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RaulMagister

Listed below are comments made by RaulMagister between Wednesday, 15th July 2009 and Wednesday, 22nd July 2009.

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The long and slow recovery of the UK economy 3:18pm on 22 Jul 2009 48 Below is a key question:

" ... so tell us the robust plan to pay back all the extra debt we're taking on and at the same time create 21st century products and services that ...

1. People around the world want and are willing to pay for
2. Will create millions of jobs in the UK, and
3. Will systematically reduce our trade deficits and national borrowing ... *

While resource costs are so much higher in the UK than they are elsewhere - particularly labour and social infrastructure, then in a global market, investors will always seek out to perform production where these overheads are cheapest - and that will not be the UK for a long time. (It did start to happen in the early '90s when it became cheaper for television producers to set up plants in South Wales rather than South Korea - but proved to be a blip rather than a trend).

The UK's function has been to provide a base for finance (English language, advanced legal structures) for the global economy rather than a manufacturing centre - that is the niche we have carved out for ourselves as the Chinese have with their factories. The problem is what happens should the specialist niche you have carefully "evolved" your economy to fit in the wider global market "eco-system" suddenly experience a big adverse shift in conditions? Like a Giant Panda, from living in clover (shurely bamboo!?) you are suddenly in danger of economic extinction.

Our governments hope to offset such effects by always staying with these and other "high value-added" products through "education, education, education" (Remember that?). But such knowledge is now also global and there is no long-term inherent national superiority in anything for anyone anywhere (In the 1830's Britain was supreme in the high value-added business with its steam engines et al. and Japan barely out of the middle ages - how times have changed.)

So if the global market is to reduce your corner of it to an economic wasteland for the time being, should you just wait until the unseen hand deems it to be your turn to receive its favours again? There is a question as to whether the dedicated exploitation of market forces to wring the last dollar and cent of cost reduction delivered to the consumer by having, say, computers made in the middle of China, programmed in India and marketed by the US and then shipped around the globe in flag-of-convenience vessels is really worth the price in terms of the uncontrollable risks to national integrity and independence that any hiccup in the system might bring - even, as we have seen, to a nation as mighty as the USA.

If feeling part of an integrated nation (operating under the premises of its own laws and customs and looking after fellow citizens who share the same cultural values) still means something to people around the world, they must decide whether they are prepared to accept a sub-optimal global economic system to pay for that perceived benefit. Sadly, there's STILL no such thing as a free lunch.
The long and slow recovery of the UK economy 12:52pm on 22 Jul 2009 GDP has been a dangerous statistic from a national point of view. It is given more credence as a measure of success than it should.

Borrowing money from overseas providers and then converting it (mostly via government deficit spending) into wages and thus GDP is what has given the illusion of well-being over the last few years.

I am far from convinced that national units as they stand are relevant any longer, but if we must persist with a nationalistic perspective, then a better indicator of our economy's performance would be the balance of trade in goods and services (and perhaps net investment income - but not recoverable capital flows for securities etc). This comprises, in the broadest terms, the national "profit and loss" account".

Looking at this measure, the economy has been operating at a "loss" since 1997 the greatest annual loss being in 2007 - just before the year of horrors - (and for quite a few years before then). This economy has been sick for a long time - it's the illusion of ever-growing GDP that has been the problem.

(I know there are all sorts of reasons why this analogy is strained), but UK plc has been operated like a company patting itself on the back for increasing its sales figures but failing to notice the spiralling costs they have needed to achieve the growth. Result - the bottom line goes to hell in a handcart and only when the bank manager calls in the inevitable overdraft does it dawn on them that they are in big trouble.

Moral - looking at GDP without balance of income stats. is a dangerous practice.
Is economics a busted flush? 3:50pm on 21 Jul 2009 "Only amongst the ignorant"

Hmmm.... one of the critics was Heckman, a Nobel Prizewinner! - wrong on this issue? He may be, but "ignorant" he is not.

"In the 'real' sciences, students do as they are told. They are not asked to think for themsleves."

Hmmm...(again) Thought occurs that it was a good job that Einstein didn't work to that rule.

I am grateful for your generous offers of guidance - somehwat Stalinist in tone though they may be - but it's little details like this that keep giving a nit-picker like me a problem - so I think I'll skip the course. Cheers!
Is economics a busted flush? 3:18pm on 21 Jul 2009 270
"I was being generous when talking of average. Try to learn a little instead of trying to be clever."

Do I conjugate correctly?

- I am "being generous"
- You are a somewhere off the mark
- He is wrong

(Only joking :-) )

"You've missed the point which is that intelligence ('g') is largely hereditary and is not improved by education."

Think you'll find that the validity of "g" itself is a matter of impassioned politico-academic debate. At best a "may be largely.." and "probably not improved..." would have been be a better representation than a definitive assertion.

Just a tip, if you seek to instruct (as you seem to), you must leave the door open for the student to doubt and seek the truth for himself.
Is economics a busted flush? 2:09pm on 21 Jul 2009 #256 "The problems is that most people (84% of the population) are of average cognitive ability or below, and for years we've had Canutists government irresponsibly marketing 'lack of deference', 'anti-elitism', and social-mobility etc in pursuit of nothing more than popularity...."

As one of the 84%, I wonder what sort of distribution this implies? We know that if "cognitive ability" were normally distributed, like IQ, then only about 50% would find themselves at or below average. (Most IQ tests approach a normal distribution in large samples).

The "Cognitive ability" to which you refer is clearly distributed very differently with a few of the population effectively on another planet compared to the rest of us. This would be a very odd result since cognition is the result of an everyday biological function (brain operation) and as a broad rule of thumb for anything biological (e.g. leg-length, rato of arm length to torso, or how fast an organism can move) a normal distribution tends to emerge when it is measured in a large population. (If not perfectly "normal" generally much less "skewed" than is implied here).

So I question the basis of the test as a true reflection of "cognitive ability", the validity of the measurements and therefore the conclusions you draw.

Cultural bias and value judgements are a constant problem with this sort of measurement. I remember the '80's when the golden age of AI was about to dawn as a practical reality and we found it was not too difficult to encapsulate the advanced knowledge of an experienced doctor into a computerised "expert system" for remote diagnosis, but difficult to get one to recognise a tea-cup and virtually impossible to get one to play a snooker shot accurately.

Does this imply that Steve Davis' "cognitive ability" is more advanced than a brain-surgeon's? You decide.
Is economics a busted flush? 2:47pm on 19 Jul 2009 123 A valid "N observational conjunction" test you could devise to find out which sort of society you lived in would be to openly take bicycles from others and see if you could do this repeatedly without a great deal of social opprobrium and some organ of the state intervening to attempt restitution of the same to their designated "owners". Alternetively, you could also try building seven storey tower-blocks on the green belt without planning permission and testing to see whether a "local authority" claimed the right to pull them down.....or see how many cigarettes you can sell openly without the government health-warning printed on the packet as prescribed before some official intervenes in your activity. Needless to say, in a state of anarchy, the results of all these tests should be negative.

What Liberal-democracy is, I'm not sure, but "anarchism" and "minimal government" it certainly is not.
Is economics a busted flush? 1:32pm on 19 Jul 2009 103 While I would agree that "pop" Heisenberg with a dash of Godel doesn't take the argument forward. There are critical problems with economic theory that makes a little metaphysical pondering more than a pointless exercise.

Marx said that the purpose of philosphers should not be to describe the world but to change it - and there's the rub. The teleological prescriptions of the three greats of the subject (Smith, Keynes and Marx) remains a major problem for all those who seek to emulate them, right up to the debacle of Fukuyama's thesis of "The End of History". Consequently, academic arguments today between any so-called "schools" of economics can easily be reduced to competitions between political manifestoes rather than anything that should pretend to be scientific in the true sense of the word.

We need to recognise that economists current function in society is the equivalent of ancient oracles and auguries; there to give assurance to those that seek to control events that they have at hand more insight into the future than is truly the case. It helps them sleep at night.
Is economics a busted flush? 12:18pm on 18 Jul 2009 67 Any theory of "micro/closed/insular environments /economies" will prove itself as flawed as any other as soon as enough economic actors start to believe in them too fervently - however "empirical" the concepts claim to be. Once the legislation you advocate is in place, the basis of the theory is no longer wholly valid - the fundamentals have been shifted.
Is economics a busted flush? 11:04am on 18 Jul 2009 You make a point about what happens when everyone's models "says sell". The sad fact is that all respected economic theories are wrong - and the more widely-accepted they become - the wronger they become. It goes like this:

1 A theorist observes the economy and develops a new model of how it (or some part of it) might work.

2 Others can see that the theory is well-formed and fits the historical data very well. So they endorse it, enhance it and (meme-style) it rapidly becomes orthodoxy throughout the ranks of the economic litterati.

3 Eventually, the theory becomes widely used by all sorts of important actors in the economy to predict what the economy (or part of it) will do in the future and they make their decisions accordingly....

And there the whole thing breaks down. Because when the theorist formed his theory, he was observing behaviour in an economy WITHOUT knowledge of his new theory and without its predictive systems and subsequent responses being affected by the same. So his original theory - by definition - no longer fits the real world.

The self-referential nature of all economic theory dooms us forever to produce correct constructs with a very short shelf-life. There is the exception, however; where a theorist produces a correct theory but, for some reason, no-one else believes him or her.

Conclusion - only genius-level Cassandras and iconoclasts have a real chance of being "right" about what the economy is about to do? But if everyone started to work on that basis - then this also would become a false precept...there's no escape I'm afraid.
How long will China finance America? 12:31pm on 15 Jul 2009 These reserves are one of the reasons for the economic collapse - it just represents demand taken out of the world economy - It's the flip side of the over-borrowing in Western Governments and non less of a problem.

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