Wednesday, June 6, 2007

Cost of Capital Higher in Poor Nations
The obvious result: Growth is inhibited in poorer nations. I highly doubt that higher costs are entirely responsible for the poor diffusion of technology in between nations (the benefits are probably lower in nations as well, and internal costs and regulations most certainly play a factor), but this explains it somewhat. Solutions? I'll read this report more throughouly and see what they attribute the higher costs to.

Tuesday, June 5, 2007

Things looking up?
At least in the short-term, I suppose. Retail Sales (along with income) actually fell in April, but both may have recovered somewhat in May, suggesting that personal consumption will hold up well enough to ward off recession. Exports and business investment are also contributing to demand growth, meaning we're no longer relying on JUST the consumer to keep the economy moving.
Unemployment rates have remained low as well, though it is possible that most of the effect has been felt on independent contractors and illegal immigrants.

Overall, I'd have to say that recession chances look much lower now.

Monday, June 4, 2007

Wal-Mart, ey?

I'd just like to provide this link to point out that Wal-Mart actually isn't an evil monopoly that is exercising a slow and inevitable takeover the world. They have reached their current limit, and everyone has recognized it. When Wal-Mart finally recognized it and decided to not expand anymore, the market rewarded them by recognizing them as a better stock-buy.

Incentives are cool.

Swedish Economics
The commenters are quite right that Swedish productivity continued to rise and that the Swedish standard of living remained quite high, even through the stringent regulations of the welfare age.
The crux of the story, of course, is that the Swedish economy as a whole was growing slower in production terms under the stringent welfare state controls of the second-half of the 20th century. The Swedish economy was structured to favor consumption and unproductive investments like housing. Swedish tax reform in the early 1990s succeeded in eliminating some of these preferences, and the Swedish economy has been growing more efficiently (in production terms) since then.
The discussion we favor the standard of living...or do we favor production?
My response is obvious: We should let the market decide. And the market wasn't deciding under old rules. The Swedish government laid down law after law that effectively limited the dynamism of their economy and favored consumption over investment.

Thursday, May 31, 2007

More on the immigration bill

What could be one effect of the new bill? Well, apparently, it may contribute to shifting economic growth from the city to the suburbs:
I have no idea how badly businesses inside cities depend on family labor, nor do I know the full social benefits of having a good family (though I support family life almost as much as I support free markets). However, it is important to note the opportunity cost in general; having more high-skilled immigrants means attacking the social capital that often enables small, family-owned immigrant businesses (and immigrants are the most likely group of people to be entrepreneurs!) to survive and prosper.


As President Bush enacts yet more sanctions against Sudan over the recent violence in Darfur, I'm left to wonder: what the heck is going on here?
When I was in high school, I was assured that no one was doing a thing, and that this would be the most violent genocide since Rwanda; 400,000 dead in 6 months, I believe? Years later, the toll has apparently remained under 200k, and most people seem to be saying that we still aren't doing enough and that a serious crisis is just a second away.

Forgive me, but I think the problem is being a bit overstated. That's not to say that we shouldn't be working to undermine Sudan (although these sanctions probably won't do much) as it is one of the most irresponsible and inhumane governments on the planet. I would, however, like to see the moral crusade die down a bit, so cooler heads prevail and we can undertake a rational strategy.

Tuesday, May 29, 2007

More on Wage Inequality

Explains a quarter of the growth in male income inequality. I'd reckon that paying bonuses to people for more work also contributes a bit to the leisure inequality growth as well: If you get paid more as you work more, you're going to get to paid more AND work more.

In this way, it appears our economy could probably solve a bit of inequality by directly tying performance to salary, and somehow introducing more dynamism into the economy that would allow people to work more hours if they so choose to (although studies conclude that most American would rather work less...)

Mr. Al Gore on the Daily Show

No, no links. Search for it on youtube yourselves, you Intellectual-Property-violating scoundrels!

Al Gore was chatting with Jon Stewart on the Daily Show a few nights ago about "The Assault on Reason," his newest book. (

Now, Gore is smart. He's an emotionless robot, but he's sharp, and did a lot of work during the Clinton years (especially the first term, or so I am told). So when he says that major news media isn't doing a good job of covering the news and that the way our society processes our information is based more on fear and ideology than facts, it's a good idea to listen.
News, of course, is now a commercial business focused on the bottom-line. Corporations have to be sensitive to the market, and the market seems to demand news that appeals to emotions, confirms their views, involves a lot of heated arguments, and follows a narrative format. It's sad to think that some day news might become a soap opera, with stories about the US and Iran clashing over Iraq as opposed to news laying out the details of our discussion with Iran.
The problem, though, is that Stewart called the internet an "equalizer" and Gore seemed to agree. As an economist, we can explain this clearly: Stewart and Gore believe that the institutions of media, rather than the people watching them, are the problem, and that the internet allows us to bypass the institution: information can get to the people without being distorted.
This argument is flawed. The reason television news is so popular is because networks define niches and successfully target them with interesting marketing ploys. The problem isn't that corporations are profit-seeking; the problem is that the people want entertainment and not news. Therefore, arguing that the internet will be a better source of information for the people is baseless, as the problem IS the people.
The internet does, of course, have unique advantages. It can carry a larger number of news networks, meaning more niches can be filled; therefore, Nazis can get their own website in the same way that Republicans get Fox News. I do wonder if this is what Gore and Stewart meant by making the internet out to be some sort of great savior?
The same biases that exist in TV news exist in internet news...actually, even more so. Pundits are, of course, naturally biased to be making extreme claims ( and Cass Sunstein's "Infotopia" offers a very good summary of current research that concludes that the internet blogosphere is heavily Balkanized into conservative and liberal camps.

That Balkanization, though, enables precisely what Stewart and Gore may actually desire: A place where "wrong" views aren't allowed and people aren't allowed to discuss things that Gore and Stewart think aren't important. A very elitist view, no?

This post is in no way a criticism of Al Gore's book. It is a criticism of the idea that internet is the best source of information because news media is terrible and doesn't allow discussion of good ideas.

Krugman goes nutso?
Sorry. I'm lacking the link to the original article in the NY Times.

Krugman is, of course, notorious for wild statements and accussations. He's a "loony leftist" though he is damn sharp and almost always has a point worth considering.

What I'd like to point out are the comments about the current crop of Republican candidates, which are the REAL story in this commentary piece:

"Here’s the way it ought to be: When Rudy Giuliani says that Iran, which had nothing to do with 9/11, is part of a “movement” that “has already displayed more aggressive tendencies by coming here and killing us,” he should be treated as a lunatic.
When Mitt Romney says that a coalition of “Shia and Sunni and Hezbollah and Hamas and the Muslim Brotherhood and Al Qaeda” wants to “bring down the West,” he should be ridiculed for his ignorance.
And when John McCain says that Osama, who isn’t in Iraq, will “follow us home” if we leave, he should be laughed at. "

While I don't agree with the sentiment about Senator McCain, Krugman is right on the money about Romney and Giuliani: If they really said those things, they don't seem to understand that Islamism is not a Monolith who's sole purpose is destroy us. See this post ( for details.

1. Giuliani is wrong when he says the Iranian "movement" has killed us on American soil. It most certainly has not displayed such direct approaches; the threat from Iran is regional, in the sense that it seeks to dominate the Middle East. A different movemenet has chosen to attack the United States: The global jihad that commenced with Osama's orders in 1998.
2. Romney, as much as I love the guy, is not correct in his statements. The Muslim Brotherhood is not working, as far as I know, with other Islamic movements, as the strategic goals are different. And Sunni and Shi'a groups are more focused on killing each other than working together to bring down the United States (unless people believe that Iran and Saudi Arabia are secretly allies, in which case our soldiers in Iraq are going to be dead very soon).

Dismissing them as LUNATICS, though, is over-the-top. It is unlikely that the Republican front-runners are as ignorant as they appear to be about this particular issue, in the same way it is unlikely that Obama and Clinton are really as stupid as they appear when they talk about Wal-Mart or free trade. It's called politics.

Religion and Insurgencies
The points I consider most important:

“Viewed in this way, it is not critical to accept that insurgencies are ‘religious insurgencies’ or not, but that all insurgencies are an expression of political struggle for power”
“Religion as political structure of the human culture is well accepted in the vast majority of schools spanning all sides of the human condition”
“The context of the extremist Islamist insurgent is the important matter here. Islam in a moderate context does not condone suicide bombing, killing of innocent victims and destruction of other societies.”
“Accepting this, Islam is marked as a faith based belief structure that includes rules and concepts for political organization, rule making and civil governance. As such, Islam can be viewed as a political structure with ready made sets of solutions for political organization that extremists exploit by appealing to the religious structures that resonate with members of the broader faith, while seeking to obtain the broader objectives of power over people and their resources. The insurgents use Islam not so much as a religious structure but as a political structure in their quest for power.”

I'm not entirely sure how relevant this could be. It's certainly a lot better than completely ignoring the forces of religion in instances like Iraq, though the above points do not, on their own, really describe what exactly is going on.

Sunday, May 27, 2007

Message to Mahdi Army: No More Talking
Al-Sadr is a destabilizing force in Iraq, and always has been. I'm quite glad to see that we're giving him a hurting.

Democrats and Fox News
Yep, that does require a log-in, but you should be subscribed to the New York Times anyways. It's free and, if I read it despite a sometimes liberal bias, you should, too.

Anyways, this article talks about the little fiasco in the Democrat camp about the Democrat debate on Fox news, sponsored by the Congressional Black Caucus. Senators Edwards, Clinton, and Obama have decided not to appear in the debate, probably to appease their liberal base.

I must say that, while I understand their motives, I'm rather disappointed; Fox News, regardless of its right-ward tilt, is still a highly rated news agency, and a media outlet where liberal thought can reach a large number of people. The step that Edwards, Clinton, and Obama took (or Bush when he refused to speak to the NAACP) reflects a Balkanization of the media that could have negative effects in the future.

Wednesday, May 23, 2007

IQ and Wealth
The great question about this article is…does the fact that the study controls for years of education completely invalidate the conclusion, since IQ strongly predicts years of education?
The key factor, of course, is whether or not they also controlled years of education when they measured income per person. If yes, then it means that IQ does indeed play a role for income, yet, for some reason, higher IQ people just spend more money and therefore don’t save more.
Nonetheless, the data still says SOMETHING. IQ differentials, even at the same level of education, should be generating higher levels of wealth, as small differences in IQ still imply greater intelligence, and therefore higher salaries and better decision-making skills.
So, why in the world is IQ NOT increasing wealth?The best argument that I can think of is that, at a given level of education, as your IQ goes up, so do your socially destructive habits; after all, if you were more stable, you’d have a higher level of education, wouldn’t you? The end effect is that you are more likely to get divorced, spend more, etc, and therefore your wealth will be negatively affected in the long-run.

Lebanon and Fatah Al-Islam
As everyone is quite plainly aware of by now, Lebanon is, once again, on the receiving end of some pretty nasty violence. This time, it’s a small terrorist group known as Fatah Al-Islam, based inside a Palestinan refugee camp.
The problem is that these guys seem to be armed pretty gosh-darn well. They have night-vision goggles, strong weapons, good tactics, and maybe even anti-aircraft guns.
Is Al Qaeda behind this group? Well, it’s possible:

At the very least, they seem ideologically linked to Al Qaeda. My guess: A small, well-trained group of soldiers, conducting a bank robbery in Lebanon, operating in Iraq, controlling a refugee camp in Lebanon, with convicted terrorists from Europe. Sounds like they’re really only using Lebanon as a safe base to mount operations in Iraq, as opposed to trying to destabilize Lebanon.

Monday, May 21, 2007

Martha C. Nussbaum
I spent a decent amount of time looking over the above link this morning, trying to wrestle out the valuable nuggets of information.

What seems most interesting is the possibility of combing other disciplines with economics to more properly understand standard of living (Some people also suggest that we could use fields like neuroscience and psychology to understand human decision making as well, but let's focus on standard of living for right now).
Many people have argued that the United States, while objectivley quite wealthy, actually has a lower standard of living than most European nations, because our people really aren't as happy; they just don't have access to the good things in life.
Of course, we know this just ain't true:
Nonetheless, we should recognize that there are many things that make a good life besides a high rate of GDP growth. My training in psychology has taught me that most people are happy when they are:
1. Not poor
2. Healthy
3. Have meaningful social relationships
4. Have a place in society

Just because our current measures, for whatever reason, are excellent proxies for good standards of living (and are excellent measures for measuring our strength and influence in the world) does not mean that they will always be good measures of how happy our people are. To understand that, we need to work with other disciplines, specificially on the power structures of our society. That's what I get out of reading the link above. Nussbaum has experience with these power structures (though she specifically examines women and their status). Hence, she has a lot of knowledge to bring to us.

Power structure study will also enable us to better understand the structure of the economy as a whole; simply supply and demand graphs don't show the actual gears of the economy underneath the surface of the economy. Rather, they only explain how changes in price will make those gears respond. It is an awesome and powerful tool to understanding how people make decisions, but it leaves a lot of the picture.

What is disturbing, though, is how she seems to criticize interdisciplinary studies. She may be right: true knowledge takes a long time to develop and master. But if interdisciplinary study truly detracts from the quality of our findings, we have arrived at an interesting junction in human history: we have so much knowledge at our disposal that, in order to properly integrate it, we have to slow down the path of discovery.

Very interesting, no? Yet economics is a perfect example of this dichotomy

Mexican Drug War

I'm afraid I don't know what exactly is going on south of the border right now. Apparently drug lords are more powerful than I imagined, and the Mexican government has called out a sizable number (I have heard 24,000) federal troops to squash resistance.

Mexican internal politics were never my strong suite, but Americans should be aware that this is happening. Violence has a tendency to spill over the border; even if it doesn't it will affect the Mexican economy, which will in turn affect our own as well as tourists in Cancun.

The Bear wakes up
Now, I don’t want to be a nay-sayer, but it seems relations between Russia and the West have fallen lately. Quite a shame, too, especially since they seem dead set on threatening the security of the relatively prosperous Baltic nations.
Oh well. The best way to make sure that nations play a positive role in the world is to assure them that they have more to gain from cooperation than from intimidation. This means a dedicated effort to keep block Russia’s external political moves, wherever they may be.

Saturday, May 19, 2007

China criticizes West on Africa

Pot calling the kettle black! I seem to recall Ghana whining that China wasn’t following through on its promises a few years ago, though perhaps my memory is fuzzy.

Regardless, the move is disturbing. China has been effectively encircled by powerful states in Asia, and it’s best ally is Myanmar. However, Africa and its rich mineral wealth, a longtime battleground between the Great Powers of the world, is still up for grabs, and not very friendly to Western intervention.

My take is that China is being a little harsher on us than they might otherwise be, and is currently trying to further relations and make economic inroads into the continent. The US has been making economic inroads as well, in addition to geopolitical moves on the Horn and strengthening militaries in North Africa. In a few years, we’ll also have a new aircraft carrier and the ability to rapidly transport a small number of F-22s (that would be able to do a LOT of damage) and our African command center, which is a recent addition, will be fully experienced and likely possess its own special operations forces.
So, we’re both playing strong for Africa. The difference is that we have force projection coming soon, and they do not. So, China is going to have to play a LOT tougher than us to make friends in Africa, and they’re going to have to start very soon.

Immigration Reform?

Wow. It’s not often that I’m absolutely floored by a bill in Congress, but this new “immigration reform” really does take the cake.
The problem isn’t that this bill isn’t going to accomplish anything positive. It’s that it really doesn’t seem to accomplish anything. If I may reference my own sociology paper on immigration, the level of illegal immigration to the United States seems to associated mostly with US economic growth and demand for labor; in other words, immigrants are going to keep coming because businesses will pay them for their labor.
So, if immigrant flows keep coming, what’s our response going to be? Apparently…more amnesty (except we can’t call it that, even though they only have to pay a small fine!) and more border control, neither of which has really worked in the past.
Color me ungrateful, but this bill seems to be a pile of useless paper.

What is positive, though, is the fact the new guest worker provision, which allows 400,000 guest workers to come to the United States legally; they also will be given visas based on their skill level and education as opposed to how many family members they have here. That much signifies a good trend in the United States; evaluating people based on their abilities and not their connections

Thursday, May 17, 2007

Income Inequality
So, one of the obvious political and economic issues of our day is the level of income inequality, which has been rising. The questions most people have are “why” and “what are the ramifications.”

There are two dominant theories right now. One describes income inequality as pretty benign: it reflects a greater of return on education.
The second is malignant: There has been a fall in taxes, allowing rich people to accumulate fortunes. CEOs can manipulate their pay and stock prices, unions have fallen, and outsourcing is taking a toll on wages. The rise in inequality is a very bad thing under this scenario, and not everyone is better off.

This argument, of course, is politicized. Most Republicans like to think that inequality is due to education and hard work, and Democrats are more likely to believe that CEOs are abusing the system.

In truth? It’s a little bit of both. The top 20% households as measured by income have been growing in share since the 1960s, but, within that segment of the population, households have been growing at different rates and at different times. The top .01%, in terms of total income, earned 50 times the median level of society in 1970. That same factor was 250 in 1998. On the other hand, a worker at the 90th percentile (we’re talking wages now, not total income) earned 3.7 times what the worker at the 10th percentile made in 1979. In 2006, that number was 4.7 times.

Obviously, different factors at work here.

Looking at the top 20% and top 10%, the story is pretty simple; the return to education has increased dramatically. In 1979, the median worker with a bachelor’s degree earned 38% more than a person with just a high school degree. That number was 75% on 2005. Numbers like this shouldn’t be too shocking too much to anyone; better educated workers are better able to take advantage of our dynamic economy and our growing level of technology. I’d also suggest that we’re more efficient in who we send to college; even though we’ve sent a lot more people to postsecondary education since the middle of the century, the average IQ of the college student has increased significantly. Since the two factors work together to increase wages, it’s not surprising to see their incomes rise.
It’s also important to note that our measures of inequality check for inequality of households. The fact that more women are working now implies greater inequality, as higher income households are more likely to have a well-educated father and well-educated mother.

But what the heck is going on at the VERY top? Their income share has risen dramatically, much more so than the rest of the population. Does this mean we’re returning an era of oligarchy?
Eh, not quite, but education doesn’t explain everything. Technology, however, does still a play a role.
For instance, technology enables actors and baseball players to be seen all around the world and quite easily; their services are now in much greater demand, and they can be paid higher wages. And I’d suggest American cultural imperialism has played a complementary role to that as well.
The other group at the top are, of course, the CEOs. This is the most profound change in the United States throughout the 20th century. Prior to the Great Depression, the top 1% made 70% of their income in dividends. The shocks of the Great Depression and World War II seemed to have completely destroyed many vast fortunes, and the capital income that the rich got was never the same. On the contrary, since then most of the top 1% has earned money by…well, by actually earning their money. In 1998, roughly half of their income came from labor, and another sizable chunk came from private business income. Dividends only composed about a quarter (compare this to France, where the rich still live off of dividends). Why has CEO pay risen?
Well, the top 1% (CEOs included) started having income share increases in the 1970s, about a decade after the rest of the top 20%. However, their income share rose much faster than the rest of the top 20%. In 1970, the top .1%, for example, had 1% of the wage share of the population. That was 2% in 1984, and has increased since then.
The reason corporate board pay has risen so much is a matter of much contention. In my opinion, the average corporate executive these days really does have it all; they posses a high level of education, put in many hours, typically have much experience, and are better connected socially. This productivity has been seen in the large increase in shareholder value since the 1970s, as well as in the numerous powerful corporations that have emerged over the past 30 years that have revolutionized the way we think about business; Wal-Mart and Microsoft are good examples.
However, does this explain the WHOLE story? Perhaps executive compensation has risen too dramatically to fully account for the new firms that been made that are, indeed, profitable. Marginal taxes, for instance, may play a role. The large reduction in taxes under Reagan may have made work more profitable for the rich, who then would work more and obviously make higher incomes. There is indeed a measured increase in the share of income for the top 1% after 1986, but this is probably due to the change in tax structure; before 1986, it made more sense to classify personal income as corporate income. It’s tough to say how much inequality rose in the Reagan years before that.
Another factor, as many on the left say, is corporate influence over their own pay, as well as social norms. Since I don’t know too much about influence over their own pay, I’ll save that for a future post.
The social norms basically suggest that no one has no idea how much executives should really be paid. Are they worth that much? It’s almost impossible to measure, but investors are willing to jump on the bandwagon simply because they don’t know any better. If true, it’s a big reason why executive pay has increased, and explains why executive pay doesn’t seem to be sensitive to things like oil shocks (which DO affect the wages of everyone else). .

So, do we have anything to worry about?
1. The higher income definitely enables the creation of an oligarchy. Tyler Cowan recently pointed out that the college premium is the same as it was in the Gilded Age. Although he was saying nothing about an oligarchy, I found it pretty interesting.
2. Consumption inequality is even more important than income inequality, and doesn’t appear to have been dramatically affected in recent years. Consumption inequality, of course, measures how much each household consumes as opposed to how much it makes. This is important because many households are at different stages of their lives; obviously, inequality exists if there are households that are run by the elderly and households that are run by people in the prime of their lives, even though the amount of goods that they have is more equal than the amount of income they make.
3. The increasing level of single mothers should disturb everyone.
4. There is still a lot of income mobility, mostly because the level of income is largely determined by what stage of life a household is in. For instance, between 1996 and 1999, slightly more than one-third of the population was impoverished for at least 2 consecutive months. Only 2% was impoverished the entire time. Indeed, even the super-rich .01% change every year as executives exercise stock options at different times. We may not all be in the top 10% now, but a lot of us will be at some point in our lives; with wise investments, we’ll be able to live well for a long time.
5. An important thing that I’m going to come back to; we should be worried about the fact that people don’t see opportunities. Part of what makes the top 1% so wealthy, in my opinion, is the fact that they recognize business opportunities more effectively than the rest of the population. Part of this is due to the fact that the top 1% has more connections and more experience. Part of this is also due to the fact that some people major in Gender studies and later join the private work force.
6. We should be confused that education is such a big problem because education reform is difficult to implement. We’re middle-of-the-road at best in k-12 education, and college education is getting quite expensive. Postgraduate education isn’t even considered by many.
7. One thing that is hopeful? Though implementation is tough, there is a lot of room for future growth in the United States. If we reformed education, if people became more perceptive of the business world, and if families in the US were more stable, economic growth would pick up considerably.

In the future:
-A post about unions will appear
-A post discussing solutions to inequality (or, rather, policies to make our economy grow faster)
-A lot more discussion on the gap in business knowledge and opportunity recognition

Monday, May 14, 2007

Iran and US to negotiate

Well, the United States and Iran are apparently going to set aside their differences (for at least a little while) so they can talk about Iraq. Surprisingly, we will NOT be talking about the various other issues at play here, such as the Iranian nuclear program or Iran's support for Hezbollah.
Also important: The talks are only going to be at ambassador at level, which means that this, while important in the sense that it is opening up the door, is unlikely to mean large, sweeping changes in Iraq anytime soon. (Not to mention the other problems Iran is causing in the area!)

This comes after some low-level Iranian and US officials "ran into each other" in Egypt a while ago (when people were wondering if Secretary Rice would have a similar "run-in" with her Iranian counterpart).

Personally, I think the strategic situation in the Middle East has changed somewhat, and that these talks can be a good idea. Hezbollah got worse than it gave in the recent battle, and is probably still licking its wounds, even if Hamas is crazy enough to renew rocket attacks against Israel. The attempt to overthrow the Lebanese government similarly failed, the Saudis are procuring more advanced weapons, and many Gulf States have gone to the IAEA to register their own nuclear programs.

In addition, Ahmadinejad is having big problems at home. Oil prices were lower than anticipated and a quiet US Treasury campaign has denied Iran supplies of hard currency. The end result? Iran is cash-strapped, both nationally and internationally. The economy is bad enough that recent elections turned against Ahmadinejad, and the Russians are quite annoyed that Iran has not made recent payments on its reactors.

The broad picture has gone against Iran, which was expecting aggressive confrontation; rather, they got an indirect assault and a proxy war, and is currently getting hit hard. The broader picture still is in Iran's favor, as they will get nuclear weapons within the next few years at the present rate, but the situatuon is much less bleak than it was, and therefore we don't have that much to lose by restricting the topic to Iraq.

On the contrary, we have everything to gain. By making concessions only within Iraq (which is ugly anyways) we can keep our hand steady outside of it.

I'll be watching. I'm expecting a few overtures and gestures, but, in the end, nothing will occur. By the end of the year, though, I expect more serious talks between the US and Iran.

Sunday, May 13, 2007

Sex for Health Part II

The author is correct in his assumption that more sex can indeed bring down the growth of STDs in society:
I did some more math work, taking into account that that STD carriers theroetically have more sex, and the original author may indeed be correct (under one circumstance, anyways)

The number of new infection=p*c*f*i
p=probability infecfted sleeping with uninfected person
c=chance of it spreading per contact
f=frequency: number of times infected person has sex compared to uninfected
i=number of infected people

f and p are related inversely. If f increases, then p decreases...the more often infected people sleep (as a whole), the less likely an individual infected person sleeps with an uninfected person.

I modelled this with:
where x is the total number of people in the population. x-i is the number of times uninfected people have sex per f times for an infected person.
IE, if there are 10 infected people and 30 uninfected, and the infected sleep 3 times for every 1 of the uninfected, then the probability of sleeping with an uninfected individual is 1/2 (40-10=30, divided by f*i=30+30=60)

This is the chance of any individual sleeping with an uninfected on any given time.

SOOOOO, putting it all together:
divided by
is the number of new infections

Put random numbers in for c, x, and i, and let f be favorable. As f increases, the number of infections increases. f=number of times infected people have sex/number of times uninfected people have sex.
So, the author is right: Holding ALL ELSE EQUAL, if uninfected people have more sex, the number of infections is wrong.

Yes, I was wrong

Special Interest Groups and Democracy: A lack of knowledge

The key question at hand: So many people think special interest groups have a strangle-hold on us, yet, in many, many cases, people support their economically ridiculous claims, such as support for tariffs or subsidies for farmers. Why in the world do they do that?

The important thing to realize from the comments in the above blogs is that the people aren't being irrational per se. Rather, they're simply ignorant. Most people really don't understand that by allowing comparative advantage to work we are really increasing our living standards. Most people do not understand that a trade deficit with China and India is not inherently bad. Most people do not understand that regulations and unions carry hefty drawbacks with them.

The reasons are for this are numerous, but I believe most of it comes from a basic misunderstanding of macroeconomics. Once upon a time, Y=C+I+G+NX was revolutionary. For many people, the idea would still be revolutionary. Hell, I never even heard of "IS-LM" until 6 months ago, and I'm a second year college student.
Most people do not have more than a vague understanding of how the economy actually operates. As such, it's not surprising when people come to erroneous conclusions.

What TYPE of erroneous conclusions do they arrive at that, though? Well, generally, people will fall back on credible social institutions to guide them, in the same way I fall back on my econ textbook. Social institutions about political issues (like the economy is treated, as opposed to a matter of science), rely, of course, on political history and the basic cultural values of the American people. This includes freedom but also , since the advent of Big Government, a respect for government can accomoplish and an expectation that government get something done. The institutions are often just as confused about economics as the people (how many Fox News anchors actually understand economics?), but, since they are in positions of respect, people do listen. And their models tend to rely on government intervention in some way or another.

Another factor to consider is "idea mutation." A social institution may give the idea, but people naturally process that idea into context, and then form policy propositions. The context part is important; I know a LOT of economics, but I can't relay the ideas to people, because they do NOT understand economics, and do not have the will to learn it. It's tough; my ideas may be better than General Motors, but General Motors has a better marketing campaign because it can easily be processed.
The processing part is important as well, especially for school-children. What happens in our history classes, when children are given only a brief paragraph about the Bay of Pigs, when scholars have written entire BOOKS about it? Children get insufficient details and make wild generalizations from them. Naturally, poor policy decisions are the result.

The context vs. processing distinction is fine that even I don't understand it. As a working definition at the moment, I'll define the context part as the ability to understand the argument in relation to what you already know. Processing involves the strategy people use to integrate the new knowledge into their knowledge-pool.

I think processing should be our primary target. Context doesn't matter so much; even if economists "dumb themselves down" so ordinary people understand them, it won't change the fact that people have incomplete understanding. We still treat people as intellectually inferior, we just have the more effective marketing strategy and happen to produce good results.
Instead, we should be given people MORE knowledge, particularly THEORY. People are not stupid; they have vague notions of how supply and demand operate. What they need are models that integrate knowledge, which will them to integrate past information and new information MUCH more easily. And they need empirical examples to back up said theory.

In essence, what we need is better basic education that serves as a foundation for people, instead of giving people more knowledge and allowing them to build on an already incorrect foundation.

Saturday, May 12, 2007


After a long, nearly 1 month hiatus, MOAES is back. I've spent the last month handling personal issues and studying for a number of exams and finals, and I decided to not burden myself too much by trying to study things outside my curriuculum.
Anyways, it's back.

Saturday, April 14, 2007

Sex for Health!

One very interesting argument in regards to stopping AIDS: More sex. At least in the Western World.

Consider a 5 person society. Person A wants to engage in sexual activity, but Person B is far too shy to actually have a fling. Person A can then choose between C, D, and E, all of whom are very promiscuous and have already contracted AIDS.
If Person A wants sex, Person A is getting AIDS.

Real societies, of course, are not like this, but consider a typical college population of 100 people, 50 female and 50 male(the female ratio is actually higher, but the difference doesn't matter). Let us assume that, per my personal statistics, half of the females are in relationships, and a quarter of the males.
Thus, we have 25 women and 37 men that are single.
Of these, lets assume that 10 women and 16 men are looking for a purely physical relationship or a hookup at any given time. The rest just don't see the point, are too nervous, etc.
These people are more likely to be promiscous in general, and are more likely to have already contracted an STD. Let's say the rate is 50%, meaning that there are 5 infected women and 6 infected men.
The typical woman faces a 50% chance of having an infected partner, as does the typical male (the percentages change somewhat if bisexuality is introduced). However, what about those shy people? There are 15 single girls and 21 single guys that AREN'T looking for sex. Perhaps that works best for them, but for society as a whole, it's best if they actually increase their sexual activity. If the typical woman, for instance, has 2 different partners every year, she has a 75% chance of sleeping with an infected person. Throw in 10 of the shy guys, who don't have STDS, and the chances fall all the way down to 53%.

My reponse? Utter hogwash. While AIDS itself could be slowed down signficantly, other STDs would be spread more rapidly. I delibatrley chose high numbers in the example to show that even small percentages of people carrying STDs mean high chances of sleeping with someone WITH an STD. In the above example, only 11 people had an STD. In actuality, the ratio is almost twice that, with fully 1 in 4 18-24 year olds having some sort of infection (and many not even knowing it!)

It's an interesting argument, but one that is ridiculous

ADDENDUM: I let this set for a long time, having forgotten about it completely. The balance of evidence, as far as I know, actually works in favor this argument, advanced by Landsburg in More Sex is Safer Sex

Sunday, April 8, 2007

Iraq War: The Classic Argument

My personal belief as to why the Iraq invasion was a good idea:

1. The Global Jihad is best combated through a complete overhaul of government and even society of the MiddleEast. Corrupt, unstable governments with poor developmental policies and no freedom, plus an unresolved crisis and constant foreign invasion is NOT a way to not breed massive discontent. To defeat the global jihad, we should build strong, stable societies.
2. Reform among our current allied states is slow-going, and the global jihad movement was getting stronger faster than our allies could reform to neutralize this. Our Iraq invasion to create a model is our version of the French Revolution, which may lead to a whirlwind of events to create an 1848-style of revolutionary outburst throughout the Middle East and maybe even the whole Muslim world and beyond.
3. Iraq was a state with a dormant WMD program, and thus a threat to the free world. They might not have had WMDs, but all signs to point to Saddam developing WMDs after sanctions ended in order to combat the Iranian threat.
4. Iraq was a potential ally of Al Qaeda. Osama, before making his 1998 declaration of war, went to Saddam. Nothing came of it, but Osama made his choice; if ANYONE was going to help him besides the Taliban, it was going to be Saddam.
5. Saddam was a hostile leader. There is no place for him in a reformed Middle East. In fact, he very likely would have been an opportunistic weasel that would strike an unstable democracy the second he had a chance unless we jumped into protect said state; at the very least, Saddam was sending the wrong message in regard to the Israeli-Palestinian conflict, was willing to cooperate with Syria (a supporter of Hamas and Hezbollah) and in general would have been just as much as a headache as Iran is now.
6. Iraq is a humanitarian crisis now, but it likely would have been one eventually anyways. It’s possible that it’s better to get it done now.
7. Therefore, invade Iraq

1. Iraq had no WMDS!
2. Iraq was an essentially contained state.
3. Even if Iraq did have WMDs, they wouldn’t have been a threat to the United States. We essentially deterred him with our own WMD supply.
4. Saddam would have never allied with Osama. They were ideological enemies, and Osama routinely denounced Saddam.
5. We are inflaming the global jihad
6. We have alienated the Muslim street, making any sort of large reformation difficult to conduct
7. We have strengthened Iran’s hand in the region, once again making reform difficult
8. Therefore, don’t invade Iraq

1. Iraq had a dormant program. They would have reproduced weapons eventually, and inspections likely would have done nothing to slow them down, as we see from Iran and North Korea. A regime totally intent on having WMDs will have WMDs.
2. Iraq was contained largely because Iraq was being bombed daily, deprived of economic supplies, had limited food aid, and had a US force ready to jump his throat. It is unlikely that this status quo could be maintained indefinitely given our political climate, and yet Saddam was STILL a headache for us, and had not yet died and created a Balkans-type situation. Beyond that, Iraq at the beginning of Saddam’s reign had moderate military capacity. Saddam turned it into having the 6th largest army and having a respectable officer corps. Economically, the nation couldn’t handle the burden of wars of sanctions, but we don’t know what Saddam would have been able to do under “normal” circumstances.
3. Proliferation is always negative. It increases the chances of weapons slipping into the hands of terrorists, and the chances of such weapons being used. Not to mention it grants Saddam invulnerability from US attacks if he ever developed his own NUCLEAR stockpile (admittedly difficult, though, as previously stated, not impossible).
4. Osama entirely readjusted his strategies after 1998. An Osama-Saddam partnership would have been entirely possible in 2010 or 2020 had we not intervened. It is now not possible.
5. We are encouraging attacks against us, but the global jihad movement sponsored by Al Qaeda itself is NOT inflamed at all. Al Qaeda proper in Iraq was never all that great, and the affiliated group calling itself Al Qaeda was HEAVILY brutalized, so badly that Zarqawi was filled with despair soon before we killed him. Al Qaeda has no base in Iraq anymore; the Sunnis are beginning to rat them out, and the Shi’a are unlikely to ally with Al Qaeda if they take over, given that Iran would be their protector.
6. Reform has continued through the Iraq War. It is largely a matter of convincing our allied governments to open up and actually be sympathetic to their peoples demands. Many, many, many peoples around the world hate the United States. Very few decision makers are foolish enough to actually challenge the US, and this pattern will hold in the Middle East.
7. Iran is indeed strengthened, and frightened enough that it is attempting to gain nuclear arms while trying to secure regional hegemony. However, we are now in a position to attack Iran, should the need arise, and our efforts have been concentrated on hurting Iran for a long time; Saudi Arabia has been acting as a counterweight somewhat, we have made overtures against Iran in Iraq, Hezbollah was assaulted, Hamas(though I don’t believe Iran had much handwork in Hamas) has been coopted, Iran is unable to get much hard currency(and thus is unable to pay Russia, which depletes it of much political support), and Iran is beginning to experience sanctions. Beyond that, Iran’s sole ally of Syria is flirting with the West, as a result of the West being more open and Syria knowing that Iran has no future.
8. Therefore, the attack is good

It's a lot of broad strokes, and ignores the depreciation of the military that's been going on, but it supports the idea that attacking Iraq was sound policy, if not the specifics of how it was conducted.

Wednesday, April 4, 2007

Understanding Islamism

A good paper to read, though the thread itself isn't too interesting.

What's most interesting here is the idea of a "religion of peace" vs. "a religion of laws." The best way I can interpret this is that a "religion of laws" is a religion in a society who's morals actually serve as the basis for moral order. Such things shouldn't be frowned upon per se; "strength through unity, unity through faith" is a much better motto than "anarchy."
This contrasts entirely to religion in a society where moral order is provided external to religion. In such a society, religion becomes more of a tool of self-expression. The practical differences in today's world would be Islam in certain areas of the Middle East, which provides the laws, and Buddhism in the United States, which is really more of an urban cult phenomenon.
In this way, we urban (and suburban) Americans may never understand the role of religion in the Middle East; it's simply too different from our own conceptions. This is probably due largely to the lack of national, non-religious institutions in the MidEast. Stable societies, I would suspect, become more secular and less religious based over time, and more concentrated on sound policies and more universal human morals.

Other than that, the paper brings us a very interesting point of view on the different strains of Islamic Activism in the MiddleEast. Those most politically active are the most trustworthy and most moderate. Those that decide to make Islamic activism about winning new converts are troublesome and potentially spawn/ally with Jihadists (which is a big problem in Europe, where young Muslim men are seeking identity), and then there the Jihadists themselves.

Also impressive is the idea that the Shi'a are actually quite modernist. In this sense, trying to negotiate with Iran is simply a matter of convincing them that our ideals of democracy and markets are superior, as opposed to simply bashing them over the head with a hammer.

Sunday, April 1, 2007

What could fail?

In the 1950s, the United States attempted to create a pan-Islamic movement in the Middle East, led by Pakistan and Saudi Arabia, that would halt the tide of Arab Nationalism (as the Arab nationalists had sided with the Soviet Union by and large).

This effort quite obviously failed, despite some other, more successful 1950s policies.

Yet, in a way, Islamic movements did emerge in many nations. Most are tame, but a number have been most menacing.

I wonder if, some day, there will be suicide bombers killing foreign occupiers in the name of Locke?

Friday, March 30, 2007

Free Trade Causing a Shift in Society?
Alan Blinder is sure causing one heck of a stir in the econ blogosphere thanks to that WallStreet Journal article, but I can't imagine what for.
As far as I can tell, Blinder isn't opposing free trade; he isn't asking for temporary restrictions on it so that nations will have better time to adjust. He's just asking for a realization of some information that flies in the face of mainstream America's ideas about what our economy needs to flourish.

Most significant about that essay of his (second link) is the idea that many of jobs that we consider "safe" because they involve a high-skill level are, in fact, vulnerable because they will eventually be tradable services. The only jobs that will actually be safe are those that cannot be delivered via an internet wire (IE, personal services).
This, according to Blinder, suggests that we are at the very beginning of the "offshoring crisis." About a million service jobs have been outsourced so far. 40 million are capable of being outsourced. And we're already seeing a massive backlash against the way our society is structured...suggesting that life will be even more turbulent. Our entire society could be restructured. What's scary: just spending more on education won't help, simply because high-skilled jobs CAN and will be outsourced.

Personally, I think Blinder is a bit over-eager in his claims. The changing economy most assuredly supports greater inter-connectedness. It also, though, supports high-skilled jobs to such an extent that the colleges of the world won't be able to turn out enough of them, especially if they are gifted with a naturally high IQ. For example, even if India has gotten a smothering of new accounting jobs since 2000, wages for new college graduate accountants have gone up (partially because of Sarbanes-Oxley, passed in the wake of Enron). American l-12 education may be bad, but we still have the best college system in the world, and k-12 "education" in nations like China and India is even worse than what it is in America:

America needs a lot of work, and we're just beginning to see changes to our society, both from economic changes and from political changes:

Saying, though, that America is in grave danger sounds like alarmist talk, though.

Thursday, March 29, 2007

Raising Wages for Low-Skilled Workers

Irrational argument for the day:
If you wanted to raise real wages for workers and thought GDP didn't matter, what would be the most rational course of action to take?

Why, it'd be kicking all women out of the labor market. Unlike the minimum wage, the new wage would be set by market forces. Unlike trying to restrict illegal immigrants, who are often hard to identify, a company would simply need to not hire women, which are much easier to sort out. Unlike trying to reform education, this is actually relatively easy to legislate (if not enforce).

Simply put, if our sole objective is raise wages for low-wage workers, there are a lot of crazy things we could do. Most of them that rely on simple legislation should be ignored, as, as previously stated, they are crazy.

Tuesday, March 27, 2007

The Iran Situation

In the grand scheme of things, what is Iran really trying to get at in its recent move to capture British sailors?

Obviously, they aren't that afraid of the West, or else they wouldn't have made such an aggressive move. Iran is now closer to war than ever before, with the US navy scrambling to make ad hoc naval exercise as a show of force.

What Iran is doing, though, by capturing British soldiers on the eve of a critical UN vote, is sending a serious message to the West: we don't care about you, and we don't need you, and there probably isn't much you can do to stop us.

The fact of the matter, though, is that Iran's long-term game of antagonizing the West is self-defeating.

1. Iran has few active allies in this game. Only Syria, Hezbollah, and a number of Iraqi militias are willing to fight for Iran. Syria is, at best, an unreliable ally (as we saw it turn on Iraq in 1991), Hezbollah has been dealt a horribly bloody nose, and the Iraqi militia groups have been unable to force the US to leave as of yet.
2. Iran has no potential allies. While the number of PEOPLE that are outraged at US hegemony is high, the number of governments willing to actually fight the US order is zilch. China merely acts in its own self-interest in areas we care little about. Russia, while increasingly menacing and paranoid, is not enough to fight the West. And Chavez simply does not have the resources to wage a proxy war against the United States.
Furthermore, even if additional nations hopped on the anti-west bandwagon, there is no organization; communism had the monolith of the Soviet Union to guide its foreign policy. Iran IS the monolith of anti-US forces in the MidEast.
3. Iran is not served by an unstable Iraq, as the Iraq Study Group mentioned. While Iran fears the Middle East the United States may create, the alternative of an Iraq perpetually in war doesn't interest Iran much either. Unfortunately, that's what Iran is creating in Iraq right now.

In the short-run: There isn't any need to worry. The UK is drawing down troops, and the US "surge" is hardly enough to make invading Iran a cakewalk. An air strike, of course, is possible (and will probably be largely ineffective if it is targeting nuclear programs), but that is the extent of the West's willingness to fight at the moment.

What it means to be a 25 year old woman

My original intention was to start out this blog with an awesome first post calling for a testosterone packed, massive air campaign against Iran.
However, I found a program on Lifetime last night that was quite interesting. A number of 25 year old women were being interviewed about their lives and their future. Being the girl-oriented kind of guy I am, I paid attention hoping to gain some insights, and there were a few bits of information that, for lack of a better phrase, colored me confused.

1. Most of these women "want it all" and are absolutely convinced they can get it. What is it all? A husband, three children, and an amazing career. I was taken aback; 3 children in this era? Plus a career(NOT a job mind you!) and trying to maintain relationship at the same time?
Go Super-Mom!

2. Apparently, my generation is a bunch of job hoppers. We seek meaning and satisfaction in work, and if we aren't getting it...well, we don't tolerate failure and have a sense of entitlement as well, and we're just going to move on to the next job.
The range of the number of jobs was 3 to 7.

3. All of them thought being the boss, even it was just the boss of herself, was preferable to working for someone else. I'm assuming most guys feel the same way as well, though I personally have a bigger team spirit.

4. Ever heard of a quarter-life crisis? Women at the age of 25 get very worried; it's the median age of marriage and first child (shotgun weddings?). It's also a period in life where young people are supposed to be doing so many other things as well; these women want to be developing careers, going to grad school, traveling, and going to the gym.
Now, if I remember my lessons from psychology well, the idea of a mid-life crisis is entirely fiction: the level of happiness is pretty consistent throughout the life cycle. However, given the supposedly rising rates of teenage depression and suicide in America over the past couple of decades, I fear that this "quarter-life crisis" may be all too real for current young people, and is in part in place by the completely unrealistic demands young people (and these young women!) place on themselves.

5. The level of debt was massive. The range was between $15,000 and $60,000 among those who mentioned debt, the highest number belonging to a law student. Some of the women commented that they spent money on some pretty ridiculous things...there, is for instance, a pressure to constantly shop and keep up with the latest celebrity trends. "Keeping up with the Joneses" may very well result in massive debt for this generation.
I am, of course, unconvinced by any argument that Americans individually are not saving enough. For these women, it may in fact be rational to spend; they seem to be smart, sophisticated people in an urban environment with high future earnings. Borrowing against that for a better life NOW is perfectly reasonable.
However, one woman that was showcased knew almost nothing about financial planning...which suggests that we may indeed have a problem.

6. Celebrity culture IS the news. More people talk about Aniston and Pitt than Iraq.

7. These women are very socially conscious. They also have no inspiration in our current leaders, or any leader throughout their lifetimes.
I say nuts to that. Reagan, Bush I, Clinton, and Bush II were all excellent Presidents who were far superior to Kennedy, who was specifically mentioned by one of the women as an example of an inspirational leader.

8. How do they want to be remembered?
"We care"
"We stirred things up"
"We set the bar high"
"We were risktakers""We had family and career"
"Followed our passions"
"We can accomplish anything"

Monday, March 19, 2007


Greetings all,
My name is Robert. As you may know from my profile or from your personal lives, I am a student of economics at the University of Illinois at Chicago, also known as "UIC."

I've created this blog to give me an area to lay out and record ideas. It is not intended for mass readership; it is meant to be my personal library and a reference area for those people I regularly converse with. If people happen to read, though, that is certainly alright. After all, I wouldn't be posting if I objected to my ideas being public.

Posts will vary in nature. Most will probably deal with some sort of policy issue. Many will link to the other blogs that I read, and some will link to discussion forums.
However, some posts will be more mundane and will deal with issues that don't move nations or garner much press. For instance, I might talk about my educational experience, or perhaps something interesting I learned in my sociology class.

I think I'll take a lot of joy in writing this, and I hope that whatever person happens to stumble across this blog will enjoy reading it as well.