Re: US Trade Deficit As 'World Engine Of Growth'?

[John Vertegaal <vertegaa@xxxxxxxxx>]

Paul Davidson wrote in reply to the below:

>>Perhaps if your book answered the question *why* its pv exceeds its
>>production cost, in a logical way from stated premises, would it be
>>understandable.

>What in the world do you think "animal spirits" means when translated
>into a mathematical formula?????
>-- it must mean thatan  entrerpreneur EXPECTS the present value to
>exceed the present costs

It takes more than a one-sided expectation to at any particular time
"determine" a value.  By the same token, our entrepreneur may "expect"
a certain rate of return, setting his profit margin accordingly; but
determination requires a _reaction_ to the initial setting of a course
of action.  In the absence of such a reaction the system is still
unbalanced and "expectation" is in no position to play the role of a
"cause" of anything; which invariably requires a determinate point of
departure.

The crux of the matter is the inability of the systematic accounting
system, out of necessity dealing with micro relationships when pinning
down a particular value at any time, to reflect the state of the economy
as a whole.  But I'm sure you're well aware of all of this.  However, a
modus operandi of treating a pv as if it's determinate and a valid point
of departure "because how far could it really be off?" defines away in
its assumptions the critical path to clarification; and is neither able
to pinpoint iniquities, nor has anything to offer by way of warning or
remedying an impending breakdown.


>>  As it stands you seem to contend a "real" or "certain"
>>present value based on an uncertain future stream of quasi-rents.

>NOT at all --

>  Since I  introduced the notion of non-ergodic  uncertainty into the
>economic literature and EMPHASIZED in my book FUINANCIAL MARKET S ,MONEY
>AND THE REAL WORLD-- I think you will find it hard to stick me with
>assuming a "'real' or 'certain' present value notion on me.  So lets not
>caste such careless accusations.

I'll gladly apologize if you now agree the present to be indeterminate,
and cannot in principle be represented in full by any set of equations;
for there would be very few if any points of contention left between us.


>>Only if the present is deemed uncertain, or better said indeterminate,
>>can progress in these discussions be made.

>What in the world do you think  a nonergodic environment means???

I would say it means that the past result of economic endeavour in no way
is indicative of future outcomes from apparently similar activities.  But
I cannot see how this would repudiate the validity of 'identities' like
Y = C + I, nor ridicule the evaluation of any economic "stock"; both
being imperative if the present is indeed indeterminate.  Am I wrong to
assume you'll never go that far?


>>It can then be shown that
>>capital can only "have been" and not "is" profitable; based not on any
>>level of wages, but on the degree of direct spending of profit income
>>within the time limit set by creditors with the power to pull the plug.

>Do not try to put this lame explanation on me.

lame?? In which way?


>>"New and improved" productive capital can be adequately provided
>>through depreciation schedules in the private sector;

>depreciation is merely an accounting charge and does not represent a
>fund per se.

And the difference to the economy as a system of accounts is?


>>  and if need be supplemented
>>through government assistance, both for the true mega projects and the
>>aspiring new entrepreneur.  But damning casino capitalism, while at the
>>same time extolling the virtues of the "real" investor while he's been
>>robbing Peter to pay Paul, is no more than exculpating the race to the
>>bottom.
>>We have to move beyond confusion and contradiction to prevent the
>>latter.

>Well if you stop confusing my writings with that of orthodox classical
>economists, that would be a start!!

I don't think I'm at all confused and respect your writings very much.
I just would like you to consider taking the next step and in the process
eliminate what I see as ambiguities and/or internal contradictions.  In
any case though, I feel honoured to have this discussion with you.

John V