Spoiler alert: They didn’t know the Laws of Thermodynamics or the emerging properties of Complex Systems that were discovered long after their time. The first half of the video (15:00 to 55:00) is a fascinating review/critique of the early economic models, why they evolved and how economists misunderstood them. I didn’t watch the rest of the video about climate change. Tell me what I missed.
Steve Keen, economist and author, joins Decouple host Dr. Chris Keefer to explain how modern economics has catastrophically misunderstood the role of energy in our world and underestimated the risks of climate change through oversimple models. In this in-person conversation, we discuss the evolution of economic thinking since feudalism, the shortcomings of prevailing economic models, modern monetary theory, the role of state capitalism in funding large infrastructure projects, and much else.
The fulcrum says nothing about the quality or outcome of the work the lever does. Taxation is taking from Peter to give to Paul. It says nothing about Peter or Paul. If you love to pay taxes, give all you have. Charity begins at home, make the most of it! Give! Give! Give!
Stuart Kauffman is my favorite Complexity Scientist. He is a biologist. Biology is about complex systems which is likely why he is so insightful about complex systems. I loved his book, At Home in the Universe where he talks about Order for Free.
At Home in the Universe
The Search for the Laws of Self-Organization and Complexity
Stuart Kauffman
An exciting exploration of a new scientific paradigm, At Home in the Universe provides stunning insights into the origin of life, the development of embroyos, genetic engineering, the evolution of economic and cultural systems, and much more. We all know of instances of spontaneous order such as the shape of a snowflake, but Kauffman argues that self-organization is a great undiscovered principle of nature. But how does this spontaneous order arise? Kauffman contends that complexity itself triggers self-organization, or what he calls “order for free”. If enough different molecules pass a certain threshold of complexity, they begin to self-organize into a new entity–for instance, a living cell.
Steve Keen mentioned that none of the economic theories mentions the effect of money on the economy. This comment brought to mind two instances where money affects the economy, fractional reserve banking which increases the money supply and Joint Stock Laws which promotes the aggregation of money for specific purposes. Note what Kauffman claims, “complexity itself triggers self-organization, or what he calls “order for free”. If enough different molecules pass a certain threshold of complexity, they begin to self-organize into a new entity–for instance, a living cell.”
Fractional reserve banking and Joint Stock Laws are emergent properties of money, of capitalism. Say, Smith, Marx, et al didn’t know about complex systems.
Taxation is just one more emergent property of social organization. It has no pride of place.
This is the saddest expression ever, and the most simplistic. Taxes pay for roads. That makes Peter better off, and Paul and the rest of society. Taxes pay for the army, navy, police, and fire departments. Those are generally considered necessary. We have found what happens without apt financial regulation. And building. And health. And food.
The amount of taxes that Peter pays that ends up in Paul’s pocket is a footnote, generally thought to be about 10%, which goes to pay for meals for children, housing for the elderly, and similar programs.
The other 90% makes things better: funding for NASA and science, better education, the CDC, and generally keeping an advanced society moving forward. There are people, however, who would rather have that last 10% in their own pocket rather than have any greater societal benefit at all, I acknowledge.
If I owned a trucking company and used the roads more than you I owe more in taxes. I need to pay the taxes to get the roads fixed. Boiling it down into the simplest of language.
The US military will protect you. I’m an alien. I have thanked the US military for WWII but in the full realization that it was for you and not for me they did it. I was in Canada when the Hungarian Revolution of 1956 happened. Hungarians took control of their country and I was expecting the US to take advantage of the opportunity to help them. It didn’t happen. Why not? Because it was not in America’s interest. Do I blame them? NO! Charity begins at home. I’m a realist, not a foolish dreamer.