back to article THE DEATH OF ECONOMICS: Aircraft design vs flat-lining financial models

John Watkinson continues his series of essays for El Reg in which he examines failures in society from banking and education to transport and IT. Here, with a critical eye on our economic plight, he looks at the methods employed by those doing the sums and their consequences. Here we are, several years into the aftermath of …

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Paris Hilton

Re: All been done before

The problem is that economics doesn't actually conform to any models that actually seem to work.

And the way economics has been run since WWII is by using debt to kick start investment into a bigger and better tomorrow. On the basis that growth solves the debt problem. More weath tomorrow repays the debts of today.

That fell apart when it became fairly obvious* that other constraints than money supply were limiting growth, and banks and governments turned to funding consumption, not capital plant and infrastructure, sometime in the late 90's.

*except to banks, politicians and economists.

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Headmaster

Re: Re:model a whole years economic activity in the UK in less than a minute

Positive feedback is not the clue.

Understanding multiple lagging negative feedback in a non linear suite of equations is the clue to chaos.

The whole POINT about chaos is that it is both unpredictable, and yet utterly deterministic.

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Re: run since WWII is by using debt to kick start investment

That's what they want you to believe but it's not actually true. There have been a couple of instances in which lowering taxes was used to kick start the economy and they've worked pretty well. Kennedy in 64 and Reagan in 80-83 are the two most obvious.

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Economics cannot be modelled

Economics cannot be modelled in this sense:

1. Any economic theory that works reasonably well is then used by financial organisations to calculate the consequnces of their own behaviour and 'optimise' for profit. This is a form of feedback that continues until the model fails which it inevitably will.

2. Economic theory is almost entirely based on the idea of a large collection of 'rational' agents acting in their best interest. This does not reflect reality where the psychology of people comes into play. In order to have an accurate model of economies we need an accurate model of people.

This does not mean that useful quantative and qualtative economic theories cannot be developed but economics as some sort of engineering disciplince is not possible.

The article itself seems written by someone devoid of significant knowledge about economics. The idea that GDP growth is tied to increased resource consumption is paticualarily bizarre for someone writing for a magazine read by software developers. The clus is that Software development and sales add to GDP.

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Anonymous Coward

Re: Economics cannot be modelled

Don't you know that the logic mines are almost exhausted ?

Everyday software engineers and programmers the world over have to find ever more convoluted ways of achieving simple tasks because all the easy code has been mined and copyrighted.

So unless you are modelling your economy in Plasticene(tm), you are all out of resource.

(and no, you can't use it like that, it's outside the Ts & Cs)

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Anonymous Coward

Re: Economics cannot be modelled

Exactly. As has been pointed out in Scientific American, a typical journey in a US SUV uses 99.5% of the fuel for something other than transporting the driver from A to B. If improved technology could increase transport resource utilisation to 95% wastage, then current resources would transport 10 times as many people, increasing utility in the economy. Resource consumption may be a sign of inefficiency, not growth.

If economics was an engineering discipline it would be looking at aspects of MRPII, kaizen and quality management. And this involves a measure of control over the economy.

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Re: All been done before

It has been proven in several academic studies that "the more qualified an economist, the less accurate his predictions". Like in the engineers in Apollo program, the economists have a minus sign in the equation where they should have a plus.

Consider the idea that "when there is inflation, it must be countered by raising the interest rate". The problem with this is that if you increase the interest rate, companies face higher costs (because they rely on borrowed money) and lower demand - because people can't afford their products. So either they raise their prices - adding to inflation - or they go bust. Not only that, the directors have higher expenses because their mortgages go up, so they must have pay rises or they will be bankrupt and barred from being directors (I have been in board meetings where this has actually been said).

Generally, the economic cycle consists of people doing OK. They get a pay rise, and buy more stuff. Just as the manufacturers are approaching a volume where they could justify more automation, the politicians get a touch of inflation panic, and raise the interest rate, making the automation unaffordable.

Politicians are stuck in an 18th century agrarian model of economics - and one that was wrong even then.

Inflation is cause by the perception that prices will rise causing people to pay more for something in expectation that the price will rise further. The correct response is to ban short skirts, or tight trousers, or some other random thing. It does not actually matter what you do - so long as you are very zealous about doing it. This is the one case where the classic political strategy "something must be done - this is something -so we must do it" has a chance of working. So long as the something is NOT raising the interest rate.

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Expecting perfection? You're going to be disappointed.

Everyone wants a system which delivers wealth, equality etc. There are some people in the world, let's call them pragmatists, who understand that there are trade offs and you can't have everything. The perfect economic system doesn't exist, as perfect things tend not to (apart from Sherlock, obviously). That's not to say that we shouldn't aim to improve things, just that it's sensible to start any discussion by deciding what your priorities are, going for those, and realising that you're going to have to lose other things in order to achieve those priorities.

Blaming 'the system', 'corporations' big this, big that etc. is all terrific fun, but can you seriously believe its that simple? What miracles do you actually expect from economists? They can't deliver what you're expecting: and neither can you or anyone else.

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Re: Expecting perfection? You're going to be disappointed.

"What miracles do you actually expect from economists?"

I think part of the point is that the goals set for economists are both unattainable and mutually exclusive, and the methods used to achieve those goals (e.g. subprime lending) destructive to society.

That's where the government should step in with regulation, but doesn't, as it's dependent on growth to finance its deficit spending.

And the result is crashes.

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Re: Expecting perfection? You're going to be disappointed.

Were they 'destructive to society'? How easily you can forget the years of economic growth before the crash. Crashes are part of the economic cycle. They've always happened, and they always will. Anyone telling you otherwise is trying to sell you a book. Economics can reasonably be judged a success if the progress between crashes is greater than the crash - and that's been the case for a very long time.

But yes, I agree that our economic goals - or should I say our demands on economists - are both unattainable and mutually exclusive - which is exactly my point that choices have to be made, instead of naively believing that you can have everything.

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Re: Expecting perfection? You're going to be disappointed.

"Economics can reasonably be judged a success if the progress between crashes is greater than the crash - and that's been the case for a very long time."

That's making the very big assumption that the economics generates the wealth rather than human ingenuity and endeavour. Correlation does not mean causation.

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Anonymous Coward

Re: Expecting perfection? You're going to be disappointed.

Agree. Without an economy not dependent on the present world financial system to compare, we can't be sure that the present system is really a success overall.

Even during the Cold War, we couldn't really conclude that communism was a failure; what we could conclude was that in a battle between capitalism and communism, communism lost. Ideally, our measure of societies shouldn't be their military effectiveness if we are comparing economic management. Where communism wasn't constantly under threat, such as in Kerala, India, it was reasonably successful at delivering education and increased life expectancy to some very poor people, whereas capitalism led to parts of Africa being poorer than they were before independence from the British Empire.

I'm not making the case for either side here and I know this is cherrypicking, but my point is that unless people from another planet suddenly arrive we don't have any objective measure of how good our systems are.

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Re: Expecting perfection? You're going to be disappointed.

That is just incorrect.

On so many levels.

We all (most) have lots of shiny-shiny now. But mom and dad both work full time - and barely scrape by, junior leaves college with the same personal debt as a mortgage, just no house to show for it and a degree that just about qualifies him to flip burgers.

And these are broadly speaking 'the haves'

Thats some economic miracle you have there

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Re: subprime lending

Subprime lending in and of itself was not the problem. It existed a long time back and the few companies initially engaged in it did reasonably well for themselves. There is a class of borrower who on paper didn't meet standard loan requirements. Their guaranteed salary was quite below the requirements. They survived because they had high and highly variable bonus pay structures. You could, if you took the time model that based on past performance they were likely to make similar bonuses in the future so you had a reasonable risk. These companies also made sure they had sufficient reserves to cover any short term losses they incurred is some of their evaluated risks turned out to be wrong.

That's where the government should step in with regulation, but doesn't, as it's dependent on growth to finance its deficit spending.

This is where subprime actually went wrong. Instead of government acting as a brake on subprime lending, they effectively mandated everybody else had to get into it, AND mandated that they didn't have to have the necessary reserves in case something went wrong. They didn't do it directly, they did it through "red lining legislation" that ignored the economic reality that when looking strictly at financial capacity some people just shouldn't be issued loans. Once the banks made those loans it was self-evident they were high risk loans the bank had to get rid of. So they did. The only way to get rid of them was to chop them up into pieces and mix it all together (which does lower absolute risk, but didn't make them lowest risk) and re-sell it. Unfortunately the effect of that was to poison the whole system. All because politicians didn't want to obey the laws of economics.

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Vic
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Re: subprime lending

The only way to get rid of them was to chop them up into pieces and mix it all together (which does lower absolute risk, but didn't make them lowest risk)

It doesn't lower the total risk of the whole package - just the risk of an individual loan (whilst raising the risk of those mixed up with it).

Unfortunately, these packages were used merely to *obfuscate* the risk, and were therefore sold on as lower risk than they really were...

Vic.

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Anonymous Coward

Re: subprime lending

'didn't want to obey the laws of economics.'

Economics is not a science but an art.

There is only one absolute law of economics and that is

Labour that is not used today is not available to be used tomorrow.

(similar to Epoxy that is mixed now will not be spreadable in an hour or so)

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Anonymous Coward

Re: subprime lending

The problem with your comment was it was the senior and supersenior debt that went pear shaped. It wasn't the poor people over-borrowing that caused the crash; it was property developers building too much stuff in the belief that prices would rise forever - the supposedly "good" borrowers. The toxic debt that got mixed in with the good stuff was usually things that had looked good not that long before - till prices dropped.

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Re: subprime lending

Yay, I have the solution - mix economists with epoxy, and leave for a couple of hours so they not only can't be used now, but not in the future either!

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"We can re-define a government as an entity that is forced by its own recklessness to stimulate growth."

That is a crucial and important observation. Also something that's very easily fixed, if there's political will to do so.

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Where's Worstall?

Dear Reg,

Can we get Tim Worstall's rebuttal to this? I imagine he'd have a rather different take on the matter!

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Re: Where's Worstall?

Eeek!

"Indefinite growth on a finite planet is not possible. I don’t need to explain that. "

Sadly you do. For it's wrong, badly wrong. And trying to explain it would aid in realising that.

It's linked to this:

"Looked at another way, GDP is also an indicator of the amount of the world’s resources that were used up by commerce. In other words it is the rate at which the planet is being raped."

GDP isn't an indicator of resource use. It's a measure of value added.

We all entirely agree that infinite growth in a finite system isn't possible. But you've got to be careful that the finity you're assuming actually exists. Sure, we can't have an infinite number of people on the planet. We also can't have an infinite number of cars, nor an infinite number of physical things. But people, cars, physical things even, are not GDP nor are they economic growth. GDP is the measure of the value that has been added in the economy. And as long as we continue to find new ways to add value then the economy can continue to grow.

This is true even in Herman Daly's "steady state" economy. Even if we only ever recycle everything, abstract no new physical resources from anywhere ever, as long as we continue to find new ways of adding value to our current stock then GDP will continue to rise.

I agree that economics ought to be taught as a general part of the school curriculum, of course I do. For then everyone would already know all of this.

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Anonymous Coward

Re: Where's Worstall?

> GDP isn't an indicator of resource use. It's a measure of value added.

Perhaps you could enlighten us and explain what GDP measures then.

Since you exclude economic ouput from your definition of measuring "value added" - by stating that "people, cars, physical things even, are not GDP nor are they economic growth" - it follows that GDP measures something else.

What is it? What is your definition of "value added"?

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Happy

Re: Where's Worstall?

Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight! Fight!

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Re: Where's Worstall?

pardon?

That word 'infinity' I don't think it means what you think it does

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Re: Where's Worstall?

Here's the standard definition (from Wiki of course):

"Gross domestic product (GDP) is defined by OECD as "an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)."[2]

GDP estimates are commonly used to measure the economic performance of a whole country or region, but can also measure the relative contribution of an industry sector. This is possible because GDP is a measure of 'value added' rather than sales; it adds each firm's value added (the value of its output minus the value of goods that are used up in producing it). For example, a firm buys steel and adds value to it by producing a car; double counting would occur if GDP added together the value of the steel and the value of the car.[3] Because it is based on value added, GDP also increases when an enterprise reduces its use of materials or other resources ('intermediate consumption') to produce the same output."

Note well that last: a reduction in resource use is an addition to GDP. And yes, it really is value added.

So, of course the production of a car is a *part* of GDP as people value the car more than the value the steel and labour and rubber that went into making it (not always the case, the value of Trabants rolling out of the factory was lower than that of the raw materials).

But people also value the lovely software that some of you guys around here write. And that requires no resource use (time and effort, yes, but none of those "finite resources") in manufacture. But it's still an addition to value added and thus is part of GDP.

There's no surprise in this either: it's exactly the same thing Herman Daly is saying when he talks about quantitative growth and qualitative growth. Perfectly willing to agree that we can't have an infinite amount of the former. But given that "economic growth" includes the second as well (and actually is rather more important too in terms of the quantitiy of each) and we can have an infinite amount of that thus, therefore, we can have infinite economic growth.

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@Tim Worstal

Your recycling example is a good one. If I'm Coke, and I need enough aluminum to make a billion cans a year, I don't care if it is "new" aluminum or recycled. If you sell me that aluminum, your aluminum output counts towards the GDP, whether or not it is smelted from bauxite or recycled from waste aluminum (like empty Coke cans)

If you were able to use renewable energy (hydro, solar, wind, whatever) in addition to waste aluminum, your operation would be almost entirely resource neutral on an ongoing basis.

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Re: Where's Worstall?

Actually, no - let's not have Worstall's rebuttal to this.

No one really needs yet another distorted world view through the prism of the Adam Smith Institute - not even the useful idiots who treat Adam Smith's work as a pick 'n mix counter.

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Re: @Tim Worstal

While I obviously agree in theory I don't in the specific instance you give. For one of the things you can't recycle used beverage cans into is new beverage cans. The alloy for the top of the can is slightly different from that for the side and bottom. When you crush and melt the old cans they mix and can't be used as cans again.

Meaning that you can turn old aircraft into cans, and old cans into new aircraft, but not old cans into new cans.

But that's just me bneing a pedant again: the core argument I obviously agree with.

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Re: Where's Worstall?

GDP (currently) *includes* "cars, physical things", but it's not *synonymous* with them. It's entirely possible that if we completely stopped making cars, today, forever, GDP would go *up* as a result.

That was what Thatcher did, and it worked.

Cars have a utility to people, which is reflected by how much money they're willing to pay for them. If you can take those same resources and convert them into something that people will pay more for, then you'll be adding more value. That's why cars replaced carriages in the first place.

There's a classic fallacy in production engineering, where the output of a process is hard to measure, so you measure the input instead and assume that it's related. This can work for a little while, but if you keep it up for any length of time, you quickly find that the input is going up and up, and the output (as far as you can tell) remains flat, i.e. the process rapidly grows less efficient. That's how we got into the mess of the 1970s. It happens because of one of the iron rules of management: You Get What You Measure.

This "equating input to output" is endemic in our political system. It's why we've historically spent so much time arguing about things like "teacher/pupil ratios", "time spent per doctor's visit", "miles of road built/added", "numbers of people in work", rather than what we really care about in each case (educational outcomes, health outcomes, traffic/productivity, generation and distribution of wealth). Because in each case, the output is hard to measure, but the input is far easier.

Focusing on "things produced" is another way of measuring input rather than output. "Producing things" is not the goal. "Making people's lives better" is. Measuring GDP as a whole, without trying to judge or differentiate between "good" and "bad" production (e.g. manufacturing vs services), is the closest we currently have to a way of measuring that.

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Re: Where's Worstall?

"But people also value the lovely software that some of you guys around here write. And that requires no resource use (time and effort, yes, but none of those "finite resources") in manufacture. But it's still an addition to value added and thus is part of GDP."

You still need a finite resource even for software: you need energy: energy to think of the design, energy to exert yourself, energy to employ tools and machines to carry out your design, and (especially here) energy to actually put your stuff to use. In addition, you need time to do everything. Both energy and time are inherently finite.

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Re: Where's Worstall?

Ash, but ifa company borrows heavily to buy the steel to build the car then should the total value add be included in the GDP or just the delta between the debt owed and the value added?

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Anonymous Coward

Re: Where's Worstall?

> So, of course the production of a car is a *part* of GDP

Production of a car wasn't part of GDP calculation in your previous post. Neither were people, taxes, etc. Now they are. Also, GDP wasn't a measure of resource usage in your original post. Now it is.

Writing software uses resources too: the laptop I'm currently typing on depreciates over time, due to normal wear and tear. Eventually it will become unusable, because some part will fail and won't be replaceable. I am also using electric power to keep the laptop running. That is resource use. Just like manufacturing a car consumes resources - steel, oil used in fabricating the plastic parts, glass, and then the car depreciates over time due to normal wear and tear. But, unlike a car, where a majority of the materials used in constructing the car are recyclable - at a minimum the steel, a laptop is pretty much not recyclable.

So, cost of materials is included in the calculation of the value of the car, just like cost of materials is included in the calculation of the value of a laptop. Plus cost of manufacturing, cost of industrial equipment depreciation wear and tear, cost of labor, cost of financing the production - the car or laptop manufacturers borrowed money at interest in the short-term corporate bond markets to finance their operations. Plus cost of economic profit to be made on the sale of the laptop or of the car.

So, your measure of this nebulous "value added" when calculating GDP is really nothing more than what Karl Marx already discussed in "Value, Price and Profit - 1913":

https://archive.org/details/valuepriceprofit00marx

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Re: Where's Worstall?

>>"Both energy and time are inherently finite."

But you must concede, both are on a rather different order of magnitude than things like aluminium or land. If you have to factor in the heat death of the Universe as your rebuttal to an economic argument, there may be a case to make that your rebuttal lacks practical relevance.

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Re: Where's Worstall?

We can in principle add an infinite number of zeros to anyone and everyones bank account.

That is not what is at stake here however.

We can also define value as 'man hours achieving nothing of any value' as well.

That is not what is at stake here however.

To create something of use - say a house - takes either man hours of labour or a certain amount of entropy (free energy).

That is what is at stake here.

Growth in a post industrial society of anything of real value - I don't count shiny new thing as being of real value, when you are starving and thirsty and cold, as any street beggar will tell you (a hot meal and shelter is far more valuable than an I-phone) - is utterly dependent of cheap, in terms of energy and human effort, energy to power the machinery that makes everything else you actually need.

And low cost free* energy (of which renewable energy so called is not a member) is something we are running out of**.

Globally.

If the price of food rockets, because the price of diesel and fertiliser rockets, because both are in fact packaged energy, and furthermore we now have 30 people between farmer and consumer, who all need to be paid more and more to have a decent lifestyle, when it used to be just two or three... then we are in a downward spiral.

*free in the thermodynamic sense, i.e. at low entropy

** except nuclear, which we have a huge amount of left.

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Re: @Tim Worstal

rubbish. You could easily turn the whole lot into aluminium silicate and various other metal salts compounds, separate them out, re smelt them and make new cans.

By using vast amounts of energy.

You can recycle any element in whatever molecular compound you want, if you have access to infinite amounts of cheap energy. You can make diesel gasoline and tar from water and carbon dioxide.

What you can't do, except by nuclear transmutation, is make new elements.

The most entropic substance in the universe, into which, by current theories all matter will ultimately turn, is cold iron.

So even with nuclear transmutation, the universe relies on 'anything that isn't iron' to fuel the processes of existence.

We are surfing the entropy wave of the big bang, and when its spent itself on the beaches of reality, we will be left high and dry, and dead.

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Re: Where's Worstall?

"In addition, you need time to do everything. Both energy and time are inherently finite."

Not on any human scale they're not. For as long as the sun exists, there will be available energy, there will also be time.

If we needed it for any pressing purpose, we could extract energy far faster than we currently do. Until the end of the species, time will be infinite in economic terms and irrelevant afterwards.

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Re: Both energy and time are inherently finite.

Short term, everything is finite. Long term everything is effectively infinite. You just need to select the appropriate term.

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Anonymous Coward

Re: Where's Worstall?

To give an example of the GPP's point, steel scrap gets recycled all the time. Thus the steel which in 1904 formed part of a rich person's toy car, slow, unreliable and expensive to operate, is still around but in much more efficient, reliable products. The value of the goods embodying the steel has increased.

The material content of a colour TV set has probably dropped by a factor of 40 or so since they were introduced, but a 1960s colour TV is not worth as much as a single modern one.

Steel, aluminium and some other materials basically are not sold, you borrow them.

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Re: Where's Worstall?

"But you must concede, both are on a rather different order of magnitude than things like aluminium or land."

A different order of magnitude, yes...lower. Especially time. "Your days are numbered" comes to mind. No matter how much we want to fight it, our time comes eventually, so every living thing as far as we know has a time limit. Meanwhile, how much energy can one human or one community amass in any given time period and put to practical use?

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Re: Where's Worstall?

"But given that "economic growth" includes the second as well (and actually is rather more important too in terms of the quantitiy of each) and we can have an infinite amount of that thus, therefore, we can have infinite economic growth."

No, I really don't think we can..

A human being requires energy to come up with those delightful programs (and books and art).

If you don't think this is true, please consider IBM's Watson doing a medical diagnosis, or analysing Wikipedia to come up with answers to a random debate question:

http://www.ibtimes.co.uk/ibm-supercomputer-watson-programmed-debate-moral-issues-1447413

Human work requires energy even if it is mental.

I would be very interested to hear what the economics experts on this forum think on the following little piece:

Do The Math- Exponential Economist Meets Finite Physicist

http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/

Oh yes.. the author on that site also has a rather remarkable piece on how long it would take humanity to use more energy than the entire galaxy at even very modest economic growth using nothing but the formula for exponential growth (if you're interested).

Though it's said that if you get 10 economists in a room, you will get 11 different theories- the one thing they will agree on is that growth is foundational to their "science".

The true problem with economics as a whole is that economists think the environment is a subset of the economy rather than the obverse.

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Anonymous Coward

Re: Where's Worstall?

explain what GDP measures

I believe it was recently redefined by the office of national bullshit to include consumption of "hookers and coke" in addition to various other traditional unmeasurables.

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FAIL

The BBC told me it was fixed?

I think you're wrong about this because the BBC tells me every day that everything is hunky-dory and that we're better together?

More seriously at the start of the article you say that economics is broken and fails to spot problems because it is not a correct model and then say at the end that we should teach kids economic principles. Doesn't make sense. I agree with teaching them history though and how economists (largely) failed to point out the impending problems.

Also as Novex referred to a lot of people didn't start working for themselves. They said they were doing that so they could get working tax credits without being hassled and sanctioned by the Job Centre in order to get their job seekers' allowance pittance.

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Re: The BBC told me it was fixed?

I think Keynes said words to the effect that 'economics is great at telling you why things went wrong in the past, but useless for telling you what to do in the future'.

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Re: The BBC told me it was fixed?

I think you made that up.

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Anonymous Coward

Re: The BBC told me it was fixed?

The reason that the "economists" didn't point out the emerging financial crisis in the 2000s were, basically, because the ones you were hearing from were being paid not to. Gillian Tett's Fool's Gold is a very readable account.

I am not an economist, but I am an economic coward with a reasonably good bullshit detector. In 2007 there seemed to be endless TV programs talking up house prices and encouraging people to move. That was a warning sign that things were out of control. By 2008 I was heavily into cash. In 2009 I bought a house for a lot less than the owner paid for it, and I was able to retire 2 years early. And that just, basically, on my grandfather's principle that if banks are offering you high interest rates for your money, this is not because they are awash with cash but because they are getting desperate for liquidity. When I saw Icelandic banks offering 6%, I knew the end was near. It came 6 weeks later.

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Re: The BBC told me it was fixed?

Dear Banksy,

You can obviously read and write but you do not seem to be able to comprehend.

You wrote:

"More seriously at the start of the article you say that economics is broken and fails to spot problems because it is not a correct model and then say at the end that we should teach kids economic principles. Doesn't make sense"

Now, let me make this really simple for you:

The author explains and justifies why economists as we have them are flawed.

In his conclusion he writes:

"It’s high time that the principles of economics were incorporated in the school curriculum."

I do apologise if my reply doesn't make it clear to you how wrong you are, but I hope it has.

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Re: The BBC told me it was fixed?

"In 2007 there seemed to be endless TV programs talking up house prices and encouraging people to move. That was a warning sign that things were out of control. "

And the cycle is starting up again.

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Re: I think Keynes said words to the effect that

Keynes was a well-liked, well-lettered idiot. It's politicians who continue to follow his advice that keep screwing things up.

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Re: I think Keynes said words to the effect that

Keynes was a very, very smart individual whom politicians have absolutely ignored.

The central tenet of JMK is to raise taxes during boom years and stash the surplus, then spend the surplus during the recession boosting economic activity and making the cycle shorter.

Politicians, however, (as seen by the current Conservative+LibDem bunch of incompetents) like to lower taxes during booms (this is called an electoral bribe) and raise them during recession, thus making everything thousands of times worse.

As for stockpiling a surplus - debt is so much easier.

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Holmes

trains and planes ...

Complex systems ... stop airliners and trains bumping into each other

Would have to a very complex system. If they have level crossings on the runways in your part of the world.

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