Debate Over Economics
I want to give my opinion regarding "Economics For Engineers Is A Branch Of Psychology" \[Oct. 2, 2000, p. 160\] and the contribution of a reader, Pedro Coelho \["Letters," Dec. 18, 2000, p. 58\].
Pedro Coelho explained the position of George Soros (author of The Crisis Of Global Capitalism). I agree with him on several aspects. But I have a different point of view on others that should be taken into consideration too. In his letter, Coelho said:
(1) "...every 'market agent,' from people to enterprises, is ignorant about the market condition." I partly agree that it's dependent on how much, how good, and how fast every agent is receiving information. It's not possible to be 100% informed, but we could estimate how reliable the information is that we're using. As you can see, I introduced probabilities in the loop, and as usual in Operation Research "Strategic Games Theory," the concept of perfect information and its associated value.
(2) "So like Kamm (Soros) said, they make delayed and wrong decisions." I say, an economic agent may produce the correct decision even with wrong information. Probabilities for that exist. Delayed or not, we can estimate properly and soon and, consequently, make the right bet in the proper time (even before). As you can see, I introduced estimation in the loop.
(3) "...every economic agent decision/action affects and changes the market." I think that in direct proportionality with the capital, the agent is driving. Each little agent tries to maximize its benefits but doesn't try to modify the market because it lacks the money to do so.
On the other hand, big agents—government and corporations—can produce modifications in the market because they can fuel a lot of money to the system. They can appreciate the effect of their decision in the final state of the system (the state after their action). They can consider the controller point of view as they drive process variables (i.e., stock values) that affect manipulated variables (purchasing or selling actions).
(4) "This isn't comparable to any physical system where there's a clearly defined transfer function and a determined and precise reply to a known input." I don't agree. A lot of physical systems deal with probabilities regarding demands and offerings. For example, public power energy generation and distribution systems, Internet systems (routing, access, servers, search engines, etc.), telecommunications systems, and so on all have probabilistic demands and distributed decision and services supply.
Also, we should consider aspects such as nonlinearity's turbulence and chaos in the systems under analysis. We need to take into consideration resonant effects, such as Linux Community's common interest to have free access to Unix, that drive all the people involved in the project (more than 1500 at coding time) to work as volunteers.
This resonant effect, the only one that enables little agents to create big effects, is the common interest that produces synergy. So, many little forces working in the same direction and in phase, as in lasers, occurs. It may be used to modify the market, or as we can often see, to modify several aspects of the world (community, minorities, charity, ecology, and other movements).
Finally, I send my congratulations to Lawrence Kamm on starting this debate, and to the entire Electronic Design staff.
Lic. Raul E. Di Fiori
Don't Get Tied Up In The Math
"Good Designs Flow From The Art, As Well As The Science, Of Engineering" \[Real-World Engineering, March 5, p. 156\] really hit home with me. Being a classical physicist working as an engineer, I must say that many of my engineering achievements "occurred" not from crunching formulas, but with an inspirational thought where the realization was that just about everything in this world is the same—only the nomenclature is different. This is most notably demonstrated by "analogies." One example is the mechanical dynamic stabilizer (used to stop vibration on machinery), which is the same principle as the bass reflex speaker enclosure where the stabilizer does all of the "shaking" (the port opening) and the machine stands still (the cone of the loudspeaker). Here, the function is the same, but the system and use are totally different to achieve a new result.
In Dynamical Analogies, Harry F. Olson sets out the characteristics and equivalent formulas for electrical, linear mechanical, rotational mech-anical, acoustical, and magnetic systems. He includes a simple line drawing for each of these forms and covers up to third-degree systems.
This has been an invaluable text to understanding a variety of systems and their relationships. The similarities are obvious as the formulas are the same: just the nomenclature differs. This is what engineering is all about—not pages and pages of formulas providing the derivation of something. Formulas are necessary to understand the relationship between parts of systems, but the initial thought has to come from the brain. I fear that far too many engineers get "tied up in the math" and cloud the inspirational achievements that could be accomplished.