6 ms·

Taking multiple years to correct a critical shortage and then overcorrecting is not a good example of markets being efficient. Any kind of system that responds

Taking multiple years to correct a critical shortage and then overcorrecting is not a good example of markets being efficient. Any kind of system that responds to usage can do this, the criteria is about speed of correction, lack of oscillation, and avoidance of side effects.

Doxin 4y ago
It's clear, We need a PID controller running the markets. Only half joking.
- carlmr 4y ago
  Maybe we are doing PID, but we need anti-windup.
  - infogulch 4y ago
    I wasn't familiar with anti-windup, so I found https://www.scilab.org/pid-anti-windup-schemes https://www.scilab.org/pid-anti-windup-schemes that seems to cover the concept reasonably well. One thing I noticed is that smoothing functions that reduce overshooting the response also add some delay to the time taken to first reach the command threshold. This is interesting, if not quite surprising.
    - carlmr 4y ago
      >I wasn't familiar with anti-windup, so I found https://www.scilab.org/pid-anti-windup-schemes https://www.scilab.org/pid-anti-windup-schemes that seems to cover the concept reasonably well. It's one of the fundamental techniques to get PIDs to work properly IRL. I can't find it right now, but I remember having a cheat sheet with a lot of tricks to make PIDs work properly. As a control engineer you learn a lot of fancy techniques, of which you usually only use a few, but practical PID control is sadly not taught in most courses because it's basically a collection of hacks. If you know a little bit more about the system's behavior you can usually precalculate the optimal inputs and use the PID only for course correction, that often yields much better responses than what you can achieve with a controller alone. If your system is nonlinear, it might be useful to use gain scheduling to adapt the PID parameters to the setpoint region you're operating in. Switching behaviors in the system can also mess up your responses. Sometimes your system has a vibrating frequency that can lead to resonance in your control. You may need to filter that, too, maybe even with a sliding frequency window. E.g. when controlling a gearbox attached to a motor, you don't want to actuate at the motor's vibrating frequency. >smoothing functions that reduce overshooting the response also add some delay to the time taken It's not so surprising if you think about what a low pass filter does. By filtering out the high frequencies the response becomes more sluggish, meaning that your input to the PID is already delayed. This means your PID reacts more slowly.
- krasin 4y ago
  >We need a PID controller running the markets. Only half joking. See Gosplan ([1]). They kind of tried. It will work better with an implementation that has more silicon than humans, but it will still be miserable on the edges. 1. https://en.wikipedia.org/wiki/Gosplan https://en.wikipedia.org/wiki/Gosplan
  - s3000 4y ago
    For more silicon, see Project Cybersyn [1]. [1] https://en.wikipedia.org/wiki/Project_Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn
  - syntaxing 4y ago
    This is extremely interesting. Is there a good book you recommend on this topic?
    - krasin 4y ago
      One of the best minds of that epoch that worked on the problem was Leonid Kantorovich ([1]). From wikipedia: "He is regarded as the founder of linear programming. He was the winner of the Stalin Prize in 1949 and the Nobel Memorial Prize in Economic Sciences in 1975." In that respect, any book about linear programming is a good start. The problem with the approach used back in the time was a slow feedback loop (5-10 years) and inability to adjust to externalities, including technology changes. That should be possible to improve with our modern tech, but I am not aware of any good contemporary books about it - if someone knows one, I would appreciate a reference myself. Edit: from the CIA file on Kantorovich ([2]): "In addition to his mathematical research, Kantorovich has been directly involved in developing improved designs for high-speed digital computers, an activity apparently motivated by the Soviet Union's need for improved computers in solving large economic planning problems" " 1. https://en.wikipedia.org/wiki/Leonid_Kantorovich https://en.wikipedia.org/wiki/Leonid_Kantorovich 2. https://en.wikipedia.org/wiki/Leonid_Kantorovich#/media/File:Espionage_den04_40.png https://en.wikipedia.org/wiki/Leonid_Kantorovich#/media/File...
    - discarded1023 4y ago
      "Red Plenty" by Francis Spufford. Many pointers from Google: https://www.google.com/search?q=red+plenty https://www.google.com/search?q=red+plenty It's a fictionalised history of some Soviet economics. There's a chapter on Kantorovich (cf the sibling comment). It goes reasonably deep (not mathematically deep) and provides a lot of context. Great book from a great author. Don't be put off by the "Soviet" part -- it's very entertaining.
- beefield 4y ago
  I think we have something that should do the PID for overall economy. It's called The Central Bank, and it is a damn difficult job.
  - whatshisface 4y ago
    Imagine hooking every valve in an entire chemical plant to a single wheel.
    - marcinzm 4y ago
      The Central Bank is about hooking up a few valves and then predicting how every other valve's flow will react as a result. The Soviet system was closer to hooking up every single valve.
- AlgorithmicTime 4y ago
- jbn 4y ago
  heh, control theory as applied to economics... this is really what MIT's system dynamics is/was about IMHO. Forrester's world model was an attempt at that.
B1FF_PSUVM 4y ago
> speed of correction, lack of oscillation, and avoidance of side effects. Aka good, fast, cheap.
refurb 4y ago
Unless you have a crystal ball I’m not sure how one can do better? The alternative is forcing some slack in the supply chain but that comes at a significant cost to consumers. Not sure about you, but I’d rather pay less not more for things, even if it means a temporary price increase or even shortage.
- WastingMyTime89 4y ago
  > The alternative is forcing some slack in the supply chain but that comes at a significant cost to consumers. I’m amused by this comment. You think the squeeze and now the glut didn’t come at a significant cost to consumers and the economy as a whole? It seems pretty clear after the massive failure at the start of the pandemic that just-in-time went too far and there is not enough slack in the supply chain at all level. Even from a purely systemic look, the wild oscillation we see right now should be proof enough that the system is significantly under-dampened.
  - refurb 4y ago
    Compared to what? Paying 10% more for a product in perpetuity costs a lot more than a 12 to 24 month period where prices double. And for non-essential goods, the option is for some customers to simple delay purchase. And you’re forgetting it works in both directions. Consumers may see temporary high prices but they often see temporary low prices during supply chain recovery. And again, how do you accurately predict the future? Demand can double pretty quickly. Having 10% slack (and the cost of it) would have dampened higher prices somewhat, but now you’re paying higher prices all the time and slightly less high prices when things go sideways. Doesn’t seem like a good deal at all. I’d much prefer the free market approach where there are multiple actors each making different bets on future demand than some overarching rule about how future demand should be planned for (thats how we get famines). The producers who bet on increased demand (or shrinking supply from competitors) get handsomely rewarded for the bet.
    - stainforth 4y ago
      Hopefully we see a future with a. multiple actors and b. that they are making different bets
tomcam 4y ago
Markets are unpredictable. Side effects cannot be avoided. And while the situation is ugly, central planning has never made this kind of thing better.
- markdown 4y ago
  > central planning has never made this kind of thing better. If the Chinese central planner Xi had decided against a zero-covid policy in China, this thing would have been far better.
  - meitham 4y ago
    In the UK we have a fraction of the population of China, and we did half arsed lockdown and lost nearly quarter million lifes! Imagine the death count in China if they went Sweden mode! Their zero covid policy is an example of putting population ahead of economy and make every other nation jealous.
    - markdown 4y ago
      Except there's no such thing as a zero covid, anywhere. Eventually you get covid and if you're susceptible (mainly old), you die. But that's beside the point.
      - meitham 4y ago
        The goal of the lockdown is to contains spreads and reduce death, reduce the chance of giving the virus an open field to mutate and yield new variants. Of course it’s never going to be zero death, but their numbers fared better than even smaller nations https://www.worldometers.info/coronavirus/country/china/ https://www.worldometers.info/coronavirus/country/china/
        thrown_22 4y ago
        Their released numbers. Least we forget this is the country that declared war on sparrows and lost.
Ekaros 4y ago
Is multiple years actually bad? We are talking about real economy and real tangible things here. With lead times involved. 2-3 years doesn't actually seem that long in that context.
- sudosysgen 4y ago
  Yes, it is bad. 2-3 years is a long time. It is possible to make real tangible at great speed, but also at great cost. It's likely this would have been better than stalling the economy.

Doxin 4y ago

It's clear, We need a PID controller running the markets. Only half joking.

carlmr 4y ago
Maybe we are doing PID, but we need anti-windup.
- infogulch 4y ago
  I wasn't familiar with anti-windup, so I found https://www.scilab.org/pid-anti-windup-schemes https://www.scilab.org/pid-anti-windup-schemes that seems to cover the concept reasonably well. One thing I noticed is that smoothing functions that reduce overshooting the response also add some delay to the time taken to first reach the command threshold. This is interesting, if not quite surprising.
  - carlmr 4y ago
    >I wasn't familiar with anti-windup, so I found https://www.scilab.org/pid-anti-windup-schemes https://www.scilab.org/pid-anti-windup-schemes that seems to cover the concept reasonably well. It's one of the fundamental techniques to get PIDs to work properly IRL. I can't find it right now, but I remember having a cheat sheet with a lot of tricks to make PIDs work properly. As a control engineer you learn a lot of fancy techniques, of which you usually only use a few, but practical PID control is sadly not taught in most courses because it's basically a collection of hacks. If you know a little bit more about the system's behavior you can usually precalculate the optimal inputs and use the PID only for course correction, that often yields much better responses than what you can achieve with a controller alone. If your system is nonlinear, it might be useful to use gain scheduling to adapt the PID parameters to the setpoint region you're operating in. Switching behaviors in the system can also mess up your responses. Sometimes your system has a vibrating frequency that can lead to resonance in your control. You may need to filter that, too, maybe even with a sliding frequency window. E.g. when controlling a gearbox attached to a motor, you don't want to actuate at the motor's vibrating frequency. >smoothing functions that reduce overshooting the response also add some delay to the time taken It's not so surprising if you think about what a low pass filter does. By filtering out the high frequencies the response becomes more sluggish, meaning that your input to the PID is already delayed. This means your PID reacts more slowly.
krasin 4y ago
>We need a PID controller running the markets. Only half joking. See Gosplan ([1]). They kind of tried. It will work better with an implementation that has more silicon than humans, but it will still be miserable on the edges. 1. https://en.wikipedia.org/wiki/Gosplan https://en.wikipedia.org/wiki/Gosplan
- s3000 4y ago
  For more silicon, see Project Cybersyn [1]. [1] https://en.wikipedia.org/wiki/Project_Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn
- syntaxing 4y ago
  This is extremely interesting. Is there a good book you recommend on this topic?
  - krasin 4y ago
    One of the best minds of that epoch that worked on the problem was Leonid Kantorovich ([1]). From wikipedia: "He is regarded as the founder of linear programming. He was the winner of the Stalin Prize in 1949 and the Nobel Memorial Prize in Economic Sciences in 1975." In that respect, any book about linear programming is a good start. The problem with the approach used back in the time was a slow feedback loop (5-10 years) and inability to adjust to externalities, including technology changes. That should be possible to improve with our modern tech, but I am not aware of any good contemporary books about it - if someone knows one, I would appreciate a reference myself. Edit: from the CIA file on Kantorovich ([2]): "In addition to his mathematical research, Kantorovich has been directly involved in developing improved designs for high-speed digital computers, an activity apparently motivated by the Soviet Union's need for improved computers in solving large economic planning problems" " 1. https://en.wikipedia.org/wiki/Leonid_Kantorovich https://en.wikipedia.org/wiki/Leonid_Kantorovich 2. https://en.wikipedia.org/wiki/Leonid_Kantorovich#/media/File:Espionage_den04_40.png https://en.wikipedia.org/wiki/Leonid_Kantorovich#/media/File...
  - discarded1023 4y ago
    "Red Plenty" by Francis Spufford. Many pointers from Google: https://www.google.com/search?q=red+plenty https://www.google.com/search?q=red+plenty It's a fictionalised history of some Soviet economics. There's a chapter on Kantorovich (cf the sibling comment). It goes reasonably deep (not mathematically deep) and provides a lot of context. Great book from a great author. Don't be put off by the "Soviet" part -- it's very entertaining.
beefield 4y ago
I think we have something that should do the PID for overall economy. It's called The Central Bank, and it is a damn difficult job.
- whatshisface 4y ago
  Imagine hooking every valve in an entire chemical plant to a single wheel.
  - marcinzm 4y ago
    The Central Bank is about hooking up a few valves and then predicting how every other valve's flow will react as a result. The Soviet system was closer to hooking up every single valve.
AlgorithmicTime 4y ago
jbn 4y ago
heh, control theory as applied to economics... this is really what MIT's system dynamics is/was about IMHO. Forrester's world model was an attempt at that.

B1FF_PSUVM 4y ago

> speed of correction, lack of oscillation, and avoidance of side effects. Aka good, fast, cheap.

refurb 4y ago

Unless you have a crystal ball I’m not sure how one can do better? The alternative is forcing some slack in the supply chain but that comes at a significant cost to consumers. Not sure about you, but I’d rather pay less not more for things, even if it means a temporary price increase or even shortage.

WastingMyTime89 4y ago
> The alternative is forcing some slack in the supply chain but that comes at a significant cost to consumers. I’m amused by this comment. You think the squeeze and now the glut didn’t come at a significant cost to consumers and the economy as a whole? It seems pretty clear after the massive failure at the start of the pandemic that just-in-time went too far and there is not enough slack in the supply chain at all level. Even from a purely systemic look, the wild oscillation we see right now should be proof enough that the system is significantly under-dampened.
- refurb 4y ago
  Compared to what? Paying 10% more for a product in perpetuity costs a lot more than a 12 to 24 month period where prices double. And for non-essential goods, the option is for some customers to simple delay purchase. And you’re forgetting it works in both directions. Consumers may see temporary high prices but they often see temporary low prices during supply chain recovery. And again, how do you accurately predict the future? Demand can double pretty quickly. Having 10% slack (and the cost of it) would have dampened higher prices somewhat, but now you’re paying higher prices all the time and slightly less high prices when things go sideways. Doesn’t seem like a good deal at all. I’d much prefer the free market approach where there are multiple actors each making different bets on future demand than some overarching rule about how future demand should be planned for (thats how we get famines). The producers who bet on increased demand (or shrinking supply from competitors) get handsomely rewarded for the bet.
  - stainforth 4y ago
    Hopefully we see a future with a. multiple actors and b. that they are making different bets

tomcam 4y ago

Markets are unpredictable. Side effects cannot be avoided. And while the situation is ugly, central planning has never made this kind of thing better.

markdown 4y ago
> central planning has never made this kind of thing better. If the Chinese central planner Xi had decided against a zero-covid policy in China, this thing would have been far better.
- meitham 4y ago
  In the UK we have a fraction of the population of China, and we did half arsed lockdown and lost nearly quarter million lifes! Imagine the death count in China if they went Sweden mode! Their zero covid policy is an example of putting population ahead of economy and make every other nation jealous.
  - markdown 4y ago
    Except there's no such thing as a zero covid, anywhere. Eventually you get covid and if you're susceptible (mainly old), you die. But that's beside the point.
    - meitham 4y ago
      The goal of the lockdown is to contains spreads and reduce death, reduce the chance of giving the virus an open field to mutate and yield new variants. Of course it’s never going to be zero death, but their numbers fared better than even smaller nations https://www.worldometers.info/coronavirus/country/china/ https://www.worldometers.info/coronavirus/country/china/
      - thrown_22 4y ago
        Their released numbers. Least we forget this is the country that declared war on sparrows and lost.

Ekaros 4y ago

Is multiple years actually bad? We are talking about real economy and real tangible things here. With lead times involved. 2-3 years doesn't actually seem that long in that context.

sudosysgen 4y ago
Yes, it is bad. 2-3 years is a long time. It is possible to make real tangible at great speed, but also at great cost. It's likely this would have been better than stalling the economy.