Apr. 26th, 2012

holdthesky: (Default)
Hello everyone. I've not had time to finish a few things that I've started yet, so just a quick passive aggressive post filed under "problems I have with people who aren't here's arguments about things".

Aren't "cyclical" and "structural" deficit just hidden astrology? I think it's amazing how quickly, when some terrible problem occurs, folk find the sheep and the goats in it. I'm sure you've seen the Alan Partridge "good AIDS / bad AIDS" sketch, which I think really hit the nail on the head for the way folk thought in the late eighties about that terrible disease. Then, recently, there's been good and bad carbon dioxide. Even before the world has turned into 1976 stamping into our faces forever, the legally inclined have, -- Canute like, -- carefully delineated bad carbon dioxide and good, as if radiative forcing gave a damn. It's good to know that the arguments in the compensation tribunal are being rehearsed well in advance of any catastrophe and, it seems, largely as an alternative to preventing it.

Most recently, the same Petrine reckoning has been applied to government debt as it's loomed, monstrously underlit, on the horizon. Now we have good debt and bad debt, the good named "cyclical" debt, and the bad "structural". The idea is this. Cyclical debt is debt which you take on at lean points in a business cycle and will repay in fatter times, whereas structural debt is everything else: not only a trivial result of passing economic wind, wave and tide but reflecting some deeper aspect of the economy. Cyclical debt is good, folk say, because it can landscape the economic road by a processes of earth-moving and steam-rollering, whereas structural debt is a start of the downward spiral to living under a bridge, swapping meths for mouth-wash with the Weimar Republic and Azerbaijan.

At the moment I think this argument is rubbish. Here's why.

I don't think economic cycles exist. I've had a look round and nobody else seems convinced that they do either. Sure economies go up and down but I don't see any evidence out there for periodicity or symmetry of any kind. Lots of people have predicted these things, regular predictable cycles, chart-gazing types, -- one step up the ladder from people who auger biorhythms and the bible-aleph-counters, -- but they've never really convinced anyone of their schemes, as far as I can tell.

I think the reason that it's important to have quite well-built cycles if we're to take the good-debt/bad-debt argument seriously is that you rely on predictions of future growth to separate good from bad.

It's easy in retrospect to find cycles: you look at the trough and the following peak, get out a ruler, try a linear regression, say integrate and say "this much" offsets "that much" and you're done.

But you don't have the advantage of seeing the trough and the following peak when you're in the present. You only have a trough, and need to predict the peak to follow, which the debt you are considering should be paid back within. Debt which can be paid back in coming better times being "cyclical" (hurrah!) and the rest "structural" (boo hiss!). That's the problem with doing this kind of thing, you get the trough first.

I've got a book at home which is full of one-dimensional random walks due to coin tosses. One day, I might ask ceb if she would make a book for me containing just that, just loads of random walks. I tell you, you can look at the end of those graphs and see cyclical and structural deficit everywhere, when actually each is generated by tossing a coin and the line going up one or down one at each step. (Quick webcam shot of one such below the cut).

When it comes down to it, folk are trying to convince us that "cyclical" is being used as something which is somehow empirically determinable and essential (as it would be if the economy had a stable, alpine Fourier transform) and therefore can be used, at any time, to predict debt that would be soon paid back.

On the other hand, looking at the use I've seen folk making of the terms for economic planning, it seems to be actually being used as that debt which we will, in the end, in circumstances which we cannot predict, actually happen to be pay back in good time. Everyone knows that this is the kind of debt which you should take on, the difficulty is working out what that actually amounts to, given the unpredictable hand of fate. Sure the economy goes up and down, but that's not enough of a cycle to be able to distinguish between "good" and "bad" debt in this way which requires too much tea-leaf reading to be any use at all.

One salutary lesson from the random coin-toss, for example, is that an arbitrary sequence of coin tosses will, on average, zero-cross for the last time less than half-way through the sequence: not easy to extract cycles from that.

So I think these terms "cyclical" and "structural" are being used to hide something that has about as much predictive power as a late night tarot-card hotline: a prediction of the future based upon data only available when that future has come to pass. It's just day-trading for the economy.

Manipulating the Environment: I have a problem with the word environment, too. (Look who's being contrary today!).

Here's my problem with it: I think it's a taboo word, a word used to avoid talking about the thing you're talking about. The word means lots of things but they're all unified by the idea that there's some kind of system, or focus of interest, and then there's the environment, which is the other stuff. In the environment-environment the focus is human society, folk themselves, the market of goods and words, and so on, and the environment is the other stuff, birds, hippopotamouses, argon, the Mohorovicic Discontinuity, etc.

Then there's the economic environment, too, which is everything that happens that isn't a part of your own finances, or business's finances, or whatever.

Do you see what I mean? People say environment when they want to talk about a taboo, so they actually talk about the shape of the thing which is everything which is not the thing which they dare not talk about, and by defining the boundary of everything that is not there, -- by shaping the negative space, -- they talk about what they daren't.

You can't manipulate an environment almost by definition: if you manipulate it it becomes a part of the system. There hasn't been an environment since there was wilderness and that wilderness had no name.

Concern about what people call the environment is a jolly good thing, I just wish people talked about the limits of civilization, the extent of humanity's dominion, the boundaries of security, our reliance on uncivilized systems, the defence of the appropriate extent of speciesism, natural selections and ethical beings, and so on, rather than colouring in all the negative space to have a very ham-fisted argument.

In the (oft repeated) words of my English teacher: "Where did I put my valium?"

nn

get a wiggle on )

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