Capitalism and Freedom Review

After reading Capitalism and Freedom carefully, my opinion of Milton Friedman has been revised upward. I was assigned this book for class, but I never gave it a thoughtful, careful read till now. The book that I had read carefully from Milton, Free To Choose, left me thinking he was not a great thinker. My recollections were that Free To Choose was surprisingly lacking in nuance. That is probably because it was targeted for a mass audience, but its simplicity still seems like a negative mark for Milton Friedman.

Capitalism and Freedom has very few numbers, and no models, but it is well-argued nonetheless. It is full of rhetoric, but it is the kind of rhetoric that makes sense -- the kind which characterizes government controlling the individual as a violation of human rights. Friedman argues against the central control which was prominent at the time, but is no longer taken seriously. He does not so much engage the other type of socialism -- welfare capitalism, except to perhaps endorse it in his last sections on the distribution of income and social welfare measures.

In Friedman's second chapter, he notes the appropriate functions of government (p. 34) -- functions which I completely agree with, but which neocons, and liberals, tend to forget about. These include setting and enforcing the rules of the "economic game", promoting competition, countering monopolies, overcoming neighborhood effects (also called externalities), and even supplementing charity and the family in protecting the irresponsible. He identifies a number of policies as unequivocally wrong. Generally I don't agree that these are always wrong, but it is hard to see why agriculture price supports would be necessary. Others, such as tariffs, parks, and detailed regulation of banking would seem to have a place dependent upon the situation.

Chapter 3, on money, is probably one of the most important chapters. Friedman opposes the current Federal Reserve system, believing it is too liable to human error, and instead proposes (citing his A Program for Monetary Stability) a consistent rate of growth in the money supply of 3 to 5 percent.

Chapter 4, International Financial and Trade Arrangements, is also enormously important, and unfortunately awfully complex -- more so than money. Friedman endorses the floating exchange rate which Soros finds so troubling -- and the floating rate might be the best of bad options. Unfortunately, it leads to a fair amount of uncertainty, speculation, and sudden catastrophes as currencies change. If only there was a perfect system.

In chapter 5, Friedman critiques the Keynesian use of fiscal policy to alleviate unemployment. He argues that it relies upon untenable assumptions, because the money which the government spends must be borrowed from the public, which will drive up interest rates, and thus reduce the amount of spending and investment. He admits that it is ultimately an empirical question, but says that his recent work (The Relative Stability of the Investment Multiplier and Monetary Velocity in the United States, 1896-1958) suggests that there is no rise in expenditures, as his "quantity theory" suggests.

In Chapter 6, Friedman lays out the case for vouchers in education. I won't spend much time here -- I agree that vouchers are a good thing if strict standards are maintained, but Friedman endorses questionable standards, such as allowing segregated schools. Chapter 7 is on discrimination, a complicated political subject I'd rather not get into.

Chapter 8 is on monopoly. Friedman admits that all the ways of dealing with monopoly are bad, but tentatively concludes that leaving monopolies private may be best, mainly because innovation happens so quickly, and the government is so reluctant to let loose of its hold. I'm not sure I agree, but it is a decent point. He also makes the case here that a corporation should not be socially responsible, and that government needs to be the one holding people responsible. This sort of reminds me of how I used to play MUDs -- exploit the code, and argue that I shouldn't have to maintain reasonable behavior if it is not programmed into the game. It was probably a bad attitude, and a corporation should similarly not follow the letter of the law -- if it does, it will hopefully find itself in trouble, as I did. This argument from Friedman might be taken as an implicit argument that the government must be especially vigilant and free to take action.

He notes an interesting unintended consequence of our current system. Dividends are taxed double, which leads corporations to hold dividends and then invest them in their business, whether it is prudent or not. I fully agree with him here, and wish corporations disbursed more dividends. He wants to abolish the corporate income tax and instead force shareholders to record their profits from the company on their taxes -- meaning that they'd have to pay taxes on them, I'm guessing?

In Chapter 9, Friedman makes the case that the American Medical Association is a lobbying group bent on keeping competitors out. It's amusing. He defends "faith healers" by noting that one of thousands of quacks may produce a valuable breakthrough through their unorthodox experimentation. Those of you who know my Wikipedia efforts will know that I am sympathetic to alternative medicine, and I like this defense -- although I truly dislike things like therapeutic touch and homeopathy. Friedman argues that restricting medicine only to the highly-skilled reduces the total "physician-hours", and reduces total amount of care, thereby reducing the quality. Friedman tentatively notes that government certification may be necessary because certification information is nonexcludable -- one person can pass it on to others.

In Chapter 10, on the distribution of income, Friedman gets again into the tough ethical issues. He admits that the issue is difficult. Somehow he tries to run inequality from personal endowments together with inequality from inherited wealth, because the latter leads to personal endowments. To an extent, this is true, but he emphasizes it too much. He also makes a somewhat bizarre argument that if there were 4 Robinson Crusoes marooned on four islands, and one landed on a fruitful island, that Crusoe would not be required to share his wealth, and the 3 others, who were barely scratching by, would not be morally justified in taking it. He says this is analagous to someone finding $20 on the street, and then 3 people deciding to mug you for not sharing it. Does his analogy make sense? I dunno. I don't get ethical issues, generally, but I think 1) we should encourage a meritocracy, 2) we cannot allow people to starve or live with debilitating illness. Which brings up to the next chapter.

In Chapter 11, Friedman discusses Social Security and other social welfare provisions. He criticizes the idea behind social security -- that people cannot save for themselves -- however, I tend to think that people cannot. He notes this possibility as well, but thinks there are better ways of ensuring that people secure their retirements, so that the government is not left supporting them in their old age. He argues that most people would save for their unemployment, and that social security arose only because many people were unprepared for the Great Depression.

In Chapter 12, Friedman endorses a negative income tax, noting that such a system would target poverty much more specifically than minimum wage laws.

In 13, he sums up his arguments. Nothing too interesting here, and I'm losing steam.

What follows?

Everything logical should be able to be stated in understandable and because of that memorable terms. That's not to say the world can be described understandably per se -- the world is not fundamentally logical. But if someone says "you just have to see it, or it just is", rather than "it follows from this principle working like this", it seems likely that they're more confused than you are. (I have already been proven wrong on these, but it's to a degree -- I assume I will discover the intuitive understanding.) There are, I suppose, important foundational principles which just have to be assumed.

How about morality -- is that one of these foundational principles? I think not. But it is clear that there is physical truth -- a fixed sort of truth -- and spiritual truth. And spiritual truth includes not only your wildest imaginations (and then some) but also things outside of your wildest imagination. But then how do we factor in the effect of data, then? All truth is constructed from some limited data of the real world. Its degree of truth, then, is a function of how close it comes to the real world. There is a truth for both physical science and human morality -- or does it? I'm not sure if we can describe what we should define as truly good -- but we can describe what we will define as truly good.

The test of a real philosopher: to learn without being taught?

If the harder disciplines (physics, mathematics) are half as screwed up as philosophy, economics, and medicine (in no particular order), then God help us.

I've forgotten everything else I wanted to say.

Affirming the Consequent, Denying the Antecedent

Both of these are misnomers. When you "affirm the consequent", you are actually affirming the antecedent upon observing the consequent.

If P, then Q.
Q.
Then P.

This is the fallacy that they call affirming the consequent. The fact that its misnamed makes it more difficult to remember.

Similarly, denying the antecedent:

If P, then Q.
Not P.
Then not Q.

Another fallacy, but again, it is misnamed. The denial of the antecedent is observational. The fallacy lies in denying the consequent based on the observation of not P.

Intuition Pumps (Thought Experiments), Free Will, and Nietzsche

In light of the way that modern philosophy works, this post by Adam Rawlings deserves to be spread far and wide. It's not often that you find philosophers rejecting (even to a degree) rather than analytically debating (fallacious) thought experiments (there are good thought experiments -- check out out I made previously by hitting the thought experiments tag).

I haven't studied modal logic, but it seems that what is "logically possible" is rather arbitrary. Logically possible in our physical world is likely not what philosophers think it is; some of these "logically possible" assertions strike me as similar to Descartes' claim that "the more perfect -- that is to say, that which contains in itself more reality -- cannot be a consequence of and dependent upon the less perfect. This truth is not only clear and evident..." (Third Meditation). ADHR criticizes all of the thought experiments on this basis.

There's another criticism for Frankfurt thought experiments. As a compatibilist, Harry Frankfurt accepts determinism. Yet if determinism implies that there is a single future path which rules out metaphysical responsibility, as Dennett, Pereboom, Honderich, Inwagen, Kane, and others believe, then Frankfurt has to explain how the "free will" necessary for moral (metaphysical) responsibility exists. His thought experiments assume "free will" because people make a free choice. He attacks what he calls the Principle of Alternate Possibilities, focusing this attack on actions -- but what really matters is choices. In Frankfurt's imaginary world, people can still make "free" choices for which they are ultimately responsible. (Technically, the agent in Frankfurt's experiment is only responsible for his action when the controller did not have to act.) What I'm saying is that Frankfurt's thought experiments don't get him any closer to the moral responsibility he wants; he still hasn't addressed the regular problems with "free will" moral responsibility. He won't be able to, either, because the metaphysical free will which allows ultimate metaphysical responsibility is incoherent. We are not responsible for our positions, and thus we are not ultimately responsible for our actions. We are only responsible in the sense that we have to be responsible (responsibility keeps people's behaviors in check). This critique is obvious, but somehow it hasn't gained traction in the philosophical literature; I imagine most philosophers would reject it out of hand simply because they don't want to admit that they've studied Frankfurt counterexamples these past 30+ years without noticing.

If we can get past this focus on ultimate responsibility, however, we can start to think about taking control of our lives and acting with at least some personal responsibility -- you aren't responsible for the position you're in, but goddamnit, you're gonna have to make the best of it. At the same time, this position recognizes (as we do legally) mitigating and aggravating factors in actions, and advocates that we study the causal factors behind behavior to maximize our ability to exert rational control over our bodies. Dennett struggles with this idea in Freedom Evolves, but this is Nietzsche's entire goal, actually, although he pushes people to do it without science (while recognizing that ultimately it may come only through science):

"learning to see -- habituating the eye to repose, to patience, to letting things come to it; learning to defer judgement (italics mine), to investigate and comprehend the individual case in all its aspects. This is the first preliminary schooling in spirituality: not to react immediately to a stimulus, but to have the restraining, stock-staking instincts in one's control. Learning to see, as I understand it, is almost what is called unphilosophical language 'strong will-power'. (Twilight of Idols, What the Germans Lack Section 6.)

Nietzsche makes the distinction between the causa sui -- the self-creating "free will" which we continually debate, and the self's "will to power", the causa prima which we really need to focus on. We can't be create ourselves, but ideally we can act with our rational self rather than our animal instincts, and avoid being jerked around by 'stimuli'.

UPDATE: Thinking more about the Frankfurt example -- in the linguistic sense, yes, Frankfurt's agent is responsible when he chooses to act as the controller wants him to act despite the fact that he cannot do otherwise. But this is a counterexample, and an outlandish one at that. It's really restricted to just this case -- when the agent acts differently than the controller wanted and must be controlled, the agent is no longer responsible. How is it supposed to apply in the real world?

Econometrics: Worse Than Useless?

Econometric Modeling as Junk Science.

The other one is in the May issue of The Pluralist Economics Review. Unfortunately not updated at the moment.

I really need start studying something really useful, like computer science.

Some feedback for the FBI

Since the FBI's Contact Us page doesn't allow you to email them, here's what my feedback states. Not that they'll listen to it.

First off, you can stop using these terrible feedback forms. There should be hardly any boxes, and more textual input. There's basically two things that people need to refer to: content and design. That's it.

Your main page seems somewhat overloaded.

Your Most Wanted terrorists page goes to a stange place where I can't go back -- it should be incorporated into your other page.

You shouldn't use tables for design. Update to more CSS.

Your History page should include links to laws that have affected you.

It's shameful that you have no email address on your website. I wanted to send this to you personally.

Usually I'm more harsh in my criticism, but again, it's not gonna matter anyway. The feedback goes into the void.

Decent Review of the Skeptical Environmental

I've been looking for a nice, concise little review of the notorious book for a while. It's by Frank Ackerman; type hit ctrl-f and then type "Tree-Huggers" and you'll find it.

The damage of cell phone radiation

Recently the press has been all over this article; a doctor's interpretation of current research into cell phones and conclusion that they are harmful. This claim has been made by experts previously; similarly, a scientific study found that cell phone masts [pdf] did seem to increase cancer rates.

Now there's a study that has found a direct relationship between cellphone radiation and tissue changes. I found out about it through Mercola, but the science comes from BioMedCentral, the premier open-access biology journal. While I still use my mobile phone, I'll likely be using a landline more when I settle down for a reasonably long time. The cost of using a landline for most of my calls is not that high.

Hume Didn't Discover the Problem of Induction

I noticed that Hume's insight into the problem of induction was not so original as philosophers like to claim when I took Ancient Philosophy. Good to see that the philosophical literature has raised the point as well. The same applies to just about all philosophical literature, I imagine -- which makes me wonder whether philosophy has been just a distraction from real knowledge all along. The Greeks set not only the foundation -- they may have built a good sturdy building, as well, and instead of letting it lie and giving it its due recognition, we tear it out down out of a need to publish. Adding more words to a world which is already drowning in them seems like a problem to me.

Listen To a Ph.D Economist Confuse The Discount and Fed Funds Rate

Somewhat shocking, but typical of an academic: listen to Russ Roberts interview Tyler Cowen.

Some other interesting comments: How much of the current credit crunch is due to lack of transparency? And why have mortgage-backed securities stopped trading, rather than trading at a value with the expected number of defaults worked in? These two seemed to assume that mortgage-backed securities aren't trading at that expected value!

Roberts: "I'm not so sure how much of this trouble is due to a lack of transparency. It seems unlikely..."

Wow.

Quantifying justice

While I've often said that morality is a function of individual preferences and cultural influences (which it is), there are certainly some things associated with ethics which are fairly objective. One of these is justice. Justice is just about universally considered to be "right". Justice can be quantifying: when a being receives a reward (penalty) proportional to the benefits (harms) they've created, the result is just. In our society, many people are not handled justly, and that's something to be concerned about.

Economics Might Be Changing

My previous post reflects a perspective based on a set of information. My information set is rather limited. While economists would like to gloss over the information limitations because they are mathematically annoying, these information problems are the greatest problems which people face when making economic decisions.

Economics is changing. Some of the George Mason economics, at least, are skeptical of the claims that your average mainstream economist will try to make. This probably reflects a growing awareness among the all economists that, say, applying the Coase theorem willy-nilly doesn't really make any sense. While I don't respect the politics of the GMU economists or the way that these political biases manifest themselves in their work, I will admit that they're probably on a better track than many of the prestigious mainstream economists, and some of their offhand blog posts are probably much more insightful and informative than many of the journal articles written today.

Check out "Evolutionary and Institutional Economics as the New Mainstream" by Hodgson, which I found on the Pluralist Economics Review. So far it's an excellent journal. The article is well-worth reading.

Mainstream economics:

• Assumes a can-opener. This is not just a cliched joke.
  
• Looks at the individuals as homogenous rational agents rather instutionally-influenced.
• Has "a preoccupation with technique over substance" (p.18, Blaug).
• Basically ignores the other social sciences.
• Must change in order to make progress.

The article quotes Kenneth Arrow as saying that the "biological is a more appropriate paradigm for economics than equilibrium models analogous to mechanics" (Arrow 1995:9). It's clear that the top people in the field (Hodgson is one of them) see the flaws in economics. So why is it a controversial thing for me to note the same thing?

As I continually try to point out, the real world is a world of "reasonably bright individuals [maybe that's a little far] in information-poor environments" [with a surplus of distracting noise] rather than "infinitely bright agents in information rich environments" (Hodgson 2007:11).

Do corporations oppose free trade?

Apparently Dr. Don Bourdreaux of Cafe Hayek noticed my comment that he, along with his colleagues, seems like a "shill for industry". His reply is that, if he was a shill for industry, he would fit a large number of conditions. The fallacy here seems to be that all shills for industry must fit all, or least some of these conditions -- it's a form of straw man argument, or perhaps a red herring. If all shills had to fit all those conditions, the word would be useless.

What does shill actually mean? Merriam-Webster defines shill as "a: one who acts as a decoy (as for a pitchman or gambler) b: one who makes a sales pitch or serves as a promoter". Wiktionary defines shill as "a person paid to endorse a product favourably, while pretending to be impartial".

Does Bourdreaux "serve as a promoter" of industry? Certainly. Do I think he's been paid egregiously to do it, as some other scholars of the Cato Institute have? Not really. Can he still be a shill? As I elaborated in my comments, shill may not be the exact word. Rather, they are apologists for the status quo. They don't think there's something wrong with the way we are treating our environment, and believe that the free market (composed of industry) will fix all problems if only it was completely unshackled.

The GMU economists seem to ignore the significant incentives that corporations have to look for short-term profit rather than the long-term, ,and the worrying concentration of power in a few firms, who exert that power both in the market and in politics. Similarly, they don't seem to mind the increasing concentration of wealth. They've expressed doubts on global warming, an area which they are not experts in. Scientists are as certain on global warming as economists are on free trade (which means that it depends on who you talk to) (do any believe in global warming? I'd like to know). They seem bothered that people ignore economists when it comes to free trade, but don't recognize the irony in their global warming skepticism. Further, and most damning in my mind, they never seem to say a peep about the information asymmetries which dominate economic decisions.

Does your typical corporation oppose free trade? Doubtful. If industry didn't benefit from free trade, it's unlikely that it would happen. Economists don't have that much power. Efficient multinational corporations benefit enormously from free trade -- it's the inefficient corporations which oppose free trade, such as the old steel industry (which is quickly being supplanted by mini-mills). Especially in today's globalized world, businesses benefit from free trade -- they can hire cheap labor and export to new emerging markets. It's likely that most businesses realize that it's the 21st century, and there's no going back from globalization (or at least, that's how it appears). Tariffs mean paying more for inputs and closed foreign markets. A glance at The Economist's CEO Briefing 2007 shows that CEOs are (or at least were) extremely bullshit about the global economy and trade, and, while worried about international competition, your average business is not really exerting a lot of political pressure to stop it. This Fortune 500 survey of 1987 found that a third of CEOs declared, without prompting, that they were free traders, and that CEOs want government to promote free trade -- and by that, they mean bipartisan free trade. I wonder what the number would be now.

Ironically, I like quite a few of the posts at Cafe Hayek -- for example, this one (though I think we can get some idea on the effect of NAFTA). But attributing most of our problems to regulation is just ridiculous. Yes, there is far too much government going on, but most of that government is spurred by industry -- the military-industrial complex which elected George W. Bush will continue to funnel most of our tax dollars to corporations. The recent financial crisis is not caused by government. Can we blame the government for our environmental crisis?

What has government done right in the past hundred years? Hmm: Internet, national road network, Clean Air Act, and the SEC., to name a few I'd agree that the government has done quite a few things wrong, but these were more a function of bad leaders than some intrinsic nature of government. It's not so simple as "industry good, government bad".

National Databases to Increase Government Efficiency

1. The Consumer Product Safety Commission database of products. The Senate just passed a bill requiring this, but the House doesn't like the idea. Similarly, other relevant information on each product should be added to this database.
   
2. A database on corporations. Contractor Misconduct is sort of a good start to this, but not quite. These databases should have all relevant information on a corporation, and should, of course, be linked to the CPSC's database, along with the usaspending.gov contractor database. To reduce overhaul, companies should be required to input this information themselves, after registering on the website. If the corporation is lax on updating its page, it should be fined.
3. A national database of all local police stations, recording all complaints on officer behavior and their official resolution. If you read Reddit or Digg, you've likely heard about ratemycop.com. The trouble is that none of these comments are official; they have to be taken with a major grain of salt. And, if you browse through it, you'll find that there's a lot of stupid shit on there already.
   
4. All complaints to federal agencies, including complaints on the federal agency's effectiveness, should be made public. All complaints which an agency collects as part of its duty need to be made public along with their resolution. There needs to be an appeal process. Note this story on on a study the GAO on the FCC's handling of complaints on business practices.
5. Obama recently revealed his earmarks. All Congress members need a profile connected to a database, and all earmarks need to be made public. This shouldn't be a choice.
6. A federal database on hospitals: misconduct of doctors, any possible performance ratings, a place to register to complaints. All prices for all procedures should be made public. Again, these profiles would be updated by the individual hospital rather than government bureaucrats.
   
7. Every government website should make all the complaints regarding its website functionality public as well. Thus, problems on the website (which I frequently find, but are rarely addressed) will be resolved quickly and efficiently if the agency wants to retain face. Comments should be votable by registered users.
8. A government account for all US citizens, detailing all information the government has collected on you. Access to this data would require a search warrant, and if any agency requested your information, you should be immediately notified. Libertarians will hate me for this, but I believe that the government should allow citizens to verify their identities cleanly and easily. Ultimately this will allow people to surf their web with their identities, comments, and so on verified if they so chooose.
9. All complaints/comments on government policy should be "votable" by those with verified identities a la Reddit/Digg. Thus, the complaints which gather the most interest will go to the top. Of course, all these things could also be sorted differently (by date, by most votes, by most viewed, by resolved, ect.) Plus, all complaints could be also be rated 1-5 stars by any web surfer. You could see what people with verified identities thought was the most important vrs. your average web surfer.
   

In fact, there's many more databases that could and should be compiled and made public, esp. in reference to government projects and their costs. These could be linked to each other to expose fishy connections and trends. Citizens could then see for themselves what business and government is doing.

While things like Wikipedia have made a good stride in linking together relevant information and greatly decreasing information asymmetries, Wikipedia can't link to information which is not publicly available. Plenty of the most juicy, important information for citizens is still hidden by the government.

As I've said often before, the first and most important function of government is to act as a bridge for information.

Obama, Transparency, Earmarks

I have mixed feelings about Obama. While I loved him when I heard that he passed the Transparency Act of 2006, I was disappointed to find later that they'd basically taken usaspending.org and tossed a .gov at the end of it. They spruced it up a bit and made it more user-friendly, but I'm not sure that there was as much value-added as there could be. There was plenty of glory, however.

Yesterday Obama revealed his earmarks. I'm not real government-savvy (I've been exploring the government websites for about a year now, but they're still a maze to me), and I wonder why he even had to reveal them. Aren't they publicly-available? Apparently not -- or apparently it would be a major hassle to compile the data, as it's probably in text files. So it's $740 million, including a fishy $1 million for his wife's hospital. I'll give him credit for revealing it. Clinton has not revealed hers. I don't think he's completely pure, but he certainly has a better record for integrity than McCain (who was involved in the Keating case) or Clinton, who is just plain slimy.

I'd trust Obama and McCain more than Clinton when it comes to making smart economic policy, as well. While Obama has made a fuss about NAFTA, his book comes down more in favor of free trade:

A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer who uses steel in its products less competitive on the world market.... U.S. Border Patrol agents can't interdict the services of a call center in India, or stop an electrical engineer in Prague from sending his work via email to a company in Dubuque. When it comes to trade, there are few borders left.

EDIT: Where is the press release of these revealed earmarks from Obama? The fact that it was revealed last Thursday (March 13), but there is no press release from Obama's website is disturbing, to say the least. It suggests that he's trying to downplay his earmark requests. However, the earmarks question is fairly prominently displayed (#2) in his AnswerCenter.

Complaints on Kant's Categorical Imperative

When I was a freshman, someone once tried to explain the difference between a consequentialist and deontological morality by claiming that the former was concerned only with the results of actions (an action with good consequences is moral) while the latter was concerned with the action itself -- the instructor may have even said the intention, although that is so clearly false that I'm probably purposefully remembering wrong. Yet consequences have everything to do with both of them. Consequentialist is an artificial, modern term which has been imposed on broad groups of historical philosophies. (According to Wikipedia, Elizabeth Anscombe introduced the word -- no citation.) It is misleading.

Both Kant's categorical imperactive and utilitarianism, to use the two most common (or only?) examples of "deontological" and "consequentialist" philosophies, are concerned with one's intentions. Without good intentions, one cannot be moral. The difference lies in the action, and, in particular, the consequences of the action. However, for Kant the abstract, universal consequences are the most important, while for someone like Mill the real (human) consequences take priority. Kant's argument is similar to the slippery slope: if you let one person do it, then everyone is allowed to do it, and then society descends into madness. What he ignores, however, is the laws that prevent everyone from doing it, and that, at least ideally, impose substantial risk upon those who do act immorally.

Kant tries to dress up his moral philosophy in flowery metaphysics: acting in a way that cannot be universalized to all men is logically contradictory, he says. Even if he's right, his categorical imperative is not as strong as he thinks, because an action should be universalized with all relevant factors included. That includes one's position and the circumstances surrounding one's position. Abstraction sheds all irrelevant information, yet in this case nearly all information is relevant. He cites an example of the suicidal man, and then claims that if we let him kill himself, then we would be saying its OK for all of us to kill ourselves, as we all have all suffered misfortune. Yet some of us have suffered far more misfortune than others, and not all of us have suffered enough misfortune to consider killing ourselves. If we allowed the terminally ill to kill themselves, for example (euthanasia), that doesn't lead to no people -- because not all humans will become terminally ill at the same time. Similarly, if all starving men who are able to snatch a bit of bread do snatch that bread, it's not as if there will be no bread left (unless there's a very, very serious famine -- in which case the rich will live and the poor will die). Instead, poor people will generally be barred from grocery stores and arrested fairly often. These examples can be applied in many cases -- even to murder, robbery, drug-dealing, ect. Further, one's position is especially relevant: a ruler of a nation is obviously allowed to do things that the average peasant cannot -- even, arguably, declare war.

Lastly, treating everyone as a end is impossible, but even worse (for Kant), insisting on the categorical imperative as you deal with other people leads to you treating others as a means to an end -- in this case, the end is the categorical imperative, and your friend who you cannot lie to save is simply a means to that end. This contradiction lies on top of the empirical impossibility of the entire idea. All individuals must treat all others as means to ends. Friends are a means to laughter and enjoyment, businessmen are a means to certain business ends, ect. This is no minor problem.

Like most historical philosophy, Kant's imperative is full of holes. But ultimately neither Kant or Mill's conception of the good is truly satisfactory, because the good is a subjective, personal decision. Everyone's conception of what is good will differ to some degree. For a philosopher knowledge may be the highest good; for your average American, pleasure; for an environmentalist, environmental beauty.

Has Economics Changed?

During a class not too long ago I was asked to state my favorite academic. Because I'd read his work not long before, and CEO pay is so out of control, I mentioned Lucian Bebchuck.

I'm also a major fan of David Colander. Pick any one of his diverse set of articles and you'll likely find something thought-provoking. In some ways, however, he seems to be almost like a sociologist or philosopher studying economics. Right now I'm reading The Changing Face of Mainstream Economics, in which he argues that mainstream economics has changed, and that today it is held together by its "modeling approach to economic problems" (p. 2). He believes that it is undergoing a paradigm shift.

Perhaps that's true. He should certainly know better than myself. But most of the papers that I read reflect the same old economics, and most economists do not seem so interested in difficult-to-quantify concepts such as information asymmetries and externalities. It seems as if most economists would rather run simple regressions or input-output analyses. However, Colander believes that minute "stealth changes" (p. 4) are happening, unbeknownst to the agents of change themselves.

If we were to judge by the internet, then the most influential economists in the world are the George Mason economists of Marginal Revolution, Cafe Hayek, and Econlog. These guys seem to be everywhere. I don't like them much -- they seem to be shills for industry, and just plain lazy. (Consider Kling's offhand comment that dogs impose more of a burden on the environment than SUVs, without any research.) They aren't exactly mainstream, either, but their views are fairly stereotypical.

What am I trying to say? I'm not happy with mainstream economists, but I'm fairly happy with economics theory. Information asymmetries, externalities, marginal analysis -- these are helpful for looking at the world. I'm just disappointed that so few economists seem to use these in the way they should: advocating greater transparency, taxes on pollution, subsidies for external benefits, and things like a national, federally-funded Health Savings Account plan. Further, the defense of things like CEO pay by way of pointing out its correlation with market capitalization strikes me as incredibly naive -- as if there was a dearth of "good chief executives".

But perhaps the blame should not be placed on economists in particular, but rather on humans in general. After all, how could people be so stupid as to think that only people who have previously worked as a CEO are good candidates, and worth hundreds of millions of dollars? And have they learned their lessons now, as these high-flying executives run corporate America into the ground?

Is it so hard to understand why executives who have no long-term stake in their companies might do a poor job? Corporate executives should be paid their bonuses in restricted stock grants -- and restricted for the long-term. By long-term I do not mean a year. I mean five years. In the meantime, let them live on a reasonable salary.

EDIT: Here is my response to Professor Bourdreaux.

Assorted Interesting News

Does alcohol actually work? Quote:

In a series of studies in the 1970s and ’80s, psychologists at the University of Washington put more than 300 students into a study room outfitted like a bar with mirrors, music and a stretch of polished pine. The researchers served alcoholic drinks, most often icy vodka tonics, to some of the students and nonalcoholic ones, usually icy tonic water, to others. The drinks looked and tasted the same, and the students typically drank five in an hour or two.

The studies found that people who thought they were drinking alcohol behaved exactly as aggressively, or as affectionately, or as merrily as they expected to when drunk. “No significant difference between those who got alcohol and those who didn’t,” Alan Marlatt, the senior author, said. “Their behavior was totally determined by their expectations of how they would behave.”

I get
Dr. Mercola's monthly newsletter. This
was particularly interesting. From the article:

Three have died and another four have battled the disease since two masts were erected on the roof of the five-storey block which has become known locally as the Tower of Doom.

The cancer rate on the top floor - where residents of five of the eight flats have been affected and the three who died all lived - is 20 per cent, ten times the national average.
...


World Health Organisation guidelines have dismissed the risks of masts despite other evidence which has found they are harmful.

The NYT on China: Choking on Growth. Quote from the wildlife article:

Nearly 40 percent of all mammal species in China are now endangered, scientists say. For plants, the situation is worse; 70 percent of all nonflowering plant species and 86 percent of flowering species are considered threatened.

If I Was President...

One of my first laws would be to require all companies to provide any customer with all data linked to their account/name, on demand, for free. Ideally they would make it web-accessible -- the smart ones, at least, would, because sending it out manually would cost more money.

Further, they would have to delete it on demand as long as doing so doesn't conflict with other laws.

Long-term tax rates

It's hard for me to see the value added in some of financial innovations and institutions. Credit card companies often simply allow people to indebt themselves more. Insurance companies must have had crazy margins before Geico started this price war. Did this rate swap add value to the situation?

What if we had a tax structure that encouraged real long-term investing? We already have long-term taxes rates for 1+ year of owning a stock; how about additional tax breaks for 5 or 10-year ownership? Or how about higher short-term rates and a more gradual long-term rate?

The short-term craziness of financial markets today is a real distraction from what matters. People don't think for the long-term. That's why we had these dumb loans: the people in charge of these companies were only thinking a few years into the future.

The Effect of the Drug War

Increasingly, the young murder suspects coming to the station for questioning seem to lack basic morality, said Sgt. Tim Nolan, who has been investigating Oakland homicides for 17 years.

"There are more and more families where there's less and less structure," he said. "Talking to these suspects day in and out, there's a higher percentage today with no sense of right and wrong. It's frightening, but we are creating super-criminals."

- http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/MNS1RBLQ5.DTL

Morality is woven into the fabric of a society, creating a structure of normative rules. Morality is functional. When society changes, those rules change, within range of certain biological limits...

Traveler's Dilemma

The Traveler's Dilemma, unless I'm missing something, is another example of Ivory Tower logic gone too far in the wrong direction.

UPDATE: Really, the Traveler's Dilemma could be viewed as a good critique of Nash equilibrium, and for that it works well.

Six Existential Thinkers

I just finished reading one of the most arcane books ever - Six Existential Thinkers by H.J. Blackham. Wikipedia says it "became a popular university textbook" -- and I must say I pity those students who had to read it. Only 160 pages but it felt like it took me a lifetime because, for the life of me, I could not understand a thing that was being said in many places. It felt to me that he was constantly trying to be intelligent by repeating the same thing over and over. For example, the Preface:

The purpose of this book is exposition, not criticism nor advocacy.

I hadn't even meant to use this part of the Preface, but look at the first sentence of the entire book!

Next:

There have been enough popular accounts of the general ideas of existentialists. It is time to discriminate between these thinkers; they are not exponents of of a school, and yet not the least impressive thing ... is the interrelatedness of their thinking: they lead into each other; they form a natural family; each throws light on the others, and together they develop the content of certain common themes.

And:

Finally, the general reader who is interested enough to want to acquaint himself with existentialism should be told at the outset that there is nothing in this book which he cannot understand if he really wants to. There are difficulties, but they are not technical, and they are likely to oppress the philosopher even more than the general reader.

Does that make me a philosopher? I don't think so.

The second word of the book is "pertinaciously". I had to look it up.

To be fair, the Kierkegaard, Nietzsche, and to some extent Jaspers sections are readable. The middle section, Marcel, is OK, but the last two sections on Heidegger and Sartre are likely the most opaque things I have ever read...

Speculative Bubbles

In a world where many academic (Chicago School) economists believe that markets are "perfectly efficient", (makes you wonder what high-level mathematics does to one's brain), there was at least one voice of "rationality" -- "an obscure economist"...

Crazy Love

Puppy Love Makes Teenagers Lose The Plot

"Love: A temporary insanity curable by marriage or by the removal of the patient from the influences under which he incurred the disorder. This disease, like caries and many other ailments, is prevalent only among civilized races living under artificial conditions; barbarous nations breathing pure air and eating simple food enjoy immunity from its ravages. It is sometimes fatal, but more frequently to the physician than to the patient." - Ambrose Bierce, The Devil's Dictionary

What is the undergroundman?

Notes from Underground: A book about a man constantly battling himself -- and losing.

He falls into a small set of people who always know how they should act, but do not periodically act in that way. This distinction between knowledge and action is said to produce free will, and those people who know right but act wrong are thought to be morally responsible for their actions.

"If I know what is right, I can act right is" is apparently the syllogism with which which we judge people daily. In other words, all people who know what is right can act right. But doesn't that fly in the face of all empirics or logical sense? (By the way, I say only those who know -- what of sociopaths? Do they know the sin of murder any better than a cat knows the sin of murdering a mouse? What if a sociopath's brain is significantly different, as it likely is?)

The Trouble With Rational Choice Economics

Again and again, people will choose short-term benefits in exchange for long-term pain. While strict rationalists will admit vaguely that people do not act rationally all the time, their theoristic "rationalism" underpins many of their other theories, leading them to believe that the freedom of the market is more effective in preventing crises and getting things done that it really is. Markets need to be regulated because people are stupid and greedy.

Piling On

This is some great advice for handling people from Jack Welch in Straight From The Gut, the former CEO of General Electric:

When people make mistakes, the last thing they need is discipline. It's time for encouragement and confidence-building. The job at this point is to restore self-confidence. I think "piling on" when someone is down is one of the worst things any of us can do. It's a standard joke during GE operating reviews that if one of the business CEOs is getting heat and someone in the room jumps on the bandwagon, the staff team will typically pull out the white handkerchief, toss it in the air, and flag the person for piling.

For people (at least those like me, who become embarrassed) the mistake is punishment enough, and people realize that if they continue to make mistakes, something has to happen -- needling people is unnecessary.

Close-Minded Fanatics Win Over Theorists

Throughout history the close-minded have always ruled over the open-minded -- in large part because the close-minded can easily act. They have their minds made up and they know what the right policy is. Their assurance is reassuring to the masses, and the masses themselves are foolishly confident in their close-minded opinions.

Today I was reading about the French Revolution, an event which ended in a pivotal disaster and set back human progress immeasurably. The Girondists, which included high-minded intellectual theorists such as Marqis de Condorcet, who came up with the lamentably unknown Condorcet Method, and a host of other intellectuals such as Thomas Paine. Condorcet, like many other Girondists, were driven to death by suspicious circumstances (as is the case of Condorcet, who was found dead in his cell) or by outright execution by the ruling Montagnards and their leader Robespierre.

If the Girondists had kept power throughout the French Revolution, Napoleon would never have come to power. Instead we might have seen a prefential voting system in France, and a meritocratic, well-ruled government.

In the US we were more lucky in our beginning, but intellectuals haven't had real power in Washington since the Founding Fathers, although we've had a very small handful of genuinely smart Presidents (Teddy Roosevelt and Grover Cleveland).

The End of the Chinese Miracle?

Good article on the problems facing China as it continues to push for double-digit GDP growth. Environmental costs are not factored into the GDP, just like the external cost which businesses impose upon society is not factored into their costs of producing. While Jagdish Bhagwati would like you to believe that environmental damage is negligible and overblown, the exact opposite is likely more true.

The good news is that concern for the environment rises with GDP per capita - as people have more material wealth, they begin to value their health and environmental beauty, which is relatively scarce, more. Thus, you're seeing a lot more environmental concern in China right now. The Chinese government, paradoxically, seems perhaps more economically aware than the US government, and they are working to slow down environmental damage. With their power they can do a lot. One might think that with China's authoritarian regime, it could stop environmental damage faster than the US -- but that's probably not true. The best policy will always be subsidies for clean energy and energy conservation and taxes on pollution.

For those looking to cash in on the possible clean-energy boom, the solar stocks are definitely worth watching: JASO (a favorite of mine), FSLR, SPWR, STP, and even little DLSL, which does solar water heaters -- possibly the most cost-efficient solar if subsidies are eliminated. These stocks are down on speculation that Germany, the main purchaser of solar power, will cut subsidies. Right now it's risky to hold them, as any day Germany could cut subsidies and you'd see a severe drop in them...that could be buying time. I expect JASO and others to jump on earnings, although it's hard to say.

PUDC washes coking coal and FTEK provides a fuel additive which reduces nitrous oxide pollution (N2Ox) among other things.

Disclosure: Long JASO for a trade.

Badscience.net author on accessing science

Here is an interesting little blurb by a scientist on the absurdity of scientific access -- he has an Athens account (/envy), but he can't access the latest research (funded by the Department of Health), which is being written about by journalists across the world, because it hasn't actually been published yet.

This means that the media – of all people - are a class privileged over academia, doctors and the public when it comes to access to the data; that for the whole of the media storm across Friday and Saturday, no interested academic, or member of the public, or blogger could participate, unless they were part of the chosen set, because they simply couldn’t see the paper.

...

Time and again we’ve covered the venality and incompetence of the media: and yet laughably the popular debate on this publicly funded academic work is conducted exclusively behind closed doors - by oldmedia employees - in a privileged world from which you, all doctors, and all academics are deliberately excluded.

The often scientifically confused journalists of the mainstream media are the people targeted in his blog -- and yet they have exclusive access to the latest research which is making headlines. Bit strange.

The paper in question, by the way, is on the correlation between marijuana and psychosis, specifically (I believe) schizophrenia. While the risk of schizophrenia may be increased by marijuana (I read it may cause an extra 600 cases in Britain, a country of 60 million), the prohibition of it has clearly been a failure.

It's important to note (as some journalists have, but as the Guardian article here does not) that correlation does not mean causation. The researchers noted that there is a distinct possibility that marijuana use and schizophrenia are driven by a third variable -- that is, people who use marijuana could be less mentally stable, use other drugs more, or could be driven by their psychoses to self-medicate. There's any number of things.

See Also:

http://en.wikipedia.org/wiki/Correlation_causation

http://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc

Media Confuses Percentages Again and Again

"There is a large growth in shopping in December, followed by Christmas. Therefore growth in shopping causes Christmas."

Seeing Through Ron Paul

The "libertarian" who "would have" voted for Defense of Marriage Act? See here.

Anecdotes from Moore's Sicko

I just saw these on Wikipedia's entry. For those too lazy to check the link:

1. Rick, who accidentally sawed off the tops of his middle and ring fingers on one hand while working at home. He had no insurance and limited funds at his disposal, so he was asked by the hospital to choose whether to have the end of his middle finger reattached for $60,000 or the end of his ring finger for $12,000. He chose the ring finger.<sup>[6]

2.</sup> Doug Noe. Noe's insurance provider, Cigna Healthcare, approved a cochlear ear implant for only the left ear of Noe's toddler daughter, Annette, who was born with an acute hearing disability. Cigna argued that a two-ear operation was "experimental." After Noe alerted Cigna that Moore was making a movie about the US Healthcare system, and that Noe's case would be featured in it, Noe was contacted by Cigna, and they agreed to approve the second implant.^[7] This occurred before Moore had actually heard of Noe's case, so Noe acted independently of Moore.

Cigna, incidentally, is a publicly traded company (NYSE:CI). Stock is up nearly 60% for the year.

3. A woman gets stuck with the ambulance bill after a car accident because she didn't clear the charge with her insurer before requesting the ambulance; the accident had immediately rendered her unconscious and unable to request approval.<sup>[6]

4.</sup> Tracy Pierce died from kidney cancer after his insurer denied numerous treatments recommended by his doctor, including a possibly life-saving bone-marrow transplant.<sup>[6]

5.</sup> One woman's insurance provider denied coverage after an operation, because she didn't mention a minor, previous yeast infection on her application; they retroactively cancelled her coverage on that basis. <sup>[6]

6.</sup> Accounts of four fully-insured American women being denied crucial specialist referrals, diagnostic and therapeutic procedures. Two of the women died of cancer as a result, and one eventually sued her HMO after the diagnosis of her brain tumour in Japan (her American HMO told her the tumour doesn't exist). A footage of the director of her HMO testifying is shown.

7. Homeless dumping. Homeless patients, still in hospital gowns and some with IV tubes in their arms, were abandoned at homeless shelters by Los Angeles hospitals after they had received incomplete medical treatment.^[8][9] Mike Huffman is seen in the film describing the dumping of a woman at the Union Rescue Mission in Los Angeles' Skid Row.

So, for those naive optimists who think that bad things don't happen, especially in America -- there you go. You're full of shit, as usual. It's like the attack on conspiracy theorists: "people are too good for that" or "it's too hard to keep secrets". Yeah, right. Your average American doesn't know the difference between Sunnis and Shiites and thinks microwaves cause cancer. Morons have no sense for what is plausible and what isn't.

UnitedHealth tries to rate doctors

When I read the summary of this article I was annoyed, but as I read it I realized that the attorney general made a very good call. UnitedHealth has a conflict of interest rating doctors.

UnitedHealth is No.21 on the Fortune 500. They stand to profit nicely if Hillary Clinton mandates that everyone receive private health insurance -- please God let's hope that doesn't happen.

Polling Economists

I've read a few of these, but they've been in (closed -- of course) scientific journals, so I couldn't exactly link to them for discussion. This one is pretty basic, with a very small sample size of 81.

Notice that a fairly significant portion (40-45%) is consistently liberal -- that's not uncommon among academic economists. Universal healthcare in the US receives an agreement of 44.7%, with 15.7% neutral. Most of these economists are probably thinking of the conventional single-payer system rather than a government-funded HSA system, as I've discussed here and which Adam Rawlings describeshere, because the idea of a government-funded HSA + a high-deductible health insurance and coverage for the chronically ill hasn't caught fire with too many economists yet. It also gets a bad rap because conservatives are trying to spin it as a solution without government subsidy, which probably won't work.

Things which receive Doomsday attention like the Social Security crisis among the media have a simple solution among economists: 77.2% would simply raise the retirement age.

35.7% of economists also opposed Bush's proposal to partly change Social Security into a mandated retirement account which is invested in the market. Some of that may be attributed to the wording of the statement which says that "the best way to deal with the Social Security long-term funding gap is mandatory personal accounts." There's no way that it is a solution to the funding gap. In the long-run it would be beneficial, but in the short-run it would cause a budget shortfall which would have to covered by the youth. It runs the risk of giving idiots too much freedom, I suppose, and those idiots who lost all their money would have to be covered by the government -- but it could be run like a state pension system, which allows you to invest in certain areas (smallcap, growth, value) but doesn't allow you to pick individual stocks on your own.

Anyway, check it out and check out some of the other Berkeley Electronic press articles as well -- they are fairly open access.

Floating Ideas

I've had a few ideas for posts floating around:

1. An examination of the real economic value of things - beyond just its exchange value.
   
2. The valuable functions that investing in equities performs (or does not).
3. How much I despise G.E. Moore's "naturalistic fallacy".
   
4. Hillary Clinton sucks.
   
5. I love Mike Gravel. Visit gravel2008.com to figure out why.

Instead I've been lazily researching stocks and tooling around on Reddit, trying to educate people in economics and promote Mike Gravel under my new alias, censored. So far I've been moderately successful, but I'm about ready to give up. I find it depressing that Conde Nast(y) has already bought Reddit, which is much nicer than Digg.

Coming up with usernames is perhaps the biggest hurdle I have to overcome when getting involved with websites -- I'm still not very involved with Wikipedia because I don't have a good username. (I have several, none of which I like.) That's probably a good thing because I am an expert in nothing, and Wikipedia should get the attention of experts -- meh, that's a dumb excuse. Wikipedia needs my help.

An Important Paradox

Sometimes it seems like philosophy is, or at least has been, largely a study of intractable paradoxes. The greatest of these is certainly not the paradox of God -- that is a paradox based upon a fictional, contradictory concept, so it's no surprise that it is paradoxical.

A more important paradox is the illusion of free will in a deterministic world. Yet at a closer glance this does not seem to be a real paradox either -- it is based upon another fiction; that is, that people have free will. People can "choose" on a whim to act a certain way.

I haven't heard any convincing arguments resolving this paradox. There is no easy answer. Compatibilism essentially says that lack of ultimate freedom to choose "doesn't matter", but clearly when you are morally blaming people for actions which they were completely compelled to do, it does matter. It's hard to understand why the compulsion of a gun to the head is more meaningful than the compulsion of Hard determinists hit closest to the truth -- and the main argument against them is seemingly that they are "too pessimistic".

People should be held morally responsible for their underlying nature (perhaps genes) rather than their actions because their genetics are at the core of who they are. That means that those who are by their nature criminal (that is, genetically) are more blameworthy than those who are driven into criminal behavior through environmental pressures, such as, perhaps, child molesters. Neither should be regarded as "evil" -- both are "bad" from the perspective of the . They should be regarded with pity. The former is a flawed human being from the start while the latter's potential has been (seemingly irrecoverably) destroyed. If their guilt was sufficiently proven (that is, zero doubt) I would have zero trouble with their execution.

The the perpetual "free will" illusion has a pragmatic, self-fulfilling - when everyone believes that everyone has free will and that people who commit wrong acts do that willfully, it imposes a deterrence on immoral and criminal acts. Lifting the veil could potentially revoke that deterrence and allow people to act even worse than they currently do, if you can imagine that. But is that really likely? I don't think so. The deterrence does not seem to be very effective. The veil, as an obvious fiction, is already under subtle attack and has been since the beginning of human history. The distorted view of responsibility confuses people. The first step to recovery is to stop denying.

Some people may think Social Darwinism when I say genetics. While that may be a concern twenty or thirty years down the road, I don't mean to endorse that view at all. The study of how genes affect behavior seems like it always be an imperfect science because of all the variables. Furthermore, if someone is told that they are genetically dishonest or sociopathic -- is it possible for them to then consciously overcome that? I don't know.

Some may notice that this argument is essentially just a secular repacking of Calvinism. Just as Calvinists felt heavy pressure to prove themselves as God's chosen, so people today may feel the pressure to prove themselves as good genetically.

Spending By Executive Office of President

This has to been seen to be believed. The budget for the office of the President rose by an astounding 768% in 2004, and then by another 100% in the next year. Discovered this via Digg here.

I'd seen the outlays by function before, but missed the outlays by agency (actually, it's still on my desktop in Excel format)... going to try to look up the primary source for this right now.

UPDATE: The US government has a shoddy website, but I found the budget without too much trouble. Here is the budget, but you won't find that table there. If you click on the Executive Office of the President you can see a (very limited) breakdown of where his money went for the year 2008, and it seems, surprise, that the Iraq war gobbled most of it.

Scroll to the bottom of that page. and you can list all spreadsheets, where, at Section 4, you'll find Outlays by Agency. I'm looking at it and that picture is correct. The budget for the Executive Office of the President went from far below .05% in 2003 to .1% in 2004, and then up to .3% in 2005.

It's hard to know for sure what's going on with these spreadsheets because there is no legend. In the President Office budget the total BA (Budget Allocated?) is only 341 million but the "outlays" (expenditures) are 5379. Ditto for the next two years. What's going on? How is the White House able to overspend by so much? It reminds me of the extension of some law (Parkinson's, maybe) which states that spending will always exceed income.

Need it be said that the Republicans' rhetoric has never matched their record? They are the War and Business Handout Party, not the Small Government Party -- in contrast, the Democrats are the Farm-Labor Handout Party (in the forms of tariffs, often).

The Crisis of Scientific Journals

Some people think I'm crazy or overly demanding for desiring and expecting scientific research to be free and openly available for all to read and discuss, but this mathematician John Baez of MIT doesn't. He describes the high (and rising) price of academic journals as a crisis and calls for a boycott of the especially ravenous public company and media conglomerate Reed Elsevier (who's databases, as I commented earlier on, pretty much suck). He notes that Reed Elsevier's operating margin was 22%. It was a good year for the stock, rising 30% over the past year according to Google Finance. I first encountered Reed Elsevier when researching the publisher of New Scientist, a magazine which I thoroughly enjoy.

The good news is that in time Elsevier's hegemonic control over scientific publishing will eventually fall, as people such as Baez are outright boycotting the ridiculous restricted-access journals and the publishing companies which collect from them. The bad news is that it is taking longer than I would like, and there is still no good open-access source for economic and social science articles. For other disciplines the resources are much greater - see BiomedCentral, PLoS, Mathworld, and arXiv. The economists (along with all the other social scientists), those paradoxical profit-seeking academics and government workers, are behind the curve, but I doubt it's because they actually profit from journal revenues. The Directory of Open Access Journals lists some Social Sciences, but they are mainly either foreign or unprestigious.

Here the creator Mathworld recounts the story of how he published a book with CRC Press based on a website of his (the early Mathworld) only to be sued later when he didn't remove much of the content from open accessibility. He didn't win the suit - actually, he surrendered early and gave up all the money he'd made from the book.

Economists (and many others e.g. Cato) like to glorify corporations, and certainly they provide valuable services and offer some external benefits to society. Conservatives claim that corporations are unjustly criticized, with a few bad apples and incidents overshadowing the good. While I consider that view to be naive, it could be true. I am well aware that a corporation is in theory only as evil as its members. Yet in practice it is so easy for corporations to slip into an "evil" mindset, beset as they are by the everpresent shadow of the profit motive, share price, and bureaucratic management. In many ways they epitomize the banality of evil.

Eric, the Mathworld creator, says this:

I have had to conclude, to my sorrow, that CRC--perhaps like many other publishers in our era of wild corporate acquisitions and conglomerations--is no longer managed by people who understand and love books, authors, and readers.

The parent company of CRC, Information Holdings Inc., appears unashamed to treat information as a commodity to be exploited for short-term, bottom-line cash with no concern for long-term, strategic planning. The goal of the CRC representatives seemed to be monomaniacal: to squeeze from Wolfram Research and from me as much instant and short-term cash as possible, using the lawsuit as a lever.

How self-defeating in an era of rapid technological change! Apparently uninterested in looking forward and building good future business strategies, here are publishers focusing instead on how to squeeze greater quantities of immediate cash from old "properties."

I have come to realize how unusual it is to be working for a company that is run by people who still enjoy the core activities for which the company was founded. Very early in the lawsuit, a Wolfram Research response to the lawsuit mentioned that Wolfram Research has chosen to remain privately held in order to be free from the obligation to outside stockholders, who appear so often to focus corporations inordinately on short-term financial results. Wolfram Research's principals believe that they can take the long and broad view of the corporation's mission, as they could not if they had to satisfy stock analysts and uninvolved stockholders.

Information Holdings was, of course, publically listed on the NYSE - and no, they didn't go out of business (what large companies do these days?). They merged with The Thomson Corporation in 2003, a company which is now planning to buy Reuters. The Thomson family, which is Canadian, owns 70% of the company and also owns 40% of CTVglobemedia.

Decreasing Marginal Costs Empirically

In my last post I linked to Debunking Economics: The Naked Emperor of the Social Sciences. When I first encountered the book I hadn't taken a class on economics. I glanced through the book, noticed the models, and tossed it aside - I don't like studying models unless I have to. But now I know that I will have to check it out next time I'm at my school's library.

Anyway, the AmazonConnect author's blog is very interesting. His latest post claims that the empirical reality of the firm doesn't match up with the theory. He reports that firms face decreasing marginal costs rather than the standard "always increasing" marginal costs. That hugely invalidates theory, yet, as I commented it makes no sense. A firm producing with fixed capital assets can only produce so much before they are constrained by their limited fixed capital - thus driving the price up. When the fixed costs are increased, the marginal costs fall to a workable level again. Instead I think he may be confusing average and marginal cost. As firms increase production without increasing fixed costs they will spread the fixed costs out. Most people have heard of this: it is called economies of scale and it is a huge force at work in industries today ranging from semiconductors, cars, pharmaceuticals and even software production (wherein the fixed cost is the initial time/money spent on the program and MC is the cost of replicating the software for sale -- essentially just packaging costs). Economics of scale will sometimes produce a natural monopoly.

It wouldn't surprise me if most firms faced fairly constant marginal costs up to a threshold level (that level being the capacity of a plant or the capacity of a firm to provide services without hiring more employees). At a certain point one's employees and one's factory becomes overextended. One has to work people overtime and run the machines overtime. Ultimately marginal cost must increase if fixed costs remain fixed. Correct me if I'm wrong.

However, empirically most businesses will fluidly increase their "fixed" costs as MC begins to increase, so businesses wouldn't notice increasing marginal costs. But they certainly notice decreasing average costs.

In Defense Of Globalization

In Defense of Globalization was written by Jagdesh Bhagwati, an acclaimed international trade economist and *cue spooky music* Council On Foreign Relations Fellow. The inside cover even claims that this is a "Council On Foreign Relations" book. It's no surprise that I picked it up, then.

What struck me the most early on in the book was the language barrier: Bhagwati's first language is clearly not English. It is hard to hold that against him, but the crudeness of some of his writing is painfully obvious. The book rambles absentmindedly, touching upon economic issues in one paragraph, moral issues in the next, and rants the next. The disorganized, muddled structure of the writing cannot be blamed on the language barrier. Strangely enough, this strange, circumlocutious writing style is common among economists, who seem uncomfortable when not doing equations.

Chapter 1 - Anti-Globalization: Why?

Bhagwati makes the fair case that most of the anti-globalization movement has not done the research on globalization and does not understand economics. They are often young people who "see capitalism asa system that cannot meaningfully address questions of social justice." He laments that the view of capitalism as a "system that can paradoxically destroy privilege and open up economic opportunity to the many " is still uncommon, and points out that "by replacing markets systemwide with bureaucratically determined rations ... worsened rather than improved unequal access."

Already I am suspicious and irritated - there is no mention of the financial power which can accompany capitalism and has meddled in American government for so many years. Sure, it's easy to make "capitalism" sound good when you compare to "socialism" a la a centrally planned economy. But where is the mention of welfare capitalism? What about the more legitimate argument that the globalization has thus far allowed corporations to consolidate too much centralized power and market share themselves? Nowhere in the entire book do I recall Bhagwati making an informed criticism of multinational corporations and unchecked capitalism despite its many abuses.

Another interesting drive which pushes young people to protest globalization is "the dissonance that now exists between empathy for others elsewhere for their misery and the inadequate intellectual grasp of what can be done to ameloriate that distress." He does not add that few of these empathic young people are willing to sacrifice their dollars to help - that may be an unfair criticism, considering how little dollars most of them have. He references the empirical ethics of Hume and Smith, noting that while humans feel under "Hume's concentric circles of reducing loyalty and empathy ... the Internet and CNN have [taken] Hume's outermost circle and turn it into the innermost." When we see and hear the cries of the poor and weak, they become more real to us. On the other hand TV and the Internet have "[shifted] us steadily out of civic participation, so that the innermost circle has become an outermost one."


This book is rich and full of ideas, even if they are spread fairly haphazardly throughout the book. It would be impossible for me go through all of them.


For all this, the book received high praise; for example:

"This book will make history. It will also be a blockbuster, not only because of the depth of Bhagwati's powerful argument backed by extensive research, but also because it is immensely readable and surely the most humorous piece of economics ever written."
-- Hernando De Soto

Humorous? While I respect De Soto, I wonder whether we both read the same book. Econ humor? Here's a joke:

I recall particularly the Cambridge Union Debate, where, astonished that free trade being blamed for environmental problems and other ills in the world, I replied to Teddy Goldsmith by recalling Balzac's 1831 novella ... "Mr. Goldsmith", I added, "you seem to have with you a similar monocle, except that when you use it and see us wonderful free-traders, you find us turned into ugly monsters, our halos turning into devil's horns!"

Hahaha - I see! Free-traders are angels and all of us who see a potential danger of to the environment from free-trade are somehow deceived? Then show us how we are wrong. Bhagwati's environmental chapter seems focused mainly not on environmental harms but rather on the ethical question of how we should value the environment.

Chapter 11 - Environment In Peril?

Of course, increased GDP per capita strongly correlates with reduced outputs of certain pollutants (everything but CO2 and garbage), and that free trade increases GDP growth. But what about corporations outsourcing work to places with lower standards? What about those nations (of which there are plenty) which will increase their pollution with increased production? How bad is the problem, and what can we do to alleviate it? Bhagwati answers none of the questions. Instead, here are his words: "Even God does not know what sustainable development means". He compares it to socialism - as if it was so hard to understand the eminently reasonable and doable concept of Cradle To The Grave.

Chapter 12 - Corporations: Predatory or Beneficial?

Bhagwati spends a fair amount of time claiming that "anti-corporation arguments are not supported by the facts" but not all that much time showing it. He introduces the topic by referring to an old Woody Allen joke:

There's an old joke... two elderly women are at a Catskill mountain resort, and one of 'em says, "Boy, the food at this place is really terrible." The other one says, "Yeah, I know; and such small portions." Well, that's essentially how I feel about life — full of loneliness, and misery, and suffering, and unhappiness — and it's all over much too quickly.

But does he have a point? Yes, corporations cause problems, but let's be realistic: they are the only force in the world capable of increasing GDP growth. Let's not pretend foreign aid to corrupt governments is useful. Corporations are often a necessary evil. They will always try to extract as many profits as possible, imposing external harms in the form of pollution while they do; they will use the means of lowest cost possible in many cases at the cost of their workers. Sometimes they will use the government to help them form a monopoly, as Telmex in Mexico has done. The main question, then, is to what degree can we get away with regulating corporations to keep them in line, and to what degree this will be efficient -- to what degree it will be on net beneficial to society and the environment. But Bhagwati does little real in-depth analysis of corporations. His one big point (and it is a big one, I suppose) is that corporations pay a "wage premium": they pay an average wage that exceeds the going rate, mostly up to 10 percent and exceeding it in some cases ... from 40 to 100 percent." This is fairly powerful.

We don't have the power to tighten the noose on corporations globally - increased regulations in a developing country could discourage corporations from coming to that country. Bhagwati claims that the effect is not significant empirically, but provides no numbers. Instead he references an economist who simply says that "regulations do not matter to site choice." (Should be "for site choice" - the constant little grammatical mistakes of these economists is annoying.) He points out that multiplant firms "invest in different locations, as multinationals often do, they tend to work uniformly witht he most stringent standards they face among these locations ... simply put, it is more cost-effective to run all of their plants with the same basic technology, so we get a race to the top."

Chapter 13 - The Perils of Gung-ho International Capitalism

This is the one area where Bhagwati criticizes the status-quo and ironically enough decries the "Wall Street-Treasury Complex." He says the East Asian Financial Crisis was caused by a lack of controls on the flow of capital. I'm not very well-educated on this stuff and I'm getting very tired of typing so I think I'm about done.

Conclusion

Unfortunately I've tired myself out and can't write a decent conclusion. When I began writing I wanted to end on a very critical note. In large part I was frustrated by Bhagwati's terrible grammatical style, rambling paragraphs, and lack of hard data. He doesn't get in deep and analyze actual policy, nor does he recommend any improvements. He points out flaws in our current system only in very general terms, or with convoluted logic and unexplained acronyms. This book was billed as a masterpiece but it is thoroughly second-rate. If this is the best defense that a star economist can do then perhaps we shouldn't be trusting them on their data. The interesting thing about economic science is that it sometimes seems as if the only people who really understand and follow it are the economists. Sometimes one has to wonder whether the Emperor Really Does Wear No Clothes. Shamefully written; I would give it two out of five stars or so. The ideas and the arguments are OK - good, even, but the presentation and the flippant, casual manner in which the arguments are made pulls the quality down. Concerns and examples which many of us know happened are not mentioned, which leaves me suspicious as to what else is being left out. There is a good review on Amazon expressing the same sentiments.

Flag Burning - A letter to my Senator

Hi,

One thing that really made me angry was the attempt to ban flag burning, which nearly succeeded. That would have been a sad day in our nation's history. Today I finally looked up who had voted for it. According to Wikipedia. only 3 Republicans voted against the amendment.

I don't think I should have to explain why the amendment was so foolhardy. It would have certainly been the most petty amendment in our nation's history. Burning the flag is an important and often warranted expression of disgust at what our country's government (and perhaps people) has become.

You may disagree with that opinion, but that doesn't give you the right to force your opinion of what flag-burning means on me.

I would love to hear a reply on this issue and hope that you think carefully about the issue if it comes up again. The Supreme Court has ruled that it is protected speech not once but twice. I see no reason to override that. Perhaps the most interesting fact is that flag-burning is not common and causes few people real trouble, which leads one to believe that the entire movement was a disheartening political ploy.

Again, I would greatly appreciate a reply. I've noticed that I receive replies when I send letters in print, but electronic emails should be treated exactly the same.

Thank you,
***

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It's old news, of course, but the Constitutional Amendment lost by a single vote. 3 Republicans voted against and 14 Democrats voted for. It makes me sick that it was so close.

Sourcewatch: Flag Burning Amendment

Not So Obvious To Adobe

I made the mistake of switching back to Adobe from Foxit a couple weeks ago. I shot off a couple emails to Adobe a second ago:

Hi,

I've had a frequent problem with your AdobeUpdater.exe - I think that's what it's called. Whenever I open a PDF, it automatically opens the Updater and never shuts it down. I don't think it needs to be said that an Updater should not run continuously in the background. It should check to see if there's an update - if there isn't, it should close out immediately. Perhaps the best thing would be to simply schedule a time to look up an update, as Apple does.

Suffice it to say that this has been extremely frustrating - I'm not even able to kill the task. In the end I've had to reboot the computer to get rid of the problem, which severely slows down my medium-speed laptop (1.3 Ghz, 512 MB of RAM).

I've uninstalled your program and won't be coming back to it (or any other program of yours) unless I get a reply on your thoughts about this problem. I'm sure others have similar problems. Updaters should not just run in the background.

Thanks,
*****

After loading up Adobe Reader 8 for another quick glance, I sent another one:



One more thing. Your Adobe Reader is one of the few programs which doesn't have general options under the Tools tab - where I would hope that I could find a way to adjust the Updater. I wish you would put those options back.

Anyway, now that I've pursued all my options, I'm done with this program. Hope you can get back to me on the deal and what you were thinking.

---------------------------------------

An updater which quits if there are no updates? A general options area for the program? ARE THESE NOT OBVIOUS? And yet Adobe has a 23.94 BILLION market cap? (I know, I know. They don't care about the free programs. Yet people know them by their free programs.)

UPDATE: It's not uninstalling. Great... did I mention that it's 267 MB?

C.P Snow and Scientific Illiteracy

I heard this man's name and checked out his Wikipedia entry to find this:

Snow is most noted for his lectures and books regarding his concept of "The Two Cultures", as developed in The Two Cultures and the Scientific Revolution (1959). Here he notes that the breakdown of communication between the sciences and the humanities is a major hindrance to solving the world's problems.

In particular, Snow argues that the quality of education in the world is on the decline. For example, many scientists have never read Charles Dickens, but artistic intellectuals are equally non-conversant with science. He wrote:

A good many times I have been present at gatherings of people who, by the standards of the traditional culture, are thought highly educated and who have with considerable gusto been expressing their incredulity at the illiteracy of scientists. Once or twice I have been provoked and have asked the company how many of them could describe the Second Law of Thermodynamics, the law of entropy. The response was cold: it was also negative. Yet I was asking something which is about the scientific equivalent of: 'Have you read a work of Shakespeare's?'

I now believe that if I had asked an even simpler question — such as, What do you mean by mass, or acceleration, which is the scientific equivalent of saying, 'Can you read?' — not more than one in ten of the highly educated would have felt that I was speaking the same language. So the great edifice of modern physics goes up, and the majority of the cleverest people in the western world have about as much insight into it as their Neolithic ancestors would have had.

This is perhaps even a greater problem today, and can be generalized further - people are most comfortable studying their field, despite the obvious fact that there are diminishing marginal returns when studying a field intensely. Once one has studied literature or philosophy for a few years, one knows the basic concepts. Further work simply supplements those concepts. Real progress may be extremely difficult. On the other hand, learning the introductory basic concepts of another field is very easy and extremely useful.