Politics for Engineers
It's amazing what can be accomplished if nobody cares who gets the credit.
Saturday, November 20, 2010
Economics is a strange intersection of mathematics and human psychology, or perhaps macro-scale sociology. If politics is America's favorite sport, then economics is America's favorite part of America's favorite sport. On the internet, it's not a rare thing to hear a call of, "read an economics textbook," to indicate that somebody thinks their opponent doesn't know anything about it. (I rank this right up there with "most Americans think" as a way to disguise the phrase "I think"). The truth is, very few people know anything about economics, economists included. If it's the intersection of social science and mathematical science, it's definitely near the social science border. It is, to say the least, inexact, and anytime anybody tells you, "I read an economist who was positive that xxxxxx," that economist is lying. Being positive of anything in economics is a good indicator of overconfidence and little else.
That is what baffles me about the new rallying call, which states that the only way to fix the deficit is to cut taxes. The argument is that if taxes are lower, people spend more, the economy grows, and we collect more in revenue. There is some precedent for this: In southern Ireland, in 1997, a reduction from 40% to 20% of the capital gains tax resulted in a huge increase in revenue, almost 300%. Of course, those of us with analytical minds may seek to ask, "what else was happening around that time," and indeed, there was a credit bubble present in the country at the time, but even so, the dramatic impact of this move cannot be denied, and it seems clear that to some greater or lesser degree, the tax rate does impact revenues collected, and it is possible to lower the tax rate and increase revenue.
However, here is where math enters. You cannot simply say, "lower taxes result in increased revenues," because this language implies that this is always the case, and that there is therefore a linear relationship between taxation and revenue. This is absurd. Were this the case, the government would achieve the highest revenues at a 0% tax rate, which mathematically simply does not work. (Any amount of money multiplied by 0% is 0.) Similarly, it cannot be argued that higher taxes result in higher revenues, because this implies another linear relationship, in which a 100% tax rate produces the highest possible government revenues. This is also absurd. (If all money leaves the economy due to taxes, then there is no economy, which means there is no flow of money, which means there are no taxes collected.)
Clearly there must be a more complicated relationship between taxation rates and government revenues, which means that any such relationship must be modeled using a polynomial equation whose degree is AT LEAST two. (For those of you who don't know math: a 2nd-degree polynomial is a quadratic equation, wherein the highest exponent to which the variable is raised is 2, for example x^2+2x+1). This, in fact, represents an economic concept known as a laffer curve. While the specifics of the laffer curve are frequently debated, the idea that there is a point of taxation which will minimize burden and maximize revenues should not be surprising. The curve is not as simple as a 2nd-degree polynomial, and finding the "sweet spot," the very top of the curve, where dr/dt = 0, will more than likely never occur, (we would need an extended period of economic stability, and we would have to play with the tax rate every year, adjusting everything just so) but it is for this that we should strive. Saying that "more taxes increases/decreases revenue collected," is a drastic oversimplification of the matter, and is not at all how we can or should effectively pursue this debate. An in-depth discussion of historical precedent, into which is incorporated notes about the current levels of saving versus spending, and how increased or decreased taxation is likely to affect them, as well as a discussion about who would be least and most impacted by any adjustment in taxes, and how this would impact the economy as a whole, is necessary. Saying that you know exactly what will happen if you increase or decrease the tax rate, just as saying you know exactly what will happen in any economic situation, is simply wrong.
Saturday, October 30, 2010
In Japan, there is a man named Yoshiro Nakamatsu. (Affectionately dubbed Dr. NakaMats.) He is a massively prolific inventor. There are some reports that he is responsible for inventing the floppy disk and the CD, and though these are contested, in particular by IBM, he is massively rich for it. (His bathroom, where he does his thinking, is made of solid gold.) Not all of his ideas are "winners," and he knows it. My personal favorite is a combination bicycle/moped. It is powered by water -- I don't know the details, but the basic mechanism uses the rotational motion generated by the pedalling action of the bicycle to generate electricity, which causes electrolysis; the pressure from the gasses produced power the engine. My friend, who is a mechanical engineer, explained more of the specifics of the engine to me, but I'm afraid a fair bit of it went over my head. The device moves faster than a bicycle, with considerably less work, but probably slower than a moped. There isn't any particular niche for this device, and so it is not a "winner," but I like it quite a bit, and if Dr. NakaMats can make the cycle of water/hydrogen/oxygen into a closed system (that is, where only work enters and only work exits, and therefore all of the hydrogen and oxygen can be reconstituted into water) he will have created the basic system for a sustainable water-powered vehicle. No business on the planet would buy this design from him, or indeed, even use the idea as a base-point -- what use does it have? It's not a winner. And yet, contained in it are the seeds for something incredible. The point I am trying to make is that our "winner" society creates motivation with amazing efficiency, but is not long-sighted.
Writing this on the night of the election, I can say with relative confidence that Republicans are going to retake the house, and by a wide margin. Depending on who you are, this prospect will either enthrall or mortify you (or perhaps you'll look at it with careful neutrality). They now have the monumental task of living up to not only their campaign promises, but being better than the people they defeated. They have railed for nearly two years about how the Democratic party has failed America in its hour of need, and how they know how to fix it. That they have been excluded from the process. It is now time for them to put their money where their collective mouths are; however, (probably now) Speaker of the House John Boehner has stated openly that now is not the time for compromise. That they will not work with a Democratic Senate, with a Democratic White House. The last time this happened, Speaker Newt Gingrich shut down the government in essentially a glorified temper tantrum, before Bill Clinton, who, it must be acknowledged, is one of our greatest living statesmen (whether or not you agreed with what he had to say, you must admit that he was masterful at handling those who disagreed with him) eventually stonewalled him into compromise.
Republicans have "won," as I said, but that is different from doing the right thing, by an inch and a mile. To John Boehner, all I can say is that now that he has "won," by which I mean he has emerged at the head of a race, he had better be ready to compromise. Working with people with whom you disagree towards a common goal is a process of give and take, not only take. I frequently disagree with my superiors, and always tell them when I do; what follows is not stonewalling. They do not call me a socialist or a fascist or a Nazi or the next Pol Pot and refuse to listen to me. Engineers, who above all else must do a job and build a working device, not so unlike politicians, must learn to listen, because they must understand that they are not always right, even when they are convinced they are. It is not a matter of winning and losing. When I disagree with my superiors, it is with the full understanding that I may or may not be right, and that there's a relatively equal chance that what I say will be heeded or discarded, entirely on the basis of its merits. This merit-based judgment is separate from compromise, but the ability to do one implies the ability to do the other.
Barrack Obama is willing to compromise with Republicans, and whether or not this is politically the right move, it is necessary to continue to run the government. I will rarely say this on this blog, but John Boehner and Mitch McConnell are quite frankly in the wrong on this. They are now responsible for doing more than talking. They are now the managers of the massive, eternal project that is America, and they had better learn to compromise, and do it pretty fast. One does not become a winner when one makes short-term gains. One becomes a winner when one completes a project, and does so successfully, and there have been very few engineers in this world who could complete a project with only one point of view working on it.
So, I will say again: John Boehner had better learn to compromise, and learn to do it fast.
Sunday, March 28, 2010
Monday, January 4, 2010
- Cost/Benefit overview
- Cost-Benefit analysis
- Case study: Germany and Japan
Engineering is an important and learned profession. As members of this profession, engineers are expected to exhibit the highest standards of honesty and integrity. Engineering has a direct and vital impact on the quality of life for all people. Accordingly, the services provided by engineers require honesty, impartiality, fairness, and equity, and must be dedicated to the protection of the public health, safety, and welfare. Engineers must perform under a standard of professional behavior that requires adherence to the highest principles of ethical conduct.
I. Fundamental Canons
Engineers, in the fulfillment of their professional duties, shall:
- Hold paramount the safety, health, and welfare of the public.
- Perform services only in areas of their competence.
- Issue public statements only in an objective and truthful manner.
- Act for each employer or client as faithful agents or trustees.
- Avoid deceptive acts.
- Conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession.