Do ‘critical points’ exist in psychology … and do they affect economics

The concept of a ‘critical point’ is something we see in many sciences … I wonder if it applies to human psychology as well?

First let’s review some examples of ‘critical points’

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From your freshman astronomy class, you may remember the event horizon that surrounds a black hole. It is the distance from the black hole’s core such that for any particle that goes beyond this point, it will never be able to come back out … it has become trapped in the black hole … it has fallen within the critical point distance.

Once a particle falls into a black hole, the only opportunity for it to escape is if some Magical Hand reaches into the black hole and pulls the particle back out.

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A more common example of a ‘critical point’ is the ‘freezing point’ of water (but it is based on temperature). When water falls below 32F, the molecules become trapped in solid form, incapable of moving … kind of like the particles that fall into the black hole.

Once a particle drops in temperature below its freezing point, it becomes trapped, unable to move, and the only opportunity for the iced molecules is if some external agent injects warmth into the system thus freeing it again.

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There also exists a critical point in human psychology … for all of us.

And once you or I or anyone falls below it we are no longer capable of functioning and behaving as would a normal, healthy individual. The only opportunity is if some external force helps us.

Simulated view of a black hole in front of the...

random picture of a black hole

I think that most of the lower economic class in our country are actually just individuals, even entire communities, that have fallen below this psychology critical point.

In the meantime, all the healthy people sit around and express their doubts about the members of the lower class: they’re lazy, they’re drug addicts, they’re criminals … but we have only observed them in their sub-critical-point psychology state, and we have done so from our own healthy state point of view. They struggle to function.

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Bubble-up economics has the potential to fix this, to directly inject positive influences into the difficulties that the lower class faces. It is a system that attempts to re-invigorate the lower class via productivity-oriented social programs, an array of types of programs, each with the similar expectation to benefit the struggling individual but also the taxpayer paying for the program through an applicable ROI.



what are Productivity-Oriented Social Programs

Would productivity-oriented social-programs make everybody happy?

Liberals want a social net.
Conservatives want productivity and progress.
Poor people want access to the American dream.

Currently America primarily uses various forms of welfare for social net: food stamps, medicare, unemployment benefits, gov’t housing, etc. So the gov’t is already paying out the money, but not getting anything in return (though the money does get pumped back into the economy).

Three examples of productivity-oriented social-programs:
1 – gov’t funded job training … so if I am unemployed I can enroll in a job training program (for 2 years probably) that will be for some envelop-pushing position once I’m fully trained … this would be good for the country, because in 2 years there would be about 5 million bad asses ready to take America’s mfg into the 21st c.
2 – gov’t funded work … maybe workers can paint bridges, or maybe something better, but regardless at least the workers get to go to work, the society gets its necessary upkeep, and the gov’t doesn’t just spend money for nothing.
3 – gov’t funded mom-and-pop angel investment … currently the only people in society who really have a shot at true capitalism (creating new businesses, new ideas) are those that already have something such as collateral for business loan, a mgmt. team, a business track record, a social network that connects to investors. So for a couple who wants to break out of their apartment-life there is really no option (the SBA does not pander to poor people). These programs could be heavily overseen by gov’t consultants and accountants until the mom-and-pod get their own momentum going.

In all three examples, people who are in the lower rungs of the economic ladder get support, but they also produce something as well. Let me know your thoughts.



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Is Big-Box Retail bad for the economy and free-market capitalism?


Over the past 25 years America has seen a transformation of our retail infrastructure go from mom-and-pop stores to big box stores.

Speaking for myself, I love the convenience of big box. And certainly the retail evolution that has led us to the big box model is understandable.

But that may not be the point, but instead, possibly, that the big box retail infrastructure represents:

  • a condensation of wealth that is prohibitive of a healthy economy where wealth is distributed to millions of moms and pops,
  • a destruction of a competitive labor pool, where good workers can bargain with their employers for better wages, or else go work for their employer’s competitor,
  • a destruction of a competitive goods and services environment where vendors and manufacturers are plentiful, each competing to access retailers supply chains.

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To illustrate these problems, imagine a small town with hardware stores. Back in the old days, there were probably 10 hardware stores, each with a different owner.

EXAMPLE 1 – imagine one of these hardware stores, such as Mayberry Hardware. The owner wants to sell wrenches. If there are thousands of different hardware stores around the country, then each owner will probably have slightly different wishes for what kind of wrenches they want to sell, and thus there will inevitably be dozens and dozens of wrench manufacturers around the country developing slight variations of the common wrench.

But if there is only one hardware company in the country (with thousands of stores), and that one hardware company chooses AmeriWrenches as its brand to sell at all of its stores, then the dozens and dozens of other wrench manufacturers will be unable to survive, and will go out of business. And all of its employees will have no choice but to go work at AmeriWrenches.


EXAMPLE 2 – imagine a worker, Little Joe, working at Bubba’s Hardware Store. Imagine that Little Joe is an amazing worker: he knows all the tools, all the construction projects around town, all the customers, all the vendors in the industry, all the tool manufacturers in the industry. But Bubba hasn’t given him a raise in 2 years. Little Joe requests a raise. Bubba refuses. But if there are lots of other hardware stores, Little Joe can go to one of them, such as Steve’s Hardware, and say, “Listen, Mr. Steve, I am great; if it weren’t for me, Bubba would go out of business; but he doesn’t pay me enough … hire me and I can bring my expertise to benefit your store.” In this scenario, we see that employees are in a natural, free market environment, using the principles of ‘competition’ to improve their own value.

However, if there is only one hardware store company in town that owns 10 individual stores around town, then Little Joe is not able to bargain on his own for better wages.

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It should be noted that these same problems occur when one national bank swallows up thousands of local banks, or when one large insurance company swallows up thousands of local insurance companies.




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It took Reagan 5-1/2 years to get unemployment under control

It took Reagan 5-1/2 years to get unemployment under control.

He began with about a 7.5% unemployment (seasonably adjusted), and 4 years later it was roughly the same, but only after a huge spike. Then it was about level for another 1.5 years, and finally it starting coming down.

Pretend it’s Jan. 2009

Pretend it’s Jan. 2009 … what would you choose?

  • A – Great Depression.
  • B – Great Debt.
  • C – Great Fix.

Sure, everybody will say ‘C’. But think … what does it take to actually accomplish ‘C’? And here is an even more important question: how many years will a Great Fix take?

Suppose that in January 2009, our government was functioning like an efficient machine, both parties working together, and immediately it began working on a solution that required 3-5 years to accomplish. 3-5 years I said, because there would not be a way to fix our problems any quicker. Complete domestic and foreign policy changes were needed. So until those 3-5 years (or maybe even 7-10 years) were completed, what should the government have done? Should it have stranded people (that would equate to a Great Depression)?

Was Jesus being an unrealistic emotional sap?

Was Jesus being an emotional sap when he told the rich man to give all of his wealth to the poor person (Mathew 19:21)?
…OR…
Was Jesus hinting at a fiscal policy?

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To find out we have to take Jesus literally, and build a legislative rule around his suggestion: JR-7473: Rich guy must give wealth to Poor guy … now let’s see what happens:

scenario 01The rich man, we’ll call Aaa, follows the rule and gives all his wealth to the poor person, we’ll call Zzz.
scenario 02But now Zzz is rich, and Aaa is poor; so Zzz must follow the rule and give all his (new found) wealth back to Aaa.
scenario 03The cycle continues: Aaa and Zzz keep handing the money back and forth indefinitely.

For me, what I see here is an Economic Circulation Pattern.

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Of course, the money is meaningless to both Aaa and Zzz if they do not spend it. So let’s try a different scenario set, allowing them each to spend money while they are in possession of it:

scenario 11Aaa follows the rule and gives all his wealth, $1,000,000, to Zzz.
scenario 12Zzz, who is starving, goes out and buys a loaf of bread and a Porsche.
scenario 13But now Zzz must follow the rule and give his wealth to now-poor Aaa … but what to give? The bread does not constitute ‘wealth’ (at least not in appropriately modest quantities), but the Porsche is clearly excess and so it is ‘wealth’ … therefore Zzz must hand over the Porsche and remaining cash (assets + cash = $999,997) to poor Aaa.
scenario 14Aaa receives the Porsche and cash. He is psyched about the Porsche, but quickly realizes that JR-7473 will not allow him to keep it, so he trades it in for a Ford Taurus. Also he buys some groceries.
scenario 15Aaa then gives his wealth to the poor person. The current value of the wealth is $979,977 (the Taurus was about $20k).
scenario 16Aaa and Zzz continue the cycle, each time getting the basic things that they need. The wealth slowly dilutes until at some point neither has excess wealth. The cycle stops.

In other words, Jesus’ rule, if followed literally, leads to a middle-class society of economic equality … interesting.

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I personally believe that in a real functioning society that this is not realistic, but I do think that there can be systems in place to foster this type Economic Circulation Pattern, specifically I think Bubble-Up Economics via Productivity-Oriented Social Programs does it, although Productivity-Oriented Social Programs do go against JR-7473, which required nothing of the recipient, whereas Productivity-Oriented Social Programs do require something. Read more: P-OSP

2 Corinthians 8:14-15

It’s dangerous territory to pick a verse from the Bible and try to build an argument from it, especially if the verse is taken out of context or is used to serve an agenda … but never-the-less:

2 Corinthians 8:14-15 (Paul) – “(14) At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. Then there will be equality, (15) as it is written: ‘He who gathered much did not have too much, and he who gathered little did not have too little.'”

The way I read this is that 15 basically says ‘those who make the big bucks need to help out those who don’t make jack so that they will have enough’ (notice that both groups do work (‘gather’), though some workers have little return for their efforts). 14 explains why doing this makes sense: in helping out the poor, you are actually not depriving yourself, because they will be in a position to return the favor, etc. (what goes around comes around).

If this doesn’t make sense to you, consider the aquarium metaphor, with oxygen-rich water circulating throughout.

Trickle Down Economics is an example of a Circulation Theory, but it fails because of the trickle-out problem. But Bubble-up Economics (via Productivity-Oriented Social Programs) solves this problem, ensuring that the poor get their opportunity BEFORE the money disappears.

Also, notice that Paul doesn’t say, ‘those who have little are screwed, they should get a better job – it’s their own problem, not mine’. Ex: Without your trash men, your neighborhood would be overrun with disease and filth, so give them the respect they deserve … and paycheck too.

Also, notice that Paul describes this ‘economic circulation’ as ‘equality’!

the scale of welfare reform

The conservatives keep saying, “we don’t want to give them anything, they need to get off their ass and work.”

The liberals keep saying, “but you don’t understand their struggle, we have to help them.”

So what is the right answer? Part of the difficulty in answering that is that we seem to have given ourselves only two options: all or nothing. But are we, and our democracy, not mature enough to look for solutions that resolve this polarity, such that both sides are happy, and more importantly such that the lower class can begin to rise into the middle class upon their own dignity?

Productivity-oriented social programs are one solution that sits in the middle of the polarity. These programs meet the bubble-up economics standard.


Hybrid Economics – the balance between capitalism and socialism

If you are an extreme capitalist, you’re probably wrong.
If you are an extreme socialist, you’re probably wrong.

The right answer lies somewhere in between these two extremes. A healthy society tries to find the right balance.

Consider my widget company:
In an extreme capitalism I can hire thieves to take my competitor’s truck fleet at night when he’s sleeping, or maybe just murder him outright to increase my profits.
In an extreme socialism the government can tell me that they don’t approve of my widget business, or require me to operate my business according to their instructions.

The right answer is to be able to pursue my own ideas the way that I want, but within the limits of civility (which should be defined by a democratic mechanism).


Productivity-Oriented Social Programs

Would Productivity-Oriented Social Programs make everybody happy?
– Liberals want a social net.
– Conservatives want productivity and progress.

Currently America primarily uses various forms of welfare for its social net: food stamps, medicare, unemployment benefits, gov’t housing, etc. So the government is already paying out the money, but not getting anything in return (though the money does get pumped back into the economy).

Three examples of Productivity-Oriented Social Programs:

  • 1gov’t funded job training … so if I am unemployed I can enroll in a job training program (for 2 years probably) that will be for some envelop-pushing position once I’m fully trained … this would be good for the country, because in 2 years there would be about 5 million bad asses ready to take America’s mfg into the 21st c.
  • 2gov’t funded work … maybe workers can paint bridges, or maybe something better, but regardless at least the workers get to go to work, the society gets its necessary upkeep, and the gov’t doesn’t just spend money for nothing. The real caveat here is that the jobs need to be meaningful and dignified, and a large selection from which to choose.
  • 3gov’t funded mom-and-pop angel investment … currently the only people in society who really have a shot at true capitalism (creating new businesses, new ideas) are those that already have something such as collateral for business loan, a mgmt. team, a business track record, or a social network that connects to investors. So for a couple who wants to break out of their apartment-life there is really no option (the SBA does not pander to poor people). These programs could be heavily overseen by gov’t consultants and accountants until the mom-and-pop get their own momentum going.

In all three examples, people who are in the lower rungs of the economic ladder get support, but they also produce something as well. Let me know your thoughts.


Do wal-mart shoppers take responsibility for their own actions

I’m frustrated at all of the finger pointing by the blue collar Republicans that shop at wal-mart. They are on the blame-obama bandwagon, unwilling to consider their own role (and mine – I go to wal-mart too) in creating this mess. With each purchase of unnaturally cheap foreign imports, a few pennies is transferred from our country to theirs. And as this trickle-out process continues, American factories close since their own output is no longer needed.

maybe I should change some of the colors

If, on the other hand, we had Fair Trade Relationships with these other countries, then purchasing these imports would not be a problem, as undoubtedly there would be a near-equal value of imports and exports.


Romney wants to reduce corporate taxes

I am not an economist, at best I am an armchair quarterback, but …

everything that I have heard suggests that:

  • 1 – trickle-down economics does not work in a Non-Balanced Trade Environment, because a lot of money trickles OUT
  • 2 – corporations will invest into what ever offers them the highest ROI, even if it is overseas … they love profit, not America

IF this is fairly accurate, then be aware of Mitt Romney’s desire to further cut taxes for corporations, though he is correct that overly-heavy regulations do discourage innovation and growth (if any democrats do not acknowledge this basic principle then they are being misleading).

But the question is: what is the critical point of regulatory heavy handed-ness? Unless a politician (Mitt or Barack or Hillary or Newt, etc) can meaningfully discuss this concept then they are no more credible than I am.

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Maybe consider this: the opposite of trickle-down economics is bubble-up economics, where money is put into the hands of the poorest through democratically created & approved productivity-oriented social programs.

These are not welfare handouts, but rather training programs for the unemployed, etc. If the voting public does not like a particular bubble-up program, then we can vote against it – no fear. Economically-rehabilitated people can then spend their new found wealth on small and medium-sized consumer tickets, and from there the $ slowly bubbles up to the executives (finally they get their money), but only after me and you have had a chance to dance with it.

Because bubble-up economics dilutes the primary basis for crime, poverty, crime will go down, so municipal law enforcement budgets should drastically decrease as well over time. Republicans will be happy about reducing government spending on law enforcement.


Capitalism is good for something – but what exactly?

It seems to me that our capitalism is not doing what it was originally intended to do.

The original idea behind the usage of a capitalism in America was to let people decide for themselves how they wanted to make money, and as a consequence all kinds of interesting ideas could come to life in a marketplace.

I do not believe that capitalism was intended to be a tool for the arrogant or the greedy to scoop up excessive amounts of money and to empower one’s self or one’s corporation beyond the scope of promoting the general welfare.

I believe that at some point wealth becomes somewhat treasonous, even immoral. America’s current capitalism, unbridled as it is, seems to be working against a large percentage of people.

Intelligent consumerism should be the counter balance to open-ended free-market capitalism. Consumerism is the people’s check and balance mechanism against wayward capitalism. In this day it is, functionally, as powerful as our democracy. Consumerism is our tool to determine how the national currency flows: to whom it flows and to whom it does not flow. If our implementation of consumerism is without discretion then our capitalism will get ugly.

But intelligent consumerism is practically impossible. I, for instance, love Ronald Mcdonald too much to ever believe that there is anything bad about McDonald’s … joke … but the point is that it is quite easy to persuade people’s consumerist behaviors.



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