Home / Updating Global Economic Models: Dr. Jan Tinbergen’s Views in Today’s World

Updating Global Economic Models: Dr. Jan Tinbergen’s Views in Today’s World

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Dr Jan Tinbergen’s (April 12, 1903 – June 9, 1994) work in the areas of economics, operations research and econometrics has important implications for policymakers today. Dr. Tinbergen was a Dutch economist and co-winner of the Nobel Prize in Economics (’69). His work was honored “for having developed and applied dynamic models for the analysis of  economic processes.”

In his Nobel Lecture, Dr. Tinbergen called for an updating of scientific arguments in the ongoing competition between various economic systems. This call to action to update scientific arguments is significant because global economic systems must be strong individually, as well as collectively, for the global economy to function. This article will explore ways that the global economy can operate more optimally.

In today’s world, the scientific arguments for capitalism must undergo an evolution in light of events like the Great Recession of ’08. The scientific arguments in favor of Gosplan (Soviet-style state planning) have been marginalized by the dissolution of the old Soviet Union. Lastly, the scientific arguments in favor of the European socialism must be refined in light of the high unemployment in areas of Europe and in pockets throughout the United States.

A period of course correction is needed for the capitalist model post-’08. The correction must deal with stock market excesses in such things as derivative transactions, tighter margin requirements, and enhancements to the Uniform Commercial Code.

In addition, budgets need to be brought closer into balance by keeping debt in a rational proportion to the overall size of the economy and the GDP. Excess consumption taxes may be utilized to collect more revenue and redirect consumer spending into products and services that are vital to everyday subsistence.

On the positive side, the American economic model of capitalism is bolstered by the value of our technology as set forth substantially in the Patent Office. In addition, our huge stock of energy resources in coal, natural gas, oil, coal-gasification processes, solar energy, wind energy, and budding fusion technologies are seen as highly desirable by our trading partners.

The course correction for the European socialist economies requires a tighter management of debt together with keeping spending within rational limits in relation to the GDP. In some of the more difficult cases, debt might require a reclassification into longer-term instruments. Whichever course is selected, socialist economies must aim for containing debt within tolerable limits as confined by the size of their economy and the GDP.

The course correction for Russia and its constituent republics is not as easy to accomplish. Essentially, there is a great divide which loosely determines trade relationships in the former Soviet Union. The economies west of the Ural Mountains are influenced by Europe; whereas economies east of the Urals are within the sphere of influence of Asia. This geographic divide must be the starting point for organizing enhanced economic models in Russia and its republics.

China has a similar problem in advancing economic activity. The coastal regions are more advanced technologically and educationally; whereas, the inner regions are less technologically sophisticated and more oriented toward agriculture. The challenge for China is to integrate these seemingly different cultures both technologically and educationally.

American entrepreneurs have great opportunities for articulating and solving the economic challenges to Russia, its republics, and China. Major assets for overcoming these challenges are American management knowhow, accounting systems, auditing methodologies, and the introduction of new products and services.

All economic systems need to take advantage of global trade as a tool for expanding their economies. Trade wars tend to contract the elliptical Offer Curve while freer trade tends to provide for a more expansive Offer Curve.

Currency wars have downsides too. The basis of domestic and foreign trade is the inherent value and uniqueness of the good or service to the buyer, and not solely the currency (i.e. iPods, 3D copiers, HD TV, Smart Homes).

For instance, a Chinese student seeking to go to an American engineering or medical school is interested in receiving a technologically up-to-date education. The payment for the education in yuans or dollars is not the sole reason for choosing an American college or university. The Chinese student seeks tremendous value in the education and not the U.S. currency per se, although currency valuations do fluctuate.

For the first time in history, new products and services can be delivered utilizing “green technology” to limit adverse weatherization and other negations associated with older and inefficient methods of production and energy consumption.

All economic systems need to take advantage of global trade to expand their economies. The above arguments comport with Dr. Tinbergen’s call for updating the scientific arguments proponents make for choosing from amongst the various global economic systems.

Dr. Tinbergen does not state that one system is better than another. In his Nobel Lecture he simply called for an updating of the arguments in favor of each system. The goal in updating the scientific arguments is to make these global economic systems work better both by themselves and in cooperation with one another during the course of domestic and international trade.

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About Dr Joseph S Maresca

I've taught approx. 34 sections of collegiate courses including computer applications, college algebra, collegiate statistics, law, accounting, finance and economics. The experience includes service as a Board Director on the CPA Journal and Editor of the CPA Candidates Inc. Newsletter. In college, I worked as a statistics lab assistant. Manhattan College awarded a BS in an allied area of operations research. The program included courses in calculus, ordinary differential equations, probability, statistical inference, linear algebra , the more advanced operations research, price analysis and econometrics. Membership in the Delta Mu Delta National Honor Society was granted together with the degree. My experience includes both private account and industry. In addition, I've worked extensively in the Examinations Division of the AICPA from time to time. Recently, I passed the Engineering in Training Exam which consisted of 9 hours of examination in chemistry, physics, calculus, differential equations, linear algebra, probability/ statistics, fluids, electronics, materials science/structure of matter, mechanics, statics, thermodynamics, computer science, dynamics and a host of minor subject areas like engineering economics. A very small percentage of engineers actually take and pass the EIT exam. The number has hovered at circa 5%. Several decades ago, I passed the CPA examination and obtained another license in Computer Information Systems Auditing. A CISA must have knowledge in the areas of data center review, systems applications, the operating system of the computer, disaster recovery, contingency planning, developmental systems, the standards which govern facility reviews and a host of other areas. An MBA in Accounting with an Advanced Professional Certificate in Computer Applications/ Information Systems , an Advanced Professional Certificate in Finance and an Advanced Professional Certificate in Organizational Design were earned at New York University-Graduate School of Business (Stern ). In December of 2005, an earned PhD in Accounting was granted by the Ross College. The program entrance requires a previous Masters Degree for admittance together with a host of other criteria. The REGISTRAR of Ross College contact is: Tel . US 202-318-4454 FAX [records for Dr. Joseph S. Maresca Box 646 Bronxville NY 10708-3602] The clinical experience included the teaching of approximately 34 sections of college accounting, economics, statistics, college algebra, law, thesis project coursework and the professional grading of approx. 50,000 CPA examination essays with the American Institute of Certified Public Accountants. Additionally, membership is held in the Sigma Beta Delta International Honor Society chartered in 1994. Significant writings include over 10 copyrights in the name of the author (Joseph S. Maresca) and a patent in the earthquake sciences.
  • Dr Joseph S. Maresca

    Par.3 Sentence 2 should read:

    Trade wars tend to contract the elliptical Offer Curve while freer trade tends to provide for a more expansive Offer Curve.

    The two good model of the Offer Curve is the quantity of a good a country exports or offers for each quantity of the other good it imports. It is also known as the reciprocal demand curve. In addition, a point of equilibrium is determinable.