Engineering Economics

From Zanecorpwiki

Contents 1 A Case for Engineering 2 Purpose 3 Hybrid Economics 3.1 Historical Perspective 4 Current Challenges 5 Scope 6 Prescription 7 Notes

A Case for Engineering

TODO: Having problems with wordsmithing today, so I'll focus on the ideas.

• "The economy" is like a car.
  • It has many interconnected systems.
  • These systems can be tuned, but not individually; the interdependency complicates things.
• Tuning vs. redesign.
  • Slightly bigger bore is not the save as rotary vs. piston.
  • Bigger issues too: Why cars and not hovercrafts? Why vehicles and not public transit?

Purpose

• Old reliable station wagon or finely tuned Indy car?
  • Ideally, an Indy car breaks down right after it crosses the line because in a race, any extra reliability would have meant extra weight. How fast you complete the race is all that matters.
  • Most people are better served by a reliable car.

Hybrid Economics

• "Best of both worlds."
• We want most Americans in comfortable, staid, family vehicles that good gas mileage.
• The Indy car that needs constant tuning and adjustment and a team of experts is for the professionals.
• But even the "Wall Street guys" mostly drive regular (albeit decadent) cars to and from work. The race car is just for the race.

Historical Perspective

• It's been only in the modern era that we've figured out how to have supercharged finances.
• First "man made"^{[notes 1]} problems in... 18th century?
• But thought in terms of "one economy for all". In other words, part of the problem with the 30's crash as well as hiccups in the 90's and 00's was putting to much into the Indy car. Supercharghing this and that caused it all to break down.
• Glass-Steigal effectively accomplished this in large part.
• When it was repealed, we had a combination of individual greed and a mis-apprehension^{[notes 2]} of "share holder responsibility" that demands short term profit maximization^{[notes 3]} caused everyone that had been driving around in safe station wagons felt they needed to be driving around in Indy cars.

Current Challenges

• This left the majority of the population forced to deal with uncertainty that is both unnecessary and highly detrimental.
  • Why do interest rates move significantly ever day? Filing your paperwork on Tuesday might make a difference of $1,000s or even $10,000s of thousands of dollars over the life of a loan. If the rate on Monday and Wednesday is 4.125% and it's 4.375% on Tuesday, then on a regular mortgage, that'll be hundreds of dollars a year and etc. -- TODO: get precise numbers in footnote. That amount of volatility in the real estate market for long term housing is ludicrous.
  • Sky rocketing home prices followed by plummeting and foreclosures is ludicrous.

Scope

• Global vs. national vs. state vs. local vs. personal
• Effects from each, but seems reasonable to consider as independent, modeling the top and bottom effects as exogenous.

Prescription

• Reinstitute a Glas-Steigal. Something like the original Voelker rules before they were gutted.
  • There will still be plenty of banks just like there were plenty of banks between 1930 and 1990.
  • The idea that everyone is hurt because some people are sandboxed is ludicrous. The only ones that suffer net loss are those that plan on bullying the kids that don't want to and can't play rough. It's like race car drivers complaining that traffic is being separated because that means they'll beat fewer people. It's true, the race car driver's record suffers, but everyone else--99.9999%--is better off.
  • The problem is that many think they should be or want to be race card drivers. This makes the race car lobby swollen, but it's a bad idea. (Yikes, I'm being patriarchal here.)

We need two economies, two largely separate systems. They can still interact... race cars are transported on highways just fine, so mobility, etc. isn't a problem. The divisions don't add significant overhead, they just insulate the vast, vast majority of normal traffic from unrestrected speeding race cars.

Notes

1. ↑ We'd made problems before, but out of ignorance... not quite right because we were ignorant of the "reality" when we messed up stuff in the modern era as well... but it seems there was a difference. Maybe this point is just to unclear and should be removed.
2. ↑ Or perhaps "an unnecessarily narrow in concept and broad in application concept ".
3. ↑ Perhaps best to lay this at the feet of "investors at large" whatever that means.