Teleportation, the idea of moving from point A to point C without traveling through the space between, has been around for thousands of years, the first recorded claim of teleportation coming from Buddhist history, in which the Buddha was reported as teleporting between his home in India and Sri Lanka, and later back.
Two kinds of teleportation have been identified in fiction. In one, the item to be teleported is broken down into its component atoms, typically to translate it into energy or a fast moving signal, and reassembled on the other end. People have pointed out that this means that teleportation of a person is killing them to replace them with an identical clone that has the same set of memories. If this kind ever exists, I think that I will not teleport myself, but that it will become routine to teleport objects. If I buy something at the hardware store, rather than put it into my car and drive it home, I will teleport it directly home, and then drive there alone. Vehicles will only be required for the transportation of living things. This would be a big advantage to me, since sometimes I buy things at home improvement stores that are very difficult to fit in my smallish car.
In the other, space is bent, causing an extreme shortcut between point A and point C, the item to be teleported is pushed through this shortcut, thus bypassing all the point B that is in between the two. The space is then un-bent. Since the item remains intact at all times, it would be safe to teleport people using this system. This may have some strange energy requirements, and repeatedly bending and un-bending space can't be good for it.
In any case, either of these teleportation systems would revolutionize the world forever if done reliably. For one, transportation is now obsolete for anything not alive. Sure, your factory could pay a truck to haul it to the store, as is done now, but it will almost assuredly be cheaper to just teleport the widgets over. The transportation industry's loss will be the rest of our gains, as this will mean lower costs, which could lead to lower prices if the extra money is not simply absorbed as extra profits.
But more noticeably, space travel. The international space station was painstakingly built over years, with many rockets each hauling up one additional part until today's current structure, the size of a football field, was in place. With teleportation, the entire structure could be built on earth and then teleported into orbit. Even if the teleporter had to supply the difference in potential energy, which seems like a certainty if there's anything realistic about this at all, this would cost far, far less than all the rockets that were required. If you're using the reassembling type, the astronauts would then have to travel up by rocket, but when they arrive, all of their food, tools, scientific equipment, and computers are all already in place. If you're using the portal method, the astronauts could just directly teleport to the station, and rockets would be obsolete.
And space colonies could be constructed on earth's most brutal deserts, like the Atacama desert on the Peruvian/Chilean border. When we verify that the station is able to sustain human life, it's then teleported to a distant planet, such as Mars. Humans arrive there, either by rocket or portal, and teleporters allow the exchange of goods between earth and the colony. Even if energy can't be directly teleported, fuel or charged batteries could, and if signals can't be teleported, then UUCP commands over a small, say, USB stick, could.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Friday, September 4, 2015
Monday, August 3, 2015
Light and Heavy
I've been thinking about two things that commonly have the adjectives "Light" and "heavy" attached to them. Specifically, rail, and industry.
While light and heavy rail have disputes on the border between these two, both are transportation systems involving a track, and a train that rides upon them. The light rail systems typically involve fewer cars, are more passenger oriented, and stop more frequently. The heavy systems are more cargo-oriented, have many more cars, and stop less frequently.
Industry, meanwhile, comes from the Latin word industria, meaning "productivity." Light industry tends to be companies that require less capital to start up, produce more consumer goods than industrial ones, and use the results of heavy industry as its primary feedstock. Heavy industry tends to be more expensive to set up, starts with raw ores, and produces primarily industrial goods. As examples, steel is heavy industry, whereas soap dispensers made of steel are light industry.
A national economy requires all four of these things. A lack of heavy rail means that all goods transportation are made with relatively inefficient means, be it muscle-based transportation (by humans in the poorest of economies, by animals in slightly richer ones), or by massive trucks that cause massive smog. A lack of light rail hinders the movement of human beings. Even the car-based transportation in my part of the world is inefficient, as the downtown region inevitably clogs on a daily basis, resulting in transport taking an extra hour, or in particular aggravating times, two. A lack of heavy industry means that all goods are based on things you can farm or import. A lack of light industry took down the communist economies, as at first, the nearly starving peasants were happy to be working at all, but eventually, the inability to buy things other than food and shelter started to grate on people. The economy resorted to military keynesian policies, meaning that lots of people were making tanks, who then had basically nothing they could buy with those wages.
Clearly, a good economy is, among other things, diverse.
Monday, January 3, 2011
Preventing Inflation
Inflation is when money becomes less valuable, as goods and services become more expensive. A small amount is practically expected. A large amount is ruinous. Keeping it under control is a very important task for nations. Inflation increases when the production of goods and services slows down or when the government prints more money. Inflation decreases, or even gets turned into its evil twin deflation, when the services speed up faster than money is printed, or if the bills get destroyed by someone other than the government.
This gives me a wonderfully weird idea to slow or kill off inflation. Potlach. Potlach was an old ceremony from Pacific coast tribes in which they were throw a feast for everyone and set part of their wealth on fire. This had the effect of increasing social equality while still allowing the high-rollers to show off and get additional status. For a modern version, we'd have a big huge party for our sponsors, with food and music and speeches about how awesome they are. This culminates with them stacking a huge number of bills on a stack and setting them on fire. As the bill burns, the sponsor gives a speech on any topic of their choosing. Inflation is controlled, rich people get to show off, almost everyone wins. It's best not to do this too often, though, as there is a minor expense in printing the bills in the first place.
This gives me a wonderfully weird idea to slow or kill off inflation. Potlach. Potlach was an old ceremony from Pacific coast tribes in which they were throw a feast for everyone and set part of their wealth on fire. This had the effect of increasing social equality while still allowing the high-rollers to show off and get additional status. For a modern version, we'd have a big huge party for our sponsors, with food and music and speeches about how awesome they are. This culminates with them stacking a huge number of bills on a stack and setting them on fire. As the bill burns, the sponsor gives a speech on any topic of their choosing. Inflation is controlled, rich people get to show off, almost everyone wins. It's best not to do this too often, though, as there is a minor expense in printing the bills in the first place.
Friday, December 17, 2010
Barter Economy
Before there was money, people dealt with their desire for things they didn't own with trading. This allowed you to turn extra goods that you didn't want (let's say you're a cattle rancher. You would have lots of milk, cheese, and beef, but you'd be disappointed if you needed say a potato), into goods that you do want.
Now, there's a reason we stopped doing it this way. For one, you have to find someone who wants what you have, and has what you want. There's a famous German story about a group of Prussian officers trying to trade around their possessions, and some 62 trades have to be made to finally get everything they want. This is essentially the ancestor that famous red paperclip story in which a series of trades turns one ordinary, fraction-of-a-cent in value paperclip into a house, but has to do a lot of trades for things he didn't want in order to get there. Money, by contrast, is a singular store of value that I can trade for almost anything under the sun.
However, in the depression climate, Barter can be useful again. Many Americans have old, unwanted possessions from fatter times. What we need is money, and money is hard to come by, but I still think we can get what we want. By trading. Trade that old stereo that you're tired of to someone who has more booze that he can drink. Trade your old car to an enthusiast, who can give you, say, a new set of tools. No money traded hands, but as I understand Economics, all of this trading would make us all richer. Something we didn't want has been turned into something we do. And that thing need not be a good. There's no reason that services couldn't also be bartered.
See, wealth is not just dollars. Wealth is also having things that you want, and more importantly, need. A broken old car isn't wealth to you, unless you're a mechanically minded old car fan. A book on how to speak Russian isn't very useful...unless you need to learn to speak Russian. Maximize the wealth.
And when the depression ends, there's an even better thing you can do -- garage sale. You unload stuff that's worthless to you, in exchange for cold hard cash, and the people who bought it get it way cheaper than it would have cost new or in a secondhand store. Everyone wins, and that's pretty rare in Economics.
Now, there's a reason we stopped doing it this way. For one, you have to find someone who wants what you have, and has what you want. There's a famous German story about a group of Prussian officers trying to trade around their possessions, and some 62 trades have to be made to finally get everything they want. This is essentially the ancestor that famous red paperclip story in which a series of trades turns one ordinary, fraction-of-a-cent in value paperclip into a house, but has to do a lot of trades for things he didn't want in order to get there. Money, by contrast, is a singular store of value that I can trade for almost anything under the sun.
However, in the depression climate, Barter can be useful again. Many Americans have old, unwanted possessions from fatter times. What we need is money, and money is hard to come by, but I still think we can get what we want. By trading. Trade that old stereo that you're tired of to someone who has more booze that he can drink. Trade your old car to an enthusiast, who can give you, say, a new set of tools. No money traded hands, but as I understand Economics, all of this trading would make us all richer. Something we didn't want has been turned into something we do. And that thing need not be a good. There's no reason that services couldn't also be bartered.
See, wealth is not just dollars. Wealth is also having things that you want, and more importantly, need. A broken old car isn't wealth to you, unless you're a mechanically minded old car fan. A book on how to speak Russian isn't very useful...unless you need to learn to speak Russian. Maximize the wealth.
And when the depression ends, there's an even better thing you can do -- garage sale. You unload stuff that's worthless to you, in exchange for cold hard cash, and the people who bought it get it way cheaper than it would have cost new or in a secondhand store. Everyone wins, and that's pretty rare in Economics.
Wednesday, November 17, 2010
Learning By Doing Theory
There's little demand for inexperienced workers. Almost all companies want to hire workers with prior experience in their field, to minimize training expenses, and to start productive working immediately. This leads to the extreme environment I have been seeing for the past year where many companies won't even bother with a person who isn't already working in their field, and all companies demand prior experience. Those with little to none, like myself, where left with a catch-22 of requiring the experience to even get the experience required. This had to be frustrating for the companies too, who keep wondering why the figurative watering hole has been permanently dried up. (Like most professions, IT workers like me do not spring fully formed from Zeus's forehead!)
I think the entire system would benefit from workfare. People would be paid to do things, thereby getting the money to raise them out of poverty, but more importantly, they would have experience that would make them more attractive to hire in the first place. Companies would gleefully hire up the workforce bunch, who have prior experiences doing what they want and can be laboring productively starting immediately, and the training expenses have already been handled. The paying government would also benefit of progressively shrinking welfare rolls as the petitioners get snapped up into the workforce and the economy recovers.
However, for this to work, workfare would have to revolve around all sorts of industry's work, without stepping on that industry's toes by competing. We do need shovelers and road crews to fix our roads, but having done that doesn't benefit any industry. If the government did manufacturing, engineering projects, and IT, three industries with large demand for the foreseeable future, wouldn't companies that do manufacturing, engineering, and IT complain about the competition? (Yes, undoubtedly.) So the government would have people manufacture build and program systems....that would be thrown in a hole and forgotten. Not good for the morale of the workers, nor would the government really benefit from the results of that.
A better idea are institutions like NASA. NASA has a massive crew of engineers with numerous skills that almost any company would want to hire, but it focuses on something that companies can't yet do profitably for themselves -- space travel. (Space engineering is extremely expensive, and won't be profitable until we figure out some way to keep the expenses down.) So a workfare engineering facility would have to manufacture things that are useful to the government, but not profitable for private companies to make. Specialized tools for the CIA, perhaps. And government IT would have to focus on programming and maintaining computer systems that are somehow unprofitable for private contractor work. I can't think of any of these offhand, but I'm sure they exist and the NSA readily knows what these sorts of things would be.
I think the entire system would benefit from workfare. People would be paid to do things, thereby getting the money to raise them out of poverty, but more importantly, they would have experience that would make them more attractive to hire in the first place. Companies would gleefully hire up the workforce bunch, who have prior experiences doing what they want and can be laboring productively starting immediately, and the training expenses have already been handled. The paying government would also benefit of progressively shrinking welfare rolls as the petitioners get snapped up into the workforce and the economy recovers.
However, for this to work, workfare would have to revolve around all sorts of industry's work, without stepping on that industry's toes by competing. We do need shovelers and road crews to fix our roads, but having done that doesn't benefit any industry. If the government did manufacturing, engineering projects, and IT, three industries with large demand for the foreseeable future, wouldn't companies that do manufacturing, engineering, and IT complain about the competition? (Yes, undoubtedly.) So the government would have people manufacture build and program systems....that would be thrown in a hole and forgotten. Not good for the morale of the workers, nor would the government really benefit from the results of that.
A better idea are institutions like NASA. NASA has a massive crew of engineers with numerous skills that almost any company would want to hire, but it focuses on something that companies can't yet do profitably for themselves -- space travel. (Space engineering is extremely expensive, and won't be profitable until we figure out some way to keep the expenses down.) So a workfare engineering facility would have to manufacture things that are useful to the government, but not profitable for private companies to make. Specialized tools for the CIA, perhaps. And government IT would have to focus on programming and maintaining computer systems that are somehow unprofitable for private contractor work. I can't think of any of these offhand, but I'm sure they exist and the NSA readily knows what these sorts of things would be.
Wednesday, October 6, 2010
Sum Economics
Some people think that Economics is zero sum. That is to say, for me to "win," you have to "lose," and it's all a fight about how much of the total "pie" of wealth we each can have. Others think that the "pie" of wealth can be grown, and the people who make it grow need to be rewarded for doing so, lest they stop doing so. The second is the usual belief of business owners, who fervently believe that they're growing the pie. (Some aren't. It's hard to see how, say, spam, or car horns that honk annoying tunes, makes society wealthier on the net.)
I don't think we're doing either model very well. If it is zero sum, then we're losing our wealth to overseas interests. And if it isn't, then we really need to do something about this unemployment problem before it starves the entire system to death. (No employment equals no customers equals no buying, equals bankrupt company.)
I have a business magnet who agrees with me on this too, albeit a historical one who is now dead: Henry Ford. His shareholders called him insane for paying his workers a living wage, and pricing the car cheap enough that the factory line workers could buy it too. And yet this proved a very smart business decision, as they praised it both as the builder of the car, and the owner of the car. He gained at least as much from the ever desired viral marketing as he lost to high wages and cheap product, plus immensely greater productivity as his workers stayed with the job and put their growing experience to work. (The low turnover also saved on Human Resources costs of hiring and firing.) Mr. Ford went on the express less.....savory....opinions.
In any case, consumer's can't rescue this economy. They're broke.
I don't think we're doing either model very well. If it is zero sum, then we're losing our wealth to overseas interests. And if it isn't, then we really need to do something about this unemployment problem before it starves the entire system to death. (No employment equals no customers equals no buying, equals bankrupt company.)
I have a business magnet who agrees with me on this too, albeit a historical one who is now dead: Henry Ford. His shareholders called him insane for paying his workers a living wage, and pricing the car cheap enough that the factory line workers could buy it too. And yet this proved a very smart business decision, as they praised it both as the builder of the car, and the owner of the car. He gained at least as much from the ever desired viral marketing as he lost to high wages and cheap product, plus immensely greater productivity as his workers stayed with the job and put their growing experience to work. (The low turnover also saved on Human Resources costs of hiring and firing.) Mr. Ford went on the express less.....savory....opinions.
In any case, consumer's can't rescue this economy. They're broke.
Tuesday, August 24, 2010
The Hero of Money
I think the IRS should look up who paid the most taxes in 2010, and give them a medal in a big ceremony. We'll call this person the "Hero of Money," since they made the most and were taxed the most, and give them a gold-leaf plated dollar sign, with moon rocks and all the other crazy things the government can gather. We'll publish their name in the paper, with much innuendo about their skill at making money. (Maybe illegal profits in greater quantities exist elsewhere, but this person was honest enough to obey proper procedure and pay taxes.)
Hopefully, this will make everyone else jealous and work harder next year. People will still whine about taxes, though, even if they do strive to be the person who earns the medal for 2011.
Hopefully, this will make everyone else jealous and work harder next year. People will still whine about taxes, though, even if they do strive to be the person who earns the medal for 2011.
Monday, August 9, 2010
Pigovian Economics
Some hundred years ago, a British Economist, Pigou, had an interesting idea. Based on the idea that what you subsidize, you get more of, and what you tax, you get less of, he proposes that subsidies and taxes be based on the quality of a thing's externalities. College tuition leads to better workforces who earn more money, and who commit less crime, so it should be subsidized. Horn factories that play "La Cucaracha" are annoying, so you should tax the crap out of them.
Assuming that one finds at least as many annoying things to tax as beneficial things to subsidize, it doesn't hurt the budget. And if it really changes the balance of the market, it changes it for the better. Who wouldn't want less annoying things, and more beneficial ones?
Of course, this idea has its critics. Free market fundamentalists would loudly decry this massive government interference, arguing that if people buy things that are annoying, they do so for a good reason. Although frankly, such people are denying the very existence of externalities. And from the perspective of one who seeks to avoid negative externalities, the alternative is regulations, which free market fans hate even more.
Can you, my reader, think of some good things to tax? Good things to subsidize? Right now, the balance needs to favor the tax, because the budget is utterly in the toilet at the moment.
Assuming that one finds at least as many annoying things to tax as beneficial things to subsidize, it doesn't hurt the budget. And if it really changes the balance of the market, it changes it for the better. Who wouldn't want less annoying things, and more beneficial ones?
Of course, this idea has its critics. Free market fundamentalists would loudly decry this massive government interference, arguing that if people buy things that are annoying, they do so for a good reason. Although frankly, such people are denying the very existence of externalities. And from the perspective of one who seeks to avoid negative externalities, the alternative is regulations, which free market fans hate even more.
Can you, my reader, think of some good things to tax? Good things to subsidize? Right now, the balance needs to favor the tax, because the budget is utterly in the toilet at the moment.
Sunday, June 20, 2010
Economic Spite
Economists talk about the world as if it were made of perfectly rational people, who all wanted to get the best outcome for themselves, and in doing so made the best possible outcome for other people too. Which would be nice, but falls short of real human psychology, which has other, less rational needs.
The more I study economics, and the psychology involved, the more I realize that spite plays an unfortunately large role in monetary affairs. Yes, we like having money, but we often like denying it to someone else more. Even if this denial impoverishes us, we, like captain Ahab, insist that from hell's heart, our enemy be good and stabbed, and damn the consequences!
As an example of this, an economist, Max Bazerman, runs an experiment in which participants bid on a $20 bill, with six rules, most notably that the 1st and 2nd highest bids are given to him, and he gives the bill to the 1st highest bid. Now, rationally, bidding at all isn't necessarily a good idea, because you could lose, and it's definitely moronic to bid more than $10 or so, because your bid eats up your winnings pretty fast. Mr. Bazerman reports that he nearly always makes a profit, often as high as $100. This is irrational...but people keep up the bidding, just to not lose.
Why? Spite. The other person is willing to give several times the prize just to punish their rival for the money. And both are poorer for it. Mr. Bazerman is laughing all the way to the bank.
I see this in other fields too. Much of politics is about spite. People furiously upset about welfare don't blink an eye at other wasteful spending that costs hundreds of times as much. It's not the loss of public funds that's upsetting them. It's that "those people" (read: the poor) that they feel superior to are getting money. Same with a lot of international rivalries -- nations are willing to impoverish themselves to defeat another they consider an enemy, when it would be far more rational, or even sane, to cooperate.
America in particular has a history of spite problems. There were spite houses that people built for that one relative that they hated to live in, and was deliberately made uncomfortable as a subtle dig at the hospitality they felt compelled to provide. There were spite fences that neighbors built too tall just to annoy each other until cities passed laws forbidding malicious construction. There have been years of "identity politics" in which people demand better protection for their group so they can mistreat others. (Especially racially and religiously. Ugh.)
Spite makes the world a worse place to be. People suffer when wrath is poured upon them, sometimes just for existing, and communal values are damaged. Sometimes even the malicious person damages themself in the process, as the old American proverb goes, "Cutting off your nose to spite your face." It makes no sense, and we should stop it at all cost.
The more I study economics, and the psychology involved, the more I realize that spite plays an unfortunately large role in monetary affairs. Yes, we like having money, but we often like denying it to someone else more. Even if this denial impoverishes us, we, like captain Ahab, insist that from hell's heart, our enemy be good and stabbed, and damn the consequences!
As an example of this, an economist, Max Bazerman, runs an experiment in which participants bid on a $20 bill, with six rules, most notably that the 1st and 2nd highest bids are given to him, and he gives the bill to the 1st highest bid. Now, rationally, bidding at all isn't necessarily a good idea, because you could lose, and it's definitely moronic to bid more than $10 or so, because your bid eats up your winnings pretty fast. Mr. Bazerman reports that he nearly always makes a profit, often as high as $100. This is irrational...but people keep up the bidding, just to not lose.
Why? Spite. The other person is willing to give several times the prize just to punish their rival for the money. And both are poorer for it. Mr. Bazerman is laughing all the way to the bank.
I see this in other fields too. Much of politics is about spite. People furiously upset about welfare don't blink an eye at other wasteful spending that costs hundreds of times as much. It's not the loss of public funds that's upsetting them. It's that "those people" (read: the poor) that they feel superior to are getting money. Same with a lot of international rivalries -- nations are willing to impoverish themselves to defeat another they consider an enemy, when it would be far more rational, or even sane, to cooperate.
America in particular has a history of spite problems. There were spite houses that people built for that one relative that they hated to live in, and was deliberately made uncomfortable as a subtle dig at the hospitality they felt compelled to provide. There were spite fences that neighbors built too tall just to annoy each other until cities passed laws forbidding malicious construction. There have been years of "identity politics" in which people demand better protection for their group so they can mistreat others. (Especially racially and religiously. Ugh.)
Spite makes the world a worse place to be. People suffer when wrath is poured upon them, sometimes just for existing, and communal values are damaged. Sometimes even the malicious person damages themself in the process, as the old American proverb goes, "Cutting off your nose to spite your face." It makes no sense, and we should stop it at all cost.
Saturday, May 29, 2010
Gasoline, Revisited
Gasoline is pretty cheap in America when I think about it. Compare it with other fluids that people buy without blinking. The cheapest wine costs $19.96/gallon. Cola? A better deal, $1.72 per gallon, but only if you buy in bulk. $3/gallon if you buy from a supermarket. Vinegar? A whopping $8.76/gallon.
American consumers pay this without blinking an eye. But when gas hits $3/gallon? The complaints never end. The current price at the closest station to me is $2.69 per gallon. People see this as expensive, but I'm going to convert it to European standards so my European readers give some perspective. This is .53 Euros/liter after I do the math. I can already hear the derisive laughter.
One reason why the gas prices are this low in the US are because we have oil supplies in the country (even though we use far more than we can readily extract), and the refineries are also local. Another reason is the political will to keep it flowing. Our politicians will move heaven and earth to keep gas cheap.
Last time there was a major spike in the gas prices, there were many speeches about gas being essential to our way of life and demanding action. But there were also considerable funds put into research for alternatives, from ethanol to electric. Funds that promptly dried up again when the price fell, supposedly due severe cutbacks in transportation leading to a fall in demand.
I think it is desirable to have alternatives, especially considering the increasing political hostility of many of the major suppliers. The three biggest suppliers of petroleum I can name offhand, Saudi Arabia, Iran, and Venezuela, all have deteriorating relationships with the United States. There is a security standpoint, which notes that if the US were blockaded, gas prices would rise to extreme prices, and probably would be unavailable to the civilian population entirely. This would affect more than just personal cars -- most businesses in the US are supplied by truck. Shortage would become the norm, shutting down large sectors of the economy.
It would be nice to develop a cheap and abundant alternative, but it may just be wishful thinking. Electricity suffers from storage issues, hydrogen is a carrier, not a source, (and is immensely difficult to keep contained), coal is smoky (and possibly stinky), nuclear is not happening, and solar is totally impractical. Ethanol would require a huge increase in farmland (and would likely drive up food prices from competition), and methane...methane could work. Insert "fart powered car" joke here.
In France's "wine lake," a region in which a large number of amateur wine producers have grown so much wine that the price of wine in the area has pretty much collapsed, it may be practical to have a wine-powered car that would filter the ethanol from the water, and burn the ethanol for fuel.
American consumers pay this without blinking an eye. But when gas hits $3/gallon? The complaints never end. The current price at the closest station to me is $2.69 per gallon. People see this as expensive, but I'm going to convert it to European standards so my European readers give some perspective. This is .53 Euros/liter after I do the math. I can already hear the derisive laughter.
One reason why the gas prices are this low in the US are because we have oil supplies in the country (even though we use far more than we can readily extract), and the refineries are also local. Another reason is the political will to keep it flowing. Our politicians will move heaven and earth to keep gas cheap.
Last time there was a major spike in the gas prices, there were many speeches about gas being essential to our way of life and demanding action. But there were also considerable funds put into research for alternatives, from ethanol to electric. Funds that promptly dried up again when the price fell, supposedly due severe cutbacks in transportation leading to a fall in demand.
I think it is desirable to have alternatives, especially considering the increasing political hostility of many of the major suppliers. The three biggest suppliers of petroleum I can name offhand, Saudi Arabia, Iran, and Venezuela, all have deteriorating relationships with the United States. There is a security standpoint, which notes that if the US were blockaded, gas prices would rise to extreme prices, and probably would be unavailable to the civilian population entirely. This would affect more than just personal cars -- most businesses in the US are supplied by truck. Shortage would become the norm, shutting down large sectors of the economy.
It would be nice to develop a cheap and abundant alternative, but it may just be wishful thinking. Electricity suffers from storage issues, hydrogen is a carrier, not a source, (and is immensely difficult to keep contained), coal is smoky (and possibly stinky), nuclear is not happening, and solar is totally impractical. Ethanol would require a huge increase in farmland (and would likely drive up food prices from competition), and methane...methane could work. Insert "fart powered car" joke here.
In France's "wine lake," a region in which a large number of amateur wine producers have grown so much wine that the price of wine in the area has pretty much collapsed, it may be practical to have a wine-powered car that would filter the ethanol from the water, and burn the ethanol for fuel.
Tuesday, May 11, 2010
Cap and Trade Roughly Analyzed
Cap and Trade is an American proposed law, in which carbon emissions would be limited per entity, (the "cap,") but the limited quantity could be traded between entities (the "trade") to minimize the cost to any one person. Permittable pollution would be represented with certificates. Companies that were particularly efficient in reducing their pollution output could trade their savings to companies that were having a harder time doing so. Reactions are mixed.
The American political left really enjoys this idea, because it would be the cheapest possible solution for limiting carbon emissions. Prices would rise, but not by much, and the economy would develop a certain efficiency of pollution, with more trade-able dollars per unit of carbon production, and the limits could be tightened or loosened by the requirements of the environment.
The American political right despises this idea, as it would increase costs for businesses for something that they refuse to consider a problem. They mostly see environmental legislation along these lines as a plot to damage business interests, as the relationship between business and environmentalism has been strained for years now.
I personally like the idea, as it combines environmental and business concerns for the cheapest possible solution. I like the way that it internalizes the externality of carbon, and uses free-market logic to minimize the expenses involved.
Some economists worry of potential side effects. Who gets the issuing certificates? If it's per person, then either we get business beholden to random people (which they will intensely resent), or we get into corporate personhood issues and shell corporations that exist purely to collect more certificates. Alternatively, if you have to buy them from the government in the first place, it's basically a stealth carbon tax. If you clean carbon from the air, do you get a certificate for that? (You should, the issue with carbon is statistical. 1 ton minus 1 ton equals zero tons.) If so, how do you prove you cleaned the carbon? What if somebody counterfeits the certificates? Or, what if somebody buys up every certificate and demands exorbitant amounts of money for any of them? (An obnoxious example of what economists call "Rent-seeking behavior" in which one seeks to be paid despite providing little to no benefit to those around you.) Some experts proclaim that the disreputable financial firm Goldman-Sachs plans to do exactly that, and has the political lobby resources to force it on the rest of us, public opinion be damned.
If it's a some-freely-issued, others produced by demonstrable sinking efforts, monopoly-free system, I'm all for it. If it's a government-issued-only system that's ignored after the initial issuing, I'm against it.
The American political left really enjoys this idea, because it would be the cheapest possible solution for limiting carbon emissions. Prices would rise, but not by much, and the economy would develop a certain efficiency of pollution, with more trade-able dollars per unit of carbon production, and the limits could be tightened or loosened by the requirements of the environment.
The American political right despises this idea, as it would increase costs for businesses for something that they refuse to consider a problem. They mostly see environmental legislation along these lines as a plot to damage business interests, as the relationship between business and environmentalism has been strained for years now.
I personally like the idea, as it combines environmental and business concerns for the cheapest possible solution. I like the way that it internalizes the externality of carbon, and uses free-market logic to minimize the expenses involved.
Some economists worry of potential side effects. Who gets the issuing certificates? If it's per person, then either we get business beholden to random people (which they will intensely resent), or we get into corporate personhood issues and shell corporations that exist purely to collect more certificates. Alternatively, if you have to buy them from the government in the first place, it's basically a stealth carbon tax. If you clean carbon from the air, do you get a certificate for that? (You should, the issue with carbon is statistical. 1 ton minus 1 ton equals zero tons.) If so, how do you prove you cleaned the carbon? What if somebody counterfeits the certificates? Or, what if somebody buys up every certificate and demands exorbitant amounts of money for any of them? (An obnoxious example of what economists call "Rent-seeking behavior" in which one seeks to be paid despite providing little to no benefit to those around you.) Some experts proclaim that the disreputable financial firm Goldman-Sachs plans to do exactly that, and has the political lobby resources to force it on the rest of us, public opinion be damned.
If it's a some-freely-issued, others produced by demonstrable sinking efforts, monopoly-free system, I'm all for it. If it's a government-issued-only system that's ignored after the initial issuing, I'm against it.
Monday, May 10, 2010
Duck-onomics
So yesterday I was taking a walk in a lovely park with a lake, and there were Muscovy ducks swimming around the lake. I fed them some of my bread, which they really enjoyed. I started to think how food is like money to them, no matter how much they get, they always want even more than that. And that got me to thinking, if I could somehow speak their language, how could I explain trade and economics to them?
Ducks make primarily three things. Their bodies grow feathers, which they discard at a certain level of wear. There are two levels of feathers, the large outer feathers, and the fluffy inner down. Both are oiled to keep the duck waterproof. (Which helps them float on the surface of the water.) The other are eggs, which they use to make more ducks. I don't think they'd be inclined to trade their eggs. Their feathers, on the other hand, were littered around the park.
I'll be imagining the ducks to be speaking in LOLCAT speak, because they're not very smart compared to humans. (Big human-style brains are metabolically expensive. We humans are the nerds of the animal world.)
Lesson for the ducks #1: Feather Plus Wood Equals Arrow
"WHAT GOOD IS ARROW NO CAN EAT"
Patience, my Anatidae friend, we're getting to that. I just have to establish some things first.
Lesson for the ducks #2: Down Feathers Plus Textiles Equals Pillow
Probably a really good one too, all natural and all that. All the humans love down pillows.
"SO CAN EAT PILLOW?"
No, ducks. But we're getting to that.
Lesson #3: Goods like pillow and arrows can be traded for monies.
"WHAT ARE MONIES? CAN EATS?"
No, you can't eat money, but we're getting really close to that, I promise. Next lesson.
Lesson #4: Monies can be traded for anything, including bread.
"NOMS!! BUT WE NO HAVE MONIES, GIVE US NOMS ANYWAY."
No, ducks, you don't get stuff for free.
"BUT WANT!!!!"
I see, I think you'll like lesson five then.
Lesson #5: Since all goods are interchangeable, you can trade feathers you don't need anymore for bread from a human like me. He (or she) will do the remaining transactions without you.
"...."
"...."
"WE TRADE RIGHT NOW K?"
No, I didn't bring any more bread, but you might want to start saving your feathers.
"CAN TRADE ALL FETHURS ME REALLY HONGRY!!!"
No, you need some feathers to, you know, stay afloat, but when some fall out naturally...
"ME PULL THEM, THAT NATRUL, NOW GIVE BREAD."
Maybe I shouldn't trade with you ducks, lest you destroy yourselves.
"NO WAIT COME BACK ME WANT MORE BREAD!!!"
Eh...you're eating well enough as it is.
"WHO TOLD YOU, CREYFISH?!?! CREYFISH LIES!!"
I'm going now. I think I need to talk to someone less...impulsive.
"ME NOT IMPULSUV, ME DUCK. YOU SELL ME BREAD NOW."
I'll bring some tomorrow. No trading.
"AWW, BUT ALL US LIKE NOMS!"
So...imaginary trade with the ducks proves...disastrous....and is accordingly not performed. Ah well. The ideas are almost assuredly too complicated for them.
Ducks make primarily three things. Their bodies grow feathers, which they discard at a certain level of wear. There are two levels of feathers, the large outer feathers, and the fluffy inner down. Both are oiled to keep the duck waterproof. (Which helps them float on the surface of the water.) The other are eggs, which they use to make more ducks. I don't think they'd be inclined to trade their eggs. Their feathers, on the other hand, were littered around the park.
I'll be imagining the ducks to be speaking in LOLCAT speak, because they're not very smart compared to humans. (Big human-style brains are metabolically expensive. We humans are the nerds of the animal world.)
Lesson for the ducks #1: Feather Plus Wood Equals Arrow
"WHAT GOOD IS ARROW NO CAN EAT"
Patience, my Anatidae friend, we're getting to that. I just have to establish some things first.
Lesson for the ducks #2: Down Feathers Plus Textiles Equals Pillow
Probably a really good one too, all natural and all that. All the humans love down pillows.
"SO CAN EAT PILLOW?"
No, ducks. But we're getting to that.
Lesson #3: Goods like pillow and arrows can be traded for monies.
"WHAT ARE MONIES? CAN EATS?"
No, you can't eat money, but we're getting really close to that, I promise. Next lesson.
Lesson #4: Monies can be traded for anything, including bread.
"NOMS!! BUT WE NO HAVE MONIES, GIVE US NOMS ANYWAY."
No, ducks, you don't get stuff for free.
"BUT WANT!!!!"
I see, I think you'll like lesson five then.
Lesson #5: Since all goods are interchangeable, you can trade feathers you don't need anymore for bread from a human like me. He (or she) will do the remaining transactions without you.
"...."
"...."
"WE TRADE RIGHT NOW K?"
No, I didn't bring any more bread, but you might want to start saving your feathers.
"CAN TRADE ALL FETHURS ME REALLY HONGRY!!!"
No, you need some feathers to, you know, stay afloat, but when some fall out naturally...
"ME PULL THEM, THAT NATRUL, NOW GIVE BREAD."
Maybe I shouldn't trade with you ducks, lest you destroy yourselves.
"NO WAIT COME BACK ME WANT MORE BREAD!!!"
Eh...you're eating well enough as it is.
"WHO TOLD YOU, CREYFISH?!?! CREYFISH LIES!!"
I'm going now. I think I need to talk to someone less...impulsive.
"ME NOT IMPULSUV, ME DUCK. YOU SELL ME BREAD NOW."
I'll bring some tomorrow. No trading.
"AWW, BUT ALL US LIKE NOMS!"
So...imaginary trade with the ducks proves...disastrous....and is accordingly not performed. Ah well. The ideas are almost assuredly too complicated for them.
Friday, May 7, 2010
Private Currency
Libertarians and the like will enjoy this notice: there is no law preventing you from producing a private currency. One of your own issue, backed by gold. There's no guarantee that anyone would accept it. (I wouldn't.)
When I buy things, I pay with US Dollars. Either directly by handing over notes, or indirectly via a credit card, which involves a series of bank transfers. These dollars are valuable basically because the US government has a monopoly on their production, and because the government says they are. They are "legal tender," the denomination and payment instrument of debt. That is to say, if I owe someone money, they have to accept the notes as payment or the debt is void. If they demand I pay in gold bars, I can take it to court and tell them "Well, I tried to pay with these dollars, he didn't want them" and then they would rule that I don't owe money after all.
Libertarians dislike the idea of legal tender, as they want to neuter the government to the point of which it could not enforce such a decree. They perceive only things backed by metal or some other such tangible good, to be of value.
So logistically, to have your own currency, you'd need a printing press, intricate designs, some sort of anti-counterfeiting system so that it's difficult for other people to copy your notes, and a stash of gold so that people can redeem your notes at their request. They should not be confused with US Dollars, and for safety's sake, should be of a very different design and size.
As a precedent for this, Scottish-printed notes in the UK are not legal tender in Scotland. In spite of this, a number of shops will accept them anyway, as if it were a check written out to them.
In the past, currency issuing was generally done by banks, who made them as a symbolic representation of a deposit, and then people exchanged them to save themselves the trouble of retrieving the deposit to hand over to the shopkeeper, who probably planned to spend it on something else anyway. The note was lighter and more portable than the original deposit, and easier to handle commerce in. Governments got into the act later.
Now as for accepting, I think it would go over about as well as a foreign-issued currency. In theory I could pay for my groceries in British pounds, or Mexican pesos, or Chinese renminbi, but in practice the store's probably going to demand US dollars, because it can use those right away.
When I buy things, I pay with US Dollars. Either directly by handing over notes, or indirectly via a credit card, which involves a series of bank transfers. These dollars are valuable basically because the US government has a monopoly on their production, and because the government says they are. They are "legal tender," the denomination and payment instrument of debt. That is to say, if I owe someone money, they have to accept the notes as payment or the debt is void. If they demand I pay in gold bars, I can take it to court and tell them "Well, I tried to pay with these dollars, he didn't want them" and then they would rule that I don't owe money after all.
Libertarians dislike the idea of legal tender, as they want to neuter the government to the point of which it could not enforce such a decree. They perceive only things backed by metal or some other such tangible good, to be of value.
So logistically, to have your own currency, you'd need a printing press, intricate designs, some sort of anti-counterfeiting system so that it's difficult for other people to copy your notes, and a stash of gold so that people can redeem your notes at their request. They should not be confused with US Dollars, and for safety's sake, should be of a very different design and size.
As a precedent for this, Scottish-printed notes in the UK are not legal tender in Scotland. In spite of this, a number of shops will accept them anyway, as if it were a check written out to them.
In the past, currency issuing was generally done by banks, who made them as a symbolic representation of a deposit, and then people exchanged them to save themselves the trouble of retrieving the deposit to hand over to the shopkeeper, who probably planned to spend it on something else anyway. The note was lighter and more portable than the original deposit, and easier to handle commerce in. Governments got into the act later.
Now as for accepting, I think it would go over about as well as a foreign-issued currency. In theory I could pay for my groceries in British pounds, or Mexican pesos, or Chinese renminbi, but in practice the store's probably going to demand US dollars, because it can use those right away.
Tuesday, May 4, 2010
Business corruption
Everyone wants less corruption -- or more opportunities to participate in it. The Economist is now reporting that corruption has many hidden costs and is therefore worth stamping out even from the bribers perspective.
Corruption hurts because it damages trust, a very valuable economic asset indeed. The article goes on to explain that contrary to expectation, it also discourages officials from acting efficiently, as instead of doing their proper jobs, they now act primarily to hit up people for money. Repeatedly. Paying one bribe encourages the demand of additional bribes in the future. In addition, it psychologically damages both parties -- the briber feeling morally filthy, the bribee becoming more entitled and obnoxious.
The article also goes on to say that even in countries with a lot of corruption, companies can prosper without paying bribes. It even gives a list of them.
In India, a country notorious for having corrupt officials, an NGO produced a zero-rupee banknote to remind officials that asking for bribes is unacceptable. One "pays" bribes with a note that explicitly proclaims itself to have no value, embarrassing the corrupt official. So far, it's working. When the official himself (or herself, but generally corrupt officials show a tendency to be male), doesn't take the hint, it becomes quite blatant to his supervisors what he's trying to do, and they order him to do the right thing. Or else. I salute the clever Indian anti-corruption NGO's solution, and wish to see it exported to other countries. Perhaps even my own -- I have yet to have a bribe demanded from me, but I'd want to be ready, just in case.
Corruption hurts because it damages trust, a very valuable economic asset indeed. The article goes on to explain that contrary to expectation, it also discourages officials from acting efficiently, as instead of doing their proper jobs, they now act primarily to hit up people for money. Repeatedly. Paying one bribe encourages the demand of additional bribes in the future. In addition, it psychologically damages both parties -- the briber feeling morally filthy, the bribee becoming more entitled and obnoxious.
The article also goes on to say that even in countries with a lot of corruption, companies can prosper without paying bribes. It even gives a list of them.
In India, a country notorious for having corrupt officials, an NGO produced a zero-rupee banknote to remind officials that asking for bribes is unacceptable. One "pays" bribes with a note that explicitly proclaims itself to have no value, embarrassing the corrupt official. So far, it's working. When the official himself (or herself, but generally corrupt officials show a tendency to be male), doesn't take the hint, it becomes quite blatant to his supervisors what he's trying to do, and they order him to do the right thing. Or else. I salute the clever Indian anti-corruption NGO's solution, and wish to see it exported to other countries. Perhaps even my own -- I have yet to have a bribe demanded from me, but I'd want to be ready, just in case.
Friday, April 23, 2010
Autarky
I believe I've mentioned this concept before, but I didn't define it. Autarky is an economic system in which the system is completely self sufficient. Imports and exports are not allowed.
In any big economy like ours, this would be a disaster. We count on imports to buy from the cheapest available sources worldwide, and we count on exports to not be wiped out by all that importing. But there are economies who would benefit from such a scheme.
Very small economies, newly started, would benefit, as start-ups would not have to face competition from deep-pocketed multinational corporations. Forced to rely on their own talents and skills for survival, people would build the resources to supply needs, and unfilled needs would be obvious to would-be entrepreneurs.
Of course, once founded companies become large enough, autarky becomes impractical. When you've reached a national economy of trillions of dollars, as the top 8 or so nations have, then going multinational is your only hope of the continuing expansion that economy requires. To forbid that expansion is to suffocate that company. Autarkies are price inefficient, which is tolerable for a small commune, but intolerable for the trillion-dollar economies. Once everyone's working, paying $8 for dinner is insufferable when you can easily see that your neighbor(ing country) eats that same dinner for 75 cents.
Only one country is pursuing such a strategy, albeit a slightly modified one. North Korea's "Juche" system is an Autarky plus a tourism industry to take foreign money. It's not working well -- it wants to be a command economy, but isn't investing enough research for that to work properly. The power goes off regularly. Reports of starvation escape. I think North Korea has reached the point where dropping autarky is recommended, but they wish not to do that for political reasons.
I would recommend autarky for, at this point, only the impoverished nations of central Africa, and then only long enough for the big startups to get off the ground level. Everyone else clearly benefits from international trade.
In any big economy like ours, this would be a disaster. We count on imports to buy from the cheapest available sources worldwide, and we count on exports to not be wiped out by all that importing. But there are economies who would benefit from such a scheme.
Very small economies, newly started, would benefit, as start-ups would not have to face competition from deep-pocketed multinational corporations. Forced to rely on their own talents and skills for survival, people would build the resources to supply needs, and unfilled needs would be obvious to would-be entrepreneurs.
Of course, once founded companies become large enough, autarky becomes impractical. When you've reached a national economy of trillions of dollars, as the top 8 or so nations have, then going multinational is your only hope of the continuing expansion that economy requires. To forbid that expansion is to suffocate that company. Autarkies are price inefficient, which is tolerable for a small commune, but intolerable for the trillion-dollar economies. Once everyone's working, paying $8 for dinner is insufferable when you can easily see that your neighbor(ing country) eats that same dinner for 75 cents.
Only one country is pursuing such a strategy, albeit a slightly modified one. North Korea's "Juche" system is an Autarky plus a tourism industry to take foreign money. It's not working well -- it wants to be a command economy, but isn't investing enough research for that to work properly. The power goes off regularly. Reports of starvation escape. I think North Korea has reached the point where dropping autarky is recommended, but they wish not to do that for political reasons.
I would recommend autarky for, at this point, only the impoverished nations of central Africa, and then only long enough for the big startups to get off the ground level. Everyone else clearly benefits from international trade.
Sunday, April 18, 2010
Cheapest Terraforming Mars
A youtube video suggests a really, really, cheap way to terraform Mars.
Bacteria. Little bacteria genetically engineered to endure the high radiation, low temperature nightmare that Mars is now, slowly pushing it warmer, wetter, gassier, and more able to help us.
The cost? He estimates it to be about "two shuttle launches," which would add up to $120 million USD at lowest and $2.6 billion USD at highest. Both are astronomical sums, but well within the reach of multiple nations, and even a few corporations.
The bacteria would work slowly, but would operate in conjunction with any other project undertaken. Warming Mars with lasers would speed it up. Adding CO2 would speed it up. Dropping resource-rich meteors would speed it up. A coal-burning remote base would speed it up.
He points out that a common objection to this kind of thing is "but we have problems here on Earth!" Which we do. For $2.6 billion, apartment complexes could be built in such numbers that rent prices would collapse nationwide, ending homelessness for the foreseeable future. Or, a comprehensive medical anti-drug program could end narcotic addiction. Or any number of other worthy projects.
However, another big benefit to this project is that it can be piggybacked on a scientific mission, the kind we were planning to do anyway, for only marginally more money. An extra $500 on a billion dollar project. And that makes it a little harder to argue.
Bacteria. Little bacteria genetically engineered to endure the high radiation, low temperature nightmare that Mars is now, slowly pushing it warmer, wetter, gassier, and more able to help us.
The cost? He estimates it to be about "two shuttle launches," which would add up to $120 million USD at lowest and $2.6 billion USD at highest. Both are astronomical sums, but well within the reach of multiple nations, and even a few corporations.
The bacteria would work slowly, but would operate in conjunction with any other project undertaken. Warming Mars with lasers would speed it up. Adding CO2 would speed it up. Dropping resource-rich meteors would speed it up. A coal-burning remote base would speed it up.
He points out that a common objection to this kind of thing is "but we have problems here on Earth!" Which we do. For $2.6 billion, apartment complexes could be built in such numbers that rent prices would collapse nationwide, ending homelessness for the foreseeable future. Or, a comprehensive medical anti-drug program could end narcotic addiction. Or any number of other worthy projects.
However, another big benefit to this project is that it can be piggybacked on a scientific mission, the kind we were planning to do anyway, for only marginally more money. An extra $500 on a billion dollar project. And that makes it a little harder to argue.
Thursday, April 15, 2010
Money Strategy
Nations that print currency have two strategies for using their currency to maximize their economy. I'm going to call them Strong Currency Strategy and Weak Currency Strategy.
In Strong Currency Strategy, effort is applied to keep the value of the currency high. This makes your currency an excellent hedge choice for investors fearful of falling value, and your citizens love it because foreign goods are now, to them, super cheap. It works best for postmodern economies with lots of services. Germany is famous for using this strategy.
In Weak Currency Strategy, the currency is deliberately allowed to inflate until it trades very poorly. Traveling people with weak currencies are unhappy at the exchange rate, but it serves to make your country attractive to industry. After all, if a company can pay all expenses in weak currency, but be paid in strong currency, they make out like bandits, and the foreign spending replenishes the lost value. The constant printing of money lowers the tax burden, further pleasing manufacturers. Traditionally, France, Spain, and Italy have opted for this strategy.
There are other strategies like North Korea's autarkic "Juche," but I'll leave discussions of those to professional economists.
So, let us imagine a world with two countries, and two currencies. I'll call the currencies the "Deutschemark" and "Lira" after Germany and Italy's traditional currencies. Let us say that the "Deutschemark's" issuer is perusing strong currency strategy and the "Lira's" issuer is pursuing weak currency strategy. Each country has certain industries, both have a strong tourism industry that appeals to each other, and industries that work more strongly in one than the other. Probably the Deutschemark's issuer will have more banking, and the Lira's issuer will have more farming.
Deutschemark holders will love buying food from the other country, since even 1 mark will buy them a huge amount of food. Likewise, Lira-holding farmers will love borrowing money from the other country, because they can do a lot on relatively little. Lira-land also gets a huge boost from Deutschemark-land's tourists. There's also huge incentives to borrow money from Deutschemark-land's banks and run factories in Lira-land. Everybody wins. Well, not everybody. Lira-land tourists will find visiting the other country to be a massively expensive proposition. And running a factory in Deutschemark-land is a losing proposition too.
My country, the United States, has been pursuing a strong currency strategy for most of its existence. Traditionally it was backed by gold for strength, but that's been done away with in favor of controlled inflation instead. There are many who'd like to switch to weak currency strategy, but I think that's a bad idea.
In Strong Currency Strategy, effort is applied to keep the value of the currency high. This makes your currency an excellent hedge choice for investors fearful of falling value, and your citizens love it because foreign goods are now, to them, super cheap. It works best for postmodern economies with lots of services. Germany is famous for using this strategy.
In Weak Currency Strategy, the currency is deliberately allowed to inflate until it trades very poorly. Traveling people with weak currencies are unhappy at the exchange rate, but it serves to make your country attractive to industry. After all, if a company can pay all expenses in weak currency, but be paid in strong currency, they make out like bandits, and the foreign spending replenishes the lost value. The constant printing of money lowers the tax burden, further pleasing manufacturers. Traditionally, France, Spain, and Italy have opted for this strategy.
There are other strategies like North Korea's autarkic "Juche," but I'll leave discussions of those to professional economists.
So, let us imagine a world with two countries, and two currencies. I'll call the currencies the "Deutschemark" and "Lira" after Germany and Italy's traditional currencies. Let us say that the "Deutschemark's" issuer is perusing strong currency strategy and the "Lira's" issuer is pursuing weak currency strategy. Each country has certain industries, both have a strong tourism industry that appeals to each other, and industries that work more strongly in one than the other. Probably the Deutschemark's issuer will have more banking, and the Lira's issuer will have more farming.
Deutschemark holders will love buying food from the other country, since even 1 mark will buy them a huge amount of food. Likewise, Lira-holding farmers will love borrowing money from the other country, because they can do a lot on relatively little. Lira-land also gets a huge boost from Deutschemark-land's tourists. There's also huge incentives to borrow money from Deutschemark-land's banks and run factories in Lira-land. Everybody wins. Well, not everybody. Lira-land tourists will find visiting the other country to be a massively expensive proposition. And running a factory in Deutschemark-land is a losing proposition too.
My country, the United States, has been pursuing a strong currency strategy for most of its existence. Traditionally it was backed by gold for strength, but that's been done away with in favor of controlled inflation instead. There are many who'd like to switch to weak currency strategy, but I think that's a bad idea.
Thursday, March 25, 2010
Burning Money Theory
If I had one million dollars, and in a fit of insanity piled them up and set them on fire, how would it affect the economy?
Well, in the immediate short term, I have one million fewer dollars, and am poorer. The money supply has been reduced by one million, so all remaining dollars are slightly more valuable. (Not much, there are a lot of dollars. What previously cost $1 now costs 99 cents.)
But in the long term, if a lot of people do that, the expense of printing dollars will start to add up. It costs about 2 cents to print every bill, for a total of $200 destroyed in my hypothetical bonfire. Pennies actually cost more than a penny to produce (currently 1.4 cents and rising), but the government mints them at a loss because of the need of exact change. The government will not be pleased at having to repeatedly print money.
Although, again, in the short term, they would benefit, as they would own each freshly printed dollar and could use it to their own ends.
It's the long term where this sort of thing catches up to you. An economy that has to constantly throw wealth creating new paper is an unproductive one. The mounting expense eventually bites you in the ass. This is why deliberately mutilating money is illegal, but you're unlikely to be caught unless you're really blatant about it.
Well, in the immediate short term, I have one million fewer dollars, and am poorer. The money supply has been reduced by one million, so all remaining dollars are slightly more valuable. (Not much, there are a lot of dollars. What previously cost $1 now costs 99 cents.)
But in the long term, if a lot of people do that, the expense of printing dollars will start to add up. It costs about 2 cents to print every bill, for a total of $200 destroyed in my hypothetical bonfire. Pennies actually cost more than a penny to produce (currently 1.4 cents and rising), but the government mints them at a loss because of the need of exact change. The government will not be pleased at having to repeatedly print money.
Although, again, in the short term, they would benefit, as they would own each freshly printed dollar and could use it to their own ends.
It's the long term where this sort of thing catches up to you. An economy that has to constantly throw wealth creating new paper is an unproductive one. The mounting expense eventually bites you in the ass. This is why deliberately mutilating money is illegal, but you're unlikely to be caught unless you're really blatant about it.
Friday, January 1, 2010
To be Rich
For a new decade, the one that starts today, I think I'll ask, why is my country, the United States, a wealthy one?
For one, it has a lot of natural resources. Oil and gold and uranium in the western deserts, farmland aplenty in the midwest, and various other minerals and forests. But this alone doesn't explain it. Japan is nearly resource-free, but is a wealthy prosperous nation, while uranium-rich Nigeria is riddled with poverty.
Probably the greatest resource in the United States is trust. If I go to the gas station, there is a refrigerator there with sports drinks, beer, milk, and other things to buy. This refrigerator is not locked. The clerk trusts that I will buy the goods contained within instead of stealing them. And if I do steal them, the clerk trusts that he can call the police, who will arrest me for it, possibly even recovering the stolen goods. In other countries, they also have gas stations, and those gas stations also have drinkable goods in a refrigerator. But their refrigerator is locked. If I want to buy something, I have to ask the clerk for it, have him unlock the refrigerator and hand it to me. All the while suspicious that I'm plotting to scam him, or stab him and run. And he can't really trust the police to help him, since they're often bought-off by the local mafia, unavailable, or useless.
Transactions in low-trust countries require more work to set up, and are more uncomfortable for both the seller and buyer. If my desire to buy, say, Gatorade, is only marginal, then in a low-trust environment, I probably won't bother. And both I and the gas station are poorer for it. I because I am still thirsty, and the gas station because it didn't sell as much today.
I worry as this new decade dawns, that the trust is going away. The system was clearly manipulated in 2009. The poor see the rich as bloated plutocrats who would happily stab them for a nickel, and the rich see the poor as a teeming mob of communists who'd take their posessions at any cost. May it not get any worse.
For one, it has a lot of natural resources. Oil and gold and uranium in the western deserts, farmland aplenty in the midwest, and various other minerals and forests. But this alone doesn't explain it. Japan is nearly resource-free, but is a wealthy prosperous nation, while uranium-rich Nigeria is riddled with poverty.
Probably the greatest resource in the United States is trust. If I go to the gas station, there is a refrigerator there with sports drinks, beer, milk, and other things to buy. This refrigerator is not locked. The clerk trusts that I will buy the goods contained within instead of stealing them. And if I do steal them, the clerk trusts that he can call the police, who will arrest me for it, possibly even recovering the stolen goods. In other countries, they also have gas stations, and those gas stations also have drinkable goods in a refrigerator. But their refrigerator is locked. If I want to buy something, I have to ask the clerk for it, have him unlock the refrigerator and hand it to me. All the while suspicious that I'm plotting to scam him, or stab him and run. And he can't really trust the police to help him, since they're often bought-off by the local mafia, unavailable, or useless.
Transactions in low-trust countries require more work to set up, and are more uncomfortable for both the seller and buyer. If my desire to buy, say, Gatorade, is only marginal, then in a low-trust environment, I probably won't bother. And both I and the gas station are poorer for it. I because I am still thirsty, and the gas station because it didn't sell as much today.
I worry as this new decade dawns, that the trust is going away. The system was clearly manipulated in 2009. The poor see the rich as bloated plutocrats who would happily stab them for a nickel, and the rich see the poor as a teeming mob of communists who'd take their posessions at any cost. May it not get any worse.
Monday, December 7, 2009
Poverty
The worst thing about poverty isn't the not being able to buy what you want. It's not having to skip a meal because you couldn't afford it this time. It's not constantly repairing your ancient clothes in an effort to remain not a naked barbarian. It's not even constantly having to beg and plead for your continuing existence.
It's the loss of dignity from all of these. A desperate person would sell their body, soul, or mind, to gain a little relief from the suffering. Relief that can be often as little as $10 away. Two hours labor for me (soon to be reduced to 30 minutes or less), but a week's wages or more for many of them.
I have little money, but I was born fortunate in world terms. I ate regularly, had shelter, and even expensive luxuries like computers and education. 10% of the world somehow survives on one dollar per day. I am gobsmacked by this figure. $1/day is enough to provide me food for the day, if I eat the cheapest possible stuff. It would leave nothing left after for shelter, hygiene, or clothing. They only survive because they live where prices are lower, and thus can afford meager food, self-built shelter, and rags. I would need, to replicate their quality of lifestyle for myself, $50 to begin with and then $5 per day every day thereafter. And this would be living in a tent under the high powered electric lines where everyone else refuses to.
There are some projects to try to improve these figures. I can only hope that they work out. Many of them require perquisites that the average $1/day person can't manage.
Another thing to consider is the exponential utility that can be gained. In the tent scenario, I would sleep in a $25 tent, eat three cans of beans for a dollar, brush my teeth if I had a toothbrush, wake up at dawn, spend the daylight hours walking around looking for work, and at dusk, come back to the tent, rub three cents of rubbing alcohol on me for hygiene, then go to sleep. But with a $20,000 house, I can make hardtack with the oven for about $0.20 per meal instead, hygiene is reduced from 3 cents to .2 cents (as well as being more effective), and sleeping is free after the purchase of a bed. Hygiene of clothes is now possible. Labor-saving appliances free up chore time for more work, or what have you.
I seem to remember reading an article that I can no longer find, about an African government producing a welfare program, in which the penniless masses of the country were given $100 per person, to last them to year. The most commonly bought item with this money was clothes, replacing the previous impromptu rags. The recipients reported that this allowed them to feel like they were real actual people (as compared to being an animal, or a peasant before), and that now they could get jobs and maybe earn enough to pay it back, or otherwise develop. However, wealthy farmers who lived in this country were outraged. Their arguments were the usual rabble about welfare: that it was unearned, that it encouraged laziness, that it would be wasted, and that taxes would inevitably go up directly because of that. Never mind that if the recipients of this money became more productive, there might be a bigger market for the crops.
Sometimes I think many economic policies are built on contempt. That people "deserve" to suffer because they are "lazy." If that's the case, then let's implement a new tax: You pay $8000 per month, minus your average daily Calorie burn. Inactive people like me would have to pay $6000 per month (inactive Adult uses 2000 Calories per day), and a hard laborer might not have to pay anything ($8000 - 8000, it's conceivable that a very active person could use 8000 calories per day), and we'll do this for a year. Then we'll see who pays more "laziness tax."
It's the loss of dignity from all of these. A desperate person would sell their body, soul, or mind, to gain a little relief from the suffering. Relief that can be often as little as $10 away. Two hours labor for me (soon to be reduced to 30 minutes or less), but a week's wages or more for many of them.
I have little money, but I was born fortunate in world terms. I ate regularly, had shelter, and even expensive luxuries like computers and education. 10% of the world somehow survives on one dollar per day. I am gobsmacked by this figure. $1/day is enough to provide me food for the day, if I eat the cheapest possible stuff. It would leave nothing left after for shelter, hygiene, or clothing. They only survive because they live where prices are lower, and thus can afford meager food, self-built shelter, and rags. I would need, to replicate their quality of lifestyle for myself, $50 to begin with and then $5 per day every day thereafter. And this would be living in a tent under the high powered electric lines where everyone else refuses to.
There are some projects to try to improve these figures. I can only hope that they work out. Many of them require perquisites that the average $1/day person can't manage.
Another thing to consider is the exponential utility that can be gained. In the tent scenario, I would sleep in a $25 tent, eat three cans of beans for a dollar, brush my teeth if I had a toothbrush, wake up at dawn, spend the daylight hours walking around looking for work, and at dusk, come back to the tent, rub three cents of rubbing alcohol on me for hygiene, then go to sleep. But with a $20,000 house, I can make hardtack with the oven for about $0.20 per meal instead, hygiene is reduced from 3 cents to .2 cents (as well as being more effective), and sleeping is free after the purchase of a bed. Hygiene of clothes is now possible. Labor-saving appliances free up chore time for more work, or what have you.
I seem to remember reading an article that I can no longer find, about an African government producing a welfare program, in which the penniless masses of the country were given $100 per person, to last them to year. The most commonly bought item with this money was clothes, replacing the previous impromptu rags. The recipients reported that this allowed them to feel like they were real actual people (as compared to being an animal, or a peasant before), and that now they could get jobs and maybe earn enough to pay it back, or otherwise develop. However, wealthy farmers who lived in this country were outraged. Their arguments were the usual rabble about welfare: that it was unearned, that it encouraged laziness, that it would be wasted, and that taxes would inevitably go up directly because of that. Never mind that if the recipients of this money became more productive, there might be a bigger market for the crops.
Sometimes I think many economic policies are built on contempt. That people "deserve" to suffer because they are "lazy." If that's the case, then let's implement a new tax: You pay $8000 per month, minus your average daily Calorie burn. Inactive people like me would have to pay $6000 per month (inactive Adult uses 2000 Calories per day), and a hard laborer might not have to pay anything ($8000 - 8000, it's conceivable that a very active person could use 8000 calories per day), and we'll do this for a year. Then we'll see who pays more "laziness tax."
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