Averting worse economic collapses

Jun 25, 2013
Averting worse economic collapses

A new study shows how specific parameters can help us steer clear of tipping points in dynamic systems, such as entire economies.

By managing macro-economic parameters, scientists believe that—unlike previously thought—it is possible to steer an economy around irreversible changes in its complex dynamics and avert potential economic disasters. These findings, about to be published in EPJ B, stem from the theoretical work of Michael Harré and colleagues at the Complex Systems Group at the University of Sydney, Australia.

Physicists have a long experience of using to study equilibrium points and small fluctuations in large numbers of interacting particles under varying pressure and . By applying statistical-mechanics methods to theory, it is possible to describe the strategic interactions between, say, businesses which are influenced by their own incentives as well as the incentives of third parties.

By changing a macro-economic parameter like tax rates, previous research has shown the system will usually move away a little from where it had settled, but not much. Their new results show that such optimisation can produce a tipping point where a change in the tax regime, for example, will cause the whole economy to suddenly collapse.

Harré and colleagues found that it is possible to find a steady state in the specific scenario where the contributions each business makes to the whole economy are maximised in terms of financial return. And even if an economy is drifting inexorably towards a tipping point, they showed that small perturbations of the system parameters can move an economy around a tipping point, thus averting it.

The ability to exert control on economies depends on having sufficient control of the system parameters—potentially addressed by , and knowing where the economy is relative to these tipping points—provided by recent measuring techniques.

Explore further: Research reveals Europe winning war on undeclared work

More information: M. S. Harré, S. R. Atkinson, and L. Hossain (2013), Simple Nonlinear Systems and Navigating Catastrophes, European Physical Journal B, DOI 10.1140/epjb/e2013-31064-x

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User comments : 23

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Stephen_Crowley
1.6 / 5 (7) Jun 25, 2013
Dug
2.3 / 5 (3) Jun 25, 2013
"The ability to exert control on economies depends on having sufficient control of the system parameters—potentially addressed by empirical research, and knowing where the economy is relative to these tipping points—provided by recent measuring techniques."

Sure.

Urgelt
4.2 / 5 (5) Jun 25, 2013
In the model:

1. People are rational actors.

2. All actors possess complete information affecting their decisions (it's a 'level information playing field').

3. All actors don't break the rules (e.g. they don't behave as criminals).

Therefore the model is not a close match at all for the real world, and lessons learned from the model may or may not apply in the real world.
Birger
5 / 5 (3) Jun 26, 2013
The model is complex, meaning policy-makers do not understand it. Therefore they will rely on advisors, namely, advisors who tell them what they want to hear.

And Urgelt has already mentioned criminals breaking the rules (which is what caused the big recession). And yet politicians oppose stricter regulation of crime-infested businesses (banks) proving that people are NOT rational actors.
VendicarE
3 / 5 (4) Jun 26, 2013
In many cases I can see it being profitable to push the system to the brink of collapse and then profit by it's recovery.

How does the theory handle the use of itself to maximize profit by individuals in a position to exploit it?

Answer... It doesn't.
geokstr
1.7 / 5 (6) Jun 26, 2013
In many cases I can see it being profitable to push the system to the brink of collapse and then profit by it's recovery.

How does the theory handle the use of itself to maximize profit by individuals in a position to exploit it?

Answer... It doesn't.

Yes, it's classic Cloward and Piven strategy - deliberately overwhelming any system causes it to collapse and then you can seize power to "rescue" it. I figured you'd approve.
cantdrive85
1 / 5 (7) Jun 26, 2013
In many cases I can see it being profitable to push the system to the brink of collapse and then profit by it's recovery.

How does the theory handle the use of itself to maximize profit by individuals in a position to exploit it?

Answer... It doesn't.

Yes, it's classic Cloward and Piven strategy - deliberately overwhelming any system causes it to collapse and then you can seize power to "rescue" it. I figured you'd approve.

This is the MO of progressives, oh and blame it on others all along the way.
ryggesogn2
1 / 5 (8) Jun 26, 2013
criminals breaking the rules (which is what caused the big recession)

No, it was bad macroeconomic policy.
One bank, was punished by the govt for NOT making enough bad home loans.
ValeriaT
1 / 5 (8) Jun 26, 2013
it is possible to steer an economy around irreversible changes in its complex dynamics and avert potential economic disasters
Not without application of new findings, like the cold fusion and magnetic generators. The surface of Earth is not a perpetuum mobile.
TheGhostofOtto1923
2.3 / 5 (9) Jun 30, 2013
The only way to mitigate the effects of economic cycles - growth, decay, collapse, and rebirth - is by the forced redistribution of wealth ie socialism.

If left to run by itself, capitalism is an inexorable sponge which sucks money out of the general pop and into a few very ruthless and greedy pockets, leaving behind ruined economies and suffering masses.

Cycles are inevitable but govt regulation can mitigate their effects. Unfortunately it is difficult to anticipate just how the lawless will go about accumulating their hoards and so the best way to redistribute this money is by enacting laws during the process to effectively track it and reclaim it at the proper time.
cantdrive85
1 / 5 (9) Jun 30, 2013
The only way to mitigate the effects of economic cycles - growth, decay, collapse, and rebirth - is by the forced redistribution of wealth ie socialism.

This is a perfect example of the major flaw of democracy, the dumbest among us have an equal vote. Actually they have the advantage because there are far more of them, a list of American politicians will attest to that fact.
"The best argument against democracy is a five-minute conversation with the average voter or blotto)."
Winston Churchill
"The ignorance of one voter in a democracy impairs the security of all."
John F. Kennedy
"Democracy cannot succeed unless those who express their choice are prepared to choose wisely. The real safeguard of democracy, therefore, is education."
Franklin D. Roosevelt
Is it any wonder why the state controls education? No!
What you claim is driven by fiat monetary systems, the Federal Reserve System is what drives the business cycle these days. The American system is fascist, not capitalist
kochevnik
1.9 / 5 (9) Jun 30, 2013
In many cases I can see it being profitable to push the system to the brink of collapse and then profit by it's recovery.

How does the theory handle the use of itself to maximize profit by individuals in a position to exploit it?

Answer... It doesn't.

Yes, it's classic Cloward and Piven strategy - deliberately overwhelming any system causes it to collapse and then you can seize power to "rescue" it. I figured you'd approve.

This is the MO of progressives, oh and blame it on others all along the way.

I didn't know banksters were progressives. The ones I know are FAR more interested in not being shot or caught for their subterfuge
ValeriaT
1.3 / 5 (7) Jun 30, 2013
Why NSF and DOE not only doesn't invest into LENR research, but even censors the cold fusion reports from its search results? This is not the ideal strategy for maintaining of USA economy in a good shape, not to say about USA superiority. Apparently the nation of Franklin and Edison did become a little bit fat and decadent.
cantdrive85
1.4 / 5 (9) Jun 30, 2013
The banksters favor the progressives policies, as they are the ones that incur the greatest public debts, SS, OBAMA!care, for example. Debt is the basis of the reserve system, the more of it the more is being "redistributed" via debt service to the few.

The banksters seem to have no foe in Washington, now that Ron Paul is gone, Progressives nor conservatives alike. It's a merry band of crooks, from OBAMA! to Bush, Holder, Greenspan, Fannie, Freddie, JPM, BofA, Enron, to Ollie North and the CIA.
kochevnik
1.6 / 5 (7) Jun 30, 2013
The banksters favor the progressives policies, as they are the ones that incur the greatest public debts, SS, OBAMA!care, for example. Debt is the basis of the reserve system, the more of it the more is being "redistributed" via debt service to the few.
Yes, indeed debt is the only product banks have. If they're not making people indebted, they're out of business. This feeds into "divide and conquer" where the loser is indebted to the banks through backdoor deals, whereas in the old days the loser was ransacked by the victor
Sanescience
1 / 5 (4) Jul 01, 2013
Wow, outrageous suppositions by a research group trying to get some publicity elicits a chain reaction of more outrageous statements and outbursts based on bitterness and anger. If only this kind of "fission" yielded useable energy we would be set.

If society is serious about changing the coarse of human affairs we will get over our reluctance to identifying people with sociopath brains and placing limits on their access to positions of power and influence.

It can be a relatively simple double blind system of testing where an individual can anonymously get tested at a facility using only a number for identification before deciding if they want to apply for a position with a restriction.
kochevnik
2 / 5 (4) Jul 01, 2013
@Sanescience That won't affect the banksters and their minions, who operate by handing out zero interest loans in exchange for favors. Congress and the State are allowed to do insider trading and many other transgressions banned in public
NOM
not rated yet Jul 01, 2013
cantthink85
This is a perfect example of the major flaw of democracy, the dumbest among us have an equal vote.

For once you have a point. A physics exam would be a good way of determining who was intelligent enough to vote.
ryggesogn2
1.5 / 5 (8) Jul 01, 2013
cantthink85
This is a perfect example of the major flaw of democracy, the dumbest among us have an equal vote.

For once you have a point. A physics exam would be a good way of determining who was intelligent enough to vote.

That will be considered racist by the 'liberals'.
kochevnik
2.1 / 5 (7) Jul 01, 2013
cantthink85
This is a perfect example of the major flaw of democracy, the dumbest among us have an equal vote.

For once you have a point. A physics exam would be a good way of determining who was intelligent enough to vote.

That will be considered racist by the 'liberals'.
Odd you claim that since conservatives declare globular cell clusters and corporations as people, while the poor and soldiers are expendable
JohnGee
1 / 5 (4) Jul 01, 2013
That will be considered racist by the 'liberals'.
Why is that racist, ryg?
ryggesogn2
1.5 / 5 (8) Jul 01, 2013
That will be considered racist by the 'liberals'.
Why is that racist, ryg?


I said 'liberals' will consider passing a physics test racist.

"Houston NAACP speaks out against Supreme Court's decision on Voting Rights Act"
http://www.khou.c...191.html
"Nineteen-year-old Rachel Jeantel holds some of the most critical information about the Trayvon Martin murder case. Yet her delivery on the stand in Seminole County this week drew widespread criticism.

She was hard to understand, mumbled, acted impertinent, annoyed, rude, and came across, as one cable TV news host said, as a "train wreck.""
http://news.yahoo...744.html
zaxxon451
not rated yet Jul 10, 2013
Apparently some still think voting makes a difference. Choosing between a corporate shill with an (R) beside his/her name or a corporate shill with a (D) beside his/her name is not a choice.

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