New owners of eBaum's World fire ebaum and his staff

Well, lots of people are now coding in Ruby/Python/etc instead of Java/PHP/C++/etc.

(Written only mostly tongue in cheek)

Are every one of today's richest Americans the same individuals who were the richest Americans eight years ago? http://allfinancialmatters.com/2007/03/12/who-was-or-is-the-...

the people in the bottom 20% 10 years ago are in most cases not the same people that are in the bottom 20% today. This is the same misconception inherent in the argument that "minimum wage workers" have not gotten a raise in [X] number of years. It is highly unusual that people making minimum wage at one point in time are the same people that are making minimum wage many years later. The same is true for net worth, which almost as a rule takes time to acquire. Many of the people in the bottom 20% 10 years ago were just starting out or fairly young, and now, 10 years later, are much higher in the percentile rankings. I know it is true for me - I had negative net worth 10 years ago. So it is completely rational to expect that to some extent the lower tiers don’t grow as much as the upper tiers - you’re not taking the age/time factor into consideration.

I would be interested to see the same numbers broken down by age group - for example, how is the net worth of people in the bottom 20% and top 20% changing just for people in the 40-45 age group.

http://www.urban.org/Publications/406722.html

The [U.S. Department of Treasury (1992)] study uses income tax return data between 1979 and 1988, tracking the adjusted gross income of a group of households that paid income taxes in all ten years examined. The study finds that 86 percent of individuals who were in the bottom quintile in 1979 had moved up by 1988. An individual in the bottom quintile in 1979, in fact, was more likely in 1988 to be found in the top quintile than in the bottom one. [...]

Cox and Alm (1996) [...] use the PSID to examine individual incomes between 1975 and 1991 for individuals who were age 16 or over in 1975. 17 They find that only 5.1 percent of individuals in the lowest quintile in 1975 remain in that quintile in 1991, while 29 percent of such individuals are in the highest quintile in 1991.

But the economy is mind-bogglingly complex and nuanced, full of billions of actors who act rationally and irrationally. Lately we have computer systems thrown into the mix that move billions of dollars around without a human decision involved.

The one thing economists can say is that people usually act in their own best interests. If there is a loophole to be found, people will find it. However smart the person coming up with the rules might be, those billions of people, due to the powers of chaos and sheer numbers, will always be smarter. You can't engineer billions of people like you would a skyscraper.

The logical conclusion here is to that simple systems that are easy to understand (and likewise easy to understand how to game) are better than complex systems that still get gamed but nobody can easily figure out why.

However there is a second camp that says that the economy is like a big science experiment: pull a rope here and see what happens over there. Sure -- things might not work as expected, but somebody has to be in charge and that's how science experiments work. After all, as you pointed out, just how difficult can it be? What do those guys do all day?

The problem is that the social engineering camp always seems to have the same problem as the laissez-faire camp -- there have been panics (recessions) for as far back as we have records. So policy doesn't seem to matter that much (or if it does, we haven't hit the magic combination yet). In fact, because of the points in the first two paragraphs here, there's good evidence that the more we muck around with the economy, the worse we actually make it. There is a large and growing faction of economists that believe that the actions of the Federal Reserve (and to some extent Hoover and FDR) made the panic of 1929 into a full-blown depression -- turned something that would have taken a year or three to recover from and turned it into the biggest panic the country has ever seen.

So no, economics are chaotic, not Newtonian. the laws that apply are myriad, complex, and currently non-understandable -- and they apply at the individual rather than system level. That's why economics are so much fun (or suck so much, depending on your viewpoint.)

Hey -- if it were easy, everybody would be doing it.

Refusing to let someone get their files from a computer is more like stealing (though since the computer itself is rightfully owned by the new owners of ebaumsworld, it's certainly arguable that it's just rude, not stealing). A file is part of the computer it's on.

Second -- agreed. People act in what they perceive to be their best interests. We initially made the mistake of assuming this was what was actually in their best interests, but that seems more doubtful. (Unless acting strictly based on perception of best interests is the optimal condition. Then we're back to square one.)

Third -- agreed. It's to some degree faith-based. Climatology is faith-based as well, and for the same reasons. There are simply too many variables and the system is simply too huge and dynamic to be Newtonian. You get a bunch of smart guys, you make a bunch of models, and you take measurements, all the time having some "group consensus" that has as much to do with science as glow-in-the-dark watches have to do with nuclear propulsion.

I've slung some code for Greenspan and the FRB BOG (Board of Governors). The people there are all highly professional and tend to focus much more on facts than theories. But even then, in my opinion, there's no science going on. It's a lot of educated guesswork.

I wouldn't give up on the thought experiments such as what the Fed did during the Great Depression or what Carter might or might not have done. Thought experiments are powerful tools, and can lead to advances in science. To the degree that faith encourages creative explanations of what we don't know, it's a good thing. To the degree that it shuts out alternative answers, it's an obstacle. That's true in a lot of areas, not just economics.