Decision Optimization

Optimization is a major part of the course of study in many of our college and university majors.  Did you know that?  That is what this blog is about.

Almost every college major has "optimization" as a part of it course of study.  Why do you think that is?  If you were an Ag major, you might study on how to optimize the amount of corn that you can grow per acre.  If you were a Mechanical Engineering major, you might study on how to build a structural beam for the least cost to hold up the load.  If you think about it, almost all college majors focus on optimizing some thing.  I used to teach a decision theory class and much of my efforts were to show how to optimize business and engineering decisions based on their cost.

The key thing about decisions optimization is that you first need a clear objective.  The big problem that we have with public sector decisions is that we do not have a clear objective.  In the public sector each player or voter often have a different objective and their is not a very good way to average out those objectives into one single objective.  The way we do it is by voting and accepting what the majority wants as the objective.  The problem with this method is that many of the voters do not have any idea what the total impact of their decision objective is.  Further, some of the voters have louder voices than others and thus skew the final results.  Let's look at an example.

First, we have a business man who has a lawn care business.  He wants to make as much money as he can and to do that he needs cheap workers.  He likes illegal immigration as a source for the cheap workers that he wants.  His objective is an open border or lax enforcement. Next we have the person who works for Ford making cars.  He also wants to make as much money as he can for his family.  He does not like trade policies that allow cars made outside the USA to come into the USA with a minimum tax while the country where the cars came from changes us a larger tax.  His objective is fewer immigrants and fair trade policies.  Following this?

Now, how do we resolve the fact that these two objectives are in conflict?  We vote!  Who has the most votes?  When you get millions of people in the mix, do you really think that we end up with the "optimum" decision?  If all the voters are well informed, it is possible that the final vote ends up "near" optimum? How often do you think that really happens?

Here is an example.  How about "global warming" and the actions associated with that?  Do you really think that voting is the way to resolve the situation?  I think that you can see that decisions in the public sector hardly ever end up as "optimum".  I don't know the answer, but I feel that I have provided some food for thought.

PS--May be the President is the one to figure out what is best for the "whole" country.  His problem is that his "optimum" decision just might not satisfy anyone and he will not get reelected.  Why don't you try thinking "bigger" than your own narrow needs and think about what is best for the country in the long term.  If you are honest, I think you will be surprised by the results.  At my age, I think less about myself and more about the future of  my grand kids and great grand kids.  Interesting?

Immigration And Small Pox

This is a true story and it might be a way to stop or slow immigration into the USA.  That is what this blog is about.

This happened back in about 1975.  I was on a business trip to Rio from Argentina and arrived about 10:00 pm.  When I was going thru customs, the health officer took me aside.  The doctor who signed my health card in my passport back in San Jose, California first wrote the date like we all do with the month, date and year.  Internationally, they put the date first.  For that reason, he wrote over his original numbers with the international method.  When the Brazilian health officer saw this he declared my health certificate invalid.  That meant that I could not enter Brazil.  How was that?

Why don't we use something like this to control immigration into the USA today?  I know for a fact that many of the immigrants have serious health problems and thus we should not let them in.  Remember Elis Island where people were checked out and if they were sick they could not enter?  Why don't we have something like that today?  I know that in Europe, the hospitals are over loaded with people from the near East who have all kinds of health problems.

When I moved back to the USA, I had some horses in Argentina and they would not let me bring my horses into the USA because we were concerned about hoof and mouth disease. If we could be concerned about hoof and mouth disease, why don't w get concerned about immigrants who have over breeding habits?   99% of the problems that the immigrants have that motivates them to try to immigrate to the USA is their over breeding.  I bogged before that some countries in Central America average over 6 children per family and for Africa it is even higher.

The reason that I bring up my personal story is that I feel we should reinstitute some of the health requirement that we used to have.  It would be simple.  Here is a simple test.  If a person has more than 2 brothers or sisters or has more than one child, they should not be allowed to immigrate into the USA.  If we just did this one thing, it would disqualify 90% of current immigrants.  Immigrants have to have some "skin" in the game and I think this is one way to make sure that they do!

PS--People who feel sorry for poor immigrants and want to let them enter the USA have to realize that they do "not" own the USA.  In our democracy, only the "majority" can speak for the USA.   A person can spend what they own on anything they want, but they don't own the USA and many don't own anything except their mouths!

EAA Spratt Flying Boat

I just got back from the EAA in Oshkosh and am fired up on experimental airplanes.  That is what this blog is about.

I fly a Supercub on floats and am into free wheeling flying which is the only place today where one can really feel free.  You can hop from lake to lake and in some cases fly into lakes that have no roads and no people.  That type of freedom is very hard to find today.  Ocean sailing is another place where one can find this type of freedom.  I know because I used to own a Passport 42 that gave me and my wife freedom that few have ever enjoyed.

The point that I want to make is that out in my barn I have a Spratt flying boat with a VW engine that is all taken apart and is worthy of a first class restoration.  It came to me by a very round about course and I know that it was built in Alaska of all places.  I have a great appreciation for the early people in aviation who would be today the technical giants like those in Silicone Valley.  This flying boat is very different from any other airplane that I know of.  It does not have the normal type of controls, like ailerons, rudder and elevators.  It has wings that can be independently manipulated. That is all, plus engine speed.  When you visualize a person flying this flying boat, you can see how a person could change the angle of each wing in such a way as to be able to go up and down and turn.  If you look at a bird flying, this is a little of what they do, only they have a tail that they can also modulate.

My next move is to see if I can find some place where this plane could be displayed for the public to appreciate.  It is so different that most people would not believe that it ever could have flown.  I think it could inspire young people to think bigger than the small square electronic boxes that they play with 90% of the time.  Spratt was a real person who, in his time, thought out side the box while most people today don't seem to even consider thinking out side of the box.

The other observation at the EAA was that most of the visitors were a little long in the tooth.  I saw very few young people.  The few young people who I did see were younger than school age.  Most people do not know that the electric car was invented several years before the first powered airplane.  Today people are all excited about the electric car or a self driving car when they have no idea that airplanes have been self driving (flying) for at least 50 years.  There is no free'r feeling than being at the controls of a small plane flying over the country side at 1,000 feet and watching the world like a bird.  Most people have no idea of how clear the view is.  You can see all kinds of details, even wild animals on the ground.  I can even read road signs on many of the country roads.

The big question is, "What is it going to take to wake people up to this exciting world of flying?"  It might be the sight of a plane like this Spratt flying boat and realize that it actually could fly.

Economics And Natural Resources

This might be getting a little boring, but I am going to keep repeating the role of natural resources in economics.  This is a new slant on the subject'

The whole point of natural resources and economics is that the value from natural resources can not be duplicated any place else or not just in any place.  My point in this blog is that even the role of natural resources is not fixed.  It can change in at least two ways.  The resource just becomes less valuable or it is replaced in some way.  Look at the early New England area of the USA.  Because of water power in the area, many mills were able to produce all kinds of goods cheaper than by physical labor.  The USA had an ordinance plant located at Harper's Ferry.  Why was that?  It was because of the water power available there.  Machine shops that now are powered by electricity were then powered by a "line shaft" that was driven by water power.  New England was famous for its textile mills even though they did not grow any cotton.  Now, that has all changed as water power was replaced by the steam engine and electric  motors.  While it lasted, however, New England was an industrial power house.  I am just pointing out how natural resources play a major role, but in some cases they do not last for ever.

Look at atomic energy and even the atomic bomb.  Why was the atomic industry located on the Tennessee River or in Hanford, Washington?  It was due to the natural resource in those areas which was hydroelectric  power.  Large amounts of electricity was needed to refine the Uranium and that was only available due to the Grand Coolie dam and Tennessee valley project.  Those are still good places for the refining of Uranium, but it can now be done in other places economically.

You might ask why there were no significant textile mills in places like Georgia or Alabama even though that was where most of the cotton was grown?  If you look at these two states, you will see that neither has a lot of hydroelectric power.  You need rivers and mountains for that and neither of these two states have both.

I visited New Zealand a few years ago and was surprised to find that, even though they did not have aluminum ore, they still produced aluminum.  It was because they have a large surplus of hydroelectric power and smelting aluminum requires a lot of electric power.  Rather than to try to ship the electricity to some place, it was more economical to bring the ore to New Zealand and send back the smelted aluminum.  This is also the main reason that Canada can produce aluminum cheaper than the USA.  Electric power is cheaper in Canada than it is in the USA.

All around the world countries are building bigger and bigger hydroelectric facilities.  China is in the process of building one of the largest and tallest dams in the world.  I think that when it is finished it will be the largest electrical power producer in the world.  You can just guess what the economic impact will be of the that.

Similarly, Brazil is also building bigger and bigger dams on their many rivers.  World wide, there is a limit to how many of these dams can economically be built.  My guess is that the USA has already used up 90% of our potential economical hydroelectric production potential.  Africa is very flat and thus does not have much potential, while the Russia and South America have considerable undeveloped hydroelectric power potential.  It will be interesting to watch now that you have a better appreciation of the impact of natural resources on economics!

PS--I blogged about ghost towns before, but it worth a few comments here.  Most of these ghost towns were towns that sprung up when Gold was discovered at their location.  Now that the Gold has played out, the towns died and became ghost towns. 

PS--Here is another point about natural resources.  Given that there are two basic types of economies, value added and natural resource exploitation. Those that rely on value added labor are poor candidates for a socialist type government because there is little free money that can be confiscated from rich people.  By contrast, a country that has substantial natural resources may be a good candidate for a socialist type government.  Look at Norway with large oil reserves and a small population.  Similarly, look at Canada who also has lots of natural resources compared to the size of their population.  Now, look at Venezuela.  They have lots of oil, but they can't economically exploit it, plus they have a large population.  Look at Russia.  They are also a good candidate for socialism while China is not.  Interesting isn't it?

Russian Strategy

What were the Russians up to during this last election?  That is the point of this blog.

You have to look at the Russians just like a pack of wolves.  I know that they identify with the "Bear", but the wolf is a better model.  I blogged in the past about how a pack of wolves hunt.  They take down game much larger, faster and stronger than they are and here is how they do it.  One at a time a single wolf will chase a large game animal taking turns to tire the animal out.  When the animal is totally exhausted, the whole pack comes in for the kill.  The whole objective is to kill and eat the bigger animal while using the least amount of energy and physical risk to the wolf.  See how it works?  It is similar with Russia and most of the terrorists.

I think that the Russians spent less than one million dollars involved in our election.  That is fraction of what both the Republicans and the Democrats spent.  Further, our own government has spent over 20 times this amount investigating so see if Trump was working with the Russians.  Do you think that the Russians got their monies worth?  We are not thru spending yet and it has divided our country like it has never been divided.  Remember the old military principle, " Divide and conquer".

Look at the Muslim terrorists.  One misguided Muslin sets off a $100 bomb or drives a $50 rental car into a bunch of people and even if they don't kill anyone, we spend at least a million dollars investigating and prosecuting the person.  Compare that with our military spending at least  a million dollars to kill just one potential terrorist on the battle field.  All these groups including the Russians are using exactly the same strategy as the wolf to get what they want.

How much do you think it would cost the USA if one thousand terrorists each tried to rob a 7-11?  I think that it would bankrupt us and plug up our legal systems for years.  It would bring our country to a total stop.  This does not count the cost of keeping these terrorists in our expensive prisons for years.

I think that you can see what the real strategy of the Russians must be.  They don't really care who we elect President.  All they want is to put "sand" in the gears of our political and legal systems and I think that they have done a very good job of that.

Next, how do we deal with the problem?  Just like the wolf, we tried to kill off all the wolves, but there are still wolves around.  It is the same with Russia and the terrorists.  They will always be around.  What we need to do is what we do for bank robbery, speeding and other crimes and that is to punish those who do these things so as to "minimize" there affects.  Zero is not a possibility as many may think.  All we can do is "minimize" the action and in this case "minimize" the impact.  What we are doing is playing directly into the hands of Russian by getting all worked up and spending millions of dollars going around in circles.

Now that you have a basic understanding of the problem, how about thinking about a real solution?  We do the same things as the Russians, but we don't seem to be as effective.  What do you think "Radio Free American" was?  Do you agree with it and do you think that it was ethical and effective?
Think about it!

Tariffs Trade And Free Body Diagrams

From reading my blogs, you must have figured out that I am an engineer or have a technical background and you are right.  In this blog, I want to show how engineering tools apply to tariffs and trade.

First off, you need to have a basic understanding of "free body diagrams".  Engineers analyze complex situations by drawing a circle around a body or component and then accounting for all forces acting on the body.  Here is a simple example.  Think of yourself standing on the side walk on a clear calm day.  If I were to drew a circle around you, I would notice that you were not moving and in total equilibrium. There are forces on you, but they are all balanced so that you are standing perfectly still.  The Earth's gravity is pulling you down with exactly the amount of force that your legs are pressing against the sidewalk.  If a wind was blowing, you would be leaning just enough to compensate for the force of the wind.  Are you starting see how it works?

Now tariffs and trade.  If China were to apply a duty on wheat from the USA, it would hurt our farmers, by lowing the price they get for their wheat.  There are only a few wheat farmers, so they would be screaming to Washington DC like mad.  With the lower price for wheat, it would mean that the cost of bread would go down and millions of people here in the USA would save a few cents.  Using the free body diagram concept, the savings by people who eat bread would be almost equal to the loss in profits by the farmers.  Is this sinking in?

Our politicians always respond to the loudest voice and in the above case it is going to be the farmers, not the million of people who eat bread.  Now, where is China going to get wheat if it is not from the USA?  How about Argentina?  If China starts to buy their wheat from Argentina which may cost them a little more, what is the impact?  Argentina only has so much wheat so the customers who used to buy wheat from Argentina are now going to have to buy wheat from the USA.  The problem with the talking heads on TV and most of the people who are watching can not focus long enough to see the full free body diagram picture.

The problem that we have with most of the trading world is that most have some kind of duty aganist the USA.  The end result is that they have farmers who are not very good at growing wheat, but their government protects them at an additional cost for bread to their own citizens.  Since it only increases the cost of loaf of bread by  few cents, most don't even notice what is going on.

There are many cases where not all the people in a country can be competitive in the world wide play ground and that is where the problems come in.  If a country has a bunch of farmers who can "not" do anything else but grow wheat the alternatives are limited.  The country either has to let the farmer go on welfare or protect their market for wheat in their own country.  Citizens of that country pay a little more for a loaf of bread as an alternative to paying the farmer who would be out of work on welfare.

Every country needs to have an economic policy that can sustain them for the long term.  We had a short term policy after WWII to help broken countries at our expense.  That was clearly not a policy that any country could sustain long term and that is why we need to change it into a long term policy with "balanced" trade.  It this too simple?

China does not have very much natural resources compared to its number of people.  That is a fact, but they do have a lot of hard working people who do not earn very much.  China is in a transition period where their poorer workers are earning more.  As long as they are poorer than countries like the USA, they will have a price advantage against us on "value added products.  What is happening is a rebalancing with China narrowing the gap between them and the USA.  How fast that rebalancing takes place is the big problem.  We all want to remain much richer than China and the way we do that is to "slow" the rate that China closes the gap.  How do we do that?  With tariffs if necessary so that our non competitive workers have a job and are not on welfare.

What we all need to do is to start looking at a bigger and longer term picture and not jump at every bump in the road like the wheat example that I have used about.

PS--If you want to get a better understanding of this problem, you should check into our "sugar" protection policy.  Sugar costs almost twice that of the world market so that our government can protect sugar beet farmers.  Note also that ethanol is made from sugar!

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Tool Making

I have always thought of tool making as the big difference between us humans and low animals.  As I have looked at the situation over many years, I am not so sure that my original ideas were correct.  That is the point of this blog.

It is true that only us humans make and use tools.  There are a very few exceptions, but they are rare.  At first, it appears that making tools is good and that there is nothing bad about it.  It is good, but all is not good.  Let's start out with Native Americans making arrow heads.  It takes a lot of skill to make a good arrow head and for that reason those few who can make arrow heads are rewarded more.  If you look at a group of Native Americans, the richest among he group would have been those few who could make arrow heads.  With me so far?

Now, let's look at a tools invented by one of the Native Americans that allowed a person of modest skill to make very good arrow heads.  The affect is to diminish the worth of the one person in the group who used to be able to make good arrow heads.  The net affect is that persons who had very modes skills before could now produce some thing of value.  That was good, but it lowered the worth of the person who used to make the arrow heads.  Notice that there is both good and bad implications of this new "tool".

It is true that the tribe now had more arrow heads, but what if this process continued to its limit?  In the limit, the people who were skilled enough to actually design and make the tools became more and more valuable and worthed more relative to those who used the tools.  Think about this?  Isn't it the purpose of tool designers to make tools that lower and lower skilled people can use?  If that is the case the final impact is that the users of the tools value keeps going down while that of the tool maker goes up.  Isn't this the same problem that we all face today with the spread between  poor and wealthy rising? 

It is actually getting worse.  I recall when a machinist had to be very skilled, but today with the higher degree of computerisation, he only has to load and unload the machine.  Even that is being eliminated with robots.  If you look at the person who writes the program for the machine, they are becoming the very few who have the required skill while we have more and more low skilled people who can load and unload the machine.

The bottom line is that we have more good arrow heads, but the spread between the rich and poor keeps getting wider.  Is this starting to sink in that this is not going to change, but is going to continue to get worse and worse?  The challenge of the future for the human race is not going to be income or wealth, but the wider and wider distribution between the poor and rich.  Remember that the median family net worth today is about $50,000 and that those in the top 1% is a thousand times this.  It has never been this much difference in human history so there is no real basis for comparison.  The only one that I can think of is between a King and his subjects.  We don't have Kings here, but the comparison is real and it all began with "tool making".  Isn't that interesting?

PS--The computer is just a new tool that the more skilled people can build and program them in such a way that they are easier and easier for lower skilled people to use.  Isn't that exactly what has been happening?  Look at your kids.  They know how to punch the buttons, but very few have the skill to write programs.  Do you now understand where this is all going?  Computers are designed by a very few very skill people, but the people who actually build the computers often can't even read.  Further, the kids who use these computers have even less skill.  Look at the spread between the computer designers and the kids who push the buttons in terms of worth and wealth!

EU Trade Imbalance

Have you been watching he news about our trade imbalance with the EU?  I have some comments on the subject.

First, we need to look at the facts. It is clear that the EU has  been protecting their markets while pushing sales to the USA.  I blogged about their "value added tax" before.  If we sell a product to them, they add a "value added tax" of about 20%.  It makes products made outside the EU cost more so that EU citizens buy local.  This has been going on for years and the EU now feels that this is a "normal" situation.  When we propose a change, they scream that, "this is the way that it has always been" and thus they don't want a change.

If you talk to people here, they agree that the EU is taking advantage of the USA, but they don't like any of the solutions on the table.  The problem is that if we want to solve the problem of most of the world taking advantage of the USA, we are going to have to take the medicine even if it tastes bad.

The reason that the EU is taking advantage of the USA is that we are cowards and the EU knows it.  The EU holds the NATO over our heads by making us think that if we try to keep the EU honest that NATO might crumble.  We are being bullied by countries that are a fraction of our size.  How can that be?  Is it PC?  I think that it is.  We need to be more hard nosed with all of our trading partners. Period!

PS--In prior blogs, I have proposed that we implement a "value added tax" and take all of the Social Security Tax off companies so that imported products pay a portion of our Social Security costs, that is what the EU does.  

Constitution Revisited

Most of us think that we understand the constitution, but that just might not be the case.  That is what this blog is about.

I studied the US constitution in school like most kids, but that does not mean that I understood it.  As I have gotten older I think that my thinking on the US constitution has gotten clearer and more complete.  In a prior blog, I stated that the reason for our constitution is to, "protect the minority from the tyranny of the majority".  That is still a good definition, but there is much more.  Look at England.  Remember the Magna Carta?  That was when the people rose up against the King and wanted to have a say in how the country was run.  It resulted in the creation of the "House of Commons" where they used to just have the King and the House of Lords. Everything was run on the basis of "birth rights".  Our revolution rejected the above governmental organization!  Why was that?

First off, no one likes "birth rights" except those who have "birth rights".  We rejected all of that, including the business of a King and royalty.  Now we have the stage set where there are 13 independent colonies who know that they can not stand along against England and have to unite in some way.  The colonies were not all equal in size, wealth or numbers of people so this had to be considered. There had to be some kind of "contract" between the parties so that there would be a clear understanding of the rights and authority of each colony.  Further, the contract had to be flexible over time, but should not allow one of the bigger colonies to run ruff shod over the smaller or weaker colonies.  They looked at England who did not have a binding contract.  Any law could be changed at any time with just a majority of the votes.  That was unacceptable for most of the colonies.  They wanted something more air tight.  They accepted that the contract could be changed in the future, but it had to be more than just a simple vote of the majority.  That was a key point.  They allowed two ways to change the contract, one by a super majority of the legislature and the colonies or states and one by convention of a super majority of the colonies or states.

What I am building up to is that our constitution is a special kind of contract.  You and I did not form this country.  It was formed by our fore fathers who expected the country that they formed to remain much like what they had planned and agreed too and not changed every time the wind changed.  If you don't like the country that they formed, don't move here or if you were born here leave or figure out how to live with it.  You can change it, but it won't be easy and that is the way they wanted it.

The founders knew that at some time in the future one group or another could take over the majority and did not what to have all they had worked to form changed in a way that completely canceled all that they had worked to create.  They did not want some new majority to change or take away rights from small minorities just because they did not like them.  That would be a risk that they did not want to will onto their children and grand children.  I feel much the same way.  I know that changes may be needed, but I would rather see 10 good ideas rejected before one bad idea was accepted.  Does this sound like our judicial system where we often need 100% of a jury to convict and where just one vote against guilt is enough to let the person go free?

These are just some of my thought on our US Constitution that I would like to share.

PS--Further, it is not the responsibility nor does the Supreme Court have the authority to "change" the Constitution.  They only have the authority to clarify its original meaning.  The Constitution clearly states that if the original colonists forgot to put something into the Constitution that any authority in that area is left up to the states.  Notice that the founders did not leave anything out or leave any "loop holes".  All potential future possibilities were covered!