Wow, my state-of-origin has continued to dig itself deeper and deeper into an economic rat hole. This week the Michigan Legislature voted for a $1.80 increase to the minimum wage in response to the current push to place a constitutional amendment increasing the minimum wage on the November ballot.
Here's a brief article, written three days ago by Mark Steckbeck of Hillsdale College, that talks about the illogic of increasing the minimum wage.
When dealing with minimum wage issues, it is vital to remember two things. First of all, when the price of anything increases less of it will be purchased. In this case we are talking about the price of labor. As employers are forced to pay their minimum wage workers (who, by definition, aren't valuable enough to earn more than the employer is forced to pay them) more, fewer minimum-wage/minimum-productivity workers will be employed. It's as simple as that, and has been born out many times in studies.
Second, Steckbeck does a good job of illustrating just who earns the minimum wage. The reality is that a tiny fraction (2.7%) of workers make the minimum wage in the first place. Of those workers, most of them are young and living with their parents, gaining valuable experience at a first job - experience that will allow them to go on and lead a productively employed life. Those minimum wage workers who are not young, the vast majority of them are either supplementing their hourly-wage with tips (ie, waitstaff, bartenders, etc....) and making decent money, or are simply working to occupy their time and supplement social security income post retirement.
Ok, I'll get off my horse for now. Got to go get more schoolwork done....
Thursday, March 16, 2006
Monday, March 13, 2006
Wealth inequality -- -- or not.
We're subject to a constant barrage of statements about "wealth inequality" - about how the rich are "getting richer" and everyone else is just barely scraping by. I'm not going to go into my own spiel here, though I could. Instead you should read this post by one of the professors at George Mason.
Thursday, March 09, 2006
More coming!
Finally I'll be getting my head back in this blog. Sorry for the long delay. My goal for the time being is to post something every other day, be it a short essay written for a class, some commentary on the news, or some random economic thoughts. The first short essay is posted below. Enjoy!
Nathan
Nathan
A Spontaneous Force
An invisible energy field surrounds us. It permeates our lives, influencing nearly everything we do. You can’t taste or feel this energy, but it wields great power to organize man’s efforts and enable the existence of society as we know it.
No, it isn’t The Force.
Instead of being practiced only by a handful of dedicated and highly-trained Jedi, the energy field I am talking about is utilized the world over by people who are – in virtually every case – completely unaware of its existence. Indeed it seems to operate best when unknown; every time a single person or a group of individuals has attempted to either manipulate the energy field or to accomplish similar coordination without its assistance, disaster has resulted.
This energy field is called spontaneous order, and without it our world would be a vastly different place.
Think about a paper clip or a pencil.* Both of these simple items are readily available, and at prices that make them quite expendable, yet could you make one? For that matter, could anyone? Some people might theoretically know how, but no one on this planet is able to single-handedly accomplish the gathering of raw materials, creation of the manufacturing equipment and processes, and production of either of these items – or virtually anything else either for that matter. It is simply far too much for any one individual to know, let alone accomplish.
Yet somehow, without a “minister of paper clips”, tens of thousands of individuals manage to coordinate their actions and combine their knowledge to create these products. The metals are mined and made available, manufacturing plants built, boxes produced, distribution systems of ships and trucks activated, and a quantity of low-cost paper clips very close to that which will be bought finds its way to the shelves of your local office supply store. All of this happens without anyone “in charge”, without any overall plan, and even without many of the people involved having any idea of the “big picture”. This is spontaneous order.
Self-interest drives spontaneous order. This sounds awful and selfish, but in reality self-interest causes all of us to do things that other people value. By doing what we can, and that is of value to others, we help create order. Prices for goods and labor are the primary signal that we can all use to decide what we can do that is most valued. You simply choose the job that pays the best and you have found what you can do that helps others out the very most.
But spontaneous order is more than just self-interest; it is also the instinct to participate in the activity of a group in a way that fits in with what is already being done, gaining value from and adding value to the activity taking place. The second form of spontaneous order is evident in both man and animal. A goose exhibits it while flying in the aerodynamic “V” with other geese. A jazz musician participates in a spontaneous order while playing in a jam-session with other musicians. You exhibit it when you decide to interact with other people by buying and selling a house using the same methods as other home-sellers. Both the self-interest that drives you to do what others value most and the instinct to participate in established ways with others are necessary.
Spontaneous order is vital to modern life as we know it. Even to make such simple goods as paper clips or pencils from start to finish, the amount of knowledge and information required is far too great for any individual, or even any small group, to grasp. How much more so for a watch, a microwave, or a car? Only through a spontaneous, uncontrolled, order that emerges from the self-interested interactions of individuals can we experience life as we do. The good thing? We don’t have to create order, all we have to do is leave it alone. Spontaneous order already exists all around us, surrounding us, permeating our lives and everything we do, and coordinating human action for the betterment of all.
Monday, February 06, 2006
Two Stories
Here are two brief stories I wrote this week for my "communicting economic ideas" class. Enjoy.
I walked away nearly twenty-five years ago. Walked away from Omelas.
Walked away from the pleasure, the ease. Walked away from the festivity of life in that desperate city. Only by walking away could I save that which makes a man human.
See, staying would have meant accepting my incapability of working for my own well-being. An acceptance that all I enjoyed in life was purchased by the unwilling suffering of a little child. I would have had to live with the knowledge that my life was based not on my actions, but on the bleak existence of someone who had no choice in the matter.
This I could not do.
Life has been hard these twenty-five years. I have discovered what a responsibility it is to rise or fall by my own actions. Though work is hard, my customers pay me a fair wage for my services. I don’t force them to buy anything. No one suffers against his or her will to benefit me, and I labor willingly for my own benefit.
See those two girls feeding the geese? Those are my daughters. Every day I give thanks that they will never know the seductive horror that is Omelas. They enjoy their play and free time all the more because they know work. Yesterday Claire, the oldest, was complaining about doing her chores. Dear thing, she probably thinks I’m crazy when I tell her, as I did yesterday, that working and benefiting from your own labor is one of life’s greatest blessings.
It’s true you know. Profiting from the suffering of another, especially if that person has no choice, reduces a man to a being dependent on the handouts of others, reliant on external sources for survival. Working and adding the results of that effort to your life, though much less enjoyable at the start, strengthens a man’s mind and body, spurs him to invent and create, and gives him a true appreciation for life and what he has.
And that really is the most priceless possession of all – to appreciate life, to enjoy your own and respect that of others around you.
I have never succeeded in freeing the child of Omelas, and life has not been without struggle. But every time I embrace my wife at the end of a day or run through the yard with my two girls, I give thanks that we live in a land where all work benefits the worker. Our futures here in Tsilatipac, our very lives, are our own.
The Second One.
“Grandpa, did you feel oppressed when you were young?”
The gray-haired gentleman seated by the window raised his eyes from his book; “No Peter, why do you ask?”
Sitting on the couch near his grandfather’s chair, Peter said, “Today my government teacher told us America’s prosperity was built on the suffering of workers, especially immigrants, and that capitalism has never succeeded without causing and profiting from the oppression of the lower classes. He also said that capitalism keeps workers in poverty to profit the businessmen who employ them. I know you came over from Germany with your parents when you were a kid, so I wanted to ask you; what happened when you came to America? Did you have to suffer so your dad’s boss could profit?”
“Peter,” replied the old man, “I think your teacher is misguided. My parents came to the United States because they heard it was a country where men could create a better life for themselves and their children through hard work. In the United States was this wondrous thing called ‘capitalism’; men could start out as a deliveryman or laborer – anything really – work hard, and someday own a big business or even be in politics. My father dreamed of owning his own business, he wanted to do something other than what his father and his father’s father had done, so we packed up our lives and moved to the States.
“Life was difficult. The home my father found was small, even smaller than the house we left in Germany. Father couldn’t find work doing what he had before, so after three weeks he took a job unloading ships. The work was hard – he would leave the house every day before the sun rose and return well after dark, hungry, sore and exhausted. He was paid little; often we had only two meals a day. After school I helped earn money for the family by standing on the corner and selling my mother’s bread.”
“Yes, life was hard for many years, but my father remained cheerful, often saying that things would get better. Sometimes he would point out a certain man when we went to mass, a man who was always dressed well and never arrived with mud on his boots. Father told me this man owned the company he worked for, that this fine and distinguished man was his boss’ boss. When I asked why this man kept my father working so hard for such long hours, my father would reply ‘It isn’t him who keeps me working, I choose to work the agreed amount to receive my pay. I work because working benefits me, not because he or any other man requires me to.’ I thought it was unfair that this man was so rich and we were so poor, but my father would answer ‘No son, that man earned what he has. Because of his business skill and hard work I, and many others, have jobs with his shipping company.’”
“Peter, even though we struggled back then, my father taught me that capitalism meant men earned their wealth through their own effort, not by exploiting the suffering of others. Yes, workers might experience hardship on the job, but they worked of their own free will – no one was forced into suffering for the benefit of their employers. Even the poorest of laborers was compensated for his work. And though some were rich and others poor, all alike were able to benefit from their own sweat. As you know, Peter, your great-grandfather didn’t work at the docks the rest of his life. He saved some money, opened his own store, and lived his dream.”
Wednesday, February 01, 2006
Unleash the economy!
So, about the President's State of the Union address last night. You should check the various news and pundits sites for what people are saying, but I have one comment.
Bush proposed a 22% increase in the budget of the United States Department of Energy. Supposedly this extra money will help develop nuclear, wind, and solar power to lessen our "addiction" (Bush's term) to foreign oil over the next nineteen years. First of all there are all the normal public choice economics type arguments to be made about this; such as I would expect that every actual attempt to follow this plan would be met with opposition by somebody, nineteen years is a long time for Americans to maintain a vision or plan, and the organizations using this money will be primarily focused on USING this money instead of providing results due to the distant time-horizon. I mean, in twenty years, who's going to remember that Bush proposed this initiative last night?
If the President really wants to lessen dependence on foreign oil, I say unleash the market. There is a vast amount of untapped information in existence, buried in the heads of a geologist here, a chemist there, or an engineer over the next mountain. This knowledge would never be fully utilized in a government program, but given the opportunity to make money from what they know...people with valuable information come out of the woodwork and the market gets to sort out whose ideas are really worthwhile.
How would the market be unleashed? Relaxing/removing various drilling and exploration restrictions. Reducing the time and money it takes to get a new petroleum refinery through inspections and regulatory red-tape (it's currently something like ten years and over two BILLION dollars). Make it more difficult for communities or states to block construction and operation of wind generating facilities and nuclear plants. Alternately, make it easier for the prospective owners to strike a deal with the affected landowners, and only with affected landowners. Not only should it be easier to get into or expand in the energy business, it should be brutally easy to get out of energy, ie go out of business without the government trying to prop you up.
If energy independence is truly top of the President's to-do list, I believe the market holds far more promise than does increasing government spending.
Bush proposed a 22% increase in the budget of the United States Department of Energy. Supposedly this extra money will help develop nuclear, wind, and solar power to lessen our "addiction" (Bush's term) to foreign oil over the next nineteen years. First of all there are all the normal public choice economics type arguments to be made about this; such as I would expect that every actual attempt to follow this plan would be met with opposition by somebody, nineteen years is a long time for Americans to maintain a vision or plan, and the organizations using this money will be primarily focused on USING this money instead of providing results due to the distant time-horizon. I mean, in twenty years, who's going to remember that Bush proposed this initiative last night?
If the President really wants to lessen dependence on foreign oil, I say unleash the market. There is a vast amount of untapped information in existence, buried in the heads of a geologist here, a chemist there, or an engineer over the next mountain. This knowledge would never be fully utilized in a government program, but given the opportunity to make money from what they know...people with valuable information come out of the woodwork and the market gets to sort out whose ideas are really worthwhile.
How would the market be unleashed? Relaxing/removing various drilling and exploration restrictions. Reducing the time and money it takes to get a new petroleum refinery through inspections and regulatory red-tape (it's currently something like ten years and over two BILLION dollars). Make it more difficult for communities or states to block construction and operation of wind generating facilities and nuclear plants. Alternately, make it easier for the prospective owners to strike a deal with the affected landowners, and only with affected landowners. Not only should it be easier to get into or expand in the energy business, it should be brutally easy to get out of energy, ie go out of business without the government trying to prop you up.
If energy independence is truly top of the President's to-do list, I believe the market holds far more promise than does increasing government spending.
Friday, January 27, 2006
Morning thoughts
Good morning! When I woke up this morning the sun was just rising, painting the sky a gentle shade of pink. Now, I've seen winter sunrises before, but it never ceases to surprise me when I look outside and see a clear, blue, sky during the winter. I grew up in Michigan remember. Gray skies ALL THE TIME! Not here though. I love my adopted state.
Check this out. A VA state delegate (like a state representative) accidentally discharges a gun in his office. The bullet is stopped by the kevlar vest hanging on his door. The governor (Democrat) calls for review of the policy allowing guns to be carried IN THE STATE CAPITOL BUILDING. Everyone else seems to think the incident isn't such a big deal. Did I mention I love my adopted state?
So Hamas won a majority of seats in the Palestinian election. Far more than anyone expected. Far more seats than exit polls indicated they would win. Now what? Well, the international consensus seems to be that no one really wants to deal with a terrorist organization as a government. But Hamas appears to be the legitimately elected majority government - and possesses something that is somewhat a rarity in parliamentary-style democracies, an individual, simple, majority of seats. They don't NEED any other party to align with them in order to form a government, but they are making overtures to Fatah, the primary (newly) minority party.
I know what I would do. From what I've read, Hamas seems to have won the victory it did because the PEOPLE (that cornerstone of any democracy) wanted a change from the perceived slow economic and political. Hamas has done a good job dealing with individual charity cases, supporting individuals - this plus their hardline stance vis a vis Israel has given them "street cred". Yet all main donor nations appear poised to cut off all aid to a Palestine governed by a terrorist organization. In essence, though Hamas is the majority party, the rest of the world may force them to form a coalition government. If I were in charge of Hamas, and from the limited amount of time I have put into this, I think I would attempt to form a government that consisted largely of Fatah in terms of foreign relations/policy. At the same time I would put my party, Hamas, in charge of domestic policy (what the people voted for). Don't know if this would work, don't know if other nations would buy it, but I would try it.
Do I think my idea will be tried? Ehh... not really. I mostly expect Hamas to say "get lost, we won and we'll run the government, to anti-paradise with the consequences".
That's enough for now, I really do have school work to be doing!
Check this out. A VA state delegate (like a state representative) accidentally discharges a gun in his office. The bullet is stopped by the kevlar vest hanging on his door. The governor (Democrat) calls for review of the policy allowing guns to be carried IN THE STATE CAPITOL BUILDING. Everyone else seems to think the incident isn't such a big deal. Did I mention I love my adopted state?
So Hamas won a majority of seats in the Palestinian election. Far more than anyone expected. Far more seats than exit polls indicated they would win. Now what? Well, the international consensus seems to be that no one really wants to deal with a terrorist organization as a government. But Hamas appears to be the legitimately elected majority government - and possesses something that is somewhat a rarity in parliamentary-style democracies, an individual, simple, majority of seats. They don't NEED any other party to align with them in order to form a government, but they are making overtures to Fatah, the primary (newly) minority party.
I know what I would do. From what I've read, Hamas seems to have won the victory it did because the PEOPLE (that cornerstone of any democracy) wanted a change from the perceived slow economic and political. Hamas has done a good job dealing with individual charity cases, supporting individuals - this plus their hardline stance vis a vis Israel has given them "street cred". Yet all main donor nations appear poised to cut off all aid to a Palestine governed by a terrorist organization. In essence, though Hamas is the majority party, the rest of the world may force them to form a coalition government. If I were in charge of Hamas, and from the limited amount of time I have put into this, I think I would attempt to form a government that consisted largely of Fatah in terms of foreign relations/policy. At the same time I would put my party, Hamas, in charge of domestic policy (what the people voted for). Don't know if this would work, don't know if other nations would buy it, but I would try it.
Do I think my idea will be tried? Ehh... not really. I mostly expect Hamas to say "get lost, we won and we'll run the government, to anti-paradise with the consequences".
That's enough for now, I really do have school work to be doing!
Tuesday, January 17, 2006
How is it done?
Quick - someone answer me this. How do you have an intelligent and reasonable (ie, not dissolving into insults, name calling, and shouting) discussion with someone who refuses to accept the same facts as you? Could they possibly be right? What if you are 100% sure your facts are correct... but so are they. How should they go about informing you that it may actually be your dearly held "facts" (assumptions) that are wrong? Is it possible to both try to persuade another and yet be open to persuasion yourself? If one party of a discussion is willing to examine facts with an open mind, and the other party isn't, doesn't that give an advantage to the one who resolves not to examine alternate facts? If one party is willing to compromise, and the other isn't, who wins? Therefore, is not the dominant strategy usually to steadfastly hold to your own "facts" or interpretation thereof, regardless of what arguments are presented? Seeing that each party in a discussion may have an incentive to refuse to look at alternate facts, of course, lands us right back where we started.
And what, oh what, does this mean for American politics?
And what, oh what, does this mean for American politics?
Wednesday, January 11, 2006
General News
Wow. The more I hear/read from Judge Sam Alito the more impressed I am with his judicial knowledge, intelligence, and general presence of mind. This dude is smart! The left side of the aisle is still trying to taint him with something, anything, that will outrage the American people, but to this point nothing is sticking. On all the major Democrat "hit issues" Alito appears to have made well-reasoned decisions that have supported various sides of each issue.
I am sure you know this, but on Monday the ninth the Dow Jones Industrial Average broke through 11,000 for the first time since 9/11/01. Though all major news sources reported the milestone as more "phychological" than real, breaking 11,000 - and staying there as the Dow has done - is indicative of an economy that is not only doing well right now, but also an economy that people expect to continue doing well.
It has been in the 50s or even 60s every day this week here in DC. This Michigan boy just doesn't know quite what to make of it. Does make it a little hard to use my dogsled though....
73
I am sure you know this, but on Monday the ninth the Dow Jones Industrial Average broke through 11,000 for the first time since 9/11/01. Though all major news sources reported the milestone as more "phychological" than real, breaking 11,000 - and staying there as the Dow has done - is indicative of an economy that is not only doing well right now, but also an economy that people expect to continue doing well.
It has been in the 50s or even 60s every day this week here in DC. This Michigan boy just doesn't know quite what to make of it. Does make it a little hard to use my dogsled though....
73
Wednesday, January 04, 2006
Published!! (on a webpage)
Today another article of mine appeared on the Mackinac Center for Public Policy website. This one is a basic explanation of and introduction to Overton Window theory. If anything you have heard about my work this past term interests you, this is a good article to read. You can read it HERE or by clicking on the link in the sidebar.
Palestinians
I don't know how much you know about Middle Eastern history from the end of WWII to present, but a common conception is that Palestinians hate Israel because Israelis threw them out of their homes and land. Forgotten in the depths of "uncomfortable history" are the instances when the leaders of the nations in which Palestinians have resided for the last sixty years refused to allow settlement among their own population, keeping the refugees in camps. Forgive any insolence, but answer me this. If Palestinians hate the Israelis and live in peace and harmony with all other residents of the Middle East, why did THIS occur?
Very interesting. Apparently some Palestinians decided that they 'deserve', are due, land from Egypt. And are willing to take it by force. Doesn't this show that Palestinians are a (effectually) leaderless rabble? How can they be considered a coherent nation that requires their own homeland (as we are so often 'reminded' of)? Doesn't this show that Palestinians do not, in fact, feel warm and fuzzy toward their Arab neighbors? Could their possibly be a reason for this anger and resentment?
Ok, I'm done with that thought.
Very interesting. Apparently some Palestinians decided that they 'deserve', are due, land from Egypt. And are willing to take it by force. Doesn't this show that Palestinians are a (effectually) leaderless rabble? How can they be considered a coherent nation that requires their own homeland (as we are so often 'reminded' of)? Doesn't this show that Palestinians do not, in fact, feel warm and fuzzy toward their Arab neighbors? Could their possibly be a reason for this anger and resentment?
Ok, I'm done with that thought.
Monday, January 02, 2006
Naples Economics
There will be more on this later, as right now I will be going to be to get up early for my flight, but it is very interesting to see the very recent spate of economic growth that this area has undergone. 73
Saturday, December 31, 2005
The economist lives!
hey friends!
There was a nice post, almost ready to be posted, and the durn laptop froze up. So here's something maybe a little different.
From Thanksgiving to the end of the semester I was extremely busy. Two weeks of writing on my two big papers for my professors, one week of intense studying for final exams. All the work paid off though. My exams went well. Both papers were very well received. A third paper will be published January 4th on the Mackinac Center for Public Policy website. All three of these papers focus on the same topic, a topic that has become an area of great interest to me and that I hope will have potential for the future - political possibilities. More particularly, the papers focus on developing a theory of a window of political possibilities and how that window can be shifted to result in policy applications.
Well, I'm hanging out with Larry Reed, the president of the Mackinac Center, in Naples, Florida - so I'm going to go for now.
There was a nice post, almost ready to be posted, and the durn laptop froze up. So here's something maybe a little different.
From Thanksgiving to the end of the semester I was extremely busy. Two weeks of writing on my two big papers for my professors, one week of intense studying for final exams. All the work paid off though. My exams went well. Both papers were very well received. A third paper will be published January 4th on the Mackinac Center for Public Policy website. All three of these papers focus on the same topic, a topic that has become an area of great interest to me and that I hope will have potential for the future - political possibilities. More particularly, the papers focus on developing a theory of a window of political possibilities and how that window can be shifted to result in policy applications.
Well, I'm hanging out with Larry Reed, the president of the Mackinac Center, in Naples, Florida - so I'm going to go for now.
Wednesday, December 07, 2005
Pearl Harbor Day!
Lest we forget either the tremendous sacrifices and triumphs of World War Two or the reality that we are at war even now - no, I'm not talking about Iraq - with an enemy that is more eager to destroy our way of life than the Japanese ever were.
One paper down, major homework getting done, then studying for finals and modifying the paper.
One paper down, major homework getting done, then studying for finals and modifying the paper.
Friday, November 18, 2005
Arrogance of the intellect.
If I ever start using my education and training as a foundation for arrogance, you MUST set me straight. This week I have come to the conclusion that, while not all of the economics professors here at GMU suffer from arrogance, far too many of them do. Included in the afflicted are all three professors that I have classes with this semester. Now, this arrogance takes several forms, but all have the same root - forming judgments and beliefs based on seriously flawed and/or incomplete information. Now don't get me wrong, all three men are brilliant, and I respect all of them, but all three have allowed their intellect to impair their ability, in some areas, to absorb information that doesn't fit with a preconceived idea of how things should be.
One professor emphatically does not believe evolution, and is able to rattle off many logical and factual problems with the theory, but neither does he believe in design by the Creator. Why? Because his back hurts, and other physical aliments observed around him, make him think that humans were not perfectly designed. His intellect cannot accept the notion of a Creator, therefore, no Creator exists. So what does he believe? Hmmm, good question. Not in evolution, and not in God (in any sense).
The next prof. allows his intellect to make snap judgments about political issues. Sometimes he seems to be on target, but more often his assumptions are simply incorrect. Though I think he realizes that he doesn't have all vital information, he feels that he has enough to act and believe as if he had all pertinent information. He doesn't.
The third professor blatantly assumes that the rules he plays by are the only proper, the only rational, rules by which to think and form opinions. If you can argue and win from within his rules he may accept your point, but heaven help you if you try to argue that one of his assumptions about rationality, morals, motives, or another such human aspect, is flawed. His fervent belief in his perfect conception of rationality is, ultimately, irrational.
Three forms of arrogance: "This doesn't fit into my preconceived opinion of how things should be, so it must not be true." "I don't need to know all the relevant information, I know enough to make a judgment." "My approach is the only rational and proper approach to use." All three are dangerous both in academic and personal life, yet all three are oh so easy to slip into - especially for the educated mind.
One professor emphatically does not believe evolution, and is able to rattle off many logical and factual problems with the theory, but neither does he believe in design by the Creator. Why? Because his back hurts, and other physical aliments observed around him, make him think that humans were not perfectly designed. His intellect cannot accept the notion of a Creator, therefore, no Creator exists. So what does he believe? Hmmm, good question. Not in evolution, and not in God (in any sense).
The next prof. allows his intellect to make snap judgments about political issues. Sometimes he seems to be on target, but more often his assumptions are simply incorrect. Though I think he realizes that he doesn't have all vital information, he feels that he has enough to act and believe as if he had all pertinent information. He doesn't.
The third professor blatantly assumes that the rules he plays by are the only proper, the only rational, rules by which to think and form opinions. If you can argue and win from within his rules he may accept your point, but heaven help you if you try to argue that one of his assumptions about rationality, morals, motives, or another such human aspect, is flawed. His fervent belief in his perfect conception of rationality is, ultimately, irrational.
Three forms of arrogance: "This doesn't fit into my preconceived opinion of how things should be, so it must not be true." "I don't need to know all the relevant information, I know enough to make a judgment." "My approach is the only rational and proper approach to use." All three are dangerous both in academic and personal life, yet all three are oh so easy to slip into - especially for the educated mind.
Wednesday, November 16, 2005
Why should I believe as I do?
Tonight I had the pleasure of attending a debate between two of my favorite professors here at GMU about the rationality of religion. It was unfortunate that one debated the rationality of religious action and the other the rationality of religious belief, but the debate was fantastic nonetheless. I believe that the debate will be made available as a podcast (digital recording) for dispersal, and when it is I will link to it. Why should you listen to it? Because it provides excellent examples of a fantastic speaker (Dr. Larry Iannacone), the types of anti-religious arguments you hear all the time in academia (Dr. Bryan Caplan), and some good, non-experiential based, arguments for why religion is a rational action (again, Dr. I). Why non-experiential? Well, simply because if you base your entire argument for religion on experienced phenomenon you leave yourself open to counter-arguments such as "well, that's your experience and that's fine for you, but I've never experienced that", or, "are you sure you didn't just see/feel/experience what you really really wanted and expected to - kind of a mind-over-matter sort of thing."
All right, that's enough for now. I have many more thoughts on this though, so if you're interested, ask me.
God bless,
All right, that's enough for now. I have many more thoughts on this though, so if you're interested, ask me.
God bless,
Saturday, November 12, 2005
Read this
Wednesday I read a paper that made me laugh, smile, chortle, and think that perhaps it's time that economists stop pretending they can analyze religion without accounting for the supernatural. That leaves me with a significant question however - how can I provide additional depth to the work being done on the Economics of Religion by drawing God and the supernatural into the picture? Here's the paper - it's not long and really isn't as sacrilegious as it seems at first. And here's a good website for some background on what economists have just started doing with religion in the last couple years. Warning about that second website - it is substantially more complex and "economic".
Another one of these kooky 60 degree and sunny November days here in Virginia.... Yesterday I drove nearly all the way to the southern edge of the state while making a run for my part-time job. At least I didn't have to drive all the way to our branch office in Raleigh NC.
Another one of these kooky 60 degree and sunny November days here in Virginia.... Yesterday I drove nearly all the way to the southern edge of the state while making a run for my part-time job. At least I didn't have to drive all the way to our branch office in Raleigh NC.
Tuesday, November 01, 2005
Was I born in the right decade?
Once again I have come across one of "my" economic ideas in a paper that was written in the 60s. I guess the challange for me now is to both learn to identify which ideas of mine that haven't been written about yet have merit (instead of just assuming they are so simple as to be worthless) and to explore new applications of these old ideas of "mine".
I have a question for you. Why is democracy the best? Do you have any economic, administrative, or effectivness reasons why democracy is the best form of government? I think that question can be solved rather easily, but more difficult is the question of which of the many voting methods is best.
Third random point. Yesterday, working in the AAV shop, I was marveling at the network of small and medium sized businesses that exist to produce the technical setups for tradeshows, conferences, concerts, etc.... Not only are there the companies that actually bring the equipment, set it up, and run the show (and even then they hire lots of freelance help for specific jobs), but there are also many companies that rent additional equipment, do shipping, even tasks as mundane as building cases in whish to transport and store expensive equipment.
I have a question for you. Why is democracy the best? Do you have any economic, administrative, or effectivness reasons why democracy is the best form of government? I think that question can be solved rather easily, but more difficult is the question of which of the many voting methods is best.
Third random point. Yesterday, working in the AAV shop, I was marveling at the network of small and medium sized businesses that exist to produce the technical setups for tradeshows, conferences, concerts, etc.... Not only are there the companies that actually bring the equipment, set it up, and run the show (and even then they hire lots of freelance help for specific jobs), but there are also many companies that rent additional equipment, do shipping, even tasks as mundane as building cases in whish to transport and store expensive equipment.
Tuesday, October 11, 2005
The reset button
Have you ever had an experience that convicted you, illuminated your actions, and pushed you back on some course you had originally set?
When these experiences come from God they are just amazing and make me praise Him all the more. When I discover a particular "reset" on my own, I just kick myself. And when the reset comes from a friend, from realizing that by straying from my previous course I may have hurt someone I care about or caused them turmoil, I grieve for them and feel great remorse regarding my actions.
This afternoon something from one of my friends triggered this third kind of reset, and believe me, seeing how far and fast I can go from where I want to be when I try to take matters into my own hands just makes me all the more glad for God's grace and the constant advice/companionship of the Holy Spirit, and all the more committed to relying totally on the provision of my Father.
My friend - - I am deeply sorry, and thank you for (whether or not you intended to) setting me back on track.
In other news, I had a meeting/interview at the Tax Foundation this afternoon. Talking with several of the staff I discovered that one of their major points in the discussion on what attracts businesses to states is almost exactly the same idea I had and wrote a little about back in June. Now I really wish I had turned that thought piece into a full paper or article for MCPP. Good news though - it appears that I am moving from having "original" ideas that were first written about sixty years ago to simply not getting my ideas on paper fast enough to be the first. Guess I should write about my thoughts and ideas more, huh. :)
Went hiking with several friends yesterday. Fantastic day, so wonderful to be out and among God's forests, hills, and rocks again. The group hiked about 7.5 miles (one of the young ladies and I hiked about 1.3 miles more than the group). Here are a couple of pictures.
Just a stream I really enjoyed hiking along. The goofy camera said the picture was blurry, but I like the picture the way it is.
Below is most of the group. The standing guy (Mike) and seated gal (Carolyn) both go to my church.
And here's me, playing with the rocks again.
When these experiences come from God they are just amazing and make me praise Him all the more. When I discover a particular "reset" on my own, I just kick myself. And when the reset comes from a friend, from realizing that by straying from my previous course I may have hurt someone I care about or caused them turmoil, I grieve for them and feel great remorse regarding my actions.
This afternoon something from one of my friends triggered this third kind of reset, and believe me, seeing how far and fast I can go from where I want to be when I try to take matters into my own hands just makes me all the more glad for God's grace and the constant advice/companionship of the Holy Spirit, and all the more committed to relying totally on the provision of my Father.
My friend - - I am deeply sorry, and thank you for (whether or not you intended to) setting me back on track.
In other news, I had a meeting/interview at the Tax Foundation this afternoon. Talking with several of the staff I discovered that one of their major points in the discussion on what attracts businesses to states is almost exactly the same idea I had and wrote a little about back in June. Now I really wish I had turned that thought piece into a full paper or article for MCPP. Good news though - it appears that I am moving from having "original" ideas that were first written about sixty years ago to simply not getting my ideas on paper fast enough to be the first. Guess I should write about my thoughts and ideas more, huh. :)
Went hiking with several friends yesterday. Fantastic day, so wonderful to be out and among God's forests, hills, and rocks again. The group hiked about 7.5 miles (one of the young ladies and I hiked about 1.3 miles more than the group). Here are a couple of pictures.
Just a stream I really enjoyed hiking along. The goofy camera said the picture was blurry, but I like the picture the way it is.
Below is most of the group. The standing guy (Mike) and seated gal (Carolyn) both go to my church.
And here's me, playing with the rocks again.
Monday, September 19, 2005
Behind the politics
More and more evidence continues to surface that we must give decentralized disaster relief more freedom in responding to crises. It seems as though worries over jurisdiction, licenses, and other bureaucratic nonsense hampered various small scale initiatives to provide assistance (article). Could there really be something to the wisdom of free-market economists' saying that a central authority has no hope of efficiently (or even workably) coordinating all relevant information and making the right decisions? Ok, so why do people clamor for stronger government response and protection after disasters? That's right, because then they do not have to take responsibility for their own actions and safety.
Apparently there is also a dispute over whether Amtrak was available to help move people out of the city (article), substantial emergency funds were unaccounted for or mis-spent before the fact (here and here), and my favorite of all religious groups in America - the envirowackos - strike again, causing more death and destruction (article).
More red tape (article). Just makes me upset.
No real profound economic thoughts, just been doing lots of reading lately - mostly about voting methods, rent-seeking, and various other facets of public economics and public choice. Played football (among other things) with friends from church yesterday, very sore all over today. So much fun....
Apparently there is also a dispute over whether Amtrak was available to help move people out of the city (article), substantial emergency funds were unaccounted for or mis-spent before the fact (here and here), and my favorite of all religious groups in America - the envirowackos - strike again, causing more death and destruction (article).
More red tape (article). Just makes me upset.
No real profound economic thoughts, just been doing lots of reading lately - mostly about voting methods, rent-seeking, and various other facets of public economics and public choice. Played football (among other things) with friends from church yesterday, very sore all over today. So much fun....
Thursday, September 15, 2005
Wednesday, September 14, 2005
I feel as though I should write something.
A possible bias may be a work here, but I find it rather sad that those most responsible (if anyone is) for the troubles in New Orleans most try to pass the blame while the one least responsible is the only one who has taken responsibility. I have actually heard people saying (and writing) that no blame rests on anyone except the President, while I strongly feel that, due to the evac plans that were not followed, the delays in requesting federal help (National Guard, etc...), and other various factors, what blame exists is to be found in lower levels of government.
Anything I could say has already been hashed to death, but you may have missed several points that I feel are crucial. First, the death toll stands at 659. Tragically high, yet not nearly the cataclysm that was initially feared. Second, to the best of my knowledge (and limited time), neither city evacuation plans and state response plans were followed completely. Third, everything that happened in New Orleans had been predicted and warned about for decades - expect perhaps the looting - and nothing was done by the "responsive and compassionate" leadership of the city and state. Fourth, it is the responsibility of the state governments to call for federal aid - especially when that aid involves military personnel. National Guard units are under the command of the governor. Neither was requested until after President Bush called and urged the governor to do so. Fifth, the talk about blacks being "targeted" in some way is preposterous. Look at the inner city of most urban areas. Anything that affects that inner city area is going to affect a greater number of "racial minorities" than "racial majorities".
There may be other salient points, and I make no assurances that the above is 100% correct, but it is true to the best of my knowledge given the limited time I've taken to be informed.
Now to some interesting economic thoughts - again, not original, but with my own spin.
First - the response of the free market, even though there are some tacit restrictions on prices, has been terrific. WalMart, Home Depot, cell phone providers, and other major retailers began preparing for the hurricane before it made landfall by stocking stores around the area expected to be hit with food, water, and relevant supplies (mobile cell towers and generators moved into the nearest safe zones in the case of the cell providers). Positive press was probably part of the story, but there was also money to be made. Survival items were given away, but markets existed for vastly increased quantities of "hurricane related but not survival" items.
Second - private relief efforts aside, the government spending/rebuilding/assistance/relief in disaster scenarios significantly decreases the costs of living in areas prone to disasters. My intelligent but non-economist mother saw this as a problem, and any economist worth his/her salt will heartily agree with her. Put in simple "economist speak", government disaster relief distorts the true costs of living in such areas, allowing more people to live in such areas than is best for the society as a whole. Instead of accounting for the true cost of potential ruin, they count on government relief to defray their costs. I have heard several economists who are concerned with the growing trend of increasing relief efforts and setting up special funds for victims of disasters. I agree with them. It is always easier, politically, to increase the amount of relief and be seen as "compassionate" than to decrease the relief and be decried as "heartless", "racist", and whatever else your political enemies will attempt to crucify you with. If we set up special funds for Katrina victims, al la 9/11 funds, where do we draw the line? At least with 9/11 you could draw a line at "victims of foreign attack during time of peace", though even that line is tenuous at best. Looking at things from a public choice perspective, it seems likely that more and more tax money will be spent on disaster relief of various kinds, and the costs of living in a disaster-prone area will continue to decrease.
Third - should we rebuild New Orleans? No, we should not rebuild it. Should it be rebuilt? Perhaps, but only if the costs of rebuilding are born by those who will live/work/have businesses there will we really know. Only then will we know if the benefit the residents expect to receive is greater than the costs of rebuilding.
Fourth - will the average income/wealth of New Orleans increase, stay the same, or decrease as a result of the hurricane? My bet is that average wealth will increase. If it is truly months before people are allowed back in to the entire city, I would expect that a lower proportion of low-income individuals will return to the city than the proportion of high and middle-income individuals.
All right, that's enough for tonight. I still have to read for class tomorrow. Do your homework, be willing to look beyond the major sources for news and information, and you won't need me.
NR
Anything I could say has already been hashed to death, but you may have missed several points that I feel are crucial. First, the death toll stands at 659. Tragically high, yet not nearly the cataclysm that was initially feared. Second, to the best of my knowledge (and limited time), neither city evacuation plans and state response plans were followed completely. Third, everything that happened in New Orleans had been predicted and warned about for decades - expect perhaps the looting - and nothing was done by the "responsive and compassionate" leadership of the city and state. Fourth, it is the responsibility of the state governments to call for federal aid - especially when that aid involves military personnel. National Guard units are under the command of the governor. Neither was requested until after President Bush called and urged the governor to do so. Fifth, the talk about blacks being "targeted" in some way is preposterous. Look at the inner city of most urban areas. Anything that affects that inner city area is going to affect a greater number of "racial minorities" than "racial majorities".
There may be other salient points, and I make no assurances that the above is 100% correct, but it is true to the best of my knowledge given the limited time I've taken to be informed.
Now to some interesting economic thoughts - again, not original, but with my own spin.
First - the response of the free market, even though there are some tacit restrictions on prices, has been terrific. WalMart, Home Depot, cell phone providers, and other major retailers began preparing for the hurricane before it made landfall by stocking stores around the area expected to be hit with food, water, and relevant supplies (mobile cell towers and generators moved into the nearest safe zones in the case of the cell providers). Positive press was probably part of the story, but there was also money to be made. Survival items were given away, but markets existed for vastly increased quantities of "hurricane related but not survival" items.
Second - private relief efforts aside, the government spending/rebuilding/assistance/relief in disaster scenarios significantly decreases the costs of living in areas prone to disasters. My intelligent but non-economist mother saw this as a problem, and any economist worth his/her salt will heartily agree with her. Put in simple "economist speak", government disaster relief distorts the true costs of living in such areas, allowing more people to live in such areas than is best for the society as a whole. Instead of accounting for the true cost of potential ruin, they count on government relief to defray their costs. I have heard several economists who are concerned with the growing trend of increasing relief efforts and setting up special funds for victims of disasters. I agree with them. It is always easier, politically, to increase the amount of relief and be seen as "compassionate" than to decrease the relief and be decried as "heartless", "racist", and whatever else your political enemies will attempt to crucify you with. If we set up special funds for Katrina victims, al la 9/11 funds, where do we draw the line? At least with 9/11 you could draw a line at "victims of foreign attack during time of peace", though even that line is tenuous at best. Looking at things from a public choice perspective, it seems likely that more and more tax money will be spent on disaster relief of various kinds, and the costs of living in a disaster-prone area will continue to decrease.
Third - should we rebuild New Orleans? No, we should not rebuild it. Should it be rebuilt? Perhaps, but only if the costs of rebuilding are born by those who will live/work/have businesses there will we really know. Only then will we know if the benefit the residents expect to receive is greater than the costs of rebuilding.
Fourth - will the average income/wealth of New Orleans increase, stay the same, or decrease as a result of the hurricane? My bet is that average wealth will increase. If it is truly months before people are allowed back in to the entire city, I would expect that a lower proportion of low-income individuals will return to the city than the proportion of high and middle-income individuals.
All right, that's enough for tonight. I still have to read for class tomorrow. Do your homework, be willing to look beyond the major sources for news and information, and you won't need me.
NR
Tuesday, September 06, 2005
Enough!
In an ideal world, rescue would have come to all individuals trapped in New Orleans almost immediately, law and order would have been maintained, and the survivors would have been spared the trial that so many have born over the past five days. Instead, despite their best efforts (the US Coast Guard alone rescued 22,000 survivors and assisted with a further 9,400 rescues) the available rescue assests were overwhelmed by the magnitude of the disaster, worries about political correctness allowed looting and armed banditry to reach such a point that US military units have been conducting "combat operations" in the city, and the scale of flooding combined with the lawlessness contributed to the length of time required to extract all survivors taking shelter within the city. Yeah, things could have been done better, but I would argue that human factors have made things substantially more difficult than they otherwise would have been.
But wait!! What's this!? It looks as though, prior to the hurricane, all residents were warned that in the event that New Orleans was hit by a hurricane they (residents) would be responsible for their own safety and evacuation. Here's the article. Draw your own conclusions - I respect you enough to let you think for yourself.
Oh, and by now I am sure you've heard about Senator Clinton's request for a 9/11 commission style investigation into Katrina and the disaster response. Does that mean the commission would get to selectively ignore embarrassing revelations? It remains to be seen whether her request has true merit or whether it is a political maneuvering device to distract the administration.
'Nough for now. I was pleased to read that many of the Gulf refineries are beginning to restart operations, that crude oil prices have fallen below pre-Katrina levels, that we got through the Labor Day weekend without serious fuel problems, that various utility crews have made strides of progress in restoring service, and that engineers have been able to plug more of the levees around New Orleans and begin pumping operations.
But wait!! What's this!? It looks as though, prior to the hurricane, all residents were warned that in the event that New Orleans was hit by a hurricane they (residents) would be responsible for their own safety and evacuation. Here's the article. Draw your own conclusions - I respect you enough to let you think for yourself.
Oh, and by now I am sure you've heard about Senator Clinton's request for a 9/11 commission style investigation into Katrina and the disaster response. Does that mean the commission would get to selectively ignore embarrassing revelations? It remains to be seen whether her request has true merit or whether it is a political maneuvering device to distract the administration.
'Nough for now. I was pleased to read that many of the Gulf refineries are beginning to restart operations, that crude oil prices have fallen below pre-Katrina levels, that we got through the Labor Day weekend without serious fuel problems, that various utility crews have made strides of progress in restoring service, and that engineers have been able to plug more of the levees around New Orleans and begin pumping operations.
Wednesday, August 31, 2005
Food for the hungry………..graduate student.
Yes, I went to the grocery store today. Buying food has become an unexpected pleasure, but also a little of a frustration as my mind glides over the many things I could make – if only I had the time, the reason (ie, guests), or the budget to purchase the ingredients. This economy we live in is truly amazing though. Bananas (fresh of course, and very tasty) were priced at $0.39 per pound. Stop and think about that for just a moment. What would be a reasonable real price for a pound of delicate fruit grown thousands of miles away, picked and rushed practically to your doorstep while still fresh, and available in such quantities that everyone has as much as they want?
How about less than five minutes of work by a low-skilled worker earning $5.50 an hour! Is that not incredible? Price is a marvelous signal of how resources need to be moved around in the market. Imagine if suddenly people began eating more bananas. At the low price of thirty-nine cents it would be easy to add several pounds of bananas to your weekly diet, and suddenly the grocery store would be running out or stock. Grocers would both increase the price they charge customers (but not too much or customers will shop elsewhere), which marginally reduces the poundage of bananas purchases, and the grocers would increase the price they pay their suppliers to provide a few extra boxes of bananas. By a similar mechanism, the increased money flowing to the suppliers would reach the growers (who may actually be one and the same, making the transmission of price very simple indeed), giving the growers - who until this time had been planting quantities of bananas and pineapples such that a box of one earned the same return as a box of the other - a very good reason to put more effort and land (resources of production) into growing bananas. Of course this story is highly simplified, but because prices were allowed to freely adjust at all levels, the increased demand for bananas was soon met with an increased supply. If price hadn’t been allowed to adjust shortages would have developed, there would have been “banana lines” in the grocery, and society would have been worse off by the value of the spent waiting in line.
Now let me jump to hurricane Katrina. Right off the bat, let me say that I am deeply sympathetic of the hurricane victims’ plight, they are in my prayers, and I understand that the nation should respond and help these many people get back on their feet. At this time I will not even touch the issue of to what level the federal government should be involved. Though it is true that the analysis of the costs and benefits of living in areas susceptible to natural disasters is badly distorted, that is a topic for some other time. However I would like to make a couple of “economist’s observations” about things I expect to see.
First, price controls. Refer to my story above. Now apply the same lesson to a shipment of generators headed for Alaska, output from a bottled water plant destined for Seattle, or plywood intended for developers in the Midwest. If the prices of these and many other goods that will be required in the hurricane-struck areas are not allowed to adjust, these and other goods intended for areas where life-as-normal continues will go where they are intended. Sure, the goods that are regularly supplied to the Gulf coast will continue to go there, but any increase in quantity will be slight regardless of how quickly stock sells out or how long the lines become. If prices are allowed to signal demand, generators, bottled water, plywood, and a thousand other goods will suddenly be freed-up from less vital requirements and made available to help with the recovery of the affected area. This reasoning also applies to the Atlanta gas panic on Wednesday. Though I hate to see gas prices going this high, I would rather see high prices than long lines at the station – even though I do have virtually no spare cash and lots of flexible time to wait in line.
Second, the economics of rebuilding. If anyone ever tells you that the rebuilding is somehow good for the economy, that it stimulates the economy, that it’s good for jobs, or any other such claptrap, they are wrong. As the great classical economist Fredrick Bastiat explains in his article, “What is Seen and What is Not Seen”, the resources that a society invests in restoring destroyed or damaged property are in essence wasted because they are expended merely to regain what was once had. So no, the rebuilding in the wake of Katrina is not a boon to the economy – resources and labor are merely being drawn from whatever other use they would have been put to in the absence of the destruction.
President Bush is absolutely right. It will take years to recover. My hope is that sound economic principles will be allowed to guide that recovery along as rapid a road as possible.
Monday, August 22, 2005
So yeah, 20 days later...
No, I haven't been sent on some secret venture to far off places. Instead I have been inward, in beyond the teeth and fingernails, through the epidermis, under the skeletal structure, into the very mind of man. What man? Why, me of course! Back in VA as of one week ago, but studying all the while for prelim exams. Last exam on Saturday. I promise I'll feed you shortly thereafter.
Tuesday, August 02, 2005
Published!
Ok, so it's not exactly the AER, but I'm happy nontheless. This is my first time published since writing about lasers and the future of warfare (don't laugh) for the Hillsdale Collegian. You can read my article for yourself here. I highly recommend poking around the rest of the Mackinac Center for Public Policy website as well.
Friday, July 22, 2005
"Think-tanking"
Just got out of a brainstorming session with a few of the other policy, communication, and advancement staff here at the Mackinac Center. The more I am here the more I begin to realize what a team has been assembled here. I'm off to Lansing (taking an early day) to attend the swearing-in of 6th US circuit court of appeals justice David McKeague, but you should check out the MCPP website.
Monday, July 11, 2005
More Fireworks Pics
Hello dear friends! Thought I'd share some pictures from the fireworks shoot on July 3rd at Delta Township. Some of the pictures are of setting up. You'll be able to see the racks and mortars that we hand-light and fire the shells from. Each tube contains one shell of either 3, 4, or 5 inches in diameter. The shells in the racks next to the fence are the finale. The finale is fused together so that several hundred shells can be fired with only a couple of lightings. I lit the finale in this show.
Davidson (16 yr old brother) took several pictures during the show. We are still learning the camera, so bear with us. Several of the pics show bursting shells. I hope these are obvious. A couple of the pictures show the environment we work in on the ground around the racks as we are lighting shells. In short it is loud with firing cues and the explosions of the lift charges, hot with our heavy gear and the flaming debris falling on us, busy with carefully thought-out but rapid movements, and such an incredible experience.
Enjoy!
Friday, July 08, 2005
fireworks
The fireworks shows that my family worked on this past week went very well. The show at Delta Twnshp on the 3rd went smoothly and normally. I shot the finale. On the fourth, setup was normal, but we had a significant amount of rain again (third year straight). I stood on the hill during the drenching to maintain the tarping and protect the shells, but even I was forced down when the lightning got just a little close. We only lost one shell in the main body during an hour of rain! Parks and Rec lost their nerve though, and the show was delayed 'till the fifth. Unfortunate this was, as I was unable to be there during the shoot or clean-up.
There were news-crews at both setups. Links to the shorts are below. Click the video link at the top of each article. One clip is entirely about fireworks, featuring Clayton, Davidson, Larry, and Roger Bonney. The second clip has several Russell boys in it and show some of the action on the hill in Lansing.
July 3rd - Delta, Sharp Park
July 4th - Lansing, the hill.
edit: belay that - the video seems to have been taken off the news site for the 3rd.
2nd edit: video now seems to be down from the 4th as well. Too bad.
There were news-crews at both setups. Links to the shorts are below. Click the video link at the top of each article. One clip is entirely about fireworks, featuring Clayton, Davidson, Larry, and Roger Bonney. The second clip has several Russell boys in it and show some of the action on the hill in Lansing.
July 3rd - Delta, Sharp Park
July 4th - Lansing, the hill.
edit: belay that - the video seems to have been taken off the news site for the 3rd.
2nd edit: video now seems to be down from the 4th as well. Too bad.
Economically Speaking
Working here at the Mackinac Center for Public Policy, I have become convinced that Michigan needs to settle down. Or at least, that Michigan political executives and legislators must settle down. Instead of continually making and changing statements about what they intend to do to "fix" the state economy, there should be some sensible reforms enacted, then things should be left alone for a while. Thus would businesses, business owners, and entrepreneurs be shown that Michigan is stable enough to support long-term business investment. Instead, what we have right now is a climate where pols are proposing significant shifts to our business environment, the established rules are not always followed, and the future prospects of new businesses in Michigan are unstable. Instead of giving MEGA incentives and legislative handouts to those who would provide Michigan jobs we should provide them with a stable and predictable legislative base. Unfortunately, our governor and legislator seem intent on creating fault-lines.
Thursday, May 12, 2005
Another imagination paper.
Hey gang. Probably the last of the short papers for a couple weeks at least - writing group is done for now and we'll see what I come up with over the summer. As opposed to the last paper, I'm actually reasonably happy with this one.
Imagination Required
Atop a slight ridge overlooking a large field a young officer sit on his charger. Briefly surveying the two armies locked in mortal combat, he couches his lance and leads his unstoppable cavalry in a charge to rupture the enemy’s lines. Suddenly he is brought up with a jerk as his horse goes down with a broken leg. As the charge sweeps around him an attendant brings up another horse. The young officer quickly remounts and leads his cavalry into the fray at the crucial time to turn possible defeat into decisive victory. After receiving the commendation of his general for his contribution to the victory, the young officer returns home to his loved ones.
Later that same evening the young officer’s mother is dismayed to find that the chain on his bicycle has ruined the cuffs of yet another pair of his pants.
What is imagination?
Nearly everyone is familiar with imagination in the context of childhood. In the role enabling and enhancing play it is truly important, it is the ability to create realities far beyond the merely physical, yet imagination does not lose its usefulness after one’s 18th birthday, or even after the 98th. Imagination remains incredibly important for any adult who hopes to solve the unexpected or create the unprecedented. It is seeing things where they are not. Imagination is that intangible ability that allows an individual to create something ‘new’ – a solution, product, or theorem that has never before existed. In particular, it is this last quality that prompts us to assume the other benefits of imagination as proven to be of value to the “grown up” world and focus on the value of imagination to economics.
Why is imagination important to economics and economists?
The economist who lacks imagination may be successful, able to analyze data and perform all the tasks normally expected of an economist. They may even be able to write papers that other people consider being helpful and contributory to the literature, but they will never make a truly revolutionary advancement of theory or ideas. The individual’s facility of imagination is what allows an answer to the query “what if…?” Though individual economists may be able to function without imagination, economics as a whole will wither if imagination ever fails. Lacking the spurs to analysis and research provided by imaginative innovations in economic theory, the discipline would quickly become stale, irrelevant, merely a method of analyzing the problems of the day with the methods of yesterday. Whereas, with imagination assisting theorists, economics as a whole drives ahead, seeking to analyze and understand the issues of today with the best methods of yesterday AND the new methods of tomorrow. For imagination to be available as a tool for the economists of tomorrow, it must be something they are accustomed to calling on throughout their lives. In today’s culture of provided entertainment, electronic and visual mediums that remove all necessity for imagination in entertainment and play, will there be a dearth of “imaginationists” in the future?
Is there a threat to imagination?
Cursory observation seems to reveal that every generation, every major shift in entertainment technology, has brought distraught cries that the children’s imaginations will atrophy. Robert E. Lee is known to have written home admonishing his wife to not allow their son access to many novels. It was Lee’s strong opinion that his son’s perspective on the world and his imagination would be weakened by reading accounts of another’s perspective of the world and life in a fictional book. Parents and elders have railed against television and more recent forms of childhood entertainment, decrying the lack of exercise and claiming a detrimental effect on young imaginations. Cave paintings probably met with similar criticism because they showed boys and girls images about certain aspects of life (hunting, skinning, etc) before the children experienced it themselves. Despite the concerns, from all appearances it would seem that the imagination of society has not suffered, with patents, inventions, and theories continuing to increase at an incredible rate. Economics in particular continues to develop new theories of markets and behavior, new ways to gather and analyze information, and new concepts of how mankind interacts with itself.
As economists, let us not distance ourselves from that little boy, riding his bicycle and waving a stick, who turns the tide of battle and wins the gratitude of a nation. We should all be so lucky.
Wednesday, May 04, 2005
slightly tardy
Ok, here's last weeks paper. I don't really like this one - it seems rather choppy and poorly written, but I don't have time to fix it right now. Yesterday's paper, the last for the semester, will follow later this week - prolly Friday.
The Role of the Selfish, Single, Working, Man
Who was the first person to purchase a DVD player? What brave soul paid hundreds of dollars for a device that could only play a very limited selection of movies? Were the first owners of DVD players willing to gamble that more movies would become available, despite witnessing the debacle of the videodisk player just a few years earlier? It seems rather amazing that people would make such a purchase. It is even more amazing that businesses would develop new technology and products that depart from previously established markets. There is risk. The company must start producing the new good before it can be purchased, cost must be incurred before the profit (maybe) arrives. The initial consumers must be willing to tolerate poor film selection, poor support, and an expensive piece of equipment that become obsolete very rapidly. Yet once enough people have purchased the good the benefits can be significant. Though this example specifically refers to DVD players, it can easily be seen how the same pattern has applied to many other goods.
A ‘networks effect’ is the term economists use to describe a good or process that experiences an increase in value as its use becomes more and more widespread. This also means that it is relatively less valuable to use/produce the good earlier rather than later. Companies would rather produce a good after it is seen to have market potential. Discerning consumers would rather wait to spend their hard-earned money until prices drop and use is sufficiently common to have raised consumer value to near its maximum level.
Companies can choose to develop new products or improve old. Each choice has its own risks and rewards. An old product has the advantage of an established market, but the risk that maybe something new will come along and supplant it. A new product has the advantage of perhaps developing a new market, replacing an old good, or gaining market share, but also has the risk of being, well, risky. Any new product carries uncertainty about whether it is a viable product.
So what gives a company the confidence to introduce a new good opening a new market such as some new gadget, equipment, or electronics device? Likewise, what possesses a consumer to purchase something so new no one really know how readily it will become a part of society? Why be the first to own a good that is expected to benefit from significant network effects, when at first the usage and network benefits will be rather small?
The answers to these questions are very intricate and require careful thought on the many factors involved, but I believe there is one element that has often been overlooked. This element can be summed up in two words. Boys. Toys.
Men, often relatively young and single but not necessarily either, seem to have a proclivity toward owning things that are “new” or “high tech” simply because they are. There is a strong flavor of competition in this – a man wanting either to have something before any of his friends does or wanting something because all of his friends already have it. Not all of this (generally) male behavior can be explained by competition though; a fair amount must be caused by just general male-nature. Gadgets, new “stuff, “toys” typically interest guys. All guys like new stuff that is high tech and interesting, but it is the single man, earning a decent wage, who can afford to indulge his taste for the latest new idea. Narrow selfishness causes him to purchase for his own enjoyment and to show off his new stuff for his friends, but in doing so he starts the ball rolling on network effects for the rest of us. It is the known existence of such consumers that give companies the confidence to delve into new products and new markets.
Back to the DVD player example. Starting from a small number of initial buyers, DVD makers have continued to develop and improve their products, numerous films have now been released on DVD, and we are well on our way to seeing the DVD burner become a normal method of recording data and video. Not bad for selfish young men with money to burn.
Wednesday, April 20, 2005
Meanwhile, in Fairfax
A young man was discovered permanently embedded in his Econometrics textbook this afternoon. Local police say it was most likely the result of studying indoors with temperatures reaching above 80* outside.
Today's random thought: Does business productivity go up in offices with windows on nice days? Or does productivity decrease?
Life is good, my God is good, friends are good, school is hard.
Today's random thought: Does business productivity go up in offices with windows on nice days? Or does productivity decrease?
Life is good, my God is good, friends are good, school is hard.
Private Military?
A [NR1]relatively recent addition to the American military industrial complex is the growth of the privatized military firm, or PMF. Classified in three major categories according to function, PMFs seek not to privatize the development and production of military goods, but to privatize the provision and application of military services. These military services range from logistical support and transportation, to training and advising, to armed para-military “security” forces and aerial reconnaissance or strike missions. There are even several foreign-based PMFs that have the capability to place a significant self-contained military combat unit on the ground anywhere in the world, complete with artillery and air support – all for the right price of course.
PMFs that openly perform combat duties have strong ancestral ties to the Swiss Guard and other organized mercenary companies of years past. Known as active or category one firms, the ex-Soviet Spetsnaz “Alpha Brigade” and the now-defunct “Executive Outcomes” of South Africa are prime examples. PMFs involved in training and advising of American and foreign military forces fall under the classification of advisory or category two PMFs. These are firms such as American-based MPRI, which in addition to running US Army ROTC programs has trained and developed the militaries of several foreign nations. Third category or administrative PMFs are firms such as Brown & Root Services, which has provided transportation, maintenance, and logistical support for the US military since its first contract in 1992.[1]
Though private military firms that hire themselves out to national governments for combat or training duties as an organized company of mercenaries is not a new idea, what the PMFs have begun to do in the United States is new and provokes, for perhaps the first time, the possibility of the United States privatizing a greater or lesser portion of its military combat power. Additionally, privatized military firms have become a very real part of the American military industrial complex as it stands right now by offering to provide certain capabilities more efficiently than the Department of Defense can provide for itself.[2]
Perhaps the most tantalizing possibility of the increased capability and usage of privatized military firms is the privatization of certain (or all) combat functions of the United States military. Militarily, a privatized system may be workable if the expectations for usage of the American military were radically changed to focus much less on overseas deployment and more on protection of the physical United States and our direct interests. Though a system in which, for example, Ford, Lockheed, and John Deer would compete to provide the Department of Defense with a combat wing of unmanned combat aerial vehicles would provide undeniable economic benefits, efficiencies, and more rapid adaptation of new technology, the concerns of such a system would outweigh any benefits. Questions could arise as to whether the private combat forces owed allegiance to the United States or to their direct employer. Other nations utilizing private combat forces have already experienced problems with “agent principal abandonment”, situations in which the hired forces either leave before contract fulfillment or pursue their own objectives to the detriment of the hiring nation[NR2].[3]
The growth of PMFs will continue as companies show interest in developing or purchasing military components as a form of diversification. Evergreen Helicopter Services is an example of a firm that earns a large part of its income by filling civilian consumer needs. Evergreen provides helicopter services for firefighting, construction, rescue, and many other reasons. In addition to its civilian fleet, Evergreen maintains a capability to fly missions in support of peacekeeping operations – such as reconnaissance, transport, and even light attack. In another example CSC, a computer security and consulting firm, has purchased DynCorp, a para-military security firm. Here we see a firm with an established market in one area looking to add a military component, allowing it to now provide security services for physical as well as informational property. Before the era of privatized military firms Henry Ford did much the same thing by seeking certain military contracts for Ford motor company.[4]
Regardless of the future role of the privatized military firm, proper integration of the private and the governmental will be crucial to ensuring that PMFs are a factor that strengthens, not weakens, the armed forces of the United States in their role to protect the freedoms of the American people and to achieve success in the national military goals.
[1] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 138.
[3] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 159.
[NR1]PMF chapter.
[NR2]MAIN ARGUMENT (tentative):
National defense need not be a purely public good.
It is conceivable that our nation would shift to reliance on 1st degree PMFs.
This would force a more precise use of force away from the borders of the US
Tactical Pro; greater flexibility and adaptability of new methods / tech.
Tactical Con; less resilience to attrition.
CNTRPNT – both money AND “home” would motivate.
On defense yea, but not abroad.
US of A would be forced to severely restrict overseas deployments.
Sunday, April 17, 2005
Just a short one, yeah right...
Hey folks! What a wonderful Saturday I had! Sunday wasn't too shabby either. Anyway, contact me if you want details.
So, I didn't post my writing group paper last week. I'll post last week's now, and this weeks in a day or two. Have fun Dame und Herr.
So, I didn't post my writing group paper last week. I'll post last week's now, and this weeks in a day or two. Have fun Dame und Herr.
Is Michigan job loss really such a puzzle?
For over one hundred years, Michigan was an industrial and productive capstone. A wealth of natural resources launched Michigan to the top of lumber, copper, and iron production. The Michigan business environment allowed several major entrepreneurs to take root and flourish. Kellog, Dow, Ford, R.E.Olds, these men and others like them carried Michigan to a position of industrial and technological leadership. As recently as the mid 1990s, the city of Lansing produced more cars than any other city on earth.
Yet now Michigan has the 36th most hostile business environment, with business taxes 50% higher than the average. Though still possessing key chemical and industrial capability, Michigan is certainly in a downward spiral. Unfortunately, the governor’s office is taking the route of government intervention and micromanagement, activities that do nothing to reassure businesses that the state government will not change the rules mid-game or raise taxes to pay for the next “great idea”.
Two instances in particular bear review, one because it is recent, and the other because of the sheer magnitude of the repercussions that can be expected.
The most recent ‘great idea’, and a prime example of the micromanagement that has become typical of this administration, involves further expenditure of state Medicaid money to create jobs in assisted living facilities. On April fifth, two thousand and five, WZZM News reported on Granholm’s "Jobs Today Jobs Tomorrow" initiative.[1] In a nutshell, this initiative would pay an additional five dollars per day for each Medicaid recipient residing at a facility. The governor intends that this money be reinvested in new construction and new staff, turned around and reanimated as additional Michigan jobs. Granholm is quoted in the article as stating that this program would provide approximately an additional $91,000 a year for each fifty residents on Medicaid at a facility. Though the program is labeled by the governor’s office as “revenue neutral”, it is unclear where, in a state budget $375,000,000 in the red,[2] the money to pay this extra $1800 per person would come from. Perhaps most dismayingly of all, Granholm is quoted in the article as saying that this initiative is anticipated to create five thousand jobs over the next three years, many of them temporary jobs relating to construction, but some nurses and other permanent staff. For a project that will currently cost an estimated $638,750,000 per year,[3] why settle for merely five thousand jobs of uncertain duration? What would happen instead if the state did not spend that money at all, but demonstrated restraint in tapping the pockets of residents and taxpayers – an effect, that if maintained, would surely increase the willingness of employers to locate in Michigan. Touted as a quick, temporary, fix, I see “Jobs Today Jobs Tomorrow” as instead becoming a permanent part of state Medicaid, ever more expensive as the allotment is pushed higher and higher.
The second example deserves more space than it will receive, but has also already been the subject of many writings and so will only be very briefly discussed here. 690 acres of land in southeast Michigan were put up for auction with two legislated requirements – that the bid accepted must equal or exceed estimated market price, and that the state retain water/mineral rights. Of the two bids; one met the criteria and one did not. The appraised value was $11.5M, the high bid was $25M, and the low bid of $9M was also contingent on obtaining all water/mineral rights. Despite the no-brainer that would seem to be dictated by constraints of the legislature, the governor’s office proceeded with selling the land to the low-bidder, supported by new legislation passed after the bidding.[4] Not surprisingly, the high-bidder filed suit, and, though rebuffed once, is continuing to appeal.[5]
Though there is still hope that the high-bidder will prevail, this incident has sent an unfortunate message to corporations; the only sure way of starting or expanding business in Michigan is to be the politically favored party, otherwise you may find the rug pulled out from under you. Businessmen do not like unpredictability. Nor do they like seeing signs that a state government cannot keep is hands in its own pockets. Result: Do business – and provide jobs – elsewhere.
Wednesday, April 13, 2005
Hooo RAH!
I have now been recognized in an academic paper for the first time! True, it is in a footnote, for help given with research, but still -- -- once this paper is published.... Of course, I expect that this will be only the first of many that will have my name attached to them in some way, shape, or form. Dr. Hanson has even suggested that I work on something similar to this piece.
Oh yeah, I guess you'd want a link. http://hanson.gmu.edu/PAMpress.pdf
Oh yeah, I guess you'd want a link. http://hanson.gmu.edu/PAMpress.pdf
Wednesday, April 06, 2005
Following up my last post.
Game theory and the Schliefen Plan: Part Two
Assuming that both Germany and Russia were rational actors at the start of World War One, Germany must have had a perspective on its payoffs for going to war with Russia in support of Austria versus not going to war and allowing Austria to be defeated that caused “war” to be the rational choice at the time. Despite the horror of war, and in hindsight the particular horror of World War One, Germany acted on the time-tested practices of sticking with good, reliable, military allies (Austria) and not allowing timeworn enemies (Russia) to increase its sphere of military and diplomatic influence – which a military victory over the Austrians would certainly do. Additionally, at the start of World War One very few military minds had any idea of the military quagmire that would result from the first major applications of chemical weapons, new artillery weapons and techniques, the massed use of machineguns, and the contrary fortunes of war. However, in deciding to go to war with Russia, Germany acted as if expecting that no other nation would use the same thought process and logic in deciding whether to declare war on Germany as a result of German military actions.
The Schliefen Plan was the plan by which the entire German nation would go to war. As a result of the political and military climate, the only conceivable situation was one in which Germany would find itself fighting both France and Russia simultaneously. As France was expected to be able to mobilize an effective army and invade Germany sooner, the Schliefen was fully structured around the idea of swinging all possible German military might against France and knocking them out of the war within six weeks, then rapidly moving the German army to the eastern front and confronting Russia. Such was the inflexibility of the Schliefen Plan that if Germany found itself facing imminent conflict with Russia, they would be forced to attack France. This firm commitment was expected to give France cause to exert pressure on their ally, Russia, to stay in line.
So when Germany decided to honor their treaty obligations with Austria, they found themselves virtually required to attack France and force a peace as quickly as possible – though France was not initiating conflict nor even threatening to do so (why not just skip to the “move the army east” phase I don’t understand). The German staff felt that their best chance at a quick victory in France lay in attacking through Belgium.
Though the Belgian people and king had taken a strong posture of fighting to maintain complete sovereignty, Germany expected that as German troops actually crossed the border the Belgian government and military would accede to German demands for uncontested passage through the little nation. After all, the whole point of such posturing is to keep other nations out, not cause the devastation of your own nation by refusing to allow passage once the invader is already in, right? Game theory sub-game perfection would say yes, once it is clear that your initial strategy has not worked, do that which is most advantageous. Instead, Belgium fought – and they did not fight alone.
Belgium had recently signed a treaty with Great Britain stating that the British would both respect Belgian neutrality/sovereignty and exert military force to ensure others did as well. Despite knowledge of this treaty, the Germans, using game theoretical reasoning similar to that above, in no way expected England to actually go to war over “a mere scrap of paper”, instead expecting that England would back down from the treaty once Germany actually invaded Belgium and Great Britain saw that war was reality. In short, though the Germans seem to have violated basic precept of game theory in going to war, they expected both Belgium and England to adhere to sub-game perfection and allow Germany to march through Belgium unopposed.
What this tragic episode from history show us it not a failure of game theory, but rather, assuming rational actors, that incentives and perceived payoffs must be clearly understood by all involved. Information is key. For the Germans, it made the difference between a quick victory over France and a long drawn-out catastrophic defeat.
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