Old Business

[From Bill Williams 21 January 2004 3:25 AM CST]

My previous CSGnet posting "He screwed the Pooch" slipped
out of my hands before I intended to post it. As a result
being asked to improve the formating of my email-- complaints
for which I am grateful. As a result a student found me a
much better email program, than the one I'd been previously
using.

But, on to substansive issues. Those of you who were at Boston
may have recall my attempting to make the point that econmics
is a serious field of inquiry, or at least issues in economic
theory ought to be taken seriously. I also attempted to make a
point about it being a good idea in economic theory to observe
some elementary arithemetic rules-- such as treating equal signs
as if they were important. That is if you use an equals sign,
then treat the quantities on the two sides of the sign as being
equal to each other. Rick's H. Economicus I argued didn't do
this-- that is treat equal signs as they are meant to be treated
in arthemetic operations. Rick, didn't then, and hasn't since
then, regard his violation of the rules usually used in adding
and subtraction etc, as a substansive comment.

When I see an error-- such as a violation of arithmetic-- in a
fundamental feature of a paper, I quickly loose interest in the
paper. Unless that is there is a possiblity of publishing a
correction in a journal. Since this wasn't a possiblity in regard
to Rick's H. Economicus scheme, I lost all interest. Rick, however,
pestered Bill Powers until Powers did what seemed to me to be a
through job of criticism of H. Economicus. Immeadiately after
encountering Power's criticism, Rick decided he "wasn't paricularly
good at economic modeling." This is a judgement to which I can
enthusiastically agree. Recently, however, Rick seems to have
forgotten this earlier and perceptive conclusion, and returned to
thinking his economic modeling skills are quite good. I can't agree.
Since Rick has taken it upon himself to make judgements about what
is and is not PCT, and HPCT correct, the claims that Rick makes
regarding his efforts to do economic modeling should be of concern
to all those interested in the future of efforts to applying
control theory in efforts to improve the quality of human experience.
Rick has ignored criticisms-- mine, and Bill Powers of the foundations
of economic modeling. Worse, Rick has after efforts have been made to
show him what is wrong, then complained of a lack of substansive
critical and constructive comment.

As, I said in Boston Economics is a serious business. It is also a
difficult business. I've made reference to the criticism that Powers
made of Rick's paper several times recently. Rick has misrepresented
what Powers had to say. Documents never "speak for themselves" but
I will leave it to CSGnet readers, the moment, to "judge for yourselves."

Bill Williams

  [From Bill Powers (2003.02.07.1037 MST)]

  Rick Marken (2003.02.06.2200)--

   >OK. I imagine the diagram could be better.

  Then make it better. It's not much help as it stands. It is hiding errors.

   >I guess one thing I was trying to do was model at the aggregate level,
  >the same level at which TCP was describing the behavior of the circular
  >flow. The variables whose behavior I am trying to model are aggregate
  >variables, like GNP. So the agents are really conceptual agents.

  That's not an answer to my objection. If you want to see what the model
  predicts about the growth of GNP, you don't make GNP a controlled variable
  and give it an exponentially-rising reference level. If you do that, you'll
  get out of the model precisely what you put into it, an
  exponentially-rising GNP. That is exactly what TPC did: declared that
  economic output depends on exponents, and then gave the impression that he
  had proven that it rises exponentially. In other words, the way you're
  going to prove that GNP rises exponentially is to make sure it rises
  exponentially. What kind of modeling is that? It would be like proving that
  the outfielder runs along a curved path by giving him reference levels for
  direction of running in X and Y that correspond to the curved path you
  observe. In your baseball model, you at least show how the directions of
  running are functions of error signals in some _other_ control systems than
  the direction-of-running systems. The fact that they are curved _emerges_
  from the operation of the model; there's nothing in the model that
  specifies the curvature directly, as your rising reference level for GNP
  specifies how GNP is to behave.

  What bugs me is that you know better than this. You have never, to my
  knowledge, made this mistake before.

  >Individuals compare income (PQ' at the individual level) to expenses
  >(P'Q' at the individual level). My PQ' - P'Q' controller is a
  >representation of the aggregate control over their balance sheets
  >exerted by many individuals.

  So are they trying to make PQ' = P'Q'? That denies leakage right there; if
  there is actually leakage of money from the system, it is impossible for
  PQ' to equal P'Q', if I interpret those symbols correctly. Your model
  contains no source of money to replace the leakage disturbance. so the
  books clearly cannot balance. You claim in your paper that the manager
  makes PQ' = P'Q' by changing the price, but changing the price does not
  supply the needed money. Your system will run out of money -- remember that
  leakage happens continuously, not just once. A continuous inflow of money
  is required to compensate for it. If you have set up the equations so this
  is not necessary, your model is incorrect.
   >
   >The evidence I gave that the model is working properly (given what I
  >wanted the model to do) is presented in Table 1, p. 169. This table
  >shows that the model does what it was designed to do: produce behavior
  >(of Q/Q' and inflation, at least) that matches the behavior of these
  >variables, according to TCP's model, as a function of leakage.

  But it does that only because you specifically made it do that. And there
  has to be an error in your model, because Table 1 shows the rate of growth
  increasing at a constant 13% a year, while in fact the amount of money
  available for spending is decreasing at the assumed leakage rate. There is
  no way that the rate of spending can be increasing according to the
  indicated inflation rate while the rate of growth is remaining constant in
  terms of goods purchased. The amount of goods may be increasing year by
  year, but inflation is increasing faster, so there is a net loss of output
  in constant dollars -- exactly as the Circular Flow model predicts.

  This is what I mean by not making sure your model works correctly before
  drawing conclusions from it.

  > I'm sure I could have done a better job of
  >validating the model. But the model did do what I built it to do.

  So why didn't you just make GNP increase at 13% per year, so you could say
  the model is correct, since GNP increases at 13% per year? Essentially
  that's what you did by making the reference level increase 13% per year.

  > I
  >agree that the discussion might have been too sketchy. But I don't know
  >what detailed evidence (other than what I presented in Table 1) you
  >would want to prove to yourself that this is a "proper" model.

  Look at Econ004.pas. It's not complete and it may even be mistaken, but it
  is a proper model. No behavior is simply assumed to happen and then made to
  happen that way. The books actually balance, both for goods and for money.
  If you put leakage into it, the total amount of money in the system will
  decline and if no new money is supplied, the system will go broke. In your
  model, all the money can be removed and the system will go right on working.

   >I don't think your conclusion that "of course leakage had no effect" is
  >correct. The increasing reference for GNP corresponds (somewhat) to
  >TCP's intrinsic growth rate; I think it represents the growth in demand
  >for GNP that results simply from population growth.

  None of that is in your model, and your model can't really work for that
  reason. Leakage has no effect in your model because you have not provided
  any way for it to have an effect. Leakage can't step in and rewrite your
  equations to give itself an effect.

  > I constructed the
  >model to mimic the behavior of TCP's model. And my model succeeds at
  >doing that.

  Except for the effect of leakage. Imitating the behavior is trivial. I can
  construct a model for stopping a car by saying its velocity decreases
  exponentially to zero. That duplicates the behavior of the real car. But
  the whole point is how that result is achieved; the essence of the model is
  in the how, not the what. Your model contains no how, or no valid how.

  > I thought that the effect of leakage on growth rate would
  >"fall out" of the model. But it didn't, and that's how I discovered that
  >TCP had put the effect of leakage on growth rate in as an assumption.

  But you did the same thing: you assumed a constant growth rate by making
  the reference level grow at a constant rate. Of course there was no way
  leakage could have an effect on growth rate when you specifically set up
  the model so _nothing_ could materially affect growth rate.

  > In
  >fact, _change_ in leakage does affect growth rate.

  How could it? You show the growth rate in Fig. 1 as constant at 13% per
  year. If you changed the leakage, it would still be 13% per year. If you
  think that a change in leakage affects growth rate, you've made another
  mistake. It might have a transient effect, but there can be no other kind
  of effect. And it is not a transient effect we're talking about.

   >I really have very little experience with Delphi. And I really don't
  >have any time to work on that model; I'm juggling 3 projects at work and
  >3 other PCT related projects at home right now. And I don't think I'm
  >particularly good at economic modeling, anyway. So I think I'll just let
  >you guys proceed.

  That's beginning to sound like the wisest course. But if your home projects
  with modeling are to fare any better than the economic model, you should
  consider very carefully what we're discussing here. Your model works by
  magic, and that is not how you have normally made models in the past. If
  you don't figure out exactly where you went wrong, you could make the same
  mistake again.

  Best,

  Bill P.

[From Rick Marken (2004.21.04.0945)]

Bill Williams (21 January 2004 3:25 AM CST) --

But, on to substansive issues. Those of you who were at Boston
may have recall my attempting to make the point that econmics
is a serious field of inquiry, or at least issues in economic
theory ought to be taken seriously. I also attempted to make a
point about it being a good idea in economic theory to observe
some elementary arithemetic rules-- such as treating equal signs
as if they were important. That is if you use an equals sign,
then treat the quantities on the two sides of the sign as being
equal to each other. Rick's H. Economicus I argued didn't do
this-- that is treat equal signs as they are meant to be treated
in arthemetic operations. Rick, didn't then, and hasn't since
then, regard his violation of the rules usually used in adding
and subtraction etc, as a substansive comment.

Sorry. I guess I didn't see exactly how to revise the model based on these
criticisms. I don't know exactly how to take issues in economic theory more
seriously. And I don't know which equals signs were a problem. In fact, most
of the equals signs in the model were replacement operators.

When I see an error-- such as a violation of arithmetic-- in a
fundamental feature of a paper, I quickly loose interest in the
paper. Unless that is there is a possiblity of publishing a
correction in a journal. Since this wasn't a possiblity in regard
to Rick's H. Economicus scheme, I lost all interest.

I think your persistent anger towards me and my paper betray your continued
interest in it.

Rick, however, pestered Bill Powers until Powers did what seemed
to me to be a through job of criticism of H. Economicus.

None of Bill's criticisms of my model (thanks for posting them) have
anything to do with yours. Indeed, Bill is as critical of your criticisms of
my model as he is of my model. Basically, Bill's criticism of my model is
that 1) assumptions (constant growth rate) were put into the model which
were then used as conclusions based on the behavior of the model and 2) some
variables (money supply) entered (and left) the model "magically". My
justification for these modeling flaws was that the model was a working
implementation of TCP's analysis, which Bill considered 3) a trivial
accomplishment. There was nothing in Bill's criticism about my failure to
treat income as equal to expenditure, because Bill knows (as I do) that
income is not necessarily equal to expenditure. There was noting in Bill's
criticism about my failure to take economic issues seriously. Bill
criticized what he thought were real flaws in my modeling. But, more
important, rather than just criticizing the model, Bill has suggested what
he thinks is the _right_ direction to go with this modeling effort. That's
the Test Bed approach. Rather than defend my model against Bill's criticisms
(some of which I thought were wrong) I figured a better way to proceed was
to work on a new model in the context of the Test Bed. I helped develop an
Excel version of the Test Bed and then the project sort of dropped away.
But I'm going to try to focus on that project again, if only to avoid the
recent sewage flow on CSGNet.

Immeadiately after
encountering Power's criticism, Rick decided he "wasn't paricularly
good at economic modeling." This is a judgement to which I can
enthusiastically agree.

I was being humble. H. economicus may have it's flaws but it does provide a
framework for understanding how a closed loop economy works. I would be
surprised if the Test Bed model doesn't start looking like H. economicus, to
some extent, when we start having to take into account that the aggregate
consumer and the aggregate producer are, to a large extent, the same people.

Recently, however, Rick seems to have
forgotten this earlier and perceptive conclusion, and returned to
thinking his economic modeling skills are quite good. I can't agree.

Of course you can't.

Since Rick has taken it upon himself to make judgements about what
is and is not PCT, and HPCT correct, the claims that Rick makes
regarding his efforts to do economic modeling should be of concern
to all those interested in the future of efforts to applying
control theory in efforts to improve the quality of human experience.

Warning. Rick can be be hazardous to PCT and human life in general.

Rick has ignored criticisms-- mine, and Bill Powers of the foundations
of economic modeling. Worse, Rick has after efforts have been made to
show him what is wrong, then complained of a lack of substansive
critical and constructive comment.

Boy, I think that guy Rick should be burned at the stake.

As, I said in Boston Economics is a serious business. It is also a
difficult business. I've made reference to the criticism that Powers
made of Rick's paper several times recently. Rick has misrepresented
what Powers had to say. Documents never "speak for themselves" but
I will leave it to CSGnet readers, the moment, to "judge for yourselves."

Thanks for posting Bill's comments again. I still disagree with several of
Bill's points. But, as I said, I don't need to defend the model. I just have
to make it better. And I think I can do that in the context of the Test Bed
project. I think that project has a lot more potential than the
income/consumption model project you describe.

Best regards

Rick

···

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

[From Bill Williams 21 January 2OO4 7:3O PM CST]

[From Rick Marken (2004.21.04.0945)]

Bill Williams (21 January 2004 3:25 AM CST) --

> But, on to substantive issues. Those of you who were at Boston
> may have recall my attempting to make the point that econmics
> is a serious field of inquiry, or at least issues in economic
> theory ought to be taken seriously. I also attempted to make a
> point about it being a good idea in economic theory to observe
> some elementary arithmetic rules-- such as treating equal signs
> as if they were important. That is if you use an equals sign,
> then treat the quantities on the two sides of the sign as being
> equal to each other. Rick's H. Economicus I argued didn't do
> this-- that is treat equal signs as they are meant to be treated
> in arithmetic operations. Rick, didn't then, and hasn't since
> then, regard his violation of the rules usually used in adding
> and subtraction etc, as a substantive comment.

Sorry. I guess I didn't see exactly how to revise the model based on these
criticisms.

The reason you didn't see was that you weren't listening. You had it
all figured out.

I don't know exactly how to take issues in economic theory more

seriously.

You could start by taking yourself less seriously. You could read
Steven Keen's book. You don't have to believe me, ask Bruce
Gregory. It really does provide an accessible, non pretentious
discussion of current problem in theoretical economics from a
critical standpoint.

And I don't know which equals signs were a problem. In fact, most

of the equals signs in the model were replacement operators.

The "replacement operators" were in the implementation of the
model. In the specification of the model you had contradictory
definitions of stuff-- as you recently realized. If you had
taken the definitions seriously to begin with you would have
seen that not all of the equalities could be simultaneously
true.

> When I see an error-- such as a violation of arithmetic-- in a
> fundamental feature of a paper, I quickly loose interest in the
> paper. Unless that is there is a possibility of publishing a
> correction in a journal. Since this wasn't a possibility in regard
> to Rick's H. Economicus scheme, I lost all interest.

I think your persistent anger towards me and my paper betray your continued
interest in it.

My only source of "interest" in either you or your paper comes from the
fact that you are in the way of an environment for me that could be
better. There are some things would make the world better would be if
they would go away.

> Rick, however, pestered Bill Powers until Powers did what seemed
> to me to be a through job of criticism of H. Economicus.

None of Bill's criticisms of my model (thanks for posting them) have
anything to do with yours.

None of them? How about the "magic" part? Bill and I at least agree
about this.

Indeed, Bill is as critical of your criticisms of
my model as he is of my model. Basically, Bill's criticism of my model is
that 1) assumptions (constant growth rate) were put into the model which
were then used as conclusions based on the behavior of the model and 2) some
variables (money supply) entered (and left) the model "magically". My
justification for these modeling flaws was that the model was a working
implementation of TCP's analysis, which Bill considered 3) a trivial
accomplishment. There was nothing in Bill's criticism about my failure to
treat income as equal to expenditure, because Bill knows (as I do) that
income is not necessarily equal to expenditure.

We've been through this several times. Bill did at one time understand
about the equality between money income and money expenditures. If he
now agrees with you, oh well... Bill has unfortunately gotten some
very strange ideas from his dad-- his views about Keynes for instance.

There was noting in Bill's
criticism about my failure to take economic issues seriously.

Read his criticism again. THere was a warning, that if you didn't
correct the mistakes you were making, then you'd make the same
errors in the future. STands to reason I think.

Bill criticized what he thought were real flaws in my modeling.

Indeed he did.

But, more
important, rather than just criticizing the model, Bill has suggested what
he thinks is the _right_ direction to go with this modeling effort.

As, if I haven't made constructive suggestions. You are very good at
this sort of "rather than just criticizing" stuff this is dishonest.

That's the Test Bed approach.

So, why hasn't the "Test Bed" made any progress? I don't see what
the problem has been-- not on the surface anyway. The underlying
cause is a failure to approach the problem in a serious way-- a
way that doesn't assume that everyone outside the magic circle is
an idiot or dishonest.

Rather than defend my model against Bill's criticisms
(some of which I thought were wrong) I figured a better way to proceed was
to work on a new model in the context of the Test Bed.

I look forward to progress reports. Like I've said, I've been puzzled
about why there hasn't been more work carried out, when there doesn't
appear to be any proximate barrier, besides the effort required, to
building this thing.

I helped develop an

Excel version of the Test Bed and then the project sort of dropped away.

How come? Could this be an indication that my criticism -- "the lack of
seriousness" might be correct? "sort of dropped away" because you had
more interesting things to do? That is certainly what it looks like.

But I'm going to try to focus on that project again, if only to avoid the
recent sewage flow on CSGNet.

Let's consider this issue. What would you call Bill ignorant sleazy
atttack on Keynes? Sounded just like a red neck cracker talking about
pointy headed liberals. Was that a part of the "sewage?" I was
disgusted by it. Or, is that just business as usual in the fabled
crank works?

> Immediately after
> encountering Power's criticism, Rick decided he "wasn't particularly
> good at economic modeling." This is a judgment to which I can
> enthusiastically agree.

I was being humble.

No, there's another more apt less pleasant word for what you
were doing. Bill was blasting you, and you were trying to get
him to stop, by acting hurt.

H. economicus may have it's flaws but it does provide a
framework for understanding how a closed loop economy works.

Its a "framework" with more than a couple of loose screws.

I would be surprised if the Test Bed model doesn't start
looking like H. economicus,

I don't know whether to join in wishing that this actually
comes to pass or not.

to
some extent, when we start having to take into account that the aggregate
consumer and the aggregate producer are, to a large extent, the same people.

> Recently, however, Rick seems to have
> forgotten this earlier and perceptive conclusion, and returned to
> thinking his economic modeling skills are quite good. I can't agree.

Of course you can't.

There really isn't any basis for this optimistic self-assessment.

> Since Rick has taken it upon himself to make judgments about what
> is and is not PCT, and HPCT correct, the claims that Rick makes
> regarding his efforts to do economic modeling should be of concern
> to all those interested in the future of efforts to applying
> control theory in efforts to improve the quality of human experience.

Warning. Rick can be be hazardous to PCT and human life in general.

Ain't that the truth of it! Actually I shouldn't blame you for all
the damage you've done. Bill Powers is more than a little complicit in
what has happened. He throws up his hands and says, "I can't control
what Rick does." But, that really isn't true. And, then there are
the rest of the people who have ignored what you've done.

> Rick has ignored criticisms-- mine, and Bill Powers of the foundations
> of economic modeling. Worse, Rick has after efforts have been made to
> show him what is wrong, then complained of a lack of substantive
> critical and constructive comment.

Boy, I think that guy Rick should be burned at the stake.

There are more than a just a few some people who wouldn't cut
you loose if someone lit a fire. You really have generated a
lot of very angry folk. You've hurt a lot of people. I'm not
really one these. I've always blamed Bill for letting you
get away with the stuff you've done. So, I'm genuinely not that
angry with you.

> As, I said in Boston Economics is a serious business. It is also a
> difficult business. I've made reference to the criticism that Powers
> made of Rick's paper several times recently. Rick has misrepresented
> what Powers had to say. Documents never "speak for themselves" but
> I will leave it to CSGnet readers, the moment, to "judge for yourselves."

Thanks for posting Bill's comments again. I still disagree with several of
Bill's points. But, as I said, I don't need to defend the model. I just have
to make it better.

That's not possible with a scheme that is fundamentally inconsistent. The more
Effort you put into it the worse it gets because the more you work on it,
Without fixing the fundamental errors, the More complicated it gets and the
Harder it is to see where the basic problems are located.

And I think I can do that in the context of the Test Bed

project. I think that project has a lot more potential than the
income/consumption model project you describe.

Then why haven't you and Bill developed it? Why did it, as you
say "sort of dropped away." ? Still, people manage to get stuff
done even when they go about it in extremely inefficient ways-- like
repeatedly reinventing the wheel. So, who knows? But, the more I see
of where I see what you are trying to do going, the more it looks like
as Bill described it, "a giant leap in the wrong direction."

Bill Williams