The Electric Commentary

Tuesday, October 11, 2005

Late Night Ramblings.

I occasionally spend some time arguing with people about evolution v. intelligent design, or outright creationism. The argument for intelligent design basically states that life is complex, and therefore, a designer was needed, after all, if you find a watch, it implies that there is a watchmaker. While arguing with this point of view is easy, most of the time I don't bother. For one thing, Danny does a better job of it. And secondly, it's rarely worth it. But every so often something gets under my skin, and some of it has been getting under my skin lately. I'm not sure why. I guess I'm shocked by the sheer number of people who disagree with me. Usually I understand it when I'm in the minority, but not this time. So ID and this whole Dover trial really pisses me off.

Moreover, I really don't understand how those who know evolution to be basically true can be left wingers, and those who believe in ID or some such nonsense can be right wingers. Actually, with recent shifts in Republican policy (huge spending increases, etc.) I do understand that one a bit better.

If you know evolution to be true, you believe that complexity has arisen through a non-ordered system under certain conditions. Why then do these people require economic activity to have a creator?

I'll never understand it I'm sure. Part of it is probably hubris. The thought that they can do better than nature. But they misunderstand the nature of nature (and of markets). Both nature and markets are just aggregators of information. They already reflect what you know, and what I know, and what everyone knows. When you interfere in a market, you aren't adding your expertise, you're removing the expertise of millions of others.

But there is one thing that makes me happy. I have confidence in my ideas, and as long as information continues to travel with more simplicity over time (yelling, writing, telegraph, phone, cell phone, internet, ???), the correct ideas will eventually win out.


  • there is nothing on this post.

    By Anonymous Phil, at 9:50 PM  

  • There is now.

    By Blogger PaulNoonan, at 10:18 PM  

  • Hmmm... interesting.

    I always thought that the reason was that economists & the very religious both wanted less regulation & government so they are both Republican. (Economists for free market, religious because of rural independence.) The economists need a unified party & either don't really care about evolution v. creation or they adopt the ideals of their party... to keep the religious right happy.

    By Anonymous Scott H, at 11:41 PM  

  • Oops, I forgot the left.

    On the left, I think you are right that most people don't really understand market forces. Those that do may be "bleeding heart" liberals who wish to help those who are taken advantage of, disadvantaged, or fall behind. Because this requires regulation, they generalize that regulation is generally good.
    I don't think they all believe in evolution either.

    Obviously I am just speculating, like Phil I would like to see someone knowledgeable explore this.

    By Anonymous Scott H, at 11:55 PM  

  • Paul, it strikes me that your point really has nothing to do with ID per se. ID is at least theoretically compatible with evolution. That is, a Designer must have designed this system whereby things have improved over time. This belief doesn't necessarily contradict the simple market proposition that letting things be will usually make things better. The question of why or how things get better is a different question from whether things get better. Your insights seem to apply simply to those that believe things do get better. The why or how is unimportant. The more interesting question, then, is why at least some of those who believe in evolution do not trust market forces.

    By Blogger Brian Hagedorn, at 1:27 AM  

  • I suppose you're literally correct about ID although most of what I read about it involves attempting to sneak religious instruction into public schools.

    However, if you still see the need for a designer in nature, it seems logical that meddling in the free market would follow. Anyway, until Republicans actually stop spending like an NBA player at a strip club, they are free from charges of hypocrisy on this issue.
    I think I mainly addressed my questions to the left in this post, didn't I?

    Scott, I think you're pretty much right on. Oh, and when Phil left that comment, there was literally nothing in the post. Blogger was being a bitch.

    One last thing for Brian. Over at your place you mentioned that I have a more positive view of human nature, which is undoubtedly true. One of the reasons for this is the constantly improving nature of the world, especially in places of comparably little government interference. When individuals are left to act independently, things get better. What else is there to conclude about human nature then?

    By Blogger PaulNoonan, at 9:33 AM  

  • Oh my God, you guys! You can’t throw a stick and not hit a sweeping generalization in this comments section.

    Republican = small government!? Maybe at one time, but how many people are now employed by the Department of Homeland Security, all because of past failures in government communication.

    Those on the left don’t understand market forces? Those that want to live in a society that takes care of the disadvantaged are “bleeding heart liberals?” And that’s the only reason for regulation? I’m gonna go for the most basic argument here, but does anybody remember Enron? A debacle, by the way, aided in large part by waivers granted by Arthur Levitt’s SEC during the Clinton “liberal” administration. Doesn’t fit neatly into any conventional wisdom, does it?

    The very religious want less government? Who, the right wing Christians who want the 10 commandments outside the Supreme Court’s building or the ones who want prayer in public schools?

    Anyway, the Glass Steagall act grew out of pre-depression corruptions on Wall Street and recently we got into trouble, in part, by ignoring the Chinese wall regulations. Unfortunately, a greedy few can take down an entire economy. How do you get around that?

    By Blogger Gypsy Rose, at 11:07 AM  

  • I'll assuming that you're yelling at Scott. I'm with you, mostly. Republicans haven't been about small government for a long time now.

    I usually use the term "leftist" to refer to those who seek to use government power for their own ends, and I do think that you can make a case that this inclination is driven by compassion, so I do agree with scott to some extent (I think the desire for power is more prevalent). I suppose that these people would be "bleeding hearts" but in general I think everyone has the same ends in mind, and so to some extent, everyone is a bleeding heart. People disagree about the means.

    Enron is interesting. First of all, was Clinton "liberal?" Not really. Secondly, what are you trying to show in your Enron example? That lefties can grant rgulatory exemptions to corporations? That a lack of regulation can hurt an economy? And what does Enron have to do with the left understanding market forces?

    Also, didn't the Market do a good job on Enron? It killed it. What more can you ask for. A few got away with ill-gotten wealth (actually, is this still true?), but for the most part everyone got what they deserved.

    What more could the law have done in this situation? Disclosure and Chinese walls are all well and good, but Enron happened largely because of an abuse of partnership law, and if you really want to embezzle, no amount of regulation is going to stop you from doing so, just like no amount of regulation will stop someone about to go bankrupt from selling off their goods. They'll be punished afterwards, but the goods are still gone, and the creditors are still screwed.

    I don't think a greedy few can take down the economy. Enron was a shock, but a relatively small shock. The economy is much more felxible now, much more knowledge based, and much more resistent to shocks. The only way that one person can take down the economy these days is if they run the federal reserve.

    You could make a case that this was also true during the depression, which may have been a simple recession if not for the subsequent contraction of the money supply.

    By Blogger PaulNoonan, at 11:32 AM  

  • You know Enron is shorthand for Enron, Worldcom, Tyco, etc. And the market corrected it, but not before thousands of people lost their life's savings.
    Collateral damage? Only if it's not your life savings.

    It was market (SEC) regulation the prohibited many of their off balance sheet partnerships. It was the SEC's waiving that regulation that cleared the way for the abuse.
    So yes, I was using that as an example of regulations that should have been adhered to, but weren't, resulting in lots of people losing money in the market.

    And I was pointing out that it was not a republican administration that openly allowed a way around regulation because it doesn't fit neatly into to conventional idea that democrat = regulation lover and vice versa.

    Leftists don't understand market forces... Just pointing out that it was a sweeping generalization.
    Paul Craig Roberts understands market forces. He just views them differently than some. As do a lot of people on the left side of the spectrum.

    Chinese wall... I left Enron and took the leap to the investment banks. They had their share of trouble and rule breaking recently too.

    Maybe I overstated it by saying one person can take down an entire economy. But one person can definitely wreak havoc... Barings.

    I just don't get this "free market" Utopia idea. There are so many of examples of regulations being ignored or broken with detrimental results.

    Whether the depression could have been less severe, is speculation. That it was at least partially triggered by events resulting from a lack of regulation is for sure.

    By Blogger Gypsy Rose, at 12:14 PM  

  • I don't think that us small gov types think that we'll create a utopia, more of a "worst system, except for all the others."

    Let's talk about those life savings. Enron, et al, was compensating some employees with 401 K's (which if memory serves, largely went into Enron stock), and options. One problem, a major problem, was the reporting of options, which has now been corrected. As for the 401K problem, those people, truthfully, never had life saving their. That stock value was illusory. What if the books had been accurate? There are two likely outcomes. The first is that 401K compensation, or wages, would have been reduced. The second is that Enron would not have employed as many people.

    Secondly, I'd ask the following. Did insider trading regulations make it more likely, or less likely, that Enron-style accounting fanagling would be caught?

    Lastly, it is extremely likely that the smoot-hawley tariff was the primary driver of the Great Depression. It obviously took many factors, including a genuine economic downturn, but the SHT is likely what caused a full on depression.

    Behind every regulatory problem, there is generally a regulation causing the problem.

    By Blogger PaulNoonan, at 1:14 PM  

  • Expensing of stock options is required per regulations resulting from Sarbanes Oxley following the corruption scandals. Are you making my point for me?

    Enron's stock value was illusionary based on their off balance sheet partnerships. Accurate but lower wages or employment rolls are always better than those that are artificially inflated.

    I really don't get your point about the insider trading regulations. I'm sorry, I'm not following. Wasn't it really more of an accounting issue?

    It's true that smoot-hawley was probably a factor in causing the depression. Tariffs cause reactions, that's different than regulations though. Speculative and reckless investment practices also played a role in the onset of the Great Depression nonetheless.

    By Blogger Gypsy Rose, at 1:56 PM  

  • But before SOX changed the rule, some firms already accounted in this way. They should have been given more value, and in some circles, they were. The point of mentioning it was to show that these funds never existed, and good accountants knew it. It's not correct to say that some people lost their life savings, because these savings never existed.

    Most Enron style problems are problems of information, not of regulation. SOX, for all of it's good intentions, won't change much. Well, it will cost more to comply with, but it won't do much to stop corruption. There is only so much you can do to prevent things like this. Note that many of the guilty parties in Enron are now in prison. Why didn't those laws stop them in the first place?

    Tariffs are regs. They are trade restrictions.

    The type of run up to the great depression is common, and non-preventable, although as information becomes more wide-spread, the shocks of the business cycle will probably lessen. Speculation about the impending passage of Smoot Hawley likely triggered the selloff in 1929. Perhaps it would have crashed anyway, but it wouldn't have crashed nearly so far. Recessions happen. Depressions are made.

    If insider trading was allowed, ratting out an embezzler would gain enormous value.

    By Blogger PaulNoonan, at 2:35 PM  

  • I don't know if you can call characterize Enron as a simple embesslement case.

    Ultimately it was that Watkins lady who understood the complexities of what they were doing right out in the open and blew the whistle.

    Wouldn't allowing insider trading create a disproportionate disadvantage for the already disadvantaged unconnected small investor? Is there some trickle down theory/reason that makes that okay?

    By Blogger Gypsy Rose, at 5:59 PM  

  • embezzlement

    By Blogger Gypsy Rose, at 6:00 PM  

  • Sorry about any sweeping generalizations, I was going on what the parties claim to stand for. Qualifying everything is lengthy and was busy and trying to be brief after my gargantuan religion post. I can see how what I said was misinterpreted ("On the left, I think you are right that most people don't really understand market forces."), but I meant that most people (left or right) don't have a strong grasp of economics. Also the reason "bleeding heart liberals" is in quotes as an attempt to mock the term.

    Republicans = small gov't does seem laughable nowadays, they do want less regulation. Many Republicans are getting increasingly angry with Bush over his budget. Bush seems much more politically beholden to the religious portion of his party than to the economic portion. In fact, I strongly suspect that Kerry would have kept costs lower than Bush. Mainly because he pays more attention to what is going on, Bush lacks discipline, and the fact that Bush's claim on having integrity is a load of shirt (can I swear on the blog?). I don't think the left want regulation because they want power, they want regulation because it gives them the means (okay power) to fix things in society that they don't feel should exist. If this is wanting power, then you can say the same about much of the right, because on right, the reason they want less industry regulation is because it interferes with their power to do whatever they want to make profits, even if it harms everyone else (obviously not true of everybody).

    Finally, I actually do believe that regulation is necessary. For example, environmental regulation is very necessary. A certain level of workplace safety is very necessary. The problem with expecting market forces to solve everything is that few people have "perfect information" which is what most economic models rely on. E.g. Workers don't know if their plant dust is toxic or carcinogenic. And we cannot fix the tragedy of the commons for everything (air, oceans). Yes, insider trading is very hard to stop. The whole point of regulating it is to give non-insiders faith in the market so they invest. More investors puts more capital in the market and drives up demand. Insider trading regulation won't stop everyone, but it does add potential drawbacks to the practice.

    And Paul, your positive view of the world does seem nieve to me somewhat. Having some limited exposure in the business world, I realized that the nature of business & competition drives the elimination of unnecessary costs and to seek any source of profit. While some businesses (usually young, new tech) are extremely profitable and/or have little source of conflict with regulatory concerns, other businesses are in a world where those who cut costs the most flourish & those who don't struggle.

    I also think Paul's ID & economics inconsistency still stands. The ID assertion is that things could only be so complex and effective at what they do if guided by a designer. If the assertion was that a higher intelligence just designed a system that left unregulated will evolve (even if just with a few tweaks now and then for) then they'd be consistent.

    By Anonymous Scott H, at 7:24 PM  

  • Yes, you can swear.

    I didn't say that inseder trading was necessarily good, but it does come with some benefit. And I would agree that some regulations are necessary, particularly in situation where an activity creates negative externalities. Some environmental regs are good examples.

    Enron was complicated embezzlement, but in the end, that's all that it was.

    By Blogger PaulNoonan, at 8:46 AM  

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