[Math and Economics] - A New Kind of Science: The NKS ForumA New Kind of Science: The NKS Forum
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Math and Economics
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Posted by: George Giles
Mathematics and Economics really have very little in common, in spite of, mainstream economics theory embracing exotic mathematical modelling as the holy grail of econometric technique and, worse still, prediction based policy implementation. No scientific theory, as soundly discredited as Keynesian economics is, gets practiced at all. Practitioners find themselves without either grants or position! Yet as dismal as economic prediction has been, models continue to be used as policy tools because all governments practice Keyneisan economics in hampered market economies (because it is politically expedient in the short run to do so).
The great economic philosopher Ludwig Von Mises covered this in multiple books starting in the 1920's. I would strongly council prospective economics modellers to review his works in depth.
The fundamental basis of economics: human desire, human motivation and human action cannot be modelled either as continuous or discrete variables. There are no axioms to start mathematically deducting with. What is a subjective axiom ?
Austrian Economics sets boundries on what is knowable. Modern economic theory has no limits has no limits, but no accuracy of prediciton either. A fundamental paradox exists, that models, my prediction, will not solve in my lifetime. NKS will not help. It has no subjectivity beyond weighting functions. A paradox like the equivalence principle exists, transitioning from the discrete to the continuous and back is beset with difficulty.
The diligent reader will get Human Action for free and read it in depth: http://www.mises.org/humanaction.asp.
References:
http://www.mises.org/fullarticle.asp?control=1051
http://www.mises.org/econsense/ch5.asp
http://www.mises.org/freemarket_detail.asp?control=296
Posted by: John Gelles
There is money. And there is it's partner price.
Von Mises and Hayek assert that price is as good as information gets -- presumably because its under very little control.
Unless you have a product others cannot make for sale -- because a government granted patent or monopoly-in-fact protects you -- price will reflect no conscious plan to improve our political economy.
It is true that many plans fail -- and improvement is hard to come by and often a matter of luck.
Nevertheless we must have a strategic American plan today. We see that price is helping to hollow out American industry. In time we may lose our freedom along with our economic power.
It's time to put money (interest-free money, probably,) to work -- perhaps with the help of NKS -- to pay for education and production systems by balancing its effect (in terms of price, profit and the achievment of strategic objectives) on the output of such systems.
Far ahead of Mises and Hayek is Abraham Lincoln. He put greenbacks to work. Keynes knew this -- and Lerner explained the likely low-tax or no-tax effect of managed (by NKS, perhaps) money.
Posted by: Gunnar Tomasson
George:
I found the following at one of the links which you posted:
Mises explained the fundamental gulf between economics and mathematics in Human Action:
"Logic and mathematics deal with an ideal system of thought. The relations and implications of their system are coexistent and interdependent. We may say as well that they are synchronous or that they are out of time. A perfect mind could grasp them all in one thought…. Within such a system the notions of anteriority and consequence are metaphorical only. They do not refer to the system, but to our action in grasping it. The system itself implies neither the category of time nor that of causality. There is functional correspondence between elements, but there is neither cause nor effect...." (1998: V.1).
Comment:
As indicated in my postings to the NKS Forum on related issues, I agree 100% with Mises.
Gunnar
Posted by: Jason Cawley
Well, where is an Austrian when you need one? Where to begin?
Mises is certainly an important economist and in his sustained polemics have done as much as anyone to clear the ground of crank theories. Where I find him least persuasive is not in economics per se but in his Weberian philosophical pose of separated fact and value analysis, which I think he basically just took over from predecessors without systematically questioning himself. His own work, I think, shows that sound value analysis rests on sound fact analysis, rather than being independent of or prior to it.
You ask what a subjective axiom might be. An example would be the phenomenon of time value. It can be traced ultimately to the value choices of acting men, yes. In this sense it can be regarded as a subjective prior datum that economics takes as given. But it being subjective does not render it unreal, optional, fictional, or subject to systematic variation. (Find me the cases when real time value was negative for any whole society). Indeed, half the mistakes of alternatives to real economics are based on such misunderstandings. Implicitly they treat only physical phenomena as "real" while regarding value phenomena as "matters of opinion", then pretend the latter means "subject to re-jiggering by policy".
Early communists said economic laws are relations among people, so if we just apply enough political power we can re-write them at will. Exploitation theorists more generally regarded all time value and therefore all interest as some socially constructed injustice, preferring it be set to zero. Naive inflationists effectively share this view, though sometimes other mistakes they make about the role of money confuses the similarities. If only prices were exactly what I want them to be, everything would be hunky dory. At least from the standpoint of only one side of any given transaction, that is.
Relations of value express real constraints, that are not however simply physical or objective constraints. Nor are they matters of mere opinion. That they pass through valuing human beings does not change their character as "real". Which Mises himself had to maintain against all the cranks. Mises then wanted to insist that their passing through human beings did render them fundamentally unknowable in some absolute sense.
While I sympathize with his polemical situation, I find this reasoning does not follow. And as an explanation for unpredictability in empirical economies, it is not a necessary postulate. It can still be considered as a possible cause of such unpredicability, yes, but alone it is neither necessary nor sufficient to that unpredicability - which, moreover, is empirically only partial.
What do I mean? First, the inability to predict an individual instance is no necessary bar to prediction of aggregates. Insurance companies can't predict when certain losses will occur. They need only for those losses to have a certain degree of independence from one another. In general, the characteristics of an aggregate must be found in that aggregate, including the principles of its composition. It cannot be inferred directly from the characteristics of its elements.
Second, inability to predict can and does arise for reasons of complexity, without any subjective factor intervening. There is nothing subjective about the center column of rule 30. If you perform the necessary computational work, by explicitly simulating that rule, you can predict exactly what it will be. But you cannot short cut that computational work, and make such a prediction, by any known shorter procedure.
Examine the rule all you like, perform all the transformations on it you like, examine limited smaller instances and analyse them as you please, statistically or otherwise. Your inability to tell me the million and tenth center cell value will remain, and does not stem from anything subjective. It stems instead from the complexity of interrelation of the system's simple parts.
To me it was Hayek, not Mises, who noticed something like this going on in empirical economies. As an information processing problem, as the coordinated use of distributed information. Rather than tracing uncertainty to eventual subjective valuations by economic actors, he saw the complexity of the information processing problem economies must solve. Even if you knew the preferences, the coordinated interaction of them would present a practical computation problem that on the surface gives every indication of being intractable.
Calculus based general equilibrium models avoid these complexities by abstracting from actual dynamics, and by making unrealistic assumptions about information available to the various economic actors. It is not surprising that an information processing problem appears simpler when more information is assumed to be possessed by all the participants than actually is.
As for the usefulness of mathematics, or of more general formal methods as distinct from traditional mathematics, it rests on the generality of the forms considered and the way system principles recur from one case to another, even in systems whose components are completely different. This is a point made in the past by Bertalanffy. Time value is a perfectly subjective process. Beta decay is a purely physical process. Since in each a rate depends on a pre-existing quantity, however, both show behavior following essentially the same simple formal rule (exponential).
It is certainly true that many of the regularities we notice in economics are "merely empirical", or start that way. But the same is true in all the other sciences, or has been for most of their past. Yes, the reason an utterly trivial form like a line can approximate some economic processes is that some simple cause operates continually in an unchanged uniform manner. That is also why other phenomena show linear relations. This is never the whole story in economics, and it is never the whole story in physical cases either. But where the same formal relations exist among the elements of a system, similar forms will be seen in the data.
Those formal relations are not, however, limited to those traditional mathematics has considered up until now. They include much more general simple classes of relations, which we can understand as repeated applications of some procedure, or as simple programs. And already with quite simple classes of relations of this type, we see behavioral results of essentially arbitrary complexity.
This does not necessarily mean that every instance we see of complicated looking behavior has such a simple underlying rule behind it. But it might. Nothing in the complexity of the behavior seen rules it out. So we can make a preliminary hypothesis, preferring a simpler explanation when it may be available, and look for such rules. If we find one that produces the behavior seen, we have a sort of construction proof that a simple rule can account for that behavior.
Peirce called it the first rule of reasoning that we must not make hypotheses that absolutely stop further inquiry. The hypothesis that economies are inherently beyond comprehension because inherently subjective equals inherently unknowable, blocks economic inquiry.
Moreover, Mises himself recognizes that acting man, economic man, does not operate on this understanding. He does not resign himself to failure simply because he finds he must predict the action of other human beings. Empirically, there is no reason why he should, since many do so regularly and successfully enough for their practical purposes.
If the only point is to warn us not to expect too much, not to expect economics to yield to prediction as easily as say chemistry, that is fine as far as it goes. It may frankly underestimate the role of practice even in chemistry.
Where we do need the Austrians and Mises arguments in particular is when we face the sort of misunderstanding about the role of money in economic calculation that leads to brainstorms like "if only the government printed lots of money and used it to buy us stuff, it'd be great", and "if prices went haywire as a result, just fix prices too".
As for whether prices are perfect, they are not because nothing human is, but it is a strawman. Prices are a general method of trying to solve a particularly difficult computation and coordination problem. That general method is not based on non-existent infalliability but on the simple principle of feedback. When prices diverge widely from costs strong incentives operate to change that state of affairs. This does not prevent such divergences and is not meant to. It is meant to adapt what is produced, when, using what inputs, to all available information - which is never exhaustive, nor is what is available exhaustively used - on priorities and possibilities.
The economic problem - determining how much of what to produce, when - is simply a hard problem. You can see some evidence for how hard such problems are in general by looking at the sections of the NKS book dealing with formal systems based on simple constraints. Good models of economic processes should reflect, rather than obscuring or idealizing away, its computational intricacy.
Many economic sub-systems are reasonably predictable, and some can probably be modeled reasonably well with simple program models, as many have already been modeled with traditional mathematics. But the general problem of the whole system should not be expected to be simple. This is not a reason to abandon attempts to model it. It is a reason to look for models whose overall behavior is not simple, either.
I hope this is interesting, and sorry it took so long to reply.
Posted by: Gunnar Tomasson
Jason:
Briefly re. the following:
Pierce called it the first rule of reasoning that we must not make hypotheses that absolutely stop further inquiry. The hypothesis that economies are inherently beyond comprehension because inherently subjective equals inherently unknowable, blocks economic inquiry.
Comment:
I would like to see Pierce's quote on this point.
To me, hypothesis and assertion are polar opposites insofar as inquiry is concerned - the one invites it, the other either reports the results of inquiry or asserts something that has yet to be shown to be the case.
Gunnar
Posted by: John Gelles
Jason Cawley suggests that if sell price and cost in a free market initially allow a reasonable profit for producers then government will never have to intervene with debt-free purchasing power (money) it calculates to be needed by consumers to sustain production and take advantage of automation and the like to grow output faster than money (as we know it) expands. Money that grows only thru debt (consumer credit) soon hits a wall and cannot do the job.
He denies that we have a problem when high output results in commodity prices that lower profits and wages to the point that output fails to reach large blocks of consumers because production has been choked off ahead of society's needs.
Of course Jason is wrong. We know millions of consumers are not served by the economy they define by their votes more than their money. By folowing worshippers of market price only, when computed money subsidies are needed, the voters have been mislead.
Such subsidies can also be distributed by government payments for some of its budget with debt-free spending money it never collected in taxes. That money will be re-spent by contractors as wages and can subsidize consumption as well as a direct subsidy.
As the effectiveness of debt-free, tax-free money is measured the fearful advice from the 30's will be forgotten. If our objective is less than freedom from want, our solutions can remain as poor as they were before powerful automation was possible.
Posted by: Fiona Maclachlan
Re:
To me it was Hayek, not Mises, who noticed something like this going on in empirical economies. As an information processing problem, as the coordinated use of distributed information. Rather than tracing uncertainty to eventual subjective valuations by economic actors, he saw the complexity of the information processing problem economies must solve. Even if you knew the preferences, the coordinated interaction of them would present a practical computation problem that on the surface gives every indication of being intractable.
I think you may be giving Hayek too much credit here. In his Nobel Memorial Lecture (1974), Hayek identifies the crucial problem as one of getting quantitative measures of all the determining variables in the system.
A theory of essentially complex phenomena must refer to a large number of particular facts; and to derive a prediction from it, or to test it, we have to ascertain all these particular facts. Once we succeeded in this there should be no particular difficulty about deriving testable predictions - with the help of modern computers it should be easy enough to insert these data into the appropriate blanks of the theoretical formulae and to derive a prediction. The real difficulty, to the solution of which science has little to contribute, and which is sometimes indeed insoluble, consists in the ascertainment of the particular facts.
Hayek's ideas about "pattern predictions" are perhaps more prescient of NKS. He defines them as "predictions of some of the general attributes of the structures that will form themselves, but not containing specific statements about the individual elements of which the structures will be made up." (ibid.)
Also, relevant to the lead post in this thread, are Hayek's thoughts on the use of formal methods:
I want ... to avoid giving the impression that I generally reject the mathematical method in economics. I regard it in fact as the great advantage of the mathematical technique that it allows us to describe, by means of algebraic equations, the general character of a pattern even where we are ignorant of the numerical values which will determine its particular manifestation. We could scarcely have achieved that comprehensive picture of the mutual interdependencies of the different events in a market without this algebraic technique. It has led to the illusion, however, that we can use this technique for the determination and prediction of the numerical values of those magnitudes; and this has led to a vain search for quantitative or numerical constants. This happened in spite of the fact that the modern founders of mathematical economics had no such illusions. (ibid.)
Wolfram makes reference to Hayek in the note on free will, which is a related connection. According to Stephen Kresge in the introduction to Hayek on Hayek, Hayek wrote his paper "The Theory of Complex Phenomena" to expand on some of the ideas in The Sensory Order. He had some correspondence with Popper on the question of whether he was presenting a causal theory of mind. Here's part of a letter by Hayek:
Would you regard what I call an "explanation of the principle" a causal explanation or not? If your argument were intended merely to prove that we can never explain why at a particular moment such and such sensations, mental processes, etc., take place I should agree. If, on the other hand, you were intending to deny that it can be explained how physical processes can be arranged in the general kind of order which is characteristic of mental phenomena, it would need a great deal to convince me. Of course, my analysis of a particular problem raises the most far-reaching philosophical problems. I am now for months puzzling about what just now seems to me the most general problem of all and which at the moment I describe for myself as the distinction between what we can say "within a system" and what we can say "about a system." I am convinced that this is a most important problem, since ever since I began to see it clearly I meet it constantly in all sorts of different connections, but though I have made some little headway it is one of the most difficult and elusive problems I have ever tackled. (quoted in Hayek on Hayek, 29)
Kresge says that Hayek began a paper on the idea of "systems within systems" but gave it up when he found that no one could follow his discussion.
Posted by: Jason Cawley
To Gunnar - Pierce explains his first rule of reasoning in his 1898 Cambridge Conference lectures, which have been republished as "Reasoning and the Logic of Things" in an edition edited by Kenneth Laine Ketner, and introduced by Hilary Putnam. It was published in 1992 by Harvard University Press.
He states it near the end of lecture 4, "the first rule of logic" (p. 178 through the end of the chapter), and invokes it again in the form I referred to in lecture 8, "habit" (p. 223).
In the second of those places he shows how he uses this principle in practice, by appealing to this previous argument to make a (local) point. There he explicitly applies it to making hypotheses, rather than merely to claims. A direct quote runs -
Since, therefore, it is a corollary from the First Rule of Reasoning that we must not make hypotheses that will absolutely stop inquiry, it follows...
Back in lecture 4, he separates off his statement of the principle, saying
...it deserves to be inscribed on every wall of the city of philosophy.
Do not block the way of inquiry.
He lists a number of common philosophical arguments or attitudes that regularly do so, of which the second is an excess of skepticism.
The second bar which philosophers often set up across the roadway of inquiry lies in maintaining that this, that, and the other can never be known.
I hope this clarifies the principle I was referring to, and where it may be found in Pierce's work.
Posted by: Jason Cawley
On Hayek, the two essays I was thinking of in particular are Economics and Knowledge and the Use of Knowledge in Society. I believe both appear in his book on Individualism and Economic Order (if I recall the title correctly), and at least the first is also in his collection the Counterrevolution in Science.
There is also a passage in "Road" to that refers to these arguments and gives a brief synopsis, in the chapter on "the 'inevitability of planning'". The basic point of all three is that the complexity allowed by impersonal coordination via the price system is vastly greater than that which could be handled by "conscious control", precisely because distributed information is more effectively found, used and even created by the decentralized price system. The particular role of expectations and coordination of them (as an emergent order) is most fully elaborated in the Use of Knowledge in Society essay.
I contrast that sort of argument with those regularly advanced by Mises. While they are fellow Austrian economists and share many principles, Mises preferred to argue from the difficulty of knowing subjective value preferences, effectively an "unknown initial conditions" sort of argument. Not an instrinsic complexity of interrelations argument.
I do think Hayek became familiar with the idea while working on his book on the brain (Sensory Order). He also was aware of the Vienna circle work on formal mathematics and complexity, which influenced his argument in Sensory Order. Though that book fundamentally tries to rest complexity difficulties on a problem of self-prediction (the brain cannot encapsulate its own behavior because it is not more computationally sophisticated than itself). An argument also used by Popper, e.g. in The Open Universe - An Argument for Indeterminism.
Whether that means Hayek understood formal irreducibility is a harder point. I think he saw phenomena that are actually due to such irreducibility and noticed that something was going on, but that his own ideas about their origin and nature were somewhat confused. He thought self-reference problems were more essential to such phenomena than they actually are. Probably as a result of various arguments and proofs making use of paradoxes of self-reference in seemingly related formal matters. But I have no doubt that Hayek was closer to seeing the real phenomenon of irreducibility than Mises was.
Posted by: Gunnar Tomasson
Thanks for the clarification, Jason.
I agree wholeheartedly with Pierce’s sentiments.
Here is how Francis Bacon expressed the like point of view in the opening lines of his Preface to ‘Novum Organum’:
“They who have presumed to dogmatize on nature, as on some well investigated subject, either from self-conceit or arrogance, and in the professorial style, have inflicted the greatest injury on philosophy and learning. For they have tended to stifle and interrupt inquiry exactly in proportion as they have prevailed in bringing others to their opinion; and their own activity has not counterbalanced the mischief they have occasioned by corrupting and destroying that of others.”
Gunnar
Posted by: John Gelles
There is no doubt that economics is the study of (a) how best to satisfy needs, as well as, (for many), (b) how current societies do, in fact, satisfy some needs -- but not those of the poor.
In both a and b type economics mathematics has a role.
Jason Cawley seems to stress that the interactions between human competitors for economic survival are not reducible to algorithms -- hence type b economics will not be able to model such processes as those that determine in real life future price or allocation of resources. In type b economics neither turing machines nor interaction macines are up to such forecasts.
Hayek and Von Mises were engaged in type a economics. They did not want concious planning to get in on the act of trying to improve the lot of the poor. They wanted this left to the magic of market prices.
It is likely that no thread on NKS forum can settle the argument between Hayek and Lincoln. So going so deep into philosophy that this thread is in danger of resembling scholasticism may do no lasting harm. Lincoln had the objective of lessening the money power and increasing parliamentry power. His prescriptions for reform may be right for today. Type b economics has no measurable objective. And that's where this thread is stuck.
The unspoken Hayek premise is that since totalitarian intervention in markets is far worse than markets themselves, the same must be true for all law (emanating from parliaments or so wise a head as Lincoln's), that would reform markets, pricing, money and systems for full employment.
Of course Hayek and any defender of his is wrong. Pure positivist designs may indeed be foolish. But just as feedback in a price system is helpful, feedback in a system of planned economic growth, that did not destroy markets whose results do obvious good, and whose objectives included ending poverty, would improve on both free market price and oligopolistic market price systems as know them.
Posted by: Fiona Maclachlan
But I have no doubt that Hayek was closer to seeing the real phenomenon of irreducibility than Mises was.
I wouldn't be surprised if that were true. Hayek has always struck me as the better mind, and he was deeply engaged in issues in the philosophy of science at one time. In 1952 he organized a seminar on scientific method at the University of Chicago that was attended by Enrico Fermi and Sewall Wright. He was also communicating during the same period with Bertalanffy, von Neumann and his friend from his Viennese days, Schrodinger ("To my surprise, he was the one man who seemed to have fully understood The Sensory Order." (Hayek on Hayek, 139)).
It's well recognized that Hayek departed from Mises' idiosyncratic methodological views. Hayek accepted Popper's view that science must make falsifiable predictions but he also understood that when dealing with complex phenomena, pattern predictions take the place of exact numbers. He also began to distinguish among sciences on the basis of their degree of complexity, seeing similarities between economics and biology.
But it's worth emphasizing that Hayek never yielded on subjectivism: in fact, his belief in its validity only got stronger over time. Subjectivism, at the core of the Austrian approach initiated by Menger, implies that social scientists should take advantage of the fact that they can interpret the behavior of their objects of study, in a way that physical scientists cannot.
Consider the study of moving bodies at Grand Central Terminal. The social scientist observes a man pausing before the departure board and then suddenly moving away from it at a great velocity (relative to the other moving bodies.) On the basis of this observation, the social scientist can predict with a fair degree of accuracy the man's position in space into the immediate future. A simple equation may be necessary to compute whether he will get to his platform in time; or, if it's rush hour, the social scientist may resort to NKS to model the route as he dodges the other moving bodies. But, despite the use of formal tools, ultimately what's guiding the whole analysis is the social scientist's intuitive understanding of what is going on in the man's mind. Weber called it Verstehen. We could call it common sense. (Sure, it's not perfect but then nothing human is.)
And, once again, to get back to the subject of this thread, another quotation to support the position that Hayek saw no conflict between his subjectivism and the use in economics of mathematics (and, I would argue, by extension NKS):
Q: Do you feel that mathematics has an important role to play in economic theory?
HAYEK: Yes, but algebraic mathematics and not quantitative mathematics. Algebra and mathematics are a beautiful way of describing certain patterns, quite irrespective of magnitudes. There's one great mathematician who once said, "The essence of mathematics is the making of patterns," but mathematical economists usually understand so little mathematics that they believe strong mathematics must be quantitative and numerical. (Hayek on Hayek, 148)
Posted by: Gunnar Tomasson
Re. the following:
And, once again, to get back to the subject of this thread, another quotation to support the position that Hayek saw no conflict between his subjectivism and the use in economics of mathematics (and, I would argue, by extension NKS):
Q: Do you feel that mathematics has an important role to play in economic theory?
HAYEK: Yes, but algebraic mathematics and not quantitative mathematics. Algebra and mathematics are a beautiful way of describing certain patterns, quite irrespective of magnitudes. There's one great mathematician who once said, "The essence of mathematics is the making of patterns," but mathematical economists usually understand so little mathematics that they believe strong mathematics must be quantitative and numerical. (Hayek on Hayek, 148)
Comment:
Hayek's viewpoint mirrors precisely that of Huygens and Einstein - namely, that "patterns" are all our minds can cull out of the universe of experience.
In the specific context of Economics, this is how David Ricardo put the like point in a letter to Thomas Malthus - a point which, in due course, would be contested by John Maynard Keynes in his 'General Theory of Employment Interest and Money':
"Political Economy you think is an enquiry into the nature and causes of wealth - I think it should be called an enquiry into the laws which determine the division of the produce of industry amongst the classes who concur in its formation. No law can be laid down respecting quantity, but a tolerably correct one can be laid down respecting proportions. Every day I am more satisfied that the former enquiry is vain and delusive, and the latter only the true object of the science."
A half-century or so later, John Stuart Mill concluded - correctly, in my view - that Ricardo was both Right and Wrong.
Right in suggesting that "No law can be laid down respecting quantity".
Wrong in suggesting that "A tolerably correct one can be laid down respecting proportions."
Instead, Mill concluded (my paraphrase) that the distribution of "proportions" of the Economic Pie is a function of Time, Space, and Circumstance.
In brief, it all depends.
Gunnar
Posted by: George Giles
Human action is based upon individual desire. There is no average desire, it is by definition individual and very fungible. We act based on our desires and motives, which are not the subject of math modeling.
Mises point is simple and correct: economic analysis using mathematical models for future predictions is feckless. Thousands of man years building econometric models has resulted in complete failure (most of it with gov't funding), none of them work.
Wolfram's cellular techniques will be shown to be equally useless as predictive tools.
Posted by: John Gelles
"... economic analysis using mathematical models for future predictions ... has resulted in complete failure... [NKS] cellular techniques will be ... equally useless as predictive tools. " -- suggests Mr. Giles.
Does this rule, if valid, mean that the "money power" to allocate jobs and resources resulting from price-based for-profit production and trade, emphasizing minimum government regulation and responsibility, ought to work better than "parliamentary democracy" under a government that emphasized management by objectives in its role as central banker and responsible party for defense, military security and economic security?
Or is the answer that there must be a balance between the money power and parliamentary power?
Or can the money power be dispensed with in a democracy where (a) computers developed price, (b) interest on loans and/or money was both illegal and non-existent, and (c) economic security was achieved along with more human rights and freedom than had ever before been evidenced?
Whoops ! I can hear the answer now-- the evidence may point the other way: freedom and the money power have always co-existed. So until we see a real live parliament (with freedom as we know it) managing without the money power, we best assume the answer is "balance" -- not just money, not just parlez-vous.
Posted by: Karl Smith
QUOTE
We act based on our desires and motives, which are not the subject of math modeling.
ENDQUOTE
What do you mean? People do create models based on desire and motives.
Perhaps, you feel that desire is beyond quantitative understanding. This is a valid belief but it is apt to be wrong.
QUOTE
economic analysis using mathematical models for future predictions is feckless. Thousands of man years building econometric models has resulted in complete failure (most of it with gov't funding), none of them work.
ENDQUOTE
I think they've been quite successful given what they've been asked to do. People ask for highly accurate predicitions about the change rates in real world phenomenon using relatively limited data.
Physics is not a failure because one cannot say whether it will be raining on a particular day in a particular zip code in the temperate zone durring a spring month a year from now.
Nor is it true that the spirit of the wind cannot be caputred in mathematical models that deal only with its physical characteristics.
The systems of differential equations envolved in real world predictions are damn hard. In many cases fundementally impossible to solve.
Couple that with the fact that half of the things you're trying to predict are theoretically random walks and you've got a really tough problem
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