g m g D e s i g n . c o m

I finally got around to reading Superfreakonomics, the economics book for people who never took an econ class in college (the book is equally useful for econ majors, btw). I finished it last night and it was well worth the read; better than the first book, I’d say.

In Freakonomics, the central theme was that people are motivated by incentives. In Superfreakonomics, they also introduced us to the idea that most innovative ideas—ones that actually work well—are relatively simple and cheap. Their examples include hand-washing (in a hospital in the 1800s, before germ theory), seat belts, and, of course, innovative ideas to reverse global warming and actually cause global cooling.

That last point intrigued me. They pointed out that scientists converge their results in order to procure additional funding (they’re capitalists, it seems, and they’re giving their “customers” the results they want). They also compare climate change zealots to religious fanatics, a comparison I’ve made myself (not for moderates, but for people who are truly obsessed and blinded by ideological zeal).

More importantly though, they pointed to some solutions to global warming. On the assumption that (man-made) global warming is indeed as dire as is projected (and I don’t think it is, but who knows?), there are solutions that are… simple and cheap! They cost in the millions rather than the trillions that are often proposed by editorialists when discussing this topic (note that much of that cost is due to externalities of regulation rather than direct).

It seems that, perhaps, human ingenuity and innovation—namely by private individuals—might be the cure for human waste and over-consumption. In fact, that fits neatly with the historical record.

Interesting article by Steven Hawking about how to build a time machine. It’s actually pretty easy, conceptually speaking. Hint: go near a black hole or, better yet, travel really, really fast.

Downside: it’s probably impossible to travel backward in time, only forward. That solves the mystery of why time travelers from the future haven’t visited us.

This is amazing. Moscow’s many stray dogs are adapting to the harsh conditions of that city, some even learning to ride the subway and get off on the right stops! (Many humans are barely able to do that.)

From the article (emphasis added):

But beggar dogs have evolved the most specialized behavior. Relying on scraps of food from commuters, the beggar dogs can not only recognize which humans are most likely to give them something to eat, but have evolved to ride the subway. Using scents, and the ability to recognize the train conductor’s names for different stops, they incorporate many stations into their territories.

Additionally, Poyarkov says the pack structure of the beggars reflects a reliance on brain over brawn for survival. In the beggar packs, the smartest dog, not the most physically dominant, occupies the alpha male position.

It’s interesting that baseball players seem to be more than willing to take the steroid gamble (even though some deny it had anything to do with their successful careers). After all, at some point in the future, they might not be able to continue doing so with impunity—they may even get in legal trouble for their crimes, which is exactly what would happen to the average (non-famous) person who engages in such behavior. And of course, their Hall of Fame spots could be in jeopardy. So why risk taking artificial testosterone in a sport wherein greater strength is ostensibly of no advantage?

My suspicion—and note that I do not believe there is definitive proof of this (yet)—is that the baseball players who take testosterone supplements do so because it does make them better baseball players. High levels of testosterone don’t just alter muscle mass. Testosterone causes other changes in the brain in addition to the obvious signals to increase muscle mass. High levels of testosterone are correlated with spatial intelligence, a characteristic that is useful in baseball or any other ball-focused sport.

From the article (emphasis mine):

Significant improvements in cognition were observed for spatial memory (recall of a walking route), spatial ability (block construction), and verbal memory (recall of a short story) in older men treated with testosterone compared with baseline and the placebo group, although improvements were not evident for all measures.

The article doesn’t mention hitting a ball, but I find it highly probable that higher serum testosterone levels would also enhance the ability to target baseballs and hit them with a greater degree of accuracy. Hence, if my pre-suppositions are correct, then it’s very likely that use of testosterone-increasing substances (including testosterone itself) would enhance one’s ability to play baseball.

I’m guessing most baseball players won’t admit that, or likely, aren’t even aware of it. However, it seems naive to me to consider steroid use in baseball or any other sport to be of negligible benefit, given the correlation to spatial intelligence, not to mention any other potential gains that could conceivably be conferred by greater testosterone use.

Implications:

This scandal has real implications. Mr. Inhofe notes that international and U.S. efforts to regulate carbon were already on the ropes. The growing fear of Democrats and environmentalists is that the CRU uproar will prove a tipping point, and mark a permanent end to those ambitions.

The scientific, or possibly pseudo-scientific, basis for the quasi-religious zealotry of the climate change movement has been called into question. Hence, the political will to propose dumb ideas like a cap and trade regime will probably not happen. I’m looking forward to the free market, not bureaucrats, deciding on innovative engine designs and cool new alternative fuels. Having said that, I’m not certain that that will be one of the implications.

This FP post suggests a wheat fungus outbreak could do to wheat what colony collapse disorder did to bees (remember that?).

What does it take for a society to have, or maintain, economic prosperity? One can approach this from many angles, from governance to geography, or from education to gender equality. There are a myrid of angles one could take to approach this question, so I’ll narrow the question a bit: what does it take for emerging markets to reach prosperity and for developed countries to maintain it?

I claim that it takes three things in particular: religion, science and freedom.

Religion

Across the developed world (US and Europe in particular), religion has had rotten eggs thrown in its direction. After 9/11, the world discovered what happened when Salafi-Islamism is allowed to operate unchecked by our intell services. Most people probably didn’t see the nuance and instead simply became paranoid of all Muslims. Some people, mostly “intellectuals,” simply blamed America rather than worry about more plausible explanations.

The terror attacks of 9/11 (and subsequent attacks or attempts inside or outside the US) have given the likes of Sam Harris, Richard Dawkins, and others, the opportunity to launch attacks on religion in general and Christianity in particular. Hollywood is in on the fun, jeering or even demonizing religion, esp Christianity (Islam has largely been ignored from direct criticism, oddly).

Certainly, not all religions are created equally. Not all practitioners are equal in their piety. Focusing on the developed world, has religion–namely Christianity–been a bane, or a boon?

I’d argue that it has been a boon. The US was built on the system of moral values innate in Christian doctrine. Contrary to anti-Christian commentary, many scientists in this country’s history were also Christians. Our Founding Fathers were largely Christians as well. Absent their convictions, I question whether or not representative democracy would have been their priority.

But I doubt our Founding Fathers could have imagined the “values void” that we see in Europe and, increasingly, the United States. So what would happen if we were all atheists, or “humanists”? Since this blog post is economy-centered, I’ll point out that business thrives when trust and integrity are high. The “greed is good” phrase in Wall Street (a movie starring Michael Douglas) has proven to be absurdity. Look at WorldCom and Enron and you’ll see greed, not innovation, and certainly not integrity. When people are able to have a relatively high level of trust in others, and when they’re able to take them at their word, that is an environment where business is able to thrive.

The alternative is a society that requires much higher regulation and enforcement. The godless might not fear the wrath of God, but they fear the law. Since that is all that keeps them in check, regulation must be much more rigorous, and like a neighborhood of hoodlums, enforcement must be higher. Sarbox (Sarbanes-Oxley legislation) might not have been over the top after all. When people increasingly have no moral convictions and no moral concern outside themselves, more oversight isn’t just useful, but necessary.

The contrarian will argue that some religions have been harmful in some parts of the world. Look at the Middle East, where the areas of prosperity other than oil-wealth are areas where conservative Islam has taken a back seat. The UAE comes to mind. I agree with this assessment, and point again to the idea that not all religious are created equally. One could make the same argument in relation to India, whose polytheistic religion has not seemingly served to bolster their economy. Some philosophical religions, like Taoism or Buddhism, have had marginal roles in economic growth. Another contrarian argument might be this: what about “atheist China” and it’s 10%+ GDP growth for the past two decades? The China example is interesting, because China’s dabbling with the atheistic governance (call Communism) did not turn out so well for its people (tens of millions died during Mao’s unfortunate tenure). Now, China has more regular church-goers than western Europe.

So, when “God is dead,” Big Government becomes bigger. Regulations become more burdensome. People cling to their new Higher Power–the state–and freedom takes a back seat.

Science

In early 2007, Bill Gates wrote a commentary on the WP. It begins as such:

For centuries people assumed that economic growth resulted from the interplay between capital and labor. Today we know that these elements are outweighed by a single critical factor: innovation.

I think he’s right, and I think science is key to this single, critical factor. Science isn’t just about cell phones or wind turbines. It’s a thought process, one that requires analysis and detail. I can’t think of a single prosperous country that has become so without rigorous science curriculae. Although most people (that I know) would likely nod in agreement at this assertion, science courses are rarely mandatory in college, while “liberal arts” courses are always required. I suppose art history is more important than physics? Or maybe computer science takes a back seat to English Literature? In fact, current priorities are in favor of other nations excelling us in math and science, a process that is already unfolding.

Freedom

No country can achieve economic prosperity without freedom. Freedom allows us to start businesses without knowing top government insiders or being friends with the president. Freedom gives us the ability to work wherever we choose to work; it also gives employers the ability to fire employers at their whim.

Not all “free” countries are comparable. France, for eg, has restrictive labor laws. It’s difficult to fire even non-unionized employees, meaning that special care is taken in hiring them. If they’re “different,” i.e., non-white, they’re not going to be hired as frequently. The riots in France were a result to idle hands unable to get work. France’s labor laws are innately anti-freedom. Unions are inherently anti-freedom as well, displacing individual liberty with herd mentality.

Just as economies can’t prosper without freedom, freedom cannot exist without capitalism. Capitalism is freedom in the context of the marketplace, and without it, freedom (in the general sense of the word) simply doesn’t exist. How can one be free if he is a serf to the state to provide his employment and means of survival? How can he donate to charity if he does not control his own purse strings? He can’t do either.

Five physics lessons for Obama

The editorialist cites the following 5 myths, as well as his explanation for those myths, and his message for Obama. They (the myths) are:

1. A nuclear attack is the biggest terrorist threat we face.
2. Big oil companies are behind our addiction to fossil fuels. If we could break their grip, we would have energy from other sources, such as hydrogen and high-tech batteries.
3. Nuclear power would be great if only we could figure out how to get rid of the horrific waste. Plutonium lasts 24,000 years. There is absolutely no way we can keep that waste safe for such a ridiculously long time.
4. Sending humans into space is indispensable. Astronauts saved the United States hundreds of millions of dollars by repairing the Hubble Space Telescope. Astronauts were essential during the Apollo missions to the moon.
5. Because the United States is responsible for about one fourth of the excess carbon dioxide that drives the greenhouse effect, the key to solving the problem is for America to go green.

Tyler Cowen of MarginalRevolution.com has a good blog post on water policy. He comments on a UN agreement to combat desertification, but I like his own suggestions best. Check it out:

I might add that national governments are the ones that subsidize the price of water to ridiculously low levels, most of all for agriculture.  My first step is to remove all these water subsidies, allow water prices to rise, institute more water trading, and then see which innovations the private sector decides to finance (hmm…those are my first four steps).  One role for government would be to ensure that patent law does not hinder international transfer of worthwhile innovations, a point which Sachs makes in other contexts.  That sounds less glamorous than a big international plan, but I think it has a better chance of succeeding.

So, should we apply the standard rules of economics (supply and demand) to the trading of water? I’d say yes, assuming, of course, we don’t wish to run out of water.

Oh, Cowen refers to global climate change as a reason for reduced water in regions around the world. My reading suggests that this is broadly confirmed by scientists, some of whom have been predicting water shortages for decades now. Not saying we need to scream “the sky is falling.” But something to be cognizant of.

Bill Gates offered his commentary on how the US can maintain/bolster its global competitiveness. In a nutshell:  a) improve education (esp science & tech); b) revamp visa system for high-skilled; c) increase fed financing for scientific research; d) provide incentives for private R&D.

Good suggestions? Yeah, overall I’d say they’re pretty good. Likely? The first sug seems possible, but unlikely in any short order given that our pre-collegiate education model is strangled by teachers’ unions that prevent vouchers at all costs. For that reason & others, education will likely stratify: it will (perhaps) get better for some and remain mediocre for many (for some, it will be very bad, depending mostly on geography).

The second suggestion is a no-brainer. Yes, of course we need to revamp this system, making it more efficient & raising the current (low) ceiling on the number of temporary, highly skilled workers coming in. Likely? No, not while this country is going through an anti-immigrant phase (and no, that sentiment isn’t just against illegal immigrants).

The third suggestion is a bit controversial to me. On the surface the idea seems worthy, but do we really need the Big Government to sponsor scientific reseach? Maybe. But I’d prefer private efforts over governmental ones.

The fourth suggestion is a bit vague, but sure, providing incentives sounds fine. As always, the devil’s in the details with such a vague suggestion. (Like, what sort of incentives? How many tax dollars are we talking about? Could it lead to favoritism of one company over another? etc)

 Edited on 3-16:

I found an email I wrote to some family members in response to a question on the US economy. My email response to his original email pretty much captures my overall thoughts on economic policy. I specifically touch on the economic stimulus package, but my main focus is more general. Here it is:

My feeling on this is that our economic future is pretty good, given this country’s history of resisting micro-management of the economy by our political “luminaries.” Keep in mind that recessions are arguably part of the “creative-destructive” forces in the market, providing a temporary and effective means of discouraging investment in areas of the market that are unproductive (or not as productive as the high level of investment would suggest). Hence, I suspect that we don’t need a “stimulus package” to fix a system that is fully operational. I’m not dogmatically against the stimulus package, however. But I think the strategic thinking on this should primarily be long-term.

Further, I assert that times like these (not that I think times are particularly bad, by any stretch) should encourage the geniuses in Washington (so to speak) to broach a discussion on further augmenting our global competitiveness. Completely off the top of my head, some possible suggestions are:

1. raising the low cap on the number of working visas that are issued next year and the years ahead, giving us a competitive advantage as the world’s brightest minds come to work in the US
2. making the process of obtaining permanent residency status faster and less bureaucratic
3. making the process of obtaining other visas, including visas for university students, faster, easier, and less bureaucratic
4. implementing a reasonable guest-worker program and finding an acceptable, humane status for the illegal immigrants who are currently in this country
5. expanding FTAs (free trade agreements)
6. negotiating FTAs with few strings attached; for eg, no imposed worker rights clauses (working conditions tend to get better as economies advance, not due to clauses added under duress, so such clauses delay the FTA and/or are used primarily to please certain groups, like unions)
7. finally, politicians should resist the urge to pick the economic “winners” (like corn-based ethanol, for eg)

From BBC Health:

If you are there is a chance fidgeting may be in your genes – and the good news is that you are less likely to be fat, according to the new research.

 Good news for me, since I’m a fidgeter.

Bjorn Lomborg has a great article entitled Europe’s dirty little secret on global warming. Excerpt:

But nobody sees fit to reveal the agreement’s dirty little secret: It will do next to no good – and again at very high cost. According to one well-established and peer-reviewed model, the effect of the EU cutting emissions by 20 percent will postpone warming in the 21st century by just two years, yet the cost will be about $90 billion annually. It will be costly, because Europe is a costly place to cut carbon-dioxide, and it will be inconsequential, because the EU will account for only about 6 percent of all emissions in the 21st century.

This is exactly why we need a smart solution that involves long-term strategic planning, not Al Gore-ish alarmism.

Genetically-modified mosquitos may lead fight against malaria. Take that anti-GM crowd!

In other, related news, GM crops could help to relieve starvation in vast parts of Africa due to greater crop yield on less land.

Conclusion: science isn’t bad, and “organic” (while quaint) is not necessarily better and is certainly less efficient. Why? It requires more land; hence, it’s arguably not the “sustainable” and “green” solution that is is purported to be. Further, organic farming requires more trees to be slashed since, as mentioned already, more land is required to produce the same crop yield.