Saturday, January 31, 2009

Saturday Round-up 3

More from the week’s reading.

  1. I was happy to see uniform Republican opposition to the Obama stimulus package in the House. A little gridlock is what this piece of legislation needs. While the measure passed it gives me hope that the Senate Republicans will torpedo the legislation with a filibuster. Long shot, but here’s hoping. I quickly emailed both my Senators (both Democrats unfortunately) a revised copy of the LTC I used last week for the 2nd round of TARP funding.
  2. It’s good to see some principled bankers rejecting TARP funds for fear of expanding government controls foisted upon their firms. If the ones who faced insolvency were only so principled.  Sneak peek at a post I wrote covering that very threat.
  3. Not every economist thinks the Keynesian stimulus is the order of the day, regardless of what our politicians want you to believe. This ran in the New York Times last week.
  4. Great editorial in Europe WSJ. “Lax Regulation Didn’t Cause This Crisis.” The author uses some key facts retrospectively to help make the case that it wasn’t the free markets that were at the cause of the economic crisis.
  5. A quick metaphor for what is wrong with the rationalism infecting today’s economic sciences, from George Mason University economist, Tyler Cowen.

Friday, January 30, 2009

Objectivist Round-up

Making Progress has the latest Objectivist Round-up. Check it out here!

Wednesday, January 28, 2009

My OCON Schedule

Attached is my tentative schedule for OCON 2009. For those of you who haven’t registered yet, you have 3 days before the early bird rates uptick!

General Sessions

Optional Sessions (I don’t recall which sessions I signed up for which class, sorry)

  • Moral Rights and Metaphysical Law – Biddle
  • Religion in American History – Daniels
  • The Moral Defense of Capitalism: A History – Brook
  • The History of Ancient Greece: The Archaic Period – Lewis
  • Property Rights and Wrongs – Bowden

Opening Banquet

I’ll be staying in the Seaport Hotel.

Let me know if you’ll be coming! I’d love to plan a meet-up.

Saturday, January 24, 2009

Saturday Round-up 2

Five more from the week’s reading.

  1. I’ve added NewMajority.com to the list of blogs that I read. During this election cycle, many Republican intellectuals chose not to back John McCain in the final contest. This included the likes of George Will, Peggy Noonan, Christopher Buckley (who publicly announced his intention to vote Obama as he left The National Review), an David Frum. These people were not pro-Obama so much as they were embarrassed by what the Republican Party has become. Most are moderates; some lean libertarian; but all are intellectuals. NewMajority is David Frum’s new website dedicated to reasoned dialogue about where the Republican’s go from here. It’s worth keeping an eye on what the debate looks like here, and if possible having a voice. I think Objectivists need to get involved in mainstream, rational debates like this. I’d love to see Ari Armstrong’s “Toward a GOP Revival” get air time on forums like this.
  2. The Three Economists. Much publicized discussion by three leading macro-economists on the Obama stimulus plans. Healthy skepticism is growing on the prudence of such a plan, as it should be. [Hat tip: Megan McCardle]
  3. Buffett on whether the stimulus will work. Notice the complete lack of certainty he claims as to whether anyone knows what the right course of action is; and conversely the complete certainty that doing nothing is not an option.  A lesson in bad epistemology, and a fatal flaw in the logic. The question that exposes it: "What if government interference makes things worse? a lot worse?” [Hat Tip: Tyler Cowen]
  4. Univesity of Chicago professor Luigi Zingales has some continued advice for government regulators. He continues to advocate what I think is the clearest solution to the financial crisis: streamlined bankruptcy and speedy recapitalizations. This is also the most free-market solution one can get given the high level of government involvement in the financial sector.
  5. I wanted to echo Ari’s recommendation of the movie Slumdog Millionaire. It is a wonderfully told tale of the pursuit of values, where the plot is threaded through the 20 questions of a quiz show.

Friday, January 23, 2009

Chekhov

One of twelve on Goal #4 is complete.

The Russian sense of life is incredibly dark, and gloomy, but Chekhov is a master at using concrete images to create a mood. Plot begins to disappear in some of his stories, but characterization is good.

Next up: James’ The Bostonians

Thursday, January 22, 2009

Objectivist Round-up

It’s up now at The Rule of Reason blog. Check it out!

Monday, January 19, 2009

LTC: Vote NO on TARP Extension

The following went to my congressman today (LTC = Letter to Congressman). Unfortunately, I missed the Senate vote, and I’m not sure I hold out much hope for the House to block the measure.

Dear Sir:

I am writing to you to request that you vote against the upcoming release of the 2nd $350 billion in TARP funding.

The original TARP legislation was wildly unpopular with the American people, yet you voted for it. The first installment of funds was not spent in the manner that was originally planned and it failed to accomplish its objective, yet the same people are now going to oversee a successful spend of the second installment? This is madness!

We were told that we could not sit back and do nothing or the economy would collapse. We were told that again when the Detroit auto companies were bailed out. We certainly shall be told the same thing for this second installment of funding, as well as the upcoming Obama stimulus. The economy has not collapsed yet we are told we must do more. We are told that the cause of the crisis was profligate spending and the overextension of credit, but that the solution to it is for government to commit those same sins.

This economic crisis was caused by government policy, most notably a loose money policy on the part of former FED chairman Alan Greenspan and a zealous desire to overstimulate the economy on the part of the Republican administration. The crisis is not the result of the free market, but rather the result of government interference in the free market. Continued government interference will not resolve the issue. Continued government spending will lead to severe inflation and risk a second Great Depression.

The only way to resolve this crisis is to stop government spending, and facilitate the private restructuring of our banking system. You must vote now to rein in excessive, ineffective government spending.

Regards,

Kendall Justiniano

Saturday, January 17, 2009

Saturday Round-up 1

Those of you who follow this blog may occasion to glance at the “What Kendall’s Reading” pane off to the left there. This is a collection of articles that I pull from the news feeds that I read every day. There are usually new articles posted to the list every day, and usually not more than 10 or so. The list is very easy to generate as I simply mark the article I’m reading and Google assures it is posted to the window.

Topically, it’s a mix of everything; sometimes raw material for my posts; sometimes off-topic article of interest; sometimes humor or human interest stories. For those of you who find yourself glancing at it and sometimes clicking through, you can also view the articles as their own RSS feed, which can be found at: “My Favorite Posts.”

I find myself at times wanting to leave a comment about these articles, but not really enough for a full blown post. So I’ve decided to pull four or five from the week and formulate a “round-up” post for Saturdays.This is the first installment! I’ll also add a few sentences of commentary or a quick quote as well so you have the essence of my perspective on the topic.

Certainly if you have elaborations or comments on the links, I’d love to hear your thoughts!

I. Next to Obama’s speech writers, I think that nobody does pure, consistent altruism better than Colin Powell. This week he weighs in on the subject in an op-ed for The Wall Street Journal, “Let’s Renew America Together.” With a subtitle “Everybody can be great because anybody can serve,” he delivers a consistent missive on the topic of “our shared responsibility to one another.”

II. The antidote to the Powell’s thinking is to be found in the winter edition of The Objective Standard, in Craig Biddles lead essay “Capitalism and the Moral High Ground.”

Altruism does not call merely for “serving” others; it calls for self-sacrificially serving others. Otherwise, Michael Dell would have to be considered more altruistic than Mother Teresa. Why? Because Michael Dell serves millions more people than Mother Teresa ever did. The difference, of course, is in the way he serves people. Whereas Mother Teresa “served” people by exchanging her time and effort for nothing, Michael Dell serves people by trading with them—by exchanging value for value to mutual advantage—an exchange in which both sides gain.

Renewal will not come from the type of service Powell talks about. It will only come from the type of service which does not even appear on Powell’s radar screen as service.

III. For a look at how Powell’s sort of service specifically banishes and excludes the kind of service we need, see The Wall Street Journal op-ed “The Mugging of Bank of America.” In September Bank of America stepped up to buy financially failing Merrill Lynch. After enough due diligence to realize how toxic Merrill’s balance sheet was, and that absorbing the bank would threaten the solvency of his own firm, CEO Ken Lewis attempted to back out. The article details how he was forced by the Treasury Department to execute the deal anyway. Today, Bank of America is teetering itself. A prime example of the effects of Powell’s type of “service.” Read this article. It is straight out of Atlas Shrugged.

IV. The big talk these days is the final installment of TARP and Obama’s proposed stimulus package. In a follow-up to my post on emerging skeptics, I offer a few more links. Two more economists come out wondering who thought the stimulus was a good idea. University of Chicago Economist Gary Becker wonders where the hell all the Keynesians came from. Finally Brian Kaplan asks the most basic of questions to be put to anyone advocating a stimulus package, “How will we know that the bailout worked?”

V. Finally, while we’re on the topic of service and The Objective Standard, I wanted to highlight an article in this month’s issue by my friend Ray Niles. It is “Net Neutrality: Toward a Stupid Internet” and it very effectively concretizes how government regulation in supposed “service” of those who would seek broadband access only hurts them. Unfortunately you’ll have to subscribe to get the whole article, or you can drop by your local Barnes & Noble and see if they carry the journal. If they don’t, ask them to Start!

Thursday, January 15, 2009

Chinks in the FED’s Armor, and the Reducto ad Keynsianism

Two items. First, not everyone at the FED agrees with the current “stimulus” tack taken by Bernanke. In a Market Watch article, “Fault Lines Emerge at the FED,” Philadelphia FED President Charles Plosser and former St. Louis FED President William Poole publicly took issue with Bernanke’s policies.

Plosser urged the Fed to "proceed with caution" with the new policy. Others outside the Fed are much more strident and want plans in place immediately to reverse it. They believe an inflation storm is already in train…

Fed officials who pay attention to the money supply believe that the Fed's current policy of printing money never ends well and the danger of inflation is very high. They believe the Fed must withdraw the stimulus before there is any sign of inflation or it is too late….

William Poole, who recently left his post as president of the St. Louis Fed, says it is crucial that the Fed set a target for cutting its balance sheet.

Poole said the expansion of the Fed's balance sheet is unprecedented and research suggests that a surge of inflation is sure to follow.

"I would say if the policy is not reversed, there is a high probability that the unpleasant risk (of inflation) materializes," Poole said in an interview.

I chuckle when I see the empiricist phrase “there is a high probability that…” as though we are simply relying on some unexplained correlation in the data to suggest that inflation is on it’s way. We know what causes inflation. It occurs when the government cranks up the printing presses. If the FED President knows that such policies are occurring, he could be a little bit more certain of what it portends. As in 100%.

I am preparing a letter to my congressmen specifically advocating them to deny additional TARP funds and also vote down the Obama stimulus. I urge my readers to do the same. Maybe we’ve become too used to seeing the large bills from the IRAQ war, but the fact remains that these stimulus packages are tremendously large. Our Congress is mortgaging our future to accomplish very little, and ultimately damage us greatly.

My next item is an analysis discussed by Yves over at naked capitalism. Martin Wolf has an analysis over at the Financial Times (free RSS feeds there!) looking at the stimulus package. He attempts to understand the cost imposed on the US private sector of all this government “stimulus.” The answer? The stimulus won’t work.

The stimulus required is significantly larger than anyone has estimated, and since public money comes from the private sector, the damage that paying down this stimulus debt will inflict on the private sector is significant.

The argument still seems to take a Keynesian perspective on the whole issue, but at least he is attempting to account for where this stimulus money is going to come from, and the damage that obtaining it will do.

This is the logical conclusion of Keynsianist policies. The government doesn’t create anything of value. It is simply mortgaging the private sector’s productivity in order to supposedly fix the private sector. On the surface this makes no sense, and I marvel at how seemingly rational people can hold the idea. If the problem was over-leverage the solution cannot be more of the same.

Yves comes back with some rational analysis in her critique. Banks were not restructured using the TARP funds, and this is what must occur. True asset values must be discovered and write downs must be taken. Treasury is simply providing banks with operating cash and ignoring the toxic balance sheets. This is like throwing money down a bottomless pit. It does nothing.

We are avoiding the bitter pill, spending like there is no tomorrow, hoping that we won’t have to deal with the problems. I’ve not seen a situation like this in my lifetime.

Tuesday, January 13, 2009

Distortions due to Subsidies and Protectionism in Domestic Corn Production

When discussing government intervention in the economy, many times we see industries where government's role is primarily one of suppression of an industry. That is, regulation, taxation, and trade restrictions serve to depress an entire industry. This is true in my industry, the chemical industry. It is also true in the pharmaceutical industry. While there may be differences in impact from firm to firm, generally all firms suffer from government intervention, and generally all firms can be viewed in some ways as victims of government intervention.

But what happens in an industry when government subsidizes a particular set of players at the expense of another? Are all firms victims? No, The picture it turns out is very different.

Dr. Monica Hughes of Free Agriculture - Restore Markets and I have been having a discussion on the economics of the agricultural industry. I wanted to understand where the biggest economic impacts were and their mechanism of impact. She has been extremely helpful in providing background information on the subject. Subsidies are a huge factor in agriculture, and I've decided to use the largest subsidized segment of agriculture, corn, as an example.

Two things happen when government subsidizes an industry. First, on the economic side, the subsidies create distortions in normal markets. These distortions generally benefit some players in the industry, and hurt others. Also, these distortions can usually be shown to be inefficient. That is, the distortions incur costs that would not normally be incurred if the system were free of intervention. Second, on the political side, some firms that benefit from subsidization use political influence to attempt to preserve those subsidies. Essentially, some firms use their political "pull" to attempt to preserve (or maybe even increase the benefit) to themselves, at the expense of others. The subsidy creates a class of "Orren Boyle" businessmen [referring to the corrupt steel mill owner who uses his political connections to stay in business in Ayn Rand's Atlas Shrugged]. Not all businessmen are innocent victims. Some are complicit in preservation of the distortions, and economic inefficiencies, through the use of political "pull."

Agriculture is an industry that takes on this sort of character. Let's illustrate with corn. I've put together a small diagram showing corn production and consumption in the U.S. today. Now analyzing this industry as a whole is a complex undertaking and I don't purport to be an economist. But I have shown the corn production "envelope," extended out to one step beyond simple production. That is, I've shown some of uses that contribute to the consumption of corn, and their impact on the corn subsidy as well.

2008 corn production in the U.S. totaled 13.2 billion bushels, and utilized 87M acres of farmland. It was consumed primarily in four downstream uses: grain for export, feed for meat production, raw material for fuel ethanol production, and as an input to the food and sweetener industry. Stunningly, food for human consumption is a very small part of this mix.

This envelope is subsidized to the tune of about $20 billion dollars annually. It's important to consider all of the various ways in which subsidies act on this envelope. This includes direct Federal payment to corn producers, capital funding and subsidies for ethanol production, subsidies for feedlot waste disposal, and the sugar import tariff/quota system (which is currently cost neutral but will become an additional subsidy soon), and also the additional price consumers must bear for ethanol and corn sweeteners.

These subsidies create huge distortions. Both the fuel ethanol industry and the corn sweetener industry are industries that exist almost entirely due to the subsidy. The U.S. sugar quota / duty system inflates domestic sweetener prices by two times. High fructose corn syrup and other corn-based sweeteners, along with domestic sugar, cost twice to manufacture than international sugar does, but the quotas and duties on imported sugar assure you'll pay the extra cost. Fuel ethanol costs twice what gasoline does, but ethanol content laws in some states assure you'll pay the extra cost. The subsidy of corn and feedlot waste disposal make concentrated farming operations more competitive than they would normally be, and thus much more prevalent.

All of this has the effect of inflating corn and corn product production at the expense of the substitutes it replaces. Ultimately this comes at a net cost to the consumer and the taxpayer. Firms within the industries that exist as a result of subsidization now have a direct incentive to use political pull to maintain their positions. Who are these firms? They are those firms who lobby for and directly receive government benefit. Monica has shown that large corporate farms (not the small independent farmer) are the most prevalent recipients of direct corn subsidies. Also included in this mix are ethanol producers, and corn-based sweetener producers, neither of which would exist in any significant number without the subsidy. Probably the most notorious recipient of corn-based subsidies, and one who possesses a formidable Federal lobby is corn-products firm Archer Daniels Midland. From a 1995 profile of ADM by The Cato Institute:

ADM is certainly the nation's most arrogant welfare recipient. And it is one of the few welfare recipients that spend millions of dollars each year advertising on Sunday morning television shows populated and watched by politicians. Chairman Dwayne Andreas's and ADM's success in farming Washington represents the rational result of contemporary government policies that turn elections into "an advanced auction of stolen goods," as H. L. Mencken quipped. Thanks to its multi-million-dollar hustling in Washington, a company that lives and dies on the generosity of the American taxpayer has managed to get itself revered as a great public servant. Although ADM is not the only corporation with its hand out in Washington, it is easily one of the most successful beggars on the block.(1)

This is the nature of those who would use political pull to get government to force you to subsidize them, and to force you to pay higher prices for the products they produce. It is reprehensible.

What would the industry envelope look like without subsidies? I took a first pass estimate, assuming ethanol and HFSC are eliminated as a result of the changes, and animal feed is replaced mostly by grass feeding practices (for beef only using Monica's analysis), but all other consumption is steady. The answer is that we would produce significantly less corn, use less land overall, replace sweeteners with cheaper [by half!] imported sugar, and cut the cost of fuel by approximately $0.22/gallon of gasoline.

Now the practicality and effectiveness of a laissez faire system is part of what makes it moral. But the laissez faire system fundamentally preserves individual rights; it prevents the confiscation of funds from some to benefit others; and it rewards the free productive farmer, not the skilled politico's. Notice how many laws go toward the distortion of the corn industry? A truly free market means the repeal of them all.

The answer is laissez faire!

Monday, January 12, 2009

What Really Caused China’s Success?

In November of last year, China announced a massive stimulus plan in response to its current economic crisis. While smaller in nominal value than the U.S. TARP package, it is huge relative to the size of China’s economy. The conventional economic wisdom heralds China for it’s blended economic policies which combine strong government spending with private enterprise. From the New York Times article cited above:

State-driven investment projects of this kind have been a major impetus to Chinese growth throughout the 30 years of market-oriented reforms, a strong legacy of central planning.

News of the stimulus was received generally well, given this perspective, and certainly it adds to the general momentum in favor of such Keynesian measures. But is the perspective, that mixed economies function better than more pure forms of capitalism, correct?

A recent article I ran across challenges this thesis with hard research on China’s development. The article is “Private Ownership: the Real Source of China’s Economic Miracle” by MIT Sloan School of Management Associate Professor, Yashen Huang, and it appeared in this last month’s McKinsey Quarterly. It summarizes the thesis of his book, Capitalism with Chinese Characteristics: Entrepreneurship and the State. [Note: I have not read the book, but plan to in the next year. My observations are taken from the article. “Capitalism with Chinese characteristics” is the Chinese government’s somewhat nationalistic description of their system, couched in a “we’re going to do it out own way” tone.]

What stands out as a credit to the author is that he has analyzed economic data on China’s 30 year journey toward a market economy in order to tease out the factors contributing to China’s phenomenal growth. China is a complex case and it surely has experienced phenomenal economic growth. Understanding the true causes of this growth is critical because it is such a compelling growth story. According to the author, the popular thinking is wrong.

The received wisdom on the country’s economic miracle – it was a triumph of technocracy, in which the Communist Party engineered a gradual transition to the market by relying on state-controlled businesses – gets all the important details wrong. This standard account holds that entrepreneurship, private-property rights, financial liberalization, and political reform played only a small role. Yet my research, based on a detailed analysis of the Chinese governments’ survey data and government documents at the central and local levels, indicates that property rights and private entrepreneurship provided the dominant stimulus for high growth and lower levels of poverty.

The real mystery of China’s miracle isn’t how the economy grew, but how Western experts got the growth story so wrong.

The author backs up his thesis with hard research, looking at the issue from several different perspectives. He shows that China’s growth was fueled in the more rural coastal areas, and that private enterprises dominated the mix, grew at a faster rate, and generated the bulk of economic growth. In a second example he compares to nominally similar provinces, Zhejang and Jiangsu, who used very different mechanisms to fuel their growth. Jiangsu province “courted foreign investment and benefitted significantly from public-works spending. However, Zhejang province relied on private growth mechanisms. The difference in outcomes tells the tale. Starting out as a poorer province, Zhejang eventually caught up with and surpassed Jiangsu over a 20-year period. Today it leads on every significant economic measure. Zhejang’s asset base is more productive and its residents enjoy a higher standard of living.

In another example he examines rural policy vs. the more interventionist policies in large cities, showing that their change in living standard is far greater in those rural regions where privatization measures were stronger and government stimulus spending was lower. Contrasting rural municipality of Wenzhou with metropolitan Shanghai, the author notes:

Today, Wenzhou is China’s most dynamic municipality, teeming with businesses that dominate European garment markets. By contrast, Shanghai, once home to China’s earliest industrialists, is now oddly bereft of native entrepreneurs.

Wenzhou’s transformation resulted almost entirely from free-market policies. As early as 1982, officials there were experimenting with private lending, liberalized interest rates, cross-regional competition by savings and loan organizations, and lending to private-sector companies. The Wenzhou government also worked to protect the property rights of private entrepreneurs and to make the municipality friendly to business in many other ways.

Bold mind. Here we see not mixed economic policies, but laissez faire policies, with government performing it’s proper function, protecting property rights. And the contrast is clear. Capitalism with Chinese characteristics is simply another name for the mixed economy, and when the analysis is done, laissez faire capitalism is the winner.

We need more analysis like this to understand the phenomena, and to break the myths that reign today, especially in this time where government intervention is seen as the solution to our financial woes.

Saturday, January 10, 2009

Rand in the Wall Street Journal

Stephen Moore has a fantastic opinion piece in yesterday's Wall Street Journal, entitled "Atlas Shrugged: From Fiction to Fact in 52 Years." In it, he draws parallels between government actions in Atlas, and in today's financial crisis.

Other than his unnecessary mention of David Kelley, the article does Rand justice (bold mine).

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

...

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

In the book, these relentless wealth redistributionists and their programs are disparaged as "the looters and their laws." Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the "Anti-Greed Act" to redistribute income (sounds like Charlie Rangel's promises soak-the-rich tax bill) and the "Equalization of Opportunity Act" to prevent people from starting more than one business (to give other people a chance). My personal favorite, the "Anti Dog-Eat-Dog Act," aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn't Hank Paulson think of that?

These acts and edicts sound farcical, yes, but no more so than the actual events in Washington, circa 2008. We already have been served up the $700 billion "Emergency Economic Stabilization Act" and the "Auto Industry Financing and Restructuring Act." Now that Barack Obama is in town, he will soon sign into law with great urgency the "American Recovery and Reinvestment Plan." This latest Hail Mary pass will increase the federal budget (which has already expanded by $1.5 trillion in eight years under George Bush) by an additional $1 trillion -- in roughly his first 100 days in office.

The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."

Into the Clouds

I have joined the ranks of those who compute “in the clouds!” Well, not really. But I did recently purchase a "netbook.”

For those of you unfamiliar with the term, “cloud computing” is the moniker given to the concept of using the existence of ubiquitous internet access to shift data and applications which one used to run on a personal computer to the web. By hosting data and applications on the internet, one becomes independent of any particular PC, being able to access their personal information from any internet access point. As a result of this, one’s personal computers tend to shift from larger more powerful processor machines to focus instead on connectivity (LAN, wireless, etc) and portability. Hence the purchase of my MSI Wind netbook.

Cloud computing isn’t really anything new. Most large corporations like the one I work for have had large corporate networks using a similar type of approach for years. Since1995, my company has implemented such a network. Today, all employees have basic laptops, outfitted with standardized software, and wireless capability. Our files are stored collectively on servers rather than on our machines. We can access those files via VPN connections from any internet connection. Most recently we converted to VoIP telephony so that our telephones use internet connections to transfer data rather than regular phone lines. I have a phone emulator on my laptop as well. This means that I can sit down anywhere in the world, plug in my laptop and it is as if I was sitting in my office. I can go anywhere I want, and my “stuff” is “up in the clouds.”

However, until recently that required a lot of back-end infrastructure and support which wasn’t necessarily available to the individual consumer. That is all changing however. I actually noticed the change slowly over the last year or two. My current machine is a 17” Dell Laptop, high res, DVD, large capacity hard drive. It’s portable but not convenient. I certainly wouldn’t take it with me on vacation. Over the last few years; however, I began shifting applications and data storage to the web. First my email went when I started using Google’s Gmail. Then I switched my RSS feed to Google Reader. I recently began creating and hosting some of my documents using Google Documents. I eliminated my home phone by switching to Skype. As this began happening I found that I preferred to grab my work laptop and sit downstairs in an easy chair or by the fireplace rather than up at my desk with my big Dell. It was a more convenient machine because it was smaller, lighter, had great wireless connectivity, rock solid operating system, simply no hassle. I was slowing migrating my home computing environment to a cloud environment without realizing it.

Then earlier this year, Gus bought an ASUS eePC netbook and I was intrigued. I’ve been watching netP1080023book models with interest over the last several months and finally decided to take the plunge. My Wind is a small, ultra-portable, paperback-sized PC, costing approximately $400; wireless card, 160 GB hard drive, 1024x600 high-res 10” screen,1Mpixel webcam, running a stable WinXP OS. All of this comes in a small beautiful white package, weighing 2 lbs and measuring about 9”x7” (about the size of a large format paperback book. It has as much computing power and screen resolution as my Thinkpad T60 I use for work, but in an ultra-light package. In fact, as I write this, I’m sitting downstairs in my easy chair, listening to music, and typing comfortably away. Almost everything I can access upstairs on my big Dell machine, I can also access here. I’ve included a picture of my Wind next to my 17” Dell and a large paperback for comparison.

For those of you who know me, I’m a “value” buyer. I don’t need the flashiest. I want dependability and functionality for the price. My experience with Mac’s for instance has always been that they are very pretty, and cutting edge, and overpriced for the functionality provided. (If you want that sort of thing, more power to you.) I thought a long time about the cost vs. the functionality I’d be buying, and in my estimation, what I expect of this thing for the $400 I paid is good value. So these are the functions I expect to utilize for the new Wind, those which are enabled by it’s portability.

  • Roaming laptop: Yes, I want to blog from the coffee shop. Yes, I want to have a laptop with me on vacation and not have to remember how heavy it is. I’ve already tied in Google Documents offline functionality so I have document editing capability even offline.
  • Stereo component: I love Pandora. For those of you who’ve not used it and love discovering music, you must. Type in any favorite song or artist, and Pandora will pull music that is similar. I don’t mean similar as in genre. I mean similar musical structure. I’ve long wanted to stream it to my stereo, but the dedicated devices that do it, still cost hundreds of dollars.
  • DVR: I don’t have cable service, but I do have Netflix subscription, which I love. For those of you who’ve played around with their on-demand streaming video, it’s superb. Yes there are boxes you can get that interface, but again, they’re in the $100’s.
  • Phone: like my office phone, I now have my personal phone and voicemail anywhere in the world I choose to be.
  • eBook reader: The netbook is about the size of large format paperback, and given it’s size and weight it is suitable to carry as an eBook reader. I can rotate the screen orientation and hold it in my hand as I would an open book. I’ve long carried books on my cell phone for those times when I’m travelling and need some diversion. Mobipocket reader has a PC version as well, and it has nice, basic functionality, along with direct access to their eBook store. In addition I’ve fallen in love with Gutenberg where you can obtain e-versions of open domain literature. The beauty of this setup is that in something the size of a single book, I can carry my entire library, and access to virtual bookstores where I can obtain additional reading instantly. (However, I may opt for one of the new Kindle’s when the come out.)

So that’s the story. I’ll keep you posted on how it works out.

Friday, January 09, 2009

The Round up is here!

Rational Jenn! Objectivist Round-up! Click here for the goodness.

“Rising Water Worsens Flooding”

I was reading the Wall Street Journal Wednesday and happened upon a poorly written general interest story which I promptly blew off until I saw that it was the second most read online article of the day. In “Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woes” author Kelly Evans attempts to make the case that the sudden contraction in consumer spending is somehow making the recession worse.

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation's standard of living. But in a recession, increased saving -- or its flip side, decreased spending -- can exacerbate the economy's woes. It's what economists call the "paradox of thrift."

The premise of this article is flawed. It implies that the shift in savings rates are somehow independent of the recessionary condition itself. To imply that the economy is made worse by saving leads one to the question “worse compared to what?” A contraction in spending is what happens during the initial stages of a recession. It is the recession! To imply that it worsens the recession is like implying that rising water worsens flooding.

This sort of thinking is at the heart of the reasoning of those economists who think that we must try to stimulate the economy by spending. Implying that something that is a natural part of any recession is worsening it gives credence to the idea that one could spend their way out of a recession. Ultimately, if the public won’t spend, then they must be “stimulated” to spend by allowing the government to spend their money for them. This is a failure to understand a basic law of economics, Say’s Law, which says that supply constitutes demand. One way to consider this is that it is ultimately capital (i.e. money) put to productive use in the hands of capitalists, which causes costs to drop and buying power to increase stimulating consumer demand.

We have seen capital destruction in the last few years, and with it, a natural contraction in the resulting demand. In order to quickly recover then, one would want to accumulate that capital, and put it to productive use. In other words, the best thing one can do when faced with destruction of personal capital is to reaccumulate it, i.e. to save!

Note the funny logic implied as well. This crisis was supposedly caused by a glut of consumer credit, a binge of spending, a lack of savings. But now, the solution to exiting the crisis is to spend. Don’t believe it. The best thing for the public to do today is to save. Yes that will cause a contraction of demand for a time, but the capital saved and ultimately deployed will mean that demand will again begin to increase naturally.

Thursday, January 08, 2009

The Politics of Fear

President-elect Obama in a speech (full text here) at George Mason University today called for “dramatic” action on the part of the Federal government in response to the U.S. economic situation. The basic premise of his speech is one that we’ve heard many times in the last few months. We heard President Bush present it when he called for the initial $700 million “bail-out” package for key Wall Street financial institutions. He reiterated it when he bypassed a grid-locked Congress to extend TARP funds to the Detroit Big Three. And today Obama gave the same justification:

I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.

In short, a bad situation could become dramatically worse.

This is the “government can’t sit by and do nothing” argument or as I like to call it, the “Doomsday scenario.” It consists of positing some sort of unnamed, nebulous “worst case” scenario, claiming that this scenario is what we face in the absence of any action, and then claiming that government must act to prevent such a scenario. It is a spurious argument, and the key to its success lies in two key aspects.

First, it relies on the fear of such an event as a motivator for action. Notice that he provides no discussion of the mechanism by which this disaster will come to pass, but only dire predictions of the result. This is the basic premise that should be questioned of course, but the hope is that your fear will be so great, and your ignorance of the situation so blinding that you’ll not question it. Note that if we do not face such a dire situation, that the basis for “dramatic” action becomes questionable.

Second, its success also relies on the fact that once action is taken one can’t confirm if the original premise was indeed true. This makes it almost impossible to appear to “fail".” Let’s say that we are indeed headed for a “cliff.” By what measure will we determine if government action actually succeeded? Well, the economy won’t fail. But isn’t this the exact outcome we would expect if there were in fact actually no “cliff?” How do we tell the difference between those two scenarios? We can’t. And so the average person is bound to conclude that the stimulus package actually worked.

This whole line of thinking is simply a enticement to help us get used to the idea of looking to government to solve our problems. In fact, Obama brazenly claims that government is the only way out of the dilemma.

There is no doubt that the cost of this plan will be considerable. It will certainly add to the budget deficit in the short-term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy. It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy – where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.

That is why we need to act boldly and act now to reverse these cycles. That’s why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That’s why we need to re-start the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again.

We can’t depend on government to create jobs at all. Don’t buy this line. The irony, of course, is that both this stimulus and the original TARP package will only end up hurting the economy more. Of course we now have the momentum of the precedent set by the Republican administration fueling a Democratic spending binge. This is nothing but the justification for a money grab using your taxpayer dollars. Don’t stand for it.

We are not headed for a cliff. The best thing the government can do for the economy is let it recover on it’s own. University of Michigan economist Mark Perry has been collecting data to quantify how big this economic crisis is at his blog Carpe Diem. It is a much needed antidote to fear, and I suggest following it for a while. In this post (check the comments) you’ll see that looking at the volume of bank failures in nominal dollar value, we have yet to see as much bank failure as occurred in the S&L crisis in the late 80’s. There certainly is economic stress, but it is not a Doomsday scenario. The best thing the government can do is “laissez faire!”

Monday, January 05, 2009

Goals for 2009

Alex Epstein has a great op-ed on New Year's Resolutions over at the ARC which has made it into several media outlets. He correctly points out he difference between the perspective that views resolutions as a "flash in the pan" and the perspective that views them as part of a goal oriented mentality.

It is a sad irony that those who write off New Year's resolutions because so many fail reinforces the passive approach to life that causes so many resolutions--and so many other dreams--to fail. The solution to failed New Year's resolutions is not to abandon the practice, but to supplement it with a broader resolution--a commitment to a goal-directed life.

If any of you have to write annual goals for work, you have an Objectivist to thank for it. Dr. Edwin Locke is probably one of the most cited organizational psychologists in the field, and his name is synonymous with the work that he is best known for: goal-setting theory. As part of a planning and action process, goals are crucial tools to help maintain focus, and by which to measure progress. That is, given things that you value, goals are instruments used to help obtain those values.

I write annual professional goals every year and take some time in deriving them. They serve as milestones to a larger action plan, and periodic review points. I summarize them at the end of the year as accomplishments. We use S.M.A.R.T. goals at work. That is good goals are specific, measurable, actionable, realistic and timely. I also add a little "stretch" to mine since that little nervousness you feel if you're not entirely sure you can accomplish it all is a great motivator.

So this year, I've decided to share some of my goals for 2009. Each goal implies an underlying action plan, a series of steps to achievement, but I won't list all of that thinking out for you. I have personal and professional goals for 2009 as well, but the personal ones are... well, personal, and the professional ones would be cryptic to anyone not in my business so I've dispensed with them.

  1. House - Remodel two bathrooms, repaint two bedrooms, install that steam shower, and put in a very large flower bed in my back yard. That assumes I stay in this house (but that is a story for another time).
  2. Health - Compete in at least 3 duathlons, two of which are Olympic distance - bettering my 2007 time. [Note: I've never been one for diet/exercise goals. Weight loss is certainly specific, but to me lifestyle and health need to be in the service of some other end, some other value. Yes, this goal implies weight loss and a host of other things. It just seems more purposeful this way.]
  3. Education - Complete next two OAC classes. Get a better grade than I got on the first one! (so humbling that was for this over-achiever!)
  4. Books - Read at least one work of good literary fiction per month (for a total of 12). Yes, this might not seem like many, but Anna Karenina is on the list. Definitely a stretch goal.
  5. Writing - Increase blog readership to a steady 100 visits/day (or ~3000/month). That's gonna require a whole lotta changes, and a commitment to more regular blogging.
  6. Writing - By years end, I will author one article for the Objective Standard. Yup, this one scares me a bit.
  7. Canine - Title Moxie in AKC Agility - Open Class - both Jumpers and Standard. I'm not a high volume trial attendee so this one is going to require some finesse.

And that wraps it up. What are your goals for 2009?

Thursday, January 01, 2009

Objectivist Round-up - Best of 2008

 

Happy New Year and welcome to the January 1st, 2009 edition of the Objectivist Round Up! Our New Year's roundup features some of the best posts from 2008, written by authors who are animated by Objectivism, the philosophy of Ayn Rand. According to Ayn Rand:

My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.


"About the Author," Atlas Shrugged, Appendix.

Valda Redfern presents There's no pragmatic way outposted at Valzhalla, saying, "Can we find pragmatic solutions to today's crises? No - pragmatism isn't practical"

Burgess Laughlin presents The third greatest sacrifice? posted at Making Progress, saying, "This article, about sacrificing one's beloved work, personalizes an earlier post, "What is a central purpose in life?" (Making Progress, May 20, 2008)."

Brian Phillips presents A Christmas Fantasy posted at Houston Property Rights, saying, "Americans awoke today to startling news-- the federal government declared itself morally bankrupt and closed the doors on virtually all of its operations. "We have realized the error of our ways," President Bush announced on the steps of the White House."

Khartoum presents Islam: What The West Needs To Know. posted at Philosophy, Law and Life., saying, "My first identification of Islamic totalitarianism."

Darren Cauthon presents Earth Day Advice posted at Darren Cauthon, saying, "Here's a post I wrote in April about Earth Day that was a great starter to some good conversations with family and friends. I also submitted it to the local morning radio guy who read and talked about it on the radio. Very fun!"

Greg Perkins presents Why the New Atheists Can't Even Beat D'Souza: The Best and Worst in Human History posted at NoodleFood, saying, "Dinesh D'Souza has been famously beating up the "New Atheists" in debates and op-eds, but it is not because he is a strong Christian Apologist. Rather, it is due to their fundamental philosophical weaknesses. This series of articles shows how D'Souza and his ilk don't stand a chance against Objectivism, by demolishing his biggest-scoring points in metaphysics ("Science vs. Miracles"), epistemology ("The Gap in Religious Thought"), ethics ("Morality and Life"), and the fundamental role of reason in human life ("The Best and Worst in Human History")."

Valda Redfern presents Valzhalla: Baltic delights posted at Valzhalla, saying, "If you read to the end, you'll find out how to add a bit of shine to your philosophy"

Ari Armstrong presents Politicians Caused and Worsened the Great Depressionposted at FreeColorado.com, saying, "Will modern American politicians repeat the mistakes of history?"

K. M. presents Freedom of Speech « Applying philosophy to life posted at Applying philosophy to life, saying, "A post defending an absolute right to free speech with some good exchange in the comments. I chose this post because 'Freedom of Speech' is perhaps the most important idea to understand today."

Paul Hsieh presents How The GOP Lost My Vote posted at NoodleFood, saying, "My favorite piece of 2008 was this Denver Post OpEd which I wrote immediately after Election Day, on the dangerous influence of the Religious Right on the Republican Party. Once it hit the conservative blogosphere, I received lots of positive feedback from disaffected Republicans as well as plenty of hate mail from religious conservatives. This was yet another demonstration of the fact that (1) this country needs our ideas, and (2) there are many people ready and willing to listen to them."

Rational Jenn presents Heroic Me posted at Rational Jenn, saying, "The first part of 2008 was marked by our resistance to participation in the "mandatory" American Community Survey. I have continued to receive hits from the domain "census.gov" ever since. Just a reminder--the ACS is completely over the top, and to my knowledge, no threat of fine or jail has ever actually been carried out by the government. I'm so happy that we refused to comply with this serious invasion of our privacy!"

C. August presents Boston's Medallion Morass posted at Titanic Deck Chairs, saying, "From June 27th, an analysis of the absurd taxi medallion mess in Boston, and the only real solution to it."

Diana Hsieh presents Jury Nullification posted at NoodleFood, saying, "Should jurors ever acquit a person they know to be guilty of breaking the law on the grounds that the law is unjust? This post explores that question."

Kendall J presents My Hero Anna Schwartz posted at The Crucible and Column, saying "A monetarist's look at causes of the financial crisis."

That concludes this edition. Submit your blog article to the next edition of objectivist round up using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.