Fri, 24 Mar 2006

Senators and Households

Max Clark points out that American, both the ones who run the government and the ones that run the PTA, are prone to short-term thinking.

If you have paid any attention to the news lately you should be aware that the Republican controlled Senate is discussing changing Senate rules to eliminate the filibuster.
What are they planning to do when the Democrats are back in power? And here is where short sidedness takes over. The answer is nobody cares. Why? Because by the time it happens it won?t be their problem.

He points out that a similar short-sightedness is plaguing those buying homes with ARMs and interest-only loans at a time when long-term interest rates are at historical lows.

Maybe they think the end of the world is near, so what the hell.

culture | Permanent Link

Sun, 12 Mar 2006

Zopa, Consumer Lending

The latest newsletter from Springwise, which lists new businesses from around the world, mentions Zopa, which they describe as "eBay for money". The concept is fairly simple.

Zopa is a place where creditworthy people who want to borrow money can get together with people who are happy to lend it to them. And because there's no middleman - the borrower just pays a 1% exchange fee to Zopa up front - both get a great deal.

They pool loans together so each lender's loans are distributed among 50 or so borrowers. Lenders can decide what type of debtors they want to lend to based on the debtors' credit.

Zopa is only open to UK residents. I wonder how such a system would work in the states with each state having different lending laws. It's an interesting idea, and easier than standing outside the check cashing store looking for customers.

business » ideas | Permanent Link

Creative Talent Tax Exemption

I had to pay business tax to the city of Los Angeles last month since I receive 1099 income. The city took $600 from me, but it turns out that "creative artists" who earn up to $300,000 are exempt from the business tax thanks to the lobbying of the Screen Writers Guild. I should move to New Hampshire.

business » taxes | Permanent Link

Keynes Was a Socialist

Brad Delong (via Calculated Risk) has posted part of Paul Krugman's introduction to Keynes's General Theory of Employment, Interest and Money. Having not ready General Theory yet, I'll have to comment on Krugman's interpretation of it.

Stripped down, the conclusions of The General Theory might be expressed as four bullet points:

  1. Economies can and often do suffer from an overall lack of demand, which leads to involuntary unemployment
  2. The economy's automatic tendency to correct shortfalls in demand, if it exists at all, operates slowly and painfully
  3. Government policies to increase demand, by contrast, can reduce unemployment quickly
  4. Sometimes increasing the money supply won't be enough to persuade the private sector to spend more, and government spending must step into the breach

Sorry if my comments are naive; I am but a budding student of economics.

1. How can an economy suffer from an overall lack of demand? The overall demand in an economy is made of up of individuals' demand. Who is Keynes to say that my demand is too high or low? The most I could demand today is limited by my productivity since birth plus any wealth gifted to me. If I decide for forgo consumation today for tomorrow, no one has the right to demand that I trade with them today.

2. If there isn't enough demand for what I can supply, I must find something else to supply. For example, if I decide that the demand for my services as a computer consultant are not sufficient to generate the income I desire, I might go back to school to study economics. (Yes, I know I'm probably deluding myself to think that my services as an economist will be more valuable to society, but at least it's fun.)

3. How can government increase demand and reduce unemployment quickly? Let's see. They can print out some money. Of course, they have to do this sneakily. If they were to announce, "Tommorrow, we are going to increase the money supply by 1%," everyone would increase their prices right away (except for those lenders and employees with dollar-denominated contracts; they're screwed). Instead, people must be caught by surprise that they now have come into more money, thinking that it must be due to their prowess and innate brilliance, so they go out and spend their new dollars of spinning hubcaps and macaws.

4. Or, rather than just injecting money into the economy, the government itself can go shopping. Of course, since the government doesn't actually produce anything, it can only spend the wealth that it confiscates from its citizens. Now, they might not take that money from you today, but they'll get you for it later. And to make matters worse, when the government goes out to Walmart to spend some money, they're competing with you, and thus forcing prices up.

economics | Permanent Link

Thu, 09 Mar 2006

Cheating with is a service schools can use to detect plagiarism. Students submit their papers to, in MS Word format, I guess, and it analyses the text for plagiarism. Here's how the company describes it:

The industry's most advanced search technology that checks papers against our in-house copies of both current and archived internet content and our proprietary database of millions of previously submitted student papers.

My Economics professor told us an amusing story this morning about She is on a committee that was evaluating using the service. Going through a demo of the service while on the phone with a rep from the company, she asked what happens if the student hides nonsensical characters within the text by replacing whitespace with characters in a white font. She went ahead and tried it with the sample plagiarized poem the company provided. Lo and behold, the poem was reported as not being plagiarized. Despite one professor's continued desire to use this $5,000 service, the committee opted not to.

school | Permanent Link

The state is that great fiction by which everyone tries to live at the expense of everyone else. - Frederic Bastiat