Any time that the state spends money, there is some cost to the economy.

The state can tax, in which case the cost is obvious. But I put obvious in quotation marks here, because people don't seem to think past the fact that money is taken, without much thinking that the value of money per se is its purchasing power.

The state can print money, issuing new currency to fund its expenditures. The cost here comes because

where M is the total supply of money in an economy system, ν is the average frequency with which a unit of currency changes hands in the system, q is vector of the quantities of goods and services purchased in the system per unit time, and p is the corresponding vector of prices. If M is increased, and there isn't some off-setting increase in the elements of q, or a drop in ν, then elements of p must increase. If prices go up, then the purchasing power of the unit of currency goes down. Ceteris paribus, when the state issues new currency, the value of the holdings of currency that people already had is decreased. (There are some other, potentially far more costly effects than the direct loss of purchasing power, but I don't want this entry to mushroom into some huge treatise.)

In many modern states, printing money is made to look like borrowing, whereïn the ostensible borrowing is from a central bank, a special creature of the state, which prints money and uses this to make the loan to the state.

But the state may also more genuinely borrow money (especially when officials of the central bank think this better than printing more) in the financial markets. In this case, borrowing by the state shifts out the demand curve for loanable funds. Unless the supply curve for loanable funds were perfectly elastic, so that any amount of funds would be made available by lenders at the prevailing price — the rate of interest — that price will go up.

When people lose purchasing power to taxation or to an over-all increase in prices, they reduce purchases of goods and of services, and they save less, so that funds for investment are decreased, and hence investment is decreased. When the price of borrowing is increased, people borrow less for consumer purchases and less for investment. So whenever the state spends, no matter whether it taxes, inflates, or borrows, that spending takes a piece of the economy. Whether there is a net cost turns upon whether the activity funded by state spending is somehow more productive than the private activity that it has crowded-out.

As I have explained, state allocation of resources can be more productive only if private provision is hampered by transactions costs, and the effects of those transactions costs are greater than the combined effects of state transactions costs (red tape and all that) and the loss of economic coördination which results from substituting guess-work for market prices.

Okay, so this gets me to these stimulus bills in the United States legislature. Various numbers are associated with various versions, but the bill that left the House of Representatives was for about 800 billion dollars. And various commentators, both conservatives at institutions such as the Wall Street Journal and social democrats (liberals) at institutions such as NPR, have noted that only about one-eighth of the projects in that bill could be reasonably claimed to be stimulus, with the rest just being pork-barrel projects. Regardless of whether we buy-into the Keynesian hopes for about $100,000,000,000, the loss to the economy associated with about $700,000,000,000 in pork will be vastly greater.

It was claimed that a stimulus bill was necessary because the economy is tanking. The word depression is being bandied-about. And, yet, a majority in Congress and the President are pushing what will plainly be a massive hit on the economy.

To explain the behavior of these parties, we could offer various hypotheses. Many politicians are simply great fools; some politicians might believe that we are indeed on the cusp of an economic disaster, but be so greedy for the political gains associated with these projects that they just won't allow themselves to think. Other politicians might not believe the talk of economic crisis, but be knaves who participate in it, creäting a smokescreen behind which to seek much the same gains as are the fools. Finally, some of these politicians might both genuinely believe that the economic crisis is quite dire, and recognize that a stimulus like those proposed will be greatly damaging, but expect that the effects of the bill can be blamed on other things, especially upon what remains of the market economy, so that those effects become an excuse for even greater expansion of state power.

With regard to one particular politician, the President, I don't at all think that he's so great a fool as to misunderstand what a stimulus bill that is about 7/8 pork would do. He knows that he's pushing a hit on the economy. I don't know whether he is amongst the knaves who don't really believe that the economic situation is all that dire, or amongst those who want to engineer a greater crisis in order to have a greater excuse to technocratically restructure the economy. But when the President speaks of recovery as taking years rather than months, I worry that he is not merely lowering expectations to reduce future criticism, but revealing more ambitious plans.

This morning, I tried a Jack Black® Pure Performance Shave Brush. Its bristles are synthetic (the badger lives to see another day) and anti-microbial, but designed to perform like a silver tip badger brush (which is generally held to be the best sort).

I have a Burma Shave™ boar-bristle brush that I got before I learned that boars were killed for the bristles, and an Art of Shaving® basic badger-bristle brush given to me as a gift before the giver learned that badgers were killed for the bristles. Jointly, these could last quite a few years. But I was quite interested to try a synthetic brush, partly so that I would know whether they were good gifts, and partly so that I could write and speak about them from experience.

The thing that I always read about most synthetics is that that they don't hold water as well as do natural bristle brushes. Well, I've not yet done a head-to-head comparison with anything but the boar-bristle brush, but the Black® brush definitely holds considerably more water than does a Burma Shave™ boar-bristle brush. (So much so, in fact, that I ended-up with far more dilute lather than I wanted. That's a problem that I can easily address, by just shaking out the brush before I put it in the soap.)

The Black® brush also feels much nicer against my skin than does the boar-bristle brush, and certainly nicer than did the boar-bristle brush when it was new. And the boar-bristle brush smelled like a musky animal when it was new, whereäs the Black® brush naturally didn't. (Jack Black in fact gave it some sort of pleasant scent which I presume will wash away with use.)

I will probably, at some future point, try the genuine badger brush that I was given. The badger whence the bristles came isn't going to get any more killed; and, while I wouldn't thus have tested the Black® brush against a high-end badger brush, I would at least have tested it against a badger brush of some sort.

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While I am on the subject of shave brushes, I would like to mention the Burt's Bees® Natural Bristle Shaving Brush, found in their Bay Rum Men's Shaving Kit and sometimes sold separately. A little research confimed my suspicion that the bristles are boar bristles.

Burt's Bees proclaims

our goal is to help create a world where people have the information and tools they need to make the highest ethical choices

Now, reasonable people might argue over whether it's ethical to kill animals for shaving products, but one doesn't have the information needed to make the highest ethical choices if one isn't being told that these natural bristles were harvested from killed boars; plainly a significant share of Burt's Bees' customers would have concluded that the use of such bristles were unethical. And we may safely presume that the boars were killed (though there is a ranch in Spain that would happily sell them bristles sheared from boars who are not killed), because Burt's Bees, which makes a point of telling us that it doesn't engage in animal testing hasn't made a point of telling us that these bristles were sheared from live boars.

Possibly Burt's Bees just didn't know any better (much as I didn't know any better). I notice that the Bay Rum Men's Shaving Kit is presently listed as currently out of stock, and I can't find the brush itself listed separately at their site (though I can find it sold by Red Rain, a company that claims to offer the concientious consumer earth friendly, cruelty free products and services). But Burt's Bees has grossly failed its customers, either willfully or inadvertantly, and owes to them an explanation and an apology.

Perhaps we should demand an apology on this score from Al Gore. After all, he told us that he took the initiative in creating the Internet.[1]

[Up-Date (13 Jan): I was informed by Gaal, in a comment to this entry, that the Times had somehow fabricated this story. (The BBC presenting the story as if it were their own research, but the chances that they would have independently fabricated the same details are slim indeed. So the Times has been caught-out in one way, and the BBC in another.) Meanwhile, the BBC story has been significantly edited, so that the sentence quoted above no longer appears, and we are instead told

A recent study by American research firm Gartner suggested that IT now causes two percent of global emissions.

]

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[1]Note that Snopes.com demonstrates that Al Gore did not claim to have invented the Internet. But what Gore did claim (and they even quote this) was

During my service in the United States Congress, I took the initiative in creating the Internet.

Snopes, which can be very much about spin rather than clarity when it is their ox that is about to be, er, stabbed with a horn, wants to claim that there's room for debate about whether his claim of creätion is justified, because the Internet is not a homogenous entity and didn't spring into being at once. Well, not much in this world is homogenous and static, but it is simply disingenuous to claim to have taken the initiative in creäting something that already existed because one pushed to fund its further development.

(Underscore mine.) The selection of Warren is, one way or another, an illustration of Obama as triangulator — someone who cobbles-together a plurality based upon a reading of demographics and of polls, with little regard for the vision thing.

I don't know to what extent the present rank-and-file of the Democratic Party will tolerate an alliance with social conservatives of any sort; but, again, politics tends to be tribalistic. Many Democrats will find formulæ to rationalize cleaving to the Party as it now further intrudes into the bedroom as well as into the boardroom. Some will argue that the Republicans have forced such alliances upon the Democrats. Others will persuade themselves that they have to stick with Obama or lose any chance at progressive policy in any area.

If the Democrats succeed in forging such ties, the Republicans will have considerable trouble off-setting the lost numbers with classical liberals, who have been terrifically alienated by what the Republicans actually did while in power. Not, though, that there's really anywhere else for the classical liberals to go now, since the Libertarian Party sold-out for a cupful of thin, red stew.

I'm not sure whether das Erwerbslosen Forum Deutschland believes that it is better to pay affluent people than poor people, or believes that die Ratten should be left unmolested. I am, however, sure that, if a €1 bounty is placed on rats, then people will raise rats for the bounty.

I haven't followed everything that has been said about the proposed bail-out of the major American automobile manufacturers, and I don't know whether the principal point that I'm going to make below has been much noticed.

It is quite natural for people to hold that, if the manufacturers are given a major infusion of financial capital, then they should surrender some control to the creditors; that if the manufacturers are given a bail-out by Congress, then Congress ought to be able to impose some changes in practices and in policies, to ensure that tax-payers are in some way repaid.

But ownership is no more or less than a right of control, and to the extent that control is transferred, ownership is surrendered. What we are then discussing, however we might put it, is nationalization, albeït perhaps only partial nationalization, whether it is called this or not.

Once the automobile industry is nationalized, management of that industry becomes another government programme, with a large bloc of voters fairly directly dependent upon that programme for their incomes. A sizeable portion of this bloc will insist upon indefinite guarantees concering employment and income. The industry would likely become another third rail of the political system, virtually untouchable unless it is to expand the benefits received by the beneficiaries. Further, conceptualizing what amounts to a transfer programme (welfare) as a manufacturing programme will consume additional resources, which really ought to go into other projects. It would literally be more efficient to pay some or all of the automobile workers to stay home than to pay them to make some or all of the vehicles that they would make; but, by golly, the illusion of productivity will trump the reälity of waste.

Because the political significance of a transfer programme is positively correlated with its direct economic benefits to recipients, the stronger are the initial guarantees of employment and of income, the more powerful will be the abiding political effect of the programme. The Republican insistance that a bail-out provide for swift wage cuts probably speaks to some awareness that the bloc of voters in-question would more naturally align with the Democratic Party.

Meanwhile, the White House discussion of doing an end-run to provide a bail-out from other funds may be an attempt to head-off later action by Congress when the Democrats assume the more sizeable majorities from the last elections. Giving money to the manufacturers with fewer strings attached puts less of a programme in place.

I wonder just how long it's going to take the typical Obama supporter to move on from Denial to Anger…

…or if, indeed, they ever will. Much of politics has a sort of tribalism to it, under which people care far less about policies than they do about whether the coälition with whom they have identified themselves is in power. My friend Ronald once noted that, in some political factions, a willingness to turn on a dime when it comes to doctrine is often seen as the true test of merit.

As previously mentioned, one of my Corsair Voyager 8GB USB flash drives has failed.

Christophe Grenier's TestDisk was unable to locate a partition table. But his PhotoRec is racing through the drive recovering various sorts of files. I am quite pleased and impressed.

Unfortunately, the program has no way of identifying the file names! So the files are all being given new, opaque names.

Addendum (2008:12/17): A recent entry by oddharmonic reminded me to note here that PhotoRec reässembled video files like Frankenstein Flub-a-Dubs. Mind you that there was really no practical way for the program to know what bits belonged together, and the resultant files could be fixed by using a decent video editor to re·splice them.

And, since the Councilman's party affiliation is mysteriously not given in the story, one might google

"Steve Lipski" (democrat | democratic | republican)

This time, I was amused to find that many of the first hits are exactly about the failure to report his party affiliation. I was also amused to find his declaration

Yes, I am a Democrat, but I have always put people before politics.

as urinating on the crowd suggests that he puts some peculiar things well ahead both of people and of politics.