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Old 03-21-2007, 06:11 AM
DarkSociologist DarkSociologist is offline
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Hi Iry, nice to hear from you again.

There's a really interesting concept that I've been learning about called the "relevant range." This are the conditions under which your assumptions hold for a certain scenario. For example, you might be able to expect to be able to purchase ice cream bars for $2 each if you purchase between 1 to 100 bars. If you want to purchase 100,000,000 bars, then you are out of the relevant range and your $2 price may not hold.

If you have studied calculus, then this concept would be similar to another concept called "local linearization," where if you zoom into a curve close enough, it actually becomes a line, rather than a curve. It is all a matter of perspective.

These concepts play a point when dealing with wealth, happiness, etc. From an individual perspective, these things seem unbounded. Whether a person has no money or $10,000,000 does not have a major impact on the economy, so it seems that an individual person has unlimited room for growth.

On the other hand, there is only a certain amount of money in the economy. A company cannot continue to grow faster than the economy or it will eventually become the economy itself. Most people and companies do not have to worry about this because they make up such a small portion of the economy.

To illustrate the impact of the role of perspective, let's play a game where if you win you get $1,000,000, but if you lose, you die. The odds of you winning this game is 5,999,999,999:6,000,000,000. The odds are immensely in your favor, so you are pretty much guaranteed to win (the belief that weath is unlimited). Although you are pretty much guaranteed to win, if everyone in the world played this game, then there is probably going to be at least one person who dies (the belief that it wealth is constrained).

So the lesson is that there are theoretical limits, but those limits are so large that they are outside of the the relevant range for individuals. Although the individual does not need to be concerned about these limits, we as a collective need to pay attention to the limits.
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