Subject: Re: Metastable oscillators
From: "Benjamin J. Tilly " <ben_tilly@operamail.com>
Date: Mon, 03 Mar 2003 23:06:32 +0500

"Stephen J. Turnbull" <stephen@xemacs.org> wrote:
> >>>>> "Benjamin" == Benjamin J Tilly <" <ben_tilly@operamail.com>> writes:
> 
>     Benjamin> Actually engineers deal with the notion of design
>     Benjamin> tolerances all of the time.
> 
> Evidently mathematicians don't.  An 0.1 sigma interval means 99% of
> the time you fall outside of it (normal distribution).  As long as
> it's an _open_ interval, a mathematician will happily declare
> stability, and go home.  The engineer still has a long night at the
> office ahead, and will be giving you _dirty_ looks as you head for
> "Miller Time".

Well..um..dang I should have read that closer.

>     Benjamin> I see your point (about the problems of controlling an
>     Benjamin> optimized process), but don't think that it is always
>     Benjamin> that clear in practice.
> 
> Not always, but often enough in practice that people make the
> artificial system vs natural system distinction that you objected to
> by appealing to Le Chatelier.  I want to make the point that that
> distinction is _intuitively_ justified.  Mathematics is supposed to
> help people who want to do better than intuition, not confuse them.

And here I thought that people make the natural vs
artificial distinction because, "artificial is bad,
natural is good, go organic!"  My inclination is that
natural designs usually take into account all factors,
with artificial systems there is always the possibility
that you overlooked something important.

>     Benjamin> In that case then it is fine to assert the plausibility
>     Benjamin> of one when waving your hands about really general
>     Benjamin> stuff.
> 
> Not really.  Except in mathematics.

Hey, it isn't my fault that you don't have the freedom
to pick easy problems. :-P

More seriously, I like looking for general principles
that create mental frameworks from within which I can
spot important things that others tend to miss.  When
you are only talking about such general principles, the
lack of existence of a detailed model is not sufficient
to keep you from looking for a possible correlation.
But take that handwaving into account and salt your
educated guesses accordingly.

The flip side of that is that you should avoid coming
to concrete conclusions until you can fill in enough
details to be confident about how it plays out in
that case.

>     Benjamin> I don't think that it is wrong in principle.  Public
>     Benjamin> policy is based on the _need_ to have minimum
>     Benjamin> quantities.
> 
> Are you kidding?  Public policy in agriculture is based on price
> maintenance for the farmers, and occasionally for consumers.  Serious
> famines don't, and won't, happen in the advanced market economies.
> The U.S. is amazingly well-endowed for agriculture, but none of the
> OECD countries needs worry about food self-sufficiency.  On the
> contrary, when push comes to shove we regularly see price control
> programs that guarantee shortfalls if not quickly relaxed or
> counteractive policies introduced: food, rent, gasoline.

My understanding of food policy was admittedly based on
accepting commentary that I have seen from economics on
it, and not from any detailed study on my part.  So I
could be way wrong.  In fact googling on the topic I
found
http://faculty.business.utsa.edu/jmerrifi/eco2003/Text-Agricultural_Subsidies.htm
which indicates that you are right.  I will have to
search around later for what I had read and based my
opinion on, because I know that I have read that part of
agriculture policy in many places is the desire to
guarantee sufficiency in basic staples.

> The proponents of intervention usually claim that if left to itself
> the market will fail to provide sufficient quantities, but I've never
> seen a case where that was anything but FUD.  True, markets do
> sometimes fail to provide sufficient quantities in extreme cases, but
> there are very simple, fairly cheap solutions to that problem (public
> stockpiles targeted to consumer risk rather than producer profit, for
> one) that don't involve distorting the market and covering up for the
> incompetence of those demanding subsidy.

Perhaps what I read was influenced by how the recipients
of the subsidy wanted the underlying policy viewed, and
not by economic reality?  I don't know, and my dislike
for realizing that I was wrong is such that I will have
to investigate...

>     Benjamin> I am aware of the situation in India right now.  That is
>     Benjamin> only the second incident of famine in a democracy that I
>     Benjamin> know of since WW II.  The other being a famine among the
> 
> You have perhaps heard of Bihar?  That's only the most famous of many.
> Cause: politicians buying votes with low prices for bread and
> circuses, leading to underproduction of bread.  The same thing is
> happening in India today.  Several state governments got a bad case of
> hubris over the success of the "Green Revolution" and decided they
> could get away with tinkering with market pricing.  They got badly
> screwed because the farmers are now more mobile than they realized,
> and many tenants went to (or stayed in, having temporarily migrated
> there) states where they got a better deal.  That's what a recent
> Ph.D. candidate from India told us in his oral examination, anyway.

/me notes.  Do not believe articles from the NY Times.
(I glanced at one about a week ago talking about the
famine in India and how that was upsetting conventional
wisdom that "democracies don't have famines.")

> India is a democracy, rough and ready and so far acceptably stable,
> but as an economy it is far more dirigiste than any OECD economy.

This I can believe.

>     Benjamin> inuit in Canada that was resolved by the drastic effort
>     Benjamin> of directly subsidising the whole population.
> 
> The Inuit problem is extremely complex.  I'm not surprised it
> sometimes manifests as famine, but AFAIK it wasn't a failure of
> agricultural markets; the Inuit aren't farmers, I believe.

Correct.  We do not have crops that survive in the Arctic.

The Inuit are hunting-gatherers.  With an emphasis on
hunting.  When their prey population crashed, they went
hungry.  Given the weather and the landscape that they
were scattered over, Canada could not find them to give
them food.  The subsidies since then have (among other
things) had the purpose of making sure that they are
findable...

>     Benjamin> I knew both things, hence my comment about higher order
>     Benjamin> effects that kick in when inflation is near 0.
> 
> This time you were lacking precision.  You said nothing about near
> zero.  Nor is it a "higher order effect".  The effect of deflation is
> not the same as the negative of the effect of inflation, because of
> the non-negativity constraint on nominal interest rates.  This is
> first-order.

I am used to calling any deviation from a linear
approximation to a smooth curve "higher order".  Also
note that there is not a simple binary "on-off" switch
between inflation and deflation.  For instance at 0.5%
interest rates money markets have a huge problem -
their internal fees are more than the interest they
can earn so they are already losing money.  At the same
short-term interest rate long-term mortgages are not a
problem because transaction costs are lower, and the
long-term interest rate takes into account the
possibility of a future interest rate increase.

>     Benjamin> (Deflation is merely a negative interest rate.)
> 
> No, it is not.  It is a general decrease in the price level, and
> cannot lead to negative nominal interest rates.  Furthermore, although
> real interest rates can be, and within recent memory have been,
> negative, in deflation the real interest rate is necessarily positive.

Mathematically deflation is just a negative number for
the interest rate.  Losing money is just a negative
profit.

Also, as pointed out, some deflationary effects start
showing up while you still have a positive inflation
rate.

>     Benjamin> The problem [in the great Irish potato famine] was a
>     Benjamin> blight that wiped out the potato crop several years
>     Benjamin> running.
> 
> Uh-huh.  Monoculture is a famine waiting to happen.  In other words,
> what happened was not a market failure, but a natural disaster.  What
> you are implicitly advocating is simply a large income transfer from
> people who were unaffected by the potato blight to those who were.  I
> certainly agree that that would have been the nice thing to do, but I
> fail to see that need as evidence for instability of the potato market.

I did not claim that it was evidence for instability of
the potato market, so that it isn't is no surprise.

I claimed that humanitarian efforts were not taken,
aborted and scaled back in part because of a belief that
doing so averted a larger humanitarian disaster later.
In short, "No matter how bad it is, intervening would be
worse."

The basic cause of the disaster is well-known.  While we
are in the mode of, "they didn't know better", the link
between genetic diversity and adaptation was not known
in the 1800's, and was only uncovered in the early
1900's.  (Point of trivia.  Gould has an essay where he
claims that this discovery resolved the last major
scientific challenge to the theory of evolution.)

>     Benjamin> Famines like the one that happened in Ireland were
>     Benjamin> regarded as inevitable.
> 
> They were--and are.  They still happen today in monoculture economies.

Um, this wasn't the theory accepted then.  The argument
(as you well know) was that exponential growth in
population with fixed available resources would only
end when death from lack of resources halted population
growth.  That death would obviously tend to be in the
form of famines.

What this economic argument missed is that improvements
in agriculture were going to offset population growth
so that major famine could safely be (barring disaster)
alleviated without fear for the forseeable future.

So economic theory said that the humanitarian thing to
do was to let people starve to death.  The naive answers
that logic said should not be done for the good of the
Irish (temporary feeding, assistence in mass migrations)
*could* have been done.

(Note that since then our ability to find unforseen
sources of resources has become so taken for granted
that economists routinely argue that we should not
worry about projections of running out of known
reserves of various things.  Some day that approximation
of reality will also prove wrong...)

> Just as catastrophes happen regularly to monoproduct companies.  The
> difference between bankruptcy and famine is that bankruptcy is
> deliberately engineered so that the irreplaceable resource---an
> intelligent human being with the guts to bet her livelihood that she
> can produce something others will find useful---is left unencumbered
> to try it again.  In famine, of course, the human is debilitated or
> worse.

Unfortunately humans often pick the answer that everyone
else picks.  For a number of reasons.  One of which is
control related - if your competitor picks the same
solution then you benefit and lose equally.  This allows
you to eliminate possible differences in that factor
from your competition and allows you to focus on the
business.

Therefore if an alternative to a standard product is not
seen as a competitive advantage, people will be reluctant
to adopt it simply because worrying about its potential
pitfalls is more than it is worth to them.

>     Benjamin> Also remember that this was the era which was hesitant
>     Benjamin> to take action to guarantee clean water supplies because
>     Benjamin> people should be free to decide whether they wanted to
>     Benjamin> pay for that.  (A policy that suddenly reversed after
>     Benjamin> Prince Albert died of typhoid...)
> 
> Right.  And today we know why clean water supplies are a public
> problem in a way that the supply of potatoes is not.  The economics of
> this were not at all well understood until the middle of the twentieth
> century, I remind you.

And what would two people arguing a century from now say
that about?  "Oops, they didn't know better." is a common
refrain for every period of history.  What don't WE know
better (yet)?

>     Benjamin> I am glad that he is not as smug as he comes across in
>     Benjamin> his writing.
> 
> Oh, I didn't mean to imply that he's not smug enough that I
> occasionally wished I had a Motie's gripping hand to do a little
> facial reconstruction with.[1]  Just not about others' misfortunes,
> and how he feels public policy should deal with them.  He has thought
> carefully and generously about that, and come to the dismal conclusion
> that to "think of it as evolution in action" is the _least harmful_
> thing to do.[2]

I understand the reasoning.  I think that reasoning is
sometimes right.  Sometimes it is not.

The British did not think of the Irish Potato famine as
"evolution in action" because they didn't have our
current theory of evolution.  But they had the Malthusian
math upon which the theory of evolution is based, and
they most assuredly DID think of it as "Malthusian
economics in action".

>     Benjamin> I disagree with him on the value of "doing
>     Benjamin> good" if only for the personal psychological benefits...
> 
> I don't know, but I would not be surprised to find that Friedman made
> substantial charitable contributions---and sat on the boards of those
> charities.  In any case, that would be in no way contrary to his
> philosophy.  Personally doing good is a very important aspect of human
> behavior, and one that I value myself, despite having few useful ways
> to model it economically.[3]

I don't know, but I do know that there are many people
who use his theories to justify not trying to do good.

> The "doing good" that is probably not a good idea is using "public
> policy," ie, tax revenues exacted from other people, and restrictions
> on their freedom to choose.  That not only surely harms those who are
> taxed, but is of unclear long-run benefit to those who are subsidized.

The extent to which that is believed is a matter of
politics again.  (Sample question: Is universal health
care a good thing?  Don't answer it, I bring it up to
illustrate an area of policy debate.)

> Footnotes: 
> [1]  He's a Chicago School economist, he can't help it.

He can help being a Chicago School econimist. :-P

> [2]  Two in one paragraph.  I'll stop now; that's N-P complete.
> 
> [3]  The "why hackers do it" thesis I mentioned in my reply to Jean
> Camp is one way, though rather unflavorful and less than satisfying.

I suspect that if a good way of handling these problems
is found, economists will find that some of their
theories about what kinds of interventions are justified
will need modification.

Cheers,
Ben
-- 
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