Trust and the Level Playing Field: Local Newspapers

Posting is light due to work and weather.

Hit the title above, or this link, to be taken to an article I think you should read.

Carrots, Bikes and Gresham's Law

There are fundamentals in economics. As the current financial problem continues to point out. But maybe, not in ways that are apparent.

It is hard to see what effect the massive infusion of federal funds into markets is having. With one exception; you can see market effects by examining clearly defined markets, markets like the New York Stock Exchange, the Chicago Merc, and the NASDAQ.

One of my biggest concerns about our President has been his willingness, almost in terms of preference, to market intrusions by the federal government. Rather than reform government, we have seen major increases in the role government plays in our daily lives. Had the President remained dedicated to his attempt to reform Social Security, he may not have had a loving Congress, but here we are today and Congress still doesn't love him.

Governments, especially our federal government, have incredible powers. But this recent round of intrusions by the government--through actions by the Federal Reserve Bank and Treasury--are rocking the markets we defined above.

It has always been my opinion that there are two types of people, those smarter than me and everybody else. And there are a lot of smart people who work the markets in New York and Chicago. And they are very aware of how difficult it is to value money when so much of it is coming into the market.

Consider carrots. If there were only ten carrots and millions of people who desired carrots, we would tend to see that the price or value of the carrot would be higher than if no one desired carrots.

So, too, with cash. Everybody wants cash. And the government is handing it out by the truckload, no, by the carload. Investment into financials? Another 700-billion? Another 300-billion? How much more tomorrow?

It's hard to guage how much the money you're holding is worth when you compare it to the value of money being put into the market through federal action. It creates pressures to continually short the values of stocks, in financials, but not only in financials. What does this cash shock mean in terms of valuing equities? With every intrusion by the federal agencies, the result has been to re-value all equities, and not just the financials.

In a market where there are no losers, what is the value of a thing? Remember Gresham's Law? Why would I put my money into a market when the federal government has signalled its willingness to put its money into the market? How can we begin to establish good pricing signals while the government infuses billions upon billions of dollars into markets?

I am not a non-interventionist. But its going to take a guy like Kudlow to explain to me why this unparalled intrusion by the government into markets, and the guarantee that there will be no losers, is good for rational markets. I can't see it. And if you've checked the Dow Industrials Average, you'll see that I'm not alone.

We must allow for failure. And, my top two picks are Fannie Mae and Freddie Mac. Sell the assets. Take the hit. Let markets adjust.

End the federal intervention.

Vote Early and Often: The Oregon Senate

I had originally titled this piece "The International Lifestyle of the Rich and Famous." Well, not so much international. If you think I would deliberately mis-lead you, it wasn't so much that you won't be mislead; it seems the whole purpose of elections is to present a kind of magic show, full of misdirection. Get used to it. More in the Second Half, as sports announcers say.

Half the Senate and all of the House has to face election this year. In Oregon, Senators are elected to four-year terms...State Representatives to two.

The State Senate is pretty easy. There are thirty senate districts. There are two representative districts in each senate district. This used to make some kinda sense back before gerrymandering completely destroyed common sense in districts. If you've ever wondered what a "non-gerrymandered" state looked like, I offer you Kansas.

Kansas leads the United States in rectangularity. And they are proud of it.

Yannow, Oregon is a pretty rectangular state. So how do you explain this?If you really want to be thrilled, click on the pic and be taken to Secretary of State Bill "One of Fifty" Bradbury's place. There you can find your particular House or Senate District, and ask yourself why normal borders, like counties and communities, are forgotten, nay, ignored, in our current districting plan.

The reason? Democrats controlled the last gerrymandering. And with the courts--that is, the Oregon Supreme Court--firmly in the hand of Democrats, the ordinary guy has no shot at a fair deal.

So, given that if you're a rural guy, a "Blue" Democrat or a Republican, chances are that your vote is being swarmed by metro areas within your district, to dilute your concerns with those of metro folks.


So, without any further ado, let us get into who should win, and who should lose. Starting with Senate District #1.


Winner in District #1 is incumbent Jeff Kruse. Roseburg guy. Okay guy.


Winner in District #2 is incumbent Jason Atkinson. Grants Pass guy. Okay guy.


Winner in District #5 is Joanne Verger. Looks like what you'd want your Gramma to look like. Take a look at her votes. She's not as dangerous as most Democrats. She wants to fix things. Mebbe it's time we re-elected someone who wants Oregon to go to work. Huh? Yep. Work.


Winner in District #9 is Fred Girod. Fred has one of those districts that defy description, and yet he's done a great job of holding onto the fundamentals of what makes Oregon great. You and me working, and taking care of our families.


Winner in District #12 is Brian Boquist. Brian is going to take over the district previously represented by Republican Gary George.


Winner in District #14 is Lisa Michaels. She went to Kansas. Rock. Chalk. Jayhawk. 'Nuff said. And she's a fit for the Sunset District. (Note to Lisa: you may want to change the front page of your website. Look, I wanna get rid of David Wu, too. But you're running against Mark Hass. Mark is a dick, too. Wu is a dick. I wanna get rid of all dicks. But you're not running against Wu. Lose the front page thingy, okay?)


Winner in District #18 is John Wight. Right in the heart of what used to be Phil Lang's district, no? Another former Kansan. While the D's keep finding former New Jersey mobsters to run, somehow the Republican party has tapped into the native intelligence of Jayhawkism. (Unless, of course we find out that Mr. Wight went to KSU. Then we gotta fight.) The incumbent? Can you say Karl Marx?


Winner in District #21? There are no winners in District #21. The incumbent is an environmental lawyer. Running unopposed. We lose. The entire state.


Winner in District #22? Again, no winners. Only losers.


Winner in District #23? No winners. As long as Oregonians are viewed as needing rehabilitation instead of opportunity, we're just going to continue to throw resources down the drain. Standing up means standing up.


Winner in District #25? Laurie Monnes Anderson. Or, Ron Sunseri. See? It's a win-win. Senator Anderson's claim to fame, though, is what she attempted last session. She voted for the annual audit of state funds. Actually, keeping Anderson is a good idea.


Winner in District #27? Chris Telfer. She's smart, she's hot. Yeah, I said it. I'm older. She's hot.


Winner in District #28? Doug Whitsett. Incumbent. Deserves re-election.


Winner in District #29? Dave Nelson. Incumbent. Deserves re-election.


Winner in District #3o. Ditto. Incumbent. Works for you. Deserves re-election.


Vote for these guys, and Oregon will get better. It's time for us to take back our state. If we don't do it now, when will we get around to it?

Oh, and the latest economic news? Oregon faces a shortfall in funding that is currently estimated at more that two billion dollars. The Unigovernor, Ted Kozingoski has announced his goals for the next legislature. They are:

"* Education, from pre-school to graduate school;

* Economic stimulus in the form of green and sustainable transportation systems;

* Making Oregon a world leader in renewable energy and the use of electric cars; and

* Health care, “especially for every Oregon child up to age 19.”

Fundamentals, like roads, law enforcement, not so important. Opening up our forests? Nope. Working for our fishermen? Nope. Making Oregon a world leader in "renewable" energy? Yep. Wasting money on "stimulating" green and other stuff. Yep. Reforming our public schools? Nope.

Fundamentals. We won't get back to fundamentals, even in an economic crisis, without adults in Salem. Men and women who have had to write a paycheck. Who have worked in jobs where people made--and lost--money.

Astoria Vandalism: FBI and Terrorism

From RoguePundit.

"your laws will have no meaning past the setting of the sun."- -VSE

Hey...take a look at what you're neighbors are doing.

It's Direct Action. It's "Change!"

Some may think I accuse the Left of having no decency. That's not true. It's just not a quality that is expressed often.

Vote Early and Vote Often

(Do me a favour and click on the pic...open a new window, and place it into the background while you read this post. It's a little catchy tune to listen to while you read my "Vision" for the future. We all love Visions, don't we? Oh, and I owe this little ditty to my fellow blogster, Max.)

If you live in Oregon, chances are you've received your November General Election Ballot.

Time for some review.

If you live outside of Oregon, here's two reasons to never adopt a "vote-by-mail" election. One is, as that we all receive our ballots before the rest of the nation, no candidate will ever search for our votes. How do you build a campaign when the worst of us never wait for the campaign to build?

Second, because we "vote" by mail, there is no sense of ritual that attends the rest of the nation as they approach their vote. Getcher ballot, mark it, senselessly, and mail 'er in. There. Democracy.

If you've ever wondered why we vote like we're the dumbest people in America, it's because we vote like we're the dumbest people in America! We don't need to percolate our thoughts. We're Oregonians! We do things differently here.

If you haven't dealt with your ballot yet--like it's a past due J.C. Penney's bill--then I'd ask you to take some time to look at your ballot with me. Let's go over it together.

First, the "National" ballot:

Sure, you could vote for Cynthia McKinney, but I'd recommend that if you view Ms. McKinney as your number one choice, you vote instead for Barack Obama. They're both Socialists, although one is running as the Democrat candidate. And really, if you're a Green, you're voting for the Father of Green, Ralph Nader.

If you have any sense of self-worth, you're going to vote for John McCain. I know there are those of you who think you should vote for Bob Barr--sort of a "statement" vote--but you're smart enough to know that a vote for Bob Barr is a vote for Ralph Nader. And you don't want to do that, do you?

Then there's the Senatorial campaign. I would have, until today, given you advice to vote for Jeff Merkley. That is, until I saw this. Then I realized that Merkley really is a dick, and only a dick would try to foist off this kinda advertising as "truthful". Folks who deliberately mis-represent are dicks. Jeff Merkley is a dick.

Next up? Congressman for the 1st District. See, I live in Northwest Oregon. The balance of my state recommendations will follow my local recommendations. Think Globally, Act Locally.

David Wu is a waste of good air. A recipient of Freddie Mac and Fannie Mae lobbying dollars, Congressman Wu is a good reason to vote for Goli Ameri. Only Goli isn't running again. Sure, David beat the rape charge, but more importantly, he has been silent on issues that would help Oregon lead in economic development. But I guess looking for a Democrat to lead anything in economic development is kinda an oxymoran. Let's just deal with Dave as a moron. Anyone but Congressman Wu. My fav is H. Joe Tabor. No chance of winning, but WTF, eh?

Secretary of State is a lot easier.

I remember a time past when my calls to the Secretary of State's office were responded to with a certain competence and alacrity. The Secretary of State enforced Oregon's election laws. Since whatzhisname has been Secretary of State, we've ignored the law. But, what do you expect from guys who adore AlGore?

So, vote for Rick Dancer. Not the brightest bulb in your drawer. But honest. It will be a nice change.

State Treasurer.

Probably the most important post in Oregon during the next four years. Really. Just hit this link for our current state treasurer. If elected officials were guys you could sue, you'd be hearing "Ka-Ching" during the next four years. Our current state treasurer has been dealing in deriviatives, and lost billions of dollars in state funds through his investments. But we can't sue him. But we can elect an honest, fair dealer. That would wake up our Governor.

Commissioner of Labour, Supreme Court Justices? Who cares? Brad Avakian is one of those guys pushing for a "new" Oregon constitution. I'm not sure he's a feller I'd vote for. And the Supremes are running unopposed.

Friday I'm heading up to Forest Grove for a meeting. The state's Forest Advisory Committee is meeting. So, I've got some work to do before showing up there.

Tomorrow why don't we look at individual house and senate races across the state. I know that it won't impact those of us who live in God's Country, but it will impact us.

Here's the info on Friday's meeting:

WHAT – Discussion of the Oregon Department of Forestry's development of management strategies for the Tillamook and Clatsop state forests to meet performance measure targets set by the Oregon Board of Forestry.

WHO – State Forests Advisory Committee, made up citizens, interest group representatives (timber, environmental and recreational groups). Committee membership is listed at: http://egov.oregon.gov/ODF/STATE_FORESTS/docs/SFAC_Roster.pdf

WHEN – 8:30 a.m. to 3 p.m. on Friday, Oct. 24

WHERE – Forest Grove Community Auditorium, 1915 Main St., Forest Grove. SFAC meetings are open to the public, and an opportunity for public comment is provided at 9:20 a.m. and 2:30 p.m.

WHY – A forum to discuss issues, opportunities and concerns, and offer advice and guidance to ODF on implementation of the forest management plan approved for northwest state forests in 2001. The plan calls for ODF to actively manage the state forestlands for economic, environmental and social benefits. A balanced approach is used to generate revenue for trust land counties that deeded lands to the state, while maintaining environmental and social values for the citizens of Oregon.

MORE INFO – Contact: Jeff Foreman, Oregon Department of Forestry, 503-945-7506

Carrots and Bicycles: Entry Into Markets

(Previ0us posts here, here, here and here.)
What is the price of a thing?

If you had carrots, what would it take to make your carrots my carrots?

Transaction is a word that we use to describe the process whereby you have a carrot and I end up with your carrot. That carrot was yours, it is now mine. A gift of carrots is a transaction. A purchase of carrots is a transaction. Theft is not a transaction. Theft, what lawyers refer to as larceny, occurs when property is taken against the will of the owner. Theft occurs even if the owner of property doesn’t know that theft has occurred.

Theft, or larceny, is an interesting topic and one well worth some time investigating. Let it suffice, for the purpose of our discussion, that we note that theft is not a transaction, but an illegal taking, the conversion of someone else’s property for our own use, without the consent of the owner.

Consent, too, is an interesting word. One of the key features of being an American is the legal standing that each individual has. You and I have grown up secure in our independence. Our freedom. We were the first nation on earth that was based upon the idea—or the ideal—that our government was based upon our consent. This was a huge break with the past, where citizens of a country were considered subjects of that country. This difference was so distinct that it was enumerated in the fundamental document of our national contract, our Constitution.

If you are going to take carrots to market, they are your carrots until you consent to transfer them to the control of someone else. Price is the word we use to capture the value of an item at a particular time. If you make a gift of carrots, you can describe the price of those carrots as zero. And a transaction has occurred.

What happens when you want five apples for a carrot?

If you don’t want to gift your carrots to me, can you be compelled to give me carrots?

No.

Even if I want to compel you to give me your carrots, I cannot.

This is the part that Leftists and Socialists don’t get. And yet history is replete with examples of the why and the how it doesn’t work. There is something about Leftists and Socialists that depends upon a type of thinking that separates them from the historical and economic lessons of the past.

When you compel a man to give the property he owns for any price less than what he wishes to sell, you’ve created a new class of existence within a society. When a man is compelled to work without the freedom of choosing his own economic outcomes, the system used is referred to as slavery. We know that compelling an outcome of property transfer without consent is theft. But theft is a legal description of an event. When laws are passed that require men to consent, can it legally be considered theft?

Well, yes and no. As a purely objective exercise, you cannot be free and be compelled at the same time. (Hold it! Above you said that “even if I want to compel you to give me your carrots, I cannot”. What’s up with that? Some of the class has it figured out already. But I’ll get back to this, since you ask!)

On a normative policy basis, your government can attempt to view it as “not theft”. This is because of what we refer to as the coercive power of the state. You are familiar with this. When we gave up the custom of carrying a weapon, we ceded the authority and control over crime and general lawlessness to the State. This was referred to in the West as our catching up with civilization. We went from being responsible for direct action against crime and criminals, to responsibility though proxy. This is because we accepted the fact that given comparative advantages, solving your own problems had a list of associated risks that were ameliorated by hiring a proxy to resolve your disputes. It was less likely that you’d kill an innocent man. It was less likely you would be killed by a faster draw.

So, essentially, the coercive power of the state is a simple statement that the government can use force to compel you. Whether it’s injury, imprisonment, or death, the power of the state is pretty broad, and pretty frightening.

And since legislatures pass laws that define what is legal and what is illegal, legislatures have almost unbridled powers to determine how that coercive power is to be employed.

This is important for you to think about when you ask yourself if you’re living in a Free Market economy, or whether you view yourself as living in a Command economy.

If we lived in a Free Market economy, how would we resolve the tension that exists between buyer and seller of carrots?

First, we notice a lack of compulsion. Second, we notice consent. So the quick answer to what resolves the tension between buyer and seller is the buyer’s willingness to pay whatever price the seller chooses. In a free market economy this could result in zero, one or all carrots being sold. When we started our examination of Carrots and Bicycles, one of the first things we noticed is that a lack of equilibrium in the market wasn’t a bad thing. Lack of equilibrium is simply a statement that describes a condition where either supply or demand of a thing—in our case, carrots—has left either sellers with unsold carrots or buyers with unpurchased carrots.

Another formal concept of free markets is referred to as entry, or in the converse barrier, to market.

What is the entry cost into the market for carrots? That is, what do you have to come up with to begin your life as a carrot producer? Let me introduce you to Joe.

Joe watched us attempt to buy and sell carrots and apples and had an idea. He looked at my apples and decided that he wanted some. You wanted five apples for a carrot. Joe talked to me and found out that I was willing to buy five carrots for an apple. And Joe said, “Yeah, I can do that.”

Joe had raised carrots in the past, but never enough for him to consider any of those carrots as being surplus to his needs. Always, in years past, had he planted one row of carrots in his garden. But now, looking at my demand for carrots, he felt it would be very easy to increase the amount of carrots he produced each year, and that that surplus was well worth it to him, in terms of apples that he would receive in the future.

Just in this past paragraph we have been introduced to several new terms used by economists. Surplus. Increase in production. Investment. Immediate gratification. Delayed gratification.

Let’s start with Joe’s surplus (actually, his lack of surplus.)

Joe annually grows a garden. In it he has two rows of corn, four rows of potatoes, two rows of green beans, one row with squash, pumpkins cucumbers and zucchini, as well as several other rows of the things you want to grow. I would think a row of tomatoes would be appropriate, but there are people who hate tomatoes and all they stand for. Each year he grows this amount of produce for his own use. Given the state of food preservation technology, this amount of produce can be stored through the year, and the nutritional benefit stored within these foodstuffs can be allocated for use until fresh fruits and vegetables reappear. Oh, and two rows of carrots.

Joe has never before had a surplus of carrots. He has never grown more than he has needed. How would we begin to describe what it takes for Joe to increase his production of carrots in order to create a surplus of carrots?

First, let’s look at the barriers to Joe increasing his carrot production. What does it take to grow vegetables? Soil and seed. What else? Tools. Sunlight. Water. (Have I told you the story about the economist stranded on a desert island? The reason I mention this, is that the punchline is, “Assume a can opener.”)

Assuming that the soil is of average quality, assuming that Joe has sufficient seed, water, etc., the only change that Joe needs to make is to increase his carrot production capacity by more than the previous two rows. Anything produced in excess of his previous harvest he can plan on as surplus to his needs. And off to market he will go for those sweet, sweet apples! So Joe needs to decide, do I add more land? Is there currently some produce that I plant in excess to my needs? Is there anything I can change in the way I go about planting my garden that will allow for greater productivity? Or, must Joe give up something that he has traditionally planted in order to increase his carrot production?

There are a lot of solutions available to Joe. Since we have already introduced the notion of ceteris paribus perhaps it’s time we make use of it. If we hold all other things equal—same number of beans, corn, etc.—what is it that Joe can do to increase the production of his garden patch? How about a change in technology?

Joe looks at his patch and determines that in past years he has planted all of his rows exactly 48 inches apart. If he has forty rows of vegetables, and plants his garden with a row-width of 46 inches, does Joe create enough new planting space to add a new row, or rows, or carrots? Well, yes, he does!

Given the same amount of land under production, all Joe has to do is decrease his row-width to 46 inches and he is able to produce another row of goods (carrots). This increase in carrot production is referred to as the “marginal” increase in production. That is to say, that given the amount of carrots previously produced, the increase in total carrot production is increased by some amount. And that “some amount” is referred to as the increase in the marginal supply of carrots. And since Joe didn’t need to increase his land-holdings, but was simply able to take advantage in the way he planted, this exogenous variable—the shift in planting technology—was able to provide him the capacity of increasing his output with a very small increase in cost. He is able to increase his productivity by simply digging another row and investing another row’s worth of carrot seed. (The additional labour required to dig a 41st row, and the additional seed he needed to plant is also referred to as a “marginal” increase in production cost.) Since Joe works cheap, and carrot seed is cheap, Joe is looking forward to lots of apples as a result of his labour and investment.

Before we leave Joe to his work, let’s take a moment and think about his decision to grow more carrots.

Who decided to grow more carrots? Not you. Not me. It was Joe.

If Joe is planning on selling his carrots for a lower price that you are willing to sell them, who is better off?

What was the variable that allowed Joe to increase his carrot production?

Who owns the product of Joe’s work and investment?

We’ve covered a lot. Next time let’s take a moment and look at product transformation curves. Some folks call them utilization curves. Bottom line is, Joe is smart. He knows what he wants and is willing to do what it takes to achieve his own, personal dream. There are lots of potential pitfalls ahead for Joe, so let’s wish him luck. Being free, making investments and planning for the future is never free of risk.

But, would you want a life free of risk?

A Future We Can't Afford

A comment made by "displaced logger" on North Coast Oregon's post "PLF URGES ADMINISTRATION TO BROADEN PROPOSED ESA STREAMLINING" prompted this post.

"(D)isplaced logger" wrote "Perfect example is the supposedly endangered “spotted owl”! what a joke that one was but how many jobs did it stop? how many people did it put out of work right here in clatsop county? literally hundreds of people lost wages because a couple of self proclaimed experts said they only bred in old growth and every logger knew they had nests in sticker bushes and undergrowth!"

Because North Coast Oregon suffers a toxic troll (as in, "suffer the children to come unto me") they must limit the number of characters in any commenter's post, since the toxic troll is a master of cut-and-paste punditry. So, after writing my response to "displaced logger" I realized I must either post in parts, or simply place my comment here, with a link supplied North Coast Oregon.

So, forgive, please, this obvious bit of link-whoring. But it is, in my opinion, preferable to cut-and-paste whoring.

My reply to "displaced logger" follows:

The creativity of the Left is boundless. Their good ideas are limitless. The goodness of their intentions are better than yours.

Whether it's the Environauts driving our "future"--or the socialists who seek to balance the needs of those who want with the needs of those who produce wealth--ideas, creativity and social justice are viewed as the products of those gifted, chosen thinkers who wish to lead us into a new era of "Change!"

The problem facing all these Visiony guys is that there is a disconnect between all their creative ideas, and the ability to implement any of them in a meaningful way.

They feed themselves so full of their own b.s. that they fail to see that what they repeat to themselves is without value. Bio-diversity! Oh, yeah! But what is the value of bio-diversity? Well, since we can't determine that, it's important to err on the side of bio-diversity. So we close down the woods until someone, some day, discovers the value of a thing of such small importance, that it's not worth the effort to be concerned about. But until that day, we must close down the woods, because we just don't know!

But we get good ideas. Socialized medicine. We need to end our hostile business climate. We need to make sure all jobs are unionized. Taxes on the wealthy need to be increased. Cap and trade needs to be adopted to save us from carbon dioxide. Felons and the homeless must vote. Free speech must be balanced with correct speech. Trial lawyers and union teachers must be deified. Terrorism exists because America is hated.

And yet, for all these wonderful reasons to praise the creativity of the Left, for all the above, important reasons, name a single thing advanced by the Left that will result in another gallon of gas being produced, another home being built, or a can of asparagus sold for a lower price. Where is the practicality of the Left? What does it produce, other than Big Ideas?

You want more, cheaper energy? From what? The Vision of energy from your governor or your high school's teachers has produced not another erg of usable energy at a lower unit cost. They rail against reasonable efforts to supply our economy with lower energy costs as failing the "sustainability" test. Well, take a clue. Unless we cut trees, trees fail the sustainability test. Unless we drill for oil, oil fails the sustainability test.

Somewhere, between creativity and good ideas, we have to be able to "do" a thing.

What the Left fails to provide is the "do" thingy. Great ideas, but not a single thing that will let you take another dollar to the bank. Isn't it time we declared bankruptcy on the Left?

What does the Left provide? Here's a quote from State Treasurer candidate Ben Westlund from RoguePundit:

"As Treasurer, Ben Westlund will invest in wind and solar to lower our energy costs."

Heh. Yeah, sure. Head to RoguePundit and hit his links. It's in black and white. Even a Leftie can read it.

Limitless great ideas. And not a practical thought to be found.

Why Drill, Drill, Drill!

Since the beginning of Desert Storm II, I've relied upon a couple of Asian papers to get some info on what is taking place in the Great Faraway.

Today's article from Pakistan's Daily Times is a great article. And, it's nice to know that our precious little community of international terrorists is going to be harmed by the recent economic inconveniences.

One of the funny inconsistencies of the Left has been its devotion to technologies that don't exist. When reasonable men point out that there are exploitable oil deposits just off-shore of our Western United States, unreasonable men point out that the exploitation of these resources would require years of effort. Hence, exploitation of known energy resources is a bad choice.

These unreasonable men--the embodiment of this type of person is our Governor, Ted Kaczynsky--will point out the problems of utilizing an immediately deployable source of energy, while ignoring the problems of utilizing undeployable sources of energy. Petroleum works. Geothermal doesn't.

And the problems associated with developing geothermal? At a time when Environauts are excoriating Pacific Power for their hydroelectric resources raising the temperature in southern Oregon streams and rivers, do you think these same Environauts will accede to the development of geothermal, when contamination of local streams in the area by heated water is one of the by-products of geothermal development?

And what about the increase in dissolved solids? And the effects of a high pH?

Environauts want you to spend money on developing energy resources that aren't even proven. They want you to invest in "change". But what is "sustainable" about geothermal, when it leads to increased solids deposited in pristine wilderness waterways, with objectionable pH levels, and high sodium concentrations? Not only is the technology not ready for deployment or use, when you start looking at the drawbacks of geothermal, you realize the objections to its use will result in its never being used.

Not like petroleum or natural gas.

The production of petroleum and natural gas resources is clean, and the use of the product is immediate. Of course, if we develop our own petroleum resources, that will result in a decline in the number of dollars available to support world terrorism.

I'm happy that Leftists want alternatives. Unfortunately, none of them work, work now, or are immediately deployable technologies. And why not continue to send hundreds of billions of our dollars to those who wish us ill.

The Leftists will tell us they wish to do us ill, because we deserve it.

Reasonable men will tell you that Oregon petroleum development will mean lower taxes, better roads and bridges. And maybe will lead to a reform of Oregon's school system. For that alone I'd be willing to support petroleum exploration off Oregon's coast.

Ready For More Of The Same, Or "Change!"

When I think about my country, when I think about what I believe about my country, I walk away from the current political debate with an almost complete sense of incomprehension.

Until 1994, I was born, grew up and expected the threat of nuclear annihilation as an eminent threat every day. Born in 1954 as the son of a Second World War Army Aviation instructor, and post-war Civilian Air Defense instructor, I had a concurrent view of the world that focused on the arts and civil defense. My dad was a professional musician, but at heart he was much more than that. He was a proud American, willing to serve with "Lonesome" George Gobel, while at the same time rehearsing to perform with Bob Crosby and His Bobcats and training pilots to fly the P-38s over Europe and the Pacific.

He wasn't "just" a musician. He had a degree in teaching mathematics, as well as music. During the Depression (the real one) he worked a government job surveying farmland. In addition, he worked another eight hours a day working on the farm. The only Silver Spoon I inherited was the belief that through hard and smart work, I could provide for myself and my family. That I had the opportunity to choose the path I would follow is simply a part of what was known then as the American Dream.

Who we were, as a nation 50 years ago, in contrast to where we find ourselves today, is such a great disconnect culturally, that we should have noticed that the fundamental beliefs that held us together as a nation 50 years ago should be noted by their conspicuous absense, today.

If you believe in the American Dream I'm going to ask you to do something political. I'm going to ask you to vote for John McCain for President.

Not because I think that John McCain is the best candidate to come down the pike in 50 years. I happen to think that quadrennial candidate Adlai Stevenson was a better candidate for America than either of this year's presidential picks. I admit freely that a President McCain has many of the same elements of criticism that dog the Presidency of President Carter.

The difference is, there is still an untoward faith in the brilliance of what makes America great that isn't found in the campaign, or followers, of Barrack Hussein Obama.

For those of you who have spent time here, on this web space, you know that I believe that there is nothing more constant than change. I hope that I have shared with you enough of the fundamentals of how economics work that you know that trying to determine outcomes based on policy beliefs is just another case of human vanity. While I'm not a Christian, I find great understanding of the human condition by reading the Bible. And when I read Ecclesiastes, I read a writer with a vast compendium of human knowledge. Is there a God? I leave that to the Ecclesians. But that doesn't diminish the value of their advice.

1994 was an interesting year. One year later I found myself on the bricks of Red Square. This could not be. And yet, it was. I was standing on ground that had been trod by Dzerzhinsky, Lenin, Stalin and Khruschev. This unbelievable truth, I was standing in Red Square.

I was humming the theme from Brahms, Opus 45.

"Blessed are they
for they shall have comfort.
Blessed are they, they that mourn.
Who with grieving
They that sow in tears shall reap in joy.

"They shall go weeping
And beareth precious seed,
Shall doubtless return with rejoicing
And bring his sheaves with them.
--

"Lord, make me to know,
Know the measure of my days on earth,
To consider my frailty
That I must perish.

"Surely, all my days here are as an handbreadth to Thee
And my lifetime is as naught to Thee.

"Verily, mankind walketh in a vain show,
And their best state is vanity.
Man passeth away like a shadow,
He is disquieted in vain,
He heapeth up riches,
And cannot tell who shall gather them.

"Now, Lord,
O, what do I wait for?
My hope is in Thee
But the righteous souls are in the hand of God
And naught of harm falleth on them.

"For the righteous souls are in the hand of God,
and naught nor grief shall nigh them come,
Nor grief, pain but the righteous souls are in the hand of God.
---

"Blessed are the dead, which die in the Lord
From henceforth.
Saith the spirit,
That they rest from their labours,
That they rest, and that their works follow after them."

I don't have an apocalyptic vision. I don't have a Vision of the world. I'm not smart enough. What I have attempted to have is an understanding of the poetic, while maintaining a realistic view of what is known, what is knowable, what is belief and what is vanity.

Senator McCain's admission that he didn't "know much about the economy" (actually he said, "The issue of economics is not something I’ve understood as well as I should") he was speaking truthfully.

Truthfully.

How much have you heard in the past sixty to ninety days that was truthful?

What is it about Sarah Palin that strikes you most? For me, it's her truthfulness.

Blessed are they that follow in the footsteps of the Lord. For me, it's a metaphor for speaking the truth. For my beloved sister in China, it's a respect for the life she's given up to bring a belief in truth to a country which has been entangled in bureaucracy for thousands of years. Perhaps not a literal truth, but a human truth. That speaking honestly and clearly about personal beliefs is important.

When I found myself treading the same places as Gorbachov and Yeltsin, I thought about the respect I was brought up on, the respect for truth. I know that there are defects in Senator McCain's training and experience that fall short of my expectations for a presidential candidate. I know that Governor Palin's training and experience fall short of my expectations for a vice-presidential candidate.

That being said, I trust them to be truthful.

That is not a trust I can place in either Senator Obama nor Senator Biden.

Is Senator McCain the best debater in modern times? No. But, does what he says resonate with his convictions? Is he being truthful?

Yes.

Same to be said of Governor Palin. Who would you rather be in control of our nation, one who would say anything to be elected, or one who would only say what he or she believed to be the truth?

I'm not ready for "Change!" I'm ready for "more of the same". If, more of the same means men and women being honest about their beliefs and ideas. It isn't about being a peacock. It isn't about being "popular".

President isn't Prom King. This is important. The values you rely upon for making your choice are yours. If I have any influence upon your decision, I would ask you to think about the difference between taking popular positions and necessary positions.

They may not always be the same position.

Fradulent Voting Practises

How bad can fraud be? It's an interesting question since the process in Oregon is flawed so deeply.

There was a time--before Vote By Mail--when precinct persons actually had an important job to perform. We ensured the integrity of the ballot.

During the run-up to election day, precinct committee men and women went door-to-door in their precincts, visiting Democrat, non-party affiliated and Republican homes. The reason was to provide a check of the information provided party workers by the county's election's clerk. If the house looked empty, you turned this info into the county clerk and the name was removed from the rolls. If you found that the "Jensens" no longer lived at 1392 Merit Lane, you provided that information to the clerk. And if the new owners were Republican, you provided them with a voter's registration card.

Later, on Election Day, you spent the day at the polls. Since you had already identified all the valid residents of your precinct, when an invalid voter came into vote, you would "challenge" that ballot. That ballot was kept separately from the genuine ballots to determine the validity of the voter's ballot. If you no longer maintained a residence in that precinct, you were no longer eligible to vote. Period. You know that if you move you have a period of time to notify the DMV of your new address. You're required to do so. Same with your voter's registration. Even if you live in the same precinct, you invalidate your own ballot by failing to follow the rules for voter registration. You either are, or are not, legally registered to vote. What is the remedy for voluntarily de-registering yourself as a voter after a move? Re-register. Duh.

So the debacle that's been playing out in Ohio has been a play in two acts. A massive voter registration effort by ACORN, and an alarming increase in the number of fraudulent voter registrations. With an additional kicker: the Secretary of State's direction that not only could one register without any verification of the legality of that registration, but additionally, that the new registrant could cast a ballot at the same time.

Taken to court, the Secretary of State prevailed, until an en banc review(pdf) by the Sixth Circuit Court took place yesterday.

Why would you be a Democrat and a Judge? To make the party circuit, of course.

Judges Moore and Martin will be cocktailing with the elites this evening. They did what they could in an attempt to lay a ground-work for overcoming this decision. The problem will be finding a party with standing to seek review of the en banc decision. Don't think it's going to happen.

What is particularly egregious--in my opinion--is Judge Moore's recognition that there are 485,000 new voter registrations...and is unable or unwilling to concede that this level of new registration presents in and of itself reason to fear dilution of individual voters' rights, with a statistically significant number (between 72,500 and 145,500) of these new registrants being invalidated under previous statistical experience without examining whether or not there may be reason to assume that these current new registrants may be even more suspect due to illegal efforts by community organizations (like ACORN) to illegally register new voters.

It isn't necessary to "google" Judges Moore and Martin's pedegrees. If you assume they were appointed by either Presidents Clinton or Carter, you'd be correct.

Perhaps the majority would have been more effective in wooing Judges Moore and Martin had they referred to "penumbras and eminations" rather than the clear language of the law.
We can only wait for the first appointee of an Obama Supreme Court to find out how bad things are going to become.

It isn't often one is able to quote William Gladstone, but in this case the minority is clearly wrong in its efforts to further the cause of fraudulent registration practises. Here is clearly a case where "justice delayed is justice denied." Even though the Left really, really, really wants to protect these fraudulent practises.

Things You Didn't Know: Jews and Dictionaries

Unbelievable.

But a big thanks to Terry Glavin for pointing this out.

From Mr. Glavin, "For an encyclopedia, no less. Lost their damn minds, is what."

Carrots and Bicycles: Dynamic Forces

I’ve introduced a lot of terms that economists use. And I’ve referred to the different types of analysis used by economists. Static versus dynamic; microeconomic versus macroeconomic. (Here, here and here.)

In talking about Carrots and Apples, so far we’ve limited the discussion of economic principles to microeconomic theory. Micro is nice, since it has so few players in the mix. We can limit, for the purpose of discussion, our market to two players; you with your carrots, me with my apples. Even so, we’ve been able to ask a lot of questions about price and equilibrium. That’s one of the reasons why most students begin their investigations into the science of economics with a study of microeconomics. We've also focused upon static analysis. What is meant by dynamic analysis?


When we look at markets and the economic systems employed to develop and support those markets, the bicycle at the top of the page should be your clue as to how markets operate. If you’ve ever ridden a bicycle you know that there are important points in riding a bike where catastrophe can occur. Getting on or off, if your legs aren’t long enough, can be challenging. If your seat is too high, you won’t be able to push your peddles well, just as if your seat is too short, you won’t be able to maximize your power or speed.

Your handlebars should be tight. Your chain should be in repair and your pants’ leg protected. And before you start up a hill, you should ask if you’re in the correct gear, just as you should have some idea of the dependability of your brakes before going down a steep hill.

When you look at a bicycle then, you can see that bikes really have two states; a state at rest, and a state in motion. And the only state that has true “equilibrium” is when the bike is at rest. Whenever your bicycle is in motion, it is not in equilibrium, but constantly seeking equilibrium. You can assume that your bike in motion is in equilibrium, but that denies that at the next “moment” in time, something can change.


It can be an endogenous change: something about the bicycle or the rider can in an instant be different. If my pants’ leg gets tangled in the chain, I have a problem. If a tire wears out, I have a problem. My favourite annoyances as a young bicyclist were with my seat and handlebars. Taking off on a trip and finding out that the nut and bolt compressing the seat stand are too loose…resulting in a shifting seat. Or, handlebars that slip up or down. Trust me, this is extremely dangerous. And how often, as a youngster, do you leave the yard with a couple of half-inch or 9/16ths inch wrenches in your pockets? In my experience, rarely, if ever.

But these aren’t the only pitfalls of bicycling. My favourite is taking my eye off my path to watch an attractive distraction cross the road. In this case, it is an exogenous variable acting upon an endogenous variable. Spend too much time watching an attractive distraction and you can run your bike into a ditch. Or worse. There are lots of other exogenous variables that can affect your ride. Neighborhood dogs, on-coming cars, fields that you thought were dry…and now you’re sinking into mud.

But the most important exogenous variable when it comes to riding your bike is the path or road you choose to travel on.




When I was younger I lived not far from Alpenrose Dairy. If you’ve never gone, for us who grew up on the Westside, it was our Disneyland. With Rusty Nails instead of Mickey. But among its attractions was a velodrome.


Endogenous variables: bike and rider.
Exogenous variables: the track.

Living near Alpenrose meant a lot of solo time on the track. No distractions. Nothing but you and the track. As I grew older the bikes I owned changed. From clunky 20 inch frame, to a light-weight racer.

As you approach a bicycle that you have hundreds of dollars invested in, you become more aware of the endogenous events taking place within the system. I’m not going to boor you with too many stories, but let me assure you that there wasn’t a single part of my bike that hadn’t been disassembled and reassembled. Or the hours spent trying to find the correct dimensions for the ball bearings in your hubs or crank assembly. Always trying to find a way to decrease the coefficient of friction; allowing you to put more energy into moving forward, than simply turning the crank.

The structure of a bicycle is a lot like the structure of the Market. When people talk about regulation, it is this structure of the Market that we should keep in mind. There are changes that are possible in the way we structure transactions that can make the market work better, or simply work more.

But even with this regulation, inspection and maintenance of the bicycle, bad things can still happen.


If you ride on a velo track, the first thing you notice is the time spend running on the flat. When you run at slow speed, you spend most of your time running on the shortest possible path, where turns are executed with minimum radiuses. That is, when you are moving slowly, working toward equilibrium is easy. But speed itself is not a guarantor of stability. And the dumbest way to learn this is to have your toe-clips on tight, and move slowly at the highest part of the corners, or, the greatest maximum radius. Here’s what happens:

The tires you have on your bike are very different from the tires used on my bike.



My tires are designed to give as smooth a ride as is possible, with very little friction except for the linear plane. So when I approach the top of a curve on my bike at slow speed, with my toe-clips on, here’s what happens.

I crash.

Now I generally know within microseconds that I’m going to crash, and am wildly tugging on my feet, trying to clear my shoes. Bending over to release your toe-clips is a nice idea, but you’re better off trying to manage your crash as your bike slips down toward the center of the track. I have simple leaned over to accept the crash and lift the bike with my legs.

But crashes occur. They can occur when you’re moving too slowly on a track designed for high-speed. They can occur when you’re moving to fast on a track designed for low-speed. And at this point, I am the only person on the track.

Now your bike may have massively treaded tires. Your tires may allow you to perch high atop the bank. But two evenly matched bikes, one with my tires, one with yours; you would never be able to compete. Smart choices in endogenous structures give me an advantage over your choice.

But even with these smart endogenous choices, crashes can still occur. Even riding solo on a track. Because your bicycle is never in equilibrium unless it’s hanging on a rack, or setting on its kickstand. It’s at equilibrium at rest. At all other times you are leaving equilibrium, passing through equilibrium or moving toward equilibrium. And because you’re in a closed system, running on a clearly defined course, there are limits to the amount of outside—exogenous—influences that can affect your attempt to find equilibrium.

On your first attempt to ride on a velo track don’t be surprised if you crash. My advice is to take it easy, ride with authority, and don’t attempt to ride the entire track. You have two basic problems; one is how to get into a curve, the other is how to get out of a curve. You will spend most of your time thinking about how you’re going to attack a curve and the rest of your time figuring out how to attack the straight. This challenge is magnified when you consider racing in an event like the Tour de France, when your speeds exceed 70 miles per hour.

The problem with most politicians is they tend to think that barriers to success are the same thing as regulation of success. There are thousands of barriers and roadblocks proposed by politicians every day, every hour, every moment.

As bicyclists, we know that good regulation is like a well-built and maintained bike. Meaningful regulation means choosing the right tires, matching your crank to your stroke, adjusting the height of your handlebars and seat to maximize your strength and minimize your risks. When critics of government criticize government actions, chances are it’s because they see these actions as outside of what’s needed to build a high performance bike. Or, even worse, they see government as changing the design of the track itself, making the work we invested into our bikes meaningless.

Let’s assume that racing is risky. Like all things in life, racing is risky. We don’t need to assume it. Just talking about the crashes you can get into at low, or no, speed, when you take racing up to a competitive speed, the risk increases. No doubt that falls are dangerous (I have a friend who broke his arm from a simple fall); but falling at 30, 40, 50 miles per hour can really screw you up. Get tangled in your bike wrong, and you can be on your way to hospital with a perforated something-or-other.

Somehow, politicians have come into our lives with a mantra of reducing risk. Would I make my sons wear a helmet when they’re riding their bikes? No. Nor would I make them wear helmets when riding on a swing, or climbing the monkey bars. But politicians have passed laws mandating that we force helmets on our kids. And you’ve seen playgrounds across the country turning into flat fields with no amusement devices that threaten our children’s lives. Playgrounds where children can’t play “tag” because of the risk involved. (And what about climbing trees? Shouldn’t we tag trees as “off-limits” to kids? Wasn’t Pollyana nearly killed by a tree? Or require kids to wear safety equipment, perhaps require Swiss mountaineering courses before they begin their ascent?)

So why should we be surprised when politicians, who have enacted so many measures to reduce the risks of our lives, attempt to pass laws that affect how bicycles and tracks are built and maintained? (This was a rhetorical device, comparing bikes and tracks to rules which govern the marketplace. As an aside, if you want me on a skateboard, I want elbow and kneepads, a helmet and gloves. But that’s a personal assessment of risk. I won’t hold it to others.)

Why do velodrome racers wear a helmet? Why do Tour de France racers wear helmets? For an excellent essay on why people make the choices they do, I refer you to Gary Becker’s “Crime and punishment: An economic approach” (The Journal of Political Economy 76 (1968) 169—217.)
When you look at risk, you end up looking at the probability of an occurrence, and the probable outcome of an occurrence. When I rode a bike at high-speed, I took a look at the probability of crashing and determined that the risk was quite good that I would crash. (If you’ve ever met a guy who said he rides, or has ridden a horse and never fell, you’ve met a liar.) Not “if” I would crash, but “when” I would crash. Also, I could assess that the biggest “at risk” parts of my body were my hands and head. If you’ve dumped a bike, you know that whether or not you break a bone depends on how well you manage your fall. No amount of safety gear is going to save you from a broken arm or leg. You deal with it.

There is that class of people, however, who know better than you. As I mentioned in the Levy article, these people are elitists. They have one defining characteristic: no matter what it is you’re doing, they can tell you how to do it, better. What is unfortunate is that they—the politicians and school administrators, elitists in general—are limiting play for children. Yes, there are real life experiences of risk, and dealing with risk, that are learned from rough games. If you were bad at dodgeball, you learned how to jump. Trust me. In grade school you wanted to be on Steve’s side. Steve could hurt you with those stupid rubber balls. If you got picked to play against his side, you better learn how to scamper.

This doesn’t really matter too much when conducting your business on a day-to-day basis. When we gave up distributing personal justice for state justice, the threat of being brutally beaten or killed, receded. If you get into an argument with a neighbor, or business competitor, chances are more likely that you’ll end up in court—or talking to a cop—than actually finding yourself needing to scamper. The question of “who are you to tell me how to do this?” can be asked and answered. No one can tell you how to do a thing. If it’s a neighbor or business competitor. Unless, you’ve gained attention from the elite class. Then things change.

Or, rather, “who elected you?”

Well, unfortunately kids, we elected them.

Enough of us have decided that we need babysitters, that we’ve elected a babysitting class called Democrats. Market moving too fast? Try adding weights to our wheels to create dynamic imbalances. Or, corrugating the track so we don't attempt higher speeds. Or, limit the crank length to shorten our stroke. Or, require body armour to add weight--and safety--to our laps.

Our markets are more dynamic than riding a bicycle. And they're always in the same three states: approaching equilibrium, passing through equilibrium, or leaving equilibrium. The goal of the rider, just as it is the goal of persons in the market, is to always approach equilibrium without over-shooting equilibrium. For the economist, this is refered to as "the margin". Whether it's bikes or NASCAR, racers understand intuitively what is meant by the margin. It is that little bit that stands between success and disaster.

Bikes and Carrots Programming Note

I'm putting together a post on that I hope will help you understand why, after passing a 700-billion dollar bail-out, the markets remain in turmoil.

In my last Carrots and Bicycles post I mentioned that I wanted to look at what happens when you view your microeconomic choices when faced with macroeconomic realities.

If you have time over the weekend, I recommend that you view this video, from Annenberg Media. What we're going to be looking at next week is the C + I + G curve, and some curious effects on you and I as individuals as government attempts to fix things. If you haven't signed up for Annenberg Media yet, please do so. It's free and fast. After you've signed up, look for Program Number 14, "Stabilization Policy". Of all the information you can get over the next few days, having an understanding about the differences between Monetarists and Keynesians is probably one of the most important distinctions I can ask you to have.

To put it into shorthand, most Republican economists are Monetarists. Most Democrats are Keynesians. The reason for this difference I think is that the Keynesian model is so simple. It approaches macroeconomic theory with the tool-kit of the microeconomist, and offers simple solutions to complex problems.

And then the Keynesian wonders why things don't work. Their conclusion is that there must be some sort of perversion in the market, and that requires greater regulatory control. You and I know that less, rather than more regulation is what markets seek. So I guess it's time to tell you, we're going to be looking at diseconomies; the things that cludge markets up.

Watch the video. Please.

The Curious Impulse to Control Others

It's not up to me to fix everything.

You're okay with that, right?

Likewise, isn't it true, that I really shouldn't expect you to "fix everything", either?

So, what is it that you can really expect me to do, just as much as what should be my reasonable expections for you doing anything to "fix everything"?

Answer? Not a lot. Why would you either expect me to fix everything for you, or have me expect you to fix everything for me?

When we break down how people actually work together, it's pretty simple to see that I'm okay with you going off and living your own life. You want to spend your weekend gardening, uh, okay. Want to run off to the hills and run your trax? Still okay with me.

In fact, whether I want to spend the next hour playing the piano, or sitting here typing is of little moment to you, your life, your family and your friends. I "get" that. (Although you'd be missing some very inspired interpretation of Claude Debussy. If I were on the piano.)

When you go to work, when you decide to clean your house, most of what fills your life is determined by the most important person in the world: you. Whether you buy a new car, or even if you pay your bills, why is that important to me?

All of the little details of our lives we face, we make the choices of what we do by our read of what we need do. Sometimes what we need do is golf. But, generally, if you grew up with some reasonable semblance of authority, you've learned there are things you've gotta do. Wanna keep your job? Best show up on time and do your best to earn the approval of your boss and your peers. Wanna keep your apartment? Best to pay your rent on time...and earn the approval of your landlord.

You own a car or you own a bike. Either way you've learned it best not to swerve in and out of traffic when you're on the road. You didn't need to learn a lot of rules. Given man's inherent capability to intuit outcomes, you could "see" that swerving our bike in traffic could end up killing you. True, too, with an automobile.

So much of what we do is in this sense, unregulated. Governments couldn't exist, nor could they have formed, if there was a need for regulation to exist in order to provide form and function for our everyday activities. Most days, most times, we live as if there was no government at all. The most common intrusion of government in our lives is when we see a cop car in our rear-view mirror. And, just curious, what is your reaction when you see a cop car in your rear-view? Even if you're "clean", there's an appreciation that for a moment, you and your life are at risk. Risk of delay, risk of embarrasment, risk of a ticket. One day I watched a car with two little old ladies in it get pulled over by an Astoria Police officer and she walked up with her hand on her side-arm. Like, can you do a risk assesment? Better get that weapon ready, these septuagenarians could decide to bolt! And anyway, what would you think if you saw a cop walking up to you with his--or her, in this case--hand on his gun?

It should be obvious, if I've done my job of writing effectively, that mostly we don't want or need government. In the first case, it's because not much of what we do is either the concern of anyone but ourselves, but the fact is, what you or I choose to do at any particular minute is normally no one's concern but for ourselves. In the second case, we perceive the danger of what can happen when we become threatened with involvement with that power that is held by our government. It is our natural sense of things that we're better off at further than arm's length distance from government in its various forms.

Who has the right to tell you what to do, anyway? There is an old concept of law that addresses the "who" in who has the right to tell you what to do. (Be aware, that this old concept is under attack by groups such as teachers' unions.) That this seigniory exists between parents and their children. That this relationship exists between and man and his wife. That parents have the right to demand behaviour from their offspring, just as a spouse can demand a certain level of obeisance from her husband.

Again, when we look at our natural behaviour, such things, such as seigniory, aren't issues for debate. Most of us neither need nor require government.

When you hear conservatives grumbling about the reach and scope of government, it is against this backdrop of what naturally regulates our lives that is at the root of this grumbling. There are certain government services which are defined as necessary. Fire protection. Police services. You gotta love the Coast Guard. Throw in the military and you have a pretty good idea of what types of services are necessary services of governments, and that, due to the level of complexity of our society, that there are additional services that governments can provide at a level that matches need, for the lowest possible cost. If you're going to organize a port district and levy a tax against property owners resident within the district, you're going to need to have a governmental organization responsible for the taxes gathered, the the decisions to spend those taxes, that is accountable to the voters of that taxing district.

So we add services to what is referred to as the Public Sphere.

You see, we have a Public Sphere as well as a Private Sphere. Now the idea behind a separation between the Public and Private Spheres has been around as long as I can remember. In the "old days"--back before SB 100--there were pretty clear lines between what the scope and role of government should be, and that those things not within the scope and role of government remained in the Private Sphere. Twenty to thirty years ago, the idea of a limited government was still pretty much in vogue. As government intervention into the private sphere has expanded, through measures which are set up to protect us from ourselves, we find that we have fewer and fewer choices that we can actually make ourselves. Your kid wants to ride his bike? Does he have his helmet on? Wanna drive to the store? Do you have your seatbelt on? Wanna sit in a bar and have a beer? You better not smoke. Nope, you can be one of Oregon's 75-thousand problem gamblers, putting your life, your family's life, your home at risk, but you'd better not smoke while you're sitting in that bar. In some areas of the state, the decision whether to plant or cut a tree in your own yard is regulated.

And yet, the same basic truth is, we really don't want or need government. But government has been our biggest growth industry for the last 30 years. And the plans are, we're going to take huge increases in government programs starting next year.

I get lots of mail each day. There's too much bad news to reprint at times. The past week has had some doozies. Remember Kitz? Former Oregon governor John Kitzhaber has been a stalking horse for the Kulongoski experience. Kitz has kept his hand in, both with community organizations and with the Left-wing base. Here's his latest, in the form of his "We Can Do Better" campaign. Go ahead and open this link up in a new window and scroll down to paragraph four.

"We must also deal up front with the economics of the transition period by openly exploring how the various stakeholders would need to change their business plans to profit within the context of the new design elements."

Translation? We're going to spend a heckuva lot more money chasing a scheme for government provided health-care in Oregon. Even if we don't want it and can't afford it. And for businesses that don't sign up with the plan? It sounds like resistance will present an existential threat.

Let's skip over to our state's treasurer. In an amazing press release, the Treas wants to assure you and our state's legislators that things are okay! Well, gee! Golly! What you don't find out unless you look for it is that Oregon has lost two percent of it's Oregon Short-Term Fund(pdf)! And this is just that amount of exposure related to Lehman Brothers. No word on what portion of the state's portfolio is in the securitized mortgage market through other investment sources. We know there's no market for these holdings, so we'll have to wait and see how bad it turns out.

Good thing he wrote a letter letting folks know that things are okay!

Coming up next week? The State Board of Forestry is meeting in Forest Grove to work on plans to further screw up our timber resources. Leading the agenda towards this new Vision for Oregon's forests?

Developing the alternative approaches is tied to the Board of Forestry's work plan to improve forest management plans on state forests. The Oct. 15 information-sharing session is the second such meeting scheduled by ODF. The first meeting was held in late August.

The results of computer-generated models of alternative management scenarios will be shared. The scenarios were developed to achieve performance measure targets set by the Board of Forestry last November.

A report on the computer outcomes, along with a recommendation, will be presented to the Board of Forestry on Nov. 6.

Both quantitative and qualitative targets were established for nine performance measures, which represent environmental, social and economic outcomes resulting from the management of these lands.

Hooray! We're going to make sure harvesting timber represents social outcomes! Yippee!

There's more. Expansion of Oregon's spending on health care, interfering with energy production oh, and a Day of Culture. Thank God we have the government we need in times like these.

See, we really don't need all this government. We're better off without it. But on the Left, when things get screwed up because we have too much government involved with everything from housing to Culture, they press for more power, more money and more authority. Which leads one to make a fairly natural comparision.

Can you name another group of folks who keep demanding increases in power, money and authority, and continue to fail to do a good job on a daily basis? Well, yeah. That would be teachers and the teachers' union, wouldn't it?

Have a nice day!

Carrots Riding Bicycles: Market Equilibrium II

In my post on Bicycles and Carrots I introduced a lot of terms that are used by economists. Let me list them as I introduced them:

Equilibrium.
Market.
Free market.
Buyers.
Sellers.
Barriers.
Widget.
Perfect substitutability.
Static Analysis.
Dynamic Analysis.
Moment.
Utility.
Value.
Fungible.
Exogenous variables.
Endogenous variables.
Ceteris paribus
Complexity.
Tastes and preferences.
Choice.
Policy.
Fairness.

When we left, you had carrots and I had apples. When we met, I wanted a carrot but you were unwilling to give up a carrot, even if I had given you one or both of my apples.

At that moment, the market for apples and carrots were in disequilibrium, since more carrots were demanded than the market was willing to provide. The question that is begged is; is this lack of equilibrium in the market a good thing or a bad thing?

Did you know that there are two schools of thought? One school is denominated by objective study. The other school is denominated by normative study.

Let’s take a look at our market equilibrium condition, and at the moment of disequilibrium we magically replace my apples with widgets and your carrots with widgets. You want to trade, and I don’t. (Take a look at the last post to understand the concept of “widget”.) If we trade, you still have two widgets and I still have two widgets. Is the market in equilibrium if I refuse to trade? if I do trade?

Let’s take a look at the market for widgets.






The widget market is determined by cost and price. (And since we’re using the perfect widget, the cost of a widget is equal to the price of a widget!) What we find is that the market equilibrium cost and price of a widget is defined by the intersecting lines of the Widget Supply and Demand curves. (Yes, they’re straight lines, but remember, this is a static analysis…in a dynamic analysis the lines would be curved. There’s a more elaborate mathematical explanation available here, just live with the fact that these straight lines are called “curves”.)

What is the ideal price of a widget? One widget. What is the ideal cost of a widget? One widget. And when the cost of supplying a widget equals the price paid for a widget, it is at that moment that the market has established its equilibrium. At One Widget, one will be provided, one will be purchased. Equilibrium.

But what is the advantage to the holder of either widgets or widgets? Markets like this don’t exist, because there’s no advantage to either seller or buyer to participate in the market. No one is better off (although no one is worse off) and I can’t think of a reason to set up a market for trading goods that provide no advantage to either the seller or the buyer. Can you?

So, if we are going to define what a market is, we need to introduce the idea that somehow, as a result of a market transaction, that either the seller or the buyer must see some advantage to himself as the direct result of a market transaction.

We’ve looked at several terms that help us express ways of describing this “advantage”. Utility, value, tastes and preferences. Because we—you and I—are perfectly rational actors, we can see that trading widgets offers neither you nor I any comparative advantage as a result of a trade. So while the market is in equilibrium, no trading takes place because there’s no comparative advantage to either seller or buyer.

So, is equilibrium in the market a good thing?

You hear a lot of talk about “sustainability”. Terms like sustainability and equilibrium are used a lot by politicians and teachers. But what is the value of equilibrium itself? Equilibrium as equilibrium has no value. There is no market because both seller and buyer see that the market cannot benefit them. So, let’s look at the way we create a market where either the buyer or the seller is better off. That is, they have received an advantage as a result of participating in the marketplace.

One of the popular criticisms of markets, and market-driven economies (known as capitalists systems) is the discovery of greed. From Merriam-Webster we get this: “Acquisitive desire beyond reason; greediness; as, a greed of gain.” There is some conjecture that the first example of Man’s greediness was exhibited by Eve. Others look at Cain. If greed itself was to be viewed as a necessary component of capitalism, we must agree that Man, living in the Garden of Eden, was compelled by market forces to eat the apple. I would assert that Adam and Eve, whilst among the environs of Delight, were not subject to the rigorous demands of capitalist exploitation. I would also assert that Eve’s actions showed an “acquisitive desire beyond reason.”

My point here is simply to show that greed as greed isn’t dependent upon some such or another system of economic organization. Greed exists, or has existed, during the entire history of mankind. Condemning capitalism due to greed is only intellectually honest if you condemn socialism due to greed. (For a complete review of the excesses of socialist greed, try looking into the fall of the Soviet Union.)

So I propose that we look at a brief deconstruction of greed. What are the components of greed? Well, as we see above, it is the acquisitive desire “beyond reason”. “Beyond reason” I’m going to leave alone for a moment. Let’s look instead at the “acquisitive desire”.

Utility, value, tastes and preferences.

Let’s take a look at utility.





If I have no carrots, the utility of carrots that I receive from having carrots is zero. But I have an acquisitive desire. I want carrots. I want the utility of carrots. So, I set about acquiring them. But, take a look at the utility curve above.

As the quantity of carrots I have increases, the utility I derive from having these carrots increases. And I get carrots, and carrots and carrots until the utility I can get from having carrots is maximized at M. Then something amazing happens. The more carrots I get, the less utility I received from having carrots. How can this happen?

I chuckle when I hear of the Muslim vision of martyrdom and the 72 virgins. At what point is one virgin enough? 36 virgins? 72? As an older man, the idea of being stuck with a bunch of virgins simply isn’t attractive to me. For me, a woman of wit and experience. (But I’m not a Muslim, so what do I know?)

So, too for us is a new conundrum. At what point do we find ourselves with too many carrots?

What determines “too many carrots” for me may not be what determines “too many carrots” for you. That is, are you able to determine what is, or isn’t, an acquisitive desire “beyond reason” for me? If I have ten carrots and you have zero carrots, is this proof of my greed? Given the utility chart above, if the utility I receive from having carrots hasn’t yet reached point “M”, I think I can argue that I haven’t, as yet, reached a level of carrot ownership that is “beyond reason”.

Another case of the relative utility of carrots may end up with this result: I have ten carrots and want no more; you have ten carrots and you want more.

Is this possible?

It’s at this point where one of the first characteristics of what is defined as “free market Capitalism” is best understood. Given the utility of carrots, given the value you have for carrots, the tastes you have for carrots and your preference for carrots, what comprises the best determinant of how many carrots you own?

Republicans believe that you are the best decision-maker when it comes to determining how many carrots you have. Democrats believe that since there are imbalances in carrot-ownership, the government should step in and make sure there is the same number of carrots for everyone.

For markets to work, buyers and sellers need to come to market and freely exchange goods and services. The number of carrots sold to the number of apples offered determines the price of carrots to apples. And we’ve already noted here that the mere existence of disequilibrium in the market is not, in itself, a bad thing.

At the beginning of this essay I pointed out that there are two different types of economic analysis; objective analysis and normative analysis. Within the academy, this difference is usually referred to as the divide between the monetarists and the Keynesians. Monetarists, in the main, believe that the role of government is to insure that an adequate level of liquidity exists to finance the transactions demands of the economy. Keynesians believe that government needs to define an outcome for economic activity.

As for the other forms of economic analysis, like the Ron Paul guys and the Bob Barr guys, anything that pins itself to barter—or gold—isn’t very interesting.

What is interesting to me is the desire to effect macroeconomic changes with microeconomic policies. Let’s be clear: so far, the market effects we’ve been examining have been microeconomic effects. It has been you and I, with our carrots, apples and widgets. The difference between a micro- and macro-economic analysis has to do with aggregation. We’ve looked, so far, at you as a producer of carrots/widgets, and me as a producer of apples/widgets. So, perhaps, we should look at what happens to microeconomic choices when faced with macroeconomic realities. That is, what happens to my apples when I’m not the only producer of apples, but one of a thousand, ten thousand, or, one-hundred thousand?

POSTSCRIPT: I'd like to welcome a brand new blogger on the intertubes today. You can read his first post, "What's Greed Got To Do With It?" over at Dr. B's Second Rate Economics Blog. Congratulations, Perfesser! (His website has been added to my link's on the right-hand side of this page. He doesn't promise to blog often, but you don't need to find many nuggets of gold before you're a rich man.)

Max On Fire

If you don't check with MaxRedline every day...you're missing out on your P-town fix.

Having grown up in P-town, there isn't a day that I don't check with Max to find out the latest ludicrous action by a city government that was torn from reason during the 1970's. It may be true that Terry Schrunk was as exciting as wood, but Neil Goldschmidt wasn't just more exciting, he was a felon.

In the footsteps first traced by Hizzoner Goldschmidt came a torrent known as Hizzoner Katz. From 1981-to present, the Hizzoner Katz method of government became known as Space Vision. What has been hidden from public view wasn't so much who was mayor, but how the city council tended to revolve itself around mooney ideas about social justice and "how the world should be" instead of what is a city, and what's the cheapest way to make sure that basic city services are provided as reasonably as is possible.

It is in this light that the professional corruption of Chicago becomes a public good.

In Portland excess is rewarded. In Chicago, lessons are taught.

You've got to deliver. In Portland, delivery is tending to the ten percent of nuts who want a socialist/ectopian paradise. The other 90 percent is afraid of speaking up since it would prove that they aren't "hip". Being hip in Portland is very cool. Simply worrying about efficiency proves you're not hip.

From the Oregon Zoo to streets, if you can imagine a city going bad, you'll find it at MaxRedline.

So, why is this important? Because, when we elect our local guys and dolls to our city councils, we find out that the first thing they do is get on a bus and head to a conference where they find out what the "big boys" are doing. Local politicians without a clue find a mandate. Even our honoured mayor Will has fallen to this madness. Instead of giving us the best, cheapest government possible, we now have to have a "Vision".

When politicians begin to talk about their Vision for the future, you have no clue of that which they're speaking. How could you?

Most of what passes for political dialogue in Oregon is couched in terms so esoteric that the average Oregonian can't participate in the conversation. In Salem, that seems the point. In Portland, who cares?

How much of your town is becoming a suburb of Portland? Keep track with Max.

Today Is Stewart Dimmock Day

One year ago, Stewart Dimmock won for us.

Here's my original post. Here's my follow-up post.