Regrets

Economist, Bryan Caplan wrote a post describing one of his favorite scenes from the show The Gilmore Girls. At the very end, he links to a previous post of his talking about regrets. I'm going to quote from the earlier post, but it helps to read both posts. Anyway, he says:

I don't regret anything in my life prior to the conception of my sons. This may sound like sentimental nonsense, but I tell you it's true. Here's my argument:

1. Basic biology: A man produces hundreds of millions of sperm every day. Each of these sperm contains (half of) the genetic blueprint for a different person. The slightest physical movement changes the position of sperm.
2. Therefore, any change in my life prior to my children's conception would have led my children not to exist. If I had crossed my legs differently, or walked to the frig, or even chuckled an extra time, the sperm would have been rearranged, negating my children's existence. I might have had different children, of course, but they wouldn't be the ones I have.

...

What I'm really saying is that if you love your children just because they're the ones you got, you have a special reason to be happy every day. After all, you can survey your whole life before your last child's conception and honestly say: "It all happened for a reason. I wouldn't change a thing."

This reminds me of the movie The Family Man with Nick Cage. It's basically an inverted version of It's A Wonderful Life. In the newer movie, the main character pursues his career with gusto, and becomes extremely rich and powerful. Until he meets his guardian angel who grants him a "glimpse". He is then transported to what his life would have been had he made one key decision differently. In his glimpse, he has a modest house, two kids, and an adoring wife.

The saddest part of the movie to me is when the glimpse ends. He knows that it's going to end and he's going to go back to his actual life. The relationships that he's built with his kids will be forever gone. It's actually worse than if the kids died. Then, he could at least remember them with someone else who knew them. Instead, his kids will be a memory that he alone has because when he returns, his kids never existed.

And this has me thinking about my regrets. I understand Caplan's logic. If given the choice to go back and undo some of the dumb things that I did, knowing that it would also undo my kids, I would leave the dumb things in place. I wouldn't even think twice about it. But I still can't shake the feeling of regret.

I suspect that the purpose of this feeling is to steer me away from a repeat performance. So in that sense, there is a value to regret. It's not that you should use the feeling to try and change past behavior (even if you could) but rather it's useful as a tool to redirect future behavior.

She Works Hard For The Money

I am a Money Map Coach. This is one of the ministries in my church. It's a difficult, but rewarding ministry to participate in. I was doing a Bible study today related to Money Map Coaching, where I read this:

10For even when we were with you, we gave you this rule: "If a man will not work, he shall not eat."

11We hear that some among you are idle. They are not busy; they are busybodies. 12Such people we command and urge in the Lord Jesus Christ to settle down and earn the bread they eat.

14If anyone does not obey our instruction in this letter, take special note of him. Do not associate with him, in order that he may feel ashamed.

And it struck me that this is difficult to reconcile with this:

42For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, 43I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.'

44"They also will answer, 'Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?'

45"He will reply, 'I tell you the truth, whatever you did not do for one of the least of these, you did not do for me.'"

In this passage, Jesus seems to identify directly with the poor. And he tells us that when we fail to feed the poor, we are rejecting Jesus himself. But in the first passage, we have Paul (and Silas and Timothy) telling us not associate ourselves with those who don't work. Holy Biblical contradiction, Batman!

Or maybe not. I can think of two ways to reconcile this.

1. Maybe when Jesus is referring to the poor, he's not referring to the people who are unwilling to work.
   
   
2. Maybe, when Jesus is referring to feeding the poor, he means something other than just tossing food their way.

I have very little input on #1. It's a possibility that I can't rule out.

But #2 is intriguing to me. I think that it might be an important part of the correct answer. I think that to feed the poor, we need to do more than just provide food for them. We need to teach them to provide food for themselves. We need teach them the value of work. Poverty is humanity's default state. Do nothing and poverty persists. It is through working that poverty is beaten back.

But what is work? Who can create jobs? After the recent election season, all the candidates - at every level - tried to convince us that they can create jobs. I don't think that's true. When the government "creates" a job what they do is take money (through taxation) from one group and use it to fund the work. Unfortunately, doing this fails to measure what jobs would have been funded by the people who were taxed. Because they can't spend that money on their own, there's a bunch of work that can't be done for them. So when the government says it "creates" jobs, it does nothing of the sort. It simply transfers the jobs from one group to another - completely ignoring the relative value that the taxpayer would have been able to give and receive had she been able to spend her money as she pleased.

So, how do jobs get created? A job gets created everytime any of us do things that are of value to other people and then trade. In fact, that is the only way to create jobs. When that happens, both the worker and the employer are wealthier than they were before the trade. The employer, valuing the work more than the money, is willing to give the money in exchange for the work. The worker, valuing the money more than the work, is willing to give the work in exchange for the money. After the exchange, both parties are wealthier than before. And that wealth is new wealth. It's wealth that never existed before in the world. But the key is the value. To fight poverty, you must be able to produce value.

But, of course, God created us all with gifts and talents. Those gifts and talents were given to us for a purpose. That purpose must be of value because it's from God. Which means that every last one of us has something of value to share with the world. And every last one of us can fight our own poverty through using the gifts that God has given us. And then trading with others.

So when I hear Jesus calling me to feed him, I don't think it means only providing food. I think that's a start, but I don't think it's enough. I think it means helping people to figure out what God given gifts they have so that they can use them to fight their own poverty. I currently do this as a Money Map Coach. I want to help people fight their own poverty by teaching people how to live within their means. Then, maybe they can find enough abundance to fund the projects that God has in mind.

That's what I'm doing to feed the poor. What about you? Are you just throwing money at them? Or are you helping them to learn how to fight their own poverty? What can you do to teach that?

Too Much Equality?

I know a guy who is a former NFL player and he recently discussed with me and some other guys what it was like to be in a locker room after the game, trying to get showered while female reporters were there trying to get interviews.

I understand that they are just trying to do their jobs. But if the situation were reversed, no female sports team would ever allow men into their locker rooms for post-game interviews. And they'd be correct to not allow that.

I understand why reporters want to interview in the locker room. The players are more likely to give raw, unrehearsed reactions to the game. Hence, it makes for a better story. Additionally, reporters have deadlines to meet. So they need those reactions as quickly as possible. But, frankly, I think it's a travesty that women are allowed to violate men's privacy after a game. If you ask me, no one should be allowed in the locker room after a game. Basic human decency suggests that a person (even a pro athlete) should be allowed a few minutes privacy to shower. But if that isn't possible, then it should be only men allowed in.

But maybe I'm wrong. Part of the criteria for convincing me will be that you have to be willing to flip all of the genders in your explanation, and still think it's a good argument.

I don't think it's possible. I think that there is a thing as too much equality. Men should not be allowed in women's locker rooms. Women should not be allowed in men's. Wishing for equality can't be taken so far that we forget that men and women are in fact different. And the behavior of both people will be slightly different when one of them is naked.

Dream

I woke up early this morning because I had a dream. In the dream, I was on the set of a movie that was shooting in the city I live. I don't remember what it was that I was doing for the filmmakers. I was important, but not in a way that would get me a lot of publicity - not even among the people working on the film. Still, I got to hang out with a few of the key people, most notably the star of the film. Who was, oddly enough, Michael Phelps. Yeah, the olympic swimmer. I guess in my subconscious, he can act, too.

Anyway, I'm sitting around the set doing something on my laptop and Michael stops by. We're just shooting the breeze, when he casually says:

Michael: Hey, do you know Angelu?

mjh: Who?

Michael: Angelu. She says she knows you.

mjh: I don't remember knowing anyone named Angelu. Who is she?

Michael: She works in the art department. She went to the same college as you.

Because, of course, Michael Phelps and I are such good buds, that he knows where I went to college.

Michael: Anyway, she says she dated you.

mjh: Is Angelu a nickname? Because I dated an art major in college named Annemarie.

Michael: Yeah, yeah, that's her. That's Angelu.

This news sent me into a tailspin. In college (in the real world) I dated Annemarie. We dated for 5 years. She was the first woman that I dated seriously for any amount of time. She was the first woman that I loved. And it was love - meaning that it wasn't just about me. It was about her well-being. But, unfortunately, it wasn't 100% selfless. And my selfishness resulted in my doing some dumb things. Really dumb things! Despite this, she stayed with me throughout college.

But when college was over, I had thoughts of marriage. She did not share these thoughts. In fact, she made it abundantly clear that it wasn't going to happen. I never officially proposed, but I broached the subject with her once. She said that she didn't know who she was. That she'd spent all of her life living in the shadow of her parents, only to come to college and meet me. Then she'd spent all of that time, seeing herself as a part of me. She didn't know who she was completely independent of anyone. And that's what she needed to go find out.

So I let go. It remains among the most difficult things I've ever done in my life.

I went off to get a job. She went off to grad school. We would call each other and chat from time to time. During one phone call she told me that she was seeing someone, and it was pretty serious. Up until that point, I had this thought in my head that I could swoop back in after she'd "found herself" and try to start over. But apparently she'd found herself and found someone else at the same time. I was devastated. Eventually, she told me that she was going to marry this guy. A few weeks after that, I made one more phone call to her. I told her that I would not be calling back, and I asked her not to call me.

A few years on from that, I realized that had I avoided the dumb things, the end might have turned out differently. And since that point, there has been exactly one thing that I wish that I could say to her. I want nothing more than to apologize, and ask her forgiveness. I want to tell her that even I realized how dumb I was, and that she was right to leave.

I tried to contact her once through a mutual friend. But Annemarie didn't want to talk to me. And ever since then, I've left it alone. I've never tried again to contact her, but I've always sort of hoped that I'd bump into her somewhere. Which is more likely than you'd think. When we left college, she went to one part of the country and I to a different part. I have since moved again to someplace new. Yet ironically, she lives only about an hour away from me. I only know this because during a few pathetic moments, I searched for her on the internet and found her. There were a few years there where she lived less then 30 minutes from me.

So back to the dream.

I stood up and walked away from Michael Phelps to go look for her. And I found her. She was sitting in a row of chairs in some back part of the set, chatting with a woman and bouncing a baby on her knee. I knew immediately that it was her child. Because that's the way that it works in dreams. She didn't see me, so I walked up to her and touched her arm. She turned to look at me.

This was my big moment. I could finally say to her what I've wanted to say for 16 years. But I didn't. I smiled and waved politely, and kept on walking. This is when I woke up.

I may never get to apologize to her. So here it is. Annemarie, if you ever read this, I'm sorry. I behaved atrociously. I hope you can forgive me. I fear, reading this, you may think that I haven't gotten over you. I have. I have a beautiful family and I'm happy. But I have this regret. That I hurt you. And for that, I am sorry. I hope, someday, to get your forgiveness.

To The Left

Steve Horowitz has written an open letter to the left that really must be read, especially by those on the left, but really by most people who vote. I've made part of it my "quote of the moment" on the right side of this blog. What I will quote here is this:

I know, my friends, that you are concerned about corporate power. So am I. So are many of my free-market economist colleagues. We simply believe, and we think history is on our side, that the best check against corporate power is the competitve marketplace and the power of the consumer dollar (framed, of course, by legal prohibitions on force and fraud). Competition plays mean, nasty corporations off against each other in a contest to serve us. Yes, they still have power, but its negative effects are lessened. It is when corporations can use the state to rig the rules in their favor that the negative effects of their power become magnified, precisely because it has the force of the state behind it.

This is what I would want communicated to those friends of mine who think of me as pro-business. I am most decidedly not pro-business. I am in favor of institutions that effectively channel the self-interest of our entire society into social good. My friends on the left believe the only effective institution for that is the government. While I believe that the government is an extremely ineffective institution for this.

Government producing social good assumes that each individual in government can wield the power of forced taxation without becoming corrupted by it. Instead I think free markets do a much better job of producing social good. Because at the core, we are free not to fund the producers in that market. That puts a constraint on free markets that doesn't exist with the government. Instead, if government spending isn't serving us and we try to withhold that funding, the government shows up at our door with a policeman (with a gun) to arrest us for tax evasion.

In an environment where one institution is forced to serve our needs, and the other can force us to serve its needs, which one do you think will allow self-interest to become destructive?

Update: Here's the important closing paragraph of the letter:

Those of us who support free markets are not your enemies right now. The real problem here is the marriage of corporate and state power. That is the corporatism we both oppose. I ask of you only that you consider whether such corporatism isn't the real cause of this mess and that therefore you reconsider whether free markets are the cause and whether increased regulation is the solution.

PJ's?

Instructions from wife: Please go check on child #3. I asked him to wake up a while ago, and he's not down here.

Child #3 is 5 years old and in kindergarten. I went upstairs to his room. He was awake and sitting in the middle of his unmade bed in his PJ's. I stood there for a second thinking that my mere arrival would motivate him to move. (Yes, I am egotistical.) Realizing that I had less of an imposing presence than I had hoped for, I resorted to conversation:

mjh: Hey. I see you're still in your PJ's.

#3: [Shrugs]

mjh: You don't think we'd let you go to school in your pajamas do you?

#3: [Shaking head] No!

mjh: Actually, son, that's wrong. We'd be happy to let you go in your pajamas. How would you feel about going that way?

He thought for a second. Then his eyes got wide and he started getting dressed.

Score one point to daddy.

Do Not Call List

Where I live, we have early voting. I was able to go out and vote early last week. I had to wait in line about 90 minutes. Fortunately, the people that were around me were quite friendly. I very much enjoyed the conversation with them.

But, of course, politicians don't know that I've voted. And as a result, continue to call me to tell me about their candidate. Tomorrow this will end and I'm disappointed by it. No, really. I am. I decided a few weeks back to make a game out of this. Here's how a recent conversation went:

mjh: Hello

politico: Hi, I'm calling for the campaign of XXX and I'd like to encourage you to vote for XXX.

mjh: Oh. Ok. Tell me about XXX.

politico: [blathering on about garbage]

mjh: Wow. That's really interesting. Hey, how are you doing? You know I've read that the job that you have can be really stressful, calling people and trying to get them to listen to you about a candidate that you believe in.

politico: uh... yeah it can be, but [not even skipping a beat] I will feel a lot better when XXX is elected. He believes in a lot of things that I think will make life better for all of us. [blather blather]

mjh: Yeah. Ok. So anyway, considering how stressful your job is, how are you doing life insurance wise? I'm a life insurance salesman, and I'll bet you really don't have enough.

politico: I'm doing quite fine life insurance wise [blather blather]

mjh: [interrupting for the first time] Do you have whole or term life?

politico: I want to focus on XXX [blather blather]

mjh: [interrupting again] I understand but really, would your family be covered in unfortunate event that stress of this job got to you?

Eventually, he hung up on me.

Another caller was persistent enough to talk to me for 30 minutes. At which point, I told her that I had voted earlier in the week, but that I was so lonely and it was really nice to talk to someone, especially a woman who seemed interested in me. I asked for her number. She hung up.

Is this mean? Yes. Do I care? Not so much. My wife, who is by far, the nicer of the two of us is even getting in on the game. Basically whenever someone calls and I'm home, she just stops them and says, "Actually I think my husband would like to talk to you." She then hands me the phone knowing full well that I intend to play with them. So if it's got her endorsement, there's really a limit on how evil it can be. My goal is twofold:

1. First and foremost: have fun at the expense of a pest.
2. Keep the pest on the line as long as possible so that they won't pester someone else.
   

Unfortunately, most of the political calls are recordings. But a precious few are people. I like to think that I made some "do not call" lists. Or maybe a "only call with recording" lists. Still with the recordings I answer the phone, and then lay it down until they hang up on me. I don't want to signal the auto-dialer on the other end, that it's ok to call pester someone else. Maybe they'll get a few less calls in that way.

How I blog

I really need to change the way that I blog. In one sense, what I write about is really me. It's what I think about. I'm obsessed with correct thinking. It matters to me, very deeply, that the thoughts that I have are accurate. When I started this blog, my intention was to put out there anything in the hopes that wrong thoughts would be corrected by commenters. I had hoped that I would (eventually) get a sufficient volume of comments so that I could test my thoughts against the collective wisdom of others. I haven't been able to get a lot of comments. So it hasn't panned out the way that I'd hoped. My point is that my purpose for this blog was as an exercise in correcting my thinking.

But then I watched the video from TED. And I think I have to change some things.



I really don't think that this blog can be only about how I think. I look at the records that this woman has of her ancestry and it's barely anything. But, yet through blogging she knows perfect strangers from across the globe far more intimately than even her grandparents.

Niffer is quickly becoming one of my favorite bloggers. I read whatever she posts almost as soon as she posts it. Because her blog captures the story of how she sees her daughter. It's really quite beautiful. It's WAAAY better than my blog. I wonder if my children ever read my blog if they'd recognize me.

It's ironic. My pastor has a blog. It's only moderately interesting, despite the fact that I find little to criticize about the thinking behind it. But from the start, I've thought that his blog wasn't really much of a blog. I learn absolutely nothing about the man writing it. Instead it's just another outlet for him to teach. And that's a good thing. But as a blog its boring.

I don't think I need to remove the posts that are about my thinking. I need to do that. Thinking is important to me. But I need to put more stuff into this that is about my general experiences and how I react to them. I guess I just hope that someday, when my children are able to show this to their children, that they will get a sense of who I was. Not just what I thought.

What would you do?

Charles Hooper wrote the following commentary:

One of the unpleasant things I do as a consultant is recommend that pharmaceutical firms halt the production of uneconomical new medicines. I'm a drug killer.

If American voters hand Barack Obama the presidency and a filibuster-proof Democratic Congress, I'll be doing a lot more of this unhappy work.

Basically, what's going on here is that Mr. Hooper would be recommending to the pharmaceutical companies that employ him, not to produce several important drugs. At first this seems really heartless that he'd recommend to cut those things. I'd like to try and explain that it's not. And I bet, if you were in the same situation, you'd do exactly the same thing.

The concern is that Obama has talked about creating a single payer system for pharmaceutical products. Basically, his idea is that by forcing all payment through the government, the government can then negotiate a much lower cost for pharmaceutical products. So the government is forcing down the wage that the producer can get for their labor.

Now imagine in your current job that the same thing happened. Imagine that the government suddenly decided that all computer programmers made too much money. That they would no longer allow your company to pay for your services. All computer programmer services would be paid for by the government. Now, you couldn't just go out and get a different computer programming job, because all of them, even those offered by competitors to your company would be paid for by the government. And the government has decided that computer programming should be paid at minimum wage. What would you do?

Some people, who really love computer programming would still do it. Some people currently write computer programs and give them away for free. So some people would stick to it. But most people would look at the situation and realize that, on average, Wal-Mart pays more than minimum wage. And others who had skills other than computer programming would realize that they could make more money doing those other jobs. I might finally decide to take that risk and open up a franchise of one of my favorite pizza places in Wisconsin. Many people would make this decision to do something else.

And that's what Mr Hooper is talking about. Medicines are the labor of the pharmaceuticals. No longer would the current employers of the pharmaceuticals be allowed to pay them. All production would have to be paid for by the government. The government would then be in a position to demand that the price of medicine be drastically reduced. And what would happen is that people who work for pharmaceuticals would decide that they can make more money elsewhere. The ability of the pharmaceutical to produce new medicines will essentially dry up.

It's not the heartlessness of the pharmaceuticals that would be doing this, either. It's the rational reaction of people who work for a pharmaceuticals. They would be deciding that it's better for them to pursue other opportunities. Even though we like to think of pharmaceuticals as entities that make decisions. They're not. They are entities that are made up of people. And when the people go elsewhere, the pharmaceutical no longer exists.

So if single payer healthcare comes along it will achieve its goal of getting rid of expensive medicines. But that will not help the people who need the medication. Because the medicines will cease to be produced. Atlas will shrug.

Of/By/For the people

This is disturbing:

U.S. District Judge R. Barclay Surrick on Friday night rejected the suit by attorney Philip J. Berg, who alleged that Obama was not a U.S. citizen and therefore ineligible for the presidency. Berg claimed that Obama is either a citizen of his father's native Kenya or became a citizen of Indonesia after he moved there as a boy.

Obama was born in Hawaii to an American mother and a Kenyan father. His parents divorced and his mother married an Indonesian man.

Internet-fueled conspiracy theories question whether Obama is a "natural-born citizen" as required by the Constitution for a presidential candidate and whether he lost his citizenship while living abroad.

Surrick ruled that Berg lacked standing to bring the case, saying any harm from an allegedly ineligible candidate was "too vague and its effects too attenuated to confer standing on any and all voters."

First, let me say that the claims that he was not born in the US are completely ridiculous.  He’s produced a birth certificate.  Factcheck.org has validated it.  Those who brought this case don’t buy it.  Puh-lease!  Enough, already.

But, the part that’s scary to me is the reason that this case was dismissed.  So pretend for a minute that the allegations were true.  Pretend he wasn’t born in Hawaii, but that he was born in Kenya (as alleged).  The judge is saying that normal citizens could not bring this lawsuit even if they could prove what they claim.  The judge is saying that normal citizens do not have sufficient standing to police the eligibility of candidates for president.  This strikes me as a dangerous precedent to set.  If the people don’t have sufficient standing, then who does?

Additionally, the judge is ruling that the harm caused by this is too vague.  In other words, if true, there’s really no harm done.  On this point, I agree.  I can’t possibly see how Obama having been born in Kenya or McCain having been born in Panama (as is alleged in a separate case) could possibly disqualify them for the presidency.   So I agree.  I don’t see the harm.  But I don’t think it’s the job of a district court judge to change the constitution because he doesn’t see what harm could be caused by not meeting something it requires.  The constitution says that to qualify for president, a person must be a “natural born citizen”.  Some people understand this to mean that you have to have been born in the U.S.   The judge can rule on whether or not “natural born citizen” means that.  But to suggest that the effects of this constitutional requirement are too vague is irrelevant.  The process for changing the constitution is defined w/in the constitution.  It is not conferred to a single judge just because he doesn’t see what the effects are.

It’s one thing for the judiciary to create law from the bench.  Many believe that they are doing this. But for the judiciary to start rewriting the constitution from the bench thoroughly undermines the constitution.  What rule of law are we under now?

In Sync

My friend shared this with me. It's amazing on two levels.

1. That there's so much that is not just in common, but *exactly* the same
2. That anyone would do all the work to put this together.

Anyway, I loved it:

On Poverty

I read an article that really has me thinking:

http://www.leadingsmart.com/leadingsmart/2008/10/its-not-up-to-w.html

There were two reactions to this. Both of which are on the comments on poverty:

1. Financial resources are *not* the reason that poverty persists. Usurped power through bad government is. We in the west have donated nearly $1 trillion to Africa. And over that time, the per capita income has increased $0. That's right. Nothing. Not one plug nickel. Where has that money gone? The leaders in the government, and their political allies
   
   This election is, to me, extremely discouraging. There are only two practical choices. And both of them would like to centralize more power in the government. There is nothing unique about the US that would keep it from the same sort of poverty we see in other countries with too powerful governments. Both of these candidates wish more power for the government. Say what you want about the evils of the United States. I agree with much of that. But you must also recognize that our prosperity has meant an awful lot for the rest of the world. Impoverishing the US has greater impact than just to the citizens of the US.
   
   And both candidates are fine with that. Who to vote for? IMHO, neither.”
   
   
2. On the concept of "Be the change you want to see." The change I want to see is poor countries participating in the global economy to enrich themselves.
   
   So what does that mean? Find someone who's poor and trade with them. Don't give. That bandaid won't cure the cancer. It will temporarily help, but when they've consumed whatever you gave them, they will be right back to where they were. By trading you insist that they provide something of value back to you for the thing of value you give them. And *THAT* is the key. Once a poor person can provide value, they won't be poor for long, even if you stop trading with them.
   
   So what does that mean for me? It means that I need to have something of value to offer the poor person as well. It means that I need to work on the things that I do best in order to create that value that I would like to trade. It means I have to keep working. And keep trading when I find value.

Part of the assumption that I make here is that people are innately poor. If a person does nothing, they will die of starvation. We are required to work if we are to thrive. The Bible describes this here. Once you recognize that you are innately poor, the question of where does poverty come from is no longer valid. Poverty is the default state. The real question is: Where does wealth come from? And the answer is pretty straight forward: it comes from providing value to others.

This has some pretty important implications.

1. Since we’re all innately poor, the answer to the question of battling poverty must start with ourselves. If you want to battle poverty, first battle your own poverty. For me, this means that in the battle against poverty, my biggest responsibility is to go to work. No, it’s not inspirational. Nor does it grab many headlines. But it is the single most important contribution that I can make to the fight against poverty.
   
   
2. The second most important contribution that I can make in the fight against poverty is to teach my children that they are also innately poor. And that their single most important contribution that they can make in the fight against poverty is to ensure that they are not poor themselves.
   
   
3. Trade. That is, find someone who is providing value and come to an agreement to exchange with them. If you do your job well, and this other person does his/her job well, then by trading you only have to be good at your own job. And your trading partner only has to be good at his/her job. Yet you can both get the benefits doing two things well. This makes both of you richer. Repeat.

After these, my ability to fight poverty is drastically reduced. But there are still some things that I can do:

4. Fight for trade. Demand that no one stand in the way of two parties trying to enrich themselves through trade. When you see individuals or governments enacting barriers to trade, get in their and let them know that they are sustaining poverty. This is true whether the trade barrier is:
• a protester actively disrupting trade
• a government import/export tariff
• a restriction on immigration or emigration
• a government subsidy to preferred goods/services in order to dissuade purchase of non-preferred goods/service

This impacts voting. And part of the reason that I’m really discouraged by the current administration and either of the two potential administrations is that they seem to have no problem enacting barriers to trade

5. Give. Last on the list. It’s on the list because there are some people who need a kickstart. Kinda like the engine in your car. It needs a jolt of electricity from the battery to start. But once it’s going, it produces its own electricity from the alternator. In fact the alternator produces sufficient surplus to ensure that the battery is recharged. But this is last on the list because it’s least effective. It requires two things:
• the recipient of the gift must see it as a kickstart, not an entitlement.
• the recipient of the gift must not be encumbered by a government that misappropriates the gift

I have hope for giving as a tool to eliminate poverty. But too often the basic requirements are not met. In one case, the kickstart doesn’t get the engine running. In the other case, the intended recipient doesn’t get it. But when the requirements are met, giving is a powerful tool. Because an effective kickstart can cause a person to start generating sufficient surplus to provide a kickstart to someone else. At that point, there are two available kickstarts: the one that I gave and the new one.

Market Failures

Was there a market failure in today's crisis? I don't know. Some say yes. Some whom I really respect say yes. Some whom I don't respect also say yes. I don't know. I'm skeptical but I also realize that I'm ignorant.

But let's say that private financial markets did contribute to this. And the contribution was completely independent of government intervention.

Ok. So what? Markets produce failure all the time. A company that opens up it's doors with a poor business plan is going to fail. It should fail. That failure is not the fault of the government, nor is it the fault of lack of regulation. It's the fault of the company having a bad business plan. What happens in the market is that the company with the bad business plan is quickly discovered and put out of business. Such a company could not serve it's customers nearly as well as the alternatives that the customers had. Such non-serving companies should fail. And the market discovers these things very quickly.

So this makes me wonder if the failure in the financial markets is just another normal, run-of-the-mill failure. If it is, then that failure should be allowed to proceed so that the bad (non-serving) ideas that were created go away.

What then is the purpose of the bailout package? It recapitalizes financial institutions that were in trouble. In other words, it bails out the bad ideas and lets them live a bit longer. Is this good? It's hard to think that it is. It's more likely that bad ideas that aren't allowed to die will create more destruction in the future.

So, I find it ironic that it is our politicians who are claiming these two things at the same time:

1. The financial market failed.
2. Let's bail out the financial market.
   

Either the financial market has bad ideas that should be allowed to die or it has good ideas that should be bailed out. These two statements seem inconsistent.

But I realize that they seem inconsistent to me because I'm focused on the ideas behind the financial markets. Are they good or bad? But these statements might not be focused on that question. Instead, they seem to be saying that the problems we're seeing today would not have happened if the government were running things. So, let's not trust the market, rebuild the failed banks and then have them run by the government. And we'll be good.

Of course for this to work, it requires that we ignore the fact that the government is not immune to failure. And we must also ignore the reality that government failures are *MUCH* harder to undo than market failures. Bad laws, even ones that everyone agrees are bad laws, live on. We have to ignore those inconvenient facts. We seem to be blissfully willing to do that.

Priorities

Bjorn Lomborg tries to get them straight.

John Stossell

This is worth the watch. There 6 episodes. Watch them all. But be prepared to be depressed.

Forgive and Forget

I just got done watching one of my favorite movies: Eternal Sunshine of the Spotless Mind. The movie is about Joel and Clementine's relationship. If you haven't seen the movie, stop here. Really don't read on. The movie is too good and... thar be spoilers below, matey.

No, really. Stop here and go watch the movie. This blog post isn't going anywhere. But you can't undo the spoilers. So watch it and come back.

Anyway...Like all relationships Joel and Clementine's relationship starts out fresh and new and exhilarating and rewarding and fulfilling. But also like all relationships, those feelings fade until Joel & Clementine are left with the burden of realizing that nobody's perfect. And then they break up. Badly.

So they each decide to get their memories of each other erased. Literally. There's a company called Lacuna who will map out all of the memories and then erase them. The movie takes us through what Joel experiences as these memories are being erased. We move from the most recent memories backwards. So we start seeing all of the bad memories. The ones that are easy to let be erased. But eventually, we start getting to the good memories. And that's when Joel starts wishing that he could keep some of them. The rest of the memory erasure is this sad journey of trying to keep some of the memories, but failing. At some point, Joel realizes that it's pointless. The memories are just going to be gone. We travel all the way back to where Joel & Clementine met. With Joel knowing that this is the end. After this he won't remember her at all.

Sometimes, all that I can remember are the things about my wife that drive me absolutely nuts. I think our relationship is different than Joel & Clementine's in that we've learned how to forgive each other for not being perfect. But it's the forget part that drives me crazy. I don't know how to forget.

I think there's a lesson in this movie: try hard to remember why you chose to be with this person. Unlike Joel, I still have the opportunity to remember those great moments. Those moments that drew me to her and her to me. Like on the jetty at Galveston. Or the first time she leaned over and said, "Kiss me". Or Jefferson and pretending to be deaf. And on and on and on and on....

But what comes so easily to mind, without any effort at all, is, for example, the disdainful tone in her voice when she got home and the kitchen wasn't clean. Or disagreements about parenting. Or whatever. All of which, in comparison to the good memories, are just stupid and insignificant blips. But these stupid little things get in the way. They block out the precious moments. I have to, periodically take the time and effort to remember the good ones or I fear they'll slowly fade away.

I was mad at her before the movie. And if I think about it, I can remember why. But after watching Joel, I'd much rather think about Galveston.

By the Book

Recently, This American Life did a show called “Another Frightening Hour About the Economy”. It was good. I listened to it pretty much as soon as the podcast was released. But on the way to work today, I decided to listen to it again. I’ve discovered that the 2^nd listening is different. It’s different because I’m not just trying to keep up with what they’re talking about. I know where they’re going and (at a high level) I understand what it is that they’re saying. That understanding has freed me up to think about other things presented in the show a bit more critically. And I’m struck by how dumb we can be.

Commercial Paper

The first part of the show talks about the commercial paper market. Yeah, I had no idea what that was before that show, either. But it turns out that it’s essentially a short-term credit card for businesses (both small & large). On a daily basis, businesses earn money. Some days they have a lot of extra money and some days they have a short-fall. It all depends on the timing of when customers pay bills. However, bills to the business tend to come in at a fairly steady rate. So businesses need a way to pay out money every day, even on the days that they’re short. To do that, they use commercial paper. When they’re short, they take a short loan that they pay back on the days that they’ve got surplus. A huge number of businesses operate off this market. If lenders to the market freeze up, a huge number of businesses can’t operate. If they can’t operate, that means that they stop taking in money. And they stop paying employees, vendors, service providers, etc. Commercial paper is a pretty big deal.

But I’m really flabbergasted that so many businesses are in this position. As an individual this is roughly akin to using my credit card to pay for things when I’m short of cash. Which many people do. However, it is pretty universally derided as a dangerous way to live. A *MUCH* better way to manage shortfalls is to build up an emergency fund. Instead of drawing on credit (which you might not be able to pay back) when you’re short, you draw from your emergency fund. Then when you’ve got surplus, you pay back the emergency fund. This is personal finance 101. Why is this not also business finance 101? The Bible describes the situation: “the borrower becomes the lender’s slave” (Proverbs 22:7). When lenders stop lending, they do not care if those who are enslaved to them can’t survive. The lesson from this is that you have a choice about being a slave: don’t be one. Build up two types of savings:

1. Day to day operational savings. This should hold enough money to pay out all the bills that you have in a single day.
2. Emergency savings: This should hold enough money so that you can survive for 3 months w/out income.

My guess: this behavior would significantly reduce the impact of financial crises like the one we’re currently seeing.

Money Market Funds

But what caused commercial paper to freeze up in the first place? The reserve fund broke the buck. Part of the way that businesses save money is by investing excess profits into money market mutual funds. One of those funds is the reserve fund. These are hyper-safe funds. The worst they’re ever supposed to do is pay you back your investment. Sometimes they even pay you back some interest. The people who invest in these funds put money there that they can’t afford to lose. The reserve fund suddenly had to pay back less than $1 for every dollar that investors had deposited. In other words, investors that were being safe with money they couldn’t afford to lose, lost money. Why? Because the reserve fund had invested heavily in commercial paper from Lehman. When Lehman went bankrupt, the reserve fund lost money. Those losses had to be shared by reserve fund investors. Then several other funds started breaking the buck. Suddenly there was a run on mutual money market funds. Investors who couldn’t afford to lose money in those funds were losing money and taking what they had left out. Drying up the money available to for loans on the commercial paper market.

But, again, I’m flabbergasted. How much position did the reserve fund hold in Lehman? Why weren’t they better diversified? Again, this is personal finance 101. And it’s a biblical principle of money management: “Give portions to seven, yes to eight, for you do not know what disaster may come” Ecclesiastes 11:2. If the reserve fund were better diversified, would it have been better able to withstand Lehman’s bankruptcy? Additionally, didn’t the credit market rates to Lehman jump sky high indicating a high degree of risk in investing w/them? Why did reserve fund (and other money market funds) lend to Lehman? Wasn’t that irresponsible use of extremely low risk money? Two lessons:

1. Diversify
2. Do not invest low risk money into high risk investments

Huh?

Of course, there is a problem that arises from the above observations and result lessons. Why did we get these results? Economists sometimes describe markets as discovery processes. People who enter markets are running an experiment. The market sorts out which ones will work and which ones won’t. Over time, bad ideas disappear, and what remains are the good ideas. On a personal level, it’s pretty darn clear that the above lessons are good ideas. Why didn’t they emerge at the business level? Why didn’t the market discard what actually happened and leave behind only these good ideas?

I suspect the answer has something to do with moral hazard. Historical government bailouts may have given investors and businesses confidence that any mistakes they make will be backstopped by future government bailouts. So investors and businesses may have taken on more risk than they would if no bailouts existed. I also suspect that government bailouts interfere with the market discovery process by allowing bad ideas to live on. By bailing out those companies and individuals who are in trouble, the government does not allow the consequences of bad ideas to be borne by those who made them. “The simpleton goes blindly on and suffers the consequences.” Proverbs 22:3. I note also, that our government (in the late 90’s) started applying pressure to lenders to increase loans to those with low incomes. The market had already discovered that it’s a bad idea to lend money to people who don’t have much means to pay it back. But the government applied pressure to ignore that lesson in the legislative changes to the Community Reinvestment Act made in the late 90’s. These changes put pressure on lenders to increase loans to low income earners.

So what’s your point?

Well, this is a blog. A point is required? I guess if I must, the point is that we can’t exclude government action as the cause of this problem. True, no one thing that the government did caused it, but the totality of what the government did is a significant contributor. Sure, This American life mentioned how the government failed to regulate. But that's government inaction. When there were distinct and specific actions that the government took that provided a major contribution to this problem. I think that point was missed by This American Life. It was not missed by Russ Roberts (and here), nor Arnold Kling (and here).