Octavo Dia

Tuesday, January 24, 2012

Why I Support (Most) Political Advertising

Political candidates have to pay for their advertising. In so doing, they subsidize stuff I like to do--YouTube, Facebook, various news outlets, radio stations, etc. I am directly benefiting from their appeals, so they can do that all they want.

However, direct mail is a wasteful, inconvenient pile of pure awfulness. I should e-mail any candidate that mails me something and tell them that I don't support tree murderers who use direct mail.

Saturday, January 21, 2012

An Evolutionary Thought Experiment.

Step 1: Assume that the history of the universe described in the Bible is true.

Step 2: Using only the scientific method, prove that that history is true.

Step 3: ????

Step 4: Profit! (Realize the limitations of the scientific method.)

Why Christians will Always be Hypocrites

The Christian's conscience--the law written on the heart--will always plague the Christian, because the law will always condemn. Christians will always be hypocrites, because they will always preach a law that cannot be achieved. Every moral stride is met with the realization that perfection is still farther away. It is only through the Gospel that the conscience can find rest.

If you are told that Christians are hypocrites, it is true. We preach that which we cannot attain, because we cannot soothe our souls with the self-righteous assurance that we a "good enough" for God. The law is a heartless taskmaster, but it drives us to the cross.

Friday, January 20, 2012

The Unconquerable Zero Lower Bound

I've read a number of techniques that would allow the Federal Reserve to breach the zero lower bound and create a negative, real interest rate. That, they theorize, would encourage people to start spending, since saving money would cause real losses for the savers.

That theory is false. I posit that, in any non-extreme economic circumstance, people's saving preference forms a serpentine curve with interest rates.

At the lower end of the interest rate spectrum, where we are now, people save for purposes which are relatively immune to the interest rate--typically to "self-insure" in uncertain economic times. Indeed, a negative real interest rate would work at cross-purposes, since, to meet this need, savers would have to save MORE to make up for the real losses they're taking. Thus, the savings curve flattens (and may even rise) at the lower bound. That must make Keynes spin in his grave.

On the other end of the curve, when interest rates are extremely high, a further increase in interest rates would generate little additional saving, since those resources that could easily be devoted to savings had already been saved. In fact, such a high interest rate could cause the savings rate to decrease, since assets would be pulled out of productive investments and devoted to savings. Thus, the savings curve flattens again as all available resources are devoted to savings.

So any attempt by the Federal Reserve to breach the zero lower bound is doomed to failure. At some point, we have to admit that there are some things that monetary policy cannot do.

Tuesday, January 17, 2012

13 Looney Ideas from Reputable Sources

Okay, not all of the ideas on Foreign Policy Magazine's list are looney, but a goodly number are, and these are particularly looney:

This one is the easiest of the bunch to pull off, because you can simply default and do the same thing. And we know how well that works. A much better idea would be for the government to have paid taxpayer's liabilities directly, rather than bailing out the banks, because that would both stem panic and help deleverage the consumer.

You know what? This didn't even work that well in the Depression! Roosevelt had to mandate that they use inefficient construction methods because even the technology at the time wouldn't employ enough people.

This one is entirely out of touch with reality. Besides unemploying those whose labor isn't worth $12 an hour, hiking the minimum wage would have exactly the opposite effect on illegal immigration. If hiring an American cost $12 an hour, but you could still hire an illegal immigrant for $5 an hour, the cost of labor is tilted even more heavily in favor of the illegal immigrant. And the fact that this would impact non-tradeable sectors most heavily is even worse. Non-tradeable sectors are the only sectors of the economy in which we've seen appreciable job growth in decades.

Friday, January 13, 2012

Commentary on "Why I Hate Religion, But Love Jesus"

First, let me say I'm glad he made this video. My personal belief is that God actively manages His word, and will bring people to the word that will reach them. I may quibble with it, but it's gotten a lot more views than any blog post of mine has ever done.

I've had this conversation with numerous people over the years, and I usually begin with, "Do you understand Biblical Hebrew?" When they respond, I say, "Well aren't you glad that there was organized religion to fund the years of training, research, and archaeology necessary to put a Bible you could understand in your hands?"

His interpretation throughout also ignores the sections of Scripture devoted to "religion" such as calling people to be ministers, evangelists, teachers, lay workers, etc. Too entirely personalize religion and ignore the organized aspects of it is to ignore large chunks of Scripture.

I also have a few small quibbles:

What if I told you, voting Republican, really wasn't his mission?

In the United States, Christians used to be spread across the political spectrum. When the godless Communists threatened the world, Christians reacted against their ideology, rejecting both their godlessness, and their leftist political ideals. Start persecuting people and suddenly they don't trust you anymore!

I mean, if religion is so great, why has it started so many wars?

He's not up on his political science research. Religion does not start wars, it prolongs wars. A group which is about to lose a war will recast it as a religious struggle to shore up the home front.

Why does it build huge churches, but fail to feed the poor?

Religion might preach grace, but another thing they practice.

I'm working on another blog post on this.

See the problem with religion is it never gets to the core, it's just behavior modification like a long list of chores.

Psychology has demonstrated that behavior modification is a powerful means of changing people's attitudes. If you act loving toward someone, in all likelihood you will becoming loving toward that person. The change in attitudes towards racism in the years since Brown v. Board of Education are far greater than simple persuasion could accomplish.

Thursday, January 12, 2012

Monetizing Women: Why Economic Growth Doesn't Feel Like Progress

As women entered the workforce, much of the unpaid labor which they had previously performed was transformed into new, service-sector jobs. The same real economic value was being created, but now it was being counted in economic figures as jobs created and GDP. As a result, we had several decades of job growth and economic growth, but it was a bookkeepers profit. The same things were being done, just by different people in different places. It was nominal growth disguised as real growth.

If this is the case, our real economic growth was much lower than even the pessimists estimated. Our monetary policy, in turn, would be far, far too tight for the actual productivity gains we were making.

Tuesday, January 03, 2012

How to Accumulate Foreign Exchange Reserves

Many states have accumulated foreign exchange reserves and hold them in sovereign wealth funds. Most of these funds are denominated in dollars, because that's the "safe," albeit under-performing, asset. However, by mixing in a bit of currency risk, foreign exchange reserves could be much more profitable and moderate the impact of mercantilism via currency manipulation.

What a nation would do is base their foreign currency holdings on the foreign-currency denominated value of their imports. So you would add up your foreign reserves and allot them proportionately to the countries from whom you imported the most. For example, if, in the last three years, 40% of imports came from country A, 30% from country B, and 10% from country C, 40% of the foreign reserves would be in A's currency, 30% in B's, and 10% in C's. As trade flows shifted and proportions changed, these numbers would shift as well.

This arrangement would provide several benefits:

First, your reserves would be in the appropriate currency to pay for your imports, should your own currency fall into question (which is, after all, the reason for having reserves).

Second, imports from a country rise as that country's currency's value falls. Contrariwise, if another currency's value is rising, imports from that country will fall. If you reallocate the foreign exchange reserve portfolio based on imports, you will be buying currency when it is cheap, and selling it when it is expensive. In other words, profit.*

Third, if a country is manipulating its currency to make it artificially cheap to support an import policy, this policy would actively counter it.

* If you're wondering why funds don't do this, it's just like trading oil futures. Eventually, someone has to take a delivery. The investors usually don't want the actual oil, they're profiting by smoothing out the variation in demand. You can still profit from long-term trends, if you can take your profits in the form of oil. The foreign exchange reserve would be in a similar position, as accumulating reserves is the goal.