extraterrestrial life

first, an apology. i haven't been posting much because i've been studying for the bar exam, which i will be sitting for in two weeks. hooray.

so, i just wanted to let everyone know i'm still alive and thinking, by submitting a theory, for your collective consideration.

it occurs to me that extraterrestrial life, whatever its manifestation, must necessarily be similar to ours in that it requires energy to sustain itself. this should be especially true in the case of anything we would call a "civilization."

also, it appears that nuclear fusion is the most efficient method of energy production possible. but even if nuclear fusion could be sustained without gravity, it could only use light elements, which would be relatively scarce on a planet that can support life. thus, the most abundant and efficient source of energy for a civilization, no matter how technologically advanced, would have to be its star.

that being the case, i would posit that if an alien civilization is significantly advanced, it would have arrived at a point where, in order to sustain its energy needs, it could not rely only on the radiation arriving on the planet, but would have to envelop its sun to capture energy radiating in all directions.

this leads me to wonder whether, in our search for extraterrestrial life, we may be overlooking such a civilization, because shielding would make it difficult to detect.

gene doping

first off, sorry for the long delay! i've had finals and graduation, and i had to be dragged, kicking and screaming, to beautiful southern california for a week, to see my sister graduate -- summa cum laude and phi beta kappa!

anyway, the bulk of this was taken from a paper i wrote for a biotech ethics class, so please excuse me if it sounds like i'm on quaaludes.

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Gene doping adds another layer of controversy to a world of sports already hounded by steroid scandals. What’s more, it only adds fuel to the controversial fire, since gene doping is not only nearly untraceable but safer than steroids. But is there really cause to be up in arms?

First, let me make it clear that cheating is not the issue. The real question is, “Should a sports league allow gene doping?” Before weighing the pros and cons of gene doping, there is the question of whether law should trump private ordering. This is especially relevant in the United States, where some sports leagues have been granted antitrust immunity. But the primary impetus for such legal intervention is a matter of antitrust and labor law, not of ethics. (A related question is whether leagues that choose to disallow gene doping should be audited to make sure they live up to their promises, and here there is a very strong case for some sort of third-party or regulatory oversight.)

Another preliminary question necessary to frame the debate is whether athletic competition is zero-sum, meaning that people are more interested in who wins than how good they are (from an absolute perspective). If this is the case, and if all athletes engage in gene doping, their overall athletic prowess would improve but their rewards would improve only slightly, or not at all. And the prisoner’s dilemma informs us that, without regulation, all athletes will be stuck engaging in this costly activity, which would be inefficient, on the whole. This is the position taken up by Chicago Law Professor Gary Becker, and his post on doping, along with its comments, can be dismantled to show why the argument does not hold.

There is good reason to question the underlying assumption of the zero-sum argument, which is that relative performance trumps absolute performance. As one commenter pointed out, in part, there are countless examples of two leagues with the same amount and distribution of wins and losses, yet one of them is more popular because its athleticism is greater. For example, male sports are more popular than their female counterparts, across the board. Another example is minor versus major leagues, or simply age groups.

The zero-sum argument also fails to explain why world records are more noteworthy than competitive wins. In fact, Becker’s own example of the four minute mile is contradictory. He claims that its notoriety exemplified a “crucial relative aspect,” which is that “no one had done that before.” But if relativism is comparing to everyone who came before, then what is not relative? It can’t be comparison to all athletes, past, present, and future!

The bottom line is that people do want to see athletes run faster, jump higher, etc. These are absolutes, and fans demand their achievement. Although this is a conjecture, it seems natural that there be some causative link between sports’ increasing popularity and the accelerating achievements of participants therein.

Becker also points to other costly enhancers that are regulated supposedly because they are costly but do not improve relative performance, such as equipment specifications or squad size limits. But these rules are in place not because they do nothing to change relative performance, but because they would make games impossible to play.

First, Becker points to equipment limitations, such as the size of golf clubs that can be used in competition, “corked” baseball bats, and the types of tennis rackets permitted. Note that these rules have a common denominator – they limit the distance that a ball can travel, or they limit its velocity, or the velocity of, say, a stock car. These rules are in place because, without them, there are environmental or human constraints that would skew the game and render it dull. If every hit were a home run, or if every volley had the speed of a serve, or if every stroke carried 300 yards, the games would be boring. Moreover, it would be inordinately expensive to correct for these changes. We would have to not only increase the size of every ballpark, golf green, and race track, we would have to make defensive players faster in order for them to cover these increased distances. (Ironically, doping could allow just such changes and, if you believe in the “absolute” argument, the value of sports.)

Other costly enhancers pointed out by Becker are number limits, for example, of players or of golf clubs. Here, allowing unlimited numbers would increase athletic achievements, but the changes would be slight in comparison to, first, their costs (salary and equipment purchases), and second, to other, more productive, enhancements. It may very well be that people would pay more to see sports change these rules, but fans may not be willing to pay enough to cover the huge expense of keeping things interesting. By contrast, gene doping could increase athletic performance by orders of magnitude at very low cost.

Even if we assume the relative position, there is still a strong argument that gene doping should be allowed. We can compare gene doping to other costly enhancers that are not regulated, despite the fact that they lead to the competitive stalemate outlined, above. Examples of these would be exercise, training, and nutrition. The common characteristic among these unregulated enhancers is that they are supposedly beneficial to the athlete. (For the sake of argument, we ignore the fact that these enhancers are just as subject to “pecuniary abuse” as steroids or other “harmful” enhancers. Athletes and their organizations spend millions of dollars on improving their training, technique, nutrition, and equipment.) And while gene doping could be subject to abuse, its proper administration would be no less beneficial than advantages garnered from exercise and nutrition. In fact, it is most likely more beneficial because it is a low-cost solution and increases the effectiveness of the athlete’s other enhancements. And any danger currently inherent in gene doping would be certain to decrease if it were allowed.

Another consideration in this debate is a fairness issue, which is closely tied to the definition of what is “natural.” Many people would think gene doping is “unfair” because it gives recipients an “unnatural” advantage over competitors. But we have good reason to question the contrapositive of this position and ask whether it is “fair” that some people should be prevented from participating in athletics because they do not have an athletic phenotype.

We would also be amiss if we did not discuss the potential scientific benefits. Many enhancements currently in development began as therapies, and there is no reason to think this is a one-way street. This being the case, athletes and organizations could potentially invest billions of dollars into research and development that could benefit society at large.

maryland smoking ban

let me begin by making it perfectly clear that i hate cigarettes only slightly less than the people who smoke them. they disgust me so much that i can almost see the logic in the maryland legislature’s proposed smoking ban. almost, but not quite.

the bill’s legislative backers will tell you they’re protecting the innocent from the dangers of second-hand smoke. now, i’m fairly certain they’d accept the praises of voters who want unabashed paternalism and are out to ban smoking in all its forms, but let’s take them at face value.

the problem with their argument is that non-smokers do have a choice. it’s a tough choice, but you can always just not hang out in bars. i’m actually selling it a bit short, because there are some bars that don’t allow smoking (even some nice ones like our local “red maple” on charles).

there are clearly benefits to the ban, but i seriously doubt they’d outweigh the costs of trying to legislate it. this law’s impact on overall smoking will most likely be negligible. smokers will smoke outside, at home, in their cars, and pretty much anywhere they want to besides public buildings, bars, and restaurants. at the same time, smokers will spend less money at bars and tip less, which will hurt those business owners. and though smokers will save a little money, they are denied one of their pleasures, making them less well-off.

but perhaps the biggest problem is that after all the sound and fury, things probably won’t change that much. there will inevitably be some exception to the rule, into which all bars and restaurants will crowd.

just look at what happened when virginia tried to shut down all its bars. their law excepted establishments who derived a certain percentage of revenue from food sales, so guess what happened? for every bar that shut down there was a restaurant that added a bar, and the bars that survived just added a restaurant. in fact, some of them run their food operations at a loss, just so that they can meet the revenue requirements and keep their bar running. obviously, the profit on alcohol (which is inflated due to regulation) more than makes up for that loss.

so, the best we can expect to get out of all this hoopla is that every bar will start selling discount tobacco products, and every tobacco shop will open a bar.

well, at least we know that our legislature's trying to nanny us to death, even if they fail at it. and maybe that's not so bad. after all, it's the thought that counts.

backdating: hype, not harm

the latest scandal du jour is options backdating. judging by the media coverage, you’d think it was enron take two, and leading the charge are the usual suspects: plaintiff’s lawyers, the s.e.c., and the i.r.s. unfortunately, only one of them has good reason to sue. doubly unfortunately, it’s the i.r.s.

plaintiffs’ lawyers and the s.e.c. both claim to represent shareholder interest, but a little help from our old friend economics shows us that shareholders aren’t the least bit affected by options backdating. in fact, they want backdating because it saves them tax money.

let’s start, as per usual, with the basics. companies like to grant options rather than giving stock outright because their value is tied more closely to the future than the past. an option only has value only if the stock value goes up, whereas granting stock outright would reward the employee even if the stock price goes down. backdating occurs when the company gives employees the right to purchase stock at a price from the past that is lower than the current market price. for example, an option grant that allows you to buy ten shares of stock for $10 when the shares are trading for $10 would be worth nothing. however, if we chose a past price, say $5, the options would immediately be worth $50, since the employee could buy them for $50 and instantly sell them for $100. such options are called “in the money,” for obvious reasons.

but we all know that money doesn’t grow on trees, so where does it come from? two out of three plaintiffs answer “shareholders,” but is this really true?

back to basics. a stock’s value comes from two parts, present and future assets and dividends, which are simply what the company owns and earns. when an in-the-money option issues, two economically relevant things happen.

first, the pool of assets and dividends gets split more ways. for example, let’s say there are 100 shares of that $10 stock outstanding, so that the company is worth $1,000. when the employee exercises his $5 options, the company gets $50, but there are now 10 more shares, so each one is worth $1,050 ÷ 110, which is about $9.55, for a loss of 45 cents. now, before you scream bloody murder, think about the fact that this is public information. shareholders knew full well that the company could hand out authorized shares at any time, and they fully expected it to do so in order to reward its employees. so, whatever price they paid for their stock included a tiny discount to reflect this possibility. so much for that supposed rip-off.

second, we have to “account” for the fact that the company is forgoing the full market price for its shares. again, though, you have to ask whether this really matters to shareholders. sure, the company could have gotten another $50 from its employee, which would have kept things even-stevens at $10 a share. but in reality, forgoing $50 is exactly the same as paying $50 in salary.

some people are all riled up over the fact that companies are restating earnings to reflect these options grants as salary expenses, but any savvy investor knows that those entries are just for bookkeeping purposes. without getting into the merits of options expensing, leave it to say that your money managers get paid to weed out those entries from what really matters.

once you cut through all the hype, options turn out to be an investor’s best friend, since they’re taxed as capital gains at 15%, rather than income at an undoubtedly higher price. this means that the company can save on payroll and create extra shareholder value.

so, in the end, the only one getting bilked here is the tax man. no wonder they’re getting persecuted.

by the numbers: the “wal-mart law”

the day before governor o’malley’s inauguration, the fourth circuit struck down the “fair share act,” which would have forced all employers with 10,000 or more maryland employees to spend at least 8% of their payroll on health insurance.

the act is also known, affectionately, as the “wal-mart law,” because its namesake comprises one-half of the companies it covers (which – if you didn’t catch that – number all of two). that, and everyone hates wal-mart.

our new governor has taken up a firm “waffle” position, his spokesman going only so far as to say, “we continue to believe that fairness is critical to making health care more affordable.” attorney general doug gansler has until april to appeal the decision, and my bet is that he’ll ride it for all its worth.

the act’s momentum owes itself to the popular sentiment that wal-mart is in some sense “at fault” for swelling medicaid rolls, because it “forces” employees onto subsidized health insurance, foisting insurance costs onto taxpayers.

but consider this: if our legislature suddenly decided to give everyone $100,000 a year, would you really blame employers for cutting salaries across the board? of course you wouldn’t – but that’s precisely what’s happening, here. our government is giving away health care, and yet it’s somehow the employer’s fault for not buying something that’s free.

you have to understand that benefits like health insurance are just a slice of the compensation pie that employees could cash out, if given the option. let’s say wal-mart is willing to pay someone $20,000 annually. it would then be equally willing to foot the bill for $5,000 of insurance and pay $15,000 in cash. but when paying that much for insurance, it would be crazy to pay anything more than $15,000 in cash, since that would bust the $20,000 cap. wal-mart’s only decision is how to divide the $20,000 pie, and if it can get a good deal on insurance, it will offer it because it can cut labor costs and increase profits.

the underlying problem at work, here, is that medicaid is a good deal, even when a better healthcare plan is available. let’s say wal-mart offers a plan worth $5,000, whereas medicaid is only worth $3,000. the employee will nevertheless want to take medicaid’s $3,000 and pocket the $5,000 in healthcare “savings.” and since the cost is no longer coming out of wal-mart’s pocket, it can pay out the full $20,000, bringing the employee’s total compensation to $23,000 of cash plus medicaid, rather than the $20,000 salary that includes private healthcare. the same holds true even if the group policy has cheaper rates – which it probably would – simply because it has rates, whereas medicaid is always free.

things work the same way when we zoom out. wal-mart may be willing to spend $1 million on payroll for all employees, who will then receive $150,000 in medicaid. all the “fair share act” would do – by forcing healthcare spending up to 8% – is reduce wages to $926,000 and benefits to $74,000. and even if there is a minimum wage, the act would just cause wal-mart to switch away from investments in labor, to investments that replace labor with robots.

leaving its employees on medicaid is just wal-mart doing what it does best – finding a cheaper product and passing on the savings.

so what’s really great about the “fair share act” is that it actually makes poor people poorer, by putting tax dollars back in your pockets and forcing them to buy health insurance they don’t want.

who saw that one coming?

sea farming

the world’s population is exploding. at our current world growth rate of 1.14%, the earth’s population will double every 50 years. and even if growth slows, we still have to figure out how to feed everyone.

this could be a slight problem.

first, of the earth’s 57million square miles of land, only about 12million (20%) are arable. land may be useless for many reasons that are, effectively, impossible to fix: too hot (desert), too cold (arctic), too rocky, too mountainous, too salty, too rainy, or too snowy. we do have control over some reasons for loss – such as development, pollution, and nutrient depletion – but the thorn in our collective side is water. i’ve written about water in a previous post, so i’ll skip the political economy in this one. for now, just note that 40% of our irrigation comes from ground water (i.e. not rain or “surface water”) and that we are using our ground water at 125% of its replacement rate.

the second problem is the income effect on food demand. as people get wealthier – which technology is making possible despite our burgeoning population – they don’t simply consume more food, they consume better food. they will demand food with large amounts of protein, sugar, fat, and oil; food like fruits, nuts, and meat. this effect makes sense because, from the individual’s standpoint, they are getting more efficient food that contains more energy and nutrition per pound than simple stuff like grains. but, like all things, this comes at a cost, which is that it takes more effort and resources to get the same amount of energy into these rich foods than into simpler foods like grains. to a certain extent, the animals we eat are actually competing with us for land, eating just as much grain as the human population. hence, the strain on resources will increase faster than we would expect from population growth, alone.

the upshot of all this – and the subject of this post – is our inevitable shift in food production to sea farming. right now, it’s a nascent industry, but i’m confident that it will soon become a major source of food for reasons that parallel the problems, above. first, because it does not require fresh water, and second, because fish – unlike land animals – don’t compete with us for arable land.

one of the major obstacles i foresee is that, as the industry expands, it will move farther and farther off-shore, and most likely into international waters. this, in turn, could spur a large increase in maritime activity - both good and bad.

newfound wealth at sea will require protection and dispute resolution, further down the line. in the meantime, i’m trying to find a way to invest in these guys.