Monday Message Board

Another Message Board

Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

I’ve moved my irregular email news from Mailchimp to Substack. You can read it here. You can also follow me on Twitter @JohnQuiggin

I’m also trying out Substack as a blogging platform. For the moment, I’ll post both at this blog and on Substack.

9 thoughts on “Monday Message Board

  1. Ikonoclast, Harry Clark provided a link to an autobiographical lecture by Prof Kenneth Arrow from 1978. Arrow is one of the most important economists of the 20th century. He and Gerard Debreu are the authors of what became known as the Arrow-Debreu model (math econ).
    Perhaps you find this article interesting, not least because Arrow did consider issues, which you also write about. Moreover, the systems approach is quite clear in this lecture.
    IMHO, Arrow’s 1978 lecture is an excellent example of how an accomplished analytical economist considers and discusses alternative economic theories (capitalism, socialism), both with respect to observables at a point in time and over time.

    Click to access 1426269747ACautiousCaseforSocialism.pdf

  2. It seems Labor’s endorsement of a 5.1% increase in the minimum wage was no endorsement at all. The fair Work Commission has been asked to increase the minimum wage but no amount has been specified – this was the LNP’s approach to the minimum wage in recent years so Labor’s stance represents almost zero change from past policies. Perhaps I heard wrong but I am fairly certain Labor changed tack – recorded history is malleable- and I am confident the cheer squads with rationalise the switch.

    I think a broken promise is a broken promise whoever does the breaking. Particularly since the earlier position was used by Albanese to contrast the humanitarian values of Labor with the cold-hearted “neo-liberalism” of the LNP. But as policy outcomes go I am happier than I would have been had the 5.1% recommendation gone through. A major increase would have gone through to one quarter of the workforce and would have initiated an inflationary spiral. It still might happen as the FWC might have internalised the earlier Labor position and acted in the God-given belief that they can save the “desperate toiling masses’ by assigning extra zeros to the dollar bills they are paid with.

    Neither governments nor centralised wage fixing authorities can peg the level of wages in an economy. This is determined by productivity. These bodies can, in the short-term, determine nominal wages and increases in nominal wages are an increased cost to business that will be responded to with price increases that undermine the real value of the nominal wage increase. Of course any induced inflationary spiral is immensely costly particularly to those on fixed incomes such as retirees.

    Lack of concern about inflation is a bit like lack of concern over public debt. It is serious economic irrationalism that opens up the economy to the inevitable need for recession-inducing interest rate hikes (beyond those that are already inevitable) and ruined public budgets that leave little scope for dealing with future emergencies and for the funding of pressing infrastructure projects.

  3. Ernestine,

    I have read Arrow’s essay attentively but only once. On that reading, there is much of significance and very little that I would disagree with. It increases my respect for Arrow. (I know little about him and his work.) It almost all looks eminently reasonable and supportable to me. The issue of the Soviet Union (was it “communist”, “socialist” or “state capitalist”?) is perhaps a bit tricky. Professor Richard D. Wolff (still alive, writing, arguing and doing video interviews and presentations) has published a paper or papers, with co-author(s), which argue that the Soviet Union and Maoist China were essentially “state capitalist” systems. I don’t recall all the arguments and I will have to re-find the link(s) after this post.

    I do remember I found Wolff’s arguments compelling at the time I read them. Arguing “speciation” or categorization gets difficult with complex, compound systems. Are corals plants or animals? In turn that very question is probably easy to answer compared to asking if national systems are “communist”, “socialist” or “state capitalist”. Indeed, that coral question suggests that what we might need to be asking is what sub-systems in a political economy are symbiotic for the whole and what are parasitic on the whole?

    Perhaps instead of being an “essentialist” and a “prescriptivist” (which I largely was as a kind of left wing ideologue) one needs to not attempt to label “essential” aspects of a system. Rather one needs, as a first step, to really describe the system and its internal and external relations in a holistic, complex systems fashion. What I mean by “essentialist” may be different from the standard philosophical definition. In this context, I mean someone who takes the attitude that a model (of any complex system) can describe all the essentials of the system adequately. I now hold that all models are ipso facto incomplete because they are (a) less complex than the original, real system and (b) they ARE models NOT the real system. Both deceptively obvious points perhaps.

    Point (b) above even looks like a truism but there is more to it. The internal interactions which make a real system work (what Bacon called “nature working within”) are a set of forces and dynamics which we would call fundamental natural forces in physics, chemistry and even at least partly in biology. The “forces” which make models work are twofold however. Yes, they can be real forces (look at a model in a wind-tunnel) but they can also be virtual and ideational (“forces”) which equate to programming, logic and “pure reason” (which importantly employ mathematics but not only mathematics).

    The above is why I try to insist (these days) on going back to ontological fundamentals to make sure we separate out prescription modelling from description modelling. I am sure good economists do it too. I can see John Quiggin, Kenneth Arrow and you, Ernestine doing that. I can see Harry Clarke doing that too albeit with some different assumptions and some different emphases. It’s just that the combination of my previous left ideology (Marxian not Marxist) combined with my new autodidact philosophical obsessions, assumptions and tentative conclusions thus far incline me to a bias for quite a few (not all!) of the views of Quiggin, Arrow and Gross (insofar as I have read some of their texts) and not so much to a bias for Clarke’s views, though some I do incline to actually.

    I find economists and not only economists, strangely disinclined (in my perception) to take ontology seriously. This is the sad result, as I have said before, of people mostly encountering religious and speculative metaphysics and not formal system metaphysics and empirical system metaphysics. I’ve written on this before. Now, economists may generally tacitly and very substantially understand all the empirical ontology relevant to their field and take it as read. They don’t feel the need to pedantically pick it apart as I do. Though I feel there is a real danger in tacit and unexamined a prioris.

    Nonetheless, I feel impelled out of curiosity and exasperation at the divergence of opinion in economics and political economy to try to find first the fundamentals which we can all agree on. There are candidate fundamentals in this regard. But I won’t go into them here. This is getting too long.

  4. Total takedown of crypto.
    Long article. Covers all bases. Links aplenty.

    “UC-Berkeley’s Nicholas Weaver has been studying cryptocurrency for years. He thinks it’s a terrible idea that will end in disaster.”

    “Dogecoin was a literal joke invented in the early days of cryptocurrency about, “Hey, this stuff is so stupid. Let’s make a coin about a meme of a talking dog.” The founder of Dogecoin says, “This is a joke, avoid the cryptocurrency space, it is total garbage.” [Note: Dogecoin creator Jackson Palmer concluded: “After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight, and artificially enforced scarcity.”] This joke is now the 10th most valuable cryptocurrency. ”

    Ikon, I have taken up your challenge by reading “Golden silkworms…” and will report back in a day or three. I now see gain of function everywhere in everything!

  5. Australia?

    “So, we now know we were right to be concerned. Around £570 billion is held in tax havens. You might expect that to yield a useful tax return each year, split between tax on income and gains.

    “But, as Dan Neidle discovered, HMRC has no idea how many of these accounts are properly declared, and nor has it sought to find out. It’s as if they don’t care. Instead, they are actually offering excuses, suggesting for example that most such accounts are probably held by non-doms and therefore not a concern, when in itself that is simply not true.

    “As Dan correctly points out, it is not possible to be sure what tax is lost as a result of this indifference by HMRC. It is their job to work this out. But we can be quite confident most of the accounts are not held by non-doms: there are just not enough of them.

    “So, what to conclude?

    “First, HMRC is not trying to collect tax owing.

    “Second, there is no one holding them to account for that.

    “Third, no wonder we have growing inequality in the UK.

    “Fourth, no wonder too that we have a tax gap that is out of control.

    “Fifth, there can be no political direction on this. Clearly, ministers have never asked.

    “I hope that pressure is brought to bear as a result because right now it is apparent that HM Revenue & Customs really do not want to collect tax from the wealthy.”

    “Tax Policy Associates report: UK taxpayers have £570bn in tax haven accounts, and HMRC has no idea how much of this reflects tax evasion
    May 2022

  6. News is the key  for – “the solution to the coronavirus crisis heavily depends on individuals’ behaviours, which in turn are directly affected by the news.” ^1.

    The researchers have a framework, methods and derived a “single combined index to assess the concentration of News from Questionable Sources on ‘coronavirus’” (^1.) applicable to any topic, not just Covid.

    This research needs to be taken seriously. Health authorities in particular, need to heed the rapidity and respond before “News from Questionable Sources” have articles posted early, which are reflecting public search terms, ensuring algorithmic boost above questionable news. This reduces time to publish reliable information to <1 day. A tough ask of science driven health responses, unless a 'science' based media team is given priority over bureaucracy. 

    I assume if we used this method to assess newscorpse, we would find them at the apex of questionable news sources. On just about any topic, driven as they are by clicks and opinion. Exoised to such indexes in (^1.), they'd shrivel and disappear like the news zombie fossil fuel they are.

    Article via;
    "What the public wants in COVID news vs. what the press provides
    There's a contrast between what people search for and what reliable media provide.

    "One clear thing was that the public's interest (as reflected in search terms) would appear, on average, the day before reliable media reported on the topic. But news from unreliable sources was notably quicker than the average news source. The faster speed wasn't simply because the less reliable sources tended to be online publications, thus able to react more quickly. Even when compared to reliable online news outlets, the unreliable ones tended to be quicker to place stories that reflected search terms.

    "The researchers also looked at other search terms that appeared simultaneously as "coronavirus"—things like "coronavirus N95 mask." When this context was considered, it turned out that articles from questionable sources fit the public's interest better than the general news media. This held true daily throughout the entire study period, indicating this is a persistent pattern.

    "Ultimately, unreliable sources appear to produce relevant articles more quickly and better match the content of those articles with the things the public is most interested in."…

    ^1. Reseach
    "The supply and demand of news during COVID-19 and assessment of questionable sources production

    " Information vulnerabilities are a major risk factor for our societies and they directly impact individuals in their behaviours and choices. For example, the solution to the coronavirus crisis heavily depends on individuals’ behaviours, which in turn are directly affected by the news."

  7. Yep, be warned. Everybody is coming out now… as democratic socialists! Gasp! Shock! Horror! Oh, the shame! Can polite civilization survive? Well, actually yes. Caring for others is simply the polite thing to do.

  8. Distillation of news & mathmatical models, “they’ve distilled it, they’ve got this essence, and they’ve thrown the rest away. We’re trying to bring it back in.” – Russell Napier, the Library of Mistakes.

    I still want an answer to data & outliers discarded in QALY LSV measures. Humans distilled away.

    This library is now on my bucket list.

    “How to prevent financial meltdowns, according to the Library of Mistakes”

    “Down a narrow alley in Edinburgh, Scotland, there is a tiny library in an old, stone building. The single room houses about 4,000 books, most of them purchased second-hand, and all aiming to chronicle the history of business and finance. Its founder, Russell Napier, calls it the Library of Mistakes

    “This single incident cost investors $45 billion. For Napier, the models and computer code that dominate the financial system now tend to obscure the lessons of history: “It’s a distillation. When you make whisky, you distill stuff and you throw the rest away. Well that’s what the mathematicians have done; they’ve distilled it, they’ve got this essence, and they’ve thrown the rest away. We’re trying to bring it back in.”…

    h/t amediadragon

  9. “Inflation is caused by too little capacity 

    ” blame it on excessive money creation during the pandemic and uppity workers demanding higher wages”

    “Is there a way to synthesize all of these factors into one explanation? Writing for Employ America (“Tight labor markets, higher wages, and better jobs”), Alex Williams gives it a go, with “The Physical Capacity Shortage View of Inflation”:

    “the sky-high prices you’re being quoted for a kitchen renovation, an ADU, or a new condo aren’t just the product of price-gouging, competition from cash-flush REITs, or wage demands from skilled tradespeople – they’re the product of sky-high prices for the stuff that your house will be built from.

    “The collapse of onshore manufacturing capacity was a choice, not an accident. It was part of the financialization of our economy, which was heralded as a source of efficiency and abundance.

    “But the polycrisis of disease and war and economic collapse have shown us that the core thesis of Modern Monetary Theory is indisputable: governments that issue their own currency aren’t constrained by how much money they have (because they can make more whenever they need it). They’re constrained by what things are for sale in the currency they issue:

    Thanks Cory Doctorow

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