Thursday, February 28, 2013

I am skeptical about a balanced budget amendment.

I don't believe that the family budget is a good metaphor for the federal budget, but I will use it now anyway.

It seems to me that there are different ways that debt can be acquired:

  • You can borrow to invest, and it makes sense to do so if the investment will be profitable and suffice to more than pay back the money borrowed, the interest, and a profit.
  • You can borrow to pay for something you absolutely need, but can't pay for from savings and current income, such as care for an acute medical problem.
  • You can borrow for convenience, as one borrows from a bank by using a credit card, and they paying the credit card bill. It makes sense to do so if the convenience is worth the cost of the credit card transaction (and the inconvenience of paying the bank's monthly bill.)
  • You can borrow to buy something you want, don't need, and can't afford. This is not a good idea.
By analogy, the government can borrow:
  • To build roads or facilities or to locate and evaluate natural resources
  • To conduct a just war with costs beyond those affordable from current taxes
  • To cover immediate expenses for which the required income will be delayed
  • To pay for tax breaks for rich influential people who don't need them or wars that shouldn't be fought.
It might make sense to separate the federal budget into an investment budget and a current account budget. Investments would be allowed into the investment budget if and only if they were justified by cost benefit analysis or imperative need such as borrowing for a just war.

The current account budget would include the other classes of expenditures. Even in this case it seems to me that government stimulus is sometimes justified in economic turn downs, so while normal expenses should not be paid from borrowing as a general rule, and since stimulus funding should be paid from income in flush times, some borrowing for the short term is justified.

A thought on the 2nd Amendment and gun regulation

I found a pretty good description of the meaning of these words. I was also thinking about the way the militias fought in 1789. Basically two lines of men stood at distance and shot at each other.

A well regulated militia would not show up, some with pistols, some with fouling pieces, and some with muskets. If they were to show up with guns that they owned and kept at home, I would expect that there would be requirements. The obvious ones would be:

  • accurate enough to regularly hit a man's trunk at a distance of 50 to 100 yards,
  • with a large enough projectile moving at sufficient speed to put a man out of action if hit in the torso, and
  • capable of being loaded, aimed and fired at least two or three times per minute.
Thus I think the words of the amendment might actually imply the right to regulate the kinds of arms that would be held by the members of the militia, and thus by the public who might serve in the militia.

Weapon technology has changed in a couple of hundred years. For instance now military units are required to have weapons with interchangeable parts, using common ammunition (meeting international standards). Indeed, given the danger of running out of ammunition and the difficulty of supplying the front lines, troops may be encouraged to limit their amount of firing.

There would seem to be quite acceptable modern interpretations of the second amendment that would simply update the implications from those applicable to smooth bore muskets to those applicable to modern rifles.

Tuesday, February 26, 2013

Book Review: God's Englishman

I just finished reading God's Englishman: Oliver Cromwell and the English Revolution by Christopher Hill. When the book was published (in 1970), the author was perhaps the foremost interpreter of 17th century English history. In this book he describes that century as the decisive one in English history, a century in which the Middle Ages ended. By the end of the century England, alone among the nations of the world, was read to enter the modern age.

Hill sees massive and interrelated economic, political and social changes taking place over the course of the century. Today we try to understand these changes in terms of underlying social and economic forces. I think Hill would find our very search for natural causes to be an outcome of the evolution in the 17th century. For Cromwell and many of his contemporaries, the patterns of history were divine providence, the working out of God's plan through the action of his chosen people. Cromwell, like many of his followers, felt himself to be one of those chosen people, blessed by God's grace, destined to an eternity in Paradise -- a status denied to the great majority of mankind. Hill describes that view of a providential future achieved by the action of men as itself different from the passivity of the Middle Ages.

Cromwell could not always predict accurately what changes would occur in England, nor where they would lead. Yet he understood himself as an agent of those changes. His Puritan faith gave him confidence that history was the working of God's will; he also is portrayed as believing that he could often predict the direction of providence and act in support of that direction.

The 17th century saw the Stuarts replace the Tudors, the English Civil War, the execution of Charles I, the Restoration of the Stuart monarchy, and the Glorious Revolution. Oliver Cromwell rose from relatively obscure part of the gentry to parliamentarian, general, and eventually Protector in the first 3/5th of the century.

Some Preparatory Facts

1492 marked a turning point in world history with the discovery of America and the expulsion of the Moors from Spain. The 16th century saw the Spanish conquest of what has become Hispanic America as well as the further development of European trade with Asia and knowledge of the African coasts; gold and silver would flood into Europe and Asia leading to radical economic change. The Reformation progressed through much of northern Europe, driving expansion of literacy and promoting individual study of religion, leading also to religious wars.

The 16th century was also that of Tudor England, with the establishment of the Church of England headed by the King. The War of the Roses was past, the nobility had been disarmed, and the Spanish threat was diminished by the destruction of the Armada.

Research published long after Hill's book has shown "show that cooling from A.D. 1560–1660 caused successive agro-ecological, socioeconomic, and demographic catastrophes, leading to the General Crisis of the Seventeenth Century.......that climate change was the ultimate cause, and climate-driven economic downturn was the direct cause, of large-scale human crises in preindustrial Europe."

Demographers and historians have shown that:
By 1530 the population of England and Wales had risen to around 3 million and by 1600 it was about 4 million. In Tudor times towns remained small (although they were a vital part of the economy). The only exception was London. From a population of only about 60,000 or 70,000 at the end of the 15th century it grew to about 250,000 people by 1600. Other towns in Britain were much smaller. The next largest town was probably Bristol, with a population of only around 20,000 in 1600. 
Nevertheless in the 16th century towns grew larger as trade and commerce grew. The rise in town's populations was despite outbreaks of plague. It struck all the towns at intervals in the 16th and 17th century but seems to have died out after 1665. Each time it struck a significant part of the town's population died but they were soon replaced by people from the countryside. 
At the end of the 17th century it was estimated the population of England and Wales was about 5 1/2 million. The population of Scotland was about 1 million. The population of London was about 600,000.
A Modern View of the Changes Occurring During Cromwell's Lifetime

Military: The New Model Army was created to support the Parliamentary cause in the Civil War. It was a professional, standing army rather than an army composed of militias such as that which preceded it and that which served the royalist cause. The New Model Army was national as opposed to the local militias. It promoted officers by merit rather than aristocratic rank (Cromwell sought a man for the office rather than an office for the man). It was relatively well trained for the time. Its soldiers were often motivated by faith that they were serving an important religious cause.

Territory: The Civil War was concluded, England and Wales pacified, the revolt in Ireland put down and Scotland conquered. The British Isles became a single nation, and the threat of "cantonization" ended.

Economic: New lands were brought into agricultural production, notably by draining fens and cutting forests (by the end of the century, England was not only able to feed its increasingly urban population but to export grains). Enclosures, which had begun in the 16th century, were continued. Trade was expanded and national policy increasingly favored trade expansion from late in Cromwell's lifetime. So too was the role of artisans and craftsmen. There were significant redistributions of property favoring the Protestant gentry.

Political: Power of the monarch was greatly reduced and that of the Parliament was increased. Government administration was improved. The gentry gained greatly in power as they dominated the House of Commons and the power of the House of Lords was reduced. The gentry gained local legal and administrative control. Efforts by the commoners (people without property) to obtain power were successfully put down. Many of the judicial institutions created by the monarchy were abolished, leaving those under control of the Parliament in place.

Religious: The Church of England endured but the religious power of the monarch and that of the bishops much reduced, and that of the gentry increased. The local gentry wound up with control of the appointment of ministers paid by tithes. Toleration of individual conscience was increased.

Note however that increasing agricultural production in the lands held by the gentry, increasing their control of their local churches (and the tithes), and making them justices of the peace was not incidental to their increasing political influence.


Check out the Oliver Cromwell timeline.

Oliver Cromwell was born in the lesser branch of a wealthy and locally important family. Political, he was early elected to Parliament, and gained early influence within the legislature. He recruited troops for the Civil War in the 1640s, gained fame for early victories in the Civil War and rose to the highest rank in the New Model Army. After the royalists had been defeated in England he led an invasion of Ireland which quickly and brutally suppressed the rebellion that had been going on there for a decade. He then led forces defeating a Scottish army. With military backing he saw a cleansing of the Parliament of opposing members, and he eventually served as Protector. Two years after his death in 1658 his body was disinterred and hanged.

Hall in his final chapter shows how radically Cromwell's depiction has changed over time; it varied according both to the spirit of the age and the political persuasion of the observer. Some aspects of his biography seem clear. He was a Puritan and his behavior was profoundly influenced by his religious belief. He was pragmatic, and not one who based action on theory. When convinced that Divine Providence was moving in a direction, he would act to support its advance even if that action contradicted philosophical positions he had previously espoused. He was sometimes manic and other times seriously depressed. He was relatively tolerant, but also a man of his time feeling that monarchy was a desired form of government, in favor of democracy but a democracy with suffrage restricted to men of property, supportive of freedom of conscience and the welfare of the common people. Cromwell led in the development of a strong foreign policy, built on naval strength and supportive of the expansion of British trade.

Hall devotes a chapter to Cromwell's religious belief. It is a hard belief for me to understand. It is based on the omnipotence and omniscience of God. Following that, he believed that God must always know who would go to heaven and who would be condemned to death, and thus that there would be a class of people predestined to go to heaven and another class predestined to hell. The chosen people would be those who achieved God's plan for mankind through their actions and God's grace; their actions while predetermined were also their responsibility. Often success would mark their devotion to the right path, but it would be the devotion to the right that was important. Man would not fully understand the divine strategy, but could sometimes perceive its direction especially through the study of history (in terms not only of events but of the trends by imputing divine causality). His was a belief shared at least generally by many Englishmen of his time and they seeing themselves as God's chosen people, able to do great things by God's grace, would feel a great solidarity.

Hall describes this as a change from earlier beliefs which tended to assume that God acted through the agency of kings who ruled by divine right (and I presume prior to the Reformation through the Pope, cardinals and bishops of the Catholic church). Hill also notes that the evolution of Protestant thought in the 17th century also contributed to the development of science as people sought to understand the natural world and through that understanding better exploit its properties; it was in the 17th century that the Royal Academy was founded and Cromwell and his colleagues promoted mathematics and education.

Appreciation for the Book

I found the book quite challenging. Of course I am a Yank; had I been subject to years of British history as any English schoolchild would be, I would have better understood the references in Hall's essays. I say that because the book is perhaps best appreciated as a set of ten related essays, each corresponding to one chapter. However, I found the book enormously thought provoking. I learned a great deal about the 17th century history of England, in part stimulated to use Wikipedia by things I didn't understand in Hall's book.

I must say that I think we still find the course of history hard to predict. Those who most influence the course of history often don't know the effect that their actions will have. Yet we are often more confident than our ignorance and powerlessness would indicate.

I think I would feel that way even if we were not headed for the fiscal cliff, likely to fall off this Friday.

Oliver Cromwell, by Samuel Cooper

Sunday, February 24, 2013

A thought about thinking about history.

I have been reading history for the past seven years. In that time I have perhaps 100 books. If I spent something like an average of 15 hours reading, considering and discussing per book, that might add up to 1,500 hours. That might be as much as an undergraduate history major spends in his/her history courses, but is far less that the 10,000 hours that might lead to expert knowledge. (And of course, I have been reading history, not doing historical research, so my knowledge is of a different order than that of a professional historian.) But I got to thinking about what I have learned.

Dante says: Knowledge doth come of learning well retained, Unfruitful else
Machiavelli in The Prince
I have also heard this quotation made suggesting that knowledge comes of learning committed to memory.

A theme of this blog is that we think with our brains, and that much of the operation of the brain is not available to conscious awareness.  I suppose that in the time of Dante and Machiavelli, well retained learning was conceived to mean rote learning of texts, facts and perhaps stories. I may have read about the sweeping revolutionary movement of 1848 but I certainly don't have recall of the names of the many people that were mentioned in the book. I could tell a much simplified story of what happened. And I know that the events of the year were an important precedent for the Arab Spring, and I have a better ability to find information on 1848 than I had before reading a book on the time.

One of the things we know about the difference between expert physicians and medical students is that the expert diagnostician asks fewer questions to come to the same diagnosis. One assumes that this is the result of having better appreciation of the a priori probabilities of different diagnoses, perhaps having a better intuition of the questions that provide most information to distinguish among the probable diagnoses, and perhaps having better skills at observing signs and symptoms that provide information without questions. I assume that different brain operations are involved in all of these different aspects of "knowledge", and different forms of "memory" are involved in developing each kind of knowledge.

Is there a real distinction in the areas of the brain involved in each kind of processing, the processes themselves, and the ways that the brain is modified as a result of the intake of information between what we call "understanding" and what we call "knowledge"? Do different learning processes result in different parts of the brain getting better at performing different operations?

I suspect that I have learned something from all the reading of history, and I suspect that the Machiavelli quote does not capture the nature of the learning very well.

Saturday, February 23, 2013

Wednesday, February 20, 2013

What skills do all employers want from young professionals?

I was chatting with a young professional and got to thinking about what we really want in hiring a young professional. Certainly:

  • The ability to meet people and deal with them effectively.
  • The ability to write clearly and quickly.
  • The ability to deal well with numbers.
  • More generally, the ability to communicate complex information well not only one on one but to groups.
  • The ability to network, in the sense of finding people who can help in the work, contacting them, and communicating with them.
  • The ability to use the tools of the trade, including the Internet.
  • The ability to see how what they already know will help with the job at hand and will help in learning more.
I wonder how many of the graduates of our professional training programs have all these skills.


If you want to go back to the intentions of the people who wrote the Constitution, Madison is as good as it gets and the Federalist Papers are the gold standard.

Monday, February 18, 2013

Convergence and Lack of a "Middle Income Trap".

Source: The Economist
Recent data provided by The Economist magazine in the graph on the left suggests that countries with GDP per person over $30,000 generally are growing more slowly that those with GDP per capita between a few hundred dollars per year and $20,000. Thus there is an economic convergence among large classes of countries. On the other hand, the graph indicates that those countries with GDP per capita in the $1,000 range are not catching up (and there are a lot of them). Moreover, countries in the $2,000 group tend to be catching up very slowly if at all.

The right hand graph suggests that occasional slowdowns of a year or two are common across all income levels. This is in response to a suggestion that middle income countries are often caught in a trap as they fail to innovate technologically adequately to make up for their loss in the advantage of low wages and rural to urban migration enjoyed by poor countries.  Apparently many/most countries are able to adequately introduce labor saving technologies as wages go up to retain their economic competitiveness. Of course, many labor saving technologies already exist so perhaps it is easier to innovate  by the transfer of existing technology than by the invention of new technology. The richest countries then might be thought to be forced to invent to stay competitive.

Sunday, February 17, 2013

Risk and flu

This video is from a nice website, Risk Bites.

It has been estimated that the Spanish flu that hit during the First World War killed 50 million to 100 million people worldwide. Flu pandemics, of which that was the worst in centuries, occur ever few decades. They occur when a new, highly infectious strain of the flu evolves to which there is little "herd immunity" in the human population. If that strain proves to be very lethal, lots of people die.

It is important that the world maintains epidemiological surveillance systems that would quickly identify the emergence of such a strain in order that public health efforts could be employed in a timely manner. These would include development of an appropriate vaccine and mass immunization campaigns using the vaccine. It is important that we inform the public that flu is more dangerous than immunization, and that they have a public duty to be immunized so that when the next potential pandemic emerges, people will respond.

The regular flu is dangerous. I quote from a January story in Bloomberg News:

The worst U.S. flu season since 2009 intensified last week, killing hundreds more people as the viral epidemic spread to additional states, health officials said. 
About 8.3 percent of all deaths nationwide were due to the flu and pneumonia for the week ended Jan. 12, more than the 7.3 percent level for an epidemic, the Centers for Disease Control and Prevention said today. About 90 percent of those deaths are people older than age 65, who are being hit particularly hard by this year’s flu strain, the Atlanta-based agency said.
Of course, it is important for people at high risk of serious cases of the flu to be immunized, but so too it is important for people who might infect the old or those with impaired immunological systems to be immunized.

Indeed, even if the immunizations are only 60 percent effective, 100 percent coverage can really benefit people. A lot of flu is spread in schools. If all kids and teachers were immunized, there would be a lot of classes in which flu was not spread from student to student. Even if only 60 percent of the kids in the classroom were protected, if one of them is yours, your whole family would be safer. Moreover, the immunizations may reduce the severity of infection even if the person is not completely immune and gets the flu.


Saturday, February 16, 2013

Sounds reasonable to me!

Interpreting the federal debt - GDP ratio.

"So, as you can see, during the 70s we had deficit spending that ran up the national debt, until Ronald Reagan was elected in 1980 and restored fiscal soundness. Oh, wait; it’s actually the opposite. 
"The truth is that whatever you might say about economic policy in the 1970s, it had nothing to do with Keynesian fiscal policy — and did not involve increasing debt. People on the right tend to use “Keynesian” to mean “liberal stuff I don’t like”, but aside from that definition, the 70s tell us nothing about the issues we’re discussing right now. You can argue that monetary policy was too loose, that the Fed was too expansionary in 1972 (when Arthur Burns was trying to reelect Richard Nixon) and that it failed to tighten in the face of oil-shock-driven inflation. But again, the idea that this experience has any relevance to expansionary fiscal policy in the face of a liquidity trap is totally bogus." 
Paul Krugman in the New York Times.
So lets look at this graph again. Federal debt decreased in relation to the GDP and was quite low until the Reagan administration. It rose rapidly under Reagan and Bush I. It came down under Clinton and began to rise again under Bush II. Then came the housing bubble crash which catalyzed the subsequent financial crisis and the Great Recession. There followed a reduction of the GDP due to the recession and a lot of deficit spending to restart the economy. Most economists seem to agree that the stimulus package was a good idea and has helped the United States restore growth in GDP.

Wednesday, February 13, 2013

Tuesday, February 12, 2013

Republicans seem to be publicly promoting ignorance.

I quote extensively from a recent column by Paul Krugman in the New York Times:
Last year the Texas G.O.P. explicitly condemned efforts to teach “critical thinking skills,” because, it said, such efforts “have the purpose of challenging the student’s fixed beliefs and undermining parental authority.”...... 
Mr. Cantor felt obliged to give that caucus a shout-out, calling for a complete end to federal funding of social science research. Because it’s surely a waste of money seeking to understand the society we’re trying to change. 
Want other examples of the ignorance caucus at work? Start with health care, an area in which Mr. Cantor tried not to sound anti-intellectual; he lavished praise on medical research just before attacking federal support for social science. (By the way, how much money are we talking about? Well, the entire National Science Foundation budget for social and economic sciencesamounts to a whopping 0.01 percent of the budget deficit.) 
But Mr. Cantor’s support for medical research is curiously limited. He’s all for developing new treatments, but he and his colleagues have adamantly opposed “comparative effectiveness research,” which seeks to determine how well such treatments work.......... 
Still, the desire to perpetuate ignorance on matters medical is nothing compared with the desire to kill climate research, where Mr. Cantor’s colleagues — particularly, as it happens, in his home state of Virginia — have engaged in furious witch hunts against scientists who find evidence they don’t like. True, the state has finally agreed to study the growing risk of coastal flooding; Norfolk is among the American cities most vulnerable to climate change. But Republicans in the State Legislature have specifically prohibited the use of the words “sea-level rise. 
And there are many other examples, like the way House Republicans tried to suppress a Congressional Research Service report casting doubt on claims about the magical growth effects of tax cuts for the wealthy.......... 
(B)ack in the 1990s conservative politicians, acting on behalf of the National Rifle Association, bullied federal agencies into ceasing just about all research into the issue. 
It is really hard to believe that critical thinking and knowledge are becoming the subject of political controversy -- that one party is actively promoting ignorance and not teaching our kids to think critically.

The subject of this blog is "knowledge for development". It seems quite obvious that more knowledge is part of the path to better development policies, and that more and better knowledge is likely to help develop institutions more supportive of development. This is true however if people will undertake critical thinking about policies and institutions, and not rely simply on doing what has been done in the past.

Thinking about the Cuban Missile Crisis

James G. Blight and Janet M. Lang have produced a podcast titled "The Reexamination of the Cuban Missile Crisis" on the podcast site of the Journal of American History.  It is occasioned by the publication of their book, The Armageddon Letters: Kennedy, Khrushchev, Castro in the Cuban Missile Crisis. (There is a website for the book.)

Blight and Lang are psychologists who began their work on the Cuban Missile Crisis out of interest in the psychology of human decision making in really important decisions such as those that might lead to or avoid nuclear war. Rather than depending primarily on documentary sources and interviews (as historians have tended to do) they chose to hold meetings with people who had actually been involved in the decisions, and indeed to have meetings in which people who had made those decisions from different sides discussing them together (with participating academic experts).  The were able to do so in part because of the cooperation of Robert McNamara, the Secretary of Defense during the Missile Crisis.

Before they started their studies of the Cuban Missile Crisis, hawks dominated the discussion suggesting that Kennedy, if he had taken a harder line, might have not only gotten the missiles withdrawn from Cuba but have gravely weakened the Castro government and strengthened the United States in the Cold War. In the early discussions sponsored by Blight and Lang someone pointed out that a limited war might have destroyed a city like Atlanta with a population of hundreds of thousands of people. Think about the feeling of responsibility of an American president thinking that his decisions could easily cost the lives of as many Americans as died in the Civil War! Decision making in the White House is in a climate of stress that is all but impossible to understand, much less duplicate.

Amazing facts came out of Blight and Lang's research.

  • Dean Rusk, Secretary of State during the crisis, disclosed for the first time that he had been instructed by President Kennedy to tell the Secretary General of the United Nations that he might be called upon to approach Nikita Khrushchev and tell him that a proposal to both withdraw Soviet missiles from Cuba and U.S. missiles from Turkey; Kennedy did not think missiles in Cuba were sufficient cause for war with the Soviet Union.
  • There were tactical nuclear weapons in Cuba and they could have been used to destroy any American invading force, had an invasion taking place.
  • The Americans were making decisions in ignorance of the existence of the tactical nuclear weapons.
Had America invaded and had tactical nuclear weapons been used there would have been a very high probability of a generalized world nuclear war.

After a quarter century of research, there are now no hawks on the Cuban Missile Crisis. In fact, historians generally agree that the world very narrowly escaped nuclear war.

The story should lead us to a great deal of caution. Decisions of this magnitude are almost always made in partial ignorance. With all of the people and money spent on intelligence by the U.S. government, our decision makers were uninformed about Cuba during the missile crisis, about Viet Nam during the war there, about Iraq and its weapons in the Iraq war and about Afghanistan during the current war. Sometimes what you don't know can come up and bite you!

I am impressed by the utility of the Blight and Lang method. Getting top leaders from the different sides of a major decision can  be done 10, 20 or 25 years after the decision. With detailed preparation, such a meeting can bring out new facts before the academic community and the public. It needs cooperation from leaders willing to suffer bad publicity in order to improve future decision making and save the public from bad decisions. Lets hope that more leaders will have the courage in retirement shown by McNamara!

A thought on the national debt and economic growth

Last night economist Adam Posen was on the Charlie Rose show. Among other points, he pointed out that a fairly large debt is OK as long as it is invested in money making activities. A company can borrow a lot if it uses the money to build its business and generate not only the money to pay the debt but to give profits to its investors. So too a country need not worry about debt (at the level of the federal debt in the United States) as long as the country economy can grow enough to pay the interest and eventually bring down the debt. This sounds very reasonable to me.

But I got to thinking about growth. We know that a lot of economic growth has been the result of the reduction in birth rates. As dependency ratios decreased and a greater portion of the population were working, investments increased, productivity increased, and the economy grew. Of course, this was in countries in which the population was young. It is the young who save and invest. As our population ages, a smaller portion of the population will be saving and a larger portion will be pulling down savings to support them in their retirement. Moreover, with our low birth rate, the dependency ratio is likely to increase as more people retire from the workforce in order to live their longer lives at ease.

We also know that technological revolutions can fuel growth. This happened in the Industrial Revolution, and in the second Industrial Revolution (electrification, internal combustion engines, mass production, etc.) and the Information Revolution. The United States has been enjoying the benefits of these sequential industrial revolutions for a couple of centuries. It also enjoyed the benefits of a huge amount of free lands (that had been taken from the remnant population of the American Indians) and a huge inflow of workers (who brought with them the human capital that resulted from the investments made in them in their original countries). It even may be that a country with more young workers will have more technological innovation.

Of course, we also know that economic growth can be promoted by good institutions and good policies. But can we depend on our dysfunctional politicians to produce good policies? Can we depend on our superstitious, "what can you do for me" population to maintain good institutions?  Do we know that there will be a new technological revolution? We certainly know that we are facing declining birth rates and an aging population.

Perhaps the motors for rapid economic growth that have served our fathers and grandfathers will fail our children and our grandchildren.

I think we would be well advised to prepare for a long term period of slower growth by bringing down the federal debt. We have time, but 15 years from now I would hope to see the debt lower and on the way down. If our children and grandchildren see a new technological revolution, and other factors combine to produce another long period of economic growth, all to the good!

Happy Birthday Mr. President

Sunday, February 10, 2013

How to Postpone the Coming Demographic Disaster.

I saw an interview of Jonathan Last about his book, What to Expect When No One's Expecting: America's Coming Demographic Disaster. Last pointed out that there is a worldwide trend for birth rates to go down and populations to age. Correspondingly, there will be a long time while the portion of old people in the population increases. He explained a number of factors that caused this situation, and was quite convincing that few if any policies could reverse the trends.

He points out that during this period it will not only be the case that the average working person will have to support more retired people than is now the case, but that

  • It is young people who accumulate capital and old people who draw down capital, so that the nations rate of capital accumulation will slow and perhaps be reversed.
  • It is young people who tend to be the inventors and the entrepreneurs so the rate of innovation and creation of new enterprises will go down.
  • As a result there will probably be a long term reduction in the rate of economic growth.
The United States still has a birth rate that is almost sufficient to maintain the current population, and is likely to have a significant immigration rate as it recovers from the current recession (assuming it has a decent immigration policy). Immigrants, especially the Hispanic immigrants, tend to have a higher birth rate so the immigration will help sustain a reasonable age distribution of the population.

(Last also points out that the Latin American countries themselves are seeing birth rates go down and will seek to retain their own citizens to reduce the coming demographic problems, so we can not depend on immigration to permanently avoid the crisis.)

So what can we do and what should we do?
  • We should welcome immigrants, especially young workers and students, and we should do all we can to keep them here.
  • We should be sure that we invest adequately in the education of the young and remove all barriers to their success as innovators and entrepreneurs. Obviously this means that we have to stop wasting the talent in our young Africa Americans and Hispanic Americans. 
  • We should be exploring government policies to make the economy grow faster. I think that means investing in education, research and development, technology innovation, infrastructure, and institutions that allow enterprise formation and success.
  • We should also be exploring ways to serve the aging population that increase the efficiency with which we can provide a given level of services. The increasing costs of health care would be a place to start.

Brad Meltzer -- How to Write Your Own Obituary

Saturday, February 09, 2013

The International Flow of Researchers

The Global Brain Trade
Source: World Bank Data Viz

This is an interesting graph, but I would probably have preferred a display in which the x axis was the inflow of researchers, the y axis the outflow of researchers, and a circle surrounding the point for a nation, the size of which was proportional to the total  number of researchers in the country.

Korea stands out as having essentially no importation of researchers, Japan as having relatively little immigration or emigration. 

Thursday, February 07, 2013

Is a consensus developing on aspects of a U.S. innovation policy?

I quote from an article that argues for innovation and against excessive government regulation:
(A) bipartisan consensus that innovation is part of America’s identity is leading to emerging areas of agreement. For example, political leaders agree that U.S. policies should encourage the best and brightest from around the world to come here and stay once they get their degrees, particularly highly trained STEM students. Politicians also agree that startup businesses are good and Americans should be allowed to fund the entrepreneurs who present the best ideas. That’s why both parties supported the 2012 JOBS Act which eased rules on crowd funding and the restraints of Sarbanes-Oxley.
 The article cites some sexy new business models.

I am glad to hear that the consensus is developing on at least some elements of an innovation policy.

It seems self evident to me that certain kinds of education, certain kinds of physical and institutional infrastructure, and certain kinds of government support for R&D stimulate innovation. Perhaps a consensus will emerge on at least part of that agenda.

I doubt that teaching modern dance, expanding the legal institutions dealing with tortes, or doing research on public opinion will contribute to innovation, and maybe we can get some consensus on what not to fund in the name of innovation (such a Congressional pork).

Is there an intellectual empathy -- feeling the thrust of an argument?

How do I know what I think until I see what I say?” 
E.M. Forster 

Listening to Charlie Rose interview Sonia Sotomayor I was struck by one exchange. Rose was asking about empathy and Sotomayor in her answer said that among her worst experiences were discussions of cases among judges where they had not understood the case.

It seems to me that we often invoke duality to separate emotional understanding from intellectual understanding. But if you want justice, should you not expect judges to understand a case both emotionally and intellectually?

Sotomayor of course makes a very important case that judges should understand their own responses to a case -- both the sources of their emotions and their prejudices -- in order to better do what the law requires.

On the other hand, she referred to the members of the Supreme Court that overthrew Plessy v Ferguson. That Plessy decision is often identified as one of the worst in Supreme Court history but it stood for more than half a century. It seems to me that when the Warren Court overturned Plessy in Brown vs the Board of Education, they must have fueled their effort with emotional outrage at the injustice Plessy was causing.

I suppose my fundamental point is that we think with our brains and not just our conscious minds. Our best thinking is probably done through a righteous integration of the brain's emotional and logical processes.

How do I know what I think until I read what I have written?

In the discussion Sotomayor noted that there have been occasions in which after a preliminary discussion within a panel of judges, she was tasked with writing the majority opinion, and in the process of drafting that opinion decided it was wrong. She would then draft what she felt to be the correct opinion and bring both back to the panel.

Her point was that in the reflective process of writing an opinion she deepened her analysis and came to a new recognition of what she thought about the case. Sometimes she could bring a majority to her new view, and sometimes she found her opinion published as a minority view of the case.

I too find that writing, especially for distribution, helps to clarify my thinking. Indeed, that is one of the reasons I continue writing this blog.

The History of Classroom Technology

Source: "The evolution of technology in the classroom", by Jill Elaine Hughes
I am an old guy, but  I suspect that I am not alone in feeling that I have not used technology well nor enough in my teaching. The UNESCO seminar where I help out has used a video prepared in Paris by the Secretary General of the Organization welcoming the students -- something that motivates the students and conveys something important about what they are studying. But we have failed to use Skype to bring informants from around the world into the classroom. The seminar uses Blackboard for discussions and other functions, but I don't think it has adequately explored other platforms for social networking. Books have been around for a long time, but what if we had texts using hyperlinks and tied to videos for tablets and other computers in the students's hands. I could go on, but you get the picture.

Transparency Seems Like a Step to Stop Corruption

The International Budget Partnership has released the 2012 Open Budget Index along with an interactive data browser to see how a country’s scores and ranking have changed over time. Click here for the full interactive feature:

Interested in learning more about budget transparency? Replay a great event on "Increasing the Pace of Budget Transparency":

Wednesday, February 06, 2013

A lot about the global distribution of R&D in a single image

How bad are American schools?

Source: College@Home, "Unprepared for College"
I would make a few comments on this data:

  1. Our higher education system wastes a lot of money in remedial courses covering material that the students could have and should have learned in K-12, in preparatory courses for upper class courses the students never take.
  2. I must wonder how many of the 40 percent of students who graduate from this system are adequately prepared for jobs, much less careers, in the 21st century's economy.
  3. The failure of American society to give African Americans and Hispanics adequate opportunities for education, as shown in the poor college completion rates (graph below) as well as the poor college preparation rates (figure above), is not only a shame for the nation, but it will probably cost the nation its leadership in the world economy in this century.
  4. We are now in a technology intensive "Information Economy" and will be entering an even more technology intensive "Knowledge Economy" in this century. Failure to educate our children now and in the future will not only handicap them in the world of the 21st century, it will handicap the nation in its efforts to compete.
Source: "The College Completion Agenda", the College Board

Maryland in the 1640s.

I just finished reading The Plundering Time: Maryland and the English Civil War, 1645-1646 by Timothy B. Riordan. It tells the story of years of conflict that almost destroyed the British colony in Maryland.

The first colonial settlement in what is now Maryland was in Kent Island in 1631, as part of colonial Virginia. A charter was given to Cecil Calvert Lord Baltimore in 1632 for the Maryland colony. Riordan states that the charter was granted (over the objections of Virginia) because the British government felt Baltimore's proposed colony would be the best available option to counter Dutch and Swedish colonies in Delaware. Led by Leonard Calvert, Cecil Calvert's younger brother, the first group of colonists consisted of 17 gentlemen and their wives, and about two hundred others, mostly indentured servants arrived in Maryland in March 1634. They established a town at St. Marys. In 1838, led by Calvert, the colonists seized the trading post at Kent's Island.

The 17th century was a turbulent time in Britain. The English Civil War between Royalists and supporters of Parliament took place between 1642 and 1651. Under the Stuart kings, James I and Charles I, in the early part of the century the country had grave economic problems. There were battles internal to the Anglican church as to its governance and role in society, with Catholics and Puritans dealing with institutionalized prejudice. In the wake of the European exploitation of the Americas, the Reformation and the Counter Reformation, turmoil roiled the European continent. Britain was threatened with both religious and political wars, and foreign policy was central to domestic political disputes. It was in this context that British colonies in North America were established.

The Calverts intended to establish a colony on a manorial structure. Catholics themselves, they made an effort to include both Protestants and Catholics in the settlement. The intent was that the colony would abide by British laws. Leonard Calvert was named governor of the colony and a committee of five gentlemen was established as a legislative body. Judicial processes were established (and the records of the judicial proceedings, assembly and governor provide much of the evidence discussed in Riordan's book). However, the Calverts also invited Jesuit missionaries to bring Christianity to the Maryland Indians at a time when Jesuits found in England would be executed.

Establishing a new colony in North America was hard! The Maryland colony was to pay for itself by growing tobacco and exporting it to Britain. The colonists could also trade with Indians for furs which could be exported. Colonists were also to grow corn and raise livestock to support themselves, but were heavily dependent on materials imported from England. The voyage from England to Maryland took from 8 to 10 weeks as did the return voyage; a single tobacco fleet was sent each year carrying trade goods to Maryland and returning with its tobacco harvest; remember the ships of the day were small and the voyage dangerous. All this to be done by Europeans with few skills to deal with the new land, subject to the climate and illnesses they found there with few protections. Colonists in the 17th century were also under threat from Indians (who had survived the decimation of the Colombian Exchange) whose territory they were occupying. Still, by the early 1640s the immigrant population of the Maryland colony numbered about 800, most of whom were men. They were concentrated in three areas.

As the English Civil War broke out, the Royalists issued a letter of marque to the Calverts allowing their ships to attack ships and ports supporting the Parliamentary side and take their property, while Parliament issued a letter of marque to Richard Ingle, a hot tempered ship captain who had traded in the Chesapeake for some years.

Ingle recruited the crew of his ship, some Virginians and some Protestant Maryland colonists and attacked and captured a couple of ships and then began to plunder Catholic households in the Maryland colony. The supporters of the Calverts fought back. Both sides build forts for protection (and presumably as bases for their attacks on the other). Within a couple of years most of the colonists had died or moved away and the economy of the colony was in tatters.

Still, the Calverts were able to recruit forces to retake the colony and reestablish its government. The population was quickly rebuilt, in part by recruiting Independent Protestant (those not affiliated with the Church of England) settlers from Virginia (where they were subject to persecution). The Puritan faction would create their own crisis later in the century.

The rebuilt colony was then governed by Protestants rather than Catholics, freemen rather than gentlemen. Moreover, it established a policy under which people were to be allowed to follow their own religious beliefs and not bound to a state religions -- an important precedent.

I found the book too academic for my interests. After all, it deals with conflict within a population of fewer than 800 people centuries ago. Indeed the people involved seem to be very litigious and not very likable. Riordan argues for interpretations of events, citing existing textual records from the time extensively, An archaeologist, he also cites the results of his own archaeological research. All of this is important for his fellow historians, but I was more interesting in the simple fact that the English Civil War had an impact in the early days of the Maryland colony that almost destroyed it. 

More Americans Below the Poverty Line Than Any Time Simce WWII

Source: U.C. Davis Center for Poverty Research
Interesting to note that the poverty rate seems to start increasing before there is an statistically defined recession. It is a leading indicator!

Monday, February 04, 2013

An Interesting Use of Indicators

The Nordic countries are probably the best-governed in the world

I quote from The Economist:
On any measure of the health of a society—from economic indicators like productivity and innovation to social ones like inequality and crime—the Nordic countries are gathered near the top (see table).
Here the authors have created a new index (giving "the overall rank") by equal weighting of six other widely used indices of social wellbeing.  In the article the authors seem to suggest that the composite index is a good surrogate for an index of the quality of governance, or at least for the pragmatism of the people of a nation who resist either too much of a laissez faire approach to capitalism as well as too much emphasis on social welfare.

The article goes on to provide this graph:

The article further states:
The World Values Survey, which has been monitoring values in over 100 countries since 1981, says that the Nordics are the world’s biggest believers in individual autonomy. The Nordic combination of big government and individualism may seem odd to some, but according to Lars Tragardh, of Ersta Skondal University College, Stockholm, the Nordics have no trouble reconciling the two: they regard the state’s main job as promoting individual autonomy and social mobility. 
I rather like the idea of seeking to utilize the available data and indices to paint a broad picture of a society as has been done here by the Economist. It is perhaps better to leave the interpretation of the information to the viewer, but I think there is some relevance in suggesting a deeper meaning to the combination of these indicators, 

The Southern Florida Ecosystems Before Human Infrastructure Development
Image soorce: NASA
Great Blue Heron
My wife and I spent a couple of weeks last month on a trip to southern Florida. We visited the Everglades and Biscayne National Parks, the Pennenkamp Coral Reef Florida State Park,  the Big Cypress National Researve, and the Rookery Bay Marine Estuary Reserve. We made a similar trip two years ago.

Gators Sunning Themselves
We are not expert bird watchers, but we have counted some 60 species of birds on these short trips. They included white pelicans, great blue herons, and roseate spoonbills -- some of the largest birds in the world. We saw large birds not only one by one, but in flocks. There are alligators and crocodiles even sharing the same waters. We did not see deer nor Florida panthers, but there remain viable populations of both. The coral reefs swarm with life.

We love driving for miles on narrow roads surrounded by a landscape that is fully comparable to that which existed in 1491. We love boating through one of the world's largest mangrove forests, again existing much as those forests existed in 1491. We love boating through the barrier islands and driving down the Florida Keys.

I quote from NASA's Earth Observatory:

Before humans constructed drainage canals, dams, dikes, and reservoirs, much of central and southern Florida was covered with one kind of wetland or another. From swampy forests dominated by giant cypress trees, to bogs and various types of marshes, to the tree-island-dotted Everglades, almost every ecosystem on North America’s southeastern tip was under the sway of water. 
Runoff from the north kept the Kissimmee River Floodplain in the central part of the peninsula almost perpetually under water. From there the water flowed south into Lake Okeechobee. The spillover from the lake glided slowly over the Everglades in a slow-moving, horizontal sheet. Today's flow is dramatically reduced, and the Everglades are only about half the size they once were.
The Everglades are unique in the world. The coral reefs too are a unique ecosystem due to their northern location.

Southern Florida As It Is Now 
Image source
Compare the two maps and you will see that the protected areas are only a small portion of the original aquatic ecosystems. We drove from Homestead to Lake Okeechobee which has been almost totally converted to agriculture with some urban development -- miles of commercial nurseries and miles of sugar cane. The east coast -- the so called Gold Coast -- is heavily populated and growing. The west coast too is urban with a growing population. The Florida Keys are populated and commercialized.

 The topographic map shows current sea level.
Land areas 5 meters (red) and 10 meters (yellow)
above sea level are at risk for flooding from storm
 surges and sea level rise.
While there has been a major effort to rectify the engineering works that were drying up the Everglades and Big Cypress Swamp, but there will be a competition for water in Florida for decades and possibly centuries to come. I question whether nature preservation will compete well with urban development and agriculture for water resources.

Global warming is going to lead to rising sea level, which is likely to do damage to the reefs, barrier islands, and mangrove forests. Indeed, changes in weather may threaten plant and animal systems. Coral reefs are threatened by whitening.

Invasive species such as the Burmese Python and Australian Pine are already damaging the ecosystems. The Florida panther is clearly threatened. Bird populations are a small fraction of what they were in 1819 when Florida became part of the United States.

We find ourselves wondering how long Americans will be able to enjoy the natural riches of southern Florida, and how long the United States will safeguard the world heritage represented by this region.

Gun Licenses and Gun Users Licenses for Maryland

We license cars and drivers. Why not license guns and their users?
Licensing Guns

Why not require that there be a license for each pistol and long gun? The state could define a set of licensing fees for different kinds of weapons. The fee for a simple shotgun used for hunting or a deer rifle might be modest, while that on an attack weapon might be quite high. High quality weapons cost hundreds of dollars so that licensing fees could not only pay the costs of a registration system, but net the state a modest income.

Individuals found carrying or using an unlicensed weapon might have the weapon expropriated and be subject to legal penalties. This would seem parallel to the practice of sanctioning a person driving an unlicensed automobile.

At the least this would provide the state authorities with information on where guns were to be found and a means to remove guns from criminals who would be unwilling to license them.

Licensing Users

It occurs to me that if we require licenses to drive a car or fly an airplane, we should require licenses to carry and use guns. In all three cases there are dangers justifying public intervention.

To get a license, one would take a written examination and demonstrate the ability to safely use a gun before a state examiner, as one takes a written exam and a driving test to get a driver's license. As one can be denied a license to drive if one can not pass a test of visual acuity of if one is subject to epileptic seizures, there would be standards for gun users licenses. In the case of weapons, a conviction for a crime involving violence of the threat of violence might disqualify a person for a license (as a driver may have his/her license revoked for traffic violations).

As there are different requirements to fly different classes of airplanes or to drive personal vehicles or to chauffeur, so too there might be different firearms licenses for pistols, rifles and shotguns.

As in the case of driver's licenses, gun user licenses would be renewed periodically. The testing for the initial granting of a license might be more detailed than a renewal.

A fee would be charged to someone applying for a gun user license to cover the costs of testing and issuing licenses. One side effect of licensing would be to make is more expensive to obtain and carry guns.

And of course, carrying or using a gun without a license should carry severe penalties.

Should there also be insurance required for people carrying guns, as there is for drivers???

Saturday, February 02, 2013

Measurement is important if joined with good management

This is a plog post commenting on Bill Gates support for measurement in international development programs and projects. It supports the general point that change is the cummulative effect of many innovations. Proper measurements enable managers to select for useful innovations and against destructive ones. However, it is the management that counts. Indeed, measurement without managerial use is waisted effort, and will soon provide bad information.

In his 2013 letter, Bill Gates emphasizes the importance of measurement in international development -- that the success of the development process depends on being able to detect which changes improve results and which do not. Measurements are key to that recognition.

Let me underline that point. Think of evolution. Most mutations are harmful, only a few are beneficial. It is natural selection that weeds out the deleterious changes and promotes the beneficial. Managers need measures to allow them to do the weeding and replication in development programs.

Here are some thoughts on reading his letter:

A physician once told me that a fundamental rule of medicine is not to order tests if the doctor will not use the results. Tests cost money and almost always involve risks. If they are not likely to benefit the patient, they ought to be avoided. So too, measurements that will not be used in managing development efforts should be avoided. Measurements always cost money, can mislead the manager, and should be justified by potential benefits.

I am reminded of Henry Wallace's recognition that the competition for the best corn crop in American county fairs led American farmers astray. For generations, prizes were awarded to the most beautiful ears of corn. Farmers grew more and more beautiful ears of corn as the winners provided seed for the next year and as the practices of the winning farmers were copied by their peers. Unfortunately, pigs and cows don't much care for the human aesthetics of the appearance of an ear of corn, but simply want to eat a lot of the stuff. Farmers who can produce more and more nutritious feed for their animals make more money. Measuring the visual appeal of the ears was the wrong metric. Measuring animals fed adequately per acre devoted to corn was better.

We have seen recently that in the financial services industry industry, managers made huge mistakes by focusing on the measurement of profits while failing to measure risk (accurately). Many firms got bitten badly by running high risks while maximizing short term profitability, and some of their managers lost their jobs. The point is that depending on a single indicator to measure success can be very dysfunctional. (Of course, many of them cried all the way to the bank as they had received huge salaries and bonuses for years based on those short term profits, consequent increases in stock prices, and remuneration based on both.)

I have suggested that the maximization of investor profits is bad management based on a poor measure. In our society, the corporation is a major institutional form. Corporations should be managed to provide good returns on investment. But there are many kinds of investments that go to making a corporation work, including the human capital of the employees that they devote to their work, the social capital in the markets for their inputs and outputs, the public capital in the infrastructure on which they depend. Managers of corporations maximizing return to a single source of capital, and ignoring other forms of capital as well as costs and benefits to consumers seems to have gotten us into many problems. (Not as many as that management practice did during the time of the robber barons, a time that lead to the Progressive movement and the rise of state regulation of corporations.)

Perhaps Gates might have focused more on management. Measurement in development programs is not enough, progress demands good management based on good measurement.

Perhaps the first challenge of management is to break the universe into bite size pieces. The health sector is itself a portion of the field of action of development programs. Within the health sector, there are traditional fields of action such as child survival, maternal health, and communicable disease control. Gates has chosen to focus on advancing child survival by promoting improved coverage of immunizations. This makes a lot of sense since it is probably the most cost effective approach to increasing life expectancy, since there is great support for saving the lives of children, and since experience has shown that increasing the chance that children will survive results in parents choosing to have fewer children, slower population growth, and eventually an improved rate of growth of per capita income. However, this is only one priority for national public health services, which in turn is only one management area in the health sector, which is only one of many management areas for government.

Gates mentions problems with the polio eradication program in northern Nigeria. The program was failing because maps were so bad that program managers didn't know where many villages were, and indeed did not even know of the existence of some villages that held children that should have been immunized against the disease. Clearly managers need to plan for where services need to be delivered and how providers and supplies are to get to where they are needed. As Gates implies, managers need to measure the distances involved, and I would add that they need to find the right metrics for those distances. The time needed for a health promoter to walk a jungle dirt path of several miles is quite different than the time necessary for a doctor to drive the same number of miles on a paved road in his car. The problem in the Nigerian program were reduced using satellite maps to locate villages and giving the people doing immunizations phones which GPS capability allowing supervisors to measure whether the workers actually arrived in the villages that they were supposed to visit.

Gates also describes efforts that led to increased success of a DPT immunization program in Ethiopia. Initially lots of kids were dying from these three preventable diseases. Measuring death rates (even roughly) indicated that there was a major problem. Measuring the percentage of the children who had actually received the necessary shots provided an indication of the magnitude of the problem. Note however, that if nothing was to be done to solve the problem, the quality of the data would quickly have deteriorated -- people quickly stop collecting data that will not be used.

Citing a comparable success in Mozambique, Gates notes that the success was due in part to assuring that health posts had adequate stocks of all the vaccines that they needed, and that the cold chains needed to maintain the utility of the vaccines actually worked. Again, it was necessary for managers to have access to accurate measurements of the stockout rates and the failures of cold chains, but not sufficient. Managers needed to take effective action based on the information that they received.

I do agree that it is important to make good measurements of the right things in order to make development programs work better. One of the important advances was the introduction by the World Health Organization of "Disability Adjusted Life Years" as an index for use by health services. That helped to change the focus from life expectancy to include illness and disability. That and many other improvements of indices and measurements can help managers improve the efficiency and effectiveness of development programs.

I recommend that you read the entire Bill Gates letter as it is short and informative.

Better tools allow better products to be produced

The other day, watching a TV interview, I saw the interviewer ask a famous architect if computers were improving architecture. The response was no, that computers were simply tools.

At least for now, the response has face validity. Architectural genius comes from the minds of great architects. Indeed, good architecture comes from the minds of good architects (or perhaps from the minds of great architects under constraints that limit the genius of their work, or perhaps from the minds of good architects adapting and utilizing the ideas of their betters).

On the other hand, better tools in the hands of innovative architects allow them to increase productivity. In some cases better tools allow them to do more with the available resources. In other cases, better tools allow architects to achieve visions that could not have been achieved with earlier, less effective tools.

Source of image
Famously, the Duomo in Florence was the result not only of new construction techniques, but also of new tools developed by the architect, Filippo Brunelleschi, (and his associates) used in its construction. Without the innovations it could not have been built.

Source of image
Similarly, Frank Gehry's design for the Guggenheim Museum in Bilbao Spain could not have been realized without the aid of computers. They were critical to transforming the ideas into detailed plans and specifications. Indeed, they almost certainly were critical in the management of construction, allowing the design to be realized in an acceptable amount of time at an acceptable cost.