The Edge of Chaos

The Edge promotes the third culture which is asking whether science can help solve the economic crisis.

Would an "Economic Manhattan Project" result in a new conceptualization from which solutions could be found?

In an e-book titled "Risk Management, The Current Financial Crisis", the actuarial profession addresses the same notion.

"The current dominant methodology for banks...asessing their capital needs ...is based on estimating the value at risk (var)...one typically fits a distribution to possible returns and works out the implied var..."

The problem is in choosing a distribution which will reflect future reality. Black Swans, as opposed to standard events, are becoming more the rule in the global economy.

Particle Physicists have spent decades studying the behavior of subatomic particles. In the process, they have developed mathematical and computer structures which can model amazingly complex behavior. These structures are available to be applied to systems more complex than the atom.

Likewise, actuaries have spent decades studing the mathematical behavior of contingent events and their financial consequences. From data reflecting the results of injuries, lawsuits, weather, disease, death,...actuaries have discerned patterns which emerge from human activity.

Combining the power of actuarial and complexity science structures with classical ones, models of the global economy and its constituents can be developed which will supersede and transcend existing ones. In the process we will come closer to undersatnding the deep, underlying causes and potentional fixes of economic and financial dislocations. That understanding will lead us to policies which can successfully transform the American and global economy so as to increase human welfare while developing a sustainable future for our children.

What do we have to lose?

We used to say, "If we can put a (man) on the moon..."

Now we can say, "If we can develop mathematical and computer structures which can model the behavior of ethreal waves and fields..which interact in multidimensional spaces to produce the world of our intellect and senses...and actuarial structures which model complex aspects of the results of many aspects of human activity...can't we find structures which will help us develop policies which will result in a future for humankind better than those now in use? "

Yes we can.

Lee