Economic Behavior as a Function of Information Theory

Serendipity. I was reading James Gleick's 'The Information' which goes into impressive depth and breadth on the nature of information while working up an essay for publication involving intellectualism as economic behavior and all the pieces of a puzzle came together.
Mr. Seller has a car. Mr. Buyer wants a car. They negotiate a price and complete a transaction. According to current economic theory they are 'setting' a relative value which can mean no more or less than that they are generating a value. Now let me recast the situation in Information Theory modalities, borrowing from physics.
Mr. Seller and Mr. Buyer are incommensurate systems of different histories, information, and value systems who are entangled by language, monetary system, and quantifying methodology. These entanglements then become the instruments, according to the auction price model, that 'generate' the value of the car. That is not the case.
Given, as Keynes said of the stock market, that 'a stock is worth whatever someone will pay for it', the car is worth whatever Mr. Buyer will pay. However, the relative value of the car as information preexists the transaction or entanglement. It is not 'generated'. It is 'discovered', thereby conserving information.
Auction price is, under these terms, not 'set' but 'discovered'. I think if equilibrium theory practitioners were to mathematically recast their arguments into information theory modalities, they would themselves 'discover' logical errors.
There are only a few books that are timely, important, and good reads. That sort of intellectualism is the subject of my essay in progress. Information Theory is a paradigm shifting discipline and if you know Thomas S. Kuhn's work and have resisted the efforts to trivialize and misuse that phrase, then you will appreciate the impressive nature of Mr. Gleick's tour de force.
Thank you for a wonderful book.
Do good and be well.

The Games People Play -

As we move steadily into the era of Game Theory, a number of observations are apparent. The first is that 'game' cannot be defined, as Wittgenstein proved. It is a form known from before in the Kantian sense. That intrigues me. The second is that a proper game properly played is a moral exercise. In the area most popularized in Game Theory study, it is a moral and economic exercise. That pleases and surprises me.
During the golden age of Liberalism in the postwar period, there was much talk of man's inhumanity to man. Today we would say human beings' inhumanity to human beings. We have improved our language but vicious exploitation described in a PC vocabulary is still vicious exploitation. If a game is properly played to a moral precept then only in a failed game would inhumanity occur since no economic game could be inhumane by design or logic. It would make no sense and only make cents for a limited time.
We have apparent games going now that exploit human beings for the benefit of other human beings. There exists no morality of game play that permits this. These are failed games eating away at the fabric of society. Anytime you are cruel to another human being it is an aberration. It is not a game. It is not moral and it will not stand the test of economic success.
Be well and do good.

If you are in need of original perspectives on your games, contact me.
http://www.basilbrylcreem.com

Economics, Love and Morality

First the obvious, those are three different things. Economics we have all come to agree is a risk and reward market game played with money. Morality, as Game Theory is discovering, is a strategy in game play. Love, however, is an incommensurate universe to those two. Money influences people and there is such a thing as dominance and submission. Morality is supposed to constrain behavior and there is such a thing as moral authority, but Love is outside both of those conceptual realms.
Love is hormonal and beyond comprehension. Communication is dependent on some degree of hormonal synchrony and, as anyone who has had a pillow talk will tell you, communication there is at maximum and as cerebral as one cares to make it. Love is not economic and not moral. The heart goes where it will when it will and that is that.
Be well and do good.

If you'd love a little original analysis applied to your puzzles, I'm ready and able. See my website.
http://www.basilbrylcreem.com

Derivatives as Deficit Spending

There is much talk in Washington these days about reducing deficits in order to manage the public debt. However, there has been insufficient processing of the recent recession and no mention of derivatives increasing the marketability of questionable loans and therefore the liquidity of the credit markets has been made. Essentially, taking a junk mortgage and tranching it at AAA is printing money. The underlying economic conditions that would normally be reflected in a AAA instrument do not exist so essentially the difference in marketing the AAA from the junk is new money. Nobody has noticed that.
It is, in fact, borrowed new money since the consequences of mortgage default are amplified and must require extra reserves and possibly public financing. We learned that lesson in the last five years. We just haven't managed to adequately characterize the phenomenon. It is a form of deficit spending.
Now, the Federal Housing Agencies, which effectively are what Fannie Mae and Freddy Mac represent have proposed a derivative for multiunit housing to shore up demand. If it bubbles and bursts we'll all be liable for it and it's completely off ledger. When Pandora's Box was opened, derivatives were found inside.
Driving this insanity is the postindustrial concept of magic money. Everybody should have a nice house in a gated community. Therefore, everybody will have a nice house in a gated community. This is Disneyland after all, isn't it? We do, as a nation, prefer trial and error to doctinaire approaches and we are in the process of proving absolutely that Disneyland is a nice place to visit, but you wouldn't want to live there. You have to pay for those rides and, as the old saying goes, money doesn't grow on trees.
Be well and do good.

If you think my original and creative approach to analysis would be valuable applied to a subject area of concern to you, I'm available.
http://www.basilbrylcreem.com

American Postmodernism and the Consumerism Ethic

Consumerism is a household god in America and increasingly the world, the more money you spend the more money you have to spend. It's a simple ethic. However, like the economics of Keynes, it only operates in certain phases of the economic cycle. If you throw money at a recession, it improves. If you throw money at an innovation cycle, a rolling recession, it lasts longer and cuts deeper.
This is the conundrum facing postmodernism everywhere but especially in America. We are not doctrinaire and we are not socialist and we have clearly reached the limits of the transfer of wealth that drives Keynes, postindustrialism, and consumerism. We are pragmatists and we are, economically, at our wit's end as to what to do next.
I have no answer. The answer fairly clearly lies in Game Theory and Schumpeter but the one is embryonic and Schumpeter is at least two different people, Mark I and Mark II. That leaves us with a trial and error best guess problem solving process. We will undoubtedly make huge mistakes and pay huge prices. That is not an unusual scenario in the American dynamic. We must be as humane as possible. We are all a lost paycheck or a bad investment away from needing some comfort.
Be well and do good.

If you're looking to consume some original synthesis, this gun's for hire. Check my website.
http://www.basilbrylcreem.com

Markets and Intervention

First off, I want to be emphatically and absolutely clear about my personal, philosophical, and analytical position that the invisible hand of the market is NOT the hand of God. In the long run, and never ever forget Keynes' 'In the long run, we are all dead', markets are efficient but they are given to episodic insanity. A market is a lot like a pit bull, a magnificent animal but sooner or later it bites you.
There is no such thing as an efficient and friendly market. It one intervenes to make a market friendlier, less unstable, one reduces the efficiency of that market. Making a market really friendly puts it in Fantasyland and in Fantasyland markets fail massively as we have recently seen. There is no nice solution to the instability of markets. It is just the way it is. If we ever get a Game Theory model powerful and sophisticated enough to handle the stock market then rational adjustments can be made. If. And when.
Be well and do good.

If you're in the market for some original synthesis, this gun's for hire. Check out my website.
http://www.basilbrylcreem.com/

Postindustrialism and Postmodernism

A tremendous number of movers and shakers in this culture of youth have never heard the word postindustrialism and have no idea what it entails, yet it informs the very nature of our existence. Having its roots in the 1950's phenomena of Levittown and Disneyland, of freeways and shopping centers, of computers and television, it is an ill formed vision of the possible that is a Keynesian, oversimplified, and ill thought nightmare of economically unsupportable infrastructure, commercial, and residential blunders that constitute a Grand Design for life in the Future. It is not a workable concept.
Postmodernism has its roots in the liberal vision of a polycultural society of tolerance and participation. It is the wellspring of consumerism, the notion of a shift from production to consumption, formalized in market socialism. While it is European in style and socialist in practice, postmodernism has no necessity of any Marxist influence. I am a postmodernist and I am not by any measure a socialist. I am a pragmatist who sees the hope of the world in Game Theory and Schumpeter.
The critical limit of both postindustrialism and postmodernism is transfer of wealth whether the magic hand of postindustrialism, incidental Keynesian transfer, or the programmatic transfer of postmodernism, socialism. What we are finding is that participation is the limit of transfer of wealt. A socioeconomy generates only so much wealth and so much meaning and they are both zero sum games. We are desperately in need of a new economic model and desolately without one and twenty years away from a Game Theory/Schumpeter synthesis that could provide one. So we stumble on into the 21st century.
Be well and do good.