The Vice of Thrift

About a month back, Alan Greenspan responded to critics of his Fed, claiming that the housing crisis was actually caused by the abundance of global savings. Becker agrees with this assessment (while noting the Fed made some contribution.)

Worries about Social Security's insolvency aside, this isn't the first time we've seen the anti-savings (/pro-debt) side of Greenspan. The former Chair told a congressional committee a few years back that the U.S. could healthily take on considerably more debt than it currently owed, that its approach towards national debt was probably overly conservative.

My initial instinct is skepticism.

But Greenspan might be right. The elimination of all debt is hardly a universally wise strategy. Whenever investments would increase your ability to pay beyond the prevailing interest rate, the better tactic is to borrow. Avoiding debt in these situations is, in fact, wasteful.

Educational loans are one example of this, the lifetime returns to education trounce the amounts that will be forfeited in interest to finance a quality education. The heavy subsidies of these loans make them an even better deal. The potential engineer who decides not to take on the debt benefits no one, and hurts both himself and the lender.

Peter Singer has famously and vigorously argued that we have a moral obligation to give away all we earn once we have accounted for our necessities. Perhaps you're unwilling to go so far. Maybe your skepticism only admits a moral obligation to pursue Pareto Optimality, that is, to help others when it wouldn't hurt us at all (and not cause others pain when it would cause you no benefit). If you have such a baseline morality, you might find that our potential engineer, who has the opportunity to benefit himself and a lender, commits a grave moral wrong if he simply stays home to count grass.

Government investment in infrastructure can be analogous to individual investment in education. Based on the moral sketch above, is it possible that governments are irresponsible to shoot for zero debt? (Ignoring, for a moment, all the other inevitable immoralities of government.)

I'm often been excited by attempts to constrain Congressional spending. But maybe a balanced budget amendment would be better if it forced Congress to maintain a constant debt of 5% of GDP!

Is There Anything Google Doesn't Know?

Google's success has actually made me start to give up after a quick search, as noted in the comments in my last post. It's so good, I generally assume that a failed search means no one can help me. A recurring column on failed searches might be of some interest to someone. (It's a longshot.)

Earlier today I gave up after looking for an open source app that would allow me to mute individual programs (so I could make sure my internet radio station, say, is the only thing making noise on my computer).

I found IndieVolume for $25. It'd be exactly what I'm looking for, except that I generally shy away from small closed source programs, whether cheap or free. Think that's unfairly paranoid?

(I always thought the next Google would be a search engine that could track not just the behavior of the rest of the web, but the behavior of its searchers. If a searcher could indicate in some way how many searches it took to find the info he was seeking, or when he was forced to give up, the search engine might be able to use that data to become somewhat more accurate given less descriptive searches.)

Help me Find this Song I heard...

When I was in Boulder, it was, maybe 11 or 12:15pm on March 7th, I heard this song on the radio. Somewhere in the middle of the dial that was playing some folky, independent stuff (though I can't recall the exact station).

There was a song on the radio just before I met up with a friend, I can only remember vague details. Lead singer with guitar, craggy voice, kinda like Tom Waits; had some background vocals. The lyrics were a repeating pattern, something like, "We used to say, {catchy quote}. {Anecdote about rambunctious youth calling for that catchy quote}. But now we're older, and we don't say that thing anymore." Repeat.

Anyone have any hints?

SOLVED: Who woulda thunk it? by Greg Brown
PS: Metafilter is awesome.

McEnergy Independence

A recently opened gas station in Lawrence specializes in biodiesel and ethanol. Seeing the lower gas prices in bright neon on a major road is bound to get a few folks thinking about converting their cars to biodiesel (it made me curious). I understand conversion isn't even that difficult. A few years back, a punk rock festival here had a panel on how to convert your own car to biodiesel as a DIY project.

Even though the prices are significantly lower than regular, I was surprised the gas wasn't nearly free. Rumors are that a biodiesel car can run on used fast food grease.

My American plan: McDonald's starts selling biodiesel.

The biggest problem with a new fuel system is deploying the infrastructure. McDonald's ubiquity is finally an advantage! The grease has already been shipped across our country for its primary use, so it would be taking an axe to our fuel shipping costs. In exchange, McDonald's gets money for free, and gets to improve its image (even if ever so slightly).

So why does this plan fail?

Another example why people don't trust the Clintons

Most people with a distaste for either of the Clintons state high up amongst their reasons that they are scheming, manipulative liars. The below link summarizing a series of events with WHYY radio does nothing to dispel this rumor.

http://www.cnn.com/2008/POLITICS/04/22/bill.clinton.race/index.html

The dime tour of the story is: WHYY asks Bill Clinton Monday night if his playing of the race card (in comparing Obama to Jesse Jackson) was a mistake. Former President Clinton responds that the race card was IN FACT played on him. When asked about the comments by a different reporter on Tuesday morning (less than 24 hours later), he told the reporter that he was mistaken and that he was not going to be manipulated by the media.

In summary, its all the media's fault. To think, before the man began stumping for his wife, I was beginning to forget why people had such resentment towards the man.

President Bush on Deal or No Deal

The modern equivalent of the fireside chat probably involves a reality tv show. ("Meet the First Family?") I can't wait until all our elections are decided by reality television!

The upside will be that our government services will eventually be ad-supported.

Bruce Springsteen: Wrong for America

It's funny video day:



T

Time Magazine on Overrated Blogs

Time Magazine grapples with the inexplicable staying power of sites like Slashdot and I Can Has Cheezburger [wikipedia links].

I respect the MSM so much more when it calls out other media, when it tries to give as good as it gets. Blind pandering to the internet makes it look like you've never actually been there.

The Real Estate Cash-Back Virus

The Freakonomics Blog points to another culprit in the subprime mess: the real estate cash-back transaction. Itzhak Ben-David, a Ph.D. candidate in finance at the University of Chicago, has an article explaining how this "sleight of hand" viciously hurts both banks and honest borrowers.

The Zawahiri Highlights

Blake Hounshell of FP sums up his trek through the 46 page transcript of Zawahiri videos, containing responses to online questions for Al Qaeda.

(I'm glad someone did that.)

My question would have been: Is anyone in Al Qaeda uncomfortable with videoblogging on YouTube while demonizing Western culture? Do the mujahideen occasionally at least note the irony?

Facts of the Day

• Cheap wine tastes better than expensive wine.
• Medical science eradicated polio in Somalia last year.
  

I have yet to connect these facts, but perhaps the latter calls for a celebration.