Saturday, August 29, 2020

Another Semester Has Started

 Welcome to any new students. The entries usually have something to do with a basic economic principle that is related to a recent news story.

Here is something I wrote for The Ranger (the school paper of San Antonio College where I used to teach) back in 2011 titled "Why is college so hard?"

Students might wonder why college, and SAC in particular, is hard. This might sound trite, but I think the faculty at SAC want students to achieve success in life and that means that classes have to be hard if you are going to learn and understand the concepts which provide a foundation for that success.

I think my own experience as a community college student over 30 years ago helps me understand this. My teachers took their subjects seriously and maintained high academic standards. They got me excited because of the expertise they brought to their teaching. Now that I have been a teacher for over 20 years, I can see how important that was.

After finishing my A.S. degree at Moraine Valley Community College (MVCC) in Palos Hills, Ill., I transferred to and graduated from the University of Chicago with a degree in economics. But it was my community college teachers prepared me to handle the rigors of the U. of C.

Later, I got a Ph. D. in economics from Washington State University. But I've accomplished some other things I never could have dreamed of when I began taking classes at MVCC and I think my teachers there paved the way for me.

In 2005, I had a letter to the editor published in The Wall Street Journal (I have now had five published there, three in The New York Times and three op-eds in the Express-News). This one was several paragraphs long, nearly as long as some of their op-ed pieces. It was the first letter in the letters section that day, and I got the top headline. It dealt with NAFTA and trade agreements.

As nice as that was, I got a big shock a few days later when I got a letter in the mail, on official stationery, from Richard Fisher, the president of the Federal Reserve Bank of Dallas. He complimented me on my letter and said it was superb. I had never even met him or ever tried to contact him before.

Wow. I graduated from high school with a 2.7 GPA, and when I started at MVCC, I had no idea what I would do with my life. If you had told me then that someday I would have a letter in the WSJ and get that kind of compliment, I doubt I would have believed you.

Then an adjunct professor at the business school at the University of Chicago contacted me a few years ago and wanted to know if it was OK for her to assign a paper I wrote on entrepreneurs for a class she was teaching on innovation. (Of course, I said yes).

That professor was Nancy Tennant Snyder. She has a Ph. D. from George Washington University and is a vice president at Whirlpool. Business Week magazine has called her one of the leading innovators in the world. She also cited two of my papers in one of her books.

Then I got an email from John Joseph, a professor at the University of Edinburgh. He is an expert on language and politics. He wanted to know if he could include an essay I wrote in a four-volume work he was planning. I again said yes and it was published last year (and it is called Language and Politics).

It is a collection of essays. Mine is titled "The Intersection of Economic Signals and Mythic Symbols." Other contributors include Jeremy Bentham and George Orwell. When I was a community college student, I never imagined being included along with the likes of those great thinkers.

The co-authors of the book The Economics of Public Issues have thanked me in each of the last three editions for my helpful suggestions. Almost all of the people they thank are from big universities. One of the co-authors of this book, Douglass North, is a Nobel Prize winner. Never imagined someone like that would value my input when I started out as a community college student.

Getting such recognition in cases like this gives me a sense of achievement. I know I have made a scholarly contribution to the world. And I want all SAC students to have a chance for this same kind of success (as an academic or any in line of work). I think all SAC faculty do. That is why school is hard, and that is why I'm thankful that my community college teachers were experts who maintained high academic standards.

Sunday, August 16, 2020

Is Covid causing some structural unemployment? (Part 2)

See Hotel Robots Get Second Life as Industry Adapts to Covid-19: Bots like Relay, produced by a Google Ventures-backed company, cut down on unsafe interactions by Will Parker of The WSJ. Excerpts:

"Hoteliers and robotics companies say delivery bots like Relay, produced by the Google Ventures-backed Savioke Inc., are cutting down on potentially unsafe interactions between hotel staff and room guests, by offering contactless room service. And cleaning robots, like Maidbot’s Rosie, are vacuuming hallway floors while cleaning crews spend more time than ever sanitizing rooms."

"Requests for delivery robots from the hospitality sector have doubled since the pandemic began"

"Savioke is now finishing work on a new robot that is two times as large as the pint-size Relay, to accommodate the larger items hotels want to send up to their guests, such as king-size pillows."

"The use of robots in the hotel industry has concerned some that these machines could eventually be used to replace employees. Many U.S. hotels have reduced staff during the pandemic, and although hotel operators and robotics companies insist robots help rather than reduce staff, robots could limit how much extra labor hotels bring on to meet new sanitation demands."

Related posts:

Is Covid causing some structural unemployment?

Can computers write poetry? Could they replace poets?

Will computer programs replace newspaper columnists?  

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts

Is Walmart adding robots to replace workers or because it is hard to find workers?

Robot Journalists-A Case Of Structural Unemployment?

Structural Unemployment In The News-Computers Can Now Tell Jokes 

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races

Are Computer Programs Replacing Journalists?

Automation Can Actually Create More Jobs 

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment 

Broncos to debut beer-pouring robot at upcoming game

Robots Are Ready to Shake (and Stir) Up Bars 

Saturday, August 15, 2020

Is Covid causing some structural unemployment?

See Companies Step Up Distribution Automation Under Pandemic Strains: Robots are helping speed the flow of goods while workers maintain social distance in warehousing and fulfillment operations by Jennifer Smith of The WSJ. 

In my macroeconomics class, we talk about the types of unemployment. Here is one of them:

Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs. One example of this is when you are replaced by a machine.

Excerpts from the article:

"A handful of warehouse robots helped American Eagle Outfitters Inc. cope with a flood of online orders during coronavirus lockdowns as consumers loaded digital shopping carts with hoodies, leggings and loungewear.

Now the company is stepping up its use of automation. The company is installing 26 more piece-picking robots at its main U.S. distribution centers, making it the latest company to deepen its logistics technology investments as the coronavirus pandemic upends sales channels and supply chains.

The kiosk-size units from robotics provider Kindred Systems Inc. use mechanical arms, computer vision and artificial intelligence to sort through piles of apparel. They provide steady labor to help workers organize orders and reduce crowding on the warehouse floor, where the company said one human can manage multiple robots instead of standing next to other associates."

One executive said "You cannot actually bring in 1,000 to 2,000 untrained people into the distribution facility and maintain safe working conditions."

"More than half of warehouse operators responding to a recent survey by Honeywell Intelligrated, Honeywell International Inc.’s warehouse automation business, said they were more willing to invest in automation as a result of the pandemic."

Related posts:

Can computers write poetry? Could they replace poets?

Will computer programs replace newspaper columnists?  

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts

Is Walmart adding robots to replace workers or because it is hard to find workers?

Robot Journalists-A Case Of Structural Unemployment?

Structural Unemployment In The News-Computers Can Now Tell Jokes 

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races

Are Computer Programs Replacing Journalists?

Automation Can Actually Create More Jobs 

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment 

Broncos to debut beer-pouring robot at upcoming game

Robots Are Ready to Shake (and Stir) Up Bars 

Friday, August 14, 2020

Judge says sharp elbows don't violate anti-trust laws

See U.S. Appeals Court Throws Out Antitrust Ruling Against Qualcomm: Court rules federal government hadn’t shown chip maker engaged in illegal monopolization by Brent Kendall and Asa Fitch of The WSJ. Excerpts:

"A federal appeals court on Tuesday threw out a sweeping antitrust judgment against Qualcomm Inc., QCOM 0.29% ruling the federal government didn’t prove the dominant cellphone chip maker engaged in illegal monopolization.

The San Francisco-based Ninth U.S. Circuit Court of Appeals ruled unanimously that the Federal Trade Commission hadn’t shown that Qualcomm’s core business practices related to its cellphone chips and patents were anything more than lawful attempts at profit maximization.

San Diego-based Qualcomm “has asserted its economic muscle with vigor, imagination, devotion, and ingenuity. It has also acted with sharp elbows—as businesses often do,” Judge Consuelo Callahan wrote for a three-judge panel.

Judge Callahan said it wasn’t the court’s job “to condone or punish Qualcomm for its success, but rather to assess whether the FTC has met its burden…to show that Qualcomm’s practices have crossed the line to conduct which unfairly tends to destroy competition itself. We conclude that the FTC has not met its burden.”"

"The case dates back to the final days of the Obama administration, when the FTC sued Qualcomm and challenged a central company practice the commission described as “no license, no chips.”

The FTC said Qualcomm enjoyed monopolies in two types of modem chips and adopted a framework in which phone makers couldn’t purchase those chips for their devices unless they also paid to license Qualcomm patents covering a range of its intellectual property. That structure made it difficult for phone makers to challenge Qualcomm’s royalty rates, and the arrangement also meant those manufacturers were paying Qualcomm royalties even if they used a competitor’s chips in their phones.

Qualcomm said it achieved its market position lawfully, developing and investing in breakthrough technologies, an argument accepted by the appeals court. The company argued its licensing practices were well-grounded because every cellphone invariably uses its patented innovations."

The court "cast doubt on using antitrust laws to challenge how a company wields its patents, which give intellectual-property owners the right to exclude competitors from using their inventions unless they pay licensing fees."

"The ruling highlighted the reluctance of some courts to intervene in fast-moving tech markets. “We decline to ascribe antitrust liability in these dynamic and rapidly changing technology markets without clearer proof of anticompetitive effect,” Judge Callahan wrote.

"Adding to the drama, the Justice Department, which shares antitrust enforcement authority with the FTC, last year waded into the litigation—in support of Qualcomm. A DOJ spokeswoman declined to comment."

"The company earns most of its revenue from selling chips, but the licensing division has much higher margins and accounted for more than half of its earnings before taxes in its latest quarter."

See also this WSJ editorial A Defeat for Antitrust Adventurism: An appeals court rebukes the FTC’s assault on Qualcomm. It has more details. Excerpts:

"The Federal Trade Commission in the waning days of the Obama Administration sued Qualcomm under the Sherman Act. According to the government, the technology company leveraged its dominance in the modem market to charge smart-phone manufacturers excessive royalties for “standard essential patents” that it had agreed to license on fair, reasonable and nondiscriminatory (FRAND) terms.

But Apple complained to the FTC that the chipmaker’s royalty policy allowed it to profit too much from its phone sales. Federal Judge Lucy Koh, a Barack Obama appointee, ruled for the FTC last year and ordered Qualcomm to license its patent portfolio to rival chipmakers. This would boost Qualcomm’s competitors while reducing its leverage with smartphone makers.  

But as appellate Judge Consuelo Callahan writes, “to the extent Qualcomm breached any of its FRAND commitments, the remedy for such a breach was in contract or tort law”—not antitrust law. Further, phone manufacturers “have been somewhat successful in ‘disciplining’ Qualcomm’s pricing through arbitration claims, negotiations, threatening to move to different chip suppliers, and threatened or actual antitrust litigation. These maneuvers generally resulted in settlements.”"

"The panel concluded that the FTC failed to show that Qualcomm’s licensing policies diminished consumer choice or increased price. “Anticompetitive behavior is illegal under federal antitrust law. Hypercompetitive behavior is not,” Judge Callahan writes, “But profit-seeking behavior alone is insufficient to establish antitrust liability.”

Citing the Supreme Court’s Trinko decision (2004), Judge Callahan goes on to explain that “the opportunity to charge monopoly prices ‘is an important element of the free-market system’” and “‘induces risk taking that produces innovation and economic growth.’”

“‘Antitrust economists, and in turn lawyers and judges, tend to treat novel products or business practices as anticompetitive’” and “‘are likely to decide cases wrongly in rapidly changing dynamic markets,’” the judge notes, quoting a Yale economics article. This “can have long-lasting effects particularly in technological markets, where innovation ‘is essential to economic growth and social welfare.’”"

Thursday, August 13, 2020

Why Being Kind Helps You, Too—Especially Now

Research links kindness to a wealth of physical and emotional benefits. And it’s an excellent coping skill for the Covid-19 era

By Elizabeth Bernstein of The WSJ.

Adam Smith said when people act selfishly they are led, as if by an invisible hand, to make society better off. So what if you try to help others because you know it will make you better off? Are being kind (altruistic) or selfish?

One researcher says "Our attention isn’t something that is infinitely expansive." It like saying you only have a certain amount of money to spend so spend it wisely, where it will help you the most.

Excerpts from the article:

"Research links kindness to a wealth of physical and emotional benefits. Studies show that when people are kind, they have lower levels of stress hormones and their fight-or-flight response calms down. They’re less depressed, less lonely and happier. They have better cardiovascular health and live longer. They may be physically stronger. They’re more popular. And a soon-to-be published study found that they may even be considered better looking."

"it diminishes our negative thoughts. “Our attention isn’t something that is infinitely expansive,” says Emiliana Simon-Thomas, science director of the Greater Good Science Center at the University of California, Berkeley. “What we are feeling at any given moment is related to what we are doing, so if we are behaving kindly, that experience will occupy our emotion.”"

"“The key to our success is not the survival of the fittest,” says Jamil Zaki, a neuroscientist and associate psychology professor at Stanford. “It’s survival of the friendliest.”"

"people born with the personality trait of empathy. Yet, nature accounts for just half of our propensity to be kind, says Dr. Zaki."

"“Kindness is a skill we can strengthen, much as we would build a muscle,” says Dr. Zaki"

"When we’re kind, a part of the reward system called the nucleus accumbens activates—our brain responds the same way it would if we ate a piece of chocolate cake. In addition, when we see the response of the recipient of our kindness—when the person thanks us or smiles back—our brain releases oxytocin, the feel-good bonding hormone. This oxytocin boost makes the pleasure of the experience more lasting."

"If you want to reap the personal benefits, “you need to be sincere,” says Sara Konrath, a psychologist and associate professor at the Indiana University Lilly Family School of Philanthropy"

"people who believed that kindness is good for them showed a greater increase in positive emotions, satisfaction with life and feelings of connection with others—as well as a greater decrease in negative emotions—than those who did not."

Adam Smith wrote a book called The Theory of Moral Sentiments. One point he made there was that we are able to sympathize with other people by trying imagine what they are going through (and I wonder if we need to be good storytellers to be able to do that). Neuroeconomist Paul Zak has been studying how the hormone oxytocin plays a role in making us feel good when we have empathy for others (beware: Zak is a big hugger). See an earlier post Adam Smith vs. Bart Simpson for more details.

There is an interesting book called Paleopoetics: The Evolution of the Preliterate Imagination. It relates storytelling to evolution.

Click here to go the Amazon listing. It is by Christopher Collins, professor emeritus of English at New York University. Here is the description:

"Christopher Collins introduces an exciting new field of research traversing evolutionary biology, anthropology, archaeology, cognitive psychology, linguistics, neuroscience, and literary study. Paleopoetics maps the selective processes that originally shaped the human genus millions of years ago and prepared the human brain to play, imagine, empathize, and engage in fictive thought as mediated by language. A manifestation of the "cognitive turn" in the humanities, Paleopoetics calls for a broader, more integrated interpretation of the reading experience, one that restores our connection to the ancient methods of thought production still resonating within us.

Speaking with authority on the scientific aspects of cognitive poetics, Collins proposes reading literature using cognitive skills that predate language and writing. These include the brain's capacity to perceive the visible world, store its images, and retrieve them later to form simulated mental events. Long before humans could share stories through speech, they perceived, remembered, and imagined their own inner narratives. Drawing on a wide range of evidence, Collins builds an evolutionary bridge between humans' development of sensorimotor skills and their achievement of linguistic cognition, bringing current scientific perspective to such issues as the structure of narrative, the distinction between metaphor and metonymy, the relation of rhetoric to poetics, the relevance of performance theory to reading, the difference between orality and writing, and the nature of play and imagination."
Click here to read a longer description by Collins himself.

Here is the new article from this week The Dalai Lama Explains Why Being Kind to Others is the Secret to Happiness. Excerpt:
"Have you ever wondered why it matters that you care for other people?

It seems commonsense that this is a good way to live life. But there are dominant philosophies today that suggest we need to maximize our own individual self-interest.

This comes from economic theories of capitalism that suggest when people look after their own self-interest, then society is better off.

The Dalai Lama explains why this doesn’t make sense in the beautiful passage below. As he says, it’s an obvious fact that your own sense of wellbeing can be provided through your relationships with others. So it’s best to start cultivating practices of kindness and compassion."
Then the article has a long statement from the Dalai Lama on this philosophy. But some economists might say that you can't run a successful business if you don't care about others and try to learn their wants and desires. Here is what Adam Smith said in The Wealth of Nations
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”

Related Posts:

Texas A & M economists study cheating (and how much might not depend on being rich or poor)

Adam Smith vs. Bart Simpson 

Do you have to be selfish to make more money?

Want to be happy and successful? Try compassion

The Dalai Lama Says It Is Sometimes OK To Be Selfish

People sometimes pay for for goods even when they don't have to.

Wednesday, August 12, 2020

Can computers write poetry? Could they replace poets?

See Was This Poem Written by a Computer or Human? Put your bot-sniffing skills to the test, and see how you do by Hailey Reissman. Excerpts:

"In 2013, Australian grad student Oscar Schwartz and his friend Benjamin Laird created a website called bot or not. On the site, you’re presented with a poem and you have to guess whether it was written by a human or computer."

"some poems in the bot or not database have fooled 65 percent of human readers"

The article has some examples of poems by both humans and computers and you can test yourself.

In my macroeconomics class, we talk about the types of unemployment. Here is one of them:

Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs. One example of this is when you are replaced by a machine.

Related posts:

Will computer programs replace newspaper columnists?  

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts

Is Walmart adding robots to replace workers or because it is hard to find workers?

Robot Journalists-A Case Of Structural Unemployment?

Structural Unemployment In The News-Computers Can Now Tell Jokes 

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races

Are Computer Programs Replacing Journalists?

Automation Can Actually Create More Jobs 

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment 

Broncos to debut beer-pouring robot at upcoming game

Robots Are Ready to Shake (and Stir) Up Bars    

Tuesday, August 11, 2020

The Incredibly True Story of Renting a Friend in Tokyo

When you’re alone in Tokyo and you need someone to talk to, do as the locals do: Rent a friend

By Chris Colin. Excerpts:

"Miyabi isn’t a sex worker, or an escort or an actor or a therapist. Or maybe she’s a little of each. For the past five years she has been a professional rent-a-friend, working for a company called Client Partners. 

There was the string of teenage girls struggling to navigate mystifying social dynamics; at their parents’ request, Miyabi would show up and just be a friend. You know, a normal, companionable, 27-year-old friend. She has been paid to cry at funerals and swoon at weddings, lest there be shame over a paltry turnout. Last year, a high schooler hired her and 20 other women just long enough to snap one grinning, peace-sign-flashing, I-totally-have-friends Instagram photo. 

When I learned that friendship is rentable in Tokyo, it merely seemed like more Japanese wackiness, in a subset I’d come to think of as interest-kitsch. Every day in Japan, it seems, some weird new appetite is identified and gratified. There are cats to rent, after all, used underwear to purchase, owls to pet at owl bars. Cuddle cafés exist for the uncuddled, goat cafés for the un-goated. Handsome men will wipe away the tears of stressed-out female office workers."

"Miyabi’s career mostly comprises the small, unremarkable acts of ordinary friendship: Shooting the breeze over dinner. Listening on a long walk. Speaking simple kindnesses on a simple drive to the client’s parents’ house, simply to pretend you two are in love and absolutely on the verge of getting married"

"I’m paying her roughly $115 for two hours, some percentage of which Client Partners keeps."

"all types of clients: Widowers who need someone to watch TV with. Shy guys who could use a dating coach. Shy gals longing for a shopping companion. And that one dude who just wanted a friend who’d do him the solid of waiting seven hours outside Nike to snag these fresh sneakers for him when they went on sale."

" I believe Miyabi when she says her job is satisfying because of the personal connection. But I have to ask her why there’s such a demand for it on the clients’ side.

“Why?” Miyabi asks. “Because this is all a lie.”"

 "Yumi cheerfully tells me about the gigs she has had since joining Client Partners. (The six-year-old agency is the largest in Japan, with eight branches across Tokyo and another that more recently opened in Osaka.) There was the mystery writer who wanted her to read the novel he’d toiled away at for 10 years. Another man needed someone to talk with about his aging parents—not in person, but via months of emails. Like Miyabi, Yumi works weddings. For one she was hired to play the sister of the bride, a real living woman who herself was in a family feud that precluded her attendance. The mother of the bride was also a rental. The two impostors got along swimmingly. 

Yumi explains that these are just the more theatrical gigs. The bulk of her clients? They just want basic, uncomplicated companionship."

"And there’s the apparently growing problem of people who literally work themselves to death; a third of suicides have been attributed to overwork. All of that, Yumi and Taka say, but you act like everything’s fine. I gather this is the lie Miyabi was referring to.

Enter the rent-a-friend. Not a miracle cure, no. But maybe a pressure valve. “With us,” Yumi says, “people can talk about their feelings without worrying what their real friends think.”"

"Say what you will about rent-a-friends, but they bypass that whole dynamic. You don’t wonder about such a friend’s real feelings about you because you know them—in fact, they abide by a clearly delineated rate. With the matter of intention taken off the table, you’re free to focus on just having a nice time, on connecting in that very moment."

Related post:

If It Pays To Have Friends, Can You Pay To Have Friends?

It discusses two articles:

1. "The boyfriends you can buy! Chinese website offers men by the hour to women ashamed of their single status"

2. "The rise of paid friends: How wealthy New Yorkers are socializing with hired staff over 'real' companions – because they’re easier 'to control'."

Monday, August 10, 2020

Adam Smith And Joseph Campbell On The Dangers Of "The Man Of System"

 Here is a passage from The Theory of Moral Sentiments by Smith at the Library of Economics and Liberty. Smith emphasizes the arrogance and conceit of those who think they can arrange society any way they want. In a separate passage, Smith writes about how this can be dangerous (that follows this longer excerpt). First, Smith discusses the man of humanity and benevolence, then the man of system for contrast. Then I have some quotes that are similar from Campbell.

"The man whose public spirit is prompted altogether by humanity and benevolence, will respect the established powers and privileges even of individuals, and still more those of the great orders and societies, into which the state is divided. Though he should consider some of them as in some measure abusive, he will content himself with moderating, what he often cannot annihilate without great violence. When he cannot conquer the rooted prejudices of the people by reason and persuasion, he will not attempt to subdue them by force; but will religiously observe what, by Cicero, is justly called the divine maxim of Plato, never to use violence to his country no more than to his parents. He will accommodate, as well as he can, his public arrangements to the confirmed habits and prejudices of the people; and will remedy as well as he can, the inconveniencies which may flow from the want of those regulations which the people are averse to submit to. When he cannot establish the right, he will not disdain to ameliorate the wrong; but like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear.
VI.II.42
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.
VI.II.43
Some general, and even systematical, idea of the perfection of policy and law, may no doubt be necessary for directing the views of the statesman. But to insist upon establishing, and upon establishing all at once, and in spite of all opposition, every thing which that idea may seem to require, must often be the highest degree of arrogance."
Adam Smith also says in his book The Theory of Moral Sentiments:
"The natural course of things cannot be entirely controlled by the impotent endeavours of man: the current is too rapid and too strong for him to stop it; and though the rules which direct it appear to have been established for the wisest and best purposes, they sometimes produce effects which shock all his natural sentiments."
The "effects which shock all his natural sentiments" are the unintended consequences of on man trying to impose his will on society. He can't know all the effects of all the changes he his bringing to a complex system.

Here is what Campbell has to say. This is from the book The Power of Myth (some parts might only be in the video version of the interview Campbell did with Bill Moyers upon which the book was base):

Campbell condemns "the man of system."  He states this clearly while speaking of the character Darth Vader from the Star Wars movie trilogy.  He is critical of him being an "executive of a system" who has no humanity. The man of system is a government planner, a bureaucrat who wishes to impose his own ideals on society.  Campbell mentions what he thinks is a good Oriental idea:  "You don't force your mission down people's throats." (recall that Smith says the man of benevolence respects individuals, and will not attempt to subdue them by force) Also, "Instead of clearing his own heart, the zealot tries to clear the world." (Smith refers to "furious zealots" who have contempt for open minded people)   Both Campbell and Smith fear the planner who will force his system on the rest of us.  Campbell's views on this are best expressed in his comments on Darth Vader, the evil dark lord of the Star Wars movie trilogy.

"Darth Vader has not developed his own humanity.  He's a robot.  He's a bureaucrat living not in terms of himself but in terms of an imposed system.  This is the threat that we all face today.  Is the system going to flatten you out and deny you your humanity, or are you going to be able to make use of the system so that you are not compulsively serving it?  It doesn't help to try to change it to accord with your system of thought.  The momentum of history behind it is too great for anything really significant to evolve from that kind of action" (this is like Smith saying the current is too strong to be stopped by the impotent endeavours of man)


This is all seen much more clearly in an exchange between Campbell and Moyers from the second televised segment of The Power of Myth called "The Message of the Myth": 
Moyers:  Do you see some of the new metaphors emerging in the modern medium for the old universal truths that you've talked about, the old story?
Campbell:  Well, I think that the Star Wars is a valid mythological perspective for the problem of is the machine-and the state is a machine (emphasis added)-is the machine going to crush humanity or serve humanity? 
And humanity comes not from the machine but from the heart. 
[As the unmasking of Darth Vader scene from the movie The Return of the Jedi  is shown, Campbell continues:]
Campbell:  The father (Darth Vader) had been playing one of these machine roles, a state role; he was the uniform, you know?  And the removal of that mask-there was an undeveloped man there.  He was kind of a worm by being the executive of a system.  One is not developing one's humanity.  I think George Lucas did a beautiful thing there.
Moyers:  The idea of machine is the idea that we want the world to be made in our image and what we think the world ought to be.
[Campbell seemed to agree or at least offered no dissent to this statement of Moyers-again, Smith says the man of system wants to impose his own plan on society, very similar to making the world in your own image]
Campbell put this in a slightly different way when he also discussed the movie Star Wars:
"Here the man (George Lucas) understands metaphor.  What I saw was things that had been in my books but rendered in terms of the modern problem, which is man and machine.  Is the machine going to be the servant of human life?  Or is it going to be master and dictate?  And the machine includes the totalitarian state, whether it is Fascist or Communist it's still the same state. And it includes things happening in this country too; the bureaucrat, the machine-man. "What a wonderful power the machine gives you-but is it going to dominate you?  That's the problem of Goethe's Faust.  It's in the last two acts of Faust, Part Two.  His pact is with Mephistopheles, the man who can furnish you the means to do anything you want.  He's the machine manufacturer.  He can manufacture the bombs, but can he give you what the human spirit wants and needs?  He can't.

This statement of what the need and want is must come from you, not from the machine, and not from the government that is teaching you (emphasis added) or not even from the clergy. It has to come from one's own inside, and the minute you let that drop and take what the dictation of the time is instead of your own eternity (recall Smith says "every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it"), you have capitulated to the devil.  And you're in hell.
That's what I think George Lucas brought forward.  I admire what he's done immensely, immensely.  That young man opened a vista and knew how to follow it and it was totally fresh.  It seems to me that he carried that thing through very, very well" (From The Hero's Journey: Joseph Campbell on His Life and Work by Phil Cousineau).
Here is the passage from Adam Smith where he talks about "furious zealots" (also from The Theory of Moral Sentiments):

"The animosity of hostile factions, whether civil or ecclesiastical, is often still more furious than that of hostile nations; and their conduct towards one another is often still more atrocious. What may be called the laws of faction have often been laid down by grave authors with still less regard to the rules of justice than what are called the laws of nations. The most ferocious patriot never stated it as a serious question, Whether faith ought to be kept with public enemies?—Whether faith ought to be kept with rebels? Whether faith ought to be kept with heretics? are questions which have been often furiously agitated by celebrated doctors both civil and ecclesiastical. It is needless to observe, I presume, that both rebels and heretics are those unlucky persons, who, when things have come to a certain degree of violence, have the misfortune to be of the weaker party. In a nation distracted by faction, there are, no doubt, always a few, though commonly but a very few, who preserve their judgment untainted by the general contagion. They seldom amount to more than, here and there, a solitary individual, without any influence, excluded, by his own candour, from the confidence of either party, and who, though he may be one of the wisest, is necessarily, upon that very account, one of the most insignificant men in the society. All such people are held in contempt and derision, frequently in detestation, by the furious zealots of both parties. A true party-man hates and despises candour; and, in reality, there is no vice which could so effectually disqualify him for the trade of a party-man as that single virtue. The real, revered, and impartial spectator, therefore, is, upon no occasion, at a greater distance than amidst the violence and rage of contending parties. To them, it may be said, that such a spectator scarce exists any where in the universe. Even to the great Judge of the universe, they impute all their own prejudices, and often view that Divine Being as animated by all their own vindictive and implacable passions. Of all the corrupters of moral sentiments, therefore, faction and fanaticism have always been by far the greatest."

Sunday, August 09, 2020

Adam Smith Meets Joseph Campbell

 Campbell wrote the book The Hero With a Thousand Faces, which was one of the inspirations for Star Wars. He was interviewed by Bill Moyers in a six hour series in the 1980s on PBS. That series was called The Power of Myth.

Here is one passage:

"“This is the threat to our lives that we all face today. Is the system going to flatten you out and deny you your humanity, or are you going to be able to make use of the system to the attainment of human purposes? How do you relate to the system so that you are not compulsively serving it? It doesn't help to try to change it to accord with your system of thought. The momentum of history behind it is too great for anything really significant to evolve from that kind of action. The thing to do is learn to live in your period of history as a human being. That's something else, and it can be done.”"
Here is another:
"The world is a wasteland. People have the notion of saving the world by shifting it around and changing the rules and so forth. No, any world is a living world if it’s alive, and the thing is to bring it to life. And the way to bring it to life is to find in your own case where your life is, and be alive yourself, it seems to me."
Adam Smith said something that seemed similar in his book The Theory of Moral Sentiments:
"The natural course of things cannot be entirely controlled by the impotent endeavours of man: the current is too rapid and too strong for him to stop it; and though the rules which direct it appear to have been established for the wisest and best purposes, they sometimes produce effects which shock all his natural sentiments."
Smith also seems to be hinting at the law of unintended consequences. Here is a longer excerpt to see the context:
"But though the general rules by which prosperity and adversity are commonly distributed, when considered in this cool and philosophical light, appear to be perfectly suited to the situation of mankind in this life, yet they are by no means suited to some of our natural sentiments. Our natural love and admiration for some virtues is such, that we should wish to bestow on them all sorts of honours and rewards, even those which we must acknowledge to be the proper recompenses of other qualities, with which those virtues are not always accompanied. Our detestation, on the contrary, for some vices is such, that we should desire to heap upon them every sort of disgrace and disaster, those not excepted which are the natural consequences of very different qualities. Magnanimity, generosity, and justice, command so high a degree of admiration, that we desire to see them crowned with wealth, and power, and honours of every kind, the natural consequences of prudence, industry, and application; qualities with which those virtues are not inseparably connected. Fraud, falsehood, brutality, and violence, on the other hand, excite in every human breast such scorn and abhorrence, that our indignation rouses to see them possess those advantages which they may in some sense be said to have merited, by the diligence and industry with which they are sometimes attended. The industrious knave cultivates the soil; the indolent good man leaves it uncultivated. Who ought to reap the harvest? who starve, and who live in plenty? The natural course of things decides it in favour of the knave: the natural sentiments of mankind in favour of the man of virtue. Man judges, that the good qualities of the one are greatly over-recompensed by those advantages which they tend to procure him, and that the omissions of the other are by far too severely punished by the distress which they naturally bring upon him; and human laws, the consequences of human sentiments, forfeit the life and the estate of the industrious and cautious traitor, and reward, by extraordinary recompenses, the fidelity and public spirit of the improvident and careless good citizen. Thus man is by Nature directed to correct, in some measure, that distribution of things which she herself would otherwise have made. The rules which for this purpose she prompts him to follow, are different from those which she herself observes. She bestows upon every virtue, and upon every vice, that precise reward or punishment which is best fitted to encourage the one, or to restrain the other. She is directed by this sole consideration, and pays little regard to the different degrees of merit and demerit, which they may seem to possess in the sentiments and passions of man. Man, on the contrary, pays regard to this only, and would endeavour to render the state of every virtue precisely proportioned to that degree of love and esteem, and of every vice to that degree of contempt and abhorrence, which he himself conceives for it. The rules which she follows are fit for her, those which he follows for him: but both are calculated to promote the same great end, the order of the world, and the perfection and happiness of human nature.

But though man is thus employed to alter that distribution of things which natural events would make, if left to themselves; though, like the gods of the poets, he is perpetually interposing, by extraordinary means, in favour of virtue, and in opposition to vice, and, like them, endeavours to turn away the arrow that is aimed at the head of the righteous, but to accelerate the sword of destruction that is lifted up against the wicked; yet he is by no means able to render the fortune of either quite suitable to his own sentiments and wishes. The natural course of things cannot be entirely controlled by the impotent endeavours of man: the current is too rapid and too strong for him to stop it; and though the rules which direct it appear to have been established for the wisest and best purposes, they sometimes produce effects which shock all his natural sentiments. That a great combination of men should prevail over a small one; that those who engage in an enterprise with forethought and all necessary preparation, should prevail over such as oppose them without any; and that every end should be acquired by those means only which Nature has established for acquiring it, seems to be a rule not only necessary and unavoidable in itself, but even useful and proper for rousing the industry and attention of mankind. Yet, when, in consequence of this rule, violence and artifice prevail over sincerity and justice, what indignation does it not excite in the breast of every human spectator? What sorrow and compassion for the sufferings of the innocent, and what furious resentment against the success of the oppressor? We are equally grieved and enraged at the wrong that is done, but often find it altogether out of our power to redress it. When we thus despair of finding any force upon earth which can check the triumph of injustice, we naturally appeal to heaven, and hope, that the great Author of our nature will himself execute hereafter, what all the principles which he has given us for the direction of our conduct, prompt us to attempt even here; that he will complete the plan which he himself has thus taught us to begin; and will, in a life to come, render to every one according to the works which he has performed in this world. And thus we are led to the belief of a future state, not only by the weaknesses, by the hopes and fears of human nature, but by the noblest and best principles which belong to it, by the love of virtue, and by the abhorrence of vice and injustice."

Saturday, August 08, 2020

Do You Know the Difference Between Being Rich and Being Wealthy?

To one man, money was a plaything. To another, it was a possibility. Guess which one came out ahead in the end?

By Jason Zweig of The WSJ. He discusses investing, consumption and the book “The Psychology of Money” by Morgan Housel (reminds me of the book Money and the Meaning of Life by philosopher Jacob Needleman).

Excerpts from the article:

"Money isn’t primarily a store of value. Money is a conduit of emotion and ego, carrying hopes and fears, dreams and heartbreak, confidence and surprise, envy and regret."

"Investing isn’t an IQ test; it’s a test of character."

One person "could defer gratification and had no need to spend big so other people wouldn’t think he was small. From such old-fashioned virtues great fortunes can be built." (reminds me of the concept of conspicuous consumption-see related post linked below).

"Analyzing two of the biggest stock-market winners of the past few decades, Mr. Housel says Netflix Inc. returned more than 35,000% between 2002 and 2018. Monster Beverage Corp. gained more than 300,000% from 1995 through 2018.

Yet, along the way, many investors quit; each stock spent at least 94% of the time trading below its previous all-time highs."

Investors "should regard it (volatility ) as a “fee,” the unavoidable cost of participation." "patience can make it bearable."

"Warren . . . accrued at least 95% of his wealth after age 65. (The chairman of Berkshire Hathaway Inc. will turn 90 at the end of this month.)

Had Mr. Buffett earned his world-beating returns for only 30 years rather than much longer, he would be worth 99.9% less"

"Housel . . . draws a critical distinction between being rich (having a high current income) and being wealthy (having the freedom to choose not to spend money).

Many rich people aren’t wealthy, Mr. Housel argues, because they feel the need to spend a lot of money to show others how rich they are. He defines the optimal savings level as “the gap between your ego and your income.” Wealth consists in caring less about what others think about you and more about using your money to control how you spend your time.

He writes: “The ability to do what you want, when you want, with who[m] you want, for as long as you want to, pays the highest dividend that exists in finance.”"

Related post

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!)

Friday, August 07, 2020

Why 536 was ‘the worst year to be alive’

By Ann Gibbons, contributing correspondent for Science. Volcanoes erupting put ash into the atmosphere, causing lower temperatures that hurt farming. Interesting article that also goes into the economic impacts. Excerpts:

"Ask medieval historian Michael McCormick what year was the worst to be alive, and he's got an answer: "536." Not 1349, when the Black Death wiped out half of Europe. Not 1918, when the flu killed 50 million to 100 million people, mostly young adults. But 536. In Europe, "It was the beginning of one of the worst periods to be alive, if not the worst year," says McCormick, a historian and archaeologist who chairs the Harvard University Initiative for the Science of the Human Past.

A mysterious fog plunged Europe, the Middle East, and parts of Asia into darkness, day and night—for 18 months. "For the sun gave forth its light without brightness, like the moon, during the whole year," wrote Byzantine historian Procopius. Temperatures in the summer of 536 fell 1.5°C to 2.5°C, initiating the coldest decade in the past 2300 years. Snow fell that summer in China; crops failed; people starved. The Irish chronicles record "a failure of bread from the years 536–539." Then, in 541, bubonic plague struck the Roman port of Pelusium, in Egypt. What came to be called the Plague of Justinian spread rapidly, wiping out one-third to one-half of the population of the eastern Roman Empire and hastening its collapse, McCormick says.

Historians have long known that the middle of the sixth century was a dark hour in what used to be called the Dark Ages, but the source of the mysterious clouds has long been a puzzle."

 ""a cataclysmic volcanic eruption in Iceland spewed ash across the Northern Hemisphere early in 536. Two other massive eruptions followed, in 540 and 547."

"the summers around the year 540 were unusually cold"

"When a volcano erupts, it spews sulfur, bismuth, and other substances high into the atmosphere, where they form an aerosol veil that reflects the sun's light back into space, cooling the planet."

"A century later, after several more eruptions, the ice record signals better news: the lead spike in 640. Silver was smelted from lead ore, so the lead is a sign that the precious metal was in demand in an economy rebounding from the blow a century before, says archaeologist Christopher Loveluck of the University of Nottingham in the United Kingdom. A second lead peak, in 660, marks a major infusion of silver into the emergent medieval economy. It suggests gold had become scarce as trade increased, forcing a shift to silver as the monetary standard, Loveluck and his colleagues write in Antiquity. "It shows the rise of the merchant class for the first time," he says.""