:Antonomics:

On Not Attacking the Human

2011-10-07T11:45:00.000-07:00

I wanted to post my feelings on this topic in video format because I think it's a nice touch to have facial expressions and the sound of one's voice helping to unveil the sincerity with which we often type, but cannot convey.

A recent comment was made via an online argument that (paraphrasing) "I like how FB allows people to get on and talk about stuff without the fear of being known for who they really are." Well, my answer to that is, watch this video. I'm not afraid to be "found out" and I'm not unaware that I'm no smarter than most average people my age with my background--most of us are nothing if not average. So, I'm throwing out the challenge, I'll play this game, but the ball is in your court.

Bitching about Capitalism... on Facebook. (What a Riot!)

2011-10-06T16:05:00.000-07:00

So, I stumbled upon what I thought were shit statistics last night (I think I was about 4 beers deep when I decided to comment). The following is the conversation as it has been going...

The whole thing started with this:

This table comes from the following website: http://tmotr.wordpress.com/2011/07/04/going-for-broke-will-legislate-for-food/

Here's the convo:

Anton J Razzmataz

Those are horrible statistics. How about we control for production?? All these stats say is that a CEO in the US is more productive than a CEO in other countries... should that surprise anyone? I don't doubt that US CEOs are horrible people, but this table is straight up statistical gibberish. Let's control for things... one idea, how about benefits? i.e. how are they determining this metric "pay"...every good economist knows that "pay" is a generic term. If stuff is so bad for South African and Mexican workers, why is it we have an overwhelming amount of people coming IN to the US?

Sam Westbrook ‎300,000 mexicans just went back because the situation is that much better down there. and are CEO's in this country really that much more productive? What have they produced other than more wealth for themselves? meanwhile driving the average worker in the dust.

Long Tom Outtgun Dear Anton, Are you seriously that stupid, or do you just come off that way in print? Sincerely, Another Concerned Citizen

Daniel Castello

This Anton guy needs to actually understand economics and capitalism before talking about what CEO's production rate is. I agree with Long Tom. Additionally, mass production of American goods is largely subsidized and outsourced abroad. Statements like "why are mexican and south African workers coming IN to our country" are so ignorant. Buy a plane ticket, explore the world and leave your bubble, you might gain some perspective.

Anton J Razzmataz

Stepping aside from ad hominem (Long Tom), let me make my points a little better. First, I get that 300,000 Mexicans went back. But, that's a factor of high unemployment here--if I had my way, we'd have open borders and no minimum wage.This wouldn't result in Mexicans, Africans, or any other -ans going back. And, I understand enough economics and capitalism to know I don't understand anything--which is the mistake that most people make when they talk about economics. My point is that these are shitty stats... the points on controlling for production/productivity go like this: how about we run some regressions against things like GDP, PPP, and other metrics that might give insights into why the rates of pay could be so divergent. Now, I'm too lazy to actually do this because I have other shit to do (which may be the excuse for not doing it in the first place). And again to the point of Africans or Mexicans coming in our country... it's not ignorant, it's a fact. And, this fact would be even more poignant if we did the right thing and let more people in with less barriers to entry. Having seen some interesting places in the world I can say that people come here for good reason--we have a great country!

Anton J Razzmataz

And Daniel, I'm talking about labor production more than anything... but I threw GDP out there because most people don't know much about the Marginal Value of Product (MVP) and I'm not smart enough to know how we could use that to control for these stats anyway... but I'll be thinking about it. My argument is that an average CEO in the U.S. has a higher Marginal Physical Product than an average CEO in the rest of the world. Why would this be? Perhaps having the insight to recognize that the world is flat... and so, outsourcing becomes another reason to look at these figures with more scrutiny. At the end of the day if we sat around and talked about this, we'd probably all come to some level of agreement. I really believe it's a matter of lying about Bayesian priors that we often find ourselves disagreeing (see Robin Hanson).

Long Tom Outtgun

Anton ... this is a table of RATIOS ... comparing the pay of the average worker to that of a CEO ... the "1" could be dollars, it could be chickens, it could be Moons of Alderaan for that matter ... therefore, for every one "Moon of Alderaan" a US employee makes, an american CEO makes, essentially, a whole solar system ... This has nothing to do with GDP or outsorcing or immigration or anything else you mention ... it has EVERYTHING to do with the grossly un-equal distribution of wealth seen in the US compared to other standards globally ... How long would it take for you to save up for a car? A CEO can buy one every week, still pay his bills AND go out drinking with his buddies. Wake up.

Daniel Castello Yeah, what he said

Daniel Castello lol, I love how Facebook and other public digital forums, have allowed people to speak so passionately without the fear of inadequacy or judgement. And Sam, see at you picture prompted?! I like it a lot

Sam Westbrook

as do i my friend/s. i love that we finally have a place where these discussions can happen. Quite frankly if fb didn't exist i'm not sure Occupy _____ would've gained so much ground. Lord knows the media's total disinterest in the subject was starting to get a bit disconcerting. It took two weeks for even the slightest mention of it to make it to the mainstream media. Rediculous. So long and short. thank you fb, for everything.

Sam Westbrook and by the way. i want to get paid in moons of Alderaan.

Anton J Razzmataz

This msg is going direct to my buddy, Long Tom: I fail to see how this table proves anything about income inequality... Hypothetically, if the average CEO in the US works two times as hard as other CEOs in the world (we could consider analyzing his/her productivity), wouldn't you expect figures such as these? The figures would only say that this marginal CEO is more productive relative to a common ground of the average productive workers in a society (which ISN'T a very good metric to compare against anyway)...I'm willing to submit to your point that this may just be just a "table of ratios" meant to highlight the uncomfortable notion that there is a lot of income inequality (it certainly isn't science.. I mean, are you really claiming that 1 avg worker = 1 avg worker (regardless of where they live)?? --no, workers also vary in their skills--esp. across borders)... Anyway, if the question is: "Is the inequality higher in this country than in other countries?" ...Let me agree; but, that says NOTHING about why that inequality exists. You can't go from "the country has income inequality" to concluding that that inequality is a function of being a CEO. Why not? Well, for one, there is the function of being a lazy ass worker that can also be a factor in this view of income inequality (remember, 1 avg worker != 1 avg worker). So, this isn't really an argument about what's causing the inequality, which would be a more productive argument than what we're doing here... I'd be happy to move to that subject if you want... but, even then,you'll find me arguing that income inequality is better than trying to ensure everyone gets paid the same wage... Capitalism may not work, but it's better than any other system that's been tried. What are your suggestions? You're good at tearing people's arguments down (well, you seem to like doing it, anyhow); however, what do you have to add to the conversation? CEO's get paid too much?? You want more pay?? You want poor people to have some of rich people's money?? Why not work towards raising everyone's pay... even if it means the rich get richer??

Long Tom Outtgun

Bro? Seriously? Here: "1" is less than "475" ...therefore, inequal. Get it? And yes, this chart DOES seem to operate under the assumption that an ethiopian getting paid in keef is equal to a chinese getting paid in rice is equal to an american getting paid in Big Macs ... and for the record, this was never an argument about the how and why ... it was a simple table of ratios. All said and done, from what i understand, you agree that this "may" be a table of ratios, and that wage inequality is higher in the US than anywhere else. Good. That was the point. My point: Very little, if anything you said about this chart had ANY thing to do with the chart.

Anton J Razzmataz ‎12 to 475 **

Anton J Razzmataz

Anyway, my only point is that the chart is misleading. It claims that there is direct correlation between being a CEO and income inequality. Here's a quote that I just heard, which I think sums up my points on CEOs: People seemed to like this on my personal profile, so I'll repost it here:

Apple's market cap: 353 billion, and people are leaving flowers and notes for Steve Jobs at Apple stores.

Bank of America's market cap: 62 billion, and people are marching on its offices in protest.

Capitalism- it can be done right, but most of you are doing it wrong.

Anton J Razzmataz ‎(I'm quoting Jodi Beggs, an economist at Harvard)

Anton J Razzmataz I wish I could explain this easier... OK... Check it out, I'm gonna do some quick excel shit and show you what I mean with numbers.

Anton J Razzmataz

Here's an interesting finding... and this is after a few mins of messing around with different variables: If you take the U.S. out of the sample, the countries that have the highest CEO premiums tend towards having less companies in the Forbes top 100. Now, when you add the U.S., this trend reverses. So, the point is... even doing some basic statistical work with this table, we're not even sure that having a high CEO pay premium relative to each worker is a bad thing... it seems like for the countries other than the U.S. it is, but for the U.S. it isn't. So, my point is, these are misleading figures. It's misleading to have a table with CEO pay premiums listed, note that the U.S. is significantly higher than any other country, and conclude the U.S. is full of corporate fat cats living off of the little guys.. In fact, there is a lot more going on here... and if 10 mins of basic stats can give you an indication that there's more to the story, I'd suggest there's definitely more to the story.

Anton J Razzmataz The U.S. is definitely an outlier... Haha, I'll give you that. Now I just wonder why.

Now, trust me when I say the irony doesn't escape me that all of this conversation is occurring over Facebook... in fact, right after my last post I saw this:

This is essentially the point I'm trying to make. Now, I'm going to post this blog link as a Facebook response so we can stop blowing up Sam's FB. Besides, what better way to bring traffic to my blog??

Job-Hunting 2

2011-10-04T17:16:00.000-07:00

So, while I shun trying to start a Job-Hunting company, I have decided to take on a lead roll as the President and Founding Member of George Mason University's College Veterans for Hire.

This opportunity will allow me to document my job-search history and the lessons learned and it will allow me to give back to student veterans, like myself.

I am looking forward to the opportunity to serve my fellow veteran job-hunters.

-Anton

Job-Hunting

2011-10-03T20:50:00.000-07:00

The more and more I read about job-hunting,the more I am drawn to the idea of sharing my experiences with the world. The question, from an economics standpoint, is basically one of cost-benefit analysis. What are the costs of sharing my experiences versus the benefits?

As it stands, it seems only fair that I should share my experiences with other individuals as I have been met with some very friendly help on sites such as LinkedIn and the Actuarial Outpost. I think the conclusion that I've come to is that, as long as I can help other people in their job search, I will most likely be helping myself.

This point makes me think, once again, about the fact that true altruism may not actually exist... but, for now... I'll just do what feels right.

Going Postal with Partnerships

2011-09-26T19:12:00.000-07:00

I was in Rite Aid the other day and noticed something that, in my opinion, is nothing other than straight genius:

The U.S. Postal Service doing something smart, say what?? It probably wouldn't shock people that even quasi private companies enter into partnerships to gain market share; however, at a time when we're all wondering what's gonna happen to this Dino, it's nice to see some cool ideas coming out.

I guess the key question is: which company brought the idea forward?

Guest Blogging at the Local Beer Blog!

2011-07-25T19:58:00.001-07:00

Do you like beer?

Heck yes you do!

Check out the Local Beer Blog!!!

Picture Borrowed from Wikipedia: http://upload.wikimedia.org/wikipedia/commons/e/e5/Pale_Ale.jpg

Live-8 Treats Africans Like Children. The West Assumes a Parental Role.

2011-07-10T19:25:00.000-07:00

After reading through Bill Easterly's "The White Man's Burden," I am contented to say that perhaps Americans are misled into thinking that we have the power to help the world through top-down economic planning.

Even something as simple as Live 8, in the eyes of educated Africans, seems to be indicative of the West's inability to be humbled by the notion that people tend to want to help themselves.

The following quote by Cameroonian lawyer and journalist Jean-Claude Shanda Tonme, referred to in Easterly's book, comes from a 2005 NY Times OP-ED Column:

"But the truth is that it was not for us, for Africa, that the musicians at Live 8 were singing; it was to amuse the crowds and to clear their own consciences, and whether they realized it or not, to reinforce dictatorships. They still believe us to be like children that they must save, as if we don't realize ourselves what the source of our problems is."

The point is, perhaps we should be pushing for bottom-up movement as opposed to top-down planning. It's not up to the West to take care of Africa's problems; however, it might be in our interest to try to understand the source of those problems before we start trying to help.

Evernote

2011-01-19T19:12:00.001-08:00

So, always one to try ideas presented by influential writers, I have heeded the words of Fitness Guru and motivating-extraordinaire Tim Ferriss (see: "Four Hour Work Week" and "Four Hour Body"). In FHB Mr. Ferriss recommends that individuals use a program called "Evernote." By detailing how Evernote can be used to post "before" and "after" pictures, Ferriss only scratches the surface of this great program. For the time being, I will be using Evernote to track my eating habits and exercise routines as well as a searchable database for keeping note of journal articles that I come across.

I expect this tool to do great things in the future.

~Anton

Pet Insurance... or People Insurance? You decide!

2011-01-05T19:46:00.000-08:00

Responding to a New York Times Freakonomics blog post by Professor James E. McWilliams, one commentator addresses a quote from the post:

“... [a fatal dog attack] happens more than you’d think. In 2009, there were 32 fatal dog attacks in the United States.”

Calling forth the sense of a practical statistical mind, our commentator Noah rebuts:

"In 2006 there were 72 million pet dogs in the U.S. ... and 32 killed a human. That’s one fatality per 2.25 million dogs. On average, there are 584 infanticides in the US (according to this source). That’s about 1 per 500,000 people. So parents are at least 4-5 times more likely to kill their children than the family dog. And that’s assuming all 32 fatal dog attacks were against children. We should be giving custody to the pit bulls."

This is the kind of shrewd thinking that tickles my fancy...

While it isn't certain where Noah derived his pet statistics, from a quick search of pet related fatality statistics on Wikipedia we see that, in 2009, there are 30 reported dog-related fatalities. From the Humane Society of the United States we find that there are approximately 77.5 millions dogs in the U.S. in 2009. Therefore, we can conclude that there is a fatality rate of 1 per 2,583,333 dogs... and, citing the same source as our friend Noah, we see that, indeed, in 2005 there were 584 infanticides. In the same year the U.S. population hovered around 296,410,404 people (according to U.S. Census data). We confirm that is is about 1 fatality in approximately 500,000 people.

So, perhaps mandated liability insurance should be considered... not for dog owners per se... but for everybody with children.

Either way, it appears from even cursory statistics, that people are too worried about dog attacks on children; maybe it's the sensationalization of such attacks via U.S. media... who knows.. what is sure, however, is that when we start to consider our problems the way our friend Noah has (i.e. statistically) we obtain a more robust understanding and ...dare I say it... perspective!

Here's another cheer for statistics!

~Anton

Legalize D.C.!

2010-10-30T23:37:00.001-07:00

Charts for OEF/OIF Casualties

2010-10-19T00:17:00.000-07:00

Inspired by the data on this website: http://www.militarytimes.com/valor/sacrifice.php

I just wanted to put together some simple visual graphics for the given data. I also included a break third chart detailing the Relative Frequency of casualties by branch. This seemed obvious because, though the Army has the most casualties total, for example, the Army also has the largest amount of troops. So, the Relative Frequency chart shows the per-capita death rate.

Not surprisingly, the Army tops out the total number of casualties; however, the Marines top out the per-capita death rate.

Social Entrepreneurship Day 2: Time for a New Market

2010-10-13T15:16:00.000-07:00

Business Idea: Develop an online market for people to donate to investors. The investors who reap the biggest profits (commissions) will be those individuals who donate to the best social entrepreneurs--those social entrepreneurs who earn the most profit.

Social Entrepreneurship Day 1

2010-10-13T01:51:00.000-07:00

So, I was hit with a amazing amount of motivation this evening. Inspired, as it were, by the contents of my previously mentioned book, Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve all the World's Problems by Michael Strong.

I came up with a great idea, I am going to call it

ProFIT and Loss: A Gym that Pays You!

Immediately following my brilliant idea, I searched the internet to make sure my new and unique idea really was new and unique. After a brief search I stumbled upon an AOL article detailing a company called Earndit, which essentially rewards individuals who work out--exactly what I want to do.

"Damn!" I thought, "They got me... but, wait... OH! This is a FOR profit industry." It looks like I am still in the game, considering my idea is quite a bit more unique (details to follow post website, but it has to do with being a non-profit... or, at least, more along the lines of social entrepreneurship outlined in Strong's book).

Anyway, I spent the night developing a logo and a preliminary business plan outline. The logo is rough but looks something like this:

Probably the main differences will be, well, for one... professionalism. But, also, I am changing the company name to ProFIT and Loss (as noted above) and the slogan will be: "A Gym that Pays You!" I think these two changes stand as improvements to the above...perhaps these two things will change again.

Right now I know that the Non-Profit idea is the unique aspect to this business... plus, this business will be focused on liberty-central ideas (again, like Mr. Strong points out in his book).

As the beginning of my business plan out line states:

“Whoever can provide us general models of institutional change in the direction of liberty that can provide guidance to implementing social change will do a great service for the human race...”

Tom G. Palmer

Realizing Freedom, p.9

This is what I'm headed for.

So, what's the next step? Well, I quickly e-mailed the crew of Earndit and we'll see how that goes. I told them that I wanted to chat about the future of their business and its ability to gain profit (an issue they have yet to fully flesh out) and I said that our conversation would likely be mutually beneficial. I am excited to hear back from them and to, as I said in the e-mail, "pick their brains."

For now, I'll probably call it a night. But I plan on discussing this new business with Liz (the de facto Non-Profit and Social Entrepreneur expert in our house) and continue developing my ideas.

Charm Industries

2010-10-12T23:23:00.000-07:00

From Michael Strong: Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World’s Problems. (p.15)

"The poet Fredrick Turner describes the twenty-first-century growth industries as the 'Charm Industries:'

Once manufacturers and information have become vanish-

ingly cheap to produce and therefore are not very profitable

or labor intensive, the major form of profitable production

in the twenty-first century will be cultural production--the

irreducibly labor- and capital-intensive human activities that

I call the Charm Industries: tourism, education, entertain-

ment, adventure, religion, sport, fashion, cuisine, personal

service, gardening, art, history, movies ritual, psychotherapy,

politics, and the eternal soap opera of relationships. Those

industries are subject to diseconomies of scale--that is, they

are less effective when pursued by large units of production,

such as big nation-states, and more efficient when they take

place in small units such as cities, regions, and traditional eth-

nic areas. Therefore we should remove the political obstacles

to the present trend toward greater regional autonomy in cul-

ture, while opening all the technological and economic gates

of world communication.

Fred Turner, "Make Everybody Rich,"

Independent Review, Summer 2002, 135

This concept is amazing to me... I have just discovered the concept of Flow and am quite enamored. I recently started reading Be the Solution and I think that I'm in possession of life altering text. Fortunately I will be seeing Michael Strong speak at the Students For Liberty Northeast Regional Conference in early November.

GMU Crime Stats

2010-10-01T13:38:00.000-07:00

Nice, the 2010 GMU Crime Stats are out... here's my first chart... expect more.

This is the chart from their Annual Security Report detailing Arrests/Disciplinary Refferals over the last three years. The amounts are totaled from four categories: On Campus, Student Residencies, Noncampus Buildings, and Public Property.

Now to figure out what the hell a "Referral" is....

Disaster Losses (1971-2009) c/o the BEA.

2010-10-01T01:56:00.000-07:00

Wow! Look at that 2005 peak!

Market Regulation

2010-09-11T18:54:00.003-07:00

Tell me what you think!

The 24 Types of Libertarian | Progressive Political Cartoon by Barry Deutsch

2010-08-05T17:46:00.000-07:00

The 24 Types of Libertarian | Progressive Political Cartoon by Barry Deutsch

Blogonomics

2010-07-27T13:12:00.001-07:00

What is the value of blogging, in economic terms? The simplest way to attack this question might be to consider what economists call "opportunity cost." That is, the cost of blogging is a matter of what opportunities one foregoes while blogging.

So, given the adage "time is money," one might coclude that it is individuals with the lowest value of time (VOT) who are the most inclined to blog. One might even say that the marginal propensity to blog (MPB) is inversely proportional to an individual's VOT.

The web is filled with blogs; surely it is more common to find individuals with lower VOT blogging about random and varied topics--even if we control for population.

On the contrary, the value of blogging (VOB) is likely as an important (if not a MORE important) metric for understanding blogonomics than the VOT. That is, we should not avoid the fact that people are willing to endure the costs of blogging when analyzing blogonomics. What's left is to determine which force is stronger; VOT or VOB.

Though we seem to be creating new terms (VOB, VOT, MPB), all of these ideas have parallel economic terms. For instance, instead of thinking about VOB we might consider the theory of Utility. The VOT is a way of approaching the concept of opportunity cost (as already noted above). And, lastly, the MPB is analogous to Keynes' Marginal Propensity to Consume (MPC)--specifically in that it can be thought of as an empirically derived ratio of time spent blogging versus time spent on other tasks.

The remaining question, then, is not one of justifying these terms as economic. The main concern here is, "How do we measure these metrics?"

(Yet another) introduction to Economics

2010-07-20T20:55:00.001-07:00

I've been inspired to write about economics lately… inspired more than usual. Of course, this shouldn't be all too surprising in that I am a student of economics; however, this time it is different. This time I feel like I need to write out some basics of economics; basics that most people with whom I interact seem to be largely misunderstanding or altogether avoiding. So, in the interest of brevity, I shall approach these basics in a list format and add to the list from time to time.

The first point that I often find myself making to people is this:

-economics does not mean "the study of money."

Though many readers may find this notion shocking, appalling, or patently wrong—my argument to the contrary is as follows:

First, money is but one aspect of the world economists find themselves trying to understand; even in those situations, what economists think of as "money" is generally different from what the layperson calls money. That is, economists delineate between the term "money" (i.e. a store of value used in exchange for [whatever]) and the more cliché version of "money"—what is more appropriately thought of as "currency." Anyway, the point here isn't to rant on about the semantics of the monetary system but to point out that labeling economists as "those who study money" is a rather vague and empty definition. So, if you'd like to understand economics, begin by forgetting that it's just the study of money.

So, "What DO economists study?" you may ask… and, indeed, I have an answer. More than money or trade or currency or spending or any of these pecuniary realms, economics is about choice. To study economics is to analyze the way the world works by looking at choices that are made (often these choices are those of governments or individuals, depending on what the economist is studying). In fact, not only do economists study choice, one might claim that they are experts when it comes to the motivations behind choice, the process of choice making, and the outcomes (be they positive or negative) stemming from choices.

Most people might argue that this is the realm of psychology. I don't portend to disagree wholly on that sentiment. Yet, the field of economics is, at least in this author's opinion, more robust than the field of psychology—if only for the fact that psychologists tend to disregard the sociological, economical (as in efficiency maximizing), or other attempts to describe the nature of human relation. So, in a sense, economics is a superset of both psychology and sociology.

-economics is a dismal science… because everyone cares about the wrong stuff and finds themselves bored with the right stuff.

One of the biggest problems in economics is conveying economic arguments while avoiding the reception of ad hominem attacks. Usually it goes a little something like this:

[At a family function…the subject of some recent news headline becomes the topic of conversation]…

Family Member 1: "Did you hear how the President is finally giving free health care?! Finally!"

Economist: "Yes, I heard that the President wants everyone to get "free" health care…"

Family Member 2: "I know?! How great is it… but, why, Mr. Economist, do yo say "free" as if you're putting it in quotes?"

Economist: [Thinks to himself…"Should I answer?"… takes one more swig of beer… thinks to himself, "Oh, what the hell?"]… "So, the issue here is, what makes it free? "I mean, someone has to pay for it… ..right?"

Family Member 1: "Yeah, it IS free though… because the sick don't have to pay and they use taxes to pay for it…"

Economist: "Ah, that's right… taxes… but, who pays the taxes, might I ask.."

Family Member 2: "We all do… we have to."

Economist: [Knowing full well that Family Member 2 has been unemployed for two years and has never made a high enough income to pay taxes…] "Really?!... We ALL do?" …. "huh… imagine that…"

….

And we can all see where this is heading.

Anyway, that's it for this blog… next blog I will be following up with some more entry level economics. Stay tuned.

~Anton

State Liquor Monopolies

2010-03-26T07:11:00.000-07:00

The privatization of state liquor monopolies would entail, in some form or another, the dissolution of state-run liquor stores and the transfer of ownership from these state-owned enterprises (SOE) to private businesses. One of the economic benefits of privatizing liquor stores would come from an increase in property tax revenue, levied on private businesses. These increased property taxes could be used to help offset budget deficits as well as to help finance future, long-term, investments.

Additionally, by privatization, states would no longer be required to pay the overhead necessary to run liquor stores. The decreased need to pay unionized workers would result in decreased expenditures.

A third economic benefit of privatizing liquor stores would come from any profits incurred via the sale of government owned businesses to the free market. Indeed, there are several ways the government could conduct the sale of its property; for example, selling stock or conducting an auction. Each method of selling SOE assets (or even private operating licenses) would likely result in increased government revenue.

Lastly, the economic (and social) benefits resulting from the increased variety of spirits, the availability of boutique products, and the increased efficiency resulting from consumer “dollar votes,” may help encourage consumer spending within the state, thereby increasing state revenue.

Many of the negative consequences of privatizing state-run liquor stores would be social issues as opposed to outright economic issues. For example, if state-run liquor stores decrease the sale of alcohol to minors more than private liquor stores are able, the social benefit of having state-controlled liquor stores may be of more value than any economic benefit or loss.

However, even these social issues have economic implications (e.g. in a public goods scenario); for example, if increased sales of liquor to minors increases automobile accidents, the resulting economic losses (via increased need for emergency care, for example) may be greater with privatized liquor stores

Additionally, by allowing the government to run a business with veritably inelastic goods (such as liquor) the government may be able to compete with the free market by undercutting price-gouging, private liquor stores.

That is, because the government’s incentives are political (and not necessarily economic), the government may be able to compete with businesses that are more responsive to price changes--businesses that pay less than half the cost of per-unit sales tax by shifting the larger portion of per-unit sales tax on to customers.

Therefore, customers would be reaping economic benefits by not having to pay as high of a price that they might have had to pay in the free-market. Another reason to oppose privatization is because private businesses have an incentive to maximize profits in any way they can—maybe even unethically. If businesses begin to take ethical short cuts (in safety standards, for example), the economic ramifications of a public health or safety crisis may be too much to handle.

Benefits

http://reason.org/blog/show/why-privatizing-liquor-stores

Reason.org’s arguments are strongly in favor of privatizing state-run liquor stores. Reason.org writer Leonard Gilroy cites a Washington Times article1 by Sara Abruzzese that talks about Mr. McDonnell’s (pre-gubernatorial) plan that, “…could result in $500 million for Virginia ‘in the near term.’” Additionally, Mr. Gilroy states that privatization in other sectors has led to significant state revenues: “For example, Gov. Mitch Daniels privatized the Indiana Toll Road and is using the $3.8 billion upfront payment to fully fund a ten-year statewide highway investment program.” 1 http://www.washingtontimes.com/news/2009/jul/22/mcdonnell-sees-revenue-in-privatized-liquor-stores/print/

Agent-Based Models of Complex Adaptive Systems: Bottom-Up Computing and the Economy

2009-10-21T05:52:00.000-07:00

Agent-Based Models of Complex Adaptive Systems: Bottom-Up Computing and the Economy

Anton Rasmussen

Introduction

If one turns to any news media outlet (television, the Internet, newspapers, etc.) it becomes clear that the economy is an extremely important segment of modern culture. When attempting to comprehend the economy within the framework of culture, individuals may often wonder, “How complex is the economy?” and “How may we best understand the economy?” In order to appreciate how complex the economy is as a cultural element, one must derive more than how the economy “basically” works. In fact, upon close examination, a keen observer will realize the extent to which complex interacting agents (businesses, consumers, and others) make up the foundation of economic action.

Fascinatingly, complex interacting agents are more than mere actors in the economy—these agents are the sole representatives of economic achievement. In an effort to avoid obfuscation, scientists and social scientists have found it useful to define economic agents by way of their interaction: “Scientists refer to parts or particles that have the ability to process information and adapt their behavior as agents and call the systems that agents interact in complex adaptive systems” (Beinhocker, 2006).

So, if economic agents are the sole representatives of economic achievement, it seems prudent to understand not just where these agents interact (i.e. complex adaptive systems) but how they interact. Advances in Information Technology (specifically, within the field of Agent-Based Modeling (ABM)) are at the heart of understanding the interactions of these agents. Fortunately, by filtering our examination of ABM through the lens of Information Technology, we may be able to contribute to the understanding of complex adaptive systems—perhaps even by utilizing the modern technological methods of online peer-collaboration, social-networking, and other Internet-based “peering” tools.

This paper begins by moving toward one specific aspect of ABM and by highlighting how such technology can help economists, financiers, academics, and hopefully, one day, everyone, understand the complex nature of the economy. Even though ABM has many uses outside of economics, by exemplifying its use in this one social science discipline, we limit our coverage and hopefully still allow the reader to gain a broad understanding of how, with the help of Information Technology, ABM has real-world value—especially in the realm of economics.

The technological progress related to ABM and occurring within the sciences and social sciences is quite rich. In order to progress the comprehension of dynamic systems such as the economy, many disciplines call upon the use of ABM. When the economy is thought of as a complex adaptive system, specifically, economists utilize so-called Agent-Based Computational Economics (ACE) in order to gain a better understanding of how the economy works as a cultural element and otherwise.

The Early History of Agent-Based Modeling

Some claim that the idea of ABM goes back hundreds of years. However, as of 2008, “…(ABM) …[had] become an increasingly popular tool used to model and understand the many complex, nonlinear systems seen in our world” (Heath & Hill, 2008). So, what does that mean? According to Brian L. Heath and Ray R. Hill, “The origins of ABM can be traced back hundreds of years to a time when scientists first began discovering and attempting to explain the emergent and complex behavior seen in nonlinear systems. Some of these more familiar discoveries include Adam Smith’s Invisible Hand in Economics, Donald Hebb’s Cell Assembly, and the Blind Watchmaking in Darwinian Evolution...” (Heath & Hill, 2008). Even so, whether or not ABM has been around for hundreds of years is less important than how it is used today.

As we alluded to above, our journey to understanding ABM must involve the quest to understand what are known as “nonlinear” systems. Though mathematicians have been able to understand so-called “linear” systems for quite some time, even the advent of Calculus was unable to approach the preciseness needed to understand “nonlinear” systems. In fact, in order to delineate the difference between linear and nonlinear systems, one may find it helpful to begin by considering a famous “linear” example, such as how scientists came upon the discovery of electrons, protons, and neutrons.

The story goes like this: throughout much of history man was concerned with deconstructing objects into their constituent parts; this division of matter resulted in ever increasing division as technology improved. This is how linear systems are understood; they are deconstructed. In the case of matter, specifically, all matter was thought to contain “atoms” and these “atoms” were once considered to be the most finite of particles, which make up matter. Of course, as we all know, the invention of certain technologies allowed scientists to find an even smaller set of particles comprising the atom—namely the electrons, protons, and neutrons that we see today.

The similarity between de-constructivist thinking (in that we will always be able to determine the whole by dividing it up and learning about its constituent parts) and “linear system thinking” is striking; in fact, ABM attempts to avoid the very top-down approach inherent in such thinking. The complimentary bottom-up approach of ABM is paramount to understanding nonlinear systems. In many fields, such as Psychology for example, the idea of bottom-up construction is considered synergistic and therefore states, to paraphrase a Gestaltian concept (albeit, a cliché), “The whole is greater than the sum of its parts.” Such a synergistic worldview provides the foundation of ABM; similarly, the emergent properties that result from nonlinear interactions within the economy are the crux of ACE. Were it not for the introduction of ACE and advances in Information Technology one realizes it may have been impossible to understand nonlinear “complex” systems (Heath & Hill, 2008).

The birth and life of ABM has been (and maybe always will be) inextricably linked to Information Technology and Computer Information Systems. According to lecture notes from the Santa Fe Institute, however, computer technology was not a prerequisite to ABM; nevertheless, “The access to computer technology … reduced the sometimes prohibitive computational costs of… algorithms and allowed them to be used for practical purposes” (Ehrentreich, 2007). So, before scientists could practically explain the complexity of nonlinear systems they needed access to computer systems that allowed them to perform ABM. Therefore, the idea behind using computers in the laboratory can be thought of as a way to increase a scientist’s ability to conduct experiments. Anecdotally, one can only imagine how fast Mendel would have come upon his genetic discoveries (or how many other discoveries he may have made) had he been able to model the experiments he conducted with pea pods via ABM.

Intelligent Complex Adaptive Systems

According to Perez (2008), agent-based models should not be thought of as anything more than tools. That is, because individuals rely on ABM to simulate reality (such as when economists use ACE to simulate economic actors so that they may try to understand the complexity of an economy), all too often these scientists and social scientists try to equate models to reality. Perez goes on to say, “computer-based simulations, regardless of their expected accuracy, aren’t the reality, there [sic] are just metaphoric representations” (Perez, 2008).

Even though Perez cautions that we ought not rely too heavily on models to answer all of life’s questions, it can be said that by allowing the study of complex adaptive systems to evolve itself (however ironic that may seem) into what he calls, “intelligent complex adaptive systems [italics added for emphasis]” (Perez, 2008), greater communication can occur across a multitude of disciplines. Therefore, the main reason we are drawn to complex adaptive systems as an answer to the question, “Why do we model nonlinear systems through ABM and through ACE?” is that the modeling of complex adaptive systems allows for interdisciplinary examination via “systemic inquiry,” which helps one better understand reality (Shan & Yang, 2008). So, not only do ABM and ACE explicitly provide help to economists and others; however, they implicitly create a language with which many scientists and social scientists may communicate across disciplines.

Further Required Research

Ehrentreich claims, “The agent-based approach is currently considered by many researchers as the latest revolution in economic modeling methodology,” this fact should indicate not how fast computation or Computer Information Systems are advancing but how incorrectly economists and other researchers approached previous methods of research (Ehrentreich, 2007). Accordingly, if we are to determine what further research is required with respect to ABM and ACE, it may be wise to let go of preconceptions; as Thucydides remarked long ago, “When a man finds a conclusion agreeable, he accepts it without argument, but when he finds it disagreeable, he will bring against it all the forces of logic and reason” (Thucydides, 2009). Some of the required research into ABM and ACE, therefore, may be outside the realm of computation. In fact, as we said above, it appears the bottom-up tools of social-networking, peering, and other apparatuses for modern collaboration may be the next step for researchers interested in ABM and ACE. Therefore, the use of modern collaboration tools within the realm of ABM is one research area that needs further investigation.

After examining the nature of agent-based economics, one quickly notices that, in order to break into the depths of ABM and ACE, one must have a particularly high aptitude for the tools of mathematics and econometrics. Because many economists feel these tools are essential to ensuring that research is valuable across disciplines (as well as within the field to which the research belongs, of course), there exists a lack of general “layperson” information regarding ABM and ACE. One of the potential risks of excluding a general readership from the use of ABM and ACE is that, in so doing, researches run the risk of underrepresentation of thought; and this may ultimately lead to stagnation within the field. Additionally, by excluding the general reader, economists are unable to exploit popular Internet based tools such as peer collaboration and social-networking to their fullest potential. Incidentally, if ABM and ACE research was formulated for the general reader, it would seem that researchers could utilize specific modern collaborative tools such as “wiki,” “mashups,” and other peer-to-peer applications, which are proven breeding grounds for progressive thought .

Conclusion

As difficult as it may be to bring computational economics and agent-based methodologies down to the general reader level, one hopes that over time this will become common practice. By recognizing the importance of Information Technology to obtaining a greater understanding of life (especially within the often experimentally inviable fields of social science), one hopes that as development of Information Technology continues, development of ABM and ACE will also continue. ABM and ACE have proved to facilitate interdisciplinary research and have contributed to the understanding of our world. When ABM and ACE methods are brought to the layperson level, every person will have an opportunity to understand important cultural dimensions, such as the economy, in a deeper way.

Though we should caution ourselves against relying on any one method of inquiry too much, by remaining critical of simulations of life and by refining those simulations we will continue to obtain a greater understanding of our world. This greater understanding would be lost if it were not for the development of the bottom-up approach to research via Information Technology and the modeling of Agent-Based complex adaptive systems.

References

Beinhocker, E. D. (2006). The Origin of Wealth: The Radical Remaking of Economics and What it Means for Business and Society. Boston: Harvard Business School Press.

Beinhocker has been instrumental in bringing some of the discoveries made via ABM and ACE to light at the general reader level. This book is likely the best account of what ABM and ACE have done for social scientists written for a layperson.

Ehrentreich, N. (2007). Agent-Based Modeling: The Santa Fe Institute Artifical Stock Market Revisited (Lecture Notes in Econometrics and Mathematical Systems). Springer.

This study came out of the collaboration of interdisciplinary studies at the Santa Fe Institue. Cited by Beinhocker it is one of the most formidable technical papers regarding a specific example of an ABM in action; namely, the Artificial Stock Market.

Heath, B. L., & Hill, R. R. (2008). The Early History of Agent-Based Modeling. Industrial Engineering Research Conference, (pp. 971-976). Dayton. Retrieved October 3, 2009, from ProQuest Science Journals. (Document ID: 1853090341).

A great (and brief) account of the history of ABM. Written in a scientific journal at a general reader level, this article was fundamental to helping me understand ABM.

Perez, P. (2008). Foreward. In Intelligent Complex Adaptive Systems (pp. vi-vii). Hershey: IGI Publishing (an imprint of IGI Global).

Perez talks about the development (and future) of Complex Adaptive Systems. He seems skeptical towards the reliance of ABM simulation. This introduction was taken from a much too (mathematically) advanced journal.

Shan, Y., & Yang, A. (2008). Preface. In Intelligent Complex Adaptive Systems (pp. viii-xv). Hershey: IGI Publishing (an imprint of IGI Global).

Taken from the same journal as Perez, this preface helped me tie together the idea of ABM and complex adaptive systems. Apparently the agents studied in ABM work within complex adaptive systems.

Thucydides. (2009). The Rational Skeptic. Retrieved October 5, 2009, from The Rational Skeptic: Uncovering the truth behind conventional wisdom: http://rationalskeptic.wordpress.com/skepticalrational-quotes/

Normalcy Revisited

2009-10-15T20:59:00.001-07:00

Normalcy, or what economists call “equilibrium” is not only undefinable, it doesn’t actually exist–at least not in a pure sense.

To be normal is to work within the confines of certain social orders; however, normal exists on a inherently disequilibriated continuum.

In effort to avoid becoming tautological, I won’t stoop to saying “normalcy is everything that is abnormal”… instead, I will use the economist’s view of equilibrium as “normalcy” and proceed hence forth.

Equilibrium is a theoretical framework for so-called economic “normalcy” that can only be achieved by the exogenous influence of academics and mathematicians (that’s supposed to be funny). Indeed, the whole idea of bringing a complex system such as human life (human existence) to the infinite realm of an artistic inquiry and into a normative analysis of “normalcy” is, at first glance, thought provoking. However, in the end, this method of inquiry is wholly without meaning. What “should” be normal doesn’t really lend itself to argument because it simply relies on a value-judgment of taste.

Economists build models to simplify their explanations of real systems; however, experience dictates that those models will never resemble human experience because they move too close to the wanton realm of what it means to be in a state sans flux–that is, to be conventionally “normal.” A model of normal doesn’t actually represent normal… it represents a stripped down version of the antithetical “normal.”

So, I strive to approach a definition that seeks to depart from the cliche, “chaos is order.” To be normal is to be labeled as such by an unwise adjudicator. And thus the impetus falls unto the individual to determine their level of normalcy.

A wise individual will see that, in a system as complex as life, the achievement of normalcy is without meaning… for to be normal in any system one has to fully understand the breadth of that system; otherwise, we are simply speaking in models.

Rather stoically, I accept that to fully understand normality of life is in itself a defeated agenda.

If it is merely a model of normalcy one seeks I beg them to consider with approbation the idea that the models of morality, justice, and freedom approach an ideal of normalcy for which beings should strive. Without such intangible models I doubt one will ever find a sound argument within the normative approach.

Therefore, it is my argument that to be normal is to work within the confines of certain systems (morality, justice, freedom)–judging full while that these systems are inseparable from each other and from the society in which we most desire as “normal.”

A Recommendation to the Wise

2009-10-15T12:20:00.000-07:00

So, lately I've been doing a lot of talking with economists, scholars, and the general lot of collegiate intelligentsia and I've stumbled upon an interesting notion.

Whether speaking with a student or a faculty member, the status quo of economic discussion relies upon references to historical (and that could mean, often does mean, recent historical) methodologies. Simply stated, in order to make a point, it is generally accepted that people should rely on previous arguments--especially arguments with technical data, thought experiments, and philosophical ballyhoo. And I don't say this to complain or signify that I am not interested in such arguments... I am often quite interested.

My point, however, is not whether appeals to authority (historical, technical, or otherwise) are logically sound but whether there might be a better way to communicate. Ok, so maybe my way isn't necessarily "better" or "worse" but, consider this proposal:

When I think about learning a new topic, I want to know what it might be like to explain that new topic to a historical figure. For example, imagine you are discussing the utility function, agent-based modeling, or anarcho-capitalism; how would George Washington respond... or, better yet, someone more scientifically inclined like Ben Franklin, Thomas Edison, or Charles Darwin... how about John Adams, Socrates, John Locke, or Thomas Jefferson? How would you go about explaining modern concepts? Albeit, many of these modern concepts are themselves simply continuations on a theme, but still, how would such interlocution best be accomplished?

It seems to me that in order to teach, discuss, argue, or entertain these aforementioned historical figures one would be compelled to break everything down to its most basic and logically sound premises. And, so why shouldn't this be the overwhelming trend in all conversations? I suppose there are efficiency arguments (e.g. why reinvent the wheel?), I suppose there are a priori arguments (e.g. don't explain what is already generally accepted); however, I feel that by approaching discussion of economics in a way not just tenable for all but for all of history, we have more than just a good idea, we have a wise contribution to learning.

~Anton

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2009-09-25T19:12:00.001-07:00

Here is where I stop to consider that everything I have ever thought about economics is wrong...