Comparative Social spending

This article has a new take on who spends more on welfare, health, education and depending upon how one measures it, the United States is comparable to the Scandinavian countries that are stereotyped for spending lots of money on social spending.

IRAQI parliamentary election and a wrinkle on proportional list voting.

The Fair Vote list had a very good discussion of proportional list voting in IRAQ. In particular, IRAQ allows voters to vote for a party and each party gets candidates proportional to their party vote totals. Within that list, they can provide a preference for the candidates. And this will determine which candidates become MP's. However, what happens if one selects a candidate and that candidate is disqualified. It turns out one might lose one's vote which would not have happened had one just gave a party preference.

A Systems Approach to Public Decisions

One thing I have felt for many years is that we should look at the entire system in dealing with energy and other problems. How can a nation particularly United States convert from a petroleum based personal automobile transportation to mass transit and electric vehicles. We always hear that it would cost XYZ billion dollars to convert our infrastructure from gasoline stations to rechargable batteries. For example, if all automobiles had interchangeable batteries, one could have the whole battery assembly swapped out if one runs out of juice on a long trip. This is part of a Better Place infrastructure, which is a challenge to collaborative process.

To build anything takes resources and if we ramp up too fast, we would hit capacity limitations. I. E. would we run out of steel making capacity? This requires a system capacity and systems approach and a linear programming approach, looking at the different resources needed. Do we use steel capacity to build new rails so that the different components of a new energy infrastructure can be shipped at a greater efficiency or is it better to use that capacity to construct the windmills, etc. first.

We have to figure out what is feasible before we can vote on it, and a dollar approach isn't the first one. The price of lithium or antimony only tells you what is available for a marginal or small change, not a big one. (Admittedly, this concept is relevant to decision making about moving a nation in a grand sense, whether for war or military accomplishments, whether participatory democracy, conventional democracy or a dictatorship.) The cost of a teacher doesn't tell you whether there are enough teachers to halve class size.

Hedge Fund Taxation Loop Hole

Many hedge funds earning a BILLION dollars in a year pay fifteen per cent as their gains are considered capital gains rather than salaries. Our proposal is restricting the consumption of those earning one MILLION dollars in a single year.

Participatory Democracy for Eliminating uneeded or wasteful government programs

Dr. Peixoto proposed a fix my street model for participatory budgeting to priorize such things as pothole repair. Here is another one-cutting University programs. At most Universities, a quarter of the programs graduate seven or few students per year! (83% in baccalaureate institutions) and (74% of Masters level institutions) (Chronicle of Higher Education, April 2 2010, Volume LVI, Number 29) And many University or planning cuts and some of these reviews start with the programs who graduate with five (or so) bachelors degree students per year over the last five years.

Could we have the citizens vote on which ones to eliminate-- But we need to consider combinatorial effects. Killing an engineering school also eliminates the need for advanced math classes and math professors. And the citizens of a state may want to drop one program but not all of them, or may only want to leave one instance of a very specialized major.

Many Military Bases were closed by an independent commission. Congress could have vetoed the entire list. This way allowed many bases to close which could not happen if each Congressperson that had a base in their district could fight them individually. So there are ways to close things down in a representative democracy.

"Over Confident Dumb People" or the Dunning-Kruger Effect

They found that people who are less experienced or skilled are overconfident, are more likely to overestimate the chances that they are correct. Those who truly know tend to downplay their ability. This is called the Dunning-Kruger effect.

My thanks to Bob Ritholz for the pointer who had a great quote from the scientists:

"Overestimation occurs, in part, because people who are unskilled in these doLmains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it."

They provided the citation to the original paper:

Psychology, 2009, 1, 30 to 46, www.scirp.org "unskilled and Unaware of It: How Difficilties in recognizing one's incompetence Leads to Inflated Self Assessments" by Justin Kruger and David Dunning. The introduction to the article is a gold mine of citations that support the conclusion that those who do poorly are less likely to realize it.

However, there are apparently other papers that show the effect is less significant, according to one comment on the blog. I have back at home a paper on uncertainty in estimation for estimating the time and effort for software engineering projects. (I am travelling this Summer, probably for about seven weeks.) So I will put these on queue for a future Thoughtful Thursday.)

Obviously, decisions have to be made with the help of expert opinions and whether participatory democracy or not, information on assessing the reliability of such estimates would seem useful to the decision maker. Paul Woodruff gave a wondrous example from Athenian Democracy of interpreting the opinions of generals on the invasion of Syracuse. They also found that people not only could not determine their own ability they were less like to assess competence in others. Can these kinds of social science form a modern piadaia ?

Energy, Growth and Sustainability, Thoughtful Thursday

SPRU Electronic Working Paper Number 185, ENERGY, GROWTH AND SUSTAINABILITY: FIVE PROPOSITIONS, Steve Sorrell, March 2010

The modern financial system means that most of the money supply is interest-bearing debt. This article cites several references, which I list below for follow up where people proposed one hundred percent reserve banking. It is a theme that Anne Pettifor spoke in her book. And it would also re resolved under a share economy. Because of the reserve-banking-based economy, the developed world cannot shift to a low-consumption pattern without financial crises. This issue was taken up in several comments to Gail the Actuaries post in the Oil Drum this May Eigth about the debt rate, where one comment said if "wipe out all debt" would "wipe all money" if we ever have a jubilee. In the old days, whoever possesed the money at the time of the jubilee would keep it and would then have purchasing power to reprime the pump. Is this true when so much of the money is based upon the fractional reserves banking system?. It seems that if one has lots of bankruptcies or a Jubilee-approach or liquidations of companies, a participatory-democracy case-by-case approach needs to be taken to ensure that the person who lied about their income on their mortgage application, engaged in unproductive financial engineering, does not get left with a totally unfair share of the purchasing poewr. And we protect the person who worked hard for a pension or the person of modest income who scrimped and saved a million dollars over a life time, a la Millionaire Next Door.

One would think when our engineers develop better ways to use energy, efficiency, our economy will use less energy. That is, if an automobile has better miles per gallon, less gasoline is consumed. However, some indivdiuals may find more money in their pocket, which will lead to more spending. A little bit of it is a direct rebound effect--it costs less to drive so we drive more, but probably, this is not elastic. But the global effects are different. The Bessmer Steel process used less energy than the alternative--more rails and more transportation and all the economic goods that come from economic productivity. Similar things happened with motors, the steam energy making it more efficient to mine coal, which meant that more coal was available. The latter was observed in 1865 by Jevons--hence the name, Jevons paradox.

California sets energy efficiency requirements for new television sets. But it does not do anything to get consumers to purchase a smaller Television and save energy that way. Their web site says "Consumers will always have the freedom to buy any size or style TV they like." Compare and contrast the sortition-based consumption-based badness tax.

And this article confirmed something I cited earlier in the United States. Britain reduced its carbon emissions at home, but this at the same time that it imported products that were made by burning lots of coal elsewhere.

To follow up on future Thoughtful Thursdays

1. Fisher I (1936) 100% Money New York Adelphi
2. Fisher I The debt-deflation theory of great depressions" Econometrica October 1933
3. Friedman M. (1960) A Programme for Monetary Stability New York, Fordham University Press
4. Jackson T. (2000() "Prosperity without growth? The transition to a sustainable economy" Sustainable Development Commission
5. Douthwaite, R. The Ecology of Money Dublin Ireland: Theo Foundation of Economics of Stability (FEASTA)
6. Simons H. (1948) Economic Policy for a Free Society Chicago: Univerity of Chicago Press
7. Soddy F, 1926, Wealth, Virtual Wealth and Debt London George Aleln and UNW

On the rebound effect and energy efficiency:

1. Rosenberg N. (1989) Energy Efficient Technologyies: Past, Present and Future Perspectives How Far can the World Get on Energy Efiicnecy Alone Oak Ridge National Labs.
2. Sanne C. (2000) "Dealing with Environmental Savings in a Dynamical Economy How to Stop Chasiong YOur Tail in the Pursuit of Sutainability" Energy Policy 28 6 to 7 487 to 95
3. Sanne C. (2002) Willing Consumers or Locked in? Policies for Sustainable Consumption" Ecological Ecoomics 47 273 to 287.
4. Saunders H. D. (2000) "A view from the Macro Side: Rebound, backfire, and Khazzoom-Brookes." Energy Poicy 286 t to 7 439 to 49, 2000
5. Sorrell S. (2007) "The Rebound Effect: An Assessment of the Evidence for Economy-Wide Energy Saviongs from Improved Energy Efficiency"
6. Sorrell, S. and J. Dimitropoulous (2007a) "The Rebound effect: Definitions, Limitations and Extensions" Ecological Economics 65 to 3 636 to 649
7. Victor, P. A. (2008) Managing without Growth: Slower by Design, Not Disaster Edward Elgar