Dear Paul Dumais and friends on several mail lists Your note of 99-06-30 12:52:20 EDT, Re: [lets] Simple solutions and global models, posed three questions, concerning the global model at url <http://www.freespeech.org/darves/bert.html>, questions that could be appropriately answered on a FRQ list. Below are my, lengthy as usual, answers to those three questions. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ `1, To: WesBurt, From: Paul Dumais, Q: you wrote: > (WSB: Yves, you have covered every aspect of our global problematique >except for the most important possibility, that is, the possibility that the simple > solution, identified as option 4 in my post of 99-06-16, might be the (snip) >>>>> QUESTION # 1, <<<<<<< Is the post that you speak of on [EMAIL PROTECTED]? If so, I cannot seem to find any of the 4 solutions for our global problematique that you speak of. Can you help me? A: I gave the wrong date for the post which described option 4, it should have been 99-06-11, instead of 99-06-16. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2, To: WesBurt, From: Paul Dumais Q: You wrote in your post of 99-06-29: > I corrected my mistake the way our bankers create money, with the stroke of a > pen, by drawing a straight line on the chart from the unit cost ($/KWH) at > design output, back to a slightly lower unit cost ($/KWH) at the no load or > minimum output on the chart. >>>>>>>>>>>>> QUESTION # 2 <<<<<<<<<<<<<<<<<<<<<< You said above that the cost ($/KWH) declined as the output of the boiler reached designed output. How then can you draw a line from the unit cost at design output to a slightly -lower- unit cost at the no load end of the chart? How does the straight line help you to compute the optimum dispatch? Does this line (the straight one) somehow account for variable costs that were not included in your cost data? A: Every capital asset will have certain fixed cost associated with it such as mortgage payments and no-load (no output) operating costs. Those capital assets which produce a product will have, in addition to its fixed costs, variable costs roughly proportional to output. The decision to build the asset in the first place, or get it up to temperature and on-line in the second place, are decisions that cannot be decided by the current markrt price for the product. On the other hand, once the asset is on line, only the variable costs can be logically involved in deciding how much output the asset can produce at unit costs ($/KWh) less than the current unit cost of power from all other assets presently on-line. Most productive assets will have a lower variable unit cost at their design output, than at lower outputs, and higher variable unit costs above the design output. But, a logical controller (the chart I was discussing) automated to move the asset from its minimum output, to its design output, and then into its overload range up to some set limit, as the market price rises, and back again as the market price declines, must have a control characteristic with an upward slope over the whole range of output. If the control characteristic sloped downward with increasing output, as I had first drawn the chart, the asset would be bi-stable under automatic control. At a certain rising price (A), it would move rapidly to near full output, without regard for the actual output needed to hold frequency and the scheduled net-exchange of power over the tie-lines constant. When the demand for power was falling and bringing the price down to near the design cost (below A) the asset's output under automatic control would move rapidly to the minimum, again without regard for the actual output needed to hold frequency and the scheduled net-exchange of power. This type of malfunction on power systems gives rise to trade disputes between interconnected power companies, just as failure to stabilize national economies gives rise to trade disputes among nations in a global economy. Power companies hold such malfunctions to a minimum, nations refuse to do so. Like the stroke of a banker's pen, that straight line on the chart would ignore no-load losses, which cannot be eliminated and do indeed make the asset less efficient at low outputs, in order to have a stable control characteristic over the whole range of output for each productive asset in the system. Most of the time, the optimum dispatch involves loading the plants in order of their unit cost at design output. When two or more plants have their straight lines at the same cost level they will share increments of additional demand between them until they reach the upper limits. If additional plants at higher cost were not put on-line in time to carry the next higher increment of demand, the local automatic dispatching system will experience run away inflation of the price index, low system frequency, and excessive incomming power over the tie-lines. Only rising variable unit costs can be used to compute an optimum dispatch of multiple productive assets. That is to say, that all productive assets serving a particular market must exhibit constant or decreasing returns to scale before the market mechanism can converge to an optimum allocation of resources, just as Henry Carter Adams said in his 1887 monograph, RELATION OF THE STATE TO INDUSTRIAL ACTION, Vol. I, American Evonomic Review. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 3. To: WesBurt From: Paul Dumais Q: I refer to your second figure 8 (there are two figure 8's - is that intentional?) in http://www.freespeech.org/darves/bert.html - "The U.S. Systematic Defect of Omission". What exactly is being omitted? A: Yes, there is a Fig 8 and a Fig 8b. The set of three charts, Fig 7, Fig 8, and Fig 9, with a common +X axis measuring each worker's contribution (units of value-added/year) to the general welfare, constitute the micro-model of the global model at URL <http://www.freespeech.org/darves/bert.html>. The title "The Whole Divine Law," together with the following text, and the three charts constituted a single file <Fig7-9.Gif> which prints on one 8.5x11 sheet and was used as an attached file on previous posts to discuss the probable biblical roots of this micro conceptual framework which shows: 1, the life cycle of a productive asset or person (Fig 7), 2, the total earned income ($/year/worker) from productive labor (Fig 8), and 3, the unit cost ($/unit of VA) of productive output (Fig 9) for each individual in the workforce. The (second Fig 8), Fig 8b, with title, "The U.S. Systemic Defect Of Omission," also prints on one 8.5x11 sheet and was used as an attached file on previous posts to discuss the root cause of the perennial deficiency of purchasing power, the 4-10% unemployment, and the 3-3%/year inflation that the U.S. has experienced since the 1890s. Notice that Fig8b has the same +X and +Y axes as Fig8 in "The Whole Divine Law," but with the addition of -X and -Y axes to show the elements of the population who are supported by the public revenue generated by the 30% total tax rate shown on the right side of Fig 8b. These dependent elements either produce no output, like children, retired people receiving social security payments, people receiving welfare or unemployment compensation, and prisoners; or they produce an output which is destroyed in war or wasted in peacetime, like the output of the public and private sectors of the defense/industrial complex which are supported by the U.S. defense budget. The important point about these dependent elements of the population, which also includes all government employees, is that their output does not compete with the output of the productive workforce on the right (+) side of Fig 8b for the effective demand (desposable income, that is to say, earned income after taxes and after child support) in the national market. Notice that in Fig 8 the fixed cost of dependent support and the variable cost of taxes are shown added together, and deducted from earned income (line 0,b), just as the head of household would experience them. In Fig 8b, on the other hand, variable taxes remain a deduction from earned income (line 0,a), as always; but child support is shown overlaying disposeable income to illustrate the workers choice between satisfying Say's Law (keeping effective demand equal to the costs of production), or, adequately supporting his dependents. Our instincts command the adequate support of our children, so the economy runs with a perennial deficiency of purchasing power amounting to about 5% of GNP, which is similar to the public education budget which is similar to the post World War II defense budget. You ask, "What exactly is being omitted?" The U.S. and the U.K. were the only two industrial nations which did not establish family allowances for the support of children in the amount of 1/5 average wage/child after World War II, either as a subsidy paid from the public revenue to parenting households, or, as an indirect tax on employers to be added to wages according to the number of dependents in each worker's family. That sustaining feedback, from those people in production, to those people in development , is what the Anglo/American establishments omitted from our post World War II public policy. Was the omission due to innocent ignorance of the principle involved, or to a vicious ambition to keep the "old Order" in place? I try to lean toward the innocent ignorance theory, because I can see no advantage to the WHIPs from this public policy of skinning the workforce, this public policy which lost the British empire and will soon lose the American empire by letting letting its citizens sink to third world status.. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Please feel free to arrange this material in any way that best serves the purpose of your FAQ website at URL <http://plaza.powersurfr.com/Usalama/economics.html>. Sincerely, WesBurt
