Friday, February 27, 2015

Liberalism and Racism

In response to: http://opinionator.blogs.nytimes.com/2015/02/27/how-liberalism-and-racism-are-wed/?_r=0

The first thing is that the author is confusing liberalism as a philosophical concept of Locke, Mill, and Rawls with the reality of the United States' law enforcement system. The act of stereotyping people based on their color of their skin is not a liberal idea, and the act of the stereotyping that these groups do is not condoned but actually condemned in the writings of these great philosophers.

The call for equality and universal protection for all is an ideal, and is something that social activists (myself included) have pushed for for hundreds of years. The beauty of this ideology is that opposed to the major alternatives (particularly Marxism, and Realism in International Relations) it sees a possibility of a world where people can work together and cooperate as opposed to fight by becoming more dependent on one another so they want other people to do better.

In a classroom setting, let's take the two fundamentally opposed views. In the liberal view there will be different students working together in order to learn the material. If one student doesn't understand the material they will help their classmates with the concept so that everyone in the classroom can learn together and when one individual falls behind the rest of the class can lift that person back up to where the others are, and then if that individual moves ahead in an area they can then help their classmates again understand the concept so that their overall average knowledge will be better than the alternatives. This is the view proposed by Locke, Mill, and Rawls among other great liberals.

Marxism is the major alternative. Marxism, put very simply is the theory that history can be defined as the conflict between two different classes (when Marx was writing there was no middle class) stretching back to the beginning of agriculture. In the same classroom example we will see the students who pick concepts up easiest and understand the material better are the bourgeoise and the other students are the proletariat. Marx's diagnosis then is not for the bourgeoise to lift up the proletariat but for the proletariat to start a revolution and tear down the bourgeoise students, an example of which in the real world is the vicious bullying that can occur in classrooms at all ages.

In this way, local police departments that are acting are seen as not acting within the framework of liberalism but within the framework of Marxism which sees that there must always be conflict between the two classes! Liberalism and Marxism should be seen as ideals, and the systems which claim to be one or the other may have certain aspects in places but not others of these very large schools of thought.

Another common mistake that this individual in this article is making is reading everything that the authors say as being literal. I am working through Thomas Hobbes' Leviathan right now (I finished the first book and am slowly working through the second among all the other things I am working on and reading) as a hobby and at some point through the book the way he was talking about what he was saying I realized that it is not a literal work but actually sarcastic. The parts of The Prince I have read as part of some classes has made it clear to me as well that Macchiavelli was writing in a time where outright saying "Liberty for all mankind" as Locke would do 200 years later would have gotten him killed. But living under the de Medici family who allowed more expressive art than any other state in Europe at the time gave him the freedom he needed to write in a sarcastic manner saying everything that a tyrant would do that careful readers will realize through important snippets is an act in absurdity. Today with modern liberal philosophers starting with Thomas Paine and further expanding with John Stuart Mill we see these philosophers take these ideas which were manifesting under Locke and bring out the central premise of these three earlier philosopher and bring them to their natural conclusion.

One cannot read moral philosophy of this era as literal and must be careful to look for sarcasm and particular turns of phrase which are there to disguise their heretical work (for the era) from the intellectually and morally impoverished minds of the monarchs of the era but the true meaning of these texts are written to come out to intellectuals so their ideas can expand in those circles. This is the case until American Independence.

When it comes to John Locke's authorship of the Fundamentals of the Constitutions of Carolina were written in 1669 when he was 37 years old. He didn't start writing his great philosophical tracts until 1689, a full 20 years later. To me this shows that in 20 years he grew as a philosopher and seeing the contradictions between his earlier views and later views that he appears to have changed his mind. This can also be seen in his religious views which started in Calvinism when he was young but by the 1690s he was clearly a deist or Arian. Locke's life (as this author should know) did not live a stagnant life where he was born and by the age of 18 had all of his liberal views figured out and never changed, but evolved substantially over his adult life. Would John Locke have written that Constitution as it was with his major change of moral and religious opinions if it had been done in the 1690s? Given his complete turnaround of almost every issue I suspect he wouldn't have.
Was he racist as a 37 year old? Yes. Was he racist in his 60s? His writings heavily suggest that he grew out of it.

In short, I found this article to be extremely flawed in numerous aspects as I have outlined and doesn't have the type of philosophical underpinnings in the writings (with the one exception of a writing Locke wrote 20 years before he started his philosophical work) needed to condemn an entire school of thought. Reading later liberal philosophers, the most important of which she completely ignores shows that this is a very weak case and a misrepresentation of a major school of thought.

Wednesday, January 21, 2015

Decriminalize all drugs

One of the biggest problems with the American justice system is how we treat drugs. We treat drugs like we would someone killing another person, locking them away forever, when the person they are hurting is themselves. The issue with this however is the person who kills another has many different reasons he or she might do it (mental illness, absolute rage, there are many possibilities, and that is not what this article is about)  but when it comes to people using drugs it is due to addiction. Addiction is solely a medical issue and needs to be treated as such. By criminalizing drugs we make it so that people are scared of reaching treatment because they can be arrested for doing so. This makes as much sense as arresting people for having cancer, which of course sounds absurd because it is.

We need to make it so anyone and everyone who seeks treatment for all drugs will be completely excused from using said drugs and provide the mental health services to all people who need them for free. This will encourage people to seek treatment and significantly reduce the demand for drugs, which will reduce the profitability of trafficking illegal drugs making many cartels go out of business. This is the only solution which respects the worth and dignity of all people, and we need to reform our drug laws in this way.

Monday, January 12, 2015

Wages aren't moving quickly... as normal

Part 1: Description of the issue
The New York Times today wrote an article about how wages are not currently rising with the unemployment rate being now at a 6 year low, currently at 5.6% for December. They described how the Federal Reserve is considering raising interest rates which will (and this is true) make it more expensive for small businesses to borrow and slow the recovery, to prevent it from overheating, and this will (also true) lower the demand for labor which will keep wages stagnant.

But the most important detail they left out is why the wages are staying low. The reason is fairly simple and has to do with an economic concept called "sticky wages" which was one concept envisioned by John Maynard Keynes at the beginning of the 20th century to help explain why the 1930s happened how it did. Sticky prices means that it takes time for prices to adjust as the economy changes, which means in the short run we observe prices can be too low or too high for a period of time as the economy. This is why wages aren't moving yet. This concept has been observed in all markets.

This is why we are currently seeing wages stay low. This is also why the Federal Reserve needs to keep interest rates low for the time being which will incentivize more small businesses to open, which will increase the demand for labor, which will increase the wage sooner than later. Small businesses will compete for the best workers which will mean that the best will pay more to the best workers which will lift the average wage, increase purchasing power for the average family, and help fight income inequality. If the Federal Reserve makes it too expensive for small businesses to open and borrow we will see the market cool too early. So far they have done this which is the right strategy.

Part 2: Solutions
This of course happens over the very long-run, and (as an educated guess) I wouldn't expect the wages to start naturally rising for another 3-5 years personally at this point. If we wanted to see the wage rise faster than that what we would want to do is pursue the following policy options which have the fewest negative side effects:
  1. Increase access to small business loans and grants from the Federal Government. More businesses means each individual business will have a smaller effect on the average wage which will push it up. It will give workers more bargaining power relative to businesses. This benefits people of all professions. (On our supply and demand diagram the demand for labor shifts to the right, pushing wages up and incentivizing people to start working)
  2. Improve our labor laws to make it more easy for workers to unionize. If businesses are able to form chambers of commerce, unionizing needs to become standard practice again. This again helps people of all professions. (On our supply and demand diagram supply will be more flat, making wages more steady and higher in each profession)
  3. Stop protecting large businesses from failure, and enforce our anti-trust laws. This makes it so each firm will have a smaller impact on the wage (forcing it up) and mean that the impact of a failure of any one firm in the future will have a smaller impact on the economy. Healthy economies have many businesses competing against each other in a competitive market, which pushes wages up (which directly makes a more equal society when it comes to income) and makes it so the failure of any one firm will not put the economy in great danger. In the short run the failure of one of these massive firms breaking up will be huge, but insuring that these large firms will go through restructuring and be reorganized as many smaller firms when they go belly up will be healthier for the economy, and have a direct effect on wages. (Demand becomes more vertical, meaning that they have a smaller impact on wages)
These are all free-market reforms and there is a very good reason for this. The first is deadweight loss which is observed any time there is a price floor (such as a minimum wage) or similar measures. I link to the Wikipedia article so readers who do not know about this can read about it, it is a fairly straightforward concept which naturally falls out of the standard analysis and is observed in reality. In the labor market deadweight loss is observed as unemployment, so in the long-run what we want to do is encourage policies which change the overall demand for labor to move in the direction towards higher wages. All three of the policy recommendations I have follow this logic, and are long-term solutions.

The other reason why I prefer these solutions is that they are less susceptible to politics. There is definitely a need for government in economics, and this has been understood for as long as economics has been around. The marriage between economics and politics is as old as both of the fields and the two will never be fully separated. But still, when making policies we want to have policies which would take years or decades to fully reverse so that if a government were to change the law (like the Republicans are currently trying to do with Dodd-Frank) it will take a long time to see the negative impacts, just to minimize human suffering so that there is a chance to have enough time to reverse the policies after the next election before the full negative consequences are observed.

Also, while minimum wages definitely help people at the very bottom of the income distribution it has a more or less negligible effect for workers who make above the new minimum wage, is easily modified by legislatures to be reduced or eliminated (ending the effects extremely quickly), and most importantly creates deadweight loss in the form of unemployment, both of which are major issues all economists try to avoid. More market-based reforms have the bonus of not having either of these very real problems.

Should we eliminate the minimum wage? Given the weakness of American unions (partially self-inflicted, partially not) this would be a huge mistake. Having poor unions significantly reduces the negotiating power of average workers with larger firms and means that if we didn't have the minimum wage we would see a lot more government benefits going to workers and this would exacerbate income inequality. In the long-run the goal is to have unions have the power they need to effectively work with employers to raise their purchasing power. With such an economy in the future the real effect of the minimum wage would be negligible and not save us nearly as much public funds for benefits as it currently does. We are unfortunately not at that stage at the moment.

We want to get more specialized work force, which has the advantage of making workers more productive and since there is a smaller supply of potential labor as labor becomes more specialized pushes wages up significantly. This effects everyone in the economy, and needs to be our long-term goal. The three policy recommendations above are a start to such an economy with minimal negative side effects.

Saturday, December 27, 2014

Economy of Georgia, end of 2014

The Republic of Georgia is a country I personally have a very close connection to, and have visited since I have friends there through scientific research. As a young political economist, I am extremely interested in their development and how to see their economy grow to a point where they can join the European Union and have a better life for all Georgians. While looking at their economy to see where they are standing relative to other European States, I noticed that their GDP growth in 2013 was only around 2%, while the annual average over the last 10 years has been between 5% and 6% with the exception of 2008 due to the war with Russia.

2013 in Georgia saw a rapid decrease in foreign investment as Georgian Dream came to power after 8 years of being an almost single-party state in its parliamentary make-up, although there were opposition parties which competed in elections and received some seats. This saw a rapid decrease in foreign investment which hurt the economy of Georgia and caused the rapid decline in their GDP growth (although the economy was still growing). 2014 has however seen Georgia return to its historic long-run average and this will hopefully continue as time goes on.  This is from a monumental shift in the Georgian economy from Foreign Direct Investment to more domestic sources, which can be seen how their GDP growth in 2014 returned to it's long run average but FDI stayed constant.

Georgia has an unusually good legal foundation for economic growth. They have an extremely good Ease of Doing Business Index rating, on par with the most developed economies of the world. These reforms which Saakashvili pushed for attracts foreign capital and is what has allowed them to grow so rapidly. Another good thing is their prices have been extremely stable over the last few years, which is highly unusual. Another good thing is Average Monthly Earnings have risen every year since 1999, which stimulates short-run consumption and economic growth in the most effective way possible.  Investment as well has also increased every year for which there is information, which is essential for long-run growth so Georgia will have the capital it needs over the next few decades.


Georgia is in an unusual status-quo which is good for long-run growth. As time goes on they will continue to get to where they need to be, and will hopefully get to join the European Union in 10-20 years from now at the longest extent. The future looks bright for Georgia.

Additional References:
http://www.forbes.com/sites/katyasoldak/2013/10/03/georgias-politics-shoot-its-economy-in-the-foot/

http://en.wikipedia.org/wiki/Economy_of_Georgia_%28country%29

Friday, December 5, 2014

My reading list

I am currently undergoing a time of education on top of my senior year in college right now (my major is economics and political science) where I am listening to and reading some great books of philosophy. The following is the list of what I am going to read. Suggestions for books I should read which are not here are appreciated!

To be clear, this list is trying to be inclusive of most points of view, but there are a handful of schools I am not interested in reading, one is existentialism (which I read some of in high school and hated) and anything having to do with or influenced by Ayn Rand. There is no Subjectivism on this list either. It also is focused on post-Renaissance European/American philosophy. I hopefully will do another survey of Chinese philosophy in the future, and hopefully Indian as well. It is also focused on political philosophy. I've tried to include at least one book from every major philosopher. Some such as Mill, Kant, and Rawls are too important and influential to pick one so I've tried to pick their most influential books. As time goes on I will 
  1. The Prince By Niccolo Machiavelli (1513)
  2. Essays by Francis Bacon (1597-1625)
  3. Leviathan By Thomas Hobbs (1651)
  4. Principles of Philosophy by Rene Descartes (1644)
  5. Two Treatises of Government by John Locke (1689)
  6. A Treatise of Human Nature by David Hume (1739)
  7. Candide by Voltaire (1759)
  8. The Social Contract by Jean-Jacques Rousseau (1762)
  9. Critique of Pure Reason by Immanuel Kant (1781)
  10. The Federalist Papers by James Madison, John Jay, and Alexander Hamilton (1787/1788)
  11. Critique of Practical Reason by Immanuel Kant (1788)
  12. Critique of Judgement by Immanuel Kant (1790)
  13. Essays by Ralph Waldo Emerson (1841, 1844)
  14. Walden by Henry David Thoreau (1854)
  15. A General View of Positivism by Auguste Comte (1856)
  16. On Liberty by John Stuart Mill (1859)
  17. Utilitarianism by John Stuart Mill (1861)
  18. Das Kapital by Karl Marx (1867)
  19. The Division of Labor in Society by Comte (1893)
  20. The Open Society and Its Enemies by Karl Popper (1945)
  21. Philosophical Investigations by Ludwig Wittgenstein (1953)
  22. My Philosophical Development by Bertrand Russell (1959)
  23. The Wretched of the Earth by Frantz Fanon (1961)
  24. Anarchy, State, and Utopia by Robert Nozick (1974)
  25. Discipline and Punish by Michel Foucault (1975)
  26. A Theory of Justice by John Rawls (1971)
  27. Political Liberalism by John Rawls (1993)
I have already read On Liberty and Utilitarianism by John Stuart Mill, and they have greatly effected the way I see politics and the world. I have also read The Wretched of the Earth and Discipline and Punish so I will just skip over them. I include them for people who are interested, and I recommend them all.

I also thank the people who wrote these two very different lists giving me some ideas on which political philosophers to include: http://leiterreports.typepad.com/blog/2009/05/the-20-most-important-philosophers-of-the-modern-era.html and https://bryannelson.wordpress.com/2009/08/24/the-20-most-important-philosophers-of-the-modern-era/

Monday, November 24, 2014

Police violence

The recent rial of Darren Wilson is a very sad event for our country, but hardly an unusual event. Reading the story of the encounter Michael Brown was definitely had problems (since he had just stolen a box of cigars less than an hour before the shooting) and Darren Wilson overreacted. He didn't have to shoot to kill, there are other ways to make sure someone who is a suspect (as Brown definitely was) can be held in custody and tried. This is definitely one of those cases.

When it comes to police shootings in the United States the biggest issue is that they too often go right to shooting people where they will die on the spot. This was the biggest issue with the latest publicized story, and is truly a tragedy. The saddest thing about all of this is this happens every day.

Wikipedia has to organize police shootings in the United States by month because there are so many. In comparison, there is only one page for police shootings in Canada and only one for Germany. The different has many factors, and they have to do with economic factors as well as the social systems set up in this country.

The first problem behind this major issue is the poverty of people (predominately African American) who are shot more than any other group. http://www.motherjones.com/politics/2014/08/police-shootings-ferguson-race-data

The first goal of all police officers should always be to bring suspects in alive to minimize casualties. It is far better to bring someone in if you are suspicious they have committed a crime than to end their lives on the spot. People can and should be rehabilitated, it is wasteful to not do this.

Fivethirtyeight points out piece of the puzzle which is the rate of indcitments is far lower for police officers than other people. Such a difference is almost certainly due to less than honorable factors. http://fivethirtyeight.com/datalab/ferguson-michael-brown-indictment-darren-wilson/

When it comes to getting the biggest picture possible, there is no searchable FBI database. This is the most insulting and infuriating thing of all about this issue in my opinion. Such a massively important issue requires that we have good data so we can be certain certain case fit within the general trend so we can know the general trend. This is necessary for good analysis along with ensuring we make the right policy and appropriately understand what is going on in our country. We need to understand the big picture of these issues, and in order to have the big picture accurately means we need to have the pertinent details for the issue. gawker

Despite this failure of our system (which should be remedied ASAP) what data social scientists do put together in surveys of police shootings all demonstrate that people are far more likely to be shot if they are African American than if they are any other race. This is an absolute tragedy and we need to find ways to end this once and for all. Mother Jones

We have a lot of work to do in order to make our system work for all people. We need to finally be able to put together the big picture in one master database in a Federal agency so everyone can know the truth and put together the demographics to find trends. This will move forward to hold all people in the system accountable for their actions and lead to a better society.

We need to build a great society and fight poverty in communities across this country, because it is the right thing to do.

Thursday, November 13, 2014

Bank regulation proposal

  1. A bank which fails will be taken over by the FDIC regardless of size, the Federal Reserve will have the full authority to print money as needed to cover deposits. There will be no bailouts of any company.
  2. A bank which is shut down that is within one state will be handled by the Federal Reserve bank it is located in and will be bought out by other bank(s). It may only be bought out by banks which do not have interstate operations. This is to keep diversity within the financial system with lots of lending institutions.
  3. A bank which is shut down which crosses state lines will be divided by state, and be bought out by banks which do not have interstate operations. This is to insure diversity of the banking system and prevent any one bank getting too big to be a systemic risk. It will also increase the number of banks which is an essential part of a fully functional market.
  4. Banks will be allowed to form in any region based on the credentials of that one bank’s operations regardless of the other banks operating in that region. A historic problem has been restricting the growth of the banking sector which has stifled the number of banks in this country from what we can have. One key to a successful market is having lots of sellers and this will ensure that will occur.
  5. Current regulations that require banks to meet certain thresholds of reserves will continue and be more thoroughly enforced. Banks will have an extra penalty on loans they cannot collect on that will be paid into the FDIC fund.
  6. A bank must retain at least 10% of the loans they make on their books. A bank may not sell a package of mortgages or other loans without information on the creditworthiness of the people and businesses in the package. The failure to do so after a long time will make it so they must pay higher interest rates when borrowing from the Federal Reserve and will be fined proportionately to the bank's asset value.
  7. A bank must leave all of their investments on their balance sheet. If the regulator discovers a bank left investments off of its balance sheet for 3 different inspections will have its charter revoked and be treated like a failed bank. Every member of the Board of Directors, the CEO, CFO, and other people in charge of leading the bank will be charged with fraud as a felony and serve time in prison.
  8. The FDIC will have full authority to invest and use its funds as needed. There is no reason not to use these funds and have them grow to create a strong fund.
  9. Interbank lending will be fully insured up to 2% of deposits for all banks, so when one bank fails it won’t spread to other financial institutions. This is so future bank crises won't spread. They spread because banks lend to other banks, so if one bank fails and another bank has a large amount of deposits in another this creates an imbalance in the bank's balance sheet which is how banks fail. This is meant to protect well-functioning banks from a few bad apples because our economy is (and should be) highly interconnected.
  10. Stricter regulation of credit rating agencies to ensure they accurately rate financial tools. The regulator will have full authority to punish credit rating agencies when they inaccurately rate financial instruments.
This is because if we bail out banks we create a problem that they cannot lose if they make bad decisions and will then take more risk than they can handle (Economists call this moral hazard). We need to keep the managers of banking institutions accountable to their actions, and this requires that we do not bail out banks when they start to fail because it means they will be more likely to put their institutions at risk. We need to protect depositors money, while still keeping the managers of the banks responsible for their actions. Otherwise we will have more banking crises because they will take more risk than they can handle which will create a larger financial crisis.

The other problem with this is the key to a successful free market is having a lot of sellers of goods and servies, and bailing out big banks creates a concentration of power where there should be many different types of banks. This policy outline aims to create a more diverse banking sector which will benefit lenders, borrowers, and also benefit banks because there will be more options to borrow with one another which leads to a more stable financial system. Bailing out banks defeats this important piece of the economy which harms everyone when lending and borrowing freezes.

I have also omitted the major parts of Glass-Steagall legislation (restricting types of banking and where banks can be formed) because it restricted competition between banks and restricted consumer choice. It also had the negative impact of increasing the price of loans for consumers without significantly stabilizing the financial sector. No other country in the world has ever done this type of legislation, and the proposals outlined above are designed to get the stability of banking without the costs of high lending fees and lack of choice that Glass-Steagall created. It is a very simple equation in economics, if you reduce supply this will increase price and this is always bad for consumers.

To be clear, this isn't about being pro-bank or anti-bank. This about ensuring that banks have the resources they need to operate without being destructive to the financial system, and ensure that borrowers and depositors are protected. In this way this plan tries to strike a balance between policies which are pro-lender, pro-bank, pro-borrower, and pro-investor. I think I have made the proper balance for a stable financial system which will lead to a stronger economy for America and protect everyone regardless of income level of profession.