The Bounded and Boundless

November 23, 2025

By Stephen Stofka

I forget how old I was when I learned that there were numbers between the numbers, that 1.333 was between 1 and 2, for example. We lived on the east coast near the ocean. Learning that there were more decimals between 1 and 2 than all the grains of sand on all the beaches in the world astounded me. A brush with infinity. My dad worked for Lockheed Aircraft doing sheet metal fabrication and worked with decimals all day. “The prices in the grocery store are simple decimals,” he told me. “Take away the dollar sign and you have a decimal.” To me, it was a revelation, a connection between what we learned in school and the adult world outside school. Math was a skill, a mind tool.

This week I want to examine two axes. The first is an axis of countability, from discrete to continuous. The concept is familiar to students in computer science, math and statistics, but I want to use that axis to help me understand some philosophical and historical ideas. Discrete data is countable, like the number of students in a class. Continuous data is not countable, like a person’s height. At first, this might seem confusing, because we do measure height. Parents may mark their children’s increasing height on a door jamb, but those are marks we make of a continuous process of growth.

Like the marks of height on a door jamb, I want to contrast countable things as they appear in a continuous field of related data. For instance, we can count the number of days but time itself is continuous. We can always discover a smaller unit of time until we get to Planck time, the smallest unit of time current theory allows us to count (Source). We borrow money for a car. We can count that, but we can’t count the use of that car, the utility we will get from the car.

Most of us are familiar with the drawing of the Mandelbrot fractal that I included at the beginning of this essay. At first glance, the protuberances or spikes on the blob seem countable and the image seems defined, but as I zoom in, I see that the Mandelbrot fractal is replicated inside of each protuberance. I can keep zooming in and the fractal appears much like it did when I was zoomed out.

At the opposite ends of another axis are law and custom. Laws and regulations are defined rules. We can identify when a law was made, a regulation written. Customs, on the other hand, are behaviors and understandings that evolve over time. Marriage and funeral ceremonies help bind a community together. Trading goods and services helps us manage our daily needs. As a society becomes more organized, these customs become institutions. People write laws to codify the customs.

 
A law becomes law on a certain date using a specific number of words. It has definition like a whole number, but the meaning of that law is not so definite, like the real numbers that lie between the whole numbers. In a 1965 decision in Griswold v. Connecticut (1965), the Supreme Court struck down an old Connecticut law that banned the use of contraceptives by married couples and forbade medical personnel from providing information about birth control. The decision was based on a right to privacy not explicitly stated but contained within the “penumbra” of the guarantees of several amendments to the Constitution (Source).

Justices and scholars of different persuasions liked the result of the decision but not the reasoning. Former Justice Ginsburg thought the justification was too vague and that the court should not have restricted the right of privacy only to married coupled. She thought that the court should have based its decision on the equality principle in the 14th Amendment (Source). In a 1992 case Planned Parenthood of Southeastern Pa. v Casey, the majority of the Supreme Court held that the right to privacy had a better grounding in the 5th Amendment’s Due Process clause (Source).

Conservative justices who favor textual analysis do not like penumbras. They favor a just the text approach as though the text of a law provided some definite boundaries that separated the judiciary from the legislature. Sometimes the text of the law gets in the way of a desired conclusion and a textual analysis simply ignores the text as Justice Scalia did in the 2008 Heller decision. His reasoning dismissed a third of the words in the Second Amendment and overturned two centuries of law and custom. A law and its interpretation often follow separate but related paths.

Textualist justices prefer a narrow interpretation of the word liberty in the 5th and 14th Amendments. Richard Epstein (2014, p. 323) disagrees, making a case for an interpretation of liberty to include a broad liberty of contract. What does that mean? We enter informal contracts when we buy and sell goods in the marketplace. We enter employment contracts when we begin working for an employer. We enter a contract when we get married. He advocates limits on government intruding on these liberties which are grounded in custom, in the very nature of being human.            

Last week I wrote about many of the variables that economists must infer from the data. Many of these inferred variables are rates, like the natural rate of interest, or a potential rate of growth, or a natural rate of unemployment. In these cases, the word “natural” is used as Adam Smith and other people of the 18th century used the word, as usual, common or average. If an unemployment rate averages 5% over ten years, that 5% becomes a benchmark. Economists focus on any deviations above and below that benchmark. The 5% is like a pencil line on a door jamb to mark a child’s growth. Each month personnel at the Bureau of Labor Statistics try to estimate unemployment but it is only an estimate, a mark within a continuous process. People leave jobs and start new jobs every minute of the day.

The economist John Maynard Keynes attributed the business cycle to an imbalance of “animal spirits.” While this sounds very much like Galen’s medical theory involving humors, Keynes recognized that investor sentiment is a continuous process. We can mark the day that the stock market dropped 10%, for example, but that is a discrete event that occurred within a field of investor sentiment. Because sentiment is continuous, it does not suddenly turn unless in reaction to an act of war or some other catastrophic event. When sentiment reaches a particular threshold, investors buy or sell. They react to the buy and sell decisions of other investors. The buying and selling are discrete events but the animal spirits that provoke those events is continuous.

What are discrete customs or cultural institutions? Rituals or holidays like Christmas and Thanksgiving come to mind. A people or a culture define the beginning and end of a holiday period. If it is May 10, it is not Christmas. What is continuous is the preparations for Christmas. Shortly after Christmas, stores begin to plan for the following Christmas. First comes the analysis of what was sold and not sold, the excess inventory or items out of stock during the holiday season. Was there a problem with the displays, the layout of the store or the merchandise? Were customers not directed properly to popular items? Did the store managers misjudge the popularity of some items? Were there problems with the wholesale distributors? Once again, we see a discrete event like Christmas operating in a field of continuous activity.

We can count the letters of the alphabet like we can count whole numbers. We use ten symbols like 1, 2, 3 and so on, adding to them and rearranging them to count to infinity. We have 26 letters and we can do the same as we did with numbers, adding letters to form the names of columns in a spreadsheet or words in a book. The letters and numbers are symbols, formed by darkening some of the points of a page that has an uncountable number of points. Again, we see this phenomenon of the defined, like the number 1, as little more than a mark in a field of white that is not countable.

Historians study events, marking their beginnings and endings with other events. World War 2 began when Hitler invaded Poland and ended when he committed suicide as the Soviet army entered Berlin, the capital of Germany. Like a law, the interpretation of a war defies easy analysis because war emerges from a continuous stream of perceived injustices, human vanities and vices. This provides a deep pool of research material for historians as they try to unravel the causal threads before, during and after a war.

We define people, animals, plants and things with a set of facts that act as a boundary. Anatomically, a horse has four legs, and a long head, and long legs, and one hoof per leg, and so on. Like the drawing books we had as kids, these facts are the dots, the boundaries of the definition of a horse. But that doesn’t answer the question What makes a horse? Those are amorphous qualities that each of us might see differently. Gentleness, agreeableness, patience and pluckiness come to mind. A horse is its well defined physicality and its less defined qualities, as well as the feelings that a horse evokes in me.

I began this essay with a story from grade school. Finally I jumped off the philosophical cliff, concluding that everything that is bounded swims in a pool of the boundless. Everything that exists is an instantiation of a continuous process, an emergence from some sequence of circumstances. What do you think? Have a good turkey day and I hope to see you next week!

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Photo by Shino Nakamura on Unsplash

Epstein, R. A. (2014). The classical liberal constitution: The uncertain quest for limited government. Harvard University Press.

Intended and Unintended Consequences

August 13, 2023

by Stephen Stofka

This week’s letter explores the free market and rule of two laws in our lives. Advocates for a laissez-faire market quote Adam Smith’s mention of the invisible hand in The Wealth of Nations, or WON. In a free market, individuals pursuing their own self-interest unintentionally promote a general welfare, a positive outcome as a result of the Law of Unintended Consequences.

Smith was particularly concerned with what I will call the Law of Intended Consequences. Under the guise of acting in the public interest, individuals furthered their own self-interest at the expense of the public welfare. In Part I of WON, Smith spent several chapters documenting many examples of collusion between business owners and merchants, labor guilds and city magistrates to further the gains of a small minority at the expense of the majority. This included price supports, price fixing, protective trade restrictions and the granting of monopolies through licensing. The only solution was a system of governance that promoted a general law and order with as few laws as possible.

The free market encourages a set of problems that subtract from the general welfare. Individuals pursue the most gain with the least cost. We want to buy low and sell high. We tout the principles of equality, but more often choose to maximize our own welfare. Transportation is most affected by this trait. Railroad, truck and airline carriers would prefer to supply the shorter distance routes which generate the most profits at the least cost. Without regulation and cross-subsidy, long distance routes that connect local or regional markets are underserved. This cripples the formation of a national transportation system. Although Adam Smith died a few decades before the introduction of railroads, he compared shipping goods by water to land based transportation by horse drawn wagon (Chapter 3). The former was far more profitable and explained why the “art and industry” of cities and towns close to water improved at a faster pace than inland communities.

This free market mechanism of the invisible hand fostered densely populated cities whose crude sanitation promoted epidemics of disease. In 1800 London had a population density averaging 30,000 people per square kilometer, a density more than twice as high as present-day New York City. The rich could afford a wagon and horse for transportation and moved to the outskirts of a city to escape the filth, smoke and disease of congested cities. The poor died prematurely. That was the invisible hand at work, subject to the same Law of Unintended Consequences.

In an ideal world, public laws would strike a balance between the laws of intended and unintended consequences. However, the very making of public law invokes the Law of Intended Consequences. Elected representatives tend to serve narrow ideological or geographical constituencies that are aligned with a representative’s own welfare. That is not a condemnation of their self interest but a description of the difficulty an elected body faces when trying to pass any law that claims to serve the public welfare.

In Article I, Section 8 of the Constitution, the framers limited Congress’ lawmaking authority to specific powers and those that promoted the general welfare. To James Madison, the main architect of the Constitution, that wording was clear. It meant only those laws that supported a broad public welfare like the common defense. Richard Lee, one of the anti-Federalists suspicious of centralized authority, protested that the general welfare could include “every possible object of human legislation,” as Michael Klarman (2016) quoted in his account of the making of the Constitution. Lee was worried that a strong central government could expand its power to tax for any reason that it deemed to be in the general welfare. A small class of people or a central government could argue that their welfare was the general welfare.

People in difficult circumstances clamor for a piece of the tax purse. Pharmaceutical manufacturers argue that a liberal extension of profit-protecting patent rights will promote more drug development and advance the general welfare. Advocates of trickle-down economics champion laws that promote lower taxes and fewer regulations, arguing that business owners will spread the wealth to working families. This is the collusion between private industry and lawmakers that Adam Smith documented 250 years ago. Our motivations and machinations do not evolve.

The welfare of the individual and that of the public must ever come in conflict. There is an inherent weighting we attach to each person’s welfare and each of us gives greater value to our own welfare. In the Part II, Chapter 3 of the Theory of Moral Sentiments, Smith remarked that we get more upset over the loss of the tip of a finger than we do over the loss of millions of lives if China were to be swallowed up by an earthquake. We cannot agree on society’s maximum welfare, or ophelimity, because we use different weighting coefficients to measure welfare. Lawmaking is a compromise between competing calculations of interest, both individual and public.

A laissez-faire market, like a pure white paint, is not efficient. A bit of black or umber tint mixed into a white paint base gets a wall covered in fewer coats and the tint is not noticeable. Each participant in a free market gains from cheating so some regulation is necessary as an incentive toward self-policing. We argue over how much regulation to mix into the free market base. We have different personal convictions, values and tastes, ensuring that our disagreements will persist.

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Photo by Tom Wilson on Unsplash

Keywords: general welfare, trickle-down economics, free market, invisible hand

Klarman, M.J. (2016). The Framers’ Coup: The making of the United States Constitution. New York: Oxford University Press, pp. 322-3. 

Community Consensus

August 21, 2022

by Stephen Stofka

Over a century ago, the passage of the 16th Amendment allowed the federal government to tax earnings from labor, giving the central government entry into the lives of every American. Fifty years earlier, Congress had passed an income tax to pay the debts incurred during the Civil War. In 1895, the Supreme Court ruled that taxes on income were a direct tax that must be apportioned in accordance with Article 1, Section 8 of the Constitution. The 16th Amendment bypassed that uniformity requirement to tax incomes at different rates. The target of the income tax was the top 1% but within two decades the tax affected low and middle income groups. The stated goal of current income taxation is income distribution and a leveling of outcomes. A century after the passage of the income tax, income distribution has reached record levels of inequality (FED, 2021). As a leveling device, the income tax has failed.

As tax rates on income increase, incentives to evade the tax rise. Those with the highest rates lobby to have their income excluded or be taxed as a special class. As advocates of Modern Monetary Theory point out, a sovereign nation that issues its own currency does not need tax revenues to fund itself at the margin. Taxes act as a restraint on the purchasing power of private parties and the spending priorities of government. Because income taxes are not levied uniformly, they are especially subject to corruption and political influence by those most damaged by the tax. Billionaire investor Warren Buffett has noted that he pays a lower tax rate than his secretary. A tax law meant to curb inequality thus promotes inequality under the law.

Bitcoin* promised anonymous transactions between people at a low cost. It’s anonymity promoted the principle of uniformity, treating large and small transfers equally. The principle of peer-to-peer exchange without government oversight, taxes or exchange fees recalls an earlier time in our history when there was a quasi-boundary between society and the federal government. Society is built on agreement. The foundation of government is forced compliance with the law. An example is our courts and police forces. Political economy is the marriage of these two institutions, force and agreement. Economics is the study of exchange in the search to satisfy our needs. Politics is the study of the division of rights and power. Needs and rights must ever be in conflict.

In conventional exchange, rights are recognized and protected by a government body. Enforcement involves sanctioned force that is concentrated in a small proportion of our society and that concentration of power makes government subject to corruption. The deluge of lobbyists on Capitol Hill is a testament to the dominant power of the federal government. Bitcoin distributes the recognition of rights across a vast public ledger but it lacks an enforcement mechanism to protect those rights. Bitcoin’s principle of distributed consensus offers the promise that the sanctioning of force could be more equitably distributed among majority and minority groups in our society.

Minority groups are often victimized by selective policing that keeps them penned into socio-economic spaces on the fringes of political power. An unpaid parking ticket rapidly accumulates interest and late fees, then becomes a bench warrant and makes someone subject to arrest. The owner of a delivery truck fleet in New York City with multiple double parking violations is rarely arrested. Institutions of enforcement were designed by the majority for the benefit of the majority.

Fear of the police and those institutions is felt deep within everyone in a minority neighborhood. Power tends to concentrate and leads inevitably to autocracy. A distributed ledger principle acts as a curb on that tendency. A community with digital control of police weapons might be able to disable the weapons of an abusive officer, forcing that officer onto desk duty or patrolling parking meters while an incident is investigated. What is science fiction today becomes science fact tomorrow. Fifty years ago a flip phone communicator like the one used on Star Trek was a figment of an author’s imagination. The public ledger technology that forms the foundation of Bitcoin exchange is still in its infancy but it is a vison of distributed community constraint as opposed to the autocratic constraints imposed by government.

In principle, the law is meant to be a uniform constraint. In practice, the law is a constraint warped by those with the money to buy influence and political power. Those who currently have power fight hard to keep it. If public ledger technology could be adapted to a community constraint on the use of force, those with resources would likely develop a way to modify that constraint for their own benefit. Should society abandon the pursuit of a distributed community constraint? No. The internet is younger than the oldest millennial and is pockmarked with scams and illegal activities but the benefits outweigh the dangers. Even if Bitcoin remains a private currency with limited adoption, its technology and principles point to a better world.

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Photo by Alexandre Van Thuan on Unsplash. A library is a distributed perspective.

*I’ve used Bitcoin as a substitute word for digital currencies in general.

Federal Reserve Bank of St. Louis. (2021, October 15). How has income inequality changed over the years? Saint Louis Fed Eagle. Retrieved August 20, 2022, from https://www.stlouisfed.org/on-the-economy/2016/june/how-has-income-inequality-changed-years

Father of Modern Economics

In his seminal work The Wealth of Nations (full text), Adam Smith refers to a man by his last name only, “Cantillon”. Smith was stingy in acknowledging the ideas of others so the reference to another author is striking. It is ironic that, in this instance, Smith argued with an idea that he mistakenly attributed to Cantillon. Had Smith paid closer attention to Cantillon’s text, he would have understood that Cantillon was refuting an earlier proposal by a William Perry.

So who was this rather obscure author? He was Richard Cantillon, a multimillionare who died a decade after Smith was born and who was arguably the first modern economist. Contrary to the stereotype of the drab economist, Cantillon enjoyed a colorful life and is the only prominent economist to have been murdered. In his posthumously published book of 1755, Essay on the Nature of Trade in General (full text) Cantillon begins with “The Land is the Source or Matter from whence all Wealth is produced. The Labour of man is the Form which produces it: and Wealth in itself is nothing but the Maintenance, Conveniencies, and Superfluities of Life.”

It is not often that one finds a book on economics that is short, understandable by the general reader and contains no cryptic formulas.