Knowledge that Transforms

i. The problem. Current theoretical growth models of Harrod-Domar type have determined the growth rate, by which is usually meant proportionate rate of growth of net or gross national product. But rates of growth of labor force, hours, and productivity are ignored in such models. This neglect is very much in Keynesian tradition. The static Keynesian model makes no distinction between goods and factors and between level of output (of goods) and level of employment (of factors). Dynamizing Keynesian model, growth models of Harrod-Domar type consequently make no distinction between time path of output and time path of employment. The purpose of present paper is to examine more closely relationship between four growth rates of output, labor force, hours, and output per man hour and in particular ' to find determinants of proportionate rate of growth of output per man hour. For this purpose, a slight disaggregation of Harrod-Domar model becomes necessary. If only two sectors are desired, most obvious division in economy is that between firms and households. We shall therefore consider a closed economy and shall ignore government. For disaggregation purposes, best notation is probably Leontief notation.2 Here, each transaction (x) has two subscripts. The first subscript refers to sector of origin, last refers to sector of destination. The subscript f refers to firms, subscript h to households. Three transactions, shown in Table I, are considered. First, firms plan to purchase

The description of politics as art of the applies likewise to public policy in general and to monetary policy in particular. To say that central banking is an art rather than a science, as both students and practitioners of central banking have been accustomed to do, is not to deny that, in this as in every other branch of applied economics, scientific methods and a scientific attitude can be extraordinarily fruitful. But the fact does remain that central banking is an art. The principal weakness of central bankers lies not in any failure to recognize that fact but in deciding what constitutes the possible when it comes to the application of their art. The main difficulty confronting central bankers is that what is possible for central bank policy is in no sense an absolute. It is not that what is possible is merely a matter of expediency, although expediency undoubtedly has to be considered; the policy-maker who disregards what is realistic is only a little less ridiculous than the one who forgets what is ideal.' The more baffling consideration is that what it is possible for central banking to accomplish, and by what means, is relative to many things. These include such internal considerations as the objectives to which it is committed, the guides available to it, the instruments at its disposal. They also include such outside factors as the state of the economy, the international climate both political and economic, and the attitude of the public. While some of these endogenous and exogenous elements are subject to accurate determination or control, others clearly are not. To suggest that the problem of the practitioners of the art of central banking is difficult is not to imply that they do as good a job as can legitimately be asked. A better job can be expected, however, only through heightened sensitivity to the changing environment in which central bankers operate and increased willingness to modify central bank actions in the light of these changes. And it is highly probable that the pressure to effect these adaptations will have to come mainly from students of the art who are outside the system itself.2

$20,000 there has been only a moderate loss, with the group from $io,ooo to $20,000 gaining as much relatively as the group from $5,000 to $Io,000. Some evidence has also been presented indicating that people in the income range from $5,000 to $I4,000 would have received from I4 to i8 per cent more income in I949 had their income-determining characteristics been valued as highly in I949 as they were in I929, but that such quantitative statements could not be made for people in groups outside this range because they would have come from diverse income classes.

T HIS article deals with two problems. (i) empirical evidence regarding the average rate of real estate in the United States; and (2) an analysis of factors affecting the rate. By effective rate of real estate taxation is meant the ratio of real estate taxes to current market value of real property. The discussion here is restricted to the of owner-occupied nonf arm homes.

As maintained by J. M. Clark the amplitude of the investment cycle is larger and that of the consumption cycle smaller than that of the income cycle, provided only the consumption constant is larger than zero. On the other hand, it is true that acceleration is neither a necessary nor a sufficient condition for magnification: not a necessary condition since (4) is independent of the investment function; not a sufficient condition since, for co = o, magnification is absent regardless of the investment function and even if Baumol's equation (3) were valid and his conditions for magnification were satisfied.

ONE of the more conceptually mysterious aspects of linear programming is the problem of degeneracy the breaking down of the simplex calculation method under certain circumstances. Although a set of rules for dealing with degeneracy is well known, in the absence of an understanding of the nature of the problem the rules must be followed by rote. This note presents a simple geometrical explanation of the problem, the solution, and explains why certain types of programming problems frequently lead to degeneracy. It is hoped that the presentation will be of use both to students and teachers of linear programming. Before presenting the geometry of degeneracy, it is necessary to review briefly the geometry of linear programming and the simplex method of computing optimum linear programs.