Regulation Theater

Bruce Schneier introduced, to me, the concept of security theater.  The idea that much of what we see in terms of ‘security’ – TSA, Homeland Security, etc – gives us the illusion that something is ‘being done’ to make us more secure, but in reality does nothing – or at worst – makes us less secure.

I have grown to understand that regulation does much the same thing.  And this has nothing to do with “government bad, markets good.”  This is true because written rules are brittle, vague and unable to adapt to fluid situations.

I work for an organization that is bound by PCI guidelines – a private consortium of credit card providers that create security rules for companies that accept credit cards.  (I told you that this wasn’t an anti-government screed.)

The concept behind the guidelines are well intentioned.  Credit card companies are liable for losses due to the theft of credit card companies.  Unfortunately, they don’t have control over the entire transaction.  Retailers accept and store credit card numbers and have been one of the primary source for theft over the years.

But I can tell you with absolute certainty that these rules are not making retailers more secure.  We spend a lot of time and money so that we can pass the audits.  But little of this activity is actually making it less likely that credit cards can be stolen.

This isn’t to say that none of their rules should be followed – quite the contrary – most of them are simply common sense.  But, some of them are:

a) Simply not applicable in our environment – but the rules do not distinguish between risk and no risk, they say that you must do X

b) Less risky than other holes in the environment.  Every company has limited funds that they can spend on security (security is always a trade off between costs and benefits) and if we have a hole Y that has a 10% chance of loss and one Z that has a 1% chance of loss we will ignore Y in favor of Z if PCI hasn’t addressed Y.

The PCI – or any regulator for that matter – simply cannot know the details of every environment.  We have a pretty good idea what our risks are, but we can’t address them because we are too busy engaging in the theater of making PCI think its all OK.

If the card issuers really want the retailers to take the risks seriously they need to create the incentives for us to really care.  Make a retailers partially responsible for a breach.  Let us decide where the risks and rewards are – if we have skin in the game we are going to be much more successful than you trying to guess what is likely going to be a problem.

This is true for other areas as well – don’t create rigid rules like SOX & HIPAA with rules that don’t actually address the problem you trying to solve.  Make the failures expensive and the perpetrators culpable.  The results will be far more successful.

Technorati Tags: regulation,economics

POSTSCRIPT: Even knowing how many holes there are in most companies I fell safe using a credit card at almost any company.  The breaches require several steps of compromise and are unlikely more often than not.  Not impossible – but improbable.

Is This Called Reverse Rescission?

My father-in-law passed away early this spring after a very long, very painful battle with cancer.  The last 6 months or so of his life was spent in a cancer clinic receiving chemo treatments 2 or 3 times per week.

I can say pretty definitely that medicine prolonged his life, I have a really hard time deciding whether it was worth it – but those aren’t really conversations you can have with anyone can you?

After he passed away his wife spent months going through all of the medical bills trying to make sense of them.  He typically took care of these things, but those last two years were really tough and I think that he was getting a bit addled.

It took her awhile – maybe three months – to organize all of the bills and get them filed for payment.  But she finally completed that herculean task.  And then the worst happened.  The claims came back one by one with DENIED written across the top.

Not only had my mother-in-law lost her husband of almost forty years but the insurance that they had been counting on to cover hundreds-of-thousands of dollars was being denied to her.  Needless to say she was more than a little distressed.

To many of you this comes as no surprise – in fact you were probably expecting this outcome as soon as you started reading.  To the family, this was completely unexpected.

So she called the insurance company to find out why all of the claims were being denied.  It turns out that my father-in-law had changed his coverage about two years ago.  He changed that coverage to the most basic coverage that Illinois law allows.

Needless to say that the minimum coverage doesn’t cover extensive chemotherapy, frequent doctor visits, huge regimes of drugs and specialists that were used very liberally to keep the man alive.

I doubt that this is what he had intended to do.  Like I said, he was very sick – and very proud.  Too proud to turn the increasingly burdensome task of handling medical bills to his wife or anyone else in the family.  His wife felt the same way.

So she called the insurance company and pled her case.  Needless to say they were sympathetic to her story.  They had signed documents, the law and a case history of at least two years on their side.  My father-in-law did not have – nor did he pay for – insurance coverage that would pay for this massive set of bills.

But she never gave up.  She kept calling different departments at different levels of responsibility until someone finally relented.  Whether it was to get her to leave them alone or because they were persuaded that it was simply illogical that a very sick man would voluntarily cancel insurance that were paying for services that he was already using I don’t know.

But in the end they agreed to cover over $200K of bills – minus the missed premium payments.

Keep this in mind the next time you hear that all insurance companies simply drop coverage as soon as their customers get expensive.  I’m claiming that this practice is wide spread.  After all companies don’t stay in business if they simply give money away to everyone that asks for it.  But they aren’t necessarily the cold-hearted, money-grabbing bastards that they are often portrayed to be.

Technorati Tags: healthcare

How Free-Marketers Can Win the Healthcare Debate

It’s simple – make the following proposal:

1. Eliminate tax preferences for employer-provided healthcare.
2. Allow individuals to purchase health insurance under a federal charter bypassing state laws limiting competition and choice.
3. Expand the role that nurse practitioners have in providing care.

If that bill does not result in lower health care spending and a reduction of the number of uninsured (controlled for people eligible for welfare but don’t sign up and illegal immigrants) then they would pass some pre-determined single payer plan.

Heck, the plan could be written directly into the bill with a sunset clause.  Its time politicians put their money where their mouth is – make a bet on which system will work and end the stupid debate.

Technorati Tags: healthcare,politics,free market

Propaganda Anyone?

Go read this and come back – I’ll wait.

You didn’t follow the link – try again.  My comment isn’t going to make any sense until you read it.

You didn’t listen, whatever.

Wait a minute - things got SO bad that he had to quit his practice and at no time prior to that point he thought maybe a blood test would tell him what was wrong?  A blood test that would potential mean that he wouldn’t lose everything?

Or that selling his Porsche might pay for the blood test before things got so bad he was destitute?

How does this story even pass the smell test?  Oh wait, anecdotal terror stories are what amounts to honest discussion these days.

Technorati Tags: healthcare,stupidity

Profit Opportunity

Fiscally conservative/socially liberal folks seem to be disenchanted with Obama.

President Obama is exceeding all their fears on fiscal and economic issues. After promising a “net spending cut” during the campaign and denouncing “the most fiscally irresponsible administration in history,” he has sent federal spending and the deficit soaring into the stratosphere.

Meanwhile, he’s not delivering what some of his voters hoped for on social issues. No gay marriage, even as Bill Clinton, Dick Cheney, conservative superlawyer Ted Olson, and the legislature of crusty New Hampshire sign on.

No end to the drug war, even though he’s the third president in a row to have acknowledged using drugs. He even mocked a question about drug legalization at his online town hall. (“Dude, we elected that guy, what’s up with that?” is Reason editor Matt Welch’s summary of the blogosphere’s reaction.) No pullout from Iraq.
So once again fiscally conservative, socially liberal voters are starting to wonder if they made a bad bargain.

Independents who turned against the Republicans are likely to become equally disillusioned with Obama, and there’s already some evidence of that in the polls. Support for “smaller government with fewer services” has risen in the ABC News/Washington Post poll, and independents prefer it by 61 to 35 percent, a margin three times as large as a year ago. The number of people who see Obama as an “old-style tax and spend Democrat” has risen by 11 percentage points.

In a USA Today poll, a majority oppose Obama’s health care efforts and 59 percent say he’s spending too much. In another ABC/Washington Post poll, only 25 percent “strongly approve” of his health care plans, and 33 percent strongly disapprove. His honeymoon may turn out to be as passionate, yet brief, as Britney Spears’ Las Vegas marriage.

It’s hard out here for a fiscally conservative, socially liberal voter. But at least there’s always the other party to try again.

“Well, duh” is the best response that I can think of.  Of course the Democrats aren’t going to give this electorate what they want.  Neither are the Republicans.  There is a true opportunity for a third way to take advantage of the situation – who is going to step up?  I don’t think it’s the LP.

HatTip: Below the Beltway

Technorati Tags: libertarian,politics

Libertarian Prospects for Office

Underneath the Beltway has an interesting post on the impact of the Barr Presidential run on long term Libertarian Party prospects for relevance.

with the selection of Bob Barr as it’s nominee, the Libertarian Party received more mainstream media news coverage than at any other point in it’s history. And it was specifically because of who the candidate was. Not only was it due to the fact that there was no small degree of media fascination with the idea of a former Republican Congressman (and not just any Congressman, but one who had led the Clinton Impeachment drive) was running as a third-party candidate, it was also due to the fact that Ron Paul’s candidacy had brought attention to libertarian ideas, and the LP had selected a candidate that was both media- and politically savvy. It was, as many observed at the time, a smart choice for the LP

As long as the LP keeps embracing an all-or-nothing approach to policy they will continue to be marginal fringe has-beens.

Too many people see too many libertarian ideas as wacky, especially from a policy standpoint.

The only way that a libertarian-like party can ever gain any relevance is to approach marginal changes to mainstream views.

Run on a platform that takes the best of the right and the best of the left, perhaps throw in something that is new. But adopt something too radical and no one will take them seriously.

What they really need to do is adopt a populist rhetoric around libertarian ideals. Denounce corporate welfare. Frame regulation as monopoly enhancing. Create villains that can be rallied around. But that isn't every going to happen because most LPers are nutjobs.

Saving Money on Obamacare is a Pipe Dream

If you want to know why Obamacare will never reduce spending on healthcare you don’t have to look any farther than California.

Medi-Cal doctors, meanwhile, this year have managed to roll back a $1.1-billion cut in their reimbursements. A federal appeals court declared illegal a 10% cut in what physicians are paid by Medi-Cal, the government healthcare program for the poor, that was implemented in July 2008. The court ruled the cut would drive doctors out of the program, endangering the ability of patients to get care and thereby violating minimum federal standards for the program.

Once the government gets involved decisions aren’t made on the basis of common sense, logic or even what is best for Everyone (whoever that person is).

Decisions are based on politics and the temperament of the bureaucrat or judge that is sitting on the other side of the bench (or 40 page form or the impersonal telephone line).

I can’t wait.

Technorati Tags: politics,California,healthcare

Missing the Point

I think that Ezra is missing the point.

The likelier outcome, I think, is that Congress will dismantle the filibuster when it realizes that the filibuster is making it less relevant. If you look back at the financial crisis, the lead response came from the Federal Reserve, because everyone understood that Congress couldn’t move quickly enough. If you look at global warming, there’s considerable pessimism that the Senate will be able to pass cap-and-trade, and many expect the Environmental Protection Agency to simply embark on its own campaign to regulate carbon emissions. If you look at health care, ideas like the Federal Health Board or the Independent Medicare Advisory Committee are an explicit effort to entrust the continual process of health-care reform to a more agile body than the Congress.

The Senate loves the filibuster because it absolves them from actually doing anything.  When nothing gets done they are allowed to demonize the ‘evil opposition’ with the understanding that they have delegated the actual responsibility for policy making to the administration anyway.

Technorati Tags: politics,congress

Benefits of National Healthcare

I’m beginning to think that it may be better to just take the plunge and commit to a single payer plan.

The alternative seems to be to slowly chip away at anything resembling a market and with that quality slowly declines, prices slowly rise and people slowly become less satisfied.

While single payer won’t make everything go to shit overnight it will certainly happen faster than the slow erosion that we are currently experiencing.

Bite the bullet, jump off the cliff, make it worse so that it can get better.

If nothing else, at least I’ll know wtf is going to happen – the suspense is killing me.

Technorati Tags: healthcare

Opportunity of a Lifetime

You would think that this would be good news for someone.

Since Obama was inaugurated, not much has changed in the political party landscape at the state level — the Democratic Party continues to hold a solid advantage in party identification in most states and in the nation as a whole. While the size of the Democratic advantage at the national level shrunk in recent months, this has been due to an increase in independent identification rather than an increase in Republican support.

Most of the Big-L Libertarians are nutjobs - but isn't this a prime opportunity for some third party or independent?

I've never understood why someone hasn't been able to cash in on the "all politicians are the same" sentiment.  Maybe I’ll start the None-Of-The-Above Party.

Technorati Tags: libertarian,politics

Perhaps politicians don’t like to be reminded that they have to follow the law too

Can someone please explain to me why the US is taking such a hard line on Honduras?

[Former Honduran Ambassador Roberto] Flores … said he believed Zelaya's ouster was legal because the Supreme Court had ordered his arrest and Congress voted to remove him from office. However, the soldiers flew Zelaya out of the country instead of turning him over for prosecution, in a move that even Honduran military lawyers have said was illegal but necessary.

The US responds to the unanimity of the Honduran official in deposing Zelaya (due to his illegal and unconstitutional actions) by revoking the visas of the new government officials.

So, the Congress, Supreme Court and the military were all behind removing Zelaya from office and the US is opposed to this because…?

Technorati Tags: politics,Honduras

Obama’s Honduras Principles

Obama has insisted that Zelaya be restored to power, but "not because we agree with him," he told an audience in Russia. "We do so because we respect the universal principle that people should choose their own leaders, whether they are leaders we agree with or not."

So does this also mean that we should stick with leaders that don’t, you know, obey the law and the other ruling principles of the nation?

Or does the fact that they were elected ‘by the people’ mean that they have cart blanche to do anything they want?

Technorati Tags: Honduras,politics

Honduras: The Most Important News That No One is Reading

Let’s just parse this bit by bit:

Ousted President Manuel Zelaya appealed to the Honduran military to return its loyalty to him

I don’t know about you, but the military of any nation should never be loyal to a person.  Never.  Under any circumstance.

I am the commander of the armed forces…

Um, not any more.

…elected by the people…

and removed by the Supreme court, Congress and the military.

…and I ask the armed forces to comply with the order to open the airport…

you don’t have the power to issue orders anymore.

Honduras' new government has vowed to arrest Zelaya for 18 alleged criminal acts including treason and failing to implement more than 80 laws approved by Congress since taking office in 2006.

Yet the international ‘community’ is declaring solidarity with the thug.  Wonder why?  I’m guessing that they don’t like to be reminded that they are bound by the laws of their own nation.

Despite a Supreme Court ruling, Zelaya had also pressed ahead with a referendum on whether to hold an assembly to consider changing the constitution…But instead of …trying to defeat his referendum idea at the ballot box

Really AP?  He was willfully committing treason (by definition of their constitution) and they should just stand by and try to defeat him at the ‘ballot box’?

Supposedly law abiding leaders should be celebrating the bloodless removal of a lawless thug.  Instead they label the action a coup and condemn the other leaders of Honduras for preventing an authoritarian prick install himself for life.

Technorati Tags: politics,Honduras

Assuming that X is evil, anything that they do is wrong

The EU has been complaining, basically, forever, that Microsoft bundling a web browser with Windows is anti-competitive.

Rightly or wrongly, Microsoft has decided to decouple Internet Explorer from Windows 7 in Europe.

So, how does the EU respond? By complaining that Microsoft doesn't give users an option of which browser to use.

the Commission's contention this morning is that Microsoft's decision does not provide a remedy for that infraction: essentially, that giving the consumer no Web browser still gives that consumer no choice.

Now that the EU has finally browbeat Microsoft into doing what it wanted - they don't like the result. In short, since Microsoft is evil whatever decisions they make must be wrong.

They want to force Microsoft to bundle other companies products into their software. This is arrogant meddling at its best.

Remember – the Models Always Trump Reality

A scientist has reported that wind speeds have declined as much as 10% across the US.

Gavin Schmidt – Global Warming Enthusiast – says that this simply cannot be since the climate models do not show an effect on wind speed from global warming.

If the facts don't fit the theory, change the facts.  It is SO much easier than changing your mind.

Technorati Tags: global warming,politics

Organ Markets: An Ethical Perspective – Part III

You should probably read Part I and Part II before continuing here.

Next we will consider the complex case of the utilitarian perspective. The utilitarian perspective will attempt to achieve the greatest good for the greatest number of people. The first thing to consider is whether or not a market in human organs would legitimately increase the supply of organs available for transplant. Evidence in India appears to show evidence that there is a market for individuals wishing to sell kidneys “it was estimated that nearly $10 million dollars had exchanged hands for 4,000 transplants in Bombay alone” (Calandrillo, 2004, p. 88).

One concern that is frequently raised is that a market would allow “rich patients buy up all available organs, and leave poorer patients without the chance of a transplant” (Volokh, 2007, p.1839). This may be true, but to some degree is already happening as hundreds of Americans fly abroad each year to purchase organs (Calandrillo, 2004, p. 87). The current ban domestically merely means that the richest of the rich resort to buying organs from the world’s most destitute. Additionally, the long term care of chronic organ failure can be up to $100,000 more expensive than organ transplant costs (Volokh, 2007, p.1839). Therefore, as long as organs can be procured for less than amount it is less expensive to pay for a transplant than to provide the long term care. This would provide considerable incentives for the providers of healthcare, such as Medicaid or insurance providers, to cover some or all of the costs of purchasing organs.

This analysis shows that recipients would certainly benefit from a market in human organs, the question of donors isn’t quite as clear. The large sum of money that they would receive is certainly advantageous. Depending on their income and the amount paid for the organ donors could feasibly be compensated the equivalent of 50% or 75% of their yearly income. This type of compensation would potentially dramatically improve their quality of life, at least over the short term.

One objection to the sale of organs on utilitarian grounds is that the most desperate, tempted by the money, are unwittingly putting their health at risk. There is some evidence that the health risk of donating an organ is quite small. For example, donating a kidney carries a less than 2% chance of death or complications (Volokh, 2007, p. 1841). It is also quite difficult, from an external point of view, to accurately judge the cost benefit analysis required to determine if the health risks outweigh the compensation.

In order to definitively answer the question as to whether organ sales are ethical from a utilitarian perspective the following questions must be answered. Does a market for organs increase the total supply of organs or does material compensation merely erode the supply of altruistic donation? Will a market in organs unfairly favor wealthy recipients over the poor? Or can mechanisms be put into place to ensure that the relatively poor have access to an organ market through charity or government subsidy? Finally, can limits be put into place to ensure that individuals do not sell organs due to desperation or ignorance? This could potentially be resolved by instituting counseling, waiting periods or prohibiting the extremely poor, young or incompetent from participating in the sale of organs.

While legalizing a market in the sale of organs to overcome donor shortages isn’t the only approach it is one that is advocated and derided by many that study the issue. Opponents frequently rely on objections that such a practice is unethical, but when reflecting on such a claim one must ask ‘From what perspective?’ It is true that a categorical imperative analysis of the ethical question will lead to an unethical result if ones values are predisposed to finding the sale of human body as unpleasant. However, alternative approaches to inquiry offer a very different result. An egoistic analysis finds no ethical dilemma while a utilitarian investigation hinges on the answers to some key questions that would protect the most susceptible to harm by such a policy.

__________________

References

Calandrillo, S. (2004). Cash for kidneys? Utilizing incentives to end America's organ shortage [Electronic version]. George Mason Law Review, 13, pp. 69-133.

Delmonico, F. L. & Kahn, J. P. (2004). The consequences of public policy to buy and sell organs for transplantation. American Journal of Transplantation, 4(2), pp. 178-180.
doi: 10.1046/j.1600-6143.2003.00370.x

National Kidney Foundation. (2003, February 1). Financial incentives for organ donation. Retrieved June 2, 2009, from http://www.kidney.org/news/newsroom/positionpaper03.cfm

O’Reilly, K. B. (2008, July 7). AMA meeting: Delegates seek to change law on organ donor incentives. American Medical News. Retrieved from http://www.ama-assn.org/amednews/2008/07/07/prsm0707.htm

The Organ Procurement and Transplantation Network. Data. Available from http://www.optn.org/data/

Volokh, E. (2007). Medical self-defense, prohibited experimental therapies, and payment for organs [Electronic version]. Harvard Law Review, 120, pp. 1813-1846.

Technorati Tags: economics,ethics,school

Organ Markets: An Ethical Perspective – Part II

You can read Part I here.  Please note that all references will be included in Part III.

In an article pondering the sale of organs Delmonico and Kahn (2004) state “[i]t is an unethical approach to shift the tragedy from those waiting for organs to those exploited into selling them” (p. 180). Their article, though, doesn’t offer much analysis beyond the claim that it is unethical. This ethical perspective can be described as an categorical imperative or “doing that which is morally consistent with the principles of right and wrong” (G. Gilmore, personal communication, April, 27, 2009). This type of ethical perspective is defined internally, it does not consider the impact to oneself (ethical egoism), the society at large (utilitarianism) or the individuals affected (altruism).

When considering each ethical perspective one should consider the vantage point of each party involved to get a true understanding of the issue. In the case of organ sales there are two key parties to consider – the recipient of the organ and the donor. However, under the view categorical imperative their viewpoints are irrelevant. If the sale of human organs is wrong, the means are wrong regardless of what ends the parties involved are trying to achieve.

Technorati Tags: economics,ethics,school

Organ Markets: An Ethical Perspective – Part I

As some of you may be aware, I am returning to school to finish what I shouldn’t have stopped many moons ago.

It kinda sucks, dumb classes with economically illiterate professors all around.

Anyway, for my current class (on leadership) I have to write a paper analyzing some social problem from several ethical perspectives.

Being the good market capitalist I am – I knew that it would have something to do with markets and would probably be something that would tweak my liberal prof just a little.  So I chose to look at open market sale of organs for transplantation.

I thought that it was a pretty good analysis of the issue so I thought I would publish it online.  It’s a little long for a blog post, so I’m going to post it in a couple pieces.  Here’s the kickoff:

-note: references will be included in Part III-

There are currently over 100,000 individuals on a waiting list organ for transplant while only 4500 transplants had taken place over the first two months of the year (The Organ Procurement and Transplantation Network, n.d.). Last year less than 28,000 transplants took place, over 48,000 patients were added to the waiting list and over 6,400 people died.

Last year the American Medical Association [AMA] proposed lobbying Congress to allowing pilot studies of payments for organ donation (O’Reilly, 2008). Economists will sometimes go much further claiming “the law banning human organ sales has the unintended and unfortunate consequence of restricting supply”, the clear message being that legalizing such sales would resolve the current shortages that are experienced (Calandrillo, 2004).

On the other side of the issue, the National Kidney Foundation [NKF] issued a very strong statement denouncing any approach to compensate donors stating:

Offering direct or indirect economic benefits in exchange for organ donation is inconsistent with our values as a society. Any attempt to assign a monetary value to the human body, or body parts, either arbitrarily, or through market forces, diminishes human dignity. By treating the body as property, in the hope of increasing organ supply, we risk devaluating the very human life we seek to save. (2003)

The NKF reaction is not uncommon; many people may have such a visceral response to the thought of allowing someone the ability to sell part of their body, perhaps claiming that it is unethical. This paper will evaluate what ethical perspective would lead one to believe that the sale of organs is unethical and investigate whether alternative perspectives can lead to a different ethical analysis.

Part II – Part III

Technorati Tags: economics,ethics,school

I Wish You Would Stop Saying That

In an AP article describing “a defining moment for American capitalism”, in other words the nationalization of GM, they claim that “the nation's severest economic crisis since the Great Depression” is at fault for no one wanting to sink any more money into GM.

First, this isn’t any worse than recessions that occurred in the 80s and 70s for certain – stop saying that this is such a catastrophe.  The only thing that is catastrophic is the government intervention into the market.

Second, companies that are well run are having no trouble getting capital.  GM can’t because they are poorly run and have no honest hope of turning around without shedding some liabilities.

Finally, the auto czar Steve Rattner says that the government will give up control of GM when it ‘succeeds’ - "The outcomes are driven heavily by things that are outside our control, particularly market conditions, car sales, overall economy and obviously the performance of this company"

Anyone want to give an over/under on when this is going to occur?  I’m willing to put on over on just about any number.

Technorati Tags: GM,bankrupcy,politics,economics,Obama

Un-PC Question of the Day

So, let me get this right.  We can’t have vouchers because parents aren’t smart enough to send their kids to a good school.

The economic ‘crisis’ was caused by evil banks selling houses to people that we too dumb to know that they couldn’t afford the house in the first place.

We must have universal health care (whatever that means) because people aren’t intelligent enough to listen to the advise that their doctors give them and come to their own conclusion.

We must ban prostitution, drugs, cigarettes, firearms, gambling all because people are stupid.

In short, we must give the government power to control our lives because we are simply too dumb and inept to do it for ourselves.

Why then do we allow these same ignoramuses to vote for the same bureaucrats that we intend to run our lives?  Or even worse, let these same morons actually create laws for themselves?

If I agree that the public at large is really stupid can I suggest that you need to pass a basic test of intelligence to get into a poll booth?

Technorati Tags: politics

Business Lesson in Four Panels

Why Do Countries Trade With One Another?

Such was the question on my 2nd grade daughter’s homework assignment.

The correct answer is, of course, countries don’t trade with each other – people do.

That answer, of course, would have gotten her an incorrect answer once the economically illiterate teacher got their hands on it.

What to do with the brainwashing that my kids receive with a public school education?  Should I attempt to augment their education and risk confusing them with contradictory information?  Or more plausibly, get them pissed off at me for insinuating that their teachers are stupid morons that don’t know anything about how the real world works?

Or should I try to infuse them with critical thinking skills and hope that one day, when I start spouting libertarian gobbledygook that some of it will seep in?

I’m thinking that there isn’t a good answer.

Technorati Tags: education,economics,family

I'm sure we will be waiting for some time before this fairy dust becomes real gold

Isn’t this the plan that got McCain skewered pre-election?

Senators are considering limiting — but not eliminating — the tax-free status of employer-provided health benefits to help pay for President Barack Obama's plan to provide coverage to 50 million uninsured Americans.

The reality is that politicians are liars – they will give you treats with one hand and pick your pocket with the other.

When government shows up “Hi, we’re with the government and we are here to help” keep both hands on your wallet because they don’t think the money in there is really yours anyway.

And one more thing – if any version of this really passes:

Baucus suggested that the benefit could be limited by taxing health insurance provided to high-income individuals, although he did not specify at what income levels. He also said that plans offering rich benefits — for example, no co-payments or deductibles — might be taxed once their value exceeded a yet-to-be-determined threshold.

Anyone voting for the bill will be immediately ousted. Gold-plated insurance plans are the golden calf of benefit packages and are highly prized as such. There will be a revolution the instant government tries to take them away.

Technorati Tags: healthcare,politics,fantasyland

I Didn’t Realize That the AP Was a Republican Shill

But I’m certain that many on the left will see it as so:

[In 2037], the annual Social Security taxes collected would be enough to pay for three-fourths of current benefits through 2083. To tap the trust fund, the government would have to increase borrowing or raise taxes because Social Security bonds exist only as bookkeeping entries. (emphasis added)

The government is running out of free money by way of borrowing.  At some point it is going to become quite costly to borrow more (if it is even possible).  What happens then?

The day that the lie that SS & Medicare pay for themselves is coming closer and the left is going to be apoplectic trying to figure out how to blame everyone but government failure on the problem.

So government can’t run the budget that it has.  It can’t run the health program that it has.  It is spending money like a drunk sailor on a 12-day meth binge.  And it wants to continue to do more of the same while telling everyone that will listen that they can make everything better while only making those evil rich people pay.

The reckoning is coming, I don’t think it will be pretty for any of us.

Technorati Tags: politics,social security,medicare,budget

Best Idea I've Heard in a Year

Free Will: The Third Option

Scott Adams thinks that free will is an illusion – humans are nothing more than moist robots.  This is essentially the Newtonian view of human behavior.  If you can discover the right factors and measure them you could predictably guess any individuals actions.

Others (perhaps most) believe that you can do anything and that every choice is voluntary.  In this model there is no physics, every human action is random.

There is, however, a third alternative.  Genetics, environment and upbringing will limit the possibilities considerably.  Humans won’t make completely random choices, they are limited to a finite number of options based on who they are. 

I call this the quantum mechanic view of free-will.  Individual behavior are pretty tightly bound by external factors – most people will follow pretty predictable behaviors – however, there is some probability that small deviations can take place.

Technorati Tags: philosophy,free will

Happy Tax Day

Ironic Krugman

The funniest thing Krugman ever wrote:

it doesn’t feel right to make fun of crazy people.

This is News?

I am actually surprised that this is considered news:

Almost three-quarters of Americans think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

In fact, two-thirds of Americans think the tax code should be changed so that middle-class Americans pay less than they do now, while “upper income” people pay more.

Really?! Most people that they should something for nothing while someone else pays?  How shocking – that is completely against human nature!

Wait, never mind.  That is just greed, the only trait I am 100% sure everyone has.

HatTip: Coyote Blog

Technorati Tags: snark

Democracy is the most vile form of government

Almost everyone – Democrats, Republicans and (l)libertarians alike - get the Constitution wrong.  The right and left selectively pick the pieces and parts of the Constitution that they like (which is increasingly small) to bully the other side and rationalize every other policy prescription.  Libertarians typically point to the Constitution and say “but the Constitution says…”, but for much the same reason – they are trying to rationalize their prior beliefs.

Most mention of the Constitution amounts to little more than an appeal to authority in the hopes that it will quench argument, but it rarely acknowledges why the Constitution is important and for what reason it was such an important innovation.  It is an implicit acknowledgement that people cannot be trusted with power – neither dictator, king or mob.

Unfortunately, the document turned out to be the parchment barrier that Madison feared it would become.  The ultimate goal is to limit the ability of anyone – individual or mob – to exert power over any other.  Simply waving the Constitution around and saying “see, it says you can’t do that” is powerless without explaining why it is important to limit power.

Democracy is glorified without a true understanding what democracy really is – mob rule.  Just because a majority want something (or more accurately – a majority of the tiny minority that actually votes) is not justification for an action if it inhibits the freedom of others.  Mobs are too easily swayed and are too ill informed to be making decisions that affect the lives of everyone else

Period.

Technorati Tags: politics,libertarian

MediaWiki & Active Directory Authentication

I had a heck of a time getting MediaWiki to properly authenticate against Active Directory so I thought I would document my configuration in hopes that someone can gain from my trauma.

I was finally able to get authentication working with MediaWiki version 1.14 with the LDAP Authentication extension (version 1.2a) and the LDAPAutoAuthentication extension.

There are many ways to configure the extensions depending on what you want to do. I was looking to accomplish several things:

1. Automatically authenticate the logged in user using integrated authentication.
2. Automatically populate the users name and email address with information out of the directory.
3. Populate wiki groups based on Active Directory group membership.
4. Only use the login id for the wiki username and not the DOMAIN\username that you typically see.
   

In order to simply get auto authentication to work you need to add code similar to below to LocalSettings.php.

//
//LDAP Authentication Configuration
//
require_once( "$IP/extensions/LdapAuthentication.php" );
require_once( "$IP/extensions/LdapAutoAuthentication.php" );
//the domain name is any arbitrary name that you will use as a variable
$wgLDAPDomainNames = array("my_domain");
//define the fully qualified name of your AD domain
$wgLDAPServerNames = array("my_domain"=>"mydomain.com");
//there are other, probably more secure ways to do this, but I know this works.
$wgLDAPEncryptionType = array("my_domain"=>"clear");
//this is the short name of your domain, not the arbitrary variable mentioned below
$wgLDAPAutoAuthDomain = "my_domain";
//this is how you get the wiki user to be username as opposed to DOMAIN\username
list($dom,$userid)=split('[\]',$_SERVER['REMOTE_USER']);
$wgLDAPAutoAuthUsername = $userid;
$wgLDAPBaseDNs = array("my_domain"=>"DC=mydomain,dc=com");
$wgLDAPSearchAttributes = array("my_domain" => "sAMAccountName");
$wgMinimalPasswordLength = 1;
AutoAuthSetup();

Those changes will get your users into the wiki without being prompted for user name and password.

If you would like to pull their name and email address from the directory add the following code into LocalSettings.php right before 'AutoAuthSetup();'

//this is where you define the credentials necessary to read information from AD
//you only need this if you want to pull the name, email address and groups from AD
$wgLDAPProxyAgent = array('my_domain' => 'CN=ldapbinduser,OU=Users,DC=mydomain,DC=com');
$wgLDAPProxyAgentPassword = array('my_domain' => 'theldappassword');
$wgLDAPPreferences = array("my_domain"=>array( "email"=>"mail","realname"=>"cn","nickname"=>"givenName"));

Finally, if you want to pull group assignments you will need to setup custom Wiki groups - add the following code somewhere before you start building the LDAP authentication.

//Custom Wiki Groups
$wgGroupPermissions['AD Group #1']['read'] = true;
$wgGroupPermissions['AD Group #2']['read'] = true;
$wgGroupPermissions['AD Group #3']['read'] = true;

Note that the wiki group names and the AD group names need to be identical. You can read all about the rights that can be assigned and additional configuration parameters for wiki groups here.

Once you have defined your groups you can have the login process automatically add users to those groups based on their AD group memberships. Just add the following code right before 'AutoAuthSetup();' (and after the code that was defined above).

//Group Configuration
$wgLDAPGroupUseFullDN = array( "my_domain"=>true );
$wgLDAPGroupObjectclass = array( "my_domain"=>"group" );
$wgLDAPGroupAttribute = array( "my_domain"=>"member" );
$wgLDAPGroupSearchNestedGroups = array( "my_domain"=>false );
$wgLDAPGroupNameAttribute = array( "my_domain"=>"cn" );
$wgLDAPUseLDAPGroups = array( "my_domain"=>true );
$wgLDAPGroupNameAttribute = array( "my_domain"=>"cn" );

I do not believe that this will remove users from groups once they have been added, but I haven't tested that yet.

The only weird thing that I have experienced is that, for some users, the first time they hit the wiki it tells them that they must log in first. If they refresh they are able to get right in. I assume that it is just a lag between creating the account and allowing login. I have a small set of users so it hasn't caused a problem.

Hopefully this is helpful and will save you the time that I spent with trial and error getting this all to work correctly. One final tip - you can add '$wgLDAPDebug = 3;' to LocalSettings.php to get debug information about what is going on with LDAP authentication if you run into any issues.

Technorati Tags: mediawiki development authentication geek

The Limiting Nature of Philosophy

Scientific discover, by its very nature, is a creative process. Those who wish to discover how things work must first imagine how they might work and test that imaging. As such, humanity places limits on scientific discovery to those things that the individuals involved can imagine. In this way prevailing philosophies can have a profound impact on scientific discovery.

It would be easy to dismiss the limiting nature of philosophy as a phenomenon of past centuries, but one can look at the modern age and at well respected scientists to see the effects. Einstein was a remarkable physicist, his general theory of relativity was a huge step forward. Without his contribution in this area “physicists would eventually have discovered general relativistic effects … but probably not until late in the 20^th century” (Scientific American, p.48). Yet even Einstein was captive to his own philosophies.

After his work on relativity Einstein began work on quantum theory, his work included contributions that eventually resulted in laser technology. But the science eventually led in a direction that he could not accept. Quantum physics relied on statistical probabilities to explain what was happening with sub-atomic particles and Einstein’s personal philosophy insisted that nature worked in a deterministic way – that there must be causal explanations of what was occurring. Einstein “famously declared that God does not play dice” (p. 185) revealing his close-mindedness to the idea that the smallest of particles behaved in a random way.

Fortunately, not everyone shared this particular philosophical view and quantum theory has continued to evolve with the recognition that photons and other sub-atomic particles can actually be in multiple places at the same time. How much physics was hampered by Einstein’s philosophic views is difficult to know, but it is not absurd to assume that, had Einstein been able to accept this reality, he may have been able to make further groundbreaking discoveries in quantum physics. Perhaps it would have even led him to discover the unified theory that had otherwise escaped him.

While human philosophy must always place barriers on what is possible to imagine, it does not necessarily have to be counterproductive. If a philosophy insists that something must be true then it can drive one to explain that truth. Einstein, again, is illustrative of this effect.

The relativity principle was suggested by Galileo stating that “all physical laws are the same regardless of your state of motion, as long as the velocity at which you cruise along does not change” (Scientific American, p. 47). With the discovery of electromagnetic forces this principle appeared to fall apart as experimentalists could never find the relativity effect when measuring light.

The lack of a relativistic effect in electromagnetism bothered Einstein. The conflict between Einstein’s own philosophy and conventional wisdom of the time pushed him to look for another solution.

This drive to validate personal philosophy ultimately led to the special theory of relativity, one of the most profound discoveries of the 20^th century. The implications of the theory are very counter-intuitive for most people – the speed of light is constant but length and time vary at high speeds – that it isn’t unreasonable to assume that only the drive to validate this philosophy made such a discovery possible.

As these example shows, philosophy has a limiting effect on the creative process regardless of the intelligence and nature of the creator. However, the limitation of philosophy can have positive and negative effects.

Technorati Tags: school

Just In Case a Translation Was Necessary

What he said:

Obama on Thursday offered business leaders his view that the crisis is "not as bad as we think."

What he meant:

We have been telling you that this is the worst crisis since the Depression, but now that you have given us what we want we can now tell you the truth.

What is even worse is that he is using the admission that they were tragically wrong to propose even more fundamental changes to the economy.

Technorati Tags: economics,politics

The Real Truth About Mortgage Deductions

Note: Somehow this got stuck as a draft since February - not very timely, but I'm not that prolific so...

Felix Salmon doesn’t think that the mortgage deduction really matters all that much.

The standard deduction in 2009 for a married couple filing jointly is $11,400. That means you get to subtract $11,400 from your income even if you don't pay any mortgage interest at all. Now suppose that married couple bought a home for $200,000, put 20% down, and got a 6% mortgage. Then their annual interest payments are 6% of $180,000, or $10,800. They own your own home, but they get no benefit from the tax deduction: they're still better off taking the standard deduction.

Here is the reply that I left at Asymmetrical Information:

Felix is totally and completely wrong on the mortgage interest deduction.

Mortgages are front-loaded so that for the first 1/3 of the term you are paying mostly interest. so all of those recent buyers are paying 80-90% of their payments just in interest.

Plus you add in deductions for property taxes, etc and you get a significant deduction on your taxes.

Long time owners don't see as much value, but inflation, etc mean that they make it up by keeping larger portions of their paychecks anyway.

Its easy to win an argument when you make up the facts to support your story.

Technorati Tags: housing taxes economics politics

Cosmologists Should Study the Stars, Not Economics

I am taking a class on cosmology and am forced to read a pretty poorly written book – The View From the Center of the Universe: Discovering Our Extraordinary Place in the Cosmos

From the very beginning the authors have been setting up an argument that something was missing in the human consciousness and that a new cosmology would lead us to some enlightenment.

I’ve been kinda dreading when they were going to get to their point – what the new cosmology would look like.  I haven’t quite gotten their yet, but it is crystal clear what form it is going to take as they have just compared gravity to wealth.

Gravity slowly magnifies subtle differences in the expanding universe.  Denser regions expand more slowly, and less dense regions more rapidly, than average.  Gravity always makes the rich regions of the universe comparatively richer and the poor regions poorer, and thus gravity is the Ultimate Scrooge Principle.
…
Wealth left to its own devices in some ways works like gravity: the rich tend to get richer and more powerful. 

Sigh.  How often must this misguided view be debunked?  It is demonstrably false, one of the foundations of economics – and arguably one of the few things that nearly all economists would agree on is this simple fact.  Trade makes everyone better off.  Or stated another way: the creation of wealth makes everyone wealthier.

I challenge anyone to find a case where the poor get poorer when wealth is left to its own devices – it takes government to reverse the progress of humanity (and they do it well).  Take government out of the picture, and only a little, and you get the massive creation of wealth such as we have seen in South Korea, Taiwan, Ireland and Eastern Europe.  Even more recently you have the incredible improvement in the lives of Indians and Chinese.

At the very least I wish that people that don’t actually know anything about economics would at least keep quiet on the subject.  The spreading of trite anti-progress metaphors simple makes it easy for the ignorant to spread their ignorance.

Technorati Tags: rant,economics,school

Change You Can Believe In

On Monday we have this:

On Thursday [Obama] plans to send at least a summary of his first budget request to Capitol Hill. The bottom line, said an administration official Saturday, is to halve the federal deficit to $533 billion by the time his first term ends in 2013.

On Wednesday we have this:

The Democratic-controlled House pushed through a $410 billion measure Wednesday that boosted domestic programs, bristled with earmarks

Which version of the truth are we supposed to believe?  The words or the deeds?

Technorati Tags: politics,Obama,Congress

Obama to Cut the Deficit

You can believe it because he says so.

On Thursday he plans to send at least a summary of his first budget request to Capitol Hill. The bottom line, said an administration official Saturday, is to halve the federal deficit to $533 billion by the time his first term ends in 2013.
….
the deficit will be shrunk by scaling back Iraq war spending, ending the temporary tax breaks enacted by the Bush administration for those making $250,000 or more a year, and streamlining government.

Can someone explain how increasing taxes on 2% of the population (call it $200 billion in revenues) and reducing Iraq spending by $55 billion (if costs are reduced by half).

Let’s leave out whether raising taxes on the most productive members of the economy is a good idea during a recession and let’s leave out whether raise taxes actually raises revenues.  That’s really only about $250 billion of deficit reductions per year.  Far less than the over $500 billion necessary to half the deficit.

Now let’s take into account that Obama is wanting to extend Medicare to cover people over 55.

Billions of new funding for government departments and projects.

Billions in interest for the so-called stimulus package.

And those are just the knowns!  How much more money will be sunk into the black hole that is the auto industry?  Will the government continue to throw good money after bad banks?

Can someone explain to me how you end up with a balanced budget in 2013 when the deficit is going to grow in 2009 & 2010 just based on the binge that has taken place in the first month in office?!

My guess is that he doesn’t want to balance the budget – this is just political cover for raising taxes during a recession.

But maybe I’m just skeptical of politicians, because lord knows there isn’t any justification for that.

Technorati Tags: politics,budget,economics

What’s Wrong With Economics

One of the things that has struck me most about the debates on the ‘crisis’ is that most of it are narratives about what happened – most of which just confirm prior biases.

Even the debates about the so-called stimulus bill are bias confirming stories about how it will ‘fix’ things or do nothing.  For all of the talk about how economics is a science there is little or no real science involved.

Science is, or is supposed to be, about the formation of theories that have predictive power.  We have plenty of theories, but most of them look backward, where are the testable hypothesis?

What I would like to see is economists making testable predications.  The economy as a whole is too chaotic and complex to use the power of economics to predict the state of the economy for the next year – or even the next month!

However, there are cases where the real science of economics can provide testable theories.  Use them!  Publicize them!

Start collecting aggregate scores of the different ‘schools’ of economics.  Are Neo-Keynesians better at predicting the effect of legislatures or the Monetarists or the Austrians? 

Physics hasn’t gained ground in the understanding the cosmos by attempting to explain it all at once, it broke it into testable pieces.  Economics has made attempts at explaining pieces but put that knowledge to practice.

Make predictions.  Be wrong.  Add to the collective understanding of the human species and quit the bias confirming narratives.   Most of all, put some science back into the discussion.

Technorati Tags: science,economics

The Fairness of Review Season

William Briggs relates an acquaintance's story about the annual review process.   From the tone of the post it doesn’t sound like he thinks it’s fair.

My friend is a top employee, a fact which nobody questions, and so my friend gave four personal goals a 5 and one goal a solid 4. The form was then handed in.

It wasn’t long before a human “resources” resource got on the phone to question the ratings. “Did you know,” the resource questioned, “that your group is only allocated three ‘outstandings’? So you cannot put four of them for your self.”

It certainly doesn't seem "fair" but it is the only way that I can think of to make the ratings scarce so that they are only truly given to those that deserve them.

Without this artificial scarcity you allow really crappy managers -- that only want to please their employees--  to give out 'outstanding' reviews like candy.  Meanwhile, more honest managers try to give them fairly (and those with rigorous standards give them out sparingly) so there are huge disparity amongst different teams.   With employees that work for lazy managers getting rewarded and employees that work for demanding managers getting punished.

This isn't to say that the system is perfect, but at least the inequity in rating is somewhat limited within a certain scale.

I have worked for managers that don't establish clear goals or objectives and rated everyone highly.  I have also worked for managers with very high expectations and doled out "outstandings" like they were pure gold. I would much rather work for the later.

Technorati Tags: work,economics

Cosmic Origins, Computer Models & Life. Or How to Get a Headache

The history of the Universe goes something like this.  At least according to the guys that study the stuff and it least as far as I understand it.

In the beginning there was an infinitesimal speck with infinite mass and it exploded in the “Big Bang.”  The resulting energy cooled ending up with protons and neutrons.

That matter cooled some more collapsing the matter into Hydrogen and Helium. The gravity of the particles collapsed the light gasses into masses so dense that they burst into stars.

The stars, as they burned, created oxygen, carbon and other elements.  Eventually the stars ran out of fuel, exploding and expelling the newly created elements into space.

These stellar remnants eventually coalesce and create new stars.  These stars manufacture more oxygen, carbon, etc.  They explode, expelling their elements into space. These remnants eventually coalesce…

This process continues and continues for billions of years creating new stars with richer mixes of elements which explode until there are enough of the heavier elements that they collapse, not into stars, but asteroids and planets.

On one such planet the elements of carbon, oxygen, nitrogen, etc chain together in such a way that amino acids are created and then proteins.  Eventually, these complex molecules result in single cell organisms.  Darwin then takes over and you get humans and the various flora and fauna of the planet earth.

Physicists have fairly complex computer models that basically confirm that this story is plausible. Plug in an infinitely dense point and what we know about physics and you get something evolves approximately like what I have described above.

So, those computer models that simulate the creation of matter, the birth and resulting death of stars and galaxies.  Computer models that churn vast amounts of data simulating billions and billions of years over the course of weeks and months.  Could those computer models actually be simulating the formation of life?

Does that life actually gain sentience? Could we actually be in a similar computer model?  I know that life as a computer program isn’t really new (though I never saw The Matrix) I’m not sure that it has ever been thought about quite this way.  Is what I am thinking about possible?

Obviously, if it took a Supreme Being to create that trigger than resulted in the proteins that make up life it certainly isn’t possible.  But if you assume that the spark that created life was purely random could we actually be creating the conditions for life every time we run through a Big Band simulation?

I think I have a headache – anyone have an Aleve?

Technorati Tags: science,physics,big thoughts

Frustration

I totally screwed up my site.  I was playing with alternative templates and downloading the old template didn’t actually back it up the way that I assumed it did.

Now I have to remember all the widgets and links and other crap I had on the site. 

How frustrating.

Technorati Tags: meta

If I had to Stimulate This is How I Would Do It

Businesses and consumers are scared to spend because they are uncertain about the future, or so the theory goes.  If someone would just inject a little cash into the system then it would all start moving again.  They key is to get the spending going soon on projects that are “ready to go” and will make good use of idle resources right?

There seems to be a belief that there are a few people (namely ‘the government’) that can figure figure out what resources are idle and knows what projects are just sitting on a shelf ready to implement.  That is clearly incorrect if you look at any of the boondoggles that are part of the current stimulus bill.  It is primary composed of increased departmental budgets and infrastructure projects that will take years (and year) to complete.

If I had to come up with a stimulus bill – let’s leave aside whether or not its necessary – I would attempt to use the private sector  to funnel the money.

There are problems with just giving business a bunch of cash – they use it for things like bonuses, airplanes and 0% interest, putting their competitors that don’t get cash at a disadvantage.  And, call me a fool, I am uncomfortable letting tax dollars go towards picking winners.

Assuming that most companies are like mine, there have been millions and billions of dollars in capital projects that have been postponed because no one knows how bad the economy is going to get or how long the downturn will last.  So there are projects that businesses will think will make them better off that they aren’t pursuing because they are simply trying to conserve cash.

Now you don’t want to just give them money and trust that they will use it in a productive way – but the government could match any capital spend that a business decides to undertake.  There are a lot of productivity projects ready to go, we cut capital in half and there are probably twice that many projects that were proposed.  (unlike government, the private sector actually has to make choices). 

So it’s clear that the money could be spent quickly.  Because the funding is only a match there is some likelihood that the spending would actually be productive (though not guaranteed).  And this type of spending is more likely to re-absorb the unemployed resources, or at the very least stop the bleeding.  It is certainly better than assuming that everyone that has been laid off could become a construction worker overnight.

So that is my plan – what do you think?

Technorati Tags: economics,politics,stimulus

Clearly Delusional

And no, I'm not talking about Blagojevich's ramblings about Gandhi, MLK & Mandella.

In an editorial in the NYT asking what's missing from the bailout package, Galbraith writes:

– Increase Social Security benefits, say by 30 percent, and a lower the eligibility age of Medicare to (say) 55 years of age. This would offset the deep drop in equity wealth of the elderly population, while favoring the poor. Expanding Medicare eligibility would permit more workers to retire, freeing firms from carrying health care costs for older workers.

Social Security and especially Medicare are under deep water and will require cutting benefits or substantially raising taxes (probably both) in the next decade. Galbriath's solutions is... to make the problem drastically worse!

Who gave this guy a microphone and how do we take it back?

Questions on Keynes

I just listened to Russ Roberts podcast on Keynesian economics – especially in relationship to the current economic situation.

Before I get to my question I would like to commend Roberts on his ability to be gracious to his guests.  I find myself nearly jumping out of my seat wanting to challenge his guests on one thing or another.  Roberts lets his guests have their say, he will challenge them – gently – on some of their points, but for the most part makes every attempt to make sure that their points are understood or understandable by his listeners.  If you do not regularly listen to EconTalk then you are really missing out on one of the most educational hours that you could possibly had.  I can’t recommend it enough.

Now on to Keynes.

So, if I understand the Keynesian perspective correctly, recessions are caused by a lack of demand.  In order to correct the lack of demand the Keynesian remedy is to have government replace that demand by spending lots and lots (and lots and lots and lots) of money, thus replacing the lost consumer demand with government demand.

So take the current stimulus as an example.  Consumers are spending as much as they used to which has led to a recession.  The Obama economic team wants to ‘fix’ this by having the government spend close to a trillion dollars, thus replacing the nascent consumer demand, thereby stimulating the economy.

Now, if the stimulus was implemented in a best case scenario with all of the money spent in 2009 on projects that are ‘necessary’ – what happens in 2010?  Doesn’t this new lack of demand put us exactly where we started?  How is this a long term fix.  It seems to me that Keynesian stimulus can be nothing but short term in effect.

Am I missing something?

Technorati Tags: Keynes,economics,politics

Some Pretty Good News

I hope they spend a lot of time on this.  In fact, Congress should make this their top priority and devote every effort into uncovering the truth.

The incoming Obama administration should launch a criminal investigation of Bush administration officials to see whether they broke the law in the name of national security, a House Democratic report said Tuesday.

The more time they spend on useless political grandstanding the less real harm they will be able to do.

Technorati Tags: politics

Foundations of Science

A scientific theory can be disproved by a single counterexample, but it can never be proved true because that would mean it couldn’t be refuted; and – it’s faith, not science.

Quick!  Which so called science seeks, above all else, to make sure that no one attempts to disprove it?

Technorati Tags: science