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🦉 10x curiosity - The Cantillon Effect and Littlewoods Law - Two more Eponymous Principles


🦉 10x curiosity

January 22 · Issue #241 · View online

🦉 A weekly sample of links that made me think 🤔

Also published in 10x Curiosity
An eponym is a person, place, or thing after whom or which someone or something is, or is believed to be, named. Wikipedia
As an engineer I learnt all about laws named after famous dead people (normally men). Bernoulli’s principleHenry’s lawFaraday’s lawBoyle’s law are some examples. I find I rarely use these in day to day life however and have become much more drawn to another set of more modern laws — eponymous law that are sharp generalisations of the world around us.
I keep an updated list of my favourite ones on this blog:
Two new ones I have just come across go to the heart of many of the issues we face in todays globalised world - The Cantillion Effect and Littlewoods Law.
A brief summary is taken from each of the below links which I highly recommend in their entirety.
The Cantillon Effect
The Cantillon Effect is an economic concept on the distributional consequences of new money creation created by Irish-French economist and philosopher Richard Cantillon in a 1755 paper.
In simple terms, the Cantillon Effect says that the flow path of new money matters — those closest to the source and entry point of the new money benefit first and most handsomely.
The robust monetary and fiscal response to COVID-19 — and a surging wealth inequality problem — has re-ignited the discussion over the distributional consequences of the crisis response and thrown the Cantillon Effect back into the mainstream lexicon.
We have seen numerous examples of this across Australia through the pandemic. Companies that made profits during during the pandemic still received significant government funding (none more controversial than Harvey Norman!). There is not a lot of evidence that this money to the business’s actually found its way to the economy. On the other hand, money that was paid directly to citizens requiring hand up, was able to directly and effectively assist them. This is also the concept of Universal Basic income, the pension and aid services that simply provide money directly to people who need it rather than to organisations who then provide services. Microfinancing is a great example of this.
Littlewood’s Law
At a global scale, anything that can happen will happen a small but nonzero times: this has been epitomized as “Littlewood’s Law: in the course of any normal person’s life, miracles happen at a rate of roughly one per month.” This must now be extended to a global scale for a hyper-networked global media covering anomalies from 8 billion people — all coincidences, hoaxes, mental illnesses, psychological oddities, extremes of continuums, mistakes, misunderstandings, terrorism, unexplained phenomena etc. Hence, there will be enough ‘miracles’ that all media coverage of events can potentially be composed of nothing but extreme outliers, even though it would seem like an ‘extraordinary’ claim to say that all media-reported events may be flukes.
This creates an epistemic environment deeply hostile to understanding reality, one which is dedicated to finding arbitrary amounts of and amplifying the least representative datapoints.
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