Thursday, December 18, 2008

Faith and Premises

It's hard to get much time to write these days, especially anything of substance. But I probably over-write things at time too, so maybe it is better to put something down and maybe figure out more about it later. Or not.

So for a while I've been thinking on how I would describe the difference between faith and premises.

It seems that there are a couple classifications I would make for faith. One would be faith in its original form and the other I might call practical faith and is close to just plain trust.

Practical faith would apply when something is taken to be true but could be proven or disproven if the time was taken. Of necessity there are all manner of this in everyday life. If we had to prove everything to ourselves it would leave no time to actually get anything done.

Naturally, we've developed ways to deal with this. Formal recognition of experts is one - where we trust something told to us by an expert on a subject because they are accredited by some institution that we trust (Medical Doctors are an example). Of course we have to also trust the institution, which might simply be based on the fact that other's do, or because we agree with their fundamental rules, and so on. It has to be recognized that all of this as described so far can be just a big pyramid of faith all the way down.

So with an idea of practical faith I may say something like, "I have faith in what my Doctor tells me."

But the more intereresting type of faith is the kind that addresses the "bottom of it all."

Faith, at the bottom of the pyramid, suffers from the problem of determining just where the logical bottom is. By it's definition it doesn't allow questioning.

It has seemed to me for a long time that if god existed he wouldn't have us rely on such a mechanism. What faith one holds is something that is largely culturally determimned. And it has to be to some extent - once you accept something on faith you are then not allowing it to be questioned, so we are naturally taken to what we're first exposed to.

Being born in the U.S. would likely mean having a Christian faith. Being born in Saudi Arabia would likely mean having a Muslim faith. Seen from the outside I don't think either side has more reason to be right than the other. Of course to each, within their own culture, things seem more obvious.

In fact I've come to think that a fair question to a Christian would be why they are not a Muslim. And of course vice-versa.

But, back to faith vs. premises. The fundamental difference, I think, is that premises can be questioned. A premise doesn't demand to be absolute, and based on new contrary evidence, premises should change. Where faith is concerned, new contrary evidence is seen as a test; and one that is only failed if you are "weak."

In an ironic way I suppose, I've thought even god (in the Christian conception of such anyway) would prefer the use of premises over faith.

Saturday, November 1, 2008

Better Person

I've long felt that your love should make you want to be a better person.

I thought that was a great line in the 90's movie "Something's Gotta Give" that nailed the sentiment.

I'm hopelessly sentimental for liking that line I suppose.

But today I realized that parenthood makes that true in perhaps it's purest form. The birth of a child today really made me feel that I wanted to be a better person - or at least the best person I can be for that new person in the world.

Friday, October 31, 2008


I have no special affinity for "oil companies" but discussion of their profits are interesting, especially around the time that they announce earnings, at least when they break profit records in absolute terms.

But the "absolute terms" is what is interesting actually. The headlines breathlessly exclaim how Exxon sets record profits. Yesterday it was $14.8B. What they don't put in the headline, and sometimes not even in the story body, is the revenue number - which in this case was $137.7B. This gives them a 10.7% profit margin. Not so exciting actually.

Today Chevron announced similar results in margin - profit of $7.89B on $76.2B, or a similar-to-Exxon 10.4% profit margin.

Also today, but without much associated consumer uproar, Clorox (maker of the bleach, as well as things like salad dressing and trash bags) announced $128mm profit on $1.38B, for 9.3%. Not as big as "big oil" but interesting for comparison.

Why does this interest me? Mostly because considering only *absolute* profit and not profit *margin* distorts the economic view of what is going on. People especially feel that they are being gouged on prices if they just hear that the oil companies "are making record profits". What if the headline was "Exxon once again makes about as much relative profit as other companies"?

Why does it matter? In my opinion it matters because it can lead to very bad public policy.

Talk of a "windfall profits" tax on oil companies is based on feeding off the anger people feel about how much the oil companies make. The idea has legs because generally people feel ripped off by the oil companies and feel they receive an "unfair" profit. I believe a lot of this feeling is based on considering the absolute profit over the profit margin.

I personally think any windfall profits tax is an extremely bad idea, not just pragmatically, but in a way ethically. The idea here is to tax a company (or companies) simply for being profitable and having invested their energy in an area of enterprise that was a good investment. It puts government in the role of deciding how much profit is "too much" profit. If "big oil" has special tax breaks or such that people want removed that is one thing, but I think structuring something as a windfall profits tax is wrong. Ethically it changes the rules of the game in the middle. Pragmatically it would act to stifle investment in the area in question - in this case the energy sector, which for a healthy economy is not an area you want struggling.

Sunday, October 19, 2008

Limits to Reason

It's struck me that reason (rationality, etc.) can be a tricky concept. I'm sure it could be said that it is irrational to be only rational (full rationality therefore being self-referentially unachievable - so the pressure is off!). But here I am saying that reason and rationality should be the guide - so I should think it through some more.

And I should have some working definitions for myself.

So, I guess what I mean by reason is in contrast to faith. I don't mean faith necessarily religiously here. By faith I mean a belief taken at face value - something that is believed true just because - because it sounds good, or feels good, or is what we'd want to be true. In contrast I take reason to be belief based on congruence with evidence and the whole of a logically consistent set of beliefs.

Setting up faith against reason always seems tricky, because at the base it seems that reason needs faith also - at least faith in the rules at the bottom taken to be irreducible. That sets up a question of whether premises are a form of faith, which I want to think about more for another time (I do think there's a difference).

In terms of the scope of reason, I think in the sphere of political philosophy there is only room for reason. Public policy that is based on what we might want to be true, or focusing on good intentions instead of results is unwise, possibly dangerous, and perhaps immoral.

In individual life, I think that it should be the underlying guide to living, but recognize that reason and rationality have their limits. Not only that, but the enjoyable parts of life are most likely the ones where rationality is put on a shelf. So I guess it seems wise to put up something like a framework based on reason, and filling in the rest as we see fit. Which I suppose comes down to a set of principles based on reason and just making sure we stick within that day-to-day.

At least I think that's what I'm trying to do.

Thursday, October 9, 2008

Creating a problem to fix

The DOW is down a couple thousand points now *since* the "bailout" was passed. I was thinking about that today when I realized that, at least in the short term, the bailout probably *is* the problem.

I've seen the "bailout" or "rescue plan" called the "splurge", which is probably a better word; so I'll use that - since it accurately describes throwing money at the problem.

One of the ideas of the splurge is these debt auctions which will essentially set a price on the toxic mortgage assets that banks are holding.

The problem is that the splurge isn't going to happen for six weeks or so. Instead of taking an approach that would have allowed the market to work this out on its own, this forces a period of uncertainty until the auction takes place. I think this puts the banks in a holding pattern until that time. Private equity isn't going to come in and price these assets, like they might have if there hadn't been a splurge passed, until they find out where the government is going to price them.

This is with some partial hindsight now. But it explains the fact that other measures haven't worked in the interim (lowering rates, announcing commercial paper buying, etc.).

If this is true, then when the splurge takes place it might improve things simply because it will remove the uncertainty from the credit market that it helped perpetuate. At that point it will be fixing the problem that it helped cause.

So the pro-government-interventionists will be eager to make the point that the splurge worked, when in fact it may just end up undoing the harm that it caused in the intervening weeks (if we're lucky). Only time will tell.

I would have much rather seen a plan that didn't have the government try to fix the problem by becoming an actor in the market, but instead something that put in place incentives to make the mortgage derivative market liquid again. Removing taxes on future capital gains on mortgage derivatives or something of that ilk.

Anyway, as things are, it seems like the splurge itself may have cooked into that things aren't going to get better in the credit markets until the splurge happens.

Friday, October 3, 2008

Perfect Close

So it seems that enough people were scared by the Dow Jones being down 777 points on Monday that they convinced their congressmen to vote for the bailout based on their fear.

After it passes what happens? The Dow goes down again, to an even lower level. Monday's close that got everyone scared was 10,365. Today's close was 10,325.

The 90's brought us "irrational exhuberance". Now I'd say we have irrational fearfulness. At least the irrational part stays the same.

Wednesday, October 1, 2008

War on Market Losses

A lot is being made in the media with anecdotal evidence that loans are harder to come by now for people, and that something needs to be done.

But, the *goal* for the credit market should be that it is harder to obtain credit now than it was a year ago. The problem with the financial market was that credit was too easy. Reform of the financials has to be that credit is tighter.

What I've heard mostly "in the media" is anecdotal evidence (usually interviews) with folks who think they should be getting credit but can't. Or had credit lines that are now reduced.

Obviously credit markets can "over-tighten" and grind things to a halt.

But the fact that credit is tightening and some people are having a harder time getting loans is not evidence that the credit market needs government intervention and manipulation.

I think the government is launching a new preemptive war. One to go on the end of their list of ill-thought wars on abstractions and inanimate objects (like the War on Drugs):

War on Market Losses

And the name?

I have strong interests in general philosophy, economics, and political philosophy. Those are the types of things that will come up the most in this blog.

My interest in philosophy is not in knowing the history of philosophy, or what philosopher said what, but in defining a philosophy to live life by.

My philosophy of living is grounded in rationality and reason.

So the name here for me evokes the idea of living with a philosophy of reason as the basis for making sense of the world.

Now... to think of something for my first *real* post to be about...

Why blog?

First post here has to be a justification I think. I've avoided the blogging bug until now, but had some ideas about it that led me to take the leap.

The first thing is that I think writing thoughts down is a good way to sharpen them. I think it's easy to have half-thoughts floating around in your head, but when you put them into writing it forces you to really make them coherent (or abandon them if they're not).

Secondly, I thought that it would be important (to me, not to everyone else) to put down my thoughts somewhere publicly available. The threat of possible scrutiny should serve to sharpen the thought process even further. Also, if anyone ends up caring what I wrote and cares to comment or start a dialog on it, then that is a good thing as well.

Thirdly, as silly as it sounds, the recent happenings of the financial market problems and the discussion around them, especially in the main stream media, have only made me shake my head even more at how little reason and rationality is used when approaching these major issues.

I guess the summary is that I think I'll want to get things into writing and have them able to be shared easily, and blogging is the technology to do just that.

So, that's why. We'll see if it goes anywhere.