PCT vs Economics?

[From Bill Williams 28 January 2004 9:40 PM CST]

[Bill Powers (2004.01.27.1634 MST)] yesterday wrote,

I would be delighted to turn [the Test Bed project] over to [Professor Bruun] >entirely -- my objective is only to see control theory modeling used in the >life sciences.

Today, Bill Powers seems to be less inclined to resort to what he describes as
"credentialed experts" saying "Look it can't be that complicated."

Bruun, however, seems to be of the opinion that economics is at least a modestly complicated field of inquiry. She recommends the study of quantum mechanics as an exercise to prepare a student for the difficulties inherent in the study of theoretical economics. I've been attending a seminar here at UMKC devoted to, among other things, quantum mechanics. I would concur with Profesor Bruun. The study of quantum mechanics does, I think make a distinct contribution to an economists education.

Bill Powers, however, in contrast is, in addition to his conviction that economics is simeple, is of the opinion that,

The source of the economic problems of today are the result of an academic discipline that "is really a means of justifying business practices more than an attempt to make them understandable."

I wonder, is Bill Powers genuinely of the conviction that _all_ academic economists are devoted exclusively to "justifying business practices?" Or, is it rather _some_ economists who make this there goal.

If not, that is are there _some_ economists who are opposed to an economics that consists of an ideological justification of corporate dominance, could he name some academics whom he considers to be exceptions to his characterization?

Bill Williams

I have attached a biography I've been reading that considers the crankish aspect of the life of the well known poet Ezra Pound. Pound, in the inter-war period was actively in search of a new economic conception that would guide an escape from the turmoil that was characteristic of the post World War I era.

Surette, Leon 1999 _Pound in Purgatory: From Economic Radicalism
to Anti-Semitism_

Banking and SocialCredit
Economics and Mythopoeia
Modernism and Fascism
Social Credit and Fascism
The Keynesian Revolution and Social Credit
The ABC of Economics and the New Deal
Modernism, Postmodernism, and Fascism
Silvio Gesell and Irving Fisher
An Increasing Eclecticism
Arthur Kitson
The Jewish Conspiracy

From Rome to Washington

Volitionist

[From Bill Powers (2004.01.28.1004 MST)]

Bill Williams 28 January 2004 9:40 PM CST--

Bruun, however, seems to be of the opinion that economics is at least a
modestly complicated field of inquiry. She recommends the study of quantum
mechanics as an exercise to prepare a student for the difficulties
inherent in the study of theoretical economics. I've been attending a
seminar here at UMKC devoted to, among other things, quantum mechanics. I
would concur with Profesor Bruun. The study of quantum mechanics does, I
think make a distinct contribution to an economists education.

I hope not. There are still a few things at the level of classical physics
to be mastered before introducing the magical mystery tour which (short of
teaching the mathematics of QED to economists) is about all that would be
transmitted.

I wonder, is Bill Powers genuinely of the conviction that _all_ academic
economists are devoted exclusively to "justifying business practices?" Or,
is it rather _some_ economists who make this there goal.

Oh, some of them, of course. But even those whose motives are completely
pure can be fooled into accepting premises from their forebears that have
no serious function but to justify business practices. For example, Bruun
points out that many economists calculate that it is often best, for
maximizing return on investment, to leave part of the workforce idle. That
makes it sound as i8f the "idle" workforce is lolling about on some sort of
vacation, and really fails to deal with the gut-wrenching realities of
unemployment. So acceptance of the premise that one must always choose the
course that leads to greater profit gives rise to attitudes that even the
best-intentioned might be ashamed of without the customary justifications
(If I don't do it, someone else will, and so on). They may not agree with
the other economists who thought up those justifications, but they use them
nonetheless.

If not, that is are there _some_ economists who are opposed to an
economics that consists of an ideological justification of corporate
dominance, could he name some academics whom he considers to be exceptions
to his characterization?

I really can't remember having mentioned corporate dominance, so I don't
see how you got that out of my post. And anyway, if there are economists
who would agree with me I don't have much reason to accuse them of
anything. My problem is with people who want to suck as much buying power
out of the economic system as possible for their own use (that "giant
sucking sound" you and Ross Perot -- one of the champion suckers-out --
mentioned) without regard for the effects on the system or other
individuals. Economists deal with these people as inherent parts of the
economic system, which makes economics far harder than it needs to be. I am
proposing that we see them as interfering with the workings of all social
systems, not just economics. If that problem were ever solved, we would
still have an economic system to understand, but it would be much easier to
model and predict.

I have attached a biography I've been reading that considers the crankish
aspect of the life of the well known poet Ezra Pound.

So now I am an old fascist like Ezra Pound. Bill, this doesn't prove
anything but your dislike for people who think differently from you. I
think that's your problem to deal with privately.

Best,

Bill P.

[From Rick Marken (2004.01.28.1100)]

Bill Williams (28 January 2004 9:40 PM CST)

Bill Powers (2004.01.27.1634 MST)

For economics as a subject is really a means of
justifying business practices more than it is an attempt to make them
understandable.

I wonder, is Bill Powers genuinely of the conviction that _all_ academic
economists are devoted exclusively to "justifying business practices?" Or, is
it rather _some_ economists who make this there goal.

I think Bill Powers was referring to economics as a subject, not to
economists as people. Just as there are many behaviorists who don't treat
people as objects, there are many economists who don't treat businesses as
sacrosanct. In these cases, however, the tenets of the discipline are in
conflict with personal values. People are objects according to behaviorism;
business is the engine of the economy according to economics.

I think the business justifying orientation of economics showed up recently
in the strong, negative reaction to TCP's discovery that total yearly
investment in capital goods and services has been a nearly constant
proportion (20%) of GNP since records have been kept. I think this
observation got a strong negative reaction because it violates an important
business justifying tenet of economics: that business investment drives the
growth of the economy. This tenet is used to justify business friendly
policies that encourage investment, like taxing capital gains at a far lower
rate than income.

In fact, when you understand the economy as a closed loop system -- with
producers and consumers being the same people, a virtual producer/consumer
control system -- you would _expect_ capital investment to be a rather
constant fraction of GNP. TCPs data would have come as no surprise. In a
closed loop system, capital investment cannot "drive" the economy beyond
what the aggregate producer/consumer can consume. Some minimum level of
capital investment is needed to keep the economy producing what can be
consumed. But investment beyond that level will simply lead to the
production of non-consumable (and, thus, surplus) goods and services. This
will happen with our without leakage. All leakage would do is reduce the
amount goods and services that can be consumed by the aggregate
producer/consumer.

I think the notion of leakage itself also gets a negative reaction because
it conflicts with some business justifying tenets of conventional economics.
In particular, I think it violates the idea that a rising economy "raises
all boats". Leakage is based on the closed-loop notion that that aggregate
producer/consumer must pay itself back for all that it has produced. If some
fraction of the population that is the aggregate producer/consumer -- the
very rich, business fraction -- hoards its income (because it can't consume
in proportion to its income) instead of returning it to the aggregate
producer/consumer, the amount produced by the system is actually reduced
below what is possible. So leakage theory violates one of the basic tenets
of business justifying economics: that individuals should strive to get rich
because by doing so they benefit society as a whole. If leakage theory (and
it is just a theory) is right then the goal of getting rich might not be
looked on as being particularly admirable.

Best

Rick

···

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

[From Bill Williams 28 January 2004 3:OO PM CST]

[From Bill Powers (2004.01.28.1004 MST)]

"... if there are economists who would agree with me I don't have
much reason to accuse them of anything."

I would guess not.

Bill Williams

[From Rick Marken (2004.01.28.1100)]

Bill Williams (28 January 2004 9:40 PM CST)

Bill Powers (2004.01.27.1634 MST)

For economics as a subject is really a means of

justifying business practices more than it is an attempt to make them

understandable.

I wonder, is Bill Powers genuinely of the conviction that _all_ academic
economists are devoted exclusively to "justifying business practices?" Or, is
it rather _some_ economists who make this there goal.

I think Bill Powers was referring to economics as a subject,

So, let me rephrase. Permit me to ask it this way. Which tradition
among the contemporary schemes in economics is Bill Powers concerned
with?

Bill Willliams

not to
economists as people. Just as there are many behaviorists who don't treat
people as objects, there are many economists who don't treat businesses as
sacrosanct. In these cases, however, the tenets of the discipline are in
conflict with personal values. People are objects according to behaviorism;
business is the engine of the economy according to economics.

I think the business justifying orientation of economics showed up recently
in the strong, negative reaction to TCP's discovery that total yearly
investment in capital goods and services has been a nearly constant
proportion (20%) of GNP since records have been kept. I think this
observation got a strong negative reaction because it violates an important
business justifying tenet of economics: that business investment drives the
growth of the economy. This tenet is used to justify business friendly
policies that encourage investment, like taxing capital gains at a far lower
rate than income.

In fact, when you understand the economy as a closed loop system -- with
producers and consumers being the same people, a virtual producer/consumer
control system -- you would _expect_ capital investment to be a rather
constant fraction of GNP. TCPs data would have come as no surprise. In a
closed loop system, capital investment cannot "drive" the economy beyond
what the aggregate producer/consumer can consume. Some minimum level of
capital investment is needed to keep the economy producing what can be
consumed. But investment beyond that level will simply lead to the
production of non-consumable (and, thus, surplus) goods and services. This
will happen with our without leakage. All leakage would do is reduce the
amount goods and services that can be consumed by the aggregate
producer/consumer.

I think the notion of leakage itself also gets a negative reaction because
it conflicts with some business justifying tenets of conventional economics.
In particular, I think it violates the idea that a rising economy "raises
all boats". Leakage is based on the closed-loop notion that that aggregate
producer/consumer must pay itself back for all that it has produced. If some
fraction of the population that is the aggregate producer/consumer -- the
very rich, business fraction -- hoards its income (because it can't consume
in proportion to its income) instead of returning it to the aggregate
producer/consumer, the amount produced by the system is actually reduced
below what is possible. So leakage theory violates one of the basic tenets
of business justifying economics: that individuals should strive to get rich
because by doing so they benefit society as a whole. If leakage theory (and
it is just a theory) is right then the goal of getting rich might not be
looked on as being particularly admirable.

Best

Rick

···

-----Original Message-----
From: Control Systems Group Network (CSGnet) on behalf of Richard Marken
Sent: Wed 1/28/2004 1:05 PM
To: CSGNET@listserv.uiuc.edu
Subject: Re: PCT vs Economics?

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

[From Bill Williams 28 January 2004 7:00 PM CST]

[From Rick Marken (2004.01.28.1100)]

I think the business justifying orientation of economics showed up recently
in the strong, negative reaction to TCP's discovery that total yearly
investment in capital goods and services has been a nearly constant
proportion (20%) of GNP since records have been kept.

When you make the claim "since records have been kept." I suppose you are including the years from 1926 to 1946?

We could ask Kenny, if he believes this claim. Your claim is contrary to the tables Bill Powers recently supplied.

I was talking the Sturgeon today about dealing with cranks. He found the black hole in the middle of the data set to say the least surprizing. And, he asked how Powers explained the hole. When I say Powers speculated that maybe the records weren't kept from 1926 to 1946 he was flabergasted.

Sturgeon, like I am, is of the opinion that control theory offers the best, or only, conception of behavior capable of replacing the neo-classical economic concept of maximization. Of course, it doesn't neccesarily say anything about the merits of control theory that it is connected with obivous cranks. But, the association is perplexing. I hope the association won't last for long.

Bill Williams

[From Bill Williams 28 January 2004 7:20 PM CST]

[From Bill Powers (2004.01.28.1004 MST)]

Bill Williams 28 January 2004 9:40 PM CST--

I have attached a biography I've been reading that considers the crankish
aspect of the life of the well known poet Ezra Pound.

So now I am an old fascist like Ezra Pound.

I didn't say anything about the facism. All that I mentioned was
Pound's crankishness.

If I thought you were a facist I could say so. But, since I don't.
I didn't. The interesting aspect of the book is that it is writen
by a English professor who is quite familiar with the various
monetary schools of thought, including the Keynesian system. This
is unusual.

Bill, this doesn't prove anything but your dislike for people
who think differently from you.

And, obviously it doesn't prove that either. In addition what the
pronoun "this" refers to is ambigious.

I think that's your problem to deal with privately.

Alternatively, perhaps your emergent paranoia is the real
problem. YOur's is a he's lying if he says he's only fucked one
pig arguement.

Bill Williams

[From Bill Williams 28 January 2004 7:50 PM CST]

[From Rick Marken (2004.01.28.1100)]

If leakage theory (and it is just a theory) is right then
the goal of getting rich might not be looked on as being
particularly admirable.

Unless the rich could manage to spend all their money?

Bill Williams

[From Bill Williams 28 January 2004 7:20 PM CST]

In the past I've been perceived as having "withheld information"
such as how the banking system works. To avoid such misapprehensions
in the future let me point out that Professor Bruun holds that
investment _causes_ saving. And, that the saving created is equal
to the investment undertaken.

When one understands the meaning of this assertion, then one
understands quite a bit about a credit economy from the
Keynesian standpoint. But, the relationship is not one that
can be described as simple.

Bill and Rick have attributed to me hatred. It is only an
attribution.

Bill Williams

[From Bill Powers (2004.01.28.1837 MST)]

Bill Williams 28 January 2004 7:00 PM CST--

I was talking the Sturgeon today about dealing with cranks. He found the
black hole in the middle of the data set to say the least surprizing. And,
he asked how Powers explained the hole. When I say Powers speculated that
maybe the records weren't kept from 1926 to 1946 he was flabergasted.

I said that those years were not shown in the records that TCP examined and
cited, which he said were the Statistical Abstracts for 1984 and the
Historical Statistics of the United States for 1975, as you would know if
you had read this book (or looked at the scanned pages I sent a few days
ago). Your report to Sturgeon about my speculation was your invention, and
I expect you to tell Sturgeon that you misrepresented what I said, and to
apologize to me. This is going beyond cheap shots to something much
dirtier. You are not acting like an educated person, but like something
much more unsavory.

I have found both of those sources at Fort Lewis's Reed Library, and the
years are indeed limited for which both private and government expenditures
on capital goods are available.It is very hard to find the data in question
and I think there is an error in the reference given in TCP's book; the
year is probably wrong. The materials from the Historical Statistics are in
that volume, but the Statistical Abstracts tables listed do not correspond
to the correct tables in the volume I got from the library. And indeed, not
all the data are there.

I can see that in my copy of the Abstracts for 1984, in the table called
"Business expenditures for new plant and equipment, 1965 to 1983", the
total expenditures are listed for 1965, 1970, then each year from 1975
to 1983. The data for the years 1966, 1967, 1968, 1969, 1971, 1972, 1973,
and 1974 are missing. So with this reference source, it would not be
possible to compute the value of (Ip + Ig)/GNP for the eight missing years.
I see that in TCP's table, the consecutive years run from 1974 to 1985,
implying that the Abstracts he used were for 1986, not 1984 as shown in his
citation. It does not look as though he deliberately omitted any data in
that table; his reference simply did not contain data for those years. But
I will obtain the volume for 1986 and see whether this is indeed the case.

By the way, in the book TCP notes that he does not expect this relationship
to hold for WWII. I don't know if it does or not, but I will try to find out.

It looks as if it may be possible to get all the data by acquiring the
statistical abstracts for about every 8th year into the past. Since you
prefer to use your imagination in drawing your conclusions, I will
undertake that task. It may take some time. I hope that in the meantime you
will be able to refrain from making any more incorrect reports about what I
have said, or what TCP did.

Sturgeon, like I am, is of the opinion that control theory offers the
best, or only, conception of behavior capable of replacing the
neo-classical economic concept of maximization. Of course, it doesn't
neccesarily say anything about the merits of control theory that it is
connected with obivous cranks. But, the association is perplexing. I hope
the association won't last for long.

Do you know what you sound like, Bill? You sound like a member of the Old
Guard, desperately trying to find something wrong with a idea that
threatens what he believes in, using any trick he can think of from
misrepresentation to innuendo to outright lies to character assasination to
keep from having to give in. For someone associated with "heterodox"
economics, this is a very odd position for you to be in.

Or perhaps what you sound like is a scared kid worried about what is
lurking underneath his bed.

Don't let those nasty cranks get you, Billy.

Bill P.

[From Rick Marken (2004.01.29.2250)]

Bill Williams (28 January 2004 7:00 PM CST) --

Rick Marken (2004.01.28.1100)--

I think the business justifying orientation of economics showed up recently
in the strong, negative reaction to TCP's discovery that total yearly
investment in capital goods and services has been a nearly constant
proportion (20%) of GNP since records have been kept.

When you make the claim "since records have been kept." I suppose you are including the years from 1926 to 1946?

No. I don't have the data for 1926-1946. Maybe that's the period during which the economy worked as expected and investment was not a constant fraction of GNP. But there is no question that from 1951-1998, nearly half of the 20th century, investment, measured as the sum of government (Ig) and private (Ip) outlays for capital goods, has been a nearly constant fraction of GNP. TCP provides the data that goes from 1951-1985. I found the data from 1989-1998. I couldn't get complete records for 1986-1988 (I couldn't get Ig for those years) so maybe things work differently for those years. But here's the data for 1989-1998:

Year GNP Ig+Ip (Ig+Ip)/GNP
89 5453 1012.0 0.19
90 5764 998.0 0.17
91 5710 942.0 0.16
92 6255 999.0 0.16
93 6576 1082.0 0.16
94 6955 1240.0 0.18
95 7287 1290.0 0.18
96 7674 1363.0 0.18
97 8102 1592.0 0.20
98 8490 1643.0 0.19

The average ratio of (Ig + Ip)/GNP for this ten year period is .18, slightly less than the average over the entire period (from 1951-1998), which is .20. The standard deviation of these ratios is .01. The standard deviation of the ratios over the entire period from 1951-1998 is .02.

The correlation between the proportion invested in capital goods [(Ig + Ip)/GNP] and growth rate (dGNP/dt) during the period from 1951-1998 is -.03. That is, there is _no_ correlation between the amount invested in capital goods (measured as a proportion of GNP) and economic growth. If we lag the correlation, so that we correlate investment with growth rate 2 years in the future, the correlation becomes _more_ negative (-.1) indicating that increases in investment (as a proportion of GNP) are associated with _decreases_ in growth rate in future years.

I believe that the conventional economic view is that investment drives economic growth. But the data over the last 50 years says that this is not the case. Perhaps things were different in the 25 years before 1951.

RSM

···

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

[From Bill Powers (2004.01.29.0644 MST)]

Rick Marken (2004.01.29.2250)--

here's the data for 1989-1998:

......

The correlation between the proportion invested in capital goods [(Ig +
Ip)/GNP] and growth rate (dGNP/dt) during the period from 1951-1998 is
-.03. That is, there is _no_ correlation between the amount invested in
capital goods (measured as a proportion of GNP) and economic growth.

Nice work. There is one more correlation that would be of interest,
PCT-wise: the correlation between Ig/GNP and Ip/GNP. In order for the ratio
of total investment to GNP to remain so constant, there must be a highly
negative correlation between these figures: when private investment goes
up, government investment must go down, and vice versa. It may be that
there is a control system acting here, possibly in the government.

The exact mechanism might be discovered if we can find out what the
government investment buys. Perhaps when private investment policy puts
people out of work, the government picks up the slack, in unemployment
benefits, welfare payments, and so on. When businessmen decide that their
interests would be better served by leaving a part of the workforce idle,
people are not actually allowed to go hungry and die in the streets, and
they are not required to sell their cars, houses, and tools. The money to
clean up the wreckage might come from governments (federal, state, and
local, which is what Ig covers). Of course that money is wrested from the
reluctant hands of those who refused to take care of the unemployed in the
first place. But I'm getting ahead of the facts here. There might be other
relationships that could be investigated. Too bad we don't know any
economists who are interested in finding out the truth about all this,
though there must be some, somewhere.

Also, the individual correlations of those two investment ratios with
dGNP/dt might be different from zero. Oh, Yes, and try the lag the other
way around. It could be that a change in growth affects investments in
subsequent years.

I will be going back to Ft, Lewis' Reed Library to check out as many
Statistical Abstracts as they have, for about every 7th year (so the
contiguous years will overlap). I have also found that the record is
somewhat spotty -- for one thing, the names of the variables seem to change
from time to time, and there is far from perfect consistency in the table
names. And some data appear to be just plain missing. Also, the numbers in
different volumes for the same year do not agree exactly. Partly that may
be from using different inflation corrections, and it may be that the
record gets corrected and updated for at least a few years. Inflation
corrections should not affect the ratios. Someone who understands all the
different names by which "investment" can be called would be a great help.
Perhaps among the economists at RAND there might be someone.

I didn't intend to get into this so far, so maybe Bill Williams has done us
a service by goading us into it (he can always claim that this was his real
intention all along). It is looking more and more as though TCP discovered
a pretty startling fact about investment, unknown even to economists who
put "PhD" on their lapels in tasteless flashing lights.

Best,

Bill P.

[From Kenny Kitzke (2004.01.29.)]

<Rick Marken (2004.01.29.2250)>

<The correlation between the proportion invested in capital goods [(Ig +
Ip)/GNP] and growth rate (dGNP/dt) during the period from 1951-1998 is
-.03. That is, there is no correlation between the amount invested in
capital goods (measured as a proportion of GNP) and economic growth.
If we lag the correlation, so that we correlate investment with growth
rate 2 years in the future, the correlation becomes more negative
(-.1) indicating that increases in investment (as a proportion of GNP)
are associated with decreases in growth rate in future years.

I believe that the conventional economic view is that investment drives
economic growth. But the data over the last 50 years says that this is
not the case. Perhaps things were different in the 25 years before 1951.>

Or, perhaps you fail to understand what the conventional economists claim, making yourself out to be a fool?

Despite your willingness to make universal claims on partial data which may be itself intentionally or unintentionally biased, how about trying this?

Take your data for lg and lp and compute their averages and SD’s over these periods. Now, run the correlation between lg and lp against GDP growth rate and tell us what you find.

Then, we can see what we learn about economics and perhaps Leakage in a closed loop economic model too.

Re: PCT vs Economics?
[From Rick Marken (2004.01.29.0850)]

Kenny Kitzke (2004.01.29.) –

Rick Marken (2004.01.29.2250)>

I believe that the conventional economic view is that investment drives

economic growth. But the data over the last 50 years says that this is

not the case. Perhaps things were different in the 25 years before 1951.

Or, perhaps you fail to understand what the conventional economists claim, making yourself out to be a fool?

I know this is very disturbing to you Kenny but please try to avoid sneaky personal attacks. Notice how I have not resorted to warning you that you may be making yourself out to be a stupid idiot. I appreciate your concern about not wanting me to appear foolish. But, believe me, I don’t want you to look like a stupid idiot either. Yet I refrain from warning you about it because I know that it might look like I am saying that you are a stupid idiot. And I know that that would hurt your feelings. So I don’t do it. “Do unto others”, as we secular humanists say. I suggest that if I say things that make me look foolish to you, it would be best if you just correct me. If I don’t correctly understand what conventional economists claim, for example, then I think the best way to handle it is to simply explain what they claim.

Despite your willingness to make universal claims on partial data which may be itself intentionally or unintentionally biased, how about trying this?

I didn’t make a universal claim. I didn’t make any claim. I simply said that the data from 1951 to 1998 shows no relationship between capital investment and GDP growth. This applies at the macro level of the economy. I am well aware of the fact that at the level of individual businesses this is almost certainly not the case. Businesses grow through capital investment. I think the mistake made by conventional economists is to assume that the macro economy works like the individual components of that economy, like businesses and households.

Take your data for lg and lp and compute their averages and SD’s over these periods. Now, run the correlation between lg and lp against GDP growth rate and tell us what you find.

Sure. I’ll do that tonight when I get home (I’m afraid the data is only on my home computer). But I don’t see the point. Those correlations are almost guaranteed to be close to 0 since lg and lp continuously increase as the economy increases while growth rate doesn’t consistently increase but varies around 0. It will be like correlating a diagonal line with a horizontal line. I think it is necessary to scale capital investment in terms of GNP to get a meaningful measure of the size of capital investment each year.
I did run a correlation between Ip/GNP and GNP growth rate and that correlation (lagged and unlagged) was actually more negative than the correlation between (Ip+IG)/GNP and growth rate. So private capital investment, measured as a proportion of GNP, is not positively related to growth rate either.

Then, we can see what we learn about economics and perhaps Leakage in a closed loop economic model too.

OK. So you want me to correlate raw Ig and raw Ip with growth rate? Will do. Could you tell me what you think I’ll find and what we will learn about economics from it?

RSM

···

Richard S. Marken

MindReadings.com

Home: 310 474 0313

Cell: 310 729 1400

[From Rick Marken (2004.01.29.0910)]

Bill Powers (2004.01.29.0644 MST)--

Nice work. There is one more correlation that would be of interest,
PCT-wise: the correlation between Ig/GNP and Ip/GNP.

Will do, tonight.

Oh, Yes, and try the lag the other
way around. It could be that a change in growth affects investments in
subsequent years.

Will do.

I have also found that the record is
somewhat spotty -- for one thing, the names of the variables seem to change
from time to time, and there is far from perfect consistency in the table
names.

I found that, too. The data available from the Federal Reserve site seems to
be of better quality but some of the variables are named differently than
they are in the Statistical Abstracts.

And some data appear to be just plain missing. Also, the numbers in
different volumes for the same year do not agree exactly.

Yes. I had the same problem. That's why I didn't have the Ig data from
1986-1988. I did this data collection work a few years back so I forget the
details.

Hasta tonight.

Best

Rick

···

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

[From Bill Powers (2004.01.29.1040 MST)]

Rick Marken (2004.01.29.0850)–

I know this is very
disturbing to you Kenny but please try to avoid sneaky personal attacks.

That doesn’t work, Rick.

I am well aware of the fact that at
the level of individual businesses this is almost certainly not the
case. Businesses grow through capital
investment.

Another way to put that is to say that when businesses grow in response
to increased demand, they require capital investment to meet the demand.
This way of looking at it says that it is the need to grow that drives
the attempt to get investment money (one way being to borrow). This
alternate possibility is what led me to suggest looking at lags in the
other direction.

Best,

Bill P.

[From Rick Marken (2004.01.1015)]

Bill Powers (2004.01.29.1040 MST)--

Rick Marken (2004.01.29.0850)--

I know this is very disturbing to you Kenny but please try to avoid sneaky
personal attacks.

That doesn't work, Rick.

Of course not.

Best

Rick

···

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

[From Bill Powers (2004.01.28.1837 MST)]

Bill Williams 28 January 2004 7:00 PM CST--

I was talking the Sturgeon today about dealing with cranks. He found the
black hole in the middle of the data set to say the least surprizing. And,
he asked how Powers explained the hole. When I say Powers speculated that
maybe the records weren't kept from 1926 to 1946 he was flabergasted.

I said that those years were not shown in the records that TCP examined and
cited, which he said were the Statistical Abstracts for 1984 and the
Historical Statistics of the United States for 1975, as you would know if
you had read this book (or looked at the scanned pages I sent a few days
ago).

#It is unclear to me how I was supposed to do this given the incomplete
#references provided. Or, why I should do so. Simply because you send
#stuff around, doesn't create any obligation on my part to involved myself
#in your program to any extent what-so-ever.

Your report to Sturgeon about my speculation was your invention, and
I expect you to tell Sturgeon that you misrepresented what I said, and to
apologize to me.

# You do? Well fuck-off. For whatever reason, there is a massive hole in
# the middle of your dad's tables. As you have by now noticed, economic
# data isn't the easiest stuff to work with. If you leave the great depresion
# and world War II out of an argument then there is an obvious problem.
# When you first presented you dad's marveous insight, I expressed skepticism.
# You weren't inclined to listen then when I did so politely, and that was
# that. Now you and Rick seem to be getting down to doing the work that I
# politely suggested ought to be done a year ago-- check the CSGnet archives.
# If you were a student, there might be some question about the paper being
# late.

This is going beyond cheap shots to something much
dirtier.

# Yes it surely is. I'm getting in practice, and now we are communicating # almost like we were family. Your family that is. Mine were really mild
# manner and prudish folk. Yours were as they say born in a barn.

You are not acting like an educated person,

# Actually I am acting like an "educated" but pragmatic person. A pragmatic
# person is capable of adapting to the situation, and I have.

but like something much more unsavory.

# But, it is effective, isn't it. I can be sweet and mild, or crudely
# obnoxious. Just tell me which way you really prefer it to be.

I have found both of those sources at Fort Lewis's Reed Library, and the
years are indeed limited for which both private and government expenditures
on capital goods are available.

# So we have your dad's argument, but his argument can not be tested for the
# two biggest, in proportional terms, events in the 20th century the great
# depression and world war two. This is important. The purpose of having a
# an income theory is to generate policy measures that will prevent things
# like the great depression and disruptive inflation. So, what ever the
# correlations involved, if the theory hasn't been tested by the two big
# income events in the 20th century, what is the point? This is why anyone
# with some modest understanding of what ecnomic theory is about is going to
# be likely to smile when they see your dad's economics.

It is very hard to find the data in question and I think there is an error in the reference given in TCP's book; the year is probably wrong.

# Welcome to the joys of economic research.

The materials from the Historical Statistics are in
that volume, but the Statistical Abstracts tables listed do not correspond
to the correct tables in the volume I got from the library.

# Clever bastards, when they want to withhold information, it isn't going to be found.

And indeed, not all the data are there.

# Maybe the data went where ever it is the leakages go.

I can see that in my copy of the Abstracts for 1984, in the table called
"Business expenditures for new plant and equipment, 1965 to 1983", the
total expenditures are listed for 1965, 1970, then each year from 1975
to 1983. The data for the years 1966, 1967, 1968, 1969, 1971, 1972, 1973,
and 1974 are missing.

# I don't know what to say, except that the "credentialed experts didn't
# get to be spring loaded in the pissed off position for just no reason
# what-so-ever.

So with this reference source, it would not be
possible to compute the value of (Ip + Ig)/GNP for the eight missing years.

# ANd, So it goes.

I see that in TCP's table, the consecutive years run from 1974 to 1985,
implying that the Abstracts he used were for 1986, not 1984 as shown in his
citation. It does not look as though he deliberately omitted any data in
that table; his reference simply did not contain data for those years. But
I will obtain the volume for 1986 and see whether this is indeed the case.

# OK

By the way, in the book TCP notes that he does not expect this relationship
to hold for WWII.

# I can believe that it could. So, what does this imply for you discussion
# with Kenny about general theory and the place of exceptions?

···

-----Original Message-----
From: Control Systems Group Network (CSGnet) on behalf of Bill Powers
Sent: Wed 1/28/2004 8:49 PM
To: CSGNET@listserv.uiuc.edu
Subject: Re: PCT vs Economics?

#
# ANd, in addion what about the Great Depression?

I don't know if it does or not, but I will try to find out.

# OK.

It looks as if it may be possible to get all the data by acquiring the
statistical abstracts for about every 8th year into the past. Since you
prefer to use your imagination in drawing your conclusions,

# Thank you very much for one more gratuitous inslut.

I will undertake that task.

# While back at the pig farm, we are training up even more "credential
# economists" who can maintain the reputation of being difficult to deal
# with. By-the-way have you read Professor Druun's (did I spell it right
# this time?) section in her dissertation where she derives the Keynesian income analysis? I really liked the way she did it. I'll be interested to see what you make of it? Maybe we could get up a fund and send Rick to
# Denmark so he could straighen her out. From what I get out of the Keynesian
# section in the dissertation-- actually the whole damn thing is a Keynesian
# section she has some real problems. I can't wait to see what her reaction is
# to being told that instead of Y = C + I, any ignorant crank can see that
# that Keynes made a blunder. Rather as Rick S(shit for brains) Marken saw
# immeadiately the income/expenditure identity is nonsense and the income
# relation should be written Y = C + S + I . So, Druun's dissertation really
# needs a lot of work. Maybe she should consider withdrawing it, and returning
# her doctorate. If you are too busy trying to find out where the imps have
# hidden the secrets, do you want me to bring her up-to-date with your
# insights into what the head devil John Maynard Keynes has done to maim our
# foolish minds?

It may take some time.

# Well since your dad is, I'm sure, paying the bill-- consider leaning on
# the shovel from time to time.

I hope that in the meantime you will be able to refrain from making any more incorrect reports about what I have said, or what TCP did.

# This is one more example of the "he only fucked one pig arugments."
# Even the junior imps are too well trained to fall for this one.
# So, I won't promise not to fuck any more pigs. However, if it will
# set your mind at ease, I will promise not to fuck any pigs.
# What, about donkey's?

Sturgeon, like I am, is of the opinion that control theory offers the
best, or only, conception of behavior capable of replacing the
neo-classical economic concept of maximization. Of course, it doesn't
neccesarily say anything about the merits of control theory that it is
connected with obivous cranks. But, the association is perplexing. I hope
the association won't last for long.

Do you know what you sound like, Bill? You sound like a member of the Old
Guard, desperately trying to find something wrong with a idea that
threatens what he believes in, using any trick he can think of from
misrepresentation to innuendo to outright lies to character assasination to
keep from having to give in.

You are more than a little confused. We are doing the best we can to generate a situation in which control theory will replace maximization as the foundational principle of economic analysis. I think your control theory stuff is first rate. I was genuinely sorry you weren't able to get the modern control theory stuff you were working to go. If that project had succeeded we wouldn't be engaged in this "much easier" exercise that is "so easy."

For someone associated with "heterodox" economics, this is a very odd > position for you to be in.

More of the his only having fucked on pig type argument. However, for your information Marxists are on the heterodox side of the split in economics. No one asked me when this got decided. Do you suppose that from time to time Marxists have told some fibs? So, it isn't in my view at all "odd" let alone "very odd" that a heterodox economists would tell what may people might think was a lie. Or at least be, from what can actually be obvserved, saying things that don't appear to be true.

Or perhaps what you sound like is a scared kid worried about what is
lurking underneath his bed.

Personally I liked it better when you were describing me as Joseph McCarthy "huffing" and "puffing." But, I have to admitt it, your threatening to bite me has caused some real concern. As a precautionary measure I've inquired about the possiblity of borrowing a pair of shin protectors from the girls field hockey team for use when I am away from home. But, as far as worrying about who might be lurking underneath the bed, my Belgian Turveerian Shepard 'Snips' who sleeps there would welcome company-- for dinner.

Snips is a really neat dog. One of the Encyclopedias of Dog Breeds I was reading recently described the breed as "scary smart." And, if you think "credentialed economists" can be difficult, It's obvious that you haven't tried to train a Belgian Shepard. Snips and I have been having this ongoing dominance contest ever since Snips was a puppy. Its not that Snips and I aren't good friends, but there is this area of disagreement about who is going to eat Kibbles and who is going to eat beef stroganoff. Snips has draw blood a couple of times. And then there was the night that Snips ate the beef stroganoff and I ended up going to McDonalds. Even if I am hungry I'm not going to eat kibbles. Aside from that one time, I'm still winning the dominance contests with Snips. After all, while Snips may be "scary smart" they were comparing Belgains to other dogs. A german shepard doesn't have a chance against Snips. But, Snips isn't nearly as sneaky as I am, not at least when I am paying attention. And, Snips hasn't yet figured out what to do about Kevlar rope. The night I ate at McDonalds was the night Snips chewed through the nylon cord and then started chewing on me. That is when I switched to the
Kevlar rope. I didn't want to use metal chain-- Snips would have tried to chew through the chain. Chewing on Kevlar doesn't appear to harm Snip's teeth. But, sometimes Snips acts really frustrated.

Don't let those nasty cranks get you, Billy.

Did daddy call you "Billy" Actually mom and dad, called me "Billy Dean" and I hated it.

If you want to jerk my chain you are going to have to be sneaky. Take for example my contriving to mis-spell Professor Druin's name. Now there was a
clasic "gottcha." So far I think I'm ahead on points. At least that is my impression. And, alfter all that's really what count's. Should we make-up a set of rules for a league devoted to competitive condecension?

I'll serve:

Are you having as much fun doing this as I am?

Now, try and get the return over the net.

Best wishes and all

Billy Dean

{From Billy Dean 29 January 2004 12:30 PM CST]

my coments marked with a pound sign-- my machine is fucked up.

[From Rick Marken (2004.01.29.0850)]

Kenny Kitzke (2004.01.29.) --

Rick Marken (2004.01.29.2250)>

I believe that the conventional economic view is that investment drives
economic growth. But the data over the last 50 years says that this is
not the case. Perhaps things were different in the 25 years before 1951.

Or, perhaps you fail to understand what the conventional economists claim,
making yourself out to be a fool?

I know this is very disturbing to you Kenny but please try to avoid sneaky
personal attacks. Notice how I have not resorted to warning you that you
may be making yourself out to be a stupid idiot.

# There you go-- naughty, naughty. You know shouldn't withhold information.
# You aren't properly trained and certified. You'll only get ot buggered up.

I appreciate your concern about not wanting me to appear foolish. But, believe me, I don�t want you to look like a stupid idiot either.

# I'm not sure, but I think we are about to start having fun.

Yet I refrain from warning you about it because I know that it might look like I am saying that you are a stupid idiot.

# This is precisely the dilemia that I had when I was "withholding" the vital
# information that daddy Powers was a crank.

And I know that that would hurt your feelings. So I don�t do it.

# We all know what a very senstive guy Rick has been and how well he behaves
# especially given that, Bill Powers aside, he is always surrounded by # asholes. Kenny, since Bruce Greggory has left this domain of sweetness and
# light, you have been elected to be the asshole. Rick, is too shy to tell
# you, but I've made a resolution not to "withhold" information.

�Do onto others�, as we secular humanists say.

# That's what you say. I'm a bit mystified though. What does "What you say
# have to do do with what you do?

I suggest that if I say things that make me look foolish to you, it would be best if you just correct me.

# Kenny pleas don't fall for this line. We can't corrrect Rick. It is foolish
# to even think about. Why do I keep hearing this echo, that starts, "The
# only good indian..." but then it fades out.

If I don�t correctly understand what conventional economists claim, for
example, then I think the best way to handle it is to simply explain what
they claim.

# See Kenny, there really is a proper way to do this stuff. By-the-way,
# just out of curiousity, how old are you?

Despite your willingness to make universal claims on partial data which may > be itself intentionally or unintentionally biased, how about trying this?

I didn�t make a universal claim. I didn�t make any claim. I simply said that
the data from 1951 to 1998 shows no relationship between capital investment
and GDP growth.

# Basic domain mistake Rick. I check with the econometrics session. As far
# as they know, "data" are not agents, and thus they don't do anything, let
# alone "show" us anything. I think many reasonable people would conclude
# that you are making a claim.

# Rick says, Businesses grow through capital investment.

···

-----Original Message-----
From: Control Systems Group Network (CSGnet) on behalf of Richard Marken
Sent: Thu 1/29/2004 10:54 AM
To: CSGNET@listserv.uiuc.edu
Subject: Re: PCT vs Economics?
#
# Lets not forget about acquisitions, as a source of growth.

I think the mistake made by conventional economists is to assume that the
macro economy works like the individual components of that economy, like
businesses and households.

# Shit for brains has put his ass in the crack.

# Bill Powers doesn't have the guts to put money on the table. How about you?
#
# And, if you are to avoid the sin of withholding information you must, as # # soon as possible explain this to Professor Druun. I am sure that Bill # Powers can give you her email. If you don't hurry, in the future she will
# never forgive you and Bill for letting her go on making a fool of herself
#

Take your data for lg and lp and compute their averages and SD's over these
periods. Now, run the correlation between lg and lp against GDP growth rate
and tell us what you find.

# Why, instead of demaning this of Kenny don't you put the question to
# Professor Druun?

After all, as someone said, this isn't the first time this issue has come
up.

Bill Williams

[From Rick Marken (2004.01.29.1130)]

Billy Dean (29 January 2004 12:30 PM CST) --

my coments marked with a pound sign-- my machine is fucked up.

Indeed.

In my post last night I mentioned that the correlation between the
proportion of GNP invested in capital goods [(Ig + Ip)/GNP] and growth rate
(dGNP/dt) during the period from 1951-1998 is -.03. The lagged correlation
between current investment with growth rate 2 years in the future is -.1. Is
this what you expected to see? Why is there no relationship between
investment and growth during this period?

RSM

···

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