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Old 08-18-2018, 12:04 PM
 
Location: League City
3,267 posts, read 6,279,717 times
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I find this topic fascinating. No I am not an advocate of communism. But I do like to read about simulation and modeling whether it be biological or industrial or economic. I did not know the Soviet Union tried to game their economy with super computing. I would love to find some high level references to read up on that. But to answer the original question, my opinion is - I don't know. Realize that the recent explosion in machine learning and AI and Big Data have made a lot of far fetched ideas possible. Many of those ideas involve massive amounts of data that were impossible to process even a decade ago. And massive amounts of data is what you need when you try to model a large scale process.
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Old 08-18-2018, 12:15 PM
 
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Quote:
Funny thing is, I'm sure many big businesses probably do that sort of thing already these days.
The Soviet Union was a corporation on a massive scale it is said.

As an answer for the OP I don't think even a modern computing system would be able to manage a market like we have in the west from top to bottom. Too many variables and people are involved.
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Old 08-18-2018, 05:36 PM
 
Location: Ohio
18,012 posts, read 13,243,316 times
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Quote:
Originally Posted by Drewjdeg View Post
Consumers are not really maximizing utility because they don't have the information to do so. In other words, a consumer may compare prices of a desired good at a couple of stores; but in general, a consumer doesn't have the ability to choose the cheapest price in the whole economy.
That's a nonsensical argument that fails miserably.

First, it ignores Actual Costs. Where's the sense in spending $0.25 to $1.00 in gasoline to drive to another store to save $0.06 on a can of vegetables?

Attorneys in Cincinnati start at $75/hour and go up to $250/hour. Attorneys in Los Angeles and New York start at $250/hour. Transportation costs would negate any potential cost-savings, not to mention few attorneys in Ohio are admitted to the Bars in California or New York.

Primary care physicians here are $25 to $45 for an office visit; specialists a little higher. But again, you'd negate any cost-savings because of transportation costs.

Second, it ignores Opportunity Costs. The consumer could spend one hour shopping at one location, where utility is maximized in reality, because everything averages out in the end, or the consumer could spend an additional 3-4 hours driving around shopping at other stores.

That 3-4 hours could be better spent as quality time with family or friends, or alone time, or performing chores like dish-washing, washing clothes, cleaning house, yard work, etc, or on personal pursuits like education, or hobbies like sewing, photography, model-building, wood-working, scrap-booking etc, or recreational time like boating, fishing, playing golf, playing tennis or working out.

Finally, Iceland is one economy, but the US is not. The US consists of 1,538 separately functioning economies, and prices for goods and services vary tremendously among those 1,538 separately functioning economies.

The price differences are based on many factors. One factor is property, sales and income taxes. Some cities charge income tax, because you either live or work in the city. Counties in Kentucky charge income tax, but counties in Ohio do not. Property taxes in Ohio are not uniform. Not only do property taxes vary in each of the 88 Ohio counties, they vary by township within a county. You may pay $2,000 more annually in property taxes than your next door neighbor, simply because your neighbor lives across the township line.

Gasoline prices vary, because States do not charge uniform excise taxes on gasoline. California and Kentucky require reformulated gasoline year round, while Ohio and Indiana do not, so people who live in Kentucky but work in Ohio and Indiana, buy their gasoline there. Reformulated gasoline costs more than non-reformulated gasoline.

If you live on the Mississippi, Ohio or Missouri Rivers, you pay less for gasoline than someone living 100-200 miles away from those rivers, due to the additional costs incurred transporting gasoline by truck to gasoline stations.

Oil can be transported through a pipeline, but the EPA does not permit gasoline or ethanol to be transported through pipelines, due to their volatility and the fact that the environmental damage they cause in a spill or leak is far greater than mere oil.

Gasoline may only be transported through a pipeline on within the confines of a refining facility, from cracking stills to storage tanks. There are refineries in the Plains States, but they are few and far between, and people who live in the Plains States always pay higher prices, because the cost to transport gasoline from the few refineries to the many gasoline stations is rather exorbitant.

States, counties and municipalities also levying varying degrees of regulations on business and industry, resulting in higher operating costs, which are passed onto consumers in the form of higher prices. It is true that many of these regulations result in a one-time only price increase, but many also result in continual price increases.

That is most obvious in Ohio, where child-care costs were $1,800 to $2,000 annually, but now cost an average of $8,700 annually and many cost more, just a few hundred less than annual tuition at the University of Cincinnati, which is only $9,800 a year.

The State, in its infinite wisdom, decreed that you don't need a college degree to parent your child, but you need at least a 2-year degree in early childhood education to parent another person's child.

That immediately slashed the Supply of Labor permanently by 95%.

Child-care workers were a dime-a-dozen, and you could pay them minimum wage, but now, you'll be lucky to get one applicant over the course of several weeks or months, and you have to pay them starting wages of $12/hour to $15/hour.

Few people have the money to waste on a 2-year degree, and those that do aren't interested, or would rather use that money to obtain a better degree, or spend it on something else. A lot of former child-care workers never took an ACT or SAT test, and have no interest in doing so to get admitted to a 2-year university or technical college, and even if they tested, they might not be admitted. Even if admitted, they might drop out for any number of reasons, including academic reasons.

Cities vary in population, and population pressures result in increased Demand, which puts enormous pressure on prices for housing, food, clothing, entertainment venues and everything else.

Quote:
Originally Posted by Drewjdeg View Post
They said they could use computers to solve these optimization problems better than the market economy. Basically the state would make sure citizens got the goods they needed the most efficient way possible with math and science.
The Soviet Union failed, because they don't have one economy like Iceland. The Soviet Union had more than 10,000 separately functioning economies, and prices varied for the reasons I've stated.

Yes, the Soviets could certainly negate one of the factors, namely taxes.

Soviets could decree a uniform tax rate, but for the other factors I mentioned, there's no getting around that.

Things cost what they cost, and transportation is part of the costs.

Even now, Russia's transportation system isn't even remotely on a par with the US. When the Soviet Union collapsed, its transportation system was on a par with the US in the 1920s.

Yes, they had a well-developed railroad system west of the Ural Mountains, but not east, and not southeast into the "Stans."

They had no interstate system like the US. It was most akin to a US Route, nearly all two-lane roads, and what qualifies as a "road" in the Soviet Union was macadam and gravel, not asphalt or concrete.

There were enormous delays getting food, clothing and other items to the people, resulting in constant shortages.

You don't seem to understand that the Soviet Union allocated resources to each economic sector. For example, diesel fuel was allotted to the military, to transportation, and other sectors.

Within each sector, resources were further micro-managed.

In the transportation sector, diesel fuel was allotted to shipping, railroads, trucks and agriculture.

When the Soviets fell short on oil production, it reduced the amount of diesel fuel. The Soviets chose to reallocate fuel from agriculture to other sectors, because allocating fuel to agriculture also meant allocating fuel to transportation to transport the harvests to markets.

It was more cost-effective for the Soviets to import grain, and they asked the US for a trade deal.

Many opposed the deal, because they thought the Soviets were hoarding fuel in preparation for war, but President Carter authorized the deal at the behest of US farmers, who had a bumper crop that year.

Metal resources were also allocated by sector. Auto-makers received an annual allocation, and once it was used up, auto-workers sat idle for months at a time, doing nothing.

Manufacturing workers sat idle for days and weeks at a time, because the transportation system was so messed up, they wouldn't get timely deliveries of parts and supplies to produce goods.

The population pressures that exist in US cities, also existed in Soviet cities.

Quote:
Originally Posted by Drewjdeg View Post
My question is this: given today's advances in supercomputing - would it be possible to achieve what Soviet scientists set out to do?
No, it just isn't possible, nor is it desirable.
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Old 08-19-2018, 04:40 AM
 
Location: Pennsylvania
8,975 posts, read 3,118,603 times
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Originally Posted by Rocko20 View Post
I think we can all agree that Communism failed so badly it's not even worth looking into whether it would be possible or practical again. No one would want it.
Alexandria Ortez or Cortez, whatever her name is, would love a Soviet style command economy.
Those who don't remember the past may repeat it.
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Old 08-20-2018, 02:58 PM
 
3,966 posts, read 1,593,575 times
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Quote:
Originally Posted by Drewjdeg View Post
In a market economy, at the most micro level, you have consumers maximizing utility based on their income and the price of goods in the market. Similarly, you have producers maximizing profit by some combination of capital and labor. In aggregate, decisions by individual consumers form market demand, and decisions by firms form market supply. Classical economics teaches that the intersection of market demand and supply is Pareto Optimal. Soviet economists disagreed.

They basically said there was some inefficiency at the micro level. Consumers are not really maximizing utility because they don't have the information to do so. In other words, a consumer may compare prices of a desired good at a couple of stores; but in general, a consumer doesn't have the ability to choose the cheapest price in the whole economy. Soviet economists and mathematicians thought they had solved this "trial and error" inefficiency through linear programming.

They said they could use computers to solve these optimization problems better than the market economy. Basically the state would make sure citizens got the goods they needed the most efficient way possible with math and science. And to their credit, using linear programming to solve these questions was a fairly genius idea at the time. The problem was computational complexity. If you take an economy with millions of goods, thousands of industrial inputs, etc. it becomes insanely difficult for a computer to process. So instead, they made simpler models which were highly flawed; that coupled with politics is why so many grocery stores were empty and so many factories sat idle with no raw materials.

My question is this: given today's advances in supercomputing - would it be possible to achieve what Soviet scientists set out to do? Can you compute maximum efficiency with todays technology? I know many quantitative finance firms like to hire Russians because they are extremely adept at making algorithms to understand markets and make sh*t loads of money on the stock market. Models used by these firms are surely more complex than what they thought of in the 60's and 70's. So - its it possible?

*This isn't a communism vs. capitalism debate. It's about whether these ideas are even possible.*
Of course not. It's kind of a naive question, because even a supercomputer cannot anticipate new innovations, new developments, or the next moves of people.


Further, even a supercomputer is only as good as the data that gets fed into it. As we know from the history of the Soviet Union, and are learning from today's China, is that the economic data was often fudged on a colossal scale in order to meet whatever Five Year Plan was in place.
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Old 08-22-2018, 06:21 AM
 
3,720 posts, read 1,667,677 times
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Originally Posted by Mircea View Post
That's a nonsensical argument that fails miserably.




It was more cost-effective for the Soviets to import grain, and they asked the US for a trade deal.

Many opposed the deal, because they thought the Soviets were hoarding fuel in preparation for war, but President Carter authorized the deal at the behest of US farmers, who had a bumper crop that year.
They also subsidized bread to the point where it was cheaper than feed. So farm collectives wound up feeding bread to cows instead of feed.

This entire premise of this thread is fantastic.

Anyone who has ever looked under the hood of econometric models, especially the multi-equation ones used to represent economies, would, if he were honest, be aghast. They are complete trash. Statistically, the bigger and more complicated they get, the smaller their confidence regions get. Assumptions, dummy variables of all conceivable types, constrained variables, dubious data, exotic specifications and estimation techniques, rise exponentially with a models complexity.

In reality, the greater the computing power needed to "represent" an economy, the less reliable the representation will be.
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Old 08-26-2018, 01:40 PM
 
369 posts, read 150,242 times
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Yes. Very possible. Because it is just a kind of slavery. The worst kind of slavery. It has nothing to do with a "theoretical background".
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Old 09-01-2018, 09:22 AM
 
349 posts, read 413,654 times
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What exactly is your question? Is it about authoritarian economies or the Soviet Union?

Human beings are fully capable of figuring out optimal inputs and outputs without a supercomputer. That is not the problem with government control of the economy.
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