Trayless = Eat Less

We've all done it. We walk around the dining hall filling our trays to the brim with pizza, pasta, general tsao's, and those new vitamin-c enriched apple slices. On the way to the drink dispensers, a bread stick teeters precariously on the edge of our plate, but we are not phased. Balancing our dinning hall trays has become an art - we do it like it's our job (and, as students of heterodox economics, this may very well one day be our job). After filling not one, not two, but three cups with liquid delights, we journey to find our seat to consume with pride our creation. At the end of the meal, we sit back and survey our creative destruction. We left survivors! That lucky half-eaten bread stick and quarter-full glass of milk! But they won't get off that easily. In 5 minutes time they will find themselves on the bottom of a trash can.

So....I've been in an avant-garde-ish mood lately, which explains that somewhat strange narrative. I was inspired by this article, and thought that I might try a new, fresh approach to blogging. The article is really interesting and should resonate with anybody who has ever "bit off more than they could chew" at the dining hall...just don't use a tray!

A short excerpt:

Students ran a test last semester showing that on two days when trays weren’t offered, food and beverage waste dropped between 30 and 50 percent, according to Kathy Woughter, vice president for student affairs at Alfred. That amounts to about 1,000 pounds of solid waste and 112 gallons of liquid waste saved on a weekly basis

The solution is quite novel, and so simple! Anyone for Trayless Thursdays? Somebody please remind me tomorrow...I'll probably forget...

Sean

I'm Just Bitter That I Don't Make Any Money From These Posts

"With adequate profit, capital is very bold. A certain 10% will ensure its employment anywhere; 20% certain will produce eagerness; 50%, positive audacity; 100% will make it ready to trample on all human laws; 300%, and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged" - T.J. Dunning (quoted by Karl Marx in Capital)

Ah, the oft celebrated profit motive...where would we be without it? Stuck in a neolithic, marginal existence of poverty and squalor, or freely enjoying the copious fruits of an egalitarian utopia? It depends on who you ask...

Looking backwards, the profit motive hasn't always sided with (this could take a while) human rights, justice, the environment, womens rights, immigrant rights....you get the idea. Sometimes it may seem that when profits win, a lot of (usually poor) people lose. Don't get me wrong, the profit motive has resulted in a lot of social good (Uggs, "American Idol", Notre Dame Football).

In all seriousness, the profit motive does provide an impetus for rapid technological and productive development. But, as Dunning mentions, at what point does the profit motive become a social cost? When do the rights or welfare of workers, women, minorities, animals, or Mother Nature outweigh the 1% productivity gain or takeover of yet another public service industry?

Sean

P.S. I found out you can post pictures on this thing, which makes me very excited. This adds a whole new medium to our economics conversation! I'm going to do a test run to see how it works. What is my first picture going to be of, you ask? Well, I figure that in honor of the 21st century and the unparalleled technological advances that allow me to post pictures on this blog, I would post a picture of my man Thomas Friedman. It made sense to honor the man for whom technology and globalization can "do no wrong" with a picture on a post decrying the profit motive...









It worked!

Where's the Beef?

People are eating more meat, and that seems to be causing a lot of problems. Meat production has grown 3 fold since the 60's, resulting in rising costs and environmental stresses spilling beyond the confines of just the meat industry.

Shocking fact of the day (it is actually 2 equally-shocking facts in one sentence...sorry for any confusion):

an estimated 30 percent of the earth’s ice-free land is directly or indirectly involved in livestock production, according to the United Nation’s Food and Agriculture Organization, which also estimates that livestock production generates nearly a fifth of the world’s greenhouse gases — more than transportation.

Of course, as any situation dealing with the economy, there are always numerous complicating factors, which necessarily result in the poor getting screwed over...

Grain, meat and even energy are roped together in a way that could have dire results. More meat means a corresponding increase in demand for feed, especially corn and soy, which some experts say will contribute to higher prices.

This will be inconvenient for citizens of wealthier nations, but it could have tragic consequences for those of poorer ones, especially if higher prices for feed divert production away from food crops. The demand for ethanol is already pushing up prices, and explains, in part, the 40 percent rise last year in the food price index calculated by the United Nations’ Food and Agricultural Organization.

Though some 800 million people on the planet now suffer from hunger or malnutrition, the majority of corn and soy grown in the world feeds cattle, pigs and chickens.

But what should die-hard meat-lovers do if they just can't stomach the thought of quitting cold-turkey (no pun intended...actually, who am I kidding...it was totally intended...)? We could wait for some crazy sci-fi solution (there are actually quite a few interesting ones that aren't to far on the horizon. The article notes a few) or we can let "the market sort it out". One practical step is to eat less beef. Chicken and pork are much more efficient and economical in terms of energy throughput per pound of meat.

Really, can somebody else post something? Anything? My words are lonely and in need of new company...

Sean

Free to Move (Immigration and Development)

Economist Lant Pritchett is interviewed about his views on immigration and third-world development. What makes him unique is that his advocation of open borders as a practical and ethical solution to world poverty are unpopular with both the right and the left.

He wastes little time in defaming the ideal of the nation-state and its stifling effects on global development and welfare:

We shouldn’t create hostages. We shouldn’t keep people locked in place within some arbitrary post-colonial boundaries just so we can continue with the bold experiment of trying to make nation-states develop. People should be free to move.

His critique of the position held by many on the left is spot-on. Though poverty, inequality, and exploitation are serious issues here at home, why do our worries end at the border? The loss of wages by the lower class (an idea contested by many economic studies) is often given precedence over the enormous gains by many immigrants, ignoring the magnitude of the poverty divide which exists more severely across state borders than within them. Why?

Being against migration to the United States is wrong for two reasons. One, I don’t think it gets the scale of the poverty in the United States vs. poverty in the rest of the world right. Second, if you are really concerned about inequality in the United States, there are many things you can do that would be better than blocking other people from coming to our country. I don’t want to say that people who are concerned about inequality in the U.S. aren’t right to be concerned about inequality in the U.S. But I think taking that concern and using it to keep people from coming to the United States is victimizing the world’s true victims in favor of people who happen to live closer to you.

There are numerous concerns about side effects, including brain drain, population and societal dynamics, crime, and identity crisis. I found his answer to be quite unexpected (especially for a Harvard economist!):

It’s the same path you take toward free trade. Rather than say you’re against free trade, let’s put the emphasis on fair trade. When it comes to brain drain, let’s get more unskilled migration rather than saying let’s stop all migration that could cause brain drain. That’s the turn that the more sophisticated NGOs [nongovernmental organizations] have taken on trade, where they really have moved from a free trade to a fair trade agenda, which has its downside but is enormously positive relative to an anti-trade agenda. But they haven’t taken that same turn at all on the immigration issue. We say, look, let’s have migration that’s the best possible for everyone. Profitable, welfare-improving trade is usually driven by differences. And there’s nowhere the differences are larger than in the endowments of unskilled labor.

All in all, a very well-rounded analysis. There are obvious issues with the practical implementation of such policies and the accompanying political friction and public backlash, but it is good to see the debate has been opened up to acknowledge the global implications of immigration policies and that perhaps the blind faith and admiration of the nation-state may be on the decline.

Sean

78 Million Barrels of Oil...

...or 150,000 years worth of tuition at Notre Dame (with money to spare for ResLife fines!)...

These figures add up to over $7 billion, the same amount of money lost this week in a trading scandal by Société Généralés, one of France's largest banks. Detailed information on the matter is limited and the story being told to/by the media still leaves many questions wanting for answers:

-How could ONE mid-level employee single-handedly pull off the LARGEST fraud in history? (even George Clooney needed 10 other people to help him rob the MGM!)

-The NYT claims that Mr. Kerviel made no profit from the scheme...but then why did he do it? Who was profiting? Somebody HAD to have been profiting...

-Société Généralés' auditors discovered the fraud last weekend, started selling off some of their hedge funds on Monday, didn't disclose the fraud until Thursday...am I missing something? Am I the only person who sees something wrong with this?

-The French Prime Minister claims that "the scandal has nothing to do with the situation in the financial markets"...even though the instability and anxiety induced by the bank selling off billions of bad bets is more than enough to induce a downward spiral in any market.

-The reporting on the scandal treats this as an isolated anomaly. Is it? If it is true that Mr. Kerviel was, on his own, able to infiltrate and exploit one of the largest financial institutions in the world and rip it off for $7.2 billion, what does that signal about the integrity of the world financial system? What other forms of scandal, corruption, and exploitation exist? This issue is not often talked about, but a telling statistic is that over $1 TRILLION is thought to be laundered every year (some estimate that the value is closer to $3 trillion). This money does not exist outside or independent of the "legal" financial system, but often commingles with licit money and enters legitimate financial systems and institutions. I don't think this is an isolated anomaly...

-I still don't believe he did it by himself. It just doesn't add up...

Sean

p.s. on a somewhat related topic, the NYT article had an interesting chart on past fraud cases similar to Mr. Kerviel's. Revealing fact: of the four others that committed trading fraud (with all but one totaling in the $billions) the longest jail sentence was 7.5 years! This is while we simultaneously put third strike drug users for LIFE. Who's a bigger criminal?

Several other articles that cover the scandal:
1
2
3

Take Three

For many reasons, I've avoided commenting on this article in this blog. I wrote two previous entries about it, only to delete them before posting (hence, the title of this post). Third-world development is as much a moral problem as it is an economic problem. Any discussion (or criticism) of these issues can put one in a precarious position. The struggle lies in how to present uncomfortable ideas to a very comfortable society. Societies tend to have varying levels of contempt for uncomfortable ideas, usually because they implicate the comfortable ones as part of the problem. This article, to say the least, is very discomforting. Diamond turns prevailing development theories on their heads, calling political and non-governmental development campaigns (even you, MDG's!) a "cruel hoax". They create a delusion that one day the poor and starving of the third-world can "live like us". It is a dream held by the most abject and despairing - a dream that becomes grander and more intangible with every new Ipod or cell phone that comes out.

Diamond gives some recommendations of how to avoid this future. I'm not too optimistic (I get more and more cynical everyday...somebody help me). Right now, the only solution that is apparent is to cut the consumption rates of the developed world (a very uncomfortable proposition!).

Read the article. Tell me what you think (Nick and I don't have to be the only people to comment on these things)

Sean

The Onion? No, It's From The NYT

I really thought this article was a joke...but it's not!

There are some very interesting economic concepts in the article - opportunity costs, labor markets, etc.

Rant Warning...

So I was thinking today about externalities. To what extent do everyday activities result in both positive and negative externalities? If humans and our actions are completely independent from each other and the environment, then externalities are minimal. But if we aren't, and our actions have significant impact on the actions of others and our environment, then externalities may be a bigger issue then we think. In most intro textbooks, externalities are portrayed as a relatively minor problem - an issue exclusive to a few sectors (the environment, etc.). But, if every human action has an unknown or undesired effect, then every action (or market transaction) has externalities. Why don't we talk about this? Maybe because it would make modeling and analysis extremely messy and infinitely more complicated. Even so, to leave out a variable that has such far-reaching effects seems to me to be pretty ludicrous.

Sean

I Think, Therefore I Am...I Think...

Here is an article on the "Top Ten Mysteries of The Mind". Despite centuries of biological, psychological, and philosophical probing, we still do not fully understand some of the most basic functions of the mind. What is un/sub/consciousness? How do we make decisions? How do we form memory? Do we have psychic powers (I'm still hoping...)? Research in this field holds powerful implications in economics, primarily in re-evaluating the most basic and long-held assumptions of neoclassical theory (unbounded rationality, unwavering self-interest, marginal decision making, etc.). Many of these ideas and assumptions have continued to be tested by behavioral economists/psychologists.

It appears that as we endeavor to analyze and criticize economic theories (both mainstream and non-mainstream) we need to be conscious of the role of both the social and natural sciences on the development of our ideas. The complexities, limitations, and interrelations of the social and natural sciences all contribute to the further understanding of ourselves and the world we live in, ultimately shaping the theoretical structures we form to explain them.



Some links for interesting articles

Link #1 - "An Oil Quandary" - but not the kind of oil you are probably thinking about...
Link #2 - "Economists Debate Quickest Cure" - what should we do about our weakening economy? No real surprises in their recommendations...


Sean

Last Post (Cont.)

Is the government intervention the only way to facilitate a more “fair” distribution of wealth?

This is the question I’ve been asking myself since reading “Interesting Article #1” from the previous post. In the article, the author cites a study done by researchers that concluded that people would give up 20% of their income to achieve a world which is more “fair”. Admittedly, I did not read the article, so I’m unsure of the methodology the researchers employed to reach this conclusion. Right away I can see several issues with trying to measure somebody’s willingness to pay for fairness (what is fair?), but that was not my biggest qualm. That came in the next line: “In other words, people who think the free market is unjust would give up a fifth of their income to switch from a laissez-faire economy to one where the government reduces the gap between the rich and poor”. Suddenly unfair, equated with laissez-faire policies, is contrasted to its “fair” opposite: government intervention. In my view, the opposite of laissez-faire, in terms of creating a more egalitarian outcome, is not necessarily more government intervention. That is one possibility among many that can be employed to redistribute wealth and create a more “fair” society. Many factors that contribute to “unfair” economic outcomes can be uneconomic in basis (racism and sexism immediately come to mind), and even those problems that are economic based (education, healthcare), may not be adequately remedied solely by government intervention. One problem that arises when looking for practical solutions to these problems is the too frequent polarization of issues coupled with the brash and often morally-charged rhetoric pouring in from both “sides” of an issue.

Sean