True Progress

Why does the car you bought in 2012 cost more than the car you bought in 1960? The Chevrolet Impala was the best selling vehicle in the US in 1960 with a list price of $2,590. This compares to the Toyota Camry, the best selling car in 2012, which has a list price of $22,055. Why the difference of $19,286? Most of us instinctively answer “inflation”, but it is also undeniable that today’s car is safer, more reliable, more comfortable, and more efficient than that of 1960. How much of the price increase is due to technological improvements, and how much is due to pure monetary inflation? Let’s try to answer that question. Read the rest of this entry »

The Free Market is hailed by economists and politicians as the purest and most effective model for organizing economic activity (that is trade in goods and services) between producers and consumers. This is true, although these ideas rest on a foundation of assumptions and caveats that are rarely explained. This article will examine some aspects of what a free market truly is, why it is so good, and why most markets aren’t free. Read the rest of this entry »

We generally understand efficiency when considering different options to the same problem, for example, how to get from point A to point B, by running, driving, or flying. One method will use more energy than the others and will therefore be less efficient. One refrigerator will chill the same amount of food as another and use less energy and will therefore be more efficient.

We also implicitly understand a trade-off between time and energy (less time to do the same task usually requires more energy). But, when we start to compare different activities, say having steak for dinner versus buying a DVD player or taking a 3-day vacation versus buying a new bicycle we often lack the information to compare the overall efficiency between the two different options in terms of energy or materials or really any possible standard that might interest us. Read the rest of this entry »

Discussions and debates on the merits of various forms of monetary policy–usually relatively technical–have invaded even the mainstream news media of late. One idea often advocated is a return to the “gold standard”, a form of monetary policy in place (although not continuously) sometime after the invention of paper currency until about the 1930′s depending on what country you happened to live in at the time.

While the advocacy in favor of or against a gold standard is often intense (especially in certain circles in the United States and the United Kingdom) specifics on the mechanics and policy implications of implementing such a system are often lacking. Read the rest of this entry »

What is the difference, and does it matter?

Whether implementing a new technology or attempting to solve a problem we currently face in the world or even just making mundate decisions about our daily activities, we continually make judgements about the risks we face. With our liminted resources, time, and skill we choose to limit some of our exposure to risk and accept others. But, when making those decisions, we open ourselves to psychological biases about risk and often make a decision that puts us in a poorer position than we otherwise would have been. Read the rest of this entry »

Recent news has highlighted the opening of the first commercial hydrogen fueling station in California. For people who lease hydrogen fuel cell vehicles (the most common user) or some kind of hydrogen combusion engine, they now have one public place in the state of California where they can refuel their vehicles. A few others already exist in New England and Washington, D.C. Is this the start of a new age in the technology of fuel consumption and the beginning of the end of fossil fuels? And, where does this hydrogen come from anyways? Let’s explore some of those questions in this article. Read the rest of this entry »

Why considering a monetary value of life is not only acceptable, but morally necessary

Typically, the first time we consider someone placing a monetary value on protecting a life, the risk of death, or other similar circumstances, we cringe. The mere mention of life in the context of money seems cruel and far too calculating. Rightly, we have learned that an absolute monetary value cannot be placed on the worth of a person whether young or old, experienced or inexperienced, whatever race they are or religion they hold. This article is not going to challenge any of those ethics. Life is a priceless phenomenon and every person’s experience is something to be held at the pinnacle of our value system. Read the rest of this entry »

How Conservation and Efficiency Can Sometimes Increase Consumption

Conservation and efficiency are always good, right? Unfortunately, not always.

Many of us, myself included, consider ourselves conservationists. We don’t buy or take things that we don’t need (for example, lots of extra paper napkins at the restaurant). We consider the energy efficiency of our vehicles, appliances, and other things we use in our homes. And, in principle, we are in favor of measures that encourage everyone to conserve more like recycling. But, things don’t always turn out as we expect, and we must be diligent that our conservation measures don’t end up resulting in more consumption than would otherwise have occured.

There are several causes and conditions for this type of occurence, and most involve market economics. To illustrate my point with an example, let’s consider a few potential conservation regulations that could be enacted by a municipal government. Read the rest of this entry »

The End of Poverty: Economic Possibilities for Out Time by Jeffery Sachs, is an optimistic, forceful argument for the economic potential of developing countries and the necessity of increased in aid from rich countries to realize it.

Jeffrey Sachs is an accomplished macro-economist, currently at Columbia University, who has experience helping poor countries get on track to development. While, often described as left-leaning, he makes strong cases in favor of free-trade, market forces, and the role of the private sector in achieving economic development. He does often tout his own success regarding recommendations for economic reforms that enhanced development in impoverished. However, given the overall pessimistic attitude that many have towards real, subtantial economic development in these difficult places, I am not so sure it was out of place. Read the rest of this entry »

Back in the good old days…

Cultures seem to have their own ideas about what progress truly is and whether it exists at all or is just an illusion. Americans, in general, seem to have faith in progress over time, yet many continue to just as strongly express nostalgia for times past. Others have a more cynical view of progress believing life and history to be more cyclical, while others who have recently experienced opression have no doubt that progress is real and something to strive for. Read the rest of this entry »

The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics by William Easterly is an honest answer to part of the question, “why hasn’t the world improved like we thought it would?” Easterly conducts a post-mortem conference on western aid programs since the end of World War II, finding that in many cases we should have known better. The incentives created by some nations’ economic environment, or the aid programs themselves led national economies into periods of stagnant or negative growth. Easterly’s mantra is “people respond to incentives.” Ignoring this truth, a central tenet of economics, has led to several irrational choices in the area of development aid, and many failures to achieve our objectives. Read the rest of this entry »

Onwards and Upwards

Do we know what we are doing? Maybe the right question is do we ever know what we are doing? What are the true consequences of our actions today and tomorrow and hundreds of years from now? Are we responsible for those consequences or should we never be concerned with them?

I believe that too often we accept not having the answers that we could have. We have chosen not to know whether our ways of “helping” each other really turn out to be help in the end. We have chosen to push the solutions to problems we have today off into the realm of tomorrow. While some of that may be rational (I am fairly certain that my computer will be faster in 5 years), not all of it is. Read the rest of this entry »