Wow, cool! The model is specified as a constrained nonlinear optimization problem for which a solution is found using high-quality proprietary numerical solvers.[a] All partial differential equations specifying the model have a basis in economic theory or in heuristics and approximations shown to be consistent with reality. Parameters come directly from (what I assume is a large amount of) economic data collected by the Danish government.
The authors working for the Danish government deserve an A+ for making their code and assumptions public, along with comprehensive high-quality documentation.[b] It was a delightful surprise to click on the link and find... a carefully curated repo.
I have only one nitpicking: This looks like the kind of project that should have been -- and in fact probably should be -- implemented in Julia, instead of in a proprietary language. I suspect many heuristics and approximations could be more accurately modeled by ML components, interspersed between equations, as has long been proposed by Julia folks like Chris Rackauckas.
Thanks! Julia was not even in 1.0 when we started the project, but would absolutely be a great choice today. So far, only the Conopt4 solver can solve our model, which means we have to go through GAMS even if we rewrite in Julia. I saw Rackauckas' JuliaCon presentation where he talks about ML approximations and immediately got excited too.
Thank you. That makes sense. Also, I fully get why you're excited: The use of "learnable components" for selectively replacing heuristics in models like yours seems like an ideal use case for Julia. (To me it looks like the future of modeling.)
I have one question, that i ask with genuine interest, since I have been in a similar position before (although certainly not as advanced).
When you develop models like this, what is your stance on testing? All that stuff in a software engineers toolbox, unittests, integration tests, exploratory tests, manual tests etc.
The only reason I ask is because your model is written in a proprietary language. While Gurobi models are written in Python (and solved by the silver).
My guess is that the non-linearity of the problem might make it harder for something like Gurobi to solve. GAMS is essentially a frontend for solvers, so you are compiling your input source into a format suitable for an underlying solver or a set thereof.
Economics is not a science like physics. We can't do controlled experiments, we can't falsify hypothesis. This leads to very muddy waters and what you are left with are two kinds of economists: Those who tell people what they want to hear and those nobody listens to.
Econometrics gives people everything they want to hear, and with a scientific veneer as a bonus. The HN crowd should however appreciate how susceptible this is to the tyranny of metrics. Claude-Frédéric Bastiat warned of this over a century ago with his parable of the broken window: Think not only of what you can see (the glazier who is employed to repair the window), but also of what you cannot see (the alternative purchase of a suit) had the window not been broken.
Please note that the origins of modern science in Europe lie in astronomy [1]. Astronomy has always has been and is an observational science, yet has been enormously successful at creating models of what we see in the skies.
Would you critique astronomy the same ways as economics? What is the critical difference?
[1] Yes, there was a lot of simultaneous work in other areas as well.
* Observers are also actors. They can and will significantly influence the observed.
* Once observations are revealed at large it'll have short/long term consequences. There's a good reason fed gives multiple indications before changing any parameters such as interest rates, tapering etc.,
* Humans don't necessarily act like rational selfish agents (as economists expect) all the time.
* Economics is often entangled with other aspects such as trade agreements, geopolitics some of which take years and decades to manifest.
You might be interested in this book [0]. One idea from the author is that in astronomy, you model the behavior of a set of objects, where each individual object or "atom" of your simulation (planets, rocks) has a behavior simple and easy to model. In economics and social science, the "atoms" of your simulation are human beings, and there is no good intrinsic model for the behavior of a single human beeing.
One of the observation of the author is that models work better if the human beings accept to restrict their behavior and follow simple rules. Another observation is that in social science, it is hard to design models that do a prediction significantly better than "tomorrow will behave the same as yesterday".
- Astronomers cannot influence the system they are describing; there's no feedback. In economics there is.
- Astronomy describes systems with a few, simple particles whose inner state is not relevant to the behavior at large. Economics describes (tries to..) systems with many complex 'particles' whose inner state is essential to the behavior at large.
Not saying that this is what's fundamentally separates astronomy from economics, just pointing out some potential differences.
A more revealing symmetry is what happened in Astronomy when a powerful political force didn't like the answer the scientists were coming up with, Galileo vs the Church. (More recent examples are climate change and COVID, but let's not get too controversial).
So when we criticize "economists" are we criticizing the scientists like Galileo and Copernicus that were right and got their books banned, or are we criticizing the ones that supported the political power of the day?
Note that some of those scientist would have genuinely believed their 'church-approved' theories. Just their opponents couldn't challenge them openly without incurring wrath.
And would generic criticism of "scientists" have benefitted science or the established political power at that time?
Neo classical economics is actually a regression even vs classical economics. The moment it became a hard science it lost the human element and became someone's optimization fetish even though nobody can even know what it optimizes for.
The even worse part is that some assumptions don't even work in once you look at the math of e.g. accounting.
Keynes and Silvio Gesell and Wolfgang Stützel are much closer to how our accounting system known as money works even though both of them lived during a gold standard where it was normal to bend some accounting rules like digging out new gold to create more money or just bend them outright by printing money without any asset backing it.
As for Econometrics, I agree that studies employing observational causal inference in statistics are much harder (and harder to swallow) than experiments. Usually.
But perhaps, if you dig a bit deeper and ask yourself things like: "what makes a hypothesis falsifyable" or, "could there be a hypothesis falsifyable by observational data?". Have your ever written down the exact exclusion condition (or exogeneity condition or whatever) you use in your experiment? You might find out something interesting.
Controlled experiments, much like any econometric (or statistic) technique, require identification assumptions. And of course, these can not be proven. Even though many people believe it is so, experiments are not really different in kind, the assumptions are just usually easier to believe. Not always, though, which can also be fun. Even in an experiment, you - in fact - observe reality only once.
In other cases, however, we find out that our assumptions about the identification in the experiment were wrong, due to factors we didn't know about. This happens even in physics (shocker, I know).
Keep an open mind, would be my advise. Your critiques are well known, and in the broad sense tackling them is the business of statistics. By the way, there are indeed smart people here and there.
A good heuristic: If your find yourself rejecting entire disciplines, like econometrics, all while implictily using auction theory, regulation, pricing etc. in your amazon, ebay, cellphone, or energy grid, you are probably on the wrong peak of a Dunning Kruger curve.
I understand the argument and I accept the idea of natural experiments in principle. The most difficult thing with all of these is the ceteris paribus (holding all else constant), or as a second best, correcting for known confounding factors. This is in such stark contrast to a lab setting, where an adversarial scientist can regard a hypothesis as wrong and construct an experiment to prove it so, only to find out that the hypothesis isn't falsified. With statistics and models on the other hand it always devolves into discussions about variables, confounding factors and there's never a satisfying resolution, especially on controversial results.
The number of places for bias to creep in are way to many. I think the econometrics people have gone down a hopeless path, guided by wishful thinking and demand from people who want us to be able to make statements about things which we just cannot do.
The parts of economics that are valuable are not based on econometrics, but upon reasoning from first principles: Incentives, supply and demand, game theory etc. under which I would argue all of your examples fall.
Then I don't get it. If you accept first principles, then the world of structural econometrics is open to you. Cake having, and cake eating - at the cost of structural assumptions.
All you are doing then is filling your models with some actual data.
Could you be more specific what is a lab setting for you? Natural experiments are not what I meant when I spoke of experiments, as natural experiments are observational inferential methods!
btw did they ever tell you about that physics experiment in a lab that was built just over a subway line? So much confounding!
Jokes aside, your assumptions amount to assumptions about what "controlled" and "in a lab" means. I hope you see it makes more sense to define the requirement for experimental identification mathematically, in which case you'd see that the conditions are not different in kind, only in degree.
etc.
Edit:
If that counts as revealed preference data, I can assure you that econometrics are used to great effect in pricing, auctions etc - one of the reasons certain orange and blue companies hiring experts on this have become mucho rich in the past couple of years. Some oldschool econ models may not be the best to describe the altruistic, boundedly rational present-preferrer. But oh boy, can you make some serious dough if you can mechanism design the auction platforms and the best the firms can do is to try to train some machine learning models against it.
The only thing to which I will object here is the use of the word "only" from "not different in kind, only in degree".
There is a substantial difference in degree when dealing with atoms, molecules, homogenous materials vs. people who think, face incentives and understand game theory.
Not an economist, but my job role involves lots of economic theory and I'm a few classes into an econ masters.
As far as economic reasoning goes, there are some studies you can do (like optimal auction clearing) where you can hold the inputs equal and then adjust some aspects of the optimization (the objective, constraints, or decision variables) and get a very accurate picture of how market changes would impact the results. I think that is probably an exception rather than the normal case though.
In general, my thoughts during my studies has been that the economic theories of supply & demand, incentives, elasticity, theory of the firm, game theory, government intervention...etc all has more use as a generic framework of thinking (ex: if we put in a price cap, here are the expected impacts), rather than an equation I can use to get an exact answer (basically exactly what you're saying above). Doing some kind of analysis on things as complex as the US economy must have massive inaccuracies involved as there are too many factors and even behavioral economics doesn't have all the answers for why people don't always act rationally.
> The parts of economics that are valuable are not based on econometrics, but upon reasoning from first principles: Incentives, supply and demand, game theory etc. under which I would argue all of your examples fall.
So how do you confirm these first principles? I'd argue that those are an even wider door to let your biases flow into the analysis. I mean this type of argument has given us trickle down economics which has significant real world evidence it doesn't work.
It's worse than that, not only are the first principles demonstrably flawed, the towering edifice built on top fails due to some very iffy analysis. It's remarkable how much time and effort goes into attempting to maintain the idea of equilibrium in economics. You can only add so many epicycles before you should perhaps consider your model is wrong.
Economists don't believe in their own theories. I see people simply declare the market free when it is clear that it is not or people claim Says Law is infallible when it actually can be used to predict the exact opposite of what it is usually lazily abused for.
For example people use says law to argue saving does not create unemployment but says law can also be interpreted as saving is impossible over the long run and therefore unemployment shouldn't happen either.
I think the problem is that economics needs to take human behavior into account, which it tries to do via game theory, which in turn relies on rational actors. I don't think individual human behavior is predictable like that. You could argue that we don't need to model individuals, only large groups of people. But the problem is that often the behavior of some individuals has a huge effect on large groups.
Contrast that to physics, where we have been very successful with predicting the behavior of masses both on small and on large scale, with relatively few exceptions.
You are on to something with ”behaviour”, ”actors”, and ”rational” . Ludwig von Mises defined ”rational” as ”aiming to an end, using means”. That means that even someone performing a dance to produce rain is a rational actor. He formulated the axiom that ”humans act”. And then derived his theory from that. The science is named Praxeology. A big difference from the natural sciences is that you really can't falsify a theory using empirics. There is no way to repeat an experiment, because reality has been reconfigured. Therefore axiomatic theory is what you have to rely on. Which is not too bad. After all sciences like geometry also make do without empiricism. (There is no way to empirically disprove that a triangle has an angle sum of 180 degrees.)
The chief danger to our philosophy, apart from laziness and woolliness, is scholasticism, … which is treating what is vague as if it were precise… F. P. RAMSEY.
It's both. I don't think it's too much of a stretch to broaden what he meant by seen/unseen to also refer to econometrics models which incorporate only some things (that can be measured/seen) and not others (that are unmeasured/unseen).
The seen/measurable: employment in the production of windows.
The unseen/unmeasurable: missing employment in the production of suits.
Because people aren't lab mice. My favourite example are claims wrt. experiments for the Universal basic income. These experiments always pertain to people who receive more money than previously, but somehow never include a proportional group of people from whom the money is taken away. To do this experiment correctly, you would have to pick a random sample of the population and do the redistribution regardless of what any of the participants want.
A representative sample features the same external validity issues you have in many (any) experiments, including in the hard sciences. That's part of science, and it would be unfair to attribute it otherwise. One experiment won't do it.
As for your other point, I guess the issue the lack of a hypothesis regarding basic income. You can't test "basic income" as such, and with such unspecific setup you are sure to conflate rather than illuminate mechanisms of relevance.
In any case, it depends on your question whether you need to take income away from anyone.
Are you going to start by examining distributive effects? Really?
No physisict would test their airflow experiment on a flying rocket, while also trying to measure how he exhaust affects the wind in Costa Rica next week and saying 'something' about the future climate. They would start by putting their airflow gizmo into an isolated chamber - which is, afaik, more or less where UBI experiments are.
> Are you going to start by examining distributive effects? Really?
Fair point. I guess you could run an experiment where money is simply taken away from people, destroyed and then look at the effect of that in isolation.
But... UBI doesn't destroy what might be taken away. That money immediately goes and does work, and eventually it potentially improves the environment of those it was taken from. In the form of fewer social issues. Is the theory anyway.
There are experimental Game Theorist experimenting with such schemes, I suspect because they get a great amount of enjoyment from taking things away from people ;-)
And lab mice aren’t elementary particles, even though inbreeding can make them extremely similar, DNA-wise. Even if they were, they aren’t humans, so extrapolating to them is an art in itself (physicists rarely do experiments with electrons and draw conclusions about neutrons from them)
That it is harder to draw conclusions from experiments in biology than in physics doesn’t imply biology isn’t a science. Economics adds the problem that we (rightfully) don’t want to do realistic controlled experiments (would at times be hard, too. Put a few million people in a country with a given law regime, watch for a couple of decades, draw conclusions. Repeat) but again, to me, that doesn’t imply it isn’t a science.
I think it’s more part of the humanities than a science, though.
So, if you would want to test if, say, a pair of shoes improves running performance, it's not enough to compare to peers without change, or the situation before the new shoes, but you will reject the study unless you also have a third group where you break people's legs? How would that be necessary?
UBI cannot be implemented unless somebody pays for it. It's necessarily redistributive. All existing experiments only look at one half of the equation. I think it's a fair question to ask what the effect will be on people who on net will pay more than before this system was introduced. Breaking peoples legs is not a prerequisite for others to run faster.
Of course not, there are a plethora of factors that would alter the effectiveness of UBI, looking at it so simply and then rejecting it outright is dishonest.
Money would majorly come from those who have the greater means to pay larger amounts into the system, and on the hypothesis that bettering the material conditions of those in the lower and middle class will necessarily lead to increasing productivity and thus (and 'thus' is a large leap) greater general income that can partly be paid back into the system in a cycle.
You can use purchasing power parity differences to check it out. Find like-minded first world people to pool a fraction of their income and you can offer UBI to a third world village or town.
Isn't the typical first principles argument that lowering taxes for the companies etc. pays for itself because of increased economic activity and thus tax income actually increases. Why could the same not apply for UBI?
Except UBI is simply a guarantee of a minimum income, not a distribution without other means of income. If UBI is 5k, everyone makes at least 5k. If you make 15k before, now you make 20k (modulo market adjustments).
I'm not interested in what you claim to pay in taxes. UBI benefits aren't solely to a person's bank account; the benefits include a prosperous economy and stable political environment their bank operates in.
I expect to pay and continue paying a lot, yet the benefit is more than what I pay in taxes. What's better is that our current UBI is quite a bit above zero already, but the distribution is fraught with large costs in time. Re-organizing and streamlining UBI distribution would result in significant cost improvements to the current US welfare approach, and improve its impact.
While I appreciate the great efforts to put hand-waving FUD via terminal histogram graphics for insertion into comments[0] (seriously, great job!), your point that the middle class is guaranteed to implode is nonsensical.
The US already has a non-zero UBI[1], it's simply inefficiently distributed via the negative income tax rate and various welfare efforts. That's a clear first area to fix things up. Then, if we need to increase the historically low tax rates on high income households or implement capital tax rates on the wealth, increases in taxes can be considered.
Further, from a theoretical perspective, the economy is not zero-sum. A rising tide lifts all boats; if less money has to be doled out to industries supporting enforced poverty, such as private jail systems among others, then there is more money in the economy for utilization for many things (including but not limited to UBI). General equilibrium effects often have counterintuitive effects, such as they are.
Randomized controlled trials happen all the time. The OP is echoing a common Austrian economics approach in claiming that economics cannot apply the scientific method ever.
Note that the model is implemented in GAMS[1], a proprietary language focused at constrained optimization problems (think Matlab, but more niche). This makes it a non-starter for most interested outsiders.
This model is supposed to replace the existing macro model cmoonly used in Denmark - ADAM (Annual Danish Aggregate Model)[1] which has been continuously developed and refined since 1970. You can find the yearly updates back to 1999 here.
It is a step forward in transparency (even though 90% of danes probably don't understand a thing of what was published) which is something no one I know is opposed to.
Hope this sets a precedent for other countries to follow!
I guess the way is to verify and check the model over the coming years against the open data which initiated it... so we'll see :) these things can get quite chaotic when taking externalities into account.
I read the comment about the unreliability of economics, however I do like to point one thing, most economical model fit well when the economy is doing ok or within a certain range of parameters, until something outside of those safe area happens. Think of 2008, and think of the economical impact of the pandemic. It's impossible to account for in prior models and thoughts as those are nonlinear events almost no one can predict. This is the thing with economy, we can only know a bit about our position and surroundings, but we have no way of knowing if we are in a local optimum, or if we are approaching a tipping point that invalidates all prior models. There are variables that don't matter until they reach a certain mass, there are metrics we simply can't find quantitive method to measure, let alone to predict. Economics is always messy, and with a lot of the classic thoughts proven wrong, we should be wary of any of the assumptions we make.
Except that some economists did predict the global financial crisis based on their models. The thing that marked them out was that they were all heterodox economists. Largely the predictions were based on a solid understanding of the financial system, something mainstream economics completely ignores.
https://voxeu.org/article/no-one-saw-coming-or-did-they
It's a bit backwards looking in that it can assess known quantities.
But far beyond 'Black Swan' events it's hard to account for innovations, geopolitical shifts, things that change the dynamic.
Plastics, the dishwasher, women in Engineering and the workplace, the birth-control pill and Rock and Roll combined to shift things in ways we could not put down in math, at least beforehand.
But the biggest 'black hole' is that it does not account for consumer surplus: we only measure what is bought and sold, at that price. We don't measure the leverage gained by consumers for cheap fashion, the benefits of more variety in goods, more vacation, shifting to bikes from cars etc..
The data is still a beneficial area of study however.
I'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information problem in that though there are/will be plenty of metrics, not all of the necessary information can always be known. That's ok for a company, but not an economy. Just make the data "open" to everyone, "the model" itself is a misnomer. Denmark already has one of the most free and open economies in the entire world...hopefully this idea doesn't help to kill the golden goose. I frankly think it will have no virtually no influence or impact.
What are you a skeptic of, exactly? This is the model actually used by the Danish Ministry of Finance to study the effects of various policy changes. I don't think there's any need to speculate about how much influence it will have: it apparently is already in use and guides policymaking. Other advanced economies have their own similar models used for studying and making various aspects of economic policy. I think another poster has provided a link to the model used by the NY Fed.
At a high level, I, like you, am fairly persuaded by the Hayekian point that its impossible to collect enough information or otherwise capture the necessary complexity to reliably model even a moderately complex economy with enough fidelity to allow central planning. But this is far short of that. And there does seem to be a need for general models to allow policymakers to make informed decisions. The only alternative would seem to be to make no decisions at all which a) is itself a decision and 2) does not seem to be an option that many people seriously advance.
I guess your position could be that these efforts are doomed to failure--i.e., no model will provide useful results. But that position--that no model will provide any amount of useful information, even at very low levels of granularity, is a very strong position--much stronger than Hayek's argument against planned economies--that I'd have to see some serious support for. And it certainly doesn't seem like a position that people should accept without a very convincing showing of its futility, given the significant costs of making policy decisions without even attempting to model them, or of making no policy interventions at all.
This is amazing! Whether or not every aspect of it is fully open-source, this is a great step forward towards governments being more transparent about how decisions are being made, and citizens being directly able to make positive contributions to that process.
Not expecting any, and the model is probably too complicated for
outsiders to make substantial changes. But anyone is welcome and if the request is good I see no reason why we would not try to incorporate it.
I wonder if this could be used to automatically suggest new policies? Presumably the optimizer will tell you exactly which input variables to tweak to increase the final number/gpd/which ever.
As the saying goes "any metric is bad once you optimize for it", so maybe that would lead to terrible politics.
That makes me worry if large actors can use the model to make any self-serving policy suggestion "look" like a good idea for the economy, by combining it with precise information on what the national economics model is sensitive to or isn't.
What makes this model specific to Denmark, apart from the supplied baselines?
Also, is anyone aware if such large scale automatic optimisation solvers are used in other departments, such as crime regulation, health care, military?
Open sourcing models that are used for significant policy decisions (affecting others) is somehow required to protect and maybe enhance democracy in the digital age. Applies obviously to the public sector but also to private sector when it operates at large scale as a de-facto regulator / controller / planner of society.
Interesting, although a bit dubious. The claim is that there are no microstructure models in banking, and in the paper he cites two econ 101 textbooks.
I mean, I guess the introduction is technically correct in stating that these textbooks are not sufficient to develop a microfounded model of banking. But then, one might suggest the author to perhaps look a bit further than Mankiw's 101 book? After all, textbooks treating the subject in more detail than even the present paper do exist, even from heterodox sources, if the mainstream is unacceptable.
I've yet to read a comment about how well such models predict reality. Who is going to weigh in?
I studied economics, and I have some doubts about whether this kind of modelling works well enough to be useful. There's statistical issues like whether you have enough data to bring in your error bars, and theoretical issues like whether the thing you're studying moved below you because it's being studied. Neither of which invalidate the model entirely, but both of which make it a heck of a hard task.
And in the end, what matters is whether it works or not. The Lagrangian for quantum physics is some huge formula that gets pushed as meme now and again but it works. Likewise f = ma works perfectly well for your high school rolling ball experiment.
Great initiative, but I must ask: is the Greek compound formed from makro and gamy entirely accidental? Because it describes the past twenty years quite accurately.
They do, but only because the English-speaking world is peculiarly susceptible to this sort of manipulation. It started with Burma->Myanmar and Peking->Beijing, something nobody should have taken seriously.
Nobody gets mad that Spaniards say "Londres" instead of London. It's funny how it's mostly despotic regimes that get so twisted up about these foreign linguistic matters.
I think a country at least gets to decide what it calls itself in english. For example in official documents that they translate to english. Or what they teach in schools as the 'correct spelling'. Now if the rest of the world follows that is another question. Languages don't have owners.
People generally do not get to declare how their name is spelled in a foreign language. It's determined by the government issuing them the document containing their foreign-spelled name. (Depends on the country of course, but this is typical)
Of course they do! For my Bulgarian papers i was asked to spell my name in latin script however i wanted, and when i moved to France I was asked how is my name spelled, and i could change it if i want to (e.g. if i had an s in my name between vowels, in French it'd be read as z; in that case i could have changed the spelling to have ss, which is always read as s).
Soon they'll have our entire lives modelled out for us. Know what we'll be useful for, optimise to give us exactly what we need and nothing more. What could possibly go wrong.
Perfect is the enemy of good. Sure there is, though the most popular alternative (Gitlab, from where I'm seated) IPO'd recently, and we know the effect that tends to have. Our national governments are already pretty comfortable with Microsoft products.
Do you know any other git hosts that have persistently proven themselves trustworthy and have superior financial incentives? Otherwise it might be better to focus on the meat of this post
I bet there are not. A 3rd party willing to host and distribute your code for free without any contractual burdens which already hosts the vast bulk of your audience and the tools they will use. Seems a great idea, rather than spending money to self host or pay a different brand name and all the follow on expenses, for a worse result. Unless you are a government contractor.
One would think the Danish government could afford to put up a server of their own, either in some computer lab of their own or a rented one at some purveyor of such. Especially as they wouldn't need a very big one, since they don't actually need all the stupid Web bumf that is good only for making naïve developers think git means github. They could just put actual git on it, publish the address, and people can do a
git clone
on their command line. They're supposed to be developers, right?
An actual belief in this is ridiculous, and taking light on literal war and anti democratic effort and meme'ing it as "freedomed" is absolutely disgusting. You know that these are real human beings we are talking about right?
I think that's part of the (dark) joke - "freedom" being the reason that the United States always gives before destabilizing a region and propping up corrupt dictators or puppet democracies which are anything but "free."
Oh wow, someone getting upset and moralistic at black humour. I’ve never seen this episode before.
No, the real joke is that the US ‘freedomed’ a democratically elected socialist government and replaced them with a ‘pro-freedom’ dictator with the full support of other western countries, as they have done multiple times before.
"The system was most useful in October 1972, when about 40,000 striking truck drivers blocked the access streets that converged towards Santiago. The strike was supported by the Patria y Libertad group and at least partly funded by private donors who had received money from the CIA.[5] According to Gustavo Silva (executive secretary of energy in CORFO), the system's telex machines helped organize the transport of resources into the city with only about 200 trucks driven by strike-breakers, lessening the potential damage caused by the 40,000 striking truck drivers"
And the coup that ended the experiment happened on Sept. 11. As Shakespear had his characters say, If this were played upon a stage now, I could condemn it as an improbable fiction.
They're referring to the CIA assisted fascist coup where the Chicago Boys "ran" the economy afterward using it as a place to experiment with their ideology.
I wonder if this includes Christiania, the billion Euros of cannabis sold there each year, and the big lift all those drug tourists impart on the local service industry. Beautiful place by the way, would recommend.
Why is it that all weed enthusiasts always believe that MJ has any relevance to the, in this case Danish, economy? The amount of MJ use in Denmark is minimal compared to other countries, and certainly there is no where near "billions" of Euros sold. Certainly "drug tourists" make little to no impact on the tourism of Copenhagen.
Maybe drug tourism has little impact, but 24% of adolescents report that they’ve used it in the past year, and 41% report they’ve tried it. With it being illegal, there’s no doubt that a fair amount of money is being moved around society shadily because of it.
I agree. We went to the Louisiana Museum of Modern Art and walked from the station. The surroundings are stunning. Rural Denmark looks really nice. Christiania not so much. A lot of dubious looking people in the station. At least they didn't attempt to sell us drugs, maybe thanks in part to Danish culture.
Yeah it's a dump. I traveled there a few years ago with a buddy who was very excited to visit Christiania, like it was the key thing he wanted to do on the whole trip. He came away pretty disappointed.
Even if we assume that “the billion Euros of cannabis sold there each year” is not a wild overstatement (that’s an unimaginable amount of weed), the Danish GDP is some 300 billion Euros.
As for tourism, it’s just one of a long list of tourist attractions in and around the city.
It would not make a huge difference if Christiania disappeared tomorrow (although Christianshavn would be a much nicer place).
I've often wondered whether the first super-intelligent AI that gets created, if it somehow manages to be both under government control and not put to strictly military uses, might be tasked with modelling the economy and deciding on the "correct" set of economic policies.
Extending the scope of AI decision-making outside of the realm of economics seems much harder, though, as there's much less training data for questions like how to educate students in a pandemic, or whether to loosen planning rules for building wind turbines.
I suspect that before AI becomes capable of providing good answers to those questions, it will already have changed the world beyond recognition, and probably not in a good way. The best we can hope for is mass unemployment and a UBI, which will also make all economic models obsolete too.
That was actually likely to happen at one point - either in the Soviet Union through OGAS [1] which was rejected due to bureaucratic politics, or Chile's Project Cybersyn which was cancelled due to, uh, American interests. It would have been extremely interesting to see what a planned economy utilising cybernetics and rudimentary ML would've been capable of, especially as the technology improved.
Sure, you would want a model to aid decision-making, but if there is (initially) no data for how the economy will behave under a UBI and with 80% unemployment, for example, then all existing models might end up generating predictions or recommendations that don't help at all.
The model encodes some generalities that may still hold true, given that it was fit on a lot of scenarios, and a lot of brainpower went into it.
But sure, it might completely miss some novel phenomenon. It is up to the humans running the model to be aware of its limitations and accuracy.
In any case, the more heads thinking about the problem the better, and the model is an approximation of a lot of heads. And the equations can show why it thinks what it thinks.
The authors working for the Danish government deserve an A+ for making their code and assumptions public, along with comprehensive high-quality documentation.[b] It was a delightful surprise to click on the link and find... a carefully curated repo.
I have only one nitpicking: This looks like the kind of project that should have been -- and in fact probably should be -- implemented in Julia, instead of in a proprietary language. I suspect many heuristics and approximations could be more accurately modeled by ML components, interspersed between equations, as has long been proposed by Julia folks like Chris Rackauckas.
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[a] https://news.ycombinator.com/item?id=30028188
[b] https://media.githubusercontent.com/media/DREAM-DK/MAKRO/mai...