Seeds

Roots of Intelligence

2012-01-11T04:58:00.001-08:00

According to a recent National Geographic article on twins, 75% of your intelligence is derived from your genes.

Eugenics is considered immoral today, even though there more evidence than ever before that the science behind eugenics is correct. It says many good things about society today that, even with today's scientific knowledge on the role of genes, we still believe it to be immoral.

Here UBS a quote about the importance of twin studies.

"
We forget that 50 years ago things like alcoholism and heart disease were thought to be caused entirely by lifestyle. Schizophrenia was thought to be due to poor mothering. Twin studies have allowed us to be more reflective about what people are born with and what's caused by experience."

Seeds will go dormant

2012-01-10T04:01:00.000-08:00

Seeds are known for their ability to go dormant. Due to a heavy teaching load this semester and several other commitments, this blog will go dormant until the end of the spring semester.

Roman Senators

2012-01-10T03:59:00.000-08:00

I was shocked recently to learn that in ancient Rome, Senators had no legislative powers, and could only issue advisory statements. This advice would end up having profound influence over the legislation that was passed, but the Senators could only pass legislation indirectly through popular assemblies. Who would have thought?

This I learned in two lectures about how the Roman Republic worked (before the revolution) and I was further fascinated to learn we really don't know how it worked--not everything, at least. From this I concluded that Isabel Paterson's chapter in God of the Machine about how Rome established equal law for all probably didn't reflect the truth about Roman government, though I do not fault Paterson because figuring out exactly how Rome operated is a daunting task.

First Day of Class: My speech about the bounty of commerce

2012-01-09T06:57:00.000-08:00

This is the brief speech I will give in the first lecture of my Introduction to Agricultural Economics course, in an attempt to convince students that economics is important.

Our time is the very best time to be alive. No one in our generation should want to trade places with someone from the past. Moreover, this new world we have created—I stress created, because this was not manna from heaven—has only been around 50-200 years, although man has existed for maybe 200,000 years. We have better food, more freedom, live longer, and experience less violence than our ancestors.

How did we achieve this world of freedom and plenty? You probably answer: technological innovation— accumulation of knowledge and how to put it to use—and you are partly right, but in the past we were more eager to use technology for the purposes of war than for the enhancement of people's lives.

Something of greater importance has changed: our culture. To be specific, we have become a culture of commerce. Eager to sell and trade with other people using money, we believe that engaging in private business for personal profit is a dignified pursuit, so long as you do it honestly and fairly. Moreover, we are respected when we learn how to create new, better products, and the word entrepreneur is perceived positively when heard. Even China, an ostensibly communist country, has realized it will only acquire the wealth of America and Western Europe by allowing—even promoting—commerce.

This is a relatively new culture. Throughout history, business was seen as an undignified activity, even immoral. Ancient China ranked merchants as the lowest social class, even below peasants. As the Industrial Revolution began and business owners began acquiring significant wealth, for the first time there was a class of people more powerful than the nobility. This bothered many of the nobility, because they believed one could only gain wealth by taking wealth from others—life was seen as a zero-sum game. If you look at historical cultures—Medieval monarchs, Ottoman Empire, Roman Empire, Sparta, Babylon—the only way they knew how to acquire wealth was to use their armies to conquer others and confiscate their land and wealth. The rise of business then meant their wealth was being stolen, from the noble's point-of-view.

That was not the case though, because commerce is a positive-sum game where everyone can acquire greater wealth. We know that commerce is a positive-sum game because [voluntary] trade is a positive-sum experience. You benefit immensely from belonging to a society that trades among itself. Think of all the things you consume in a day: housing, food, ipods, television, movies, cars, beer, beer, beer, ... Now, think of how long it would take you to produce these items all by yourself, if you lived in isolation where everything you consumed you had to produce yourself. That is a world without trade. Even if you possessed all the books in the world, giving you the knowledge to produce all these things, you could not possibly produce even 10% of it in your lifetime. Virtually everything you consume is available to you because of trade with others. Don't believe me? Try living like Robinson Crusoe for a while. You'll eventually agree.

Making an honest profit is a good thing. One can only make more money (legally) by selling a higher quality and/or lower priced product than your competitors. Because of this, every year we get the same products at a lower price, because businesses like Wal-Mart replaces less efficient stores. See the video below to observe the proliferation of Wal-Mart across the U.S, and note these stores multiplied because consumers wanted Wal-Mart to come to their town.

Likewise, every year the goods we consume are of higher quality. Consider this picture, showing two hard drives of equal storage capacity. A huge one from 1956 and a tiny one from today. Computers become faster and have greater memory every year because product improvement is the only way a computer company can stay in business.

Let's not forget that commerce also leads to the creation of new products, like smart-phones.

Don't let anyone tell you we should not allow progress from commerce because some businesses go broke in the process. The people who used to make horse carriages went broke. The firms that made typewriters went broke. We don't want to travel by horse and cart, nor do we want to write papers on typewriters. These firms went out-of-business for a good reason, and they eventually found something else to do. To create our new world some things had to be destroyed, and this is a price we are eager to pay.

Not every country has adopted the institution of commerce. North Korea believes a feminine-looking man can direct the millions of North Korean citizens better than the laws of commerce. Observe the consequence of North Korea's government in the left graph. This picture shows the night-time sky of three countries. At the bottom is South Korea, who adopted an American-style system of democracy and commerce. In the middle is North Korea, and at the very top is Russia who has lately become more open than North Korea to commerce.

Where are lights in North Korea? Only one? Yes, because wealth comes from commerce. No commerce, no wealth, no lights. Can you imagine a better illustration of the triumph of commerce?

North and South Korea were not always so different. After World War II Korea was split into two separate countries, with South Korea ruled by the U.S. and given the opportunity to develop commerce and democracy. North Korea was pulled into communism, where those who participate in profit-making are deemed criminals. Observe in the graph below how South Korea pulled away from its northern brother. Commerce is a blessing, and North Korea was not blessed.

This is our world, our beautiful, prosperous world. We must understand it to preserve it. What is this world, exactly? Roughly, it is one-third government and two-thirds commerce. Consequently, that is the composition of this course: two-thirds about the world of commerce, and one-third how government policy interacts with commerce, and the consequence of all of this on our lives and the lives.

Finally, we must understand economics because other people understand it, and we must not only communicate with them but earn their respect by our knowledge. Below are two videos showing how an economics degree can be valuable: to exert authority over others in debate, and to get jokes said on TV.

Quotes Related to Valuation

2012-01-06T14:34:00.001-08:00

But these surveys were ultimately slapdash and speculative. Businesses were recognising the limits of quantitative studies (dismissively described as “nose counting”), which offered little genuine insight into how customers behaved. Asking shoppers why they bought particular products was like “asking people why they thought they were neurotic,” quipped Dichter.
—The Economist. Retail Therapy: How Ernest Dichtre, an acolyte of Sigmund Freud, revolutionised marketing. December 17, 2011. Begins page 119.

In fact, he believed, most people have no idea why they buy things. They might answer questions in an effort to be helpful (particularly in the early 20th century, when consumers were chuffed to be asked to share their thoughts). But these were attempts to make sense of decisions retrospectively. To understand what truly motivated people, Dichter said, it was necessary to get them to talk at length about their everyday habits. Instead of subjecting many people to quick questionnaires, he preferred a deep, psychoanalytical approach with fewer participants: “If you let somebody talk long enough, you can read between the lines to find out what he really means.”
—The Economist. Retail Therapy: How Ernest Dichtre, an acolyte of Sigmund Freud, revolutionised marketing. December 17, 2011. Begins page 119.

Why scholars are always talking about Rome

2012-01-06T13:43:00.000-08:00

There can surely be nobody so petty or so apathetic in his outlook that he has no desire to discover by what means, and under what system of government, the Romans succeeded in less than 53 years, in bringing under their rule almost the whole of the inhabited world—an achievement which without parallel in human history.
—Polybius (220-118 BC). The Rise of the Roman Empire.

In his Great Courses lectures, when remarking on explanations modern authors have given towards Rome's success, Garrett Fagan makes the insightful observation than modern author's explanations say as much about the authors themselves as they do Rome, especially the age in which the author lived. For example, authors today are not likely to sympathize with Rome's expansions and conquests like British authors in the Victorian Era.

Trailer Park Boys

2012-01-05T09:36:00.000-08:00

Available streaming on Netflix, the Trailer Park Boys should be checked out by any male with a decent sense of humor.

Love at Goon Park by Deborah Blum

2012-01-04T02:51:00.001-08:00

What a beautiful story about the psychologist Harry Harlow, who by prestigious research forced recalcitrant psychologists to recognize the biological importance of love and social connections (connections which we now know are the best predictor of your happiness in life).

What a great movie could be based on this movie (something like Kinsey)!

From this book I have concluded that
Harlow did more positive deeds for the animal welfare movement than negative, and all accounts of Harlow by animal advocacy authors were poorly researched (unless my memory is in error)

A great book for behavioral economists to read.

Money Means Power...and red lights suck!

2012-01-03T15:25:00.001-08:00

Do u think the rich can use their money to acquire a power such that they "play by different rules" than regular folk? In the 1930's they certainly could.

Jesse Livermore was an immensely rich speculator during the 1920's. When he left work at 8:07 AM--keep in mind police managed stoplights by hand back then--the policemen watched for his car and made sure the lights were green when he passed. On his own turf, the man never had to stop for a red light!

Those r different rules!

Source: American Experience: The Crash Of 1929. PBS. About 11 minutes.

Help for the poor and bad incentives

2012-01-03T07:22:00.001-08:00

Over Christmas I learned I have a relative who is on food stamps and Medicaid. She is a single mother who could work part-time, but if she did she would lose her food stamps and Medicaid. So when the kids are at school she stays home and watches TV instead of working.

Graduate students should read more books...

2012-01-02T05:28:00.001-08:00

...and less journal articles. I say that because I read more books than journal articles, and my work on university committees has taught me curricular should be designed to make students a mirror of yourself!

If I taught a grad course in finance, I would definitely assign Neil Ferguson's "The Ascent Of Money."

Economic Harmonies by Bastiat

2011-12-31T16:52:00.001-08:00

I am beginning to think the Libertarian philosophy contrasting the coercive nature of the state with the voluntary, mutually beneficial associations inherent in free-market [crony-free ] capitalism began with Bastiat's Economic Harmonies. Everything that I once thought was original with Ayn Rand is there, in a more bright and crisp form--with a more affable demeanor, though with equal persuasive power.

Note: When reading Bastiat you must remember externalities were not an issue in his time, and the reader must guess how he would write today.

If Paul Krugman is wrong...

2011-12-31T12:09:00.001-08:00

If u believe that Paul Krugman's is always wrong, and u can devise what u believe to be credible rebuttals to all of his arguments, are u thinking, or reacting? And if u r a researcher, is your job to react or think?

P.S. U may replace "Paul Krugman" with "Milton Friedman" if u like.

Why Mercantilism bothered Adam Smith

2011-12-29T05:07:00.001-08:00

...one reason which I think is particularly interesting is that the rulers only cared about the types of trades that brought gold / silver money into Britain. Trade within Britain did not meet this criterion, though it was this trade that impacted people's lives the most.

In Wealth of Nations (Book IV, Chapter 1), he laments this fact.
Either its rulers did not understand the major sources of wealth for the regular person or they didn't care. Either way, it is unfortunate, but at least it motivated Smith to write one of the most influential books in history.

If I was a military historian...

2011-12-28T10:38:00.001-08:00

I would write a book about navies quickly built from scratch and proved victorious.

(1) Rome in the Punic Wars, who went from no navy to a navy that defeated the Phonecians / Carthage to become the superpower of the Mediterranean.

(2) Agrippa who built ships in a lake, practiced in seclusion, and then dug a canal to carry the ships to sea, ensuring one victory among several to transform a lad named Octavius into an emperor named Augustus.

(3) Peter the Great, who drug a reluctant nation into the Baltic--a nation with no navy nor desire for a navy--to take land from Sweden that would soon become Saint Petersburg.

Some of my details may be off, as I write from memory. I'm sure there are other similar stories I haven't read about.

What a book that would be!

In case my appraisal matters...

2011-12-28T10:27:00.001-08:00

I am promoting Jonathan Haidt's "The Happiness Hypothesis" to the #1 most influential book in my life.

Nations run like businesses

2011-12-24T10:53:00.001-08:00

Someone should write an economic histrory book about the Phonecians / Carthage and Britain's East India Tea Company, illustrating the similarities of the two entities--both were operated giving business profits priority over everything--and what it meant for their citizens and neighbors.

One might even suggest the U.S. is run similarly, though I don't believe that to be true.

And they should thank me for the idea in the preface.

No one is really religious anymore

2011-12-24T06:44:00.001-08:00

Why? This is what I observe.

(1) I have read a number of books by the Dalai Lama, and have concluded that he does not believe anything about his religion other than the personal, psychological benefit it
can provide.

(2) There are Christian churches in the U.S. allowing Muslims to use their Christian churches for Islamic worship. That is admirable, I believe, but you can't tell me those people really believe their religious texts. All gods are jealous gods.

(3) When contemporary Americans justify their religious beliefs, they always tout how religion makes them a better person, but they never say it is because they actually believe the words of the Bible. They never say it is because they believe in the holy trinity , heaven and hell, angels, holy sacrament, the resurrection, the story of Job, ...

(4) Everywhere religions are becoming more and more tolerant of other religions, even though it is arguably impossible to do so while staying true to scripture.

For these reasons, religion in modern countries share two trends. First, they distance themselves from much of their holy scriptures, instead believing all religions to be different paths to a similar sacredness. Second, this secularization occurs while reserving a belief in a sacred something that gives people a psychological benefit.

For these reasons, I don't think anyone really understands the role of religion in modern societies (the philosopher Daniel Dennett has made the best attempt thus far), but whatever its role, it promotes a social harmony like it has never done before, such that Humanists must resign themselves to [largely] attacking its historical role and its role in developing countries.

My collection of quotes is better than yours

2011-12-22T09:47:00.001-08:00

https://docs.google.com/document/pub?id=1SGCdDvsXu72865cCWbF3HHoBeQopPMdplMI-Hb6NwlI

Take that, Department of Applied Economics

2011-12-22T09:35:00.001-08:00

There does not exist a category of science to which one can give the name applied science. There are sciences and the applications of science, bound together as the fruit of the tree which bears it.
—Louis Pasteur

Economic Models and Inequality

2011-12-21T14:03:00.000-08:00

Can any economist imagine a model of the economy where 1% of people earn 16% of the aggregate income and own 35% of its wealth? What would that model have to assume about individual intelligence, the nature of politics, economies of scale in management, signaling, and the like?
I can form explanations, but if we started with an economy where 1% of people owned 3% of the wealth and I was then asked what would have to change for 1% to own 35%, I would probably reply that it is inconceivable, and no reasonable model would predict such an outcome.

Quote on Rent-Seeking and Corporate Tax Rates

2011-12-21T13:57:00.000-08:00

We have a situation where we in essence invite corporations to buy their own tax rate, where they spend money on lobbying and they get their special deals, rather than just having one consistently applied competitive tax rate where everybody gets the same deal.
—Roquel Alexander from the University of Kansas, interviewed on Planet Money podcast (Jack Abramoff on Lobbying; December 20, 2011).

Should Student Loans Be Forgiven?

2011-12-21T10:56:00.000-08:00

A recent Intelligence Squared debate concerned the notion: Do too many people go to college? The debate mentioned how student loans are not forgiven, so if a student accrues $100,000 in student loans and goes bankrupt he still must pay back the loans.
I understand why. Default on a house, and the bank can at least take ownership of the house and sell it. Go bankrupt with student loans and there is nothing for the government to take and sell. There is no collateral, of sorts.
What if, out of empathy for struggling college graduates, we began forgiving student loan debt if individuals go bankrupt? Would this help students?
Some, but not others. Because debt can be forgiven the profitability of the loans (at the old interest rate) wanes. With banks / governments less interested in making loans, interest rates will rise to compensate for the greater default risk. Otherwise there will be an excess demand for loans (which in could be addressed by restricting loans to only the best students, but that may not be politically feasible, and I assume it is not). Now, instead of punishing the students who cannot translate a degree into a decent salary, you are punishing everyone who takes student loans by making everyone pay a higher interest rate.
Are the banks / governments better off? On the one hand, they get a higher interest rate. On the other hand, some people default and never pay back their loans.

Debt-Bondage, Ancient Rome, and the Incentives of Lenders and Borrowers

2011-12-21T10:49:00.000-08:00

Debt-Bondage: the archaic system of ensuring cheap labor for the landowning gentry. In return for subsistence, poorer citizens became indentured servants of the landowners. One of the main issues that generated the Struggle of the Orders.

Most people would object to the idea of debt-bondage, where the poor would initially take loans to avoid starvation during bad times, and when they were unable to repay the loan (the nobles might make it hard to repay) they became something of a slave to the lender. Ask most people whether debt-bondage should have been banned, and they would have said yes.
Just like people say there should be minimum wages, and price controls, and paid maternity leave, and regulated payday loans...
Their wish would be granted in 320-330 BC, when Roman conquest brought in slaves from new territories, making nobles less reliant on debt-bondage as a form of cheap labor. Did the peasant who would have normally gone into debt-bondage benefit from this? Maybe. Maybe not. Now it may have been harder for peasants to get loans. In the past landowners would have lowered their interest rates in hopes the peasant would take a loan, some of which would default and earn them slaves. Now they will charge higher rates because they are in less need of slaves. Moreover, when peasants needed the noble's help to avoid starvation, now that they had to compete against imported slaves, the peasants may have simply starved, as the noble was unwilling to loan them money for food.
The situation is similar to immigrants into the U.S. Unskilled labor may be harmed, as the supply of unskilled labor is now higher, pushing wages down. Conversely, the income generated from immigrant labor may increase the demand for other more pleasant jobs, allowing unskilled labor access to better employment.
Economics rarely provides certainty or easy answers, which is one reason I respect it.

Catherine the Great Convenes Her Empire

2011-12-21T10:14:00.000-08:00

In 1766 Catherine the Great called on representatives from "all free estates of the realm" to convene so that they could review the current laws and suggest news laws which would enhance the empire. Even free peasants sent representatives. Russians were so impressed with her desire to rule with care and humanity that they offered to add "the Great" to her name. She declined, saying she had not yet earned that title.
It may not be surprising that the 564 delegates got little accomplished (besides flattering their Tsaress). What I think is interesting is that the bond between the peasant and the monarch, seen so often in history (see here, and here, and here), expresses itself.

The discussions in St. Petersburg were providing even more unproductive and divisive than those in Moscow. The commission continued to stumble along, burdened by procedure, by conflicts of class, and by the generally impossible nature of the task...Many peasant delegates simply transferred their limited rights to speak to nobleman from their districts. The few free peasants who did speak concentrated on grasping their chance to lay their complaints before the empress herself. Catherine, listening as they jumbled together every abuse, burden, and future fear, realized how far they were—and how far she was not—from Montesquieu. By the autumn of 1768, still without seeing any concrete results, the empress was tired. The commission had dragged on for eighteen months through more than two hundred sessions and not one new law had been written.
—Robert K. Massie. 2011. Catherine the Great: Portrait of a Women. Page 360. Random House, NY, NY.

By the way, it is a fantastic book. Robert K. Massie is my favorite biographer, whose biography of Peter the Great is even better.

Context-Dependent Preferences in Birds

2011-12-21T09:58:00.000-08:00

This study illustrates how "irrational preferences" may form in birds, and supports a view I have found present in most economists, though not often seen in print. This view is that the brain did not evolve nor does it gather information to perform well on one particular choice or experiment, but to perform well in all of life.
When you consider any one specific choice, especially if that choice opportunity is unusual and novel, both birds and people may seem to make irrational preferences, in that they pay attention to contextual clues which are irrelevant to the actual choice. For example, you may express a higher value for wine in an experiment if you are randomly assigned an ID number that takes a high value. Birds may respond to signals from a research that were relevant in another, similar choice opportunity, but not the present one.
The researchers found that even though the birds relied to heavily on contextual signals in one particular experiment, the birds performed better across a larger array of experiments because they rely on contextual clues (that is my take one the study, and I only read a summary of it). Similarly, humans respond to their environment because most of the time the environment matters. Behavioral economists may conclude me to be predictably irrational if he narrows his range of inspection sufficiently small, but I will continue to live my life as if the context of my surroundings matter...just like the birds.

I was wrong about posting copyrighted videos

2011-12-20T12:21:00.000-08:00

Here is a much better answer to the question of whether one can post copyrighted videos online for education purposes.

The legality of clips on xxx derives from the Fair Use statute, which is part of copyright law. There has been lots of misinformation over the years about what is regarded as fair use. Contrary to what you may have heard, there is no "rule" based on percentages or time limits. The principle that we encourage our users to observe when posting to xxx is that you should only post as much of a given work as you need in order to make your point.

The key to making these posting fair is to significantly transform the clip from its original context and to add cultural value, such as is often the case for educational re-uses. I can't, however, advise you on the legality of any particular posting -- this is your responsibility to decide in good faith. The fact that you are asking these questions and concerned about contributing responsibly is an excellent start!

The best resources for thinking through fair use that I know of are those created by the Center for Social Media -- of particular relevance here may be their guide to best practices in fair use for online video:
http://www.centerforsocialmedia.org/fair-use/best-practices/online-video

If only we were still hunters and gatherers...

2011-12-20T10:47:00.001-08:00

...agriculture brought about a steep decline in the standard of living. Studies of Kalahari Bushmen and other nomadic groups show that hunter-gatherers, even in the most inhospitable landscapes, typically spend less than twenty hours a week obtaining food. By contrast, farmers toil from sunup to sundown...early farmers had more anemia and vitamin deficiencies, died younger, had worse teeth, were more prone to spinal deformity, and caught more infectious diseases, as a result of living close to other humans and to livestock.
—Elif Batuman. December 19 & 26, 2011. “The Sanctuary.” The New Yorker magazine.

Diamond considers agriculture to be not just a setback but “the worst mistake in the history of the human race,” the origin of “the gross social and sexual inequality, the disease and despotism, that curse our existence.
—Elif Batuman. December 19 & 26, 2011. “The Sanctuary.” The New Yorker magazine. Referring to Jared Diamond, author of Guns, Germs, and Steel.

Religion First, Then The Plow

2011-12-20T10:43:00.000-08:00

Anyone interested in the evolution of man and his ancient roots, especially those wanting to understand the psychology of a person and society, must look into the recent archaeological findings in Anatolia, written about recently by National Geographic magazine and The New Yorker.
This site contains what appears to be religious structures obviously requiring large groups of people but occurring before agriculture. They are over 11,000 years old, over 6,000 years older than the Great Pyramid! What is remarkable is that these religious structures were built before man took up the plow, which means that (at least in this location) organized religion came before large, organized, hierarchical, and agricultural societies. Consequently, we must update our assessment about the importance of organized religion in the homo sapien species.

The findings at Gobekli Tepe suggest that we have the story backward—that it was actually the need to build a sacred site that first obliged hunter-gatherers to organize themselves as a workforce, to spend long periods of time in one place, to secure a stable food supply, and eventually to invent agriculture.
—Elif Batuman. December 19 & 26, 2011. “The Sanctuary.” The New Yorker magazine.

In The New Yorker article I learned that the term "Neolithic Revolution" (the transition from hunter-gatherer to livestock-farming )was coined in the 1920s by a [disillusioned] Stalinist named V. Gorden Childe, who committed suicide in 1957 after an uprising in Hungary.

A World Without Conspicuous Consumption

2011-12-20T10:15:00.001-08:00

...some may like it and others may not. Of course, those who want to read something other than the Bible could simply leave the community. This is what Thomas More dreamed of in Utopia.

“We are as prosperous and as happy as any one; we have here all we need.”
As all work for the common good, so all are supplied from the common stores. I asked the purchasing agent about the book-keeping of the place; he replied, “As there is no trading, few accounts are needed. Much of what we raise is consumed on the place, and of what the people us no account is kept. Thus, if a family needs flour, it goes freely to the mill and gets what it requires. If butter, it goes to the store in the same way. We need only to keep account of what we sell of our own products, and of what we buy from abroad, and these accounts check each other. When we make money, we invest in land.” Further, I was told that tea, coffee, and sugar are roughly allowanced to each family.
Each family has either a house, or apartments in one of the large houses. Each has a garden patch, and keeps chickens; and every year a number of pigs are set apart for each household, according to its number. These are fed with the leavings of the table, and are fattened and killed in the winter, and salted down. Fresh beef is not commonly used. If any one needs vegetables, he can get them in the large garden. There seemed to be an abundance of good plain food everywhere.
…
In fact there is little room for poetry or for the imagination in the life of Aurora. What is not directly useful is sternly left out. There are no carpets, even in Dr. Keil’s house; no sofa or easy chairs...no books, except a Bible and hymn-book, and a few medical works; no pictures—nothing to please the taste; no pretty out-look, for the house lies somewhat low down. Such was the house of the founder and president of the community; and the other houses were neither better nor much worse. There is evidently plenty of scrubbing in-doors, plenty of plain cooking, plenty of every thing that is absolutely necessary to support life—and nothing superfluous.
—Charles Nordhoff. American Utopias. 1875. This passage concerned the Aurora commune.

Two Quotes

2011-12-20T09:53:00.000-08:00

In sheer numbers, the brain is just beaten by the Milky Way with its 200 billion or more stars, but they are spread across 100,000 light years, not packed into a one-and-a-half-litre capacity skull.
—Alun Anderson. The World in 2002. “Brain Work.” The Economist magazine.

...in a recent poll by the Pew Foundation, Russians, by a margin of 57% to 32%, preferred to rely on strong leadership rather than democracy to deliver good government.

—The Economist magazine. December 10, 2011. “The Cracks Appear.” Leaders. Page 13.

Copyrights Be Damned

2011-12-20T08:48:00.001-08:00

I was just informed by my university that you can post a video of any copyrighted material for teaching purposes so long as it is under 30 seconds (and it may be 60 seconds, the person wasn't sure).

Utopia Documented

2011-12-19T10:37:00.000-08:00

When I first began reading Thomas More's Utopia I thought it naive to think any society of more than fifty people continually be hard-working, but taking only what they "need" for consumption, without having to document who took what or having to ration goods. However, I was proven wrong by the 1875 book American Utopias by Charles Nordhoff, who showed that when people self-select into a community for strong religious feelings, such utopias can exist.
Whether such communities can be forced upon people is much less likely, and if history has been documented properly, has never been done.
I wonder why these religious communes all were somewhat heretical in their religious beliefs. For example, the Shakers believed Christ had come a second time in the form of a woman. Did any communes follow a conventional Christian creed? I don't know. I can't recall reading of one.

Middle Ground Between Science and Religion

2011-12-19T10:07:00.000-08:00

It takes remarkable integrity on the part of Haidt (an atheist) and the Dalai Lama (who is thought of by some to be a demigod) to make these remarks.

My research indicates that a small set of innate moral intuitions guide and constrain the world’s many moralities, and one of these intuitions is that the body is a temple housing a soul within.
—Jonathan Haidt in The Happiness Hypothesis. 2006. Basic Books.

...if scientific analysis were conclusively to demonstrate certain claims in Buddhism to be false, then we must accept the findings of science and abandon those claims.
—Dalai Lama, from The Universe in a Single Atom

Inside the mind of a saint

2011-12-18T16:41:00.001-08:00

Anyone writing a novel featuring a historic character who is a deeply pious Catholic, and has trouble imagining how one would think, would do well to read "The Story of a Soul," the autobiography of Saint Theresa of Lisieux.

Jonathan Haidt

2011-12-17T17:35:00.001-08:00

"The Happiness Hypotheses" by Jonathan Haidt is among the most profound books on individual and social behavior--readable also. Daniel Kahneman contributed more to economics than any psychologist before him (excluding the real father of psychology: Adam Smith), but if economists really want to explain societal behavior, they can learn even more from Dr. Haidt.

It is not another "cute" book; it is surprisingly profound.

Conversation with my daughter

2011-12-17T14:31:00.001-08:00

Bailey: Maggie, do u want ice cream or a milkshake?
Maggie: Yes.

Lit agents are ridiculous

2011-12-15T15:13:00.001-08:00

This is what an independent author (novelist) wrote me today.

"I've been through the grueling process of being rejected by over a hundred agents, going to writers’ conferences to meet them, sending them material, etc. Even after my book won two national literary awards and after I got the great testimonials, I hit the agents again, but they still wouldn’t give me the time of day. It’s so depressing. I’m sorry, I have no connections or success to share with you there. All I can say is that Amazon and Kindle are the independent publisher’s greatest friend"

One thing I have noticed is that independent authors establish "publishing companies" which sell only their books, so that on paper they appear to have book contracts.

Origin of word "placebo" and placebo quotes

2011-12-15T11:14:00.000-08:00

When there was nothing else to offer, placebos were a salve. The word itself comes from the Latin for "I will please." In medieval times, hired mourners participating in Vespers for the Dead often chanted the ninth line of Psalm 116: "I shall please the dead in the land of the living." Because the mourners were hired, there emotions were considered insincere. People called them "placebos."

—Michael Specter. “The Power of Nothing.” The New Yorker. December 12, 2011.

I had great respect for shamans—and I still do. I have always believed there is an important component of medicine that involves suggestion, ritual, and belief—all ideas that make scientists scream.

—Ted Kaptchuk, an acupuncturist interviewed by Michael Specter. “The Power of Nothing.” The New Yorker. December 12, 2011.

Kaptchuk practiced acupuncture for half his adult life. But he stopped twenty years ago. Despite the popularity of acupuncture, clinical studies continually fail to demonstrate its effectiveness—a fact that Kaptchuk doesn’t dispute. I asked him how a person who talks about the primacy of data and disdains what he calls the “squishiness” of alternative medicine could rely so heavily on a therapy with no proven value.

Kaptchuk smiled broadly. “Because I am a damn good healer,” he said. “That is the difficult truth. If you needed help and you came to me, you would get better. Thousands of people have. Because, in the end, it isn’t really about the needles. It’s about the man.”

—Ted Kaptchuk, an acupuncturist interviewed by Michael Specter. “The Power of Nothing.” The New Yorker. December 12, 2011.

Straight-A Students Need Not Apply

2011-12-13T17:24:00.001-08:00

Recent research has shown that teachers discourage creativity in students. Perhaps this is why some employers will not hire straight-A students. Any student favored by teachers, they assume, can recreate what the teacher does, but nothing more.

The lies of children

2011-12-13T17:06:00.001-08:00

Regarding my previous on self-deception, as the father of a four-year-old who lies frequently, I believe children sincerely believe most of the lies they tell. Only as they mature do they begin to understand the complexity of their beliefs.

The "tinkering" metaphor

2011-12-13T10:09:00.000-08:00

FDR was popular during the Great Depression partly due to his willingness to experiment with different solutions to the economic crisis. He tried everything, as David Kennedy remarks...

What unit of plan or purpose, one might ask, was to be found in an administration that at various times tinkered with inflation and price controls, with deficit spending and budget-balancing, cartelization and trust-busing, the promotion of consumption and the intimidation of investment, farm-acreage reduction and land reclamation, public employment projects and forced removals from the labor pool?

—David M. Kennedy describing Franklin D. Roosevelt’s New Deal in Freedom From Fear

The idea of using government to create different experimental interventions into the economy makes a lot of sense with certain metaphors of the economy. If your metaphor for the economy is a gasoline engine, a broken economy is like a broken engine, and it makes sense to keep replacing different parts until the engine works again.
Is a gasoline engine a good metaphor? Yes, if you allow the possibility that replacing one working part with another part can cause damage elsewhere in the engine. Like, spending money on a new alternator degrades from the performance of the fuel injection. You would also have to assume that the engine, given time (and it may take a long time), will fix itself.
Any money the government spends must be taken from somewhere. Even if the money is printed, money is essentially taken from the economy in the form of a devalued currency. Consequently, you only replace the alternator if you have reasonable assurance the alternator was the problem, or if you believe the cost of replacing a working alternator in the form of a less efficient fuel injection is something you can live with. Likewise, you do not want to risk the damage to the fuel injection unless you believe it will take the economy a long time to fix itself.
This is why a better metaphor for a troubled economy is a sick person. Chemotherapy might help a cancer patient, but will hurt the patient if the cancer diagnosis is wrong—just like a fiscal stimulus might be counter-productive if the problem is lack of confidence / spending, and just like a "quantitative easing" might be counter-productive if bank reserves are not the main problem.

The Art of Self-Deception

2011-12-13T09:56:00.000-08:00

When a person cannot deceive himself, the chances are against his being able to deceive others.
—Mark Twain.

The secret of getting away with lying is believing it with all your heart.
—Elizabeth Bear.

“Do you think she means it?”

“Of course. All the best liars mean what they say...until they’ve said it.”

—Dialog between two senators in Nero: The Decline of the Empire.

Jerry, just remember: it’s not a lie if you believe it.
—George Castanza.

Don't forget my idea about self-deception.

College Subsidies

2011-12-12T17:43:00.001-08:00

My experience on a committee to review general education has taught me one thing: instead of giving government subsidies to the university, it should be given directly to students in the form of vouchers.

Otherwise, when designing general education, we will ask what we know and what we like, and wish the student to follow our footsteps. If I am a math professor, students should learn to "purify their soul by studying Euclidean geometry" (actual statement). If I study ethics, students should take more ethics courses.

In the beginning (long, long time ago) university classes depended almost exclusively on what the students wanted to learn. After 12 years of school, students have probably earned that opportunity.

Ayn Rand's Opposite

2011-12-12T12:10:00.001-08:00

Some of the jobless never appeared on the relief rolls at all because they simply left the country. Thousands of immigrants forsook the fabled American land of promise and returned to their old countries. Some one hundred thousand American workers in 1931 applied for jobs in what appeared to be a newly promising land, Soviet Russia.

—David M. Kennedy describing the Great Depression in Freedom From Fear. Chapter 6.

Quotes about cities

2011-12-12T11:54:00.001-08:00

There’s no such thing as a poor urbanized country; there’s no such thing as a rich rural country.
—Edward Glaeser quoted by Robert Kunzig. “A City Solution.” National Geographic. December, 2011.

Spillover works best face-to-face. No technology yet invented—not the telephone, the Internet, or videoconferencing—delivers the fertile chance encounters that cities have delivered since the Roman Forum was new. Nor do they deliver nonverbal, contextual cues that help us convey complex ideas—to see from the glassy eyes of our listeners, for instance, that we’re talking too fast.
—Robert Kunzig. “A City Solution.” National Geographic. December, 2011.

Maybe I do understand the EU

2011-12-12T11:53:00.000-08:00

I've always been hesitant to talk about the European Union (EU) because I feel uncomfortable with my understanding of its essence. For example, I don't understand the current fracas. Why should Germany have much to do with the corruption inherit in Greek politics? Why don't they act like the independent countries as they are—Greece default, and Germany let her default—but treat the Euro as if it is commodity money? So long as they limit the amount of Euros created, and if people have confidence that the volume of Euros will not change significantly in response to a Greek default, is there really much of a problem with the EU and its currency?
If they do this, there is little difference between the Euro and gold money, assuming gold could only be mined by the European Union Central Bank.
I've always thought that I missed something important, because no one utters such a thought, but a recent Wall Street Journal editorial emboldened my views on the EU.

We wish the Germans well in driving a hard bargain in return for writing a big check, but there is a better way. That would be to return to the Euro as it was originally conceived: Countries share a currency but are responsible for their own fiscal policies, including the consequences of default.

—The Wall Street Journal. December 10-11, 2011. A14.

What's that? Oh, yes: the sweet sound of self-confirmation.

Reasons why most people would call me insane

2011-12-08T11:12:00.000-08:00

(Reason 1) I don't believe anyone really existed before 1990, nor do I believe real, conscious people exist in poor, repressed countries. However crazy it seems, I just cannot fathom a universe where all the suffering I read about in history books really took place.

(Reason 2) Politically-charged issues like global warming and income inequality are difficult to understand because so much ostensibly credible evidence is presented by each side. I go further than simply saying it is a complex issue. While truth does exist in many places, when an issue because hotly contentious, with much to gain / lose on either side, I believe that truth literally ceases to exist.

(Reason 3) I do not believe Tyler Cowen exists, because it seems he has no supporting staff, and I do not believe one person could write and read so much while also teaching, eating, and sleeping.

(Reason 4) I don't believe the book A Death in the Family could win a Pulitizer Prize when I cannot even get a literary agent to consider my novel. Much of my world, alas, is an illusion. Either I don't exist, or that book doesn't really exist. Or perhaps the Pulitizer Prize is also an illusion?

I wonder how long...?

2011-12-07T10:45:00.000-08:00

I wonder how long the unemployment must stay at its high levels before people start calling on the federal government to directly create jobs itself.

Read his memoir, An American Life, and you will also find Reagan referring to the Works Progress Administration, among the biggest government jobs programs of all time, as “one of the most productive elements” of Franklin Roosevelt’s New Deal. Read accounts of Reagan’s tenure as California governor and you will find him proposing, in 1971, that a WPA-style public works program replace the state’s welfare apparatus.
—Thomas Frank. “More Government, Please!” Harper’s Magazine. December 2011, page 10.

But if we are so concerned about job creation, why not [have the government] just create jobs?...We have waited for them [read: the job creators of the private sector] long enough. It is time we took the business of job creation into our own hands.
—Thomas Frank. “More Government, Please!” Harper’s Magazine. December 2011, pages 10-11. Frank was referring to the government hiring workers.

By and large, the things they built [FDR’s New Deal] are treasured today. Indeed, there was a genius and grandeur to their far-flung labors. The Roosevelt Administration dealt with unemployment by putting murals in post offices, by bringing electricity to deepest Appalachia, by paying artists to paint, theater directors to state plays, and penniless authors to assemble collections of folklore and write a famous series of guidebooks.
—Thomas Frank. “More Government, Please!” Harper’s Magazine. December 2011, page 11. Frank was referring to the government hiring workers.

How to be a political pundit

2011-12-07T10:39:00.000-08:00

If you are to be a liberal pundit: Read all you can about President Reagan, and then use what you have learned to show how Republican politicians contradict their favorite president (e.g., Reagan raised taxes many times, and viewed many elements of Roosevelt's New Deal favorably).

If you are to be a conservative pundit: Read all you can about Franklin Roosevelt, and then use what you have learned to show how Democratic politicians contradict their favorite president (e.g., Roosevelt did not always want to borrow during a recession and opposed a number of modern financial regulations, like the FDIC).

Vitamins should be banned

2011-12-07T10:02:00.000-08:00

From Reason magazine. January 2012. Page 15.

Denmark has banned Marmite, Rice Krispies, and Ovaltine, among other popular foods. The foods were banned because they have added vitamins or minerals, which are illegal in Denmark.

For the last four years, Wesley Wood has supplemented his Social Security income by selling vegetables he grows from the front yard of his Parma, Ohio, home. But city officials have shut him down. The city's code says vegetables can be grown only for private use and any home business must be conducted "wholly within the dwelling."

The most devoted medical researcher ever

2011-12-07T09:54:00.000-08:00

John Hunter is arguably the most devoted medical researcher that has ever existed. From childhood until his death he spent almost every day dissecting animals and cadavers, and when experiments on patients were impossible he experimental upon himself. These forays into the human anatomy were not class assignments in medical schools, but personal missions. But how is he the most devoted medical researcher ever?
Because his interest in syphilis, concomitant with his lack of patients to study patients, induced him to give him self syphilis. You read right: John Hunter gave himself syphilis so that he could study it. First he found a sailor with syphilis willing to give Hunter a sample of his penis discharge in exchange for a few pounds. Then Hunter scraped the tip of his penis raw with sandpaper and placed the sailor's discharge on it. Sure enough, he contracted syphilis, and spent the rest of his life documenting the symptoms.
Crazy? Yes. Extreme? Yes. Devoted to medical science? Absolutely.

Following John Hunter's example, I plan to study the effects of a fiscal stimulus by borrowing money from a Chinese friend and then paying my wife money to dig holes in the backyard. If this experiment doesn't increase my yearly income, I'll just assume that the stimulus wasn't big enough.

Source
Sherwin B. Nuland
Doctors: The History of Scientific Medicine Revealed Through Biography
Lecture Six: Hunter, the Surgeon as Scientist.
The Great Courses.

A Story of Creativity: how the stethoscope was invented

2011-12-06T19:34:00.000-08:00

I love stories illustrating how bursts of creativity are formed, and here is one I heard today.

Laennec was a French medical doctor who encountered a patient that would change medical history forever. She was not wealthy, smelt bad, a little obese, yet pretty, and Laennec did not want to press his ear to the skin under her breast to listen to her heartbeat—as he should have.
Later that day he was walking in a the Louvre courtyard where he saw two kids playing a game he recalled from his childhood. The game requires two people on the opposite side of a board. One person would scratch a symbol (perhaps a letter) on one end of the board and the other person pressed his ear to the board and tried to decipher the symbol from the sound alone.
Brilliant! That is how the stethoscope was born. Laennec experience this burst of creativity where he immediately knew how to listen to the heart and lungs better while standing further from the patient. Rushing back to the hospital, he finds the woman, rolls up a notebook into a cylinder, and presses one end on the patient's chest and his ear to the other end. It worked. Much better than the unaided ear. With refinements to this basic idea the modern stethoscope was born.

The psychologist Jonathan Haidt describes the mind as a rider on an elephant. The conscious component is the rider, who tries to direct the elephant, which is a metaphor for the subconscious.
Laennec's genius stems from the fact that his elephant was working on medical problems without the rider's awareness, and once it found something it brought it to the rider's attention—much as an elephant might stop without being told too if it sees something the rider cannot.
We should not lament the fact that our mind concentrates on seemingly irrelevant details when our consciousness focuses on a problem. Yes, our stated values can change according to environmental factors irrelevant to the good's worth. For instance, without our awareness, we state a higher value for a beer if it comes from a hotel whose prices are high, compared to the same beer from convenient stores, known for low prices.
So what if our mind anchored onto something irrelevant to the taste and satisfaction of the beer. Because our mind is constantly weaving unrelated observations together, we suffer from minor (but scientifically identifiable) irrationality (the kind that helps behavioral economics earn tenure and sell books). Yet this irrationality is the womb of creative genius. Laennec was able to connect the kids' game with the patient, and modern medicine forever improved. Likewise, our mysterious elephant is a wrinkled ton of possibility, because of—not in spite of—many behavioral irrationality.

Source
Sherwin B. Nuland
Doctors: The History of Scientific Medicine Revealed Through Biography
Lecture Seven: Laennec and the Invention of the Stethoscope
The Great Courses.

To train an economist...

2011-12-06T10:54:00.000-08:00

In which of the following situations would you lose more faith in the ability of an economist?
(Scenario A) If it is revealed he is unaware of the recent econometric innovations in heteroskedastic estimators (when used with panel data, specifically).
(Scenario B) If it is revealed he doesn't understand the causes of communism in Russia or the consequence of socialism in China.
Then ask yourself, is your answer consistent with how graduate students are trained?
This is posed as an interesting question, and not a condemnation of my colleagues who teach graduate students.

The Political Purpose of Debasing Profits

2011-12-06T10:27:00.000-08:00

I think the job of an economist, before determining his political affiliation, is to first make sure he can rationalize all political affiliations. Otherwise, he doesn't understand people, or society. It is important that he does understand society, to the extent that anyone can. Here are some of my forays into this worthy exercise.

Why do liberals / progressives consistently demonize rich people and the earning of extraordinary profits, even if the income of most people is rising?

In economic issues, the central component of the progressive platform is force. Force employers to pay people a certain wage or don't hire them at all. Force investment firms into mortgage-backed securities and taxpayers to subsidize the homes of others. Force other taxpayers to pay for the education of my students. Force you to pay for the health care of other people.
However, at the same time people support large government plans to redistribute wealth, they dislike the notion of forcing people to do things. It makes us seem dictatorial. Consequently, they must be convinced that the people they are forcing are immoral, and that is why the very richest of people will usually be seen as corrupt to the progressive party members.

Or, does causation run the other way, and force is the natural consequence of believing the richest among us are corrupt? And let's not deny the possibility that the richest Americans may actually be corrupt (though if they are, does more government solve it, or less?).

The Final Destination of OWS

2011-12-06T10:04:00.000-08:00

This is a great narrative to teach the lessons from A Road To Serfdom in the classroom, illustrating the timeliness of a book written decades ago.

  “There’s no work for us anymore—we’re out of work a year at a time,” he said. “It’s because of them”—he waved toward the financial district. “The people who are holding us back. The banks, the government, anyone who controls the money.”
  Two middle-aged men had stopped in front of Moss and begun to argue with her in heavy Russian accents. “Cuba, North Korea, Venezuela is the ultimate destination of what you’re doing,” the first Russian said.
  “My wife if midwife—she has a job,” the second man said.
  “Congratulations, that’s great,” Moss said.
  “You can get job, too.”
  “I’d love one. Can’t find one.”
  “This is waste of your time. Go look for job—put your time into that.”
  “Bottom line: go to North Korea,” the first Russian said. “This is your final destination.”
—George Packer. December 5, 2011. “All The Angry People.” The New Yorker. Pages 32-38.

How would a progressive reply, and let's be fair in asking. I'm guessing they might say, "You can have an active government without a dictator. That's what elections are for. Look at France. Look at Sweden. Do those resemble North Korea, Cuba, and Venezuela?

I might have to change my assessment of The New Yorker. I inferred from James Surowiecki's columns it had an active editorship which forced a progressive slant to all articles. The fact that the editors allowed the narrative above increases the magazine's value—to me, at least.

A Forty Year Plan

2011-12-06T09:50:00.000-08:00

We barely have 10 years here. We will take it to 10 more and 10 more and 10 more to construct the new social virtues.
—Hugo Chavez as reported by Mary Anastasia O’Grady in The Wall Street Journal: “Chave’s 40-Year Plan to Conquer Vice.” December 5, 2011. A15.

Chavez is expressing his desire to force the same virtues that resonate within the successful communal societies I discussed in a previous post. What he doesn't understand—or more likely, what he doesn't acknowledge—is that these communal societies thrive because the virtues were voluntarily adopted by the residents of those societies (they can leave), and the religious fervor undulating throughout their congregation helps to intensify these virtues, as well as employs god to punish the vices.

A forty year plan is not necessary to Venezuela's resurgence. What is necessary is something Chavez cannot provide.

The Truth About Communal Living

2011-12-05T10:53:00.000-08:00

Every Thanksgiving, the Libertarian blogs I read pass around narratives of the Pilgrims' experience with their new home in America, and those narratives are true stories about the failure of a socialist system. The Pilgrims first initially employed a communal lifestyle without property, where one was supposed to work out of loyalty to everyone else, and the amount of food one received was largely independent of one's own effort, but heavily dependent upon the effort of others.
If we are to be objective researchers, however, we must also admit that there have been many instances when communal living was successful. Many monasteries are an example, especially the Benedictine kind, where monks grew food and engaged in crafts for self-consumption and sale and all the proceeds are given to the monastery as a whole, to be distributed by the monastery. Some Mendicant Orders might be included, and some nunneries.
Better examples are found in the eighteenth and nineteenth societies formed in Germany and carried to the U.S., where hundreds and sometimes thousands of people lived and worked diligently for the society itself, with no personal property of their own. They go by the names Amana Society, Harmonists, Separatists of Zoar, and the most widely known society, the Shakers. I consider these Protestant and independent monasteries. There are others: The Oneida and Wallingford Protectionists, Aurora and Bethel Communities, Icarians, the Bishop Hill Colony, and the Cedar Vale Commune. I want to say the Transcendentalists created a commune, as well as the famous U.S. socialist Upton Sinclair, but I can't say for sure (I know Sinclair lived in a commune at one time, but I can't remember what kind of commune).
While it is true that few such communes exist today, neither do some nations that existed in the nineteenth century (e.g., Prussia). Most of these did thrive for decades though, and left behind large estates with fertile land and large, sturdy buildings. They lived a socialist lifestyle, without property, and for them it worked. Plenty of communes have failed after a vigorous start—think hippies—but plenty did not.
I certainly would never want to live in such a place, but neither would I want to spread the story of the Pilgrims without the story of these other societies. Communal living, without property, and with labor motivated by altruism and strict social norms, can work. It seems the key to their success resides in their voluntary nature (by contrast, communism was mandatory in Russia, and initially for the Pilgrims), the religious fervor of their members, and a diligently monitored set of social customs (either work, or live someplace else).
Communal living is a possibility in some instances, and Libertarians can admit this while still arguing that the possibilities are few—and for them personally, non-existent.

Inspired and partially informed by...
Charles Nordhoff
American Utopias
Originally published in 1875 as The Communistic Societies of the United States.

Is Utopia a vegan paradise?

2011-12-02T11:00:00.001-08:00

Or just a place where slaves do the killing for you?

The Utopians feel that slaughtering our fellow creatures gradually destroys the sense of compassion, the finest sentiment of which our human nature is capable. Besides, they don’t allow anything dirty or filthy to be brought into the city, lest the air become tainted by putrefaction and thus infectious.

—Thomas More in Utopia, 1516.

What pleasure can there be in listening to the barking and howling of dogs—isn’t that rather a disgusting noise? Is any more pleasure felt when a dog chases a hare than when a dog chases a dog? If what you like is fast running, there’s plenty of that in both cases; they’re just about the same. But if what you really want is slaughter, if you want to see a creature torn apart under your eyes—you ought to feel nothing but pity when you see the little hare fleeing from the hound, the weak creature tormented by the stronger, the fearful and timid beast brutalized by the savage one, the harmless hare killed by the cruel hound. Utopians, who regard this whole activity of hunting as unworthy of free men, have accordingly assigned it to their butchers, who, as I said before, are all slaves. In their eyes, hunting is the lowest thing even butchers can do. In the slaughterhouse, their work is more useful and honest, since there they kill animals only out of necessity; whereas the hunter seeks nothing but his own pleasure from killing and mutilating some poor little creature. Taking such relish in the sight of slaughter, even if only of beasts, springs, in their opinion, from a cruel disposition, or else finally produces cruelty, through the constant practice of such brutal pleasured.

—Thomas More in Utopia, 1516.

Thomas More's Utopia

2011-12-02T10:43:00.000-08:00

Thomas More's Utopia is what I am reading (actually, a easily-read translation by Robert Adams). And these are some my impressions.
I never understood where the word "Utopia" came from until now. The word was invented by More, combining a Greek adverb and noun to create a word best interpreted as "no place." Clever. The strangest thing about the book is that it is divided into two sections, and the first section seems irrelevant.
Much of it is predictable, and reminiscent of a college progressive yearning for local food, ostentatious equality, and despots. The book is far from boring, however, and here are some parts I particularly enjoyed.
Everyone works in Utopia, and in similar jobs. Each person farms for a period of time and works a craft other times. Because each person performs similar manual labor, and because one does not earn money for their labor, there is considerable equality. They also work less than people do even today: six hours a day, including Saturday. Although Utopians work less and cannot specialize, they are wealthier. Why?
Thomas More makes an argument that because there is no upper-class to confiscate the wealth of others, and because that upper-class in non-Utopian society is assumed to provide no service (I thought peasants worked, clergy prayed, and nobles fought?), each person in Utopia consumes more while working less because there are more people working. This assumption breeds another: that no money is required because there is so much wealth, when people take all they "need" there will still be goods left over.
Pervading the assumed functionality of Utopia is the assumption that social pressure will work as well or better than money in inducing people to work hard. It is also assumed that the social culture of equality will prevent people from distinguishing themselves and causing inequality. It is the social norms of Utopia that is responsible for the equality and wealth, not politics (in fact, there are very few laws in Utopia, and no lawyers).
This made me think of wage labor in the Soviet Union (particularly in the 1929-1941 era). All proletariats were guaranteed a job, but at set wages for everyone. Because the Communist Party determined other things like food rations, housing, and the like, there was considerable equality (cramped housing, fleas in summer, stale bread, and even some laudable things like women's rights). Like Utopia, a strict passport system existed in Russia, limiting people's rights to move around.
Russian communists tried desperately to establish a new proletariat culture where workers were inspired to work diligently despite the lack of economic incentives. Maybe some of them had read Utopia. Because the proletariats could easily find work elsewhere, they were hardly submissive to their bosses. Good luck finding workers on a peasant holiday. How did communists try to change peasant culture? For example, Russia established a movement called socialist competition, where groups pledged to reach certain production goals and competed against other groups in fulfilling this mission. The same thing happened in Utopia, where blocks of communities competed against each other for the best gardens. This kind of thing worked in Utopia, but failed in Russia.
Slowly, the Communist Party learned that the social culture in Utopia, where people work out of social obligation alone, was hard to instill, so they they began mimicking the free-market. Higher wages were not offered, but hard working laborers did win metals, special meals, priority to housing, goods experiencing a shortage, and cheap theater tickets (how is that not a market?). When that didn't work, the Communists began offering higher wages for better (more skilled and more reliable) work , and did their best to find a wage close to the free-market wage but still meeting budget restrictions; after all, a Russian plant may offer higher wages for better work and higher quality products, but because they don't sell these products on the market and instead "distribute" them to other organizations, additional revenues may not result. And by 1931, 70% of workers were paid based on what they produced, not what they "needed." However much people dislike markets, they have a hard time living without them.
The contrast between a 16th century fictional account of an idealized social system and its partial implementation in 20th century Russia provides a number of instructive contrasts. The most notable of these is the very reasonable idea that reliable, high quality work on a large-scale really does require more compensation. Go figure.

Sources:
More, Thomas. 1516. Utopia. Edited by George M. Logan and Robert M. Adams in 1989. W. W. Norton & Company: NY, NY.

Hoffman, David L. 1994. Peasant Metropolis: Social Identities in Moscow, 1929-1941. Cornell University Press: Ithaca, NY.

Understanding Social Interactions is Difficult

2011-11-30T10:51:00.001-08:00

To begin with, we don’t have a good theory of social behavior from which to start.
—David Weinberger, discussing the difficulties of taking enormous amounts of data and and using it to predict the future of the world. December, 2011. “The Machine That Would Predict The Future.” Scientific American. Pages 52-57.

On December 17, 2010, Mohamed Bouazizi, a street vendor in the small Tunisian town of Sidi Bouzid, set himself on fire in a protest against the local culture of corruption. That singular act set into motion a popular revolution that burned across the Arab world, leading to uprisings that overthrew decades of dictatorial rule in Egypt, Libya, and beyond, upending forever the balance of power in the world’s most oil-rich region.

What model would have been able to foresee this?

—David Weinberger. December, 2011. “The Machine That Would Predict The Future.” Scientific American. Pages 52-57.

Somewhat defending Barney Frank

2011-11-30T10:15:00.000-08:00

I want to roll the dice a little bit more in this situation towards subsidized housing.
—Senator Barney Frank, chairman of the Financial Services Committee in 2009. This remark was made on September 25, 2003, as reported by The Wall Street Journal on November 29, 2011 (Editorial: The Barney Frank Era).

I am not saying Barney Frank played no role in the housing bubble and subsequent recession, but economics does not predict that a subsidy in a good will cause a bubble in that good. Look in any economics textbook, and it will assert that house subsidies should result in more houses being built than is [socially] desirable, but that equilibrium with a subsidy is just as stable as an equilibrium without the subsidy.

Of course, there is no economic narrative that allows economics to predict when a bubble will occur, but unless Senator Frank was spreading false information about the future value of houses, he cannot be blamed for the bubble.

I should also like to add that, while I do not share Senator Frank's politics, I have seen him on TV many times, and believe that he has more respect for American democracy than anyone else. When others complain about the squabbling that goes on in Congress, only Mr. Frank and George Will (what a pair!) raise their heads to remark that that is exactly what Congress is supposed to do. If you want political stability with no debate among political leaders, it can only be found in a dictatorship.

Libertarian Paternalism

2011-11-29T11:52:00.000-08:00

This is my theory about Libertarian Paternalism. There are people who will insist on "nudging" others, for a variety of reasons, some of them well-intentioned. If you don't give them something to nudge (if you don't let them set the status quo for retirement account savings rates, or influence whether fruits come first or last in a school cafeteria) they will eventually begin to shove, and they will justify their shoving as an attempt to prevent society from you.
You will have become "the man" who oppresses society. Let them nudge just enough to occupy themselves, and keep them out of the bigger decisions. Because if they ever get the power to shove, everyone and everything will seem to need shoving.

Econophysics is a joke

2011-11-29T10:44:00.000-08:00

A nascent economic field is emerging where physics attempt to compensate for economists' failures by applying the mathematical rigor inherent in physics. An article in Science News might confuse the economist, for it wrongly suggests that economists only assume normality in data, and describes how the econophysicists have rediscovered the log-normal distribution (and other transformations of normality) that economists have used for decades. Consider the quote below...

Economic theory suffers from ideological differences that render policy decisions dependent on the predispositions of those in power. Physics transcends partisan political debates—the speed of light is the same for all parties, gravity warps everybody's spacetime in precisely the same way and quantum physics confuses everybody regardless of age, sex or national origin.

—Tom Siegfried. "From the Editor: Perhaps physics can also solve economics puzzles." ScienceNews. November 5, 2011. Page 2.

Economists: try not to laugh.

This quote is incredibly naive. Economics cannot operate independent of political debate, because political debate is inherently a part of economics—economic questions often involve a political answer.

Plus, economists disagree on the efficacy of a fiscal stimulus for the same reasons physicists disagree on whether the universe has twelve dimensions or an infinite number of dimensions. Data do not allow a final verdict on the stimulus question, nor do data precisely reveal the number of dimensions our universe possesses.

Moreover, before physicists believe their mathematical skills could be fruitfully applied to political economy, they should do two things. First, drop in on a Ph.D economics course to see just how much mathematics economics already employs. Second, they should think about the complexity of human psychology and social culture. They might conclude that people are as evasive and frustrating source of study as the electron.

Bailey's Radio Interview

2011-11-28T12:44:00.001-08:00

My Agritalk radio interview this morning regarding the farm animal welfare debate.

Sometimes they actually say it...

2011-11-23T10:17:00.001-08:00

A perfect democracy can come close to looking like a dictatorship, a democracy in which the people are so satisfied they have no complaint.
—Huey Long, 1933 (Williams, Huey Long, p. 762)

Sustainability means activism

2011-11-22T12:03:00.000-08:00

I am on a Task Force regarding General Education at OSU, and recently hosted two Public Forums where any faculty, staff, or student can come and have their thoughts heard.
One thing I have learned is that people love the word "sustainability", and it seems to be defined as activism in support of any legislation that is ostensibly motivated by good intentions.

and the pope knows not how to respond...

2011-11-22T10:50:00.000-08:00

Guyuk asked [Pope] Innocent IV the obvious questions: How do you know whom God absolves and to whom He shows mercy? How do you know that God sanctions the words you speak? Guyuk pointed out that God had given the Mongols, not the pope, control of the world from the rising sun to the setting sun. God intended for the Mongols to spread his commandments and his laws through Genghis Kahn’s Great Law. He then advised the pope to come to Karakorum with all of his princes in order to pay homage to the Mongol Kahn.
—Jack Weatherford in Genghis Kahn and the Making of the Modern World. 2004. Page 263. Three Rivers Press: NY, NY.

Christopher Columbus Loves Genghis Kahn

2011-11-22T10:37:00.000-08:00

Christopher Columbus did not know know the Mongolian Empire was no more. All he knew was that Eurasia had lost the safe and prosperous trade routes the Mongols had once provided, and he wanted to resurrect this lost source of trade. So when we set his sails westward, he wasn't looking for India (contrary to what you learned in school), he was looking for the Mongol Court.
Indeed, no emperor valued free trade more highly than Genghis Kahn. His descendants and military ensured merchants safe travel. Shelters were erected with provisions every thirty miles, and in some areas, guide to lead merchants entering new territory. Passports and credit cards were created, as well as paper money.
Perhaps most importantly, he abolished taxes and tolls that increased transportation costs without increasing the value of the goods traded.
(This is something America's founders understood well, when in an amalgamation of fiercely independent states, they prohibited states from charging fees to merchants transporting goods across state lines. Facts like these are causing me to rethink the idea that decentralized power is always a more desirable power.)
It should be noted that this free-trade ideology was not just an ideology based on gains from trade, but the manner in which Mongol tribes instituted shares, where each ruler of one area of the empire shared some of his tribute with all other Mongolian warriors, requiring a safe and convenient transportation system. The shares helped reinforce Mongolian cohesiveness.
However, it is not like the U.S. has a free trade policy due to ideology alone. Lobbying by exporters plays a vital role in ensuring free trade.
Whatever you think about Genghis Kahn, when it comes to trade, he is an economist's ideal ruler.

Source
Jack Weatherford.
Genghis Kahn and the Making of the Modern World.
2004.
Three Rivers Press.

What little I know about taxes and income inequality

2011-11-21T10:33:00.000-08:00

My god it is confusing trying to understand the truth about income disparities. Here are a few facts I feel comfortable, with no attempt to tell you what they mean.

Fact 1: The richest people are indeed getting richer, and the proportion of their income taken by taxes is not rising. This is a graph Rolling Stone has posted on their website and was within an interesting article I read.

Fact 2: The federal tax system is indeed a progressive tax. The poorest 20% of Americans in 2006 paid federal taxes equal to 4.3% of their income. As you move the the higher quintiles, this percentage increases: 2nd, 10.3%; middle, 14.2%; fourth, 17.6%; highest quintile, 25.8%; and the top one percent of Americans pay 31.2% of their income to federal taxes. When you include all taxes, it is possible to find the top 1% paying slightly less of their income than the top ten percent, but at least some of this seems to be due to state and local taxes.

Fact 3: There is little evidence that the really high marginal tax rates in the past (like the 70% marginal tax rate around the middle of the 20th century) brings in more tax revenues, and it may actually reduce tax revenues by deterring economic activity and diverting activity into less valued enterprises.

Fact 4: It is very difficult to determine the extent to which statistics take into account corporate taxes. A corporation can't be taxed.

Fact 5: A large percent of total income is captured by the richest people, but the percent of total taxes they pay is much larger. In fact, the poor get much of their public goods for free.

Fact 6: In some ways there is large income mobility in the U.S., and in some ways there isn't. People move around a lot within the top and bottom quintiles, but they tend to stay in the top and bottom quintiles over time.

Fact 7: Because people regularly ignore fringe benefits, study household income without accounting for changes in divorces rates, and misrepresent the data to support their ideology, it is almost impossible to discern whether income inequality is becoming larger and if the poor are better off.

Fact 8: When people do try to correct for the deficiencies in Fact 7, it appears that everyone (the rich, the poor, the middle class) increased their incomes between 1979 and 2007. However, if you ignore benefits and the composition of U.S. households, and choose your time period carefully, you can make it appear the poor are getting poorer.

Fact 9: The rich increased their wealth by a larger percentage than the poor in the last thirty years, but again, both probably got richer during this period.

Fact 10: Discussions of income inequality are also clouded by the corporate tax. It is absurd to think a corporation can pay a tax. Do cows pay a cow tax? If the rich get most of their money from stocks, then their tax rate is the 35-37% corporate tax rate plus the capital gains tax of around 15%. So, a rich person whose only income is from stocks is going to pay 50% of his taxes to the federal government, and then must pay state and local taxes of around 10%. The result is that these individuals will pay more of their income to taxes than they keep for themselves.

Fact 11: When you use Gini Coefficients--economists' favorite measure of income inequality--there has been no rise in income inequality in the last fifteen years. There only appears to be inequality when you look at households without adjusting for the number of workers in that household.

Because no one reads this blog, I left out the references. Email me if you would like the reference to something.

About the rich and the taxes they pay

2011-11-21T05:26:00.001-08:00

We're going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share...Such loopholes sometimes makes it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary--and that's crazy...Do you think the millionaire ought to pay more in taxes than the bus driver, or less?
--Ronald Reagan in 1985, quoted in: Dickinson, Tim. November 24, 2011. "The Party Of The Rich." Rolling Stone.

This article on to claim that the top 400 richest Americans pay only 17% of their income in taxes (federal taxes, I presume). At first, I wanted to say that this does not include the corporate income tax, which certainly should be included. But then, I recently read an article illustrating how, with some many tax exemptions available to corporations, the effective corporate tax rate is rather flat and small (about 5%, I believe).

The tax code is so complex, and discussions of taxes so contaminated with ideology, it is impossible to have an intelligent conversation about it.

Podcast interview on farm animal welfare

2011-11-18T07:27:00.000-08:00

Here is a podcast interview with me regarding a paper I recently published in Applied Economic Perspectives and Policy.

A Pulitzer winner talks about writing and liberty

2011-11-16T11:45:00.000-08:00

It is the function of the novelist to tell timeless and universal truths through the device of a fashioned narrative. A story’s significance as a piece of art cannot be divorced from its message, any more than a society’s prospects for freedom and prosperity can be divorced from its underlying principles. The write and the man are one and the same, as are the culture and its common beliefs.
—Mario Vargas Llosa. November 8, 2011. “Literature and the Search for Liberty.” The Wall Street Journal. A19.

What is lost on the collectivists, on the other hand, is the prime importance of individual freedom for societies to flourish and economies to thrive. This is the core insight of true liberalism: All individual freedoms are part of an inseparable whole....Many cling to the hopes that the economy can be centrally planned. Education, health care, housing, money and banking, crime control, transportation, energy and far more follow the failed command-and-control model that has been repeatedly discredited. Some look to nationalist and statist solutions to trade imbalances and migration problems, instead of toward greater freedom.
—Mario Vargas Llosa. November 8, 2011. “Literature and the Search for Liberty.” The Wall Street Journal. A19.

The search for liberty is simply part of the greater search for a world where respect for the rule of law and human rights is universal—a world free of dictators, terrorists, warmongers and fanatics, where men and women of all nationalities, races, traditions and creeds can coexist in the culture of freedom, where borders give way to bridges that people cross to reach their goals limited only by free will and respect for one another’s rights. It is a search to which I’ve dedicated my writing and so many have taken notice. But is it not a search to which we should all devote our very lives? The answer is clear when we see what is at stake.
—Mario Vargas Llosa. November 8, 2011. “Literature and the Search for Liberty.” The Wall Street Journal. A19.

The power of Atlas Shrugged

2011-11-14T15:11:00.001-08:00

Last year I purchased a copy of Atlas Shrugged for an ambitious student with an interest in political economy. Last week she boarded a plane with the book in hand. Impressed with her reading, a passenger struck up a conversation with her. By the time the plane landed she was asked to travel to Chicago for an internship interview with Thompson Reuters. You've probably heard of them.

So awesome a quote

2011-11-14T13:03:00.001-08:00

I would hazard a guess that 90% of great scientists start out as heretics. The problem is that 90% of scientific heretics are talking nonsense....I was asked how you can tell when a scientific heretic is right rather than mad. I confessed that, as I’ve grown older, I’m becoming more confused on this point. The problem is not just that vindicated heretics are rare, but also that the heretic who’s right will be just as partisan—avidly collecting evidence to confirm his idea—as the heretic who’s wrong.
—Matt Ridley writing in The Wall Street Journal. “Is That Scientific Heretic a Genius—or a Loon?” November 12-13, 2011. C4.

Writing For The Public About Ethical Issues

2011-11-10T10:41:00.000-08:00

Earlier this year I was asked to speak to an agricultural communications class titled Communicating Ethical Issues in Agriculture, and I chose to relay how I would write a book about ethical issues, if the book was intended for the general public and my ambitions were for a bestseller.

Writing For The Public About Ethical Issues

During my work as a graduate student in agricultural economics and economics, and for the first few years as a professor, my research efforts focused mainly on mathematical issues, such as the constructing of economic models and the creation of novel statistical techniques. I did this not out of a love for math (though my love is ardent) but to acquire degrees and secure tenure. Math is unambiguous and uncontroversial. That is why it enhanced my academic career, but gave me little personal pleasure and almost no social recognition outside of economics.

When tenure was secure I altered my research to focus on controversial ethical issues, such as farm animal welfare. The contribution of economics lies primarily in its ability to organize thoughts. Ethical issues can make for frustrating deliberation, as answers are not easy to acquire and mistakes are punished deftly by bloggers and comments to internet articles. However, a little knowledge of economics can clarify the world in profound ways. It doesn't often give you the answer to ethical riddles, but it does allow you to talk about the riddle intelligently.

Writing about farm animal welfare was the best professional decision I have ever made, as it was only then I was invited to speak at conferences, asked for media interviews, and talk about. I will not hide my desire for attention from society, and if attention is what one desires, writing about ethical issues can have desirable outcomes.

In these ethical adventures I have perused a sundry of ethical writings, from blogs about egg production in 2010 to the most daunting and erudite works of the eighteenth century. When invited to speak to you today, I was conflicted about what I should say. This is an unusual audience for me, and after careful consideration, I decided that I can best serve you by describing my conception of ethical writing by paid professionals. Not amateur bloggers, and not academics who write one unprofitable book after another. I am talking about professional writers whose pen provides their paycheck. It is my impression that you seek to be one of these professionals, and if your desire is not to write but to conduct public relations campaigns, all of what I write extends to you nicely.

Genres of Ethical Writing

Non-fiction communication of ethical issues can be parsed many ways, but to facilitate clarity, I will group all writings about ethical issues, excluding fiction like Uncle Tom's Cabin, into one of three groups.

(Genre 1) Reporting of Details—The front pages of newspapers typically provide straightforward narratives about who, what, when, and how. An example would be an article about how Smithfield Foods is delaying their transition away from gestation stalls to group pens, written without any context as to why their transition was forced upon them by activist groups and consumers, and written without any apparent opinion of the writer about whether the transition is “good” or “bad.”

While such writings would ostensibly seem to provide valuable information, I argue that details provided without context is avoid devoid of information. If you are trying to learn about the farm animal welfare issue, and are not told why some people avoid gestation stalls and why companies love them, the aforementioned article will provide you information but not understanding.

An issue is made into an ethical issue through context, by the ardent support of an action by one group and fierce opposition by another, through insight into why one group's opinion differs from another, and the objective consequences of either side winning. Without this context, it is difficult to write about ethical issues and simultaneously export knowledge.

(Genre 2) Holistic Academic Books—I consider my book, Compassion by the Pound, to a holistic and academic treatment of the farm animal welfare issue. The term holistic is used to signify that my book attempts to communicate and scrutinize almost every view of how animals should be treated, to reflect almost all scientific studies about the issue, and to “connect the dots” in every perceivable pattern. By academic I mean that the book has a dispassionate irreverence for the reader. Although the book is certainly written for an audience, the logic and science employed should stand on its own, such that all eager readers with a panoramic intellect and long attention span should arrive at the same conclusion. The author cares little for whether the reader agrees with the book's conclusions, because reader approval or disapproval has no impact on the book's logic, and hence will have little impact on the author's view of her own work.

Initially, one might suspect that these holistic academic books might be the best reference for ethical issues, the verbosity, length, and erudition typically asks for too much of the readers' time. These books do not sell well. They are not read. They have little to no impact. Indeed, they are not written to have an impact, sell well, or obtain social approval. The motivation resides solely in the author's personal and relentless search for truth.

(Genre 3) Short Works Imparting Partial Understanding—It are these books that make a difference, make money, and meet social approval. Every point made is done so succinctly, like the farmer who strives to grow one-hundred-eighty-five bushels of corn using the least amount of fuel and fertilizer possible. Yet, because these books must facilitate understanding while also remaining profitable, they must be tailored to the readers' interests, and while they may read an article for its intellectual treats, these treats must be found concomitant with other rewards.

Note that the term short works does not imply a work short in number of words, but in relevance to the number of issues on trial. A book on food may be long, but as long as the author is stingy in regards to the supporting evidence for their claims, it belongs to this third genre.

Successful Advocacy Through Communication

In an ideal world—ideal from the viewpoint of an academic—I would help you learn how to communicate an understanding of ethical issues, you would communicate with efficacious narratives and speeches, and you would be appraised based on the actual learning imparted. However, to be successful, meaning your communication is profitable, the world is not so simply and your objectives are not so simple.

In what follows, I outline what I believe to be the steps of effective writing. A good writer may remark, “Is there any need to also way 'what I believe' as you would only say what you believe,” but I use that verbose statement to warn you that my writing is not profitable. While I have some valuable advice to offer, anyone who seeks my advice alone will eventually regret not seeking additional advice.

What Your Readers Want

(1) The author is a personal consultant to the reader, and readers seek a relationship with their media. Readers know that details are not necessarily information, and that because communicating context concomitant with the details is so important, readers seek to develop a relationship with the author, or with a publication.

Furthermore, there is no one “context” for everyone to report. The context partially depends on your reader. The setting surrounding Prop 2 in California[1] was far different for a farmer and a consumer. Prop 2 entailed higher egg production costs, which can not only hurt egg production profits but even corn prices. For consumers, Prop 2 meant some of the animals used to produce their food would experience less suffering. Differences in personal values dictate different contexts, and so readers will patronage an author or publication who shares their values. There is a reason Democrats read The New York Times, and Republicans read The Wall Street Journal.

The world is a complicated place, and yet our nature requires us to develop an identity, one dictating our view on most every subject, an outlook with a resolute idea on how the world would be better. Thomas Huxley stated, “Try to learn everything about something, and something about everything.” To do the latter, we cannot perform vast readings on every conceivable subject. Instead, to learn something about everything, we must read or hear a condensed version of everything. Yet a subject can be condensed infinite ways: whose condensed version will you read? Answer: those who share your values and beliefs.

(2) The communication must be consistently bias and slanted towards the reader's beliefs and values, in order to reinforce the relationship between reader and author. Face it, if you are to be read, you must tell small lies, distort other people's statements, and neglect to tell the whole truth frequently. Disagree with me, and you will be the first profitable communicator to defy this assertion. The reader needs to know they can trust you. The reader needs to be assured of your values and intellect. To achieve this, you must repeatedly speak the mantra of your loyalty. Just as English subjects shouted, “Long live the Queen,” throughout their empire to demonstrate their loyalty, so must you cower—at times, not all the time—to your reader as if she were Queen.

(3) The reader must finish your writing with more confidence in their identity, a sharpened depiction of their adversaries, and tools for defending their identity in public. Christians do not visit Hindu priests or Mosques to hear another point of view. Young adults do not thoroughly investigate all religions, they take the religion of their family. Catholics attend Mass to be reminded of their divine rituals, and Protestants attend fiery sermons challenging them to read the Bible themselves, to be reminded why the Protestant Reformation occurred and why they are its offspring.

Similarly, writers who consistently challenge the values and beliefs of their readers do so at their professional peril. Readers who are urged to doubt themselves will doubt the author first. You are the reader's guide to an intricate and complex world. If you make them doubt their destination, they will doubt you, and every word you write.

(4) To provide readers with intellectual tools that remain with them after your article is put down, they must be given a few lines of logic, a few carefully selected scientific results, and nothing else. The whole truth cannot be imparted.

People memorize selections from Alexander Pope's Essays on Man (The monk's humility, the hero's pride / All, all alike, have reason on their side; Hope springs eternal from the human breast / Man never is, but always to be, blessed) but never the entire poem. Your reader asks you to arm her with a few implements for intellectual battle, but has only two hands for battle.

(5) Readers need to hear a story. Have you ever wondered why books written by your English teachers can't be found in Barnes and Nobles? For almost one-hundred years it has been fashionable among the literary avant-garde to write books without a plot, and with poor character development. Yet, their books are shunned by the vast majority of people, who patron crime, mystery, and romance novels—for good writing, but mostly for plot.

We understand the world through story. We hear the “story” of Christian salvation and the “story” of how America triumphed over evil in both world wars. We emphasize the ease of salvation but hastily skip over the part about the meek and poor inheriting the earth. Americans revere the World War II soldiers who triumphed over evil Hitler, but try to forget that we are also guilty of eugenics, and performing medical research on black Americans without their consent.

“Never let the truth get in the way of a good story,” a friend of mine often remarks, not entirely in jest. Let that also be the advice for you. I am not asking you to be entirely dishonest, but advising you to gloss over aspects of ethical issues which contain excessive nuance; twist the story so that your reader is either the victor or the martyr; claim that for space considerations you must ignore details which blur the qualities of the protagonist, soften the harshness of the antagonist, reduce the intensity of the conflict, or complicate the story's moral—so long as you do so with the readers' consent.

Of course, never alter the truth such that you are vulnerable to attack from your reader's adversaries. The beauty of writing short narratives is that you can use its succinctness as justification for the omission of details.

The Denouement—You are a storyteller, a guide to a complex world, an entertainer, and your reader's embellished reflection.

There is a poem that states:

Man sees the world not as it is,

but as what the world can be.

He rearranges the stars, from where they are,

to their every possibility.

Your reader is looking for something in the world: her place within it. You must help her find this place, amidst a thousand frustrating ethical dilemmas. Your reader is looking for a pattern of stars in the sky, and for you to be her guide in the universe, you must help her find it. They will only follow the trajectory of your finger as you point in the sky if they trust you, and to trust you, they must be assured you are looking for the same pattern. In this pattern, there must be beauty, and it is no coincidence that constellations are often named after characters of Greek myths. You are the storyteller, and well-crafted stories are beautiful.

Throughout this essay it may seem that I have asked you to repeatedly forsake your integrity, your honesty, your character. To some extent this is true, but so long as you write for customers, you must comply with their desires.

Yet there is one place where you can make your moral stand, where integrity is preserved at all costs, and you will sacrifice customers for the sake of your soul. As your readers look to the stars for a pattern, and seek your counsel, you must trace out a pattern among the shimmering lights: but only—and this is the essence of your moral constitution—only trace that pattern if it truly exists. Never let the stargazer attempt to rearrange the stars, because there are same facets of ethical issues that are as immovable as the distant stars.

[1]Prop 2 was a referendum whereby voters cast their ballot for or against a measure which would provide laying hens, hogs, and veal calves larger space allotment. For sows, this meant the ability to merely turn around!

Prepared Remarks About "Gasland" Documentary

2011-11-10T10:16:00.000-08:00

Tonight I will serve as a panelist and moderator for a discussion following the documentary Gasland. If given the opportunity to make a few short remarks, this is what I have prepared.

In my Introduction to Agricultural Economics class I give a few lectures about environmental pollution and regulation, and to demonstrate what a world without regulation would look like, I always show them the scenes from Gasland where kitchen sinks and streams burst into flames. I do so because students are amazed and appalled when they see water from a kitchen seek burst into flames. I do so because of the video's effect—not because the video is actually a good depiction of a regulation-free world, and I immediately tell the students that I have deceived them slightly, because it turns out that the flammable sink water in Gasland was likely naturally contaminated by gas, and not the result of horizontal fracking.

Now, hear me out before you judge what I am trying to say. There are some truths communicated in Gasland, there is no doubt about that. However, it seems that many of the facts purported by the documentary Gasland are not true—or, at least, questionable. But to me, strange as it may sound, that is okay. This is because I do not view documentaries primarily as information sources. In fact, I would argue that it is very difficult to produce a successful documentary without much of its facts being called into question. I like showing well-known documentaries in class: like Food Inc. and Capitalism: A Love Story, but I do not do so for the information they relay. I do so for the attention they earn and the discussion they encourage.

A documentary that is completely factual is, unfortunately, boring to most people—more importantly, it would not motivate the activist within us. Activism of any sort requires symbols, traditions, beliefs, experiences, and notions in which the activists can use to define their cause, enhance the uniformity of their beliefs, and reinforce their enthusiasm for promoting the common good. That is exactly what Gasland does, and it is important, because a moderate level of activism is healthy for a democracy. I promise you this: we need energy companies questioned about their actions constantly; we need regulation of any energy extraction; we need laws that allow us to sue companies if they are at fault for environmental damage. There is such thing as too much activism, of course, but Gasland helps to ensure we do not have too little.

So, what dangers does fracking pose? After searching around for what I thought to be a reliable source, I settled on Scientific American magazine. Here is what I learned. Horizontal fracking differs little from vertical fracking, which has gone on for decades. But there is a difference, and that difference is that we simply don't know much about horizontal fracking, we will only learn by experience, and there are some potential dangers unique to horizontal fracking. One promising technology is an additive companies can add to their chemicals, whereby if the gas contaminates water supplies, this additive will allow us to determine which company (if any) is at fault. We can then sue them. For a lot of money. Knowing this, companies will be more responsible.

As we learn more, both government and environmental interest groups should be allowed to monitor, report, and interpret data collected from horizontal fracking. Gasland helps to ensure this is the case. After all, if it were not for Gasland, we would not be here tonight talking about horizontal fracking.

Reasons to love Genghis Kahn

2011-11-09T09:53:00.000-08:00

Yes, I know, he ruthlessly murdered countless people. If a town did not surrender at his arrival, he took the life of almost every soul, serving as an example to subsequent towns, who did indeed learn the proper lesson and immediately surrendered the town and paid a hefty tribute. That is one reason among many he was able to establish the largest empire of all time (in terms of people; second largest in terms of land area): he didn't have to fight all of them.

Yet, like many powerful emperors, he did some good, and is likely to have given the Mongol people on the Asiatic steppes a more enriched life. Before Genghis, the Monguls were scattered tribes constantly warring with each other, looting each other's livestock, and stealing each other's wives. Genghis ended this division, provided stability, and provided his people a surprising array of freedoms. Here are some of his admirable edicts established after he became Kahn of all the Mongul people and the Tatars.

Genghis Kahn

forbade the kidnapping of women for wives
forbade abduction of Mongols for use as slaves
forbade slavery of Mongols
declared all children to be legitimate
outlawed the selling of women into marriage
outlawed adultery (between married people of separate households)
punished animal rustling with death (is that a good thing?)
prevented the Tragedy of the Commons in hunting for wild animals by only allowing animals to be hunted between September and April and preventing hunters from killing more than what they needed for food, and
in what some historians to be the first instance of a ruler doing so, Genghis Kahn ensured complete and total religious freedom for everyone.

Thanks to Genghis Kahn, his people lived in security and peace, assured of their right to property, given human rights many people do not have today, and provided women a level of freedom none of their ancestors possessed. Though he raped Europe, Genghis Kahn was in many ways a blessing to his people.

Source:

Jack Weatherford
Genghis Khan and the Making of the Modern World
2004. Pages 68-70.
Three Rivers Press: NY, NY.

Low unemployment rates for agricultural economics degrees

2011-11-08T10:51:00.000-08:00

Of the ten college majors with the lowest unemployment rate, agricultural economics degrees have the seventh lowest rate, of just 1.3% of agricultural economics graduates in the labor force who cannot find a job (source).

This is partly due to the fact that agricultural economics degrees are valuable and versatile, but I also think the low rate is due to the fact that agricultural economics (and agribusiness) students have a strong work ethic, and many students would consider it an embarrassment to be on the government dole.

Great Hobhouse Quotes

2011-11-07T12:47:00.000-08:00

From Social Evolution and Political Theory (1911)

If the process of the universe is inherently opposed to the ethical order, it follows that the ethical order is inherently opposed to the process of the universe. In this state of things the position of humanity would be very unfortunate.
——Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911, page 10). The Columbia University Press.

Mathematical arguments drawn from the assumption that human actions proceed with the statistical regularity that might be found in a flock of sheep are often exceedingly difficult to refute in detail, and yet they rest on an insecure foundation. Man is not merely an animal. He is also a rational being, and accordingly, he reacts to new circumstances in a way that can only be determined by taking the possibility of rational purpose into account.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911, page 15). The Columbia University Press.

The past, when it is seen at all, appears always in a halo of romance.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911). The Columbia University Press.

Those who are most zealous for social improvement will indeed be the last to minimize the evils that exist.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911). The Columbia University Press.

There was probably never a time at which among civilized peoples there was so much diffused sensitiveness to any form of social ailment. If we were briefed to defend our own time, the line to take would surely be, not that its evils are few or small, but rather that every evil calls forth a strong and persistent effort to cure it.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911). The Columbia University Press.

In sociology as in all sciences specialism is a necessity and it is also a danger. It is a necessity for the simple reason that human capacity is limited and it is not given to man to acquire sound knowledge and adequate skill in many departments at once. It is also a danger because social life is no more divisible into independent sections than the human body is divisible into independent organisms.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911, page 5.). The Columbia University Press.

Give a man a sheet of meal with a dint in it, he says, and ask him to flatten it out. What does he do? If he knows nothing of metal work, he takes a hammer and knocks the dint flat, only to find that it has reappeared elsewhere. He applies the hammer again at the new point with the same result, and so he goes on till he convinces himself that dints are not to be levelled out by this direct and easy method. So it is, urges Mr. Spencer, with society. We find some evil or evils which we seek to prevent by direct and forcible means, only to find, says this critic of social effort, that a corresponding evil appears somewhere else. We put down overt crime only to find that some form of secret vice is increasing. A temperance crusade suppresses drunkenness, and it is discovered that those who used to drink now find an outlet for excitement in gambling. Compensation for accidents is secured by law to workmen, and in consequence it is alleged that elderly workmen are refused situations. Workmen form trade unions only to maintain and improve the conditions of their work, and no sooner do they succeed than their employers imitate them and form federations by which the unions are overpowered...Mr. Spencer did well to call attention, that every change, however good in itself, provokes unforeseen reactions, and that if we are to achieve permanent and assured good we must as far as possible keep in view the life of society as a whole and seek not jealously to magnify our own little sectional interest at the expense of the others, but rather to correlate it with the work that others are doing and endeavor to induce in them the same spirit.
—Leonard Trelawny Hobhouse in Social Evolution and Political Theory (1911, page 5.). The Columbia University Press.

This blog posting is not accurate

2011-11-04T14:37:00.000-07:00

For years I have heard individuals dismiss the validity of logic by making the following proposition: This proposition is incorrect. The recent Radiolab show Loops discussed this. The idea is that because this statement can be neither true nor false, there is something empty about all logic, and something vapid about every statement. Or, at least, the claim is that logic has its limitations.

Someone probably offered this response decades ago, but I haven't heard it yet, so here it goes.

A tool cannot be used upon itself, and logic is a tool. By simply stating that a proposition is automatically false, you are trying to use logic against logic, and that is not how tools work. Suppose I have a hammer and tell you that you can hit anything within your reach with that hammer. You then ask me, "Can I hit the hammer with the hammer?" I answer impatiently, "No." But I am not responding to a clever argument. It is implicit when using tools that the tool cannot be used upon itself, because it is so obvious that it can't.

You can't hit a hammer with the same hammer, and you cannot make an proposition that the proposition is false. Both the hammer and proposition are tools used for other endeavors, and should only be judged in their ability to do so.

Integrity in Macroeconomics

2011-11-04T14:25:00.000-07:00

It takes a remarkable amount of integrity to make such an honest and humble statement about macroeconomics.

There are times when the economy works well and times when it doesn’t, and when it works well it’s easy to find a job and when it doesn’t work well it’s really hard to find a job, but we don’t really understand those differences.
—Russell Roberts in “Ramey on Stimulus and Multipliers,” EconTalk, October 24, 2011.

Rational Economic Man?

2011-11-04T10:38:00.000-07:00

As Copernicus removed the earth from the centre of the universe and Darwin knocked humans off their biological perch, Mr. Kahneman has shown that we are not the paragons of reason we assume ourselves to be.
—The Economist. “Human Decision-Making: No so smart now.” October 28, 2011. Page 98. Review of Thinking, Fast and Slow by Daniel Kahneman.

These types of quotes have to end. While it is true that Kahneman documented many interesting economic behaviors, it is false to say that he created a revolution in now economists view man. Just because we write a constrained-utility-optimization problem on the board does mean that we believe it to be exactly how the human brain operates. Go into any economics classroom and you will hear the teacher stress to students that all models are false but some are useful*. We teach the sunk-cost fallacy for the reason that we know humans commit the fallacy—why else would the fallacy be interesting? Every economist brushes with his own behavioral anomalies everyday, and is not so stupid to believe he is the only one who has trouble saving money, tends to prefer the status-quo, values something less when he must explain why, and the like. I know of no economist who believes or once believed in the rational man that researchers like Kahneman and Ariely debunked. The authors taught us some things, there is no doubt, but there was no revolution.

*George Box

Food Safety: Who Regulates the Regulators?

2011-11-04T10:24:00.000-07:00

Food-related scandals, often exacerbated by official negligence or corruption, can cause major political embarrassment in China. In the approach to the Olympic games in Beijing in August 2008, the leadership's efforts to create an image of a safe and hygienic China led to the suppression of news about a widespread contamination of milk products with melamine, a chemical that can be toxic. By the time the central government admitted the problem in September that year, tends of thousands of babies had been affected and several had died.

Public anger over the incident hastened the passing of a food-safety law in 2009 which was intended to tighten standards, improve supervision and impose tougher penalties on violators. It appears to have done no more to alleviate public anxiety than did the execution in 2007 of a former head of the State Food and Drug Administration for taking bribes to certify products as safe.

—The Economist. “Food Safety in China: In the gutter.” October 28, 2011. Page 49.

Small farms are all we need

2011-11-04T10:16:00.000-07:00

I fervently hope the person talking to Jeff Greene in the quote below never gains any political influence.

I found that no one could offer me a coherent explanation of why they hated Wall Street, and no one suggested a workable plan for regulation banks. (One fellow told me all we need to do is establish more small farms.)
—Jeff Greene describing his mingling with the Occupy Wall Street Protestors. “We Should Listen to the 99%.” Wall Street Journal. November 13, 2011. A17. (Not a quote I identify with)

Don't hate the merchant, hate the game

2011-11-03T10:14:00.000-07:00

In my readings of history I am continually baffled at various society's debasement of merchants. In Medieval societies the merchant wasn't even included in the classes of society (three classes: the peasants, who worked; the clergy, who prayed; and the noble, who fought), as if merchants added nothing to social felicity.

Ninth century China was even worse. The Chinese class system was divided as follows, with the highest class listed first.

The Gentleman / Noble: "...The Gentlemen are at the top of the hierarchy because they manage the affairs of society, so their social utility is at the most..."
Farmer / Peasant: "...because they produce the food which everyone needs to survive."
Artisan: "...because while they don't produce food, they make things that are of use to everybody."
Merchants: "Merchants are at the bottom because they don't produce anything themselves. They don't grow food, they don't make objects of utility. What they do is take things that other people have produced, move'em around, and enrich themselves in the process. So they are seen in the Confuciun system as being in a sort of socially-parasitic role. They do perform a social function, but it is one which is tainted—it is morally less acceptable, because they enrich themselves from the production of others."

When I was first taught the four classes of utility...

Form Utility
Time Utility
Place Utility
Possession Utility

...I felt it stupid that it needed to be pointed out that someone who transports bread from where it is made to the time and place I want to eat the bread performs me a valuable service. However, history shows us that what appears obvious to us now was not so obvious without a good education.

Perhaps the Chinese felt that no special skills were involved in being a merchant, whereas a farmer, artisan, and gentleman could not perform their duties without learning certain skills.
One only has to observe the sophistication of storage, transport, logistics, and retailing to understand that today's merchant possesses an array of valuable skills.

If I were teaching the four classes of utility, I would definitely discuss this artifact of Chinese history to motivate what seems so obvious to us now.

Source
Kenneth J. Hammond
"Five Dynasties and the Song Founding"
Lecture 14
From Yao to Mao: 5000 Years of Chinese History
The Teaching Company

Overrated Universities

2011-11-02T15:20:00.000-07:00

As for the “practical” majors...they might not be as useful as once thought. In a recent work called “Academically Adrift”, these authors tracked the progress of more than 2,300 undergraduates at two dozen U.S. universities. They found that more than a third of seniors leave campus having shown no improvement in critical thinking, analytical reasoning, or written communications over four years. Worse, the majors and programs often thought most practical—education, business and communications—prove to be the least productive.
—William McGurn in his Wall Street Journal column Main Street. November 1, 2011. A10.

Galbraith on Keynes

2011-11-02T10:31:00.000-07:00

“Never forget, dear boy, that academic distinction in economics is not to be had from giving a clear account of how the world works. Keynes knew that; had he made his General Theory completely comprehensible, it would have been ignored. Economists value most the colleague whom they most struggle to understand.”
—John Kenneth Galbraith in A Tenured Professor (1990), page 50.

Galbraith on lecturing

2011-11-02T10:27:00.002-07:00

“Lectures,” said McCrimmon, “are our most flexible art form. Any idea, however slight, can be expanded to fill fifty-five minutes; any idea, however great, can be condensed to that time. And if no ideas are available, there can always be discussion. Discussion is the vacuum that fills a vacuum.”
—John Kenneth Galbraith in A Tenured Professor (1990), page 39.

Galbraith on Tenure

2011-11-02T10:27:00.000-07:00

“I’m going to be an economist, but I want to make my small contribution to the liberal agenda. Peace, a better break for the poor and the inner cities, greater equality in income distribution, government assuming its proper responsibilities. I haven’t got it fully worked out yet.”

“Most unwise,” said McCrimmon, adding with some emphasis, “most unwise. And certainly impractical.”

“Why, sir?”

“You simply won’t get tenure. Tenure was originally invented to protect radical professors, those who challenged the accepted order. But we don’t have such people anymore at the universities, and the reason is tenure. When the time comes to grant it nowadays, the radicals get screened out. That’s its principal function. It’s a very good system, really—keeps academic life at a decent level of tranquillity.”

“Suppose one waits until one has tenure to show one’s liberal tendencies?” Marvin felt obliged to make some response.”

“The only sensible course,” said McCrimmon. “But by then conformity will be a habit. You’ll no longer be a threat to the peace and comfort of our ivied walls. The system really works.”

—John Kenneth Galbraith in A Tenured Professor (1990), pages 38-39.

Piquo and Welfare Economics

2011-11-02T10:23:00.000-07:00

According to John Kenneth Galbraith, A.C. Pigou (for whom the Pigouvian tax is named after) "was known for having brought the word 'welfare' into economic use."

Source
John Kenneth Galbraith
A Tenured Professor
Page 36
1990
Houghton Mifflin Company

Pagan fertility chant in Early Middle Ages

2011-10-31T10:55:00.000-07:00

Earth, Earth, Earth! O Earth, our mother!
May the All-Wielder, Ever-Lord grant thee
Acres a-waxing, upwards a-growing,
Pregnant with corn and plenteous in strength;
Hosts of grain shafts and of glittering plants!
Of broad barley the blossoms,
And of white wheat ears waxing,
Of the whole land the harvest...
Acre, full-fed, bring forth fodder for men!
Blossoming brightly, blessed become!
And the God who wrought with earth grant us gift of growing
That each of the all the corns may come unto our need.
—Eileen Power in Medieval People (1963). Page 28 of the 2000 Dover reprint. This was a “charm” (pagan chant intended to have worldly impact) a farmer would recant as he began plowing and placed a little bread-cake under the soil, hoping to increase the fertility of the field. During early Middle Ages. This farmer may have to admit to the chant during confession, and do penance.

Electro-Shock Therapy and Placebos

2011-10-28T10:03:00.000-07:00

Halloween is near, and the streets will undoubtedly be walked by a Frankenstein or two. However fictional Mary Shelley's book may be, her idea to have electricity bring dead flesh to life was grounded in [what people thought to be] science. In the beginning of the 19th century, many scientists thought that animal muscles were powered by electricity, as electrical currents applied to the body of a frog or a decapitated human would cause its muscles to move. Given this, it didn't take much imagination to imagine a lightning bolt bringing Frankenstein to life.

This generated considerable interest in the interaction between electricity and the human body. Could electric shocks to a shaven head cure someone of a major depression? This was attempted on a twenty-seven year old man named Luigi. The first sessions delivered a mild shock, but the intensity of the shocks increased at each session. Luigi, it is said, improved with each session and was eventually cured of his depression. Life was worth living again. Remember, this was the early 19th century, and this idea of treating mental disorders evolved to modern electro-shock therapy (used by Carrie Fisher, it turns out).

Back then, a patient recovering from depression through electro-shock therapy was considered evidence that the therapy works. Today, we know there is the placebo problem to deal with. It is easily possible that the personal attention everyone gave Luigi before and during the electro-shock therapy was what cured him, not the electric shocks. Acupuncture or an ancient pagan healing ritual might have been equally effective, as long as people were talking to him, showing that they cared for him, and listened to him.

To prove the efficacy of the therapy, we would need to randomly sample willing participants, randomly place them into a treatment and control group. Researchers would apply electro-shock therapy in the treatment group. In the control group someone would simply sit down with the subject and talk to them. Only then would electro-shock therapy pass modern criteria for a proven medical therapy.

Perhaps this has already been done. I doubt it, though.

Sources:
"Who was the real Dr. Frankenstein?" Stuff You Missed in History Class podcast. Howstuffworks.com October 19, 2011.

"Placebo." Radiolab podcast. May 17, 2007.

Keynesian Multipliers and the Perpetual Intellectual War

2011-10-27T10:34:00.000-07:00

The recent EconTalk podcast concerned Keynesian multipliers (like, if the multiplier is 1.2, an increase in government spending of $1 increases total national income by $1.20), and within the podcast the interviewer did what many libertarian economists have been doing for three years: mocking the use of decimal points in multipliers.

For example, the Congressional Budget Office used a multiplier of 1.52 (I'm pretty sure, that's what Dr. Roberts at EconTalk has said) to appraise Obama's fiscal stimulus. Are macroeconomists being arrogant, or ridiculous when they use a multiplier of 1.52 instead of 1.5, when everyone knows these type of estimates can in no way possess a precision warranting two decimal places? The Cafe Hayek blog has frequently mocked macroeconomics for this, as if Keynesians do not understand the complexity of a real economy, but the libertarian does.

But what if we hesitate in our attack, and instead try to understand why such decimal places are used? My guess is that macroeconomists (especially when they represent the Congressional Budget Office) want to communicate that these numbers are not guesses: instead, they are the result of intense econometric estimates. When you hear the multiplier of 1.52, you are more likely to believe that rigorous data-crunching was involved in the estimate, even if the estimates are not precise. However, if they simply said a multiplier of 1.5, it sounds like a casual estimate, derived from no data or statistical estimation.

It is my sincere wish that economic blogs from different political parties would seek to sincerely understand the reason for their opponent's views, rather than stay on the attack perpetually. True, their readership might decline. But I would learn more.

For example, just imagine how much we could learn if, when libertarian bloggers attack Paul Krugman for his inconsistent statements over the last fifteen years, they try to understand what in the economy has changed which induced Dr. Krugman to alter his remarks. Instead, libertarian bloggers attack him, asserting that Krugman was once an economist but is now a progressive columnist--that he has sold out!

After all, are university economists educators, or political pundits?

Spinoza and the Enlightenment

2011-10-25T11:16:00.000-07:00

Actually, to become a professor or a clergy member in Europe even a hundred years following Spinoza’s death, you had to have your denunciation of him ready. That was part of the oral exam, knowing where he’d made his mistakes. And this meant that everyone was reading Spinoza; they had to read him in order to denounce him, so he was radicalizing Europe, and in about a hundred years they were ready for the Enlightenment.
—Rebecca Goldstein’s acceptance speech for the 2011 Humanist of the Year award. Published in The Humanist. November-December, 2011. Pages 12-16.

BTW: Spinoza is the only person I have heard of that was excommunicated permanently.

Theory of Virtue and Sin

2011-10-25T10:51:00.000-07:00

“Group selection,” he said, “brings abut virtue, and—this is an oversimplification, but—individual selection, which is competing with it, creates sin. That, in a nutshell, is an explanation of the human condition.
—Howard W. French quoting E.O. Wilson. “E.O. Wilson’s Theory of Everything.” The Atlantic. November, 2011. Pages 70-82.

“Within groups, the selfish are more likely to succeed,” Wilson told me in a telephone conversation. “But in competition between groups, groups of altruists are more likely to succeed. In addition, it is clear that groups of humans proselytize other groups and accept them as allies, and that that tendency is much favored by group selection.” Taking in newcomers and forming alliances had become a fundamental human trait, he added, because “it is a good way to win.”
—Howard W. French quoting E.O. Wilson. “E.O. Wilson’s Theory of Everything.” The Atlantic. November, 2011. Pages 70-82.

Excerpt from Grand Pursuit

2011-10-25T10:41:00.000-07:00

I wonder if this will not also describe the Great Recession of 2008-present well? Except for the fact that investors were not panicky when they "sold", but simply realized they had been wrong about the value of mortgages. When they sold they sold because of long run economic fundamentals—not panic.

Most economic historians agree that not only did no one predict the Great Depression on the basis of any previous depression, but no one could have predicted it on the basis of any existing theory. In retrospect, modern scholars put the primary blame on mistakes by the Federal Reserve, the collapse in confidence and spending by consumers and business, and the wave of selling into falling markets by increasingly panicky investors, but as David Fettig at the Federal Reserve Bank of Minneapolis has observed, “In the end, if the Great Depression is, indeed, a story, it has all the trappings of a mystery that is loaded with suspects and difficult to solve, even when we know the ending; the kind we read again and again, and each time come up with another explanation. At least for now.
—Sylvia Nasar in Grand Pursuit. Chapter 10. Page 320.

A Remark On Keynesian Models

2011-10-25T10:05:00.000-07:00

After the recent financial crisis and recession there has been a renewed interest in Keynesian models of the macroeconomy (e.g., see the many posts by Don Boudreaux at the excellent blog Cafe Hayek). Many of these are criticisms, pointing to the seemingly queer assumptions which must be made for a fiscal stimulus to be effective. Keynesian models, it seems, does not make sense. They certainly don't to me.

However, that criticism has a weakness. Keynes developed his theory during a prolonged worldwide recession—a recession that also did not make sense. There is no good reason for why the depression was so deep and so long. The Great Depression does not make sense. It certainly doesn't to me.

Keynesian models don't make sense, but neither did the economy during the Great Depression. Yet, we know the Great Depression actually happened, so perhaps Keynesian models adequately described the economy at the time?

Note: I used to subscribe to Robert Higg's view of the Great Depression, which stipulated that the depression was so severe because many businessmen lacked the confidence to invest. Higgs described a survey in 1941 showing 37% of businessmen believed America would become a "semi-socialized society with little room for private economy." It is a fact worth pondering, but I'm wondering if causality couldn't run the other way? Perhaps businessmen saw so little room for capitalism because the Great Depression proved that capitalism failed? They lacked the confidence to invest, because they lacked confidence in capitalism.

Analogy for tariffs

2011-10-25T09:55:00.000-07:00

The Qin dynasty was the first empire to unite all of China, though it only lasted fourteen years. But in those fourteen years the Qin administrative system sought to standardize everything; including how areas were ruled, how weights were measured, coinage, and the size of cart axles—this last item I believe provides an excellent analogy to international tariffs.

The length of cart axles differed across states, and this is important because a cart may not be able to be pulled on a road whose ruts were carved by an axle of smaller or larger length. This meant that if goods were exported from one state to another, as you approached the border of the new state you had to unload your goods from one cart and load them onto a different cart whose axle-length corresponded to the country you just entered. As you can imagine, this increased the cost of exporting and importing goods considerably, and did so without changing the quality of the good being traded.

A tariff does the same thing. It makes it more expensive to trade the good while not enhancing the good's quality. Now, all of us can imagine the wealth resulting from standardizing axle lengths, as goods can now be traded with more ease. However, the non-economist has trouble understanding the wealth generated from eliminating a tariff—but they are the same thing, conceptually!

And that is what makes the axle-length issue in ancient China such a great analogy for metaphors.

Source
Kenneth J. Hammond
From Yao to Mao: 5000 Years of Chinese History
Lecture Six: The Hundred Schools
The Teaching Company

Monasteries for Protestants

2011-10-23T14:01:00.001-07:00

I always wondered why Protestants never developed their own version of the monastery. But they did--they are called the Shakers.