Monday, August 31, 2009

Matthew Fox Knows What Really Matters in Life

Matthew Fox, well known for his role in the TV series "Lost" and also an economist with a degree from Columbia University, shows us what dignity and professionalism are all about in this Details Magazine interview:

"My major motivation is to be closer to family," he explains. ...

[Interviewer:] Well, let's grant him this: In the air, you don't have people asking you questions you don't want to answer. Asking for your opinion about things you'd rather not discuss. Expecting you to be a spokesperson for a political cause because you've graced the cover of Turkish Cosmopolitan. You may have noticed that Matthew Fox does not lend his name to causes, alliances, or efforts of any kind. While we are perched on the pickup's tailgate, it just so happens that Ben Affleck has returned to the Congo, to do what he, as an actor, can to save the world. A few months earlier, Clooney, who seems to have joined the State Department, visited Sudan. So why haven't we seen Matthew Fox—Ivy League grad, well-read and thoughtful guy—visiting any beleaguered nations, or speaking out about anything more controversial than the flame job on his 1950 Merc? This question brings him up short. He chooses his words carefully. "Up to this point I've made a conscious choice not to do that. To be quite honest with you, I'm a little reticent to step into that whole thing. This isn't knocking anybody. If they make a positive change, then that's great. I'm just not sure that I feel that I have . . . the right to . . . I don't know, man, I really kind of struggle with it.

"I'm an actor. I try to play a character in a really cool story, the very best I can. And somehow or other that does make people very interested in what I have to say. And I think that, being the stubborn bastard I am . . . the more people want to hear what it is I have to say, the more I kind of . . . not say anything.

"What I'm trying to say is I don't think that's my place. Sometimes people look to others for answers they can find within themselves. I don't really want the responsibility of being the guy they look to."

In other words: Matthew Fox understands that if you want to improve the world you should focus on your work and on the well being of your family and friends. He has the dignity to not allow himself to be a jester at the service of control freaks, and he knows what really matters in life. If only other celebrities could learn something from him.

Saturday, August 29, 2009

7th Art: Gran Torino (2008)

I consider Clint Eastwood to be among the greatest American movie icons of all times. "Gran Torino" (2008), his latest movie gem, shows us once more how the best cinema can be masterfully crafted without big stars, bucks and bangs. All that you need is a straight and thoughtful story, possibly based on universal values and narrative principles known at least since the ancient Greek, good acting, and sensible use of resources, and voilà, the magic lantern is on. And yes, Eastwood knows the magic.

Politically, Clint Eastwood is a giant in the midst of a horde of Hollywood dwarfs. A man that is by himself a symbol of the greatest values and ideas that make up America's most important gift to humanity. "Gran Torino" shows it in many levels. His treatment of the question of prejudice is magnificent. As a versed libertarian, he knows that being human means being imperfect and prejudiced, but also being innately capable of redemption and of finding sympathy in apparent dissimilarity. The movie also gracefully shows how bigotry at the individual level is by far much less dangerous than the social evils that will always arise from institutionalized privileges created by the coercive powers of the state, independently of their good or bad intentions.

If you haven't yet watched this marvellous movie, make sure that you do it. Enjoy the trailer.

Friday, August 28, 2009

Guilt, Shame and Atonement

Here's an intersting NYT article on the effects of guilt and shame on character development (HT Game Theorist). To summarize:

“The key element is the difference between shame and guilt,” Dr. Tangney says. Shame, the feeling that you’re a bad person because of bad behavior, has repeatedly been found to be unhealthy, she says, whereas guilty feelings focused on the behavior itself can be productive. But it’s not enough, Dr. Tangney says, for parents just to follow the old admonition to criticize the sin, not the sinner. “Most young children,” Dr. Tangney said, “really don’t hear the distinction between ‘Johnny, you did a bad thing’ versus ‘Johnny, you’re a bad boy.’ They hear ‘bad kid.’ I think a more active, directive approach is needed.”

She recommends focusing not just on the bad deed, but more important, on how to make amends. “Both children and adults can be surprisingly clueless about whether and how to make things right,” Dr. Tangney said. “Little kids are overwhelmed by the spilled mess of milk on the floor. Parents can teach and support them to say ‘I’m sorry’ and to clean it up, maybe leaving the kitchen a little cleaner than it was before.”

Thursday, August 27, 2009

Heading to a $14 Trillion 10-Year Deficit?

EconomistMom thinks this is the most plausible scenario (HT Mankiw). According to Concord Coalition's Bob Bixby:
The routine budget process has produced an unsustainable outlook. It is unrealistic to think that this will change without some mechanism to compel consideration of the hard choices that have been ducked in the past. Regardless of the outcome of this year’s health care reform debate, there will be a need to address other contributors to the structural deficit such as Social Security growth and inadequate revenues.
Forget about other so-called "global crises." This is the real McCoy in the making. No millenarianism or speculation, just heightened and transparent government fiscal irresponsibility that started with the previous administration and has become much worse with the current one.

Wednesday, August 26, 2009

Government Failure: Wasted Cash for Wasted "Clunkers"

This article in the magazine The Economist explains how the current administration's beloved "Cash for Clunkers" or CARS program (now gone, RIP) was nothing more than a perfect example of government failure.

The article makes lots of good points against the program, but there is more. It also redistributed resources and jobs away from not-so-rich folks (for example, repair shop workers and owners that would have fixed those scrapped vehicles along the years) towards the coffers of very large companies. It made cars less accessible to poor people. It confiscated taxpayers' money and used it to destroy productive capital in the form of useful vehicles, an example of the broken window fallacy. The program indirectly imposed a tax on people that have chosen to buy high-mileage cars or to use public transportation to subsidize people that have chosen to buy gas-guzzlers. It was a totally inept and unfair program, and yet, despite ample public criticism by lots of people that know it better, nothing stopped our elected officials from happily proceeding with it.

The absurdity of this program can be better understood this way: had the government set up a voluntary contribution fund to buy and destroy working vehicles, and had you wished to make a donation to a cause, would you have ever contributed to this fund? I for sure would have never contributed even one penny to it. I can easily think of an unending number of alternative uses for my money that would have made infinitely more sense than this.

By the way, now that our elected officials got ourselves deep into policy foolhardy mode, maybe we should ask the government to assume the role of circus impresario and start promoting demolition derbies across the country.

Anyway, let the video below serve a postmortem homage to all working automobiles and trucks that were victimized by economic insanity (HT Division of Labour).

Tuesday, August 25, 2009

NOVA: Hunting the Hidden Dimension

PBS NOVA rebroadcasted last week a pretty interesting episode on fractal math, showing how it developed and its effects on the sciences and the arts. You can watch the online episode here. Here's a trailer:

Monday, August 24, 2009

Government Failure: Special Phone Rates for Stutterers in Brazil

Another case of Brazilian taxpayer's money wasted by an elected megalomaniac (HT Libertarianismo, translation is mine and, believe me, it's not a joke):
Congressman Diogo Tita, from Mato Grosso do Sul, brings good news: he presented a bill proposing cheaper telephone rates for stutterers. A stutterer needs more time to speak at the phone.

Sunday, August 23, 2009

7th Art: Children of Men (2006)

What would happen if humanity would suddenly become unable to reproduce? This is a question that graduate students of economics are sometimes asked in exams. The answers can be startling to some. Among them, money would probably lose most if not all of its value very fast (hyperinflation). Savings would collapse in value. Aggregate investment would dwindle and as a result economies would fall, bringing down political systems with them. Intense and fast predation would possibly and suddenly become the name of the game. And we can only wonder about the religious and ideological consequences of such a scenario.

"Children of Men" (2006) tries to tackle the question, and in general does a pretty good job. Credibility however suffers from British home bias. It's hard to believe that the UK would have remained in "relatively good" shape so many years after infertility had set in, and the idea implicit in the story that the US would become some kind of violent and chaotic no man's land, apparently due to access to guns and military equipment, is inconsistent with history and pretty naive. On the other hand, Mexican-born director Alfonso Cuarón does an excellent job making the UK look like a third world country.

It appeared to me that the movie also suggests that some "remedievalization" of the UK takes place through nobility, what would have helped the UK to remain as some kind of semi-fascist, semi-feudal state. I doubt however that feudal and fascist institutions would prosper without "heirs to the throne."

Despite my skepticism regarding some of its assumptions, I must say that it's an interesting and well-done film. Watch it however only if you have a taste for futuristic dystopias involving government distribution of free suicide kits and mandatory fertility exams... Here's the trailer:

Saturday, August 22, 2009

Al Gore's Manbearpig According to South Park

A classic, always good to see it again, now more hilarious than ever...

And there is more!

Friday, August 21, 2009

Economic Lessons from Switzerland

Great economic lessons by University of Basel's Professor Silvio Borner in this Swiss Review interview. I transcribe a few passages:

Is anyone to blame for the crisis?

Economists are not moralists. I don’t want to point the finger at excessive greed or swindlers or claim that the regulators failed. That doesn’t tell the whole story. There have been and always will be financial crises. The entire financial market had simply become so big and complicated with different investment products that those responsible could no longer see the bigger picture. The financial crisis then became a banking crisis and that is the biggest problem now. If it had just been a matter of a lack of liquidity, the central banks could have solved the problem. But the banks took a hit to their assets. They had no money left and had to be recapitalised. In this case, there is also a shortage of private investors. This is why some banks went under and others had to be rescued by the government.

What do you think of government programmes to stimulate the economy?

I doubt whether they help much. By the time they have been finalised, it’s often too late. Unfortunately. And what they are actually used for is a key point. If they are invested in long-term infrastructure, that’s okay. However, economic programmes are a dream come true for powerful interest groups. They can finally get their pet projects, which have previously been rejected as uneconomical, financed or at least subsidised by the state. I don’t believe in investing in social or ecological romanticism.

State intervention primarily aims to save jobs. Isn’t that a strong argument for it?

No, otherwise we should have saved the stagecoach as well. The American stock exchange was founded in 1896. Of the founding companies, only General Electric still exists. Big companies will always disappear, like the airlines Pan American and Transworld Airlines. And not just in the USA. The Austrian economist Joseph Schumpeter saw “creative destruction” as an opportunity. And Basel’s modern-day chemical multinationals emerged from the city’s silk-ribbon industry.

Why then does the financial sector deserve special treatment?

The collapse of the financial sector poses a threat to the system, which means the entire economy runs the risk of collapsing. But structural development mistakes are also made in the financial sector, as the UBS example shows. There is much to suggest that there should be a scaling-down process across the board. Care must be taken to ensure government fire-fighting measures do not hold back necessary restructuring in the medium term. With the benefit of hindsight, you have to ask whether UBS should have been scaled down immediately and whether it would have been better to sell off the investment business. But in the middle of the crisis that was no longer possible.

Guy Sorman on Rose Friedman

Guy Sorman pays homage to Rose Friedman in this in memoriam. To summarize:
The Friedmans’ happiness thesis also incorporates their personal experience. Having lived long enough, they could compare various stages of American social life. They found that when the government encroached less on people’s lives, the country was safer. Americans behaved more responsibly and took more individual initiative. Rose and Milton were not waxing nostalgic: they were, above all, freedom fighters, dedicated to a better future for everyone.

Thursday, August 20, 2009

Won't Get Fooled Again

Another dose of intellectual vaccination for the Obama generation: The Who's "Won't Get Fooled Again." Sounds right to me:

I'll move myself and my family aside
If we happen to be left half alive
I'll get all my papers and smile at the sky
For I know that the hypnotized never lie
Do ya?


There's nothing in the streets
Looks any different to me
And the slogans are replaced, by-the-bye
And the parting on the left
Is now parting on the right
And the beards have all grown longer overnight

I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday
Then I'll get on my knees and pray
We don't get fooled again
Don't get fooled again
No, no!


Meet the new boss
Same as the old boss

Enjoy the video!

Wednesday, August 19, 2009

Freedom Heroes: Rose Friedman

Rose Friedman, spouse and professional partner of Milton Friedman, and coauthor of the influential book and TV series "Free to Choose," died yesterday (HT

"Free to Choose" changed my way to understand the world and to relate with it. It also motivated me to become an economist. Thanks Rose for helping me to become a wiser and saner person, and also for making the world a better place to be in.

Sunday, August 16, 2009

You Don't Need a Weather Man

More intellectual vaccination for the Obama generation. This time it's a segment from Bob Dylan's great song "Subterranean Homesick Blues" (more about it here). Here it is:
I'm on the pavement
Thinking about the government
The man in the trench coat
Badge out, laid off
Says he's got a bad cough
Wants to get it paid off
Look out kid
It's somethin' you did
You don't need a weather man
To know which way the wind blows
Enjoy the video!

Saturday, August 15, 2009

I Will Choose Free Will

Intellectual vaccination for the Obama generation: an extract from Rush's powerful song "Freewill":

You can choose a ready guide
In some celestial voice
If you choose not to decide
You still have made a choice

You can choose from phantom fears
And kindness that can kill
I will choose a path that's clear
I will choose free will

Enjoy the video!

Friday, August 14, 2009

My Investment Losses Have Nominally Zeroed Out

As of today, for the first time since the beginning of the crisis, my financial portfolio has recovered all dollars invested, in other words, my investment losses have nominally zeroed out. There's yet some way to go until the returns get back to decent historical yearly yields, but this is good news anyway.

The two segments of society that I don't thank for the recovery of my nominal losses are the political system and the media. Most people in these two segments get an F when it comes to devising rational and efficient policy responses and providing me with balanced and sensible information. I bet that, when people will look back at this episode some years from now, what they'll see will look like a swine flu scare elevated to the power of one million.

What worries me now however is what will be the result of all the awkward and politically opportunistic economic policies adopted by governments around the world. As summarized by Rogoff (HT Mankiw):

Within a few years, western governments will have to sharply raise taxes, inflate, partially default, or some combination of all three.

To have predicted when the financial crisis would have happened was task for a demigod. To predict that fiscal irresponsibility and cartoonish Keynesianism will wreck the economy, this one is as easy as taking candy from a baby. Don't believe me? Just read any good monetary economics textbook, for example this one.

Thursday, August 13, 2009

Government Failure: Credit Card Regulation that Makes Our Lives Worse Off

Economist Bob McTeer once explained in this post how misguided credit card regulation implemented by the current administration would lead to unintended consequences and make the lives of responsible credit card users worse off. In his words:
higher bank costs in one part of their business will likely be recovered in another part of their business. "Good behavior" is once again likely to be punished for the "bad behavior" of others...
Well, I just received a letter confirming this prediction. According to one of my credit card administrators, "the credit card industry is facing unprecedented market conditions" and, as a result, "we are increasing your variable APR for regular purchases." I bet other administrators will follow soon. I also know someone that always pays her credit card bills in full and yet cannot increase her credit limits due to the same "unprecedented market conditions."

Personally, I don't care much about the rate hikes, since I always pay my credit card bills in full. Yet the new regulation clearly made my life worse off. It'll become a bit more personal however when credit card administrators decide to impose fees or reduce benefits to recover revenue losses due to inept regulation.

Wednesday, August 12, 2009

Government Failure: If Coke Can, Why Can't the USPS?

Here is a great post by University of Michigan-Flint professor Mark Perry that serves as an example of what will happen to this country as we allow more and more political and government micromanagement of its economy. It has a picture that shows two fully operational vending machines near a deactivated USPS stamp machine in a Post Office (see it below). Perry makes the point:

The stamp vending machine at the downtown Flint Post Office no longer sells stamps, it sits there empty. Right next to the dark, empty vending machine for stamps sit two fully operational, bright and shiny vending machines, one for soft drinks and one for snacks, presumably owned and operated by a private, for-profit vending machine company (see photo above).

Old machines, breakdowns, and replacement parts apparently are not overwhelming problems for a for-profit vending machine company, so couldn't the Post Office outsource its stamp vending machines to the private company that is providing soft drinks and snacks in the Post Office lobby?

Monday, August 10, 2009

It's Good to Be a Dog in the UK

At least they have choice, as reported in the WSJ (HT Mankiw):

In the last few years, I have had the opportunity to compare the human and veterinary health services of Great Britain, and on the whole it is better to be a dog.

As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs—or hamsters—come first. ...

Of course, from the point of view of social justice as equality, it wouldn’t really matter whether the treatment meted out to dogs was good or bad, so long as it was equal. And, oddly enough, one of the things about the British National Health Service for human beings that has persuaded the British over its 60 years of existence that it is socially just is the difficulty and unpleasantness it throws in the way of patients, rich and poor alike: for equality has the connotation not only of justice, but of hardship and suffering. And, as everyone knows, it is easier to spread hardship equally than to disseminate blessings equally.

Wednesday, August 5, 2009

Endless Corruption in Brazil

Seven years of socialist government in Brazil and corruption has only got worse. Here's the latest The Economist article on the subject. Not surprising anyway.