The only way to truly manage global warming is if we establish a global government with the power to control every human’s carbon emissions.    Anything less than this, and it falls apart, because any individual nation-state’s ability to self-manage will be taken advantage of by other nation-states.   See: The Mote in God’s Eye.

Discuss!

Yo, what’s up? It’s been a while since I wrapped atcha.

This caught my eye - the chairman of the GMU economics department discusses the questionable benefits of stimulus packages.

In general, I think he’s right - if you take money from X and give it to Y, it doesn’t mean that there is more money sloshing around. Even if you borrow money from X to give to Y, the situation is the same.

However, what if you borrow money from X, who is not an American. Especially if X is a foreign government. In that situation, there’s more money in the US economy than there would be otherwise. (Unless you assume that all of that money would have come through the US anyways).  Foreign Country X may be a little lighter in the wallet, but then they were the ones who decided to buy treasuries at the agreed-upon rate of interest.

And the people who pay back the debt are our future selves, which, if the past is any indication, will be living far richer and more prosperous lives than we are.

You know how sometimes you forget to do something, and then you forget that you forgot, and then you feel bad that you forgot and it just seems awkward…

Well, I wrote this just before Thanksgiving. Since it’s still the holiday season, it’s still worth saying:

• I want to thank Pamela Slim, and J Timothy King for helping inspire me to try something new
• I want to thank Tyler Cowen and Alex Tabarrok from Marginal Revolution for providing the economic justification to try something new
• I want to thank all the good people at the Sunlight Foundation for helping introduce me to non-profits, the inner workings of democracy and most of all, their interesting points of view.
• I want to thank my wife and kids for putting up with selling the house and moving and all the strange new things that come along with it.
• I want to thank all my wife’s friends for being incredibly helpful and supportive when she was trying to get the house ready.

Eliezer Yudkowsky deconstructs education, examining the incentives and relative power of the various people in the education “food chain”.   He points out a series of issues - governments mandate certain tests, administrators focus on reducing costs and managing “process”, bookmakers focus on covering subjects at the expense of readability and effectiveness, teachers are not able to control which textbooks are used, parents can’t be in the class to see what happens, etc.

There is, of course, one school system where none of this is true - home schooling.   The administrators, teachers, parents and curriculum selectors all have the exact same motivations, and a tremendously greater incentive to ensure the future success of their students .   Not all parents can or should homeschool, but for those that do, at least their motivations are aligned around the individual child, rather than the statistical mean of a population.

Every once in a while, I run across commentary that seems to believe that man is a plague on the earth, and the earth and nature would be better off without us.

Recently, a friend of mine said that these statements were made by trolls and sock puppets.

But I don’t think this guy is a sock puppet, (Chris Thomas, not Robin Hanson) and I don’t particularly think he’s trolling.

A pair of economists did two years of research using speed-dating as a way to measure the weights that men and women use to evaluate each other.

I’m re-reading Taking the Red Pill - (thanks Rick and Marni) essays about The Matrix, and I’ve discovered that two members of my Blogroll - Robin Hanson and Peter Boettke wrote essays in said book.

How worlds collide.

This has been making the rounds in economic circles. Resulting in comments like “Humans act less in their self-interest than chimps”

But I disagree. If I’ve learned anything in my reading of persuasion by Richard Cialdini, I’d say it’s pretty clear that reciprocity and some level of fair behavior are the glue that holds civilization together. And as such, have some specific economic value.

That is to say, a human being confronted with an unfair distribution in the “all or nothing game” (read the original link) has a thought process (perhaps too quick to realize) like so:

I could take this offer, but it would damage the overall sense of fairness and reciprocity in our shared human civilization. That sense of fairness is critical to my own well being, as well as the well-being of my future offspring, who benefit greatly from a society that rewards fairness and punishes overt unfairness.

In other words - as a human being with an advanced, future-predicting brain, I can view self-interest with an eye to the long time horizon.

Civilization is a tremendous public benefit, and I don’t think it’s irrational to place significant value in maintaining it. There’s a reason we have the Internet, and the chimpanzees don’t.

It should also be possible to determine the fairness limit - i.e. in the all-or-nothing game, what’s the ratio at which the receiver balks and squashes the deal. Is it at a 55/45 split? a 60/40? a 70/30?

More importantly, does the actual dollar amount matter, and how much? For example, I’d forego 30 cents out of a dollar, just to punish the bozo, but I’m not sure I would forego $30, even if he did get to walk away with $70. But I’d definitely forgoe $40 if he got to walk away with $360. What a jerk!

It’s even more interesting at $1000/$1,000,000 - I’m not sure I’d take that deal, even though it would cost me $1000, because giving $1 million to someone that unfair is really hard to swallow. But I’d have a very hard time giving up $10,000, even if he got to walk away with $990,000, because $10k is a lot of money. At some point in there, the curve would probably go flat - I’d almost certainly take $10k whether he walked away with $10k, $20k, $100k, a million or even a billion dollars. Other people might be willing to walk away from $10k, and still others might not be willing to walk away from $1k, depending on their current lifestyle and financial situation

So, bottom line, as the value of the reward goes up, my tolerance for unfair distribution goes up as well. There’s probably a PhD thesis in here somewhere. Also, I know exactly where to do this test - inside a MMO. Money is fairly easy to acquire, and a few months of effort would accumulate a large bank account (plus, you could always buy gold/plat at very modest prices). But there are always new players as well, who are short of gold. So you could run this experiment a number of times and get a wide range of economic tiers represented, without having to use a significant chunk of real cash.

The latest tool from the SunlightFoundation - EarmarkWatch is out, and we’d love for you to check it out, give us feedback, and if you like, help us Digg it up to the front page.

Courtesy of 800-CEO Read  (who I normally find quite solid)

I don’t mind, so much, when people say “Don’t pay off your house, invest that money in the stock market”.  I don’t agree, but I don’t mind.

But when you combine that with this bizarre BS “double asset” accounting, I get seriously frustrated.

Let’s review:

• The house is not your asset.   It is the bank’s asset until you buy it.   How do I know?  Try selling it.
• Even if you do consider it your asset, if you don’t pay it off, you have a serious liability to go along with it.  You can’t just wave your hands and pretend that the liability doesn’t exist.
• When you have a large mortgage, that puts iron clamps on a significant chunk of your income every month - money that you have to pay to the bank.  This has the following effects:
  • It is harder for you to move, because you have to sell your house first
  • It creates an income floor - you simply cannot afford to not earn less than X per year
  • A run of bad luck on your investments, and you have no fallback plan, because you have no equity to draw from.

Essentially, this is the doctrine of “profit over flexibility”.   But do you really want to tie yourself down like that, create incredibly stressful obligations that leave you with significantly fewer opportunities to experiment, to explore, to take time away from work?

Tyler Cowen links to a story about a Carpenter’s Union that outsources its picketing work.

(So, what’s wrong with that?)    They’re paying people to picket construction sites, grousing about the poor wages of carpenters.

And what’s more?  They only pay these picketers slightly above minimum wage.

This is like the Acorn institute all over again — demanding a raise in the minimum wage, but paying its employees significantly less, and insisting that the organization couldn’t operate effectively if they had to pay minimum wage, because they’d have to let a bunch of people go….

Matt Blumberg, CEO of Return Path, writes:

My biggest takeaway from the TED Conference this week is that we — that is to say, all of us in the world — have an execution problem

we know a lot about the world’s problems, and we don’t lack for vision and data on how to solve them.  A few of the things we heard about this week are the knowledge — and in many cases, even real experiences — about how to:

- Steer the evolution of deadly disease-causing bacteria to make them more benign within a decade

- Build world class urban transportation systems and growth plans to improve urban living and control pollution

- Drive down the cost of critical pharmaceuticals to developing nations by 95%

- Dramatically curb CO2 emissions

We have the knowledge, and yet the problems remain unsolved.  Why is that?

Why is that?  Because there are opportunity costs involved in every plan of action.   (Opportunity costs are the costs of the things that you don’t get to choose when you make a decision.  For example, if you choose to take a taxi from the airport to your hotel, you can’t also choose to take the bus.  And you pay more because of that)
In a given organization, there is a centralized hierarchy for decision making that makes these “choose the taxi or the bus” decisions straightforward.

In the wide world, there are no such hierarchies, and, I would argue, it is a very, very good thing that there aren’t.  Because while hierarchies are effective at making decisions, they are not effective at representing the views of the population.

I can’t speak to Matt’s first example, because I’m not familiar with steering the evolution of bacteria. But on his other three examples:

• Build World Class Urban Transportation
• Drive down the cost of pharmaceuticals
• Reduce CO2 Emissions

All three of those represent significant tradeoffs - in order to build world-class urban transportation, tax money will not be spent on something else.   Driving down the cost of pharmaceuticals - which already happens when the patents expire - could have harmful effects on drug research.  And reducing CO2 emissions would also represent a significant re-allocation of money and time.

Deciding that “We want to build a world-class transportation system” will require that people give up on other things… things that they want (or think they want) more than a world-class transportation system.  Because we live in representational democracies, it is not appropriate to force these people to give up what they want.  Instead, we have to persuade, and persuasion takes time, and involves compromise (give me some of X, and I’ll give you some of Y)

And world-class execution does not work when you have to make significant compromises.    And, I will add, given the choice between (sloppy execution and representational democracy) vs (world-class execution and benevolent dictatorship) I’ll take sloppy execution, every time.

Some beekeepers make their living by trucking their hives full of bees around the country, looking for pollination work.

http://silflayhraka.com/archives/2007/02/if_they_was_meant_to_ride_arou.html

Huh.

A long, long time ago at JavaLobby, Eric asked:

The most common piece of advice is that in addition to technical skills, IT people need to develop “business skills”. A lot of these articles never list some of these business skills, they simply repeat that phrase.
So the main questions are: What are some of the “business skills” that IT people should acquire? How do I go about getting them?

What:

• Understand “Return on Investment“
• Understand “Opportunity Cost“
• Understand the difference betweeen Gross Revenue, EBITDA and Net Income
• Understand Cash Flow, and why it’s often more important than any of the others, especially in smaller companies

If you take the time to understand these things, you’ll have a pretty good understanding of why business people will often make decisions that

1. Seem shortsighted
2. Seem counterproductive
3. Seem greedy and abusive

Don’t get me wrong! There are times when business people are shortsighted, counterproductive and greedy/abusive. However, often they have reasons for what they do. Programmers often think that other people are stupid, because they don’t understand how to make computers dance. But they’re not stupid. They’re wired differently.
How:

• Join a startup, the earlier in its lifecycle the better
• Take some economics classes
• Listen to economics podcasts on your way in to work, or on your way home
• Read entrepreneurial blogs
• Update - Walter Williams has a 10-part series on Economics. It won’t be perfect, but it’s free, and easy to follow.
• Update #2 - A reader suggests: “Stop on the street, choose some random business nearby. Ask yourself how they make money.”

In my opinion, when you can listen to the Administrator explain why he likes the Machine that goes “Ping” and you understand what he is saying, and why he might prefer that model, you will have grasped the essence of business.

Update: - added two new suggestions to the “How” list.

Update 2: It just occurred to me that I should mention my own blog - PicoBusiness, which is obviously written from a business/technology cross-over background.

This reminded me powerfully of the XP concept of turning up all the dials.

Reasonable economic cases can be made for allowing people to sell their organs, and for allowing people to buy the ability to immigrate into our country.  Cautious people avoid such proposals, because they push too many emotional buttons.  Mischievous folks like myself, however, wonder what happens if we push all the buttons at once: what if people could enter the country if they give up a kidney, or similarly valuable organ?  Would those who worry about the loyalty of immigrants who just pay cash to come here be reassured by the symbolic loyalty of giving up an organ?  Would those who fear that organ sellers are exploited be reassured by the huge value immigrants gain from living here?  Impish minds want to know.

Regardless of where you fall politically on these debates, I hope you appreciate the paradigm-shattering creativity of combining the two concepts together.   The next time you have two different, difficult problems staring at you, perhaps you can consider interesting ways to play one off of the other.