Zeitgeist

I have been remiss in addressing many issues on this forum, let alone keeping up with the current events. I do apologise as there is much to be said, and much to be reported. Zeitgest is a propaganda film worth seeing. It addresses a very rough history of the origin of the Christian myth in Western Mythology with connections to astrology. This is somewhat interesting and entertaining though by no means a BBC documentary. Next, a stright up 9-11 Truth Conspiracy section (which I dont buy and do not recommend) ended with an informative and largely correct section on the origins, illegality, and fraud that genuinely is the Federal Reserve Banking Cartel.

Zeitgeist Addendum, the sequel, is even better. It refreshes us to the problems, and again addresses the Federal Reserve, fractional banking fiasco. It misunderstands monetary dynamics and fundamental economics in many respects,but makes some excelent points. Next it features the Economic Hitman followed by ample time to a living treasure, Jacque Fresco, and the Venus Project. .

By the way, I visited Jacque last march in Venus and will have more to say on him including a filmed interview.

In telling you to watch these films, know also that I do not agree with at least 50% of its assertions and analyses. Please also read and watch the criticisms which have merit, ironically coming from other Conspiracy Theorits who agree with most of the major premises but not the analyses or conclusions. Alex Jones. G Edward Griffin.

From Griffen:

All of the evils to which this program alludes are the result, not of the free enterprise system, but of the abandonment of free enterprise and the adoption of collectivism. This program creates a mythological boogeyman and then advocates more of the very thing that has brought us to the mess we are in today.

I think it is safe to say that money, trade and free enterprise as general technological systems are not the root of all our problems as Zeitgeist suggests. The redistribution of wealth is debatable as are laws and restrictions of markets and limitation of free contract. Money however is an inevitable property of combining scarcity, divisibility, transferability, durability and common perceived value.

The real battle emerging is between collectivist central-planning green technocrats - and the libertarian, self-sufficient, privacy-loving anarcho-Capitalists - perhaps these should be our emerging and conflicting dominant paradigms. Throw in some chaos from Fundamentalist Abrahamic Apocalypse Cult Fascists and Nihilists. Welcome to the Future.

Irony

Via Ron Paul:

“The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

-Alan 'Bubbles' Greenspan, 1966

The 'Bubbles' were my addition.

Jacque Fresco: Future by Design

Jacques Fresco is an engineer, inventor, futurist and visionary. I believe his name will eventually become commonly known years after his passing. Future By Design (torrent) is a documentary film about the work and ideas of Jacque Fresco. Fresco has a fairly coherent vision for the transition of our civilisation to a prosperous and harmonious Type I civilisation. Mostly this involves education and culturally focusing humanity towards embracing and shaping technology to take care of our living needs, so that we might be free to pursue the higher goals. The DVD currently available on the Venus Project's website contains a book, Designing the Future.

He does not have all the answers nor does he propose that he will make a Utopia. He claims only that his ideas are a far better direction that the one in which we are currently headed. He takes a rational, analytical engineering approach towards designing an economy and infrastructure which automatically satisfies the basic needs of humanity in a sustainable way. A must see.

Monetary Theory and Policy

Having had some brilliant lecturers in college, particularly in History, I have always wished that those lectures would have been recorded for the world to appreciate. Gradually lectures are making their way onto the Internet. Berkeley seems to be making progress. I just discovered Mark Thoma, author of the quality Economist's View blog has his Monetary Theory and Policy course online through Google Video.

Brad DeLong Lecture Podcast

My favourite economist, J. Brad DeLong of Berkeley has published on his new Podcast his lectures from this years course American Economic History. The sound quality is unusually good.

Irrational Living Practices

Every year, some fairly predictable natural disaster occurs and devastates large areas of land creating human death and misery and property damage. Earthquakes, flooding, and hurricanes come to mind. After the disaster, affected regions usually prey upon the sympathy of others to rebuild their homes and cities through both charity and governmental subsidy. A notable example is the aftermath of Hurricanes Katrina and Rita. The Army Corps of Engineers was widely blamed for the failure of the levies and the subsequent flooding. 1) The inefficiencies of the legal code to deploy National Guard soldiers without the consent of a State Government combined with 2) the normal inefficiencies and ineffectiveness of government at all levels and 3) a general lack of psychological preparedness for infrequent devastating events resulted finally in an anarchistic, violent scenario of devastation and distress. The reconstruction efforts have basically followed in the same mode despite billions in subsidies and tax cuts.

The critical problem which is politically incorrect to address is who decided it was a good idea to build their house in a flood zone in the first place. In the case of New Orleans, the sad answer was everybody, but especially the poor. Since in economic terms the wealthy had far more to lose, it makes sense that the wealthiest areas of New Orleans were constructed on somewhat more secure ground. It is not fair to say, however, that the risks living below sea level next to one of the world's largest rivers which regularly changes course was properly priced into the housing market. Most people who build their houses in flood zones are either ignorant of the risks, risk loving and possibly irrational, a very high personal discount rate, or a very high preference for living in those areas. Unfortunately psyche of humans, like many pack or herd species, is far more prone to feel secure in a clearly irrational situation so long as everyone else does the same.

A related problem of course is the question of climate change. Far more people are in far greater danger than Katrina owing to probable climate change from human activity. Many major cities are rationally addressing the fallout by considering dikes and other technologies to ensure the cities survive intact. Others are intelligent and ambitious enough to build flood-proof houses.

Whenever possible, avoiding a confrontation with nature is the wisest course of action. Reducing greenhouse emissions and not constructing cheaply in a predictable future disaster area are good rules of thumb. In the event of an inevitable but unfortunate catastrophe, federal governments in all of their fiscal inefficiency ought not be expected to pay.

Blog Recommendation: Charles Kenny

Charles Kenny has a blog about Development and Welfare Economics.

The Least Among Us

Niall Ferguson, a history author, journalist, and Harvard professor, has a well written review of three new books on African Development politics and economics. I will add them to the list of things to read. Eliminating disease and poverty are the two biggest moral imperatives for the developed world. Nowhere are those problems more dire than sub-Saharan Africa.

More on Pigovian Taxes

Steven Levitt of Freakonomics has a great post in favour of further petroleum taxes. Interestingly, he argues that carbon taxation to prevent global warming is less important than reducing congestion and traffic accidents for social welfare. I suspect that he is not properly factoring in the globally felt negative externalities of global warming, but his conclusion is nonetheless correct that at least a tax of USD 1.00 on petroleum is dearly needed.

The most economically efficient solution to the issue of congestion, ie a proper Pigovian tax, would be a system like London's centre where only those vehicles which have paid a daily fee may enter. Their system relies on sophisticated network of cameras and plate recognition software to automatically bill and fine drivers.

Traffic accidents are doubtless a problem which should be seriously considered. I would expect that insurance and lawsuits already captures those externalities, but I do think a tax on vehicle size and weight per mile driven would help to counter the runaway arms race of personal safety that exists in vehicle addicted nations. I am mostly referring to the exorbitant demand for SUVs particularly for women. The individual driver, surrounded by an armada of SUVs piloted by cellphone distracted drivers, is not inclined to purchase a Volkswagon Golf. Thus the rational individual, in the interests of self preservation, chooses to join the backwards collective. This lesson I learned quite vividly on my first visit to Texas.

Nonetheless, a gasoline tax would as Levitt suggests have a beneficial effect on many things including congestion, traffic accidents, climate change and obeisity.

Film Review: Sicko

The propagandist Michael Moore, perhaps partly responsible for the Bush reelection, has produced a new film. Google's ratings suggest it is being received extremely well. Like all of his work, Sicko appeals much more to emotion than to reason. In seducing the American populace with the conveniences of socialism, he completely whitewashes the costs paid in high taxation, lower economic growth, high unemployment, and reduced technological advancement. Perhaps this is why country after country in Europe has been electing conservative governments; they have learnt the lessons of socialism the hard way. I agree that for poor, unproductive, and unambitious people such as those featured in Sicko, socialism is an absolutely fantastic deal. Goods and services are provided at someone else's expense. Michael Moore would lead one to believe that it is the greed of megacorporations who are responsible for all human suffering in the United States. The problem of unaffordable health care in the United States does not come from competing insurance companies. It is a problem of monopoly.

The American Medical Association, the State union of doctors, maintains medical school quotas and strictly suppresses the licencing of foreign trained doctors. This medical monopoly also maintains the sole ability to prescribe medication. Prescription fraud such as trying to fill a prescription in a higher amount than ordered by a doctor, is a felony punishable by prison sentencing. Doctors tend to prescribe medicines in artificially low quantity so as to encourage more overpriced visits for a refill. On top of this the medicine which is prescribed is sold at a large premium because of the lack of regulation in drug pricing as well as the overprotective intellectual property inherent in the American patent system.

Medical expenses are further inflated by the inordinate costs of doing business. Malpractice insurance is extremely expensive. There is no upper limit to the damages in a medical malpractice suit. Merck was famously ordered to pay USD 253 million for the death of one marathon runner. With 33% cuts, over-educated and overpaid lawyers are all too happy to help recover alleged damages. Lawyers such as John Edwards make fortunes preying upon the misfortunes of others.

There are of course some delightfully positive aspects of the US system. With the supply of doctors kept artificially small, the competition to be one of those doctors is increased so that American doctors, after they have been paid, are some of the best in the world. Maltreated patients do have the recourse to sue. Overprotected intellectual property drives innovation in medicine saving countless lives and improving quality of life in the long term. With drug price regulation in most other countries, America effectively subsidises medicine for the rest of the World.

Unfortunately, Michael Moore does not address any of these real issues. He is long on sob stories and short on understanding. American medicine is no doubt expensive and long overdue for anti-trust and tort reform, but calls for a medical socialist revolution are entirely inappropriate.

Politics and US Healthcare

As I have mentioned before, the biggest flaw I see in the current US system is the problem of the limited supply from the American Medical Association doctor's labour union. This aside, I would like to draw attention to Brad DeLong's FT opinion article endorsing Barak Obama's proposed healthcare "solution." Obama should be applauded for having the courage to announce such a detailed proposal which exposes him to political attacks.

Economic Thinking vs. Evolutionary Thinking

Economics is the study of the allocation of scarce resources in the production and consumption of goods and services. Mankind has finally entered a stage where the economy tends to increase at a positive rate owing to scientific understanding and the mastery of the physical world through technology. If humanity survives past its current critical phase (Type 0), the economic expansion will likely continue until the energy of the nearby galaxies has been exhausted and the Universe gradually begins to die a particle death.

During large periods of human evolution such was not the case. Resources and technology were stagnant. One person's average gain was another's average loss. Accepting immigrants into the community or yielding resources to a nearby tribe could have been an existential threat to a population's genetic prevalence. Thus humans have evolved with an inherent suspicion of outsiders and reluctance to trade with them. It works well as an evolutionary survival strategy on the African forest or Savannah, but is a very poor strategy for expanding wealth and resources in a positive-sum, technologically advancing civilisation. Without education to overcome the protectionist genetic instincts of primitive man or similar memetic cultural exclusivity, politics and laws end up restricting trade and immigration in very unproductive and uncooperative ways to the detriment of everyone.

Paul Rubin has written a very interesting piece about this. Via Mankiw.

Euro Monetary Policy

Quite unlike the possibilities for future private currencies, I find traditional governmental monetary policy generally uninteresting. The 20th Century taught us that the most economically and politically stable monetary policy is one in which money supply and interest rates are gently tweaked only to maintain price stability. The US Federal Reserve and the now the ECB have held to this fairly well thus making them the World's reserve currency. A stable money supply also promotes economic activity with participants confident in the future value of their long term contracts.

Price stability really is a one-size fits all solution. Countless models have been able to show circumstances where deviation from this policy could be beneficial. Despite the painful inflationary lessons many countries learned in the last century, there are always some who wish to manipulate the money supply to take advantage of the short term benefits of the Phillips Curve in lowering the rate of unemployment. Sarkozy has been among those calling for monetary policy to target job creation rather than price stability. For the specific case of France, Sarkozy's suggestion likely would be a net benefit since their labour market is so completely bureaucratic, over-regulated and backwards. Some inflation would act like a lubricant on rusted metal. Tyler Cowen explains it a bit better. However, France's focus really should be on firing its State employees, eliminating labour market regulations, and cutting back on welfare benefits. Just because inflationary monetary policy would be politically acceptable amelioration in France does not mean the rest of Europa should have to suffer.

Happy Planet Index

Human Development and quality of life most often comes at the price of environmental destruction. The New Economics Foundation's HPI makes a fair attempt to rank different countries on the basis of human quality of life or happy human years per environmental footprint. Vanuatu has the highest HPI. Maximising measures such as these rather than artificial production or velocity measures such as GDP should be the aim of economists and policymakers.

Larry Summers on Climate Change

Finally, the Global Warming debate is hotting up. Larry Summers begins to call for practical solutions to the crisis in his FT column. The first in a series I presume.

Via DeLong.

Wealth and Efficiency at the Cost of Privacy

The Economist has an article about the coming wireless revolution. Gradually, wireless-enabled microchips will be embedded in almost everything that is manufactured turning our cities into giant sensor nets. The benefits of this will be unprecedented, but so will the ability for even the average person to spy on almost anything. It is Little Brother rather than Big Brother who will be the menace of the 21st Century. I believe that no matter what the laws are, in future privacy will be all but eliminated. People will do well to live their lives with this in mind.

The Economics of Climate Change

In fall 2006, the Stern Review of the Economics of Climate Change,a British government commissioned study, was released. Most scientific or economic criticisms have said that the review did not go far enough in assessing the effect of climate change, although it did present extremely stark warnings for the future. Martin Weitzman has a upcoming book review of the Stern Review in the upcoming Journal of Economic Literature. Brad DeLong also has a great post on this topic. Combined with UN reports on climate change, the evidence for highly destructive global climate change is conclusive and undeniable. The solutions to this crisis are clear, and yet the corruption and inefficiency of the geopolitical system allows the perpetuation of such egregious harm to life on Earth and human well being. How and when will it end?

Quantifiable Advantages of a Large City

An article in Scientific American pointed me to an interesting article in Proceedings of the National Academy of Sciences. From SciAm:

"This is a fascinating paper that quantitatively explores the complex interactions between urbanization, sustainability and social innovation...Insights, such as those presented in this paper, will help guide our collective choices as the pace of socioecological change accelerates."

-Thomas Parris

Privatised Currency

Introductory Economics teaches that there are 3 fundamental properties of money: divisibility, transferability, and storing of value. Traditionally, various commodities which were rare, small, and relatively indestructible such as precious metals were the dominant currency or at least backed the value of dominant currencies. As governments became more stable and dominant in people's lives in the last two centuries, they were able to abandon all commodity backing of their treasury notes whilst letting currencies stand on their own merit as stores of value. This served to further governments grip over its populace by permitting enormous macroscopic control over wealth, interest rates, and inflation in the economy for good or ill.

We are now entering the information age where anyone may be able to create their own effective "virtual" currencies through modern technology. This soon will allow encrypted and anonymous transactions which will effectively transfer value beneath the radar of government. Governments will try to suppress this activity, but ultimately currency simply represents information and the preservation of information is a law of physics. With satellite internet available in a wristwatch, who will possibly be able to destroy the flow of information? Currency is an important example of the gradual inevitable decline in power and authority of governments and the rise of the multinational corporations as the dominant world powers of the future. After all, the modern system of Nation-States is an idea less than 200 years old, having been created at the Congress of Vienna. It will pass, like all previous forms of rule and diplomacy, into mere history texts.

The currencies of the near future will be varied, exchangeable, customised to individual financial needs and desires, and backed by a tradable basket of securities. To buy a haircut, you could be paying with shares of IBM and GOOG whilst the barber is receiving credit towards his new telescreen and futures contracts on organic wheat. I must thank David Friedman for first sharing this revelation with me in his book 'The Machinery of Freedom.'

This post was prompted by this WSJ article describing the current "virtual" currency, QQ, now being suppressed in Zhong Guo for doing just what I have described, undermining the legitimacy of the Yuan. As with other forms of information oppression, Zhong Guo is doomed to fail.

Starting Your Own Business

For anyone who has ever thought about starting their own business, this essay by Paul Graham may be encouraging. I am among many people I know who have started a business. Most of them have not yet acheived great success and even if it has to be a part time gig at first, it is all still worth it for the experience alone. If you can do it full time and make good money, tant mieux. Working at a start-up is also much better in terms of setting your own schedule. As such, the BBC found that flexible hours were the most valuable job benefit.