Wednesday, August 31, 2011

Dan Ariely

Today I got to hear Dan Ariely, author of Predictably Irrational and The Upside of Irrationality, speak. Professor Ariely performs studies in the area of Behavioral Economics. His speech today was about cheating.

People cheat for all different kinds of reasons. His first example was of dentists who have a conflict of interest that encourages cheating. In fact, the longer a person is with a dentist, the more that dentist is likely to recommend less necessary work. Because of the relationship, the patient trusts the dentist and the dentist creates a story to justify to himself what he does.

In studying cheating, it does not seem to matter what culture or religion the people he studies comes from, cheating is pretty much consistent. He acknowledges that different cultures have different moral values so that different forms of cheating occur at different rates depending on the society looked at. However, the techniques that Ariely uses to measure cheating take people out of their normal environment and place them into an artificial environment.

There are two theories of cheating. The rational or classical theory is that people cheat based of off the expected return for cheating versus the expected cost, meaning it is simply a cost benefit analysis. However, the Behavioral Economic theory is that people tend to act emotionally and that personal characteristics or environment are more likely to determine whether or not someone cheats.

To test the theories, Ariely performed tests were people were offered $1 per correct answer. The tests were simple but the participants were not given enough time to complete the entire test. Once the test was complete, they graded their own work, placed it into a rigged shredder and came to the from to state how many they got right. On average, the participants got 4 right but on average they claimed they got 6 right. This was not due to a few participants cheating and claiming they got them all right, most cheated just a little.

To determine if the classical theory was right, one participant stood up and said he was done after just 30 seconds. This set the expectation that cheating was accepted by the other participants. In one test they had the cheat wearing a sweater of the school performing the test and in a second test he wore a sweater from their biggest rival. Under the classical theory, it should not matter what this obvious cheat was wearing, students should behave the same way. However, if the cheat was wearing the local school sweater, cheating went up but when he wore the rival sweater cheating actually went down. This confirms that it is more then a simple cost/ benefit analysis to cheating.

So much good information was given at this presentation that it is impossible to go over it all. Several of these studies are mentioned in Predictably Irrational. I would highly recommend his book.

Tuesday, August 30, 2011

Misquoting Jesus

In Misquoting Jesus: The Story Behind Who Changed the Bible and Why Bart Ehrman examines the process by which the New Testament and other early Christian writings were copied and passed on. Since he earliest Christians were primarily poor and illiterate, the few literate Christians were expected to perform the scribal functions. Since they were not professional scribes, early copies were rife with copying errors.

Another problem with the process of copying is that there is no way to prevent the scribes from editing, either adding or removing from the document they were copying. So the documents we have contain both scribal copying errors and intentional changes. The task of the textual critic is to attempt determine which wording is the original.

Most errors are minor but there are certainly some known errors that effect important doctrinal views. The major Christian views such as the resurrection of Jesus, that he was sent by God and the he was born of a virgin are not in dispute. However, several changes have been made to support the divinity of Jesus, the notion of a triune God and the role of women were made.

So numerous and pervasive was the errors and changes that a pagan by the name of Celsus wrote a book challenging Christianity's legitimacy on that basis. Though Celsus' work is no longer available we do have a book, Contra Celsum, by the early church father Origen that quotes Celsus extensively.

In the early 18th century, when trying to develop a Greek John Mill made some startling discoveries. Amassing hundreds of manuscripts his discovered over thirty thousand variants, which now is closer to three hundred thousand. Mill's work was the first great work done in the field of textual criticism and, not surprisingly, created quite a stir. If biblical text cannot be trusted, leading apologists feared that this might be used by Catholics to claim superior authority of the church.

A Protestant by the name of Johann Wettstein made a significant discovery. 1 Tim. 3:16 in the King James version states in part "God was manifest in the flesh". However, Wettstein discovered in an old manuscript that the word used for the abbreviation for "God" was actually the word for "who" and this correction is made in the New American Standard Bible, "He who was revealed in the flesh."

A similar verse used to defend the divinity of Jesus is known as the Johannine Comma, 1 John 5:7-8 which reads "For there are three that bear record in heaven, the Father, the Word, and the Holy Ghost: and these three are one. And there are three that bear witness in earth, the spirit, and the water, and the blood: and these three agree in one." However, this wording is completely different from which is present in the best manuscripts. Again the New American Standard Bible has the verses corrected "For there are three that testify: the Spirit and the water and the blood; and the three are in agreement."

Due to these and other changes made, Wettstein began to question the legitimacy of the concept of the triune god and the divinity of Jesus. Other changes were made to defend the faith including changing wording that might seem to support a "heresy" or adding wording to defend against a "heresy."

It is not impossible to discern what the original authors of the new testament books wrote. However, due to the amount of changes and not having the actual originals or even copies of the original but copies of copies of dozen times copied documents there are still argument among textual critics about what the originals said.

This of course does not mean that the basic story did not occur but it leads to great difficulty if you intend to claim the bible as inspired and that it has authority over what should be believed.

Monday, August 29, 2011

School Choice

The Indiana school voucher program is under fire from a law suit claiming it is a government sponsorship of religion. The Colorado voucher program just lost a suit from the ACLU but the decision is expected to be overturned by a higher court claiming the lower court judge ignored settled law. Neither suit is expected to disrupt the current school year.

This brings up an important distinction, the difference between giving money to religion and money for education. In the Indiana case only 6 of the 242 nonpublic schools enrolled in the voucher programs were nonreligious but this is reflective of the number of ratio of secular and religious schools. The voucher for the Indiana students is less then the per student cost of education and so saves the school district money. But with tightening budgets, these vouchers are being blamed for lost funding.

Not surprisingly the biggest opponents to school choice are the unions and the teachers they represent. Since they only care about maintaining the status quo and not the students, it is not relevant to them that the students who use the vouchers show significant improvements at private schools. An important question to ask though is if the problem is the educational environment or the education itself that is making the difference. Either way, private schools continue to outperform the majority of public institutions.

As a libertarian, I believe that an paying for an education is the responsibility of the parents and the children not the public. While the late economist Milton Friedman agreed that privatizing the school system would produce better returns, he did advocate for a voucher system as a compromise. A voucher system, in theory at least, allows for the benefit of competition that forces schools to change and become more productive.

Former Libertarian Party presidential candidate Harry Browne disagreed. Browne believed that since government money inevitably comes with strings attached that a voucher system actually threatened the success that private schools have had.

I agree with the late Harry Browne that such a threat is possible. However, there is some evidence that a voucher system does help to improve academic performance. If voucher programs can get past the constitutional hurdle in enough states, we may be able to see if in the end they are a net benefit.

Friday, August 26, 2011

Making Senses Out of Scripture

I recently finished the book Making Senses Out of Scripture: Reading the Bible as the First Christians Did. The book was obviously meant for Catholics so I am not sure why my brother recommended it. Based on the subtitle, one might expect to see how the different Christian groups each viewed the Bible. What the author Mark Shea actually discussed is how the modern church views the Bible.

There were multiple Christian groups with different views about Jesus as well different interpretations of the Old Testament writings. Bart D. Ehrman has a great series through the teaching company called Lost Christianities: Christian Scripture and the Battles over Authentication that discuss these other views in detail. Even though the so called heretics where not discussed, Shea does not provide any evidence that the successful "orthodoxy" actually interpreted scripture the way he claims.This does not mean that they didn't, only that he fails to support his assertion.

The book is mostly about how the Catholic church views the Bible and how to deal with the inconsistencies. There are several issues I have with much of what he says but is a disagreement of opinion. However, in one of the last chapters he gets to the mistranslation of Isaiah relating to the virgin birth. First admits the mistranslation then that it probably should not have been translated incorrectly but then suggests that the mistranslation may have been inspired.

His defense of not just the misreading of Isaiah but of all claims to supposed prophecies that really have nothing to do with Jesus opens creates a large problem. Some of the so called prophecies Jesus fulfilled were not actual prophecies. Shea claims that after Jesus, the existence of these prophecies could be seen. However, we cannot be sure what Jesus really did as we have no eye witness accounts and even if he did those things that supposedly were prophesied, it would be wrong to reread into ancient texts meaning that they did not have from the beginning.

To illustrate how useless it is to try to read prophecies with the benefit of hindsight, consider the case of Nostradamus. Nostradamus writings were very cryptic but that has not prevented people from taking the words and claiming that he predicted everything from World War I, World War II to 9/11. Of course he did not actually predict any of this but with the hindsight bias, it is easy to read into previous works meaning that they do not have.

For early first century Christians wanting to share their beliefs, embellishing a story to make it seem like Jesus fulfilled a prophecy that he never did or to illustrate an important teaching may have seemed justified. This does not mean that Jesus was not born of a virgin or that he was not born in Bethlehem, tough neither one seems likely. This just means that if you believe these things, you believe by faith.

Sunday, August 21, 2011

The Science of Good and Evil

Michael Shermer in the book The Science of Good and Evil develops a theory of provincial morality. The moral theories that have been developed have tended to one of 2 extremes complete absolute morality or completely relativistic morality. Rather then tending to to either of these 2 extremes and rejecting the Aristotelian dichotomy of A or not-A, Shermer attempts to approach the issue from a middle ground.

Humans have moral sentiments, guilt, shame, pride, etc. that encourage us to act in a moral fashion. In order to be viewed as trust worthy, since humans can detect deceit we must not just fake being moral we have to actually be moral. These moral sentiments or emotions come into play even when there is no possibility of reciprocity.

To determine what is moral and what is not, Shermer has a set of principles. Since an action cannot be determined to be immoral in an absolute sense but only determined to be immoral for most people in most places most of the time, the first principle is to ask other parties involved. Is adultery immoral? Ask you spouse how they would feel about it. Some couples have open relationships because both partners have agreed to allow extramarital affairs.

Of course simply asking is not enough without a means to measure the relevancy of the other person's response. The second principle is to not pursue happiness at the expense of someone else's happiness. If an action would reduce other people's happiness, it would not be moral to do it.

The next principle is to not pursue liberty at the expense of another person's liberty. The last principle is to avoid extremism. When innocent people die, extremism in the defense of anything is no virtue and moderation in the defense of anything is no vice.

Since laying out a system of morality is meaningless if there is applicability, Shermer goes on to apply these principles to adultery, pornography, abortion and animal rights. in doing so he attempts to avoid absolutist claims that any of these are always wrong or always right but that there are shades of grey.

Friday, August 19, 2011

The Prime Mover

In contemplating the aspects of Aristotle's Prime Mover, I have been trying to determine what we can know. The first is the obvious conclusion that it is not a composite because a composite is made up of something else which is the material cause of that thing. Since the Prime Mover can have no cause, it cannot be a composite. I quickly realized that pondering just the nature of the Prime Mover itself would get me no where. I had to ask if the Primer Mover could have specific attributes.

Can the Primer Mover have emotions? Emotions are responses to stimulus. We become angry because of some external cause. Something external to us causes our joy and our happiness. So that Prime Mover must be emotionless.

Can the Prime Mover be the Christian God? The Christian God is claimed to be a Trinity, a composite of three beings in one. Since the Prime Mover is not a composite, such a thing could not be possible. However, there is the possibility of multiple Prime Movers, each responsible for a different causal chain. If the three beings in God are separate and distinct Prime Movers, this could be possible with the three acting together as a composite called God. However, neither of the three could become or change into a human. A human is a composite and a Prime Mover is not a composite.

Tuesday, August 16, 2011

Aristotelian morality

Under Aristotle an action is immoral if is goes against a final cause or purpose of either the action or any of the beings involved in the action. To make the case that any sex outside of the sex act that does not include any artificial means of preventing conception is immoral, Feser relies on the idea that the final cause of sex is conception. He goes on to state that nature of the sex act being conception, it should not be done outside of marriage, which is the institution whose nature is raising kids. Because humans are driven to copulate often, he concludes that married couples should have lots of kids.

Obviously my summary leads out the details of his arguments for his conclusions, but his arguments all rest on the definition of morality. The problem is that this ignores what the consequences might be to humans from these actions. Because advances in technology have over come certain obstacles humans have faced through out our evolution, certain parts of our nature if left unchecked could lead to suffering for humans.

First, let us deal with the idea that going against the nature of an act is immoral. Previously I discussed walking and how a treadmill frustrates the purpose of walking by not allowing us to go from one place to another, as is the purpose of walking. Consider another example, that of walking by putting one foot in front of the other so as to cause you to trip. Is this immoral? If it was done unintentionally, we would say it was silly or foolish but not immoral. What if it was done intentionally? If I trip over my feet as a means of entertaining as for example a comedian or actor, is this action immoral? Certainly not. In the case where it is meant to entertain we would not even say that it is silly or foolish.

Now let us consider what morality actually means. For an action to be immoral it would have to promote the bad, it would have to have a bad or negative consequence towards humans and that consequence would have to be known and probable. Non-procreative sex does not meet that standard. However, the notion of everyone having lots of kids does. If everyone procreated as much as they are biologically compelled to, we would have a population explosion. We would deplete our resources at an enormous rate and soon would not have enough to feed everyone. While technology might be able to help us to delay the mass starvation, we would inevitably consume all available resources.

There are 2 possible solutions to this problem, both of which go against the nature of humans as determined by Feser. The first option is the road we are currently on, using birth control to reduce the number of conceptions and keep population growth down. The second option is voluntary celibacy. It is unreasonable to expect that the population will be able to suppress their sexual urges enough for the second option to work. When under sexual arousal people tend to make poorer decisions then when not aroused. This conclusion is based on a study by Dan Ariely documented in his book Perfectly Irrational. The only option that does not lead us to increased human suffering is to support birth control.

Sunday, August 14, 2011

Aristotle's forms

I cannot help but question the validity of the Aristotelian idea of the forms. While it seems that form exist objectively, the forms that we see in the world appear to be artificial concepts, means by which similar things are grouped.

By convention an shape consisting of 3 sides is called a triangle. Instead of grouping all such objects under one form we could have separate names for each different type of triangle. A right triangle an isosceles triangle etc. are all grouped under triangle but only due to accidental convention and each type could have its own form instead being labeled triangular.

Consider also that forms tend to be fuzzy sets. There is no hard and fast rules with regards to were an object stops being one imperfect actualization of one form and becomes another. Take for example the instrument known as a triangle. It is a metal bar bent into the shape of a triangle. It has the form of triangularity. It is not perfect, the corners are rounded and one corner is missing. But say we start bending the triangle very slightly. Since it is never the perfect actualization of triangularity we can say that even slightly bent, it contains the form of triangularity. At what point in bending the triangle does it cease to have triangularity and instead takes on a different form? This is subjective and different people can disagree.

Since language is finite, it is necessary that similar items are grouped under the same form. But when items that are clearly under one form begin to change, like the triangle, they start to fall out of the group they were placed in. As I stated, form are fuzzy sets, meaning that there can be overlaps and while the sets are objectively defined, the overlaps have to be placed subjectively because they do not clearly belong in one set more then another.

If forms are only creations of the intellect that were developed as languages were created, then when we recognize an object for the form it actualizes, the form itself does not exist in our mind. Only an object that actualizes the form, as defined, contains that form. As such, the claim that the soul or the intellect is immaterial because the forms exist within is not true. The intellect does not possess the form of the object within it.

Saturday, August 13, 2011

Netflix price change

ecently Netflix changed the way their subscription plans worked. For $7.99 you get unlimited streaming movies and TV shows. Adding DVDs is extra. Previously, streaming was free with any subscription. To get the same service, you have to pay $7.99 for streaming plus $7.99 for one DVD at a time.

For some time now, Netflix has indicated that they intend to focus on streaming rather then DVDs. In line with that objective, every Netflix customer subscribes to streaming. For the same service you could pay $11.99 for one DVD at a time through Blockbuster and watch streaming DVDs through Blockbuster for a per rental fee. Or you could pay for Blockbuster and pay for Hulu Plus for $7.99 to get streamed movies and TV shows and not have the same wide selection available through Netflix.

Clearly if you want both DVD and streaming, the best option will be Netflix. If you are only interested in DVDs, go with Blockbuster. At $7.99 for the base subscription and a large and increasing selection of streaming videos, I think I will stay with Netflix, at least until I have exhausted the available streaming movies I want to see.

While it is true that we have to pay more for the same service through Netflix, we were really getting a much better deal and changes in the market have forced Netflix to change its pricing structure. It is an understandable and inevitable fact that markets change and companies much make changes to reflect the underlying market.

Edit: I have found out you can choose 1 disk at a time for $7.99 from Netflix without streaming which beats Blockbuster's price.

Another Victory for Health Care

The Patient Protection and Affordable Care Act, also know as Obamacare, has been dealt another blow. For the first time a federal appeals court has ruled the health care law as unconstitutional. But the battle is far from over. Since there have been multiple conflicting rulings, these law suits will inevitably make it to the Supreme Court.

Historically the Supreme Court has interpreted the constitution to grant to the federal government what ever power they feel the government should have. While it is clear from reading what the intentions of the founding fathers were about the meaning of the constitution that the federal government has no power to force people to purchase health care, the Supreme Court could easy assume the authority to reinterpret the constitution to give government that power.

Because we effectively have no constitution beyond what the government decides at it own discretion that we have, all arguments against Obamacare should be practical and not constitutional, at least outside the courts.

The health care mandate is effectively a massive wealth redistribution from the middle class to rich insurance companies. Since insurance companies produce no output by themselves, this guarantees that after the mandate takes effect, the rate of growth of wealth in this nation will fall. The middle-class families who now have no insurance or less insurance then the bureaucrats in Washington think they should have will be forced to sacrifice to obtain or increase their insurance.

Since people who have no insurance must pay out of pocket for doctor's visits and other medical expenses, they have an incentive not to over consume. Once they are forced by dictate to have insurance, the marginal cost of medical expenditures reduces to nearly zero. People who once had no incentive to consume medical care, will now have an incentive. As long as the cost in lost time is less then the gain from the medical care they will consume medical care. 

What happens when the demand goes up? The price goes up. Basic law of economics. The government  and insurance companies will respond to these rising prices by putting price caps. If prices are not allowed to rise, the quantity supplied will reflect the current price level. This means we will have excess demand or a shortage of medical care. The response to that will be to ration medical care. Those who are determined to have the most urgent medical need will be placed first in line and anything less serious will be forced to wait.

The problem with this form of rationing is that people who may not seem to need immediate care may be forced to wait too long. Also people who have no serious medical emergency but are only in for a check up may have an undiagnosed condition. Because prices are not allowed to go up, resources that might otherwise be allocated to health care aren't and the shortage will be permanent.

Under the free market, shortages do not exist. If demand spikes, for what ever reason, prices go up to encourage a reduction in demand. This is still a form of rationing just like what would happen in a planned economy. However, the higher prices create incentives to move resources into the health care sector and drive prices back down so that everyone can get the health care they need. With out this pricing mechanism, everyone gets less health care in the end.

Friday, August 12, 2011

On the soul

Continuing my journey through The Last Superstition, an argument was presented concerning the soul. Before I get into that I would like to discuss just my issue with the arguments for God's existence that I brushed off in my prior post.

To get down to the real nitty gritty would require an explanation of Aristotle's notion of the 4 causes. However, my objection to the arguments are not that the conclusion, that there is a primer mover or first cause that is itself uncaused, but that the attempt to determine what this cause is like and even how many there are falls short.

Moving on to the soul, an argument based on forms is presented for the immortality of the soul. The soul itself is defined as the essence of the living being, what gives it life. Because of this meaning, Aristotle and Aquinas as well as the Catholic Church that follows their ideas accepts that plant and animals also have souls but of different types.

Now to show that the human soul, as opposed to the pure animal and plant souls, is immortal, Feser appeals to Aristotle's concept of forms. The claim is made that when we see an object, we have the form of that object in our intellect. No material thing has the perfect form, for example triangularity. No one can draw a perfectly straight triangle no matter how hard they try and even a computer is forced to accept a pixellated triangle. However, it is claimed, we have in our intellect the perfect form or the triangle. Since the perfect form cannot exist in matter, the intellect must be immaterial.

Do we have in our intellect the perfect form of the triangle? Or do we simply recognize the aspects of the imperfect triangle that give it triangularity? We see a shape composed of 3 lines. We do not even think to try to measure the angles since we know if it is a perfect triangle in Euclidean space, the angles will add up to 180 degrees and just accept that from appearance, the triangle is close enough. At no point do we need the form of the triangle to be in our intellect any more then an animal needs to have the form of an object it sees in its mind. Any animal can recognize food when it sees or smells it. Shall we conclude that the animal has the form of that object in its intellect, how ever lacking we may assume that intellect to be, an conclude that the animal has an immortal soul as well?

What about if we programmed a computer to recognize forms? Since we recognize forms only because we learn them not because they are innate in us, teaching a computer to recognize forms would be analogous. If I programmed a computer to recognize the shape of a triangle as an object with 3 reasonably straight lines, would the computer now have a soul?

Aristotelian logic is a rather interesting subject but we should not just accept his conclusions without some scrutiny else we may end up defending something absurd such as a computer with a immortal soul.

Journey into Superstition

It has been a while since I started reading The Last Superstition and I think an update is due. The book spends chapter 2 discussing Greek philosophy, specifically Plato and Aristotle.This lead directly into chapter 3's discussion of the medieval philosopher Thomas Aquinas.

Interspersed through these chapters are ad hominem attacks against Dawkins, Hitchens, Harris and Dennette, the infamous New Atheist. Much of these attacks are due to the apparent ignorance of this group, especialy those with training in philosophy, about the metaphysics and arguments of Aristotle and Aquinas. Since Aristotle's ideas as well as Aquinas' improvements have been rejected in modern philosophy, this omission should hardly be surprising.

As for the arguments themselves, Feser does give quite a few arguments for the existence of God. Unfortunately, due to the length required to sufficiently explain the argument and give my objections, I do not have the room to refute them here.

However, once argument that was given was with regards to sexuality. Basically, he objects to all sex acts that do not involve a man having vaginal intercourse with a woman with out and birth control. He argues that the biological nature or final cause of sex is procreation and thus any sex act that does not end with the man freely ejaculating into the women in such a way that is conducive to pregnancy is immoral.

This, of course, is silly. The biologically final cause of an action does not determine, in and of itself, whether or not an action is immoral. Consider this, the biological nature of walking is to move a person from one point to another. Walking on a treadmill frustrates the biologically final cause of walking. Using the same logic, we should oppose treadmills.

One might point out that walking on a treadmill is not as bad as using a condom because a condom prevents the sex act from producing life and nothing is more valuable then life. However, not having sex also prevents life and there is nothing inherently immoral about that. No one would even attempt to claim that treadmills are immoral. Why not even though they evade the biological purpose of walking?

Treadmills have human derived final cause of improving health. Because of our ability to reason we can over rule a biological final cause with our own desired final cause. Like walking has uses beyond just moving us from one point to another so too sex has uses other then simple procreation.

Based of this argument, Feser claims that marriage is about procreation. Husband and wife work together to support the family. This is not what we mean by marriage in modern times. In the past when marriage was solely about 2 people coming together to start a family, marriage as between a man and woman only made sense. However, the modern version of marriage is perfectly suited for couples who want no children as well as gay couples. Due to the existence of adoption agencies, if a gay married couple decided they did want to raise children, that option is as open to them as to heterosexual couples.

The mistake is to assume that the only proper final cause is the biological but that only leads to absurdity.

Wednesday, August 10, 2011

Low interest rates

The Fed has announced, or specifically Ben Bernanke has announced, that the Fed will keep interest rates low through at least 2013. Though the current crisis has spurred an increase in savings, this foolish move will keep savings below what we need to rebuild our capital stocks to get our economy moving again.

We had historically low interest rates though the housing bubble. Because the borrowing was being funneled through the housing market, whose prices are not reflected in the inflation measures. Since inflation appeared low when in fact it was higher, the Fed assumed the target rate was correct. A similar occurrence took place during the tech bubble when stock prices were soaring and the inflation there was not reflected in inflation measures.

The low savings rate caused by low interest rates caused a huge problem. People did not have savings to use to purchase homes. The solution was to "encourage" banks to loan to people with low down payments. This was done in several ways.

Fannie Mae and Freddie Mac were created to purchased home loans from banks thus freeing up new funds to create new loans. Since Fannie and Freddie were government created entities, it was assumed they would have the backing of government funds if anything went sour. They lacked the incentives to verify that the loans they purchased were good investments and the banks knew that.

Under the old system, in order to purchase a home you needed to have a sufficient down payment to give you a vested interest in the home as well as a reliable income to show that you will be able to make the payments. Unfortunately this meant many blacks and other minorities could not own home. Some interests groups attempted to pressure banks to make more loans to minorities to try to fix the inequities. Of course these loans did not fix the underlying cause of these inequities, poverty, and lead these people to inevitable foreclosure.

With the Feds announcement that they intend to continue the practice that encourages bubbles and recession, where are we headed next? Recently gold prices have been increasing due to the fears of inflation. Is gold the next asset bubble or will there be something different? And after the next crash caused by artificially low interest rates, will the Federal Reserve learn its lesson or will the continue the insanity of doing the same thing over and over and expecting different results?

Tuesday, August 9, 2011

Credit Rating

So what does it mean now that one of the 3 credit rating agencies has downgraded the US government from its coveted AAA rating? Apparently very little.

People are still running into US securities as he stock market continues in a downward spiral. Ironically, some blame Mondays dip on the lower credit rating. But if people were concerned about the government's ability to pay its debt, there would be movement either into stocks or corporate bonds and out of treasury bills.

The US government is not the first government to lose AAA rating. Japan got downgraded to AA- by S&P and they are currently the nation with the highest debt to GDP ratio of over 200% and yet they have managed to keep interest rate at a savings killing 1.5%.

Since it is not politically feasible to reduce spending as both Democrats and Republicans are unwilling to cut either entitlement or military spending, the debt of the US government will only go up and the percentage of the annual budget devoted to interest on the debt will only increase. These means that future generations will have to give up more of their blood and sweat through higher taxes to pay for our excesses.

To my daughters generation, I am sorry. I opposed the governments massive deficits and kept screaming at my representatives Washington but they only ignore my pleas.

Sunday, August 7, 2011

The Last Superstition

I have started reading the book The Last Superstition: A Refutation of the New Atheism. Having only just read the preface and acknowledgements, I can say that this will be an interesting read. Edward Fesser, the author, is clearly frustrated by the success of gay rights groups in getting gay marriage legalized in California through the courts.

No doubt Fesser is happy that the hateful bigotted anti-gay rights groups managed to get prop 8 passed that defines marriage in the California Constitution as between a man and a woman. There are still legal challenges to the law and equal rights groups are trying to get the discriminatory definition changed in the 2012 voting season.

Fesser has promised to rationalize his bigotry in the book and states that if the reader does not agree, he needs to read the book to be convinced that his hate is justified or at least to understand his position. I have already explained why I support gay marriage so I expect to at least gain an understanding of his beliefs.

Though he went on a tirade about gay marriage, the book is not all about this one issue. As the title suggests, the book is really about countering the new atheist movement. Of course the gay marriage issue is one supported by the new atheists, gay marriage is supported by loving and compassionate people of all groups. He says he will go back to Aristotle and Aquinas claiming that there work has not been refuted. We shall see.

Monday, August 1, 2011

Crisis averted, for now

The Republicans and Democrats have come to an agreement. Few people are likely to be surprised that there was much compromise. The debt ceiling willing raised and token "cuts" will be made. There will be no tax hike in the current proposal and the proposed "balanced budget" amendment will not be made a requirement.

Proposed cuts, as those familiar with the dishonest accounting in Washington are aware, are in fact cuts in planned spending not cuts in actual spending. This means government will still grow just by less then planned. The proposed cuts are $900 billion with an equal increase in the debt limit. The social safety net and its massive unfunded liabilities will not be touched.

Since this legislation will not fix the true issue of deficit spending, a committee of 6 Republicans and 6 Democrats with come together to find a way to reduce the deficit spending by $1.5 Trillion. Since the expected revenue gain from the extended Bush tax cuts finally sun-setting does not count towards the total, we can expect either more cuts or higher taxes, and likely will get a combination of both.

Nevada's own Harry Reid called this a success of compromise by both parties. Unfortunately, the compromise is going to cost the average taxpayer. Democrats are unwilling to make necessary cuts and Republicans cannot support increases in revenue.

Items that should be cut or changed but will not be are corporate tax loopholes and corporate welfare. Eliminating both of these would help with the deficit as well as level the corporate playing field. These could be made revenue neutral by lowering the corporate tax rate to encourage corporations who have fled to come back to the US. When those companies come back, the new tax revenue collected would then be used to reduce the deficit.

What will likely happen? I expect that the upper bracket tax rates will be increased despite the fact that the rich can more easily move their money to avoid paying higher taxes. The revenue from the tax hike will be far short of what was expected as the rich move their money to protect it as they always do so we may see even higher taxes on the rich or increases in the lower brackets. There will likely only token changes if any to our unsustainable entitlement programs that will mean future generations will have an even greater burden placed upon them.

In the end, the politicians have compromised and it is our future that has been compromised.