Potential and the energy analogy to economics

I wrote earlier about how flippin awesome Gibbs is.  And this is truth.  Energy is elegant and simple (at least, when you compare it to matter– that stuff is way screwed up).  Many of the forms energy comes in are, largely speaking, understandable on an intuitive level.  Put a rock up high, and it has the potential to move.  So alot of people use energy as an analogy.  This is all great, I love me some analogies.  It’s just that sometimes people use analogies to make arguments, and the analogy does not always mean what they think it means.

Case in point: trickle down economics.  The argument, as it has been presented to me, is that if we take our wealth (lets say dollars, just for a discrete unit) and put it up high at the ‘top’ of the economy, it will naturally fall down to ‘lower’ places in the economy.  Because moving dollars are good for the economy (minimizing ‘idle capacity’ I think is what people say?), this will be good for everyone.  At heart, this is very much like our energy diagram, with dollars in the unstable state moving down to the stable one:
Energy Diagram

Great, the dollars are analogous to atoms and the people/businesses/kittehs which can own dollars are the states which they can occupy.  But which states belong at the ‘top’ of our diagram?  In chemistry, when we want to know the relative energy of two very simple states, we can call up physics and physics will calculate it from scratch.  The vast majority of the time though, we go the quick and dirty way: we measure it.

Remember, the equation for how many atoms are in each of two states consists of energy and a bunch of constant numbers.  So if we want to know how much difference in energy there is between two states, we just measure how many atoms we have in each state (in the analogy, how many dollars each kitteh has out of the total number of dollars) at equilibrium (some point in time when the numbers are not changing much).  The more dollars a kitteh has, the more stable (relatively) those dollars are when owned by that kitteh.  Dollars given to these kittehs will tend to stay put.  In contrast, kittehs with the fewest dollars are not stable kittehs.  Dollars owned by these kittehs will be owned for relatively short periods before moving on.

I understand that it is intuitive to say that rich kittehs are at the ‘top’ of the economy.  Our language for dominance is often vertical in nature, with ‘up’ and ‘good’ being roughly equated.  This language is deeply intuitive to most people.  But the analogy being made is not about dominance, it is about how likely something is to move if put up ‘high’.  Making that substitution is a clever rhetorical trick, but if we want to make an honest analogy to some physical process, we should use the language that goes with that process.  The poor are at the top of the economy in this analogy, not the rich.

Now arguments from analogy are notoriously slippery, and this whole thing is certainly open to the criticism that I’m digging too far into the analogy and losing sight of the economics that it was meant to clarify.  That is certainly valid.  To be clear, my intention here is not to talk about the underlying economics or social justice or whatever (although those conversations can be fun).  If there is some data that show rich people are more likely to spend large fractions of their money than poor people, thus (or in any other way) establishing a divergence between the analogy and the way real economics work, that would be quite on point.

This is also open to the criticism that the analogy was intended to be all literary-like, and not an argument at all.  In the face of this objection, should it be raised, I am perfectly willing to cede the point that trickle down does not constitute an argument.

But my point is this: it doesn’t matter if you’re making an argument, a poem or a submarine- before you make an analogy to the physical world and act like it is somehow insightful, you should at least do your audience the courtesy of figuring out which way is up.

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One Response to Potential and the energy analogy to economics

  1. a coward says:

    I’m fairly confident the reason people feel this analogy is accurate is that they believe rich people do spend more (by having more) than the poor. I believe they’re wrong, and agree entirely with your assessment. Normally, I’d point out that you’re spending too much effort pointing out something that doesn’t need pointing out, but I rather enjoyed the spiel this time. 🙂

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