I think this article is trying to make a political statement, "Our leaders have just done something that is going to cause a future problem, a crash".
I have only read the linked article, I think the followup might be available, but I'm not going to read it before posting this -- because this article was meant to be clickbait, to get you hooked and possibly mis-informed.
The article as it stands (incomplete) contains some classic argument fallacies.
It is an "appeal to authority", by attempting to explain control theory. This person knows something.
The examples all result in bad things, airplanes crashing, hard drives (crashing - perhaps a stretch). Bicycle at the edge of a cliff. Eating too much ice cream. Chernobyl. This is a possible "appeal to emotion".
The final issue is an "incomplete comparison". The graph at the bottom of the article shows housing prices -- all of the previous examples have mathematical models which can explain the behavior. For the last graph no model (the equations) is presented. Without a model you cannot use control theory to analyze the zeros and poles.
The last graph wants you to believe in a continuing upward trend, the fallacious argument, implies that whatever the Canadian political change that has been made is going to make this trend to zero, despite the intention to keep it trending upwards.
Background: A long time ago, as a mathematics undergraduate, I did take a course in control theory, it was run out of the engineering department. It was somewhat awkward as quite a few mathematical terms were not-quite-the-same. I get the same unease when reading this for poles, zeros and right-half-planes. Any engineering textbooks that use j for sqrt(-1) instead of i (because that is taken) is an indicator. Yup, this could be construed as an "appeal to authority".
There are, to me some language red flags. The followup article now uses "we' -- suggesting this is not the work of an individual. This was not present in the initial post.
An attempt is made to build a model. Curiously a visual programming model is now used. No explicit differential equations are given. If the equations are not given there is no way to check the model. So "pole" and "zero" analysis is mute.
There are no tests to validate this model against past situations - an easy and free test, the past history is known. If the model that has been created and can predict the future, why would was it not run it against the past and show the predictive success?
The built model is only presented against the current situation -- is it circumstantial / opinion based.
My understanding of science is -- build a model that can predict the future / what happens accurately, i.e. matches the measurements. The consensus agrees that this is the (current) best model.
Prices are ultimately influenced by a sentiment factor, a value derived from a I have no idea what human feeling / property. Some power "enabled" humans have been endowed with a much higher influence on this parameter. Where is this value expressed in the predictive equations?
I agree. The first article was interesting when it was talking about control theory, but the hard pivot to economics and politics at the end turned the article from potentially informative to a disingenuous appeal to authority.
The author clearly knows a lot about control theory, but this seems to have led to an idea that he knows a lot about everything. This is a theme I see all too frequently in people who list “systems thinking” as one of their areas of expertise (like this author).
I have the benefit of the doubt and read the second article looking for perhaps some actual modeling and references to econ literature, but he merely refers to a couple papers and then admits that his model was home-grown and will be simpler. Some parts of it might be right, but this has too many elements of “I’m an expert in one thing therefore I’m qualified to talk about everything” for me.
> There are, to me some language red flags. The followup article now uses "we' -- suggesting this is not the work of an individual. This was not present in the initial post.
First person plural ("we") is normal in technical and scientific writing.
Yes, agreed. It is a term of inclusivity that is applied to observations and models, the testable items. I don't think "we" it is acceptably used for individual opinions unless it reflects the opinions of multiple authors.
The followup definitely uses the "I" (for opinion) initially, but then switches to "we".
As a reader I am not a participant in "we" unless I agree with the statements being made. I think it is this is what made me frosty and say who is this other person, because it isn't me.
Canada does not have 30 year mortgages. Most home owners have mortgages with 3-5 year terms. Since 3-5 years ago rates were low, and home prices were low, people's mortgage expenses are still low. However that's about to end. As people either bought at much higher prices in the last 2 years, and/or the older mortgages are getting renewed at higher interest rates. This will result in drastic increase in what people need to pay to stay in their home.... possibly causing a market crush.
You are correct that in Canada we don't do 30-year fixed mortgages. We only lock in interest rates for a 5 year term.
However, we have what's called a stress-test. In order to get a mortgage at the previously low 5-year fixed rates of 2%, you still had to qualify as though the rates were >5%. This means that if rates go up to 5% everyone should still be able to afford their payments.
This is all correct. It is worth nothing that other expenses are increasing quickly and consistently, so the stress test could be undermined slightly.
I don’t mean to be alarmist or anything here. It has just been on my mind as a recent home buyer. The stress test was performed on my finances under conditions which have already changed (for the worse).
I doubt the bottom will fall out of things, but I expect this to bite some people and to hear about it in the medias.
>This will result in drastic increase in what people need to pay to stay in their home
This will result in a drastic increase in what a relatively small number of homeowners need to pay to stay in their home. Specifically, those who bought a house to live in in the last 3-4 years.
>possibly causing a market crush.
Before losing their home, this relatively small number of people (plus a larger number of those who will experience much more moderate mortgage payment increases) will cut back on spending for literally everything else. This will have a very significant impact on the rest of our economy. Which, in fact, is the whole point of inflation targeting - cool down the economy when inflation is out of control.
The vast majority of 28% of Canadian households who are currently carrying a mortgage did not buy their house at peak bubble prices, i.e. within the last 3-4 years. They carry a much more modest debt load, have paid off more of their mortgage, and this will significantly dampen the effect of rising rates on their finance.
Yes, my understanding is this tends to hit recent buyers and those who have had to remortgage. I don’t have numbers, but it seems reasonable to believe this makes up a small portion of homeowners.
No. Those who paid the exorbitant prices of the last 3-4 years. I've renewed recently, and borrowed the ~$100k remaining on my mortgage at a historically low rate. If I had to renew at twice that rate it would not make a huge impact on my finances, because I'm currently paying interest on a five-figure principal.
Across all Canadians, we're talking about $1.5 trillion (CAN) in mortgage debt. That's on par with the GDP. If you hike the interest rates to match your inflation, that's like sucking 5% of your GDP into interest payments. This will be a pretty dramatic event, no matter how it is distributed.
It will certainly be a dramatic event, but it still matters how it is distributed. To make up some numbers by way of example, if 4 million people have to pay $50/month more, I believe it has a significantly smaller effect on the economy than 1 million people having to pay $200/month more.
Governments are in a privileged position to get this data and they likely have it and have reasonable models.
The classic knob to influence inflation is interest rates. This can be also be modeled. Non-politicised civil servants have a good record of being able to do a reasonable job at this - only if the politics are removed. In my opinion, removing all political allegiance for civil servant agencies is probably the best way to get better long term stability and prosperity.
> Most home owners have mortgages with 3-5 year terms.
As an American, this is easily misinterpreted to mean the mortgages are expected to be paid off in 3-5 years, which would be mind-blowing if true, because it would mean that either houses are super cheap, or only the rich are buying.
IMO, adjustable-rate mortgages are almost a scam. Are there any legal protections in place to disallow a bank from deciding "In the next period, we're going to raise your rate to 20% because fuck you the CEO wants another yacht"?
Thank you for taking the time to write these follow-ups. I was left with the same uneasy feeling at the end of the article, and you’ve articulated perfectly why.
That's not an appeal to authority. An appeal to authority is "P is a statement in the topic T. A is an expert in T. A says P is true. Therefore P is true." If I draw a parallel between two topics and proceed to explain one of them in order to argue something about the other one, that's not an appeal to authority.
It could be that the reader fails to understand the explanation and instead treats the writer as a trustworthy authority. That would not make the argument an appeal to authority or even fallacious.
It could be that the analogy is poorly justified, which would make the argument incomplete, or it could even be that the writer failed to understand some subtle aspect of the second topic that makes the analogy inappropriate. Neither of these would be appeals to authority.
In this case the author (A) is setting themselves up as an authority in (T). The statement (P) in this article has not been revealed, but because (and I suspected separated) is in the followup (which I have now read). The followup does refer back to the "now you know about poles" -- the appeal to authority.
Setting yourself up as an authority isn't a fallacy. It's a rhetorical device. (Though I am not sure what makes you say that anyway. The article didn't particularly strike me as the author setting themselves up as an authority, beyond what is inherent in writing an article that explains something.)
If they made the argument "I am an expert in control theory, therefore what I think about Canadian politics is correct", that would be an appeal to one's own authority. But I didn't see anything like that in the article.
So if a school teacher taught you addition and then later used it as the basis for teaching multiplication you'd reject it because they were referencing their own work on addition?
This is complicated. It involves identity, credibility (accreditation), reputation and authority.
For me to be taught, my parents ceded authority to the school to appoint credible teachers. Those teachers will have an identity, qualifications and perhaps a reputation. There are consequences for failing or abusing this position.
This is the way a lot of traditional things work.
To directly answer your question, no. A teacher that taught addition would likely be excellent for teaching multiplication.
But, I don't think this is how the internet now works, especially in the social media space. There is infinite identity, which creates trust problems for reputation and credibility. Applying traditional models breaks down. At the moment the dominant factor appears to be who can win a popularity content.
Hacker News is interesting in that karma is currency to build credibility and reputation. This model has flaws too. In my opinion, rewarding the most popular is not a long term winning strategy for a society or community. The demand for change only comes from dissenters. Dissenters and different opinions are the engines of change for any society / community, otherwise, without change, it would stagnate and fall into decline.
But, in the face of infinite identity what is the collective actually trying to say?
I find it pretty funny that you're accepting one claim because it comes from what you think is an authority, while rejecting another because you think it relies on an appeal to authority.
An elementary school teacher doesn’t need to rely on appeal to authority to teach math. The student can quickly verify the method works themselves — they don’t have to take the teacher’s word for it alone.
In general, appeal to authority as a fallacy applies to subjects that are opinion-based or contentious.
The person you're replying to already has answered this question in a post you've already replied to. But to be explicit, consider the first sentence of the follow up post [1]:
> Now that you know what right-half-plane zeros are, in this article I'm going to begin a deep-dive into a control-systems-based analysis of a certain feedback system that is drawing particular public attention today: inflation.
In my mind, this is explicitly drawing a connection between the author's engineering background, particularly in control theory, and the current topic, inflation. To be clear, it would be fine if the author wanted to make a _mathematical_ connection between control theory and inflation. However, since the author does not explain right-half-plane zeros with any meaningful technical detail, the rhetorical effect is an appeal: "just trust me on this." Then the author switches topics _and explicitly connects the two topics_. I cannot speak for the person you're replying to, but this rhetoric is what bothers me.
"Now that you know what right-half-plane zeros are, in this article I'm going to begin a deep-dive into a control-systems-based analysis of a certain feedback system that is drawing particular public attention today: inflation."
And all of the statements made in the walkback "a bit of a preamble" -- basically issuing caveats or disclaiming all of what was said before. A classic "I got you here", but I'm going to disclaim all of that, you are a fool to read anything that follows.
I read that as "now that you know some of the concepts and terminology used in systems theory, I can use them to make an argument in economics, and you can use that knowledge to judge for yourself whether the argument is valid or not". It's literally the opposite of a appeal to authority. As I see it, the only way it could be dishonest would be if the systems theory explanation is incorrect or purposely leaves inconvenient things out (which it might).
It would be an (incompetent) appeal to authority if it said "now that you've seen that I know my stuff when it comes to systems theory, you know that this thing I say about economics is true".
> As I see it, the only way it could be dishonest would be if the systems theory explanation is incorrect or purposely leaves inconvenient things out (which it might).
That should be the default assumption, no? Today’s Control Theory has never been shown to be predictive of the economy or politics, wouldn’t you agree? The article framed the discussion as if control theory is useful, purposely implied it’s utility, and did not state it’s known lack of scientific validity, which is indeed leaving some very inconvenient facts out, right? Saying that they left it open with a ‘judge for yourself’ is not a great counter to the critique of the argument style. There is an intentional framing here that fails to list the alternatives, tries to establish itself as ‘correct’ via implication, and pivots to a separate topic that is unproven to be relevant. Pretending to be unbiased while presenting a one-sided set of “information” is a pretty common type of appeal to authority.
I'm not particularly interested with whether the argument raised by the article is valid or not, which is why I left open several possible ways in which it could be fallacious. My point is solely that it's not an appeal to authority.
What makes appeal to authority fallacious is that one's supposed expertise has no bearing on the truth of the things one says. An appeal to authority is when someone argues something like, "I'm an expert, I think X and so should you" basing their opinion on X on their supposed expertise and not actual logic.
When someone gives reasons, their argument rests on those reasons, not on their supposed authority as an expert on the topic.
Actually, it seems more an effort to establish credibility. "I have a degree in such and such" or "I have worked in this field for over 20 years". That seems to be much different than appeal to authority.
The author of the article has had their understanding of systems eat their understanding of humans. Every time they make a realization about people, it immediately gets turned to getting more understanding and control over the world. Which doesn't leave any room to grow for their understanding of humans.
This makes it really hard for them to write an article for non-technical people. To do so, they would have to connect the human side of things to the systems theory side of things. Which they can't do, because they don't understand the human side of things.
They aren't using bad-faith arguments to convince you that they are correct. They simply have no idea how to talk to you. They are in fact trying to be helpful, by presenting what they think is really useful information to understand and control the world with. Their help is useless to you, but they are trying.
I agree. The author uses technical jargon but is clearly intending the reader to be non-technical. Otherwise, footnote 1 should just be in the main text. The rhetorical effect, intended or otherwise, is an appeal to (the author's) authority. As you say, the author then switches to a topic he likely much less expertise in (housing prices, inflation, etc.) while relying on the reader to believe that this new problem shares some mathematical foundations with the original set of problems.
I call it the "Ian Malcolm syndrome", in reference to the character (a mathematician) in Michael Crichton's Jurassic Park who tries to apply mathematical concepts to the dinosaur attraction to try to show why it is doomed to collapse.
There are a lot of similar posts online about people trying to use chaos theory (or what they believe chaos theory is), "systems theory", and other obscure concepts to explain why, for example, climate change will be the end of us all, or the global economy will enter a depression, or any other extremely pessimistic macro scenario. I see three reasons why these people are doing it. (1) To draw attention to themselves as someone with a superior intellect (which they actually aren't) (2) To construct an analysis no one has constructed before, in a "all these professional economists are saying the same thing, but here's why they're all misleading themselves, thanks to my ace card of a theory" kind of way, and (3) A love for the hyperbole, for dramatic outcomes.
A classic economic prediction like "Inflation pressures will potentially slow down growth in the short term, but the behavior of the economy over the next 12 months remains unpredictable" is not enough. It MUST be "A catastrophic economic collapse is inevitable", or "We are going back to the Middle Ages by the end of the decade", or "Hundreds of millions will die in the next few years".
Er, Ian Malcolm, the character who was introduced so that he could arrogantly predict that the park would collapse, only to get his satisfying come-uppance when... he turns out to be completely correct?
This seems uncharitable. The author is trying to explain how knowing a bit of control theory could be helpful for understanding economics. Unfortunately they’re having trouble writing for a general audience, perhaps due to being too comfortable with the math. This doesn’t mean anything nefarious, just that they could use an editor.
Textbooks that use j instead of i are an indicator of what? Why is slightly different notation awkward? It's not as if notation is always consistent within the field of mathematics, right?
The context of the writer. Apologies if I implied that the notation semantics were important -- letter exchange is free; concept change is not. What I indented to mean was the use of the terms poles and zeros is a bit wonky. Attempting to be cute with a physicist's hat, a pole is a "black hole", an entity you must not cross because the calculus will not work. It is a discontinuity, a singular value. There are worse things in mathematical generalizations; a cut / line in a manifold. But tools to cope.
I’m curious what the right half plane zero in housing is. In general, we correct inflation through interest which we raise gradually waiting a month or two to observe the effects of a 0.5% raise. I think that should be sufficient to avoid the control feedback effects he talks about in this article.
The RHP0 in (Canadian) housing comes from including mortgage interest payments -- a term that increases in proportion to interest rates -- in the measurement of the CPI.
I admit I was a bit disappointed by the end of the article. But I don't think it was strictly an appeal to authority. The author is evidently a very good writer, but he might have done a better job at summing up a conclusion. It's very difficult to tell just what point he was trying to make. He never even said just what his inputs and outputs are in his housing model. Even if he is saving that for a later article, he should have at least mentioned that.
Comment: j is used instead of i in certain contexts -- e.g. circuits -- when it is possible to confuse it with the current (same letter used). As e.g. an Electrical and Computer Engineer you just move back and forth on sqrt(-1) notation appropriately. Not sure beyond that about the not quite the same terminology -- not my experience but who knows.
The article is kind of a "layman's article" to put it politely. I am erring towards the side of hocus pocus -- if economics were that well behaving and linear and composable as the author models, it would be a solved field years now. And control theory wouldn't exist as a field for 50 years, as it would have been solved. Do the components diverge? Where in the complex plane are they defined to begin with? Anyways.
Also: if you should learn something: Central Banks have a terrible track record, and despite what they keep saying are political. The joke is that they are the blind driver with a gas and break pedal that have a 2 years delay. So good luck to us all.
The follow-up article tries to argue there is an over five year lag to interest correcting inflation based on undisclosed principles of a model they don’t provide equations for. Their argument is in effect that the growth of roughly 30% of the inflation basket of goods (housing) dominates the shrinking of the other 70% of the inflation basket of goods. The analysis is suspect as they don’t seem to model how much the 70% shrinks or slows in growth at all. They also aren’t very numerically precise on the interest effects on housing prices and misanalyze how mortgages work in Canada.
Their analysis argues that roughly 4% of mortgages are replaced every year while 96% retain the same rates. This makes it hard to argue interest rates have the desired effect size but that doesn’t stop them from trying.
> The analysis is suspect as they don’t seem to model how much the 70% shrinks or slows in growth at all.
It doesn't model it at all. The trajectory of ex-shelter CPI is taken as an input. For the provided scenarios, all non-shelter components are assumed (as a scenario premise, not a prediction) to instantly return to a 2% growth rate and stay there.
I have only read the linked article, I think the followup might be available, but I'm not going to read it before posting this -- because this article was meant to be clickbait, to get you hooked and possibly mis-informed.
The article as it stands (incomplete) contains some classic argument fallacies.
It is an "appeal to authority", by attempting to explain control theory. This person knows something.
The examples all result in bad things, airplanes crashing, hard drives (crashing - perhaps a stretch). Bicycle at the edge of a cliff. Eating too much ice cream. Chernobyl. This is a possible "appeal to emotion".
The final issue is an "incomplete comparison". The graph at the bottom of the article shows housing prices -- all of the previous examples have mathematical models which can explain the behavior. For the last graph no model (the equations) is presented. Without a model you cannot use control theory to analyze the zeros and poles.
The last graph wants you to believe in a continuing upward trend, the fallacious argument, implies that whatever the Canadian political change that has been made is going to make this trend to zero, despite the intention to keep it trending upwards.
Background: A long time ago, as a mathematics undergraduate, I did take a course in control theory, it was run out of the engineering department. It was somewhat awkward as quite a few mathematical terms were not-quite-the-same. I get the same unease when reading this for poles, zeros and right-half-planes. Any engineering textbooks that use j for sqrt(-1) instead of i (because that is taken) is an indicator. Yup, this could be construed as an "appeal to authority".