I've been known to say that the best job growth will be found where there is sustainable development. This sounds like nonsense to some people who grew up with an understanding that there is always a contradiction between economic growth and taking care of the environment.
I'd like to define my terms and clarify my statement such that my claim that the best job growth will be found in a sustainable economy is a logically sound and self-proving statement that does not need any empirical verification.
In general, the scientific process does not really allow for what is called a priori knowledge, so I understand that the following argument may not appeal to materialists or empiricists. As such, the following argument must be considered as a philosophical argument. Here goes...
The statement is as follows ... The best prospects for job growth and economic development can be found where there are incentives which encourage entrepreneurship in sustainable development for new and existing businesses in all shapes and sizes.
The first part of my argument is very short. The statement could be seen as a value judgment, and therefore cannot be logically disagreed with. The way that I am using the word "best" here is a subjective valuation according to my ethical values. This is a highly ineffective defence of my argument though, since someone else could just disagree. In this line of thinking, it would be equally valid for them to say that the best prospects for job growth would be found where every natural environment was economically developed to the max. Given a difference in values, empirical verification becomes meaningless, and recourse to political discourse and economic games would be required.
I don't generally like to make values-based arguments since they are necessarily subjective, and are formed by one's education, upbringing and experience of the world. Values-based arguments are highly effective when preaching to the converted, but are otherwise a waste of breath.
Since incentives can mean anything (although generally refer to tax incentives or regulatory frameworks that influence production decisions), and business can be defined in any way you like (but generally refer to private businesses operating within a regulatory framework), the rest of the statement is not particularly amenable to a logical contradiction, and can be interpreted in any way desired.
___________________
As such, I move to defend my statement in another way. The focus here is on the concept of sustainable job growth. The argument is straightforward in my mind. The first thing I do is to create a dichotomy between unsustainable job growth and sustainable job growth.
By definition, unsustainable job growth eventually crashes, or goes into decline. By definition, sustainable job growth is that which never exploits our natural resources, under available combinations of technology, physical capital and human capital, at a level that would bring on a future crash in job growth.
In principal, job growth can be positive or negative in both cases. In terms of human development, this can be more effectively considered in per capita terms, but the realpolitik of international relations requires genuine consideration of absolute gains, and the consequential effects on the relative distribution of power in the international system.
In principal, this argument does not necessarily set aside any portion of nature for the purposes of protecting nature. It could be interpreted as setting aside only a sufficient portion of nature such that natural capital would provide returns through environmental services such as cleaning water, maintaining soil or air quality, processing toxins, tourism.... etc. I don't really like such an extreme commoditization of nature, but it is a useful approach when faced with arguments that God gave us the earth to exploit in every way possible, or some such thing. (In a more literal interpretation of the passage, I think we are actually instructed to take care of nature, not to destroy it.)
Having created a dichotomy where there is either unsustainable or sustainable job growth, all I really need to do is point out that if it's unsustainable then it'll crash. As we eat into natural capital, the net economic potential for any given set of technical combinations falls below the scenario of sustainable job growth.
There you have it. The best prospects for job growth and economic development can be found where there are incentives which encourage entrepreneurship in sustainable development for new and existing businesses in all shapes and sizes.
You can argue this from a values perspective, focusing on "best", but someone can equally make the opposite argument. Or, you define unsustainable as anything that leads to a crash in economic output resulting from reduced natural capital. Anything else is, in principal sustainable.
While there is no possible untruth in this argument, the unfortunate limitation is that it's practical applications can only be pursued by venturing back into the domain of values.
It is important for the politically oriented to acknowledge that economics always influences politics, as dictated by our material nature and the reality that relative gains are the primary currency of hard power in the international arena. It is also important for the economically oriented to acknowledge that economic efficiency is never, on its own, a sufficient argument for anything. That is to say that desirable solutions always involve value judgments, which involves political processes, whether at the level of families, communities or nations.
_____________________
The problem though, lies in what can be called time preferences, or something called a 'social discount rate'. I'm not going discuss the term. Instead, I'm going to draw attention to what is typically considered the 'long term' for purposes of economic analysis.
Economics considers the long term to be any period of time where all production factors, including the size of the factory or work force, can be changed. This is a useful way to engage in analysis of optimization of production factors.
When the long term is defined by the amount of time it takes to build or vacate a factory, it becomes exceedingly difficult to discuss the REAL meaning of the long term with economists.
To express how differently I see the long term, consider this. Some people find security in a 200 year supply of coal. I think 200 years is a very short period of time compared to the 10-14000 since we started farming, and is barely a blink of the eye compared to the millions of years it took to build up those energy deposits.
I suppose the psychological impact of regarding ones life as a blink of an eye in the history of the world may be daunting for people who are obsessively focused on their own self-importance and the material present. I personally find it quite comforting. That's another story altogether, and one that, to my knowledge, has not been taken up very effectively in the context of the environment, the economy, and our status as questioning beings. The conclusion that comes from such reflection is the following - nature is ultimately resilient and recovers over the space of thousands or millions of years. It is us, the human species, who are ultimately threatened, economically and spiritually, by an excessive focus on our present economic development.
The statement that I am defending may well appear untrue when looking at a 5 or 20 year time frame.
Let me state again, that I believe that the best prospects for long term growth job will be found where there is sustainable economic development. The statement is, in and of itself, an inherently true statement, when considering a truly long term outlook.
Saturday, November 22, 2008
Wednesday, November 19, 2008
Why we should bail out GM and Ford
Well, I can think of one good reason. People work there. OK, there’s the end of that side of the argument.
The littler three auto companies already got $25 billion to help them get rolling with some new initiatives earlier in the year. A big question right now is whether we should help them get their hands on another $25 billion to help retool their factories (presumably with some additional Canadian funds tossed into the pot as well).
One could ask, to start with, why they need such enormous sums of money. Aren’t corporations supposed to be good at concentrating wealth in their own hands? Well … companies that are good at this stick around for a long time and companies that aren’t good at making money either change or go extinct.
As lots of people know, American auto makers have been making quite sizeable and inefficient vehicles for the last number of years, despite rising concerns about sustainability, climate change, and so on. It’s hard to blame them too much, since we the consumers (not counting me) have been buying the enormous vehicles. All the same, most of the rest of the world has put together more stringent efficiency standards than North America, and GM, Ford and Chrysler have had the nerve to claim that these efficiency standards were protectionist measures that excluded our SUVs from competing in foreign markets. Not surprisingly, when the price of fuel recently shot up, demand for vehicles made by these dinosaurs collapsed.
Of course, there are all the problems with the credit markets that have made it exceedingly difficult for auto makers to offer the generous credit conditions that they often use to encourage people to buy new cars and trucks.
Altogether, it can be said that the companies set themselves up for disaster, and now that disaster is hitting, it’s really hitting.
_______________________
To change the topic briefly, let’s consider the optimal time of investing in a green economy. I asked myself this question some time ago. In a conversation with someone who works in the finance industry, I suggested that companies in green energy would be a great place for long term investment.
Main problems in investing early in green tech as a portfolio investor would be picking the right companies. This could be largely taken care of by pooling investments through an investment vehicle such as a mutual find. Still, the problem of timing comes along.
I realized, sadly, that the optimal investment strategy was not to take the very long term picture. The optimal strategy for an individual would be to stay in the unsustainable model for as long as possible, and try to jump into green energy just an instant before it really caught on.
Do you see an analogy here?
Both consumers and the auto makers have been playing this unfortunate game. The consumers have been funding their profligate tastes by consuming at a rate well beyond sustainability. The companies have acted in accordance, by taking some very limited endeavours to develop products for the markets of the future, while focusing on their high-margin markets such as SUVs, light trucks, etc.
That is to say, that the North American companies have been investing all their capacity into short-term unsustainable growth, and are waiting until the last possible moment to switch to producing more efficient vehicles that would meet the needs of a future economy.
_____________________________
Back to the bailout.
Now if you don’t think this was a calculated risk, then you have more, or less, faith in the leadership of the big auto companies than I do. I’d suggest that either one points to poor handling by management in recent years.
In the more optimistic case, the auto makers were caught completely unaware. Toyota, Hyundai and other manufacturers were bringing efficient cars into our markets, while making cars that passed the efficiency requirements of other markets. Meanwhile, they designed a number of enormous vehicles to meet the tastes of North American consumers.
In this perspective, the North American auto makers were completely outmanoeuvred by foreign competitors who designed cars that competed in more markets, that were more efficient, were more attractive to consumers who worry about the costs of gas or climate change, and that were more sellable in uncertain economic times due to their greater efficiency and affordability. The North American auto makers could thus be seen as ignorant, or as poor strategists. They tried to profit from high-margin, large vehicles, and lost markets share over a long period of time due to an inability to shift to a new strategy.
In this perspective, bad strategy merely combined with hard economic times, leading them to burn through billions of dollars a month while looking for a way out, while looking for a way to survive through the present economic difficulties.
This is, more or less, what the industry seems to suggest has happened.
I went onto the websites of GM, Ford and Toyota yesterday. This is by no means a scientific comparison, but GM, and Ford made lots of really big trucks and cars with relatively poor fuel efficiency (and had a couple of small models), while Toyota offered a large variety of small, fuel efficient cars, as well as a decent line-up of minivans and trucks, with a few monsters to boot.
My immediate thought was this – Toyota has been planning for the future for a long time. This was significantly helped by the fact that lots of international markets have better efficiency standards than we have in North America, but all the same, they simply make more efficient vehicles. The American manufacturers, however, made lots of big cars and trucks that clearly had no mind to sustainability.
I couldn’t help but think they were playing the apparently optimal strategy of trying to squeeze every penny of profit out of the unsustainable economy before a rapid switch to the new economy. They wanted their competitors to take all the risks in testing new strategies in auto markets while focusing in high-margin SUV and light truck markets for as long as possible.
Now, they want us to bail them out and help pay for the process of retooling their factories to make something that is less unsuitable for the future economy … after they failed to plan for it like other companies did.
The problem is that they got caught with their pants down when the credit crisis hit. It’s tempting to just take some photos and laugh, but the reality is that millions of jobs in North America depend on this industry. Green as I am, I recognize that people will continue to drive cars for some time. They should be smaller, greener cars, of course, and they will be … although I hesitate to consider any sort of car ‘green’.
Do I care if we make and buy Toyotas or Fords in North America?
Well, personally, not really, but I am not insensitive to the idea that it is of some strategic advantage to have technological innovation happening in our borders. This argument is pretty weak these days due to the rapid diffusion of technology across borders, but we can’t pretend that this argument doesn’t exist.
There’s also the whole thing about where the profits go … if profits get sent overseas then it doesn’t benefit my neighbours or their friends and family as much as if the jobs were local. Then again, my neighbours might be able to make more money making things other than cars. The problem is that economic logic plays out in the long term, but short term pain may not be politically acceptable.
Lots of people are going to lose jobs in the auto sector in the coming months or years. Some people argue that this means we should fork over billions in aid to companies who largely created their own problems.
I don’t think we should do nothing about the shrinking pains in the auto sector, but if we are worried about the effects on families, we should be supporting efforts by these people to shift into an area of the economy that has a future.
____________________________________
To finish off, let me tell you Stalin’s greatest strategic mistake. He bet on heavy industry.
In principle, his approach to economic growth should have worked wonders (and it did in the first few years). He determined that as much of production as possible should be recycled into physical capital in heavy industry. This view was driven by historical evidence that rapid economic growth was fuelled by growth in heavy industry.
There was one major problem with Stalin’s analysis though. Heavy industry was a major factor behind early industrialization and growth in the century preceding his rule. Growth industries after the 1940s collected most of their gains in industries that were outside the scope of heavy industry.
Our auto makers are now telling us that our economy needs enormous infusions of state capital to protect our economy today and in the future.
Stalin bet on old growth industries. New growth industries will be green.
Yes, limit the damage to Canadian and American families who presently rely on the auto industry. Handing out billions to keep them making things that society and the economy don’t need is not only a disturbing waste of economic resources, it is a sign of incompetence among the financial planning elite.
What do I suggest? Spend the money supporting the families. Let the companies go bankrupt if they must, since this will reduce the glut of capacity for cars that do no favours to a sustainable economy. Betting public money on an unsustainable industry in relative decline cannot possibly be the solution we’re looking for. If communism taught us something useful, it’s that one of the worst ways to maintain employment is to support industries that make things that people don’t want to buy.
I’m not convinced that we need a huge auto industry, but if we are committed to it, then maaaaybe whatever comes out of the ashes can receive public support for retooling if credit markets continue to be gummed up.
Maybe GM will come to be known as the largest maker of wind turbines around.
The littler three auto companies already got $25 billion to help them get rolling with some new initiatives earlier in the year. A big question right now is whether we should help them get their hands on another $25 billion to help retool their factories (presumably with some additional Canadian funds tossed into the pot as well).
One could ask, to start with, why they need such enormous sums of money. Aren’t corporations supposed to be good at concentrating wealth in their own hands? Well … companies that are good at this stick around for a long time and companies that aren’t good at making money either change or go extinct.
As lots of people know, American auto makers have been making quite sizeable and inefficient vehicles for the last number of years, despite rising concerns about sustainability, climate change, and so on. It’s hard to blame them too much, since we the consumers (not counting me) have been buying the enormous vehicles. All the same, most of the rest of the world has put together more stringent efficiency standards than North America, and GM, Ford and Chrysler have had the nerve to claim that these efficiency standards were protectionist measures that excluded our SUVs from competing in foreign markets. Not surprisingly, when the price of fuel recently shot up, demand for vehicles made by these dinosaurs collapsed.
Of course, there are all the problems with the credit markets that have made it exceedingly difficult for auto makers to offer the generous credit conditions that they often use to encourage people to buy new cars and trucks.
Altogether, it can be said that the companies set themselves up for disaster, and now that disaster is hitting, it’s really hitting.
_______________________
To change the topic briefly, let’s consider the optimal time of investing in a green economy. I asked myself this question some time ago. In a conversation with someone who works in the finance industry, I suggested that companies in green energy would be a great place for long term investment.
Main problems in investing early in green tech as a portfolio investor would be picking the right companies. This could be largely taken care of by pooling investments through an investment vehicle such as a mutual find. Still, the problem of timing comes along.
I realized, sadly, that the optimal investment strategy was not to take the very long term picture. The optimal strategy for an individual would be to stay in the unsustainable model for as long as possible, and try to jump into green energy just an instant before it really caught on.
Do you see an analogy here?
Both consumers and the auto makers have been playing this unfortunate game. The consumers have been funding their profligate tastes by consuming at a rate well beyond sustainability. The companies have acted in accordance, by taking some very limited endeavours to develop products for the markets of the future, while focusing on their high-margin markets such as SUVs, light trucks, etc.
That is to say, that the North American companies have been investing all their capacity into short-term unsustainable growth, and are waiting until the last possible moment to switch to producing more efficient vehicles that would meet the needs of a future economy.
_____________________________
Back to the bailout.
Now if you don’t think this was a calculated risk, then you have more, or less, faith in the leadership of the big auto companies than I do. I’d suggest that either one points to poor handling by management in recent years.
In the more optimistic case, the auto makers were caught completely unaware. Toyota, Hyundai and other manufacturers were bringing efficient cars into our markets, while making cars that passed the efficiency requirements of other markets. Meanwhile, they designed a number of enormous vehicles to meet the tastes of North American consumers.
In this perspective, the North American auto makers were completely outmanoeuvred by foreign competitors who designed cars that competed in more markets, that were more efficient, were more attractive to consumers who worry about the costs of gas or climate change, and that were more sellable in uncertain economic times due to their greater efficiency and affordability. The North American auto makers could thus be seen as ignorant, or as poor strategists. They tried to profit from high-margin, large vehicles, and lost markets share over a long period of time due to an inability to shift to a new strategy.
In this perspective, bad strategy merely combined with hard economic times, leading them to burn through billions of dollars a month while looking for a way out, while looking for a way to survive through the present economic difficulties.
This is, more or less, what the industry seems to suggest has happened.
I went onto the websites of GM, Ford and Toyota yesterday. This is by no means a scientific comparison, but GM, and Ford made lots of really big trucks and cars with relatively poor fuel efficiency (and had a couple of small models), while Toyota offered a large variety of small, fuel efficient cars, as well as a decent line-up of minivans and trucks, with a few monsters to boot.
My immediate thought was this – Toyota has been planning for the future for a long time. This was significantly helped by the fact that lots of international markets have better efficiency standards than we have in North America, but all the same, they simply make more efficient vehicles. The American manufacturers, however, made lots of big cars and trucks that clearly had no mind to sustainability.
I couldn’t help but think they were playing the apparently optimal strategy of trying to squeeze every penny of profit out of the unsustainable economy before a rapid switch to the new economy. They wanted their competitors to take all the risks in testing new strategies in auto markets while focusing in high-margin SUV and light truck markets for as long as possible.
Now, they want us to bail them out and help pay for the process of retooling their factories to make something that is less unsuitable for the future economy … after they failed to plan for it like other companies did.
The problem is that they got caught with their pants down when the credit crisis hit. It’s tempting to just take some photos and laugh, but the reality is that millions of jobs in North America depend on this industry. Green as I am, I recognize that people will continue to drive cars for some time. They should be smaller, greener cars, of course, and they will be … although I hesitate to consider any sort of car ‘green’.
Do I care if we make and buy Toyotas or Fords in North America?
Well, personally, not really, but I am not insensitive to the idea that it is of some strategic advantage to have technological innovation happening in our borders. This argument is pretty weak these days due to the rapid diffusion of technology across borders, but we can’t pretend that this argument doesn’t exist.
There’s also the whole thing about where the profits go … if profits get sent overseas then it doesn’t benefit my neighbours or their friends and family as much as if the jobs were local. Then again, my neighbours might be able to make more money making things other than cars. The problem is that economic logic plays out in the long term, but short term pain may not be politically acceptable.
Lots of people are going to lose jobs in the auto sector in the coming months or years. Some people argue that this means we should fork over billions in aid to companies who largely created their own problems.
I don’t think we should do nothing about the shrinking pains in the auto sector, but if we are worried about the effects on families, we should be supporting efforts by these people to shift into an area of the economy that has a future.
____________________________________
To finish off, let me tell you Stalin’s greatest strategic mistake. He bet on heavy industry.
In principle, his approach to economic growth should have worked wonders (and it did in the first few years). He determined that as much of production as possible should be recycled into physical capital in heavy industry. This view was driven by historical evidence that rapid economic growth was fuelled by growth in heavy industry.
There was one major problem with Stalin’s analysis though. Heavy industry was a major factor behind early industrialization and growth in the century preceding his rule. Growth industries after the 1940s collected most of their gains in industries that were outside the scope of heavy industry.
Our auto makers are now telling us that our economy needs enormous infusions of state capital to protect our economy today and in the future.
Stalin bet on old growth industries. New growth industries will be green.
Yes, limit the damage to Canadian and American families who presently rely on the auto industry. Handing out billions to keep them making things that society and the economy don’t need is not only a disturbing waste of economic resources, it is a sign of incompetence among the financial planning elite.
What do I suggest? Spend the money supporting the families. Let the companies go bankrupt if they must, since this will reduce the glut of capacity for cars that do no favours to a sustainable economy. Betting public money on an unsustainable industry in relative decline cannot possibly be the solution we’re looking for. If communism taught us something useful, it’s that one of the worst ways to maintain employment is to support industries that make things that people don’t want to buy.
I’m not convinced that we need a huge auto industry, but if we are committed to it, then maaaaybe whatever comes out of the ashes can receive public support for retooling if credit markets continue to be gummed up.
Maybe GM will come to be known as the largest maker of wind turbines around.
My favourite new snack/invention
Can of chick peas
Olive oil
A few cloves of garlic
Some minced green pepper
Chilli flakes (lots), chilli powder (little), parsley (lots), black pepper (little), sesame seeds (some), parmesan cheese (in proportion to budget)
Cook the chick peas in a few table spoons of olive oil on high heat so they get a bit browned. Time the garlic and peppers depending on your preferred balance between roasted and burnt flavours. Add plenty of the appropriate spices. Spread them out on the frying pan so they all get sort of burnt on one side. Add parmesan cheese, then use a flipper to flip them. Don’t worry about being too careful. Add more olive oil and parmesan cheese. Let the parmesan cheese get sort of crispy fried. 10 min total
Heat flat bread and eat it together, or on its own.
Like all my favourite foods … easy, cheap and healthy, blended together with damned tasty.
Olive oil
A few cloves of garlic
Some minced green pepper
Chilli flakes (lots), chilli powder (little), parsley (lots), black pepper (little), sesame seeds (some), parmesan cheese (in proportion to budget)
Cook the chick peas in a few table spoons of olive oil on high heat so they get a bit browned. Time the garlic and peppers depending on your preferred balance between roasted and burnt flavours. Add plenty of the appropriate spices. Spread them out on the frying pan so they all get sort of burnt on one side. Add parmesan cheese, then use a flipper to flip them. Don’t worry about being too careful. Add more olive oil and parmesan cheese. Let the parmesan cheese get sort of crispy fried. 10 min total
Heat flat bread and eat it together, or on its own.
Like all my favourite foods … easy, cheap and healthy, blended together with damned tasty.
Monday, November 3, 2008
Tasers
Much like tobacco use, it would be impossible to prove beyond a doubt that a taser was the cause of death in a specific case. In any given case, a person could have died from a number of reasons, and the taser doesn't leave evidence of causation, as opposed to what happens with a physical beating. Similarly, we know that smokers are more likely to get cancer, but cancer can also come from random chance or other causes. The individual case cannot be proven, even if there is a systemic flaw.
There seems to be a disturbing trend here. Too many people are dying from the taser.
The only physiological literature I was able to find on the matter when researching it about a while ago basically suggests that while the taser's charge is very strong, the bursts of electricity are too short to kill people. They extrapolated results from an experiment that was not carried out on humans, using some estimates about typical conductivity in the human body, under normal circumstances, to claim it was safe.
However, 99.9% sure isn't good enough for a weapon used regularly by police across the country on a daily basis. At least with billy clubs the resulting evidence is well enough understood to know if the force excessively endangered a citizen's life.
Tasers may have saved officers from some bruises. But it comes at the high price of most of the respect that the public may have held for them ... not to mention the cost of some statistical portion (perhaps all) of those 20 lives.
As a teen, I feared, yet respected police. Then I came to respect their role in society. Since the question of tasers has come along, I now have an inclination to both fear AND disrespect the police. I'm not talking about the cops on the streets, I'm talking about the institution. There is ONE reason for that. The taser.
Since this is a question that requires medical experts, I believe that is should have to go through a process similar to that carried out by Health Canada when approving new drugs.
Tasers may be a useful tool in the law enforcement toolkit, but any ongoing use of this weapon should be accompanied by full documentation of every event where a taser is used.
Since police don't typically like more paperwork, this could act as an incentive. Incidentally, it would also provide us with more information to make better choices with respect to the use of tasers if they are here in the long run.
____________
Now that reading week is over, and there are no more strikes to interfere with regular classes, I'm sure it'll become unrealistic to set aside an hour or two to writing stuff that has nothing to do with my school work. Fewer pieces, usually shorter, will be the norm over the next six weeks.
There seems to be a disturbing trend here. Too many people are dying from the taser.
The only physiological literature I was able to find on the matter when researching it about a while ago basically suggests that while the taser's charge is very strong, the bursts of electricity are too short to kill people. They extrapolated results from an experiment that was not carried out on humans, using some estimates about typical conductivity in the human body, under normal circumstances, to claim it was safe.
However, 99.9% sure isn't good enough for a weapon used regularly by police across the country on a daily basis. At least with billy clubs the resulting evidence is well enough understood to know if the force excessively endangered a citizen's life.
Tasers may have saved officers from some bruises. But it comes at the high price of most of the respect that the public may have held for them ... not to mention the cost of some statistical portion (perhaps all) of those 20 lives.
As a teen, I feared, yet respected police. Then I came to respect their role in society. Since the question of tasers has come along, I now have an inclination to both fear AND disrespect the police. I'm not talking about the cops on the streets, I'm talking about the institution. There is ONE reason for that. The taser.
Since this is a question that requires medical experts, I believe that is should have to go through a process similar to that carried out by Health Canada when approving new drugs.
Tasers may be a useful tool in the law enforcement toolkit, but any ongoing use of this weapon should be accompanied by full documentation of every event where a taser is used.
Since police don't typically like more paperwork, this could act as an incentive. Incidentally, it would also provide us with more information to make better choices with respect to the use of tasers if they are here in the long run.
____________
Now that reading week is over, and there are no more strikes to interfere with regular classes, I'm sure it'll become unrealistic to set aside an hour or two to writing stuff that has nothing to do with my school work. Fewer pieces, usually shorter, will be the norm over the next six weeks.
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