Archive for the ‘economics’ Category

Economics

Sunday, May 18th, 2008

I used to think economics was a terribly dry subject, but lately (especially since I've become part of the working population and a homeowner) I have been finding it interesting to think about how wealth, money and value are created, destroyed and moved around.

For example, would we all be better off if we tried to create wealth that lasts at the expense of ephemeral wealth? Perhaps to some extent, but on the other hand one can have too many marble statues and too few cheese sandwiches.

Where the money goes

Saturday, May 17th, 2008

There was an interesting piece on the radio a while ago about some people who had a religious objection to war - specifically, their religion said that they could not pay taxes if that money would go to funding a war.

That got me wondering - what would be the consequences of trying to accommodate these people? Suppose that your tax forms had a series of boxes which you could check to tell the government what you want your tax money to go towards. Then the government could try to ensure that the war was funded only by the tax money from people who had ticked the "war" box on the tax form, and fund everything else with what is left over.

Of course, the government couldn't guarantee that peoples' money went where they wanted it to go (if they could, many people would probably just leave all the boxes unticked, or just tick the cheapest boxes in an attempt to pay no tax or less tax.

But even as a non-binding thing, the aggregate data could be useful as a gauge of public opinion - if the war is costing much more money than the taxes paid by the people who actually think it's a good idea, maybe it's time to elect a government that will end the war. Similarly for roads, schools, healthcare and welfare. Such a thing might encourage governments to be more open about what your money is being spent on and why.

Evolution of morality

Sunday, May 11th, 2008

In my university days I would often have philosophical debates with religious friends. One of them once tried to convince that, if there was no God, there would be no reason to "be good" - that the root of morality had to be spiritual in nature.

As reasons for believing in Gods go, that one seems to be a particularly bad one. Most atheists don't go around raping and murdering people.

My friend presented me with a thought experiment. "Suppose you could kill someone you didn't like, in such a way that it would be provably impossible for anyone to find out it was you - would you do it? A Christian wouldn't, because it's against the wish of God, but an atheist would have no such compunction." Well, first of all it's ridiculous to speculate about an impossible hypothetical situation - no matter what form the proof took, it's impossible to be sure that no mistake was made and that you could never be found out, so as far as you can tell there is always an element of risk. Also, my friend was effectively arguing that the only reason he wouldn't kill is because someone (God, if no-one else) would always find out and dole out punishment. Avoiding a potential punishment seems to me to be the least moral reason for avoiding murdering people - the golden rule is a much better one.

My friend could not conceive of how a sense of morality could have arisen in the human race by evolution alone. But after a small amount of though I realized that there are many evolutionary advantages to helping the other members of your community. If you help your community, the community as a whole is strengthened. The other members of this community are likely to share more of your DNA than members of rival communities. So any advantage to your community improves your DNA's chance of surviving and reproducing. Thus, communities with a sense of morality will tend to be favored by the evolutionary process over communities with no sense of morality.

It isn't just individual survival and reproduction that drive evolution - groups of related individuals exhibit all prerequisites for evolution as well (variation in hereditary characteristics producing survival and reproduction advantages) so social behavior can evolve just as well as body shape.

In order to evolve, social behavior does not have to be encoded in DNA. Ideas can (and do) evolve and propagate just as genes do. The human mind provides an environment that is fertile for memes to breed and evolve. This is good, as speeding memetic evolution gives a survival advantage for our species (arguably, it the one thing that has allowed us to be so spectacularly more successful in control and adaptation than any other).

But just as we apparently have some "junk DNA" in our chromosomes which is reproduced faithfully but doesn't actually do anything useful, we may have accumulated some "junk memes" as well. Perhaps these aided our survivability in the past but now serve no useful purpose. I'll leave you to speculate as to what these memes may be.

No competition

Saturday, May 5th, 2007

I've never really liked competing with others. As a child I would often refuse to play party games even at my own birthday party - I preferred to just sit out and watch instead. I suspect that this is because I actually have a fiercely competitive nature, and don't like the feelings that this nature inspires in me (the feeling that I must be better than others, regardless of their feelings, lest I be marked the "loser".)

For the same reason I've never really liked sports (playing or watching) and I suspect I would do better at work if on being told that I will be ranked against my peers my natural inclination was not to think "well I just won't play that game then - I'll just sit it out and do my own thing".

During one electronics class at school, I was helping one of the other students understand something that he was having trouble with. Another student advised me that I should not help him because we were to be graded on a curve, and helping one student implicitly hurts all the others. I don't want to live in a world where nobody helps anybody else - life isn't a zero sum game.

I think competition is overrated as a motivator for human accomplishment anyway. The great works of art of the world weren't created to prove their creators superior to all the other artists, and I think most of the accomplishments in academia happen in spite of the great competition for funding (and publish or perish rather than because of it.

I also suspect that the software industry could have achieved much more were it not for the duplication of effort caused by having competing companies solving essentially the same problems (particularly because of the exponential increase in complexity caused by having to interoperate). Different ideas should be allowed to compete on their own merits rather than on the merits of the companies that sell them.

Having a free market with competition to provide the best prices/best customer service/least environmental harm seems like a good idea in theory but from the individual customer's point of view, their only power is to take their business elsewhere. So my choice is between the supermarket that's close, the one that treats their employees well, the one that's cheap or the one that has the chocolate muffins I like. And (other than writing a letter that is likely to be ignored) I don't really have a way to tell the other two supermarkets why I'm not choosing them. The system only works on the aggregate level - individual consumers with requirements different from the profitable herd are basically screwed.

What's the answer? I'm not sure. Clearly some forms of competition are necessary (since communism didn't work out so well) and some people do great things precisely because of competitive pressures. But I think I would like to see a shift in policy towards rewarding cooperation and "absolute performance" and away from rewarding "performance relative to competition". Unfortunately that's rather more difficult to set up than a free market - in some disciplines (like computer programming) absolute performance is extremely difficult to measure absolutely (almost any metric you choose can be gamed). Also, if different factors become important (for example if we as a species suddenly decide than environmentalism is important) we all have to agree to change the metrics to take this into account, whereas in a free market we just have to have enough consumers decide "environmentalism is important to me - I will choose the environmentally friendly product even though it is more expensive".

What a carry on

Thursday, August 10th, 2006

Suppose you run an airline. Times are hard for you. Fuel costs keep going up, but you can't raise your ticket prices too much or your pleasure customers will holiday closer to home and your business customers will videoconference instead.

You have to find some ways of cutting costs. You can't cut the salaries or benefits of your staff because they'd go on strike. You're already charging passengers extra for their in-flight meal and the movie. What do you do?

Apart from fuel costs, the bane of your existence is passengers:

  • They bring their own food, drink and cosmetics on board instead of buying your $5 bottled water, $10 sandwiches and $20 moisturizer.
  • They bring their own books, magazines, MP3 players and movie players aboard, preventing you from making a tidy profit selling entertainment to them.
  • They cause delays by talking on their cellphones during pre-flight checks, messing up the navigation instruments.
  • They increase the percentage of time your planes spend on the ground by taking forever to put their huge carry-on bags in the overhead bins. They invariably use these bins selfishly, causing later passengers to have to spend ages rearranging things in order to get everything to fit.
  • They take forever to get their carry-on bags out of the overhead bins and get off the plane, further increasing the ground-time factor.
  • They listen to noise-cancelling headphones and are therefore unable to hear instructions from flight crew.

But the passengers pay the bills, so you put up with them.

Hang on a sec, though - all those peeves above aren't so much with the passengers themselves but with all the junk they bring aboard. Almost none of it is really needed, especially given that you can sell them equivalents on board at great profit.

Of course, you can't just say "no non-essential carry on items" - how would you enforce it? The only way to prevent passengers from sneaking in a book or drink is to somehow get the security screeners involved. But how could you possibly convince the world that every piece of carry on baggage is a possible security risk? Well, I'll leave that one up to you.

Whenever new security measures are introduced into your life, ask yourself the following questions:

  1. Will it really improve security?
  2. Regardless of actual improvements in security, who stands to gain from the introduction of these measures?
  3. How could those who make the decision to implement these measures be influenced by those who stand to gain? (Clue... follow the money).

Now, this may sound like a bit of a conspiracy theory but I would not be at all surprised if the security measures introduced in the UK today stick, and spread to other countries. I will also be completely unsurprised if business and first class passengers are exempted from the rule, which would pretty much prove that this is a money-making scheme rather than a security improving one (just like the photo ID requirement).

Charity cold calls

Wednesday, March 8th, 2006

Is my karma going to hell because I hang up on charities that phone me asking for money? I always feel a little bit bad for doing so (which happens about once a weekend), but I logically I know I really shouldn't. If everyone donated money to every charity that ever called them, then charity cold calling would just explode and everyone's phone would be continually ringing. The amount of money these charities received would probably increase at first but then fall back to normal levels as people found themselves having to donate smaller and smaller amounts per phone call.

On the other hand, if no-one ever donated money to charities that called them, the calls would soon stop, the people employed to make the phone calls would be able to put their energies towards more constructive uses (such as promoting that charity's cause in less invasive ways, or working more directly to help the people that the charity is trying to help) and I could go back to expecting to speak to family or friends whenever I heard the phone ring.

I figure the best thing to do with charity phone calls is just to hang up as quickly as possible (without even saying anything) after discovering that it's not somebody I know or some kind of emergency. That way I have used up as little of that charity's money/time as possible (not to mention my own valuable time). Doing this feels kind of rude but it really isn't - the call in itself is rude so the social contract of politeness has already been broken and there should be no expectation of politeness from me.

I'm not against the concept of charity altogether (I donate money through work so it gets taken out of my paycheck before the tax withholding, my employer matches my contribution and I don't have to remember what I donated when I come to file my taxes).

Overreactions to terrorism

Wednesday, September 14th, 2005

I do not understand why a terrorist exploding a bomb which kills (say) 50 people is considered so much worse of a crime than (say) a serial killer murdering 50 random people for non-terrorist reasons. The objection people have to terrorism is, after all, the killing rather than the motive. If Al Qaeda pursued non-violent means to their ends instead of violent ones, they would not be nearly the enemy of the US that they are (in fact, their requests might even be taken seriously if they could persuade the US government to listen to them without violence).

I guess the point of taking terrorist crimes more seriously is prevention. Serial killers generally work alone, so once you have arrested one the stops. But if you arrest one terrorist (or he dies in the explosion he causes) there is always another to take his place. So in order to put an end to terrorism, the US government is attempting to eliminate all the people who could become terrorists, even if they have done nothing wrong. The trouble with that plan is that you have to turn this wonderful free country into a police state to do so. It is not enough just to arrest people who attempt to create or buy explosives or who contribute financially to terrorist causes, you also have to arrest people for the books they read, the photos they take, the websites they visit, the people they talk to and the things they say. You have to spy on everyone to find out if they have any sympathies for terrorist organizations. You have to completely gut the concepts of free speech and privacy which are some of the most important principles upon which the country is based. Already such rights are being eroded, and terrorism is showing no signs of disappearing. And instead of abandoning these dangerous and ineffective policies, the US government is trying to expand these anti-terrorist activities and erode more rights in the process. I think most people would (if they thought enough about it) rather take the freedoms we have along with a small chance of being killed in a terrorist attack than live in the world of 1984 but be safe from terrorists. As with all law enforcement it is a question of balance. I for one am more afraid of being arrested on suspicion of terrorism charges than I am of getting killed by a terrorist, which means that the balance has swung too far to the side of fascism. In fact I was in two minds whether to post this lest it be interpreted as supporting terrorism.

Here is what I think the government should do instead: treat terrorists as the criminals they are. There is no need to implement any special policies like deporting people to countries where they will be tortured, or imprisoning people indefinitely without trial, or removing judicial oversight from surveillance operations, or requiring libraries and bookshops to hand over their records. None of these things were needed in the past when it was just normal criminals that were being dealt with, so they should not be needed now. All that is needed is a sensible set of laws and the ability to enforce these laws. If we need laws against things like "possession of explosives with intent to murder" or "financially aiding a criminal organization" then so be it but no laws should be made limiting free speech or evading the checks and balances that have evolved to keep the system fair and just.

At the same time, the US government should be more open to considering the points of view of any political group who feels they have a legitmate gripe, even terrorist ones such as Al Qaeda (there is no point excluding the terrorist ones because any such organization will just split into two groups - a "political" one which does not officially endorse terrorism, but which secretly funds it, and a "military" one which blows things up). The idea is that if a group is given the same amount of attention whether or not they commit terrorism, there will be no incentive to commit terrorism. And there is still a definite incentive not to commit terrorism - namely that if you do so, your followers are liable to get arrested. Also, no-one should ever be left feeling that terrorism is the only option they have to get their point across.

And once you have your enemy sitting at the same table as you and prepared to talk, the war is half over.

Economics for bluffers

Thursday, February 19th, 2004

This is hilarious.

I'm off to England tomorrow. For the weekend. To get another Master's degree. It's going to be pretty hectic - it'll be a miracle if it all goes according to plan.