Archives for: January 2013
Humankind's Groundhog Day
According to most history textbooks, civilization as we know it arose some ten thousand years ago, during the so called Agricultural Revolution, when large bands of our primitive ancestors apparently came to conclusion that hunting and gathering was for suckers and started poking their increasingly green thumbs in the cultivated soil. Placed on a geological time scale though, the history of mankind is really just a blink of an eye. Or so we thought.
According to Komsomolskaya Pravda, a strange discovery was recently made near the Russian city of Vladivostok, a midsize Far Eastern port close to the Chinese and North Korean border. One of its residents, a guy identified as Dmitry, was trying to light a fire in his home when he spotted something odd about one of the coal chunks. A metallic-looking rod - later determined to be 100,000 years old - was pressed into its body. Fancy that. A sign of metallurgical prowess harking back to the times when we were supposedly still throwing stones at midsize ruminants for a living. This strongly indicates that our love affair with technology is much older than we think and had probably started way before the denizens of the Neanderthal valley realized that bronze axes looked totally cool on their cave walls.
It also opens an intriguing possibility that the arrival of intelligence on this planet wasn't just a one time thing, a slowly breaking dawn at the onset of the Holocene, but rather a periodic process like the alternation of day and night. What if the whole history of civilization on Earth was just one giant Groundhog Day experience? You know, that movie in which Bill Murray, a disgruntled weather reporter, gets stuck in Punxsutawney and as he tries to awkwardly woo his female coworker, he relives the Groundhog Day over and over again until - after countless loops - he finally gets all the romantic ingredients right and wakes up besides her the next morning.
Perhaps our Earth was roamed by advanced cultures before. Perhaps more than once. It's just that they - much like Bill Murray's character - kept making stupid mistakes which tossed them back in time whenever they reached certain evolutionary level. Sophisticated social orders may have developed along the way, whole nations may have flourished, but when they grasped for that technological apex, their inherent character flaws got the better of them and they evaporated into oblivion. If you think about it, there really is no shortage of ways for us to self destruct. Polluting the environment with noxious chemicals. Bioagents gone wild. Warming the global climate beyond agricultural tolerance. Or just good old fashioned nuking ourselves to smithereens. Whatever poison our hypothetical predecessors chose, they just knocked themselves right back into the stone age. Rinse and repeat.
And so we go on and keep bootstrapping ourselves from a semi-erected hominid state back into a highly structured society only to repeat the same blunders a few millenia down the road. At the end, we escape the evolutionary infinite loop only when we finally get it right and turn into truly intelligent and cooperative life forms. The kind that possesses natural wisdom, doesn't litter their own neighborhood with plastic junk, uses finite resources with discretion, doesn't choose pathological liars as political representatives, and above all does not wage endless wars.
But I do not think the present cycle is it. Reading the New York Times front page suggests that we are still a bunch of sophomoric teenagers playing with matches at a dynamite factory. And when it all goes boom, the great artifacts of our era - pyramids, cathedrals, airports, football stadiums - will disappear underneath a thick layer of sediment and volcanic ash. But sooner or later - perhaps eons from today - the right combination of psychological traits will bring about the enlightened version of humanity who will break the vicious cycle, stop bickering and scheming and start pulling together in the same direction. They will tend domesticated animals, sow their fields, build their own pyramids, rediscover electricity and one sunny day they may even make it to the moon.
Now imagine how puzzled they will be when they stroll around the Sea of Tranquility and find Neil Armstrong's footprints there.
Global warming is a tough call. On the one hand the Arctic ice melts, methane in the same region leaks freely and weather records keep popping up all over the place. On the other hand, average temperature rise has slowed down a bit and the catastrophic consequences we have been hearing about for a number of years now failed to materialize. Should we do something about it or not?
Climate change deniers like to marginalize the threat by saying that the Earth temperatures have always fluctuated. Indeed, they did. But whole species were wiped out in the process, too, not to mention that natural disasters could reach magnitudes which our fragile agriculture is ill prepared for. Sure, a herd of hardy mammoths might not have minded an occasional monster storm, but in a world where many man made structures are quite sensitive to vagaries of elements we better pay attention.
To put it in other words, let's consider the following scenario. You have two potential problems. One of them is fairly likely, say its odds are 50%, and its realization will cost you damages of $100. The other one is fairly unlikely but catastrophic. Let's say its odds are only 5% (one in twenty), but if it happens, your losses would add up to $100,000. Which of the two problems will you worry about?
I would say the latter one. Yes, the case for the harmful climate change is still tentative. But the huge potential damage outweighs the smaller likelihood. We should worry about the climate change long before its symptoms are obvious to everyone - for when they finally are, it might be too late. If this seemingly innocent trend turns into a full blown planetary emergency, the associated cost of dealing with it would be gigantic. Do we really want to put our way of living on the poker table?
As every year, I spent this Christmas in the Czech Republic with my family. It was the warmest Christmas on record. Not a flake in sight. After the holidays, we went for a short visit to my parent's summer house in the mountains. It is a healthy 2 mile walk from the nearest train station, and the dirt road leading to the house is usually snowed in or completely frozen in late December. But this time around it was all soft and muddy and when we reached our destination our boots looked as if they just came back from a field trip to German trenches. I do not remember that ever happening before.
I simply flinch at the idea that the next generations would never see the White Christmas we used to enjoy as kids. I think we should make an effort to prevent any harsh and irreversible climate change that might be heading our way. Even if the odds of that actually happening are only one in twenty.
Close to the edge
So the big drama of the fiscal cliff ended just as we expected.
With our banged up federal bus teetering precariously over the edge, its nose sticking unsupported into the precipice, its wheels still spinning from the wild ride that lead to this moment, our elected representatives carefully tiptoed to the back of the bus and in the eleventh hour eked out an uneasy compromise which raised taxes on the rich and postponed all other important decisions by a few months.
Sadly - this noble effort drilled barely a dent into the problem of unsustainable deficits. Indeed, the public pail is as leaky as it was before, but in the spirit of positive thinking we might call it a promising start. Sure many on the right have decried the higher taxes on the "job creators" and attacked them viciously, but to me this small step toward righting our fiscal ship seems more than fair. Many of the services we pay for - whether it is the functioning infrastructure, backstopping the financial system or keeping the global trading routes safe - benefit owners of the capital more than rank and file members of the labor force, so it makes sense that those who are more invested in the safe and orderly social environment should support its protection a little bit more as well. Not to mention that hiking the upper bracket may help alleviate the ever widening wealth inequality which has been on the rise for the past several decades and slowly decimates the once thriving middle class.
But not everyone sees it that way. For some, higher taxes are the enemy number one regardless of the state of public coffers. One of the main arguments coming from the foot soldiers of Grover Norquist's Army is that many high income earners may not be willing to produce under such oppressive conditions. That they won't have enough incentives to create and innovate if government takes extra 3% from their paychecks.
I think such fears are greatly exaggerated. First, the resulting 40% is still generous compared to the top rates we had under Kennedy or Eisenhower. And second, those who won't be willing to take the deal can be replaced by those who will. That is the beauty of free markets - they work in many settings. Those entangled networks of interlocking economic and social mechanism have the wonderful property that they automatically seek optimal solutions. Isn't it strange that we use their power in determining (and optimizing) worker wages, but when it comes to taxes, especially in the higher brackets, we let lobbyists determine their magnitude?
Let's see how this works. You pay your laborers the lowest price at which someone qualified would be willing to take the job (as opposed to selling his or her expertise elsewhere). If someone is willing to do what you demand for $10, why would you pay them $12? Now let's apply the same principle on the taxation side. If someone qualified is willing to take a position with a 40% salary tax, why would we give it to someone insisting on the 36% tax. If you are unwilling to pay higher taxes on your generous compensation package, you are free to vacate your position to someone who will.
For every entrepreneur, there is someone with a similar idea just waiting in the woodworks, someone whose dreams went unrealized because the market had already been saturated. For every well paid manager there are many deputies or associates who have the same skills and are eager to prove it. In other words, we should let the free markets help us determine the proper level of taxation as well. Of course, that assumes that the whole system will not overspend, because in that case the overall tax burden would derail the whole economy. In other words, we'd need to stick pretty close to a balanced budget.
In economy, however, nothing is ever certain. This idea may not work for million reasons. But granted how dysfunctional our present system is, we should look for alternatives. I think if we managed to control the spending (by limiting deficits) and applied market principles to all components of the system, we might just arrive at an elusive equilibrium that is the hallmark of a properly functioning society. That magical point where public welfare is low enough to provide sufficient motivation to work, where workers make enough to sustain their families, and innovators and risk takers can still keep enough of their profits to make the risks worth their effort.