Value vs. Utility

Money, according to the experts, is a "means of exchange and a store of value." Less obvious, however, is the relationship between "value" and "utility". Around the time Lehman collapsed, a friend of mine asked "What is capital?", because it seemed to be something the banks needed badly, but we were having a heck of a time defining (yes, we know that in that context it consists of money that can be used to pay for losses). Pie making gives one quite a bit of time to let the fore-brain wander, and it finally came to me that the problem we face today is reconciling the difference between "value" and "utility."

Someone on a radio program, I think it was Talk of the Nation, a while back described the difference between the macro economist's view of capital and the business community's (and most of the country's) view by comparing a clay and Lego dinosaur. In both cases, the "value" of the parts is one dinosaur's worth of stuff, providing the "utility" of play to a dinosaur-loving child. The modeling clay dinosaur is easily reconfigured, providing utility in the event of the loss of small amounts of clay, but it has a nasty habit of staining carpets and you can't make good horns with it because they droop. Thus, the Lego dinosaur is probably more popular with parents who have carpet, and kids who want more realism. However, while the "value" of both is the same (1 dino), the "utility" of the Lego dino is more fragile and more difficult to achieve.

Much like a complicated bond or derivative contract, the Lego dinosaur's utility to the "investor" (young child) depends on the "issuer" (assembling parent) completing several steps and all of the parts being in place. If, however, the "regulator" (cleaning parent) is used to dealing with modeling clay, it is very likely she will expect modeling-clay like utility from the same value of investment (this is fundamental flaw of assuming regulations based on historical data can handle new products). But what if a part is lost? Or, perhaps worse, the "investor" decides that airplanes are more fun than dinosaurs?

In the first case, there is a measurable loss of value. In the clay case, there is less overall dinosaur, but in the Lego case it's hard to say if there is much of a dinosaur left if certain critical pieces go missing. In the second, clay is easily reconfigurable, but specialized Legos, much like a car factory, are not. Thus, the kid with the Lego dinosaur had better keep liking dinosaurs, otherwise the "issuer" and "regulator" are in trouble.

The guest on NPR explained that most economic models tended to assume we were collectively playing with clay models. When suppliers are largely interchangable, barriers to entry are low, and the amount of equipment ("capital" in the microeconomic sense) required is minimal, this is largely true. For example, a good metal shop can be reconfigured from making parts for trailers to making snow shovels pretty quickly. More complicated products, like cars, require far more specialized equipment, and so there is a tendency to do everything possible to keep the dinosaur together, since it has value in terms of jobs in politically sensitive areas that greatly exceeds its utility.

What does this mean? I'm not quite sure. I think this is the gist of George Soros' argument about a in confidence leading to the bursting of "super bubble." The whole point of a market economy is to let people decide how to value the things they use, and while this system is fairly robust to government interventions, laws and subsidies do not create usefulness. Which means, ultimately, they cannot preserve value.

Apple Pizza Pie

This is one of those recipes that reflects this blog's "waste not" mentality. I mixed up too much yeasty water for pizza dough, and decided to make a yeasty apple pie.

It starts with the sweet yeasty crust (makes two):

Ingredients:

Combine in a glass measuring cup:
1Cup warm water (~120F)
1/2 t dry yeast
1/2 t sugar
Let sit until frothy on top.

Combine in a bowl or food processor with dough setting:
3 1/3 Cup white flour
2T sugar
1t salt
3T butter, cut into small pieces
Mix until well blended

Add the yeast mixture to the flour while mixing, mix until the dough cleans the side of the bowl. Mix another 30s in processor or knead 5min. Allow to rise for about an hour in a warm, sealed and greased container, like a plastic bag or bowl covered with plastic wrap.

The Pie:
Place a pizza stone in the oven, cover with a layer of cornmeal and preheat to 375F
In a large bowl, combine:
5 Granny Smith apples, peeled cored and sliced thin
1/3 cup sugar
1/2 t cinnamon (fresh ground)
Allow to juice while rolling out the crust to a ~13in circle. Transfer to a pizza peel covered with cornmeal. Arrange the apples to cover the crust evenly, leaving a small part of the rim uncovered. While the oven is still heating, combine in a small bowl:
1/2C brown sugar
1/2C flour
pinch of nutmeg
3T butter, cut into small pieces
Mix until it resembles fine gravel, then spread over the apples. Carefully slide the pizza pie into the oven, bake for about 40min, until the topping turns golden, remove, slice and serve.

The sexiest mode of transport?

A young woman with whom I frequently discuss bike-commuting issues complained about the amount of honking she hears from drivers who, she suspected, are trying to tell her to get out of the road. I said that I hardly ever got honked-at, and we speculated about whether it's related to our routes (possible) or riding styles (which are very similar), and came to the conclusion that someone, perhaps us, ought to arrange for PSA's during Michiana Bike to Work Week encouraging better driver behavior.

This weekend I rode about 80mi (130km) to and from a small lake for a regatta. I didn't wear a shirt to avoid getting too sweaty before spending the day sailing (yes, I enjoy my low-carbon lifestyle). I was honked or shouted at by several cars full of young women, and only once by an older couple who I assume wanted me off the road.

So, why is the physically fit female cyclist in lycra shorts getting honked at? Probably the same reason the shirtless young male one did. The drivers are expressing appreciation, not anger. A couple years of using our glutes to commute has had more than just health benefits.

Thus, the correct PSA is quite possibly a picture of me from 2006, when I was an unhealthy 225lb, and today, now that I'm down to 185lb. Results fairly typical, given the metabolism boost. Perhaps not as good as $4/gallon gasoline, but if you need a reason to ride . . .

Lighter Sweet Potato Pie

This could also be called "Crossroads and Lighthouse Pie", and was baked to celebrate the recent commencement exercises at Notre Dame. We here at Pie and Policy believe there is nothing more anti-pie than identity politics, and so we offer deep-dish support to those who seek and encourage constructive engagement.

Now, off the soap box and into the kitchen.

Ingredients:
1 whole wheat crust, rolled as thin as possible

~2 C baked sweet potato flesh, not skins

1/3 C brown sugar
1/8 T cinnamon
1/8 T nutmeg

2 whole eggs
2T butter, melted
7/8 C 2% milk -> put the butter in the cup measure and fill the rest with milk

Procedure:

(1) Get the crust into a standard 9" pie dish. Preheat the oven to 350F.

(2) Puree the sweet potato in a food processor, add the sugar and spices and blend some more, then add the eggs, butter and milk. Process until smooth.

(3) Pour the puree into the pie shell, and place the center rack for about 45min. Once the sides have start to puff a little and the center is still a bit wiggly, pull it out. Let cool for a couple hours before serving.