Philip Greenspun’s Weblog

My favorite economist (never understand what she says, but love to hear her talk) sent me “Possible Macroeconomic Consequences of Large Future Federal Government Deficit” by a Yale economist under a subject line “fodder for your bleak outlook”. She summarized my recent Weblog postings on the economy as “bleak”, which to me means “pessimistic”. Yet I’m actually very optimistic about U.S. economic prospects in an unfettered market. Here are some reasons for optimism…

• The average American worker is better educated and more capable than the average worker worldwide. There are, of course, many excellent workers in countries such as China and Mexico, but on average a U.S. worker is more useful to a business.
• We have a better-than-average infrastructure of transportation, communications, electric power, and legal system.
• We have a lot of natural resources, including the basics of land and fresh water.

How come we are having trouble growing our economy? Part of the problem is that the products and services that people want to buy aren’t available. Let’s look at a top-of-the-head list. We’ll exclude products that require a huge amount of scientific and engineering innovation, e.g., a house-cleaning robot.

• A basic city car, gas or electric, priced similarly to the Tata Nano (i.e., $2500)–I would buy one tomorrow
• A dock for using a smartphone as one’s home computer  (see this 2005 article)
• A compact motorhome, sort of like the old VW camper van (see this article on making recreational vehicles in China)
• A home aquarium hood combining lights,  filter, heater, UV sterilizer, and automatic fish feeder (see this posting; I would buy one tomorrow)
• A floor lamp consisting of an upright fluorescent tube covered by a paper shade (see this posting; I would buy one tomorrow)
• A prefabricated one-room house, for someone who wanted to have the industrial loft experience in the suburbs (see this design)
• Mobile phone software that would, based on its knowledge of your location, show you a list of nearby hotels and how much they were charging for rooms at the moment, with the opportunity to reserve a room through the phone (useful for travelers; I used this as an example of the lack of innovation at phone companies back around 1997 when it became technically straightforward (Expedia was up and running by then)–it never occurred to me that we still wouldn’t have this 12 years later)

It is true that the same old products aren’t selling quite as well at their same old prices, but that’s partly because people already have the same old products. It is a lot easier to sell new products for which no competition exists.

So that’s my optimistic posting about the economy. All that we need to do is design and produce a few things that aren’t available already.

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… but we’re still trying to do it in Kabul.

Let’s consider the case of Najibullah Zazi, who speaks English and has lived in Flushing, Queens (New York City) and Denver, Colorado. Subsequent to Mr. Zazi’s first trip to Pakistan for terrorism training, it took the FBI at least two years to figure out that this guy was planning to attack his neighbors here in the U.S.

We’re going into our ninth year of war in Afghanistan, attempting more or less the same task: sorting out the Afghans who want to kill Americans from those who don’t. We don’t speak the language, we don’t know the terrain, and yet we’re trying to do what we were barely able to do in Queens.

[Zazi is a good example of why we might want to consider changing our immigration policy along the lines suggested in my economic recovery plan. He was a legal immigrant to the U.S. at the age of 7. He would have been educated in the New York City public schools, some of the most expensive in the world. Let’s say 10 years times $15,000 or $150,000. He filed for bankruptcy earlier this year, costing U.S. creditors $52,000. His career as a would-be terrorist will probably cost at least $5 million in FBI salaries and legal process. Fear of similar activities by Mr. Zazi’s colleagues should result in security costs and reduced economic activity running into the hundreds of millions of dollars.]

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This year’s Nobel Prize in Physics goes to the guys who developed the CCD sensor that enabled the first tubeless video cameras and consumer-priced digital still cameras. Please add comments with examples of how either cheap video cameras or digital still cameras have changed someone’s life. I will lead off…

A friend of mine is a working mother. Her toddler’s nanny, a Mexican woman in her late 30s, carries a small digital camera with her all day every day. When Mom gets home she can review the photos and see the fun that her kid was having all day. Doing this in the film era would have required a trip to the one-hour lab every evening and a cost of $20 and therefore would never have happened.

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A lot of companies make floor lamps that are designed to produce a vertical strip of light. Here’s an example from Target. The conventional way to do this is to cover the light source with a vertical paper shade. To get the illumination to be reasonably even, you put three 60-watt light bulbs inside. The result is a fairly cheap lamp that burns a lot of electricity, wastes most of the energy into heat that might set the shade on fire, and whose light is not very uniform across the shade.

This makes me wonder why there aren’t more floor and table lamps made with conventional fluorescent tubes. If you want a strip of light, why not start with a line-shaped light source? It is hardly the case that fluorescent fixtures are expensive. A two-bulb 4′ fluorescent fixture can be purchased at Home Depot for less than $20.

The quality of light from a fluorescent bulb can be excellent, with 5000K (daylight) color temperature and high color rendering index (CRI). A photographer’s light table uses just such a fluorescent tube. A fluorescent light might be too bright at full power for many floor lamp uses, but it can be electronically dimmed (vendor).

If Dan Flavin could make sculpture from fluorescent light bulbs in 1963, how come we can’t get something vaguely like it at Walmart 40+ years later?

[Of course I recognize that the modern way to do this would be a strip of LEDs, but right now I think they have poor CRI and can’t be fabricated in a continuous strip.]

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Here’s my personal stimulus story. I added something to U.S. GDP this week. The American-made 9-year-old water heater in my Cambridge condo failed yesterday, covering the basement floor with water. This was discovered about 6 pm last night. As I was not in the area, the neighbors all got together in an attempt to stanch the water gushing out. They closed all of the shut-off valves, but the water kept coming. Greg Walsh, the plumber, had planned to come the next morning, but sent his son to investigate. It turned out that the American-made shut-off valve had failed and, despite being shut off, was not impeding the water flow. Son of a great plumber is at least a pretty good plumber, so he managed to stop the geyser. By noon the apartment was being supplied by a new American-made water heater and equipped with some new shut-off valves. GDP should be at least $1000 larger and government economists will hail this as a green shoot of recovery.

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Upon hearing about Chicago’s failure to secure the 2016 Olympics, a young friend asked if the Olympics would have been profitable. I said that they would have cost billions of taxpayer dollars and that Greece spent over $1 billion on security alone for the post-9/11 Athens contest (even the very successful pre-9/11 Sydney Olympics 2000 punched a $2 billion hole in Australians’ collective pocket (source)). There was no way to recover that in ticket sales, television rights, or temporary boosts to the economy. My friend then asked if the Olympics were guaranteed to lose money, how come any city would bid on them? My response was that bidding for the Olympics highlights the conflict between rulers and subjects, or “politicians” and “taxpayers” as we might refer to these groups in the U.S. The mayor of a U.S. city wants to get the Olympics so that he or she can be in the national and international spotlight for a few months, which might result in being able to obtain a more powerful job. The mayor has the ability to spend taxpayers’ money, and borrow billions more on their behalf through construction bonds, for personal advancement. The taxpayers would have a tough time organizing to stop the commitment to an Olympics.

The taxpayers of Chicago dodged a bullet this time, though no thanks to any of the politicians who supposedly represent their interests. If we assume a modest amount of inflation since the 2000 Olympics, a reasonable dose of Illinois corruption, most of the work being done by mob-controlled unions, and the American systems of dealing with vague security threats, it seems reasonable to assume that the Olympics would have cost at least $5 billion. That would be enough to finance a great engineering college, an online university serving tens of thousands of students, an electric car manufacturer, a bunch of high-tech businesses, a free wireless Internet covering the entire city, and still have a lot left over. Unless taxpayer dollars were truly unlimited, could anyone minding the long-term best interests of citizens choose to spend that money on a two-week spectacle?

Update: http://www.nytimes.com/2005/07/10/opinion/nyregionopinions/10CImatheson.html

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An article in the Chronicle of Higher Education by Kevin Carey argues that Harvard should have used some of its fantastic accumulated wealth to expand the number of undergraduates. The U.S. population keeps growing and yet Harvard produces the same number of graduates each year. Thus Harvard becomes progressively more elitist.

[Related 2005 posting: “Radcliffe Southwestern Pre-Professional College for Women of Color”, in which I argued that Radcliffe should have used its substantial endowment to start up a new women’s college in the Phoenix or Los Angeles, rather than disappearing into Harvard. I did not argue for this as a moral imperative, as does Mr. Carey, but rather as something Radcliffe could have done to remain relevant.]

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Western philosophy teachers offer a standard explanation for the birth of scientific inquiry. Isolated cultures clung to myths and religion to explain the existence of the world and natural phenomena. The Ionian Greeks, however, positioned in the middle of various trade routes, heard religion and creation stories from all of their trading partners. These religions and stories were all mutually inconsistent. The Ionians concluded from this that all were likely false and looked for new ways to explain the world. Science was born. (wikipedia)

Let’s look for a parallel in the modern world. Many societies are dominated by a single religion and/or culture. Italy, for example, is at least 90 percent Roman Catholic. Very seldom does an Italian encounter a passionate adherent of some other religion. Yet Italian Roman Catholics are not necessarily themselves passionate or strictly observant. The U.S., by contrast, has at least as much cultural and religious diversity as the Ioanian city states. An American, simply by strolling around his neighborhood, may learn about many religions and creation stories. If the philosophy teachers are right, Americans should be among the world’s least religious people. A Southern Baptist learning about other Christian sects, Muslims, Jews, Buddhists, and Hindus should say “I’m not going to believe any of these stories; I’ll look for explanations in Physics, Chemistry, and Biology.” Yet this is not what we observe. There are millions of Americans who believe very passionately in their particular religions, despite being fully aware that others in the U.S. and around the world hold contradictory beliefs.

How can we account for this apparent discrepancy? Are the historians of philosophy simply wrong about the pre-Socratics? Are modern religions much more compelling and convincing than those promulgated in Miletus circa 600 B.C.? Or what?

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Newspapers have been covering Benjamin Bernanke’s mid-September statement that the recession may be “technically over”, by which he presumably meant that U.S. Gross Domestic Product (GDP) was no longer shrinking. Should we pay attention to GDP statistics or whether or not we see business investing and people getting hired for non-government-related jobs? The technical definition of GDP includes government spending. If the government were to double all of its employees’ salaries, printing sufficient money to cover the increase, GDP would increase. The government could end any recession in 10 minutes by doubling all the amounts paid to doctors and hospitals through Medicare and Medicaid. The government could send out $500 checks to every American in exchange for people filling out a survey on what TV programs they watched in the preceding week (survey results were produced!). There is no subtraction from GDP for government borrowing that must eventually be repaid.

A statistic that can be manipulated as easily as GDP should not be used to gauge the economy’s health. The obese sedentary guy who takes a statin will end up with a low measured cholesterol level… and he’ll drop dead of a heart attack all the same.

What could we look at? How about private investment. Without investment there won’t be growth in productivity, wages, or jobs. Government investment isn’t sustainable in the long run because eventually there has to be some private activity to be taxed to feed the government. Data on private investment as a component of GDP are available from  www.bea.gov. The NIPA table released on August 27, 2009 (direct link that may rot) shows that “gross private domestic investment” was falling in 2007 and 2008, mostly due to residential housing being lumped in. Investment was falling at a rate of 50 percent per year in the first quarter of 2009, at a rate of 25 percent per year in the second quarter (Q3 data are not yet available). The fall was not simply due to Americans deciding that they could live with their parents. Investment in “Equipment and software” was falling at a rate of 36 percent in Q1 of 2009 (after three years at that rate of decline, American business would only be investing one quarter as much as it had in 2008… in the U.S.; they might be investing vast sums in China or India but those don’t add to our GDP).

An alternative statistic would be the total number of private sector jobs. The number of jobs that the government can extract taxes from is about the same as in 1999 (earlier posting). Despite a larger population, the U.S. has not added any private sector jobs over the last 10 years. I like this statistic better than anything having to do with earnings because it is not subject to distortion from the financial sector (a few Wall Street guys collecting $100 million bonuses can make it look like the economy is growing sustainably). Nor is it subject to distortion from America’s pension system. The 41-year-old retired Boston city transit workers and the 48-year-old retired autoworkers get and spend checks every month, but an increase in the amount of money society allocates to paying people not to work is not a sustainable path out of a downturn.

It surprises me that people are willing to pay attention to the GDP statistic, at least in the currency that the U.S. government can print. If we must use GDP, shouldn’t we at least look at it adjusted for what the dollar is worth against a basket of foreign currencies? Usually currency traders aren’t fooled by our politicians’ shenanigans. The Euro was introduced in 1999, ten years ago, and was worth about $1. Today it is worth $1.46. Nominated in dollars, it looks as though the U.S. GDP grew from $9.5 trillion to $14 trillion . Nominated in Euros, however, the U.S. GDP is about the same as it was in 1999. Due to population growth, this would mean that the average American should be slightly poorer than he or she was in 1999, aside from any benefits that stem from improved technology.

Should we be putting on our King Bush II-style Mission Accomplished flight suits and celebrating the end of the recession because our government has figured out how to borrow more money and then spend it faster than ever?

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A household member has demanded that I set up an aquarium on a kitchen island countertop. This will probably be 20-40 gallons, glass (tired of acrylic scratches), and contain freshwater community fish. The aquarium will be viewable from four sides. Without drilling through granite, it would be impossible to have any filtration underneath. I want to minimize equipment hanging off the sides and it would also be nice, for leak-proofing, to minimize the extent to which water travels outside of the area covered by the tank.

It would be nice to have the following:

• excellent mechanical filtration, like the best canister filters
• reasonable biological filtration (I’ve been told that almost any water movement and some gravel is sufficient to keep nitrifying bacteria alive)
• light for fish viewing; need not be bright enough for growing plants
• heater sufficient to keep the temperature at 76 or 78 for tropical fish
• UV sterilizer to control algae and disease
• hood to minimize evaporation and chance of a fish jumping out
• mounting for a decent autofeeder, e.g., the Eheim

The Marineland Eclipse hoods are the closest thing with which I’m familiar. They incorporate a light, mediocre mechanical filtration, and superb biological filtration. You end up sticking a heater into the tank (ugly and one extra cord) and having to live without UV sterilizer or autofeeder. Eclipse was popular during the Clinton Administration. Is there anything newer and more complete?

Note that it is conceivable that I could sacrifice one of the short edges of the tank and hang something there, but I very much want to avoid hanging anything front or back.

Update: Since nobody seems to make the product that I need, I wrote up a design for an aquarium hood incorporating LED lights, filter, heater, UV sterilizer, and automatic fish feeder.]

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