The Economics of Scrooge

Charles Dickens' A Christmas Carol is among my favorite stories. This year, I've been reading it aloud to the family for the first time. (I started off reading it to the girls, but MrsDarwin has proved a more apt audience. Dickens' prose remains a bit beyond 5 and 6-year-old tastes.)

I'm far from being alone in my affection for A Christmas Carol, and so there are any number of movie adaptations available as well. This particular year, it happens that I saw two versions, the George C. Scott adaptation which is an absolutely superb film, and also The Muppet Christmas Carol with Michael Caine.

A number of comparisons might spring to mind when watching two such different treatments a few days apart, but in this case what struck me immediately was the way in which each movie attempted to convey the heartlessness of Scrooge's business methods.

Dickens himself is rather sketchy about what exactly Scrooge's business is, other than that it consumes all his attention. Scrooge sits in a counting house through the day, and in the outer office Bob Cratchit is seen copying letters -- a clerical task generic enough it could pertain to any business. It's also mentioned that Scrooge makes short term loans or securities on the Exchange. Or at least, that is how I take the line:
This was a great relief, because ``three days after sight of this First of Exchange pay to Mr. Ebenezer Scrooge or his order,'' and so forth, would have become a mere United States' security if there were no days to count by.

Doubtless merchant financing and options trading seemed far too complex for a children's movie, so in the Muppet Christmas Carol, Scrooge has been turned into a writer of mortgages -- or a landlord of rental properties, the scriptwriter can't quite seem to make up his mind. In the opening scene Scrooge gleefully tells Cratchit (Kermit the frog) and a small army of small clerks (the rats) to write up the next day's foreclosures to be delivered on Christmas. Gleefully rubbing his hands together, he declares that this is the best season of the year for mortgage lenders.

Later, however, when Marley's ghost (in the Muppet version transformed into the Marley Brothers, played by the hectoring old men from the Muppet Show) appears, they reminisce about the good old days when they evicted people from houses they couldn't afford the rent on. "Remember the year we evicted the whole orphanage? There they were, shivering in the street with their frosted teddy bears!"

Clearly, the point here is to portray Scrooge as being in the very worst possible sort of business, but what the screen writer seems to have been unclear on is that if you hold a mortgage as a lender the very worst thing that can happen to you is having to foreclose on it. If the homeowner had enough equity in the house to cover the balance owed, the homeowner would obviously sell the house, pay off the loan, and keep the balance. So foreclosures are only going to happen when the house is worth less than the balance on the loan. The lien holder sells the house to make back as much as possible of the lost money, but it'll invariably be a loss for him. If Scrooge is writing our reams and reams of foreclosures, he's probably about to go out of business. (After all, if foreclosures made lenders rich, our financial industry wouldn't be in such trouble now.)

Similarly, although a landlord stands to start making money again if he evicts renters who can't pay and replaces them with ones who can, he obviously loses rent in the mean time, and has to go through extra work getting rid of the old renters and finding new ones. A landlord would make much more money by finding good renters who can afford his rents in the first place.

So while the Muppet Christmas Carol seeks to make Scrooge out as the ultimate in greedy businessmen, they mostly only succeed in making him look deeply incompetent. How he could get rich by such means is totally unclear.

The George C. Scott adaption has a rather more historically and economically literate approach to Scrooge's business dealings. In an early scene, Scrooge goes down to the exchange where he meets with three men seeking to buy a warehouse full of grain which Scrooge owns. They ask him if he has reconsidered his price since the day before. Scrooge replies that he has: the price has gone up 5%. That's outrageous, they reply. No, says the imperturbable Scrooge, it's business. But if grain prices rise, the poor will suffer. That's their look out, says Scrooge. You'll end up with a warehouse stuffed with grain, they warn him. Surely, he replies, that's his own lookout. He then warns them that the price will increase another 5% if they wait until the next day -- on which threat he succeeds in closing the deal.

From what I've read about the mid 19th century British economy what Scrooge is probably doing here is using his considerable capital to buy up futures on the harvest for the year. Because it was a period of instability for many British farmers, it was often possible for a money lender to buy up the harvest in advance at vastly reduced prices. This relieved the farmer of the risk of a bad harvest, but lost him most of the benefit that would otherwise have come from a good year -- with the profits from a bountiful harvest instead going to lenders and traders like Scrooge. With sufficient dominance in such a market (and enough capital to be able to wait for scarcity to set in) Scrooge could also attempt to corner a market and wait for times of scarcity in order to sell his grain.

If one feels the need to imagine a business model that fits with Scrooge as presented in the story, this seems like a fairly reasonable way to go.

Is that absolutely necessary?

Phrases often achieve a sort of iconic status within family culture. In ours, one of the standard exchanges is:

"Is that absolutely necessary?"
"Yes, 'e's afraid it is."

These days, this is usually said within the context of young master Jack doing something -- like spitting cheese all over someone's new outfit or overflowing a diaper in a particularly disgusting fashion.

The context is an exchange from Terry Gilliam's Time Bandits, the first of his trilogy which also included Brazil and The Adventures of Baron Munchausen. And as you can see, it covers the inexplicable rather well:

Time Bandits was a movie that I watched dozens of times when I was eight or nine -- which may explain rather much about me...

Merry Christmas

One of the things I have always found compelling about Christianity is its clear beginning at a specific place and time -- which we commemorate today on the Feast of the Nativity of Our Lord.

And it came to pass that in those days there went out a decree from Caesar Augustus that the whole world should be enrolled. This enrolling was first made by Cyrinus, the governor of Syria. And all went to be enrolled, every one into his own city. And Joseph also went up from Galilee, out of the city of Nazareth, into Judea, to the city of David, which is called Bethlehem: because he was of the house and family of David. To be enrolled with Mary his espoused wife, who was with child. And it came to pass that when they were there, her days were accomplished that she should be delivered. And she brought forth her first born son and wrapped him up in swaddling clothes and laid him in a manger: because there was no room for them in the inn. And there were in the same country shepherds watching and keeping the night watches over their flock. And behold an angel of the Lord stood by them and the brightness of God shone round about them: and they feared with a great fear. And the angel said to them: Fear not; for, behold, I bring you good tidings of great joy that shall be to all the people: For, this day is born to you a Saviour, who is Christ the Lord, in the city of David. And this shall be a sign unto you. You shall find the infant wrapped in swaddling clothes and laid in a manger. And suddenly there was with the angel a multitude of the heavenly army, praising God and saying:

Glory to God in the highest: and on earth peace to men of good will.

And it came to pass, after the angels departed from them into heaven, the shepherds said one to another: Let us go over to Bethlehem and let us see this word that is come to pass, which the Lord hath showed to us. And they came with haste: and they found Mary and Joseph, and the infant lying in the manger. And seeing, they understood of the word that had been spoken to them concerning this child. And all that heard wondered: and at those things that were told them by the shepherds. But Mary kept all these words, pondering them in her heart. And the shepherds returned, glorifying and praising God for all the things they had heard and seen, as it was told unto them. (Luke 2:1-20)

A merry and blessed Christmas to all our readers.

A Taste of Christmas

The feast of the nativity of Our Lord has traditionally been a time for feasting and the gathering of family and friends. And since taste and smell are powerful hooks for memory, many of us have intense connections to various Christmas foods and drinks. The other holiday here in the US which is heavily food-centric is Thanksgiving, yet with a few familial variations, the Thanksgiving food palette is pretty well defined. Christmas food traditions, however, are pretty various.

The following are the foods that I most closely associate with Christmas. Please feel free to add your own favorite Christmas food memories in the comments or in a post on your own blog.

The central dish for our family Christmas dinner varied from year to year, sometimes a Christmas ham (baked with cloves stuck all over it and a sherry and brown sugar glaze) and sometimes a turkey. So the dinner I remember most was actually one seldom if ever eaten on Christmas day itself: My grandmother's tamales. Nearly every year, shortly before Christmas, my Ramirez grandmother would have all her daughters over for a day of tamale making -- and my mom would bring home her share of three or four dozen tamales. Pork, beef, and chicken tamales. Yum. Living as I do now far away (and tamale making being a big enough production that my mother seldom attempts it on her own) I try every so often to recapture my memories with locally bought tamales -- but as with any grandmother-made dish, the stuff I buy is never as good.

From the other side of the family, my strong memory is of the rum balls which my dad made most years, according to the recipe handed on from his father. One batch of rum balls included 16oz of dark rum, and seeing as the mixture was not cooked, eating one left a distinct alcoholic burn in the mouth. I recall that cocoa powder, vanilla wafers, pecans and rum were all involved, and the result was generously dusted with powdered sugar. One of these days I'll have to get hold of the recipe and try it out -- as we did with my grandfather's recipe for fraternity eggnog last year.

The third taste which is definingly Christmas-like to me is that of thick, fresh gingerbread cookies. Too often, in an effort to make something that will last months in the form of a gingerbread man or house, these are cooked until rock hard, or made with too much flower to make them denser and harder. But to my mind the perfect gingerbread cookie (my mother's recipe, of course) is thick and soft under the teeth, with strong tastes of molasses and ginger. I generally make these at least once each year, though we don't overdue it as poor MrsD can't stand the taste or smell of molasses.

Calling the New Yorker Cartoonists

The Wall Street Journal features an article on a winning new ad from Pedigree dog food: The cutest puppy in the world is pictured along with a plea to president elect Obama to fulfill his campaign promise to his children by adopting a dog from a shelter (rather than picking up one of those over-bred creatures bred for the dog market.)

Doubtless the younger generation of Obamas is campaigning hard to make sure that this is one campaign promise not put off until the economy recovers.

I don't think much of our president elect, but I must give him credit for picking a condition for dog ownership which ensures that he will not have to be the one dealing with house training and the pooper-scooper. (Surely even in a modern progressive family such as his, the universal rule that the man of the house deals with all non-human excrement producers holds. You don't exactly picture convincing Michelle to scoop the cat box, do you?)

Which leads, of course, to the obvious New Yorker cartoon. Disapproving looking mother in business attire stands with hands on hips glowering at her two well-coiffed children, between whom cowers a puppy. "Please, mommy!" begs one of the tykes. "I promise my staff will take care of him."

Undying fame

Hey! My fab sister made the ranks of TS's Blogeuses of the Catlick Blogsphere calendar! See, sis, it pays to have connections.

Joining the Ranks of the TV-ed

For something over a year now, we haven't had a TV. Our previous one had died a slow and painful death as a result of the injuries sustained while being knocked over several times by young Darwins scaling the entertainment cart. (Smashing a coffee table, on one occassion.) And as it was hard to justify spending several hundred dollars on something like a TV at the time, we simply cancelled the cable subscription (keeping the high speed internet, of course) and settled down to watching the occasional movie from Netflix on our iMac.

This also allowed us to go around making ourselves annoying by saying in regards to cultural attachments, "Why, we don't even have a TV."

Have we been watching The Amazing Race this season? We don't even have a TV right now.

Oh I just love Dancing With The Stars! Never seen it. We don't even have a TV.


Yes, it's been fun. I get a kick out of telling people that we don't have a TV, because it generally kicks off interesting conversations focusing around topics like: What do you do at night?

But all good things eventually have to come to an end, and good things which involve annoying those around you should probably come to an end sooner rather than later. Plus it does get a bit annoying, when we want to relax and watch a DVD, to have to do so clustered around the computer on chairs. So when an opportunity came up last week to get a 32" flat panel TV at a very low price through the company at which a work, we decided to fulfill MrsDarwin's decorating dream of getting a TV which could hang up out of the way on a wall and not take up any valuable floor or furniture space.

I expect we'll enjoy the new addition to the "digital home" -- but I must confess that I will miss having the chance to brag about not having a TV. We aren't completely giving in, however. Thus far, the plan is for this to be a DVD viewer only. We are not getting cable back (and reception is non-existant in our neighborhood) -- at least for now.

Freedom as a Political Good

Historically the Catholic Church has had, or has been perceived to have, a rocky relationship with "freedom" in the sense that the term has come to be used in a political and cultural sense since the Enlightenment.

Freedom in the modern sense is often taken to mean, "I'm free to do whatever I want without anyone telling me what to do." The Church, on the other hand, generally takes freedom to mean, "Freedom to do that which is good." The Church sees sin as enslaving and as reducing one's capacity to choose freely in the future, and as such even where acting contrary to the good is in no way forbidden, doing wrong is not seen by the Church as exercising "freedom".

So the in the moral sense, the Church does not hold "freedom" in the sense of simply doing whatever you want to be a good. Rather, the Church holds doing the good to be the good, and freedom to be the means of achieving that.

I speak above in the moral sense. However, let us look now at the political question of freedom. There are several senses of "freedom" that one can speak about politically. Sometimes we talk about a country being "free" in that it is not a dictatorship or more specifically in that it has a free press and a moderately democratic form of government. However the sense that I'd like to examine is "freedom" in the sense of "not legislating morality" or more generally erring on the side of not restricting personal action even in cases where one is sure that the action in question is wrong.

The argument for using the state to restrict people from doing things that are wrong is pretty straight forward: Generally when we refer to something as being "wrong" we are talking about something which causes injury to others, or at least to the actor himself. For example, it is wrong to steal, and it is illegal to steal because stealing causes injury both to the person who is stolen from and also (though this is of more interest to the moralist than the lawmaker) because stealing causes damage to the person who steals as well.

Generally, when people argue against making something destructive illegal, they do so on one of two bases:

1) Outlawing the activity would cause social destruction greater than the activity itself.

2) Outlawing the activity would set a dangerous precedent because of disagreements in society as to the definition of what is destructive.

A good example of the first of these is the debate over whether the ban on drugs causes more damage than simply having drugs legally available would. This is an interesting prudential debate, but what I'm interested in looking into more deeply is the second reason.

One of the classic examples that occurs to me in this regard is the sort of case that comes up every so often in which parents with religious beliefs against some particular medical procedure are in conflict with doctors who want to save the life of their child by means of the forbidden procedure. Now, from my position as someone confident that the parent's beliefs about blood transfusion or chemo therapy or heart surgery or what have you, my initial thought would be that the parents should be prevent from inflicting the damages resulting from incorrect beliefs upon their child.

However, given that our society has an ever decreasing degree of consensus as to which beliefs are erroneous and which are correct, this strikes me as a dangerous precedent to set. If today I support the strong arm of the government being used to overrule the beliefs of another set of parents because I am certain their beliefs are erroneous, it's not inconceivable that at some point in the future the majority of the population will decide that my beliefs are erroneous and take away my ability to make decisions about my children.

The Church learned this the hard way in regards to religious freedom. For much the Church's history in Europe, it had strongly supported governments providing their backing to enforce tithing, stamp out heresy, etc. This seems a right and obvious thing to do when the societal consensus was that the Church represented theological truth -- and thus only erring sects suffered pressure from the state. However, when the Reformation and Enlightenment brought other religious groups and anti-religious groups into power, the Church found the tradition of using the state to stamp out error turned against it.

Given that modern society has seen the increased breakdown of social consensus on a wide variety of moral and religious topics (or a vast increase in diversity, depending on how you want to spin it) and at the same time an ever increasing ability of the central state to regulate everyday life, it seems necessary to ask: Should we consider political freedom (defined as the refusal to use the power of the state to regulate behavior) to be a positive good, or should we simply consider it a temporary compromise to be used in those areas where we are concerned that the societal tide is shifting away from us?

To take the latter position is to open ourselves up for accusations of hypocrisy, though the difference between pragmatism and hypocrisy is sometimes narrow. To take the former is admit to ourselves more bluntly than we are often willing to do that we as a state and a society are unable to "stamp out evil" in our midst -- because we are unable to agree on what evil is.

For now, I think my own conclusion is perhaps closer to the latter, though with deference to the former: If the state is at all to be seen as a protector of the common good, it must at times restrict the freedom of people to do what they want, based on a social consensus that what they want is bad for them and for others. However, we must be hesitant to use that power too much, and principledly so, because it is a weapon that can at any time be turned back upon us on our dearest beliefs. And so we must always be seeking the correct balance between combating the most socially destructive wrongs, while being hesitant enough to restrict others' freedom that we can avoid being oppressed overmuch when we find ourselves in the minority.

Easy Post

Via Melanie, a quick and fun meme. Things I've done are in bold.

1. Started your own blog
2. Slept under the stars
3. Played in a band (I once played with my brother's band in a low-key way, but I wasn't "in" the band.)
4. Visited Hawaii
5. Watched a meteor shower
6. Given more than you can afford to charity
7. Been to Disneyland (and that's a streak I'm going to keep up)
8. Climbed a mountain
9. Held a praying mantis
10. Sang a solo
11. Bungee jumped
12. Visited Paris
13. Watched a lightning storm at sea
14. Taught yourself an art from scratch
15. Adopted a child
16. Had food poisoning
17. Walked to the top of the Statue of Liberty
18. Grown your own vegetables
19. Seen the Mona Lisa in France (I hadn't expected much, but I found her more intriguing in person than in photographs)
20. Slept on an overnight train
21. Had a pillow fight
22. Hitch hiked
23. Taken a sick day when you’re not ill
24. Built a snow fort
25. Held a lamb (but I've milked a cow, which seems much more iconic)
26. Gone skinny dipping
27. Run a Marathon
28. Ridden in a gondola in Venice
29. Seen a total eclipse
30. Watched a sunrise or sunset
31. Hit a home run
32. Been on a cruise
33. Seen Niagara Falls in person
34. Visited the birthplace of your ancestors
35. Seen an Amish community
36. Taught yourself a new language
37. Had enough money to be truly satisfied
38. Seen the Leaning Tower of Pisa in person
39. Gone rock climbing
40. Seen Michelangelo's David
41. Sung karaoke
42. Seen Old Faithful geyser erupt
43. Bought a stranger a meal at a restaurant
44. Visited Africa
45. Walked on a beach by moonlight
46. Been transported in an ambulance
47. Had your portrait painted
48. Gone deep sea fishing
49. Seen the Sistine Chapel in person
50. Been to the top of the Eiffel Tower in Paris
51. Gone scuba diving or snorkeling
52. Kissed in the rain
53. Played in the mud
54. Gone to a drive-in theater
55. Been in a movie
56. Visited the Great Wall of China
57. Started a business
58. Taken a martial arts class
59. Visited Russia
60. Served at a soup kitchen
61. Sold Girl Scout Cookies
62. Gone whale watching
63. Got flowers for no reason
64. Donated blood, platelets or plasma (and I fainted afterward, and missed a class, and screwed up someone else's plans. I haven't donated blood since.)
65. Gone sky diving
66. Visited a Nazi Concentration Camp
67. Bounced a check
68. Flown in a helicopter
69. Saved a favorite childhood toy
70. Visited the Lincoln Memorial
71. Eaten Caviar
72. Pieced a quilt
73. Stood in Times Square
74. Toured the Everglades
75. Been fired from a job
76. Seen the Changing of the Guards in London
77. Broken a bone
78. Been on a speeding motorcycle
79. Seen the Grand Canyon in person
80. Published a book
81. Visited the Vatican
82. Bought a brand new car
83. Walked in Jerusalem
84. Had your picture in the newspaper (when I was pretty young, at a Christmas parade)
85. Read the entire Bible (most of it)
86. Visited the White House
87. Killed and prepared an animal for eating
88. Had chickenpox
89. Saved someone’s life
90. Sat on a jury
91. Met someone famous (I guess it depends on your definition of famous)
92. Joined a book club
93. Lost a loved one
94. Had a baby
95. Seen the Alamo in person
96. Swam in the Great Salt Lake
97. Been involved in a law suit
98. Owned a cell phone
99. Been stung by a bee
100. Read an entire book in one day

Now that is Employee Appreciation

It's not unusual to receive a box of cookies or chocolates or something from your boss as a "holiday present". Mine just plunked one of these down next to me.

Now there's someone who understand the rigors of our work.

Rationality and the "Paranormal"

Ross Douthat links to a post by John Derbyshire over at Secular Right responding to a recent survey finding that belief in God, heaven and hell is near universal and belief in angels, demons, ghosts and UFOs is quite common, while only 47% of the US believes in evolution. (Let's leave aside, for now, the question of whether it makes any sense to compare "belief" in a scientific theory with belief in God.)

Derbyshire asks:

What do people actually mean by any of this? Do they actually conduct their lives on the working assumption that the next stranger they meet may be an angel, a ghost, Satan, or a UFO crewman? (Ans: Obviously not.) How many could give a coherent account of the theory they reject? (Ans: Vanishingly few.) What does “believe” actually mean in this context? (Ans: Nothing very functional.)

Douthat's answer is, I think, very much on base. He concludes:

But if you want to understand what, if anything, a person means when he says he believes in demons or angels or ghosts, the simplest baseline answer is this: He means that if confronted with an encounter or an experience that seems demonic or ghostly or angelic and asked to rationalize it, he will be inclined to give credence... to the possibility that the encounter is, in fact, what it appears to be.

I think this is one of the basic areas in which materialists and non-materialists talk past each other a great deal. There's a sort of creation myth of mythology, religion and folklore that moves about in secularist/materialist circles (perhaps given that these are materialist circles we really should use Dawkins' terminology and call it a meme) that all forms of "superstition" are in fact attempts explain how the world works. Thus, belief in God is really just an attempt to explain "how things got here" in the absence of scientific knowledge on the topic. Belief in angels or demons or ghosts or any number of folkloric characters is simply a way of explaining phenomena which people didn't understand the physical causes of. Or perhaps a way of reading causation into something which is actually random -- an over-active sense of pattern recognition.

However, I think part of the real difference here is that people have strongly different ideas about how unlikely it is to experience something that is non-material. For some people, the idea that the sun danced at Fatima or that late stage cancer could completely vanish as a result of miraculous means is so unthinkable that even if one receives multiple testaments to such a thing having happened, one concludes that there must be some completely unknown (or highly unlikely) physical explanation which is what "really happened."

But the difference is not so much between people who look for "real explanations" for things and people who don't, but rather between people who discount all non-material explanations and those who don't.

Needless to say, there is still plenty of room for disagreement. I've often had fellow Christians relate to me small "miracles" which I would tend to assign as simply being coincidences. But again, that's a difference primarily attributable to my placing a different likelihood on supernatural intervention in certain issues than some other people do.

One of the primary charges often leveled against religious believers is that they are irrational -- but I think the key difference to understand here is that believers in various forms of non-material creature or phenomena do not fail to understand cause and effect, or fail to look for rational explanations, it's simply that their ideas of what is a possible cause for a given effect are difference from those of the committed materialist. Whether the materialist's commitment to all phenomena having material explanations is justified by anything other than choice is less clear to me.

Bloody stupid question

What happens if a vampire drinks contaminated blood? You just don't hear much about blood-borne disease epidemics in the vampire community.

And for your un-vampirical delection, here's this parody of Twilight (h/t Happy Catholic):

Taking my temperature

Baby is three months old, so it's time to break out the charts and thermometer again. Which means I had to go out and buy a thermometer since the girls lost mine during the 24-hour fever which swept the children's ward here a few weeks ago. Whaddaya know, Wal-Mart actually carries a "family planning" thermometer, and I guess it's okay. But after having gone through three thermometers (all of which are somewhere in this house -- whoever lives here after us is going to be mystified by finding thermometers under baseboards or tucked under the carpet), I have to say that the best basal thermometer is the B-D brand which you get in the Art of Natural Family Planning kit (also available separately).

Here's what I like:

• it lights up when you turn it on.
• it stores the last temperature.
• it beeps while you're taking the temperature. (I can't stress this one enough, having had several thermometers that don't. When you're taking your temperature when you're only half-awake, any little thing to let you know the process is working is a help.)
• when you turn it off it lights up again, allowing you to read the temperature quickly without turning on the light. (And sometimes, knowing your temperature first thing allows you to plan out the rest of your day. Just sayin'...)

I've gone ahead and re-ordered the B-D thermometer. As for the Wal-Mart one? Well, next time the fever goes around, it won't be my nice thermometer that gets lost.

Gimme

This isn't our gift-giving model around here, but this has to be one of the best examples of viral marketing I've seen.

Okay, here's a pet peeve: what is it with women buying gifts for themselves "from" their husbands? If you buy it yourself, it isn't a present. Also: what is it with couples buying themselves a joint present? That's not a present, it's a joint purchase. A present is something given.

We're not all that big on presents. I got it into my head at a young age that it was greedy to show too much interest in presents, and so I'm pretty low-key about them (both receiving and giving). In fact, it's only over these past few years that I've realized that it's not in poor taste to open a gift in front of the person who gave it to you. (I don't know where this particular hang-up came from.) It's only since I had children to watch opening presents that I've come to understand that presents aren't just about materialism.

Does a Profit Driven Business Model Corrupt?

One of the big criticisms of free market economics is that markets are driven by greed. "Why would you want to allow markets to set the price of [health care, wages, basic housing, food, education, etc.]," the argument goes, "when that means subjecting a basic humanitarian necessity of the dictates of unfettered greed?" I think this represents a basic misunderstanding of how markets work, and I'm going to try to address that in this post -- though I approach the attempt with some trepidation given the difficulties of the subject matter and the limits of the medium.

I'm going to start by conceding a point which those making the assertion I describe above may consider to prove their case: The economic view of market dynamics tends to view individual actors within a market as value maximizing agents. In other words, a market consists of a number of actors each trying to get the most possible value for the least possible expense.

Doesn't this mean that markets are driven by greed? Don't we need to encourage people to be something other than value maximizing agents?

Well, certainly, there is much more to life than what you can buy and sell, so people should never reduce themselves to nothing but value maximizing agents. However I'm going to attempt to argue that markets based on individual value maximization are not necessarily merely exercises in greed.

There are two things which must, I think, be kept in mind here. First of all, we do not all value things equally. And secondly, a market involves all sides of every transaction trying to maximize value.

The first of these points is key because the different values which we place on things result in the motivation for trade. Say that I enjoy doing carpentry while a buddy of mine enjoys doing car work. It would make sense for me to help my buddy with building book shelves and installing wood floors, while he would help me when my car needs work, because the work of doing carpentry has a higher "cost" to him than it does to me. (I enjoy it, and he doesn't. Plus I perhaps have more skills than he does, so I get it done faster and better as well.)

Since I get enjoyment from doing carpentry (and find it easy) I would not be willing to pay someone much to do it for me. But since my friend doesn't enjoy it, he would pay significantly more in order to avoid having to do the work himself. When we specialize and exchange, we both get increased value from the transaction. In essence, by exchanging what we don't want for what we do want, we create value. Is either one of us being greedy in this exchange? No. Indeed, you could argue that we're both helping each other, even though we are also both maximizing value for ourselves.

Let's try this with an example which is more often seen as showing greed. I bought a coat yesterday for $69 (50% off) which was, according to its tag, made in Vietnam. I'd long delayed buying a coat, even though the last one I bought (nine years ago) was pretty seriously worn out, because I was put off by the expense of the coats I was seeing. If you grit your teeth and jog fast from your car to the building you're headed for, you can get by a long time in Central Texas without a coat, and the thought that the $150-$250 that many of the coats I was seeing cost would feed our family for a week or two, or buy winter clothes for all the kids, or cover car repairs, or any of another of other items on the list of household expenses. Now, if the wages for coat makers in Vietnam were such that it was impossible to buy a coat for less than $300, I certainly would not begrudge them a better lifestyle, however I almost certainly would have continued wearing my shabby old coat and dashing about in shirtsleeves and put off buying the coat for another year. And that decision of mine (and of others like me) would mean that there would be a reduction in the demand for coats. Which in turn would impact those who make coats.

The current cost of coats thus represents a balance. I want to cover other household expenses before my own needs. Coat sellers want to sell more coats and grow their business. Coat makers want higher wages. Unemployed Vietnamese workers living near coat factories want jobs, and are willing to get them by offering to work for slightly less than others who are already skilled in coat making. All of these demands are weighed and balanced through millions of individual transactions in the coat market. And everyone gets as much of what they value as possible given the demands of everyone else.

Some of the people involved in this complex interweave of desires may indeed be profoundly greedy, but in a sense, it doesn't matter. Whether they are greedy or simply trying to take care of their families by balancing the many demands upon them, the result is a balance between the demands of everyone involved.

The idea behind markets is that given that hundreds, thousands, or millions of people are often involved in a complex economic supply chain, it's far easier and more efficient (and thus in the long run, better for all involved) if to a great extent prices are negotiated through free exchange of goods and labor rather than through seeing prices or wages where they "ought" to be -- because given a sufficiently complex situation the sum of the knowledge of all the individual actors involved is much greater than the understanding of any given regulator could possibly be.

Still, isn't it a problem to have a market full of people thinking only of their own profits? Wouldn't it be better to have community organizations whose whole purpose is to benefit everyone involved?

A couple weeks ago I had an extended conversation with someone over whether credit unions were morally superior to banks. His argument essentially was, "The express purpose of a credit union is to provide value for its members, to whom it is directly accountable. A bank, on the other hand, is accountable to its stockholders, so it is always going to put the interests of its customers second to profit."

If this were the case, it seems to me, then people would invariably keep their money at credit unions, buy their food at co-ops, etc. Because while a credit union and a bank have different business and ownership models, the services they provide are pretty much the same: They loan money in return for interest, and they pay interest out to depositors.

People with savings will naturally want to get the most interest that they can without sacrificing the security of their savings, so they will check around at a couple of different banks and/or credit unions and put their money in the most advantageous place. Similarly, borrowers will shop around for the lowest possible interest rate.

If the community-owned model of credit unions always provided greater value to depositors and borrowers, then they would get all the business and banks be left on the sidelines. And yet, we know that this is not the case. Why not?

I think that more than anything else it boils down to incentive. A bank is constantly incented to stretch itself in order to both win more customers by offering high interest to depositors and low interest to borrowers, and also to make those bets pay off in order to make money for the stock holders and bonuses for the employees. As such, the management and employees at a for-profit bank are strongly incented to take good risks, avoid bad risks, and find new ways to make that extra basis point of profit. (A basis point is 1/100th of a percent, and it's the sort of thing that a lot of work is put into making when you deal with consumer financing.)

The community owned, not-for-profit enterprise, on the other hand, is primarily incented towards stability. At this particular moment in history, when a lot of banks recently made bad bets based on poor forecasting, focusing on stability definitely has its upside. However, because a community owned enterprise is incented towards stability while a for-profit enterprise is incented towards risk and innovation, the result is that a for-profit enterprise will often provide goods and services at similar or lower cost than a not-for-profit, while at the same time paying out a small operating profit to its owners. By providing people with the incentive of additional gain, for-profit enterprises encourage the creation of more value than communally owned enterprises.

One final example: Let us consider two grocery stores in a small neighborhood. One of them is a community owned co-op. As a member, you are a part owner and you help elect the governing board which sets policies and hires employees. Any reductions in costs are handed back to the members in the form of lower prices. The other is a family owned grocery, and that family keeps all the profits which are made.

Both the co-op and the grocery will only have customers if they provide good groceries at low prices. Sure you could label the grocer as being motivated by "greed" in everything he does, because if he find that he can price cereal $0.05 higher per box he gets to keep the money -- or if he's able to buy honey directly from a local bee-keeper he gets to pocket the 5% markup that a distributor would have taken.

And yet, in order to make his family money, he needs to provide customers with good products at low prices. While his business model may be centered around making a profit, if he doesn't do just as good of job of meeting the food co-op's mission of "Provide the community with good food at great prices while maintaining a warm, personal atmosphere" he won't have customers and won't make a profit. So while you could argue that his ultimate incentive is to make a profit, the only way he can achieve that goal is to give himself the personal goal of providing the community with good food at great prices.

Meanwhile, the fact that he directly benefits his family when he finds a way to save $1000 here in cost negotiations and make $500 there where the competitive environment allows him to raise prices incents the grocer to work harder and take more calculated risks than the managers of a community owned food co-op would be. After all, a $2000 increase in monthly profits might mean a great deal to a family grocery store, but in a food co-op that $2000 would be spread out across the monthly food budgets of hundreds of families in small savings on each item until it became impossible to notice.

Because ownership assigns the benefits gained from cost savings, increased efficiency, demand generation and optimal pricing to a small enough number of people for them to have a compelling interest in putting a lot of work into improving those numbers, for-profit enterprises can succeed in producing more value for more people, and have just as much incentive to keep their customers' interests at heart as not-for-profit "community owned" enterprises.

You Don't See This Every Year

That would be snow falling outside our house, not a usual thing here in Central Texas.

And this afternoon (when I presciently went out to buy a coat) it was in the mid 70s.

Those Wicked, Wicked Corporations

On a lark, I went out with some young friends last night to catch a late showing of Transporter 3, which was about as much of a goofy/fun action movie as one would expect. While various chases and fights were fun to watch, the plot itself was one of those confections which implodes on the least scrutiny. Particularly interesting to me, however, was the role of the Evil Corporation.

You would think that the rabbit like timidity of office park culture would not provide much grist for the action movie mill. Not so in Transporter 3. When the American-based Eagle Corp. is in danger of having their request to dump eight cargo ships a year worth of toxic waste in Ukraine, they kidnap the Ukrainian prime minister's daughter and threaten to kill her if he doesn't sign their contract. This leads to lots of tense staring at the contract with pen in hand, and plenty of black Audi and Mercedes sedans speeding around the continent -- as well as the occasional shoot out.

You can, of course, picture how this would go.

[Interior: Eagle Corp. conference room where waste management directors are in conference.]

Evil Corporate Man One: Report on the Ukrainian waste management plans?

Evil Corporate Woman: Unfortunately the Ukrainian Prime Minister has decided this is the time to boost his environmental cred in the EU. He's broken off negotiations and is planning to give a speech to the EU denouncing environmental destruction and explaining the need to preserve the planet for his daughter's generation.

Evil Corporate Man One: This kind of obstacle makes me feel like using non-board-room language. I'm open to creative suggestions.

Evil Corporate Man Two: The Prime Minister's daughter is a big player on the party scenes. Let's drug her, rig her with an explosive bracelet, and send her out across Europe in a fancy black car with an underworld delivery man while telling her father that he'll never see her again unless he signs a contract allowing us to dump even more waste than originally planned.

Evil Corporate Man One: That sounds like a reasonable suggestion. Any objections?

Evil Corporate Woman: I'd like to run your underworld driver choice by HR to make sure that they agree we're engaging in fair hiring practices. And of course you'll need to send the revised contract over to legal for review.

Evil Corporate Man One: I'll make a note of those action items. Evil Man Two, could you run our new scenario by the folks in PR to make sure they don't see any corporate image problems resulting from kidnapping and intimidation. Evil Woman, could you contact our negotiation team and ask if threatening the PM's daughter would result in difficulties in future negotiations?

Evil Corporate Man Two & Evil Corporate Woman: Got it.

Evil Corporate Man One: All right. Thanks for putting some good, outside-the-box thinking into this, team. I'm glad to see you're all living up to corporate value number three: dealing with ambiguity. That's all for today. I'm giving the last five minutes of our meeting back. Remember that year end reviews are coming up and you'll want to update the results in your performance plans. We can discuss that in our one-on-ones next week.

I Remember MrsDarwin: Can't Trust This! Edition

Happy birthday to me!

Turns out that many historic events have transpired on December 5, but the other 30-year contender isn't really an upper:

1978 - The Soviet Union signs a "friendship treaty" with the Democratic Republic of Afghanistan.

Boo to that, but hurray for the 75th anniversary of the repeal of Prohibition! And the 217th anniversary of the death of Mozart!

And now comes the part you've all been waiting for: our annual installment of I Remember MrsDarwin.

If you read this, if your eyes are passing over this right now, even if we don't speak often, please post a comment with a COMPLETELY MADE UP AND FICTIONAL MEMORY OF YOU AND ME.

It can be anything you want--good or bad--BUT IT HAS TO BE FAKE.

When you're finished, post this paragraph on your blog and be surprised (or mortified) about what people DON'T ACTUALLY remember about you.

Want to know how it's done? Check out the egregious falsehoods from years past:
I Remember MrsDarwin 2007
I Remember MrsDarwin 2006
I Remember MrsDarwin 2005

(Confidential to Big Tex: I'm old but you're older. Happy birthday, you big lug!)

Cannibalism?

Some may recall that the eateries and drinkeries around my workplace have all been going bust -- or at least bust-themed.

It has now become evident that this slippery slope goes down much further than previously imagined. Driving past Twin Peaks today at lunch time I noticed they had a big sign up reading, "Hot woman, cold beer. What else do you need?"

If that initial noun had been plural, we might have comforted ourselves by imagining that they were simply complimenting the appearance of their wait staff, but I think that with the singular noun we must conclude that the path from treating a woman like a piece of meat to serving her up as a piece of meat must be shorter than any of us had realized.

Tragic, isn't it. Drumstick, anyone?

What He Said

I'm with Dale Price on this one.

One of my co-workers, an immigrant from northern India, is a Jain. He eats no meat, including fish and any other animal. He once rescued a roach I was about to kill in the office and took it outside.

But he supports the death penalty, because although the terrorist attack in Mumbai last week were unique in scale and in happening in one of India's major financial centers, they're hardly unique in recent Indian history. I think one figure I read was that more than 4000 Indians have been killed in terrorist attacks since 2001.

When one of my American-born liberal co-workers asked him how he could be so emphatic on preserving life in all other cases, but support the death penalty he replied, "When someone comes into your village, and enters your house, and kills everyone in your family because they do not like your race, or they do not like you faith, they have crossed a line."

While I accept the wisdom of our Church's leaders that the death penalty is seldom needed in modern society -- but seldom is not never. If any of the perpetrators of last week's terror attacks in Mumbai failed to be escorted off this mortal coil by the Indian commandoes who sought to rescue their hostages, I could certainly find it in me to hope that they receive a short trial and a long rope.

The myth of "What's one more?"

Jumping off Darwin's post about whether "planning" is a dirty word: I've been thinking a lot lately about the myth of "What's one more?"

Some of you may have invoked this phrase as conversational protection. Someone makes a comment about the number of kids you have (or the one you're expecting), and you smile cheerfully and say, "Well, at this point, what's one more?" Short and pithy, this defense is intended to show that you're open to life, children are great, and that three aren't that much more difficult than two, four aren't that much more difficult than three, etc.

The trouble is, it's not exactly true. Here at chez Darwin, we're finding that four is a lot more than three. Baby's a treat; he's not that demanding (though he likes to be held most of the time) and he's at that delightfully gurgly three-month stage. But the addition of a baby changes the dynamic of the household, and highlights the behaviors of the under-7 crowd that are now more difficult to manage. It seemed like we were just getting to a point where everything was becoming manageable, but throw a newborn who needs the constant attention of one adult into the mix and suddenly all the parameters have shifted to some unknown point.

There's nothing wrong with acknowledging that -- except that since large families run against the cultural paradigm, it puts those parents into a constant propagandizing mode. In an arena in which most (though not all) families are consciously limited, the decision not to limit your family (or even proclaim a particular number as "it") stands out. Catholic parents don't want to seem as if we're participating in a contraceptive or limiting mentality, and so reflexively spin our answers to intrusive questions as positively as possible. (My current response to the "Are you done?" question is, "But every boy needs a brother!")

The truth is that families who have many children close together are taking the harder path. I don't use the phrase "choose", since not all parents who have children close together necessarily plan to do so. (We certainly didn't plan to have our first two so close.) Frankly, four seems as much as I can handle right now, though I expect that in the future I'll feel differently. For now, though, one more is an awful lot, and I won't make excuses for that-- in this friendly forum, anyway.

Is "Planned" a Dirty Word for Catholics?

Taking a quiet Saturday morning to catch up on reading the newspaper, I was perusing a WSJ article on the lost virtue of prudence in our modern American society when I came across this jarring note:

The puzzling thing is that, under normal circumstances, our Americanus prudens should be flourishing. By looking ahead and exercising self-control, these unassuming homebodies tend to do well in school, form solid families and make lots of money -- which they compulsively save, tucking it away in banks or mutual funds (once-sturdy institutions recently found by scientists to be hollow). The prudent have only the children they can afford -- prudential parenthood is inevitably planned -- but these offspring tend to thrive thanks to a stable home environment in which education is emphasized.

This threw me because the most financially prudent people I know at work are those with single incomes and large families -- while the most imprudent are generally DINKs who take several packaged vacations a year and insist that pet insurance is so expensive on their treasured dogs that they can't imagine how they could possibly afford to have children on a combined income of a mere 200k+ a year.

And yet, as I think about it, it's not that I think prudence plays no role in one's decisions about having children, but rather that I have a strong immediate reaction against ever discussing having a child as being "planned" or otherwise with anyone other than other committed Catholics I already know to share my beliefs about the nature of sexuality and marriage.

By chance I'd had a conversation with a young co-worker a few days before that had thrown this into relief for me.

Coworker (who had just been talking about how her "clock was ticking" but her boyfriend seemed in no hurry to propose): "I can't believe you've got four kids already. Are you guys done?"

Darwin: "Oh, I don't know. Probably not."

Coworker: "Oh my gosh! How many are you going to have?"

Darwin: "We'll just have to see. My wife is the oldest of six, so she's hoping to have a large family."

Coworker: "Are you guys Catholic or something?"

Darwin: "Well, yes."

Coworker: "Oh, okay. That makes sense. I mean, if you think God says you'll go to hell if you use birth control, that would explain having a lot of kids."

Darwin: "Ummmmm..."

Coworker: "I mean, I want to have a large family. But for me, large is four kids. I guess for you guys it's just however many children God sends?"

[pause followed by topic change]

I found myself unable to quickly come up with answers near the end of this conversation because of two conflicting things that I wanted to express yet couldn't think how to reconcile without making the conversation much more long and personal than I would have liked. On the one hand, "just however many children God sends" is not, I think, a very accurate description of married Catholic life as we know it in our family. Certainly, there is an element of being open to whatever happens. The use of NFP is not always exact (or easy), and one can be surprised. And yet, I think there is a valid part for prudence to play for a Catholic married couple. There are serious considerations that a married couple takes into account in regards to finances, the wife's health, and their ability to deal with the kids they already have well. None of this means that one imagines oneself to be in complete control of the situation, but one does try hard (and usually successfully) to do what is best for the family in "planning" when to get pregnant and when to wait.

Not only does "just however many children God sends" not accurately describe the experience of being a Catholic married couple (or our experience, at any rate) but an additional concern is that it doesn't produce a very attractive view of what that Church has to say. (And while many people know that traditional Catholics don't use birth control, few in the outside culture seem to know that modern NFP exists and works.) The teaching, it seems to me, is not at all that one must do no planning and simply wait to see how many children appear, but rather that sex and procreation and intimately connected and that in order to avoid having children one must forgo sex at certain times.

And yet explaining all this, and how it works, is not something that I find myself eager to do with a female co-worker in what started out is a casual cube-to-cube conversation.

"Planning" one's children is something which I (and I think many orthodox Catholics) strongly associate with the contraceptive culture and with explamations of, "Oh my gosh, I couldn't possibly have another. Two is so hard!" And so when asked these questions I generally only feel comfortable with saying something like, "You never know" or "It could happen". Because the only other option involves explaining far more about married Catholic sexuality than I'd really like. And yet, I fear that this inability to discuss the Catholic approach to "planning" (out of hesitation to get into lots of messy details of how NFP works) makes it all the more difficult to spread our understanding of marriage and sexuality to the wider culture. An understanding which society could probably use to hear a bit about.