6 ms·

some transactions are zero some (pareto optimal) and some are not (nash equilibria). The easiest observable way to see that the economy is not zero sum once yo

some transactions are zero some (pareto optimal) and some are not (nash equilibria). The easiest observable way to see that the economy is not zero sum once you take into account delta T (time) is that the economy grows and can grow both faster or slower than population growth. If it was truly zero-sum in aggregate, the size of the economy and wealth would always be strictly proportional to population.

neonological 6y ago
Does this model include energy that continuously decays into higher entropy states? You need to model energy alongside an economy and population. Logically, If you limit energy, you limit the size of the economy. Therefore, energy is an important variable in any economic model. To not include such a factor in your model means your model is inaccurate.
- incongruity 6y ago
  1) All models are wrong but some are useful. 2) What you are espousing here really isn’t all that useful other than as a way of playing “ooh gotcha” in arguments with others 3) Energy is only zero sum in closed systems and the earth is not a closed system. The overwhelming majority of our energy comes from a source outside our ecosystem and a non-zero amount also escapes from our planet. Ergo, it’s not a closed system and your zero sum notions do not necessarily always apply.
  - neonological 6y ago
    1. Except your model is missing an extremely important figure. Modern economies thrive off of the energy variable. This is not some missing detail, it is critical. 2. No it is useful and highly practical. See here: https://news.ycombinator.com/item?id=26352352 https://news.ycombinator.com/item?id=26352352 3. Energy is limited in the amount that arrives from the sun per day and the amount we have the ability to extract from the earth and the sun and the wind per day. The limit is evident by the fact you have to pay for it. If it were unlimited, your energy bill would be zero. There does exist products on earth that while not technically unlimited can be practically considered unlimited. One such example is the air you breath. Energy is NOT an example of this.
  - hippira 6y ago
    I want to chip in here and say that accouting for limited resources in an economic model is definitely useful, because the negate ( not accounting for limited resources ) has led to the environmental disaster that we find ourselves in right now.
    - incongruity 6y ago
      That’s an eminently reasonable proposition but that is far far from insisting on dogmatic application of a zero-sum rule where it demonstrably does not apply. One of the most interesting proofs of this is the measurable change in the Earth’s albedo due to climate change (and the downward spiral that creates). If we can demonstrate notable changes in how much energy is retained or lost, globally, that destroys the notion of this being a closed system. Similarly, the sun itself is known to be variable in its total energy output so there is no reasonable assurance of a constant amount of energy into or out of our global system. We can’t really control how much energy is produced but it is false to assert that all energy is used as well - there is notable margin for good or for bad here - and because of that, the zero-sum claim is just silly.
      - neonological 6y ago
        What confuses people is the fact that for many things if energy isn’t used it is actually completely lost, hence people believe that this “lost” energy constitutes a possible unlimited potential supply. Sure it can constitute such a thing if you can find a way to utilize this lost energy. Currently there’s no way to utilize hence it’s not a factor. Ephemeral supply and wasted energy only limits supply even further. Here’s a very simple way to think about it that gets rid of the associated complexities : The fact that you pay for energy and the fact that energy outages can occur when usage exceeds supply means that energy is limited and therefore zero sum. In fact the attempt to try to reason your way to another conclusion is the silly endeavor. The economy is zero sum because the actual key measurement of all economic goods is the lowering of entropy which is directly done by energy utilization which is directly limited.
        malandrew 6y ago
- malandrew 6y ago
  > Does this model include energy that continuously decays into higher entropy states? Nope, it doesn't. You're not wrong. You're just being pedantic. For all intents and purposes for the discussion we're having here this continuous decay into higher entropy states is a non-issue. Within the sphere of the humans involved in free exchange, it's not zero sum even if it is zero sum when you take into account the entirety of the physical world.
  - neonological 6y ago
    I'm not being pedantic. I think it's reasonable to involve all humans effected by an exchange. If a corporation purchases water rights in an area from the government and suddenly deprives the poor farmers in the area from using the water to grow their food does this make the farmers a negligible part of the equation? In my opinion: No. You can create your box so that it only fits the participants of the transaction but that would be a fantasy. There are great real world zero sum costs to almost everything in an economy.
    - malandrew 6y ago
      Your examples are pretty much strictly isolated to limited extractable natural resources. This is but a tiny sliver of all economic activity.
      - neonological 6y ago
        No. That’s just one example in response to your attempted boxing of all economic consequences into the “participants” of a transaction. The example falsifies your claim from ever being true. My claim is that all economic activity is tied to energy and that energy is limited and usage of said limited energy in one place prevents usage elsewhere. Try to find an example that falsifies my claim. You can’t.
chordalkeyboard 6y ago
Pareto improvements are positive sum.
- malandrew 6y ago
  Thanks for the correction. That said I would say "pareto improvements can be positive sum" since they can be but aren't necessarily so.
  - chordalkeyboard 6y ago
    My understanding is that pareto improvements are positive sum by definition. >> Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose. [0] Neonological seems to believe that pareto improvements are not possible because of negative externalities. Maybe they are right but positive externalities also need to be accounted for. https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency
    - neonological 6y ago
      One way to see that the externality is overall negative is to make a small model of the economy with even tighter limits on the energy resource. You can literally hold this model in your head. We both agree that energy is a limited resource and that usage of a limited resource prevents others from using that resource and is thus zero sum. Just replace all available energy with a free triple A battery gifted to you by the government per day. That battery can’t even push your car 100 meters. If you can’t drive then the suburban layout of US cities can’t even function. Every aspect of the economy will grind to a near standstill. Energy is the primary resource that drives everything in an economy, everything. Because energy is limited the game in every economy is in actuality overall zero sum. Because energy is relatively abundant right now, certain models of the economy sort of do work for certain scenarios when they don’t account for energy. But I think these models are still bad because, practically, even differences in energy utilization correlate with how technically advanced an economy is. Once energy is used up, then all economies are basically dead. There is no positive externality here. Every economic transaction involves energy and is thus zero sum. If the United States uses up all the oil in the world to build its advanced economy then other countries and people in the future and past cannot build that same economy because there is no oil. Zero sum.

neonological 6y ago

Does this model include energy that continuously decays into higher entropy states? You need to model energy alongside an economy and population. Logically, If you limit energy, you limit the size of the economy. Therefore, energy is an important variable in any economic model. To not include such a factor in your model means your model is inaccurate.

incongruity 6y ago
1) All models are wrong but some are useful. 2) What you are espousing here really isn’t all that useful other than as a way of playing “ooh gotcha” in arguments with others 3) Energy is only zero sum in closed systems and the earth is not a closed system. The overwhelming majority of our energy comes from a source outside our ecosystem and a non-zero amount also escapes from our planet. Ergo, it’s not a closed system and your zero sum notions do not necessarily always apply.
- neonological 6y ago
  1. Except your model is missing an extremely important figure. Modern economies thrive off of the energy variable. This is not some missing detail, it is critical. 2. No it is useful and highly practical. See here: https://news.ycombinator.com/item?id=26352352 https://news.ycombinator.com/item?id=26352352 3. Energy is limited in the amount that arrives from the sun per day and the amount we have the ability to extract from the earth and the sun and the wind per day. The limit is evident by the fact you have to pay for it. If it were unlimited, your energy bill would be zero. There does exist products on earth that while not technically unlimited can be practically considered unlimited. One such example is the air you breath. Energy is NOT an example of this.
- hippira 6y ago
  I want to chip in here and say that accouting for limited resources in an economic model is definitely useful, because the negate ( not accounting for limited resources ) has led to the environmental disaster that we find ourselves in right now.
  - incongruity 6y ago
    That’s an eminently reasonable proposition but that is far far from insisting on dogmatic application of a zero-sum rule where it demonstrably does not apply. One of the most interesting proofs of this is the measurable change in the Earth’s albedo due to climate change (and the downward spiral that creates). If we can demonstrate notable changes in how much energy is retained or lost, globally, that destroys the notion of this being a closed system. Similarly, the sun itself is known to be variable in its total energy output so there is no reasonable assurance of a constant amount of energy into or out of our global system. We can’t really control how much energy is produced but it is false to assert that all energy is used as well - there is notable margin for good or for bad here - and because of that, the zero-sum claim is just silly.
    - neonological 6y ago
      What confuses people is the fact that for many things if energy isn’t used it is actually completely lost, hence people believe that this “lost” energy constitutes a possible unlimited potential supply. Sure it can constitute such a thing if you can find a way to utilize this lost energy. Currently there’s no way to utilize hence it’s not a factor. Ephemeral supply and wasted energy only limits supply even further. Here’s a very simple way to think about it that gets rid of the associated complexities : The fact that you pay for energy and the fact that energy outages can occur when usage exceeds supply means that energy is limited and therefore zero sum. In fact the attempt to try to reason your way to another conclusion is the silly endeavor. The economy is zero sum because the actual key measurement of all economic goods is the lowering of entropy which is directly done by energy utilization which is directly limited.
      - malandrew 6y ago
malandrew 6y ago
> Does this model include energy that continuously decays into higher entropy states? Nope, it doesn't. You're not wrong. You're just being pedantic. For all intents and purposes for the discussion we're having here this continuous decay into higher entropy states is a non-issue. Within the sphere of the humans involved in free exchange, it's not zero sum even if it is zero sum when you take into account the entirety of the physical world.
- neonological 6y ago
  I'm not being pedantic. I think it's reasonable to involve all humans effected by an exchange. If a corporation purchases water rights in an area from the government and suddenly deprives the poor farmers in the area from using the water to grow their food does this make the farmers a negligible part of the equation? In my opinion: No. You can create your box so that it only fits the participants of the transaction but that would be a fantasy. There are great real world zero sum costs to almost everything in an economy.
  - malandrew 6y ago
    Your examples are pretty much strictly isolated to limited extractable natural resources. This is but a tiny sliver of all economic activity.
    - neonological 6y ago
      No. That’s just one example in response to your attempted boxing of all economic consequences into the “participants” of a transaction. The example falsifies your claim from ever being true. My claim is that all economic activity is tied to energy and that energy is limited and usage of said limited energy in one place prevents usage elsewhere. Try to find an example that falsifies my claim. You can’t.

chordalkeyboard 6y ago

Pareto improvements are positive sum.

malandrew 6y ago
Thanks for the correction. That said I would say "pareto improvements can be positive sum" since they can be but aren't necessarily so.
- chordalkeyboard 6y ago
  My understanding is that pareto improvements are positive sum by definition. >> Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose. [0] Neonological seems to believe that pareto improvements are not possible because of negative externalities. Maybe they are right but positive externalities also need to be accounted for. https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency
  - neonological 6y ago
    One way to see that the externality is overall negative is to make a small model of the economy with even tighter limits on the energy resource. You can literally hold this model in your head. We both agree that energy is a limited resource and that usage of a limited resource prevents others from using that resource and is thus zero sum. Just replace all available energy with a free triple A battery gifted to you by the government per day. That battery can’t even push your car 100 meters. If you can’t drive then the suburban layout of US cities can’t even function. Every aspect of the economy will grind to a near standstill. Energy is the primary resource that drives everything in an economy, everything. Because energy is limited the game in every economy is in actuality overall zero sum. Because energy is relatively abundant right now, certain models of the economy sort of do work for certain scenarios when they don’t account for energy. But I think these models are still bad because, practically, even differences in energy utilization correlate with how technically advanced an economy is. Once energy is used up, then all economies are basically dead. There is no positive externality here. Every economic transaction involves energy and is thus zero sum. If the United States uses up all the oil in the world to build its advanced economy then other countries and people in the future and past cannot build that same economy because there is no oil. Zero sum.