Sunday, May 10, 2009

Social Engineering traps

The unintended consequences of social engineering
May 10, 2009

This subject has been approached from several angles like the projects creating criminal and drug refuges to welfare creating a permanent underclass. I would like to expose another unintended consequence that will be appearing in the future.

I started thinking about a new rule the NCAA is studying to impose which requires colleges to interview at least 1 minority candidate. On the surface this appears to be a no-brainer. Actually, I am surprised such a rule does not exist; after all, the NFL adopted the ‘Rooney Rule’ in the eighties. I would have expected the NCAA to adopt a similar rule by now. I always forget the NCAA is the epitome of the good ‘ol boy’s networks that allows nepotism to penetrate every level of the bureaucracy or hypocrisy. This new rule is aimed at helping black candidates receive consideration for top coaching jobs at top schools.

The hitch in the step is, if estimates are correct, the Hispanic population will be the majority ethnic/racial ancestry in the next 10 to 20 years. Imposing this rule and similar civil rights rules will require potential employers to include white coaches in there searches and hiring practices or face sanctions. What effect will this rule have at the traditionally black schools (you know, the fact that we have what are referred to as traditionally black colleges and the black college football championship spits in the face of civil rights reform. Think about it, if the ivy-league champion was named the traditionally white college champion, there would be a protest or two. I just don’t understand why the moniker of traditionally black school has not been changed.) Will Grambling be required to have a white coach? It depends on how the rule is written and whether the rule is evenly enforced.

You know the path to destruction is paved with good intentions. I do not question the intent of the NCAA but the NCAA, as the rest of society does, need to be careful when engaging in social engineering. It tends to lead to bad unintended consequences. Urban planners of the 1950’s to today decided to create housing projects in urban centers near manufacturing centers for low income people. This effort created a segregated area of low income people in a poor job market in the 1970’s. These areas had higher unemployment rates leading to crime and dysfunctional society. The intent was well placed and the idea was well meaning but the outcome was unforeseen and unfortunate.

It is very difficult to predict how a complex system will react when an artificial stimulus is added. All complex systems behave chaotically and it’s the nature of chaos which makes it hard to predict outcomes from stimulus. The environmental field has several examples of trying to stimulate a system or engineer a complex system and not foreseeing the trap that lies ahead. Anyone remember rabbits in Australia????

The Green Elephant

Monday, February 16, 2009

keynes stimulus+trade deficit=bankrupt

Keynsian economic policy states, and I am summarizing, 'Economies can be guided and/or controlled by governments and any government spending is good for the economy' On the surface this seems like a decent premise. Government controls tariffs, international trade agreements, interstate/province trade, monetary policy, banking and finance regulation and tax policy. The government is also not for profit, so when an economy is tanking the government can inject massive spending to help support private enterprise until the private economy recovers.

Any spending should work. Welfare injects capital into the retail and utility sectors. Food programs can augment agriculture. Housing projects can prop up real estate and building. Infrastructure can support heavy machinery, engineering, steel, mining and construction. You get the picture. But why does it not seem to work. Japan spent vast amounts in the 1990's and are still suffering. We spent large amounts in 2000-now and it does not seem to budge the economy in any great direction. The only time it seemed to work was under Reagan in the 1980's.

The reason this system does not work is globalization of markets and commodities. Something that was configured differently during Keynes hayday. I will explain after a quick example. Think about high payout slot machines and why the house always ends up with the majority of the money. A slot machine paying out 95% should return 95% of the bets to the gamblers over time. Which seems on the surface like a gambler loses only 5% of there monies. The problem is the gambler is losing every time money is put in the machine. Even over time the gambler loses. on average, 5% of the money bet. 100 dollars becomes 95 after 1 bet. 95 becomes 90.25 and so on, until nothing is left.

During Keyens time, raw resources were extracted from outside markets and brought into the domestic market for manufacture of finished goods. These goods were then returned to outside markets for sale or domestic sale. This scenario yielded a net gain in trade. As foreign markets demand grew and labor, health, tax, energy, etc. costs escalated in the industrialized economies, the means of production were shifted closer to the resource base. Finished products were now being shipped to inside the economy which begins a trade deficit. As globalization continues through consolidation and mergers, more components in a once encapsulated economy become outside the domestic economy. Now, money spent by the government does not necessarily stay inside the domestic economy with the same velocity.

This is the crux of why Keynesian economics has not worked in recent times. Government dollars that were once spent 5 to 10 times inside the domestic economy may be spent only once, before being exported to outside the economy. So, why did it work for Reagan? Reagan increased spending on defense. Most defense spending, especially R&D and advanced weapon systems, was spent entirely in the U.S. during the 1980's. Today, manufacture can happen overseas on certain systems, but most of the R&D and advanced weapons are still fully developed in the U.S. It is hidden protectionism that no other country would protest. The technical engineers and designers of the 1980's were mainly U.S. citizens or nationals. Today, there is export of pay as more foreign nationals work in defense.

Infrastructure spending does not build an economy, either. The engineering firm may be international, the steal is produced overseas and many components of the heavy machinery is from international markets. The high velocity dollars spent on infrastructure are contained in the workers salary and the ancillary services built on their pay. However, the money spent on food and household items by the workers soon leaves the domestic economy as well. Textiles and household items are mainly made overseas and depending on the season, many food items come from international agriculture.

It is like playing the slots. Every time the government injects stimulus into the economy, there is less left in the economy. As our government is running huge deficits, the money being injected is from other sources besides the treasury. We are in effect using a line of credit in a casino and putting all back into the slot machine. As we do this over and again, the line of credit seizes and the domestic economy becomes bankrupt.

With little manufacturing base or resource base to fuel a 'homegrown' economy, we can find ourselves slipping into the second or third world. The government already can not satisfy the social contract and commitments made to social security and medicare in the future. How can we possibly satisfy these commitments while we continue down the road of Keynes. We need to find a sustainable economy that is in equilibrium with our means of production.

As a nation, we are addicted to consumption. We purchase for the thrill or to fulfill an emotion more then to fulfill a true need. As a nation we need to reduce conspicuous consumption. 2/3 of our economy is from consumptive spending. Judging by sales of automobiles and durable goods, this consumption is on small insignificant low quality junk that will need to be thrown away and replaced by more cheap junk. To move the economy to sustainability, we need to consume and produce quality goods that can be fixed or kept for many years. The economy won't show record growth but it will be balanced without showing record declines either. We also need to ease away from credit spending and move to a cash society. Back to scrimping and saving to make big ticket purchases. The effects won't be felt domestically too much from moving back to cash. Manufacturing is done externally and the banks and credit markets are already at historic lows. Overtime, using these strategies toward household spending will bring our economy back and pride in buying quality goods made by skilled labor-not sweatshops.

The green elephant attacks again

Tuesday, February 10, 2009

What is a green economy????

I was thinking about what is a green job and green economy.

I found a definition of a green job in Time magazine: http://www.time.com/time/health/article/0,8599,1809506,00.html

Basically, any job that pays a 'livable' wage and contributes to helping the environment. This could be a solar energy engineer or an administrative assistant in a 'green' building. So, the definition can be anything the definer cares to define or undefinable. Sounds like a lot of double speak. I am a watershed hydrologist in a climate studies group. Is my job green? We waste a a lot of electricity on large individual offices, many computers, servers, printers, wall mounted display screens, etc. Are workspace is not green. My wage is not so great, borderline livable. My research is building a predictive model based on historical observations to run climate and land use change scenarios into the future. The goal is not to put forward any particular plan but to try and predict results. By the definition in Time my job is not green, but if I was a union light bulb changer, making a change from incandescent lights to cf lights- that might be green. Just more liberal double speak to separate more classes of people to feel disadvantage and victimized.

What is a green economy? 3 books or ideas really started the green movement. Rachel Carson's Silent Spring, Paul R. Ehrlich's Population Bomb and Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens paper The Limits to Growth.

The Limits to Growth an effort to model simple world systems through time to run different scenarios to predict outcomes. The main drivers were economic growth, population growth, natural resource depletion, pollution mitigation, etc. The outcomes pointed to social and economic collapse after population growth, resource depletion and runaway pollution. The conclusions were made in 1972. Many critics of the findings have pointed to the fact that the scenarios have not held true to the time lines predicted. Many factors are involved in the failed accuracy. Themain factors are the growth rate in fully industrialized countries has either become stable or negative. Population is 1 of the main drivers in this model and in real world outcomes. The other main misconception was the true scarcity or abundance of natural resources. As prices have inflated over time and technology has become less expensive per unit, the extraction of mineral resources has produced profits in low percentage ores that at the time of the first writing of Limits were not viable resources.

The one conclusion that has not been contested over time is that economies that grow ad infinitum are not sustainable and yield a resource scarcity and runaway pollution followed by population collapse and a lowered standard of living. So, a green economy could be said to be a 0 growth or slightly contracting economy. Then we have it- we were promised the hope a green economy and now we have a green economy. So why do we need a 'stimu-aint' bill, if we have green economy.

I am confused. Please, somebody help explain.

The green elephant wuz here

Wednesday, February 4, 2009

Crying About T.A.R.P.

I had to detour from the environment for this one.

All the whining needs to stop. To begin with, this was a terrible idea thought up by Paulson and Bernake. Bernake is known for his theory on asymmetric information in lending to small business during financial disturbance, which lends him to believe that the banks are being taken advantage of by borrowers and the banks are the cornerstone of financial recovery.

We have a policy that was rushed through the 'Hill' based on a theory that is owned by one of the priciple creators of the bailout.

What would have happened without a bailout. The argument was the worst financial disaster ever. Markets are governed by psychology and temeperment of investors and actors in the market. When the ex-prez, the tresaury and all the chicken littles on wallstreet started crying the sky is fallen-the sky fell. Whenever a hint of good news or positive outlook is put forward the markets rebound.

Back to T.A.R.P.-> if the institutions in trouble were allowed to fail what would happen. The other institutions with inflated balance sheets and sketchy accounting would tumble also. The result would be, regional banks that were in strong financial positions would acquire the assets and other companies would buy the debt at a discount to cover losses of bad loans. The regionals flush with new deposits would increase lending in their regions. These banks tend to be the banks that finance small business and home purchases.

T.A.R.P. did exactly the opposite. All banks were forced or coerced to take the money whether the institution was solvent or not to, hide the institutions actually in trouble from runs on deposits and stock/bond devaluation. This is the 'Indy Mac' rule. Indy Mac was financially solvent until, I believe it was Schumer from New York, sent a letter to leaders about the trouble in a regional bank with large business in California. Indy Mac went out of business based on a lie and speculation.

So, when Wells, which is 1 of the few financially strong institutions, wants to operate as normal with vacations and bonuses the press and new_prez get their panties in a bunch because they took T.A.R.P. money. Well, let the banks that did not need or want the T.A.R.P. money give it back and let the weak banks fail or shut-up about T.A.R.P.

Maybe next time, before passing a massive increase in socialism, read the bill before voting!!!!!!! If you don't read the bill and vote for it anyway, then shut your mouths and stop whining or admit your absolute lack of competence and judgement in fulfilling your duties to your constituents.

I have not read the full report on the executive pay cap, but I am sure it will be a whole lot of talk with no teeth and unenforced. This is the presidency of talk the talk but walk a different direction. Luckily most people live on sound bites and forget the actual actions taken like no lobbyist in the white house and paying taxes(I thought Biden said 'be patriotic pay your taxes', so I guess Geithner, Daschle, etc. are unpatriotic????).

The Green Elephant wuz here

Monday, February 2, 2009

back to blue crabs

I have to revisit this subject and add a point. I have been thinking about how I and many others identified the problems with the Chesapeake Blue crab harvest 20 years ago and this past year the bloviating governors of Maryland, O'Mally, and Virginia, Kaine, act like they did some great bit of oversight in acting to change harvest regulations. At least they did act, which is more then can be said about the last 20 years of democrats and republican governors.

This lapse of oversight and management is exactly why big government does not work. Nobody has authority to act. Fifty commissions and hearings have to be held before an action committee is convened to discuss possible policy solutions that will not be acted on if it's an election year and the particular lobbies are well endowed.

All these bureaucracies and bureaucrats get in the way of effective government. Streamline the upper management and middle management and empower people to make decisions and introduce policy changes that get real support based on the authors years of service and dedication-not the biggest pocket book.

Saturday, January 31, 2009

Glenn Beck shows history of dollar devaluation

Check out this video link on hte explosive flood of money being pumped into the economy. Our train wrecked economy is going to cripple our children if the government does not stop spending like a teenager with their parents amex.

Glenn Beck - Current Events & Politics - Glenn Beck: U.S. dollars in circulation skyrocketing

Problems with Blue Crab Lack of Management

Today an article appeared in The Capital, the official fish wrap of Annapolis, on the state of the blue crab fishery and a 2 year history of mis-management. This article points to the complete lack of governance and understanding by elected governement leaders in managing natural resources.

Quoting Pamela Wood 'And even as Maryland and Virginia look at the crabbing situation on a year-by-year basis, thay also are looking long term. Officials are taking early steps toward possibly setting a quota on catching crabs, setting limits on how many pots or trotlines waterman can use or even buying back licenses from crabbers.' It sounds like the officials in charge have just recently realized there is a problem in the blue crab population. In 1991, I wrote my junior thesis on the problems of harvesting female crabs, the winter dredge crab fishery and 'ghost crab pots'.

So in 2008, what did the esteemed democratic governors of Maryland and Virginia agree to: June 2008 -> recreational restrictions on harvesting female crabs
August 2008 -> catch restrictions on commercial harvest of female crabs
October 2008 -> early season ending for female crab harvesting
Spring 2009 -> The state of Maryland is receiving $10 million in disaster relief from the federal government to alleviate problems with the commercial crab fishery. Part of this money will be used to pay commercial crabbers to retrieve 'ghost crab pots' from the Chesapeake Bay.

Amazing, a 19 year old, 17 years ago, figured out a strategy to help protect a major commercial fishery from self-induced collapse. How many jobs and small businesses have been lost while the states have delayed action to 'protect the waterman's way of life'. Soft stepping around commercial fishing lobbying groups has resulted in a collapsing ecosystem. Leadership is doing the right thing, even when it is not popular among corporate donors. Maryland and Virgina once supported vibrant commercial fisheries and canneries throughout the Chesapeake. With modern catches, most packing houses have closed or have resorted to importing crabs form other regions or other countries to fill in for the product no longer coming from the Chesapeake Bay.

While the crab fishery has slowly been in decline, all efforts have been on restoring a robust striped bass, 'Rockfish', fishery. Striped bass's primary forage in the Chesapeake Bay is menhaden, However, the menhaden fishery has been decimated by overfishing resulting in striped bass foraging on other species, especially blue crabs adding further pressure on a declining species. The impacts of the blue crab collapse on striped bass include low weights and increased disease mortality. The striped bass fishery supports a good commercial fishery in Maryland, 2 million plus pounds a year, and a fantastic recreational fishery, over 3 million pounds per year.

Recreational fisherman spend money and lots of it. They buy or charter boats, they pay for fuel, gear, bait, booze, food, trucks, etc. This is a huge industry as was the commercial industry. It is a self-replicating source of income for both the commercial waterman and the thousands who rely on jobs linked to the recreational fishing industry. Don't let the government screw it up any more than it is already. There can not be a targeted one species approach to managing a complex fishery. A concerted effort to manage the entire system is needed to avoid tipping the balance towards population over shoot in one species and population collapse in another. There should be an effort towards equilibrium of the system.

Solutions are quite simple. Target limiting harvest in areas with the most impact. Female crabs release hundreds of thousands of eggs every year of their adult lives. Limit female harvest by total catch or size. Restore and protect juvenile crab habitat. Market Chesapeake seafood as a premium product demanding extra money, much like Alaskan Salmon. Try to buy Yukon river salmon, when in season, without a home equity loan. By increasing the landed price to the commercial fleet, the fisherman can reduce their effort to return a profit, thus reducing pressure on the resource and guaranteeing themselves a bright future.

These fisheries problems are not entirely the waterman's fault. The deteriorating conditions of the upland watersheds feeding the Chesapeake have been detrimental to the productivity of the Chesapeake Bay. Over-building along waterfronts and destruction of riparian buffers has been extraordinarily harmful downstream. Instead of buying 200 million in contraceptives and Pelosi a new 737, maybe the federal government could "stimul-ain't" the economy by real infrastructure improvements, such as, the inter-county connector in Maryland, A heavy rail purple line from Bethesda through New Carrollton and continue by running it above ground along the route 50 corridor to Annapolis. Getting cars to run fewer miles will result in less oil from leaky cars and less heavy metals, like cadmium, from brake dust ending up in the Chesapeake becuase of street run-off.

Friday, January 30, 2009

Michael Steele in Charge of RNC

Go Maryland!!!!!!!

Mr. Steele will return us to our fiscal core conservatism and bring us back to the fore front of policy and governance.

Initial Posting

8 days down, too many to count to go.



This blog is intended for a fiscally conservative audience, who value natural resources and the environment. Posts will be focused on the economics and policy decisions about natural resource use and abuse. An underlying theme to most government policies and interference will be the 'law of unintended consequences'. Basically, the more a complex system is managed the more chaotic and unexpected is the outcome. For an example, review George Will's column from 3 weeks ago about civil rights actions and exploding costs of college and devaluation of a high school education.



I live near the Chesapeake Bay, so many of the issues I post will focus on the mid-Atlantic region and the policies of ,the right coast 'little California', Maryland.