Phillip Paulwell’s Magic Bullets

It seems that Minister Paulwell’s scheme for getting tablets out to schools is going well. All it took was 850 million dollars from the Universal Access Fund.

In other completely unrelated news, not only are teachers to be given a four year wage freeze, but teachers past retirement age are to be sent home, never mind that much of our schools a re overcrowded.

The use of technology to undermine the rights of skilled workers is an old one. This is what the historical Luddites fought against – not technology, but the way that technology was used to destroy their way of life. This is not to say that Minister Paulwell (or Minister Thwaites) sits around plotting ways to screw over teachers. But if you fire teachers, and buy tablets, you may just get the idea that tablets can replace teachers, or supplement teachers in some way. My thesis, however, is that technologies like tablets, as well as ill-thought out social policies implemented by Phillip Paulwell will have the effect of dis-empowering skilled workers, as well as other unintended consequences that are worse than the problem that it is intended to solve.

This is one of the main problems with technocrats (not that Paulwell can be thought of as a technocrat) – they believe that any social problem can be solved with the right technological bullet.

Take for example our energy situation. Jamaica’s electricity price is currently 40 US cents a kilowatt, compared to 10 US cents a kilowatt for an advanced nation, and 3 US cents for Trinidad and Tobago. So he puts out an offer for a 360 Megawatt plant. Never mind the fact that we lose 23 percent of our electricity through distribution losses that occur due to heat losses, outdated transformers and theft. But that sort of thing is basic maintenance, and that is not sexy. Not like LNG barges and all that.

While we have had many discussions of various Natural Gas Wunderwaffen, what we have not heard is anything resembling an energy policy, one with milestones, 10 year goals, strategic investments, maintenance, futures contracts, energy security, that sort of things. What we have is, basically this:

  1. Get 360 megawatt LNG plant
  2. ???????????
  3. Profit!!!!!

and with Tablets?

  1. Get tablets that will make dunce students smart with pretty Flash animations
  2. ??????????
  3. Profit!!!!!

It’s rather interesting that, out of the blue, comes Energy World International – with their own Natural Gas field. Anyone who has ever paid attention to energy gets the impression some sort of bandoollo is going on, that the Energy World International plan looks something like this:

  1. Proposition dumb-ass third world technocrat wannabee with the short con , bait him with natural gas field, and build him a nice cheap plant (razor, inkjet printer).
  2. Lock the fool in with a nice natural gas supply contract.
  3. Use the fact that natural gas prices are extremely volatile, as they inevitably go up, as they have been doing over the last 25 years – the long con (the blades, the inkjet cartridges).
  4. Profit

Anyone with basic knowledge of the historic world energy prices knows that natural gas prices are volatile. They’re too unpredictable to use as a national policy especially for a nation that is perpetually starved fo foreign exchange, like ours. Unfortunately, Mr. Paulwell cannot be described as one who is knowledgeable about anything regarding energy, or education. This is despite the failure of technological strategies  such as Nicholas Negroponte’s One Laptop Per Child (OLPC) initiative.

Yet, men like Paulwell continue to bang the technology drum. But technology without policy , or economic considerations is like a gun wielded by a deaf and blind man – he will just hurt himself and others, but almost always miss his target.That’s the thing with magic bullets, the guns and gunmen that use them usually have in common the fact that they both come with empty barrels that make a lot of noise.

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Dr. StrangeTax (or how I learnt to love the Laffer Curve)

Economics and Applied mathematics are not inherently difficult topics. In a lot of cases, they are merely an expression of some specific ideology in a symbolic form. One example of this, is the Laffer Curve.

Laffer_CurveThe point of the Laffer curve is to show the relationship between the amount of revenue a government collects at each point of a tax rate. A tax rate of zero percent obviously raises zero revenue, while a tax rate of 100 percent is what mathematical economists call “slavery”, and is usually avoided as a fiscal policy. The idea is to find the point on the curve  which revenue collection can be maximized.

Another example of a Laffer Curve

Obviously, this parabola is nothing more than a graphical illustration of the porridges that Goldilocks had to drink. Too hot, and no one has any money to pay taxes. Too cold, and government gets no revenue. We have to find the point where its just right.

Laughable Laffer

The problems with this should be fairly obvious at this point.

  • In a country with a progressive tax rate, you will need more than one Laffer curve. Sometimes, a lot depending on the demographic. This is a problem, because the Laffer curve was originally intended to help rich people.
  • There may be multiple peaks on the curve.
  • There may be other variables at play affecting tax collection. If they are quantifiable, you’re going to have to get out that Div, Grad and Curl. If they are unquantifiable, like say, a Kafkaesque bureaucracy that prevents people who want to pay from paying, well then, that’s another problem.

The first bullet point needs some more explaining. The Laffer Curve was formalized by one Arthur Laffer, one of the main proponents of Supply Side Economics. The thrust of his argument was that the tax rate that maximizes revenue was at a much lower level than previously believed: so low that current tax rates were above the level where revenue is maximized. So, what should be done was to lower the tax rate – for rich people.

Supply Side Economics defined

Previously, Supply Side Economics was called horse and sparrow economics. Why?

According to John Kenneth Galbraith, the theory dates back to the 1890s when it was called horse and sparrow theory — i.e., if you feed horses enough oats, it will pass through their digestive systems and their droppings will provide enough leftover oats to feed the sparrows.

It is now known as either Reaganomics, after its most popular promoter, or trickle-down economics,, based on the idea that  the rich will use the money saved from taxes to re-invest in the economy, instead of, you know, hiding it the Cayman Islands.

Suffice to say, the implementation has had some controversial results, especially under George W. Bush.

Bush cut taxes for the rich, eliminated the inheritance tax for wealthy people too stupid to consult with a financial planner, gave away bribes called tax incentive packages, sought and got an $800 billion bailout package (which he called $700 billion bailout), and paid for it all with a Chinese credit card.

During this same period, the dollar slipped against world markets, losing so much ground that some nations chose to no longer peg their currencies to the US dollar. Once at par with the euro, the US dollar lost a third of its value. When Bush junior entered office, the Canadian dollar was worth about 65¢. By January 2008, the Canadian dollar exceeded the value of the US dollar for the first time since 1976, although it has since receded to about 95¢, due in part to governmental intervention,and falling oil prices.

It’s also worth noting that N. Gregory Mankiw, who was at one point the chair of the president’s Council of Economic Advisers, actually lists supply-siders in his introductory economics textbook under a section entitled “Charlatans and Cranks.”

However, like all economic policies, it has its place, but a problem occurs when you shift the tax burden from the rich to the middle and poorer classes.

Peter Phillips, you bloodclaat dunce

Jamaica is a nation of higglers. Not in occupation, but in thought. Our idea of wealth creation is a simultaneous exchange of good for money – it is present centered. W do not appreciate that over time assets – and this includes people can , well, appreciate. So we ignore the stock market, but get caught up in monthly payout Ponzi schemes like Cash Plus. And this is what Peter Phillips has essentially created with his policies – a national Ponzi scheme. The government has already squeezed all the taxes they can from Jamaican people. See that second Laffer curve? Let me show you again:

Growth, not maximum revenue

We are waaaayyyy on the right hand side of he Laffer Curve – meaning tax evasion and black market trading, but the cool thing about the above curve is that it focuses on growth maximization, not revenue collection. You keep collecting more and more taxes, you will reach a point where you can’t get anymore taxes, just like how a Ponzi scheme reaches a point where it can’t get bring in any more money to pay its investors.What you need to do is stop taxing middle and lower class people, fix the bureaucracy and fix our infrastructure,  if you want to get your our damn money. In other words, Supply Side economics for everybody.

He even looks like a fucking retard
He even looks like a fucking retard

Phillips and company seem to believe that only way to maximize growth and tax revenue is through more and more taxation. But anyone with half a brain should be able to realize that doubling taxes will not double tax revenue. That is like having nine women pregnant for one month to get a baby faster. The Laffer curve is a parabola, not a straight line, and is merely a mathematical model of common sense. Perhaps if Dr. Phillips paid attention to the policies of previous administrations, he would realize that the Laffer Curve is no laughing matter.

It’s all informal.

There is much talk about the informal sector of the Jamaica economy. This ‘informal’ sector is usually spoken of in a derisive manner as it exists in a grey area that is free from taxes and government regulations. Thus, it seen as parasitic, disorganized, inefficient, and even dangerous by both privately employed and government technocrats. You know, the type that likes to say “stakeholders”, “ICT”, “paradigm shift”, and other such vacuous buzzwords.

Most of the solutions to the “problem” of the informal sector consists of having them register with government to become legitimate. The problem with this solution is that, if it made sense to register a business in Jamaica, there would be no informal sector. The sad fact is, only the most masochistic of our citizens actively choose to interact in anyway with Jamaican government, and when a citizen (inevitably) does deal with the government, he inevitable finds the processes unsafe, the procedures insane and his options non-consensual.

But what of the people and organizations that are legit? Look a little deeper and you realize something interesting – they are almost always extensions of government functions. The most recent industries created in Jamaica are mirror images of government functions that only exist because of the inefficiency, ineptitude and ineffectiveness of the government proper. Just consider

The results of letting the private sector play government? Dangerously overcrowded buses, an underperforming private school system, a security guard industry that treats its dogs better than its employees, among other failures.

The obstacles to legitimize a business in Jamaica can, for the most part, be blamed on the on the government’s inefficiency and bureaucracy.  The only place for one to register a business in Jamaica is a small office on Grenada Way, even though it would take almost nothing to create a website that on could register one’s business with. The very failure of the Jamaican government to carry out its tasks has not only lead to the creation of an informal private sector that consists of 50 percent of Jamaican businesses, but of another informal one that is itself dependent on government being unable to carry out said tasks. If ever the Jamaican government were to be run properly.  During the 1970s we found out the danger of letting government run the private sector. It would seem that in the New Tens, we are finding out the dangers of letting the private sector play government.

The Facebook I.P.O. and Lanier’s Paradox

Image

There is much schadenfreude to be had from the drop-off in the price of the Facebook’s Initial Public Stock offering. It is important,however, to realize that the belief that Facebook could be monetized comes from a set of beliefs that one author has described as “Digital Maoism.” That author is Jaron Lanier -computer scientist and virtual reality pioneer, and he has had quite a few criticisms about the direction the Internet has been moving towards.

The bulk of his techniques can be found in his book, “You Are Not a Gadget“, which I will be reviewing soon. But there is a very important point hat he makes about information aggregating platforms such as Facebook and Google. He cites a paradox; if these services were as good at retrieving information as they claimed they were, they would not be able to advertise! After all. the very first result would the best answer, making whatever advertisement being offered elsewhere on the page redundant.

http://channel9.msdn.com/Blogs/Charles/A-Conversation-with-Jaron-Lanier/player?w=512&h=288

The paradox is explained in more detail at 26:30

The implication is that any Internet service that offers information for free, yet expects to make money off of advertisement can expect its stock price to drop to much lower than when it started out.