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20 April 2011 @ 02:44 am
As much as I enjoy it, I think I have to stop listening to music: at some point it has become inimical to my ability to think. It doesn't hamper my ability to carry on a train of thought - but it does seem to reduce my desire to.
08 April 2011 @ 10:16 am
Browsing the web, I stumbled across the phrase "cornflower blue sky" and, in some deep recess of my mind , started laughing.

It took me a while to remember why...
01 February 2011 @ 11:30 am
The New Industrial State is a pretty bad description of post-financialization USA; shareholders have re-asserted control over the capital they own. But it does strike me as a pretty good description of any country politically dominated by conglomerates, e.g., Japan. With some modifications, elements of the idea could apply to Singapore.

Moving across countries and cultures loses many of the details, but the basic intuition that someone has to carry out a nontrivial amount of conscious design in an industrialized economy - that the invisible hand is, to a nontrivial degree, actually visible. Much is negotiated outside the price mechanism; if the price mechanism were the most efficient, the biggest organizations should be one person large. Since complicated plans entail some assumptions on infrastructure, available labor, acquiescence of employees and customers, etc., plans by different entities can affect these assumptions and cause expensive conflicts. Thus in any state where such planners (for whatever reason) enjoy stable and entrenched positions, there will be an incentive for state and said entrenched private planners to cooperate, responding to the same broad combination of economic and political pressures, rather than state planners responding to politics and private planners responding to economics separately. Cue Japanese welfare-by-unusual-corporate-generosity.

Singapore, of course, does not have conglomerates; it has one conglomerate, Singapore Inc., with one technostructure, helpfully melded by social ties. Economic sensibilities are restrained by deep integration with the international economy and there Singapore Inc. has no say; it must take international markets as given. Thus Singapore Inc. behaves like a Galbraithian firm embedded in a non-Galbraithian world, with no conscious state actor with which to negotiate. Within Singapore, planning rules supreme. Here, have an extract from a summary:

[...] In the planning sector, ownership and control are divorced. The owners of the giant firms are the millions of holders of common stock who have no actual control over the operation of the corporation. Instead, control is exercised by the technostructure - a professional elite consisting of executives, managers, engineers, scientists, product planners, market researchers, marketing personnel, and so on. The disgruntled stockholder who does not like the performance of a particular firm does not have the option of firing the management. The usual recourse is to sell the shares of the company and to buy shares of another company. It is naive, said Galbraith, to assume that the technostructure has an incentive to maximize the return to the millions of anonymous stockholders. The technostructure pursues much more complex purposes, which he categorized as protective and affirmative.

The central protective purpose of the firm is survival, which translates into the need to earn a profit sufficient to keep most stockholders relatively happy and to provide sufficient retained earning for investment and growth. One way that this less-than-maximum profit can be assured is by taking product price out of competition [...] [ed: which is irrelevant in Singapore's case; there are of course other ways to keep shareholders happy]

The major affirmative purpose of the firm is corporate growth. Growth of output, sales, and revenues produce greater employment security and financial rewards to the members of the technostructure. In the orthodox theory of the firm, oligopolists restrict their production in order to boost their prices and enhance their profits: "No point is better accepted by the neoclassical model than that the monopoly price is higher and the output smaller than is socially ideal. The public is the victim. Because of such exploitation, oligopoly is wicked." In Galbraith's theory, oligopolists fix prices at low levels - ones that achieve a minimum profit and permit expansion of total output and sales. Huge advertising outlays, campaigns to gain market share, unprofitable mergers between competitive and noncompetitive firms, and so forth, all make perfect sense if the goal is growth. According to Galbraith, "The neoclassical model describes an ill that does not exist [high oligopolistic prices and restricted output] because it assumes a purpose that is not pursued [profit maximization]. "

Thus the curious situation of a technocracy managing a somewhat transient population; this does not imply anything bad about the performance of said technocracy. By the metric of generating prodigious growth per capita, this is a government which has done extraordinarily well. It is always the case that voters in every country have limited say over the character and priorities of the civil service; it is by historical accident that Singapore has so evolved to have a technocratic civil service and a deferential (or, at least, resigned) population and thus emulates a corporation-based model well. The point is that this thus correlates, to a remarkable extent, with the priorities of the resulting ideology of pragmatism; with what the technocracy consciously plans toward achieving.
26 December 2010 @ 06:39 pm
So what's "shoppe"? Shop 2.0?
10 December 2010 @ 02:31 am
Austrian calculation must be costly, to agents in the Austrian world; otherwise it would resolve virtually instantly and therefore transform into the neoclassical universe. So there are distributional issues involved here in who, eventually, pays said cost; we can argue, as the Austrians often do, that any attempt to alleviate this issue will distort prices and cause whatever losses, but this just becomes the usual efficiency-vs-equity tradeoff that we are so familiar with.
08 December 2010 @ 10:27 am
I derive way too much satisfaction arguing with people who I know are not well-placed to formulate effective counter-argument.
06 December 2010 @ 02:32 am
From The Representative Agent in Macroeconomics, Hartley, p190-191:

In a remarkable series of papers, Sonnenschein (1972, 1973, 1973), Mantel (1974, 1976), Debreu (1974), and Mas-Colell (1977) showed that in an economy in which every individual well-behaved excess demand function, there are only three restrictions on the aggregate excess demand function: (a) it satisfies Walras' law; (b) it is continuous; and (c) it is homogenous of degree zero in prices.

That is it. Nothing else can be inferred. Any completely arbitrary function satisfying these three properties can be an aggregate excess demand function for an economy of well-behaved individuals. Having an economy in which every single agent obeys standard microeconomic rules of behavior tells us virtually nothing about the aggregate economy.


These results are quite general, placing no restrictions on the distribution of agents' preferences or income distribution, and were initially met with skepticism. Deaton (1975, p. 237) argued that the results required "arbitrary manipulation of the income distribution and of preferences." (See also Grandmont, 1987, and Kirman's, 1989, discussion of it). However, Kirman and Koch (1986) show that restricting the distribution of agent's preferences or income distribution does not solve the matter. As Kirman summarises:

Put another way, given an arbitrary excess demand function, no matter how ill-behaved and difficult to work with, I can give you an economy in which people are as close as you like to being identical, i.e., they have the same preferences and almost the same income, which will generate this ugly aggregate excess demand function. (Kirman, 1992, p. 128)

I came across the SMD result in S4, but I had come to the same conclusion as Deaton mentioned in the quote; its removal is quite surprising.

I'll have to think about it after sitting through statistics past papers, I think...
30 November 2010 @ 09:25 pm


(dog pawprints in snow are what makes it for me, I think. I always wonder what the dog that made them thinks of the snow. An unanswerable question - what is it like to be a dog? - but I never stop wondering)
30 November 2010 @ 06:20 pm
Just has a mathematical econ test.

It is nice to know I could answer the "prove $ARCANE_RESULT" bonus question by spotting the trick in under thirty seconds. It wasn't so nice to find out that it was all in the totally-not-gonna-be-tested appendices to the lecture notes, though...
14 November 2010 @ 02:19 pm
Note to self: don't try to cook spaghetti in a hurry again.