Robert Vienneau

In article , "Arthur E. Sowers"
wrote:

    > On Wed, 6 Nov 2002, Robert Vienneau wrote:

    > > In article ,
    > > [email protected] (Tim Worstall) wrote:

    > > > Robert Vienneau wrote in message
    > > > news:...
    > > > > In article ,
    > > > > [email protected] (Tim Worstall) wrote:

    > > > > > "Arthur E. Sowers" wrote in message
    > > > > > news:...
    > > > > > > On 3 Nov 2002, Tim Worstall wrote:

    > > > > > > > I tend to think ( and yes this is rather sweeping, and
    > > > > > > > therefore
    > > > > > > > not
    > > > > > > > to be taken as 100 % serious ) that there are really only two
    > > > > > > > important underlying questions in economics.
    > > > > > > > 1) What structure, methods and systems ensure an efficient
    > > > > > > > allocation
    > > > > > > > of resources?
    > > > > > > > 2) What are the reactions of human beings to certain stimuli

    > > > > Pareto efficiency doesn't allow one to always attack monopolies.

    > > > I?m a little uncomfortable with this...

    > > Tim is, of course, free to reject textbook "econ-speak". I still
    > > find it curious that he would introduce a technical term ("efficient
    > > allocation of resources"), describe it as a technical term, and
    > > then decry all knowledge of what it means.

    > When you're in the textbook world, then textbook "econ-speak" is OK. Just
    > as in any specialization. Its what's NOT in the textbooks that will trip
    > up anyone who is not knowledgeable.
    >
    > Is it possible for an economist (or any other *-ist) to sufficiently and
    > extensively possible to define his/her terms, establish the boundaries
    > carefully enough, etc, as to: i) remove most if not all uncertainty, ii)
    > reduce misunderstandings, and iii) address the issue?

When an economist talks about "efficient allocation of resources", the
interested bystander thinks they understand and might think the
economist is talking about value-free, technical, and uncontroversial
results. When an economist talks about "Pareto efficiency", the
bystander is more likely to inquire for an explanation. Or the
bystander might dismiss the economist entirely.

I think Tim's explanation of Pareto efficiency was muddled.

The dominant school of thought in Western economics grew out
of neoclassical economics. Neoclassical economics was invented
in the 1870s by Jevons, Menger, and Walras. I think of neoclassical
economists as more a theory about what some think should be
than what is. Here's Jevons on the problem of economics:

"Given, a certain population, with certain needs and powers
of production, in possession of certain lands and other
sources of material: required, the mode of employing their
labour which will maximize the utility of their produce."

This claim that neoclassical economics is basically a normative
theory was made by William Jaffe, a great scholar who specialized
in studying Walras. Pareto built on Walras' approach. This
claim can also be seen in a recent textbook by Arrow and Hahn.

At one point, maybe, economists thought of "utility" as a robust entity,
as something that existed in your pysche. Given all relevant quantities
of things you like and dislike, utility would measure how well off you
are.

Economists had two big objections to assessing policy by total
utility.

(1) How can an individual measure how much utility he has? He
might be able to say whether he's better off in his own judgement
in one situation as compared to another, but how can he say
how much better?

(2) How can one compare utility across individuals? If Tim
is hurt by a pin prick and I get a new car, is total utility
increased? Perhaps Tim is very sensitive and I don't
care much about cars.

So economists moved away from utility. They now think of
utility functions as formal entities summarizing mere preferences,
not as measures of the intensity of pains and pleasures. In
the jargon, utility only attains an ordinal measurement scale,
not a cardinal (interval) measurment scale. Utility is a
much more ghostly entity, and this is a good thing.

Economists adopted a norm of Pareto "efficiency". Suppose in
some allocation of goods, no agent can be made better off
in his or her own judgement without some other agent
being made worse off. Then that allocation is Pareto
efficient.

It should be noted that Pareto efficiency does not rank all
allocations; there can be many allocations that are
Pareto efficient.

Also notice what happens if a policy dramatically improves
the lot of the bottom 10% but hurts a couple of people
in the top 1%. That policy is not a Pareto efficiency-improving
policy.

Pareto efficiency is a very weak criteria for policy - it
doesn't allow one to say much. So economists have tried
to come up with work-arounds, for example, based on
the concept of the winners bribing the losers. I think
these workarounds seem to rely on implicit judgements
about the fairness of the status quo ante. I tend to
distrust this whole approach.

The idea that policy should be judged by its impact on
the lowly is not a bad idea, though. Such an idea can
be embedded into a social welfare function, I guess.

--
Try http://csf.colorado.edu/pkt/pktautho.../Bukharin.html
To solve Linear Programs: .../LPSolver.html
r c A game: .../Keynes.html
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau

Arthur E. Sowers

On Wed, 6 Nov 2002, alexy wrote:

    > "Arthur E. Sowers" wrote:
    > >
    > >
    > >On Wed, 6 Nov 2002, alexy wrote:
    > >
    > >> "Arthur E. Sowers" wrote:
    > >>
    > >>
    > >> >Beautiful. And, its just fine. I'm just bothered by the guys who not only
    > >> >don't know where the holes are, but even that they might exist. After all,
    > >> >who's theory is perfect? ;-)
    > >> Absolutely, but where have you seen that?
    > >
    > >Oh, I donno. I had the feeling that after I did a sweeping hose of the
    > >economists with that quote of that reporter who announced the Nobel prize
    > >to that non-economist that I got such a counter-hose from all the
    > >economist-types that they surely knew so much more that the only ones
    > >permitted to make tweaks on their already nearly perfect theories were
    > >them, not anyone else.
    > Boy, I sure never saw that. Maybe the ones you are talking about did
    > not get cross-posted in a.c.c.

In case you didn't notice, various editings of the crossposts were added
and subtracted by various people, at various times, and I only know the
identity of one of the people. And, I'm not going to go back and trace who
the mischeivous one(s) might be. And, yours truly, 'swiped' a couple of
posts from sci.econ and reposted on another NG (I'm not telling) for the
purposes of 'sharing the show' where I'm sure there is at least a little
hysterical laughter. Buuuut, you might just want to 'subscribe' to
sci.econ and go over there, yourself. For all I know, you just might 'eat
up all that stuff'. ;-)

You know, nothing like some real-life, commercial-free, live
entertainment, eh?

Art

    > --
    > Alex
    > Make the obvious change in the return address to reply by email.

Arthur E. Sowers

On Wed, 6 Nov 2002, alexy wrote:

    > "Arthur E. Sowers" wrote:
    > >Pardon my digression (and I appologize, too, but some of this is for
    > >'alexy', with which I had a nice big flamewar back about a 1-2 months ago
    > >over the value of econ101 and simple supply-demand relationships)

    > More accurately, about your understanding that supply and demand were
    > not working in sutuations where the more conventional view is that the
    > market was distorted, or that public policy should prohibit the price
    > that would have been set by supply and demand.

Which is a fine statement of what I was trying to get across but someone
(ahem), at the time, wasn't in a mood(?) to accept anything other than
rigid definitions AND that "its all simple econ101 and suppy and demand".

    > To clairify for others reading this thread, you brought up the example
    > of price-gouging that was going on in the sale of plywood for some
    > time after a hurricane. You said that that price gouging was an
    > example of where supply and demand were not working. My contention is
    > that supply and demand were working, but that there were public policy
    > reasons not to allow such pricing to work and form the basis for the
    > distribution of a limited resource (the plywood). You commented in
    > this and other examples that the supplier was "charging what the
    > market would bear" as if that were a concept different from supply and
    > demand.

I gave a couple of other examples, too, and nobody wanted to see them in
any other interpretation except as simple relationships and tangential
rationalizations. At one point you used the word "willingness" as part of
the decision between a buyer and seller in ariving at a price, and yet I
see in our present (western) world a very extensive landscape in mind
manipulation (through advertising, marketing, and other activities) and
exploitation of human psychology to coerce people into buying goods and
services and all this takes away quite a bit of free will and common sense
from the whole economic picture. This is why I got a big charge out of the
Nobel prize for economics going to a non-economist (a psychologist) who,
as the article I read went on, investigated quite a lot of irrational
behavior in connection with economic processes.

In the plywood example, I would say that the seller was exploiting a
circumstance for personal gain at the expense of hurricane victims. Sure,
you can explain it in terms of supply and demand, but that is like the big
corporations who carry out all kinds of unethical and immoral actions on
the grounds that they are legal and that's all that matters. And, in
really modern times (eg. Enron/Andersen), they considered as legal ("we
didn't do anything wrong") all kinds of things by extensive manipulations
that hurt lots of people. So, you can do or think whatever you want, but
I'm still going to say that its not a simple supply-demand situation
unless you just want to talk about a textbook example. In real life, there
are lots of situations where peripheral details are significant. Regulated
prices and military budgets ... I don't see any supply-demand
relationships there, either.

    > What say you (amateur or professional) economists?
    > > but
    > >could you tell me how Arabian rug merchants back surely 500 years earlier,
    > >or more, managed to stay in profitable business in the absence of
    > >Neoclassical economics in the 1870s?
    > Or equivalently, how were they able to eat, when they did not
    > understand anything about the the process of digestion?

1. Don't answer the question with another question.

2. The fact that they did not understand anything about the process of
digestion actually sorta proves MY point that explicit knowledge of
economics (as an academic discipline) is totally unnecesary for a person
to carry out a profitable business AND in a community where other persons
also live a life involving trade-based interactions with each other.

3. Ergo, how does economics benefit modern man? Jarrad Diamond (in Guns,
Germs, and Steel) mentioned that thousands of years ago, the only recorded
documents were tax records. Oh, yes, that is supply and demand. The king
makes the demand, and the peasants make the supply.

4. Or, do you think we really need Alan Greenspan?

Art

    > --
    > Alex
    > Make the obvious change in the return address to reply by email.

Arthur E. Sowers

On Thu, 7 Nov 2002, alexy wrote:

    > "Arthur E. Sowers" wrote:
    > >
    > >
    > >On Wed, 6 Nov 2002, alexy wrote:
    > >
    > >> "Arthur E. Sowers" wrote:
    > >>
    > >>
    > >>
    > >> >Pardon my digression (and I appologize, too, but some of this is for
    > >> >'alexy', with which I had a nice big flamewar back about a 1-2 months ago
    > >> >over the value of econ101 and simple supply-demand relationships)
    > >
    > >> More accurately, about your understanding that supply and demand were
    > >> not working in sutuations where the more conventional view is that the
    > >> market was distorted, or that public policy should prohibit the price
    > >> that would have been set by supply and demand.
    > >
    > >Which is a fine statement of what I was trying to get across but someone
    > >(ahem), at the time, wasn't in a mood(?) to accept anything other than
    > >rigid definitions AND that "its all simple econ101 and suppy and demand".
    > >
    > >> To clairify for others reading this thread, you brought up the example
    > >> of price-gouging that was going on in the sale of plywood for some
    > >> time after a hurricane. You said that that price gouging was an
    > >> example of where supply and demand were not working. My contention is
    > >> that supply and demand were working, but that there were public policy
    > >> reasons not to allow such pricing to work and form the basis for the
    > >> distribution of a limited resource (the plywood). You commented in
    > >> this and other examples that the supplier was "charging what the
    > >> market would bear" as if that were a concept different from supply and
    > >> demand.
    > >
    > >I gave a couple of other examples, too, and nobody wanted to see them in
    > >any other interpretation except as simple relationships
    > You might have heard that it was a simple relationship, but I'm pretty
    > sure no-one said that. We just kept saying that it was supply and
    > demand, and that the factors you were raising were valid issues in
    > determining what the supply and/or demand curve were.

That sure does not jibe with my memory, but I will also disclaim that my
memory is perfect or even excellent.

You kept saying
    > that those factors became more important than supply and demand, and
    > the point others were trying to make to you is that these were factors
    > within a supply and demand model.

Starting with the books "The Hidden Persuaders" (Vance Packard), "The
Status Seekers" (same author), on up to the present, including "What they
don't teach you at Harvard School of Business" (Mark McCormick, who, by
the way is one of YOU guys more than one of MY guys), modern marketing can
make people buy ANYthing whether they want it or need it. There is at
least one chapter by MM where he gives a personal example he was involved
in. YES, I can accept simple supply-demand concepts but only as simple
concepts. The human psychology component, emotional appeals, irrational
processes play large roles. I think the s-d model is _within_ the broader
processes in society rather than the other way around. And, the stuff I
"threw in your face" from the newspaper article on the Nobel prize going
to a non-economist is an issue YOU can dismiss if you want, but I'm going
to file that detail and the detail that some important people thought
that the work of the non-economist had serious relevance for
economics.

    > > and tangential
    > >rationalizations. At one point you used the word "willingness" as part of
    > >the decision between a buyer and seller in ariving at a price, and yet I
    > >see in our present (western) world a very extensive landscape in mind
    > >manipulation (through advertising, marketing, and other activities) and
    > >exploitation of human psychology to coerce people into buying goods and
    > >services and all this takes away quite a bit of free will and common sense
    > >from the whole economic picture. This is why I got a big charge out of the
    > >Nobel prize for economics going to a non-economist (a psychologist) who,
    > >as the article I read went on, investigated quite a lot of irrational
    > >behavior in connection with economic processes.
    > Are you saying that irrational behavior is unwilling behavior?

Bad sentence. I can't answer that sentence in a yes or no. And, certainly
not without further clarifications.

I'd
    > have a hard time buying that. It might not have been rational for my
    > wife and me to trade in her car with "only" 220,000 miles on it while
    > it was running fine. But we did it willingly.

I have no idea what other things were going on in your mind or your wifes
mind. Its just as rational to look in the refrigerator and find it half
full and decide "therefore I need to go shopping now" as it is rational to
decide "therefore I can wait another day."

    > >
    > >In the plywood example, I would say that the seller was exploiting a
    > >circumstance for personal gain at the expense of hurricane victims. Sure,
    > >you can explain it in terms of supply and demand,
    > Finally!!!

Premature explicative. You didnt read the qualifications I put below.

    > > but that is like the big
    > >corporations who carry out all kinds of unethical and immoral actions on
    > >the grounds that they are legal and that's all that matters. And, in
    > >really modern times (eg. Enron/Andersen), they considered as legal ("we
    > >didn't do anything wrong") all kinds of things by extensive manipulations
    > >that hurt lots of people. So, you can do or think whatever you want, but
    > >I'm still going to say that its not a simple supply-demand situation
    > >unless you just want to talk about a textbook example. In real life, there
    > >are lots of situations where peripheral details are significant. Regulated
    > >prices and military budgets ... I don't see any supply-demand
    > >relationships there, either.

What? No comeback on that?

    > >> What say you (amateur or professional) economists?
    > >>
    > >> > but
    > >> >could you tell me how Arabian rug merchants back surely 500 years earlier,
    > >> >or more, managed to stay in profitable business in the absence of
    > >> >Neoclassical economics in the 1870s?
    > >>
    > >> Or equivalently, how were they able to eat, when they did not
    > >> understand anything about the the process of digestion?
    > >
    > >1. Don't answer the question with another question.
    > >
    > >2. The fact that they did not understand anything about the process of
    > >digestion actually sorta proves MY point that explicit knowledge of
    > >economics (as an academic discipline) is totally unnecesary for a person
    > >to carry out a profitable business AND in a community where other persons
    > >also live a life involving trade-based interactions with each other.
    > Absodamnlutely! Whoever said anything to the contrary?

You implied it. Many times with i) your attempts to "educate" me about
econ101, ii) your implication that econ101 explained everything, or
nearly everything, and iii) your dismissal of most if not all of all of
the examples I thought where simple s-d was questionable.

    > >3. Ergo, how does economics benefit modern man? Jarrad Diamond (in Guns,
    > >Germs, and Steel) mentioned that thousands of years ago, the only recorded
    > >documents were tax records. Oh, yes, that is supply and demand. The king
    > >makes the demand, and the peasants make the supply.
    > How does understanding the digestive system benefit modern man?
    > (Sorry, I reject your point 1.)

How does advanced economics benefit modern man. If you can reject my point
1, then I can use it against you, too.

    > >4. Or, do you think we really need Alan Greenspan?
    > I think we definitely need someone in that role.

That answer is not permitted.

Going on for some possible thoughtful further discussion, (this is beyond
econ101 and it may even seem to you to be heretical and blasphemous but
consider that I'm putting quite a bit of extra effort into "explaining" my
skepticism).

Many many years ago, I read a fascinating book review (I love to read book
reviews, they sometimes induce me to buy the book) of "Beyond the Edge of
Certainty" edited by someone, I think, named Collodny (and I'n not so sure
of either the title or the editor. The book review concentrated on the
first chapter which was quite large and also extreemly significant
(whereas all the others were much less so). That chapter was written by a
philosopher who "attacked" Newton's three laws of motion. Now, we're
talking about physics here. Not woolgathering and contemplating questions
about "why air exists". This was a very straightforward but also very
valid criticism of what these laws were based on. For me, I was very
"religeous" about physics and -- after all -- these guys made the atomic
bomb possible and you'd better be affraid of that. The author, and without
any hocus-pocus, clearly showed, just with as much brilliance as I've ever
seen (and far more than I have!) that there is really something wrong with
these laws. Don't ask me to explain it, because I can't remember the
details, but the book reveiwer saw it as amazing, too.

Hence, "Art's notion #1" (notion is not a law, hypothesis, principle,
whatever): there is more dogma out there than you think and quite a bit of
it either may be wrong or surely is wrong or incomplete.

The next somewhat related notion (#2) comes from two books "The End of the
Future" by Jean Gimple, and "The End of Science" by --I think-- Tom or Tim
Horgan. Gimple is a respected name, but reviewers thought the quality of
the analysis was poor compared to the other works he wrote, but the idea
(I have the book, and I read it) was, I thought, valid: quite a few of the
past promises of science and technology never panned out. And, I remember
the examples. Horgan's book was based on a large number of interviews with
both biologists and physicists and was aimed at calling attention to the
problem that many if not most of the fundamental and major unsolved
problems are still unsolved and the experts are actually mostly stumped. I
found his narrative compelling; but, out of several book reviews I read,
and a number of letters to the editors, a wide range of scientists were
quite unhappy with his "judgement" that scientific progress may have
reached some limits. Indeed, controlled thermonuclear fusion is about
dead (I have a friend who is in this stuff, and that's what he's told me),
and there are no new giant atom smashers being built. Biotech is at a
peak now, but its a question if it will last another two decades. We've
got malaria in the USA now, the fire ants are still moving north, and
killer bees are moving north too, and despite decades of research, the
fire ants and killer bees are still moving. There are DDT resistant
mosquitos out there and if malaria spreads, we're going to be in deep
trouble and the molecular biologists may be helpless. Cancer is also on
the rise according to some study just released.

And, so, "Art's notion #2" is something like: will great and detailed
efforts in advanced economics ultimately solve -- either in few or many
"models" -- all if not most economics questions/problems? Actually, that
phrase can be re-written to include any science or technology field.
Horgan, by the way, wrote another book dealing with progress in the
behavioral sciences and with similar conclusions to his first book.

Moving on to another related issue, I have always asked why the most
intelligent life form on the planet insists, even in the presence of
enlightenment/education/science, on waging war upon its own species? To
date I have not been able to answer that except that readings in several
books on animal behavior and Jarrad Diamond's "Guns, Germs, and Steel"
provided some answers. To cut a long story (and spare myself digging
up still more references to citable sources) short, and contrary to how I
thought when I was younger, I have come to a conclusion that human
intelligence is much more limited and that modern society is: i) unable
to learn from history, and ii) limited in its ability to control
prejudicially formed ideas and
prejudicially/incompletely/inaccurately generated perceptions. This
"judgement," even more brash than my "snotty remark" about
advanced economics/economists, is based on what I've read in history
books, learnings in a course in social psychology (especially as regards
witness reliability in courtroom cases), many books on war and missle
defense technology and crisis management, many books on animal behavior
and animal intelligence, the books I mentioned above, several books on the
mistakes made in the Viet Nam war, and my lifetime observation of
"Republican vs Democrat" rivalry which is more interested in getting one
side in and the other side out than in solving real problems in society.

This is really an extension of "Art's notion #2" and I think its a serious
problem. And, I really can't take any credit for putting my name on these
notions. After all, all the "data" is there in the books authored by the
experts. And, so, I have to ask, are there any economists that would dare
to admit that their "hobby horse" may really be a "trojan horse" of some
kind? Or, are all of them so sure that continued and expanded study of
economics will solve all if not most economic problems?

Yet another fascinating book is Alvin Kerwin's "The death of literature".
A non-scientist (faculty at Columbia), Kerwin traced recent and major
changes in thinking in contemporary english and literature and even the
involvement of major court cases in these academic studies. This branches
into something called "post-modernist" thinking which many bright people
accept. Some make reference to it in terms of deconstruction, and that it
is related to the anti-scientific and anti-intellectual movements, but
this is not what I am talking about. I may be able to dig up some
examples, but its not part of my above "line of thinking". Nor is Alan
Bloom's "The closing of the American Mind" (which I also read) which just
says today's college student is totally unprepared for advanced study.

And, where does that leave me? Well, I'm happy to have built my own castle
in the sky, and I've made it out of mostly non-fiction books that I love
to read. Some I listed above. Or, is it not an example of, "the more you
know, the less you know" -- a paradox? -- and, vice versa? For flavoring,
shake a little content from the Tao te Ching.

Art

    > Alex
    > Make the obvious change in the return address to reply by email.

Alexy

"Arthur E. Sowers" wrote:

    >On Thu, 7 Nov 2002, alexy wrote:
    >> "Arthur E. Sowers" wrote:
    >> >
    >> >
    >> >On Wed, 6 Nov 2002, alexy wrote:
    >> >
    >> >> "Arthur E. Sowers" wrote:
    >> >>
    >> >>
    >> >>
    >> >> >Pardon my digression (and I appologize, too, but some of this is for
    >> >> >'alexy', with which I had a nice big flamewar back about a 1-2 months ago
    >> >> >over the value of econ101 and simple supply-demand relationships)
    >> >
    >> >> More accurately, about your understanding that supply and demand were
    >> >> not working in sutuations where the more conventional view is that the
    >> >> market was distorted, or that public policy should prohibit the price
    >> >> that would have been set by supply and demand.
    >> >
    >> >Which is a fine statement of what I was trying to get across but someone
    >> >(ahem), at the time, wasn't in a mood(?) to accept anything other than
    >> >rigid definitions AND that "its all simple econ101 and suppy and demand".
    >> >
    >> >> To clairify for others reading this thread, you brought up the example
    >> >> of price-gouging that was going on in the sale of plywood for some
    >> >> time after a hurricane. You said that that price gouging was an
    >> >> example of where supply and demand were not working. My contention is
    >> >> that supply and demand were working, but that there were public policy
    >> >> reasons not to allow such pricing to work and form the basis for the
    >> >> distribution of a limited resource (the plywood). You commented in
    >> >> this and other examples that the supplier was "charging what the
    >> >> market would bear" as if that were a concept different from supply and
    >> >> demand.
    >> >
    >> >I gave a couple of other examples, too, and nobody wanted to see them in
    >> >any other interpretation except as simple relationships
    >> You might have heard that it was a simple relationship, but I'm pretty
    >> sure no-one said that. We just kept saying that it was supply and
    >> demand, and that the factors you were raising were valid issues in
    >> determining what the supply and/or demand curve were.
    >That sure does not jibe with my memory,
That doesn't surprise me. You never "got it" that we were saying that,
so there was no way to remember it.
    > You kept saying
    >> that those factors became more important than supply and demand, and
    >> the point others were trying to make to you is that these were factors
    >> within a supply and demand model.
    >Starting with the books "The Hidden Persuaders" (Vance Packard), "The
    >Status Seekers" (same author), on up to the present, including "What they
    >don't teach you at Harvard School of Business" (Mark McCormick, who, by
    >the way is one of YOU guys more than one of MY guys), modern marketing can
    >make people buy ANYthing whether they want it or need it.
Bull shit. (Off-the-top-of-my-head reaction of course.) The only
things I can be forced to buy are those things government provides in
return for my taxes. E.g., as a property owner, I am forced to buy
police and fire protection, and to buy education for other people's
children. As a wage-earner, I am forced to buy Social Security
benefits. But Madison avenue cannot force me to buy something. They
may well change my desire for something, but that is not the same.
What have they ever forced you to buy?

    > There is at
    >least one chapter by MM where he gives a personal example he was involved
    >in.
Haven't read it. Did he force someone at gunpoint to give him some
money, and he gave the person some goods in exchange?

    >YES, I can accept simple supply-demand concepts but only as simple
    >concepts. The human psychology component, emotional appeals, irrational
    >processes play large roles. I think the s-d model is _within_ the broader
    >processes in society rather than the other way around. And, the stuff I
    >"threw in your face" from the newspaper article on the Nobel prize going
    >to a non-economist is an issue YOU can dismiss if you want, but I'm going
    >to file that detail and the detail that some important people thought
    >that the work of the non-economist had serious relevance for
    >economics.

No-one is dismissing it. Its just that anyone at all familiar with the
very basic concepts of econ does not share your fascination that a
psychologist's contribution to the field is recognized. Within the
first 100 pages of that _high-school_ econ book I found, they talked
about how advertizing, production quotas, natural disasters,
monopolies, rent controls, etc. affect the supply and demand curves,
and thus the prices of goods. At an introductory level, the
quantification of all these factors is not attempted, and I think it's
great that a psychologist is doing Nobel-level research on some of
those factors. I have no earthly idea exactly what his research was
on, but no-one with the slightest inkling of what economics is about
should be at all surprised that such study is being done.

    >> > and tangential
    >> >rationalizations. At one point you used the word "willingness" as part of
    >> >the decision between a buyer and seller in ariving at a price, and yet I
    >> >see in our present (western) world a very extensive landscape in mind
    >> >manipulation (through advertising, marketing, and other activities) and
    >> >exploitation of human psychology to coerce people into buying goods and
    >> >services and all this takes away quite a bit of free will and common sense
    >> >from the whole economic picture. This is why I got a big charge out of the
    >> >Nobel prize for economics going to a non-economist (a psychologist) who,
    >> >as the article I read went on, investigated quite a lot of irrational
    >> >behavior in connection with economic processes.
    >> Are you saying that irrational behavior is unwilling behavior?


    >Bad sentence.
Why? Seems perfectly well-constructed to me. And it is not of the "do
you still beat your wife" variety. You either do or do not think that
irrational behavior is also unwilling.

    > I can't answer that sentence in a yes or no. And, certainly
    >not without further clarifications.
You pointed out the work on irrational behavior in the same paragraph
where you pointed out that I discussed willing behavior. You seemed to
be giving it as a counter-argument, although that was not clear, thus
my question. I was wondering whether you thought there was any
connection, or your were just throwing in irrelevant factoids.

    >> >
    >> >In the plywood example, I would say that the seller was exploiting a
    >> >circumstance for personal gain at the expense of hurricane victims. Sure,
    >> >you can explain it in terms of supply and demand,
    >> Finally!!!
    >Premature explicative. You didnt read the qualifications I put below.
    >> > but that is like the big
    >> >corporations who carry out all kinds of unethical and immoral actions on
    >> >the grounds that they are legal and that's all that matters. And, in
    >> >really modern times (eg. Enron/Andersen), they considered as legal ("we
    >> >didn't do anything wrong") all kinds of things by extensive manipulations
    >> >that hurt lots of people. So, you can do or think whatever you want, but
    >> >I'm still going to say that its not a simple supply-demand situation
    >> >unless you just want to talk about a textbook example. In real life, there
    >> >are lots of situations where peripheral details are significant. Regulated
    >> >prices and military budgets ... I don't see any supply-demand
    >> >relationships there, either.
    >What? No comeback on that?
There was so much nebulous hand-wringing and rambling that it's hard
to find something specific to reply to. But let's look at Enron stock
for just a second. Before the fall, its price was set by supply and
demand. The price floated each day to the point where the number of
shares that current holders were willing to sell at that price matched
the number of shares that others were willing to buy at that price.
That is supply and demand. Or put another way, which you seem to think
is different, the sellers sold there shares at whatever price the
market would bear. Now, what do we know about the supply and demand
curves? They were what they were because of incomplete and fraudulent
information. When better information started to come out, the demand
curve shifted far to the left, and the supply curve shifted far to the
right, resulting in a collapse of the stock price. Again, this is
high-school level stuff. Is it "simple" supply and demand? In concept,
certainly. In understanding all of the shenanigans that went into the
deception leading to the inflated prices, certainly not.

Regulated prices are a trivial example of supply and demand, since the
supply curve is a horizontal line.

It's a stretch to consider military spending a market.
    >> >> What say you (amateur or professional) economists?
    >> >>
    >> >> > but
    >> >> >could you tell me how Arabian rug merchants back surely 500 years earlier,
    >> >> >or more, managed to stay in profitable business in the absence of
    >> >> >Neoclassical economics in the 1870s?
    >> >>
    >> >> Or equivalently, how were they able to eat, when they did not
    >> >> understand anything about the the process of digestion?
    >> >
    >> >1. Don't answer the question with another question.
    >> >
    >> >2. The fact that they did not understand anything about the process of
    >> >digestion actually sorta proves MY point that explicit knowledge of
    >> >economics (as an academic discipline) is totally unnecesary for a person
    >> >to carry out a profitable business AND in a community where other persons
    >> >also live a life involving trade-based interactions with each other.
    >> Absodamnlutely! Whoever said anything to the contrary?
    >You implied it. Many times with i) your attempts to "educate" me about
    >econ101, ii) your implication that econ101 explained everything, or
    >nearly everything, and iii) your dismissal of most if not all of all of
    >the examples I thought where simple s-d was questionable.

Please understand the distinction between what you infer and what I
imply. I never thought that understanding of economics was necessary
for running a successful business, so I am sure I did not imply that.

Let me give a better example than my digestive system one:

A medieval archer or trebuchet operator know how far above the horizon
to aim in order to maximize their range, even though they knew nothing
about Newtonian mechanics. Similarly, the rug merchant of the time
knew how to price his rugs to maximize his income, without ever having
thought of a supply and demand model.

Fast forward. Today, both mechanics and the workings of markets are
much better understood. But a quarterback might still knows how high
to throw a pass to get the needed range without understanding the
physics. Similarly, I just read about a luthier who makes high-end
custom guitars (~$6,000) who is significantly raising his prices this
year because he has a two-year backlog of orders. He did not need to
study economics to make this decision.

The physicist and economist give us better ways of understanding what
is happening when the quarterback and luthier do their things. In a
sense, the physicist and economist in these instances are chroniclers
and theorizers, not doers.



    >Hence, "Art's notion #1" (notion is not a law, hypothesis, principle,
    >whatever): there is more dogma out there than you think and quite a bit of
    >it either may be wrong or surely is wrong or incomplete.
How do you know what I think?
Heisenberg & Goedel (too lazy to figure out how to do the umlaut!)
virtually guarantee that.

    >And, so, "Art's notion #2" is something like: will great and detailed
    >efforts in advanced economics ultimately solve -- either in few or many
    >"models" -- all if not most economics questions/problems? Actually, that
    >phrase can be re-written to include any science or technology field.
I'd say no.

    >And, so, I have to ask, are there any economists that would dare
    >to admit that their "hobby horse" may really be a "trojan horse" of some
    >kind? Or, are all of them so sure that continued and expanded study of
    >economics will solve all if not most economic problems?
Stupid question. Those are not the only two alternatives. Expansion of
knowledge does not imply attainment of perfect knowledge.

--
Alex
Make the obvious change in the return address to reply by email.

David Friedman

In article ,
alexy wrote:

    > >Starting with the books "The Hidden Persuaders" (Vance Packard), "The
    > >Status Seekers" (same author), on up to the present, including "What they
    > >don't teach you at Harvard School of Business" (Mark McCormick, who, by
    > >the way is one of YOU guys more than one of MY guys), modern marketing can
    > >make people buy ANYthing whether they want it or need it.

This always reminds me of an argument my father had a very long time ago
one summer in New Hampshire, I think with the guy who ran the local auto
repair shop. Ford had brought out a new and different car, and the man
was arguing that, however bad it might be, they could always make it
sell by advertising it enough.

The car in question was the Edsel.

Marketers push lots of things. Some ofls
m succeed, some of them flop.

--
www.daviddfriedman.com

Arthur E. Sowers

On Fri, 8 Nov 2002, alexy wrote:

    > "Arthur E. Sowers" wrote:
    > >On Thu, 7 Nov 2002, alexy wrote:
    > >
    > >> "Arthur E. Sowers" wrote:
    > >>
    > >> >
    > >> >
    > >> >On Wed, 6 Nov 2002, alexy wrote:
    > >> >
    > >> >> "Arthur E. Sowers" wrote:
    > >> >>
    > >> >>
    > >> >>
    > >> >> >Pardon my digression (and I appologize, too, but some of this is for
    > >> >> >'alexy', with which I had a nice big flamewar back about a 1-2 months ago
    > >> >> >over the value of econ101 and simple supply-demand relationships)
    > >> >
    > >> >> More accurately, about your understanding that supply and demand were
    > >> >> not working in sutuations where the more conventional view is that the
    > >> >> market was distorted, or that public policy should prohibit the price
    > >> >> that would have been set by supply and demand.
    > >> >
    > >> >Which is a fine statement of what I was trying to get across but someone
    > >> >(ahem), at the time, wasn't in a mood(?) to accept anything other than
    > >> >rigid definitions AND that "its all simple econ101 and suppy and demand".
    > >> >
    > >> >> To clairify for others reading this thread, you brought up the example
    > >> >> of price-gouging that was going on in the sale of plywood for some
    > >> >> time after a hurricane. You said that that price gouging was an
    > >> >> example of where supply and demand were not working. My contention is
    > >> >> that supply and demand were working, but that there were public policy
    > >> >> reasons not to allow such pricing to work and form the basis for the
    > >> >> distribution of a limited resource (the plywood). You commented in
    > >> >> this and other examples that the supplier was "charging what the
    > >> >> market would bear" as if that were a concept different from supply and
    > >> >> demand.
    > >> >
    > >> >I gave a couple of other examples, too, and nobody wanted to see them in
    > >> >any other interpretation except as simple relationships
    > >> You might have heard that it was a simple relationship, but I'm pretty
    > >> sure no-one said that. We just kept saying that it was supply and
    > >> demand, and that the factors you were raising were valid issues in
    > >> determining what the supply and/or demand curve were.
    > >
    > >That sure does not jibe with my memory,
    > That doesn't surprise me. You never "got it" that we were saying that,
    > so there was no way to remember it.

Fine, you never 'got it' as far as what I was talking about except that
your more recent 'tune' sounds more accomodating.

    > >
    > > You kept saying
    > >> that those factors became more important than supply and demand, and
    > >> the point others were trying to make to you is that these were factors
    > >> within a supply and demand model.
    > >
    > >Starting with the books "The Hidden Persuaders" (Vance Packard), "The
    > >Status Seekers" (same author), on up to the present, including "What they
    > >don't teach you at Harvard School of Business" (Mark McCormick, who, by
    > >the way is one of YOU guys more than one of MY guys), modern marketing can
    > >make people buy ANYthing whether they want it or need it.
    > Bull shit. (Off-the-top-of-my-head reaction of course.)

No big deal. I have my own repetoire of knee-jerk reactions, too.

The only
    > things I can be forced to buy are those things government provides in
    > return for my taxes. E.g., as a property owner, I am forced to buy
    > police and fire protection, and to buy education for other people's
    > children. As a wage-earner, I am forced to buy Social Security
    > benefits. But Madison avenue cannot force me to buy something. They
    > may well change my desire for something, but that is not the same.
    > What have they ever forced you to buy?

You used the word force, and yet modern marketing is designed to 'entice'
you into making voluntary decisions. I've seen tons of it. As far as the
things you are really forced to buy, I can add that I am also _forced_ to
_buy_ all manners of corporate-based actions that result in the transfer
of red ink to ME. When corporations juggle their books, have high powered
CPAs organize their taxes for much lower bills this just transfers the
debt to the people like me (and you) who don't have access to high powered
CPAs, etc. Unless, of course, you are one of those citizens who goes to
great lengths to screw the govt wherever you can.

    > > There is at
    > >least one chapter by MM where he gives a personal example he was involved
    > >in.
    > Haven't read it. Did he force someone at gunpoint to give him some
    > money, and he gave the person some goods in exchange?

Again, gunpoint isnt even needed. I'll bet if I study you and your life, I
will find that you have given in to 'inducement' by -- either directly or
indirectly -- advertizing, peer pressure, keep up with the jonses, or be
the first on your block, or just plain "I guess I'd better get this".

    > >YES, I can accept simple supply-demand concepts but only as simple
    > >concepts. The human psychology component, emotional appeals, irrational
    > >processes play large roles. I think the s-d model is _within_ the broader
    > >processes in society rather than the other way around. And, the stuff I
    > >"threw in your face" from the newspaper article on the Nobel prize going
    > >to a non-economist is an issue YOU can dismiss if you want, but I'm going
    > >to file that detail and the detail that some important people thought
    > >that the work of the non-economist had serious relevance for
    > >economics.
    > No-one is dismissing it. Its just that anyone at all familiar with the
    > very basic concepts of econ does not share your fascination that a
    > psychologist's contribution to the field is recognized.

And, I am going to still say there is much more to what is going on in the
world than "the very basic concepts of econ..."

Within the
    > first 100 pages of that _high-school_ econ book I found, they talked
    > about how advertizing, production quotas, natural disasters,
    > monopolies, rent controls, etc. affect the supply and demand curves,
    > and thus the prices of goods.

And, in that list you gave was not a single word dealing with matters of
human psychology and semantics.

At an introductory level, the
    > quantification of all these factors is not attempted, and I think it's
    > great that a psychologist is doing Nobel-level research on some of
    > those factors.

This is pretty much almost a flip-flop on your part compared to what you
wrote above.

I have no earthly idea exactly what his research was
    > on, but no-one with the slightest inkling of what economics is about
    > should be at all surprised that such study is being done.

And, so is this.

    > >> > and tangential
    > >> >rationalizations. At one point you used the word "willingness" as part of
    > >> >the decision between a buyer and seller in ariving at a price, and yet I
    > >> >see in our present (western) world a very extensive landscape in mind
    > >> >manipulation (through advertising, marketing, and other activities) and
    > >> >exploitation of human psychology to coerce people into buying goods and
    > >> >services and all this takes away quite a bit of free will and common sense
    > >> >from the whole economic picture. This is why I got a big charge out of the
    > >> >Nobel prize for economics going to a non-economist (a psychologist) who,
    > >> >as the article I read went on, investigated quite a lot of irrational
    > >> >behavior in connection with economic processes.
    > >> Are you saying that irrational behavior is unwilling behavior?
    > >Bad sentence.
    > Why? Seems perfectly well-constructed to me. And it is not of the "do
    > you still beat your wife" variety. You either do or do not think that
    > irrational behavior is also unwilling.

Why can't a person be willing or unwilling based on any of: i) logical
behavior, ii) rational behavior, or iii) irrational behavior, depending on
the circumstances or situation?

    > > I can't answer that sentence in a yes or no. And, certainly
    > >not without further clarifications.
    > You pointed out the work on irrational behavior in the same paragraph
    > where you pointed out that I discussed willing behavior.

There are lots of examples in real life where willing behavior is
influenced by external factors that contravene or suppress free will.

You seemed to
    > be giving it as a counter-argument, although that was not clear, thus
    > my question. I was wondering whether you thought there was any
    > connection, or your were just throwing in irrelevant factoids.

Too much depends on what is meant by willing. Maybe YOU don't buy cars
based on advertizing, but tons of people do.

    > >> >
    > >> >In the plywood example, I would say that the seller was exploiting a
    > >> >circumstance for personal gain at the expense of hurricane victims. Sure,
    > >> >you can explain it in terms of supply and demand,
    > >> Finally!!!
    > >
    > >Premature explicative. You didnt read the qualifications I put below.
    > >
    > >> > but that is like the big
    > >> >corporations who carry out all kinds of unethical and immoral actions on
    > >> >the grounds that they are legal and that's all that matters. And, in
    > >> >really modern times (eg. Enron/Andersen), they considered as legal ("we
    > >> >didn't do anything wrong") all kinds of things by extensive manipulations
    > >> >that hurt lots of people. So, you can do or think whatever you want, but
    > >> >I'm still going to say that its not a simple supply-demand situation
    > >> >unless you just want to talk about a textbook example. In real life, there
    > >> >are lots of situations where peripheral details are significant. Regulated
    > >> >prices and military budgets ... I don't see any supply-demand
    > >> >relationships there, either.
    > >
    > >What? No comeback on that?
    > There was so much nebulous hand-wringing and rambling that it's hard
    > to find something specific to reply to. But let's look at Enron stock
    > for just a second. Before the fall, its price was set by supply and
    > demand. The price floated each day to the point where the number of
    > shares that current holders were willing to sell at that price matched
    > the number of shares that others were willing to buy at that price.
    > That is supply and demand. Or put another way, which you seem to think
    > is different, the sellers sold there shares at whatever price the
    > market would bear. Now, what do we know about the supply and demand
    > curves? They were what they were because of incomplete and fraudulent
    > information. When better information started to come out, the demand
    > curve shifted far to the left, and the supply curve shifted far to the
    > right, resulting in a collapse of the stock price. Again, this is
    > high-school level stuff. Is it "simple" supply and demand? In concept,
    > certainly.

Yes, and I don't have any problem with the "simple" stuff. The problem is
that the world isn't that simple.

In understanding all of the shenanigans that went into the
    > deception leading to the inflated prices, certainly not.

Right...so the "shenanigans" that you used in your own sentence takes us
way beyond that "simple" stuff.

    > Regulated prices are a trivial example of supply and demand, since the
    > supply curve is a horizontal line.

I'd rather think about the first two words there than the last phrase in
the sentence.

    > It's a stretch to consider military spending a market.

It sure funnels 350 billion into a hell of a lot of paychecks.

    > >> >> What say you (amateur or professional) economists?
    > >> >>
    > >> >> > but
    > >> >> >could you tell me how Arabian rug merchants back surely 500 years earlier,
    > >> >> >or more, managed to stay in profitable business in the absence of
    > >> >> >Neoclassical economics in the 1870s?
    > >> >>
    > >> >> Or equivalently, how were they able to eat, when they did not
    > >> >> understand anything about the the process of digestion?
    > >> >
    > >> >1. Don't answer the question with another question.
    > >> >
    > >> >2. The fact that they did not understand anything about the process of
    > >> >digestion actually sorta proves MY point that explicit knowledge of
    > >> >economics (as an academic discipline) is totally unnecesary for a person
    > >> >to carry out a profitable business AND in a community where other persons
    > >> >also live a life involving trade-based interactions with each other.
    > >> Absodamnlutely! Whoever said anything to the contrary?
    > >
    > >You implied it. Many times with i) your attempts to "educate" me about
    > >econ101, ii) your implication that econ101 explained everything, or
    > >nearly everything, and iii) your dismissal of most if not all of all of
    > >the examples I thought where simple s-d was questionable.
    > Please understand the distinction between what you infer and what I
    > imply. I never thought that understanding of economics was necessary
    > for running a successful business, so I am sure I did not imply that.

Also, if you ask me, you did imply it. After all, you've been defending
all manners of economics all along.

    > Let me give a better example than my digestive system one:

No, your digestive system one was fine: basically the guy who ate knew he
had to eat to live.

    > A medieval archer or trebuchet operator know how far above the horizon
    > to aim in order to maximize their range, even though they knew nothing
    > about Newtonian mechanics. Similarly, the rug merchant of the time
    > knew how to price his rugs to maximize his income, without ever having
    > thought of a supply and demand model.

Just fine.

    > Fast forward. Today, both mechanics and the workings of markets are
    > much better understood.

"...better understood" in what way? How better? Why better? Is the archer
arrow more accurate? Is the rug merchant making more profit? I have no
doubt that the workings of markets is being _described_ and _analyzed_ in
more detailed ways, but is this all _better_?

But a quarterback might still knows how high
    > to throw a pass to get the needed range without understanding the
    > physics.

Nothing better than caveman practice-makes-perfect.

Similarly, I just read about a luthier who makes high-end
    > custom guitars (~$6,000) who is significantly raising his prices this
    > year because he has a two-year backlog of orders. He did not need to
    > study economics to make this decision.

Exactly.

    > The physicist and economist give us better ways of understanding what
    > is happening when the quarterback and luthier do their things. In a
    > sense, the physicist and economist in these instances are chroniclers
    > and theorizers, not doers.

OK on your "philosophy" but I'm still looking for a significant benefit
from advanced economics from you. The physicist has made the atom bomb.
Where is the economis'ts "atom bomb"? (or, whatever is going to save the
world, prevent poverty, eliminate diseases, etc., or otherwise do
something -- not for supply and demand -- but quality of life? )

    > >Hence, "Art's notion #1" (notion is not a law, hypothesis, principle,
    > >whatever): there is more dogma out there than you think and quite a bit of
    > >it either may be wrong or surely is wrong or incomplete.
    > How do you know what I think?

Because you've been preaching that econ101 is sooooo important (yet that
rug merchant has been doing fine even before movable type was invented).

    > Heisenberg & Goedel (too lazy to figure out how to do the umlaut!)
    > virtually guarantee that.

Ah, but perhaps Heisenberg can be applied to himself? Don't need the
umlaut. But, anyway, I have the notion that there is a "Heisenberg
equivalent" for most other human knowledge: You can know a lot about a
little bit, or a little bit about a lot. But not both.

    > >And, so, "Art's notion #2" is something like: will great and detailed
    > >efforts in advanced economics ultimately solve -- either in few or many
    > >"models" -- all if not most economics questions/problems? Actually, that
    > >phrase can be re-written to include any science or technology field.
    > I'd say no.

"no" to which? First sentence, second sentence, or both, or neither?

    > >And, so, I have to ask, are there any economists that would dare
    > >to admit that their "hobby horse" may really be a "trojan horse" of some
    > >kind? Or, are all of them so sure that continued and expanded study of
    > >economics will solve all if not most economic problems?
    > Stupid question. Those are not the only two alternatives. Expansion of
    > knowledge does not imply attainment of perfect knowledge.

Ah, but -- as far as I'm concerned -- you actually answered the question,
even if it was stupid. But, if you claimed "those are not the only two
alternatives" you did not give at least one example of the third. And,
lastly, "expansion of knowledge does not imply attainment of perfect
knowledge" is also badly worded because what you should be talking about
is as knowledge expands, there should also be a (parallel) expansion of
quality. It is a given that knowledge (actually, understanding) can't be
perfect, but the quality (and thus, the value), should also improve. We
should not be substituting knowledge with data, or confusing data with
knowledge.

Art

    > --
    > Alex
    > Make the obvious change in the return address to reply by email.

Arthur E. Sowers

On Fri, 8 Nov 2002, David Friedman wrote:

    > In article ,
    > alexy wrote:
    > > >Starting with the books "The Hidden Persuaders" (Vance Packard), "The
    > > >Status Seekers" (same author), on up to the present, including "What they
    > > >don't teach you at Harvard School of Business" (Mark McCormick, who, by
    > > >the way is one of YOU guys more than one of MY guys), modern marketing can
    > > >make people buy ANYthing whether they want it or need it.
    > This always reminds me of an argument my father had a very long time ago
    > one summer in New Hampshire, I think with the guy who ran the local auto
    > repair shop. Ford had brought out a new and different car, and the man
    > was arguing that, however bad it might be, they could always make it
    > sell by advertising it enough.
    > The car in question was the Edsel.
    > Marketers push lots of things. Some ofls
    > m succeed, some of them flop.

Yep. I remember the Edsel. There are quite a few examples of hoopla, hype,
and hucksterism in selling stuff. As it relates to the supply-demand
discussion I'm having with alexy, though, I'd rather think about farm
products and people who need to eat to live as being better examples where
some kind of simple supply-demand relationship can be discussed and
recognized. But, for tons of products and services that are marketed to
people, the mind manipulation in our mass media is pretty serious. I
forgot to mention one other book by Vance Packard: "A nation of sheep".
This is at the other end of the pipeline. "Hidden Persuaders" was about
how the marketers/advertisers shoved stuff down our throats, while "Nation
of Sheep" was all about how 'we' readily let this happen. Today's
politicians also exploit this and the effectiveness of negative
campaigning and sound-bites seems to confirm this. I am seriously dismayed
that 'the people' can't figure out AND communicate back to the politicians
that the negative campaigning and sound bites obscures the real issues.
But, then, this is a tangent for another discussion.

However, my question is: how does the economist 'measure' and
'analyze' this process/outcome (i.e. elections and the results they
cause)?

Art

    > --
    > www.daviddfriedman.com

Alexy

"Arthur E. Sowers" wrote:

    >On Fri, 8 Nov 2002, alexy wrote:
    >> "Arthur E. Sowers" wrote:
    >> >On Thu, 7 Nov 2002, alexy wrote:
    >> >
    >> >> "Arthur E. Sowers" wrote:

    >Again, gunpoint isnt even needed. I'll bet if I study you and your life, I
    >will find that you have given in to 'inducement' by -- either directly or
    >indirectly -- advertizing, peer pressure, keep up with the jonses, or be
    >the first on your block, or just plain "I guess I'd better get this".

So what. I'm not an automaton. I did it willingly.

    >> >YES, I can accept simple supply-demand concepts but only as simple
    >> >concepts. The human psychology component, emotional appeals, irrational
    >> >processes play large roles. I think the s-d model is _within_ the broader
    >> >processes in society rather than the other way around. And, the stuff I
    >> >"threw in your face" from the newspaper article on the Nobel prize going
    >> >to a non-economist is an issue YOU can dismiss if you want, but I'm going
    >> >to file that detail and the detail that some important people thought
    >> >that the work of the non-economist had serious relevance for
    >> >economics.
    >> No-one is dismissing it. Its just that anyone at all familiar with the
    >> very basic concepts of econ does not share your fascination that a
    >> psychologist's contribution to the field is recognized.
    >And, I am going to still say there is much more to what is going on in the
    >world than "the very basic concepts of econ..."
    > Within the
    >> first 100 pages of that _high-school_ econ book I found, they talked
    >> about how advertizing, production quotas, natural disasters,
    >> monopolies, rent controls, etc. affect the supply and demand curves,
    >> and thus the prices of goods.
    >And, in that list you gave was not a single word dealing with matters of
    >human psychology and semantics.
How about these two words from my list (actually three):
"advertizing"
"et cetera"

    > At an introductory level, the
    >> quantification of all these factors is not attempted, and I think it's
    >> great that a psychologist is doing Nobel-level research on some of
    >> those factors.
    >This is pretty much almost a flip-flop on your part compared to what you
    >wrote above.
Flip-flop with what? I don't see it.

    > I have no earthly idea exactly what his research was
    >> on, but no-one with the slightest inkling of what economics is about
    >> should be at all surprised that such study is being done.
    >And, so is this.
Why? What have I ever said that would contradict this?

    >> >> > and tangential
    >> >> >rationalizations. At one point you used the word "willingness" as part of
    >> >> >the decision between a buyer and seller in ariving at a price, and yet I
    >> >> >see in our present (western) world a very extensive landscape in mind
    >> >> >manipulation (through advertising, marketing, and other activities) and
    >> >> >exploitation of human psychology to coerce people into buying goods and
    >> >> >services and all this takes away quite a bit of free will and common sense
    >> >> >from the whole economic picture. This is why I got a big charge out of the
    >> >> >Nobel prize for economics going to a non-economist (a psychologist) who,
    >> >> >as the article I read went on, investigated quite a lot of irrational
    >> >> >behavior in connection with economic processes.
    >> >> Are you saying that irrational behavior is unwilling behavior?
    >> >Bad sentence.
    >> Why? Seems perfectly well-constructed to me. And it is not of the "do
    >> you still beat your wife" variety. You either do or do not think that
    >> irrational behavior is also unwilling.
    >Why can't a person be willing or unwilling based on any of: i) logical
    >behavior, ii) rational behavior, or iii) irrational behavior, depending on
    >the circumstances or situation?
I agree. That means that the answer to my question is "no".

    >There are lots of examples in real life where willing behavior is
    >influenced by external factors that contravene or suppress free will.

Examples?

    > You seemed to
    >> be giving it as a counter-argument, although that was not clear, thus
    >> my question. I was wondering whether you thought there was any
    >> connection, or your were just throwing in irrelevant factoids.
    >Too much depends on what is meant by willing. Maybe YOU don't buy cars
    >based on advertizing, but tons of people do.
So? Unwillingly? You seem to have a concept of free will being to make
the same choice you would make. If my neighbor becomes convinced that
living under a pyramid shaped roof creates cosmic influences
lengthening his life and therefore spends $100,000 to have an
extensively modified roof put on his house, you and I might agree that
his behavior is irrational, but it is still a choice he freely made.

    >Yes, and I don't have any problem with the "simple" stuff. The problem is
    >that the world isn't that simple.

Well, what everyone except you has been saying all along is that this
is one more example of supply and demand working, with lots of factors
going to set the supply and demand curves.

    > In understanding all of the shenanigans that went into the
    >> deception leading to the inflated prices, certainly not.
    >Right...so the "shenanigans" that you used in your own sentence takes us
    >way beyond that "simple" stuff.
Absolutely. The only thing everyone but you was disagreeing with you
on is your concept that these other things were somehow operating
"instead of" supply and demand, or had "more influence than" supply
and demand.


    >> >You implied it. Many times with i) your attempts to "educate" me about
    >> >econ101, ii) your implication that econ101 explained everything, or
    >> >nearly everything, and iii) your dismissal of most if not all of all of
    >> >the examples I thought where simple s-d was questionable.
    >> Please understand the distinction between what you infer and what I
    >> imply. I never thought that understanding of economics was necessary
    >> for running a successful business, so I am sure I did not imply that.
    >Also, if you ask me
I didn't
    >, you did imply it.
I didn't.
    > After all, you've been defending
    >all manners of economics all along.
Never ONCE have I said that understanding of economics is necessary to
carry out the kind of transactions that economists study.

    >> Let me give a better example than my digestive system one:
    >No, your digestive system one was fine: basically the guy who ate knew he
    >had to eat to live.
    >> A medieval archer or trebuchet operator know how far above the horizon
    >> to aim in order to maximize their range, even though they knew nothing
    >> about Newtonian mechanics. Similarly, the rug merchant of the time
    >> knew how to price his rugs to maximize his income, without ever having
    >> thought of a supply and demand model.
    >Just fine.
    >> Fast forward. Today, both mechanics and the workings of markets are
    >> much better understood.
    >"...better understood" in what way? How better? Why better? Is the archer
    >arrow more accurate?
If they decide to build a larger trebuchet, engineers, using
principles of physics, can design the larger trebuchet for optimal
release points and optimal counterweight based on the mass of the
projectile, rather than having to build multiple models and
test-firing countless tests. And the better the physics and
engineering knowledge, the more completely trial and error can be
eliminated.
    > Is the rug merchant making more profit? I have no
    >doubt that the workings of markets is being _described_ and _analyzed_ in
    >more detailed ways, but is this all _better_?
Not necessarily.
    > But a quarterback might still knows how high
    >> to throw a pass to get the needed range without understanding the
    >> physics.
    >Nothing better than caveman practice-makes-perfect.
yep
    > Similarly, I just read about a luthier who makes high-end
    >> custom guitars (~$6,000) who is significantly raising his prices this
    >> year because he has a two-year backlog of orders. He did not need to
    >> study economics to make this decision.
    >Exactly.
    >> The physicist and economist give us better ways of understanding what
    >> is happening when the quarterback and luthier do their things. In a
    >> sense, the physicist and economist in these instances are chroniclers
    >> and theorizers, not doers.
    >OK on your "philosophy" but I'm still looking for a significant benefit
    >from advanced economics from you.

Why are you looking for that from me?
    >> >Hence, "Art's notion #1" (notion is not a law, hypothesis, principle,
    >> >whatever): there is more dogma out there than you think and quite a bit of
    >> >it either may be wrong or surely is wrong or incomplete.
    >> How do you know what I think?
    >Because you've been preaching that econ101 is sooooo important
Your imagination is getting the better of you. I never said anything
about its importance. I've just said that the principles taught in it
fit very well and help understand a lot of transactions.

    > (yet that
    >rug merchant has been doing fine even before movable type was invented).
Which is in no way inconsistent with anything I have said. Maybe with
things you have inferred, but that's your problem, not mine.
    >> Heisenberg & Goedel (too lazy to figure out how to do the umlaut!)
    >> virtually guarantee that.
    >Ah, but perhaps Heisenberg can be applied to himself? Don't need the
    >umlaut. But, anyway, I have the notion that there is a "Heisenberg
    >equivalent" for most other human knowledge: You can know a lot about a
    >little bit, or a little bit about a lot. But not both.
Nice paraphrase!

My paraphrase of Goedel for general fields of human knowledge is that
your theory is either incomplete or wrong.

    >> >And, so, "Art's notion #2" is something like: will great and detailed
    >> >efforts in advanced economics ultimately solve -- either in few or many
    >> >"models" -- all if not most economics questions/problems? Actually, that
    >> >phrase can be re-written to include any science or technology field.
    >> I'd say no.
    >"no" to which? First sentence, second sentence, or both, or neither?
Neither econ nor hard sciences will solve all the problems.
    >> >And, so, I have to ask, are there any economists that would dare
    >> >to admit that their "hobby horse" may really be a "trojan horse" of some
    >> >kind? Or, are all of them so sure that continued and expanded study of
    >> >economics will solve all if not most economic problems?
    >> Stupid question. Those are not the only two alternatives. Expansion of
    >> knowledge does not imply attainment of perfect knowledge.
    >Ah, but -- as far as I'm concerned -- you actually answered the question,
    >even if it was stupid.

It is not a Trojan Horse.
It will not solve all of the economic problems.
--
Alex
Make the obvious change in the return address to reply by email.

David Lloyd-Jones

Arthur E. Sowers wrote:

    > However, my question is: how does the economist 'measure' and
    > 'analyze' this process/outcome (i.e. elections and the results they
    > cause)?


Art,

Given the books you refer to in your post, the answer should be obvious:
the famous economist Herr Doktor Dichter, of motivational analysis fame.

They seem to be handing out Nobels for that kind of stuff this year.

-dlj.

Robert Vienneau

What a mainstream economist means by "rational" is not what most
people mean by "rational". In particular, you can be behaving
perfectly reasonable and still be "irrational" by the mainstream
economist's definition. The mainstream economist's definition
may even be incoherent.

There's an argument along these lines in the 7 November entry at:



--
Try http://csf.colorado.edu/pkt/pktautho.../Bukharin.html
To solve Linear Programs: .../LPSolver.html
r c A game: .../Keynes.html
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau

David Friedman

"Arthur E. Sowers" wrote in message news:...

    > However, my question is: how does the economist 'measure' and
    > 'analyze' this process/outcome (i.e. elections and the results they
    > cause)?

You can find a discussion of applying economics to the political
system in my webbed Price Theory. Most of it is in Chapter 19, webbed
at:

http://www.daviddfriedman.com/Academ...y_Chap_19.html

Thus Spake Zarathustra

"Robert Vienneau" wrote in message
news:[email protected]...
    > What a mainstream economist means by "rational" is not what most
    > people mean by "rational". In particular, you can be behaving
    > perfectly reasonable and still be "irrational" by the mainstream
    > economist's definition.

This seems to be something that Art doesn't realize. He argues that
illogical acts invalidate basic economics, because they are not "rational".
That "rational" in an economic context actually means self-interested is
something he missed, because he never bothered to acquaint himself with any
training whatsoever in economics. So he blunders in, misusing terms and
generally making himself irrelevant.

Arthur E. Sowers

Sorry, I've never heard of the guy.

Art

On Sat, 9 Nov 2002, David Lloyd-Jones wrote:

    > Arthur E. Sowers wrote:
    > > However, my question is: how does the economist 'measure' and
    > > 'analyze' this process/outcome (i.e. elections and the results they
    > > cause)?
    > Art,
    > Given the books you refer to in your post, the answer should be obvious:
    > the famous economist Herr Doktor Dichter, of motivational analysis fame.
    > They seem to be handing out Nobels for that kind of stuff this year.
    > -dlj.