Re: The economic whole equals the sum of its parts.

["John O'Donnell" <jackodonnell@xxxxxxx>]

John Vertegaal wrote:
>
> In the thread: "City of Beijing announces Job Gaurantee"
> John O'Donnell wrote:
>
> >>It is "representative firm modeling" in that the
> >>demonstration is the effect of macro economic policy on the
> >>behavior of micro economic decisions. The only extent to
> >>which the model is brought forward to represent the economy
> >>as a whole is the simple fact that the total is the sum of
> >>its parts.
>
> >>Can you provide some specifics of the pitfalls you see? The
> >>fallacy of composition you seem to be asserting is one of
> >>improperly imputing the whole will have the same composition
> >>as a partial sample of the parts. I make no such assertion.
>
> and
>
> >None of my argument depend on imputing characteristics of a
> >part to the whole beyond simply concluding that the whole is
> >the sum of its parts and even that conclusion, while
> >obviously true, is superfluous to my argument.
>
> The macro economy is not as simple as you make it out to be.

No, it is not a simple as you ASSUME I make it out to be,
not "not as simple as I make it out to be."

> It is a dynamic circular flow system that moreover is complex,
> because of overlapping horizontally flowing components (profits).
> And at no time can it be represented by a single equation as the
> sum of its parts, because complexity results in the values of all
> those parts not being determinate at the same time.

Not "at no time" but only at very limited times, such as the
simple statement that the whole consists of the sum of all
its parts.

> If you try to build a system integrally, from what are essentially
> "elastic" components, then the outcome is either meaningless or
> contradictory EVERY TIME.

Not "EVERY TIME" but perhaps MOST times and in any case that
is NOT what I have done. I have demonstrated that a few
particular macro policies affect micro decision making and
that those affected decisions will lead to beneficial macro
outcomes.

> You presuppose microeconomic values before they are systematically
> ascertained,

Where? be specific.

> and your model asserts that by manipulating micro
> supply-side components, macroeconomic demand can be determined.

Not "determined", AFFECTED.

> As
> a deduced conclusion this is fallacious, because there is no way to
> independently determine the value of microeconomic components in
> terms of the systematic outcome.

True, but the outcome based on a set of assumptions does
determine the direction of the impetus for change and use of
a particular set of assumptions only provides the vehicle to
demonstrate that impetus.

> The values of the system's micro
> elements, as depicted from elementary axioms governing the system
> as a whole, are determined by demand only.

Nonsense. Supply must be available to meet demand at some
point along the demand curve and the demand curve itself is
undoubtedly affected by the supply curve however imaginative
each of these curves may be.

> Hence, it is not pricing, but satiation and the fallacy of being
> able to postpone direct spending indefinitely, that determines
> economic (ill-)health.  And the assertion that the system equals
> the sum of its parts is meaningless, because at any particular time
> those parts cannot be measured.

While it is true that not all real world decisions are made
to accomplish the optimum, it remains that the impetus
toward that optimum is affected by the control of the
variables that can be controlled, particularly those
variables controlled in response to meaningful measures of
the effect of the controls.

The assertion that the whole is the sum of its parts is not
"meaningless" even though it, as I have stated [and was
quoted by you above] earlier, is superfluous to my
arguments. The only time it is used is to create a
particular attainment point for the model. The actual
control of the value of the currency is described elsewhere
and is not controlled by the amount of the Citizen's
Dividend. Likewise, all the other specific numbers used in
the model are clearly stated as assumptions and are only
used to present the effect of the impetus created by the
proposed macro policy choices.

--
			-- jbod

		Tax Privilege, Not People
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