Tuesday, March 26, 2013

Links: Surplus and Modeling

Came across two interesting posts in surfing the blogs (hat tip "everybody").

One is at NEP by Mitch Green on the Economic Surplus here.
Through the ages we have erected monuments in honor of our ability to generate an economic surplus. That we perennially produce more than we consume, which of course varies in degree and kind depending on the age and place, means that we simply do not live in a world of scarcity. The materials we use to shelter and feed ourselves, and even pay homage to our cultural heritage are themselves the product of human labor and ingenuity. That is to say, how we get our daily bread depends not so much upon gifts from Mother Nature, but in our ability to coordinate social labor. Homo sapiens is a clever species.
I think Mitch is on to something very important wrt pointing out "the surplus", and our current mis-management of the distribution of it.

But would add that yes although some human input is required, from a secular/pagan perspective, "Mother Nature" is involved to a greater extent than humans are in the deliverance of the current surplus.  For feedstocks from which we indeed obtain 'our daily bread', we may plant the seeds and perhaps water them a bit, but who among us can take it from there?

This writing is a bit vain in this regard especially when we are trying to make the case that our species is "clever" when at the same time our current crop of "leaders", our "elites" so-called, are all running around saying "We're out of money!" and that we are "Borrowing from the future!".

Spare me the accolades for the human at this particular moment, but Mitch's eyeballs are indeed focused on what should be getting much more attention, our great surpluses in real terms.

Another interesting link via Matias V. here to a recent paper of a Fair Model of the U.S. macro system, that includes some interesting perspectives on macro modeling generally.
A macroeconometric model like the US model is a set of equations designed to explain the economy or some part of the economy.  There are two types of equations: stochastic, or behavioral, and identities. Stochastic equations are estimated from the historical data. Identities are equations that hold by deļ¬nition; they are always true.  
There are two types of variables in macroeconometric models: endogenous and exogenous. Endogenous variables are explained by the equations, either the stochastic equations or the identities. Exogenous variables are not explained within the model. They are taken as given from the point of view of the model. For example, suppose you are trying to explain consumption of individuals in the United States. Consumption would be an endogenous variable-a variable you are trying to explain. One possible exogenous variable is the income tax rate. The income tax rate is set by the government, and if you are not interested in explaining government behavior, you would take the tax rate as exogenous.
Goes on from there and includes both government Monetary and Fiscal Policy inputs.  Looks very interesting.

To me, these two posts are related in that our economy should be "modeled" to deliver what we collectively determine via the authority of our government institutions,  a (at least minimally) just and guaranteed  distribution of the "surplus".

A "surplus" that, to stay in the pagan vernacular, is ultimately provided by "Mother Nature", not the human.

1 comment:

STF said...

FYI, I've published two papers using the Fair model to simulate the JG.