Kruse Kronicle

Forget Obama. Here is the Real Answer to our Problems.

From nearly thirty years ago during our last major recessionary era.

One Definition of Centrist

More than three years ago Beau Weston gave the following description of centrism in a post at his blog,  What I think Principled Centrism Means.

... Let me put this in a too-strong way at first in order to be clear:

A centrist wants to promote what is best for society, tolerate what is good enough, and prevent what is harmful.

Conservatives want to promote what is best for society, and prevent everything else.

Liberals want to promote all options (except the truly dangerous ones) as equally good.

If your first reaction to this is, “Who is to say what is best?” you are a probably a liberal.

If your first reaction to this is, “Why settle for mediocrity?” you are probably a conservative.

If this bell-curve picture of the social options seems reasonable to you, and you have no principled objection to making discriminating judgments – welcome to the Gruntled Center. ...

What do you think?

Leaders Go Left, But Economists Get Back To Basics

Forbes: Leaders Go Left, But Economists Get Back To Basics William Easterly

In trying times, even protectionists go free market.

The conventional view at Davos is that a previous consensus in favor of free enterprise has taken a huge beating from the Great Crash of 2008-2009. What is much less known is that many economists are not willing to play along.

Instead, the crisis seems to have scared many economists of all kinds--including some previously heterodox--to reassert the orthodox recommendations of Econ 101. ...

...What is going on? I think we economists love to speculate about heterodox theories when times are good and we feel free to discuss experimental alternatives to economic orthodoxy (and nobody is paying us much attention during good times anyway). But when the global economy is in free fall and everyone else seems ready to throw each and every Econ 101 principle out the window, we get desperate to save the core principles that lead to prosperity and development.

Free trade does create opportunities for firms and workers doing what they do best. The government can't forever spend money it doesn't have. Competitive markets reward innovation and efficiency and punish customer-abusing would-be monopolies.

Rapid deregulation has its risks, which we have learned that financial regulators should manage carefully, but too much regulation is far worse. This is what the Principles textbooks teach us. These ideas made their way into Principles textbooks by some process of natural selection--they were the ideas that stood the test of time in economics, because they were associated with the steady climb toward prosperity of the rich countries and, in the last half century, of the global economy.

There are variations around these core ideas of course, but the variations are always grounded in a home of sensible economics 101. In the midst of the scariest crises of our lifetimes, economists are coming home.

Fixing a broken world: Failed States

The Economist: Fixing a broken world: Failed States

The planet’s most wretched places are not always the most dangerous.



IN ALMOST any discussion of world affairs, there is one thing on which doves and hawks invariably agree: much more needs to be done to shore up states that are failing, in a state of collapse, or so poor that they are heading in that direction.

For development-minded people, such benighted places are an obvious concern because of their desperate suffering; and for hard-nosed strategists, states that hardly work are places where terrorists could step into the vacuum. Indeed there is a certain convergence between these points of view: aid workers agree that security is essential to prosperity, and generals want economic development to boost security.

In America these days, defence planners say they worry more about weak states, even non-states, than about strong ones. “Ungoverned, undergoverned, misgoverned and contested areas” offer fertile grounds for terrorists and other nefarious groups, says the Pentagon’s National Defence Strategy, issued last year. The penning of that document was overseen by the defence secretary, Robert Gates, who will remain in charge of defence policy under Barack Obama. Large chunks of its language could have been issued by bleeding-heart aid agencies or the United Nations: it speaks of the need to “build the capacity of fragile or vulnerable partners” and to address “local and regional conflicts” that exacerbate tensions and encourage drug-smuggling, gun-running and other illegality. To the chagrin of old-school sceptics, nation-building is now an integral part of American strategy.

Similarly, the European Union’s declared security strategy sees state failure as an “alarming” phenomenon. It opines that: “Neighbours who are engaged in violent conflict, weak states where organised crime flourishes, dysfunctional societies or exploding population growth on its borders all pose problems for Europe.” ...

Best Economic Indicator

Carpe Diem: Best Economic Indicator

Both Dennis Gartman and Larry Kudlow have reported recently on the recovery in the London-based Baltic Dry Index (BDI), "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain." ...

Zimbabwe abandons its currency

BBC: Zimbabwe abandons its currency

Zimbabweans will be allowed to conduct business in other currencies, alongside the Zimbabwe dollar, in an effort to stem the country's runaway inflation. ...

Judging Presidents

Greg Mankiw: Judging Presidents

A reader asks a good question:

What are some useful and objective measures which we can use to judge the performance of President Obama and his new team? How would Greg Mankiw judge Obama four years from now?

Consider a related question: How would you judge the competence of a doctor if you could observe him treating only a single patient?

What you would not do is judge him by the outcome. Even the best physicians have patients die. And even witchdoctors can have patients recover. Randomness is a fact of life (and death). In the case of a medical doctor, the answer seems clear: Instead of looking at the outcome, you would judge him by the decisions he makes and treatments he prescribes. That is, you would examine whether he followed best practices for the circumstances he faced.

Similarly, randomness is a fact of economic life, and it would be a mistake to judge a president by the economic outcome during his administration. It is better to look at the decisions the president made, and to acknowledge that the outcome is a function of those decisions and many other factors not under his control. As an economist, I have views about what best practices are for economic policy, and I judge presidents by how closely they adhere to those principles.

Unfortunately, that evaluation process is not quite as simple and objective as the reader might have hoped for. But I don't think there is a better alternative....

Bingo.

Installing a Deep-Sea Webcam

Wired: Installing a Deep-Sea Webcam

Last week, the world's first deep-sea webcam was installed on the floor of California's Monterey Bay, giving scientists an unimpeded look at deep-sea life. Wired went along for the ride.

Forecasting Guru Announces: “no scientific basis for forecasting climate”

Watts Up With That (Anthony Watts): Forecasting Guru Announces: “no scientific basis for forecasting climate”

It has been an interesting couple of days. Today yet another scientist has come forward with a press release saying that not only did their audit of IPCC forecasting procedures and found that they “violated 72 scientific principles of forecasting”, but that “The models were not intended as forecasting models and they have not been validated for that purpose.” This organization should know, they certify forecasters for many disciplines and in conjunction with John Hopkins University if Washington, DC, offer a Certificate of Forecasting Practice. The story below originally appeared in the blog of Australian Dr. Jennifer Marohasy. It is reprinted below, with with some pictures and links added for WUWT readers. - Anthony

Guest post by Jennifer Marohasy

YESTERDAY, a former chief at NASA, Dr John S. Theon, slammed the computer models used to determine future climate claiming they are not scientific in part because the modellers have “resisted making their work transparent so that it can be replicated independently by other scientists”. [1]

Today, a founder of the International Journal of Forecasting, Journal of Forecasting, International Institute of Forecasters, and International Symposium on Forecasting, and the author of Long-range Forecasting (1978, 1985), the Principles of Forecasting Handbook, and over 70 papers on forecasting, Dr J. Scott Armstrong, tabled a statement declaring that the forecasting process used by the Intergovernmental Panel on Climate Change (IPCC) lacks a scientific basis. [2]

What these two authorities, Drs Theon and Armstrong, are independently and explicitly stating is that the computer models underpinning the work of many scientific institutions concerned with global warming, including Australia’s CSIRO, are fundamentally flawed.

In today’s statement, made with economist Kesten Green, Dr Armstrong provides the following eight reasons as to why the current IPCC computer models lack a scientific basis: ...

Centrist, Middle, Moderate, or Third Way?

What to does it mean to be centrist, middle, moderate, or third way? Scot McKnight recently did a great series on Adam Hamilton’ book Seeing Gray in a World of Black and White: Thoughts on Religion, Morality, and Politics. (I have the book and look forward to reading it.) Scot likes to refer to perspectives like Hamilton’s as “Third Way.” My cyber-friend and fellow Presbyterian Beau Weston calls his blog The Gruntled Center: Faith and Family for Centrists. Bruce Reyes-Chow, moderator for the Presbyterian Church, U.S.A., recently wrote a post about Musings on the middle way.

I relate to the general concerns of many who use these terms. Like many, I too grow weary of the harsh rhetoric and “gotcha” style of public debate. While I suspect many would classify me politically and religiously right of center (at least in my PCUSA world) there is enough about me that would keep me at arms length in many “conservative” Christian circles. I agree that dogmatic identification with ideologies of “left and right” or “conservative and liberal” probably isn’t healthy. Yet, the language of “centrist,” “middle,” “moderate,” or “third way” is not attractive to me.

First, “center” and “middle” are in between two other things. They are decidedly binary and end up defining the person by identifying who they are not, namely not the poles on the extremes. “Moderate” works the same way as it is an antonym for extreme. On the surface, “Third way” seems to get out of the “middle” metaphor. But without giving the term content, “third way” can be any set of constructs that isn’t one of the other two ways. Again, the metaphorical phrase is anchored in being contra to two poles, and thus is defined by those poles. What is a centrist, moderate, third way person for?

To illustrate further, construct in your own mind a checklist of conservative and liberal positions on a range of issues. I hold the following positions on some theological and political issues: Economically conservative (not libertarian), old earth theistic evolutionist, opponent of abortion on demand, advocate of aid and free trade to address global poverty, and advocate for women being in all varieties of service and leadership within the church. Am I liberal or a conservative? Am I centrist? If so, in the center of what? If my constellation of positions is a third way (i.e., neither left nor right), then could not there also be a fourth way? Fortieth way? Four hundredth way? The continuum metaphors and the third way metaphor don’t clarify anything for me.

Second, there is the adage that the only thing in the middle of the road is road kill. :-) There are strong overtones of blending and compromise. I’m not saying this is necessarily true of actual belief and behavior by a centrist. I’m speaking to the images called up by the metaphors. For instance, take Hamilton’s book title, “Seeing Gray in a World of Black and White.” Isn’t gray a melding of black and white that is neither black nor white? Isn’t this a gradation between a binary realities? "Seeing color in a world of black and white" seems like a more fitting metaphor to me.

Third, when some people who use centrist terms to describe themselves they immediately contrast themselves with the strident mean-spiritedness of one "extreme" or the other, (usually whichever extreme they see themselves emerging from.) Thus, for them, “centrist’ becomes more a matter of civility and less about the specific constellation of positions one holds. It is about taking a particular posture toward others. I see an element of this reflected in Weston’s blog name, “The Gruntled Center.” However, I would make the case that there are also disgruntled people who call themselves centrists and I know people who line up pretty well with left and right ideologies who are quite civil. Therefore, if “centrist” (… moderate, middle way, third way) is to be a synonym for “civil” why not just call it being civil? If it is not a synonym, then what is that makes one centrist?

Fourth, I’m distrustful of centrist terms because too often I’ve seen them used in triangulation. Here is a scenario of how it works in a deliberative body. One camp is stridently pro-life, believing abortion should be legal in only the rarest of cases. Another camp is stridently abortion-rights and believes abortion should be totally at the discretion of the mother. There emerges a third group who believes abortion should be totally at the discretion of the mother but avoids strident tactics. This third group positions itself as the “reasonable” and “thoughtful” camp, seeking a “middle way” to get the support of those troubled by stridency, knowing they already have the votes of the strident wing that shares their position. They have two sides of the triangle and that often means they win. (This could just as easily be the strategy of a “moderate” pro-life camp.) Thus, the third way is less a third position and more accurately a political strategy for capturing votes.

So then, how would I label this impetus for something different than what we’ve had? I honestly haven’t a clue! I think part of it may be that we are trying to combine to many variables into our “centrist,” “moderate,” “middle way,” “third way” constructs that don’t have any inherent correlation with each. (Many don’t like the present levels of incivility but civility necessarily related to a particular set of positions?) So how might we break down some of the variables that get caught up in this dialog about a new way of debating and relating? Over my next few posts I’m going to share some of my reflections on these issues.

Bill Cowher to Sign with Chiefs?

The Kansas Citian: EXCLUSIVE: Bill Cowher to Sign with Chiefs

Despite reports from the KC Red Star that former Steelers' head coach Bill Cowher is not interested in a job with the Kansas City Chiefs, tipsters to the Kansas Citian are reporting that Cowher has purchased a beautiful new home in the upscale KC suburb of Leawood, KS. The home is estimated to have cost $3.5 million.

The move is a strong indication that the Chiefs have indeed signed Cowher and will likely make the official announcement within the next few days.

On the other hand, it could be that Cowher just wanted to move to a metro area without an NFL team. :-)

New William Easterly Blog

For those of you who are big William Easterly fans like me, he has just launched a new blog called Aid Watch. Check it out.

The Bailout Game

Check out the Bailout Game. (HT: Greg Mankiw). I finished the game five spaces ahead of a recession.

Becoming Penniless

Wicked Local: Planned penny protest gains momentum among businesses

Concord - Following the publication of an article in The Concord Journal on Concord Teacakes co-owner Judy Fersch, describing their penny boycott starting on Lincoln’s 200th birthday, many more West Concord merchants have followed suit. In each case, all transactions will be “rounded down” so that pennies will not be needed in change. Customers who insist on paying with pennies will be asked to throw them into a charity jar, though a charity which is willing to accept piles of pennies has yet to be located, a search which turns out to be harder than it would appear.

For actual payment, though, pennies will no longer be considered legal tender by most of these merchants. ...

What do you think? Should we go penniless?

Housing market may have turned a pivotal corner

Reuters: Housing market may have turned a pivotal corner

NEW YORK (Reuters) - The coast-to-coast fire sale in the U.S. housing market appears at long last to have caught a bit of a bid.

Yes, residential real estate remains in the throes of the worst downturn since the Great Depression. Yes, home prices are the lowest in six years and still falling. And yes, it still takes three quarters of a year to sell a house.

Nevertheless, the market may have turned a pivotal corner last month, if a surprising increase in existing home sales is any guide.

Until now, plunging home prices have been keeping many potential home buyers at bay because they were leery of buying an asset that was all but guaranteed to lose value, at least initially.

Now, though, prices appear to have fallen enough in some regions to make buying cheaper than renting, particularly in the West. Add with record low mortgage rates, demand has started to rebound. ...

Philadelphia’s Climate in the Early Days

Watts Up With That: Philadelphia’s Climate in the Early Days

January, 1790 was a remarkable year in the northeastern US for several reasons.  It was less than one year into George Washington’s first term, and it was one of the warmest winter months on record.  Fortunately for science, a diligent Philadelphia resident named Charles Pierce kept a detailed record of the monthly weather from 1790 through 1847, and his record is archived by Google Books.  Below is his monthly report from that book.

JANUARY 1790 The average or medium temperature of this month was 44 degrees This is the mildest month of January on record. Fogs prevailed very much in the morning but a hot sun soon dispersed them and the mercury often ran up to 70 in the shade at mid day. Boys were often seen swimming in the Delaware and Schuylkill rivers. There were frequent showers as in April some of which were accompanied by thunder and lightning The uncommon mildness of the weather continued until the 7th of February.

Compare that to January, 2009 with an average temperature of 27F, 17 degrees cooler than 1790.  One month of course is not indicative of the climate, so let us look at the 30 year period from 1790-1819 and compare that to the last 10 “hot” years.

From Charles Pierce’s records, the average January temperature in Philadelphia from 1790-1819 was 31.2F.  According to USHCN records from 2000-2006 (the last year available from USHCN) and Weather Underground records from 2007-2009, the average January temperature in Philadelphia for the last ten years has been 29.8 degrees, or 1.4 degrees cooler than the period 1790-1819.  January, 2009 has been colder than any January during the presidencies of Washington, Adams, Jefferson, or Monroe.  January 2003 and 2004 were both considerably colder than any January during the terms of the first five presidents of the US.  ...

Vatican 2.0: Pope gets his own YouTube channel

Wired: Vatican 2.0: Pope gets his own YouTube channel

VATICAN CITY (AP) -- Puffs of smoke, speeches in Latin and multipage encyclicals have all been used by the Vatican to communicate with the faithful. Now the pope is trying to broaden his audience by joining the wannabe musicians, college pranksters and water-skiing squirrels on YouTube. In his inaugural YouTube foray Friday, Pope Benedict XVI welcomed viewers to this "great family that knows no borders" and said he hoped they would "feel involved in this great dialogue of truth."

"Today is a day that writes a new page in history for the Holy See," Vatican Radio said in describing the launch of the site, http://www.youtube.com/vatican

The Vatican said that with the YouTube channel, it hoped to broaden and unite the pontiff's audience - an estimated 1.4 billion people are online worldwide - while giving the Holy See better control over the pope's Internet image.

The pontiff joins President Barach Obama, who launched an official White House channel on his inauguration day, as well as Queen Elizabeth, who went online with her royal YouTube channel in December 2007. ...

"Economic Parables" Book Review

Jesus had much to say about wealth and possessions. His parables make a variety of implicit and explicit statements about economic aspects of our lives. Unfortunately, much of the teaching we receive from the pulpit and in popular Christian literature on the economic issues raised by these parables is simplistic moralization. I suspect the reason for this is that most often those doing the teaching are either theologians with little knowledge of economics or thinkers who know economics but haven’t done extensive biblical study.

David Cowan’s Economic Parables: The Monetary Teachings of Jesus Christ provides some depth of thought about the economic implications of Jesus’ teaching. Cowan is a pastor and theologian with a Masters of Theology from Oxford. He also has worked for twenty years as bank executive and journalist for a variety of business periodicals. His grasp of both theological and economic issues is well evidenced in his book.

Economic Parables is collection of reflections on thirteen of Jesus’ parables. Cowan explores the basic contours of each parable and then offers some insight on what these parables might mean for the economic sphere of our lives. Each chapter ends with a list of other biblical texts to consider as well as questions that can be used for personal reflection or in a small group study. The book is non-technical and intended for a broad audience.

Unlike so many theologians who write about markets in restrictive limiting terms, Cowan lifts up market activity as something positive without idolizing particular views of economics. His discussion at the end of the book contrasting the difference between giving gifts and market exchange helps show why markets are so important yet insufficient for economic shalom.

I really like the book’s concept. Cowan is good thinker and writer. I readily recommend this book.

Evolutionists Flock To Darwin-Shaped Wall Stain

The Onion: Evolutionists Flock To Darwin-Shaped Wall Stain

DAYTON, TN—A steady stream of devoted evolutionists continued to gather in this small Tennessee town today to witness what many believe is an image of Charles Darwin—author of The Origin Of Species and founder of the modern evolutionary movement—made manifest on a concrete wall in downtown Dayton.

"I brought my baby to touch the wall, so that the power of Darwin can purify her genetic makeup of undesirable inherited traits," said Darlene Freiberg, one among a growing crowd assembled here to see the mysterious stain, which appeared last Monday on one side of the Rhea County Courthouse. The building was also the location of the famed "Scopes Monkey Trial" and is widely considered one of Darwinism's holiest sites. "Forgive me, O Charles, for ever doubting your Divine Evolution. After seeing this miracle of limestone pigmentation with my own eyes, my faith in empirical reasoning will never again be tested."

Added Freiberg, "Behold the power and glory of the scientific method!" ...

HT: Lingamish

Joblessness in Perspective

Mark Perry offers this graph from his post, Jobless Claims Would Have to Top 900,000 To Reach the Same Levels of the 1970s and 1980s .

The Evolution of Darwin

Christianity Today: The Evolution of Darwin

It was in 1859—exactly a century and a half ago—that Charles Darwin published his Origin of Species. It is perhaps the most controversial book of the past millennium, and the work that has since made Darwin the patron saint of modern atheism. According to Richard Dawkins in The Blind Watchmaker, "Darwin made it possible to be an intellectually fulfilled atheist."

Evolution does seem to turn many Christians into unbelievers. A famous example is the distinguished Harvard biologist E. O. Wilson. Evolution gave him a profound sense of intellectual liberation from his Baptist upbringing in the South. Evolution also makes some people secular evangelists for the Darwinist cause. Michael Shermer was an evangelical Christian studying at Pepperdine University when his study of evolution convinced him to give up his faith. Shermer is now the editor of Skeptic magazine.

So does a belief in evolution automatically lead to disbelief in God? Actually, Darwin didn't think that. Darwin was not an "intellectually fulfilled atheist"; rather, he called himself an agnostic. Atheists say God does not exist, while agnostics say they don't know one way or the other. Moreover, Darwin did not boast about his unbelief; rather, he approached it with marked public caution. Shocking the mores of traditional believers may be Dawkins's thing, but it certainly wasn't Darwin's.

Here we must distinguish between Darwin the scientist and Darwin the unbeliever. Darwin, who was raised Anglican and even considered becoming a clergyman, did eventually relinquish his Christian faith. But he did not do so because of evolution. ...

Bend me, shape me, anyway you want me

The Economist: Bend me, shape me, anyway you want me

 

Electronic screens as thin as paper are coming soon

OVER the years, the screens on laptops, televisions, mobile phones and so on have got sharper, wider and thinner. They are about to get thinner still, but with a new twist. By using flexible components, these screens will also become bendy. Some could even be rolled up and slipped into your pocket like a piece of electronic paper. These thin sheets of plastic will be able to display words and images; a book, perhaps, or a newspaper or a magazine. And now it looks as if they might be mass produced in much the same way as the printed paper they are emulating.

The crucial technological development happened recently at the Flexible Display Centre at Arizona State University. Using a novel lithographic process invented by HP Labs, the research arm of Hewlett-Packard, and an electronic ink produced by E Ink, a company spun out of the Massachusetts Institute of Technology, the centre’s researchers succeeded in printing flexible displays onto long rolls of a special plastic film made by DuPont. To make individual screens, the printed film is sliced up into sections rather as folios for magazines or newspapers would be cut from a printed web of paper.

The resulting “electrophoretic” screens are lightweight and consume only a fraction of the power of a typical liquid-crystal display (LCD). Their first use is likely to be by the American army, which helped pay for the project. It hopes its soldiers will be able to use the screens as electronic maps and to receive information. The idea is that the flexible screens will replace some of the bulky devices that soldiers now have to lug around. If that works, the retail market beckons. The first trials of consumer versions could begin within a few years. ...

Did You Know?

This is a great video. I think it was prepared for a presentation at Sony (that will explain the seemingly out of place stat at the end.) Does this video unnerve you or exhilarate you? It exhilarates me! What a great time to be alive.

The End of Capitalism?

Acton Commentary: The End of Capitalism? A thoughtful piece by Michael Miller.

... it is important to point out that the word “capitalism” is actually a Marxist term, and while we use it interchangeably with “market economy,” the Marxist view of capitalism surprisingly still shapes the way we tend to understand economics. The term capitalism gives the impression that the market is something out there: a nebulous force which can create great wealth but can also turn and harm us. This impersonal understanding can lead us to blame markets when things go wrong instead of looking for reasons that are harder to diagnose and often reveal deeper cultural and spiritual issues. ...

...Markets are the combined activities of millions of individuals and families. They are not composed merely of some guys on Wall Street; they are made up by us. Like anything else run by humans, markets are not perfect and can fail. If we become overly speculative and convinced that prices can go nowhere but up so that we violate all norms of prudence and keep buying at outlandish prices—as happened in the Tulip Bubble in 1637 the dot.com bubble in 2000 and the housing bubble last year—sooner or later reality will set in.

Despite their failures however, free markets have lifted more people out of poverty and helped create prosperity and peace better than any system ever devised. So much so that even in today’s financial downturn, as hard as it may be, very few people who live in mature market economies are completely without resources or on the brink of starvation. Notice that markets are often blamed for the downturns, yet we tend to forget the cause of the upturn.

In these days of financial turmoil, we often hear critics speaking about de-regulation or “unbridled capitalism.” Both of these are straw men. Unbridled capitalism is a myth. Try to think of one country where there are no regulations on the economy or business. For free markets to succeed and be sustainable, they require a framework built of rule of law, contracts, and secure property rights.

The real question is what kind of regulation and what level of intervention we should choose. ...

... It is likewise delusional to believe that markets alone are enough. Markets require more than just efficiency; they require virtue. Our Founders taught us that without virtue political liberty could not long be sustained. The same holds true for economic liberty. And yet without economic liberty there can be no political liberty. Like liberty, the market must be moral, or it cannot exist at all.

Cleaner air equals longer lives: study

Reuters: Cleaner air equals longer lives: study

BOSTON (Reuters) - Dramatic improvements in U.S. air quality over the last two decades have added 21 weeks to the life of the average American, researchers reported on Wednesday.

Reducing fine particles given off by automobiles, diesel engines, steel mills and coal-fired power plants have added as much as 15 percent of the 2.72 years of extra longevity seen in the United States since the early 1980s, they wrote in the New England Journal of Medicine.

Changes in smoking habits are the biggest reason why Americans are living longer, said Arden Pope, an epidemiologist at Brigham Young University in Utah who led the study.

Improved socioeconomic conditions, judged partly by the proportion of high school graduates living in an area, rank next. But cleaner air was a big factor.

"It's stunning that the air pollution effect seems to be as robust as it is after controlling for these other things," Pope said in a telephone interview. ...

China censors parts of inaugural speech

International Herald Tribune: China censors parts of inaugural speech

... China Central Television, or CCTV, the main state-run network, broadcast the speech live until the moment Obama mentioned "communism" in a line about the past defeat of ideologies. After the off-screen translator said "communism" in Chinese, the audio faded out even as Obama's lips continued to move.

CCTV then showed an anchor asking an analyst about the economic challenges that Obama faces. The analyst was clearly caught off-guard by the sudden question.

The offending line was this: "Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions."

Later, the president said: "To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist."

Chinese translations of the speech published Wednesday omitted that line and the earlier one on communism. The government, however, has allowed the full English text to be published. ...

The Economy Is Bad, but 1982 Was Worse

New York Times: The Economy Is Bad, but 1982 Was Worse

You often hear that we are now living through the worst recession since the early 1980s, and the comparison is not wrong. But it’s ultimately unsatisfying, because it is a little too vague to be useful.

Is the economy only a little worse than it was in the last couple recessions, as some have said, and still a long way from the dark days of 1982? Or are we instead on our way toward something that may even approach the severity of the Great Depression? ...

...  I thought it would make sense to get some clearer historical perspective, and the economists at the Bureau of Labor Statistics were nice enough to help me do so. In the last week, they helped me put together a broad measure of the job market — one including both official unemployment and more subtle kinds — stretching back to 1970. Since the job market covers the entire economy and affects families in tangible ways, it seems to be the single best yardstick.

And it shows, for starters, that the economy is not yet as bad as it was in the early 1980s. It’s not even that close to being as bad. The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today. ...

... So suffice it to say that the serious recent declines in retail sales, business spending and employment make it highly unusual that the economy will improve anytime soon. The job market will almost certainly continue to worsen for most of 2009. Even if the much-needed stimulus bill passes, the economy is likely to end the year in roughly as bad a shape as its 1982 nadir. Which is saying something. ...

 So why are public opinion polls showing Americans to be even gloomier about the economy today than they were back then? I think there are two main reasons.

First, the economic expansion that just ended wasn’t as good as the 1970s expansions. The ’70s get a bad rap, and deservedly so in many ways. But median family income still rose 2 percent during the decade, after adjusting for inflation. Over the past decade, it has fallen.

Second, people seem to understand that the worst is yet to come — that the economy has not yet worked off its excesses. ...

With regard to his point about median family income falling over the last decade, there is more to the story. Family characteristic have been changing in recent years. The average family size has declined slightly. There has also been a widening of differences in family size between the top and bottom quintiles of family income. It is now 3.1 on average for the top quintile and 1.9 for the lowest. Taking these factors into account, per capita income (as opposed to family income) has been rising.

I think there is a third reason for the gloominess and the author alludes to it in the article. Almost half the U. S. population is not old enough to have memory of the recession in the early 1980s. I graduated from college in 1981. I remember it! Those younger than I am have no personal baseline to which they can compare our current troubles. Pre-1980s, and especially pre-WWII, significant recesssions were an ongoing pattern. We have become quite spoiled over the past quarter century.

There is also likely a fourth reason. A sensationalist media combined with the arrival of an election year. There are powerful interests who have a stake in making things look as bad as they can possbily paint it.

Some comparisons from Mark Perry:

Prime Rate
1981: 20.5%
2009: 3.25% (Current)

Inflation
1980: 14.8%
2008: 0% (December)

Unemployment Rate
1982: 10.8%
2008: 7.2% (December)

30-Year Mortgage Rate
1981: 18.5%
2009: 4.96% (Current)

Real Gas Price (2008 dollars)
1981: $3.45 per gallon
2009: $1.82 (Current)

Benevolence vs. Free Market

The following is interesting passage from David Cowan's book Economic Parables: The Monetary Teachings of Jesus Christ.

The gospel is a gift given us – something that is precious but yet costs us no money – which leads us to ask whether it thus subverts the human economy. At the risk of deconstructing capitalism, we could cite that doyen of postmodernism, Jacques Derrida, who provided a wonderful insight when he wrote that the problem of gift is that it breaks the cycle of exchange in the economy. Derrida’s proposal is that the gift subverts the real objective of all economic transactions because our acts of economic transaction are all calculation. Thus gift has not place in the economy, which is perhaps why economists would call a gift an externality. However, perhaps a gift also becomes a source of doubt in the economy because gifts are ultimately more valuable and meaningful that the things we buy or covet for ourselves. The gift suggests that we act in a way that is wholly other, that we give up our self-interest as selfish. Yet, if we give, or forgive, are we not still making a calculation?

It seems that we want the economy to do that which we personally don not want to do: to serve of be charitable. We do not want to give ourselves, so we subcontract to the state. I am not suggesting that charity will solve everything (though it would go a long way). Rather, I wonder to what extent we abdicate our responsibility to care, expecting others – government agencies, welfare, the state – to do our bidding. The price we pay is perhaps small, and we expect a big dividend from it, one that takes away our guilt. A gift also becomes indebtedness, for gifts are not truly given freely, and the gift becomes part of the cycle of exchange, for there is symbolic debt or duty created in the act of giving. The one to whom I give becomes indebted to me. Can we ever give truly selflessly?

Derrida and other writers have taken this discussion of gift further, and in these postmodern times there is a tendency toward wishful thinking in imagining an alternative economy to the free market. This is taking a good idea in the wrong direction. Absolutely, there is tension between economic life and the life of faith. Economic life appeals to our self-interest, rewarding us for our self-interest, as well as punishing us when we manage our wealthy badly. The free market system is truest to our nature and money provides a measure of how well we as individual economic agents, businesses, other economic organizations, and governments play the game. Yet the life of faith asks us to give ourselves up, to be selfless toward our neighbor. But few, if any, of us are so capable. We area then held hostage by the economy, caught in a struggle between economic self-maximization and our selflessness, for which we receive no economic reward.

In many ways I have been at pains in this book to defend the free market system against theological attack. However, the overall aim has been to rectify a perceived bias against the market and to argue that the market is something Christians and churches can and should work with for the better. Theology should not exclude the market, since the market is the best form of economic organization we have at our disposal at present. Within its limited framework there is much that can be achieved for the good. To this view, I add a major caveat. The market is not the place for us to fine salvation, nor should we use the economy as a means to shore up our own independence from God. The values of the gospel are, in the ultimate court, contrary to the market – but this applies just as much to all else in this world that is at odds with the gospel. (183-185)

Elsewhere in the book, Cowan makes the point I’ve made at this blog concerning Adam Smith’s famous statement:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

First, “self-love” or “self-interest” are not selfishness. Looking both ways before crossing the street, getting an annual physical, and eating healthy meals are not about selfishness but they are clearly products of being self-interested. It is only through a society of self-interested individuals that relationships and communities can develop. All would be chaos otherwise.

Second, reread Smith’ quote and note that he does not call us to act in our self-interest, much less selfishness. He calls us to address ourselves to the self-love of others. Smith understood human nature (we might say fallen nature) well enough to know that we can’t reliably count on the benevolence of others to supply the goods we need. The dependable basis for ensuring that goods will be supplied is people acting on their self-love. The suppliers welfare is linked the welfare of the recipients of those goods. While this is necessary for economic functioning, Smith also wrote that highest of all virtues, well above self-interest, is benevolence. Smith was hardly an orthodox Christian but I think his insight into human motivations was correct.

Rechargeable batteries as a social business

Defeating Global Poverty: Rechargeable batteries as a social business

I met up recently with Whit Alexander, a co-founder of board game company Cranium which they sold last year to Hasbro. He has provided the seed funding for a new social business venture called Burro.

Whit believes that there is a huge opportunity to develop quality branded products and a distribution channel optimized for the bottom of the pyramid (4B+ people who live on < $2/day). His goal is to deliver products at reduced cost to these customers which also improve their lives.

Their first business line is renting rechargeable batteries starting in Ghana. Why, you might ask?

• Long-term cheaper. Rechargeable batteries are cheaper to operate over their life-time than the traditional non-rechargeable disposable batteries.
• Multiple benefits. Batteries can power lights which lets a shop stay open longer and kids to perform homework when it's dark. Also, mobile phones and radio ... important communication tools ... all require batteries. Batteries are a regular budget item for most families globally.
• Better for environment. Growing issues created by disposed non-rechargeable batteries.

Here's how their model works: ...

Microfinance Heats up in East Africa

Defeating Global Poverty: Microfinance Heats up in East Africa

With BRAC's (Bangladesh Rural Advancement Committee) recent announcement of their successful raise of $62M for their Africa Loan Fund, a new benchmark/milestone has been reached for the potential growth in microfinance in East Africa. For the underdeveloped East Africa microfinance market, this is a huge amount of commercial debt capital to support BRAC's ambitious goal of reaching 700,000 microfinance clients (families) in Tanzania, Uganda and Southern Sudan.

BRAC is a microfinance NGO based in Bangladesh which has recently started expanding their presence outside of their home country to other regional markets including Pakistan, Afghanistan, Sri Lanka and a number of sub-Saharan Africa countries. They position themselves as the "world's largest private human development organization" (mainly based on the number of employees they have in Bangladesh microfinance operations) and leading a new kind of development effort ... a southern hemisphere organization serving another southern hemisphere developing market. BRAC has been much more aggressive in expanding beyond its home borders than the much more famous Bangladeshi microfinance bank, Grameen Bank, which in 2006 jointly received the Nobel Peace Prize. ...

Inaguration Day!

You don't have to be a Democrat to celebrate today. For 220 years Americans have seen one successful transfer of power after another. And now we see a transfer of power to a man who earlier in my lifetime would have had no chance at the presidency because of his race. Political struggles are ahead but today it is a proud day to be an American.

The Cat Whisperer

When I was at the in-laws in Iowa for Thanksgiving , we went out to the barn to check out the new "crop" of cats. This little guy had been riding around on my father-in-law's shoulder and head. Without warning, he leaped about four feet to my shoulder (the cat, that is, not my father-in-law.) Boy could he purr.

I'm a cat magnet. Just call me the cat whisperer.

(PS: Isaac, my tabby, is not impressed. He frown's upon such public displays of cats accepting humans. What is this younger generation coming to? Next thing you know they'll be fetching slippers or doing tricks for treats.)

If Only ...

If only he had lived to see tomorrow's events.

Where Sweatshops Are a Dream

New York Times: Where Sweatshops Are a Dream  by Nicholas Kristof

Before Barack Obama and his team act on their talk about “labor standards,” I’d like to offer them a tour of the vast garbage dump here in Phnom Penh.

This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires.

The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage.

Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.

Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children. ...

 

Consumption vs. Consumerism (Final Part)

The following quote comes from David Cowan in Economic Parables: The Monetary Teaching of Jesus Christ. I almost jumped from my chair and shouted “YES!” when I came to this passage; it expresses my sentiments so well.

Economic life, in part, is about aspirations. How are we to balance our economic goals with our aspiration to be with Christ? We can’t secure this using plastic – “gold,” “platinum,” or otherwise. We cannot allow ourselves to be seduced by slick marketing that seeks to offers us materialistic salvation. This is an aspect of the economy that we must battle with, but the battle is within ourselves. Other facets of our economic life are our work, mortgage, other debts, investments, and relationships with other economic agents. These are the day-to-day realities of living in the economy. We struggle with them, and we calculate and measure our daily life by them.

Those who would want to undermine the free market system are escapists. They too have economic aspirations. This protest movement has its own style of dress, music, and language, branded and sold like any other commodity in the economic world. The celebrities who preach to us about the ills of free enterprise earn huge advertising contracts from major companies. They are, in effect, the chief executive officers of multi-million-dollar-a-year corporations, something along the line of “U2 Inc.” and the “George Clooney Corporation.” They are what they protest.

The crowds who gather to protest free enterprise and globalization warn us of environmental cynicism and poor stewardship and link these to poverty. Are they the crowds to be feared? I suggest not. The crowd Jesus faced was not a group of well-healed protestors in designer jeans, organized via the Internet. They did not cheer rock stars with wealth beyond their dreams at “poverty concerts.” The crowds who gather to protest capitalism are what they protest.  They fly to the protests using cheap Internet airline deals, seek the best hotel packages, and wear designer clothes. They seek identity in this economy, a cause that will set them apart, showing themselves to radically different from people in the business suits or doing an honest day’s work. Where is the prophecy in that?

The protestors have become, in essence, “consumers of poverty,” purchasing the feel-good factor of thinking that they have done something about the problem. Poverty is deeply troubling and complex, with many causes and with many barriers standing in the way of change. Many of the environmental problems are in poorer countries, which do not have the economic resources to tackle their difficulties. One effect of better economic management in these countries will be better environmental conditions. There are people in poor countries who can help themselves; they need the capital to invest and the know-how, not sympathy. (106-108)

Cowan says “consumers of poverty.” I might have said “consumers of poverty activism.” So much of what passes as social justice advocacy is little more than activist consumerism. Activists deride the church for its consumerism. Churches are charged with offering ministries that merely cater to the felt-needs of the congregants without calling for genuine transformation. What is being offered in its place?

Much of what is being trumpeted as emerging Christianity is precisely the same. Segments of the church feel disaffected from the “product” and identity being offered from the church they grew up with. New identity competitors have risen up to meet the felt-needs of these disaffected folks. These new suppliers cater to the felt-need for activism and the need for an identity that will distinguish the advocacy consumer from lesser evolved and out of style consumers of the old Christian consumerism. Populist events and online campaigns are organized so customers can have their identity reinforced by like-minded consumers. Idealistic leaders are molded for mass consumption through personal appearances, print, and electronic media. Enemies are identified and singled out (say, market economy sympathizers or U. N. skeptics) for either attack or marginalization. This too helps increase loyalty of advocacy consumers to advocacy products and their purveyors.

Meanwhile, precious few customers of this Christian advocacy product actually have seriously wrestled with the advocated issues. The willingness of people to polemically engage economic issues, for instance, without ever having taken a class in economics or even making minimal effort to be acquainted with the most fundamental economic concepts is pervasive.  It should not be a surprise, since the real issue is not about the poor but rather the felt-needs of the advocacy consumer to be an advocate for justice. It is no different from the consumerism advocates deride in the “consumer church” where discipleship is not truly about discipleship but about the customers felt-need to feel spiritual. In advocacy consumerism, the poor are made an object for satisfying felt needs of consumers. So maybe Cowan is right after all. Maybe they should be called “consumers of poverty.”

True pursuit of justice requires consumption. We must consume a variety of ideas and experiences that are in the marketplace of ideas as we collectively seek God’s wisdom. We have to be vigilant in finding our identity in God and not in our systems of understanding. Regrettably, much of what represents itself as prophetic advocacy is not a healthy consumption of knowledge and wisdom but merely advocacy consumerism.

Part 1

Part 2

The price of prejudice

The Economist: The price of prejudice

It’s what you do that counts—not what you say you’d do.

NOBODY likes to admit an uncomfortable truth about himself, especially when charged issues such as race, sex, age and even supersized waistlines come into play. That makes the task of the behavioural scientist a difficult one. Not only may participants in a study be lying to those running a test, but they may also, fundamentally, be lying to themselves. ...

... In their first study, Dr Caruso and his team recruited 101 students and asked them to imagine they were taking part in a team trivia game with a cash prize. Each student was presented with profiles of potential team-mates and asked to rate them on their desirability.

The putative team-mates varied in several ways. Three of these were meant to correlate with success at trivia: educational level, IQ and previous experience with the game. In addition, each profile had a photo which showed whether the team-mate was slim or fat. After rating the profiles, the participants were asked to say how important they thought each attribute was in their decisions.

Not surprisingly, they reported that weight was the least important factor in their choice. However, their actual decisions revealed that no other attribute counted more heavily. In fact, they were willing to sacrifice quite a bit to have a thin team-mate. They would trade 11 IQ points—about 50% of the range of IQs available—for a colleague who was suitably slender.

In a second study the team asked another group, this time of students who were about to graduate, to consider hypothetical job opportunities at consulting firms. The positions varied in starting salary, location, holiday time and the sex of the potential boss.

When it came to salary, location and holiday, the students’ decisions matched their stated preferences. However, the boss’s sex turned out to be far more important than they said it was (this was true whether a student was male or female). In effect, they were willing to pay a 22% tax on their starting salary to have a male boss. ...

Technology in the recession: Less is More

The Economist: Technology in the recession: Less is More

FOR years, the computer industry has made steady progress by following Moore’s law, derived from an observation made in 1965 by Gordon Moore, a co-founder of Intel, now the world’s biggest chipmaker. His original formulation was rather technical, and was based on the number of transistors that could be crammed onto a chip, but it was adopted as a road map by the industry, so that it became a self-fulfilling prophecy. In practice, it boils down to the following: the cost of a given amount of computing power falls by half roughly every 18 months; so the amount of computing power available at a particular price doubles over the same period.

This has resulted in a geometric increase in the processing power of desktop computers, laptops, mobile phones, and so forth. Constant improvements mean that more features can be added to these products each year without increasing the price. A desire to do ever more elaborate things with computers—in particular, to supply and consume growing volumes of information over the internet—kept people and companies upgrading. Each time they bought a new machine, it cost around the same as the previous one, but did a lot more. But now things are changing, partly because the industry is maturing, and partly because of the recession. Suddenly there is much more interest in products that apply the flip side of Moore’s law: instead of providing ever-increasing performance at a particular price, they provide a particular level of performance at an ever-lower price. ...

The Increasing Affordability of Consumer Goods (Part 2)

Yesterday I did a post on the increasing affordability of Consumer goods over the years. Mark Perry has taken the cost of a product at a point in the past and divided that by the average hourly manufacturing wage at that time to determine how many hours it would take to earn enough to by the product. Then he does the same calculation for the product today. Here are his findings for three more consumer goods:

VCR (Source)

Sears VCR in 1981:  187.3 hours of work (23.4 days or 4.7 weeks)
Sears VCR/DVD combo in 2009:  3.8 hours of work

Television (Source)

Sears 19-inch portable TV in 1981:  71.3 hours of work (9 days)
Sears 20-inch TV in 2009:  9.2 hours of work

Calculator (Source)

Rechargeable scientific calculator from Wards in 1975: 12.5 hours of work (1.5 days)
HP 10s Scientific Calculator in 2009: .54 hours of work (33 minutes)

Richard Neuhaus

The Economist: Richard Neuhaus

WHILE the rest of the world fawned on Barack Obama, Richard Neuhaus took no joy in him. If Mr Obama truly meant, as he said, to liberalise abortion rules from his first day in office, Father Neuhaus foresaw an intensification of the culture wars at every level of American life. But he was ready to fight his side. For 30 years he had done so in books, manifestos, studies for the American Enterprise Institute and 12,000-word columns in First Things, the journal of his own Institute on Religion and Public Life. He fought his conservative corner in fluent, fervent, gossipy conversations, smoothed with bourbon and cigars and interrupted by immersion in Bach. George Bush, among many others, found talking to “Father Richard” on cloning, or same-sex marriage, superb for clearing the head. And he made his point even as, day by day, he raised Christ’s body at his church on the lower East Side of Manhattan. For the Eucharist, too, was a “call to commitment”, an “evangelistic” act.

Without Father Neuhaus, the religious right might still have enjoyed its 20-odd years of ascendancy in American politics. But it would have lacked much of its intellectual spine. Father Neuhaus, a Lutheran-turned-Catholic fearsomely well read in both the Church Fathers and the Protestant dissenters, encouraged evangelicals and Catholics to join forces to fill, with a new moral philosophy, the empty space at the core of modern American public life. There was, he wrote in 1984, a “naked public square” from which religion had been banished, and which “seven demons”, all secular, now competed to control. ...

Origins of the Word 'Capitalism'

Adam Smith's Lost Legacy: Origins of the Word 'Capitalism'

... The word ‘Capitalism’ and its related term ‘Capitalist,’ were not “first derived in the English vernacular from a translation of the pejorative term used by Karl Marx” (though he certainly used them pejoratively in his writings).

‘Capitalism’ was a word and a phenomenon neither used by, nor known to, Adam Smith. Capitalism was a wholly late 19th-century experience. The Oxford English Dictionary (Vol II, p 863) locates its first usage in English in 1854 by William Makepeace Thackeray in his novel, The Newcomes.

Karl Marx published, in German, Das Kapital, in 1867 and subsequent translations introduced the word ‘capitalism’ to his readers some years later (Moscow's 'Marxist' editors during the Soviet era ‘interpolated’ the new word of capitalism into his works as if Marx himself had written it).

While Marx may have read Thackeray, it is unlikely that Thackeray read Marx in time to include the word, capitalism, thirteen years earlier in his novel.

Of the word ‘capitalist’, this was first used in English in 1792, by Arthur Young (Travels in France) and it was used by Turgot (in French) in his ‘Reflections on the Formation and the Distribution of Riches’ LXIII-IV, 1770.

If Adam Smith is ‘known’ as the ‘father of capitalism’, it is 20th-century accolade of which he knew nothing, nor, to be accurate, deserved. This is an example of projecting modern notions onto the past. ...

China's economy leapfrogs Germany

BBC: China's economy leapfrogs Germany

The Chinese government has increased its estimate of how much the economy grew during 2007.

The revision means China's economy overtook Germany's to become the world's third largest in 2007.

Gross domestic product expanded 13%, up from an earlier estimate of 11.9%, to 25.7 trillion yuan ($3.5 trillion).

The figures underscore China's emergence as an economic superpower, although the country's growth rate is expected to have dropped to 9% in 2008. ...

...China's economy has grown tenfold in the past 30 years.

Merrill Lynch economist Ting Lu predicted that it will overtake Japan as the world's second largest economy in "only three or four years". ...

Toyota to launch pure electric car in U.S. by 2012

Reuters: Toyota to launch pure electric car in U.S. by 2012

DETROIT (Reuters) - Toyota Motor Corp (7203.T) said it would launch an all-electric car for city commuting by 2012 in the United States as part of its plan to speed up the introduction of green cars as its global sales falter.

The FT-EV concept made its debut at the North American International Auto Show in Detroit Sunday, where the world's top automaker is also unveiling two new gasoline-electric hybrid cars.

The FT-EV concept shares a platform with the tiny iQ urban commuter car, which runs on a gasoline engine and emits just 99 grams of carbon dioxide per kilometer.

"Now, more than ever, while we are so focused on the pressing issues of the moment, we cannot lose sight of our future," Irv Miller, Toyota Motor Sales U.S.A. group vice president, said in a statement.

Toyota said the concept car is targeted at the urban dweller driving up to 50 miles between home and work, for instance. ...

Prices for rooftop solar systems fall as supply grows

USA Today: Prices for rooftop solar systems fall as supply grows

Here's a bright spot in an overcast economy: Solar panel prices are tumbling.

Prices for rooftop solar systems, including installation, already have fallen 8% to 10% since October and are expected to drop another 15% to 20% this year.

Fueling the trend are an oversupply of worldwide manufacturing capacity and lower demand, especially in Spain and Germany, which have been growth engines for the industry.

For U.S. homeowners, effective prices are likely to plunge by more than 50% after figuring in a bigger federal tax credit that took effect Jan. 1.

"The era of extremely expensive (solar) modules is over," says analyst Nathaniel Bullard of research firm New Energy Finance. ...

The Increasing Affordability of Consumer Goods

In today’s post about Consumption vs. Consumerism (Part 2) I make the observation that the price of commodities has been dropping over the past 140 years, the recent spike in prices notwithstanding. One indirect measure of what has been happening with commodity prices (like iron ore, copper, and aluminum) is to look at the real cost of consumer goods that are produced from these commodities.

Mark Perry at Carpe Diem has been shopping E-Bay for old Sears and Montgomery Wards catalogs. Lately he has been publishing some posts that compare items from 1949 to roughly the same items in 2009. He then calculates the number of hours a worker would need to work at the average manufacturing wage in order to buy the goods. Here are his first three comparisons.

Refrigerator

Here are ads for a 1949 9.2 cubic foot Sears frig versus a 2009 9.5 cubic foot Sears frig. (Source)

"Sears Coldspot Spacemaster Refrigerator, available on sale in the 1949 Sears catalog for $224.75. The average hourly manufacturing wage in 1949 was $1.26, meaning that the average worker had to work for 178.4 hours (22.3 days or 4.5 weeks) in 1949 to earn enough money (before tax) to purchase the refrigerator."

"A current Sears model 9.5 cubic feet refrigerator, available on sale for $339.99. At the current average hourly manufacturing wage of $18.03, the average worker would have to work today for only 18.9 hours (only 2.4 days) to purchase the refrigerator."

The comparison:

1949:  178.4 hours of labor (22.3 days or 4.5 weeks)
2009:  18.9 hours of labor (only 2.4 days)

Toasters (Source)

1949:  13.5 hours of labor
2009:  1.1 hours of labor

Washing Machines (Source)

1949:  83.3 hours of labor (10.5 days or 2.1 weeks)
2009:  17.9 hours of labor (2.2 days)

It is worth noting that even this comparison under represents the changes. Today's models are far more energy efficient and usually have a great many more features that give the user more value.

The prices of such items have been dropping for years. The price of the raw materials that go into them have been dropping for years. Technological innovation in production and recycling of used up goods will only make the goods more affordable, even with much greater global demand.

Consumption vs. Consumerism (Part 2)

Scot McKnight just completed a great series on Adam Hamilton’s new book Seeing Gray in a World of Black and White: Thoughts on Religion, Morality, and Politics. I have the book but haven’t read it yet. I have lot of respect for Hamilton and I’m looking forward to reading it.

However, in the course of McKnight’s review, he lifted this quote from Hamilton’s book and it is a line of reasoning I take issue with:

We have 5% of the world's population; we consume 22% of its energy resources. We expect other countries to go along with our global and national designs. We are obese while other nations struggle with starvation.

I’ve heard this stat repeated over and over again over the least thirty years. I think the first place I probably encountered it was in Ron Sider’s Rich Christians in an Age of Hunger. It is intended to give evidence of the incredible wastefulness of American society.

But what if I were to tell you that for each hour worked, an American worker produces four to five times as much as the average worker in the world? That is the flip side of this statistic. Americans consume 22% more fuel and produce 22% of the world’s goods even though they are 5% of the world’s population.

Prior to the industrial era, the great masses of humanity have had one option:

Option 1: Hard physical labor in agriculture, sunup to sundown, with very low consumption of energy resources.

With the industrial era a new option emerged:

Option 2: Hard physical labor in factories, sunup to sundown, with more consumption of energy resources but still relatively low consumption on an economy-wide basis by today’s standards.

As industrialism matured, a third option emerged:

Option 3: Very few people engaged in hard physical labor and most tasks once done through hard labor being done through technology directed by workers operating in safe environments while working fewer hours per week. Most of the masses freed up for pursuits other than laborious manual labor and high energy consumption on an economy-wide basis.

That basically leaves us with two options with good and bad consequences.

1. Low energy consumption (good) and the masses locked in long hours of hard physical labor (bad).

2. High energy consumption (bad) with most people having a wide range of options that don’t require long hours of hard physical labor (good.)

Ideally what we would like is low energy consumption with few people engaged in long hours of hard physical labor. The problem is that growth and decline in gross domestic product correlates almost perfectly with growth and decline in energy consumption. Barring innovation, we will need to consume a great deal more energy resources in order to bring the rest of the planet to our level of post-industrial life. “Barring innovation” are the operative words.

A century ago, the United States had 300 million acres of land in crop production. Up until that time the ratio of cropland to population had been fairly constant. Land had been plentiful and the pressure to innovate was not strong.

If we could return to 1900 with the knowledge that the population would more than triple in the next 100 years, then project forward based on land to population ratios of that time, we would see that we would need another 700 million acres by century end. That is roughly the land area east of the Mississippi! So how many acres are in crop production today? Same as in 1900, about 300 million. Not only are more than triple the number of people fed and with the same amount of land but surpluses are sold around the world. The government pays some farmers not to grow crops in order not to depress food prices with too much supply.

Energy is the new cropland dilemma. Oil is the energy that moves the world today. The recent spike in oil and gas prices had far more to do with institutional investors diving into the commodities markets when other investments were underperforming than it did with the actual demand for oil. That said, with India and China (one third of the world) significantly subsidizing gasoline for their citizens, demand pressure had been rising faster than would otherwise have been the case. There is more than enough oil for a rapidly growing world for centuries to come but the price is still likely to creep higher in real terms. Concerns about carbon emissions are likely to put even more upward pressure on the price of oil. The economic pressure for affordable alternative energy and for technologies that are more energy efficient has been rising.

The other challenge that frequently gets mentioned is the exhaustion of natural resources. Yet for 140 years the real cost of commodities has been falling and is expected to continue on that path (the recent investor driven spike notwithstanding.) And as Donald Hay has pointed out in Economics Today almost everything we use today can feasibly be replaced by renewable and recyclable materials. The economic pressures to force such transitions simply have not yet been present.

The challenge of the 21st Century is how to create a global economy of low energy (or at least renewable energy) consumption with few people engaged in long hours of hard physical labor. The fact that 5% of the world consumes 22% of world energy is not an indictment of American consumerism (though surely consumerism is present.) It is a consequence of having discovered how to substitute energy and technology for back-breaking human labor so the masses can be free to flourish in ways unimaginable prior to our era. The next step in economic evolution is figuring out how to extend this development to the rest of the world while transforming our energy sources.

Unfortunately, there are anti-growth activists at work who wish to block this emergence. They have decided the world economy has grown large enough. With discredited Matlhusian logic they project current relationships of production and consumption forward into the future and prophecy global disaster. “Sustainable” comes to mean projecting current realities into the future as a justification for blocking growth in the present when instead sustainable is a moving target directly related to the technologies and economies we have available to us at any given moment.

Part 1

Part 3

Historian’s hard work, innovation survive in Arabia Steamboat Museum

One of my favorite places in the Kansas City metro area is the Arabia Steamboat Museum. For two reasons. First, it is a museum about a steamship that sank in the Missouri River in 1856, carrying supplies to settlers in the West. The ship was recovered in 1988 and countless artifacts from this supply ship are now on display. It is described as an 1856 Wal-Mart, giving incredible insight into the daily lives of people from that era.

The second reason is the way the ship was found and the way the museum came into being. A blue collar family, the Hawleys, (who owned a cooling and heating business in Independence, MO) along with friends, did the work to identify the wreckage. They put together a team to recover it on their own, investing their personal fortunes to do so. It is a remarkable story. (Click on "Museum Info" at the website and select "Arabia's Video" to get the story of the Arabia and the Hawley's.)

Sadly, one of the brothers, Greg Hawley, was killed Saturday when his pickup was struck by an 18 year old racing another teenager on the highway. That teenager is being charged with first degree manslaughter. One man's life ended and his family devastated. Another man's life horribly altered by incredibly irresponsible behavior. It is truly heartbreaking.

Here is the Kansas City Star article Historian’s hard work, innovation survive in Arabia Steamboat Museum. Peace to the families of all involved.

Protecting Indigenous Culture: Honor Killings versus Globalization

Nova Scotia Scott has a post today, Turkey: Family jailed for life in honour killing:

A Turkish court has ordered five members of the same family imprisoned for life in the murder of a 16-year-old girl who became pregnant after being raped.

The original news report is posted at CyberPresse.ca. What follows is my (literal but somewhat stilted) translation of most of the story: ...

Every time I read horrific stories like the one Scott has translated here, an interesting question comes to mind.

Few of us living outside this honor-shame oriented culture recoil at this stuff. We support efforts to end it. We want to change the indigenous culture. However, one of the most fervent arguments made against economic globalization is that it destroys indigenous cultures. This is frequently made on behalf of societies where economic and governmental practices do not sustain the lives of the inhabitants, or do so at levels that are far below what we in developed nations would consider befitting human dignity. Why is it that in these cases indigenous culture is held up something to be preserved?

Mind you, I'm not saying that Western models of living are the model for the rest of the world. There are likely many models cultures could adopt and still integrate with the global economy. My suspicion is that contrary to the stated desire to protect local cultures, the driving motivator of anti-globalization folks is opposition to market economies.

Consumption vs. Consumerism (Part 1)

Activism against consumerism is all the rage these days. But what is meant by consumerism?

I’ve been reading Economic Parables by David Cowan. He makes these observations:

“… Critics of the free market system believe that materialism is an essential element of the system. They argue that the drive toward materialism is a necessary, and evil, outcome of free market activity. The question they need to ask, however, is whether this is a true picture of the economy. They need to look more closely at the difference between consumption and consumerism.

We can classify our purchases into three categories: necessities, additional comforts, and unnecessary items. We need to buy food to live, but how much – and of what kind – do we need to live on? We might argue we need a car, but how comfortable does it need to be? We could get by driving a Ford or a Saturn rather than a Mercedes or a Porsche. Most of us buy many things that we don’t really need, things like new CD players, jewelry, and the latest fashion in clothes.

We all draw the line on our spending according to our means. …We can only stand in awe at the seemingly endless things that money can buy, if we have the wealth to buy them. In contrast, we can only wince at the daily struggles of those too poor to pay for the basic necessities of life.

In the divine economy, Jesus turns this all on its head. …” (89-90)

Cowan writes this in his reflection on the Parable of the Rich Fool in Luke 12:13-21. The rich man in story has amassed possessions far beyond what he good use and enjoy. He has so much that he has to tear down his storage facilities and build bigger ones to hold it all. Though not explicitly stated, surely an implication of the story is that he is doing this in the presence of many who are hungry and in want.

Kenneth Bailey adds this observation about the parable:

Literally translated, the text [v. 17] says, he “dialogued with himself.” This is a very sad scene. In the Middle East, village people make decisions about important topics after long discussions with their friends. Families, communities and villages are tight knit together. Everybody’s business is everybody else’s business. Even trivial decisions are made after hours of discussion with family and friends. But this man appears to have no friends. He lives in isolation from the human family around him, and with an important decision to make the only person with home had can have dialogue is himself. (Jesus Through Middle Eastern Eyes, 303)

The rich fool has become thoroughly isolated from genuine community and finds his solace in his possessions. Isn’t this the very essence of consumerism? Upon making his decision to build more storage capacity, he dies. Jesus asks us to reflect on the value of the man’s possession then.

At its core, consumerism is about trying to meet legitimate desires for identity and security through illegitimate means of excessive acquisition and consumption. Our identity and security can only truly be found in God. Legitimate acquisition and consumption flows out of our relationship with God and our relationship with those with whom we have been called into community.

All of us consume. We all participate in consumption. There is nothing unseemly about being a consumer. Being a consumer does not mean being trapped in an ideology of consumerism. Consumption is essential to human flourishing and human flourishing is about far more than having the bare minimum of food, clothing, and shelter. Human flourishing is about having time for relationships. It is about being surrounded by things of beauty both inside our homes and in the world that surrounds us. It is about opportunities for learning, exploring, and creating. It is about having a degree of security. It is about being entrusted with resources through which we enhance our lives and the lives of others. These all require consumption beyond what we need in the pure materialist sense.

Anti-consumerism activists frequently treat “wealthy” and “consumerist” as synonyms. There are clearly wealthy people who have succumbed to consumerism but there are many people who aren’t wealthy, including from among the poor, who have fallen prey to consumerism as well. Watch an episode of Clean House sometime and see how consumerism has taken hold of some average folks’ lives.

Furthermore, there are many wealthy people who are not consumerists. Studies of millionaires show that the majority live well below their means in median priced homes, drive used cars, don’t buy expensive clothes, and are quite frugal with their expenditures. That is how they became wealthy. Less than 20% became wealthy through an inheritance.

My point is that consumerism is not so easy to spot as it might first appear. In fact, I suspect the most common definition consumerism is "someone who spends at least a little more than I do." Yet few of us doubt its presence among us.

Clearly advertisers want to induce people to buy their products. Products are strategically placed in stores to induce sales. The home shopping channels provide an endless parade of stuff for the compulsive shopper. Advertisers strategically place their aids in order to motivate children to bug their parents into getting them more toys. But is this peculiar to capitalism? No.

The roots of consumerism are far deeper than the arrival of free market economies in the past century or two. Surely when John Bunyan published Pilgrim’s Progress 330 years ago, Vanity Fair was the epitome of consumerism. The roots go back at least 2,000 years to Jesus and his rich fool. They go back centuries before that to the teacher in Ecclesiastes with his warning of vain pursuits. Free market economies did not originate consumerism nor are they dependent on it. Yet their integrative and productive powers do have the ability to place us ever in the midst of a destructive Vanity Fair. A dangerous development if the people in the marketplace are not equipped to with virtue and wisdom.

I submit that it is the church, not the market economy, which is most responsible for the rise of consumerism. Market economies essentially reflect the values o f the players who participate in the economy. The church lost its influence due, not in small part, to sacred versus secular dichotomies that led factions of the church to unthinkingly embrace models of behavior from an increasingly secularized business world or to scapegoat the economy as the culprit for fostering destructive behaviors counter to the virtues that church should have been instilling all along. Frankly, some anti-consumerism activism is merely factions of the church diverting blame to the economy for the church’s failure to have effectively integrated economic life with our Christian discipleship. The reality is that when the church fails to present a compelling vision of how life has abundant meaning in relationship to God and community, the culture is going to find a  substitute.

We all consume but too many of us find our identity in the things we consume. We behave as the rich fool. But there were rich fools in Jesus time in a completely different economy. Therefore, should our attention be primarily on market economies that merely reflect a human impulse that predates market economies or should it be on the communities God established to bring transformation to humanity and have failed to do so?

Part 2

Part 3

U.S. mortgage meltdown linked to 2005 bankruptcy law

Kansas City Star: U.S. mortgage meltdown linked to 2005 bankruptcy law

There’s no shortage of blame for the mortgage crisis that drove the economy into the ditch.

But here’s a fresh culprit: the 2005 bankruptcy reform act, which was strongly pushed by the credit card industry.

So say three researchers at the Federal Reserve Bank of New York, who argue that the legislation shifted risk from credit card lenders to mortgage lenders, helping trigger the surge in home foreclosures.

Before Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, households could erase their unsecured debts by filing for Chapter 7 liquidation. That freed up income that distressed homeowners could use to make mortgage payments.

The new law, however, forced better-off households seeking bankruptcy protection to file under Chapter 13. That chapter requires homeowners to continue paying their unsecured lenders.

In other words, say the Fed researchers, cash-strapped homeowners who might have saved their homes by filing Chapter 7 are now much more likely to face foreclosure.

“Is it just coincidence that the surge in subprime foreclosures that has rocked financial markets came right after the bankruptcy reform in 2005?” they asked. “Is that surge just about falling home prices, bad mortgage decisions and weak economic conditions?

“No and no.”

The paper’s lead author, Donald P. Morgan, a research officer at the New York Fed, said last week in a phone interview that he was “99 percent confident” that the bankruptcy reform law was a major reason for the foreclosure crisis and the falling housing prices that have affected virtually every homeowner in the country. ...

...“One of the great lessons and ironies” of the new law, Treasury Department economist David P. Bernstein wrote in a recent paper, was that, by increasing the dollar value of assets susceptible to default, it has weakened many of the financial institutions that sought the new law in the first place. ...

That nasty little thing of unintended consequences emerges again.

Delivering propane as a social business

Defeating Global Poverty: Delivering propane as a social business

Vidagas is currently the leading distributor of propane in northern Mozambique ... the least developed and primarily rural portion of the country. It has recently become profitable and is raising additional capital to expand into additional provinces of Mozambique and beyond.

What's most interesting about Vidagas is that it's a social business. It was started in 2002 by two NGOs VillageReach and Foundation for Community Development. They raised the initial capital and started this business not because they were looking for a great new investment opportunity, but because VillageReach had a contract to improve delivery of medical supplies to the rural clinics. The rural clinics needed a reliable supply of propane to power their refrigerators (to keep their vaccines effective) and for lights so that they could operate the facilities for operations and at night time. And there was no propane supplier.

Rather than simply funding the delivery of propane with government subsidies (if these could even have been obtained), they saw an opportunity to bootstrap a sustainable commercial business with a strong multi-year client ... the Mozambique government clinics. So, they created a separate commercial business and then went about operating it like a commercial business selling propane delivery to other local businesses and residential customers. Today, less than 20% of their revenue comes from the government clinics and their customer base continues to grow as they deliver a valued service. ...