Econometrics and Its Zero-Sum Game

Hayek writes in Cosmos and Taxis,"There exist orderly structures which are the product of the action of many men but are not the result of human design". Econometrics concerns itself with the measurement and relationship of these components to derive an economic order either a priori or a posteriori.

In order for an econometricist to subscribe to a Cosmos order, they must conceive its reality in a measurable and deducible manner. By stroke of habit in constructing their economic and social worldview through its components, they begin to see the world in Taxis. To the econometricist, they seek to measure the components in order to manipulate and achieve in their mind a desirable economic order.

In the measurement of population behavior, an investigator cannot measure with simultaneous certainty, the movement of a population and its position. By measuring any component's movement, you by nature fix its position. By measuring its position, you by nature fix it's movement. By fixing, one component's movement or position, you by nature fix another component. A Taxis construct contains less dimensions of reality than its larger Cosmos reality. The Taxis reality is true and reasonable, but merely a snapshot of a fixed component measurement of the larger Cosmos reality.

In fixing the economic order, there is a constant in its total value. When one component variable gains, another must lessen. The net sum of the movement or position of its components converges to zero. Therefore, a Taxis reality is by nature a zero-sum economic game.

Implications? Econometricists are slaves to limits. By advising policy makers, they map for government a world that cannot exist larger than what is measured. Thus by nature, society converges to a Taxis order and a zero-sum game.

Clinical Trials versus Online Health Information - A Case In Cosmos Versus Taxis

In the Economist's recent article entitled, "Health 2.0", it explores the merits and risks of online health information. Dr. Daniel Hoch, quoted in this article states, "[Many doctors] don't get the wisdom of the crowds". Hayek writes in Individualism, “[Reason] is a product of an acute consciousness of the limitations of the individual mind which induces an attitude of humility toward the impersonal and anonymous social processes by which individuals help to create things greater than they know, while the latter is the product of an exaggerated belief in the powers of individual reason and of a consequent contempt for anything which has not been consciously designed by it or is not fully intelligible to it.”
According to Hayek, the aggregate or the whole has greater knowledge than any individual, including an expert. Critics argue the potential inaccuracy of online health information. Health 2.0 cites a 2004 study in the British Medical Journal that showed 6% of online information posted by an epilepsy support group was inaccurate.
As clinicians, we make clinical decisions based on clinical trials. However we all know the limitations of these trials, particularly in safety information. The challenge of every clinician is the answer to what degree our particular patient in question is represented in a given clinical trial population. This is key particularly in assessing the risk of adverse events.
Online health information is a form Hayek would describe as cosmos. It captures the local knowledge, disbursed in the aggregate, embodying the complex wisdom of the aggregate. Clinical trials represent Taxis, whereby a limited number of experts dictate the relevance of central knowledge not necessarily applicable to the whole.

COSMOS AND TAXIS IN COUNTER-TERRORISM STRATEGIES

In a talk televised on cspan, May 7, 2005, Mr. Ganor talks about two different strategies for counter-terrorism. One strategy involves removing the terrorists' ability to strike by military means. Another involves addressing the incentives behind a terrorists desire to attack. The former is a short-term solution, while the latter is a long term solution. Mr. Ganor discussed that the men of impoverished families join radical islamic mosques in order to gain job training, food, and financial assistance for their families. In time they are converted into the radical islamic ideology leading to acts of terror.

I believe, the military solution is a taxis solution. It is the intention of a few to impose order on many through brute force. While successful possibly in the short term, the movement will reorganize itself. The long term solution is a cosmos solution. Address the economic disparities of the populations susceptible to recruitment. Allow them to reorganize toward constructive societal structures rather than destructive terrorist cells.

References:
Ganor, Boaz. "The Counter-Terrorism Puzzle". Center for Peace and Security Studies. Georgetown University. May 7, 2005. http://www.booktv.org

Ganor, Boaz; Interdisciplinary Center; International Policy Institute for Counter-Terrorism. The counter-terrorism puzzle : a guide for decision makers. New Brunswick, N.J.: Transaction Publishers; 2005.