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Aug 2010

A Piece about Magic

I was watching a TV programme recently which was showing how the residents of the Sundarbans, mangrove forests in estuaries of the Ganges and Brahmaputra, were scared of the tigers that lived across the river from their village where they had to go to collect wild honey. The interesting commentary in the programme was about how they relied on the magic of their religion to protect themselves from the tigers.

This caused me to think that all religions rely on magic. If you asked the believers if they believe in magic, some of them would say no but they really do believe in the magic of their religion, the omniscient god, the workings of prayer, and the concept of life after death.

This thought led me to a new concept of the failings of religions which I see as human invented ideas about the magic of an omniscient, and human loving god.

Posted: 28/8/10 6:55 AM

Two of the sheep are back here

Our back paddock is very green with lots of grass and lots of weeds because we have had lots of rain over the last few weeks.

Two of the ewes who used to stay here are still at home because they have two baby lambs who need constant attention from Mark.

Randy, the old ram and the old ewe are back here because we have so much feed for them and Mark's paddock is just growing some grass.

The old ewe spent lots of time baa'ing at me when I went down to fill up the water tub but she was quiet when I was talking to her so I think we are getting on well.

Posted: 27/8/10 12:54 PM

My views on Modern Macroeconomic Theory

I have not studied "Modern Monetary Theory" in depth in the Billy blog but I know Bill Mitchell believes in it as the proper foundation for macroeconomic theories.

My engineers view is pretty much out of touch with Bill's writing but I believe that my view has some significance.

As I have said before, I am horrified that the "value ascribed to real products" is not related to the input of materials and labour in their manufacture. A house is constructed with a certain number of bricks and certain quantities of other materials and consumes a certain amount of labour in its building. There are of course overheads in the organisations involved in the provision of material and in the organisation which manages the labour, but in my experience these overheads are required to provide the plant and equipment needed in the construction and the management team needed to keep the organisation running but these costs are also real in the sense that they are costed at the real cost of these procured items and the labour required to achieve all the bureaucratic work involved in the operation of the organisation.

The current "value" of any house on a plot of land is pretty well totally unrelated to these real costs of construction. The "market" sets the price by determining how much of their savings or their borrowings the purchasers are prepared to offer and the highest bidder gets the purchase.

Of course most buyers consider that they are "investing" in an asset which will appreciate with time and provide them with a remarkable profit from their purchase. This appreciation has, in my view, no relationship with the real value of the property.

I included "borrowings" in the previous statement because I believe that those who make a living lending money are very happy to see this form of investment give them a opportunity to make heaps of money because of the escalation in house prices.

Some of us (not just me) think that the Global Financial Crisis was caused by the unreasonable amounts of money being offered to borrowers (the crisis resulted from the inability of many borrower to repay the money they had borrowed).

I could reflect on the extraordinary "valuations" put on antiques in the "Antiques Roadshow". Even the owners of the antiques are amazed at the appreciation their investment has achieved, sometimes many thousand pounds sterling on an item which was bought for a few shillings or a few pounds or tens of pounds.

My view is that the "market" is pushing the price of things up because people believe they should be able to sell things for much more than the paid for them so that they will become "richer" even though the "value" of the thing measured by its "utility function" has not changed.

Matt Ridley has used "manhours" value real stuff and this shows how irrational the "market" is at establishing real value.

Posted: 15/8/10 4:57 PM

A Presentation by Peter Andrews to Barraba Farmers

Last night we attended a dinner and a presentation by Peter Andrews, the author of the book "Back from the Brink" which I was given to me by one of my friends in Barraba last Xmas and which is about his lifetime experience as a farmer in Australia with concerns about degradation of the landscape and about the information has obtained from many world class scientists.

His presentation was pretty much a condensation of the book and was very interesting. He was keen to get questions from the audience, particularly from people who didn't agree with him. I kept my mouth shut because most of the audience were farmers and I am an engineer.

One of the questions was about our need to take the willow trees out of the Manilla River. His reply was that willow trees are always good for the landscape.

After the presentation I spoke to him, introduced myself as an engineer, and told him that I appreciated what he had said but that I believe that applying his ideas in any particular situation required an assessment of the cost and benefits. He didn't chide me for my view and I was impressed that, though he believes absolutely in his theories, he does accept that we can think about the issues.

Posted: 13/8/10 7:59 AM

A Poem given to me by Steve, a Barraba Resident

We live in a little country town
And when the sun goes to bed of nights
The stars seem to tumble right down
To bolster our meagre street lights.

We don't spend trillions here
Searching for other inhabitable planets,
We balance hard work with skittels and beer
And contemplate that strange shoe fettish of Janet's.

Its drought so we watch our water use,
We watch the lawn curl up and die,
We watch Janet dolly her latest shoes
And we watch how much we question why.

We pay our rates and taxes,
Our mortgages and bills and all that,
We works then we relaxes
With the kids and the dog and the cat.

Lady is a skinny bitch,
She lives up the road a-way,
She got in and ate our chicks,
But they wouldn't lay so that's O.K.

We live in a little country town
Where its too small to complain---
Here you're known inside out and upside down
So you don't gossip if you've half a brain.

Once we up and went to the coast,
But that didn't last too long,
Janet turned our credit into toast
On a bunch of shoes she "got for a song."

Those people down the coast don't smile,
Wouldn't give you the time of day---
Now we reccon we'll stay home a while,
If we need a good laugh the barman is gay.

We live in a little country town
And we like it just that way,
Theres nothing but nature for miles around
And nothing forces us to stay.

Squirrel & Trixie 6/Aug/2010

Posted: 10/8/10 3:14 PM

The Rational Optimist by Matt Ridley is my present reading

I haven't been able to get far into the book but I was very happy to read in Chapter 1 that Matt believes that it is necessary to value stuff in man hours rater than dollars or pounds to ensure that there is no distortion of the values caused by inflation over the years or by currency variations.

I have been hoping that this procedure would be publicised by someone with Matt's reputation because I have the same thought in my mind.

I am looking forward to read the rest of the book because Matt is a very good writer and relies on well founded evidence to sustain his propositions.

Posted: 9/8/10 5:15 PM

Was Milton Friedman right?

Todays billy blog reinforces my view of modern economics. When I was at school in the 70s, Milton Friedman was the archangel of macroeconomics. The GFC seems to me to have proved his theories were quite wrong.

"The US economy is showing signs of slowing as the fiscal stimulus is withdrawn and the spending contractions of the state and local government increasingly undermine the injections from the federal sphere. The recent US National Accounts demonstrate that things are looking very gloomy there at present. In the last week some notable former and current policy makers have come out in favour of austerity though. Some of these notables contributed to the problem in the first place through their criminal neglect of the economy. Others remain in positions of power and help design the policy response. A common thread can be found in their positions though. A blind faith in the market which links them intellectually to the erroneous views espoused by Milton Friedman. His influence remains a dominant presence in the policy debate. That is nothing short of a tragedy."

Posted: 3/8/10 6:45 AM


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