Friday, February 25, 2011

A Teachable Moment

This week in class I introduced the relationships between national saving, investment, and real interest rates. The latter part of the chapter talks about the history of the national debt. So, we talk about charts like these:Source: Washington Post, Ezra Klein "The U.S. Government: An Insurance Conglomerate Protected by a Large, Standing Army"

Source: Center on Budget and Policy Priorities.

We talked about long-term debt being mostly driven by entitlements and how no one in either party wants to be the first mover in tackling the real problem.

One student, who was not raised in the U.S. (which gives him a wonderfully innocent point of view), raised his and and asked:
"Let me see if I understand this correctly. Politicians don't want to cut spending programs because that makes people mad. But they also don't want to raise taxes because that also makes people mad. So, in the end they just won't do anything, and we're all screwed? That sucks!"

Yes, it certainly does.

Thursday, February 24, 2011

Why I'm excited about iPad 2

So, the rumor is that the iPad 2 will be announced on March 2. In a related story, I will hopefully be receiving a tax return around that time.

I traveled to a conference a few weeks ago and chose to leave both my netbook and laptop at home, taking only my iPod Touch. That trip solidified the need for an iPad. One night, I found myself listening to music, surfing the web, Skyping with my wife, and tweeting all at the same time-- on my iPod. I did it faster and more easily than it could have been done on my netbook.
It simply would have been an easier task (and less battery-taxing) on an iPad.

I read a lot of articles on my iPod, but the small screen is often both bothersome and harmful. It's super for Instapaper reads I've stored and blog posts, but "ehh" for non-HTML5 websites. iPad would solve those problems. I saw people at the airport restaurant with their iPads propped up in front of them, reading articles while they ate. Nifty.

While teaching last week, I misplaced the paper printout of my lecture notes and was in a hurry to get to class. I store all of my notes on Google Docs. I simply used my iPod to connect wi-fi and read the notes in one hand while I wrote stuff on the board. That was really nice, but it would have been easier to read on an iPad.

A local lawyer that we adjunct out our Business Law class to reportedly uses an iPad connected to a keyboard and uses it to project everything he needs to show in class. (Not sure the details of what devices he's using, but the students sound impressed.)

There are some educational games that Elias loves to play on the iPod, along with plenty of YouTube videos I keep stored for him on demand. These would just be easier to see and touch on the iPad.

The iPad 2 reportedly will have a camera built in for videoconferencing and such. That would be great as well, I have a pre-camera iPod Touch.

I don't really care at this point if later in the year a better iPad will be released, as is also rumored. Lord willing, I'm going to get an iPad 2 in March.

Tuesday, February 22, 2011

What a bad day looks like

With a nod to the fact that God is sovereign in all things... I mainly just wanted to record this to look back on later.

A co-worker and supporter of our work in Central Asia was due to watch doctors take her husband off life support this morning. He died at 5pm tonight. He was in a coma following a heart attack just a few days after he had major heart surgery. I last talked to her in a UEGE meeting a few days before his first surgery, she requested prayer, sensing that something might have been worse than doctors expected. I remember the discussion turned to how lucky she was that her husband's health plan put him at St. John's Hospital, known nationally for its cardiac unit.

A student, who I'd consider to be a friend, watched his wife give birth to their second child yesterday. The child was born with spinal bifidia, which wasn't discovered until the delivery. Now he faces surgery and special needs. He's sort of a non-traditional student, having taken the long road to get to SBU and due to graduate in May. He drops by my office to talk basketball, but I suspect that won't matter much anymore.

Another co-worker is going through a divorce and has a sister who just became disabled as an indirect result of the blizzard. She always asks about me and my family, and every time she does I remind myself that I have nothing to complain about.

I also found out that an eager student I talked to for 20 minutes yesterday apparently was lying for about 15 minutes of it. I'm convinced that he believes every word he says, but it turns out none of it is true. It's depressing, he's only deceiving himself at this point.

I opted out of watching the news tonight. Qaddafi's madness, Somali pirates murdering Americans delivering Bibles, and further economic fear and political vitriol were a bit too much after today's interoffice news.

Lamentations 3:22-23 - The steadfast love of the Lord never ceases; His mercies never come to an end; they are new every morning; great is Your faithfulness.

Monday, February 21, 2011

On Property Rights

Harking back to a previous post on views of property rights, I have boiled down my thoughts:

In a world where everyone clings to Christian love and understanding, and levels of trust are high, property rights aren't really necessary. The tragedy of the commons doesn't exist, everyone does the "right" thing.

However, in a fallen world where few people know God and His love, property rights are a necessary starting point for organizing economic activity. They are clearly approved by God (Leviticus 25, etc.)

In the Piper book Momentary Marriage, I find this quote on divorce helpful:

“there are laws in the Old Testament that are not expressions of God’s will for all time, but expressions of how best to manage sin in a particular people at a particular time. Divorce is never commanded and never instituted in the Old Testament. But it was permitted and regulated—like polygamy was permitted and regulated, and like certain kinds of slavery were permitted and regulated And Jesus says here that this permission was not a reflection of God’s ideal for his people; it was a reflection of the hardness of the human heart. “Because of your hardness of heart he wrote you this commandment.”

You can see God's commands regarding the enforcement of property rights as similar to this. That makes Jesus' words in the New Testament more powerful-- give to all who ask, and do not turn from whoever wishes to borrow from you.

One microeconomics textbook example of the importance of property rights is that of a particular university that adopted a bike-sharing program. At the end of the school year, the community bikes were all either stolen or in disrepair. "That which is owned by everyone is owned by no one." However, there are counter examples of similar programs that work fairly well. In some cases they work because incentives are aligned with a property/price mechanism--it works just like the textbook says it should. But in other cases it just seems to be that the participants behave better, they show a love and respect for each other even in the absence of property rights. People in the community maintain the bikes, even though they don't have to.

This doesn't eliminate the problem of scarcity as some claim (to be addressed in a future post) but it does show that in a God-fearing, loving community property rights don't have to be absolute. If everyone is giving up their rights then we can trust each other to do the "right" things.

Wednesday, February 16, 2011

What do political science and Watson have in common?

Will Wilkinson again does a bang-up job blogging for The Economist (though I find it disturbing to see his American English edited into British). In this post he pulls research from the blog of Jason Sorens, a polysci professor at University of Buffalo. Sorens did research on whether America fits the "exceptional" mold people as people on the right and left portray it. I find this interesting since President Obama irked the ire of the right by having a Niebuhrian viewpoint on American exceptionalism. I highly recommend reading Wilkinson's summary.

I like Sorens' work because it puts conventional wisdom on its head: Americans don't love government any less than Europeans, our government is only smaller because of our historical religious diversity. In terms of income disparity in America actually looks good when you control for the fact that we've enslaved, massacred, and quarantined parts of our population. I haven't looked at his equations or formal articles, but I'm only jealous it's a polysci person running those regressions instead of an economist. He thought outside the box and came up with results we wouldn't well predict from independent variables we wouldn't have thought to look at.

But it dawned on me last night while watching the IBM love-fest that is Watson on Jeopardy! that a supercomputer like Watson, being filled with all the data on the planet, could be used to do this same kind of research. I imagine it in two ways:
1. He runs trillions of random regressions and reports those that show up the most significantly. Of those trillions of regressions, someone would have to figure out which ones make sense or are actually related and aren't just noise.
This is, in a sense, like the controversial poetry written by computers. Essentially, if you have infinite monkeys on typewriters eventually one of them will write Shakespeare.

2. As he learns the nuances of the human language, thought patterns, and relationships Watson could eventually sort through his trillions of regressions and report the ones that make the most sense. Studies that economists and doctors and others would come up with if they had enough time to think about it. That would be huge. You could have Watson-generated and Watson-refereed journal articles. And eventually there would be no need for actual researchers, right? We just let the machines do it.

It's a scary, Wall-E world sort of thought.

Friday, February 11, 2011

What Leadership Reads Like

Just to end the day on a happier note, I'm still impressed by this op-ed penned by Mitch Daniels in the WSJ earlier in the week. He's speaking at #cpac tonight and saying things like "We need people who never tune in to Rush, Glenn, Sean," and "Remember, we have no enemies, only opponents," getting stunned awe on Twitter.

Here's a previous post on him from last year, the people I listen to are even more admiring of him now than then. If the article linked in that post whets your appetite, then read this profile of him on Politico yesterday. If you still can't get enough, read his Five Books interview.

I like this article... I'm linking to it:
Libertarian Will Wilkinson writing for The Economist's Democracy in America blog:
"Reaganomics debased: Paul Ryan's Republicanomics."

"Reagan met the specific challenges of the American economy in the early 1980s through tax cuts and tight money, among other things. Republicanomics transformed the policies of the Reagan administrations and the Volcker/Greenspan Fed into hardened ideology."

Wilkinson, oddly enough, gets much of his thought from an article by a progressive writer in The Daily that is also worth reading:
The Curse of Republinomics.

It's the same stuff Scott Sumner, David Beckworth, and other conservative monetary economists have been saying for a while. I can't resist re-writing a Scott Sumner quote into my own words:

"Sometimes I feel like I am trying to save conservatives from themselves... I do have a problem with conservative politicians sitting on regulatory bodies, like Paul Ryan, who are ignorant of the key tenets of monetary theory, that do not know the meaning of basic economic terminology, indeed that seem to have created a private language that has nothing to do with the real world. "

Book Review (#3 of 2011)

Underwriting Democracy: Encouraging Free Enterprise and Democratic Reform Among the Soviets and in Eastern Europe by George Soros.
I bought this book for $1 several years ago after we returned from working in Eastern Europe. There, I had worked for a company competing directly with a Soros-funded microcredit firm in the same town. I thought this book would be about Soros' efforts towards those ends, but I was wrong (the title is somewhat misleading, I think).

The book was published in 1991, the period over which Soros wrote it was tumultuous as the Soviet Union was collapsing. In the first half, Soros explains the beginnings of his Open Society fund which provided research grants to scholars in the Eastern Bloc to pursue activities that wouldn't receive government support or funding. He details the frustrations of opening foundations in Hungary and elsewhere, dealing with government suspicion and red tape and office politics among members of his board.

Along the way, Soros begins meeting with various heads of state and giving advice on economic reforms. He worked with Jeff Sachs in Poland when they were getting rid of price controls and the like, and later brought Sachs and other economists to Russia to achieve the same ends-- but failed. It was interesting to get a behind-the-scenes take on how those meetings/discussions all came together as I've read about those events here, here, and here.

Pgs. 36-37 are the best two-page explanation of why communism/socialism fails. I like this tidbit, too:
"Economic activity under the Soviet system is simply not economic; it is better understood as the expression of quasi-religious dogma. Perhaps the best analogy is with the pyramid-building of the pharaohs. This interpretation explains why the portion of resources devoted to investment is maximized while the economic benefit derived from them remains at a minimum...We may view the gigantic dams, the steel plants, the marble halls of the Moscow subway, and the skyscrapers of Stalinist architecture as so many pyramids built by a modern-day pharoah. Hydroelectric plants do produce energy, and steel plants turn out steel, but if the steel and energy are used simply to produce more dams and steel plants, the effect on the economy is not very different from that of the construction of pyramids."

In the second half of the book Soros jumps off the deep end espousing his theory of reflexivity. He's been developing his thoughts for decades but studying some chaos theory helped formalize his thoughts. Here is a speech he gave about it at MIT in 1994, where he basically asks the academics "am I crazy?" Basically, due to human biases prices can deviate from the fundamentals those prices are supposed to reflect (as in behavioral finance). But as the prices deviate, they actually change the fundamentals. He gives some anecdotal evidence to back this up but it's a thought exercise rather than a mathematical one. Where it gets murky is how he applies this to a theory of history and how he claims reflexivity also shows up in the fall of communism.

Soros gives definitions for various "systems of thought." The "dogmatic" system is a "closed society" where all new information is filtered through certain supreme dogma. An "open society" is one where people can freely choose between alternatives and we can live in the tension of different opposing ideas. One gathers from various passages that Soros is an atheist or agnostic and hates those who believe in a supreme Truth being. The problem is that he's dogmatic about that-- so he falls into his own trap. Soros admits that the open society may be untenable-- people may be so uncomfortable in it that they return to dogma instead.

Soros believes that we're not always converging towards equilibrium; a closed society is one that is so far from equilibrium (where beliefs match reality [or price = fundamentals]) that it is stuck. As that society opens up and revolution occurs the fundamentals change faster than participants' beliefs can keep up-- hence revolution leads to a quick collapse of the old regime.

He also objects to the "theory of perfect competition" because it is divorced from reality. I don't know anyone who treats perfect competition as a reality-- it's just a theoretical construct. Consequently, he also rejects the "theory of property rights" because it requires perfect competition to justify it. He is obviously supportive of property rights, recognizing how the lack of which destroyed quality of life in the USSR. But he espouses that society should make sure the property is used for the "greater good." It doesn't sound much different than talking about externalities, but there is also just some general vagueness in his statements (and it seems odd from someone who has greatly profited off the demise of various countries' economic systems). I suppose I might want to read his 1987 book The Alchemy of Finance.

The book ends rather hastily, he has a hard time trying to bring it all together. It appears to have been revised as events in the USSR unfolded in 1991.

2 stars.

Thursday, February 10, 2011

On Win Probabilities and Watching Sports

Brian Burke's Advanced NFL Stats "blog" is one of the best sports websites on the planet. It's what happens when you turn a rocket science loose on raw sports data. That said, Burke has also greatly diminished my enjoyment of watching NFL football. For example, he has a wonderful win probabilities equation that follows live play-by-play action of all the games. It uses game score, offense field position, and time left on the clock to calculate a team's win probability (WP) based on all historical games played since 2003. I always follow along when watching the Super Bowl.

Here is Super Bowl 45's WP graphed:

Note that huge drop on the left hand side, that's when the Packers went up 14-0 with 3:34 left in the first quarter. At that point, Green Bay had a 90% probability of winning.

If you're like me, you think "It's only a two possession game. There are still more than three quarters of football left to play. Anything can happen." But history says only 10% of teams overcome a 14 point deficit even that early in the game. When you tell me there is a 90% chance of rain, I take my umbrella. Tell me there's a 90% probability of a team winning, I turn the TV off and find something else to do (though I didn't on Sunday). You can see that according to the WP graph, the probabilistic outcome of the game wasn't in doubt very often.

You can read his analysis of the game-- the key plays and coaching decisions. It is now too hard to watch a coach punt on 4th-and-short when the data say he'd increase chances of winning by going for it. It's too hard to hear Phil Simms say something stupid like "It's too early to go for two," when the probabilities of that team winning are higher with a 2-point attempt than an extra point try. You wish that Burke was on the sideline with his computer so the coach could ask him "should we run or pass here?"

I imagine that since college offenses are much more varied and wide-open than NFL, average scores are higher and there is much more variance in outcomes. Maybe that's why I enjoy watching NCAA so much-- some ignorance is bliss.

Monday, February 07, 2011

Narrative Found

In a previous post I was searching for an article that would credit Egypt's revolution to the Bush administration's attempt at planting a democracy in the Arab world (Iraq). Today, The Economist delivered that article to my doorstep (and you can read it here).

"The experts who scoffed at Mr Bush for thinking that Arabs wanted and were ready for democracy on the Western model are suddenly looking less clever—and Mr Bush’s simple and rather wonderful notion that Arabs want, deserve and are capable of democracy is looking rather wise."

The author goes on to make the point that the Obama administration can't burnish the same credentials while also pointing out that neocons are still scared of the potential consequences vis a vis a Muslim Brotherhood takeover. I don't share that fear. Natan Sharansky dealt with that fear in The Case for Democracy, which was touted by both Bush and Condi Rice (around the time of the Iraq invasion). The Egyptian people are showing that they don't want to live under anyone's iron fist again. A successful revolt would simply serve as a reminder to whoever is in power next that they will be held very accountable for how they govern-- Muslim Brotherhood or not.

Saturday, February 05, 2011

Book Review (#2 of 2011)

This Momentary Marriage: A Parable of Permanence by John Piper. You can download the book as a free PDF file.

"Marriage exists to display the covenant-keeping love of Christ and His church."
Once you understand that statement, you can understand why marriage doesn't exist in heaven-- when Christ and His church are together. You can understand why husbands and wives have different roles (Eph. 5), the husband representing Christ, and the wife representing His church, so it's important not to get the roles confused. You can understand why divorce is sin-- Christ would never abandon His church. And you can understand why the purpose of marriage isn't to make children.

Every chapter is introduced with a quote from Bonhoeffer, this sets a great tone on the un-permanence of marriage. It also deals with singleness and childless marriages-- both are perfectly fine-- so it's useful to read no matter your status.

My wife and I decided to read through this book together as a study, and that's been good. Piper gives a great biblical defense of everything he writes. His books are always God-exalting, and this is no different. He gives you a great appreciation for God's plan for marriage from Genesis to Revelation.

It's a pretty quick read, too. I give it 4 stars out of 5.

Wednesday, February 02, 2011

Egypt coverage

Saw two very different Egypt reports tonight. ABC World News and NBC Nightly News differed in their view of the "Mubarak supporters" who began attacking anti-government protesters in Cairo. Brian Williams threw it over to Richard Engel, who made it clear that the Mubarak supporters were goons sent in by Mubarak himself. He cited plenty of anecdotal evidence-- people claiming to have found police ID on the attackers, the military-style tactics they used to seal off the square, the coordinated arrival, etc. Williams was careful not to lay any of the blame to the government-- he let Engel do all the talking.

ABC, however, only briefly mentioned that many anti-government protesters "believe" that the pro-Mubarak faction were brought by the government itself. Nothing else said, other than reporting the violence itself (including almost getting two reporters beaten up). The rest of the report made it sound like the pro-Mubarak faction was just as grass-roots as the anti-government one. (I wasn't alone in noticing this, my wife picked up on it immediately.)

ABC took The White House's line, as Gibbs condemned the violence but stopped short of blaming the government.

This same stark difference bothered me reading the Twitter updates today. Nick Kristof didn't hesitate to call them "Mubarak's mercenaries" from the beginning while other outlets just said "Mubarak's supporters."

My head thinks ABC's line is correct-- report the facts, let them speak for themselves. Engel may well be right but has no evidence. But my heart wanted ABC to say "doesn't it seem strange that these pro-government forces were so organized...?" They wouldn't go there.

PBS NewsHour gets around this by outsourcing to an ITN reporter to get the facts on the ground, and then posing questions to a panel of experts-- who are free to express their beliefs/opinions that the pro-Mubarak demonstrators were sent by the government itself. One person pointed out that it appeared some of the Mubarak supporters "were clearly from a lower socioeconomic class" who may have been paid a small sum to do the dirty work. Seemingly plausible hypothesis.

PBS NewsHour always wins, by the way. (You'll always win if you're willing to devote more than 5 minutes to a news story.)

Gotta hand it to NBC's coverage in general though, they have an army of people on the ground; Engel speaks Arabic and lived in Cairo for years.

Poor ABC looks like it has no money for foreign offices. They have led with U.S. news the last two days. Kinda like they're embarrassed by their lack of overseas resources. (This is pure news snobbery on my part, but that's what I do).

Snowmaggedon (#3)

Kudos to the Bolivar road crews for getting our road done today. Kudos also to a post woman who attempted to climb a 4' snow drift to deliver a package on foot to our neighbor. She got stuck and the neighbor had to pull her out. Here is our street:Here is our driveway after another 2 hours of shoveling this morning:
Here is a picture of our backyard neighbor's house, just so you can get an idea of some of the drifts against the houses:

Plenty more shoveling to do. Fortunately, Joni is very eager to get out and shovel since it will get her out of the house. I'll gladly let her shovel however much she wants!

Tuesday, February 01, 2011

Snowmaggedon (#2)

I took these pictures while shoveling the driveway a second time today... all before 2pm. There were 7" on the driveway the first time, more than that the second with some high drifts against the garage.
This is next to our garage, there are drifts like this around the house.

Here you can see what's piled up next to the mailbox. The street hasn't been plowed or driven on for a while, there is about 17" on the street.

Here you can see the front door. You can also tell that snow and ice pellets are raining down as I take the picture.

This is a concerning mound of snow on top of the garage. Hoping the wind blows it off.

Saw two trucks get stuck at the end of the street trying to come into the neighborhood. Our neighbors shoveled and got off to work early this morning but I doubt they'll be able to make it back in their cars tonight unless the road is cleared (and I doubt they can pull in their driveways).