Re: can economics reflect reality?

highflite1977@xxxxxxxxx wrote:

Can economics be used to make a real model of the economy and society.

Hardly, the model is damn complex.

Is it possible to predict the future of an economy and also is it
possible to produce good guidelines that are based on reality rather
than the middle class pretentions of the neoclassical economist?

Possibly yes. Unfortunate you don't have access to all the data you need
to make clear predictions. Only rough predictions can be made when some
trends are very clear.

Where would you start when trying to make economics correspond to reality.

Supercomputers, supercomputers, supercomputers. Hopefully we start to be
able to implement models closer and closer to reality.

Is the problem intrinsic to the questions economics tries to ask and
answer? Could it be that the human mind is unpredictable and the
dynamics that come from many humans are too chaotic to understand?

There are some rules about how the investors mind work. While you can not
predict any individual person, on a large scale you may get statistically
satisfactory models.

The biggest investors are business people, therefore pretty simple minded
and short sighted individuals :-)

Should governments shut up shop and do nothing when it comes to the
economy?

Nope. Without any gov. intervention the market naturally evolve toward a
total monopoly. The market will be divided vertically and horizontally
betwen local monopolies which figure out that they can get better off by
price fixation in the market they currently have than compete each another.
In this moment you does not have anymore ANY free market. This is the
direction multinational corporations are pushing toward.

Gov. must keep a controll over the economy in order to ensure free market.
Keep in mind that an 100% free market can ONLY be achieved when you have a
large number of players having roughly the same size. When one player grow
to much, everybody else is handicapped against it. Here is when gov. MUST
intervine to keep the market free.

One example: Any mentally sane gov. would immediately split back almost ALL
the mergers in the telecom and banking industry that happen in last 5 years.
Also, players requiring strong gov. interventions are: WalMart, Microsoft,
and most of the oil companies.

Or should government take complete control of the anarchy
that is the market and impose a command style economy?

Nope. The system is to complex and to dynamic for one controller.
Having a 100% planned economy as in socialism doctrina will slow down
the dynamic of system. The government is going to become the monopoly.
And the economy is going to stagnate.

Competition is required to keep business process innovation alive.

Market
Hobbesianism versus Adam Smith. You decide. What's your view?

Neither one extreme nor another is the answer. Both corporatist anarchism
(aka libertarianism) and socialism are going to generate problems.

The answer is in the middle. We need a competitive free market and a strong
government involved to keep the market 100 competitive, regulate it when
the trend toward instability (negative feedback loop) and take care of some
services extremely important for society (health care, pension, education,
welfare).



.

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