Economics

[From Bruce Gregory (2001.0214.1725)]

Rick Marken (01.02.14.1330)

I'm sure a mathematician could prove this but this numerical
example should suffice to get the point across: in an economy
that generates a finite amount of wealth over time (w(t)), as
the rich in this economy get richer the poor necessarily get
poorer, and vice versa.

Don't want to get involved here, but this conclusion seems unwarranted. Say
there is one poor person and one rich person. Why can't both get richer
over time if the economy grows?

BG

[From Rick Marken (01.02.14.1440)]

Me:

>Does this answer it?

Mike Acree (2001.02.14.1400)

No. But it confirms my impression that you don't understand
the question I'm mildly interested in what it would take to
get you unstuck, but not enough to continue the thread right
now.

I hope you don't really give up on me. This is a very important
question. I've met many people who believe that the wealth of
rich and poor are independent of one another; the amount of wealth
possessed by the rich has nothing to do with the amount of wealth
possessed by the poor. If this were true I think it would be truly
wonderful; each individual could possess as much of a country's
wealth as their individual luck and pluck allowed and the one's
who managed to get the most could sleep well knowing that they
were not depriving others. I think this is impossible and its
impossibility is, indeed, built into my model of the economy
because the model assumes that the wealth possessed by each
individual in the economy (at any instant) is a proportion of
the total wealth produced by the economy: GNP.

So could you try to unstick me on your question? I think it's
a very important point.

Thanks

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Rick Marken (01.02.14.1445)]

Me:

in an economy that generates a finite amount of wealth over
time (w(t)), as the rich in this economy get richer the poor
necessarily get poorer, and vice versa.

Bruce Gregory (2001.0214.1725)--

Don't want to get involved here, but this conclusion seems
unwarranted. Say there is one poor person and one rich person.
Why can't both get richer over time if the economy grows?

They can! It's especially easy if the proportion of the wealth
possessed by each person remains the same. So if the rich person
owns 80% of GNP and the poor person owns 20% then, as w(t)
increases the real wealth of both parties increases. This can
probably even happen if the proportion owned by the rich person
keeps increasing (of course, it will stop happening once the
rich person owns 100%). But it would happen only under special
circumstances where w(t) was increasing fast enough and the
disparity between rich and poor wasn't increasing too fast.

All my little demonstration shows is that, in a relative sense
(and almost always in an absolute sense, in terms of real growth
in wealth over time) as the rich get richer the poor necessarily
get poorer: there is a negative relationship between the amount
of w(t) possessed by rich and poor even when w(t) is changing
over time.

Best regards

Ricky Rich

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Mike Acree (2001.02.14.1544 PST)]

Rick Marken (01.02.14.1440)--

I hope you don't really give up on me. This is a very important
question. I've met many people who believe that the wealth of
rich and poor are independent of one another; the amount of wealth
possessed by the rich has nothing to do with the amount of wealth
possessed by the poor. If this were true I think it would be truly
wonderful; each individual could possess as much of a country's
wealth as their individual luck and pluck allowed and the one's
who managed to get the most could sleep well knowing that they
were not depriving others. I think this is impossible and its
impossibility is, indeed, built into my model of the economy
because the model assumes that the wealth possessed by each
individual in the economy (at any instant) is a proportion of
the total wealth produced by the economy: GNP.

So could you try to unstick me on your question? I think it's
a very important point.

Thanks for your interest and concern. We're agreed on the importance. In
terms of a direct response to the point at hand, I wouldn't have known how
to improve on Bruce Gregory's (2001.0214.1725) post a moment ago. His
question doesn't take you the whole way, but your response, just in, appears
to concede the point "under special circumstances." (I wouldn't necessarily
deny that the requisite circumstances were "special," but they're hardly
unfamiliar. The poorest 20% in the U.S. are vastly wealthier than the
poorest 20% in Cuba, even with the billions held by Bill Gates and all the
rest.) If you understand that one economic system can, even in principle,
lead to both greater wealth held by the poor and a greater disparity between
rich and poor than another economic system, we can return to the original
question: Which do you favor?

I've been reflecting on the process that got us into this (temporary?)
impasse, for what it may be worth to any of us, in this exchange or in
general.

You asserted a truism: r + p = w, the whole equals the sum of its parts.
You're (justifiably) certain you're position is correct, because it's a
mathematical truth. Anybody who disagrees with you has to be wrong, and you
don't even have to pay much attention to what they are saying. Whatever
they say, it's a sufficient response in principle to reiterate your logical
truth. The problem is just that that truism was irrelevant to the point
under discussion. However I try to redirect your attention, I get the same
response. f(x) = k is uninteresting, and I drop out. The only way I know
to avoid the trap is to pay closer attention to what other people are
saying. It's often more interesting than you apparently assume--enough more
on average, I would say, even to justify the extra effort.

Possibly you have the same experience in exchanges with me. I could imagine
that lots of our arguments with different people are convoluted forms of
this same process. The present example stood out as unusually simple and
transparent in its structure, so I took a stab at it. In the larger
economics debate, I have suggested that the root premises are moral rather
than mathematical, but we got to mathematics because I was trying to avoid
ethics (and economics).

All best,
Mike

[From Rick Marken (01.02.14.1830)]

Mike Acree (2001.02.14.1544 PST)--

The poorest 20% in the U.S. are vastly wealthier than the
poorest 20% in Cuba, even with the billions held by Bill
Gates and all the rest.) If you understand that one economic
system can, even in principle, lead to both greater wealth
held by the poor and a greater disparity between rich and poor
than another economic system

Yes. Of course. I understand that. In fact, I already agreed (in
Rick Marken (01.02.12.2130)) that this was possible. I said:

I agree...So the poor in an economy with a hugh wealth disparity
are getting a tiny portion of a large, fast expanding pie while the
middle class in an economy with no wealth disparity are getting a
large portion of a tiny, sluggishly expanding pie. It's easy to
work the numbers out so that the wealth of the poor person in the
large wealth disparity economy is always much larger than that
of the average person in the no wealth disparity one

What I didn't (and still don't) agree to is that the large, fast
expanding economy is that way _becuase_ of the wealth disparity.

we can return to the original question: Which do you favor?

Neither. Though if it were a forced choice I would, of course, pick
the high wealth disparity economy, where the poor are doing OK,
over the low wealth disparity economy, where the poor are in dire
straights.

Wealth disparity is only _one_ factor involved in economic
performance. According to the leakage model, wealth disparity
is keeping the US economy from producing up to its potential.
Other factors, such as central command and limited natural
resources, are surely the main factors that keep countries like
Cuba poor.

By the way, I am not against wealth disparity per se. All I'm saying
is that, according to the leakage model, anyway, significant wealth
disparity can produce leakage, which slows the economy. I don't know
what the "right" level of disparity is. But a lower level than what
we have now would be good for the economy as a whole and, of course,
for the poorest elements of the society. When 20% of the children
in a society are living below the poverty level, as they are in the
USA, you know that the wealth disparity is _way_ too large.

You asserted a truism: r + p = w

I think it's an assumption; the assumption that wealth is consumed
by the entire population (here represented as two groups, r and p).
This assumption could be wrong. It probably is wrong in at least
one little respect. Some wealth is never consumed by anyone. So a
slightly better assumption may be w = r + p + l where l is leakage,
wasted w.

Anybody who disagrees with you has to be wrong

No. Anybody who disagrees with me "has to" show their preferred
alternative model.

and you don't even have to pay much attention to what they
are saying.

I never "have to" pay attention to what anyone is saying. But I
do pay attention to people (like Bill and T.C. Powers) who talk
in terms of mechanistic, mathematical models of the phenomena
we are discussing.

However I try to redirect your attention, I get the same response.
f(x) = k is uninteresting, and I drop out...Possibly you have the
same experience in exchanges with me.

Yes. My problem with you is that I've never heard you describe
your model of the economy in anything like quantitative terms.
I find philosophical debates about the economy uninteresting; I
prefer models and data. Always have. Always will.

Best regards

Rick

···

---

Richard S. Marken Phone or Fax: 310 474-0313
Life Learning Associates e-mail: marken@mindreadings.com
mindreadings.com

[From Bill Powers (2001.02.14.1958 MST)]

Rick Marken (01.02.14.1330)--

I think you are missing the meaning of Mike Acree's proposal. He is saying
that the sum of incomes of rich and poor is not necessarily a constant. His
proposal is that the sum might increase faster if the rich were allowed to
become even richer relative to the poor. The tacit assumption is that
economic growth is caused mainly by rich people, with poor people just sort
of being along for the ride. So if you cater to the greed of the rich even
more, this will cause them to work still harder to expand the economy, with
the result that the poor become better off, though not as much better off
as the rich. On the other hand, if you limit the income of the rich, they
will cease to work so hard, and the economy could even begin contracting,
to the detriment of the poor. This was basically what his rather cryptic
comment was about.

If you wanted to, you could show that exactly the same reasoning could
justify giving the poor a greater share of the wealth. If you pay the
wage-earners more, they will work harder and become more productive.
Capital income will not be as large at first, but with the peons working
harder the economy will expand, and the rich will end up being better off
than before. You have my permission to call this Powers' Trickle-Up Economics.

I don't, however, believe in either proposal.

Best,

Bill P.

[From Mike Acree (2001.02.14.2016)]

Rick Marken (01.02.14.1830)--

If you understand that one economic
system can, even in principle, lead to both greater wealth
held by the poor and a greater disparity between rich and poor
than another economic system

Yes. Of course. I understand that. In fact, I already agreed (in
Rick Marken (01.02.12.2130)) that this was possible. I said:

I agree...So the poor in an economy with a hugh wealth disparity
are getting a tiny portion of a large, fast expanding pie while the
middle class in an economy with no wealth disparity are getting a
large portion of a tiny, sluggishly expanding pie. It's easy to
work the numbers out so that the wealth of the poor person in the
large wealth disparity economy is always much larger than that
of the average person in the no wealth disparity one

I beg your pardon for overlooking that. But then I'm not sure what all the
r + p = w stuff was about. (I don't need an answer.)

What I didn't (and still don't) agree to is that the large, fast
expanding economy is that way _becuase_ of the wealth disparity.

I didn't claim that, and wouldn't interested in defending such a claim.

When 20% of the children
in a society are living below the poverty level, as they are in the
USA, you know that the wealth disparity is _way_ too large.

There will always be a lowest 20%. I'm not sure the definition of the
poverty level is simply the 20th percentile, but the process of definition
isn't too far from that. The definition is in any case relative. In 1900
only 10% of the U.S. population lived above today's poverty level. Unlike
80% of those below the poverty level today, they didn't have cars,
microwaves, color TVs, or VCRs. None of that is of course to glorify
poverty. I've been there, and may be again someday.

My problem with you is that I've never heard you describe
your model of the economy in anything like quantitative terms.
I find philosophical debates about the economy uninteresting; I
prefer models and data. Always have. Always will.

I don't find quantitative data or models in economics any more interesting
or compelling than statistical data or models in psychology myself, but I'm
content to leave us in disagreement on that.

Bill Powers (2001.02.14.1958 MST)--

The tacit assumption is that
economic growth is caused mainly by rich people, with poor people just

sort

of being along for the ride.

This was not my assumption, as I said to Rick above, and it's not one I
would want to try to defend. The people I think of as having contributed
especially to economic growth--Edison, Carnegie, Gates, whoever--didn't
start out rich. More nearly, I would say, they grew rich as a result of
their contribution to economic growth.

My point, again, was just the methodological one of whether Rick was going
to constrain his economic model a priori to be a zero-sum game, because I
didn't think he recognized the constraint he was tacitly imposing. Both you
and he want to draw me into arguments about economic theory, and I'm still
skeptical about the usefulness of that at this point.

Best,
Mike

[From Bruce Gregory (2001.0215.0635)]

Mike Acree (2001.02.14.2016)

There will always be a lowest 20%. I'm not sure the definition of the
poverty level is simply the 20th percentile, but the process of definition
isn't too far from that. The definition is in any case relative.

Perhaps you'll agree that the increasing number of homeless is telling us
something. The increasing number of people without health insurance may
also be sending a less relative message.

BG

I think this is impossible and its

impossibility is, indeed, built into my model of the economy
because the model assumes that the wealth possessed by each
individual in the economy (at any instant) is a proportion of
the total wealth produced by the economy: GNP.

Rick
--

I'm no economist but for what its worth, I've read that the whole arts and
crafts end of the economy is growing steadily yet is not included in GNP.
You can prove all sorts of things with partial models.
David Wolsk
Metchosin, BC Canada (where our artists and crafts people separate lots of
Americasn tourists from their money)

[From Mike Acree (2001.02.14.1544 PST)]

The poorest 20% in the U.S. are vastly wealthier than the

poorest 20% in Cuba, even with the billions held by Bill Gates and all the
rest.) If you understand that one economic system can, even in principle,
lead to both greater wealth held by the poor and a greater disparity

between

rich and poor than another economic system, we can return to the original
question: Which do you favor?

On the basis of two lengthy visits to Cuba and friends who work there, I
feel the poorest 20% of Cubans feel better off than the poorest 20% in U.S.
The differences between them and the next 70% better off are minimal and
basic necessities and safety nets are available free. I enter this into the
discussion not to defend Cuba but to question economic modelling.

David Wolsk

[From Rick Marken (01.02.15.0800 PST)]

David Wolsk (01.02.15?) --

I'm no economist but for what its worth, I've read that
the whole arts and crafts end of the economy is growing
steadily yet is not included in GNP. You can prove all
sorts of things with partial models.

GNP is data, not a model.

It is difficult to measure the _actual_ wealth produced
by an economy. GNP is an _estimate_ of actual wealth that
is based on measurements of the monetary value of what is
thought to be a representative sample of goods and services
produced by the economy each month. The sample leaves out
many things, most notably illegal goods and services (eg.
drugs, prostitution) and household services provided by
stay-at-home spouses. The estimate of GNP is, therefore,
likely to be a slightly biased (low by about 1%) and error
prone (off by + or - 1%) estimate of true GNP. Unless arts
and crafts makes up more than 2% of the economy (which I
doubt) it's probably not going to make a big difference in
one's conclusions about the behavior of the economy.

Bruce Nevin (01.02.15 08:40 EST)--

Is the wealth in the world a fixed quantity?

No. It's a variable quantity. In the Western industrial
countries over the last 100 years or so wealth has been
increasing at a faster pace than the increase in the
population of these countries. Wealth is natural
resources that have been fashioned by human labor into
goods and services that people want. The natural
resources themselves are not wealth; they are just
there. Something like gold is not wealth until it has
been transformed in some way by human labor (including,
as a first step, just retrieving it from the ground --
which might involve nothing more than bending over and
picking it up, if you are lucky). The natural resources
that are used to produce wealth are a _fixed quantity_.
That's why it's important to figure out ways to have
sustainable economies: economies that are not based on
transforming usable natural resources into unusable waste
products as fast as possible. The first step in getting
such an economy is, of course, to stabilize population.
Another step, which can be taken simultaneously, is to
develop methods for _recycling_ resources through the
production process.

David Wolsk (01.02.15) --

On the basis of two lengthy visits to Cuba and friends
who work there, I feel the poorest 20% of Cubans feel
better off than the poorest 20% in U.S.

Thanks. Very interesting observation.

I enter this into the discussion not to defend Cuba
but to question economic modelling.

Why do you question economic modeling? If you don't know
how an economy works how can you fix it? Without a model,
economics is just superstition. And the bad guys -- the
one's who care only about their own wealth -- can invent
any self- serving stories they want to justify their
cruel policies (as is happening now with the Bush Tax
Cut).

Best regards

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Bruce Nevin (01.02.15 08:40 EST)]

Rick Marken (01.02.14.1330)--

···

At 01:31 PM 02/14/2001 -0800, Richard S. Marken wrote:

If we assume that w(t) (wealth
varying over time) is the sum of the wealth held by the rich (r(t)
and poor (p(t)) at time t, then r(t) and p(t) will covary;
indeed, they will covary _negatively_. As the rich get richer
(r(t) increases over time) the poor necessarily get poorer
(p(t) decreases over time) and vice versa.

Is the wealth in the world a fixed quantity?

i.kurtzer (2001.02.15.1240EST)

[From Rick Marken (01.02.15.0800 PST)]

Why do you question economic modeling? If you don't know
how an economy works how can you fix it? Without a model,
economics is just superstition. And the bad guys -- the
one's who care only about their own wealth -- can invent
any self- serving stories they want to justify their
cruel policies (as is happening now with the Bush Tax
Cut).

Are you the good guy then? And are you completely unaware of any cruel
policies design to redistribute wealth?
Or are those policies given a moral blank slate as long as they don't say "I
see you have chosen".
I think your moralisms are irrelevant at best, i.e please stick with
modelling.

i.

[From Mike Acree (2001.02.15.1001 PST)]

Bruce Gregory (2001.0215.0635)--

Perhaps you'll agree that the increasing number of homeless is telling us
something. The increasing number of people without health insurance may
also be sending a less relative message.

Yes, I agree they're telling us something interesting and disturbing,
whatever it is. We've always had poverty, but homelessness is a new
phenomenon, practically even a new word. (Russell Means says that in his
drunk days he wasn't homeless, he was a bum.) Kennedy's community mental
health program, emptying state mental hospitals out into the streets, is
usually blamed, but that wouldn't have been effective by itself. When I was
young, there was a community near us in Indiana called Tintown, because the
shacks were made of tin cans. My uncle lived in another community of
one-room tarpaper shacks. I'm sure they're no longer there. Somebody came
along and said, "People shouldn't have to live like that. Let's make it
illegal." We've progressively raised legal minimum housing standards
everywhere to price many people out of the market. Public housing is
supposed to make up the gap, but people who can build a shanty out of tins
cans don't necessarily have the skills for negotiating the bureaucratic
hoops and paperwork and qualifications. In San Francisco many of these
units are occupied by middle-class people with the skills to hide their
assets, or merely the right political connections. A few years ago a
businessman in Atherton, a wealthy neighbor of Palo Alto, had a large unused
warehouse he wanted to use as a homeless shelter. The city government
wouldn't let him. Public safety and all. The NIMBY phenomenon, in other
words, masquerading as compassion.

The nature of health insurance has changed. Sixty years ago it was
basically catastrophic coverage, and it was affordable enough that we didn't
have a health care crisis. When wages were frozen in World War II,
employers added health benefits to make themselves competitive in hiring.
That practice continued after the war, so everybody expected health
insurance to be paid by employers, and the costs were invisible to them.
When government and private plans were expanded, starting in the '60s, to
include routine care, the demand for services skyrocketed, since they were
all prepaid. Premiums then had to be raised accordingly, and people get
priced out. There's a lot more to be said here, but not by me, since I know
very little of the history.

David Wolsk--

On the basis of two lengthy visits to Cuba and friends who work there, I
feel the poorest 20% of Cubans feel better off than the poorest 20% in

U.S.

The differences between them and the next 70% better off are minimal and
basic necessities and safety nets are available free. I enter this into

the

discussion not to defend Cuba but to question economic modelling.

Thanks, David. I've heard differing reports, but have no first-hand
knowledge, and find your observations credible. I picked Cuba because many
poor countries are dictatorships where the rulers have billions, usually
from U.S. aid, in Swiss bank accounts; and my impression was that Castro
doesn't.

I'm with you (and Mises), of course, in questioning economic modeling.

Mike

[From Bruce Gregory (2001.0215.1314)]

[From Mike Acree (2001.02.15.1001 PST)

The nature of health insurance has changed. Sixty years ago it was
basically catastrophic coverage, and it was affordable enough that we didn't
have a health care crisis. When wages were frozen in World War II,
employers added health benefits to make themselves competitive in hiring.
That practice continued after the war, so everybody expected health
insurance to be paid by employers, and the costs were invisible to them.
When government and private plans were expanded, starting in the '60s, to
include routine care, the demand for services skyrocketed, since they were
all prepaid. Premiums then had to be raised accordingly, and people get
priced out. There's a lot more to be said here, but not by me, since I know
very little of the history.

This is one example of what I call the "you can't get there from here"
phenomenon. We've built a system that we cannot dismantle without causing
pain, yet the system provides no more than a far-from-optimal situation.
There seem to be quite a few of those "gotchas" in U.S. society today.

BG

[From Mike Acree (2001.0215.1022 PST)]

Bruce Gregory (2001.0215.1314)--

This is one example of what I call the "you can't get there from here"
phenomenon. We've built a system that we cannot dismantle without causing
pain, yet the system provides no more than a far-from-optimal situation.
There seem to be quite a few of those "gotchas" in U.S. society today.

I agree, it's a very serious problem. Some solutions may be better than
others, but it's hard to imagine any without significant pain to somebody.
Even ending the War on Drugs would leave lots of people having to find
other, surely less remunerative, work.

Mike

[From Rick Marken (01.02.15.1040)]

Me:

Without a model, economics is just superstition. And
the bad guys -- the one's who care only about their own
wealth -- can invent any self- serving stories they want
to justify their cruel policies (as is happening now
with the Bush Tax Cut).

i.kurtzer (2001.02.15.1240EST) --

Are you the good guy then?

Pretty good (I do get rave reviews from my family and
friends;-)).

And are you completely unaware of any cruel policies design
to redistribute wealth?

Sure. I am aware of them. I certainly would count the murder
of the monarchies in France and Russia, to the extent that
there was redistribution of their wealth, a very cruel policy.
But the main redistribution policy used in the USA (the economy
with which I am most familiar) today is tax policy. I don't
see that as particularly cruel. I consider taking 50% of the
income of a billionaire to be a lot less cruel than not
providing income (welfare, workfare, whatever) to a family
that can't provide itself with adequate food, shelter and
education.

I think your moralisms are irrelevant at best, i.e please
stick with modelling.

You're right. The fact of the matter is that most of the
people who are (from my point of view) creating the worst
problems in the economy are probably acting with the best
of intentions. T.C. Powers made this point in his book. The
people who are hoarding vast amounts of wealth (and creating
leakage) probably have no idea that they are slowing the
economy and creating unemployment, poverty and inflation.
Indeed, they probably think that accumulation of vast wealth
is a good thing; good for them and good for the economy. The
modeling suggests that this is not the case, however. Indeed,
it's quite the reverse. So moral judgment need not even enter
the picture. Although I find greed morally reprehensible, that
judgment is economically irrelevant. If greed really did make
things better for everyone in the economy then I might even
celebrate it. But it doesn't. The modeling shows what results
when vast accumulations of wealth are hoarded by a few: economic
stagnation, unemployment, inflation and high levels of poverty.
It's at this point -- after the modeling -- that values and
morals enter the picture. If you like these results (stagnation,
unemployment, poverty, inflation) then there is nothing wrong
with a few hoarding vast wealth; if you don't like these results,
then, based on your understanding of the economy (in terms of
the successful model of that economy), then you try to figure
out ways to fix things.

Best regards

Rick

···

--
Richard S. Marken Phone or Fax: 310 474-0313
MindReadings.com mailto: marken@mindreadings.com
www.mindreadings.com

[From Norman Hovda (2001.02.14.1400 MST)]

[From Mike Acree (2001.02.14.1400)]

Rick Marken (01.02.14.1330)--

>> So I still see you as not having answered my question
>
>Does this answer it?

No. But it confirms my impression that you don't understand the question.
I'm mildly interested in what it would take to get you unstuck, but not
enough to continue the thread right now. Sorry. Maybe someone else can
help.

Happy V.D.
Mike

If I'm at all in touch, IMO, part of the problem falls within the vague
category of "wealth". Might as well be attempting to quantify the
"general welfare" (which no doubt will largely be a function of the quality
of one's POV), but clearly not just a wave or particle.

As to the matter of time, and the roll of organized markets in a mixed
economy - the functions of which are both totally missing from any eco-
model I've heard mentioned - the non-linear, fluid, emotionally charged
time frame of one participant's mind set or POV, versus anothers, and
anothers, and sometimes in the aggregate roughly corresponding to
dynamically different and varying spans of time, all stewing in the same
pot or one close by, all view price and value according to differently held
reference levels <g> and yet at times similarly oriented,

but...

bottom line...

price (i.e., currency subject to its own relative gyrations and a
commonly assumed as a _fixed_ standard or measure of "wealth")
fluctuates wildly, opposite and not necessarily equally over time for
different participants depending on when positions were opened and/or
liquidated not to mention errors, hedging, insurance, delivery or
offsetting transactions... more or less... volume, open interest, closing
prices, market cap and shares outstanding, transactions reported and
NOT reported...

(Just the mad ramblings of a day-trader whose declining net worth
totally unprepared to defend or support any of the above, and one who
wonders if the above made any sense at all and __big breath__ if not,
maybe it will provoke a useful idea for someone.)

Best,
nth

[From Dag Forssell (940211 0900)] Martin Taylor 940210 11:15

Martin, as Rick has already said, thanks for your lucid post.

Yes. Bill Powers has several times tried to start a discussion thread
going on the application of PCT to economics.

I took the trouble to search my files for the word economics in order to
include a thread on economics among the PCTDOCS on the February release
of the PCTDEMOS disk. The "thread" is 50 KB and includes the following
six posts:

···

-------------------------------------------------------
Date: Tue Feb 11, 1992 2:24 pm PST
Subject: CT Economics

[From Bill Powers (920211.1500)]

Here's a kickoff for a thread we might call CT Economics.
----------------------------------------------------------

Date: Mon Jun 01, 1992 7:23 pm PST
Subject: Economics

[From Bill Powers (920601.2000)] to Greg Williams (920601)

Good point about the reference levels. But I think there's a deeper
glitch in the economy than just oil prices.
----------------------------------

Date: Wed Jan 27, 1993 7:52 pm PST
Subject: Economics; misc

[From Bill Powers (930127.2030)] Bob Clark (930127) --

I have a lot of things to say about economics, Bob,
-------------------------------------

Date: Sat May 01, 1993 8:14 am PST
Subject: Economics: the Williams Effect

[From Bill Powers (930430.1100)]

Six or eight years ago, an economist named Bill Williams came to visit
me. He thought that control theory might be able to explain a phenomenon
called the Giffen Paradox. We worked nonstop through the weekend, and
indeed came up with a control-system model that reproduced this effect
(no longer a "paradox").
----------------------------------------

Date: Thu Sep 16, 1993 7:20 pm PST
Subject: Marcos: Economic PCT Proposal

[From Marcos Rodrigues (930915.1600 BST)]

The Economic and Social Research Council in the UK has just launched a
new research programme entitled "Economic Beliefs and Behaviour":
-------------------------------------

Date: Fri Sep 17, 1993 2:48 pm PST
Subject: Marcos & economics

[From Bill Powers (930917.1600 MDT)] Marcos Rodrigues (930915.1600 BST)

The economics project sounds wonderful. Economics has been in the back
of my mind since a CSG member and economist, Bill Williams, enlisted me
------------------------------

Best, Dag

<[Bill Leach 940212.11:14 EST(EDT)]

[Dag Forssell (940211 0900)]

I would certainly be interested in such a discussion. A major difficulty
as I see it, is trying to maintain the PCT view point, particularly for
those of us like myself that are so new to the concepts.

I have always been "uncomfortable" with the "soft sciences" (of which
behavioural science and economic science have certainly been a part).

I have fairly recently come to realize that there are several scientists
in the past and even now, that have made quite serious attempts at
looking at economics with a critical "scientific process" "eye".

PCT fascinates me precisely because it does have the "audacity" to assert
that the behavioural sciences can be approached from a "hard" science
point of view. PCT "says" to me that the "mumbo jumbo" of much of
psychiatry is not, and does not have to be, a "part of science."

Objectivism essentially makes the same claim for philosophy. While many
(including myself) may dissagree with some of the conclusions based on
Objectivism (or for that matter PCT), it is the method... the process,
that is so fundamentally right. As far as I am concerned, it is this
method of using a logical, rational, repeatable, defined system in the
search for truth and knowledge that is essential.

As I see it, PCT will work (does work) because it does demand "system"
solutions. "Patches" that work sometimes and not other times are NOT
acceptable within the framework of PCT except where they allow reasearch
to eliminate themselves.

-bill