Investment in infrastructure; SECURITY WARNING MESSAGE

View 764 Thursday, February 28, 2013

SEQUESTRATION FRIDAY IS COMING

Doom Doom Doom Doom Doom

It is a common axiom in political economics that investments that produce no revenue can lead to disaster. Examples are big stadiums, desert land developments, and the like. The history of Spanish economics is instructive. Under Franco, Spain had a long period of economic growth, including periods in which Spain led the world in economic growth rates. After Franco died the new government indulged in a frenzy of development, producing a bubble and economic collapse. Examples (1) (2). Another example is China, which has managed state capitalism extraordinarily well, but has also indulged in showcase projects: :

The authors cite the city of Loudi, in Hunan Province, which has used CDB’s loans to build a costly 30,000-seat "Olympic" stadium, adorned with the trademark rings, even though the city lacks a professional sports team. Infrastructure loans that produce no cash flows, such as Loudi’s, create the potential for a banking crisis in China. http://online.wsj.com/article/SB10001424127887324445904578286913921668472.html

State capitalism can be effective. Mussolini demonstrated that and garnered the admiration of a good part of the world including that of Franklin Delano Roosevelt, and did so while remaining a committed Socialist. Some of his projects were for show and glamour, others were genuine infrastructure investments. As von Mises points out, opulence can have economic value, an example being the various cultural institutions of Vienna which made Austria a far more important country than her actual wealth would warrant. Proponents of free enterprise argue that over time state capitalism doesn’t win against freedom, but history shows that it can do pretty well and last generations. The key is the intention of the investments, and the management of cash flow.

Turn now to education. Would anyone argue that spending on education is not an infrastructure investment? Its purpose is to increase economic efficiency, lower the cost of government, and such like. The return on that investment takes a while, but the ultimate intent is to increase the national cash flow.

Infrastructure investments that produce no economic return can be disastrous. You can make a good case for the proposition that the most important infrastructure investment made by any State of this Union is in the education system.

“If a foreign government had imposed this system of education on the United States, we would consider it an act of war,” said Nobel laureate Glenn T. Seaborg in 1983. The system has since received huge investments. It has not improved. The quality of education appears to be independent of the investments made in it, at least to a first approximation. Increases in spending on education don’t produce consistent improvements, and cuts in the system don’t seem to matter much either. Other factors govern.

Meanwhile:

The $85 billion in spending that will eventually be cut after the sequester kicks in amounts to around two cents on the dollar in the overall federal budget. That hasn’t kept Mr. Obama and his team from trying to scare the bejesus out of Americans about the spending reductions.

On Friday, Transportation Secretary Ray LaHood said he’d have to furlough 5,000 air-traffic controllers. On Saturday, the president warned in his weekly radio address that thousands of teachers "will be laid off," and "tens of thousands of parents will have to scramble to find child care."

On Sunday, the White House released a report for each state detailing how many unsafe bridges would be left unrepaired. On Monday, Interior Secretary Ken Salazar threatened to close all National Park campgrounds. Homeland Security Secretary Janet Napolitano said she’d have to sideline 5,000 border agents. Immigration and Customs Enforcement announced it would release from detention several hundred illegal immigrants.

This is all hogwash. After the sequester, this fiscal year’s federal budget ($3.553 trillion) will still be larger than last year’s ($3.538 trillion). Last year, the border was patrolled, emergency responders arrived when called, and airplanes left on time and landed safely.

http://online.wsj.com/article/SB10001424127887324662404578329862541820272.html

The largest single item in most state budgets is education. Instead of thrashing around with concerns about the dire effects of sequestration, perhaps we ought to turn some intention on education that produces a future revenue flow? But in California the governor proposes to take money from the successful schools and put it into the poor schools that need it so much. And there we are.

The plain consequence is (and it is a general maxim worthy of our attention), ‘That no testimony is sufficient to establish a miracle, unless the testimony be of such a kind, that its falsehood would be more miraculous, than the fact, which it endeavours to establish….’ When anyone tells me, that he saw a dead man restored to life, I immediately consider with myself, whether it be more probable, that this person should either deceive or be deceived, or that the fact, which he relates, should really have happened. I weigh the one miracle against the other; and according to the superiority, which I discover, I pronounce my decision, and always reject the greater miracle. If the falsehood of his testimony would be more miraculous, than the event which he relates; then, and not till then, can he pretend to command my belief or opinion.

David Hume, An Enquiry Concerning Human Understanding

I found this in another place in a discussion of the origin of Carl Sagan’s aphorism that extraordinary claims require extraordinary proof. I have also heard the idea attributed to LaPlace and Descartes. In ESCAPE FROM HELL we have Sylvia Plath comment to Carl Sagan “Descartes, surely?” when he makes his famous claim.

Education

My boss, when I returned to lab work after three years of clinical medicine in 1976, was German, Jewish and had got out of Munich to Britain in 1937. Having lived through hyper inflation, persecution and the rest, one of his aphorisms was "There is only one thing worth investing in and that is the education of your children". Advice that I took to heart without regret.

Robert Forrest

Well said. It refers to my short disquisition on education and the importance of learning to read before going into the school system (yesterday’s View).

 

"They were something we thought we mostly understood by now, the first discovery of the Space Age."

<http://www.space.com/20004-earth-radiation-belt-discovery.html>

Roland Dobbins

We continue to learn how much we do not know yet. Few theories on Earth’s interaction with space are certain.

 

Dr. Pournelle:

A warning to your readers that may have Hotmail accounts…..Reset your password now!

This is a widespread attack, and lots of Hotmail accounts appear to have been compromised. The result is that ‘you’ will send out a message to all of your contacts, the message will probably have malware attached, or a link to malware. Exploits to Hotmail accounts are widely available.

An article about this attack is here http://nakedsecurity.sophos.com/2012/04/27/microsoft-rushes-out-fix-after-hackers-change-passwords-to-hack-hotmail-accounts/ .

If your account has been hacked, then you should

1) Reset passwords on all of your accounts . Don’t use the same password everywhere.

2) Check your computer for malware by doing a full anti-virus scan. Make sure your antivirus is current. If you don’t have an antivirus, the free Microsoft Security Essentials is a good start.

3) Watch your financial accounts for suspicious activity. Change your PIN and passwords to all financial accounts

4) Ensure you have the latest Microsoft updates. Install them now.

5) Remove Java (not Javascript) from your computer. If you must use Java for a legitimate purpose, use Firefox, which will automatically disable Java and require you to manually enable for applications that need it.

6) Ensure all of your software is current. A really good tool is the free-for-personal-use Personal Software Inspector from Secunia (www.secunia.com )

7) Do this for any computer you access.

8) If your Hotmail account is compromised, send a notice to all of your contacts (use BCC, not CC or To; that hides your contact list from others). Suggest they follow the above steps on their computer.

9) Consider an on-line backup solution for your personal and critical files. The cost is affordable; I use Carbonite (www.carbonite.com) which automatically backs up my computer data.

Be careful out there!

Rick Hellewell, a computer security guy.

  This was an old message but one of my advisors who is fairly careful was hit with an attack last night. It’s going around again. 

 

 

Major Comet Impact On Mars Possible Next Year

Jerry,

Via Instapundit, this story on a recently discovered large comet that will be doing a close pass by Mars in October 2014. The comet’s diameter and course are still not precisely known – it could hit Mars, and if it does it’ll be a major impact, what would be an "extinction-level event" if it happened on Earth. Even if it does miss, it should be spectacular, at least as observed by the various Mars probes.

http://astronomyaggregator.com/solar-system/large-comet-to-buzz-mars-impact-possible/

Henry