Economic Control

CSGnet Archive CSG2004
1

[From Rick Marken (2004.09.14.1020)]

Well, since my previous post on the historical deficit/surplus was such a
big hit (well, it was in private posts to me) I thought I would show the
time course of the budget balance in terms of government expenditures and
receipts. The attached graph shows yearly government expenditures (Expend)
and receipts (Receipt), each as a proportion of GNP, since 1959. I have
marked the beginning of the Clinton and Bush II administrations with
vertical bars.

The Clinton period is interesting because there was actually a steady
decline in government spending, probably a result of reduction in the
defense budget due to the end of the Cold War, and a steady increase in
government receipts. That's why there was a surplus. The decline in
government expenditures could also be attributed to the fact that Clinton
had a Republican Congress from 1994 until the end of his term. But that
can't be the main reason for the decrease since expenditures started
increasing again as soon as Bush II came in, again with a Republican
Congress. Note also that, shortly after Bush II came in, well before 9/11
and right when the first tax cut was passed, receipts started to drop
precipitously. Also, note that the increase in receipts throughout the
Clinton administration cannot be attributed to Clinton's luck at having a
"booming" economy because the dot.com boom didn't start until 1997 at the
earliest while the linear increase in receipts starts in 1993.

I think what these data show is that who is president makes a difference to
the economy: presidents can control the economy, to some extent, via their
policies. They also show that, since Reagan, Republican presidents have led
the biggest increases in government spending of any presidents. The idea
that Republicans stand for small government is simply a myth. The data also
show (again) that presidential leadership has an easily detectable effect on
macroeconomic variables. This is particularly clear in the transition from
Clinton to Bush II. There is no sign at all, in 2000, just before Bush II
takes office, that the economy was "tanking" in terms of the deficit (or in
terms of growth). Expenditures were starting to level out or tick up a bit
and receipts had leveled out. The precipitous drop in receipts happens 2 or
3 months after Bush II takes office, well before 9/11. The increase in
spending during Bush II (with a Republican House and 50/50 Senate) continues
right on through to the end of 2003, but does decrease in 2004, probably
reflecting a reduction in spending on the war.

Best regards

Rick

Exp.jp2 (59.8 KB)

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2

Hi, Rick --

What is a .jp2 file? I can't open it.

Bill

3

[From Rick Marken (2004.09.14.1150)]

Hi, Rick --

What is a .jp2 file? I can't open it.

Bill

It's a jpeg format that I had in my Graphic Converter package that makes a
nicer image than the plain jpeg, for some reason (that has to do with moving
images from Excel to graphics format, I suppose). Here is a GIF version of
the figure that looks OK on my computer but is about twice the size of the
jp2.

Best

Rick

Exp.gif

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4

Me neither, Dick R

···

From: Bill Powers powers_w@FRONTIER.NET

Date: Tuesday, September 14, 2004 1:31 pm

Subject: Re: Economic Control

Hi, Rick –

What is a .jp2 file? I can’t open it.

Bill

5

Hi, Rick --

OK, I can see the Gif file fine. How about indicating each of the previous
administrations by name, and identifying the quantities on the axes? Is
this one point per year, or one per quarter?

you wrote:

···

[From Rick Marken (2004.09.14.1150)]

> Hi, Rick --
>
> What is a .jp2 file? I can't open it.
>
> Bill

It's a jpeg format that I had in my Graphic Converter package that makes a
nicer image than the plain jpeg, for some reason (that has to do with moving
images from Excel to graphics format, I suppose). Here is a GIF version of
the figure that looks OK on my computer but is about twice the size of the
jp2.

Best

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

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6

[From Rick Marken (2004.09.14.1330)]

Hi Bill --

OK, I can see the Gif file fine. How about indicating each of the previous
administrations by name, and identifying the quantities on the axes? Is
this one point per year, or one per quarter?

OK, here is a Gif with each administration indicated by name (well, by
initial). I notice that I attribute the last year of Eisenhower to JFK but
c'est la vie; Eisenhower would be counted as a left wing Democrat these
days, anyway). The data are _quarterly_ measures of government expenditure
and receipts, both measured as a proportion of GNP. So the Y axis is
"proportion of GNP".

Best regards

Rick

EXP2.gif

···

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7

[From Dick Robertson,2004.09.14.1550CDT]

···

From: Bill Powers powers_w@FRONTIER.NET

Date: Tuesday, September 14, 2004 2:43 pm

Subject: Re: Economic Control

Hi, Rick –

OK, I can see the Gif file fine. How about indicating each of the
previousadministrations by name, and identifying the quantities on
the axes? Is
this one point per year, or one per quarter?

you wrote:

[From Rick Marken (2004.09.14.1150)]

Here is a GIF

version of

the figure that looks OK on my computer but is about twice the
size of the
jp2.

Best

Rick

I don’t see no stinking GIF file! ???

Best,

Dick R

8

[From Bruce Gregory (2004.0914.1644)]

Me neither, Dick R

You can always tell who is using Windows. It opens by itself (and looks great) in Mac Mail.

Bruce Gregory

"Great Doubt: great awakening. Little Doubt: little awakening. No Doubt: no awakening."

9

[From Dick Robertson.2004.09.14.1555CDT]

···

From: Richard Marken marken@MINDREADINGS.COM

Date: Tuesday, September 14, 2004 3:34 pm

Subject: Re: Economic Control

OK. Sorry, the Gif file arrived after I sent the last message.

Best,

Dick R

10

From [Marc Abrams (2004.09.14.1709)]

I just couldn't resist answering this post before logging off CSGnet. :slight_smile:

[From Rick Marken (2004.09.14.1020)]

Well, since my previous post on the historical deficit/surplus was such a
big hit (well, it was in private posts to me)

Yes, I'm sure like mined individuals were very enthusiastic about your
'analysis'. I think you should ask Linda to get you a job in the Federal
Reserve.

The Clinton period is interesting because there was actually a steady
decline in government spending, probably a result of reduction in the
defense budget due to the end of the Cold War, and a steady increase in
government receipts. That's why there was a surplus.

Hmmm, exactly what good did the 'surplus' do us when our intelligence
community was under funded and we were being attacked around the world?

I think what these data show is that who is president makes a difference
to the economy: presidents can control the economy, to some extent, via
their policies.

No Rick, the _President_ does not 'control' the economy. Yes many
governmental agencies have a tremendous _influence_ on the economy, but no
one person or 'policy' _controls_ it.

The legislature is responsible for _all_ of the spending. I never knew a
politician, either Republican or Democrat who wasn't willing to give some
government money away for a few votes. It's the easiest way to get elected.

They also show that, since Reagan, Republican presidents have
led
the biggest increases in government spending of any presidents. The idea
that Republicans stand for small government is simply a myth.

Yes, unfortunately small government _is_ a myth, but it's been a bipartisan
effort for about the last 100 years

The data
also
show (again) that presidential leadership has an easily detectable effect
on
macroeconomic variables. This is particularly clear in the transition from
Clinton to Bush II. There is no sign at all, in 2000, just before Bush II
takes office, that the economy was "tanking" in terms of the deficit (or
in
terms of growth)....

Yes Rick, it was actually in the 3rd quarter of 1999 that we realized we
were going into a recession, and not in 2000, and I would suggest you
actually try to understand what some of your 'indicators' might actually
indicate before making pronouncements like this.

What I would really like to know is what any of this stuff has to do with
PCT? The 'conclusions' Rick has come too are about as helpful as a Rubber
crutch in a Polio ward. I'm left with the feeling of, So?

Marc

11

[From Rick Marken (2004.09.14.2130)]

Marc Abrams (2004.09.14.1709)--

No Rick, the _President_ does not 'control' the economy. Y

Yes Rick, it was actually in the 3rd quarter of 1999 that we realized we
were going into a recession, and not in 2000,

What I would really like to know is what any of this stuff has to do with
PCT?

I can answer all three points with a single graph, which is attached. This graph shows quarterly variations in growth (dGNP/dt, the black line) and quarterly variations in the government budget balance (the red line) between January 1991 and the present. The two vertical bars indicate the start and end of the Clinton administration. Note that the budget balance moves in an almost perfect straight line from deficit (the low point of the red curve) to surplus during the Clinton years. This steady increase occurs despite the variations in growth (black line) that occur during the same period.

Assuming that growth is a disturbance to a balanced budget (which you seem to assume, since you attribute Bush II's budget deficit to recession -- negative growth), what we are seeing is a balanced budget that is under control. If the budget were not under control it would vary pretty much along with variations in growth. But it doesn't, at least not until Bush II comes in, when the budget balance plummets into deficit when growth goes negative (recession).

The steady rise in the budget balance from deficit to surplus seems to be a controlled result of policies of the Clinton administration. I believe that Clinton's Treasury Secretary Rubin said he wanted to control the budget and it appears that he did (with Clinton's concurrence, of course).

So the graph answers your first point by showing that presidents (via their policies) can control at least one economic variable -- the budget balance. It also answers your second point by showing that the recession that started in 1999 was not a necessary cause of the the runaway budget deficit that really took off a few months after Bush was appointed president by the Supreme Court. Finally, the graph answers your third point by showing what this has to do with PCT; we are almost certainly looking at a control phenomenon. The red line (budget balance) looks like the position of a cursor in a tracking task, being made to follow an intended path while being protected from disturbances (variations in growth).

RSM

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

dGNPDeficit.gif

12

From [ Marc
Abrams (2004.09.15.0134)]

[From Rick Marken
(2004.09.14.2130)]

No Rick, the President does not ‘control’ the economy. Y

Yes Rick, it was actually in the 3rd quarter of 1999 that we realized we

were going into a recession, and not in 2000,

What I would really like to know is what any of this stuff has to do
with

PCT?

/color>

I can answer all
three points with a single graph, which is attached.

I don’t think so. :slight_smile:

Assuming that
growth is a disturbance to a balanced budget (which you seem to assume, since
you attribute Bush II’s budget deficit to recession – negative growth),

No, this is your assumption about my thinking. I never told you why I thought we went into a recession. It
would be difficult to attribute the recession that started in Clinton’s administration to the
spending of Bush. BTW, as an aside, a recession does not indicate negative
growth. It indicates a slowdown in consumer spending. A recession is where an economy
that had previously been growing slows down. The level of production declines,
unemployment rises and consumer spending dries up - in the worst case
scenarios, as happened in the depressions of the 1930s and the 1980s, so few
people are spending money that businesses sack staff to cut costs. Our economy
right now is doing just fine, thank you, deficit and all. But we really do need
to do something about Medicare and Social Security. The Ponzi scheme has
finally met its match. Our real
deficit is not the 4 trillion we are currently running. It’s the 42 trillion in present value our SS and
Medicare systems represent that will make life very difficult for your kids and
mine if we don’t fix this real soon, and it can’t be fixed with a simple
tax increase either.

So, this statement is inaccurate;

what we are seeing is a
balanced budget that is under control. If the budget were not under control it
would vary pretty much along with variations in growth. But it doesn’t, at
least not until >Bush
II comes in, when the budget balance plummets into deficit when growth goes
negative (recession).

And this next statement if true is truly
an amazing feat. Rubin wanted to ‘control the budget’ so that means
the budget was a ‘controlled’
process? OK, whatever you say. Again, what is ‘negative’ growth? A
slowdown is quite a different animal than shrinkage in the overall economy.

The steady rise in
the budget balance from deficit to surplus seems to be a controlled result of
policies of the Clinton
administration. I believe that Clinton’s
Treasury Secretary Rubin said he >wanted
to control the budget and it appears that he did (with Clinton’s concurrence, of course).

So the graph
answers your first point by showing that presidents (via their policies) can
control at least one economic variable –

Pretty nice trick, Rick. You go from
saying he controls the economy to controlling ‘at least one variable’
of the economy. Quite a leap, don’t you think? And the ‘variable’
that he does seem to control provides a key insight into what exactly?

the budget balance. It
also answers your second point by showing that the recession that started in
1999 was not a necessary cause of the the runaway budget deficit that really
took off a few >months
after Bush was appointed president by the Supreme Court.

I see, the budget deficit ‘really’
took off a few months after Bush took office. Why did it take that long? Your
analysis showed that Bush could have had an impact 2 weeks after he took
office. He didn’t waste a minute did he? He probably started the deficit
by buying all the Justices Cadillac’s for getting him into office. :slight_smile:

Finally, the graph
answers your third point by showing what this has to do with PCT; we are almost
certainly looking at a control phenomenon. The red line (budget balance) looks
like the >position
of a cursor in a tracking task, being made to follow an intended path while
being protected from disturbances (variations in growth).

I see, now all control processes are of the ‘PCT’ variety.
Interesting, I thought Norbert Weiner & Cybernetics first popularized the
concept of control, Silly me.

So Rick you were both right and wrong.
You did in fact answer my three questions with one graph, unfortunately they
were all the wrong answers but don’t give up hope, one day you too might
actually know what you are doing and so I give you a C, for Chutzpah, :slight_smile: for
your effort. That’s Chinese for having nerves of steel for those that
have never heard of the term. :slight_smile:

Rick, you really are a pretty nice guy and I really do wish you and
I could have a legit discussion about the issues, but you seem to be so blinded
by an ideology you can’t seem to see the forest for the trees. Even if
what you said was all true, my response would be, So what? What does it mean?
That the President can affect the economy? You’re not going to win a Nobel
for that one.

I’m not quite sure I understand
what you are trying to ‘analyze’ here. There is a very old axiom, in the consulting
business, when it comes to modeling. Never, ever
build a model to prove a particular point for a client. The reason behind this
is that anyone can build a model to prove just about any point you want to
make. It all depends on the data that is put into the model and just as
important, the stuff that is left out. Models in and of themselves are
meaningless unless backed up against and with empirical observations.

Marc

13

[From Bill Powers (2004.09.15.0847 MDT)]

Rick Marken (2004.09.14.2130) --

Very interesting chart, Rick. If changes in GDP really are disturbances to
the balance of the budget, this seems to show that maintaining a surplus is
being deliberately controlled. But I'm a bit confused.

Here's the problem. As I understand it, a deficit means a rate at which
we're going into debt or using up savings. If I run a quarterly deficit of
$1000, then each month I go $1000 further into debt, or have $1000 less in
savings. That would be indicated by a horizontal red line in your chart,
located at negative $1000 in the Y direction -- a constant deficit.

A rising line, as in the Clinton years, indicates that the difference
between income and expenditures is gradually increasing. That would mean
that the debt is shrinking not at a constant rate but at a steadily
increasing rate -- a parabola, not a straight line.

So the straight-line rise from deficit to surplus doesn't show something
constant, but something changing at a constant rate. The difference between
expenditure and income is continually changing, government quarterly
expenditures being reduced and/or quarterly income being increased. So what
would the controlled variable be, if this is evidence of control? Is there
some variable which, if held at a constant reference level, would result in
a steady change in either income or expenditure or both? I can't think of
one. Or does the reference level for the amount of quarterly deficit
gradually change in a linear way from a negative number to a positive
number, as if a target for the deficit is being changed every quarter and
being successfully achieved? In that case, whose reference level was it?

I'd like to show your charts to other people, but they're not really in
shape for publication. It would help if you included a title, labeled the
axes (with units) and other significant aspects of the plot, and perhaps
even included a caption with a description and a citation of the source of
the data. I know this slows things down, but it makes the plots useful in a
wider context.

Best,

Bill P.

14

[From Rick Marken (2004.09.15.0930)]

Marc Abrams (2004.09.15.0134)

Rick Marken (2004.09.14.2130)]

Assuming that growth is a disturbance to a balanced budget (which you seem to
assume, since you attribute Bush II's budget deficit to recession -- negative
growth),

No, this is _your_ assumption about my thinking. I never told you _why_ I
thought we went into a recession.

I never asked. What you said is that the Bush II deficit was a result of the
recession that started in third quarter 1999. My data shows that it was not.
Indeed, they show that there was no recession starting in the third quarter
of 1999, just a slowdown.

It would be difficult to attribute the
recession that started in Clinton�s administration to the spending of Bush.

There was no recession that started in Clinton's administration. There was a
slowdown; growth (indicated on the right axis) never goes negative in the
graph I sent.

BTW, as an aside, a recession does not indicate negative growth. It indicates
a slowdown in consumer spending.

The standard macroeconomic definition of recession is as follows: "a fall of
a country's Gross National Product in two successive quarters". A fall of
GNP over time is indicated by dGNP/dt going negative.

A recession is where an economy that had previously been growing slows down.

I'll accept that, though I think the actual term used is "slowdown, since
dGNP/dt never went negative. Given you definition of "recession", there were
four recessions during the Clinton years: in 1993, 1995, 1998 and 2000. The
point of the graph I sent is that, despite these "recessions", the budget
balance kept increasing linearly into surplus.

Again, what is �negative� growth?

A decrease in GNP over time. Negative growth is seen when dGNP/dt goes
negative.

A slowdown is quite a different animal than shrinkage in the overall economy.

That's true. A slowdown is seen when dGNP/dt at time t is smaller than
dGDP/dt and t-dt. "Slowdown" and "recession" are words that are used to
describe the actual dynamics of economic variables. It's the dynamics (like
dGNP/dt) that are important, not the words used to describe them.

Pretty nice trick, Rick. You go from saying he controls the economy to
controlling �at least one variable� of the economy.

You were the one who talked about "control of the economy". I have always
been careful (I hope) to make it clear that it is economic _variables_ that
are controlled.

I see, the budget deficit �really� took off a few months after Bush took
office. Why did it take that long?

It took a couple months to pass the tax cut. The inflection point in the red
budget balance trace (between Jan and Sept 01) probably is the point where
the reduction in tax revenues from withholding started to kick in.

I see, now _all_ control processes are of the �PCT� variety.

They always have been. PCT isn't about a particular kind of control process.
It's about the proper mapping of the engineering control model to the
controlling done by living systems, such as their controlling of economic
variables.

I�m not quite sure I understand what you are trying to �analyze� here.

There is no need for you to be unsure. You definitely do not understand it.

RSM

···

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15

[From Rick Marken (2004.09.14.0950)]

Bill Powers (2004.09.15.0847 MDT)]

Very interesting chart, Rick.

Here's the problem. As I understand it, a deficit means a rate at which
we're going into debt or using up savings.

That's true. What the budget balance (red) trace in my chart shows is the
rate at which the debt is being increased (budget deficit) or decreased
(budget surplus)

A rising line, as in the Clinton years, indicates that the difference
between income and expenditures is gradually increasing. That would mean
that the debt is shrinking not at a constant rate but at a steadily
increasing rate -- a parabola, not a straight line.

Right. I don't know if they have data on the quarterly size of the debt. If
they do, I'll get it and it.

So the straight-line rise from deficit to surplus doesn't show something
constant, but something changing at a constant rate.

Right.

The difference between
expenditure and income is continually changing, government quarterly
expenditures being reduced and/or quarterly income being increased. So what
would the controlled variable be, if this is evidence of control? Is there
some variable which, if held at a constant reference level, would result in
a steady change in either income or expenditure or both? I can't think of
one. Or does the reference level for the amount of quarterly deficit
gradually change in a linear way from a negative number to a positive
number, as if a target for the deficit is being changed every quarter and
being successfully achieved? In that case, whose reference level was it?

I think it's possible that the controlled variables is rate of change in the
budget balance. That is, Rubin could have been controlling b(t)-b(t-1),
where b(t) = revenue(t) - expenditure (t), trying to keep it at a reference

0. It looks to me like the reference for b(t)-b(t-1) (if that's the

controlled variable) changed in 2000, probably because there _was_ an
unnecessarily large surplus.

I'd like to show your charts to other people, but they're not really in
shape for publication.

I'm sorry. I can make them better but I'm just trying to prepare them
quickly while I'm working on several other projects.

It would help if you included a title, labeled the
axes (with units) and other significant aspects of the plot, and perhaps
even included a caption with a description and a citation of the source of
the data. I know this slows things down, but it makes the plots useful in a
wider context.

I completely agree. I've just got to improve my time management skills so
that I can set aside time -- between the several projects I'm doing at work
and the several more cultural activities Linda has planned for us after work
-- to do this. But I will do it.

Best regards

Rick

···

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16

[Bruce Gregory (2004.0915.1318)]

Rick Marken (2004.09.14.0950)

I think it's possible that the controlled variables is rate of change
in the
budget balance. That is, Rubin could have been controlling b(t)-b(t-1),
where b(t) = revenue(t) - expenditure (t), trying to keep it at a
reference

0. It looks to me like the reference for b(t)-b(t-1) (if that's the

controlled variable) changed in 2000, probably because there _was_ an
unnecessarily large surplus.

Since the President's budget is developed more than 12 months before
the start of the fiscal year and rarely approved until after the start
of the fiscal year, I'm most impressed by Rubin's apparent ability to
predict revenues and rate of expenditures several years into the
future. This seems to be an argument in favor of "modern" control
theory rather than PCT, however.

Bruce Gregory

"Great Doubt: great awakening. Little Doubt: little awakening. No
Doubt: no awakening."

17

From [Marc Abrams (2004.09.15.1326)]

You just don't quit do you?

[From Rick Marken (2004.09.15.0930)]

I never asked. What you said is that the Bush II deficit was a result of
the
recession that started in third quarter 1999. My data shows that it was
not.
Indeed, they show that there was no recession starting in the third
quarter
of 1999, just a slowdown.

A _SLOWDOWN_ _IS_ A RECESSION.

There was no recession that started in Clinton's administration. There was
a
slowdown; growth (indicated on the right axis) never goes negative in the
graph I sent.

YOU DON'T KNOW WHAT YOU ARE TALKING ABOUT

The standard macroeconomic definition of recession is as follows: "a fall
of
a country's Gross National Product in two successive quarters". A fall of
GNP over time is indicated by dGNP/dt going negative.

A 'fall' is a _decline_, a _SLOWDOWN_, _NOT_ a shrinkage. It is the _RATE_
of growth that is affected _NOT_ the stock or integral. Your dGNP/dt is a
_DERIVATIVE_, or a _RATE_, and _NOT_ a STOCK (ACCUMULATION), or integration.

I'll accept that, though I think the actual term used is "slowdown, since
dGNP/dt never went negative. Given you definition of "recession", there
were

It is not _MY_ definition of a recession. It is the commonly accepted
definition. But then again, common definitions never stopped you from
reinventing things as you deemed necessary before.

A decrease in GNP over time. Negative growth is seen when dGNP/dt goes
negative.

> A slowdown is quite a different animal than shrinkage in the overall
economy.

That's true. A slowdown is seen when dGNP/dt at time t is smaller than
dGDP/dt and t-dt. "Slowdown" and "recession" are words that are used to
describe the actual dynamics of economic variables. It's the dynamics
(like
dGNP/dt) that are important, not the words used to describe them.

Yes, and you should understand that dGNP/ dt is a _RATE_, and _not_ an
_amount_, or accumulation (integral). You need to be consistent in how you
speak of things, both mathematically and with words.

You were the one who talked about "control of the economy". I have always
been careful (I hope) to make it clear that it is economic _variables_
that are controlled.

The GNP is _NOT_ a controlled variable, it is an _EMERGENT_ property of many
interacting economic and political variables. I'm surprised at you. You
constantly pan the behavioral establishment for focusing on the 'wrong'
variables when trying to understand human behavior, yet you don't seem to
have any problem with the foundation of 'macroeconomics' and the variables
they try and use to talk about the economy. I guess we all believe what we
feel is most expedient for our purposes.

> I see, the budget deficit �really� took off a few months after Bush took
> office. Why did it take that long?

It took a couple months to pass the tax cut. The inflection point in the
red
budget balance trace (between Jan and Sept 01) probably is the point where
the reduction in tax revenues from withholding started to kick in.

Rick, this is so off the wall and absurd I am a loss for words and that is
an accomplishment in and unto itself. :slight_smile: An 'inflection' _point_ that spans
nine months??? _That_ is one hell of an inflection _point_. Some might even
call that a trend :slight_smile: over that time span, but I guess if your time frame is
by geologic periods, what are a few centuries among friends? :slight_smile: I have not
seen the graph, and I don't need to.

> I see, now _all_ control processes are of the �PCT� variety.

They always have been. PCT isn't about a particular kind of control
process.
It's about the proper mapping of the engineering control model to the
controlling done by living systems, such as their controlling of economic
variables.

Thank you for clarifying this for me Rick. Now I know why you idolize
Powers. You and he are the only two people on earth (at least according to
you) that truly understand what control actually is, so anyone who wants to
see the 'light' must ultimately come to the same conclusions you and Bill
have. That's the reason why people like Dr. Hubbard who did not 'get' Bill's
message in his attempt to understand PCT, needs to get some religion.

This confirms my feeling that you and Bill have nothing on Jim Jones. You
might want to think about your own CSGnet commune somewhere and don't feel
bad about being dissed. That's the way Mohammad got started and now he has
over a billion devotees. Think of it Rick, an ultimatum to all behaviorists
and cog sci folks (people of the book) convert to PCT or die. :slight_smile: I vote for
Rick as the first PCT Caliph. :slight_smile:

> I�m not quite sure I understand what you are trying to �analyze� here.

There is no need for you to be unsure. You definitely do not understand
it.

Yes, and when _YOU_ do, you might get back to me.

Beam me up Scotty, I'm ready. :slight_smile:

Marc

18

[From Rick Marken (2004.09.14.1140)]

Bruce Gregory (2004.0915.1318)

Rick Marken (2004.09.14.0950)

I think it's possible that the controlled variables is rate of change
in the budget balance. That is, Rubin could have been controlling
b(t)-b(t-1), where b(t) = revenue(t) - expenditure (t), trying to
keep it at a reference > 0.

Since the President's budget is developed more than 12 months before
the start of the fiscal year and rarely approved until after the start
of the fiscal year, I'm most impressed by Rubin's apparent ability to
predict revenues and rate of expenditures several years into the
future. This seems to be an argument in favor of "modern" control
theory rather than PCT, however.

I don't think so. First, of course, we have to prove to our satisfaction
that b(t)-b(t-1), or something like it, is, indeed, a controlled variable.
Part of doing that -- part of the test for the controlled variable -- would
be identifying the agent(s) that exert the control. Once we've gotten to
that point, we can start trying to understand _how_ the agent(s) exert this
control. It may be that the agents involved in the control of economic
variables use something like prediction when controlling variables where
there is a long lag between output and result. But we have found that this
kind of "lagged control" (as in tracking with an integral connection between
output and cursor, which effectively puts a delay between your mouse
movement and the effect of those movements on the cursor) can be explained
rather well using a hierarchical model of control, sans prediction.

By the way, you can experience this kind of "lagged control" by doing the
"Integral" control task in the "Open Loop" control demo at

http://www.mindreadings.com/ControlDemo/OpenLoop.html

The lag is not very pronounced, but, still noticeable.

RSM

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

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19

[From Rick Marken (2004.09.14.1250)]

Marc Abrams (2004.09.15.1326)--

A _SLOWDOWN_ _IS_ A RECESSION.

A 'fall' is a _decline_, a _SLOWDOWN_, _NOT_ a shrinkage. It is the _RATE_
of growth that is affected _NOT_ the stock or integral. Your dGNP/dt is a
_DERIVATIVE_, or a _RATE_, and _NOT_ a STOCK (ACCUMULATION), or integration.

I am well aware of that. In the table below I'll show what is meant by the
words "growth", "slowdown" and "recession". The first column of the table is
a sequence of 5 quarters (3 month periods). The second column is GNP
numbers. The next column contains the rate of change in GNP during each
quarter (except the first) computed as dGNP/dt = [GNP(t)-GNP(t-1)]/GNP(t),
where t indexes the quarter in which GNP is measured. Note that there is no
measure of dGNP/dt for the first quarter because you need to know the prior
GNP value to calculate the rate of change in GNP during the quarter.

Quarter(t) GNP dGNP/dt
  1 1000
  2 1001 0.000999 <--- Growth
  3 1003 0.001994 <--- Growth
  4 1004 0.000996 <--- Slowdown/ Growth
  5 1003 -0.000997 <--- Recession

Note that the rate of change in GNP is positive during the 2nd, 3rd and 4th
quarter. The economy would be said to be growing in all three quarters, but
it is growing at a lower rate in the 4th quarter than it was in the 3rd so
there is a slowdown in the 4th quarter, though there is still growth. GNP in
the 5th quarter is actually smaller than GNP in the 4th quarter, so the rate
of change in GNP has not only slowed down, it has gone into reverse
(indicated by the negative sign in front of dGNP/dt for the fifth quarter).
This reversal of growth is called a recession, though economists typically
wait to see two quarters of negative dGNP/dt in a row before they use the
term "recession".

Now let's look at my graph of dGNP/dt and budget balance in terms of what
we've learned from the table. I've attached a better version of the graph,
which shows the values of dGNP/dt more completely on the right hand axis.
The right hand axis contains the values that apply to the black trace, which
are the quarterly dGNP/dt values. Note that these values never go negative;
the lowest value for dGNP/dt is .004, which does seem to coincide with 9/11.
So the economy is always growing (rate of growth, dGNP/dt, is always
positive) but there are periods when the growth rate slows. These are the
periods of slowdown. Note that these periods of slowdown seem to have no
effect on the increase in the budget balance between 1993 and 2000. This is
what suggests that control may be involved in balancing the budget.

RSM

dGNPDeficit2.gif

···

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

This email message is for the sole use of the intended recipient(s) and
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20

From [Marc Abrams (2004.09.15.1619)]

I wish you would make up your mind.

[From Rick Marken (2004.09.14.1250)]

The first column of the table is a sequence of 5 quarters (3 month
periods).

Fine.

The second column is GNP numbers.

Fine.

The next column contains the rate of change in GNP during each
quarter (except the first) computed as dGNP/dt = [GNP(t)-GNP(t-1)]/GNP(t),
where t indexes the quarter in which GNP is measured. Note that there is
no measure of dGNP/dt for the first quarter because you need to know the
prior GNP value to calculate the rate of change in GNP during the quarter.

In my Calculus class dGNP/dt signifies the derivative of GNP. Your equation
above does _not_ represent the derivative of the GNP, nor is it the _rate_
of change of the GNP. It is the _amount_ of change from one quarter to the
next, not the _rate_ at which the GNP is changing from quarter to quarter.

This is what suggests that control may be involved in balancing the budget.

Whatever floats your boat. :slight_smile:

Have a healthy and happy New Year

Marc