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Cultural and Economic Development

I have no words.
What happens when a culturally and economically 'backwards' territory is suddenly made a part of a great economic powerhouse? If you're a follower of Aid Watch (and, really, you all should be), you know that the answer is 'mostly bad things.' Part of the problem, of course, is the fact that who gets to decide what constitutes 'backwards' is a pretty important question, and one with almost no good answers. But supposing we can identify a truly inferior culture-economy, that still doesn't mean the economically powerful can make things better by swooping in like a hero in red and blue.

This post by Vivek Nemana illustrates the point nicely. The antebellum American South was both entrenched in a social system that was morally deficient and locked into an industrial system that was economically counterproductive. (I realize not all my readers will agree. I stand by the strength of this statement.)

The South was heavily invested in racial subjugation - slavery directly accounted for over a quarter of the GDP. The region spent an enormous amount of resources to justify slavery, hiring silver-tongued apologists like John C. Calhoun to spin slavery as humane. In this light, slavery was an economic institution that was designed for racially hegemonic society.
Presumably, then, the North was doing the South a favor by overthrowing its destitute system and replacing it with a system based on sound property rights and the promise of true freedom for everyone, not just the landed gentry... right?

While the Civil War radically restructured Southern laws to promote racial equality and property rights, the hegemonic bonds were resistant to change. [...] As the legacy of slavery wound its way into postbellum Southern society and politics, it hindered the way freedom and property rights should have boosted the economy, denying the South the full bounty of American development.
In other words, "the very insertion of these new freedoms and property rights into a society designed for slavery [...] led to the divergent development of North and South." Improving economic and political conditions aren't enough to produce lasting prosperity, and fixing one part of a system can actually make the people under the system worse off.

(As an aside, this post really got me thinking about the economic destructiveness of even a little bit of racism, especially this sentence: "Gary Becker once wrote that people lose out on the potential gains from trade if one group is able to indulge in 'tastes for discrimination' against another." It ties in closely with a post at another blog from Jonathan Wight on the nature of property rights: "Property rights do not bestow limitless abilities on owners, and property rights come with responsibilities.")

All this brings me to an article at the Financial Times. Essentially, the article discusses how we should compare cites like Vancouver to cities like NYC, and what sort of values we express by preferring one over the other. I just don't know how to react to it. The author wants to argue for the organic, unplanned outcomes of a place like NYC over the zoned and top-down oriented nature of Vancouver. But I'm left not sure what to do with some of the elements of the argument.

In fact, it can often be exactly the juxtaposition of wealth and relative poverty that makes a city vibrant, the collision between the two worlds. Where parts of big cities have declined, through the collapse of industries or the fears about immigration that led to what urbanists have termed the "donut effect" (in which white populations flee to the suburbs, leaving minorities in the centres), there is space to be filled by artists and architects, by poorer immigrants arriving with a drive to make money and by the proliferation of food outlets, studios and galleries. These, in turn, attract the wealthy back to the centre, at first to consume, and then to gentrify.
Is he saying diversity is a good thing? That wealthy elites should not isolate themselves? I think that's a great point. But is he also saying that the wealthy should keep a few poor folk around because they run tasty food trucks? Because they offer a culture worth fixing (my wife hates the word 'gentrify,' btw)? That's something else entirely.

In a strange way the everyday conflict with the (unliveable) city can also become part of the attraction.
Again, whether I can get on board with this depends crucially on whether we're talking about opening ourselves to learn from those different from us, or whether the goal is to bring our (clearly superior) ways to influence the 'backwards' folks of the inner city.

Mumbai is probably the greenest big city there is - slums like the million-strong Dharavi use minimal land, energy and water.
Once again, does this mean that we should be willing to have some poor people around because it is good for the environment, or that economic growth for the poorest around us is worth being less green, or that striking the balance between economic and environmental stewardship is hard?

At the end of the day, how we relate to the people and city around us depends an awful lot on if we are developing full and complex relationships with them, with plenty of give-and-take and holistic engagement, or if instead we are setting out to gentrify the backwards natives. And for those of us who educate others vocationally, I think it's a call to special reflection and introspection.



For those wondering about the difference between John Galt and Jesus of Nazareth, Ayn Rand would like to clarify the matter:

Let's remember that believing in objective truth does not imply Objectivism.

Unions: Monopoly of Labor?


wisconsin protester.jpg Isn't this what you expected the protesters to look like?

It was bogus when Microsoft abused its power via illegal monopoly, but how should we think about labor unions? It seems obvious that labor unions coerce employers by controlling the labor resource just as Microsoft tried to coerce consumers to use Internet Explorer. Isn't that what the Wisconsin protests are about?

This article compares labor unions to cartels and goes on to say:

Despite considerable rhetoric to the contrary, unions have blocked the economic advance of blacks, women, and other minorities.

Is there a positive moral case to be made for labor unions? I have family in unions and therefore have personally benefited from the protections afforded by collective bargaining, but in today's economic climate it seem like a luxury society cannot afford...

What would be a more moral way for workers to gain basic rights in the workplace?

I'm agreeing with Pat Robertson. Stop the presses.


This is just remarkably good sense. Law enforcement/judicial services/incarceration are a scarce resource, no matter how you slice it. Utilizing those resources in wasteful manners, enforcing drug penalties and incarceration for marijuana, is...well...wasteful, and even Pat Robertson gets it.

Of course, I'd go further and legalize all forms of drugs, only creating/enforcing laws where one harms another by their actions, but this is a good step. It's not a question of how dangerous the drug is to the individual using it, but whether they harm another's person or property as a result of the drug. I'm not planning on ol' Patty coming out in agreement with The Shawn on that one, though.

via KPC

The Global Cities Index 2010


hongkong.globalcities005.jpgHong Kong by Mike Clarke, shown in this slideshow

Foreign Policy, A.T. Kearney, and the Chicago Council on Global Affairs got together and published their list of the top 65 global cities. Here's their top 10:

1 New York
2 London
3 Tokyo
4 Paris
5 Hong Kong
6 Chicago
7 Los Angeles
8 Singapore
9 Sydney
10 Seoul

Conventional wisdom says that China is so hot right now, but Beijing only came in at #15. The underlying methodology of this list factors in business activity, human capital, information exchange, cultural experience, and political engagement. Curiously, one of the human capital metrics is the size of a city's immigrant population. Shouldn't there be a more intelligent way to measure the immigrant contribution?

Homeownership: If you have to ask, it probably isn't for you.


who-dat-say-dey-gonna-give-free-cash.jpgPeople, I bought a house a few years ago. It turns out that I bought at the height of the market, and I wish someone had pointed this out to me: buying a house is not a good idea for (arguably) the vast majority of the American populace. I honestly doubt that this needs to be said any more, given how painfully clear it is in our current economy that having that kind of anvil (ah, and NOW you understand the Wile E. Coyote image) on your back is a financial nightmare, but perhaps it still bears mentioning.

Do yourself a favor--consider some of the great information laid out by my friend Brian Hollar at his blog Thinking on the Margin. Brian is a fellow (or, is that former-fellow, considering that I'm now finished) economics student at George Mason University (but Brian's a superbrain, as he is completing his PhD in econ concurrent with a JD, and he already has an MBA, as well as an undergrad degree in mechanical engineering).

Buying a house is not a foolproof investment, and renting might be (probably is) wiser for you in many cases--don't believe the hype, even as housing prices fall, despite how many (vested interest) "experts" keep touting the benefits of owning.

Manuel "Muso" Ayau (1925-2010)



I just learned of Guatemala's late, great "searcher":

Driving to my hotel from the Guatemala City airport on my first trip to Guatemala in January 2000, I commented to my host that I was pleasantly surprised to find no customs agents ransacking people's luggage. In fact, once my fellow fliers and I had our passports stamped by the passport-control officials, the airport was refreshingly clear of the usual swarms of harassing government officials.

My host smiled and said,"I pushed for that. For years I pushed for that. Finally I won." He spoke these words not boastfully, just matter-of-factly.

Normally I would have been skeptical of such a claim. But in this case I immediately knew it to be true. My host, you see, was Manuel F. Ayau, whom I'd known for several years...

Crisis of Equality?


Ezra Klein wonders if financial crises like the one that sparked the recent recession could be caused by increasing income inequality. In case this thought doesn't carry enough economics gravitas on its own, Klein is really just following up on the ponderings of Nobel-prize winning economist Paul Krugman.

It's an interesting idea, but as Klein points out, it's not easy to sort out why things should work that way:

The problem, he says, is finding a mechanism. Krugman brings up underconsumption (wherein the working class borrows a lot of money because all the money is going to the rich) and overconsumption (in which the rich spend and that makes the next-most rich spend and so on, until everyone is spending too much to keep up with rich people whose incomes are growing much faster than everyone else's).

I think Krugman would admit that these options aren't very satisfactory, since consumption isn't some outside force acting upon the economy, but an integrated part of it. Which is to say, it's not really a cause, it's a symptom. Klein's argument is a bit better, since the "supply of idle money" can increase purely by the policy whims of the central bank (or by discovering gold if you're on the gold standard). This chain of reasoning, easy money -> easy credit -> mal-investments (or asset bubbles) -> crash, is the workhorse theory for economists of the Austrian school of thought. Klein simply points out that the mal-investment problem, investing in projects that are at unusually high risk of going bad, could be made worse in situations with higher income inequality. So does this mean you should believe Klein's story?

Are you worried about [some company]'s "monopoly"?


Poison-Apple.jpgChill. Competition does a wonderful job of taking care of corporations who overstep their bounds (and, of course, it would be foolish to assume that some, if not most, don't).

If you want the government to fix your problems with this or that company, realize that the DoJ, FTC, and FCC are not in the business of helping taxpayers, but of justifying their salaries and increasing them next year (go back to Weber 1956, Economy and Society, should you wish).

The latest brouhaha involves Apple, and their restrictions on both Flash and AdMob. People, if you hear anyone say that Apple has a monopoly, feel free to laugh in their face, and tell them to take some econ. Apple, like Wal-Mart (cue silly comments here), has nothing LIKE a monopoly--they simply have a markedly growing/large market share, which is not anywhere near the same thing. When you have a product that people are choosing to buy, and a lot of people do so, you simply have a good product. Unless and until some other company finds a way to compellingly compete with your product at a price and quality point comparable to yours, you will be making above-normal profits.

Those profits are the great thing about the market system: they induce others to jump in and try their hand at out-competing your above-normal profits. Consumers benefit from this, rather than government action, which tends to stagnate and drastically limit innovation.

BTW, just as a general rule, the top companies in the US make less than a 10% profit. Some are more, of course, but not anywhere near the 50%-200% that Average Joe thinks they make. That factoid is important to remember the next time you go ranting against "excessive corporate profits." If a company makes more than 10%, you can bet a healthy chunk of change that several dozen start-ups are working frantically to get in on that market, and that eventually those profits will be driven down to some sort of normal level.

From Andy Xie on China's policies

Powerful interest groups have paralyzed China's macro policy, with ominous long-term consequences. Local governments consider high land prices their lifeline. State-owned enterprises don't want interest rates to rise. Exporters are vehemently against currency appreciation. China's macro policies have been reduced to psychotherapy, relying on sound bites and small technical moves to scare speculators. In the meantime, inflation continues to pick up momentum. Unless the central government bites the bullet and makes choices, the economy might experience a disruptive adjustment in the foreseeable future.
More here.

HT Paul Kedrosky

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When what you want isn't what you get...


sp2col_wide.jpgIn the previous post, I outlined how the perverse incentives of regulation led to a modern-day situation that is likely worse than it would have been otherwise. I wanted to add a couple things to that already-long post, but didn't want them to get lost amidst the rest.

  • Activist groups who care about the issue largely stop paying attention after point one in the list: the passing of legislation. People, there is a huge difference between mere legislation (laws on the books) and what people do (laws). Hayek called this the difference between laws and legislation, and I'm following him on this. A mere piece of legislation does nothing--or does things worse than if it did not exist in the first place--if it is not enforced well and correctly (if it even is enforceable). Furthermore....

  • Prior to legislation being enacted, lobbyists for various interest groups will spend loads and loads of money to get their own preferred method of legislation. People usually think that large companies don't want to be regulated, but nothing could be more wrong. Companies who are highly capitalized and leaders in their industries will inevitably try to get their own existing ways of doing things written into the regulations. This prevents competition from smaller competing firms entering the industry and competing away their profits. If the regulation is severe enough, this can easily create above-normal profits for the regulated firm. Before he went loony, Stigler wrote some great stuff about this under the heading of "Regulatory Capture." There are some examples of this in various EconTalk podcasts, but the Yandle one has a couple doozies, including a variation on the theme showing how "Big Tobacco" really was hugely benefited by the "tough lawsuits" brought in the 90's to curb teen smoking. Coupled with the point above, (that once legislation is enacted, the activists (baptists) stop paying attention to the nuts and bolts) this really means that regulations are really 'run' by the regulated, as a particular regulator gets his information from the regulated industry, and it is often the consumer who suffers and the regulated industry who benefits.

Sowell has offered an A to any student of his who can go through Adam Smith's Wealth of Nations and find a positive word about businessmen. I think Sowell is dead-on about this, but the problem is really pronounced once government gets in the mix, even with the best of intentions, and businessmen get to use the guns of the state to enact pseudo-monopolies, under the rubric of "regulation," "occupational licensing," and "safety." Without the government regulation, you might get some collusion and price-fixing, or other anti-consumer actions by businesses, but those are incredibly hard to maintain when competition is open and vibrant, as anyone can benefit by entry or breaking the collusive agreements.

Well-intentioned activists would do well to remember this the next time they want to fix something via government regulations. When you resort to the political system, what you want often isn't what you get (I'm giving all activists the benefit of the doubt, and just assuming that they really want something good for society, rather than just exercising power and extracting donations for their non-profits). Unless the goal is to merely feel like one is doing something, the gradual and inevitable road to improvement will likely be a better course--and we don't even need to be talking about "the long run" here.

Scariest Image I've Seen in a While.


about_us_splash_img_1.jpgFrom Sojourners' "About Us" page.

See? I'm so open-minded!


statism is sadism.jpgI'm actually suggesting that you (that nebulous 'you,' largely consisting of lurkers) read an article at The DailyKos, a pretty lefty blog, entitled "Smackdown: Keynes vs. Hayek With Poll." And, let's reiterate here: I "hate" those on the left as much as those on the right. Statism is what I hate, as evidenced by my super-sweet t-shirt, here.

So, then, on to business. In honor of the Keynes/Hayek Fear the Boom and Bust rap video winning a Sammie Award, and via a link from one sweet head-nodding-limo-driver, I offer the following for your perusal and edification. I'll include a couple of quotes to whet your collective appetites.

But what does [the rap video] mean? The rap is dense with economics and in-jokes. It almost requires an under-grad degree to get everything.

Well, that's true...I'm about to have a grad degree in econ, and from a notoriously Austrian-friendly school, and I still didn't get everything--this post at dailykos helped me out quite a bit. Unfortunately, sometimes (often?) I wish I did have an undergrad degree in econ before I decided to get a masters. Oh well, such is life.

You may have noticed my Hayekian leanings more than once. I like the Austrian school for its emphasis on what we don't know. Most macro schools can be defined by what they leave out of their models, how they simplify our staggeringly complex world in order to make their problems tractable.

The Austrians are always there to remind us that the details are crucial, that there are important things we can't know, even in theory. Our models, no matter how mathematically elegant, will mislead us when stretched too far.

Mr. VAClassicalLiberal and I agree on quite a bit, it seems...kudos to him/her. It's nice when 'liberal' means what it used to (pretty much the opposite of what it means now), and sad that someone needs to say 'classical' liberal to define their views. Oh well...again...such is life. Kudos to dailykos for posting such a blatant anti-statist post, and kudos to those who voted (1602 to 80, as of my posting) that Hayek 'won' this 'battle'.

Now, if only an idea based on the uncertainty and incomprehensibility of human actions would win the day in politics. Unfortunately, as VAClassicalLiberal points out, there is the ubiquitous Politician's Syllogism: "We must do something. This is something. Therefore, we must do this."

googlefiber03272010.jpgGoogle's Gigabit Fiber Network.

For those of you who don't know, Google is looking to put ultra-super-mega high speed internet in some local municipality. I have no idea how Google is going to make money on this, but given their propensity to monetize everything, and effectively, it's a safe bet that they feel that this is a money-maker. So, there's something like an "open call" for exactly where that USMHS (not a technical term) internet is going to actually be. Cities, towns, and individuals all over the country (see the map for a graphic representation of the density of requests) are vying to be the Chosen One.

This is an example of rent-seeking. I can almost guarantee that, in whatever measure you use to determine whether this is a net-benefit or not, this is a nightmare waiting to happen. In short, the total dollar value of effort spent by municipalities will definitely overwhelm the benefit gained by being the Google-Chosen-One. To be more clear, for the winning municipality, the benefits will outweigh the costs, but on an overall basis, taking into account the time spent on crafting the proposals (including hiring what I assume are typical grant-writers in the 1,100 communities mentioned in the Engadget article for whatever amount of time they spent on preparing their proposals), as well as the time spent by the 194,000 individuals, as well as the opportunity cost of that time on the whole, this will be a net loser.

When there is slop in the trough, the pigs will fight to get at it.

Apple execs cash out lots of stock...what can we learn?

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gimme.jpgAs reported at MacRumors, Apple execs yesterday cashed out a lot of stock (1,000,000 shares).

To me, that says that people in the know (that is, people with the most incentive to know) have decided that paying taxes (at the present rate) sooner, rather than later (at the future tax rate), have decided that present > future.

So, what does that current > future (in terms of desirability, not quantity) rate mean to you?

Feel free to work "future entitlements as a result of healthcare spending" into your answer. "Increased statist sadism" will gain extra points. If you manage to make fun of the CBO's alleged "cost/benefit analysis," you get a free pass.

Using the term "greed," in any way, unless you can somehow delineate a way in which individuals are somehow more greedy than they previously had been, will earn an F--and earning an F on a blog is a very, very serious issue.

I read lots of papers...

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bigstockphoto_Stack_Of_Papers_1196666.jpg...and I try to be selective about which ones I suggest others read.

Given that I've mentioned this paper in comments several times (not necessarily here, but elsewhere), I thought it worth putting a link up. Klein is one of my professors this semester, and I had him last semester as well. I really like several of his papers; I'll include links to some of the other ones I like below the main one I'm recommending.

The Demand for and Supply of Assurance

Consumers want products and services that are safe and of good quality. Corresponding to such demand is the demand for assurance, before the fact, that the quality and safety will be as promised. This demand for assurance creates opportunities for entrepreneurs to profit by providing assurance - and they do so in a wide and largely unappreciated variety of ways. When it comes to assurance, the essential dialectic of the free enterprise system applies pretty well. I think governments' quality and safety restrictions on the freedom of contract, known to be so harmful, are unredeemed and should be repealed.

Demand for and Supply of Assurance paper available here.

Other papers:
The People's Romance: Why People Love Government (as Much as They Do)
If Government Is So Villainous, How Come Government Offiicials Don't Seem Like Villains?
Resorting to Statism to Find Meaning: Conservatism and Leftism

More here, but those are some of my favorites.

Hate Wal-Mart? Get in line--the clueless line.


evilempire2.jpgSince we're talking about hipsters, here's a post on something hipsters (or other "socially conscious" folks) love to hate: The evil mega-corporation Wal-Mart, which somehow underpays their employees, manages to evilly drive other companies out of business, and underpays their suppliers. And, yes, I did pull this out of the comments. Oh well--sometimes I like my comments.

Explain this: whenever Wal-Mart opens up a store or a factory, they have applicants that FAR outweigh their positions. Seems to me like the people are taking advantage of the (relatively) high wages that Wal-Mart offers. Maybe everyone lining up is just masochistic. Maybe they need the nice westerners to tell them what they really should be wanting, eh?

In some examples, the next-best option to working at a Wal-Mart or Wal-Mart producer is picking through garbage at the dump. Oh, but at least a mean, evil western company isn't "exploiting" those dump workers! At least they're making an honest living. Right?

Wal-Mart works so well (hey, it wouldn't be an "evil empire" if it didn't work well, right?) because they have a business model for their stores and producers that enables them to use very low-skilled workers--workers that would not be able to find a factory job elsewhere--and then, having obtained modern factory experience, those workers often leave Wal-Mart to work at more lucrative positions elsewhere, having gained a great amount of human capital because someone "underpaid" them (according to the arrogant west-centric assumption that something other than a dollar a day is the 'right' wage for them).

For a primer on this issue, check the Econtalk on fair and free trade coffee w/ Munger here, and for more information on rent-seeking (what Munger refers to in the podcast as "job gentrification," check (another Munger) Econtalk here. Rent-seeking is the reason that you can't give money (or higher-than-market-wage-jobs) away for free w/o it being a net-loser for all involved.

This really is basic, elementary economics. If one is going to have an opinion on economic issues, it really behooves one to read some basic economics. And, Sowell's Basic Economics is a great place to start.

Here's a puzzler (answered in the aforementioned podcasts): the best way to help the poorest is not to try to offer high wages for low-skill jobs. Now, why is that?

As Robert Samuelson put it in a recent column,

One job of presidents is to educate Americans about crucial national problems. On health care, Barack Obama has failed. Almost everything you think you know about health care is probably wrong or, at least, half wrong. Great simplicities and distortions have been peddled in the name of achieving "universal health coverage." The miseducation has worsened as the debate approaches its climax.
That same sort of miseducation, simplicity-rifeness, and distortions exist in almost every economic issue that is decided by majority rule (see Chicago's banning of Wal-Mart w/in large portions of the city), and they are just plain wrong, if not outright malicious.

200 Chicago Ministers Back South Side Wal-Mart

More info here. I have yet to hear any opposition to wal-mart that is based on anything but economic ignorance (or, possibly, ill-will toward the poor disguised as concern for them).

I'm willing to bet that there aren't any Presbyterians among those 200, however.

No milk in a snowstorm? I have a solution.


WaPo today-"Washingtonians hit by back-to-back monumental snowstorms have been buying groceries in near hoarding quantities over the past week. They've been quick to post photos of empty grocery shelves..."

Here's an idea. Repeal "price-gouging" laws and let prices ration scarce goods. Idiots. People buy too much milk in a snowstorm. They'd buy a reasonable amount (aka "not hoard") if the price was raised to an emergency-only level, and then not have (waste) a fridge full while others have jack-squat.

Should anyone be interested, the always-intriguing Munger and Roberts discuss "the evil that is price-gouging" here, on EconTalk (the best-spent several hours of my life).

Now, WHO exactly is the one that doesn't care about people? The libertarian? I think not. Let it never be said that I did not criticize Republicans: Charlie Christ made it to the governor's seat in Florida largely because of his (?tomfoolery? ?posturing? ?idiocy?) "legislation" following the spate of hurricanes during his tenure as AG, taking a "tough stance" on gasoline price gougers.

Also, check out my newly-created Facebook page, which might piss off some of you more conservative readers:

Let's Just Get the Government out of the Marriage Business, which I've posted on here before.

Tech for the poorest: Oil-filled glasses.

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Brian Hollar, with whom I went to see mediocre Avatar in mediocre 3D yesterday, relates the following on his blog, Thinking on the Margin, via Gizmodo:

I've been fascinated by the "Adspecs" since I first heard of them a few years ago. The glasses have oil-filled lenses which, when adjusted with the attached syringes, allow anyone to dial in their own prescription just by looking at a chart...

For the last few weeks, I've been speaking to the Centre for Vision in the Developing World's Owen Reading about where the project is going...  He explained why the Adspecs are such a good solution for developing economies.

"They require very little training to dispense, can be dispensed by an organisation's volunteers in the field, they only need to be delivered once and can make a difference for years afterwards, and are inherently safer (and less valuable on the black market) than items such as prescription medications."


It's the sort of mixture of charity and innovation that makes my heart leap, an opportunity to use the mass production and design capabilities of the developed world to provide a life-changing solution to those who need it--without making those who receive aid dependent on someone else for continued support...

Among all the widgets-of-the-day, the tablets and phones and mail-order furniture, it's easy to forget how technology can make such a profound difference in people's lives. So let's not forget.

Indeed, let's not.  Read the whole thing.

As Joel mentions, these are glasses are still undergoing iterative improvements and need quality enhancements to ensure ruggedness.  Maybe there's a way to build hollow frames which store the oil rather than storing it in syringes?  I wonder how easy these things are to clean?

Here's a video explaining more of how they work and what they do:

This is a brilliantly simple idea that has the potential to impact the lives of millions in the developing world.

This is exciting technology, and could do wonders not just for quality of life, but for commerce, and the creation of wealth.

BTW, I'm (unwittingly? unwillingly?) taking part in "Snowpocalypse 2.0: SNOWMAGEDDON" in DC this weekend...pray for people who have to drive in snow that usually don't, and that the shelters will have space and resources for the homeless caught in this storm.


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Created by one of my Econ professors. :) Silly, but fun.

Mark Perry has a great post discussing the sleight-of-hand that is performed (perhaps unintentionally, though I doubt it) when politicians and interest groups discuss trade.

Starting with the fallacy that countries, not individuals, engage in international trade, it's then much harder to realize that it's individual American companies and consumers who are penalized, taxed and disadvantaged by trade protection. By understanding that only individuals ultimately trade, it's then much easier to see that trade barriers typically protect a concentrated, small but well-organized group of inefficient domestic producers from more efficient foreign competition, while imposing huge and significant costs on other Americans - domestic companies that buy imported inputs and ultimately millions of U.S. consumers.

In that vein, Perry has rewritten some relevant recent news articles:

What if Economists Wrote News Articles on Protectionism and Trade?

priest.jpg.display.jpg WORSHIPPERS at one York church got a shock when their parish priest used the last Sunday before Christmas to advocate shoplifting.

Father Tim Jones, parish priest of St Lawrence and St Hilda, broke off from the traditional Nativity story yesterday, and said stealing from large national chains was sometimes the best option many vulnerable people had.

He told the congregation: "My advice, as a Christian priest, is to shoplift. I do not offer such advice because I think that stealing is a good thing, or because I think it is harmless, for it is neither.

"I would ask that they do not steal from small, family businesses, but from large national businesses, knowing that the costs are ultimately passed on to the rest of us in the form of higher prices. I would ask them not to take any more than they need, for any longer than they need." (full article here)

When I read this and compare it to what I've recently learned from Matt Chandler and John Piper on suffering well, I cannot but grieve for the Church. We are missing it completely...we are completely irrelevant as we have succumbed to worship the exact same things the world does, except we throw in a couple of verses to butter it up and make it an easier pill to swallow.

I trust that worshippers at St. Lawrence and St. Hilda have read their Bibles and quickly dismiss this offense to the Gospel and I hope this sort of "ends justiflying the means" mentality is removed from our churches.


Christians and the Housing Bubble


prosperity gospel.jpg

Christians and their utopianism:

Many explanations have been offered for the housing bubble and subsequent crash: interest rates were too low; regulation failed; rising real-estate prices induced a sort of temporary insanity in America's middle class. But there is one explanation that speaks to a lasting and fundamental shift in American culture--a shift in the American conception of divine Providence and its relationship to wealth.

Add water, an oligarchical Fed/Congress/Wall Street, and vibrant multiculturalism!, mix, and wait for collapse.

James Buchanan on how you want to be a child.


Unfortunately, I can't find an ungated version of Buchanan's paper, but Don Boudreaux, a professor of mine, included a synopsis a while ago on Cafe Hayek:

My colleague Jim Buchanan has a new article entitled "Afraid to be Free: Dependency as Desideratum." It's forthcoming in a special issue of Public Choice.

In this paper, Buchanan identifies four "sources or wellsprings of ideas that motivate extensions in the range and scope of collective controls over the freedom of persons to act as they might independently choose." These four sources of collectivism are:

1) "managerial socialism" - that is, the idea that central planners can outperform the market at producing material prosperity

2) "paternalistic socialism" (or what in French is called "dirigisme.")

3) "distributionalist socialism"

4) "parental socialism"

It's parental socialism that's most interesting. Here's Buchanan on this source of collectivism:

In one sense, the attitude is paternalism flipped over, so to speak. With paternalism, we refer to the attitudes of elitists who seek to impose their own preferred values on others. With parentalism, in contrast, we refer to the attitudes of persons who seek to have values imposed upon them by other persons, by the state, or by transcendental forces. This source of support for expanded collectivization has been relatively neglected by both socialist and liberal philosophers, perhaps because philosophers, in both camps, remain methodological individualists.


Almost subconsciously, those scientists-scholars-academics who have tried to look at the "big picture" have assumed that, other things being equal, persons want to be at liberty to make their own choices, to be free from coercion by others, including indirect coercion through means of persuasion. They have failed to emphasize sufficiently, and to examine the implications of, the fact that liberty carries with it responsibility. And it seems evident that many persons do not want to shoulder the final responsibility for their own actions. Many persons are, indeed, afraid to be free.

Reading this paper for a class, I had the following comments. (I don't have time at the moment to include the Lakoff information, but I'll try to find an ungated version of his "Metaphor, Morality, and Politics. Or, Why Conservatives Have Left Liberals in the Dust" paper and provide a link to it later so you can see the competing parent models he provides for the major political parties here in the states.)

Taken together with Buchanan's earlier point of paternalism, that system where the elites provide the masses with guidance toward "what should be wanted if the masses only knew what was in their own best interest" (Buchanan, 21), there is a strong connection between people as children, and government as parents. I believe Buchanan makes a good case here--experientally, this just rings true. As classical liberals, we may be doing some of the same 'paternalism,' though of a different sort...and that might be a good thing.

Where a leftist paternalism would seek to administer ever-increasing amounts of the citizens' life, giving the masses what they should want if they knew what is good for them, our classical liberal dogma can be seen as much in parental terms as any soft-statist position: we are the parent who believes in the adolescent and encourages him to leave the house and get a job. It's almost a combination of the nurturant parent and strict-father mentality in one...the tricky part is that there is not a uniform age when the transition from one parental model to the other is appropriate (further enhancing the knowledge problem with centralized, uniform positions). The classical liberal position, then, is as much paternalistic as the leftist/conservative one: we simply believe that people should want to be free, if they knew what was good for them, much as New Yorkers should want to avoid trans fats.

We can affirm the desires in both competing systems' models, and bring them together under a classical liberal model, realizing that the parenting can be done best (when at all, apart from actual parents) by club-level societies. I believe churches are well-suited to this role, and provide transitionary roles for individuals as they progress through life, surrounded by other individuals who seek the same mix of independence and interconnectedness.

There is the classical liberal 'parent' model to compete with Lakoff's strict- and nurturant-systems.

They were all in a meeting. Everyone who would have doled out horrific retributions on the citizens and guards at the Berlin Wall crossings were locked up in "very important" meetings, and a low-level bureaucrat was tired and blubbered out some uncertain phrases.

The media pounced. Pandemonium ensued. Concrete was busted up. Hasselhoff "sang."

Check the story here.

Spontaneous order, indeed.

(h/t: Kids Prefer Cheese)

See? I said I was *almost* an anarchist.


Screen shot 2009-09-18 at 10.27.04 PM.pngpolitical spectrum copy.jpg

The first image is from OkCupid Politics, which I just finished.
Similar here
and another here.

The second is my result from the last one (, when I took it last year. Of course, the historical and contemporary figures are guesses, made by the site's creators, based on speeches/writings they made.

Take one or two of them...maybe you're not as interested in the results as I am, though. :) (aack, another emoticon!!)

This also explains why comments by Democrats and Republicans are about equally likely to frustrate me, and why I have such a hard time discussing politics with...well...most everyone. :) I guess a better way to look at it would be to say that there are some things I can agree with Democrats on, and some w/ Republicans. Yeah, positivity!

It's all your fault that government doesn't work. ;) (yes, that's an emoticon...I know those have caused some stress here at the Institute're just going to have to deal with it).

Brian's previous post on Robin Hanson's 'cooperation' comments made me think of this...

We've actually been talking about this in my class this semester...essentially, if you buy that our genes (and, apparently, with them, our deepest inclinations) haven't changed much at all since our hunter/gatherer days, it follows that we would be inclined to think like individuals would have in a small band (around 40 or so) that intimately knew and relied on each other. Unfortunately, these tendencies don't translate well when we're dealing with people we don't know at all, and can actually be destructive (see Munger's example of "and the people actually clapped" in the above-mentioned podcast).

This is consistent with Hayek's comment in The Fatal Conceit:

Moreover, the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even thought they are incapable, by themselves, of creating a basis for the more extended order. Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings oftenmake us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once. To apply the name 'society' to both, or even to either, is hardly of any use, and can be most misleading (see chapter seven).
-Hayek, The Fatal Conceit, emphasis original.

I call your attention particularly to the second and third sentences: "Part of our present difficulty....we would crush them."

My options, then, are either to: a) rewire the polity's gene structure to recognize and fluidly operate within these different and overlapping spheres, or b) to restrict the items that the polity decides as a whole, realizing that the best of intentions can produce the worst of outcomes, and the worst of people administering those decisions (more on this in Hayek's more-famous book, The Road to Serfdom.

Book & DVD Recommendation:


auschwitz.jpgGulag.jpgReading through Julia/Brians comments on an earlier post, I happened to think of these two works, and I would be remiss if I didn't recommend them.

All, please take the time (and emotional effort) to read Anne Applebaum's excellent book, Gulag. I'll be writing a short paper discussing the economics I was considering while reading the book (along with those displayed in PBS/BBC's excellent documentary Auschwitz: Inside the Nazi State (available here).

You're probably more familiar with the Nazi's atrocities, but Stalin's were much more deadly, if nominally less methodically murderous. I'll share some of the details as I revisit the book/DVDs in the writing process.

Howdy, Neighbor!


Introductory aside: This is still political posturing...but it's a bit against the status quo, so I'll give it a hesitant approval. :)

Uh oh, all is about to be not so well in Mr. Rogers' neighborhood, if the reaction to previous individuals' speaking their opinion on the "health care crisis*" is any indication.

Mr. Rogers better hope that republican base is awful strong in his district. This sort of anti-government talk doesn't bode well for a politician's career! I know nothing about this dude, and I'm too skeptical to bother looking...anybody got some history on him?

*note: "health care crisis" is akin to a "swimming crisis," if the coaches cut Phelps' Achilles tendons, got him high (alright, he might have done that one himself....zing), dressed him in combat fatigues, and then wondered why he didn't win more than one gold medal. I wish I never complained about the government, so I'd have a full bank account to proclaim as loudly as possible how ridiculous it is that governmental experts, who have shown exactly zero prowess in anything but getting elected, are going to be able to determine how best to administer such an emotionally charged and complex system as health care, or insurance thereof, in a way that can be effectively applied to the multitude of differing preferences and requirements that individuals across the country have.

Ahem. That will be all.

benbernanke1_vertical.jpgCommentary on Bernanke's reappointment.

Granted, this isn't one of his better pieces..not that there's anything wrong with it, it's just pretty standard stuff...but if you're a non-economist, you'd be hard pressed to find someone who does a better job explaining economic concepts to you.

In this piece, you can see a level-headed assessment of what's happened here in my home district (DC) over the last bit of time as a result of the monumental expansion of government powers under Bernanke's watch. It's not pretty, and it's a great example of broken windows.

There are a lot of suits that won't be purchased due to the open paycheck the Fed's been burning through.

I shouldn't need to mention this...


blackboard.jpg...and, heck, I might not need to...

The broken window fallacy.

Move along if you know what this is. If not, boy are you in for some disappointment (with the vast majority of government programs in general, and economic 'stimulus' packages in particular).

Discussing the debacle that is the Cash for Clunkers program, Mark Perry links to a Cato piece that discusses some of the program's...umm...shortcomings (I'm being as charitable as possible).

We're not necessarily concerned with the C4C program here, though it should be lambasted and ridiculed as often and as loudly as possible. We're more interested in an excerpt from Henry Hazlitt's apparently-excellent short book, Economics in One Lesson, which I have yet to read. I have read Sowell's similar piece, Basic Economics, and flipped through his shorter treatment of the general topic, Economic facts and fallacies. I can wholeheartedly recommend anything Sowell writes, and I know Anthony would too.

Back to Hazlitt: a commenter on Mark Perry's blog included an excerpt out of Hazlitt's book. This refers to the 'broken window fallacy,' originally put down by Frederic Bastiat a couple hundred years ago in France. Yes, econ is relatively least, the principles are...we keep trying to find new ways to make it make sense...

The Broken Window

A young hoodlum, say, heaves a brick through the window of a baker's shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sun. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $250 that he was planning to spend for a new suit. Because he has had to replace the window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $250 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier's gain of business, in short, is merely the tailor's loss of business. No new "employment" has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.

The seen is what is always touted by the politicians. The unseen is what economists are often tasked with reminding everyone of. This is the essence of tradeoffs, a word that can't be repeated enough. This is why economics are important in whatever conversation you're having, whether that be about the economy, environment, or anything else (whoever asked that the other day on Brian's post about consensus and the environment, sorry I didn't comment there).

The commenter at Mark's blog also included the following postscript, which I'll include, as it sizes up the situation rather well:

People who are ignorant of economic knowledge love programs like the cash for clunkers fiasco because they do not account for what is not seen. While they see a benefit as the Ontario Toyota plants sell more vehicles to American consumers they do not see the fact that the local garage has less work because cars that would have been repaired have been taken off the road. While they see Avis get a better price for its used cars they do not see that consumers that could only afford a clunker see their prices increase because of the destruction of supply. While they see dealers see their receipts increase they don't see charities, which sold donated cars see their receipts go down. And so on, and so on, and so on,...

I am sorry my friend but destroying value is never a good idea, particularly when the nation that is choosing to destroy value is bankrupt.

Now, I (Shawn) actually don't think that the nation is 'bankrupt,' per se, but the point still stands w/o that bit of hyperbole.

I will now shop at Whole Foods



This line from a story on caught my eye:

"I'm boycotting [Whole Foods] because all Americans need health care," said Lent, 33, who used to visit his local Whole Foods "several times a week."

Whole Foods must be doing something right to piss this guy off. The prices at Aldi's and Trader Joe's are more my style, but I have to support a CEO who publicly says this:

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction--toward less government control and more individual empowerment.

John Mackey, CEO of Whole Foods, backs up his stance by pointing to his company's excellent health benefits. He goes to list some good ideas, then throws this in:

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That's because there isn't any. This "right" has never existed in America.

What? I'm not sure what he means by his later use of "intrinsic," but there's more immediately gratifying quotations:

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor's Business Daily. In England, the waiting list is 1.8 million.

Why would Mackey risk angering his socialist-leaning customer base? Is he in bed with medical companies that will collapse under Obama's Ministry of Health, or is Mackey simply acting morally?

Washington vs. Silicon Valley

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If only this was a joke

Here's a stumper: In the Treasury financial reform proposal, who comes in for more regulatory retooling: Fannie Mae, or your average 14-man venture capital shop? If you said venture capital, you understand why one of America's greatest competitive advantages is now at risk in Washington.

As part of their regulatory redesign, Team Obama and Congress still don't have a plan for reforming the giant taxpayer-backed institutions like Fannie that caused the credit crisis. Yet they're moving to rewrite the rules for investing in tiny technology companies that had nothing to do with the meltdown. Under the proposed rules, venture firms will be declared systemic risks until they can prove themselves innocent. The typical venture capital (VC) firm has nine principals plus five support staff and doesn't use leverage. Yet Treasury Secretary Timothy Geithner wants VCs to be regulated as investment advisers by the Securities and Exchange Commission.

This means the firms will be required to send heaps of data to the SEC and be subject to unannounced examinations that can last days, weeks or months. The firms will also have to appoint a chief compliance officer, create written procedures to comply with the various securities laws, and follow new regulations on record-keeping, privacy of client information, marketing, and so on. Information gathered by the SEC will then be analyzed by the Federal Reserve or some other systemic-risk regulator to decide if there is a hidden danger buried deep inside these companies. Never mind that VCs don't trade derivatives, or much else for that the rest

Wonderful the Treasury wants to regulate the VC industry that uses no leverage and trades no derivatives. The VC industries risk profile is positive to extreme events. When extreme events happen VCs make money. If no extreme event they lose only the equity invested. Yet the Treasury says the VC industry may have Systemic Risk. You have to be kidding me a $28 billion dollar industry that uses no leverage and is positive to extreme events is a risk that can bring down the whole financial industry? Banks have systemtic risk. Banks are negatively exposed to any extreme moves. When you have an extreme event like the credit crunch banks lose not only their money, but also taxpayers money. Banks or any other kind of massive lending is a systemic risk.

Yet the Treasury says that if the VC industry is not regulated then hedge funds will call themselves VCs and leverage up. Hmm, right as the VC industry is held to anti fraud laws this would not be legal. Then another problem the hedge fund industry was not mainly responsible for the crash. The crown of responsiblity is on the heads of Commercial banks and investment banks and the Fed.


FADEP (The Center for the Study of Family, Population and Development) has recently published in English a study of the impact of strong, united, traditional families on Guatemala's economy and business community. The complete document in English can be downloaded on a PDF here.

As we move through this global economic crisis, strong families are essential, not only in providing the market with truly free and virtuous individuals that can thrive on an even more challenging market place (because of the strong moral character that is only forged within the context of family), but also serve as the strongest support web for those hit the hardest by the crisis.

If we are to survive this crisis, if we are to build strong communities of faith and if we are to re-learn the gospel, the vocation of serving others and the virtues of self-restraint and selfless love, we need to work together in strengthening the family.

The consequences of not doing so are very scary:

P.S.: Feels great to post again!!!!!!

How do you Price Nature Provided Services?


Pricing signaling is the best system we currently have to value services. It is not perfect. You can have external costs not priced into a product or service. Example industrial pollutants where the cost is paid by society but not the companies and individuals producing and using. AKA the Free Rider problem.

My question comes how can we effectively price the services that nature provides? Giving a incentive for people to not cut down the rain forest (massive carbon sink). Or clear trees by the river which act as pollution filters? Then who pays for the services? How does rain forest farmer in Brazil get paid by Americans?

I know for carbon this is being address to some extent. A farmer in say Brazil can sell carbon credits on the market where any one can buy them. What is not clear is how to value the rain forest itself. With the exchanges in place supply and demand will be an effective price discovery tool. Personally I am not worried about the government setting prices as the market will be way to large. It is projected in the trillions. Ex look how non effective oil and gas price manipulation is. It can be done but not for very long.

We need to build other markets and exchanges for watershed protection, soil erosion, biodiversity and countless other nature provided services

Retail titan Wal-Mart launches 'sustainability index'


"US retail giant Wal-Mart on Thursday announced plans to develop a database that it said would revolutionize shopping by putting information about products' sustainability at consumers' fingertips.
The database, dubbed the sustainability index, could put information about how environmentally-friendly suppliers, manufacturers and their products are, just a garment label or barcode-scan away for shoppers, according to Wal-Mart executives speaking at a webcast gathering of their suppliers."Read the Rest

Here is a good analyst of the difficulty of implementing Lifecycle Analysis

You know the joke about economists, put 3 of them in a room, ask 1 question, get 10 correct answers. Well with lifecycle analysts, those same 3 people give you 547 correct answers, not 10. Because those three items, especially number 3, tend to have lots of shades of legitimate gray.

That's why rigorous lifecycle analysts generally shy away from using LCA techniques to compare 2 products or processes, as opposed to using them to assess trends in a single product. Because two products, both with perfectly reasonable assumptions as to what should be counted, often mean a "right" answer for one is not equivalent to a "right" answer for another. In fact, you know you have an idiot for a lifecycle analyst, if he or she tells you his or her answer is right, and product A is better than product B.

A simplistic example, let's say you have a plant in Thailand, that ships 1 mm cotton shirts a year to several vendors, including Walmart, and uses 1 mm kwh of energy a year. Should the energy allocation be then 1 kwh/shirt? What if 20% of those shirts are extra large? Should the XLs get a higher allocation because they're bigger? Do you make that allocation based on size, %, square footage, time to manufacture, or cost, or a combination? Even financial inventory accounting leaves room for differences. What if some shirts cost less than others to produce, should cost be included as a variable in the allocation, and if so, should average, LIFO, or FIFO be used? What if only 30% of the shirts go Walmart, and the others go to a place that doesn't have ecolabels? How do we account for shifting allocations over time if products in one batch come up with different labels, or get shipped by different ships? What if one ship is 20% full and the other 100% full? And how do you allocate the energy footprint for product returns, shrinkage, or wastage? What periodicity do you pick? Allocate quarterly, monthly, annually? Not every answer is material, and not every answer is difficult in every case. That's the whole point, it varies. All of these can have legitimately different answers depending on the nature of the business (and if we get comments on this article explaining the "right" answer, that will just highlight the point), and when you consider that multiple companies or plants supply components, and therefore part of the answer to each other to calculate the final footprint, the permutations of "right" blow out fast.Continue

Wal-Mart has been rather impressive on the sustainability front the past few years. If they can increase the sustainability of its supply chain it will have a massive impact across the world.

Now only wish they could Wal-Martize the health industry. Bringing massive cost reductions to a screwed up industry.

Sustainability an Impossible Problem?


Sustainability venn diagram.jpgFor better or worse man is reshaping the earth in his image. All prior changes on the planet where brought about by nature. This one is brought about by humans. We are changing a dynamic system that we barely understand. Sustainability brings together three factors. Environmental systems, human systems and financial systems. We must learn how they interact with each other. In this lies a major problem. Can these systems be brought under the hand of reductionism to provide a model we can use? Or is the earth itself a non reducible problem. Meaning the only way to model the system is to have a system bigger then the observed system.

This is why I believe sustainability will be a bottom up system. It will follow the path of evolution. Working towards a solution based on trial and error. We have started the process already. There is no turning back. Humankind is changing the face of the earth at an unprecedented pace. We have wiped out whole ecosystems. We have accelerated the extinction rate. At the same time we have brought real choice to hundreds of millions of people. No longer struggling to survive. Millions are added annual to our ranks. There is nothing pretty or predictable about the process. Global wealth is one of the keys to a sustainable human made system. The question is how do we get there without destroying the earth in the process.

China is dealing with this firsthand. They use to say the West expanded with no pollution controls so can we. What they got is a river nothing can live in and the worst polluted cities in the world. But something amazing is happening China is expanding on all fronts in the clean energy arena. Finally seeing that clean energy is in the best interest of China's future.

So is sustainability an impossible problem? Yes there will be no equilibrium. It will be built on continuous decisions made over time. Every decision changing the dynamics of the system. We live in exciting times. It will be amazing to see what the earth will look like over my lifetime.

In Chicago next week for an IHS seminar...


I may or may not have time to post, as the days are pretty full, but if anyone is interested, the Institute for Humane Studies (IHS) has some great opportunities for summer seminars around the country that are offered at no cost to the participant. I'll be at the 'Liberty & Society' seminar at Loyola University beginning tomorrow and lasting through next Friday.

For more information, go here and see if there's something that interests you. I'll be able to offer more input following my attendance, obviously.

Aside from that...I'm just looking forward to my first bit of time in Chicago! If there's anything near Loyola that people suggest I must see, feel free to let me know in the comments.

[whiner]: "You buy too much stuff." [me]: Shut up.



A friend of mine, with the best of intentions, recently posted a link to another blog, commenting on the materialism, wastefulness, and worthlessness of (the West's) life:

We're in love with stuff -- with shopping, with acquiring, with owning, with collecting.

Let's lust after life instead.

Our obsession with stuff has become unhealthy. When we have a void in our lives, we buy things. When we have problems, we buy things. And these things are becoming more and more expensive, bigger, shinier ... more wasteful.

This obsession with stuff leads to owning a lot, having a lot of clutter ... and yet this stuff doesn't fill our lives with meaning.

It leads to deep debt, from buying so much, and needing bigger houses and storage spaces to contain everything. Financially, we're worse off than ever, because of this obsession with stuff.

We buy things when we're depressed, we buy things for others to show how much we love them ... and in this way, stuff has separated us from actually dealing with our emotions, blocked us from truly connecting with others.

Let's replace that lust for stuff with a lust for life.

A seminary professor of mine often said that "since the deck of life is always shifting, balance is nothing more than momentary synchronicity." With that in mind, I submit the following, wherein I run headlong away from the swells and toward the high-side of the deck in this storm of life.

Okay...I'm just about OVER this hackneyed commentary. Let's look at a couple points in Mr. Babuta's excerpt:

This is how it's done my friends....

More info here.

Demand: Still Sloping downwards (Italy Edition)



Alright, quiz time.
1) Name the most interesting thing in this image (from an American perspective).
2) Name the thing that SHOULD be there, but isn't.

Answers after the break...see if you can guess beforehand. Points will be awarded.

Daring to Dream...


Picture 1.png What would be wonderful, delightfully wonderful, is if Honda really stuck it to the fat, slovenly (American) firms that can't stay alive without the teat in this video. Sadly, that's probably not what this is about...but I'll keep hoping.

Profit...and loss. That second part might be the most important. On a somewhat related note, check out the the latest EconTalk podcast, which is about Wal-Mart. The next time someone tells you that WM "exploits their workers" or is somehow bad for "the poor," especially if those poor "don't know any better," tell them to stick their arrogant noses---ahem.

A...definitional question. A bleg, if you will.


If someone says "commitment" to you, what does that word mean? Especially, and I'm speaking hypothetically here, in the context of marriage.

These are amazing statements. To think of a market that is actually asking for responsible restraint and trading what used to be superfluous consumption into meaningful consumption...consuming with purpose, not as an end in and of itself.

As Christians, we need to infuse these trends with a new quest for Truth, and to teach again the value and dignity of the human person who should be at the focus of any and all marketing efforts.

I encourage you all to read the Pontifical Council for Social Communications "Ethics in Advertising" document here.

Ya' don't say?!

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Gm "hopes" to make profit in 2011.

As do I (hope that I make a profit, that is). Any reasonable person could care less if GM makes another cent (and would likely prefer them to fail)...ummm...unless you hitched your horse to their carriage (sorry, mate)...but, then, I have to ask: why haven't you indexed? Here's the creator of the index fund on...well...index funds. This stuff isn't rocket surgery. Wanna listen to a dude who's prescience gains him some credibility? Check out Taleb in Black Swan or Fooled by Randomness. Note: podcasts w/ Taleb also available on econtalk.

HAHAHAHAHAHA...."A slump in sales forced GM to file for bankruptcy protection this week."
Subtext: "...and when we say 'slump,' we mean, 'damn, this has been like a drunk monkey taking the bar exam.'"

Say it with me, folks: Debacle. It really is atrocious that the BBC didn't say anything about the obvious tomfoolery and mismanagement that has been part and parcel of GM for...oh....years, nor the governmental coddling that allowed this sort of atrocity.

Cuba Libre.


the street.jpgRelations with Cuba....thawing?

The anti-Castro Cubans in Miami (remember Florida, that seemingly perennially-politically-important state?), purely out of an intent to harm Castro, certainly seem to be harming that Cuban citizen that I would gladly trade with, given the option. Apparently, they have an enormous amount of political clout. Given Florida's many electoral votes, and overall peach of a position for anyone seeking election, along with South Florida's immense Latino (particularly Cuban) culture/population, their opinion is incredibly powerful.

Sadly, however, it is misguided.

"Economic sanctions" are a load of bollocks. When 'trade' happens, it happens between me, an individual, and another individual. Washington and Havana have nothing to do with it. Obama and Raul (or Fidel, whichever) Castro have nothing to do with it.

I do hope that this happens, regardless of whether Cuba does not accept. Anything to foster relationships is a good thing, and anything that allows more and increased trade is an even better thing.

'The crossroads of trade are the meeting place of ideas, the attrition ground of rival customs and beliefs; diversities beget conflict, comparison, thought; superstitions cancel one another, and reason begins.' -Historian Will Durant

As if GM weren't enough....



NEW YORK (Reuters) - Jen-Hsun Huang, chief executive officer of graphics chip maker Nvidia, called Intel's chip pricing unfair but said his company will not seek antitrust action against the world's largest chip maker for now.

Nvidia makes graphics chips that pair with Intel's low-powered Atom in lower-priced netbook computers. He said Intel sells an Atom chip by itself for $45, but sells a three-chip set for $25 to lure business away.

"That seems pretty unfair," he said. "We ought to be able to compete and serve that market."

Last week, the European Commission fined Intel $1.06 billion euros and ordered it to change its business practices for competing illegally against Advanced Micro Devices.

Intel brushed off Huang's suggestion.

"We compete fairly. We do not force bundles on any computer makers and customers can purchase Atom individually or as part of the bundle," said Bill Calder, a spokesman for Intel. "If you want to purchase the chip set, obviously there is better pricing."

For now, Huang plans no legal action.

"I hope it doesn't come down to that," he said, adding: "We have to do whatever we have to do when the time comes. We really hope this company (Intel) will compete on a fair basis."

Article here.

Get the man a tissue so he can wipe his eyes after his nose is out of the government's...well...nevermind.

This is why fans of capitalism are very often wisely not fans of capitalists, especially after they can get the government to back them up. As Sowell has mentioned, you can't find a positive reference to businessmen in Smith's Wealth of Nations(I believe he referred to them typically as 'industrialists,' and I'd like someone to find/remind me of the quote reading something like: 'every time businessmen get together to meet, the victim is the consumer'). Sowell, incidentally, would give an 'A' to any student who could find such a reference. If intel is selling stuff for "unfairly low" prices, that's GOOD for consumers. If nvidia can't sell at that price...guess what; innovate or go the hell away, don't whine to get the justice system to prop up your shitty business skills by hobbling your competitor.


Tomorrow, Monday June 1st, we'll be live on the radio here in Guatemala City speaking about the global financial crisis from a Christian and moral perspective. We'll be on Ilumina FM 98.1 and you can listen online.

The show is at 5:30pm Guatemala time. To find out the time in your area, visit here.

If you missed it, the podcast is available for download here.

madddd_1.jpg The Mexican news website El Milenio reported that from now on the consumption of 5 grams of Marijuana, Cocaine or Crystal is legal. This is part of an effort to battle the "narco retail" business.


What are the implications? Is this the solution? What is the proper Christian response to this?

The System is Down, the System is Down


People do not think clearly on the systemic level.


From Matt Perman, explaining Andy Stanley's DVD set "Systems": trump intentions and mission statements.

Here's what that means. You might have a great mission statement, but systems are what create behaviors. So if your systems are out of sync with your mission, then your results will be off-mission too.

This will be true in spite of the best of intentions. Even if everybody in the organization wants "change," the change will not happen if the systems are set up in a way that produces and rewards the opposite behavior.

Man, this insight explains so much. It's not just business organizations, but also churches and governments. If we include groups of people with implied mission statements, then this applies to families, cultures, etc. Keynesian economics, currently favored by our leaders, is a great example of a foolish system, but so is Monetarism.

Things like racism and poverty are systemic dysfunctions as well as personal problems. Sin works on both individuals and systems, so shouldn't the Church do the same? Have you been in an organization with nice leaders but a horrible system?

Let GM go under


From CNN: Jack R. Nerad is Executive Editorial Director for Kelley Blue Book, says don't let GM go bankrupt over at CNN.

(CNN) -- The events of the past week have been unprecedented in the auto industry and in the annals of American business.

As the events have unfolded, there is the strong implication from the administration's automotive task force that Chapter 11 bankruptcy, followed by restructuring and "cleansing" of General Motors' balance sheet, is a potential scenario in the ongoing efforts to keep the giant automaker alive.

GM's new chief executive, Fritz Henderson, acknowledged as much on CNN Sunday. "You can't rule options off the table. So you basically say we will spend time to try to get it [done] outside of bankruptcy. But if we can't, we're not going to compromise our goals. We're going to get it done inside our bankruptcy. Our preferred approach is still to do it outside, but you can't rule out going in."

Over the past few weeks pundits of all stripes have appeared on financial news networks suggesting that entering Chapter 11 is GM's only way to future viability. "Get on with it," they say, and save us the agony.

It is the only way, they argue, General Motors can get relief from its immediate cash-flow issues, tear up or substantially modify its union contracts, dump unnecessary brands, close plants and "right-size" its operations. But those pundits who propose Chapter 11 fail to acknowledge that General Motors is a consumer-facing company whose success or failure is in the hands of millions of average Americans.

NO, NO let GM go bankrupt like the rest of the companies that produce things that people do not want. GM's been a poorly run company for the past 30 years because government enables them to be inefficient and produce cars that people don't want. Quit bailing them out and let them be bought by a company who makes quality cares that people want.

Every Day Has Been Fools' Day


I was going to post something funny for April Fools' Day, but we're already experiencing a farce that can't be topped under the Obama administration. So for a change, let's listen to someone serious, Daniel Hannan, prophet-at-large:

It's not just the brilliant content, but it's the cadence, the delivery, the flow. When will the U.S. get its own Daniel Hannan? Had he been a candidate I would have voted for Hannan for President based primarily on this video, as is appropriate these days.

It's like Raekwon said:

"Frontin' like he's sittin' on a lump,
he's sittin' on junk."

The result of this election now leaves only Mexico and Colombia in all of America (the entire continent from Canada to Tierra del Fuego in Argentina) as right-wing type governments.

On Monday, the FMLN's victory over the traditional right winged party ARENA in El Salvador caused major shockwaves across Central America. Ever since the signing of the Peace Agreements in El Salvador, the FMLN (former guerrillas) established themselves as a political party but had little success until this year when they finally won the presidency. Many analysts say that this was possible because they chose as their candidate an outsider, a former CNN journalist, Mauricio Funes, that had not been part of the FMLN or any of their armed efforts to take power.

Traditionally, El Salvador has been a very strong ally of the US and one of the most (if not the most) open economies in Central America with a very dynamic business sector and the most modern and efficient banking system in the region. Let's wait and see what happens.

The Rich Get a Second Chance the Rest go to Prison.


real-panopticon.jpg.jpegI just had to post this from Howard Lindzon

I was reading yesterday that AIG has approved $163 million in bonuses. I mean that seems fair because according to their attorney, they were promised..get this....CONTRACTUALLY.

Let's see here, the government owns 80 percent of your ponzi shithole company and we are allowing bonuses because of a contract. It would be cheaper to kill every lawyer and executive associated with the bonuses at this point. The company does not need to retain anybody. It needs to be unwound and quickly.Read the Rest

Our country has a two tier system when it comes to screwing up. One you mess up you go to jail. Thanks the Bankruptcy Abuse and Consumer Protection Act of 2005 when a person files bankruptcy his/her credit card debit does not get discharged and he/she carries it for life. Meanwhile the elite not only get their companies bailed out, but also keep their bonuses and to add insult to injury they keep running their walking dead companies. Lawrence Lessig talks about this and corruption in politics in the video below.

I see a need for lower income communities to rebuild their much needed support mechanisms. To help people that are in transition or who have made poor decisions. The black communities in the 40's and 50's had strong support systems in place. Even though they where relatively poorer then white communities they functioned well. Then welfare and urban renewal wiped them off the map.

How many of our churches are helping their own in this time of need? Providing health insurance for those that have lost jobs? Provide food or shelter to those who are struggling? Help church members find much needed work?

No one is a success on his or her own. A community provides support. We need to recognize this as a good thing. We needed to rekindle it in our communities.

Invitacion.jpgThis was a busy week for Christians in Guatemala. Under the umbrella of Luis Palau's Family Festival a whole host of great activities for Christians of all interests was organized.
One activity in particular was of interest to me because some of my professors and friends from my graduate school, Regent University, came on behalf of Regent's Center for Entrepreneurship to give a conference on Business as a Mission (under the Kingdom Business Paradigm).
A lot of the talks focus on the already popular and I believe, cliche'd idea of "leadership". What does leadership mean anyway? As Christians....are we called to be leaders....or servants? What is servant leadership? How does this contrast with the idea of stewardship?

10 years after I wrote my thesis on "Stewardship and Transcendence: Two Key Biblical Principles of Economics" to obtain my B.A. in Economics from Francisco Marroquin University in Guatemala, a reporter from El Periodico, came across it as part of her research in an article published last Sunday about a small rural, indigenous town in the Northwest of Guatemala called Almolonga. (You can download my complete Thesis in English here -please bear with my mistakes in grammar and style while reading it: Thesis English.doc) I had the privilege of being interviewed for this article.

Almolonga is famous for its amazing transformation from an extremely poor rural town, to a bustling commercial and agricultural center that has been infused for more than 35 years with the envigorated preaching of God's Word. The town is now more than 90% Christian, there is no jail, only one cop works in the town and most of the old "cantinas" are now mom & pop grocery stores. The town that now worships Christ, used to worship Maximon, a mayan-catholic deity/saint who required offerings of tobacco and booze in order to bless his devout followers. More on Almolonga here and here.

Back to Basics with Vishal Mangalwadi


This is my guy:

Yesterday, Eric Holder, US Attorney General, informed that after 21 months of anti-narcotic operations in Mexico, 755 narcos related to the Sinaloa Cartel were captured and with that, 23 tons of drugs.

This is just the tip of the iceberg of a drug war against two powerful drug cartels in Mexico (the Sinaloa Cartel and the Gulf Cartel) that are themselves in a war to control the lucrative drug trafficking business into the US (for consumption).

The war between these two cartels has claimed over 6,000 lives in Mexico in 2008 alone (more than those in Afghanistan during the same year) and due to this drug war in Mexico (Government vs cartels and also cartel vs cartel), the cartels have begun to fight for a new territory to dominate.....Guatemala.

The following article was written by our good friend, Fernando Coronel, a brilliant young Catholic and brave lawyer-to-be from Ecuador who will most certainly be the country's next president. Anthony and I have the privilege of knowing him from various activities with the Acton Institute.

Ecuadorian President Rafael Correa, a leftist U.S.-trained economist, recently imposed hundreds of restrictions and outright bans on imported goods in an effort to restrict the outflow of dollars from the national economy. But this desperate move will not work. Alarmed by slumping demand for oil -- his country's largest export -- Correa's protectionist measures are leading Ecuador back to the same failed policies of the past that have condemned so many Latin American countries to mediocrity and poverty.

Correa is a member of the small club of Latin American leaders who are advancing what they call "Socialism of the 21st Century." This group includes Hugo Chavez of Venezuela, Evo Morales of Bolivia, Fernando Lugo of Paraguay, and Daniel Ortega of Nicaragua. But whether they call their policies the New Socialism or the New Left or whatever label strikes a populist tone, the results will be painfully familiar. The ruinous consequences of collectivism, restrictions on individual liberty, and huge increases in public spending are easily imagined. As someone once said, these socialists love the poor so much, they do all they can to multiply them.

Read the rest here:


I posted this over at World Magazine:

"Renting Way Underrated"

There is nothing wrong with being a long-term or permanent renter. Don't believe the hype. One of the reasons we are in the midst of a housing depression is the misguided belief that owning a home is always a good investment and that home ownership is key to experiencing the "American Dream." Both are false. Owning a home is not a good investment if you cannot afford to maintain it or if you are not the home-owning type. Owning a home does not necessarily create a better quality of life.

Pushing home ownership on those who are probably better suited to be long-term or permanent renters sets many people up to fail. The home ownership idol does not deliver, as we now see.

I have an engineer friend who earns a great salary and sold his house a few years ago because he didn't like being a homeowner. He disliked doing maintenance work, mowing the grass, dealing the all the extra bills, worrying about security issues, and so on. He sold his house and is now a renter with no plans to buy another home anytime soon. He invests his money in other areas instead of property because, as we have now seen, housing investments are not guaranteed to appreciate.

Renters are people who want a certain lifestyle. They prefer the freedom of mobility, free from the hassle and worry of house maintenance, etc.

Read the rest here.

The Abracadabra Stimulus Plan


I posted this over at Acton:

The $787 billion economic stimulus President Obama signed into law this week rightly recognizes that spending stimulates the economy. That measure, however, misses the mark: It is targeted, demand-driven consumer spending is the engine that grows economies, not frivolous government spending for future "needs." We have forgotten what Harvard economist and past president of the American Economic Association, Frank Taussig, told us in his 1911 book, Principles of Economics: "We must accept the consumer as the final judge."

As recent history teaches, economic crises arouse an emotional panic that tempts us to believe that centrally planning the economy is the medicine for economic recovery and the best safeguard against future volatility. To make matters worse, spin doctors lead anxiety-laden people to believe the notion that without government oversight we are doomed. This history displays a major moral temptation of economic crises: a prideful belief in our capacity to "save" the economy by controlling the decisions of the millions of human beings who participate in it every day.

Read the rest here.

As a part of the Obama-revolution The Institute is adding a few more voices to the mix. We welcome two writers, Tom Kim and Abraham Sangha, to the voice of "protest and invest" because I believe that red, yellow, and brown people are more than just ornaments on the evangelical's "we're not mono-cultural" mythological Christmas tree and should have a platform and a voice beyond the margins.

Most people in evangelicalism can't name any Latino or Asian voices that they read or follow on a regular basis. One of the most profound blessings I've encountered over the years has been learning from Koreans and mis amigos from the Latino Leadership Circle.

I can't even name a Native American theologian/preacher/etc. So why do we not request the voices of Latinos and Asians? Not sure, but I do know that the "racial reconciliation" blah, blah is more rhetorical and is still Anglo-centered. Just because some bohemian-types wear African clothes and throw in a Hispanic praise song it can still be paternalistic and patriarchal. Trust me, I've been there.

Becoming a Christian should not be synonymous with becoming Celtic or Eurocentric. I've noticed that many evangelicals who are into "the arts" do not promote African, Latino, nor Asian expressions. Why is that?

Dr. Clearance Shuler, thankfully is more creative than "reconciliation blah, blah" and promotes something better, "Biblical Diversity." Shuler focuses on the fact that "African Americans, Asians, Euros, and Latinos think differently." The dominant culture doesn't get that some argue.

So, we welcome new brown and yellow voices to the mix here. Stay tuned. . .

Tom Kim_opt.jpgTom (far right) works as Financial Analyst for a scrap metal recycling company in the Bay Area of Northern California.

Thumbnail image for abraham_opt-1.jpgAbraham, a former civil engineer, graduated from the University of Illinois and is currently completing a Master of Divinity degree while serving a church in the St. Louis area.

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