Was the Old Testament plagiarized?

The Babylonians had their own story, one quite similar to the story of Noah and the flood in the Old Testament Christian Bible and the Torah.  A god came to one man, warned him of a impending, worldwide flood, and advised him to build an ark. The man was saved due to his moral constitution, and his story serves as a warning to all others.

Moreover, the Babylonians seem to have acquired their story from the Sumerians, one of the first urban civilizations who existed earlier than 2,000 B.C.  I think the Old Testament was written well after 1,000 B.C.

I'm not implying anything.  I just think it interesting.

Source: Kenneth W. Harl.  World of Byzantium.  Lecture 4: Hammurabi's Babylon.  2001.  The Teaching Company.

Economists should act more like historians

Russ Roberts provided an excellent interview about the nature of economics in a recent EconTalk podcast, with interesting takes on the extent to which economics is a science, and what we mean by "science".  Listening to it, I had this thought.

As they write articles and seek publication, economists make repeated efforts to take a complex world and simplify it to a few forces, or a few mathematical models.  We all know the world is too complex for one model to handle, but our institutional reward system discourages acknowledging this.  I believe that if economists acted more like historians, meaning they were rewarded for composing articles and books articulating the complexity of the world and the importance of personality and circumstance in addition to economic constraints, we would seem wiser in our writings, and probably less politicized on television.

[Marginal Revolution Style] Markets in Everything: Nobleman-Backed Securities

We have all recently learned about the complexity of mortgage-backed securities, but what about securities whose value depended on the ransoms collected by kidnapping a nobleman in the fourteenth century?

   It was not only wages that attracted, in any case: it was plunder.  Every foot soldier stood a good chance of finding loot in the rich provinces of France; as for a knight, he would hope to capture a nobleman.
   "There's your path to fortune," Gilbert reminded his son.  "We must have a knight to ransom.  That'll save the estate.
   The ransoms were huge.  A French knight could often be sold back to his family for over a thousand pounds.  Indeed, so valuable were captured nobles that a thriving commodity market in them had developed.  Captives were sold between knights, or even to syndicates of merchants for cash against an anticipated ransom, so that a French nobleman might after a little time find that he was owned by a confusing collection of men spread all over the country, each of whom had a percentage interest in his life.
--Edward Rutherfurd in Sarum: A Novel of England.  In the chapter titled Death.  This may be a novel, but it is a historical novel, and I have yet to catch Rutherfurd tell anything but the historical truth.

The Goal of Economics

If you asked me the goal of economics, I would quote the famous physicist Paul Dirac, when he asked, "What are the fewest general propositions from which all the uniformities existing in nature could be deduced?" I want the fewest and simplest explanations that explain as much empirical fact as possible.

Fact About Garbage

30% of waystream trash (I think that just means the stuff at landfills) is made up of food scraps.  That seems way too high to me, but still...that's a lot.
Source: http://news.opb.org/article/new-food-composting-program-will-change-trash-day-routine-portland-residents/

Fact About Plastic Shopping Bags

Wal-Mart now has reusable shopping bags for sale, which would reduce the number of plastic bags used.  To understand the disadvantage of plastic bags, try this: next time you drive your car from work to home, count how many plastic bags you see along the way.

Here is the fact.  A reusable bag must be used 9-13 times before the environmental damage from reusable bags is less than the damage from plastic bags.
Carl Bialik.  The Wall Street Journal.  September 24-25, 2011.  A2.

Today's Quote

We might as well have had a catechism:
What is a farmer?
A farmer is a man who feeds the world.
What is a farmer's first duty?
To grow more food.
What is a farmer's second duty?

To buy more land.
What are the signs of a good farm?
Clean fields, neatly painted buildings, breakfast at six, no debts, no standing water.
How will you know a good farmer when you meet him?
He will not ask you for any favors.
—Jane Smiley in A Thousand Acres 

Two Neglected Phenomena of Modern Macroeconomics

There exists two phenomena which temper the ability of monetary or fiscal policy to encourage growth, and both of these are consistently and wrongly ignored.

1. Fiscal policy is often said to be effective when businesses or individuals elect to hold large amounts of cash they would normally spend.  The government then essentially forces them to spend this money by taxing / borrowing the money and then spending it on transfer payments or public goods.  What economists neglect, however, is how individuals react to the taxing / borrowing.  If I wish to keep $1,000 under my mattress for protection, and the government taxes me $200 and spends it on infrastructure, spending might not increase.  It is true the government reached under my mattress, yanked $200, and spent it.  But it is also true that I might decrease my normal spending by $200 to bring my cash holding back to $1,000.  Government spending increases $200, but my spending decreased $200.
2. Monetary policy is not as effective as we think.  When the Fed injects $1 million of "liquidity" into financial markets, economists use the analogy of dropping a million $1 bills from a helicopter.  However, when the Fed gives bankers $1 million, they are taking away treasury bills/bonds worth something close to $1 million.  Consequently, when the Fed prints $1 million, it is false to say spending will increase by $1 million, because bankers gave up, say, $995,000 of wealth in treasury bills/bonds.  In reality, the Fed printed $5,000 and gave it to bankers for free.  And $5,000 is much less than $1,000,000.

Local Currencies

In various pockets around the world, some communities are encouraging the use of a local currency (Brazil example here), so that the community imports less products and tries to prevent the destruction part of creative destruction.  I have thought hard about these kinds of issues, especially in their relation to local foods (see an article I wrote on local foods here).

The more I think about the issue, an idea keeps presenting itself.  I wonder if one strong motivation (among several) for warding off trade is a belief that non-local producers are less ethical than local producers.  That is, I believe a corporation will do everything it can to not pay the costs of the environmental harm it imposes, whereas the farmer down the road insists on being held accountable for everything he does?

This is related to a more general idea I find increasingly appealing: that both Libertarians and Progressives believe in the felicity a free market can deliver, if externalities are intensely sought and rectified.  However, they disagree on whether these externalities can be accounted for without a very coercive government.

An odd wedding vow

When Augustus (called Octavian at the time) married Livia, this was his vow: Where you are Gaius, I am Gaia.  When gay marriage becomes more acceptable, perhaps this Roman wedding vow will be resumed?

Isabel Paterson's Political Philosophy (first attempt)

Lately, while eating lunch, I have been rereading portions of Isabel Paterson's The God of the Machine in hopes of reducing it to a few succinct talking points.  This is more difficult than I expected.  Below is my first attempt, which is much longer than I wanted, but I plan to take this narrative and reduce it further.  It may take some time, but succinctly articulating Paterson's political philosophy is a worthy endeavor.  This is my first attempt.  A better draft will follow.

I cannot claim that I fully understand Isabel Paterson's political philosophy, expressed in God of the Machine.  However, because she never expresses herself clearly or succinctly, this is my best attempt.  Regardless of its truthfulness, it is a useful system to contemplate in an era where government expansion is debated.  Although the book is frustratingly difficult to read, the intellectual challenge it poses makes it a delight.  Some things are worth the effort, and God of the Machine is among them.

1. Energy is used as a metaphor for economic wealth and social felicity throughout the book, and the nations that allow individuals economic freedom--largely embodied in the right to own, modify, and protect property--generate the most energy.
2. Greek democracy stood no chance for energy generation, because democracy without individual rights allows large groups to confiscate the property of others, thereby removing the individual's incentive to create energy.  "Democracy inevitably lapses into tyranny...With the Greeks, the hopeless instability of democracy allowed no security of the individual against the mass."  I caution the reader that she criticized only those democracies without strong individual rights.  She was not against American-style democracy, even if she disliked many aspects of it.
3. The great breakthrough in political structure emerged in Roman Empire, who required all Roman citizens to obey the same laws, and these laws provided extensive individual rights.  "Rome raised no exclusive barriers, and refrained from granting formal monopolies.  Roman law affirmed private property, and in the circumstances was bound to be most careful of the citizen; this tended toward individualism."  Although she praised Rome's construction of roads, bridges, and aqueducts, she did not frame this activity as an effective government providing valuable public goods.  Libertarians dislike the fact that public goods do exist, and the fact that sometimes governments can sometimes generate great wealth by investing in public goods.  In fact, like Ayn Rand, she denies that public goods exist, claiming the benefits of a good can only be experienced by individuals.  This, however, is semantics.  The communist champions the "collective good" because he believes it generates the most benefits for the individual within that collective.
4. From this legal structure, two manifestations of power are desirable.  One is the central power, referred to as the "mass-veto" and the other are regional bases.  It is from these two structures the U.S. devised the House and the Senate.
1. Mass-veto: Before the reformation the Catholic church (in those days, simply "the church") provided the mechanism by which the the masses could exert control over all of Christendom through the power of the Pope.  Would nobles have allowed serfs so many holidays if they were not religious holidays sanctioned by the Pope?  Do not underestimate the power of the Pope, especially in the Early and High Middle Ages.  The Holy Roman Emperor must be crowned by the Pope (or at least approved by the Pope...a tradition that began with Charlemagne), and when the Pope excommunicated Emperor Henry IV the Emperor performed penance by standing barefoot in the snow for two days next to a caste where the Pope took shelter.  When the Pope lost his influence the English replaced it with a more effective institution: the House of Commons.  Mrs. Paterson states, "...the secular government learned from the church how to fix a center, a problem which had been insoluble in the Roman Empire.  The authority (since defined as infallibility) of the Pope existed finally only in ecumenical council and within a prescribed sphere (of faith and morals).  So in the English form of secular government as it evolved, the authority of the king existed only in conjunction with Parliament and within the scope of law.  When Charles I failed to perceive this distinction, it was imparted to him with the edge of the axe."  It is this mass-veto--the manifestation of the entire kingdom's political influence through a single apparatus--that Isabel claims eliminated serfdom (in England).
2. Regional Bases--Western Europe was in constant flux of power, sometimes held by one autocrat, and sometimes by barons wealthier than the king.  Political intrigue was so interesting because there was this constant conflict between nobles and their kings, especially in England, where the Magna Carta spelled out this conflict explicitly.  Paterson asserts the presents of the regional bases held considerable value for the society because it provided a refuge for the oppressed, and thus limited the ability of one autocrat to suppress the energy of an entire nation. There would also be a competition among the various regional bases.  As each baron sought to acquire more wealth than other barons, there would be competition for which set of taxes and property rights generated the baron the greatest wealth.  To some extent this resulted in a baron bleeding his vassal's dry of wealth, and to some extent the baron must temper his level of taxation, less he discourage all economic activity.  Crosby supports Paterson's depiction of "regional bases" but carries it further to identify other sources of protection: "Western Europe was a warren of jurisdictions--kingdoms, dukedomes, baronies, bishoprics, communes, guilds, universities, and more--a compost of checks and balances."
5. What is unique about The God of the Machine is Paterson's reluctance to articulate specifically her political philosophy.  Instead she asserts herself through her wide grasp and keen understanding of history.  Perhaps it is wise not to spell-out one's political philosophy word-for-word, and with succinctness.  Anything written succinctly is an easy target for snarky criticism, because brevity precludes thorough justification.  What Paterson does do is narrate the history of American government, and why it is the closest thing to utopia humans will probably ever create.  This is my attempt to summarize her philosophy, reducing the aforementioned remarks to their essence.
1. The survival of a society is determined by its ability to produce and trade.  Social felicity is a human action, action which will only take place with the proper motivation.
2. Action is a decision made by humans, which takes place when the individual has economic freedom, including private property and protection from confiscation.  These are individual rights, not the rights of groups.
3. Economic freedom is best bestowed in a system of laws, where each person is subject to the same laws.
4. The universality of laws protecting individual rights is best created and preserved in a political system where power is decentralized, allowing the oppressed to take refuge from one group into the protection of another group, and where all individuals can ban together and veto the actions of any one group.
5. Thus we have the U.S., with a constitution protecting individual rights to property and equal rights, where all presidents serve with the consent of all citizens, and where power is shared not only between three branches of federal government, but state governments as well.

Paterson's reluctance to articulate her political philosophy is compensated for her willingness to address her exact beliefs on the U.S. republic.  In one of the best endings to a book I have ever seen, she states, "Whoever is fortunate enough to be an American citizen came into the greatest inheritance man has ever enjoyed. He has had the benefit of every heroic and intellectual effort men have made for many thousands of years, realized at last. If Americans should now turn back, submit again to slavery, it would be a betrayal so base the human race might better perish. The opportunity is equally great to justify the faith which animated that long travail, and bequeathed them such a noble and happy heritage."

I recommend God of the Machine to anyone who likes history and politics, and also encourage progressives to study it, as it doesn't take much tweaking of Paterson's theory to allow public goods, despite her resistance to anything called a "common good."

Sources:

Paterson, Isabel.  The God of the Machine.  1943.

Crosby, Alfred.  The Measure of Reality. 1997.

There is a book within each of us

I have read that 81% of Americans believe they have a book within them and should write it.

I have also read that 80% of Americans believe in a heaven, and that same percent believe in paranormal activity.

I see a connection, and that connection is an adroit, creative mind that is not satisfied with the world they see and the banality of everyday life.

Projecting Book Sales

If you are not an established author, to predict your book sales when publishing independently, count the number of friends and family who say they will purchase your book.  Multiply that by five, and that's about how many books you are expected to sell.

If you have a contract with a publisher, double that number.

That's what I've learned from the internet.  I half-way believe it.

How To Run An Ancient Government

When describing the Roman Republic, established after its monarchy was abandoned in 509 B.C., Anthony Everitt states, "The Roman constitution was the fruit of many compromises and developed into a complicated mix of laws and unwritten understandings.  Power was widely distributed and there were multiple sources of decision-making...the Roman constitution made it so easy to stop decisions from being made that it is rather surprising that anything at all got done.  The Romans realized that sometimes it might be necessary to override the constitution."


Sounds familiar.  When will our Caesar arrive?

It is interesting that, "Senators were prohibited by law from engaging in business."  


The most interesting feature of the Republic for me was that, "Modern governments employ many thousands of administrators who carry out their decisions.  This was not the case during the Roman Republic. There were no bureaucrats, apart from a few clerks who looked after the public treasury.  There was no police force, no public postal system, and no fire service, and there were no banks.  There was no public criminal prosecution or judicial service, and cases were brought by private citizens...The consuls brought in servants and slaves from their households, as well as personal friends, to help run the government."

Source: Augustus by Anthony Everitt.  2006.  Random House.  An absolutely super book, with a perfect brew of historical detail and engaging narrative.

From another source I saw how government changed when the power of Rome moved from the city of Rome to Constantinople (formerly, Byzantium).  Because there was no establish nobility with their own sources of wealth in Constantinople, people had to be paid to run the government.  In the Rome the nobility ran the government from their own funds.  Moreover, Rome had a system of values where civic duty was virtuous; Constantinople did not.  Hence, civic duty in the eastern empire was done for personal profit, and it was evident in the rampant corruption.


Source: Kenneth W. Harl.  World of Byzantium.  Lecture 3: State and Society.  2001.  The Teaching Company.

Jon Stewart on political polarization

The thing that I truly believe is that the overwhelming majority of the country is not this conflict-driven group of ideologues.  It just isn’t.  And that ultimately always wins out.  Because no matter what, the guy with the NRA bumper sticker and the Don’t Tread on Me flag is still going to pull over when he sees an accident and help out No Nukes guy, and vice-versa....So I’m always of the mindset that any asshole victory is short-lived.  It just is.  They lose.  Assholes lose.  They’re annoying.  They cause momentary hardships.  But they ultimately lose.  And that’s a good thing.
—Jon Stewart in the Rolling Stone magazine on September 29, 2011.

This not manifested in the media we watch, though. It is sad that Al Jazeera provides more intelligent, objective information than CNN, Fox News, MSNBC, Fox Business News, Headline News, and CNBC. In fact, Al Jazeera, PBS, and BBC are the only honorable sources of information available on television (perhaps I have neglected one though).

Equal Before The Law

In a previous post I remarked how all Roman citizens were largely considered equal before the law.  I recently stumbled across another story attesting to this claim.

The Roman Emperor Marcus Aurelius (ruling from 161 to 180 CE) was traveling on an Italian country road when a peasant woman approached, waving a petition and saying, "Emperor, hear my petition!"    When Emperor Aurelius replies that he does not have time, the peasant responds, "Then stop being Emperor!"

At that point, the Emperor stops and sits under a tree with the woman, because even though she was a peasant, she was also a Roman citizen.

Source:
Dr. Kenneth W. Harl
World of Byzantium
Lecture 1: Imperial Crisis and Reform
The Teaching Company

The Evolution of Language

So much of the human world seems beyond my comprehension.  Like language.  I just can't imagine language evolving to its current level of diversity and sophistication, but a recent video helped me understand.

See the picture below, referring to language from the Ancient city of Sumer.  The first two elements are pictograms: one for "head", one "food".  We eat by putting food into our head, so the symbol for "to eat" was created by combining the pictograms for "head" and "food".  Notice that while the "head" and "food" pictograms are explicit pictures of the object they represent, their combination denoting "to eat" does not seem like a picture at all, which is why it is a "character" instead of a "picture".

From this process, we arrive at a set of characters--an alphabet--that do not resemble anything but take specific meanings.  That, I can comprehend.

Kenneth W. Harl
Origins of Ancient Civilizations
L2: First Cities of Sumer
The Teaching Company

What would you say before your suicide?

My mother thinks that we are all spirits, and that we’ve all lived before, that it’s a dance, without end.  How terrible that would be!  To never have any rest, any peace—for it all to go on forever, and ever, and ever and ever and ever and ever.  That would be hell, Mary.  Wouldn’t that truly be hell?

—line by Archduke Rudolph (1858-1889), the crown prince of Austria, Hungary, and Bohemia in the movie The Crown Prince. Spoken shortly before his suicide pact with his mistress, Baroness Mary Vetsera.

A movie apparently based largely on fact, it is one of the most underrated movies I've encountered, and one I would never had found had it not been for a recommendation by Netflix.

The Majesty of Ancient Rome

After watching a documentary on Rome it occurred to me that Rome is the embodiment of a public good.  The roads connecting Rome and Brittany and the aqueducts keeping Rome wet likely provided benefits greater than their costs, and were projects that could only be constructed through the vision and strong-arm of the state.  Yet, a village could not accept the roads and refuse Rome itself, for that road brought Rome's tyranny a easily as it did grain.  The cost of public goods is larger than the monetary outlays for the actual goods, because the political apparatus that make public goods possible is also a platform for the autocrat.

Greek Stimulus (not what you think)

This may be the first record of a fiscal stimulus.  When describing the Corinth dictator Periander (625-585 BC), Will Durant states, "He solved a crisis of unemployment by undertaking great public works."
--The Story of Civilization.  Part II.  The Life of Greece.  V. Corinth.

I deceive myself because it makes me awesome

Maybe recent simulations (link 1, link 2) showing that self-delusion can be an advantage is not surprising.  There are empirical studies suggesting overconfidence in one's ability can improve performance.  This has been shown for swimmers.  Radiolab composed a stimulating podcast on the topic.

Inflated self-confidence is considered a virtue, so long as it doesn't border on arrogance, because it signals a person interested in self-improvement.  Because it is a virtue, people are consistently optimistic about the future, telling themselves and others about the person they wish they could be, not the person they are.

Perhaps it relates to what people seek in life.  I contend that in addition to striving for wealth and hedonistic happiness, people want their lives to constitute a riveting story.  A great (and handsome) man once said...


A poet might say the value of living 
is the power of your story. 
That a story can bestow the poorest of men 
with Earth's greatest glory. 
Life would seem so futile, 
if story after story would repeat. 
Conflict, injustice, with all its harms, 
ensures man's story is unique.

To believe one can accomplish the seemingly impossible, and then to actually do it, makes for a grandiose story.  Much more grandiose than a story about one who soberly assesses their likelihood of winning, claims they are unlikely to win, and by chance, wins.  This over-confidence, you see, ensures the unlikely victory is attributable to self-worth, not chance.  Moreover, if those who yearn for this story put forth greater effort, then self-delusion would be correlated with achievement.  It's just an idea...

Of course, we must be skeptical of the claim that self-delusion is correlated with achievement.  How many studies found the opposite and could find no outlet for publication?

Quantification and Society

I love the painting Temperance by Pieter Bruegel the Elder.  In the middle, I believe, is Temperance herself: spectacles in one hand (sagacity); a snake as a belt (evil under restraint), a bit in her mouth with its reins in her other hand (self-restraint).  In the precise middle is the quintessential quantification of life itself: a clock.

For a short yet insightful guide to the rest of the painting, I recommend Alfred Crosby's The Measure of Reality: Quantification and Western Society, 1250-1600.

Temperance by Pieter Bruegel the Elder

Wonder-Twin Powers: Activate

Have you noticed that horror movies often feature evil twins, usually twin girls?

It turns out that before the twentieth century people really believed twin children could perform magic, from making it rain to harming those they hate.

Wall Street Journal.  September 14, 2011.  A15.  Cites The Golden Bough: A Study in Magic and Religion (1890) by anthropologist James George Frazer.

Law and Order: Anglo-Saxon Unit

The Anglo-Saxon system of law and order (England: around 800 AD) may have been written in law but it was not arbitrary.  If one man charged another with an injustice the case was settled by counting who had the largest number of witnesses testifying on their behalf.  The math was not a simple sum though.  If you had thousands of peasants testifying on your behalf, it would be negated by the testimony of a single thane (nobleman).  If you had a thousand thanes' testimonies, they would be negated by one earldorman's testimony.

Moreover, the punishment for wounding or killing another without due cause was not arbitrary.  Each life, and each limb, had a invariable value known by everyone of the same class.  And of course, a thane's hand is valued greater than a peasant's, and an earldorman's life is worth more than a thane's.

Economists who study the value of a life might wish to revisit these values, for curiosity, at a minimum.

From Sarum: A Novel of England by Edward Rutherfurd.  It may be a fiction, but the history is truthful.

Item related to origin of law and contract society

Excellent item related to previous post.

Forthcoming in American Economic Review

The Consequences of Radical Reform:
The French Revolution
By Daron Acemoglu, Davide Cantoni, Simon Johnson, and James A.
Robinson
The French Revolution had a momentous impact on neighboring
countries. It removed the legal and economic barriers protecting
oligarchies, established the principle of equality before the law, and
prepared economies for the new industrial opportunities of the second
half of the 19th century. We present within-Germany evidence
on the long-run implications of these institutional reforms. Occupied
areas appear to have experienced more rapid urbanization
growth, especially after 1850. A two-stage least squares strategy
provides evidence consistent with the hypothesis that the reforms
instigated by the French had a positive impact on growth.

The Evolution of Contract Society

Modern societies pride itself on making all citizens equal before law.  What is the historical evolution of written law?

When describing political leaders of Achaean during the Heroic Age of Greece (think 1200 B.C.), Durant states, "His degrees are the laws, and his decisions are final; there is as yet no word for law."
Will Durant.  The Story of Civilization.  Part II.  The Life of Greece.  The Heroic Age.

Of course, without law, there can be no contract society.  Men are at the mercy of arbitrary power.  The Greeks may have discovered many things, but political wisdom was still nascent when the Iliad was written.

Although in hindsight Rome was no gentle creature, it was in Rome's political structure where contract society began.  The Christian apostle Paul was once taken into custody during a riot, and as the guards were about to beat him, Paul asserted, "Is it lawful for you to scourge a man that is a Roman, and uncondemned?"  It was not lawful, and Pual's appeal to law immediately halted the guards.  Paul was then  brought before the governor, Porcius Festus, who tried to convince Paul to submit himself to Jewish law, but all Paul had to do was say, "I appeal unto Caesar."  The response from Festus was, "Has thou appealed unto Caesar?  Unto Caesar shalt though go."

Isabel Paterson tells this story of Paul to make the following assertion, "The crux of the affair is that a poor street preacher, of the working class, under arrest, and with enemies in high places, had only to claim his civil rights and none could deny him...The value of the idea of law in its primary use of framing legislation is clear.  It sets moral sanctions above force, while recognizing human fallibility."
Isabel Paterson.  The God of the Machine.  Chapter 3.

Although it would undergo much transformation, this concept of equality before law was essential to providing the modern, liberal democracies where the fortunate of the world currently reside.

Purple is for Power

The color purple is universally associated with power.  Roman emperors wore purple, and both kings and the Catholic church wrapped itself in a purple facade.  To mock Jesus, the Romans made him wear a purple robe when they arrested him, as Jesus had referred to heaven as "his kingdom".

Why?  Not surprisingly, because it was rare.  In antiquity, purple dye was obtain by salting a Mediterranean mollusk referred to as murex, and even if the mollusk was free the dye could be difficult to extract.  Because of this, Julius Ceasar did the logical thing: forbade anyone except his household wear purple-trimmed togas.  And if Caesar did it, then anyone with power should do likewise.

And let him drink from a jeweled cup and sleep on Sarran purple
Virgil, first century B.C.

Source: Kurlansky, Mark.  Salt: A World History.

China and Ayn Rand's Train

In the Sept 3 edition of The Economist, they talk about the recent train crash in China, remarking...

The crash was an embarrassment; a reminder that China's state-directed rush to modernise has involved cut corners, shoddy safety standards, and a staggering amount of corruption.  That contradicted the official storyline, in which China has become the world's second-largest economy thanks to the Communist Party's wise guidance.

The article is a useful reminder that greed and corruption are present in all facets of life, including both the private and the public sector.

I wonder, has anyone remarked on the similarity of this train wreck to the train wreck in Atlas Shrugged?  Not just the carnage, but the cause of the wreck?

Never believe academic research (half the time)

It turns out that the pharmaceutical industry's rule of thumb is that 50% of academic research findings cannot be replicated in seemingly identical experiments.  Seems about right.

If "academic research" included all the articles that were not published, many times because the results were not 'interesting', would this percentage rise?

Pillage and murder is okay, but not the earning of profits

Odysseus is insulted when he is asked is he a merchant, “mindful of the gains of his greed”; but he tells with pride how, on his return from Troy, his provisions having run low, he sacked the city of Ismarus and stored his ships with food; or how he ascended the river Aegyptus “to pillage the splendid fields, to carry off the women and little children, and to kill the men.”
—Will Durant.  The Story of Civilization Part II: The Life of Greece.  Chapter 3: The Heroic Age.  1939.

Nuts to St. Francis

In a previous post I remarked upon the Medieval culture where planning for the future contradicted [St. Francis' interpretation] of the Christian gospels.  If St. Francis is correct, then Jesus and his animal loving saint ask humans to disregard the mental tool which separates us from the animals (including the birds which Jesus noted do not sow or store grain).  Consider this narrative from a recent Scientific American Mind article:

...humans, perhaps uniquely, can generate mental models of our circumstances that enable us to anticipate future changes and concoct coping strategies.  We use our working memory to hold mental representations of situations.  We can envision a fantasized scenario and compare this image with a model of our current state.  By doing so, we can simulate strategies to reduce the difference between where we are and where we want to wind up in the future, giving us a key evolutionary advantage.  We might mentally rehearse ways to out-compete others, for instance, for a mate or a job promotion.  The combination of consciousness, self-awareness, and explicit problem solving is what enables us to learn things not relevant to our evolutionary past.

—David C. Geary in Scientific American Mind. "Primal Brain in the Modern Classroom." September/October, 2011. Pages 45-49.

Note: for modern-day Christians, there is an out.  In this parable (Matthew 6:31-33), Jesus said to seek his kingdom first, and your biological needs would then be met.  Hence, as long as you place god above the mundane chore of planning, you may be okay.

What I look for in a fiction

When I read a novel I am looking for one of two themes:  an underdog who perseveres in demanding that the universe acknowledge his existence, or the universe redeeming itself after an embarrasing neglect of humankind.
—F. Bailey Norwood 

On McDonald's Happy Meal

Who has the responsibility of making sure kids eat well? Sometimes we say the parents, sometimes we say everyone. Should Joe Johnston feel impelled to apologize for creating something parents voluntary decide to give their children?

Kids didn’t like McDonald’s hamburgers at the time, so we wrapped burgers and fries in decorated boxes in the shapes of trains and alphabet blocks.  Then we put them together in white sacks with games and puzzles printed on the sides.
—Joe Johnston, discussing his work in the advertising industry creating the ‘Fun Meal’, to which McDonald’s later added a toy and renamed it the ‘Happy Meal’.  The Daily O’Collegian.  September 8, 2011.  Page 3.

I deeply apologize.
—Joe Johnston commenting on his role creating the McDonald’s happy meal.  The Daily O’Collegian.  September 8, 2011. Page 3.

Merchants of Christ and the Sin of Planning

There are a number of artifacts of Medieval culture which discourage the formation of wealth.  One of these is the disdain for economic planning, the aversion to a merchant's life.

The Medieval world is typically parsed into three groups: those who work (peasants), those who pray (clergy), and those who fight (nobles).  What about the merchants?  They were a small group, but that is not the whole reason for their exclusion.  Merchants were thought to lead sinful lives.  Merchants were only tolerated because they were necessary.  What is sinful about a merchant's life?

Planning. Constant concern for profits.  Constant tinkering with numbers to plan for the future.  Making sure there was enough inventory.  Haggling over price to ensure a profit.  The fact that every transaction required them to project their entire future and make sure the current transaction resulted in a desirable outcome.  It was the merchant who valued arithmetic the most, and they valued it not for it revealed about god's order, but for the practical utility of running a business.  Everyone planned, of course, but not like the merchants.

But what about economic planning is sinful?  I'll let Jesus explain.
So do not worry, saying, 'What shall we eat?' or 'What shall we drink?' For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first his kingdom and his righteousness, and all these things will be given to you as well.  Therefore do not worry about tomorrow, for tomorrow will worry about itself.  Each day has enough trouble of its own (Matthew 6:31-33).

Do you see?  "...do not worry about tomorrow...".  In a world where it is sinful to plan, and where wealth requires planning, to follow Jesus is to become the pauper.  But that is exactly what St. Francis of Assisi preached: to be poor is to be heavenly!  Who followed Jesus more closely than the Franciscans?

It is worth noting that, although most of the Medieval world believe the merchant and town life to be sinful, no clergy gave the merchants more attention than the Franciscans.  Most monasteries were deliberately located in the country, in order to avoid the defiling nature of town life.  But it was the towns where the Franciscans headed, and for the first time a clergy was present to tend to the merchants spiritual needs.  It is even said that, in confession, merchants would haggle over the penance they must pay!

It was for these reasons that the Franciscans (and I think St. Francis himself) called themselves merchants of Christ.


Dr. Philip Daileader
Lecture 10: Francis of Assisi and the Franciscan Movement.
The High Middle Ages
The Teaching Company.

Movie of Leonardo Fibonacci

If my previous post on the medieval mathematician and merchant Leonardo Fibonacci interested you, seek the movie Anthony: Warrior of God.  The plot also involves the monk Anthony, a follower of St. Francis of Assisi (see subsequent post). I think much of the movie is based on actual events.  Though spoken in Italian, English subtitles are available.  I recommend it.  Hard to find anywhere except Netflix.

Cause of the Great Recession (1998-?) and Importance of the Histogram

The Great Recession was caused by a bad histogram.  That is what I tell my students in my data analysis class.  All financial institutions create histograms showing their projected profits/losses, along with the probability of a particular profit or loss.  To determine how much collateral they should hold in case the unlikely chance of a large loss occurs, they look at the first bars on the histogram.  If it says there is a 5% change of losing $1 million or more, they may decide to hold $1 million of collateral.

But their histograms were faulty.  Consider one reason why.  AIG had insured lots of mortgages, without really looking at what mortgages they insured.  When the insurance policy was granted (what they call a CDO), they thought sub-prime loans (the risky loans) comprised 10% of the loans they insured, when in reality it comprised 85%!  Their histogram of projected profits was bad, because they didn't investigate what they insured well.  See page 201 of All The Devils Are Here.

Now, as to why they didn't investigate the mortgages better, I have no good answer.

Origin of "noon" from Medieval Ages

In John 9, Jesus says, "Are there not twelve hours in the day?"  He was implying there were also 12 hours at night.  So, what comes between the twelfth hour and the first hour?  Nothing, or none, and that is where noon comes from.  In the Middle Ages, people disagreed on exactly when "noon" was, and it was often what we would call 3 PM (an hour could be more or less than 60 minutes; it had to be, if there is to be twelve hours of daylight in winter and summer).

From Alfred W. Crosby's The Measure of Reality: Quantification and Western Society, 1250-1600

Huey Long: Destined for Dictatorship

Here is my challenge.  Watch Ken Burn's documentary on populist Huey Long, and then ask yourself: if he had not been assassinated, and if WWII had not ended the Great Depression, what is the likelihood Mr. Long would have been America's first dictator?

The First Monotheist...

was Akhenaten, an Egyptian Pharaoh who died around 1334 B.C.  He asserted that the many gods Egypt worshiped did not exist--only Aten, the disk of the sun, was real.  That is what Akhenaten claimed, long before Zoroastrianism, long before Abraham.

Great Pharaohs of Ancient Egypt
Lecture 4--Akhaneten
Professor Bob Brier
The Teaching Company

The Religion of Keynesism

For over eighty years economists have studied the ideas of John Maynard Keynes, an economist who advocating government spending to counter recessions.  We have tried an enormous variety of models demonstrating how and when Keynesism would work, but the models seem absurd.  Only if prices never change and people hoard money for no justifiable reason would Keynesism work.  We have purged data from economies near and far, current and historical, but we cannot find evidence that a dollar spent by government generates more than a dollar in overall wealth (see the work of Robert Barro).

There are some instances when government spending might increase overall wealth, but the point is that identifying when those instances would occur has been a daunting task.

After all this--considering all this--a smart and eloquent James Suroweicki writes a The New Yorker editoral on the obvious truth and sanctity of Keynesism (9/5/11, p 24), ridiculing the European Union for not going on a spending spree.  Not only does he call the European Union stupid, he calls them predictably stupid.  Where can one gather such hubris to set oneself on a pedestal above all Europeans and most economists?  Especially from one who wrote The Wisdom of the Crowds! (A superb book, by the way.)

I think I know the answer.  I have come to know what sells in print and what editor believe sells in print.  It is my hypothesis that Mr. Suroweicki does not wish to sound so arrogant, but that is what readers want, and thus that is what editors want.  To sell, one must develop an enemy, attach them with intellectual fierceness, and make it seem that when the last period is typed the issue is settled for any smart reader.  Moreover, one must tell the reader what they want to hear.  From this we get Ann Coulter, and Michael Moore.

This is why, when I read books I know have earned profits, I no longer see the words as thoughts of an author, but the latent desires of the masses of readers and the steward: the editor.

Origin of the word salary

At times, soldiers were even paid in salt, which was the origin of the word salary and the expression worth his salt or earning his salt.
--Mark Kurlansky in Salt: A World History

The Tragedy of Russia

Thus, after centuries of tsarist rule, and after its February and October revolutions, Russia enjoyed its one and only day of democracy.
—Edward Rutherfurd in Russka: A Novel of Russia (note: Russka was written before 1991

Tragedies of Central Planning

Procopy had assumed that, just as the villagers in Russia can build a house in a day, so, with a strong leader and a titanic effort, a new order can be imposed from above.  This belief is the perennial tragedy of Russia.
—Edward Rutherfurd in Russka: A Novel of Russia

Medieval Merchants, Ideas, and Economic Growth

Economists know that a nation's resources have little impact on their wealth. Instead, wealth is derived in the mind's of men.  Specifically, in their human capital: what they know, what they can imagine, what they can record, and their culture of entrepreneurship.

Consider Fibonacci, who taught 13th century Italian merchants how to employ math for mundane business, thereby allowing the merchants to keep track of inventories, balance their accounts, and trade in volumes never before.  Imagine using Roman numerals in accounting for large shipments of imports and exports.  Trade becomes cheaper, and business more efficient.

Consider the world today, where number-crunching is conducted on such a vast scale we must employ computers to aid us.  What Fibonacci gave the world in the 13th century is what computers give us today.

Reference:  Science Friday.  NPR.  August 12, 2011.

Ancient Chinese Thought on Government

On the one side were Confucians, inspired by Mencius, who, when asked how a state should raise profits, replied, “Why must Your Majesty use the word profit?  All I am concerned with are the good and the right.  If Your Majesty says, ‘How can I profit my state?’ your officials will say, ‘How can I profit my family?’ and officers and common people will say, ‘How can I profit myself?’  Once superiors and inferiors are competing for profit, the state will be in danger.
—Mark Kurlansky in Salt: A World History.