Wednesday, November 14, 2018

Few, several, many, and some

I recently had a chat with another guy including about the words few and several. He believes they are interchangeable. I believe that several is more than few. This article says there are no firm rules about their meanings, but agrees with me.

The article says little or nothing about the context. Don't few and several depend on what is being referred to? If I say there have been few National Basketball Association players more than 7 feet, 2 inches tall, few means 27 according to one source. If I say there are few living people on Earth more than 7 feet, 2 inches tall, few means a lot more than 27. In a different context few may mean less than 10.

Several might mean 7 in one context, but 25 in another context, or 100's in yet another context.
Many might mean 15 in one context, but 100's in another context, or 1000's in yet another context.
Suppose 18 people attended a meeting and 15 of the 18 went for lunch together afterwards. Wouldn't 15 qualify as many? Yet in another context 15 could be considered few.

Obviously people in general won't change their usage, but it seems few, several, many and most would have firmer meanings if they were based on percentages. For example, few could mean less than 10%,  several could mean at least 10% but less than 20%, many could mean more than 50% but less than 75%, and most could mean 75% or more (but not all). Between 20% and 50%? A bunch? 😊

The article's opinion about the range of some is very narrow -- more than few but less than several. Some has a far wider range in my opinion. That may be due to having studied logic. In logic some means not none (or no) but less than all.

Tuesday, November 13, 2018

Perfect Competition #1

The economic theory of perfect competition is critiqued in the first two chapters of George B. Richardson’s Information and Investment: A Study in the Working of a Competitive Economy (link).

The theory is a much celebrated attempt to reduce the working of a competitive economy to essentials. Its importance to economists is two-fold. As an instrument of analysis it has held a central position in economic theory for a long time, much due to the ease it lends to mathematical formulation. Second, the prices and outputs associated with perfect competition, in its supposed equilibrium state, have a normative significance, in that they are consistent with the optimum conditions of production and exchange. Perfect competition hence represents an ideal with which actual competitive organization may be compared.

Richardson criticizes the theory in two ways – its concept of equilibrium and what it says about the knowledge of entrepreneurs, and the information available to them (Information and Investment pg.1-2).

The concept of equilibrium is addressed in Chapter 1. The concept is used to say what particular actions are taken in response to the prevailing conditions, such as a change in aggregate demand. The perfect competition model assumes numerous individual economic actors who have equal knowledge about their market, no control over prices, are mere traders of homogeneous goods, and have little or no control over the nature of the goods. In the simplest case, the economic activity in each time period repeats itself, becoming a stationary state. The same amount and kind of product or service is both produced and consumed each time period. How this stationary state came or comes about is largely unexplained.

However, entrepreneurs act not merely on what they know, but also what they expect. Moreover, they may alter the nature of goods and services they offer. Consumers may alter how much they buy and the mix of goods and services they do buy. Both kinds of alterations imply disturbances to the existent equilibrium.

Summarizing, the “theory of the maintenance or the attainment of equilibrium under perfectly competitive conditions fails to account for the process of adjustment in terms of investment decisions by individual entrepreneurs, who have expectations which they could reasonably be presumed to form, on the basis of information which can reasonably be presumed to be available” (28).

My next post will be about Chapter 2, information available to entrepreneurs.

Saturday, November 10, 2018

Aristotle's Wheel Paradox #3

The title includes #3 because I posted #1 and #2 in February (link). I am posting #3 because I edited the Wikipedia article about the topic (link).

I improved the first section. It had said the paradox was about two wheels. The section 'Wrong problem entirely ' on the Talk page says the paradox is about one wheel. I wholly agree. So my change to the first section says it is about two circles and one wheel (or a suitable substitute for the wheel).

I added the Analysis & Solution section to include my two solutions to the paradox. To the best of my knowledge the solutions are original. At least I didn't see or hear them anywhere else.

Since others can edit Wikipedia articles at any time, I cross my fingers that somebody won't impair it. I earlier added similar text to the Talk Page. I believe others can alter that too, but maybe they are less likely to do so.

Wednesday, November 7, 2018

The Organization of Industry #2

A coordinating example Richardson doesn't give is a home-builder, HB for short. HB could contract with an architect to create detailed design and specs for building a new house. After the architect's work is done, HB contracts with an excavator, landscaper, concrete provider, carpenters, plumbers, electricians, painters, roofers, and so forth to build the house. When the home is at least partly built, HB could contract with a realtor to sell the property.

The quantitative mix between direction, co-operation and market transactions can vary due to other particulars such as the size and specialization of the firms. Richardson's paper addresses some of this relying in part on brick-making. "What is important, for our present purposes, is to note that impersonal co-ordination through market forces is relied upon where there is reason to expect aggregate demands to be more stable (and hence predictable) than their component elements. If co-ordination were to be sought through co-operation, then individual brick-makers would seek to match their investment and output plans ex ante with individual builders. Broadly speaking, this does not happen, although traditional links between buyers and sellers, such as are found in most markets, do introduce an element of this kind. Individual brick manufacturers rely, for the most part, on having enough customers to ensure some cancelling out of random fluctuations in their several demands. And where sales to final consumers are concerned, this reliance on the law of large numbers becomes all but universal. Thus we rely on markets when there is no attempt to match complementary activities ex ante by deliberately co-ordinating the corresponding plans; salvation is then sought, not through reciprocal undertakings, but on that stability with which aggregates, by the law of large numbers, are providentially endowed[.] "

Richardson's summary section begins as follows: "This article began by referring to a vision of the economy in which firms featured as islands of planned co-ordination in a sea of market relations. The deficiencies of this representation of things will by now be clear. Firms are not islands but are linked together in patterns of co-operation and affiliation. Planned co-ordination does not stop at the frontiers of the individual firm but can be effected through co-operation between firms. The dichotomy between firm and market, between directed and spontaneous coordination, is misleading; it ignores the institutional fact of inter-firm cooperation and assumes away the distinct method of co-ordination that this can provide."

Tuesday, November 6, 2018

The Organization of Industry #1

The title is that of a seminal 1972 paper by English economist George B. Richardson. The entire text is here. It is also included in Richardson's book Information and Investment: A Study in the Working of the Competitive Economy  (Amazon link).

When Friedrich Hayek wrote about the spontaneous order of a market economy, his main concern was prices. He said that market prices help to guide and coordinate the actions of market participants. Richardson's view of coordination is more extensive.

"[C]o-ordination can be effected in three ways; by direction, by co-operation or through market transactions. Direction is employed when the activities are subject to a single control and fitted into one coherent plan. Thus where activities are to be co-ordinated by direction it is appropriate that they be consolidated in the sense of being undertaken jointly by one organisation. Co-ordination is achieved through co-operation when two or more independent organisations agree to match their related plans in advance. The institutional counterparts to this form of co-ordination are the complex patterns of co-operation and affiliation which theoretical formulations too often tend to ignore. And, finally, co-ordination may come about spontaneously through market transactions, without benefit of either direction or co-operation or indeed any purposeful intent, as an indirect consequence of successive interacting decisions taken in response to changing profit opportunities."

An example of such co-operative coordination is sub-contracting, such as when a manufacturer buys specialized parts from a supplier. The supplier learns in advance what specifications the parts must meet, and the supplier works to assure the specs are met.

Richardson's paper gives the British retailer Marks and Spencer as another example. "Not only do Marks and Spencer tell their suppliers how much they wish to buy from them, and thus promote a quantitative adjustment of supply to demand, they concern themselves equally with the specification and development of both processes and products. They decide, for example, the design of a garment, specify the cloth to be used and control the processes even to laying down the types of needles to be used in knitting and sewing. In the same way they co-operate with Ranks and Spillers in order to work out the best kind of flour for their cakes and do not neglect to specify the number of cherries and walnuts to go into them."

To further distinguish inter-firm co-operation from market transactions: "Where buyer and seller accept no obligation with respect to their future conduct, however loose and implicit the obligation might be, then cooperation does not take place and we can refer to a pure market transaction. Here there is no continuing association, no give and take, but an isolated act of purchase and sale such, for example, as takes place on an organised market for financial securities."

Saturday, November 3, 2018

Maximum size of animals

The largest animal is a blue whale, and the largest land animal is an African bush elephant. The average mass of a blue wheel is more than 22 times that of an average African bush elephant. The maximum mass of a blue wheel is more than 15 times that of the largest African bush elephant. Link.

Why can blue whales be so many times larger than an African bush elephant? Galileo Galilei had an answer in Two New Sciences (TNS). TNS is written as a dialogue in which Salviati played the part of Galileo’s own spokesman.

Salviati: "Well, the ability of fish to stay motionless in water is a convincing argument that the composition of their corporeal bulk is equal to water in specific gravity. So if some parts heavier than water are found in them, there must necessarily be an equivalent amount less heavy in order for equilibrium to hold. So if the bones are heavier [than water], it must be that the flesh, or some other material present, is lighter, and that these offset with their lightness the weight of the bones. Thus, what happens in aquatic animals is the opposite of the case with terrestrial animals; namely, that in the latter, it is the task of the skeleton to sustain its own weight and that of the flesh, while in the former, the flesh supports its own weight and that of the bones. And there the marvel ceases that there can be very vast animals in the water, but not on the earth, that is to say, in the air." Link.

A large part of blue whales is blubber. This page cites 50 tons, or about 45.5 tonnes.  If that were from an average sized adult blue whale, it would be about 41% of the body weight. The density of blubber is very near that of seawater (65 pounds per cubic foot).

Monday, October 29, 2018

World Series 2018

The Boston Red Sox won the World Series for the 4th time this century. They were favored to win, given their regular season W-L% (wins/games) was .667 versus the Los Angeles Dodgers' .564.

The Dodgers won only one game, the third. I made an error reporting on that game. My wife and I were visiting Nashville, TN with two other couples. We went to the Grand Old Opry on October 26. Returning to our motel afterwards I looked on my cell phone to see the result of the game. It was well past midnight, and I saw the score as Red Sox 2, Dodgers 1. Assuming the game was over by then, I reported the score to my companions.

The next morning I was mildly chided by my companions, because the Dodgers had won. Looking on my cell phone again, I found that the 2-1 score was after the Red Sox scored a run in the top of the 13th inning, but before the inning ended. (The score was tied 1-1 after 9 innings.) I had unintentionally reported fake news and didn't heed Yogi Berra: "It ain't over 'til it's over." The Dodgers scored a run in the bottom of the 13th inning to tie the game 2-2. The game continued until the bottom of the 18th inning when the Dodgers scored again to win 3-2. It easily broke the record for the longest game in World Series history -- 7 hours, 20 minutes, 18 innings. (link).