Vaccines

 

I Can’t Make You Love Me

'Cuz I can't make you love me
If you don't.
You can't make your heart feel
Something it won't.

Can I make you do something you won’t?

The reluctance to get the COVID-19 vaccine is a classic case of a User Optimal versus a System Optimal solution.  The System Optimal solution is for enough of the population, around 70%,  to get the vaccine in order to achieve herd immunity.  Since in the United States, the vaccine has not been approved for those under 12 years old, it requires that those over 12 years of age have more than a 70% vaccination rate.   The vaccination  rate is currently 64% and  moving slowly.  Those who accept the System Optimal solution have probably already gotten the vaccine.  But the User Optimal solution is to NOT get the vaccine.  If you place no value on others, not yourself, getting COVID, and there is a real probability of a reaction to the vaccine and a long term possibility of side effects of the vaccine, then not getting the vaccine is a valid User Optimal solution. 

Arguing that those not getting the vaccine are being selfish will not change that User Optimal solution.  Paying to get the vaccine might work, but only if that payment is more than the cost perceived for the immediate reaction and the long-term side effects.  Additionally the necessary payment will vary for each individual.   Finding a value that achieves the desired herd immunity is difficult.  Since this is a System Optimal solution, prohibiting Users from participating in desirable system events, say concerts, sporting events, travel, etc. may be the only way to change the User Optimal solution.  Will those who have opposed getting a vaccine complain loudly?  You bet.  But  they may not otherwise choose the System Optimal solution, and the shadow payment of getting them to adopt that System Optimal solution is not known. Making those Users pay a price for not getting the vaccine may be the only way to get them to choose the System Optimal solution.  Society, i.e. the System, just has to ignore the complaints coming from those who are reluctant to getting vaccinated. After all murder, theft, lies, etc. are all User Optimal solutions.  But no murder, no theft, no lies are System Optimal solutions.  If a cost is imposed to make Users choose what society has determined to be a System Optimal solution, then it seems like a small price to pay.  If society is  willing to impose a death penalty to prevent murder, then imposing a vaccine requirement to prevent further COVID outbreaks seems like a small imposition.

Money

 

Money (That's What I Want)

The best things in life are free
But you can keep them for the birds and bees
Now give me money, (That's what I want)
That's what I want

But what is money?

Webster defines money as “something generally accepted as a medium of exchange, a measure of value, or a means of payment.”  To prevent the need to barter, which requires that I have a good that I can exchange for your good, people have historically accepted gold as a medium of exchange.  The problem with gold as  medium of exchange, is that is bulky and heavy.  Paper money began when that gold was stored somewhere and a paper note that represented that gold was used as the medium of exchange.  A problem with this is that it required trust that the paper note was true.  The paper US Dollar might say “In God we trust”, but in fact we trust that the paper dollar is not a counterfeit and does represent something of value.

In addition to trusting that a note is something of value, in order for an economy to grow that medium has to also grow.  Gold can not grow. The frenzy around gold rushes is because the amount of gold on earth is fixed and can not be increased.  This is also true with one of most successful digital currencies, Bitcoin.  There is a limit to the number of Bitcoins that can be created, 21 million, and when all Bitcoins have been created, it can not be grown.

To accommodate growth banks lend the money which is deposited with them.  However, if that money is lent, then it can not be immediately returned to their depositors.  That is why historically there were runs on banks.  The creation of a national bank was a way to spread that problem among the entire nation and not just a few banks.

A popular idea in economics in Modern Monetary Theory, is that the state can create money by increasing the supply of money.  This is hardly modern.  William Jennings Bryan campaigned for silver coinage to increase the supply of money so that “mankind would not be crucified on a cross of gold”. The Weimar republic printed, increased the supply of, money so fast that a loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.  Increasing the supply of money works only if we can trust those creating money.  They are not really printing money. They are increasing the medium of exchange.  Printing money that exceeds the need for that medium of exchange creates hyperinflation.

The rapid inflation in the 1970s, and the continuous low, but pervasive, inflation of today can arguably be tied to one event, the Nixon Shock of 1971.  Before that event, international trade used the US Dollar backed by gold as its medium of exchange.  When it was no longer backed by gold there was a surplus of international dollars but no comparable increase in the existing supply of goods.  The initial shock resulted in the rapid US inflation in the late 1970s.  The continued growth of the global economy, without increasing the US money supply to consider this growth, has arguably resulted in today’s low but persistent inflation.

When I was a young engineer, I was given advice by an older colleague that a good rule of thumb is that growth should be considered to be 2% per year.  Inflation has been averaging about 2% per year.  A coincidence? I would suggest not.  Should the supply of money be increased, as Modern Monetary Theory suggests? In my opinion yes, but heeding that old advice, it should be limited to about 2% per year.

Olympics

 

Try 

Yeah, yeah, you better try, try, try, try a little more
You ain't never gonna get any man if that's the sort of thing you can do
Shit, there's lot more talent around than that man
Try, try, try, try try try
You've gotta try, try, try, try 

Congratulations to MyKayla Skinner and all of the Olympians, especially those who were NOT gold medal winners.

“And the word was much better for this.  That one man scorned and covered with scars.”

“A man’s reach should exceed his grasp, or what’s  a heaven for.”

“They also serve who only stand and wait."

I hope that we have all learned some lessons from watching these Olympics.  Second place is not first loser.  Katy Ledecky's most impressive race was not her Gold Medal performances.  It was the Silver Medal in the women’s 4 x 200m relay where she showed her heart and did not count her team out or let it down.  Great Britain Jesse Knight’s  Olympics did not end in heartbreak when she tripped in the heat of the women’s 400m hurdles. Jordan Rainey did not even get to travel to Tokyo because she was the last person cut from the women’s US Women’s Water Polo team. MyKayla Skinner won a Silver Medal in the Women’s Vault but only got a chance to compete after  Simone Biles dropped out.  Simone Biles may not have won a single medal but her courage and sportsmanship in admitting that she was not her best has been the story of this Olympics.

Winning is not the only thing.  It is the effort that counts.  We can be entertained and celebrate the winners of the competition.  But there would be no competition if you all did not try and try your best.  Thank you all for trying.  If this last year has taught us anything it is how fragile and temporary everything is and how important the effort is.  Stay safe and thank you all.

Fantasy

 

Pure Imagination

There is no life I know
To compare with pure imagination
Living there you'll be free
If you truly wish to be

Is truth always better than fantasy?

In a previous blog post I proposed a framework for human behavior https://dbeagan.blogspot.com/2021/06/truth-justice-and-american-way.html, that included an attribute of Truth vs. Fiction.  I stand by that attribute, but it is not meant to be judgmental.

Being at an extreme for truth might mean reading only works of non‑fiction, watching only documentaries, and viewing a suspension of disbelief as a waste to time.  You can enjoy fiction without abandoning the truth.  Much of the humor in cartoons comes from the knowledge that the reality does not act that way.  If Wil E. Coyote runs off a cliff and doesn’t begin to fall until he realizes that he is running on air, or  the Road Runner enters a tunnel painted on a rock, the humor is that this is contrary to the way things work.  Superheroes smash and destroy buildings without injuring anyone but showing the probable injury might evoke horror instead of the intended excitement. We willingly suspend our belief and accept the conventions of fantasy.  If you read Harry Potter, watch Star Wars, Star Trek or Game of Thrones, you can accept the rules of the story even if those are not the laws of physics.

Believing in something that is not true does not mean that your other contributions are not valuable.  Isaac Newton developed calculus, the law of gravity, optics, etc., but he also wasted his time pursuing  alchemy and occultism and trying to find an elixir to turn lead into gold.

Being able to do stage magic, practicing the art of deception, can be useful in telling stories. Some of the most famous storytellers and performers (e.g. Charles Dickens, Walt Disney, J.J. Abrams, Arsenio Hall, Johnny Carson, etc.) were amateur magicians.  That does not mean that using the tricks of stage magic for deceit or swindling is not wrong. In fact some of the most famous debunkers of the occult were themselves stage magicians, e.g. Harry Houdini, The Great Randi, Penn Jillette).  They better than anyone understand that there is a difference between fantasy and reality.

Believing in fantasy despite facts to the contrary is an extreme that is just as problematic as denying all fiction.  I believe that people who believe in ancient astronauts, UFOs, astrology, a flat Earth, etc. despite facts to the contrary are to be pitied.  But those who swindle, lie, or deceive those who have those beliefs are to be condemned.  There is a difference between believing in fantasy ( e.g. “the WWE is real”) and being entertained by fantasy ( e.g. “I enjoy watching the WWE”).  Some of the greatest advances have come because people adapted ideas from their fantasies.  It is good to have an imagination. It is only bad if you start believing your imagination.

Ronald Reagan

 

The Hunter Gets Captured by the Game

What's this whole world comin' to
Things just ain't the same
Any time the hunter gets captured by the game

Ronald Reagan loved a good story.  Did he get fall in love with his story and get captured by the game?

The August 6, 2021, issue of Newsweek has a cover story on Ronald Reagan.  The proposed framework of rights versus duty; exclusion vs. inclusion; and truth versus fiction, https://dbeagan.blogspot.com/2021/06/truth-justice-and-american-way.html was tested on Ronald Reagan to determine its usefulness.

It is suggested that Ronald Reagan was more inclined to favor a User Optimal solution (rights) over a System Optimal solution (duty).  Remember it is not suggested that the framework is binary, either 100% rights or 100% duty, but a spectrum between those extremes,  It is suggested that in this case rights are favored over duty and not that there is no consideration of duty.

It is suggested that Ronald Reagan was more inclined to favor exclusion over inclusion.  His exclusion certainly extended to Democrats. His 11^th Commandment was to not speak ill of other Republicans.  If certain groups are more identified with Democrats, i.e. labor, government employees, blacks, he might appear to favor solutions that excluded these other groups.  He would put America first, which should not be misinterpreted as attacking those living in other countries.

It is suggested that Ronald Reagan was more inclined to favor fiction over reality.  His early specialty was rebroadcasting Chicago Cubs games where he embellished game statistics that  he received over the telegraph, in order to appear as if he were at the game in person.  He is noted for his career in Hollywood where the ability to act in fiction believable was a positive.

It is suggested that those who shared either user optimal solutions, exclusions of any kind, and favor fantasy might be inclined to think that Ronald Reagan shared their positions.  This appears to have led Ronald Reagan to support a redraft of the Tax Code which favored those users who had capital, favored states rights or any exclusions, and  fiction over reality.

The adoption of supply side, often called Reaganomics, as government policy arguably began with the Economic Recovery Tax Act of 1981. Supply side policies proposed two things.  That expenditures by government had no value to suppliers, and that reducing tax rates for wealthy suppliers would lead to more investment by those wealthy suppliers.  This position was enacted gradually beginning in 1981 cpntinuing over several Tax Acts such as the Omnibus Budget Reconciliation Act of 1990, Economic Growth and Tax Relief Act of 2001 and the  Jobs and Tax Cut Act of 2017.  These Acts lowered the marginal tax rate of the highest tax bracket and reduced the income ranges of the lower tax brackets.  Adopting Ronald Reagan’s dictum of trust but always cut the cards, it is worth seeing if growth was greater after these tax cuts and benefitted all the income for all groups and not just the wealthy.

Looking at mean and median household income during the period 1953 to 2019, the reported incomes suggest that growth would have been higher if government spending had not been cut.  It also suggests that the gap in income has increased, rather than decreased over this period.

This is hardly surprising.  The Kansas experiment enacted by Governor Brownback had more drastic tax cuts, and its impact was more immediately apparent.  The changes enacted under Reaganomics were more gradual and while the end result is the same: reduced government expenditures  and increased income gaps. It has occurred over a longer period and might be  thus less obvious.  It also occurred over a period of increasing inflation, which arguably began because of the Nixon Shock, and its impacts were also marked by increasing inflation.  Raising the cooking temperatures in a pot gradually might not be noticeable by a lobster in that pot, but in the long run that lobster is cooked and dead.

Ronald Reagan might have preferred rights over duty, Republicans over Democrats, and was willing to suspend his belief, but it appears that he might have been taken advantage of by those who shared similar positions, but for different reasons. 

Money Supply

Trade Winds

Yes we're caught up in the trade winds
The trade winds of our time
We are riding on the trade winds
The trade winds of our time

Trade is a good thing.  Not accounting for trade is a bad thing. 

The money supply should allow all buyers to complete their transactions with all sellers.  A problem is identifying buyers and sellers within the existing administrative /political boundaries.  Because there is no accepted international currency, the US Dollar serves as a major medium of international trade. According to SWIFT, 52% of international trade is in US Dollars.  Thus the money supply of the United States should not just be the US Gross Domestic Product, i.e. the  buyers and sellers in the United States. It should also include the use of the US Dollar in international trade, even if that trade does not contribute to US GDP. According to the World Bank, the US GDP was 21.43 Trillion US Dollars in 2019. The amount of international trade was 19 Trillion US Dollars in 2019.  If 50% of that is in US Dollars, then the US money supply should not be $21.43 trillion but should include an additional 8 trillion US dollars. The US money supply should be increased not only to accommodate the growth of the US economy but to accommodate the growth in this international trade.

The US currency in circulation in 2019 was $1.2 trillion.  But the total money supply incudes not only this cash, but also all liquid assets. According to the Federal Reserve in 2021, the M2 money supply was $19.4 trillion or about equal to the US GDP.  However  this does not include the use of US dollars in international trade, where this currency is used even when neither party in the trade is based in the United States.  Inflation has in recent times been continuous and pervasive in the United States.  In fact the Consumer Price Index, CPI, a measurement of inflation, shows a dramatic change in the early 1970s, when the Nixon Shock removed the conventions established at Bretton Woods. In fact inflation, as measured by the change in the CPI, was not a factor before Bretton Woods, was modest when the US Dollar was convertible into gold at a fixed rate as established at Bretton Woods, but became dramatic after the Bretton Woods conventions were abolished but the US Dollar remained a major international trading currency.

Year to year inflation was dramatic in the 1970s but has become persistent but lower than  2% per year in recent times.  This is exactly the situation that one would expect if the CPI changes were viewed year to year and not over a longer period.  The changes in the CPI have been consistent since the Nixon Shock.  It is only when the changes are viewed compared only to the previous year that the inflation rate has changed. The finding ins the blog post on the CPI from 2018, https://dbeagan.blogspot.com/2018/08/the-happening-riding-high-on-top-of.html, has been updated to use more recent CPI data, but the finding remains the same.  The best fit to observed data is still no inflation prior to 1945 ( the year that Bretton Woods convention took effect); modest inflation from Bretton Woods to the  Nixon shock ; and a constant and dramatic increase in the CPI in the period after the Nixon Shock.

The growth in US Money supply should consider not only the growth in the US GDP, but also the growth in international trade. If the demand for dollars increases because of increasing international trade, but the supply of dollars is fixed only to the US economy, then is it any surprise that inflation in the US economy is the result?

It has been observed that the relationship between the money supply and US GDP and other domestic measures has been unstable in recent decades.  It is proposed that it became unstable when global trade became significant compared to the US economy.

Credentials II

 

My Way

Regrets, I had a few
But then again too few to mention
I did what I had to do
 I saw it through without exemption

I did it my way too, but my way was wrong and I do regret that.

There is  a scene in the 1939 Wizard of Oz movie where the Wizard ( who remember is a charlatan) is asked to give brains to the Scarecrow (who remember already solved most of the intellectual challenges faced by Dorothy and her companions). The Wizard does this by giving the Scarecrow a diploma.

“Back where I come from, we have universities, seats of great learning  where men go to become great thinkers.  And when they come out, they think deep thoughts -- and with no more brains than you have.... But!  They have one thing you haven't got!  A diploma.”

I took this scene way too much to heart.  I also consider myself a Marxist, that is a follower of Julius Henry “Groucho” Marx. He once famously said that “I refuse to join any club that would have me as a member.”.  I thought that it was the man, not the club; the idea, not the diploma, that matters. “I was so much older then, I’m younger than that now”.  Because the system was one of caste I refused to participate and did not get the benefits of merit bestowed by that system.  Now that it is too late to get credentials, diplomas, social networking, etc. I have ideas but no one to vouch for them,  And people have to trust me before they listen to my ideas. If they don’t know me, then why should they trust me, no matter how good my idea is.  I should have gotten diplomas, certificates, memberships, joined clubs, etc., before I had an idea, if I expected anyone to listen to my ideas.