There is a curious mix of conventional wisdom* that makes people apply the core message of the Second Law of Thermodynamics to how economics and thus knowledge interact. Often this is explained by saying that economic systems are not Zero Sum. Much of the reason knowledge, and thus economics, are not zero sum is that there is an intrinsic disconnect between the Second Law and its supposedly intuitive application to systems of knowledge, organisms, or economics. If one believes in evolution (and I certainly do) the concept that organic or computational systems create less entropy from random is somewhat obvious from the natural outcomes of evolutionary processes.

* I'm not a fan of conventional wisdom. Pragmatism has value, but the way things change is to creatively challenge orthodoxy of any body of knowledge.

As is often the case, I keep hearing much about Pope Benedict XVI's comments on Islam. Reading through the spin, I was very curious what the actual message was. I found this version from the Zenit News Agency, which from looking at the in depth Wikipedia entry, looks to relatively faithfully quote the one line that Iran is trumping up protests about.

The emperor's quote as quoted by the Pope follows in context (emphasis mine):

In the seventh conversation ("diálesis" -- controversy) edited by professor Khoury, the emperor touches on the theme of the jihad (holy war). The emperor must have known that sura 2:256 reads: "There is no compulsion in religion." It is one of the suras of the early period, when Mohammed was still powerless and under [threat]. But naturally the emperor also knew the instructions, developed later and recorded in the Koran, concerning holy war.

Without descending to details, such as the difference in treatment accorded to those who have the "Book" and the "infidels," he turns to his interlocutor somewhat brusquely with the central question on the relationship between religion and violence in general, in these words: "Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached."

The emperor goes on to explain in detail the reasons why spreading the faith through violence is something unreasonable. Violence is incompatible with the nature of God and the nature of the soul. "God is not pleased by blood, and not acting reasonably ("syn logo") is contrary to God's nature. Faith is born of the soul, not the body. Whoever would lead someone to faith needs the ability to speak well and to reason properly, without violence and threats.... To convince a reasonable soul, one does not need a strong arm, or weapons of any kind, or any other means of threatening a person with death...."

Most interestingly the Pope's main point is that theology remains a part of the curriculum at a University because it has certain socially scientifically important things to say. To lose sight of whatever truth exists in that statement handicaps the ability of the Western Enlightenment to reach out and engage others who value their religious beliefs.

Reading source material in disputes like this reminds me why the Internet is such a historically significant change..

I was reading a briefing in a pending Second Amendment case and it brought up an interesting point. If the Second Amendment is a right of the States, then didn't Abraham Lincoln violate that right when he demanded South Carolina disarm?

The other interesting item of how Constitutional law interacts, the Supreme Court ruled in Eldred v. Ashcroft the prefatory clause "To promote the Progress of Science and useful Arts" of the copyright and patent clause didn't limit the scope of Congress' authority to regulate patents and copyrights, then the prefatory phrase "A well regulated Militia being necessary to the security of a free State" doesn't limit the individual right in the Amendment.

Parker v. District of Columbia is the case in question.

All through the late '90's as I was running EMusic, I remember the constant drum beat from policymakers that somehow spectacular growth that was occurring all around us was driving up inflation. I surmise that it was some odd effect of the Philips Curve model that the Fed uses. What really drove me nuts is that this was being stated as gospel while I was watching huge capital influxes into various vertical industries drive tremendous competition and dramatically lower margins and pricing power. How could inflation rise when no firm I know of had pricing power?

This morning I received a great Monday Morning Outlook from Brian Wesbury and Bill Mulvihill. Quoting at length:

Because lags between changes in Fed policy and overall inflation can take up to two years, understanding today requires us to step back in time. The story begins in 1999, when the Fed feared that high stock prices and an overheating economy were inflationary.

This view was mistaken for two reasons. First, growth does not cause inflation. With commodity prices low, and falling, in the late 1990s the Fed should not have fretted that policy was too easy.

Secondly, Y2K caused the Fed and markets some confusion. Massive demand for high-tech equipment and software boosted spending above trend. Investors priced into many high-tech stocks ongoing growth rates in sales of 50% or 60%, while the Fed made the assumption that this growth, and some pricing pressures that it created, were permanent.

Between June 1999 and June 2000, the Fed hiked the federal funds rate from 4.75% to 6.5%. The real federal funds rate peaked at 4.0% - a very tight policy. This mistake caused deflation, recession and a collapse in the stock market.

This also leads me to want to pull excel out and do a price of oil as adjusted to gold ounces so I have a more rational basis to talk about the real cost of oil/gas over the last 5 years. Maybe if I have time.

A hat tip to Steve Conover at Skeptical Optimist who put me on to these guys in the first place. He's worth visiting as he's also talking about energy in an ongoing three part series.