Shifting economic balance

Tenshinai wrote:

Shifting economic balance

Unless i´ve completely misread the source material, this is incorrect.

But as others have noted more or less, the balance of potential tax incomes, yup, that could totally take a leap.

However, if the SL manages to get itself "fixed" before the highly likely collapse, the potential economy it could put to use is utterly massive.

There´s simply too many planets with HUGE populations that could be exploited vastly more effective if needed and allowed.

It is the League's own analysis (in ART) which says that if Manticore maintains control of the wormholes, the combined economic power of Haven and Manticore will surpass the League's within ten to fifteen years, assuming the League even lasts that long.

SWM wrote:It is the League's own analysis (in ART) which says that if Manticore maintains control of the wormholes, the combined economic power of Haven and Manticore will surpass the League's within ten to fifteen years, assuming the League even lasts that long.

“Essentially, the federal government would have to impose direct taxation in some form in order to compensate. There’s an enormous amount of wealth in the League’s economy, even—or especially—in the Core Worlds, alone. If there were some way to tap that wealth, it would completely transform our current analysis of the competing economic trends.”

Tax output and total economy isn´t the same thing.

kzt wrote:

SWM wrote:My point was that it would take a little time for them to grow. It can't happen instantly. Ten to fifteen years is actually a rather short period of time for the economy to double three or four times.

Growth that fast seems pretty suspicious. But David Weber books are not where you go to learn about economics. The entire employment and economic structure of Manticore as presented is absurd.

Kzt, personally I look at it another way. Remembering economics--and what a hot professor I had, ahem--many of our economic models are based on theories. Theories may run askew if the model is suddenly magnified by such a huge factor as the Honorverse represents. For instance, supply and demand, in my intuitive opinion would look nothing like it does here. With so many worlds, and trade on steroids, the varying ramifications of just this single consideration, should give us pause to challenge the implications of said absolute effect on economic theory as a whole. I would imagine an even different, or at the very least, additional, set of theories. After all they are just theories, that very well may not hold water when removed from such a microscopic scale as is a single planet, single star system.

Supply and Demand (Invisible Hand)
Classical Economics
Keynesian Economics
Neoclassical Synthesis (Keynesian for near-term macro; Classical for micro and long-term macro)
Neo-Malthusian (Resource Scarcity)
Marxism
Laissez Faire Capitalism
Market Socialism
Monetarism
Solow Model (growth comes from capital, labor, and technology)
New Growth Theory (Romer & endogenous growth)
Institutions and Growth (rule of law, property rights, etc.)
Efficient Markets Hypothesis
Permanent Income / Life Cycle Hypothesis
Rational Expectations
Rational Choice Theory
Something Behavioral (e.g., Prospect Theory)
Adverse Selection and the Lemons Problem
Moral Hazard
Tragedy of the Commons
Property Rights as a solution to the Tragedy of the Commons
Game Theory (e.g., Prisoner’s Dilemma)
Comparative Advantage
New Trade Theory
The Trilemma (exchange rates, capital flows, and monetary policy)
37 More Theories

Washington Consensus
Financial Accelerator
Theory of Independent Central Banks
Bagehot Theory of Central Bank Lending
Creative Destruction (Schumpeter)
Ricardian Equivalence
Dynamic Consistency
Diversification and Investment Portfolio Design
Capital Asset Pricing Model
Option Valuation (Black-Scholes et al.)
Austrian Economics
Speculative Bubbles (e.g., Minsky)
Liquidationist View of Downturns
Time Value of Money (incredibly important but very old)
Public Choice / Economic Theory of Regulation (politicians and government workers as self-interested maximizers)
Arrow’s Impossibility Theorem
Welfare Theorems
Veblen and Conspicuous Consumption
Polluter Pays Principle (e.g., Piouvian Taxes)
Offsetting Behavior (e.g., people drive safe cars more aggressively)
Heckscher-Ohlin Trade Theory
Optimal currency areas
Exchange Rates and Purchasing Power Parity
Mercantilism
Rubinomics
Supply-side Economics
Laffer Curve
Phillips Curve
Theories of Economic Geography
Fisher Theory of Interest Rates
Liquidity Traps
Resource Curse (Dutch Disease)
Exchange Rate Overshooting (Dornbusch)
Auctions
Mechanism Design
Principal-Agent Theory (e.g., separation of management and ownership)
Theory of Optimal Taxation (e.g., broad base, low rate, tax less-elastic activities)

I remember the old saw: "If you lined up all the economists end to end, they would all point in different directions." (Or was that weathermen?). Anyhow, economics is not called The Dismal Science for nothing....

Still, if I was the SEM, I'd have 2-3 buildings (big ones, with some heavy-duty computers) set aside for the MMM, both the Cartels and the little guys, to dump information into (and after centuries of carrying the Galaxy's commerce, they'll know something about what each planet has/needs). Havenites, Sillies, Andies and anyone else who can would be welcome to contribute--and inquire.

Just for a mind-exercise (Lord knows, I don't unduly exercise any other part of my body), suppose there is business in Silesia that needs molybdenum*, which is rare in the Silesian region. Before the 'change in ownership' a corrupt manager made a deal with a corrupt SL transtellar for 500,000 tonnes/year, but with bribes, transhipment fees and time (maybe as long as a year), it wasn't a growing (or even more than a break-even) operation.

Now...with the defacto Embargo (because that is what it is), perhaps that (now more or less honestly run) Silensian comapny is told that there is a huge amount of molybdenum in the Dresden system, which can do a deal which makes the action profitable and, being carried the whole way in Mantie bottoms via the wormhole network, is much quicker. Soon the businessman is trying to increase his order to 2MT a year to keep up with the improving business, Dresden is making money it needs to buy better mining equipment (and schools and other good stuff), and oh, by the way, here's a Havenite shipping line that has three planets in the Republic that would love to get a piece of the mobybdemun business....and such, in a single, small way, do several economies grow.

Now as for the SL--a transtellar isn't going to sweat losing a tiny contract that represents a minute fraction of his business--but if (1) He is losing A LOT of those fractions and (2) He is having trouble delivering to his big-ticket customers (due to the withdrawal of Mantie bottoms and increased raiding (Manties) and piracy (taking advantage of the confusion). And those companies in the Core that depended on that ore are now laying off workers and 'retrenching'--which creates economic hardship and resentment in ever-increasing waves.

Now multipy that by thousands of similar actions...and you can begin to see where Gweon's estimates come from.

And that "Economic Community" in those buildings in Manticore just keeps on growing....

*I don't know what anyone in the Honorverse would do with molyddenum or why it would be crucial. I don't even know it's properties. But I think it has a neat sounding name so I used it for my example. Chemists, Geologists and Astrophysicists can **** off if they disagree...

IMHO as always. YMMV.

swm wrote:My point was that it would take a little time for them to grow. It can't happen instantly. Ten to fifteen years is actually a rather short period of time for the economy to double three or four times.

kzt wrote:Growth that fast seems pretty suspicious. But David Weber books are not where you go to learn about economics. The entire employment and economic structure of Manticore as presented is absurd.

cthia wrote:Kzt, personally I look at it another way. Remembering economics--and what a hot professor I had, ahem--many of our economic models are based on theories. Theories may run askew if the model is suddenly magnified by such a huge factor as the Honorverse represents. For instance, supply and demand, in my intuitive opinion would look nothing like it does here. With so many worlds, and trade on steroids, the varying ramifications of just this single consideration, should give us pause to challenge the implications of said absolute effect on economic theory as a whole. I would imagine an even different, or at the very least, additional, set of theories. After all they are just theories, that very well may not hold water when removed from such a microscopic scale as is a single planet, single star system.

***

I'd state it a bit differently: economic theories are based on unverified assumptions. Then those assumptions are run through "models" using 19th century mathematics that isn't capable of handling even the gross oversimplifications they have to use to build the models in the first place.

Given that, is it any surprise that you can find an economic school that will tell you what you want to hear, regardless of what it is you want to hear? As long as you do your part: give them money, status, power.

I agree with kzt: the economics is a mess. However, unlike some fields, it's currently a mess with no clear resolution, so I figure Weber is entitled to whatever set of assumptions he wants. He has at least plugged some of the more gaping holes.

I believe brigade XO's and Hutch's posts describe what is happening best. I would add one more thing. The Verge and Protectorates are effectively merchantile clients of the Transtellars. The economic relationship of those systems are set for the benefit of the transtellar monopolist of the client system.

As in all monopolies, the allocation of capital in this sort of client structure is inefficient because the price/demand relationship is artificially supported. If viewed from the entire client/sponsor economic system, capital is being used efficiently. From the local perspective, it is not.

When the merchantile relationship s removed from those Verge/Protectorate systems, those economies will skyrocket quickly as capital is allocated according to local demand. Think about the Seraphim (the Graham sibling's home system). The local oligarchs and transstellar monolpoist have squeezed out local businesses. That lack of local competition stifles demand and reduces the efficieny of the services being delivered. The transtellar also expatriates all the profits.

The combination of repatriating the profits, making the economy more efficient through competition, reduction of barriers and nationalizing transstellar assets will spark a massive and immediate growth spurt. That increased economic activity will allow Seraphim to purchase what they can't produce from abroad. Since they don't want to invite the same leaches they just got rid of, they will buy from the EoM.

Most of the growth will not accrue immediately to the EoM but the loss of assets and income will have a larger impact on the transstellars. Trade isn't a huge part of the SL economy. All else being equal, the SL economy can lose the Verge/Protectorates. The SL Federal government will lose the majority of its recenue stream if that happens. The impact to the SL economy will come in when the Federal government decides to tax the member systems directly. The combination of increased taxes to support the federal government and shrinking economy due to loss of income from client systems will hammer the SL even if it sticks together. Of course, that won't happen.

If the SL breaks into roughly 3 equal sections with 1 section pro Grand Alliance, 1 SL rump star nation and the last pro RF, the GA will be have the lions share of the star nations. IIRC, the GA currently controls about ~300 star systems. That's about 15% the size of the SL. Add another 33% of the Old SL and that's new association is about half the size of the current Solarian League. That GA association will be larger than any other association of star nations. Toss in the majority of the Verge and Protectorates siding with the EoM and the GA will benefit a significant majority of the galaxy's economic activity. That can easily happen in 10-15 years. I believe Geown's analysis is sound.

Hutch wrote:I remember the old saw: "If you lined up all the economists end to end, they would all point in different directions." (Or was that weathermen?). Anyhow, economics is not called The Dismal Science for nothing....

Nobody really calls it that, though - Economists don't think it's dismal, and nobody else thinks it's a science.

Werrf wrote:

Hutch wrote:I remember the old saw: "If you lined up all the economists end to end, they would all point in different directions." (Or was that weathermen?). Anyhow, economics is not called The Dismal Science for nothing....

Nobody really calls it that, though - Economists don't think it's dismal, and nobody else thinks it's a science.

Well, I had to take three economics classes when I was in College (so many years ago), and it sure was dismal to my Grade point average....

JohnRoth wrote:

swm wrote:My point was that it would take a little time for them to grow. It can't happen instantly. Ten to fifteen years is actually a rather short period of time for the economy to double three or four times.

kzt wrote:Growth that fast seems pretty suspicious. But David Weber books are not where you go to learn about economics. The entire employment and economic structure of Manticore as presented is absurd.

cthia wrote:Kzt, personally I look at it another way. Remembering economics--and what a hot professor I had, ahem--many of our economic models are based on theories. Theories may run askew if the model is suddenly magnified by such a huge factor as the Honorverse represents. For instance, supply and demand, in my intuitive opinion would look nothing like it does here. With so many worlds, and trade on steroids, the varying ramifications of just this single consideration, should give us pause to challenge the implications of said absolute effect on economic theory as a whole. I would imagine an even different, or at the very least, additional, set of theories. After all they are just theories, that very well may not hold water when removed from such a microscopic scale as is a single planet, single star system.

***

I'd state it a bit differently: economic theories are based on unverified assumptions. Then those assumptions are run through "models" using 19th century mathematics that isn't capable of handling even the gross oversimplifications they have to use to build the models in the first place.

Given that, is it any surprise that you can find an economic school that will tell you what you want to hear, regardless of what it is you want to hear? As long as you do your part: give them money, status, power.

I agree with kzt: the economics is a mess. However, unlike some fields, it's currently a mess with no clear resolution, so I figure Weber is entitled to whatever set of assumptions he wants. He has at least plugged some of the more gaping holes.

I should have made it clearer. I agree that the economics are...odd. But when I read sci-fi, and my suspension of disbelief is challenged, I try to reason a possibilty that would enable that suspension again. And in this particular case, I was only saying that I approached the problem in the manner that I proposed, allowing for the literary license of the author.

When Superman caught the falling Lois Lane why didn't the sudden change in vector cause some maladies?

I posit that Superman is able to quickly adjust his vector, quicker than the camera action can capture. Same premise, for my own suspension of disbelief, an explanation only has to make sense to me. However, an explanation as to how it could work I have posited. I don't wish to disprove the literature that I love. I like to give supporting arguments.

Pro and Con arguments pertaining to the suspension of disbelief is effected all of the time on The Big Bang Theory. It's satisfying to participate in these type discussions.

Since even you agree that the theory of economics is indeed supositions and theories, I only suggest that perhaps, in a grand scale that is the Honorverse that what we presently know amounts to a hill of beans. Good enough only to give a serious case of gas and indigestion.

I have a suspension of disbelief problem in the one-liner thread I'm trying to rectify.

.

HungryKing wrote:You have to remember that Gweon is an agent of the Alignment who probably has instructions to present data in a way furthers the disintregration of the League and disrupts the GA's ability to pick up the pieces.

This was the point I was going to make. How much is truth and how much is playing games with the data to make it look the way Mesa wants it to (or to make the SL see what Mesa wants it to)? Things could be far worse than we think and Gweon is trying to get the SL to underestimate the severity of the problem or they could be better than he indicates but he's trying to panic them into doing (more) stupid things.