04 November 2009

Quotes on tragedies

Thanks to A.Word.A.Day with Anu Garg I came across these great quotations. Perhaps they struck me because some of my thoughts after listening to a podcast about George Orwell and beginning von Hayek's Road to Serfdom.

The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.
- Isaac Asimov, scientist and writer (1920-1992)
The tragedy of modern war is not so much that young men die but that they die fighting each other, instead of their real enemies back home in the capitals.
- Edward Abbey, naturalist and author (1927-1989)

24 October 2009

Political Parties

I tried getting more involved in the political process last year and attended our county republican convention. In many ways it was an interesting day, but I was left with a bad, frustrated taste in my mouth. After that I registered as an independent/un-affiliated voter. In the state of Colorado this means that I can't participate in the caucus process, I am only able to vote in the general elections. I did this even with a continual frustration at the thought that supporting independent or third-party politicians is too often a 'wasted' vote.

This article by Robert Higgs lays out many of my own frustrations with the American political party system.
I go through life constantly bemused by all the weight that people put on partisan political loyalties and on adherence to the normative demarcations the parties promote. Henry Adams observed that “politics, as a practice, whatever its professions, has always been the systematic organization of hatreds.” This marshalling of hatreds is not the whole of politics, to be sure, but it is an essential element.

I find the following a bit extreme, but it easily finds sympathy within my own feelings and frustrations.
Of course, it’s all a fraud, designed to distract people from the overriding reality of political life, which is that the state and its principal supporters are constantly screwing the rest of us, regardless of which party happens to control the presidency and the Congress. Amid all the partisan sound and fury, hardly anybody notices that political reality boils down to two “parties”: (1) those who, in one way or another, use state power to bully and live at the expense of others; and (2) those unfortunate others.

I am torn by the feeling that as much as I hate the current system the only way to have any influence is to play their game. The way around this would be to help educate the rest of the citizenry, help them understand more of the political party system as seen in the light of the founding fathers' intentions to free us from undue influence and power in the government. Unfortunately, I feel that the apathy and distraction with which so many live their lives makes the latter course one of futility.

I see any change in the political system coming from an individual level and spreading by personal interaction and local efforts. It may take a long time, much longer than any one voter's lifespan, but I still hold on to a little hope that there are enough people concerned with abuses of power in government that the ideals of personal freedom may live on.

21 July 2009

Mozy unlimited

We have been using Mozy online backup for a few years now and it has been great. We have used the free home version that lets you back up to 2 gigabytes of data and backed up our key files.

With a move to a new computer and a desire to clean things up we decided to go for a full backup and signed up for the unlimited home backup service with Mozy. At less than $5 a month, unlimited storage size, and a fully configurable client for the mac it wasn't a hard decision.

16 July 2009

MLK jr

A thought:
Cowardice asks the question, 'Is it safe?' Expediency asks the question, 'Is it politic?' Vanity asks the question, 'Is it popular?' But, conscience asks the question, 'Is it right?' And there comes a time when one must take a position that is neither safe, nor politic, nor popular but one must take it because one's conscience tells one that it is right.
-Martin Luther King, Jr.

26 June 2009

Truth from the past

It has been a while since I last blogged, but I appreciated the following observation from a few centuries ago.

No protracted war can fail to endanger the freedom of a democratic country. -Alexis de Tocqueville

11 May 2009

BCS insanity

I get as frustrated with the college football BCS system as most Americans, but it isn't something our federal government should be getting into.

As usual this has been around for a while. I pulled it off of Cafe Hayek. As Russell Roberts points out,
Words fail me. Except to note that when Congress spends time doing stupid things it shouldn't be doing, it is not doing even stupider things it shouldn't be doing.

30 April 2009


"Self-sufficiency is the road to poverty."

This idea is from Russell Roberts, an economist who blogs at Cafe Hayek.

At first I found this idea to be incorrect, as I prize self-sufficiency. However after just reading a small portion of Roberts' argument I see the truth in the statement. Wealth is a product of specialization and the division of labor; being able to trade with others.

Even though I see the truth in the idea, I am still trying to think what role self-sufficiency should play in my life. There is an amount of satisfaction that comes in being self-sufficient, but I think this is an attitude only held by those who are privileged with enough leisure that self-sufficiency is a choice rather than a necessity.

25 April 2009

Bribery and the Republic

I received the following quote the other day and was struck once again by the clarity with which de Tocqueville wrote about the American people. I am sure this applies to all peoples, but I find it especially scary at this time in the history of the United States of America.
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money
- Alexis de Tocqueville

22 April 2009

The Cost of Living

I haven't made it all the way through Barry Schwartz's The Cost of Living but I am intrigued by the premise of his book. Schwartz raises valid questions with regards to many aspects of our lives today, not only in this book but everything I have heard or read from him.

Here is a quote used in his book that captures the essence of his argument.
The burden of our civilization is not merely, as many suppose, that the product of industry is ill-distributed, or its conduct tyrannical, or its operation interrupted by embittered disagreements. It is that industry itself has come to hold a position of exclusive predominance among human interests, which no single interest, and least of all the provision of the material means of existence, is fit to occupy.
- R. H. Tawney, historian
Whether you refer to it as Western civilization, the rat race, or any other name I certainly feel this pull in my life. Perhaps this is only a problem we can have at this point in history when so many of us have so much leisure freedom. If we were living on the edge of hunger or survival from danger I am sure we wouldn't have these worries. The realities of our lives though is that we must face the question of where to place material goods and the getting of them in the priorities of our lives.

15 April 2009

Pleasures of eating

I recently finished Michael Pollan's In Defense of Food. I highly recommend both that book and Pollan's earlier The Omnivore's Dilemma. Mentioned in Defense of Food is a short essay by Wendell Berry entitled The Pleasures of Eating.

I recommend the essay as it has some practical recommendations to bring our relationships with food into a healthier perspective. I found the following quote especially relevant.
Our kitchens and other eating places more and more resemble filling stations, as our homes more and more resemble motels. "Life is not very interesting," we seem to have decided. "Let its satisfactions be minimal, perfunctory, and fast." We hurry through our meals to go to work and hurry through our work in order to "recreate" ourselves in the evenings and on weekends and vacations. And then we hurry, with the greatest possible speed and noise and violence, through our recreation - for what? To eat the billionth hamburger at some fast-food joint hellbent on increasing the "quality" of our life? And all this is carried out in a remarkable obliviousness to the causes and effects, the possibilities and the purposes, of the life of the body in the world.

06 April 2009

A prophet's voice

I has set a personal goal to post to my blog on a more reliable schedule. I haven't always been keeping to it, partly because of the time it takes.

With the LDS general conference this past weekend one of the bits of counsel was to not spend too much time in things of little value. With that counsel in mind I now have no regrets in dialing back my efforts to post to my blog as often as I have.

02 April 2009

Rule of Law

I came across the following quote that I wanted to share.
The rule of law, in its most basic form, is the principle that no one is above the law. Thomas Paine stated in his pamphlet Common Sense (1776):

"For as in absolute governments the king is law, so in free countries the law ought to be king; and there ought to be no other."
I can't speak to the how the rule of law applies in contemporary America, but I love the ideal.

Thomas Paine's pamphlet Common Sense was written in argument for the American separation from Great Britain. I have put it onto my to-read list. I am curious what things still apply today.

31 March 2009

Who will defend the Constitution?

The topic of executive bonuses seems to have quieted down a bit, or at least I am not listening as closely, but the topic of this post I feel is too important to let go.

I am frustrated at a number of things that the previous U.S. presidency did that in my opinion are obviously against the original intentions of the United States Constitution. I am thinking of habeas corpus and warrantless wiretapping. I am even more disappointed that the encroachments on rights explicit in the constitution may continue.

An article by Steve Chapman in the Chicago Tribune that I came across thanks to Russell Roberts of Cafe Hayek brought up the an interesting point. Chapman's article discusses a number of the recent attempts of congress to get involved in how things are run in business. Specifically the idea that up to a ninety percent tax be placed on the bonuses given to certain employees. Chapman ends with the following point.
Expropriating property from people who did nothing more than accept money they were legally due sounds uncannily like a bill of attainder—a legislative measure declaring someone guilty of a crime, and imposing punishment, without trial. This weapon was expressly forbidden by the framers of the Constitution because it is fundamentally unfair, at odds with the rule of law and driven by mass hysteria rather than dispassionate fact-finding.

Once upon a time, those were considered bad things.
I can't seem to find my Political Science Dictionary, probably a casualty of a past cleaning effort, so I am relying upon Wikipedia. The United States Constitution explicitly forbids a bill of attainder in Article I, section 9, clause 3. This is a part of our constitution because it had a history in British law (though no longer). The Wikipedia entry includes some relevant legal references that I found interesting.
from Cummings v. Missouri:
A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment.
Since in the case of bonuses I have read that contracts existed concerning these bonuses the following portion concerning bills of attainder from various state constitutions is intersting.
The constitution of every State also expressly forbids bills of attainder. For example, Wisconsin's constitution Article I, Section 12 reads:
No bill of attainder, ex post facto law, nor any law impairing the obligation of contracts, shall ever be passed, and no conviction shall work corruption of blood or forfeiture of estate.
Contrast this with the subtly more modern variation of the Texas version: Article 1 (Titled Bill of Rights) Section 16, entitled Bills of Attainder; Ex Post Facto or Retroactive Laws: Impairing Obligation of Contracts: "No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made".
We find ourselves on a slippery slope when we forget the freedoms which the founders of this country found so important and fail to defend these freedoms in the face of a perceived public uproar or panic. I for one fear the actions of our government in attempting to protect us more than those things from which they are attempting to protect us.

24 March 2009

Bonuses abound

I know Wal-Mart can be a controversial subject of conversation among some circles. With all the talk of bonuses Wal-Mart now has the gall to give out hundreds of millions of dollars of bonuses, to their hourly employees.

I learned of this from Russell Roberts' blog Cafe Hayek. The original news article is from bloomberg.com and contains a fair amount of details. I appreciated Roberts' comments.
Don't they know there's a recession going on? How dare they award their employees for doing a good job? They should all give a bunch of the money back to the government. What? The bonuses aren't being funded by taxpayers? How yes, I remember. This is how capitalism once worked. Successful companies rewarded their employees and lousy companies disappeared.

22 March 2009

Cast out first the beam

This counsel found in both Matthew and Luke of the New Testament came to mind as I read a blogpost by Russell Roberts on his blog Cafe Hayek. Roberts made some "modest changes" to an article about Senator Charles Grassley of Iowa and his comments on the Japanese practice of hara kiri and its application in modern America. An excerpt:
“Point being, U.S. corporate executives politicians are unapologetic about running their companies the country adrift, accepting giving away billions of tax dollars to supposedly help, and then spending being surprised when those tax dollars get spent on travel, huge bonuses, etc,” [Grassley spokeswoman Jill] Gerber said.
I realize that this is a few days old, but I enjoyed it too much not to share.

19 March 2009

The Law

I was recently trying to learn more about common law and the distinction between common and statutory law. I initially was curious if common law used common in the same sense as the economic concept of the tragedy of the commons. It appears that it does not.

Here are some definitions from the web:
English common law was largely customary law left unwritten, until discovered, applied, and reported by the courts of law. In theory, a judge did not create law but rather discovered it in the customs and habits of the English people. (reference)
Laws or legal principles that have been established by courts over the years. May be codified into a statute or overruled by a statute passed by the government. (reference)

This idea that so much of our law and courts are based solely on legal tradition and precedence is amazing to me. I would imagine that at this point in time much of common law has been codified in statutory law, but I don't know. It makes me think that judges have more influence than I previously thought.

16 March 2009


I don't fully agree with the amount of outrage that there has been about the most recent AIG bonuses. I don't like it, but it is also how they run their business and compensate their employees.

The Cafe Hayek blog had a brief post related to all of this based on a New York Times article. I especially liked Russell Roberts' conclusion:
I wish the bonuses would stop, too. I don't believe in rewarding people who destroyed their company. Note to the President: when you stop sending them money, the bonuses will stop.

12 March 2009

Cwm and funny plurals

English is an interesting language. I find it interesting the large number of languages that have contributed to English as we know it today. Having learned a couple of those languages you begin to see origins and explanations for some of the "funny" words we find in english. By funny I mean both words that are humorous and words that don't follow the rules.

The Grammar Girl podcast clued me into a great English word. The word is cwm, pronounced /kuːm/. Grammar Girl points out that this is a great Scrabble word. It comes from Welsh and means a specific shape of valley.

Another word origin related episode talks about funny plurals in English. Knowing Dutch Old English is very interesting. I can see the germanic influence and the connections as the language moved westward.

I have found linguistics intriguing for some time now, but I have never attempted to study it seriously. Language is so critical to our experiences and to think of where the differences in language arose can be enlightening.

And despite the geeky topic, the Grammar Girl podcast is quite interesting.

03 March 2009


For some time now I have avoided keeping my wallet in the back pocket of my pants. This is probably due to all of the sitting that I end up doing throughout the day. I find it more comfortable and often more convenient to place it in a coat pocket or bag.

Regardless of whether the wallet is in my pocket or a bag I can always expect it to wear around the corners and eventually need to be replaced. I usually get a simple leather wallet, tending toward thinner wallets when possible.

I got to thinking of other possibilities, and Lifehacker pointed me in a new direction. I know that there are many different options out there. I wasn't looking for duct tape or vinyl but I did come across what I think is a great alternative.

Jimi wallets

A few points:

  • I think that this plastic case should be very durable. As long as I don't try to fall 8 feet onto any rocks it should last a long time

  • The limited size makes you reconsider what you carry with you

  • Very easy to throw into my front pocket, my coat, or whatever bag I happen to have with me

  • The transparency is a nice feature

  • One of the best feautres is the cost. At half the cost of most bottom line wallets I went ahead and got two wallets

If you are looking for a new wallet and are willing to try something different, I recommend a Jimi.

01 March 2009

Happy Birthdays

I wanted to wish both of my girls a happy birthday. I love them dearly and hope that they have some extra fun.

27 February 2009

An Affair

My wife accused me of having a love affair with the stars. I understand why, as at 10pm for this past week I have laid outside staring at the stars for a few minutes. Soon the Lulin will pass and the nightly visits will end.

I do find the stars fascinating. It has been fun to learn more about the constellations and everything that you can see in the sky. The order that is displayed is amazing, as is the fact that the deeper you look into the sky the more stars you see.

24 February 2009

Comet chasing

I got up at 3:00 am this morning to try and find a comet in the sky. This morning comet Lulin was it's brightest, just below Saturn in the south-western sky. I don't know for sure if I found the comet, but it was fun watching the stars and learning some new constellations.

Star gazing is one of the things that I think our society has unfortunately lost. With lights everywhere it can be frustrating to try, and we know so little of what is in the sky that it has little meaning. For me it is like staring out at the ocean. Both experiences bring a feeling of wonder at all that is before me and a curiosity of all that lies beyond my vision.

I remember fondly laying out at night watching meteor showers, gazing at the milky way, anticipating a lunar eclipse and times with my grandpa learning a few of the constellations. I would love a day, or I should say night, where everyone agrees to turn out their outdoor lights. A holiday to watch the stars. Instead of everyone going to watch fireworks we could enjoy laying out and searchings the sky for familiar and new constellations.

23 February 2009

Dystopia for the young

Why is it that there are so many failed utopias in juvenile literature? I am perhaps being too generous in my description, they are really stories of controlled societies. Rarely do the authors put forth the communities as utopias. A Brave New World, Lois Lowry's The Giver and Gathering Blue are some examples that came to mind. I have it on hand but haven't read it yet, but City of Ember is a similar story.

Those more familiar with the academics of literature I am sure have a name to refer to this genre of story. I just wonder why so many of us are exposed to this material in school. Is it the juvenile resistance to rules and order? A veiled attempt to prepare us for the world of adults?

Reading some of these books as an adult I enjoy them as well written stories. I can see some of the failings in the principles that these communities were based on. Perhaps this is the purpose for sharing them to young adults studying literature. In the Messenger by Lois Lowry we find a village where freedom, kindness, and acceptance are the guiding principles. I think that Messenger does an excellent job of introducing the difficulties of such an ideal society.

Perhaps the enjoyment of these and similar stories lies in their focus on a small number elements of our complicated reality. We can consider and digest the ideas and how we feel about them more easily than dealing with the world around us. We can then take these thoughts and lessons to help guide us in our daily actions.

16 February 2009

Austrian Theory Summary

I wanted to add one more post about the Austrian economist essays. I have come across a number of competing economic ideas that discuss more closely our current situation, but I want to mention the general summary of the Austrian theory put forward by Roger W. Garrison in his essay The Austrian Theory: A Summary.
The Austrian theory of the business cycle emerges straightforwardly from a simple comparison of savings induced growth, which is sustainable, with a credit-induced boom, which is not. An increase in saving by individuals and a credit expansion orchestrated by the central bank set into motion market processes whose initial allocational effects on the economy's capital structure are similar. But the ultimate consequences of the two processes stand in stark contrast: Saving gets us genuine growth; credit expansion gets us boom and bust.
We find ourselves in a reality where economic realities may frown upon savings. It still appeals to me as something that should be held as a guiding principle in private, public, and corporate life.

08 February 2009

Reading challenge

Our local library is having an adult reading challenge over a two month time period. The challenge is to read at least eight books, with prizes at four and eight books read. Both my wife and I have been reading more than usual as of late anyway, so we thought it would be fun to record our reading as part of the challenge.

I have a confession to make however. As I have been checking out books to read I have come across interesting titles from the teen section that I haven't read before. I just finished Lois Lowry's The Giver and enjoyed the book quite a bit. Since the ending left me wanting a further conclusion, I plan to read the other two books loosely associated with The Giver. There are some really good stories that I have not read, and even though they may be shorter and targeted at younger readers, I plan to fill up my reading list with them.

If you have any good book recommendations I am always curious to hear them. My to-read list is always growing, but I love adding good books to it.

04 February 2009

Wage Policy v. Monetary Policy

There is plenty more in Hayek's essay Can We Still Avoid Inflation? about the effect of wage policy on monetary and fiscal policy in an effort to keep unemployment low. Without posting here multiple long paragraphs I want to share a few key points.
[There are policies and laws] which in effect release unions of all responsibility for the unemployment their wage policies may cause and place all responsibility for the preservation of full employment on the monetary and fiscal authorities...

Since it cannot be denied that at least for a period of years the monetary authorities have the power by sufficient inflation to secure a high level of employment, they will be forced by public opinion to use that instrument...

[Inflationary developments] will continue to operate as long as we allow on the one hand the unions to drive up money wages to whatever level they can get employers to consent to-and these employers consent to money wages with a present buying power which they can accept only because they know the monetary authorities will partly undo the harm by lowering the purchasing power of money and thereby also the real equivalent of the agreed money wages.

I see all of this as a vicious cycle that can only be broken by breaking a large number of people. Either workers must be willing to periodically take wide spread cuts in pay, companies must risk labor conflicts by not agreeing to unreasonable wage policies, or monetary officials (i.e. our government) must dispel the myth that unemployment can be held low indefinitely and risk the wrath of their constituents.

I often try to apply personal financial principles to macroeconomics and the economy as a whole, and I am beginning to realize how quickly this can fall apart. The simple desire to provide well for your family and ensure a good wage can lead to a chain of decisions that leaves the entire economy in need of a painful correction due to misappropriated capital.

02 February 2009

Inflation for the union

Given the number of posts I have already written and the amount of material I would still like to mention from Friedrich A. Hayek's essay Can We Still Avoid Inflation?, it may be best to read the essay for yourself. I preface the following excerpt with a warning that I have a hard time understanding the benefit of labor unions. I know of many stories of how poorly labor used to be treated and the battles fought to influence management, but I see labor unions as another body to concentrate and misuse power by a few individuals in the name of a group. Now that my biases are on the table, I want to share a taste of what Hayek has to say about inflation and the influence of labor union policies.
Before I proceed with this main point, however, I must still say a few words about the alleged indispensability of inflation as a condition of rapid growth. We shall see that modern developments of labor union policies in the highly industrialized countries may there indeed have created a position in which both growth and a reasonably high and stable level of employment may, so long as those policies continue, make inflation the only effective means of overcoming the obstacles created by them.
This certainly describes the situation we find ourselves in today. Perhaps we will still yet see widespread bargaining agreements were labor unions agree to decreases in pay and benefits, but it will not come without much wailing and gnashing of teeth. It is also unlikely to find management that is ready to stand up for the future of the company and not give unfulfillable promises to labor to appease the current groans for more.

I hope my feelings on the matter are plain enough. The continuation of the paragraph from Hayek adds more fuel to the fire.
But this does not mean that inflation is, in normal conditions, and especially in less developed countries, required or even favorable for growth. None of the great industrial powers of the modern world has reached its position in periods of depreciating money. British prices in 1914 were, so far as meaningful comparisons can be made over such long periods, just about where they had been two hundred years before, and American prices in 1939 were also at about the same level as at the earliest point of time for which we have data, 1749. Though it is largely true that world history is a history of inflation, the few success stories we find are on the whole the stories of countries and periods which have preserved a stable currency; and in the past a deterioration of the value of money has usually gone hand in hand with economic decay.
I do not have the data to back this up, but it appeals strongly to the sense of logic that I have developed throughout my life and my experiences.

The Joy of Achievement

I came across Franklin Delano Roosevelt's first inaugural address a few weeks back. That is his famous "the only thing we have to fear is fear itself" speech. I was impressed with much that he had to say. Last week the great Planet Money podcast at npr.org had a bit to share from an essay published in 1933 by H. L. Mencken. I highly recommend the blogpost, which can be summarized with the following excerpt.
It seems to me that the depression will be well worth its cost if it brings Americans back to their senses.
In Roosevelt's first inaugural address he shared something that agreed with the essay mentioned above and I believe is a good lesson for myself.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy, the moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves, to our fellow men.
I came across the same sentiments in the scriptures as I read this past week. The message has come from so many directions that it is hard to ignore. Happiness does not lie in possessions but rather in achievements and service to others. This is not the first time I have heard this, but the truth of the statement was a welcome reminder.

26 January 2009

Inflation, round 2

I have some more insights to share from Friedrich A. Hayek's essay Can We Still Avoid Inflation?. It too has to do with the distortion that inflation causes in a business's ability to forecast the future, and therefore distort the business decisions it must make.

I must deal with an argument that, ... seems to lie at the root of the view which represents inflation as relatively harmless. It seems to be that, if future prices are correctly foreseen, any set of prices expected in the future is compatible with an equilibrium position, because present prices will adjust themselves to expected future prices. For this it would, however, clearly not be sufficient that the general level of prices at the various future dates be correctly foreseen, and these, as we have seen, will change in different degrees.

A main part of the Austrian argument is that prices do not rise simultaneously throughout an economy. Elsewhere in the essays the adjustment of prices is described as a titled plane, where some commodities rise or fall in price before others. This is a way to visualize the fact that money does not flow equally throughout the entire economy. Despite our governments policies, there is only a limited supply of money available and it must flow through the economy. It takes time for inflationary effects to touch any particular segment.

With this background, the quote above is attempting to point out that future valuations will be flawed because the effects of inflation are not consistent and the different degrees by which these changes occur cannot be foreseen.

More important, however, is the fact that if future prices were correctly foreseen, inflation would have none of the stimulating effects for which it is welcomed by so many people.

Now the chief effect of inflation which makes it at first generally welcome to business is precisely that prices of products turn out to be higher in general than foreseen. It is this which produces the general state of euphoria, a false sense of wellbeing, in which everybody seems to prosper. Those who without inflation would have made high profits make still higher ones. Those who would have made normal profits make unusually high ones. And not only businesses which were near failure but even some which ought to fail are kept above water by the unexpected boom. There is a general excess of demand over supply-all is saleable and everybody can continue what he had been doing. It is this seemingly blessed state in which there are more jobs than applicants which Lord Beveridge defined as the state of full employment-never understanding that the shrinking value of his pension of which he so bitterly complained in old age was the inevitable consequence of his own recommendations having been followed.

But, and this brings me to my next point, "full employment" in his sense requires not only continued inflation but inflation at a growing rate. Because, as we have seen, it will have its immediate beneficial effect only so long as it, or at least its magnitude, is not foreseen. But once it has continued for some time, its further continuance comes to be expected...

Or in my own words, when the high wears off businesses realize where the growth came from and are able to adjust future valuations on the inflated prices.

But if prices then do not rise more than expected, no extra profits will be made. Although prices continue to rise at the former rate, this will no longer have the miraculous effect on sales and employment it had before. The artificial gains will disappear, there will again be losses, and some firms will find that prices will not even cover costs. To maintain the effect inflation had earlier when its full extent was not anticipated, it will have to be stronger than before. If at first an annual rate of price increase of five percent had been sufficient, once five percent comes to be expected something like seven percent or more will be necessary to have the same stimulating effect which a five percent rise had before. And since, if inflation has already lasted for some time, a great many activities will have become dependent on its continuance at a progressive rate, we will have a situation in which, in spite of rising prices, many firms will be making losses, and there may be substantial unemployment. Depression with rising prices is a typical consequence of a mere braking of the increase in the rate of inflation once the economy has become geared to a certain rate of inflation.

All this means that, unless we are prepared to accept constantly increasing rates of inflation which in the end would have to exceed any assignable limit, inflation can always give only a temporary fillip to the economy, but must not only cease to have stimulating effect but will always leave us with a legacy of postponed adjustments and new maladjustments which make our problem more difficult.

Let me repeat, only a temporary bump to the economy. I have some more from Hayek's essay to share, but I will leave them for another post.

24 January 2009

Can We Still Avoid Inflation?

I really enjoyed the essays from the Austrian school of economic thought on the trade cycle. I have another point I want to mention, and a few more posts worth.

The essay Can We Still Avoid Inflation? by Friedrich A. Hayek was given as a lecture on May 18, 1970. I find this question interesting, as it seems to be a given in our time that inflation will always be with us.

In the elementary textbook accounts, and probably also in the public mind generally, only one harmful effect of inflation is seriously considered, that on the relations between debtors and creditors. Of course, an unforeseen depreciation of the value of money harms creditors and benefits debtors. This is important but by no means the most important effect of inflation. And since it is the creditors who are harmed and the debtors who benefit, most people do not particularly mind, at least until they realize that in modern society the most important and numerous class of creditors are the wage and salary earners and the small savers, and the representative groups of debtors who profit in the first instance are the enterprises and credit institutions.

I don't know if most of us really know that inflation is helpful in paying off debts, but the larger debtors (e.g. our government) I am sure do know. When you can use money worth less to pay off past amounts it makes economic sense in that transaction. Hayek moves on beyond this point, and this I find interesting given the little that I have learned about valuing companies. Again quoting from the essay.

There is, however, another more devious aspect of this process [inflation] which I must at least briefly mention at this point. It is that it upsets the reliability of all accounting practices and is bound to show spurious profits much in excess to true gains. Of course, a wise manager could allow for this also, at least in a general way, and treat as profits only what remains after he has taken into account the depreciation of money as affecting the replacement costs of his capital. But the tax inspector will not permit him to do so and insist on taxing all the pseudo-profits. Such taxation is simply confiscation of some of the substance of capital, and in the case of a rapid inflation may become a very serious matter.

My short summary, inflation is bad. Savings are a much healthier form of growth, if only we could have more discipline in these matters. I am curious what the arguments for inflationary policies are, how do they defend what I view as corrosive practices. More to come shortly.

20 January 2009


I have been trying to follow the economic news and ideas being tossed around lately. I was curious about the Austrian school of economic thought that has been mentioned by many writers. These theories have been placed in contrast to the ideas labeled as Keynesian. I read a compilation of essays on the Austrian theory of the trade cycle published by the Mises Institute. Mises was an economist to whom, among others, the foundations of the Austrian theories have been attributed. The published essays provide a brief introduction to these theories as well as the history behind them. I recommend these essays to anyone interested in our present economic situation. They are available in pdf form from the Mises Institute website.

The basics of the theory are that manipulation of interest rates lead to misallocation of capital throughout the economy. Forecasts that appear profitable under these conditions lead to projects and enterprises that would not otherwise have been considered prudent. Depressions are the natural correction of the economy as it reallocates capital in line with sustained demand. In the essay Economic Depressions: Their Cause and Cure by Murray N. Rothbard are the following recommendations on how to react to such a depression.

Mises, then, pinpoints the blame for the cycle on inflationary bank credit expansion propelled by the intervention of government and its central bank. What does Mises say should be done, say by government, once the depression arrives? What is the governmental role in the cure of depression? In the first place, government must cease inflating as soon as possible. It is true that this will, inevitably, bring the inflationary boom abruptly to an end, and commence the inevitable recession or depression. But the longer the government waits for this, the worse the necessary readjustments will have to be. The sooner the depression-readjustment is gotten over with, the better. This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease. The government must never try to prop up wage rates or prices of producers' goods; doing so will prolong and delay indefinitely the completion of the depression-adjustment process; it will cause indefinite and prolonged depression and mass unemployment in the vital capital goods industries. The government must not try to inflate again, in order to get out of the depression. For even if this reinflation succeeds, it will only sow greater trouble later on. The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio. In fact, cutting the government budget will improve the ratio. What the economy needs is not more consumption spending but more saving, in order to validate some of the excessive investments of the boom. [emphasis added]

Thus, what the government should do, according to the Misesian analysis of the depression, is absolutely nothing. It should, from the point of view of economic health and ending the depression as quickly as possible, maintain a strict hands off, "laissez-faire" policy. Anything it does will delay and obstruct the adjustment process of the market; the less it does, the more rapidly will the market adjustment process do its work, and sound economic recovery ensue.

The Misesian prescription is thus the exact opposite of the Keynesian: It is for the government to keep absolute hands off the economy and to confine itself to stopping its own inflation and to cutting its own budget.

What I find most striking is that this essay was originally published in 1969. I realize it is naive to hope that our government will take the recommended approach of this essay, but I was glad to find the words that echo my own thoughts on the matter.

I realize that these are theories, and we can argue about theories all day and it will make little difference. Real people feel the pains brought on by economic upheaval, and the economic theory being pushed at the time is of little consequence. That said, I hope that we can look further toward the future and act to place our economy on a more firm foundation rather than sacrificing that future to relieve the current, and I feel temporary, pain of the moment.

18 January 2009


Thank you to Nate for pointing me towards goodreads.com. I should have known that a community existed on the world wide web to meet my needs to share what I have been reading and thinking about.

I still plan to continue publishing here, but we will see if the content shifts away from books.

13 January 2009

Orson Scott Card and technology

I had some more thoughts about Ender’s Game that thematically deserved a separate post.

I read some science fiction as a teenager (not any Orson Scott Card as I admitted previously) and perhaps I knew too little to realize some of the foresight the authors had. Reading Ender’s Game however I am amazed at the technical aspects that we are beginning to see today that Card wrote about in the 1970’s.

It may be that I view the 1970’s as long ago because of my age, but as I understand things this was before the personal computer was a part of even the most tech savvy home. Ender’s Game is full of things that are just now becoming a part of everyday use. They studied on personal, laptop computers connected together in a giant network. They played simulation and computer games, some of which they interacted directly with.

Perhaps we haven't come as far as I think since the late 1970's and we have been this close for a long time. Even if there were visionaries then talking about these things I am impressed with Card’s ability to understand how technology can be used in our lives and how it will affect our lives.

Ender - Orson Scott Card

I came to the Ender series late. I never did read any of Orson Scott Card’s books as a teenager. I finally read Ender’s Game recently and was very impressed.

The copy of Ender's Game that I read had questions at the back to be used in classroom discussion. The questions had the potential to elicit very serious answers and yet were directed at young adults. These questions echoed many of the thoughts I had as I read and pondered the book.

I have been reading some of the other books in the Ender saga. Card has the ability to draw me in quickly with each book. A real part of the satisfaction is not simply the good story and approachable delivery; I enjoy the deep potential thoughts that are brought up throughout each book.

I also came across Card’s Alvin Maker series and feel the same way. This series is a historical fantasy set in an alternate colonial North America. This series is directed at a more mature audience because of the themes, but it is undergirded with deep issues to think about.

I don’t know if Card intends his works to be as deep as I read them, but it is wonderful to enjoy a book not only for the story but also for the things it makes you think about.

John Madea and Simplicity

The Laws of Simplicity (Simplicity: Design, Technology, Business, Life) The Laws of Simplicity by John Maeda

I loved this book and the concise presentation of powerful ideas. He has collected the principles to drive toward simplicity and makes the case for the power behind simplicity. This can be applied in so many circumstances.

Madea’s background coming from both computer science and design is especially intriguing to me. As I sit on the technical side of things I am often fascinated by the design world. The more I learn and observe I see many corollaries between the two worlds. I was able to see the application of the principles in this book both to design as well as the technical world.

The Alchemist

When I began this short book by Paulo Coelho I was skeptical. I felt as I did while reading The Richest Man in Babylon by George S. Clayson. I did not agree fully with the motivations of the individuals in the story, but as I continued to read both books I found lessons that I could easily apply to myself and my own experience.

For those unfamiliar with these books they discuss ways to achieve goals and are set in times long ago. The Richest Man in Babylon is specifically about paying yourself first to provide financial freedom. The Alchemist is about following your personal dream. I recommend both books and the overall messages that they have to share.

The sticking point for me that I had to get past was that I saw much of the individual motivations based on selfishness. I know that I have many selfish desires myself, and probably many I don’t realize, but I have spent a lot of energy trying to curb many of those selfish desires.

Perhaps we all need a certain amount of healthy selfishness in our lives. I find motivation a much friendlier word, and this is how I view healthy selfishness. We need the motivation to get out and do productive things and build worthwhile relationships.

The side of selfishness that bothered me the most in the story was the lack of commitment to other people close to the main character. Granted this may only be my perception, but in comparing these characters to myself they had very few if any obligations to others. I feel that it is natural for us to take upon ourselves obligations that should determine decisions we make in the future. With a family it is not appropriate to leave or force your family into a difficult situation. I don’t mean to say that family commitments restrict our dreams, these commitments just add another layer of things that must be considered before major actions are undertaken.

I believe that our lives are more meaningful when shared with others. If we expand self to include family and others important to us then acting upon selfish motivation for this expanded self will bring more happiness to our lives.

Stumbling On Happiness

I listened to this book after listening to Malcolm Gladwell's Blink, which in hindsight was a good fit. This book addresses more of things that our brain does without us realizing it. In this case Daniel Gilbert dissects some of the ways our brain may deceive us and specifically why it can be so difficult to understand what decisions will bring us the most happiness in the future.

The analogy that Gilbert uses is the optical illusion. An optical illusion is the corruption or confusion of our vision. Our past vision (memories) also becomes corrupted in a way similar to optical illusions. In the same way our future vision is also imperfect, seen through bias of the present. This means that our decisions are tainted by the present moment. Our thoughts and feelings now are poor predictors to how we will feel in future situations that we have not yet experienced.

Daniel Gilbert leaves the reader with an antidote to overcome our inability to accurately predict future happiness, and it is surprisingly simple. He makes the point however that it is also tremendously difficult. His recommendation is to ask someone else who has gone through a similar situation how they felt and how the experience went. It has been found that even if we feel our situations are unique they are not nearly as unique as we think. The best projection of how we will feel in a situation we have not experienced can be found in the experiences of someone who has gone through a similar situation.

I have my own reluctance in counseling with others, but I can also see the power in turning to others to help guide our decisions. We are not as different as we may think. Part of the difficulty in following this advice is knowing the best person to ask. This is a good argument to be socially active, as those with a wider circle of friends and acquaintances will probably have an easier time than the recluse.

2009 Update

I intended these posts to try and present some of the thoughts I had while reading the books I enjoy. Unfortunately I have let too much time elapse since reading these books and my thoughts have turned into vague impressions. Compounding the problem is the fact that I haven't stopped reading other books, so I hope ideas don't become muddled. I will try and do some catch up so that I can post my thoughts more quickly, but no promises.

If anyone has read any of these books and would like to discuss them let me know. Also, if you think of any books that I may enjoy, please let me know and I will add them to my ever growing list of interesting books to read.