Tuesday, October 30, 2007
for your latest award:
Gary S. Becker, the University of Chicago professor known for applying economic theory to social issues ranging from drug addiction to family behavior, is among the latest recipients of the Presidential Medal of Freedom.
The 76-year-old economist’s early work showed that companies discriminating on the basis of race or sex hurt themselves by losing out on productive workers. Later, he presented criminality in a rational framework, suggesting that criminals — instead of being mentally ill — take into account the likelihood of being caught, and the expected punishment, before committing a crime.
The White House said today in announcing the recipients: “Gary S. Becker has broadened the spectrum of economics and social science through his analysis of the interaction between economics and topics such as education, demography, and family organization. His work has helped improve the standard of living for people around the world.”
Seventeen years, according to Bret Stephens.
Maybe Darryl Hannah could address big polluters in her own industry.
Global warming prediction market here.
If you prefer the latter, then you should not be wringing your hands over the trade deficit with China, but doing handsprings over the capital surplus the U.S. enjoys with that country:
In my late teens, I worked in a dusty hot warehouse for roughly $3 per hour. I've since found that working in an office for $3 per minute is better.
The Commerce Department's Bureau of Economic Analysis calculates that America's service sector had a $3.7 billion trade surplus with China last year. In 2005 the surplus was $2.4 billion, up from $515 million in 1992. U.S. service exports cover a wide range of economic activities, from parcel shipping to investment banking. Education is one of America's top service exports (a $1 billion surplus). Advertising, technology, legal services, industrial engineering and other "business, professional and technical services" account for just over a third of the U.S. surplus, and financial services, for another $480 million.
China is now the ninth largest purchaser of American services. And the U.S. surplus could grow bigger if China meets all of its World Trade Organization commitments and opens its markets further. According to a study prepared late last year by Oxford Economics for the U.S.-China Business Council, America's service-trade surplus could reach $15 billion a year by 2015.
*Everyone except Goldman, who was short subprime paper, and politicians who don't need to mark any positions to any market.
One of Mr. O'Neal's purported sins was to surprise Merrill's board last month when the size of the company's third-quarter write-down ballooned to $7.9 billion from $4.5 billion. That's a big surprise all right, and it suggests that oversight was late in coming. But it also implies that Merrill did the right thing by taking a good hard look at its books before reporting its results. Some other big banks haven't been so candid. As for Merrill's board, while it may be wielding the ax against Mr. O'Neal, shareholders have a right to ask why those directors were sleeping through 2006.
We suspect some of the tightest white collars these days are over at Citigroup, America's largest bank and one with some of the biggest subprime exposure. Something like $80 billion worth of so-called "structured investment vehicles" sold in Citi's name are wobbling, yet the bank is doing all it can to avoid absorbing those losses on its own balance sheet.
Thus Citi and a few friends have come up with the razzle-dazzle of the $100 billion "super-conduit" fund to buy some of the assets and hope to ride out the storm. We've been wondering why anyone not in similar subprime straits would want to invest in such a fund, notwithstanding Treasury Secretary Hank Paulson's political blessing. (Citigroup director and former Treasury chief Robert Rubin owes Mr. Paulson for that one.) But Citigroup insists the fund is moving ahead, and if they can pull it off, so be it. In any case, the future of Citi CEO Chuck Prince is very much on the line. If he can't find a way to roll over those liabilities in the coming months, the bank may have big write-downs of its own.
This self-cleansing is crucial for the financial credibility of individual companies as they try to win back customers, many of whom have taken a bath. But it is also vital to the larger financial system that the big banks are honest about their mistakes, clean up their balance sheets, and generally police themselves. The short phrase for this is "marking to market." And while it may be painful for companies and CEOs, it will help the system work through the losses faster and prepare for recovery sooner.
And speaking of Washington, that's one place where no one is being held accountable for the subprime boom and bust. That includes in particular the Federal Reserve, whose far too easy monetary policy created a subsidy for debt that fueled the housing and subprime mortgage excesses. One difference between Wall Street and Washington is that in the latter no one ever admits a mistake, much less suffers for it.
UPDATE: Maybe even Goldman is scathed.
Monday, October 29, 2007
1) Vouchers don't work ... But most tellingly, this argument is incompatible with removing your own children from failing schools. Either the school makes a difference, or it doesn't. If it doesn't, why are you moving to the suburbs in search of a better school district for your kids?UPDATE: She crushes on nationalized healthcare, too. Megan is the Tom Brady of policy right now:
3) The community doesn't want vouchers. Awesome. Then the community won't take vouchers, and you'll win by default. If what you mean is that some people claiming to speak for the community, want other people who are members of that community not to be able to have vouchers, then I'm less than interested in your argument.
9) I don't want my tax dollars used to pay for religious education Waaaaaaah. The fundamentalist down the block doesn't want his tax dollars used to pay for teaching evolution. I don't want my tax dollars used for 97% of the things my tax dollars are used for; welcome to representative democracy. And in Catholic schools, where most of the vouchers would be used, the religious education is voluntary; lots of non-Catholic kids go there without being proselytized. If this bothers you that much, we can discuss requiring schools that accept vouchers to make religious education optional. But let's go back to why we're debating this policy in the first place: the kids. This is about the kids, right? And which is worse: that junior might hear, once a week, some sort of religious message which, to judge by the people I know who went to parochial school, has a fairly dim chance of sticking; or that junior won't be able to read and write and will spend the rest of his life moving heavy things from one place to another?
11) There's no way to assure the quality of private schools Ha. Ha. Hahahahahahahahahahahahahahaha. Seriously? The problem with private schools is that they can't match the same level of quality we've come to expect from our urban public school system? And what else have you learned in your visit to our planet?
Andrew points to an article showing that 70,000 British people a year fly abroad to get basic life-saving procedures such as hip replacements, heart bypasses, and dentistry.
Ezra responds that 100,000 Americans go abroad for plastic surgery a year! And untold numbers more are going for non-cosmetic procedures. This would be a more devastating critique if
a) Britain were not one-fifth the size of America
b) we had hard figures on how many people in America were seeking procedures abroad that are normally provided in a timely manner by national health systems
Ezra also claims that Americans are creating the industry; Britons are just free riding. Beg pardon, but if Americans were going abroad en masse for dentistry, I'm pretty sure that Hungary wouldn't be their first destination.
But the weirdest thing is that he seems to think that low-cost free market care is an indictment of the free market. And yet, this subtly undercuts the argument that Ezra et al. consistently make: health care in Europe is cheaper than health care in America; health care in Europe is paid for by the government; ergo, if America had health care like Europe's, it would be cheaper.
Let me try my own version: privately provided health care in Bangkok is very, very cheap, much cheaper than publicly provided health care in Europe. Ergo, Europe should privatise health care.
The liberal instantly recognizes that this is ludicrous: cost structures in Europe are much different from cost structures in Bangkok. But the same is true of America and Europe.
Bangkok's doctors are so cheap because a doctor making a modest wage by British standards can have an enormous house and a flock of servants to take care of him, putting him in the very top echelon of Thai earners. Nurses too, can make an American pittance and still live very well. As Bangkok gets richer, the servants and the gigantic house will not be so affordable--and neither will the health care.
Likewise, America is richer than Europe; it therefore has to pay its doctors, nurses, etc. more. (A doctor in France makes about what a moderately experienced RN makes here.) Also, health systems held down wages in previous periods, which is much easier to do than inducing everyone to take a 75% pay cut now. If we did slash wages by that much, workers would exit the public system in droves, immediately destroying it. We literally cannot get there from here.
NFL is considering a rule that would prevent the Patriots from throwing passes longer than five yards
once they gain a four-touchdown lead.
If the opposing team makes it a three-score game, the Patriots would be allowed to file an appeal for "more creative routes," but receivers Randy Moss and Wes Welker are no longer allowed to be on the field together in the second half.
League officials hope the new rule, dubbed "The Other Brady Bill," will provide more acceptable final scores, and improve the self-esteem of players across the league.
according to Matt Mosley.
UPDATE: Rich Tandler recounts episodes when the Redskins ran up the score.
by Glen Whitman:
... John scores each woman’s looks on a scale from 0 to 10. Then he interacts with each woman (from behind a screen, if you insist) and scores each woman’s personality on a scale from 0 to 10.UPDATE: Don Surber holds up Giuliani's prostate as anecdotal evidence (no picture following, and Surber is holding it up figuratively).
The scores John gives for looks range all over the map, from 0 to 10, while the scores he gives for personality are bunched together in the 6 to 8 range.
To calculate composite scores, the World Mating Association (WMA) decides to rescale the personality scores. It calculates each woman’s personality score as follows: personality = 10 x (raw score – 6) / (8 – 6). In other words, it measures a woman’s score as the percentage of the distance between the lowest-scoring and highest-scoring women. A woman John gave a 7 would be rescaled to a 5, because she’s halfway between 6 and 8. A woman he gave a 6 would now be a 0, and a woman he gave an 8 would now be a 10.
Does this method make sense? Well, let’s see. Take two women, Alma and Betsy. Alma got a 9 on looks and a 6 (now rescaled to 0) on personality. Betsy got a 6 on looks and a 7 (now rescaled to 5) on personality. So Alma’s and Betsy’s composite scores are 4.5 and 5.5 respectively.
“But wait a minute,” John objects. “I said looks and personality were equally important to me. Alma’s three whole points better looking than Betsy. And while her personality is not quite as nice, it’s not that different. I thought they were both nice enough. All things considered, I’d give Alma a 7.5 and Betsy a 6.5. What I’m trying to say, I like Alma better!”
The problem, obviously, is the rescaling. John said personality matters just as much as looks to him – but fortunately for him, he likes most women’s personalities. The WMA’s approach exaggerated the significance of personality to John by treating women whose personalities he liked somewhat (6’s) as women he didn’t like at all, and women whose personalities he liked a lot (8’s) as women he thought were flawless.
The punchline is that the method I’ve just described is the method the World Health Organization (WHO) used to make its composite scores of healthcare system performance. These are the scores used to create the widely-cited rankings of nations’ healthcare systems.
I worked under Gutfreund and Warner--neither one was visionary or intellectually competitive--but both had strong personal skills. I think Gutfreund was a better manager of talent, but Salomon had more talent at its peak than JPMorgan (in my 2 decades of working).
Stan O’Neal is leaving as chief executive officer and chairman of Merrill Lynch in the wake of a record $7.9 billion write-down in fixed income, but he is by no means the first top banker to suffer that fate. Our friends over at sister publication Financial News took a trip down memory lane to look at some senior executives who were forced out after problems at the banks they led.
• Peter Wuffli - UBS - ousted: 2007;
Wuffli was ousted as CEO July 6 after estimated losses of $3.5 billion from hedge fund Dillon Read Capital Management. The bank’s share price rose at half the rate of rivals Credit Suisse Group and Deutsche Bank in the 18 months before he left. UBS Chairman Marcel Ospel backed Wuffli as his successor, but instead the bank’s board showed him the door. Ospel agreed to extend his contract for another three years and former wealth management head Marcel Rohner stepped in to become CEO.
• Philip Purcell - Morgan Stanley - ousted: 2005;
Purcell, formerly chairman and CEO of Morgan Stanley, was forced to step down in June 2005 after a period of discontent among shareholders and employees over the direction of the investment bank and performance since its $10.2 billion combination with Dean Witter. While integration of the brokerage businesses proved problematic, the main charge was that Purcell showed little interest in investment banking and blocked proposals to use Morgan Stanley’s money to make financial bets or to invest in private equity deals. The U.S. bank’s market valuation slipped to about $57 billion in June 2005 from about $94 billion in January 2001, a bigger drop than its main competitors.
• Douglas “Sandy” Warner – J.P. Morgan Chase – retired: 2001;
Variously J.P. Morgan’s chairman, president and CEO, Sandy Warner retired as chairman in September 2001 on the one-year anniversary of its merger with Chase Manhattan. In the month before his retirement JP Morgan Chase announced 3,000 job cuts in its investment-banking business, which had already suffered a major cull in the immediate aftermath of the merger. He recently became an adviser at Carlyle Group.
• Jon Corzine - Goldman Sachs - ousted: 1999;
Corzine, former chief executive and co-chairman of Goldman Sachs, left in January 1999 after 24 years at the investment bank. Goldman insiders claimed Corzine’s ouster was connected to bitter politicking after the bank racked up losses from the Russian debt crisis of 1998, but the official line was that his departure was part of an orderly transition ahead of the bank’s initial public offering. Corzine was later elected to the U.S. senate and now is governor of New Jersey.
• John Gutfreund – Salomon Brothers – resigned: 1991;
Dubbed the “King of Wall Street” in the 1980s, John Gutfreund’s 38 years at Salomon Brothers, where he had been chairman and chief executive for more than 10 years, ended in ignominy after the bank was implicated in illegal trading in the US Treasury bond market. Salomon Brothers under Gutfreund had been the top investment bank in the 1980s. It eventually was bought by Warren Buffet, before being sold to Citigroup.
UPDATE: Felix Salmon has some penetrating organizational insight.
Saturday, October 27, 2007
... any restriction on liberty reduces the number of things tried and so reduces the rate of progress. In such a society freedom of action is granted to the individual, not because it gives him greater satisfaction but because, if allowed to go his own way, he will on the average serve the rest of us better than under any orders we know how to give. —H. B. PhillipsThe ever excellent Steve Conover.
Friday, October 26, 2007
We are starting to enter the point of the season where we really have to wonder if the New England Patriots are going to be one of the great teams of all-time. What they are doing is simply amazing.
I'm starting to get excited about the prospect of an undefeated season with the Patriots. I know there have been a few teams such as the Broncos and Colts who have made bids at perfection recently, but for the first time in a long time, this seems like a real possibility.
The hurdle for the Patriots is one of the toughest AFCs I've seen in a long time. The Colts, Steelers, Jaguars and Chargers are all really good. And the Patriots still have dates with the Colts and Steelers left on their schedule.
If the Patriots can beat the Colts in Indy, then you have to start having serious conversations about this being the greatest team of all-time, or at least of the salary-cap era. Comparing teams of different eras is hard, because you have to give credit to some of the deep teams that the Steelers and 49ers had. I have for a long time said the 49ers second team of the 1980s could have beaten 80 percent of the league.
But with due credit to the 1972 Dolphins and the 1985 Bears, it is hard to remember a team that was this dominant against its peers, and they definitely are on the right track to be one of the teams for the ages.
We offend fire by occupying the holy lands of burnable, burnable forests with our "fireless" nuclear power plants, claiming that we are "better than mere flames". We laugh at fire's "primitiveness" and "simplicity".
Well, apparently fire is stronger than we think, as it continues to prove itself unstoppable despite our recent surge of extinguishing agents. Water, and by extension America, is no match for such a primal force.
How foolish fighting fire is. And what a waste of resources in a country where there are children without health insurance.
In “The Millionaire Next Door,” authors Thomas Stanley and William Danko herald the thrifty rich who save every penny, drive old cars and invest cautiously. Getting rich, they say, is all about being conservative.But there's still the bigger perspective, as I read somewhere a long time ago:
Today, Barclays Wealth released a report along with the Economist Intelligence Unit that found 60% of individuals with investible assets of $1 million or more said “a high appetite for risk has been an important influence in their wealth creation.” That compares with 36% of those surveyed with assets under $1 million.
The richer people get, the more comfortable they are with investments others might consider risky. For instance, 77% of respondents worth $3 million or more have invested in individual stocks over the past three years, compared with 55% of those worth less than $1 million.
... use worldly wealth to gain friends for yourselves, so that when it is gone, you will be welcomed into eternal dwellings.
"Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else's property, who will give you property of your own?
We do assume that housing starts trough at 1.18 million units and remain near there through 2008, and we have a 6% nominal, 11.3% real decline in house prices, and push that through personal consumption expenditures via a traditional wealth effect. We still don’t get a recession. It is interesting to compare the current episode to the last recession. Both had one component of fixed investment that was in a sharp decline and hits to wealth from stock prices in 2000, and from house prices presently. This comparison is shown in the chart below. The direct drag on GDP growth from declines in fixed investment are similar, at least in the peak effect (given the expected trough in starts), but the wealth effects are dramatically different!
Years after studies first found that dangerous bacteria routinely hitch rides on the neckties of doctors, U.K. health officials have banished the old four-in-hand, along with jewelery and long sleeves, from their hospitals. They hope the ban will slow the spread of Methicillin-resistant Staphylococcus aureus (MRSA), a so-called superbug that accounts for more than 40 percent of inpatient blood infections in the U.K. (Health officials in the U.S. might be advised to follow suit: a 2004 study found that half of the neckties worn by doctors in a New York hospital harbored dangerous pathogens.)
But your tie just might be hiding something besides germs. In a letter to the Financial Times, top Google lawyer Peter Fleischer had the following to say about neckties:
Decorative camouflage for the business suit, designed to shield the middle-aged male physique, with its shrinking shoulders and protruding paunch, from feeling sufficiently self-conscious to hit the gym…. Wouldn’t you like to know whether your business partners are fit? Why should you trust a man in business if he abuses his own body?
Or in politics? Political reporters often fawn over candidates who go tie-less on the campaign trail.
This past preseason, the Nobel laureate precursor McGahee said:
Going to Buffalo, it was like hitting a brick wall. Like, ‘Damn!’ Can’t go out, can’t do nothing. There’s an Applebee’s, a TGI Friday’s, and they just got a Dave & Busters. They got that, and I’m like, ‘What the?’ And, you know, the women …Now, Ed Glaeser confirms the Ravens RB theory of urban economics (via Greg Mankiw):
“You see, when I was in college that’s what I used to thrive off of,” the 25-year-old says. “The better you do, the more fame you get. So you know, it was like, I was used to that. And then you get to Buffalo and no matter how you do, it’s the same. It’s no big city. You know what I did every day? I came home and played video games.”
At the onset of the Great Depression, Buffalo had 573,000 inhabitants, making it the 13th-largest city in America. In the 75 years that followed, this once-mighty metropolis lost 55 percent of its population, a decline most dramatic in its blighted inner city but also apparent in its broader metropolitan area, one of the 20 most quickly deteriorating such regions in the nation. Twenty-seven percent of Buffalo’s residents are poor, more than twice the national average. The median family income is just $33,000, less than 60 percent of the nationwide figure of $55,000.OK, stop blaming him now. And just think, Baltimore is the standard by which Buffalo fails.
The history of Buffalo helps us understand why it continues to lose people and why it will be hard to reverse the trend. Historians often overstate the importance of the Erie Canal to New York City’s expansion: Gotham grew just as quickly before the canal was dug.
A major culprit in Buffalo’s collapse was a shift in transportation technology, reducing the importance of the Erie Canal and of the cities that arose to take advantage of it.
Other trends compounded Buffalo’s woes. Improvements in electricity transmission made companies’ proximity to Niagara Falls increasingly irrelevant. Mechanization meant that the industry that did remain in the city needed fewer bodies. The appeal of the automobile induced many to leave the older center cities for the suburbs, where property was plentiful and cheaper, or to abandon the area altogether for cities like Los Angeles, built around the car. And Buffalo’s dismal weather didn’t help. January temperatures are one of the best predictors of urban success over the last half-century, with colder climes losing out—and Buffalo isn’t just cold during the winter: blizzards regularly shut the city down completely. The invention of air conditioners and certain public health advances made warmer states even more alluring.
In general, when cities shrink, poverty isn’t far behind, for two reasons—one obvious, the other subtler. The obvious reason: urban populations fall because of relocation of industry and drop in labor demand; as jobs vanish, people living in a city get poorer. The subtler reason: declining areas also become magnets for poor people, attracted by cheap housing.
State and local government did little to improve Buffalo’s chances—in fact, they worsened things considerably. First, New York’s high taxes, burdensome regulations, and pro-union laws made Buffalo less attractive to employers than its more successful southern competitors.
Buffalo also suffered from lousy local politics. During the 1960s, the city government failed to deliver either safety or good schools. Race riots shook the area, and crime rose steadily. Fiscal crises became epidemic. Buffalo had difficulty recruiting police because of low wages and the dangers of the street. Leadership was especially dismal during the late sixties and early seventies, the city’s worst years. Mayor Frank Sedita, who faced ceaseless fiscal problems and surging violence from 1966 to 1973, was a traditional urban politician, better at playing to the city’s various ethnicities than at confronting its ongoing crisis.
Buffalo wasn’t a particularly skilled city in 1970, and it isn’t one now. Fewer than 19 percent of the city’s adults boast a college degree; the number in Manhattan is 57.5 percent. Whereas New York always had some industries, such as finance, that required brainpower, Buffalo’s industries were invariably brawn-based. Buffalo wasn’t a university town like Boston, and it didn’t have Minneapolis’s Scandinavian passion for good lower education. It had the right skill mix for making steel or flour, not for flourishing in the information age.
No one thinks his plan has a chance of becoming law this year, but its beauty is as a signal of Democratic intentions for 2009. In proposing what would be the largest tax increase in history, Mr. Rangel is showing the world what he wants the tax code to look like if Democrats run the entire government. None of the Presidential candidates will admit this before November 2008, but give Mr. Rangel credit for having the courage of Hillary Clinton's convictions.
With one very revealing exception. Mr. Rangel does propose to cut the corporate tax rate, of all things, to 30.5% from 35% today. He'd "pay" for this by reducing business credits and deductions. This is revealing because it is a tacit admission that tax rates really do matter to investment choices.
Yet when it comes to individuals, Mr. Rangel seems to think that he can raise rates and no one will behave differently. Thus he proposes to raise taxes on business and the upper-middle class in order to reduce the Alternative Minimum Tax (AMT) that Democrats created to soak the rich but is now threatening to skewer the middle class.
But where Mr. Rangel really gets busy is with his plan for a long-term "revenue neutral" AMT fix. He wants to abolish the AMT permanently and greatly expand "refundable tax credits" for low income families, while adding a 4% income tax surcharge on anyone who makes more than $200,000 a year, or 4.6% if you make $500,000 ($250,000 for singles). Mr. Rangel also wants to raise the capital gains tax rate to 19.6% from 15% today, and raise taxes on dividends, business partnerships, and companies with foreign subsidiaries. Add it all up and you get new taxes of $1 trillion or more.
We sympathize a little with Mr. Rangel, whose bad luck has been to take over his tax chair just when the AMT is becoming the tax that ate the middle-class in the high-tax "blue" states of New York, California and New Jersey. Democrats are desperate to avoid blame for this, even as they've boxed themselves in with their "paygo" promise to offset every tax cut with a tax increase or entitlement spending cut.
Amid slow growth and a housing recession, this couldn't be a worse time to raise taxes on capital gains, dividends and small business. Democrats would be smarter to drop the tax increases and "paygo," and simply patch the AMT for another year. And if Mr. Rangel really wants to reform the tax code in 2009, he's going to have read up on what the Gipper accomplished. All he's proposed so far is a trillion-dollar bomb.
Serves us right. For the most part the academy teaches our students that the higher the tax the better, the media reports to our voters that the answer to failed government programs is to grow the old ones and make new ones, and we elect buffoonery, ...Democracy = Idiocracy.
Thursday, October 25, 2007
I'm always waiting for one of these Hollywood greenies to speak out about the emissions caused by making films and television programs. There is always a shoot going on, and besides taking away swaths of already scarce street parking, there are about 10 trailers and trucks, idling or running generators in my Tribeca neighborhood.
You guys are telling me to drive a Prius, while my kids are breathing your carbon monoxide and spending money on your media-licensed products. Sure, that's fair.
Cartoon via Greg Mankiw.
... the bill undermines energy independence by raising taxes on domestic production and throwing up new barriers to exploration. It's hard to see how it has any effect on national security, and we're at a loss about its consumer-protection claim too, unless you think Americans need "protecting" from the incandescent lightbulb. The bill bans those, effective 2012, on page 601.
But its worst (and little noticed) provision may be a requirement that 15% of U.S. electricity be generated from "renewable" sources by 2020. Utilities that can't meet these goals are fined -- taxed, really -- based on how far short of this Eden they fall. Currently, only about 3% is provided by such renewables as wind, solar or "biofuels."
In any case, as we're all discovering with corn-based ethanol, renewables have their own problems, both substantive and political. Liberals are all for wind power -- as long as it doesn't obstruct their oceanfront views off Nantucket. Hydro power is dandy -- except it kills fish and disrupts their habitat. Solar requires acres and acres of real estate. There's plenty of land for solar arrays in the middle of the country, or at least there was before the land was turned over to grow corn for heavily subsidized ethanol. And, by the way, using farmland for energy means using less to grow food -- which means higher prices at the kitchen table, or more food imports, or both. The House Members who voted for this must figure all of this will be some other Congress's problem.
Earlier this year, Mr. Dingell suggested that if Congress were really serious about global warming, it would impose a carbon tax. At least that's being honest about the costs. The "renewables" mandate in the House energy bill, by contrast, is a multibillion-dollar stealth tax on electrical utilities, and ultimately on electricity users. The danger is that, with all eyes on car-mileage standards, this tax could become law without many people even noticing.
Jason Stark: You can mark down that 13-1 score as the most lopsided Game 1 blowout in World Series history. And if you want to chalk that up to ... A) the Christy Mathewson of his generation (a.k.a. Josh Beckett) and B) the hottest lineup ever to march to home plate in the annals of 103 Octobers.These Red Sox are better hitters than Version 2004. But beyond Beckett, Okajima, and Papelbon, the pitchers are vulnerable. I'm short a few WS.4GAMES.BOS, even though I'm long MLB.REDSOX.
Jerry Crasnick: The Red Sox welcomed the Rockies to town with a full-course beatdown menu Wednesday night. It began with a Boston schoolyard tradition -- the atomic wedgie -- followed by a noogie, a nose twist, and the obligatory forfeiture of lunch money and loss of dignity.
Wednesday, October 24, 2007
whoops, I meant forgette, in a recursive blog link, er, linkette.
The WSJ Numbers Guy has this:
Alan Reifman, a Texas Tech professor of human development and family studies who runs a blog called The Hot Hand in Sports, suggests using a binomial probability calculator to get a handle on the Rockies’ streak. These calculators answer questions such as, if you flip a coin 22 times, what are the chances you’ll get heads 21 times? The Rockies were, essentially, a fair coin on Sept. 16. So the probability of the run, according to a Vassar online calculator, is about one in 182,000. If we take the Rockies’ exact winning probability heading into the streak — 51.35% — we get one in 107,000.
Prof. Reifman suggests trying a different estimate that gives the Rockies more credit. What if we assume that, despite the record they actually had, the Rockies should have been expected to win 70% of their games? In that case, their streak is still a one-in-245 long shot.
No baseball team has ever had a streak this good so late in the season. That might seem to confirm a piece of baseball conventional wisdom, namely that hot teams such as the Rockies have a sort of momentum of winning that overcomes their underlying skill level and the historical record. But researches would argue the opposite: A hot streak such as the Rockies’ is just what one would expect to arise eventually if each baseball game were a flip of a coin, albeit a coin weighted according to the teams’ skill levels — just like if you flip a coin a couple hundred thousand times, you’d expect to see a run of 21 heads out of 22 at some point. And the Rockies overall have been no more streaky than you’d expect this season had their games been decided by coin flip, as Prof. Reifman wrote recently on his blog.
“These things happen,” Prof. Reifman told me. “This is one of those person-winning-the-lottery-twice kind of bizarre scenarios.” (It’s also akin to having triplets twice, without fertility aids.) That statement is supported by general research in the field, starting with a 1985 paper debunking the notion of streak-shooting in basketball, and running through a paper last year that reviewed the last two decades of research and found that “the empirical evidence for the existence of the hot hand is considerably limited.”
But there is one question such statistical techniques can’t answer: Are the Rockies merely by happenstance the team that sits on the edge of the bell curve (just lucky, as Tim Marchman recently wrote in the New York Sun), or is there something intrinsic to the team, at this time, that made it the one with the once-in-history hot streak? Prof. Reifman acknowledges that is a danger of writing off all such streaks as the product of sheer luck. For instance, he notes, the streak of 43 straight U.S. presidents being men was no accident.
Don Surber has a good case in point (via Glenn Reynolds):
Drudge and NYT are about even in Web hits. A British study showed one-quarter of the U.S. hits for Brit newspapers come from Drudge. I’m guessing he steers quite a few hits to NYT.
MoveOn hates Drudge because the Clintons were able to get Newsweek to spike the Lewinsky story, and they would have gotten away with it too, if not for that meddling Matt.
NYT carries water for MoveOn today in a Page One story that included this:
The site is a potent combination of real scoops, gossip and innuendo aimed at Mr. Drudge’s targets of choice — some of it delivered with no apparent effort to determine its truth, as politicians of all stripes have discovered at times.
Well, let’s put that to the acid test. The Drudge at 8:20 a.m. Eastern today.
Top of the Page:
Wildfires Prompt State Of Emergency In 7 Counties…
Thousands more homes could be at risk…
Wind gusts to 60 mph…
And the links are to: KNBC, the Daily News, LA Times, and Weather Underground — the news service, not the group of radical bombers that was featured in a NYT story on Sept. 11, 2001.
Banner headline: “HELL COMES TO SOUTHERN CALIFORNIA”
Left side stories think to 1. ABC News, 2. AP, 3. Fox News, 4. Financial Times, 5. AP, 6. Financial Times, 7. Malaysia Times, 8. Hollywood Reporter, 9. Times of London, 10. International Herald Tribune, 11. Deadline Hollywood.
Center column: 1. Times of London, 2. London Telegraph, 3. London Guardian, 4. International Herald Tribune, 5. Times of London, 6. Washington Post, 7. Washington Times, 8. Haaretz.
Right side: 1. New York Times, 2. AP, 3. Bloomberg, 4. AP, 5. Agence France-Presse, 6. Washington Post, 7. AP, 8. YouTube
32 links – 31 to news organizations that were established pre-Internet. The lone Web-only site is YouTube.
The only story that is based solely on innuendo is the lone NYT story: “Clinton Finds Way to Play Along With Drudge”
Which is where I got the quote. Game. Set. Match.
Tuesday, October 23, 2007
Gregg Easterbrook is worthy of respect for his many skills and accomplishments. But, as he paints Belichick to be the Darth Vader of the NFL, I can't help but think that he sounds worse than the guy he's demonizing.
Victory seems to give Bill Belichick no joy, and defeat throws him into fury. Belichick and the rest of the top of the Patriots' organization continue to refuse to answer questions about what was in the cheating tapes -- and generally, you refuse to answer questions if you have something to hide. The team has three Super Bowl triumphs, yet its players regularly whine about not being revered enough. The team's star, Tom Brady, is a smirking sybarite who dates actresses and supermodels but whose public charity appearances are infrequent. That constant smirk on Brady's face reminds one of Dick Cheney; people who smirk are fairly broadcasting the message, "I'm hiding something." The Patriots seem especially creepy at this point because we still don't know whether they have told the full truth about the cheating scandal -- or even whether they really have stopped cheating.Contrast this with what Belichick says about his upcoming opponent, Joe Gibbs:
Q: Could you talk about Joe Gibbs' stature in this game?
Sure, Belichick is scandalous like the biblical David, and not nearly as poetic. But who will cut the head off Goliath? As much as I respect Peyton Manning and Tony Dungy, I'd rather Tom Brady and Bill to represent me on the gridiron front.
BB: Hall of Fame. He's a Hall of Fame coach. He's already been recognized for his career to…whatever his last year was there. '93, was it?
BB: '92, OK. Yeah, '92. Fortunately he's come back to tack on more to that, and he has a good team this year. He's really one of the…I wouldn't say the founders, but a coach that took the one-back offense and took it to a level far above what it was when he started there at Washington in…it would have been '81, right?
* * *
BB: We all make mistakes - me more than anybody. I've made plenty of them. You try to learn from them and move on. It's the same thing I would tell a player. Look, the players that played yesterday, it's not the first time they've made a mistake in a game, any of them. Every player, there's always things they can do better. They all made mistakes. There's all things that they can learn from them. We're all in that category. That's how it is every week. That's how you get better - You learn from your mistakes and you move on.
Q: Do you have a World Series prediction?
BB: No. My focus is on Washington and that's where it needs to be. They're a good football team coming in here. They'll be ready to go and I have a lot of respect for Joe Gibbs and his staff -Gregg Williams, all of them. They're tough. They've won four and they could have easily won a couple more, so we'll have our hands full. That's all I'm worried about right now.
I can't help but think that Easterbrook is football's Salieri, with nothing but fumes over Belichick as Mozart. Which guy is complaining (and getting paid to do it) while the other guy is getting it done?
Patriots are favored over the Colts to go to the Superbowl at 2:1.
If a pregnant woman chooses tomorrow to have an abortion, the result in 2021 will be one fewer eligible voter--and that's a statement of fact, not a moral judgment. If tens of millions of women have abortions over decades, as they have, it will eventually have a significant effect on the voting-age population.
Not all women, after all, are equally likely to have abortions. It's almost a truism that women who have abortions are more pro-choice than those who carry their pregnancies to term, and it stands to reason that they generally have more-liberal attitudes about sex and religion. It also seems reasonable to assume that parents have some influence on their children, so that if liberal women are having abortions, the next generation will be more conservative than it otherwise would be.
I thought of this being countered by those who hold the keys to education, when I read John Leo's "Who Will Stand Up For Campus Free Speech" (via Glenn Reynolds):
The campus rule of thumb is that if someone on the liberal side is disinvited or punished for speech, the left will howl - and the right will usually howl too. This is what happened when the University of St. Thomas disinvited Archbishop Desmond Tutu for making remarks critical of Israel. After protests from across the political spectrum, he was reinvited. A better example is the hiring and almost immediate firing of liberal Duke law professor Erwin Chemerinsky as dean of a new law school at the University of California, Irvine. A huge number of conservatives protested, including professors and virtually the whole first string of nationally known conservative and libertarian bloggers. Chemerinsky was rehired.
The process doesn't work in reverse - with liberals protesting the silencing of a conservative. It's one of the most obvious flaws of the modern PC university.
More constitutional whimsy posted earlier today.
I was thinking about the constitutionality of prediction markets when reading Gary McDowell's "The War For the Constitution":
Warren Burger summed it up for many when he described Mr. Bork as simply the best qualified nominee in the former chief justice's own professional lifetime -- a span of years that included the appointments of such judicial luminaries as Benjamin Cardozo, Hugo Black and Felix Frankfurter. Such praise was no empty exaggeration.
A former Yale law professor and U.S. Solicitor General, Mr. Bork was, at the time of his nomination, a judge on the United States Court of Appeals for the District of Columbia Circuit. When he was a circuit court judge, Mr. Bork's opinions not only were never overruled on appeal, but on several occasions his dissents were adopted by the Supreme Court as its majority view.
In an earlier day such an appointment would have been celebrated as adding breadth, depth and luster to the highest bench. Instead, the nominee faced a mauling by those who set out not only to destroy him personally but to discredit all that he stood for as a jurist.
It was immediately clear that the unprecedented vote of 58-42 against his confirmation reflected something far more historic and fundamental than an ordinary partisan standoff. The confrontation in fact had been one of the most cataclysmic and divisive events in American domestic politics during the second half of the 20th century. The reason was that Mr. Bork's opponents succeeded in making the fight over his nomination into a contest over the future of the Constitution.
* * *
Time has shown that Mr. Bork's theory of constitutional interpretation remains very much alive; he was defeated but his central idea was never discredited. That theory of interpretation and its implicit belief in restrained judging should continue to guide anyone who believes that the inherent arbitrariness of government by judiciary is not the same thing as the rule of law.
One thing that is more scary than irrational voters is whimsical judges. And I know a few, personally.
*Off the top of my head, free speech and peaceful assembly seem to enable our rights to prediction markets.
UPDATE: Chris Masse linked prediction markets to the right to privacy here last year. I'm not sure that is as relevant as speech and assembly--the whole point being prices from prediction markets is a public good (even as I concede that the anonymity of traders improves prices). But what do I know--I'm not an attorney or judge, just someone who knows a lot of them.UPDATE: Tom Bell, on the Constitution's call for progress in science and arts.
UPDATE: Alvin Roth, on the repugnance of markets (including prediction markets in terror). This reframes my point--constitutional repugnance is good, fleeting cultural repugnance is irrelevant. Just as slavery markets were not repugnant yesterday (but unconstitutional), so prediction markets are repugnant today (but constitutional)!
Monday, October 22, 2007
If there's somethin' strange in your neighborhood, who you gonna call?Megan McArdle (with an assist from Greg Mankiw) busts the mythical link between taxpayer funded healthcare and international competitiveness. She says:
I ain't afraid of no ghost!
Greg Mankiw points out that this is silly:Employer-provided health insurance is just a form of compensation that happens to be provided in kind rather than in cash. What the Times seems to be saying is that because companies like General Motors have promised levels of compensation too large to make them competitive in the international marketplace, we should shift the responsibility for some of that compensation from the companies to the taxpayer.
An alternative approach is for the companies to reduce compensation to levels they can afford. One might respond that reduced compensation would be hard on workers. But so would the higher taxes needed to pay for the national health insurance the Times is lobbying for. There is no free lunch here.
But what he doesn't point out is that one of their main assertions--that GM is losing competitiveness because it has to pay for health care and pensions--isn't even true. GM's foreign competition comes from Japanese and German cars; the next biggest player, the Koreans, has less than five percent of the market. And Japan and Germany have employer-paid health insurance just like American companies.
I have no idea how the meme got started that American companies are losing competitiveness because only they have responsibility for their employees' health, but it shows up quite a lot, along with the even more erroneous belief that our pension problem creates a competitiveness disadvantage; for the record, Germany and Japan have their own gigantic pension problems.
UPDATE: Her post on optimal tax policy is even more awesome. Read the whole thing.
Yes marriage is a social contract, complete with a term sheet and witnesses and transaction costs. But that is not the contract that Robin Hanson is talking about:
Imagine a web site where you could start a market to bet on the duration of any upcoming or current marriage. That is, you could buy or sell assets that pay in proportion to the number of years the marriage will last, if it begins, up to some maximum of say fifty years. If the marriage never starts, you get your money back.
Once it became widely known that such market prices are often available, wedding guests and the couple would probably check out the price before the wedding, coordinating everyone's expectations about the marriage.
Pride would likely induce the couple to try to push up the price estimate of their marriage duration. Perhaps disgruntled rivals would try to push the price down. Both would provide crucial liquidity to get the market going. And successful couples would get a great fifty year wedding present from cashing in their bets.
Since weddings and divorces are a matter of public record, there should be little dispute on who won these bets. The long time scale would mean that the bets should be of assets bonds or stock index funds, which increase in value over time. The market price would usually be somewhat lopsided, usually being closer to zero than to the maximum time, which might bias the price up a bit, but that doesn't seem a big problem.
These markets could create incentives for outsiders to hurt the marriage, such as causing or spreading rumors about cheating. But my guess is that the suspicion of hidden powers out there trying to hurt the marriage would on average tie the couple to each other all the stronger.
Jonathan Clements has a great piece today about the downsides of having more money than everyone else.
At first glance, it does seem silly--who doesn't want more money than they have now? And that profit motive makes everyone better off, as opportunities to provide more and ask for less drives competitive excellence and innovation.
But, as I see my kids growing up with much more than I did, I worry that they will not have healthy perspectives and attitudes in their later life. Clements talks about some of these concerns:
We all tend to sit up and take notice when we come across people with fancy titles, hefty incomes and immense riches. Yet these aren't signs of genius or virtue. Want proof? All it takes is two words: Paris Hilton.
Wealth may be inherited, which means the beneficiaries' struggle for riches didn't extend beyond the delivery room. Legendary investor Warren Buffett, the billionaire chairman of Berkshire Hathaway, has described "the idea that you win the lottery the moment you're born" as "outrageous."
What about the self-made rich? Shouldn't we be more impressed by them? While their hard work and perseverance are often admirable, I wouldn't be too quick to deify.
Today, if you are adept at judging the chances that a corporate takeover will go through, you can make good money running an investment fund devoted to merger arbitrage. Such a skill, however, wasn't nearly so valuable in thirteenth century England -- or, for that matter, twenty-first century Afghanistan.
* * *Displays of wealth can also be misleading. Folks can appear wealthy -- but the mansion may be fully mortgaged, the cars might be leased and the landscaper may still be awaiting payment.
Even if you come across somebody who can easily afford the trappings of wealth, the trappings themselves are not a sign of wealth, but of wealth that has been spent. The money lavished on the cars, homes and jewelry is now gone.
* * *
Don't get me wrong: There is nothing wrong with spending. The whole reason for saving and investing now is so we can have money to spend later. That said, I can't imagine why I should find this spending impressive -- and I am not sure it is making the spenders happy.
It seems obvious that your life would be better if you had a gardener to maintain the yard, a chef to prepare your meals and a private jet to whisk you off to exotic locations.
And if you were suddenly handed all these things, life would indeed be grand -- until you got used to them. Unfortunately, after a while, you would become accustomed to the great food and the no-hassle travel, and you would be hankering for something even better.
Problem is, once you are used to life's finest, that hankering can be hard to satisfy. Suppose you go to the best restaurant in town with your wealthy friends. To you, the food is unimaginably good. To your friends, it is just another meal -- and yet there's no place better they can eat.
As you might gather, I think it is important to realize that there is nothing that special about the wealthy or the life they lead. But my goal isn't to discourage folks from striving to be rich. That brings me back to my children.
Not everybody will grow up to be president of the United States -- or, for that matter, president of a major corporation. Still, I hate the idea that my kids might be so awed by such people that they consider these lofty positions out of reach.
* * *
Maybe, of course, my kids will decide that they aren't interested in spending their lives in pursuit of fame and fortune, and that would be fine. But I don't want them to be so awestruck by anybody -- whether wealthy, talented or powerful -- that they rule out such possibilities.
Having enough money is important, but having heaps of it doesn't guarantee happiness. Instead, what matters is doing something that you enjoy and that gives you a sense of purpose -- and I don't want my children to be deterred from doing just that.
All this said, I still wish you a new dollar today that you did not have yesterday.
Friday, October 19, 2007
Kling: I favor limited government.UPDATE: Steve Conover stumps for Robert Reich. Definitely smelling the leptokurtosis--I never knew I shared so much with our former Labor Sec'y:
Rodrik: I favor right-sized, adaptive government. Government must select policies and regulations that take into account local history and conditions. Government must experiment and correct its own mistakes.
Kling: Adaptive government is an oxymoron. In reality, you never observe adaptive government.
Rodrik: The same could be said of limited government.Kling: [burble]
Read the following sample of ideas excerpted from his lecture and his book—then guess whether he has been pigeonholed as a "conservative" or a "liberal" by the media.
• The corporate income tax should be eliminated.
• The biggest step toward solving the illegal immigration problem would be to eliminate all agriculture subsidies.
• Corporations are not evil—and that includes Wal-Mart.
• Our energy future will require "going nuclear" in a big way.
• We should be skeptical of any politician who blames a corporation for doing something that isn't illegal.
• Punitive fines that would cripple or destroy a company should not be allowed.
Solow reference to Schumpeter is here.
Thursday, October 18, 2007
Hip hop athletes are being rejected because they're not good for business and, most important, because they don't contribute to a consistent winning environment. Herm Edwards said it best: You play to win the game.
I'm sure when we look up 10 years from now and 50 percent — rather than 70 percent — of NFL rosters are African-American, some Al Sharpton wannabe is going to blame the decline on a white-racist plot.
Here's a picture of Jason, in case you were wondering ...
A little-publicized fact is that the Colts and the Patriots — the league's model franchises — are two of the whitest teams in the NFL. If you count rookie receiver Anthony Gonzalez, the Colts opened the season with an NFL-high 24 white players on their 53-man roster. Toss in linebacker Naivote Taulawakeiaho "Freddie" Keiaho and 47 percent of Tony Dungy's defending Super Bowl-champion roster is non-African-American. Bill Belichick's Patriots are nearly as white, boasting a 23-man non-African-American roster, counting linebacker Tiaina "Junior" Seau and backup quarterback Matt Gutierrez.
The markets say that one of these teams will win the Superbowl, with 55% of the aggregate probability.
When the Fed cut their target rate by 50 basis points, it seemed like a "one and done". I was one of the lone voices in the wilderness thinking a 25 bp increase was better for the long term, but as a person employed in a sector where layoffs and pay cuts are imminent, I am guilty of protesting little.
Now, the market is expecting another 25 bp cut when the FOMC announces on Oct 31. Using Fed funds futures data, the probability of a 25 bp cut have increased from 38% to 72% in the last 48 hours. Bernanke & Co. seem to be citing domestic uncertainty as the largest factor, ahead of inflation (which is low), a weakening US Dollar and other international forces.
I think this contract is priced pretty close to October 16th's fair value, although it's not trading liquid:
Wednesday, October 17, 2007
Most economists favor the free market, with reservations. [I reject] the reservations. If John and Mary are free individuals, and John trades with Mary, then John and Mary both are better off. End of story.
Most other economists believe in the need for government intervention. Like many non-economists, they talk about government policy in terms of we. We must, we have to, we need, we should, etc.
... you have to lose the we. When people use we in today's politics , they are doing two things.
Appealing to a moral entity that stands apart from and above John, Mary, or any other individual
Treating government as the embodiment of that higher moral entity
I should emphasize that "lose the we" does not mean that one should be selfish or uncompassionate or uncaring. Instead, it means that you should channel your impulse to do good by actually doing good. Saying we and advocating government policy is instead a way of feeling good. It is an arrogant, demagogic pose.
Governments lay claim to legal authority to collect taxes or impose restrictions on trade across borders. But there is no moral significance to a border. If John, Mary, and Sam all lived within the same country, the question of whether free trade is good for "us" would never arise. John's right to trade with Mary without interference on behalf of Sam would not be questioned. It is hard to see how moving Mary across a border changes the situation from a moral or economic standpoint.
* * *
One of the variables that is correlated with health status is Unmentionable. This Unmentionable Factor affects life expectancy, income, international differences in the standard of living, and many other phenomena. Garett Jones is a young economist who incorporates The Unmentionable into his research. I describe a recent paper of Jones as saying that "people with high levels of The Unmentionable are better able to co-operate with one another." Not surprisingly, Jones has just joined the faculty at George Mason.
Here is one ethanol alternative that might work out better. Here is more on solutions being more problematic than the problem being addressed.
Heavily subsidized and absurdly inefficient, corn-based ethanol has already driven up food prices. But the Senate's plan to increase production to 36 billion gallons by 2022, from less than seven billion today, will place even greater pressure on farm-belt aquifers.
Ethanol plants consume roughly four gallons of water to produce each gallon of fuel, but that's only a fraction of ethanol's total water habit. Cornell ecology professor David Pimentel says that when you count the water needed to grow the corn, one gallon of ethanol requires a staggering 1,700 gallons of H2O. Backers of the Senate bill say that less-thirsty technologies are just around the corner, which is what we've been hearing for years.
Ethanol's big environmental footprint is not limited to water, because biofuels like ethanol are highly inefficient. In September, the Chairman of the OECD's Roundtable on Sustainable Development released a report entitled, "Biofuels: Is the Cure Worse than the Disease?" Authors Richard Doornbosch and Ronald Steenblik compared the power density of different energy sources, measured in energy production per unit of the earth's area. Oil -- because it requires only a narrow hole in the earth and is extracted as a highly concentrated form of energy -- is up to 1,000 times more efficient than solar energy, which requires large panels collecting a less-concentrated form of energy known as the midday sun.
But even solar power is roughly 10 times as efficient as biomass-derived fuels like ethanol. In other words, growing the corn to produce ethanol means clearing land and killing animals on a massive scale, or converting land from food production to fuel production. Peter Huber of the Manhattan Institute says that the best-case scenario promoted by ethanol cheerleaders will actually cause the greatest environmental disaster. If people can actually refine cheap, low-maintenance production techniques that don't require huge water supplies, Mr. Huber predicts a world-wide leveling of forestland as farmers turn vegetation into fuel.
Slowly but surely, these problems are beginning to alert public opinion to the huge costs of force-feeding corn ethanol as an energy savior. The ethanol lobby is still hoping it can keep all of this under wraps long enough to shove one more big mandate through Congress, but the Members need to know the problems they'll be creating. We hope that House conferees, who did not include a new mandate in their energy bill, insist that any final bill is ethanol-free.
UPDATE: Daniel Botkin has more science (vs. global warming religiosity):
The key point here is that living things respond to many factors in addition to temperature and rainfall. In most cases, however, climate-modeling-based forecasts look primarily at temperature alone, or temperature and precipitation only. You might ask, "Isn't this enough to forecast changes in the distribution of species?" Ask a mockingbird. The New York Times recently published an answer to a query about why mockingbirds were becoming common in Manhattan. The expert answer was: food -- an exotic plant species that mockingbirds like to eat had spread to New York City. It was this, not temperature or rainfall, the expert said, that caused the change in mockingbird geography.
You might think I must be one of those know-nothing naysayers who believes global warming is a liberal plot. On the contrary, I am a biologist and ecologist who has worked on global warming, and been concerned about its effects, since 1968. I've developed the computer model of forest growth that has been used widely to forecast possible effects of global warming on life -- I've used the model for that purpose myself, and to forecast likely effects on specific endangered species.
I'm not a naysayer. I'm a scientist who believes in the scientific method and in what facts tell us. I have worked for 40 years to try to improve our environment and improve human life as well. I believe we can do this only from a basis in reality, and that is not what I see happening now. Instead, like fashions that took hold in the past and are eloquently analyzed in the classic 19th century book "Extraordinary Popular Delusions and the Madness of Crowds," the popular imagination today appears to have been captured by beliefs that have little scientific basis.
Some colleagues who share some of my doubts argue that the only way to get our society to change is to frighten people with the possibility of a catastrophe, and that therefore it is all right and even necessary for scientists to exaggerate. They tell me that my belief in open and honest assessment is naïve. "Wolves deceive their prey, don't they?" one said to me recently. Therefore, biologically, he said, we are justified in exaggerating to get society to change.