tag:blogger.com,1999:blog-70562082409657650462024-02-07T18:52:39.873-08:00Garth's Politics BlogPolitics, Economics, Philosophy, Current Events and interdisciplinary thought.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.comBlogger61125tag:blogger.com,1999:blog-7056208240965765046.post-1080064328213921642018-11-08T11:35:00.000-08:002018-11-08T11:35:04.763-08:00A new post -- 7 years later + discussion of gender equalityIt's been a long time since I posted on this blog. I've been living in China and it's possible I'll go back there again sometime. Not that I couldn't have posted from China, but being in a different country suddenly pulls you out of the cycle of reading and watching political news. I became focused on other challenges and forgot about this little corner of the web for seven years.<br />
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Now I'm here again with another update. The topic today is gender equality.<br />
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Obviously I'm talking about this in the normative sense. What standards are acceptable as equal standards between genders in social and relationship settings? Here, 'relationship' means any sort of association between two people who know each other and expect continued interaction.<br />
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The first, and strictest type of equality is gender blindness. In this arrangement, people simply act as if there is a single gender, and that all people are part of that gender. This is ideal for most social situations and professional relationship settings, especially the workplace. The principal advantage of this strategy is its simplicity. <br />
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One strategy to enforce gender blindness in <i>action</i> is to actually hide peoples' genders. HR that follows this standard should even go so far as to hide applicants' names when reviewing applications to avoid gender bias. This can of course easily be done online as well, although in practice many websites make genders public.<br />
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But when genders can't be hidden, people who report themselves to be gender blind will inevitably make gender-biased decisions. They literally can't help themselves. Their subconscious sees people as different, and it isn't just because what they are taught in school or by their parents, so society as a whole can't correct this problem with half-baked solutions.<br />
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An interesting thing to note here is that the mere practice of assigning different names to different genders is itself a violation of gender blindness which promotes inequality. <br />
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A second strategy is gender-based roles. Each gender has its own set of social and relationship expectations. Women must be coy. Men must be gentlemen. Gay women must be tomboys. Gay men must be boisterous. Obviously this isn't reality... unless you turn on the television. This strategy is not the continuing cause of the workplace today. Sure, statistically there is a lot of evidence that workplaces are unequal, but that isn't because these roles are overtly pushed. Rather, the people involved simply don't live up to their words.<br />
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But interestingly, gender-based roles are still overtly practiced in many contexts outside education and the workplace. Some gender-based roles are actually connected to biological necessities. A man can't bear a child, for example. For the most part, however, it is in the context of romantic relationships and courtship that rituals with different gender-role expectations are consciously accepted and practiced, albeit without any direct biological basis (at this point 'men are from Mars' arguments have been thoroughly refuted). And just as in any other walk of life, alongside these consciously practiced gender-roles are the many unconscious ways in which different genders behave differently, and unfortunately are in the end treated unequally.<br />
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This tendency ought to be criticized, not simply because there is no biological basis for it but because some of the participants may not truly prefer to engage in some of these rituals in the prescribed way. Few would take offense to a man holding a door for a woman, or a man giving flowers, a man taking the initiative, a man being the one to propose. Kudos also to the women who are willing to hold the door for their man, take the initiative, etc. Society generally applauds them for taking on these extra obligations. But what about the men who don't want to be obligated in this way? A man who doesn't want to propose is no worse than a woman who doesn't want to shave.<br />
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The truth is all of those rituals and obligations are holdovers from the times of vast gender inequality. They are connected to entire social orders that don't exist anymore. They continue to perpetuate and maintain a residual inequality that is difficult to perceive directly. It may not be clear at this moment, but one day it will be.<br />
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What would a relationship be like absent these rituals? Generally, the objections to the feasibility of this lifestyle are all criticisms of feasibility centered on the act of initiative. Perhaps the man and the woman would become stuck at an impasse? Actually no, because by de-ritualizing the action it becomes more spontaneous and natural. If a man and woman can discuss the possibility of dating in a casual way, then there is no longer any special import attached to the "woman asking". The nature of the dialog becomes more relaxed, the questions asked are no longer heavy with obligation, and even the significance of the status of dating itself changes. When the act of ritual asking is abolished, the status loses its rigidity and both parties are more able to connect to their emotional inner-self.<br />
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This is not an argument against romance any more than an argument against religion is an argument against ethics. On the contrary, romance itself is smothered by the duties of relationship. If a person in a relationship acts again and again according to perceived duties, it makes it difficult for both people in the relationship to develop real and true feelings. Indeed, all of those rituals are just a sham designed to entice and trick people who are miserable together to stay together.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-7043525297118873882011-07-25T20:19:00.000-07:002011-07-25T21:02:59.446-07:00The Pathetic Nature of TerrorismIf, as the word implies, the goal of terrorists is to inspire terror, especially terror of such a proportion that it actually causes us to change our behavior, then they have failed, and failed dismally.<div><br /></div><div>A person can only be said to be committing terrorism if they are able to embody this ideal, that is to participate in some sort of campaign against civilians that is of such a magnitude that it actually does cause them to live in terror and to change their way of life as a result. If this is the case, then we should not be so eager to use the word "terrorist" because it implies the existence of such a campaign. In reality, these campaigns are sad, weak, and ineffective. Their participants are all similarly deluded, whether they are blowing themselves up, opening fire on civilians, or doing some other sort of stupid activity. Thus, we should not be calling these participants "terrorists" but rather "wanna be terrorists".</div><div><br /></div><div>The reality of effective terrorism is that it must arise through a power vacuum that rarely exists in the developed world. Terrorism is really a story of radical groups operating in failed states, oppressive dictators, and of course western corporate sponsorship of violent groups that oppose the peaceful organization of labor. Therefore, our response to and use of the term "Terrorism" shows the lack of understanding that the Average westerner has of conditions outside of the West.</div><div><br /></div><div>Following the 9/11/2001 "terrorist" attack in New York, President Bush and other western political leaders exploited this lack of knowledge to create the modern ideological "war on terror". This is nothing but a meaningless show, a quixotic pursuit of only the small and insignificant outgrowths of (manifestly ineffective) anti-western violence amid the sea of power struggle in underdeveloped regions where terrorism of all types actually occurs. The objective of preventing terror in these regions is, in fact, a noble goal, but it will only prevent violence against the West if it is true that a properly organized and empowered government in such a region would be a western ally - something that is not likely considering the history of western involvement in such regions. In this context, the western policy goal of promoting democracy in these regions is not itself misguided, but the stated political goal of preventing attacks against the West is certainly a lie.<br /><br /></div><div>Of course, the means by which democracy is allegedly being promoted in these regions is not a means of bringing about democracy at all. Here, a mix of sinister motive and pure ignorance reigns. The motive is sinister in the sense that wherever popular sentiment is anti-western, a true democratic process cannot be allowed to occur, because then anti-western leaders will be elected. The motive is ignorant in the sense that the western leaders are generally ignorant of the actual economic, legal, and social conditions that must be cultivated in order to bring about a prosperous society. President Bush was the exemplar of both the sinister motive and pure ignorance.</div><div><br /></div><div>Rhetorically, the language that terrorism is wrong is a pointless endeavor because terrorism arises from a political conflict. The very nature of political conflicts is for individuals to hide factual disagreements behind ideological positions. These ideological positions involve accusations of injustice. Thus, arbitrary ideological disagreements prevent, in general, the comparison of ethical positions in a way that allows disputes to be resolved.</div><div><br /></div><div>The only meaningful way to fight terrorism with rhetoric is to characterize it as pathetic and ineffective. This will dissuade individuals from participating because they will feel it is an inefficient use of resources, and seek alternative means of bringing about their policy goals. Conversely, the more wildly overstated the magnitude of a terrorist incident is, the more media attention it receives, and the more disproportionate the western response, the greater the likelihood that some other idiot will take up arms against the West.</div>Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com1tag:blogger.com,1999:blog-7056208240965765046.post-69470989909883925242011-07-01T13:43:00.000-07:002011-07-01T14:36:15.917-07:00A little sketch of the beginnings of proper philosophic thoughtFrom a distance, the playground sounds reach the ear as an ecstatic whispering. As the person approaches, these sounds flow apart to become the shouts of children, myriad shuffles of motion, wind blowing across grass, and the low, deep hum of adult conversation.<div><br /></div><div>Distributed in their respective zones, the denizens have segregated themselves by activity. About the very perimeter there can be found dogs. One is squatting down to shit while its owner waits with a scowl, no doubt uncomfortable with being observed. Another runs in J shaped intercept patterns, zealously retrieving the ball that is thrown by its patient master. In a sunny but secluded space, just inside this perimeter, one finds alluringly toned men and women sunbathing. They are young, old, nearly naked, fully clothed, happy to be seen, unhappy to be seen, indifferent. Moving now toward the heart of the space, here are the games and the children. Some play on the equipment. Others buzz in endless squiggles as they pursue the soccer ball. Little groups of children quietly or boisterously discuss their plans in the shade of the great fur trees. One solitary boy sits against a concrete wall, whining to his mother who listens with concern that may or may not be genuine. Here one finds that encircling these groups of children and sprinkled throughout are adults: parents and caregivers of various types, older siblings and babysitters.</div><div><br /></div><div>Categories puff into being as the mind searches for eloquent words. The truth is there but it can never be anywhere but where it is, it can never have a form other than itself. Those particulars which become the exemplars on which we base categories can never be identical to ideas in the mind, words on the lip, or the abstract workings of a step-wise mechanical process.</div><div><br /></div><div>The observer speaks from memory, but those who listen must then speak from their imaginations. Deep in the consciousness there are these little things - impressions of the world - that are a more primordial form of imagination which springs up in the moment of observation. But for the reader there are no impressions of the particular moment at the particular place that I have observed. And so even if by some luck every detail he contemplates is filled in exactly as it was, the reader will only have recreated those things which he has contemplated. But contemplation itself is limited in ways that experience is not, and it extends in dimensions that have never yet been experienced.</div><div><br /></div><div>Philosophy can now be considered. If description, prediction, and all the other measurable ways of analyzing the narratives of people are to be refined, all such refinement must be based on the comparison of the narratives of observers with those of listeners. Because this is a question of the quality of the imagination itself, Philosophy is an effort to improve imagination. But this means that we must define improvement, and so we must have some sentimental agreement as to what ways of imagining are superior. Thus it will never be possible to proceed from first principles in the way that the philosophers of old have done. It should be obvious, in any event, that philosophy cannot exist outside of the particular cultural tradition from which the consciousnesses of its practitioners are constructed. To note: consciousness can only be constructed from things which are not consciousness, or it cannot be constructed at all.</div>Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-69727056762961047412011-03-19T14:00:00.000-07:002011-03-22T12:14:12.419-07:00An ethical assessment of occupational hazard level agreements in hero class operationsFirst, what is a <span style="font-style: italic;">hero class</span>? Well, there are specific job functions that allow a person to be viewed as heroic by virtue of their daily activities within that job function. Typically, these are privileged classes in the sense that workers within them are viewed as being better, in some way, than the typical member of the society. In western societies these classes are the Firefighters, Police, Paramedics, Doctors, and Military Personnel.<br /><br />Why these classes are viewed as being particularly heroic is largely a narrative question. We have narratives throughout our social experience that enforce the heroism of these types of worker. These narratives contain the logic that these individuals are <span style="font-style: italic;"><span style="font-style: italic;"><span style="font-style: italic;"><span style="font-style: italic;"></span></span></span></span>engaged in professions where they contribute to the good of the society in some way. However, this logic applies to a far greater class of worker than just these classes, so there must be additional, less manifest criteria. In any event, these categories of worker comprise a class that will from here be called the <span style="font-style: italic;">hero class</span>.<br /><br />A note on the analysis that appears below: The terminology used may appear to be imprecise. It is not explicitly connected to any particular ethical theory. It is my view that the terms used can be <span style="font-style: italic;">internalized</span> to a given ethical system such that they make sense within that system. This will work for a large number of ethical systems. Whereas my language often suggests a consequentialist framework, it may be recast as deontological analysis by agreed upon replacement mechanisms that replace object values with rule arrangements.<br /><br />How much greater is the value of the life of a hero than that of other classes of person? Certainly, the value of a hero is treated as being much greater than that of a criminal. For instance, if a law enforcement official suspects any degree of danger to his person, he can usually justify the summary execution of a criminal. This is the basis of the ethical justification for killing of criminals extrajudicially.<br /><br />Foreign nationals are valued depending on their occupation and nationality. Generally speaking, Foreign military personnel and police officers are not given heroic distinction at all. Additionally, peasants, blue collar workers, the unemployed, day laborers, and non-professional white collar workers (basic civilians) are viewed as less valuable than professionals, businessmen, capitalists, and academics (prestige civilians). Peoples from countries outside of the United States, Europe, or the British Commonwealth (western) are also generally viewed as less valuable.<br /><br />Thus, in order to preserve the life of a single hero, as many as one hundred civilians can be killed or allowed to die, provided that they are basic civilians from non-western countries. In this scheme, a prestige civilian is probably worth about 10 basic civilians, and a western civilian is probably worth about 10 non-western civilians. An empirical study could elucidate this ratio.<br /><br />How did this arrangement come about? There are three aspects to it: first, the power of unions bargaining for occupational safety standards for these classes of peoples leads to restrictions on activities in times of crisis. Secondly, political leaders often perceive that allowing deaths of many heroes will be politically unprofitable, so they will make decisions that prioritize the lives of heroes. Third, the casualties among less valuable classes of people are heavily discounted in various ways.<br /><br />On the first point, unions are successful in their attempts to secure benefits for the worker classes they represent largely as a result of the political dynamic in place. Hero classes generally receive a favorable political dynamic, so the interests of their unions become more successfully advanced than that of other workers represented under collective bargaining. Safety is typically a highly valued concern for these classes. Thus, the result is the establishment of procedures that reduce hazard levels. While not a deliberate trade off between the lives of non-heroes and heroes, it is this in effect because efficacy, and therefore net life-savings, becomes a secondary criterion to safety at least some of the time.<br /><br />On the second point, Political leaders recognize the importance of preserving the lives of heroes, in part because some of the blame for hero deaths ultimately falls upon them. When heroes die, it carries extra poignancy to a society that idolizes them. Additionally, politicians seek to appease their unions, lobbyists, and advocates. Specifically, in the industrial supply for these industries, it is more profitable to utilize advanced technology, often on the basis of preserving hero life, and politicians will follow the money in this regard. Additionally, popular sentiment is more likely to follow stories of individuals or small numbers of people than large, statistical quantities. Popular sentiment also views the lives of typical people as being nearly worthless - this is the basis of our attitude toward strangers.<br /><br />Regarding the third point, while the death of many people might carry a larger absolute number, people do not register these deaths in the same way because of various discounting mechanisms. First, media is often not present in the decision making of heroes. Thus, information on what actually happens is frequently unavailable. Secondly, people have a tendency to deny that heroes' decision making or operational pattern of action can actually be anything but ideal. Thus, the view that heroes (not necessarily at the individual level but through their institutions) can make a calculation that puts their lives above those of who they are saving is a source of cognitive dissonance for the average person, who will therefore avoid conscious consideration of the problem.<br /><br />Turning now to the question of what hero institutions should strive to achieve, consider that as an alternative to this actual, unequal value arrangement, there was an ideal in which all human life is treated as being of equal value.<br /><br />Under such an arrangement, one must consider relative effects on human action. Thus, the policy of police to less often shoot criminals might encourage them to become more confrontational on average, or less likely to flee from police. However, much sociological work suggests that this is of limited effect. Similarly, military interventions would probably not suffer from significantly increased resistance if military actions were made less brutal. In this regard, it is important to count accurately, since some of the changed effect comes from differences in immediate conditions, which should not be included, as the question is whether the net quantity of such decisions increases, not how they individually pay out.<br /><br />Within a given operation, there are logistical constraints. The death of a hero prevents their presence at a later time in the operation. In this regard, two types of operation can be distinguished.<br /><br />In an emergency operation, attrition is important because replacement cannot occur within a sufficiently brief scope, so that each death hinders efforts through to the remainder of the operation. Thus, in this case, the initial assessment of operation length and frequency of life-saving trade-off should help determine the degree of risk that the hero should initially undertake. As the operation approaches its conclusion, the hero should gradually be exposed to greater risk, until such point that the expected value is maximized with no risk avoidance premium at the termination of the operation.<br /><br />In an operation that is planned in advance, arrangements can be made to replace any hero that is killed. Thus, the expected value should be maximized throughout, with no risk avoidance premium at all.<br /><br />Expected value is maximized in terms of net human life. Thus, for the hero that has no risk avoidance premium, operational possibilities should be ranked based on expected lives saved - expected lives lost. A hero must be indifferent between his own death and that of another person. The risk premium is simply an additional value that is placed on the life of the hero, thus the calculation when there is a risk premium takes the form of expected lives saved - expected lives lost - risk premium * risk of hero death.<br /><br />In conclusion, let an operation that has a net gain of human lives be considered good. Let an operation that has a net loss of human lives be considered evil. When the perspective is set such that the status quo is the current operational framework, operations are then defined as changes to policies and corresponding changes to lives saved or lost.<br /><br />It is clear that policies that allow police to shoot people with near impunity, or allow militaries to bomb civilians in pursuit of political goals are evil. The resistance, even by unions (such as police unions) to policies aimed at increasing accountability of heroes, are policies that enforce the unequal valuation of lives between heroes and non-heroes. The honoring of military personnel who have committed atrocities in foreign states similarly enforces this inequality. Even the use of the term "hero" to describe activities that in any other light would be horrific is testament to the relativity and self-serving nature of our popular thinking regarding good and evil.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-44254292624601568602011-02-22T22:15:00.000-08:002011-02-23T16:19:48.716-08:00Good Business, Bad BusinessDenote the concept of a rule as a general term for everything from guidelines to laws, encompassing all of our sentiments regarding morality.<br /><br />In a system where the rules are set by an outside (divine) authority, the rules themselves define the totality of goodness or badness. This can be proven by contradiction; suppose that someone did something bad (or good). If there was no rule to determine that it was bad, how could it be bad?<br /><br />In a system where the rules are set by a human process that is internal to the society in which the rules exist, the rule set cannot be entirely stipulated or communicated throughout the society; regardless of whether it is agreed upon, individuals are only given a part of it and forced to infer the remainder. If we take this inference to be the basis of individual differences in ethics, we are, in a sense, arguing against the individual proclivity to have ethical originality. Nevertheless, this seems to manifestly be the case. Those who have more dissident ethical views are typically those who for some reason formed strong completions based on small subsets and then came to conclude that the remainder of society's opinion of the rules were invalid due to the resultant discrepancies. Typically this happens early in life.<br /><br />The above description posits that rules begin at the level of the whole society and are disseminated to individuals through acculturation. Then it cannot be that the rules are merely the confluence or agreements, mediated by political processes, of individual ethical positions; rather they are the expression, by the politically dominant, of a mixture between their own vision of the complete rule set and modifications, including intentional omission of those rules which are in some way disadvantageous to them. For example, money talks in politics.<br /><br />The concerned intellectual responds by pointing out these flaws and omissions, ideally by demonstrating clear and simple contradictions or recalcitrant data. The politically dominant, often having hired unscrupulous intellectuals of their own, seek to undermine, in whatever way is most effective, the potency of the concerned intellectual's message.<br /><br />There is also an important function served by rules, namely that of the just social order. Under a rule set that is ideal, the basic physiological, social and emotional needs of the people are best fulfilled. Many arguments support this idea but it would be onerous to argue for it here; a detailed argument is given by Rawls<span style="font-style: italic;"> </span>in <span style="font-style: italic;">A Theory of Justice</span>. There may be no single ideal, but within a single ideal the utility of stability typically makes movement to a different ideal undesirable.<br /><br />Define a business as a collection of individuals that is marked by internal political relations that lead it to have coherent profit-seeking behavior and a hierarchical command structure. Typically the business has political interests insofar as proposed and existing rules have a significant effect on either the business itself or some political faction within the business. Since it has a hierarchical command structure, only certain factions within the business are able to express their political views through the business. Thus, the business organizes the labor of many political factions toward the ends of its leadership.<br /><br />This political participation has its ethical expression in ubiquitous and blatant manipulations of the rules. Having not experienced more than a tiny portion of the unfairness within a given rule set firsthand, the typical member of the society will object to only a tiny portion of the behavior of businesses and a tiny portion of the rules. However, the many tacitly accepted modifications of the rules will, over time, create a divergence from the just social order. The individual whose interests are not coincident with those of business will not necessarily realize that the rules have become increasingly unfair to him. Instead he may perceive an arbitrary aspect of the rule set as vulgar or oppressive due to the interaction of his many rule completions, some of which involve the acceptance of manipulations or omissions.<br /><br />Within a typical society, the lions' share of profit and corresponding sinister political manipulation come not from each business in an equal share, but from a small portion of businesses. These businesses are not necessarily the largest (so long as profit is not used as the yardstick). What makes these businesses different is the <span style="font-style: italic;">modus operandi</span> of subversion through rule manipulation. Not always is the conduct of such businesses illegal, but typically there are many illegal activities taking place within these businesses, hidden behind a veil of secrecy and plausible deniability. Typically these businesses are monopolies or parts of cartels; or they control majority market shares within consumer and/or supply chain markets. In part, it is the freedom from the persistent pressure of competition that allows the accumulation of profits in sufficient quantity to corrupt the political process. However, perfect competition is an unbearable state for the typical business, and so it is no wonder that it is so rare.<br /><br />Because of the power of business that result from their profits, and the myriad incentives to manipulate rules to jeopardize society in general, the political goals of businesses should be viewed with extreme skepticism. Within the political structure, the vast majority must be united against the small factions who control businesses. Great care must be taken, in particular, to ensure the fairness of competition between businesses, because it is often arguments related to this unfairness that become the basis for profound regulatory blunders.<br /><br />If, on the other hand, the political effort to maintain skepticism toward the political goals of businesses fails, the political environment rapidly deteriorates. Instead of having a system in which the rules are more or less fair and a small amount of effort is needed to maintain that fairness, the system becomes one in which the rules are more or less unfair and those seeking to restore fairness must resort to extreme philosophic extrapolation in order to even visualize what a fair rule set might be. In such a situation, social reformers become pitted against each other because the proper ideal is unclear.<br /><br />In order to resolve this conflict among social reformers, a robust traditional character must be cultivated within societies. This character must combine expressions that appeal to each relevant political faction. Within the traditional character, artistic and philosophic expressions, particularly hero stories read to children, must be developed that serve as a common language of ethical discussion. Small ethical fragments, enforced by celebrated art, become the basis for effective political discourse by the masses.<br /><br />Businesses will seek to disrupt this character. However, it is not difficult at all to engender a persistent cultural belief that businesses are not cool.<br /><br />I think that this musing has some relevance to present day America.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-37846854784704193302010-10-11T05:12:00.001-07:002019-05-19T17:34:54.595-07:00Defending Gay Marriage by valuing Equality<a href="http://www.youtube.com/watch?v=fuuPIEQXKeU">Here's a video on marriage equality</a><br />
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As I see it, a person can come up with rather silly "discrimination" arguments. But just because they follow the same form doesn't mean they have any merit:<br />
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Pretend the following holds:<br />
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1. "Banning men from womens' restrooms does not discriminate against men because they still have the same right to use mens' restrooms as anyone else".<br />
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IF AND ONLY IF<br />
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2. "Banning Mexicans from breathing air does not discriminate against Mexicans because they can still breathe water"<br />
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Clearly these two arguments have no relation to each other. But the point is they follow the same logical form. <br />
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But what about Gays who want to marry each other?<br />
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I post this because the concept of discrimination is problematic because we need to do two things:<br />
1. Pick a well defined protected class<br />
2. Have some standard of minimum harm<br />
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Instead of being generally frustrated, I'll give this one a shot using equality instead, something "easier" than discrimination. Its hard to precisely formulate what you mean when you say equality, and there will always be technical objections raised to arguments, even when these objections clearly come from a very cynical position within the debate. Discrimination, however, requires a subjective sense of proper conduct, which usually takes as its basis the assumption of equal rights. <br />
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Lets start with a simple definition of inequality (state of being unequal): Denying a thing to one person while it is provided to another. We can then define equality: if a situation is not one of inequality, it is a situation of equality. "Rights" are just a type of "thing" that can be equal or unequal. Now, you need to be talking about something that can be measured or else you can't apply this criterion at all. So I can't say that I'm equal to you unless we are comparing something, for instance the length of our toenails or right to trial by a jury of our peers.<br />
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You might start by arguing that two unmarried people have the right to consensually wed, regardless of genital type. Technically though, that isn't an argument for equality of the individual but equality of the pair. For me, this is a fine and dandy way of looking at it but I think it is somewhat unorthodox and in conflict with the fundamentally individual way we tend to look at rights.<br />
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So, what if we try to frame it as the rights of individuals? Here's how I see it:<br />
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Some Jerks say "Gays and straights have an equal right to marry because everyone has the right to marry a person of the opposite genitalia". However, this is like saying that F(A) = F(B) because F()=F(). If the function was not dependent on its inputs, that is to say you could determine F(X) without knowing if X=A or X=B, then yes it would be an equal standard, but of course it isn't.<br />
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Here's what the law says:<br />
Men can marry women but not other men.<br />
Women can marry men but not other women.<br />
If I say "Who can person X marry" you can't answer yet, because you have to ask:<br />
"Is person X a man or a woman?"<br />
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So at the very least, men and women do not have the same right to marry.<br />
At this point we can't say that the situation is equal or unequal because I haven't also assumed that these two situations are of equal value. There is a nagging question though: Is the right to marry a man equal to the right to marry a woman?<br />
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Here's another argument that should shed some light on that point:<br />
Suppose a racist southern town in the 1950s devised a means of discriminating against its black population. They pass an ordinance that reads:<br />
White citizens may only use the public transit system that operates in the western half of the city.<br />
Black citizens may only use the public transit system that operates in the eastern half of the city.<br />
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Even supposing that these two systems were perfectly equal, that the public transit usage rate was the same for whites and blacks, etc., discrimination still occurs. Whites who live, work, or play on the eastern half of the city would suffer an equal harm to the blacks who live, work, or play on the western half of the city. The discrimination still exists, regardless of whether it exists in an equal pair with some other discrimination! This situation could be a huge inconvenience for both blacks and whites, and it is clearly wrong.<br />
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Returning to the issue of Gay Marriage: Just as in the above example, some men are harmed by not being allowed to marry other men; and some women are harmed by not being allowed to marry other women. Gays aren't the *only* group harmed here, for instance two male friends might wish to get married just to get better financial aid status. But gays are definitely the most harmed group.<br />
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How can this be put into words as an explicit "helper" principle for equality? Doing so is always dangerous. I like this one (flawed though it is):<br />
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"Inequality under a given criterion between any two groups is unjust and can only be tolerated for the purpose of promoting equality under a higher criterion, and only when this is the best proven method"<br />
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Of course, a situation doesn't have to be unequal to be wrong. Imagine if there was an 11th commandment: "Thou shalt not use insulin". How would diabetics feel? They are being treated equally, right?<br />
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It is no secret that America continues to treat gays as second class citizens for reasons that have nothing to do with logic.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-29204760069004934812010-06-22T11:34:00.000-07:002010-07-02T16:16:49.774-07:00Unpleasant questions, Migration, Wealth, Secession, and the Common GoodThink out loud last week was about immigration rules in America, particularly the controversy surrounding Arizona's immigration law. As I lay in bed listening, I got to thinking about the underlying policy of immigration and emigration, the limits of liberal education, and how the many smaller issues that came to light throughout the discussion linked back to the philosophy that our Nation's laws are ostensibly based on. Although everyone agreed that reform was needed, there were essentially two visions of what the reform should be. One group put forward rather persuasive arguments that the large influx of new immigrants was undermining the bargaining power of workers in America and by the numbers this influx can account for all of the unemployment in America today. The other group essentially argued that we are all immigrants and that it is wrong to separate out the immigrants of yesterday from the immigrants of today. These arguments aren't mutually exclusive, and neither side really argued against what the other group said. It seemed that the commentators on each side approached a dark space within the rhetoric, a collection of unutterable assumptions underlying the worldview of the opposition, and chose to remain safely in the light rather than venture into new, dangerous territory.<br /><br />Without dwelling on the implications of this behavior on the theory of progress through dialectic, this debate highlighted a clear deficiency in the liberal educational experience. Although the typical collegiate is bombarded with a few ideas from a smattering of philosophers and given many tools for justifying whatever opinion he or she might personally fancy, there is little effort made to confront the ideas of the student in a way that highlights systematic inadequacy and encourages the synthesis of new ideas and structured application of theory. Instead, the individual finds himself with many different ideas at his disposal that are mere instruments of justification, rendering the ideas of philosophy nothing more than tools to be used ad hoc to justify whatever decision the student fancies. In this way, the liberal experience functions as a preparation for corporate office culture because it deliberately deconstructs many of the individual's natural tools of moral decision making rather than integrating the philosophy into those notions. Thus, the individual is torn between a philosophy for which he or she has a poor understanding and his or her natural sense of fairness that has been stunted and alienated. Such an individual comes to experience the world from a state of permanent immaturity. When acting with authority, he or she tends to be unnecessarily cruel; when responding to authority, he or she tends to experience a much higher level of stress.<br /><br />To illustrate, consider a thought experiment that one of my teachers used in a writing class that I took. In this experiment, a ship is sinking, and there is not enough space on the life boats to accept everyone. The question is then to determine who among the remaining passengers shall be saved. There are young people, old people, child prodigies, retards, lepers, etc. We each made our list and recorded our reasoning. The teacher then had a few of us present our views on the matter. After listening patiently to our presentations hinging on random dice rolls, who is first in line, and of course measures of the value of individuals based on characteristics, our teacher told us that the only ethical thing to do was to refuse to participate in the thought experiment entirely. I disagreed, and continue to disagree, and this is the core of my objection to the liberal educational program. My teacher had conflated two very similar but different things: the political impression of an action, and the moral impact of an action.<br /><br />Anyone who we believe to be a good person has certain traits. Such a person respects diversity, cares for the less fortunate, shows kindness and compassion, etc. Our perception of the person as such comes from a relatively small data set. We typically only know of a few actions a person has taken that are good or bad. Additionally, we tend to see things in a self-centered way, so that our friends become good people because they have done thing that are good from our perspective, such as helping us to get a job over other people, hanging out with us rather than other people, and sharing with us rather than other people. I call this phenomenon - our impression of a person based on a relatively small data set, biased by our ideas of allegiance - our political impression. Therefore, when a person does something that strikes us as not being good, it doesn't necessarily mean that it is a bad action or that he or she is a bad person, even if we individually come to believe that it is so. He or she has left a bad political impression, but more investigation must be done to determine if the action is truly bad or if the person is truly bad.<br /><br />Because it is highly likely that people actually can't be good or bad, and in the interest of brevity, I'll focus from here out on just actions. The political impression of an action is one thing, and it is an aspect of our individual perceptions. The actual moral impact of an action must be an object that does not depend on individual perceptions - we are striving to perceive an actual object that is ultimately constructable from a log of physical events (by "actual object" I don't mean something having physical substance, I just mean a collection of traits, eg. a doorway, a karate kick, to give $10, a collision, the color red).<br /><br />So we can immediately approach the question in two ways - either we can have a paradigm of actions that are good and actions that are bad, match the action up to that paradigm and immediately label it, or we can have a valuation of world states in which the action occurs and in which some alternative occurs, and label the action as good iff the world state that results is the more valuable one. We want our approach to eventually solve the problem, and a little bit of thinking tends to reveal situations in which both approaches must be blended in order to arrive at the truth. But we can't pretend to have solved a problem by refusing to address it, nor can we act as if it is unsolvable simply because we haven't solved it.<br /><br />Western philosophy is horribly tainted by Christian sentimentalism. When a group of firemen race toward a burning building only to find several people outside dying of smoke inhalation, knowing that several others remain inside, they may be faced with a choice: save those who have already escaped or try to rescue more from inside. The political impression of either choice cannot be bad, but the moral question is not necessarily neutral. It certainly isn't neutral for the author of the firefighter's training manual. Here, even when weighing lives equally, points of equivalence must arise. If nobody asks whether the life of an elderly man should be saved before the life of a child, whether a convicted felon should be saved before a Nobel Laureate, whether a healthy person should be left to die while a sick person is saved, nobody will know if the right thing was done. The christian answer seems to be to pray, that is to say to leave the decision to fate. But fate is not just.<br /><br />This is all stated merely to argue that even though unpleasant questions may arise during philosophic discussions this is not an indication that the discussion has gone down the wrong track. Rather, this tends to mean that that these questions must be asked - a person who purports to have a solution must answer them. A person who doesn't offer solutions is not necessarily unwelcome in the discussion, but those who offer solutions deserve the highest honors, even if those proposals end up being flawed. The discussion must always be about finding solution, not just meandering talk.<br /><br />Democratic decision making functions best when it is the most localized. That doesn't mean that the best decisions are made at the local level - but that when the democratic process does work correctly, it puts the decision in the hands of those who are affected by the problem. Of course, the process requires some level of dedication to the common good to be of use at all, and a real debate must occur. We tend to see this very little nowadays. This is probably symptomatic of the fact that modern states are so large that individual opinion really end up mattering very little, even for people like the President. It is only natural that people stop caring about the common good when their opinion seems irrelevant in the first place.<br /><br />Nevertheless, as a democratic country, the United States gives each citizen a vote and collectively the citizens are sovereign from the laws of other countries. Even though our control is imperceptible at the individual level, collectively we control the destiny of our country. We determine the economic regulations that in turn create specific incentives that lead to specific business configurations. Collectively, the people's preferences, knowledge, and beliefs, in combination with the system of economic regulations, history, and institutions of business represent the object known as the economy. This economy, being the result of repeated democratic decisions reaching back into the past, is ultimately sovereign from other economies. This sovereignty is necessary if we are to exercise democratic control over the economy.<br /><br />Other economies, existing within other sovereign states, are similarly free to determine their own compositions. As a result of different events in their history, some economies experience significantly lower standards of living than our economy does. So it might seem that accepting people from these other economies to come live within the United States is a good policy. But allowing this free exchange of peoples actually deals significant harm to the ability of the people to regulate the economy.<br /><br />Immigration to this country has always imposed the greatest weight upon the poorest. The first immigrants to this country drove the indigenous peoples off of their ancestral lands, "spoiling the world" for them. So naturally I take the statement that "you should be for immigration because you are an immigrant" with a grain of salt. Regardless of my specific heritage, looking at the problem objectively it is clear that immigrants tend to inflict real harm to those whose economies they migrate to. While a new immigrant to our country might not have the right to take land away from us as we did from the Indians, they instead compete for jobs, and to a lesser degree, social services. There was a time (about 40 years ago now) when a young, middle class person like me could work in a factory producing the goods we consume, work in a field tending the crops we eat, or work in a kitchen washing dishes or the like. But nowadays it is not simply that we don't want to do this work, but that the wage for such jobs has been artificially depressed as a direct result of an influx of unskilled laborers as a result of a broken immigration policy and porous borders. For the wealthy and the educated elite, in fact for any member of our society who has a secure, white collar job, or even some secure blue collar jobs, these immigrants pose no danger - they are not in line to receive public welfare service or applying for jobs that take unskilled labor. In fact, these classes of our society benefit from unregulated immigration because there is a marginal lowering of prices that results from reduced labor costs.<br /><br />The core of the problem is that resources are limited, meaning that only a certain maximum quantity of goods and services can be provided within our society at any particular time. Furthermore, the level of exploitation of resources is far below the theoretical maximum because environmentally harmful infrastructure must be built upon any natural resource that is to be exploited, or the resource itself is environmentally valuable. Thus, there is an environmental cost associated with any particular standard of living. Ultimately, too, these resources will one day be depleted. Our country has prudently decided to pursue meaningful environmental policies. These are predicated on controlled growth and a limited material standard of living. Inviting millions of additional people to this country means that either A) they will starve or B) they will receive some resources, either through additional environmental destruction or through competition - meaning reduced welfare for those already here.<br /><br />The problem cannot be solved simply through increased welfare and raises to minimum wage. As more services make available to the poorest, and the more friendly we are toward immigration, the greater the incentive becomes to immigrate to this country. There are more than enough poor people in this world to overwhelm the limited resources that are available to the United States to feed, house, educate, and employ them, at least in our current economic configuration of market capitalism with debt-issue balanced budgets.<br /><br />All of this drives me to ask whether the right of emigration - the right to leave one's country - truly is a fundamental human right. It is enumerated within the UN's Universal Declaration of Human Rights, so according to one authority it is fundamental. But as I have written before, it is problematic without a right to immigrate anywhere. I prefer the stance that the right to become a refugee and the right to amnesty are fundamental - but that there is no right to leave without first being seriously oppressed or under threat. Poverty alone cannot suffice. Certainly, being wealthy, gifted, or ambitious is also not a valid reason.<br /><br />Wealth is only ownable by an individual because the laws of the state to which that individual is a citizen confer the privilege of ownership to the objects of property that are considered to have a wealth value. It certainly follows that an individual cannot take wealth from one country to another except by the consent of both governments. Whenever such a transfer is considered, the governments must ask whether the common good is served by allowing this exchange. The movement of currency from one state to another alters the market conditions in both states. As immigrants arrive in the United States, they bring currency with them that is exchanged for dollars, reducing the quantity of dollars held by the country from which they came and in turn encouraging imports from that country to the U.S. Prices are also bid up in the U.S. and down in that country. This price disparity exacerbates the inequality between nations. So it seems that a prudent policy is to heavily tax the movement of wealth between nations.<br /><br />Finally, emigration can be seen as a special case of secession. If secession is disallowed, so ought be emigration. When a group of people secede from a nation, they declare themselves and certain of their property holdings to no longer fall under the jurisdiction of their former State. Secession generally disallowed by states because it poses significant problems to the process of law. Emigration is merely the movement outside of the geographic boundaries in which the state operates. That is, it accomplishes the aims of secession but only for the individual. However, individuals can still emigrate <span style="font-style: italic;">en masse</span>, in which case emigration ceases to be the harmless, low level phenomenon that it was. Furthermore, the state's interest in controlling a person's behavior do not cease simply due to a person being in a specifc geographic place. This is particularly true if the person in question is, say, an unscrupulous industrialist intent of thwarting environmental regulators. So, individuals have no more right to emigrate than they have the right to secede, that is to say, they have no such right.<br /><br />If emigration is not allowed, immigration cannot be allowed. Thus, there is no case to be made that a fundamental right to immigration exists.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-1179444647569351432010-05-17T13:56:00.000-07:002010-05-17T13:57:18.856-07:00The ironic pairing: Globalization and Deficit TerrorismGlobalization - here used synonymously with "free trade" - punishes countries which pay their workers too much. It lets a flood of cheaply manufactured goods into wealthy countries' markets - and these goods are cheaper precisely because of the difference in wages. In other words, each portion of wage in the importing country can capture more than an equal portion of wage in the exporter country.<br /><br />Since wages are typically paid in national currencies, this effect sees its expression in currency exchange rates. Since currency can only be used to purchase goods within an economy, a nation that imports more than it exports will, ceteris paribus, find that over time its currency will decrease in value relative to those of nations that export more than they import. However, this measure of value is only meaningful if incomes and currency circulation patterns are also taken into account. The simple measure of literal exchange doesn't tell the full story of the value of a currency. If an hours' labor earned worker A 1000 yuan that were each worth 0.25 dollars, while worker B slaved for a pittance of 10 dollars per hour, can one really say that the yuan is a "weaker" currency?<br /><br />For the typically encountered modern situation where one large consuming nation is served by several satellite nations that function as producers, any additional money entering the hands of an investor will tend to be invested in a satellite nation if it is invested in production and a few other outsourceable functions, and invested in the importer nation for purposes like distribution and retailing. Therefore, a true currency supply expansion, distributed uniformly (such as through tax relief) in an importing country would in part be transmitted to foreign countries and in part into the local economy. This ratio is determined by the nature of the goods that are intended to be produced and by incentive structures that apply to these goods. Thus, such a currency supply expansion will increase the wealth of both the importer and the exporter nation.<br /><br />However, this effect is moderated - and can even be supplanted completely - by rent-seeking behavior. If wealthy individuals are able to cartelize or monopolize any stream of consumer necessities, acts of currency issuance instead lead to a near seamless increase in the costs of those necessities until the effect of the currency issuance is absorbed. If labor markets are sufficiently slack to keep workers from bargaining effectively, the system will essentially remain as it was, except that the price of goods in the importing country will rise or fall relative to each other, depending on the nature of the rent-seeking. If, on the other hand, labor markets are tight (and not necessarily because of low unemployment but also possibly because of a shortage of qualified workers) inflation will occur as the workers demand greater wages to counter the increase in cost of living and these wages motivate increases in prices. But here it is worth noting that price increases and wage increases in pair do sometimes serve a beneficial equalizing function in the society, if the worst off see these wage increases.<br /><br />Anti-deficit hysteria hinges on value of currency as expressed not in the wages of workers but in exchange rates. But this means that nations which refuse to devalue their currency through deficit spending are essentially capitulating on trade deficits, agreeing to continue exporting industry and jobs. The sensible policy - indeed what appears to be the strategic equilibrium - is to have every nation locked in a currency devaluation race. Such a race would proceed until full employment was reached.<br /><br />This strategy will doubtless lead to inflation, especially since workers who depend on cheap imports to maintain a low cost of living will see these imports increase in price due to the inferior exchange rate. However, this inflation should be moderated by the reduction of profits collected by the outsourced companies. The inflation is also beneficial in the sense that it forces workers to bargain for higher wages and undermines the total profits of the wealthy, delaying the rent-seeking behavior that would otherwise lead to increases in the value of real estate and other owner-income-stream-type assets. The inflation is necessary to stimulate the growth of local industry in the importer country - from the perspective of the entrepreneur, inflation has the same effect that tariffs would, except that the upward price trend will tend to make investment more favorable in the long term than tariffs would, especially since tariffs can be much more effectively countered by foreign government policies than currency devaluations.<br /><br />Therefore, the pairing of Globalization with deficit terrorism is particularly odd. On the one hand, nations are expected to put up no resistance to the exporting of jobs overseas. On the other, expansions of money supply are criticized as irresponsible, even though such expansions would correct the imbalance caused by the strategy of globalization. In fairness, as has been noted before, government borrowing from wealthy investors doesn't really expand the money supply. However, it does effectively increase the money in circulation , but with a much more mild effect than non-parity currency issue. But in their economic ignorance, most deficit terrorists are blind to the actual workings of the money supply anyway. What we should never forgive them for is their willingness to blindly repeat political talking points as if they represent real analysis.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-21735674384421867252010-05-10T21:01:00.000-07:002010-05-11T00:00:05.113-07:00The role of bank capital scarcity on inflationIncreases in interest rates due to bank capital scarcity cannot generally lead to increases in prices, because interest rates are the arbiters of general employment levels which in turn control demand for goods. However, changes in interest rates can precipitate changes to market structure that cause increases in the cost of goods in individual markets, or occasionally precipitate both unemployment and inflation, given that economic growth within a region is sufficiently robust or the general population is sufficiently wealthy. To illustrate, begin with the following example of a single firm within a single industry.<br /><br />Imperial Widgets (IW) is a widget factory facing capital replacement costs due to depreciation. The company is not profitable (zero net profit) and has no liquid assets that can be sold to finance such a purchase. Therefore, the company must take a loan to cover these replacement costs or cease operations. Supposing that IW takes such loans on a rolling basis and therefore faces similar monthly payments (without loss of generality) in each term.<br /><br />Further, suppose that IW is making its price and quantity production decisions in a competent fashion, that is to say it is maximizing (or attempting to maximize) its profits. It expects an increase in price charged to lead to a decrease in sales sufficiently large to reduce profits and a decrease in price charged to similarly lead to an insufficiently higher volume of sales; additionally it is not likely to sell additional units produced, the marginal cost of production equals the marginal revenue, or IW is already producing at capacity. In other words, IW's profits would decline were it to maintain current capital stocks but change its price and/or quantity of production.<br /><br />Now, suppose that interest rates increase. As IW considers its replacement schedule for depreciating capital, it realizes that it faces a change to its cost curve that could alter its price and quantity decisions. Depending on the capital objects to be replaced, IW may either curtail production and increase prices, or simply operate at a loss. In the first case, IW is likely to only obtain a partial replacement of capital, thus it is borrowing less. In the second case, IW is likely to finance these losses, causing an increase in borrowing.<br /><br />The distribution between these two decisions across all firms is connected in a mutually causative way with the economic trend. At the macro level, some firms will move in one direction and some firms will move in the other, but a third option looms in the shadows. Here, long term expectations become significant - do firms that are operating at a loss hold out for better days or close shop? In any event, employment declines so long as at least one firm either cuts production or goes out of business.<br /><br />The model case from here on will depend on market structure. It is virtually impossible to conceive of a monopoly enterprise that is not in the first place profitable, so we can focus instead on competitive and near-competitive markets. Within such a market some firms will be facing slightly higher cost curves and others slightly lower curves, but all firms will charge very similar prices for the same good, therefore some firms will be slightly profitable or have liquid asset reserves and some will be operating at a slight loss or have a deficiency in liquid asset reserves. When interest rates increase, some firms will face untenable finance positions and close. Therefore, interest rate increases can cause the breakdown of competitive market structures and lead to monopoly, cartel, or other degenerate market structures. This in turn allows the individual market to come to a higher price equilibrium due to the diminished competition within the market. This higher price equilibrium is generally accompanied by lower output.<br /><br />However, if similar effects occur across too many markets <span style="font-style: italic;">at the same time</span>, the reduction in employment level and wages that accompanies such restructuring leads to decreases in demand for goods through both revision of consumer budgets and increased incentives to save. In such a situation, the prices charged for goods must decrease as output declines, because prices follow a cost curve that is non-horizontal (due not just to the initial assumption of high interest rates and capital scarcity but also to the reduction in wages). A reduced output level must in turn exert downward pressure on interest rates.<br /><br />Another under-appreciated aspect of this problem is the role that investment decisions play in the availability of capital to banks. Bank loans are a class of investment that competes with direct investment in corporations. During boom times, the increase of direct investment in corporations is a source of the very capital scarcity that leads to market consolidations as described above. However, during more stagnant economic times, companies cannot raise capital as easily because of the greater risk associated with direct investment. This means that capital is being held in bank accounts, implying a capital surplus - so interest rates should tend to fall as economic conditions deteriorate.<br /><br />Economies go into crisis when prospects for direct investment become so bleak that essentially no direct investment occurs. Here, individuals will even settle for no interest and keep money in the bank, waiting for better times. These better times are caused by exogenous effects - technologies, government stimulus, and resource discoveries.<br /><br />In contrast, economies also go into crisis when too few dollars are available for loans. If spending is sufficiently robust, investors will be unwilling to leave any money sitting. Capital for short term adjustments becomes too expensive for firms, and they are forced to curtail production. During times of especially strong demand, this can lead to prices increasing even as unemployment increases. Ultimately, the ability to spend is actually a function of wealth and not of income. Among other things, this explains the enigmatic "stagflation" of the 1970s.<br /><br />In a previous post I have described these two contrasting situations as "disincentive" and "shortage". It is "shortage" that most closely corresponds with bank capital scarcity scenarios particularly the enigma of stagflation.<br /><br />It is worth addressing whether such an effect - stagflation - can occur in a less developed country (I cringe and the imperialist heritage of this term. Is it conceptually much different than "less civilized" or "barbarian"?) due to the same forces as in a developed one. Here, banking and capital sources are primarily externally located. This is crucial, because it implies that any growth or decline in local demand will only have a marginal effect on the investing economy. These <span style="font-style: italic;">export economies</span> do not get the benefit of profit capture or control, because the investors are not members of the economy itself and do not have a stake in the local community. It is the destabilization that the interests of the foreign investor bring to the political process that repeatedly dooms efforts at growth and social justice within a developing country. Generally, both loans and direct investment will always be available or unavailable in parity to the developing nation. It is not some economic law - but the political conditions of our time - that leads to suffering throughout the world.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-26617109530433748332010-05-05T20:23:00.000-07:002010-05-05T20:24:35.624-07:00Firefox Double CrashingDear firefox feedback,<br /><br />Firefox is a very predictable product. If something causes it to crash, that same thing will cause it to crash again. Please forgive me for not sounding sophisticated here, but I don't have the statistics that your techie people have access to. This is because firefox is a computer program. It responds in a predictable fashion to the data that is fed into it.<br /><br />The crash recovery option is designed to store, apparently in cached form rather than reloading them, all of the pages that were being viewed at the time of a crash. In 99.99% of situations, this means that when firefox is restarted, it simply crashes again. I reported this as a bug and was shut down:<br /><br />https://bugzilla.mozilla.org/show_bug.cgi?id=506883<br /><br />Apparently, having a product that crashes a second time after every crash is not a bug but a feature.<br /><br />So, at the very least, I would like to have an option to turn this "feature" off. I know from searching support that I can go to some internal settings page to fix the problem - and I have. But for everyone else out there who is a loyal firefox user and might not know about this fix, I am asking you and the other tech people to do two things:<br /><br />1. Come up with a crash recovery procedure that works in a meaningful way.<br />2. Include an option in preferences that can be checked to disable this feature.<br /><br />On the first point,<br /><br />I suggest storing any form data and URLs and simply saving them to a text file in the event of crash. Naturally you can exclude credit card and password info. Then, on recovery, firefox should simply display these contents in a form that makes them easy to copy and paste.<br /><br />Especially in crashes, your current standard is really unrealistic. Paul Oshannessy said "I'll say that the common case, people just want Firefox to start back up and figure it out on its own. They don't want to be shown this potentially confusing page after Firefox crashes - they want it to 'just work'."<br /><br />But it doesn't "just work". Common sense indicates that it won't. Programs can't just start back up after crashes with no data loss, because as soon as the program executes that same line of code a second time, the same result occurs! In the case of web content, crashes are the result of errors in the generation of webpage scripts or firefox's interpretation of the contents of those scripts. If firefox doesn't ask the servers that generated the pages to re-generate them, it will simply run the same scripts on those pages that caused the original crash, and because firefox is such a nice and stable product, it will crash again! But even re-generating pages will still cause a lot of crashes, almost as many as loading the cashed pages. What you find, and this is very much CS315, is that each time you strip away a layer of data, that is step back from the most recent page, the fewer crashes there are, until you find the only way to really prevent any crash is to not reload the offending page at all.<br /><br />That gets back to the comment of the poor user that Paul shut down: Why not let the user choose which tabs to restore on the first restart?<br /><br />On the second point,<br /><br />I suggest you make it so that whatever Crash Recovery "solution" you end up implementing, you make it easy to turn off so that grouchy people like me can avoid going batshit insane. Make this an advanced option. That way average users who have no functional literacy won't go bumbling into that option, accidentally turn it off, and subsequently leave nasty messages demanding to know why their firefox doesn't double crash anymore.<br /><br />Also, I would suggest that you take the time to figure out whose idea this was, because you might want to take future ideas by this same person with a grain of salt. As a general rule, clever marketing comes after the product - it should never motivate the creation of the product itself, unless you intend to defraud consumers.<br /><br />Thank you. I feel better now.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-78039361265192395552010-05-02T21:15:00.000-07:002010-05-02T21:15:52.089-07:00The Business Cycle - another explanationAt a given time t, the total production within an economy is distributed according to payments made by purchasers. Calling the sum of these payments the <span style="font-style: italic;"><span style="font-style: italic;">dollar expression of production</span></span>, the corresponding <span style="font-style: italic;">goods expression of purchases </span>is the total production expressed as a very large goods bundle. Neither term implies actual value. The only determinant of actual value is a detailed analysis of the goods bundle itself by experts who can evaluate the total social benefit of each good. For sake of simplicity, services provided are also considered part of production. The term "goods" will refer to both goods and services.<br /><br />Alongside the acts of production are speculative sales. Speculation is defined as "ownership for the purpose other than use or consumption". An object, such as an ox, could be purchased simultaneously for production (use of the ox for plowing), speculation (sell if prices reach a certain level) or consumption (eat if food is not available). Similarly, homes are purchased for both use (to live in) and for resale (under the assumption that property prices will rise). The holding of money, such as in a savings account, or any other asset, is also an act of speculation. The act of holding is, essentially, "exchange with oneself". The sum of production purchases and speculative purchases at time t is the entirety of economic exchange at that time period. Furthermore, the total supply of money within an economy therefore participates in exchange in each time period.<br /><br />Suppose that the supply of money within an economy increases at a rate greater than the total level of production. Then it must follow that speculation within that economy increases. Similarly, if production booms at a greater rate than expansion of the money supply, the number of speculative exchanges must decrease. Here, "level of production" refers to actual production and not production capacity, while "money supply" refers to actual currency in circulation and bank accounts (m1). It is premature at this juncture to make policy recommendations, because increases in the money supply can be made in a variety of ways, some of which can spur increased production in excess of the increase in money supply.<br /><br />In any market, some individuals will have large, speculative holdings, and will hereafter be referred to as "wealthy". What conditions must persist over time for these speculative holdings to diminish? Similarly, what conditions must persist for these holdings to increase? Which of the two scenarios are more likely?<br /><br />These questions are answered by looking at the essential choice that the wealthy have in the investment of their money. Either they invest in a productive enterprise by purchasing capital for use by that enterprise, or they invest in speculative enterprise by purchasing assets that they believe will appreciate in value. The act of simply holding onto money is tantamount to saying that all other investments are inferior, i.e. that money will increase in value.<br /><br />In a situation where the economy is rapidly expanding, speculative holding tends to fall behind productive investment in terms of profit levels. Therefore, the wealthy can be expected to reduce their speculative holdings during such periods, instead investing in capital. Conversely, the wealthy will tend to withdraw capital and invest in speculative holdings during economic downturns. Despite the use of the term "Speculation" to describe non-productive investments of money, it is speculation that gives more stable (lower risk) returns to the investor, at least with respect to general market trends. Part of this risk equation is the magnification of economic events at the level of production relative to the level of simple wealth holding. The wealthy will obtain peak wealth levels by switching to speculation at the exact point of market reversal. This ensures that even as wages fall for workers, the prices of goods and rental costs do not fall proportionately (due to decreases in number of suppliers and increases in speculation in land). Thus, workers are impoverished and must consume less, leading to a decrease in prices of all speculative assets and eventually uniform deflation. This process of decay continues without any theoretical bottom, however in practice governments change policies, new technologies are developed, or wars and revolutions occur. In a broad sense, the wealthy class will only diminish in wealth concentration as a result of unexpected losses, which are correlated with changes in the direction of the general economic trend - the frequency of which principally depends on government action, as described below.<br /><br />Two key features of modern economies are the dependence of the vast majority on the market for their subsistence and the use of fiat monetary systems. Historically, two different factors moderated the inescapable spiral described above: 1. The agrarian economic system, and 2. The precious metal economies. These two had particular synergies, such as feudal patterns of land ownership and the "free market" expansion of currency supplies which served to reverse economic trends. However, these counterbalances have now been totally removed from our present economies. Instead, we have a government system in which a fiat money system is implemented in a dishonest way where national governments essentially pretend to be bound by invisible rules which force them to maintain a fairly limited expansion to actual currency supplies. Furthermore, political leaders tend to know little to nothing about the economy, and of course there are virtually no academics who can honestly claim to know much more. It is therefore an operation of pure chance that brings a modern society out of economic slump.<br /><br />Ironically, the cycles of growth and collapse are initiated by an underappreciated phenomenon called <span style="font-style: italic;">saturation</span>. In a "goods saturation" collapse scenario, additional wages cannot motivate increased purchasing. Wage workers instead become speculators, accelerating any pyramidal effects already occurring within the economy. In a "speculation saturation" growth scenario, available speculative assets suffer from a relative deflation in value due to vastly overinflated prices and widespread cost of living inflation. Investors have no choice but to invest in industry in order to preserve their wealth.<br /><br />A prescription for our own economy in this situation follows from the identification of our stage within this crisis: we are currently facing a non-inflationary collapse of production capacity. It is a slow moving crisis that in many ways began in the 1980s. To address it, we must devise a way to destabilize the prices of fixed assets like real estate and bonds. A rather painless way to do this is simply to reduce their opportunity cost, that is, to expand the money supply through giveaways as part of social welfare programs. The additional spending that such policies would engender would make productive investment more profitable than mere speculation, and the economic trend could be reversed.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-47998671036082880762010-04-06T06:06:00.000-07:002010-04-09T13:24:29.992-07:00Laziness in economy: minimizing employmentWhen a human being sets to work on a task, he is compelled to complete that task in an efficient manner. In conceptualizing the task, he will have in mind some standard of quality, and go about the task with the goal of achieving that standard with the minimal expense of thought, time, resources, and muscular exertion that his expertise and available technology will allow, that is to say, to conserve effort. Typically the final result is somewhat below the standard of quality originally envisioned, but such results are tolerated by both the individual and society. This process, endlessly repeated through all the endeavors of human day-to-day life, is evidence of a governing principle of laziness that is more intimate and real, more potent in human events than any alleged "rationality" could ever be.<br /><br />Here, the notion of laziness as a governing force does not imply a psychological or moral defect in the individual. Though the term technically refers only to the urge to shirk one's duties, laziness can also be seen as a pervasive force that expresses itself throughout our economic reality as a potent psychological drive to minimize effort. While a person who shirks an important duty is often punished by society, a person who does unnecessary work is often punishing himself. Even as those among us who work harder than the average win our praise and gain various types of prestige, they find themselves stressed, malnourished, culturally deprived, drug addicted, and even psychologically disturbed or physically injured. Laziness can be seen as a countervailing force, pushing back against desires to achieve and resisting unreasonable requests. Moreover, laziness is not the negative of effort, as it seems to play a role in the direction of effort. It is laziness that so often compels us to devise more efficient means in our day to day life.<br /><br />Laziness is unfairly villainized within common discourse. Western society seems to retain ideas of work ethic that have their origins in feudal peasant agriculture. In such times, all work was of utmost importance. Each additional hour of labor either fulfilled a basic need or settled an obligation to a lord who dominated his vassals. Among the lowly peasants, there was never a need for each individual to independently judge others - the slackers would be dealt with systematically. However, among the more affluent, it was always possible to fake things in such a way that it brought harm and detriment to others. All social classes (distinct or arbitrarily divided) are lifted on a sea of secrets and conspiracies, by a political process. Rules are both protective and restrictive. As a person rises toward a position of power, additional burdens manifest themselves through the absence of these rules: the fledgling rule-maker discovers there are rules for making rules. In its essence, human power always flows from the consent of others to one's authority within an organized structure, that is to say, from unanimous consent of those who immediately receive orders. This consent is based primarily on evidence of ability to act in various capacities that illustrate the consent of others. It seems that all things that an individual seeks to acquire become objects not merely in themselves but symbols of the ability of that individual to acquire things, that is to say to obtain consent. Competition for acquisition sometimes develops over time, gaining conceptual depth and its own lexicon even as it remains fluid and somewhat undefined. Concepts of fashion and entertainment are examples of such competitive processes. Even though there is no wrong in losing such a competition, the losers must recognize the power of the winners, and in doing so, some agendas are advanced ahead of others. Moreover, the stakes can be very high: loyalty is itself a cardinal virtue (crimes such as treason come to mind), but in a broader sense loyalty to a cause is just one of many expressions of the authoritative consent required to further any ethical goal. Because of the limitations of the human mind and the limited flow of information, evaluations of the actual effect of any command passed down from an authority is typically exceedingly difficult or impossible for the average citizen. That is to say, our moral theory is subject to profound manipulation. It allows political processes controlled entirely by others to determine arbitrary tasks that we have a duty to complete. This in turn leads to a common perception of laziness that is based on the individual completion of these arbitrary tasks - and stacks endless obligations onto the psychology of the morally conscious individual. As an inevitable aspect of political reality, a profound skepticism of these obligations has likely been instilled into human nature - but ironically this skepticism is not expressed as a <span style="font-style: italic;">skeptic</span> might express it. Though a <span style="font-style: italic;">skeptic</span> might object by voicing technical objections to aspects of theory or illustrating absurd conclusions, he has still been captured by the structure, made to participate in its evolution. The only reprieve for the individual from these endless obligations is to focus on those concrete needs and wants in his immediate sphere - those things he can verify with his own eyes and address with his own hands. But as a person advances within society or as a society advances within a population, individuals find themselves more remote from both from suffering and from the means to address suffering.<br /><br />In response to this dissonance, there is a great struggle within the discourse of a society, played out both on the public sphere and within the consciousness of participants and observers, to label factional allies (including the self) and enemies with politically charged descriptive terminology that imply various motives and behavioral tendencies. Within this context, the individual is compelled to labor. Even his freedom to pursue various leisure activities is in fact heavily structured: those things which individuals pursue for personal enjoyment within any society are invariably things which identify them with an immediate social group that wields some degree of political power and a more distant network of allegiances and animosities - consciously or unconsciously, an individual obtains dual purpose from his leisure. Indeed, all people have a secret and private set of vices that are publicly unmentionable, but in their own way these follow the same rules. It is questionable whether leisure itself is a motivating factor, or if some other psychological drive motivates the action, with the enjoyment of the activity being an internal aspect of some external, symbolic display. A motivational spectrum develops for the purpose of judging others, couched in a variety of explanatory terminologies, having both a negative aspect and a positive one. A person who does not labor enough can either be lazy (economics or business), of poor character (religion or philosophy) or mentally unhealthy (psychology). A learned person in any of these fields is less likely to emphasize such a concrete and real application of theory - he knows that the overwhelming lesson of education is the realization of <span style="font-style: italic;">how little is actually known</span> in any of these disciplines. These terms and thinking techniques, rather than being illuminating of the problem, are rhetorical devices "painted over" the underlying logic of work ethic inherited from the agrarian peasantry. Ironically, the political act of judging laziness has lived on in (and is just one of many examples of) pedestrian misconceptions of academic discourse which preserve political devices that are detrimental to social welfare.<br /><br />First, consider the negative aspect of this spectrum, expressed as various political acts harmful to the individual. The threat of these acts is ever present, as the typical member of a society sees their wrath visited on strangers, friends, coworkers, bosses, and subordinates. The fear, disgust, and stress that this induces forms a negative motivational spectrum that drives the members of a society to work hard, to present themselves as if they have done more work than they actually have, and to demonstrate their own allegiance to such values by joining in the ridicule and punishment of shirkers.<br /><br />The positive motivational aspect, though superficially less harmful, shares many of the worst features with the negative. Here, the glittering jewels of recognition, promotion, and reward shimmer in the distance. The individual finds that recognition from unimportant individuals is easy to obtain, however it is problematic because it is typically meaningless and in a technical sense, false. As a result, he finds this recognition unsatisfying and thereby cultivates a torturous ambition, or he constructs a false belief that the recognition does have a deep meaning and thereby falsely elevates himself and the person who has recognized him beyond the position that the actual merit of his actions would normally imply. Within the relativistic soup of social reality, individuals will at times come to see the absence of punishment as reward, or the absence of reward as punishment. The only clear delineation between the two is in the mind of the authority responsible for declaring who will receive what. Promotion, properly speaking, is a type of reward but one implying potential rather than achievement. Therefore, its converse is also implied: a person passed up for a promotion is a person with less potential.<br /><br />Over the ages, those who do work have applied their ingenuity to the tasks at hand, bringing about new ways of doing things (technologies) that reduce the load of work required for the completion of individual tasks. The effect of this development has been twofold: first, the individual finds that rather than being required to do less labor, the new technology is used to justify a higher level of production from each individual; secondly that as new technologies are developed, the complexity of production and therefore the hierarchical authority required to undertake each endeavor increases.<br /><br />The cause of the first effect is the negotiating imbalance between the firms who offer the wages, and the workers, who provide the labor. It is not easy to summarize exactly why this persistent imbalance exists. In a deep and remote sense, the division of labor between the proletariat and capitalist class evolved from the division of labor between the lord and peasant. If the economy is seen as a dynamical system, could there simply be no force in effect to correct the initial imbalance, which has persisted like a standing wave to the present day? The proximate causes seem decidedly less satisfying but much more actionable: first, because there are many laborers, in persistent surplus and fewer firms; second, because firms are well informed relative to workers; third, because firms have the power to wait while workers must meet their immediate needs; fourth, because firms have political power. In the middle, there are revealing points, possibly the keys to the whole question: first, that the flow of currency through an economy is effectively constrained by the actions of the peak wealth accumulators, who desire to make money, meaning that the net flow is from the economy to them; second, that physical land and other essential resources of production are typically wholly partitioned in an unequal fashion, with firms investing to produce goods only when additional resource rights acquisition is unprofitable; third that worker budgets can never purchase the entire product of their own labor, thus only the constant increase in production from each worker can pay the rents associated with food, shelter, courtship, child raising, and everyday life.<br /><br />The cause of the second effect is the basic nature of technology itself. Each element of a technology occupies a part of the human mind. The human mind is finite, thus, as technology developed, a threshold was reached beyond which a single mind could no longer contain all of the understanding required for technological processes. Those who share the process of understanding inherently engage in a political struggle for control of the means of production. In times when technology was simple, hierarchies could also be simple, but nowadays sophisticated management techniques are necessary.<br /><br />The question of economic management is often posed as a question of how to increase production, raise the "standard of living", and limit unemployment. It is becoming clear that the unchecked desire to produce is destructive to the environment. Unexamined metrics that show increases in standard of living have also failed to correlate with individual happiness. Could it also be the case that increased employment can also be without benefit, or even harmful to the individual and the society?<br /><br />Intuitively, the force of laziness indicates that there is a spectrum of employment within which an optimal point or region exists for a given level of production (unless production is measured poorly). Work has several dimensions: first, what type of work is being done; second, how are working hours distributed through the worker pool; third, how enjoyable is work for each worker?<br /><br />The first question relates to appropriate levels of production and correct measurement of standards of living that reflects real quality of life. This question has been voluminously explored at <cite>www.stiglitz-sen-fitoussi.fr</cite> and I will not devote much time to it here. The answers to questions about where production ought be directed are clear. If society has the capacity to produce sufficient food that nobody goes hungry, ought society do so? If society has the capacity to build and organize cities in a way that everyone can live in the type of community they enjoy, ought society do so? If society can implement policies to protect the natural environment without harming its citizens, ought it do so? And, if the accumulation of property, patent rights, capital, and political power becomes injurious to the public good, ought the society vigorously pursue measures to correct such imbalance?<br /><br />The third question relates to the inherent hierarchy of work. While some jobs are not enjoyable, others are. Concepts like the "career"might be satisfying for professionals, but other, more flexible concepts of work duties might better serve blue collar workers who work in a factory and repeat the same motion mindlessly for 40 hours a week. Civic education does not need to stop after high school - blue collar workers could have rotations and exchange programs to break up the monotony of life and to add perspective and pride to their role in industry.<br /><br />The second question relates to the utilization of technology - if production is constrained to only production that increases quality of life, then there is no guarantee - in fact there is evidence against the idea - that there will be sufficient demand to provide employment at current standards of working hours for all. Thus, work must be partitioned between individuals in some way. When compared to the previous two answers, this one is by far the most radical. Yet it is the most provable of all three, and the most easily addressed by public policy.<br /><br />Creating institutions to enforce a fair division of work is preferable to creation of a welfare state. In the broadest possible terms, the most general analysis possible creates three categories of possible work policy for a society. The first category are the societies that do not enforce a fair division of labor or provide unemployment services. In this system, the persistently unemployed depend on the charity of private groups in order to survive. This grizzly state of affairs is surely bad for the society as a whole, as there is little, if any, marginal benefit to those who do work and those without it suffer tremendously. The second category are the societies that do not enforce fair labor division but do provide unemployment services. These economies are divided into two overlapping classes: the middle and upper classes (hereafter called just upper class) who work hard, make significantly more than the minimum wage, and are engaged in investment and savings; and the lower class who may work hard but make close to the minimum wage, are moving frequently from one job to the other, depend on unemployment, and have either building debt or a lack of coherent investment and savings strategy. These two classes overlap because some investments always fail, some households have bad money management, and because of luck. Here, the extra labor hours that the upper class work relative to the poor generate some amount of extra wages. The poor, who are persistently unemployed and depend on social services, absorb some of these wages through the costs of their social programs being paid through progressive taxes that are visited on the upper classes. Thus, the situation is unfair to both the upper class, who must to some degree labor without compensation, and to the lower class who must go without work and the opportunities for advancement and life enrichment that work offers. The third option, the division of labor between all individuals in a society, with no long term unemployment compensation necessary, is the preferred policy. In this system, a limit on each individual's working hours is strictly enforced. For instance, the work week can be defined (such as it is now) to be only, say, 40 hours in a week. But no individual would be exempt from this. For example, if a scientist wants to work 60 hours a week on his research, he must be compensated as if he worked 20 hours of overtime, that is, paid 1.75 times his normal salary. Therefore, Universities whose policy it is to work their scientists more than 40 hours a week would be encouraged to hire more of them. This policy would then be coupled with a definition of the workweek that could be reduced based on unemployment trends. Very roughly speaking, to correct for 10% unemployment, the work week need only be reduced 10%, <span style="font-style: italic;">provided that a means exists to ensure that salaried individuals also work 10% less</span>. This system is superior because no wealth transfer is necessary between the upper and lower class. Thus, the labor and compensation are brought into harmony.<br /><br />In order to bring about an economic system focused on the fair division of labor, the ideas of work ethic that have been inherited from ancient times must be challenged. The matrix of insidious concepts that are tied to the work ethic ideal mean that this debate will be played out in numerous academic topics that seem entirely unrelated to the ideal of work ethic. But when the underlying assumptions of academic theories are laid out in detail, so often the most innocuous and basic things turn out to be incredibly complex, hiding places for endless preconceived notions. Social sciences have in general strayed too far from philosophy, and philosophy has strayed too far from its own roots. In physics, it took over 1000 years for the basic ideas such as motion and inertia to root before Isaac Newton was able to introduce his core concepts in an almost entirely philosophic work, the <span style="font-style: italic;">Principia Mathematica</span>. If social science is to follow natural science, it must focus for some time more on the building blocks, both in experiment and in discourse. This essay has been illustrative, in part, of the simple solutions that emerge to vexing social problems when the building blocks are examined in detail.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-52191546875563433612010-03-15T14:22:00.000-07:002010-03-15T16:31:33.951-07:00Measuring and aggregating incentives to workIn <span style="font-style: italic;">The Affluent Society</span>, Galbraith asks whether it is the products of most laborer's work or the wages paid to them that have a greater positive social impact. By a strict Pareto analysis where market value is the only measure of worth, it must be the case that the product of the labor is more valuable. Rather than solving the problem, such a result is more of an example of absurdity, casting doubt on the Pareto Optimality concept.<br /><br />The question can actually be broadened, as it has been by contemporary economists. Professor Randall Wray of UMKC looks at a variety of factors that workers gain from working rather than sitting idle, and argues that the social costs of unemployment are actually grossly underrated. Rather than utilize his analysis, which is not holistic enough for my tastes, I want to develop my own system for estimating the value of employment for the laborer.<br /><br />Borrowing again and elaborating on arguments developed in <span style="font-style: italic;">The Affluent Society</span>, Generally speaking, a worker will labor for some combination of the following reasons:<br /><br />1. Pecuniary Compensation (wage, salary, bonuses)<br />2. Ideology (feelings of the righteousness, charity or necessity of his actions)<br />3. Fear (punishment awaits those that do not work)<br />4. Personal Education (Development of skills or specialized knowledge)<br />5. Conveyance of Status (The worker gains some status that is valuable, such as being considered "experienced" or being considered a brave or good person)<br />6. Leisure (The task is the preferred alternative to boredom)<br /><br />Without this broad set of motivating factors, it becomes impossible to understand why some activities become ones that individuals pay for and others become ones that individuals desire to be paid for. These may be negative or positive.<br /><br />An economy is actually a dynamical system, and so there are two more general considerations. First, that the relative value of each of these factors to an individual will be evaluated by that individual on the basis of net gains/losses from the individual's current position. Secondly, that a set of filters exist which limit the potential applicant pool for any given position. Once again, speaking generally, they are as follows:<br /><br />1. Status (holding specific titles or claims to experience)<br />2. Education (having certain skills or knowledge)<br />3. Geographic proximity (worker and firm must be within a certain radius)<br />4. Cultural Conformity (being part of a sufficiently similar cultural group, in particular having a common language)<br />5. Search success (the firm or worker must search each other out and will not always find all matches)<br />6. Miscellaneous Hiring Filters (personality tests, interview "impressions", arbitrary limits to considered applicants, etc.)<br /><br />These are not numerical values. They are subsets. The space that is the intersection of all of these constraints contains all the potential qualified applicants. Ideally, firms will then evaluate potential applicants within this space, and perform a cost-benefit analysis, ultimately hiring individuals who promise the greatest positive impact on the firm given their requested wage. But, to capture a real approximation of firm behavior in this respect requires an understanding of the internal politics of firms and empirical data for theories of internal politics to analyze.<br /><br />The existence of so many constraints on worker pools harms the ability of firms and workers to to find matches that would work well for them. It is appalling, for instance, that so many individuals would happily work as CEOs or Doctors but are effectively prohibited from pursuing such careers. This has led, in once case, to vastly overinflated wages, and in the other case, to shortage.<br /><br />Regardless of the cause, it is clear that the empirical state of the economy is far from ideal. Not only are many individuals who seek labor not finding it, but many tasks which would be highly enjoyable to a large sector of the population, such as philanthropic work, is not available to individuals. Finally, many people work extremely hard only to make enough for bare survival. Given our natural resource position, this can be due only to gluts in worker pools. Nobody should work only out of fear of poverty, homelessness, or starvation.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-34103774129623587632010-03-11T14:04:00.000-08:002010-03-11T17:25:10.483-08:00Pigouvian taxes and subsidiesThere is a theory in economics that an effective way to reduce the incidence of a bad behavior is to place a tax on it. The reasoning goes that this tax increases the cost of the behavior, thus by the law of supply and demand, the quantity demanded decreases. The use of taxes for the purpose of balancing out externality costs is referred to as a Pigouvian tax.<br /><br />The implementation of these strategies in the real world tests both the entire regulatory framework and the economic theories. This naturally complicates things - are failures the result of the theory being wrong or merely due to flaws in implementation? Many public policies that seem to have great promise may actually be nothing more than the fiscal equivalent of building a levee on this mile of the river: flooding is prevented here but made worse downstream.<br /><br />I have been approached on multiple occasions by bicycle advocates who have suggested that better bike policies and funding for bicycles can best be brought about through a campaign against car usage. The reasoning goes that by not funding more roads and by increasing taxes on gasoline, the "cost" of driving increases. By the Pigouvian reasoning, this will lead - nay, force - people to pursue alternative transportation options.<br /><br />There is certainly some marginal effect, but it will not follow a uniform curve. This marginal effect will be a function of the attractiveness of alternatives, and these alternatives can be quite varied. The temptation is to be lazy, and to assume that some intersection of continuous curves defines the demand functions, meaning that each incremental cost increase of driving would have a similar, incremental decrease in driving. This, of course, is not the whole story, because the reality of the situation depends on the discrete decisions that are made. A small increase may not be enough to actually push a different transportation option into the top spot - people are actually quite uniform in their transportation situations and the biking/public transit system tends to have a more or less uniform cost. Furthermore, an additional "hump" that represents the force of habit may block people from changing habits for savings that are insignificant.<br /><br />Therefore, there is a threshold below which only an insignificant portion of drivers would bother changing their plans. Above this threshold, a large number of drivers would seek to change their plans. And so, the question now arises, "What is the value of incremental driving disincentives both below and above the key threshold?"<br /><br />Below the threshold, taxes on gasoline and congestion promoting policies amount to little more than regressive taxes. That is to say, the cost is passed through the drivers. Rather than changing their driving habits, it merely leads them to have less wealth available to purchase other goods in the economy. Owing to the dependence of many goods on gasoline transport, these taxes may also be expressed in the cost of goods.<br /><br />The story is essentially the same above the threshold as well: those who are still driving with high taxes on driving are unlikely to change their behavior simply because driving starts to have a slightly higher cost.<br /><br />The real effect occurs at the threshold, where the variable is actually sensitive. This is the only area where a case can actually be made that the pigouvian incentive concept is a good idea, because here the tax actually does bring about a reduction in the unwanted behavior. Here, the supply of the chosen alternative goods must be sufficiently flexible to absorb the relatively rapid change in habits that the cost increases bring about. But are public transit and bike networks actually capable of making these sudden changes? Not really. Here again, even at the threshold, the consumers will find they are unable to switch because the existing bike infrastructure is insufficient and the existing mass transit system is already operating at capacity.<br /><br />A similar argument can be made for subsidies of public transit and bicycle infrastructure: they will be underutilized and fail cost/benefit tests without a complimentary policy of increasing the cost associated with existing behavior.<br /><br />So, it is sensible to propose a steep tax, and to cut back severely on existing vehicle infrastructure, such that the effect is sufficient to bring incentives across the threshold, only if a comprehensive expansion of public transit and bicycle infrastructure is also implemented in parity.<br /><br />In reality, the issue of cost pass-through is present in every tax and subsidy scheme. It can have a variety of unintended consequences. Generally, cost driven changes in consumer behavior come in the form of regressive policies. Care should be taken by well intentioned reformers to take the two steps outlined here: first, to find any thresholds in the discrete consumption bundles of actual goods; and second, to find and assess the role of potential bottlenecks in the desired new behavior pattern.<br /><br />Additionally, there are two more potential problems in the basic implementation of such systems.<br /><br />First, the shift in behaviors as a result of increasing costs may be unpredictable. Could increases in driving cost drive a portion of people to simply never leave their houses, instead becoming Television and Internet addicts? Could toxic waste disposal fees, instead of leading to reductions in toxic manufacturing processes, lead to the marketing of building material mixtures that contain these toxins (so that they do not need to be disposed)? The regulatory framework, as well as the nature of the goods in question, are the determinants of such results. Thus, taxes may need to be imposed on a large number of goods, and subsidies or other supply expansions may need to be effected on a similar scale.<br /><br />Secondly, the political cost may be great. A politician in anything but a safe district would have to be incompetent to back a gasoline tax. Even safe politicians may want to vote against a gas tax simply to preserve the stream of automobile lobby dollars. At some point, advocates for social and environmental justice will need to assess the political realities. Though it is a difficult task, compromise will be necessary in all environmental agendas. For real political change, a great deal of consensus, log rolling, and popular awareness are essential.<br /><br />In conclusion, there are four prerequisites for the use of a pigouvian tax/subsidy scheme:<br />1. Discrete understanding of the supply/demand for the goods to be taxed and subsidized in terms of the consumption bundles of the consumer demographics.<br />2. Ability of policies to simultaneously cross both the demand threshold for the good that is to be suppressed and any necessary subsidy to supply of the substitute good.<br />3. Adequate regulatory structure to ensure that new consumer behavior will actually be as planned. This may require a comprehensive set of many taxes and many subsidies across a large number of goods.<br />4. A strong political position for the elected officials responsible for the policies that bring about 1-3, as well as an electorate that is highly sympathetic with the cause that such policies represent.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-8328858021175517502010-02-24T18:28:00.000-08:002010-02-24T19:10:28.914-08:00DutiesUltimately, ethical imperatives must be absolute in nature. That is to say, it is invalid to use a relative measure to determine the morality of an action, unless that relative measure is used as an inference to some absolute state of affairs.<br /><br />Suppose a person were to assert that "college students have a duty to get good grades". This imperative would be invalid if grades were rated on a curve such that some students must get bad grades. However, many people actually intend this statement merely as a surrogate for the statement that "college students should study hard and learn the materials to the best of their ability", with the assumption that some will inevitably not study hard and be the same students who do poorly.<br /><br />Additionally, the assertion that "only the best alternative among good alternatives is morally acceptable" is nonsensical, as it represents a double evaluation. If an alternative can be seen as good, then it cannot follow that it is also not good. Typically, examples that fit this definition suffer from a lack of sufficient parsing, stringing together series of actions into a single object. It may actually be possible to define actions in such a way that better alternatives do not exist, by looking at each decision point as a separate action in which only one choice is the good one.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-8031927179697124932010-02-22T11:26:00.000-08:002010-02-22T15:11:11.600-08:00Trade: Dangers and instabilitiesThe political and media game in the midst of this <span style="font-style: italic;">Second Great Depression</span> is sadly fixated on real estate and banking. Certainly, these sectors have played a role in the collapse that we have experienced, but it is wrong to attribute the full force and persistence of our malaise on just these sectors. At the very core of the economic problem, it is not currencies that are to blame. Balances of income and expenditure between various regions of the globe and sectors of the economy are what actually determine things like unemployment rates and other numbers of political importance. Additionally, the degree of achievable prosperity is constrained by the rate at which key natural resources are exploited. These two determinants of economic outcomes are aspects of economic geography and market structure.<br /><br />A firm that follows a neoclassical business strategy will seek to maximize production efficiency by minimizing costs per dollar value of finished goods. Such profit maximizing philosophies are clearly the norm among large scale businesses. This model takes both workers and consumers as essentially being factors of production. The final product of the firm, in the mind of the firm's owner, is not the product for sale but the income stream that firm profits bring to him.<br /><br />This maximization is best achieved through locating of factories where the necessary natural resources can be plentifully obtained and where costs of labor are low. The degree to which real estate costs affect this calculation seems to be minimal, in part because low cost of labor tends to correlate with low cost of real estate. Delivery of natural resources to the factory and a means of moving finished goods to port are the required infrastructure developments and these are also expressed in the production cost. Low shipping and transport costs (primarily the low cost of shipping on large tanker ships) make the possible market for goods global in scope, making distance to consumer largely irrelevant in all cases except for goods that are perishable. Therefore, manufacturing for non-perishable goods will tend to be concentrated where costs of production are lowest.<br /><br />Regions that offer ideal locations are invariably those that have both persistent poverty and a well organized government capable of and interested in providing the necessary infrastructure to the factory. The goods produced will be sold on a global scale, directly to nations which are not ideal locations for new factories.<br /><br />All factories eventually become depreciated to the point of needing to be shut down. Therefore, new economic growth is not a prerequisite for the relocation of these factories to more optimal regions. Rather, over time, industry in general will naturally move into those regions.<br /><br />Firms in these factories' host countries will have revenue in the goods importing country's currency, but pay their workers in the local currency. Therefore, they must exchange most of the imported currency for local currency. With a floating exchange rate, this is merely the sale of that currency on the market. The imported currency's value is equal to that of the goods it can purchase - that is the value of manufactured goods offered by the goods-importing country.<br /><br />If a simple system of comparative advantage emerged from this relationship, two effects would result. First, the goods-importing country would experience relatively fewer working hours and relatively lower prices for goods when compared to wages (higher standard of living) than the exporting country. Secondly, over time the exporting country's higher level of savings and lower unemployment would reduce poverty to the point that wages would be bid up, while the importing country's lower (or negative) level of savings and higher unemployment would cause wages to be bid down, effectively leading to a trend toward equilibrium (or, more likely, an equilibrium-centered oscillation) and a progressive reduction in the level of wage differences between the two countries.<br /><br />This simple system of comparative advantage is complicated by three factors. New technology that is developed will tend to dramatically slow the trend toward equilibrium. Shifting balances of trade with other countries will create chaotic effects that contribute a high degree of uncertainty to the analysis of eventual effect. Finally, changes in output levels will alter the purchasing power of consumers in both countries and lead to a non-unique equilibrium.<br /><br />New technologies that are available tend to originate through the research of wealthy countries that have the resources to spend on comprehensive education systems and research funding. These technologies become a market good that is exported from the goods-importing countries and slow the rate of convergence toward the equilibrium described above. This effect has the following characteristics: first, firms must save up or receive loans in order to make the costly technology purchases and implement them. This leads to a financial market that mediates (with occasional speculation bubbles) the collection of currency in the goods-importing country's denomination. Firms are unlikely to take loans in their local currency and attempt to then save up imported currency because this time consuming process has a large opportunity cost and may involve costly interest payments as well.<br /><br />These new technologies will bring about three types of improvement for the firm that implements them: 1. Labor usage reduction; 2. Natural resource usage reduction; 3. Greater market share. For this reason, new technologies can accelerate the rate at which markets become monopolized, and can actually lead to lower levels of employment within markets.<br /><br />Additionally, this process will affect both economies in different ways at the macro level. For the goods-importing country, the tech industry will sustain higher levels of employment. This will sustain higher goods importation rates for longer. For the goods-exporting country, the higher rates of market monopolization and lower employment levels that technologies bring will actually slow the rate of poverty reduction. Thus, the trend toward equilibrium is slowed by technology. Both of these factors, however, will eventually dissipate unless new technologies are introduced at a constant rate, or if a technology development industry develops in the exporter country. Because new technologies are actually developed erratically, markets will tend to spurt toward equilibrium, then stall, then spurt again, rather than moving smoothly. This can lead to oscillatory effects that prevent the existence of steady states.<br /><br />The comparative advantage equilibrium is further complicated by the effects of the comparative advantage of other countries. If natural resource costs increase, or if exports to another sector increase or decrease, the labor and natural resource markets will transmit these effects throughout the market, affecting the balance of trade between all trading partners. The demonstration of oscillatory effects in complex equilibrium systems is a topic of high mathematical sophistication, but oscillating reactions have been discovered in chemistry, a discipline in which the units are approximately 21 orders of magnitude finer and therefore statistically better behaved than an economy.<br /><br />Finally, the simple model is inaccurate in part because drops in exports, caused either by a loss of relative currency value of the importing nation or a drop in incomes due to higher unemployment, typically leads to an increase in unemployment or decreases in wages in the exporting country. This effect implies that increases in measured comparative advantage can lead directly to a diminished economic outcome.<br /><br />Taking these things into consideration, where does our current economic position fit into this model? Likely, the United States and most of Europe have survived the past decade only by taking a technology provider role. As China and India and other major exporters develop science and technology programs of their own, what we have to offer in exchange for the constant stream of cheap goods becomes increasingly limited. The uses for US dollars correspondingly diminishes. Most likely for geopolitical reasons, the Chinese government has artificially stimulated demand for US dollars by buying US treasury debts. This has lessened the loss to Chinese manufacturing to some degree. Similar activity by other exporter countries all over the world, concerned with preventing collapse of their industries, has propped up the exchange values of importer country currencies. This has, in turn, prevented oil prices from going up. Ultimately, though, these measures will reach their limit. This is not unlike the catastrophic collapse of the globalized markets in the first great depression, but in our case, the supply of oil is not as plentiful nor can it be readily expanded, making the situation dire.<br /><br />The root cause of this problem is really the false <span style="font-style: italic;">steady state</span> model that seems to dominate economic thought. This model typically takes aggregates as stable objects and firms as permanent fixtures. In reality, firms are not permanent fixtures. Rather, they have a finite but indeterminate lifespan. Employment results from specific tasks that are undertaken by the firm during its lifespan. The natural trend in economies is toward wealth concentrations and high productivity. This inevitably leads to low employment and low quality of life. This is where the "equilibrium" rests. In truth, there is no guarantee that a job will last for the 30 years that our tradition defines as a career. Nor is there a guarantee that a person will be able to live off of the wage they are paid. Nor is there a guarantee that housing will exist for each citizen. And amid all of these human concerns, the environment will be exploited to the point of complete destruction, permanently reducing the possible quality of life for all future generations, over and over again.<br /><br />In order to lift the masses out of squalor, a government must be able to occupy a strong negotiating position. The guarantee of high employment is not really possible unless productivity is artificially reduced, a deliberate endorsement of waste. However, high quality of life is possible through rigorous efforts at wealth redistribution and rules limiting working hours (such as shorter work weeks). But regardless of the solution proposed, the actual production of goods cannot occur outside of the jurisdiction of the government, so that reasonable regulations can be imposed. For this reason, and this reason alone, foreign trade ought be severely confined. But if a thinking person looks in detail at its actual effect, it is also clear that it is undesirable for other reasons.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-37314283331014359132010-02-11T22:57:00.000-08:002010-02-22T15:26:21.541-08:00The Infatuation with EleganceEconomics, as an institution, is one that has tended to have an infatuation with elegance, a notion that simple solutions will emerge from the proper approach, and that the layman's instinct to roll up his sleeves and fixate on minutae is a sign of simplemindedness. This tendency is most pronounced in the political gestures made by the prestigious minds at the forefront of the modern day's many schools of economic thought. They propose that an economy can be improved by some radical change to monetary policy, by a restructuring of the tax system, or by general policies of laissez-faire. Ironically, it takes but the smallest bit of critical thought to dispel this illusion, and to reveal the incredible complexity necessary in even the most rudimentary of public policies. It is not that these minds have an inability or unwillingness to think critically; rather, their very academic careers depend upon their continued championing of the school of thought to which their thesis represents an oath of allegiance.<br /><br />Wealth is taken often to mean the total monetary value of an individual's assets. If this is the case, then the distribution of wealth alone can hardly be taken as an indicator of the general quality of life. Let us use a simple example, that of the production of bread, from overwintered wheat grains ready to be sown in the spring, to the point of consumption at the table. It is clear that one must look at details: what portion is the cost of a loaf of bread of a laborer's daily wage, and is this state of affairs inclined, without further intervention, to improve or to become more severe, threatening the laborer with starvation? Here again, it is not enough to simply look at the possible, to assess the amount of labor spent in baking the loaf - though a certain level of productivity is necessary for a given quality of life it is not a sufficient condition. Productivity gains can in theory be distributed in any way the firm owner wants between price reductions, cuts in number of labor hours, and expansions of the production level. If any part of the supply chain cannot expand to meet increased demand for its factor goods, prices will not tend to fall and output will not tend to increase, thus unemployment becomes inevitable. In some situations, prices may also rise.<br /><br />It is also not the case that the combination of different industries, each with a certain level of complexity, is confined by a law of interrelation that limits the total effect to some predictable bounds. Though it is true that as new industries are added, complimentary pairing can arise that compensate for some supply issues, a survey of major economies today reveals a few "bottleneck" resources that can each prevent a smooth expansion of supply levels in every industry. Few industries can go without gasoline in the distribution of goods. Nor can industries go without at least one of electricity, water, fertile land, available real estate, healthy ecosystems, or a general public willing to be fleeced.<br /><br />One must ask, what about technological advancement? But here, the general trend of history indicates that technology is correlated with increases in resource consumption rather than reductions. In any event, a fundamentally unpredictable thing such as technology cannot make the supply of essential goods more predictable. If, in theory, the economy can become predominantly information oriented, and a permanent, abundant supply of electricity can be secured, the massive production and replacement of electronic gadgets would remain a source of both uncertainty and toxic waste.<br /><br />We can now turn to the specific limits of monetary measures in the prediction of economic conditions. The welfare of person A is wholly uncorrelated with the wealth of person B, so long as person A and person B consume the same goods and negotiate for the same prices on these goods. In fact, if person B has a great deal of wealth, he may even get a better deal on some goods than person A, simply because his wealth will open doors for him. Inevitably, though, person B will not consume the same goods that person A does, nor will he negotiate for the same prices.<br /><br />If one charts the flow of money within an economy, one will find that it is constantly flowing from individuals to businesses, then from businesses to banks, and from banks back into businesses, who return a portion of it to individuals in their wages. Assume that times are prosperous and every sector is flourishing. Here, a few inequalities generally apply. Businesses must collect more from individuals (revenue) than they give out in wages and loan payments (we may leave out business to business transactions such as costs of services and utilities, as we are looking at businesses in aggregate; furthermore wages includes dividend payouts). Similarly, banks must collect more in loan payments than they give out in new loans and wages. Investors must collect more in dividends than they pay in loan payments. Finally, individual incomes (wages) must exceed loan payments and payments to businesses if individuals are to become more wealthy.<br /><br />This is described symbolically as follows<br /><br />I.Business > W.Business + L.Businesses<br />I.Banks > N.Loans + W.Banks<br />W.Business + W.Banks > I.Business + L.Individuals<br /><br />Additionally, Loan payments by businesses plus loan payments by individuals is the sum of bank income. Thus,<br /><br />I.Banks = L.Businesses + L.Individuals<br /><br />But can this linear system be satisfied with positive values? Let us check:<br /><br />Start by subbing out I.Banks:<br /><br />I.Business > W.Business + L.Businesses<br />L.Businesses + L.Individuals > N.Loans + W.Banks<br /><br />=> I.Business - W.Business > L.Business<br />L.Business > N.Loans + W.Banks - L.Individuals<br />=> I.Business - W.Business > N.Loans + W.Banks - L.Individuals (1)<br /><br />Furthermore:<br />W.Business + W.Banks > I.Business + L.Individuals<br />is equivalent to:<br />W.Banks - L.Individual > I.Business - W.Business (2)<br /><br />(1) composed with (2) gives:<br />=> W.Banks - L.Individual > N.Loans + W.Banks - L.Individual<br /><br />Which is equivalent to:<br />0 > N. Loans<br /><br />Thus, the system cannot be all positive. In particular, new loan issues must be negative! In the real world, businesses and individuals actually accept new loans to offset various costs, meaning that many operate at a loss, hedging on better times ahead. However, these inequalities indicate that some sector is always going to lose out.<br /><br />Indeed, these inequalities indicate that loans are being paid back in times of prosperity, such that eventually the banking system withers away and ceases to exist. Perhaps the banking system is a structural object, never intended to occupy a central place in economic life, but present only due to the persistent imperfections in the market. It is likely, then, that prosperity can be better insured through a policy of tight regulation of banking, and perhaps its confinement to single state charters or being an entirely government run enterprise.<br /><br />Returning to the nice consumer pair A and B, what types of goods is the person B inclined to purchase? B will purchase the following:<br /><ul><li>Similar basic necessities to A</li><li>Real estate - B will bid up real estate that A is considering purchasing and lead to higher rental rates if A is renting</li><li>Land for its natural resources (This will benefit A if it expands economic growth, harm A if it causes environmental damage or the reverse if purchased for sake of squatting or conservation).<br /></li><li>Luxury goods that do not appreciably increase B's quality of life but may compete for scarce resources and/or get A a better job.<br /></li><li>Political favors, generally to give B an unfair advantage in the market place</li><li>Charitable donations<br /></li><li>Investments in existing businesses (various effects, from good things like reduction of banking to bad things like monopolization)<br /></li><li>New starting businesses<br /></li></ul>This last point, though, warrants some expansion. If a society has a coherent standard of civic virtue, B may develop his business for the sake of having a business. If he has ties to his community he may be content to run without a profit or with little profit (honest competition) simply because he will be cognizant of the benefits he is giving to the community. However, if the structure of industries is generally too concentrated (e.g. in megacorporations, box stores, etc.), B may not have any such opportunities. Furthermore, the society may be organized in such a way that genuine communities may be impossible (e.g. sprawling suburbs with no coherent design) or his culture may spend disproportionate amounts of time engaged in antisocial behavior (e.g. watching television or blogging).<br /><br />Of course, having large amounts of money is different than having a high income. Assume the money supply in an economy expands in the following fashion: the dollars are distributed in an equal fraction to each member of the economy. Then any person who makes X more than the average income must have a total of Q individuals who make Y less than the average, such that X = Y*Q. In fact, net income within the economy (changes in dollar wealth) is equal only to the total amount of new money added to the money supply. Thus, unless prices drop as income becomes concentrated, the quality of life of those at the bottom tends to fall.<br /><br />So on and so on, myriad details form a web of economic exchanges that has many dimensions and caveats. The interdisciplinary nature of proper analysis in this field ensures that those who focus primarily on mathematical models will not grasp the nuances necessary to make accurate predictions.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-80722651712585420182010-01-30T12:35:00.000-08:002010-02-02T01:53:35.073-08:00Value theoriesHistorically, currency had its value pegged to the value of the collateral that backed the currency. Thus, a paper bill was typically representative of some quantity of specie (precious metals or coins made of precious metal) held in a bank. Much of early economic theory was dedicated to the justification and promotion of this fact. Thus, the idea arose that the value of a unit of currency was based on what it represented - be it a share of a valuable object, a quantity of labor, etc. Thus, the argument goes, an expansion in currency available leads inevitably to a decrease in its value, as more units of currency exist for each unit of the backing object.<br /><br />This classical line of reasoning has been hard to shake despite the fact that it was never justified in a scientific way. Observations that people think of currency in this way is evidence only of a body of beliefs, not a revelation of universal law. Moreover, currency and the specie that backs it are both currencies of sort. Many thinkers make the (rather sad) error of believing that a block of precious metal has value in and of itself. Precious metals are not used for anything other than as wealth holding assets, and it has always been the common belief in their value - arbitrarily decided by historical events - and nothing more, that creates the value itself.<br /><br />The false theory of currency value as proportion of backing object value results from two big mistakes in the classical line of reasoning relating to currency value.<br /><br />1. The classical line of reasoning ignores the possibility of underutilized resources.<br />2. The classical line of reasoning ignores the fundamental role that uncertainty plays in currency value.<br /><br />Both of these points are made by Keynes in his <span style="font-style: italic;">General Theory</span>, but I would like to expand on them here in my own direction. Incidentally, both of these are tied to a fundamental problem in economics: the failure of equilibrium models to rigorously represent equilibria as related rates.<br /><br />First, the case of underutilized resources can be directly highlighted by a few examples:<br /><br />Suppose that a king wishes to expand his treasury, and devises a brilliant strategy for quickly growing his gold-mining industry. He prints new bills of currency, backed by no matching specie, and enters into contracts with mining firms whereby they will provide him with a portion of the specie that they find, such that it directly matches the quantity needed to back the currency issued. Assuming that the results of the venture meet the king's expected value and that there is a high unemployment rate, how will this affect the value of the currency?<br /><br />Looking first at time of initial issuance - one can expect demand to rise for machinery and chemicals used in the mining process. This change will then ripple into the spending habits of the producers of these components. The increased revenue of these "component firms" will, due to the assumption of surplus labor, primarily become increased plant capacity and profits for the firm owners. These owners will bid up investments of various types (including real estate), and may spend marginally more on luxury goods.<br /><br />Having a larger paid labor pool will also have an effect - laborers may increase their food consumption, primarily by demanding greater food variety, but for the most part, increased income will be spent on goods and services. Landlords will see lower vacancy rates as laborers cohabitate less, prompting an increase in rental rates.<br /><br />Generally, an increase in prices <span style="font-style: italic;">across the board</span> represents a decrease in the value of the currency. However, in the case of currency issue, these increases are the response of suppliers to the increase in quantity demand. In many cases, the supply of a good is sufficiently elastic that only the quantity produced increases. In only a few situations is there a bottleneck such that the supply of a given good cannot increase easily, and it is in this case that a price increase will occur.<br /><br />To calculate the initial stimulus effect of such an action by a Government, an economist should ask two things: 1)Are the natural resources that will see increased demand readily available for use? 2)Is the economy significantly below full employment? If the answer to both of these questions is "yes", then the vast majority of the quantity demand increase will be expressed in terms of increased output. If the answer to either question is "no", the vast majority of quantity demand increase will be expressed in terms of increased prices.<br /><br />Next, let us turn to the point when the mining firms begin to transfer precious metals back into the King's treasury. It is hard to see how this could have any effect whatsoever. Other than the labor utilized for the actual movement, inspection, storage, and safeguarding of the specie, no actual changes take place. The King now simply has more of a valuable asset, which is kept out of circulation, and which he will be able to use to meet future obligations if necessary.<br /><br />Theories that predominated during the time when currency was directly backed by assets most likely had a profound effect on the decisions of the speculative class. When exchange rates were fixed, speculation often surrounded the values of currencies. In any speculative atmosphere, the ideas and decisions of the herd were the primary determinant of changes in prices paid by speculators. Therefore, so long as a sufficient portion of speculators believed in a given economic rule, the market would behave in a way that allowed economists to draw statistical evidence for that rule from the market. The egoes of the wealthy had a further impact on the development of the discipline, in that they believed their own wealth stemmed not from the collective effect of an otherwise arbitrary belief, but from actual knowledge. It is the wealthy that control University endowments, and they want the world to know that they are people of virtue.<br /><br />Uncertainty also plays a key role in currency value. I invite the reader to imagine an economy in which individuals do not have uncertainty. Note that risk should be treated as a type of uncertainty. The cognition of an individual who does not have uncertainty is really omniscience. Such a person does not respond in a nash equilibrium fashion because he is able to coordinate with others effortlessly. Furthermore, the psychological predisposition of the individual toward equality would be an overriding factor in his economic relationships. Specialized knowledge disappears, and thus workers are no longer differentiable from each other. The only (economically significant) differences between individuals in such a scheme is their preferences and their property.<br /><br />This thought experiment highlights another aspect of economic life that is seldom mentioned: its ethical connotation as revealed by our impressions. I invite the reader to contemplate the following examples:<br /><ul><li>A convicted murderer (about whose guilt there is no doubt) is released from prison due to a legal error by the prosecution. He purchases a lottery ticket and wins the jackpot, becoming a multimillionaire.<br /></li><li>A woman who works hard her entire life, saving a small amount of money from each paycheck, invests her money in a mutual fund that loses more than half of its value in the course of a year.</li><li>A man witnesses a stranger help a blind person across a busy intersection and buys him a drink.</li><li>A student who earns straight A's has her allowance increased.</li><li>The city council passes a tax increase that affects only a single business owner. </li><li>The city council passes a tax increase that includes an exemption that only a single business owner can take advantage of.<br /></li></ul>If these examples awaken any feelings of righteousness or outrage, it is because our economic life is inseparable from our ethical impulses. In fact, the motivation of individuals cannot be expressed only through self-interest. We care not just about our absolute gains but about the effect our actions have on others and on the society as a whole. We value our own success relative to the success of others.<br /><br />Considering our ethical impluses and our way of evaluating our own economic position, a society of omnipotent individuals will have a certain political equilibrium. Currency will not be necessary because the actions of each individual will be known to all. Each person will understand the full configuration space of individual action combinations and their consequences. Labor would be divided between individuals only on the basis of their preferences. Nobody would want to see the basic needs of others go unmet, and will balance this desire against selfish interests. Labor could not be divided between workers and management because management is completely unnecessary - the only possibility is the existence of a capitalist class who own the means of production, but even this is unlikely given that these capitalists would face perfectly coordinated resistance by the rest of the society and collective bargaining by their workers.<br /><br />Individuals also have foreknowledge of all their future consumption needs. Therefore, individuals would be able to enter into contracts with each other for the direct exchange of goods between current and future dates. For example, I may work in a machine shop for an hour, with the understanding that this earns me a loaf of bread from the baker. The baker would understand how this settles some contract he is involved in, or establishes a future compensation for him.<br /><br />Currency is really an effort at approximation of this system of contracts. Approximation is necessary because of the incompleteness of individual knowledge. This incompleteness is synonymous with uncertainty. Uncertainty has three principal effects:<br /><br />1) The use of risks and estimates<br />2) Creation of <span style="font-style: italic;">search costs</span> that establish a value for information.<br />3) Existence of liquidity<br /><br />Returning now to an example of a theoretical "normal human" economy, if the total quantity of currency in circulation is X, during any given time period somewhat less than every unit in X (X-a) will change hands at least once. Of the exchanges that take place, some will be at a price that has not been actively reevaluated. When reevaluations do take place, the price-setter must generally plan for a price that will not need to be raised (or lowered) again for some time, meaning the change will be in greater proportion than what is initially required, and often will occur later than expected. In other words, price changes and rebalances do not freely propagate across economies, but actually move at a certain estimable rate. Furthermore, price changes may not be made at all if the cost threshold for change and accompanying discounting rate of the costs are not met. Therefore, even if the economy is at capacity when the currency supply is changed, the question is not merely by how much but for whom the change is taking place.<br /><br />A tax can be seen as a transfer of currency from one group to another. It is paired with government services that are funded by the tax, and these services are, in turn, expressible as monetary savings for the individuals who benefit from these services. Often, the Government can provide services more optimally than the private sector. We may, in accordance with our ethical prerogatives, denote certain services as providing a greater contribution to quality of life than others. So long as tax policy shifts the balance of goods and services provided toward those that provide a greater benefit to quality of life, it is justified.<br /><br />Returning to the concept of the money supply in contrast to the effective money supply, suppose that the money supply is expanded or contracted in some fashion. The economic effect of this change is wholly dependent on who receives the currency. Let us rank the individuals within a society based on (1) their propensity to spend an additional dollar received and (2) their propensity to take each dollar reduction in income from spending rather than savings. These two variables are bound to have some degree of covariance, but that is beside the point. Imagine a scale going from zero (will not spend) to one (will spend) for these measures. Then each individual will occupy a point on this scale. Savings are only reintegrated into the economy as loans. Thus, private debt is a function of the total level of savings. Payments on debt lead to income concentrations in the hands of debt holders. Thus, either price levels must fall, income levels must increase, or debt levels must increase for individuals to maintain their consumption levels over time. When left alone, the trend seems to be toward a glut of savings in the hands of the ultra rich, a lack of viable investments, and a inevitable drop in the price and employment level.<br /><br />An injection of additional currency targeted to the least likely to consume will lead only to an increase in loan issuance. If the loans market is saturated, it will lead to a direct increase in savings and no overall change in the economy (X and a increase in parity).<br /><br />An injection of additional currency targeted to the most likely to consume will lead to an increase in consumption levels. This will mean that the effective quantity of money has directly increased. Prices may rise, but they will not rise in a greater portion than income, as this additional currency is first expressed through income. However, the added currency will eventually reach the hands of those least likely to consume and it will "fall out" of the market in this fashion (X increases but a stays constant).<br /><br />A tax placed on those least likely to consume will lead to a decrease in loan issuance, or to no change if the loans market is saturated. The direct decrease in savings will precipitate no change to the actual economy because the effective supply of money has not been changed (X and a decrease in parity)<br /><br />A tax placed on those most likely to consume will lead to a direct contraction in the economy. It will precipitate a reduction in the effective money supply and would be very harmful to the economy (X decreases but a stays constant).<br /><br />For the reasons just outlined, the policy of the US government of backing its deficit spending with bond issues is silly (actually I think of it as <span style="font-style: italic;">grand theft</span> of taxpayer dollars). The government can simply issue additional quantities of currency and should not be concerned with balancing its books. Rather, it should pay attention to the macroeconomic effect of its actions and work to bring unemployment down.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-54616100306047879032010-01-28T14:30:00.000-08:002010-01-28T17:33:33.816-08:00The Opinion game - variations on a voting gameIn my own personal throwback to the 1970's, when these kind of things were all the rage, I have thought up a game, with a few variations, that I believe can be of use in the modeling of opinions formed by groups.<br /><br />This game is played with one player. There is a stack of identically backed tiles, each having a color on the reverse side, one of m possible colors. In each round, a new tile is revealed, and the player must pick a color.<br /><br />They are awarded points on the following basis:<br />+1 point if they pick a color that is shown on the greatest number of tiles revealed thus far<br />-4 points if they changed their color from last round (no penalty for this in the first round)<br /><br />Naturally, the behavior of the player will depend on the distribution of tiles. If the tiles are chosen ahead of time from an equally distributed lot, they will behave differently than if each tile's color is an independent random event.<br /><br />Because the analysis is easier when each tile is independent, I will focus on this case. If there are 2 possible colors - say red and blue - the minimum number of rounds that must pass before a rational player has an incentive to change his or her opinion is 8. This follows from the following argument and example (WOLOG):<br /><ol><li>We may limit ourselves to the simple case where one red tile is revealed then all blue tiles after that.</li><li>It never makes sense to change one's mind within four rounds of the last round</li><li>If red is behind by p tiles, the total expected payout of changing is derivable from the binomial distribution as follows: let n be the number of rounds remaining; the payout is a function of the path traveled to the final distribution. There are 2^n paths; we care about the difference between this outcome and the continuation of the red choice, thus equality of red and blue tiles is worth 0. Each path decomposes into previously calculated paths.<br /></li></ol>The shortest game in which switching makes sense is as follows:<br />Round 1:<br />Red tile revealed<br />Pick red<br /><br />Round 2:<br />Blue tile revealed<br />Pick red (tied numbers; the "change cost" can be avoided)<br /><br />Round 3:<br />Blue tile revealed<br />Pick red (at this point nine more rounds must be played for the expected value of changing to exceed 0)<br /><br />Round 4:<br />Blue tile revealed<br />Pick blue (at this point, only 4 more rounds must be played for this choice to pay off)<br /><br />Rounds 5 - 8:<br />regardless of tile revealed, player picks blue (see assertion 2)<br /><br />Conclusions -<br /><br />Studies of communication tend to emphasize the "deeply entrenched" nature of our opinions. This game confirms that if there is a social cost to changing an individual's opinion (such as alienation from your like-minded bretheren), a very large preponderance of evidence may be necessary to counterbalance this loss. Considering our number of choices in daily life, and the marginal benefits (if any) that abstract knowledge poses for the individual, it is no wonder that people tend to believe crazy things.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-73694605955754458562010-01-27T15:16:00.000-08:002010-01-29T00:12:57.827-08:00Availability of capital - modeling aggregate investment levelsGiven persistent payments on business investment I and loans (at interest) L, aggregate fixed costs F, quantity sold Q, expected revenue per unit R, and per-unit cost V, profit in time period t is:<br /><br />profit(t) = (R-V)Q - F - L - I<br /><br />Ceteris Paribus, a business that shows profit could in theory pay down its loans and buy back its stock over time, increasing long run profits. Such a business could also continually fail to meet profit expectations, in which case expenses will be paid in left to right order. One can expect investors to receive dividends or other benefits only if a surplus reaches them. Thus, they are in the highest risk position. One can also expect corporations in particular to generally be unable to pay down investments, instead maintaining constant investment levels and paying out dividends in lieu of buying back, as this is a more lucrative path for the controlling shareholders to take.<br /><br />A start-up will have a risk position that is a point within the bounded range between the maximum expected profit and minimum expected profit (negative being loss) that determines interest rates and total loan credit available. A business proposal does not give an incentive to the prospector (for purposes of this essay the prospector will be the person who creates the business proposal) to safeguard investments or loans received. Rather, the prospector's primary incentive is his own desire to attract the investment, meaning he is interested in making a convincing argument regarding the business venture. The prospector enters into negotiations with investors and banks in which he will make an argument regarding his risk position within the minimum-maximum range.<br /><br />Similarly, any business looking to either expand operations or replace depreciated equipment may have need for temporary capital. The same process will take place, but in models featuring incomplete information, more complete information than in the prospector case should be assumed.<br /><br />This negotiation is best modeled by empirical data. In a theoretical sense, such a negotiation is irresolvable due to it being empty of a priori content. Games or market models that may be superficially similar show similarity only insofar as they make assumptions about the players that are grounded in empirical reasoning.<br /><br />The risk position is dilated or contracted when aggregate demand changes. An economic decline will generally shift the minimum expectation down slightly and the maximum expectation down greatly. Similarly an economic recovery will shift the minimum up slightly and the maximum up greatly. Typically, the level of aggregate demand is a significant determinant of the risk position of any business. This in turn determines the results of negotiations and the aggregate investment level. The loan offerings available to a business will also change based on the state of the economy. Generally, loans are more secure during economic downturns due to their lower risk position than investments, and will expand less during upswings due to bank attitudes regarding speculation - meaning they will generally have a higher price than investors during good times and a lower price than investors during bad times.<br /><br />The distribution of business financing between investments and loans will also depend on the interest rates offered on loans. Businesses and prospects will each have both a credit rating (which partially determines loan offerings) and a risk position (which partially determines investment offerings). Thus, businesses can be divided into three categories:<br /><ol><li>Businesses which attract loans at a lower interest than investments</li><li>Businesses which attract loans and investments at the same interest</li><li>Businesses which attract investments at a lower interest than loans</li></ol>An important psychological factor comes into play in this distribution: the desire of investors and businessmen to maintain various degrees of control over businesses. For this reason, loans and other indirect investment mechanisms will have some edge over the introduction of new investors who could conceivably interfere with existing leadership structures. This means that even in boom times where there are many investors, institutions will still feature loans as a significant part of their portfolio.<br /><br />Looking specifically at economic downturns, on the supply side investors will generally move assets into "safe" financial instruments. This will reduce the potential investor pool, driving up the price of each investment (in the form of dividend payouts). Therefore, loans will become a greater portion of business portfolios - meaning more businesses will be in category 1. This is accompanied by an increase in interest rates that is somewhere in between previous term interest rates and the new price of investment. Generally businesses become saddled with higher costs and less repayment flexibility during recessions.<br /><br />Economic conditions may also prevail in which speculative investment increases in real estate, commodities, and other factors of production. This has the effect of driving up other aspects of business cost. Ceteris paribus, this forces businesses to seek additional investment, loans, or curtail operations. In fact, general decreases in prices seem to reach real estate last - meaning that real estate proportionally increases in cost during recession periods even as it shows no net increase in investments. Such changes bring about a long-term shift in the profit functions of businesses and force a decrease in hiring.<br /><br />Arguably, it is these two effects which have the largest role in explaining the business cycle. Before venturing on, it is worth reviewing a key concept described in a previous blog entry regarding the distribution of money between the financial and real parts of the economy. Ignoring possible increases in the money supply, even if divided in a totally arbitrary fashion, it is clear that a two sector economy will have a relationship in which one sector gains money only as another loses it. If one takes the position, as I do, that loans do not actually increase the money supply, the following points will hold true.<br /><br />Economies display a certain degree of stability. This stability is the result of the stimulus effect of incidental profits and losses. Within any given time period, some businesses will fail and investors will lose their money. However, so long as these failures are not interpreted by investors (or economists!) as a sign of changes in aggregate demand, average investor behavior will not change. These incidental losses must exist to balance against the unexpected successes (incidental profits) of other investors. Each time such an event occurs, aggregate demand is either stimulated beyond its equilibrium (in the case of incidental losses) or drawn below equilibrium (in the case of incidental profits). This follows from analysis of the relative stimulus effect of dollars in the financial relative to the real sector: since a failing business must by definition inject net dollars into the hands of noninvestors and a profitable one must do the opposite.<br /><br />Paradoxically, the stability described above can only be maintained in an economy where there is a great deal of uncertainty among investors. Typically, the stability itself will lead to the perception of greater certainty as investors look to specific examples as test cases (regardless of the actual significance of these tests) and investors will turn toward a new strategy. It is extremely unlikely that investors will allow the economy to move toward a higher aggregate demand position through their own changes, as this would entail, in the short term, a higher risk position in the context of an average expected investment profit that is close to zero in the long term. In the event that mistakes are made and investors make bad investments, the immediate stimulus effect may roll the economy over to a new equilibrium. If mistakes are not made, investors will precipitate a recession because the opening time periods of the recession will promise them the largest profits. It is likely that some increased investment has occurred in commodities and real estate, further deteriorating the risk position of businesses.<br /><br />Economic recoveries (and the prevention of recessions) generally occur through a combination of four factors:<br /><ol><li>Increased spending by Governments<br /></li><li>Collapse of commodity and real estate markets</li><li>Significant expansions in the dollars available to the poorest (perhaps through welfare or other deficit income transfers).<br /></li><li>An exogenous increase in the propensity to spend by consumers<br /></li></ol>Each of these, in sufficient magnitude, will produce a stimulus that has the potential to push the economy back to a new equilibrium.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-67978911537029452532010-01-19T14:14:00.000-08:002010-01-19T18:00:42.567-08:00Taxonomy of Incentives and Production; OptimizationEach good or service provided by an economy has its own means of production, marketing, and consumption. These differences are not rooted in government policy or market structures, but rather in the physical realities of the natural resources, available technologies, and cultural paradigms involved. If one were to compose a list of all the different types seen in these three categories, one could then describe each good or service according to which of the types are present. The means by which a good or service is consumed is an important aspect of consumer demand and helps to make consumption patterns predictable, e.g. the correlation between cigarette and alcohol consumption. Furthermore, the characteristic given by the combination of means within each category partially determines the incentive structure that predicts the behavior of the business leaders controlling the production and marketing of the goods or services, e.g. the prevalence of beer commercials and absence of gasoline commercials. Therefore, the particular quirks of each product constitute an extra-market force that can be corrected by government policy, irrespective of concerns relating to market structure and externalities. It is worth noting that in this capacity, it is not the individual preference but the individual benefit with which the economic analysis is maximally concerned, and that even when benefits accrue to the individual, there is nothing to suggest that costs are passed exclusively to individuals in practice.<br /><br />Production is described by a capitalization rate, which is the portion of the cost of production of each unit of finished good that depreciation of the capital assets consumes. The remainder of the cost of production is labor cost. Capitalization will come from natural resources, factor goods, and machinery.<br /><br />Marketing is described by three cost categories: advertising, distribution, and pricing. Advertising is a direct cost calculated to stimulate demand at a given price level; distribution is mostly correlated with the inclusion or exclusion of various geographic markets; pricing costs are costs incurred through coupons, promotions, sales, and other temporary price variations designed to stimulate demand or reduce inventory levels.<br /><br />Consumption is described by probable aggregate goods consumption bundles given household budget levels. This is further divided by demographic. For each good at a particular price with a particular marketing and production strategy, there is a predicted consumption level (a mean with a standard deviation) and covariance with each other good available or changes to budget levels. In practice, the predicted consumption levels for each good are empirically determined. Accepted business practices and rules of thumb dominate over any "assumption of rationality" and so none is needed.<br /><br />Businesses attempt to maximize profits by coordinating both production and marketing strategies. Businesses are constrained from an absolute realization of efficiency by limits to their own strategic abilities. Many choices made by a business are probabilistic in nature, meaning that as a business approaches its maximum profit level, the probability of moving closer to maximum profits decreases. Thus, the uncertainties of the production and marketing of any given good create an efficiency ceiling for the business. Furthermore, businesses typically have steeper cost discounting curves than either the "firm as a sovereign entity" would have or the society at large would agree on (in fact, it is arguable that society does not discount future costs at all).<br /><br />In order to realize the true scale of the possible improvements to quality of life, the behavior of consumers must be described in such a way that it becomes possible to criticize it. A model such as a revealed preference model is not sufficiently rich in its psychological descriptors to be of service in this capacity. For this purpose, I would rather develop a marginal benefit impact for each consumed good. Underlying such a measure would be the assumption that rather than measuring individual welfare relative to no consumption, the more common concern is the effect of changes when measured relative to existing consumption levels. There would be no assumption of self-rationality; we merely observe that individuals tend to pick goods that benefit them, but that these are not always optimal choices nor are individuals aware of every possible budget composition available to them. The actual values used would be based on health and lifestyle data and sociological studies.<br /><br />Optimization across these categories takes the following form:<br /><br />1. marginal benefit - marginal cost = net gain<br /><br />2. predicted consumption level * effective price - distribution costs - advertising costs - capitalization costs - labor costs = business profits<br /><br />3. business profits are maximized when the marginal business profit is zero; but since the function is multidimensional we must also calculate the Jacobian to assure ourselves that we are in fact viewing a global maximum (rather than, for instance, a saddle point). In general, this situation shows the failure of automatic market correction because the under(or maybe even over)supply of financing to businesses can lead to inefficient capitalization ratios. High(or low) advertising and distribution costs can also affect the general level of sales of the entire business.<br /><br />4. Even when the situation exists that all externalities and market structure inefficiencies are properly counterbalanced by regulation, two situations will tend to exist in the market provision of any good: 1. The marginal benefit will be less than the individual's perceived marginal benefit. This follows from the effects of advertising and the incompleteness of individual strategies. 2. The marginal costs will be greater than strictly necessary because businesses cannot realize maximum efficiency levels and have steeper future discounting curves.<br /><br />5. If marginal benefits are well known, government policy can be organized around changing the various cost and incentive structures affecting businesses and individuals to push them toward decisions that maximize marginal benefits. Generally, this means 1. Ensuring adequate capital flow to emerging or expanding businesses. 2. Ensuring media diversity and access so that all types of business that seek to advertise have the opportunity to. 3. Planning local, regional, national, and international infrastructure to ensure that markets are accessible to distributors at a low cost. 4. Relatively high educational subsidies to promote competence within organizations and to ensure that individuals have adequate self knowledge to build good consumption bundles in the first place.<br /><br />It is worth noting that this only looks at the individual business and consumer. It does not consider externalities or market structure issues (e.g. monopolies). Public goods and various types of Government activity are also justified by the existence of these situations. In particular, wealth redistribution and monetary policy are crucial functions of Government.<br /><br />It is also worth noting that existing Government policies do not always reflect solutions to problems, but can often be problems in themselves. The best way to put the policy recommendations that follow from a principled economic analysis is not "regulation" or "deregulation" but "reregulation" as many problems exist on both sides of the issue.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com1tag:blogger.com,1999:blog-7056208240965765046.post-39573074472385499472010-01-13T16:15:00.000-08:002010-01-13T16:16:19.319-08:00General Nature of Economic Model Dependency SchemaFollowing on the heels of my previous post, this essay will classify the different types of economic predictions and trace them back to their source data by following the paths that this data takes through the models (dependency scheme). In keeping with this approach, the objective of this study is to evaluate the degree to which various assumptions play roles in the actual conclusions observed within a given model. Once the structure of the model is understood it can be critiqued as being more or less scientific on the basis of the criteria described in my previous post: correspondence between model elements and observed reality, the degree to which it addresses the original questions of its scope, and the degree to which it behaves as a way of observing through the creation of structure of reality theories.<br /><br />Below is a schematic depicting the dependencies for a classical economic model.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQi8l9-tGQUFEETN1oNaKVmaZvgzvvAZen5aplGKKFaGW562xkdwXWi0e9FQrVIF4joCCRQyijtuG-sVUuQlaFabV62XtH_D8YCG7_LF9KDpu0i2-NSWTp-k3kR_2TQgXcSlnUbtlxJg6a/s1600-h/classicalmodel.png"><img style="cursor: pointer; width: 400px; height: 389px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQi8l9-tGQUFEETN1oNaKVmaZvgzvvAZen5aplGKKFaGW562xkdwXWi0e9FQrVIF4joCCRQyijtuG-sVUuQlaFabV62XtH_D8YCG7_LF9KDpu0i2-NSWTp-k3kR_2TQgXcSlnUbtlxJg6a/s400/classicalmodel.png" alt="" id="BLOGGER_PHOTO_ID_5426370850358886498" border="0" /></a><br /><br />Three important observations can be made:<br /><ol><li>Wages do not alter commodity demand in this model, as decreases in wages mean increases in profits (not separated schematically), which in turn increases in other factors. Similarly for wage increases. This is an example of the type of troublesome details that seem unavoidable in models built this way.<br /></li><li>This model, though predicated on the use of calculus as maximization, does not feature equilibrium in the sense of <span style="font-style: italic;">related rates</span>. Thus, the model is "always in equilibrium", with equilibrium being nothing more than the (assumed unique and extant) solution to a linear system of constraints.</li><li>Exogenous factors disturb a key point in the system - commodity demand, which feeds both the aggregate supply and the aggregate demand side of the equilibrium. Unless some means is devised <span style="font-style: italic;">ad hoc</span> for bounding or predicting these exogenous factors, the predictive power of the model is compromised.</li></ol>Generally, similar criticisms can be made of other economic models.<br /><br />The key scope question asked by macroeconomics is <span style="font-style: italic;">How do changes in Government policy</span><span style="font-style: italic;"> affect the parts of the economy? </span>This question, in turn, spawns the following questions: <span style="font-style: italic;">How are the parts of the economy best described in terms of their functional relationships?</span> And, <span style="font-style: italic;">What effects are economically relevant when reviewing or proposing policy changes?</span> In addition, the first question can be pushed back to encompass brainstorming by asking <span style="font-style: italic;">What changes are occuring in the economy under the status quo? </span>And <span style="font-style: italic;">What policies should be implemented to address changes in the economy?</span><br /><br />Rather than addressing the question of whether a model matches observations <span style="font-style: italic;">as a whole</span>, it is important to ask whether this model matches the behavior of its component groups. Generally, one should ask how the component groups behave when analyzed in this model, then examine the behavior of individuals and firms based on historical records and experimental data. Having fewer variables involved reduces the effect of exogenous factors. Additionally, without such analytic separation, progress is rendered impossible when particular errors cannot be identified because the solution space is too large to practically check them all.<br /><br />Next a system of accumulation and exhaustion rates must be formulated to allow the model to have equilibrium generated not by constraint but by the equality of countervailing rates. This introduces the temporal element to the equations, and allows the direct description of economic trends, growth, etc. When these things are directly described, they may be directly compared to observations.<br /><br />Finally, the development of metrics must go beyond mere measures of aggregate production. Single index values are not acceptable because many ethical systems are predicated on deontological standards such as minimums, rights, duties, and social orders. These must be integrated into the economic variables in such a way as to preserve their original meaning, and this requires knowledge of both the relevant philosophy and the economic model. It is important that this development be scientific, because in this way it can remain based on observations, allowing critique not merely of the economic methods but the philosophic ones as well.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-91647855839821261592010-01-12T10:49:00.000-08:002010-01-12T14:41:21.589-08:00"Measuring" the effect of StimulusThe AP recently wrote what can only be called a <a href="http://hosted.ap.org/dynamic/stories/U/US_STIMULUS_UNEMPLOYMENT?SITE=ORLAG&SECTION=HOME&TEMPLATE=DEFAULT">hit piece</a> targeting the Obama administration that alleged that the stimulus has not created any jobs. This is the result of a study conducted by the AP and reviewed by "independent economists at five universities". Unfortunately, the study itself, which the AP quotes in its own article, does not seem to be available for review by the general public. This is troubling, because the study is certainly methodologically flawed. The claim that the stimulus has not been effective, which is what many readers will take from this article, is not one that an economist can make in good faith.<br /><br />The claim is suspect for three reasons.<br /><br />First, the study seems to make a serious error in counting of jobs. A key hint comes from a quote by Emory University Economist Thomas Smith, who reviewed the study:<br /><blockquote>"As a policy tool for creating jobs, this doesn't seem to have much bite. In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different."<br /></blockquote>Most likely, this study is counting "jobs" as the secondary stimulus effects, or ripples in the private sector created by the public spending. This type of counting is wrong. In terms of stability and growth, there is no functional difference between a job in the private and public sector. The difference is at the level of the firm, meaning that expanding the public sector undermines efficiency at the firm level, assuming that firms function more efficiently than government. Workers who are employed by the government do not spend less or create less demand for production materials than private employees.<br /><br />Suppose that a law were passed that had the effect of taking $40,000 annually from the single richest person and using it to hire a single laborer - then so long as there is not a shortage of laborers, the number of jobs in the economy is increased by 1. One might here ask whether that wealthy individual will now be deprived of capital that he could use to hire an employee. But two conditions must be met before the wealthy individual will fund such a job - he must have the capital and there must be sufficient demand for the product. In our economic situation, as in most economic situations, the second effect is certainly dominating over the first. In keeping with this analysis, a $20 billion dollar stimulus could be expected to create 500,000 jobs if it was raised totally from taxes. However, in the case of this stimulus plan, the stimulus comes from government issued debts, which are held as safe assets by banks, meaning that they are sold on the market only to wealthy individuals who do not have a better investment option (such as going into business). This makes the stimulus much less likely to trigger capital shortages by potential investors. Certainly, though, there are mitigations, such as disbursement costs that make the initial effect somewhat less. So, this number could be trimmed further, maybe even cut in half, but it is still not zero. If it is not a large enough number, then it is evidence, as many economists have argued, not for abandoning the stimulus concept but for making a much larger stimulus - on the order of $800 billion or so, which is about what the total stimulus adds up to. That is the opposite spin from what many people got from the article.<br /><br />Secondly, there are persistent questions that need to be asked about the measurement of economic variables. Since many things in the Economy are in constant flux, and since the Economy itself is unpredictable, it is not possible to separate the variables involved without depending on one's economic models. In other words, economics can only ever compare reality to the theoretical. It cannot create or observe any experimental controls. The very term <span style="font-style: italic;">ceteris paribus</span> is a transition to the theoretical.<br /><br />Many economists sadly use a neoclassical model that posits the economy in a constant trend toward an equilibrium labor employment that is set by a unique equilibrium given by the labor market. Even the Oregon State's official economists use such a model, and as soon as the economy started to go downhill, this model predicted a recovery. In fact, I have seen one rather hilarious graph which shows a series of three predictions, each made two months apart, that doggedly showed the same upward trend in the coming months, each being wrong.<br /><br />We have known that such a model is wrong since Keynes wrote the <span style="font-style: italic;">General Theory</span>. Though the assumptions, first formulated by Ricardo, about the way labor behaves were almost certainly wrong, Keynes also pointed out that the classical model was based on circular logic. But just to add perspective to this issue, Keynes' primary academic opponent in the General Theory was Pigou, who pioneered many aspects of welfare economics and advocated for subsidies to correct market failures. I highly doubt that were Pigou alive today, he would advocate against government intervention in our economy.<br /><br />In other words, without knowing if things were going to get better or get worse without the stimulus, it is impossible to tell with any accuracy how many jobs the stimulus created. If one uses a classical model, one is likely to predict a recovery too soon and therefore underestimate the effect. Even finding the stimulus ineffective does not endorse inaction.<br /><br />Third, the very small nature of the stimulus studied in this article makes it harder to measure. For reasons not explained, this study looked only at a small part of Obama's total stimulus package. In an economy with 300 million people and GDP in the trillions, the aggregate employment effect of a $20 billion disbursement at the national level is going to be rather diluted.<br /><br />Furthermore, this measure was offset directly by State Governments cutting their budgets. Here in Oregon, we were smart and knew that gutting the State budget would only make our economic situation worse. Even so, we may be forced into such a situation, and we could even lose our super-majorities in the legislature. The tax increases that Oregon passed are really a good option for our economy, but you would never learn this by reading what newspapers like the Oregonian have published. Referring to the disastrous way that budget cuts by Herbert Hoover exacerbated the great depression, Paul Krugman warned of the state legislatures becoming "Fifty Herbert Hoovers".<br /><br />Sadly, the media remains a pawn of business interests. This manipulative relationship is formed in part by the inability of journalists to see through the economic deceptions created by conservative economists. The best way to describe such economists is ironically through their own language of regulatory capture. I would say that these people have been captured by corporate interests. With their help, corporations can expand their grasp, to capture the media. We must work diligently to build our own information networks for political and economic information, because the evidence is mounting that advertising-based media cannot be trusted.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-84731923873943277122010-01-04T13:31:00.000-08:002010-01-04T16:53:21.301-08:00Some Philosophy of ScienceThis post is my exploration of various concepts and standards in the philosophy of science. The purpose of the exploration is to define clear criteria for the inclusion and exclusion of various approaches within economics as being scientific. Unfortunately, the existing literature and philosophy dealing with what science is are crude and unhelpful for a variety of reasons. The many myths about the scientific or nonscientific nature of particular arguments or models within economics are probably due to this deficit. Thus, it must be addressed if the discipline is to obtain practical clarity and a real public policy vision.<br /><br />In particular, This is intended to be an exploration of the essence of the science, the science itself, rather than its practical application. The definitions given of what science is, such as in Thomas Kuhn's <span style="font-style: italic;">Structure of Scientific Revolutions </span>do not generally make this distinction, often blending the institutions of science with the science itself. Generally, there may be a vast number of institutions and rituals surrounding a particular practice of science that are not part of the science itself. To the degree that these things are necessary for the science to exist, there must be some requirement - a property of the science itself - that creates this necessity.<br /><br />The essential, classifying property of science is that science is a way of observing. The development of sciences is really the development of different ways to observe phenomena. When a conscious being observes a phenomenon, it initiates a mental process whereby it assigns a meaning to what was observed. The theories of science are particular techniques for assigning these meanings.<br /><br />The type of technique that is created for the purpose of assigning meanings is what I'll call the <span style="font-style: italic;">structure of reality theory</span>. This theory defines and creates the objects used by the observer of a given phenomenon in his explanation of that phenomenon. This is typically a partial replacement of whatever other <a href="http://en.wikipedia.org/wiki/Intentionality">intentionality</a> might exist for the phenomenon, but I can't say that there aren't cases of pure augmentation. Science isn't the only thing that creates structure of reality theories; rather these theories are, in my schema, an essential component of all human understanding. Their totality provides a cover for the domain of object definitions in the thought process itself. As a dynamical system, the thought process is always drawing from this domain of object definitions to create the objects of thought corresponding to observed phenomena, memory, and mere imagination. The thought process is apparently also capable of making changes to these structure of reality theories based on the qualities of the objects of thought that are created, and of communication to other individuals (and to itself) of a fragmentary form of both objects and structures. In this way, the system evolves and the thought process of the individual changes.<br /><br />Science is differentiated from other methods of creating structure of reality theories in that science attempts to base its structure of reality theories on only observed phenomena and formal logic. Properly speaking, this is impossible, as phenomena are not accessible to the consciousness prior to their interpretation into objects. Once the object is created, it has already been processed by the structure of reality theory in which imagination, memory, and communications from other consciousnesses may have exerted significant influence. Remembered or communicated objects trace their origins back to either imagined or observed phenomena. Therefore, to establish a record of pure observation, science needs a way to systematically exclude imagined phenomena and any phenomena of unverified origin.<br /><br />Science is also differentiated from other methods because it seeks a specific explanatory telos. In more general terms, this means that each science has a defined end-point at which it is fully understood. It poses a finite set of questions, which, when answered completely, would constitute a complete structure of reality theory that cannot be improved to better answer these questions. At first glance, this might seem to be nothing more than a descriptive property, but it has a key function to the development of the science itself. When we talk or think about reality, we tend to forget that each topic to which we turn our attention has its own collection of concepts, defined in relation to each other, that collectively constitute the topic. These are an expression of the structure of reality theory that we have with respect to that topic. The science must have an origin, and this origin is in the criticism of objects that arise through a less scientific structure of reality theory.<br /><br />Neither of these are unique to science. Rather, sciences are the ways of knowing that exhibit both of these characteristics.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0tag:blogger.com,1999:blog-7056208240965765046.post-81314840758877742232009-12-31T14:38:00.000-08:002009-12-31T20:36:35.909-08:00Wealth and the State of NatureThe traditional beginnings of a philosophical treatise on topics in government features a section in which a thought experiment is carried out in order to justify later assertions regarding the social order. This "state of nature" experiment determines which issues will be of primary concern to the treatise at hand. In more modern times it is called by different names, but it seems necessary in one form or another. It provides a focal question or set of questions which the philosopher can then answer, allowing him to transform his work from exposition into argumentation.<br /><br />The essential question in economics relate to wealth. If and only if levels of wealth are sufficient are economic concerns abated. Failures of economy are always confined to insufficiencies of total production and failures of adequate distribution. The consequences of this failure are deficits of wealth.<br /><br />If economic regulation is seen as a part of the function of government, it is possible for a state of nature based argument to spawn policy suggestions. As one would expect, economic ramifications are presented by virtually every political philosophy. For some, such as Marx, economic considerations dominate all others. In other words, the production and distribution of wealth is a legitimate concern of the individual in the state of nature, whatever these terms mean.<br /><br />In order to better understand wealth, visualize the society most adversarial to it. Imagine a communal society having no formal currency or meaningful accumulations of persistent goods, no agreements on ownership of property or rights to land or its use. More precisely, this is is a society where differences in the individuals' physical and mental capacity and social standing are the only measures of these individuals' wealth. Goods acquired are consumed rapidly. Well being is describable only in terms of quality of food, sexual prowess (in the sense of having desirable sexual roles), and amicable social relations within the society. Wealth is thus the descriptor for the situation in which a greater or more secure stream of these goods flows toward a particular individual or group. Furthermore wealth has two other properties that will become important later in this discussion: it may have a conspicuous aspect but it is not bound to be conspicuously presented; and wealth need not be deliberately pursued or even understood in order for an individual to have it or accumulate it.<br /><br />The philosophers at the base of the economic tradition have typically emphasized the state of nature as being one in which freedom reigns in a more or less unrestricted sense. The function of the state of nature within a philosophy was to serve as some basic state in which man's true nature is clear, or in which action could be analyzed in some pure sense to draw out a basic concept (e.g. Locke's concept of property through labor). The conditions described were not typically representative of any existing cultures, nor were the availability of various resources accurately represented. This - in and of itself - is not problematic because the state of nature is merely a thought experiment, after all. What makes these descriptions problematic is that they don't genuinely escape the culture from which they are conceived: they are given an essence of freedom and assumptions of motivation that are artificially copied from the motivational framework of the author into the thought experiment. The point need not be labored that such a beginning will eventually misguide the entire discipline built upon it.<br /><br />Individual motivations generally take a highly cultural character. This is a point not easily grasped by philosophy, even eastern philosophies that ostensibly place less emphasis on the individual. The motivation for even selfish acts that we engage in alone is part of a conscious stream the primary function of which is to monitor and develop our social position. To posit humans outside of culture is to separate them from a part of themselves, being that a significant portion of our neurological wiring is dedicated to the perception of others, and that any state of affairs in which this wiring is engaged will have a cultural character. There is no basis that defines what types of interactions are noncultural, nor can the actions of an individual in isolation be seen as natural. Our observations of thought process and motivation all come from within our cultural paradigm. Therefore there is no cause to believe that an individual outside of society will have any particular pattern of thought, or a pattern of thought at all.<br /><br />Freedom is an object of contrast. It is definable in part because its absence is possible. Supposing a person were living in a state of nature, he would not be any more (or less) free from the laws of nature than any of us. This person would have no cause to define or experience freedom unless he engaged with other individuals who were capable of limiting it. However, in the course of interaction, culture develops, and whatever division comes to exist between individuals is immediately subjected to the very cultural concepts that the state of nature is supposedly filtering out.<br /><br />Locke gives an example of a person who picks an apple, and who therefore has the apple now as his property. Were another individual present, that individual would have a relationship with the apple-picker that is cultural in nature. It would not be possible to discount cultural considerations offhand, because they might very well define the apple in a way that made it not property of the apple-picker. Conversely, if there were not another individual present, the concept of property is meaningless because it cannot be contrasted with any idea of "not property". The "individual" that Locke has envisioned, having no claim to a thought process or any notions of freedom, can't be viewed as anything but a creature artificially inserted from Locke's own cultural realm, robotically acting out a set of instructions it does not in any way understand.<br /><br />John Rawls defines the Orginal Position as a thought experiment in which people are separated from their knowledge of their own identity within the society, forcing them to weigh the risk of poverty against the rewards of opulence. In this more modern approach, the culture of the individuals and indeed the very thought processes of the automatons into which the individuals are injected remain and may be subjected to criticism. This thought experiment is far superior to Locke's because it does not rest on an artificial notion of the individual. However, it does rest on an artificial notion of wealth. Since wealth is merely a culturally defined property of individuals, this is a less serious problem.<br /><br />With the proper lumping, all wealth can be placed into two categories. The first category is connected to the productive talents and abilities of the individual. This is not merely their skills, but their traits that make them interesting or uninteresting to the other members of the society (physical traits like attractiveness, gender, age, etc.). The second category is connected to the standing within the society that the individual has - through money, connections, caste, marriage, legal conveyances, etc. The wealth is not these objects, for instance the money itself, but what it can bring on demand. In other words, wealth is the capacity to bring a thing on demand, and it is talents and privilege that tend to do so (and don't forget that in this schema, pecuniary wealth is merely a privilege).<br /><br />Returning to the state of nature question, the proper way to begin a description of the state of nature, with regard to economic questions, is to posit a situation where a person has no wealth. This is obviously not possible, as the person must have some talent or ability that can be used to some avail. Nevertheless, this schema is still very useful, as it shows immediately that wealth, in some fashion or other, is needed merely to secure more wealth. It also captures the fate of a human in the "state of nature": starvation, hypothermia, death by exposure, possibly being eaten by a wild animal or perhaps being killed by the actions of another human. At an even more primitive level, a person in a state of nature must not merely be deprived of his ability to survive but of his very ability to enjoy his remaining days. Surely, this is a form of wealth. A person need not have much to enjoy the natural beauty of the earth. This beauty is the most fundamental form of wealth, and all people posessing any of the five senses can demand it at any time.<br /><br />To measure wealth, in one way or another, is to create a criterion for valuing some demands above others, for the ranking of distributions of privilege (note that educational training, although increasing skills that can't be transferred, is still a privilege in this schema. This is not an altogether accurate description but in the end it will not affect the conclusion). Wealth cannot be measured in any other way. To value only dollars is to value dollar demands and no other demand types. A person in any kind of society obviously has wealth in some form or another. Even a very small group of people, having nobody else to depend on, is capable of survival and even happiness. So long as there are a fair number of hearty women and fertile men, it is possible for this group to survive indefinitely, provided that the natural world continues to supply the necessary resources.<br /><br />The other aspect of wealth is the existence of resources to which society can apply labor and technology in order to meet demands. The presence of these resources depends on 1) the development and use of technology and 2) the ecology of the environment in which the individual is situated. Together, these two concerns encapsulate the strategy for maximizing the total wealth of a society, at least prior to a more detailed consideration of distributions.<br /><br />The development of technology is not dependent on any particular or regular factors. It is often erroneously asserted that technological development depends in some way on savings or investment. This is an unsatisfactory and overly abstract, nonmechanistic answer. The real mechanism that motivates technology is the provision of resources to those both interested and capable of developing technologies, and there are myriad ways to allocate resources in this way. In any event, there is a level of privilege that must be assigned to the scientist or the tinkerer to allow him to dedicate a portion of his time to his passions and to make requests for the necessary resources.<br /><br />Technology is not merely instruments or machines, but the means of using these machines. It is internalized in individuals to a great degree. In truth, the pursuit of knowledge itself is a technology that has unlocked what is best described as "new ways of thinking." Technology should rightfully have a high priority in the valuing of demands - meaning that societal configurations that invest more in technology are generally higher in the ranking of privilege distributions. Technology is also the social structure, institutions, and various public goods that have undergone increasingly beneficial metamorphoses from one age to the next.<br /><br />Ecological science, itself a product of the pursuit of knowledge as a technology, must be vigorously applied to any question of economic impact. For instance, even if he is starving, a hunter should not be allowed to shoot the last of a species of animal. Ample ecological evidence supports the thesis that species extinction impoverishes future generations. There are many types of ecological damage other than biodiversity loss, but their effect is always to impoverish. The problem is never monetary in nature; it is in changes to the types of demands that future people can make. In fact, it is folly to measure ecological damage in dollars, because the ecological damage hasn't changed the money supply in any way! It merely diminishes what is available for us to enjoy. It follows that distributions of privilege that preserve the natural world to a high degree will also tend to be favored. Preventing every extinction is not possible, of course.<br /><br />Turning now to the question of distribution of wealth within a society, we can venture back to our minimal wealth village. Supposing that a calamity of some kind struck, and a shortage of food were to suddenly materialize. Would the person who does some other craft without producing food of his own, instead trading for it, be one of the first to be fed, or would he be lucky to be fed at all? It seems that in this case, absent some privilege that allows him to take the bread from the hands of his fellow villager, he would have no means of obtaining food. In other words, there is an order of importance to production. The goods most important are those necessary to survival. Those least important are the ones we can do without. This in turn imposes an order of importance to privileges: those that can be used to obtain the most important resources are the most important. Finally, the importance of each thing is always dependent on context and the subjective tastes of the individual. However, this dependence on subjective taste becomes stronger only as one progresses away from the necessities: all people have similar physical and emotional needs.<br /><br />The arrangements of labor that are common in my culture are really agglomerations of privileges. Many people who are highly paid are doing work that others would do for very little pecuniary compensation. Furthermore, as Galbraith noted in <span style="font-style: italic;">The Affluent Society</span>, we value our pay much more than we value the products that we produce at our jobs. But, he hasn't quite pierced deeply enough. When the actual material needs of the society can be provided through a small amount of labor, in which the labor itself is not distributed equally through the society, there must be a system of privileges in place to entice the few to work for the welfare of the many. Our society takes two approaches: taxation and consumerism. Marx suggested land reform. This, of course, would undermine our very beneficial economies of scale.<br /><br />Taxation is a form of coercion when seen in this light. It is justified by the existence of life enriching public goods that game theory has definitively demonstrated cannot be effectively provided by the private sector. In particular, we have benefitted from those that enhance our level of technology and safeguard our environment, ensuring a high level of production in the future. Even so, it is a necessary evil.<br /><br />Consumerism is a blight. It serves few purposes. Its historical source was conspicuous consumption and the confusion of happiness with luxury. It is perpetuated by ignorance, for a person who consumes heavily must be ignorant of cause and effect. In no way does a person who watches a movie rather than volunteering at a soup kitchen benefit themself. In fact, I would go so far to say that a person who dedicates themself to selfless acts is happier than a selfish consumer. In fact, a person's intake of consumer goods, in a purely maximizing fashion, would be minimal, only enough to allow him or her to appear "normal". He or she would be better off saving the rest. This critique applies sufficient force to argue against consumerism on the basis that it is a mental disease, even as its environmental impacts pause within my pen.<br /><br />If political debates center around taxation, I support them. That is because the trade off is typically between taxation and consumerism. Americans are not on the verge of starvation (though that could change in 2010...)<br /><br />But there is an alternative to either taxation or consumerism, and it centers on our culture. Marx was not altogether wrong in his utopian vision. In a sense, he hearkened back to the time of the peasantry in Europe. In those otherwise grim conditions, humans toiled in a way that brought them together. Without trinkets and salesmen to corrupt them, without the financial markets and sophisticated business models to swindle them, they each led a diverse life that exercised every part of the human instinct, just as the life of a hunter-gatherer might. When we walked the path of technology, we were enamoured with the noncontroversial and therefore the nonpolitical, and so our ability to regulate our own creation fell behind our ability to produce. But, now I feel the pendulum has swung back the other way. It is time to truly assess what we are capable of.<br /><br />What I speak of is a cultural unification of sorts. It is not at all what Marx planned. It is the replacement of consumer goods with local crafts. It is the use of and evolution of art as currency, as a thing of value, and as a meaningful pursuit. It is the wholesale endorsement of science. Our precious class of farmers and laborers should be paid very well, so that there will be no shortage of them. After all, they are the most important members of the society. Working hours will not be long. The rest of us will live frugally, surviving through our arts and through the public system of welfare, but we will make the world rich with philosophy, political activism, art, and literature. The government will be within our control, as we are the ones available to work for it. And its main function will be to ensure that everyone's basic needs are met.<br /><br />This vision is not inevitable. It is, however, possible, and more equitable than any government existing today.Garthhttp://www.blogger.com/profile/02169566706243781115noreply@blogger.com0