Sunday, November 28, 2010

On The Distributional Effects of Property Rights: Solar Edition

 Spanish Woman Claims Ownership Of The Sun

The document issued by the notary public declares Duran to be the "owner of the Sun, a star of spectral type G2, located in the centre of the solar system, located at an average distance from Earth of about 149,600,000 kilometres".

Duran, who lives in the town of Salvaterra do Mino, said she now wants to slap a fee on everyone who uses the sun and give half of the proceeds to the Spanish government and 20 percent to the nation's pension fund. She would dedicate another 10 percent to research, another 10 percent to ending world hunger -- and would keep the remaining 10 percent herself.

"It is time to start doing things the right way, if there is an idea for how to generate income and improve the economy and people's well-being, why not do it?" she asked.

Free rider problem aside, I can't help but wonder what Bastiat would have to say.

No Such Thing As Bad Publicity

Interesting article from the NYT on the perverse incentives facing shady online retailers.

Today, when reading the dozens of comments about DecorMyEyes, it is hard to decide which one conveys the most outrage. It is easy, though, to choose the most outrageous. It was written by Mr. Russo/Bolds/Borker himself.

“Hello, My name is Stanley with DecorMyEyes.com,” the post began. “I just wanted to let you guys know that the more replies you people post, the more business and the more hits and sales I get. My goal is NEGATIVE advertisement.”

It’s all part of a sales strategy, he said. Online chatter about DecorMyEyes, even furious online chatter, pushed the site higher in Google search results, which led to greater sales. He closed with a sardonic expression of gratitude: “I never had the amount of traffic I have now since my 1st complaint. I am in heaven.”

 Caveat emptor...

Saturday, November 27, 2010

The TSA Probably Kills More People Than They Save

At least according to Steve Horowitz

As the nation readies for one of the busiest traveling holidays, Steven Horwitz, a professor of economics at St. Lawrence University, told The Hill that the probable spike in road travel, caused by adverse feelings towards the Transportation Security Administration’s (TSA) new screening procedures, could also lead to more car-related deaths.

“Driving is much more dangerous than flying, as you are far more likely to be killed in an automobile accident mile-for-mile than you are in an airplane,” said Horwitz. “The result will be that the new TSA procedures will kill more Americans on the highway.”

I don't doubt that since 9-11 the TSA's intrusive screening procedures have encouraged more Americans to drive to their destinations rather than fly. The question is, on the margin, how many more fatal accidents resulted from the choice to drive instead of fly? If we've hit diminishing marginal returns to safety from the TSA then when did we pass the optimal level of airport security?

Thursday, November 18, 2010

Microcredit Crunch

India Microcredit Sector Faces Collapse

Microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay. Some companies have more than doubled their revenues annually.
Now some Indian officials fear that microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy.
 Michael and Sitara. Your thoughts?

Wednesday, November 17, 2010

The well informed parent?

Although I have already written this week, I see that this parent-is-best thread is getting some attention. I couldn't help but add to it.

Rothsbard suggests my tutelage as a child would be best managed by parents. My experience brings that argument to question. If I had begun to learn the saxophone at age 9, or began singing, I would have learned from a nationally recognized music program. Instead I decided with my parents that music was not my forte. Never mind the studies of developmental psychology that show improved mental development with involvement in art and music programs. At age 11 I was placed in the advanced track Mathematics program. After 3/4 of a school year, my annoyance with homework convinced my mother to drop me to the regular track math program. Instead of considering my clear aptitude for mathematics, decisions were made based on parents responding to complaints from a child. Never mind studies showing the young mind must be challenged to meet its potential. Never mind what has been proven to result in the best developed and therefore most efficient person our society could produce.

Now, at 21 years old, I am struggling to motivate myself to learn guitar. I staggered in calculus after years of disengaged coasting in mathematics. I have started reviewing economics (which I also shirked), but I have some ways to go. Rothbard says this is good: as an adult I am choosing to pursue my own interests and applying my skills where I see fit. Fine. I do wonder what the opportunity costs of these missed experiences has been.

My mother might not have fully considered my educational options while raising three other kids and working >full time. Her GED may not have given her the best background for understanding the benefits of these programs, or the process for college applications, but my mother taught me to learn from better informed people. Maybe the decades my Father has spent working manual labor were not the best background to help me make educational decisions, but he did teach me to demand the best from myself. I think Rothbard made an excellent point by distinguish the role of formal education from societal education. You cannot be taught work ethic in a lecture. If you give the same resources to different people you will have different results. Education is no different.

I'd say if we measure it by student knowledge and performance, the best policy is to get kids to spend more hours and more days in school until we have maximum performance. I'd say every student should learn english and spanish in elementary school, since bilingual children are shown to perform better in life. I'd say programs can be influenced nationwide without turning into No Child Left Behind, because there is no reason to say past failures make failure inevitable. There is no reason to say that tenure cannot be reformed, and no reason we can't double the national funding for education by cutting a fraction of military spending.

And yes, we could privatize the entire system and start over again. Theoretically we eliminate massive bureaucratic waste etc etc, but what about implementation? What about convincing 300,000 Americans that the answer is to give their children to corporations for education? Baby with the bathwater?

Now, I've rambled. Please feel free to beat my arguments like a nerd in the high school locker room.

Tuesday, November 16, 2010

The reading in general this week was good, however I thought that some of the stuff that Rothbard wrote about was a little too, to say it kindly, ridiculous. I understood from the text that he does in fact see education as a good thing, and needed for intellectual growth, however some things he said made me a little sick.
Rothbard says that the government cannot solve the problem of educating its children because every child has a different style of learning and is slower or faster than some other child. He also goes on to talk about how parents are the best resources for their children, and how they can guide them through atleast a primary education. Wow, I cant believe he said that! I know the world was not globalized in the early 1900's- mid 1900's, but boy did this guy not read?!
How can parents who are not literate be a guide to a child, when it comes to developing a child's intellect. Thus would just not work in many countries, especially because man illiterate parents seek out free government education so that their child can go to school , get a job, maybe go to college, and get a job, so that his/her kids then maybe will be able to afford an individualized teacher. I see the point in smaller teacher:class ration, but this is ridiculous!

hmm.....

This is Michael schulte writing through Sitara Chauhan's blog. Perhaps public education has not taught me to memorize my blogger id when I am at a different computer. I attended a private school for most of my life until I moved to Alaska. When it was stated by Rothbard that parents know what is best for children in terms of choosing schools, I have to strongly disagree with the claim. I attended a school founded by a leading member of the Ku Klux Klan and didn't recognize the Martin Luther King Holiday until 2004. In addition, I came to Alaska shocked that the Confederate cause wasn't considered by most of the country to be considered noble and honorable. I know an individual at UAF who also attended private school that gave separate instructions for ladies to train them as housewives. Public schools generally have state or federally mandated guidelines to prevent such idiotic things from occurring. I appreciate the fact that West Valley set these guidelines. I don't think this would have occurred in the former private school system I attended.

Poshabby

The question I will ask is not of state funded schools but of state owned schools.

I will use this post to offer an option which may appeal to some, but mainly I offer it in hopes of some substantive criticism.

Propose a state funded (national or provincial, that is irrelevant at this time) private schooling system. This system could be equated to a voucher system of sorts. The schools would be private, and set their own price levels independent of any legislative influence. Governmental appropriation offices (once again national or provincial) would supply citizens with 'vouchers' that are worth a certain amount at any accredited educational institution. These institutions would be accredited by similarly privately owned state funded institutions; essentially contracting. These institutions would then compete with each other and respond to market demands similar to any business.

Alright, lets apply this line of thought:
Private schools 'Posh Academy' and 'The Shabby Institute', secondary education institutions, are both accredited and are currently functional in the market.
The educational vouchers at this time were set at $4000 by the institute of Made Up Numbers.

Posh Academy offers guaranteed small classes, higher levels of instruction including an unusual core curriculum containing calculus, physics, biology, ethics, economics, business, and political science. All classes are taught by doctorate level instructors, and incorporate the latest technological innovations in their instruction methods. This school is viewed as a highly reputable preparatory school and many of its graduates typically move on to ivy league universities and successful leadership careers.

The Shabby Institute primarily offers large auditorium classes, and technical 'shop' classes, both of which meet the minimal core accreditation standards. The classes are going to be taught by graduate students from the local university and will use basic PowerPoint/note-taking lecture, and 'shop-practice' styles of instruction. This school is viewed as a basic tech school which prepares graduates for semi-skilled labor in the work force. A small percentage of the graduates typically go on to various technical universities.

Posh Academy has set its' prices at a noteworthy $20,000 per semester. (room and board not included) The Shabby Institute has set its' prices at $3000, the remaining $1000 can be used by the student to purchase educational equipment that matches their focus. Once again the standard is: most schools offer services equal to the average standard of education today for the cost of a voucher.

Posh Academy is known to operate with a significant profit margin (evil capitalists amirite?) due to the prestige associated with the school. Whereas The Shabby Institute is constantly trying to cover its' operating costs, resorting to any forms of subsidization it can get. All in order to keep prices low for the impoverished individuals who typically enroll. (poor dears!)

Is there anything wrong with this situation? Posh Academy and The Shabby Institute are tailoring their services to the market. Access to education is ensured but only minimal quality is guaranteed. Individuals who have a greater ability to pay will have access to higher quality, and likely more individualized education. These institutions will be run with the efficiency of modern business with the only state guarantee being that local customers will be able to afford a certain price. Yes this system of education is funded with stolen money, but so is our current one. In theory this is only an adjustment to the current educational system. A large variety of efficient institutions would be created and any individuals who did not wish to go to school would not have too. These unmotivated individuals would no longer be a cost to the system and they could seek wealth elsewhere.

I will ask you dear reader, to argue with me. Prove me wrong, critique my supposition. The only way for me to learn is with your constructive feed back.

Renaissance Man

Nowadays, we praise specialization as the answer to our problems. A man should focus his qualifications in one direction. People should pursue that talent which best suits them. Comparative advantage and such and so forth. I cannot dispuit that persons should become authorities in the subject they toil at most regularly.

It is clear, however, that the idols of our society are not trapped in a single expertise. Theodore Roosevelt was never exclusively a politician. Benjamin Franklin pursued other interests outside his printing shop. Bill Clinton plays saxophone. Closer to home, our SWEET faculty moderator is pursuing a Doctoral degree with her thesis, titled "Thresholds and Natural Resource Decisions: A Case Study on Institutional Resilience and Adaptation Given a Changing Climate".

My own thesis sounds much less impressive but suffices for the same point: "Economic Considerations for Greenhouse Heating in Alaska". This is not a thesis on economics, nor a survey of greenhouse designs, nor a discussion of Alaskan climates. It is a discussion of the interrelation of these factors and their effect on management decisions. It is not possible without understanding all of these factors.

As qualified as I might be to lecture on greenhouse covering materials, I absolutely have other fields of expertise. Ask me about the fate and transport of 2,3,7,8-tetrachloroethylene in soil and groundwater. Ask me about photography, politics, Ethiopian history or economics. Save some time and look at my resume, and you will see that no one qualification dominates.

I submit that the key to success is not exclusively specialization, nor specifically generalization. Those who we admire most are well rounded adults with a wealth of different experiences. They can impress many people from many backgrounds. The hallmark of the Renaissance Man is a strong base from which to expand. To me, this means that the basic and fundamental requirement for formal education is to teach the pupil how to learn.

Rothsbard argues that in adulthood the individual interests may be expanded upon, and I agree with this. He argues that the education should emphasize the particular skills of the child, and with this I disagree. I believe that a standardized curriculum gives children necessary generalization from which to expand, with specalization coming later. I believe giving citizens the base from which they may succeed is a responsibility of the State. Private schools are great, but how would the fundamental educational base be guarenteed for the less prosperous citizens?

You are doing it wrong.

I don't think I agree with Rothbard when he says: "It is obvious, therefore, that the best type of instruction is individual instruction. A course where one teacher instructs one pupil is clearly by far the best type of course. It is only under such conditions that human potentialities can develop to their greatest degree."

It's been my experience that I don't really know something unless I teach it to others. That aspect of the learning process is missing in individual instruction. Smaller groups might be the way to go as far as really getting things stuck in people's heads. Although, earlier in the essay he talks about areas where formal instruction is unnecessary.

"Now it is clear that for a large segment of his general education, he does not need systematic, formal instruction. The space is almost always available for his physical faculties to develop and exercise. For this, no formal instruction is needed. If food and shelter are provided for him, he will grow physically without much instruction. His relationships with others-members of the family and outsiders-will develop spontaneously in the process of living. In all of these matters, a child will spontaneously exercise his faculties on these materials abundant in the world around him."

It's been my experience that many people are unqualified to have children, but they do anyway. (I'd be happy to argue about my opinion concerning parental qualifications on Thursday.) Those people who procreate recklessly and dangerously put children in environments where they don't spontaneously learn to interact socially with others.

I'm going to have to agree with Camilla by skeptically examining the following claim: "Obviously, the worst injustice is the prevention of parental teaching of their own children. Parental instruction conforms to the ideal arrangement. It is, first of all, individualized instruction, the teacher dealing directly with the unique child, and addressing himself to his capabilities and interests. Second,
what people can know the aptitudes and personality of the child better than his own parents? The parents'daily familiarity with, and love for, their children, renders them uniquely qualified to give the child the formal instruction necessary."

My parents love for me was within one standard deviation of the norm, but all the love in the world couldn't help them teach me calculus, or sanskrit. They didn't know those things. That's kind of a left handed argument, because the government never tried to stop my parents from teaching me anything they knew. I'm not sure why Rothbard is so upset here.

Oh wait, I do see where he gets his pants in a twist. "The only logical alternative to parental "ownership" of the child is for the State to seize the infant from
the parents and to rear it completely itself. To any believer in freedom this must seem a monstrous step indeed. In the first place, the rights of the parents are completely violated, their own loving product seized from them to be subjected to the will of strangers. In the second place, the rights of the child are violated,
for he grows up in subjection to the unloving hands of the State, with little regard for his individual personality."

There are undoubtedly instances where idiot breeders teach their children to be racist, willfully ignorant, superstitious, sociopaths, and the world would be a better place if a benevolent dictatorial faceless bureaucrat, or batman, would swoop in, take the children away, punch the parents in the gonads, and try and repair the damage done, but Thomas Jefferson disagrees: "It is better to tolerate the rare instance of a parent refusing to let his child be educated, than to shock the common feelings and ideas by the forcible transportation and education of the infant against the will of the father."

I disagree too, and so that I'm not hypocritical, I'm going to spend the rest of the afternoon looking for parents who are raising their children "wrong", tell them how I feel, and then not confiscate their children from them and educate them properly against their will.

Monday, November 15, 2010

A Relevent Working Paper

The title is "Polycentrism and Gargantua". The authors are the GMU's Pete Boettke, Chris Coyne, and Pete Leeson - the triumvirate of modern Austrian economics. Despite my skepticism of the Austrian school, if any of its representatives are worth taking seriously it is these three. Read it.

The abstract:
How should governments publicly provide goods and services? One option is to do so polycentrically – through multiple, autonomous, local decision-making centers. Alternatively governments may organize public good provision monocentrically – through a singular, centralized, higher-level decision-making center. We call the former arrangement “polycentrism” and the latter one “gargantua.” This paper investigates the costs and benefits of polycentrism and gargantua. We argue that polycentrism is superior. Polycentric provision permits localities to discover and deploy the efficient scale of public good provision, small or large. Gargantua precludes small-scale provision as an option even when it’s efficient. To investigate our argument we consider governments’ consolidation of public education in the United States.

Sunday, November 14, 2010

Private? Public? Are there any Trade-Offs?

I quite like the reading this week. Coming from a family of educators and being raised in an environment where learning was a top priority, this subject is very near and dear to my heart. I quite like Rothbard’s point about pluralism being necessary for a society and the importance of individualism. I can agree with the point that compulsory education is inefficient in nature at most, as public school systems often are hotbeds for poor teachers (who will be around forever because of ten year), worn textbooks, and dilapidated buildings as state run institutions present a lack of competition.

However, though at heart I really do believe that free markets provide the most efficient outcomes. I am reluctant to believe that a private based education would solve all of our education problems. Though schools would all of a sudden become more efficient some unfortunate trends would also spring up.

Rothbard’s assumption that “parents know what is best for their children”: Though many may try to counterbalance my point by stating that even if parents don’t know their children’s education needs the fact is that the state is likely to know less about the child in question. Please hold off though and think about the trade-off that is presented through assigning parents the complete right to dictate their child’s education. Many parents are not RATIONAL. Blinders often lead parents to lack the full knowledge of their children’s true needs. Many parents get caught up in trying to live through their children assuming that their kids will enjoy what they did or would have. This makes it so children who might be talented in say, art are forced only to study math. Creating a position where the child not only misses out in specializing in their talent, but also is locked in a position of stress and anxiety. Rothbard mentions that specialty schools would soon pop up and this I agree would be an outcome of the effect of privatization, but would these school’s really lead to the best outcome for what students need or would they just be marketed commodities to what parents want (which would be fine and all if parents were rational which not all of them are). While it may be daunting to waste all that time in public school studying ALL of the subjects, in a sense isn’t a bit refreshing that we a familiar with all of them so we ourselves finally get (in college) TO CHOOSE our point of specialization and it can be something we want to do and not what our parents wanted us to do.

The F-word: By placing a price to education you have the problem of bright children who are still brought down not by their moronic peers but their moronic parents. This not only is dictated by rationality but by income as well. Parents with lower incomes will find it more difficult to ensure that their children get education. Parents with high incomes will pay more for the best. Education, being a factor of productivity which then directly impacts individual’s wages. We can extrapolate that inequality would be exacerbated. Dare I say….unfair (I know I can’t be real economist now after bringing the F-bomb to the table)

Don’t get me wrong America’s public education system is indeed broken. I know as it was a dreadful realization for me that I learned more in one year of homeschool, which I worked hard on formal instruction for only about three hours a day than in most of my entire grade school. I just want to be clear that a switch would not be absent of trade-offs.

Tuesday, November 9, 2010

At the end of the day...

Sadly, at the end of the day there exists a group of people who are unable to make decisions for themselves. The free market doesn't have in place a mechanism that can force these poor illiterate peasants to do what is best. Thankfully there exists a myriad of government officials who are qualified to make decisions for these people that they don't know. As a result of careful application of force and government power people's lives are made better. Regretfully, globalization undercuts this upward trend in human achievement. There are, however, some things that can be done to limit globalization's power. Tragically, I'm not qualified to decide what they are. There is good news for people like me. I'll tell you what it is as soon as I'm notified.

Fraudulent Window Dressing

The proposed ‘evils’ of child labor.

The concern that much of society seems to have, as well as some of my peers, is that child labor is unethical. Let me postulate: If a family can force (no child labor laws in place) a child to work in a sweatshop for the extra cash they will. In many of the countries in question there are already educational institutions in place, these institutions have alarmingly low attendance, likely due to the presence of child labor. If a child is able to work and bring money for their family; they will work in the place of schooling. Children are working in evil sweatshops and not getting educations. Damn corporations.

This is the view of a simpleton who does not have any understanding of the real world. By making ‘sweatshop’ labor illegal, children will just be forced to look to other avenues. Among these avenues could be school, but due to the impoverished state of the areas the children will likely have to turn to illegal forms of labor such as prostitution, theft, or drug peddling. Not to mention simple ‘less than legal’ businesses that avoid following the law wherever possible. To impose laws that will limit their ability to work will only result in greater detriment.

Market social responsibility

Bhagwati mentioned the possible use of “moral suasion” in today’s market. Consumer identities such as CNN or Oprah can vilify certain corporations for their ‘In-humanitarian acts’ and the sheep of the market will crucify the evil capitalist dogs. I do see a value in this act not inasmuch the negative ‘suasion,’ but in positive publicity. This can be achieved through what some na├»ve individuals would call altruistic socially responsible business. I will cite the example of Merck pharmaceuticals ‘courageous fight against river blindness.’ What happened was Merck accidentally discovered the treatment for an African ailment. In this ailment a parasite enters the human body through the bite of a blackfly. Upon which larvae spread throughout the body. When the worms die they release a toxin, this triggers a host immune system response that causes intense itching and can destroy nearby tissue, such as the eye. Lovely description eh? Well Merck tried to get funding to supply the drug to people who could not afford it. Unable to get outside funding Merck decided to offer the drug to the people for free. I feel that the good publicity they gained from this venture has certainly helped Merck maintain its’ position as one of the top pharmaceutical companies in the world.

This application of marketing, what Milton Friedman would call "Fraudulent window dressing", can apply to not only pharmaceuticals but also child labor, the environment, and other issues of human rights.

I feel that social responsibility and proactive ‘altruism’ (effective advertising) are both excellent practices which can alleviate the ‘evils’ of the global market.

Whats this Gujju got to do with it?

Dont get me wrong I respect Bhagwati, I guess they dont always give Padma bhushan's to any Tom Dick or Harry or rather ( Rajiv, Suryanarayanum or Kapoor!), but something's he said just made me cringe.

Firstly, on a lighter note, I know economics is a soft science but the supposition that Kerry watched BBC, eats Brie and drinks French wine is just ridiculous. Im not saying he doesnt, but Kerry is just the wrong kind of example to use, he did marry the heir to Heinz! Also, am I the only one who thinks its a little funny that an old Indian dude was referencing Tina Turner! Ha! I must give him props for trying to be funny, humor is just one of those things that was mutated out Indian genes.

To make my point clear about old Indian men referencing Tina Turner heres a picture of Bhagwati!-

Then again you may not find this funny. Blame it on my Indian genes!

However, I must disagree with Bhagwati on the child labor issue. He assumes that all parents know how to make right decisions. 42% of my country lives in poverty. Most of this 42% is also illiterate (the literacy rate in India is 68%). Also, there is a huge gender disparity when it comes to the literacy rate in India, only 54% of women are literate! Grameen bank data has shown that money earned by women directly impacts the lives of her children, therefore they only give loans to women. Therefore, I will assume that women in India are more in touch with their children and are more involved in their successes especially in the field of education.
Even if all the illiterate women in India are making more money because of the effects if globalization (Im not asserting globalization is bad, it is benefiting even the poorest, however indirectly), it cannot be assumed that the illiterate woman will understand that if she sends her child to school, after a span of 18 -25 years, their family will be in a better condition. This is why they send their children to work, instant gratification, more food in their stomachs that night versus a night two decades from now. Same reason someone like me might spend $1000 on a credit card on Brian Atwood's (I have not done this yet!).
Also it cannot be assumed that the illiterate women have any concepts of financial literacy, of savings with a bank versus a moneylender, most dont. Many dont understand the benefits of saving money in a bank, they dont see a future where they can save say a $3000 they might need to send their child to college. Therefore, Bhagwati's argument is false, it cannot be assumed that just because a parent is earning more they will send their child to school. It doesnt always happen in reality.

Also, the only reason India's literary rate is growing at an unprecedented 12% per year is because of solid efforts by the government as seen in the states of Kerela and Himachal Pradesh. Adam Smith's invisible hand obviously failed to see these invisible people.
I am a huge proponent of globalization. In theory, nothing would be better than to tear down the borders, open up trade among all people, extinguish prejudice, xenophobia and bias based merely on tradition, and to embrace one another as part of the same human family in a loving global hug. Yet my bets are against that happening in my lifetime, although I will work toward that aim. The reality is, regardless of what our righteous brethren in their lofty ivory towers would like to theorize, there are real differences between what we see in charts, graphs and numbers and the real people they represent. When we stand on the ground and view the world through our own eyes rather than our rose colored glasses, it gets hard to swallow the sewage ridden rhetoric that pure capitalism tries to force feed us with its invisible hand. I was very happy to read that Mr. Bhagwati realizes this and gives appropriate consideration to the fact that market failures do exist and need to be corrected by a visible hand. The only thing that I really don’t agree with in this article was that there seems to be a blurred line between short-run and long-run change. The assertions that these positive outcomes can exist with a free global market, one that can never be adequately controlled by a government, makes grandiose assumptions about both the will of the people and a non-existent (or negative) time preference. It also avoids the simple fact that although the number of available labor hours for hire is not finite, the resources that require labor to become outputs are. As Malthusian as it sounds, if we were able to achieve globalization, then at some point we would have to revert to protectionism to avoid poverty ourselves. That's not to say that we shouldn't push in that direction. We should just realize that there is a reality beyond our ideological views.

Let's talk about child labour

I would strongly agree with the premise that globalization brings about social change, such as poverty alleviation or women's rights. I can even accept the idea that an increase in wages will lead to more parents sending their children to schools. Bhagwati references peasants in Vietnam who were able to send their children to primary schools after rice was liberalized. Fair enough. I am not going to argue for a single minute that globalization leads to increased wages that can bring about such change. What I reject, and this isn't exactly what Bhagwati argues from what I can tell, is that government doesn't have the ability to step into the picture by enacting (and in India's case enforcing) laws that ban child labour completely. If the economy is liberalized, wages will rise for the parents regardless of whether the child is working or not. It is a very short term solution to a problem that most people recognize. After all, "in the long run, we're all dead."

Economic Progress through Randomness?

Mr. Bhagwati says many, many words (perhaps too many…but hey it is a speech right), to make one clear point economic growth through globalization can in fact minimize social injustices and through appropriate governance, timing out policy with economics (at the correct pace), and the promotion of trade liberalization in poorer protectionist countries.

I found myself thrown in a rather tangential manner to think about those who are in favor of anti-globalization. Bhagwati splits these individuals up into two different groups the protectionists and the anti-globalization folks that are in the streets whom you see protesting those who find the maladies of globalization ethical injustices.

What always makes me raise my eyebrows at these groups is the sheer amount of globalization they use to make their points. I think that there should be an effort to organize an anti-globalization rally where the organizers are not allowed to text on their phones, use their computers to send emails, or in any way use any techniques or tools from other countries. I have a feeling that they would not be so successful.

The Protectionists: These guys they make sense right. All they have to say is “DON’T TAKE OUR JOBS” and followers will gather swiftly at the door. They just don’t want to be the losers; it makes perfect sense there’re just acting rationally in their own self-interest.

The others: These are the ones that I have trouble understanding. Stating riots in Seattle and causing a ruckus. None of them know what a live would be like without trade yet they advocate for it. When it comes down to it these guys are have more of an internal conflict with living in a prosperous country an have not experienced real economic hardships of the third world they feel that by protesting trade some who people will all of a sudden not be exploited. Like I said though the motive behind this group seems more unclear, as there are many reasons why people take this side.

About the imagery: Globalization “has a face”. I’m unsure of this…I think that the term globalization is probably one of the most miss used buzz words of the 21th century. I think it’s simple I like Thomas Friedman's definition of globalization as the flattening of our globe in his book, “The World is Flat”. As a visual person I see the benefits of trying to connect the idea with a human face. Perhaps, though like we discussed last week about the invisible hand metaphor that there will always be a group whom will miss interpret the imagery which is intended use is for another point. When I think of globalization I simply think of a tangle networks streaming everywhere wrapping its self around the world. From here one can realize all of the benefits which everyone gains from when we trade openly and the world becomes flat…transaction costs diminish and it become easier to find what we need or provide what we wish to give. Mr. Bhagwati writes 3.5 pages about giving globalization a face however, I am still unsure if he effectively did so through his few examples.

Sorry about the randomness of all of these thoughts…question if this post makes me $15 dollars richer and some person whom likes reading random thoughts $100 dollars richer will this counter balance all of your losses by reading it? IF soooo yah globalization if not…sorry about the rambling of random thoughts guys ;-)

Why Globalization is Anti-Christian

Why Globalization is Anti-Christian


Dr Bhagwati, in this week’s reading, argues that Globalization helps reduce poverty. “Why? We have a two step argument here. Globalization increases income. Income expansion in turn reduces poverty.” There is a continuum between poverty and riches, and it’s possible to slide along the scale between the two. In fact, it’s possible to bounce against poverty, slide up the scale into riches, and bounce back down into poverty again. Whenever you have increased trade and specialization, you are able to become wealthy (or at least less poor) by capitalizing on the gains in wealth that trade provides.


There is a floor on this continuum of wealth and poverty. If you don’t have enough to eat, you live in poverty. If you don’t have clothing or shelter and risk dying of exposure, you live in poverty. It’s pretty hard to deny that. If you have enough to eat and have clothing are you no longer in poverty? That question is a little more difficult to answer. (I’m going to grant the premise that Christianity is ‘true’ for the rest of the blog post.) The creator of the universe tell us in the book of 1 Timothy 6:7-10 (New International Version) “7 For we brought nothing into the world, and we can take nothing out of it. 8 But if we have food and clothing, we will be content with that. 9 Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. 10 For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” Having clothing and food is the pinnacle of Christian material achievement. Anything more than that can be questionable.


It seems that accumulation of wealth, beyond subsistence, presents everlasting dangers to the global community. We live in a world where globalization and trade has allowed millions of Indians and Chinese (among others) to “pierce themselves with many griefs.” To the extent which globalization has allowed these simple people to slide along the continuum from poverty to riches, it has also put their everlasting souls in danger. Consider the implications Matthew 19:23-24 - ”23 Then Jesus said to his disciples, “Truly I tell you, it is hard for someone who is rich to enter the kingdom of heaven. 24 Again I tell you, it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.” One thing I love about most modern liberal Christians is their amazing mental plasticity. There may be a universe where camels can gallop through the eye of a needle, but unfortunately it isn’t the one I inhabit. Accumulation of wealth makes it impossible to enter into the kingdom of God. Globalization’s legacy is one of wealth. (Even if you think globalization hurts the developing world, by your own arguments it still allows those in the developed world to become wealthy, to their everlasting detriment.)


Another legacy of globalization is that it makes slavery economically untenable. Countries that are economically interconnected usually have very low rates of slavery. (I’m leaving aside sexual slavery for now, although a closer reading of the Old Testament shows us that sexual slavery doesn’t make God as angry as it usually makes us. Deuteronomy 22:28-29.) Sadly, slavery is a respected institution as far as Christianity is concerned. It was only abolished in modern times. The New Testament is littered with passages concerning slavery, the duty of slaves to their Christian masters, and the importance of runaway slaves returning to their masters for the glory of Christ. Let me go back to 1 Timothy 6:1-2 “1 All who are under the yoke of slavery should consider their masters worthy of full respect, so that God’s name and our teaching may not be slandered. 2 Those who have believing masters should not show them disrespect just because they are fellow believers. Instead, they should serve them even better because their masters are dear to them as fellow believers and are devoted to the welfare[a] of their slaves.” To the extent that Christians have had a hand in modern times abolishing slavery, we should thank the values of the enlightenment and humanists, as opposed to those explicitly stated by the Creator of the Universe in his best-selling self help book, the bible.


Dr. Bhagwati also lists Women’s Equality as one of the benefits of globalization, specifically in the areas of pay equality, and women’s rights (specifically in Japan). One of the negative externalities of globalization is the idea that women and men are equal. Christianity, as informed by the most high, has a specific gender hierarchy. It goes like this: Jesus > Men > Women. To the extent that globalization undermines this natural order of things it is anti Christian. 1 Corinthians 11:2-3 “2 I praise you for remembering me in everything and for holding to the traditions just as I passed them on to you. 3 But I want you to realize that the head of every man is Christ, and the head of the woman is man,[a] and the head of Christ is God.” It’s possible that women reading this previous passage may be upset at it’s demeaning tone toward them. I must encourage you to be quiet about however in accordance with the following passage, 1 Corinthians 14:34-35, “34 Women should remain silent in the churches. They are not allowed to speak, but must be in submission, as the law says. 35 If they want to inquire about something, they should ask their own husbands at home; for it is disgraceful for a woman to speak in the church.” I’m anticipating your objections to the previous verse. We are not “in church” you might say. Matthew 18:19-20 preempts your feeble objections by pointing out that wherever two or three Christians are gathered together Jesus is with them (Just like he is in Church.) Anyway, unless you are married to me, the scripture encourages you to take your questions to your husbands in the privacy of your own home. I’m going to help you ‘avoid disgrace’ by not responding to your female objections to Jesus’ heavenly arrangement.


I’m already anticipating objections to the fact that Globalization is Anti-Christian. You might be tempted to give me any number of excuses for why ‘real Christians’ don’t believe in the specific interpretations if listed to support my argument. I don’t care: That’s a no true Scotsman fallacy, you can fight about that on Wikipedia. You also might accuse me of cherry picking scripture and deliberately ignoring the pro-globalization quotes that are there to be mined out of the Holy Scriptures. I don’t care: It hard to argue that the creator of the universe couldn’t author a publication that was unambiguous in its tone and intent. If what we got was the best he could do as far as conflicting interpretations is concerned then perhaps Jesus spoke too soon when he said “… with God, all things are possible.” Honestly, I’m ashamed with myself for even trying to preempt the love and pity I’m about to receive from Christians who care about my eternal salvation. If eternal salvation is your concern, perhaps restricting globalization, or at least limiting its effects to “providing sustenance and covering only” should be your secondary motivation after _____________(insert Christian imperative here).

Food Stamp Interactive Map

I imagine some of you will be interested in this link. It shows a map of Food Stamp Usage in the United States, broken down by county.

http://www.nytimes.com/interactive/2009/11/28/us/20091128-foodstamps.html

Kotzebue for the win!

Sunday, November 7, 2010

But Dr. Bhagwati, How?

Expanding trade and the increasing inter connectivity of global markets forces questions about the free exchange of goods and labor. It is inevitable that we should hear arguments from both positions, the merits of which are occasionally excellent and occasionally misinformed. Dr. Bhagwati offers a lens to consider these possibilities.

During this reading, I was reminded of an argument I was exposed to two years ago. Please consider: exposure to toxic compounds over a lifetime is likely to reduce the longevity of a population to an average age of 45. In the developed world, these theoretical exposures would cause the average longevity to drop about 35 years. However, if we learn that the average lifespan in Elbonia is 45 years, it would seem that the best location for global stockpiles of hazardous materials would be Elbonia.

It seems theoretically that this "solution" would work. but a theory without evidence is a molecule without elements. One might be frightened to recall the electronics stripping happening at landfills in third world countries. Discarded Walkmans and outdated word processors lie half buried, the heavy rains and acidic conditions promoting dissolution of cadmium, zinc, mercury, selenium and lead into the local water supplies and oceans. Children scavenge for processors and copper to earn enough for part of a meal, all because someone made money by capitalizing on negative externalities. Sounds like a solution from the Third Reich.

The rebuttal provided by Bhagwati offers that this is not a permanent condition. Consider the island of Formosa. Taiwan was ruled by a strict authoritarian regime after WWII, suffering from environmental degradation, and her people were apparently condemned to deplorable conditions for their short lives. The predictions of Bhagwati seem to be a tiny bit more accurate. Increased wealth helps the Taiwanese climb out of poverty. Their immediate needs met, they realize that their air is the wrong color (not clear). Their push for environmental protection foreshadows a general campaign for worker safety, gender equality, child labor laws, medical care, and voting.

Taiwan is not the only example where globalization has brought societal improvement. My trouble with the globalization movement is that we are permanently damaged while we wait for the turnaround. All that mercury seeping into the ocean means that pregnant women and children shouldn't eat tuna. Those child labor laws are put in place after children are sent to factories. It is a value judgment: do the ends justify the means, or is it fundamentally wrong to allow the condition regardless of the outcome?

Bhagwati offers a detour from the ethical question by suggesting "Globalism works; but we can make it work better". How can we create the desired future without the painful process that every developed nation has passed through? My tuna has problems that won't reverse for decades; evidence suggests Pacific salmon is developing the same fate. The anti-globalization types are asking, how? I am asking, how?

Friday, November 5, 2010

Good Intentions

Things seemed like they got a little heated tonight. When I arrived I tried to use a hand signal and was completely ignored (next time I'll try a bull-horn). Well, not completely ignored. Richard sort of shook his head resignedly and Garet just laughed at me. That's alright with me though because sometimes the hand signals actually interfere with the flow of debate and argument structure. However, I would like to point out something to everyone. Despite the fact that there are strong opinions and some radical differences amongst the SWEET scholars I feel like I can safely say that everyone there is well-intentioned. This is important to keep in mind when debating someone you disagree with as often these sort of debates tend to devolve into ad hominem attacks: "No, YOU suck!"

Michael and Sitara are good people (not so sure about Ed, though. ;-) ). They don't believe in laizze faire capitalism not because they are haters, but because they feel like it causes social injustices. That is well-intentioned.

David is a good person (also, he is not a Nazi). He believes in anarcho-capitalism as he believes that provides the most freedom, liberty and prosperity for people. That is well-intentioned.

It seems that the disagreement is only the method, not the intent. And for the most part everyone in SWEET scholars has been very academic or "professional" in the debating. Continue to do so, because ad hominem attacks don't strengthen your argument and only make it seem like you've run out of logical propositions.

Anyway, I do realize that now that I've played the politician and taken both sides everyone will hate me. ;) That's ok though, because you all suck and engineers make more money than economists and limo drivers. (But not lawyers, DAMN YOU MICHAEL!)

Thursday, November 4, 2010

Thank You Richard

At first I was irritated that Richard called out my blithely quoted statistic of 10,000 people killed per day by governments in the 20th century. But he's right. They say 87.3124% of statistics are made up on the spot. And that's only the real ones. Made up imaginary [sic] statistics tend to be higher. Something on the order of j98.99% [also sic].

If I'm going to throw numbers around I should have a credible source I can immediately cite. I didn't just make up that number but I didn't research it as thoroughly as I should have. So here is the research behind it now:

Originally I found the 10,000 per day number from a Christian anarcho-capitalist website (yes, they exist, imagine my surprise!). Originally I didn't look into the source they cite, but in independent searching I ended up discovering the same source they used. Professor R.J. Rummel (http://en.wikipedia.org/wiki/R._J._Rummel) has spent 15 years assembly data on what he calls "democide"--murder by the State. He came up with 262,000,000--262 million deaths caused by governments, with this number excluding combat deaths (which I think should be included as essentially all large scale wars are conducted by States). Here's a link to his website:


The math:

262,000,000/100 = 2,620,000 per year

2,620,000/365 = 7,178 per day. So my 10,000 number was off by a significant amount because I think my original source included combat deaths and executions .

So now I'll restate my statistic: Governments killed over 7,000 people every day during the 20th century. This does not include combat deaths or executions. There were about 19 million (low estimate) combat deaths in World War II ALONE, which adds about 500 per day. Then if you include WWI, the American Civil War, etc. etc. it could easily get up toward 10,000. But regardless, 262 million people or 7000 a day is a horrendous number.

World War II statistics:



(Note that Rummel is referenced in the second website.)

Thank you Richard for the peer review and keeping me accountable.

Sam



Tuesday, November 2, 2010

I don't buy it

As I have said on numerous occasions, I am not an economist, but I do understand social circumstances, and this idea of the invisible hand is completely flawed. One quote should be mentioned by the great proponent of the invisible hand, Adam Smith, who argues in the "Wealth of Nations" that "it is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." This suggests that some laissez faire system will prevent any problems with dinner served by the baker or the butcher. This reminds me of when I was abroad and I knew there was very little, sometimes no, regulation in terms of cuisine that was being sold either in the restaurants or on the streets. These people knew I was a foreigner and that I probably would never see them again. They were trying to make as much as possible by selling me refilled soda bottles with God knows what kind of water in addition to assuring me that everything they were doing was sanitary. I went in to the situation knowing that none of this was true. Nevertheless, this is why we have health inspectors and the FDA in the United States. We have them because we know people who handle our food will always have their best interest in mind, which can often mean that we will pay the price if that best interest means unsafe food. In these cases, I think it is safe to say that the free market is not the solution to the problem. The free market is the problem.

Invisible Hand aka god?

After reading over the article for this week I feel like the Invisible Hand sounds like a made up, oversimplified model for trying to understand a deeper more complex issues. The more I think about it the more the Invisible Hand sounds like religion to me. Instead of maybe trying to observe and make scientific conclusions, early humans thought it would be easier to believe in a supernatural power. Im not calling the Invisible Hand supernatural, but I do think it is an overly simplified model for economics. It almost seems like an explanation to soothe economists or people into thinking that, oh well this invisible force is guiding us, all we need to do is have flat tyres, listen to our stupid whiny kids, max out our credit cards, and somehow all the dumb decisons we make will aggregate out ok, becuase some people make good decisions and other makes bad ones.
The article also brought up banks and how money lending worked before the crazy banks came in and ruined our lives. However, I know for a fact that moneylenders in many rural areas in India charge 50% interest, and sometimes even harm borrowers if all the money is not paid back in time. State and federal banks are the only way villagers get fair loans because multinational banks just do not have any incentive to into the villagers to work. Are we still to beliieve that somehow the invisible hand we idolize will solve these problems, just with no management from the outside. The bigger question I have, that maybe someone could help me with is, do we believe that as an aggregate the decisions we make will all lead us towards a more stable economic state without any monitoring?

Flat tyres…Yes too! They do fit into the invisible hand explanation.

I found this work a bit long and drawn out, but perhaps this is just me as it is definitely a thought piece and sometimes it is difficult for me to follow some of the philosophical pieces we read. I do follow though, that the invisible hand is a social phenomenon not a natural one. This “hidden hand” is responsible for the creation of the banking system, loveable but useless Ferbies, and the contracted agents who help keep all the riff-raft out of poo alley.

However, I don’t understand how according to the author, that actions that are negative by products don’t fit in to the invisible hand explanation.

“we would certainly want to legislate that not every unintended consequence of human action qualify as an invisible-hand explanandum. Just think of the numerous occasions on which our children come to us in tears begging to be excused for the latest calamity they have wrought on the ground that they "didn't mean to". Quite obviously, the accidental by-products of many of our actions, even of several individuals' actions taken together, hardly constitute a promising recruiting ground for invisible-hand explanations.”

I don’t get this logic. So, all of the crazy awesome impacts that we receive from the market are from the invisible hand guiding actors to engage in the market place (this is not considered human action…I think he meant that…unsure though) are all thanks to the invisible hand, but any unintended actions like a boy breaking open milk jugs; does not fit into the invisible hand explanation. I understand what the author meant when he explained that it is too easy to say that the flat tyers (is this how British people say it?) are due to the profit seeking gas station when they in fact, they are not, and this misjudgment opens the door for conspiracy theory aimed at the invisible hand.

I would like to make this clear though, regardless of what the author states the flat tyers do fit in to the invisible hand explanation. I believe that they too are the outcome of the invisible hand. If it were not for the company who hired the boy to deliver the milk and the glass company who produced the bottles there would be not shards of glass on the road (if not for the invisible hand there would probably be no tyers/tires to be flattened either, but play along here I making a point). I think it is reckless and flat (no pun intended) to think that just because something is accidental (and oh yeah bad!) it is not a part of the invisible hand theory. It is important to realize that markets have externalities that arise when costs not are distributed properly. Even though these flat tyers are not the direct impact of some person trying to profit off of fixing them this is not say that they were not the outcome of some person or group trying to profit out of something. If one argues that indirect benefits are the result of the free market hidden hand friend it is illogical that they should exclude indirect costs from their definition.

Occam's Hand?

I sincerely appreciate the progression of readings this semester. This literature seems to expand on concepts we have considered in the last couple of weeks, but the novelty of Ullman-Margalit's analysis gives plenty to discuss. What is the invisible hand (and what is not), how would one determine the genesis of such a phenomenon, and how can we explain the rational of the invisible hand theories to our potential senators?

I like theories. I enjoy learning about concepts that have taken centuries to develop in order to consider them for a few minutes. I appreciate the patterns and connections. My involvement in SWEET is precisely out of interest in economic theories, so one may imagine my interest in a theory on developing theories! Ullman-Margalit begins with a description of his invisible hand, with some examples to clarify what he considers as the defining characteristics of the theory.

One could postulate a series of self-interested acts without central design, compounded across a society and generally meeting the conditions required of an invisible hand theory. If our assumptions hold true we would have a valid theory to explain the particular subject of interest. This is the Invisible Hand. The pursuit of interests by a group, with no premeditated central plan, resulting in an approximate pattern that might be mistaken for a central plan.

Camilla is observant to catch the author's rejection of accidents as relevant to the theory. I see the point that enough accidents and negative actions will impact the market, but I interpreted Ullmann-Margalit as describing a system driven by the self-interested pursuits of individuals. I see that flat tires happen frequently enough to create a market demand, but it doesn't self-perpetuate in the same way as individual motivation does. I wouldn't presume to have an answer, but the question is noteworthy.

Of course, bad assumptions beget flawed theories. One bad assumption is too many assumptions. We should be careful to acknowledge our limitations. Occam's Razor could not amputate the Invisible Hand as a theory of developing theories, but it is valuable to look for the least complex adequate explanation. If we were so motivated we could correlate any two economic activities, but we would probably be correct in most cases to say the complexity of a large enough system overwhelm most such connections. It would seem that the Invisible Hand theory with a healthy respect for uncertainty would be most helpful for developing theories.


As an aside, I found that much of Ullman-Margalit's ideas remain valid if "intelligent design" is replaced with "interior design".

Invisible HADD Explanations

The human brain is hard-wired to look for agency and intentional design where there is none. It's an evolutionary remnant of our hyper-active agency detection device (HADD). It's helps explain why conspiracy theories are so popular, why we see zombies on our fish-sticks, and why we tend to assume that if something looks designed, that it just must have had a designer.

Of course by now we should know that our HADD is just playing tricks on us, finding purpose where there is none, giving way to what Ullmann-Margalit calls our "artificer bias". We should recognize that just because something looks like it was purposefully constructed doesn't necessarily mean that it was. But it's not easy to ignore hundreds of thousands of years of evolutionary instinct, and people still routinely make the same mistakes.

Ullmann-Margalit defines the natural realm as consisting of everything that is the result of neither human action, nor design. But that hasn't stopped people from letting their HADD-induced artificer bias get the best of them, looking at nature for evidence of action and design from their imaginary friends in the sky. (Richard Dawkins coined the term "designoid" to describe natural phenomena that look "intelligently" designed, but in reality are not.)

Things get a little more complicated when we introduce the artificial, or "social" realm though. Now we're dealing with phenomena that are the result of both human action and human design. What happens when the two realms overlap? Adam Smith's Invisible Hand, the decentralized coordination of the market process that results from the pursuit of our individual self-interest, is the result of our collective actions, but not our collective design or intention. Thus in a way Invisible Hand Explanations represent the intersection between natural and social phenomena.

Economists devote the bulk of their efforts to the study of these issues. This might help explain why even though they typically describe themselves as "social" scientists, economists (probably more-so than other "social" scientists) tend to fancy themselves practitioners of the "harder" sciences.

The article doesn't really deal with this, but I wonder what types of phenomena we could consider the result of human design, but not human action? Can such a thing exist? If so what would we term it?