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Piņata Principle: Corollary to the Hansen Economy

 
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Sun Nov 28, 2010 7:29 pm    Post subject: Piņata Principle: Corollary to the Hansen Economy Reply with quote

The Hansen Economy explains the ability of people to survive on little money yet enjoy quality goods through the application of intelligent search and process.

However, while it gives insight into the balances that allow a good or bad Hansen Economy to develop on the demand side, it does little to explain the supply side, especially in today's highly asymetric distribution of income and assets.

I attempt here to begin an explanation by what I call the "Piņata Principle".

Having worked in business and attempted to form many small businesses over the years, I have come to the conclusion that the standard way of thinking of things is not accurate and is somewhat over complicated. Coming up with great ideas, getting funding, becoming successful, these are very ration principles. But they never seem to operate in the real world.

This is why I propose the Piņata as metaphor. Think of the pinata. It is a paper mache receptacle full of goodies...candy, prizes. It is placed well above children's heads so they cannot reach it and smash through to get the goodies. However, if parents give them a stick, they can whack it until it bursts dropping the goodies all around. Of course, they are blindfolded to make it all the more frustrating, or fun if you're watching.

Given that the wealth is so asymmetrical, trying to gain wealth among the pinata players is pretty much futile. For example, say a kid is hungry for candy. How much good would it do to ask another kid for some candy? None, because the candy is in the pinata. Would it make sense for one kid to come up with a "great idea", say a toy or other prize to trade for candy? No, because the other kids have no candy...or if say one did from a previous party, it would pretty much be a one for one trade.

More to the point, to get any sufficient amount of candy, requires that the kids grab the bat and whack the piņata...because the scale of goods inside the piņata dwarfs the accumulated candy wealth of the entire birthday party.

The other part of piņata distribution is the person who whacks it is blindfolded....hence they are in the worst position from taking a gain...while the other party-goers are poised and ready to scoop up the loot (unless you make a rule that only the batter has first digs).

So in a world of asymmetric wealth, the only rational exercise is to go after one of the wealth concentrations and devise ways to unleash it onto the public. This might be the big government contract, or the wall street bonuses, or working for a hedge fund. Somehow, someone has to whack the piņata.
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PostPosted: Mon Nov 29, 2010 8:38 pm    Post subject: Reply with quote

I haven't thought very deeply about this side of the equation.
It sounds like you are describing something very particular,
a particular variation on a tournament structure.

I don't think you'd want to commit to a literal interpretation
of your metaphor: everyone but the "winner" benefit greatly,
while the "winner" only benefits slightly, meanwhile the winner
is determined by merit.

It conjures up some strange scenarios. The guy who invented
the HD television (as if it were only one), ended up benefitting
a little (he got a 22 inch set), while everyone else around him
benefited by getting 44 inch sets for free. On the other hand, it
fits in with the Prometheus myth, so far as I recall it.

It's the hero's tale, this pinata economy you describe, with a
tragic end. An anti-meritocracy, except that those who went
before you might have weakened the pinata a little.

Maybe a lot. It might only be a bit of luck that our hero wasn't
another in a long line of pre-heroes, who weakened the pinata
sufficiently.

If the economy was really like this, then if one was already in
the game, one would act to weaken but not break the pinata,
or to not even bother to weaken it at all, letting the heroes
take on the task.

Meanwhile, it might not be so tragic for the hero, especially if
they aren't motivated so much by the candy. If numbers 2 through
10 get most of the candy, and number 1 only gets a little, it
might not be so bad.

Finally, there are plenty of cases where the hero is rewarded
in our society. I think the pinata model is not so accurate.
The exceptions are noticeable because they are exceptions.
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brian-hansen
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PostPosted: Mon Nov 29, 2010 8:56 pm    Post subject: Reply with quote

My exploration of the pinata game that you describe left off
probably the most important part of your point. If you strip
away the particulars of the game that don't correspond to what
mostly happens, then you are left with the notion that there
are these pinatas full of goodies lying around ready to be "unleashed"

(It is surprisingly difficult to talk about this subject without mixing
metaphors.)

So, there are seams of gold, or new kinds of medicines or computer
chips to be developed, or capitol pools waiting to be "released".
Pent up demand for the next beanie baby, or a fortune to be made
in baseball cards. But I figure out how to trigger a wall street bonus
that benefits me, how is it that everyone else benefits (perhaps even
more than I did) from this? I certainly hope you don't mean another version
of your trickle down economy, where it benefits everyone else because
we get the chance to clean millionaires' mansions.

Ultimately, I think that once again, you have gotten it gloriously wrong.

I think that the overall notion of the tragic hero releasing the pent-up
values to everyone else, but suffering thereby, and the notion that
the soundest way of thinking about wealth is that it is just waiting
to be discovered or released, that both these notions have an appeal,
but that there are other, less romantic views, that are more useful.
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Mon Nov 29, 2010 10:31 pm    Post subject: Reply with quote

There seems to be a consistent pattern to argumentation here, if I may take a minute.

You seem to confuse my describing something, with me wanting it to be that way...or even liking it or promoting it.

I am not sure why that is. My Pinata Principle is just that ... a statement of how it seems things might be.

Whereas on the other hand, you seem absolute in your own positing. That it "must" be the way you see it, and if Person A can't show otherwise, then hence with him! (Forgetting that what you say may not have a null hypothesis anyway).

Therefore, back to the argument at hand.

I merely look at the most logical and productive way to gain income...for myself...anyone...based on observation and some experience.

Given that wealth is very concentrated, it makes more sense to "work against" or sell to these concentrated clusters of wealth rather than try and take money away from peers, who are also just as impoverished.

I'd Love To Change the World.
But I Don't Know What To Do-ooooo
So I'll Leave It Up to You
And Whack a Pinata if I find one
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PostPosted: Mon Nov 29, 2010 11:14 pm    Post subject: Reply with quote

jabailo wrote:
There seems to be a consistent pattern to argumentation here, if I may take a minute.

You seem to confuse my describing something, with me wanting it to be that way...or even liking it or promoting it.

I am not sure why that is. My Pinata Principle is just that ... a statement of how it seems things might be.

Whereas on the other hand, you seem absolute in your own positing. That it "must" be the way you see it, and if Person A can't show otherwise, then hence with him! (Forgetting that what you say may not have a null hypothesis anyway).


I find this passing strange. There is a germ of truth in what you say.
The wealthy have the wealth. If you want wealth you need to get it
from the wealthy. Or something like this, I think.

But, from my perspective, I'm doing the same thing that you are doing.
describing what you perceive as being true or not true. I don't see
where I say that you want it. I see where I say that it isn't true.
I give some reasons why your idea may not be true, and I include a
few tidbits that might be clues as to why you say it.

There are certainly examples of what you say. The hero robbed of
the fruits of his merit, and gold waiting to be discovered, and "unleashed",
but I find these story lines to be suspect. They are so much like fairy
tales that I start to find myself swept up in their familiar plot lines.
Under the spell of these ideas, "get-rich-quick" seems like a sensible
strategy, and not being the "guy-who-broke-the-pinata" seems like
a good plan too.

The over-the-top level of certainty expressed in my post is probably
unfortunate, because I am finding it difficult to argue against a fairy
tale.

Its just that the notion you describe is so limited. If I were only going
to sell to the rich, then I couldn't make a new kind of blender that sells for
$20. That wouldn't be a pinata. I should wait for some other guy to
bust it, and then swoop in. Well, if it were true it might be okay,
but if not, I might be waiting a long time, for someone else to bust
the pinata and then not get anything for myself.

It's not so much that it doesn't or couldn't happen the way you say,
but my sense is that these are not very sound or universal strategies.
What I perceive as happening is that you are now seeing the flip side of
the power and the glory of the extended metaphor.

There are at least one or two ways that life is like a bowl of cherries,
but I'd advise against using this idea to guide a lot of one's strategy.

Maybe part of my misunderstanding is that I don't yet see that we
are at the point where wealth inequality is so high that virtually the
only way to get income is to focus on the wealthy only.
That might explain our difference of opinion.


jabailo wrote:

Given that wealth is very concentrated, it makes more sense to "work against" or sell to these concentrated clusters of wealth rather than try and take money away from peers, who are also just as impoverished.

I'd Love To Change the World.
But I Don't Know What To Do-ooooo
So I'll Leave It Up to You
And Whack a Pinata if I find one
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brian-hansen
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PostPosted: Thu Dec 02, 2010 2:00 pm    Post subject: Reply with quote

Can I take it all back?

Actually, not all, but some of my objections to your idea.
In a post that followed on to our discussions about
used cars, I finally realized that your idea of
the pinata could extend to lower levels of "prizes".

So, a new car, and by extension, furniture, and now
that I've got a hold of this idea, any, even minor goods
could qualify. At this level, it's fair to say that a
purchase would qualify as a whack that burst open the
pinata. It has a cost (my effort in breaking it, and
all that entails), and a benefit (the use of the goods
being purchased.

Indirectly, we all tend to benefit from this whacking / transaction.
While the seller benefits directly, commerce means that the
seller of the goods can now buy things from the rest of us.
Another indirect benefit to the rest of us is that the buyer
might have a surplus that can be made available to us at
a lower price. I call this the kickdown on the upgrade.
Finally, there might have been some taxes associated with the
transaction, or the income it generated, helping to fund our
common needs, as determined by the taxing governments.

So, that gives us the treasure, and the hero. Side-benefits? Check.

Here's where the particulars of your metaphor get trickier.

The blindfold. This must mean that there is some real disadvantage
of being the one that whacks it down, the one who buys the new couch.
If I had to shoehorn an idea into this, I'd say that the disadvantage
is represented by the fact that this couch has 1) the highest price
it will ever have, and 2) it probably has the highest price to value
ratio it will ever have. All subsequent transactions involving this
couch will be for lower figures than these.

Now to revisit the side-benefits, I think that this is a critical area
for understanding our economy where it is today. Taxes?
I mentioned it as a side-benefit, but we're talking pretty small potatos,
really. The taxes that derive from this particular transaction
aren't likely to generate a whole lot of candies for a whole lot
of people, if at all. There's no sales tax in Oregon, for example,
and if the new couch seller didn't make a profit this year, then
no tax side-benefit.

The seller got a benefit from the sale, and so now we can sell him
goods and services. But that might not be a net benefit, because
he might be no more likely to buy things from us than the whacking buyer.

Finally, there are many ways that the "upgrade kickdown" can
fail to operate. 2 ways seem especially relevant. 1) there may
not be a kickdown, because the buyer just holds onto both, keeping
the old couch in storage, or using that old house as a vacation
home 2 weeks of the year. 2) the fact that there is no secondary
market, or only very inefficient ones leads to the result in number
(1), namely that there is no kickdown.

So, it's a bit of a strain, but I can make your pinata idea work
a bit. The problem now is that it just seems out of balance,
and it suggests some of the wrong conclusions.

In particular, it 1) downplays the cost [the treasure is just there.
It didn't cost any of the kids taking a swing at it anything more
than the labor to take their shot], 2) overplays the advantage
that others get from someone taking a winning whack [does
it actually generate taxes to a significant degree? Is there an
efficient secondary market and will a kickdown actually occur?
Will the seller (perhaps in a foreign country) actually buy extra
goods and services from us bystanders?], and 3) overplays the
original buyers disadvantage [he is somehow paying more than
his fair share, and getting less in return].

I guess this is what I meant about you being gloriously wrong.
That is, it's an original and interesting metaphor for understanding
part of the economy, but it's misleading in several ways,
even if someone is trying to be pretty careful.
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brian-hansen
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PostPosted: Fri Dec 03, 2010 12:01 pm    Post subject: Reply with quote

jabailo wrote:
There seems to be a consistent pattern to argumentation here, if I may take a minute.

You seem to confuse my describing something, with me wanting it to be that way...or even liking it or promoting it.

I am not sure why that is. My Pinata Principle is just that ... a statement of how it seems things might be.

Whereas on the other hand, you seem absolute in your own positing. That it "must" be the way you see it, and if Person A can't show otherwise, then hence with him! (Forgetting that what you say may not have a null hypothesis anyway).


I have to say I find your meta-observations to be baffling.

When I re-read my responses to your original posting, I find no trace
that suggests I am attributing any attitude to you in relation to
the "pinata principle" other than that you think it might be true.
I would be very interested in learning what makes you think otherwise,
because it is something of a blind spot for me. I just don't see it.

As for being absolute, although its a bit more of a gray area,
the observation also seems far from the mark. For instance, I
see text I wrote such as "I haven't thought very deeply about this...",
"It sounds like...", "I don't think you'd want ...", "It conjures up ...",
"might ...", "Maybe...", "If the economy was really like this...",
"I think the pinata model is not so accurate...", "My exploration...",
"probably...", "I think that..."

From my perspective, if I were any more tentative, I'd be in serious
jeopardy of saying nothing at all. As far as I'm concerned I'm not
being very absolutist in this text.

I am doing something different though, and maybe that is what
you are picking up on. While my philosophical musings usually have
a scientific flavor to them, I think I'm starting to bring in a different
kind of style, whose name I find elusive. Humanist? Anthropoetic?
Mythology is not out of bounds. Metaphors are great, and we can
bring more of them into the arena, but they also have limits, and
the key to reasoning with them is to know when they are starting
to break down. Fairy tales can have a great power when underlying
some idea, but they can distort our thinking by making it run in
a well-worn groove. As humans we often don't know the deepest
reasons why we do or believe things. That kind of stuff.

I can't say that I'm doing very well with this new (to me) kind of
language, but it comes from the fact that I've long admired writers
(or speakers, especially) who can bring this kind of "logic" to
understanding a question. This kind of language or reasoning,
I think, works better when the standard, scientific ("null-hypothesis")
approach falls short. When facts or standards of proof are scarce.
I guess the fact that you find my post to be absolutist and to not
include null hypotheses may be an indication that it isn't working
very well for me. If that's the case, then "fair enough".
Needs more work.
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Researching your dissertation? Serious collector? Just looking for something neat?
You've found the right place to add to your existing collection, or to start a new one.
jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Sun Mar 27, 2011 3:41 pm    Post subject: Reply with quote

Pinatas backtalking!

Watch A Hedge Fund Manager And Obama Go From Laughing To Arguing

Quote:
...everyone on Wall Street is feeling like a "pinata" lately and it starts going down hill. Soon the pair are fighting each other to make their arguments heard by the audience.

Scaramucci: "So, first question, when are we going to stop whacking at the Wall Street pinata?"

Obama: I have been amused by this sense of me beating up on Wall Street. I think most folks on Main Street think they got beat up on.


http://www.businessinsider.com/anthony-scaramucci-pals-around-with-president-obama-2010-9#ixzz1HqXGRpnU
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