Thursday, September 12, 2013

Life is a moving target...

From the list of "policies that aren't working like we thought they would", this interesting take on why monetary policy (interest rates) don't deliver the bang for the buck they used to.
What’s the theory? To start with, monetary policy works by changing the cost of borrowed money. When growth is weak, a central bank cuts interest rates, which in turn makes spending, consumption, and investment more attractive. You’re more likely to buy a house or a car if the interest rate is 3 percent than if it’s 5 percent, for example. But crucially, the use of borrowed money is a crucial way that these lower rates translate into higher economic growth.But borrowing money is disproportionately an activity of the young. Economists call it “life cycle hypothesis of saving” — people use credit to smooth out what they can consume over the course of their lives. When just embarking on a career, a young person might take out major loans for education and for buying a house and car. As they reach middle age, they will tend to have paid down some of that debt while also building savings. By the time they hit retirement age, they should be net creditors, with significantly more savings than they still owe in debt.
That would imply that in an older society fewer people are actively using credit products. Which should in turn imply that a central bank turning the dials of interest rates will be less powerful at shaping the speed of the overall economy. [More]
I find this idea persuasive. In fact, older Americans are beginning to despair at low interest rates, since they are on the receiving end of money rental. Meanwhile record low rates still can't seem to put m all the excess money to work.

Case #2: Hunger. Here in agriculture our answer to growing food insecurity has been to pay farmers to grow more. But there are catches to this obvious solution, as well. Poverty and waste.
In a 2012 paperRebecca Bratspies, of the CUNY School of Law, makes the case that increased food production is not the way to resolve food insecurity. Rather, the problem comes from food distribution. For the past decade, she says, food production has increased faster than population growth. Yet, in the past 35 years, the number of people experiencing food insecurity has nearly doubled: 500 million experienced hunger in 1975; by 2010, it was 925 million. Food production doesn’t alleviate poverty, Bratspies argues; it’s a “social commitment to an equitable distribution of food” that will actually help those suffering.
In the U.S., nearly 49 million people live in food-insecure households. However, theUSDA says that our food waste is equal to 30 or 40 percent of the national food supply. That’s 36 million tons of food uneaten, food that the National Resource Defense Council says “eats up 10 percent of the total U.S. energy budget, uses 50 percent of U.S. land, and swallows up 80 percent of all freshwater consumed in the United States.” Reducing food losses by 15 percent, the NRDC continues, would be enough to food to feed at least 25 million people experiencing food insecurity. [More][My emphasis]
Of course we have an answer for the problem of poor people not having enough money to buy the food we grow: government assistance. No - wait, I forgot. We're going to shutdown government in order to CUT food aid (SNAP), and send more of the farm bill $$ to well, me. Yeah, that makes sense.

Case #3: Breakfast and obesity.  We all know the right answer - breakfast is the most important meal of the day. But are we looking at cause and effect or simply correlation?
The mere fact of this association doesn’t tell us very much about what breakfast really does, of course, and it’s possible that the case for eggs and toast has been overblown. A study published last week in the American Journal of Clinical Nutrition starts with this simple fact—that in spite of all these association studies, no one knows exactly what skipping breakfast might be doing to our bodies. The study goes on to make a disturbing claim: Scholars in this field of inquiry—breakfast science—have been fudging facts and misinterpreting the science. The literature shows signs of research bias.That doesn’t mean any of the studies described above is fraudulent or dubious. There certainly is a link between skipping meals and getting fat, but Andrew Brown, a nutritionist at the University of Alabama at Birmingham and lead author of the new critique, points out that large surveys of people’s diets and their health are at most suggestive. Lining up several dozen of them in a row doesn’t add much more value to their claims. It could be that my yuppie morning ritual really keeps my BMI in check, perhaps by changing my metabolism or helping to control my appetite. But it’s also possible that my breakfast habits do nothing for me on their own, and that they only correspond to some deeper determinants of health.As a breakfast-eater, for example, I’m more likely to work out than other people. At least that was the finding of a breakfast study from 2008, which also found that breakfasters tend to be rich and white, and less likely to indulge in cigarettes and alcohol. Any of these factors might protect someone from obesity and diabetes, so it’s hard to know what role might be left to eating breakfast. There are other confounds, too: People with lousy sleeping schedules may have less time for making pancakes. So what makes them fat—missing breakfast or not getting a good night’s rest? Here’s another: People who are trying to lose weight often make a point of missing meals. The fact that they’re on a diet, though, suggests that they’ve been gaining pounds, not shedding them. Does skipping breakfast make them fat, or do people who are getting fat choose to skip breakfast? [More]
In short, if you haven't learned to keep and open mind on as many beliefs as you can, you may be heading for rude shocks and future shock. We live in a complex world, as as it becomes ever more interlinked, teasing out what will happen when we do X is going to be tougher and tougher.

Which is why I am a big supporter of random trials.  Imagine if we could do that with the farm bill. 

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