Problem Solving, American Style

The quirks of the American culture are endlessly fascinating. The go-go culture of making a fast buck and hero worshiping wealth is one dimension. The fierce belief in the right to walk around armed to the teeth by a Constitutional guarantee to "arms" another dimension. The special tax privileges of owning a home and the cultural push to "own your own home" is yet another dimension.

These dimensinos came to an intersection in the following story from Business Week entitled "Upset homeowner shoots real estate agent in Mich.":

A man upset about a property transaction fatally shot a real estate agent in the head during a meeting Tuesday morning in the victim's office, authorities said. ...


Tague said Johnson plotted to kill VanderStelt, took a .22-caliber semiautomatic handgun to the real estate agent's office, got him preoccupied with some paperwork in a conference room, stood next to him, pulled out the gun and shot him once in the temple. ...

A suspect was arrested a short time after the shooting at a home in nearby Norton Shores. Tague identified him as Robert Arnold Johnson, 73, of Roosevelt Park. ...


"We believe this was a planned-out execution-style murder of the real estate agent," the prosecutor said.

Tague told WOOD-TV in Grand Rapids that Johnson believed that VanderStelt took advantage of him in a real estate deal. Johnson bought a house through him in 2005, then recently decided to sell it and went to a different real estate agent. The second agent told Johnson that, because of the slumping housing market, the home was not worth what he had paid for it.

Ghost Riders in the Sky?

I enjoy reading economic thrillers like Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds and John Kenneth Galbraith's A Short History of Financial Euphoria. I don't claim to be immune from the madness of financial bubbles and panics. I take solace in knowing that an intellectual hero of mine, Issac Newton was caught up in the South Seas Bubble (see Newton quote). I believe everybody should get a good belly laugh out of their own foibles...

The following is for the less literate, i.e. those who like their info via a direct video injection instead of the more labour intensive exercise of reading text. It is an interview with Roddy Boyd who wrote the Fortune magazine's article "How Lehman Lost Its Way". This snippet covers Lehman's investment in the McAllister Ranch housing development -- now ghost town -- outside of Bakersfield California. This is now a big, 3 sq. mi. development. Sit back, relax, and enjoy a little schadenfreude:

The End is in Sight

When I was a kid I was fascinated by the cartoons of guys carrying signs saying "The End is Near". Well, I'm now willing to admit that the end may be in sight. Here is an aptly named article, "The End of Neo-Liberalism", by Joseph Stiglitz, Nobel-prize winning economist from Columbia University on the end of a economic/political illusion that has held the high ground for the last 30 years:

The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.

For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

Though neo-liberals do not want to admit it, their ideology also failed another test. No one can claim that financial markets did a stellar job in allocating resources in the late 1990’s, with 97% of investments in fiber optics taking years to see any light.

...

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.

Bush the Bungler

Here is a tongue-in-cheek review of the Bush Presidency...

Math as Painless as Novocain

Now... why didn't we try singing acappella as a method to learn math back in the dark ages when I was in school?



Oh... and thank God there weren't digital gadgets to capture all of our foibles and foolishness! Today people live lives like the laundry hung out on clotheslines when I was a kid, i.e. out and exposed for everybody's edification and/or delectation.

By the way... here's an acappella group -- The Nylons -- from my part of the world that I have enjoyed for decades. These guys are professionals, and I think the difference in quality between amateur and professional will, as they say, "knock your socks off"...

Dignity gets Lost in the Details

Stephen Pinker has an interesting essay in The New Republic that attacks the maneuver by conservative "ethicists" to build their arguments on dignity. He addresses the thinking behind the President's Council on Bioethics released a 555-page report, titled Human Dignity and Bioethics:

Many people are vaguely disquieted by developments (real or imagined) that could alter minds and bodies in novel ways. Romantics and Greens tend to idealize the natural and demonize technology. Traditionalists and conservatives by temperament distrust radical change. Egalitarians worry about an arms race in enhancement techniques. And anyone is likely to have a "yuck" response when contemplating unprecedented manipulations of our biology. The President's Council has become a forum for the airing of this disquiet, and the concept of "dignity" a rubric for expounding on it. ...

The problem is that "dignity" is a squishy, subjective notion, hardly up to the heavyweight moral demands assigned to it. The bioethicist Ruth Macklin, who had been fed up with loose talk about dignity intended to squelch research and therapy, threw down the gauntlet in a 2003 editorial, "Dignity Is a Useless Concept

Here is the crux of his argument:

Conservative bioethicists presume to soothsay the outcome of the quintessentially unpredictable endeavor called scientific research. And they would stage-manage the kinds of social change that, in a free society, only emerge as hundreds of millions of people weigh the costs and benefits of new developments for themselves, adjusting their mores and dealing with specific harms as they arise, as they did with in vitro fertilization and the Internet.

Pinker can't resist poking some fun at the idea of "dignity":

Thorstein Veblen wrote of a French king who considered it beneath his dignity to move his throne back from the fireplace, and one night roasted to death when his attendant failed to show up.

And, Pinker can't resist poking fun at these "ethicists" who have blighted view of "dignity":

Kass frequently makes his case using appeals to "human dignity" (and related expressions like "fundamental aspects of human existence" and "the central core of our humanity"). In an essay with the revealing title "L'Chaim and Its Limits," Kass voiced his frustration that the rabbis he spoke with just couldn't see what was so terrible about technologies that would extend life, health, and fertility. "The desire to prolong youthfulness," he wrote in reply, is "an expression of a childish and narcissistic wish incompatible with devotion to posterity." The years that would be added to other people's lives, he judged, were not worth living:"Would professional tennis players really enjoy playing 25 percent more games of tennis?" And, as empirical evidence that "mortality makes lifematter," he notes that the Greek gods lived "shallow and frivolous lives"--an example of his disconcerting habit of treating fiction as fact. (Kass cites Brave New World five times in his Dignity essay.)

Kass has a problem not just with longevity and health but with the modern conception of freedom. There is a "mortal danger," he writes, in the notion "that a person has a right over his body, a right that allows him to do whatever he wants to do with it." He is troubled by cosmetic surgery, by gender reassignment, and by women who postpone motherhood or choose to remain single in their twenties. Sometimes his fixation on dignity takes him right off the deep end:

Worst of all from this point of view are those more uncivilized forms of eating, like licking an ice cream cone--a catlike activity that has been made acceptable in informal America but that still offends those who know eating in public is offensive. ... Eating on the street--even when undertaken, say, because one is between appointments and has no other time to eat--displays [a] lack of self-control: It beckons enslavement to the belly. ... Lacking utensils for cutting and lifting to mouth, he will often be seen using his teeth for tearing off chewable portions, just like any animal. ... This doglike feeding, if one must engage in it, ought to be kept from public view, where, even if we feel no shame, others are compelled to witness our shameful behavior.

And, in 2001, this man, whose pro-death, anti-freedom views put him well outside the American mainstream, became the President's adviser on bioethics--a position from which he convinced the president to outlaw federally funded research that used new stem-cell lines. In his speech announcing the stem-cell policy, Bush invited Kass to form the Council. Kass packed it with conservative scholars and pundits, advocates of religious (particularly Catholic) principles in the public sphere, and writers with a paper trail of skittishness toward biomedical advances, together with a smattering of scientists (mostly with a reputation for being religious or politically conservative). After several members opposed Kass on embryonic stem-cell research, on therapeutic cloning (which Kass was in favor of criminalizing), and on the distortions of science that kept finding their way into Council reports, Kass fired two of them (biologist Elizabeth Blackburn and philosopher William May) and replaced them with Christian-affiliated scholars.

The Obvious Answer

There is lots of discussion about "speculation" in the oil market. One of my favourites is Paul Krugman who argues determinedly that there is no "speculation" because there is no place to hold the oil (here and here). Some people have slyly pointed out that the most inconspicuous place to hold that speculative oil is "in the ground".

Now, Theodore Seto, a professor of tax law and policy at Loyola School of Law, puts his two bits into the argument:

Why Oil Companies Don't Drill

U.S. oil companies are pushing hard to get Congress to allow the current Administration to issue more oil leases before its term expires. In response, skeptics have noted that three-quarters of the 90 million-plus acres of federal land already leased for oil drilling are not being worked. Oil companies deny this. Regardless of who is right, the number of operating oil rigs in North America declined across the course of 2007.

In the meantime, OPEC has raised its quotas by only 20% since 1998 – a measly 2% per year. World GDP grew by about 85% over the same period. The International Energy Agency reports that non-OPEC oil countries are also underproducing and predicts that they will continue to do so.

Everyone seems to be holding back.

Why?

The most likely answer is very simple.

Goldman Sachs has predicted that the price of oil may move past $200/barrel within the next 6 to 24 months. OPEC's chief and EU’s energy commissioner have also both warned that prices in excess of $200/barrel are possible in the near future.

Suppose you owned a source of oil. Would you sell that oil now for $140/barrel? Or would you wait for two years and sell it for $200/barrel?

Obviously, you would wait.