A non-economist's take on the economy

I'm not an economist, nor do I pretend to be one. However, I do want to point out a few practices that I think have contributed to our current financial crisis. Hopefully, with the proper resolve, these problems can be rectified so that this kind of a mess can be avoided in the future.

1) Subprime mortgage lending - If a prospective buyer cannot demonstrate that he has the resources to pay for a home mortgage, don't sell him one. Let him rent a home while he stabilizes himself, and then do business with him. There's really no way around this. Selling him an adjustable rate mortgage (ARM), with seductively low interest rates upfront, followed by skyrocketing interest rates down the road is just a setup for disaster.

2) Healthcare costs - The Right wants to keep medical insurance private, while the Left wants to socialize it. Why don't we just let the federal government sell insurance policies to people right along with any other legitimate health insurance agency, but keep the medical system itself private? That way, there would be accountability among payers, insurers, and providers alike. The most common reason people go into credit card debt is having little or no healthcare coverage. Giving people a way to find affordable health insurance is one way to attack this problem.

3) Credit card debt - Americans aren't saving enough, and heavy credit card debt has become widespread. Whether it's because people are using their credit lines as a surrogate for proper health insurance, or just overspending, the interest rates on their balance can be oppressively high. Isn't it shocking that Congress still allows banks to continue gouging people like that? What we're seeing is greed on the part of the credit card companies, and collusion on the part of Congress. Banks think they'll make more money by charging people 20-30% interest on their debt, but really all their doing is weakening their consumer base. If banks charged only, say 2-5% interest, they would be able to retain a lot more people for a lot longer. As it stands now, they rip people off for as much as they can, then negotiate with credit counselors when their customers can no longer pay. If we did that with our agriculture, we'd all starve to death.

4) The failing auto industry - It's sad that the Big Three automakers (GM, Ford, and Chrysler, in that order) are now on the verge of bankrupty. It's sad because so many people in Michigan rely on these companies for employment. It's sad because their collapse could seriously affect our economy. And it's sad because this whole mess was quite avoidable. Over the past three decades, these companies could have been developing cars that use renewable energy, but instead they've just been making bigger gas guzzlers that people can't afford when fuel is expensive. They could have used their money to create quality, long-lasting cars and equitable work environments. Instead, they've allowed foreign automakers to make often superior cars (and yes, I do drive a Ford myself). While trying to provide for their employees, executives have created what amounts to a cumbersome, inefficient welfare system, even while giving themselves obscene bonuses and perks. And now these people want a $25B loan? Unless there are heavy strings attached for renewable energy and management reform, I think giving it to them would be a very bad idea.

5) War - I'm no pacifist, but I am against unjustified wars ... which just happens to be most of them. Unless a country is defending its borders against an imminent threat, there is no reason to go to war. Or, rather, there is a reason: to plunder the region of interest for its resources, and to make obscene amounts of money selling war machines. The war in Iraq is not only illegal, it has also gone on for too long, and the sooner America withdraws, the better. This country is in a recession, and has just elected a new president, so the economy is on everyone's lips. Everyone is trying to come up with ways to save money right now. Well, I have news for you. The biggest single expense America has is our military-industrial-congressional complex. If reduced responsibly, America will become more prosperous again.

6) Corporate welfare - The amount of money we waste in subsidies and tax credits is ridiculous. Our country is becoming less capitalist and more corporatist all the time. Instead of giving special priveleges to some companies and denying them of others, there should be a level regulatory playing field in which all companies can compete fairly. Then we wouldn't be squandering millions of dollars every year for things our economy neither needs nor wants.

7) Financial sector bailouts - I understand that if banks can't lend, then the economy would stagnate and we would dip into even deeper recession and possibly even a depression. But again, an ounce of prevention is worth a pound of cure, and we wouldn't be in this mess if banks weren't run by greedy, unscrupulous thieves. This crisis is due, in part, to money managers using other peoples' money for risky things, and then facing little or no consequence when things go wrong. Why did AIG throw a couple of big company bashes after being given $85B? Because there is no accountability. They can do whatever they want, and it's okay, because they're the oligarchs, and we're just plebeians. This should not be happening in the United States of America! We don't need massive government bailouts. America is now shelling out $700B of taxpayer money, and the Federal Reserve might lend out an additional $800B beyond that. This is not what we need. What we need is massive monetary reform.

Money represents different things to different people, but one major function of it is to represent resources. That is, a given unit of money represents crops harvested, or space used, or work done. Having a gold standard to back up cash is important, but that gold itself represents something even more basic: the energy we need to live. As such, money may be infinite but it is not limitless, because there's only so much energy to go around at any given time. If we forget that, then we risk making our money worthless.

We should reform the way in which banks hold and loan money. The current system is called the fractional reserve system, in which banks loan out much more than what they actually hold. This means that they are creating money out of nothing, rather than using the actual currency available, which represents the energy in the community. With a full reserve system, banks can only lend as much as they hold, which means there will be no "runs" on the bank during tough economic times, thereby preventing loss of confidence in the market, and the economic collapse that can ensue.

We should also get rid of our central bank, which is the Federal Reserve. The Federal Reserve's name is misleading, because it is actually a private bank that lends money to the US government at interest. Unlike the Treasury, which is authorized to mint new money, the Fed simply loans us money, which we then have to pay back. Each time the Fed "makes" more money, our national debt increases. Unless we abolish the central bank, we will never pull ourselves out of our financial mess.

So, as you can see, our current financial crisis has been a long time in the making, but without profound reform of our system, all the bailout money in the world is only going to prolong the inevitable, which is economic collapse. The bottom line is, I think, greed. Our country is being ruined by greedy oligarchs who want to take over everything and give us little in return. I think most people don't want to be coddled by a paternalistic government, nor do they want to be saddled with the burden of supporting one. Rather, I think Americans just want to be able to conduct their affairs freely and fairly. Unless we seriously reevaluate how our country does business, these abuses are only going to continue.

The significance of consciousness

Over the years, I have encountered a lot of different approaches to understanding the nature of life. Many people have studied the inanimate world and living things (including us) to figure out what makes them tick, and others have pondered what our existence means in the grand scheme of things. Thus, we see that there are basically two kinds "why" questions to ask when exploring life; one is "how," and the other is "what for." Science and engineering allow us to find out how things work, while philosophy and religion address what life is for, or what our purpose is. In short, science attempts to explain how life works, while philosophy attempts to discern the meaning of life. Many people think the two world views compete with one another, and that one must either be a scientist or a believer, but not both. I disagree. Because science is concerned with physical mechanisms, and religion with metaphysical causation, I think the two complement each other quite nicely.

There are, however, a few areas of overlap, and that's when conflict arises. If people interpret the Bible story to mean that the universe is only about 6,000 years old, they are in for a painful shock. Scientists have shown that the universe is not only some 20 billion years old, but also that the concept of "years" is relative. The question of the universe's age lies in the realm of mechanisms, so it's no wonder that science trumps religion here.

But what happens when science delves into the realm of ultimate causation? Many (but not all) scientists are agnostic or atheist, and have no trouble with the idea that the universe is completely physical, and that any experience of the metaphysical must be illusory. Neuroscientists are making great strides in understanding how the brain, spinal cord, and peripheral nervous system work, which helps them treat these organs and tissues when they are damaged. However, has it also given them a false sense of confidence when it comes to understanding the human (and animal) mind as well?

It's true that the physical condition of our brains affect our thoughts, feelings, and attitudes. People with organic neurochemical imbalances may suffer from mood disorders or have problems with concentration, and people with gross (i.e. - large, not "disgusting") anatomical aberrations may exhibit behavior quite different from others with more normal brain structure. But from this knowledge, is it safe to leap to the assumption that we will some day completely understand what makes us human (or dog, or cat, or elephant), simply from our biology? I don't think so.

One thing that biology has failed to explain - and I submit will always fail to explain - is consciousness. Why do people, and apparently other intelligent animals as well, have consciousness? Why do we have a subjective experience of life? Why do we think and feel the way we do, instead of just walking around like mindless automatons all day? We are not just organic machines or motile lumps of goo; we are individuals with personalities, goals, and intentions. Why?

Biological theory alone cannot explain this. It's true that we are made of the same stuff as the rest of the universe ("Ashes to ashes, dust to dust"). The physical body does obey certain physicochemical laws, and natural selection has shaped living beings to survive and procreate. But none of these facts explain why we actually experience the world around us the way we do. As a mechanistic theory, science can elucidate certain natural laws that the universe must obey, and it can explain why the physical world - including its organisms - behaves the way it does. But it simply cannot explain why living things actually perceive the world around them.

From a purely evolutionary standpoint, the meaning of life is to procreate. That's why we're here, but this is more of a "how come" explanation than a "what for." Ever since Earth's primordial soup of some 4 billion years ago, organic molecules have been replicating themselves, and we are the products of that long, long chain of events. As such, our behavior is an epiphenomenon of natural selection, which is dependent upon chemistry, which is in turn dependent upon physics. That's how the world works, and that's fine.

But none of this explains how it is that we can perceive anything. No amount of neurotransmitter release, neuronal organization, or hormone absorption can explain why we actually feel the emotions of fear, hatred, excitement, or love. They can't explain how it is that we can think about ourselves, those we care about, and the world around us. It seems, therefore, that we are forced to invoke a metaphysical explanation. Whatever life is on a physical level, there must be more to it. In short, the fact that we have consciousness proves that we have souls, and the fact that we have souls proves that life is very significant indeed. Say what you will about the existence or nonexistence of a divine creator; I can prove neither one. The fact that we have souls proves that life is not just some random collection of molecules. Rather, life is precious and sacred. That is the significance of consciousness.

Happy Thanksgiving,
Gaddy Bergmann

Para-scientific research

A colleague of mine has started a blog called the Para-Science Research Organization. The aim of this organization is to study the paranormal phenomena of ghost haunting as objectively as possible. Check it out at:
http://psro.blogspot.com/