Galileo Blogs

I will throw in my two cents here. I originally posted this response here to Mr. Veksler's post: *** You conclude by saying, “The best that new competitors can hope for in this environment is to be acquired by the giants or to establish their own patent portfolios - rather than create products than people want to use.” I don’t accept the patents versus good products dichotomy you are stating. To what extent was Apple’s willingness to invest millions of dollars to develop the iPhone dependent on the comfort it took in that its intellectual property would be protected? Its willingness to sponsor the development of capacitive touch-screens and 3-axis accelerometers, which make the iPhone a great product, would have been compromised if it could not own those developments and profit fully from them. I think you might be making a better case for *shorter* patents rather than for their abolition. The proper length of a patent just like the proper length of a copyright is something that changes depending on technological and economic factors. Perhaps one can make the case for shorter patents in technology and longer ones in drug development. All of this should be coupled with a better patent office run on rational principles. That means issuing patents quickly and only for true innovations (which you made in your argument against software patents, which has legitimacy, in my opinion).

Brian, Thank you for promoting the article. I will gladly email it to anyone who emails me through this forum. Here is what I said originally about the article on HB List (hblist.com). (I modified the language slightly for this forum.): *** I am excited to announce that an article I wrote has been published in CFA Magazine, a magazine with global circulation of 100,000 that is published by CFA Institute, a finance professional organization. It is part of an "Agree / Disagree" set on the proposition: "The global market crisis calls for an expansion of regulatory oversight." I have permission to distribute it. I will email it to anyone who wants a copy. It can also be re-distributed, as long as no one posts it in its entirety on the web. In the article, I call for gold money and the abolition of regulatory agencies. I identify the need for government to recognize the right to life, liberty, and property. The editor featured the article as the magazine's cover story under a scary image that says, "Big Government Is Watching." In the print version of the magazine, a yellow banner also asks, "Is more regulation the answer to market woes?" Here are the opening paragraphs. Later, I discuss the specific causes and solution to the crisis. "Regulation cannot be the solution to the financial crisis because it is the cause of the financial crisis. The only proper action for governments to take is to remove existing regulations, fully recognize property rights, and enforce already-existing laws against fraud and theft. Doing so will help our economy speedily recover and make future crises smaller and rarer. In fact, the premise itself is misleading. "Regulatory oversight" implies that regulation is some form of law enforcement mechanism that protects the rights to life and property, akin to laws against robbery, murder, and fraud. But that is not the case. Such laws already exist on the books and should be enforced when mortgage lenders, for example, commit fraud. No new regulation is necessary to protect rights. Instead of protecting rights, regulations violate them. A regulation is an action by a government body that intervenes in voluntary agreements between individuals. It prohibits--before the fact--entire classes of behavior, criminalizing that behavior even if it is voluntary and involves no compulsion or fraud. For example, a law such as the Community Reinvestment Act that forces lenders to give mortgage loans to borrowers that do not meet their credit standards violates the right of the lender to decide whether and to whom to lend its money." -GB

Count me in.

Nice photos, Andrew. I bet the Chinese and Russians have an advantage in these industries because of looser pollution rules than we have. I am also curious how these plants compare to U.S., European or Japanese plants that make similar materials.

Happy Birthday, Kendall! I look forward to seeing you in person at OCON in a few weeks! I feel like I've already met you online; seeing you in person will just be connecting corporeal form to disembodied soul.

From the parts of his testimony I read, he builds up a "good" case for regulation, but then he says he doesn't want regulation. If he didn't want regulation, he would not have testified in front of Congress, which is the only body in the country that has the power to regulate the commodities markets. Certainly he would not have laid out his arguments to that body that irrational speculation by institutional investors is fueling the rise in the price of oil. I don't know what his real motive was in testifying, but it sure as hell wasn't to prevent regulation.

In late 1998 or early 1999, oil dipped briefly below $10 per barrel. Where were those speculators then? Interestingly, at that time the U.S. dollar had been appreciating for about 4 years. It had appreciated roughly 25% by then from its bottom in 1995. The dollar is not the only factor (other factors cited in this thread are also important), but it is a significant one that explains the oil price. A good deal of today's gain in the price of oil, denominated in dollars, reflects the depreciation of the dollar. Speculators are agents that transmit fact-based expectations about future supply and consumption trends into present prices. As such, they facilitate economizing between present and future supply/consumption. If the expectation is that future consumption will be high and supplies will be constrained -- or that nominal demand expressed in dollars will be high due to dollar depreciation -- then speculators will bid up the price of oil today. That is happening now. The opposite happened in the late 1990s, at least with regard to the purchasing power of the dollar. Expectations were that its purchasing power would strengthen relative to the world's currencies. Therefore speculators bid down the price of oil. In regard to the general point of whether speculators can manipulate the market, they cannot alter the long-term or fundamental course of markets. Market prices incorporate such fundamental information. If a speculator positioned himself (incorrectly) against the long-term trend, he would be bankrupted very quickly. For example, if a speculator in 1995 incorrectly bet that oil would go up, he would have lost his shirt. Blaming the speculators is a lot like blaming the gas gauge for showing that your tank is empty, except that the "speculator gas gauge" is even smarter. It accounts not just for the amount of gas in your tank right now, but also for the nearness of a gas station down the road. The "speculator gas gauge" will adjust to reflect the ease with which you can fill up your tank in the future, thus encouraging you to either consume more gas or less right now, depending on those facts. The speculator's role is very valuable. If the government restricts it, it will make the markets work less efficiently. Ultimately, this will mean less oil availability because it will become more costly to finance oil production and refining. Capital will demand a higher premium to invest in that sector if financial liquidity and quality market information about future demand/supply are reduced because speculation has been diminished.

The Church is trying to have Galileo and eat him, too. Little do they know that it will take far more than putting up a statue of Galileo to show that Church and reason can live in harmony. Galileo stands for reason, and reason is the opposite of faith. In fact, reason is the enemy of faith. The Church, by bringing that statue onto its holy ground, is bringing the enemy into its sanctuary. It can only end one way. Galileo's revenge for the crime the Church committed against him has been centuries in arriving, but arriving it is. As reason wins, the Church will be forced on the defensive more and more. Doing silly things such as erecting statues to the men the Church condemned (and forgave, but never exonerated in Galileo's case) will not change that. I am heartened that the Church is so afraid of Galileo -- no, they are so afraid of Reason -- that they have to erect a statue of Reason on their very grounds (in the form of Galileo) in an attempt to placate her.

I basically concur with JMartins' opinion of the series, except that I had a more favorable impression of Adams. Because he is the Founding Father I know least about, I cannot vouch for the accuracy of his portrayal. I did like the portrayal of Benjamin Franklin, who appeared in the early episodes. His depiction as a worldly, intelligent, savvy man fits with the biographical accounts of him I have read. Washington is great, and the scene of his swearing in (with Adams at his side as Vice President) in front of the cheering patriotic crowd was very moving. As for Jefferson, I am really enjoying his portrayal now, although I detested the early scenes of Jefferson where he was portrayed improbably as some sort of smart aleck dandy. However, that portrayal ended and what emerged was a dignified, very serious, very moral man. Finally, I adore the opening credits of the series. There is rather simple martial music with close-ups of actual revolutionary flags or good copies of them. With the music stirring our patriotic feeling, flags billow with the words, "Unite or Die," and show a snake representing the colonies chopped into pieces. The sequencing of the flags is timed beautifully to the music and achieves a great dramatic climax, all within a couple minutes. Overall, the effect of the opening sequence and the series is to place me at the scene of our Revolution. It made it quite real, that these men and women were fighting for their lives and in so doing, fought for our lives. They fought a life and death struggle for freedom, and won. In sum, despite some serious flaws (such as the annoying early portrayal of Thomas Jefferson and an over-emphasis on "humanizing" the characters), I recommend the series. I will ask any John Adams experts out there, whether academic or armchair, if they care to comment on the veracity of his portrayal.

They certainly do. That makes it all the more ironic that the FAA grounded a number of Southwest's planes for failing to perform required safety inspections. The FAA is on a warpath to enforce the letter of regulation. Meanwhile, the fatality rate of commercial airlines is (I believe) at an all time low. The last fatal accident of a U.S. carrier was at least several years ago. The lie is that regulation results in safety. It does not. Profit-seeking behavior in a capitalist society produces safety.

Yes, that particular scene was annoying. I cannot imagine that any man, no matter how taciturn, after presenting his draft of such a forthright and well-crafted document as the Declaration of Independence, would react the way you describe. I almost stopped watching the series then, but I am glad I didn't. Overall, I am enjoying it. In terms of characters, Ben Franklin is my favorite so far. I do like John Adams, but he is the one Founding Father of whom I have read very little. So, it is hard for me to judge him.

Yes, I saw it. I just watched the scene where George Washington is sworn in and found it quite moving. It transported me to that time, when everyone knew they had created the first republic founded on the principle of individual rights in human history. Very stirring. However, I don't understand Thomas Jefferson's characterization, as some sort of smart-alecky dandy. I have read a couple biographies of Jefferson and have visited Monticello several times. Nothing that I saw or read suggested he would have this type of personality. That is the oddest thing about the series. Overall, though, I am enjoying it. I especially enjoy the opening sequence. The music and the billowing patriotic flags rile me up with patriotic fervor. "Live free or die." "Don't tread on me." and "Unite or die." The struggle of these people, our forebears, was a struggle for life or death -- life as free people, or the death of subservience. I am ever so thankful they fought this fight... and won. This series transports me to that day and helps me see it from their perspective.

Nice comment, Jay. You make a good point.

If the Bush quote is an April Fool's joke, I didn't find it funny, simply because every time Bush speaks he sounds like an April Fool's joke. The humor has worn thin.