I usually don't bother to explain entries in The Stupid! It Burns!; any reader with a triple-digit IQ a Google PhD will immediately get it. But Grizwald Grim has politely asked me why I think his post is burningly stupid. He won't understand the explanation, of course — if he were intelligent enough to understand the critique, he wouldn't have posted something so stupid to begin with — but his request gives me an opportunity to heap additional abuse on someone whose stupidity is exceeded only by his self-opinion.

The most obvious feature of Grim's post is that he himself is acting like an insufferable prick. I don't mind prickishness; I'm often a prick myself, and I'm being one now. But Grim is an insufferable prick complaining about other people being insufferable pricks, which makes him a hypocrite. I, on the other hand, am being a prick because Grim is a hypocrite (as well as being stupid). Not only is Grim being a obvious hypocrite, he is (incorrectly) condemning others for being hypocrites. Just by itself, two levels of clueless self-parody is enough to earn him a spot on TSIB.

But Grim is not only a stupid, hypocritical prick, he also so deeply misunderstands bullying and the concept of rights that I wonder how he's able to find his mouth with a spoonful of soup.

Bullying is coercion. Mockery and disrespect are not (for adults) bullying. Grim is correct: atheists are mostly immune to (legitimate) mockery precisely because we don't have many obviously stupid beliefs to mock. (Of course, that doesn't stop a lot of religious believers from inventing stupid things they think we do or ought to believe, and mocking those made-up beliefs. But that's grist for other TSIB posts.) Grim links to Paula Kirby's article, Worrying developments for freedom of expression in the UK, and highlights the case of Rhys Morgan, who, according to Kirby, "has apparently received veiled threats of expulsion or suspension from his school if he does not remove a Jesus & Mo image from his personal Facebook page" and has received threats of violence from his Muslim classmates. Morgan was not attempting to coerce anyone. He didn't harass anyone, he didn't threaten anyone, he didn't demand anyone be expelled or suspended, and he certainly didn't actually harm anyone. Morgan is, contrary to Grim's assertion, not a bully. And atheists in general do not engage in coercive behavior, except to insist on the ordinary social coercion to prevent harassment, threats, and overt violence prescribed by law.

Finally, Grim risibly completely fails to grasp the concept of rights. Regardless of their ontological origin — objective, subjective, or socially constructed — to accept a right is to accept a social obligation to protect that right. The connection between rights and protection is not just an entailment, it's an identity. So when Grim both asserts the right to free expression and in the same sentence implies that he will not protect those who exercise the right of free expression, he is blatantly contradicting himself.

When Grim says, "You're on your own when the consequences of being an insufferable prick come back to haunt you," he is essentially saying that if someone murdered a 17 year old for posting a cartoon on his Facebook page, he would give the murderer a round of applause instead of a lifetime in jail. I am a civilized person, so I will not harass, threaten, or harm Grim (and even this second post is at his explicit request), but I can with a clear conscience say that he is a stupid, contemptible, disgusting excuse for a human being.

Thanks for the books, Eric! Wow! That means a lot to me.

They're going straight to the top of my reading list, and I'll post a review/reflection of each book when I finish reading it.

Part 1: What is "real"? (commentary)
Part 2a: Real microeconomics (demand shocks)
Part 2b: Real microeconomics (supply shocks)
Interlude: Real and financial economics

I come to economics and political science from an unusual place. I was a computer programmer for many years, and an avid reader of popularizations of science. When I'm thinking about science and engineering, I'm always keeping one eye on the physical. I'm always asking, "What does this have to do with what's physically happening?" I have to be especially careful about the physical as a computer programmer. I mostly worked on business information systems: my job was to help people track and control what was physically happening in their business. (I also had to worry about what was more-or-less physically happening with the bits and bytes.) We have to worry about what's physically happening with the economy, too. All too often, economics deals with money, but money — even hard money — is not itself physical. Money is still important, but it's not physical. It's not an end in itself.

Imagine that for a thousand years, everyone in the country (or the world) decided to consume nothing but the bare minimum necessary for physical survival (mud huts, rice and beans, etc.), work as hard as possible, and put all our (fiat) money in the bank to grow at compound interest. In a thousand years, would our descendents be fabulously wealthy? Of course not. Not only is it unclear what we would be working at, our physical productive capabilities would be geared towards producing only subsistence. The money in the bank would represent nothing real.

"Hard" money doesn't change anything. Imagine that for a thousand years we produced only subsistence goods, and with our extra time we all worked as hard as possible getting every possible gram of silver, gold, platinum, etc. out of the ground (we might even work on producing "hard money" by transmutation). Would our descendents be wealthy? Again, of course not: they would have a lot of yellow metal in vaults and the productive capability only to produce a lot of gold; they wouldn't have cars, televisions, cell phones, and they wouldn't have any more capacity to build such things than if we, their parents, had spent a thousand years masturbating.

To be wealthy in the real sense, we have to have physical goods and services that it gives us pleasure to actually consume. Money itself is not the end; money is the way we try to work out socially what physical goods and services to produce, and who gets to consume them. At a microeconomic level, how many lattes should we make? How many hours of yoga instruction should we provide? It's a trade-off: producing more of one means producing less of the other. We use money to try to balance the production of the two for maximum happiness. At the macroeconomic level, how much of our time and effort should we spend actually making stuff? How much should we spend investing, making factories, educating people, and improving our stuff-making technology? Again, these are trade-offs; we use actions such as monetary and fiscal policy to balance between consumption and investment.

If we lose sight of the underlying reality, of the physical production of goods and services, we enter the land of theology. Indeed, one economist I read (I can't recall which; JFGI if you're interested) calls this "theoclassical" economics. We do have to have a control system to manage a 300,000,000 person economy, and we do have to spend some time maintaining the integrity of the control system itself, but if we don't always think carefully about the effects on the real, physical production of goods and services, worrying about the properties of the control system itself is at best pointless and at worst mendacious.

(As an aside, and because I'll take shots at Ayn Rand whenever possible, it's notable that Rand has to handwave away the real economy to make her "strike" work. Without John Galt's perpetual motion machine and magic science, the strike would have failed: the strikers would have starved long before the lights of New York went out.)

As a more concrete example, think about what really happens when you put your money in the bank. It's not enough to say only, "Oh, the bank pays 2% p.a. interest, compounded quarterly." What's the underlying reality? Really, you are making a decision to invest rather than consume. If all goes well, your investment should make the production of goods and services more efficient: after a year, we will be able in general to produce stuff with less human time. Indeed, if all goes well, we should increase our productive capabilities by exactly 2%. That's why, if you invest rather than consume some amount of real stuff today, you should be able to consume 2% more real stuff next year: we have spent a year becoming more efficient at producing stuff.

One advantage of tying financial economics to real economics is that we can use the philosophy and all the tools and techniques of scientific examination to discuss the physical; we don't need to to descend into any "praxeology" bullshit.

Whenever you see an economist (or anyone else) talking about financial economics without referencing the underlying reality (or telling a false or unfalsifiable story about the physical economy), you should call bullshit. Does someone say that taxation, or debt, or fiat money, etc. is bad? These are just example of moving money around; they cannot be intrinsically bad or good, because money itself isn't real. Ask, "Under the current conditions, what are the effects of adjusting the control system (money) on the physical, measurable, scientifically examinable reality?" Always always always keep one eye on the physical.

Despite the title, the habits John Cheese describes in The 5 Stupidest Habits You Develop Growing Up Poor aren't really stupid. Human beings in any environment do not operate by "rational" thought, i.e. thinking through the consequences of every possible action in every situation, and picking the action that will result in the best outcome. Instead, people develop habits of thought, and then pick the most applicable habit to each situation and act accordingly. Rationality is, I think, more applicable to evaluating our habits: does this habit usually lead to a moderately good outcome; if it does not, the rational response is adjust the habit.

The habits that Cheese describes are, when you're poor, actually rational, in that they usually lead to a moderately good outcome, and the habits that middle- and upper-class people develop would typically be disastrous. When you're poor, according to Cheese, you're always facing critical-priority expenses. You don't buy a new dryer when it's on sale because your car needs a new transmission that month. The only thing you buy in bulk is food, because transaction costs (driving to the grocery store) dominate food shopping. (Also, I suspect that, like me, a lot of poor people buy prepared food because they work a lot, at physically demanding jobs; cooking takes time, energy, and attention that's already in short supply.)

What Cheese means by "stupid", I think, is that when poor people suddenly become slightly less poor, it's hard to abandon the rational habits they learned and developed to survive poverty, but have become counterproductive in their new environment. But that's more-or-less how habits have to work; the propensity to behave in a certain way that is easily abandoned will not serve as a survival strategy, especially under stress.

Part 1: What is "real"? (commentary)
Part 2a: Real microeconomics (demand shocks)
Part 2b: Real microeconomics (supply shocks)

In the last post, I talked about real "demand shocks", when we want a lot more of something than we can presently produce. There are also real "supply shocks". A supply shock happens when something becomes considerably more expensive: given some set of resources, we can produce less of something we want or need than we could yesterday, with no compensation in the production of other things.

But what do I mean by "more expensive"? I'm talking about real economics, economics without money. The only resource we can arbitrarily change is how we spend our time. We cannot just arbitrarily make decide to have more iron: if we want more iron, human beings have to spend time digging it out of the ground. (We might also spend time creating machines to dig it out of the ground, or we might choose to use up some of the labor "embodied" in an already created digging machine to dig up iron instead of copper or uranium). So, by more expensive, I mean producing something requires more labor* than before, labor that has an opportunity cost, that could have been used to produce something else.

*Strictly speaking, socially necessary abstract labor time.

Real supply shocks tend to "creep"; in this sense, "shock" is kind of a misnomer. (In economics, "shock" just means something exogenous, i.e. in some sense outside the normal economic system.) We don't wake up one morning to find that hats suddenly take twice as much labor to make as yesterday. Rather, the real cost — the labor — tends to inexorably increase over a long period of time.

Oil is a good example of a supply shock. We believe (IIRC) we have in the last century extracted about half the oil that's in the ground. The problem is that we've already extracted the oil that's "easy" to get to, and increases in our productivity are starting to fall behind the increase in difficulty in extracting the rest of the oil. We're not going to "run out" of oil; oil will just take more and more labor time to extract, until the oil that's left is so expensive it will be used only for those things we really really want.

In a similar sense, agriculture before the industrial revolution was in a state of creeping supply shock. As the population grew, more and more land had to be put into food production. The problem is that we used the most productive and fertile land first; additional land was less productive than new land. This caused the average labor time for a given quantity of food to rise over time. Improvements in technology and the production of capital could not keep up with the loss of productivity, to the point where food production was a severe constraint on population growth. This sort of constraint is not pretty: people tend to actually starve to death.

Of course, supply "shocks" don't have to be crisis producing. As we create more capital, which makes labor more productive, and as technology improves, it requires less labor time to make most goods and services, which reduces the opportunity cost in terms of making goods and services that cannot have improvements in productivity. (One cannot, for example, greatly improve the productivity of live performances of classical symphonies.)

One interesting comparison of real economics vs. financial economics is that "positive" supply shocks (which can be abrupt), where the labor cost of something decreases, cannot produce a crisis in real economics, but can produce a crisis in financial economics. Curious.

16-year-old Jessica Ahlquist won her lawsuit removing from her public school a banner containing a prayer.

Here's what Christians have to say in response.

Can you feel it? Can you feel the love?