Derivatives should not be allowed

Except in engineering. Haha

Some good pieces explaining what are CDO's.

Origins of the Financial Crisis

CDO Squared Senior Tranche

Goldman Sachs is getting sued by the SEC for fraud. That's kind of exciting.

Teacher Certification

Interesting NYT article on Alternative Education Certification. Organizations like Teach for America have been supplying more teachers these days, and there has been a lot of activity lately in reforming teaching schools and education.

Underlying Ethics that Motivate Environmental Sustainability

I'm always interested in how to convince people that we need to move to an environmentally sustainable way of life. Currently, the main arguments I hear is about how it is a moral imperitive, and that we need to preserve the earth for future generations. This vision for the world usually includes reaching economic equality for everyone and living healthily. However, I think there are some more fundamental ethics that can lead to the conclusion that we need to live within the ecological limits of the earth.

I have been trying to think about what kind of ethical values I have that made it easy for me to buy into environmentalism. The thing is that I did not need to see much data to be convinced that our way of life is unsustainable in the long term, and that we should do something about it.

For one, I value efficiency of resource use. I was brought up not to waste things so at this point seeing things be wasted like food causes a negative emotional response. This ethic is in opposition with the idea that once you have bought something, it doesn't matter what you do with it. If you can afford it, why not? You have paid your hard earned dollars for it.

The second thing is that I feel all processes should be cyclical. I remember reading about diapers when I was little and realizing that they don't decompose so they'll just sit around in landfills forever. These open loop processes bother me because I always think about what will happen eventually. I feel in my gut that everything should be at a steady state, and there should always be a balance. I'm not really sure why.

I'm still trying to think of a better explanation, but at any rate I think this ethic comes out of Chinese cultural traditions, which has been influenced by Daoism and Buddhism. Daoism is embodied by the yin-yang symbol, which says that nothing is pure and everything is made of a balance of two opposing forces. Buddhist philosophy talks about the Middle Way, and how everything should be done to moderation. It now makes sense to me that Buddhism was founded by a prince, who felt unsatisfied with a life of indulgence and opulence. Now my understanding of Buddhism is that it is about managing your mental state to feel positive and satisfied regardless of the level of your material wealth.

There are probably other ethics that are fundamental to the environmental case.

Developing content

I've been doing a lot of discussions on the Climate Collaboratorium.

Today I did a bunch of posts on the debate on behavioral economics. I'd encourage people to join the discussions.

I'm also interested in how the economic/political system affects our ethics and behaviors. It is widely accepted that the communist system in the USSR and in post-revolutionary China fostered inefficiencies because people did not have enough incentive to work hard. There is also anecdotal evidence that people take advantage of entitlement programs and benefits from being unionized.

On the other hand, it seems to me that capitalism also causes people to value only doing things that are economically rational. The belief in the invisible hand of the market has been used to rationalize selfishness and why it's best for everyone to be as selfish as possible. Within this context, there is no reason why anyone should curb their consumption or even care about their own grandchildren much less other people. Plus, the possession of things is used to express ourselves and gifts communicate to others how much we appreciate them, etc. This idea that things serve a large social function is discussed in the UK Sustainable Development Commission put out a report "Prosperity without Growth".

I think these are very controversial issues, but it would be great if we could try to study them more systematically.

Tiny Practice Rooms

This weekend I heard some music I liked, and so we went exploring, and found that there was this space with rows and rows of tiny practice rooms. There was a band who called themselves "The Roads," but it seemed like they were just starting out so they didn't have any venues lined up. Oh well. It was good.

Grow Mushrooms

NYT article on growing mushrooms! Sounds awesome.

Hallucinogens

NYT article on using hallucinogens to treat depression.

However, I don't know if there are clinical studies, but hallucinogens like LSD seem to trigger emotional instability if used too often.

Tea Party Backers

NYT article about T party demographics.

Tea Party supporters’ fierce animosity toward Washington, and the president in particular, is rooted in deep pessimism about the direction of the country and the conviction that the policies of the Obama administration are disproportionately directed at helping the poor rather than the middle class or the rich.

The overwhelming majority of supporters say Mr. Obama does not share the values most Americans live by and that he does not understand the problems of people like themselves. More than half say the policies of the administration favor the poor, and 25 percent think that the administration favors blacks over whites — compared with 11 percent of the general public.

“The only way they will stop the spending is to have a revolt on their hands,” Elwin Thrasher, a 66-year-old semiretired lawyer in Florida, said in an interview after the poll. “I’m sick and tired of them wasting money and doing what our founders never intended to be done with the federal government.”

It is irritating to me that these people talk about revolution as if it were such an easy thing to do. These people sit in their houses with TV and drive around in their SUV's taking so many things completely for granted. They're mostly old people so it's not like they would be able to physically fight much anyway. Plus, they all take a bunch of pills everyday for their heart conditions or diabetes, etc. The whole point of democracy was so that disagreements could be resolved without total social upheaval. Revolution is very traumatizing, and it would take decades to simply rebuild the infrastructure, not to mention restore order, the rule of law, and political stability. Americans idealize revolution because it was founded by revolting against England. I would say that was a relatively clear cut struggle. Americans did not want to be taxed without representation, and ultimately England was driven out of the colonies. Who is the modern day colonizer of America? Obama? The Democrats? Anyway, if Tea Partiers want to get violent, we can have a revolution, but there will be just as many liberals interested in a new order so it will more likely be a civil war. Perhaps one side will be driven away to Alaska.

Some defended being on Social Security while fighting big government by saying that since they had paid into the system, they deserved the benefits.

Others could not explain the contradiction.

“That’s a conundrum, isn’t it?” asked Jodine White, 62, of Rocklin, Calif. “I don’t know what to say. Maybe I don’t want smaller government. I guess I want smaller government and my Social Security.” She added, “I didn’t look at it from the perspective of losing things I need. I think I’ve changed my mind.”

Climate Collaboratorium

I have started volunteering for the Climate Collaboratorium, which is a project by the MIT Center for Collective Intelligence. It takes data from climate models and economic models and allows users to put together policies and debate about them. They are presenting the site this week at a conference, where they hope to get some more user activity, and I'm going to help moderate. I haven't gotten involved with the discussions yet, but I will soon.

Climate Policy and Economics Talk

John Sterman is giving a talk at MIT about climate change and economic implications.

BES International Policy and Economics: What is the Road from Copenhagen?

It's a MIT Club of Boston event.