Joule economics

[Acrophob]

Hello everybody!

Let me ask dummy questions!

 

1. Why is this ratio so critical: http://en.wikipedia.org/wiki/Debt-to-GDP_ratio ? http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
For example, Luxembourg's value is enormous... still.. there is no bankruptcy or something...

2. Can anybody suggest simplest way to compare countries' economies? Say, 3-4 ratios and their common sense, please.

 

I also want to suggest alternative understanding of Economical Analysis!

IMHO actual money on the planet is Energy. And its unit of measurement is Joule. http://en.wikipedia.org/wiki/Joule

This is inspired by K. Marx (see his writings about Gold).

 

Any comments are welcome.

[Nicky]

Hello everybody!

Let me ask dummy questions!

 

1. Why is this ratio so critical: http://en.wikipedia.org/wiki/Debt-to-GDP_ratio ? http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

Which ratio? You're linking to two different measurements.  (Also, the second link contains an obvious error on the first item on the list. )

 

Maybe you meant to link to this list:

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

?

 

For example, Luxembourg's value is enormous... still.. there is no bankruptcy or something...

 

Trust me, if Luxembourg's government owed three thousand times what the country produces, there would be "bankruptcy or something".

[frank harley]

Hello everybody!

Let me ask dummy questions!

 

1. Why is this ratio so critical: http://en.wikipedia.org/wiki/Debt-to-GDP_ratio ? http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

For example, Luxembourg's value is enormous... still.. there is no bankruptcy or something...

2. Can anybody suggest simplest way to compare countries' economies? Say, 3-4 ratios and their common sense, please.

 

I also want to suggest alternative understanding of Economical Analysis!

IMHO actual money on the planet is Energy. And its unit of measurement is Joule. http://en.wikipedia.org/wiki/Joule

This is inspired by K. Marx (see his writings about Gold).

 

Any comments are welcome.

Debt to GDP reflects a nations basic capacity to repay what it owes, In this sense, smaller nations borrow against their ability to repay as a sort of credit report.

 

Richer nations, however, can simply print their own money to repay debt, or extend credit to themselves. The assumption here is that money itself has no intrinsic value, rather serving no purpose but as 'ability to purchase.

 

OTH, Austrian School Philosophy, by maintaining that money represents real value, obviously finds serious fault with padoodling with the money supply. 

 

The problem, with the Austrian POV, as it were, is their refusal to enter the empiricist fray with numerical-based proof; This is why it's advisable to call their work 'Philosophy' rather than 'Economics'.

 

For better or worse, what's normal, paradigmatic behavior for economists is to use math to fight out their positions.

[Nicky]

Debt to GDP reflects a nations basic capacity to repay what it owes

Debt to GDP does not reflect a government's capacity to repay what it owes. There are other factors that can cause two governments with the same debt to GDP ratio to fare very differently as far as being able to repay their debt (factors such as how that debt is structured, future economic growth, political will to avoid a default, etc.).

So this ratio says precious little about whether the debt is going to be repaid or not.

What public debt to GDP does reflect, is the economic prospects of a country: a high ratio means either rising taxes and economic stagnation, or a default and economic crisis (no money to be made by investing in such an economy). A low one means room to either lower taxes or expand the government (economic growth and money to be made either way).

Richer nations, however, can simply print their own money to repay debt

Yes, technically a government can devalue its currency to reduce the real value of securities it issued in the past, in that currency (except for TIPS). But that's entirely irrelevant: the reason why governments pay their debts isn't out of a sense of honor, it's to secure their ability to borrow even more. 

 

If a government devalues its currency to screw over its lenders, that would hinder its ability to borrow in the future to the same extent simply defaulting on its obligations would. And devaluing a currency also has other negative effects, so the better option will always be to simply default.

or extend credit to themselves

Mind giving a real world example of this happening?

[Harrison Danneskjold]

1.  Why is this ratio so critical: http://en.wikipedia.org/wiki/Debt-to-GDP_ratio ?

For the same reason that a minimum-wage employee should not borrow $1,000,000; he would be unable to make the interest payments, alone.  For one person to do that would be like selling themselves into slavery. 

What are the differences between one individual doing that to themselves, and a small clique of individuals doing it to an entire nation?

 

2. Can anybody suggest simplest way to compare countries' economies?

Per capita GDP.

You are looking for how much stuff is produced each year by X number of people, in order to see approximately how productive each individual is being.

 

IMHO actual money on the planet is Energy. And its unit of measurement is Joule. http://en.wikipedia.org/wiki/Joule

This is inspired by K. Marx (see his writings about Gold).

I disagree.  A nuclear reactor produces massive amounts of energy, which can be used in all sorts of helpful ways by countless individuals.  A nuclear bomb also produces massive amounts of energy, which one would be hard-pressed to find some benefit to.

Do you see what I'm driving at?

 

I think that entropy may be a more precise measure (production= decreasing entropy) but it still wouldn't be quite correct yet, because our survival itself requires a certain amount of microscopic chaos; corpses hold less entropy than living bodies and yet I would say that life is rather valuable.

 

So I disagree with the measure you've chosen but I still find it an intriguing line of reasoning.

 

The problem, with the Austrian POV, as it were, is their refusal to enter the empiricist fray with numerical-based proof; This is why it's advisable to call their work 'Philosophy' rather than 'Economics'.

http://en.wikipedia.org/wiki/Hyperinflation

[dream_weaver]

<snip>.  A nuclear reactor produces massive amounts of energy, which can be used in all sorts of helpful ways by countless individuals.  A nuclear bomb also produces massive amounts of energy, which one would be hard-pressed to find some benefit to.

 

If the detonation of a nuclear device protects myself and my loved ones from further detriment by those it was used against - is it that hard-pressed to find a benefit to?

[Acrophob]

Many thanks to everybody replied!

Let me clarify my ideas.

 

Amount of Energy produced in any useful way can be computed in terms of "cash".

Say, the value of one calorie (remember "bread index" and "hamburger index"?) in every country must be equal. And this is what really determines http://en.wikipedia.org/wiki/Exchange_rate . I utilize invariance idea from the Physics field.

 

The truth is I do not know the methodology of this new Energy oriented Economics, but I hope

this paradigm can considerably reduce inflation and corruption. AFAIU, energetical evaluation of currencies can demolish Forex speculations at all.

Edited June 4, 2014 by Acrophob

[aleph_1]

It takes a great amount of energy to produce millions of buggy whips. Think of all the energy it takes to produce useless monuments! I propose the National Silicon Dioxide program. We would employ millions of people taking silicon dioxide (sand) from one locale, expend enormous amounts of energy turning it into large solid blocks (glass). Then we could ship these solids to random points, expend great quantities of energy to reduce the blocks to powdered form (sand), and think of all the energy expended and jobs produced.

 

The answer is obvious. The Joule Economy is a chimera.

Edited June 4, 2014 by aleph_1

[Acrophob]

I chose Energy because

1. It is vital (Gold, bread etc...)

2. http://en.wikipedia.org/wiki/Physical_quantity is invariant in nature.

 

So, I think energetical approach is more or less objective.

[Acrophob]

Aleph_1, let me think for a while about your critics. I want to suggest invariant value of money = not like gold (different quality), labor (different measures) or food (different forms).

Edited June 4, 2014 by Acrophob

[Acrophob]

It takes a great amount of energy to produce millions of buggy whips. Think of all the energy it takes to produce useless monuments! I propose the National Silicon Dioxide program. We would employ millions of people taking silicon dioxide (sand) from one locale, expend enormous amounts of energy turning it into large solid blocks (glass). Then we could ship these solids to random points, expend great quantities of energy to reduce the blocks to powdered form (sand), and think of all the energy expended and jobs produced.

 

The answer is obvious. The Joule Economy is a chimera.

 

Dear, aleph_1! From Physical point of view your exmaple is a transformation of energy. In this process energy conservation law does not contain http://en.wikipedia.org/wiki/Use_value. You may consider my "theory" as introduction of  http://en.wikipedia.org/wiki/Energy_conversion_efficiency into Economics.

[Harrison Danneskjold]

If the detonation of a nuclear device protects myself and my loved ones from further detriment by those it was used against - is it that hard-pressed to find a benefit to?

I am not attempting to insinuate anything about the historical uses of nuclear weapons, but the negation of a loss is not the same as an actual benefit.  If a "good" action was identical to any "not bad" action then no instance of coercion could be distinguished from commerce; "perform X and I will pay you" would be the same as "perform X or I will hurt you".

Now, with regard to the preemptive use of nuclear weapons (their only historical use), I absolutely consider it moral- just as it's moral to kill a killer or set a broken bone- but they are only moral within the context of some emergency, and none of them are truly beneficial; only non-harmful.

 

I mention this because the OP expressed that "value" can be measured in joules, which could be applicable to a nuclear reactor but directly contradicts a nuclear explosion (in which a massive number of joules totally obliterate buildings, cars, money and human beings).  The necessary implication would be that it is valuable to build and valuable to destroy, at the same time and in the same way. . .

 

The Joule Economy is a chimera.

. . . A Keynesian Chimera? 

 

Amount of Energy produced in any useful way can be computed in terms of "cash".

Acrophob:  I completely agree with this definition, and furthermore believe that Rand would have too, provided one thing: define "useful". 

This is why I mention "entropy", the measure of relative organization or chaos; 

http://en.wikipedia.org/wiki/Entropy "organization" being in the eye of the beholder.

Edited June 4, 2014 by Harrison Danneskjold

[Harrison Danneskjold]

There are many people in the world right now who believe that it is both valuable to create, and to destroy, simultaneously.

http://en.wikipedia.org/wiki/Keynesian_economics

 

"Value" is meaningless beyond a conscious being's pursuit of some goal; in order to define "value" you must also specify to whom and for what purpose.  I realize that those questions are precisely the ones which are the hardest to answer, because in order to do so one must grapple with a great number of slippery little intangibles.

But while one may simply ignore such questions and jump straight into economics, there aint no such thing as a free lunch; not even intellectually.  http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union

 

If you are willing to ask such difficult questions then I would gladly lend whatever assistance I can. 

[Nicky]

If the detonation of a nuclear device protects myself and my loved ones from further detriment by those it was used against - is it that hard-pressed to find a benefit to?

You'd be hard pressed to turn that energy into good and services.

[aleph_1]

. . . A Keynesian Chimera? 

 

Since you're searching for a universal measurement of an object or action's "value" you would probably find that "entropy" conveys your exact meaning. . .  Once you isolate the other variable; the observer.

 

LOL! Indeed.

 

Dear, aleph_1! From Physical point of view your exmaple is a transformation of energy. In this process energy conservation law does not contain http://en.wikipedia.org/wiki/Use_value. You may consider my "theory" as introduction of  http://en.wikipedia.org/wiki/Energy_conversion_efficiency into Economics.

 

"Use value" is in the eye of the beholder. By making an appeal to a floating abstraction, you are ruining the objective nature of your definition. At least your assertion that "money on the planet is Energy" can be comprehended, even if it can be shown to be false. Marx had to keep adding to his explanation of what "use value" is in order to confuse his readers into believing that they understood what he was saying.

[dream_weaver]

I am not attempting to insinuate anything about the historical uses of nuclear weapons, but the negation of a loss is not the same as an actual benefit.  If a "good" action was identical to any "not bad" action then no instance of coercion could be distinguished from commerce; "perform X and I will pay you" would be the same as "perform X or I will hurt you".

Now, with regard to the preemptive use of nuclear weapons (their only historical use), I absolutely consider it moral- just as it's moral to kill a killer or set a broken bone- but they are only moral within the context of some emergency, and none of them are truly beneficial; only non-harmful.

 

 

The good is the service it provides in the defense of a nation. This is not stated to support  monetizing energy. I think history has demonstrated a more fungible element serves that purpose when the popular alternatives have revealed their true nature.

[Acrophob]

Thank you very much, Harrison.

I must confess: at the moment I do not know how to evaluate one portion of energy in money form.

 

Initially, I thought about some averaged evaluation from different Economic spheres.

Cost of Nuclear, Heat, Water, Oil, Wind (...) and even food Energy is known.

Edited June 4, 2014 by Acrophob

[Harrison Danneskjold]

Cost of Nuclear, Heat, Water, Oil, Wind (...) and even food Energy is known.

You're welcome.  And it can't only be energy; it must be useful energy so you have to start by defining "usefulness."

What are heat, water, nuclear, oil, wind and caloric (especially caloric) types of energy good for?

 

The good is the service it provides in the defense of a nation.

A moral good; yes.  I mean quite literally that nukes are not productive or profitable.  It is good to defend yourself and your loved ones but "defense" can only mean the negation of a threat and nothing more.

 

There is no profit to be made from dead bodies.

[dream_weaver]

Productivity goes down during war. Less workers, as many are off providing a different service. Much of production is geared toward winning. The rest to make sure you keep your strength up to continue producing war materials to win. Still energy is used even in this context. Do you mete it out in the form of soldiers, bullets and rifles, or pool it together to convince the enemy it's not worth their expenditure of energy on their behalf to persist in as quickly a means as possible? When war is waged, and you are the target, it is not something you can choose not to purchase. War? No thank-you. I'm really not interested today.

[frank harley]

Dear, aleph_1! From Physical point of view your exmaple is a transformation of energy. In this process energy conservation law does not contain http://en.wikipedia.org/wiki/Use_value. You may consider my "theory" as introduction of  http://en.wikipedia.org/wiki/Energy_conversion_efficiency into Economics.

Several points, please:

 

* usable energy is created by a given technology. It is not in any way a constant.

 

* the energy used to produce energy (itself a variable) must be calculated out.

 

* You have to develop an exotic daffy-nition of 'money to see it as anything other than available purchasing power, ostensibly depending upon many factors...

[Harrison Danneskjold]

One can, in fact, choose not to fight; sometimes it is wiser (and moral) to surrender. This is actually a direct extension of not "throwing yourself under the juggernaut".

The fact that violence is not productive, even in self-defense, is key to its reconciliation.

[Acrophob]

Good day, Forumers!

 

I write from the library. That is why I can't reply quickly.

I understand, my ideas are in philosophical plane and non-systemized.

Now I will try to share them in

 

                                      MINIESSAY

 

What is money? Money reflects "goods and services" (hereinafter "goods") produced by mankind. Money is an abstraction of things needed in some way. Marx used term "labor". "Goods" are capitalized "labor". I suggest term "energy". "Goods" are transformed "energy". I hope the expression "average price of a Joule" makes sense.

 

Currency emission happens almost instantaneously compared to the production of "goods". This is where corruption occurs, because some people have easier (earlier) access to new money. And after that inflation stage comes, because amount of "goods" produced did not increase proportionally.

 

Real cost of all things produced is energy. Energy pricing can be more transparent than cash pricing because it is known what Joule is. Therefore Energy should be a world currency.

Edited June 6, 2014 by Acrophob

[Acrophob]

TYVM for your post!

 

Several points, please:

 

* usable energy is created by a given technology. It is not in any way a constant.

Here you write about "amortization", as I understand. http://en.wikipedia.org/wiki/Amortization

Well, there can be "energetical amortization".

 

* the energy used to produce energy (itself a variable) must be calculated out.

You are right. I admit I don't know how to compute every thing's cost in energy units avoiding money pricing.

 

* You have to develop an exotic daffy-nition of 'money to see it as anything other than available purchasing power, ostensibly depending upon many factors...

 

BTW, let me know your opinions, please. What is the price of one Joule? Every comment is welcome.

Edited June 6, 2014 by Acrophob

[softwareNerd]

BTW, let me know your opinions, please. What is the price of one Joule? Every comment is welcome.

It seems like you're trying to find a universal standard of value rather than money. They're different. Mark and Adam Smith both thought that labor was the basic cost (the "Labor theory of value"). This was an improvement on the earlier idea that land and natural resources were the only original value (ref. "Physiocrats"). Using Joules might seem like an improvement, but the basic problem is with the whole approach. Just because something costs a certain amount does not make it have value. That's the basic error of Marx and Smith. I could have a brilliant idea for a new product that just comes upon me, and yet it is worth billions. Two bottles of wine may take the same inputs to produce, and yet 10 years later one is hugely more expensive than the other. Value is not about the making of the product; that's cost.

[frank harley]

It seems like you're trying to find a universal standard of value rather than money. They're different. Mark and Adam Smith both thought that labor was the basic cost (the "Labor theory of value"). This was an improvement on the earlier idea that land and natural resources were the only original value (ref. "Physiocrats"). Using Joules might seem like an improvement, but the basic problem is with the whole approach. Just because something costs a certain amount does not make it have value. That's the basic error of Marx and Smith. I could have a brilliant idea for a new product that just comes upon me, and yet it is worth billions. Two bottles of wine may take the same inputs to produce, and yet 10 years later one is hugely more expensive than the other. Value is not about the making of the product; that's cost.

Well, yes, re Marx: his 'Transformation Problem' is the quantitative conversion of labor values into prices.

 

Working backwards, we can inquire as to what's really the value of something other than its stated price?

 

As money enters into the issue because money is what we measure prices by,the issue (for some) becomes 'what's the value of money'?

 

In pother words, if it has a deeper reference that 'represents' labor, worth, or whatever,it's highly advisable not to padoddle around with the quanity in circulation.

 

OTH, saying it's just 'purchasing power' permits you to adjust the quantity to fit what you want to see as depletion of stock, consumation, etc...