Ricky Gervais

Though I don't agree with all of it, I very much enjoyed Ricky Gervais' Why I'm an Atheist in the WSJ.

Great Visualization

This is a fantastic way to show the progress the world has made over the past 200 years. (And I could have titled my post "thank you Capitalism".) HT Crossfit.

Merry Christmas

Over at Forbes, Don Watkins and Yaron Brook give us some Objectivist reading for the holidays.

A Look at Research in Motion (RIM)

This is more or less off topic, but for those interested in analyzing companies (or who are interested in the cellphone/technology space) I found this blog post to be one of the more insightful analyses that I've run across.

FDA and Avastin

Tom Bowden has a nice piece on the subject over at PJM. (FWIW, I also published some thoughts on a related topic in the same venue.)

Nonagenarian Athletes

This is a fun story. (HT Crossfit)

Voluntary "Recycling"

As I'd written previously, I don't think the concept of "recycling" is useful, as it doesn't really distinguish itself from typical economic activity. And of course the idea of forced "recycling" is always wrong and uneconomic.

What some advocates of "recycling" neglect is that when people value the output of a process more than the inputs (i.e. when the benefits outweigh the costs) they voluntarily act to reuse goods. Here's an example of this from Japan where people are beginning to recycle rare earth elements because they've become relatively scarce (due mostly to Chinese distorting the market via subsidies and quotas).

It takes two Hitachi Ltd. workers eight minutes to slice open the metal casing of the used air conditioner compressor. The prize inside: four wafer-thin magnets containing about 30 grams of rare earth metals.

...

Besides Hitachi’s project, Tokyo-based chemical maker Showa Denko KK in May opened a plant in Vietnam to begin recycling dysprosium and didymium metal used to make magnetic alloys. The company, the world’s biggest producer of some components used in hard disk drives, makes 8,000 tons of the alloys a year and plans output of 800 tons at the recycling factory.

Advisers in a Free Market

In several of my editorials I recommend abolishing the regulatory state. A key component of the argument is that the function of regulation would emerge on a free market without requiring government force. Here's one excerpt of this type of argumentation:

But if ceding our minds to the government isn’t the way to protect ourselves against ignorance, what is? The free market. For here, knowledge is efficiently shared, and authorities and standards naturally emerge. Yet everyone retains the freedom to follow their own ideas if they so choose. Looking once more to the computer industry, we see that there are computer magazines (PC Mag, Macworld), computer rating and standards groups (CNET, IEEE), and countless online message boards and forums where experts, aficionados, and neophytes alike congregate and share information. Knowledge is valued, but it’s not forced on anyone. This makes disagreement, dissension, and often breakthrough innovations possible.

and here's another:

In a free, unregulated market, anyone who is highly risk averse can—and always could—refrain from using new products or adopting new ideas. Indeed, on a smaller scale, this is what differentiates technology late-adopters from first-adopters. Those worried about the latest cancer drug can limit themselves to treatments that have been on the market for 15 or 20 years. Those who don’t understand the stock market or distrust corporate leaders can invest elsewhere, or keep their money in a safe. Those who find planes too risky can drive rather than fly, or spend extra for a premium airline with a sparkling safety record. (As discussed elsewhere, there are many free market mechanisms to convey knowledge and help with such choices.)

Moreover, in a free market, the regulatory “geniuses” who now rule our lives could still try to persuade us of the best course of action—they could even set up shop and charge us for their knowledge. The only thing they could no longer do is forcibly impose their judgments on us. (I’ll leave it to the reader to decide what it says about regulators’ confidence in their own edicts that they so vehemently refuse to go the route of persuasion, preferring instead to rule by government force.)

There are many historical examples which bear out this line of reasoning, but here's one that I wasn't familiar with until reading this NY Times story. Turns out that many businesses voluntarily adjusted their business practices in order to meet a third party's recommendations and evaluations:

When Weight Watchers introduced its points plan to Americans in 1997, it captivated a generation of women, propelling the company into a $1.4 billion empire. Weight Watchers points became a cultural touchstone: Restaurants like Applebee’s distributed special Weight Watchers menus; food companies like Healthy Choice listed points on their soup cans; and members bought Weight Watchers cookbooks, scales and points calculators. Members pay $12 to $15 a week to attend one of 20,000 weigh-ins and pep talks across the nation, or $65 to use the company’s Internet-monitoring program for three months.

Were we to restore our freedoms by ending government regulation, all manner of third party -- private -- advisers, standard setters and auditing groups would help provide us with the knowledge and information that's needed in modern life. But, just as we're not obliged to heed Weight Watchers' advice, we wouldn't be forced to pay for, or adhere to, any of their evaluations or opinions either.

Three Stages of Delusion

The first item of John Mauldin's latest (and free) outside the box newsletter does a very nice job of showing the mentality of failure, and gives us even more reason to doubt government officials when they either say "there's nothing to worry about" or "it's someone else's fault". Here's a brief excerpt to give you a sense of it, but the whole first item is worth reading:

The dawning of reality hurts. Prodded and bullied along a tortuous emotional path by events unforeseen and beyond our control, we descend through three phases: the first is denial that there is a problem; the second is denial that there is a big problem; the third is denial that the problem was anything to do with us.

US policymakers’ three steps during the housing crash fit the template well. Asked in 2005 about the danger posed to the economy by the housing bubble, Bernanke responded: “I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis.” Here was the denial that there was a problem. But as sub-prime issues arose, Ben Bernanke reassured the world that they would be “contained.” And when Bear Stearns collapsed, Hank Paulson promised “The worst is likely to be behind us.” Here was denial that there was a big problem.

Soon the financial system was on the brink of collapse. There could no longer be any credible denial of the problem, so the locus of delusions shifted: there was a problem, but it was someone else’s fault. Thus a ban on naked short selling of financials was implemented in Sept/Oct 2008, as though the crisis was somehow short-sellers’ fault. (It certainly wasn’t the Fed’s fault, according to the Fed. Ben Bernanke argued this year “Economists … have found that only a small portion of the increase in house prices … can be attributed to the stance of US monetary policy.”)

What’s interesting is that the journey Bernanke and Co. took fits the journeys of policymakers presiding over crises past very closely, as I’ll show inside. What’s worrying is that taken in this context, eurozone policymakers’ denials/reassurances sound eerily familiar. And if these past crises are any guide, the euro crisis is still in its early stages.

Coming Bankruptcies

For those following the mounting debt woes of government entities at all levels, here's another story summarizing the facts. But while the factual reporting is alright, it irks me to no end that the NY Times doesn't apply the same standards to government as it does to private enterprise. (Of course that view is also held by those in government itself and indirectly by the electorate who votes them into office.)

When private companies have problems with their accounting, however trivial, journalists are all over them, alleging the most nefarious of motives and intent. But when those same journalists report on what has to be considered close to massive fraud by government entities, there's no hint of chastisement, much less of outright condemnation. (I know, altruism explains why those acting out of self-interest must always be suspected and reined in, while those acting for the "public good" are immune from evaluation.)

Other than that, the article also highlights how government appointed and approved ratings agencies work (don't ever confuse them with those which would exist in a free market):

The credit ratings of a number of local governments have improved this year, not because their finances have strengthened somewhat, but because the ratings agencies have changed the way they analyze governments.

The new higher ratings, which lower the cost of borrowing, emphasize the fact that municipal defaults have been much rarer than corporate defaults.

This October, Moody’s issued a report explaining why it now rates all 50 states, even Illinois, as better credit risks than a vast majority of American non-financial companies.

One reason: the belief that the federal government is more likely to bail out a teetering state than a bankrupt company.

“The federal government has broadly channeled cash to all state governments during recent recessions and provided support to individual states following natural disasters,” Moody’s explained, adding that there was no way of being sure how Washington would respond to a bond default by a state, since it had not happened since the 1930s.

Finally, although this is typical, it's worth noting that no solutions to the situation are proposed, nor are any principles by which one might come up with solutions discussed.

No more "compromises"

I'm behind with my blogging, but under the rubric of better late than never, I wanted to bring attention to Charlotte Cushman's LTE: "No compromise possible with evil".

The Wrong Kind of Growth

A telling and depressing graphic from John Mauldin's latest eletter: