Monday, August 30, 2010

Mind. Blown.

Ive read about the genetic code and how DNA uses nanotechnology to copy itself and read instructions in the code to make proteins. It's pretty impressive, but actually seeing it represented in computer animation... It's mind-blowing! From the folks at Dolan DNA Learning Center.

I know the prohibition of the use of 'design language' is de rigueur around the biological sciences but one can't help it. Those tiny proteins that are doing what they do -- reading instructions and carrying them out -- look like and are behaving like machines. Not only machines, but programmed machines. It's what prompted Nobel Prize winner Sir Francis Crick, after taking a look at the genetic code, to remark, "Biologists must constantly keep in mind that what they see was not designed, but rather evolved. " Biologists must keep reminding themselves, despite what their instincts and common sense are telling them, that these intricate processes occurring in cells are a result of random chance and necessity. But even his resolve about this wavered a bit when he advocated some sort of directed panspermia.

DNA Replication

DNA Transcription

DNA Translation

Code, transcription, translation. There's no way around it. One has to use the language of computer programming and information technology to talk about this stuff. The genetic code is a set of specific instructions written using a 4-character alphabet (A,C,G,T) much like a machine code is written in binary. Then nanomachines read and translate the four-character machine code into a higher level code composed of 20 characters (the amino acids) which is then used to make proteins: enzymes, blood vessels, skin, hair... It's like translating this:
01010100 01101111 00100000 01100010 01100101 00100000 01101111 01110010 00100000 01101110 01101111 01110100 00100000 01110100 01101111 00100000 01100010 01100101
to this:
To be or not to be
so it can be performed on stage by Patrick Stewart. And of course to do that youll need something like this. Even ignoring the obvious chicken-and-egg problem this presents, the origin of the genetic information is already a doozy for scientists and is probably getting them very excited.

Some guy called Bill Gates, who I heard knew something about computer code said, "DNA is like a computer program but far, far more advanced than any software ever created." ( In this book. Not to misrepresent Mr. Gates though. I bet he'd rather keep reminding himself that what he sees in DNA was not designed but rather evolved.)

Oh, and for the record, that idea that all those nanomachines in the cell are the result of random events that somehow fell together? I think it's BS.

Tuesday, August 24, 2010

Real wages

As countries continue to reel from the financial crisis, the Asia-Europe Peoples’ Forum (AEPF) has a proposed solution: Raise real wages. Their words.
Charles Santiago, Member of Parliament of Malaysia and AEPF co-coordinator in Asia, proposes a solution to the crisis that has a much longer effect: Raise workers’ real wages.
“Government is subsidizing business when it bails out banks using the stimulus packages. The money should go directly to the people. This is a more sustainable option.”
How sustainable is it? First of all, the AEPF is proposing an increase in workers' nominal wages: mandating perhaps an increase in the minimum wage of workers across the board. This is fine, but does that translate to an increase in real wages? Often, it does the opposite.

How are real wages increased? Real wages are increased when workers' wages can buy more stuff. For example, a worker's 100 pesos used to buy 2 kilos of rice, then later his 100 pesos can buy 3 kilos of rice of the same quality. His real wages have effectively increased even if his nominal wages remained the same since the money he has can buy more stuff. When does this happen? It happens when more products are produced such that the demand for these products do not exceed the supply disproportionately. Does increasing workers' nominal wages lead to an overall increase in the production of goods and services? That's the theory. Here's Mr. Santiago again:
Give underpaid workers their real wages and what will they do with it? They will spend all of it. They will buy food, clothing, creating a demand for goods and services. The effect on the economy would be very fast, similar to the stimulus packages,” he said in a news release.

“Except that unlike giving money to the rich, who may buy paintings and other luxuries that create nothing, the poor will 100 percent buy useful things that create local demand for goods and services available locally.
Giving workers "their real wages" could mean allowing the market to determine their wages. The nominal wages can go up, or they can go down. This is not what Mr. Santiago means. He means only raising nominal wages even if we have an oversupply of labor.

Most likely, this is what happens when the nominal wages are increased in this environment with a labor surplus: An increase in the wages is an increase in production costs. The price of products go up naturally and as they rise, the demand for them goes down. To stay profitable, that is, to stay in business, the business owner will lower prices up to the point where he can still make a profit, but as soon as he starts losing money he'll start laying off workers or cutting their work time or close shop. A general increase in nominal wages also means that prices of production inputs also increase. There will be a general increase in prices such that the worker's 100 pesos, instead of being able to buy 2 kilos of rice, can buy only 1 kilo. The effect is a decrease in the real wages in spite of the increase in nominal wages. And since businesses are cutting costs to make a profit or closing down, there will be an increase of workers working, say, 4 hours instead of 8 as well as an increase in the ranks of the unemployed since a lot of businesses won't be able to hire workers at the mandated wage. There will be a general slowdown of business activity and a general deflation as businesses default on their loans and banks tighten up.

So no, increasing the nominal wages does not mean an increase in the real wages. To increase real wages, we need to get more people working, and more people producing stuff. We need to stop destroying the value of our currency by inflationary 'stimulus packages'. We should let deflation happen instead of fighting it. True, deflation might create a downward pressure on nominal wages but if it results in an increase in the purchasing power of the workers' peso, then that's a good thing. Mr. Santiago is correct in saying that government stimulus packages only help the banks (and government crony corporations, I might add), but mandating businesses to increase worker wages also has a detrimental effect on real wages. Businesses will be happy to bid up the price of wages if workers were in short supply, but that is not what we have.

Thursday, August 19, 2010

"The banking system is a crime"

When I was in Jakarta last year, the subject of gold came up in a conversation with a Muslim colleague. I asked him if it were easy to buy gold coin. He said yes. These weren't issued by the government but these coins are good and are guaranteed by the coiner. He said they were a very good investment. I never thought about it again because back then one coin the size of our one-peso coin costs around 1,000,000 rupiah (around 5000 pesos) and I couldnt afford it. It probably costs about 1,500,000 rupiah now. Little did I know that the minting of gold and silver coin and the use of these as currency are deeply rooted in Indonesia's Islamic culture.

As I remarked to another colleague there, looking at the vibrant economic activity in the capital, I said I thought that Indonesia could be the next economic miracle after China and India. The next video reinforces that as the Indonesians themselves, in a repudiation of their central bank, are slowly moving towards a commodity currency. Indonesians are beginning to realize that the present system of fiat currency is on the brink of collapse and they need to return to the sound economic principles rooted in Islam. It really is about freedom and justice.

See also this post on commodity currency.