Is deflation truly that bad for an economy?

[thaaanos]

however in central planning choice is striped from the players (not freedom)

Freedom is choice.  It is an oxymoron to say that you strip choice from individuals, but not their freedom.

If you want to eat strawberries for desert, and central planning tells you that you should take chocolate cake, then it takes away your freedom to pick your desert.  And no, central planning will never know that you prefer strawberries today.

oh comeon the actors in the economy are not people, they are corporations who cares about thier freedom if such a thing exists?
besides freedom of choice is an illusion

[thaaanos]

1st there is not a single nash equlibrium (not to mention that it may not even be a single point but a closed trajectory in the solution space) It is highly sensitive to the initial parameters, one could at least  set the initial parameters so (Rig the game) so that players eventually gravitate to the optimum eq.

There can be several Nash equilibria.  But there is at least one.  (Nash' theorem).

Initial conditions (and changing conditions !) will determine WHICH equilibrium is reached (hypothetically, in a steady-state situation).  But what is for sure, is that no situation that is NOT a Nash equilibrium, will remain stable.

And you seem to forget that central planning ITSELF is a game, too.  Who is going to be a central planner, and what are you going to do as a potential or actual central planner, IS JUST AS WELL A GAME.  Central planners also optimize their personal gain.

the existence of a nash equilibrium is not a guarrantie that it is reachable. IE the earth never reaches the sun.
No central planning is not a game, it is an algorithm that determines the parameters in the economy, its gain is to find the optimum solution.

[twiifm]

however in central planning choice is striped from the players (not freedom)

Freedom is choice.  It is an oxymoron to say that you strip choice from individuals, but not their freedom.

If you want to eat strawberries for desert, and central planning tells you that you should take chocolate cake, then it takes away your freedom to pick your desert.  And no, central planning will never know that you prefer strawberries today.

oh comeon the actors in the economy are not people, they are corporations who cares about thier freedom if such a thing exists?
besides freedom of choice is an illusion

"Freedom" is legislative not economic.  You have a free market but its regulated.  You can do business freely as long as its complies w regulation

[dinofelis]

Nash equilibrium isn't some reversion to the mean or anything like that.  Nash equilibria is the most probable move given the rules and each players strategy

The Nash equilibrium is also the strategy that is KEPT if the game is played over and over, when entities learn about others' strategies.  This is why it is called an equilibrium.  If the game is played over and over again, and you assume that the others' strategies are those they took in the last round, and everybody, using this information, updates his own strategy for maximum gain, only if a Nash equilibrium is reached, the strategies will remain the same from round to round.

Now of course that makes the hypothesis of steady state of all the game conditions, which is not true in the real world, and of course you can and will have evolution.  But we make the simplification of steady state game conditions.

The Nash equilibrium is to games, what thermodynamic equilibrium is to a physical system with many degrees of freedom.  Of course, if the external conditions change, the thermodynamic equilibrium will shift.  And if the dynamics is fast enough, you will be off the equilibrium.  

But we are considering here "models of society" which comes down to "sets of strategies adopted by individual entities".

If a whole set of individuals makes choices of strategies in a given context, some individuals will find that they gain, others will find that they will lose, and "the next round" people will adapt their strategies as a function of the observations of the previous round and previous people's strategies.  As such, the set of strategies will change at each round.... unless it reaches a Nash equilibrium.  At that point, every individual will find out, for himself, that he should adopt the same strategy as the previous round, because (assuming that others also act that way), any OTHER choice would bring him less advantage.

Simplistic example with Prisoners Dilemma:  Joe and Jack are interrogated.  Suppose Joe and Jack first don't betray each other.  Both of them are sentenced 1 year.  Joe now thinks "damn, I should have betrayed Jack, he didn't betray me, so I would have been free".  Jack now thinks the same.  Next time they are interrogated, they betray each other.  They both take 2 years.  And now Joe thinks: "ah, Jack betrayed me.  I have nothing to win by not betraying him.  Next time I'll betray him again".  And Jack thinks the same.  ---> Nash equilibrium reached !  If you play it over and over again, Joe and Jack will continue betraying each other.

It is very funny, because in the beginning, they were actually applying an Utopia Optimum (if I can call it that way).  But the Utopia Optimum (the lowest sentence for both) was not stable against "personal improvement" of each individual.  They ended up in a Nash equilibrium, that is below the Utopia Optimum, but there is no incentive any more for each of them to go away from it.

Life is worse in the Nash equilibrium than on the Utopia Optimum, but it wasn't stable against "egoistic optimisation" which turned out not to be one.

This is exactly the same problem of Communism and Socialism, btw.  If everybody would work together for the best of common good, then we would have a higher economic production than in a free market (where resources are "wasted" to competition).  Everybody would be happier and richer than in the case of competitive free markets.
If everybody works together to plant potatoes and elevate chickens to the best of his capacity, there would be a lot of food for everybody.
But the problem is that everybody can change strategy individually.  Joe, in his Colchoze, will find out that if HE lies in the sun while his fellow comrades plant potatoes, he will have about just as much food as before, and life is much nicer lying in the sun than planting potatoes.  Jack will think the same.  Mary too.  
And in the end, everybody lies in the sun, and then everybody is hungry.  But there's no reason for any of them to change strategy.  There's nothing personal to be won to be the only one NOT lying in the sun and planting potatoes for everybody.  So the Nash equilibrium of Communism is reached: everybody lies in the sun and does nothing, while everybody is hungry.
This is more or less the real story behind colchozes btw.  The 5% private land produced as much as the 95% communist land in the end.
In social democraties, you get a similar problem with social redistribution and things like unemployment payments and so on, if they are too generous.

[dinofelis]

the existence of a nash equilibrium is not a guarrantie that it is reachable. IE the earth never reaches the sun.

That's not what I'm saying.  I'm saying that if you do NOT have a Nash equilibrium, you will NOT stay there.  Any utopic system that is not a Nash equilibrium, will not remain utopic.

No central planning is not a game, it is an algorithm that determines the parameters in the economy, its gain is to find the optimum solution.

Central planning implies central planners.  Central planners play the game of optimising things for themselves.

If you were a central planner, and you have the choice between setting the algorithm such that everybody, you included, has 2 loaves of bread and a bottle of milk, or setting the algorithm so that most people have 1 loaf of bread and a bottle of water, and you and your kin have caviar and vodka, what algorithm are you going to implement as a central planner, you think ?
What is then, according to you, the "optimum solution" ?

[dinofelis]

Cold War.  US politicians use game theory in a MAD strategy.  Nash equilibrium tells them that no matter how much nuclear missiles is built up, neither side most probably won't strike first in a nuclear war cause it'll wipe themselves out as well (mutually assured destruction).  

As a side note: MAD works indeed when you consider a rational cost function.  It becomes dangerous when self destruction implies getting 70 virgins to fuck in paradise

[thaaanos]

the existence of a nash equilibrium is not a guarrantie that it is reachable. IE the earth never reaches the sun.

That's not what I'm saying.  I'm saying that if you do NOT have a Nash equilibrium, you will NOT stay there.  Any utopic system that is not a Nash equilibrium, will not remain utopic.

No central planning is not a game, it is an algorithm that determines the parameters in the economy, its gain is to find the optimum solution.

Central planning implies central planners.  Central planners play the game of optimising things for themselves.

If you were a central planner, and you have the choice between setting the algorithm such that everybody, you included, has 2 loaves of bread and a bottle of milk, or setting the algorithm so that most people have 1 loaf of bread and a bottle of water, and you and your kin have caviar and vodka, what algorithm are you going to implement as a central planner, you think ?
What is then, according to you, the "optimum solution" ?

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

ok lets recap, nash equilibrium existence does not guarantee
1 stability of the eq
2 optimality of the eq
3 reachability of the eq
4 persistance of the eq
now tell me why one should invest playing a game with uncertain outcome? for some illusion of freedom of tv-imposed choice?

[deisik]

the existence of a nash equilibrium is not a guarrantie that it is reachable. IE the earth never reaches the sun.

That's not what I'm saying.  I'm saying that if you do NOT have a Nash equilibrium, you will NOT stay there.  Any utopic system that is not a Nash equilibrium, will not remain utopic.

No central planning is not a game, it is an algorithm that determines the parameters in the economy, its gain is to find the optimum solution.

Central planning implies central planners.  Central planners play the game of optimising things for themselves.

If you were a central planner, and you have the choice between setting the algorithm such that everybody, you included, has 2 loaves of bread and a bottle of milk, or setting the algorithm so that most people have 1 loaf of bread and a bottle of water, and you and your kin have caviar and vodka, what algorithm are you going to implement as a central planner, you think ?
What is then, according to you, the "optimum solution" ?

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

[thaaanos]

the existence of a nash equilibrium is not a guarrantie that it is reachable. IE the earth never reaches the sun.

That's not what I'm saying.  I'm saying that if you do NOT have a Nash equilibrium, you will NOT stay there.  Any utopic system that is not a Nash equilibrium, will not remain utopic.

No central planning is not a game, it is an algorithm that determines the parameters in the economy, its gain is to find the optimum solution.

Central planning implies central planners.  Central planners play the game of optimising things for themselves.

If you were a central planner, and you have the choice between setting the algorithm such that everybody, you included, has 2 loaves of bread and a bottle of milk, or setting the algorithm so that most people have 1 loaf of bread and a bottle of water, and you and your kin have caviar and vodka, what algorithm are you going to implement as a central planner, you think ?
What is then, according to you, the "optimum solution" ?

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.
The rule is not authoritarian if you dont make it so, people could vote on priorities, and on algorithms deployed central planning is not central command, it may be confusing because only now we have the means to split them.
Innovation though is beeing traded to sustainability, but not altogether lost as ambition is inherent and people will follow vision when they see it.
I am not groupie of central planning I just see it as an eventuality... Unless and only unless we break through a new frontier and transcend the limits of earth.

[deisik]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.

I don't see much difference between directly making consumers consume what you want or intermediately through producers. It is all the same. Besides, how is the current system dictating consumers what to consume? Indeed, it influences your choices through mass media or whatever, but ultimately it is your individual preferences that matter. Otherwise, all people would consume absolutely the same goods and have the same tastes, right?

[thaaanos]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.

I don't see much difference between directly making consumers consume what you want or intermediately through producers. It is all the same. Besides, how is the current system dictating consumers what to consume? Indeed, it influences your choices through mass media or whatever, but ultimately it is your individual preferences that matter. Otherwise, all people would consume absolutely the same goods and have the same tastes, right?

lets drop pretenses freedom <> freedom of choice <> choice variety.
I ask what is marketing? is it about finding what people want? if so what stops use of marketing in central planning?
Central planning is not about giving people a take it or leave it choice, its about meeting demand optimaly, and  about not inflating demand

[deisik]

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.

I don't see much difference between directly making consumers consume what you want or intermediately through producers. It is all the same. Besides, how is the current system dictating consumers what to consume? Indeed, it influences your choices through mass media or whatever, but ultimately it is your individual preferences that matter. Otherwise, all people would consume absolutely the same goods and have the same tastes, right?

lets drop pretenses freedom <> freedom of choice <> choice variety.
I ask what is marketing? is it about finding what people want? if so what stops use of marketing in central planning?
Central planning is not about giving people a take it or leave it choice, its about meeting demand optimaly, and  about not inflating demand

I don't understand what you mean by "dropping pretenses freedom <> freedom of choice <> choice variety". Care to explain? Furthermore, compare the consequences of marketing failure in predicting future demand and central planning failing to do the same (and waste of resources inflicted thereby)...

[dinofelis]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

ok lets recap, nash equilibrium existence does not guarantee
1 stability of the eq
2 optimality of the eq
3 reachability of the eq
4 persistance of the eq
now tell me why one should invest playing a game with uncertain outcome? for some illusion of freedom of tv-imposed choice?

This is somewhat akin to:

A: - If you want to jump from an air plane, the only way to have a possibility to reach the ground safely, is with a parachute

B: - Jumping with a parachute doesn't guarantee:
       1) that it will open
       2) that the ropes will not mangle
       3) that down under you will not fall into a lake and drown

now tell me why on earth I should use a parachute with an uncertain outcome ?  Let's jump without !

[thaaanos]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

ok lets recap, nash equilibrium existence does not guarantee
1 stability of the eq
2 optimality of the eq
3 reachability of the eq
4 persistance of the eq
now tell me why one should invest playing a game with uncertain outcome? for some illusion of freedom of tv-imposed choice?

This is somewhat akin to:

A: - If you want to jump from an air plane, the only way to have a possibility to reach the ground safely, is with a parachute

B: - Jumping with a parachute doesn't guarantee:
       1) that it will open
       2) that the ropes will not mangle
       3) that down under you will not fall into a lake and drown

now tell me why on earth I should use a parachute with an uncertain outcome ?  Let's jump without !

sorry not the same, parachutes have gone through vigorous testing, while "free market" doesnt have a great success record, besides I gave you a jet pack.
my criticism on the theoretical grounds of free market (magic nash equilibrium) is simply to point that free market is not the final sollution, and that we should also reach for and experiment with other ways

further reading http://www.amazon.com/Game-Theory-Shaun-Hargreaves-Heap/dp/0415094038/ref=sr_1_6?s=books&ie=UTF8&qid=1326045227&sr=1-6

[thaaanos]

No, I don't think that the central planning of economy can be made independent of a government system in the society. Really, how could you force people to accept what they should eat and wear if there would be no authoritarian rule that would tell them what they should think and say in the first place?

Otherwise, you should show how you could foretell every individual's whimsy and fancy in respect to their economic decisions

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.

I don't see much difference between directly making consumers consume what you want or intermediately through producers. It is all the same. Besides, how is the current system dictating consumers what to consume? Indeed, it influences your choices through mass media or whatever, but ultimately it is your individual preferences that matter. Otherwise, all people would consume absolutely the same goods and have the same tastes, right?

lets drop pretenses freedom <> freedom of choice <> choice variety.
I ask what is marketing? is it about finding what people want? if so what stops use of marketing in central planning?
Central planning is not about giving people a take it or leave it choice, its about meeting demand optimaly, and  about not inflating demand

I don't understand what you mean by "dropping pretenses freedom <> freedom of choice <> choice variety". Care to explain? Furthermore, compare the consequences of marketing failure in predicting future demand and central planning failing to do the same (and waste of resources inflicted thereby)...

i mean that Freedom is not freedom of choice and that is not simply a choice variety, people tend to infer that a choice variety gives makes them free, and concluding that free market liberates men, and therefore the opposite must enslave men, so they go on crusading...
oh but marketing failure is invariant on both counts, but the point was that marketing is not about about finding what people want but about telling people what to want, therefore making the illusion of free choice irrelevant.
Marketing essentially neutralizes free choice therefore making it irrelevant and denying that argumentmto be used in the debate.

[GreenStox]

i mean that Freedom is not freedom of choice and that is not simply a choice variety, people tend to infer that a choice variety gives makes them free, and concluding that free market liberates men, and therefore the opposite must enslave men, so they go on crusading...
oh but marketing failure is invariant on both counts, but the point was that marketing is not about about finding what people want but about telling people what to want, therefore making the illusion of free choice irrelevant.
Marketing essentially neutralizes free choice therefore making it irrelevant and denying that argumentmto be used in the debate.

Still telling them what to want is not equal to forcing them stuff they don't want! It's not the same.

Asking some1, persuading it or telling them is not the same as forcing to them at gunpoint. So free-market is free, or it should be , if there were no interference from the governments.

[dinofelis]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

ok lets recap, nash equilibrium existence does not guarantee
1 stability of the eq
2 optimality of the eq
3 reachability of the eq
4 persistance of the eq
now tell me why one should invest playing a game with uncertain outcome? for some illusion of freedom of tv-imposed choice?

This is somewhat akin to:

A: - If you want to jump from an air plane, the only way to have a possibility to reach the ground safely, is with a parachute

B: - Jumping with a parachute doesn't guarantee:
       1) that it will open
       2) that the ropes will not mangle
       3) that down under you will not fall into a lake and drown

now tell me why on earth I should use a parachute with an uncertain outcome ?  Let's jump without !

sorry not the same, parachutes have gone through vigorous testing, while "free market" doesnt have a great success record, besides I gave you a jet pack.

I'm not talking about free market, I'm talking about your logical error.

I say: "no social system can be stable if it is not a Nash equilibrium".

You answer: "there's no guarantee that you reach a Nash equilibrium, so let's go for a non-Nash equilibrium solution".

There's a logical error here, which I tried to point out with my colorful parachute example.

The logical error is this:

The statement "if a social system is stable, it needs to be a Nash equilibrium"
is not contradicted by a statement like "one might not reach a Nash equilibrium, or there may be many"
But that certainly doesn't imply: if it is NOT a Nash equilibrium, it might be stable.  Indeed, that last statement is forbidden by the theorem that has not been disproved.

It is not because a parachute might not work, that you can save your ass by jumping out of a plane without one.  It is not because a Nash equilibrium might not be reached, that you can find stable social systems which aren't Nash equilibrium.

[dinofelis]

central planing is not about what consumers should consume, its about what producers should produce... the current system is dictating consumers what to consume.

Producers produce what they think (and try to find out) what consumers want to consume. 
The incentive to produce what consumers would desire is so large, that there's a continuous battle for the attention of consumers.  No central planning, who couldn't care less about the consumer's desires, can cope with the incentive of producers wanting to satisfy consumers in a new market.

The rule is not authoritarian if you dont make it so, people could vote on priorities

The problem with voting is that it doesn't cost you much.  You might vote that you want the moon, and eat it too.
The "put your money where your mouth is" is a much more secure way of voting.

I am not groupie of central planning I just see it as an eventuality... Unless and only unless we break through a new frontier and transcend the limits of earth.

The main problem I see with central planning is that it will always be corrupt, and claim to work for the general good, while serving the interests of the central planners, or their cousins.

[dinofelis]

I ask what is marketing? is it about finding what people want? if so what stops use of marketing in central planning?
Central planning is not about giving people a take it or leave it choice, its about meeting demand optimaly, and  about not inflating demand

You are somehow right that if there would not be any scarcity, then you could just as well centrally plan all the needs and desires, produce them, and send them off to who-ever wanted them. 

But the problem is the allocation of resources to those actions that respond best to consumer's demand, all while knowing that they cannot be satisfied all of them.  So the question is not only: "what do consumers want ?", but also "what demands of consumers can we satisfy by using a limited and shared amount of resources".  And that's where competition comes in: I may know a way to satisfy a consumer's demand by using 3 resources A and 5 resources B ; now someone might come up with the idea to satisfy that same demand (or a very similar one) by using 4 resources A and 3 resources C.
First of all, a centrally planned economy may not know that someone had this idea.  Next, we don't know if it is a good idea: is it better to consume 3 resources A and 5 resources B or rather 4 resources A and 3 resources C ?  That will depend on how those resources are solicited by OTHER needs and by OTHER ideas by other people to do this.
So without knowing all these things, there's no way to find a good deal.  Moreover, why would someone make any EFFORT to try to find another way of producing, if there's no personal gain to it ? 

So in the end, if you are going to centrally plan the rewards  to people finding new ways of producing (taking risks !  It might not work) equal to the gain they allow to make, then you could just as well let them do their business in a free market, no ?

And if not, then these people will not be motivated to find, and even to tell, their invention of a new way of transforming resources into products. 

[twiifm]

central planning is not incompatible to democratic concesus, central planing of economy is orthogonal to society's method of rule.

ok lets recap, nash equilibrium existence does not guarantee
1 stability of the eq
2 optimality of the eq
3 reachability of the eq
4 persistance of the eq
now tell me why one should invest playing a game with uncertain outcome? for some illusion of freedom of tv-imposed choice?

This is somewhat akin to:

A: - If you want to jump from an air plane, the only way to have a possibility to reach the ground safely, is with a parachute

B: - Jumping with a parachute doesn't guarantee:
       1) that it will open
       2) that the ropes will not mangle
       3) that down under you will not fall into a lake and drown

now tell me why on earth I should use a parachute with an uncertain outcome ?  Let's jump without !

sorry not the same, parachutes have gone through vigorous testing, while "free market" doesnt have a great success record, besides I gave you a jet pack.

I'm not talking about free market, I'm talking about your logical error.

I say: "no social system can be stable if it is not a Nash equilibrium".

You answer: "there's no guarantee that you reach a Nash equilibrium, so let's go for a non-Nash equilibrium solution".

There's a logical error here, which I tried to point out with my colorful parachute example.

The logical error is this:

The statement "if a social system is stable, it needs to be a Nash equilibrium"
is not contradicted by a statement like "one might not reach a Nash equilibrium, or there may be many"
But that certainly doesn't imply: if it is NOT a Nash equilibrium, it might be stable.  Indeed, that last statement is forbidden by the theorem that has not been disproved.

It is not because a parachute might not work, that you can save your ass by jumping out of a plane without one.  It is not because a Nash equilibrium might not be reached, that you can find stable social systems which aren't Nash equilibrium.

I dont think Nash equilibrium means what you think it means.

Its not a state of existence.  It doesnt mean "stable" or "balanced".  You cant say whether some system is or not Nash equilibrium.   NE is the most probable move.  

Example.  If we propose change from free market to social medicine what is the likely response by voters?  The Nash equilibrium is the most probable vote (yes or no) considering strategy of the individual voter