QuoteOriginally posted by: macrotradeQuoteOriginally posted by: knightrider@macrotrade: acastaldo is a bit too harsh, but is the reason Krugman's rant appeals to you that you are gleeful that you can finally shed the burden of playing with all those squiggly Greeks? What the h**l is "Logic >> Maths"? What do you care which is larger, since you appear to neither have nor want either?To adapt a phrase from the worlds most successfull investor: beware of geeks with greeks. That by the way was part of the point of Krugman's article. But I am sure you will never understand it. Obviously I am in the wrong forum, because Quantitative Finance in this case means nonsense finance.And obviously nobody has ever made money doing that, right? I suppose Renaissance Technologies and other funds like them have just be very lucky... year in and year out.There is a very big difference between being mindful of the dangers of overconfidence, and believing a whole school of investment strategies to be useless.I suspect he knew that when he said it, but I'm not as certain you understood it when you read it.

If you compare RenTech to mainstream QuantFinance you should learn about what they are doing exactly. Hint: they don't hire finance guys and they operate mostly in very small time frames. That has nothing to do with riskmanagement / long-term economic models, which is what we are talking about here.

QuoteOriginally posted by: macrotradeIf you compare RenTech to mainstream QuantFinance you should learn about what they are doing exactly. Hint: they don't hire finance guys and they operate mostly in very small time frames. That has nothing to do with riskmanagement / long-term economic models, which is what we are talking about here.Maybe you can illuminate us. What kind of guys do Renaissance hire? Are they innumerates, philosophers, novelists, musician? Certainly not physicists, mathematicians, and computer scientists, wielding more esoteric "greeks" than the finance, economics types have ever heard of. If there are any untouchable "geeks with greeks", there couldn't be any more harmful lot you had merely two posts ago admonished us to steer clear of. Oh, as for the owner of Renaissance, James Simons, he couldn't possibly have been the differential geometer, the namesake of the Chern-Simons invariant.Pray, do tell what exotic alchemists and witchcraft of the non-mathematical variety Renaissance employ to mint their money.

QuoteOriginally posted by: knightrideracastaldo:Finally, I got through to somebody that "we cannot compare utilities or aggregate them into a social welfare function". The task is impossible. Speaking of wasteful activity, the effort expensed constructing one is one of them. Moreover, any serious and forceful attempt at it will on the contrary induce tremendous harm. Examples of the malicious consequence of the latter abound. Fascist and communist regimes are but a few manifestations.In a free market where the properties rights including the sanctity of contracts are strictly observed and upheld, and constituents of the market are free to trade, no dilemma will arise. The train incident is a cut and dry case. There are 100 possible cases of breach of contract between each passenger already on board and the train company (I say possible, it's hard to bring a case when the token of $1.25 does not seem to entitle you departure and arrival time accurate up to seconds within the nonexistent schedule. It will be different if you charter a private jet.) There is a case of tresspassing and possible property damage the "gentleman from uptown" perpetrated on the train company. We can dispense with any futile notion of social utility or welfare function, which is self contradictory and in all likelihood pernicious.How is the 'dilemma' resolved here? All you did is superimpose an arbitrary system of rules. Here is another system: let's arbitrarily designate a king as the only person who can ride the train and everyone else walks. No need to calculate social welfare functions or utilities, plus you don't have to worry about a legal system, lawsuits, etc. Problem solved... Or are you saying that a sytem of private property rights will get us most close the 'optimal allocation'? That can't be because according to you there is no way to measure it. For instance, why shold one respect private property or even right to life? Perhaps the extreme joy a psycopath could get from killing another exceeds the utility of the life of the victim. How does one know? On what basis can you infinge on someone's right to kill or steal? You end up with such silly notions if you go down that road.

QuoteOriginally posted by: gardener3QuoteOriginally posted by: knightrideracastaldo:Finally, I got through to somebody that "we cannot compare utilities or aggregate them into a social welfare function". The task is impossible. Speaking of wasteful activity, the effort expended constructing one is one of them. Moreover, any serious and forceful attempt at it will on the contrary induce tremendous harm. Examples of the malicious consequence of the latter abound. Fascist and communist regimes are but a few manifestations.In a free market where the properties rights including the sanctity of contracts are strictly observed and upheld, and constituents of the market are free to trade, no dilemma will arise. The train incident is a cut and dry case. There are 100 possible cases of breach of contract between each passenger already on board and the train company (I say possible, it's hard to bring a case when the token of $1.25 does not seem to entitle you departure and arrival time accurate up to seconds within the nonexistent schedule. It will be different if you charter a private jet.) There is a case of tresspassing and possible property damage the "gentleman from uptown" perpetrated on the train company. We can dispense with any futile notion of social utility or welfare function, which is self contradictory and in all likelihood pernicious.How is the 'dilemma' resolved here? All you did is superimpose an arbitrary system of rules. Here is another system: let's arbitrarily designate a king as the only person who can ride the train and everyone else walks. No need to calculate social welfare functions or utilities, plus you don't have to worry about a legal system, lawsuits, etc. Problem solved... Or are you saying that a sytem of private property rights will get us most close the 'optimal allocation'? That can't be because according to you there is no way to measure it. For instance, why shold one respect private property or even right to life? Perhaps the extreme joy a psycopath could get from killing another exceeds the utility of the life of the victim. How does one know? On what basis can you infinge on someone's right to kill or steal? You end up with such silly notions if you go down that road.Well, let's dissect your comments point by point, shall we? Quote All you did is superimpose an arbitrary system of rules.I did not superimpose an "arbitrary" system of rules. Because we, in the US, already have a system in place. The Constitution upholds the sanctity of private properties ---- that include ones' own lives, on which point we shall revisit when we come to your last example ----- and contracts.Quotelet's arbitrarily designate a king as the only person who can ride the train and everyone else walks.This is another consistent system which works at least better than the nonexistent and self-contradictory notion of social value or welfare. On the other hand, if you substitute the word "king" with "owner", there is nothing amazing about it, is there? You can do whatever you want with your own train, so long as you do not infringe upon another person's property and renege on existing contracts with others. You can ride your train up and down all day, all year long, so long as you haven't sold a single ticket. Hey, who cares about profit and loss just as long as you can afford it all and utilize your own possession however you please. I suppose this private train in question is no longer purported to be a business facility but merely a toy for the joy of the owner, is that so, gardener3? As a minor side note, most kingdoms, at least the ones that last longer, not to mention the constitutional monarchies, do have elaborate legal systems in place, that even the kings themselves have to abide. QuoteOr are you saying that a system of private property rights will get us most close the 'optimal allocation'? That can't be because according to you there is no way to measure it. You are right that I am certainly not talking at all about "optimal allocation", until we are clear about the ownership of the properties. That phrase is meaningless and even pernicious without reference to the ownership. I trust you have never seen the words "optimal" and "allocation" in my previous posts. Two words standing alone by themselves has no meaning. What are you allocating? Are you allocating properties that constitutionally belongs to other people, without delegating contracts from the rightful owners? What right do you have to do that? What do you mean by "optimal"? Optimal by what and whose criteria or objective function? Mine? If that's the case, I'd oblige in a heart beat to "optimally allocate" your bank account and all your belongings into my possession. We have circled back to the first ownership question again, haven't we?QuoteFor instance, why shold one respect private property or even right to life?I am at a loss how this logically follows from your previous sentence. Setting this aside for now, I have to stress that respect of private property and right to --- I have to add---- ones own life (the life issue is merely a corollary of the respect of private property, since your life is the property of yours not others unless you have sold or indentured yourself completely to someone else, isn't it?) is the starting point for my argument.Your argument is quite garbled from here on. I can only guess at what point you are trying to drive at. QuoteOn what basis can you infringe on someone's right to kill or steal?In short, there is no such thing as right to kill or steal in the private property system. I am at a complete loss where and how you deduce this "silly notion" from reading my post. Are you saying in the private property system I am advocating, every one has a right to everything conceivable? I would like to know how you have drawn that conclusion. Obviously you haven't thought through what I have said and what idea you would like to convey.For a private property right system, or for that matter any system, to work, it has to be self-consistent. The social welfare system fails exactly this test from the outset. Therefore, there couldn't be conflicting ownerships of the same property. An asset has to belong to one person only or a group of people with clear delineation of ownerships, shared or hierarchical. If a property universally belongs to every one ---- I can't even start to imagine the true operational meaning of this concept of universal ownership ---- the word ownership looses its sense. The phrase "right to steal" is oxymoronic. The word "steal" means the usurper is the not the rightful owner of that piece of property of concern, and therefore by definition the usurper has no "right" to speak of with respect to the aforementioned property, otherwise we will end up with conflicting ownerships. As for life, it is clearly owned by the one the bespoken life belongs to, unless the life under consideration is of a slave belonging completely to his master, or the owner delegates the killer to kill him with a contract. We draw the same conclusion as the case with "stealing". Therefore there is clearly no "right to kill or steal" under the private property system.Of course it is within right of the owners of properties to decide to trade with one another voluntarily and freely. On the other hand and on the contrary, you have just offered up a perfect scenario and highlighted a fatal flaw a social welfare or value system would inexorably lead to and has, respectively. Were such a system in place, you would have to weigh someone's joy against another's pain. It is inevitable given enough joy or number of people, someone would have to be sacrificed in property or even life for the joy or, as the Nazi and communists would so aptly put it with great pomp "the greater good of the people", because the gain in the former out-weighs the loss of the latter. If this does not qualify as, using your own word, "silly", to say the least, horrific, to put it properly, in notion, I don't know what does.

knightrider, I was refering to what you wrote: "In a free market where the properties rights including the sanctity of contracts are strictly observed and upheld, and constituents of the market are free to trade, no dilemma will arise." Why doesn't the dilemma arise? IF you cannot know who is made better off and by how much (an impossible task according to you) the dilemma will remain. As I said there are an infinite number of 'consistent' systems that will not require you to calculate utility or welfare functions, that will trivially solve the train problem by imposing an arbitrary system, and I don't see why the system of property rights should be any different.You mentioned a number of other things that I cannot follow. The issue of rights is complicated. I am sure Hamilton can post links to 200 books on the subject . This is off-topic, but I don't believe that rights should be defined in a completely negative way (as per Isiah Berlin's definition of rights). Some rights are more important than others, and without the ability of fulfill them they are meaningless. Who knows, perhaps that is why Franklin changed Jefferson's "right to life, liberty and property" to " right to life, liberty and pursuit of happiness"

gardener3:QuoteWhy doesn't the dilemma arise?I can not possibly answer your question about the resolution of the train dilemma (in fact I thought it was pretty clear from my previous post directed at acastaldo, but surely I can reiterate and elaborate if necessary.), because your very question presents a logical dilemma. First you claim the dilemma remains under the private property system, then in the next breath declares there are "infinite number of 'consistent' systems" that resolves the train dilemma, and the private property system is one of them, since you "don't see why the system of property rights should be any different". Does my private property system "trivially" resolves or "trivially" un-solves the dilemma? You seem to have tripped yourself again and got tangled into some strange logical knot of self-contradiction in the earnest attempt to reject my argument. The "trivial" non-resolution seems to fall in the same category of oxymorons as the "right to steal" in your previous post.QuoteYou mentioned a number of other things that I cannot follow. Why don't you list them in quotes and we can discuss them.QuoteI don't believe that rights should be defined in a completely negative way (as per Isiah Berlin's definition of rights).Now it's my turn to profess ignorance. Is this directed at my argument of private property system? Where do you get the impression that my definition of rights is "completely negative" (setting aside the question of the exact meaning of this phrase)? Are you referring to my rebuttal of your "right to kill and steal"?QuoteSome rights are more important than others, and without the ability of fulfill them they are meaningless.I don't know how to comment on this. It'd be better if you lay out a bit of the details.

QuoteI can not possibly answer your question about the resolution of the train dilemma (in fact I thought it was pretty clear from my previous post directed at acastaldo, but surely I can reiterate and elaborate if necessary.), because your very question presents a logical dilemma. First you claim the dilemma remains under the private property system, then in the next breath declares there are "infinite number of 'consistent' systems" that resolves the train dilemma, and the private property system is one of them, since you "don't see why the system of property rights should be any different". Does my private propery system "trivially" resolves or "trivially" unsolves the dilemma? You seem to have tripped yourself again and got tangled into some strange logical knot of self-contradiction in the ernest attempt to discredit my argument. The "trivial" non-resolution seems to fall in the same category of oxymorons as the "right to steal" in your previous post.I will be saying the same thing for the third time now, but I can see how you can be confused. So: the dilemma is that some people will be made better off some will be made worse off and there is no way to know/measure the aggregate benefit/cost. By a system 'trivially solving', I meant a system that resolves the measurement problem by essentially ignoring it, and there are an infinite number of systems that will do this, the system of private property rights being one. 'Right to steal' is as much an oxymoron as ‘right to property’. Claim rights according to you would be 'rights to steal'. A substantial portion of the rights listed in the universal declaration of human rights would require the 'right to steal' from others. You start with some assumptions and a framework, and certain rights appear contradictory given your assumptions. As I said the issue of rights is complicated, philosophers have been discussing rights in civil societies for centuries. They all start with different set of assumptions and end up with different conclusions (or perhaps you think that philosophers like nietsche, Van Parijs, Rawls, etc. are idiots who lack basic logic). You said it's obvious that a person owns or has the right to contract his own life. According to most religions, god owns your body and soul (and no you don't get to contract with god). That is a different starting assumption. Perhaps you could ask: why should we respect god's ownership of you, why should we take that as a given as self-evident, on what basis does he have this right? Would questioning god's ownership right as self-evident be stupid? 'I should have the right to do whatever I want', is another starting assumption, why should we not respect this right? Because it conflicts with others right to do whatever they want or allows for the right to kill/steal? Why is that important? Locke starts with the 'do whatever I want' right, and shows that we could do 'better' by curtailing some of these rights (including the right to kill/steal). Others take different approach in determining what ‘better’ is. These are all interesting philosphical questions, the point is that the rights you have mentioned are not at all self-evident, or that the 'right to steal' is self-contradictory. Depending on your assumptions claim rights would be just as self-evident or self-contradictory as the 'right to private property' (which some philosophers think is itself self-contradictory). QuoteSome rights are more important than others, and without the ability of fulfill them they are meaningless.I can not comment on this seemingly ---at least for now ---- vacuous statement, before you precisely lay out what exactly you are talking about. This is Berlin. Negative/positive rights rights refer to rights of not being prevented from acting on one's will, and of having the ability or resources to act on one's will. For instance the right to do time travel is meaningless because you don't have the ability to exercise that right. Right to fly in private jets is irrelevant to everyone but a miniscule percentage of the world population. You could also talk of some rights being more important than others. For instance, it would be silly to say that because there are less traffic lights Harare than In New York, new yorkers are less free. And you can see how claim rights (which is a right to steal from others) could arise from a framework built on these notions.

QuoteOriginally posted by: gardener3You said it's obvious that a person owns or has the right to contract his own life. As an aside, I think this is false in all modern societies that I know of. The US constitution would not allow a contract whereby I sell myself into slavery to be enforcible.That famous recent cannibal case in Germany is a startling illlustration of this point (Miewes was convicted of murder after killing and eating parts of a sex-partner who had agreed to this). I cannot imagine this would be different in the US.Similarly, selling one's own organs for transplantation is also illegal, I believe.

gardener3:You have made some interesting points, that we will come to discuss. But in the interest of keeping the discussion concrete and focused. Let's start with the most basic and proceed point by point. Otherwise, we'd waste time and never come to a conclusion.In that spirit, I would like to ask you a couple of questions starting with one answerable with yes or no.QuoteSo: the dilemma is that some people will be made better off some will be made worse off and there is no way to know/measure the aggregate benefit/cost. By a system 'trivially solving', I meant a system that resolves the measurement problem by essentially ignoring it, and there are an infinite number of systems that will do this, the system of private property rights being one.So does the system of private property rights resolve the dilemma you just spelled out (Trivial or not, whether there are infinite other solutions, are not part of the question.)?

QuoteOriginally posted by: knightridergardener3:You have made some interesting points, that we will come to discuss. But in the interest of keeping the discussion concrete and focused. Let's start with the most basic and proceed point by point. Otherwise, we'd waste time and never come to a conclusion.In that spirit, I would like to ask you a couple of questions starting with one answerable with yes or no.QuoteSo: the dilemma is that some people will be made better off some will be made worse off and there is no way to know/measure the aggregate benefit/cost. By a system 'trivially solving', I meant a system that resolves the measurement problem by essentially ignoring it, and there are an infinite number of systems that will do this, the system of private property rights being one.So does the system of private property rights resolve the dilemma you just spelled out (Trivial or not, whether there are infinite other solutions, are not part of the question.)?Yes, by ignoring it.

QuoteOriginally posted by: gardener3QuoteOriginally posted by: knightridergardener3:You have made some interesting points, that we will come to discuss. But in the interest of keeping the discussion concrete and focused. Let's start with the most basic and proceed point by point. Otherwise, we'd waste time and never come to a conclusion.In that spirit, I would like to ask you a couple of questions starting with one answerable with yes or no.QuoteSo: the dilemma is that some people will be made better off some will be made worse off and there is no way to know/measure the aggregate benefit/cost. By a system 'trivially solving', I meant a system that resolves the measurement problem by essentially ignoring it, and there are an infinite number of systems that will do this, the system of private property rights being one.So does the system of private property rights resolve the dilemma you just spelled out (Trivial or not, whether there are infinite other solutions, are not part of the question.)?Yes, by ignoring it.2. Is it true we cannot compare utilities or aggregate them into a social welfare function?

QuoteIs it true we cannot compare utilities or aggregate them into a social welfare function?Yes, for sure: we can and we do. Why would you think that we cannot? You seem to imply that by relying on nothing but property rights and contract law we are not comparing utilities, but that is completely false.If you have 2 people, 100 shells and a barter economy, suppose A owns all the shells. Whether or not you think that is a better economy than one where A and B own 50 shells each is not a judgement you can make using Pareto efficiency arguments or the Coase theorem, but it's a quesion you are implicitly deciding by design: you are saying that however the shells are to start with is better than any other way, except to the extent that A chooses to give away shells.You are pretending you are not making this value judgement by hiding the issue behind property rights, but you are comparing utilities nonetheless.

QuoteOriginally posted by: knightriderQuoteOriginally posted by: gardener3QuoteOriginally posted by: knightridergardener3:You have made some interesting points, that we will come to discuss. But in the interest of keeping the discussion concrete and focused. Let's start with the most basic and proceed point by point. Otherwise, we'd waste time and never come to a conclusion.In that spirit, I would like to ask you a couple of questions starting with one answerable with yes or no.QuoteSo: the dilemma is that some people will be made better off some will be made worse off and there is no way to know/measure the aggregate benefit/cost. By a system 'trivially solving', I meant a system that resolves the measurement problem by essentially ignoring it, and there are an infinite number of systems that will do this, the system of private property rights being one.So does the system of private property rights resolve the dilemma you just spelled out (Trivial or not, whether there are infinite other solutions, are not part of the question.)?Yes, by ignoring it.2. Is it true we cannot compare utilities or aggregate them into a social welfare function?I've already said so (for the fourth and final time now)

QuoteQuote2. Is it true we cannot compare utilities or aggregate them into a social welfare function?I've already said so (for the fourth and final time now)gardener3:Sorry, I have been away and busy for a while. Let's continue with our conversation.According to wikipedia, a dilemma (Greek δί-λημμα "double proposition") is a problem offering at least two solutions or possibilities, of which none are practically acceptable.According to your answer to question 2, you accept that it is definitive that "there is no way to know/measure the aggregate benefit/cost" or "we cannot compare utilities or aggregate them into a social welfare function". There is no other possibilities there, is there? I have the following question:3. What is the problem with two or more possibilities, or the dilemma, you have been referring to? Please spell it out unequivocally, precisely and concisely.