Price of gas and Dr. Dow perform perfect 10 Swan Dives...

...and now we know, price of gas is more a function of demand then it is of disparity.  Demand takes a dive as so do the prices.  I made a bet with a financial advisor less then a year ago that the price-per-Barrel would surely drop below $100 before the end of my life.  He was convinced that cheep gas was a thing of the past.  

Can someone please explain the implications of this recent fall in gas prices?!  but no one will...

The relevant question to ask, from a humble analytical perspective, is: what is the level of urgency we face?  It seems that gasoline is rather elastic.  What does this mean?

It's like Halloween

how's about some scare tactics with your bailout?

http://news.yahoo.com/s/ap/20081203/ap_on_bi_ge/meltdown_autos

This article is such a load of phony science I needed to go to thesaurus.reherence.com to capture the perfect word for this. Plunder just doesn't have the emphasis it used to have.

This is pure claptrap!

the "visable" hand of government subsidies.

My mom (and yea most of my posts are in responce to family members... seems like they are the only ones challenging me now a days) was most concerned with how we could get out of this bail-out crisis in the most humane way.

I responded with this letter...

oh... here I go...

Frankly. I think it's humane to let them die. But you already know that about me. People forget the secondary unseen effects. Milton Friedman called them the smoke stack on every regulation spreading a ring on effects from every policy. Bastiat rants about them as "the seen" and "the unseen" Anything that changes the natural course of human behavior (a policy) can never be alone in its effects after all if you stop someone or something from happening in it's course then it does something else and that makes something else in everyone/thing they encounter... the economy is fluid, nothing is isolated. The primary influence of anything is never alone. In fact if I were to define economics, and the system of, I would say that it is entirely a system of reactions and the study of how people/organizations react. The important lessons, similar to contemporary studies in physics, are that nothing can be distilled to a single source or a single cause or a single reason or a single result and value is never a zero sum game. Anything that would work to negate the previous sentence should be considered a gross underestimate of the world's complexity.

What about the people who won't get a chance in the economy because the fat American car companies won't move over? I'm sorry, bad decisions mean bad outcomes. This should never change except maybe for my own baby. One of my favorite analogies is that of an economist I recently heard speak. He said, we don't have ice delivered to our door do we? That industry failed and there was no question of bailing out all the people who knew no other in their life but to deliver ice to ones doorstep. Now we have refrigerators and the world is better because of it. If we bailed out the ice deliverer where would we be now? Maybe if it's your grandpa it's a different story, or maybe if it's the last endangered species, but if it's a company we can very rationally show consistently that there will be significantly more cost to society when old industries are saved by the "visible" hand of government subsidies. Do you seriously want to send a message to the American auto industry worker that it is ok to go on working in the auto industry? No. Dude. That industry is past its prime. I don't care if you don't want to, it's time to adapt. Would you please go get a job with that other company that really wants to make us a refrigerator right now?

Unions in the auto industry.

sent my little bro this article... http://online.wsj.com/article/SB122809320261867867.html

and he responded by asking me what I thought about Unions.

I wrote him back this novel...

In short you’re right, there was a bigger evil at hand before they came about but Unions aren't a perfect solution. Fact they carry some implications that can be quite scary. So again in short they had a very important use but I think they have no place in today’s economy where media provides buyers with very fast information. Information that hurts companies when they treat their employees bad. If I'm a crappy company and I screw my employees people stop buying, I get hurt, and if I don't change my ways I go out of business. Furthermore in the time period when unions came about people did not have much freedom to move around if they did not like the job (horizontally or vertically). They were forced to deal with what they had. Consequentially it the dilemma began to arise in much the same way as democracy started to form in countries that had monarchies. (If you like this idea check out "Ronald Coase" theory of the firm, this was a question that stumped economists for a long time, essentially firms are islands of totalitarianism within a free society, why does this exist if freedom is better than totalitarianism? Coase has a pretty good explanation) Anyway workers rose up and demanded rights (democracy within a company) and the business leaders gave them a seat at the table. Now this sounds great, and it did work in the short run, the workers went back to work and the companies carried on producing profit.

Over time though a problem arises, and for this I'll use the case of the auto industry. The union, with its seat at the decision making table, has alternative incentives then the other people at the business leaders at the table. The business leaders want to create profit, while the union wants benefits for its employees. On a marginal decision making basis this creates situations where compromises are reached and unions can leverage their power as a cohesive whole over the influence of the business owner him/herself. Ultimately forcing the business into inefficient contracts that it would not normally opt into. For example, retirement benefits for all line employees. High wages for line employees. medical for factory worker. Again this sounds good, but the cost is that the money going toward employee benefits is not going into developing a better product. The problem ultimately turns into a disease where the company is locked into contracts it can't keep with its employees and at the same time its product cannot compete with other companies that did not make those decisions for its employees. Again in short the unions forced the company to give the employees more then the company could sustain. In the long run the employees ate their cake before they were supposed to get it and there's no more cake now. I say "supposed" here because I assume that in a free market economy a company makes decisions to stay alive. Therefore allocating resources in such a way where employees voluntarily opt into a job (the alternative being slavery) and people voluntarily opt into buying your product. The numbers come in and you should also make a profit. Most good companies reinvest profit. You pay what people are worth and you put the rest back into staying on top.

The people I work with have a philosophy to capture this. They pay me for the value I create. That is the difference between efficient and effective. I can take a shit very well and efficiently but that action has very little effectiveness to them. The business of business is business. Look at Honda. No unions. And as the article said they can produce a better product for less and right now they are opening new plants hiring more people. I don't disagree with democracy. But I would be skeptical to place it in a firm. I mean it probably wouldn't be effective for dad, every time he makes any business decision to have his workers vote on it. He would be out of business in a second. (No race reference, just practical there's no time to round the troops and decide) here at the office when we have a project we delegate tasks in the group. One person is the leader and we are accountable to that person. The other does the data, the other the research, and the other gives the presentation. We found that if everyone tries to be the leader we're up shit creek it a butt load of egos. By giving that up we make a better product.

Again I agree Unions have a purpose. I would question what the purpose of a union is today. And I don't have a clear answer for that.

I do know that unions can push around elections too. I don't really like this idea. Politicians should focus on the topics that they determine help the most citizens possible. Not the topics that help a specific company or a specific group of people over another. That’s unfair. Special interest groups are sketchy business in Washington. I don't like it one bit. Be it a union or an oil company. The business of politicians is everybody equally, not one group over another.

To touch on one last thing. Unions aren't my forte. If you can dig something up to counter what I laid down. Let me know. I'm not completely convinced about anything on this subject. This above is what I could piece together based on the news and theory I read. Not on theory regarding the specific issue. As I said before. I think you and I are very academically alike. We reason before we feel. a lot of people are the other way around.

Peace dude,

Lincoln McLain

And I totally forgot to even mention one of the most basic arguments. It’s hard to hire and fire based on skill. People get locked in to jobs and performance stagnates.

...is this a false assumption?

I had a moment of interest in creating this study: a potential regression of sorts. It would look at what might be some exogenous factors that determine whether "the youth" vote more conservative or liberal through history. I really like this idea of looking historically to show trends. Though that line of logic always has held some merit to me, reading Joseph Schumpeter’s “Creative Response in Economic History” sparked my imagination again. I do agree though, that the constant battle that exists between a “the world never repeats itself” and “historical trends can predict future outcomes” is important to recognize, it is undeniable humans can be predicted to act with specific motives and this can be shown historically and is logical today as well.
At first I thought generally the youth are more liberal. This makes sense, right? Those crazy kids always F-up what we worked hard to achieve. But then I thought about it a while. Do we F it up? And Why is the youth more liberal, and I realized that this might be a false assumption. There have been obvious major shifts when liberalism may have become more popular among the youth but this phenomena may be due to other facts like war or lifestyle limitations. This makes perfect sense. If a policy restricts freedoms of a specific demographic that demographic is bound to resist. One would think that if the republicans were the party that opposed war, all other factors constant, then we might see more youth opting to be conservative and being more sympathetic towards some other conservative ideas they might have otherwise opposed based solely on party affiliation. Anyway, I came across this website that has demographic data on youth in America. Maybe we’re wrong. Maybe those ideas of tradition do flow more constantly then we think. I would predict that “the youth,” in America, being more liberal as a demographic is a direct result of infractions on their liberty. The Vietnam War, Prohibition, and all the other crap the government does against young’ins. This is what makes youth liberal. I predict a lower rate of leftism among the youth during times of media stagnation and less degradation of the youth’s freedom. http://www.civicyouth.org/

Sorry I just dorked in your face reader... I'll get you a napkin.

america used to be cool...

http://www.youtube.com/watch?v=M-Bcq658Ba4

The Government doesn't know how to Stimulus my Package.

Love it!
I thought of that title on my way to the bathroom at work. As I passed a co-worker I said "the government doesn't know how to stimulus me..." and she added to icing to the cake to make it title-tastic.

One of my bosses told this story to us to explain inflation and it totally relates to the aforementioned magna-title.

Imagine I have a room full of people and it is an isolated functioning society. They all go to sleep and I slipped one dollar in coins into their pocket before they wake. When this small society wakes up they all have a dollar and they all begin living their individual daily lives. Soon people self-select into specialties and because they have currency in the form of a dollar they trade amongst themselves to acquire other necessary components that they do not individually have the time to provide for themselves. This is roughly where we are now except we evolved to be here and we didn't all just wake up one day with a buck in our pocket. Not to mention we're not all locked in a room and a creepy man doesn't sneak around slipping money into our pockets... at least not all of us. Work with me here people... the analogy is good, just trust a little.

So what say you if everybody goes to sleep after the first day. People have accuired un equal incomes through out the day. This is a perfect manifestation of the fact that some commodities of life are worth more than others and people are willing to pay a little bit more out of their dollar for those specific goods. That is to say... if I were locked in a room all day I might pay a little bit more for a bite to eat then a basketball. It's just subjective value.

So everyone is asleep again and I walk around and slip ten dollars into everybody’s pocket as they sleep... Naturally when the society wakes they will rejoice with their new found riches. Yesterday the individual only had a dollar, now they have ten and what a day to be rich!!

That's not where the fairy tail ends though... you see when they go to their little market place and trade their dollar for what ever it is they demanded they soon realize that everyone has 10 more dollars and... suddenly what was one yesterday is suddenly the same as ten today.


In a large market economy this process is called inflation. It doesn't happen immediately because inflation never gets realized by the dollar value in the primary transactions of infused money. It is a response by the market, that is dealers in the market, to a deflated monetary value. So yes, in the short term a stimulus package will get people to buy and energies the market but it's a lie because everybody has more money proportionally. So I'm not stimulated sorry government... not tonight. I'm going to bed.

Diversity of narrow-mindedness...

It's been bugging me lately...

I have been spending my last few hours at a free market conference that was slightly more conservative than libertarian. (Though I make a clear distinction, as does my hero Hayek, many people do not) One of the presentations got me thinking...

The way The Endangered Species Act of 1973 has been enacted breaks the same fundamental pillars as does the abuse of Eminent Domain.

I have a moral dilemma. I value endangered species. There is a real long term cost to letting species go extinct across the world; but on the other hand, I value private property and the right people have to do what they want with their property. Prosperity stems from the voluntary exchange of property, which creating value for those involved and disperses out into society through secondary and tertiary. Get in the way of that process and you're bound to piss people off.

Maybe there is already... but there should be some serious environmental economic analysis based on a cost benefit model--which includes long term analysis--that sheds some light into the actual benefit, subjectively and monetarily, there is from saving a single species.

It gets me frustrated when conservatives have a tendency to discount the value of species diversity when in reality they have a problem with the policy approach taken in the 1973 Act. Harp on command and control don't take it out on the warm fuzziest. It's ok to not want species to go extinct. It's back tracking when people who have legitimate arguments against regulatory and legislative abuses take low blows against Endangered Species themselves. The Polar bear may actually be in danger (it may not but that's a different story). That should worry all of us. Policy is where the battle is, not with closed minded low blow tag lines that just make people frustrated.

Bringing it home: The use of the 1973 Endangered Species Act is a perfect example of a Bootleggers and Baptists theory of policy. A moral argument drives the masses while side standing business stand to gain from regulations by burdening their competition. This is dirty business. This happens everyday, and the playing field is in policy. The real issue still stands. Species are going extinct. I care about this and you should too. The correct approach is getting away from out-of-date 1970's command and control policy that allows for companies to manipulate the system to their own benefit, therefore leveling the playing field for competition while replacing older policy with smarter up-to-date policy that actually works to help endangered animals while not incentivizing plunder.

Clowns. People who walk the party line and stab out across it with cheap shots that just piss people off are clowns. Republicans are rational, Democrats are rational, all politicians want to help the world, and think that they actually are. What a diversity of narrow mindedness we have.

Washington holds onto it's large Fannie. (great title for a post: can the post live up to the title? this an more to be seen below)

This Sunday morning I did what every good American does on their day of Sabbath... I watched a considerable amount of football while eating snacks and complaining about the world's problems...  mmmm the American dream tastes so sweet!  The aforementioned title came to me in a not-so-out-of-the-ordinary moment of self-criticism. 

My friend just pointed out to me the dichotomy that exists between Washington DC and New York.  It seems every time New York looses jobs, Washington DC gains them.   And--in theory because in reality this has never happened--on the other end of the spectrum every time Washington DC looses jobs New York gains them.  I think many people today might say that they would rather see more jobs in DC than New York: thus is illustrative of the ever growing skepticism of free markets.  However, I adamantly believe that wealth is generated in society when markets are allowed the freedom to evolve and self correct.  

If anyone can help me.  I have heard many people's account for why market skepticism exists today with such sway.   Why do people not believe in the self correction in a market?  My libertarian friends each proclaim a story for why this is so. Each of them offering differing perspectives for this market skepticism, each however is not based in rational or unbiased analysis.  I'm not discounting their advise or to say that there even exists an accurate assessment of this dilemma, but at the same time it sucks being alone and it sucks wanting to advise every young schmuck who brings ill-advised and generally not well thought through perspectives.  That's not me to boast perfect knowledge I don't know the answers but I do know that many people have not thought these issues through...

oh... loneliness... 

Freddie and Fannie (because its the trendy thing to write about)

I wanted to draw up an analogy between panda bears functioning in the wild who become impotent in captivity and Fannie and Freddie’s stratified existence stretched between natural-free-market signals as a proposed completely government owned status, which I feel is much like wild animals in a zoo. In all reality the more I think about the analogy the more it makes sense: except for the pressure Fannie and Freddie had to decrease interest rates to make housing "more affordable." What does make sense is that a zoo is a place that usually has really wild animals trapped and controlled in small cages where they are given controlled resources and their cages are painted to look like nature. I think that fits perfectly into a representation of how the government treated Fannie and Freddie. They controlled them and did not let natural processes take their toll/role. The most ironic part, which I personally love, is that panda bears have forgotten how to reproduce. This is a perfect representation of how when any entity is pulled away from a grind stone be it natural selection or creative destruction in the market place and brought under the protective wing of a subsidizing branch, like the government or a zoo that entity looses it's natural ability to compete. A firm cannot use price signals or profit measurements to gauge its effectiveness. God knows a panda bear is not even attempting to measure it's effectiveness at staying competitive when it gets into a zoo. I think more likely a panda bear is sitting on its haunches and getting fat. Fact this is probably why people work out. We can rationally process the fact that we are away form the grindstone of natural selection and therefore, on some level, strive to self-enact some force of evolution or betterment. Fortunately for humanely, most of us haven't realized that the only force that can effectively evolve a society is death; those who do try to enact that force again generally get put in prison. On the other hand we have many people who have learned this mechanism works the same way in markets and that it is good for markets to evolve. I only pray they let it happen, less we all end up like impotent pandas in a zoo.

EPA... Today

I used to really like the idea of the EPA, though I always realized that they did have rather large structural flaws. The entire concept is flawed to begin with. Crude regulation can never capture the complexity of nature and evolution. We try to regulate it, but we end up looking a lot like command and control on a skipping record. Recently at a Mercatus Center conference command and control policies were referred to as a 1970's car: you don't drive a 1970's car in 2008. It's not efficient or effective. Environmental regulation needs to fit the paradigm of the new technology it represents. This does not mean troubleshooting technology with regulation. By no means should regulation ever be ahead of technology on the margin of creation. I don't pretend to know the solution; I just want to point to some relevant flaws in the EPA.

Flaw number one:
1) They have historically been the puppet of the executive branch of the government to expedite the creation of trendy-no-good-boondoggle regulations that are structured to promote a single technology over another. Example Clear Skies which if you read into you will soon figure out is nothing more than the Bush administration's attempt at making Coal look good. Garbage. Not to mention they screwed up mercury legislation. Mercury disperses locally (that's called point source pollution) not globally. Clear skies attempted to regulate a local pollution on a national scale.

2) The EPA fails to understand that "government funded research" does not compare with the productivity and creativity that is present in a competitive free market. the incentives just aren't there. This is not a hard concept everyone knows this to be true. If there is no system for checks and balances, measurement, accountability, and creative destruction than things don't get done well: if at all. I don't want to say stop funding all research. That would be overstepping lowly status as a know-it-all associate. Rather, I would like to ask the question, "Why do we fund research?" and when ever anyone answers that question with anything but "we shouldn't be funding research" counter them with another "why," then another "why," and maybe another "why." Depending on how stubborn the person is and or how creative they are the point, in theory, may become evident some time next week. EPA, please help entrepreneurs but don't give them money. It's like a fat kid in a candy shop; do as all the good children’s books say, stop feeding them candy! I want people to think of Olympic athletes when they think of American creativity, not couch potatoes playing wii.

3) The final flaw I wish to draw attention to is the newest and freshest new kid on the block. It is talked about here. I purposefully did not read the entire article so as to avoid getting sick to my stomach or ripe and angry. The EPA is creating a legislation that would expand the influence of the Clean Air Act into other sectors in the economy, including small businesses, and homes. The rational is questionable and I would seriously like to hear an argument for this regulation outside of one that ends in "the sky is falling." Benefit of the doubt is always higher ground. If this is true, and it is not suppressing, than you can expect me to roll up my sleeves for the next couple of months and lay some verbal elbow-drop on these irrational eco-dorks.

Civic Duty

Recently, my family found out about a little moral dilemma I have been struggeling with (weather or not to vote) and I nearly got taken off the Christmas party list. Public choice economics has been making off the charts-heartbreaking-yet... rational argumets for a while now about the actual effects of an individual voter. This is not to say that my perspective is anything based in actual presidance but rather that there are some convincing arguments for not voting or more importantly not caring about voting.
Anyway my aunt sent me a rather agressive message about how it is my civic duty to vote and it got me thinking. What is Civic Duty? and if there is Civic Duty and it is important, why is it legal to not vote? The whole idea seems like it lacks scientific method, like it is the rhetoric of a campaign ... huh... Many people come down with vigar on the side of (what could be considered) voting fashism, while others, based upon the fact that supposeively many american don't vote, don't give a flying fudgesickle about politics. I wish I could find more of those Americans, every punk I have a conversation about this with wants to shove voting down my throat like a beer bong.

I wrote the following messge back to my aunt in responce to her message.

Dear Aunt,

You tone in the message makes me feel like you might be academically interested in my side of the conversation.

(this was sarcasm, her message came off strong winded, like a rock-the-vote)

Aunty, I have been trying to detach myself from party loyalty for the last couple of months. It has recently come to my attention that my party affiliation has been making me professionally and emotionally bias. I'm branded. It's like watching the 49ers play and I am supposed to be a honest critique on both. (I love the 49ers damn you ESPN East coast bias!) Normally I would be ok with being branded, but it's just not honest and that irks me. At this point in my life it is important for me to be honest and critical as I analyze the details of policy implications or at least what people think the implications are. The premise of this approach is that politics and intellectual debate has largely been running in circles over the past 5 to 6 decades. Both sides swear they are correct. and in all reality the actual issues have tended to shift sides as it becomes advantageous for a party to gain the vote. Republicans used to be the party of lincoln. Democrats used to be the party of the south. This has led me to believe that parties are phony, people are different than parties, and 98% of it is a big show to get voters. I want to understand the source of prosperity/wealth/health/happiness/candy in our society and what economic parameters actually make people better off. Some questions to ask that lead to this line of thinking are "how did the west get rich?" "How does knowledge work in our society?" "why do some people respond to emotion while others respond to reason or tradition?" "what type of world do I want my children to live in?"

Frankly I have been struggling the most with these questions, and more specifically where I come down on these two questions:
do you support policies with a short-term benefit and a long term cost.
or policies with a long term benefit and a short term cost.

Without question, I would answer the second best describes me. but when it gets down to the nitty gritty and gets applied to policy, it is a really tough question to answer.

The analogy I have been using lately is: do I give a bum money on the side of the road? why or why not?
I don't know the answer to that question.

Thank you for your concern about me voting. And you have to know that any information about grandpa warms my heart. Please trust that I am trying to be as honest to myself in my decision to vote or not. 

Cheers,

Lincoln McLain

Social Entrepreneur: more like a Robin than a Batman

All the hippies/leftists/socies/dems/donkeys/obamas are all up about this "social entrepreneur" upholstery.   Which didn't really hit me as anything strikingly different from your normal entrepreneur in a venture except the former is slightly more in touch with their feminine side.  Today someone mentioned in passing that the social entrepreneur is actually taking up the role of government in the private sector by providing a social service.  This idea is great!  I'm all about the social entrepreneur now!  Momma Gov.  is finally sharing some of her pork.  Thought she never would.   

Trust in society.

America we have trust issues!

...or so they tell me.

I was in this really quaint book store the other day looking for some good reads and I happened upon a conversation with one of the locals. She was a sweet well-read girl who had a surprisingly impressive intuition for economics. Need I say anymore, she was attractive! She said something that struck a chord for me. We were discussing the pros and cons of cap and trade and she said, in reference to the need for policy creation, that she didn't trust society to determine the outcome of an issue as important as those posed by global warming. She didn't trust society! (hold the phone!) Honey, humans are durable beasts! We flipping survived an ice age without metal! The one thing we can rely on, the one constant, when addressing something so vague as human nature, is that when an environment throws up constraints, we survive. Society/humans/not government is the only thing I trust to actually yield a solution to global warming. Policy is not an ends. Policy is a means, and not very good one at that. (here I go now repeating myself) The solution needs to come from entrepreneurs and buying power. These things move society. Policy is as much an ends to a problem as the levees were for New Orleans.

To Crap and trade or not to crap and trade (thus is the question of every 4th grader and politition)

Cap and trade is the only model for environmental regulation that promotes solving the knowledge problem at the same time.  It allows for companies purchasing the quotas for emissions to bargain and determine the price of their deemed proper emission standard.  

this all roughly according to Lynne Kiesling (she is awesome) and her studies promoting cap and trade as the best alternative in an attempt to make Air into a property.  

This is all true but an argument that has not been addressed by academics in the grand battle existing between carbon tax vs. cap and trade is that the act if seeking tradable quotas is a zero sum game.  All revenues delegated to seeking and purchasing quotas are locked out of any competitive industry and hurtled into the public sector.  Specifically what they intend to do with those collected revenues is another can of worms.  More importantly is the fact that those revenues are not set to creating the most real value within a competitive enterprise.  Some may say that they could be delegated by the federal government to fund research projects in energy efficient technology.  To which I would respond--in accordance with previous posts--that is a load of crock!  Innovation comes out of competition and the private sector can innovate two dollars on every dollar created by the public sector any day.  

 

Bigger question being do we need a policy and I think we do...   Air is a commons, commons need to be owned before they are respected.  Granted there is no easy way to do that.  Lynne Kiesling mentioned in a debate published in Reason Magazine that if we could put a bubble above everyones head and call it owned air this would be easy... but we can't.  

I'm interested to see where this debate goes.  

Here's a list of fun some fun plays-on-words relating to the topic:

-Cap and burn

-More like "Carbon 'Jack" us out of our money. 

-Crap and trade

got any ideas, let me know.

Spontaneous order vs. natural selection (same thing?)

The principles of "spontaneous order," "extended order," "invisible hand"... etc. (as explained by Hayek Adam Smith and many other economists)  are the same as those that govern a natural ecosystem--natural selection.  Those shinning principles that most economists point to be the most efficient means of allocation of resources... the free market, the price system.  If not disturbing the natural flow within a market place: allowing for resources to distribute themselves based on pure supply and demand and limited government that protects life liberty and property, is the most ethical means of approaching the knowledge problem, than is it essentially unethical to take a similar regulatory behavior towards the environment?  Uni-cropping, preventing the flow of species onto a property or landscaping.  How far does the ethic of supporting spontaneous orders extend?  Self benefit plays in. That is to say when it stops benefiting me, than I place restrictions on my yard and regulate my env.  

This is an interesting intersection between The Land Ethic by Aldo Leopold (an extreme environmental philosopher from Wisconsin, and Hayek.   Maybe it means nothing but I think they are applying the same idea in two different directions... It's like turn around Dorothy! your sister's right behind you! but they both walk opposite directions down the same yellow brick road. 

bono vs. sting

I was talking to a woman in a van coming back from the airport today. She was just returning from her work abroad in the Peace Corp. where she had been doing development work. In our short 10 min conversation she used the word "plan" 15 times in direct reference to the means of implementation of her humanitarian aid. I wanted to say something but I didn't have the heart. I asked her if she knew who William Easterly was, she said no...
(I paused)
Then said, do you know who Jeffrey Sacks is?
Her eyes lit up and she said yes, of course. Then she went into a discussion about how she loved him. ... lame!

Come on Easterly! You need a celebrity on your side like Sting! Then "Celebrity Death Match" (MTV claymation) could have the ultimate battle-to-the-death between figureheads representing different schools of thought in economic development.

sting- "Roxanne! you don't have to be so socialist! Walk the streets with money... you don't care if it helps 'cause it does not! Roxanne!"
bono- "see the stone set in your eyes... see the thorn twist in your side... I'll waste money on you. With or with out you!!"

Then sting would break the message-in-a-bottle over Bono's head and he wouldn't do anything about it because he thought it was supposed to be a beautiful day... guess he still hasn't found what he was looking for.

labor policy in california

This is a bit of a detour but it is still interesting all the same.
I've been listening to a lot of talk radio lately and only today did I catch anything of value coming through the airwaves. (public radio... biased but still good radio... that's another question)

The topic in subject was a bill being proposed for California that would mandate employers to provide 9 days of payed sick leave for their employees.
The pro argument consisted of anti-business idealists (almost back to union days) who saw this as a must to prevent the transmission of sickness at the workplace as well as a right of the Californian work-horse. They supported their argument by siting the recently implemented micro-version of the bill in San Francisco.

This is a bunch of pettifoggery! What supporters of this bill fail to realize is that the cost of implementing this liberty will be imposed by small business owners who will subsequently be forced to reduce an already existing exogenous benefit which was previously provided. Employees will be not better off! and if anything they will be worse off. Increased restrictions on starting business is like handcuffing your star pitcher in the ninth...
Right now--at this moment in history--we need our ingenuity to pull through. We need our innovative (American) entrepreneur. Small business is where it's at. And seriously what is the big deal with getting sick. I mean, where does it stop. Next it will be a requirement for employers to provide DayQuil and condoms. No! Grow up America take care of yourself.

Not to mention that economic theory was never mention in the context that the 9 day limit acts like a cap or ceiling. They didn't site this but I would predict that if this law were passed it would no be interfered as security for the last case scenario where people are just too sick to come to work. Rather it would be interpreted as "sweet! now I can take 9 days vacation." Which I would say, is not the purpose of the bill.

Employees know this too, they don't need to be babied. If you want their jobs to be better promote small business so that employers would have to compete for their employees and employees would be able to choose from a variety of benefit packages. It seems to me that the underlying problem that is not being addressed is that people are trapped in jobs not that bosses are evil and should be regulated. Get your facts straight before you make the government into a dictator.

Community Forum

My mother just held a community forum at her house where local environmental politicians met with her friends and neighbors for a meet-n-greet.
It was adorable and at times very extreme. Needless to say I did a fair bit of muffled chuckling.

These are a few of my favorite quotes:

"China has a sustainable housing complex where they force people to be vegetarians."
...freedom?

"...Well of course, suburbia is just not sustainable."
...Whats the alternative look like? and by the way nothing is sustainable: its written in the second law of thermodynamics.

"It's that whole development thing, we need to stop it. Its just grow grow grow."
...yea, but don't take away my job!

"We need to limit the amount of water we use."
...try letting the price represent the cost. just an idea.

"I personally stopped the hospital from becoming privately owned, they were planning on phasing out the offices that did not make any money."
...not even going to get started with the problems in this statement.

"Can you believe foreigners are growing our food. Its just irresponsible."
...Buy American! ;) (that smiley face is sarcastic; and it also comes with a sarcastic thumbs-up)

"We need subsidized community housing. Like we had under FDR."
...and socialism!

this was my favorite. (drum roll)

"We know about a minimum wage but what about a maximum wage?"
...The man made a coy face after he said this statement, oblivious to me cracking a small giggle. Yes, ladies and gentlemen thats the new dumbest thing I've ever heard. What a gem!

I sat in the corner as multiple friends and neighbors talked about raising crime rates then bringing in more affordable housing complexes, then stopping all growth that wasn't what they deemed to be "sustainable" but also complaining about fewer jobs at the same time. They talked about jsut needing more green collar jobs and water conservation by limiting the amount people can use.

Yep, that thump you just heard was Ludwig Von Mesis rolling in his grave.

Polar bears and Astronauts (self-titled)

I haven't yet explained on this site the reason for naming it "Polar Bears and Astronauts."  but enough procrastination. 

Polar Bears have become something of a center-piece for the ethically extreme environmentalists.  The threat to their survival represents a growing concern for the dediversification of our planet.  More species are going extinct at a faster rate than ever before. (if you are a dork for sappy stories about furry cuddly things dying off all over the world, check out IUCN's red list, and bring a box of hankies)  I make a joke about this, but from a biological perspective this does pose a real threat to humans in the future; less diversity = less ecosystem stability = more blossoms of everything weird and unheard of.  

The Galapagos are good examples of this, there is less ecosystem diversity there, which means, unlike in a rain forest, there may be only one or two species to fill a niche and complete the circle of life.  An invasive species can sweep in and provide a reign of terror.  On the galapagos it seemed like every other week there was some new bug that was everywhere, then they die off.  Think of what the world would be like if bacteria had even more dramatic life cycle waves. 

  

Basically, low ecosystem diversity could be pretty costly.  Another short example are the deer in Wisconsin.  They are everywhere and they cause diseases like giardia and chronic waste disease as well as hit-your-car-itus, which I've heard is nasty.  This is a costly issue, and it is caused by the lack of species diversity in carnivores that we killed off like wolves and mountain lions. 

The case of the polar bear is no different.  Species extinction is inevitable and it is important to note that we have more extinctions now than ever before.  Where should the line be drawn? At what point does the polar bear become important?  Maybe never, but what's next? Any conversationalist will confirm that species extinction starts a domino effect and one extinction never just ends with one extinction.  This is a piecemeal massacre caused by global warming.

I ask when will this become important because I am an economist and I know humans inescapably make decisions on the margin.  Decisions like saving the polar bears don't fall on the margin.  This is because they are more costly than any benefit gained from saving a single species.  There are in essence two types of environmental problems those that fall on the margin and those that are two costly.  

Astronauts are the physical manifestation of what human kind can accomplish.  I pinned the idea of an astronaut up against polar bears for this reason.  The same way we have accomplished piecemeal development and growth we are also creating piecemeal environmental degradation.  Yet the two extremes must work together.  Science world meet your corporate world friend from college and suck it up dude you're both right!

 

Turns out Milton Freidman was awesom...

In this series of four short videos Milton Friedman addresses why it is ok to believe in environmentalism and free markets at the same time. He uses the definition of a rational libertarian to explain why externalities imposed diffusely onto society should be incorporated into prices. He braided conversation by tying his thoughts together, and I love it, what a lyricist!

Also, get a load of the biker helmet in the opening scene. I wish I could be as cool as that guy! I bet he has creases in his jeans. Radical dude! (sike)

Eating orgainic makes your foot look big.

I wrote this response to a friend who sent me these two articles:
http://www.reason.com/blog/show/126254.html

http://www.reason.com/blog/show/126276.html

Yea isn’t that crazy, organic doesn’t really mean anything. I think it is hilarious. You should check out the USDA Organic procedure for certifying cosmetics. What the hell does it mean to have organic lotion? That probably realistically means it has less preservatives, but frankly I’d rather rub antibacterial on my canvas than mold. If I were to open a company right now I’d name it Lincoln’s Organic Hodgepodge’n Sorts. We’d put organic in the name of the company so people would think we were healthy, and then we’d sell corn byproducts like all the other non-organic companies. Of course we can’t even do that anymore, what with corn prices being more artificially inflated than Berry Bonds’ biceps. Carbon foot print aside, I would say that organic food does tend to taste better. I think organics have done well lately because the organic farmers have found their market niche in people who are desperate to buy good quality and good taste rather than long shelf-life and seedlessness. Organic food and good quality food don’t necessarily have to be the same thing. I think they were lumped together because food supplier—in the time leading up to the boom in organic foods—made efficiency more important than quality. Organic food is the market response to a demand for quality food. Some people would say that it has more to do with ethics, and that organic food is better for the environment. I think—and you showed me in the articles you sent me—this is not true. But people believe that it is, and organic food wears the label to ride their revenue home. It’s like that whole Obama “Change” (populism) movement. I like to think about what the world would be like if organic food ended up actually tasting like butt compared to genetically modified snacks. I bet in that world, organic food would be just as popular as cheese whiz and Lunchables are now. For those not hip to food fashion, cheese whiz and lunchables are “out.”

I like that people use carbon foot print to measure environmental impact of supposable environmental behavior. It shows an example of real cost/benefit analysis. I know carbon footprint it is not the perfect measure of being-good-to-the-planet, but it does shed light on the possibility of corrective behavior and future industry standards that could combine other impacting chemicals like NO2's, SO2's, and Mercuries.

Beautiful Folk singer ambigious to Austrian reference in lyrics.

I was listening to some folk music by Greg Brown on his album "Further In" and he sang something that struck a chord with me.

"We have no knowledge and so we have stuff, and stuff with no knowledge is never enough."

At first read this line could read as a lyrically beautiful critique of materialism. However on a second and third read through when you apply Hayek's theory on the use of knowledge in our society it kind of reads as if Greg Brown is a bohemian-anti-materialist who recognizes that society can't function without the use of knowledge in our society. I feel myself slipping into thinking about knowledge in terms of the individual when I read this line. If Hayek were here he would kick me back to thinking about knowledge as a dispersed diffused resource throughout our society.

Gas prices on the rise, means sunshine ahead.

It's getting to be summer soon. This means the vacation driving market is about to boom and gas prices are going up. This is good though, it represents more of an incentive to buy energy efficient technology. Especially with the present growth in this sector, it couldn't come sooner. So buckle in all you utopian-environmental-masochists you are finally getting what you've been dreaming of, we're all going to suffer together.

Please make some changes

There are a few things my friends and I have discussed as potential areas for improvement around my small Liberal Arts campus.

Firstly, we really should start charging for utilities like heating, lighting, and hot water. I know what your are going to say, something throughly whiny and Ronald Coase-y, like but lincoln..... what about the transaction cost... I don't want to hear it! I'm down here in the trenches and believe me the "transaction cost" you speak of, relating to implementing an infrastructure that would charge students for utilities, is nothing compared to the huge lump sum you would save when these spoiled-never-worked-a-day-in-their-lives students stop leaving all their toys plugged in. At least some of them will get some solid shock therapy when daddy gets the nerve to stop footing the bill (this of course will never happen, one can only pray).

Secondly, the food facility on campus is the least efficient I have ever seen in my life. They keep getting funded by our tuition and never feel the competition to improve. As a result I have to eat stale dry hotdogs on a foam white bread bun.
"What can I get for you today Lincoln?"
"Serenity, but I guess you can't help me after all."
Please give me options that can compete! Maybe then I could be eating gourmet pizza and some banging barbecue not American cheese on dehydrated egg powder. Not to say the food hasn't gotten better it really has. It is is a result of people really trying to make it better but this is not necessary. All you need to to is open the market to exterior influences. Then the food will have to be good or it will go out of business.

This list will continue.

Freegans... no no... this is worse.

In my current ploy to expose the absurdity around me I feel the need to further reference the only existing unexpendable resource know to exist, that is the parody surrounding the world view of your everyday liberal arts students (i.e. my peers).

Freegans:
This is the dumbest thing I have heard since decommodifying agriculture... maybe dumber.
let me quote from freegan.info.

"Freegans are people who employ alternative strategies for living based on limited participation in the conventional economy and minimal consumption of resources. Freegans embrace community, generosity, social concern, freedom, cooperation, and sharing in opposition to a society based on materialism, moral apathy, competition, conformity, and greed."

So... basically you are a drain on society and you disperse the weight of your existence onto other hard working people. Believe me your foot print isn't erased, it is just carried. Real moral of you. If you want to be a voluntary hobo, by all means go ahead, but if you want to make it into a movement that is labeled with philanthropy then I'm'a come after ya. "Making a difference" doesn't come from running into the hills. Even in something as hippie as yoga they discourage this by saying the yogi who wants to live in the Himalayas and bask in the glory of god is selfish because change comes from action taken from within the society not from a hobo on the outside.
The story I am referencing comes from the book "Autobiography of a Yogi." They don't actually mention hobo's but it's kind of the same thing.

If you want to enact change become an entrepreneur and make your business change. I am not saying people would buy your product, even yogi's would be against it, but at least you would be supporting yourself instead of piggybacking as a burden/drain on society.

Hope I didn't upset the freegan mafia of pacifist dead-weights.

Decommodifying Agriculture... dumbest idea ever.

In my daily stroll around campus today I overheard some students talking about the possibility of decommodifying of certain goods for the good of human welfare. They were saying that agriculture as a necessity should not be left to the free market to distribute, siting Switzerland as an example of a working people's agricultural sector. What a Crock!? Do they know what that would look like...? Do they think about the freedoms and property rights that would be violated? Maybe it has been too long since we have seen pictures of yards full of refrigerators with nowhere to go. The price system represents the most efficient allocation of resources. That is the reason we do not use platinum for medial things like baby toys. The society can agree upon a value based off a competitive price. Decommidifying the agricultural sector is like taking an already beaten mule (from subsidies) and locking it in a cage full of velociraptors. Maybe you don't follow my analogy, god knows I see the world a little differently that others, not everyone sees markets in terms of mules and raptors, however it is no joke to say that the environmental movement could really use a get-with-the-program shift in what we say should happen. Primitivism is not an option. We need markets.

Environmental Economist Find!

Recently I have been searching for academics or leading professionals with a similar perspective to mine in the environmental field. This of course has by all means been difficult due to the overwhelmingly large lack of economic knowhow/whowhat within the environmental movement. In spite of this I have been able to locate through the complex workings of the internet one Robert Costanza. Robert has published 300 scientific articles in journals ranging from Science to Nature to even The Economist and from what I could tell, I think he has his head on his shoulders. I am currently reading his article entitled "Social traps and Environmental Policy," I'll get back to you about what I think.

transportation and the electric car.

How cool are these car?
http://www.teslamotors.com/
http://www.treehugger.com/files/2006/02/loremo_ag_157_m.php

The use of these electric cars centralizes the conversion of energy to a power plant location rather than having it dispersed around the land in automobiles. Electricity, as a fuel source, is neat because it burns clean, and makes no noise, the down sides are that it doesn't store that well and it is still transformed from relatively emissive forms of energy like coal and oil. If you really want to be inclusive it is also necessary to point out that the production of electric cars can be wasteful to a point that it could exceed the desired result of an over all decrease in carbon emissions. I am by no means advocating a paranoid lifestyle where one should track their every action to make sure one's conscience is clean enough to go to heaven. A guilty life is just no fun, take it from the catholics.

On the other side it is justifiable to look into the indirect implications of ones buying power investment. If everyone stopped buying SUV's they really wouldn't make them. I know you don't believe me, but that's ok sometimes it is easier to believe that corporations are evil.

I feel like it is necessary to take a second to clarify what I mean by centralization of energy production and what kind of hypothetical benefits are implied to the overall improvement of human welfare. Centralizing energy productions is--for all of you Austrians--NOT moving the energy sector into anything public or planned. It simply means producing energy at a power plant and dispersing it through the grid using power lines. I know what you're saying, "Lincoln, we already do that!" You're right, we do! that's whats so cool about this. We just need to incorporate the use of transportations onto the burden of the grid. I'm getting into shady territory here with my wording. Let me clarify your concerns: the government should not play a part in funneling public demand away from filling up your tank with Chevron's best. Although, it is fair to point out that more and more people are demanding electric cars, and that is creating an indirect positive externality by centralizing energy production.

The benefits associated with energy productions are that cumulatively there would be less every converting machines therefore making it easer to have one good emissions scrubber rather than having many not so good catalytic converts and mufflers.

Future knowledge is not accessible

It is possible to make certain judgments about the resource needs of future generations, however it is not as easy to make long term estimates as to what type of technological developments lie ahead for our society. Imagine 30 years ago the idea of a network of computers providing massive job opportunities might have seemed hairy. Now imagine what the Internet would look like to someone in the 19th century. Energy innovation has been shown to occur when there is a market demand for more efficient products and when funding comes from the government; even though I am thoroughly uncomfortable with the latter, I will admit some innovation gets done even if it is done under government funding and the resources are allocated inefficiently. I cannot even imagine a developed society like ours not being able to provide necessity goods. I know this is an assumption I am making about future generations, which could work against one of my earlier premises. All the same, the idea of making a “doomsday” judgment about societies so called inevitable collapse based what we can presently conceive technologically makes the same mistake by not taking into account the propensity for future societies to develop inconceivable alternatives when and if resources become more scarce.

Here's a rolling theme for this website.

A professor of mine asked me a preparatory question for an interview. She asked me, "If you could change one thing about the 'environmental movement,' what would it be?"

Where to start!
I replied, for starters, that creating policy recommendations with an apocalyptic premise seems relatively faulty to me.

Here's some more ideas I forgot in the heat of the moment:

-Environmentalists should work to save the earth for humans not polar bears, though polar bears are nice too. "Ecocentrism" proposed by Aldo Leopold, "Sentienism" proposed by Richard Ryder and Peter Singer, or "Deep Ecology" proposed by Arne Næss, might work as a philosophical brain children but when it all boils down humans come first. Anthropocentricism is all we got: but come on, you knew this all along, after all you are a human!

-Growth is good, and we can't have environmental protection without it.

-Growth is good, and we can't have welfare with out it.

-Growth is good, and we can't have technological innovation with out it.

-Growth is good, and we can't have jobs with out it.

-Growth is good, and we can't have jobs that give us technological innovation that gives us welfare that protects the environment without it. Deal!

-Profit is good, so is money.

-Quit complaining about too many jobs going overseas and the lack of developmental humanitarian AID at the same time. Its paradoxical.

-And finally, think through the actual repercussions of whatever you demand. We call it holistic cost benefit analysis, if we are going to "save" the planet (there's that Jesus-affect again) its going to be because we thought it through.

-and for Pete's sake take a shower! Even monkeys groom.

I will refer back to this when I can think of more one-liners.

Is it too late to save ourselves?!!

Someone asked me today “is it too late to save ourselves” in reference to pending environmental doom, and I caught myself wanting to slip into a usual explanation of how being “saved” isn’t the correct jargon for how we should approach the problem. However, after a second consideration of the question I realized that it was not too plagued with environmental extremist bias. After all it is fair to ask if we can survive at present course.
The extremist environmentalism comes in when we start to determine who'll be our savior. Presently, it is the tendency of our society to look for a single figure to pull us to safety. I call this the Jesus affect. Often times this is manifested in a call for unnecessary policy from our politicians, or similarly unnecessary organizations acting as social welfare nets. All in all this movement towards a populist leader shows a lack of trust in market-based methods to solve our problems, which I would argue to have the highest propensity to be our actual savior. We are no longer in a monarchy!! The king isn’t going to save us!! Become an entrepreneur; that’s where “change” will really come from!! (and no it is not too late.)

Interest vs. Self-benefit.

My friends and I were spending time together earlier today, and I was explaining a festival that exists in Northern California to celebrate the spring and the blossom of the mustard in the fields. Mostly it is a festival for already rich people to make tons off of really rich people who secretly want to be cultured and think they know something about wine. Go on basking in your hippie rich vacuum nor cal one of these days reality really will come knocking; it’ll probably be your children that get effected when they don’t know how to find a job.

Anyway I was telling my friends about this festival and they were giving me their deflection faces (basically ignoring me, but from time to time dropping a word or two). I have a feeling close friends do this to other people who try to hang out with them but obviously aren’t on their level as friends. Also people who are really weird get this done to them a lot, i.e. Beloit College Students. My friends shifted into their own conversation and I walked off mid-sentence. A moment or two passed and I heard one of them shout from the other room, “Sorry Lincoln!”

When I came back I told them that I was chill, and that they didn’t have to be sorry. Fortunately, for my own self-happiness I knew when people weren’t interested in what I had to say and I could walk off and be fine with it.

Topically this just looks like normal interactions but if one were to dig deeper there are some underlining economic principals and a little chicken-and-the-egg action as well.

From a theoretical economic approach (and believe me when I tell you this, I know of no literature relating to this subject) what comes first interest or self-benefit? I would have said that interest is based on self-benefit. Are people interested in things because they get benefit from them? If so, from a purely utilitarian perspective much of academia should not exist. What fuels interest? Why are we tickled by some topics while that same topic might seem as boring as shit to another individual? For example, environmentalism and economics. I’m interested in environmentalism and most sociology topics make me want to stick a pencil in my eye I get so bored, even the ones that relate to environmentalism. Why is that?

Hayek you beautiful man, you did it again!

Here is the opening paragraph from the article mentioned in the posting below--"Why I am not a Conservative." And wow, Hayek hits it on the spot:
"At a time when most movements that are thought to be progressive advocate further encroachments on individual liberty,[1] those who cherish freedom are likely to expend their energies in opposition. In this they find themselves much of the time on the same side as those who habitually resist change. In matters of current politics today they generally have little choice but to support the conservative parties. But, though the position I have tried to define is also often described as "conservative," it is very different from that to which this name has been traditionally attached. There is danger in the confused condition which brings the defenders of liberty and the true conservatives together in common opposition to developments which threaten their ideals equally. It is therefore important to distinguish clearly the position taken here from that which has long been known – perhaps more appropriately – as conservatism."

new discovery

my father is always telling me about new discoveries that scientist are coming up with concerning the pending environmental destruction of the world, or how certain mushrooms can heal you. A lot of me is in love with this quality of his but more and more of me has come to detest his lack of objective perspective when it comes to reputable sources.
so with that in mind I wish to bring up a new discovery I have just come across, although my new discovery is of an article that has been in existence for a while and truthfully I haven't read it yet. However just from the title and the author I am itching to wrap my mind around it.
drum roll...
"Why I am not a conservative"
F.A. Hayek
I'll let you know what I think after I've read it.

Oil desparity, now-or-later

As the price of crude continues to climb it is necessary to ask the question whether or not we are in a situation of oil disparity or does the price of gas have more to do with Middle Eastern politics. We saw int he 1970's oil crisis the price of crude sky rocketed but as politics cooled down we continued to produce more oil than ever before and prices dropped for nearly two decades. Currently they are on the rise again as well as political unrest.
As an objective economist it is necessary to determine the true cause of our present surge in the price of oil. Maybe once we determine whether or not we are immediately running out of oil it will be easier to make long term decisions about energy saving policies that have unnecessarily high costs with minimal long term return.

what causes innovation?

here's an interesting question.
recently I have been working with a firm in Beloit where we are developing a new product that would cut the heating bill for a building. It is a purely structural adaption that would work into a roof system and passively preheat the air, using solar energy, before it gets to the heater. In the course of patent research we have taken it has come to my attention that the number of patents related to this product was significantly greater during the late 70's and decreased steadily through the 80's and 90's. I can think of two likely causes for the spike of environmental innovation in the 70's and the steady decline through the 80's and 90. One being the price of energy during the oil crisis created and demand for a more fuel efficient lifestyle, and the other being that there was heavy governmental funding during those time periods.
Which of these causes greater environmental innovation? If governmental funding for innovation causes a rapid response, what effect does it have on longer term innovation? Determining how money is allocated is important but at the same time it must be stressed that it may not always be optimal to provide funding at all. Allowing for a competitive free market, as Hayek would say, provides a situation where the optimal allocation of resources achieved based on a price value which is determined by the market.

Welcome!

Welcome to polar bears and astronauts. this is my first blog as well as my first posting. So I am a little excited.

I wanted to create a blog that I could express some of my day to day experiences at the liberal arts college and provide a platform with which to express my perspective.

I am an environmental economist with a developing Austrian perspective. Free market approaches to environmentalism fascinate me. I hope to address developmental questions that value environmental conservation as well as the hard fact that human welfare is intrinsically entwined with consistent economic growth.