July 27, 2011

Christian Rejection of Science

I was recently driving in an area that I don’t frequent often and was in search of a news broadcast.  As I flipped through various radio channels, one caught my attention.  It was from a Christian station that played what sounded like a public service announcement.  The gist of the message was this:

The complexity of life couldn’t possibly have been the result of an accident.  Think about it.  Doesn’t it make more sense that a divine being made everything around you, just as it is?

The point was clear: Evolution is a lie and the Bible tells us so. 

I immediately felt a mixture of sadness and anger.  My feelings were especially sharp as I had recently finished the book, Endless Forms Most Beautiful by geneticist Sean Carroll.  It’s a wonderful summary of recent discoveries in the science of evolutionary development (or Evo Devo, as some call it).  Evo devo looks at genetic processes that occur during embryonic development for clues to how evolution works.  It’s a fascinating new science, from which we’ve learned a considerable amount.  In fact, the book startled me with its sweeping understanding of how life comes about. 

To thoughtful and open-minded people it’s clear that evolutionists haven’t been deceived.  On the other hand, those who believe that an ancient text (written for a civilization with no grasp of basic science) must be read literally are sadly mistaken.  Even if we assume God wrote the Bible, we have to believe He simplified the truths of His existence for us to understand it.  As I’ve said before, there’s a reason Genesis quotes God as saying, “Let there be light,” instead of, “Let the universe be filled isotropically and homogeneously with a high-energy density.”  It’s the same reason we don’t describe light’s wave-particle duality and how each wavelength corresponds to our perception of a color when a child asks, “Why is the sky blue?” 

One of the interesting discoveries coming out of evolutionary development is that genomes are not, as many people assume, blueprints of the creatures they represent.  Rather, they’re more akin to recipes that direct the expression of various proteins during embryonic development.  A small portion of any genome—less than 2% in humans—are so-called toolkit genes that provide key instructions.  Another 3% act as switches that turn the toolkit genes off and on.   What’s remarkable is that the same toolkit genes appear in species after species—fruit flies as well as humans—with only minor variations that determine when and where they’re expressed.  Using these learnings as building blocks, one can draw an evolutionary roadmap based upon gradual changes in genetic makeup. 

I think it’s tragic that some people will read this and dismiss it immediately, all because of an interpretation of the Bible that misses the point of who we believe God to be.  If God is so great, how can we assume He speaks to us on His level?  Isn’t it more reasonable to assume that he relates to us as children and speaks to us in simple ways that might not fully express the details behind broad assertions?

For more information about evo devo, click here

July 26, 2011

Supply-Side Reprise

A friend recently disagreed with a posting of mine regarding supply-side economics.  The gist of his argument was that tax breaks to corporations encourage investment, which in turn creates jobs.  My reply was to say his summary explained the theory behind supply-side economics, but didn’t reflect its empirical results.  Since the Bush tax cuts were put into place, millions of workers have been laid-off and corporations have horded cash—trillions of dollars at last count—rather than invest it in new businesses or expansion.
Follow my logic that explains why this happens.
·   Typically, corporate employees are not significant shareholders of the institutions where they work.  (For example, in the late 90s, Bank of America made a big show of trying to get more of its stock in the hands of employees.  Today, however, its workers only hold about a tenth of 1% of the bank’s shares).
·   Corporations are beholden to shareholders.  Employees, on the other hand, represent labor costs to be managed.
·   Labor is managed in the following way:
o   Corporations hire employees only when it results in efficiency or revenue increases that are greater than the added labor costs.  When it comes to capital investment, corporations require not only a recouping of costs, but the achievement of a return to shareholders’ equity that exceeds an established hurdle rate.
o   Labor is often the target of a corporation’s search for efficiency, with jobs going to automation or offshore labor sources.
·   While it’s true that lowering corporate tax rates can change the projected returns of various investments, in practice, most corporations evaluate investment returns based upon an expected long-term tax rate.  As I mentioned earlier, the Bush tax cuts have done little to encourage corporations to expand or invest in new businesses.  Rather, businesses have horded the cash saved. 
·   The only thing that will get big businesses to expand or invest in new businesses—and thereby create new jobs—is revenue growth. 
·   The way revenue growth is achieved is through greater consumption, which is already 2/3s of our economy and much larger than the other components of GDP: government spending, investment and trade surpluses. 
·   The best way to induce consumption is to put more money into the hands of consumers, which could be accomplished through tax reductions to workers.  Tax breaks for automobile purchases and first-time homebuyers, for example, provided tremendous economic lift in 2010.
·   But that’s demand-side, not supply-side, economics. 
The point is that in any discussion about the nation’s budget, we have to get corporations to pay a fair share.  Some naysayers claim that U.S. corporate tax rates are too high.  That might be true if it weren’t for the fact that after all the loopholes are accounted for, the tax burden of U.S. corporations is one of the lowest in the developed world.  As I’ve said in previous posts, this institutionalized corruption should not be acceptable.  However, we’ve become accustomed to it—as have the politicians who find it profitable to grease corporate hands by exchanging tax and other benefits for campaign contributions. 

July 23, 2011

A Question to the House GOP

So this is what house republicans want to happen. They hope to vote for a resolution to prohibit an increase in the debt ceiling, then allow the president to raise it by fiat. The former is for cosmetic purposes when standing before voters, and the latter is because in their hearts they know we're screwed as a nation if we don't find an alternative to technical default. In short, they're willing to stand for the thing they believe will get them elected, and jeopardize our nation's pre-eminent position in the world.

To the house GOP I ask this: When the mass of Americans realize their retirement savings have halved again and they resort to hoarding food (just as corporations have been hoarding trillions of dollars that will be rendered worthless) who will vote for you then? How smug and self-righteous will you feel then?

July 21, 2011

Who's Afraid of Grover Nordquist?

I'm really beginning to freak out.  I thought by now that cooler heads would prevail and our elected officials would finally be working together to solve the problem of a possible technical default on our nation's debt. 

Then yesterday I was watching the news and saw an unbelievable scene.  It was a number of talking heads speculating together on what Grover Nordquist might think about possible options to the impasse.  Today we saw our answer.  In an early morning radio call he said a discontinuation of the Bush-era tax cuts--which had always been meant to be temporary anyway--wouldn't be considered a rise in tax rates.  This gave a lot of people the impression that a bi-partisan deal might be imminent.  A little while later, Nordquist was heard to say that allowing tax rates to return to their prior levels would not be acceptable. 

So it turns out the nation's no-tax Nazi--who wants to drown the government in a bathtub and is considered the most powerful man in the world who doesn't sleep in the White House--doesn't know what he wants or what his no-tax pledge means.  Now people who have signed his pledge are shaking in their boots and resorting to reading tea leaves to understand how Nordquist would have them vote. 

Here's my message to Nordquist.  If he doesn't want to pay taxes, why doesn't he just move to Somalia and change his citizenship?  Let's see how he survives in a place with no public security or infrastructure of any kind.  Let him try his pledge out over there first before exposing us to the nonsense.  I'm sure he'd learn a lesson or two about the need to maintain our nation's public assets.  (Not that all public assets are necessary--I'd be willing to see a significant reduction in weapons systems if it meant we could bring our educational standards to levels shared by other industrialized countries).  In the meanwhile, we would do well to be rid of the man and his form of blackmail.

July 17, 2011

The BS Behind Supply-side Economics

Are there people who still believe in the hype of supply-side economics?  If so, they must be living under a rock, because the evidence clearly suggests the theory to be a monumental failure.  Among the early promises of its architects are that economic rewards “trickle down” to middle income and low income workers when corporate interests are supported.  However, contrary to the hype, the economy doesn’t work like the sea in lifting all boats in a rising tide.  The reason it doesn’t should be obvious, but conservative law-makers are either blind to it, or too interested in lining their pockets with corporate money to care.

At first blush the basis for supply-side economics seems reasonable.  Its objective—to reduce the costs of doing business for corporations—is meant to improve corporate profitability and thereby create more jobs for workers.  Consequently, supply-siders seek to reduce income taxes to the rich and corporate interests as a component of the cost of capital. 

If anything, however, the relationship between tax rates and job creation is negatively correlated.  The greatest economic growth in recent history came after tax increases were imposed during the Reagan and Clinton administrations.  In contrast, job growth was anemic subsequent to the Bush-era tax cuts and continues to be unsatisfactory even though the cuts have been extended.  More problematic, however, is that the gulf between the rich and poor has only widened.  While corporate profits have been stellar and cash balances have increased geometrically, these results haven’t translated into a lowered unemployment rate.

The reason supply-side economics doesn’t work is a point you’ll never see printed in the Wall Street Journal.  When corporate tax rates fall, it’s not in the nature of CEOs to use the windfall to improve the situation of workers.  Quite simply, management sees labor as another cost to be reduced.  It is, however, in the nature of corporate managers to do whatever it takes to improve returns to shareholders.  And that, in a nutshell, is the problem with the theory: Decreased tax rates are used to enrich investors in the form of increased dividends and stock price appreciation, but the benefit doesn’t trickle down in a world where layoffs are seen as a good way to increase efficiency and further improve shareholder value.

Supply-side policies are great only if you’re a well-heeled corporation.  Otherwise, they force middle class tax payers to pay for an educational system, national security and infrastructure that corporations benefit from the most.  They create a situation in which GE can book $14 billion in profits and get a tax credit to boot.  More damaging is that corporations and their rich shareholders can parlay the savings into political contributions that insure their brand of politicians are elected.  No wonder there are so many corporate tax loopholes, which Robert Reich refers to as “institutionalized corruption.”

Supply-side economics is a bone-headed theory that doesn’t work—unless, of course, you’re rich.

July 16, 2011

Playing Chicken and the Debt Ceiling

Playing chicken requires the interaction of two idiots and it results in either: 1) the destruction of both parties, or 2) the bigger idiot winning.  As an observer of the reckless debate over the country's debt ceiling, I'm worried that the former will be the result.  If all it meant was the demise of a political party, it might be okay, but the trouble is that the destruction will also jeopardize the safety and dreams of spectators to the debacle.

What are the consequences of an extended default if the debt ceiling isn't lifted?  Here are a few:
  • The default will reduce the market value of Treasury securities.  Owners of bond funds will immediately recognize losses in their investment portfolios.
  • Foreign investors will become reluctant to invest in America and stop using the US dollar as a reserve currency. 
  • The value of the dollar will plummet, perhaps to the extent that it becomes worthless in foreign markets. 
  • The US will find it difficult, if not impossible, to refinance its maturing debt or to pay for its ongoing financial obligations. 
  • Liquidity will plummet, not only for the Treasury, but for corporations, banks and individuals.
  • Credit will be jeopardized.  Mortgages, credit cards and other borrowings will become virtually impossible to acquire.
  • The value of all financial and real estate assets will plummet.
  • The consequences to employment and economic activity will be massive.
  • The contagion would spread to the rest of the world.
If all of this were to happen, supplies of food and guns to protect them will be the only truly valuable assets.  It's irresponsible of our elected leaders to even contemplate such a scenario.  They shouldn't be holding the dreams of people hostage just to make political points.