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The economy is not a machine - it's an ecosystem.

OrphanSlug said:
Actually it does, the nature of the economy is driven by multiple components and indicators as to its strength.
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Ye s there are multiple components that effect the economy - myriad of them interacting in different and not totally predictable ways. The same actions don't always produce the same results - that's where the economy-as-a-machine analogy breaks down. Dr Thomas Sowell once defined the economy as the interaction and results of millions if not billions of individual decisions made by billions of people on a continuing basis. Buyers, sellers, lenders, investors, entrepreneurs and workers all choosing what to do with their wealth to benefits themselves. And
Bullseye's corollary is "not all those decisions are made logically and rationally".
 
Winston said:
I find your dodges cowardly.
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I find your obsession with Trump pitiful. I talk about Trump on other threads, I want this one to remain more theoretical/thought provoking.
 
Bullseye said:
I find your obsession with Trump pitiful. I talk about Trump on other threads, I want this one to remain more theoretical/thought provoking.
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Fair play.

My viewpoint is that laissez faire capitalism always leads to crisis.
 
Bullseye said:
Nonsense. Ecosystems are so complex and interconnected that no machine could ever approach.
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That's delusional nuttery. Just because it's a really big and complex machine doesn't mean it's not a machine. Your falling for the whole... "The technology of a sufficiently advanced culture would be indistinguishable from magic." fallacy. ****, most religious people believe our entire universe to be nothing more than a machine built by a superior being. They seem to think we're living in the World of Warcraft.

Bullseye said:
Actually, in most cases, we just create an environment for the ecosystem to heal itself and flourish.
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Sure, and we can do the same thing with an economy. You irrigate an ecosystem with water, you irrigate an economy with a stimulus package.

Bullseye said:
Yet you claim to lean libertarian.
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Right, because while I understand that when in doubt we should leave well enough alone I recognize the reality that there are plenty of cases where there is no doubt that regulation and actions need to be taken to solve problems.

Bullseye said:
But that doctor analogy is just a subset of the economy as a machine mindset.
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Right, but in the case of a machine, you can just rebuild an entire machine from scratch and even add on to it quite simple to make it better. In the case of a person, there's very little a doctor can or should do to try and improve upon a healthy person.

Bullseye said:
Both are far more progressive than libertarian. Change you lean choice immediately.
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Sorry, there's no option to lean "intelligent."
 
Economies must be managed or they dissolve into oligopolies or worse, they collapse under the sheer greed of the participants. The only question is how much management is needed? One the one side we have Keynes, the other is likely some mix of Freidman and Hayek. Which side has the better track record?
 
Winston said:
Fair play.

My viewpoint is that laissez faire capitalism always leads to crisis.
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This isn't about laissez faire capitalism. View the economy as an ecosystem doesn't say "hands off". It's more about accepting that the unlike a machine controlling the economy isn't a cookbook activity; "fixing" it isn't always replacing the same part based on the current problem. Understand what we're talking about is how we model the economy in an effort to understand and guide it.
 
MrWonka said:
That's delusional nuttery. Just because it's a really big and complex machine doesn't mean it's not a machine. Your falling for the whole... "The technology of a sufficiently advanced culture would be indistinguishable from magic." fallacy. ****, most religious people believe our entire universe to be nothing more than a machine built by a superior being. They seem to think we're living in the World of Warcraft.
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Talk about delusional nuttery. This paragraph is a fine example.

MrWonka said:
Sure, and we can do the same thing with an economy. You irrigate an ecosystem with water, you irrigate an economy with a stimulus package.
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and you get eight years of anemic recovery.

MrWonka said:
Right, because while I understand that when in doubt we should leave well enough alone I recognize the reality that there are plenty of cases where there is no doubt that regulation and actions need to be taken to solve problems.


Right, but in the case of a machine, you can just rebuild an entire machine from scratch and even add on to it quite simple to make it better. In the case of a person, there's very little a doctor can or should do to try and improve upon a healthy person.


Sorry, there's no option to lean "intelligent."
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LOL, I love your ability to bend and twist an analogy to fit your ideology.
 
DifferentDrummr said:
The engine metaphor may be lousy, but history has already proved that ignoring the economy completely doesn't work either.

You left out a key point, that the article opened by complaining about the Fed's rate hikes. Right or wrong, these are the only tools available to a nation to curtail inflation pressures.
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The Fed chairman and presidents of the regional federal reserve banks could all resign in protest of the right wing extremist stimulus promoting further wealth concentration and accelerated federal debt legislated late last year
at the height of a sustained economic upturn of already unprecedented length, comparable to a farmer eating his seed corn. The follow on to this reckless legislation was removal of many of the safeguards put in
place just eight years ago in reaction to fraudulent abuse of the economic system by many of the same actors who recently used their influence to curtail the constraints protecting the American public from the fraudulent
abusive practices of these same financial industry actors.

So, there is a second tool, in addition to raising or lowering key interest rates. Guess who neutered it?
FederalReserve2016SCFWealthDecileChart.jpg
 
post said:
The Fed chairman and presidents of the regional federal reserve banks could all resign in protest of the right wing extremist stimulus promoting further wealth concentration and accelerated federal debt legislated late last year
at the height of a sustained economic upturn of already unprecedented length, comparable to a farmer eating his seed corn. The follow on to this reckless legislation was removal of many of the safeguards put in
place just eight years ago in reaction to fraudulent abuse of the economic system by many of the same actors who recently used their influence to curtail the constraints protecting the American public from the fraudulent
abusive practices of these same financial industry actors.

So, there is a second tool, in addition to raising or lowering key interest rates. Guess who neutered it?
FederalReserve2016SCFWealthDecileChart.jpg
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Not sure that a mass resignation of Fed board members would ever accomplish anything.
 
Bullseye said:
Came across this this morning and found its premise very interesting.
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The analysis is good, but the conclusion isn't.

The economy is a complex system of many interdependent feedback loops. This means that the effects of any policy can be counterintuitive and/or counterproductive. But hard problems are not a valid excuse to throw up your hands and give up. Regulations and policy changes are vital to creating and maintaining a strong economy.
 
Mithros said:
The analysis is good, but the conclusion isn't.

The economy is a complex system of many interdependent feedback loops. This means that the effects of any policy can be counterintuitive and/or counterproductive. But hard problems are not a valid excuse to throw up your hands and give up. Regulations and policy changes are vital to creating and maintaining a strong economy.
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I'm not sure the article's conclusion was to give up and through up our hands.
 
Bullseye said:
I'm not sure the article's conclusion was to give up and through up our hands.
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IBD's editorial belief is to have a hands off policy on the US economy, where the hands end up is your call....they can even be "through".
 
Bullseye said:
I'm not sure the article's conclusion was to give up and through up our hands.
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Really......Read until the end:
"The economy is too complex to be engineered," noted Max Borders in an article for the Library of Economics and Liberty. "It is dynamic and organic. "

"We can no more fix an economy," he says, "than we can fix a rain forest or a coral reef. At best, we can leave it alone."

Andrew Coyne, writing in Canada's National Post, makes the same point. "Leave its self-equilibrating processes to work, and watch it flourish. Start monkeying about at one end, on the other hand, and be prepared for all sorts of unintended effects to spread throughout."

Now if we can only get policymakers to understand this.​

That's throwing your hands up. And for the record, a system that's too complicated to analyze doesn't argue for no intervention, it argues that without prior evidence of previous results, the expected results of all interventions are essentially equivalent.
 
Bullseye said:
I'm not sure the article's conclusion was to give up and through up our hands.
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That was exactly his conclusion. He ended up with a quote; in part: "Leave its self-equilibrating processes to work, and watch it flourish."

The idea that the economy is self-equilibrating is not at all established fact. Inherent in the self-equilibration idea is that a system will equilibrate at some level, and anything above that level would be unstable, or out of equilibrium, which is nonsense.

Governments play an obvious role in a nation's economy, and whether or not that role is positive has far more to do with whether or not you have a competent government than whether or not government intervention itself is a good or bad idea.
 
JohnfrmClevelan said:
That was exactly his conclusion. He ended up with a quote; in part: "Leave its self-equilibrating processes to work, and watch it flourish."

The idea that the economy is self-equilibrating is not at all established fact. Inherent in the self-equilibration idea is that a system will equilibrate at some level, and anything above that level would be unstable, or out of equilibrium, which is nonsense.
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And since governments so such a bang up job we should trust them to taking care of it? Is it an "established fact" that government can navigate the economy around rough spots and produce continuous smooth sailing.

JohnfmCleve said:
Governments play an obvious role in a nation's economy, and whether or not that role is positive has far more to do with whether or not you have a competent government than whether or not government intervention itself is a good or bad idea.
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LOL. Ok if you want to believe that, be my guest.
 
Bullseye said:
Ye s there are multiple components that effect the economy - myriad of them interacting in different and not totally predictable ways. The same actions don't always produce the same results - that's where the economy-as-a-machine analogy breaks down. Dr Thomas Sowell once defined the economy as the interaction and results of millions if not billions of individual decisions made by billions of people on a continuing basis. Buyers, sellers, lenders, investors, entrepreneurs and workers all choosing what to do with their wealth to benefits themselves. And
Bullseye's corollary is "not all those decisions are made logically and rationally".
Click to expand...

It is not about the economy being "a machine" or whatever else, this is about dealing with the economic cycle. More importantly what is and should be deployed to reduce the amplitude of the economic cycle so that we have consistent growth over the long term while dealing with short term issues like a recession no matter the factors behind it.

Going with hands-off marketing planning basically goes back to the conditions that caused the Great Depression, and in more recent times the conditions that allowed for the Financial Collapse.

To be hands-off in today's economic models (which is most of the developed world) means ignoring all the reasons to explain where we are in the economic cycle, or what is driving inflation or lack of, or labor conditions, or investment, or dozens of other conditions we have to account for.

And speaking of "logically and rationally," you are discarding both suggesting market economics allows for a better economic model for everyone. We've been there, done that, and watched the failure harm plenty.

Government has to play a role with a mixed economic model, has to be that way.
 
Bullseye said:
1) And since governments so such a bang up job we should trust them to taking care of it?

2) Is it an "established fact" that government can navigate the economy around rough spots

3) and produce continuous smooth sailing.
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1) All modern economies are like that, try Somalia.

2) Economies are inherently unstable. That was even more true before Keynes.

3) And live happily every after? Try a Disney movie.
 
I think all of the things are which playing with economy because of people greedy, People are never happy with what they have always want to have more, countries are not happy what they have always want to have more. Someone happy, someone sad always because of that. That's what I think about economy.
 
MrWonka said:
Ummmm... We engineer ecosystems all the time. We farm, we cut down trees, we build dams and levees, we create global warming, we manage hunting seasons. There are a number of different endangered species that we've been able to bring back from the brink of destruction by managing our ecosystem. In truth, an ecosystem is a machine so the supposed distinction between these two analogies is idiotic. The fact that some of the things we try don't work doesn't mean it isn't possible. Just because something is complex doesn't mean it can't be understood. It can take longer, but we can still study it, and better understand it all the time.

Libertarians want economic chaos because almost all of them are upper-class white men who stand to benefit the most from that chaos. They are already in positions of power and see the government as they only check to their power. They'll believe any dumb argument that supports that position regardless of how nonsensical it is. This analogy is no better.

The analogy that I prefer best and have been using a lot lately is that of a doctor's patient. When a patient comes in with certain symptoms there are generally things the doctor knows he can do to try and make you better, but they don't always work. No matter good your doctor is, they can't always prevent you from doing dumb things to yourself that get you hurt or make you sick. That doesn't mean there aren't good choices or better choices that can improve our odds of success, and that doesn't mean we can't continue to re-evaluate them over time.
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Just to point out.. one of the tenets of medicine is "do no harm". In other words.. there are times when a hands off approach is the most appropriate with a patient.
 
Bullseye said:
Because it refers to an alternative to government intervention for every little hiccup in the economy.
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Ahhh, define which intervention is considered sacred then, because from where I sit, a whole lotta interveenin' been goin' on lately. Why our Prezzy-dint been tweetin' bout buildin' up a interveenin' musheen of his very own.

Ah heer tell he's gonna point it at China!

Jethro_scientist.jpg
 
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jaeger19 said:
The real take away here is that economics is about human behavior.. not mechanics.
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Very true. Let us assume that one could successfully predict future behavior. That knowledge itself would allow the person knowing it to anticipate future behavior which would affect future behavior meaning that perfect knowledge today about tomorrow is in itself a path towards influencing future behavior. This leads one to conclude that perfect information itself is not the key to managing an economy. In my opinion, the most important thing about managing an economy is understanding the goals one is pursuing by doing the managing. This is why the Fed is focused on inflation and in the late 70s, unemployment was added to the mix due to the acceptance of the Phillips Curve which has since been completely debunked as pure fantasy, Phillips himself even admitting it had no real basis other than being an interpretation of data. All one can do is try to control the excesses of human behavior. If you lean too far to the left, you get communism. Too far to the right, you get history repeating itself prior to 1930.
 
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