Depressions, demand, and money: An economic puzzle.

Some years ago, I posted the following in the Comment section of a major newspaper. I can't recall the details of the story, but there was the threat of an economic downturn.

A puzzle about Depressions keeps bothering me: In a Depression there is tremendous demand for goods, mostly consumables. There is a pool of workers willing to produce and satisfy that demand. It looks to me like a Depression violates the "law" of Supply and Demand.

So why doesn't production match demand? The culprit seems to be "debt", which must be paid at all costs. Even if it prolongs the Depression by reducing the profits needed to pay the debt.

Something is seriously wrong with an economic theory that can't explain why its founding principles don't work.

Another reader commented as follows:

@Wolf Kirchmeir 

Something is seriously wrong with your understanding of the economic dynamics of depressions. In a depression contrary to your assertion there is NOT a tremendous demand for goods. In fact, due to massive unemployment demand plummets, as does the incentive to supply that demand. The result is spiral where decreasing demand and the decrease incentive to supply feedback on one another. The dirty little secret about capitalism is that distressed markets when left to their own devices will collapse without outside i.e. government intervention in the form [of] fiscal and monetary policy and massive fiscal stimulus which creates enough demand to literally resuscitate a distressed economy until markets are able to function without that assistance.

This was my answer:

@[name] You're using classical economics, which equates "demand" with the amount of money available to spend. But demand is what I need and want. Money is merely a measure of my ability to satisfy my demand, and that's not the same thing at all.

In short, the classical explanation doesn't resolve the puzzle, it creates the puzzle.

My need and desire for stuff doesn't depend on the amount of money I have. It depends on how much food, shelter, clothing etc that I have. Demand rises and falls with that supply of needs and wants. To repeat: Money is just a measure of my ability to satisfy my demand. Not enough money means incomplete satisfaction of demand. It does not mean reduction of demand. On the contrary. The less money I have, the more demand I have. So if you use available money as a measure of "demand", that shows that there is something wrong with how money is distributed.

The reference to the "dirty little secret of capitalism" I think reinforces that point, if I understand it correctly. Government's injection of money doesn't "create demand", it just reduces the mismatch between demand and money.

The puzzle remains, because it's about  psychology, not about finance.

Language: What exactly do we communicate?

We use language to fix memories, to construct our pasts, to invent a future. This thought came to me while reading in a story by Malcolm Lowry the description of a landscape I had never seen, of Italy. The words Lowry used named familiar objects and experiences: tunnels, hawks, sunlit green valleys, trains, white oxen. Did, then, these words enable me to see what Lowry saw? No, they did not. For they recalled images from my memory, not his. Then I knew that if I described a train journey from my childhood, I would find myself selecting language that recalled to mind what I remembered. If the language-born image differed from memory, I would select new words, new phrases; and when I had finished my description, I should delude myself into thinking another would know what I meant by it. Thinking this (which took less time and language than it took to write it), I realized that we talk to ourselves. I describe my experience so that I will remember it. And because my language can arouse your memories, I can communicate an idea of a notion of an apprehension of what I experienced. (January 1976)

(See also Steiner’s After Babel, which supplied ideas that made this thinking possible.)

Follow-up 2024: Whatever memories my words call up in my reader, they are accompanied by feelings and thoughts. We remember how we felt perhaps more strongly than the event itself. We also modify our memories every time we reconstruct them, so my words may change what the reader recalls. Our memories must pass the strictest test of all: they must be plausible, and our sense of what's plausible changes with experience and with remembering. It seems to me that the the sanest stance towards our own memories is This is how I think it happened, but I can't be sure. Whoever reads this will agree or disagree depending on their experience of remembering, or of reading, of having their understanding or imagination altered by what they read, or what they heard someone say. That we are able to communicate well enough to work together, to continue to love each other, to agree on some notions of how the world works, all this and more seems to me an amazing accomplishment when I consider the certainty that what I intend to communicate and what is actually communicated are never the same.

Time (Some rambling thoughts)

 Time

2024-12-08 to 11 

Einstein’s Special Relativity (SR) says that time is one of the four dimensions of spacetime. String theory claims there are more dimensions, but that’s a side issue.

We move through the three space dimensions. SR shows that our motion affects how we perceive motion and time.

We measure our own motion within our frame of reference. In fact, measuring motion defines a frame of reference. We ride in a car sitting still. But the car moves at 100 kph along the highway, so we are moving at 100kph along the highway, too. And the Earth spins, and orbits the sun, and the solar system moves within the local star cluster, which moves within the spiral arm that orbits the Galaxy. The Galaxy spins, and moves towards Andromeda. And so on.

Within us, the blood moves, air moves, muscles expand and contract, molecules move about and react with each other. Within larger molecules, groups of atoms move this way and that as the molecule changes shape. The atoms themselves move, and within the atom, the electrons and nucleus move. In fact, they move so much that the best we can do to specify their motion is to describe it as a cloud of possibilities, using a wave function that’s said to collapse when we measure those motions.

Heisenberg says the more precisely we measure the motion of electrons etc, the less precise the measurement of their location. Or the more we know about how the electron moves, the less we know about where it is. Which interpretation of the math is correct? I don’t know. Take your pick.

Why do I emphasise motion? Because all motion “takes time.” That is, any change in a space dimension entails a change in the time dimension. This seems to me the intimate integration of space and time that Einstein formalised as General Relativity. I hope this interpretation Einstein’s insight is correct.

So the other day I was thinking about time as a dimension, for about the 777th time. It had occurred to me that if we move through space, what would it mean to say that we move through time?

We normally think of time as “passing”, and point to clocks that measure that passage one tick at a time. Where a tick is a small motion of something. In the international standard of time  measurement that tick is a single cycle of the vibration of caesium:

The second [...] is defined by taking the fixed numerical value of the caesium frequency, ΔνCs, the unperturbed ground-state hyperfine transition frequency of the caesium 133 atom, to be 9192631770 when expressed in the unit Hz, which is equal to s−1.[1]

That “.... one tick at a time...” is either evidence of our brain’s conceptualising limits, or else proof that time is real in the same sense that space is real. Take your pick. I mention this puzzle because recently Carlo Rovelli and other physicists have wondered whether time is real or an illusion. Maybe space is all there is, and the feeling that time passes is created by our brains. The question may have been instigated by the awareness that being aware means being aware of time passing.

We speak of “spending time”, and continue with the terrifying thought that once we’ve spent a chunk of time, we can’t (unlike with money) earn an equivalent chunk of time to replace what was spent. Heraclitus supposedly said that we never step in the same river twice, since the water has flowed on between steps. Time, he said, is like that river. There’s a hymn that includes the phrase “time, like an ever-flowing stream”, which is a cliche by now. These ways of thinking all imply that time is some kind of entity. It’s not like space. Which may be why we have trouble dealing with Einstein’s concept of spacetime.

Does thinking of time as something we move through solve these conceptual problems? Maybe. Let’s try it.

Begin by supposing that there’s more than one time dimension. We happen to be confined to a line within that space, our timeline. Specify a frame of reference and you specify a timeline. We move through time along that line whenever we move through space. And as I’ve sketched above, we are always moving with respect to some other entity. Utter repose is impossible. Even death entails motion: as our body decays, its bits and pieces move in all directions, transported by the critters that eat them or the wind and water that carries them away. The skeleton that remains moves with the Earth.  

Now suppose that we could move off that timeline, in any direction, sideways, up and down, at an angle, in a circle. Just as in space we can take a shortcut, we could take a shortcut in time, and arrive at a future point on out timeline without passing through the intermediate ones. Time travel the would be moving off our timeline, moving around in time, and rejoining our timeline.

If time is multidimensional, would there be some way of writing a formal theory that could be tested? I’ll leave that up to the people who can handle the math. But the concept could work as a premise for sci-fi story. I’m sure the idea has occurred to someone else. If not, I hereby claim first invention (or discovery), and grant a non-transferable licence to anyone who wants to use it. Just give me a cut of the royalties.

© W. Kirchmeir

Maigret Wins the Game (Inspector Maigret and the Killers, 1954)

Georges Simenon. Inspector Maigret and the Killers (1954) A typical Maigret, with

straightforward reporting of the action, and limited  narration of Maigret’s problem solving. We do get a lot of his reactions to his colleagues, and the suspects and witnesses. But it’s up to us to sift the clues from the red herrings and come up with the solution(s).

Here, a dead body is dumped almost at the feet of a cop who happens to suffer from what Freud labelled an inferiority complex. Simenon (that is Maigret’s) take is that it’s an aggrieved sense of unrewarded superiority. Anyhow, the corpse disappears, the cop is beaten up, and Maigret is told he’s dealing with Americans, who are professionals when comes to crime. This annoys Maigret, I mean who wouldn’t bristle at being told he’s out of his league? In the end Maigret wins, of course.

The British made Maigret TV series are better, more subtle and nuanced than these books, which are good for a train ride or plane flight, when one is not fully engaged with the book. This one is below Simenon’s usual standard. **½

Two More From The Vinyl Cafe (Vinyl Cafe Unplugged, Vinyl Cafe Diaries)

Stuart McLean. Vinyl Café Unplugged (2000) #3. It begins with a story about Arthur the dog, who figures out how to insinuate himself into Dave and Morley’s bedroom and onto the bed. It includes the story of Eugene and the fig tree, and how Sam helps Eugene bury the and later resurrect the tree.

McLean’s stories are classified as humour or light reading, differentiated from more serious fare. “More serious” usually means “more gloomy” when applied to literature and the other arts. When I see “realistic” in some blurb or review, I know that there will be blood, if not on the saddle (1) then elsewhere. I think there’s  a misclassification, aka “category error”, in these descriptions. Yes, McLean’s stories are humorous. They are also profoundly serious. Dave’s errors of judgement could lead to catastrophe. That they don’t comes down to kindness, love, forgiveness, extended to him by Morley, his children, and his neighbours. And Arthur the dog.

To affirm that these virtues exist, and that without them we would lead Hobbesian nasty, brutish, and short lives, is a serious matter. The cynic will raise his eyebrows, the pessimist will roll her eyes, the moralist will frown and prepare a sharp rebuke. But they’re all wrong. Life isn’t perfect, humans are flawed, and that will cause pain and sometimes worse. But life is a gift, family and friends are treasures, and joys large and small enrich our lives. That’s what McLean’s stories affirm.

Read any of the Vinyl Café collections. Read them all. ****

1) Blood on the saddle
blood on the ground,
great big gobs of blood all around.
Pity the cowboy
lying in the gore,
he ain’t gonna ride the range no more.

Stuart McLean.  Vinyl Café Diaries (2003)These stories fill in the back story of Dave and

Morley and their family. I’m still bingeing, haven’t yet tired of McLean’s bitter-sweet humour, more certain than ever that he’s a major writer.

Humour may be a matter of temperament, but writing humour takes great skill. Getting the timing right is essential, and that’s hard enough live, and  much more difficult in writing. McLean is a master of the momentarily distracting detail, the aside that pauses the narrative just long enough, the word that triggers the insight that makes us laugh. Merely as examples of skill, his stories are masterpieces. In their apparently artless evocations of everyday life, they raise deep questions about what makes life worth living. He occasionally suggests answers, but these at best merely hint at the meanings of his tales. ****

Vinyl Cafe, 1st collection (Stories from the Vinyl Cafe, 1995)

 Stuart McLean. Stories From The Vinyl Café. (1995) The first collection, and it sets the high standard that all the other collections met. Dave and Morley aren’t yet the focus of the history that McLean relates in the rest of his stories. But they are already what they will be: very much ordinary flawed people who try their best to do their best, and fail and succeed as we all do.

McLean’s gift is his ability to stir nostalgia, regret, joy, contentment, and grief without descending into sentimentality. His style is journalistic without being reportorial. We get a mostly neutral narrator who tells us what’s happening, and occasionally allows himself a comment on what he thinks it all means. And what does it all mean? That love makes life worth living.

I’m on a Vinyl Café binge, and I find it hard to stop reading. ****

P D James Short Stories (The Mistletoe Marder, 2016)

P. D. James. The Mistletoe Murder (2016) ... and other stories. Like other successful mystery writers, P D James was asked to contribute to Christmas mystery story collections. Here we have four examples, and a short essay on the short story. The stories are nicely constructed, with plausible crimes and well paced discoveries of the perpetrators. As in James’s novels, the denouements are psychologically nuanced. James understood that the reasons for crime are more interesting than the crimes themselves. The artistic problem in writing a short story is to sketch the characters well enough that they are believable criminals. James also knows that discovering the criminal does not bring what’s labelled “closure”. The effects of crime spread like a stain though the family and community, and will affect lives long after the case files are closed. In one story, a death caused in all innocence leads to blackmail that lasts a lifetime.

A very good read. A nicely designed and made book, too. ****