Newport Beach Lifeguards

For those of you who don't watch the clip, it's pretty much saying that lifeguards are being paid $200,000 and isn't that outrageous.


The video is a bit misleading. 
First, from the associated press, in regards to pay, "Base salaries for Newport Beach lifeguards range from $58,000 for the lowest-paid officer to $108,492 for the top-paid battalion chief, according to a 2010 city report on lifeguard pay. Adding in overtime, special compensation, pension, medical benefits, life insurance and other pay, two battalion chiefs cleared more than $200,000 in 2010, while the lowest-paid officer made more than $98,000."
Which isn't too outrageous for Newport, where, according to wikipedia "Males had a median income of $73,425 versus $45,409 for females. The per capita income for the city was $63,015." $58,000 to $108,000 lies fairly across this range. So, their pay is roughly average.

 On top of that, these aren't the guys in the towers. Again from the associated press: "Those whose salaries are in question point out that they hold management roles, have decades of service and are considered public safety employees under the fire department, the same as fire captains and battalion chiefs. The fulltime guards train more than 200 seasonal lifeguards who make between $16 and $22 an hour, run a junior lifeguard program that brings in $1 million a year and oversee safety on nearly seven miles of sand.
Many began as seasonal guards and worked their way into management roles and must stay certified as instructors in an array of advanced emergency, scuba and rescue techniques, said Brent Jacobsen, president of the Lifeguard Management Association, the lifeguards' union."

So, what we have is 13 professionals who manage 200 lifeguards being paid comparably similar wages to those in similar positions (firemen and policemen) and average wages for the city they live in while working over 40 hour weeks. That sounds... pretty standard and reasonable.
Sources:
Associated Press: http://www.google.com/hostednews/ap/article/ALeqM5iOX982YP932CogjsJbMT0eP2ZQQw?docId=79959bafd9cd4546b12bc54ada0391d1
Wikipedia: http://en.wikipedia.org/wiki/Newport_Beach,_California#Demographics

Debt

I do not have any debt, which is nice.  My tuition is... well, let's not get into how it's paid for, but it is paid for without my having to take out any student loans.

But, if I did have to take out loans, I would.  The reason being is such:  the investment in my education would like give out greater returns than the debt I incurred, interest included.  The result would be a net gain in my total wealth.

This, in general, is the proper way to consider debt. It's a kind of inverse investment. As long as the money you borrow goes to purchasing you something of greater value, than you should take out the loan. As a concrete example, imagine we have a  company named Firm A.  Firm A does one thing and one thing only. It borrows money from individuals or banks who wish to save and it invests that money. Because Firm A is rather large, it's portfolio is diversified and every year it averages returns of about 4-5%.  It borrows money at an interest rate of about 2-3%. How much money should Firm A borrow?

As much as it can possibly invest.  Let's say it can only borrow $100 and it invests that $100 for a year.  At the end of the year, it owes $102 - $103 and has $104-$105.  It's made a net profit of $1-$3.  If it borrows twice that, it doubles the amount it earns.  Clearly, the way to maximize profit is to borrow as much money at that rate as the Firm can invest.

Let us assume we have a small country called Country A.  Country A's economy grows at a rate of 4%.  Its government offers bonds at a rate of 2%.  How much money should Country A's government borrow?

As much as it can pour into its economy and still have its economy grow at a rate greater than 2%.

Let's assume Country A has $100 in its economy (total GDP).  Tax rate is 10%.  So, the government collects $10, which it then spends right back in the economy.  GDP is still $100.  The government borrows $20, then spends it.  Total GDP is still $100 (total assets minus liabilities, $120 - $20).  Government borrowed at 2% interest rate.  Economy grows at 4%.  Next year, the government owes $20.40, and the economy has assets of $124.80.  "Fiscal conservatives" enter office, and all taxes now go to paying back the debt.  They even raise taxes to  16.35% (roughly) to pay off the debt.  All $20.40 has been paid off, and the total GDP is $104.40.

What would have happened if the government had never borrowed money at all?  Then the total GDP would have been $104. The country is richer because it went into debt.

What happens if the fiscal conservatives don't enter office?  The government, instead of paying off the debt, borrows another $20 and pays off the interest.  So, debt stands at $40 and total GDP stands at $144.80.  Another year passes.  The national debt is at $40.80 and assets are at $150.592 (we'll round to $150.60 to make it easier).  As a percentage of GDP,   the debt has gone from 0% (first year) to 19.5% (second year) to 37.15% (third).  And yet the total GDP, the wealth of the nation, has grown at a faster rate than it would have if there was no debt at all.

What the hell is going on?

What you are witnessing is two different compound interests battling each other.  And much like sumo wrestling, real wrestling, rugby scrums, and black hole collisions, the larger one always wins.  As long as the GDP growth rate remains above the interest rate, as long as assets exist to pay off the debt, and as long as lenders believe the first two are true, then a country can borrow money until the sun explodes and the universe either collapses into another Big Bang or entropies itself into heat death.  Interestingly enough, current physics seems to indicate the latter is more likely.

Guess what the GDP growth rate for the last quarter of 2010 in the US was? 3.10%
Guess what the interest rate on the national debt for the last quarter of 2010 is? 0.25%
Guess how much I'm concerned about deficits? Not at all.

[1] - Data taken from Trading Economics.  I have no knowledge of their possible biases.

Simpson's Paradox

Simpson's Paradox is a particularly well known statistical paradox. At least, it's well known among statisticians.  It is less well known among everyone else.

A layman's version goes something like this: imagine there are two ways of transporting emergency patients to the hospital.  One is by helicopter, the other is by ambulance.  50% of patients who go to the hospital by helicopter die, while only about 21% of patients who go by ambulance die. Clearly, there is something wrong with helicopters, we should make all patients go the hospital by ambulance.

But wait! There are two categories of emergency patients at this hospital, those in normal condition and those who are in critical condition. Of those who travel to the hospital in normal condition by ambulance, 12.5% die while only 10% of normal patients who by helicopter die.  Likewise, of those who travel to the hospital by ambulance in critical condition, 75% of them die while only 70% of critical patients who by helicopter die. What's going on?

	Normal	Normal died	Critical	Critical died	Total	Total died
Helicopter	100	10	200	140	300	150
Ambulance	600	75	100	75	700	150
Total	700	85	300	215	1000	200

What happens is that two thirds of critical patients go by helicopter while only one seventh of normal patients do.  Since normal patients die at a much lower rate than critical patients (roughly 12% as compared to roughly 72%), this skews the data to make ambulance looks much safer than helicopters, even though helicopters are way safer.

Most of the time, that is.

The fascinating moral of this story:  don't immediately assume a relation based on a single correlation. Look deeper for causes.

Morality

I define morality as the collection of acceptable behavior, or morals, that a society largely agrees upon. A society, for this discussion, is any group of people who have to interact with each other on a regular basis.  People, in this context, consist of anyone who can intelligently voice an opinion.  A moral code, however, is an individual's set of beliefs that determines their morals.  Two people can have entirely different moral codes while having the same set morals, in the same way that two entirely different function can still produce the same output.

That raises the question: are some moral codes objectively better than others?  I find it hard to answer.  Intuitively, the response would be yes.  Morality is objective.  Some things are clearly wrong. "Murder," a friend of mine once argued, "is always morally wrong."  But murder is, by definition, the immoral (or unjust, but in this case the adjectives are synonyms) killing of another creature.  Saying "an immoral killing is immoral" is a tautology.  But killing someone can be justified. It can be considered morally correct depending upon the circumstances under which it happens and, more importantly, depending on who's judging it to be moral or immoral. Self-defense, punishment, vengeance, casualty of war, etc have all been used as justifications for why a killing may be considered to be just or moral instead of murder.

But surely some overall moral codes, the collection of morals held together by a unifying theme, can be shown to be better than others.  How would we even show this?  How can we define better?  Is it the code that results in one society having the largest possible population, or another society having the happiest population? Perhaps it's the code that allows one society's population the most "freedom," however you wish to define that word.  Regardless, for one code to be objectively better than another, it must have some empirically testable dependent variable.  As I have not been able to identify such a variable, nor have I yet seen an argument which strongly defends one that I can agree with, I tentatively conclude that no such variable exists.

The disturbing question is then raised: if all morality is equal, then how do we justify punishing those who do things we morally disagree with?  All moral codes are equal, but only the morals which are widely agreed upon are enforceable.  Therefore, even if your moral code found a killing you committed to be acceptable, if everyone else (or really, a sufficiently large number of people) found your action to be immoral, you would be considered to be a murderer, with all the weights and punishments attached.

Similarly, multiple people with very different moral codes could (and do) live harmoniously together as long as their moral codes produce similar outputs. One person's moral code could be defined as "what Jesus said in the New Testament," another could be "the ten commandments," and a third could be "do not harm another living person," and all three would probably agree on a wide variety of issues that would come up on whether or not an action that was taken was morally right or wrong.

As a final note,  I used to believe that a moral code should be logically derived from a few axioms and be as thoroughly consistent as possible.  I can think of no reason to defend that view, unless you believe hypocrisy is morally wrong (which, for the record, I do).  However, at this point, society does seem to consider hypocrisy morally wrong, so I do think that any argument that relies on morality at this point should be internally consistent.

Over time, morality will continue to evolve and change. Things that we would regard as innocuous now will one day be considered reprehensible, and vice versa.  For this reason, all laws need to be passed in such a way that they can be eventually discarded or abandoned.

The structure and style of this post's prose frustrates me.  Though thematically, the ideas here are related, I seem to be making several arguments at once, and all of them poorly. I'll edit this later.

Revisiting Quantum Mechanics and Free Will

In my last post, I made some rather broad claims regarding the nature of the universe and determinism.  I'd like to go into a little bit of that more deeply.

From Quantum Mechanics, we know that with all of the smallest particles, we cannot determine their location and velocity exactly. Instead, we can only say with what probability they will be in a location or have such a velocity.

For the purposes of this argument, let's presuppose that there are no hidden variables that determine location that we can't identify. Instead, let's assume at the most basic level, this universe is inherently probilistic.

Now, let's recover Laplace's Demon.  Remember that the demon is defined as some extra-universal entity which has perfect knowledge of every particle in the universe at a single moment in time. Also, the demon has unlimited computing power and our current level of knowledge of quantum mechanics.

In this case, the Demon cannot say what the universe will look like in the next period of time.  Instead, he can calculate all of the infinitely possible next states of the universe, and the probablitity of each of them occurring.  Now suppose that he calculates the next states of the universe from that set of states, and so on until the end of time.  Here is the essential question: can anything happen in the universe that would not appear in the Demon's model of the universe?

I do not see how it could.  But how does this apply to Free Will?

Let us suppose that our theory of the mind is physicalism and functionalism (note: they are not mutually exclusive).  Physicalism is the philosophy that only physical things exist. In Philosophy of Mind, it states that a mind is a physical thing in all aspects.  For humans, this means that a mind is solely the brain and whatever other neural connections attached to it.  Functionalism is the idea that minds are defined by their functional roles, e.g. if some computer's circuitry mimics human vision processing perfectly, on a mental level, there is no way to distinguish the two.

From these definitions and my previous assertion that only things calculated by my expanded Laplace's Demon can happen in this universe, the only viable conclusion is that every mental action, every thought, can be predicted by the Demon.  Which means everything is determined, free will cannot exist.

When I say "free will,"I mean the ability to make choices free from constraints.  But since all mental thoughts are constrained by the physical, and the physical is determined (or at the very least, predictable, which amounts to the same thing), then our entire mental lives are determined.

Of course, Laplace's Demon cannot exist due to the boundary constraints of the universe.  Quite simply, any machine with its predictive power would require more particles than the entire universe and it would take longer to compute than the age of the universe.

Yes, Zach Weiner not only can make the same argument I can in a more concise form, but can also make it into a sex joke at the same time.  Go read his comic. SMBC-Comics.com

Free will could only exist if mental activity was immaterial or in a separate universe from this one where physics works differently.  To illustrate this concept, imagine a game of World of Warcraft. Even if you knew the entire programming code of the game, you would not be able to predict the actions of the players' avatars because their actions are dependent on what the players do, and the players are entities not described or constrained by the programming.

So should we check out now because everything that can happen, will happen, and that's that?  Not quite.  Because we know that Laplace's Demon cannot exist, any predictive models we develop will have a certain inherent inaccuracy.  To extend the metaphor used above, even if our model is the game's programming, there are still the elements(the players at home) that we can't know.

This means that when we construct models on decision making and behavior (and from that, some of cognitive science, all of economics, and all of political philosophy),  we need to try to account for as man variables as possible while still acknowledging that there are errors being made.  We need to assume everyone has free will while simultaneously acknowledging that they don't.

Due to the obvious contradiction above, I foresee numerous debates involving which variables can be accurately measured and predicted (and with what precision and accuracy), and from those debates, the relative strengths and weaknesses of different models. However, as long as everyone involved in those debates is relying on this same philosophical framework, I think the disagreements that will arise can be handled amicably and with careful acknowledgement of where the differing viewpoints come from.

Hopefully, these past two posts help place all of my other posts in a more understandable framework, and my intention is for all claims I make on this blog in regards to economics and political philosophy to be in basic accordance with this structure.

A Philosophical Overview: Rationalism to Empiricism to Determinism to the Lack of Free Will and Back Again

This post marks an attempt at explaining my underlying philosophical view.  As the title implies, it will set forth a logical progression from Cartesian rationalism to the currently accepted view of empiricism to determinism (or a variant thereof) to my belief that free will does not exist, explaining along the way why I believe what I do.

From the very beginning, the only thing I can know with any certainty is that I exist.  I think, therefore I am (Cogito, ergo sum - Descartes).  But in what way do I exist?  Am I a brain inside a human body?  Am I, like in the movie the Matrix, floating inside a machine, this entire universe an illusion electrically fed into my brain?  Am I a lunatic locked in an asylum, completely unaware that this entire universe is a figment of my imagination?

All of these are possibilities, and there is no way for me to determine with any certainty which is true.  What is true, though, is that the physical laws in this universe/matrix/my imagination are consistent.  I pick up my book, let go, and it falls to my desk. Gravity constantly pulls on me, and I cannot deny it.  Water boils in strict accordance with temperature and air pressure.

Therefore, as long as this universe (or matrix or imagination) continues to exist in this form, I am willing to accept all things that can be empirically shown as true for this universe. But which hypotheses should I accept and reject when it comes to explaining this universe? Is gravity some force that drags all masses together, or is it a secret army of leprechauns that runs around holding everything down? Fucking magnets, how do they work?  Here is where I apply Occam's Razor.  The simplest hypothesis that accounts for all results is the one that I'll accept as true.

Granted, I cannot perform every single experiment and rediscover all of science just to satisfy my own questions on truth and certainty, so I also accept as true discoveries that are made and presented to me with sufficient evidence.  If a peer reviewed paper says it, I'll consider it. If nearly everyone is in agreement with it, I'll accept it.  For a lack of a better way of saying it, I'll accept the status quo unless I have very strong evidence not to.

My physics is a bit dodgy, so humor any mistakes I make in this next paragraph.  From this view, I believe the universe is composed of matter and energy.  Let us assume that Laplace's Demon can exist.

For those of you unaware of Laplace's Demon, read the following illustration.  Imagine a tiny box. Imagine that, just for an instant, you know with perfect certainty the exact location and velocity of every particle in that box (this violates Heisenberg's Uncertainty Principle,  but just make the assumption for the purposes of this experiment).  Furthermore, you know there is no way for anything to enter or escape the box: no light, no heat, no tunneling little mouse, nothing.  With the knowledge you have and sufficient computing power, can you extrapolate from the data you have of that one instant the location and velocity of every particle from then until the end of time?  Now imagine this box contains the entire universe, wouldn't that imply that the entire universe is predictable?

The counter to this is that the at a very small level, particles are not deterministic, but probabilistic.  That there is a 90% chance a particle may be in one spot and 10% chance in another, and there is no way to know, even with perfect knowledge, which is true.  Even then, with sufficient computing power (exponentially more than required in the example above), Laplace's Demon could calculate every single one of the quickly growing towards infinite possibilities.

If every conceivable possibility for the universe could be thus calculated, that has some interesting implications.  The first is that nothing happens at random: everything has a clear precedent and cause.  From that, we can conclude that as our science advances, we can create predictive models with more and more precision, though never with perfect certainty (again, it's impossible to know the exact location and energy of every particle).

The second, and in my opinion, more interesting implication is that there is no free will.  If every possible universe can be calculated complete with all of their particles and energies, then all possible compositions of thinking matter can be calculated.  Since our minds are physical objects (yes, yes, I know Philosophy of the Mind is an entire field of philosophy. So is epistemology, yet I'm going to skim over those entire fields with just a few words), we can conclude that all thoughts are a result of physical interactions.

Your mind is the firing and functioning of a set of neurons.  These neurons are activated by a series of physical events; the chemistry of your brain, the input coming in from various external factors, etc.  Change just some of these factors, and your thoughts will be different.  The end result is that we have no actual control over our thoughts, they are all result of our initial state and all of the experiences we have had since then.

The result of this is that economics, psychology, cognitive science, etc eventually all belong in the natural sciences, and that once they are developed to a certain point, they will be.

But this lack of free will has the implication that my original premise, the fundamental axiom of my entire philosophy, "I think, therefore I am," is instead "I am, therefore I am."

Short version of this entire post: the universe exists. Unless it doesn't.

Inevitability of Regulation

Yesterday, I was playing rugby in a tournament held a couple hours away.  The tournament was organized from the ground up by the players who were there.  Teams paid a few hundred bucks to the club organizing it for the tent and the permit to play and all that fun stuff.

On the field, the games were refereed by former players.  All the players knew the rules and deferred to whichever call the refs made, even if the refs were particularly bad.  Watching this, and playing in it as well, the thought occurred to me how regulation is inevitable.

Let me take a step back.  There is a lot of political rhetoric these days about how the government is infringing on the free market and how there should be less regulation or, coming from the other end, how the free market is screwing the common joe and there should be more regulation.  I'd like to present the idea that current government regulation, and whatever minute changes in it occur, are the products of the free market.

To illustrate this example, let us imagine a single industry: the food processing industry.  Let us all imagine, for our purposes, that we live in a libertarian paradise and there is no government regulation or FDA or any of that.  There are solely the food processing companies, competing against one another, and the consumers.  Now, the food processing companies wish to make as much money as possible doing as little work as possible (as we all do).  Therefore, they will take whatever options they can to make their production cheaper.

Likewise, the consumers want as much as possible for as little as possible.  Let's say that all companies currently have equal market share, and all produce one product, Food, which they all produce and sell for the same price.  Let's say Company A realizes that if they add a little sawdust to Food,  they can sell it for less while still making more money than Company B.  Unfortunately, sawdust in Food causes roughly one in a thousand consumers to have horribly scratchy throats and start coughing blood.

Company A doesn't want their consumers to know this, rightly assuming that it may scare some consumers off.  So, they don't anyone, but they do lower their price.  Company A starts gaining market share.  As it happens, 0.01% of their consumers get pissed off when they start coughing blood, and they start buying from Company B.  However, this is not enough to stem the tide of consumers heading to Company A, so Company B starts a marketing campaign, accusing Company A of child slavery through television ads, radio ads, and well-funded whisper campaigns, while at the same time finding that they can totally cost cuts by reducing work place safety.  Company A retaliates through their own combination of cutting costs and marketing, and meanwhile the quality of Food is going down this whole time.

Consumers, fed up with the lying bullshit being fed to them, as well as the actual bullshit that both companies now include in Food to make it cheaper, decide they're going to form a consumer coalition that looks into the production of Food done by both companies as well as how they treat their workers.  Of course, there's the trouble of financing this coalition, and at first it's done by whoever has signed up for this group, but as the group grows in size, and the information it produces starts leaking out to everyone anyways, people find they can still benefit without paying their dues.

At this point, the consumers have a regulatory body without any funding, so the next step is pretty natural.  Everyone pays their share for this coalition, or they face the wrath of an angry mob.  And now we have a de-facto government complete with taxes and an army (in this case a lynch mob).

Society and people crave a certain amount of order within their lives.  It's a good that everyone is willing to pay for, as evidenced by the fact that we do.  It is similar to a rugby game. Sure, it can be played without a ref, but there's a certain point where it gets so messy with players policing themselves that a ref is decided upon and all defer to his decisions, even when they might be wrong, because slightly unfair play is better than anarchic play.

As a corollary, when the ref sucks and everyone on the field agrees (or even just a significant number agrees), we get rid of the ref and replace him.  Same should be so with government, hence the attraction(though not always the result) of democracy.

When the play gets messy, the field selects a ref. When trade gets messy, the market creates a government.