Tuesday, June 30, 2009

Quote of the day

The whole point about Ponzi schemes is that there is not enough money to make anybody whole — they were robbed, pure and simple, and the government is not in the business of reimbursing for robberies. Not even when the cops stumble across the robbers and then mistakenly let them go.--Joe Nocera

Monday, June 29, 2009

When you have neither science nor consensus to support your mythology

what's left to do:

The number of skeptics, far from shrinking, is swelling. Oklahoma Sen. Jim Inhofe now counts more than 700 scientists who disagree with the U.N. -- 13 times the number who authored the U.N.'s 2007 climate summary for policymakers. Joanne Simpson, the world's first woman to receive a Ph.D. in meteorology, expressed relief upon her retirement last year that she was finally free to speak "frankly" of her nonbelief. Dr. Kiminori Itoh, a Japanese environmental physical chemist who contributed to a U.N. climate report, dubs man-made warming "the worst scientific scandal in history." Norway's Ivar Giaever, Nobel Prize winner for physics, decries it as the "new religion." A group of 54 noted physicists, led by Princeton's Will Happer, is demanding the American Physical Society revise its position that the science is settled. (Both Nature and Science magazines have refused to run the physicists' open letter.)

The collapse of the "consensus" has been driven by reality. The inconvenient truth is that the earth's temperatures have flat-lined since 2001, despite growing concentrations of C02. Peer-reviewed research has debunked doomsday scenarios about the polar ice caps, hurricanes, malaria, extinctions, rising oceans. A global financial crisis has politicians taking a harder look at the science that would require them to hamstring their economies to rein in carbon.

DISCLOSURE: I am short this contract.

If it doesn't work well for cancer research

it may not work well for other research, either.

Arnold Kling spanks President Obama pretty good

on healthcare and doublespeak:

There is a disconnect in the Obama administration’s rhetoric on health care. On the one hand, the administration points out that our current health care financing system, particularly for government-funded programs, is unsustainable. This suggests an urgent need for major reform.

On the other hand, the administration is quick to reassure Americans that they will be able to keep the same insurance and maintain the same relationships that they have with their doctors now. As individuals, most Americans are happy with the status quo, and the Obama administration does not want to appear to threaten their satisfaction.

The administration is trying to position Obamacare as solving problems in our health care system that are real and fundamental while allowing individuals to continue with business as usual. The administration has decided that the best way to appeal to voters is to offer hope without change.

Bryan Caplan spanks Paul Krugman

pretty good on healthcare and market principles.

UPDATE: Bryan also thinks Fed Chair Bernanke should be canned. Is this what a rational voter would think?

UPDATE: Greg Mankiw lays on some gentle slaps of his own:
The Obama administration says it wants a public insurance plan that will compete on a level playing field with private plans (that is, without taxpayer subsidies). Is there any cogent economic analysis that suggests that such a policy addresses problems of adverse selection and moral hazard? None that I know. If it has to stand on its own financially, the public plan has no special advantage in addressing these issues.
On the issue of tone, I again think I understand Paul's point of view. He likely believes that civility is overrated. He seems to think that in the blogosphere, and perhaps in the public debate more generally, you score points simply by insulting your intellectual adversaries. Sadly, I am afraid he may be right.

The Merrill/Bank of America material adverse clause

was actually airtight and not invokable by Lewis, so reports Derek Thompson using a source from the Merrill camp. Interesting stuff.

Quotes of the day

Here is a handy-dandy way to determine whether the failure to order some exam or treatment constitutes rationing: If the patient were the president, would he get it? If he'd get it and you wouldn't, it's rationing.--Michael Kinsley

The pattern that I see [from the Obama administration] is one of following the path of least political resistance, even if it means failing to make any significant contribution to solving the actual public policy problem. I cannot say that I am completely shocked by this. It is sort of Public Choice 101. But there are a lot of bright, highly-educated people in the Obama Administration who, if they were to step back and evaluate what is happening, would see the pattern for what it is. They believe that they inherited such bad policies that they could not possibly do worse. That belief is starting to look shaky.--Arnold Kling

It is one thing to have different views from those of the Fed Chair on particular decisions that have been made-- I certainly have plenty of areas of disagreement of my own. But it is another matter to question Bernanke's intellect or personal integrity. As someone who's known him for 25 years, I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ. His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil. Whether you agree or disagree with all the steps he's taken, let's start with an understanding that that's been his overriding goal. These interrogations reveal more about those doing the grilling than they reveal about Bernanke. I see this as pure political theater, and I don't like it. If Congress wants to explore more usefully the wisdom and motives behind some of the decisions that have been made, it might want to investigate why some legislators are now pushing for Fannie and Freddie to guarantee a riskier category of mortgage condo loans.--James Hamilton

Some hope for restoring faith in the effectiveness of democracy has come from the idea that while voters may not be all that big on ideas and words, they may be able to judge the competence of politicians.The idea is that they know enough to tell when incumbents are doing a good job by not screwing things up and throwing out those who are. Unfortunately, effectively judging the competence of politicians requires citizens to be able to tell the difference between conditions caused by incumbents' policies and those that merely happened to occur on their watch without any such causal connections. In short, voters may be fooled by randomness into thinking that skillful politicians are improving things rather than simply enjoying lucky timing.--John Carney

... growth isn't a mystery. By and large, we know what works and what doesn't. Corruption doesn't work well, property rights do. Globalization is working everywhere it is allowed. Protectionism is a disaster, in the long term and usually before. Democracy, unfortunately, seems insignificant in promoting growth, but free markets are essential.--Bryan Caplan

Economic laws can either enhance or undermine the vibrancy of an economy, helping or hurting individual incentives and the flow of creative ideas. Policymakers everywhere need to keep this in mind. There are $100 bills on sidewalks all across the world. What matters is whether people have the incentive to pick them up.--Brian Wesbury

Transformers 2 more than $200 million in opening. Incredible somebody finally found a way to make money using American cars.--Jimmy Fallon

Just how bad is the new Cap and Tax bill? Greenpeace is against it.--Stephen Green

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap."--WSJ Editorial Board

The [Community Reinvestment Act] did not singlehandedly cause the meltdown. But the relaxation of credit standards that allowed the meltdown did start, as far as I can tell, with the CRA. And perhaps more importantly, the CRA, and the mentality behind the CRA, made regulators extremely unwilling to intervene. Everyone wanted to make credit more widely available to the poor. Well, the poor aren't good lending risks. So if you want to give them access to credit, you need to relax your lending standards. Any attempt to tighten lending standards on the part of the government would have resulted in a massive contraction in the credit available to core Democratic constituencies. Meanwhile, the Republicans were hoping that turning poor people into homeowners would make them more Republican.--Megan McArdle

In any case, the biggest danger of a Consumer Financial Protection Agency is not that it will artificially limit risk-taking. Rather, it’s that giving products a government imprimatur can make people feel safer than they really are. (The economist Kip Viscusi has termed this type of problem “the lulling effect.”) Regulation can help protect people from fraud and trickery, but finance will still be a place where ill-informed or reckless decisions can wreak havoc on people’s lives. A consumer-finance agency is a good thing, but it would do well to teach consumers a simple lesson: if you don’t understand the deal you’re making, don’t make it.--James Surowiecki

He thought he could dodge his way through life, but he couldn’t dodge death. ... I was tremendouly upset when he died. You’re stuck with friends after a while, and I realised he was part of me.--Martin Amis

[Socrates] said that death is one of two possibilities. Either it is a long dreamless sleep and really rather pleasant, or it is a passage to another place, namely Hades, and there we’ll be able to hang out with Homer, Hesiod and rest of the Greek heroes, which sounds great. Socrates’ point is that we do not know whether death is the end or some sort of continuation. He concludes by saying only God knows the answer to this question. Of course, this makes it a little tricky if you don’t, like me, have the good fortune to believe in God.--Simon Critchley

Friday, June 26, 2009

Voucher students costs are 1/4 the public schools, and they are 2 grade levels ahead

Andrew Coulson reporting.

So, remind me, why are vouchers bad?

Mark Perry rounds up Phil Donahue's interview of Milton Friedman

I prefer reading to listening; but I know others have the reverse preference. And for those of you who like a fuller sensory experience, I link you to Mark Perry's roundup of Milton Friedman on Donahue's show, 3 decades ago.

It still resonates true today, the voice of reason and truth responding to a conceited, uneducated celebrity.

I wonder if one can be an educated and humble celebrity. I'm unsure if humility can survive the externalities of celebrity.

UPDATE: Oh, and about education: a publicly financed and unionized system combined with a university culture that tries to eclipse the brilliance of Friedman--which is my experience at Cornell--is probably a bad thing, after reading, writing, and arithmetic have been taught and learned.

Quotes of the day

... Bernanke's reappointment (a good idea) is running at 70, Waxman-Markey is running at 50, and health care reform at 35, c'mon people get the volume on those Intrade contracts up.--Tyler Cowen

If you want your [goods] to be manufactured using primitive technology so that they cost a lot, then buy local--Arnold Kling

... the number one thing a scholar needs is the ability to sit still for a very long time.--David Steinmetz

It’s a shame what politics does to really smart people.--Michael Cannon

... [Woodrow] Wilson’s economic policies were perhaps the worst in American history. He presided over the creation of the Fed and the income tax, which went from 0% to something like 70% while he was president. In the long run the Fed may have been a good thing, but there can be no doubt that 1913 was premature, we didn’t know anywhere near enough about monetary policy to warrant a central bank meddling in the gold standard. He presided over a period of very high inflation after WWI, when we actually needed somewhat lower prices. Then we had a severe depression in his last year of office.--Scott Sumner

... without help from his rich daddy and rich friends, this cocky, arrogant, smart-aleck [John Maynard Keynes] would have fallen on his face, ended up digging ditches somewhere and we would never have heard of him. But he did have a rich daddy, who bailed him out. ... Don’t anyone write in and tell me that Keynes made lots of other good investments, because if you’ve got a rich backstop, none of that matters.--Scott Sumner

From what I can tell, the only threats from Harvard are the thing where the dudes dress like ladies and give awards to James Franco, and that one guy who tried to embarrass Matt Damon in a bar in front of Minnie Driver, about which I'll just say, Not cool, Harvard.--Michael Schaub

Yike. Forcing up energy costs doesn't create jobs? Who knew?--Tom Maguire

As Ricky Gervais once said after the wildly critical success of "The Office": "Something has to be your best work." On the other hand, it is the compulsion of any creative mind to constantly strive for something new and fresh; I don't think it is possible to be truly fertile without the conviction that your best work is ahead of you. --David Shenk

I'm uncertain if this is a sign of a top, a bottom, or something in between

I'm Ron Insana -- perhaps you recognize me from CNBC, where I was a senior analyst for many years.

I'm writing today to let you know about a brand new product I've developed with TheStreet.com. It's called Market Movers by Ron Insana and it has only one purpose: to help you make more money in the markets.

Here is an earlier confirmation of the Ron Insana Indicator.

UPDATE: Felix's take; I'm unsure how to interpret.

The outpouring of remembrance for Michael Jackson and Farrah Fawcett

is understandably, huge. I cannot come into close proximity to a television without seeing or hearing about them.

But this is understandable. These icons from the Seventies and Eighties represent what is best about this world: the manifestation and celebration of art and beauty, beyond what we had realized up to the point we came to know them.

Still, I am missing my mom the most today, who represents truth, love, and persistence to me--all of which are even better than the best the world has to offer.

UPDATE: Here is James Lileks, saying similar things in his erudite voice as compared to my kindergarten scribbling:
Then came the scandal years - the lawsuits, the hideous surgeries. It was almost like watching the Joker carve up his face in the mirror, without the Joker’s delight in his own depravity. He thought he was sculpting something supremely beautiful, but to the outsider who watched his face change as the stories of his personal life came out, it was like watching Dorian Grey walk around holding the picture from the attic before him, convinced it was lovely.

it’s no shame to have your best work behind you. It’s a pity to die young. It’s a testament to the work you did to be mourned by millions.
I'm telling myself that my SAT math score was probably higher than James'. Sniff.

UPDATE: And then I stumbled across this:
[Ayn] Rand, perhaps better than anyone else, helped Fawcett understand her place in American culture.

Thursday, June 25, 2009

Quotes of the day

Melancholy and bile are not our greatest traits.--Larry Mullen

You can't make a baby in a month by getting 9 women pregnant--Warren Buffett

[President Obama will] stop the globe from getting warm, fill your car with nuts and corn.--JibJab

Never buy a Ford from a guy who drives a Lexus. Democratic Sen. Ted Kennedy voted for Medicare. He is eligible for Medicare. When he got cancer, he did not use Medicare. If they won’t use it, you don’t want it.--Don Surber

... Bernanke really is the most superbly qualified economist out there to deal with this particular sort of crisis. But perhaps more importantly, regulatory uncertainty is not what we need now. Bernanke may be tempted to keep monetary policy loose in order to make the economy look better and save his job. Obama may be tempted to appoint someone insufficiently interested in inflation, both to goose the economy ahead of the midterms, and to ease his debt problem. And whoever it is will be getting his feet wet at exactly the wrong time. There's a strong argument to be made that one of the reasons the Great Depression was so bad in America was that the Fed power vacuum left behind by the death of Benjamin Strong left the central bank too divided to take appropriate action.--Megan McArdle

I love it when people who have never managed anything more than a government grant are convinced they can manage one sixth of the economy.--Arnold Kling

No word yet on whether the FTC plans to go after Congressmen and political appointees who fail to disclose conflicts of interest when they advocate particular policies after having received thousands of dollars from those who stand to benefit from the policies.--David Henderson

Why, Gabriel Calzada wonders, is the U.S. president recommending that America emulate the Spanish model for creating "green jobs" in "alternative energy" even though Spain's unemployment rate is 18.1 percent -- more than double the European Union average -- partly because of spending on such jobs?--George Will

Today, the regulatory community whines about the systemic risk that financial technology created. At the time, the regulators were approving and encouraging the process. Today, regulators complain about the "shadow banking system." At the time, they were encouraging the dispersal of risk and saying that it made the system more resilient.--Arnold Kling

The explicit lesson is the futility of central planning. The surest sign a Soviet-era communist country had a government office of food distribution was the presence of food lines—again, no one person or even group of people staffing a government agency can possibly possess all of the knowledge required to move a food item from raw materials to the packaged goods in your cabinet. If there isn't a single person on the planet who can make a pencil or toaster without the aid of millions of others motivated by their own self-interest, it seems ludicrous to think, for example, that we can save the entire U.S. economy if only we can find the right all-knowing experts to use the power of government to "more properly" allocate resources.--Radley Balko

Just as President Bush did in the first film, President Obama does take a few hits here. The president is named and his National Security liaison, a posturing, snotty Paul Begala-esque simp who disrespects the military, takes the same appeasement, anti–American Leftist position we saw in Iraq. Rather than blame the bad guys, the President blames the good guys for attracting the bad guys and demands Optimus Prime and the Autobots leave Earth until “every diplomatic option” with the Decepticons is explored. To Bay’s credit this is handled with some subtlety, much more subtlety than the cinematic attacks on Bush these last few years.--John Nolte

When asked to judge the constitutionality of the Senate HELP committee proposal, there's a reason why the nonpartisan Congressional Research Service said that the proposed Medical Advisory Council "raises potentially significant constitutional concerns." Our Founders thought politicians should be accountable when it comes to citizens' right to life, liberty and the pursuit of heart surgery.--Scott Gottlieb

If we had 130 law schools (instead of 200) and 200 medical schools in the U.S. (instead of 130), it would probably go a long way to solving our "health care crisis." More MDs at much lower salaries along with fewer lawyers and lawsuits would be a good thing, wouldn't it? Can't breaking up the medical cartel, training more physicians, and lowering MD salaries be part of the discussion for health care reform?--Mark Perry

Or to put it another way, to let Ken Lewis threaten a [material adverse clause] without any repercussions is to give Lewis a free roll. Heads: Bank of America gets to extricate itself from Merrill. Tails: The get a bailout to help it acquire Merrill. What the heck is that? The problem comes back to banks being of such a size that they're too big to fail. When they get that large, there's just no way to credibly deny them a bailout. So, until there's some way to address this issue, the only realistic lever the Fed can have over big banks is over management, and Bernanke recognized that. Why this is so outrageous to people, particularly Congress, is hard to imagine.--John Carney

I recall the pride with which I wore my first Fred Perry shirt and being put out when the art master said “what’s that seaweed round your nipple?”.--Jon Henderson

How it came to pass that the melody of an American Baptist hymn was transmogrified into an ode to raccoon dog testicles, I cannot tell you. But I think we need more of this kind of globalization.--Andrew Leonard

It's Dr. Evil, I didn't spend six years in Evil Medical School to be called 'mister,' thank you very much.--Dr. Evil

You know, do me a favor. Could you say 'senator' instead of 'ma'am'? ... It's just a thing, I worked so hard to get that title, so I'd appreciate it, yes, thank you.--Barbara Boxer

Wednesday, June 24, 2009

Remind me not to tangle with Christopher Badeaux

Here's one reason why not to:
Behold Andrew Sullivan, a man who contains infinite contradictions: A believer in privacy, except a woman’s medical records, who never seemed upset that his preferred horse in the race released nothing besides a one-page “All clear!” note from his doctor; an opponent of the objectification of homosexuals, who objectified at least one, and arguably two, children; a professional journalist with a boundless understanding of not only applied medicine, but also hospital protocol and the art of diagnosis by news clipping and photograph.

Play of the day

Nick Green tags runner, somersaults, and fires to first.

Graph of the day

Via Mark Perry.

UPDATE: Mark has posted some interesting followup here.

Quotes of the day

It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult.--Seneca

Essentially, all models are wrong, but some are useful.--George E.P. Box

Reporters typically don’t coordinate their questions for the president before press conferences, so it seemed odd that Obama might have an idea what the question would be.--Michael Calderone

But [Bill Keller's] decisions and those of his colleagues at the [New York] Times indicate pretty clearly whose side they are on. They are determined to protect their brave and admirable colleagues from danger. But they are not concerned to protect the people of the United States and friendly nations from dangers which, while perhaps more remote, have proved painfully real, and not only on September 11, 2001. They seem to see themselves as transnational journalists, with responsibilities to their colleagues and their profession, but with no particular responsibilities as American citizens.--Michael Barone

People in democracies will continue to have access to independent and often quite accurate, reports on events in their own countries and most other parts of the world. In fact, the populations of undemocratic countries now have much greater access to what is happening in the world than they had in the past because it is far more difficult to suppress access to the Internet and other electronic forms of communication than it is to suppress newspapers.--Gary Becker

Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.--Richard Posner

This phenomenon, known as the “Quarterlife Crisis,” is as ubiquitous as it is intangible. Unrelenting indecision, isolation, confusion and anxiety about working, relationships and direction is reported by people in their mid-twenties to early thirties who are usually urban, middle class and well-educated; those who should be able to capitalize on their youth, unparalleled freedom and free-for-all individuation. They can’t make any decisions, because they don’t know what they want, and they don’t know what they want because they don’t know who they are, and they don’t know who they are because they’re allowed to be anyone they want.--Kate Carraway

For grownups fated -- or maybe even compelled -- to see "[Transformers:] Revenge of the Fallen," a few bright spots and oddities may relieve the sustained-release idiocy. Henry Ford's Model T was, it turns out, a Decepticon in disguise. So was the supersonic SR-71 Blackbird, though a Decepticon that came over to the Autobots' side. The ranks of the Autobots are rife with General Motors product placements, and in the current climate anything that may sell a GM car can only be seen as a plus. In a movie not distinguished by dramatic focus, the camera's concentration on Mikaela's lips, breasts and behind is unwavering.--Joe Morgenstern

We argue that a simple preference for a taller husband (or shorter wife) can explain part of the gender-specifi…c asymmetries across ethnic groups in the propensity to outmarry. Blacks are taller than Asians, and their height distribution is closer to whites. Because they are taller, black men have better prospects on the white marriage market than Asian men. For women, the reverse is true. Because Asians are relatively short on average, women fare substantially better on the white marriage market than black women.--Michèle Belot and Jan Fidrmuc

Signals are forever, because we can always change. Yes, she might have been very sure that he loved her last year, but today there is a small nagging doubt about whether he still loves her. So he must continue to signal to reassure her.--Robin Hanson

The Wachowski brothers offer further proof “The Matrix” was a glorious fluke. If you’re gonna make a bomb, why not make it as color-saturated as this box office calamity [Speed Racer].--Christian Toto

... as a marketing gimmick, the [MBA] Oath is pretty slick, but as a way to generate trust among others, it sucks. For one thing, it is voluntary and self-selected. Attila the Hun, Joseph Goebbels, and Caligula could all have signed the Oath, and for all anyone knows their modern-day MBA equivalents did, too. In fact, bad guys with zero ethics have the greatest incentive to sign up to such schemes, because they hope whatever good juju accrues to the thing will rub off on them and blind victims to their misdeeds until it is too late. Everyone pays lip service to good ethics, you know, especially the bad guys. Just wait until a signatory blows up the next Enron or Madoff Securities, and then see what your precious honor code is worth.--Epicurean Dealmaker

Do you want the poor people to become rich? ... Then give me your car.--11 year old Liberian plastic bag salesman

Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development. ... Fannie and Freddie have always been political creatures under the best circumstances. But we don't remember anyone electing Mr. Frank underwriter-in-chief of the United States.--WSJ Editorial Board

Tuesday, June 23, 2009

You may want to temper that belief that government is the solution

because it is often the solution killer.

David Henderson spanks Ezra Klein on health insurance

and good.

UPDATE: Ezra pats Bruce McQuain, very lightly.

Ideas and Institutions

Charles Jones and Paul Romer write (via Arnold Kling):
The interaction between institutions and idea flows is easy to illustrate in familiar contexts. For example, until 1996, opponents successfully used the local permit process to keep Wal-Mart from building stores or distribution centers in Vermont. This kept powerful logistics ideas like cross-docking that Wal-Mart pioneered from being used to raise productivity in retailing in the state. Such nonrival ideas must have been at least partly excludable. This is why Wal-Mart was willing to spend resources developing them and why competitors were not able to copy them. All this fits comfortably in the default model of endogenous discovery of ideas as partially excludable nonrival goods.
The pure public good approach also makes it very difficult to address one of the most striking episodes in modern history. By something like 1300 A.D., China was the most technologically advanced country in the world, with a large integrated population. According to the Lee model, it should have persisted indefinitely as the worldtechnology leader. The explosive dynamics of the virtuous circle between population and ideas suggests that such technological leads should never be lost. Only a remarkable and persistent failure of institutions can explain how China fell so far behind Europe. A model in which institutions can stifle innovation could explain why China lost the lead, but it takes a model in which institutions can also stop inflows of ideas from the rest of the world to explain why, for more than 500 years, ideas developed in the west were not more systematically adopted in China.

Greg Mankiw links us to Milton Friedman's take on healthcare reform

An excerpt from the 2001 piece (Greg's link and Don's link):

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become "What’s wrong?" not "What’s your insurance?"

Quotes of the day

Education is a progressive discovery of our own ignorance.--Will Durant

[Unlike the Torah, most religious texts lack] the power, the ability to give it multiple readings, and to read it again and again and again and be lead to develop more sophisticated questions about the stories that are taking place and to find subtleties and interconnections across the different parts of the Hebrew Bible I really find quite astonishing.--Tyler Cowen

... the more muscular a man is, the more sexual partners he has. So why haven’t skinny, fat, or average men been wiped out of the gene pool? One reason, according to [William] Lassek, is that men with bigger muscles have to eat more to sustain themselves and have weaker immune systems. Advantage, skinny!--Steven Levitt

Maybe she’s noble — but exactly the same behavior can be adequately explained by painting it as a power grab.--Felix Salmon

I try not to celebrate Father's Day; it's my wife who insists on doing it. If she can ratchet up Father's Day, it means Mother's Day is that much bigger. That's the only reason it gets celebrated. It's a phony holiday. ... There is no question that it is easier to outrage people by celebrating one's bad motherhood than celebrating one's bad fatherhood. People cut men more slack. Ayelet [Waldman] is writing a much more controversial book than I ever could unless I said something like, "I intend to kill my children."--Michael Lewis

It does seem to be the case that many people think that without a governor in charge, our lives would be in chaos. But ask yourself. How often through the day or even through the year do you consult the governor before taking action? You could argue that without the governor around, certain big spending or regulatory decisions would not be made. And that's necessarily bad?--David Henderson

If we are growing at a robust rate, then we can pay for the government that we need without having to raise taxes.--President Obama

Obama and his team seem sharply opposed to the view that creative destruction is a valuable economic force. They seem happy with what might be called destructive destruction -- the obliteration of value and wealth without any resulting positive change.--Kevin Hassett

... we react inappropriately to future extrapolations, because we project them onto our own situations--we ignore the fact that the changes in income shares devoted to a given product arise from economic growth. It is true that I cannot afford to spend 40% of my income on healthcare. It was equally true that my great-great grandparents could not afford to spend a third of their income on housing, and another half on clothing, manufactured good, transportation, and services--Land o' Mercy, everyone in the future is going to starve to death!!!--Megan McArdle

When the secretary informed me that, "Insurance doesn't cover this treatment," I was positively delighted. Why, you ask? It's not envy - I don't mind if other people have better insurance than I do. The reason for my delight: As soon as she said that no insurance companies covered this treatment, I knew it would be reasonably priced!--Bryan Caplan

It’s far from obvious that the point of health care should be to extend life or raise average lifespans. It’s not even clear that extending lifespans following the diagnosis of a serious disease should be the primary goal of health care. There’s a long tradition, in fact, that argues that it is the quality of life rather than the length of it that should be the true measure. ... Unfortunately, much of the health care debate seems to be built around either the idea that extending lifespans is the primary goal of health care or an good proxy for its effectiveness. With this bad measuring stick, we’re sure to wind up building a bad health care policy.--John Carney

[Paul] Krugman's comments above clearly suggest that he is in favor of letting people, even people on Medicare, pay for medical care if they value it enough. I guess we can look forward, then, to a New York Times column, or at least a blog post, by Krugman in which he advocates:
1. Letting people out of Medicare who want out.
2. Letting people pay doctors and hospitals more than the Medicare-set rates. (It's now illegal for doctors and hospitals to bill Medicare beneficiaries even a penny more than the rates set by Medicare.)--David Henderson

Everyone knows there were bad bets in the housing and mortgage markets. But this question of whether on top of those bad bets there was a co-ordination failure is a really, really fundamental issue. If there was no co-ordination failure, then all the talk about "shadow banking" and the need for a "systemic risk regulator" is beside the point.--Arnold Kling

If more of us had acted on the feelings we had, which he did, things could have been different, things could have changed. We didn’t, and for that our generation, the generation we played in now defined as the “Steroid Era”, got it’s name. That’s on us, the owners, and the Commissioner, but it sure as hell isn’t on Don Fehr.--Curt Schilling

If Stanford Financial was in fact a Ponzi scheme, it was strikingly similar to Bernie Madoff’s. As with Madoff’s operation, only a handful of people appear to have known what was going on. Stanford’s auditor, like Madoff’s, was tiny, in this case a 14-person accounting firm in Antigua; its owner has recently died. Stanford’s seven-member board was composed entirely of insiders, including Stanford’s father and one of his elderly chums, disabled by a stroke. That such a scheme could grow so enormous, and last for so many years, is a devastating indictment of worldwide banking regulation. It took Alex Dalmady maybe two hours on the Internet to glean the amazing truth. It’s not clear anyone in Washington ever seriously tried.--Bryan Burrough

Let’s not pretend that the street revolt in Iran — is it too early to call it a revolution? — is occurring in a vacuum. It isn’t. Something approaching secular democracy is working for millions of Muslims, most of them Shiites, in Iraq.--Stephen Green

It was OK for the New York Times and the rest to endanger every person in America by revealing the secrets of an anti-terrorist program, but they were all in league to protect one reporter for the New York Times.--Don Surber

We may reflexively regard him as slower, dumber, less handsome than the hero he shadows, but in practice the sidekick may be the smarter, funnier, faster, better-looking or more practical one. Less bound by convention or expectation, flexible rather than stiff-necked, he is free in ways forbidden the hero. His life is simpler, his soul less troubled. Ed Norton may be a dimwit, but he isn't tormented, like Ralph Kramden, by desperation and desire. Spock is cooler than Kirk. It seems like the better job. ... An uncharitable or undiscerning critic might say [Ed] McMahon had an easy job: Laugh at the boss' jokes, read a few cue cards, sell a little dog food, cheerfully absorb whatever cracks are made at his expense, slide further down the couch as the evening's guests arrive. ... There is a kind of genius in knowing how to live with a genius. Did anyone want to grow up to be Ed McMahon? Maybe not.--Robert Lloyd

Monday, June 22, 2009

Busting the myth of health prevention reducing medical costs

Abraham Verghese does a great service:

But if your preventive strategy is medical, if it involves us, if it consists of screening, finding medical conditions early, shaking the bushes for high cholesterols, or abnormal EKGs, markers for prostate cancer such as PSA, then more often than not you don’t save anything and you might generate more medical costs. Prevention is a good thing to do, but why equate it with saving money when it won’t? Think about this: discovering high cholesterol in a person who is feeling well, is really just discovering a risk factor and not a disease; it predicts that you have a greater chance of having a heart attack than someone with a normal cholesterol. Now you can reduce the probability of a heart attack by swallowing a statin, and it will make good sense for you personally, especially if you have other risk factors (male sex, smoking etc).. But if you are treating a population, keep in mind that you may have to treat several hundred people to prevent one heart attack. Using a statin costs about $150,000 for every year of life it saves in men, and even more in women (since their heart-attack risk is lower)—I don’t see the savings there.

Or take the coronary calcium scans or heart scan, which most authorities suggest is not a test to be done on people who have no symptoms, and which I think of as the equivalent of the miracle glow-in-the-dark minnow lure advertised on late night infommercials. It’s a money maker, without any doubt, and some institutions actually advertise on billboards or in newspapers, luring you in for this ‘cheap’ and ‘painless’ way to get a look at your coronary arteries. If you take the test and find you have no calcium on your coronaries, you have learned that . . . you have no calcium on your coronaries. If they do find calcium on your coronaries, then my friend, you have just bought yourself some major worry. You will want to know, What does this mean? Are my coronary arteries narrowed to a trickle? Am I about to die? Is it nothing? Asking such questions almost inevitably leads to more tests: a stress test, an echocardiogram, a stress echo, a cardiac catheterization, stents and even cardiac bypass operations—all because you opted for a ‘cheap’ and ‘painless’ test—if only you’d never seen that billboard.

Quotes of the day

The only useful definition of human rights is one where a human rights crusader could identify WHOSE rights are being violated and WHO is the violator. [...] Poverty does not fit this definition of rights.--William Easterly

The idea that there is something natural and inevitable, and therefore nothing objectionable, about the status quo global system of exclusive states is I think one of the ultimate barriers to the spread of legitimate human rights and the prosperity that entails.--Will Wilkinson

Sonia Sotomayor, Barack Obama's nominee for a seat on the Supreme Court, served on the board of a New York State agency charged with providing discounted mortgages to middle and low income homebuyers from 1987 to 1992. During the time, she was a consistent advocate of pushing the agency to provide more mortgages to low-income home buyers. In short, she advocated the kind of aggressive lending practices that helped create the mortgage meltdown.--John Carney

Dan Mitchell making a good point on CNBC

Our test scores improved more before the Department of Education, and have stagnated since its creation.

Friday, June 19, 2009

Quotes of the day

Remember, I was part of the student rebellion and we didn't listen to anything anyone over 30 said because they were just too clueless. Or so we thought.

... serving others is really, really important. It truly is the secret to happiness. ... Money won't do it. Fame won't do it. Nor will sex, drugs, homeruns or high achievement.

... Failure will give you a tattoo that will stay with you for the rest of your life, and sometimes it's a really good thing.

... intellectual capital will always trump financial capital.--Paul Tudor Jones

Right now a lot of people are asking for more populist regulation without realizing that also requires more populist monetary policy.--Tyler Cowen

The next time you hear someone cavalierly point to international comparisons in life expectancy as evidence against the U.S. healthcare system, you should be ready to explain how schlocky that argument really is.--Greg Mankiw

One hypothesis is that anyone who deals with university administration, as I sometimes do, will have no marginal taste for playing Kremlin.--Tyler Cowen

The Pacific is experiencing a little fire burn, cauldron bubble

double, double toil and trouble. Thanks to Presidents Bill Clinton and Jimmy Carter.

Quote here.

Pic link here.

Blogging light today, as is typical with quadruple witchings.

Thursday, June 18, 2009

The stimulus package is discouraging hiring

What?!? (Via Tim Kane).

Neato story about summer camp

Once upon a time, there was a summer camp. To entertain the kids, the counselors handed out matches1, lighter fluid2, and newspapers3.

To see what happens next, go here.

I've been having a rough week

This news cheered me up.

As with applying Freudian analysis on Freud yields skepticism

so it is with Nassim Taleb.

David Leonhard tries to make "rationing" easier to digest

Here is his smokescreen.

I will only say that you can replace "ration" and "rationing" with "slavery", and get a similar, if not intended outcome.

Rationing is having a coercive authority, say the government, limit your choice and consumption.

Rationing is, in its simplest form, an antonym to Freedom.

UPDATE: Daniel Indiviglio does not love the piece either, and makes some constructive suggestions.

UPDATE: Russell Roberts seems to agree with me to some degree.

Quotes of the day

Although we didn’t do a clean experiment in changing Zach [the Cat's] behavior, that doesn’t mean we can’t make up for it now by undoing the changes one by one. I think I’ll start today by taking Zach off Prozac. I’ve always wanted to try Prozac myself, and I really have had a strong urge to pee on rugs lately.--Steve Levitt

Believe me, nothing except a battle lost can be half so melancholy as a battle won.--Duke of Wellington

The Federal Reserve System was founded by Congress in 1913 "to provide the nation with a safer, more flexible, and more stable monetary and financial system." In short, it controls the supply of money. Now it is suddenly supposed to regulate the largest financial institutions in the country? How? By giving them more money? Putting the Federal Reserve in charge of financial regulation is like putting arms manufacturers in charge of military policy. You're asking for trouble, in other words. Or at the very least a hairbrained approach. Then again, who knows? Maybe that's what we need.--Nathaniel Baker

We still have by and large academics and lawyers who are trying to regulate an industry in which they've never run a fund, they've never bought and sold stocks professionally, they've never cold-called a client.--Jim Chanos

Obama needs support of Congressional and Senate Democrats to pass not only the financial regulatory reform, but also his climate and health care proposals. He most likely decided he couldn't risk angering the members of the agricultural committees by proposing taking away their authority. And so one of the most basic pieces of regulatory change was dropped for political considerations. --John Carney

If you can afford a cell phone or cable TV, you can afford basic health insurance. In Michigan, you can get basic health insurance through Blue Cross Blue Shield starting at $47.14 per month for those 18-30 years old (about the cost of a basic cell phone plan), and starting at $168.13 per month for another plan for individuals under 65 and families (not too much more than a cable TV plan with premium channels, and about the same as two cells phones at the monthly average of $77).--Mark Perry

Barney Frank, Meet Irony.--Andrew Samwick

In many cases I think he goes a bit over the top. But here it is just the opposite. I am outraged over Krugman’s lack of outrage over current monetary policy.--Scott Sumner

Hyuk hyuk hyuk, that's just so funny, [Milton Friedman's desire] to wanna certify surgeon capability some way other than imprisoning folks who won't join a government cartel! What a side-splitter! Next he's going to say we shouldn't use slaves in the army! Oh, what a riot.--Silas Barta

Let me elaborate on that. The young interviewer, Conor Clarke, owes a huge debt to Milton Friedman, who did more for him and for every healthy American male under age 54 than Samuelson ever did. I'm referring, of course, to Friedman's "nutty libertarian" crusade against the draft. The draft ended in 1973 and among the leaders who pushed to end it were Milton Friedman, Alan Greenspan, W. Allen Wallis, William Meckling, and Walter Oi, all of whom were or are strong believers in the free market. Meanwhile where was Samuelson? He was AWOL. He was represented by a Senator, Ted Kennedy, who was one of the staunchest proponents of the draft and, if Samuelson ever wrote against the draft or ever tried to talk Kennedy out of it, I can find no record of it. In 1980, when Senator Sam Nunn was trying to bring back the draft and I circulated an economists' statement against the draft, Samuelson refused to sign. Friedman, by contrast, not only served on President Nixon's Commission on the All-Volunteer Force but also lobbied Congressmen personally against the draft.--David Henderson

US Open first

The defending champions of the 4 majors are paired together for the first time ever:
  • Angel Cabrera (Masters)
  • Padraig Harrington (British Open, PGA Championship)
  • Tiger Woods (US Open)
My golf picks for the pool run by my favorite broker (assuming no alternates):
Allenby, Clark
Furyk, Goosen
Mediate, Ogilvy
O'Hair, Perry
Stricker, Villegas
Casey, Garcia, Mickelson, and Woods were excused from the picking.

Wednesday, June 17, 2009

Statistical anomalies showing up in the Iranian recounts

here (via Eddy Elfenbein).

Rating agencies can do whatever they want

Is it criminal? No. It should be! (Rating agencies are chartered by Congress ...)

Via John Carney.

The consequences of language on thought

Most interesting (via theBrowser):
Instead of words like "right," "left," "forward," and "back," which, as commonly used in English, define space relative to an observer, the Kuuk Thaayorre, like many other Aboriginal groups, use cardinal-direction terms — north, south, east, and west — to define space.1 This is done at all scales, which means you have to say things like "There's an ant on your southeast leg" or "Move the cup to the north northwest a little bit." One obvious consequence of speaking such a language is that you have to stay oriented at all times, or else you cannot speak properly. The normal greeting in Kuuk Thaayorre is "Where are you going?" and the answer should be something like " Southsoutheast, in the middle distance." If you don't know which way you're facing, you can't even get past "Hello."

The result is a profound difference in navigational ability and spatial knowledge between speakers of languages that rely primarily on absolute reference frames (like Kuuk Thaayorre) and languages that rely on relative reference frames (like English).2 Simply put, speakers of languages like Kuuk Thaayorre are much better than English speakers at staying oriented and keeping track of where they are, even in unfamiliar landscapes or inside unfamiliar buildings. What enables them — in fact, forces them — to do this is their language. Having their attention trained in this way equips them to perform navigational feats once thought beyond human capabilities. Because space is such a fundamental domain of thought, differences in how people think about space don't end there. People rely on their spatial knowledge to build other, more complex, more abstract representations. Representations of such things as time, number, musical pitch, kinship relations, morality, and emotions have been shown to depend on how we think about space. So if the Kuuk Thaayorre think differently about space, do they also think differently about other things, like time? This is what my collaborator Alice Gaby and I came to Pormpuraaw to find out.
In fact, you don't even need to go into the lab to see these effects of language; you can see them with your own eyes in an art gallery. Look at some famous examples of personification in art — the ways in which abstract entities such as death, sin, victory, or time are given human form. How does an artist decide whether death, say, or time should be painted as a man or a woman? It turns out that in 85 percent of such personifications, whether a male or female figure is chosen is predicted by the grammatical gender of the word in the artist's native language. So, for example, German painters are more likely to paint death as a man, whereas Russian painters are more likely to paint death as a woman.

Quotes of the day

Believe those who are seeking the truth. Doubt those who find it.-- Andre Gide

Never attribute to conspiracy that which can be explained by incompetence.--Jeff Bezos

Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.--Paul Krugman, back in 2002

As Taleb points out, we notice the ones who do well a lot more because those who do badly simply drop out of sight. So it is also with predictions of disaster: We mostly get to hear about the few times that they turn out to be right.--Mark Gimein

[Detroit's] 22.8% unemployment rate is among the highest in the U.S.; 30% of residents are on food stamps.--Andrew Grossman

Somewhere Hank Paulson must be smiling. He called the TARP purchases an investment, and insisted that the taxpayers could actually make money on the bailout. And, at least with JPMorgan Chase, we did. The bank has the U. S. Treasury an aggregate of $795,138,889 in dividends on the preferred stock.--John Carney

Ryoma Igarashi likes going for long drives through the mountains, taking photographs of Buddhist temples and exploring old neighborhoods. He's just taken up gardening, growing radishes in a planter in his apartment. Until recently, Igarashi, a 27-year-old Japanese television presenter, would have been considered effeminate, even gay. Japanese men have long been expected to live like characters on Mad Men, chasing secretaries, drinking with the boys, and splurging on watches, golf, and new cars. ... Japanese women are not taking the herbivores' indifference lightly. In response to the herbivorous boys' tepidity, "carnivorous girls" are taking matters into their own hands, pursuing men more aggressively. Also known as "hunters," these women could be seen as Japan's version of America's cougars.--Alexandra Harney

Baseball is a game of nuance where three successful hits out of 10 makes you an expert. Two hits out of 10, on the other hand, makes you a real-estate broker or a shoe salesman or, in May, significantly better than [David] Ortiz whose average for the month was .143. But the painful beauty of Mr. Ortiz’s slump, is that it does feel true to the essence of a game where all the best stories, as in fiction and life, are about adversity.--Nicholas Dawidoff

Question of the day

Is Google actually making us smarter:
As the digital systems we rely upon become faster, more sophisticated, and (with the usual hiccups) more capable, we’re becoming more sophisticated and capable too. It’s a form of co-evolution: we learn to adapt our thinking and expectations to these digital systems, even as the system designs become more complex and powerful to meet more of our needs—and eventually come to adapt to us.

Creative Destruction catches up

with television.

Tuesday, June 16, 2009

Quote of the day

Why did the turtle cross the road? To get to the other side of a stimulus project.--Senator Tom Coburn

Twitter enables freer speech in Iran

Life is still far from perfect. But it does get better over time.

UPDATE: Some background here.

Monday, June 15, 2009

Richard Posner and Gary Becker on the futility of a Pay Czar

Becker writes:
Defenders of the selection of Mr. [Kenneth] Feinberg [as Pay Czar] point to his almost three years spent as a pro bono Special Master of the fund that compensated victims of the 9/11 terrorist attacks. I do not know how well he carried out these duties, but determining compensation of victims is entirely different from what is required to set compensation of executives. As Special Master he had to assess the value of losses due to wrongful deaths and injuries. Although that assessment is not easy- it depends on lost earnings and other aspects of the so-called statistical value of life- it really has little to do with determining employee pay in a few companies engaged in highly competitive and changing industries.

The same fatal conceit behind the setting up of a pay Czar is also responsible for the belief that members of Congress and Washington officials are capable of steering GM and Chrysler toward profitable directions. This is behind the government pressure on these companies to shift toward small fuel-efficient cars, even though GM and Chrysler have been best at producing trucks and larger cars. Perhaps they will be able to make this shift, but it is far more likely that Honda, Kia, Toyota, and other foreign auto manufacturers that have been making small cars for decades will eat their lunch.

and Posner says:
Any monkeying by government with compensation practices, especially below the top level of management and especially in financial firms, will impair the ability of American firms to compete with foreign firms. The banking business is thoroughly international, and unless all countries act in lock step with the United States in regulating compensation practices, many of our ablest financiers will be lured to foreign banks.

One can only hope that the appointment of a "pay czar" is merely a sop to ignorant public and congressional opinion, and that Mr. Feinberg will be suitably restrained in the exercise of his powers. Secretary of the Treasury Geithner seems unenthusiastic about the government's imposing more than cosmetic changes on corporate compensation. practices. More power to him.

Quotes of the day

To have a right to do a thing is not at all the same as to be right in doing it.--G. K. Chesterton

For whatever reason, the Patriots place a higher monetary value on guys who play closer to the ball. That’s why players like Richard Seymour, Ty Warren, Tom Brady and Matt Light have been able to walk away from the bargaining table satisfied with their contracts. For the most part, New England has considered receivers and defensive backs to be fungible commodities, interchangeable parts that can be added and subtracted. It hasn’t always worked (they are still working to replace Samuel), but it’s their business model, and there’s been no indication they’re not sticking to it going forward.--Christopher Price

... home runs are distributed just about as unequally as income - the top 5% earn a disproportionate share of income, about 36%; and the top 5% of baseball players hit a disproportionate amount of home runs, about 36%.--Mark Perry

I think that politically, if not intellectually, the success of smoking bans is a heavy blow to libertarian credibility.--Megan McArdle

For costless and near-costless actions, small beneficial correlations are enough to justify changing your behavior. If you find a lottery ticket for a free lunch, you might as well hang on to it. But you shouldn't count on finding such lottery tickets with any frequency. In the real world, beneficial changes usually have a steep price, and a lot of "free lunches" are just scams.--Bryan Caplan

... the fact is that the Federal Reserve, which regulates most of the nation's largest banks, had enough power to prevent bank failures with better capital regulations. Preventing failure at Freddie Mac and Fannie Mae also did not require a systemic risk regulator—what was needed was tighter supervision by the Office of Federal Housing Enterprise Oversight, which regulates those institutions. That in turn would have required support from Congress, which generally was instead more prone to tampering with the regulator than with the housing enterprises it was supposed to regulate.--Arnold Kling

Obama has more reason to be mad at Johnson and FDR for bequeathing him intractable legacy costs than at Bush: they will substantially reduce the scope of the things that Obama can do. But I don't expect to hear him explain that he has to run a budget deficit because he inherited a legacy of unsustainable spending by his Democratic predecessors. The fact remains that Bush actually left him very little legacy of permanent spending to be drivng his future deficits.--Megan McArdle

MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later. This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.--Tyler Cowen

As people get richer and consumption rises, the marginal utility of consumption falls rapidly. Spending on health to extend life allows individuals to purchase additional periods of utility. The marginal utility of life extension does not decline. As a result, the optimal composition of total spending shifts toward health, and the health share grows along with income. In projections based on the quantitative analysis of our model, the optimal health share of spending seems likely to exceed 30 percent by the middle of the century.--Robert Hall and Chad Jones

How did Obama manage to spend all his political capital so quickly? Did it all go on the stimulus bill? Wasn’t the whole point of bringing Rahm in as chief of staff that he could work constructively with Congress to pass an ambitious agenda? And isn’t Obama himself the first president since JFK to have entered the White House from the Senate? I’m not sure when everything went wrong here, but I fear that the damage is now irreparable — and that Obama’s agenda is going to be severely scaled back as a result.--Felix Salmon

[Donald] Rumsfeld is in many respects an honorable man, deeply patriotic, a good friend to many and unfailingly loyal to those he has served and to a number who have served him. He is smart, cunning and capable of great geniality, all highly desirable qualities in a leader with such power. And the challenges he faced as secretary were considerable. But in the end, Rumsfeld's biggest failings were personal -- the result of the man himself, not simply of the circumstances he confronted. While he was unwilling to profess regrets to me, it is unlikely that he doesn't have some. Nor do I expect him simply to fade away. That has never been his style. Withdrawal is not on his list of Rumsfeld's Rules.--Bradley Graham

I had to rub my eyes

after reading this:
But, rather than leave so much of our fate to chance, we’d be better off doing what politicians always say they want to do: lessen the U.S. economy’s dependence on oil. One step toward that would be to phase in a gas tax designed to smooth out oil’s spikes and plunges by keeping the price of gasoline fixed (the tax would rise when the price of gas fell, and vice versa). Raising gas taxes is, of course, a solution that politicians—and voters—hate. But perhaps another oil shock or two will change that.
What is Surowiecki thinking/smoking? Would hiding the truth (i.e. the price of oil) help the situation more than revealing it to all? Would the government handle the hedging of oil volatility any better than its Ponzi schemes otherwise known as Social Security and Medicare (i.e. actually escrow surpluses, rather than spending them)?

UPDATE: Felix questions him, too:
Either you want to effect consumer behavior and reduce gasoline consumption — in which case you actually welcome price spikes. Or else you want to smooth out price spikes, in which case you slowly boil the frog (to use one of the stupidest metaphors ever) and keep consumption high. But you can’t have it both ways. Which is it to be, Jim?

Here are two things any one is free to do (that is, not coerced by the goverment):

1) Save for oil shocks, in an FDIC-insured account even
2) Trade oil futures, say with Lind-Waldock, or gasoline ETFs like UGA

Thursday, June 11, 2009

Quotes of the day

My obituary’s written. And that is a very hard thing to live with.--Elliot Spitzer

As long as the deficit is less than inflation + GDP growth, the government is unlikely to get into much trouble. ... The problem with the budget deficit is not any particular program, or even any particular tax cuts. It is not that George Bush or Obama is a bad person who does bad things. The problem with the budget deficit is that, unlike the deficits George Bush ran, the deficits projected under Obama (and beyond) are actually large enough to potentially precipitate a fiscal crisis. If our interest rates suddenly spiked up, perhaps because lenders were worried about the size of our budget deficits, we'd find ourselves in the kind of nasty fiscal jam that regularly plagues third-world countries. The difference is, no one has enough money to bail us out. ... Obama is the one who will have to prevent this. Yet instead of plans, we're getting fairy numbers from the OMB. That's worrying, and it's sure not George W. Bush's fault. His OMB liked to inflate the deficit projections, so that they could take credit for a mostly imaginary reduction.--Megan McArdle

Some things in politics you can't make up, such as President Obama's re-re-endorsement Tuesday of "pay-as-you-go" budgeting. Coming after $787 billion in nonstimulating stimulus, a $410 billion omnibus to wrap up fiscal 2009, a $3.5 trillion 2010 budget proposal, sundry bailouts and a 13-figure health-care spending expansion still to come, this latest vow of fiscal chastity is like Donald Trump denouncing self-promotion. ... The main political question now is when Americans will start to figure out Mr. Obama's pattern of spend, repent and repeat. The President is still sailing along on his charm and the fact that Americans are cheering for an economic recovery. But eventually they'll see that he isn't telling them the truth, and when they do, the very Blue Dogs he's trying to protect will pay the price. And they'll deserve what they get.--WSJ Editorial Board

A Nation of Seventh Graders vs. An Army of Davids


And a refresher why I choose anonymity: I work for a publicly traded bank, and can be easily linked to it. Plus, my wife is an attorney, and her employer would also prefer not to be linked to the expressions here (as much as I might be covered by the First Amendment).

Both of us toil under more stringent communication policies than the average employee, and so, anon.

UPDATE: More food for thought, here.

Graph of the day

Source here.

Wednesday, June 10, 2009

I feel so oppressed and disenfranchised as a man

after seeing this.

I wouldn't take on the tag-team of Greg Mankiw + Robin Hanson lightly

Especially after reading this:
[Matt] Yglesias and [Conor] Clarke seem here to exemplify unprincipled courtiers, who talk sagely of important considerations, and can find sage reasons for any opinion, and so need never allow analysis to move them from the dictates of inertia or fashion.

It costs any government at least twice as much to do something as it costs anyone else

David Henderson reflects upon David Friedman's Law.

Household net worth falling significantly

Data source here. Assuming 113 million households over the two year period and 10% of the total is non-profit, on average, your net worth has fallen from $500k to $400k.

I think I prefer the written Steven Colbert

to the oral version:
I know what you're thinking: "Isn't the Iraq War over?" That's what I thought, too. I hadn't seen it in the media for a while, and when I don't see something, I assume it's vanished forever, like in that terrifying game peekaboo. We stopped seeing much coverage of the Iraq War back in September when the economy tanked, and I just figured the insurgents were wiped out because they were heavily invested in Lehman Brothers.

Turns out there are still 135,000 troops in Iraq, which I don't understand because we've already won the war. And we've won it so many times. We should win something for the number of times we've won it. We eliminated the weapons of mass destruction by having them not exist. We took out Saddam Hussein—or a really convincing and committed Saddam Hussein double. We helped write the Iraqi Constitution and clearly gave Iraqis the right to bear a lot of arms. And by August of next year we'll withdraw every single one of our troops, leaving behind only memories and 50,000 troops.

Quotes of the day

I have never once met a person whose blog I like and then been disappointed. Never.--Tyler Cowen

Interestingly, in terms of both maximizing current contributions and inducing participation, we find that a one-standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive.--Landry, Lange, List, Price and Rupp

Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college.--JOSEPH MARR CRONIN and HOWARD E. HORTON

But isn't your whole complaint about the market that it counts the welfare of the truly poor for virtually nothing? Now it sounds like you care less about their welfare than the market does. Maybe less than zero. ... So how much weight in the social welfare function does social democracy really give to the truly poor? ... There may be good arguments out there for social democracy. But 'It's better for the poor than laissez-faire,' isn't one of them.'"--Bryan Caplan

I won’t defend Mr. Paulson for not being clairvoyant of the Wall Street collapse. He missed it. Ben Bernanke missed it. Most people missed it. But the measure of a man isn’t whether he can stop a crisis from happening but how he deals with it when it has happened. Do you blame Captain Chesley Sullenberger for hitting a flock of birds, or do you praise how he bravely landed Flight 1549 in the Hudson River?--Evan Newmark

A fresh-faced 31-year-old, Deese dropped out of Yale Law School last year to work for Hillary Clinton's presidential campaign. When Clinton sank, Deese skipped over to the winning ship, impressed everybody who counts, and landed a desk in the White House. The big guns like Larry Summers and Christina Romer are busy cooking up hilariously sunny budget projections while trying to look like they're keeping the economy from collapsing. So Deese, armed with an undergrad degree in political science, finds the GM portfolio and the fate of millions in his hands. ... It shouldn't come as news, but the rhetoric of American politics is gushing with hypocrisy. Just as Republican "libertarian" arguments for decentralized government often aim to protect the tyranny of local prejudice, Democratic "egalitarian" arguments about inequalities in wealth and income too often aim at concentrating political power in the hands of people like Brian Deese. In an America of free and equal people, no one would need to assure us that the president's men won't be issuing commands about the colors of cars.--Will Wilkinson

[Ronald Reagan] wouldn't have won election if it weren't for inflation, if it weren't for gas lines, if it weren't for the reigning hostage crisis, if it weren't for Afghanistan, if it weren't for the entire litany of Carter administration failures. And when you are as far as Republicans were in the late 1970s, and as far down as they are today, you need the other side to fumble, and for its vision to be discredited. And at the moment, Barack Obama has the ball, and he is going to have the ball until he commits some sort of turnover.--Rich Lowry

A veteran of three wars—my father-in-law joined the communists at fifteen in the anti-Japanese struggle—he has taken the whole thing in stride, remains optimistic, and is gradually regaining his abilities. In my view, he is one of the few true communists left in China: meaning that his outlook is genuinely other-regarding. Relatives and friends visit him at the hospital and they want to know how he’s doing, but he seems more concerned about how they are doing.--Daniel Bell

Tuesday, June 09, 2009

Richard Pryor

Stand-up philosopher.

Quotes of the day

For the perishable must clothe itself with the imperishable, and the mortal with immortality.--Paul the Apostle

Problem for [stock market] bulls; which fear should they fear more: fund managers' fear of missing The Recession-Ending Mega-Rally or the insiders' fear that their companies' miseries are far from ended? The fear that is winning proclaims, "Happy Days Are Here Again!" The opposed fear growls, "That song came out in 1929".--Don Coxe

As Chrysler’s bailout was proceeding, President Obama appeared on TV to denounce “the speculators” who were insisting that their ownership of secured bonds gave them priority in the bankruptcy. This was not the calm, cool, compromise seeker who had reassured the business community that he would respect its claims to full participation in the economic rescue program. He shouted, (like the Marxist Labourites who kept the party out of power until Tony Blair cowed them), “I stand with the workers!” In the outcome, the UAW, whose benefit programs were unsecured creditors, was awarded a 55% ownership share in the company, and the secured bondholders were given only pennies on their holdings—and threats of the kind of personal retaliation suffered by AIG officers. Only later did we learn (on Page 16) that “the speculators” included public pension funds in Indiana. The state funds had, (despite the investment rules in ERISA), invested heavily in the secured debt of Chrysler, which was, directly and indirectly, a major economic power in Northern Indiana. In GM’s bankruptcy, a large percentage of the secured debt was held by yield-seeking individual investors, and leading law firms announced their willingness to protect their rights from White House assaults. Result: this bankruptcy is now, thankfully, proceeding according to the law, and GM executives need not fear being harassed in their homes by ACORN radicals paid, (at least in part), by Washington.--Don Coxe

Monday, June 08, 2009

Light blogging

I've spoken to a few readers, who have noticed the reduced posting here, lately. It's been mostly because trading has been very busy (and fortunately, rather profitable) in these last several weeks.

Also, a few readers and friends know my mom has been dealing with health issues for some time now, and she finally succumbed. So blogging will continue to be lighter than usual for the next few weeks.

Take heart; both she and I believe she is in a better place now. I hope you will meet her someday there.

Friday, June 05, 2009

Myths about "green jobs"

here (via Don Boudreaux). The cheat sheet:
  1. The jobs are well defined
  2. Employment will be improved
  3. Forecasts are reliable
  4. Lives will be improved by reducing trade
  5. Mandates are as good as markets
  6. Technology wishes are sufficient

Star Trek franchise revived!

How about The Three Stooges next?

YouTube of the day

Via Jane Wells:
Look at the new, upcoming 2012 Pelosi GTxi SS/RT Sport Edition! Sure to surpass even the most stringent change emissions standards. The video comes from IowaHawk, which spoofs the new car as "mandatory", which can be driven "on those special, odd-numbered Saturdays when driving is permitted."

The Pelosi car comes with 15-way airbags and a hockey helmet to give you enough protection to survive a 45 mile-per-hour collision "even if the GTxi SS.RT were capable of that kind of illegal speed." Other options include a sound system so good, "you'll never miss a segment of NPR again". The video hurls some below the belt (literally) insults to Ted Kennedy and Barney Frank, while also taking swipes at "card checked" union workers and "Detroit's famous jet set management."

But the Pelosi sports car can be yours, for just under $630,000! "1974 Detroit is back, with a vengeance." (Easy financing from Fannie Mae available).

Quotes of the day

Peter Drucker’s Concept of the Corporation pioneered the intellectually rigorous analysis of management issues. Alfred Sloan’s My Years at General Motors is the most thoughtful business autobiography. Alfred Chandler’s Strategy and Structure turned business history and corporate strategy into academic disciplines. Only then did I notice that all were about GM. The history of modern business is the history of GM, and vice versa.--John Kay

There is, of course, a large amount of terrible advocacy masquerading as social science out there, and too many journals and journalists abet it. But this is particularly troubling because Elizabeth Warren is now in charge of overseeing the TARP program for Congress. What other inconvenient facts is she shielding us from?--Megan McArdle

... Marcus Welby did not face a conflict between serving patients and earning an income. In 1960, 50 percent of personal health-care spending was paid for by patients out of pocket. Today, that figure is about 10 percent. We will never again see a patient-centered system as long as someone else is paying the bills.--Arnold Kling

According to a May 29-31 Gallup Poll, 37% of Americans have a favorable view of Cheney and 34% have a favorable view of Pelosi.--Lydia Saad

Rodney [Harrison] is the best practice player I have seen in 35 years in the NFL, which is a testament to his exceptional passion for the game and his desire to sustain and improve his level of play.--Bill Belichick

People are going to get criticized. I’m not going to be afraid to do that. I’m not going to be afraid to bring it. When I played I didn’t have many friends, and I’m sure I’m not going to have friends now [that I am an analyst for NBC].--Rodney Harrison

[Rodney Harrison] retires as the only player in NFL history to record at least 30 sacks and at least 30 interceptions ... --Patriots news release