Archive for the ‘economics’ Category

What really prevents us from making 20 thousand NIS a month?

Friday, April 5th, 2013

Those days there is a commotion in Israel due to a speech by Yair Lapid, the new Finance Minister, about Riki Cohen who earns 20 thousand NIS a month but cannot make ends meet due to various expenses of living in Israel.

Several Israelis do not reach income of 20 thousand NIS a month. Some of them nevertheless manage to make ends meet but their monthly savings are not enough to buy an apartment at reasonable time. Others do not succeed in making ends meet.

I propose that instead of being angry at Yair Lapid for his failure to know the situation of the lower socioeconomic classes in Israel - each one is to think, check and inquire what really prevents him from making 20 thousand NIS a month.

Usually the reason is a low-paying profession, and the blocking factor is the absence of ability to convert to another, better paying profession. But there are several other blocking factors, and it would be a swell idea if someone is to run a survey so that we’ll know why most Israelis cannot make 20 thousand NIS a month.

Several possible reasons:

  • No funds or time for vocational change course, or the course is held in a place which requires 3 hours commutation from home to course and back each day.
  • During high school years, I could not study, and after army service, while I can study, there is no time or appropriate organization.
  • The rabbi or ADMO”R forbade me from studying “secular studies” lest I sin and deviate from the way of the Holy Torah.
  • I am screwed because I am an Arab.
  • There is a good job in my profession but there is no reasonable public transportation from my home to the workplace, and I cannot move to live near the workplace.
  • My vocation is important for the community but due to some reason has a low pay (examples: primary school teacher, social worker, nurse, caregiver).
  • I have children who need to be taken care of but the regular work hours in my vocation are crazy so I cannot work in my well-paying profession.
  • I have a disability which causes employers not to want to give me a job even though I can do it well.
  • I have a medical problem which prevents me from working.

All this - under the assumption that we are speaking about industrious people, who want to honorably support themselves, rather than be parasites living off at the public expense. This assumption is correct for most people, but we still need to filter out the parasites.

Ramon Breakthrough 2012

Saturday, December 3rd, 2011

קרן רמון הכריזה על תחרות בין הצעות לפרויקטים פורצי דרך, שישפיעו תוך 5 שנים על חייהם של לפחות 5 מיליון ישראלים.

עולים בדעתי ארבעה רעיונות כאלה, שחלקם דורשים כיפוף חוקים כדי להכנס למסגרת התחרות.

  • תצוגה חזותית של אותות דיבור - ישפיע על חייהם של כ-7000 ישראלים חרשים, כיפוף הכללים הדרוש הוא לקבל פרויקט שישפיע על לפחות מיליון חרשים מכל העולם.
  • חפירת מנהרות עמוק באדמה וחיים בהן, כדי לפנות מקום לחיות בר וצמחיה על פני כדור הארץ. יאפשר לישראל לקלוט עוד מיליון יהודים ויותר בלי שתהיה צפיפות בלתי נסבלת. הפרויקט ידרוש יותר מ-5 שנים כדי לגרום לשינוי משמעותי.
  • שינוי חברתי כך שיהיה מעמד חברתי גבוה יותר למי שיש לו יותר מיומנויות שעוזרות לשרוד ולהתאושש מאסון טבע או מעשה ידי אדם, במקום למי שמפגין יותר צריכה ראוותנית. קורסי הכשרה לכל הציבור ימומנו על ידי חברות הביטוח שמוכרות ביטוחים נגד האסונות למיניהם. ישפיע על כלל האוכלוסיה.
  • בתי מחסה לחתולי רחוב - לא רעיון שלי. ישפיע על כל מי שיש חתולי רחוב באזור מגוריו וזה כמעט כולנו.

הפרס הוא קורס באוניברסיטת הסינגולריטי.

אני מתלבט. האם להגיש הצעה אחת? האם להגיש את כל ההצעות שהן רעיונות שלי? האם בכלל להגיש הצעה? האם לא תהיה בעיית נגישות בקורס או בביצוע הפרויקט הזוכה לאחר מכן?

The Ramon Foundation announced a contest among proposals for breakthrough projects, which will affect the lives of at least million Israelis within 5 years.
I have in mind four such ideas, part of which require some rules to be bent in order to be admissible to the competition.

  • Visual representation of speech signals - will affect the lives of about 7000 Israeli Deaf persons, the needed rule bending will be to accept a project which will affect the lives of at least million Deaf persons from all over the world.
  • Digging tunnels deep in Earth and living in them, to free room for wild animals and vegetations on Earth surface. Will enable Israel to absorb another million Jews and more without incurring unbearable congestion. The project will need more than 5 years to cause a meaningful change.
  • Social change so that high social status will be granted to whomever has more survival and disaster recovery after natural disaster or human-made disaster, instead to whomever demonstrating conspicuous consumption. Training courses for the entire populace will be financed by insurance companies which sell insurances against the various disasters. Will affect the entire population.
  • Hostels for feral cats - not my idea. Will affect anyone whose neighborhood has feral cats and this is almost all of us.

The prize is a course in the Singularity University.

I am agonizing over it. To submit one proposal? To submit proposals for all my ideas? To submit a proposal at all? Won’t there be an accessibility problem in the course or in subsequent execution of the winning project?

Israel Zak 1927-2011

Friday, August 26th, 2011

ישראל זק תרפ”ז - תשע”א

לימדת אותי לכפול ולחלק כשהייתי בגן. אחר כך שכחתי איך מחלקים עד שלמדתי בבית הספר.

השגת לי צעצוע שמחירו היה מיליוני דולר - CDC6400 שהיה המחשב המרכזי של האוניברסיטה העברית בירושלים.

בזכות השבתון שלך, הייתי בארה”ב וזכיתי לטייל שם בתקופה שבה ישראלים עדיין לא הרבו לטייל בחו”ל.

יום אחד הבאת הביתה מכשיר טלפון שבעזרתו הצד השני יכל לשלוח לי מסר על ידי קוד מורס. הנסיונות לא עלו יפה כי אני ואלה שניסו לשוחח איתי טלפונית לא היינו מיומנים בתקשורת מורס.

כשהייתי בתיכון, פתחת חברת ייעוץ גיאולוגי ועזרתי לך בתכנות. לאחר שנים, הנסיון שלך בצד העסקי של הייעוץ הקל עלי את המעבר מעובד שכיר לפרי-לאנסר עצמאי.

ליווית אותי בתקופה שבה התחלתי לנהוג ברכב, מה שהקל עלי את ההשתלבות בתרבות הכביש הישראלית.

כשכתבתי את עבודת המסטר שלי, קבלתי ממך עצה להוסיף לה רשימת שאלות להמשך המחקר.

אתה ואמא ניהלתם אורח חיים שלא הדגיש את החומרנות וצריכת הראווה. המותרות שלכם היו לטייל כמעט בכל חור נידח בעולם. לכן גדלתי בתחושה שכסף לא יהיה מה שימנע ממני להשיג מה שבאמת חשוב בחיים. היה פתרון תקציבי ללימודים בקולג’ גלאודט כך שיכלתי לבחור לא ללמוד שם לא בגלל שיקולים כספיים. עזרתם לי לרכוש דירה מיד כשידעתי איפה אגור. בחרתי לא לעבור ניתוח שתל שבלול אבל דאגתם למימון, כך שאם הייתי רוצה, הייתי יכול לעבור ניתוח זה - גם בתקופה שלפני שהניתוח נכלל בסל הבריאות.

פרויקט הטלכתבים, להנגשה לחרשים של רשת הטלפונים לפני יותר מ-25 שנה, נזקק גם לכל מיני קשרים עם כל מיני בעלי השפעה. פעלת רבות מאחורי הקלעים. אצלנו מקובל להתגאות כשלא נזקקים לקשרים בשביל להצליח. אבל זה היה פרויקט שבשבילו זו היתה מצווה לנצל כל קשר שאפשר ולהפעיל כל השפעה פוליטית שצריך.

לאחר שנים קראתי את ההיסטוריה של הטלכתבים בארץ שבה הכל התחיל - ארה”ב - והתחושה שלי היא שבסך הכל בישראל הכל הלך לנו יותר בקלות מאשר ליוזמי הטלכתבים בארה”ב.

בניגוד להרבה אנשים אחרים, לקחת על עצמך את האחריות לאפשר ולהקל על התקשורת איתי. אני לא זוכר שאי פעם תיקנת לי את הדיבור, ואני זוכר פעם שאמרת לי שכשאני מרגיש בנוח אני מדבר יותר ברור. השקעת את המאמץ בלימוד ואימונים בדיבור מרומז ותמיד היה לי קל להבינך כשדיברת אליי, פרט כמובן לשבועות האחרונים שבהם כבר היית עייף מדי בשביל זה.

אני זוכר שהיו נסיבות שונות בילדותי שבהן לא הבנתי מה הולך ומה רוצים ממני - עד שבאת והסברת לי בבהירות מה הולך שם.

מאז שהטלכתב נכנס לחיינו, היית שרות הממסר שלי, לתיווך ביני ובין אנשים אחרים שהייתי צריך להשיגם בטלפון. לשמחתי הצורך שלי בשרות הממסר הלך וירד עם השנים, עם שיפור הנגישות התקשורתית של הציבור הכללי, הודות למסרונים ולדואר אלקטרוני.

תודה לך, אבא.

Israel Zak 1927-2011
You teached me to multiply and divide when I was at kindergarten age. Later I forgot how to divide until I relearned it in school.
You obtained for me a toy which costed multimillion dollars - CDC6400, which was the central computer of Hebrew University in Jerusalem.
Thanks to your Sabbatical leave, I was in USA and got to travel there at a time in which Israelis still didn’t travel abroad as much as they do today.
One day you brought home a telephone which had the means to let the other side pass a message to me by Morse code. The experiments were not successful because I and my conversation mates were not proficient in Morse communications.
When I was at high school, you opened a geological consulting company and I helped you in software development. Few years later, your experience with the business side of consulting eased my transition from employee to self-employed freelancer.
You escorted me when I started to drive a car, making it easier for me to integrate into the Israeli road culture.
When I wrote my M.Sc. thesis, you advised me to add a list of questions for further research.

You and mother had lifestyle, which did not emphasize materialism or conspicuous consumption. Your luxuries were to travel to almost every distant hole in the world. Therefore I grew up with the feeling that money will not be what’ll prevent me from achieving whatever is important in one’s life. There was a financing solution for my studies in Gallaudet College so I could choose not to study there not due to financial considrations. You helped me buy an apartment as soon as I knew where I’ll live. I chose not to undergo cochlear implantation but you secured financing for this, so that if I wanted, I’d be able to get this operation - even before the operation was included in the Health Basket.

The TDD Project, for making the telephone network accessible to the deaf more than 25 years ago, needed also all kinds of pull with all kinds of people with influence. You did a lot behind the curtains. It is our custom to be proud when pull is not needed in order to succeed. However it was a project for which it was mitzvah to exploit every exploitable connection and pull every available rope. Several years later I read the history of the TDDs where everything started - USA - and my feeling is that overall it was easier for us than for the TDD innovators in USA.

Unlike several other people, you accepted the responsibility to facilitate the communication with me. I do not remember any occasion in which you corrected my speech, and I remember that once you told me that when I feel relaxed, I speak more clearly. You invested the effort into learning and practicing cued speech and it was always easy for me to understand you when you addressed me, except of course for the last few weeks during which you were too tired for this.
I remember various circumstances during my childhood, in which I did not understand what was going on and what people want from me - until you arrived and explained clearly what is going on there.
Ever since the TDD entered our lives, you were my relay service, to relay messages between me and other people whom I needed to contact by telephone. Happily, my need for the relay service was lessened over the years, with improvement in telecommunications accessibility of the general population, thanks to SMS and E-mail.

Thank you, father.

Prophet ahead of his time?

Wednesday, August 17th, 2011

The following subject caused me to feel like a prophet who came before his time.  Some time after the upheavals in Israel started, I tried to interest several people in my economic ideas (links appear below).  I even joined a promising Facebook group of people, who want to preserve the sanity of economics in Israel.

However, it turned out that the leaders of that Facebook group have their own agenda, which is incompatible with discussions of novel economic ideas.  As a consequence, they asked me to stop posting there, and I left the group.  So I decided to just summarize links in a blog article and just refer any comers to it.

The subject of sane economics has been interesting me for several years.  Actually, it was the reason why I started to write this blog on May 2004.  As time passed, I switched to writing about other topics.  However, now, due to the upheavals in countries like Israel, USA, or England, it is necessary to develop a new way of thinking about economics.

I would like to solve problems like the following (in no particular order of importance):

  1. Environmental pollution due to over-consumerism.
  2. Joblessness in USA and several European countries (happily not a serious problem in Israel, at the moment).
  3. Cost of living for the middle and lower classes (a problem in Israel).
  4. Feeling of youths that no matter how much you try, you won’t be able to get ahead in life.

Following are links to relevant articles:

Stef Wertheimer and Hank Rearden

Thursday, February 3rd, 2011

אחד מהגיבורים בספר “מרד הנפילים” של איין ראנד הינו האנק רירדן שתואר כתעשיין.

בביקורי האחרון בחנות ספרים נתקלתי באוטוביוגרפיה של התעשיין הישראלי סטף ורטהימר.  קניתי ויום לאחר מכן כבר גמרתי לקרוא את הספר.  בכל סרט שראוי לשם “מרד הנפילים”, ורטהימר היה יכול לשחק את תפקיד רירדן והמראה שלו היה מתאים לדמות.  כמו כן, אם לא היה בוחר בכיוון הציוני של הקמת ושכלול מדינת מקלט ליהודים, יש להניח שפעילותו היתה דומה לזו של רירדן.  ורטהימר דוגל בעקרון הלסה-פר - על הממשלה להמנע מהתערבות בניהול עסקים.  הוא ציין דוגמא של פיקוח על עופות בתקופת הצנע הישראלית, וטען שאם היו מעסיקים את הפקחים בגידול עופות, זה היה פותר את בעיית אספקת העופות לכל ישראל.

באוטוביוגרפיה שלו, תיאר ורטהימר את ההיסטוריה של ישקר, יצירתו התעשייתית, ושל מאמציו לחינוך והכשרת עובדי תעשייה ברמה גבוהה.  הספר מיוחד בהיותו סיפור שעדיין לא נגמר - ורטהימר לא בחל בתיאור פרויקטים שנמצאים עדיין בביצוע או בתכנון, כמו שמתאים לאדם שלא יפרוש כל עוד הוא יכול לעבוד.

כשקראתי את הספר, חשבתי לעצמי שאם המשפחה העשירה ביותר בישראל היא משפחה שעשתה את הכסף שלה בתעשיה דהיינו משפחתו של סטף ורטהימר, ולא משפחה של בנקאים, איילי נפט או מחצבים, או אנשי נדל”ן, זה אומר שבכל זאת יש משהו נכון בכלכלה הישראלית.

Water quotas and bad socialism

Monday, October 4th, 2010

Israel currently suffers from serious water shortage.  Efforts to alleviate the shortage are underway.  One of the efforts is getting people to consume less water each month, by providing them with a certain quantity of water at one price, and any excess consumption costs much higher price.

This is bad socialism and is harmful to the liberty of people, because water bills are by apartments.  So people need to declare how many people live in an apartment, and if someone moves to another apartment, the water bill payers of both apartments need to declare this change of living place.

A better solution would be to do what was done with bread few years ago.  Economically, it was necessary to raise the price of bread.  It was handled in a better way - the price was allowed to rise, but people, who live on welfare, got few extra NIS each month, to cover the extra cost of bread, so that they won’t be worse off.

In the case of water, poor people at any case lack the capital for investing into water saving measures - plugging any leaks in the water pipes, installing water flow limiters (חסכמים) in the taps, shower sewage recyclers, rain water collectors, etc.  Well to do people can afford to make the investment which will reduce their water consumption - but need economic motivation to do so.

My suggestion is to provide water to everyone at high price.  No need to report how many people live in each household.  No need to compute water quotas for provision at lower price.  However the monthly payments to people on welfare and on fixed budgets are to be adjusted upwards so that they’ll not be worse off than they were before.

Appeal to all good people who donate meals to people in need in Israel

Tuesday, October 20th, 2009

Whenever you feed people, who could not feed themselves, please do not only shed tears on their bad fortunes.  Please do not stop at providing them with a meal.
Please ask them about the circumstances, which prevented them from being self-sufficient.

Then do something to ameliorate those circumstances.  Sometimes you can do a lot for the price of a single meal for a group of people.

I suspect that several responses will go along the following lines.

  • People past retirement age - why couldn’t they save in their retirement funds?  Probably they saved and lost the money to crooks or bad investments.
  • People with disabilities - what inaccessible places and circumstances prevented them from exercising their full earning potential?
  • Unemployed - probably need vocational training to train for an occupation with higher demand.  The expense consists of both tuition, free time for study, and stipend to live on while studying.

Some people will turn out to be lazy bums with feeble excuses - they should NOT be fed.

If you have a lot of money to donate, usually the best way to use it to help those non self-supporting people - is to make it easier for them to train for a better paying occupation.

Resolution of Yair Lapid’s “The Real Crisis” of nonprofits in Israel

Monday, December 1st, 2008

In the 28.11.2008 issue of “7 Days”, the Saturday supplement of Yediot Aharonot, Yair Lapid wrote about “The Real Crisis”.  It is about the financial crisis facing several nonprofits, which live on donations from well to do people, and which perform various services in behalf of people at need. Eventually, this financial crisis could adversely affect several vulnerable people.

The crisis is due to the drying up of the donations due to the financial/economic crisis happening now. Yair Lapid’s conclusion is that the Government should provide for those services rather than relying upon nonprofits.

I would like to offer another solution to the problem.

At times of economic depression, traditional economic doctrine calls upon governments to pump money into the economy.  Usually this is done by make work projects, infrastructure investments, etc.

I suggest that in addition to the above measures, the Government hand out stimulus money also to the above nonprofits, in proportion to the amount they got from donations in previous years.  Only nonprofits, which meet the criteria for proper management practices, would qualify for this.

My reasoning is that such monetary infusion will help keep employed people with special skills, so eloquently listed by Yair Lapid.  Also, since it can be assumed that people vet on nonprofits before making donations, the Government money will be almost well-spent as the monies of the private donors during previous years.

How to get capitalism to regulate itself?

Saturday, November 8th, 2008

In This is not the end of capitalism, Mark Shuttleworth (of Ubuntu fame) points out the need for capitalism with regulation. The regulators - those people who would regulate businesses - would need to have extraordinary personal qualities of resourcefulness, wisdom and incorruptibility. In other words, they need to have caliber like E.E. “Doc” Smith’s Lensmen (the qualities required by Lensmen include intelligence, utter incorruptibility, a high drive to succeed, and the highest drive to fight evil).

However, like Santa Claus, such people exist only in fiction. Therefore another solution is needed. A practical solution would, by necessity, be based upon a system, in which imperfect and corruptible people would nevertheless do almost as good job as incorruptible ones.

Fortunately, there is a precedent for systems obviating the need for supermen. The 18th century political philosophers faced a similar problem. They were faced with the problem of designing a regime, in which people will enjoy freedom, even though they are governed by other imperfect people. The solution was to devise a system of checks and balances. It was embodied in the constitution of USA and worked well for several years.

Therefore, a possible solution to the problem of regulating capitalism is likely to come from a system of checks and balances. In the following I’ll try to sketch a possible design for such a system.

A business operating in an industry, which needs to be regulated, has to answer to the following stakeholders:

  • Shareholders
  • Employees
  • Business partners (customers and suppliers)
  • Environment

Regulation, when it is enforced, aims at restoration of balance of the interests of all those stakeholders. Regulation has to be enacted when money fails to work as a means to motivate the business to serve its stakeholders in a balanced way.

Let’s try to set up a feedback loop, in which bad regulation translates into loss of profits. This can be accomplished by nominating people, who act like the historical kings or modern Benevolent Dictators For Life (BDFLs). Each BDFL will be responsible for regulating all businesses in a particular geographical area. Every business in the region will pay the BDFL 1% of its profits. On the other hand, the BDFL will be subjected to lawsuits from any stakeholder, who believes to have been wronged by a business under the BDFL’s responsibility.

Thus, the BDFL will have an interest at ensuring that the businesses in his area will prosper in a balanced way. Since small businesses have larger growth potential than big businesses, the BDFL will tend to favor small businesses. The BDFL will balance the interests of businesses with those of the other stakeholders when formulating regulations, so that the business will thrive and the BDFL won’t lose too much money to lawsuits.

This proposal is incomplete, and leaves out answers to several questions such as:

  1. What happens if a business operating in a geographical area gets to be so large that the BDFL of that area will profit more from favoring it than from nurturing other businesses?
  2. Is the BDFL only to regulate businesses, or also develop infrastructure (like kings)?
  3. How to select BDFLs from among candidates?
  4. When and how to replace BDFLs, who do not do good work?
  5. How to preserve the sovereignity of the people in a BDFL-controlled area?

Socialism - 1830 style

Saturday, May 31st, 2008

At 1830 there were riots in England, which were caused by bad policies, which seem to have counterparts in today’s social and immigration practices.

  • People were paid subsistence salaries, with supplemental income paid by the local government from the parish fund, which was financed by a special tax - the Poor Rate. The modern counterpart (at least in Israel) is the practice of paying people at low-skill professions salaries below the legal minimum rate, and having them supplement their income by “hashlamat hachnasa” - complementary income. This practice discourages employers from paying those people salaries which would let them support themselves (and from the effort to train those people so that their productivity will be high enough to justify reasonable salaries).
  • The Poor Rate’s modern counterpart is the National Insurance (known in USA as Social Security) fee.
  • Today as at 1830, social policies created the notorious poverty trap, from which people could not escape without extraordinary measures.
  • People could not move from parish to another parish unless the original parish certified that it would take them back if they cannot support themselves in other parishes. The modern counterpart is that of countries requiring people arriving from other countries to have means to support themselves and travel back to their country of origin.