Publisher's Synopsis
The Physics to Economics Model (PEM) is a ground-breaking work, challenging conventional wisdom on the mechanics of the economy, from how economies operate to why traditional measures of economic performance and growth fail. By applying the "Physics to Economics Model" to the U.S. economy, author and Certified Investment Management Analyst, F. Patrick Cunnane, MBA, demonstrates how a physics-based approach to the U.S. economy could significantly increase American wealth. Currently the accepted academic definition of economics is "a social science relating to production, consumption, and distribution of goods and services." Yet, in addition to being wholly inadequate, this definition is impractical when applied to problem solving since it's presented in a circular, rather than a unit form. Thus, it doesn't conform to the laws of natural science and can't be calculated. Nor does it reflect the observations of how global economies operate. Such a definition is without a first principle, and without a science based first principle it is impossible to understand a subject matter. The book establishes a physical science based "first principle" of economics, which is the fundamental concept of a theory, used to explain how economies actually work and how their impact can best be measured. By interpreting the economy through the lens of mechanical physics, the theory-the Physics to Economics Model (PEM)- establishes economics as a physical operation within the universe and, as such, implies that it's subject to the laws of the universe. This is the same reasoning behind the concept of energy in physics. Energy cannot be defined, but it is known by what it does. Energy can do work, change its surroundings, alter the state of an object, cause change in a position or speed, or change from one form of energy to another. Yet, similar to energy, this theory proposes economics cannot be defined, but we can understand it by what it does. We understand economies based what they do and produce. Economies can change the environment and build or alter the form of resources. They have the ability to defend, invent, and provide food, clothing, and shelter. Economies can change form by moving from an activity to wealth possessed. Stored wealth can then change in form back to an activity. This makes economics a concept that is best understood based on what it does. Therefore, it should be represented by a unit, enabling its impact to be calculated and measured where its cause and effect are evident. By establishing economies as units of measurement, which in concept form can be calculated and measured where a deterministic result occurs, we're able to answer the question of, and determine a cause and effect for, economic input where the cause forces what should happen to an economy, and the change is the effect or result. Ironically, economics becomes more logical, rational, and easier to understand within the reasoning process of physics than the more abstract approach traditional academics take to presenting economic theory. The Physics to Economics Model provides a fresh and engaging way to explore modern economic theory that allows the reader to ignore the math and still understand the general theory.
