Aristocracy Is Dead ... So Why Isn't Orthodox MacroEconomics Gone Too?

  (Commentary posted by Roger Erickson)

Having studied biology for years before ever paying attention to economics, I immediately wondered where the heck orthodox economists get their many, strange ideas.

Nothing made sense until something plausible dawned on me:

Orthodox MacroEconomics is an extension of Aristocratic "Court Politics" 

and is at heart a management theory for how an upper class can best rule "the masses."

To me, that explains nearly everything about orthodox macroeconomics and its inane list of things that human behavior "should" include. It's an unfortunate set of vague myths blindly promulgated by groups as diverse as aristocrats, property owners, cattle herders, and capitalists. Meanwhile, we always knew that human behavior can evolve as fast as new contexts arrive (at least so far). There's a fundamental dichotomy here. Peasant reality is that we have zero predictive power. We only know that recombination on all levels works, with few bounds.

What are the implications? A rare, honest person states one aspect of the obvious.

Aristocracy is Dead

So why is orthodox macroeconomics still kicking us while it holds us down? We're only down because we're LETTING a dead-man-walking hold us down.

Well, that, and also partly because too many dimwit escaped serfs only want to be Aristocrats themselves, if given the chance. Doh!

Meanwhile, as always:

Actual Human Behavior Makes A Mockery Of Orthodox Economic Models  

... (but Rulers Don't Care To Notice)

Ya think? So there's yet another another flaw in orthodox economics: the presumption that emerging aggregate outcomes should be logical? Really? Why doesn't this invalidate the entire field? There's a seemingly obvious answer.

"Thaler began to keep a list of things that people did that made a mockery of economic models of rational choice."

Well, that's yet another indicator that orthodox macro-economics grew out of aristocratic politics, not tribal common sense based on trial-&-error progress.

"Logic" is just a body of perceived patterns, which we use when trying to extrapolate from past experiences to future predictions.

Biology, chemistry, physics, etc, etc have amply proven that the past order of any system does NOT predict all of it's future options.

Aggregate degrees of freedom are a function first of aggregate inter-dependencies - which grow factorially with system growth - PLUS any changes in external context, which may or may not change at seemingly fixed or unpredictable rates, but always change nevertheless.

Orthodox macro-economics has become an increasingly impossible yoke to live with. This is one parasitic baby we'd do well to throw out with the accumulating bathwater.

Call it "Marie's Dilemma":

Unfortunately, The "Formulization" Of Other Disciplines Is Also Proceeding. Institutional Momentum vs Aggregate Adaptive Momentum.

   (Commentary posted by Roger Erickson)

(evolving hitching patterns in different size mule teams)

And you thought that NeoLiberalism in economics was bad!

Rebels in many professions are resisting our current period of systemic decline. Take DoD Personnel Doctrine. Please! Or law enforcement mis-training. Or mis-education in general.

And now we can add sociology. For example, the following paper strikes me as an infatuation with formulae, in this case computer modeling.  The article may make some people think (about SOMETHING), but it is functionally useless as a guide to practitioners of Democracy in the real world.

Conditions for the Emergence of Shared Norms in Populations with Incompatible Preferences

"By means of computer simulations, we study conditions ... "

Is it different this time? Have new tools made distributed logic* obsolete? No.

If there's a computer, there's programmed software. And if there's a software program, 99.999% of the time, there is still a presumed formula for handling a presumed static context.

The insidious, main outcome? Creeping acceptance of formulaic methods reinforces a VERY BAD HABIT. Namely, the naive, underlying belief that systems adapt by predictively reorganizing previously describable degrees of freedom, rather than by completely unpredictable & constantly changing sorting following repetitive trial and error. That sort of institutional momentum delays our endless pursuit of Outcomes Driven adjustments and prolongs wasteful wanderings in Ideologically Driven dead ends.

The simpler, more useful message was already and always known. There are no Cookbook Recipes for adapting and evolving - i.e., no formulae, and no reliable program to use. Our degrees of freedom grow faster than our knowledge, habits, methods and practice base.

Our only recourse is ceaseless expansion of distributed trial-&-error, and frantic selection from our own aggregate feedback. No new tool changes the fundamentals of evolution.

1) We always face new aggregate challenges and capabilities, both demanding and bestowing orders of magnitude more degrees of freedom than we currently perceive. Constant exploration is required.

2) We have zero predictive power, yet seemingly unlimited adaptive power.
We can leverage that adaptive power IF we industriously utilize our full distribution of feedback and analysis. Tempo matters. [None of us is as smart as all of us, or as quick thinking when it comes to aggregate context.]

3) How do we survive every new niche we drag ourselves into? We start trying many things, and then start finding out - ASAP! - what starts to work. In the process, we reshape and tune ongoing, distributed momentum, based on distributed feedback.

4) So please cease, forever, the habit of trying to predict unpredictable adaptive formulas beforehand, and in the process constraining the very distributed activity & feedback which we need to drive massively parallel SELECTION.

5) Preserve fundamentals AND evolve more variables. Constantly retune a GRADIENT involving re-standardizing carefully selected infrastructure, while simultaneously promoting active diversification near the outer edge of your evolving system. [To use a building analogy, consolidate nearer to the foundations, and ceaselessly innovate nearer to the top floors. Our spectrum of innovation must include highly conserved elements as well as increased variance in some elements, just for OUR system to evolve. While not letting innovation fall completely to zero anywhere. To survive, EVERYTHING in our system must change. Just not at the same rates everywhere.]

What we have here - 2014 in the USA - is a lull in an unceasing civil war to evolve.

One combatant is our own urge to rapidly over-adapt to transient context, leading to efficiency traps.

The other combatant is our own requirement and urge to re-orient to changing context, sometimes leading to complacency about transient contexts.

Survival, obviously, requires surviving today as well as endless different tomorrows - but never any of those in isolation.

[Then there is also the constant burden of the untrained zombi or deadweight element, which actively resists any and all change, and actually believes that sitting in the middle of the road isn't suicide. They're not on anyone's side. They're just in the way. If we stop our civil war and pay a bit more attention to education and training requirements, the zombies should soon become statistically insignificant.]

Clearly, we need transient efficiency on demand, plus resiliency on demand, not either in isolation.

Right now, we've hitched up half or more of our own team backwards! Some are demanding too much efficiency, and some are demanding too much resiliency. How do we actually get our swelling ranks of combatants to lubricate all the random frictions, and make recombinant love, not factional war?

Since a formula for solving one, static context can be optimized ... does that mean that EXTENSION OF THE SAME FORMULA can provide optimal solutions bridging multiple, different contexts?

No. Most grandparents learn that the hard way, yet most fail to adequately teach it to their kids. Hence - SO FAR! - most grandchildren must relearn many things that their grandparents learned, but didn't pass on as a permanently incorporated part of our expanding cultural toolkit.

Ok. Does that mean that ANY particular formula will work for the unending stream of different contexts we face? NO!!! We've also learned that too, by trial and error. 

You might say that the only formula that works for any system, is to permanently discount excessive belief in any PERVASIVE formula whatsoever. The only formula that's workable long term is to decline all formula except that of a shifting gradient of distributed innovation.

Slowly change foundations, while rapidly sifting through new experimental variables.

That's how we preserve our aggregate adaptive momentum, while varying it too.

Does this work? Yes. And we actually have a tremendous opportunity to increase our Aggregate Adaptive Rate! 

How? By remarkably subtle and simple tuning of our citizen-development methods. It's a given that all citizens will face new horizons that none can predict or specifically prepare for. The most valuable talent to practice is comfort and familiarity with embracing and extending NEW perspectives on our own aggregate and it's situation.

Practice at audacious innovation - not formulas - is what used to drive American Ingenuity.

There's a difference between Aggregate Adaptive Momentum, and Institutional Momentum, and the former always wins in the end.

There's no reason why most citizens can't learn all this by age 10. Unfortunately, we're not even trying to prepare them!

Summary. New tools and methods are:

a) always prompting us to slowly, recursively improve our highly preserved foundation or "logistic" formulae,

b) while also distracting us from practicing further aggregate innovation.

There's a required duality between foundation and exploration. We survive by coordinating, not consolidating those complementary activities.

Aggregate success means grandparents embracing the inventions of grandchildren PLUS challenging them to explore agile vs formulaic applications of new capabilities.

Youth or beginners start with Institutional Momentum in perceived static contexts, and must grow into perceiving Aggregate Adaptive Momentum in unpredictably evolving contexts.

Without adequate aggregate challenges to generate experience, new generations inevitably get stuck in Static Context outlooks, which reduce their Adaptive Rate.

Our current challenge is to invent AND USE subtly altered education and training methods which permanently capture and preserve a higher adaptive rate in yet a larger population.

Froebel seems to have come close to realizing that, 200+ years ago, and most disciples of Kindergarten promptly forgot it! Go figure.

* Casey Haskins defines logic as "using evidence to draw conclusions".
Evolving, distributed logic is therefore: "using accumulating, distributed evidence to draw NEW conclusions about always changing aggregate situations." Clearly there are multiple, simultaneous levels of logic, and the very concept of logic, like data, is meaningless without context.

"I'm A Multivariate Process Slave, And So Are You." That's The More Appropriate Statement.

   (Commentary posted by Roger Erickson, hat tip to Russell Huntley.)




The folks at ZeroHedge are doing more harm than good, by promoting one of their standard, pet concepts.

I'm A Fiat Slave, And So Are You

[i.e., fiat currency is bad for you]

This is, sadly, a widely held and actively promoted view of modern fiat currency.

Tragically, it's fiat currency that sets us free from gold-plutocrats & oligarchs who traditionally were more easily able to control & manipulate the currency supply. Yet like all new tools, we have to learn to wield our new degrees of fiat.

The underlying task is to organize faster than our numbers grow.

That's difficult. Imagine how hard sports coaches work, just to train tiny teams. Now imagine if basketball, rugby or football teams added a player a day. No current coach would keep up.

Our most important research topic is our own policy apparatus, and yet it's the thing we most assiduously try to avoid changing. Holding all but one variable constant, and changing just one thing at a time works in the lab, but that is NOT applicable anywhere else in life, where massively parallel, combinatorial experimentation is a given.

I'm A Multivariate Process Slave, And So Are You

That's the more appropriate statement.

As Context Nomads, we're juggling more knives with each changing context we enter. Therefore, unlimited access to more degrees of freedom is an absolute requirement, not an option.

ps: How can we be in debt when the so-called debt is denominated in metrics which we can make in unlimited quantities? That's like becoming personally indebted to one's own personal initiative. Can a fool be convinced that he's indebted to his own myths? Sure! Yet the problem is not with the myths, but with the fool who believes them - and who can't discern the difference between static value and dynamic value, or between fixed correlations and arbitrarily derived variables. Worse, such fools can't discriminate the cost-of-coordination from the return-on-coordination. Maybe they never took high school algebra.

ps: ps: What's next? Because situations are more complex, and demand bigger/faster/leaner aggregate responses every year (i.e., a more agile electorate) ... ZeroHedge will complain that we're all becoming slaves to a growing vocabulary?

It's Not the Static Capital, Stupid! It's the Net SUM of (static + dynamic) Capital.

commentary by Roger Erickson

There's a reason I feel like I've been talking to a brick wall all my life.

My entire culture IS a freaking brick wall.

As just one example, orthodox capitalists are toxically confused over a fundamentally simple feature of all social species.

Every culture is, by definition, a brick wall. It's always been this way. The latent capabilities are always stacked out the Wazoo. They can be unleashed only by group practice. People who understand this innately are typically the youngest child in a large family. From the onset they get to observe team activity at work, well before they get immersed in it, and lost in defined roles. It's rather like the coaches kid sitting on the bench for years, before even being eligible to play.

One lesson it's faster to learn by observing vs being on a team is that any team member or citizen seeking credentials or prizes is, by definition, a "toxic" team player. Alfred Nobel should never have endowed the Nobel Prizes, since they promote and reward totally academic endeavors and misely perspectives, at the expense of operational practice.  If we traded every Nobel Prize winner in history for a double dose of Walter Shewhart, W.E. Deming and John Boyd, we as a country would be far ahead for the trade.  Academic prizes weren't necessary through 3.5 billion years of evolution, and aren't necessary now, unless taking our eyes off the prize has become our suicidal goal.

In adaptive systems, component and system dynamics are always in both competition and cooperation.  Net benefit accrues to the extent that they optimize the combination of local and group initiative, not either alone. Dynamic return on coordination swamps both team-only and individual-only strategies, by far. To say it formally, it's simple, 2-stage optimization in real-time, that expands via successive layers of increasingly distributed autocatalysis. However, you don't even need to say it formally. It's obvious to little kids sitting on the bench, watching, seeing many possible combinations of individual and team outcomes, while waiting for their chance to join and/or change the game, or imagine inventing totally new ones.

Orthodox capitalists are toxically confused over this fundamentally simple feature of all social species. How is it that we invented both calculus and capitalism ~500 years ago, and the two have never met! (At least not where it mattered most.  The two fields use one another shamelessly, but have never formally met.) You couldn't make this up.

For those with the opportunity to watch and recognize a system before joining, endless opportunities to tweak - or replace - the entire process are easier to see. Few immersed in arbitrarily specific roles (e.g., seeking "prizes") in any version of any game are as likely to see the spectrum of options for changing the whole game.

It's not the static capital, stupid! It's the dynamic, net sum of distributed (static + dynamic) capital. We are ALWAYS in the process of completely changing the entire game, OVER the objections of all the Luddites working harder at specific things they learned how to do yesterday. It's the infinitely nested Degrees of Freedom, Stupid! NOT any subset of them whatsoever. By mathematics alone, there are ALWAYS more options awaiting than we can possibly imagine. Go do something to enlarge your imagination, rather than leaving it where it is today. Ditto for your culture. Do something to trigger bigger challenges worth going after, and achievable only through complete indirection. Otherwise, we're leaving our latent capabilities unemployed. For what reason? Eating more twinkies? Get real, or get extinct.

How many people today would rewrite the entire US Constitution? Or invent something radically different, and even better? Why not? We did it once before. Are you seeking prizes in the current game, or willing to design games involving an order of magnitude more imagination.

Which sound more satisfying, and more fun?

Forget Paris.  How ya gonna keep people down in a role, once they've seen "gaym" systems?

The orthodox among you will be too inhibited to see the value in that degenerate statement.  Try exploring it in a virtual game first, then imagine selecting from some of the more interesting options that crop up.  The ones you haven't thought of yet, and can't even imagine.   They're out there.