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To: John McCarthy who wrote (94316)	2/16/2009 6:57:27 PM
From: koan	Respond to of 116555

HI John. I get what you are saying, there are natural laws and we are interferring with their function. Here is how I would answer that concept. It has to do with the evolution of economic and social complexity and understanding. The raw law of supply and demand is simple and profound and can be isolated and proven to be true. It just takes a simple T test to prove that law. But the sophistication with which we see reality unfortunately has a by product of uncertainty. By sophistication I will use this famous quote: "the sophistication with which one solves an hypothesis is dependent upon how many varibales one can hold in consideration at any given time." Point being, considering lots of varibale while increasing the sophistication makes errors a large problem. A perfect example would be physics. We went from simple Newtonian physics which was pretty good, but the equations for the MORE SOPHISTICATED ideas didn't work. The scientists just kept fudging the equations until Einstein came along and said, "you can't do that something is wrong-lol". Then he figured out relativity. Insert relativity and the forth diminsion of time and equations work perfectly. Now take the next step and go onto quantum physics which is used constantly in modern day technology, but which we know nothing about. Quantum physics makes no sense. Entangle two particles and then separate them and they can communicate instanstanously from across the universe. That has been proven again and again. Try and trick a particle even going back in time e.g. the double slit experiment. Can't do it. Particle always outsmarts the scientist. So we can use it to build an an atomic bomb, but we do not understand it. The point being, that economics has infinite diminsions of complexity which can be used to help society thrive or fail. The sophistication of our economic understanding determines how well we will figure out economic problems. So while the more sophisticated the economic variables one uses the harder it is for people to figure out what is right and what is wrong. So using more sophisticaed economics is a double edged sword. Both good and bad depending on who does the best job figuring out the variables, And that is what Nassim Taleb is pounding the table about i.e. "first and foremost we need to understand what we do not know, even more that what we do know." cheers, Hi Koan >>"I always thought the foundation of economics was "THE LAW of supply and demand"!" OK - but (1) Why are housing prices crashing to a 1997 level? (2) How did they get to a 2006 level? I will use this answer: There are no laws of economics. We economists (anyone after Volker) have permitted this to occur. I hope you are fine -g- and look forward to getting my butt kicked -g- regards John>>