Economics & Finance

A Dime Saved Out of $3500

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Via Randy Barnet at The Volokh  Conspiracy.

People do have a great deal of trouble with scale, especially  exponential  scale.  Developing an intuition of scale is one of the most important lessons when training in technical fields.  

When talking about big spending, I like to cut every number down by a single factor that will put the numbers in a range that people deal with on a day-to-day basis. In this case, let’s cut everything down by a factor of a billion (10^9), so that a trillion (10^12) dollars becomes a thousand (10^3) dollars and a million (10^6) dollars becomes 0.001 (10^(-3)) dollars. This preserves all the ratios without giving people big-number MEGO (My Eyes Glaze Over).

So, if the total 2010 budget comes to $3,500, then Obama wants credit for trimming 100 X $0.001 which comes to $0.1 which is one tenth of a dollar or one thin dime.  

One dime out of $3,500 dollars.  

Imagine that you go to buy a used car and the seller wants $3,500 for a clunker. You say that $3,500 is way too much and he replies that in order to compromise, he’ll take a dime off. Would you feel like the seller was taking your position seriously?

Heck, maybe Obama really light a fire under his people and increase the savings ten times over! Why that would bring us up to $1 out of $3500. Whoopee. I’m so excited I might get the vapors!

By contrast, if the total budget is $3500, then Obama is borrowing ~$1800.  

The video is correct. Obama is counting on people hearing “a big pile of money taken out of a bigger pile of money.” He’s counting on them not understanding how badly he is misleading them.  

Seriously Pathetic

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From a letter to the editor in today’s WSJ:

A few years after retirement I had a chat with an eager young fellow a month away from his MBA in finance at the Wharton School. I asked what appealed to him about finance. “It is so scientific,” he replied. I then asked him what he thought about Long-Term Capital Management. “Never heard of it,” was his answer.

Monkeywrenching socialism – Introduction

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I always thought that if we every got within shouting distance of a tipping point where we would become a socialist country somebody would start up an extended discussion on monkeywrenching socialism. Nobody else seems to have done so (feel free to educate me on other efforts in comments) so I thought I’d put in my two bits with a blog post series.

Let me be clear as to what I am talking about. This is not about felonious conduct. It’s not a mirror image of left-wing monkeywrenching. It’s about exploiting a simple fact of life, that socialism doesn’t work and the socialist ideology makes headway only when the long-term effects are hidden or obfuscated. Monkeywrenching socialism is about improving society across the board from politics to economics to culture by introducing moments of clarity and insisting that there is no moral or ethical high ground for a wrong system that has caused as much damage in the world.

Peacefully adopted socialism depends on people feeling a misplaced sense of loyalty to the corpse of the system that socialism is usurping. People know that something is wrong but they ‘play fair’ long after the socialists have started their long march through the institutions and played dirty pool to tear the guts out of the old order before anybody notices.

More soon.

Quote of the Day

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Cut to the chase. We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can’t even make any durable dent in global emissions—because emissions from the developing world are growing too fast, because the other 80 percent of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we’re foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.
 
We don’t control the global supply of carbon.
 
Ten countries ruled by nasty people control 80 percent of the planet’s oil reserves—about 1 trillion barrels, currently worth about $40 trillion. If $40 trillion worth of gold were located where most of the oil is, one could only scoff at any suggestion that we might somehow persuade the nasty people to leave the wealth buried. They can lift most of their oil at a cost well under $10 a barrel. They will drill. They will pump. And they will find buyers. Oil is all they’ve got.
 
Poor countries all around the planet are sitting on a second, even bigger source of carbon—almost a trillion tons of cheap, easily accessible coal. They also control most of the planet’s third great carbon reservoir—the rain forests and soil. They will keep squeezing the carbon out of cheap coal, and cheap forest, and cheap soil, because that’s all they’ve got. Unless they can find something even cheaper. But they won’t—not any time in the foreseeable future.

-Peter Huber, “Bound to Burn”