Friday, February 29, 2008
Anyone who can bring Paul Krugman into shock simply by asking him for an autograph at a book signing, needs to be picked on with caution.
Chris, I tried to warn you.
The longitudinal study finds significant decreases in “vicarious,” or emotionally driven, empathy, during the course of medical education. Significant drops happen after the first year and after the third, clinical year when “students,” the article notes, “were seeing patients they had, presumably, looked forward to helping.” (The drop at that point of first patient contact in the third year is particularly concerning, the lead author, Bruce W. Newton, said in an interview Thursday).(Via Tyler Cowen)
“The significant decrease in vicarious empathy is of concern, because empathy is crucial for a successful physician-patient relationship,” says the study, authored by Newton, Laurie Barber, James Clardy, Elton Cleveland, and Patricia O’Sullivan. All are from the University of Arkansas for Medical Sciences, except O’Sullivan, of the University of California at San Francisco.
“Empathy is one of the most highly desirable professional traits that medical education should promote, because empathic communication skills promote patient satisfaction and adherence to treatment plans while decreasing the likelihood of malpractice suits. Patients view physicians who possess the quality of emotional empathy as being better caregivers.”
Previous UC installment here.
The narrowly tailored provision, first added to the bill by Sen. Edward Kennedy, D-Mass., is the fruit of an impressive $4.6 million lobbying campaign featuring an all-star cast of former lawmakers and government officials from both parties.(via John Carney)
Medicines Company, or MDCO, a pharmaceutical maker, has dispatched this full-court lobbying press in hopes of extending by 56 months its patent on a heart medication, preventing competition from generics in that period and boosting company earnings by $1 billion. To this end, the company’s lobbyists have crafted a change to patent law that would apply, in fact, only to MDCO.
The story line begins Dec. 15, 2000, when the Food and Drug Administration approved sale of Angiomax, the prescription heart medication on which MDCO held the patent. Because the FDA approval process took some time, MDCO was entitled to a 56-month extension of its Angiomax patent past the March 2010 expiration. However, MDCO didn’t apply for this extension until Feb. 14, 2001, 61 days after FDA approval, and thus one day past the deadline clearly set in law for such applications.
This meant generic versions of Angiomax would hit shelves in 2010 rather than in 2014 — good news for Angiomax patients and generic drugmakers, but bad news for MDCO. That one-day tardiness cost the company an estimated $500 million to $1 billion. MDCO begged for forgiveness, but the law doesn’t grant the U.S. Patent and Trademark Office any flexibility when it comes to this deadline.
Rather than forgo half a billion dollars, MDCO did what any company in its position would do — it started lobbying Congress to change the law. MDCO, however, assembled an unusually impressive lineup of lobbyists. The company hired at least eight lobbying firms and retained the biggest names available.
The American householder is at war with the financial services industry. At stake, around two trillion dollars. At least, this is the inevitable conclusion if one accepts at face value Nouriel Roubini's recent testimony to Congress. This testimony rehearses the Professor's well publicised conviction in a doomsday scenario and concludes with dire forecasts:"So let us consider the implications for the household sector of price declines of the order of 20 to 30%. The math is simple as I will flesh out in this note: 10 to 15 million households will end up in negative equity territory and will be likely to default on their homes and walk away from them. Then, the losses for the financial system from these massive defaults will be of the order of $1 trillion to $2 trillion"Uh huh. 15 million households. Let's see - there are some 116m households in the US population of 303m. So sometime soon, Roubini expects 13% of them will be in the market for a U-Haul truck, cardboard boxes and a decent brazier against which to warm their hands under the arches. Steady on, chap. This isn't Darfur we are talking about. I'll keep it simple - where will these people go? Hmm, hang on, I just noticed something: 15m households on the street, and 15m empty homes.
Yet if Roubini is correct, who is having the last laugh here? None other than the 13% of underwater, insolvent, speculative households presently dialling 1-800-GO-U-HAUL. They have nothing more to lose; they cannot be compelled to pay without the means to pay. They have even managed, somehow, to destigmatise the concept of reneging on a mortgage. I don't doubt that there are presently some terrible hardship stories out there, but ultimately the cavalry will come. They will have their aspirational homes in the end - they just won't have had to work for them and pay for them.
A new paper by Radha Iyengar on three-strikes-and-you're-out sentencing in California shows that crminals respond to incentives, sometimes in unintended ways:I estimate that Three Strikes reduced participation in criminal activity by 20 percent for second-strike eligible offenders and a 28 percent decline for third-strike eligible offenders. However, I find two unintended consequences of the law. First, because Three Strikes flattened the penalty gradient with respect to severity, criminals were more likely to commit more violent crimes. Among third-strike eligible offenders, the probability of committing violent crimes increased by 9 percentage points. Second, because California's law was more harsh than the laws of other nearby states, Three Strikes had a "beggar-thy-neighbor" effect increasing the migration of criminals with second and third-strike eligibility to commit crimes in neighboring states.
Previous UC installment here.
Most workers seem to have little knowledge of how much after-tax wages they are forgoing in exchange for their employer-provided health insurance. One result of this is less pressure for efficiency in the health sector. Indeed, given the apparent size of inefficiencies in health care, it may turn out that one of the biggest distortions from the tax code occurs through this channel.--Peter Orszag
courtesy of Russell Roberts:
Martin Brock, in response to this post, writes:
Still, the median debt is up 151% since 1989, adjusted for inflation, and if the "wealth effect" theory of the personal saving rate is correct, much of this increase is consumer debt (the cars and such). I don't see how the clarification makes this increase any less gloomy. Maybe it's not very gloomy at all, but if it's gloomy before the clarification, it's still gloomy after.
It's funny how numbers can be used to scare and mislead. One hundred and fifty one percent seems like a big increase. But the size of that number tells you nothing. It does sound scary. But it tells you nothing. Nothing. All it tells you is that in 1989, the median family with debt had debt of 22,000. In 2004, the median family with debt had debt of 55,000. Good or bad news? You can't tell. It tells you nothing by itself. It could mean people are living more and more beyond their means. It could mean that people have more wealth and income and are buying bigger houses and nicer cars. There is nothing inherently gloomy or cheerful until you know more information.
The fact that net worth is up from 68,000 to 93,000 makes it more likely that it's cheery. But let's look a little deeper. Here's another chart from the Federal Reserve Board's Survey of Consumer Finances, the source of all of these data:
Look at the line called Goods and Services. Flat. That's trying to measure people living beyond their means, using debt to buy furniture, food and so on. That's the line the Washington Post should have used to look at whether debt was being used for what the article called "day-to-day expenses." What this chart shows is that the increase in debt is due to people buying bigger houses and investing in a little more education.
Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron LevensteinThe previous BS installment here.
Obama's response to McCain, described in the same AP dispatch, makes even less sense:"I do know that al-Qaida is in Iraq and that's why I have said we should continue to strike al-Qaida targets," he told a rally at Ohio State University in Columbus."But I have some news for John McCain," Obama added. "There was no such thing as al-Qaida in Iraq until George Bush and John McCain decided to invade Iraq. . . . They took their eye off the people who were responsible for 9/11 and that would be al-Qaida in Afghanistan, that is stronger now than at any time since 2001."Obama said he intended to withdraw U.S. forces from Iraq "so we actually start going after al-Qaida in Afghanistan and in the hills of Pakistan like we should have been doing in the first place."
So let's see if we have this straight. Al Qaeda in Iraq isn't worth fighting because it wouldn't be there if it weren't for Bush and McCain. Obama is going to pull all U.S. troops out of Iraq to go fight in Afghanistan and Pakistan, although he will send them back to Iraq if al Qaeda are there, even though he now wants to withdraw notwithstanding al Qaeda's presence.
Yes, we can!
I said this back in September:
Right on cue, the best indicators of inflation expectations hit new highs. Oil has surged past the once astronomical $100 mark and is now $102 a barrel; as recently as September, it was $70. Gold is nearly $975 an ounce, and the $1,000 threshold seems inevitable. The euro has broken $1.50 for the first time, while commodity prices in general are hitting record highs. These increases will roll through the rest of the economy and lift prices for food, energy, and countless other goods and services.
Call it the Bernanke reflation, though it's more precise to call it the Fed's second inflation gamble of the decade. The first was Alan Greenspan's roll of the dice from 2003-2005, keeping interest rates too low for far too long in the aftermath of the dot-com bust. That spurred the first boom in commodity prices, as well as the subsidy for debt that led to the housing bubble and the credit mania whose collapse we are now dealing with. Mr. Bernanke was a Fed Governor during much of that time, and he seems to have learned his lessons all too well. He's now going all-in for round two.
The people who aren't being fooled by all this are the American people. They don't pay their bills with "core" dollar bills, and they know those dollars buy less with each passing month. This explains their rising economic anxiety -- and anger -- better than trade or job losses do, especially since the job market has remained relatively healthy. Inflation is the great thief of the middle class, as even Americans who don't recall the 1970s are learning. With its all-in reflation bet, the Bernanke Fed is gambling with their money.
I think the best thing for Bernanke to do here is increase the rate by 25bps. When enough time passes, I suspect more people will agree with me. Inflation still looks like the greater threat.
Until August, it was a foregone conclusion that the target rate would remain above 5%. Shows what a lot of angst in the market can do. But like this piece says, I also think that the Fed needs to look in the mirror to see the biggest contributor to this current circumstance.
Thursday, February 28, 2008
As promised, we tallied the votes received in the first 48 hours after posting. There was a clear winner:
Our Worst Critics Prefer to Stay (194 votes)
Here are the runners-up:
Caution! Experiment in Progress Since 1776 (134)
The Most Gentle Empire So Far (64) votes
You Should See the Other Guy (38)
Just Like Canada, With Better Bacon (18)
I applaud your choice of winner, and I especially applaud “edholston,” the blog reader who wrote the motto. “Our Worst Critics Prefer to Stay” is, while perhaps not outrightly uplifting, a wonderfully concise acknowledgment of the paradox that a capitalist democracy inevitably is: a place that is often well worth complaining about, and which allows you to complain as loudly as you wish.
Some commentators dubbed Buckley a "libertarian conservative," and in the broadest sense, I guess that was true. Though he seldom let National Review deviate from his own Catholic social issues positions (especially on banning abortion), Buckley courageously took a stance against drug prohibition, making common cause on that issue with Friedman and other libertarians. And that enlightened view seemed to survive Buckley's retirement as the magazine's editor in chief (as one hopes it will survive his demise).There's a lot of good stuff out there, but this is the one I thought might resonate with those desiring freedom in markets.
And despite those Catholic social views, Buckley was always far more cosmopolitan and sophisticated about sex, drinking, dining, and other human pleasures than his fellow-travelers among today's religious right. That helped make Buckley-style intellectual conservatism more acceptable in salons, boardrooms, and the corridors of power. And the fact that William Buckley could maintain genuine friendships with people such as socialist John Kenneth Galbraith and gay anti-communist activist Marvin Liebman says a lot about his open-mindedness and tolerance.
UPDATE: Peggy Noonan's piece; she's pretty good at these reflections.
Within the last month, a top staff member for Obama's campaign telephoned Michael Wilson, Canada's ambassador to the United States, and warned him that Obama would speak out against NAFTA, according to Canadian sources.Remember this gem:
The staff member reassured Wilson that the criticisms would only be campaign rhetoric, and should not be taken at face value.
Late Wednesday, a spokesperson for the Obama campaign said the staff member's warning to Wilson sounded implausible, but did not deny that contact had been made.
"Senator Obama does not make promises he doesn't intend to keep," the spokesperson said.
The President," Stephanopolous said, "has kept all of the promises he intended to keep."UPDATE: This is James Taranto's take:
Apparently the real enemy isn't Canada, it's cynicism.
Glen Whitman writes,suppose that a country currently provides everyone the same quality of health care. And then suppose the quality of health care improves for half of the population, while remaining the same (not getting any worse) for the other half. This should be regarded as an unambiguous improvement: some people become better off, and no one is worse off. But in the WHO index, the effect is ambiguous. An improvement in average life expectancy would have a positive effect, while the increase in inequality would have a negative effect. In principle, the net effect could go either way.Almost two-thirds of the weight in the WHO index goes to these distributional factors. They focus more on inequality than on the absolute level of care received by the poor. In fact, if you dig deeply, what WHO is really measuring is not even inequality in terms of health services but just plain income inequality. Just having very rich people per se is enough to lower the quality of our health care system, according to WHO's methodology.
He was fired a few months later, in the spring of 1968, for talking with a reporter about his antiwar views. He still marvels that Stony Brook was willing to make him a department chairman that year, when he was just 30.
He left Stony Brook in 1976, he said, because he had been struggling with an unsolved problem for two years and was restless.
“Some money had come in from an investment,” he told The Times. “I invested that money, and it went very well. I thought, ‘Hey, I’ll try this.’ ”
Today, Renaissance Technologies does more than well, running a fund for its employees of nearly $9 billion, as well as two funds with about $25 billion for outside investors.
So does the Simons Foundation, his private philanthropy, which this year will give about $80 million in grants, many to universities, but most hewing closely to Mr. Simons’s primary interests, math and autism. (One of his daughters is mildly autistic.) “It’s all for very basic research,” he said.
As the Democratic contest continues, it is becoming a race to the bottom on protectionism. Perhaps the best trade demagogue will win, but someone should point out that the last President who tried to govern as a protectionist was Herbert Hoover. It didn't turn out so well.--WSJ editorial boardA tie:
Democrats cannot simultaneously talk about improving America's standing abroad while acting like a belligerent unilateralist when it comes to trade policy.--Daniel Drezner, via Greg Mankiw
Wednesday, February 27, 2008
UPDATE: Also via Instapundit, proof that Obama could be Jimmy Carter redux.
It's all about Ohio in this election; if the Democrats can take this state they will have the election nearly locked up. Bush similarly pandered with his steel tariffs. The distortions of democracy in America (e.g. subsidizing corn ethanol ahead of the Iowa caucuses) lead to job destruction, ironically in the name of job protection.
Mr. Obama's proposal would designate certain companies as "patriot employers" and favor them over other, presumably not so patriotic, businesses.
The legislation takes four pages to define "patriotic" companies as those that: "pay at least 60 percent of each employee's health care premiums"; have a position of "neutrality in employee [union] organizing drives"; "maintain or increase the number of full-time workers in the United States relative to the number of full-time workers outside of the United States"; pay a salary to each employee "not less than an amount equal to the federal poverty level"; and provide a pension plan.
In other words, a patriotic employer is one which fulfills the fondest Big Labor agenda, regardless of the competitive implications. The proposal ignores the marketplace reality that businesses hire a work force they can afford to pay and still make money. Coercing companies into raising wages and benefits above market rates may only lead to fewer workers getting hired in the first place.
Under Mr. Obama's plan, "patriot employers" qualify for a 1% tax credit on their profits. To finance this tax break, American companies with subsidiaries abroad would have to pay the U.S. corporate tax on profits earned abroad, rather than the corporate tax of the host country where they are earned. Since the U.S. corporate tax rate is 35%, while most of the world has a lower rate, this amounts to a big tax increase on earnings owned abroad.
Put another way, U.S. companies would suddenly have to pay a higher tax rate than their Chinese, Japanese and European competitors. According to research by Peter Merrill, an international tax expert at PriceWaterhouseCoopers, this change would "raise the cost of capital of U.S. multinationals and cause them to lose market share to foreign rivals." Apparently Mr. Obama believes that by making U.S. companies less profitable and less competitive world-wide, they will somehow be able to create more jobs in America.
He has it backwards: The offshore activities of U.S. companies tend to increase rather than reduce domestic business. A 2005 National Bureau of Economic Research study by economists from Harvard and the University of Michigan found that more foreign investment by U.S. companies leads to greater domestic investment, and that U.S. firms' hiring of more offshore workers is positively, not negatively, associated with the number of American workers they hire. That's in part because often what is produced overseas by subsidiaries are component parts to final, higher-value-added products manufactured here.
UPDATE: Greg Mankiw, William Buiter, and Anne Sibert hate it, too.
UPDATE: Don Boudreaux notes Obama's deaf ear to his economic advisors as well, and invokes the concept of Consumer Sovereignty (hear ye, those of you who are "pro-choice"):
UPDATE: Jagdish Bhagwati supports Obama yet says:
There are countless distressing facets of this anti-trade nonsense. One of these is the weaselly "I'm for free trade as long as it's fair trade" refrain. Such a claim (now as familiar in political campaigns as Dunkin' Donuts) is a cowardly attempt by the candidate to stand on both sides of the issue by invoking a word ("fair") loaded with emotion but devoid, in this context, of meaning. No one, as far as I know, favors unfair trade -- but by slapping the label "unfair" on any trade that a candidate's favorite constituents dislike, that candidate can oppose free trade while claiming still to support free trade.
Such a rhetorical gimmick is unfair.
Also distressing is the fact that Austan Goolsbee, the fine economist who is a close adviser to Obama, apparently is ignored by the would-be President of the USA on this front. Of course, I have no knowledge of what Goolsbee says and doesn't say to Obama, but I presume that Goolsbee isn't in the anti-trade camp. Consider that just this past June Goolsbee had this excellent column in the New York Times, with this key passage:A related source of distress is Alan Blinder's recent skepticism of trade -- his lending his good name and the prestige of the economics profession to protectionists.
We [Americans] hate experiencing major adjustments and industry transformations that force people to look for new jobs. That experience has made many skeptical about the future of the United States in the world economy. Yet the evidence seems to show that for all our dissatisfaction, we are the most flexible economy around and may be best poised to take advantage of the coming changes on a global scale precisely because we are so good at adjusting.
Trade is just one manifestation of consumer sovereignty. Just as there are, by Blinder's calculus, winners and losers from consumers shifting their expenditures from goods made in America to goods made abroad, there are winners and losers from consumers shifting their expenditures from goods made in Illinois to goods made in Arizona - and from consumers shifting their expenditures from donuts, beef, cigarettes, whiskey, and train travel to bagels, fish, yoga lessons, wine, and air travel. Trade plays no unique, or uniquely important, role as an avenue of economic change spurred in part by consumer sovereignty. The only practical way to rid the economy of such "loses" is to try to freeze it, a futile step that will in the long-run only make losers of everyone.
On NAFTA, he is dead wrong.UPDATE: He needs some constitutional advisors, too. This pretty much takes away my perceived edge that Obama and Clinton each had over McCain. We haven't even voted, and I'm already depressed.
Tuesday, February 26, 2008
Nobody, or very very few, would notice that this model is completely made up. The reason is that, in real life, each of these x’s would have a name attached to it. If, for example, y was the amount spent on travel in a year, then some x’s might be x7=”married or not”, x21=”number of kids”, and so on. It is just too easy to concoct a reasonable story after the fact to say, “Of course, x7 should be in the model: after all, married people take vacations differently than do single people.” You might even then go on to publish a paper in the Journal of Hospitality Trends showing “statistically significant” relationships between being married and travel model spent.
And you would be believed.
I wouldn’t believe you, however, until you showed me how your model performed on a set of new data, say from next year’s travel figures. But this is so rarely done that I have yet to run across an example of it. When was the last time anybody read an article in a sociological, psychological, etc., journal in which truly independent data is used to show how a previously built model performed well or failed? If any of my readers have seen this, please drop me a note: you will have made the equivalent of a cryptozoological find.
Incidentally, generating these spurious models is effortless. I didn’t go through 100s of simulations to find one that looked especially misleading. I did just one simulation. Using this stepwise procedure practically guarantees that you will find a “statistically significant” yet spurious model.
This sort of thing is why we're barraged with studies showing that almost everything will kill you--no, wait! they'll make you live forever!
Original BS quote here.
But when it comes to ethanol subsidation (which can increase death via higher global warming than gasoline, plus starvation due to crop diversions to ethanol away from feeding people), McCain looks like the better:
David Brooks reports:In 2000, McCain ran for president and reiterated his longstanding opposition to ethanol subsidies. Though it crippled his chances in Iowa, he argued that ethanol was a wasteful giveaway. A recent study in the journal Science has shown that when you take all impacts into consideration, ethanol consumption increases greenhouse gas emissions compared with regular gasoline. Unlike, say, Barack Obama, McCain still opposes ethanol subsidies.
UPDATE: Megan McArdle nails it on Obama's economic advisors:
The differences between Obama's team and McCain are also stark, but in a different way: his advisors are more technocrat than Ideologue.
If Obama's team has a fault, it is that they spend far too much time saying "Don't listen to him--listen to us!"
Check out Garett Jones' new working paper, "An Explanation for Cross-country Income Differences." His motivation: Previous research indicates that within countries, 1 point of IQ raises wages by about 1%, but across countries, 1 point of IQ raises wages by about 6%. Jones builds a compelling (if stylized) model that is perfectly consistent with this result:I contend that the average wage within a given country is pinned down by the productivity of its best workers in a Kremer-style (1993) “O-ring” sector. In this sector, high-skilled workers perform tasks that depend on strategic complementarities in production.Long story short: Low-IQ immigrants do not reduce the productivity of high-IQ natives - any more than short immigrants reduce the height of tall natives. (See here for further discussion). IQ research has often been a rationalization for immigration restrictions, but that's largely because few psychometricians understand the principle of comparative advantage.
Other less-skilled workers in that same country ... can work in a conventional, diminishing-returns-to-labor “Foolproof” sector, earning only slightly less than the high-skilled workers in their own country. The key assumption of this model is that the wage of high-skilled workers must be equal across the two sectors, a simple invocation of the law of one price.
But across countries, a nation whose best workers are slightly lower in quality will be much less productive, since it means that workers in that nation’s “O-ring” or “weak link” sector will produce much less.
How did InTrade do at the Oscars? Pretty well, it turns out. All the favorites - anybody trading above say 65 - won in their category. Immediately before the announcements were made, No Country For Old Men was trading in the low 70s for Best Picture, and the high 70s for Best Director. Javier Bardem and Daniel Day-Lewis were trading in the low 90s for Best Supporting Actor and Best Actor respectively.
Cotillard was not an upset so much as a comfortable second-favorite (Christie was trading in the mid 50s), while in the Best Supporting Actress category the InTraders seemed to be convinced it would either be Cate Blanchett (mid 40s) or Amy Ryan (around 30). And even Ruby Dee was trading at higher levels than Swinton.
So the Upset of the Night award, I think, has to go to the fabulous Tilda Swinton. In her honor, it's worth quoting some of her acceptance speech:
George Clooney, you know, the seriousness and the dedication to your art, seeing you climb into that rubber bat suit from "Batman & Robin," the one with the nipples, every morning under your costume, on the set, off the set, hanging upside-down at lunch, you rock, man.
If we'd known she had that speech lined up, I'm sure she would have been trading much higher.
Update: James Surowiecki notes in the comments that the play-money Hollywood Stock Exchange beat out InTrade in this instance. Conventional wisdom holds that prediction markets work much better when real money is at stake; that certainly wasn't the case here.
My retort to Surowiekci: Any given Sunday, James, any given Sunday.
Might be interesting:
The survey, of 35,000 adults by telephone, offers an unusually comprehensive picture of faith among the nation's 225 million adults. This is in part because of the sheer number of people who answered questions, especially about their childhood religious affiliation. Several of the findings echo those of earlier studies, including the precipitous drop in mainline church membership and the rise in membership in nondenominational churches, the majority of which are evangelical Protestant churches.
Scholars say the Pew survey's most surprising finding is the fluidity of religious preference. The study found that 44% have left the faith in which they were raised, including Protestants who now practice another form of Protestantism and people who no longer worship at all. Sixteen percent of adults say they are unaffiliated with any religion -- including those who describe themselves as atheists, agnostics and "nothing in particular." That is double the number surveyed who say they were raised unaffiliated -- a trend noted by other religion surveys.
"Every single group in this country loses members at a considerable rate," says Luis E. Lugo, director of the Pew Forum, which conducted the study, part of the nonprofit Pew Research Center in Washington. "It is a highly competitive religious marketplace."
Protestants accounted for about two-thirds of the population in the 1970s and 1980s. Now, they make up about 51%, the Pew survey found. And of the Protestants, a quarter belong to an evangelical church, while 18% belong to a mainline church, such as Episcopal. The decline has been confirmed by other surveys of Protestants.
UPDATE: Jesse Eisinger and Felix Salmon have more:
What happens when the feds license only a few companies to provide a service, and then require investors to buy that service?
For the answer, take a look at the mess in today's bond market, where investors have been hanging on whether the main government-appointed credit rating agencies -- Standard and Poor's and Moody's -- would downgrade bond insurers MBIA and Ambac. Equities rallied yesterday when the agencies maintained their AAA ratings.
By now no one should care what the rating agencies think, but the problem is that by law we have to care. Since 1975, the Securities and Exchange Commission has limited competition in the market for credit ratings by anointing only certain firms as "Nationally Recognized Statistical Rating Organizations" (NRSROs). A 2006 law has begun to lead to faster approvals of new entrants, but this follows decades of protection for the incumbent firms.
Over time, federal and state laws and regulations have explicitly required NRSRO-rated securities to be held by money market funds, insurers and others. This in turn has created the impression that these ratings are something more than merely financial opinions, which are often less informed than opinions you can read in a newspaper. Every state and federal legislator eager to avoid a repetition of the subprime crisis should begin excising the term NRSRO from statutes and regulations.
This process has begun at the SEC.
Not surprisingly, the rating agencies are coming up with their own ideas for "reform," none of which seem to include more competition. In its 27-point proposal, S&P suggests more training for its analysts, better review of analytical models, and better disclosure of a security's collateral -- all welcome changes, but remember that Moody's and S&P also suggested reforms after the Enron rating debacle.
No doubt S&P and Moody's would love Congress to add rules that raise the cost of entry for new competitors. If Congress takes this bait, it will repeat the mistakes of Sarbanes-Oxley. "Reform" of the accounting industry ended up being a gold mine for the very auditing firms that Congress wanted to punish, as a few megafirms thrive in a more regulated market. The key to better ratings is for Congress to make the rating agencies compete in a market where no one is required to hire them.
Why did Moody's do all that work over ten years to come up with the muni/corporate ratings equivalence and not move munis onto the regular scale? When I asked Moody's they said that the market likes to have fine distinctions in their muni ratings. Ok, so why does muni bond insurance need to exist, which makes every insured bond Triple A? Because, Moody's told me, the market likes the "commoditization" in the ratings that bond insurance brings. Hmmm. So which is it?Previous UC installment here.
Stephen Hayes thinks Obama could be like Reagan:
This part of Hayes' piece leads me to believe that Obama understands the Constitution better than McCain:
Throughout his campaign, Reagan fought off charges that his candidacy was built more on optimism than policies. The charges came from reporters and opponents. John Anderson, a rival in the Republican primary who ran as an independent in the general election, complained that Reagan offered little more than "old platitudes and old generalities."
Conservatives understood that this Reagan-as-a-simpleton view was a caricature (something made even clearer in several recent books, particularly Reagan's own diaries). That his opponents never got this is what led to their undoing. Those critics who giggled about his turn alongside a chimp were considerably less delighted when Reagan won 44 states and 489 electoral votes in November.
Are Republicans making the same mistake with Barack Obama?For months now, Hillary Clinton has suggested that Mr. Obama is all rhetoric, no substance. This claim, or some version of it, has been at the center of her campaign since November. One day after losing to him in Wisconsin and Hawaii -- her ninth and tenth consecutive defeats -- she rather incredibly went back to it again. "It's time we moved from good words to good works, from sound bites to sound solutions," she said -- a formulation that could be mistaken for a sound bite.
As she complained about his lack of substance, tens of thousands of people lined up in city after city, sometimes in subfreezing temperatures, for a chance to get a shot of some Mr. Obama hopemongering. Plainly, her critique is not working.
DISCLOSURE: I'm long 2008DEM.NOM.OBAMA, and short 2008.PRES.OBAMA.
At Cornell College on Dec. 5, for example, a student asked Mr. Obama how his administration would view the Second Amendment. He replied: "There's a Supreme Court case that's going to be decided fairly soon about what the Second Amendment means. I taught Constitutional Law for 10 years, so I've got my opinion. And my opinion is that the Second Amendment is probably -- it is an individual right and not just a right of the militia. That's what I expect the Supreme Court to rule. I think that's a fair reading of the text of the Constitution. And so I respect the right of lawful gun owners to hunt, fish, protect their families."
Then came the pivot:
"Like all rights, though, they are constrained and bound by the needs of the community . . . So when I look at Chicago and 34 Chicago public school students gunned down in a single school year, then I don't think the Second Amendment prohibits us from taking action and making sure that, for example, ATF can share tracing information about illegal handguns that are used on the streets and track them to the gun dealers to find out -- what are you doing?"
"There is a tradition of gun ownership in this country that can be respected that is not mutually exclusive with making sure that we are shutting down gun traffic that is killing kids on our streets. The argument I have with the NRA is not whether people have the right to bear arms. The problem is they believe any constraint or regulation whatsoever is something that they have to beat back. And I don't think that's how most lawful firearms owners think."
UPDATE: Greg Mankiw worries, too.
Monday, February 25, 2008
and is now top ranked in the country.
The contract is trading pretty cheap, as Memphis, NC, Duke, UCLA and Kansas are all trading over 10.0.
DISCLOSURE: I am long NCAABK.TENNESSEE and NCAABK.DUKE, and short NCAABK.MEMPHIS, NCAABK.NORTHCAROLINA, NCAABK.UCLA and NCAABK.KANSAS.
Previous UC installment here.
Oakland's recent gun buyback was especially ridiculous. The police offered up to $250 for a gun "no questions asked, no ID required." The first people in line? Two gun dealers from Reno with 60 cheap handguns. Fortunately the buyback did manage to get some guns off the street, too bad they were turned in by a bunch of senior citizens from an assisted living facility. Whew, the streets are safe at last.
Even putting aside the obvious nonsense, gun buybacks simply don't work. In technical terms the supply of guns to Oakland is perfectly elastic so buybacks won't reduce the number of guns in Oakland. Here is an analogy from my op-ed in the Oakland Tribune.
Imagine that instead of guns, the Oakland police decided, for whatever strange reason, to buy back sneakers. The idea of a gun buyback is to reduce the supply of guns in Oakland. Do you think that a sneaker buyback program would reduce the number of people wearing sneakers in Oakland? Of course not.
All that would happen is that people would reach into the back of their closet and sell the police a bunch of old, tired, stinky sneakers.
Gun buybacks won't reduce the number of guns in Oakland. In fact, buybacks may increase the number of guns in Oakland.
Imagine that gun dealers offered a guarantee with every gun: Whenever this gun gets old and wears down, the dealer will buy back the gun for $250.
The dealer's guarantee makes guns more valuable, so people will buy more guns.
But the story is exactly the same when it's the police offering the guarantee. If buyers know that they can sell their old guns in a buyback, they are more likely to buy new guns. Thus the more common that gun buybacks become, the more likely they are to misfire....
One might expect that a ban on smoking in bars would deter some people from showing up, thereby reducing the number of people driving home drunk. But jurisdictions with smoking bans often border jurisdictions without bans, and some bars may skirt the ban, so that smokers can bypass the ban with extra driving. There is also a large overlap between the smoker and alcoholic populations, which would exacerbate the danger from extra driving. The authors estimate that smoking bans increase fatal drunken-driving accidents by about 13 percent, or about 2.5 such accidents per year for a typical county.Previous UC installment here.
Should state Attorneys General be able to outsource their legal work to for-profit tort lawyers, who then funnel a share of their winnings back to the AGs? That's become a sleazy practice in many states, and it is finally coming under scrutiny -- notably in Mississippi, home of Dickie Scruggs, Attorney General Jim Hood, and other legal pillars.
We've recently examined documents from the AG's office detailing which law firms he has retained. We then cross-referenced those names with campaign finance records. The results show that some of Mr. Hood's largest campaign donors are the very firms to which he's awarded the most lucrative state contracts.
In 2007 alone Mr. Hood received some $790,000 from partners and law firms that have benefited financially from his office. That is more than half of all of Mr. Hood's itemized contributions for 2007.
This kind of quid pro quo is legal in Mississippi and most other states. However, if this kind of sweetheart arrangement existed between a public official and business interests, you can bet Mr. Hood would be screaming about corruption. Yet Mr. Hood and his trial bar partners are fighting even Mississippi's modest attempt to require more transparency in their contracts. The AG says it's all part of a plot to undermine his attempts to "recoup the taxpayers' money from corporate wrongdoers."
The real issue is the way this AG-tort bar mutual financial interest creates perverse incentives that skew the cause of justice. A decision to prosecute is an awesome power, and it ought to be motivated by evidence and the law, not by the profit motives of private tort lawyers and the campaign needs of an ambitious Attorney General. Government is supposed to act on behalf of the public interest, not for the personal profit of trial lawyers. The tort bar-AG cabal deserves to be exposed nationwide.
Sunday, February 24, 2008
Yes, poverty did decline after the introduction of LBJ's War on Poverty....at about the same rate as it declined prior to the introduction of LBJ's War on Poverty.
And then it stopped declining in 1969. At about the same time welfare spending rocketed upward.
I am not suggesting there is a direct causal connection between increased welfare spending and stagnant poverty levels - perhaps there is, perhaps there isn't - but there's certainly more evidence for causality there than there is for causality between LBJ's relatively limited 64-65 programs and the decline in poverty that Krugman cited between 1963 and 1969.
There may be things that can be done to reduce the Poverty Rate in the United States - e.g., training and education - but government redistribution of wealth and welfare subsidies are not among them.
His .710 winning percentage (22-9) in postseason games is the best in major league history among managers with at least 20 games. He also has the most World Series wins (eight) without a loss.This was a nice "never-give-up" line:
Francona has come a long way since his four-year tenure as Philadelphia's manager, all losing seasons, from 1997-2000. Epstein studied that and decided that Francona had learned a lot from managing a team with mediocre talent.
"But for that experience in Philly, he wouldn't be the manager that he is today for us," Epstein said.
In any kind of national health system, some treatments will, by simple cost-benefit calculation, be deemed too expensive to provide to all citizens. But does that mean those of above-average income should be excluded as well? Should they lose basic benefits if they choose to pay for these marginal services with their own money?UPDATE: Steven Levitt nails education (hint, it's not about the kids):
If you say yes to this last question, as the U.K. health service has, here is a related one: Should a parent who hires an after-school tutor for his child be barred from sending the child to the public schools?
Some people like to think of health care and education of basic human rights. Maybe they are. But they are also normal goods. That is, the income elasticity of demand is positive. It is hard to escape the conclusion that the right cost-benefit calculation for providing the good depends on the income of the consumer.
Achieving both efficiency and equality in the provision of these goods is impossible. Dealing with this conflict will provide a major challenge to the political system in the years to come.
A non-academic friend and I once had the idea of taking my cheating detection tools and turning them into a business to help school districts across the country. It turns out, however, that school districts don’t really want to catch cheaters. Cheating detection makes the districts’ test scores go down, and leads to problems with teachers’ unions. As such, no one wanted to buy our services.
3. Half the subsidies would go to farmers in just seven states producing a handful of crops — corn, cotton, rice, soybeans and wheat.
4. Two-thirds of the nation’s farmers would not benefit at all.
5. Subsidies will flow to farm families making as much as $2 million a year.
7. The largest commercial farmers reap the bulk of the subsidies, while most growers get little or nothing.
8. Subsidies spur overproduction, wasting resources and harming the environment.
9. They impede efforts to open more foreign markets to U.S. products.
10. Subsidies are especially uncalled for now, when biofuel demand has sent farmland values and crop prices soaring.
Friday, February 22, 2008
Yesterday, FEC Chairman David Mason said he still has questions about Mr. McCain's loan terms -- questions that need to be answered before the candidate will be allowed to drop out of the primary financing system and its restrictions. Adds Capital University Law Professor and Former FEC Chairman Brad Smith: "There is certainly an argument that what they did amounts to a pledge of the funds" as collateral. Either way, it appears that Mr. McCain has been employing lawyers to game the campaign finance rules he hails as a defense against "corruption."
Having decided not to accept public financing during the primary, the possibility of going up against Barack Obama in the general election is a different story. Mr. McCain insists he intends to take public financing, saying: "I made the commitment to the American people." And, by the way, he expects Mr. Obama to honor his earlier pledge to do the same. But, naturally, Mr. Obama is having second thoughts now that he's rolling in dough. (See "Obama's Cash Games")
Public funding was hatched in the 1970s and has now become one of those blind touchstones of "progressive" thinking. No matter how regularly its proponents are mugged by reality, they never give up. Running for President is a serious business, with millions of people devoting time and money to promoting the candidate of their choice. We suppose we can't blame Mr. McCain for trying to make the finance rules work for him, but it'd be nice if he finally admitted their embarrassing folly.
Thursday, February 21, 2008
Hillary Clinton, later on in the same debate: "You know, the hits I've taken in life are nothing compared to what goes on every single day in the lives of people across our country."
Jack Stanton speech, in Primary Colors (New York: Random House, 1996), p. 162: "Y'know, I've taken some hits in this campaign. It hasn't been easy for me, or my family. It hasn't been fair, but it hasn't been anything compared to the hits a lot of you take every day."9:46 PM ... That was an interesting final moment to end on for Hillary. Candy Crowley is on CNN now saying how it was a good connect moment for HIllary, which I suspect it may have been. But we all do remember that those words were borrowed from Bill Clinton's 1992 campaign, right?
Fortunately, one Lefty blogger - Greg Sargent - stopped to think about what they were making a fuss about...Let's try a little experiment. Let's take the meat of the big New York Times story and substitute the words "Dem Presidential Hopeful" for "John McCain" [...] If these words had appeared on the front page of The New York Times, wouldn't we all be yelling and stamping our feet about "panty sniffing" and condemning the use of anonymous sources who suggest a possible affair that may or may not have happened and wasn't directly alleged by anyone?The answer is "Yes, the Left would." Come on, do you even need to ask? Am I the only one who remembers...
That's a sincere question. Wouldn't we?
- ...2004, when John Kerry was accused of having an affair.
- ...2007, when John Edwards was accused of having an affair.
In both cases, the Leftosphere was apoplectic. Media Matters ran multiple attacks on anybody who dared to discuss the 2007 allegations. Slate and Mickey Kaus were attacked by Lefty bloggers for mentioning the story, with some even pushing to have Kaus fired. In both 2004 and 2007, the Leftosphere was outraged - outraged, I tell you! - that people would cover these "sleazy whispering campaign" allegations.
Today, they're covering the vague allegations. Enthusiastically.
So this is the pattern:
- Thinly-sourced, unconfirmed 2004 rumor that a Democrat may have had an affair: the mainstream media won't cover it, and the Left bulldozes those who mention it.
- Thinly-sourced, unconfirmed 2007 rumor that a Democrat may have had an affair: the mainstream media won't cover it, and the Left bulldozes those who mention it.
- Thinly-sourced, unconfirmed 2008 rumor that a Republican may have had an affair: Front page of the New York Times
UPDATE: Gabriel Sherman has more here (via Ann Althouse):
The publication of the article [on John McCain] capped three months of intense internal deliberations at the Times over whether to publish the negative piece and its most explosive charge about the affair. It pitted the reporters investigating the story, who believed they had nailed it, against executive editor Bill Keller, who believed they hadn't. It likely cost the paper one investigative reporter, who decided to leave in frustration
McCain strikes me as a fundamentally honorable guy . . . so honorable that he doesn't realize when he's getting himself in a mess. Most politicians would do the risky things, but take more care not to get caught. I'm not sure whether this is a feature or a bug.--Megan McArdle
But when I look at the graph, it looks like the 350,000 level was breached in every year on the graph except 1999 and 2000, which I would argue are the most distortionary years on the graph, due to the height of the tech bubble.
DISCLOSURE: I am short US.RECESSION.08
Harold Meyerson thinks we've become a nation of shoppers rather than a nation of producers:
If 19th-century England was a nation of shopkeepers, the United States today is a nation of shoppers, and our role in the world economy is to buy what other countries -- or U.S.-based corporations with factories in other countries -- make. It was not ever thus. In the four decades following World War II, our largest employer was General Motors; for the past decade, it's been Wal-Mart.
It's a fact. Sort of. Actually, the federal government is the largest employer—1.7 million employees and that excludes the Post Office. Does that mean we've become a nation of bureaucrats because a little over 1% of all employees work for the government? Does it mean we're on a perilous downward path where instead of making things, we regulate things? That would be a silly statement. It is equally silly to conclude that because Wal-Mart is the largest private employer we've stopped making things.And as it turns out, we do make a lot of stuff here in the United States. Manufacturing output is dramatically greater today than 30 or 40 or 50 or 60 years ago, the halcyon era that Meyerson imagines once existed. Manufacturing output has almost tripled since 1970. What has happened over the last 60 years is that productivity in the manufacturing sector has increased greatly. That has allowed the US manufacturing sector to produce a lot more stuff with roughly the same or even a declining number of employees.
Wal-Mart is a red herring. It's success hasn't come at the expense of the manufacturing sector. The trends in the manufacturing sector go back 60 years, long before Wal-Mart existed.
Meyerson's solution to our alleged economic crisis is to elect either Hillary or Obama:
One of the crucial differences between the two parties this year is that Hillary Clinton and Barack Obama have both revived the idea of a national industrial strategy -- better late than never -- while John McCain still acts as if banks and corporations, left to their own devices, would revive our economy through their investments. Problem is, we've left banks and corporations to their own devices for decades, and they've funded the rise of low-wage, high-profit East Asia . Nonetheless, McCain calls for across-the-board corporate tax cuts, though that money may well be bound for Shanghai. Clinton and Obama, by contrast, call for the public sector to take up the slack created by the private sector's reluctance to invest in the United States.
Ah, that's the ticket. Let's try the Japanese economic strategy. And what does he mean by the private sector's reluctance to invest in the United States? Everybody wants to invest in the United States. Foreign governments, foreign investors, American investors and American companies. The money flows in because the United States is the most productive economy on the face of the earth. Would someone let Harold Meyerson in on this secret?
Wednesday, February 20, 2008
It was feared that the polar caps were vanishing because of the effects of global warming.Probably busted; whether you agree or disagree, please go trade at the Global Warming Exchange.
But figures from the respected US National Oceanic and Atmospheric Administration show that almost all the “lost” ice has come back.
Ice levels which had shrunk from 13million sq km in January 2007 to just four million in October, are almost back to their original levels.
Figures show that there is nearly a third more ice in Antarctica than is usual for the time of year.
I'm calling the contest for Intrade; which was much more predictive of state primary results, and which actually presented predictive data for more than double the contests that Zogby did.
Put simply, credit markets anticipate, and equity markets confirm, recessions.
DISCLOSURE: I am short US.RECESSION.08
UPDATE: Paul Kedrosky links to this nice graph of 2008 GDP forecasts over time:
last week Congress attacked baseball players for taking
performance-enhancing drugs while at the same time
supporting artificial and temporary stimulus for the US
economy no matter what the long-term costs.
Many people don’t like professional baseball players
using steroids because they mask the underlying ability of
the player. They taint the results.
But so does artificial economic stimulus. Monetary
policy accommodation can help people feel wealthier for
awhile, but it cannot create wealth. Printing money does not
make anyone wealthier. If it did, then counterfeiting should
be made legal and everyone in the world would then be
wealthy. The same is true for tax rebates. If they really
could increase wealth, then why not make them much larger
and much more frequent?
In the end, trying to increase spending without
increasing the country’s productive capacity is a fool’s
errand. Boosting demand without boosting supply causes a
misallocation of resources. Like with steroids any boost is
temporary and risks longer-term economic problems.--Brian Wesbury
If a man tonight falsely assures a woman of his undying love only to score with her, we rightly regard him as a sleazeball. But when politicians do essentially the same thing, save on a much larger scale, we call them "public servants" and treat them as our saviors.--Don Boudreaux
Saturday, February 16, 2008
Friday, February 15, 2008
Evangelical Christians actually enjoy sex as much as anybody.
Many Catholic priests do not molest children.
It's possible to watch somebody else make money and not hate them for it.
There's a lot to be said for getting married and staying married.
Children are cute.
Lots of people in the armed forces are really smart.
If you don't love America, try living abroad for a while.
Alas, much of the forum history does not appear. Here's hoping that Intrade will be competitive enough to allow for uninterrupted unfettered speech in the forum, just as it's paying customers advocate for unfettered markets.
According to NCDC’s MMS database, the Lampasas climate station has been at this location since 10-01-2000. Previous location was an observer residence, which appears to have been a park-like location according to MMS location map. The sensor was apparently converted to the MMTS style seen in the photo in 1986, so the move did not include an equipment change. See the complete survey album here.
But the big surprise of just how bad this location is came from the GISS plot of temperature. It clearly showed the results of the move to this location, causing a jump in temperature almost off the current graph scale. Note that before the move, the temperature trend of Lampasas was nearly flat from 1980-2000.
Bush: “I view the Olympics as a sporting event.”It also seems to be working better than Carter's policies of unilateral disarmament or countering a Soviet invitation with skipping the Olympics.
Bush gave an interview to the BBC’s Matt Frei. Midway through, Frei asks him about Steven Spielberg pulling out of the Olympics this year to protest Darfur.
BUSH: “That’s up to him. I’m going to the Olympics. I view the Olympics as a sporting event. On the other hand, I have a little different platform than Steven Spielberg so, I get to talk to President Hu Jintao. And I do remind him that he can do more to relieve the suffering in Darfur. There’s a lot of issues that I suspect people are gonna, you know, opine, about during the Olympics. I mean, you got the Dali Lama crowd. You’ve got global warming folks. You’ve got, you know, Darfur and… I am not gonna you know, go and use the Olympics as an opportunity to express my opinions to the Chinese people in a public way ’cause I do it all the time with the president. I mean. So, people are gonna be able to choose — pick and choose how they view the Olympics.”FREI: “The Chinese government has been saying - part in response to this that - ‘America is [slipping back into] Cold War thinking’.”
BUSH: “Yeah. Well, you know, they’re… I think that’s just a brush back pitch, as we say in baseball. It’s… America is trapped in this notion that we care about human life.
“We respect human dignity. And that’s not a trap. That’s a belief. And that many of [us] in this country recognize that the human condition matters to our own national security. See, I happen to believe we’re in an ideological struggle. And, those who murder the innocent to achieve political objectives are evil people. But, they have an ideology. And the only way you can recruit for that ideology is to find hopeless folks. I mean, who wants to join an ideology say women don’t have rights? You can’t express yourself freely. Religious beliefs are… you know, the only religious belief you can hold is the one we tell you. And, oh, by the way, it’s great. You can be a suicider. Well, hopeless people are the ones who get attracted by that point of view. And, therefore, it’s in the world’s interest from a national security perspective to deal with hopelessness. And it has to be in our moral interest. I repeat to you… I believe to whom much is given, much is required. It happens to be a religious notion. But, it should be a universal notion as well. And… I believe America’s soul is enriched, our spirit is enhanced when we help people who suffer.”
Elizabeth Bumiller reports in the New York Times that John McCain has come up with an interesting way of defusing Barack Obama's financial advantage:Senator John McCain’s presidential campaign said Thursday that it stood by a year-old pledge made with Senator Barack Obama that each would accept public financing for the general election if the nominee of the opposing party did the same. But Mr. Obama’s campaign refused to reaffirm its earlier commitment.
The McCain campaign’s latest stand on the issue was first reported Thursday by The Financial Times. On Tuesday, one of Mr. McCain’s advisers told The New York Times that the campaign had decided to forgo public financing in the general election, an awkward admission for a senator who has made campaign finance reform a central part of his political persona.
That adviser was speaking on the assumption that Mr. Obama, who has broken all records in political fund-raising and is currently drawing more than $1 million a day, would find a way to retreat from the pledge in order to outspend his opponent in the fall by far. Under public-financing rules, the nominees are restricted to spending about $85 million each for the two-month general election campaign, far less than what Mr. Obama might be able to raise on his own.
On Thursday, in an effort by the McCain campaign to speak with one voice and put the onus for abandoning the system on Mr. Obama, several McCain advisers called on him to make good on his pledge. Mr. Obama was the candidate who proposed the pledge in the first place, in February 2007, a time when he was not raising the prodigious sums he is now.
Mr. McCain, co-author of the McCain-Feingold act of 2002, which placed new restrictions on campaign financing, was the only other candidate to take Mr. Obama up on his pledge.
Previous UC installment here.
It might be better to read another paper.
As far as our coverage of the case itself, if the essence of your question is whether I feel good about it, the answer is that I very much regret my failure to recognize that we were dealing with a rogue prosecutor and that the university had compounded his bravado by overreacting to the initial reports about the case. I don't recall another instance of a university canceling the season of a team that was a contender for a national championship. Nor do I recall a similar example of a prosecutor launching such an aggressively wrongheaded investigation.
But the bottom line is that I'd do some things differently, and that knowledge gained by hindsight has informed our approach to other stories since then.There's nothing the Times will ever be able to do to make up for the way it covered the Duke lacrosse story, but acknowledging their mistakes and vowing to change the paper's approach going forward is better than nothing.
UPDATE: Maybe the Times is turning the corner? (via Glenn Reynolds)
Thursday, February 14, 2008
The New York Times has never been especially vigorous about publishing letters from conservative readers complaining about the outpouring of hate, slander, innuendo and other species of satanic sputum from the mouth of Paul Krugman, as long as its target was George W. Bush and the Republican party. But when his column criticized Barack Obama's campaign for being a "cult of personality" based on "Nixonland" tactics -- in other words, when Krugman focused his hate on a liberal Democrat -- the Times has room for letter after letter after letter. Here is a sampling:...Mr. Krugman, a consistent critic of Barack Obama, did not produce a shred of evidence for his categorical statement that the “venom” being displayed in the Democratic campaign comes from Obama supporters, “who want their hero or nobody.” And it seems to perpetuate the same bizarre bitterness that he derides in his column....
...I don’t have to give Mr. Krugman or anyone else my strong assurances that I will support the Democratic nominee, and I don’t have to apologize to Mr. Krugman or any Democratic Party apparatchik for passionately opposing Hillary Rodham Clinton. ...
...To top it all off, Mr. Krugman compares Mr. Obama’s ability to inspire and organize to George W. Bush’s demonstrated penchant for conceit and self-indulgence in Operation Flight Suit. Who’s perpetuating “Nixonland” now?...
...The fact that many Democratic voters would simply stay home in November rather than vote for Hillary Clinton is not a sign of “hate” or “venom.”...
My post last week on Megan McArdle noticing the same thing.
He is concerned with a deep problem. Those of us who are "minarchists," meaning that we favor government that is limited to adjudicating conflict, have no reliable mechanism for restraining government.UPDATE: Megan McArdle adds:
His point is that government can use its rule-making power to remake any rules that were used to create it. Certainly, we have seen this in the United States, where I would say that the original Constitution lies in shreds.
He concludes that only irrational standards or taboos can constrain the power of government. I tend to agree. If there is no taboo against government interference with activity X, then as long as it is in the interests of the governing coalition to interfere with activity X, that will happen.
I call these irrational standards and taboos folk beliefs. In my view, the real political contest in America is not between Republicans and Democrats but between a folk Locke-ism which restrains government and other folk beliefs, such as folk Marxism of college campuses or the collectivist religion that Daniel Klein calls the people's romance.In other words, the irrational standards and taboos that undergird our political system are likely to reflect, for better or worse, our moral sense that evolved under tribal conditions. Hence, the "people's romance" comes from a (misguided) attempt to apply tribal morals to complex nation-states. So you get Senator McCain arguing that highly-paid individuals in the private sector are not doing their part to serve the tribe.
This really seems like a special case of a larger problem that anyone who favors any restraint of government has to deal with. I've heard basically this argument advanced in favor of anarcho-capitalism, but of course one of the biggest problems with any anarchism is that unless you can secure unanimity (in which case you had better not imagine a polity where n>1), some form of coercion seems to be required in order to prevent people from forming governments. Even with strong taboos, has there ever been a society that actually succeeded in controlling the size and shape of its government in the way that libertarians imagine?