Friday, October 31, 2008
How I blog
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?
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.
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.
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.
Thursday, October 30, 2008
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?
Wednesday, October 29, 2008
- That there's so much that is not just in common, but *exactly* the same
- That anyone would do all the work to put this together.
I read an article that really has me thinking:
There were two reactions to this. Both of which are on the comments on poverty:
- 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.”
- 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.
- 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.
- 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.
- 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:
- 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
- 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.
Tuesday, October 28, 2008
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:
- The financial market failed.
- Let's bail out the financial market.
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.
Thursday, October 23, 2008
Monday, October 20, 2008
Saturday, October 11, 2008
Forgive and Forget
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.
Thursday, October 09, 2008
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 2nd 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.
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:
- Day to day operational savings. This should hold enough money to pay out all the bills that you have in a single day.
- 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:
- Do not invest low risk money into high risk investments
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).
Monday, October 06, 2008
Getting Better All The Time
There are a couple of things that I think about after seeing this video. First, it puts data to my instinct that life is getting better. Watching movies like Gladiator, 300, or Braveheart really bring home the idea that life in times prior was outrageously more violent than life today. And then programs like Frontier House or 1900 House that show us how all those time saving devices that we thought did nothing, actually do save a *ton* of time. And then there's the good economic news about how we're doing and it appears that life in general is getting better. Yes, there are negative blips, but the trend is up. Hooray!
But as a Christian, this creates a problem. Because we would expect that worldliness would cause things to get worse. As we push the need for God further and further from our lives, this should cause our lives to be less and less settled. My pastor has even stated as such. Prior to releasing his book Serious Times, he delivered a message to us as a sort of preview. And I distinctly remember him saying that things are getting worse and we should expect this trend to continue. I remember that there were supporting quotes from the Bible, but I don't remember what they are. (Maybe I should read his book?)
Anyway, what I wonder is whether or not we are misinterpreting what it means to be close to God. I've mentioned before that I think God works through emergent phenomena. Markets are one example of human driven emergence - the order that results is a product of human action, but not of human design. But at the heart of markets are some very important concepts that very much are Biblical. For example:
- consider others
- play fair
- don't ignore yourself
- protect and defend freedom
Can behavior be an indicator of what you truly believe? Even more so than what you express? Even if your behavior contradicts your expression? The Bible seems to support this concept when it talks about professed believers who don't act like they are believers. It calls them hypocrites. But what about the other way? What if you act like a believer but express non-belief? In that case, do actions also trump words? I don't know, but if so then this means an awful lot in terms of evangelism.
Saturday, October 04, 2008
Re: Luxurious Lifestyles
Many of your conclusions are incorrect. Your claim that farm subsidies benefit small farmers is absurd. There isn't one person on any side of this issue who has done a resonable [sic] amount of researech [sic] on the topic who would agree with you.First, off, thanks for the comment.
Secondly, I think we should make a distinction between small local farmers and agribusiness - large, highly capitalized, but still domestic farmers. Certainly subsidies help agribusiness more than they help small local farmers. The problem is that if you get rid of subsidies all of that business that currently goes to agribusiness will most certainly not go to small local farmers. The cost of domestically growing wheat, or rice, or sugar or whatever is subsidied will go up. And the sales that domestic farmers used to get will now go to foreign producers who produce much more cheaply (even including the transportation costs) than do US farmers.
But make no mistake, small local farmers are helped by subsidies. In 1999 they were paid on average $4141.
Now, combine the subsidies with import quotas on certain farmed products, and the market is strongly distorted in favor of domestic farmers over foreign farmers. Get rid of the subsidies and import quotas and small local farmers will disappear in favor of cheap foreign farmers. Keep subsidies and you force all domestic consumers to pay more for food than they ought to. This doesn't hurt the rich. This hurts the poor who pay a substantially larger percentage of their income to food. It's foolish.
Your personal knee-jerk gut feelings don't really count and are potentially harmful.Are you suggesting that I censor myself in lieu of the harm that I might cause by speaking? Really? I am generally of the opinion that the best response to bad (even harmful) speech is more speech. So keep the comments coming. But I will ignore any suggestion that I not speak, even if you think that speech is harmful.
What he suggests is that any parenting skills we develop have very little influence on what happens to our children as they grow up. He tells a very compelling story using studies of twins. I'm inclined to believe his story. If it's true, it means that the parenting skills that I have worked hard to develop has little to do with how my children will turn out. Their character, responsibility, moral fiber, etc do not come from the environment that I provide.
In one sense, this is really freeing. It means that I don't have to stress to much. In another sense, this is rather depressing because I waste a lot of time trying to develop skills in parenting that will have little impact on them. But it also suggests something else. If I do spend all this time on parenting skills that have no benefit to the kids, there must be some other reason to develop these skills. It strikes me as an odd possibility that I develop those skills because they make me feel better about myself. Maybe development of my parenting skills gives me a rationale for the behavior of my children. If they behave well, good job me. If they don't, bad job me. In other words, parenting skills aren't about my kids; they're about me. When the random selection of genes that God has selected for them turns out good, I get to take some of the credit away from God. But when it turns out bad, I suspect I'd be more inclined to blame God for my childrens' dispositions. (I don't really know because I have great kids!)
Nevertheless, while I find the idea that nature plays an enormous role in how people turn out, I can't eliminate environment from the mix. Sure, two twins who are separated at birth and come back together later on might end up remarkably similar. But they had to have sufficient environments to allow them to survive so that they could come back together. If environment played no role at all, you could imagine a set of twins one delivered to a "mostly normal" family, and the other to an excessively violent and criminal family. If the 2nd twin was murdered by that family, then that twin would never grow up to reunite and compare to the 1st twin.
My point with this rather ghastly and extreme thought experiment is that environment must play *some* role. I wonder how much. If a lot, then my parenting skills aren't just an ego trip. They pay some benefit to my children. If hardly any, then I'm even more of an egomaniac than I thought I was.