Greconomics

I was thinking about the best ways the government can stimulate the economy and came upon a little puzzle for which I have a grand little insight.

The puzzle appeared as I was looking into the debate between tax cuts and government spending, which really boils down to a debate between tax multipliers and fiscal policy multipliers. "The multipliers measure bang for the buck--the amount of short-run GDP expansion one gets from a dollar of spending hikes or tax cuts.
The idea is for the government to either increase government spending (the government increases its purchases of goods and services) or to decrease taxes (the government gives consumers and firms a tax break in order to induce an increase in their spending on goods and services)." - http://homepage.smc.edu/szekely_claudia/OnlineE2/LecturesF05/lectureFiscalPolicy.htm

Going deeper, the effect of a tax cut boils down to the "marginal propensity to consume" (mpc), or how much of a windfall people will actually spend. For example, if you get an extra $1000, will you spend all $1000 or spend $800 and save $200? If you spend all of the money, then your mpc = 1; if you spend $800, then your mpc = 0.8. So, if the government gives you a tax cut, how much of that extra money are you going to spend (to boost the economy)? According to the logic of those who oppose the tax cut, the fact that the mpc is less than 1 means that a trillion dollar tax cut will generate less than a trillion dollars of economic stimulus.

This is a bit of a puzzle to me because money put into the banks is spent by the banks, is it not? Most of it is, anyway - they are required to keep a certain percentage of their holdings in reserve, but the required reserve ratio in the US is only 10%. So, even if the mpc was 0 (100% of the windfall tax cut was saved), the banks would spend 90% of it, so the real mpc = 0.9. In other words, the minimum mpc is determined by the required reserve ratio. (This is my grand little insight.)

You can read about the rest of the debate in other, better written, blogs and op-ed pieces, if you're interested. I just wanted to get to the required reserve insight.

Two other points, though:
1) If you get a windfall, you are probably more likely to spend it on stupid things, including black-market items like drugs. This might further depress the mpc derived from empirical data.
2) Spending effects lobbyists and special interest groups much more powerfully and directly than general tax cuts. So the political return on investment is much better for spending than for tax-cuts. This moves the debate into the patronage realm – third world (3rd grade) politics. http://en.wikipedia.org/wiki/Patronage

EMFs and DNA

I decided to look into the health effects of mobile phones and exposure to low-levels of electromagnetic radiation.

Initially, I thought the topic was pretty simple and straight forward: there should be no health effect.
- Radio wave frequency radiation is non-ionizing and non-dangerous, especially at low power densities.
- Human beings emit higher frequency radiation (infra-red) than cell phones, and radiation does not become dangerous until it gets to very high frequencies with wavelengths similar to molecular bond distances.
- Natural sources (like the sun) bathe us in more radiation than most artificial sources.

But, we've been wrong about health effects before, and, to be honest, I would not want to live under high-power transmission lines.

I was only a little surprised, therefore, to find so much research (millions and millions of dollars, decades of time) focused on the health effects of radio-wave frequency, low-energy radiation.

The World Health Organization has a summary of the health effects research.
http://www.who.int/peh-emf/about/WhatisEMF/en/index4.html

An amateur radio website (tech geeks) gives a very good summary of the research.
http://www.sss-mag.com/rfsafety_bkg.html

An excerpt from this gives a glimpse as to why the topic is not so simple:
There has also been considerable laboratory research about the biological effects of EMR in recent years. For example, it has been shown that even fairly low levels of EMR can alter the human body's circadian rhythms, affect the manner in which cancer-fighting T lymphocytes function in the immune system, and alter the nature of the electrical and chemical signals communicated through the cell membrane and between cells, among other things.

A possible explanation for this effect is discussed here http://www.ehponline.org/docs/2004/112-6/ss.html#emfs

One thing about life that seems to be empirically solid is that we all die.

Movies

Amazon and (for Canadians) Chapters-Indigo have a "others also bought" feature, which is great for recommendations. I figure you could probably make your search for your unique style and identity much more efficient by uploading lists of all the movies, books, and products (clothes, etc) you've liked onto Amazon and then follow the recommendations. In fact, you could probably find the perfect zip code to move into and have a filter notify you of all the bills and political issues you would probably care about. Eventually, you could save time in voting by having the computer vote for you, based on how you have voted in the past and how other people with similar reading, movie watching, buying patterns have voted.
If you have a budget, a system could automatically make purchases for you and have them show up in your mail - better, more interesting books, movies, and clothes you could possibly find on your own.
What an exciting, brave new world we are entering!

To start it off, Nora and I wrote up a list of movies we've seen and liked (with the help of Amazon)("***" means we haven't seen the movie, but it looks interesting)

Punch drunk love
You and me and everyone we know
Eternal Sunshine of the Spotless Mind
American History X
American Beauty
Memento
The Usual Suspects
me myself and irene
Night at the Roxbury
Cache
I Now Pronounce You Chuck & Larry
My sone the fanatic
the truman show
bhaji on the beach
inch allah dimache
lars and the real girl
little miss sunshine
Persepolis
Paradise Now
Fire
Sam and I
Mississippi Masala
Monsoon Wedding ***
Bend It Like Beckham
Whale Rider
Nurse Betty
My Big Fat Greek Wedding
c.r.a.z.y.
Ali Zaoua*********
Viva La'ldjerie**************
Caramel********
The Diving Bell and the Butterfly *******
The Visitor****
Adaptation
Magnolia
American Psycho*******
A Clockwork Orange *******
Run Lola Run
Cinderella Man****
The Namesake**************
A beautiful mind
Amadeaus
A room with a view
My immortal beloved
my beautiful launderette
My Left Foot (Special Edition)
In the Name of the Father
Men in Black
Torch Song Trilogy***********
bon cop bad cop
Miss Pettigrew Lives for a Day*******
Le Grande Voyage********
Raja*****
la sex des etoiles*****
Rachida****
Cinema Paradiso
Chocolate
Delecatesin
Strawberry & Chocolate
Il Postino
Amores Perros
Y tu mama tambien
Gandhi
Day without a mexican
Bread and Roses
The Wooden Camera
Al Otro Lado*********
Sarafina *****
Cry Freedom *********
21 Up South Africa Mandela's Children *********
Cry, The Beloved Country****
Yesterday*******
Do the Right Thing
Jungle Fever
Summer of Sam
Donnie Brasco
Trainspotting
Blow
Clerks
21 Grams
Stranger Than Fiction
Fight Club
Return of the Barbarians
Decline of the American Empire
Jesus of Montreal
The Lives of Others *********
Tsotsi*******
Kolya
The Mission
Roxanne
Shakespear in Love
Mrs. Brown
Black Robe

Endearingly Dismal

Continuing with my dismal theme, one problem with negative growth is that people lose jobs and lose the freedom of changing jobs or of moving. Shrinking economies are not just painful to those unlucky millions who become unemployed, it is actually dangerous. Rebellion and civil unrest are extremely likely in periods of continued decline, especially for countries without well developed democratic structures of checks and balances of power.

Just to add more vinegar to the mix, I believe pro-immigration is anti-green as well. Economic growth is comprised of efficiency gains and new people seeking jobs. With more people entering the work force, more resources are consumed and more damage is done.

Most self-respecting democrats and liberals tend to care about the environment and poverty, but does anyone have a solution for solving both issues? I am looking and thinking about this issue, but I cannot find a viable solution.

Energy – solar, wind and bio all require substantial inputs of resources (and continual input, if growth is to continue)
Pollution – point sources are reducible, but are not the major contributors
Materials – clothes, solar panels, computers, zero-emission vehicles, houses, etc do not lend themselves to compatibility between growth and sustainability
Economic sectors dependant on resource consumption – if we reduce mining, oil, and gas, then the economy will need to expand in other sectors

If we had a communist dictator take over the world and made everyone equally poor, equally well educated, and with equal opportunities for non-economic self-expression, then the problem would be solved. But this is like saying that all a doctor has to do is get rid of the cancer cells to cure a patient, or resource scarcity could be solved by moving a few protons and neutrons around.

Poverty

As I bounce around through thoughts on a sustainable economy, poverty, negative economic growth, etc, I become convinced of two things. One, it is a heavy, complex subject with no simple answers. Two, negative economic growth may not only be the wrong thing to do (due to the effect it has on the worlds' poor), it may already be happening. The apparent growth in the developed world may primarily be a redistribution of resources in a slightly less than zero sum game.

From http://www.globalissues.org/article/26/poverty-facts-and-stats
For economic growth and almost all of the other indicators, the last 20 years [of the current form of globalization, from 1980 - 2000] have shown a very clear decline in progress as compared with the previous two decades [1960 - 1980]. For each indicator, countries were divided into five roughly equal groups, according to what level the countries had achieved by the start of the period (1960 or 1980). Among the findings:

Growth: The fall in economic growth rates was most pronounced and across the board for all groups or countries.
Life Expectancy: Progress in life expectancy was also reduced for 4 out of the 5 groups of countries, with the exception of the highest group (life expectancy 69-76 years).
Infant and Child Mortality: Progress in reducing infant mortality was also considerably slower during the period of globalization (1980-1998) than over the previous two decades.
Education and literacy: Progress in education also slowed during the period of globalization.Source 29

image source: http://www.nytimes.com/2009/01/15/opinion/15kristof.html?em

Dollars and Sense

This winter has not been good for skate skiing for me. Although the snow came early, colds, travel, and sub -15C temperatures have kept me off the misery sticks more often than not.

Gym time has also fallen into a Tuesday/Thursday/+1 pattern. I was eating like a cow before the New Year, but now I'm less interested. The fact is, it costs a lot to put on muscle mass. 200 grams per day of lean meat and supplements adds up quickly in dollars and cents. At 10% utilization of protein ingested, each pound of lean muscle cost about $114.

1 pound = 454.5 grams
required ingested protein for 1 pound = 4545 g
Cost of supplements = $55/2200 g = $0.025/g
4545g x $0.025/g = $113.63

Borrowing someone else's data on the cost of various protein sources, I find that $114 is the average cost per pound of muscle from beans, milk, dry milk, eggs, chicken, tuna, bars, quinoa, soy milk, and salmon.

Gaining 10 pounds of muscle mass is going to cost an additional $1140 in food.

Blad and bladder

Starting with the assumption that a mature, diverse economy works efficiently with around 2% annual growth, a shift to a green economy would increase the volatility of the overall economy and require a higher overall rate of growth.

A true green shift would be toward reduced consumption, which is equivalent to an economic contraction. To compensate, sectors of the economy that are not affected by the green shift would need to grow at a faster than 2% rate to keep the overall rate around 2%. This would increase the volatility of the overall economy.

But when the growth is not diversified and there is more market volatility, the business cycles have more effect and a 2% overall growth rate may not be sufficient for efficient markets. A higher growth rate may be required.

In other words, not only would the growth rate need to increase, but the efficiency with which resources are consumed would also decrease.

A similar (other side of the coin) idea is explained here (http://en.wikipedia.org/wiki/Uneconomic_growth):

"...innovation- or knowledge-driven growth still may not entirely resolve the problem of scale, or increasing resource consumption (see Jevons paradox).[9][10] For example, given that expenditure on necessities and taxes remain the same, (i) the availability of energy-saving lightbulbs may mean lower electricity usage and fees for a household but this frees up more discretionary, disposable income for additional consumption elsewhere (an example of the "rebound effect")[11][12] and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending."

"In economics, the Jevons Paradox (sometimes called the Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource. It is historically called the Jevons Paradox as it ran counter to popular intuition. However, the situation is well understood in modern economics. In addition to reducing the amount needed for a given output, improved efficiency lowers the relative cost of using a resource – which increases demand. Overall resource use increases or decreases depending on which effect predominates."

Organic economics

I have an inkling of dissatisfying conclusions that I would like to work around. (please point out logic errors)

The premise is that economic growth causes increased consumption of energy and resources. (Even the service economy uses energy.)
The (un)conventional wisdom is to shift to a green, organic economy.
My fear is that while the green elements of the economy are good (organic farms, green energy, etc) for the local environment and health of everyone involved, the total global resource consumption stays the same.

The reasons for this are a) governments strive to keep the economy growing at 2%/year (higher for developing countries); b) any cost greater than the market price for conventional goods is either b1) inefficient and slows economic growth (which is then compensated for by pro-growth government policies); or b2) extra money that the farmer/producer uses to increase production or standard of living (consumption - even green consumption is still consumption).

My (sub)conclusions are:
1) green growth is an oxymoron, net greening only occurs when growth is zero or negative
2) real green spending will have a negative effect on the economy

Image that all the goods and service in the world were "green", ie zero carbon footprint, fully sustainable. This would mean that this "green" economy could expand indefinitely. Even hypothetically this wouldn't work, eg. indefinite increases in organic food production would still require increases in land use.

One problem with negative or zero growth is that it disproportionately affects the poor and unestablished.
a) more people are pushed below the poverty level (for neg growth, ie less money)
b) no new jobs are created
c) no wages are increased
d) innovative ideas which lead to better (more efficient) ways of doing things cause people to lose jobs
e) developing countries stagnate
etc, etc.

So, it seems that green is anti-growth and anti-growth is anti-poor, so green is effectively anti-poor.