Wednesday, June 30, 2010

Quotes of the day

Authority should derive from the consent of the governed! Not from the threat of force!--Barbie, Toy Story 3

In his dissent in McDonald, signed by three liberal justices, Justice Breyer argues that gun rights deserve little or no judicial protection at least in part because they put lives at risk:
Unlike other forms of substantive liberty, the carrying of arms for that purpose [self-defense] often puts others’ lives at risk.... And the use of arms for private self-defense does not warrant federal constitutional protection from state regulation.
This argument ignores social science evidence suggesting that extreme gun bans like those of DC and Chicago cost at least as many innocent lives than they save. Still, gun rights probably do cause at least some deaths that might otherwise have been prevented. In that respect, however, they are no different from numerous other constitutional rights. Justice Breyer’s argument in McDonald is actually very similar to Justice Antonin Scalia’s dissent in Boumediene v. Bush, where Scalia warned that giving habeas corpus rights to War on Terror detainees “will almost certainly cause more Americans to be killed.” That argument didn’t move Breyer, who voted with the majority to extend those rights.--Ilya Somin

Now we learn that language purporting to be the judgment of an independent body of medical experts devoted to the care and treatment of pregnant women and their children was, in the end, nothing more than the political scrawling of a White House appointee. Miss [Elena] Kagan’s decision to override a scientific finding with her own calculated distortion in order to protect access to the most despicable of abortion procedures seriously twisted the judicial process. One must question whether her nomination to the Court would have the same effect.--Shannen Coffin

Apparently scientific integrity only matters as long as it doesn’t somehow infringe on abortion.--Yuval Levin

The Kagan catch is that conservative senators cannot question her lack of judicial experience, nor may they rely on her actual words and acts to determine her fitness for the Supreme Court. Not only is this a catch, it is a complete inversion of Kagan’s own standard, in which she claimed that Supreme Court nominees with thin records such as her own should be subjected to more searching scrutiny and be expected to be far more open and forthright about their views. Not considering ourselves bound by the Kagan catch, we assert that such hypocrisy about the standards that should be applied to oneself should be granted great weight in determining whether a nominee is deserving of a seat on our most important court of law.--Brian Walsh

Kagan recognizes that the confirmation process is a charade designed to keep information away from the public, and to prevent the public from forming an informed opinion about who will sit on the Supreme Court. And she's chosen to participate in it anyway.--Radley Balko

Well, like all Jews, I was probably at a Chinese restaurant.--Elena Kagan, at her senate confirmation hearings

Only religious groups were required to admit students who did not share their views. An environmentalist group was not required to admit students who rejected global warming. An animal rights group was not obligated to accept students who supported the use of animals to test cosmetics. But CLS was required to admit avowed atheists. This was patent viewpoint discrimination. … It is no wonder that the Court makes no attempt to defend the constitutionality of the Nondiscrimination Policy.--Justice Samuel Alito's dissent on Christian Legal Society v. Martinez

I don’t see “wage stickiness as the #1 culprit” [causing high unemployment]. Here is an analogy. Suppose we observe engine failure once a month on jetliners. Each time the plane crashes. What’s the fundamental problem here, bad engines, or gravity? Most people would say bad engines. Now assume that every few years the Fed creates a negative nominal shock. Because nominal wages are sticky, it creates a temporary recession (until wages adjust.) What’s the fundamental problem here, sticky wages or monetary policy? I’d say monetary policy. To me, nominal stickiness is just a part of nature, like gravity. It is not something you’d think about altering with government policies. (BTW, it certainly isn’t the fault of “workers” most of whom don’t even set their nominal wage.) Just as gravity is something airplane engineers must take into account, nominal stickiness is something that the Fed must take into account. Of course there are government policies that increase real wage stickiness (minimum wages, extended IU benefits, etc) and those can make the problem worse. At the risk of making my airliner analogy even more ludicrous, these rigidities are analogous to installing giant magnets on the ground, which try to suck airplanes out of the sky. (Yes, I know that airplanes are aluminum.)--Scott Sumner

... we do not yet have uncontrolled inflation (or really, any sort of inflation) in the United States. And demand for US debt remains robust. So why wouldn't we try more stimulus? That's a plausible argument. But you have to balance it against another plausible argument, which is that all the countries who are now in trouble were once countries who found themselves able to borrow at surprisingly attractive rates. In fact, due to external market conditions, these rates were actually often somewhat lower than they were used to paying. This did not end well. Austerity is an expensive form of insurance against a true fiscal crisis. And though it doesn't necessarily seem like it when you're not having one, fiscal crises are much, much worse than austerity budgets. Fiscal crisis means that rather than unpleasant cuts, you have sudden, unmanageable collapses in things like public pension plans. The resulting suffering is not unpleasant; it is disastrous. A year or two ago, I'm sure some corporate executive at BP was asking why the company would consider installing expensive remote control valves on its offshore rigs, when this sort of spill is extremely rare, and the fail-safe might not even work. One could even argue that given the economic cost of higher gasoline prices, and the rarity of these spills, BP made a good bet. We might well . . . if the spill hadn't happened. But once it has, we're damn sure that we wanted them to be a lot more careful, no matter what the cost. Just as even before the spill, some environmentalists were sure they wanted the added protection at whatever cost, some fiscal hawks are sure they want the added protection from fiscal breakdown. Given that the odds of fiscal crisis are less than 100%, this is certainly arguable. But unless you know how much less than 100% they are, it's not exactly crazy to try to head it off by spending less than the bond markets are willing to let us.--Megan McArdle

Daily Kos comes clean

I have just published a report by three statistics wizards showing, quite convincingly, that the weekly Research 2000 State of the Nation poll we ran the past year and a half was likely bunk.

Since the moment Mark Grebner, Michael Weissman, and Jonathan Weissman approached me, I took their concerns seriously and cooperated fully with their investigation. I also offered to run the results on Daily Kos provided that they 1) fully documented each claim in detail, 2) got that documentation peer reviewed by disinterested third parties, and 3) gave Research 2000 an opportunity to respond. By the end of last week, they had accomplished the first two items on that list. I held publication of the report until today, because I didn't want to partake in a cliche Friday Bad News Dump. This is serious business, and I wasn't going to bury it over a weekend.
I hereby renounce any post we've written based exclusively on Research 2000 polling.

Read the whole thing here. Via Megan McArdle.

I predict more environmental scientists will be saying the same thing about global warming.

Tuesday, June 29, 2010

Quotes of the day

There is something attractive about the idea of becoming a terrorist in response to being terrorized.--Jessica Stern

A lot of older men and women think I’m talking about Playboy from 15 years ago: a centerfold or a woman with no clothes on smiling in a cornfield. They think, “What’s wrong with that?” Well, that was bad enough in the way it objectified women, but we’re on a whole new level now with this kind of imagery. How it got to this point is the Internet. It made it more accessible, affordable, and anonymous. You’re seeing a massive rise in use, and the users are getting younger and younger. Children who are 11½ years old are now looking at pornography because it comes straight into the home. There’s no limit on how much you can access. It used to be you had to steal father’s Playboy or Penthouse. Use was limited to how much you could actually pilfer. Today it is unlimited. So what happens is that desensitization sets in that much quicker and that much earlier. In order to keep the consumer base going, the pornographers have to keep upping the ante. They make it more violent, body-punishing, or abusive as a way to keep men interested. When you think about it, if you’re exposed to it at age 11 or 12, you’re jaded by 20. You’re certainly jaded by 30. Pornography bleeds sex dry of intimacy, emotions, and connection. Once you do that, then there’s not much left. It becomes boring and mechanical. So you have to keep feeding newer and newer ideas just to keep [the audience] interested.--Gail Dines

... the FBI must have been clapping its collective hands when it discovered the primitive radio techniques the Russians were using: high speed "burst transmissions.” The Cold War-era technique requires the sending party to record a coded Morse code message on a tape, then shoot it through the air in a millisecond. They were easy picking for the FBI, once it knew where to listen: Bugs in the defendants’ residences picked up “the irregular electronic clicking sounds associated with the receipt of coded radio transmissions,” its affidavit states. Likewise, you’d think the Russians would have moved beyond buried paper bags to pay their agents. Moscow Center did supply them with ATM cards, according to the FBI’s affidavit. But it also seems stuck with the old ways.--Jeff Stein

One way in which critics are silenced is through the accusation that they are ignoring ‘peer-reviewed science’. Yet oftentimes, peer review is a nonsense. As anyone who has ever put his nose inside a university will know, peer review is usually a mode of excluding the unexpected, the unpredictable and the unrespectable, and forming a mutually back-scratching circle. The history of peer review and how it developed is not a pretty sight. Through the process of peer review, of certain papers being nodded through by experts and other papers being given a red cross, the controllers of the major scientific journals can include what they like and exclude what they don’t like. Peer review is frequently a way of controlling debate, even curtailing it. Many people who fall back on peer-reviewed science seem afraid to have out the intellectual argument.--Alexander Cockburn

Trade increases income. The more that people consume goods that they do not produce, the better off they are. Our measures of economic activity take this proposition to extremes. If I cook my dinner and you cook yours, then the value of our cooking does not count as GDP, and my work does not count as employment. However, if I pay for dinner in your restaurant and you pay for dinner in my restaurant, then our cooking does enter into GDP, and both of us are counted as employed. ... Or, to put it another way, a common view is that if wages were fully flexible, then the labor market would clear, and we would not have unemployment. In the dishwasher story, the labor market clears in the sense that everyone is employed, but the economy is generating a low level of output and income, and workers are not fully utilizing their skills. We see that simply increasing the willingness of workers to accept low wages is not a cure-all. Still, it may be that wage stickiness in high-skill labor markets might be the problem that lies in the background in the dishwasher story.--Arnold Kling

Perhaps one could argue that though the aim of Nazi Germany’s stimulus was misdirected towards the armed forced; it still had net effects on economic growth. A different policy which matched the Nazi drive for stimulus, but which redirected it towards public goods, may have worked equally well without the war side effects. Perhaps—though Tooze cautions us on this score as well. The reality is that many different governments, each following different economic policies, ultimately recovered from the Great Depression. It is impossible to know the counterfactual policy—but scholars such as Barry Eichengreen and Christina Romer have convincing work that suggests that monetary boosts, in the form of exiting the Gold Standard, formed the primary basis for international economic recovery. This is not to say that further fiscal stimulus now would be a bad idea. But the lessons of 1930s Germany are not exactly an ironclad defense of the wisdom of spending your way to prosperity.--Arpit Gupta

Barbados was leading 2-0 until the 83rd minute, when Grenada scored, making it 2-1. Approaching the dying moments, the Barbadians realized they had no chance of scoring past Grenada's mass defense, so they deliberately scored an own goal to tie the game at 2-2. This would send the game into extra time and give them another half hour to break down the defense. The Grenadians realized what was happening and attempted to score an own goal as well, which would put Barbados back in front by one goal and would eliminate Barbados from the competition. However, the Barbados players started defending their opposition's goal to prevent them from doing this, and during the game's last five minutes, the fans were treated to the incredible sight of Grenada trying to score in either goal. Barbados also defended both ends of the pitch, and held off Grenada for the final five minutes, sending the game into extra time. In extra time, Barbados notched the game-winner, and, according to the rules, was awarded a 4-2 victory, which put them through to the next round.--Wikipedia

Apologies for not posting today

busy trading day for me.

Monday, June 28, 2010

This just in: Constitution is still relevant

The Supreme Court upheld separation of powers by striking down Sarbanes-Oxley, and upheld the Second Amendment by striking down Chicago gun law.

While I don't believe the Constitution is a perfect document, it would be nice if we were able to amend it where it needs improvement.

What gives you your freedoms?

UPDATE: Megan is back from her honeymoon, and this is her first post:
Sarbanes-Oxley is not very popular in large swathes of the financial world, and among some financial pundits. Arguably, it doesn't do much except intensify the compliance burden of public companies. Higher compliance requirements are a disproportionate burden on smaller companies, who have less revenue across which to spread the cost of attorneys, accountants, and administrators required to meet the new burden. In effect, then, it raises the minimum level of assets at which it makes sense to operate as a publicly traded company. To the extent that you believe that the financial reporting requirements for public companies increase the transparency and efficiency of the economy and the financial markets, this is counterproductive.
I really doubt that this is going to much impact the independence of the board's decisions. It's not like the Congress is an apolitical body with only the best interests of the nation at heart; in fact, I'd argue that it's both more parochial, and more open to manipulation by specific lobbies, than the presidency.

UPDATE: Brent Kendall clarifies the scope:
The court, however, refused to strike down the accounting board in its entirety, saying the board's mere existence did not violate the Constitution.

Justice Roberts said the structure of the accounting board violated constitutional separation-of-powers principles because it was too difficult for the president to remove board members.

Justice Roberts said Sarbanes-Oxley "remains fully operative as a law." He said the unconstitutional provisions governing the board could be severed from the rest of the law.

One can have a government that functions without being ruled by functionaries, and a government that benefits from expertise without being ruled by experts. Our Constitution was adopted to enable the people to govern themselves, through their elected leaders. The growth of the Executive Branch, which now wields vast power and touches almost every aspect of daily life, heightens the concern that it may slip from the Executive’s control, and thus from that of the people.--Justice John Roberts

UPDATE: Roger Pilon says:
Most Court-watchers expected the decision to come out as it did, yet the dissent by the Court’s four liberals speaks volumes. How could other rights in the Bill of Rights be good against the states, but not this right? Given the quality of their argument, the conclusion that the Court’s liberals are picking and choosing their rights on political grounds is inescapable.

UPDATE: Well, the Supreme Court gets it wrong sometimes, too.
I do not think it is an exaggeration to say that today’s decision is a serious setback for freedom of expression in this country.--Justice Samuel Alito

Quotes of the day

BTW, any time someone wields the term ’science’ as a weapon, you pretty much know they are an intellectual philistine. Am I being defensive yet?--Scott Sumner

There's lots of fun data issues and rhetorical strategy presented in [A.W. Mortford's The Hockey Stick Illusion] that highlights how real science is done. You have two sides with pretty strong end-views--global warming is unprecedented, or not--and while both claim to simply be interested in the objective truth, after 10+ years invested in one conclusion it defies credulity to think a researcher can address this question objectively any more. Basically, we have two sets of partisan scientists presenting their case, like paid lawyers. The winner of this debate will be those who fooled themselves the least. Like a financial economist rigging his backtest, this may generate a publication but in the long run the data are what they are, and its best to have the facts on your side because eventually the facts win. Very few are committing conscious fraud, but rather, fraud of the more common sort, that of where a seemingly innocuous inaccuracy saves tons of explanation in their mind. As Oscar Wilde noted, education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught. Big debates are usually not centered on not singular facts or theories, but their many observations, knowing which are relevant, which are not. Knowing how to weight correctly is mainly an exercise in meticulous research and wisdom, and it especially helps to have correct or at least popular a priori prejudices.--Eric Falkenstein

From his investigations [David] Goodstein found three risk factors present in nearly all cases of scientific fraud. The perpetrators, he writes, “1. Were under career pressure; 2. Knew, or thought they knew, what the answer to the problem they were considering would turn out to be if they went to all the trouble of doing the work properly; and 3. Were working in a field where individual experiments are not expected to be precisely reproducible.”--Michael Shermer

The psychologist Dan Ariely, with three colleagues, studied internet dating and discovered that people spend 12 hours a week searching and e-mailing, but only two hours a week on dates. Dan Ariely blames the dating websites for being poorly designed. I blame you.--Tim Harford

... the economist might contend, is that one element of my self-interest, in addition to enjoying a leisurely meal, and plenty of sleep, and the ability to go away on vacations without worrying about who will watch the youngsters, is not becoming (remaining?) a jerk. Kids certainly don't guarantee that won't happen, but they help mitigate the risk. And if we conceptualize that self-interest, in turn, as happiness, we're right back where we started. But I wonder if the questions would change. Instead of asking parents and non-parents whether they are happy right now, we might ask whether they are becoming more like the people they want to be. And then we might see children not as factors that may or may not be contributing to our happiness, but as opportunities to practice what most of us -- perhaps me most of all -- need to do more often, which is to put someone else before ourselves.--Tony Woodlief


Because of overstaffing, the U.S. Postal Service selects 1,125 employees per day to sit in empty rooms. They are not allowed to work, read, play cards, watch television, or do anything. This costs $50 million annually.--Heritage Foundation

Do you think that the [proposed consumer financial protection] agency would have had the willingness and political clout to tell low-income and minority home buyers that they could not afford the houses that lenders were willing to lend them money to buy? Of course, we have no way of knowing. My bet is that the agency would not have taken on this skunk-at-the-garden-party role. But, again, I'm wasting my breath.--Arnold Kling

Poland is the only country in the European Union which did not have a recession during 2009, as shown in this chart. And among all the OECD countries, Poland had the best real growth performance in 2009. ... What are the reasons for Poland's extraordinary performance in 2009? Good economic policy had much to do with it. As with some other emerging market economies Poland was in a much better macroeconomic position in 2009 than it was 10 years ago. It kept its inflation rate and its debt levels low, limited its borrowing in foreign currencies, and accumulated a large amount of foreign reserves. It also did not overact to the financial crisis, despite urging of many inside and outside of Poland to do more to stimulate the economy with discretionary fiscal policy. By not overacting it prevented the kind of panic seen in other countries.--John Taylor

What made reform possible was the depth of the crisis Canada faced, the extent to which the Canadian electorate demanded an end to irresponsible public finances, and the degree to which the entire political class responded. Governments at all levels then moved on a broad front, making it clear that no established interests would be exempted from contributing to the cost of slaying the deficit, lowering both taxes and the debt, and making the Canadian economy an outperformer. Every one of these lessons is entirely applicable to the United States today. America's budget mess can and will be fixed when the public demands action and the political class decides to set aside rancorous and extreme partisanship in pursuit of a robust economy, job growth, lower taxes, and focused government. Call it the Canadian way.--BRIAN LEE CROWLEY, JASON CLEMENS, NIELS VELDHUIS

When the Obama administration came into office, the American economy was one very sick patient. To complicate matters, the financial crisis and the recession that ensued did not neatly follow the pattern of past downturns — instead combining a collapse of the housing market, a credit crisis, failures of large financial firms, and an assortment of other worrisome symptoms. Still, the new administration's economic advisors had no choice but to diagnose the problem and propose solutions. There was, however, little room for trial and error: Their only laboratory was the very economy they were seeking to heal, and time was of the essence, as markets continued to plunge, jobs swiftly evaporated, and bad news mounted. In an economic assessment they released in January 2009, President Obama's advisors concluded that, if they did nothing, the unemployment rate would reach 9% — its highest level since 1983. So they developed their medicine: an ambitious plan to stimulate the economy by spending a great deal of taxpayer money. According to their estimates, that stimulus would help keep the unemployment rate from exceeding 8%. Today, however, the unemployment rate is nearly 10%. Clearly, things have not gone as the president's advisors expected. For economists, this raises some obvious questions. Why were the administration's projections off the mark? What should their experience teach us regarding stimulus policies in future downturns? And what can the government do now, as unemployment remains very high, to help the patient heal faster? Trying to resolve these questions illustrates not only the difficulty confronting policymakers in a crisis, but also the inherent limitations of the economics profession — limitations that both economists and politicians would be wise to keep in mind.--Greg Mankiw

By 2085, the White House says, our deficit will be running at a staggering -62% of GDP. Almost half of the government expenses in those days are projected to be interest payments on the debt we've racked up over the intervening years. Most of the rest are the ballooning costs of our entitlement programs (Medicare, Medicaid, and Social Security). Only a tiny percent of the spending, meanwhile, is what is described as "discretionary" spending--on schools, defense, and other stuff that people normally associate with government. That, of course, is why everyone is so freaked about those entitlement programs. And the fact that these projections are put together by an organization that has a vested interest in NOT freaking people out is even more scary. So, we admit it: We're freaked out.--Henry Blodget

In her book “The Overspent American,” Juliet Schor cites research that shows that “the more people watch television, the more they think American households have tennis courts, private planes, convertibles, car telephones, maids and swimming pools. Heavy watchers also overestimate the portion of the population who are millionaires, have had cosmetic surgery and belong to a private gym.” Rich reality-TV, in other words, distorts our own reality of wealth. What is the solution? Clearly, the shows attract audiences, so they will remain a part of the media landscape. But perhaps every show should carry a financial warning like: “The wealth you are about to see is largely fictional or borrowed. Any resemblance to actual wealth, earnings or investments is entirely coincidental. Oh, and please, don’t try this at home.”--Robert Frank

Hundreds of millions of people want to move here, landlords want to rent to them, employers want to hire them - but the law won't allow it. Contrary to my conservative friend, then, libertarians aren't the ones with a blind spot. He is. While restrictions on exclusion are occasionally irksome, they rarely ruin lives. Immigration laws, in contrast, usually condemn their victims to life - and often early death - in the Third World. Libertarians rightly emphasize the freedom to associate, because the status quo's restrictions on exclusion are minor and mild - and the status quo's restrictions on association are massive and monstrous.--Bryan Caplan

FIFA will censor World Cup match action being shown on giant screens inside the stadium after replays of Argentina's disputed first goal against Mexico fueled arguments on the pitch.--AP

... having more scoring [in soccer] would reduce the luck factor. It seems as though every game I read about, including Germany-England and Argentina-Mexico yesterday, is decided by a lucky goal or a wrongly-allowed goal or a wrongly-disallowed goal. It makes me think--why doesn't this happen in baseball or football?--Arnold Kling

Here are a few changes I might propose in soccer to increase its entertainment value and reduce the randomness of the outcomes.

1. Free substitution. Allow fresh players into the game. This will make for more aggressive and faster play, which should lead to more scoring. Free substitution will also allow better strategic use of players with special skills.
2. Shorten the field. The ball will then spend more time within striking distance of the goal.
3. Increase the size of the goal. The most direct way to increase scoring.
4. Slope the field. Have the field slope toward the nets, both from the sides of the field and the center of the field. This will keep the ball closer to the goal area. Furthermore, this change will lead to a host of new scoring strategies. If a team can be distracted from the game -- by, say, a staged fight or a naked fan running across the field -- the ball will just roll into the goal.
5. Use two balls. Having two balls in play will increase the number of shots, and spread out the defense. The balls can be color coded, with one ball being worth two points and the other ball one point.
6. Add a goal tunnel. Have a corrugated metal tube that runs into the goal from beyond the goalie area. If someone can kick the ball into the tube, it is an automatic goal, since the goalie cannot defend it. New and entertaining strategies can be added with this feature. For example, players can be "tunneled" by being slammed against the sharp metal edges of the tube, thereby increasing the physical component, and with it, the entertainment value of the sport.--Rick Brookstaber

The Sox have faced four Cy Young Award winners this season — CC Sabathia three times, Zack Greinke twice, Roy Halladay once and Tim Lincecum once. The Sox are 6-1 in those games. The Cy Young winners are 0-4 with a 6.57 ERA.--Peter Abraham

Russ Roberts nice introduction to F.A. Hayek

He championed four important ideas worth thinking about in these troubled times. First, he and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story. ... Second, Hayek highlighted the Fed's role in the business cycle. ... Third, as Hayek contended in "The Road to Serfdom," political freedom and economic freedom are inextricably intertwined. In a centrally planned economy, the state inevitably infringes on what we do, what we enjoy, and where we live. ... The fourth timely idea of Hayek's is that order can emerge not just from the top down but from the bottom up. ... Despite the caricatures of his critics, Hayek never said that totalitarianism was the inevitable result of expanding government's role in the economy. He simply warned us of the possibility and the costs of heading in that direction. We should heed his warning. I don't know if we're on the road to serfdom, but wherever we're headed, Hayek would certainly counsel us to turn around.

Friday, June 25, 2010

Quotes of the day

Freedom from mobs as well as kings.--traditional Founding Fathers toast

Much of the Greek debt is held by European banks, and they simply do not have enough capital to absorb losses on Greek debt, let alone if Greece were to be joined by Portugal, Spain and others. The banks will need first to rebuild their capital bases before they can admit the obvious, and this could take several years. So we are condemned to spend much of the next decade postponing a resolution of the crisis while banks rebuild their capital base. Until they do, we will all pretend that Greece isn’t insolvent and that other European countries will not face a crisis. Meanwhile none of these countries will be able to grow.--Michael Pettis

... the Harvard economist Roland Fryer has shown that when ninety-thousand students’social lives were analyzed according to friend networks, high-achieving black students have many fewer friends on average than high-achieving students of other colors. ... It was the demise of segregation, of all things, that helped pave the way for the “acting white” charge. With the closing of black schools after desegregation orders, black students began going to school with white students in larger numbers than ever before. White students were often openly hostile, and white teachers only somewhat less so. Black teachers and administrators from the old black schools often lost their jobs. Unsurprisingly, black students started modeling themselves against white ones as a form of self-protection. This dovetailed nicely with the new open-ended wariness of whites that was the bedrock of “Black Power” identity.--John McWhorter

... surveillance technology was in its infancy back then [in the Garden of Eden], but He could have managed it, and it wouldn’t have undermined Eve’s free will. She still has a choice to make; but once she sees the camera she’s more likely to make the right choice. The most likely explanation would be that God doesn’t just want Adam and Eve to make the right choices; he wants them to make the right choices for the right reasons. Not eating the forbidden fruit because you’re afraid you’ll be caught doesn’t earn you moral credit. After all, you’re only acting out of self-interest. If paradise suffered a power cut and the surveillance was temporarily down, you’d be in there straight away with the other looters. So what would be the right reason for not eating the fruit? Well, God is really no different than any other parent. All he wants is absolute, unquestioning obedience (which, by an amazing coincidence, also happens to be exactly what every child wants from their parents.) But God wants this obedience to be voluntary. And, very importantly, He wants it to flow from the right motive. He wants right actions to be driven not by fear, but by love for Him and reverence for what is right. ... Moral philosophers will find themselves on familiar ground here. On this interpretation, God is a follower of the eighteenth century German philosopher Immanuel Kant. (This would, of course, come as no surprise to Kant.) According to Kant, our actions are right when they conform to the moral rules dictated to us by our reason, and they have moral worth insofar as they are motivated by respect for that moral law. In other words, my actions have moral worth if I do what is right because I want to do the right thing. If I don’t steal someone’s iPod (just another kind of Apple, really) because I think it would be wrong to do so, then I get a moral pat on the back and am entitled to polish my halo. If I don’t steal the iPod because I’m afraid of getting caught, then I may be doing the right thing, and I may be applauded for being prudent, but I shouldn’t be given any moral credit. ... One of the goals of moral education is to cultivate a conscience – the little voice inside telling us that we should do what is right because it is right. As surveillance becomes increasingly ubiquitous, however, the chances are reduced that conscience will ever be anything more than the little voice inside telling us that someone, somewhere, may be watching.--Emily Westacott

Thursday, June 24, 2010

Two types of women to avoid


Quotes of the day

Obama's decision to replace McChrystal with Gen. David Petraeus is a stroke of brilliance, an unassailable move, politically and strategically. On a political level, McChrystal has many fans inside Congress and the military, but Petraeus has orders of magnitude more. No one could accuse Obama of compromising the war effort, knowing that Petraeus is stepping in. On a strategic level, while McChrystal designed the U.S. military policy in Afghanistan, Petraeus is its ur-architect. Petraeus literally wrote the book on counterinsurgency strategy while McChrystal was still running the black-bag hunter-killers of the special-ops command. Petraeus has also spent the last year and a half as head of U.S. Central Command, supervising military operations throughout the Persian Gulf and central Asia, including Afghanistan. McChrystal has built relations with political and military leaders in Afghanistan and Pakistan. Petraeus has been building the same relations, plus some.--Fred Kaplan

Barack Obama, who has in recent days turned haplessness into an art form, played a masterstroke today, making perhaps the canniest, wiliest, even wisest decision of his generally rudderless presidency. I refer, of course, to his appointment of David Petraeus to the Afghan war command, in place of the Rolling-Stoned Stanley McChrystal. In doing so, Obama has, at a stroke, taken Petraeus out of the 2012 presidential race.--Tunku Varadarajan

General Stanley McChrystal was wrong to say the things he said — to have his aides mock Vice President Joe Biden and others — before a Rolling Stone reporter. That cost him his job. That was right. But make no mistake: General McChrystal was right. President Obama is a ditherer who on the campaign trailed mocked and tried to block General Petraeus’s surge in Iraq. Vice President Joe Biden is an idiot on foreign affairs who wanted to divide Iraq into three parts. Only Secretary of State Hillary Clinton stood by General McChrystal. This incident tells our allies how deeply the American military really is about their child commander-in-chief who loves the perks and the adulation of the job but golfs when he should be getting the war won. President George W. Bush gave up golf when the war began and American soldiers began coming home in flag-draped coffins.--Don Surber

Hey, Remember When Harry Reid Called Petraeus A Liar? And insisted that the surge engineered by Petreaus had failed?--William Jacobson

The development of the typical app cost $35,000 and the median paid app earns $682 dollars per year after Apple took its cut. You see where this is going.. We get to break even on our App Development costs in... 51 years.--Toni Ahonen

... the shareholders ALREADY own the company. So when they sue the company, they are suing themselves. And the lawyers get rich in the process. Sweet.--Kid Dynamite

Talking about American jobs lost to trade is like giving casualty stats for a war and only counting dead U.S. soldiers. It's inaccurate, and it reveals a skewed, provincial view of the world.--Katherine Mangu-Ward

Don't you threaten me!--Larry Summers

Don't you bully me!--Christina Romer

It is typical of young lawyers going into constitutional law that they have inflated dreams of what constitutional law can do and what courts can do," Bork said. "That’s the danger of Ms. [Elena] Kagan that she hasn’t had any experience that would lead her to mellow…the academia is not a place where you use prudence and caution and other virtues of a judge.--Robert Bork

As you can see there is almost nothing that has happened in the Obama years that Reynolds is not directly responsible for (Except, perhaps, Michelle Obama's recent nip and tuck. Developing.).--Vanderleun

[China's dating contest for millionaires] feels much the same as an emperor selecting his concubines out of a row of girls in ancient times. The only difference is that it’s now for the wealthy class, not the emperor.--Chinese office worker

Overall, the results suggest that attending to the health of one’s friends’ marriages serves to support and enhance the durability of one’s own relationship, and that, from a policy perspective, divorce should be understood as a collective phenomenon that extends far beyond those directly affected.--McDermott, Christakis, and Fowler

John Isner beats Nicolas Mahut 6-4, 3-6, 6-7, 7-6, 70-68 in Wimbledon epic.--Guardian

How the development of technology averts Shakespearean tragedies

At Bill Easterly's place.

Wednesday, June 23, 2010

Intrade McChrystal contract trading has been halted

Source here.

UPDATE: Closed for expiry. Pays out at 100, or $10 per contract.

Chart of the day: BP profits and campaign finance

Source here.

Mainstream media reporting more objectively these days?

Tigerhawk thinks maybe:
White House mocks BP CEO's yacht race, defends Obama golf

is a real AFP headline.

UPDATE: Donald Sensing highlights the mainstream bias I have come to expect of the media.

Appoint Scott Sumner to the Jedi Council

Apparently, he's even able to take Master Obi-wan (aka John Cochrane) down on occasion. A few tidbits:
Cochrane is comparing an outdated monetarist model where current monetary policy drives current and future AD, with a sophisticated fiscal model where current AD is driven by future expected deficits. But that’s not fair. We have known for a long time that it is future expected monetary policy that drives current AD. The fact that money and T-bills are now almost perfect substitutes does not in any way inhibit the Fed from targeting the price level (unless you assume that the liquidity trap will last forever.) Believe me, when T-bill rates get up to 2% or 3%, then non-interest-bearing reserves will not be considered perfect substitutes for T-bills, demand for excess reserves will fall almost to zero, and the Fed will have its usual ability to control the price level path that comes from its position of being the monopoly producer of the stuff we carry around in our wallets. I don’t plan on carrying T-bills to go shopping at Wal-Mart. The quickest way to get out of the liquidity trap is to target a much higher NGDP growth path than what is currently expected. That will dramatically lower the demand for base money.
I think he is grasping for straws here. If you want a relatively direct take on inflation expectations you look at TIPS spreads and CPI futures markets. Real gold prices are distorted by massive Asian demand.

Quotes of the day

No other general is going to succeed with such men in such a position [in Afghanistan]. The overwhelming lesson of [Michael] Hastings’s article is not: “Get rid of McChrystal.” It is, simply: “Get out!”--Garry Willis

... historically the boundaries between government and criminal groups have often been very fuzzy.--Paul Seabright

It’s not just the Devil who’s in the details ... God, it turns out, is in there too. Daylight ...--Bono

Thuggery is unattractive. Ineffective thuggery even more so. Which may be one reason so many Americans have been reacting negatively to the response of Barack Obama and his administration to BP's Gulf oil spill. ... the Constitution does not command "no person . . . shall . . . be deprived of life, liberty or property, without due process of law except by the decision of a person as wise and capable as Kenneth Feinberg." The Framers stopped at "due process of law." Obama doesn't. "If he sees any impropriety in politicians ordering executives about, upstaging the courts and threatening confiscation, he has not said so," write the editors of the Economist, who then suggest that markets see Obama as "an American version of Vladimir Putin." Except that Putin is an effective thug.--Michael Barone

Much to the government’s discomfort and this Court’s uneasiness, the Summary also states that “the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering.” As the plaintiffs, and the experts themselves, pointedly observe, this statement was misleading. The experts charge it was a “misrepresentation.” It was factually incorrect. Although the experts agreed with the safety recommendations contained in the body of the main Report, five of the National Academy experts and three of the other experts have publicly stated that they “do not agree with the six month blanket moratorium” on floating drilling. They envisioned a more limited kind of moratorium, but a blanket moratorium was added after their final review, they complain, and was never agreed to by them. A factor that might cause some apprehension about the probity of the process that led to the Report. ... After reviewing the Secretary [of Energy Ken Salazar's] Report, the Moratorium Memorandum, and the Notice to Lessees, the Court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium. The Report, invoked by the Secretary, describes the offshore oil industry in the Gulf and offers many compelling recommendations to improve safety. But it offers no time line for implementation, though many of the proposed changes are represented to be implemented immediately. The Report patently lacks any analysis of the asserted fear of threat of irreparable injury or safety hazards posed by the thirty-three permitted rigs also reached by the moratorium. It is incident specific and driven: Deepwater Horizon and BP only. None others. While the Report notes the increase in deepwater drilling over the past ten years and the increased safety risk associated with deepwater drilling, the parameters of “deepwater” remain confused. And drilling elsewhere simply seems driven by political or social agendas on all sides. ... How these studies support a finding that shear equipment does not work consistently at 500 feet is incomprehensible. If some drilling equipment parts are flawed, is it rational to say all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavyhanded, and rather overbearing.--Justice Martin Feldman

A whim of the president is not, in a country that can meaningfully be said to be governed by the rule of law, sufficient basis for this. And by putting the money in an “escrow fund,” it gives the illusion that there’s some kind of contractual or due process mechanism at play here. There isn’t. Procedure matters in a liberal democracy; getting to the “right result” isn’t enough. Of course, Obama couldn’t do this if his predecessor hadn’t teed up such a perfect shot for him. So well done, Republicans. Your insistence that the “unitary authority” of the president allowed him to imprison and execute at will has been reapplied from real people to the legal persons that are corporations. Nothing Obama’s doing is inconsistent with the Bush doctrine on presidential power. The target has merely shifted. Heck, it’s really just a continuation of existing Bush administration policy: Hank Paulson did the same thing when forcing banks to take TARP money, though at least TARP could hide behind the fig leaf of congressional action.--Daniel Rothschild

Meanwhile, Secretary Salazar has renamed the Minerals Management Service as the Bureau of Ocean energy Management, Regulation and Enforcement.--Jonathan Adler

I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in life that are irreversible, that lead you into a path you can't get out of, and unless you have more than one escape clause, the adversary can gang up on you and destroy you. What else? I didn't have a proper foundation. I was not sufficiently private in my activities. I was playing poker with men named Doc. I must've made a hundred errors on that one, but those are five or six that come to mind. And then there's the greatest error of all, which is that I had delusions of grandeur. Unfortunately I was so successful for so many years in that particular field that I began to believe in my own success. I thought that because my method worked in markets that I knew about and had quantified, I could apply the same methods to something I didn't know about. And I had as an example [George] Soros, who would always say, "I made the most money in things I don't know about." ... In both cases I was in over my head. I didn't have the capital to be strong enough to provide a backup in the case of unforeseen events. I didn't have a proper foundation. I was playing with adversaries who were stronger than me and who actually made the rules. My base of operations was not diversified enough, and I was vulnerable to forces I couldn't withstand. I was too vainglorious. In my opinion, those are recurring errors behind most disasters. ... I'd had this incredible string of successes where I made 50, 100 percent, year after year. And in 2006 I'd won the award again as the best-performing fund—you can imagine how reluctant they were to give me the award a second time after my first disaster—but I didn't take account of this. I didn't have a stop-gain, if you will.--Victor Niederhoffer

In the real world, a budget would involve adding up income and spending, taking a realistic view of future income and figuring out the least painful place to spend less. Tough choices, perhaps, but you can figure out your own emergency Budget with little more than pen, paper and Mr Micawber’s dictum about the sixpences. In Westminster, Budgets are very different. The ideal Budget skewers about 30 per cent of the population in some subtle way and showers the other 70 per cent with eye-catching goodies. The losers may be rotated from year to year, although if they are smokers they will suffer every time. I am not sure how this would work in the Harford household. Suppose I had let my wife spend a decade or so rearranging chocolate button quotas. Then I would sweep in, announcing that I had suddenly found a gigantic credit card bill stuffed behind the sofa, when in fact it had been attached to the front of the fridge. I would then give each of my daughters a lollipop and send them out to work on an assembly line, preferably outside the south-east so I’d enjoy a tax break. That’s what I call private wealth creation. This time around, the Budget did feel different, and not just because the chancellor was younger than England’s goalkeeper and flanked by Liberal Democrat fullbacks, poised to intervene if young George fumbled a shot from the backbenches. No, this Budget was different because Mr Osborne really did start to sound like Micawber. For one thing, neither seems to have any idea what fiscal stimulus is.--Tim Harford

A new study by Harvard health policy professor Joseph Newhouse finds that when Medicare payments to doctors for chemotherapy are cut, doctors respond by prescribing chemotherapy to more patients than they previously had, thus making up the difference. Predictable or unintended consequence, it’s still Econ 101. Still, policymakers act as if people (and doctors are people) can be immune to incentives. Since the Obama health reform pays for itself in part with medicare payment cuts, expect to see more of this sort of thing. What’s especially interesting to me is how this underscores the insanely asymmetric relationship we have with doctors. The only difference between a doctor and a car mechanic telling you that you need to replace your Johnson rod is that you’re probably in a much more vulnerable position talking to a doctor.--Jerry Brito

Human height has posed an emblematic challenge to geneticists searching for the link between genes and complex traits and diseases. It's strongly heritable — how tall one's parents are is 80–90% predictive of one's own stature. But studies scanning the genomes of tens of thousands of individuals for gene variants associated with height have come up short: around 50 variants have been identified, but together they account for only 5% or so of height's heritability.--Alla Katsnelson

Tuesday, June 22, 2010

Chart of the day: China's share of world GDP over the past 400 years

Source here.

Quotes of the day

In terms of total reported and unfunded liabilities, the USA is pushing its debt toward a $57 TRILLION hole ($13.1T in debt that trades + $44T in unfunded liabilities like pension, social security, etc.).--Keith McCullough

It is a common view that governments should run a deficit in bad times, and a surplus or balanced budget -- if at all possible -- in good times. I have news for the people: according to the German view of the world, these are the good times. Thus they want to run a surplus. I don't see that perspective being rebutted.--Tyler Cowen

We do not need men like Proust and Joyce; men like this are a luxury, an added fillip that an abundant culture can produce only after the more basic literary need has been filled,’ Updike wrote to his parents in 1951, when he was 19. ‘This age needs rather men like Shakespeare, or Milton, or Pope; men who are filled with the strength of their cultures and do not transcend the limits of their age, but, working within the times, bring what is peculiar to the moment to glory.--John Updike

... it’s not like [Manny Ramirez] cared whether they ever won and it’s not like he left town with any dignity. He’s not Dustin Pedroia. I’m sorry. You wouldn’t be trading Clay Buchholz for him. The fact that there were only two teams willing to take him with the Red Sox willing to pay his salary in 2008 and neither team would give up a prospect really tells you something about his stature in the game.--Peter Gammons

360 Feedback?

The top commander in Afghanistan, Gen. Stanley McChrystal, has been summoned to the White House to explain biting and unflattering remarks he made to a freelance writer about President Barack Obama and others in the Obama administration. The face-to-face comes as pundits are already calling for McChrystal to resign for insubordination. McChrystal has been instructed to fly from Kabul to Washington today to attend Obama’s regular monthly security team meeting tomorrow at the White House. An administration official says McChrystal was asked to attend in person rather than by secure video teleconference, “where he will have to explain to the Pentagon and the commander in chief his quotes about his colleagues in the piece.”--Gordon Lubold

Now, what the general did is disrespectful and dishonoring to the President, his boss. He needs to reconcile with Obama, and take appropriate discipline, which could include resignation.

I hope that Obama does use this opportunity to improve his game, though. McChrystal has served our nation under Carter, Reagan, Bush Sr, Clinton, and Bush Jr. He's no pup, but a grizzled veteran who led our Special Forces in Desert Storm and Desert Shield.

I was really disappointed with Peter Orszag (see previous post) talking about "halving the deficit" after more than tripling it, who seemed so reasonable before his White House appointment in his previous post heading up the Congressional Budget Office. But I am thinking that his replacement will be even more of a kool aid drinker.

One simple test of a leader is to see the type of people following him or her. And look at the ones who are quitting: are they the good ones, or the ones that need to be culled for the greater good?

UPDATE: Intrade has listed a McChrystal departure contract here.

If anyone deserves blame for the latest airing of the administration’s internal feuds over Afghanistan, it is President Obama. For months Obama has tolerated deep divisions between his military and civilian aides over how to implement the counterinsurgency strategy he announced last December. The divide has made it practically impossible to fashion a coherent politico-military plan, led to frequent disputes over tactics and contributed to a sharp deterioration in the administration’s relations with Afghan President Hamid Karzai. The virtue of the Rolling Stone article is that Obama may finally have to confront the trouble. But the dismissal of McChrystal would be the wrong outcome. It could spell disaster for the military campaign he is now overseeing in southern Afghanistan, and it would reward those in the administration who have been trying to undermine him, including through media leaks of their own.--Jackson Diehl

I don’t know why he and his advisors thought they could crack wise to a Rolling Stone reporter and not read about it later. But then again, I don’t know why he thought he could vote for Barack Obama and not find himself, as a battlefield commander, at odds with the “wimps in the White House.” Sounds like poor situational awareness, lack of command and control of his mouth. Sounds like he just called in fire on his own position in the middle of the minefield he planted for himself. --Jules Crittenden

So - should he stay or should he go now? I say he is out - the December review was going to be a minefield anyway, since the anti-war left should be in full Vietnam/Iraq flashback mode by then (and their Iraq flashbacks end with the surge in January 2007). Obama won't want to admit that Bush was right in not trying to put a big army into Afghanistan, which is a logistical nightmare. But Obama won't want to back a general who has alienated everyone and is delivering results that are at best uneven. Get rid of McChrystal and hand the ball to a new general who just might engineer a face-saving de-surge for Obama, or at least buy time for a delay in the review - that will be the ticket.--Tom Maguire

There is no stinging criticism by McChrystal of Obama or other senior administration officials. It's just not in [the Rolling Stone article]. So why is McChrystal apologizing?--William Jacobson

The most striking example of McChrystal's usurpation of diplomatic policy is his handling of Karzai. It is McChrystal, not diplomats like Eikenberry or Holbrooke, who enjoys the best relationship with the man America is relying on to lead Afghanistan. The doctrine of counterinsurgency requires a credible government, and since Karzai is not considered credible by his own people, McChrystal has worked hard to make him so. Over the past few months, he has accompanied the president on more than 10 trips around the country, standing beside him at political meetings, or shuras, in Kandahar. In February, the day before the doomed offensive in Marja, McChrystal even drove over to the president's palace to get him to sign off on what would be the largest military operation of the year. Karzai's staff, however, insisted that the president was sleeping off a cold and could not be disturbed. After several hours of haggling, McChrystal finally enlisted the aid of Afghanistan's defense minister, who persuaded Karzai's people to wake the president from his nap. This is one of the central flaws with McChrystal's counterinsurgency strategy: The need to build a credible government puts us at the mercy of whatever tin-pot leader we've backed – a danger that Eikenberry explicitly warned about in his cable. Even Team McChrystal privately acknowledges that Karzai is a less-than-ideal partner.--Michael Hastings, the journalist who started it all

Orzsag has had enough

Enough of stimulus spending, I'm guessing. Unfortunately, this means that a saner voice will be replace by an insaner one at the White House.

Monday, June 21, 2010

FP's failed states index


Quotes of the day

... you might say that for-profit education is a lot like subprime: At some point we’ll get to the rational solution. Just don’t count on it happening before the taxpayers are already staring at epic losses.--Mark Gimien

What underlie crises are bad investment decisions, and they are difficult to regulate away. Sharp and empowered regulators can do a lot to prevent intentionally bad decisions (e.g., fraud). But most investment errors are sincere. Humans are irrational, prone to bouts of foolish optimism. Regulators are humans, too. Worse, when regulators have wide discretion, market participants focus less on fundamentals than on trying to predict the regulators' actions.--aka 'HFM'

Liberals had hoped that Obama’s election marked the beginning of a long progressive era — a new New Deal, a greater Great Society. Instead, from the West Coast to Western Europe, the welfare state is in crisis everywhere they look. The future suddenly seems to belong to austerity and retrenchment — and even, perhaps, to conservatism. In this environment, the rage against Obama for not doing more, now, faster, becomes at least somewhat understandable. It’s not that he hasn’t done a great deal for liberals during his 18 months in office. It’s that liberalism itself may be running out of time.--Ross Douthat

So nightclubs routinely and frankly discriminate by gender and race. Country clubs have been sued for such discrimination; so why doesn’t anyone sue exclusive night clubs? It should be easy to document such discrimination – just video the front of the line and collect stats on features of folks accepted vs. rejected. Is it that we see such clubs as mainly about sex, where we are fine with discrimination and inequality, and not about business or careers, where we object much more?--Robin Hanson

A typical 1,000-square-foot, two-bedroom, one-bath apartment in the capital now costs about $274,000. That's 22 times the average annual income of a Beijing resident. Unlike in the United States, where home buying traditionally takes place after marriage, owning a place in China has recently become a prerequisite for tying the knot. Experts said securing an apartment in this market signals that a man is successful, family-oriented and able to weather challenging financial circumstances. Put succinctly, homeownership has become the ultimate symbol of virility in today's China.--David Pierson

It turns out that the people in red who were cheering for North Korea in their soccer game against Brazil weren't North Koreans at all, but Chinese actors. According to Hunter Stuart in the Huffington Post, the North Korean government paid them to show up and cheer. It makes sense. If the North Korean government had let a few hundred North Koreans out of North Korea to go to South Africa, odds are that some of them would have defected from that Communist hellhole. Sure, the government could have threatened to kill or at least badly punish the families of the defectors, but they would still have had something else to worry about: that the North Koreans who were let out of their cage would see how other people live and would go back with those stories.--Bryan Caplan

Is FIFA Censoring the U.S. Non-Goal?--Courtney Knapp

But beauty and strangeness persist, theology persists, proving real life is elsewhere. Subjectivity is the ancient haunt of piety and reverence and long, long thoughts.--Marilynne Robinson

I've always been creative, but you can't assume a role without falsification. Even if the role is indistinguishable from your identity, you can't do it. That frightening to me.--Marilynne Robinson

It's easier to achieve acclaim in the workplace than the home, however, and so we fathers gravitate to the places where our cleverness or hard work will find reward, and abrogate our duties at home, and imagine that we are doing this all for our families, when really it is because we are cowards. The most intractable business problem, after all, is infinitely more solvable than a wayward teenager. And so do we become failures as we grasp for accomplishment.--Tony Woodlief

Over the last several years, talking to high school students about Raiders Night, a young adult novel of mine that deals with a football player and his driven dad, I’ve been struck by how regularly boys tense up when the subject of just why they play arises. Remarkably often, once you get past the easy answers -- the prestige of the varsity, the thrill of contact, the friendships, and the girls -- it comes down to seeking the love and attention of dad. When dad manages to use his son as an avatar in his obsessive sports dreams, that love and attention become a whip and a cage. Ask Tiger. ... But after so many decades in the Game, I think the father-son dynamic is more vivid and charged in sports because the relationship blooms in all its loving and violent forms at such a vulnerable time in a kid’s development. That’s why so many grown-ups adore or despise sports. Looking back, I wonder if I was the lucky one after all. When it came to sports, I experienced benign fatherly neglect. That’s undoubtedly one reason I’ve never had a decent jump shot. Fair enough. Thanks, Dad.--Robert Lipsyte

Team sport athletes were perceived as being more desirable as potential mates than individual sport athletes and non-athletes. It is suggested that team sport athletes may have traits associated with good parenting such as cooperation, likeability, and role acceptance, and/or these athletes may be better able to assert dominance in a team setting.--Evolutionary Psychology, 2008

Father's Day is a time to reflect on whether you want to be a parent—or want to be a parent again. If you simply don't like kids, research has little to say to you. If however you're interested in kids, but scared of the sacrifices, research has two big lessons. First, parents' sacrifice is much smaller than it looks, and childless and single is far inferior to married with children. Second, parents' sacrifice is much larger than it has to be. Twin and adoption research shows that you don't have to go the extra mile to prepare your kids for the future. Instead of trying to mold your children into perfect adults, you can safely kick back, relax and enjoy your journey together—and seriously consider adding another passenger.--Bryan Caplan

Another reason to trust more in God than the government

For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.--Binyamin Appelbaum

If we added the liabilities from these agencies back onto the federal balance sheet, it would increase our debt by $5 trillion, and it would exceed our GDP.

Let's also not forget to give credit where it is due: the congressionally chartered rating agencies.

And the runner-up award goes to the GM bailout; the UAW has the government wrapped around its little finger.

Web page of the day: World Clock


Friday, June 18, 2010

Quotes of the day

The truth is that the volume and complexity of the knowledge that we need to master has grown exponentially beyond our capacity as individuals. Worse, the fear is that the knowledge has grown beyond our capacity as a society. When we talk about the uncontrollable explosion in the costs of health care in America, for instance—about the reality that we in medicine are gradually bankrupting the country—we’re not talking about a problem rooted in economics. We’re talking about a problem rooted in scientific complexity. Half a century ago, medicine was neither costly nor effective. Since then, however, science has combatted our ignorance. It has enumerated and identified, according to the international disease-classification system, more than 13,600 diagnoses—13,600 different ways our bodies can fail. And for each one we’ve discovered beneficial remedies—remedies that can reduce suffering, extend lives, and sometimes stop a disease altogether. But those remedies now include more than six thousand drugs and four thousand medical and surgical procedures. Our job in medicine is to make sure that all of this capability is deployed, town by town, in the right way at the right time, without harm or waste of resources, for every person alive. And we’re struggling. There is no industry in the world with 13,600 different service lines to deliver.--Atul Gawande

A reasonable health care reform would shift the incentives so that when I go and get expensive health care, I pay enough of the costs to get me to think twice about whether the benefits outweigh the costs. It makes sense to have catastrophic coverage. That's the idea behind insurance: When someone is unlucky, you don't want that to ruin their life financially. But we as a society often will spend vast sums at the end of a life trying to keep someone alive for an extra month. It's not something society likes to talk about, but I think people should face a tradeoff: Do I want my mother to live another week, or do I want to have enough money to send my kids to college? ... The other real problem in the U.S. system is that health care is tied to employment, and that leads to people getting locked into jobs. Everyone agrees that that's not an ideal solution, and the current bill if anything makes the connection stronger rather than weaker. It seems like we did everything wrong with the health care bill. --Steven Levitt

The shrimp boats that are sitting idle today are sitting idle partly because BP decided to drill in the gulf, but also partly because the shrimpers chose to operate in the vicinity of an oil rig. In this case, making BP feel the costs of its own decisions entails insulating the shrimpers from the costs of theirs. In this particular case, I’m inclined to believe that it’s a good thing for BP to pony up. But contrary to what I’ve been reading around the web, there’s absolutely nothing in economic theory to dictate that conclusion; instead the conclusion depends on the particulars of the case. Is it cheaper to deal with the problem of spills by encouraging oil companies to be more responsible, or by encouraging others to stay out of their way? That’s an empirical question. Theory can’t answer it. The various commentators who think they can justify holding BP liable by crying the word “externality”—and stopping there—exhibit a commendable grasp of environmental economics circa 1930. But this is 2010.--Steve Landsburg

... the Coast Guard ordered the [oil cleanup] stoppage because of reasons that Jindal found frustrating. The Coast Guard needed to confirm that there were fire extinguishers and life vests on board, and then it had trouble contacting the people who built the barges.--DAVID MUIR and BRADLEY BLACKBURN

[President Obama] went back to the same well he has drawn from repeatedly; blame the previous administration and their “failed philosophy.” Whether justified or not, this refrain is getting old. Even the president’s appeals to America’s greatness sounded old. Can his speechwriters really do no better than remember when we won World War II and put a man on the moon?--Alex Tabarrok

President Obama has a solution to the Gulf oil spill: $7-a-gallon gas. That's a Harvard University study's estimate of the per-gallon price of the president's global-warming agenda. And Obama made clear this week that this agenda is a part of his plan for addressing the Gulf mess. So what does global-warming legislation have to do with the oil spill? Good question, because such measures wouldn't do a thing to clean up the oil or fix the problems that led to the leak.--Ben Lieberman

Well, basically we have a world-class budget deficit not just as in absolute terms of course – it’s the biggest budget deficit in the history of the world – but it’s a budget deficit that as a share of GDP is right up there. It’s comparable to the worst we’ve ever seen in this country. It’s biggest than Argentina in 2001. Which is not cyclical, there’s only a little bit that’s because the economy is depressed. Mostly it’s because, fundamentally, the Government isn’t taking in enough money to pay for the programs and we have no strategy of dealing with it.--Paul Krugman, 2004

Many economists, myself included, regard this turn to austerity as a huge mistake.--Paul Krugman, 2010

The austerity/stimulus debate is make-work for the chattering classes. It’s conspicuous cogitation that avoids the hard, simple questions. What, precisely, should we do that we are not yet doing? What are the things we do now that we should stop doing? And how can we make those changes without undermining the deep social infrastructure of our society, resources like legitimacy, fairness, and trust?--Steve Randy Waldman

[The late Paul] Samuelson profoundly misread Hayek’s book, The Road to Serfdom. Hayek said that “the planning against which all our criticism is directed is solely the planning against competition – the planning which is to be substituted for competition.” So because Scandinavian countries emphatically do not plan in this way, Samuelson was mistaken to say that their socialism is of the sort that Hayek believed paved the road to serfdom. Those countries have reasonably free trade, only light regulation of capital markets and business, and strong private property rights. In short, all Scandinavia retains what for Hayek was the most significant protection against serfdom: competitive economies. And while Hayek would disapprove of the size of Scandinavian welfare states, he stated explicitly that “Nor is the preservation of competition incompatible with an extensive system of social services.”--Don Boudreaux

ESPN and ABC (NYSE:DIS) are projecting an average of 400 million soccer fans will watch each of the 64 games that it will televise during the 2010 World Cup. Only 106.5 million people watched the Super Bowl in February 2010, an all-time record for NFL football.--Derek Hoffman

... what made [Referee Koman] Coulibali’s Call-of-Folly so maddening is that even soccer experts could not tell us why it happened. Even an honest bad call — even Jim Joyce’s imperfect game call, for instance — is something digestible. He thought the guy was safe. OK. But this… what did he see? What mistake was made? Can a referee simply disallow a goal for fuzzy reasons that only he seems to know? The world has grown used to the foggy quirks of soccer — extra time, diving, stretchers for players who immediately run back out on the pitch, calls made without explanation. But most of us are not used to these things. And, for so many, this was a lousy introduction to soccer’s whims. In the end, the draw gives the United States an excellent chance of advancing to the knockout round. If the U.S. beats Algeria, it probably will move on. But a victory would have given the U.S. an excellent chance to win the group. And a victory would have given a lot of people all across the country a moment to remember… and a story to tell when people asked, “So, when did you become a soccer fan?” Instead, it will baffle a lot of people who wanted something to remember. And it will give a lot of people who didn’t like soccer in the first place a chance to say: “What the heck was that?”--Joe Posnanski

Pixar's newest gem is currently scoring a 100% on Rotten Tomatoes, a movie review aggregation website, which means that there is not a single negative review among the hundreds of critics on RT's expansive roster. (Avatar, by comparison, earned an 83%.) For Pixar, this is merely par for the course. Toy Story 2 also scored 100%. The first Toy Story? 100%, of course. Last year's Up? A pathetic 98%. Not only does Pixar claim the highest batting average of any major film studio among ornery critics, but also it's become the single most financial successful studio in movie history, on a film by film basis. What's the secret? High doses of self-criticism and patience. From story idea to the silver screen, the Pixar team takes more than 1,100 days to produce and perfect its CGI masterpieces. It is precisely this methodical approach to film-making -- a self-critical process that boarders on navel-gazing -- that makes Pixar special and consistently successful ...--Derek Thompson

If you show off imaginary cool technology in a film or TV series, then kids, teenagers and enthusiastic technologists of all ages will try their damnedest to make it come true. When James T Kirk beamed down to an alien planet and flipped open his communicator, when Spock waved his tricorder over strange life forms and murmured "intriguing . . .", when the crew of the Enterprise teleported, carried phasers, communicated with their computer by voice and carried data around on little plastic sticks, a generation looked at it and thought: that's a future I want to live in. And so with Minority Report. In the manner of all the best science-fiction, it included numerous gadgets but didn't rely on any of them as the key to its plot, which still revolved (as was Dick's predilection) on people's ability to deceive themselves about truth, lies and reality. For a lot of geeky fans, however, the plot was incidental to the possibilities offered by the technologies on show. And there were plenty: pre-crime (predicting that a particular person will commit a crime); iris recognition (picking you out from a crowd on the basis of the unique pattern of your iris); personalised advertising (where what you see on hoardings is targeted specifically to you); e-paper (electronic paper, for newspapers with moving images that people can read on trains); 3D video (do we have to explain this?); computer-guided cars (which follow preset patterns); spider robots (for tracking people); jetpacks; and some rather unpleasant police restraint technologies – including the sick stick (makes you sick on contact) and "the collar" (which effectively paralyses you once fitted). Things such as gesture computing were still way off (though a jetpack had been used in the opening ceremony of the 1984 Olympic Games). But, eight years on, Spielberg and his technical advisers look as though they were too cautious . . .--Charles Arthur

Thursday, June 17, 2010

Quotes of the day

There are two main reasons for thinking this spill something of a godsend for Obama. One is that it happened under the watch of a company as big and solvent as BP, rather than one of the smaller independents operating in the Gulf. Otherwise it would be the US taxpayer that would be providing the $20bn compensation fund just announced, and you can bet your bottom dollar the Federal authorities would be a good sight more stingy with the handouts if forced to provide them from taxpayer dollars than they are likely to be with BP’s cash flow. But the main reason is that it plays straight into the President’s clean energy agenda.--Jeremy Warner

You know things are bad when a $20 billion price tag looks small.--Michael Corkery

Unfortunately, in earthquake-devastated Haiti as in troubled central Africa, the promise of starting from scratch is an illusion. It has always been true that no matter where you go, you take yourself with you—culture, history, habits, attachments and animosities come along like a skin you can’t shed. But these days there are fewer and fewer territories on our taxed and shrinking planet beyond the reach of someone’s determined claim. These ideas share an overly-optimistic belief in a neutral, benevolent international community and its power to peacefully oversee imposed changes. All are tone-deaf to the very real degree of nationalism that does exist in basically all countries by now, regardless of whether they were misbegotten colonial creations or not. They also violate sovereignty as conventionally defined, which may be good or bad but is sure to provoke a nationalist reaction. Early development economists working at the hopeful dawn of colonial independence believed that they really were starting from scratch. The last fifty years have shown us that they weren’t, and this has been—and remains—one of development’s biggest blind spots.--Laura Freschi

[My worst quality is] having such a capacious intellect and formidable market savvy that it can make it difficult to relate to the plebeians on Wall Street I chronicle such as Lloyd Blankfein and George Soros.--Bess Levin

If men are innately better at certain subjects than women, then why should society struggle so hard - and so expensively - to try to engineer a perfect balance between the sexes? By all means, take steps to ensure that boys and girls get the same opportunities in education, but let's also accept that those same opportunities will not produce the same outcomes. Men will always outnumber women in certain fields and vice versa. My argument isn't based on crude chauvinist doctrine (although I'm quite sure my opponents will disagree) but on decades of research, relatively simple statistics and an understanding of the law of averages. Of course, just because men, on average, are more intelligent then women, doesn't mean there are no individually brilliant women around. If I'm right, it doesn't mean there will be no female professors of physics; it just means we should accept that there will be fewer of them. Nor does it mean that a woman will never win the Fields Medal for mathematics; it just means that we live in a world where such an event is very, very unlikely. I realise my views are unfashionable, just as I realise the juggernaut of sexual equality and political correctness will take an awful lot of stopping. But I say to the social engineers who dream up ever-more-ingenious ways of getting more women into top positions; don't be surprised if you find your nobly motivated ambitions foundering on the immovable rock of human nature.--Richard Lynn

Did Obama just dump his best friend on Wall Street?

Noam Scheiber wonders:
The White House has certainly styled itself as a bulwark against Wall Street excess. And Wall Street certainly bristles at the populist rhetoric and policy it sees emanating from the administration. But, as we reach the endgame on financial reform, just how frayed are Obama’s ties to the industry, really? When you consider the story of how the White House has treated its best friend on Wall Street, the relationship begins to resemble nothing so much as a high school romance. It turns out even the best friend doesn’t know if he’s been dumped.

Wednesday, June 16, 2010

Rule of law? Not important. Contracts. Nope.

BP Cancels Dividend to Set Aside $20 Billion for Spill Costs.

I have no problem with the board deciding to suspend their August or November dividends, nor any other future payments.

It's the canceled dividend--that was declared by the board this past April 27 for holders of record as of May 7--that I find infuriating.

Society works better when we cooperate with each other. That includes making and keeping commitments. Ignoring contracts and laws destabilizes community.

Does this mean that my parents can claw back the taxes they paid which were allocated to the Vietnam War, since Robert McNamara said it was all just a mistake in hindsight? A lot more people were hurt during that crisis than the one currently spreading in the Gulf of Mexico.

Pure idiocy.

Obama fan club (i.e. MSNBC) feeling a bit chastened

Jules Crittenden has the roundup.

Chart of the day: presidential approval

Source here.

Wow, the NY Times actually posted the following comment

of mine:
I agree that good government promotes job creation, but we cannot escape the laws of diminishing returns to scale. Taxes do create dead weight losses; government spending does crowd out private investment. Both of these factors may be increased for Pareto optimality, but not ad infinitum. There is a reason why no one can reasonably talk about 90% or 99% marginal tax rates, because everyone would stop working as result of such policy. Just as we needed to factor in the possibility of falling home prices in the last decade, we also need to consider the possibility of negative Keynesian multipliers. In sum, government can promote job creation until it gets too big and then it destroys jobs.

Rick Brookstaber thinks about some of the weaknesses of the proposed financial reform legislation

If regulation allows equity index swaps to be under the CFTC’s regime and the stocks to be under the SEC regime, there will be the same potential for regulatory arbitrage. I can already envision a thriving new market developing for what might be called Index Spread Total Return Swaps. A fund that wants to hold a long equity position in IBM and P&G, but wants to do it under the CFTC regime, will have a broker give them a total return swap that pays the difference between a position in an index that holds the S&P 500 and another index that holds all the stocks in the S&P 500 except for IBM and P&G. This is a swap on indexes, and so will be under the aegis of the CFTC. Whatever equity positions the fund wants to hold, a swap can be created to fulfill its needs. With the push of a button, voila, the fund is effectively trading stocks – securities – under the CFTC rather than SEC umbrella.

This is a simple example of a broader point: a financial engineer could just as easily construct a position drawn from the equity market that behaves like a commodity, or create a currency swap that looks like a bond. In other words, under the proposed OTC derivatives regime, traders will be permitted to choose their regulators. In my view, these provisions should seek to eliminate regulatory arbitrage, not create it.

Another weakness of the bill is what it affords regulators in terms of transparency. As I stated in my 2007 testimony before your subcommittee, I believe that regulators should know the positions, leverage and web of counterparty connections across firms. I do not think regulators can fulfill their mission of protecting investors, the market or the economy at large without this information. The bill enhances the transparency of OTC derivatives both by improving price discovery and by pushing for greater simplicity and standardization, a critical step. However, the division of OTC derivatives oversight between the SEC and the CFTC moves us away from this objective. There is no ready mechanism envisioned within the bill to allow unfettered sharing of these data. This not only will create routes to hide abuse, but also, because what is essentially the same asset will end up in different buckets based on how it is constructed, neither agency will be able to readily amass this position and exposure information.