Tuesday, October 30, 2012
Morici has been penning articles like this for a long time, and he's immediately smacked down by people like Don Boudreaux and Mike Munger. What's different this time I noticed is that the commenters to the original article tore it apart right away.
Boudreaux has called Morici out on these claims before. Henry Hazlitt even wrote a book about why Morici is wrong in 1946. They are far from alone in their criticism.
What I don't understand is why Morici keeps on trucking like nothing is up. Does he know that he's a court jester? Has no one told him the gaping flaws in his arguments so he can respond to pick up the remains scraps of his dignity?
I don't advocate violence or criminal activity, but since Morici is claiming it's in everyones interest to destroy, why hasn't he asked anyone to burn down his house?
Sunday, October 28, 2012
I never give talks by reading off a script on stage. I do write a script to rehease and organize my speech. When it comes time for the talk, I have a list of bulletpoints to stay on track and I always keep a physical copy of the speech at the podium in case my mind goes blank, but I've never had to use it.
My rehearsal script is available after the link:
In 2007 a group of 20 artisans banded together to create a man's suit using materials harvested and processed within 100 miles. After 500 hours of labor this was the result.
I've been writing about the economic claims of the "Buy Local" movement for the last four years and show you why these claims are pure woo.
This is going to be like cutting the head off a hydra. As we know, cutting the head off a hydra allows two new ones to take its place. Just as we see when confronting conspiracy theorists and astrologers, localists will attempt to change the subject to claims about the environment , safety and security, social responsibility or aesthetic values.
Localist economic claims can be traced back to one of two organizations that produce activist "studies" that claim to show wealth creation from this method. They are the transparently-named activist organization "The institute for Local Self Reliance,” and “Civic Economics,” which as far as I can tell is two guys in Austin Texas with a pocket calculator.
My brief talk will focus on the "local multiplier effect," which is a psedoeconomic growth model presented by "Buy Local" advocates. The idea is that if consumers in a community shift their purchases to vendors that are also inside the community, those vendors will have more money that will also be spent within the community. The wealth of the community will be contained and avoid escaping to other places. Localists are willing to pay higher prices under the assumption that it will be more than made up for with economic growth. This assumption is both false and ancient
This idea is just a rehash of a ancient disproven idea called mercantilism that was refuted by Adam Smith, the founder of modern economics. Under mercantalism, entire nations tried to maximize exports, minimize imports and build up reserves of precious metals. Like many pseduoscientific ideas, local purchasing preferences do not build upon the existing economic framework, but ignore it because its advocates do not understand it and that's why they are able to accidentally recreate disproven models like mercantalism.
The biggest program with this model is that it ignores half of the equation. The focus is always on what the merchants take in, but it ignores what the customers pay out.
Another big assumptions the mercantialists made is that precious metals and gems are wealth, but it was Adam Smith who argued that real wealth is in resources, the goods and services one can command. Money is just a proxy for resources.
In 1776 Adam Smith showed in his book The Wealth of Nations that trade can increase wealth by allowing people to specialize and become more efficient.
Imagine if you and a neighbor each want to eat a hamburger and a tuna fish sandwich every day. You could prepare one of each for yourself and let your neighbor do the same, but this would require two grills to be fired up and cleaned for the hamburger. Two can openers would need to be purchased and put away, along with two bowls to mix the mayonnaise into the tuna.
What if instead you made two hamburgers and your neighbor made two tuna sandwiches and you traded. You would see a reduction in the tools needed and the cleanup. Efficiency would increase. That's why specialization is important.
In 1817 David Ricardo revealed his revolutionary idea of comparative advantage. I don't have time to explain this notoriously difficult idea in depth so I will simply sum it up as trading with people allows you to concentrate on your most productive tasks while they handle less important tasks for you. Once again, efficiency is increased.
This is why self-reliant societies usually exist on the verge of subsistence.
Jobs are not a benefit in and of themselves, and being more efficient means certain types of jobs are eliminated. This frees up workers to concentrate on other tasks. If you don't force all the workers in a community to grow food to keep everyone from starving, you are able to let some workers focus on other needs like arts, entertainment and scientific research.
But the localist model creates jobs by being purposely inefficient. Instead of buying a mass-produced cutting board, you might by a handmade cutting board from a local craftsman and pay twice as much. That creates busywork, but it doesn't increase the amount of goods produced. That ties up the members of the community with busywork when they could become software engineers, cancer researchers or airplane manufacturers.
When you limit who you will buy from, you will on average pay higher prices. When you limit the size of production, you will sacrifice economies of scale and be less productive. If your community is trying to be self-reliant, it will ultimately be poorer.
So back to the multiplier effect as promoted by localists. Let's test this model with a hypothetical community that is entirely self-reliant.
The claim is that by purchasing things entirely from within the community, money will stay in the community and the community will become wealthier. So that means that the community will turn resources into goods using jack-of-all-trade production, instead of specializing. Therefore, more resources will be used to create fewer goods. These goods will then be traded within the community. The focus is to “buy local” but not to “sell local” and occasionally goods will be sold outside the community while more green pieces of paper will come in.
However, no new goods will be allowed into the community – they must be made locally, so the volume of green pieces of paper will increase. Localism concentrates on what the merchants take in, but it forgets to factor in what consumers pay out. Higher production costs mean local goods will cost more to buy, so the purchasing power of these green pieces of paper will decrease. In addition, with resources leaving the community and more green pieces of paper coming in, the ratio of resources to currency will change.
This is essentially inflation, and merchants will demand more money as goods become scarce while they are awash in currency. Even in their perfect dream economy, dollar bills may stay in the community, but wealth will not increase, as wealth means having more goods and resources.
This community would be poorer in every sense of the world.
The "Buy Local" movement is best understood as an advertising scheme for local merchants that uses false promises and guilt to win over customers.
I'm going to share a quotation from Paul Krugman from his 1996 Pop Internationalism, a wonderful book on economic woo. He was writing about modern day protectionists, but every word of it applies to localists.
“…We learn that the authors on my reading list do not base their disdain for academic economics on a superior or more subtle understanding. Rather, their views are startlingly crude and uniformed… [the view] is dominated by entirely ignorant men, who have managed to convince themselves and everyone else who matters that they have deep insights, but are in fact unaware of the most basic principles of and facts about the world economy.”
Today I am wearing a globally-produced suit and the entire ensemble can be purchased for less than $300. If you paid every worker for the 100 mile suit I showed at the beginning a mere $10 hourly wage, the labor cost alone would be $5,000 and each worker would have to set aside a quarter of their income to buy the outfit, and it looks like it was made from a burlap sack and pressed dryer lint. Which world would you rather live in?
Saturday, October 27, 2012
My vote will have no real impact in Massachusetts, a state that will go to President Barack Obama, so how could I waste something that has no value?
With that aside, I am making a simple request to any reader who is voting for one of the two mainstream candidates:
Will you just admit you don't like them?
People in 2008 were entranced by Barack Obama. That feeling is deader than disco today after his failure as a president. His supporters just fear the world will explode is Mitt Romney is elected president. Will you please admit that you hate Romney more than you like Obama?
Romney supporters are no better. Few of them seem to really think he's a candidate to admire. They just would rather have anyone who is not Obama in office. Nearly anyone, in fact. Will you kindly admit that?
Wednesday, October 24, 2012
One of my friends from back home organized a symposium on international relations and peace today to coincide with United Nations Day.
I originally turned down his invitation. It's a work night and the event is a two hour drive in each direction. I told him, sorry, adulthood is in the way.
But first thing this morning I realized adulthood cuts both ways and decided, what the hell, I can make that drive.
As an adult I have the autonomy to eat ice cream for breakfast every morning, but I also have the foresight not to.
I'm currently blogging from the symposium. I may not support the United Nations but I can always support a friend.
By the way, Dylan. The WiFi from your university venue has blocked your own political blog because it "may contain inappropriate material."
Monday, October 22, 2012
“We also have fewer horses and bayonets.”
When I first heard this silly claim from Candidate Romney a week ago I came to a similar assumption. We're fighting small bands of warriors in deserts, not sprawling nations with traditional military structures. This weird position comes off as an attempt to bribe shipbuilding communities into voting GOP, not a legitimate desire to improve the American military.
Saturday, October 20, 2012
That's what it felt like a few months ago when I tuned in to NPR giving investigative journalists and authors Donald L. Barlett and James B. Steele airtime to promote their protectionist book The Betrayal of the American Dream, where they got in over their head and made policy recommendations along the lines of the Smoot-Hawley Tariff Act of 1930.
That interview lacked a response from a free trade supporters and the listener was never informed that Barlett and Steele are rejecting a firm scientific consensus that goes back several hundred years.
Now I see that PBS has given them another chance to promote their book. This time they brought in Harvard economist Robert Lawrence to respond to some of their claims, although I feel he could have done a much better job.
Lawrence made a great case that mechanization has replaced manufacturing jobs the same way it replaced agricultural jobs. Unfortunately, he completely let Barlett get away with saying:
The problem is, when the theory [of free trade] was developed back in the early 1800s, it was envisioned as countries operating comparably. The incomes of the United States and China are so disparate that it would never work. It's always going to be cheaper to go over to China to build what you want to build.
It's our old friend the pauper labor fallacy, where economic illiterates assume production costs are determined entirely by labor prices. They ignore that capital investments, like labor-saving machines, can dramatically increase productivity. In short, it's the cost per unit, not merely the cost of the labor, that matters.
Lawrence also made a pop internationalist argument, where he spoke of free trade as if the benefit is merely in exports:
We need to get tough in opening foreign markets and signing trade agreements that increase our exports. But if we start to discriminate against foreigners with tariffs, they will do the same to us, and what we will end up in is a giant trade war, in which we will all be losers.
I'm a little embarrassed for everyone involved. The point of free trade is not to ship the hard work of American workers overseas to benefit foreigners. It is to bring imports to American consumers as cheaply as possible.
We don't have to wait for revenge tariffs from other nations to harm America. The tariffs our government passes directly harms the American public by raising the prices people must pay. This idea that the danger of tariffs is that they may cause trade is foolish when spoken by a member of the general public. To hear it from an Ivy League academic economist is heartbreaking.
Barlett and Steele must have done some good work in the 1970's and 1980's when they won two Pulitzers together for their work in federal taxes. Today, they've become cranks living on an outdated reputation. Shame on public broadcasting for promoting their nonsense.
Thursday, October 18, 2012
One of the debate questions asked to the candidates was what they would do about the discrimination that causes women to earn 72 cents for every dollar a man makes. The usual rallying cry is 77 cents, so already we're off to a bad start.
Advocates were no doubt pleased to see the issue take the center stage, but now that it's there people are exposing its flaws. It's not just the fact-checking authorities that are disproving it like Politifact and FactCheck.org, even the cherry-picked studies one-eyed watchdog Media Matters is citing reduce the gender wage gap to 5 to 9 percent and confirm that the gender wage gap in the Obama White House is at 18 percent.
It always bugged me how UFO nuts automatically conclude that a point of light in the sky they can't explain simply must be a vehicle created by a secret extraterrestrial life form. The "U" in UFO is supposed to stand for "unexplained," but they insist they do have an explanation.
The gender wage gap advocates automatically take any unexplained pay gap between men and women and call is discrimination. Much the way some some religious people have used gods to explain any areas currently unexplained by science, known as the God of the gaps argument, modern feminists have created a discrimination of the gaps argument as an easy explanations for things they haven't bothered to answer.
Don't get me wrong, it's possible some of this shrinking wage gap between genders could be explained by discrimination. We need to keep an open mind for that possibility. However, in the presence of additional uncontrolled factors in that 5 to 9 percent range, there needs to be some hard evidence before we can label it discrimination.
Tuesday, October 16, 2012
Monday, October 15, 2012
A name that won't be counted on the list of Nobel Prize winners is David Gale, who died in 2008. Gale was Shapley's partner in the landmark 1962 paper that introduced the Gale-Shapley algorithm, but the deceased can not be nominated for the Nobel Prize and as a result Gale is not eligible to receive the award.
I have not read any official statement saying that Gale would have received the award if he had survived another four years, but the case looks pretty clear. I've had a lot of fun reading about the wonderful benefits to humanity Roth and Shapley have brought with their work, and I just want to make sure Mr. Gale is not overlooked by the public. These are mathematicians and economists who saved peoples lives.
Rest in peace David, your work is not forgotten.
Sunday, October 14, 2012
In XCOM the player controls a planetary defense agency. Half the game is managing the XCOM agency and the other half is controlling a small team of soldiers in combat missions using the tools and resources the base has produced.
Resource management is crucial to running your base. The game offers way more cool projects to spend your time and resources on than you can fit in. You need satellites to detect alien ships, war planes to shoot them down, scientists to research new technologies and engineers to build advanced weapons and equipment. Do you assign your researchers to invent a new type of armor with a built-in grappling hook so your troops can scale walls, or do you have them research plasma rifles? Do you sink most of your budget expanding your satellite program to intercept more aliens, or do you purchase more scientific labs to speed along your research? Sometimes aliens attack multiple cities at the same time and you can only send your troops to save one. Do you choose the one that gives you money or an advanced assault trooper?
While the plots in a lot of games tend to reinforce left-wing views, I've seen plenty of games that provide a lesson that could help players be more fiscally responsible.
Too many people on the left look at potential programs individually and don't attempt to fit them into a larger budget. They think if a certain program could help fix a problem, than it must be good and chastises anyone who votes against it.
That kind of reasoning doesn't fly in game budgeting. If you're playing Magic: The Gathering your deck is allowed to have 60 cards minimum. Competitive players make their cards exactly 60 cards, and that always involved cutting a lot of good cards from the deck. The reason players do this is that those additional cards may be good, but they would make it harder to draw some cards that are even better. In effect your deck has a 60 card budget and competitive players typically do not go over that budget.
Tabletop war games like Warhammer and 40K have strict budgets that players have to follow. They agree upon a specific amount of points and each unit in the army they draft has a specific cost. Players have to make hard choices on which units to cut to remain under budget to build a strong fighting force.
These games do a service to players by providing a real lesson in opportunity cost and budgeting. Hopefully more players will make the connection between the way they run their XCOM base and a realistic way to run the country.
Friday, October 12, 2012
It's a well known-problem that cutbacks to news rooms has eliminated a lot of science reporters, and general purpose reports end up covering some of those studies. With the recent scandal where reporters for big media companies agreed to avoid contacting opposing views in order to receive a problematic study early, it's important that every reporter learn the basics.
Wednesday, October 10, 2012
New online education models, such as Marginal Revolution University, will allow the best teachers to take a larger share of the students.
The mechanism we see here is our old friend, the rock star theory of rising inequality, where technology allows fewer and fewer musicians to rise to the top, reach a wider audience and take a bigger share of the profits.
It can work the same way with teachers, where microphones and videos let them reach more students and the most popular ones will attract large classes while lackluster teachers will get less and less.
Monday, October 8, 2012
And sadly, that brings me to the skeptical community.
In this case the message is an alternative medicine magazine that skeptical activists are asking newsstands not to carry. As I've said before, this is not censorship, but it's not in the spirit of free speech.
Ken from Popehat had some good words of caution for skeptics on this issue. See his original post for the links:
Mind the rhetoric, please. Freedom of expression is threatened not only by specifically censorious methods, but by flexible and insipid memes and mottoes. When I see Keir Liddle employing the "fire in a crowded theater" image — the unprincipled nature and repulsive origins of which I discussed recently — I roll my eyes. Andy Lewis' headline "This is not an Issue of Free Speech, but of Responsible Speech" is a cringe-inducing appeal to the categorical dodge. I guarantee you that Mr. Lewis will see some future attack against his writing spun as "this isn't an issue of free speech, but of harassment/bullying/defamation/abuse." Ladies and gentlemen, using sloppy rhetoric in discussions of freedom of expression hands weapons to censors...
Boycotts and complaints are an acceptable more-speech remedy, whatever the junk scientists might complain. These stores are private actors; informing them of the nature of a magazine they stock, advocating that they make a different private decision, or even threatening to boycott is part of the marketplace of ideas. Of course, if woo merchants organize some boycott that the skeptics don't like, and the skeptics argue that it is censorious, they should be called out for hypocrisy.
The magazine in question, titled "What Doctors Don't Tell You," is an irresponsible pamphlet of misinformation that tries to get innocent people to reject proper medical attention. This is a battle we need to fight, but I don't like this tactic one bit.
I did not join in a year ago when skeptics pressed Delta Airlines into rejecting a paid advertisement that discouraged vaccination use. They weren't alone, the American Academy of Pediatrics also pressed and Delta ended up dropping the ad.
I know we're on the side of the angels here and it's perfectly legal to pressure companies into ending arrangements that the customers do not like, but I personally don't want to use that tactic. I want to defeat my opponents with facts and sound arguments, not by making it harder for them to get their message across.
We're living in a new world with the Internet, where any idiotic idea has the potential to reach a large audience. I want to advance efforts that make facts available for those who care to listen.
Legitimizing these tactics sets a legal precedent that others can follow, and some of them won't have good motives. Just as Muslim fundamentalists are justifying blasphemy laws with the criminalization of holocaust denial, creationists could use this framework to push secular magazines off shelves. Any gag you make for speech can be turned on you one day.
Saturday, October 6, 2012
"Foodie" has now pretty much everywhere replaced "gourmet", perhaps because the latter more strongly evokes privilege and a snobbish claim to uncommon sensory discrimination – even though those qualities are rampant among the "foodies" themselves. The word "foodie", it is true, lays claim to a kind of cloying, infantile cuteness which is in a way appropriate to its subject; but one should not allow them the rhetorical claim of harmless innocence implied. The Official Foodie Handbook spoke of the "foodism" worldview; I propose to call its adherents foodists.
The term "foodist" is actually much older, used from the late 19th century for hucksters selling fad diets (which is quite apt); and as late as 1987 one New York Times writer proposed it semi-seriously as a positive description, to replace the unlovely "gastronaut": "In the tradition of nudist, philanthropist and Buddhist, may I suggest 'foodist', one who is enthusiastic about good eating?" The writer's joking offer of "nudist" as an analogy is telling. I like "foodist" precisely for its taint of an -ism. Like a racist or a sexist, a foodist operates under the prejudices of a governing ideology, viewing the whole world through the grease-smeared lenses of a militant eater.
Thursday, October 4, 2012
Most of them are out of context, like how she likes playing as a rogue that stabs people. There's also the occasional vulgarity, disparaging remark about her political opponents and one reference to her left-wing guild jokingly calling itself a socialist guild.
If the occasional joke about fantasy combat disqualifies Lachowicz for office, I'd hate to hear what they would think of the things I did for fun during the four years I played World of Warcraft.
*I started an importing business in Hellfire Peninsula selling Nethergarde Bitters, a plentiful item sold in unlimited quantities in another area, at 40 times the original cost to players undertaking a specific quest, taking advantage of the arbitrage. I wrote a script advertising my service and a second script defending my business's right to exist, as the opportunity cost of fetching the items hurt my customers more than my 39,000 percent markup.
*I encouraged my friends to create a "hit list" of players on our faction that we disliked. I would later promise those players gold and other rewards for help in a simple task to trick them into letting a warlock summon them into a special arenas where players of the same faction could fight each other. Five or six of us would ambush them the moment they arrived.
*When a joke vendor was introduced that sold useless amulets I found I could make a quick profit by selling them to other players at a markup. Instead of providing refunds, I offered buy them back for a fraction of what my marks paid. It was cheaper than buying a fresh one from the vendor and I ended up selling the same worthless necklaces over and over again.
*I adapted a classic con scheme to take advantage of greedy marks. I found a rare item worth about 80 gold and had a friend put it on the auction house with an instant buy-out price of of 200 gold. I then went around and asked if anyone had a copy of the item, offering 300 gold for it. A victim thought I was too lazy to check the auction house and they could make a fast 100 gold off me. He asked me if I was serious and we struck a deal. I saw him walk over to the auction house to buy it, then over to his mailbox to pick it up, and I signed out and never responded to him again. We kept the gold he paid the auction house and we were never caught.
*I spent nine months infiltrating a guild I disliked using an alternate character. I convinced one of the officers if he can beat my friend Eric in a duel I would pay him money and if Eric one I got to be the guild leader for a short while. Eric floored him, as I knew he would, and I cleaned out every coin and item in the guild bank. I then filled the bank with cheap blacksmith hammers and labeled the partitions "hammers" and "more hammers" and posted screenshots on the official forum to mock them. They all quit the guild and I was immune from any punishment, as I never told them the name of my main character and the Blizzard staff do not get involved with issues involving guild banks.
*In the same spirit that Lachowicz's guild called itself socialist, my guild billed itself the world's only all-gay white supremacist guild. We knew other players got the joke, but after viewing ColleensWorld.com I'm not sure the Maine GOP would get the joke.
It was never really about enjoying the profits, it was about the thrill of taking it. I loved to swindle people in the game, but that doesn't mean I am untrustworthy in the real life. It was a safe, controlled setting that didn't hurt anyone and it has no bearings on how I act in the real world.
Tuesday, October 2, 2012
Classmate Bo Bayles posed an interesting question about a massive multiplayer online game to act as a computer model to demonstrate Diamond's biological determinism theory of why some nations develop and others stagnate:
Suppose I created and successfully marketed a large online video game that randomly assigned players to geographic areas that had features associated with Eurasia and then watched as the game evolved. Would these observations carry much weight in academia? Should universities be doing this sort of thing?
What would such a game look like if it wanted to accurately represent Diamond's model?
It would require players to start in different areas with different environments. However, it would not be as simple as providing one group more items to harvest, monsters to fight or quests to complete. That would simply show that ownership of natural resources leads to growth, which Diamond has made clear was never his point.
Instead, diamond spoke about sometimes the plants and animals around a civilization required fewer people to work to achieve subsistence levels. It took five people to feed five people in ancient Papua New Guinea while only four ancient people were needed feed five in the Fertile Crescent. That freed up one fifth of the workforce to accomplish other tasks, which lead to progress and civilization.
For the Guns, Germs and Steel online game players would need to have some kind of ticking time bomb that needs to be kept in check daily, such as hordes of enemies that try to overrun the village but provide no experience points when killed or an ancient well that requires constant sacrifices of materials mined from nearby resource nodes.
One starting village would have an easier time meeting that daily upkeep because of their surrounding environments, such as nodes that produce raw materials at a faster rate or materials for weapons that make warriors more powerful and allow a smaller group of players to hold off the ravaging hordes. This would allow some players from the gifted village to go on quests or craft better items for his faction.
The only problem would be that this game wouldn't be fun for most players, as farming or grinding all day merely to keep from dying is not a rewarding experience. Perhaps that's why Sim Subsistence Farmer or Civilization: Bushman never took off.