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Thermodynamics And Other Things Best Not Discussed At Dinner Parties


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No income is not socially defined. Inequality grows when the economy grows, and it tends to fall when the economy contracts (because we all get poorer but normally the rich take a bigger hit).

To some extent the curve can be smoothed by taxation and benefits, and that tends to truncate the left hand side of the curve (e.g. you don't get incomes at zero). But it doesn't really alter the form of the distribution. It appears to be impossible to create an "arbitrary" distribution and even norway hasn't been able to move the curve far from a basic boltzmann-gibbs distribution. Maybe the taxation can to some extent get rid of the pareto 'long tail' of the "1%", but that still leaves an exponential distribution for the remainder.

An additional problem arises when transfers are funded by borrowing. In this case, the borrowing creates a new financial asset for the private sector which essentially becomes money, which means that the rich segment who "gave up consumption" to fund the benefits, have not actually given anything upo because they can quite happily sell the bond the next day.

Inequality only exists if you accept the value system.

A man who doesn't like jam in no way feels deprived if he hasn't got any.

However, this is a forced system, whereby the man is forced to acquire jam and feels deprived when he doesn't have any (because someone else arranges things so he will be deprived of the things he really wants if he doesn't acquire and hand over jam to the jam lovers.) Remove the force and you also remove the inequality.

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Inequality only exists if you accept the value system.

A man who doesn't like jam in no way feels deprived if he hasn't got any.

However, this is a forced system, whereby the man is forced to acquire jam and feels deprived when he doesn't have any (because someone else arranges things so he will be deprived of the things he really wants if he doesn't acquire and hand over jam to the jam lovers.) Remove the force and you also remove the inequality.

I agree. I would add that by doing this you would remove most of the rest of civilisation's benefits but I can certainly understand the impulse to return to the primal hunter-gather state.

I mean, all of this 'forcing' as you put it, starts in earnest as soon as a nomadic hunter-gather tribe starts to bury caches of food and tools, does it not? That right there is I suppose the Fall from Eden.

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Ooh a sceepy post, how wonderful.

Always a pleasure B)

Not really all that important, given most human valuation (i.e. the bit that makes economics work) is done using the brain, which needs feck all power and is completely unconstrained by physical laws as long as it's hosting body is alive.

The brain consumes about 20% of the body's total power budget, more when it is thinking hard. The information processing that goes on in the brain and communication between humans is not physically unconstrained. It is true that it would seem that interpretation of the semantic content of a received message is not thermodynamically constrained and has no thermodynamic burden. But the transmission of messages and the apparatus to receive them does cost energy and has thermodynamic costs.

The costly part of human information processing is the 'engineering' aspect of firing neurons, activating the voice box, powering the eyes etc. Not to mention the upkeep of records stored in inanimate matter.

Once all that is take care of, the attachment of meaning and value has no additional costs.

Yep, they do. The only reason socialism fails is it doesn't get the results desired in reality. (Because of the lack of choice) however, people who are free to choose don't notice.

No, because making a valud judgement requires the transmission and reception of information, which has thermodynamic costs. You can try arguing agains these costs but you will simply be wrong. The science of thermodynamics and the links to information theory are well established.

The inequality is doe to the choices of some humans to act on other humans in a hierarchical and negative way. They don't actually have to, it's not a law of nature.

Rabbits live in a hierarchical and negative way. So do many other animals. It doesn't appear to be a trait confined to man. We just happen to have amplified the effects via the increased chronognosis (awareness of time and capability to predict, as evidenced by hunter gatherers caching foodstuffs), and by the evolution of a supra-phenotype (the employment of inanimate mater in ther service of biological machines).

More closely linked to a cancer, really. Again, the financial system is a human design with very little connection to reality (if you stop beliving in it.)

According to you the whole human civilisation is an unreal construction, in which case I am only guilty of trying to establish links between two unreal constructions.

it takes the same brain power to imagine in a wonderful way as it does to imagine in a poor one. So, erm. Nope.

Wrong. Interpretation of information content depends on context and it costs energy to both from and transmit the message and to maintain a receiver in which the received message can be decoded, noise removed and semantic value extracted. Once the value is extracted it also needs to be stored and prepared for re-transmission, which also has costs.

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Always a pleasure B)

The brain consumes about 20% of the body's total power budget, more when it is thinking hard. The information processing that goes on in the brain and communication between humans is not physically unconstrained. It is true that it would seem that interpretation of the semantic content of a received message is not thermodynamically constrained and has no thermodynamic burden. But the transmission of messages and the apparatus to receive them does cost energy and has thermodynamic costs.

The costly part of human information processing is the 'engineering' aspect of firing neurons, activating the voice box, powering the eyes etc. Not to mention the upkeep of records stored in inanimate matter.

Once all that is take care of, the attachment of meaning and value has no additional costs.

Yeah, that's what I said, more or less.

No, because making a valud judgement requires the transmission and reception of information, which has thermodynamic costs. You can try arguing agains these costs but you will simply be wrong. The science of thermodynamics and the links to information theory are well established.

Not so - the bulk of the information is internal to the brain (the operation of the mind)

Rabbits live in a hierarchical and negative way. So do many other animals. It doesn't appear to be a trait confined to man. We just happen to have amplified the effects via the increased chronognosis (awareness of time and capability to predict, as evidenced by hunter gatherers caching foodstuffs), and by the evolution of a supra-phenotype (the employment of inanimate mater in ther service of biological machines).

Choice. Rabbits and other animals can't choose, men can.

According to you the whole human civilisation is an unreal construction, in which case I am only guilty of trying to establish links between two unreal constructions.

Which must fail to describe accurately what's going on. :)

Wrong. Interpretation of information content depends on context and it costs energy to both from and transmit the message and to maintain a receiver in which the received message can be decoded, noise removed and semantic value extracted. Once the value is extracted it also needs to be stored and prepared for re-transmission, which also has costs.

Not internally, once fed the brain does it's valuing all on it's own.

Maps not being territories and all that. See eckart tolle for details about the real cost of high value living.

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:D

"Thick as mince"

But that's the whole point. If people are as thick as rabbits, and you can use statistics and mathematics to model the behaviour of rabbit families competing for nice sandy soil to dig their warrens, how is human behaviour (viewed as large scale populations) any different?

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But that's the whole point. If people are as thick as rabbits, and you can use statistics and mathematics to model the behaviour of rabbit families competing for nice sandy soil to dig their warrens, how is human behaviour (viewed as large scale populations) any different?

The more stupid the person, the less insight they have into themselves and the less predictable their own behaviour will be.

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The more stupid the person, the less insight they have into themselves and the less predictable their own behaviour will be.

Any evidence for that bald statement? I have no compunction in claiming this is nonsense you have just made up on that spot.

Anyay,lets just say you are correct. As long as the behaviour of each sheeple-rabit-person is so stupid to be essentially random, then the lack of predictability is actually a net benefit to using statistical methods.

If the behaviour of this majority is indeed random, then they can be modelled using standar equilibrium thermodynamics. If their behaviour is stupid but non random, then please state in what ways you see non-random yet stupid and unpredictable behaviour emerging? Assuming the behavioir exhibits complxities like immitation, then non-equilibrium thermodynamics may be the better approach.

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No income is not socially defined. Inequality grows when the economy grows, and it tends to fall when the economy contracts (because we all get poorer but normally the rich take a bigger hit).

To some extent the curve can be smoothed by taxation and benefits, and that tends to truncate the left hand side of the curve (e.g. you don't get incomes at zero). But it doesn't really alter the form of the distribution. It appears to be impossible to create an "arbitrary" distribution and even norway hasn't been able to move the curve far from a basic boltzmann-gibbs distribution. Maybe the taxation can to some extent get rid of the pareto 'long tail' of the "1%", but that still leaves an exponential distribution for the remainder.

An additional problem arises when transfers are funded by borrowing. In this case, the borrowing creates a new financial asset for the private sector which essentially becomes money, which means that the rich segment who "gave up consumption" to fund the benefits, have not actually given anything upo because they can quite happily sell the bond the next day.

Ok, tentatively accepting your starting positions, can we now go a bit further down the rabbit hole? What I'd like to see (if you don't mind) are some sort of specific illustrations of what you are talking about. You have sketched it out, could you now colour it in?

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Any evidence for that bald statement? I have no compunction in claiming this is nonsense you have just made up on that spot.

Find a stupid person. Ask them what their plans are for 5 years time. Now go and ask an intelligent person. Because the intelligent person has plans, you know the steps they will have to take to get their you can approximate their decisions. Because the stupid person isn't big on planning, you are scoobyless due to the constanmt arrival of new things into social discourse and the economy. You know they need to eat, but in 8 months time when they are eating a brand new cajun/halal fusion microwave meal that didn't exist when you tried to plot their behaviour you had no chance to predict it.

What you think is that because you can make bell curves of peoples past behaviour, the bell curve can be extended into the future. It can't. Previous behaviour is not binding on anyone.

Anyay,lets just say you are correct. As long as the behaviour of each sheeple-rabit-person is so stupid to be essentially random, then the lack of predictability is actually a net benefit to using statistical methods.

Isn't random. Is predictably irrational. http://www.amazon.com/Predictably-Irrational-Revised-Expanded-Edition/dp/0061353248

However, no one knows what the future holds. An intelligent person (long term goal) is less influenced by new things than the stupid person.

If the behaviour of this majority is indeed random, then they can be modelled using standar equilibrium thermodynamics. If their behaviour is stupid but non random, then please state in what ways you see non-random yet stupid and unpredictable behaviour emerging? Assuming the behavioir exhibits complxities like immitation, then non-equilibrium thermodynamics may be the better approach.

You can't model the unseen. People operate in reality based on models they contain in their minds. Reality can't be defied, but it can be badly thought about.

Example - schizophrenic thinks he can fly. He jumps off a bridge and obviously falls to his doom. The only thing you can predict is how physical forces will act on his body once he's chucked himself off - you can't predict that he will jump (because he's operating on an unreal model of how the world works which you can never have access to until afterwards.) Unless you think that people en masse understand how the real world works then you have to concede that their behaviour is not knowable ahead of time.

Two things that can be done (indeed have to be done) to make your scenario halfway plausible.

1_ Give people en masse a model of the world (for example state educate them all with the same lies) which then makes their behaviour sortof knowable (for as long as they follow the model)

2_ Force them to do what you want.

The unknowns then become

1_ How long people will keep following something that's wrong and against their own self interest.

and

2_ How much force you can safely use before a backlash of some kind. On the example of housing - in todays 24/7 media world if a large cross section of the population decided to opt out of paying rents and mortgages, the peterloo solution isn't on the table.

But you want to ignore these importnt factors and instead pretend that people are molecules, and their lives are decided by physical laws.

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Ok, tentatively accepting your starting positions, can we now go a bit further down the rabbit hole? What I'd like to see (if you don't mind) are some sort of specific illustrations of what you are talking about. You have sketched it out, could you now colour it in?

Well, its quite a large canvas. Is there a particular area of interest you would like to discuss where we could begin? Maybe if you could be convinced in a particular area of interest that would be sufficient?

Here are some areas I can think of:

* The sources of demand deficiency and policy options to deal with it.

* The history of economic growth and banking as evolving entropy maximisation processes.

* Profit, entropy, consumption and value.

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Well, its quite a large canvas. Is there a particular area of interest you would like to discuss where we could begin? Maybe if you could be convinced in a particular area of interest that would be sufficient?

Here are some areas I can think of:

* The sources of demand deficiency and policy options to deal with it.

* The history of economic growth and banking as evolving entropy maximisation processes.

* Profit, entropy, consumption and value.

Demand is the ability of people to pay for things that they want. You can';t fix it with policy, only the absence of policy.

Banking doesn't have much of anything to do with economic growth, other than stealing from it.

Profits are unknowable and so are values.

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Well, its quite a large canvas. Is there a particular area of interest you would like to discuss where we could begin? Maybe if you could be convinced in a particular area of interest that would be sufficient?

Here are some areas I can think of:

* The sources of demand deficiency and policy options to deal with it.

* The history of economic growth and banking as evolving entropy maximisation processes.

* Profit, entropy, consumption and value.

Can we start with the sources of demand deficiency? I am curious as to how wide inequality needs to be.

Cheers!

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Can we start with the sources of demand deficiency? I am curious as to how wide inequality needs to be.

Cheers!

Sure. I can't say what level of inequality is 'needed' because thats the wrong way about. Its a question of what inequality arises naturally.

The first thing to note is that with any cash money system, prices are inherently indeterminate since the money can move from hand to hand arbitrarily fast. Of course in reality there are limits to how fast phsyical or even electronic specie could actually move in practice. But also in reality, the stock of money M is also indeterminate since we could really use almost anything, So money itself is not sufficient to determine prices.

THis situation is not stable, so various constraints come along that cause the system to seek some stable operatng point, Technology puts an upper bound on how fast money could move. Social consensus puts a limit of some kind on how much money there can be.

In the middle ages, gold, silver, copper and metallic mixes like billion were all variously used as money and the quanity of each employed varied. More money could be put into circulation by melting down the considerable stocks of metal goods like plates and cutlery.

Prices were quite stable over reasonable periods of time when measured accross national borders, but without any central institution controlling money quanitity, quality and velocity.If everyone had an equivalent income prices of real goods could be bid up ad infinitum by simply increasing the velocity of the money stock, and posession of money would therefore be no guarantee of access to the goods bidded for, so it could not be thought of as money, I mean, if everyone bids the equivalent amount for each unit of output, how to decide how to allocate it?

Since this process is not stable other factors intervene, like hoarding money and force majure, which quickly dissipate the originally 'even' wealth distribution.Then demand falls because many people don't have any money, which causes losses to those hoarding goods,money and capital they can't or won't use. Output falls, but this eventually generates price inflation (goods become more scarce) that serves to cause the hoarders to start spending again. This reduces inequality, which then eventually leads to indeterminiate prices again and causes a speculation driven collapse of prices as above.

Eventually, under stable social and environmental conditions, this oscillation is damped by social complexity that arises to enshrine something approaching the median level of inequality measured over this dynamic process.

If the economy gets incrementally richer every year with a larger surplus the point of maximum inequality that causes the above collapse can be put off. However, what happens here is merely that the maximum inequality from richest to poorest that can be tolerated is wider. Typically the population becoming richer starts to grow, which serves to actually increase the absolute number of very poor above what is was in the poorer prior society. The average person is better off, but the worst off are in just as bad shape as before, and most people have a similar GDP/capita to what they had before. But eventually economies of scale begin to tell, and we get urbanisation and other stuff which increases efficiencies and general standard of living.

By way of example, the considerable populations of basket cases like Zimbabwe and Haiti today have a real GDP somewhat lower than the typical peasant in high middle ages britain! And there is a lot more of the former than there were of the latter. That's progress!

'Growth' stretches the canvas of wealth, rather than floating all boats.

When the society hits maximum inequality for a given level of energy input (aka wealth), demand deficiency arises which cannot be ironed out by social policy because doing so raises demand above the ability for the real economy to supply. Therefore production is scaled back until inequality returns to a level which is sufficiently low to maintain the circulation of money and ensure that the output of the economy can be profitably produced. This causes a relative reduction in the rich rentier class such that their hoarding behaviours cease to have a material impact on operation of the economy.

Obviously, a society which acts socially to ensure that all output is always consumed profitably would simply increase its usage of resources (by re-investing profits in incremental production increases, which is rational while existing output is profitable) until the point it killed itself stone dead by resource depletion. This thing is an economic equivalent of a perpetual motion machine.

It should therefore be no surprise that it is not economically possible to construct an system in which all output can be profitably produced and consumed in the absence of a continuously increasing energy influx which is at least partially translated into a larger population.

THis makes perfect sense if you viewed an economy like a living being that needs to regulate its own accumulation of body mass and output of activity in the face of real world constraints. Living systems poersist because they have such in built limiters and metabolic pathways.

It is my observation that the observed form of inequality happens to be equivalent more or less to that found in natural processes subject to such limiting constraints. Demand deficiency is a crucial part of the economic metabolism.

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Thanks Scepticus for this.

I'm interested in what you laid out just there but I'd like some clarification on a couple of points:

1. "indeterminate" prices?

2. "which cannot be ironed out by social policy because doing so raises demand above the ability for the real economy to supply" - this seems a key step that could be expanded rather.

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Thanks Scepticus for this.

I'm interested in what you laid out just there but I'd like some clarification on a couple of points:

1. "indeterminate" prices?

Yes, the opposite of price stability. Prices cannot be purely determined by a quantity of money without knowing the velocity of the money. The velocity is essentially unconstrained except by inequality. Additionally, in the presence of a system of credit creation, or in the presence of a system which can create money (by printing it, or say be declaring some new metal coinage with a particular image minted on it to be money as in the middle ages), these monetary aggregates cannot themselves be the causal factor in a determinate price level. Unless there is some constraint which prevents endless bidding up of the prices of consumption goods and assets then prices are not determinate. I hold that inequality is a necessary (but not necessarily sufficient) such constraint.

2. "which cannot be ironed out by social policy because doing so raises demand above the ability for the real economy to supply" - this seems a key step that could be expanded rather.

Real GDP is essentially fully correlated with total energy usage, as I just pointed out on the if Anyone's Interested Thread. Therefore real GDP cannot be raised in the absence of an increased energy flux.

If an available free energy gradient is present and is underutilised then it IS possible to raise demand by policy however this policy will raise demand not by decreasing inequality, but by accommodating a greater level of absolute inequality. In fact in general, in the presence of such an underutilised gradient the economy will find ways to use it without needing policy guidance, assuming that the basic technical and institutional capabilities (such as credit or money creation) are present.

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Yes, the opposite of price stability. Prices cannot be purely determined by a quantity of money without knowing the velocity of the money. The velocity is essentially unconstrained except by inequality. Additionally, in the presence of a system of credit creation, or in the presence of a system which can create money (by printing it, or say be declaring some new metal coinage with a particular image minted on it to be money as in the middle ages), these monetary aggregates cannot themselves be the causal factor in a determinate price level. Unless there is some constraint which prevents endless bidding up of the prices of consumption goods and assets then prices are not determinate. I hold that inequality is a necessary (but not necessarily sufficient) such constraint.

Thanks yes i get the energy limit. I still dont quite see what you mean by "indeterminate prices". the opposite of stability - volatility? endless bidding up - ridiculously high? To me "indeterminate" suggests more like "unknowable".

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Thanks yes i get the energy limit. I still dont quite see what you mean by "indeterminate prices". the opposite of stability - volatility? endless bidding up - ridiculously high? To me "indeterminate" suggests more like "unknowable".

yes, endlessly bid up. A perfectly equal cash society would experience very significant inflation, for a short time until it became unequal again.

I think society approached such a point of 'destabilising equality' in the late 60's which was part of the reason for the subsequent inflation problems and why they were only conquered when thatcher and reagan had broken the Unions. The volcker interest rate hikes prior to busting labour power only made the problem worse by increasing velocity of money.

This was not the only input into the 70s 'flation - there were energy and demographic factors too. But it remains a fact that inflation was not brought under control properly until the unions were destroyed and the financial liberation of the 80s had succeeded in re-establishing prior levels of inequality.

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yes, endlessly bid up. A perfectly equal cash society would experience very significant inflation, for a short time until it became unequal again.

I think society approached such a point of 'destabilising equality' in the late 60's which was part of the reason for the subsequent inflation problems and why they were only conquered when thatcher and reagan had broken the Unions. The volcker interest rate hikes prior to busting labour power only made the problem worse by increasing velocity of money.

This was not the only input into the 70s 'flation - there were energy and demographic factors too. But it remains a fact that inflation was not brought under control properly until the unions were destroyed and the financial liberation of the 80s had succeeded in re-establishing prior levels of inequality.

You did notice my point about all this being completely arbitary and optional, right?

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Yup.

So, i'll ask cos I am interested in your thoughts - do you have any information on the breaking points and thresholds for human beings under duress?

(Assuming that at some point the system will break as the cost of being delusional/forced wil be too high.)

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So, i'll ask cos I am interested in your thoughts - do you have any information on the breaking points and thresholds for human beings under duress?

No. I'm sure there are limits.

But this thread is about thermodynamics, not psychology. At least, not yet. Lets stick with the thermo for now shall we.

[Edit to add: I do agree that the state is going to have to shrink, Ultimately that is what this thread, as far as I am concerned, will turn out to be about. That shrinkage will make us all poorer materially, but confer some compensating benefits]

Edited by scepticus
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No. I'm sure there are limits.

But this thread is about thermodynamics, not psychology. At least, not yet. Lets stick with the thermo for now shall we.

[Edit to add: I do agree that the state is going to have to shrink, Ultimately that is what this thread, as far as I am concerned, will turn out to be about. That shrinkage will make us all poorer materially, but confer some compensating benefits]

As the thermo is irrelvent, and we have proved that - why bother?

We already know your basic assumptions are incorrect, so your theory is already gone.

Move on?

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