"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.

A few more pictures

Here are the pictures of the "pit" and a couple more bursts.

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!

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.

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.

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 18^th birthday, or even after the 98^th. 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.

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.

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.

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.

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[1] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 138.

[2] Ibid, 133.

[3] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 159.

[4] Ann Markusen; Yudken, Joel, Dismantling the Cold War Economy. (Basic Books, 1992), 46.

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[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 1^st 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.

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.

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 36^th 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.

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[1] http://www.wzzm13.com/news/news_article.aspx?storyid=38387

[2] http://www.milhs.org/Media/EDocs/HandoutOprFeb05.pdf

[3] 350,000 eligible residents x $1825 per person, per year.

[4] http://www.mackinac.org/article.asp?ID=6946

[5] http://www.detnews.com/2005/autosinsider/0504/08/C01-144004.htm

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

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.

Random stuff

It's the end of March and a FABULOUS day here in Fairfax. I'm finished with Metrics homework and going to try to spend a little time outdoors. Oh, btw, sorry the last article posted, contrary to its title, doesn't have anything to do with the Schliefen Plan.

Random economic thought for the day - I wonder how divorce affects economic growth.

Have a wonderful, God blessed, day!

Game theory and WWI - very briefly

Life = good. Grad school = busy. Church = wonderful. My family drove down for Easter weekend. It was super to have them here, even if that meant I didn't get to dance this weekend.

So I know the last couple posts have been kind of lengthy, but it’s another one of the papers I am writing for my discussion group. The economic (or somehow related) ideas keep coming, but most of them aren’t getting written down. Anyway, here’s this installment of “random thoughts with Nathan.”

Game Theory and the Schliefen Plan

Game theorists talk glibly about many applications of game theory; how humans, unconsciously, go through life applying game theoretic techniques to many choices we make. What interests me are the applications of game theory to international relations – particularly those of the “strong” flavor; war and armed conflict.

Many conflicts, both their origins and their continuance, can be analyzed using game theoretic methods, but one conflict in particular begs to be examined and promises to, through its examination, throw light on many other conflicts. The war, for such it is, that so readily lends itself to game theory is World War One, the Great War, the War to End All Wars.

Vastly, and unfairly, simplified, basic game theory runs thus: You, the rational individual, given the information you have, make the decision or series of decisions that will maximize your benefit given constant or certain expected action by the other relevant entities. Expectations of the other’s actions change as expectations of information and other circumstances change.

Europe at the beginning of World War One was a messy place, made so by the tangle of alliances and treaties that bound each nation to others. Mutual defense pacts pledged that if either nation A or B was attacked, the other would declare war on the aggressor. These treaties, pacts, and accords grew from the incessant warfare that had covered much of Europe, the logic ran that if there were enough interweaving alliances, no one would go to war with anyone. While a bane for the strategist and politician, these treaties are a boon to the game theorist, with each nation generally being expected to keep these treaties, lending a certain measure of predictability and stability to the behavior of the political and military mess.

These treaties at the beginning of the war can easily be seen as a method by which a nation would attempt to firmly commit to a course of action that, were circumstances ever actually warrant application of the treaty, would seem too not be in national interest, in the hopes of ensuring that such conditions never actually arose. In other words, nations committed to war under certain conditions, hoping that the reliable and very real threat of war would dissuade aggressor nations from attacking allies. Each European nation participated in these treaties with one or more other nations and often with one of the “great powers”, and each European nation expected every other nation to follow through on their treaty obligations. There was stability in this system of pledged mayhem, just as game theory predicts will happen when the commitments are believable and punishments severe enough. What no one expected was a shock from outside the system of mutual defense treaties to set a match to the powder keg.

A non-governmental group provided that match, and the assassination of the Archduke Austria provoked a chain reaction of regrettable, but predictable given how the European nations had pre-committed themselves, events. Briefly, Austria went to war with Serbia. Russia, allied with Serbia, prepared to go to war with Austria. Germany, Austria’s ally, warned the Russians to stand down, then prepared for war themselves. Germany’s only war plan was rigidly dependant on fighting both France and Russia at the same time, knocking France out of the war within six weeks so as to bring the entire German armed forces against the Russians before the Russians could fully mobilize. To quickly knock France out of the war required that Germany invade through Belgium, activating England’s mutual defense treaty with Belgium. Thus, every major power in Europe was embroiled in war, those that were required to fight by treaty and those that simply saw an opportunity to strengthen their position in Europe, acquire natural resources and prestige, or reinvigorate a dying empire (the Ottoman-Turks).

In an attempt to banish war from European soil, the nations instead ensured that, once war started, it would engulf the continent. If a nation not directly threatened with invasion and fairly near the beginning of the chain of events, say Russia or Germany, had instead done the game theoretically unthinkable, and cheated, the Great War would never have occurred and the world would be a very different place.

my quasi-necessary paper

Early March, and it's sunny and clear outside - warm enough not to need anything more than a light longsleeve shirt. If I could, I would be playing frisbee in this weather! So this weekend, with the studying for a major exam tomorrow, dancing, and church responsibilities, I made time to write a short piece on political possibility theory. Enjoy!

An introduction to the Overton Window

Of the many ideas and options that exist in the political world and in the minds of politicians, what determines which ideas become reality and which ideas remain banished to the political ether? Somewhere on the spectrum of ideas from the crushingly socialist, and therefore radical, to the breathtakingly libertarian, and therefore also radical, must exist a range of ideas that actually stand a chance of being successfully implemented in the current socio-political climate. The range on the spectrum of ideas in which a policy initiative can be considered politically and socially viable is called the Overton Window of Political Possibilities. Regardless of the economic validity of an idea and how fervent its supporters are, if the idea does not lie within this window of opportunity it simply will not happen.

Politicians are self-interested. Of this there has been little serious doubt since the general acceptance of public choice arguments. Lawmakers will not support an idea unless it receives sufficient public acclaim and acceptance so that backing the idea does, at the very least, not harm the politician. Public policy is judged not its merit, but on its political viability. This only makes sense given politicians’ interest in preserving their jobs, but is often lamented by advocates of any policy that seems doomed to languish in the political shadows. The key insight of the Overton Window theory is that ideas initially outside the range of the politically possible are brought within that range not by political lobbying, but by moving the ‘window’.

Think tanks, pundits, and those economists who engage in policy issues often seek to advance their agendas though direct interaction with politicians. This strategy is a misdirection of energies. In the words of the Mackinac Center for Public Policy; “However principled a politician may be, he or she can only accomplish those things which are within a narrow window of what is politically possible at the present time.” Granted, there are some actions that lie within the discretion of politicians, but instead of expending resources to influence things that cannot be changed, those same resources should be used to shift the Overton Window.

Shifting the Overton Window requires changing the public’s perception of a policy issue. Perspective must be changed so things formerly infeasible become inevitable, through interactions with the public, educating, speaking, providing written perspectives, and conducting sound research. It is towards these aims that many who wish to see policy implemented should orient their resources. By shifting the window of possibilities, policies can be brought into effect with fewer negative “adjustment effects” among the people and whatever unenforceable intent supported the desire to create the policy will be more likely to emerge in society.

One example of an application of the Overton Window is homeschooling. Not too many years ago homeschooling was illegal in many states, and frowned upon even when it was legal. My family still knows people who faced state legal action in Michigan because they dared homeschool their kids during a period of time in which the laws were unclear at best. Yet, in Michigan and every other state, through a mixture of political and popular action, the window of political possibilities was shifted. What was once considered outrageous is now common, and no significant door of educational or employment opportunity remains closed to homeschoolers.

Could Overton Window theory also be applied to concepts of the slippery slope? It is fascinating to dream of ways that could be found to let socio/political “gravity” do the work of enacting and reforming policy, yet the difficulty has always been to find a way to guide the weight of policy as it rolls downhill. However, integrating a concept of political possibilities and the theory of slippery slopes results in the idea that instead of trying to guide the “stone” of policy it would be more advantageous to “shape” the slope so that policy will be “slippery” in the direction you like. Instead of putting a priority on efforts to influence policy makers directly, economists and proponents of ideas should focus on the people of the polity in question. In this way will the most pervasive and lasting reforms be made.

Creativity and society.

Ok, so this is an essay I wrote last week just for the heck of it. After discussing it last night with several classmates I have realized that parts of it should be re-written and strengthened, but that hasn't happened yet. You know, econometrics homework and all. Enjoy.

CHILDHOOD TOYS AND SOCIETAL CREATIVITY

During my childhood, my parents’ backyard was a little boy’s dream. Full-sized playground swing set, a large maple tree that was perfect for building forts in, spruce trees that were perfect for climbing, a corner of the yard that was designated for digging, a sandbox, and a wooden fence that often doubled as a wild-west stockade. Through the imaginations of my younger brother and I, that backyard was transformed into virtually every imaginable place and time period, for virtually every situation. The many hours spent in imaginative play in our backyard, plus the encouragement of my parents to find better, yet still proper, ways of doing things, instilled in my siblings and I something that has and will continue to play a fundamentally important role in our lives. Creativity. One of the fundamental aspects of the human thought process, creativity allows flexibility and agility on the road to finding a better way, a different way, or sometimes even any way at all. Creativity is important for home life, business success, artistic expression, and political or social problem solving. Those societies that successfully enjoy the full richness of the individual’s powers of creativity are those societies that posses the social, educational, legal, and cultural conditions necessary to encourage and allow both the development and the expression of creativity. Though the power of creativity is hardwired into the brain of every child, it can be stifled, or, even more tragically, lost. Each of the four societal conditions above interacts with creativity in a different way and can substantially alter either the expression or development of the individual’s creative powers.

In a societal setting, individual creativity manifests itself in a variety of different forms. These forms are private creativity, social or public creativity, business creativity, and artistic creativity. Private creativity is that which is exercised around friends, at home, and in personal affairs. Social or public creativity is that which is used to develop solutions to public issues in a non-business sense. This type of creativity would be used in a neighborhood council, a church, a school board, or even in politics to solve observed problems. Artistic creativity is what most people think of when they hear the word “creative” – performing and writing music, painting, sculpture, acting, and writing. Business creativity is that power necessary to find innovative solutions to marketing, production, and entrepreneurial issues. Though all four types of creativity can be lost over time as children are raised in an institutional and cultural structure hostile to creative development, it is business and public creativity that are most susceptible to restrictions on their expression. Private and artistic creativity largely take place out of the public eye, unobserved, and thus can persist despite rigid, unyielding, and unimaginative social structures, but business and public creativity exist to work change in the public eye and are thus easily squelched, even unintentionally, by burdensome legal, social, and cultural conditions. It is these easily destroyed expressions of creativity in public and business practices that are vital for the long-term health of any economic system.

For years, my younger brother and I enjoyed nailing guns together from wood and playing with them. Though we each had our favorites, each time we began to run short of the necessary pieces to fabricate our next idea, out came the hammer and pliers as we tore apart those rifles that just did not meet the grade anymore. Just as wood scraps of the proper shape and size were in short supply for my brother and myself, at any given time certain resources and qualified people with the proper experience are scarce in the nation’s economy as well. Rather than require that these people and resources remain occupied in a non-benefit maximizing fashion, the structure of the market and society needs to be willing to let – nay, needs to encourage – the failure of those businesses that are not providing the maximum benefit to society. In this way, in addition to natural resource growth, resources are released and freed for new business ventures and ideas. If my brother and I had not been willing to dismantle those rifles that we enjoyed less than we expected to enjoy our next creation, none of the rifles that became our favorites would have been made – including the wooden rifle that still stands in a closet at my parents’ house. This is precisely what is needed to maintain a healthy economy – a certain amount of turmoil and motion.[1] Business ventures need the freedom to start and to fail; only in this way can any economy achieve the greatest chance of discovering those ideas that actually work. Creativity comes into play in developing new business ideas, new ways of doing things.

Conversely, the more the natural motion of the economic “tide” is distorted, either by restricting the expression of business creativity in the implementation of new ideas or by artificially supporting failed business ventures – thereby tying up resources, the more stagnant the economy will become; outdated, inefficient, and lacking real, meaningful, growth. To avoid this result social, cultural, and legal structures must exist which protect individual effort and investment without seeking to maintain the status quo. Governmental regulations are especially suspect in this, often burdening entrepreneurs with “red tape”, requirements, and punishments for being “too successful” that reduce the entrepreneur’s creative agility.

Public creativity is also subject to many of the same influences. Though the blame largely shifts from government regulatory structures to social and cultural institutions, all too often individuals are prohibited from using their public or social creativity to solve a problem simply because “it has never been done like that before” or some other such reason. The result is a host of ideas in government and public life that were workable or the best available at some point in the past but which now have been superseded and should be replaced.

In the words of F.A. Hayek, and applicable to both business and public creativity; “It is in the pursuit of man's aims of the moment that all the devices of civilization have to prove themselves; that the ineffective is discarded and the efficient handed on. And this is the point, but it is important to have as large of a selection of ideas and possibilities to be chosen from as possible.”[2] Only through allowing and encouraging the use of creative powers in public and business life can a large selection of diverse ideas be obtained for society to choose from. Though repressed creativity in these areas would be disastrous for an economy, far worse can happen.

Some social and regulatory factors can restrict the expression or utilization of creative powers to solve business, economic, and political problems, but other social factors can restrict or prohibit altogether the very development of creativity in the individual. It is this result that is far more damaging, because once an individual has grown up without creativity being a part of his or her life, it is extraordinarily difficult to develop that creativity regardless of how hospitable the legal, regulatory, social, and cultural conditions may be. Though creativity is hardwired into the mind of every child, it needs to be exercised. If society stifles expressions of creativity in business and society, creativity can survive for a while, but will perish in less than one generation as children are unable to observe creativity and the use of creative solutions in day-to-day life. Here the educational structure of a society comes into play. Along with the example provided by adults, education has an important role in nourishing the natural creative drive.

The education system – whatever form it takes – must both allow creativity and yet provide structure. It is completely true that creativity, unconstrained by appropriate restraints, is destructive. Simply allowing children to “creatively” avoid truly doing their schoolwork only teaches avoidance and poor work habits, but encouraging creative ways to find the proper solution, the right solution, now that, that is how education can truly help foster creativity in a society. This responsibility is not limited to primary and secondary education – colleges and universities also serve to enhance individuals’ creative powers through pushing them to find solutions to ever more difficult puzzles. Enhancing and training natural creative powers is vital to ensuring that those abilities will be available for future use in the economic and social realms.

One of the primary ends of creativity is to better society, all of society.[3] Towards this end, a full realization of the individual’s creative powers requires a legal structure that protects human and capital investment while not weighing entrepreneurs down and decreasing their social and business ‘agility’. Society and culture must encourage flexibility. Even more important, social and cultural factors must celebrate, allow, and encourage change. An acceptance to change encourages creativity by rewarding it and actually allowing the creative solution to be applied. Finally, children must be encouraged and allowed to be creative in play and education through their years of growth. Only in this way will children grow into adults who have creative solutions ingrained in their thought process for access later in life. Though social, cultural, legal, and educational institutions can greatly dampen creativity, they can also greatly enhance the same. Creativity is too precious a commodity, a resource, to be squandered and suppressed by those who believe they know best for society.[4] It was creativity that allowed me to see my parent’s backyard as a zoo, a battlefield, the Wild West, or frozen tundra. It is now creativity that allows me to find interesting and sometimes unique methods of solving the puzzles posed by the graduate school faculty. One day, it will be creativity that assists me in finding answers to economic and social issues for the betterment of those around me and myself. May we all never lose that creative spark that inhabited our childhood play.

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[1] Unseem, Churn, Baby, Churn

[2] Hayek, F.A. 1958. The Creative Powers of a Free Civilization

[3] Hayek, F.A. 1958. The Creative Powers of a Free Civilization

[4] Postrel, Virginia. The Future and Its Enemies

Economic Policy and God

Ok, so those who know me know I am a Christian. Be that as it may, only recently have I started considering the reality that a sound economic structure can only be built with a strong moral foundation. Now don't get me wrong, I very strongly believe in the importance of morality in life, and in the absolute vitality of that morality being rooted in God's word, but while I have understood the "rightness" of various facets of economic thought (individual freedoms, property, self-determination, etc...) I had never really thought of economic thought as a whole in light of morality. Steve Landsburg, in his book "The Armchair Economist" addresses the idea that we can create all the positive (i.e. analytical) economic theories we want, but without a normative theory to instruct us as to the desirability of that result, all our positive theories are worthless. Without a moral foundation for what we do, economists are left merely saying "so we can get to any result a through z, but which one is best?" This particularly applies to macroeconomics.

Currently one of the faculty here at GMU is working on the economics of religion, using economic analysis to examine religious behavior, but I wonder what would happen if we used religious thought to analyze economics???

Some late-night thoughts.

Ok, so it’s pretty obvious that I’m not writing about social security tonight. In fact, I’m not writing about much of anything. Just wanted to write about an idea that is floating around in my head these days. See, last week I went to a presentation about theories of slippery slopes. This got me thinking – “how can we determine the direction the slope will take? More importantly, how can we influence that direction?” I think this will tie in closely with the Overton Window Theory of political possibilities. Could be some very interesting possibilities in this…. Just think, if you could determine the direction a “slippery slope” would take public policy, you would know the proper time to give the governmental structure a little push to achieve your desired result – using the gravity of the slope. Even more powerful, what if the very direction/angle of the slope could be manipulated?

The war is over people!

Ok, so I'm really tired of hearing people who are smart enough and informed enough to know better talk about the "war in Iraq" as if we are still actually fighting a war. Yes, we still call it a "war", but if it still truly is such... well, it's about the strangest war the earth has ever seen.
1)Both the governmental system and the military we set out to defeat have completely ceased to exist.
2)Iraqi support for international terrorist organizations has been removed - in fact, those same organizations are send men and material to Iraq.
3)What conflict there still is in Iraq is between the US military and Iraqi police on one side, and the various groups that have lost the tyrannical power they once held and foreign Islamic fighters on the other. That does not qualify as a war.
4)In war you either invade, prepare to invade, or defend you or an ally from invasion. This last is closest to what is actually the case. Let us not forget that our military is there with the invitation of the legitimate Iraqi government, which has publicly stated that they do not want our men and women in uniform to leave Iraq yet.
5)This is NOT Vietnam. In Vietnam the military was used to create leverage, but not too much leverage, for the politicians. Result; a frustrated military that was not allowed to use wise strategy and tactics to actually win the conflict. Our military was operating among a population that was indifferent or hostile and was unable to destroy enemy bases of support. None of this is the case in Iraq.
6)"All that money the President is wasting/spending in Iraq"... Guess what, a large portion of that money is coming from other military budgets. The Air Force is under tremendous pressure to make further cuts in the F/A-22 Raptor procurement. I talked to a submariner last night, and he says that when his boat return to harbor, others going out on patrol swipe all of their spare (and not-so-spare) parts because they can't get their own.
7)Exit strategy. We have one. Leave when the Iraqi police is able to handle violence as it occurs. Every day they become more capable and competent, every day the Muslim (yes they are) guerrillas become weaker.

'nough 'bout that for now. Rant on Social Security reform probably coming tomorrow.

Back in the swing of things - in more ways than one!

Oh what a time! Last night I decided to change my normal swing-dancing routine. So, instead of Glenn Echo tonight, I hit the Kennedy Center (Blue Sky 5 was playing) and the Chevy Chase Ballroom (NightHawks). Both were loads of fun, for different reasons. At the Ken Cen I was thrown in with a completely new group of dancers, some really good and some just about my skill, and we were dancing on the red carpet between the stage and the audience. Fun fun fun. Blue Sky 5 was a lot of fun, playing mostly classic jazz/swing tunes. Though I didn't know any of the people there, I still had fun dancing and met several follows (women) that I would enjoy dancing with again. In fact, at the Ken Cen website you can see a video of the performance, and us/me dancing! I show up best in the two songs starting about 56 minutes into the thing. Your link to the Ken Cen site. Click on the video from Feb 4, 2005.

At Chevy Chase I arrived early, and for a while was kinda worried that I was not going to have fun because the only people there/arriving were rather older than I and married. So I wasn't real confident in what the atmosphere would be like or in the prospects of dance partners. Turns out I needn't have worried. As 9 o'clock rolled around more people started showing up. I had a fabulous time dancing with a wide range of partners, some really good, some not so good. Some about my age, some a good deal older. Oddly enough (perhaps not) two of the best three follow I danced with the whole night were probably in their 50s - but my did they follow well! The band was a lot of fun - at least for me. Through the evening I heard a couple of people griping about the band, but I found their style of rock/blues/swing to be a whole lot of fun to dance to.

So I got home late, exhausted, and slept for a long time. Woke up today to absolutely beautiful weather! Like, I'm talking near sixty degree temperatures and a clear, sunny, sky.

Economics - oh yes, that's why I here, right? Things are actually going very well. My classes are hard, with me already having spent more than 8 hours on one homework assignment, but that just makes things exciting. We have had a couple of casualties from the program, but not as many as I expected. One was a friend of mine though...

I attended an interesting lecture last Thursday about the 'slippery slope' phenomenon, leaving with a great wonder about how one (anyone) can determine the "direction of fall" in policy, and even more so, how that natural slope can be influenced - even changed. This I must ponder at length.