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

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.

Good article in the Journal about how to not prevent another “mortgage crisis” and at the same time make mortage brokers more expensive: state-imposed licensure. One point is in regards to incentives:

A mortgage broker has an incentive to originate a big loan; after that, it becomes the bank’s problem. The challenge is not that of ensuring mortgage brokers smart enough to recognize a risky loan headed for default; it’s making them care. That’s tough to legislate.

Another point is in regards to how state-imposed licensure originates:

The politics of this make perfect sense, even if the economics don’t. Most professions don’t have licensure thrust upon them; they seek it. One of the best predictors of whether a profession is licensed at the state level is the organizational strength of the professional association, which translates into political clout in the state capital. Professional groups seeking licensure laws are often granted the golden loophole: a “grandfather” clause. Existing practitioners are exempted from the new requirements, making the law a form of occupational protectionism, not unlike medieval guilds.

There you have it. Professional licensure keeps people out of the profession so as to enrich the people currently in the profession. Politicians like it to, because they have a chance to “do something” about a temporary crisis (doing something irrelevant to solving the actual crisis, of course). It’s a win-win-lose: win for the protected guild; a win for politicians; and a lose for everyone else.

Shelby Steele has a (somewhat controversial) commentary on Barack Obama, race, and his pastor’s controversial comments. First, Steele’s perspective on why many whites in the US are interested in Obama as president:

The answer is that one “bargains.” Bargaining is a mask that blacks can wear in the American mainstream, one that enables them to put whites at their ease. This mask diffuses the anxiety that goes along with being white in a multiracial society. Bargainers make the subliminal promise to whites not to shame them with America’s history of racism, on the condition that they will not hold the bargainer’s race against him. And whites love this bargain — and feel affection for the bargainer — because it gives them racial innocence in a society where whites live under constant threat of being stigmatized as racist. So the bargainer presents himself as an opportunity for whites to experience racial innocence.

Not to discourage anyone reading this blog from reading the referenced editorial, but here are the last four paragraphs. Strong words, indeed:

How does one “transcend” race in this church? The fact is that Barack Obama has fellow-traveled with a hate-filled, anti-American black nationalism all his adult life, failing to stand and challenge an ideology that would have no place for his own mother. And what portent of presidential judgment is it to have exposed his two daughters for their entire lives to what is, at the very least, a subtext of anti-white vitriol?

What could he have been thinking? Of course he wasn’t thinking. He was driven by insecurity, by a need to “be black” despite his biracial background. And so fellow-traveling with a little race hatred seemed a small price to pay for a more secure racial identity. And anyway, wasn’t this hatred more rhetorical than real?

But now the floodlight of a presidential campaign has trained on this usually hidden corner of contemporary black life: a mindless indulgence in a rhetorical anti-Americanism as a way of bonding and of asserting one’s blackness. Yet Jeremiah Wright, splashed across America’s television screens, has shown us that there is no real difference between rhetorical hatred and real hatred.

No matter his ultimate political fate, there is already enough pathos in Barack Obama to make him a cautionary tale. His public persona thrives on a manipulation of whites (bargaining), and his private sense of racial identity demands both self-betrayal and duplicity. His is the story of a man who flew so high, yet neglected to become himself.

Is he right? Maybe. I’m not an expert on Obama, but Steele’s analysis doesn’t seem far off to me. Does that mean Obama isn’t worthy of office? Not necessarily. One perspective is that he’s a bargainer (in a negative, deceptive sense). My suspicion? He’s either:

* A skilled bargainer, like the editorial states, but one that can be useful for negotiation’s sake. I.e., someone who will “bend” when needed, but stand firm when needed as well. Bending is not always bad, and standing firm is not always good. Obama would likely be more flexible than the current president, maybe for the better.

* Someone who feels an innate need to be accepted and liked, even by ideological foes. In other words, he’s insecure, deep down, and wants to be liked.

* Or, maybe both conjectures are true to an extent.

The NY Times has an article on “new” techniques that are being employed to deter terrorists. First, it sounds like the tactics have little to do with the Cold Warrior tactics used during that era, so I interpret this as: “Cold War tactics don’t work any longer, so let’s innovate.” Having decided that, the article asserts that psychological warfare is the big tactic that they’re using, esp on the Web.

… Roll your own cryto algorithm, misleadingly label it AES-128, and start selling it. Here’s an article about a security company that discovered that a company was doing just that (Drecom is the name of the offending company).

Apparently, only the password is encrypted with AES. All other data on the drive is encrypted with a simplistic XOR encryption algorithm (or, “encraption,” as it is often called).

Encryption is a tough thing to get right, and “rolling your own” is always a bad idea. So is false advertising.

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)

OpinionJournal has a pretty flattering commentary on Barak Obama.  Basically, Obama will give diplomacy a chance but will get tough if he has to (remember those statements about targeting al Qaeda in Pakistan that Hillary found so appalling?). The editorial suggests that Obama’s world view isn’t as immature as his detractors let on.

Reason magazine asks why the Democratic candidates are so hard on trade, particularly NAFTA. Check it out.

Teaser paragraph:

Why NAFTA would induce a company to move production to China is a puzzle, but you get the idea.
His campaign claims a million jobs have vanished because of the deal. That sounds devastating, but over the last 14 years, the American economy has added a net total of 25 million jobs—some of them, incidentally, attributable to expanded trade with Mexico. When NAFTA took effect in 1994, the unemployment rate was 6.7 percent. Today it’s 4.9 percent.