The World is Not Atomistic, Deterministic, Materialistic

Blinded By “Science”

History of Atomism, Determinism, Materialism

Democritus in 300 BCE outlined a view of the world that has strongly shaped perceptions of reality to this day. All physical things can be reduced to smaller particles (atoms) that are irreducible. Everything can be “explained” by these particles.

https://plato.stanford.edu/entries/atomism-ancient/

The progress of science since 1500 has been shaped by a principle, called Occam’s Razor, which asserts that a simpler explanation is better than a more complex explanation. This is an untestable assertion, let alone a “law”, but the general progress of “science” and the “scientific method” since that time has reinforced this bias toward simple, rational, linear, logical explanations.

https://www.britannica.com/topic/Occams-razor

The progress of modern science was accelerated by Rene Descarte’s 3-dimensional right-angle coordinate system of space. It led to the belief that all space was composed of a substance called “the ether”. Physics experiments showed that this “materialist” view of space was inaccurate.

https://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/ether-physics-and-astronomy

However, the progress of science reinforced the atomist, determinist, materialist concept of the universe through the end of the 19th century (1800-1899).

https://plato.stanford.edu/entries/atomism-modern/

Early Modern Physics was Not Atomistic, Deterministic, Materialistic.

Newton defined concepts and equations for gravity and calculus. These were true breakthroughs, but perhaps misinterpreted as purely mechanical breakthroughs.

https://www.goodreads.com/quotes/168406-nature-and-nature-s-laws-lay-hid-in-night-god-said

To this day, we can describe gravity, but we have no idea how it works through space and time and matter. Gravity does not reinforce atomistic concepts, it challenges them with the notion of force at a distance, affecting those atoms.

https://science.howstuffworks.com/environmental/earth/geophysics/question232.htm

The next major progress in physics was in describing “waves”, as they flowed between atoms. Curvilinear, not linear. Waves have a role to play in mechanics, but they are more important in electromagnetic waves.

The equivalence of electricity and magnetism was one of the first true innovative discoveries in modern physics. Counterintuitive. Not atomistic. Not easy to understand. Not understood by most.

Click to access CHAP03.PDF

The role of heat or thermodynamics in physics and chemistry was one that allowed atomistic views to continue into the 20th century. With a plausible description of probablistic Brownian motion, the atomistic view remained ascendant through 1900.

Click to access CHAP03.PDF

Research into the “nature” of the atom eventually revealed that atoms were comprised of “particles”: protons, neutrons and electrons. However, the tiny electrons did not stand still. They rotated about the core of protons and neutrons. They also rotated at specific fixed distances away from the center of electrons. Or, they “tended” to appear at these 4 distances (SPDF) away from the center, based on a very complicated probability function. Atomistic, deterministic, materialistic concepts did not apply. This did not destroy the atomistic world view, I know not why.

Modern Physics Rejects Atomism, Determinism, Materialism: Einstein

Einstein showed that time is “relative” to other factors in the universe (gravity/speed). The simple world view of “fixed” time is wrong.

https://www.sciencealert.com/watch-the-famous-twin-paradox-of-special-relativity-explained

Einstein’s theory also asserted that space is curved, rather than linear as always assumed previously. No simple “billiard ball” universe.

https://en.wikipedia.org/wiki/Curved_space

Einstein did not like the new “quantum theory” of the universe that was described in his time. The inherently probabilistic nature did not resonate with him, even though the physics community adopted it.

https://www.livescience.com/65697-einstein-letters-quantum-physics.html

Einstein was a “determinist” at heart and devoted his later life to finding a way to reconcile the very different “forces” of gravity, electro-magnetism and atomic forces. He failed to find a simple, deterministic explanation of the universe.

https://www.aps.org/publications/apsnews/200512/history.cfm

Modern Physics Rejects Atomism, Determinism, Materialism

The universe appears to have a history and a future, it is not static.

https://www.space.com/25126-big-bang-theory.html

Light is a wave. No, it is a particle. No, it is both.

https://www.thoughtco.com/wave-particle-duality-2699037

All of reality is based on probability. Quantum theory of physics says that particles are connected/entangled at a distance. We don’t know which reality is real until we observe it.

https://www.discovermagazine.com/the-sciences/schroedingers-cat-experiment-and-the-conundrum-that-rules-modern-physics

How Bell’s Theorem Proved ‘Spooky Action at a Distance’ Is Real

If we try to observe nature more closely, we effect nature. Hence, we can never, ever, really know the world.

https://scienceexchange.caltech.edu/topics/quantum-science-explained/uncertainty-principle

The very best modern physics theory that attempts to integrate gravity, electromagnetic forces and atoms is “string theory”. It has no experimental evidence, only logic to support it. A world of “many dimensions” is far removed from an atomistic world.

Other Modern Applications of Probability or Non-Determinist Logic

Darwin’s theory of natural selection is based upon probabilistic events. Sexual reproduction. Genetic changes. Population results.

True Darwinism Is All About Chance

Mathematicians attempted to “systematize” their discipline at the end of the 19th century. Bertrand Russell was the leader.

https://en.wikipedia.org/wiki/Principia_Mathematica

Unfortunately for those who longed for a solid, formal structure, Kurt Goedel proved in 1931 that any logical system worthy of the name of mathematics could not be proven from a finite set of obvious first assumptions. Mathematicians, physicists and other scientists had long looked at classical logic and geometry as a model for their work. Goedel showed that this was impossible. Again, the world should have digested the implications of this HUGE change, but due to the complexity of the arguments it was, and has been, largely ignored.

https://www.britannica.com/topic/Godels-first-incompleteness-theorem

Modern portfolio theory, the basis of our financial system, is based upon system level probabilities.

https://en.wikipedia.org/wiki/Modern_portfolio_theory

Political theorists have determined that no voting system can fully represent the preferences of the voters.

https://www.investopedia.com/terms/a/arrows-impossibility-theorem.asp

All modern scientists conduct experiments trading off alpha and beta risks. The hypothesis may be right, but stats say it is wrong. The hypothesis may be wrong. but the stats say it is right. This is an unavoidable conflict. No deterministic system can solve this.

https://www.investopedia.com/terms/a/alpha-risk.asp

Determinist Philosophy

The scientific community, in reality, works based on existing paradigms, and changes its views slowly based upon new evidence and new paradigms.

https://www.theguardian.com/science/2012/aug/19/thomas-kuhn-structure-scientific-revolutions

Human consciousness remains a challenge to the deterministic world view.

The practical use of machine learning / artificial intelligence does not use pure logic. It searches for probabilistic patterns.

https://mitsloan.mit.edu/ideas-made-to-matter/machine-learning-explained

Summary

Atomism, determinism, materialism is an attractive view of our universe. However, we have much evidence to reject this world view. Our world is based on multiple levels of reality and probability. Most of it is “logical” and consistent, but it cannot be simply reduced to a mechanistic base.

Top 50 – 1963

The British Invasion had not started. R&B dominated the charts (17). Leading men (10) and women (4) were still featured. A few foreign/novelty hits (4). Blues (2) and folk (4) songs were revived. A few rock (3) and C&W (5) songs. The Beach Boys’ sound was brand new (4).

R&B – Ladies

R&B – Men

Leading Ladies

Leading Men

Novelty/Foreign

Blues

C&W

Folk

Rock

California

Why is Inflation 7%?

https://fred.stlouisfed.org/series/CPIAUCSL

Easy Monetary Policy

https://fred.stlouisfed.org/series/FII10

The “real” interest rate is the nominal interest rate minus the inflation rate. It reflects the “real” cost of borrowing. Prior to the “Great Recession”, 2% was a typical “real cost” of borrowing money. To entice lenders to lend, borrowers had to pay some “real” amount extra per year, 2%.

The Federal Reserve did what it could to “ease” monetary conditions and lower interest rates to offset the negative impact of the Great Recession in 2008-9.

By the end of 2011, real rates were ZERO or negative. In other words, the Fed went too far. By June, 2013, rates returned to positive territory, but only reached 0.5%, where they remained through the end of 2017, despite president Trump’s complaints that the Fed was constraining the Trump economy. Monetary policies were “easy” for a very long 7-year period.

By May, 2019, real interest rates were back to just 0.5%, having reached a peak of just 1% for 3 months at the end of 2018. With further “easy” money policy, real rates dropped back to ZERO percent by August, 2019. The economy was now 9 years into recovery. Interest rates should have been higher.

The Fed found new ways to “ease” monetary policy as the pandemic struck in 2020. Real interest rates dropped to -1% and stayed there. Monetary policy has been “easy” for more than a decade. Time for inflation. “Too much money chasing too few goods”. “Inflation is always and everywhere a monetary phenomenon”.

Supply Chain Disruption

The recovery has been faster than anyone expected, but most critically, with consumers less eager to buy “in-person” services, they have greatly increased their purchases of goods. The modern US economy relies on imports and modern manufacturers and retailers hold lower inventories to buffer changes.

https://fred.stlouisfed.org/series/ISRATIO

https://fred.stlouisfed.org/series/PCEDGC96

Yes, durable goods purchases jumped by 20% in 1 year, from $1.8T to $2.2T. Businesses have simply been unable to adapt to that scale of change.

Easy Fiscal Policy / Large Budget Deficits

https://fred.stlouisfed.org/series/FYFSGDA188S

Standard macroeconomic theory focuses on aggregate demand versus aggregate supply as the key driver of output, unemployment and inflation. When total demand grows faster than remaining excess capacity of total supply, inflation results. The biggest driver of changes in aggregate demand is the level of government spending (demand) minus government taxation (reduces demand).

Historically, various pressures have kept the federal budget deficit between -3% and +3% of GDP, allowing the government to buffer change in private demand through the business cycle. The large drop from -2.5% to -5% in 1979-82 was a factor that contributed to the last major round of US inflation. A similar decline from -2.5% to -4% in 1989-91 increased inflation, but not on such a large scale. It also served to convince President Clinton and congress to reduce the deficit to ZERO by 1997 and run a surplus for a few years.

The 2001 recession caused a 2.5% decrease in this ratio, from a surplus to a deficit. Bush tax cuts, foreign wars and congressional agreement lead to deeper deficits at 3.3% in 2003-4, before some recovery to -1% in 2007, prior to the Great Recession.

Bush, Obama and congress agreed to spend more to fight the Great Recession, pushing the deficit to a worryingly low -9.8% in 2009. There was no agreement on a second major round of spending, so the deficit improved a bit to -6.6% by 2012 and then to a more reasonable -2.5% in 2014-15. Instead of continuing to improve with the economic recovery, it fell a little, to 3.1% in the last year of the Obama economy.

President Trump’s first order of business was to enact “job creating” tax cuts. Unfortunately, the desired boost to economic growth to fund these tax cuts did not occur. The budget deficit increased from 3.1% to 4.6% of GDP, as the economy reached a record long recovery period of a full decade.

To address the pandemic, congress and Trump agreed to spend money to protect the economy and workers, leading to very large budget deficits of 15% and 12% in 2020 and 2021, respectively. Too much aggregate demand for the level of aggregate supply, so we have major inflation.

Summary

Easy money, easy fiscal policy and a 20% increase in demand for goods leads to major inflation. Like a frog getting boiled as a pot slowly warms up, we became complacent based on the apparently “just right” conditions of the late teens (2012-19). The federal budget deficit needs to get back above -5%, real interest rates need to become positive and consumers need to rebalance to consume more services and less goods. I don’t think we’ll see 7% inflation for 2022, but it looks like 4-5% is a good bet. Hold on.

Politics

Biden deserves a good share of responsibility for the government spending budget deficit, as he was seeking to make it even larger. I give him a “pass” on consumer demand for durable goods since it mostly occurred before he started. I also give him a “pass” for the loose Fed monetary policy which has been going on for a decade or so. He was wise to reappoint the Fed chairman, who I believe will raise interest rates as needed to get the real interest rate back to a proper level. In the meantime, Biden will pay politically for higher inflation, which has a “real” impact on the wallets of voters.

https://apnews.com/article/coronavirus-pandemic-business-health-prices-inflation-bd71ae9e491907a51956c1d4eb07fb90

Good News: 30 Topics

US Cars Last Twice as Long

US Libraries Have Adapted to the Digital Age

Air Conditioning is Nearly Universal in the US

US Housing Market Supply and Values are Growing

Unemployment Rates for Younger Works are Lower

More Earned Doctorates

More College Students Study Abroad

Growing US Exports

Hotel Options

Not “Living in a [Strictly] Material World”

Apparel prices

On-line Access

Lower Airfares

Agriculture Productivity Improvement Continues for Centuries

Take Care of Our Pets

Lawyers are Less Influential

More Beer Options!

More Car Choices

More Parks

More Women in Politics

Lower Consumer Debt

Less Air Pollution

Fewer Abortions

Fewer Fires

More Science Degrees

More College Grads

More High School Grads

More Charitable Giving, US is a Leader

Illegal Immigration is Down

Traffic Fatalities are Down

IQ Scores Rise

Good Economic News

Better off, job seekers/job openings.

US GDP/Capita versus Other Countries

Long-term Real US GDP Growth

6 million jobs added in 2021

Great Labor Market

Higher Effective Minimum Wage

Very Low Unemployment

Are You Better Off Economically? Yes!

Labor Productivity

Labor Force Participation

Good News: Apparel Prices

The nominal/actual average price of clothing today in the USA is 3% LOWER than it was 30 years ago, in 1991!!! Meanwhile, the overall consumer price index (CPI), has more than doubled (+106%). So, the price of clothing, relative to overall prices, has dropped by a mind-boggling 53% in the last 3 decades!

This is on top of the 37% real reduction in prices from 1970 to 1991.

From 1960 to 2021, the real reduction in clothing prices is a full 71%. More than two-thirds.

https://fred.stlouisfed.org/series/CPIAPPSL

https://fred.stlouisfed.org/series/CPIAUCSL

This illustrates the benefits of “free trade” to US consumers.

Money / Clothing for nothing …

Good News: Are You Better Off? (2)

Ronald Reagan taunted Jimmy Carter with this question to voters in the 1980 debates. It helped him win.

Twelve years later, James Carville helped Democrats return from the political wilderness in 1992 with his advice to Bill Clinton that “it’s the economy, stupid”.

https://en.wikipedia.org/wiki/It%27s_the_economy,_stupid

Politicians have used various measures, from unemployment to inflation to the “misery index” to jobs created to productivity to the stock market, to promote their success and detract from their opponents.

I want to focus on one measure, the ratio of the number unemployed to the number of job openings, to highlight the strength of the American economy in the last dozen years.

https://www.bls.gov/charts/job-openings-and-labor-turnover/unemp-per-job-opening.htm

https://fred.stlouisfed.org/graph/?g=p9aA

George W. Bush: Jobless Recovery in the “aughts”

The Bush economy was widely criticized for its “jobless recovery” following the economically healthier Reagan and Clinton presidencies. The presidency started at close to 1 unemployed person per job opening. The recession pushed this up to 2.5x and then 3.0x. In labor market terms, this is a huge difference. At 1:1 or 1.5:1, unemployed workers expect to be re-employed quickly. At 3:1, some may enter the dark days of the “long-term unemployed”. After 3 years, the economy DID recover to 1.5:1, but it was unable to improve further. The “Great Recession” was a brutal job killer, pushing this measure of labor market tightness up four-fold, from 1.5X to more than 6X before its peak in the first half of 2010, as Obama and congress and the federal reserve bank wrestled with the situation.

Obama: Recovery and “New Territory”

Between April, 2010 and April, 2012, the economy cut this ratio in half, from 6x to 3x, a very solid performance. It took 3 years, until April, 2015, to complete the next 50% reduction, from 3x to the historically “very solid” 1.5X. The economy continued its growth for the next 2 years, but at a slower pace, reducing this ratio to 1.3X.

Trump: Even Better

The Trump economy continued to improve for the first 18 months of his term, reducing this ratio from 1.3X to 0.8X by September, 2018. This was a time of record low unemployment and economists recalculating their standard of “full employment”. While the economy continued to grow, the unemployment rate continued to decline and the stock market continued to climb, THIS measure had reached its minimum before the 2018 mid-term elections. It remained steady at the very positive level of 4 job seekers for every 5 jobs (0.8) for the next 17 months, until the pandemic disrupted everything. The ratio quickly shot up to 5X, not as high as the 6X that Obama faced, but very high. It quickly recovered to 1.4X by the end of Trump’s term. This was partly job recovery and partly fewer job seekers, but it was an amazing recovery in historic terms. Recall that 1.5X was “a good as it got” during George W. Bush’s presidency.

Biden: Even Better, Again !

In the first 6 months of the Biden presidency, this ratio dropped from 1.4X back down to the prior record level of 0.8X. Yes, by July, 2021, there were 5 jobs available for every 4 job seekers. This was as low as the ratio had previously fallen, even as the Trump economy piggybacked on the Obama economy and continued its extraordinary run. The ratio continued to fall in the next 6 months to 0.6X, an unheard-of level. 5 jobs for every 3 job seekers. It’s “no wonder” that voluntary job quits are at unprecedented levels. For, perhaps, the first time in American history, “everyone who wants to work, can find a job”. Whether you are right or left, Dem or Rep, this is “good news”. This is “great news”. Wages for the “bottom 20%” are rising in real terms. Income inequality is declining, a bit. The economy seems to be able to digest this new condition. And, the economy is not done growing, innovating, creating businesses, creating jobs, exporting, etc. About 2% of Americans are likely to be attracted back into the workforce in the next year or two, keeping the headline unemployment rate from going much below 4%, but pushing US real GDP growth to 4% in 2022 and close to 4% in 2023.

Summary

The “Great Recession” and the “once in a century pandemic” have been unable to disrupt the ongoing progress of the American economy and labor market. As a nation, IMHO, we have cultural and political challenges, but we “aught” to appreciate the power of the American economy to move forward.

Good News: We’re (Almost) All On-line

Cable TV Subscriptions

https://www.economist.com/business/2019/05/09/american-pay-television-is-in-decline

https://en.wikipedia.org/wiki/Cable_television_in_the_United_States

Hey! Quick Summary

Cable TV subscribers and networks grew rapidly through the 1980’s and 1990’s reaching near universal availability. US subscribers plateaued from 2009-2014 at 100 million before rapidly declining to 74million in 2021. As the first graph shows, much of the decline has been a substitution of internet for cable access to media content. This is “good news” because everyone that wants it has access, but a new, better product has started to rapidly displace this 50 year-old technology.

Desktop/Laptop Computers

Ownership of a home desktop or laptop computer also remains near universal, at 77% in 2021. The ownership of tablet computers has risen from 14% in 2012 to a majority of homes (53%) in 2021.

Broadband Internet Access at Home

Broadband internet access has rapidly grown from 1% of homes in 2000 to 58% in 2008 to 77% in 2021. The retired generation (65+) lags behind at 64% connectivity. Black (71%) and Hispanic (65%) homes are below the average. Rural residents are also less connected (72%).

Internet Users

Pew Research also reports that the percentage of individuals that are internet users has nearly doubled from 52% in 2000 to (near universal) 93% in 2021. About three-fourths of older individuals (65+) are “surfing the web”. 97% of others are connected. There is no major difference between racial categories. Rural citizens are little less engaged (90%).

Mobile Phone and Smart Phone Owners

Mobile phone ownership has grown from 62% in 2002 to 97% today. Seniors (65+) have slightly lower ownership rates (92%). Racial groups have the same ownership. Rural residents have slightly lower ownership rates (94%).

Smart phone ownership has grown rapidly from 35% in 2011 to 77% in 2016 to 85% in 2021. Ownership rates vary by age: 18-49 (95%), 50-64 (83%) and 65+ (61%). There is no racial ownership gap. Rural residents have an 80% ownership rate.

Summary

Although we saw news coverage during the pandemic which highlighted the imperfect access to electronic devices and network required for effective on-line learning, the US is approaching a state where nearly everyone has access. Cable TV access is now post-peak. TV network access is increasingly through the internet. Broadband access is the weakest measure at 77% ownership. Cell phone ownership is universal and smart phone ownership will reach that level before the end of the decade.

Postscript: Economic Impact = 10% of GDP

Industry associations, journalists and consultants wrestle with each other to capture and communicate the economic value added by personal computers, smart phones and the internet. In rough terms, about 10% of GDP is due to the direct and indirect value of these technologies that did not exist in any economically material amount in 1980, just 40 years ago. Good news? No, GREAT NEWS.

https://www.reuters.com/article/us-usa-internet-economy/internet-sector-contributes-2-1-trillion-to-u-s-economy-industry-group-idUSKBN1WB2QB

https://www.iab.com/news/study-finds-internet-economy-grew-seven-times-faster/