On the 22nd March, Learning from Dogs had the pleasure of a Post from our first Guest Author, Elliot Engstrom. We are doubly delighted to have Per Kurowski join us as our second Guest Author.
Per Kurowski
Per is a prolific blogger. He has had a full career including serving as an Executive Director of the World Bank from 2002 until 2004 for Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain and Venezuela. More about Per’s life experiences can be found here.
Here is Per’s first Guest Post for Learning from Dogs.
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The GPS and the AAAs
Not so long ago I asked my daughter to key in an address in the GPS and then even while I continuously heard a little voice inside me telling me I was heading in the wrong direction I ended up where I did not want to go.
Whither we are led?
Something similar caused the current financial crisis.
First the financial regulators in Basel decided that the only thing they would care about was the risk of individual financial defaults and not one iota about any other risks.
Second then, though they must have known these were humanly fallible they still empowered some few credit rating agencies to be their GPS on default risks.
Finally, by means of the minimum capital requirements for banks, they set up all the incentives possible to force them to heed what the GPS said and to ignore any internal warning voices.
Of course, almost like if planned on purpose, it all ended up in a crisis. In just a couple of years, over two trillion dollars followed some AAA signs over the precipice of badly awarded mortgages to the subprime sector. Today, we are still using the same financial risk GPS with the same keyed in instructions… and not a word about it in all recent Financial Regulatory Reform proposals
I hate the GPS type guidance of any system since I am convinced that any kid brought up with it will have no clue of what north, south, east or west means; just as the banker not knowing his client’s business or how to look into his client’s eyes or how to feel the firmness of his client’s handshake, can only end up stupidly following someone else’s opinion about his client on a stupid monitor.
I hate the GPS type guidance system because, on the margin, it is making our society more stupid as exemplified by how society, day by day, seems to be giving more importance to some opaque credit scores than to the school grades of their children. I wait in horror for some DNA health rating scores to appear and cause a total breakdown of civilization as we know it.
Yes, we are buried under massive loads of information and these systems are a tempting way of trying to make some sense out of it all, but, if we used them, at least we owe it to ourselves to concentrate all our efforts in developing our capacity to question and to respond adequately when our instincts tell us we’re heading in the wrong way.
Not all is lost though. I often order the GPS in my car to instruct me in different tongues so as to learn new languages, it gives a totally new meaning to “lost in translation”, and I eagerly await a GPS system that can describe the surroundings in more extensive terms than right or left, AAA or BBB-, since that way not only would I get more out of it but, more importantly, I would also be more inclined to talk-back.
The winter can seems very long when the temperature remains extremely cold and the news headlines show dramatic pictures of villages completely cut off by drifting snow. And the old debate about cold weather payments for pensioners comes around once again.
We are often still able to enjoy time in our garden well into October, but the weeks that follow up to March can be very long and drawn out. Then comes my favourite flower, The Snowdrop.
Snowdrops
There are several different types of this beautiful little plant, and in the county of Hampshire in England [where Bob and his family live, Ed.], in particular there seem to be clumps of this special white flower everywhere.
Heale House
However the other day I was able to see a complete field of them in the grounds of Heale House, a private residence owned by Patrick Hickman,an ex Lancaster pilot, now 89, who is still very active and keeping his yew bushes well trimmed in the art of topiary.
Heale House is open at this time of year for people to visit the lovely gardens and again enjoy the snowdrops.
Spring has arrived, but it is the first flower that is my favourite!
Well, this is election season in Britain, or as near as it gets ….. no doubt British PM Gordon Brown will wait to the last possible moment in the hope that either oil in vast quantities will be struck on Salisbury Plain or that David Cameron will be found wandering around near the men’s toilets on Wandsworth Common late one night.
But Gordon-Brown’s procrastination has almost reached its consume-by date and everyone expects an announcement soon for an election on May 6th.
This will be a momentous election. As it seems that British politics has evolved into mammoth-long parliamentary stints – a bit like Japan – the government of the next 15 years could be up for grabs. Will we stagger along under the camel-breaking weight of turgid bureaucracy, overspending and debt under Labour or emerge post-election into the great entrepreneurial leap forward à la Maggie Thatcher Mark II? (this is a slight over-simplification for newcomers to British politics).
We’ll see, but one of the most fascinating aspects of general elections is always to listen to what politicians say. On rare occasions we may be inspired and amazed by their vision and rhetoric, but unfortunately one’s reaction is more often one of total disbelief. I had one of the latter yesterday when I read the following in the Guardian:
“I will continue as Labour leader even if I lose election, “Gordon Brown says.
Now nobody pretends being British PM is easy, but one does at least hope that one’s leader – the one with the finger on the nuclear button after all – will not lose touch with reality. And the idea that Brown could soldier on after a defeat is surreal.
He was never actually elected by his party in the first place, nor of course as PM by the British Public. He has already nearly been thrown out a couple of times by his own party so what possible justification could there be for trying to stay on in defeat? Is the following a justification?
“I owe it to people to continue and complete the work we have started of taking this country out of the most difficult global financial recession.” (Reuters)
Does he really think that NOBODY ELSE can save Britain? Megalomaniac delusions, I fear. And IF he loses the election, the Labour Party could face another 15 years in opposition. The idea of Brown staggering on until he drops is rather sobering.
Mr Brown didn’t NEED to say what he did; the usual politician’s deviousness would have sufficed: “no point speculating about hypothetical situations …. ” and so on …. the fact that he cannot seem to imagine NOT being leader after so many years of playing sulky bridesmaid to the slick and charismatic Tony Blair is pathetic in the true sense of the word.
In sport, business, love and politics, there comes a time when you have to give up, and leading your party to defeat at an election is one of them ……..
PS Of course, he could WIN the election! Oh dear …… pass me the Glenfiddich …..
On the 10th February, I wrote an article entitled Every Economist, Mr President? No Sir! The thrust of my argument was “that the unemployment rate would have been much lower today had the stimulus program never occurred.”
That post also appeared on my own Blog and there attracted a fascinating response from Rick Rutledge. Rick’s response is worthy of a separate article, as below, together with my reply.
Sherry,
The problem with your explanation here is that it states that “government spending is funded with taxes that WOULD HAVE BEEN invested by private industry” and that “the unemployment rate WOULD HAVE BEEN much lower today had the stimulus program never occurred.” (Emphasis mine.)
This argument, it seems to me, is predicated on the conceptual fiction of a two-dimensional relationship between government spending and business investment, with taxes as the lever. That model lacks a time vector, not so much from omitting it, as compressing it. The relationship between those factors can only be simplified to this level by compressing all time into the representational plane.
That is to say that, to fairly represent the relationship between government spending and business investment (via taxation), we have to compress three presumptions into one premise:
– Past government spending that resulted in increased taxes diminishes past, present, and/or future business investment resources;
– Increasing present taxes to fund present and future spending diminishes business’ investment resource pool.
– Past, present, and future government spending without matching funding WILL, EVENTUALLY result in increased taxation, diminishing future business investment resources. (And, consequently, MAY have a chilling effect on present business investment attitudes.)
However, unless NPR has let me down (it could happen), and I’ve missed a big, breaking story about an increase in business taxes, these stimulus programs have been wholly funded by deficit spending.
Of course, it could be argued that deficit spending generally COULD (nay, should) have a chilling effect on business investment. This, together with the third presumption of the aggregate premise above (that is to say, burgeoning national debt), does create a basis for the belief that the unemployment rate COULD have been much lower today, IF a number of things had been done differently. The French have a saying: “With enough ‘IFs,’ we could put Paris in a bottle.”
To simply state that “the unemployment rate would have been much lower today had the stimulus program never occurred” strikes me as conclusory, and the sort of reasoning on which our elected officials too often rely to justify partisan and ideological positions.
Too, and unfortunately, there is a great body of evidence to suggest that business leaders have historically taken a disappointingly short-sighted approach to management, so I would be reluctant to put too many eggs into the “chilling effect” arguments.
Rick Rutledge
As a person who teaches financial literacy, I’m fully aware that sometimes there are urgent needs that justify the use of leverage (and short-term deficit spending) to deal with near-term emergencies. Credit has its uses. I’m of the belief that short-term deficit spending is not the primary (and certainly is not in and of itself) the cause for our current woes. I’m more inclined to believe that short-sightedness, whether in the form of The Quick Buck on Wall Street, or a systemic refusal to acknowledge the looming problem of the national debt, is more to blame than any single short-term stimulus program. Government spending on stimulus, OUTSIDE THE CONTEXT OF DEFICIT SPENDING, wholly evades your argument.
(But then, there may be good reason I don’t claim to be an economist – through no fault of yours, to be sure!)
Rick Rutledge
This was my reply:
Hi Rick,
Goodness. Where to begin! I simply stated my conclusion because it’s a post, and I was responding directly to Obama’s claim about what “all” economists think or say. He was misinformed or stretching the truth, and I wanted to point out that fact. So, yes, there were a lot of unstated underlying assumptions and data and studies and research and theory that I did not specify. Apparently you’ve supplied some of your own to try to deconstruct the “reasoning” or “ideology” that I might have used to arrive at my conclusion! Creative and ambitious but, alas, wrong.
You’ve ignored or misunderstood the very essence of causality: the only thing one needs to know is that business profits are the ONLY source of tax revenues to the government, and when the government takes and spends those tax revenues, they are spending dollars that WOULD HAVE BEEN RETAINED AND INVESTED by the business that created those profits and those very tax revenues IN THE FIRST PLACE, and would have then caused further profits next period. CAUSED. And it doesn’t matter whether you talk one period or multiperiod or lags. This fundamental economic fact does not change.
You bring deficit spending (the relation between this period’s G and this period’s T) and the level of debt (cumulative deficits) into the picture, both of which are entirely irrelevant to the issue I am raising and, worse yet, are the accountant’s version of business profits.
You site “evidence” that business leaders have been short-sighted (do please share some of that evidence with me — cite the source and let me have at it — it will not hold up) and use that to conclude that government spending does not reduce economic wealth? And then literally blame our current woes on the short-sightedness of business? or on national debt? huh?
You say: “Government spending on stimulus, outside the context of deficit spending, wholly evades my argument.” Not so. My point is that when the government takes a dollar of tax revenues, whether the government is running a deficit or surplus, it reduces the economic wealth of the economy relative to what it would have been had the government not taken that dollar of business profits as taxes. Very simple. Very straightforward. The plain, simple, unadorned, incontrovertible truth.
Thanks for your interest and for taking the time to write such a thoughtful, thought-provoking comment!
Learning from Dogs has been publishing on a daily basis since July 15th, 2009. That’s over 460 posts and is a great tribute to the commitment of all the authors of this Blog. We are grateful that our regular readership is also measured in the hundreds and is growing steadily.
Elliot Engstrom
It seemed time to make a small change. We have decided to include articles from Guest Authors on a regular basis. Our first guest is Elliot Engstrom.
Elliot Engstrom is a senior French major at Wake Forest University, and aside from his schoolwork blogs for Young Americans for Liberty and writes at his own Web site, Rethinking the State
Elliot first post for Learning from Dogs is about the US Federal Government and Poverty. This also appeared in The Daily Caller.
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The federal government, which claims to be the greatest supporter of those in need, is anything but a friend of the impoverished.
Often times when conservatives speak of the government treating the rich differently than the poor, the discussion is framed around taxes and welfare, with the argument being made that the government forces the highest earners to pay a massive percentage of all taxes, both punishing success and stifling overall economic productivity and making it all the more difficult for anyone not in the upper echelons to accumulate wealth for themselves. I sincerely hope that I have not constructed a straw man version of this common conservative argument, as I certainly think it has a great deal of credibility. However, I also would like to draw attention to the fact that while government loots the rich through the direct means of taxation, it likewise loots the poor, albeit through a different set of means that is much more difficult to recognize, and thus much more difficult to counteract.
While looting the wealthy can often be construed as some kind of humanitarian effort to aid the poor, looting the impoverished is a much more difficult enterprise to disguise as a moral good. Thus we will find that the government’s means of taking money from the poor are much more difficult to detect, comprehend, and eliminate than the means of direct taxation that is used to extract money from the wealthier members of society.
The dollar in which the majority of Americans receive their wages or salary has no absolute, set value. We see this in the fact that the value of the dollar is constantly fluctuating when compared to gold, silver, or the currencies of other nations (which are all constantly fluctuating in value themselves). “Value” is determined by a wide range of factors, but is based in the fact that human beings are all rational maximizers who are all trying to get what they want while expending the least amount of resources possible to do so. The occurrence of this phenomenon in the mind of every single individual economic actor coordinates the price system in a free market economy.
A given worker making $10.50/hour may see himself as bringing home a constant source of income. However, this is not the case at all due to the constantly shifting value of the dollar. Even in a free and unhindered market, the value of the dollars that this worker takes home each day would fluctuate based on factors like how much liquid currency was actually in existence in the market, how many resources had been invested in banks or stocks, and what amount of resources had been converted into physical capital or products. In the end, the dollar itself has all the value of a flimsy piece of cotton paper – it derives its true value from the productive activities of economic actors who use it as a medium of exchange. In other words, the dollar is a widely accepted “I.O.U.” This would be the case even in the freest of economies. Values of commodities and currencies are always changing based on the effectual demand and effectual supply of the moment.
But, as we all know, we live in anything but a free and unhindered economy. Our supposed “free market” is criss-crossed with a Federal Reserve System that manipulates the value of the dollar at will, a corporate welfare system that socializes the losses of corporations at the expense of the rest of society, and law enforcement policies that weigh the heaviest on those who do not have the time or resources to easily deal with court and lawyer fees, jury duty, and detainments prior to trial, not to mention the fact that the War on Drugs does substantially greater damage to the lower classes of American society than it does good, particularly when speaking of poor African-Americans.
And here’s the scary part – this was all the case before the bailouts and stimulus package that George Bush began and Barack Obama continued and amplified. Not only do these bailouts threaten to massively inflate our currency, spelling disaster for those whose livelihood is based in hourly wages paid in dollars, but it also directly took from all of society, not just the rich or the poor, and gave to a few select corporate entities such as Goldman-Sachs and Wells Fargo. We know this because every new dollar created by the government in the stimulus plan detracted from the value of every dollar already existing in the pre-stimulus economy (or will do so when released into the economy).
Does this sound confusing? It should, because it is, and that’s exactly how the federal government likes it.
While the federal government would tell us that they protect the poor from the exploitation of the rich, economics would tell us that it is in fact the federal government itself that is the greatest exploiter of our nation’s impoverished, and it is this institution that in fact facilitates much of the disparity in wealth between wealthy national corporations and impoverished local communities.
Those of the small government mindset who wish to rally more people to their cause should not go about proclaiming that we should be immediately getting rid of affirmative action and welfare for the poor, but instead should be putting forth a rallying cry against corporate welfare, an inflation-minded Federal Reserve System, and a law enforcement system whose economic penalties weigh heaviest on those with the least money in their savings accounts. It does not have to be out of selfishness that we advocate for a reduction of the federal nanny-state. It can, and should, instead be out of a concern for the poverty and destruction of wealth that is directly generated by this institution’s misguided policies.
Is this a need for change that will become unstoppable for the Catholic Church?
St Peters
I approach this subject with some hesitation. It’s a free world, and how people choose to organise themselves is basically their affair; freedom of association and all that. However, all freedoms are both a personal matter and an absolute right as long as they do not impinge on the rights and freedoms of others. So, in for a penny ……
The Catholic Church’s insistence on celibacy for their priests’ is obviously absurd. It is all very well in theory – “they can then concentrate on serving God” – if you (somewhat bizarrely in my opinion) choose to make that argument. The problem is that Man is NOT a theoretical animal. Sexual abstinence is alien to most models of Homo Sapiens that roll off the production line. It may be the preferred CHOICE that works for some, or even many, but forcing it on priests just DOES NOT WORK.
In recent years, there have been endless scandals in the Catholic Church about the abuse of children by priests, to the point where their policy in fact makes a total mockery of the vast edifice and bureaucracy that their Church is.
There was (or rather is) the dreadful case of the abuse in Ireland going on for decades and involving the most appalling abuse covered up at the highest levels. Now there is an on-going crisis in Germany, with churches and priests all over the country suspected of child-abuse. There are plenty of other examples we know about, and no doubt many we don’t.
And the word “cover-up” is deadly, of course. As soon as an organism evolves – and I find an amoeba, the Church, a company, a political party all alike in this respect – its first instinct is to survive and multiply. And so we have today the grisly spectacle of a Bishop apologising for covering up a priest’s paedophilia. The (usually wrongly) perceived needs of the organism almost ALWAYS take precedence over the law, humanity and decency. Rather than deal effectively and openly (and THAT is what this Blog is all about) with a real problem, the Church very often sweeps the problem under the carpet in the hope that it will go away.
Safe, or in harm's way?
Only of course (like the toxic effects of sub-prime insanity) a serious problem does NOT usually self-heal. Would the Bishop try out this policy with a toothache? I doubt it; he’s know it would only get worse and whack him in the midriff at some stage. So WHY do they do it with abuse cases in their own Church?
No, as long as you have this absurd dogma in the Catholic Church, you will have abuse. And the point is, as soon as you get abuse, it concerns us ALL. We then DO have a right to stick our nose into the Catholic Church’s affairs, or so I maintain. No man is an island ……
Unfortunately, the larger the institution and especially where it concerns beliefs, creeds or whatever (and companies are often similar) the more difficult it is to give up a long-held shibboleth even in the face of the most overwhelming evidence that it is time to “move on”.
If the Pope thinks that all this is helping his particular organism to survive, he is – I believe – sorely mistaken. Celibacy is unnatural – period. Man is HUMAN (sorry to state the obvious). Sex is an integral part of humanity (for the vast majority). But all that is theory and opinion; the point is, the policy JUST DOES NOT WORK, thus leading to multiple and repeated cases of abuse. There may be hand-wrenching, apologies, investigations and promises to put the house in order, but as long as the Pope insists on celibacy, there will be abuse.
And what for? It is all so POINTLESS! Is the Catholic Church maintaining that , for example, the Church of England (CofE) is in some way heretical? If marriage for priests works OK for the CofE, then why not for Catholics? In reality, this dogmatism is only the dead-weight of centuries of tradition, but we should cast off dead weights in the interests of innocent children – and of course (they are human, too) of priests themselves.
Though not a believer, I also sometimes wonder what God would think. In fact, trying to empathize with God is one of my favourite pastimes. Looking down on all this, wouldn’t he be inclined to think the Catholic Church is barmy? How could he POSSIBLY (if he is the God I think he must be) want his humanly-frail priests to be celibate if it means (AS IT DOES) the regular and repeated abuse of children?
Very early on in the life of this Blog, indeed on the second day, I wrote a short article about the NASA mission to the moon, some 40 years after the event. You see, for me that has been the historic event of my lifetime.
I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth. No single space project in this period will be more impressive to mankind, or more important in the long-range exploration of space; and none will be so difficult or expensive to accomplish.
Apollo 11 badge
That speech before Congress by President Kennedy was on the 25th May, 1961. I was 16 and was enthralled by the idea of being alive when man first set foot on another planetary body. That came about on July 20th, 1969 at which time I was living and working in Sydney, Australia. I took three days off work, rented a TV and watched every minute of the event.
Exploration is a core need of man. By pushing out the boundaries of our knowledge we continue to offer hope to mankind.
So it is with great disappointment that it has been announced by President Obama that the manned mission programs to the moon are to be severely curtailed – that sounds terribly like political speak for cancelled!
As Eugene Cernan (last astronaut to set foot on the moon) said:
I’m quite disappointed that I’m still the last man on the Moon. I thought we’d have gone back long before now.
I think America has a responsibility to maintain its leadership in technology and its moral leadership… to seek knowledge. Curiosity’s the essence of human existence.
Curiosity is indeed the essence of human existence.
That curiosity and the investment in space exploration by NASA on behalf of the whole world has shown us some remarkable findings about Saturn and it’s majestic rings. Just watch the video segments in this piece from the BBC.
The one-time cost of Cassini-Huygens mission was $3.26 billion. Just 0.3% of the cost of one year’s expenditure on U.S. defense spending.
Science missions like Cassini enhance cooperation between nations, and greatly contribute to scientific progress which benefits everyone.
Perhaps the big Banks would like to pick up the cost of further manned missions to the Moon?
When I was a very young boy at Grammar School (aka High School) in Wembley, North West London, one of the subjects taught was wood-working. I loved the feel of wood, still do, and the smell of a wood shaving fresh off the wood plane is still remembered. But, for whatever reason, wood and I never got on.
Later on, my first yacht was a pretty little East Coast gaff cutter, built in 1898, with a hull of pitch pine laid on grown oak frames. Her original name was Mimms but this had been changed to Esterel by the time she was purchased by me. Despite needing a lot of remedial work, the over-riding memory was how the hull ‘spoke’ when she was being sailed.
It’s almost as though wood doesn’t die when the tree is felled, it just passes into another phase depending on the use made of it.
So where’s this all leading?
Alan Peters who died October 11th, 2009
In the issue of The Economist dated November 7th, 2009, there was an obituary about Alan Peters, furniture maker, who died on October 11th, 2009, aged 76. Like all obits. that appear in The Economist this was well published but something about this particular obituary really stuck in my mind. I tore out the page so it could be re-read over the coming weeks.
It’s still on my desk even 6 months later and it prompted me to write about Alan Peters on Learning from Dogs.
In contrast to many of today’s school-leavers, who look for instant success and celebrity, the furniture designer Alan Peters served seven years’ apprenticeship in the workshop of Edward Barnsley, which then operated without power tools. When interviewed last year Peters was still proud that he swept the workshop floor quicker and better than anyone else. His eagerness to share his passion and knowledge of furniture design and furniture making was a theme of his life.
And here’s another reflection from David Savage who studied under Alan Peters:
Damn, Damn, Damn, I am getting fed up writing obituries on dead furniture makers. Why can’t they just go on for ever.
I knew Alan quite well. He was a role model and a mentor when I really needed one. This would be way back in the late 1970s when there were very few people making modern furniture in a barn in Devon which is what I wanted to do. Even fewer making a living doing it. I had all the questions and Alan as far as I could see had all the answers. I spent a short time working with him. I was first in the workshop in the morning and last out in the evening. I’m sure he got fed up with my questions but he patiently answered. He gave and gave and gave. When I was set up he helped me get into the Devon Guild of Craftsmen and much later he would come to my workshop in Bideford to give Saturday seminars showing slides of his work and trips to Japan and Korea. He was an inspiration I know not just to me but to a generation of makers. I miss him.
Question: How many furniture makers does it take to change a light bulb?
Answer: Ten, one to change the bulb and nine to discuss at length how Alan would do it.
A relaxing contrast to high profile events in the UK
During March I was working in the UAE, and there in the hotel where I was staying in Sharjah were the Pakistan cricket first team, and the English Lions representing England and Wales.
Pakistani cricket team
The weather was lovely with temperatures in the mid 70`s during the day. It was interesting to watch the players of each team, relaxing, but really using this time to prepare for the season, running round the lagoon, and getting fit. There were no raised voices, or bad behaviour, in fact quite the opposite, and each team came into the eating area well dressed, quietly enjoying the week.
There were several matches starting in Sharjah at the old cricket ground. No posters, no large crowds, just a few people like myself who had heard about the games and who had wandered along to find a bench and sit and watch a 20/20 match without the big coverage and hullabaloo which will come later in the year.
One lovely six went flying over the stands and later a young boy came proudly back with the ball which he had found the other side of a main road, stuck in the sand.
The teams later moved on to Abu Dhabi some 70 miles along the coast to play in the new stadium and ground. This, like the new world-class Formula 1 racing circuit is brand new, and full of bright lights and modern style.
Venus Williams
Dubai in between Sharjah and Abu Dhabi likes to host sport during this time of the year, and just as with the cricket, tennis has a big following, with all the big names appearing in the small stadium near the airport in Dubai.
One evening I was watching Venus Williams play, and in the quiet of the late evening, and the general quiet of the match it was interesting to hear the chanting from the minaret as prayer time came.
If you want a winter break, and enjoy cricket motor racing, tennis, or golf you could do worse than stop off in the UAE to relax and enjoy your time.
Learning from Dogs 