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Re: Simulations
At 06:28 AM 8/29/96 -0400, Duncan Frissell wrote:
>At 10:05 PM 8/28/96 -0800, jim bell wrote:
>
>>To me, the most obvious one is GIGO: Simulations, especially
>>political/social ones, might depend heavily on assumptions that are
>>programmed into them. A trivial, yet interesting example is the computer
>>game "Sim City" which allowed you to adjust the "tax rate" but problems
>>always cropped up the further away you were from 7%. The libertarians were
>>frustrated that we were unable to drop the tax rate and still get a
>>well-functioning, happy society.
>
>I was taking economics back in the Armonk Iron days and we played around with
>an economic simulation program written in Fortran. One was supposed to
>adjust government spending and taxes to find an optimum level. I set both
>taxes and spending to zero. We got a lot of economic growth and a lot of
>inflation (this was not a monetarist simulation).
Yes, it does sound a bit inaccurate. Let's see, while I only took one
economics course in college (macroeconomics) as I recall inflation is
generally the product of either the monetarization of the deficit or an
increase in wages unmatched by productivity increases. The latter is
unlikely to be caused extensively by government policy or spending
(Davis-Bacon is an obvious exception to this in the private sector), and if
the government spending and taxes are zero then obviously the former can't
be the cause.
> But we were happier.
That reminds me of a related flaw in Sim City. When the program is queried as to
what the public's main complaints are, the information is presented by the program as
the percentage of the population considering various problems to be the
"most important." However, it did not explicitly rank the SERIOUSNESS of
these problems in absolute terms. Since it is practically an axiom of human
nature that we'll FIND something to complain about if nothing comes
immediately to mind, the danger is that you'll over-react to a non-problem
with a "solution" (often involving more government spending) that is even
worse.
Another bias was the fact that the program seemed to lump all
infrastructure-type spending into government, as opposed to a privatized
solution. In reality, if you drop government spending very low problems
will begin to be solved by private means. In Sim City, however, the system
did not compensate in this way, leading to low or even negative growth, and
extreme dissatisfaction, etc.
Jim Bell
[email protected]