(Different AC here). The proximal reason is that humans eating other humans produces feelings of disgust, anger and shame (with some exceptions in some cases, times and places), and also because humans socialise with each other (humans do not generally feel that it is moral to eat their pets). Why have we evolved those? Disease? Social cohesion (similar to prohibitions on murder)? A side effect of some other trait? Chance? I don't know, but it does look rather like we have.
If you want a direct logical explanation for morality, rather than a biological explanation for its emotional generators, then you need to revise your expectations. Human morality is not logical in that sense and it's very easy to find inconsistencies, including amongst the religious.
I think the point is that evolutionary biologists can't account for the amount of altruism that exists, and religion is one way to try to explain the caring for non-kin that we see all around us.
Although that can only be an intermediate explanation because you then have to explain why humans have evolved a strong propensity to religion.
religion extends the family; thus we see soldiers, for example, laying down their lives to save those unrelated to them. Or lifeguards...
IANAEB, but if altruism of this sort itself is selective then we have to ask: why do it via religion, which has many other costs in ceremonies, praying time, sacrifies, etc? Altruism towards others could perhaps instead have arisen without religion. Of course it could just happen to be religion that arose from mutation and not non-religious species-wide altruism....but....there's another reason. Religions are good at promoting in-group (within religion/sect) altruism without compromising the ability to generate out-group hatred. The soldier example is a good one. Species-wide altruism wouldn't be as good at generating soldiers laying down their lives. Religion is a lot better.
Exactly. At least now in Europe, the courts are better for smaller guys than in the USA. As I understand it, in many European countries (particularly Germany), there's a "loser pays" rule, so if some jerk tries to sue you over something that's BS, and of course he loses, he has to pay all your legal fees. It's not like that here in the USA; you have to have plenty of money to mount a legal defense, no matter how ridiculous the lawsuit. Sometimes, depending on the whims of the judge you happen to be assigned to, and just how ridiculous the case is, he may grant you legal fees, but it's definitely not a sure thing.
Yes, there's a loser pays rule in the UK....but you don't often get all of your costs, normally you get 70%, and you don't get them until afterwards. If you're the plaintiff you might also find your case thrown out because you won't be able to pay the other side's costs if you lose. If you're the defendent you're going to have to find many hundreds of thousands to pay lawyers and may run out, leaving you likely to lose, or go bankrupt before the end of the case. Better, maybe, but still likely to be instant death for the smallest companies or startups.
Whereas in the finance lectures I went to one of the first things they said was that CFOs know very little about finance:) Not the sort of thing a university would/should be teaching in a proper academic course, anyway. But that course was part of my undergraduate degree, not an MBA, and having not experienced one I'm not sure whether or not an MBA counts as a proper education in such things.
However, it's still true that in the sort of model a basic finance or economics class would use - one with efficient markets bringing share prices towards expected net present values of future dividends - there's not a lot of difference between 'making money' (in a specific well defined sense) and 'raising the share price'. But even then there would still be perfectly legitimate (=in the interests of shareholders) ways to increase the share price without increasing profits. Producing the same profits with lower risk, for example. Or producing the same profits with the same overall risk but with less correlation with the rest of the market. If you studied CAPM (which at a basic level you should if the course was any good) then these things ought to have been either taught or somewhat obvious.
CEO's are not in it to bring profits for a company. That is not their job. Their job is to boast the share price at all costs. Its taught in finance 101 in any college.
Not, it isn't. Finance courses do not teach corporate governance or management in any case. They'll probably teach you about things like CAPM and basic option valuation. They may also teach you that the fundamental value of a company's shares is the expected net present value of all future dividends, which would imply that the way to increase the share price is to increase future profits, with the relative importance of profits soon vs profits later depending on the risk-adjusted interest rate. They probably won't teach you about irrational behaviour in markets or systematic financial asset pricing errors, however.
In other parts of related degrees they're likely to teach you about agency problems, including the coordination problems among disparate shareholding bodies.
Now imagine you are the CEO. You can invest in R&D and have your shareprice get cut down by almost half in this recession and risk your job for not using the money to hire more marketing and sales people, but if you stay on for 5+ years you will make tons of money and create long term value. Or you eliminate R&D and your company will die within 5 - 7 years right? As CEO you get a 20 million bonus for selling your prized assets that make you money for short term gain and your stock price goes up a good 35%. You do not think such CEOs who do this stay right? They jump ship within 2-3 years with a golden parachute. Even better with that track record you go on raiding the next company for even more money and become a guru and genius to stroke your ego. 90% of CEO's would pick this and let the next CEO take the fall when they go out of business or fade to the competion. Meantime you buy a yatch and retire or buy a bigger one as you ruin the next company, etc.
Average tenure for CEOs is something like 7 years, so CEOs jumping ship after 2-3 years can't be all that common. Also, the CEO market isn't a big one and eventually it'll catch up with you, although you're hardly likely to be a pauper by then. CEOs certainly do make decisions to the detriment of their investors for their own reasons, but they aren't always designed to make the short term share price go up. Acquisitions are bad decisions more often than they're good ones and investors regularly drop their valuations of companies dramatically when they happen (like HP) but CEOs seem to love them - presumably for reasons ego and empire building.
If this needs to change we have to stop having Wall Street reward short term behavior and start punishing companies like HP who do retarded things for long term shareholder wealth. I do not know how and do not think it is our job to do this
I think only a few large investors are genuinely in a position to do much here - people like Warren Buffet, activist shareholders like Carl Icahn, private equity investors who can buy whole companies (but many have just added lots of debt and done little of benefit), or maybe University endowment funds. People with long time horizons and/or investing their own money. Fund managers who get their money from myriad individuals tend to find their investors withdrawing money from their funds if they don't perform consistently well over short periods, and in any case fund managers are normally assessed relative to other fund managers. Besides, there isn't anyone who has perfect incentives to invest your money properly but you. If you want the problem solved you can't do it just by making it someone else's.
I kind of agree with you. In reality, nobody can predict the market. But in practice, you don't need to. It's pretty easy to see a downtrend in the broad market, and when that happens you move from equities into bonds. And then when the market begins to trend upwards again, you do the opposite.
If there's a trend then it's predictable.
There have been many cases of useful predictability being discovered, although it doesn't always last long afterwards. It might involve, say, the end of the tax year or certain days of the week. I suspect, also, that you might find predictability if you can spot times when there's a cause for general changes in the level of saving. Think, for example, of Japanese insurance companies selling and repatriating investments after the earthquake, or retirement savings and withdrawal rates change with age profiles. Those are cases where you don't need to out-predict the future, you just have to be in different circumstances.
I never understood this "diversify everything!" sentiment that plagues bank managers. It comes off as lazy, as no matter what 25% part of your portfolio (in the above example) goes up, another part will go down, since gold hedges stock and vice versa. You're always gaining/losing, hoping the gains outweigh the losses. How strange.
Then you misunderstand its purpose. This is the simple textbook justification (look up CAPM for the complicated version): Image a market full of stocks. Imagine they're all basically similar: same average return (x), same variance (v), but their prices and earnings vary. Much of that variation is individual - they have a particularly good product idea, they suffer some disaster, whatever. Some of it is not. Some of the variation comes from market or economic conditions which affect all of them. IOW, each has a variance and they all have some covariance with the average of all the others. If you invest in one then your expected return is r and its variance is v. If you invest in all of them then your expected return is still r.but its variance is smaller. It's purpose is to give you the same expected return but at lower risk.
So then give tax exemptions or rebates to people who own a certain type of car.
Doesn't work well enough. For example, a noisy and locally-polluting car driven occasionally in rural areas causes less damage than if it were driven frequently in cities. Differentially taxing these two cases will help push those cars out of cities and in to rural areas. Differential harm has to be reflected in differential pricing to affect decision making and fixed taxes/rebates on certain kinds of car are too crude to pick up those differences.
Congestion charging.
That works for one particular kind of harm, to a point. It tends to cover a fixed area, for example, and will often only charge you once for being in it, no matter how much you drive there. The suggested Dutch system can incorporate it - indeed, improve on it - whilst simultaneously providing an infrastructure to vary the tax with other kinds of harm, too.
Tax insurance premiums.
Again, that doesn't work. A fixed insurance premium tax doesn't differentiate between levels of harm caused by drivers. A proportionate one taxes someone who's car is expensive because it's a quiet, efficient and safe modern hybrid as much as someone who's car (or insurance) is expensive because it's designed to go fast. Insurance premiums aren't well correlated with externalities - the level of harm you're causing to others for which you're not already paying - because they include internal costs as well.
Oh, road tax is pretty much useless as a corrector of externalities (although 40 ton lorries DO pay quite a lot more). I suspect we agree that the Dutch idea would be a much better tax than either fuel or road taxes from that point of view. I presume the only reason why road tax exists is because governments realized that if you have to go through a procedure to maintain your car's registration they might as well charge you for it. All I disagree with is that anyone could be competent to divide car use in to good and bad....tax it in accordance with the damage it does to third parties and let individuals decide if their intended use is worth what they have to pay.
A modern car uses the same amount of fuel as an old car? Really?
No, of course not for comparable cars. But I'm sure you could find an old small low-powered car that uses the same amount as a large new high-powered car. The old one may still have a higher accident risk, produce more local pollution (particulates, NOx, etc.) and produce more noise.
And a heavier one uses the same as a light car?
The same applies. You can find heavy cars that use less fuel than light sports cars, for example.
The fuel tax already takes into account congestion, weight, and age.
It does so badly. My fuel is taxed just as much if I drive at 2am in a rural area as at 9am in a city. Possibly not at all if its an electric car. Weight and age are irrelevant, it's road damage, pollution and so on that are important. Weight and road damage may be closely correlated, but damage from pollution is not.
Highway miles are more efficient.
Yes, but they're just as efficient if the highway is in a built up area as they are in a rural area. The damage is different.
Newer cars are more efficient. Lighter cars are more efficient. The cars that do the 'bad driving' have worse mileage, the conditions that are 'bad' have the worse mileage. Don't you know how cars WORK?
Just because there is SOME correlation between fuel use and the damage you do to others doesn't mean there's GOOD correlation. Fuel use and levels of local pollution are not perfectly correlated. Level of damage caused by a given amount of local pollution and level of fuel use are not correlated at all. Level of noise is not perfectly correlated to fuel use - an old, badly designed or moronically modified car may produce more noise for a given amount of fuel. Damage caused by a given level of noise depends on location and time, which is not correlated at all with fuel use. Contribution to congestion is probably quite badly correlated (because it depends so much on time and location and not at all on the efficiency of your engine). Accident risk and fuel use are not likely to be well correlated.
Given that the goal is to reduce the amount of damage drivers do to others beyond the benefits of the driving it's important to get the correlation as good as possible to make those decisions as good as possible. The differential cost of driving a highly polluting car in a city vs the countryside might mean that the current stock of highly polluting cars moves more to rural areas. Heavy vehicles may take different routes, deliveries may happen at different times, warehouses and factories may be built in different areas, etc. A fuel tax alone can't create enough of a price differential between such different decision to affect them sufficiently.
The purpose of taxation should be the same as the purpose for which any other government action should be done: to raise the welfare of its citizens. Taxes change economic decisions. If cauliflowers are taxed more than cabbages I may choose cabbages over cauliflowers even if it's better for both me and the farmer if I didn't. All taxes do this; but some do it more than others.
But some economic decisions are already distorted. Taxes (sometimes subsidies) can distort them back the other way. eg, if I drive a car a damage others. If the price I pay reflects only the cost to my car/fuel suppliers then we'll all drive too much in the sense that on average we'd all benefit if we all drove less, even though none of us individually would benefit from driving less individually. A tax may correct that decision, ideally by charging us exactly as much as we cost others when we drive....then when we decide whether to drive our decision is based on 'benefit to me' vs 'cost of creating car and fuel' + 'cost to third parties of me driving'.
If there are unexploited opportunities to levy such taxes then it doesn't make economic sense to be increasing VAT. Why not reduce VAT or income tax and raise the revenue through road pricing, electricity and gas taxes, air travel and so on? Mainly it's because it's politically impossible because of international treaties and because for some reason people scream about road taxes more than they do about paying the same via income taxes. And so we end up with taxes that don't fulfill their purpose as well as they could...[sigh]
Yes, fuel tax already does that. However it doesn't differentiate between "good" mileage (the lorries that transport food/goods around) and the "bad" mileage such as driving little Johnny a quarter of a mile to school in the 4x4 every day (and then back again, later).
That's very kind of you to decide whats good and bad to save everyone else the bother. We already have a mechanism to distinguish these: do you value it enough to be prepared to pay the market price? If you can get the market price equal to the cost to society by taxing based on pollution, congestion and so on, why do you need to intervene to crudely categorize 'good' and 'bad' uses? If you're worried about the effect on poorer people then you should instead worry about misallocation of income, not cause deliberate mispricing.
Mispricing caused by you making an exception for food will distort certain decisions, such as:
- Do I transport food to my supermarkets at 9am, or be more careful to stick 3am and 2pm, letting my staff sit idle for an hour or two if I have to? If it costs sufficiently more I may avoid busy times more.
- How many warehouses do I use and where do I put them? If transport costs more relative to storage I may use more storage facilities in order to drive fewer miles.
- What size of vehicle do I use and how many stops does it make? A large vehicle making many stops may cause more damage to roads or more pollution, but cost less in driver time. Increasing the cost of a ton-mile relative to staff time will change that equation.
- Which route do I choose? Do I avoid densely populated areas at the expense of more time and fuel use?
- How much extra am I prepared to pay for a quieter vehicle, or a safer vehicle, or one which damages the road less?
Getting the road pricing right will mean each retailer will try to balance these for themselves. Large retailers are generally pretty good at making these decisions, IF they have the right incentives.
Fuel taxes do a poor job of correcting the externality because they don't accurately reflect the costs you impose on others when you drive. Those costs come from accident risk (minus what you pay for insurance), noise, local pollution, global pollution, damage to buildings, roads and crops, policing, congestion and the worsening of the physical environment, especially in cities. The size of those depends on:
- When you drive (congestion, accident risk and night time noise)
- Where you drive (almost all of the above; remember that local pollution and noise in cities affects more people)
- Which particular roads you choose - do you cut through the residential streets, for example
- What car you drive (a modern car the uses the same amount of fuel as an old car may still emit fewer pollutants this causing fewer health problems and less damage to crops and buildings, may have a lower accident risk and may be quieter)
- How you drive (accident risk, noise, your effect on congestion and pollution)
- How heavy your vehicle is (damage to roads especially, but maybe some sensitive or historic buildings, too, from vibrations)
eg, IIRC, there are several cities where the number of early deaths from traffic pollution is larger than the number from accidents. Also IIRC, there was a study in the Netherlands about the costs of traffic that put local and global pollution costs about equal on average, but of course not for any given journey. That's the sort of thing you can't capture with a fuel tax because of the effect of population density.
The provision of useful goods and services improves people's standards of living. Movements of money are part of the control system for the economy; they're overhead, not part of its useful output. If everyone could be counted on to somehow do the right thing without any movement of money (or any sort of alternative) we'd be able to do everything we do now and more. That's not possible, of course, but that doesn't mean that having to do those things is not a cost rather than a benefit.
Employed people move all the time when they lose or change jobs, or when a areas becomes more or less expensive. It isn't unreasonable for the long term unemployed to have to move as well. Newham and Tottenham aren't exactly glamorous, there's cheaper and better housing elsewhere.
I don't see why those without jobs need to be there; you can be unemployed anywhere. And if they move away then lower demand will take the price pressure off for those who really do need to be there.
Oh, I agree. It's insane to house long term unemployed in London whilst millions of employed spend hours on overcrowded trains commuting. (Of course, some may have been previously employed in London and likely to employed there again; it's not necessarily sensible to force people out immediately). That's not going to stop them bitching about, though.
Two particular things have been cut, maybe not unreasonably but it may be relevant to some of the rioters. One is that incapacity benefit has been reassessed and a large proportion of claimants told that they're not so ill they can't work, or possibly that they're not ill at all (some people have even previously been receiving it because of obesity). Secondly, housing benefit is being capped. Those not in the UK may not know that if you're unemployed or on a very low income and can't afford to rent a house or flat in the UK then you're entitled to have it paid for you. You don't exactly get a palace, but you can be funded up to some proportion of the average rent in your area. In some areas, especially in London, that's still a very large amount of money. That amount is being capped. A lot of non-working and low income poor may be forced out of London.
Because some people like smashing things, like the feeling of power and enjoy a sense of ownership and domination of the things around them. The police don't always help themselves by overusing stop-and-search powers on certain sections of the population, but you don't have to spend long in these areas to realize there's a strong dynamic of power relations, petty harassment, intimidation and violence.
I remember, once in Tottenham, having to go and rescue my grocery delivery driver from the local youths. He retreated to his cab and called the police, leaving me to guard my shopping while about 6 youths, one on a moped, circled me and the van. They plainly weren't interested in serious violence or robbery, they just wanted to intimidate, disrupt and exert power over others for fun. Many people in the area are perfectly normal and sane, but there are enough career single mothers and dysfunctional parents who don't care at all for their children's futures to make it an uncomfortable place to live.
Unemployment will be a lot higher in the areas affected. They're mostly (but not entirely) shitholes and a lot of people move out if they find anything other than the lowest levels of employment. They're packed with a wide variety of immigrants (the council used to complain of having to deal with 113 languages when I lived in Tottenham) which doesn't do a lot of good for racial harmony. It's also the sort of area where the voluntarily welfare dependent and attitudinally unemployable seem to end up, along with a mix of the unfortunate and the otherwise normal urbanites who move there for the 'vibrancy'.
The Soviet Union used to use agents provocateurs to catch potential dissidents. Sometimes they lost the paperwork and shot their own agents.
The UK riots aren't mainstream society, but a lot of local residents and business owners are getting very upset indeed. The government most certainly will be in danger if the riots continue - not from the rioters, but from everyone else.
Of course people have asked why they're rioting, but there aren't really any clear answers coming from the rioters except 'because its fun'. These rioters are not like those in the Middle East. They aren't chanting slogans, they aren't carrying placards and they aren't giving interviews. They aren't protesting and they aren't making demands. They're mostly targeting businesses, mostly shops, not homes or banks or government buildings. In some cases I've heard of asian businesses being particularly targeted (blacks and asians don't tend to get on in rough parts of London). They aren't rioting 'for' anything, except maybe for free televisions and alcohol.
Spending during difficult economic times should be higher than tax revenues. It's not unreasonable that the US government be borrowing heavily right now. The problem is that politicians never prepare properly for the next recession by stabilizing their budgets and then paying down debt. Then recession-time governments have room to respond....except, of course, politicians would always prefer to spend their successors' tax revenues to buy popularity rather than do the right thing. GWB was borrowing heavily at a time when he should have been paying back debt; so was Gordon Brown in the UK; so were many of their predecessors. Even when debt was paid back its always been half-heartedly. Greek and Italian politicians have spent years dodging fundamental problems partly by borrowing because its politically easier (deal with corruption in the tax departments and break down entry-barriers to industries that let insiders do a cushy job badly at everyone else's expense [gasp], no way!). And its US government debt which has helped China keep its currency artificially low and allowed the US to import from China without needing an export industry.
What really is shocking to an outsider is the ludicrous, fantasist faction of US politics that treats tax rises of any kind as the ultimate governmental evil. Even if the budget were balanced right now there are still huge quantities of government services provided years and decades ago that haven't been paid for. The US population needs to accept it must start paying for those soon, and hopefully learn that it needs to keep its politicans spending under control even when things are good and there's a republican in charge. And, personally, I think a good way to do that would be to impose an income tax separate to the normal budget of something like 1/20th of the national debt as a percentage of GDP, adjusted anually. Having taxes go up whenever the debt goes up should at least get people's attention.
The economic cost is different in the short term and long term. The financial cost to the company will be different to that because markets and technology never work properly, but it's probably a good start.
In the short term the economic cost to using extra bandwidth is zero until capacity is reached. So is the financial cost to the company. The infrastructure and organizations have to be maintained whether is being used or not. When it reaches capacity the economic cost is the cost of failing to deliver the data which now doesn't get through (plus the cost of slowdowns and any other inefficiencies which come about because of the way TCP/IP works). If the system is economically efficient the person who values the transmission of their data the most has their data go through, and those who value it less than some threshold don't. TCP/IP and this market aren't efficient like that so the cost will be more. The short term financial cost to the company can come only from other people not using their overage because they're the only people who'd be paying them extra. Because there will inevitably be a mix of overage and non-overage data not being sent you will inevitably be paying more for overage than the average short term financial cost for as long as they're charging you a fixed amount at all. Or, to put it another way, the financial cost to selling that bandwidth to you is the cost of not being able to sell it to someone else.
In the long term the economic cost of using more bandwidth depends on when you use it (is the link at capacity at that time?), how much others who'd like to use the bandwidth instead of you would be willing to pay, how much people who wish to use bandwidth at other at-capacity periods but can't would be prepared to pay and how much it costs to upgrade the infrastructure. This cost will always be less than the short term cost - if the short term cost would be sufficiently high then, given sane financial incentives, the network would be upgraded because that's cheaper. Financially, there will be times when you're costing them nothing (you're only using it at not-at-capacity times). The rest of the time you're causing them either lost overage from others and lost subscriptions, or you're causing infrastructure costs, depending on which is most financially advantageous. If there's only a short period of hugely over capacity demand and you're part of it then that may cost them more than if there's a long period of a little over capacity demand. In the first case c more capacity gives c * (short time) more bandwidth they can sell, in the second it gives them c * (long time) more bandwidth. But the cost of lost subscriptions may be different, and we don't know what that is.
They can't charge you what it costs because what it costs is insanely complicated and depends on what long term commitments to buy bandwidth you're prepared to enter in to. Even they probably don't know what it really is. Either way, you're most certainly not going to work it out in a 'yes it is' 'no it isn't' argument.
Java appears to have a rather lower bug rate than C++ (one third according to the rather ancient study I came across). Is there no similar difference for.NET? Or any difference in development times?
Huh? Employers aren't likely to offer you a 30-hr work week instead of 40, at the same salary, because you're working more efficiently. But they will fire the guy sitting next to you, because you can the work of 2 people in a 50-hr week. Business has absolutely embraced the idea of producing the same (or a little) more with less labor. They just do it by cutting jobs rather than cutting amount of work from each employee.
As for buying extra leisure time, isn't that what I'm doing when I buy a car to use in place of public transportation? Or when I move closer to my job to reduce commuting time? Or purchase a dish washer vs. a wash board? Or pay some one to mow my lawn?
I'm not suggesting they might do it at the same salary (or that, if they do, it's because you're using bargaining power you could have used to demand a salary higher than that advertised to demand lower hours instead). I'm suggesting that even when a mutually beneficial agreement could be reached it generally isn't. There will always be a reduction in salary which would more than compensate an employer for a reduction in hours (and it may be more than proportionate, possibly huge for some jobs), but what does it do to your job prospects to even ask? And I'm talking about a whole economy level, not a single employer level - individual employers do not, of course, automatically give you a higher salary or reduced hours because you're working more efficiently. Labour markets could, and do in the case of salaries - people certainly are paid more now than thirty years ago - but whatever the economic circumstances you don't often see employers competing for new employees with offers of lower working hours.
Working hours have actually decreased, quite a lot over 100 years, but it's happened through political action and union confrontation rather than markets and negotiation. The balance between consumption and leisure could be wrong on average and is certainly going to be different across individuals - some people I'm sure want to work more than is typical, as long as they get paid more - but for many industries it doesn't look like labour market competition is able to do its job of finding where the right levels are. If you have your own dental, law or accountancy practice or want part-time work in a shop maybe...but a sysadmin wanting to work 32 hours a week (or possibly 50 paid-for hours a week, though there's rather more flexibility in that direction because you can switch to certain kinds of demanding but high paying employer) is going to find it hard to get any typical employer to negotiate over that.
Buying extra leisure time = working less and giving up income to do so. I'm using 'leisure time' to mean 'time not spent working', which is possibly more how an economist would use it than would someone normal. When you do the things you list you're merely using money to make your leisure time more pleasurable.
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Have you eaten a steak, and still maintain you have "rights"?
Why you, and not the cow?
Materially-verifiable differentiating attributes only, please.
(Different AC here). The proximal reason is that humans eating other humans produces feelings of disgust, anger and shame (with some exceptions in some cases, times and places), and also because humans socialise with each other (humans do not generally feel that it is moral to eat their pets). Why have we evolved those? Disease? Social cohesion (similar to prohibitions on murder)? A side effect of some other trait? Chance? I don't know, but it does look rather like we have.
If you want a direct logical explanation for morality, rather than a biological explanation for its emotional generators, then you need to revise your expectations. Human morality is not logical in that sense and it's very easy to find inconsistencies, including amongst the religious.
I think the point is that evolutionary biologists can't account for the amount of altruism that exists, and religion is one way to try to explain the caring for non-kin that we see all around us.
Although that can only be an intermediate explanation because you then have to explain why humans have evolved a strong propensity to religion.
religion extends the family; thus we see soldiers, for example, laying down their lives to save those unrelated to them. Or lifeguards...
IANAEB, but if altruism of this sort itself is selective then we have to ask: why do it via religion, which has many other costs in ceremonies, praying time, sacrifies, etc? Altruism towards others could perhaps instead have arisen without religion. Of course it could just happen to be religion that arose from mutation and not non-religious species-wide altruism....but....there's another reason. Religions are good at promoting in-group (within religion/sect) altruism without compromising the ability to generate out-group hatred. The soldier example is a good one. Species-wide altruism wouldn't be as good at generating soldiers laying down their lives. Religion is a lot better.
Exactly. At least now in Europe, the courts are better for smaller guys than in the USA. As I understand it, in many European countries (particularly Germany), there's a "loser pays" rule, so if some jerk tries to sue you over something that's BS, and of course he loses, he has to pay all your legal fees. It's not like that here in the USA; you have to have plenty of money to mount a legal defense, no matter how ridiculous the lawsuit. Sometimes, depending on the whims of the judge you happen to be assigned to, and just how ridiculous the case is, he may grant you legal fees, but it's definitely not a sure thing.
Yes, there's a loser pays rule in the UK....but you don't often get all of your costs, normally you get 70%, and you don't get them until afterwards. If you're the plaintiff you might also find your case thrown out because you won't be able to pay the other side's costs if you lose. If you're the defendent you're going to have to find many hundreds of thousands to pay lawyers and may run out, leaving you likely to lose, or go bankrupt before the end of the case. Better, maybe, but still likely to be instant death for the smallest companies or startups.
Whereas in the finance lectures I went to one of the first things they said was that CFOs know very little about finance :) Not the sort of thing a university would/should be teaching in a proper academic course, anyway. But that course was part of my undergraduate degree, not an MBA, and having not experienced one I'm not sure whether or not an MBA counts as a proper education in such things.
However, it's still true that in the sort of model a basic finance or economics class would use - one with efficient markets bringing share prices towards expected net present values of future dividends - there's not a lot of difference between 'making money' (in a specific well defined sense) and 'raising the share price'. But even then there would still be perfectly legitimate (=in the interests of shareholders) ways to increase the share price without increasing profits. Producing the same profits with lower risk, for example. Or producing the same profits with the same overall risk but with less correlation with the rest of the market. If you studied CAPM (which at a basic level you should if the course was any good) then these things ought to have been either taught or somewhat obvious.
Here is a little secret.
CEO's are not in it to bring profits for a company. That is not their job. Their job is to boast the share price at all costs. Its taught in finance 101 in any college.
Not, it isn't. Finance courses do not teach corporate governance or management in any case. They'll probably teach you about things like CAPM and basic option valuation. They may also teach you that the fundamental value of a company's shares is the expected net present value of all future dividends, which would imply that the way to increase the share price is to increase future profits, with the relative importance of profits soon vs profits later depending on the risk-adjusted interest rate. They probably won't teach you about irrational behaviour in markets or systematic financial asset pricing errors, however.
In other parts of related degrees they're likely to teach you about agency problems, including the coordination problems among disparate shareholding bodies.
Now imagine you are the CEO. You can invest in R&D and have your shareprice get cut down by almost half in this recession and risk your job for not using the money to hire more marketing and sales people, but if you stay on for 5+ years you will make tons of money and create long term value. Or you eliminate R&D and your company will die within 5 - 7 years right? As CEO you get a 20 million bonus for selling your prized assets that make you money for short term gain and your stock price goes up a good 35%. You do not think such CEOs who do this stay right? They jump ship within 2-3 years with a golden parachute. Even better with that track record you go on raiding the next company for even more money and become a guru and genius to stroke your ego. 90% of CEO's would pick this and let the next CEO take the fall when they go out of business or fade to the competion. Meantime you buy a yatch and retire or buy a bigger one as you ruin the next company, etc.
Average tenure for CEOs is something like 7 years, so CEOs jumping ship after 2-3 years can't be all that common. Also, the CEO market isn't a big one and eventually it'll catch up with you, although you're hardly likely to be a pauper by then. CEOs certainly do make decisions to the detriment of their investors for their own reasons, but they aren't always designed to make the short term share price go up. Acquisitions are bad decisions more often than they're good ones and investors regularly drop their valuations of companies dramatically when they happen (like HP) but CEOs seem to love them - presumably for reasons ego and empire building.
If this needs to change we have to stop having Wall Street reward short term behavior and start punishing companies like HP who do retarded things for long term shareholder wealth. I do not know how and do not think it is our job to do this
I think only a few large investors are genuinely in a position to do much here - people like Warren Buffet, activist shareholders like Carl Icahn, private equity investors who can buy whole companies (but many have just added lots of debt and done little of benefit), or maybe University endowment funds. People with long time horizons and/or investing their own money. Fund managers who get their money from myriad individuals tend to find their investors withdrawing money from their funds if they don't perform consistently well over short periods, and in any case fund managers are normally assessed relative to other fund managers. Besides, there isn't anyone who has perfect incentives to invest your money properly but you. If you want the problem solved you can't do it just by making it someone else's.
I kind of agree with you. In reality, nobody can predict the market. But in practice, you don't need to. It's pretty easy to see a downtrend in the broad market, and when that happens you move from equities into bonds. And then when the market begins to trend upwards again, you do the opposite.
If there's a trend then it's predictable.
There have been many cases of useful predictability being discovered, although it doesn't always last long afterwards. It might involve, say, the end of the tax year or certain days of the week. I suspect, also, that you might find predictability if you can spot times when there's a cause for general changes in the level of saving. Think, for example, of Japanese insurance companies selling and repatriating investments after the earthquake, or retirement savings and withdrawal rates change with age profiles. Those are cases where you don't need to out-predict the future, you just have to be in different circumstances.
I never understood this "diversify everything!" sentiment that plagues bank managers. It comes off as lazy, as no matter what 25% part of your portfolio (in the above example) goes up, another part will go down, since gold hedges stock and vice versa. You're always gaining/losing, hoping the gains outweigh the losses. How strange.
Then you misunderstand its purpose. This is the simple textbook justification (look up CAPM for the complicated version): Image a market full of stocks. Imagine they're all basically similar: same average return (x), same variance (v), but their prices and earnings vary. Much of that variation is individual - they have a particularly good product idea, they suffer some disaster, whatever. Some of it is not. Some of the variation comes from market or economic conditions which affect all of them. IOW, each has a variance and they all have some covariance with the average of all the others. If you invest in one then your expected return is r and its variance is v. If you invest in all of them then your expected return is still r.but its variance is smaller. It's purpose is to give you the same expected return but at lower risk.
So then give tax exemptions or rebates to people who own a certain type of car.
Doesn't work well enough. For example, a noisy and locally-polluting car driven occasionally in rural areas causes less damage than if it were driven frequently in cities. Differentially taxing these two cases will help push those cars out of cities and in to rural areas. Differential harm has to be reflected in differential pricing to affect decision making and fixed taxes/rebates on certain kinds of car are too crude to pick up those differences.
Congestion charging.
That works for one particular kind of harm, to a point. It tends to cover a fixed area, for example, and will often only charge you once for being in it, no matter how much you drive there. The suggested Dutch system can incorporate it - indeed, improve on it - whilst simultaneously providing an infrastructure to vary the tax with other kinds of harm, too.
Tax insurance premiums.
Again, that doesn't work. A fixed insurance premium tax doesn't differentiate between levels of harm caused by drivers. A proportionate one taxes someone who's car is expensive because it's a quiet, efficient and safe modern hybrid as much as someone who's car (or insurance) is expensive because it's designed to go fast. Insurance premiums aren't well correlated with externalities - the level of harm you're causing to others for which you're not already paying - because they include internal costs as well.
Oh, road tax is pretty much useless as a corrector of externalities (although 40 ton lorries DO pay quite a lot more). I suspect we agree that the Dutch idea would be a much better tax than either fuel or road taxes from that point of view. I presume the only reason why road tax exists is because governments realized that if you have to go through a procedure to maintain your car's registration they might as well charge you for it. All I disagree with is that anyone could be competent to divide car use in to good and bad....tax it in accordance with the damage it does to third parties and let individuals decide if their intended use is worth what they have to pay.
A modern car uses the same amount of fuel as an old car? Really?
No, of course not for comparable cars. But I'm sure you could find an old small low-powered car that uses the same amount as a large new high-powered car. The old one may still have a higher accident risk, produce more local pollution (particulates, NOx, etc.) and produce more noise.
And a heavier one uses the same as a light car?
The same applies. You can find heavy cars that use less fuel than light sports cars, for example.
The fuel tax already takes into account congestion, weight, and age.
It does so badly. My fuel is taxed just as much if I drive at 2am in a rural area as at 9am in a city. Possibly not at all if its an electric car. Weight and age are irrelevant, it's road damage, pollution and so on that are important. Weight and road damage may be closely correlated, but damage from pollution is not.
Highway miles are more efficient.
Yes, but they're just as efficient if the highway is in a built up area as they are in a rural area. The damage is different.
Newer cars are more efficient. Lighter cars are more efficient. The cars that do the 'bad driving' have worse mileage, the conditions that are 'bad' have the worse mileage. Don't you know how cars WORK?
Just because there is SOME correlation between fuel use and the damage you do to others doesn't mean there's GOOD correlation. Fuel use and levels of local pollution are not perfectly correlated. Level of damage caused by a given amount of local pollution and level of fuel use are not correlated at all. Level of noise is not perfectly correlated to fuel use - an old, badly designed or moronically modified car may produce more noise for a given amount of fuel. Damage caused by a given level of noise depends on location and time, which is not correlated at all with fuel use. Contribution to congestion is probably quite badly correlated (because it depends so much on time and location and not at all on the efficiency of your engine). Accident risk and fuel use are not likely to be well correlated.
Given that the goal is to reduce the amount of damage drivers do to others beyond the benefits of the driving it's important to get the correlation as good as possible to make those decisions as good as possible. The differential cost of driving a highly polluting car in a city vs the countryside might mean that the current stock of highly polluting cars moves more to rural areas. Heavy vehicles may take different routes, deliveries may happen at different times, warehouses and factories may be built in different areas, etc. A fuel tax alone can't create enough of a price differential between such different decision to affect them sufficiently.
The purpose of taxation should be the same as the purpose for which any other government action should be done: to raise the welfare of its citizens. Taxes change economic decisions. If cauliflowers are taxed more than cabbages I may choose cabbages over cauliflowers even if it's better for both me and the farmer if I didn't. All taxes do this; but some do it more than others.
But some economic decisions are already distorted. Taxes (sometimes subsidies) can distort them back the other way. eg, if I drive a car a damage others. If the price I pay reflects only the cost to my car/fuel suppliers then we'll all drive too much in the sense that on average we'd all benefit if we all drove less, even though none of us individually would benefit from driving less individually. A tax may correct that decision, ideally by charging us exactly as much as we cost others when we drive....then when we decide whether to drive our decision is based on 'benefit to me' vs 'cost of creating car and fuel' + 'cost to third parties of me driving'.
If there are unexploited opportunities to levy such taxes then it doesn't make economic sense to be increasing VAT. Why not reduce VAT or income tax and raise the revenue through road pricing, electricity and gas taxes, air travel and so on? Mainly it's because it's politically impossible because of international treaties and because for some reason people scream about road taxes more than they do about paying the same via income taxes. And so we end up with taxes that don't fulfill their purpose as well as they could...[sigh]
Yes, fuel tax already does that. However it doesn't differentiate between "good" mileage (the lorries that transport food/goods around) and the "bad" mileage such as driving little Johnny a quarter of a mile to school in the 4x4 every day (and then back again, later).
That's very kind of you to decide whats good and bad to save everyone else the bother. We already have a mechanism to distinguish these: do you value it enough to be prepared to pay the market price? If you can get the market price equal to the cost to society by taxing based on pollution, congestion and so on, why do you need to intervene to crudely categorize 'good' and 'bad' uses? If you're worried about the effect on poorer people then you should instead worry about misallocation of income, not cause deliberate mispricing.
Mispricing caused by you making an exception for food will distort certain decisions, such as:
Getting the road pricing right will mean each retailer will try to balance these for themselves. Large retailers are generally pretty good at making these decisions, IF they have the right incentives.
Fuel taxes do a poor job of correcting the externality because they don't accurately reflect the costs you impose on others when you drive. Those costs come from accident risk (minus what you pay for insurance), noise, local pollution, global pollution, damage to buildings, roads and crops, policing, congestion and the worsening of the physical environment, especially in cities. The size of those depends on:
eg, IIRC, there are several cities where the number of early deaths from traffic pollution is larger than the number from accidents. Also IIRC, there was a study in the Netherlands about the costs of traffic that put local and global pollution costs about equal on average, but of course not for any given journey. That's the sort of thing you can't capture with a fuel tax because of the effect of population density.
The provision of useful goods and services improves people's standards of living. Movements of money are part of the control system for the economy; they're overhead, not part of its useful output. If everyone could be counted on to somehow do the right thing without any movement of money (or any sort of alternative) we'd be able to do everything we do now and more. That's not possible, of course, but that doesn't mean that having to do those things is not a cost rather than a benefit.
Employed people move all the time when they lose or change jobs, or when a areas becomes more or less expensive. It isn't unreasonable for the long term unemployed to have to move as well. Newham and Tottenham aren't exactly glamorous, there's cheaper and better housing elsewhere.
I don't see why those without jobs need to be there; you can be unemployed anywhere. And if they move away then lower demand will take the price pressure off for those who really do need to be there.
Oh, I agree. It's insane to house long term unemployed in London whilst millions of employed spend hours on overcrowded trains commuting. (Of course, some may have been previously employed in London and likely to employed there again; it's not necessarily sensible to force people out immediately). That's not going to stop them bitching about, though.
Two particular things have been cut, maybe not unreasonably but it may be relevant to some of the rioters. One is that incapacity benefit has been reassessed and a large proportion of claimants told that they're not so ill they can't work, or possibly that they're not ill at all (some people have even previously been receiving it because of obesity). Secondly, housing benefit is being capped. Those not in the UK may not know that if you're unemployed or on a very low income and can't afford to rent a house or flat in the UK then you're entitled to have it paid for you. You don't exactly get a palace, but you can be funded up to some proportion of the average rent in your area. In some areas, especially in London, that's still a very large amount of money. That amount is being capped. A lot of non-working and low income poor may be forced out of London.
Because some people like smashing things, like the feeling of power and enjoy a sense of ownership and domination of the things around them. The police don't always help themselves by overusing stop-and-search powers on certain sections of the population, but you don't have to spend long in these areas to realize there's a strong dynamic of power relations, petty harassment, intimidation and violence.
I remember, once in Tottenham, having to go and rescue my grocery delivery driver from the local youths. He retreated to his cab and called the police, leaving me to guard my shopping while about 6 youths, one on a moped, circled me and the van. They plainly weren't interested in serious violence or robbery, they just wanted to intimidate, disrupt and exert power over others for fun. Many people in the area are perfectly normal and sane, but there are enough career single mothers and dysfunctional parents who don't care at all for their children's futures to make it an uncomfortable place to live.
1920ish, I believe. Before that the right for Protestants to bear arms was written in to the Bill of Rights.
Unemployment will be a lot higher in the areas affected. They're mostly (but not entirely) shitholes and a lot of people move out if they find anything other than the lowest levels of employment. They're packed with a wide variety of immigrants (the council used to complain of having to deal with 113 languages when I lived in Tottenham) which doesn't do a lot of good for racial harmony. It's also the sort of area where the voluntarily welfare dependent and attitudinally unemployable seem to end up, along with a mix of the unfortunate and the otherwise normal urbanites who move there for the 'vibrancy'.
The Soviet Union used to use agents provocateurs to catch potential dissidents. Sometimes they lost the paperwork and shot their own agents.
The UK riots aren't mainstream society, but a lot of local residents and business owners are getting very upset indeed. The government most certainly will be in danger if the riots continue - not from the rioters, but from everyone else.
Of course people have asked why they're rioting, but there aren't really any clear answers coming from the rioters except 'because its fun'. These rioters are not like those in the Middle East. They aren't chanting slogans, they aren't carrying placards and they aren't giving interviews. They aren't protesting and they aren't making demands. They're mostly targeting businesses, mostly shops, not homes or banks or government buildings. In some cases I've heard of asian businesses being particularly targeted (blacks and asians don't tend to get on in rough parts of London). They aren't rioting 'for' anything, except maybe for free televisions and alcohol.
Spending during difficult economic times should be higher than tax revenues. It's not unreasonable that the US government be borrowing heavily right now. The problem is that politicians never prepare properly for the next recession by stabilizing their budgets and then paying down debt. Then recession-time governments have room to respond....except, of course, politicians would always prefer to spend their successors' tax revenues to buy popularity rather than do the right thing. GWB was borrowing heavily at a time when he should have been paying back debt; so was Gordon Brown in the UK; so were many of their predecessors. Even when debt was paid back its always been half-heartedly. Greek and Italian politicians have spent years dodging fundamental problems partly by borrowing because its politically easier (deal with corruption in the tax departments and break down entry-barriers to industries that let insiders do a cushy job badly at everyone else's expense [gasp], no way!). And its US government debt which has helped China keep its currency artificially low and allowed the US to import from China without needing an export industry.
What really is shocking to an outsider is the ludicrous, fantasist faction of US politics that treats tax rises of any kind as the ultimate governmental evil. Even if the budget were balanced right now there are still huge quantities of government services provided years and decades ago that haven't been paid for. The US population needs to accept it must start paying for those soon, and hopefully learn that it needs to keep its politicans spending under control even when things are good and there's a republican in charge. And, personally, I think a good way to do that would be to impose an income tax separate to the normal budget of something like 1/20th of the national debt as a percentage of GDP, adjusted anually. Having taxes go up whenever the debt goes up should at least get people's attention.
The economic cost is different in the short term and long term. The financial cost to the company will be different to that because markets and technology never work properly, but it's probably a good start.
In the short term the economic cost to using extra bandwidth is zero until capacity is reached. So is the financial cost to the company. The infrastructure and organizations have to be maintained whether is being used or not. When it reaches capacity the economic cost is the cost of failing to deliver the data which now doesn't get through (plus the cost of slowdowns and any other inefficiencies which come about because of the way TCP/IP works). If the system is economically efficient the person who values the transmission of their data the most has their data go through, and those who value it less than some threshold don't. TCP/IP and this market aren't efficient like that so the cost will be more. The short term financial cost to the company can come only from other people not using their overage because they're the only people who'd be paying them extra. Because there will inevitably be a mix of overage and non-overage data not being sent you will inevitably be paying more for overage than the average short term financial cost for as long as they're charging you a fixed amount at all. Or, to put it another way, the financial cost to selling that bandwidth to you is the cost of not being able to sell it to someone else.
In the long term the economic cost of using more bandwidth depends on when you use it (is the link at capacity at that time?), how much others who'd like to use the bandwidth instead of you would be willing to pay, how much people who wish to use bandwidth at other at-capacity periods but can't would be prepared to pay and how much it costs to upgrade the infrastructure. This cost will always be less than the short term cost - if the short term cost would be sufficiently high then, given sane financial incentives, the network would be upgraded because that's cheaper. Financially, there will be times when you're costing them nothing (you're only using it at not-at-capacity times). The rest of the time you're causing them either lost overage from others and lost subscriptions, or you're causing infrastructure costs, depending on which is most financially advantageous. If there's only a short period of hugely over capacity demand and you're part of it then that may cost them more than if there's a long period of a little over capacity demand. In the first case c more capacity gives c * (short time) more bandwidth they can sell, in the second it gives them c * (long time) more bandwidth. But the cost of lost subscriptions may be different, and we don't know what that is.
They can't charge you what it costs because what it costs is insanely complicated and depends on what long term commitments to buy bandwidth you're prepared to enter in to. Even they probably don't know what it really is. Either way, you're most certainly not going to work it out in a 'yes it is' 'no it isn't' argument.
Java appears to have a rather lower bug rate than C++ (one third according to the rather ancient study I came across). Is there no similar difference for .NET? Or any difference in development times?
Huh? Employers aren't likely to offer you a 30-hr work week instead of 40, at the same salary, because you're working more efficiently. But they will fire the guy sitting next to you, because you can the work of 2 people in a 50-hr week. Business has absolutely embraced the idea of producing the same (or a little) more with less labor. They just do it by cutting jobs rather than cutting amount of work from each employee.
As for buying extra leisure time, isn't that what I'm doing when I buy a car to use in place of public transportation? Or when I move closer to my job to reduce commuting time? Or purchase a dish washer vs. a wash board? Or pay some one to mow my lawn?
I'm not suggesting they might do it at the same salary (or that, if they do, it's because you're using bargaining power you could have used to demand a salary higher than that advertised to demand lower hours instead). I'm suggesting that even when a mutually beneficial agreement could be reached it generally isn't. There will always be a reduction in salary which would more than compensate an employer for a reduction in hours (and it may be more than proportionate, possibly huge for some jobs), but what does it do to your job prospects to even ask? And I'm talking about a whole economy level, not a single employer level - individual employers do not, of course, automatically give you a higher salary or reduced hours because you're working more efficiently. Labour markets could, and do in the case of salaries - people certainly are paid more now than thirty years ago - but whatever the economic circumstances you don't often see employers competing for new employees with offers of lower working hours.
Working hours have actually decreased, quite a lot over 100 years, but it's happened through political action and union confrontation rather than markets and negotiation. The balance between consumption and leisure could be wrong on average and is certainly going to be different across individuals - some people I'm sure want to work more than is typical, as long as they get paid more - but for many industries it doesn't look like labour market competition is able to do its job of finding where the right levels are. If you have your own dental, law or accountancy practice or want part-time work in a shop maybe...but a sysadmin wanting to work 32 hours a week (or possibly 50 paid-for hours a week, though there's rather more flexibility in that direction because you can switch to certain kinds of demanding but high paying employer) is going to find it hard to get any typical employer to negotiate over that.
Buying extra leisure time = working less and giving up income to do so. I'm using 'leisure time' to mean 'time not spent working', which is possibly more how an economist would use it than would someone normal. When you do the things you list you're merely using money to make your leisure time more pleasurable.