Excercise is Just as Important as Diet

The mainstream media rarely does a good job of reporting on more than "just the talking points." I suppose you can't necessarily blame them - that is what consumers apparently want.

So it's nice to see an important issue like diabetes getting more of a nuanced treatment. Parade reports:

3. Exercise is just as crucial as diet. Here’s where insulin comes in: This hormone helps transport glucose from your blood into your body’s cells, which burn the sugar for energy. When you have prediabetes or type 2 diabetes, either your body doesn’t produce enough insulin or your cells don’t use it efficiently; as a result, glucose builds up in the blood. When you exercise and lose weight, your body is better able to employ its supply of insulin (or decrease “insulin resistance”), making it easier to control blood sugar levels.

Naturally, I have said much the same here on Stationary Waves. I stress that exercise is absolutely key to managing one's blood sugar. The metabolism is a system that requires more than just managing one aspect or another. It's crucial to manage the system holistically.

Please keep this in mind when you read in other media sources that diet is more effective than exercise at combating obesity or whatever. Everything that is true of diabetics with regard to healthy living is also true of non-diabetics.

Exercise is just as important as diet.

Rita Nakashima Brock Misses the Point

Interesting news coming out of "Occupy Oakland" this morning. Apparently, there has been a shooting. The number one link that comes up on my Google News feed for this story is this apologetic Huffington Post article from a woman named Rita Nakashima Brock, about whom I know nothing.

Of note is the following excerpt:

I came home to write this article at 1 am because I know this shooting is going to feed the media obsession with the violence of a tiny number of occupiers, which dominated news of our successful General Strike held on Nov. 2, with a few wonderful and notable exceptions, including a full report of our people of faith presence that day.

I pose an open question to Ms. Nakashima Brock: What is the methodological purpose of an "Occupy"-style protest?

As I discussed yesterday, the purpose of these sit-ins is very clear (even if the objective is far less so). One way or another, the sit-in mobs' sole purpose is to create a physical obstacle so onerous that the powers at be have no choice but to meet their demands (whatever they are). This is not dismissive or a matter of opinion, it is the definition of a sit-in.

Again, as I mentioned yesterday, this sort of protest is inherently destabilizing. That is the whole objective: destabilization. If the protesters were "merely" voicing their collective opinion, they would freely and happily show up in a more convenient place, clean up and go home after a rousing day of amicable protest, and then reappear the next day to further the cause. They would write, they would publish, they would make public appearances. In short, they would participate in the civic dialogue in a much more convenient way.

But that's just it: the purpose of the protest is to be inconvenient, so that their demands will be met. That's what a sit-in is. That's the whole point.

What am I getting at?

When a "movement's" whole modus operandi is one of destabilization, that movement cannot possibly be surprised when it observes the inevitable results of public destabilization: sexual assault, vandalism, and now murder.

So while Ms. Nakashima Brock may be correct that most of the protesters are not actually interested in committing violent acts of aggression, what they are unquestionably interested in is initiating the threat of such violence. Were they not, the protest would look completely different. Threatening the system with mass violence is precisely what a large-scale protest of this kind is all about.

If I gave the protesters the absolute greatest benefit of the doubt, the best I could say is that their cognitive time-horizons are so short that they could not predict in advance that their protests would lead to destabilization; they expected change, but did not bother to anticipate how such change might occur. After all, it's not as if a protester with any level of foresight would have believed that the protest would result in public officials saying, "Gee, you know what? They're right! Let's end systemic corruption! I'm sure glad they told me, otherwise I never would have thought of that..."

In short, I believe this shooting and all other past and future incidents of "Occupy" violence completely validate my claim that mass-protest is a violation of the non-aggression principle and is inherently violent.

Does Mass Protest Violate the Non-Aggression Principle?

Suppose you are a wealthy banker. Suppose your neighbors believe that it is morally wrong that you have done so well for yourself, considering what else is going on in the economy.

Now suppose one neighbor decides to sit on the sidewalk outside your front door in protest of his situation relative to yours.

No problem, right? You're one person, he's one person. He's sitting on public property, voicing his opinion, and you're otherwise going about your day. You might find it annoying that you have to steer your car around him when you back out of your driveway, but hey - that's protest.

Now suppose your neighbor convinces hundreds of other people to sit on the sidewalk outside your home in protest.

When we were talking about just you and your neighbor, this seemed like a harmless protest. In this second situation, though, a hundred discontent people are sitting outside you home, protesting you livelihood. My question to you, the reader is: Does a peaceful protest of this kind violate the non-aggression principle?

Think of it this way, would you be okay if one hundred people camped outside your home and refused to leave until your way of life was systemically altered, even if they "promised not to hurt you?" In other words, can a crowd of discontented people who refuse to move until their demands are met ever be considered peaceful? Or, is the very act of assembling a mob and making demands inherently violent?

The purpose of a large protest is to make known to others how many people agree with a given position. Why is this necessary? What does anyone stand to gain from collecting into a large group and making a set of demands?

I'm circumlocuting this a bit, so let's get to the point. The purpose of mass protest is intimidation. In terms of rhetoric and validity of opinion, there is no difference between a large protest and a sign hung up in a conspicuous location. So the difference is literally not rhetorical. The size of the crowd has no bearing on the strength of one's argument. Logicians would call this a bandwagon fallacy.

Perhaps my giving protesters the benefit of the doubt would be to suggest that such people are guilty of committing a logical fallacy. However, I don't think it's as simple as that. I think the purpose of staging a large protest is to intimidate people into meeting their demands. It is always some kind of a threat, and therefore always aggressive.

In some cases, we may prefer this form of aggression to others. For example, the Arab Spring is a much better solution to a political problem then a bloody civil war. Much better to demonstrate that the government is illegitimate and avoid unnecessary bloodshed than to take up arms and attempt to improve one's situation via an armed coup.

On the other hand, the Occupy Wall Street mob is not actually avoiding any unnecessary bloodshed, nor any other form of violence. The only ones engaging in any kind of aggressive tactic in this situation are the protesters.

To sum up: Yes, mass-protest violates the non-aggression principle; and no, this is not an ethically valid solution to the matter at hand, because only one side is engaging in aggression (or, the OWS folks started it).

Origins of Economic Theory

I just read this great post at The Money Illusion that offers a few anecdotes about the Chicago School in the 1970s. Agree or disagree with the theories involved in these anecdotes, it is an peek inside the history of economic thought from a firsthand perspective, and therefore priceless. Enjoy!

You Have to Hand it to Steve Vai

Say what you want about Steve Vai, you have to hand it to him: the man knows how to take care of business. Granted, he learned most of what he does (both musically and economically) from Frank Zappa, but occasionally Vai does come up with a pretty fantastic business idea or two.

Case in point, I discovered this ingenious business venture via a Gmail ad (yes, Mr. Varian, they work like a charm - well done).

Naturally, Vai didn't invent the online music lesson. Plenty of great musicians have been offering them for years. (Ron Thal, Derek Sherinian, Mark Zonder, to name a few...) The difference is that Vai has teamed up with the biggest name in rock music education and has mass-marketed the idea.

A lot of this comes down to the fact that Vai's name has more goodwill attached to it than those other guys. Even though they are probably better, more interesting, and more technically accomplished musicians, Steve Vai is a name unto himself. He can draw a crowd just by announcing that he'll be there; the others, sadly, cannot.

The reason I think goodwill is such a key component of success in the music industry is in part because it represents Austrian School economic theory in action. Goodwill is essentially an intangible form of capital built up over years of peerless performance. By giving more than what was required, and making smart business decisions, Steve Vai was able to invest in his goodwill. Now, while others are struggling to sell CDs to an ever-shrinking market, Vai continues to make good money on projects like this music class.

If you don't love him for his music, you have to love him for his business sense. Had he never made it as a guitarist, he surely would have made it as a CEO.

Mystifying or Demystifying?

Here is Scott Sumner on Aggregate Demand and "nominal gross domestic product."

Arnold Kling and Russ Roberts make AD seem more mysterious than it really is.  When both output and inflation rise, AD has risen.  When output rises and inflation falls, AS has risen. (Oops, replace "inflation" with NGDP growth;)

It is important to always keep in mind that when Scott Sumner refers to "NGDP," he has in mind the total inflation-unadjusted dollar amount spent within a country's borders.

You can think of it this way: nominal GDP is (supposed to be) what dollar amount we spend on everything. Real GDP is (supposed to be) the total net value of the goods and services produced and used within an economy, i.e. "wealth."

Therefore, to restate the Sumner quote above, "Aggregate Demand" rises when people spend more money on everything *and* end up with more goods and services compared to a previous time period. "Aggregate Supply" rises when people spend less money on everything, but still end up with more goods and services.

Note that in both cases, output rises. Therefore, in the two situations Sumner provides, we know we are talking about Aggregate Demand when inflation occurs.

Perhaps the Crux of the Whole Macroeconomic "Problem?"
Can Aggregate Demand rise without a corresponding rise in output? This would occur if society in general demanded more of every product and service at any price. Regardless of the price level, people simply wanted to consume more. This would cause prices to increase and resources to become more scarce.

What is interesting about this fact is that it expresses the most important aspects of Austrian theories of money, credit, and capital. When prices rise and output remains the same, we don't have an increase in Aggregate Demand, not at all. We have nothing more than inflation.

This fact deals a serious blow to Keynesian and Monetarist theories of macroeconomics, because when the government increases the money supply via fiscal or monetary policy, output remains the same. This results in, at first, additional consumption on the part of those who first get ahold of the new money (i.e. bankers). But as the money reaches the rest of us more broadly, we don't end up with more wealth to consume, we simply end up with higher prices.

So, at best, we face inflation. At worst, the initial consumption caused by the monetary distortion makes resources all the more scarce for the rest of us because output doesn't rise.

This is no less true of Sumner's theory of increasing the money supply just high enough to ensure that we're spending exactly the same amount of inflation-unadjusted dollars we spent last year (NGDP targeting).

Conclusion
The whole concept is smoke and mirrors. People believe that they "just don't understand economics," but in reality they absolutely do. The Cardinal Rule of Ryan's Personal Philosophy is that if something doesn't make sense, then it absolutely cannot be true. When people hear or read about these senseless macroeconomic theories, they become bewildered, none of it makes sense, but economists insist that it all makes sense when you have a PhD in economics.

They're lying. It doesn't make sense no matter what kind of PhD you have. And you're not wrong or crazy for realizing this.

For the record, I highly recommend this post from Russ Roberts, which seems to have started it all.

Winter Cross-Training: Week 3

This week, we're building muscle the old-fashioned way. No tricks, no gimmicks, just some straight-forward meat-heading.

A-Day (Sun, Tues, Thur):

• 4x 10 burpees
• 3x 10 lunge sets (R lunge, R backwards lunge, L lunge, L backwards lunge = 1 set)
• 3x 10 squats
• 4x 50 crunches

B-Day (Mon, Wed, Fri):

• 3x 10 lateral raises
• 3x 10 rear deltoid raises
• 3x 10 front raises
• 3x 10 bent rows
• 3x 10 running curls
• 4x 30 push ups
• 3x 10 chest press

Saturday: Rest Day

Conspicuously absent is cardio. This week I'd like you focus really hard on your strength training and make sure you get the most out of each and every repetition. When you finish, you should be pretty spent. Feel free to get 30-50 minutes of cardio in afterwards, or to do your workout in the morning and add cardio in the evening.

But the important thing this week is to get the most out of your strength training.

A Walk Down Memory Lane

As a research project, I will be taking a deep dive into NGDP targeting. I assume that deep dive will have an impact on the material that appears on my blog. You can (I think) expect to see more commentary on macroeconomic policy here at Stationary Waves. If not, I'm sure you will see the inevitable impacts of a deep dive such as this, eventually.

Part of that deep dive involves poring over some of the older information on NGDP targeting available out there. This morning I decided to take a trip down memory lane, back almost three years ago, to see what the state of the blogosphere was then, as compared to now.

On February 2nd, 2009, Scott Sumner published this post on his blog, The Money Illusion. It's a long post, but it can be succinctly summarized in the following excerpt (italics in the original, bold text mine):

Premise 1: The only coherent way of characterizing monetary policy as being either too“easy” or “tight” is relative to the policy stance expected to achieve the central bank’s goals. 

Premise 2: “Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero.” 

Premise 3: After mid-2008, and especially in early October, the expected growth in the price level and nominal GDP fell increasingly far below the Fed’s implicit target. 

In plain English, the first premise means the Fed should adopt the policy stance most likely to achieve its goals.  It is a point forcefully advocated by Lars Svensson, who Paul Krugman recently cited as an expert on the role of expectations in monetary policy.  The second is a quotation from Mishkin’s best selling monetary economics text (p. 607), i.e. it’s what we have been teaching our students.  And I have encountered few if any economists who disagree with my third assumption.  Indeed, if this were not so, why would Bernanke be calling for fiscal expansion?

To restate, Summer's Premise 3, in Q3 2008, market behavior with respect to inflation and spending in inflation-unadjusted dollars was less optimistic than what the Federal Reserve expected of the US economy. In the next paragraph, Sumner goes on to say that "few if any economists" disagree with this premise. (Clearly, Sumner is ignoring the Austrians, but that is not a uniquely Sumnerian problem.) If this were not the case, Sumner asks, why would the Fed want to expand the money supply?

We can thus summarize the totality of Sumner's position as follows: The Federal Reserve engaged in expansionary fiscal policy, but market behavior was contractionary. Therefore, the Federal Reserve should expand even more, in order to correct the contraction. QED.

I have been reading Sumner's blog for a long time, and I have never seen his position diverge much from this basic argument. This old post, however, provides a couple of interesting footnotes:

Sumner addresses the question of why he thinks money was tight in the ramp-up to the Great Recession: "Because markets expected NGDP growth to fall far short of the Fed’s implicit target."

Sumner addresses the question of why this could be, despite the fact that interest rates were at record lows: "Interest rates are a very misleading indicator of monetary policy."

Sumner addresses the question of why this could be, despite the fact that the money supply increased greatly:

During periods of deflation and near-zero rates, there is a much higher demand for non-interest bearing cash and bank reserves.  In addition, last October 6th the Fed began paying interest on reserves, which caused banks to hoard bank reserves.

So, in Sumnerland, low interest rates are not an expansionary policy, and a sharply increasing money supply is not an expansionary policy. Why not? Because the market behaved otherwise. The market contracted.

The assumption throughout Sumner's blog is that if the economy contracts, the Federal Reserve is engaging in a contractionary policy; if the economy expands, the Federal Reserve is engaging in an expansionary policy.

In other words, Sumner believes that the Federal Reserve is ultimately responsible for everything. Of course, he would never say so himself, but as you can see above, that is precisely what he has indicated. Money was tight because the economy contracted. Expansionary Fed policies are not really expansionary because the economy sometimes contacts during those policies.

Either Sumner is being hideously obtuse and ignoring reality to make his pet theory look good, or he is willfully ignorant of both his argument and the fact that the Federal Reserve is not the Prime Mover of the entire global economy. I wonder which.

More on this story as it develops... ;)

Business Idea of the Day

If you have ever had the fortune of tasting dairy products made in Latin America, then you know just how delicious they are. I have never tasted milk, cream, cheese, or butter that tasted as good as the dairy products I have eaten in my occasional trips to Central America and the Caribbean.

The person who figures out how to reliably import Latin American dairy products without compromising on taste is a billionaire in the making.

Not to Say I Told You So, But...

It appears I managed to get my prediction in just in time. Violence of this sort will drive away the peaceful protestors and all that will soon be left of the sit-in mob are the anarcho-syndicalists.

It is not difficult to analyze a socialist movement once you learn the basics of their thought processes and modes of operation.

Predict an End for the "Occupy" Mob

Mirroring my own thoughts on the issue, CBS news reports that there is no goal and no endpoint in sight for the various "Occupy" mob sit-ins.

While some may argue that I am unfairly dismissing the entire crowd as nothing more than socialists, I maintain that these mobs are the perfect example of a truly democratic socialism, in which decision-making is subjected to crowd consensus. If I am right about that, then the mobs will simply disperse when internal conflict inevitably discourages them from staying on any longer.

What I mean is: I predict that the "Occupy" mobs will implode from internal conflict and disperse naturally.

Why do I think so? The answer comes from the following Ludwig von Mises quote from Omnipotent Government (or any of a dozen other, similar quotes he made in other works):

If a man says socialism, or planning, he always has in view his own brand of socialism, his own plan. Thus planning does not in fact mean preparedness to cooperate peacefully. It means conflict.

 Think about that statement in light of the following quote from the CBS article I mentioned (emphasis mine):

As the protests continue, there's disagreement over what the long-term goals should be. Occupiers even disagree on whether there should be goals at all. 

That's in large part because members' ideas about what the movement should accomplish are as diverse as the members themselves.

 As we can see, there are really only two endpoints for the "Occupy" mob:

1. The "movement" implodes as the inevitable result of internal conflict, as all socialist movements do.
2. The "movement" somehow manages to endorse a single leader or group, who speaks for all of them.

Option number 2 here clearly rubs the Syndicalists and left-anarchists the wrong way, so it is unlikely that this will be how the story ends.

Therefore, I'm banking on option 1. What do you think? Discuss other possibilities in the comments section.

The Trend Continues?

Not long ago, I blogged about a budding temperance movement I have noticed gaining momentum in the mainstream media.

Here's another article to put in the evidence pile. Now, to be clear, I have nothing against a voluntary decision to abstain from alcohol. In fact, I think it's a great idea. The problem I have with this new temperance movement is that it seems to be coming from the state:

That point was driven across Tuesday with the release of a U.S. study suggesting women who consume three to six alcoholic beverages a week face a small increased risk of breast cancer, but it's not enough of a danger to stop drinking. The study in the Journal of the American Medical Association involved105,986 nurses who were tracked for three decades. 

The Canadian Public Health Association (CPHA) concludes that while studies have shown alcohol has some health benefits, their scope is limited. In effect, the harmful effects of alcohol "on the body as well as on society far outweigh the good."

Maybe I'm imagining it. Anyway, to sum up: personal decisions about alcohol: good; state mandates about alcohol: bad.

Bangla Word of the Day

অসুবিধা (awshubidha) n. - Problem

Read My Latest Article at Mises Daily

Are Government Jobs Productive? That is the question posed in my latest Mises Daily article, published this morning. The piece focuses on the impact of government spending and the non-neutrality of money on privately held capital available for investment.

Whether you agree or disagree with Dr. Paul's claim that government jobs are "not productive," the extent to which you agree provides valuable insight into the extent to which you buy into the mainstream, Keynesian view of money in the macroeconomy.

Check it out, leave a comment, stay for additional Austrian School enlightenment...