Liberal baiting

Okay, so Obama's not the most liberal senator. But who is? Enquiring minds want to know . . .

Worst. Article. Ever.

Well, I haven't done an exhaustive study. But this article on counting casualties in Iraq is embarassingly bad, even by the standards of cursory reprints of press releases. As it happens, I've been writing about casualty counts in Iraq (so I'm afraid you're going to be hearing much more about this over the next month or so), and I'm flabbergasted by its bizarre omissions. I don't think that any credible person who has spent any time on the debate would be satisfied with this particular attempt to deal with it.

For starters, it repeats nearly uncritically the results of a survey from ORB which purports to find a million casualties in Iraq. Pretty much everyone I've spoken to regards their numbers--which utilize a murky methodology on a very small sample, and then publish bizarrely tiny uncertainty estimates on a survey in a bloody war zone--as a bit of silliness. It fails to mention that the largest survey using the best regarded methodology, which was just released by the WHO earlier this month, found about a tenth as many deaths.

But the really strange thing is that it drags in the first Lancet study without mentioning the second.

Medical journal The Lancet published a peer-reviewed report in 2004 stating that there had been 100,000 more deaths than would normally be expected since the March 2003 invasion, kicking off a storm of protest.

The widely watched Web site Iraq Body Count currently estimates that between 80,699 and 88,126 people have died in the conflict, although its methodology and figures have also been questioned by U.S. authorities and others.

ORB, a non-government-funded group founded in 1994, conducts research for the private, public and voluntary sectors.

It's as if he's unaware of Lancet II--which unawareness is really, really, really hard to achieve, because it's the main thing you get on either a google search or a Nexis of Iraqi casualties, or any plausible variant on those terms. Even Lancet I's authors would say that the study, which was published in 2004 on the cheap and had a very small sample, has been superceded by the larger, better funded, and more recent Lancet II, which found 601,027 violent excess deaths (654,965 total).

Helping the housing bubble along

Regarding the housing crisis, Mr Brian Beutler asks:

Is this crisis truly devoid of any partisan responsibility? In something like a mathematical sense, I'm prepared to pin most of the blame on Greenspan. But isn't at least some of this political and cultural in origin? To me it seems very much as if the Bush administration and Congressional Republicans (and plenty of Democrats) have done everything they can--through bankruptcy legislation and various other regressive policies--to assure creditors of all species that the government stands firmly behind predatory lending, consequences to the poor and uninformed (and, of course, to the economy) be damned. That must have had some impact, yes?

In a word, no.

I wouldn't even pin most of the blame on Greenspan. It's not clear how much of an effect the money supply had on the mortgage bubble; the starring role seems to go to the river of capital pouring in from abroad, mostly courtesy of Asian central banks who were manipulating their exchange rates by buying dollars, and then parking the funds in various asset classes. If interest rates were too low, this should have staunched the flow by making US investments less attractive; they certainly didn't do that. I need to go back and re-read my Monetary History of the United States (where is that box . . . ), but my impression is that the Fed had a similar problem in the 1920s. They actually did raise interest rates quite a bit in an effort to choke off the stock market bubble, but all this did was encourage foreign capital to pour into the United States, to buy stocks and be loaned out on margin.

As for the federal government, I've been wracking my brains, and I've yet to come up with any Bush administration policy that credibly made the housing bubble worse. If anything, his biggest policy achievement should have tamped down the bubble. The Bush tax cuts, by reducing tax rates, also substantially reduced the value of the mortgage interest tax deduction. That should, in turn, have reduce the amount that people were willing to pay for a house (though this is complicated, because of course people might want to spend their extra post-tax income on more housing).

The biggest problems with mortgage lending seem to have occurred during the mortgage brokering process, and mortgage brokers are regulated at the state level. Many of the worst-hit states are controlled by Democrats.

The bankruptcy code, including the recent reform, just doesn't have much effect on mortgages. Bankruptcy is only tangentially concerned with secured debt, like mortgages; that is what the foreclosure process is for. The bankruptcy reform did (in one of its least useless provisions) put a stop to a tactic that people used to use in order to avoid eviction or foreclosure: serially declaring Chapter 13 every time the bailiffs got close. But this wasn't all that common, and at any rate, not even the consumer advocates I interviewed on the topic wanted to defend that particular stunt.

But at any rate, the level of the homestead exemption--which governs whether or not you get to keep your house in a bankruptcy--is also set at the state level. The only major change the recent bankruptcy reform made to this was a small provision aimed at OJ Simpson, which prevents people from moving to states with an unlimited homestead exemption in order to shelter income from criminal and civil recovery. (This being how OJ dodged Ron Goldman's family lawsuit.) In most states you can declare bankruptcy without losing your house, and you can certainly lose your house without declaring bankrutpcy, and neither has very much to do with the Bush administration.

Some people are criticizing the Bush administration for not doing anything about the housing bubble--setting up an agency to keep the banks from lending so profligately, say. (Though I notice very few of them noticed we needed this in, say, 2003.) But I don't think anyone credible has a very good theory whereby something the Bush administration did actually produced the housing bubble. Human beings are natural born speculators. They don't really need all that much help to lose their heads.

Surrender?

If you spend any time watching "technical analysts"¹ on the market watch shows--and who can resist?--you'll notice they spend a fair amount of time talking about "capitulation". This is what they call it when everyone decides the market isn't going up any time soon and sells out in the hopes of sheltering in safer investments. It is supposed to be a good time to buy because once everyone has capitulated, the market starts going up again.

I don't hold much faith in technical analysis. But looking at all the "just reduced!" ads in the Washington DC real estate classifieds, I wonder if homeowners aren't finally throwing the towel and trying to sell at any price.

¹ A.k.a. "chartists" a.k.a. cranks

How profitable is Pharma?

I'm really busy this morning, and probably won't be blogging much, but there's an interesting debate going on in the comments threads about the return on investment in the pharmaceutical industry. You have to be very, very careful with this stuff, because there's enormous survivor bias in stock screens. A pharma that has a long, bad run of no good drugs disappears from the sample through merger or failure. Sadly, this is pretty common, which is why so many pharmaceutical firms have obviously compound names. If you have relatively binary outcomes--companies are either very profitable, or not profitable at all--then if you drop the non-performers from the sample, being in the pharmaceutical business will look like a license to print money. The fact that so many new entrants find it so hard to actually grow to pharma size indicates that it might be a little harder than it looks.

Putting think in the tank

Julian Sanchez and Radley Balko are, to put it mildly, not pleased with Roger Pilon's Wall Street Journal op-ed on FISA. There are only so many topics I can develop an informed opinion on, and national security law is not one where I have tried, so I don't really have anything to add on the substance of the article. But I do think there's an important problem at the heart of Radley's post:

Julian is right, the real impact of Pilon’s op-ed isn’t its persuasiveness (it isn’t, really), it’s the fuel it gives neocons and Bush acolytes to say, “See? Even the libertarian Cato Institute supports warrantless wiretapping…” It also gives Cato’s leftist critics more fuel to say the organization is really no different than, say, Heritage, or AEI.

. . .

I do think it’s a credit to Cato that they allow their scholars to have divergent views on contentious issues. That said, Cato is a libertarian organization. It’s one thing to have internal disputes over issues like intellectual property, incrementalism versus absolutism, or even (at least at the outset), the war in Iraq. But it’s something else to have a scholar making a public case for unchecked executive power to spy on U.S. citizens. Cato would never hire a health care analyst who favors a single-payer health care system. They’d never hire a criminal justice scholar who supports the war on drugs. You might hire, say, an education or trade analyst who doesn’t toe the party line on foreign policy. But you wouldn’t hire an education analyst who thinks we should give more money to the public school system, or a trade guy who supports farm subsidies or steel tariffs.

My opinion on this may reflect a difference in what we write about, because legal writing in general is pretty much exclusively about generating an opinion; there's no expectation that anyone is going to generate independent data. But for economics writing, the reliability of the data set matters, and that means that I have to trust that the person who generated it was at least capable of reaching a conclusion other than the one they ultimately published. I'm already reluctant to use all but the most anodyne data from think tanks--either right or left--precisely because I know that most of the scholars there knew what the answer was before they asked the question. Think tanks that fire people for ideological unsoundness do not get their papers mentioned by me.

I'm not ambivalent about what Cato should do: nothing. No matter how appalling Roger Pilon's position, I think it's better for Cato (and libertarianism) to develop a reputation for tolerating a lot of dissension within the ranks. If people can be fired for developing their own opinions, no matter how stupid or ideologically unsound, then we should stop calling them scholars and start calling them stooges.

The best defense is a good offense

My former colleague, Robert Lane Greene, is defending free trade from the Forces of Insufficient Light over at the Council on Foreign Relations website.

Millenium model

Someone from the MCC emails:

Thanks for having our back. For more MCC wonkery, the CGD folks usually have us mostly right.

The other thing behind our low disbursement rate that people don't understand (and we explain poorly), besides the fact that the partner countries are responsible for actually spending the money, is that early expenses are for relatively cheap things. Not only are we almost never giving out money for humanitarian/consumption projects, but in the first years of these compacts, much of the money goes to really boring things, like revising land registration/financial sector/other regulatory policies, feasibility studies for infrastructure works, etc (not to mention setting up an administrative structure to manage the whole thing). "Soft infrastructure" investments are less expensive, and also less flashy (to non-economists). We get no pictures of kids with distended bellies smiling about their new cadastral maps. Things that burn money and make good photo ops, like building irrigation systems and roads tend to happen in years 3-4 (of 5 year programs), and the first MCC compacts (Honduras, Nicaragua, Madagascar - all signed in 2005) are only barely starting to get there. Alas, none of this lends itself very well to a snappy elevator speech, which is why we can look like an incompetent bureaucracy if people don't understand how our model is different from traditional aid programs.

You're so good to me!

John Quiggin is blogging about an under-appreciated aspect of US financial markets: we're much, much nicer to borrowers than any other country in the world. (Yes, even after the bankruptcy reform¹.):

As with bankruptcy, however, the high frequency of financial distress is partly offset by the fact that US law and standard contractual arrangements are more friendly than in other countries. Compared to those in other places (at least in Australia) US mortgage contracts have commonly favored borrowers in two important ways. First, they have been fixed rate contracts with no, or limited penalties, for early repayment. That means that borrowers can stick with their fixed rate if market rates rise, but can refinance at lower cost of market rates fall.

Second, most mortgages are non-recourse, meaning that the lender can take the house but cannot recover the debt from the borrowers income or other assets. That means that once the value of the house falls below the amount owing (equity becomes negative) the borrower can walk away from the house and the debt. As Felix Salmon notes, the difficulty of pursuing deficiency payments means that most loans are non-recourse in practice even if the contract says otherwise

The mystery, of course, is why American capital markets are so much deeper than places where it is presumably more attractive to lend.

¹ I was living in London during the 2005 bankruptcy reform, and I had a lot of difficulty putting across the notion that the new law was a "draconian" reform. The terms were so much more generous than British bankruptcy law (and British bankruptcy law is positively lavish compared to European laws) that they thought the reform was needed to curb the absurdly generous terms of the new law. Indeed, one chap simply refused to believe that I wasn't having him on about the existence of Chapter 7.

Fantasy pharma

The left, of course, has its own fantasy solution set: drugs should be both innovative and cheap.

But clinical trials for a single successful drug cost $500 million, and not because the labs have outrageous administrative overhead. Even if the government were in charge of running them, they would still be on the hook for that $500 million, which would have to come out of taxes. We can get existing drugs on the cheap by essentially stealing the property of shareholders in drug firms, who risked a lot of money on drugs that they reasonably expected to be profitable under existing laws. But that's a one-trick pony. We cannot get new drugs at bargain basement prices.

Many people are holding out the hope that the government can somehow substitute for the pharmas, bolstered by the ludicrous claim that the government really discovers all the drugs. This is arrant nonsense; government-funded research discovers targets that might someday turn into drugs, if the Big Pharma chemists can: find a molecule synthesis can be economically mass produced; keep the molecule from killing rats, mice, dogs, or humans; get the molecule into a form that does not have to be directly injected into the bloodstream; tweak the molecule so that the liver doesn't immediately chew it into pieces that no longer affect your target; and shepherd the entire thing through years of clinical trials. That's just off the top of my head; research chemists will undoubtedly have more.

There is no evidence of a nationalized industry that consistently does cost effective innovation. Yes, you have a list of things invented by the government--but that number is a small fraction of a fraction of one percent of the number of things in the private sector. If the universe of products were your house, the government would have invented one washer inside the tap of your bathroom sink; the private sector would have developed every other thing you use. Even where the government is given credit for "inventing" something, such as DARPANet's invention of the internet; it turns out that 99% of the process of actually turning it into a product that was useful to end-consumers was handled by private actors, most of them corporations like Netscape, Microsoft, and AOL.

This is why when you start to make a list of all the state-run economies that have produced large numbers of innovative products with a high level of consumer satisfaction, you have to throw your privately manufactured gel pen aside in disgust. For whatever reason, the government is just not good at producing innovation.

Before you say it, I know that you are leaning forward in your chair, your eyes alight, preparing to demand "What about the military?!" and lean back triumphantly in your chair. My friend, have you ever taken a close look at the military procurement process? It costs a fantastic amount of money to generate products that often aren't even wanted by the end users--how many times have you read about some military service being forced to buy some gargantuan piece of equipment they don't want because the thing is being manufactured in a key congressman's district? This is how we spend four percent of our national income on something that most of the American public never sees. Forgive me if I'm not excited about applying the same process to health care.

Pharmaceuticals: understanding your solution set

There's an old adage variously attributed to chefs and engineers: "Good. Fast. Cheap. Pick two."

This does not hold all the time, of course; strawberries in season are fast, cheap, and divine. On the other hand, if it doesn't happy to be July, you have to wait months. So usually, the adage holds: you cannot have everything. You have to choose.

A lot of people in my comment threads on pharma are saying "Well, okay, maybe if we forced the drug prices so far down, that would kill off innovation. But it's not fair that Europe is free riding. We need to find some way to force them to Pay Their Fair Share." Interestingly, many of them seem to be conservatives, the same people who applaud when I say, in re other policy issues, that the fact that there is a problem does not automatically imply that there is also a solution.

No one who is a serious policy wonk on this stuff has any sort of workable proposal whereby America persuades Europe to pay more for its drugs. We have no leverage to do so. European governments have extraordinarily strong financial and political incentives to keep the costs of drugs down. Our trade relationship is not exactly harmonious right now. And we cannot forbid pharmaceutical companies to sell into those nations at discount prices, because those countries can break the patents and license generic manufacturers to manufacture the drugs. All we would end up doing is removing a small source of profit from the pharma company's books. This threat seems to be the most plausible reason that Pharma is still selling to Canada at heavily discounted prices, even though this costs them a fair amount of money in the US market. We have the legal ability to force American prices down to European levels. We do not have any way to force their prices up to ours. The fact that you are animated by an angry passion does not magically conjure up a solution out of nowhere.

As your mother repeatedly told you, the only person whose behavior you can control is your own. Screwing up our pharmaceutical industry because it's so damn unfair that Europe gets the benefit too is cutting off our noses to spite our faces, as long as we're still getting good value for money. As anyone, including me, who is taking a newly invented drug will tell you, we're getting pretty good value for money. (And if you're not getting good value for money, you can just not take the drug! Problem solved.)

Dinner is served

Today's my birthday, so I spent the evening at dinner with loved ones, rather than watching television like the rest of you. This did give me some time to poll a representative sample of the non-wonketariat. My mother, whom I have dubbed The Swing Voter because her vote has correctly called every presidential election since I was sentient, has announced that if Hillary is the nominee, she's voting Republican--regardless of who the Republican is.

Meanwhile, the gay Republican vote is apparently going for McCain, with a margin of error of 100%.

G is for gone

Giuliani concedes. The bit of the speech I saw was classy. Like most New Yorkers, I kind of think he's a maniac, but I was touched.

Okay, best line of the night

Fox News anchor: McCain won among men, and among women, and that'll usually do it.

But who won the all-important transgender Republican vote?

Mitt-tastic

Mitt Romney's concession speech is actually pretty good, except for when he starts talking about the Federal government teaching girls to get married before they have babies. Let me channel P.J. O'Rourke for a moment: they can't even deliver my mail, and it's got my name right on it and everything. I misdoubt that the Department of Education has the mojo to keep impulsive 15 year olds on the straight and narrow.

Nonetheless, this is a better effort than I've so far seen. For the first time, Romney seems to be more dynamic than his hair. This is probably a little late to break out the dynamism, though.

Favorite line: "the source of America's greatness is the American people." One can only imagine what a campaign issue this would be for the Democrats if we'd already shifted the production of American greatness to China . . .

Measuring success

Matt takes issue with my praise of the Millenium Challenge Corporation, noting this article complaining about the slow pace of aid.

Actually, as I understand it, this is a feature, not a bug. The idea of the MCC was to change the traditional "Don't just stand there: do something!" approach to disbursing aid. The MCC projects are large and very carefully designed, which is taking a lot of time. This may not turn out to make a difference. But the general approach of measuring aid by the amount of cash you managed to pump out, rather than the results generated thereby, was a very bad idea that the MCC was designed to challenge. It makes little sense to declare the project a failure on the ground that it's not spraying dollars over Africa like a firehose.

Why can't we just fund R&D from pharmaceutical advertising budgets?

Even if companies could, they won't, for reasons I just explained. But mostly because pharmaceutical advertising budgets aren't really very big. People who think that there is a gigantic pool of capital that could be sucked out of the pharmaceutical advertising budget are being misled by accounting terminology. People who rail against the pharmaceutical industry are fond of noting that about 20% of industry revenues go to marketing, with the implication that this is all wasted on advertising baldness cures during Golden Girls reruns. But just the top ten firms in the pharmaceutical industry took in about $350 billion in revenue in 2007, 20% of which is $70 billion. The entire US expenditure on advertising by all companies in all media forms totaled something like $150 billion in 2007. I know it seems like every other commercial you see is for Botox, but most advertising is not done by pharmaceutical firms.

In fact, advertising is only a small fraction of that marketing expense. Over half of it expense consists of free samples, the offering of which seems to me like an unalloyed public good.

Prophets of profit

Yesterday I wrote:

So the most probable outcome of introducing monopsony power here [in the U.S.] is that the market for drugs shrinks to the point where it will support few-to-no new drugs.

Not to put too fine a point on it, Tom responded:

This seems crazy.

He is not the only one for whom this seems a little nuts. But it is not. Let me explain.

People who think that there will be continuing R&D in the pharmaceutical industry are basically thinking of it as a budgeting problem. They think of the pharmaceutical industry's gross income as a budget to be allocated between various functions, such as marketing and R&D. They may concede that by changing the size of the budget, you may shrink the amount of money to fund R&D, because there will be less money in the kitty. (Though many or most hope that shrinking the size of the pie will force pharmaceutical companies to transfer money from the advertising budget to R&D¹). But, their reasoning goes, there will still be money in the kitty; if you allow pharmaceutical companies 1/3 as much gross income, you will get 1/3 as much R&D. Or perhaps they will cut their advertising budgets to zero, and then you will get 2/3 as much R&D. But still, you will get something.

I don't think of R&D as a budgeting problem; I think of it as an investment problem. After all, even if the pharmaceutical industry has no profits right now, they can borrow the money in the financial markets at fairly attractive rates.

The main obstacle to R&D, then, is not the current state of pharmaceutical industry profits; it is the potential return on the investment in R&D. After all, Merck doesn't have to make drugs; it could generate a nice, safe return of 5% a year in government bonds. Or it could get into some other business, such as making soap. If you drive down the profits on new drugs too far, it stops making sense to invest in new drugs, even if there is a small profit to be made on current production.

Developing new drugs is very, very risky. Depending on what you think constitutes a drug candidate, somewhere between one in one thousand, and one in ten thousand drug candidates makes it from a lab bench to clinical trials. Each of the failed drugs was very expensive, particularly if it got partway through clinicals, which run about $500 million per course.

The problem is, once you've developed a drug, it's easy to copy. It's also usually trivially cheap to produce. And your patent is rapidly running out. This gives a monopsony buyer a lot of leverage to force down your price--you're almost always better off taking something. This is particularly true if the monopsony buyer has the power to break your patent and license its generic manufacturers to turn out cheap but near-perfect imitations of your product². This is, in fact, what Europe has done; they make pharmaceutical firms sell to them at cost plus. The lion's share of the profits on any drug come from the United States; what they get in Europe and Canada and the rest of the world is (thin) gravy, a price that is just a little bit better than not selling any drugs there.

Now imagine that America drives drug prices down to that sort of "cost+10" or "cost+20" level. The pharmaceutical firms will keep making the drugs they already have, because there will still be a little profit there. But they would have to be psychotic to invest billions of dollars over a 20 year time horizon in exchange for a one in a thousand chance of making that small a profit. Would you put 20% of your income now into an investment that might yield a profit of 10% of your income--in thirty years?

But they have to invest in R&D, say my interlocutors; otherwise they won't have any drugs to sell! This makes the odd assumption that they can't do anything else. But history is full of companies that used to do something else entirely--and also, of companies that went out of business when their market collapsed.

¹ This belief is wrong, for reasons I will explain in another post.

² The patent threat seems to be the most plausible reason that pharmaceutical firms do not raise Canadian prices to US levels.

It's hard to be rich

The trials of a successful investor:

A few months ago I had dinner with an old friend who told me an amazing story.

Two years before, a nice guy with no experience at all in real estate had come to him and said that there was a fortune to be made betting against the U.S. housing market. This fellow hoped to raise money for a hedge fund whose sole purpose was to do this, by shorting the subprime mortgage market. He asked my friend to invest with him but my friend turned him down. Now my friend felt foolish.

``It all happened exactly like he said it would happen,'' he said. ``In every single detail.''

The hedge fund creator's name was John Paulson. And -- as Bloomberg News's Jenny Strasburg and Anthony Effinger and the Wall Street Journal's Gregory Zuckerman laid out recently -- by making between $3 billion and $4 billion for himself in 2007, he appears to have set a Wall Street record.

In the long history of money-making, no one has ever made so much so fast. As the Journal story also showed, Paulson's instincts now tell him to lay low and avoid calling attention to his fantastic triumph over his fellow Wall Street man.

He got lucky. One of the reasons there are so few short selling hedge funs is the old trader's adage: the market can stay irrational longer than you can stay solvent.

Go vegan!

This made me kind of glad I'm giving up animal products next Wednesday.

Markets in everything

The manufacturing of beautiful Russian women:

Whatever you may say about the Soviet Union in the 1970s and '80s, it was not widely known for feminine pulchritude. Whatever you may say about women's professional tennis in the 1970s or '80s, it did not feature many players who looked like Maria Sharapova, the latest Australian Open victor.

Where were they all before?

Though this is a fairly frivolous question (OK, extremely frivolous), I am convinced it has an interesting answer. To put it bluntly, in the Soviet Union there was no market for female beauty. No fashion magazines featured beautiful women, since there weren't any fashion magazines. No TV series depended upon beautiful women for high ratings, since there weren't any ratings. There weren't many men rich enough to seek out beautiful women and marry them, and foreign men couldn't get the right sort of visa. There were a few film stars, of course, but some of the most famous—I'm thinking of Lyubov Orlova, alleged to be Stalin's favorite actress—were wholesome and cheerful rather than sultry and stunning. Unusual beauty, like unusual genius, was considered highly suspicious in the Soviet Union and its satellite people's republics.

This doesn't mean there weren't any beautiful women, of course, just that they didn't have the clothes or cosmetics to enhance their looks, and, far more important, they couldn't use their faces to launch international careers. Instead of gracing London drawing rooms, they stayed in Minsk, Omsk, or Alma Ata. Instead of couture, they wore cheap polyester. They could become assembly-line forewomen, Communist Party bosses, even local femmes fatales, but not Vogue cover girls. They didn't even dream of becoming Vogue cover girls, since very few had ever seen an edition of Vogue.

Those were the good old days . . .

There's less demand than there used to be for prose stylings that read like Benjamin Barber after a three-day coke bender in Macao. -- Dan Drezner

Liveblogging the State of the Union

I am sitting in my apartment with a few other journalists, eating chips and watching the State of the Union. Bush looks like he has been preserved in formaldehyde; the Democrats look as if he is a particularly disgusting specimen they are being forced to examine, like a fetus with two heads. Hillary Clinton is, one can't help but notice, making sure the cameras catch her hugging every minority in the room. Barack Obama is staring at the ceiling as if he were actually planning to rise above all of this.

9:15 Handshaking over! Now speech

9:17 Grave danger that tax relief will not be made permanent! Not very specific about what the danger is, exactly, other than George W. Bush's taxes going up.

9:18 Republicans leap to their feet. Barack studiously sitting down and looking serious, with two fingers pressed over his pursed lips. One of the other journalists wonders if this is some sort of signal. Perhaps "Beam me up, Scotty".

9:24 Okay, I love me some trade deals. But even I find it hard to believe that the greatest threat to human liberty today is the specter that Panama may not be able to sell us handmade hats.

9:29 Calling for bans on the patenting of human life. Thank God, because after what the Patent office has done with computer algorithms, I'm afraid I'd find myself paying royalties to some guy in Idaho every time I take a deep breath.

9:32 The speculation on who tonight's SOTU special guest stars will be is growing to a fever pitch here at Stately McArdle Manor. Best guess so far: Heath Ledger's family.

9:34 President Bush says that illegal immigration is complicated, but it can be resolved, and must be resolved. But illegal immigration is probably the least complicated issue out there. The 3-10X wage differential across the US-Mexico border draws people here to work; it's hard to patrol more than a thousand miles of border. Unlike almost any other issue, there aren't really any complicated, wonky proposals out there that ordinary citizens have a hard time wrapping their brain around. The main proposal is a wall. Walls are not really very hard to understand.

9:39 Don't forget to play along at home

9:41 Thoughtfully, from one of my guests: "It's hard to differentiate between cheers and boos sometimes.

9:42 President Bush says that 80,000 Iraqi citizens are fighting the terrorists. This implies something disturbing about the other 25,920,000 Iraqi citizens.

9:46 The segment on Iraq is problematic: he wants to reassure Americans that they won't have to sacrifice much more, and scare the bejeesus out of the terrorists with our steely resolve. These are mutually exclusive goals.

9:51 Peace in Israel/Palestine. And a pony! Why does every American president with a grim-looking prognosis for their legacy try to salvage everything at the 11th hour by swashbuckling into Jerusalem with no political capital to spend and praying for a miraculous resolution of the least tractable conflict of the last 50 years?

9:55 Making fun of State of the Union speeches feels a little cheap. These speeches always have the informational content of a Highlights Rebus, and they're never more vacuous than in the last year of a presidency. George Bush isn't going to do anything in the next 12 months; the biggest achievement he can hope for right now is to veto a whole bunch of earmarks. And that isn't even his fault; no president gets anything done in their last year. So why make fun of him? Well, because if you want less of something, you should raise the price of it. Me, I want fewer vacuous political speeches.

9:58 Oh. My. God. As soon as the Bush says the word "African", CNN cuts to apparently specially staged woman in full African gear, with a child wrapped in a leopard print throw. "Cue human props!"

9:59 And yet, he's talking up the Millenium project, which is actually one of the great things this administration has done. This doesn't get nearly enough good press.

10:01 Bush sounds like he's telling the little nations that if they drink their milk, some day they will grow up to be just like America.

10:02 Let us go forth to do their business? Was that seriously the last line of his final State of the Union speech? Are we toilet training them? Who's writing his speeches these days--the copywriters for Charmin?

10:04 Wolf Blitzer ponderously declares "The state of the union will, he says, remain strong" as if this were somehow remarkable. Was he thinking that George Bush might come out and recite The Second Coming?

10:06 The commentators are discussing the possibility that George Bush will achieve piece in Israel/Palestine as if this were remotely feasible. Personally I think it would be even more remarkable if he suddenly developed the ability to heal the blind.

10:17 There's something really odd about being in the middle of a hotly contested Democratic primary involving two sitting senators, and having the Democratic response to the State of the Union be delivered by . . . the governor of Kansas.

10:22 She is asking the President to "join them". This seems unlikely. Also, even if he did, having a lame duck president with low double-digit approval ratings on your side is not all that helpful.

10:24 "I know government can work, Mr President, because like you, I grew up in a family devoted to public service." This makes it sound as if the purpose of government is providing jobs for every politician's child. Oh, wait . . .

10:26 A friend reminds me of the time I fell asleep in mid-sentence--my sentence. Apparently, the governnor is causing flashbacks.

10:28 Yes, snark is beneath me. But what else can you do? The speeches are totally content-free.

10:40 t-t-t-t-t-t-t-t-hat's all folks!

We're no experts

In the newly launched Washington Independent, Spencer Ackerman has an article arguing that, surprisingly, the CIA had no real interrogation capacity prior to 9/11. Worse, after 9/11 they botched the job of building their capabilities:

Despite having nearly no off-the-shelf experience, the CIA was tasked by President Bush to come up with a robust interrogation program for the most important al-Qaeda captives. So the agency turned to its partners for assistance in designing its interrogation regimen: Israel, Egypt, Saudi Arabia—all countries cited by the State Department for using torture—among others. Additionally, as Mark Benjamin has reported for Salon, two psychologists named Bruce Jessen and James Mitchell, who worked as contractors for CIA, helped the agency "reverse-engineer" the military and CIA training on resisting torture for use on detainees. Suddenly, waterboarding, an illegal practice of simulating or in some cases inducing drowning, became an American-administered practice.

Interestingly, one place that the CIA didn’t look for help was the place where interrogations have been performed, lawfully, for decades: the Federal Bureau of Investigation. "In terms of actual interrogations, when you have a suspect in custody, the FBI does that hundreds of times a day, 365 days a year, for 90 years," said Mike Rolince, who spent over three years as Special Agent in Charge of counterterrorism at the FBI’s Washington field office before retiring in October 2005. "The FBI brought serious credibility and a track record to the table. That said, the U.S. government decided to go about [interrogations] in a different way. The results speak for themselves. I don’t think we need to be where we are."

Fashion signals

I look at this kind of thing, and the only explanation I can come up with is that certain fashion items are intended to send a signal about the wearer. D'uh! you will say, but the signal these items send is a little odd. That signal is: I am so young and pretty that it doesn't matter *what* manner of ugliness I put on my body; you will still think I am hot.

Unfortunately, a number of people are emboldened by fashion magazines to wear these sorts of items even when their bodies are aggressively countersignalling.

Supply, meet demand. Demand, meet supply. I just knew you two are going to hit it off!

There's an argument about pharmaceutical prices on parts of the center-left through right in America that goes roughly like this: It is true that high pharmaceutical prices provide both the capital and the incentive for innovation. However, Europe is free-riding on our pharmaceutical spending. Therefore (it usually continues), we must get tough with the pharmaceutical companies in order to force them to force Europe to pay their full share.

This is rife with economic error. It imagines that there is some basket of drug money that the pharmaceutical companies need to recoup--if we pay more, that allows them to charge Europe less.

I, however, assume that there is a demand side as well as a supply side to the equation. That is, the pharmaceutical companies are charging Europe about as much as they are able to for drugs; they are also charging about as much as they can charge us. If Europe raised the price that they were willing to pay for drugs, this would not lower the price they charged us--any more than Citibank lowers your interest rate here because they just had record profits in Canada. What we are losing through Europe's refusal to pay higher prices for drugs is not help covering the cost of the drugs that our buying funds; it is the never discovered drugs that a larger and more lucrative market would have supported.

The main constraint on prices in Europe is that the buyers have monopsony power. Changing what America pays will not alter the demand side of the equation. European governments might realizing that they have been free riding on our drug payments, and decide to raise the prices that they pay in order to support more R&D. But the political incentives all run the other way, and I see no evidence that the EU governments are excited about spurring private sector innovation by offering high profits on life-saving drugs. So the most probable outcome of introducing monopsony power here is that the market for drugs shrinks to the point where it will support few-to-no new drugs. This result will be sufficiently removed in time from the decision to monopsonize purchasing that the politicians will escape most of the responsibility. And even if the public realizes that it has forgone future discoveries for the sake of a few dollars now, and wants to undo this, the fact that everyone is monopsonizing will make it difficult to enact such a change: no one wants to be the patsy, even if they themselves are made better off by paying higher prices and getting new drugs in return. Witness the insistence on multilateral trade deals, even though all the evidence suggests that unilaterally lowering your trade barriers makes your nation unambiguously better off.

Derek Lowe, a toiler in the bowels of Big Pharma, has more thoughts on this.

VP!=VIP?

Cactus muses on how Edwards should position himself to eventually run for president again:

If you do become kingmaker, what do you want for it? The obvious slot is the VP slot. But, in recent decades, the only veep to go on to get an upgrade (without the president dying or being forced out of office, which isn't something you can count on happening) was GHW, and it didn't hurt that he ran against Michael Dukakis.

The VP slot seems to be a lot less important than it used to be. Thoughts on why this is?

Tee hee!

Jim Henley on his new book review in Reason:

Eventually the review should make it online, but if you buy the newsstand version you get:

1) A tiny picture of my head;

2) The awesomest table-of-contents blurb ever, which goes like this:

“How do you defend a country against small stateless bands of terrorists? Jim Henley“

And such reasonable rates too!

Ever since I switched to Jim Henley, my whites are whiter, my brights are brighter, and I've got 45% percent less terrorist activity in my bathtub.

Don't get too excited about that rebate

Notes Thoreau:

I don’t really mind the feds giving us some money back, but if they’re just going to borrow in our name then it’s not much of a win. If your spouse came home and said “Look, I just got $600 from the credit card company!” would you give a high-five or note that you’ll have to pay interest on it?

To be fair, the government interest rates on long-term debt are a lot more attractive than those offered by Mastercard.

Liberal!=Fascism

Jonah Goldberg protests my take on the title of Liberal Fascism. Some of his argument is a misreading of my post, perhaps because I was unclear--when I said that

The fascist ideal, which I'd liken to the dream of making every citizen behave like a cell within a mighty body, driven by a Great Leader functioning as the brain, was in many ways a new and pernicious vision. But the constituent parts, such as ferocious group loyalty, xenophobia, an antipathy to individualism, and the hunger for a charismatic strongman, were certainly not.

I was not listing those elements as specifically right, or left, wing, but merely as general human tendencies which became major elements of Fascism. The point is that when Goldberg says that militarism preceded fascism, and that therefore it is somehow not characteristic of fascism, I don't think this works as a defense. Any element that is characteristic of fascism will have preceded it; human nature just doesn't undergo that many rapid innovations.

I think Goldberg is actually making a valid point, which is that Fascism!=Conservatism. Fascism was a compendium of left and right wing ideology; part of what gave the movement its power was its co-option of (to my mind) some of the most appalling elements of each. The liberals who think that "Liberal Fascism" is somehow more definitionally stupid than "Conservative Fascism" are, I think, patting themselves on the back a little too hard. They didn't call themselves "National Socialists" for no reason, and pointing this out is, so far as I am concerned, God's work.

But though I am very much all for the goal of stopping people from deploying the term fascist against any conservative they happen to disagree with--and particularly libertarians, who, will their horror of both state intervention in the economy and nationalism, are literally as far from fascism politically as it is possible to get--ultimately, I just don't like inflammatory titles. I find things like "a politics of meaning" creepy, but calling it fascist isn't going to do anything except give a flutter of satisfaction to people who already hate Hillary Clinton, and alienate her sympathizers.

Political pragmatism

Of all the arguments in favor of putting a food stamp provision into the stimulus package, rather than a cash transfer, possibly the most bizarre is "Well, it is perhaps less than ideal, but it was the only way we could get it passed."

You may have noticed that it didn't, in fact, pass. Politically, increasing food stamps has been exactly as successful as increasing cash transfers, which is to say, not at all.

In fact, the EITC is the only major program for the poor that has been expanded in the last ten years--and yes, that last expansion would be in 2001, under President George W. Bush.

Update I stand corrected: the farm bill expanded food stamps in 2002. The larger point stands: there's no reason to think that cash transfers are politically impossible, because they self-evidently aren't; and trying to use food stamps to funnel money, however inefficiently, to the poor, clearly failed in this instance.

Poison pill

Matt and Mark Kleiman are right that we shouldn't shut down Narcan, a nasal spray that can counteract the effects of a heroin overdose. The Feds want to control access to it, apparently on the grounds that this will make it easier to be a heroin addict. As the good professor says:

Why not just go all the way and poison the heroin supply? If withholding Narcan in order to generate more overdoses in order to scare addicts into quitting were proposed as an experiment, it could never get past human-subjects review. But since it's a failure to act rather than an action, there's no rule to require that it be even vaguely rational.

I completely agree, of course, since I favor drug legalization. But isn't this the logic of keeping drugs illegal, a policy Mark favors? We make it dangerous and illegal and costly to be a heroin addict, in order to deter other people from becoming heroin addicts; as a result of this, some people undoubtedly die.

I imagine that poisoning the heroin supply would, in fact, be a pretty effective way to deter future heroin addicts. That doesn't make it good policy, even if the net effect is many saved lives. But our current drug policy seems to me to ground itself, though more obliquely, of the same crude utilitarian calculus.

Those kids!

With a town in California looking to keep people from smoking in their own homes, this blast from the past has a particularly poignant oddity:

Protect them from themselves

A number of people in my commenters have come out in favor of food stamps not as a political expediency, but as a first best policy option because they force people to spend money on food that might otherwise have gone somewhere else. This comes in two varieties:

1) If I'm giving you my money, I damn well get to determine how you spend it

2) Poor people might make bad decisions with cash, so better force them to use it on food.

Both of these arguments are somewhat undone by the fact that food stamp recipients can always monetize their grants to some extent, by buying food and then exchanging it for cash. It's just that the process is extremely inefficient, and the sale will net much less than the full value of the food stamps.

More broadly, do I get to attach strings to the money you get from the government? If you have a mortgage, and deduct the mortgage interest, thus getting a hefty government benefit paid by those of us who are not homeowners, does this entitle me to go over to your house and make sure that you're not spending the money on something I disapprove of?

As to the second argument, I recognize an obligation to ensure that those who are genuinely incapable of earning a minimally decent living for themselves have the ready needed to secure the basics. I do not recognize an obligation on my part to ensure that they actually do so. Nor do I think that I am the best judge of what people need.

If people are genuinely so screwed up that when given enough money to buy what they need, they fail to purchase enough food to sustain life, then what they need is not food stamps, but 24 hour supervision. If people will buy alchohol or some other unnecessary instead of feeding their children, then they are probably neglecting their children in other ways requiring a stronger intervention than an EBT card. One could argue that right now, incomes are not high enough to purchase basic necessities (and indeed, I think the EITC should be increased, as I've said numerous times.) But that still doesn't make the case for food stamps for me; if the poor take money out of their food budgets to buy something else, it is presumably because they think they need that something even more than they need their next meal. Who am I to second guess them?

This has nothing to do with the appropriate level of spending on the poor, or even the structure. But assuming a basic basket of cash that we are prepared to spend on improving peoples' lives, it seems clear to me that none of that cash should be handed out in the form of food stamps.

Interesting

Favorite books and average IQ. I find it most amusing that a web page titled "Books that make you dumb" has labeled Tuesdays with Morrie and The Five People You Meet in Heaven as works of philosophy.

Timeless music

Tom Ewing doesn't care whether its a timeless classic:

Here's Dave Marsh, circa 1984, on the Smiths: "You can take all those sad cafe ballads, and I'll take [Lionel Richie's] 'Penny Lover'. Meet you on the corner of the centuries, and we'll see which one has lasted." While tinkering with my own end-of-year lists this winter I spent some time reading other people chat about how they were making their own choices. I kept noticing this line of argument, though rarely phrased as boldly as the Marsh quote. Even so it stood out because it annoys me. "I think people will still be listening to this in 20 years time," or conversely, "I don't think it will stand the test of time." Whenever I encountered that phrase I couldn't help think of my friend Mark Sinker, who gave a paper at last year's Experience Music Project conference called "B-but what about the test of SPACE?"

Stamp act

Speaking seriously about the Food Stamp Challenge, its heart is in the right place, but the government does not, in fact, ask anyone to try living on an average food stamp grant of $21 per person. Food stamps are awarded on a sliding scale related to your income. If you are so poor that you literally have no cash beyond your food stamps to spend on eating, your grant will be much more than $80 a month.

A better exercise is to attempt to live on the government's thrifty food plan, which is what it uses to calculate the poverty level. It's pretty spartan, but it's more than $21 for a week. Since poor families getting food stamps typically spend about 125% of the thrifty food budget, you'll have a decent idea of what their food lives involve.

The truth emerges

More comes out on the Societe Generale trading scandal:

FRIENDS of rogue trader Jerome Kerviel last night blamed his $7 billion losses on unbearable levels of stress brought on by a punishing 30 hour week.

Kerviel was known to start work as early as nine in the morning and still be at his desk at five or even five-thirty, often with just an hour and a half for lunch.

One colleague said: "He was, how you say, une workaholique. I have a family and a mistress so I would leave the office at around 2pm at the latest, if I wasn't on strike.

"But Jerome was tied to that desk. One day I came back to the office at 3pm because I had forgotten my stupid little hat, and there he was, fast asleep on the photocopier.

"At first I assumed he had been having sex with it, but then I remembered he'd been working for almost six hours."

As the losses mounted, Kerviel tried to conceal his bad trades by covering them with an intense red wine sauce, later switching to delicate pastry horns.

At one point he managed to dispose of dozens of transactions by hiding them inside vol-au-vent cases and staging a fake reception.

Last night a spokesman for Sócíété Générálé denied that Kerviel was overworked, insisting he lost the money after betting that the French were about to stop being rude, lazy, arrogant bastards.

Why not give the poor food?

If giving them food stamps is such a great idea, why not give them the food you say they are unable to purchase, and turning them fat: produce, whole grains, lean meats, etc.

When you think of actually lining people up to hand them a big bag of quinoa and a chicken breast, the stupidity of this program seems fairly self evident (or at least, I hope it does). How happy would you be to get a chicken breast and a bag of quinoa? Not very. Maybe you wanted chicken breasts tonight, but probably you didn't. And you definitely didn't want quinoa. No, you didn't. Stop lying.

Most poor people, if they had access to more money to spend on food, would not buy a lower-calorie, higher fiber diet laden with fruits and vegetables. We know this because almost no one in America eats that kind of diet; it is almost exclusively the province of a certain substrate of the upper middle class. Poor people, given more money to buy food, might upgrade their calorie consumption, but they would not eat like a corporate lawyer from the Upper West Side.

And this is not a moral judgement. Being thin, eating little, having a high fiber diet--the fact that so many people think I am judging the poor reflects their own belief that there is some sort of important moral content to one's weight or calorie consumption. There isn't.

But the only reason to give people food, rather than cash that they might, if they desired, use to buy food, is that they are starving and need food right away. The poor in America are not starving. They do not need food right away. They certainly don't need you telling them that they can have $45 a month, but only if they promise to spend it all on vegetables. They have enough problems without having to contend with well-meaning bureaucrats trying to raise them.

Now, I assume that most people will concede that the poor are not starving, but at the same time say that living on the food budget implied by food stamps is pretty miserable. Indeed it is--though please, don't tax me with the bloody food stamp challenge, because first of all, I've already done it for an article I never sold, and second of all, the average food stamp grant is not what people actually live on; it's a budgetary supplement, not a food budget.

I am sympathetic to this argument. But that doesn't mean I want to increase food stamps, for the same reason that I don't want to actually give people food: many of the people I give the food, or the food stamps to, would rather have the cash to spend on something else. If peoples' incomes are inadequate to the bare minimum needed for decency in modern America, then I am in favor of topping up their incomes. But food stamp programs are stupid at the best of times, and in a population that has clearly reached and surpassed caloric sufficiency, they are ludicrous.

There are two possibilities with food stamps:

1) They are entirely fungible, so that every dollar of food stamps frees up a dollar to be spent on something else. This makes the program good stimulus, but perfectly idiotic social policy.

2) They are not perfectly fungible, so that at least some of the increase has to actually be spent on food. Many people who would rather spend the money on something else are forced to buy food, and many of those people are probably obese.

Food stamps continue not because they're great for the poor, but because they're terrific for the farm lobby. If you want to give stimulus money to the poor, increase the EITC, welfare grants, disability, or unemployment insurance. (I'm on the record as being in favor of the former, against the latter). But for God's sake, can't we all agree that food stamps are a program whose time has gone?

Highway to heaven

Is Huckabee's highway plan the nuttiest thing to come out of this presidential election?

I don't want to speak too authoritatively, because I certainly haven't tried to catalogue every nutty thing everyone has said. But it certainly seems like a good candidate. I say that as the daughter of an avid transportation infrastructure advocate--indeed, my dad just co-authored a report on transportation finance for the next 50 years, which I hope he'll be joining me for a podcast on next week. Transportation spending takes years, even decades, to complete, which makes it less than ideal for stimulus spending. In a phone chat a few hours ago, my father estimated that in a best case scenario, if you jammed through a law mandating the widening of I-95 from Florida to Maine today, it would clear the EIS process and be ready to break ground about 20 years from now. And the idea that adding two lanes to I-95 would lower America's energy usage is, to put it mildly, unsupported by any sort of credible evidence.

As Dad points out, if you want to use government works projects for fiscal stimulus, the only way to do it is to initiate a large number of small-scale projects like playground reconstruction in low-income communities, which fly below the EIS ceiling, and which you could therefore require be initiated in 90 days from successful bid.

Vegan inflation

An article in the WSJ today is headlined the 247-lb Vegan, about a veggie-loving tight end for the Kansas City Chiefs, is pretty good. But it does make me wonder if the headline writer, like, read the whole thing:

Mr. Gonzalez considered scrapping the diet altogether and returning to the Chiefs' standard gut-busting menu. First, though, he called Mr. Campbell, who put him in touch with Jon Hinds, himself a vegan and the former strength coach for the Los Angeles Clippers basketball team. Mr. Hinds suggested plant foods with more protein.

The Chiefs' team nutritionist, Mitzi Dulan, a former vegetarian athlete, did not believe that was enough. With the team's prospects and Mr. Gonzalez's legacy at stake, she persuaded the tight-end to incorporate small amounts of meat into his plant diet. Just no beef, pork or shellfish, he said; only a few servings of fish and chicken a week.

When I was a vegetarian, I was always annoyed by the "vegetarians" who turned out to eat fish and chicken. I wasn't annoyed because I cared about what they ate, but because their fast-and-loose standards meant that I too often showed up at a dinner party to find that the hostess thought "vegetarian" included "smoked salmon". Now apparently "vegan" is going the same way.

The poor, you shall have always with you

The mental model most Americans use for dealing with poverty is Dickens-with-a-hotplate. Thus the raging anger triggered by the statement--which has rich supporting evidence from places like the Census Bureau and the USDA--that however many and varied the needs of the poor may be, food is not among them. If you mentally equate poverty with hunger, then denying the hunger means denying the poverty.

But the poor don't need to be hungry to be poor. There is little to no systematic evidence that poverty-linked undernutrition--malnutrition caused by too little food intake--is an actual problem in America. "Food insecurity" numbers batted around by the FDA do not mean that people actually went hungry; they mean that people worried about going hungry, or changed their diet--usually by altering the composition of the diet, not by forgoing food--to avoid going hungry. But of actual sustained hunger, there is no evidence.

There is, on the other hand, a lot of evidence of obesity among the poor; their obesity rate is estimated at 36%, and the obesity rate among poor children seems to be about twice the rate among non-poor children. The poor people are eating more calories than they need. Yet we propose to stimulate the economy by giving the poor money that can only be spent on more food.

What about the argument that the poor are forced into eating high-calorie diets by the expense of produce and whole grains? This is silly on many counts:

1. It assumes what it sets out to prove: holds the caloric budget of the poor constant, and then proves that you have to spend more to get the same number of calories from whole grains and fruit than you currently do from potato chips. Fully one third of the poor are consuming too many calories; there is nothing in this to indicate that they could not afford a healthier diet if they cut back on the number of calories they consumed, and used the money saved therefrom to upgrade the quality of their food. If you want to know whether the poor can eat a healthy diet, you hold their budget constant, and see whether they could afford to eat fewer, higher quality calories. The public health researchers I've spoken to seem to universally agree that they could.

2. The poor are getting fatter, fast. High-quality foods are not getting more expensive, the incomes of the poor are not going down, and grocery stores, even in urban areas, are only improving.

3. This is generally "proven" by the observation that the poor are fat; therefore, they must be eating too many empty calories. But the causal link is more likely to run the other way; there is good evidence that obesity depresses your earning potential. This is particularly true because obese people are disproportionately likely to end up on disability: excess weight is hard on he knees and back.

4. This partakes of a mental model of obesity that casts it as a matter of simply making good choices from the available basket. Choose the salad, you stay thin; choose the steak, you get fat. That model is popularized by diet books and nutritionists, who are in the business of telling you what choices to make. The logical conclusion is that the reason the poor are obese is that they are either making bad choices, or their basket of choices is too restricted to allow them to choose low-calorie foods.

This model is being upended by research on appetite and metabolism. People's bodies have a set point that they very much want to maintain; if you push their bodies below the set point, their appetite will increase until it is nearly unbearable. A few superhuman people can withstand it, but hunger is an evolutionary response of the same order as pain: unless you're superhuman, you cannot overcome it with willpower.

There is no evidence whatsoever that giving poor people food stamps will cause them to reduce their calorie consumption. There is no evidence that the poor need more food.

Saying that the poor don't need more food is not the same thing as saying that the poor aren't poor, or that they live joyous lives of material satiety. Being poor is awful for a score of reasons that I don't think I have to go into--and if you doubt it, I invite you to rent an apartment in Anacostia or East New York for a month, and attempt to live on the average welfare grant.

But to the extent that you think we have an obligation to help the poor with their problems, and that those problems can be fixed by giving them money to buy things, then we should give them money to buy things. Attaching strings to the money both blunts the fiscal stimulus, and degrades the dignity of adult citizens who are presumptively capable of deciding whether they would like to spend their money on a bag of apples or a pair of shoes.

Meanwhile, to those who had a procedural complaint with my post--saying that we should use food stamps because we already have the EBT cards--we already have several rich networks for distributing cash to the poor. For the working poor, we have the EITC, which is conveniently about to be distributed right now; we could just tack on $500 to each check. And for the non-working poor who qualify for food stamps, we have the disability insurance and welfare systems, which are giving them money right now. Food stamps are simply an inferior alternative to these options on all dimensions--unless you happen to be a food processor or a farmer.

Why not food stamps?

1) The poor don't need more food. Obesity is a problem for the poor in America; except for people who are too screwed up to get food stamps (because they don't have an address), food insufficiency is not.

2) Food stamps only imperfectly translate into increased cash income, meaning that the poor will spend . . . more money on food.

3) If the increase in food stamps takes the form of expanded eligibility, rather than larger grants, the administrative issues and public outreach will delay your stimulus until well after it is no longer needed.

4) The limits on the type of goods available to food stamp consumers, and the growing season, mean that some (it's hard to say how much) of the food stamp spending will simply draw down perishable stocks rather than generating new economic activity. Eventually this will probably generate more economic activity, but probably well after your stimulus is needed.

5) The economy doesn't need a food sector more distorted by daft government programs than it already is. If you want to give money to the poor, give it to them. Even if they spend it all on drugs, it will hardly be much worse than spending it all on increasing their already astronomical obesity rates.

The 101st Quibblers unleashed

One of my commenters says, in re my statement that Israel had cordoned off Gaza, and that people in Gaza were suffering therefrom:

And in any event, the Allied bombing of Dresden is a fact. So if I dwell on it, while ignoring anything that led to it, then I guess I'm properly neutral.

This is a very good example. When I note that the allies bombed the hell out of Dresden, and that a lot of civilians were killed in the bombing, am I a Nazi sympathizer if I don't go into the causes and roots of World War II? Yes, I realize that many people on both sides would like me to attach an editorial to each and every statement of fact about Israel/Palestine noting that their opponents are a bunch of amoral butchers, but I've already gone into why I'm not going to do so.

Wealth is sovereign

Daniel Drezner takes on Larry Summers's concerns about sovereign wealth funds. My take is that they're not nearly as big and scary as they sound. With one exception--Abu Dhabi, which does not seem to pose much of a strategic threat to America or its companies--the biggest funds aren't that much bigger than CalPers. If the thought of the California Public Employees union does not keep you awake at night, probably Sovereign Wealth Funds shouldn't either.

Music Thursday

Last.fm, of which I am an avid fan, emails to tell me that they are letting you stream songs for free on their website as a promo for their upcoming subscription service.

Why Tide?

Tyler Cowen asks how come it has a high market share, even though it's more expensive. Answer: it actually does seem to be better (and I'm generally a fan of generics.) Am I deluded? Any chemists in the audience?

News you can use

James Joyner would rather have a butterscotch pudding recipe than more news from Gaza. Personally, I think butterscotch pudding is too much of a muchness; I much prefer Maida Heatter's Creme Brulee.

Have I mentioned . . . .

. . . . that this stimulus package is a terrible idea? It's a terrible idea. It wouldn't, mind you, be any less of a terrible idea if the Democrats were 100% in charge; in fact, the notion of trying to enact stimulus through the food stamp program is daft on so many levels that I really don't even know where to begin. The Democratic/Republican debates over this were just quibbling over whose supporters got to sup longer at the trough. And indeed, ultimately the reason that we're getting this package is not that anyone seriously thinks it will save the economy. Rather, politicians needed to be seen to be doing something, and well, this is something.

Typing for Israel

It is simply not possible to make any statement, however anodyne, about Israel/Palestine, without drawing the Fighting 101st Quibblers. These are the folks who will contest factual statements to the death, as if admitting that their side has done anything except distribute flowers to orphan children were somehow tantamount to craven and utter surrender. When they have crawled so far out on their limb that it is about to crack beneath them, they will suddenly retreat to the statement that whatever you said was biased and betrays a total lack of understanding of the situation, because you mentioned whatever it was--Israeli cordon of Gaza, Palestinian suicide bomber on a bus--without chronicling whatever incident it was that provoked them.

Here's the thing: everything that happens in Israel/Palestine is believed, by the perpetrator, to be the fully justified response to outrages from the other side. And whoever committed that outrage was undoubtedly 100% convinced that he was simply dealing out righteous retribution for the horrors recently visited on his people. I don't have time, in every post on the subject, to chronicle the entire history of Israel from the destruction of the Second Temple onwards. If it makes you feel better, every time I say anything on the subject, just mentally preface it with this and assume that I am well aware that there is a back story.

Whether or not Israel is justified in cordoning off the Gaza strip and preventing key supplies from moving in and out--and I have not the time, the energy, nor the inhuman patience required to wade into that debate right now--it is an indisputable fact, one publicized by the very government of Israel, that it is preventing supplies from moving in and out of Gaza through a combination of military action and diplomatic pressure. It is also a fact that this is causing big problems for the population of the Gaza strip, problems that are going to get worse if the cordon continues. That Israel feels it was provoked and by G-d can do no other, is also undoubtedly true. But this does not make what I said any less true. I chose my words very carefully to make them a neutral statement about things that had indisputably happened, precisely because I had no intention of being drawn into a debate over whose fault it all is.

This, of course, enrages people who want nothing more than to get into a lovely, long, loud argument about whose fault it all is. Coming from a family with roots in Northern Ireland, having been close to both Jewish and Arab Americans, I'm really rather disinclined to believe that such lovely, long arguments ever go anywhere. You're welcome to them, but for the nonce I intend to keep my thoughts on the subject to myself. You may interpret this as a sign that I secretly agree with you, or that I am a coward who does not dare to flaunt her ridiculous opposition to your obviously correct beliefs. But you will not succeed at drawing me into an argument on the subject.

Slugfest

DC Transport blogger Ryan Avent wonders if the new High Occupancy Toll lanes about to open in Virginia won't change the economics of slugging:

Those of you not from around here may not be familiar with the concept of slugging. Slugging is an informal carpool system that sprung up in Northern Virginia in response to the construction of High Occupancy Vehicle lanes, which may only be used by cars containing multiple passengers. At various points along the highway, folks heading into the city line up each morning and wait for drivers going into the city to swing by. Swing by they do, and once loaded up with an appropriate number of people, the cars jet into the HOV lanes and bypass the heavy traffic going downtown. In the evenings, similar lines form downtown for the ride home. It’s a nice little system, and all the more interesting because it has evolved on its own.

Things will soon change for slugs, however. Northern Virginia is preparing to widen and extend the HOV lanes and turn them into High Occupancy Toll lanes. These lanes will still be free to multiple passenger vehicles, but individual drivers will also be able to use them by paying a variable toll, the size of which will change with traffic in order to maintain a steady flow. Studies analyzing the proposed system have speculated that the toll for an average rush hour trip will be about $6, but the system’s mandate to keep traffic flowing freely at all times means that one-way costs could potentially much higher.

Comes now a traffic study predicting that slugging will continue as normal after the HOT lanes open. I’m not so sure. You see, the prevailing toll rate will be flashed on signs along the highway, constantly updated, so slugs will know the exact financial value of their presence in a carpooling automobile. Drive alone, pay $10. Pick up slugs, go free. I suspect that the display of a tangible value for slugs may alter the dynamics of the system.

I presume, however, that slugs are mostly drawn from the pool of people who might themselves otherwise drive; thus, the value of the slug to the driver is roughly the same as the value of the driver to the slug: they're both saving time and tolls. Theoretically, this could spur a market in professional slugs, who do nothing but ride back and forth, but if people are willing to pay for speed--as the installation of the tolls presumes they are--then I don't see why that wouldn't have developed already.

Joy

Obama ad: trashes Hillary and NAFTA.

Is there a doctor in the house? I want a prescription for 6,000 Ambien so I can sleep until next February.

Societe Generale today announced a $7.1 billion fraud by a rogue trader.

Stand by for indignantly dull columns calling for tighter bank regulation. Regulation is supposed to stop banks from getting away with things, and if there's one thing banks aren't trying to get away with, it's having rogue traders commit $7.1 billion worth of the bank's capital in a futile attempt to corner the world's fur-bearing trout market.

Meanwhile, what does this say about internal bank checks? That it's impossible to stop all fraud, and also, that people get lazy the longer they go without having a problem. Banks will now tighten up their trading standards for a while, which is no doubt a good thing, though as this Wall Street Journal history illustrates, eventually we'll have another one of these anyway.

If you're wondering why this sort of bad news tends to cluster with other financial crises, it's because a rising tide is a good place to hide bodies. AOL, for example, played games with its expenses to turn a loss into a profit, but got away with it because eventually the profits materialized. MCI Worldcom wasn't so lucky. And big financial bets like this one are most likely to go bad when the financial markets are doing something thoroughly unexpected, like completely melting down.

If you're looking for a sunny side to this, the best I can do is a small laugh:

The trading loss wipes out almost two years of pretax profit at Societe Generale's investment-banking unit, run by Jean-Pierre Mustier. The company said it's suing the trader, who had a salary and bonus of less than 100,000 euros a year and worked at the bank since 2000.

One presumes that Jerome Kerviel is not going to be working in the lucrative derivatives trading field any time soon. At the salaries he will be able to command, and allowing for reasonable living expenses and high French taxation, the SG stockholders should get their money back in a few hundred thousand years.

Question of the Day

Becks points me to this question:

who’s the most important — meaning influential, as in, could play the lead in the book or movie version of, [Insert Name]: And How S/he Changed America** — historical figure about whom most people know nothing?

The guy who discovered fire, I'd guess. Or agriculture.

The saddest commentary on the Gaza breach

How many Americans even knew about the Israeli cordon and the resulting humanitarian crisis in Gaza? When I tuned into the morning news yesterday, the BBC was covering the Gaza strip. Fox News was teaching people how to make homemade butterscotch pudding.

Why isn't this a null set?

Democrats who believe that the GOP southern strategy is a defining moment that discredits the entire movement ∩ Democrats who think that the Clintons are very deliberately playing up Obama's race in order to drive white voters into Hillary's camp ∩ Democrats who will vote for Hillary Clinton in November once she secures the nomination.

Marriage minded

Bryan Caplan thinks that the partner in a marriage who cares less about something should always win.

When women see how little housework men do, they interpret it as "shirking" - a willful violation of basic norms of decency. Men, in turn, feel unfairly maligned by the accusation (or, perhaps more often, by the stink eye).

Who is right? Let me just throw away any future career in couples counseling, and say: Usually, men.

The evidence: Look at the typical bachelor's apartment. Even when a man pays the full cost of cleanliness and receives the full benefit, he doesn't do much. Why not? Because the typical man doesn't care very much about cleanliness. When the bachelor gets married, he almost certainly starts doing more housework than he did when he was single. How can you call that shirking?

I'm no neatnik, but this is . . . daft.

1) Men who live alone clean less than men with male roommates. This is because your own mess is much less unbearable than mess generated by other people. I assume that Mr. Caplan covers negative externalities at some point in his classes.

2) Coasean reasoning only holds if you believe that marriage somehow eliminates all transaction costs.

3) Mr Caplan seems not to have heard of the tragedy of the commons.

4) In most relationships, even keeping a two-person apartment at the level of a bachelor pad seems to be done mostly by the woman, which would seem to indicate that the men are, well, shirking.

5) The introduction of kids raises things to an entirely new level of mess, again, usually beaten back mostly by the woman.

6) Does Mr Caplan think that "person with the lowest standards wins" should be a general rule for marriage? Can women unilaterally quit their jobs because they're content with a lower standard of living, or spend the retirement fund on shoes because they don't mind spending their golden years in penury?

Liberal = Fascist?

I haven't read Jonah Goldberg's book, and frankly, am not likely to, so I won't comment on the contents. But I have watched the Will Wilkinson Bloggingheads with Mr. Goldberg, and his defense of the title therein is well, kind of silly and pointless.

Jonah Goldberg once made one of the more interesting throwaway remarks about fascism I've ever seen, to the effect that when he is confronted by liberals ranting about fascism, he likes to ask "Other than the genocide, what is your disagreement with the fascists"--usually to blank and confused stares. The point being that genocide is not actually a tenet of fascism, merely something that was done by one fascist state, and that those who rant about "fascists" in government almost never have any knowledge of the actual history of the political movement.

But his definition of fascism is not ultimately much more satisfying than "Right wing governments I don't like." In my limited reading on the subject, it seems clear that the intellectual heritage of fascism is at least 50% from the left--but Goldberg has erased the right wing elements of its paternity, such as nationalism and militarism. While it is true that the attributes commonly used to define fascism--the nationalism, the racism, the collective Will of the People embodied in a great leader--can make it hard to exclude Josef Stalin, that doesn't mean one can't distinguish Communist Russia from Nazi Germany. It is possible to develop meaningful criteria that fit Hitler's Germany and Mussolini's Italy, but not Mao's China or Stalin's Russia, and two of the main ones were an explicitly central obsession with ethnic purity, and a co-opting of traditional, generally conservative social institutions. Goldberg has largely defined those elements out of fascism in order to disguise its right wing heritage.

The fascist ideal, which I'd liken to the dream of making every citizen behave like a cell within a mighty body, driven by a Great Leader functioning as the brain, was in many ways a new and pernicious vision. But the constituent parts, such as ferocious group loyalty, xenophobia, an antipathy to individualism, and the hunger for a charismatic strongman, were certainly not. Chopping off the bits that you think aren't so bad in order to use what remains to label your political opponents is bad faith.

While I will go so far as to concede that phrases like "politics of meaning"--implying that interaction with the state, devoid of any particular purpose, is supposed to elevate and ennoble our otherwise drab lives--have a creepy whiff about them, it is silly to call Woodrow Wilson a dictator, or Hillary Clinton a fascist. It seems particularly disingenuous to note that fascist is not the same thing as evil, and then act all bewildered when your political opponents get upset about being labeled a fascist. There are plenty of evils that are not fascist, and one could theoretically have a fascism that didn't involve a police state or oppression of minorities, just as one could theoretically have a communism that didn't involve famines and thought crimes. But in modern America, the association it has picked up is "evil", and it's not really such a useful term that we need to "rescue" it.

The name "Judas" does not mean "traitor" in Hebrew, and there were undoubtedly all sorts of nice chaps by that name running around Israel in the early BCs. Nonetheless, the associations the name has picked up since then mean that if you call someone a "Judas", you cannot reasonably expect to get out of it by saying "Oh, I didn't mean Judas Iscariot, I meant Judas ben Eliezer. Wine merchant, lived in Bethlehem around 75 BC. Nice guy, saved thirteen kittens from a hungry wolf."

Another good question

Fontana Labs asks:

In a nice post about the dangers of the hedonic treadmill, Ben A wonders what luxuries would be agonizing to give up. His list: no roommates, in-house laundry, car. . . . Other candidates? What would hurt to leave behind?

I don't regard a car as a luxury, but I miss my bike fiercely, and am saving up for a new one. (One that will live inside) In house laundry, which I am now enjoying for the first time, is pretty sweet, but not that big a hedonic improvement over in-building laundry. Laundromats are appalling, especially if you don't have a car and the nearest one is a quarter of a mile away.

My votes:

1) Sunlight. I didn't realize I cared until I lived in a cave-like apartment which required 24 hour electrical lighting for a couple of years.

2) No roommate

3) New clothes. When I started out as a journalist, my salary was low, my taxes were and my loans and rent together were over $2,000 a month. I couldn't afford things like meat or new clothes. The meat I didn't miss, but after several years of unemployment, all my clothes were slightly tattered, stretched, and vaguely out of style. By the time I got a raise, I understood, for the first time in my life, what Victorian authors had been describing when they made their heroines shabby: I looked frumpy, and couldn't do a damn thing about it.

4) A full sized stove

5) High speed internet

Good point

Commenter Zaleriana says:

The one that always confounds me is vegans not eating honey, but happy to eat produce pollinated by captive bees. How is that rationalized?

I have no idea. Probably, like me, they never thought of it before.

Should vegetarians wear leather?

I have been pondering this. Most non-vegans do wear leather, figuring it is a by-product of the meat production process; they are not themselves killing any cows. But when you buy leather, you make animal slaughter more lucrative. This suggests that you will get more of it. It may push down the cost of meat, or encourage ranchers to put marginal pasture into grazing, but either way, wearing leather probably means more dead pigs and cows. Even restricting your purchase to vintage items ultimately probably contributes to the death of extra animals, since vintage shoes are substitutes for new ones, and if you buy that pair of pumps, someone else will splurge on a new pair instead.

Dems the breaks

I've never been persuaded by the argument that Democrats are mostly electoral victims of their relative lack of expertise at politics--that they would win every election if it weren't for the fact that Republicans are just badass, nasty, down and dirty campaigners.

But boy, Obama and Hillary do seem determined to prove that Democrats do so shoot themselves in the foot!

I look at that debate and it seems to me that Democrats think they can't lose in November--that the only important battle is the one for the nomination. Yet if this goes on much longer, the chances rise that the nominee will hobble, crippled, into the November elections. Obama's supporters probably won't vote for McCain if Hillary is the nominee, but they might well stay home if they think that she slimed her way into the nomination. And all the sniping is just upping everyone's negatives and providing the Republicans ammunition for November. My original prediction of a 95% chance that Democrats take the White House in November is being revised downward, fast.

One more food post

Over the last few months, I have virtually totally lost my sweet tooth. This also happened to my mother when she was in her thirties, and I could never understand it--how could you not want dessert? Now, suddenly, I'm just not interested. I'm not revolted, or anything; I'd just rather fill up on dinner.

Something that didn't happen to my mother is that I'm also losing my taste for processed carbohydrates; I've virtually stopped eating bread, and pasta and rice are falling farther and farther down the menu.

Of course, I should be thrilled--my body is naturally demanding one of those healthy diets I keep reading about. Except . . . there's something a trifle sad about never even wanting what used to be the best part of the meal.

Speaking of judging what you eat

This line jumped out at me from the New York Times article on the Fatosphere:

The Big Fat Deal blog (bfdblog.com) suggests 10 ways to be a “body positivity activist,” including “Be yourself,” “Understand that a lot of people are hateful morons” and “Don’t be afraid to order the cheesecake.”

All the things one doesn't know about living another person's life . . . I mean, having lived in New York for thirty years, I'm sure that there were any number of mosquito-women staring at my size 10 frame and thinking "That's what would happen to me if I hoovered down ice cream like that." But at least I didn't know it.

Heath Ledger is dead

I'm no cultural critic, and also, not sixteen, so I don't have much to say about this except the banal bewilderment at how much extra-tragic it seems when rich, beautiful, famous people die young. There were pills found near the body, and it happened in the middle of the day, which makes it sound like suicide. Even worse, he had a masseuse scheduled, which makes it sound like a too-successful suicide attempt. But presumably there will be an autopsy.

Where's the beef?

Neat little retrospective on the American Way of Beef from our archives.

Agree to disagree

Is it true that there is some implied censure in the decision not to eat meat, or not to eat factory-farmed meat? Well, given that I have concluded that refraining from the purchase factory farmed meat is the ethical thing to for me to do, then it is indeed logically implied that I also think it is the ethical thing for you to do.

However, polite society thrives on people with ethical differences agreeing to live and let live. I leave room for the possibility of errors in my own judgment, for differences in situations and priorities, and for the fact that no human relationship can survive a strict accounting of every value difference. I think it would be nice if everyone thought hard about how much moral weight to give to the suffering of animals, and gave up meat for a month or so in order to find out how hard it would be to live without it. (Answer: not nearly as hard as you think. I eat meat perhaps a few times a month, and honestly don't much miss it--and I like to eat.)

On the other hand, I also think it would be nice if everyone tried hard, every minute, to be as nice as possible to those around them; volunteered with homeless children in their spare time; and supported a robust free market regime. I don't live up to all of these ideals, however, and living in society means understanding that others make differing value judgments. I presume you know better than I do whether you are really doing your best to do what is right. I'm not going to lecture you on your moral obligations. In return, I would very much appreciate it if people would refrain from attempts to argue me out of doing what I believe is right because they would enjoy their own value judgments better if they had more company.

In short, if my refusal to eat factory farmed meat makes you uncomfortable, then you should probably stop eating factory farmed meat. Because I am not, I swear, wasting one moment of an enjoyable dinner worrying about what's on your plate.

I mean, except if it's brains. That's just disgusting.

Radio Free Megan: Obamanomics

I have a full hour podcast with Austan Goolsbee, Barack Obama's economic advisor (and one of my very favoritest professors ever) up at my audio site, which has now been named Radio Free Megan. It's also been chopped up into seven minute segments for those of you with short attention spans. Gene Sperling, Clinton's economic advisor, is next on tap, and I'm stalking the Republicans.

Preach it, veggie-man

There's an interesting debate raging in this thread between the veg*ns and the meat-eaters. I find it interesting, because on the one hand, there are veg*ns claiming that veg*ns don't prosletyze, despite the presence of people doing just that upthread. On the other hand, what the veg*ns are talking about is a very real phenomenon: meat-eaters who are angry at you for not eating meat.

Most vegetarians and vegans do not, in fact, prosletyze. While I do explain, when asked, my decision to only eat humanely raised meat, I've never finished up with " . . . and that's why you should too, you cruel, thoughtless bastard." Nonetheless, many people react as if I'd tacked on this last phrase, and spit. What the hell is wrong with me? Don't I understand that meat tastes good? That certified humane meat is expensive? That animals would do the same, and worse, to each other . . . etc. Yes, yes, thank you Dr. Insight, I have in fact heard each and every one of these devastating arguments at least a hundred times.

Those who, like me, have made ethical choices about our diets that we haven't asked anyone else to emulate, find the aggressiveness of these encounters puzzling; most of us have come to the conclusion that it is a psychological defense mechanism employed by people who think that we're right, but don't want to make the modest hedonic sacrifice necessary to comply with this ethical position. So you're not only not persuading us to change our ways; you're reinforcing our belief in the correctness of our choice.

To be sure, in some cases I'm just undoubtedly standing in for the annoying minority of vegetarians who have rudely and repeatedly pressed their case. Not that this is any more enjoyable for me. Please, if you would, go find the crushing boor who lectured you on your diet and prosecute your case with him. I'm perfectly willing to discuss why I do what I do, if you're interested, but while I'm happy to have converts, I'm not interested in recruiting them at the point of a verbal sword.

Meanwhile, vegetarians who feel that they must lecture the Great Unwashed: how many people have you converted? Count them up, right now. The answer would be "none", wouldn't it? Yes, that's right, the people you're hectoring are about as likely to come into the fold through your lectures as you are to be reborn in Christ through the efforts of that guy shouting about the Whore of Babylon on the 42nd Street subway steps. Just as he makes Christianity less attractive through his histrionics, you are, by convincing potential converts that vegetarians are a bunch of humorless jerks who spend most of their time lecturing hapless diners, probably driving people away. Plus, you're not only annoying them; you're annoying me by proxy. Please stop.

If you want people to become vegetarians, show them that it's not so bad to be a vegetarian. Feed them good vegetarian food. Have fun vegetarian parties. Live to be 100. It really is possible to lead a rich, satisfying meat-free life. But you wouldn't know it from the free-lance preachers in the hemp shoes.

Libertarians and liberals . . . brothers under the skin?

Ezra Klein and Tyler Cowen are having an interesting back and forth over whether they systematically differ in their models of human behavior. The latest installment, from Tyler, is here:

A very good post. On the specifics: relative to most libertarian economists, I am more likely to think -- or should I say admit -- that human beings are irrational, even when the stakes are high (see the self-deception chapter in Discover Your Inner Economist). But, relative to social democrats, I tend to think that politicians are irrational actors trying to pander to irrational voters and that it can't be any other way. I am much less optimistic about democracy as an instrument for fine-tuning good policy or for that matter as a medium for enforcing progressive sentiments.

Like Tyler, I believe the evidence for human irrationality from behavioral science supports government intervention only if you believe we can draw our bureaucrats and politicians from some other gene pool. But I wonder if there isn't an element of egotistical bias to the arguments between libertarians and liberals. We tend to assume that people who disagree with us are disagreeing about hte point we ourselves care most about--so if you're a liberal very worried about power accumulation in market institutions, or consumer irrationality, you tend to assume that libertarians who disagree with the conclusions you draw therefrom are simply denying the premise.

In reality, many libertarians are aware of, and believe, the research showing consumer irrationality; they simply think that government interventions, for a variety of reasons, tend to malfunction even worse.

Also there's an intriguing possibility that consumer irrationality is one of those micro phenomenon that don't scale up to macro irrationality. The institutional features of markets may simply correct those biases--market experiments generally show those same irrational consumers behaving pretty much like your average Micro 101 textbook would predict. (Though not, I understand, in asset markets, where you get bubbles and busts, just like the real world). Thus Milton Friedman's response to behavioral economics, which boiled down to saying that the rational actor model still seems to have the best predictive value. Personally, I very much believe in the behavioral economics work on consumer irrationality--but it still seems possible that it may fall into the category of "true, but not particularly useful".

Of course, symmetry implies that I, too, am thusly unfairly maligning those with whom I disagree.

Hell is other investors

Well, the Dow is of by hundreds of points, the Fed is announcing surprise inter-meeting rate cuts, Bank of America reported a 95% fall in its profits, and the outfits in the new spring catalogs have the shape and coloring of badly-decorated Easter eggs. All in all, not a good morning.

What to make of it all? I decline to comment on the fashion trends, because a lady doesn't use those words in print. As for the rest of it, I pass on the sound advice of the Hitchhikers Guide to the Galaxy: Don't Panic. Though you may feel, in the immortal words of Tom Lehrer, a bit like a Christian Scientist with appendicitis, keep your hands off the 401(k). Don't call your broker. Put the children's toys back in their room--no need to sell them on EBay quite yet. And you can cancel that order for 1,000 Red Delicious apples and a little wheeled cart.

This is very bad news for people at the large investment banking houses, who didn't get much in the way of bonuses last year, and can probably expect the same disappointment again come next December 31st. Nor would I want to be an upper-level executive at Bank of America right about now. Anyone who invested money in the stock markets looking for a quick 5% return to make rent this month is in trouble. But everyone else should take a deep breath, have a cup of soothing herbal tea, and repeat to themselves "I am invested in stocks for the long term".

Stocks are at best a middling-good indicator of what is happening in the economy. In my humble opinion, for a welter of reasons that aren't entirely clear, they've been overvalued since the late 1990s. Though they've adjusted somewhat since George Bush took office, the adjustment hasn't gone far enough, which meant that a market correction was likely at the first sign of trouble in the economy.

We do have some trouble. But it isn't yet terrible trouble. The banks saw their profits fall, but despite the mortgage awfulness, they're still making a profit. Unemployment rates are still rather low, and the Fed is clearly signaling an aggressive stance on falling output. Absent a liquidity crisis, which we are very unlikely to have, there's no particular reason to fear more than a mild recession. Obviously, a mild recession is not anyone's idea of fun--I myself was unemployed during the last one, and during that period I came perilously close to the edge of despair's bottomless maw. Nonetheless, seven years later, I am still here.

Vegan's just another word for "nothing left to eat"

Well, I do want to thank whatever thoughtful person sent me Vegan Freak, because I read it this weekend. And frankly, I may never eat again. Describing milk as "full of cow pus" is a willful and extravagent distortion of the truth, but after you've read it 87 times, even if you know it's not true, that extra large skim cappuccino begins to look distinctly unappetizing.

I read somewhere that evolutionary biologists now believe that digust co-evolved with the decision to eat meat. After reading that book, I may be devolving.

Greg Mankiw explains it all

Excellent analysis of Clinton's tax plans:

1. The $52 billion estimate seems high to me. The CBO reports that each percentage-point increase in the top two income tax rates--singles making over about $150K, married taxpayers over about $180K--increases tax revenue by only $6.5 billion in 2009. Multiply that by 4.6 (the proposed rate increase), and you get $29 billion, not $52 billion. And even that $6.5 billion is an overestimate, because it includes the top two rates, not just the top rate. I would guess that the Clinton campaign included other tax increases in the $52 billion figure, such as increases in the taxes rates for dividends and capital gains.

2. Even taking the $52 billion estimate at face value, it shows how little revenue would come from increasing taxes on the rich. This is only about 1/3 of one percent of GDP.

3. The passage from Leonhardt makes clear that Senator Clinton wants to spend the extra revenue on other proposals, instead of using it to reduce the long-term fiscal gap.

4. The passage says that this revenue will "help pay" for her other proposals, instead of fully paying for them. The entire package seems to involve either an expanded deficit or other taxes increases (or spending cuts) to be named later.

I don't want to hear any more about how the Democrats are the party of fiscal responsibility; none of them are planning to close the current deficit, much less deal with the now-seriously-it-really-is-looming entitlement problem. Their tax code changes will claw back only a small fraction of the revenue lost in the Bush tax cut. If you are surprised, it is probably because the Democrats and the Republicans have a different definition of the tax cuts going "mostly to the rich". If you mean, "which individuals got the biggest benefit from the tax cuts?", rich people did, because they pay the most taxes; that is the definition Democrats use. But if you mean "which class of people got most of the money?", then the answer is "the middle class". There just aren't that many rich people; it costs a lot more to hand out a modest amount of cash to 200 million than to hand out a lot of cash to 500,000. So when Democrats repeal only the tax cuts on the top one or two brackets, this may be symbolically rewarding, but it will not actually generate that much revenue for the treasury.

Democrats are, of course, planning to spend every bit of the money from their tax increases on new spending, plus it looks like some more. You may now return to forgetting that you ever thought you cared about the budget deficit.

Framing the stimulus

As talk of stimulus plans grows, readers are asking for my thoughts. Which are: stimulus rarely works unless it is massive and very rapidly applied, and if it is massive and very rapid, it usually has much larger problems.

The difference between tax cuts and spending is irrelevant in theory. In practice, because so few people pay significant income tax, it has distributional effects. Since rich people seem to save more money than poor people, this blunts the effect of the stimulus. On the other hand, spending is generally much more distortionary than tax cuts, because the government picks what the money is spent on. One more reason not to like fiscal stimulus packages.

The most interesting point, which no one is paying much attention to, is that it may matter how you frame the stimulus. The fiscally responsible thing to do is to make the stimulus temporary, something Clinton is emphasizing in her speeches. However, there is some evidence that if you tell people your stimulus is temporary, it doesn't work so well. This matters particularly with tax cuts: Nicholas Epley of Chicago (then Harvard) has a paper indicating the Bush administration's decision to frame its stimulus as a rebate, rather than a bonus, may have affected its usefulness.

Blogginheads special election/haircut edition

Spencer and I talk about the election, policy, and the situation in Iraq.

Department of Economic Illiteracy

I'm surprised to see Mark Kleiman linking to this piece of silliness, which purports to "prove" that the Dow has fallen by 20% since GWB took office. Says Mark, "Turns out the "ownership society" hasn't even been good for the owners."

This little treasure comes from a website hilariously titled "Just the Facts", and achieves this result by using a market-weighted basket of global currencies. This is--what's the word I'm looking for? Right, right, utterly daft. Americans don't buy things in a market-weighted basked of global currencies. They shop in dollars. And we have a perfectly good mechanism for calculating the value of the Dow in dollars; it's called "inflation adjustment". The inflation-adjusted value of the January 2001 Dow in today's dollars is about 12,200; today's level is unambiguously higher about the same (oops! need to check stock market news even while on deadline. larger point stands).

But what about foreigners? I hear you cry? What about 'em? They hold almost no stocks--about $200 billion on a total market capitalization¹ of 17.75 trillion.

What about the amount of foreign goods you can buy by selling your stocks? Trade is a relatively small part of the United States economy, and much of it is with places like Mexico and China, whose currencies haven't really altered much against ours. (To be fair, a lot of it is also with Canada and Japan, that have seen higher currency appreciation). Moreover, many of those places have dropped the prices of their goods and taken lower profits rather than lose sales volume. That's why, you may recall, everyone's complaining that our trade deficit is failing to adjust. Overall, the effect of the currency decline on the purchasing power of your stock investment is exceedingly modest unless you planned to blow every dollar on Paris vacations and BMW automobiles.

¹ Of the Wilshire 5,000 index, which comprises all the stocks on the three largest exchanges

Chairborne warriors

Honestly, are we reduced to arguing about whether a messy desk will make Obama a bad president? I've worked in a variety of organizations over the years, and I've witnessed just about zero correlation between the neatness of one's office, and one's managerial efficiency. The President has plenty of aides to keep his damn desk neat.

Those were the good old days

24 Pilot as filmed in 1994. As Don Boudreaux notes, its not just funny, but also something of a challenge to the notion that middle class incomes have gone nowhere for the last ten years.

Very funny

Some thoughtful friend just sent me a book titled "Vegan Freak". I'm not even a vegan yet, and the kids are already calling me names.

Department of Awful(ish) statistics

Abortions have been falling steadily since their peak in 1990. Kevin Drum posts the graphic at left, which I gratefully stole from him, and links to an article trying to explain the decline:

Abortion rights advocates suggested women may be avoiding unwanted pregnancies, thanks in part to the morning-after pill, emergency contraception that is sold without a prescription to women 18 and older.

Conservatives, by contrast, [focus on] laws in more than 30 states mandating counseling before an abortion.

Kevin does an able job of explaining why the conservative argument is nonsense: the pregnancy rate has dropped, and the abortion rate has dropped in states that don't have counseling requirements. He doesn't do quite as good a job at explaining why the abortion-rights activist explanation is also wrong--or at least, not backed up by the available evidence. The abortion rate has been falling pretty steadily for almost 20 years, but the morning after pill, though it has been widely known about since the 1980s, has only been legal in the United States since the late 1990s. Neither of those developments matches up with the observed drop in abortions very well. Nor is better sex ed a very good explanation; I'm aware of no revolution in sex-ed that occurred in the late eighties.

The best explanation may be AIDS; unprotected sex is riskier, so people are having much less of it. The fall roughly matches up with the widespread change towards perceiving AIDS as a heterosexual problem. But that's an offhand guess. We really don't know why the abortion rate has fallen, though I'm sure we're all glad it has.

I'll drink to that

Will Wilkinson wants to associate himself with these remarks. Personally, I think a Cosmolifestyleorangebeltwaytarian sounds like a damn fine drink, and I'm hoping there's somewhere in DC that I can buy one.

Don't just stand there, spend something!

Mr. Brian Beutler complains that the Iraqi government has not spent much of its reconstruction funding. I find it interesting that so many people seem so obsessed with using the amount of money that the government has spent as their prime metric rather than, say, whether it built anything worthwhile.

Breaking Ron Paul news

I know, if you're not a libertarian, you're sick of it already. But Reason reports that Tom Lizardo, one of Ron Paul's congressional aides, has gone on the record backing the Lew Rockwell story. He says that Ron Paul's secretary prepared a press release outing Rockwell, and Ron Paul approved it, before it was quashed by Kent Snyder, the campaign chair.

Now back to your regularly scheduled econblogging. Er . . . tomorrow, I mean, after I've filed the article I'm working on.

There are no new arguments under the sun

Max Sawicky's old blog, now manned by new faces, is apparently no longer specializing in passionately and unapologetically left-wing heterodox economics. Now they just spout random nonsense:

Econ bloggers have really missed the point about Landsburg’s free trade screed. The estimable Dani notwithstanding, the issue isn’t ultimately ethics or even procedural fairness. The problem is that doctrinaire economists understand less about trade than the average person with no academic training in the subject.

Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.

Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.

You have to be very well trained in economics and have high-level skills to make such a brain-dead assumption and not even know you’ve made it. Then you don’t have to give serious consideration to counterarguments because, hey, why pay any attention to the fallacies of economic illiterates and mathphobes?

Ordinary people in many parts of the world worry about getting fatal diseases because witches have cast an evil spell on them. That doesn't invalidate the germ theory of disease. Notably, doctors using the germ theory of disease have produced far more cures than doctors attempting to chase out the bad spirits with an energetic series of bloodlettings. And economies with (classically) liberal rules about trade both among the citizenry, and with citizens of other countries, tend to be much, much nicer places to live than the economies that charge you $1,500 for the privilege of importing a laptop.

But we needen't resort to complicated economic theories to illustrate that Peter Dorman is speaking twaddle. His post strongly implies--without daring to actually say something quite so stupid--that if we liberalize trade, we'll end up buying more than we export.

There are three possibilities for what will happen if we liberalize trade:

1) We will sell more stuff to foreigners than they sell to us. Since we can't use all those funny banknotes, we will essentially be giving them free stuff.

2) Over the long run, we will sell about as much stuff to foreigners as they sell to us.

3) Over the long run, foreigners will sell us more stuff than we sell to them. Since they can't use all those funny banknotes, they will essentially be giving us free stuff.

Situations numbers two and three are obviously preferable to the first--but the first is what mercantilists want. After all, then we've got more jobs than those nasty, nasty foreigners!

As I've pointed out elsewhere, worrying that "all the good jobs" will go to India is definitionally stupid. If that is really true, and all we make are stupid t-shirts that say "I'm spending my kid's inheritance", then we will have nothing worth selling to India, and they will stop trading with us.

Now, one could take him to be saying "ordinary people are worried that their particular job will go to India, and they themselves aren't well suited to do anything much else except flip burgers at Arbys". But that would hardly justify a rant against economists, since the problem of unequally distributed gains from trade is a bog-standard argument of conventional trade economics.

Update Yeah, I don't know what I was thinking either. Weirdness fixed.

Yup, that about sums it up

Tony Woodlief hasn't been paying much attention to politics, but he's managed to get the gist:

On the Democratic side of things, Obama isn't such a bad guy, if we can get him to renounce terrorism and stop-fathering crack babies, which you didn't hear from the Hillary camp. Clinton, meanwhile, is being perhaps a little too feminine on the campaign trail, what with the cleavage and the crying, though his wife remains the shrill, cast-iron harpy we've all come to loathe and fear. John Edwards is dragging his poor sick wife across the country in a quest to improve health care. He stands on principle against any hedge fund of which he's not a partner. The rest of the Democratic field is a collection of sissies, malcontents, and nutjobs.

On the Republican side, meanwhile, Giuliani is a polygamist. No wait, that's McCain. Sorry, I meant Fred Thompson. Mitt Romney? No, he's a hard-working, family-oriented husband of one wife who stands for everything that made America great, except that he's in a Satanic cult. The one-time darling of the Libertarians, Ron Paul, used to own slaves. Mike Huckabee, meanwhile, seems to drive Peggy Noonan apoplectic, which is reason enough to recommend him. Someone just needs to stop him from channeling Herbert Hoover. The rest of the Republican field is a collection of conspiracy theorists, isolationists, and psychopaths.

As for policy positions, as best I can tell, the Democrats want to give most of the southwest U.S. to Mexico, and invite Muslim terrorists to publicly behead everyone making more than a million dollars a year, except for Steven Spielberg and George Soros. Republicans, meanwhile, want to kick anyone with a Mexican-sounding name out of the U.S., and conquer the entire Middle East so that Halliburton will have work after it kills all the porpoises while drilling for oil off the U.S. coast, which will soon be just east of Kansas City, as a result of the Bush-Reagan-Hitler global warming conspiracy.

Both parties are convinced that government is exceptionally skilled at doing things they want more of, and entirely incompetent when it comes to things they don't like. Every candidate is a candidate for change, using the failed ideas of the past, to create a brave new world for the children.

More economics podcasting

It's taking the world by storm! Glenn Reynolds and his lovely wife, Dr. Helen, interview Gene Sperling, Hillary Clinton's main economic advisor. There's also some guy named Rudy, who seems to be running for office.

Rule changes

The lawsuit to prevent at-large precincts in Nevada casinos, because the big casino union embraced Obama, is . . . how do I say this . . . a wanton abuse of process. Changing neutral procedural rules in order to alter outcomes is a terrible, terrible idea, and it seems to be getting more popular recently.

Farewell

Gary Farber has a tribute to Andrew Olmsted.

Profit center

Warranties are fantastically profitable for the manufacturer, and I claim this means they area bad deal for you. iPods are fantastically profitable for the manufacturer, and I just bought a new one with Christmas gift cards.

This seems, on the face of it, contradictory.

Ah, but an iPod has difficult to calculate subjective value. A warranty's sole value is cash. (AFAIK, they rarely give you better treatment when you have a warranty; rather the reverse, in fact, since you're a cost center.) Thus, it is possible for us to calculate the expected value of your warranty. And trust me, if the manufacturer makes a lot of money on it, then by definition, it has a high negative expected value for you.

There is the peace of mind that comes from knowing people will repair your appliance if it breaks. But people will repair your appliance even if you don't have a warranty! You just have to pay them. And the way to bet is that you will spend more money on warranties then on repairs, if you buy them.

What about insurance? My interlocturs ask. Insurance is for catastrophic events--it allows us to use the magic of pooling to protect ourselves against losses so big, and improbable, that they could wipe us out. If repairing your washer is in that category, then you should not be buying a new washer. Yes, people are risk averse. That's how manufacturers make all this money on warranties. But you can train yourself out of handing over unnecessarily large sums to the manufacturer. Try this: every time you don't buy a warranty, deposit the money in an interest-bearing savings account. I virtually guarantee that after five years or so of this, you will have a healthy account balance and no worries about paying for sudden repairs.

Yes, in individual cases buying the extended warranty turned out, after the fact, to be a good decision. I have also seen people go all in while drawing to an inside straight, and win the pot. But I'm not tempted to emulate them.

No logic, no peace!

You should read Steven Horwitz on PC libertarians. This, for me, is the money quote, taken from a site that doesn't like us cosmopolitans:

Political correctness is a very strong signal of statism. In the mind of a statist, something is either required or banned. Either homosexual behavior is banned or it is required that everybody respect homosexual behavior.

The irony is breathtaking. I'm still turning it around in my mind, admiring its perfectly smooth and impermeable surface.

The author of that quote is saying, "I have a right to decline to associate with blacks or homosexals." And he is saying this in a piece decrying cosmopolitan libertarians for exercising our right to decline to associate with racists.

Can this be turned around on me? Of course, but I don't think it holds. I think it's good to shun people for certain kinds of behavior. I just don't think that being born with black parents is among the behaviors it is valid to shun. The paleolibertarians are not, by and large, trying to convince me that I, too, should be frightened of black people--given where I live, this would seem to be a fruitless exercise. They're simply denying that I have a social right to disassociate myself from people who do feel that way.

Well, I stand foursquare behind any American citizen's legal right to hate black people. But they shouldn't expect to be invited for brunch.

Should you buy a warranty?

Dr. Helen regrets not buying the warranty on all the appliances that broke. She shouldn't. Warranties are fantastically profitable for manufacturers, which means they're a fantastically bad deal for you. There's a little bit of truth to those old jokes about appliances breaking immediately after the warranty fails. Most appliances fail either immediately out of the box (due to small faults in the manufacturing not visible to quality control), or work for quite a while before they start breaking. There's usually an inflection point--an age at which the number of breakdowns starts to rise dramatically. Unsurprisingly, your warranty is almost always timed to expire before that age.

The only circumstance under which it would be worth buying a warranty is if you know you are about to be a lot poorer--for example, if you are entering grad school. But even then, you'd possibly do better just saving the price of the warranty.

Of course, we all have regret when it turns out that we would have been better off buying the warranty in this one case--but that's because we don't remember all the times when we bought the warranty and it lay unused in a drawer. Making the right decision doesn't guarantee the best outcome. It just makes it more likely.

Restoring my libertarian street cred

I haven't really developed an opinion on the Danish Mohammed cartoons. On the one hand, I think that people who publish nasty jokes about other peoples' religious beliefs are basically kind of jerks. They are especially jerky when those religious beliefs are held mainly by an economically and socially marginal minority. On the other, I have considerable ire towards people who think that the correct response towards blasphemy is violence, threatened or actual.

But whatever one's opinions about the decision to publish, breathes there a libertarian with heart so dead that they can fail to thrill to the sight of Ezra Levant telling off the thought police Canadian Human Rights commission when they interrogate him about his motives?

Um . . . no

I'm no fan of the Fair Tax. But this from Kevin Drum is just wrong:

The issue isn't so much Social Security benefits, which are currently tax-free for nearly all retirees but would end up being subject to a sales tax. The "prebate" feature of the FairTax proposal would, in theory, take care of most of that. Rather, it's retirement savings, which would end up getting taxed twice. Say you earn $1000 at age 64, pay taxes on it, and then stick the remaining $800 in the bank. The next year you turn 65. Under current law, that retirement money is yours free and clear because you've already paid taxes on it. But if a sales tax is in place, that $800 isn't worth $800. It's only worth about $600. Surprise! All that money you've saved for retirement is suddenly worth a whole lot less than you thought it was. Better not plan on taking any of those Caribbean cruises you've been dreaming about.

This is transitionally true--once. (And could be fixed in a variety of ways, such as boosting Social Security checks). But on average, it is not.

Assume for simplicity's sake that we are choosing between a fair tax of 20% and an income tax of 20%.

Income tax Worker gets paid $2,000, loses $400 to tax, consumes $800, saves $800. 10 years later, retires and spends the other $800.

Sales tax Worker gets paid $2,000, pays no income tax. Buys $1000 worth of goods, 20% of the value of which is tax. Saves $1,000. 10 years later, buys $1000 worth of goods, 20% of the value of which is tax.

The senior pays the same amount of taxes, no matter what. It gets more complicated when you add time preference for money, interest, investment and growth. There is no reason, however, to claim that the Fair Tax results in double taxation. Broadly speaking, the reason a fair tax hits seniors harder is that they don't save; they run down savings. And the Fair Tax is structured to benefit those who save.

Politically, this is probably a killer. But economically, it might well actually be good, encouraging seniors to delay the date at which they retire and start drawing down savings.

Emergency averted

Tom muses on the writer's strike:

We're now ten weeks in, and I have to say that I don't think things look very good for the writer's strike. The late night shows are back on the air and beardier than ever. The country is contemplating a canceled Oscar season, and is not happy about it. We had an understanding: citizens will be subjected to Billy Crystal, Whoopi Goldberg and jokes written by Bruce Vilanch for one (1) six hour period per annum. It's like tossing a virgin into the volcano — a nasty business to be sure, but better than the alternative. With the telecast canceled, who knows where that banality will erupt?

I suspect--a presidential debate. Possibly the one I watched last night.

I confess, I'm shocked

And I didn't think I could be shocked.

A bunch of allegedly libertarian commenters in this thread do not seem to grasp the idea that there is any sort of operating manual for society other than what is legal.

Someone may have the legal right to say abusive things to their spouse, refuse to hire Catholics, or use racial epithets. Indeed, I think they should have the legal right to do all these things. But that doesn't mean that I believe people who do do those things are right. I am not going to smile approvingly and say "Normal human impulse." Society--in the person of you and me, excercising our own precious right of free speech--should discourage these sorts of behaviors. We don't need laws precisely because the hidden order embedded in our culture does a (mostly) very good job at controlling behavior in these areas.

Society operates on rules. But the legal system is just the tip of the iceberg. 95% of the rules that sustain us--"Don't jump the queue"; "be polite to your mother in law"; "send a thank-you note"--float below the level of our consciousness. They are not codified anywhere, and through long socialization, they have become so natural to us that we are rarely aware of them at all. Libertarians are supposed to appreciate and celebrate the awesome weight of this emergent order, not complain that expecting people to behave like civilized adults without supervision is really just an extension of the state's cold, dead hand.

Things that make you say Yea

Yeasayer tickets are sold out in DC, which is giving me, among many, a good deal of heartbreak. But it strikes me that this is a good time to tell you that Yeasayer is really pretty good and you should check them out.

Of all the delightful passages in the Reason article I just linked, this stands out:

Rockwell explained the thrust of the idea in a 1990 Liberty essay entitled "The Case for Paleo-Libertarianism." To Rockwell, the LP was a "party of the stoned," a halfway house for libertines that had to be "de-loused." To grow, the movement had to embrace older conservative values. "State-enforced segregation," Rockwell wrote, "was wrong, but so is State-enforced integration. State-enforced segregation was not wrong because separateness is wrong, however. Wishing to associate with members of one's own race, nationality, religion, class, sex, or even political party is a natural and normal human impulse."

Anyone who has ever observed a two-year-old knows that lying, stealing, and using force to bully those of slightly lesser strength are also natural and normal human impulses. The point is, society is supposed to encourage us to control some of our less noble desires.

Ron Paul and the Case of the Missing Rockwell

Julian Sanchez and Dave Weigel have a long, terrifyingly thorough piece up on Reason's website cementing the allegations that Rockwell wrote the Ron Paul newsletters into a rock-solid case.

Not good news for HIllary

70% of Michigan blacks refused to vote for her in the primary even though hers was the only name on the ballot.

In it to win it

I understand that primary voters may be supporting Hillary and Mitt Romney for entirely non-strategic reasons; that they simply think theirs is the best candidate for the job. I'm pretty sure that this is why, for example, Greg Mankiw has signed on with the Romney campaign. I don't find it hard to believe that Mitt Romney is the best of all the Republican candidates; indeed, I think that's probably true, in terms of whom I would most like to see govern the country.

But economic advisors shouldn't behave too strategically; they can't be effective with a candidate who is too far from their beliefs. Voters in a primary, on the other hand, aren't just picking the person who is closest to their beliefs; they are picking the person who is closes to their beliefs, and can beat the candidate from the other party, who presumably is farther from their beliefs.

Mitt Romney is having trouble inspiring Republican voters, which bodes ill for his fate in the general election. Hillary Clinton inspires voters on both sides, but what she inspires in Republicans and many independants is a visceral and passionate loathing.

Despite the chirpy news stories about long-time Republicans changing their party affiliation, Democrats will probably win the 2008 election for two reasons: disgusted independents voting Democratic, and Republicans staying home in despair. But independents don't like Hillary, which is why she does the worst of the major Democratic candidates in head-to-head polling. And Republicans almost all hate her. Put her up and the Republicans don't need to bother with a turnout operation; their voters would pull themselves to the polling place with their tongues if that's what was necessary to cast a ballot against That Woman. Given how little daylight there is between the Democratic candidates on policy matters, I find it hard to understand why you would vote to nominate the candidate with a strong chance of losing the general election.

It's easier to understand on the Republican side--a fair number of my Republican friends join me in trembling at the thought of Giuliani in office. Still, I presume that most Republicans would prefer to have McCain actually in office than a Romney loss to Obama.

Robert Reich and I agree on something

Shocking, I know. But his commentary on our "soaring trade deficit with China" this morning was excellent.

Update Link fixed. Having a little trouble with the audio links this week, sorry.

Liveblogging the debate: Did Tim Russert <i>say</i> that?

Did he just accuse John Edwards of providing "cover" for Musharraf the day after Benazir Bhutto's assassination? Because I feel like Pervez Musharraf is probably less than concerned, when considering his political assassination needs, with ensuring that he stays in John Edwards' good graces.

Say what?

I'm on record as thinking that Hillary is the only person who can lose this race for the Democrats.

And if Hillary is the nominee, Mitt is the only person who is nearly guaranteed to lose this race for the Republicans. He's the H² of the Republican camp.

What goes through the mind of primary voters? Can someone 'splain me, please? Using small words and lots of pictures?

Liveblogging the debate: Alternative Energy, Part II

John Edwards has delved deep into the "Cap 'n Trade or Carbox Tax" question?

This is the sort of thing that gives economists hives.

For starters, theoretically, cap-and-trade is identical to a carbon tax. That is, if you know the elasticity of demand for carbon, and the value of carbon emissions to the economy, you can get to the desired amount either by capping the amount of carbon, or changing the price of emitting it.

In practice, of course, these things are hard to know. Carbon cappers favor the cap because they know, absolutely, how much carbon we'll end up emitting.

The carbon taxers have two objections to this, both of which are compelling. The first is that, politically, it is hard to get the carbon cap to the right level--as the EU example shows, governments often end up giving out permits. Those permits go to favored interest groups, distorting economic activity; or too many of them are issued, which doesn't distort economic activity between sectors, but rather moots the purpose of setting up the carbon trading regime. (To be fair, Europe is trying to fix this latter problem. But they're not there yet.)

The second objection to cap-and-trade is that emitting carbon has value--not just monetary value to evil, polluting corporations, but actual hedonic value to Americans who like to do things like flip a switch and have the lights come on.

Ideally, we should understand what the economic cost of carbon emissions is, and use a carbon tax to raise the price until it includes the cost of that negative externality. If, once we have raised the cost of carbon to the price of the utility + the negative utility, and people still continue consuming carbon-intensive goods, then that is telling us something important about the value of that added carbon-intensive economic activity.

This is, needless to say, not a popular view with environmentalists who place a value on (other peoples') extra carbon-intensive economic activity of zero, or less than zero.

Liveblogging the debate: Alternative energy

Blech. Everyone competes to come out against Yucca Mountain. John Edwards claims that he has changed his mind about Yucca Mountain based upon the science that has come out since then. Presumably, one of his aides finally got around to explaining nuclear fission.

At least we're out of Iowa, so I haven't heard anyone pledging allegiance to ethanol. Dated: Corn-based ethanol. Rated: Cellulosic biodiesel!

Liveblogging: Moral hazard

Obama's campaign has been talking a lot about transparency in mortgage and credit markets going forward. I interviewed Austan Goolsbee today (podcast to come) and his point was that the damage in the mortgage market has been done, but that there's still time to streamline procedures in the credit card market to make them more transparent to consumers. Hillary, on the other hand, is looking for a retroactive bailout: ease bankruptcy procedures to allow people who took out unaffordable mortgages to get out from under their onerous payments.

This is stupid. I reported on the bankruptcy bill for The Economist, and I'm on the record as thinking that it was an unnecessary sop to the credit card companies. It's not that don't I believe that, theoretically, bankruptcy laws might be too generous, leaving creditors no recourse against borrowers engaging in predatory strategic behavior. But in practice, I see no evidence that this is a problem. Before and after the bankruptcy bill, credit has been very easy to get. There was no need to improve access to credit by reliable buyers by tightening the screws on the less credit-worthy. The bill smacked of creditors attempting to retroactively rewrite the terms under which they loaned money, in their own favor. And there is substantial evidence, as I wrote for the Economist, that tightening up bankruptcy laws has a dampening effect on entrepreneurship, and other economically valuable risk-taking behavior.

But altering the bankruptcy laws will help sub-prime borrowers not one whit. Sub-prime borrowers--if they can afford their payment--can still keep their homes right now; bankruptcy lets borrowers cut deals with secured lenders, while shedding their unsecured debt. (This is why unsecured debt carries a much, much higher rate of interest.) There is some talk about allowing judges to unilaterally rewrite the terms of mortgages, but this creates as many problems as it solves: the expansion of housing credit to poor people has been a pretty good idea, and that rule is likely to cut it off.

Short of that, easing bankruptcy will make things slightly easier on people who borrowed too much money. But it will have little effect on the subprime crisis.

My ears hurt

Barack Obama just actually explained that he is not a muslim. That he goes to church. That he wasn't schooled in a Madrassah. That he rejects Lewis Farrakhan's weird version of anti-semitic race-based politics. That he knows nothing about the Watergate break-ins . . . sorry, wrong scandal.

I am ashamed to live in a country where this was actually a question in the debate.

Mitt Romney goes big in Michigan

He wins. Did I mention my amazing podcast with Ace political reporter Josh Green on Mitt Romney? Because if not, allow me to do so now.

O no

Noooooooooooooo! A new channel from Oprah is replacing my beloved Discovery Health. How will I learn of new diseases with which to self-diagnose?

The new new (old) thing

Probably, there are a significant number of families out there in this great nation of ours who could, right now, act to make most of their children a lot better off. They could do so by killing one of their children. That would leave lots more resources for the other kids: more maternal attention, more money, and maybe it wouldn't be so hard for Mom to find a decent stepdad without all these screaming kids.

Now raise your hand if you think that's a winning political argument for legalizing infanticide . . . all right, Peter Singer, put your hand down. Anyone else?

I do, I do, I do wish that pro-choicers would lose the delusion that the only reason they're having political trouble is that they're just not explaining it right. Telling people that we should allow abortion because it leaves more time and energy for the other kids sounds really compelling if you are already a vigorous supporter of abortion rights. If you think that abortion is kind of like murder, then it sounds as if you are talking to the worst kind of quasi-utilitarian sociopath.

The gulf in opinion between the roughly 30% of Americans who are strong supporters of abortion rights, and the vast mushy middle, is not caused by a lack of information. People are really very familiar with the procedure, and why women choose to get it. The things they are not familiar with--things like what an eight-week-old fetus looks like, or how many women getting abortions are repeat customers (answer: most of them) often do not redound to the pro-choice side's benefit.

Nor has the pro-choice movement been stymied because we just haven't hit on the right combination of code words to convince the great unwashed that abortion rights are the real family values. It's that most people in America believe that a fetus has some, though not unlimited, rights that have to be weighed against those of the mother. The way you overcome this, IMHO, is to acknowlege this as a valid point of view, and then to explain reasonably why you disagree. It is not to hunt for better code words. Believe me, we tried 'em all fifteen years ago, from "A woman's right to choose . . . the right time to raise a family" to the gnarly pictures of coat hanger abortions. You may note that this did not produce the upswelling of pro-NARAL sentiment that we eagerly anticipated.

The visceral revulsion against scraping a fetus out of your womb is very, very strong. Most people believe that a fetus is something very close to a baby, which makes almost all of the slogans the movement deploys sound kind of stupid. Yet we keep deploying them because so many pro-choicers, especially the young coastal ones who provide the movement's energy, have not really emotionally appreciated what it means to think that the thing inside her stomach is a baby. Hint: leave the Bentham at home.

I don't have a solution to this, mind you; my finely distinguished arguments about the wisdom of giving the state this sort of coercive physical power have not been noticeably more successful. But insanity is the belief that you can keep doing the same thing and get different results. It's time to stop the madness.

Things that make you go hmmmm

Raise your hand if you actually parsed this paragraph from Dani Rodrik's guest blogger, Arvind Subramaniam, on first reading:

The World Bank’s statisticians have changed the economic facts. Under these circumstances, Keynes, the economist, would have us change our opinions, while the great scientist, Einstein, would have us tamper with the facts especially if they clash with our theoretical priors. Which should it be? A little bit of both, it seems.

The hardest thing for economists, when writing for a popular audience, is remembering all the things they didn't know before they were economists.

Wesley Snipes: One tough tax protester

So my friend Conor emailed me yesterday with the news that Wesley Snipes is a tax protester:

unlike other celebrities who find themselves on the wrong side of the Internal Revenue Service, Mr. Snipes has a flamboyant explanation: he argues that he is not actually required to pay taxes.

Mr. Snipes, who is scheduled to go on trial Monday in Ocala, Fla., has become an unlikely public face for the antitax movement, whose members maintain that Americans are not obligated to pay income taxes and that the government extracts taxes from its citizens illegally.

His trial has become the most prominent income tax prosecution since the 1989 conviction of the billionaire New York hotelier, Leona Helmsley, who went to prison for improperly billing personal expenses to her business.

Tax deniers maintain that the law only appears to require payment of taxes. All their theories have been rejected by the courts, including the one invoked by Mr. Snipes, which is known as the 861 position, after a section of the federal tax code.

Adherents say a regulation applying the 861 provision does not list wages as taxable, though it does say that “compensation for services” is taxable. The courts have uniformly rejected all such theories, and eight people have been sentenced to prison after not paying taxes based on the 861 argument.

Despite the court rulings, juries have acquitted some prominent tax resisters in recent years, and failed prosecutions have encouraged others to join. Even when the government has failed to obtain convictions, it succeeded in collecting the taxes through civil enforcement.

Actual rich people are almost never tax protesters; they have too much to lose. And Mr Snipes will lose. Whatever the justice of the argument, no court is going to shut down the tax collection system that finances the federal government. Most tax protesters get by simply because it takes quite a long while for the government to notice that they haven't paid any taxes, and to get around to collecting them. But once it does, it's ruthless. The State of New York once (erroneously) concluded that I hadn't paid taxes I owed it¹; by the time they got around to demanding their money, a several-hundred-dollar tax bill had, through the magic of penalties and interest, ballooned into several thousand. It took over a year to straighten out their misconception, in part because they were unable to explain why, exactly they thought I owed them money.

Wesley Snipes will presumably now lose much more of his fortune to the IRS than he would have if he'd just paid the damn taxes. I find it hard to imagine that any reputable advisor is encouraging him to proceed with this course.

¹ I had paid the taxes to Illinois, where I had resided for the part of the year during which I earned the money. The State of New York had lost my partial-year tax return.

Where am i?

This is pretty neat: a graphical tool for showing relationships between websites. If you saw it eight months ago, I don't want to hear about it; it's new to me.

Whisper campaign

Is it really only a few years since Hillary Clinton was being excoriated for hugging Yasser Arafat's wife? Now, suddenly, she's the standard-bearer for American Judaism in the 2008 election. Let me point out the obvious: Hillary is not racist. Obama is not sexist or anti-semitic. All of the careful code words and indignant counterattacks are beneath the dignity of adults vying to represent a once great nation.

And boy, am I glad there aren't any Kennedys running. It's bad enough reading about this stuff; I don't think I could stand actually listening to it.

Paul Krugman? Biased? Don't be daft

I took some flak on liberal blogs for pointing out that Paul Krugman has been the voice of doom on the economy for nigh on a decade. But there was good reason to think that there might be a recession, my critics cried.

Here's the problem. What's the one time that Paul Krugman didn't forecast a recession? That would be when we actually had a recession. It just wasn't a recession that could be blamed on George Bush.

Pod people

Atlantic political writer Josh Green and I just did a podcast on Mitt Romney, who is facing his make-or-break moment today in Michigan's primary. Part I, on Mitt's background, is here, and Part II, on whether both parties are out of ideas, is here. Both are roughly a trim, enjoyable eight minutes.

Update Link problem fixed

Oh, Dr. Boli, I love you

His celebrated magazine strikes again:

The Worker! How we love to sing his praises!
The Worker! How we hate to give him raises!
We praise him as the fount of every virtue,
And also ’cause his union pals can hurt you.

The Worker! He’s the hero of our story!
The Worker! His the fame and his the glory!
We gladly pay him tribute every Mayday,
As long as we don’t have to every payday.

It’s really best, although it may seem funny,
That he should work, and we should get the money:
For ’tis a truth that cannot be ignored
That Virtue ought to be its own reward.

Department of awful statistics

This time the LA Times gets into the mix, claiming that 60 million Americans live on less than $7 a day. Like many awful statistics, this was generated by a sort of Rube Goldberg machine; the LA Times got the figure from a guy with a website, who got it from the World Socialist Workers Website, which took it from an article on reported taxable income in the New York Times. In this case, though, I don't see how this could have happened. The Census bureau is the obvious place that you go to see how many Americans are living on how little income. Random people with websites are not. Not that the Times article is much better; it compares reported taxable income to the poverty line, even though it grudgingly concedes that benefits aren't included, and even though we know that the poor tend to strongly underreport income because reporting income means losing their EITC and health benefits.

Suckers for a good story

In the comments to the previous post, Brooksfoe, who I respect a great deal, points out that the narrative "Soldiers exposed to combat come home to kill" does not flunk the gut check test.

No, indeed, it doesn't. I can build a quite plausible story where combat makes people into crazy killers.

The problem is, it's just a story. History is full of those stories that turned out not to be true. As my commenter points out, I can also build a plausible story where combat makes you realize the sanctity of human life and makes you less likely to kill. Or where the amazing human capacity for compartmentalization makes it have no overall effect. A look at one piece of gross evidence--the massive return of combat troops post World War II does not seem to show evidence of a killing spree; homicide rates fall during the war (not surprising; we shipped our prime homicide age overseas by the millions, plus national emergencies tend to surpress both crime and suicide); rates return to their 1940 level in 1946, then fall rapidly, which is not what I would expect if combat is really so brutalizing. But lots of things changed, yadda yadda. The point is, there is usually more than one plausible story. To check whether your story is true, you need data.

The Times article purports to provide data. But it does not. It provides raw numbers without reference to the size of the relevant population. This is statistical garbage. I'm sure that some Ivy League graduates committed crimes during the same period, and some of them probably blamed it on their high stress upbringing. But this does not tell us anything without knowing how many Ivy League graduates there are.

Humans are designed by evolution to make some bad cognitive snap judgements. We are very prone to the post hoc, ergo propter hoc fallacy, because that was the safest way to bet when you're a naked, vulnerable east african plains ape. These heuristics are the best we could do on the veldt, but with time for cooler reflection, the problems become obvious.

In any group of a couple of million people between the ages of 18 and 24, some will be mentally unstable. Some will snap without warning--"He was such a nice boy". Some will commit spectacular, inhuman, surprising crimes which no one will ever hear about outside of their local area because unfortunately, young people snapping is not rare enough to make the national news. Some will drive drunk and be charged with vehicular homicide. Some will abuse their children. Obviously the people in their lives who are shocked by this behavior will associate the fact that they went to Iraq with the change, in the same way that parents of children with autism associate vaccines or other random events with the change that occurred in their children around age two. But that doesn't mean the event caused the change.

To know whether one event caused another, you would first want to know that the event you are seeking a cause for was actually unusual. That's why you need to know whether the homicide rate among veterans actually spikes when compared to a) soldiers who didn't go to war b) similar demographic groups among the population. The New York Times doesn't even try. Their work is not merely anecdotal silliness; it's anecdotal silliness masquerading as actual information. This puts my hackles up.

Support our troops

Reporters are crazy on the subject of people who serve in the military.

I don't mean that they're rabid, soldier hating libruls; I just mean that their logic circuits seem to be utterly short-circuited by the news that people were soldiers once, and young. The name "Vietnam", (and increasingly, Iraq) is like the secret brainwashing code word in a bad forties movie; it causes reporters to print, without questioning them, awful statistics.

I noticed this in 2005, when it came to my attention that the UPI had uncritically passed along the news that 300,000 of the homeless were veterans, half of them Vietnam-era veterans.

Let's unpack this number. About 2 million people in America are though to be homeless, but the overwhelming majority of them--about 90%--are not actually what we think about when we think of homelessness, which is to say someone living on the street. They're people living in long-term shelters, with relatives or friends--in far from ideal housing situations that the government wants to get them out of. Unsurprisingly, these tend to be single mothers with children; the government is far less predisposed to care if a 25 year old man has to crash on a friend's couch for weeks at a time.

Then you have the hard core: the chronic, or streeted homeless. These are the overwhelmingly male cadre that most of us associate with homelessness: the panhandlers, the crazy guy who talks to himself and walks around in a t-shirt in January. There are 200-300K of them total.

Next time someone panhandles you, take a careful look at him. Is he in his fifties or sixties? You'll notice he is not. That is because, tragically, homeless people who live on the street tend to die very young. Almost all of them have severe mental illnesses, drug/alchohol problems, or both. Even if they weren't living on the street, these things would kill them young, but sleeping outside tends to bring on pneumonia, and the homeless are very frequently victims of violence.

But Vietnam ended in 1975. Since it took about a year to get shipped to Vietnam, and the youngest you could enlist was 17 (the draft started at 18) the very youngest any Vietnam vet could possibly have been was 47. But that isn't the likely age, because most vets were older than 17, and the conflict peaked in 1967. Most Vietnam era vets are now in their late fifties. It should have taken ten minutes to dismiss this claim as ludicrous claptrap from an overeager advocacy group. Instead, the innumerate reporter with a poor grasp of history printed it on a newswire service. It's still showing up on liberal blogs.

The New York Times is apparently not content with passing along those sorts of silly numbers; it wants to make up its own. I'm just sort of flabbergasted. Did the reporters really not realize that they should, um, check the murder rate among the general population, and see if it was, like, lower than the rate among returning Iraq veterans, before they, um, published a story claiming that war is turning Our Fine Boys and Girls into Psychotic Killers?

I went into the article thinking no, the conservative bloggers must be being unfair. But it's not only that bad; it's worse. More than 20% of these psychotic murders are . . . drunken driving incidents. Yes, the New York Times has discovered, with great fanfare, that military-aged males like to consume alchohol and then drive home. The one thing it apparently wasn't able to discover is how many people have served in Iraq/Afghanistan--or at least, I can't find that number in the article. Nor did they take the seemingly blindingly obvious step of using that number to generate a homicide rate and then comparing that against the general population. I mean, it's possible that the rate is higher--I would assume that, ceteris paribus, people in the military are less likely to commit homicide, so maybe service is turning them into gun-crazed lunatics. But the New York Times article certainly doesn't offer any evidence to convince me that it is so.

I don't, by the way, think that this is some sort of liberal media conspiracy, before the commenters start in. I think that reporters are often innumerate, and too willing to believe bizarre things about combat troops because they've never actually met any.

Sometimes they really are out to get you. And sometimes, you're just crazy.

Another "Cologne warrior" moment. Memo to LewRockwellites: if you are trying to combat the accusation that your founder is a racist populist with a penchant for conspiracy theories, you should find a better way than complaining that the gigantic Cato-centered libertarian conspiracy is out to get you. More than two libertarians together can't even agree on where to grab a latte, much less on what positive rights children have. They're certainly not cohesive enough to mount a vast, bright-wing conspiracy. Someone would talk. I mean, presuming that they could stop arguing about road privatisation long enough to even pass the "Lew Rockwell Delenda Est" resolution.

My name is Hillary Clinton, and I'm verklempt

Did you ever go on a date with one of those guys who thinks that if one splash of cologne is sexy, eight will be positively irresistible? After you've crawled, gasping, onto the street and the blue tone has faded from your lips and fingernails, you kind of want to go back and explain to him, gently, that many things in this world are really best in moderation. Not enough to actually swim back into that overpowering miasma of Polo, mind you. But as you walk home, you are sort of wrapped in a wistful longing that someone would set him straight.

I'm getting that feeling about Hillary. Cry once, you're human. Cry all the time, and it's a schtick. A schtick, moreover, that suggests you're a cynical, manipulative woman who uses tears to get what you want.

Staring at the stopped clock

Just how excessively pessimistic is Paul Krugman? John Henke compiles some choice quotes.

Radley on Ron Paul

Eloquent, as always, about the injustice of the prison system:

Here’s the other thing: Paul talks in the Blitzer interview about how the drug war has disproportionately sent black people to prison. He’s right. Black people use drugs in proportions only slightly higher than their share of the general population. But the proportion of blacks in prison for drugs crimes is substantially higher. They are far more likely to get arrested for drug crimes, far more likely to be convicted, and even when facing similar charges, tend to receive longer sentences than whites.

A big reason why is the latent sentiment at every level of the criminal justice system—from cops to prosecutors to jurors—that black people are inherently more prone to criminality than white people. It’s sort of the opposite of "group rights." It’s "group wrongs"—or punishing black people on a individual basis for perceived transgressions by black people as a group. It’s also a form of collectivist thinking—the antithesis of libertarianism.

I have no idea if Paul is a racist. I suspect that he isn’t, at least today. But he’s certainly had no problem benefiting from the support of people who are. It’s more than a little disingenuous for him to now defend himself by invoking what the criminal justice system has done to the black community when for fifteen years a newsletter bearing his name, and the profits from which went into his bank account, celebrated and encouraged the black-people-are-savage-criminals lie in particularly vile and perverse ways.

The newsletter defended the Rodney King beating, for God’s sake, on the bullshit argument that King was part of a criminal class of people. The implication is that some people deserve substandard treatment under the rule of law because of the color of their skin. There’s nothing remotely libertarian about that.

Whether he was active or passive in the newsletters doesn’t matter. Paul perpetuated that way of thinking for more than a decade in a newsletter he published. He did it during the 1980s and 1990s, the very period over which the drug laws exacerbated the white-black disparity in America’s prisons. He can’t now use the "blacks are treated poorly by our criminal justice system" defense to distance himself from those very newsletters.

Perhaps it’s too much for us to expect Paul to turn over the names of the paleo types who wrote those screeds (if it’s true that he had no hand in writing him himself—which I’m having a harder and harder time believing), to apologize that they ever went out under his name, and to disavow and repudiate the beliefs of the paleolibertarian supporters who have propped him up for most of his career, some of whom he still calls friends.

But if he can’t, it’s also too much to ask libertarians who find those views abhorrent to continue to support him.

Will the economy decline in 2008?

Paul Krugman is voting for doom. It's worth keeping in mind, however, that Paul Krugman has predicted eight of the last none recessions under the Bush administration.

I think it's obvious we're in a slowdown, and a recession seems likely-ish, but Britain's skirted recession for over a decade now, so I can't be too fatalistic.

I, for one, welcome our new robot overlords

Tyler Cowen reads my prediction about productivity growth in caring for old people, and says "I hereby take Megan to be a robot pessimist. "

For the relevant time period, yes. The boomers start retiring this year; by 75, they'll start having major life impairment. By 20 years hence, we will--if we are not to lose productivity--need a robot capable of feeding and bathing an old person without damaging them. I don't see that as particularly likely. The technical hurdles are tough, and so, it turns out, are the economics:

It's easy to walk through the Robotics Tech Zone at CES without ever realizing it. There are card tables strewn with a handful of gaudy brochures, booths that are completely empty, a handful of extroverted toys, and what appear, at first, to be many Roombas. Some of these roving disks zoom across smaller pens, one across a stage—all idly bouncing off their surroundings and mercifully unaware of how boring they are. That's because they're basically clones of the iPod of consumer robots: the Roomba.

In fact, these competitors don't really function any differently either; Yujin Robot's Plus A robotic vacuum, for instance, boasts a list of features that are identical to the latest Roombas, including pre-set cleaning times and the ability to automatically recharge its lithium-ion battery. With 2.5 million Roombas sold, and no one currently coming close to out-innovating its flagship model, iRobot has effectively zero competition. But that's not necessarily a good thing.

"One company doesn't make an industry," the company's CEO, Angle, has said for years. That's why iRobot developed Create, an open-source, mod-friendly version of Roomba that could not only empower the niche bot-hacking community, but serve as a research platform to help start-up robotics companies get their footing. As investors warm up to the concept of consumer robots, Angle claims it's becoming easier for newcomers to get access to capital. Still, he said, creating household bots is a nightmarish business proposition.

"Unlike with software, the margins are terrible," he said, citing 56 percent drop-off from software to robotics profits. "And you're building physical stuff. You have moving parts, gears operating in nasty environments. The robots are going to break." Initially, the Roomba was built to last 150 hours before failing, to meet European product standards. But considering how often the vacuum runs, that would have meant just six months of operation.

Even military robot-makers like Boeing and Foster-Miller, who are no strangers to engineering for endurance, would be crippled by the slim profit margins involved in consumer robotics, according to Angle. And while Samsung, General Electric and similar companies might have a better shot, he maintains that gaining a foothold is "ridiculously hard. It took us 10 years to develop the competence," Angle said, some of which included a toy deal with Hasbro that didn't pan out, but helped teach the company how to deal with production and quality control issues on a massive scale.

This is Spin magazine's writeup of the show I went to see on Wednesday. It's a trifle unkind--the room wasn't that empty, especially for a Wednesday night in an incredibly square town. They asked me and Tony Woodlief the question: what song would you like to see these guys cover? I hate questions like that. I rarely have a good answer, and knowing that I never have a good answer just makes me more nervous and drives any possibly good answers back down into whatever remote part of my psyche they live in. After a few long, frozen moments I blurted out the first thing that came to mind, which was, for no reason I can discern, "Cake Parade" by Georgie James. At that, at least I had an answer; several other people hemmed and hawed for a few minutes, and then gave up.

I had the exact same thought

From Instapundit:

"SNOW FALLS ON BAGHDAD, for first time in memory."

UPDATE: Reader Kevin Greene emails: "I had no idea Al Gore was in Iraq."

Mac vs. PC: the last agnostic

I appear to be the only person in the known universe who did not have a problem with Vista. My Sony Vista laptop was fast, woke up out of sleep mode just fine, and if I had any complaint it was with the crap Sony loaded on it, not the OS itself. Vista itself was lovely, though I turned off the damn security alerts.

I use a Mac because The Atlantic uses Macs. And it's fine. Not life changing, not miraculously more awesome than a PC, but fine. And convenient, because all my friends have them too, so we can do things like share power cords in coffee shops. I remain the world's lone apparent OS agnostic.

Things that make you go hmmmmm . . .

I had a friend whose father was the head of a research center run by the state of New York. His father's secretary was crazy; she was also civil service, and hence practically unfireable. After the secretary started throwing away any invitations he received in the mail, her mother actually had to step in and take over the job. I never understood what motivated that secretary, but I suddenly find myself plagued by the same problem: Evites sent to my gmail account are killed.

I don't mean they're marked as spam; I mean I never get them. They don't show up in my spam box, and as far as I can tell, there is no way to add "evite.com" to my list of allowed senders. Since the emails never show up in the spam box, I also cannot ceremoniously move the email into my inbox and tell Google to route further such straight to me.

Aside from a personal plea to my friends not to send me more evites to my gmail or janegalt.net addresses, I am throwing the technical issue out to my readers. Has anyone heard of this? And if so, how do I fix it?

Update Yes, yes, I considered the possibility that I was not actually being invited to these parties. When I log into Evite, the invitations are there. I have actually sat with a friend, watching them type my email address into the list and hit "Send". No Evite.

A streetcar named "Washington DC"

Ryan Avent, DC transit blogger extraordinaire, says of the beleaguered Metro system:

A good first step would be–surprise!–a new cross-town line, especially if that line were built to handle two lanes in either direction. That should help prevent stoppages in the core from rapidly propagating throughout the system. A good second step would be to augment Metro with better streetcar and bus systems, shifting some local traffic off Metro and ensuring the availability of other options should the need for alternatives arise.

I don't get the streetcar fetish. Philadelphia had them, and they always struck me as having all of the downsides of busses, with none of the advantages. To be sure, they were fine in the days when internal combustion engines had very low efficiency, but those days are long gone. What am I missing?

The Economist says, of the state of economics education in France and Germany, "I desperately hope it's not really this bad." Unfortunately, I think it's really that bad. When the 35 hour work week was proposed, I was talking to someone in the French consulate who did economics and trade. "Aren't you worried that this will raise employer's costs and lead to business failures or higher unemployment?" I asked.

"That's just Anglo-saxon economics" was his rather stunning reply. Apparently, in France, demand curves do not slope downwards.

Ron Paul's downfall: but is it good for the libertarians?

Obviously, having our most successful candidate ever lose big in New Hampshire and outed as having operated a newsletter that published racist material is not libertarianism's finest hour. But I'm actually glad this happened (and no, not because I hate Ron Paul).

I was at an event last night where this came up a few times, and the words "The Movement" got thrown around. This always feels a little strange, since I'm not really a member of "The Movement": I didn't come to my squishy libertarianism until rather late in life, and so I missed the round of internships, political meet-and-greets, and low-level think-tank jobs that cement people into it.

Nonetheless, I am now on its fringes. And sufficiently steeped in it to know, as all younger libertarians in the wonkosphere kind of know, that it has some ugly moments in its history. Specifically, a lot of its funding used to come from crazy old white people hoping to turn back the clock to the days before minorities and women got all uppity. Ron Paul is a good example of the kinds of people who got in bed with these folk of the festering fringe--probably he didn't exactly believe what was being published under his name, but it certainly didn't bother him enough to do anything about it. His quasi-populist, rural, America-first type politics fit well enough into their beliefs about the ideal America that as long as he overlooked their animus towards people who were poorer and darker skinned, he could raise a lot of money from them.

What matters, though, is that this isn't an important component of "the Movement" any more. The money doesn't come from racists, nor does the political energy, or the leadership. Ron Paul's unfortunate moment, and the outing of Lew Rockwell and Jeff Tucker as the probable authors of the bile, have given libertarians the opportunity to make decisive break with that past--and thankfully, they all seem to be taking it.

What happened in Iowa?

Emily Thorson, who has organized in Iowa, has suggested that it was a fluky weirdness about the caucus system:

The TV coverage I've been watching has implied that New Hampshire is a crazy comeback surprise and Iowa is somehow the "real" result. I think they're wrong. Iowa is the anomaly, because of the bizarre public forum that is the Iowa caucus. You know why Hillary does worse in a caucus? Because women who are leaning Hillary go to the caucus with their husbands, and he says "Let's go for Obama" or "Let's go for Edwards" and she says "Well, all right then" because she doesn't want to spend the next hour sitting alone in the Hillary group. I've sat through a caucus. This is how it works.

I'm also hearing that the Clinton organization in Iowa was a bit of a disaster: no hispanic literature at all, basically no student outreach, and a host of other, smaller problems. That doesn't negate what Emily says, but it might have amplified the effect.

HIllary of Arc

I've said before that I suspect at least some Democrats want Hillary as their candidate in part because they view her as the most partisan. They think their moment in history has come, they are tired of compromise and they want her in part because the Republicans hate her so much, because she will be their warrior. (I'm not sure why they think this; Edwards seems more incendiary and confrontational. But it feels as if they do.) Glenn Loury's impassioned defense of her on Bloggingheads.tv exudes that kind of sentiment.

This is, dare I say it, not a good sign for the Democrats in the election. The things they like about her are the things Republicans hate about her, and that don't go over particularly well with independents. Republicans are demoralized now, but run Hillary and the Republicans won't even need a ground operation; the turnout problems will take care of themselves.

Who wrote the Ron Paul newsletters?

The Economist names names. This doesn't let Dr. Paul off the hook; it just hangs Lew Rockwell out to dry with him. Not that this seems to have been exactly a stunning shock to any of the movement people I know.

New study: 150,000 deaths in Iraq since the invasion

I'm writing a print piece about this so I'm afraid you'll have to wait for my opinion, but a few quick thoughts:

1. The disparity between the Lancet figures and the new count is higher than people are assuming; the Lancet study is more than a year older than the NEJM one. Since the violence was trending upwards, if the new study is correct, the Lancet figures were wildly, wildly, wildly off.
2. The new version is more likely to be correct; it covers a longer time period, uses a bigger sample, and employs more than one method of counting
3. It is not that likely to be correct, in the sense of giving us a good, descriptive number. Iraq is a war zone, and it is very hard to collect good data. Beware of false precision, particularly if it validates your priors.
4. One would obviously wish that the Iraqi government were not involved.
5. Attempting to salvage the Lancet study by distinguishing between violent and non-violent deaths are silly. Virtually all the violent deaths in the Lancet study were excess, and virtually all the excess deaths were violent.
6. 150,000 deaths is a figure that should make any supporter of the war swallow hard.
7. There are good reasons to conduct public debates about these sorts of things with courtesy and humility.

If you build it they will come

Arnold Kling, whose excellent book on health care I highly commend to you, has been blogging about my article. A commenter offers a perspective I hadn't seen before:

There is a perspective of the U.S. health care system that I have rarely, if ever, see applied to discussions of this subject. The U.S. health care system is currently, and has been for more than 30 years, in what could be termed a build-out mode. A great deal of national income is and has been diverted to the health care industry - both from governmental programs such as Medicare/Medicaid and from voluntary diversion of returns to labor in the form of employer paid health insurance.

The net effect is that the baby boom generation that has produced the national wealth of the last 30 years or so have also funded this health care system build-out, if only through tolerating current income diversion, in anticipation of the surge load that generation will place on the system in the future. It is now, as that generation begins to become an increased load on the health care system they've funded, that the U.S. begins to truly test whether the build-out was adequate.

The value to economists and others of applying this perspective is multi-fold:
First, the baby boom generation has already paid for the overwhelming majority of the U.S. health care system build-out, in anticipation of their own future load to the system, out of their past/current earnings. The current health care system is far more capable, in terms of capacity, quality of care and availability, than would have been the case had the baby boom generation not tolerated income diversion to that purpose.
Second, most discussions/projections anticipate that the health care system build-out phase (cost increases) will or should continue at a similar pace in the future. That is probably not the case. The current system will be transitioning from build-out to maintenance phase, which can and will be less expensive than the build-out phase. That transition may be "forced" to some degree due to the income production capacity of the younger generations and their tolerance for income diversion, as indicated by Megan and others, but I doubt that the catastrophic projections are realistic.

One of the lessons I learned from Arnold's "Crisis of Abundance" is that most of the current U.S. health care system is under-loaded at current demand. Each of the citations of excessive procedures, duplicative procedures and other apparent inefficiencies are artifacts of a current system that has excess capacity. That excess will become fully loaded and consumed as the baby boom generation retires. But it is highly unlikely that further capacity expansion will be desirable - the future income diversion will most likely only be to maintain, not expand the system.

I have no idea whether this is true or not--though I would caution that the evidence seems to be that health care capacity that is built, is used, and doctors can easily generate their own demand. But it's an interesting idea.

Music Thursday

A friend is going to be in New York on the last few days of the month and wants to see some live music. He was inspired to this by last nights performance of the 1900s, which was his first live music concert in ten years. (And at which I was interviewed by Spin magazine's website. My fifteen minutes of fame awaits.) Any suggestions?

I am woman, hear me vote.

Reading Christopher Hayes' aunt's take on Hillary gives me the heebie jeebies. I don't want to vote for someone because it would be a historic blow for women; I want to vote for someone with a good policy agenda. Barring that, I want to vote for someone whose policy approach doesn't actually make me physically queasy. The exit poll split makes it pretty clear that large numbers of Democratic women voted for her because she has ovaries.

Everything you always wondered about the credit crisis

Tee hee!

A friend passed this along. But they forgot about the drugs. Is anyone willing to give me a metric ton of cocaine in exchange for my annual CO₂ emissions?

Ron Paul roundup

Glen Whitman highlights a problem that was part of what I was trying to get at when I declined to cast a protest vote for Ron Paul:

Given the relative rarity of libertarians, both in the public eye and in general, most people’s judgment of libertarianism will be based on a very small sample – often a sample size of one. If the first libertarian someone meets is a smart, reasonable, decent person, they will come away with a positive impression and possibly a willingness to explore further. If the first libertarian someone meets is a wild-eyed lunatic, on the other hand, they could easily write off libertarianism as the ideology of wild-eyed lunatics.

The Paul candidacy presents a special case of the small-sample problem. For many people, Ron Paul is the first and only libertarian-identified candidate they’ve ever seen receive any serious media attention. As a result, they may assume other libertarians share all of his views. Many libertarians, including Kling, are wary of supporting Paul – even though they probably agree more with Paul than anyone else in the field – because they fear the public will assume that all libertarians are anti-immigrant gold-bug conspiracy theorists (and possible closet racists).

Meanwhile, Ross Douthat sums up roughly my suspicions about Ron Paul's racial attitudes:

You know, I half-believe Ron Paul when he says that he is not a bigot or a racist or an anti-Semite. I half-believe him in when he says the inflammatory material that James Kirchick has uncovered in years and years of newsletters and pamphlets with his name on them was written by others without his supervision or direct permission. But what I'm nearly sure of is that he doesn't really care that much if some of the people around him are racists - not because he shares their opinions, but because he thinks those opinions aren't all that important in the grand scheme of things.

This doesn't make Ron Paul a terrible person; it just makes him human. He believes in a constellation of ideas - some of them nutty, but some of them not - that have been shunted to the fringe of American political life. And people who find themselves in that position tend to be far, far more forgiving of their allies' various tics and idiosyncracies and yes, bigotries than would otherwise be the case. It's unfortunate, but it's also human nature: If someone agrees with you and supports you when the whole world seems to be against you, of course you'll be more likely to look past their tendency to suggest that Mossad was behind the 1993 WTC bombing, or their fondness for pre-apartheid South Africa. When you're way out there on the fringe, without any obvious way to reach the mainstream, it's very easy to tell yourself that your dubious friends aren't really all that bad - and that besides, if you ever start finding your way back to the mainstream, it won't be all that hard to jettison them along the way. It's easy, as well, to start making excuses for them: If the mainstream accuses you of anti-Semitism, unfairly, because you're a principled non-interventionist who wants the U.S. to pull out of the Middle East, it's easy to find yourself making excuses for other people who get tarred (more justly) with the label. And then time goes by, the mainstream never gets any closer, you're spending all your time in a cramped and crankish and resentful world, and you hear yourself thinking hey, if these neo-Confederate guys are right about states' rights and the Constitution, then maybe they're right about race too ...

It's the most natural thing in the world. Just ask Sam Francis.

It kind of doesn't matter what he actually believes. A number of libertarians have argued that Dr. Paul is obviously not a racist because he has so many other crazy ideas that if he did hold repulsive racial views, he would have aired those too. I find this pretty unconvincing. Since my blog brought me out of the closet, pretty much everyone I know is aware that I think we should privatize Social Security, eliminate most forms of government spending, get rid of the corporate income tax, legalize heroin, etc. etc. Almost all of them think I am crazy. But they still associate with me. I myself am friends with at least one person who claims to be an actual communist, and doesn't suffer socially for it. However, if either of us started saying "You know, the real problem with America is race-mixing" that would clearly put us in an entirely different category of crazy loon: the kind you shun. Ron Paul doesn't have Tourette's syndrome; I presume he is able to discern these find distinctions as well.

But regardless of whether he believes the things he wrote, we punish people (socially) for enabling racism. Dr. Paul should be abandoned because that is how American society, and the libertarian movement, says: "Helping racists publish their nastygrams is totally legal, but it's not ok."

Incidentally, I apologize if yesterday's Ron Paul post came off as "I told you so". I'm not surprised that Ron Paul's newsletter occasionally plunged into the fever swamp to wallow in the muck, but it's not as if I knew this was coming.

And ending on a "hmmmmm" note, has anyone else noticed that the Paul supporters have completely disappeared? I have one left in my comments who was a regular reader before I ever posted on Paul. But the locust hordes are no longer descending on my comment section every time I mention the good doctor's name.

Stop the world, I want to get off

A New York barista is apparently resisting the "skinny" label for a non-fat, sugar-free latte, on the grounds that it will make her fat customers and employers feel bad.

This seems painfully reminiscent of the movement in Britain in the early 1990s to outlaw black garbage bags because . . . wait for it . . . this might convey to those of African descent that people thought they were garbage.

If you are under the impression that others believe you are a garbage bag, or a latte, then you should not be hanging about in coffee bars. You should be in an institution, where we can work on bringing you out of your delusional state.

Notably, even the fat acceptance commenter on the thread seems to think that this is totally ridiculous.

Everything's coming up roses . . .

I am taking some flak, as expected, for the optimism of my piece on the baby boomers. How can I be so darn cheery when we've got $55 trillion in unfunded obligations coming down the pike?

Well, the point of the piece was to stop focusing so much on cash figures. All government spending numbers are impressively large--that's what happens when you're dealing with a very rich, very populous nation.

But our entitlement problem is not that our unfunded liabilities have a net present value of $55 trillion. That is a very big number, but we're not going to get handed a bill for it all next week. It's a slice of a much, much bigger figure: the NPV of our future income.

Prices are very, very useful things. But they can often obscure as much as they hide in economic debate: a $20,000 Hermes handbag does not consume 100 times as many economic resources as a $20 Target handbag, and the illusion that it does fuels much of the current debate over redistributing wealth.

The ultimate price tag of Medicare is hazily unknowable, and really, the number does not much matter. And the argument that this spending is "unsustainable" is not particularly interesting; as Herb Stein famously said, "If something cannot go on forever, it will stop." If the spending is really, actually, unsustainable then the government will eventually stop trying to sustain it. These are not the interesting questions.

My (partial) list of the interesting questions:

1. Is Medicare well structured to provide good health care to the elderly?
2. Is Medicare encouraging today's workers to save less than they will ultimately need? In other words, is the program likely to be severely curtailed in the future, leaving workers who counted on it worse off than they would have been had it never existed?
3. Is Medicare encouraging, or discouraging, the medical innovation that could make future generations better off?
4. What is the deadweight loss of the taxation required to pay for Medicare, and does this represent a good use of our money?
5. Is this massive transfer from old to young just? Does this answer change if it turns out that future generations are likely to massively trim the program?

My answer is that Medicare is a bad program on many fronts: badly structured, economically and medically destructive, and a fairly injust transfer of resources. But none of those things have anything to do with eye-popping NPV figures. A bad program doesn't become a good program just because it's cheap.

Drug war

I just got an email from a friend who seems to think that asking Obama whether he thinks he should have done a long stretch in the pokey for using drugs is a sly way of attacking Obama. No, no, no. Obama is the candidate that I am most likely to support right now, for reasons I'll lay out hopefully sometime this week (I'm on a miserably tight deadline for a print piece). That was my not-so-sly way of attacking the drug war. None of our politicians thinks that they should have gone to jail for their youthful drug use, I presume--in Obama's case, I note, this would have disbarred him and thus effectively ended his political career. I would like them to answer, then, why they take the position that other people should go to jail for simple possession. And that applies to any politician who supports continuing our current drug policy, left, right, or center.

Heather has two processors

Gawd, not another children's book reducing complicated adult lifestyle choices into propagandistic pabulum. Where will it end?

Wilder? Wait . . .

Steve Teles offers another hypothesis for Clinton's victory:

I don't buy the idea that Obama lost due to the "Wilder effect" (that voters told pollsters that they'd vote for a black candidate, but secretly voted for white candidates in the secrecy of the polling booth). The main reason is that there's a plausible alternative hypothesis, which is that the large Obama lead in the polls sent independents into the Republican primary to vote for McCain. But we'll have to take a look at the data tomorrow, when we'll have fine-grained information. More soon...

Bush, then Clinton. Rinse. Repeat.

I agree with James Fallows: the dynastic secession problem is going to be a huge issue for Hillary in the general election. So will the corruption that plagued the last years of the Clinton administration; I think Democrats have been lulled into a false sense of security by the fact that this stuff isn't coming out in the primary. But this, of course, is because the other Democratic contenders are hoping to run in part on the Clinton (economic) legacy; the Republicans will have no such scruples. She is the candidate with the best chance of losing the general election, and I'm not sure why she's doing so well.

Obamarama

Matt notices something that struck me last night:

It's interesting how much more interested the press seems to be in the Democratic race than in the GOP one. When after Iowa there was tons of attention showered on Barack Obama and nothing on Huckabee, I figured that was just part of the vast pro-McCain conspiracy. But after the media got the McCain victory it was hoping for, there's still more talk about the Democratic result.

The thing of it is that the Republican race is really much more interesting. It's a bigger field of semi-viable contenders and it's very unpredictable. What's more, there appears to be much more separating the Republican nominees from each other in terms of policy and approach -- Mike Huckabee is really, really different from Rudy Giuliani. My feeling has kind of been that I, personally, tend to focus on the Democratic field perhaps a bit more than it deserves because I'm a liberal and I've got a mostly liberal audience, but actually it seems that everyone is playing it my way and I'm not really sure why.

I don't want to go out on a limb here or anything, but I think it might just have something to do with the fact that 99% of the reporters covering the election are planning to vote Democratic. Just a thought.

A question for my candidate

Julian Sanchez notes how odd it is that it is seen as gauche to mention Barack Obama's youthful indiscretions with drugs.

Now, this is all right with me: I think the laws prohibiting cocaine and marijuana are foolish and wrong, that there's nothing especially shameful about having used them, and that so long as we're talking about use that ended long ago, it's a private matter that shouldn't be used as campaign fodder. What I find surprising—or at any rate, inconsistent—is that so many folks in mainstream politics and media seem to be on board with that third point given how few are prepared to publicly endorse the first two. Because our government does, in fact, send people to prison for using cocaine and marijuana. And it seems a little odd to get the vapors at the prospect of anyone criticizing a candidate for behavior that they concede, at least tacitly, it would have been perfectly legitimate to lock him away for.

As an avid drug legalizer myself, I should like to see someone ask this question:

Senator, you used cocaine and marijuana. Would it have been just and right for you to have been sentenced to multi-year prison terms under today's drug laws?

Has anyone actually said this?

Most interesting sentence I've read all day

From Tyler Cowen:

The piece attempts to redress many myths of micro-credit. For instance it is often claimed that micro-credit doesn't involve collateral, but that isn't quite true. The borrowing is done in small groups, and if you don't pay your share the neighbors come and take away your TV set. In reality micro-credit takes the collateral-seizing function away from the bank and puts it in the hands of our neighbors, thereby increasing loan repayment rates.

The biggest critique of microcredit so far is that the borrowers don't transition to traditional banking. This highlights one of the major reasons why. One of the barriers to providing credit to the poor--particularly in developing nations with no cultural history of mass banking--is that you can't repossess your collateral. If you try to foreclose on a house, neighbors will often rally to block you; if you sell it, they will prevent the new buyer from taking possession¹. Microcredit dodges this problem by making the liable party a member of the community.

¹This is hardly unique: it was a giant problem in America, particularly during depressions, when neighbors often showed up at foreclosure auctions, intimidated outside buyers to prevent them from bidding, and then bid trivial sums on all the property in order to return it to its former owners. This seems cute and folksy and community-oriented until you realize that this generally made the bank go out of business, or at least stop lending to that community, whereupon everyone complained that they couldn't get credit.

Public service announcement

My spam filter has now been set to automatically bin anything that contains the string "Barack Hussein Obama". Thanks for your kind interest, etc. etc.

Ron Paul 2008: now with 73% less racist bile

Obviously, this does not come as the horrifying shock that it did for those who were more supportive of Ron Paul's candidacy. At least to judge from the commenters who show up here, Ron Paul's primary appeal is "The 19th century: now with iPods and better health care!" So it's not exactly a stunning surprise to discover that his newsletter struck some of those notes in social chords as well.

For the record, I doubt that Ron Paul is the virulent racist who penned these little treasures. But who cares? At best, he is the kind of guy who maybe wouldn't say these things himself, but finds himself, half-ashamedly, nodding along. What else are we to infer from the fact that he allowed this garbage to be published under his own name--not once, which could be written off as a horrifying editorial oversight, but over and over? If Nick Gillespie had published an issue of Reason with a feature article by Tom Metzger on the international Jewish conspiracy would his staff be saying "Well, he didn't write it"? More to the point, would they have extended a similarly generous benefit of the doubt to, say, Mike Huckabee?

Update Okay, I guess there's another explanation: Ron Paul is the kind of guy who would publish a newsletter under his name, but never, ever, read it. I'm not sure why this is supposed to reflect better on him.

Is it sexist to comment on Hillary's clothes?

God, no. If any of the male candidates don apparel that seems to have been thrown together out of carpet remnants, you can be sure I'll comment on their sartorial excesses, too.

Men have less range--less scope to look good, and therefore, less scope to look bad. This is in some sense unfairly restrictive, suppressing their right to self-expression, but it also means that they never venture into the carpet zone. Women can achieve the same effect by dressing very, very conservatively. When they don't, I think their wardrobe choices, like their haircuts and their verbal tics and every other superficially amusing characteristic, are fair game.

Keep the dream alive

Yes, I was the deluded moron twittering "Don't give up hope". A friend and I sat on the couch and played online poker while we watched the final returns; drawing to an inside straight while all-in was considerably less nerve-wracking. I was briefly cheered by Democracy in America's snarky liveblogging. But a more lasting boost comes from Ryan Avent:

In listening to the coverage of the New Hampshire primary, it strikes me as odd that no one is mentioning how the tight Obama-Clinton race is among non-Edwards voters. If we suspect that Edwards voters would tend to favor Obama, then one has to wonder how long he’s willing to stay in the race without winning any primaries. You have to feel like Obama would have run away with this had Edwards dropped out after Iowa.

I was surprised at how hard I was rooting for Obama, given that this election feels a lot like being asked "So, which of the plagues of Egypt would you like to be consumed by?" Watching the primary returns surrounded by a vast horde of Obama supporters may have something to do with it, but by the end of the night, I was the most agitated one.

The wrong way to feminize your image

I'm sure the brocade suit looked charming in the store. But the last thing you want to do, when you are trying to humanize your candidate, is to dress them up like your grandmother's furniture.

Things that make you go hmmmm . . .

So CNN won't call the New Hampshire race, but they are projecting the delegates--5 for Hillary, 6 for Obama. Since New Hampshire allocates delegates based on the statewide vote, this makes it seem as if they are slyly calling the state for Obama. What am I missing?

Is Hillary in?

I'm not sure. But I've got the ipecac to hand, just in case.

Reason to be cheerful

Coupling is back on BBC America.

Coffee boost

This Slate article bolsters my belief that Starbucks has actually created the independent coffee shop culture that is now competing with it:

The first time Herb Hyman spoke with the rep from Starbucks, in 1991, the life of his small business flashed before his eyes. For three decades, Hyman's handful of Coffee Bean & Tea Leaf stores had been filling the caffeine needs of Los Angeles locals and the Hollywood elite: Johnny Carson had his own blend there; Jacques Cousteau arranged to have Hyman's coffee care packages meet his ship at ports around the world; and Dirty Dozen leading man Lee Marvin often worked behind the counter with Hyman for fun. But when the word came down that the rising Seattle coffee juggernaut was plotting its raid on Los Angeles, Hyman feared his life's work would be trampled underfoot. Starbucks even promised as much. "They just flat-out said, 'If you don't sell out to us, we're going to surround your stores,' " Hyman recalled. "And lo and behold, that's what happened—and it was the best thing that ever happened to us."

Ever since Starbucks blanketed every functioning community in America with its cafes, the one effect of its expansion that has steamed people the most has been the widely assumed dying-off of mom and pop coffeehouses. Our cities once overflowed with charming independent coffee shops, the popular thinking goes, until the corporate steamroller known as Starbucks came through and crushed them all, perhaps tossing the victims a complimentary Alanis Morrisette CD to ease the psychic pain. In a world where Starbucks operates nearly 15,000 stores, with six new ones opening each day, isn't this a reasonable assumption? How could momma and poppa coffee hope to survive? But Hyman didn't misspeak—and neither did the dozens of other coffeehouse owners I've interviewed. Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door.

That's certainly how it worked out for Hyman. Soon after declining Starbucks's buyout offer, Hyman received the expected news that the company was opening up next to one of his stores. But instead of panicking, he decided to call his friend Jim Stewart, founder of the Seattle's Best Coffee chain, to find out what really happens when a Starbucks opens nearby. "You're going to love it," Stewart reported. "They'll do all of your marketing for you, and your sales will soar." The prediction came true: Each new Starbucks store created a local buzz, drawing new converts to the latte-drinking fold. When the lines at Starbucks grew beyond the point of reason, these converts started venturing out—and, Look! There was another coffeehouse right next-door! Hyman's new neighbor boosted his sales so much that he decided to turn the tactic around and start targeting Starbucks. "We bought a Chinese restaurant right next to one of their stores and converted it, and by God, it was doing $1 million a year right away," he said.

One thing that isn't wrong with the Fair Tax

. . . is that it will raise unemployment. Allow me to channel Paul Krugman:

Before the 1936 publication of Keynes' The General Theory of Employment, Interest, and Money, economists had developed a rich and insightful theory of microeconomics, of the behavior of individual markets and the allocation of resources among them. But macroeconomics--the study of economy-wide events like inflation and deflation, booms and slumps--was in a state of arrested development that left it utterly incapable of making sense of the Great Depression.

So-called "classical" macroeconomics asserted that the economy had a long-run tendency to return to full employment, and focused only on that long run. Its two main tenets were the quantity theory of money--the assertion that the overall level of prices was proportional to the quantity of money in circulation--and the "loanable funds" theory of interest, which asserted that interest rates would rise or fall to equate total savings with total investment.

Keynes was willing to concede that in some sufficiently long run, these theories might indeed be valid; but, as he memorably pointed out, "In the long run we are all dead." In the short run, he asserted, interest rates were determined not by the balance between savings and investment at full employment but by "liquidity preference"--the public's desire to hold cash unless offered a sufficient incentive to invest in less safe and convenient assets. Savings and investment were still necessarily equal; but if desired savings at full employment turned out to exceed desired investment, what would fall would be not interest rates but the level of employment and output. In particular, if investment demand should fall for whatever reason--such as, say, a stock-market crash--the result would be an economy-wide slump.

It was a brilliant re-imagining of the way the economy worked, one that received quick acceptance from the brightest young economists of the time. True, some realized very early that Keynes' picture was oversimplified; in particular, that the level of employment and output would normally feed back to interest rates, and that this might make a lot of difference. Still, for a number of years after the publication of The General Theory, many economic theorists were fascinated by the implications of that picture, which seemed to take us into a looking-glass world in which virtue was punished and self-indulgence rewarded.

Consider, for example, the "paradox of thrift." Suppose that for some reason the savings rate--the fraction of income not spent--goes up. According to the early Keynesian models, this will actually lead to a decline in total savings and investment. Why? Because higher desired savings will lead to an economic slump, which will reduce income and also reduce investment demand; since in the end savings and investment are always equal, the total volume of savings must actually fall!

Or consider the "widow's cruse" theory of wages and employment (named after an old folk tale). You might think that raising wages would reduce the demand for labor; but some early Keynesians argued that redistributing income from profits to wages would raise consumption demand, because workers save less than capitalists (actually they don't, but that's another story), and therefore increase output and employment.

Such paradoxes are still fun to contemplate; they still appear in some freshman textbooks. Nonetheless, few economists take them seriously these days. There are a number of reasons, but the most important can be stated in two words: Alan Greenspan.

After all, the simple Keynesian story is one in which interest rates are independent of the level of employment and output. But in reality the Federal Reserve Board actively manages interest rates, pushing them down when it thinks employment is too low and raising them when it thinks the economy is overheating. You may quarrel with the Fed chairman's judgment--you may think that he should keep the economy on a looser rein--but you can hardly dispute his power. Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.

It's not fair!

Kriston Capps asks a simple question and gets a lot of answers. Allow me to throw in my two cents, because I think most of the criticisms of the fair tax mostly miss the point.

I am in fact against the Fair Tax, and not only because (as it is) the thing is regressive-ish. But the liberal half of the blogosphere has made its claims too strong. The thing is not a poor-killing holocaust of massive proportions; and it is also not quite as economically implausible as they are claiming.

Most of the critics are hanging their criticism on the fact that the poor spend a higher proportion of their income than the wealthy. My answer to this is yes, and why should we care? Few of the wealthy are Scrooges who gain massive positive utility merely from staring at their stock certificates. Most of them, like most of the rest of us, enjoy their wealth only when they spend it on some form of consumption. And when they do that, they pay the same tax as the rest of us. Until they spend it on consumption goods, they are giving it to the rest of us to make our economy more productive. In this dimension, the tax is flat--actually very slightly progressive, because the "prebate" is a smaller share of their consumption than it is for someone in a low-paying job.

I am aware that one can argue that savings are actually a consumption good, first because massive accumulations of capital confer power (Bob Rubin gets his phone calls returned by famous people), and second because the security they offer is in itself a positive good. I find this unconvincing. There are very few people who have enough wealth to do the first kind of consumption, and almost every one of them gets much more clout from, say, being the president of GM, than they do from being rich. And the second form of consumption gets taxed as soon as you actually realize it, so I can't worry about it excessively.

There are, however, two important senses in which the tax is regressive. The first is that it moves us from a more progressive system: in the future, the poor would bear a heavier share of the total tax burden than they do now. (Forgive me if I suspect that for many of its boosters, this is a feature rather than a bug). I don't feel like the poor are such extravagent free riders that this should be a priority of tax reform.

And the second is that while the tax may be flat as regards consumption, it is steeply regressive as regards utility. While I think that the tax system should be structured so that the poor have a stake in spending decisions--so that new government spending requires sacrifice from them as well as from more affluent citizens--it seems morally obvious to me that they should pay a lower share of their income to the government than the wealthy should. Consider how much a low wage worker gives up when she hands over 23% of her paltry income--and then compare it to how much Warren Buffett sacrifices when he hands over the same 23%. Though his 23% is several orders of magnitude larger than hers, the net drop in his utility is many times lower. I find it ludicrous that anyone would even contemplate structuring a tax system that way.

These problems could actually be mostly allayed by playing with the prebate--if you make it large enough, the thing is progressive to any level any liberal of my acquaintance would like to target. But that runs into political problems. Which highlights the biggest problem, to my mind, with the fair tax. The tax's main virtue is its simplicity--it is a backdoor way to accomplish bipartisan goals like tax simplification. But that simplicity would never survive the political process. The prebate would be set too low to be progressive, or too high to raise much revenue; vast swathes of goods would end up exempted (medical supplies! new homes! baby products!); and the compliance process would get progressively more complicated in order to catch evaders. In the end, everyone except Steve Forbes would be begging for the return of the income tax.

More on Starbucks

Starbucks has released a bullet-pointed list of the new strategic initiatives that are supposed to revitalize its business:

• improving the current state of the U.S. business by refocusing on the customer experience in the stores, new products and store design elements, and new training and tools for the Company's store partners to help them give customers a superior experience;
• slowing the Company's pace of U.S. store openings and closing a number of underperforming U.S. store locations, enabling Starbucks to renew its focus on its store-level unit economics;
• re-igniting the emotional attachment with customers and restoring the connections customers have with Starbucks(R) coffee, brand, people and stores;
• re-aligning Starbucks organization and streamlining the management to better support customer-focused initiatives and reallocating resources to key value drivers; and
• accelerating expansion and increasing the profitability of Starbucks outside the U.S., including redeploying a portion of the capital originally earmarked for U.S. store growth to the international business.

One of my commenters argues that Starbucks is retrenching because it went too downmarket; stores in lower-income areas are not as profitable, and (I assume) erode the lifestyle cachet of the brand. This list rather bolsters that impression.

Boom, boom, boom baby

My first article for The Atlantic, on what happens to America when the baby boomers retire, is up. For companion reading, there's a roundtable between me, Clive Crook, and Phillip Longman.

An exercise in privilege

A friend asked this morning whether I was against exercises in confronting one's privilege (or lack thereof) or merely the particular version implemented at Indiana State?

Actually, I think it's really useful to understand how you're shaped by class, money, and the social capital of your parents. I've thought long and hard about whether I'd send kids to the kind of exclusive private school I attended. On the one hand, the education I got seemed to be noticeably better than that received even by Penn classmates who had gone to marquee public schools in affluent suburbs. On the other hand, going to private school doesn't just give you funny ideas about money and class; it gives you funny ideas about money and class that you don't even know you have.

One of the falsest moments in movies and television shows is when the "rich kids" make fun of the poor kids for being poor. I went to school with pretty much the most privileged kids in the nation, and I never once heard anyone make fun of someone's lack of money, or even the quality of their material goods. The snobbery was directed entirely at class markers with no obvious monetary content--in 1980s Manhattan, the heavy, obvious makeup, and permed, sprayed hair popular among the Catholic school girls I played basketball against.

Many of my readers will disagree, but I think it's rather useful for children like the youthful me to be confronted with the ludicrous ease of their lives. But I don't think that that particular list was a very good way to do it.

Mind you, it is possible that I'm simply suffering from geographic bias--the first thing I thought when I saw it was "but poor people don't know how much their heating bills are--that's paid by the housing authority!" But weird New Yorkities aside, that list still seemed to me to reek of unconscious class bias, the kind that academics are supposed to be challenging. If you had no television, one television, or a black and white television as a child (and are under the age of thirty-five), then it is extremely likely that your parents were educated people with a great deal of social capital that they passed on to you. Having to give up a second television may make academics feel poor, but cutting out cable in order to fund piano lessons is not what happens in households that are actually underprivileged.

Academics are terrible, terrible snobs about certain forms of consumption, and painfully few of them are aware that these tastes are class markers, not ordinal virtue rankings written into the fabric of the universe at the beginning of time. Maybe I'm reading too much in, but a lot of the items on that list smacked not of privilege, but at an underpaid academic's resentment of the material largesse showered on the rich little snots who snore through their classes.

To me, privilege is not about how enjoyable your parents were able to make your childhood leisure time. It's not even about material goods: the immigrant construction workers I worked with at the WTC disaster recovery site enjoyed a considerably higher material standard of living than the scions of the upper-middle-class who populate the Northwest DC journowonk community.

Privilege describes how much scope your parents bequeathed you to shape your destiny. This operates in multiple and often subtle ways. It can be reading in the home, or a peer group carefully selected (usually through real estate purchase) to ensure that you "choose" to go to a competitive college instead of dropping out of high school and selling drugs. Or it might be the way having affluent, stable families enables people like me to opt for high-status, low-paying, personally enriching careers, because we know that if something really awful happens, our families can help out.

By my definition--and I think that by any reasonable definition--I was about as privileged as any kid in America whose last name is not "Hilton". The only hurdles I faced in getting into college, grad school, and a job I love were entirely self-constructed--like that low high school GPA¹.

But by the standards of that list, I was really rather deprived. My house had two bedrooms for four people, and one television that I was barely allowed to watch. We took no vacations, other than driving to visit aunts, uncles and grandparents. I got out of grad school with about $100,000 worth of student loans.

Which is not to suggest, as a few bizarre commenters/emailers suggested, that I was under the impression that I was deprived, or that my childhood in any way resembled growing up in the rough-hewn arms of the proletariat. Rather, the opposite: that many of the status markers chosen do not, in fact, meaningfully contribute in any way to privilege.

Obviously, any list will be imperfect, if only because wealthy Manhattanites will always be the outliers. But that list seemed particularly inapt.

¹ And it really was appallingly low; I shouldn't have been admitted to Penn, or any of the other schools that let me in. I retain the suspicion that somewhere out there is a girl named "Megan McAndle" who was shocked and disappointed with her results in the 1990 college admissions lottery.

Putting a price on tears

If Hillary did sob deliberately, how well did it work? We'll know tonight, of course. But while the latest polls show a widening gap between her and Obama, the price of a Hillary contract rose slightly on the Iowa markets this morning.

Very slightly, though; she's still trading at only around 20 cents to get the nomination. Obama is the overwhelming favorite.

Sob story

Several of my commenters think that the Hillary sob was a setup: an attempt to humanize her into a last minute win of the New Hampshire primaries. That sentiment is echoed by an anonymous blogger over at The Economist's Democracy in America blog, the best-kept secret in American political blogging.

CALL me a terrible, terrible cynic—perhaps one of those who "think elections are a game"—but it seems awfully convenient that a rare emotional crack should appear in Hillary Clinton's steely wonkish façade just as she is fighting to dispel the notion that she is cold, aloof, or unlikable, and to gain ground against an opponent whose personability and charisma may be his greatest assets. . . . John Edwards is reported to have "pounced" on Mrs Clinton's choked-up moment, telling reporters that "what we need in a commander-in-chief is strength and resolve, and presidential campaigns are tough business, but being president of the United States is also tough business". Perhaps this illustrates the catch-22 faced by women in politics: They are portrayed as bossy and unfeminine if they behave like their male counterparts, but tarred as weak or hysterical at the first display of emotion. (Reason's Kerry Howley notes that Y-chromosomed politicians can apparently get misty without prompting a media feeding frenzy.) But given that many of the reactions to Mr Edwards' remarks have been hostile, perhaps it also illustrates Mrs Clinton's canniness. Her next tear may be shed over the fact that it was Mr Edwards, rather than frontrunner Barack Obama, who took the bait.

All right, I'm as sympathetic as the next working woman to the problems that women face in trying to make it to the top . . . but if New Hampshire votes for Hillary Clinton because the Poor Widdle Girl Feels so Bad About Losing, I'll vomit, I really will.

Baltimore sues to bring back redlining

That headline was suggested by the friend who emailed me this little gem from the New York Times:

The recent surge in homeowner defaults nationwide, generated by lax lending practices during the real estate boom, has officials bracing for a range of problems that often accompany foreclosures. Some municipalities, including Cleveland and Buffalo, are trying to make lenders responsible for abandoned properties to ward off crimes like arson, drug use and prostitution.

But the civil suit that officials in Baltimore are filing in United States District Court may presage another type of litigation against lenders by municipalities facing shortfalls in their budgets.

In the suit, Mayor Sheila Dixon joined with the City Council to ask that the court bar Wells Fargo from charging higher fees to black borrowers. Many of these borrowers paid more under the bank’s subprime lending program, designed for less creditworthy consumers, and are more likely to default on their loans.

I hear a lot of complaints that borrowers were shifted into rates "higher than their credit profiles" merited. But the articles never actually tell me what I want to know, which is: were these borrowers charged higher rates than their loan packages merited? Your FICO score is just one part of the package; others include things like assets and income, and the size of the loan relative to the house value. The sad fact is that, even in a (previously) decaying urban core like Baltimore, blacks are likely to have lower assets and income than whites. So far I've seen little evidence that, taking these things into account, banks are discriminating against minority borrowers.

I have no doubt, mind you, that some unscrupulous mortgage brokers have put clients into inappropriate mortgage packages. Mortgage brokers work for the lender, not for you, and you forget this at your peril; unfortunately, financially unsophisticated first time buyers may never have learned this in the first place, and their social networks may not have that information to impart.

But if I were an evil conspirator who wanted to ensure that poor borrowers have a hard time accessing conventional credit, this sort of lawsuit is exactly the strategy I'd take.

Buck up

So Starbucks has removed CEO Jim Donald and is bringing back founder Howard Shultz, who has been serving as Chairman since 2004. As you can see, the stock hasn't been performing particularly well, and investors blame Donald's strategic decision to take the focus off coffee and expand into creating a sort of fast food lifestyle brand.

But it seems as if Starbucks is still trying a little too hard to emulate Apple. CEOs matter, but the talismanic faith in the power of a founder-CEO to wreak miracles is overdone. Starbucks' market is saturated, and competition is heating up. On the low end, McDonalds and Dunkin' Donuts have stepped up their game; on the high end, the Starbucks revolution has created an independent coffee shop culture in urban areas that is siphoning off Starbucks' most lucrative sales. Perhaps Howie Schultz can bring back the magic . . . but this process was well underway when he was in charge, and he didn't seem to have much of an answer for it.

The market sure likes him, though; the stock jumped on the news. You can all watch me eat my words when I buy my first iLatte in 2009.

Don't cry for me, New Hampshire

I've no doubt that Hillary Clinton has it harder because she's a woman. Act too commanding, and you're a bossy shrew; stay low-key and you're weak. But on the crying thing, I have my doubts that she's really getting special treatment.

There are, to be sure, are different rules about crying for men and women. I've had female colleagues cry on my shoulders about problems with their boss, which didn't strike me as particularly odd, even though a male colleague who did the same thing would come across as more than passing strange. And perhaps leadership should not be assigned, by default, the "male" style of crying. But it is; and though it is true that male politicians, including Senator Clinton's husband, have cried, they have done so in circumstances where we recognize that men, and leaders can and even should cry.

Hillary didn't cry because she was moved by the pathos of the lives lost in the brutal New Hampshire winter. She cried because she's tired and campaigning is emotionally as well as physically exhausting, and dare I say it, because women tend to find public rejection a lot harder to take than men do. For all her talk of experience, this is only the third campaign where voters were answering the question "Do you like Hillary Clinton?", and it's the first time the answer has been "No, not really." I'm sure I'd cry like a baby. But we rather expect the president of the United States to be able to endure an exhausting travel schedule, constant criticism, and an endless loop of the same banal speech without bursting into tears.

If John Edwards had cried in Iowa, would he be getting a pass for displaying his sensitive side? Don't be daft; he'd be labeled a big fat crybaby who couldn't stand losing. But I have a hard time picturing him weeping on camera. Hillary's problem in this case isn't that she's being held to a different, higher standard than men. It's that she's being held to the exact same standard, but she hasn't been trained from birth to live up to it.

Pure partisanship

I find it hard to believe that, in this day and age, anyone is really making an issue of Obama's purported ability to transcend partisanship. Whether it's Paul Krugman lamenting that he just doesn't have the steely will to really stick it to the right, or fawning fans gushing that Barack's transcendant appeal will finally unite us all into one big pulsating mass of Obamamaniacs, I have the same reaction: didn't I already graduate from high school? More to the point, didn't they?

Neoadolescence is the only explanation I can devise for the fact that none of these Very Serious People seem to recall that eight years ago, George Bush was making this claim at least equally convincingly. And am I really the only one who remembers that every single campaign of my adult life has sported lavish feature stories on the crossover appeal of the media's favorite candidate? Forget 1992--in 2004 I could have papered a largish condo with all the stories those angry Republicans who were crossing party lines for the first time in order to cast their lot for Kerry.

It is easy transcend partisanship when you are not, yourself, a polarizing figure. As the anodyne governor of a conservative state, George Bush had little difficulty reaching across the aisle to work with Democrats whose politics would put them on the rightish side of the Republican party in New York. Similarly, a first term Senator whose party holds an uneasy majority seldom has either the need, nor the opportunity, to become the standard-bearer for partisan purity.

And though you really wouldn't know it from the gushing political columns, it is not exactly a stunning surprise to find Democrats voting Republican, or Republicans voting Democrat. We live in a dynamic world. People change. They grow. Liberals get mugged, and conservatives get sacked. None of this means that we've suddenly got A New Sort of Candidate. Barack Obama is a lovely chap, but five gets you ten that in a couple of years conservatives will be complaining about him just as bitterly as they did about Clinton.

I'm rubber, you're glue . . .

Mark Kleiman ably summarizes the tedium of ginned-up campaign "gotcha!" moments:

In putting out that message, Obama's campaign broke a law. The violation was about as egregious as they come: the law requires that a phone call's sponsor be identified within thirty seconds, and in the calls in question that announcement didn't come for a full thirty-eight seconds. Has he no sense of decency? At long last, has he left no sense of decency?

Well, yes, technically the law being cited didn't actually apply to this case: it specifically exempts Presidential preference primaries. But that just shows how utterly untrustworthy B. Hussein Obama is: he's capable of breaking laws that don't even exist! Anyway, it's the principle of the thing.

Or something.

God damn, I'll be glad when this is over!

The P-word

John Scalzi has a rather scathing post up on the subject of the "privilege checklist" apparently deployed by professors at Indiana State to show their charges what a bunch of pampered sissies they all are. I share a number of Scalzi's objections: like him, for example, I wasn't read children's books because I learned to read very young. He goes on to list the number of ways that he, who was not privileged, nonetheless registers as privileged by this checklist. I, who had a pretty soft upbringing, must also protest. Many of the things on the list have nothing to do with "privilege", and in fact, I didn't get them, because my parents poured pretty much all of their disposable income into educating me: vacations, for example. Many of the other things on that checklist--getting a new car from your parents, going on a cruise with your family, having a television in your room--were rare among my ultra-privileged private school classmates because they were seen as vulgar; not having those things was a sign of higher social class. (I think some of that's changed now, though, from what I gather, not the disdain for cruise ships.) This list reeks of academics confusing their petit-bourgeois disdain of ostentation with actual privilege. Having a television in your own room is a sign of poverty mostly to the less well remunerated castes of the lower-middle class, who always feel they should be pouring the money into something more worthy; it is not an uncommon sight among welfare families in New York City.

Vacations with hotels are an even less reliable indicator of "privilege". Aside from a youthful trip to Niagara Falls, I can't remember any family vacation that did not involve visiting relatives, or did involve an airline flight. I can think of no way in which this hampered my development as a fully actualized human being, or an economically productive member of society; nor do I think that the fact that I have not been to Disneyland¹ materially affected my chances at Harvard². I'm a child of privilege not because my family gave me fantastic leisure opportunities, but because the circumstances of my birth and upbringing made it relatively easy for me to choose my path in life. Every one of those professors' kids is more privileged, in that sense, than the child of the median car-dealership owner.

¹But didn't your parents love you? cried one friend, upon learning this.

²Though in fairness, any effect would probably have been swamped by my anemic high school GPA.

Good question

Commenter Dick King asks a question that deserves its own post:

More seriously, with bar codes and instantly reprintable memos and internet shopping, is the consumer as aware of inflation as he used to be?

I'm not sure. I noticed the new menu (and the price increase) because they'd taken the opportunity to remove some dishes that we'd always wanted to order, but never had because they were available only in a fasting season that mysteriously never seemed to arrive. But if not for that, I'm not sure I would have realized prices were rising.

Of course, at some level of inflation, even modern printing technology can't keep up; in some hyperinflationary economies, one hears about people trying to spend all their money in the morning, because prices will be higher come afternoon. And in the end, the effect on the consumer's budget will tell; one way or another, the books have to balance. So at best, it's a very temporary respite from inflationary expectations. But still an interesting question.

Free the feed, part II

It turns out that super-brilliant friend Tom has solved the problem.

Weekend thoughts

I went to see the Hopper exhibit yesterday at the National Gallery. If you're going to be in Washington DC before the exhibit closes, I highly recommend seeing it.

As we walked through the exhibition, we were discussing friends who hate Hopper (I have a few), and why they do. One friend theorized that it's because he's accessible, and I have to concede some of that, but I wonder if it isn't also that to some extent he's been spoiled by his imitators. After all, that same friend conceded he'd hated the recent Turner exhibit largely because it's far too reminiscent of Thomas Kinkade.

Hopper is even easier to imitate--badly--than Turner, and hence he's the stuff of half the hotel paintings between here and Sacramento. Similarly, I've been listening to a lot of 19th century composers in the last year, and I've struggled to get over the fact that their minor themes seem to have been so shamelessly pillaged for the construction of 1940's movie scores.

This makes me ponder the social value of fair use. Perhaps I'm more willing to contemplate its downsides because of David Balan's weekend post defending what I would normally consider indefensible: the standard cries of "selling out" whenever an artist becomes more accessible.

I want to offer an argument that the original fans are (or at least can be) right to feel betrayed. Most people regard art to be an important part of their lives. But artistic products are, by their nature, things that you can't fully appreciate until you consume them. Moreover, they aren't even "experience goods" in the traditional sense that once you've experienced them you know everything there is to know about them. Rather, art exercises its influence over you subtly and gradually, and in ways that you cannot fully predict or control. This means that you are, to some extent, at the mercy of artistic gatekeepers: it is inevitable that the people who feed you art, who tell you what is and what is not "good," have real power over an important part of your life, and that power is partially unaccountable in the sense that you will not necessarily ever know whether your gatekeepers have been acting as a faithful agent in your interest (i.e., acting to help you achieve the richest possible artistic experience), or whether they are taking advantage of you for personal gain. This means that you must trust other people to look after this aspect of your well-being, with the knowledge that they may have interests that diverge from yours. And where there is trust, there can be a betrayal of trust. And as a practical matter, it makes sense to direct your opprobrium at anyone you actually catch violating that trust, in the hopes that this will serve to deter some of those would-be betrayers whom you would not have caught.

I'm not sure I buy the legitimacy of "gatekeepers" of art. But art clearly is constructed in the sense that it is not just the piece itself, but our associations with the piece, that create our experience. So anything that creates bad associations--an awful subsequent album, a bad piece of fair use, or even a poorly judged licensing--has the power to destroy our enjoyment of something we otherwise consider good art. I don't mind Hem selling out to Liberty Mutual, but the eHarmony ad has permanently put me off "Everlasting Love", and for that matter, Natalie Cole.

Not that I think we should do anything about this, mind you. But for now, I'm preserving my right to get mad.

Loosey goosey

The Economist warns against using fiscal stimulus to pull America out of its current slump:

The last time the Federal Reserve slashed interest rates to shore up the economy, between 2001 and 2003, it sowed the seeds of today's housing mess. Although a housing and credit collapse would be deflationary, pre-empting that risk too dramatically could be inflationary. Consumer prices are rising uncomfortably fast, and people's expectations of future inflation, by some measures, have inched upwards. If central bankers allow inflation expectations to become unhinged, they will have a nasty, protracted problem on their hands. That is why the Fed's measured pace of interest-rate cuts is prudent.

If America's economy falls into a long slump, then of course politicians should grasp the fiscal lever. That is one way to reduce the pressure for extreme monetary easing. Cash-strapped consumers in depreciating houses might respond more forcefully to tax cuts than lower interest rates. And if the mortgage mess gets bad enough, a public bail-out—say by using institutions such as the Federal Housing Administration—may prove a less damaging palliative than heavy-handed government rewriting of mortgage contracts.

But none of this means it is right to act now. With private spending weakening, not slumping, there is no case for a fiscal offset. Although America's budget deficit, at 1.2% of GDP, is not enormous, the room for manoeuvre is smaller than in 2001, when Mr Bush sold his tax cuts as a stimulus. Partly as a result, Congress is contemplating only modest actions—such as a tax rebate, more food stamps, perhaps some infrastructure spending. It is likely to be a vain exercise: unnecessary if the downturn is mild, but insufficient to deal with a truly dire mess. Like good doctors, policymakers ought to plan for the worst. But, for now, they should keep their strongest pills locked away.

It's safe to say that as memories of the 1970s have faded, the Federal Reserve has become a little less hawkish than it used to be. Is it too loose? I'm not sure. In hindsight, Y2K didn't wipe us out, and the economic impact of the 9/11 attacks was limited, so the Federal Reserve probably erred too far on the easy side. But of course, in hindsight, I should have staked my life savings on Giacomo to win the 2005 Kentucky Derby.

Nor am I clear on how much of the stock/housing bubbles should be laid at the Fed's feet. For all that the market drops whenever the Fed fails to provide ever-easier credit, I need a better explanation than a mild loosening in the late 1990s for why the stock market soared to such exotic multiples of historical values.

That said, it is now clear that inflation is ticking upwards: not yet to worrisome levels, but enough to make one fret that today's price increases may be a harbinger of worse to come. I went to one of my favorite Ethiopian restaurants last night and was handed a newly printed menu with prices about 10% higher than the old ones. Like today's core inflation numbers, this is not in itself particularly notable--except that it called to mind my dim memories of menus in the 1970s, when prices changed so fast that many places didn't bother reprinting the menus, but merely stuck new stickers over the old prices.

Free the feed!

I just clicked on a link to a blog that had sat in my RSS reader for weeks, unread, while 34 new entries piled up. It's a blog I like, one where I often find smart food for thought. But it only has partial RSS feeds.

I used to be a defender of the partial feed; ad revenue is, after all, what makes the bandwith go round. But I've changed my opinion. There are too many good posts I haven't linked because I found them two weeks late; I even get behind on Economist blogs, and I founded one of them. The gain from readers who click through to see the full link has got to be more than offset by the loss of readers who dispense with your blog entirely, plus the readers of other blogs who never saw your post because their favorite blogger didn't bother to read it.

A soldier falls

Andrew Olmsted is dead. I wish I had something better to say than "I mourn", but words fail.

I mourn.

Second best paragraph I've read all year

From Daniel Davies:

In particular, I’m not in the market for arguments which rely on, say, a physics exam being “more difficult” in the past because it used to require the memorisation of a list of formulas. The same exam could be made even more difficult by turning out all the lights and making candidates wear boxing gloves, but this would not have much to do with the standard of physics learning either (I don’t believe that standards of driving have declined due to the obsolescence of double-declutching, or that standards of football have declined due to the invention of laceless balls)

Tyler Cowen explains it all

Best paragraph I've read all year:

Government-dominated health systems, insofar as they work well (a number of them do), succeed simply by lowering costs. Health care has a murky relationship to human health, pharmaceuticals and broken limbs aside. A version of the single-payer system, as might be adopted in the United States, would not lower costs.