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Date:         Wed, 27 Jan 1993 21:38:00 GMT
From:         "Robert K. Clark" <0004912499@MCIMAIL.COM>
Subject:      ECONOMICS & PCT - RKC

A recent post (930122.1658) touched on the subject of economics.  This is
surely an area in which PCT can be useful.  But it's not easy.  Recent
discussions have found the number of degrees of freedom involved with
control of finger-hand-arm systems to be very large when broken down into
the smallest pieces.  US Economics involves some 250 million individual
hierarchical control systems -- degrees of freedom?  WOW!

In the early 60's I, together with five other Radiological Physicists, had
formed Radiation Control, Inc.  One of their wives was a widely recognized
economist, leading to an opportunity to raise questions about negative
feedback systems in economic theory.  I was told this was a familiar set
of concepts, resulting in the development of large arrays of interacting
systems, including both positive and negative feedback as well as
cross-coupling.  It is my impression that current economic models are
derived from these concepts.  But they don't seem to work very well.
Perhaps the hierarchical concept needs to be added somewhere.  Or maybe
individual motivations, knowledge and skills should be included.  A BIG
JOB!

I think it was in the early 70's -- I was with Mosler Safe as Manager of
Applied Research -- I ran across "Industrial Dynamics," Jay W Forrester,
MIT Press, Fourth Printing, 1965.  This book traces a series of decisions
made by a generalized manufacturing company resulting in oscillation due
to mismanaged temporal variables -- not conflict.  He discusses several
interesting topics, but his major work consists of detailed digitized
treatment of the resulting interactions.  When I finally worked my way
through the details, I realized that it could have been greatly simplified
by using the standard second order differential equation and its
solutions.  This kind of thing could be revised and up-dated to good
advantage.  Once again, application of the hierarchical concept would
surely be very helpful.

In this connection, a column in the Wall Street Journal seems worth
quoting.

"In other words, those who haven't learned the mistakes of the past are
about to repeat them.  The Clinton administration seems poised to embark
on yet another high-tax austerity program that will neither move the
economy toward 4% growth nor substantially narrow the deficit.

"Throughout economic history this truth remains: When something is taxed
more, we get less of it.  When income, investment and sales are taxed
more, we have less of them.  When after-tax rewards are reduced,
productivity and risk-taking diminish.  When retail items are taxed more
(including gasoline), fewer sales result.  When the cost of doing business
rises, profits decline, along with output and employment." The Deficit
Obsession, Lawrence A Kudlow (Chief Economist at Bear Stearns.) Wall
Street Journal, Monday, January 25, 1993, p A14.

Projects such as these directly involve working with higher order systems,
particularly Sixth Order and its Modes.  Many of these studies are needed.

Regards,
Bob Clark
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU