Educating Pie Makers: College (part 1)

"If you think education is expensive, try ignorance." --Derek Bok

Whenever someone points out the high, and rapidly increasing, costs of college education, Derek Bok's quote gets included in the open salvos of the argument. Often this leads to a round or two of competitive econometrics comparing employment rates, lifetime earning potential and even a "happiness" study or two which generally favor keeping high school graduates idle for another four years or so to give them a shot at a better life.

These statics make a compelling case for individuals, foundations and governments to provide large amounts of money for higher education. This has reduced the barriers to college entry to the point that a large percentage of the jobs available now require at least a bachelor's degree, and an increasing number require a masters' or PhD. For the student, between federal subsidies, family money, and private debt, the actual cost is generally hidden, and fear of the unknown, but presumably high cost of "ignorance" makes the choice simple.

What I haven't yet seen is someone actually trying to explain what one could do with the cost of a college education while remaining "ignorant." Any statistical approach is only as good as the assumptions behind the models they use to aggregate their data, often with the implicit narrative that there is a "generic person" of which we are all small variations. Here at P&P we harbor strong doubts about this idea, it sounding an awful lot like saying there is a "standard" pie. Your pie maker had a "standard" apple pie when he lived near Michigan's apple country and could buy them by the bushel for a few cents a pound. In different circumstances, he's moving into pumpkin and winter squash, and if the people to whom he's loaned pie plates do not return them, then he may be making a lot of form-free pies in the near future.* The point is, if we just look at econometrics, we're not fulfilling Mr. Bok's suggestion.

Instead, let's try ignorance. Or, to be more precise, let's imagine spending the cost of college on something else and see where that leaves us.

At first, that means defining our assumptions. For the "cost of college", this thought experiment will assume full tuition plus room and board at a private institution. This is significantly more than the "average" student pays, but it does cover the amount that is paid by states and private donors at other institutions. Based on College Board statics, $37,000/yr is a rough estimate if books and travel to and from campus are included. Over four years, that gives us $148,000 to work with assuming tuition doesn't rise at its typical 5% annual rate.

That's a lot of money. What if instead of college a hypothetical student bought a nice, seaworthy Beneteau 361 for $99,000? That could solve the non-student's housing needs, and allow precisely the sort of mobility that defines a modern career. With the rest of the money, it would be highly prudent to buy another ~$6000 worth of training (not education!) from a place like Sunshine Coast. That leaves $33,000 to provision a trip to sail around the world, at a cost of roughly $1250/month. Assuming the non-student takes it slow and completes one cirumnavigation per year, that allows 2 whole trips, with money left over for contingencies.

Now we can actually answer Mr. Bok's challenge. Putting a student through college costs the student, family, charities and government a really nice yatch and two trips around the world. Only a narrow definition of "ignorance" would describe the learning that would happen on such a voyage, and at the end the non-student would have a place to live, a global network of acquaintances and a better personal understanding of math, science and law than nearly every college graduate in the world.

What can a college offer its students that would compete? Comments are most welcome.

*If you currently have one of my pans, send a note and I'll bring you a free form pie in exchange. No, this is not meant to encourage people to "borrow" more of them.

This week in Pie Making (Dec. 17)

This week in pie making is a good one. Last week, we saw that the US Congress is perfectly willing to hold its nose and dole out goodies to everyone for as long as credit markets will allow it to do so. In a way, this is good, because it means that if circumstances change for the worse, as long as everyone suffers, the will to solve serious problems does in fact exist.

The "conservative" narrative that all government activity is bad, even when it's proposed and promoted by "conservatives", continues. It would appear that the central players in the USG have accepted that the major banks and pension funds are themselves vital instruments of national power, but that's old news. Very interesting that the current crisis hasn't yet produced a Charles Keating, but maybe that's coming next year with the BoA data dump. You'll note the lack a reference to any Australian-founded websites here in the spirit of this brilliant piece of information management by the State Dept. that's related to why all of the milblogs have been tying themselves in knots this week. Unfortunately, they are not in Congress and so can't have their porkcake and eat it too.

Interestingly, one of the preferred forms of pork (security) has hit the point where even in the DC metro area there is active resistance to committing substantial resources to the Metro system's security. In fact, the Metro proposal is pretty modest and very likely to not select stations randomly at all. A measured response to several serious threats (one suspicious package, one kid describing his pipe bombing plans and an FBI sting) is almost commendable. We'll have to see how it goes. Hopefully better than current anti-piracy efforts.

Meanwhile, your pie maker got to experience something very like skiing while riding home yesterday. He could have waited for a car to carry him home, but he has heard of people putting on warm clothes and subjecting themselves to high winds and wanted to give it a try. Also, one of the robots at work "attacked" him, and getting to an icy road seemed safer than giving it a second chance. Getting to watch two bald eagles, see trackless snow on a large meadow and the patterns of ice formed on the river more than made up for mild discomfort.

There seems to be a growing call for the President to fire the behavioral economists on his staff. This NYT article is a good example of them, essentially saying that the current administration is being too subtle about its means and objectives. The moment is clearly calling for something big to happen.

Sustainable taxation

This Week in Pie Making awarded a "double face-palm" to a deal that could potentially buy your pie maker a really nice bike and all the cold weather gear he could want. What's wrong with that? Has P&P "gone lib", supporting Big Government for its own sake and a radical redistributionist agenda?

Hardly. It is entirely possible to live below US poverty line and still make a pie every week (especially if you can move in with family, friends or to a lower cost of living). Outside the US, a farming village that meets its basic needs is effectively a PMCIN=1 society, and the history of any attempt at large-scale wealth distribution from the rich to the poor generally ends badly. So, P&P does not have a strong stance on the merits of a progressive, regressive or "fair" tax code with one huge caveat: it must be fiscally sustainable.

What we saw two weeks ago, and are actively discussing this week (there's a few NYT op-eds by Krugman and Brooks that are also worth reading for those with subscriptions) is that fiscal sustainability is not even on the agenda. This is troubling for three reasons:

(1) The United States cannot leave the era of "kicking the can down the road." Despite passing "landmark" health care reform legislation, we're still kicking a massive pay-cut for doctors under Medicare down the road. There is chronic uncertainty over the research and development tax credit (and some other Dem-favored goodies) that makes it tough for any company to invest in long term R&D. Ongoing uncertainty over pollution, energy and climate policies prevents companies without government backed loans from expanding or maintaining generating and transmission capacity.

Whatever the reason for this, it encourages stasis in the domestic economy and acrimony abroad. It is generally better for business to have draconian, certain regulation than substantial uncertainties between years, except in finance, where regulatory arbitrage counts as innovation. Capital intense industries, such as heavy manufacturing, are almost guaranteed to move abroad to countries whose laws are more stable.

(2) The narrative of taxes as an unalloyed evil was strengthened. This is incredibly bad because taxes are how we as a country pay for the promises that we as a country make. Since we as a country decided to pay less in taxes, we've added two countries with their populations to the administrative burden of the US (is Iraq able to pay its own way yet?), passed the largest expansion of the Medicare program (and any comparable social welfare program in the nation's history) and absorbed substantial portions of the debts of almost every major financial institution in the world. The original tax cuts were unaffordable before those expenses, now we're supposed to believe another two years is okay?

Meanwhile, the "off-balance sheet" liabilities of the USG are growing. State governments in the US find themselves in a situation very similar to European states, now that federal stimulus dollars are receding, and it's hard to imagine a state default not impacting the Federal government. Even after the US presence in Afghanistan winds down, there will be billions in veterans' benefits to cover. Norfolk, VA is sinking, the Metrodome collapsed and the massive drought that's broken the assumptions about rainfall in California continues. The longer this attitude of stasis lasts, the less likely it is that the next generation will enjoy a quality of life comparable to our own.

(3) It encourages willful intellectual blindness. This is perhaps the most damaging aspect, since what gets lost is a sense of objective history and agreed upon facts. If James P. Pinkerton can continue to get paid for saying the GOP's goal is to "starve the beast", one has to wonder how he explains how the GOP-run Congress and Presidency presided over the largest ever expansion of government during their last tenure. Meanwhile, Obama's supporters argue, earnestly, that they "won" the negotiation with Senate Republicans because they got a numerically larger tax cut, in addition to the temporary extension of some key benefits. All seem to have faith in Technological Progress, suggesting that the massive productivity gains of the last twenty years will be sustained. Given troubles with immigration, network security and wildly inconsistent energy policy, this is a tenuous hope at best.

Will these groups, which actively resist the deficit commission's recommendations and facts, actually be able to address comprehensive tax reform? Your pie maker would not let such people into his kitchen lest he be liable for someone intentionally believing that knives do not cut or ovens can't burn.


Unfortunately, I think Grover Norquist is right, and that the current view on taxation will have exactly the effect he desires. Unfortunately, the mechanism is going to be unpleasant and directly opposed to many other Redcoat Republican objectives. The empirical evidence today is that the best way reduce the government spending is actually to allow a tax increase on one's own constituents while demanding cuts to another's spending, but that's a really unpopular viewpoint. Gonna be an interesting couple of years . . .

Chinese five spice pumpkin pie

Your pie maker's loveliest assistant came home recently with not one but two sugar pumpkins. Your piemaker has already baked his way through Ken's supply of interesting recipes, so he borrowed the ratios from the "Libby's Famous Pumpkin Pie" recipe reproduced therein, with a few changes.


Start by rolling out a standard whole wheat crust into a standard 9" pie plan. I didn't this time, but you ought to partially pre-bake it (Ken's got great directions for this).

While that's happening, combine in a bowl:
1/2 Cup brown sugar
2 T Chinese 5 spice powder
2 Cup pureed pumpkin
3/4 Cup half and half cream
2 large eggs, gently beaten


Pour the mixed ingredients into a somewhat cooled pie shell and bake at 350F for about 40min, or until the sides are slightly puffy and the center jiggles like jelly.

Let it cool completely before serving!

Two weeks in pie making.

Your pie maker was going to write a "This Week in Pie Making" last week about the non-fallout from the DoS document dump. The gist of it was that SecDef Gates caught the essence of problem in this quote:

Now, I've heard the impact of these releases on our foreign policy described as a meltdown, as a game-changer, and so on. I think -- I think those descriptions are fairly significantly overwrought. The fact is, governments deal with the United States because it's in their interest, not because they like us, not because they trust us, and not because they believe we can keep secrets. Many governments -- some governments deal with us because they fear us, some because they respect us, most because they need us. We are still essentially, as has been said before, the indispensable nation.

So other nations will continue to deal with us. They will continue to work with us. We will continue to share sensitive information with one another.

Is this embarrassing? Yes. Is it awkward? Yes. Consequences for U.S. foreign policy? I think fairly modest.

The reason for this indispensability is largely because of our very large and powerful economy. The same one that mortgaged its future to pay for benefits for current workers on the assumption that it could refinance that mortgage with future productivity growth. Well, it almost worked. Fortunately, the tax cuts passed right before we got into two land wars in Asia are going to expire soon, and we'll avoid the worst sovereign debt projections from the recent deficit commission. Oh, wait.



Interests in the US ranging from the largest banks to public service unions seem bet on busting-out the US credit rating. The President we elected with a broad mandate to be an Andrew Jackson or an FDR has instead turned out to be a Woodrow Wilson. Mark Lilla does an excellent job explaining the cultural economic forces that have pushed us into this corner.

Not all of the news is bad. The body politic seems to have a lost its sense of history, but GE seems to have found theirs. It is possible for a strong personality to ram through unpopular cuts in a state budget and keep enough popularity to continue to govern. GOP Senators publicly endorsed raising the gasoline tax (among other deficit-reducing items), and car-crazy California voted convincingly to stick with their carbon reduction plans. Heck, maybe this latest capitulation was a subtle export-boosting, emissions-reducing plan devised by expert economists.

Butterscotch Pumpkin Pancakes

Here's why you should plan to stay at the Fuzzy Wups B^n next year:



Leftover pie ingredients become breakfast. Last night I made a Pumpkin Cheesecake Pie and a Butterscotch Pecan Pie (using my 12" pie plate and extra butterscotch and pecans). Also, I make several pies for the holidays. You should come next year.

Combine in a large bowl:
2 Cups white flour
1 tsp baking soda
2 Tbsp brown sugar
Pinch of salt


In a separate bowl, combine:
Leftover cooked pumpkin
Enough milk to get 2 cups milk & pumpkin
2 eggs

Pour the liquid into the dry ingredients, then stir in:
Leftover butterscotch chips

Cook like normal pancakes and serve warm.

Cider-infused Winter Squash Pie

'Tis the season for winter squash and apple cider. Also, sweet potatoes, one of my favorite pie ingredients. I had leftovers after chopping for dinner, and some Trader Joe's spiced cider. This is a revision of one of Ken's that I made several years ago, but revisited since we're doing two new ones for Thanksgiving.

Ingredients:

Prebake a crust in a 9.5" pie plate.

In a small pot combine and boil until tender:
1/2 Cup diced sweet potato
2 Cups diced butternut squash
1 Cup spiced cider.


Once soft, puree in a food processor. Save the cider/squash-water mix and add enough milk to make 2 Cups
(1 Cup milk).

Bring it to a soft (not rapid) boil and stir in
1/4 Cup fine cornmeal
and stir continuously until thickened, like thin oatmeal.

Allow this to cool, then mix into a bowl with
1/2 Cup sugar
1/4 Cup molasses
3 eggs
1 t salt


Stir in 1.5Cups of the squash puree, then pour into the cooled pie crust. Bake at 350F until the sides get puffy and the center jiggles.

This Week In Pie Making (Nov. 21)

Last week, your pie maker was dangerously close to the shadow of the Mouse for a conference devoted to the technical side of preventing very bad things from happening. There is nothing quite like being surrounded by hundreds of engineers, scientists and medical professionals who sincerely hope that the work they are presenting never sees its intended use. Actually, a guest speaker highly recommended that we find alternative uses for our ideas, lest the vagaries of politics and realities of economics cause us to lose work that could be the difference between a small incident and a major catastrophe. Also, the most effective response any society can have to most any type of terrorism is a very good public health system. It is very hard to kill healthy people who can be treated quickly and effectively.

This meant flying during the ongoing TSA-as-sexual-predator controversy. Your own pie maker was not subjected to any extra screening, which is good since his bike-shorts were in the wash, but it does seem odd that young women in slip dresses who did not set off the metal detector were selected. Even odder when men who are acting strangely (well, like irresponsible teenagers) were able to set off the metal detector, distract several workers and still not face any extra attention. In short, your pie maker finds himself in agreement with this Forbes op-ed, the staff of Digg, Ann Coulter and the ACLU. Anyone who can make financiers, internet junkies, populists and egg-head liberals agree must be a heck of a leader. Unless, of course, he's managed to unite them all against him.

The loudest voices in support of this policy come from the President, DHS Sec. Napolitano and Ayman al-Zawahiri. They argue that preventing any incident means spending considerable amounts of money everywhere because those sneaky guys will try just about anything. Stockholders in RapidScan and Smiths (like major Dem. donor George Soros and former SecHS Chertoff) agree that this is absolutely critical, and an important part of growing our economy through stimulus spending. The only other option is that we ask ourselves, honestly, what risks we are willing to accept as a society.

That is going to be a very difficult conversation. Issues like profiling and liability will come up, and we need to be ready to be civil and assume good faith on the part of the other. It's a conversation that gets to the heart of what exactly our government is supposed to do for us, and what we are supposed to do for our fellow citizens. As a first step, there's the National Day of Listening. That will take a lot of energy, and to refuel, P&P recommends the Rolled Date Pie with Honey Glaze. Recipe coming soon.



Sustainable plug: Hooray for AMTRACK! First-class seats, power outlets and no involuntary groping.

Sustainable Substitutions #2: The Blowtorch

Disclaimers:
Kids: DO NOT DO THIS WITHOUT PARENTAL SUPERVISION!
Parents: DO NOT LET YOUR KIDS DO THIS!

We're getting into nut pie season. We might also be heading for much higher gas prices again, and your bike-commuting pie maker may have to celebrate with Schadenfreude Pie. This requires roasted nuts, and, given the price instability and unsustainability of fossil fuels, a natural gas oven is not an option.

So, how do we get nuts hot enough to carmelize some of their sugars and break down their bitter flavor? We need two things: A metal bowl and a butane blowtorch. Butane is a lot easier to make out of biomass than gasoline, and a lot easier to transport than natural gas.

Place the nuts in the bottom of the bowl and rapidly wave the flame over them. Those little balls of proteins and fats will burn vigorously if you're not careful, so keep that flame moving. Make sure you keep the flame moving, shake the bowl to get nuts from the bottom to the top, and stop as soon as the kitchen smells warm and nutty.

This approach will lightly char some of the of the nuts, giving your pies a more complex flavor profile. It does involve a bit more active labor, but significantly less total time than oven roasting, so depending on which econometric you use this process improves or harms pie making productivity. However, it does involve playing with carefully wielding fire, so the added enjoyment makes this a net positive from a PMCIN perspective. For more on making up convenient economic metrics, check out William Easterly's excellent Aid Watchers blog.

This week in pie-making

Two pieces of news caught your pie-maker's eye this week, and it's hard to say which is more significant:

(1) We just witnessed our third "wave" election in a row.

(2) The Federal Reserve is going to print another $600,000,000,000 (that's $600billion)

Both are a reaction to the perception that the US economy is in terrible shape, and I think both will prove remarkably ineffective. Neither the Republicans nor the Federal Reserve have the authority or will to break the politics of stasis in which we find ourselves today. Both will warn of the dangers of large, continuous Federal deficits, but both rely on them for political support or policy tools, respectively. Both count on a large increase in consumer spending to make their economic models work, and all will be disappointed on that score.

Sustainable Substitutions #1: Coffee Grinders

Sustainable Substitutions is a new feature devoted to making small changes in the kitchen to make pie-making more sustainable environmentally, economically and/or enjoyably.

First up: Coffee Grinders. There are pie recipes that call for coffee grounds, and, more importantly, pie making often keeps your pie-maker up late. Fresh ground coffee is enormously better than vacuum-sealed ground, and with this substitution we can extract the full flavor.

The antique grinder on the left was your pie maker's original device, until the frequently small repairs and ~1NPR Morning Edition story's worth of grinding time convinced him to go electric.

Two broken electric grinders later, it became obvious that electric grinding is not a sustainable solution. It turns out to be impossible to repair even a simple malfunction like the inevitable failure of the bushing that held the blade in place. So for want of a $0.10 part, roughly 1kg (2.3lb) of plastic, steel and copper is rendered useless.

The wood, brass and steel manually cranked version is very repairable. Both of those screws are probably replacements, and the entire unit can be dissembled with a simple toolkit. Some replacement parts will probably require custom machining, but nothing on it is so complicated a good art school won't have the right equipment. Additionally, because the distance between the grinding wheel and the wall can be set manually, it's possible to select exactly the size of the average granual. Your pie maker uses this to make a very fine powder for Austrian-style coffee, or a courser grind appropriate for a big mug from a French press.

An added bonus is that "grinding" is exactly what your pie maker does in his favorite non-baking hobby.

Satire, in good taste:

As P&P contemplates how to respond to sublime satire, this is pretty good:



Thanks to my favorite Orthodox family for linking me to Pithless Thoughts, which linked to this. Also, anyone who will be in the DC area around the end of October is welcome to stop by for pie.

In (mild) praise of essentialism

Essentialism in a social context refers to the practice of strongly identifying a person with a particular group. Often the definition of that group's identity is slightly ambiguous and the subject of truly nasty debate within the self-identified community. Is Barack Obama black enough? Too black (or not enough)? Who is a REAL conservative (P&P thinks it's the Tories), and who's just a RINO?

To outsiders, such debates are pedantic or silly at best and downright terrifying at worst. However, there's a deeper issue here that gets lost in our liberal (and I mean Lockean, P&P is very old school) norms of tolerance and liberty. The ability to define oneself as part of a group is absolutely fundamental to many people's happiness. If we can't define the boundaries of a group, does it really exist?

This point struck home for me when a friend declined a dinner invitation. He'd been joining us every month or so after he moved from a place with a very large Jewish community to semi-rural Indiana. There, without the social easy of a large group of that mixed Americana and Judaism fluidly, he had to chose whether to become "more" Jewish or just partake in Amaricana. His choice, and the reason he became the first person to decline one of my pies, was to strengthen the ties to his religious community. I can't begrudge him that, and in fact made a similar choice when my travels found me joining the Catholic minority in one city.

I think that it worthwhile sometimes to take a step back from the normative (classical) liberalism of modern life and consider ourselves as part of larger groups. The TEA Party is trying to do this for economically displaced middle class, primarily white (and thus lacking a strong alternative cultural identity) Americans who now realize that they are getting royally screwed by the system they supported most of their lives. As a social movement, it has a lot in common with other disadvantaged groups that have carved out space for themselves in the political landscape. Glenn Beck now makes millions as a sort of white Al Sharpton.

This is a good thing. When a group finds itself on the short end of changing political and economic conditions, its only hope is to unite and try fight for its interests collectively. The other option is individual repression, despair and even political violence by the voiceless. Americana as a culture is threatened, and while many parts of it are strongly anti-pie, a loud voice for those who are hurt by the changes in modern life is critical to the "security" slice of PMCIN.

So, has this out-of-power group figured out how to define itself? Not yet, and some of its elements are intentionally resisting that. But a definition is emerging (I think), and the sooner the better. Focused anger within the political space is much better than unfocused anger outside of it. As long as we don't abandon the best parts of our American classical liberalism, like the 14th Amendment, our political dialogue is much better for having groups honestly represent their interests collectively. The first step in dialogue is respect, and respecting each other's distinct identities is almost as important as respecting our mutual humanity.

Late Summer Pie

In the late summer in Northern Virginia (hey, it might be its own state someday) peaches and plums are plentiful.

Preheat the oven to 400F

Crust: Basic whole wheat crust, single crust rolled into a 9.5" deep dish pie pan.

Filling:
Heat in a non-reactive pot until reduced by 1/2:
1/2 cup ruby port

Meanwhile, slice into a non-reactive bowl:
4 cups plums
3 cups peaches


Mix in the reduced port and:
1/4 cup tapioca
1/3 cup sugar
juice of one lime

Pour the filling into the crust and bake about 30min. Meanwhile make the biscuit topping by combing in a small bowl:
1 cup flour
1 tbsp sugar
2 tbsp butter
2 tbsp yogurt


Cut the dairy into the flour until it resembles crumbs or dry biscuit dough. Remove the pie from the oven and quickly spread the topping over it. Return to the oven for 25min or until the juices bubble thickly at the sides.

The Eight Slices of PMCIN

After my last post on how to define the physical pie making capacity, I realized that I was falling into the trap of most ecnometrics and baking-in a fairly narrow focus on information that's available rather than providing a tool to facilitate understanding and discussion. At their best, such numbers (like GDP) are useful for discussing constraints, but at their worst (US unemployment figures) are intentionally misconstrued to try and avoid discussion of structural problems.

Instead of trying to produce a single number, we're going to look at the problem in slices. Each slice will be broken into three parts: (a) the fundamentally important crust, (b) the almost-equally important filling and (c) the nice-to-have topping. If you disagree with any of them, please let me know. Several of these will be more subjective than a trained economist would prefer, but it's better to wear one's bias on the sleeve than to hide it in the formulation of "real" metrics.

The "filling" in most of these relates to the sustainability of the good provided by the "slice", but intentionally focuses on only a narrow aspect of that. My hope is to be able to compare technology and policy developments by looking at how they would impact the other dimensions of sustainability (economic, social, environmental, etc.), with the resulting change in the PMCIN "pie chart." Anyone who wants to contribute Java or spreadsheet calculations for any of these will get a fresh-baked pie the next time I see them.

Slice 1: Grain production.
Crust: (Total grain production)/(Population's caloric needs)
Filling: (Environmentally sustainable grain production)/( Population's caloric needs)
Topping: (Number of grain varieties grown today)/(Number of grain varieties grown before the industrial revolution)

Slice 2: Fruit production
Crust: (Total fruit production)/(Population's nutrition requirements)
Filling: (Environmentally sustainable fruit production)/(Population's nutrition requirements)
Topping: (Number of fruit varieties grown today)/(Number of fruit varieties grown before the industrial revolution)

Slice 3: Dairy production
Crust: (Total dairy production)/(Popultion's nutrition requirements)
Filling: (Environmentally sustainable dairy production)/(Population's nutrition requirements)
Topping: (Locally grown dairy)/(Total dairy needs)

Slice 4: Housing
Crust: (Total safe housing units)/(Needs of population)
Filling: (Median cost of housing)/(1/3 of median income) -->there's probably a better "affordability index" to use here
Topping: (Houses with good cooking facilities)/(Total housing units)

Slice 5: Energy
Crust: (Total power produced) / (Total required for society's standard of living)
Filling: (Environmentally sustainable power produced) / (Total required for society's standard of living)
Topping: (Locally generated power) / (Total required for society's standard of living)

Slice 6: Transportation
Crust: (Ton-miles of freight hauling capacity)/(Needs of the population at acceptable standard of living)
Filling: (Environmentally sustainable ton-miles of hauling capacity)/(Needs of the population at acceptable standard of living)
Topping: (Population with access to self-powered commutes)/(Total population)

Slice 7: Security
Crust: (People who feel their government can provide basic security)/(Total Population)
Filling: (People who respect their government as legitimate)/(Total population)
Topping: (People who feel certain of their standard of living)/(Total population)

Slice 8: Health
Crust: (Total population - disabled by injury/illness)/(Total population) -> would have to normalize this by "acceptable" ratio
Filling: (Number of people with access to non-emergency primary care)/(Total population)
Topping: (Average vacation availability per year)/(2 weeks)

Physical Pie Making Capacity in a Nation

When I started this project, I thought it would be pretty straightforward to develop an automated means of computing how many people in a society could make a pie a week. Instead, this lead to a long and occasionally heated discussion about what exactly constituted "pie", how much work really goes into making one, and whether or not the data for such a thing exists.

About the same time, I stumbled across Dr. Easterly's Reinventing Foreign Aid, which is to econometrics what Michael Pollan's In Defense of Food is to nutrition science. It's not a refutation, exactly, but a serious study of both the assumptions and practice of analyzing complex systems. Meanwhile, a global financial crisis was busy re-ordering the world's economy and making a lot of econometric data about incomes, trade and production obsolete. Meanwhile, serious economists are asking questions of their own field about the validity of counterfactuals and ex post storytelling.

What I've learned from this is not to reject all economic measures outright, but to be very careful to keep the metrics as simple as possible and with very clear ties to the hypothetical narrative. If the story I'm trying to tell is wrong, then my metrics are suspect. If my metrics do not reflect what is actually happening in the world, then my narrative may be wrong as well. In this sense, it is possible to develop metrics that can serve as an aid to examine potential policy options, but they are only as useful as the assumptions underlying their basic narrative. For more on this epistemological approach, see Nassim Taleb's body of work. In short, a simple metric with few assumptions helps inform discussions of the impact of political and personal decisions, while complex models often contain hidden assumptions that make them dangerous to use.

The title of this post has nothing to do with epistemology, but I wanted to be sure I including that disclaimer at the beginning. Now, on to the narrative and its metric:

Narrative (aka hypothesis): The physical pie making capacity in a nation (P-PMCN) depends primarily on its internal food production. This is a mildly controversial statement, since a globalized world can, in theory, rapidly move food from where is it efficiently produced to where it is desperately needed. However, this assumes a much freer market for food than actually exists, and that someone will always be willing to pay to feed foreigners. Because these assumptions are specious, and because the countries doing the best job of providing food security are the ones that ignore classical economic analysis, while those that tried to follow "free market" advice have relied heavily on food aid. This makes my job easier, because food production numbers for a given region are pretty easy to find, and all evidence suggests that a country will feed its citizens first, regardless of their economic position.

So, how to compute P-PMCN? The answer, I think, is to find the limiting factor in a given national production system. To make a pie each week, one needs:

(1) Roughly 2000 Calories/day of food, consisting of .84kg of grains (assuming 70% of harvested grain becomes edible) and .053kg of proteins (active, 180lb young male). Suggestions for improving this "basic diet" model are welcome, please leave a comment.

(2) Enough fruit to make the filling. My pies generally use about 1-2kg (2-4lb) of fruit each, but I'll assume that an even 3kg (6.6lb) are required to allow for losses in travel and "sampling" by the pie maker and family. I don't plan to make any distinction between the types of filling, but this may change with time.

(3) Sufficient fuel to bake the pie. I have used a shovel and backhoe as cooking implements in the past, so I'm comfortable saying that the only thing you need for pie production is heat. For now I will assume this means either natural gas or electricity, and for the developed countries I'll assume that it comes from either natural gas not used for electricity or electric power at 80% efficiency. Further, I'll assume that a pie must be baked at 205C (400F) for 1hr, and that its internal temperature must be raised from room temperature at 25C (77F) to 100C (212F) to bring the fruit to a boil. Assuming 3kg of fruit, which is mostly water, this "internal heat" requirement comes to 941kJ (892BTU), which is to approximately .89 cubic feet of natural gas or .33kWh of electricity. Simply keeping the oven hot for that long consumes roughly 2.5kWh (8530BTU, 8.3 cubic feet of methane). I'd like to independently confirm those numbers, sources and suggestions appreciated.

For the US, we'll use the USDA numbers for wheat, corn and rice production provides a good estimate of the grain available to the population. Using the assumptions above, the US produces about 409billion kg of grain per year, enough to feed 1.3 billion people (roughly 4x the population). Protein production from beef, chicken, pork and cheese comes to 49billion kg, enough to meet the needs of 2.5billion people. P-PMCN is not limited by basic food production in the US, at least as long as the fertilizer, soil and irrigation systems hold out.

Fruit crops are probably also overabundant, although the statistics for them aren't as current in terms of raw production (I welcome alternative sources). However, given that fruit production is largely concentrated in central California, it's availability nationwide depends on keeping transportation costs low.

In terms of energy production, it's important to remember that the US does produce a lot of its own fuel. However, it also uses quite a lot of that fuel for transportation, air conditioning and lighting. What I plan to do is grab the numbers for those three items and subtract them from gross energy production to compute the amount of energy left over for pie making. If you have any suggestions about sources and/or methods, please let me know!

Using uncertain science in public policy

The relationship between science and society changed fairly dramatically in the 1970s, at least in the United States. Prior to that decade, almost all science served a notion of Progress. However, around that time, the consequences of progress could be felt by enough people and observed by enough scientists that the enterprise changed fundamentally. Instead of Making Progress Possible, a growing cadre found themselves in the role of ancient prophets, warning people they had gone too far.

Right now I'm listening to a fascinating discussion about carbon accounting by the CSIS, which has a great series of Energy and Climate Change. A big question asked right off the bat is how actually access how much carbon gets released, much less the impact of those emissions. It's a fascinating to hear a discussion of how to do things like determine the carbon footprint of a screwdriver.

This is a very important question,and any international agreement on managing the transition to a sustainable economy depends on getting this right. However, when science and policy collide like this, uncertainty quickly becomes wiggle room, and wiggle room quickly leads to acrimony by those genuinely worried and "junk science" accusations by those who are not. How is the non-scientist to approach this?

For a partial answer, I recommend reading Michael Pollan's book "In Defense of Food." In it, he quite aggressively attacks the practice of nutrition science, itself not much older than climate science, for pursuing molecules instead of foods, and in so doing allowing themselves to be caught by "regulatory capture" as food manufacturers use their work to selectively add or remove nutrients. We've known that the western diet high in grain-fed meats and highly refined grain products is the best way to encourage heart disease, diabetes and most cancers, but our "science based" policy on food has encouraged trying to find the right balance of molecules instead of encouraging people to eat the whole plant-based foods that kept generations healthier (well, until they died of infections before we figured out penicillin)

Likewise, I recommend a similar approach in discussing climate science and its relationship to public policy. Carbon dioxide absorbs infrared radiation in the wavelength that the Earth radiates out into space, but does not affect the rate at which the Earth receives higher frequency radiation from the sun, resulting in a positive net heat flux, or, put simply, wrapping the planet in a blanket as it spins around its heat-lamp. The precise effect of this is hard to determine, but it's pretty well understood now that the climate is a "meta-stable" system, kind of like a marble on a rough surface. We know that we like were that marble is, and that we probably won't like any of the places it would roll to if we poked it too hard.

The goal of climate policy must be be to limit that poking. The gritty details of exactly how hard a poke we can stand, how to account for the carbon cost of a hammer, and who or what groups gain and lose in the trade off are worthless if we lose sight of that goal. We don't know exactly what will happen if we give the planet over to full-scale human modification, but given how we've treated out bodies, the answer is certainly not going to be good.

The joys of "stuff"

Last post, I was riffing on the story of how commercial banking got replaced by investment banking. I implied that it was bad that this happened, and the great crash of the last few years has largely confirmed this model. Unfortunately, I wasn't clear on the real ontological problem: "stuff" and money have become disconnected in the financial world.

Consider bank capital. What is it? Sophisticated investors, regulators and scholars fundamentally disagree about what should be counted and how to count it. So the fundamental building block of bank, and thus finance, regulation is something that bankers try to inflate, regulators cannot measure and investors just have to hope is real.

Meanwhile, equity markets have fallen from their "assured 11% growth" that was promised to your piemaker by a man in a sharp suit in 2004. I was told that day that betting against the NYSE was "betting against America!" Turns out I would actually have been betting against algorithms playing arbitrage games with exchange order books and Congressmen with insider information (h/t to Dan Carlin). To this day I'm not sure if the man in the suit was foolish or disingenuous, but his passion and intensity convinced me that he did not work in a rational market.

Normally, when money and "stuff" go their separate ways, there's hyperinflation. Indeed, the price of gold (~$1200/ounce as of this writing) would seem to bolster this claim. Unfortunately for large debt holders, the rest of the economy is extremely deflationary. Housing prices are such that homes financed after 2005 (give or take a couple years depending on the market) cannot even be rented at a high enough rate to cover the mortgage. Those same houses are now unaffordable to the people who would buy them until three years ago, and people with highly mobile careers (essentially the whole upper-middle class) have been taught the hard way that equity can be an anchor instead of an asset.

Meanwhile, globalization's march to ever cheaper labor helps ensure that there will not be too many dollars chasing too few goods. Quite the opposite, as imports continue to hold steady or rise slightly and the effective monetary destruction of housing debt defaults and write-downs (Planet Money's "pet" Toxie tells this story well). So instead, too few dollars wind up concentrated in the hands of relatively few people and companies with declining incentives to invest in the face of uncertain regulation and government action.

Clearly something has to give. The question is are we Turning Japanese, or going medieval? I'm not sure how the world's reserve currency can hyperinflate when the second largest economy intentionally devalues itself, and the other major currencies face similar (or worse) economic pictures.

Is there a brighter future? Quite possibly. The loss-making rentals I mentioned aren't so bad when the Mortgage Interest Tax Credit is taken into account. There is simply not enough oil that can be extracted at $70/barrel to keep up with demand for the next several years, and so there will be innovations in transportation and infrastructure. Where and how that happens depends on the policies of various countries, but we have the cash and expertise to take the lead in the US. Support your favorite climate legislation and encourage investment in "stuff."

Hitting the limits

Disclosure: The author has intentionally, and continues to, hold only assets that are either liquid or utilitarian. He does not own stocks or property and considers the mobility required to use his education to be of greater importance than financial investment.

I've had a lot of time to reflect on property management and economics over the past week, and the exercise has not been uplifting. It has produced, however, an interesting narrative that you readers might enjoy.

In my youth, I spent a great deal of time with bankers. As a result, the old small bank "rules of thumb" for income/loan ratios, price/earning ratios and some of the mechanics of commercial finance were drilled into me from the beginning. My reaction to events of the last twenty years is heavily influenced by that experience. The most interesting story, I think, has been the transition of commercial banking into investment banking.

The commercial bank model assumed that a borrower would provide a stream of revenue. The banker's job was to find new customers, arrange lines of credit, and then help those customers continue paying by arranging new credit terms or special deals with other bank customers. For instance, a bank with a large construction business as a client would be more likely to lend to a hardware store, since their original customer could use the goods in the new customer's warehouse if something went wrong. Thus, banks tended to be tied to a given industry, and rose and fell with one sector of the economy. Today, this is still done, but it's called "private equity." (there's a great story about a firm buying a fashion magazine and using it to promote "thin belts" as the new fashion item, boosting sales from another company of theirs)

The Investing Banking model assumes that any stream of revenue should be sold to investors. In the short run, this is enormously more profitable because instead giving out a bunch of capital and waiting for loan payments to trickle in, the banker "originates" the loan and sells it to an external investor as a Structured Investment Vehicle (SIV) or Collateralized Debt Obligation (CDO). Thus, issuing loans doesn't affect the capital base of the bank, unless they do something like insure the value of the security, but that's an off-balance sheet transaction and so doesn't count. As a result, the amount of credit available, and thus money creation, is limited only by the amount investors can buy.

This approach also move innovation up the value chain. Instead of employing tens of thousands of commercial bankers to find relatively simple innovations (the builder helping out the struggling hardware store), now the world needs thousands of very smart "quants" to find statical arbitrage. Since banks don't need to keep industry experts on staff, and they have more money to lend, interest rates go down. If something goes wrong, instead of an "offer you can't refuse" to receive help from another bank customer, it's much easier to get an extra bridge loan. As long as there's someone to buy that next security, life is good.

But what happens when the market for iffy debt saturates? Well, either everyone goes bankrupt together or we go find another sucker. With TARP, the US government promised to be the Sucker of Last Resort, and now the EU's large Eurozone economies have promised to do the same thing for sovereign debt. Is this "find another buyer" model sustainable? I'm starting to doubt it.

Equity markets, social security and Chinese purchases of US Treasury bonds all represent wealth transfer mechanisms that count on relatively young people giving money to their elders. Middle managers at the Chinese central bank and treasury are typically fans of Currency Wars, a book that makes very a clear case that the Politburo's export-subsidizing policies are effectively a huge tax on them. The loudest advocates against any changes to Social Security in the US come from people who also demand no new government revenues, and so the SSA will turn to statical tricks to keep payments reasonable. Stagnating real wages and rising unemployment, especially among people under 30, chokes off the flow of money into 401ks, and so depletes the order books on the NYSE and other exchanges.

I'm thinking that this is actually very good news, net. Moving innovation away from the "real" economy and into finance has encouraged manufacturing and physical R&D to leave the United States. If the most profitable move for a pension fund is to build a wind farm or factory instead of buying the bad mortgages, that has to be good for the country as a whole. The next few years will be rough, but I think we'll emerge with a better world for it.

Improved Applesauce Pie

Week Of Pies, Day 3

Roll out a Whole Wheat Pie Crust and get it into a deep-dish pie pan, preheat the oven to 400F.

In a medium mixing bowl, combine:

3 eggs at room temp
1/3 Cup brown sugar
1/4 Cup granulated sugar

Mix until combined. Then add:

2.5 Cups homemade applesauce (much better this way)
1/4 butter, melted
pinch of allspice
~1T lime juice

Pour the mixture into the crust, place on an upper rack and bake for ~50min. Let cool and serve.

Simple Carmel-Apple Pie

Day 1 of the Week of Pies.

I have a bunch of Fuji apples, which are delicious in pies, pancakes and plain. I also had about a cup of caramel sauce left over from a party. The solution:

Simple Carmel-Apple Pie

Ingredients:

1 Whole Wheat Crust

~6C peeled, cored and finely sliced Fuji apples

~1C caramel sauce, heated for easy pouring

Proceedure:

(1) Roll out crust to 13", place into a deep dish pie plate. Trim and reserve the overhanging crust

(2) Place sliced apple into the crust, cover with caramel.

(3) Arrange the reserved crust in two concentric rings on top of the fruit.

(4) Bake at 400deg for 45min or until bubbling. The bubbling is key.

(5) LET COOL COMPLETELY! There's no cornstarch here, so the fiber in the fruit has to set up to hold this thing together.

The coming Week of Pies!

Craziest idea I've had in a while

The US exported the idea of televised debates to England, and they might have found a way to make for much better political theater. Cleggify them. Not at that national level, but for state and local offices with much lower interest and stakes.

The truth is that our two major parties have a lot more in common than they do differences. However, there's a host of local "consensus" challenging discussions that would be very helpful. Drug laws are the obvious one here, since they turn a potentially valuable tax source into a cost center. However, there are others, like over-broad sex offender registries, zoning laws, tax incentives for new employers and other civic initiatives that don't fit either party's ideological bend.

These issues will not be brought up if the only two candidates in the public eye are looking towards their careers with the parties. However, a flamboyant or pragmatic third candidate who has little or no hope of election can at least force discussion of them, and make for much better television. If the younger GOP and Dem activists have to defend the things on which they agree, that would be better for bipartisanship.

I'm only looking to change local televised and radio debates, not Presidential ones. Igniting interest in local politics would be good for national politics in general, ideally breaking some of the focus on social "wedge" issues. Multi-candidate primary debates are more fun that two-candidate ones, but they are generally only trying reach a narrow part of their party's base. Someone who's only a mild risk to upsetting the system could force a more interesting political scene at the local level.

Official pie loving

To borrow from the Huffington Post: For Reagan, it was Jelly Beans. For Clinton, it was McDonalds. W loved his BBQ. For Obama, it's pie.

Sadly, this doesn't mean I'm likely to end up working at the White House, seeing as they have both an economics advisor and a pastry chef.

Optimism!

These days, the dismal science of economics is producing quite a lot of bad news. If you can find the time to read this 5-part piece, it's a great explanation of what to expect over the next couple of years (full disclosure: I don't own property and have a very cash-heavy portfolio). Meanwhile, Greece has officially gone the Bear Sterns route, meaning the next country up gets to play Lehman Brothers. Oh, and don't forget about this year's Social Security shortfall.

What does this mean? At first blush, it seems like the death of modern prosperity, capitalism and possibly civilization as we know it. It will certainly seem this way for many, and I do not want to minimize the pain that is to come in any way. But does this really mean the beginning of a long, dreary future?

Hardly. We will, as a society, be considerably less wealthy going forward, but also less busy. Easy credit encourages ever-increasing productivity, requiring a constant increase in the time required to work off the debt. A new computer with better editing software lets everyone write a paper or legal brief faster, giving the authors more time to write more briefs. Not surprisingly, the burn-out rate in the creative professions has been growing steadily. Anxiety and depression are now so common among students that faculty know their department's procedures for handling it better than the fire escape routes.

In an easy credit society, every marginal unit of labor competes with any capital or process improvement that reduces labor. When interest rates are very low and the cost of employment, in the form of wages and mandates such as health care and unemployment insurance, grows steadily, automation always wins. It wins out on farms, producing vast amounts of infertile corn. It wins in factories, with fewer people required to operate the robots that do all the machining, assembly and clean-up. It even wins in retail, replacing mom-and-pop clerks with shelves that force customers to do much of the labor.

The coming years of deleveraging will be bad, and despite enormous spare capacity there will not be demand for much new economic activity for several years. The "new normal", however, ought to be a more pleasant place. Mechanics, plumbers and handymen will find plenty of non-tradable work keeping up houses and cars that people cannot afford to replace. Climate and environmental pressures will ease as people replace 300-1000W desktop computers and TVs with 30-100W laptops. Bicycle commuting will rise as more people buy up depressed "urban infill" housing, with accompanying benefits to health, traffic and national security.

The new normal will be smaller, more Aldi than Walmart, and more labor will move from the factory and fast food kitchen to the home. The future may be hot, flat and crowded, but I think we're heading towards a pie-friendlier world.

All politics are national (updated!)

[realized that I've got three arguments tangled together here, so I'll try and unwrap them]

This story brilliantly shows how "cooperative federalism" can co-opt civil society in favor of a central authority:

Court to hear arguments on campus Christian group

Central questions:

(1) Does a group have a right to define its membership?

The issue here is whether the group has the right to demand voting members sign a "statement of faith" declaring that they believe only certain things to be morally right. Failure to include this kind of statement opens the group to the possibility of having its charter overridden by activists who can assemble a crowd in time for club elections.

This approach has been suggested to "tame" the British National Party and helped get McCain the GOP nomination. With both progressive and Tea Party activists able to assemble large, relatively motivate crowds, groups that oppose either would do well to limit access to its membership. Is a statement of political belief fundamentally different from a statement of moral belief?

In pie-centric terms: Should I be required to admit pie cabinet members who don't believe in sustainable homemade pie making? Actually, it's not that hard to imagine such people. They argue for continuing to underfund massive social programs and punishing political cooperation. I am happy to talk to such people, but do I have to open my group's identity to them?

(2) Is this a form of federal "regulatory capture", giving it effective control of civil society?

The implicit imprimature and improved access to potential members that come from recognition and subsidies guarantee that groups that comply with the central authority will grow faster than those that do not. In this environment, control of government means control of the rules of civil society. Once civic groups such as churches and clubs or states and municipalities become dependent on a special subsidy or tax status, they get co-opted by the taxing authority. At that point, a change in tax or recognition rules becomes an existential threat, and so every group must choose between its sense of mission and keeping its lights on. China's ham-fisted censors could learn a lot from this more subtle approach.

Want to see women in the Catholic priesthood? Don't appeal to Rome, appeal to Washington and demand they pay full taxes on discriminatory seminaries. Don't like abortion? Mandate that insurance companies not include such coverage in subsidized plans. Want to make helmets mandatory for motorcycles and bicycles, mandate seatbelt use and force the creation of bicycle lanes? Tie them to highway funding.

Well intentioned efforts to support civil society inevitably result in unhealthy relationships. Internationally, this happens when NGOs get funding from governments and effectively become tools of their sponsor's policy. What are civic organizations supposed to learn from ACORN's demise at the hands of edited video tapes? How about this: if you take federal money keep your group's views as close to mainstream as possible.

(3) How do we make politics local again?

"Values based" politics unite people nationwide who share a sense of identity. Media sources that pander to their audience's ideology. Heavily gerrymandered districts and seniority rules that reward federal and state legislators for long service guarantee that the extremes of both parties make the leadership more nervous than voters in the middle.

I have some ideas for future posts, but that's how I'd like to frame the question. Can we make a more respectful civil society by disaggregating control of it? If so, how? If not, what is the correct path?

Carbon accounting is tricky, and the wrong approach anyway

I just came from a talk by a guy affiliated with the CO2PE group about accounting for the carbon cost of manufacturing. The speaker presented a novel means of accounting for the carbon cost of manufacturing parts in terms of tonnes of CO2 equivalent emitted. It was very technical, and highlighted the enormous significance of location (and thus source of grid electricity, with coal burning places the worst and those with large hydroelectricity and nuclear power the best).

However, the discussion afterword quickly fell into "What about X?" questions in his accounting. After a couple "we will have to consider that", mostly related to water, the answer became "we have to start somewhere, and tweak the accounting later." The major difference between his formula and the 54 wildly divergent "carbon footprint" surveys is its transparency, which is good. However, I doubt anyone left the room satisfied that that this was a good method. That is was also the best most of us had seen (indeed, the only formula), highlights how difficult it will be to have carbon trading schemes that involve manufacturers directly.

He did, however, make a subtle point that there's an enormous amount of inefficient equipment in use today. Getting rid of this equipment will require two things: (1) a rise in energy prices due to something like a carbon tax and (2) functional credit markets. Given the state of finances in the Western world, we're looking at a combination of higher taxes, cut services and high inflation. A tax that encouraged investment, by say, covering the Social Security Deficit with a carbon tax (~$4.74/ton this year), could potentially shore up the fiscal situation and ease a lot of fears worldwide.

The trouble, of course, is that realizing that future savings requires investment in real things today. I think this is a big part of why so little progress has been made, especially in the US. Our economic policy since 1982 has heavily encouraged, through gov't guarantees, Federal reserve action, tax incentives and "degregulation" (aka regulatory capture) financial investments (housing, 401K's, IRA's, etc) at the expense of infrastructure and physical capital. Changing that requires a fundamental shift in how we view retirement, wealth and the role of government.

The concept of "too big to fail" and the S&L crisis heartily confirmed that our economy would be structured to favor financial instruments. Problems with unions and energy supply in the 1970s probably had a lot to do with that, but basically the federal government has been quietly moving downside risk away from private investors and into the public purse since Lockheed's debacle with the L-1011. This form of economic planning is largely invisible to the average citizen. They are invited to join in the benefits with tax-deferred savings, higher property values, and access to a society that "feels" wealthier. Now that the blush is off the rose, we've seen a few groups that would like less economic planning, but still plead for government action that will give them jobs.

However, the kinds of policies that will result in a clearer, more efficient economy will be visible. You can't ignore a wind turbine or a solar rooftop, and rising energy prices will hit everyone. Getting there will require credit markets that are actually healthy, not relying on clever debt-hiding schemes. Given where we are now, and how all major markets now rely on some kind of government guarantee or subsidy, an explicit move must be made. Using a carbon tax to cover entitlement shortfalls is my personal favorite, since it fixes a temporary shortfall with a temporary revenue stream. It also puts a very powerful lobby on the side of clean technology and physical-plant investment. However, actually getting the metal bashed will require successful financial reform.

Hopefully those of us in the metal-bashing world will bear in mind the lessons of Greece, Enron, Madof, Lehman Brothers and the failure of Sarbanes-Oxley to prevent the financial crisis. Accounting is good when there are no places to hide or fudge numbers, but "off balance sheet liabilities" are especially common when the rules are vague and incomplete. Open standards for carbon footprints are a huge step in the right direction, but at best they tell us how much trouble we're in. Getting out of it means creating incentives and allowing investment.

New feature! A blogroll

I haven't been able to post as often as I'd like, and when I do I'm often rehashing the arguments from one of the authors on the right.

Today I'd like to highlight Simon Johnson's (former head of the IMF's) Baseline Scenario and Arms Control Wonk. Dr. Johnson's recurring theme is that no institution is too big to fail, but in his experience (and with 2 exceptions all of human history) many are too big to succeed. There's a lot of nuclear security talk these days, and the team at Arms Control Wonk do a great job of boiling it down.

Best Beignets Yet

I once heard that there were no good beignets in South Bend. Chicory Cafe, a fine establishment that all you South Bend readers ought to patronize (they give away bags of coffee grounds to customers who garden), does a passable job. However, for a real Beignet with real depth of flavor, read on:

Ingredients:
1.5 Cup warm (100-120F) pasta or potato water
1Tbsp dry yeast
4 cups all purpose flour
1 cup evaporated milk
2 eggs
1/4 cup sugar
1/4 cup molasses

1/4 cup butter, melted
3 cups whole wheat flour
Oil for frying
Confectioner's sugar for dusting

Combine the first two ingredients in a large bowl and let the mix get frothy.

Stir in the a.p. flour, cover and place somewhere warm.

Take your time (~20min) mixing up the ingredients in italics

Combine the early dough with the sugar mix, then add the butter.

Stir in enough wheat flour to make a soft dough.

Now chose "Make Soon" or "Make later"

Make Soon: Place bowl in a warm place for about 1hr until it approximately doubles in size
Make Later: Cover bowl and place in a cool, dry place like a refrigerator until 30min before you plan to start frying

Punch down the dough and roll it out on a well floured baking mat (or counter top) to about 1/4" thickness

Cut into 2" squares with a pizza cutter and fry in hot (350F) oil. Fry 3-5 at a time and flip once, ~2min per side or until golden brown.

Sprinkle with powered sugar immediately, ~1/2t per beignet. More just causes a mess.

Drill, 'Bama Drill!

I make no secret of the fact that the policy goal of this blog is to find the set of incentives that will lead to a sustainable economy that provides a minimum level comfort to as many people as possible. As such, the opinions expressed here are generally opposed to activities that encourage greater use of fossil fuels. For the moment, however, I'm all for this: Recharging Debate, Obama Expands Offshore Drilling

I do not, however, believe that it will make a noticeable difference in US oil imports. I don't expect there to be any real impact on the price of oil, given the cost of extracting deep-water reserves and the years of work required to bring this stuff to market. This will do very little, if anything, for US employment. In other words, I doubt there will be any significant positive benefit from this decision, and it will likely be regarded by history as mistake.

That is precisely what I hope to see. History suggests that energy extraction is extremely bad for the local community, bringing environmental degradation (and loss of tourism dollars). It draws corruption like flies, the only thing worse is foreign aid or Federal pork-barrel spending. If the money doesn't get siphoned off, its effect on civil society is about what one would expect from people spending money they didn't earn and don't have to (or can't) maintain.

Nothing will defang the argument that "we're not exploiting our national resources" in the energy debate like actually exploiting them. Nothing will hurt oil's image in the public mind quite like a big spill, or even unsightly oil rigs, off formerly beautiful beaches. The political fight over issuing permits, arguments over subsidies will become political footballs that will increase uncertainty and make everyone involved look bad.

In short, this is likely to be a Pyrrhic victory for the extraction industry. Inshoring the problems of energy extraction over the objections of a large number stakeholders will highlight those problems. The only way this decision will impact energy security is if it is matched with enormous efficiency improvements and little regard is paid to environmental concerns. According to the CSIS, we're looking at a period of stagnating energy demand, meaning it may never be profitable to use a rig off the coast of Florida or Virginia.

If this move provides the political cover to pass a climate bill that creates a stable regulatory environment, it will be an unqualified success. If it changes the tone of the debate away from simply rehashing old arguments, it will be moderately successful. Alone it will do as much for energy security as Diet Coke has for obesity.

Hot drink parties

My Ode to Modernity ended with an oblique reference to the Tea Party movement. A comment on the post suggested I look into the Coffee Party counter-movement, I think with the implication that I host one.

Obviously, I'm an academic. My first economics book was Hayek's Road to Serfdom, and I identify strongly with the Austrian School of economics. I simply don't believe that any bureaucrat can know enough to successfully manage the economy. Unfortunately, some eighty years of government backed private debt (fan though I am of Sheila Bair) and regulatory capture have created a system that generates wealth a lot faster than a free market ever could.

Now this system is breaking down. The past three years have seen something unprecedented as a financial crisis in a highly indebted nation led to a vast increase in the number of people buying that nation's debt. This is not a sustainable system, the deficits that helpfully created all that debt to buy cannot be sustained. The Navy, whose services many of those foreign investors are effectively buying, is overstretched and does not have a coherent shipbuilding plan. Deficit reduction in the US will require both cutting services and raising taxes, but the political will to do so does not exist. Meanwhile, our recent attempt to stop one sector of the economy from dragging down the rest can be described, at best, as a halting step towards making a bad system slightly less unpalletable (a tee shot, in a previous post).

We are now having an internet-style national philosophy debate. Tea Partiers seem to believe most strongly that our best days were in 2003-2005, when the economy was growing strongly on the back of gov't backed bad mortgages (including pension funds buying non-FHA stuff). The Coffee Parties are generally more "progressive", seeking smarter regulation to tame the business cycle and more equitable wealth distribution. The first have already been captured by the neoconservative wing of the GOP, the second probably host a lot of Howard Dean supporters and may find themselves backing democratic candidates this fall.

As the former head of the Pie Cabinet, I will not host either in my home. Historical irony might inspire me to turn up at a rally with a bundle of sticks tied together, or perhaps a sign warning "Beware the Red Tide!" (oh, so many meanings!). However, I remain committed to asking simply what is the best way to incentivize a sustainable economy that provides at a minimum the capacity for each family to make a pie every week. Come on over, I've got plenty of tea and a brand new coffee grinder.

Growing Stronger STEMs

I'm a frequent critic of appeals for more STEM (science, technology, engineering, math) education. I am also an engineer with a PhD who teaches both grade-school and college students. I don't see this as a contradiction at all because I didn't learn to be a successful engineer in a STEM classroom.

I learned the basics of mechanical and systems engineering under the hood of a dozen or so cars and trucks that my friends and I decided we could fix. My most successful friends learned to program computers, rewire stereos and generally perform all of the "STEM" tasks because they tinkered at home. Our curiosity wasn't awoken by grades, but rather a desire to learn that our parents encouraged and our lax (by modern standards) schedules allowed. We were simply interested in making a change in the world, and as Tycho points out, no-one of any sense has ever bet against the . . . resourcefulness of young men."


An AP Economics class gave me the tools I needed to start forming economic models of the behaviors I read about in the newspaper. This, along with long discussions with my parents, led me to ask "what's the underlying dynamics here?" When confronted with organizational challenges, this education provides me with the tools to navigate them. On technical issues, knowing what the instrument really measures is the difference between a failed experiment and a PhD.

The problem with my path through STEM education is that it does not fit well into an NCLB/TAKS/Iowa Test model. At what grade level should one be able to check oil, inspect a brake pad or replace an intake manifold? Since most diagnoses take several tries, how do you test a student's ability to find "the underlying dynamics?"

In addition, the facilities required for my education spanned several cooperative households, took the time and flexibility of school administrators and a community that felt young people ought to be engaged with their world, not sheltered from potential harm. Today's education debate seems to accept as first principles that learning can only happen in a classroom, is only official if it can be tested and that there is one standard of capability to which all should be trained.

As a STEM educator, and one who holds a PhD in a mechanical field, I'd much rather teach math to studets who know metal than metal to students who know math. It's cheaper to teach and easier to to test algebra, geometry and calculus than auto mechanics, baking and philosophy. Traditionally, the latter subjects have been learned at home, and I don't want to suggest we put more of the education burden on schools. How we encourage stronger STEMs at home that will bear fruit later?

Pie making abroad

We recently took a longish trip to Europe. It was amazing, and I owe special thanks to our wonderful hosts who drove us all over the place. Really, I cannot thank them enough for everything, perhaps most of all giving us a chance to step back from our cluttered lives in the US and give us a chance to soak in a more relaxed culture.

While there, we went to a farmers' market where I bought a couple kilos of apples and a kilo of pears to make a pie. When we got back to the house, I realized how dependent I had become on the array of kitchen gadgets I use to reduce pie-making time. We brought along a dough blender at our hostess' requests, but my apple peeler/slicer, baking mat, multiple sets of measuring tools, giant rolling pin and food processor were an ocean away. Our host's kitchen was beautiful, clean and very well stocked, but I learned my "gadget-neediness" to my own chagrin.

More helpfully, this led me to think about what the real "minimum equipment list" is for making a pie. This list is important because it bears directly on the industrial capacity required of a PMCIN=1 society. I believe it consists of:

(1) A good cleaning cloth and a supply of clean water (~5L/pie)

(2) A very sharp pairing knife

(3) 75cm x 100cm countertop for crust rolling

(4) A large (3-4L) mixing bowl

(5) A measuring cup and spoon (scales also work)

(6) Pie plate

(7) Minimum 50cm x 50cm x 50cm oven.

Sorry for the metric units here, but these reflections happened in Europe, and Google, the generous host of this blog, offers a fantastic unit conversion service.

Interestingly, the largest industrial need, and thus environmental impact, of pie making consists of clean water. The electricity for the oven came, at least in part, from a wind farm about 2km away from the house. The water, on the other hand, had to be pumped from a well, treated, pressurized and piped to the house. After use it had to be piped to another treatment center, cleaned and discharged into a suitable environment. Unlike the wind turbine, knife, dishes and oven, this has to happen with every pie. Nothing like international travel to give you an interesting look at life. Also interestingly, with only a pairing knife, I wound up peeling more apple off the outside. However, I saved considerably more fruit by not throwing away hole cores, as I do at home, instead cutting away only the inedible segments near the seeds.

Also, European fruit, at least in the market we bought it, is much denser than American varieties. It's very important, therefore, to cut it up much smaller than comparable American apples and pears. It may also be necessary to pre-cook some fruit, as Ken suggests in his "French Apple Pie" recipe, which is an adaptation of a French apple tart. Note that this adds a skillet and stove to the list above, but does not substantially change the water requirement.

The next place I need to go is an undeveloped rural community. I will do my best to bring along items 1-6, ovens being a bit hard to transport, but I may have to add "shovel, metal box and charcoal" or "large pot and cooking fire." I wonder if there's a Fulbright for culinary adventures . . .

An ode to modernity

My first experiment with free verse:

A man holds cash, seeking transportation
A dealership, stock full of cars, his likely destination
"This cash, you see, for that car there, and let me drive away,"
Says the man to dealers who must want the cash he holds.
"Oh no, good man, your cash, you see, is not the way to pay.
For the products that we truly sell do not go by 'Olds'
But rather notes and loans and leases too,
Relationships that reach beyond
This simple car I'm selling you
Pay with cash and you'll abscond
From whole industries, it's true
Sign this contract by our lawyer Frank
(That's one, in case you're keeping score)
And send monthly payments to our bank,
(That's two, twice more than before)
While slickest brokers write up SIVs
(And three, but wait there's more)
bought by pensions, who wisely do insure
(Holy cow, now we're up to four)
Against losses you may cause them to incur
And so my friend, you see it clear,
With this simple car we may
Keep many fed for many years.
That's how things work today.
Peering at his wad of bills, and knowing well the cost,
He looked upon the dealership, and told them all "get lost"

Professor Russ Roberts, one of my favorite economists and host of EconTalk, makes this point very well: "Self sufficiency is the road to poverty." However, this brings up an inherent question that should occupy the mind of any policy wonk (and, by extension, voter): how much of this mutual dependence should we encourage? What is the right balance between prosperity and robustness, and how does one shape incentives to achieve it?

Right now, violating the system by simply paying cash for a car sounds like a subversive act. As for me, I'm gonna fix by bicycle, change the oil in my car and bake my own pies. Yes, I'm being rebellious by living out an episode of Leave It To Beaver. Stop by for pie and tea, we'll make it a party.