Trade

 

Money, Money

A mark, a yen, a buck or a pound
A buck or a yen
A buck or a pound.
Is all that makes the world go around
That clinking, clanking sound
Can make the world go 'round

Does a buck still make the world go around, and should it?

If one county produces petroleum but needs grain, and another country produces grain but needs machinery, and still another country produces machinery but needs petroleum, it is possible that a three-country trade agreement could take place.  However just like in sports, multi-party trades are complicated and hard to complete.  Trading is easier if it is conducted using a currency that each party can earn, and then use that currency to complete their own trades.  In 1944 at Bretton Woods that international reserve/trading currency was established to be the US Dollar.  While the Nixon Shock of 1971 abolished the Bretton Woods agreement,  the US Dollar is still the preferred medium for international trade. According to  Society for Worldwide Interbank Financial Telecommunications (SWIFT), the US dollar, a buck, was used in 51.9% of the international currency transactions in 2014. The second, with a 30.5% share of the totals is the Euro, which was not even a currency yet in the song from Cabaret, which was set in pre-WWII Berlin, and which replaced the mark. The British pound was third with a 5.4% share of the total value, followed by Asian currencies, such as the Japanese yen and the Chinese yuan.

As international trade increases, this causes an increase in the demand for US Dollars.  This means that the US trade deficit must increase, or else this international trade could not take place.

This is the Triffin dilemma, named for the Belgian-American economist, Robert Triffin, and has been known since the late 1960s, although the dilemma can be traced to a 1932 lecture by French economist Jacques Rueff. As long as the US Dollar is the international trading and reserve currency, if international trade increases, then the US trade deficit will also increase.  Additionally short term domestic economic objectives, such as controlling inflation, may result in conflicts with long term international objectives. That this was known long ago, does not make it any less true.  After all, the fact that money makes the world go around is also still true.

Leadership

 Johnny B. Goode

His mama told him "someday you will be a man
And you will be the leader of a big old band
Many people coming from miles around
To hear your playing music when the sun goes down
Maybe someday you name will be in lights
Saying "Johnny B. Goode tonight"

What does it take to be a leader?

“I wanted to always play it (the coronavirus) down. I still like playing it down because I don't want to create a panic,"  Donald Trump in a March 19, 2020 phone call with Bob Woodward.

“You can’t handle the truth”, Colonel Nathan R. Jessup testifies in court on "Code Red" in  the movie “A Few Good Men”

“I have nothing to offer but Blood, Sweat, Toil, and Tears”, Winston Churchill in a speech to parliament on  May 13, 1940.

All of the statements above are concerned with leadership and the truth.  Society needs truth from our leaders, no matter how unpleasant that truth may be.  The people CAN handle the truth, and expect the truth from its leaders.  We will not panic, if we are told the truth. 

We also expect the truth in promises from our leaders.  Churchill also did not promise victory, which he knew he could not assure, but he did promise that he would never surrender.   “We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender”.

There is a reason that Churchill is celebrated as a leader.  He told the truth, and he did not make promises that he could not keep. If leaders tell us the truth, and do make promises that they can not keep, the people will do their part and not panic. We place our trust in leaders, who place their trust in us.

Choices

Aquarius 

When the moon is in the Seventh House 

And Jupiter aligns with Mars 

Then peace will guide the planets 

And love will steer the stars  

Do our stars choose what is best for us? 

Society consists of individuals. What is best for society, may not be the best for each individual in that society. My favorite way to understand this is the bank run scene in the film, “It’s a Wonderful Life”. https://www.youtube.com/watch?v=iPkJH6BT7dM. At the 1-minute mark of this clip, Tom demands all of his $242 from the Bailey Building and Loan, and says it is better to get half the amount from Mr. Potter, than to get nothing. George Bailey gives the customers his own money to stop this and at the 3 minute 30 second mark kisses Miss Davis when she only asks for $17.50 to tide her over. Tom is willing to consider taking a loss of 50% because he is considering a User Optimal solution. George and Miss Davis are seeking a System Optimal solution. 

Back in 2005, I was part of a team studying the transportation impacts of Climate Change on the Gulf Coast. In the middle of the study, Nature provided an unplanned experiment when Hurricane Rita struck Houston. The evacuation of Houston was a massive failure. The developers of the evacuation plan were part of the consultant team. Their evacuation plan assumed that each household would use only one vehicle to evacuate the members of the a household to safety, and any other vehicles would be abandoned at the household. Thus a household with 3 drivers and three cars would still only use one car, would evacuate on a timed schedule by neighborhood, and the highways would not get clogged. But the developers of the evacuation plan explained during the study that they themselves had one driver in every one of the cars they owned, ( 3 cars and three drivers per household means 3 cars evacuated), and left as soon as the evacuation started, which was their User Optimal solution, and as a result the roads were clogged. So even those who developed the System Optimal solution still chose a User Optimal solution, which explains the clogged evacuation highways. The lesson is that it is hard to choose the System Optimal solution when it requires you do something that conflicts with your own User Optimal solution. 

But “There is no “I” in Team”, “I only regret, that I have but one life to give for my country”, etc., etc. We want, and admire, System Optimal solutions, but we will choose User Optimal solutions. The problem is when the sum of User Optimal solutions is often way less than the System Optimal solution. That is why the fault is not in the stars, but in ourselves.

Fever

98.6

Hey, 98.6, it's good to have you back again
Oh, hey, 98.6, her lovin' is the medicine
That saved me, oh, I love my baby

Is a difference from 98.6 normal?

98.6 is the normal body temperature of humans.  But no single value should ever be taken as normal unless you also see an error range.  98.6 is the temperature in Fahrenheit.  In most of the world that temperature would be given as 37 degrees Celsius  If a Canadian heard that the outside air temperature was 35 degrees, he might consider it a heat wave, not because he is Canadian  but because he uses the Celsius temperature system.

Again 98.6 degrees Fahrenheit is 37 degrees Celsius.  The common claim that human body temperature averages 98.6 degrees Fahrenheit originated with a study by the German doctor Carl Reinhold August Wunderlich, who repeatedly measured the temperatures of 25,000 people in Leipzig in 1851. The error range is not often given but based on the instruments of that time it is assumed to be plus or minus 0.5 degrees Celsius.  That means the range of average normal temperature would have been given as 97.7 (36.5 degree Celsius) to 99.5 ( 37.5 Celsius).

But this was in 1851.  Has normal human body temperature changed in the last 170 years?  A body temperature higher than the outside air temperature is a mammalian defense against bacteria and fungus.  For example, the common intestinal bacteria Helicobacter causes open sores called ulcers in the esophagus, stomach and small intestine and raises affected people's risk of developing gastric cancers. Over the years, Helicobacter infections have become less common in the U.S because of antibacterial treatments.  This has meant that the evolutionary bias against body temperatures less than 98.6 degrees Fahrenheit may no longer apply.  According to a recent study, American men born in the 2000s measure an average 1.06 F (0.58 C) cooler than men born in the early 1800s. Women born in the 2000s measure about 0.58 F (0.32 C) cooler than women born in the 1890s. 

The bottom line is that 98.6 may not be YOUR normal body temperature, which might have fluctuated throughout the day anyway.  A fever is when YOUR body temperature is higher than its normal, not when your body temperature is higher than 98.6.

Heroes

 

I Need A Hero

I'm holding out for a hero 'til the end of the night
He's gotta be strong and he's gotta be fast
And he's gotta be fresh from the fight.

What does it say about you if you need a hero?

We have been telling stories about heroes from the time of Greek myths, to today’s Marvel and DC Universe movies.  What does it say about you, if you believe in heroes?  In a previous blog post, I described a framework for human behavior, https://dbeagan.blogspot.com/2020/06/a-framework-for-human-behavior.html.  One of the attributes in this framework is whether someone favors User Optimal or System Optimal solutions.  Heroes by definition must believe in System Optimal solutions.  They clearly don’t seek a solution that is best for themselves, but seek the solution that is best for others. 

Superman could use his powers to be the wealthiest individual, but he chooses instead to save others. Batman is a billionaire but chooses to pursue justice, rather than his own pleasure.  In the movie "Civil Wars", Captain America seeks justice over order. When Spiderman says “With great power, comes great responsibility”, it clearly means responsibility to others even if it is to your own detriment.  Greek tragedies often describe what happens when heroes seek to advance their own interests, seek a User Optimal solution, and abandon seeking what is best for others, a System Optimal solution.

If you expect a hero to not seek their own User Optimal solution and save you, or you follow a story where a hero does just that, you probably also prefer System Optimal solutions over User Optimal solutions.   A hero may not only be someone who doesn’t get captured, but also includes those that get captured, depending on why they got captured and what they did once they were captured.  The best way to show that we admire heroes is to seek System Optimal solutions for ourselves. Then we can be our own heroes.

Trade Wars

War 

(War) h'uh. Yeah! 

(What is it good for?) Absolutely nothin’ 

 uh-huh, uh-huh 

(War) h'uh. Yeah! 

 (What is it good for?) Absolutely nothin' 

 Is a trade war good for nothing, too?

 “The US trade deficit is increasing because the US is losing the trade war with China.” There is a lot to unpack as wrong in that statement. 

First, war is a zero-sum game in that there are winners and losers. Trade is NOT a zero-sum game, and if it is done correctly should be a win-win game. 

Second , trade is not always a bilateral game. The trade deficit between one country and another is not necessarily relevant. In grade school we learned of the 17th and 18th century triangle trade: of slaves from Africa to the Caribbean; of molasses from the Caribbean to New England; and of rum from New England to Africa. (the following by no means is an endorsement of the triangle trade but is illustrative as to why bilateral trade measures are not relevant.) Between New England and Africa, Africa is the loser and New England is the winner. Between Africa and the Caribbean, Africa is the winner, and the Caribbean is the loser. Between the Caribbean and New England, New England is the winner, and the Caribbean is the loser. However the lesson of the triangle trade is that bilateral winners and losers do not mean anything. Another example is when the Red Sox traded Mookie Betts to the Dodgers as part of a three-team deal with the Twins. Trade can involve more than just two parties. 

Third, is the trade deficit in goods and services for the US increasing? Yes, but it has been increasing since the Bretton Woods agreement was terminated in 1971. The US Dollar is an international reserve currency and a major currency used in international trade. If US Dollars are in demand by other countries, they have a reason to be in a trade surplus with the US. This means that the US will be in a trade deficit with the rest of the world. Highlighting the trade deficit in service and goods acts as if the only value of the US dollar is to the US economy, which is not true. If the US dollars have a value to other countries, and there is value in trade between countries that does NOT even involve the US, the expected result is that the US will have a trade deficit. If  US dollars were not a reserve currency or the major international trade currency, there would probably be no trade deficit. 

So is the US losing a trade war with China and is that responsible for the US Deficit in goods and services. That viewpoint is so wrong that it is good for absolutely nothin’.

“Law and Order” vs. “Honor and Justice"

 

The Impossible Dream

This is my quest, to follow that star
No matter how hopeless, no matter how far
To be willing to give when there's no more to give
To be willing to die so that honor and justice may live.

“Law and Order” may only mean supporting the existing system.

We have elections to determine who controls the government, i.e. the system.  “Law and Order” supports those who control the existing system.  “Honor and Justice” supports the system, no matter who controls it. 

If there are protests against the system, those may not be supporting “Law and Order.”  However if those protests are on behalf of “Honor and Justice”, isn’t that  better than supporting “Law and Order”.

It brings to mind the opposition to protests when I was young as “My country, right or wrong”.  The best response that I remember agreed with that statement, but acknowledged that it was incomplete.  ”My country, right or wrong.  If it is right, keep it right.  If it is wrong, make it right."  That is supporting “Honor and Justice”, even if it is not supporting “Law and Order”.