This might look like a strange name, but wait and you will see the significents.
There are two key classes that all Engineers have to take in college and those are "Statics" and "Dynamics". I had to take them and I got an A+ in Statics, but only a B in Dynamics. Statics was easy. You could easily draw up a model of the problem on a sheet of paper and then analyse each part of the problem, step by step. You could even build a physical model and test it to see if your calculations were correct. After taking Statics, I thought that Engineering was simple and easy. Was I ever wrong!
Dynamics was a totally different animal. Things were changing all over the place and you had to analyse many of the same things from Statics while many elements were on the move. Think about the differences between holding a baseball "statically" in your hand compared to the forces that were on the same baseball while it was being pitched to a batter? A lot more complex, right?
Real economics is more like pitching the baseball than just holding the baseball in your hand. The problem is that most people can not mentally handle the complexity of the baseball being pitched so the stop at the static model. They might go so far as changing "one" variable at a time, but not take into account the fact that the baseball is starting to spin in a certain direction just before it it released by the pitcher. In the engineering Dynamics class, they learn how to deal with the many changing variables as the baseball is being pitched. In may cases, they have to use super computers to simulate what is happening split second by split second because closed form equations would be too complex. Isn't real economics just as complicated as pitching a baseball?
My point is that most economics is so over simplified for college students that it has little relationship to the real world. That is just one reason so many economic forecasts end up being so far off. Growth of the economy seems to be the primary focus of most economics, but what about all the other things that are changing at the same time? Some in one direction others in other directions. Here is an example. Take the "retail" segment or consumption. While Amazon and Wal-Mart are expanding, Sears and any "big box" stores are going out of business. Amazon is growing at over 10% while others are going out of business at about the same negative rate. Why do we focus so much on why Amazon is growing and not more on why many others are declining?
Look at IBM or HP. It was not so many years ago that these were the economic leaders. What happened? Where did Apple come from or why are Kodak and Xerox gone? If you look at the Dynamic picture, you will see that companies are growing faster and dying faster today. Why is that and what does it predict for the future? Remember when only those with a big bank wad could start a company? Today, it is not money, but intellect or new technical ideas that are needed to start a company. What we are talking about here is "change" and that means "dynamics". Static models used to be good enough to understand economics and predict the future, but not anymore. Some how we are all going to have to graduate from simple Statics to the much more complex Dynamics if we what to be serious players in the future. The problem is that most of us humans do not have the intellect to play in the Dynamics arena. That means the spread between rich and poor is going to get wider and wider and there is no real way to prevent it.
Talk to your friends and see if they have any idea how significant Dynamics is compared to Statics. If they have never thought about it or don't know the difference, then you know that the human race has a serious problem.
There are two key classes that all Engineers have to take in college and those are "Statics" and "Dynamics". I had to take them and I got an A+ in Statics, but only a B in Dynamics. Statics was easy. You could easily draw up a model of the problem on a sheet of paper and then analyse each part of the problem, step by step. You could even build a physical model and test it to see if your calculations were correct. After taking Statics, I thought that Engineering was simple and easy. Was I ever wrong!
Dynamics was a totally different animal. Things were changing all over the place and you had to analyse many of the same things from Statics while many elements were on the move. Think about the differences between holding a baseball "statically" in your hand compared to the forces that were on the same baseball while it was being pitched to a batter? A lot more complex, right?
Real economics is more like pitching the baseball than just holding the baseball in your hand. The problem is that most people can not mentally handle the complexity of the baseball being pitched so the stop at the static model. They might go so far as changing "one" variable at a time, but not take into account the fact that the baseball is starting to spin in a certain direction just before it it released by the pitcher. In the engineering Dynamics class, they learn how to deal with the many changing variables as the baseball is being pitched. In may cases, they have to use super computers to simulate what is happening split second by split second because closed form equations would be too complex. Isn't real economics just as complicated as pitching a baseball?
My point is that most economics is so over simplified for college students that it has little relationship to the real world. That is just one reason so many economic forecasts end up being so far off. Growth of the economy seems to be the primary focus of most economics, but what about all the other things that are changing at the same time? Some in one direction others in other directions. Here is an example. Take the "retail" segment or consumption. While Amazon and Wal-Mart are expanding, Sears and any "big box" stores are going out of business. Amazon is growing at over 10% while others are going out of business at about the same negative rate. Why do we focus so much on why Amazon is growing and not more on why many others are declining?
Look at IBM or HP. It was not so many years ago that these were the economic leaders. What happened? Where did Apple come from or why are Kodak and Xerox gone? If you look at the Dynamic picture, you will see that companies are growing faster and dying faster today. Why is that and what does it predict for the future? Remember when only those with a big bank wad could start a company? Today, it is not money, but intellect or new technical ideas that are needed to start a company. What we are talking about here is "change" and that means "dynamics". Static models used to be good enough to understand economics and predict the future, but not anymore. Some how we are all going to have to graduate from simple Statics to the much more complex Dynamics if we what to be serious players in the future. The problem is that most of us humans do not have the intellect to play in the Dynamics arena. That means the spread between rich and poor is going to get wider and wider and there is no real way to prevent it.
Talk to your friends and see if they have any idea how significant Dynamics is compared to Statics. If they have never thought about it or don't know the difference, then you know that the human race has a serious problem.
