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To: JF Quinnelly who wrote (58376)1/28/2001 1:39:40 AM
From: greenspirit  Respond to of 71178
 
Fascinating post Freddie,

allow me to add, "all models our wrong, some models describe accurate relationships". Is as true today as it was 50 years ago when Jay Forrester and others started using modeling as a tool.

I realize I'm not telling you anything new here, but I felt like typing a bit, so please indulge me....

Mapping human behavior and pretending you can accurately describe how an economy will operate starts with certain assumptions. Those assumptions are what models are built on. The further one moves down the timeline of human development, the further modeling breaks apart.

Certainly, modeling can be a wonderful tool in which to explore areas not envisioned. But, the belief that if X is good, more of X is even better, has led to all kinds of economists failures. Human behavioral feedback loops can be a very difficult thing to map accurately over time.

One way in which models fall apart rapidly is in the predictability of Creativity and innovation. Creativity and innovation lie at the heart of economic upheavals. Who predicted with any certainty the rise of the internet as near as 1989, and what that has meant to Silicon Valley? And who today, can understand where and how creative geniuses such as da Vinci, Einstein or Bill Gates will come from next?

Sure, many people have analyzed the creative geniuses of our past and catalogued thousands of research hours in an attempt to predict the elements which give rise to creativity. And some researchers have even attempted to predict which economies will be the most innovative based on this research. But that's about as far as we've gotten. And maybe as far as we will get in our lifetime attempting to predict which creative genius will change the worlds economy next.

Modeling today simply cannot adjust to these sudden shifts of human endeavor. That doesn't mean we shouldn't try, we should just be very careful putting too much faith in a bunch of economists who tweak on their modeling dials, in an effort to make the past fit our present reality.

Mike

p.s. Good to see you still posting such wonderfully thoughtful posts which stimulated me to add my 1/2 a cent Freddie.



To: JF Quinnelly who wrote (58376)1/29/2001 3:44:38 AM
From: nihil  Read Replies (3) | Respond to of 71178
 
Well we differ on several things. I remain convinced that Lincoln prevented slavery being impressed on the United
States and the world permanently. Even had the erring sisters been allowed to depart without federal interference or attempt to enforce the law -- something I consider impossible -- the United States would still have been gripped by slavery. The nonseceding slave states -- eight of them -- would have continued to be protected by the Dred Scott decision. Ultimately, those states that wanted to protect human liberty -- such as Massachusetts -- would have had to succeed from the truncated, rump union.
That the seceding states could do so peacefully was only a mad dream. Anger against the seceders was so great, that I believe there would have been a coup d'etat replacing Lincoln with a military dictator, a coup possibly led by Secretary of State Seward and supported by several cabinet members and many member of Congress. I could be wrong, of course, and no one will ever know what would have happened.
If you put yourself in Lincoln's position, how could you tolerate the South Carolinians firing on the Star of the West and Fort Sumter? How could you tolerate the North Carolinians seizing the forts at Wilmington, and the Texans seizing federal property? How? Even had there been a shred of legality in secession, there was no theory under which Ft. Sumter, an established federal property, belonged to South Carolina. Even had it belonged to South Carolina, and had South Carolina been a truly independent nation, the wreckless endangering of the American troops legally occupying the property of their country, was a violation of international law. South Carolina had no legal justification in precipitating armed conflict and the massive murder of its own subjects and others. They were simply pirates. They deserved to be hanged.
Had the US become a permanently slave nation, whether as a union or in fragments, the great moral lesson of the civil war would have never been established. Russia's freeing of the serfs was according to the czar based on the American example. Brazil's emancipation of the slaves was again based on the American example. You may recall Mongkut's offer of elephants to Lincoln to help in the civil war, and Chulalongkorn's emancipation of Siam's slaves. A society that was almost completely enslaved thus become Thailand -- land of the free.
Hard to say, of course. Slavery is still with us -- but surrepticiously. Lincoln put an end to the respectability of slavery. No nation could persist with slavery once the United States had paid such an immense price to end it. I believe that the triumph of republicanism and democracy in Europe in the 19th century is traceable to the example of the United States which demonstrated that a people could make themselves free and stay that way.
Of course, many other wars had to take place for freedom to become established world-wide. We had to crush Japan's imperial madness and impose a democratic constitution on them. Hitler's Germany had to be crushed by USSR and US and UK and rebuilt in part by American leadership. In turn, the USSR had to be dissolved and overthrown by people inside who could no longer tolerate Communist dictatorship, and so for much of Eastern Europe.
There are many countries remaining in the world that are not committed to a republican constitution and a democratic electoral system. There are monarchies (e.g. Kuwait, Saudi Arabia) there are communist dictatorships (e.g. China, PDK, DRVN), there are kleptocracies (e.g. Congo). What is not in existence is any respectable alternative to a democratic society. A nation may have a figurehead monarch (such as Queen E the II). It may even have a king who is a moral and political leader such as Bhumipol), but to be a respectable member of the modern world, the government must be selected by and upheld by the people and that means all the people. This is the principle that Lincoln established, I hope and believe for all time.

As for the theoretical foundations of capitalism, they are merely a "game" in Wittgenstein's terminology. Since no system in the world works with precision, it cannot conform to any theoretical optimum. That is precisely what modern economic theory claims and what the free market fantasists like von Mises refuse to understand. The free marketers have no way to make tobacco merchants honest, or to prevent stock-market swindlers like Milken from stealing billions. To prevent, and to punish the criminal misbehavior of the worst business crooks takes a strong government, willing to confront and destroy criminal businessmen (such as Bill Gates). Free markets cannot repair themselves. They tend to capture themselves in hopeless contradictions and to suppress all progress. A government with the power and the willingness to intervene, control, and correct, is necessary to obtain efficiency and equity. No free market can restrain the monopolist. The monopolist, if unrestrained by government, can bribe and kill if necessary to maintain his power.
That is the true problem with socialism. Once government steps beyond control and law enforcement, and goes into direct operations in the economy, any possibility of an optimum is lost.
One needs to remember the apochryphal remarks (supposedly by Keynes) to the American visitor about the British economy. "There are two kinds of enterprise in Britain -- private enterprise, over which the government exercises very close control, and public enterprise, over which the government exercises no control whatsoever."
No entity can control itself. Private business must be regulated by someone else. Government enterprise must be regulated by private interests (working through the courts
imo.
IMO it is a mistake to mix the discussion of slavery with free markets. Obviously, the 13th amendment ending slavery abrogated the 5th amendment insofar as slaves were property. The civil war is an example of why markets cannot heal themselves. John Brown was correct in saying that the evil of the American government could only be eliminated by the effusion of blood. Perhaps it could have been eliminated with less bloodshed. In any event, all of those people are now dead. IMO the Southerners (including many of my ancestors) died in a futile and evil cause. It is late enough that showing respect for them and their lost cause doesn't make me angry. I think it is foolish. I think respect for mistakes of the past that creates rancor today is wasteful of human emotions. If people want to stand in the gloom of Oakland Cemetary and mouth a few words of memory for the Confederact that is okay. I don't think there are any African-American bodies or spirits lurking there to be offended. But having the battle cross on the flag of the State of Georgia is offensive, to me, and to all who think the Confederacy was worse than a mistake.
I think it is too early to celebrate the memory of the Nazis. Too many people alive today had their families destroyed and their lives disrupted by that particular evil.
The inability or unwillingness of people to bury the past, the evil past that all of us have ancestors who made it evil or who suffered from its evil, is the real tragedy of today. Left to me, I would have destroyed every shred of the Temple Mount, Andersonville Prison, Bergen-Belsen. After a decent period of mourning, maybe one generation, such relics should be forgotten. I reread Walt Whitman's poem about the discovery of the tombs of thousands of American prisoners and sailors who died in the hulks off of
New York harbor during the Revolutionary War. I don't hate the British who murdered these people. One of my ancestors was a loyalist (Tory) and was killed in the War. Had we enshrined these bones and worshipped their memory, as perhaps we should have, we would have found it difficult to join the British in WWI and WWII. Maybe this would be better after all. But then, maybe Hitler would have won and succeeded in enslaving mankind.
It is better to forget history. I think it is impossible to forgive history.