Octavo Dia

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Name: Octavo Dia

Monday, November 09, 2009

Wealth Creation

I've been reading a lot of Keynesian posts about the American savings rate, and why it is unhealthily high. And why, these are Keynesian posts after all, the government needs to act counter-cyclically "because not everyone can save at the same time."

That sentence may be correct in practice, but in theory it is not. Saving, by definition, is consuming less than your produce. What happens if everyone consumes less than they produce? It's called wealth creation. Infrastructure, capital (human and otherwise), investment--that all can go on by everyone at the same time. In our finance-ridden world, having everyone save paper assets may not be the greatest thing to do, but in the real economy, everyone saving can be highly beneficial for future growth.

Friday, October 30, 2009

Prisoners: Let them vote.

The Economist has an article this week entitled Prisoners: Let Them Vote. I began thinking that maybe I should think strategically. I fully expect that there will be over persecution of Christians within my lifetime, so perhaps I should support policies that will provide me with the freedoms I would like when such a state of affairs occurs. On the other hand, I have little doubt that anyone overtly persecuting Christians would have few qualms disposing of whatever freedoms were put in place.

Wednesday, October 14, 2009

Blockhouses


I found this photo in a book on the Civil War. The blockhouse is canted at the top so a full rank of riflemen can fire in every direction.

World Series Elections

How would elections change if there was a World Series sort of arrangement, in which the contenders had to run in multiple elections? I suppose you could argue that we already do that with the primaries, but how would it change things? Would you get out the vote more for subsequent elections? Would there be a whole lot more fraud? What would happen?

Thursday, September 24, 2009

Plumbing rant

I was in the Detroit airport yesterday. I had the distinct pleasure of using a motion sensitive sink. I also had the distinct pleasure of splashing water all over the counter, because the motion sensor was so close to the spigot, that unless I had my hands right neck to it, the water would shut off. With my hands that close, the water sprayed sideways and onto the counter. Would it really have been so hard to make the faucet a little bigger?

And while I'm on the subject of plumbing, whoever invented the hotel shower that controls pressure and temperature with a single knob, should be beaten.

Self Insurance

I've blogged about how private health insurance is dead. Many on the libertarian side say that private saving is the answer. The economist in me knows this is not the case. In China, most health care is privately purchased. There is neither a social safety net nor a private insurance system. So people self insure.

What does self insurance look like? People saving 30-50% of their incomes. It's what you have to do if you might have a medical condition that could easily consume 400% of your income.

This is not optimal. Protecting yourself against the possibility of catastrophic loss soaks up income which would be better used on current consumption, or investment in other areas. Instead, it is saved, and saved, and saved. I would even argue that the lack of insurance in China is why their attempts to trigger domestic consumption fail.

It's like the guy who was so concerned about home security, that the only possession he had that was worth stealing was his guns. In fully privatized health care, or self insurance, so much money is spent protecting your health, that there's nothing left for any other laudable uses--would you send a kid to college when the whole family might be on the street tomorrow because you didn't have that money? Would you invest in your business knowing that a cash flow problem could ruin you? Self insurance is for people who don't have to worry about money.

A purely private system won't work, and a mixed system is unstable, tending towards the extremes. It's all or nothing.


On the other hand, I expect that what we cobble together will put the "dis" in "functional".

Wednesday, September 23, 2009

Currency Denominations

Most currencies have relatively random currency denominations. They have a one, many have a two, a five, a ten, a twenty (or twenty-five), a fifty, and a hundred. Added to this is a variety of coins.

So here's how you properly denominate a currency:

First, you get rid of the stupid decimal. Make all of the currency have whole numbers. Just make the lowest four or five into coins.

Second, you minimize the number of notes needed in transactions--so no transaction will need more than a single bill of each denomination is needed.

Thus you would need a $1, and a $2 (so you wouldn't need two $1's).

You can get three with a $1 and a $2, but you can't make four, so you would need a $4.

Five, six, and seven can be accomplished with the bills you already have, but you would need an $8 to go farther.

Can you see the pattern? 1, 2, 4, 8, 16, 32, 64, 128. Those are the denominations we need, and only two of them are included in anyone's currency.

Of course, people would complain that it requires too much math, but how else are you going to cheat tourists?

Thursday, September 10, 2009

The Power to Tax

I read a letter to the editor today that underscores why history is important. The author suggested that the only way to control government spending was to separate the power to tax from the power to spend.

It has been tried before.

It leads to an underfunded, weak, and ineffectual government. And if the power to borrow isn't included in the power to tax, it leads to even greater government deficits.

There must be a solution, but that's not it.

Tuesday, September 08, 2009

Just a random thought on child support.

What if, rather than paying child support to the mother of the child, child support was instead paid to a general fund which was then divided evenly among the children receiving child support?

Would that change how many children would be had? Would rich guys have fewer relationships? Would more couples stay together? Would nothing at all change?

What would happen if there was no correlation between the wealth of the guy in question and the benefits received?