WE'VE FOUND IT -- A COPY OF ALAN Greenspan's long-lost Ph.D. thesis! Or, more accurately, a rare copy of the elusive document, in Lassie-Come-Home-fashion, found us.
The dissertation, written in 1977 when Greenspan received his coveted degree from New York University, had been tucked away on a professor's sagging bookshelf for 31 years.
There are only two known copies: the Maestro's own and the one we viewed. As far as we can tell, Barron's is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU's Bobst library at Greenspan's request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.
Greenspan purportedly was trying to deter news coverage of his personal life when he ordered the thesis into hiding. His anti-paparazzi subterfuge backfired: The stealth thesis became red meat for his critics, who smelled a cover-up. Magazine articles and a new book, Deception and Abuse at the Fed (reviewed here on March 31), have suggested that his degree was largely honorary and that the thesis was a cut-and-paste job, comprised of previously published, non-academic articles wrapped in a flimsy introduction.
Greenspan ... didn't foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp "break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building." Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade's housing mania.
We were tickled to find that the work's introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: "There is no perpetual motion machine which generates an ever-rising path for the prices of homes."
Sure to draw snickers from snarky critics is chapter five on economic policy and outlook -- part of 1977's unsigned Economic Report of the President. Greenspan claims to have authored it as CEA chairman. The general policy principles discussed in the chapter include the following: "Stimulus should be provided by tax reduction rather than by increases in government spending; tax reduction should be permanent rather than in the form of a temporary rebate; economic initiatives should be balanced between measures to stimulate consumption and those designed to increase business investment."
Greenspan also broke new ground in the introduction to his thesis, where he noted that homeowners were refinancing for larger amounts than their original mortgage, in essence monetizing increases in their home's market value and spending the excess cash on goods and services or putting it into savings. Economic models at the time had missed the trend.
Friday, May 09, 2008
Busted coverup of the day: Greenspan's censored Ph.D thesis
Thursday, May 08, 2008
Tom Maguire is casting McCain as Maximus, and on the fence with who gets to be Commodus
I don't want to cast Barack as Commodus. But Russell Crowe as John McCain as the Gladiator is a lay-up:On the other hand, rapsmith thinks death might not be a bad thing.Commodus: The general who became a slave. The slave who became a gladiator. The gladiator who defied an emperor. Striking story! But now, the people want to know how the story ends. Only a famous death will do. And what could be more glorious than to challenge the Emperor himself in the great arena?
Maximus: You would fight me?
Commodus: Why not? Do you think I am afraid?
Maximus: I think you've been afraid all your life.The scene continued:
Maximus: I knew a man once who said, "Death smiles at us all. All a man can do is smile back."
Commodus: I wonder, did your friend smile at his own death?
Maximus: You must know. He was your father.
Commodus: You loved my father, I know. But so did I. That makes us brothers, doesn't it? Smile for me now, brother.
[stabs him]Hmm, Hillary could be Commodus... This is tricky - she has the endless ambition, but I don't think she has a fearful inner core, which Obama, the life-long conciliator, might. Developing...
I'm retiring the Intrade nomination charts
Here's where we finished up:
New and improved Bikini Statistics
Post 1: an introduction to Elizabeth Warren and her statistical foolery
Post 2: reports of the savings death of the middle class are highly exaggerated
Post 3: reports of the debt drowning of the middle class are highly exaggerated
Previous BS installment here.
Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron Levenstein
Buffett and Munger should hire Andrew Clavell
Of course, following through with Clavell's recommendations would include adding over-the-counter balance sheet elements complete with credit exposure, tranforming Berkshire into an entity that Buffett would not want to buy or hold ...
The Minsky Theory
Stability is destabilizing.The 3 phases of Minsky's process are: Hedge (most stable), Speculative, and Ponzi (least stable). The whole writeup by Thomas Tan is here.
Feud between ex-Bear Stearns CEOs
While Mr. Cayne has always given Mr. Greenberg credit for his contributions to the firm, he has poked fun at his offbeat personality, including his nickname, Ace, which Mr. Cayne makes a point never to use. He has a standing order among some of his closer associates: Anyone who uses the name Ace in his presence owes Mr. Cayne $100.
The final straw for Mr. Cayne was Mr. Greenberg’s decision to charge Mr. Cayne a commission of $77,000 for the sale of his six million shares of Bear stock, a rate far above the maximum $2,500 commission that employees pay for a single trade. Since Mr. Cayne was not an employee anymore, he did not deserve such a rate, Mr. Greenberg said. “If he doesn’t like it, he should do his future business elsewhere,” he added.
Compounding Mr. Cayne’s ire, say people who have spoken with him, is the question of why Mr. Greenberg, who served as chairman of Bear’s risk and executive committees during the period in which the firm’s exposure to subprime mortgages hit its peak, has himself escaped censure.
That Mr. Greenberg now claims that his warnings went unheeded has driven Mr. Cayne to further distraction, these people say. One member of the executive committee said that Mr. Greenberg, as a longtime director, had ample opportunity to voice concerns about Bear’s vast exposure to subprime mortgages and its hedging strategies, which he did not do.
More corruption mongering at the World Bank
On April 21, the bank released the findings of a corruption probe into a $100 million "demobilization and reintegration" scheme in the Democratic Republic of Congo, which uncovered "sufficient evidence to substantiate allegations of fraud, corruption and disallowed expenses." The very next day, April 22, the bank announced that it had approved an additional $50 million grant for – drumroll, please – the same "demobilization and reintegration" scheme in the Democratic Republic of Congo.
This two-step is worth pondering as the World Bank struggles to implement a credible anticorruption strategy. On Monday, the bank announced the appointment of South Africa's Leonard McCarthy to lead the bank's internal anticorruption unit, known as INT. Mr. McCarthy, who previously led the (now disbanded) "Scorpions" anticorruption unit that investigated bribery allegations involving ANC leader Jacob Zuma, has a reputation for political courage that he will need in his new job.
Previous post on World Bank corruption here.
State Department excludes its own verification department
The State Department's systematic exclusion of its own Bureau of Verification, Compliance and Implementation has gone unreported as the North Korean diplomacy proceeds. But it is causing concern on Capitol Hill and has already led to a proposal to require State to submit a report to Congress describing how the U.S. will verify any nuclear deal.
The mandate of the verification bureau, as described on the State Department's Web site, is to provide oversight "on all matters relating to verification or compliance with international arms control, nonproliferation and disarmament agreements and commitments." It "supports the Secretary" in "developing and implementing robust and rigorous verification and compliance policies."
The verification bureau was created by a Republican Congress in 1999 over the objections of the Clinton Administration and State Department careerists who didn't want agreements subject to additional oversight. The bureau's biggest success to date is Libya, where it played a central role in dismantling the country's WMD programs in 2003.
North Korea is a different story. The verifiers "have no voice so far," one person close to the process told us. They aren't part of the negotiating teams talking to the North Koreans and they've been excluded from key internal meetings. No one from the verification bureau participated in a recent State Department trip to Pyonygang intended to work out verification issues.
Quotes of the day
A fine is a tax for doing wrong. A tax is a fine for doing well.--anon
We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.--Frédéric Bastiat
Much of "journalism" these days seems to involve deciding what we shouldn't be told.--Glenn Reynolds
Frank Thomas: an All Star spot to recognize his steroid-free career?
The Baseball Writers Association of America has drawn a line in the sand and told Mark McGwire he cannot pass. Your view on their rationale may vary but the best way for reward Thomas for doing the right thing is to assure that he gets into Cooperstown on the first ballot. If players like McGwire, Rafael Palmeiro and Barry Bonds are forced to wait their turn and watch from afar while Thomas gives his speech it will mean much more than one All-Star game that, quite frankly, he doesn't deserve to be part of.
Wednesday, May 07, 2008
Quotes of the day
What do Americans care most about this election season? The troubled housing market, and the short supply of oil. That's why Hillary is here with a plan. Specifically, a plan to discourage investment in the oil industry through a windfall profits tax, and to destroy the mortgage market by freezing foreclosures and interest rates. That way, no one has to worry about oil or houses, because there won't be any to worry about. That's just the kind of thoughtful, caring politician she is.--Megan McArdle
Adjusting for both increased fuel efficiency and the significant increases in income since 1980, gas today is a bargain, even at $3.56 per gallon (price I paid today in Michigan).--Mark Perry
The media promised a depression and all we got was yet another lousy quarter of economic expansion--Ken Braun
DISCLOSURE: I am short US.RECESSION.08
Megan McArdle and Arnold Kling explain why suspending the gas tax does nothing for the consumer
Megan McArdle likes to tell a story with charts.
I like to tell it this way. There is a wholesale market for gasoline, and there is a retail market for gasoline. Gas stations buy in the wholesale market and sell in the retail market, with essentially no profit margin.
If I'm a gas station selling for $3.18 a gallon, the instant that the tax is cut by $.18 I have an $.18 profit margin. That is not going to last. It is going to be competed away.
I might try to lower my price and sell more gas. If every gas station does this, then the price goes down and the consumer benefits. But in order to get more gas, I have to bid for it in the wholesale market. And we can't get more gas out of the wholesale market, because for the next few months the supply is essentially fixed. So what's actually going to happen is that the gas stations are going to bid up the price of gas on the wholesale market. In fact, this process is going to reach a point where in order just to keep my share of gas, I'll have to bid higher by $.18. The net result is that more money goes to refiners, my gas station pays less in taxes, but we pay more for gasoline wholesale, and the consumer gets no benefit.
Don Boudreaux with a great review of Bryan Caplan's "Myth of the Rational Voter"
If by "govern themselves" is meant that people conduct themselves sensibly in their private affairs, the answer is "yes, typically." But if by "govern themselves" is meant that people generally vote sensibly, the answer is "no, typically."This startling conclusion will upset many people. But bear with me. It's a chief conclusion drawn by my George Mason University colleague Bryan Caplan in his pioneering book "The Myth of the Rational Voter."
Bryan's conclusion rests on the insight that acting rationally is costly. This means, in part, that it take time and effort to gather and process information. To understand the likely consequences of buying a Honda rather than a Lexus requires that you know something about both cars and that you think clearly about the costs and benefits you'll bear as a result of choosing one of these cars over the other (or of choosing not to buy a car at all).
You have strong incentives to spend sufficient time and effort comparing different cars because you will directly bear the costs and enjoy the benefits of your choice. If you choose carelessly, you likely wind up with a car that you dislike or one that you can't afford.
You have incentives to choose wisely also because you are the exclusive chooser. You alone make the choice. If you choose the Honda, you get the Honda. No one else is required to join you in choosing to buy this car. You don't need the approval of your neighbors or your fellow church members.
If you did need the approval of others, you'd have less incentive to take the effort necessary to make a sensible decision. The greater the number of people who vote along with you on which car you'll buy, the lower are the chances that your vote will decide which car you buy. (Your vote will be just one among many.)
Each of us has muted incentives to study the facts and issues carefully -- and to reflect upon them dispassionately -- because no one of us is responsible for deciding which policies the government will implement.
But Bryan Caplan explains another reason why each of us as a voter generally exercises less wisdom than we do in our private affairs. This other reason springs from what Caplan calls our "preferences over beliefs." Each of us wants to believe certain things. Each of us gets satisfaction simply by holding certain beliefs firm to our hearts. Just as many of us enjoy feeling loyal to our favorite sports teams, many of us enjoy believing that our favorite political party is an especially wise steward of the public interest.
Many of us enjoy believing that our troubles are caused by foreigners. Many of us enjoy believing that if the rich pay higher taxes, middle-class and poor people will be better off. We resist rejecting these beliefs even if the evidence before us suggests that they are mistaken.
Unlike in private affairs, where actions taken on mistaken beliefs typically and directly harm the person taking such actions, when people vote their mistaken beliefs in elections, they don't suffer personal repercussions of their poor choices and they enjoy the personal gratification of voting according to their beliefs.
With no direct and obvious feedback telling a voter with mistaken beliefs that his beliefs are, in fact, mistaken, a voter who cherishes his mistaken beliefs has little incentive to abandon these beliefs. So, according to Caplan, it's no surprise that politicians successfully pander to economically ignorant voters.
It's important to repeat, however, that the same person who votes "irrationally" likely acts rationally in his private affairs -- because in private settings each of us generally gets what each of us chooses, however wise or unwise those choices.
This direct connection between personal choice and personal consequences is one of the great advantages of private spheres of action over political spheres of action.
I think Robert McFarlane needs some economic review
1. Biofuels still need land, for growing the switchgrass and the wood for celluosic ethanol and methanol. If demand for these biofuels rises, land will be reallocated away from growing foods.Fortunately, we have the means to relieve this strategic vulnerability. There are four policy measures to alleviate this threat and in the process lower the global price of oil and dramatically reduce our emissions of greenhouse gases:
- Accelerate the introduction of second-generation biofuels (e.g. cellulosic ethanol and methanol) which don't rely on any food crop as feedstock, and should not require any government subsidy.
- Establish an Open Fuel Standard. That is, require that any automobile sold in the U.S. be a flexible fuel vehicle capable of burning gasoline, methanol, ethanol or any combination of the three – a feature that costs just $100 per vehicle.
- Accelerate the production of plug-in hybrid-electric cars and trucks.
- Introduce the use of lighter, stronger carbon composite materials, as Boeing is doing in the new 787 Dreamliner aircraft, into the production of cars and trucks. A Pentagon study a few years ago concluded that this step alone could reduce our oil imports by 48%.
2. See .1.
3. Most electricity in the nation is generated from coal. Does Mr. MacFarlane believe that the decades-long embargoes on new coal and nuclear plants will magically disappear? Or maybe he thinks biofuel plants are the answer (if so, see .1.)
4. Will the savings provided by lighter, stronger materials fully offset their costs? If not, it may not make any sense.
President Bush demonstrates leadership
A post from yesterday, entitled "The Ridiculous Farm Bill".
It's hard to hold onto values, in the face of $100+ crude
Yes, that Senator Schumer and that Senator Dorgan, both of whom voted against increasing U.S. oil production because they couldn't abide drilling across 1% of Alaska's wilderness. Yes, that Senator Casey, who has called for mandatory reductions in emissions of carbon dioxide. At least Senator Landrieu of Louisiana has fought to allow more offshore drilling in the Gulf of Mexico.
All of these Senate Democrats are willing to accept greater carbon emissions, as long as we can also outsource jobs in the petroleum industry to Middle Eastern dictatorships. The Senators do aver that "some of us have concerns in general about arming this region to the teeth," but apparently cheap fossil fuel buys a lot of peace of mind.
A special word of concern about Mr. Sanders: He is the only avowed socialist in Congress, but the Vermonter appears to be losing his religion over $122-a-barrel oil. By signing this letter, not only is he officially recognizing the law of supply and demand; he's also proposing a more crassly commercial trade of guns for oil than anything we've ever heard from the most candid realpolitician.
To top it off, the Senator whose Web site proudly proclaims that the first bill he introduced was to combat global warming now wants more fossil fuels ready for burning. We hope his friends are closely watching Mr. Sanders, in case he blows a gasket over all of this cognitive ideological dissonance.
BCWUW4: High-risk Canadians give birth in U.S.
The United States and Canada share the longest unprotected border in the world, and Toronto's Globe and Mail has a story illustrating why that is so dangerous:
More than 100 Canadian women with high-risk pregnancies have been sent to United States hospitals over the past year--in what a doctors' group attributes to the lack of a national birthing plan.The problem has peaked, with British Columbia and Ontario each sending a record number of women to U.S. neonatal intensive care units (NICUs). Specifically, 80 B.C. women have been sent to U.S. hospitals since April 1, 2007; in Ontario, 28 have been sent since January of 2007, according to figures from the respective health ministries.André Lalonde, executive vice-president of the Society of Obstetricians and Gynaecologists of Canada, said the problem is due to bed closings that took place almost a decade ago, the absence of a national birthing initiative and too few staff.It's all so horrible to contemplate, but it can be stopped. All we need to do is make America as inhospitable as Canada for expectant Canadian mothers. Hillary Clinton has the right idea: The U.S. needs socialized medicine.
Final Intrade v. Zogby Showdown Results
Unsurprising to those who know a little bit about the scholarship, economics, and/or track record of prediction markets, the traders of Intrade provided us much better data this election season than the respondents to the Zogby polls.
| Standings | |||||
| Wins | Losses | Ties | Pct | Contender | Avg Eve Prob |
| 7 | 3 | 11 | 59.5% | Intrade | 71.3% |
| 3 | 7 | 11 | 40.5% | Zogby | 40.7% |
| Schedule | ||||||||||
| Score | Date | State | Party | Intrade | Zogby | Winner | Intrade Pct | Zogby Pct | ||
| 7-3-11 | 6-May | IN | Dem | Clinton | 2-way-tie | Clinton | 85% | 42% | ||
| 6-3-11 | 6-May | NC | Dem | Obama | Obama | Obama | 90% | 50% | ||
| 6-3-10 | 22-Apr | PA | Dem | Clinton | Clinton | Clinton | 82% | 47% | ||
| 6-3-9 | 4-Mar | OH | Dem | Clinton | 2-way-tie | Clinton | 70% | 45% | ||
| 5-3-9 | 4-Mar | TX | Dem | Obama | 2-way-tie | Clinton | 57% | 44% | ||
| 5-2-9 | 5-Feb | NJ | Rep | McCain | McCain | McCain | 96% | 52% | ||
| 5-2-8 | 5-Feb | NJ | Dem | Clinton | 2-way-tie | Clinton | 67% | 43% | ||
| 4-2-8 | 5-Feb | NY | Rep | McCain | McCain | McCain | 98% | 53% | ||
| 4-2-7 | 5-Feb | GA | Dem | Obama | Obama | Obama | 96% | 48% | ||
| 4-2-6 | 5-Feb | MO | Dem | Obama | Obama | Obama | 63% | 47% | ||
| 4-2-5 | 5-Feb | CA | Rep | McCain | Romney | McCain | 56% | 40% | ||
| 3-2-5 | 5-Feb | CA | Dem | Obama | Obama | Clinton | 52% | 46% | ||
| 3-2-4 | 29-Jan | FL | Rep | McCain | 2-way-tie | McCain | 51% | 33% | ||
| 2-2-4 | 26-Jan | SC | Dem | Obama | Obama | Obama | 90% | 38% | ||
| 2-2-3 | 19-Jan | SC | Rep | McCain | McCain | McCain | 56% | 29% | ||
| 2-2-2 | 19-Jan | NV | Dem | Obama | Clinton | Clinton | 54% | 42% | ||
| 2-1-2 | 15-Jan | MI | Rep | McCain | 2-way tie | Romney | 54% | 27% | ||
| 2-0-2 | 8-Jan | NH | Dem | Obama | Obama | Clinton | 91% | 39% | ||
| 2-0-1 | 8-Jan | NH | Rep | McCain | McCain | McCain | 82% | 34% | ||
| 2-0-0 | 3-Jan | IA | Dem | Obama | 3-way tie | Obama | 54% | 28% | ||
| 1-0-0 | 3-Jan | IA | Rep | Huckabee | 2-way tie | Huckabee | 53% | 28% | ||
Lord willing, I will have another showdown season, but will most likely choose another pollster. Whereas Intrade listed contracts and probabilities for every state primary, Zogby only provided election eve updates for only 21 of the 87 held to date. Rasmussen stands out as a worthy pollster, but I would be happy with any candidate referrals from my readers as well.
Tuesday, May 06, 2008
Yes, I'm glad we got Mike Lowell
I was there during the birth of my first daughter (as well as my second), about 18 inches from the birth canal, it wasn't so bad. I stayed upright and cut the umbilical cord and all that jazz.
More insights into the theology of Gaia
If beavers build a dam, it is perfectly natural. If men build a dam it is an assault on nature. A beehive is beautiful, an apartment complex is an eyesore. How can we reconcile this? In the purely material world, the world of matter and energy, the one devoid of gods and spirit, nature is all there is. Every human artefact is as natural as a flower, because it can be nothing else. There is nothing that is not a part of nature. Nature is all there is.
If one is to paint human action as toxic and unnatural, there has to be something outside of nature, either something above it, or something below it. So the goddess returns in her new incarnation as Gaia. We have sinned against her, and so fallen out of nature.\
We are the key. The only way living planets can possibly reproduce is to spawn intelligent life. Life capable of developing interstellar travel, capable of spreading life to other worlds. We are the ones entrusted with this task. The dolphins, the chimps, the whales, the parrots, none of them can do this. We are the only chance for Gaia. She created us to save her. But if we take Watson’s advice we condemn Gaia and all life to die when the sun finally reduces us to ashes. This would be a colossal failure of nerve and purpose, a dereliction of duty, a betrayal of life itself.
Consider a fetal bird, growing inside the egg. Slowly it devours all the energy resources in its small world, which grows ever more cramped. Should the bird try to reduce its footprint and so stave off the end just a little longer? Our purpose is not to graze alongside the buffalo, or to catch fish by hand. Our task is to ensure that Gaia’s children flourish long after Sol’s third planet is no more. We are not a virus or a cancer. We are Gaia’s only chance. She created us for a purpose, to take her througout the galaxy. We are the seeders, and we are the seeds. That is the true environmentalism.
Arthur Brooks on happiness research on liberals and conservatives
If you believe that people generally get from life what they deserve to get, and if you belong to the majority who are doing fairly well (employed and healthy, for example), you will probably be more satisfied with life than an equally fortunate person who believes that there is much stubborn unfairness in the world.
In other words, that liberal you know who drives a Beemer isn’t very happy about it because he feels guilty.
Psychologist Philip Tetlock is a professor of leadership at Berkeley’s Haas School of Business. He suggests that conservatives seek out simplicity and clear moral values:
Conservatives quite unapologetically prefer leaders who project can-do decisiveness and dissonance — free rhetoric anchored in solid moral principles.
Assuming that it is easier to be happier in a world where right and wrong are crystal clear, this might lead conservatives to be happier than liberals.
In my book I argue that conservatives are more optimistic about the future than liberals are, and believe in each individual’s ability to get ahead on the basis of achievement.
Liberals are more likely to see themselves and others as victims of circumstance and oppression, and doubt whether individuals can climb without governmental help. Consider a bit of evidence.
• The 2005 Maxwell Poll on Civic Engagement and Inequality asked, “How much upward mobility — children doing better than the family they come from — do you think there is in America: a lot, some, or not much?” Among those sampled, 48 percent of below-average income conservatives believed there’s “a lot,” versus 26 percent of upper-income liberals.
• In the same poll, 90 percent of the poorer conservatives agreed that, “While people may begin with different opportunities, hard work and perseverance can usually overcome those disadvantages.” Just 65 percent of richer liberals agreed.
• The liberal-conservative differences on these questions persist when we control not just for income, but also for education, sex, family situation, religion, and race.
Correlations in everything: how daughters affect their legislative fathers
Ebonya Washington, an economist at Yale, has a great paper that was just published in the American Economic Review called “Female Socialization: How Daughters Affect Their Legislator Fathers’ Voting on Women’s Issues.”I'm reporting that I am a bigger feminist than ever, since my 2 daughters arrived. But alas, I have still not drunk the kool aids of "affirmative action" nor "boys and girls are the same".
She looks at members in the House of Representatives and looks to see whether their voting patterns change. She provides interesting evidence that, “conditional on total number of children, each daughter increases a congress person’s propensity to vote liberally on reproductive rights issues.”
Increasing competition reduces poverty
Because there was no price competition, some of the biggest insurers wouldn't do business in the state. During this exercise in central planning, the number of insurers dropped to 18 last year, from more than 70 three decades ago. But as of April 1, the state government decided to try a little experiment in the free market. We do mean little – proposed premiums must still be filed with the regulator, who can approve them or not. And many factors used to set rates in other states – such as credit history – are barred.
Even so, this modest experiment in price competition is already working to reduce costs for consumers. Progressive, the third-largest insurer in the country, entered the market May 1 with rates that are on average 18% below the old price-controlled rates. Overall, premiums in the state are due to fall nearly 8% this year as insurers adjust to a world in which they need to compete to attract customers instead of bargaining with their regulator for price hikes. Imagine: When you remove price controls, supply increases and prices fall.
Losing our First Amendment rights
With his fund raising headed for the stratosphere, Mr. Obama has transformed himself from earnest reformer to Senator Moneybags willing to renege on his pledge to accept public financing. Mrs. Clinton flirted initially with another donor scandal, and now her big givers are maxed out so even she has to scramble for cash for the later primaries. And John McCain, the caped crusader of reform for more than a decade, has taken to bending rules so he can remain competitive: His campaign pledged his eligibility for federal matching funds as collateral for a bank loan, then declined public funding and its spending limits for the primary season.
If you don't like how this looks, send your complaints to the three candidates. They were all proponents of fund-raising rules sold as a way to "cleanse" the system. Send your complaints as well to the good-government types who pledge allegiance to the idea that money is the root of political evil. They have had their way since the Watergate era, passing reform after reform.
Yet in 2008 the role of money is more important than ever, only by means less accountable and transparent. To run for President nowadays means devoting a large share of your time to creating a fund-raising "machine." Scores of good potential candidates won't run because they can't stomach the endless wheedling required to raise campaign cash in $2,300 chunks.
The King Canutes of reform are outraged. Their answer is to stack new regulations on top of the current malfunctioning regulations they said would solve everything. Fred Wertheimer at Democracy 21, the godfather of this mess going back to the 1970s, now denounces the 527s, which he says create "enormous inequities."
Maybe he's referring to George Soros, his billionaire ally and fellow supporter of McCain-Feingold. Today Mr. Soros and his friends conduct a fleet of liberal 527s so broad that it is nearly untrackable. The reforms that were sold in the name of minimizing the influence of "fat cats" has made one of America's richest men among the most powerful in politics. The very reforms championed by Mr. McCain could help Mr. Soros defeat the Arizonan this year.Another unsavory result has been deterring nonprofessional candidates from giving political lifers a run for their money. No one can realistically contemplate running for office without a team of lawyers to navigate the campaign laws. This year, to complicate matters further for the benefit of incumbents and insiders, those insiders are politicizing the Federal Election Commission that is supposed to enforce all of these rules. The FEC has been left without a quorum indefinitely, thanks to a Democratic charade over one of President Bush's nominees.
Last year, Mr. Obama placed a hold on the nomination of Hans von Spakovsky, on grounds that he had once supported a voter ID law in Georgia. Last week, a 6-to-3 Supreme Court majority agreed with Mr. von Spakovsky on voter ID. But don't expect that to sway Senate Majority Leader Harry Reid, who still refuses to confirm Mr. von Spakovsky as part of a traditional FEC nominee group of bipartisan pairs, or even to confirm two other FEC nominees without him. How convenient. Blocking an FEC quorum opens up maneuvering room for Democrats in a year when they have the financial advantage. They can count on their inventive campaign tactics receiving adjudication around, say, 2011.
The Founding Fathers would have had no trouble detecting the absurdity of having political actors determine what does or doesn't constitute free political speech. The First Amendment was written precisely to deny politicians such control. The Supreme Court has nonetheless upheld the idea of limiting campaign contributions on grounds that it would reduce "corruption." But after 30 years of contrary evidence, the Justices should revisit that fanciful notion. Money is required in modern America to amplify political speech. Attempting to limit or ban money merely gives the advantage to those best able to game the rules, or to the news media that can make nonfinancial "contributions" via endorsements.
If this campaign proves anything, it is that more reform on the post-Watergate model will only compound the McCain-Feingold-Clinton-Obama folly. The rules themselves are the scandal, empowering the powerful and making it harder for voters to judge the indebtedness of candidates to individuals or interest groups.
The better path is more simplicity and transparency, so office seekers can raise whatever amount they can from whomever they want so long as it is reported immediately on the Internet. It's time we reclaimed politics from the reformers who ruined it.
Quotes of the day
The remarkable thing about the Venkatesan affair, to me, is that her students cared enough to argue. Normally they would express their boredom with the material by answering emails on their laptops or falling asleep. But here they staged a rebellion, a French Counter-Revolution against Professor Defarge. Maybe, despite the professor's best efforts, there's life in American colleges yet.--Joseph Rago
Health care, the fastest growing major sector of the economy, is also the sector that is increasingly being absorbed by the government. Extrapolating current trends, Medicare alone would be most of GDP in another generation or so. It boggles my mind how someone can not be worried about too much government.--Arnold Kling
But the problem isn't politicians -- it's politics. Politics won't allow for the truth. And we can't blame the politicians for that. Imagine what even a little truth would sound like on today's campaign trail: "No, I can't fix public education. The problem isn't the teachers unions or a lack of funding for salaries, vouchers or more computer equipment The problem is your kids!"--P.J. O'Rourke
Global warming hippy-crites
I complained about the same thing last year.
Monday, May 05, 2008
Unsecured laptops: the latest case for more limited government
Apparently no policies or procedures which procured and secured laptops that gave the Department a way to keep up with who had them and whether they were secure.
I have to wonder what would happen to the person in the corporation I work for, and which provides me with a laptop, if this same problem existed. Well really I don’t have to wonder, but I do wonder what will happen to the person or persons responsible for this particular mess.
My guess - nothing.
At this point the Department has no idea of where the laptops are, what information has been compromised (and in situations like this, until you know otherwise you have to assume it has all been compromised), or frankly, what to do about it.
All-star list advocates for freedom in prediction markets
Abstract:Signatories:
Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors.
We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.
Arrow, Kenneth J.,
Sunder, Shyam,
Forsythe, Robert,
Litan, Robert E.,
Zitzewitz, Eric,
Gorham, Michael,
Hahn, Robert W.,
Hanson, Robin,
Kahneman, Daniel,
Ledyard, John O.,
Levmore, Saul,
Milgrom, Paul R.,
Nelson, Forrest D.,
Neumann , George R.,
Ottaviani, Marco,
Plott, Charles R.,
Schelling, Thomas C.,
Shiller, Robert J.,
Smith, Vernon L.,
Snowberg, Erik C.,
Sunstein, Cass R.,
Tetlock, Paul C.,
Tetlock, Philip E.,
Varian, Hal R. and
Wolfers, Justin
I'm always hearing how Red Sox fans are obnoxious
being a Red Sox fan in New York. But the Yankee fans who tell me this never bring up stories like this.
How free markets free people
Knowing the fair market value of crops allows farmers to fetch better prices and circumvent local traders who used to dictate terms.
Justin Wolfers has the best roundup on Hillary's jumping the economic shark
UPDATE:
Soon I expect to hear the Senator from New York promise to jump out of a tenth-story window and fly, to demonstrate defiance of "elite" physicists who doubt the feasibility of the project.--Arnold Kling, with credit to Megan McArdleMegan weighs in:
Must we abandon common sense merely because economists occasionally speak it? No, I say, a thousand times no, no more than we would abandon children and dogs merely because Hitler was fond of them.
Great visualization on consumer spending allocations and inflation over the past year
Click on graph for larger version. The original NY Times version provides annual inflation for specific goods. (Via Mark Perry)
Quotes of the day
Liquidity is not a virtue in and of itself unless it produces a benefit to the real economy.--Yves SmithOf course, I agree with Yves, but then I would replace "Liquidity" with "Government" and agree even more. Besides protecting individual rights and property, I think government should be tiny to non-existent. The sin of pouring liquidity into the economy in the short-term is miniscule compared with the distortionary subsidization and the unconstitutional regulation of markets over the past century.
Life sends the message, "I'd better not be poor. I'd better get rich. I'd better make more money than other people." Meanwhile, politics sends us the message, "Some people make more money than others. Some are rich while others are poor. We'd better close that 'income disparity gap.' It's not fair!"
And finally:Well, I am here to advocate for unfairness. I've got a 10-year-old at home. She's always saying, "That's not fair." When she says this, I say, "Honey, you're cute. That's not fair. Your family is pretty well off. That's not fair. You were born in America. That's not fair. Darling, you had better pray to God that things don't start getting fair for you." What we need is more income, even if it means a bigger income disparity gap.
Using politics to create fairness is a sin. Observe the Tenth Commandment. The first nine commandments concern theological principles and social law: Thou shalt not make graven images, steal, kill, et cetera. Fair enough. But then there's the tenth: "Thou shalt not covet thy neighbor's house. Thou shalt not covet thy neighbor's wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor anything that is thy neighbor's."--P.J. O'Rourke (via Don Boudreaux)
That's the spirit of America, as John Adams never quite said: may I advocate classical-liberal limited government, so that my son may advocate anarcho-capitalism, and that my grandson may plan to build new artificial countries in the ocean.--Brian Doherty, via Bryan Caplan
UPDATE: Intrade v. Zogby Showdown: Indiana and North Carolina
| Date | State | Party | Intrade | Zogby | |
| 6-May | IN | Dem | Clinton | 2-way-tie | |
| 6-May | NC | Dem | Obama | Obama |
| Intrade | Zogby | |||
| NC Dem | ||||
| 9% | 40% | Clinton | ||
| 91% | 48% | Obama | ||
| 0% | 5% | Someone else | ||
| 8% | Not sure | |||
| IN Dem | ||||
| 83% | 42% | Clinton | ||
| 16% | 44% | Obama | ||
| 1% | 7% | Someone else | ||
| 8% | Not sure |
Previous post here.
Friday, May 02, 2008
A breakthrough in battery capacity?
The new technology, developed through research led by Yi Cui, assistant professor of materials science and engineering, produces 10 times the amount of electricity of existing lithium-ion, known as Li-ion, batteries. A laptop that now runs on battery for two hours could operate for 20 hours, a boon to ocean-hopping business travelers.
"It's not a small improvement," Cui said. "It's a revolutionary development."
The breakthrough is described in a paper, "High-performance lithium battery anodes using silicon nanowires," published online Dec. 16 in Nature Nanotechnology, written by Cui, his graduate chemistry student Candace Chan and five others.
The greatly expanded storage capacity could make Li-ion batteries attractive to electric car manufacturers. Cui suggested that they could also be used in homes or offices to store electricity generated by rooftop solar panels.
Steve McIntyre uncovers incompetence with IPCC (the climate change authority)
UPDATE: More bad news for buyers of global warming, courtesy of Steven Milloy.
UPDATE: Tim Blair has more:
The same people who only now predict a twelve-year cooling still expect to be taken seriously about eventual massive warming. They’re making this up as they go along. And it’s your fault for believing previous warming threats.
DISCLOSURE: I am short 2008.GLOBALTEMP.TOP5
Quote of the day
... compared to forced-union states, right-to-work states have had faster economic growth, lower unemployment rates, greater employment growth, higher state real GDP growth, greater growth in personal income, higher population growth, and greater home price appreciation.--Mark Perry
The Intrade v. Zogby Showdown: Indiana and North Carolina
| Date | State | Party | Intrade | Zogby | |
| 6-May | IN | Dem | Clinton | 2-way-tie | |
| 6-May | NC | Dem | Obama | Obama |
| Intrade | Zogby | |||
| NC Dem | ||||
| 10% | 34% | Clinton | ||
| 90% | 50% | Obama | ||
| 0% | 8% | Someone else | ||
| 8% | Not sure | |||
| IN Dem | ||||
| 85% | 42% | Clinton | ||
| 13% | 42% | Obama | ||
| 1% | 7% | Someone else | ||
| 9% | Not sure |
The Indiana contest will be of interest, as Zogby is showing a dead heat, while Intrade is heavily calling for Clinton.
Policymakers still can't grasp the concept of opportunity cost
Wind, hydro, and all the "alternate" sources of energy have been dubbed "green" because they are supposedly clean, renewable, and sustainable. In fact, what being "green" really means is that they all require vast amounts of land.
In a 2007 paper – well on its way to becoming a classic – Jesse Ausubel, director of the program for the human environment at Rockefeller University, calculated the amount of wood it would take to run one standard 1,000-megawatt electrical plant, the kind that can power a city the size of Cincinnati. Feeding the furnace year-round would require a forest of one thousand square miles. We have 600 such coal plants around the country now – to burn wood instead would require a forest the size of Alaska.
Glen Canyon Dam, which can produce 1,000 megawatts of electricity, is backed up by a reservoir 250 miles square (Lake Powell, in Arizona and Utah). That's why we stopped building dams in the 1960s – because they were drowning scenic canyons and displacing populations.
Those 30-story windmills produce 1.5 megawatts apiece – about 1/750th the power of a conventional generating station. Getting 1,000 megawatts would require a wind farm 75 miles square.
In a January cover story for Scientific American, three leading solar researchers proposed meeting our electrical needs in 2050 by covering southwestern desert with solar collectors. The amount of land required would be 34,000 square miles, about one-quarter of New Mexico.
And that's where biofuels went awry. Nobody ever bothered to calculate how much land they would require.
Unintended consequences: Obama needs a working FEC now, but he previously mothballed it
Barack Obama should be careful what he wishes for, to judge by this Associated Press dispatch:Obama's presidential campaign wants federal regulators to investigate fellow Democrats who are backing Hillary Rodham Clinton's candidacy, taking intraparty discord to a new level of confrontation.Obama's campaign lawyer, Robert Bauer, filed a complaint Wednesday with the Federal Election Commission, accusing the pro-Clinton American Leadership Project of violating campaign finance laws by running ads against Obama. The group is spending $920,000 for an ad in Indiana questioning Obama's economic policies.There's just one little problem:
Complicating matters is the FEC's lack of a quorum to act on any investigation or regulatory matter. The six-member commission has four vacancies. Though the commissioners would be unable to act on such a complaint immediately, FEC investigations typically take more than a year to resolve.What the AP doesn't note, though our John Fund did last month, is that the FEC's inability to conduct business is Obama's own fault:
Democrats balked at confirming Hans von Spakovsky, who had served on the FEC for two years. Sen. Barack Obama put his nomination on hold for years because Mr. von Spakovsky, as a Justice Department official, supported laws requiring voters to show photo ID.
Blog power
From the kitchen table in his tranquil suburban neighborhood, Brodkorb for the last year has used his blog "Minnesota Democrats Exposed" to launch a furious political assault on Franken. He's labeled the former comedian and liberal commentator a "mean-spirited and un-Minnesotan" candidate who's running a "desperate and ridiculous" campaign.
That's routine stuff in the world of political blogging, but in the last two months Brodkorb has scored two direct hits that have the Franken campaign reeling. Brodkorb scooped the traditional media by detailing extensive bookkeeping problems in New York and California that ultimately prompted Franken, this week, to pay about $70,000 in back taxes to 17 states.
Thursday, May 01, 2008
Quote of the day
Being a capitalist can be very rewarding and a lot of fun. Just don’t be the tallest capitalist, because you’re likely to get your head chopped off.--Larry Ribstein
Arthur Herman feels that we have yet to learn the lessons of Vietman
Actually, the U.S. had won the war in Vietnam on the battlefield, just as the surge has done today in Iraq. Over Easter 1972, South Vietnamese forces, backed by U.S. airpower, crushed the last communist offensive, killing nearly 100,000 North Vietnamese troops.
The North was forced to sign peace accords in Paris recognizing the Republic of South Vietnam. The last 2,500 U.S. support troops went home. What they left was a fragile but sustainable peace, and an elected government in Saigon that was growing stronger every month.
After nearly two decades of devastating war and 58,000 American combat deaths, the U.S. left Southeast Asia. As the last helicopter lifted off from Saigon, the New York Times's Sydney Schanberg wrote an article with the title, "Indochina Without Americans: For Most, a Better Life." And the Times's columnist Anthony Lewis asked, "what future could possibly be more terrible than the reality" of a war that had cost so much in lives and treasure?
With the North Vietnamese Communists and the Khmer Rouge taking over, the world was about to find out.
At least 65,000 Vietnamese were murdered or shot after "liberation" – the equivalent in terms of Vietnam's population at the time, of killing three-quarters of a million people in today's U.S. The new communist regime ordered somewhere between one- third to one-half of South Vietnam's population to pass through its "re-education" camps, where perhaps as many as 250,000 died of disease, starvation, or were worked to death (the last inmates were not released until 1986).
That number does not include the thousands of "boat people" who tried to flee the totalitarian nightmare of communist Vietnam, and perished at sea.
Cambodia's fate was even worse. At least one and a half million innocent Cambodians were butchered or starved to death in the Khmer Rouge's killing fields and re-education camps, put to death by a fanatical regime that believed that anyone who wore eyeglasses must have "bourgeois intellectual tendencies" and be shot.
The scale of moral collapse and suffering went beyond Indochina. The pullout had a ripple effect on U.S. power and prestige, just as the proponents of the so-called "domino theory" had warned. American foreign policy, crippled by remorse and self-doubt, stood helplessly as others rushed into the power vacuum.
Marxist-Leninist regimes emerged not only in Vietnam, Cambodia, and Laos, but in Ethiopia and Guinea Bissau (1974), Madagascar, Cape Verde, Mozambique, and Angola (1975), Afghanistan (1978), and Grenada and Nicaragua (1979). Soviet troops were welcomed in Fidel Castro's Cuba for the first time since the 1962 missile crisis. Cuban troops traveled freely to Africa to prop up Marxist regimes there.
In 1979 the Ayatollah Khomeini was able to establish his brutal theocratic rule over Iran, confident that America, having learned "the lessons of Vietnam," would never intervene.
Technology: Another argument for more limited government
The Census Bureau decided as long ago as 2000 that handheld computers were the future, and spent four years trying to develop one in-house, with little to show for it. That earlier failure led to the contract with Harris in 2006. As usual in government, no one in particular seems to be taking responsibility for the serial failures – which of course is part of the problem. There is little incentive for getting it right, because no one below the level of a political appointee ever loses a job for getting it wrong. You can even lose your job for getting it right if it means more efficiency.
In the case of the botched handhelds, the result is that the Census will now have to deploy some 600,000 temporary workers to go door to door and get the forms filled out by hand. The handhelds will still be used for "address canvassing," although even at that they can't handle more than 700 addresses at a time. For this great leap backward, taxpayers will pay $3 billion more for the census than originally estimated.
At a recent Senate Commerce hearing, Oklahoma's Tom Coburn put this in perspective: "So we're still going to pay $600, four times what the American [tax]payer should be paying, for something that can be done on a $150 BlackBerry." He added: "A $400 iPhone can do twice as much as the $600 handheld. You could buy iPhones and do all of this."
We wish we could be shocked by this fiasco. But no one who's followed the IRS's decades-long failure to upgrade a computer system built in the 1960s, or the Federal Aviation Administration's reliance on vacuum tubes in the age of global positioning systems, can really pretend to be surprised.
We keep hearing that the era of big government is back, and all of the presidential candidates are promising that Uncle Sam can and should do so much more for us. Here's a radical idea: Before it takes on more obligations, maybe the government should first have to show that it is capable of doing in remotely competent fashion what the Constitution has obliged it to do for some 220 years.
Obama's disappearing friends trick (and his last best friend?)
This week we learned the limit of a dream in American politics. At Barack Obama's darkest hour, not one prominent ally came forward to support him. Everyone abandoned Everyman.
No prominent black clergyman came forth to make even the simple point that Jeremiah Wright's notion of the "black church" is but one point on a spectrum of faith. Rev. Wright, now written off as a virtual nut case, got more support from black clergymen than did Obama.
Barack Obama was bleeding by Monday and needed cover. Where, when he could have used them, were Obama's oh-so-famous endorsers: Jesse Jackson, Ted Kennedy, Oprah, John Kerry, Chris Dodd, Patrick Leahy, Tom Daschle, Amy Klobuchar, Claire McCaskill, Jay Rockefeller, John Lewis, Toni Morrison, Roger Wilkins, Eric Holder, Robert Reich, Ted Sorenson, Alice Walker, David Wilhelm, Cornel West, Clifford Alexander, Donald McHenry, Patricia Wald, Newton Minow?
Where were all the big-city mayors who went over to the Obama camp: Chicago's Richard Daley, Cleveland's Frank Jackson, Atlanta's Shirley Franklin, Washington's Adrian Fenty, Newark's Cory Booker, Baltimore's Sheila Dixon?
It isn't hard for big names to get on talk TV to make a point. Any major op-ed page would have stopped the presses to print a statement of support from Ted Kennedy or such for the senator. None appeared. Call it profiles in gopher-holing.
The list is long this week of supporters who let Barack Obama hang out to dry. More than a few were last seen running out on Hillary Clinton. Perhaps the solution here is for the two soloists to meet, flip a coin, and spend the next six months as a pair running against John McCain. It looks like they're the only friends they've got.