Tuesday, March 30, 2010

Town Hall Meeting

This morning I went to a 'Town Hall Meeting' where they discussed the university's plans for the future and its response to lower funding from the state.  I brought along my laptop and papers to grade.  I am glad that did.  The ratio of propaganda to information was incredibly high.  I was able to get a lot of work done while they ran a movie full of self-congratulatory fluff, and while the university president gave a similar presentation, most of which was reading stuff verbatim off PowerPoint slides, which any decent public speaker knows not to do.

During the question-and-answer session, I asked something that I had been wondering for a while and was related to the topic.  Several years ago, the state offered to privatize our university, handing over all the state property and ending restrictions in exchange for ending the state support.  Several of the professors in the Econ department think that this would have been a great idea; it would have given us hundreds of millions of dollars worth of property and allowed us to dramatically boost tuition, which would have easily covered the lack of funding.  If they had taken the offer, we would not be facing the budget cuts we are today; we would be independent of the state budget.

So I brought up the topic and asked "If the offer was given today, would you take it?"

He never answered the question, of course, but his answer was instructive anyway.  Last time the offer was made, his response was a strong and definite 'no'.  But this time, he did not rule out this possibility.  He talked about how the state funding was 12% of our budget, but he also said "The source of our funding does not change our mission, goals, and character."  It sure seemed to me that he was implying "If they offer us a good enough deal, we might take it."

I still think that the probability of making the switch is low, however, for one important reason: ranking tables.  The president has placed a great deal of importance on the goal of reaching a specific rank in the list of public universities.  He wants to make us a "Top X" school, and we are pretty close to meeting that target.  If we switched to being a private school, then we would lose that rank.  We would be moving into a much more competitive league, where our ranking is a lot lower.  So for that fact alone, the administration will probably cling to 'public' status even though privatization would likely make us a better university.

Now to shift topics a little and discuss questions and communication:

My question was the only one that was an actual request for information.  All of the other 'questions' were really just a form of begging or whining.  It was obvious from the question what the questioner wanted and what to say to appease that person.  And the president, like a good politician, immediately started to make the appropriate soothing noises*.

I was actually quite old before I realized that most people do not view information gathering as the purpose of communication.  Most communication, and especially most conversations, are about playing social status games and signaling information about yourself.  The president was accustomed to dealing with such things.  About 80% of the question-and-answer session was of the form:

Q: I really care about X.  What are you doing to help it?
A: I agree that X is important to the university.

I don't know what value people obtain from this process, but it seems that they do value it.  I guess they think that reminding him that people care about X will be a useful form of lobbying and might help shift money their way.

He tried to answer my question the same way, but was handicapped because he did not know what I wanted to hear.  He may have assumed that I was afraid of privatization; he took care to assure me that any privatization would not damage the quality of the university.  I was not worried about that, but the answer told me that it might actually be a possibility.

This leads to an important lesson:  If you actually want to extract information from someone, reveal as little information as possible about who you are and what you want.  If they know these things, they will simply repeat what they think you want to hear.  But if you ask a factual question without betraying your allegiance (this is harder than you think; ideology affects language in a lot of subtle ways) you may actually obtain some knowledge.  The person may be forced to rely on facts when they cannot pull out the appropriate spin, or, more likely, they will generate a more informative kind of spin.

*Of course, I am not sure if they were actually 'appropriate' or effective.  In response to somebody whining about staff stress as a result of budget cuts, he recommended walking around campus and admiring its beauty.  I was immediately reminded of this Dilbert cartoon.

Monday, March 29, 2010

Art Students

There is a courtyard outside the art building.  It has a metal bust of some guy in it.  Today, I saw about a dozen art or architecture students building something in the courtyard.  It was some kind of big platform thing with ramps.

They had put a hard hat and safety goggles on the statue.  Not a single one of the humans was wearing either a hard hat or safety goggles.

Sunday, March 28, 2010

Math Education Considered Harmful

Back in the 'good old days' when you could get away with stuff like this, a school superintendent did an experiment where he simply stopped teaching math in elementary school.  No arithmetic training at all.  Nada.  It was replaced with time spent talking about things, with a few practical counting tasks:

The children would be asked to talk about topics that interested them--experiences they had had, movies they had seen, or anything that would lead to genuine, lively communication and discussion. This, he thought, would improve their abilities to reason and communicate logically. He also asked the teachers to give their pupils some practice in measuring and counting things, to assure that they would have some practical experience with numbers.

The results were incredible:

At the beginning of their sixth grade year, the children in the experimental classes, who had not been taught any arithmetic, performed much better than those in the traditional classes on story problems that could be solved by common sense and a general understanding of numbers and measurement. Of course, at the beginning of sixth grade, those in the experimental classes performed worse on the standard school arithmetic tests, where the problems were set up in the usual school manner and could be solved simply by applying the rote-learned algorithms. But by the end of sixth grade those in the experimental classes had completely caught up on this and were still way ahead of the others on story problems.

As far as anyone knows, this is the only experimental evidence on math education that exists.  And it was a proper experiment, with different classes randomly placed in different teaching strategies.  We know that the experiment was not contaminated by outside tutoring, because all of the experimental classes, both the testing and control groups, were of poor children whose parents were not paying attention to their education.  That was the only way he could get away with the experiment, even in the 1930's.

So basically, all available experimental evidence shows that teaching math in elementary school is worse than useless.  As a good scientist, I will abandon my preconceived ideas and accept this as fact until more evidence comes in.

Thursday, March 25, 2010

Infuriating Weakness

This article is full of stuff that really annoys me.  Let's start with the leader:

The EU's naval force has freed six Somali pirate suspects, a day after they were captured trying to hijack a vessel off the East African coast.

They caught a gang of violent criminals in the act of committing a crime, and then they release them without any punishment.  This is not how you preserve law and order in international waters.  We are teaching this hive of scum and villainy that we are too weak, cowardly, and/or stupid to protect ourselves against blatant unprovoked attacks.  Is it any wonder that piracy in particular, and lawlessness in general, are infecting the world?

The suspected pirates were allegedly part of a gang who attacked the Panamanian-flagged ship MV Almezaan.

I know they have to follow journalistic conventions, but it is just ridiculous to use the words 'suspected' and 'allegedly' in that sentence.  They are definitely pirates.  They were shooting at people.

Cmdr Harbour told the BBC that the case against the suspects captured on Tuesday was "clear-cut".

"We intercepted the pirates, we destroyed their mother-ship and we went on board the cargo ship to get statements," he said.

"But we had to release them because the master of the ship would not testify."

 Why do we even need the testimony of anyone the ship being attacked?  Why is the word and expert opinion of a military officer not enough?  Is the court system really so screwed up that they will refuse to convict on the testimony of a (presumably) respected and competent officer, but they would convist based on the word of some random merchant captain?

The guards who shot the pirate suspect were also likely to avoid any censure, with Cmdr Harbour saying nothing could be done without statements from those involved.

Was someone seriously considering censuring the people who acted in self-defense?  Why on earth would you get in trouble for shooting a pirate that was attempting to take you hostage?  Maybe this is why they refused to testify.  I would not want anything to do with a legal system that treats me the same as it treats a pirate.

The authorities have struggled to find a solution to the problem of piracy - both stopping the attacks, and how to punish captured suspects.

Here's a suggestion: Stop being such bloody wimps and cowards!  Existing international law gives all naval officers the right to try and execute pirates.  They were clearly guilty, so use them as target practice and send them to the bottom of the ocean.

But there is no consensus on how to prosecute the suspects, and moves to set up an international tribunal have foundered.

Why are we so obsessed with giving these thugs 'proper justice'?  They have set themselves in clear violation of the law of nations.  They are terrorists earning money that funds more terrorism.  They are unlawful enemy combatants.  They are pirates.  Existing legal precedent, game theory, and common sense all agree that they should be killed on sight.  I trust any naval officer in the military of any democratic country to tell the difference between 'pirate' and 'not pirate' and kill the pirates immediately after they are caught.  It worked 200 years ago, and it will work today.

Giving legal rights to people who are actively engaged in the premeditated business of depriving others of human rights is stupid.

The really annoying thing is that we are willing to throw away all of our notions of rights and justice when we find it politically convenient and we can get away with it.  Our ongoing drone attacks in Afghanistan and Pakistan have killed hundreds of innocent civilians, just because they happened to be in the vicinity of someone that an informant claimed was a terrorist leader.  Why are we willing to slaughter hundreds of innocents in one war zone, but we are unwilling to punish a few dozen of the the clearly guilty in another?

It seems that the only things they really care about are status, image, and politics.

Wednesday, March 24, 2010

Rationality Equilibrium

As a way to make my Economics class more interesting, each homework assignment has an 'Extra Credit Game' that illustrates a principle of economics or game theory.  A game that I have used three times now, with a slight variation, is:

Extra Credit Game: Choose a number from zero to 100. You will get one point if you choose the number that is closest to one-half of the average of all numbers chosen by the class.


Before reading on, pick the number that you think will win.

This game has a lot of strategic depth, if you think about it a bit.  It tests your rationality and your ability to predict human behavior.  There are several possible levels of thinking:

Level 0: Some people will just not think about the problem and pick a number at random.  Anyone who picks a number above 25 is clearly a Level Zero thinker.

Level 1: If you assume that everyone else guesses at random, then you will figure that the average will be 50, so you will choose 25.  That is, if you chose 25 it marks you as a Level One thinker who assumes that everyone else is a Level Zero thinker.

Level 2:  If you think that everyone else is a Level 1 thinker, then you will think that the average will be 25, and you will pick 12.

There are also in-between levels.  If you picked a number between 12 and 25, it means you think that the rest of the population is divided between Level 0 and Level 1 thinkers.  (Or you could be a Level Zero person who just happened to guess low.)

Level 3:  If you think that everyone else is a Level 2 thinker, then you will think that the average will be 12, and you will pick 6.

This process continues, up until the level of 'Hyperrationality'  A hyperrational thinker is one who is capable of thinking through all consequences of everything and assumes that everyone else does the same thing.  A hyperrational person will pick zero for the problem.

Game theory assumes that everyone is hyperrational, so the only equilibrium for the problem is one where everyone picks zero.

There is a difference between being hyperational and being wise.  Wise people understand that the world is full of people who, to put it kindly, do not really think through things, and adjust their estimates accordingly.  In order to win, you have to accurately judge the rationality of the other people playing the game.

This game shows how hard it is to make economic predictions about things like consumer behavior or housing prices or the stock market, because the 'correct' prediction will be based on the actions of other people, many of whom are also trying to figure out what you are doing and who will change their actions based on the signals you generate.

The first time I ran the game, the class average was 17.2 so the winning number was 9.  The second time I ran it, the average was 8.5 and the winning number was 4.

The last time, after the homework had been assigned but before it was due, one of the students asked, in class, "If we all pick zero, will we all get the point for winning?"  I said yes.

This student is the 'community organizer' of the class.  Whenever I run any kind of coordination game, she sends emails out to the class telling them what to do so everyone gets the maximum number of points.  She told everyone, in class, to pick zero, and later sent an email to everyone with the same instructions.

This is a great example of why economics models that assume rational, or even hyperrational actors, make good predictions about the world.  Casual observation, plus lots of lab experiments, have shown that people act irrationally the first time they are confronted with a problem.  In my class, five people picked numbers greater than 25 in the first game.  But economic theory is about the real world, where people have a chance to see what happens as a result of their choices, and learn from their mistakes.  People may be bad at thinking things through, but they are good at responding to feedback and learning through experience.  It does not take many feedback cycles for behavior to converge to the hyperrational.

Unfortunately for our community organizer, and most of the class, chaos happens no matter how much you try to plan.  There were three people who did not pick zero.  I have no idea why.  They were actually in class when she asked the question, and they must have gotten the email.  Maybe they just did the homework at the last minute and forgot about the plans.  Two of the people picked higher numbers, and one picked the number '1' which turned out to be the winning number.  I do not think that this was a conspiracy, based on what I know of the social patterns of the class.  In any case, there is zero motive to arrange such a thing, because the winner would have still gotten a point if she picked 0, and there is no grade curve.

This illustrates another thing that economists know.  Even if everyone has an incentive to cooperate, and if someone is actively helping the cooperation, there will always be random shocks to the system.  No matter how much you try, it is really hard to get people to all do the 'right' thing.  Any system you design has to be robust to these shocks.  A small shock, or a small act of stupidity, can make everything fall apart if you are not careful.  Never assume that people will always listen to you or do the right thing or even avoid doing utterly stupid things.

So in conclusion, 'self-interested rationality, plus a random error term' is the best model we have of predicting human behavior.

Tuesday, March 23, 2010

Health Care Bill Prediction

The summary of the health care bill states:

Promoting Employer Responsibility. Requires employers with 50 or more employees who do not offer coverage to their employees to pay $2,000 annually for each full‐time employee over the first 30 as long as one of their employees receives a tax credit. Precludes waiting periods over 90 days. Requires employers who offer coverage but whose employees receive tax credits to pay $3,000 for each worker receiving a tax credit up to an aggregate cap of $2000 per full‐time employee.

If this is an accurate summary, and I am reading this correctly, and cross-referencing properly, it means that employers will have an extremely strong incentive to stop hiring low-skilled people, and if they do, to not offer them health insurance.

Workers receive tax credits if their income is less than 400 percent of the poverty line.  The first sentence implies that, if you have one worker making less money than this, you will have to pay a lot of money, but if everyone in your company is highly paid, you do not have to pay anything.

In most cases, low-skill labor and high-skill labor are substitutes.  This means that companies usually have a choice between hiring a small number of highly skilled people or a large number of low-skilled people.  Highly skilled people must be paid higher salaries, but they also bring more benefits to the company.  This provision, like any government mandate that forces you to pay some fixed cost per worker, encourages companies to hire fewer low-skilled people and replace them with high-skilled people.

Therefore, I predict that income and employment inequality will continue to increase.  Low-skilled people will find it harder and harder to get jobs, and they will be paid less.  Whenever the government forces a company to pay money for each worker, the pay of that worker will go down by an equal amount in the long run.

I am not sure exactly what the last sentence means, but I think it relates to the following from the full text of the bill:

(3) CONTRIBUTION IN LIEU OF COVERAGE- Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange-participating health benefits plan ... the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 313.

In other words, if an employee chooses to decline the employer-provided health care but instead goes to the exchange, and if the employee is eligible for a subsidy, then the employer has to pay $3000 to the government.

I understand why this provision is in there.  It is meant to discourage employers from offering substandard coverage.  But if enough people choose to go to the exchanges, it would mean that offering health care is actually more expensive than not offering it.  It may seem unlikely that people would choose to decline coverage, given that the employer must pay most of the costs, but that might happen if the exchange plans are good and if the government subsidy is high enough.

Consider what happens if the employer does hire a large number of low-skilled people.  Assume that you run a factory that hires 80 workers who earn less than 400 percent of the poverty line, and 20 managers who earn more.  If you do not offer any health care to anyone, you will have to pay $140,000. ( $2000 x (100-30))  If you do offer them health care, but they all choose to remain with their current exchange-based provider, you will have to pay $200,000.  ( 80 x $3000 = $240,000, which is limited to the cap of $2000 X 100 )  As long as 47 or more of your workers decline your coverage, you have to pay more than $140,000.

Therefore, offering your employees health insurance could easily cost you more in taxes, over and above the actual costs of the health care.  If my understanding is correct, then you will see many employers simply ceasing to offer health insurance in 2014.  Paying the fine for not insuring people is cheaper than paying the fine for having people choose another option.

Actually, I hope that this is the case.  Most economists understand that the current practice of getting health care through your employer causes a lot of problems.  We would prefer a system where everyone bought health insurance with their own money and employers did not get involved.  It may well be that this health care reform bill drives employers out completely and produces a market of nothing but individuals buying their own care on health exchanges, with poor people getting a cash subsidy.  If it does, then that would be a big improvement.

Sunday, March 21, 2010

Conscription

I get angry when anyone starts suggesting that our country should consider reinstating any form of military conscription.  This is partly because they demonstrate ignorance of military facts by assuming that the quality of a volunteer and a conscript are the same.  Volunteers are always far better than conscripts, and the damage that would be done to the morale and culture of our armed forces by reinstating a draft, in any situation, would be immense.

The existence of conscription damages society in other ways.  It makes people despise the concept of military service.  It gives the elites a tool to abuse their own population, and also to threaten other countries.  It makes it much easier to wage aggressive war.

But mainly, my feelings come from a very strong belief that military conscription is wrong.  It is fundamentally and unequivocally wrong, one of the worst possible violations of human rights that can be imagined.  It is the ultimate and most brutal consequence of the philosophy that human beings only exist to serve a collective, and that individuals can be sacrificed at will when 'society' demands it.

Conscription is slavery.  It is actually worse than slavery, because the conscript is forced to do things that are far worse than manual labor.  Slavery 'only' puts you in a position where you have no power over your own life and are subject to arbitrary cruelty and violence.  Conscription does all of this, and combines it with a regime of psychological manipulation designed to make you murder your fellow human beings.

I may need to explain that last sentence a little.  I do not mean to imply that volunteer soldiers are doing anything wrong.  Volunteering to defend your family, friends, homeland, and civilization from things that would threaten it is a good and noble thing to do.  It is precisely this nobility of purpose that makes conscription such an abomination.  Conscription corrupts something that should be an individual choice by making it a type of slavery.

To see what I mean, consider marriage.  Marriage is an extremely important institution; the proper raising of children is vital for the future of society.  If people did not get married and have children, then the country would surely be destroyed.  But consider what would happen if the government conscripted people into marriage.  Consider the damage it would do to individuals, to the idea of marriage, and to society as a whole.  Forcing people to get married would be an abomination, precisely because a volunteer marriage is such a good thing.

This analogy also helps explain why it is so insulting to call our soldiers 'mercenaries'.  The difference between a volunteer and a mercenary is the difference between a wife and a prostitute.  The only thing they have in common is the fact that they are not slaves.

Society can only function when people make choices to do the things that are necessary for that society to grow and prosper.  You cannot force them to do these things.  If you try, you end up with a hollow shell of a civilization.

There is never an excuse or justification for conscription.  Any civilization that cannot summon enough volunteers to defend itself does not deserve to exist.

Tuesday, March 16, 2010

Logic Puzzle Answer

Regarding yesterday's question:

Most people choose option 2.  It seems more plausible because it has two greens, and we know the dice is more likely to turn up green.  However, if you look carefully, you can see that sequence 1 is actually contained within sequence 2.  Sequence 2 is just sequence 1 with an extra G added at the beginning.  This means that is 2 wins, 1 must win also.  Sequence 1 is strictly better than sequence 2, and you should bet on it.

The general lesson to learn is that each bit of information in a prediction makes the prediction less likely, no matter how plausible it seems.  The combination of A and B is always less likely to happen than A alone, no matter how much the combination might 'make more sense' than A alone.

More here

Cuong Nhu Self Defense

It is 7 in the morning.  A noise in your house has just woken you up.  What do you do?

If you are a Cuong Nhu black belt, you grab two weapons, rush downstairs in your underwear, and deal with the situation.

"In essence, he gift wrapped this case for us. He did a great job," Lt. Keith Kameg said about White.

The newspaper article is well-written, and gives a good description of how a trained martial artist should deal with an intruder.  Although Sensei MJ White was prepared for the worst, he used the minimum amount of force necessary to subdue the guy who had just broken into his house.

Note that he had weapons within easy reach and his first instinct was to grab them.  This is important.  Whether your self defense training is with martial arts or firearms, you should always have your weapon where you can get to it easily, and you should always remember your training and be prepared for all things at all times.  Simply owning things and practicing how to use them is not enough.

Learning how to hit things is easy.  Training your instincts and reflexes to respond appropriately to a wide variety of situations is much harder, and takes years of training.  That is what we do in Cuong Nhu

Congratulations to Sensei MJ for showing how a true martial artist acts.

Monday, March 15, 2010

Logic Puzzle

    Consider a regular six-sided die with four green faces and two red faces.  The die will be rolled 20 times and the sequences of greens (G) and reds (R) will be recorded.  You are asked to select one sequence, from a set of three, and you will win $25 if the sequence you chose appears on successive rolls of the die.  Please check the sequence of greens and reds on which you prefer to bet.

    1.  RGRRR
    2.  GRGRRR
    3.  GRRRRR

I will post the correct answer and a discussion tomorrow.

Wednesday, March 10, 2010

New Ideas

Shocking but True Story:

While employed as assistant to the professor of the maternity clinic at the Vienna General Hospital in Austria in 1847, Semmelweis introduced hand washing with chlorinated lime solutions for interns who had performed autopsies. This immediately reduced the incidence of fatal puerperal fever from about 10 percent (range 5–30 percent) to about 1–2 percent. At the time, diseases were attributed to many different and unrelated causes. Each case was considered unique, just like a human person is unique.

Semmelweis' hypothesis, that there was only one cause, that all that mattered was cleanliness, was extreme at the time, and was largely ignored, rejected or ridiculed. He was dismissed from the hospital and harassed by the medical community in Vienna, which eventually forced him to move to Budapest.

Semmelweis was outraged by the indifference of the medical profession and began writing open and increasingly angry letters to prominent European obstetricians, at times denouncing them as irresponsible murderers. His contemporaries, including his wife, believed he was losing his mind and he was in 1865 committed to an asylum (mental institution). Semmelweis died there only 14 days later, possibly after being severely beaten by guards.


I wonder how many similar ideas are being ignored or rejected today.

Tuesday, March 9, 2010

Another Generation

Those white iPod earbud wires always remind me of the wires you see on patients in the hospital who are attached to some kind of medical equipment.  This is especially true when the iPod is worn on an elastic cuff on the arm, as is typical for people working out in the gym.

Monday, March 8, 2010

Smart Charity

They have found a way to train rats to find land mines.

We watched as the rats ran along wires between two handlers. When they smell a landmine, they stop, sniff the ground and begin to dig. This signal lets the Apopo staff know they have found a mine or some other explosive, which can then be removed.

Rats, according to Apopo, are much faster than men using metal detectors and are not distracted by metal contaminants. They are much cheaper to maintain than dogs and are easily passed between different handlers.

I did a bit more research.  The rats do seem to be quite effective at clearing land mines, and this organization it noted for being efficient and well-run.  They need more money for research and rat training.

You can pay to sponsor a rat.  I have done so.

Saturday, March 6, 2010

Friday, March 5, 2010

Misguided Charity

Fully half of the items on my shopping list were not on the shelves when I went to the grocery store today.  They were out of split peas, 2-pound bags of black beans and rice, dark brown sugar, and trail mix.  After about the forth missing item, I thought 'this is ridiculous' and grabbed an assistant manager that was wandering around doing inventory.

It turned out that most of the items were missing because of some program where people fill buckets with food to send to Haiti.  The manager explained this and gave estimates of when the food would be restocked.  While some of them would be in tonight, the others were missing completely from the warehouse.

This is exactly the wrong way to do charity.  If you want to help people, you either give them money directly or hire specialists, like my friend, who know what they are doing, know what people really need, and know how to spend money so it does the most good.

Haiti has plenty of food at the moment.  There were systems in place to feed the country before the quake, these systems were not really disrupted, and there are now 200,000 less people to feed.  There is so much food being given away for free that the local food merchants are going out of business, which is making the economic situation even worse. 

Even if they did need food, this would be the wrong way to supply it.  It would be far cheaper and more efficient to give a charity money to buy and ship wholesale truckloads of food, rather than filtering the food through a retail establishment in South Carolina.

What the Haitians really need is shelter.  That means building materials, construction equipment, and people who know how to direct its use.  The actual labor can and should be supplied by the Haitians; they would love a chance to get an honest job building houses.  Charities also need vehicles to move stuff around.

But the sad fact is that, when giving charity, people care almost nothing for the actual needs of the recipients.  If they did, they would just give people money.  What people really seem to care about is their own emotions.  They want to feel like they are doing good, and pulling beans off a Wal-Mart shelf to put in a bucket apparently accomplishes that goal.

This kind of misdirected aid can actually be counterproductive.  The Haitians are asking for specific things, and we are failing to give them what they actually need.  We are giving them the things we think they should want.  This breeds resentment.  Haitians are real people, just like you and me, and they are just as good at figuring out when people are just feeding their own egos or buying bragging rights instead of really thinking about making a difference.  Probably even better, because they deal with that kind of thing a lot more.

Whenever possible, aid money should be spent in the country being helped.  This helps develop an independent economy, building a network of small businesses that serve their own people.  As things recover and people start exporting things and earning their own money, they can transition relatively easily to economic independence.  But shipping goods in destroys that.  There is no development of local capabilities, and the people will either remain forever dependent on aid or suffer when it is stopped.

Thursday, March 4, 2010

Economic Technology

Most people are familiar with the history of technological progress in physical goods.  Even those who are quite ignorant of history are aware that people did not have computers 50 years ago and that there were no cars in the 1800's.  People know the story of how scientists and engineers invent new technology that lets us build fun and useful things.  All you have to do to get a feel for these changes is to watch a few movies set in the past.

People are also aware of the social changes that have taken place in our history.  There is more ignorance in this area than there is in physical goods, but people generally understand that there is more personal freedom for everybody in a modern society.  They know that kings and royalty are less powerful, that people have a better chance in life, and especially that women and minorities have gained a lot of civil rights in the last century.

But very few people understand that many of the features of our economy are relatively recent inventions.  People do know that credit cards are only a few decades old, probably because they require relatively advanced technology to function.  People may be aware that their parents and grandparents did not have access to the same banking and investment services, but they may assume that this was because their ancestors were too poor to afford them.

This is true for a few things, like checking accounts and bank accounts and stock portfolios.  These are hundreds of years old, but only the very rich used them.  Most people did not bother.  All of their (meager) wealth was in the form of cash.  But for many features of our economy, the truth is that they did not exist at all. 

For example, mutual funds were invented about a hundred years ago and popularized about fifty years ago.  It seems so obvious that you can make a good, diversified portfolio and share it with all comers, but in the past all people either owned individual stocks or paid a specialist to custom-make a portfolio just for them.

A much bigger, and possibly more surprising, example is that the idea of consumer credit, of any kind, is about a hundred years old.  In the 1800's, there was no such thing as a house mortgage.  There was no such thing as buying on credit, from anybody.  Your ancestors simply could not borrow money to buy a house.  They had to rent, or pay cash up front.  The overall philosophy of banking was that it was irresponsible and stupid to make long-term loans.  Banks collected savings and made short-term loans to businesses to smooth out their cash flows.  If you wanted to raise money for something, you had to issue stocks or bonds.  Banks would not help you.  The idea that you can lend to consumers to help them smooth their consumption over their lifetimes is a recent invention. 

Note that I am not talking about a tab at a local store.  It was very common for merchants to put things on your tab and ask you to settle up at the end of the month.  They did this because there was no reliable money, and handling any transaction was very tedious.  Let me say that again.  There was no such thing as money, the way we understand it today.  Modern money, by which I mean a uniform currency issued and backed by the government, has only been a feature of our country since 1935.

There were two things that were used as money.  First, there was specie: gold and silver coins.  Humans have been using these for millennia.   But paying for something with a gold coin was not like sticking a quarter in a vending machine.  The value of the coin was the value of the precious metal it contained, no more and no less.  The markings of the coin were a claim by the government that the coin was of a certain weight and purity.  Governments sometimes tried to gain money by lying about this, which was the ancient equivalent of printing money and causing inflation. 

But even when the government was honest, as they usually were in the past few centuries, you had to be careful.  Coins would wear out over time.  They were softer and less durable than they were today.  An old quarter might only have 22 cents worth of silver instead of 25.  Also, people would sometimes shave the metal off the outside of the coin, lowering its value to gain precious metals for themselves.  As a result of this, all coins were valued based on their weight.  When you paid for something with coins, the merchant had to carefully weigh the stack of coins to figure out how much money you were really paying.

This problem was compounded by the fact that, in the early 1800's at least, the USA never managed to produce enough coins to keep up with the growing economy and the demand for money.  People would use all kinds of coins, from Mexican dollars to French, German, and English coins.  The merchants had to keep lists of exactly how much all of these coins were worth.  Simply paying for something in coins was a tedious process.

In order to deal with this and make life easier, they had bank notes.  A bank note was paper money issued by a private bank.  All paper money in the economy was printed by private banks.  Except during wartime, there was no government-issued paper money.  And the paper money was only as good as the bank.  If the bank went down, the currency became worthless.  Think about that for a moment.  Think about what it must have been like to live in that world.

Imagine that someone pays your wage by giving you a stack of paper notes saying "Citigroup will pay the bearer 20 dollars in silver on demand."  Now imagine that there are rumors of Citi going under.  Merchants will no longer accept the notes at face value.  There is a probability that they will not actually get their silver from the bank.  So they might only give you $15 worth of stuff for your money.

There were hundreds of banks in the country.  Merchants had to keep track of all of them, to make sure that nobody could rip them off by paying for something with the notes of a dead or dying bank.  There were entire newspapers devoted just to telling merchants how much the notes of all the different banks were actually worth.

If you were staying in your hometown, it was not a big problem, because everyone knew how the local bank was doing.  You could pay off your tab with your salary, and the merchant was fine with that because he or she could go right back to the bank to deposit it.  But if you traveled, especially across state lines, it was a nightmare.  They might not even take your cash, because someone would have to go back to your hometown bank in order to redeem it for specie.  You had to use coins, with all the hassle that involved.

So every time you pay for something with cash, remember how easy your life is compared to that of your ancestors.  We have a universally recognized medium of exchange that nobody has to weigh and everyone will accept without looking up a value in a newspaper.  That is a really impressive technology, just as important to our world as a car.  But unlike a car, it is very easy to forget that things were no so easy in the past.

Tuesday, March 2, 2010

Reality Versus Film: Movement

I saw our school's production of Rent last weekend with a bunch of friends.  I mainly went because one of the lead actors was a friend and we were all going to see him.  I didn't really enjoy the play, but that does not mean anyone did a bad job.  I always have trouble understanding song lyrics, so it was hard to figure out what was going on.

Also, the people were so alien to me that it was like watching some kind of National Geographic special about a strange primitive tribe.  The only character that I could relate to at all was Benny, the 'bad guy' of the play who has made good and escaped the life of poverty and misery and disease that the rest of the characters live in. ( This may have been partly due to the fact that my friend was playing Benny. )

But that is not the main point of the post.  I noticed, while watching the play, that the movements of the actors were quicker and more jerky than what you see on movies and television.  This does not mean that they are bad actors.  They were moving like real people do.  And in really old movies, people are shown as moving like that.

I have noticed a similar thing when comparing martial arts movies to the real-life videos that we shoot.  In real life and home videos, the movement is very fast, happening in a kind of flurry, like the fights of animals on nature shows.  By contrast, fighting in cinema seems so much more deliberate.  It seems that the actors are trained to pause dramatically for a split second after each movement.  This happens even in modern, fast-paced movies.  They may execute the techniques quickly, but there is always that pause.  Instead of a confusing flurry of movement, the audience sees the fight as a collection of discrete actions.

I understand why this cinema convention developed.  It makes things easier for both the audience and for the actors.  The audience has an easier time understanding what is happening.  The fights are easier to choreograph and practice, and are less tiresome.  It also allows the actors to show off their flashy movements; the audience actually has time to notice them, process them, and remember them.  By contrast, an accurate depiction of a real fight would seem fast, jerky, messy, and far less elegant.

The same thing is true for movements in things other than fight scenes.  Real movement is quick and jerky.  However, actors who move like this seem flighty or frazzled.  The audience seems to expect actors and actresses to move slowly and dramatically, far more than they would in real life.

It is interesting, and a little, scary, to think about how television distorts our expectations and our sense of reality.