Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Friday, December 12, 2008

Things to learn

Yesterday was a day of lasts:
  • I went to my last undergrad class (CS 431, compilers, with Dr. Mercer).
  • I turned in my last undergrad homework (a EE 380 problem set on the z-transform).
  • I turned in my last undergrad lab (a EE 380 lab on elliptic filters).
  • I turned in my last undergrad project (a peephole optimizer for my compilers class).
Next week I'll take my last undergrad final ever, and, with that, I'll be done with college.

I feel like I've just started learning, though. There are lots of things that I'd like to learn but haven't had time to because of school. Well, now's my chance.

Here's a sampling of things that I'd like learn about:
  • Global poverty and public health, and ways to improve things
  • Programming stuff: Cocoa programming in Objective-C, Android development, Haskell, AVR programming, MapReduce
  • China, India, and Africa
  • Spanish. I think I might take a class. I'm getting rusty.
  • Trad climbing
  • Medicine. I'd like to become an EMT or wilderness first responder.
  • Algorithms (especially graph algorithms) and algorithm analysis.
  • Maybe join a search and rescue team. Maybe.
  • Child development
  • Literature. I've learned a lot in college, but I've been too busy to read as much as I'd like. Time to get back to the books.
  • Cooking
  • Psychology
  • Probability, Bayesian statistics, and graphical modeling
  • Economics
That should keep me busy for a while.

Wednesday, November 19, 2008

Don't save the automakers

I was going to write a blog entry about why we shouldn't bail out the U.S. automakers, who, like everyone else, it seems, are in financial trouble. The Economist saved me an hour or two, though, since they wrote up the argument against the bailout—and they did a better job than I would have, anyway.

Wednesday, November 05, 2008

How to bankrupt America

How can we bankrupt the federal government? Simple: just keep doing what we're doing and wait a little while.

I.O.U.S.A. is a recently-released documentary about the national debt, and its conclusion is frightening. The U.S. is on a path toward financial ruin, and none of the major political figures are talking about it. This isn't just a big conspiracy theory by a bunch of crackpots, either. It's explained by top figures in finance, including Alan Greenspan, Paul Volcker, Robert Rubin, Alice Rivlin, Warren Buffet, and David Walker. These are people who have run the Federal Reserve, the Treasury, the Government Accountability Office, and the New York Stock Exchange.

The documentary is a fascinating and scary look at our country's financial history and possible future. I'd encourage you to take the time to watch the 30-minute "byte-sized" version (below). You can also watch the trailer or watch the full-length movie in theatres.



(Higher quality version available from blip.tv)

Tuesday, November 04, 2008

I voted

Since voting in Oregon is done completely by mail, I've never had the pleasure of wearing an "I Voted" sticker on election day to advertise my civic responsibility. That's OK, though, because vote by mail encourages participation, decreases costs, and makes the process run more smoothly. I mailed in my ballot last week.

There were some interesting items on the ballot this year, aside from the one that everyone's been talking about:
  • Measure 58, which would prevent teaching students in a language other than English for more than two years. That's a horrible idea! I think that bilingual immersion education is a great idea—in fact, I would love it if all students were educated in bilingual classrooms. And what happens to the students who don't pick up English in two years? No education for them? Bad idea.
  • Measure 26-95, which would allocate over a third of a billion dollars for Portland Community College. I voted yes on this one. I'm generally pretty fiscally conservative, and this was by far the largest single price tag on the ballot. However, I think that education is vitally important, both for society and for business, and there seems to be a lack of good education in the Portland area. PCC seems to be doing a good job now, so I'm hopeful that they will be able to use additional funds effectively.
  • Measures 57 and 61, which are both "tough on crime" bills. Both would institute mandatory minimum sentences for many crimes, and measure 61 would spend a bunch of money to build new prisons. Measure 57 requires addiction treatment for some offenders, which I think is a great idea. While we do need to lock up some people, I think that the "Department of Corrections" should do more correcting and less carcel-ing. I also think that it's better to let judges decide sentences depending on circumstances, rather than require them to issue one-size-fits-all mandatory minimum sentences. Finally, I don't think that it's worth diverting the government's resources away from education and healthcare to fund more prisons. Interestingly, if both of these measures pass, then only measure 57 will be enacted. Some people who aren't fans of either one are voting for measure 57, just because they think it is the lesser of two evils. I decided that I want no evil, so I voted against both.
  • Several positions (mostly for county judges) that looked like this: "(Position): Vote for one: (1) Person A. (2) Other: __________". Those ones were easy.
I thought a lot about most of the 15 positions and 19 issues that I voted on, and it ended up taking me about six hours to finish. Voting took a lot more time this time around, since I haven't been living in Oregon. I wasn't familiar with a lot of the issues, so I had to do a bunch of research on them.

I ended up voting for five democrats, three republicans, and a guy from the Pacific Green Party.

One of the republicans I voted for was Gordon Smith, the incumbent senator. I've been really impressed with his moderate, bipartisan record in Congress. It's too bad there aren't more politicians like him.

One of those democrats is probably the one that you're wondering about: I voted for Obama. (I know, I know! Heresy! A BYU student voted for Obama!) Here's some of my reasoning:
  • I've been appalled at the lack of fiscal restraint that has swept over the Republican party during the last several years, and I think that they deserve a slap on the wrist.
  • I don't think that Sarah Palin is prepared to hold high office, despite her popular looks. Can you imagine her negotiating with Vladimir Putin? It wouldn't be pretty. There's a non-zero chance that McCain will die during his term, and the thought of President Palin doesn't leave a good feeling in my stomach.
  • Obama seems to genuinely care about improving life for common Americans. While I'm economically pretty conservative, I'm rather socially liberal, so Obama and I agree on many issues.
  • Obama will do great things for our international relations. Bush and Cheney have been an absolute disaster, and we need someone who can restore our good name in the world. When I was in Europe this summer, every European I asked supported Obama. The rest of the world cares a lot about this election. They want to like the United States, but we haven't given them many reasons to do so for the past few years. Our actions have spurred anti-Americanism across the globe. I think terrorism is largely a boogeyman that has been blown out of proportion, but if we want to reduce our risk to terrorism, I think it's more valuable to quit making everyone mad than to send our military around harassing everyone we don't like.
  • I'm impressed with his energy policy, despite his stance on ethanol (see below). Energy is going to become a huge issue—perhaps the issue—over the next decade, and Obama has a much better plan than McCain to deal with it. I like the idea of an Apollo-like program to catalyze the nation into solving this immense problem, because private industry doesn't seem to be doing enough. The space program resulted in huge advantages to our economy, and I think that a similar energy-related program will also pay off.
  • I think that Obama takes a more reasoned approach to decision making. I'm a fan of leaders who think.
  • I think that Obama is a good person with good intentions.
There are also several things that I don't like about Obama:
  • He wants government to solve a lot of society's problems. I think there's a legitimate role for government, but I think his idea of its role is bigger than mine.
  • Having a democratic president and a democratic congress produces too little governmental friction. The idea of separation of powers runs deep in American government for good reason. I would prefer to have a little more tension between the executive and the legislative branches.
  • He supports ethanol, perhaps because he's from corn-rich Illinois. That's a bad idea for many reasons. It's not sustainable, it increases food prices, and the subsidies for it cause problems for agricultural exports and imports in developing countries.
  • He lied about fundraising for his campaign. He told McCain that if McCain accepted public funding, Obama would too. McCain went ahead with public funding, and Obama went back on his word. He's since been able to outspend McCain by immense margins. Not cool.
For a more detailed explanation of some of the reasons that I voted for Obama, see David Bassett's analysis.

Although I didn't get an "I Voted" sticker, thanks to the magic of technology, I'm now able to self-issue myself a virtual one:


I voted... and you should, too!

Thursday, October 16, 2008

Global poverty

There's a big news story today that no one is covering. The story is that much of the world is living in poverty.

In 1987, the U.N. designated today, October 17, as International Day for the Eradication of Poverty. While the New York Times covers how much Barak Obama is spending on ads, and CNN covers a new archaeological site in Rome, I can't find a blip today about poverty on their web sites. I bet I know which story is more important to the billions of people wondering what they're going to eat today. (At least the BBC wrote something.)

To give you a sense of the situation, are a few statistics:
  • There are about 6.7 billion people in the world.
  • About half of those people live on less than $2.50/day.
  • 26,500-30,000 children die each day due to poverty (source). You think school shootings are bad? Try annihilating two or three average-sized elementary schools—every hour.
  • 1 in 6 people in the world are illiterate (source).
  • 2.6 billion people lack basic sanitation.
  • 1.1 billion people have inadequate access to water.
Excluding China, things have improved some, but not much, over the past few decades:

(Image from Anup Shah, Poverty Facts and Stats, GlobalIssues.org. Used with permission under a Creative Commons license.)

If you're reading this post, chances are that you're not part of the population that we're talking about. The fact that you have electricity and internet access bumps you out of that group. However, that means that you probably also have a lot of capacity to help.

Christ taught that "unto whomsoever much is given, of him shall be much required". This principle certainly applies to both you and me as individuals, as well as the countries where we live. We have a lot to do as a world. People and countries that are well off (that's you!) have a responsibility to help those who are struggling.

The way that we help is important, because some help actually hurts. For example, food aid can actually cause more problems than it solves, since it can depress prices below what local farmers can compete with. (Agricultural subsidies in developed nations have the same effect.) The result is that instead of having local farmers supply nutritional needs and build the local economy, the farmers are themselves forced into poverty and their country becomes even more dependent on foreign aid. Real solutions must be sustainable.

As part of Poverty Day today, the U.N. released a book called Turning Rhetoric into Action. Its motto, "With us not for us", is a good summary of how to make real progress.

So how do we solve this problem? I'm not an expert, but it seems like these things might help:
  • Reduce barriers to trade for poor countries. Providing a broader market for poor people to sell their wares would cost us little and help them a lot.
  • Get rid of farm subsidies. Artificially pricing one of the most viable economic activities in developing nations out of the game just isn't cool.
  • Help people in developing nations learn how to lift themselves out of poverty. We can't just do it for them, or else things will return to how they were when we leave. People and nations need to become self-sufficient.
  • Relieve debt for poor countries. This would free up resources spent financing debt for more productive uses.
"OK," you might say, "but what can I do? I can't just eliminate tariffs by myself or forgive Madagascar's debt." True. Fighting poverty requires big changes that no one can effect alone. However, you can still help. Spread the word. If everyone knew and cared about this issue, things would change. Contribute to organizations that promote sustainable solutions to world problems. Influence the legislative process to promote helpful policies and laws. Pray for change—and then do something.

For more information on Poverty Day:
(As a side note, the U.S. doesn't do so hot with poverty at home, either. Fourty percent of us have been below the poverty line in the last ten years, and around 15% are currently below the line.)

Tuesday, September 16, 2008

How economists vote (and why they matter)

Scott Adams is the creator of Dilbert comic strip, so you shouldn't take him too seriously, right? Not true—at least not today. Adams recently commissioned (out of his own pocket!) a quite-serious survey of the political opinions of over 500 economists. Today he released the results.

The findings are interesting. Here are a few tidbits:
  • 48% of economists surveyed are Democrats, while only 17% are Republicans.
  • Not surprisingly, those surveyed favored Barak Obama over John McCain.
  • Economists think that education is the most important economic issue.
Take a look at the full results. I bet you'll learn something.

(Scott Adams also recently wrote about why economists matter. It's a good read.)

Tuesday, June 10, 2008

Oil economics

I was listening to NPR on the way home from work today, and there was a news blurb about the high price of crude oil (around $140/barrel lately). It said that, in an effort to reduce gas prices:
  • Democrats want to tax oil companies and give tax breaks on gas to working families.
  • Republicans want to tap ANWR and other currently off-limits domestic sources of oil to increase supply.
Both of these options sound pretty ridiculous—or perhaps I should say "unviable" or "unsustainable". We Americans don't have a God-given right to cheap petroleum, not even if our lawmakers say so. The factors that determine petroleum prices at any given time are complex, but there's one fundamental force at work in the long term: economics. And, despite Congress's desires, you can't legislate away economics. At least the energy secretary seems to understand that.

Taxes

The Democrats want to tax oil companies (or reduce their tax breaks). NPR said that the petroleum industry receives $17B in tax breaks, but they didn't specify over what time period that was. Let's assume the best-case scenario (for consumers):
  • The $17B/year would be distributed back to taxpayers directly.
  • The profits of the three largest oil industry profits ($71B/year in 2007) would be returned to taxpayers.
That adds up to $88B/year in savings to consumers. The U.S. uses about 142B gallons of gasoline a year, so that comes out to a total savings of $0.62/gallon. The more realisitic option of eliminating tax breaks but leaving profits alone would produce a savings of only $0.12/gallon. These savings are significant, but not sustainable. More importantly, this solution doesn't fix the underlying economic problems. It's just a Band-Aid. (Sources and calculations.)

U.S. Oil Reserves

I don't need to construct a long argument for this one: currently available U.S. oil reserves would last about three years at current rates of consumption. Tapping currently off-limits areas would approximately double that. Band-Aid? You bet.

Option Three

Let me suggest a third option to add to the two lousy choices reported on NPR:
  • Reduce demand for petroleum, or face up to the high (and rising) prices.
The only sustainable, long-term solution is to use less oil, since it's a finite (and dwindling) resource. No matter how many laws Congress passes, they can't cause trillions more barrels of oil to appear in the ground. Rather than trying to hide the problem with Band-Aids and gimmicks, we should face reality.

Of course, politicians know that telling people the truth about economics doesn't get you elected—most of them, anyway. I've been very impressed with Barack Obama's position that we should not lower the gas tax. He argues that it doesn't make sense, and he's right. He's a politician who's arguing for what's right and reasonable instead of what's popular right now. That's impressive.

(As a side note, I took this post's photo in August 2006 and labeled it "Crazy gas prices in St. Mary, Montana" because the price was the highest I had seen in my life. These days, that price is "crazy" again, but because it's crazy cheap, not crazy expensive!)

Wednesday, May 28, 2008

Can you balance the federal budget?

My roommate pointed out today that the New York Times Freakonomics blog has a link to a really cool online game called Budget Hero. The premise is simple: you get to choose how the federal budget is divvied up. You play cards that send a little money to your favorite program, cut the ones you don't like, and raise or lower taxes in specific ways. If you haven't seen it, you should definitely check it out. It's not only entertaining, but it's also really informative.

How did I do? Glad you asked.
  • I reduced the debt from 37% ($8.4T) of GDP today to 13.5% of GDP ($3.0T) in 2018.
  • I delayed the time when the government will run out of money to fund programs from 2033 until sometime after 2070.
  • I shrank the size of the government from 20.0% of GDP today to 18.4% of GDP in 2018.
  • I improved the budget from a several-trillion-dollar deficit today to a surplus of more than $6T in 2018.
How did I do it? My biggest changes were:
  • Cap and limit carbon emissions.
  • Limit the Bush tax cuts to only the needy.
  • Cut military spending by 10%.
  • Eliminate pork barrel projects.
Climate change is a serious problem, and the U.S. contributes to it largely because carbon emissions are currently a negative externality. For those of you who slept through economics, that means that it's a bad effect that you don't have to pay for. Capping carbon emissions would solve two problems: it would limit the amount that goes into the atmosphere, and it would force people who are polluting to pay for it.

I'm all for tax cuts, but not when the government is $37T in debt. I think that paying down the debt is more important than keeping a few more dollars in the rich's pockets. We've been playing a dishonest game of spending more than we make for a long time, and it's time to bite the bullet and own up.

If you haven't played, give it a whirl. You might learn a thing or two. I sure did.

Sunday, February 10, 2008

Queuing efficiency

OK. It's time for a little venting about something everyone deals with and no one likes: lines, or queues, for you folks across the pond.

A line is a sign of inefficiency that occurs when the rate of demand for a resource exceeds the rate of supply. As an engineering student who is also interested in economics, I look at lines from a practical point of view. I'm always trying to find ways to shorten or eliminate lines, or at least reduce the amount of time that I spend in them.

I often find myself silently wishing that someone would fix the problems with lines so that I wouldn't have to spend so much time standing around. But how do you fix a social problem as big as line behavior? Maybe I should work on getting it introduced as part of the national first grade curriculum. I could probably save the country $500 billion in productivity losses over the next 20 years. Maybe they'd put my face on a postage stamp—one that you would no longer have to stand in line at the post office to buy.

Failing that, I guess I could just blog about the situation instead.

Here goes.
  • What's the deal with buffets? They seem to be a magnet for questionable queue practices. For example, why does it seem that most buffet lines go down just one side of the table? It doesn't take a rocket scientist to see that if the line goes down both sides, it will go twice as fast.
  • Also, who puts the napkins, forks, and cups at the beginning of the buffet line? That plugs up the beginning of the line, and it also slows down the rest of the line because you have to juggle all your utensils while you're trying to dish up your food. Put the accessories at the end, folks!
  • What's with the social stigma against cutting in a buffet line? You know how lots of times everyone is backed up at the liver (or whatever), and there's a giant gap after that at the rolls, and cookies, and baked beans, etc.? If I skip up ahead to the rolls, it doesn't slow anyone else down, but I feel like everyone will think I'm a bad person if I do. That doesn't stop me, though. (Really, a buffet swarm would be more efficient than a buffet line, but it doesn't preserve the first-in-first-out property.)
  • Change of venue: the sidewalk. BYU's hallways and sidewalks get pretty plugged up during class breaks. I hate it when I'm walking down a crowded sidewalk and someone just stops in front of me. If they looked around, they would realize that they had disrupted the vast current of students flowing behind them, slowing down hundreds of people. Next time you need to send a text message, be a little more aware of your surroundings and step off the sidewalk first.
  • For that matter, if you feel the need to talk to five of your best friends, don't do it right in the middle of a really busy sidewalk. There are better places.
  • Back to the buffet: you don't actually have to stand in line—at least not for very long. Most people go get in line right when the event starts, and many of those people have to wait quite a while to get to the front. Why not just wait in your seat where you can have a good conversation with your friends, and go get in line when it dies down? It's a lot more pleasant that way.
  • Have you ever been in a class where a bunch of signup sheets (or assignments to be returned, or whatever) have been passed around? If the pile is big enough, it snakes through the first two or three rows, but it doesn't makes it to everyone before class is over. There's a solution to the problem, inspired by a principle from computer processor design: pipelining. Instead of sending everything around in one giant pile, break it up into several smaller piles and send them around one after the other. The total amount of time that any one person spends going through everything will be the same (after all, there are still the same number of things to go through), but since the piles are smaller, they will move between people faster, and thus hopefully make it to everyone by the end of class.
Thanks for indulging me. Watch for this information coming to a first grade classroom near you.