The Sovereign Mind

Free thought on politics and real life

Archive for December 2008

Economics 101

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Wow, could I think of a more boring title for a blog post?

Economics is probably considered one of the most boring of topics, but it also happens to be at the root of many policy debates. As I browse some blogs in my free time, I’ve noticed that it seems a lot of people are clueless when it comes to economics. Am I especially troubled by the characterization (which is gaining supporters recently) that the free market as a failed experiment. Certainly there are aspects of our economic system that have problems and have let to our current recession, but to characterize the free market as the cause of everything that is bad is to desecrate the system that has allowed us to become the most productive society in the world.

Many policy debates between liberals and conservatives hinge on a fundamental question: What economic factors should be controlled by government, and what factors should be left to the control of the free market? Of course that’s a simplification, but that’s the root of it. In debating this question, I’ve heard statements from both sides (but not necessarily representative of everyone on their respective sides) that I believe indicate a flawed understanding of basic economics. Here are two paraphrased examples from both sides:

From the left: Businesses should be taxed more because they are lucky to be running in such a prosperous nation (the U.S.) that we live in. Business should have the pay a high premium to be allowed to do business here.

From the right: Since consumers would usually buy a cheaper car that is worse for the environment than a more expensive car that is better for the environment (all other factors being equal), that means that consumers don’t value environmental conservation. Environmentalist shouldn’t be pushing for more environmentally friendly cars if the free market won’t produce those cars by itself.

Today I stumbled across a useful website: I think I will use it to link to in response to such statements. Specifically, the first comment (from the left) exhibits a lack of understand of the negative effects of business taxes, and the second comment exhibits a lack of understanding of externalities.

Why is this important? Is it just a game for political junkies? I don’t think so. These issues are important to the future of our world–the one our kids and grandkids will live in. So I hope more people (particularly those who seek to promote government policy) will educate themselves in basic economics. And I will hold myself to the same standard. The website I linked to seems to be an unbiased economics introduction. But if you feel it leaves out important information or is biased, please feel free to offer a link of your own.

Written by Mike

December 21, 2008 at 9:45 pm

Posted in government

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The iPhone Is So 2008

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As Christmas approaches, I was recently caught up in a wave of irrational consumerism. I craved a fancy smartphone to replace my PDA and pre-paid cell-phone (yes, I’m a cheapskate). Of course, the iPhone, being the coolest of the cool, and the status symbol of the day, was at the top of my list. But after seeing the price tag on both the device and the plan that you have to buy with it, I started to look for cheaper options. I did find some smartphones that are much cheaper and meet my needs, but the cell phone plans that come with them still seemed pricey. I didn’t really need a “data plan” for extra $30 a month since 95% of my time I’m within range of a WiFi signal that I already pay for, and most of the remaining time I’m driving, when I probably shouldn’t be checking eBay anyway. And I don’t even need 500 minutes when 95% of my calls are to my wife, which would be unlimited under the family plan anyway. But alas, there aren’t many options for cheapskates like me.

I pondered on the close-mindedness of cell phone companies to fail to provide a cheaper alternative to their expensive services. I wonder if they know that there are people like me who spent hours browsing their selection online, only to decide not to purchase. Or maybe I’m just weirder more unique than I think…

Anyway, I decided to do something about it. If the cell phone companies weren’t going to provide a cheaper alternative, then I would. Presenting the “iTape N3G” (N3G = “Not 3G”). The philosophy of the iTape is simple: the main idea of a smartphone is that you really shouldn’t need to carry around both your PDA and your cellphone separately. Seriously, if God intended you to need to carry two separate devices, he would have created us with two hands…

So for those who just want a PDA and a cell-phone combined, but don’t need all of the bells and whistles of an iPhone or some other fancy smartphone, then the iTape is for you. You can find a role of it at any hardware store for about $2.99. Some assembly is required, but this makes it very customizable. The standard version just requires putting your PDA and your cell-phone back-to-back, and then wrapping the iTape around a few times. Voila! Instant smartphone!

Since the end result is *virtually indistinguishable from the iPhone, both in features and in looks, you can look just as cool as those iPhone users for about $397 less, and you can still have your PDA and phone in the same device. Cool huh? Especially as everyone and their dog is losing their jobs, “MacGyver meets Steve Jobs” is sure to be the trend of 2009.

*virtually indistinguishable should be interpreted as “somewhat similar if you squint your eyes from a distance”.

Written by Mike

December 9, 2008 at 9:24 pm

Posted in society

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My Questions for the Auto Execs

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I’m listening to the executives of the US auto industry be “questioned” by members of congress today in Washington (yes, I’m officially a policy-geek). I say “questioned” in quotes because about 95% of what the members of congress are doing is preaching, rather than questioning. The argument for the bail-out is that letting the companies go into bankruptcy would cost way more in lost jobs and lots of other financial consequences I don’t pretend to understand. We wouldn’t want all of those hard-working assembly line workers to lose their jobs, right? I don’t disagree that the consequences would be dire, but that doesn’t address my fundamental question:

How would 25 or 34 billion dollars be the difference between bankruptcy and survival?

Common sense says that throwing money at a problem doesn’t fix it. The same business plans that got them in this mess would quickly eat up that money. I’m definitely not convinced that our tax-payer money would do anything more than pro-long to inevitable. In fact, as I’m writing this I’m hearing the executives say that if the economy gets worse, they could be back asking for more. One expert (who is actually in favor of the loan) says that the money we provide them might just buy them time so that they can prepare for bankruptcy (they haven’t already been preparing?).

Still, I’m no expert so I could be very wrong. However, what makes fear that I’m right is this:

If the companies’ current plans are so good and are so certain to make them viable, why are private investors not willing to make that investment?

If it’s such a great investment, you would think there would be people (private investors) waiting in line to give them money. They are the experts, so if they aren’t convinced that their business plans will work, why should I be? One republican member of congress grilled Chrysler about the fact that 80% of their business is owned by a private investment firm who has many other successful investments, but is unwilling to put more money into Chrysler. Hmm, bad sign?

Since it seems the loan is imminent, we will see if I’m right. We will see if the auto companies are back in a few months to ask for more, of if they go into bankruptcy anyway. I hope I’m wrong.

(Side note: any news organization who’s first comment on the auto industry’s plan is that they arrived in hybrid vehicles, or that the CEOs are willing to work for $1 a year, should go off the air. That is fluff, and will have zero affect on the companies viability. Of all the articles I’ve seen, there has been almost no reporting on what is actually in the company’s new viability plans, other than the aforementioned symbolic gestures. Are we as stupid as the media thinks we are?)

Written by Mike

December 4, 2008 at 10:01 pm

Posted in government

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