Everyday Thoughts

The New Action Sport: Brazillian task force

2010-12-02T10:50:00.000-08:00

40 more where this came from, hat tip to Vaughanbell.

Link here

Homeless but not pennyless

2009-11-16T13:51:00.000-08:00

Tim Ogden asks, "how often do you or your friends take advantage of the opportunity to give directly and establish a connection by giving $20 to the guy standing at the corner with the cardboard sign saying, 'Will Work for Food'?"
Ogden bets that your answer will be "never". I don't necessarily agree. I will say that there are a large group of individuals (myself included) who refuse to fund these free-riding individuals. However, they must be making some sort of an income for 2 reasons:
1) They keep on doing it. If it wasn't profitable they would seek "employment" elsewhere.
2) some of them have very expensive habits to fund ($100 a day for a heroin addict is not at all unusual) and manage to do so with the income received begging.
This demonstrates that these street corner care takers are in fact making some sort of an income, but exactly how high of an income might astound you. Take a look at the some of the references below, and I must insert a caution: if your a minimum wage worker, prepare to be angry.

From Freakonomics author Steven Levitt

From Marginal Revolution Alex Tabarrok

From KomoNews in Oregon

From CBC News out of Edmonton Canada

From Asylum News

I am not familiar with all these news organizations but I can vouch for the information coming from Levitt and Tabarrok. All of these stories seem to paint a pretty clear picture of the reality of face to face donations. I think Salvation Army will second this motion, ring...ring...ring...

Cause and Effect: Expenditure, Deficit, and Marginal Taxes

2009-10-30T09:41:00.000-07:00

Government spending minus Net Taxes equal a budget Deficit when expenditures exceed tax revenues. At some point whatn you increase spending you must also increase income (tax revenue is government income). So higher spending will lead to higher tax rates which will lead to a reduced deficit. Right...

In a future post I hope to get all this data on the same time scale and add a graph of government revenue as a percentage of GDP.

2009-10-29T13:01:00.000-07:00

Economist.com reports, "NEARLY one in five deaths in rich countries is caused by smoking, according to new data released this week by the World Health Organisation." What do you think about this statistic?

Reply to Gilbert

2009-10-06T16:03:00.000-07:00

A good friend of mine sent me a short summary on the proposed changes in the California Tax Code. My thoughts below:

A brief explanation of the BNRT tax. It's just like a value added tax. One thing I am worried about is the implementation of this. How easy will it be for businesses to cheat? It looks to me like it's going to be far easier for companies to over inflate costs to offset profits using the VAT then it is for them to manipulate revenues. This tax is one that is designed to attack the profits of the businesses that fall within it's battle zone. No doubt that those costs will be transferred right back to the consumer with no net gain and possibly a net loss. However, the nature of the incentives (reduction in sales tax) seem to make it something that the public will like.
I give this commission the benefit of the doubt in assuming that this new tax will increase will preform as intended to increase the revenue stream while making it more stable. I agree with the tax on the grounds that it's not a regressive as a general sales tax. The businesses that will be taxed the most are high profit entities, and I think there is an inverse relationship between the income of an individual and their consumption of high profit goods or services.
As for some of the other recommendations: Reducing the number of tax brackets will have a negative effect only on those who make less the $7,200, and in accordance with conservative views, will greatly benefit those with high incomes. This will hopefully spur investment by the rich into California business which will have the external, although small, benefit of increasing tax incomes by the state, in turn reducing the net loss.
Overall, this newly proposed tax structure calls for the transfer of approximately $64 billion, or 49.2%, of the current tax income directly to CA businesses and indirectly to consumers. As long as the necessities remain tax free, this I see this as an overall benefit to society and a step in the direction of overall equity.

I don't have the summary but here is a link to the entire Report from the Commission on the 21st Century Economy.

Cardwell's Law and Obama's Economic Stimulus

2009-09-28T09:23:00.000-07:00

Cardwell's Law states that each government will come to a point of stagnation because technological growth can not be sustained for eternity. What does this mean? Cardwell was talking about the tendency of countries to become content with their standard of living. Contentment breads complacency which can lead to a narcissistic mentality like: "If we can't create it, it can't be done." When complacency and an inflated ego infect an entire society, nothingness happens. That society retreats from innovation and the world as a whole is worse off for it. How do we keep this from happening?

Incentivize people to innovate.

To curb complacency I propose we print 1 trillion US dollars and increase the inflation rate to levels that will force the citizens to actively seek higher returns on their investments. When the masses are engaged in searches for high yielding investments they will spur entrepreneurs to create new business plans revolving around existing products. They will also light a fire under the comfortable seats of innovators currently lounging in R&D departments around the country.

Second, take a few hundred billion dollars from the tax payers and their children and invest it in an emerging industry that has the potential to create high paying jobs for years to come. Focus not only on innovation, but on optimal productions methods that will yield high quality products in little time using few resources.

Finally, don't sit back and watch... Participate and create...

A Thought Experiment on Healthercae by an Economic Master

2009-09-20T13:31:00.000-07:00

The hypothetical immortality pill: Who gets to take it? Who has to pay for it? And, should we continue to develop advanced medical technology, or is it the cost of development outweighing the benefit of a healthier society? The experiment continues...

Greg Mankiw's Article Here

The Recession and Nietzsche

2009-08-04T15:42:00.000-07:00

While reading a blog post by Mr. Brad Delong, I began to see another side of the recession. Specifically it's corrective abilities. When the economy retracts and people begin to hold more of their money, the companies with the lowest profit margins fall first. Size only matters when the government is there to step in and lend a helping hand. This corrects the business environment by allowing only the strongest to survive.
Mr. Delong opened my eyes to the corrective powers of the recession on the individual company; their ability to dismiss those worker who's production is the lowest. In economics we view companies as purely profit motivated, but I believe that laws and business ethics (mostly laws) are giving them a little more of a sympothetic behavior when dealing with employees. For instance, if a company had only 2 employees and one did twice as much work as the other, in good economic times they would both be retained. However, because of the economic downturn, the company has a justified reason to unload the poorer preforming employee. As the economy begins to pick up some steam and more workers are needed, this company will look to hire another worker like the one they retained, thus increasing their productive capacity as the economy bounces back. This has the potential to create exponential growth of profits, because not only are more people consuming products, but now this company has a more productive staff.
For businesses, the recession shows us, "that which doesn't kill us only makes us stronger." Nietzsche

Seasonally Adjusted Data

2009-07-23T11:12:00.000-07:00

After reading a blog from the vice president of the Atlanta Federal Reserve's Research Department, I have decided to try to fully understand seasonal adjustments. Before I dive into the technical aspects of it, I've been first working on how to conceptualize it. My thoughts were that if I were able to understand the basic intuition behind seasonal adjustments that I would see exactly how it can skew data reported under atypical situations (like a recession).

The first Thing to look at is how the data gets adjusted and what that adjusted data represents. Seasonally adjusted data is designed to show the reader exactly how the variable in question changes due to changes in all other variables accept the seasonal effect. A seasonal effect is characterized by a change in some variable due entirely to the change in time, usually months. A good example is looking at the monthly sales figures for Macy's . It is no surprise that during the end of November through the December those figures are going to be extremely large relative to the rest of the year due to increased shopping for the Christmas season. If we were to report the unadjusted sales figures for December we can pretty much bet that they would always be a positive number and that they will always be larger then every other month. However, say your an investor and you want to know how Macy's is doing relative to the same period last year, can you simply look at last years December sales figures and compare then with this years? Absolutely, but now you would need 2 different data points to tell you one thing. Also this is only going to give you the change between 2 years, what if last year they had record high sales? This years data point will be negative unless they have another record year. But lets say that they do very well relative to every year accept last years record year, the variable we will get for this yearly change will not represent the large picture of how Macy's is preforming overall.
How about relating Decembers sales figures to the inflation adjusted average of all other Decembers? This is basically what seasonal adjustment does. It allows us to report a figure, not a percentage change, that represents the performance of a variable (in this case Macy's December sales) relative to structural and economic effects without the "noise" that is created specifically by time.

Questions for further research:
1) How do these adjustments work during atypical times?
2) If we base our analysis of the economy on seasonally adjusted data, what is the affect it can have on consumer confidence? On the economy as a whole?
3) What model does the government agencys that are widely sited in popular media use to compute seasonally adjusted data?
4) Do we need to make an adjustment to the way they are computed in an attempt to take into account larger cyclical changes like recessions, or does this already take place within the widly used models?

A Theory of History?

2009-07-21T00:31:00.000-07:00

Paul Romer has an idea that can speed up global economic growth and increase the standards of living (as measured by light in his lecture) for people across the globe. His lecture entitled A Theory of History: with an Application, sheds some light on the possibility of new sets of dynamic rules governing carefully planned cities in the quest for global innovation. I do see this as a real possibility, although the whole idea of displacing existing inhabitance of an area in order to develope these cities has to be looked into further. More thoughts on this to come, but if you have 50 min to spare, it's well worth the time to view this lecture.

Utilitarianism

2009-06-25T00:03:00.000-07:00

A moral philosophy that advocates making choices based on the maximization of utility for the majority of people. What is Utility? Happiness, pleasure, it's a measure of an individuals satisfaction with life. You don't have utility, someone or something gives you or increases your utility.
A look at this in terms of policy analysis.
Say the mayor of a small mountain town wants to put a state of the art levy in place to stop a rivers' overflow from damaging buildings on one of the city's streets. This will directly enhance the utility for the shop keepers and homeowners who's dwellings are in the direct vicinity of the river, but how about the rest of the town who lives on top of the mountain? Presumably they are going to have to foot the bill for this new levy in the form of a new tax, this will directly lower their utility. Now a Utilitarian would say that the levy is a "right" policy if the total utility of this town is increased. This is exactly the decision making system economists use when preforming cost benefit analysis. Not too alarming.
Now I'll look at this from a moral angle.
Say there is an Utilitarian individual out there who is trying to decide between two actions. Killing someone and stealing their money, or not killing someone and stealing their money. The individual is sane enough to know that killing someone is wrong and against the law and that most people would decide against it. However, if this individual really enjoys killing people then murder will increase his utility. A true utilitarian would choose to kill the person even though they know it is wrong.
Im going to try to merge these two examples. Suppose you have a city that is located below sea-level and surrounded by water. The probability that flood waters could breech the levy's in place is low but still a probability. Reconstructing the levy's would increase the utility of those who are paid to do the work, and in the event of a catastrophe would increase the utility of all those who's lives and possessions would be saved. However this construction process is very costly. It will reduce the utility of a majority of the citizens in the city even they know that it will one day save lives. What is the mayor to do? Does the Utilitarian mayor take into account the current utility that this policy would generate or does he project what the future utility increase will be and use that to make his decision?

I'm still trying to wrap my head around this idea of Utilitarianism. It's been used to justify socialism, communism, libertarianism, and has been the grounds for a hypothetical height tax debate among economists. It says that we do what is best for the majority, regardless of the implications to the minority. But what happens when the minority is the one with all the power and resources? Can this ever really take place?

3 lb Gem

2009-06-19T00:16:00.000-07:00

In spending the day at the San Diego Natural History Museum I was able to catch a lecture titled "Our Brain: Our Selves" by William C. Mobley, M.D., Ph.D., Professor and Chair, Department of Neuroscience, University of California, San Diego. There I was refreshed on a lot of the information that I had learned in Psychology 101 at Grossmont College. Dr. Mobley's specialty is degenerative deceases, particularly Alzheimer's. It turns out that Down syndrome has an interesting connection with Alzheimer's, each and ever person who has Down syndrome will get Alzheimer's at some point in their life. Dr. Mobley went on to say that every degenerative brain disease occurs because of a malfunction of the neurons within the brain.

Here is a brief overview of what I got out of the lecture. One of Dr. Mobley believes is that your brain is you and you are your brain. I completely agree with this. Your body is the vessel that nourishes and protects your brain, the most complex machine on earth. The brain of a woman is statistically different from those of men. Yes it is true. He listed a few differences in size and performance that had been proven to be inherently different. The only one that I remember is that the woman's brain was that women's brains had thicker cortices and that females were more verbal in their cognition. On that note the 4 major functions of the brain seemed to be Perception, Cognition, Emotion, and Memory. A brain can be trained to preform better. Dr. Mobley spoke of a few ways to enhance the performance of our brain, most of them had to do with a good diet and the one that stood out the most was the importance of regularly socializing. I take this for granted but without constant contact the brain does not optimally function. I remember when I was reading Thoreau's Walden Pond, he mentioned that he made it a point to regularly walk into town to socialize with the locals (I think some beer was involved...in the socializing, not my reading). This had to help keep his brain in top shape to construct all the poetry and literature that came out of him during those few years.
Dr. Mobley was very interested in the compassionate functionality of the brain. He sited a few experiments where Monks and a regular population of people were studied to see who's brain were more compassionate, as measured using both brain waves and FMRI scans. The brain of a Monk was consistently and substantially more compassionate then those of the non meditaters. Mobley believes that strict meditation can enhance the amygdala and the Cerebral Cortex, both of which play a large part in compassion and empathy. (personal goal, to develop my amygdala)
I'm sure this is getting a little boring, if fact I'm about to fall asleep myself, but I only have notes on a couple more things. First is the importance of the Hippocampus for memory. This is the part of the brain that needs the most stimulation in order to remain sharp into our golden years. I know it's far a away for me, but the development of good habits now that exercise the hippocampus could greatly enhance my quality of life with little effort. It defiantly passes the cost benefit analysis test. And finally, Dr. Mobley left us (kind of) with this final idea. Genetics have an impact on society, but society has it's impact on genes. This implies that the environment can morph our genes, which further implies that we can not only change our minds or our behavior, but we can change those blocks with which our fortress is made. We are more dynamic then I previously assumed. More on this inthe future...

Mandala

2009-06-18T00:13:00.000-07:00

Today I have a pleasure of witnessing the opening ceremonies for a Tibetan Mandala. There were 8 monks from a school in the south of India who came to San Diego to create this masterpiece from chalk and sand. The particular mandala they are creating here is one for prosperity and good economic times, right now the exact name escapes me but I'll get it at some point. The ceremonies kicked off with the youngest monk explaining to us that in order to create this mandala each monk had to memorize over 90 pages of scripture. The design is an exact replica, from memory, of an ancient mandala. More on it's history later. After a brief introduction all 8 monks came out some with instruments, the chanting began. I felt a tingle down my spine as the lead monk started out. His chant sounded like a digery do, it was ominous yet pleasing to the ear. The other monks chanted softly for about twenty minutes then they all began to play their instruments. It sounded like chaos, nothing melodic, nothing meshing together. Then I figured it out, first the bell rang, then the drum then the small horns and with the small horns at the end the large horns kicked in, then the bell, immediately followed by the drum as if they were one sound, then the rest. More chanting proceeded. Once they asked the spirits if this was a suitable spot to build the mandala, and got their answer, they began to make it.
From a blank black table they drew 4 large circles using a large compass, presumably representing the 4 cardinal directions, and took out the chalk line and began making marks. About 30 min later they had a plethora of lines each intricately placed using compasses, and each from the memory of the 4 monks.

Later this evening I got the opportunity to come back to the museum and see the progression. They had begun to place the sand, working from the center out. I can't quite make out what it is yet but I will do some research and give a detailed explanation later. I know each symbol stands for something, but what, I don't remember.

I asked myself, why are they doing this. Answers,
1- raise awareness of Tibet and it's occupation by China.
2- raise some money for the school back in India.
3- as a tool for meditation (most important)
4- to symbolize their dedication to Buddha

Health Care Reform

2009-06-17T00:26:00.000-07:00

Thank you Mr. Obama for spending as much money as possible to try to get our economy back on track. I know that because your the good Democrat that you are, that you want to play Robin Hood and take some money from the rich and give it to the poor. That's all fine and dandy as long as you don't take so much that the rich stop working (they are rich for a reason... their smart), and that you give it to the "deserving" poor. I want to make sure that you have some language in your proposals that require the recipients of your handouts to be contributing members of society.

On Health care:

Your new health care proposal reportedly will cost us over the next 10 years over 1 trillion dollars. That is about 8% of the currently expanding deficit. According to a study by Health Affairs, by 2010, absent of any policy, the amount of uninsured Americans will reach 52 million. With the Obama administrations new policy that number is projected to be reduced to about 36 million. Assuming these numbers, were talking about a cost per uninsured person of about $62,500. This estimate is most likely underestimated. It already takes into account the number of people who are already insured in the private market who will take advantage of the new subsidies and go Government. Maybe I should talk a little about what the new policy is going to do.

The gist of this new policy is that is takes taxpayer money and subsidises the cost of health insurance to anyone enrolled in it. Those who's income is above the poverty level, even those who's income is slightly below that level, are going to be charged a small premium set by the Treasury. Preliminary estimates are $100 per person, I assume that is per month. Those with an income of 150% below the federal poverty level will not have to pay any premium. Although it is not yet included, the consensus is that the House will add a clause into the bill that will require participation by all US residents, and those who elect not to participate will be financially penalized.

With that said, let me talk a little about how the health care system works.
1) Doctors provide a service
2) They charge for that service
3) The recipients must pay for that service

The money has to come from somewhere. In the current case, those who are uninsured and unable to afford the services are getting it somewhere. Those costs are getting redistributed to the paying customers in the form of higher overall costs. Obama and his team of merry men want to take money from the tax pool to offset this cost to the general public. When it's put this way, it sounds great, but how will it actually work? First I think we need to see how much the actual overall costs will be reduced by insuring everyone. Insurance theory along with empirical evidence shows that when you insure everyone, the individual cost of insurance decreases. So with this new pool of money available to pay for the health care of the poor, how much will the cost of a doctors visit be reduced? How much will a procedure in the emergency room be reduced?
The numbers above and in here, where I got a lot of my information, are for the next 10 years, however, this program will be around (knowing the government) for many more than 10 years. Where will the money come from when a Republican is elected into office? Looking a little different already...

That's all I have right now.

I'll leave with this,

Obama's request that the health care industry should cut costs is a good idea, but tough without government regulation and oversight. The end goal is to lower the average percentage of income spent on healthcare while maintaining it's quality and advancement. If this was possible market forces would dictate that it would be happening. However I think the insurance industry is creating an innefficiency.