"The Sound of Liberation: what music tells us about freedom"

This past January, the Veritas Forum at the University of Michigan and the Center for Faith and Scholarship co-sponsored the British Professor of Theology and classical musician Jeremy Begbie to give a free lecture in Rackham Auditorium on the University of Michigan's Ann Arbor campus. The subject was what music and Christian theology can, when considered together, teach us about freedom.

The basic thesis that Begbie arrived at is this: God created us to abide by certain moral laws so that through their structure we might freely flourish, much as individual notes harmonize and build upon one another when combined within a key signature. Allowing God into one's life is no more a threat to man's freedom and thriving than adding a sense of rhythm is to the possibilities of a song. As for political philosophy, Begbie is in agreement with limited-government advocates in his belief that man is at his best when laws exist only to outlaw destructive action, just as music is at its best when dissonant notes are barred from the key signature, allowing melody to flow freely.

Although Begbie's conclusions seem to fall in line with Libertarian thought, he actually called this philosophy a "sham" at one point in the lecture. He argued that Libertarians are so fixated on individual liberty that they ignore the possibility that we can help one another. As he put it, "notes don't just allow each other... [they] help each other". Begbie lamented that these thinkers do not recognize that through liberty we are "freed by the other and for the other" or, as he put it at another point, "freed from being unable to hug one another".

My own comment on Begbie's appraisal of Libertarianism is that individual liberty in a free-market system is exactly what allows for moral action. Christian free market thinkers advocate charity and community service with the mindset that forced charity, through tax-funded government programs, is not true charity. It is voluntary giving that holds moral value. I call myself Libertarian and I love the way Begbie described freedom as a social principle. It is important to recognize that by becoming more free, we need not become more selfish and individualistic. I would argue that in his lecture, Begbie confused Libertariansm with the anti-altruistic philosophy of Objectivism.

Toward the end of his lecture, Begbie emphasized that freedom and limits go together in terms of both human action and musical performance. Freedom for all can only survive within the framework of moral law. And, as Begbie demonstrated for the audience on a Steinway grand, the most beautiful and creative improvisations arise from uninhibited variations on a given musical theme.

JB Video

Self-Reliance: Quotes concerning the philosophy of Emerson and (maybe) Oprah

One of my new favorite websites is InCharacter.org, the site of a magazine by the same name plus the subtitle, "a journal of everyday virtues". I discerned from the Past Issues page that it got started in Fall 2004, and by briefly scanning the dates of other issues, one might believe that it comes out three times a year, winter, spring, and fall. But, no. It appears that some falls winters and springs don't matter enough to merit their own issue, so it comes out sporadically every several months and is dated simply by whatever season it happens to be published in.

The content of this magazine is amazing. Each issue has a theme, much like O, the Oprah Magazine, except that all the themes are virtues. Here's a complete list: Thrift, Purpose, Creativity, Loyalty, Modesty, Generosity, Justice, Self-Reliance, Honesty, Compassion, Forgiveness, Courage, Grit, and then the most current issue (Fall 2009) has the theme of Wisdom. The articles are well-written, extremely interesting, and the site is designed beautifully.

On to the Self-Reliance Quotes!

"Degrees of ability vary, but the basic principle remains the same: the degree of a man’s independence, initiative and personal love for his work determines his talent as a worker and his worth as a man. Independence is the only gauge of human virtue and value. What a man is and makes of himself; not what he has or hasn’t done for others. There is no substitute for personal dignity. There is no standard of personal dignity except independence."

—Ayn Rand, The Fountainhead

"People, people who need people are the luckiest people in the world."

—Barbra Streisand, “People” (written by Bob Merrill)

"It takes a time like this for you to find out how sore your heart has been, and moreover, all the while you thought you were going around idle terribly hard work was taking place. Hard, hard work, excavation and digging, mining, moling through tunnels, heaving, pushing, moving rock, working, working, working, working, working, panting, hauling, hoisting. And none of this work is seen from the outside. It’s internally done. It happens because you are powerless and unable to get anywhere, to obtain justice or have requital, and therefore in yourself you labor, you wage and combat, settle scores, remember insults, fight, reply, deny, blab, denounce, triumph, outwit, overcome, vindicate, cry, persist, absolve, die and rise again. All by yourself! Where is everybody? Inside your breast and skin, the entire cast."

—Saul Bellow, The Adventures of Augie March

"The proverb warns that “you should not bite the hand that feeds you.” But maybe you should, if it prevents you from feeding yourself."

—Thomas Szasz

"There is a time in every man’s education when he arrives at the conviction that envy is ignorance; that imitation is suicide; that he must take himself for better, for worse, as his portion; that though the wide universe is full of good, no kernel of nourishing corn can come to him but through his toil bestowed on that plot of ground which is given to him to till. The power which resides in him is new in nature, and none but he knows what that is which he can do, nor does he know until he has tried....

Live no longer to the expectation of these deceived and deceiving people with whom we converse. Say to them, O father, O mother, O wife, O brother, O friend, I have lived with you after appearances hitherto. Henceforward I am the truth’s. Be it known unto you that henceforward I obey no law less than the eternal law. I will have no covenants but proximities. I shall endeavour to nourish my parents, to support my family, to be the chaste husband of one wife — but these relations I must fill after a new and unprecedented way. I appeal from your customs. I must be myself. I cannot break myself any longer for you, or you. If you can love me for what I am, we shall be the happier. If you cannot, I will still seek to deserve that you should. I will not hide my tastes or aversions. I will so trust that what is deep is holy, that I will do strongly before the sun and moon whatever only rejoices me, and the heart appoints. If you are noble, I will love you; if you are not, I will not hurt you and myself by hypocritical attentions. If you are true, but not in the same truth with me, cleave to your companions; I will seek my own. I do this not selfishly, but humbly and truly. It is alike your interest, and mine, and all men’s, however long we have dwelt in lies, to live in truth. Does this sound harsh to-day? You will soon love what is dictated by your nature as well as mine, and, if we follow the truth, it will bring us out safe at last....

Insist on yourself; never imitate. Your own gift you can present every moment with the cumulative force of a whole life’s cultivation; but of the adopted talent of another, you have only an extemporaneous, half possession. That which each can do best, none but his Maker can teach him. No man yet knows what it is, nor can, till that person has exhibited it. Where is the master who could have taught Shakespeare? Where is the master who could have instructed Franklin, or Washington, or Bacon, or Newton? Every great man is a unique. The Scipionism of Scipio is precisely that part he could not borrow. Shakespeare will never be made by the study of Shakespeare. Do that which is assigned you, and you cannot hope too much or dare too much. There is at this moment for you an utterance brave and grand as that of the colossal chisel of Phidias, or trowel of the Egyptians, or the pen of Moses, or Dante, but different from all these."

—Ralph Waldo Emerson, “Self-Reliance”

"The fact is that liberty, in any true sense, is a concept that lies quite beyond the reach of the inferior man’s mind. And no wonder, for genuine liberty demands of its votaries a quality he lacks completely, and that is courage. The man who loves it must be willing to fight for it; blood, said Jefferson, is its natural manure. Liberty means self-reliance, it means resolution, it means the capacity for doing without ... the average man doesn’t want to be free. He wants to be safe."

—H.L. Mencken

"If there is no wind, row. "

—Latin proverb

"There is an inverse relationship between reliance on the state and self-reliance."

— William F. Buckley Jr.

"I learned this, at least, by my experiment; that if one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours."

—Henry David Thoreau

"The shoes on my feet
I’ve bought it
The clothes I’m wearing
I’ve bought it
The rock I’m rockin’
I’ve bought it
’Cause I depend on me"

—Destiny’s Child, “Independent Women”

"What is the best thing for a stream? It is to keep moving. If it stops, it stagnates. So the best thing for a man is that which keeps the currents going — the physical, the moral, and the intellectual currents. Hence the secret of happiness is — something to do; some congenial work. Take away the occupation of all men, and what a wretched world it would be! Few persons realize how much of their happiness is dependent upon their work, upon the fact that they are kept busy and not left to feed upon themselves. Happiness comes most to persons who seek her least, and think least about it. It is not an object to be sought; it is a state to be induced. It must follow and not lead. It must overtake you, and not you overtake it. How important is health to happiness, yet the best promoter of health is something to do. Blessed is the man who has some congenial work, some occupation in which he can put his heart, and which affords a complete outlet to all the forces there are in him."

—John Burroughs

"We either make ourselves miserable, or we make ourselves strong. The amount of work is the same."

—Carlos Castañeda

"The Buck Stops... in China." : Investigating China's confusing monetary policy

What is up with China's currency and monetary policy, and what's the deal with their stockpile of American assets?

Here's an explanation of why I have recently become so determined to understand this. On Tuesday morning at the Circ. Desk, Sandy came up to me, cited how I intend to major in economics, and asked me some questions about China's possession of American assets - why they have them, what they might do with them, what the effect of the current recession has been on their value, etc:

Sandy: "... so I'm only asking this because I figure you're interested in this stuff. But I read this article in The Economist, "The Danger of the Bounce", .... do you know why China ...?"

Martha: "Yeah, um... hmm. I don't know much about that. I guess they wouldn't want to convert all their assets to their own currency..."

Sandy: "Yeah, because they don't want it to depreciate... inflation..."

Martha:"But I do remember learning about how China wanted to keep its currency worth little compared to the dollar so that their goods would be cheap for American buyers... So, yeah, I don't really know about that..."

Meanwhile, Julie, a senior economics major was sitting next to me.

Julie: "...it wouldn't really matter. They could always exchange the assets back to their own currency..." Later, in response to my vague memory of China wanting its currency worth little: "I don't understand why they would do that... it would hurt their people to make their money worth less than would it should be..."

So, after that conversation revealed my ignorance on the issue, I decided that I would figure out what the heck China was up to even if it meant applying structured procrastination at 1:02 AM.

Here is a summary of my path to a limited understanding:

After Wikipedia strangely failed in giving me an elementary understanding of the situation, I searched Google, and found this discussion titled "Can you explain the dispute over Chinese currency valuation?" In it, one response cited a paragraph from a May 2007 Fortune Magazine article, "China's $1.2 Trillion Cash Hoard" (a great title):

Beijing's burgeoning foreign-cash pile is a consequence of its effort to boost exports by fixing the value of its currency, the yuan, to the U.S. dollar. To keep the yuan from appreciating too quickly, the central bank buys up dollars brought to China by foreign investors and Chinese exporters. Then the bank issues bonds to mop up the yuan it has paid for those dollars, thus warding off inflation.

The guy who posted that followed it with refreshing honesty: "Hopefully Fortune isn't just making it up because I sure wouldn't know the difference." Haha, I feel you, Stuart S.

So the paragraph confirms my previous understanding that China tries to keep its currency somehow 'undervalued' so that its goods are cheaper for other countries, especially the US, to import. Chinese leaders want to keep their exporters ultra-competitive in the world market, because: 1. It grows the infrastructure of China's economy, and there is a lot of room for it to grow; 2. China has a huge population willing to work for long hours in factories. The export industry ensures their easy employment; and 3. They know that we Americans have a lot of wealth that we are willing to expend for cheap goods.

Now the question is: how does pegging the yuan to the dollar magically make their goods cheaper to us? If there are 6 yuan to the dollar, and a camera costs $100 in the US, wouldn't the same camera cost 600 yuan in China, and therefore cost the same $100 for us to purchase there (after we exchange our $100 to 600 yuan)?

As it turns out, the answer to that is 'No.' And this is where Wikipedia did help me out, by referencing Purchasing Power Parity in the article on renminbi. Wikipedia defines PPP as a tool for comparing between countries "the amount of a certain basket of basic goods that can be bought in the given country with the money it produces" (The Economist got witty with PPP in 1998, comparing the relative prices of Big Macs in different countries: "Big MacCurrencies").

Good old Wikipedia even uses the Chinese economy as an example. Apparently, in 2003, the basic good that cost $1 in the US cost 1.8 yuan in China, so the PPP of China to the US was 1.8. However, at the same time, due largely to China's pegging strategy, $1 was trading in the money market for 7.6 yuan. So, the yuan being worth less on the world market didn't mean that it was worth that much less in its own markets, which explains China's incentive to peg their currency at 7-8 yuan to the dollar, and answers Julie's concern over why Chinese leaders would hurt their own people by devaluing their currency.

Because of the way international commerce works PPP doesn't automatically adjust itself to exchange rate (on this note, Wikipedia mentions the "law of one price", its rejection by econometric analysis, and something called the "Balassa-Samuelson effect theory"). Although the US is getting an amazing deal when it purchases goods from China at 'artificially low' rates, it doesn't necessarily mean that the Chinese are getting a bad deal. As the paragraph from Fortune states, the Chinese "bank buys up [the] dollars brought to China by foreign investors and exporters", thus returning payment and wages to Chinese workers in yuan, which they will sensibly use to buy in their domestic market, assisting the Chinese economy even further.

With the export market and domestic demand booming, the only problem Chinese leaders have left to worry about is inflation, which, again according to Fortune, is a problem monetary authorities solve by selling bonds to "mop up the yuan".

Now what on earth is happening with China's stockpile of American assets, or as the 2007 Fortune article put it, with their "trillion dollar cash hoard"? Well according to another brilliant article I just found from the Jan/Feb 2008 issue of The Atlantic, "The $1.4 Trillion Question", written by James Fallows, China's cash hoard, represents, in effect, the savings of the Chinese taken by their government and invested in the United States:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China...

Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.

How exactly has Chinese government "held down the living standards for their own people"? Fallows explains that too. When Chinese producers trade goods for dollars, they bring those dollars to a Chinese bank, which, under China's "surrender requirements", surrenders the valuable dollars to China's central bank, which then cranks out renminbi at the 'official exchange rate'. In other words, China's government takes the hard-earned dollars that are guaranteed value in the international market, and gives back to its people a currency whose value they have complete and utter control over. The result, as Fallows states, is "to keep the buying power earned through China’s exports out of the hands of Chinese consumers as a whole".

China has traditionally invested most of its dollar hoard in US Treasury bills, which are known for their "boring safety", earning a guaranteed but very low rate of interest which has barely kept up with the devaluation of the dollar against the renminbi in recent years. That's why, with the value of the dollar continuing to drop, China fears that its hoard is losing too much value and America fears that its biggest investor may drop the ball.

These days, although the Chinese are certainly looking for more profitable areas to invest their dollars, even researching how major American university manage their endowments, they have every incentive to hold onto the ball as tightly as possible while they move around the court. If they made any move that signaled a loss of faith in the value of the dollar, the world would notice: "Their years of national savings are held in the same dollars that would be ruined; in a panic, they’d get only a small share out before the value fell. Besides, their factories depend on customers with dollars to spend." This is a great example of how market incentives naturally encourage actions that benefit everyone. China truly is invested in American interests, so we need not worry all that much.

Intellectual Property Laws

Lawrence Lessig's Remix for the Hybrid Economy

Reflecting for a moment over whether or not I may end up breaking copyright laws by posting or scanning different articles or sections from books into here, I remembered an interview I heard on NPR once. There was a guy being interviewed who believed that intellectual property laws are generally silly and inhibit education and the spread of ideas. This sort of connects to the below discussion about the economics of ideas and "crowding in" versus "crowding out". The idea is that in the long run, the free sharing/stealing of ideas will lead to greater innovation/invention than the short term appeal of being able to charge people to share your idea with others.

I suppose it all depends on what one values. If the originator of an idea values its promulgation then he will make his "property" free to share. If he instead values his own college education, he will want to use his idea as a good to be sold in exchange for money which he can use for a purpose altogether unrelated to his idea.

Anyway, turns out the guy I remember being interviewed was Lawrence Lessig, the founder of the website Creative Commons, which I just learned about last semester through my class in Library Research.

Here is a really good excerpt from the interview, in which Lessig discusses how decisions on copyright law are made from a corrupt standpoint, without reasonable economic consideration:

[Prof. LESSIG:] ...I got into this battle when the issue was a statute passed 10 years ago called the Sonny Bono Copyright Term Extension Act, which extended the term for existing copyrights by 20 years. This was the 11th time Congress extended the term of existing copyrights in the last 40 years. And I looked at that and I said, wait a minute. The copyright clause in our Constitution gives Congress the power to create copyrights for a quote "limited time." And if you can extend the time every time it expires, that makes a joke of the concept of a limited time, and more importantly, it makes no sense from the perspective of copyright, which is to create an incentive for people to make something new.

Now what we know about incentives is that they're prospective. No matter what we do, George Gershwin will not produce anything more. So it can't possibly make sense to extend the term of copyright for George Gershwin or for Robert Frost or for the Walt Disney Corporation. It might make sense to make them longer going forward, although I don't think that makes sense either, but it certainly can't make sense to make them go longer backwards. Now...

GROSS: Wait. Can I stop here for a second? But their families, their estates will lose royalty money once the copyright ends.

Prof. LESSIG: Oh, of course. I'm not saying that it doesn't make economic sense to particular people to have a longer monopoly granted by the government, of course. But the question is whether the copyright is creating an incentive to produce something new. That's what copyright is about. It's about a monopoly granted by the government in exchange for the incentive to create something. So once it's already...

GROSS: I thought it was just about giving money to the people who made the work. I never saw it the way you were describing. I didn't know that.

Prof. LESSIG: Yeah. The framing idea behind copyright, and it was strongly resisted by, for example, Jefferson, who was very skeptical of the idea of these monopolies being granted by the government. But when Jefferson and Madison had a long exchange in letters about this, Jefferson accepted Madison's characterization, and Madison's characterization was we need to grant these monopolies to create incentives for people to produce these inventions. That was his real focus but also the same justification applies to copyright.

So we create the incentive, and once we create the incentive, people produce work, and once they produce work, they ought to be compensated for it. But once the work is created, it can't make any sense to extend the term if what you're trying to do is create an incentive as opposed to just pay off rich contributors who have made lots of very prominent contributions to your campaign, and that's the point. What was clear in this battle was that it wasn't that there was good reason on both sides. Indeed, when we took this case to the Supreme Court, there was a brief filed by a bunch of economists, including five Nobel Prize-winning economists, including Milton Friedman, Ronald Coase, James Buchanan, a bunch of conservative economists. And Milton Friedman said he wouldn't sign the brief unless the word "no-brainer" was in the brief somewhere, so clear was it to him that there could be no public benefit from extending the term of an existing copyright that he wanted that point made as plainly as possible to the court.

Well, then, why is Congress doing it? Congress is doing it because of the enormous political influence that money in this system has. And what I recognized a little bit more slowly than it should have taken, but what I recognized about a year ago was that obviously, this was not the only area of public policy where money was having that distorting influence. It hit me when I was, you know, paying attention to Al Gore's film and Al Gore's speeches about global warming, and it struck that if it's not just some esoteric area of public policy like copyright where the affect of money was distorting the outcome, but the most important public policy question we're facing, questions of global warming where money was distorting the public policy response to this problem, then it was time to focus on what is the underlying first problem here, which is the problem of money and its influence on how politics gets done.

And so that's the focus that I shifted to but certainly it was recognizing that in the context of copyright that got me onto this problem.

"Give Me Your Scientists"

http://casi.ssc.upenn.edu/system/files/Give%2Bme%2Byour%2Bscientists_Economist_5March2009.pdf

Here is a link to an article from a March 2009 article from the Economist that is featured in my Microeconomics textbook under the heading: "Do Immigrants Displace or Complement Domestic Workers?"

The main point of the article is that the answer to that question is the latter. Innovative immigrants should be welcomed whole-heartedly into American society and institutions. They help us. As the author of the article wisely states, "Economists think of knowledge, unlike physical goods, as 'non-rival':use by one person does not necessarily preclude use by others". Instead of "crowding out" innovative Americans, bright immigrants "crowd in" native innovation because "ideas feed off each other".

This article hearkens back to the very first section of Chapter 1 in the textbook, where the H-1B visa is also discussed. ("US law restricts the number of foreign 'specialty workers' who may enter the United States under the H-1B visa program to just 65,000 per year".) Economists know that this law is a bad idea. So does Bill Gates. The textbook cites him complaining that the H-1B visa results in a "critical shortage of scientific talent" for American companies. Gates also noted when he testified before Congress in 2008 that our universities draw the brightest students from around the world, but then they are "not allowed to stay and work in the country... we're turning them away".

Sources in addition to the linked article include:
-My Econ 101 testbook, Microeconomics: Third Edition written by R. Glenn Hubbard and Anthony Patrick O'Brien.
-"Turning Away Talent," Wall Street Journal, March 10, 2008
-"Anger Grows in India over US Visa Rules", BusinessWeek, February 24, 2009
-"Gates Repeats Request for More H-1B Visas," InfoWorld, March 12, 2008

See for statistics and graphs concerning foreign-born scientists: National Science Foundation, Division of Science Resources Statistics, Science and Engineering Indicators: 2008, NSF 08-01 (Arlington, VA, February 2009).