Broken Windows Fallacy

Modern Economic theory is based on a well-known fallacy, the broken window fallacy. Here is how its originator  Frédéric Bastiat in his 1850 essay Ce qu'on voit et ce qu'on ne voit pas (That Which Is Seen and That Which Is Unseen) describes it:

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

In other words chaos and loss looks good, if you ignore the “opportunity cost.”  This is common in a lot of the defense expense around the military. We must build the F-22 fighter to defeat the Soviet menace, never mind that there is no Soviet menace, never mind that there are alternatives that are cheaper. This increases our defense costs. It is the jobs that the F-22 brings that trumps everything. But if the money for the fighter was not taxed from taxpayers they would have money to spend on other things. That would produce more jobs than the fighter production would. 

It actually does not matter if there is actually a threat. It is good to waste money to prepare for space aliens! Then all our problems would be solved! Sometimes you cannot make this stuff up. 

Yes, you too can prepare for the next alien invasion or the next zombie apocalypse, and at the same time end our economic crises. Yes, according to modern economic theory you are ahead if you hire one person to dig a hole, and hire another to fill it in! Jobs! Jobs! Jobs! What is ignored is what the money would have done if it remained in the private sector: Production that would produce jobs that last. I think that Snoop Dog needs a Nobel Prize for his contribution to music in his video, "I Want To Make You Sweat." That makes about as much sense as Krugman and Obama's prizes. 

I bet you did not know that taxing people to produce welfare benefits will magically produce more jobs than the tax removes. It is magical! 

I have no objection to this spending, I would say that it is a necessary part of our society, but this is a COST for the society, not an asset. 

Is it any wonder that we are in a crisis with a genius like this advising Obama?

Maybe Gary Oldman has a future in the Obama administration.

The Scum Also Rises

I was looking at the blobs of cream in my non-homogenized Russian milk in my coffee and I got to thinking about society. Naturally we want our leaders to be the cream of our societal milk. The best and brightest bravely leading us into the new millennium. But looking at business, government, and our churches I would be blind if I did not notice the crap floating in our societal milk. 

When I think of this in the business world I think of Dilbert.

 

I think all of us identify with Dilbert. His boss is clueless and not too bright. His coworkers lazy and disingenuous. I chose this cartoon because it identifies a problem we all have. Doesn't anyone see the problems? Is anyone listening? It does not matter. We need to do what Dilbert does, do our work in our cubicle and hope for the best. To be gainfully employed we may need to be in the system, but we can avoid being of the system. 

Our government is the same—people being a part of the system and enforcing its edicts even if they make no sense. Banning lemonade stands, forbidding soldiers from farting, not allowing children to ride their bikes to school, yet having no seat belts in the commanded buses, or illegally arresting a mom for REFUSING to give her daughter drugs, all these kind of stories lead the rational to consider that government has become irrational. I am concerned that voting is to be a part of the system that is corrupt, and it will corrupt us as well. If I am given the cream to vote for, I will vote; but voting for floating crap? I will pass.  

Surely our churches are not corrupt and not a part of the system? I suppose it depends on the church. Ever notice the flag pole outside the church with the "Christian" flag and the American flag proudly waving? (BTW where did the "Christian" flag come from?) Which is on top? If your church has the American flag on top I suggest you run, not walk, to the exit. 

Here is how one blogger put it:

When the American flag is brought in leading that procession, with the Christian flag behind it, there is a problem. At a church I recently spoke at, the flagpole in front of the church had both flags flying, with the American flag on top. Problem, at least in terms of what the symbols are saying. 

Flag etiquette is clear that this is proper, but for Christians, it is symbolically blasphemous. In fact, when the flag is used in any way other than as a passive part of sanctuary decoration, symbolic contradictions almost always emerge. Pledges, salutes, and so forth are close to acts of “veneration.” (Those who criticize Catholics for bowing, etc. to statues might want to take pause and thing about the parallels.)

It is bad enough that in many churches the American flag is placed in a position of honor and worship in the sanctuary, even if that place is not in a symbolically superior position.  What message are we saying? Do we intend to say it?

I remember the two-week training session that I received when I was a member of a denomination. It was important that we "lay" speakers learn to conform to speak properly. The message that Saturday was given by Ron Dart, whom I have mentioned before and is in my links. He has probably influenced me more than any other teacher. 

There was a man there that we had all noticed, it was hard not to notice someone in stereotypical prophet garb—a staff, a robe and an impressive beard. He jumped up, pointed at the flag in the sanctuary and said "Ron, why does the Church worship the Eagle?" All of us trainees were shocked and stunned with inaction. But the founder of our denomination, well known for his patriotism, leaped up and escorted the gentleman out. None of us considered the "prophet's" question. It was a legitimate question. Why does the church worship the eagle? 

I have felt for years that I could filter out the scum from my milk and everything would be fine. Lately I have come to understand that while I can get most of the scum from the milk, to continue with my analogy I began with, the milk is still poisoned. Do you really want your milk to have unseen, but still present, scum? This is what will inevitably happen if you become a part of the system that God has set us here on the earth to fight. 

It would be nice if it was the cream that always rose to the top, but alas, the scum also rises. 

Bush’s Legs

Earlier in the week Elena and I walked to the store to buy "Bush's legs." This blog post is my thoughts as we walked. 

The "tragedy of the commons," as it is often called, is what happens when no one owns something—it is misused. This was evident everywhere as we began our walk. Since no one owns the outside of the buildings at my mother-in-law's apartment, they are in disrepair. The inside of these apartments can be quite nice, such as the one where my wife's childhood friend Natalie lives. My mother-in-law's apartment is better than most, as we help her financially. But it wouldn’t be, if she had to do it herself, on her pension of $200 a month. You can thus imagine that the average apartment needs work on the inside too. 

There is almost no landscaping. If there was an apartment association, no one would pay the dues. But what seems troubling is the moss that grows on the building at the entrance. Sunlight does not always reach the bottom level between the buildings. We are thinking the dampness is causing our daughter Stacy to cough. 

There is some public art work—plastic bottles cut to resemble flowers, and an old tire cut up to represent a bird. Whole tires are laid on the ground as planters, but nothing was planted in them. This sounds worse than it looks. 

We walked by the place I mentioned in my first blog post about my trip, a trash dump. What the authorities did was brilliant. Rather than fight the people, they put in dumpsters. This is a great improvement, although they do not empty them often enough. 

The grocery store itself was not as clean as an American would like. They were cleaning it while we were there. Often this would be done before opening, but not here in Russia. The mix of products is different than I am used to. A lot more alcohol and candy—and a lot less fruits and vegetables. 

The fruit would not pass muster in an American store. It was bug marred. But this got me to thinking. Which is better: the American approach to fruits and vegetables—picking the fruit before it is ripe, hauling it 1,000s of miles, and spraying the heck out of it to achieve that pristine look? Or is the Russian approach better—the food is grown locally in season and not sprayed with large amounts of pesticides? Intellectually I would say the Russia approach is better. But my eyes, corrupted by Babylonian marketing, prefers the pristine, fake, and artificial. 

Things are more expensive here than one would expect with the low wage rates. One reason is that there are twice as many employees as one would expect. (I have seen ice cream stands with two employees.) Another reason is that we add the sales tax at the point of sale, taking into consideration the prices. In Russia, with the Value Added Tax (VAT) system the taxes are baked into the sale price. 

Russian stores also tend to buy things in smaller quantities. Capital for inventory is at a premium. This must raise their costs considerably. You see a lot of vegetable stands as you drive through Murom. One lady I saw was selling her potatoes herself. (At least it looked that way.) They were great looking potatoes that would have fetched a premium in America for baking. 

Bush's legs looked good so we bought some. This is a Russian slang expression for the fact that much of the dark meat chicken in Russia is imported from America. We American's have a mania for white meat. So it makes sense to ship dark meat to other countries who do not care about this like we do. This started during the first Bush presidency, thus the nick name Bush's Legs. 

Walking home carrying a load was not something I was used to. This got me to thinking about transportation in Russia which I will talk about soon. 

3-D Printing

I remember how proud I was of my Apple Lazer Printer. 

Moves With Eggplant

Every blog needs a restaurant review on occasion, so the next time you are in Murom, Russia, be sure to go to the "Nobles' Club." 

To understand any Russian restaurant you need to understand the phenomenon of the "Businessman's Lunch." Russians are not linguistically chauvinistic as the French are. The French actually have an official council that approves official French words. They want only "proper" French words. They do not want to repeat the horror of "le computer." The Russians could care less. Drop the proper ending if the noun needs to be declined and they are fine with it. So the English phrase, "Businessman's Lunch," is a proper Russian phrase now. It refers to a discounted lunch that they can bring to you quickly. 

The first place we went to only had a "Businessman's Lunch" available. We did not want a simple salad and soup for $3. Certainly the price was right, but it was not what we wanted. Most of the restaurant bursting into a dirge made the decision even easier, we would go elsewhere. (The main room of the restaurant was hosting a wake.)

We had passed by the "Noble's Club" earlier, but as it was only a door with a sign we did not consider it. We went down the very steep stairs (as is typical in Russia my wife had high heels.) The club was a cellar made from bricks. The decor was very nice, and the bricks had an irregular pattern with arches that was esthetically pleasing. We did not want the Club's version of the "Businessman's Lunch" so we ordered from the dinner menu. 

The English version of the menu they gave me was translated with Google Translate and had a number of amusing entries. One salad had sliced languages. Since I did not want a tongue salad I passed on this—much to my wife's disappointment as she wanted to share. We ordered zakuska (Hors d'oeuvres)- Champignon Mushrooms in a cheese sauce and a salad with fruits. The salad with fruits ended up as a type of Waldorf Salad without the walnuts. I ordered the lamb that “moves with eggplant.” This was, I thought, a mistranslation and should have been “comes with.” I was not happy with the $17 price, but it turned out to be a full rack of lamb so the price was all right. I was correct, the lamb came with grilled eggplant. Elena ordered the fish. We were happy with the food, but the sauce for the lamb was a little strong.

One negative was the wide screen TV hanging above the musician area. It was on MTV Russia, and it actually had music. The reason this was a negative was that I did not want to watch Snoop Dog sing, "I Want To Make You Sweat." Nor did I like the song that followed which had the chorus "What the ****."

It was an enjoyable experience and I would give "Noble's Club" 4 forks.