Friday, February 22, 2008

Institutional stability

President of the Czech Republic has a rather weak position - we do not have a presidential system like USA. Some of his decisions have to be approved by the Senate (like new judges for Constitutional court), but some don't. The prime example is Czech National Bank, which board he names himself alone.
CNB had a good start - previous president did not have any idea about economics and he knew it, but he was rather lucky in choosing his advisors. They have chosen the right candidates and he appointed them (no, really). The CNB gained some reputation.
Current and future president does not know much about economics, but he thinks he does. Because of that he chooses new board members himself. There are some obvious criteria one has to fulfill to be a candidate. You have to present at VK's funclub (CEP), you have to say what he wants to hear (ideally, you should mention that the whole idea about global warming is a plot to enslave free world, that number of species is growing due to the human presence on the earth), be opposed to euro and some other things (people say it does not hurt to be a young, charming guy, but I don't know anything about that)
This brings me back to my original though. What happens if you appoint complete morons to the top of well established institution? How long does it take before it rots? How long before public will learn that? These questions are particularly funny because VK promoted to vice-director (chairman?) a guy, who wrote such unbelievable articles to the newspapers (and insisted on their publication) and signed them as a member of the CNB board that he has to have all his future publication in the name of CNB approved by the CNB. I guess he will now be his own supervisor, so we are in for a number of funny, surprising, yet somewhat sad, articles.

I have asked this question myself repeatedly. When a new student organization is founded, how do you make it stable - able to attract enough people to keep going? When Academic Senate happens to be composed of people smart enough to elect a good rector, how do you make sure that it will happen next time? If you are a chair of national student organization (I never was!), what do you need to do to make sure that there will be a good candidate to take your place?
I don't know. Right now, I dream that CR will have euro soon, but this is unlikely to happen. So these "friends" of VK have a chance to screw CR once again. That's the main reason why JS would have been a better president. Probably.

Thursday, February 21, 2008

Money, Economics and Happiness

I study economics.I don't consider myself "an expert", but I believe I have somewhat deeper understanding what economics is than most layman. So I'm not really surprised how many people confuse economics with something it is not.
The typical example is that "economics is about money". It's not, believe me. Economics is about everything except of money (this is just a slight exaggeration). Money are studied, of course, but they are the least important thing of all in the economic science. It is interesting how they evolved as a means of payment, storage of value etc., but for most of the current economic research, money just don't matter.
What matters is incentives. Incentive is an understanding that doing something will have certain effect on me (possibly via something or somebody I care about). For example - buying an ice-cream will reduce my ability to buy other things, but also make me happier for a while (and fatter and sadder in the long-run). If you kill somebody, you probably go to the prison. That's an incentive not to do that - at least for most of the people.
Money are a way how doing something costly reduces my ability to do other things. But money themselves are useless. They are just pieces of paper that entitle their owner to do/get/see things. And most people care about doing things, not about these pieces of paper. They of course say that money matter, buy what they in fact mean that it is what money allow them to do that matters.
Sadly, some people don't realize this distinction and blame the economics. Even worse, some people confuse things money allow you to do with just money. Economics is general enough to allow people to be happy just because they have money, but people who tend to enjoy this kind of happiness don't end up happy at the end. Having money comes at the cost - friends, family, health, time...
Most importantly, economics is not about "people making money". Economics is rather general and most of it follows old but good rule: de gustibus non est disputandum, which means that economics does not question your tastes. Tastes (preferences) are taken as given - something that is axiomatically given. What economics does it that it takes these preferences, possibilities of behavior (like work, trade, marry,...) and resources and analyzes the outcome of interaction of people with (in general) various resources, tastes and abilities.
Because of that, economics is useful even if you care about only about number of plastic bags you have, or probability that you will find a wife or just about anything. Economics is a science about how you can reach these goals in the most efficient way. (Today, it is also science about how people solve complex problems when the quality of the solution determines their happiness, ie. how rational people can be, and many other things)
Be prepared for next part in the series "What is not Economics". Coming soon to your homes.

Tuesday, February 19, 2008

Smog in LA

Everybody probably heard stories about smog in LA basin. I certainly did and I did not believe them. I do now. The smog is clearly visible even on a sunny, windy day. I don't really understand how the smog can stay in the basin, since quite strong winds move from sea to inland.
I'm also not sure where does it come from. They say that the small particle component of the smog comes from China (about 1/3 of it). The rest probably comes from cars (we have many of them and no smog in SD) and heavy industry (there is still some left?).
I'm sure it is not healthy to breath such polluted air, but it is nor really bothersome, so it is probably not as bad as it is in China.
Other than that, LA is not really interesting city (not much to see), but there are places ($5m and more) where you could live comfortably, if you really have to.

Risk aversion

Most people who know me would probably agree that I save too much - I try not to spend more than I really have to. I think that the reason is that I'm more risk averse and possibly forward looking than most people. I know it is not purely rational and I have all reasons to believe that I will be earning (significantly?) more money than I do today. So, I'm occasionally thinking about suppressing the subconscious fear of spending and to learn (force myself) to spend more.
There are two good reason not to do that. First, I believe that one can get use to higher living standard very easily, but reducing it is very painful. Moreover, after you get used to your new standard, you don't feel any happier than before - only the transition brings extra utility.
Second reason is more complicated. As a young person, life seems long, I have a potential to earn a lot of money, I'm smart, educated, reasonably hard working, so why should I be afraid?
Well, things happen. Imagine that you are, say, 50 years old and you loose your job. You are going to loose your health insurance (in the US, fortunately not in CR), but you are likely to get more sick. You can't change your education or major - you are to old for that. You may have 30 years to live, but you don't have many years to earn living. You will have really hard time finding a new job. And if you are alone, there is nobody to help you.
Loosing your job in your 50s can basically end your happy life. I want to be ready for that. Feeling safe is more important to me than having a better pizza for dinner.

Monday, February 18, 2008

Extra extra high quality - by Microsoft

As you might already know, I'm no friend of Microsoft (for a large and expanding number of reasons). So I'm twice happier to make fun of them. For example - recent versions of Microsoft's programs were not accepted as fast as expected. It is said that people are waiting for first "service-pack" - an update that fixes bugs and design errors.
Obviously, such delay from release of the first version to the release of SP1 delays the revenues and profits. So Microsoft did something "incredibly" smart. They offer new versions already with SP1 (Windows Server 2008). That's right.
I'm not sure if this is supposed to be a joke. Maybe not. Maybe they are trying to cheat the consumers(again). Maybe there will be someone who would really believe that the "service-pack" means what it is supposed to mean - better programs (operating system). Maybe it will take a version or two before consumers learn that new version with SP1 means in fact new version without SP1, ie. Microsoft is just practicing cheap talk. For most people, this means that it is just trying to fool you.
Better take a look at that Ubuntu Linux soon.

Question of the day

Q: What four Czechs that meet on Sunday in LA have in common?

A: They all want to go back to Czech Republic.

P.S. Four is not enough for law of large numbers, so I don;t think this is necessarily general perception. It also should not suggest that life in the US is bad - it is probably better than in most countries. But it might suggests that young, probably middle-class, educated people find living at Czech Republic more appealing than being (possibly) rich (wealthy) elsewhere. Well, no surprise there - money can buy only so much.

Joshua Tree

On Saturday, we visited Joshua Tree National Park, which is famous, as the name suggests for Joshua Tree. We did not have much time, so we made only a couple of very short hikes. We did enjoy beautiful view over the sunset, Imperial Valley and the valley that funnels the smog from the Los Angeles basin. Pictures will be at Picasa soon.

Salton Sea

I have been traveling in the SD/LA region and one of the most interesting thing is the area around Salton Sea and Imperial Valley. The picture of the area from NASA shuttle (source: Wikipedia ) is interesting:

The sea itself is freshwater lake created by man (!) during a disaster in 1905-1907, when the flow of the Colorado river was diverted due to high volumes of water in the river that ruptured the irrigation channel. The water from the river flew for 2 years and created Salton Sea, which is 227 feet bellow sea level. The sea exists till today because of the run-away water from farms that you can see on that picture. Google Maps picture looks also very impressive. The Salton Sea was originally recreational area, but increases saltiness and pollution of the water lead to the end of the boom. Many buildings are abandoned and waters smells. In fact, the shores are covered with dead fish in various stages of disintegration. What looks like sand is in fact huge number of small shells of unknown (to me) small animals.(Pictures will be eventually posted on Picasa).
Since the whole area is in fact desert, water from Colorado river makes it very fertile. The region is the main producer of lemons in the US and we saw large number of other citrus trees as well. On our way to the Salton Sea, we passed through Anza-Borrego Desert, which is bare but beautiful area covered with occasional cactus and ocotillo. This time of the year, the weather was acceptable and many flowers were blooming.