The problem with debates over objective and subjective beliefs

... is that we have no God-like entity to referee the debates. So all we can do is muddle through on our own. Science can make a lot of neat predictions, and hence is very useful, but only for our purposes. The way I like to think about these issues is to imagine a cat taking a nap on top of a big old boxy TV set. Does the cat know what he is sleeping on? She thinks she does. She thinks she knows that it is a 3 foot cube with a hard surface that gets a bit warm when noise and flickering light are emitted.--Scott Sumner

As a parent of 2 feisty kids, I can tell you that I've got much better things to do than to referee their debates. I don't expect a Creator-type of entity to referee mine.

This is deja vu, all over again, for some of us.

And we thought Wall Street bonuses were bad

... the taxpayer, is being represented by government employees wh will get paid the same paid regardless of how well muni bonds price.--Vincent Fernando

Quotes of the day

Failure is not something to be avoided. It may be an early warning sign for success.--Dan Heath

The [South] Korean fishing fleet gives off more light than all of [North] Korea except Pyongyang.--Eric

Real freedom is the absence of monopoly. --Arnold Kling

51% of the nation’s voters fear the federal government more than private insurance companies.--Rasmussen Reports

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.--Douglas Elmendorf

Four out of 10 Britons going abroad for surgery do so to avoid NHS waiting lists at home, a survey has revealed. ... The poll found that 34% of people went abroad because they were uninsured for particular treatments or surgery in the UK, while 32% wanted a treatment or surgery not available at home.--UK Press Association

In the last few years, I have had the opportunity to compare the human and veterinary health services of Great Britain, and on the whole it is better to be a dog. As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs—or hamsters—come first. ... I also want, wherever I am, the Americans to go on paying for the great majority of the world’s progress in medical research and technological innovation by the preposterous expense of their system: for it is a truth universally acknowledged that American clinical research has long reigned supreme, so overall, the American health-care system must have been doing something right. The rest of the world soon adopts the progress, without the pain of having had to pay for it.--Theodore Dalrymple

... most of us realize that there are huge differences between price rationing and government rationing, and that the latter is usually much worse for everyone. This is one of the things that most puzzles me about the health care debate: statements that would strike almost anyone as stupid in the context of any other good suddenly become dazzling insights when they're applied to hip replacements and otitis media. ... But there is also a real difference between having something rationed by a process and having it rationed by a person. That is, in fact, why progressives are so fond of rules. They don't want to tell grandma to take morphine instead of getting a pacemaker. It's much nicer if you create a mathematical formula that makes some doctor tell grandma to take morphine instead of getting a pacemaker. Then the doctor can disclaim responsibility too, because after all, no one really has any agency here--we're all just in the grips of an impersonal force.--Megan McArdle

... things like going back to school, entering the peace corps, joining the army and declining immigration are signs of a bad economy. Even if they don't count as worker discouragement from a government stats perspective, they are, strictly speaking, symptoms of worker discouragement. So it's possible that we'll not hit the 10% [unemployment rate] number, but the number is pure fiction. What we want to know is whether people who want to work can find jobs -- and that isn't something which the unemployment rate, below or above 10% actually tells us.--Joe Weisenthal

In my own life, in my own small way, I have tried to give back to this country that has given me so much. See, that’s why I left a job at a big law firm for a career in public service.--Michelle Obama

What she doesn’t mention is that the helping industry has treated her pretty well. In 2006, the Chicago Tribune reported that Mrs. Obama’s compensation at the University of Chicago Hospital, where she is a vice president for community affairs, jumped from $121,910 in 2004, just before her husband was elected to the Senate, to $316,962 in 2005, just after he took office. And that does not count the money Mrs. Obama receives from serving on corporate boards.--Byron York

President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. ... Six months in, Mr Obama still has the look of a lucky, two-term president. But that could change if voters become even more disenchanted with the legislative branch and start blaming the president for the looming fiscal train-wreck. The scariest possibility for Mr Obama is that the runaway deficit could leave him with the worst of both worlds: exploding debt and flat-lining growth.--Niall Ferguson

... if Joe Cassano (of AIG) was the "man who crashed the world," Spitzer was the guy who gave him the keys to the car. And all this for his supposed non-fraudulent responsibility for a barely material (if that) accounting mistake, plus, of course, the boost to Spitzer's then career.--Larry Ribstein

One of the few uncontested causes of the current crisis is the 2004 decision by the Securities and Exchange Commission to let the largest investment banks increase their leverage ratio from about 12-to-1 to 30-to-1, or even higher.--Megan McArdle

I think that the challenge is to come up with a reward system for the regulator/entrepreneurs. It isn't just fraud that you are trying to find. What you want is a set of incentives that in 2004 and 2005 would have rewarded the social entrepreneur for identifying and measuring the exposure of key financial firms to stress in the housing market and to the misbehavior in the mortgage market. It's even tougher than that, because there are two types of errors the regulator/entrepreneur can make. One is to fail to spot a dangerous situation. The other is to incorrectly characterize a benign situation as dangerous. Too much incentive to avoid one type of error will increase the errors of the other type.--Arnold Kling

Perhaps the most troubling aspect of the House bill, however, is its reliance on regulators to recognize and rein in compensation practices that encourage risky actions by executives at financial services companies. Under the bill, federal regulators would write new rules to prevent “inappropriate or imprudently risky compensation practices” that could threaten the safety and soundness of major financial institutions. It’s hard to believe that regulators are savvy enough about both pay packages and risky compensation incentives at financial companies to recognize when either or both have become dysfunctional. Remember, these are the same regulators who allowed brokerage firms to increase their leverage to wildly high levels, who helped break down investor protections put in place during the Great Depression, who let big banks balloon their balance sheets with poisonous assets and who were unable to spot the decades-long fraud of Bernie Madoff. That’s some track record. How do you think they will do when it comes to pay? A much better fix would be to hold compensation committees and directors themselves accountable for pay policies and responsible for discouraging reckless managerial practices.--Gretchen Morgenson

Hillary is NOT channeling Bill

She is channeling political feminist Gloria Steinem (who, in turn, channels Bill).

Quotes of the day

You don't stop laughing because you grow old. You grow old because you stop laughing.--Michael Pritchard

If Obama has his way, his health care plan will be funded by his treasury chief who did not pay his taxes, overseen by his surgeon general who is obese, signed by a president who smokes, and financed by a country that is just about broke.--Ron Hart

I can calculate the motions of the heavenly bodies, but not the madness of people.--Isaac Newton, reputedly

I’m of the persuasion that budget contraints are very, very good for creativity. I think people having unlimited amounts of money makes you really lazy.--Matthew Weiner

Perhaps the only other producer as committed to the rules of [Matthew Weiner's] imagined universe is George Lucas. --Bruce Handy

I will always go to the country that has the best crew coupled with the most tax incentives.--George Lucas

Historically, Indian reservations are a great place to be poor if you are Indian—and a fantastic place to get rich if you're not. It is only recently that this pattern is being reversed.--David Treuer

Rob Arnott tells a lovely story of a speech he was giving to some 200 finance professors. He asked how many of them taught [Efficient Market Hypothesis] - pretty much everyone’s hand was up. Then he asked how many of them believed it. Only two hands stayed up!--John Maudlin

A sure way to create inflation? Subsidies!

The federal government, through subsidization, has made everything from education to healthcare to corn and sugar more expensive by throwing money at those industries.

Now it's happening with cars.

So our taxes are going up, while our buying power goes down. Thanks, Dear Leaders.

Most people realize that taxes make some things more expensive (e.g. sales and gasoline taxes), which, I theorize, makes the inflation effects of subsidization counterintuitive. Of course, taxes can make thing cheaper--income taxes and property taxes can really drive down the value of real estate. No one said economics was easy. But that's no excuse to deny the realities.

A logical followup question: how can we make things more affordable? (Hint: Airline tickets and telecom services used be really expensive decades ago).

Government reminds me of mafia sometimes

Frequently, actually.

Simultaneous and parallel inventions

are the rule, rather than the exception (via TheBrowser).

It turns out that lots of people can have similar ideas, and several people will innovate in near identical ways to make something new. Here is a nice graphic from that article:

Quotes of the day

It has not occurred to many people, at least not yet, that [Ken] Lewis is a bank branch manager who was promoted a dozen too many times.--Douglas McIntyre

A study has found that companies with women on their boards are less profitable and have smaller market caps than those governed by solely alpha-males. ... The results suggest that women like to keep companies neat and tidy and nice-smelling, but if you want to kick ass, hire men.--Henry Blodget

And I don't think this is a gap we can bridge by discussing the [tension in innovation between academics and profit seekers]. We're doomed to keep getting angry at each other.--Megan McArdle

Let's say that every bank on Wall Street took every penny of bonus money paid out for 2005, 2006 and 2007 and put it in their treasuries instead for capital cushion. According to two articles I tracked down, the grand total of all Wall Street bonuses for these three years combined was $83.4 billion. ... the big bailout bank portion was smaller than this $83.4 billion. Let's compare that with the money that was used to bail out these banks. Combining Citigroup, Bank of America, JP Morgan, Goldman Sachs and Morgan Stanley, you get $140 billion. That far exceeds the bonuses paid. So we can officially stop blaming bonuses for causing the crisis. --Daniel Indiviglio

Well, we don't need birth control either--we could just decide to be celibate--but I don't hear so much complaining about the [Big Pharma] commercials for Seasonale or the HPV vaccine.--Megan McArdle

Government is not always the solution

If it were, then there would not be headlines like this one:

Fannie Mae Seeks $10.7 Billion in Aid After Loss

Healthcare quotes of the day

As [my British dentist] put it starkly, why risk a lawsuit doing a root canal that takes several hours to do properly when you could just pull the tooth and be done with it? I went private.--Delia Lloyd

... the drug companies only spend about 15 cents of every dollar on research and development. That's compared to more than 30 cents in administration and marketing and more than 20 cents on shareholder equity. As an investment in R&D, I think any venture capitalist would say a company spending 15 percent on research is not a robust innovation engine.--Jerry Avorn

This makes about as much sense as saying that Dr. Jerry Avorn cannot be that smart because his brain only weighs about three pounds. Presumably, you can't be really smart--really innovative--unless your brain is at least 30 percent of your body weight! --Megan McArdle

... Jerry Avorn, chief of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women's Hospital, announces that companies don't do anything. It's no mystery how Dr. Avorn formed this belief: he pretty clearly has absolutely no idea what companies do. But the fact that he mistakes his ignorance for a fact about the universe makes me wonder if pharmacoeconomics is what my college boyfriend's roommate used to do with a few grams of cocaine and a copy of Mankiw's Principles. ... I am completely unsurprised to find out that Dr. Jerry Avorn has completed no work in economics, and indeed, so far as I can tell, no work in anything except being a professor of medicine? I'm sure he's a very good researcher on how patients use drugs. But he's pretty clearly no sort of expert at all on how companies actually make them--or anything else gracing our store shelves.--Megan McArdle

BCWUW4: Be careful what you wish for.

Good for strategy and innovation. Not so much diet

Cannibalism, that is.

That's me in the corner, ~233 days per year

Source here.

Actually, I'm the guy standing up, and I've found the subway a good place for prayer.

Quotes of the day

The Economist does not understand marginal analysis.--Will Ambrosini

... most philosophies that frown on reproduction don't survive.--Darwin Catholic

... international labor standards and product boycotts may delay the ultimate eradication of child labor.--Matthias Doepke, Fabrizio Zilibotti

Students do not find professor-specific explanations to be very satisfactory.--Michael, an economics Ph.D. candidate

However, consideration of the ratings for "reward" (as opposed to pleasure) told a rather different story, with "work" now the top scorer, and "time with children" not far behind.--White & Dolan

Hard times whet the appetite for survival stories.--Judith Thurman

I keep saying that the sexy job in the next 10 years will be statisticians. And I’m not kidding.--Hal Varian

[Critics of high frequency trading have] an odd mix of views about the relevance of the short run. ... Even if you think HFT is bad, on an actual list of bad policies or practices in our world, would it be in the top million? Mostly it's a canvas on which to paint complaints about the continuing political and economic power of finance, but we shouldn't let that skew our judgment of the practice itself. ... When I read that HFT may give markets "a new, currently unknown set of emergent properties" I think buying opportunity.--Tyler Cowen

Rules matter because they determine whether we reach our collective potential. Bad rules divide us and diminish us. Good rules free us to collaborate and grow.--Paul Romer

[In the film The Tunnel] we see the tyranny of Communism in its most visceral form - "No one gets out of here alive."--Bryan Caplan

In fact, the entire mainstream economics profession is built around [experts controlling the economy]. When you write a paper, if you don't include a section on "policy implications" (i.e, how a benevolent technocrat would use the findings in your paper), the paper is considered incomplete.--Arnold Kling

The theory of aggregate output ... can nevertheless be much more easily adapted to the conditions of the totalitarian state ...--John Maynard Keynes

Transactions in the private sector are voluntary, but transactions with government are often not. So it seems to me that Progressives are at the totalitarian end of a totalitarianism continuum, and Libertarians are at the opposite end.--Les

Of course the Progressives are Totalitarian, and they don't really try to hide it. Afterall, the perfect society cannot be achieved without total control. At present they are constrained by what remains of liberal tradition, but they work constantly to remove the constraint, and this is what they mean by Progress.--Randy

The ad shows cartoons of everyone — from aliens to King Kong — urinating in the shower and ends with the slogan: “Pee in the shower! Save the Atlantic rainforest!”--Freakonomics

Aw, gee, I am sorry I described L[ibertarian], C[onservative], and P[rogressive] in terms of how each type thinks social problems should be addressed. That is such a "straw man" view of progressives. What progressives are all about is that unlike L's and C's who are cruel and mean, P's are really good people who really care. There, does that provide a description that the P's can relate to?--Arnold Kling

Harvard sent me admissions materials in Spanish along with a letter from their Hispanic union promising that I could be provided with inculturation opportunities and remedial English help if I came to Harvard. I didn't know any Spanish, so I had to get someone to read the letter to me. They never did send me any materials in English, even based on my SAT scores which were a fairly respectable 99th percentile. Apparently a 75th percentile Hispanic student was a lot more appealing to them than a 99th percentile white one.--Darwin Catholic

Congress erodes the First Amendment, yet again

This time, its children's books.

On the heels of my previous confession comes another prediction

PIMCO is the next Fannie Mae.

Goldman's trading machine is humming

according to this Bloomberg article.

Maybe I was wrong; certainly my GS short in the personal account is not doing so well (I am long some other banks and financial ETF against it, but its still underwater).

"Cash For Clunkers" is not adding up

Steven Levitt notes that if you divide $1 billion by $4,500 subsidy per car purchase, it's a lot more than the 125,000 cars sold in the first week of the program.

And people want government run healthcare because we'll spend less?

I guess if we keep taxes and deficits behind the curtain.

And monkeys could fly out of ...

Bryan Caplan makes an interesting point on insurance claims in Nazi Germany

In 1938, Jewish businesses and synagogues through Germany were burned and looted in a massive pogrom. Historians call the incident Kristallnacht. The Nazis naturally blamed the Jews. So the Nazis were horrified when they realized that Aryan-owned insurance companies were liable for the damages!

The obvious solution for the Nazis was to let the insurance companies weasel out of their contracts. But contrary to what critics of private health insurance would have you think, insurance companies aggressively lobbied against this solution. Why? Because they greatly valued their reputation.

A stimulating new economic indicator

The Hot Waitress Index (via Felix Salmon):

The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.

A waitress at one Lower East Side club described to me what happened there: “They slowly let the boys go, then the less attractive girls, and then these hot girls appeared out of nowhere. All in the hope of bringing in more business. The managers even admitted it. These hot girls that once thrived on the generosity of their friends in the scene for hookups—hosting events, marketing brands, modeling—are now hunting for work.”