https://arxiv.org/abs/2002.12438 Almost Public Quantum Coins
classical economics postulates a human being strongly rational and developed the Expected Utility Theory for decisions in regime of uncertainty.
I got out of my economics study last century with the rather strong faith conviction that the basis of rationality in economic behaviours makes impossible to justify cooperation on rational ground.
And really it was not just me, some people had to build ad hoc theories to justify cooperation in terms of social capital, while some other simply took to show how the rationality hypothesis of human behaviour is really not grounded in reality, so behavioural economics is born and “people are “dumber and nicer” and more human compared to “econs” described in graduate economics texts”
Then lately I discover something funnily named ergodicity economics, got confused and took me a while to understand that it really describes a non-ergodic economics, models where the the ergodic hypothesis which is implicitely made in the Expected Utility Theory is abandoned.
A non-ergodic model better describes the economics and financial world and such model can retaina stronger definition of individual rational and has better chances to rebuild economics than chipping it away with the nudges criticism.
Utility Theory was built in the 18th century based on this “mistake” to think probability additive, made of independent events, while in reality, wealth accumulates over time and therefore when you consider probability of betting it becomes multiplicative, you have the St.Petersburg Paradox and maybe a cascade of consequences that brigns to my “rational man cannot cooperate” belief in university carried over to last here. Then I met the Farmers Fable and I got to love ergodicity economics (which is, a new foiundation of economics on non-ergodic pillars)
UPDATE march 22, 2021. Higher up I write “I got out of my economics study last century with the rather faith conviction that the basis of rationality in economic behaviours makes imposible any cooperation” but I cannot remember precisely which part of economic theory gave me this impression. Today, searching, I got to this paper of AMartya Sen “RATIONALITY AND UNCERTAINTY” http://homepage.sns.it/hosni/lori/readings/Sen%20-%201985%20-%20Rationality%20and%20uncertainty.pdf
The self-interest approach is crucial to the derivation of certain central results in traditional and modern economic theory, e.g., the Pareto optimality of competitive equilibria. / The traditional theory of utility provides a seemingly firm basis for the rationality of pursuing one’s utility – defined either in terms of Benthamite hedonism of pleasure calculus, or in terms of various formulations of desire-fulfilment. In fact, ambiguities in the concepts of ‘utility’ and ‘preference’ have played quite a substantial part in intermediating between self-interest and choice, giving the appearance of tying rational choice firmly to the pursuit of self-interest”
and elsewhere I guess trouble got crystallised with Samuelson formalisation, Samuelson considered ergodicity essential to make economics scientific (citation neeeded)
citation found, apparently Samuelson once said that economics can’t be scientific if you drop the erogodic assumption https://rwer.wordpress.com/2013/02/12/ergodicity-the-biggest-mistake-ever-made-in-economics/
still on the issue of the cancelled singularity
a dinner chat between a physicist and an economist on the physical limits to infinite growth , the infinite growth postulated by economists in their models.
I got there from this tweet on ergodicity economics https://twitter.com/DrCirillo/status/1201782869712146432
and gave another read to Ole Peter’s Nature paper which sinks deeper in my reasoning on economics.
It all started because some economist on Facebook complained that some other economist had opposing views, but this is not the point, he started with an “in science, no economic theory …” science and economics so close in one sentence got me thinking about epistemics
a comprehensive article on “is economics a science?” lots of quotes so probably it isn’t you would not need so many instead
EDIT: I found today Noah Smith arguing that economic policy today seems limited to “Give poeple money” without any attempt to ground the directive in theory, unlike what happened in 2008 crisis where economists resorted to theory and in course they wrecked the economy even more. So the state of economics, macroeconomics I mean, is dismal https://noahpinion.substack.com/p/the-new-macro-give-people-money
UPDATE june2021:I had not realized that Noah Smith had a rebuttal of the physicts and economist dialogue https://noahpinion.substack.com/p/murphys-law-or-follies-of-a-finite
on askblog I read of Fama efficient market hypothesis and monetary policy https://www.arnoldkling.com/blog/finance-theory-and-the-fed/
he says that “Actually, the central banks don’t do anything real. They are issuing one form of debt to buy another form of debt. If you are an old Modigliani–Miller person the way I am, you think that’s a neutral activity: You’re issuing short-term debt to buy long-term debt or vice-versa. That’s not something that should have any real effects“
I should study the Efficient Market hing. It also prompted me to punt on reading list Mandelbrot The (Mis)Behavior of Markets https://www.goodreads.com/book/show/665134.The_Mis_Behavior_of_Markets
things to grow
the feeling of not having any updated idea on industrial policies, other than the memory of being bad from uni times, is really nagging me. So here s some links
great Noah Smith 3d following Nobel Prizes starting on grwoth https://twitter.com/Noahpinion/status/1316777689697587201
here is a seminal paper “The return of the policy that should not be named” IMF free download https://www.imf.org/en/Publications/WP/Issues/2019/03/26/The-Return-of-the-Policy-That-Shall-Not-Be-Named-Principles-of-Industrial-Policy-46710
ECB inflation forecasts from 2012 to 2020 mostly wrong in the same direction, in 2020 they changed their direction, maybe they are a reverse benchmark
IEA sistematically undervalued renewables potential in their yearly forecasts
beware the experts, don’t believe what they say, there’s always room for things to go the way you like best
1960 the year singularity was cancelled on SSC. History developed mainly in Malthusian trap, with industrialization we got out of the trap and started growing product percapita in an exponential growth. That stopped in the 60’s
German sociologist Beck sensed that capitalism was getting into its second stage, from growth to risk priority. Adam Tooze on Foreign Policy
see also Parrow with normal accidents
Noah Smith on “What happened in 1971 along the lines of singulraty cancelled in 1960. https://twitter.com/Noahpinion/status/1306264582046937088
Assuming that the secular trend was not negated, we are simply in the through of the secular cycles, how long would be this cycle and how high would the upswing carry us ? Check also Turchin and Kondratiev for longer cycles
Turchin Cliodynamics “Cliodynamics is entirely different. Its roots are in nonlinear dynamical systems. We don’t go out looking for cycles; but we don’t shy away from them when there is robust evidence for them. In Structural-Demographic Theory, in particular, oscillations arise because of nonlinear feedbacks between different interacting components of the social system (state-level society).”
with a nice chart:
fuck wordpress and the blocks editor, BTW, when a platform interface becomes baroque for some dynamics clear only to the programmers it’s probabluy time to move, it used to be easy to add an image, no longer
Gartner Hype cycle
jazzed up version of traditional Everett Rogers’ diffusion of innovations
this was the trigger https://twitter.com/NickPinkston/status/1278353201905823745
and this is Carlota Perez curve which puts together technology and finance in a play of coupling and decoupling in the installation and deployment phases
I guess it owes something to Kondratiev, that originally was a theory of cycles in commodity prices over long periods (like 60-80 years)
and I wonder the relationships with Urchin Secular cycles more of 2 to 3 centuries due to demographic factors https://www.lesswrong.com/posts/3bPH2az479gzxDMbf/book-review-ages-of-discord
are different, it’s like having an idea and selling it
Greeks had a steam engine, more a steam turbine, aelopyle. The stem engine arrived in 18th century England
Actually it wasn’t only the steam to do the work, the steam created the void and the air did the work in the Newcomen engine. And it was at some point economical only because coal mines flooded and so there was a lot of coal with non shipping costs.
The sumerian had the wheel, but only for toys. Maybe the economnics ewasn’t right. The middle east forgot the wheel in the middle age because four camels could be run by a man instead of a single chariot. The economics.
so, things look at us waiting to be discovered, we had gotten to the moon and still had not put wheels to luggages, implementation can be harder than invention
distilled of a chapter in Antifragile by Taleb and Anton Howes newsletter “Age of Invention: The Weight of Air” of July 3, 2020
Tech companies are eating out all profits. In Europe health instead software, and tech is the new oil, barely
more goodies in this 3d, ripoff of bank research https://twitter.com/RobinWigg/status/1273967030979493888
also found this, dominant sector in economic ages, we are oil/tech overlapping with some finance domination on it