Friday, July 11, 2014
Feedback Relationships and Equal and Opposite Reactions Thwart Geometric Extrapolations. No Wonder When The News Media Says Scientists Say You Know For Sure They Don't know What They Are Talking About. Economic Science Suffers From The Same Malaise.
Economic Political Policy, Scientific Models of Expected Behavior and Actual Feed Back Italy Has Long Been a Country Famous for High Taxes Nobody Pays Lex Loeb Contributor Network . Most economic theory models are not complex enough to consider all of the implications and feed backs that will happen in the real world. Sometimes one goes to the bank of a river in the real world and observes that the water actually is flowing uphill in places because of obstructions in the river. Consistant Downstream flow is what can be expected but it will depend on a great number of variables. To make an accurate model as many if not all of the varialbes have to be put into the model from the beginning as potential assumptions with none left out. In the business of scientific modeling and economic modeling esepcially there is a tendency to leave a lot of the varibles that might have implications for major feedback mechanism because that ruins the elegance of the conclusions that those making the model want to demonstrate. A river running backwards is an anomaly and unuasual right? No it is actually very commonly found in rivers because of the nature of whorl pools and eddies. Anyone experienced as a river canoner knows it. People who live on rivers know it happens in places but back in the grand ivory towers where the most scientific modeling theme papers are composed it is not usually a big concern unless you might be in the civil engineering department. Models being produced are telling us all sorts of conflicting things are true in the field of economics and economic policy making . It becomes really dangerous to believe that just because a model gets published or becomes a popular idea that the implications of using it to improve the economy are better than ignoring it. A case in point is the infamous Italian Tax System which at times had some of the highest taxes imaginable in Europe that for the most part no one ever paid. The basic theory is that the higher the tax the more money a government will collect. It gets modeled on a super computer and sure enough , raise taxes and the government collects a lot more money. That is a fantasy in Italy and elsewhere. Raise the taxes high enough anywhere and they probably won't get paid. The one reason we still have illegal drug trade around the world, even in countries where the taxes are 100% confiscation as high as the death penalty over that is because those taxes can be avoided. You say those are penalties not taxes? There is no tax in any market place that is not seen as a penalty. Every tax is a cost on the balance sheet. The United States experimented with prohibition with an infinite tax on production and sales and that lead to a market feed back which ultimately paid no taxes with some of the larger Canadian outfits retaining market share long after prohibition ended. .