If we add $1 trillion to existing government spending, and allocate the existing spending in a way that stimulates, how much will the economy grow over time, and how sustainably?
While that is the question of the hour, all the kings horses and all the kings men have no answer.
That is tragic because the answer is blowin' in the wind.
Using complexity and actuarial science tools to supplement existing models, alternative ways of stimulating the economy could be tested before implementation. The ones most likely to succeed could be implemented and monitored and adjusted over time as needed.
That way, tables could be developed showing multiples of alternative allocations. One allocation might double GNP growth over five years while another might produce a 500% increase over three years.
Wouldn't it be refreshing to hear, "We have decided to add $1 trillion to existing spending for the purpose of transforming our tired economy. We have tested alternative approaches and decided on one which has a 95% chance of doubling GNP within three years. We will monitor the money and if it is not having the desired effect, will make adjustments.
We are confident this stimulus will transform our economy because we have tested it from the macro to the micro level. The money is targeted to industries and companies most likely to provide sustainable, transformative growth.
Our models are actuarially sound, demographically robust, temporally adjusted, interactively designed, and probability oriented. The money flow will be transparent and accounted for professionally."
Yes we can.
Saturday, February 21, 2009
Monday, February 16, 2009
$787 billion
A billion here...
Now the details of the stimulus package are out. Will it work? Has it been tested?Does anyone know?
Complicated economic/mathematical models have been run. But aren't they the ones which got us here?
Do they account for black swans? tipping points? cascades? power laws? multifractals? fat tails?cluster correlations? phase transitions? interactions? demographics? uncertainties? time frames?
The fact is that there are data mining, agent based, actuarially sound, data visualization, econometric tools available by which to truly test and monitor any stimulus scenario developed. The anticipated impact on the global and US economies as well as the individual sectors and businesses could be forecast. The options most likely to have the sustainable, transformative effect desired could be chosen and monitored and adjusted as needed.
How much more confidence would be inspired if officials could testify..."We anticipate (based on the best data and analysis availble) that this stimulus package will have an impact on GNP of $500 billlion in the first year with a 92% probability it will be at least $400 billion...the multipliers associated with the chosen components of the package are the largest of all those tested..."
Here are the details of the ($787 b) stimulus package passed this weekend:
$506 billion in spending
-$141b healthcare
-$92 b infrastructure
-$87b education
-$67b welfare
-$41b energy
-$10b housing
-$6b science
-$7b security
-$55b other
$281 billion tax credits
This money could be targeted and monitored at the micro level to have maximum impact. For example, the science money could to where it would have a multiplier of 22 or 1.
From the labs of Los Alamos to the campuses of Boston, the tools needed to assure that the stimulus works have already been developed. All we need to do is integrate them with those currently being used.
Yes we can
Lee
Now the details of the stimulus package are out. Will it work? Has it been tested?Does anyone know?
Complicated economic/mathematical models have been run. But aren't they the ones which got us here?
Do they account for black swans? tipping points? cascades? power laws? multifractals? fat tails?cluster correlations? phase transitions? interactions? demographics? uncertainties? time frames?
The fact is that there are data mining, agent based, actuarially sound, data visualization, econometric tools available by which to truly test and monitor any stimulus scenario developed. The anticipated impact on the global and US economies as well as the individual sectors and businesses could be forecast. The options most likely to have the sustainable, transformative effect desired could be chosen and monitored and adjusted as needed.
How much more confidence would be inspired if officials could testify..."We anticipate (based on the best data and analysis availble) that this stimulus package will have an impact on GNP of $500 billlion in the first year with a 92% probability it will be at least $400 billion...the multipliers associated with the chosen components of the package are the largest of all those tested..."
Here are the details of the ($787 b) stimulus package passed this weekend:
$506 billion in spending
-$141b healthcare
-$92 b infrastructure
-$87b education
-$67b welfare
-$41b energy
-$10b housing
-$6b science
-$7b security
-$55b other
$281 billion tax credits
This money could be targeted and monitored at the micro level to have maximum impact. For example, the science money could to where it would have a multiplier of 22 or 1.
From the labs of Los Alamos to the campuses of Boston, the tools needed to assure that the stimulus works have already been developed. All we need to do is integrate them with those currently being used.
Yes we can
Lee
Friday, February 13, 2009
The Info Mesa
Ed Regis' book shows how Santa Fe became the nerve center of a movement which is changing the world. He documents the rise of dozens of companies which came to apply new methodologies, complexity science, chaos theory, nonlinear dynamics, artificial life, and so on to real world problems.
He traces the movement from Los Alamos where computer technology had exploded to deal with the complexity of nuclear physics to the Santa Fe Institute where an interdiscipinary approach to scientific research blossomed. The Institute would, "...blur the edges, merge the disciplines into a unique synthesis that was greater than the sum of its parts...large portions of empirical reality had been reduced to data...atoms, molecules, chemicals, proteins, genes cells...the planet itself...".
Years earlier, Mitchell Waldrop had written of the dawn of the complexity movement. Neoclassical economics had reduced "...the rich complexity of the world into a narrow set of abstract principles...when philosophers saw the cosmos as a ...vast clockwork device...governed by the Invisible Hand...small events could have large consequences..."
If there was ever a time for interdisciplinary, rigorous, creative, quantum thinking it is now. World markets are collapsing and entire countries are on the brink of collapse. Stimulus packages are being passed with little or no underestanding of how they might work.
Using the perspective of complexity science, levened by actuarial science, policymakers can test alternative approaches against alternative scenarios and dynamically choose those most likely to succeed. They could answer questions like, "What is the likelihood that the stimulus will raise the standard of living 30% within 9 months, and 50% after 18 months?"
Wouldn't that create more confidence than the current mantra," No one knows what to do...or what will happen if we do do"
The future of the US and world economies may be at stake. We may only get one chance.
We must do it right.
Yes we can.
Lee
He traces the movement from Los Alamos where computer technology had exploded to deal with the complexity of nuclear physics to the Santa Fe Institute where an interdiscipinary approach to scientific research blossomed. The Institute would, "...blur the edges, merge the disciplines into a unique synthesis that was greater than the sum of its parts...large portions of empirical reality had been reduced to data...atoms, molecules, chemicals, proteins, genes cells...the planet itself...".
Years earlier, Mitchell Waldrop had written of the dawn of the complexity movement. Neoclassical economics had reduced "...the rich complexity of the world into a narrow set of abstract principles...when philosophers saw the cosmos as a ...vast clockwork device...governed by the Invisible Hand...small events could have large consequences..."
If there was ever a time for interdisciplinary, rigorous, creative, quantum thinking it is now. World markets are collapsing and entire countries are on the brink of collapse. Stimulus packages are being passed with little or no underestanding of how they might work.
Using the perspective of complexity science, levened by actuarial science, policymakers can test alternative approaches against alternative scenarios and dynamically choose those most likely to succeed. They could answer questions like, "What is the likelihood that the stimulus will raise the standard of living 30% within 9 months, and 50% after 18 months?"
Wouldn't that create more confidence than the current mantra," No one knows what to do...or what will happen if we do do"
The future of the US and world economies may be at stake. We may only get one chance.
We must do it right.
Yes we can.
Lee
Beyond Economics
Kenneth Boulding wrote that economics like any science has a pure and empirical part. Economic models often throw light on the "...workings of the intolerable complex of social relationships...".
Max Weber wrote that the relationship between the protestant ethic and the spirit of capitalism was palpable.
Milton Friedman wrote that while the relationship between economic and political freedom is complex, it is real.
Galbraith broke the bonds between Adam Smith and economic theory, bonds which were strained by Keynesianism.
Now we are faced with a global economic crisis of unknown dimensions. yet we are still using analytical tools and databases more suited to the conditions of Adam Smith's time than our own.
When we begin to recognize that the same methods which physicists have developed to probe the mysterious activity in the nucleus of the atom are available to probe the mysteries of the global economy, we will be on the road to sustainability.
Then we will begin to incorporate population levels and demographics, resource levels and placements, quality as well as quantity of consumption, capital as well as income, and mind as well as body.
When an Obama official testifies that a $ trillion will matter in the long term health of the nation's economy, we will listen because it will be backed up with detail on the flow of funds through the global economy and impacts on employment, welfare, and output. It will be shown to be actuarially sound, probabilistically tested, temporally developed, and layperson coherent (transparent).
We can make the world better, safer, cleaner and happier.
Yes we can.
Lee
Max Weber wrote that the relationship between the protestant ethic and the spirit of capitalism was palpable.
Milton Friedman wrote that while the relationship between economic and political freedom is complex, it is real.
Galbraith broke the bonds between Adam Smith and economic theory, bonds which were strained by Keynesianism.
Now we are faced with a global economic crisis of unknown dimensions. yet we are still using analytical tools and databases more suited to the conditions of Adam Smith's time than our own.
When we begin to recognize that the same methods which physicists have developed to probe the mysterious activity in the nucleus of the atom are available to probe the mysteries of the global economy, we will be on the road to sustainability.
Then we will begin to incorporate population levels and demographics, resource levels and placements, quality as well as quantity of consumption, capital as well as income, and mind as well as body.
When an Obama official testifies that a $ trillion will matter in the long term health of the nation's economy, we will listen because it will be backed up with detail on the flow of funds through the global economy and impacts on employment, welfare, and output. It will be shown to be actuarially sound, probabilistically tested, temporally developed, and layperson coherent (transparent).
We can make the world better, safer, cleaner and happier.
Yes we can.
Lee
The Worldly Philosophers
Economists are on the hotspot regarding getting us out of the global economic mess.
Unfortunately, the profession as a whole is as clueless as they have been in all the crises of the past few decades. They refuse to ignore the power laws, cascades, feedback loops, adaptivity, demographics, Black Swan, Tipping Point, phase transitions, symmetry breaking, uncertainty, temporality, interactivity, multifractal, cluster correlation nature of global finance and economics.
As a result, when anything happens which hasn't happened in the same way before, such as mortgage derivative collapse, international turmoil, terrorism, natural catastrophes and so on, their models miss it and we all suffer.
This is a tragedy because models exist which can handle unforseen events, cluster correlations, demographic shifts, interactions, uncertainty, missing data, and so on.
Physicists have teased out of subatomic behavior the deep patterns which drive physical reality . These patterns involve vibrating particles with wavelike characteristics, clouds of fields connecting the energy patterns, dimensions which explain probabilistic behavior and other activity which transcends human understanding.
Shouldn't they be part of the team charged with helping us jumpstart the global economy?
If you say well, how does subatomic activity impact the global economy?
That is where complexity science comes in.
But, you say, what about social security, healthcare, finance, insurance, and risk?
That is where actuarial science comes in.
We can build a stimulus package which will truly transform the economy in a sustainable way.
We can test and monitor the flows over time and make adjustments as needed.
Yes we can.
Lee
Unfortunately, the profession as a whole is as clueless as they have been in all the crises of the past few decades. They refuse to ignore the power laws, cascades, feedback loops, adaptivity, demographics, Black Swan, Tipping Point, phase transitions, symmetry breaking, uncertainty, temporality, interactivity, multifractal, cluster correlation nature of global finance and economics.
As a result, when anything happens which hasn't happened in the same way before, such as mortgage derivative collapse, international turmoil, terrorism, natural catastrophes and so on, their models miss it and we all suffer.
This is a tragedy because models exist which can handle unforseen events, cluster correlations, demographic shifts, interactions, uncertainty, missing data, and so on.
Physicists have teased out of subatomic behavior the deep patterns which drive physical reality . These patterns involve vibrating particles with wavelike characteristics, clouds of fields connecting the energy patterns, dimensions which explain probabilistic behavior and other activity which transcends human understanding.
Shouldn't they be part of the team charged with helping us jumpstart the global economy?
If you say well, how does subatomic activity impact the global economy?
That is where complexity science comes in.
But, you say, what about social security, healthcare, finance, insurance, and risk?
That is where actuarial science comes in.
We can build a stimulus package which will truly transform the economy in a sustainable way.
We can test and monitor the flows over time and make adjustments as needed.
Yes we can.
Lee
Thursday, February 12, 2009
Saving the World-A $ trillion at a time
The reason there is so much confusion in Washington at the moment over how to stimulate the economy is that no one there knows. They don't know because they don't have the analytical apparatus by which to adeqautely gauge the impact of proposals on the economy
The analytical structures and databases, however do exist.
Below is a simplified version of what a stimulus budget being thrown around in Washington looks like:
Stimulus Stimulus
Component Budget *
Health $ 150000
Education 100000
Welfare 100000
Crime 10000
Infrastructure 70000
Energy 70000
Housing 30000
Transportation 50000
Tax Credits 300000
----------
880000
*$ 000,000
No serious attempt is made to estimate how each component and the total will flow through the economy in a demographically adjusted, probabilistically calculated, interaction robust, temporally realistic manner. To do that would require tools that are not being used.
Those tools do exist, however. Complexity scientists, actuaries, computer scientists, economists, and financial engineers have created data bases and analytical structures which can simulate how various options for economic stimulus will flow through the economy.
These scenarios can take account of interactions, uncertainties, demographic shifts, time frames, and other factors which ultimately impact of the way stimulus alternatives impact long term stability and growth. They can show how different alternatives will have different multipliers over time, and therefore greatly different impacts.
We can design a stimulus package which can be integrated with normal government budget activity to give a reasonably likely opportunity to transform the economy in a sustainable way.
We can show how that will happen and monitor the results so as to make adjustments as needed.
We can make it transparent with manageable accounting structures.
All we need to do is adapt methodology which is already out there.
We can do it
Yes we can.
Lee
The analytical structures and databases, however do exist.
Below is a simplified version of what a stimulus budget being thrown around in Washington looks like:
Stimulus Stimulus
Component Budget *
Health $ 150000
Education 100000
Welfare 100000
Crime 10000
Infrastructure 70000
Energy 70000
Housing 30000
Transportation 50000
Tax Credits 300000
----------
880000
*$ 000,000
No serious attempt is made to estimate how each component and the total will flow through the economy in a demographically adjusted, probabilistically calculated, interaction robust, temporally realistic manner. To do that would require tools that are not being used.
Those tools do exist, however. Complexity scientists, actuaries, computer scientists, economists, and financial engineers have created data bases and analytical structures which can simulate how various options for economic stimulus will flow through the economy.
These scenarios can take account of interactions, uncertainties, demographic shifts, time frames, and other factors which ultimately impact of the way stimulus alternatives impact long term stability and growth. They can show how different alternatives will have different multipliers over time, and therefore greatly different impacts.
We can design a stimulus package which can be integrated with normal government budget activity to give a reasonably likely opportunity to transform the economy in a sustainable way.
We can show how that will happen and monitor the results so as to make adjustments as needed.
We can make it transparent with manageable accounting structures.
All we need to do is adapt methodology which is already out there.
We can do it
Yes we can.
Lee
Wednesday, February 11, 2009
The Geithner Performance
It's not his fault.
No one knows what to do.
At least no one in Washington.
The tragedy is that a bailout/stimulus/budget package can be developed and tested which would meet the critria everyone has-that it gets the economy moving. From the labs of Los Alamos and Chicago to the campuses of Ann Arbor and Boston, models have been developed which are up to the task of analyzing all the proposals which are now randomly floating around Washigton.
Actuaries, physicists, economists, and computer scientists have develped data and analytical fameworks which will allow any proposal to be tested properly before implementation. The models have the needed demographic, interactive, temporal and probabilistic dimensions.
What confidence it would give the American public if the President could lay out scenarios describing how alternative expenditures would flow through the US and global economies. Multipliers for each element and for the program as a whole would be provided.
Yes we can.
Lee
No one knows what to do.
At least no one in Washington.
The tragedy is that a bailout/stimulus/budget package can be developed and tested which would meet the critria everyone has-that it gets the economy moving. From the labs of Los Alamos and Chicago to the campuses of Ann Arbor and Boston, models have been developed which are up to the task of analyzing all the proposals which are now randomly floating around Washigton.
Actuaries, physicists, economists, and computer scientists have develped data and analytical fameworks which will allow any proposal to be tested properly before implementation. The models have the needed demographic, interactive, temporal and probabilistic dimensions.
What confidence it would give the American public if the President could lay out scenarios describing how alternative expenditures would flow through the US and global economies. Multipliers for each element and for the program as a whole would be provided.
Yes we can.
Lee
Tuesday, February 10, 2009
Markets and Fish and the Global Economy
We have been making the case that no amount of government spending/stimulus will have the desired effects on the global and US economies unless properly targeted. Proper targeting requires data and analytics which can reasonably test alternative scenarios. Such data and analytics are currently not part of the dialogue on the economic crisis.
It does, however, exist.
In the current issue of Scientific American, an article by Paul Raeburn demonstrates clearly one of the deep values of complexity science-interdiscipinary perspective.
Mathematicians, physical scientists, biologists, social scientists, artists, doctors, military leaders, and economists all see patterns which impact on all aspects of life.
In the case of Raeburn's article, fisheries are seen as complex systems with characteristics many of which are similar to those of chaotic financial markets. As we indicate is the case with financial markets, that they are no longer amenable to conventional analysis, so with fishing, which is "...like the stock market-the crash of one or two species or a hedge fund or mortgage bank, can trigger a collapse of the entire system."
The same issue of Scientific American has a column on the stimulus. It indicates what should be obvious, that certain expenditures like electrical infrastructure and sustainable energy, may have multipliers many times those of other types of expenditure.
Only a complexity based actuarial model can test the various scenarios probabilistically demographically, interactively, and temporally.
Yes we can.
Lee
It does, however, exist.
In the current issue of Scientific American, an article by Paul Raeburn demonstrates clearly one of the deep values of complexity science-interdiscipinary perspective.
Mathematicians, physical scientists, biologists, social scientists, artists, doctors, military leaders, and economists all see patterns which impact on all aspects of life.
In the case of Raeburn's article, fisheries are seen as complex systems with characteristics many of which are similar to those of chaotic financial markets. As we indicate is the case with financial markets, that they are no longer amenable to conventional analysis, so with fishing, which is "...like the stock market-the crash of one or two species or a hedge fund or mortgage bank, can trigger a collapse of the entire system."
The same issue of Scientific American has a column on the stimulus. It indicates what should be obvious, that certain expenditures like electrical infrastructure and sustainable energy, may have multipliers many times those of other types of expenditure.
Only a complexity based actuarial model can test the various scenarios probabilistically demographically, interactively, and temporally.
Yes we can.
Lee
Monday, February 9, 2009
The Secret of Being
Every once in awhile a book will come along which alters the course of history. This is one of those times.
Still untitled, the book is written. Metaphors like harmonius universe, cosmic song, unfinished symphony, paradigm shift, and web of reality speak to its message.
From Plato's Forms though Smith's Invisible Hand, from Bacon's Idols through Rousseau's General Will, all philosophical ideas of history flow into a vessel which empties into recently uncovered truths.
Idealism, Rationalism, Empiricism, Materialism, Mysticism, QCD, QED, QFT, particles, fields, waves, love, truth, beauty, harmony, eightfold way, golden rule, dfa, erm, all are elements of the new vision.
One dimension of the new paradigm is that there is a mathematical edifice which begins at the subatomic level, travels through the classical level, and emerges at the complex level. A mathematical structure may be conceived which will tie all of reality into a grand unified theory.
Another dimension is that all philosophical structures from the Platonic to the Hegelian, from the Kantian through the Sartrean, are a foundation for a metaphorical vision of the reality being uncovered at the subatomic level.
The fuzziness within the atom which is at the core of all being reflects the gaps in understanding which historical thinkers were trying to fill.
A third dimension of the new paradigm is that public policy decisions, including those involving the current stimulus/bailout proposals, can be informed by the deep thinking which is going on in the universities and labs around the world.
The interconnected, convoluted, demographic, heterogeneous, uncertain and temporal nature of the global economy calls for models which not only incorporate traditional econometric structures, but those of compexity science, computer science, and actuarial science as well.
The path to justice is paved with knowledge, and the knowledge needed to transform the economy in a successful and sustainable way can be brought to bear if there is the will.
Yes we can.
Lee
Still untitled, the book is written. Metaphors like harmonius universe, cosmic song, unfinished symphony, paradigm shift, and web of reality speak to its message.
From Plato's Forms though Smith's Invisible Hand, from Bacon's Idols through Rousseau's General Will, all philosophical ideas of history flow into a vessel which empties into recently uncovered truths.
Idealism, Rationalism, Empiricism, Materialism, Mysticism, QCD, QED, QFT, particles, fields, waves, love, truth, beauty, harmony, eightfold way, golden rule, dfa, erm, all are elements of the new vision.
One dimension of the new paradigm is that there is a mathematical edifice which begins at the subatomic level, travels through the classical level, and emerges at the complex level. A mathematical structure may be conceived which will tie all of reality into a grand unified theory.
Another dimension is that all philosophical structures from the Platonic to the Hegelian, from the Kantian through the Sartrean, are a foundation for a metaphorical vision of the reality being uncovered at the subatomic level.
The fuzziness within the atom which is at the core of all being reflects the gaps in understanding which historical thinkers were trying to fill.
A third dimension of the new paradigm is that public policy decisions, including those involving the current stimulus/bailout proposals, can be informed by the deep thinking which is going on in the universities and labs around the world.
The interconnected, convoluted, demographic, heterogeneous, uncertain and temporal nature of the global economy calls for models which not only incorporate traditional econometric structures, but those of compexity science, computer science, and actuarial science as well.
The path to justice is paved with knowledge, and the knowledge needed to transform the economy in a successful and sustainable way can be brought to bear if there is the will.
Yes we can.
Lee
Sunday, February 8, 2009
Cosmic Symphony
The world is a symphony of energy, playing out at the subatomic, human, social, and cosmic levels.
The fields, waves, particles, quarks, strings, electrons, photons, and dimensions which dance in and out of existence in the atom are like notes, tones, beats, rhythms, melodies and harmonies, all blending into an elegant and beautiful song called reality.
Jusy as we experience music on different planes of understanding, so it is with life. Our senses, minds, bodies and spirits all react to different aspects of reality in different ways.
Music resonates within the genetic structure of all life. Pitch may be encoded in our DNA.
We are all part of the orchestra of reality which plays from the subatomic to the cosmic level.
Music and mathematics are intimately related. Just as mathematics can tease out patterns of subatomic interaction, it can identify patterns of harmony.
The Music of the Spheres drives heaven and earth in a symphony of beauty, truth, justice, love and harmony.
All of art contributes to this cosmic song. Art and science give us visions of reality. Just as scientific theories emerge from the sweat of scientific research, aesthetic treasures emerge from the sweat of artistic exploration.
Language often fails both in the description and depiction of scientific and aesthetic truth. Metaphors are used to approach an understanding of the meaning of subatomic interaction and aesthetic result.
Philosophers have eternally struggled with distinctions of reality and appearance, subjective and objective, mind and body, particle and wave. Only with the advent of modern science and art can we see that all may be complementary, and at its core everything may be part of a cosmic holism.
In science we use terms like entanglement, symmetry, non locality, fuzzy and probability wave to approach an understanding of an interconnected, multi-dimensional subatomic world. Art uses words like abstract, surreal, absurd, and non-Euclidean to describe the frustration of attempting to reach an aesthetic vision of core reality.
Space, time, matter and energy are no longer the background against which reality plays, but integral parts of reality itself. Artists must revert back to their sense of childlike wonder to capture this new vision of reality.
We are all part of an interconnected web, interdependent and virtual. From Plato to Kant, Shakespeare to Sartre, philosophers have probed the mystery of reality which science is now unveiling.
Cosmic consciousness, web of nature, harmonious universe, song of the heavens, all ways of articulating the new vision.
What a wonderful world if we only let it be.
Lee
The fields, waves, particles, quarks, strings, electrons, photons, and dimensions which dance in and out of existence in the atom are like notes, tones, beats, rhythms, melodies and harmonies, all blending into an elegant and beautiful song called reality.
Jusy as we experience music on different planes of understanding, so it is with life. Our senses, minds, bodies and spirits all react to different aspects of reality in different ways.
Music resonates within the genetic structure of all life. Pitch may be encoded in our DNA.
We are all part of the orchestra of reality which plays from the subatomic to the cosmic level.
Music and mathematics are intimately related. Just as mathematics can tease out patterns of subatomic interaction, it can identify patterns of harmony.
The Music of the Spheres drives heaven and earth in a symphony of beauty, truth, justice, love and harmony.
All of art contributes to this cosmic song. Art and science give us visions of reality. Just as scientific theories emerge from the sweat of scientific research, aesthetic treasures emerge from the sweat of artistic exploration.
Language often fails both in the description and depiction of scientific and aesthetic truth. Metaphors are used to approach an understanding of the meaning of subatomic interaction and aesthetic result.
Philosophers have eternally struggled with distinctions of reality and appearance, subjective and objective, mind and body, particle and wave. Only with the advent of modern science and art can we see that all may be complementary, and at its core everything may be part of a cosmic holism.
In science we use terms like entanglement, symmetry, non locality, fuzzy and probability wave to approach an understanding of an interconnected, multi-dimensional subatomic world. Art uses words like abstract, surreal, absurd, and non-Euclidean to describe the frustration of attempting to reach an aesthetic vision of core reality.
Space, time, matter and energy are no longer the background against which reality plays, but integral parts of reality itself. Artists must revert back to their sense of childlike wonder to capture this new vision of reality.
We are all part of an interconnected web, interdependent and virtual. From Plato to Kant, Shakespeare to Sartre, philosophers have probed the mystery of reality which science is now unveiling.
Cosmic consciousness, web of nature, harmonious universe, song of the heavens, all ways of articulating the new vision.
What a wonderful world if we only let it be.
Lee
Friday, February 6, 2009
Obama's Economic Advisory Board
Today the President took the first step in de-Washingtoning the economic renewal process. He has a great inside team and now has a Board from outside the "echo chamber" to give more perspective.
What is still lacking, unfortunately, is an appropriate analytical framework by which to monitor the process.
All the ideas in the world will not bring about a transitioned economy without a realistic analytical structure by which to guide decisions, and technicians to develop and maintain the model.
That is the missing piece of the puzzle.
As we have discussed in earlier blogs, by ignoring advances in actuarial science, complexity science, data mining and computer processing, existing models make themselve useless in the world of black swans, cascades, power laws and multi-fractals and which we now face.
No amount of fidgeting will make the models work right. Only a concerted effort to integrate the innovations will succeed.
Model output is only useful if actuarially sound, interaction friendly, data robust, and computer scrubbed.
Let us join the team with our new analytics and help transform the economy successfully.
Lee
What is still lacking, unfortunately, is an appropriate analytical framework by which to monitor the process.
All the ideas in the world will not bring about a transitioned economy without a realistic analytical structure by which to guide decisions, and technicians to develop and maintain the model.
That is the missing piece of the puzzle.
As we have discussed in earlier blogs, by ignoring advances in actuarial science, complexity science, data mining and computer processing, existing models make themselve useless in the world of black swans, cascades, power laws and multi-fractals and which we now face.
No amount of fidgeting will make the models work right. Only a concerted effort to integrate the innovations will succeed.
Model output is only useful if actuarially sound, interaction friendly, data robust, and computer scrubbed.
Let us join the team with our new analytics and help transform the economy successfully.
Lee
Harmonious Bibliography
Any book owes a large debt to all books which preceded it.
In my case, Harmonious Universe emerged from my immersion in:
Affluent Society by Galbraith
Silent Spring by Carson
Zen and the Art of Motorcycle Maintenance by Pirsig
Lila by Pirsig
The Story of Philosophy by Will Durant
The Dancing Wu-Li Masters by Zukav
The Tao of Physics by Capra
The Art of Mathematics by King
Chaos by Gleick
Complexity by Waldrop
Fire in the Mind by Johnson
Quantum Self by Zohar
Superforce by Davis
The Elegant Universe by Greene
How to Know God by Chopra
Shakespeare and the Common Understanding by Rabkin
Quantum Theory by Bohm
A Mathematical Bridge by Hewson
Tao of Chaos by Walter
Consilience by Wilson
Art & Physics by Shlain
Hyperspace by Kaku
The Self-Aware Universe by Goswami
The Philosophy of Physics by Torretti
The Quark and the Jaguar by Gell-Mann
At Home in the Universe by Kaufmann
Would be Worlds by Casti
Universals by Armstrong
The Theatre of the Absurd by Esslin
Free to Choose by Friedman
The Prophet by Gibran
Synchronicity by Peat
Complementarity by Plotnitsky
Metapatterns by Volk
Microfoundations by Weintraub
A First Course in String Theory by Zwiebach
Among others
Lee
In my case, Harmonious Universe emerged from my immersion in:
Affluent Society by Galbraith
Silent Spring by Carson
Zen and the Art of Motorcycle Maintenance by Pirsig
Lila by Pirsig
The Story of Philosophy by Will Durant
The Dancing Wu-Li Masters by Zukav
The Tao of Physics by Capra
The Art of Mathematics by King
Chaos by Gleick
Complexity by Waldrop
Fire in the Mind by Johnson
Quantum Self by Zohar
Superforce by Davis
The Elegant Universe by Greene
How to Know God by Chopra
Shakespeare and the Common Understanding by Rabkin
Quantum Theory by Bohm
A Mathematical Bridge by Hewson
Tao of Chaos by Walter
Consilience by Wilson
Art & Physics by Shlain
Hyperspace by Kaku
The Self-Aware Universe by Goswami
The Philosophy of Physics by Torretti
The Quark and the Jaguar by Gell-Mann
At Home in the Universe by Kaufmann
Would be Worlds by Casti
Universals by Armstrong
The Theatre of the Absurd by Esslin
Free to Choose by Friedman
The Prophet by Gibran
Synchronicity by Peat
Complementarity by Plotnitsky
Metapatterns by Volk
Microfoundations by Weintraub
A First Course in String Theory by Zwiebach
Among others
Lee
Thursday, February 5, 2009
Harmonious Modeling
Now we begin.
To build the new analytical framework needed to allow the Obama Administration to deliver on its promise of change, the following steps will be needed:
1. Empower the analytical team.
2. Develop team strategy.
3. Assemble the team.
4. Review existing models.
5. Survey new models.
6. Integrate models.
The goal is an efficient transition from the existing structure to one appropriate to the twenty first century. Any new structure will start with the existing economic/financial/public policy structure and integrate the needed actuarial, complexity and data structures.
Examples of output from the new model include:
Year
Scenario
Factor
Population
Resources
Infrastructure
Demographics
Health
Welfare
Defense
Medicare
Social Security
Debt Service
Transportation
Housing
Energy
Manufacturing
Financial
Education
GNP
NEW*
*Net Economic Welfare
It should be pretty obvious how such a model would transcend and improve upon existing ones. This model could test a wide variety of complex options, and even after an option is chosen it could monitor results and make adjustments as needed. It could test the actuarial soundness of results as well.
It could also test sustainability of results in terms of available resources and population levels.
It's time to get serious.
Yes we can.
Lee
To build the new analytical framework needed to allow the Obama Administration to deliver on its promise of change, the following steps will be needed:
1. Empower the analytical team.
2. Develop team strategy.
3. Assemble the team.
4. Review existing models.
5. Survey new models.
6. Integrate models.
The goal is an efficient transition from the existing structure to one appropriate to the twenty first century. Any new structure will start with the existing economic/financial/public policy structure and integrate the needed actuarial, complexity and data structures.
Examples of output from the new model include:
Year
Scenario
Factor
Population
Resources
Infrastructure
Demographics
Health
Welfare
Defense
Medicare
Social Security
Debt Service
Transportation
Housing
Energy
Manufacturing
Financial
Education
GNP
NEW*
*Net Economic Welfare
It should be pretty obvious how such a model would transcend and improve upon existing ones. This model could test a wide variety of complex options, and even after an option is chosen it could monitor results and make adjustments as needed. It could test the actuarial soundness of results as well.
It could also test sustainability of results in terms of available resources and population levels.
It's time to get serious.
Yes we can.
Lee
Actuarial Model of the Economy
An actuarial model of the U.S. economy would be probabilistic, demographic, holistic, complex, and actuariall sound. It would incorporate Enterprise Risk Management, Dynamic Financial Analysis, General Linear Modeling, Econometrics, and Complexity Science.
Who cares?
Well, the global and U.S. economies are on their deathbeds, the environment is collapsing, we are running out of resources, and the demographics of upcoming generations is unsupportable by existing institutions.
Unless somebody in Washington realizes that the analytical tools being used to evaluate public policy initiatives are outdated, and prone to misdiagnosis, (how do you think we got here?) all the "geniuses" in the world (Summers, Geithner, Goolsby, Clinton, Kudlow, Welch, Bernacke, Volcker...) will fail.
Who cares?
Well, the global and U.S. economies are on their deathbeds, the environment is collapsing, we are running out of resources, and the demographics of upcoming generations is unsupportable by existing institutions.
Unless somebody in Washington realizes that the analytical tools being used to evaluate public policy initiatives are outdated, and prone to misdiagnosis, (how do you think we got here?) all the "geniuses" in the world (Summers, Geithner, Goolsby, Clinton, Kudlow, Welch, Bernacke, Volcker...) will fail.
Demonstrating a model which will supplement and transcend the impossibly complicated financial and economic models currently in use is not realistic on a blog.
The basic outline of such a model, however, can be attempted.
The modeling team will consist of physicists, mathematicians, economists, computer scientists, financial engineers and actuaries with a mix of management, technical, and public policy expertise.
Such a team does not currently exist as such.
The model input will be as much detail about the federal budget and national economy as is deemed feasible and useful. It will be enough data to see all the major interactions which occur as a result of government activity but not so much as to be analytically unworkable.
The analytics will be a mix of traditional econometric and financial models supplemented by advances in actuarial science, complexity science, data-mining and visualization, and computer processing which have thus far not been utilized in public policy modeling.
The output will be impact by area by time frame by uncertainty level of alternative government actions. For example, if $100 million of government largess is to be bestowed upon the "auto industry", the impact on all areas impacting and impacted by the auto sector will be shown under various scenarios.
If $100 billion is to be allocated to the "financial sector'" the various ways that the money can flow through the economy under various economic scenarios can be tested. That allocation can (to some degree) be targeted to have the desired impact on national welfare.
For more information, go to my website, paradigmactuaries.com.
Lee
Tuesday, February 3, 2009
The Obama Budget as an Agent Based Structure
The Obama Stimulus/Bailout Proposal is in trouble...for good reason...no one knows how it will work.
The tragedy is that there are analytical tools available which could tell us how various scenarios would play out. From the labs and universities of our country have emerged data mining, analytics, data visualization, computer processing and statistical models which can take the most complex issues and make them manageable.
The American and Global economies are complex systems. Their performance depends on complex interactions among a number of complex networks and webs.
Standard economic and financial models of the type still used in Washington have continually failed to address real world problems. The economic models, for all their apparant sophistication, still incorporate assumptions which have not been seriously updated for decades.
Financial models are largely based on the same Portfolio Theory structures which gave us Enron, Long Term Capital, and the recent global economic collapse over mortgage derivatives.
The reasons standard models don't work any more, if they ever did, is that they are not robust enough to respond to the real world. The real world is messy, uncertain, interconnected, and labyrinthine.
Traditional models postulate smooth patterns, rational behavior, and independent actions.
What the advanced models which exist in places like Los Alamos, Ann Arbor, Boston and Santa Fe do is to allow nature and the real world define itself. Using the latest data organization, analytical and visualization technology, they take raw data from the environment and let it sort itself into logical categories. They then adapt analytical structures to the patterns which emerge.
What his leads to is information for policy makers which is:
1. Holistic: All interconnections, emergences, cascades, fractal structures, and power laws are tested before conclusions are drawn.
2. Probabilistic: Various scenarios are run, and results are tabulated not just on an expected value basis, but with expected ranges of results by time frame.
3. Actuarially Sound: Demographics, credibility, homogeneity, risk and time value, are all incorporated into the model.
4. Emergent: When networks and webs result in projections where emergent structures transcend preliminary ones, those more robust projections are utilized.
As a result, the bailout and stimulus proposals can be blended with conventional government activity to produce scenarios by sector and in total. These scenarios will include probability ranges by time frame by sector.
Healthcare is a good example. In the U.S., healthcare is a complex web of patients, providers, corporations, government, employment, demographics, and administraton. Randomly injecting money into the systems will result in random welfare impact.
Only by following the money through the complex web of activity, and directing it at the micro level where possible is there a chance of having optimal impact on welfare, wellness, jobs, the deficit, and gdp.
The tragedy is that there are analytical tools available which could tell us how various scenarios would play out. From the labs and universities of our country have emerged data mining, analytics, data visualization, computer processing and statistical models which can take the most complex issues and make them manageable.
The American and Global economies are complex systems. Their performance depends on complex interactions among a number of complex networks and webs.
Standard economic and financial models of the type still used in Washington have continually failed to address real world problems. The economic models, for all their apparant sophistication, still incorporate assumptions which have not been seriously updated for decades.
Financial models are largely based on the same Portfolio Theory structures which gave us Enron, Long Term Capital, and the recent global economic collapse over mortgage derivatives.
The reasons standard models don't work any more, if they ever did, is that they are not robust enough to respond to the real world. The real world is messy, uncertain, interconnected, and labyrinthine.
Traditional models postulate smooth patterns, rational behavior, and independent actions.
What the advanced models which exist in places like Los Alamos, Ann Arbor, Boston and Santa Fe do is to allow nature and the real world define itself. Using the latest data organization, analytical and visualization technology, they take raw data from the environment and let it sort itself into logical categories. They then adapt analytical structures to the patterns which emerge.
What his leads to is information for policy makers which is:
1. Holistic: All interconnections, emergences, cascades, fractal structures, and power laws are tested before conclusions are drawn.
2. Probabilistic: Various scenarios are run, and results are tabulated not just on an expected value basis, but with expected ranges of results by time frame.
3. Actuarially Sound: Demographics, credibility, homogeneity, risk and time value, are all incorporated into the model.
4. Emergent: When networks and webs result in projections where emergent structures transcend preliminary ones, those more robust projections are utilized.
As a result, the bailout and stimulus proposals can be blended with conventional government activity to produce scenarios by sector and in total. These scenarios will include probability ranges by time frame by sector.
Healthcare is a good example. In the U.S., healthcare is a complex web of patients, providers, corporations, government, employment, demographics, and administraton. Randomly injecting money into the systems will result in random welfare impact.
Only by following the money through the complex web of activity, and directing it at the micro level where possible is there a chance of having optimal impact on welfare, wellness, jobs, the deficit, and gdp.
Historical transformations in the eras of the automobile, computer, electronics, and so on have shown definite patterns. The need now is for a sustainable transition which is envoironmentally friendly and resource efficient.
Future blogs wll provide additonal material on models which respond to the landscape of the twenty first century.
Lee
Monday, February 2, 2009
The Mathematics of Chaos
Now that we've reviewed the math of particle physics and relativity, we can move on to the math of things we can touch, feel, see, hear and smell.
No, we aren't interested in Newtonian Mechanics at this point. We want to show how chaos theory is a bridge from "simple" systems like atoms to "complex" systems like humans, ecologies, and economies.
Just as patterns in the subatomic world give rise to the mathematics of particle physics, patterns in nature and the cosmos give rise to the mathmatics of complex systems.
A universality has been found in patterns beneath the surface of things like the human heart, weather, internet traffic, the human brain, nature's rhythms, and cosmic expansion.
There is a holism and universality not unlike that found in certain subatomic patterns in the world around us.
Historically, mathematicians and scientists have attemped to deal with the nonlinear patterns of complex systems using standard mathematical structures like transformed differential equations and probability theory. The problem is that complex systems involve patterns that ultimately don't cooperate with such standard approaches.
As was the case in quantum mechanics and relativity theory, a new way of thinking is needed if we are really going to make progress in understanding complex systems. The dramatic increase in computing power in recent years has provided opportunities for such new thinking.
State and phase space, perturbation, fractals, attractors, power laws, cascades, symmetries, topologies, multifractals, and phase transitions are examples of notions which have arisen in the search for patterns in complex systems. If the mathematics underlying those patterns happens to relate to the patterns uncovered in the subatomic world, a metaphysical and scientific revolution of unprecedented power will be unleashed.
A mathematics of reality which begins with the fuzzy patterns in the subatomic world and shows how those patterns, even in principle, can be followed up the chain of reality, could lead us to a picture of human and cosmic reality which is holistic, interconnected and transcendent.
Economic activity, political activity, social activity, intellectual activity and spiritual activity could all be viewed from the perspective of universal patterns emerging into structures of truth beauty and justice. Quite a leap in logic, perhaps, but better than most of the other possibilities.
We have discussed in other blogs, and will discuss in future blogs, how such deep perspective can help us deal with the problems of the day. As a highly complex system, the global economy cries out for holisitc analysis. The tools of complexity science and actuarial science are ready to be combined with those of relativity and quantum mechanics to form an analytical structure for public policy analysis in the twenty first century.
Are we up to the challenge?
Yes we are.
Lee
No, we aren't interested in Newtonian Mechanics at this point. We want to show how chaos theory is a bridge from "simple" systems like atoms to "complex" systems like humans, ecologies, and economies.
Just as patterns in the subatomic world give rise to the mathematics of particle physics, patterns in nature and the cosmos give rise to the mathmatics of complex systems.
A universality has been found in patterns beneath the surface of things like the human heart, weather, internet traffic, the human brain, nature's rhythms, and cosmic expansion.
There is a holism and universality not unlike that found in certain subatomic patterns in the world around us.
Historically, mathematicians and scientists have attemped to deal with the nonlinear patterns of complex systems using standard mathematical structures like transformed differential equations and probability theory. The problem is that complex systems involve patterns that ultimately don't cooperate with such standard approaches.
As was the case in quantum mechanics and relativity theory, a new way of thinking is needed if we are really going to make progress in understanding complex systems. The dramatic increase in computing power in recent years has provided opportunities for such new thinking.
State and phase space, perturbation, fractals, attractors, power laws, cascades, symmetries, topologies, multifractals, and phase transitions are examples of notions which have arisen in the search for patterns in complex systems. If the mathematics underlying those patterns happens to relate to the patterns uncovered in the subatomic world, a metaphysical and scientific revolution of unprecedented power will be unleashed.
A mathematics of reality which begins with the fuzzy patterns in the subatomic world and shows how those patterns, even in principle, can be followed up the chain of reality, could lead us to a picture of human and cosmic reality which is holistic, interconnected and transcendent.
Economic activity, political activity, social activity, intellectual activity and spiritual activity could all be viewed from the perspective of universal patterns emerging into structures of truth beauty and justice. Quite a leap in logic, perhaps, but better than most of the other possibilities.
We have discussed in other blogs, and will discuss in future blogs, how such deep perspective can help us deal with the problems of the day. As a highly complex system, the global economy cries out for holisitc analysis. The tools of complexity science and actuarial science are ready to be combined with those of relativity and quantum mechanics to form an analytical structure for public policy analysis in the twenty first century.
Are we up to the challenge?
Yes we are.
Lee
Sunday, February 1, 2009
Confessions of an Economic Hit Man
What if he's right?
In his book, John Perkins talks about the military industrial complex's impact on Third World countries.
"Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, USAID,...into the pockets of a few wealthy individuals who control the planet's natural resources."
Wow. If this beginning to the Preface has any basis in truth, the Obama Administration has issues that transcend those currently being discussed in the media.
In addition to considering the traditional networks in determining ways to allocate government resources in a way that optimizes human welfare, he has to look behind the curtain and see if the resources are really going to appropriate places.
Are the, "Few wealthy individuals who control the planet's natural resources" also receiving government bailouts...?
Do they run the banks, healthcare organizations, infrastructure contractors, and other organizations receiving government money?
Does it matter?
We know that the government needs new analytical tools to determine whether government programs accomplish their goals.
Using actuarial, complexity science, data mining and visualization, and other tools which are available but underutilized, the Administration can be sure its resources will be more likely to have the intended effect.
Can we build analytical tools which will allow us to be sure we are getting the most welfare impact possible from our programs? Can we predict Net Economic Welfare and Gross National Product scenarios which will provide for a reasonable standard of life for future generations?
Yes we can.
Lee
In his book, John Perkins talks about the military industrial complex's impact on Third World countries.
"Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, USAID,...into the pockets of a few wealthy individuals who control the planet's natural resources."
Wow. If this beginning to the Preface has any basis in truth, the Obama Administration has issues that transcend those currently being discussed in the media.
In addition to considering the traditional networks in determining ways to allocate government resources in a way that optimizes human welfare, he has to look behind the curtain and see if the resources are really going to appropriate places.
Are the, "Few wealthy individuals who control the planet's natural resources" also receiving government bailouts...?
Do they run the banks, healthcare organizations, infrastructure contractors, and other organizations receiving government money?
Does it matter?
We know that the government needs new analytical tools to determine whether government programs accomplish their goals.
Using actuarial, complexity science, data mining and visualization, and other tools which are available but underutilized, the Administration can be sure its resources will be more likely to have the intended effect.
Can we build analytical tools which will allow us to be sure we are getting the most welfare impact possible from our programs? Can we predict Net Economic Welfare and Gross National Product scenarios which will provide for a reasonable standard of life for future generations?
Yes we can.
Lee
Glass Bead Game
Hesses's novel posits an imaginary world in which spiritual values emerge dynamically as a game with musical and mathematical elements is played. The rules of the game draw from the sciences and arts, and express interrelationships among all areas of knowledge. As a result, it encompasses all aspects of culture and can lead to a full understanding of reality.
That sounds remarkably close to the basic premise of Harmonious Universe where developments in particle physics become the structure of the game. The metaphors of particle physics, waves, particles, fields, dimensions, entanglement...create a vision of a transcendent world where the mysteries of life are resolved.
The deeper we penetrate the atom and its nucleus the more fuzzy the core of reality seems. Electrons which orbit the nucleus are not "things", but are more like clouds of virtual reality. The quarks which make up the protons and neutrons in the nucleus may be stringlike objects whose vibrations in dimensions beyond our own create the elements of our world.
These particles may not exist at all, except as part of a web of connections made manifest by fields of virtuality.
In The Music of the Spheres, Jamie James starts out with a "Great Theme", "Picture to yourself, if you can, a universe in which everything makes sense. A serene order presides over the earth around you, and the heavens above revolve in sublime harmony.
Everything you can hear and see and know is an aspect of the ultimate truth: the noble simplicity of a geometric theorem, the predictability of the movement of the heavenly bodies, the harmonious beauty of a well-proportioned fugue-all are reflections of the essential perfection of the universe."
James goes on to demonstrate, through a journey through Western thought, how a loss of transcendence in the Industrial Revolution and Romantic movement dulled our sense of wonder and awe at the sheer power of the universe.
Harmonious Universe puts the sense of wonder back into our souls. A physical universe of mystery and beauty evolves into a mental and spiritual universe of unlimited possibility.
A convergence is now occurring. In the late 18th century, a group of amazing intellects created a country which has been a beacon of hope for all peoples for centuries. In the 1960's, developments in the sciences, arts, and politics were pointing to a new age of truth beauty and justice.
In 2009 a new Administration entered Washington on a wave of hope that mirrors that in the sciences of finding deep truths.
We are beginning a process of transforming the American economy into one which will provide hope for centuries to come. We will need wisdom, courage, strength and integrity.
We can move our society forward in a way that assures that future generations will have the opportunities we have had.
Yes we can.
Lee
That sounds remarkably close to the basic premise of Harmonious Universe where developments in particle physics become the structure of the game. The metaphors of particle physics, waves, particles, fields, dimensions, entanglement...create a vision of a transcendent world where the mysteries of life are resolved.
The deeper we penetrate the atom and its nucleus the more fuzzy the core of reality seems. Electrons which orbit the nucleus are not "things", but are more like clouds of virtual reality. The quarks which make up the protons and neutrons in the nucleus may be stringlike objects whose vibrations in dimensions beyond our own create the elements of our world.
These particles may not exist at all, except as part of a web of connections made manifest by fields of virtuality.
In The Music of the Spheres, Jamie James starts out with a "Great Theme", "Picture to yourself, if you can, a universe in which everything makes sense. A serene order presides over the earth around you, and the heavens above revolve in sublime harmony.
Everything you can hear and see and know is an aspect of the ultimate truth: the noble simplicity of a geometric theorem, the predictability of the movement of the heavenly bodies, the harmonious beauty of a well-proportioned fugue-all are reflections of the essential perfection of the universe."
James goes on to demonstrate, through a journey through Western thought, how a loss of transcendence in the Industrial Revolution and Romantic movement dulled our sense of wonder and awe at the sheer power of the universe.
Harmonious Universe puts the sense of wonder back into our souls. A physical universe of mystery and beauty evolves into a mental and spiritual universe of unlimited possibility.
A convergence is now occurring. In the late 18th century, a group of amazing intellects created a country which has been a beacon of hope for all peoples for centuries. In the 1960's, developments in the sciences, arts, and politics were pointing to a new age of truth beauty and justice.
In 2009 a new Administration entered Washington on a wave of hope that mirrors that in the sciences of finding deep truths.
We are beginning a process of transforming the American economy into one which will provide hope for centuries to come. We will need wisdom, courage, strength and integrity.
We can move our society forward in a way that assures that future generations will have the opportunities we have had.
Yes we can.
Lee
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