Esoteric Dissertations from a One-Track Mind

February 25, 2009

Bank Re-privatization?

Filed under: capitalism, economy — Tags: , , , — codesmithy @ 9:50 am

The growing consensus seems to be that banks will be nationalized. The case for nationalizing banks is pretty much a done deal as far as economists are concerned.  Krugman lays out the case fairly well.  I hate the term “stockholders” in this context, because it isn’t really stockholders that are the problem, at least directly.  The problem is with the executives of the banking companies and the ridiculous moral hazard they are faced with.  Society has an incentive to keep these financial institutions afloat.  The executives have an incentive to run the businesses into the ground precisely because they know society will not allow these institutions to fail.  

Why not pay exorbitant bonuses to yourself as your company is losing money hand-over-fist?  Might as well do it now while you still can.  It is precisely this perverse incentive for those who actually run the company that necessitates a government intervention, especially if the institution is FDIC insured.

As such, it is an illusion to say stockholders control a company.  I’m a stockholder and in many cases the ownership is indirect through mutual funds.  It is a complete illusion to say I exercise any power in the corporations in which I own a stake.  Myself and stockholders like me theoretically have power but it is too dilute.  Locking me out from benefits of a bailout is nothing compared to the executives.  However, saying so requires an admission that there is a corporate master class, and such an admission is not considered polite when you are an academic talking to the proles in the New York Times.

Regardless, the nationalization that is proposed is always temporary.  Why?  I’m not saying that re-privatization is not a good idea, but I want someone to explain it to me.  And one key point I would like to see addressed is explaining how re-privatizing banks would ensure a crisis like this won’t happen again, because, to me, this current crisis seems to be a direct result of a private profit motive combined with successful lobbying.  

It is particularly galling because the alternative is so obvious.  Why not keep the banks nationalized and centralize them?  Why not lock out the for-profit motive of lending entirely?  The Federal Reserve system already effectively sets interest rates, why not just take it one step further and provide financial services directly to citizens and businesses in the form of a national bank. Citizens could deposit and obtain loans from this bank.  We could get rid of FDIC.  If people wanted to risk putting their money in private banks, fine.  But, if it goes under, the government is not going to come and bail you out.  I even imagine there are some economies of scale with such an approach, in that it may be more efficient than the current banking system.  It would also reduce the need for regulatory oversight of private banks.  At the very least, there wouldn’t be “stockholders” to screw things up.

February 12, 2009

Why Evolution is Awesome

Filed under: books, science — Tags: , — codesmithy @ 10:14 am

I recently finished reading Why Evolution is True by Jerry A. Coyne, a professor at the University of Chicago.  He also has a blog with the same title as the book.

From the quotes on the back cover, I was expecting a devastating case for evolution.  Dawkins puts it, “I defy any reasonable person to read this marvelous book and still take seriously the breathtaking inanity that is intelligent design ‘theory’ or its country cousin, young earth creationism.”  At various points in the book, Coyne takes shots at creationism.  So, the book is definitely written within a social context in which evolution is rejected by a significant portion of the population.  I guess the disconnect I feel between Dawkins’ quote and the actual experience of reading the book is that I didn’t feel throttled by the logic, as it were.  

It could be that it was just me, or maybe the experience is different considering that I already accept evolution as true and was already familiar with many of the arguments presented in the book.  Nevertheless, I did try to put on my adversarial hat and asked myself, if I were a creationist, would this book force me to discard creationism and accept evolution.  The answer I kept coming up with was “no.”  Now I fully admit I could be wrong, and as I said, I’m not a creationist.  But the reason why the book wouldn’t convince me is illustrated by Lewis Carroll’s dialogue “What the Tortoise Said to Achilles.”

Tortoise: Readers of Euclid will grant, I suppose, that Z follows logically from A and B, so that any one who accepts A and B as true, must accept Z as true?”

Achilles: Undoubtedly! The youngest child in a High School — as soon as High Schools are invented, which will not be till some two thousand years later — will grant that.

Tortoise: And if some reader had not yet accepted A and B as true, he might still accept the sequence as a valid one, I suppose?Achilles: No doubt such a reader might exist. He might say ‘I accept as true the Hypothetical Proposition that, if A and B be true, Z must be true; but, I don’t accept A and B as true.’ Such a reader would do wisely in abandoning Euclid, and taking to football. 

Tortoise: And might there not also he some reader who would say ‘I accept A and B as true, but I don’t accept the Hypothetical ‘? 

Achilles:  Certainly there might. He, also, had better take to football.

 Tortoise: And neither of these readers is as yet under any logical necessity to accept Z as true? 

Achilles: Quite so.  

Tortoise: Well, now, I want you to consider me as a reader of the second kind, and to force me, logically, to accept Z as true.

The full dialogue is worth reading, but in the end, Achilles was never able to make the Tortoise accept the proposition if A and B are true, then Z must be true.  So, a creationist could accept every fact presented in the book, but still not accept the conclusion.  Maybe this falls outside of what Dawkins would consider “reasonable” but from reading the dialogue, I don’t see any particular place where the Tortoise is being particularly “unreasonable.”  Now, I consider the Tortoise’s position nonsensical, untenable, inconsistent and potentially hypocritical, but I do think that it demonstrates an important point.  Truth is something that one must approach with an open mind.  That doesn’t mean discarding all skepticism, since there is a lot of “woo-woo” out there as James Randi puts it, but expecting any argument to throttle you with logic and force you to accept a particular position is itself, an unreasonable expectation.

This brings us back to why evolution is true.  Evolution is true, not because we want it be true, or we’d like it be true.  Evolution is true because as we examine the world around us, we keep coming up with the same answer.  The earth is approximately 4.5 billion years old.  Life has existed on the planet for approximately 3.5 billion years, with the first animals that we would commonly recognize as being human emerging approximately 250-100 thousand years ago.  The evidence for this comes from a number of diverse sources such as fossilized coral that recorded 400 days in a year to similarities in DNA (not just any DNA but DNA that is essentially junk).  

As Coyne repeatedly points out, this evidence puts the creationist in the position of either admitting evolution is the process that explains the diversity of life or else the creator also created all this evidence to make it appear as if life had evolved.  Of course, the religious apologia of “sure everything may appear that way, but it is actually another” is as old as Galileo and may go back further.  However, getting a creationist to accept either of these positions, for reasons I stated before, is the challenge.

The evidence for evolution is more than can be put in a blog post.  There is more evidence than what is even presented in Why Evolution is True.  However, Coyne gives a great overview surveying some of landscapes of evidence and plumbing some of its depths.  I won’t go as far as Dawkins’ quote, but I would be surprised to hear from a creationist who read the book with an open mind and still refused to admit that evolution is true or at least appears to be true in the same way the sun being the center of the solar system appears to be true.  Again, open-minded in this sense does not mean uncritical.   Please, be skeptical.   Just don’t be like the Tortoise.

Epilogue: Dawkins beat me reviewing the book.  He also addresses some of my concerns.  Overall, I would say the difference in views is due to Dawkins being more confident in people’s inherent pragmatism.  Maybe there are fewer people like the Tortoise than I think.

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