Monday, January 28, 2013

Macroeconomic manipulation

One problem with using policy to alter macroeconomic results with the goal to improve the standard of living for a society is as follows:

  • true macroeconomic measurements of a society's wealth are incredibly hard to make, because 
    • all values of things are subjective,
  • this is usually dealt with by using a proxy for wealth: the monetary valuation that society places on that wealth as measured by the prices paid for the transfers of this wealth

Care should be taken to keep in mind that this is still the estimation of one thing that is exceptionally difficult to evaluate by using a proxy for it that is much easier to measure.

The fact that a proxy is used, and more to the point, an imperfect proxy, means that this estimation is vulnerable to the manipulation of that proxy by parties whose self-interest lies in the inflating of the measurement.  For example: paying one group of people to dig ditches and another to fill in those ditches would increase monetary activity, but it produces nothing.  Not just nothing of value (because that is subjective), but nothing at all.  I could pass a dollar bill back and forth with my neighbor, and if you measured each transaction then you would see that the GDP of my neighborhood was increasing steadily by such an activity, but only a fool (or a Keynesian....but I repeat myself) would claim that the neighborhood was any better off by that activity.

Attempting to manipulate interest rates or the monetary supply to achieve desired economic results is a similar manipulation of the proxy with the intent to influence the proxy's object.  If we assume good intentions then this is magical thinking; if we assume bad intentions then this is fraud.  I think fraud is the more benign possibility.

Friday, May 27, 2011

Zero Calorie Sugar

So when does 3.36 = 0? When it's the calorie content of Splenda.
According to the FDA, if a single serving of something contains fewer than 5 calories, the manufacturer is allowed to lie and claim that it has zero calories.

Further, when you consider that a single service of Splenda is 1 gram, while a single serving of sugar is 2.8 grams, well, if we just reduced the size of sugar packets to a 1 gram serving size then, since it would only have 3.85 calories, we could also claim that it was zero calories.

I see a business opportunity here......

Wednesday, April 27, 2011

Too May Teachers Not Enough Students

I want to start by professing some of my ignorance here: I have never been a teacher, I have never studied "Education", so I may be way off base here.

I think we have too many teachers today.

Specifically I think we have too many bad teachers.  I recall a friend of mine back in High School who related his experience in a Geometry class where the teacher didn't understand anything past the first half of the book - so his class was basically converted into a "study hall" for the second half of the year.  This teacher had many years in service, I assume she effectively had tenure, and I am horrified to think of how many young folks she injured by failing to do her job.  [anecdotal, and second-hand as well, but I'm using this to illustrate where I'm coming from, not as evidence to support my conclusions]

For my time as a student, I rarely cared a wit about getting individual attention from the teacher for the vast majority of the time.  I could have had 10 classmates, 50, or even 100 (and I did have some classes in college with around 100 other students) and yet in all cases I was able to absorb the information being sent from the instructor as well in each case.  The information spoken or written could be heard and seen the same no matter how many students were present.

I will admit that I enjoyed smaller classes more.  I did enjoy being able to get more individual attention from the instructor.  But the purpose of a school (especially one largely supported by funds forcibly confiscated from the citizenry) is not the pleasure of the student, it is for the education of the student.

I am not opposed to making the experience pleasant, but I believe that any effort towards that end should only be done after the core purpose of educating the students has been accomplished.  I also believe that any cost for non-core activities should be paid for voluntarily by people who want those improvements.

So what are the benefits of fewer teachers and a larger class size?

With fewer teachers to pay, we will be able to pay them more money.  With higher salaries, teaching will become more attractive to those who are most capable, those who by their very nature are able to do many things will be more inclined to choose to teach.  More people will want to become teachers, so the bar to entry can be raised to exclude those least able to teach.

With fewer teachers to administer, we will need fewer school administrators.  These administrative positions are overhead - they have no direct influence over the education of the students.  If we assume that the goal of the school is to educate its students, then it is to the benefit of the school to reduce its overhead to devote more of its resources to the declared goal of education. 

If we had a limitless supply of resources to devote to every worthy enterprise then none of this would matter.  That is not the world in which we live.  Though we can print money, we cannot print wealth (we can at most only dilute it by the printing of more money.)  If the goal of education is to educate people, then I believe that we need to direct our limited resources to the funding of only the best teachers we can get.  For educators: raise their standards, raise their pay, thin their ranks.

Tuesday, April 19, 2011

Legislative implications for "Birther" scenerio

(disclaimer: I'm agnostic on the question of Obama's place of birth, and I am neither a lawyer nor a constitutional scholar - I just got to thinking after reading about Louisiana HB 561)

So what happens to all the legislation that Obama has signed into law if it is somehow discovered that he's not eligible to serve as President of the United States?  While I think it would be impossible to undo it and all the effects of it, I don't think that would even be necessary, because according to Article I, section 7, clause 2 of the U.S. Constitution:
"..If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it..."
So it seems to me that even if he is illegitimate, the laws he has signed would remain in effect, having not been vetoed after a 10 day period.  I suppose there could be some argument as to whether the bill had actually been "presented" to the President.

I suppose his many executive orders might be "undone" but given the effect of one of his first executive orders closing down GITMO....

What I think would be more interesting is what about any bills that were vetoed by him.  Since all of his acts would be invalid, seems to me that those bills might actually be legitimate laws.

Tuesday, April 5, 2011

They Live

Some days I look at the world around me and I feel like such an alien.  Every so often I get a glimpse of the alien in someone else and I'm struck with the realization that possibly everyone else is just as alien as me.  That's what I like to tell myself anyway.

If religion is the opiate of the masses, then self-delusion is surely the opiate of the individual.

Thursday, March 24, 2011

Why conventionally grown tofu is the key to our continued prosperity...

One of my favorite Biology teachers in college, Dr. Pinter, had something to say in response to the pro-vegetarian argument that fewer resources would be consumed by a vegetarian diet versus an omnivorous diet: that while true, this does not solve the problem of depleting our resources, it only kicks the can down the road because we would simply continue to reproduce until we hit the limit of plant food available. So we would live as well with either strategy so long as we adjusted our population accordingly (note: this is according to my recollection of my time sitting in a class more than a decade ago, which may be of questionable reliability - but as it is this recollection that brought about this line of thought, I think it still relevant.)

While I think that her reasoning here is sound, it has an underlying assumption that the size of the world population is unimportant. From my perspective I think that we humans are better off with the largest population our planet can support.  Have you noticed that people who live in populous areas (i.e. cities) tend to be (generally) wealthier  than those who live in sparsely populated areas?  The more people we come into contact with, the greater the chance that their innovations will inspire innovations from us, and vice versa.  Human technological innovation, which has played a central role in our efforts to improve our material lives occurs so much faster when we have more ideas from more people from which to draw.

Central to supporting an increasing worldwide human population is the production of sufficient quantities of food.  Pre-1960s naturally occurring famine was not an uncommon event, today it is almost exclusively the result of political events (i.e. tyrants like Ethiopian "President" Mengistu Haile Mariam who deliberately starved large numbers of their people as part of a military struggle against the Oromo Liberation Front and other anti-Derg groups.)

What has changed things between then and now was an incredible series of innovations (beginning in the 1940s, yielding results by the 1960s):
  • developing high-yield grains
  • improvements in irrigation techniques
  • modernizing land management techniques
  • development and distribution of hybridized seeds
  • development and use of synthetic fertilizers and pesticides
These innovations, collectively called the "Green Revolution" are what have allowed us to keep famine at bay these past several decades.  To return to "organic farming" (a term I find curious) would either require reducing our population or would necessarily lead to a population reduction by means of mass starvation.

So my thought process here is:
  • I think that increasing our standard of living is a good thing.
  • Technological innovation is the way we have historically increased our standard of living.
  • An larger population of well connected people is necessary to bring about that technological innovation.
  • Modern farming techniques are necessary to support even our current population.
  • Moving to a vegetarian diet will enable the feeding of a larger population than an omnivorous diet will.
I'm not opposed to "organic" foods or farming - it often results in a higher quality of food, but at a much higher cost.  TANSTAAFL and "organic" farming comes at a price - (and here I'm making some under-informed assumptions, I invite corrections) it takes more land, requires more labor, uses more resources to produce the same quantity of food that could be produced using modern (i.e. "conventional") techniques.

Tuesday, February 15, 2011

Labor Justice

So the knee-jerk reaction to low-priced foreign imports is the imposition of tariffs and other restrictions on their importation in an attempt to "protect" domestic industry. Restrictions on the quantity of available goods cause the same number of dollars to chase fewer goods, causing prices to rise. It does not, however, follow that wages should also rise with prices. What causes wages to increase? "When two workmen run after one boss, wages fall; when two bosses run after a workman, wages rise."

Perhaps a more precise way to express that sentiment might be: "The rate of wages depends upon the proportion which the supply of labour bears to the demand." Wages therefore increase when the demand for them increases 1 (duh!). Now the demand for labor is directly dependent on the amount of available investment capital. It follows then that even if a government prohibits the importation of a good, this action has no effect on the quantity of investment capital, it can only change the allocation of that capital. What this means is that an increase in labour demand in one protected industry necessarily reduces the labour demand in another industry.

The sum of production is the result of capital and labour, minus any obstacles imposed. If obstacles are increased for a fixed amount of capital and labour, then the sum total must decrease. And if the amount produced is diminished, then how can one assume that their share of production will increase. Such a belief is dependent on the assumption that the "rich"2 who effectively make the laws will for some reason sacrifice an increasing portion of their decreasing fair share of production. It seems to me that one would be wise to reject this most suspicious act of generosity.

So what I'm wondering here is this: Is it not just that after working all day I should be able to use my earnings to purchase the most they can? Is it not obvious that the imposition of trade restrictions reduces this? Does it not also logically follow that ANY tariffs or any other sort of imposed restriction of trade is an unjust taking of my labour?


ideas taken from "Does Protection Raise the Rate of Wages" by Fred Bastiat
  1. ^ Also note that increasing wages does not increase prices unless that increase is imposed from outside, in which case the increase in price is still not due to the wage increase, but to the external imposition.
  2. ^ who are generally better politically connected than the rest of us.