I have joined livingtheamericangreen.org as a contributor. So, when appropriate, I will be cross-posting on both this and that blog.
There certainly is a lot of talk about being green these days. A lot of publicity on a lot of different fronts. Given the media exposure, I think it would be prudent to see how well perceptions match up with reality.
As I am sure many a commentator has noted before, there is a truly disproportionate amount of attention being paid to three letters in particular: M-P-G. A lot of people seem to regard the mpg of your vehicle as a merit badge, a barometer for just how "green" you are. The unfortunate truth is that mpg represents but a small slice of the energy pie, even when considering the transportation sector in isolation. First, we should be concerned not about miles, but about passenger miles. Five people carpooling in a gas-guzzler surely beats five people each driving their own hybrid car. Second, we need to account for the embodied energy in the production of a new vehicle. With regards to transportation, we should ultimately be thinking about how to take cars off the road, and how to get people to share cars, bike, walk or use public transportation.
The outsized attention being paid to vehicular fuel efficiency ought to give us pause. How else do the various loci of media scrutiny skew public attention on energy issues? There are a lot of commercials these days about the wondrous possibilities of a smart electric grid and smart devices (vehicles included). Is all the hoopla deserved? Does it crowd out other energy interests? By many estimates, agriculture accounts for fully one-fifth of U.S. petroleum consumption. But is one-fifth of our attention being directed towards increasing the energy efficiency of agricultural practices? I don't have any numbers to back me up on this, but I would guess not.
Media scrutiny is important because it plays a role in shaping the public conscious and directing public as well as private funds towards the development of various initiatives. It would behoove the "green movement" to think about how the allocation of media attention matches up with underlying realities.
Tuesday, February 10, 2009
Information Anxiety
The Internet makes available a lot of information, and its democratizing effect really is unbelievable. If you are at all curious about or hungry for what is out there, though, the sheer amount and variety of information can be overwhelming.
So this is my plug for Google Reader. It takes a modest amount of time to familiarize yourself with all of the tools, but it allows you to conveniently centralize your information consumption and to keep up with sources that you might not visit with high frequency.
The information flow is still a bit overwhelming. I currently have 256 new items. But Google Reader allows you to manage the flow with some efficiency. The function that I am most excited about is the "Share" function. Rather than have an anonymous crowd filter Internet content, you can have those people whose opinions you respect and interests you share perform a filtering function. In this way, you get to see quality articles that you would never have seen otherwise. Plus, the "Share" function doubles as an archiving tool.
Now, the thing to do is get on Google Reader and find a group of people that will actively share. As with all network ideas, the "Share" function becomes effective only after reaching some critical mass. I have not reached the critical mass yet, and that is why I am writing this entry.
Bringing my connectivity up a notch...Many thanks to one James and one Benjamin for directing me to Google Reader.
So this is my plug for Google Reader. It takes a modest amount of time to familiarize yourself with all of the tools, but it allows you to conveniently centralize your information consumption and to keep up with sources that you might not visit with high frequency.
The information flow is still a bit overwhelming. I currently have 256 new items. But Google Reader allows you to manage the flow with some efficiency. The function that I am most excited about is the "Share" function. Rather than have an anonymous crowd filter Internet content, you can have those people whose opinions you respect and interests you share perform a filtering function. In this way, you get to see quality articles that you would never have seen otherwise. Plus, the "Share" function doubles as an archiving tool.
Now, the thing to do is get on Google Reader and find a group of people that will actively share. As with all network ideas, the "Share" function becomes effective only after reaching some critical mass. I have not reached the critical mass yet, and that is why I am writing this entry.
Bringing my connectivity up a notch...Many thanks to one James and one Benjamin for directing me to Google Reader.
Tuesday, February 3, 2009
The Omnivore's Dilemma
I have nothing but praise for Michael Pollan's book, The Omnivore's Dilemma. It is informative, engaging, thoughtful and thought-provoking. I especially enjoyed the ecological perspective that Pollan employs as well as the intellectual humility with which he writes. Intellectual humility, by the way, I find myself prizing more and more highly everyday.
Ecological Perspective. We often think of literary analysis and the tools employed in such analysis as being useful for, well, literary analysis alone. But Pollan demonstrates just how far a simple literary conceit, a metaphor, can go in explaining the way behavior is organized. How a Cartesian metaphor largely explains the contemporary model of industrial agriculture. How an ecological conceit yields a totally different specimen, the Polyface Farm in Virginia that calls itself "beyond organic," or "postindustrial." The implications are dramatic for a term that I've been thinking a lot about recently, "efficiency":
I still need to do a bit more thinking about this, but I think the distinction between industrial efficiency and ecological efficiency is important and exciting. Especially with all the attention that "energy efficiency" has received recently.
Intellectual Humility. The book's NYTimes reviewer criticizes Pollan for being too nice a guy, for failing to judge when judging was clearly called for. To be sure, Pollan is neither didactic nor vituperative in his style, but I take the book's balanced argumentation as a sign of intellectual humility, something that Pollan clearly values as well:
I like this a lot: "a healthy appreciation of one's ignorance in the face of a mystery..." On buying Argentina-grown asparagus from Whole Foods, Pollan writes:
The material in this book could easily have lended itself to a rhetorical attack on the vices of industrial agriculture. But Pollan refuses to deliver on that account, and the final product is incredibly refreshing. Though I am none the wiser as to how one ought to disentangle the moral knot presented.
Ecological Perspective. We often think of literary analysis and the tools employed in such analysis as being useful for, well, literary analysis alone. But Pollan demonstrates just how far a simple literary conceit, a metaphor, can go in explaining the way behavior is organized. How a Cartesian metaphor largely explains the contemporary model of industrial agriculture. How an ecological conceit yields a totally different specimen, the Polyface Farm in Virginia that calls itself "beyond organic," or "postindustrial." The implications are dramatic for a term that I've been thinking a lot about recently, "efficiency":
Most of the efficiencies in an industrial system are achieved through simplification: doing lots of the same thing over and over...By contrast, the efficiencies of natural systems flow from complexity and interdependence--by definition, the very opposite of simplification...Polyface Farm is built on the efficiencies that come from mimicking relationships found in nature...(214-215)
I still need to do a bit more thinking about this, but I think the distinction between industrial efficiency and ecological efficiency is important and exciting. Especially with all the attention that "energy efficiency" has received recently.
Intellectual Humility. The book's NYTimes reviewer criticizes Pollan for being too nice a guy, for failing to judge when judging was clearly called for. To be sure, Pollan is neither didactic nor vituperative in his style, but I take the book's balanced argumentation as a sign of intellectual humility, something that Pollan clearly values as well:
The problem is that once science has reduced a complex phenomenon to a couple of variables, however important they may be, the natural tendency is to overlook everything else, to assume that what you can measure is all there is, or at least all that really matters. When we mistake what we can know for all there is to know, a healthy appreciation of one's ignorance in the face of a mystery like soil fertility gives way to the hubris that we can treat nature as a machine. (148)
I like this a lot: "a healthy appreciation of one's ignorance in the face of a mystery..." On buying Argentina-grown asparagus from Whole Foods, Pollan writes:
The ethical implications of buying such a product are almost too numerous and knotty to sort out: There's the expense, there's the prodigious amounts of energy involved, the defiance of seasonality, and the whole question of whether the best soils in South America should be devoted to growing food for affluent and overfed North Americans. And yet you can also make a good argument that my purchase of organic asparagus from Argentina generates foreign exchange for a country desperately in need of it, and supports a level of care for that country's land--farming without pesticides or chemical fertilizer--it might not otherwise receive. Clearly my bunch of asparagus had delivered me deep into the thicket of trade-offs that a global organic marketplace entails. (175)
The material in this book could easily have lended itself to a rhetorical attack on the vices of industrial agriculture. But Pollan refuses to deliver on that account, and the final product is incredibly refreshing. Though I am none the wiser as to how one ought to disentangle the moral knot presented.
Monday, February 2, 2009
The Journey Defines the Place
Maybe it's because I was an English major in college and studying literature has deeply informed my worldview. But, for me, this world and this life that we bumble our way through is most enriched when populated with stories. I say "enriched," but maybe "enchanted" better captures what I'm going for. Because stories, as meaning-giving, hermeneutic devices, imbue our discrete experiences with what is often for me a sacred dimension. A bunch of mumbo-jumbo that is.
Here is what I mean. A couple of days ago, I drove thirty miles from my sister's house to the Snoqualmie Falls. As I am prone to do, I got lost along the way and took a detour, bringing the trip to something more like fifty miles. The detour was both worthwhile and frustrating. I got to see beautiful parts of the Pacific Northwest that I would not otherwise have gotten to see, but I was also obviously delayed from arriving at my ultimate destination, the Snoqualmie Falls. Finally, after asking for directions at a gas station, I found my way to a lookout point. I parked my car in the parking lot and walked all of ten yards to a gazebo from which I could enjoy a quite stunning view of the falls. An hour of driving, getting lost, asking for directions, and thirty short seconds of walking. And there it was, Snoqualmie Falls as though in a postcard picture.
The waterfall was impressive but very much a letdown. Gazing down from the gazebo platform, I remembered another similarly sized waterfall I went to see last year, El Paílón del Diablo in Baños, Ecuador. To get to that waterfall, I biked for an hour and then hiked twenty minutes before having the waterfall unveiled to me from behind formidable rock formations. I could hear the thunderous roar of the waterfall well before I saw it, and as I approached, anticipation built even as my body tired. Undoubtedly, the path to the waterfall had been paved in a very literal way to ease my journey, but still, I felt that my view of the waterfall had been in some way earned. Seeing El Paílón del Diablo was a qualitatively different experience than seeing the Snoqualmie Falls. Much more gratifying.
So the journey defines the place. And what else is a journey but a story? Another example. This one from Kerouac's On the Road:
Kerouac presents San Francisco in its physical context, in its geographic setting. For Kerouac, having hitchhiked, bused and driven three thousand miles from the East Coast, San Francisco is a physical destination in a way that it isn't for me. After reading this passage, it dawned on me that I arrived in San Francisco by being dropped from the sky. My experience of the city is as a result qualitatively different from Kerouac's. Lacking a substantive journey to precede arrival, emptied of history, stripped of meaning, a city is nothing more than a bunch of concrete and glass, an abstraction of industrial development.
It is in this light that I have begun to understand technology. Technology shortchanges the journey in order to deliver the place. Snoqualmie Falls delivered to me. San Francisco delivered to me. What energy did I expend personally to arrive at these places?
I think this is why I experience aversion to things like Facebook. Facebook has the power to deprive social interaction of journey. As far as maintaining a social network goes, Facebook is infinitely more convenient than having to go through the trouble of composing a thoughtful e-mail let alone scrupulously handwriting a letter. Convenience is Facebook's utility. But at the same time, its convenience shortchanges the usual journey that is required of keeping up a healthy interaction.
The same logic can be applied to food. What knowledge do we possess of the journey that the food we consume took in order to arrive on our dinner plates? Most often, nothing. This is the magic of industrial agriculture and technology. Food delivered to us. Unfortunately, the anonymous food that we consume, and our ignorance of its journey, deprives the food of any real meaning. There is little to no enchantment involved in scarfing down a BigMac. We enjoy it only in an abstract sense.
None of this is to say that I am a Luddite. Believe me you, I enjoy my BigMac or McPollo as much as the next guy.
Thoughts inspired by The Omnivore's Dilemma by Michael Pollan on which I will write more...
Here is what I mean. A couple of days ago, I drove thirty miles from my sister's house to the Snoqualmie Falls. As I am prone to do, I got lost along the way and took a detour, bringing the trip to something more like fifty miles. The detour was both worthwhile and frustrating. I got to see beautiful parts of the Pacific Northwest that I would not otherwise have gotten to see, but I was also obviously delayed from arriving at my ultimate destination, the Snoqualmie Falls. Finally, after asking for directions at a gas station, I found my way to a lookout point. I parked my car in the parking lot and walked all of ten yards to a gazebo from which I could enjoy a quite stunning view of the falls. An hour of driving, getting lost, asking for directions, and thirty short seconds of walking. And there it was, Snoqualmie Falls as though in a postcard picture.
The waterfall was impressive but very much a letdown. Gazing down from the gazebo platform, I remembered another similarly sized waterfall I went to see last year, El Paílón del Diablo in Baños, Ecuador. To get to that waterfall, I biked for an hour and then hiked twenty minutes before having the waterfall unveiled to me from behind formidable rock formations. I could hear the thunderous roar of the waterfall well before I saw it, and as I approached, anticipation built even as my body tired. Undoubtedly, the path to the waterfall had been paved in a very literal way to ease my journey, but still, I felt that my view of the waterfall had been in some way earned. Seeing El Paílón del Diablo was a qualitatively different experience than seeing the Snoqualmie Falls. Much more gratifying.
So the journey defines the place. And what else is a journey but a story? Another example. This one from Kerouac's On the Road:
The bus trip from Denver to Frisco was uneventful except that my whole soul leaped to it the nearer we got to Frisco. Cheyenne again, in the afternoon this time, and then west over the range; crossing the Divide at midnight at Creston, arriving at Salt Lake City at dawn--a city of sprinklers, the least likely place for Dean to have been born; then out to Nevada in the hot sun, Reno by nightfall, its twinkling Chinese streets; then up the Sierra Nevada, pines, stars, mountain lodges signifying Frisco romances--a little girl in the back seat, crying to her mother, "Mama when do we get home to Truckee?" And Truckee itself, homey Truckee, and then down the hill to the flats of Sacramento. I suddenly realized I was in California. Warm, palmy air--air you can kiss--and palms. Along the storied Sacramento River on a superhighway; into the hills again; up, down; and suddenly the vast expanse of a bay (it was just before dawn) with the sleepy lights of Frisco festooned across. Over the Oakland Bay Bridge I slept soundly for the first time since Denver; so that I was rudely jolted in the bus station at Market and Fourth into the memory of the fact that I was three thousand two hundred miles from my aunt's house in Paterson, New Jersey. I wandered out like a haggard ghost, and there she was, Frisco--long, bleak streets with trolley wires all shrouded in fog and whiteness. (60)
Kerouac presents San Francisco in its physical context, in its geographic setting. For Kerouac, having hitchhiked, bused and driven three thousand miles from the East Coast, San Francisco is a physical destination in a way that it isn't for me. After reading this passage, it dawned on me that I arrived in San Francisco by being dropped from the sky. My experience of the city is as a result qualitatively different from Kerouac's. Lacking a substantive journey to precede arrival, emptied of history, stripped of meaning, a city is nothing more than a bunch of concrete and glass, an abstraction of industrial development.
It is in this light that I have begun to understand technology. Technology shortchanges the journey in order to deliver the place. Snoqualmie Falls delivered to me. San Francisco delivered to me. What energy did I expend personally to arrive at these places?
I think this is why I experience aversion to things like Facebook. Facebook has the power to deprive social interaction of journey. As far as maintaining a social network goes, Facebook is infinitely more convenient than having to go through the trouble of composing a thoughtful e-mail let alone scrupulously handwriting a letter. Convenience is Facebook's utility. But at the same time, its convenience shortchanges the usual journey that is required of keeping up a healthy interaction.
The same logic can be applied to food. What knowledge do we possess of the journey that the food we consume took in order to arrive on our dinner plates? Most often, nothing. This is the magic of industrial agriculture and technology. Food delivered to us. Unfortunately, the anonymous food that we consume, and our ignorance of its journey, deprives the food of any real meaning. There is little to no enchantment involved in scarfing down a BigMac. We enjoy it only in an abstract sense.
None of this is to say that I am a Luddite. Believe me you, I enjoy my BigMac or McPollo as much as the next guy.
Thoughts inspired by The Omnivore's Dilemma by Michael Pollan on which I will write more...
Friday, January 30, 2009
Online Community
I picked up a print edition of the New York Times today. It was a refreshing change from reading the Internet version. Its flimsy, cumbersome pages so tactile, so present in my hands. Needless to say, browsing a print edition is decidedly different from browsing a web page. With a hard copy, you are forced to see an article in visual context, which in turn directs your attention to articles you wouldn't otherwise notice, whereas you are only able to read a full article online in isolation of other stories. The experience is substantively different.
It got me thinking, though. Ever since graduating from college, I have spent a ton more time online than ever before. Why?
1) Community. At a small residential college like Swarthmore, you are much more a member of your immediate community. Now, deprived of that tight-knit and physically-bounded community, I use the Internet to leapfrog my more immediate physical surroundings. I don't know the names of any of my neighbors sadly enough.
2) Information consumption. In an academic setting, information tends to flow in the context of human-to-human interactions. In the classroom. In the dormitory lounge or hallway. Now, information streams to me overwhelmingly via digital signal. Online periodicals. Recorded lectures. Blogs.
3) Increasingly sedentary life. If you are working any kind of white-collar, entry-level job, then your circumstances almost certainly dictate that you spend more time sitting in one place than ever before. The Internet provides a convenient way to feign hard work.
I can't quite pinpoint what I want to say in this entry, but I think I am beginning to see the Internet and connectivity in a different way. Web 2.0?
---
I spend a lot of time on NYTimes.com. I used to be a big fan of their feature that allowed you to save a page under "My Saved Pages." It was like a scrapbook of my favorite news clippings, making it super easy to pull up old articles and also to see what other people had deemed worthy of saving. Recently, the website eliminated this feature. WHY? How do other people archive or flag articles that they want to store away for some reason or another? (Seriously, I want to hear answers.)
The other feature I really like on NYTimes.com is looking at the articles under their "Most E-mailed" or "Most Discussed" tabs. These tabs help differentiate the overwhelming amount of information in a self-sorting way. Essentially, they crowd-source the arbitration of quality, which is no easy task. Not really a novel thing at all, but when I think critically about the way I surf the Internet, I think that my methods are lacking. I don't think I use the Internet to its full potential. E-mail. Online Banking. NYTimes.com. Wikipedia. Amazon. Various blogs. Pretty much, that is the extent of my Internet use.
It seems like differentiating quality through a crowd-sourcing mechanism is exactly what Digg does. Cool idea that I am currently looking into. Seriously, I need to reconsider my surfing methods and bring my connectivity to a new level. Especially considering the amount of time I spend online. Yeah, I'm ready to elevate things.
It got me thinking, though. Ever since graduating from college, I have spent a ton more time online than ever before. Why?
1) Community. At a small residential college like Swarthmore, you are much more a member of your immediate community. Now, deprived of that tight-knit and physically-bounded community, I use the Internet to leapfrog my more immediate physical surroundings. I don't know the names of any of my neighbors sadly enough.
2) Information consumption. In an academic setting, information tends to flow in the context of human-to-human interactions. In the classroom. In the dormitory lounge or hallway. Now, information streams to me overwhelmingly via digital signal. Online periodicals. Recorded lectures. Blogs.
3) Increasingly sedentary life. If you are working any kind of white-collar, entry-level job, then your circumstances almost certainly dictate that you spend more time sitting in one place than ever before. The Internet provides a convenient way to feign hard work.
I can't quite pinpoint what I want to say in this entry, but I think I am beginning to see the Internet and connectivity in a different way. Web 2.0?
---
I spend a lot of time on NYTimes.com. I used to be a big fan of their feature that allowed you to save a page under "My Saved Pages." It was like a scrapbook of my favorite news clippings, making it super easy to pull up old articles and also to see what other people had deemed worthy of saving. Recently, the website eliminated this feature. WHY? How do other people archive or flag articles that they want to store away for some reason or another? (Seriously, I want to hear answers.)
The other feature I really like on NYTimes.com is looking at the articles under their "Most E-mailed" or "Most Discussed" tabs. These tabs help differentiate the overwhelming amount of information in a self-sorting way. Essentially, they crowd-source the arbitration of quality, which is no easy task. Not really a novel thing at all, but when I think critically about the way I surf the Internet, I think that my methods are lacking. I don't think I use the Internet to its full potential. E-mail. Online Banking. NYTimes.com. Wikipedia. Amazon. Various blogs. Pretty much, that is the extent of my Internet use.
It seems like differentiating quality through a crowd-sourcing mechanism is exactly what Digg does. Cool idea that I am currently looking into. Seriously, I need to reconsider my surfing methods and bring my connectivity to a new level. Especially considering the amount of time I spend online. Yeah, I'm ready to elevate things.
Tuesday, January 27, 2009
Going Kerouac on Everybody's Ass
I watched "Step Brothers" the other day. Funny movie. Made me laugh.
There is a job interview scene in the movie where Dale, the character played by John C. Reilly, explains twenty some years of unemployment by saying that he had "gone Kerouac on everybody's ass." Yeah, I thought that was pretty funny.
So, you know, I've been wrestling with the idea of responsibility recently. Especially after Obama talked about "a new era of responsibility" being required of us. Big important questions like, you know, what does responsibility even mean? Or: did Sal Paradise live responsibly?
Because, don't you see, maybe Sal was living more responsibly than any of us. Maybe he was just being responsible to the gift of life, and that's why he gripped life so hard and then ripped it again so hard.
This column about institutional thinking helps me understand what I think is an important piece of the puzzle. So often we frame questions about important decisions in terms of ourselves. This is the way we are trained to think. What am I passionate about? What will make me happiest? Thus, the archetypal journey of self-discovery makes intuitive sense to us. Kerouac occupies a prominent place in our collective conscious. We aspire to live passionately, to dig life right alongside Dean Moriarty.
I guess Kennedy's famous exhortation to "ask not" hinges upon the distinction between individual and institutional thinking. When thinking about responsibility, the important question is, What are we responsible to? Ourselves? Or to the various groups to which we belong? Nation? Family? Or here are a couple of old possibilities that might appear extremely novel: History? Our forebears? What responsibility do I have towards George Washington and his men on that bleak winter night?
There is a job interview scene in the movie where Dale, the character played by John C. Reilly, explains twenty some years of unemployment by saying that he had "gone Kerouac on everybody's ass." Yeah, I thought that was pretty funny.
So, you know, I've been wrestling with the idea of responsibility recently. Especially after Obama talked about "a new era of responsibility" being required of us. Big important questions like, you know, what does responsibility even mean? Or: did Sal Paradise live responsibly?
Because, don't you see, maybe Sal was living more responsibly than any of us. Maybe he was just being responsible to the gift of life, and that's why he gripped life so hard and then ripped it again so hard.
This column about institutional thinking helps me understand what I think is an important piece of the puzzle. So often we frame questions about important decisions in terms of ourselves. This is the way we are trained to think. What am I passionate about? What will make me happiest? Thus, the archetypal journey of self-discovery makes intuitive sense to us. Kerouac occupies a prominent place in our collective conscious. We aspire to live passionately, to dig life right alongside Dean Moriarty.
I guess Kennedy's famous exhortation to "ask not" hinges upon the distinction between individual and institutional thinking. When thinking about responsibility, the important question is, What are we responsible to? Ourselves? Or to the various groups to which we belong? Nation? Family? Or here are a couple of old possibilities that might appear extremely novel: History? Our forebears? What responsibility do I have towards George Washington and his men on that bleak winter night?
Saturday, January 24, 2009
Deficit Spending
In November 2008, Thomas Friedman wrote a column urging young people to save more:
Is Thomas Friedman offering sound economic advice here? Certainly, the importance of saving seems to be the new mantra these days. Lots of emphasis on "bargain meals" and such. But, really, should everybody be saving? Should we all be hoarding money in preparation for financial endtimes?
Steven Levitt puts the question nicely in his blog entry, titled, "When it Comes to Saving, Who Would You Listen to: My Wife or Milton Friedman?" (Note that Levitt is speaking of Milton Friedman, the Nobel Prize-winning economist, and not Thomas Friedman, economic layperson and obviously in cahoots with Levitt's wife.)
A lot of people blame today's economic crisis on excessive borrowing. Loans were too often extended to people not worthy of the credit. A fair assessment. But does this mean that borrowing is necessarily a bad thing? No.
Enter probabilistic thinking. The US government currently operates at a deficit and all signs point towards this deficit increasing dramatically during Obama's first years as president. This is not a bad thing. Economists are generally in consensus that large fiscal stimulus (read: deficit spending) is required to get the economy back on its feet. But there is an important distinction to be made when talking about the deficit, the difference between structural deficit and actual deficit. The structural deficit can be thought of as a probabilistic deficit: do spending programs exceed expected tax revenues (which can be calculated using the economy's long-run probabilistic unemployment rate). So Obama's challenge is this: to simultaneously increase current actual deficit spending while eliminating Bush-era structural deficits.
How does this all relate to the initial question about the prudence of saving? Well, the same principles that apply to government deficit spending apply to personal finance, especially for young people with long time horizons to consider. It is okay to borrow and to spend so long as you are probabilistically-structurally sound. In fact, your spending patterns need change from what they were a year ago only if there has been an underlying, probabilistic shift in your expected, life-time income stream. Consumption-smoothing, after all, is one of the primary functions of financial markets.
As for Thomas Friedman's advice? He with his words is single-handedly responsible for a statistically significant drop in consumer confidence, and we should blame him at least partially for our current woes.
Of course, probabilistic thinking sometimes or oftentimes runs counter to emotional thinking. Thus the conflict between the coldly rational Milton Friedman and the surely sentimental wife of Steven Levitt (why she must surely be sentimental I have no idea).
Maybe I am just trying to rationalize my current spending habits.
I go into restaurants these days, look around at the tables often still crowded with young people, and I have this urge to go from table to table and say: "You don't know me, but I have to tell you that you shouldn't be here. You should be saving your money. You should be home eating tuna fish. This financial crisis is far from over. We are just at the end of the beginning. Please, wrap up that steak in a doggy bag and go home.
Is Thomas Friedman offering sound economic advice here? Certainly, the importance of saving seems to be the new mantra these days. Lots of emphasis on "bargain meals" and such. But, really, should everybody be saving? Should we all be hoarding money in preparation for financial endtimes?
Steven Levitt puts the question nicely in his blog entry, titled, "When it Comes to Saving, Who Would You Listen to: My Wife or Milton Friedman?" (Note that Levitt is speaking of Milton Friedman, the Nobel Prize-winning economist, and not Thomas Friedman, economic layperson and obviously in cahoots with Levitt's wife.)
A lot of people blame today's economic crisis on excessive borrowing. Loans were too often extended to people not worthy of the credit. A fair assessment. But does this mean that borrowing is necessarily a bad thing? No.
Enter probabilistic thinking. The US government currently operates at a deficit and all signs point towards this deficit increasing dramatically during Obama's first years as president. This is not a bad thing. Economists are generally in consensus that large fiscal stimulus (read: deficit spending) is required to get the economy back on its feet. But there is an important distinction to be made when talking about the deficit, the difference between structural deficit and actual deficit. The structural deficit can be thought of as a probabilistic deficit: do spending programs exceed expected tax revenues (which can be calculated using the economy's long-run probabilistic unemployment rate). So Obama's challenge is this: to simultaneously increase current actual deficit spending while eliminating Bush-era structural deficits.
How does this all relate to the initial question about the prudence of saving? Well, the same principles that apply to government deficit spending apply to personal finance, especially for young people with long time horizons to consider. It is okay to borrow and to spend so long as you are probabilistically-structurally sound. In fact, your spending patterns need change from what they were a year ago only if there has been an underlying, probabilistic shift in your expected, life-time income stream. Consumption-smoothing, after all, is one of the primary functions of financial markets.
As for Thomas Friedman's advice? He with his words is single-handedly responsible for a statistically significant drop in consumer confidence, and we should blame him at least partially for our current woes.
Of course, probabilistic thinking sometimes or oftentimes runs counter to emotional thinking. Thus the conflict between the coldly rational Milton Friedman and the surely sentimental wife of Steven Levitt (why she must surely be sentimental I have no idea).
Maybe I am just trying to rationalize my current spending habits.
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