflict that they would compete for each job.

BP: Yes, this would work out quite neatly, because everyone who wants a job would get one, if not the one they trained for. At least they’ll have some income. But suppose there are ten people and nine jobs. After eight of the jobs are sorted out by negotiation, you now have two people trying to get the remaining one job. That is a conflict between the two people, because if either one of them gets the job, the other one doesn’t. What does the other one do now?

AM:

Suppose there are a hundred people and only ten jobs. They can still agree to compete, just as well as when there are ten people and nine jobs. There might be conflict if the last one does not realise he can go and find himself another job. Conflict is not inherent to the situation. Two people could also agree to compete for one job.

BP: Come to think of it, what happens if nine jobs are filled and there are one job and one applicant left? How would you like to be that applicant? The interviewer says, “OK, you’re the last one, and we’re offering $3 per hour. Take it or leave it.” If you leave it, there is no other job to get. Your income will be zero. The employer says that’s all he can afford, and if necessary he’ll just get his other 99 workers to work 1% harder and not fill the position. So make up your mind, I don’t have all day.

AM:

We agreed that there are ten jobs and ten applicants. Like ten taxis and ten people who need a driver. There is no magical “let’s remove one job”, we could just as simply also remove one applicant and we’re back where we started. I’d love to be the last applicant. No one else is there to do the job, so we have to come to an agreement. I would ask for what I think is fair, but if the other person does not have enough money, I’d be happy with what he’s got. I might even do him a favor and spend money on him, not earn it. I wouldn’t be able to do that often, but here and there, why not. Nothing preventing me.

Even if he’s got a lot of money, I could do it for what I usually take because that’s how I like to do business.

I don’t want someone giving me a million dollars for a half hour taxi ride. I think that’s silly. If people can’t pay me for what I’m asking, then I need to do something about that price. I can imagine whatever I want about these people and not like them and think they are cheap and blame them for not wanting to buy my services, but the only way to make them buy my services is to improve. Either I offer the same service for less money or I make the service better for the same money. I can’t force anyone to give me money. That’s just bad business. It’s short term and my colleagues might not like that I’m giving the business bad advertising.

BP: When new businesses open in the area where I live, they advertise for workers. They may plan to hire 100 people, but typically they get 2000 applications. This, of course, delights the people starting the business because they will be able to select the 100 best-qualified people in this large pool. This is definitely an incentive for the business community to make sure there is always substantial unemployment; they speak of the optimum level of unemployment, by which they don’t mean the natural minimum below which people aren’t looking for jobs or are between jobs. They mean a pool of people who are likely to work for the lowest possible wage because they have no choice if they want their families to eat. This is, of course, just as much coercion as if they held a gun to the worker’s head. Unemploymnent is good news for the businessman who hires workers. That’s why so little is being done about it. It’s just the good old law of supply and demand. If you want the price of something to come down, stop demanding so much of it. If you want to pay lower wages, lay people off and make the remaining ones work harder or longer for the same pay, then less pay. That’s how it’s done. It’s quite popular nowadays. And of course you explain that you have to lay people off to reduce expenses and “make ends meet.” So sad.

AM:

This is inconsistent reasoning.

Hiring someone is not the same as pointing a gun to their head and making them work. It’s the opposite. It doesn’t matter if the owner has a lot of money or is truly making ends meet, it’s still not coercion to give someone a job. People are still making contracts of mutual benefit.

This is why the profits are so important - they sent a message to other people - “hey, look here, cheap labor”. Then other businesses come and employ the remainder of the people for the same low wage until everyone is working Now businesses start competing for workers. Wages start increasing. Now immigrants come looking for work and people complain that they “take American jobs”. That is sad. That is faulty reasoning too.

BP: This is not done because businessmen are evil. As Martin Taylor, our Gibsonian, would put it, it’s just a matter of affordances. The current system is organized so that what’s good for business is bad for a lot of individuals. All it takes is for one businessman to discover that sending his manufacturing overseas does wonders for his bottom line. As soon as he does that he can lower his prices and take business away from his competitors. When they wake up and see what he has done, they hurry to do the same thing to get back into the game. It’s not long before everything is being made overseas – and guess what? All those people who lost jobs over here have no money with which to buy this influx of cheap goods. Their wages have gone to zero and they’re thinking about staying alive, not about buying cheap lawn furniture.

AM:

Well, who’s not thinking about those poor overseas people now? Aren’t we all humans? They got a job. They’re not working in rice fields anymore, but in a job that can buy them more rice then before. So, the businessman is doing good for a great number of people. As for the people who lost their jobs, of course it’s bad. How do you know that the business was not falling apart before moving to another country? Shouldn’t the workers have excepted somewhat lower wages to keep their job? They will surely be “forced” to accept some other jobs, but it’s just too hard to accept a lower wage.

You are forgetting that you are personally the employer of a lot of people by the simple act of buying things. You are your baker’s employer - you give him money for his services. If his service is too expensive for you, are you just going to agree with his demands that you can’t meet, or will you go to another bakery? When you buy a pencil - you are paying for a small part of employment of thousands of people who contributed in making it - from the forest mill workers to graphite makers to paint makers, packagers, transporters and sellers. How is it wrong to choose which pencil to buy?

And all this is just ignoring the real causes of companies fleeing overseas.

I think it’s because of all the hatred americans have for money and profits. Some politician says “I’ll cut those profits from evil companies and give them to you, who really deserve it”. And the people become a lynch mob - “take their damn money and give it to the poor, tax them, tax them”. Make a million regulations, force them to employ lawyers to interpret those regulations, force them to employ union workers, forbid them for employing teens and immigrants, blame them for exploiting, just make it as hard as possible. Then, of course, there is between-company competition. There is nothing wrong until coercion comes into play. “Look, they are too good, soon they will be the only company in the world”. And the government says “oh, we can’t let that happen, can we”.

Why are the borders closed? For some reason Americans are afraid that too much people will come to their country. Americans have been living there for thousands of years and no non-citizen should… oh wait, right… all americans are immigrants. “We gotta prevent those evil companies from exploiting the poor imigrants. Force them to pay $7.25”. How silly is this?

BP:

You know the story. The stock market rises on bad news – bad for consumers, that is. A hurricane means a huge market for construction materials, a crop failure means lower inventories, less cost for shipping grain, and higher prices and profits. The greater the need, the harder it gets for the consumer to fill it. Supply and demand again. The US is in a recession right now and producers are sitting on record profits. Why should they spend those profits to create more jobs? They’d have to hire more people (making wages rise), producing more would eliminate a lot of the demand, and down would go the profits. Not only that, but as things are now they can blame Obama for not creating more jobs, and given a friendly Court, spend all the money they want to to elect a president who thinks profits are the main thing in life. The recession is a great opportunity.

AM:

I’ve mentioned Peter Schriff - he’s the guy who predicted the recession and he did it based on Business Cycle Theory that explains how manipulating the financial market creates bubbles and bursts in an economy and why government spending only prolongs the recession. Things are a little more complicated than you make it seem.

Obama can’t create jobs. No government can do that.

How is a job created? Well, a person simply needs to go to the market and offer his services for some amount of money. If someone excepts it, we’ve got a new job. And you always have freedom to accept higher wage from someone else who needs your services. No matter if it’s legal or illegal, that just how things work. It’s only more trouble if it’s illegal.

BP: Apparently, the human race has not yet developed very far at the level of system concepts. When people speak of “us”, they do not mean all of us, but just the small group they might invite into their living rooms or back yards for a barbeque. The rest of us are just some vague mass in the background, crowds you see milling around and burning cars and buildings on TV (good market for replacements there). They aren’t real.

AM: Yeah… Like the Chinese in China who got jobs. They are in the background. Look at these poor Americans who are forced to work for $7.25 per hour, now that’s just pointing a gun to their head and forcing them to work.

BP: The economic system will reform itself once people get the idea that we are all really here, and we all really do need to “just get along” with each other. You don’t compete with your friends and family except in fun, never seriously and for real. And when you get to know people, it’s hard not to see that they belong in the friends and family category, too, most of them. One day we will look at those big houses built along the ridges above town and see them as sad remnants of hypertrophied acquisitiveness, built by people who really didn’t want to just get along; they wanted to be better and more important than everybody else including each other, and thereby excuse themselves from being part of the human race which they really don’t much like. All those sweaty dirty masses. School children will be taken on field trips to see those decaying monstrosities and be glad they don’t live in those times.

It looks as if the internet is going to do something about the problem of capitalism. Eventually.

AM:

I can only hope that people will understand that no one can be forced to do good. They need to realise that by themselves. No amount of laws, police and jails will make people better, but will certainly make things worse.

Best, Adam

[amatic]

[From Adam Matic 2011.7.02 0340 gmt+1]

Bill Powers (2011.07.01.0900 MDT)

AM: There are no laws saying what the minimum wage for computer programmers should be. How is it possible that they get payed so much if there is this eternal inherent conflict between employees and employers? There is no such thing. There is a process of coming to agreement between two people. If they come to an agreement, well, then there is no conflict. If they don’t come to an agreement, they walk away from each other, and again, there is no conflict. The only time conflict happens is when one of them wishes to force the other one to do things his way.

There is conflict if the best efforts of each party to achieve a goal are almost canceled by the best efforts of the other party to achieve a different goal. In that case, unless one party is effectively destroyed, neither party gets to satisfy his or her goal. The deal may still be struck, because at higher level the parties both realize that they are not going to get what they want, and they judge that a little is better than nothing. But the ability to get what they want at the higher level has been impaired. This is a malfunction.

AM:

We should look at the exact moment of exchange. One person wants a million dollars for a bubble gum. The other person wants a truckload of bubble gum for 50 cents. If there is a higher level goal of coming to the best possible agreement, or a fair agreement or a win-win agreement, then the reference values for the lower level goals of how much is received for how much given, then at the moment of exchange, there is no malfunction.

Right?

Now why would anyone have a goal of coming to a fair agreement? Well, because that’s good business to make fair agreements and win-win situations. That’s why sellers are nice to buyers. That’s why products improve constantly. That’s why companies want to know what their customers wish for in order to provide it for them, in order to get either more money or popularity or reputation for being a fair business.

BP: You can’t take the mere reaching of an agreement to mean that the parties are satisfied with the result and it’s the best of all possible worlds. People are party to bad agreements all the time, just because they can’t find anything better to do about the situation. This is not achieving one’s goals, it’s making do with less than you hoped to achieve, often just a tiny bit of it. If I ask you whether you’d rather have the nail on your little finger pulled out or be blinded in one eye, and you pick the former because there’s no other choice, this is not “agreement.” I can’t brush your objection aside because I didn’t try to influence your choice, and tell you it was your decision and not my fault. That’s just sophistry.

AM:

You’re leaving something out of the picture - the fact that you’re pointing a gun to my head. If you are not we can come to an agreement of “I’ll be going home”.

I thought there must be some personal problem behind this. I felt the same way about The System when I was around your age. All those rules and expectations, people evaluating you, telling you what to do. I hated it. It took me a long time to get past that, and I won’t tell you how to do it. You have to find your own way.

AM:

Of course I have problems with The System, but that is not the point.

The point is - people won’t act according to laws simply because they exist. You can’t control other people by writing some laws and it’s immoral to use force either as a punishment or as a means to achieving your own goals. What’s more important is the first part - the law will just make criminals out of decent people and it will not fix the ones that are already not decent, so let’s just remove the law.

Now I just think that people are doing the best they can. Things used to be much worse than they are now; there are many forces at work to correct the injustices and other mistakes that go on. Nobody has an instruction book telling how to do it, though some people claim they have one. We have to work it all out ourselves. That’s what we’re all doing in PCT-world, and it’s why I got started on the PCT trail so long ago. You and I now, arguing about economics, are trying to make things better. If we keep going that way, things will get better, a little bit at a time, eventually.

You see, my objection to your economic arguments is not that the free-market view is too free; it’s that it isn’t free enough. It works through subtle means of reward and punishment, it encourages deceit and selfishness and hostility and me-first-ism, and it’s indifferent to the actual wishes and intentions of individual people. There is no provision for human mistakes, no sympathy for another person’s plight, no wish for others to prosper as well as oneself. And no hope that others will grant similar favors to you. It’s a cold, lonely, nasty world, the world of free markets. That’s why I reject it.

AM:

I just can’t believe I see the free market system as the verbatim complete opposite of what you see.

Those system concepts, ha?

Best, Adam

[amatic]

[From Adam Matic 2011.07.02 1200gmt+1]

Kenny Kitzke (2011.07.01)

However, I am in favor of a minimum wage—set by the worker; not by congress or governmental agencies.

AM: That is my view also. Every worker has a barganing position.

Best

Adam

[Bill_Powers1]

[From Bill Powers (2011.07.02.0727 MDT)]

Adam Matic 2011.7.02 0340 gmt+1 --

AM: I just can't believe I see the free market system as the verbatim complete opposite of what you see. Those system concepts, ha?

BP: What we are proving in these discussions is that the truth can't be reached through verbal argument. You select premises so your reasoning can reach the conclusion you already accept, and -- though I'm less conscious of this -- so do I. This is goal-driven logic, logic designed to lead to a preselected conclusion. One form of this is "petitio principii:"

Begging the question

It is very hard for any intelligent person not to realize where a line of reasoning will quite likely end up. In an argument, you see the opponent assuming something and you immediately ask, "Why is he assuming that? What's he going to do with it if I agree to it?" And you zoom ahead in your thoughts as you imagine what that premise might lead to. As soon as you see it could be used against your argument, you will object, or offer a different premise that cancels out the dangerous premise at some step of the argument yet to come. It's just like playing chess or any other strategy game. It's like lawyers trying to present a line of reasoning to a judge and jury, attempting to anticipate and cancel out the opposing lawyer's arguments and assumptions. Each side's lawyer knows the conclusion that he or she desires. It's just a question of finding a logical path to it and blocking the logical path to the other conclusion. Premises are then just a tool for doing those things.

The outcome of this is something that looks like a logical conclusion but is not. It's simply a manipulation of premises in such a way as to make the logic reach the conclusion you already know you want to reach. It's an example of a logic-level control process. There is no "discovery" of truth in this method.

Model-making can be perverted in this way too, if it's not done right. But it's harder to pervert, because every premise has to be justified and demonstrated to be true. It can't just be slipped in as an arbitrary assertion and used as a springboard to reach the next sentence. What makes modeling even harder to pervert is that it doesn't have to be aimed at a specific conclusion. You can simply ask "What would actually happen if ...?" and introduce your premises that way. If you really construct a model from that wondering point of view, you will not be under any pressure to select premises to reach any particular conclusion, and can simply look for the premises most likely to be testable and correct. You will be willing to accept any conclusion as long as you're pretty sure it follows correctly from the premises. And after you accept that the conclusion is, indeed, what that model predicts, you can compare the prediction with observation and judge the merits of the whole process from premise to conclusion.

That's how science is supposed to work.

I suggest, therefore, that we cease approaching economics as laywers for the prosecution or defense, that we discard any preferences we may have had for or against any economic system, and that we simply do our best to find out the truth, whatever it may prove to be. I don't recall ever having found anything like this in an economic or political theory or textbook, so we will be breaking new ground.

Best,

Bill P.

[amatic]

[From Adam Matic 2011.07.02 1730gmt+1]

Sure, I’ll stop arguing. I enjoyed it, though. Thank you for going along.

I made some new sketches of the market exchange model, so that might be an improvement towards a working model.

All the best, Adam