2005. People’s stock ownership

We need new economics sufficient to make a significant difference. In provocation #129 I appended a short paragraph that proposed that we enter into a new stock plan for the nation (and as a model for others to follow).

The plan is simple and as I tried it out with people during the week I got a surprising amount of encouragement. 

It starts with two facts:

1. Few people feel part of society. To live in a society where you don’t own a part is pathetic. The people should own their own society.

2. Capitalism is once again  feeling the punch of serious criticism, since it has engendered oligopoly, climate change, and increasing inequality (Piketty 2018) .

Can we include the people and save capitalism?

The idea is simple: requisition ten percent of all the stock ownership in the US (that would be about $3 trillion in value) and put it in a federal holding agency paying dividends once a year to every citizen in the country. (Payout would be,   given  total stock of $30T, ten percent of that is 3 trillion and earning about 2% pay out to each person would be about $2,000. Family of four would be $8,000. (This idea is  a modification of Peter Barnes, first in his Capitalism 3.0, which is based on the Alaska citizen’s fund, and further back, to Henry George, Progress and Property)

The holding agency would not have to do any management beyond being a holder. Normal corporate management would be left in place. But the managers and regular owners would feel the national pressure, now that ownership is spread to all the people  to make decisions in the long-term interest of the country. Since we have to move  the economy in a green direction, now there would be a large constituency coming to bear on the corporations to have sensible polices, including reasonable executive compensation plans. 

This would eliminate some welfare needs and shift people from being welfare recipients to being owners.  I am more willing to sacrifice (say in response to  climate change) if I anticipate that I will benefit

Meanwhile the morale of the country would go up and everyone would be a capitalist, not welfare recipients,  in that they actually are collectively owners of stock that pays out

An advantage of giving dividends rather than stock is that many people would, pressured by economic necessities  sell the stock, as happened in Russia. Provisions would have to be made to keep them however for selling future anticipated payout for current cash. There are probably other pitfalls and corruptions to cope with. The banks obviously would try to turn that stream of income to themselves.

The one percent, the primary losers in this transaction, have to compare this loss to the loss of social upheaval and much stronger taxes and potential loss of everything through social system collapse. Ten percent seems politically feasible because it is reasonable. 

This can be justified by returning to older values of equality,  as Emma Rothschild writes

For Arthur Condorcet O’Connor, the Irish general who married Condorcet’s daughter Eliza, “the Turgots, the Condorcets, the Smiths” were the “fathers of the science” of political economy, whose principles, including “the eternal principle of equality,” had been overturned by the “new sect of so-called economists” of the post- Revolutionary reconstruction. (Economic Sentiments page 4) 

Capital begins with the fruits of cattle breeding. The new head, cap, is new surplus and can be re-bred. The question since Mesopotamian times has been,  how is the herd and it surplus to be managed? The “divided”, the divided, is part of the answer, but how distributed is the key, to social morale.The use of the word “stock” is inherited from  that cattle culture.

2003. Petra.

https://www.bbc.com/ideas/videos/welcome-to-petra-a-little-bit-of-heaven-on-earth/p05zn715

Screen Shot 2018-04-10 at 10.05.54 AM.png

The blend of architecture and greening. Then we have

Writing early in the first century A.D., the Greek historian Strabo reported that while foreigners in Petra are “frequently engaged in litigation,” the locals “had never any dispute among themselves, and lived together in perfect harmony.” Dubious as that may sound, we do know that the Nabateans were unusual in the ancient world for their abhorrence of slavery, for the prominent role women played in political life and for an egalitarian approach to governing. Joukowsky suggests that the large theater in the Great Temple that she partially restored may have been used for council meetings accommodating hundreds of citizens.

Strabo, however, scorns the Nabateans as poor soldiers and as “hucksters and merchants” who are “fond of accumulating property” through the trade of gold, silver, incense, brass, iron, saffron, sculpture, paintings and purple garments. And they took their prosperity seriously: he notes that those merchants whose income dropped may have been fined by the government. All that wealth eventually caught the attention of Rome, a major consumer of incense for religious rites and spices for medicinal purposes and food preparation. Rome annexed Nabatea in A.D. 106, apparently without a fight.

Read more: https://www.smithsonianmag.com/history/reconstructing-petra-155444564/#HhkZ84fTQEhbOPzh.99

1995.Current economics supports careers, not insight

provocation # 128. Current economics supports careers,  not insight

When I was studying physics and working half-time in the physics labs at Caltech I was hit almost daily with news about new experiments and theories. News traveled fast. If it was really exciting, an afternoon physics colloquium would be called and a few hundred, some obviously from other departments, would gather to hear  the story and examine the details as much as they were accessible.  The whole field felt like a living organism, each part of the periphery aware of the other parts. There was a broad agreement as to what had been achieved, and what remained as serious or interesting problems. 

There is a very interesting article about Keyes and his critique of economics, which  is devastating, and solid.  The article  asks, why do we keep making the same mistakes  ( in this case assuming  that a few variables can adequately describe the infinite variety of economic causes.). Why is there no accountability in economics and we continue of a disproven path? 

(Keynes’ critique of econometrics — still valid after all these years,  rwer.wordpress.com · by Lars Syll · March 30, 2018

Since I do a lot of reading I discover, over and over,  that there is (almost) no thought  about the current state of society and economics which isn’t already in print. The range and quality is amazing. But we don’t make use of it, we don’t harvest it,  and move on. Economics more than most fields, stays in a narrow band of readings and writings. 

If we don;’t step outside the narrow  lines, how can we expect to be creative? Two examples.

Bernard Harcourt writes The Illusion of fFee Markets, looking in  exquisite detail of the policing of the early markets in Paris (think of Stendhal’s novels)  show that regulation of markets and law started as merged, operating around private property. “If you don’t use the right font on your tomatoes sign three days in jail.” He discovers that markets arise through regulations. 

Second, the idea that capitalism starts with capital which is the output of breeding cattle could give rise to rethinking what capital is, who owns it and how society relates to it.

Most economics papers will not use a single word that moves outside the normal boundaries of mainstream economics, using  no vocabulary that cross the lines of conventional economic writing . “The impact of land tax policy on productivity in the upper Niger delta.”  No mention of the impact on people, on the land, on corruption, on climate. 

If we don’t read and think out of the normal lines of a field,  creativity is thwarted just as we seriously need it.

Like writing about climate change: which most people assume by now  is a serious problem, yet most papers and books coming from social thought (sociology, history, politics) are written that ignore it, staying stuck in the narrow band in which the researcher normally operates. Even papers that deal directly with climate are long on policy proposals, short on implementation.The same seems true in economics. A whole issue of many current economics journals often have not a single article that relates the content to larger issues of climate, corruption,  or future jobs, to say nothing about the lack of insight into the impact of economics on quality of lives. Considering both economics and climate change as two examples of the same thing, helps clarify the dynamics (or lack of them).

For climate, people are afraid to change because thy cannot imagine the consequences on income and life circumstances. “It is not crazy to stay in a leaky canoe if you don’t have an alternative canoe.”

For climate that means inability to imagine a successful outcome as to how changes  would affect  jobs and living conditions. 

For economics it is the same.  A researcher taking the state of the standard economic  literature  and moving it a tiny notch toward rigor and data can get you through graduate school and into the major journals and a tiny step toward tenure. Writing about the recognized main issues of our time does not. 

Economics can’t  see interesting things outside as we only look for the past that created the present, not the pasts that could create other presents – when we need them like now.  We are  more afraid of change than driving over the cliff.

A recent article on  history of economics (The Return of Economic History?

booksandideas.net · by Guillaume Calafat) 

considers only mainstream histories that are looking for the factors that created the present, not the things that did not create the present but might help create a better future.

Perhaps the problem is “the”economic” in the title. If we don’t  read histories of archeology,the impressionists, philosophy, regulations  and the chemical industry, we can’t break out if we don’t try.  The way out is through the door, how come no one uses that method? 

I want to raise the idea that everyone might be  acting rationally, given their actual circumstances. Getting into grad school, keeping the house in the energy wasting suburbs – all reasonable. End of the world? Maybe just accept it. Maybe we just have to learn how to feed each other. 

1994. good economics we need

Provocation # 127 The good economics we need

Economics, if it were empirical, would be interested in the major economic phenomena some of which are:

Class (fruits of talent in one generation passed to the next in a frozen system)
Money (psychology of abstraction and desires)
Interest (as in shifting value of assets over time. The father has an interest in the pregnant wife)
Ownership (who does, who doesn’t, its basis)
Capital (surplus of production over cost)
Property (from what is proper to show rank in society)
Corporations (what is a body? A person?)
Individual (a social construct?)
Trade (CMC shifts to MCM across space and time)
Markets (where all that is made under many conditions is sold to many with a variety of motives, obscured by supply- demand without curiosity about where those come from)
Stock market (ownership problem)
Makers (workers)
Takers (capital owning rent extractors)
Quality of life (the output of the system)
Political regime (who decides?)

The problem is that the system, which ought to be feedback loops among all the terms aborts to ownership and wealth as outcome targets and leaves out quality of life and instead shifts to the feedback loops that maintain power and wealth in the hands of a small elite. Education, location of home, job entry, marriage, are all part of the narrow system we have, not the broad system we should have.

This would be ok if it didn’t lead to wars and environmental damage and broken hearts. But the current economy does. The economics that would help us get out of this mess does not yet exist. It would have to take seriously capital, ownership and politics and analyze all the feedback loops.

Most economic research seems to circle around the temple but not enter.

Your thoughts?

1950. Difference between economics and the economy

provocation # 126.

Lets start from the idea that economics is not the economy. Economics is a more or less adequate description and analysis of what an economy is. The economy is not a concept. It is a reality to be explored.

But is the economics we have the economics we want? Does it discuss capital, what it is and who owns it, Does it deal with property and why we have it? Does it deal with the skewed impact on people of corporations? Does it deal with class and how such divisions are maintained? Does it deal with the health of the land? Does it deal with the soundness of parenting? The happiness of children and their access to the world? Does it deal with incarceration for breaking property rules.

Perhaps there is an economics that we really want but don’t yet have that would better fit our feeling, our intuition, for what economics should be and would also be more objective, closer to reality.

What is clear is that the economics we really want is more objective, more real, than the economics we have, more objective even than the economics we usually think we want.

 

 

1932. Math, humanities and economics

Provocation # 120 Math and economics.

Math has a dampening effect on an economics of observation and participation in real lives. Prep for war, chaos of poverty, dynamics of hope and despair eddy around all economic activity – but is largely ignored in main stream economics which favors formalism.

We know that in the ancient world: Mesopotamia and then Greece and in the background China, accounting created numbers that it was important for the state to be able to predict: how much tax could be collected (bags of grain), how much grain would be grown next year. We know that contracts were written that specified payback times and included interest. Calculation merged with accounting and then with mathematics. The new power was used by temple managers and priests representing an elite support class, obviously for its power, and this becomes a major part of the math story for economics. Math and its supported economics is the plumbing so to speak for the flow of wealth in the society benefitting the elites. I think it is obvious that this attraction for economists to use math is to show they have tools that are useful to elites. Though often not directly, because the elites don’t actually use the results but as a sign of sophistication and expertise.

But deeper was and still is the attraction to math by many economists because of its power as an unseen force. A drawn triangle was known to be imprecise but Pythagoras knew that [a squared plus b squared = c squared] was true for all time, invariant and that the real triangle drawn in the sand was a mere approximation. The imagined triangle is more real than the drawn one. There is behind appearances, so the thinking from Pythagoras to the present went, a deeper truth of invariant relations, approximately true in the material world but unequivocally true in the world of the mind, as somehow representative of the forces of the universe, the creative power of number, the ultimate force of the universe. The cosmos was lawful, the microcosm down here reflects the big cosmos up there. The truth of math precedes the first humans and will still be true when there are no humans.

After Newton further advanced the move toward understanding the motions of planets as mathematical, the success was so profound, it seemed magical, god-given, the model of what knowledge should be: true, invariant in time, and elegant.

Reality is created, again following Pythagorians, out of something not material. Math is architectural for everything that can be. The body, with its harmonies, balances of energies, is an effect of the abstract harmonies organizing the material as an unseen equilibrating entity. It was assumed by later economists that Adam Smith’s Unseen Hand had real effects.

Because the material world of Newton’s time was strongly based on trade and empire, navigation made the realm of the stars seriously important for investment in voyages and this was only enhanced as mathematical representation came to seem more real than the thing it represented.

The impact on economics can be seen in the following: imagine a globe with the land masses and all the lines of latitude, longitude the tropics, the constellations projected downward onto the surface. For economists the lines and measurements became increasingly more real than the land masses underneath. Even if the earth vaporizes, the pythagorian belief in number says the lines and numbers persist for all time and are an essential part of the non material universe.

Math had an appeal because of its success, its power, its hint at things unseen but true. It avoided the noise of the world for the complete clarity of the mental in touch with the essence.

For Plato following Pythagoras, all things were relational and relations were math and math was numbers. Plato was interested in harmony of the heavens and of music. The discovery that music was relational (attributed to Pythagoras) and precise CEG for example with its harmonized relations, you can hear the beats of the mismatch when two slightly out of tune strings are plucked, as on a guitar)

There were other trends in Greek thought. Heraclitus (before Plato) saying you can’t step into the same river twice, all things are flux, but the platonic won out because it could lead to calculations and predictions whereas the heraclitian world was a nice story but didn’t lead to action.

Part of the appeal of math was its relation to contemplation, an extreme denial of the body as a distraction from the real. Contemplation to get to the real avoids day to day affairs in order to get to the ultimate nature of things.

That math is more real than material appeals to economists, many of whom are drawn to careers in economics because of the formalism, more than to it as the science of pragmatic action or as a guide to public policy. Undergrads in economics courses have these broader interests nut get sorted out by the series of required courses leading to a higher degree.

You will notice than any use of math must assume some constancy in the referred to system, for example the constancy of the sample space over time. Otherwise calculation is not possible.

The tendency of math to seek for and represent constant relationship suggests that the economics that prefers math is perhaps unconsciously support ing a conservative view thta things basically don’t change. Change is seen only a perturbation within a fixed system. The struggle between economics as observational, journalistic, humanitarian and motivated by interests will remain in tension with an economics that seeks hidden patterns and causal formal systems.

———————

From Wikipedia on math.

Galileo Galilei (1564–1642) said, “The universe cannot be read until we have learned the language and become familiar with the characters in which it is written. It is written in mathematical language, and the letters are triangles, circles and other geometrical figures, without which means it is humanly impossible to comprehend a single word. Without these, one is wandering about in a dark labyrinth.”[11] Carl Friedrich Gauss (1777–1855) referred to mathematics as “the Queen of the Sciences”.[12] Benjamin Peirce (1809–1880) called mathematics “the science that draws necessary conclusions”.[13] David Hilbert said of mathematics: “We are not speaking here of arbitrariness in any sense. Mathematics is not like a game whose tasks are determined by arbitrarily stipulated rules. Rather, it is a conceptual system possessing internal necessity that can only be so and by no means otherwise.”[14] Albert Einstein (1879–1955) stated that “as far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.”[15]

Well , can you imagine a book written only in geometrical figures? In economics texts you will see a formula followed by a few english sentences which have the form A=,Q=.. Etc. My view is that the real understanding is in understanding what A, Q etc are, not in the math, which while often interesting is secondary to the hard work of figuring out things like income, wealth, ownership, contract. Take “unemployment” for example. All the equations hide the debate about what it is, perhaps the idea that unemployment means talents that are not used in work.

If math is method, the real science is in the understanding of the things counted, not so much in the counting.. For an alternative view of some attempts at interesting use of quantification see for example

http://peterturchin.com/cliodynamics

Another site full of interesting perspectives is
https://understandingsociety.blogspot.com

From within Economics the series of book reviews by Diane Coyle is a good education.

http://www.enlightenmenteconomics.com/blog/

My discussion of math and economics is a prelude to a discussion of the division in economics between calculation and the humanities, especially literature.

The shift from math to statistics is another story of an apparent gain in accuracy and computability but a loss of underlying understanding. It is very hard, in a statistical discussion, to introduce a nuanced shift in the meaning of one of the variables because it would throw off the whole basis for calculation. A story for another time.

 

 

 

 

 

 

 

 

 

1923. Economics should be about the full spectrum of the basics.

Provocation #115. Economics should be about the the full spectrum of the basics, Some musings:

Economics has become increasingly abstract, mostly through the influence of mathematics and the marginalists. But the reality of economy is organic. Manuel De Lande in his book Assemblage Theory says that in mechanical systems the parts maintain the integrity of their properties, but in organic systems the parts do not maintain the integrity of their properties.

Human society starts with concerns for food and reproduction. The institutions build out from this ground. The first signs of trade and craft start there, with pots and cutting instruments and grain grinding slabs. Activity we call economic is organized around feeding clothing and housing a few generations ay a time.

Early counting systems dealt easily with grain because it is a measurable commodity and when economists now think of markets they are drawn to commodities that fit that logic, still thinking of grain or stocks (root word as grocery stocks or stock up), or shares in a market that are fully quantified.

“the city-states were dependent on grain: wheat and barley in Mesopotamia, millet in China, maize in Mesoamerica. The reason is that cereals are easy to tax: they ripen at predictable times, the size of the harvest can easily be assessed, and the grain can be divided, transported and distributed in precisely measured rations by weight and volume.” (from Scott, Against the Grain)

Where this has gotten economics to is a field that feels autistic, lacking in feeling for people, obsessed with quantification and commensurability.

Economics ought to be about food and population management in the context of protecting the environment. Instead I can take a casual walk through some land covered with redwoods and the owner sees nothing but board feet. Even the roots holding the soil are unnoticed.

The middle class whose passing is lamented emerged during and after WW2 as the class of intermediate managers coordinating the new complex corporations (McNamara at Defense oversaw the B-29 which had a million parts). The GI bill trained millions to be managers, but independent of the product. Chocolate and refrigerators, same management issues. Their job was to gain control and turn their businesses into monopolies.(a Xerox ad for television shows a group of managers. One puts a folded shirt of the table and the CEO says “what’s that?” and the junior officer says “It’s what we make.”)

Hunter gatherers moved in open terrain catching gazelles, birds, squirrels, rabbits.. 120 different kinds of meat moving in seasonal cycles with 100 different edible plants.. Early settlements remained porous as people took the opportunity of planted crops but maintained the freedom to move out when the local cropped failed. The density of grain, population, and livestock in a concentrated space is the source of a state’s power.

“The primary purpose of the walls around the merging city-states may have been to keep people in, not to keep the barbarians out. In some early states human domestication took a further step: written records from Uruk use the same age and sex categories to describe labourers and the state-controlled herds of animals. Female slaves were kept for breeding as much as for manual labour.” (again Against the Grain)

Economy is, as Aristotle meant it: estate management, the care and feeding of the people on land well managed. Remember home ec in high school? How we looked down on it. Big mistake. It is the core competency for humans.

As the middle class is being replaced by computers (everything from the management of the care and use a Caterpillar diesel to a law firm or bank), we end up with an elite and an underclass. The elites will own the robots (German for slave).

The function of government is to prevent the majority being the prey of the elites.” (Jonathan Israel), but government seems now to be too weak and acquired to be able.

Economics is fascinating because it (should) crosses lines from theory to pragmatics and really includes everything. Yet it is taught as a narrow formalism.

So what might be new economic thinking?