You are currently browsing the monthly archive for April 2010.

Roger Ebert describes seeing Werner Hertzog at the 62nd annual Conference on World Affairs doing a shot by shot analysis of “Aguirre, the Wrath of God” and taking questions from the audience:

Kinski, in constant rage. Describing himself as a “natural man” who could live in the forest like an animal. Then complaining that his tent leaked. Then complaining that the thatch shelter built over the tent leaked. Then moving at great inconvenience to the production into a shabby hotel where he beat his wife nightly, the crew discreetly removing the blood stains.

“A coward,” Herzog says.

“Is it true,” a voice from the dark asks, “that the Indians asked your permission to murder him?”

“No. That was on ‘Fitzcarraldo’.”

I strongly recommend that anyone who has enjoyed the parodies of Herzog narrating Curious George, Matilda, and Where’s Waldo? see Herzog’s own parody of himself, Incident at Loch Ness. It has many hilarious exchanges like this:

Zak Penn: At least we’re not dragging the boat over a hill…
Werner Herzog: What was that?
Zak Penn: Uh… nothing.

Matt Yglesias agrees with William Galston that the democrats would do well to switch their focus from immigration to the economy. I don’t know -or care- what’s best for the democrats politically, but I think immigration policy is actually one of the few levers that the government can push on to improve the economy at this point.

Most economists would agree that an increase in house prices right now would be a good thing. It would increase household wealth and bank balance sheets, which would potentially stimulate consumption and lending. A large enough increase can send a clear signal to hesitant homebuyers that the bottom has been reached, and lead to further increases in demand. Construction output increases to meet demand… and so on and so forth. These things are obvious though. The question is, how do we increase prices at a low enough cost to make it worthwile?

The most efficient way I can see to do this is to increase immigration. I think increasing all immigration would work, but even more targeted to economic growth would be a very large increase in H1B visas for skilled workers. This is a more efficient means to increase house prices than any other stimulus/housing policy plan out there, because it

1. requires no market distortions (you’re welcome Arnold Kling)
2. does not encourage buying over renting (Ryan Avent and Felix Salmon, that’s for you)
3. is Keynesian stimulus, because the spending on housing, transportation costs, and new furniture associated with immigrating would not have happened otherwise (DeLong, you can celebrate)

Now if you auction these H1Bs at a couple thousand dollars a pop and then use that money to build those crybabies in Arizona their border fence then you’ve got a Pareto improvement. What about lower wages for high skilled workers? I can believe that the increase in output from more immigration might be enough to actually increase the marginal productive of skilled labor, and thus wages. If someone wants to work out the general equilibrium result there please do so.

If you’re concerned about the welfare of the emigrating nations consider that remittances are often sent back, and the ability to leave the country and get higher returns on human capital raises the incentives for citizens of that country to accumulate human capital. This in turn would increase the supply of human capital generating institutions like higher ed, which the non-emigrating population benefits from. I can’t cite specific literature on this, but I believe the work done on this generally supports the notion of a positive impact of emigration.

Perhaps then we should be considering pro-emigration policies too. For instance, as Dean Baker has suggested, if we let the elderly take their medicare to Europe they will get more for their money and we will spend less on medicare.

In a global sense more immigration is just allowing labor to move to where it is most productive. For all the urbanists who criticize pro-homeownership policy for reducing labor mobility, this should be an obvious win. Let’s lower barriers to entry and exit, and not let nativism get in the way of economic recovery.

As I had hoped, the Secretary of Alien Strategies reports for duty:

Many species here on Earth have endured for millions of years while retaining “aggressive” tendencies, and even very “mildly” bellicose aliens, ones who would only exterminate us if they could make a plausible case that we might pose a future menace, should still be of great concern to us.  I sure don’t want to be exterminated “just in case.”  Wouldn’t it make more sense then to shut up until either we don’t look so menacing, or until we are strong enough to defend ourselves?

In retrospect there’s two reasons to be concerned about Robin in this position. Are we sure he’s not here on behalf on some future invading alien species to make us rational enough to accept their inevitable domination when they invade rather than fight them to the death as our irrational “humanity” may compel us to do? And even if he is human, if aliens do arrive can we say for sure he would not advise them that it would be more efficient to wipe us out?

Conor Friedersdorf is my minor internet hero. I found his recent twitter campaign to persuade fans of talk radio blowhard Mark Levin that Levin should not be trusted to be somehow badass. Is this not the ballsiest tweet ever?

@LizzieViolet @MarcieDreyer@debster7301 @prismsinc I am Conor Friedersdorf. And I can prove that Mr. Levin is deliberately misleading you.

Well ballsy in a Jimmy Stewart kind of way, anyway.

He explains his sisyphean campaign here, and has an open letter to Mark Levin fans here. Good luck to him, he’ll need it going up against wit like this.

Everyone from households, to  corporations, to foreign nations are declaring bankruptcy, and now some U.S. cities are looking to get into the fun. According to the Financial Times,  there were ten chapter 9 bankruptcies last year, but none were large cities. But now, with $68 million in debt service payments due this year and a total debt of $288 million, Pennsylvania’s capitol of Harrisburg is considering a chapter 9 bankruptcy. The $68 million due before December 1st this year amounts to about $1,400 per person for this city of 47,000. Other plans that have been floated include a tax hike or selling the city’s minor league baseball stadium, parks, the sewer and water systems, and parking garages. The latter of which they received and rejected a $215 million offer for a 75 year lease in 2008, but the bidder has said that the offer still stands. It’s tough to understand how this could be a difficult choice.

Rep. Duncan Hunter wants to deport American citizens who are the children of illegal immigrants:

“Would you support deportation of natural-born American citizens that are the children of illegal aliens,” Hunter was asked. “I would have to, yes,” Hunter said. “… We simply cannot afford what we’re doing right now,” he said. “… It takes more than just walking across the border to become an American citizen. It’s what’s in our souls. …”

So does he think that illegal immigrants and their children don’t have American souls, or don’t have souls altogether? If he’s going to start deporting the children of illegal immigrants, I wonder if he will at least let this one keep his gold medal.

H/T Yglesias

A New York tax appeals board has rejected the claim that poll dancing should be exempt from sales tax on the basis that it is “dramatic or musical arts performances”. I suppose one must draw a line somewhere, it might as well be at the door of the strip club.

A new gallup poll illustrates the relationship between smoking, education and income.

image

The relationship mirrors health issues

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The real challenge, however, is to tease out the causal relationship between these four factors. Are people poor because they are unhealthy? Are they uneducated because of the same social forces that drove them to smoke? Are there genetic factors underlying all of this?

Noah Millman offers a three dimensional taxonomy political leaning aptly summarized by William Brafford

    • liberal vs. conservative (attitudes toward the individual and authority)
    • left vs. right (attitudes toward social/economic winners and losers)
    • progressive vs. reactionary (attitude toward past and future)

Noah asks where we fit in. On a line by line analysis I would have to call myself a conservative left-leaning progressive, but that doesn’t seem quite right. I tend to have more in common with Will Wilkinson ( liberal right-leaning progressives) than either Ross Douthat (conservative left-leaning reactionary) or Matt Yglesias (liberal moderate-leaning progressive).

To me the problem seems to be in the term liberal/conservative which conflates elitism vs. populism  with authoritarianism vs. liberalism. I would probably more accurately call myself an elitist liberal than a conservative, but my elitism probably outweighs my liberalism and thus according to the Millman taxonomy dumps me in the conservative camp.

To be more specific I am highly skeptical about the ability of individuals to understand their choice set. I generally think politics doesn’t work because the general public is always interjecting their mostly foolish ideas. I also think that the dominance of major corporations, think tanks, universities and to a lesser extent religious institutions are a good thing for society.

At the same time, however, I am highly skeptical of attempts to prescribe behavior for individuals. I don’t think that the social problem is tractable and I don’t think that socialism qua socialism will ever be able to compete with a market economy. It is because this that I think I side more with the Cato boys who are right-wing and elitist than say Yglesias who is moderate-leaning but populist.

Robin Hanson proposes two simple campaign promises that would get people more of what they say they want

Here are two positions most any politician can take, yet few ever do:

  1. “If elected, every month I will impanel a new random jury of voters in my district.  I will inform them in detail about my upcoming decisions, and will ask them for their choices.  Then I will just do what they say.  In this way I can assure you that won’t act on my own interests or those of my cronies or donors; I will act as would random informed citizens from my district.”
  2. “I promise that, if elected, I will do X, Y, and Z.  But I don’t just make promises; I show you I am committed to keeping my promises.  My word isn’t my only bond; my house is also my bond.  I have contracted with ABC law agency; they will give my house away to the first person that can prove that I have broken any of these promises.”

 

Robin suggests a few reasons why politicians don’t make such promises and more importantly why voters don’t demand a politician who does. However, I think he misses the big point. Politics, for most, is a sport. Its a chance for the Blues to trash the Greens and vice versa.

What important in politics is that the politician is a member of your team. We he wins, you win. This puts politicians in a bind. On the one hand they want to float to the middle so the most people can realistically tell themselves that the politician is on their team. On the other hand they need to draw contrasts with their opponent so that team affiliation is strong. Walking this tightrope is the essence of politics.

An excellent article from Foreign Policy lays out the case for modern industrial farms, and argues that the local, sustainable, organic food movement is not a solution to world hunger. Particularly noteworthy is his section on how “precision farming” has helped reduce the environmental impact of agriculture:

Soil erosion on farms dropped sharply in the 1970s with the introduction of “no-till” seed planting, an innovation that also reduced dependence on diesel fuel because fields no longer had to be plowed every spring. Farmers then began conserving water by moving to drip irrigation and by leveling their fields with lasers to minimize wasteful runoff. In the 1990s, GPS equipment was added to tractors, autosteering the machines in straighter paths and telling farmers exactly where they were in the field to within one square meter, allowing precise adjustments in chemical use. Infrared sensors were brought in to detect the greenness of the crop, telling a farmer exactly how much more (or less) nitrogen might be needed as the growing season went forward. To reduce wasteful nitrogen use, equipment was developed that can insert fertilizers into the ground at exactly the depth needed and in perfect rows, only where it will be taken up by the plant roots.

These “precision farming” techniques have significantly reduced the environmental footprint of modern agriculture relative to the quantity of food being produced.

It’s pretty hard to picture your friendly, local neighborhood, organic farmer using such high-tech methods.  This is the kind of benefit that modern industrial farming brings.

Along the way the author also defends pesticides and attacks organic foods:

Health professionals also reject the claim that organic food is safer to eat due to lower pesticide residues. Food and Drug Administration surveys have revealed that the highest dietary exposures to pesticide residues on foods in the United States are so trivial (less than one one-thousandth of a level that would cause toxicity) that the safety gains from buying organic are insignificant.

The whole thing is worth reading. Felix Salmon, who had recently written a defense of local food movement in the same journal, linked to the article as “Felix Salmon smackdown watch, organic farming edition”, if that tells you something.

If someone told me that U.S. retailers are more price competitive than Canadian retailers, and that they offer a cushier package of services and perks in their retailing, I would have assumed they were just operating under some vague stereotypes that somehow fits with generalizations of Canadian/U.S. cultural difference. In the U.S. we are results oriented, cut-throat, and professional consumers. Pregnant mothers in labor make take-it-or-leave-it offers hospitals, we want free choice and market competition in everything from prisons to adoptions. In Canada they like things a little slower, a little softer, and need to be gently coaxed into spending their hard earned loonies. “Now explain to me again how this replaces my VCR, eh?” They are comfortable with a mixed economy in everything. Every year the prime minister decides which brands of HDTVs can be sold; so far he has chosen none, ‘Canada is not ready’ he rightly says.

This article from the Vancouver Sun suggests that this stereotype (of mine) may in fact be correct:

…goods are cheaper in the U.S.

That may be in part because there is more competition in the U.S., which is larger. But the main difference is the type of competition traditionally found in the two countries.

In Canada there has been more emphasis on service and a pleasant retail environment, Brander said.

“Price isn’t everything.”

In the U.S. the focus has been largely on price, not service. But that’s changing.

“In Canada we have been getting more and more Americanized in our retailer culture thanks to places like Walmart,” Brander said.

And as that culture continues to make inroads into Canada, prices will continue to converge.

The author of the piece cites cultural reasons and the number of competitors, but I wonder if something else isn’t at work. In the U.S., antitrust is often concerned with agreements that allow manufacturers to set minimum retailer prices, or make exclusive deals with retailers and distributors that prevent other manufacturers from competing, or other vertical restraints that could inhibit competition and reduce consumer welfare. One economic justification for restraints like these is that they allow retailers to offer better sales services for the manufacturers goods, which other retailers cannot free-ride on and undercut them on prices. For example, Store A will tell you everything you need to know about Sony HDTVs (unless you’re in Canada), and then you’ll go and buy them in Store B which has no sales staff to give you information, but is thus able to charge lower prices. By setting a minimum price for their TVs in each store, Sony is able to prevent Store B from undercutting store A, so that both will offer sales services, which Sony prefers.

Does Canadian antitrust have similar concerns with vertical restraints? If they are more lenient with vertical restraints, then that might create a retail environment with less price competition and more services.

Stanley Fish takes us on a tour of First Amendment theory that leads up to the recent controversial decision:

Decisions like Hustler v. Falwell exhibit a pattern. Before coming down on the side of the speech the government tries to regulate, the Court declares its distaste and even revulsion in the face of what it must, according to its lights, permit, as if to say, “we are on the right moral side, we regret having to do this, but, hey, it’s the First Amendment.”

This “rhetoric of regret” is on display in spades in the famous Skokie case (Smith v. Collin, 1978), in which a 7th circuit court declares that a march by a band of neo-Nazis through a neighborhood populated by Holocaust survivors must be allowed even though, as the Court concedes, emotional and mental distress would be inflicted upon elderly people who had already suffered more than enough.

It’s a very informative and readable history, I recommend the whole thing.

A friend writes:

I was just buying some tickets and had to type the security word thing and as I was getting it wrong four times in a row learned that I was actually helping (or perhaps hurting by getting them wrong) to:

“Digitize books one word at a time by entering the words in the box, you are also helping to digitize books from the Internet Archive and preserve literature that was written before the computer age.”

I’ve spent my whole day trying to figure out how this possibly could work.

My guess is that the mistakes give them a similarity measure between letters in different fonts. For instance e’s are similar to a’s because people often mistake an e for an a and vice versa, but e’s are not similar to k’s since people rarely make that mistake. This means the mistakes are more useful to them than correct answers. But I’m not sure what the road is from a similarity matrix to OCR software. Suggestions?

In accordance with their ban on “murderabilia”, eBay has removed an auction of the van used by Dr. Kevorkian to perform assisted suicides. The top bid at the time was $3,400. I am surprised that an auction site dedicated to repugnant goods and services has not arisen for situations such as this. I will spare you a list of things I suspect would likely be on sale there, but it would be hosted in Latvia and anything would go. Pareto improving, no?

That is the contentious title of a new paper from Philip Z. Maymin and Zakhar G. Maymin, which is significantly less contentious than their abstract:

We show that any objective risk measurement algorithm mandated by central banks for regulated financial entities will result in more risk being taken on by those financial entities than would otherwise be the case… This result leaves three directions for the future of financial regulation: continue regulating by enforcing risk measurement  algorithms at the cost of occasional severe crises, regulate more severely and subjectively by fully nationalizing all financial entities, or abolish all central banking regulations including deposit insurance..

It is my admittedly casual observation that a bipartisan majority of economists believe that the creation of the FDIC has played a large part in the lack of bank runs that we’ve had in the latter 2/3 of the 20th century.  Milton Friedman even suggested as much in A Monetary History of the United States:

Major changes in both the banking structure and the monetary system resulted from the Great Contraction. In banking, the major change was the enactment of federal deposit insurance in 1934. This probably has succeeded, where the Federal Reserve Act failed, in rendering it impossible for a loss of public confidence in some banks to produce a widespread banking panic involving severe downward pressure on the stock of money; if so, it is of the greatest importance for the subsequent monetary history of the United States. Since the establishment of the Federal Deposit Insurance Corporation, bank failures have become a rarity.

Although I also believe he backed away from this somewhat later in life. And there are certainly economists, including Charles Calomiris, who have agreed with what these guys are saying about deposit insurance making things worse. This paper does make this interesting point:

…the number one response consumers cited as the most important reason for choosing their primary financial institution was the location of the bank’s offices, with more than 40 percent of respondents indicating geographical convenience as their most important reason. The second and third most popular reasons were low fees and the ability to obtain many services at one place, at about 15 percent response each. Safety and the absence of risk were listed as next to last, at only 2 percent on average. In short, with deposit insurance, consumers are indifferent as to the particular risk each bank runs.

I mean, if you were a bank and this is how your customers thought, how would that make you behave with respect to risk?

Still, I haven’t yet read an argument persuasive enough to overturn my deference to the consensus (the consensus I perceive anyway) of economists on this issue.

The title is Hitch 22 and it appears it will be released this June. He apparently has a whole chapter on Salman Rushdie, and one Amazon reviewer recounts this:

he tells of accusations against him of turning on his friend, edward said, at the time said was on his death bed. his account will have him appear as an apologist to his detractors, but there’s no way he can avoid this. [Saul] bellow, of course, was baiting him in manhattan, not only with the magazine with the article about edward said, but also by drawing hitchens out with a question about wordsworth’s political persuasion.

That all sounds about right. Perhaps to market this book Hitchens will be prompted to blog, if even temporarily. His writing often reads like, and sometimes is, correspondence -albeit an entirely overwrought correspondence- which would lend itself to blog form.

Gabriel Sherman says, she’s all about the Benjamin’s. image

And, whatever one thinks of her intelligence, she was more than shrewd  enough to see that there was money to be made on her newfound national profile, and she hadn’t been the one making it—this was her particular American resentment. The tabloid-media culture began cashing in on the Palin-family drama ever since her pregnant 17-year-old daughter, Bristol, and boyfriend Levi Johnston stepped on the Xcel Energy Center stage at the Republican National Convention in St. Paul. On multiple occasions, Palin complained to campaign aides about Kaylene Johnson, an Alaska journalist, who had just published a book about her. “I can’t believe that woman is making so much money off my name,” Palin said.

Greed, deceit, sex. She’s an Alaskan Gossip Girl. Just keep her away from the button and I think we’ll do just fine.

Arnold Kling and Niklas Blanchard discuss the past and future of US debt.

Niklas concludes

if borrowing pushes up the nominal interest rate on bonds above the productivity growth (which is highly correlated with GDP growth), then the trend in public spending becomes very unsustainable very quickly. Why is this a problem for the US and not countries in Europe? Because of their lower levels of growth, there is a lot of low-hanging fruit for those countries to pick off in order to increase their productivity growth rates. The US, seemingly (from the above graphs), not so much.

If I am remembering my growth models correctly then its not possible for the risk free real interest rate to exceed the GDP growth rate for an extended period of time.  Which leads me to two possibilities:

  1. The US debt becomes a problem because it is no longer risk free.  This is a theoretical possibility but requires a lot of systemic change. The devastating nature of a US default makes US debt risk free both because no other asset would be immune to such a failure and because it is unlikely that the US political structure would allow such an event.  Both of these factors could change but I tend to think we would see that coming
  2. Somehow the economy adjust to produce rapid expected GDP growth. Now, the easiest way to do that is through a massive consumer driven recession. This seems the likeliest possibility to me. Rapidly rising government interest rates begin to crush consumer spending which leads to a massive recession and skyrocketing savings. Something similar to what we just experienced but likely much larger. The rapid increase in savings would push down government yields and the decrease in output would push up expected growth. 

David Henderson hypothesizes about why the phrase “it’s a free country” has changed in useage:

First, when I grew up in the 1950s and 1960s, not many people around me considered that a sassy reply. When I used the line, it was shorthand for, “I have rights; maybe this isn’t the best decision, but I have the right to make my own mistakes.” Second, almost no one uses that line any more. Why? I think it’s because, if only subconsciously, most people recognize that in some important ways, freedom in the United States has declined.

I think David is misunderstanding what happened to “it’s a free country”. What really happened was that obnoxious people used it as a phrase to justify obnoxious behavior for which there was literally no excuse other than “I am legally able to do this”. For instance, you might expect the man screaming at his kids while waiting outside a restaurant to yell “it’s a free country!” to the gawking crowd. Or the woman blowing smoke on a baby carriage. Or  the teenager littering an empty 32 ounce bottle of Mountain Dew in a graveyard. Or the older Canadian economist who won’t turn down the Sean Hannity book-on-tape that he’s blasting on a public bus. Or countless obnoxious movie theater behaviors (seen below).

I think the problem here is not a subconscious realization of the decline of freedom, but the fact that the brand of the phrase has been ruined by a few generations of obnoxious American’s for whom it was a thoughtless defense of behaving atrociously.

[UPDATE: See David Henderson in the comments]

A new paper from NBER tests Max Weber’s Protestant work ethic, and other hypothesis about whether religious affiliation affects economic behavior:

We find that Protestantism increases contributions to public goods. Catholicism decreases contributions to public goods, decreases expectations of others’ contributions to public goods, and decreases risk aversion. Judaism increases worker reciprocity in a bilateral labor market gift-exchange game. We find no evidence of religious identity effects on  disutility of work effort, discount rates, or generosity in a dictator game.

The authors sought to create exogenous variation in religious identity using a laboratory experiment:

The priming instrument… is a sentence-unscrambling task where subjects are asked to drop the irrelevant word in a five-word group and rearrange the remainder to form a four-word sentence. For example, “yesterday it finished track he” becomes “he finished it yesterday.” Each subject unscrambles ten sentences.

The sentences vary depending on whether the subject is in the religion-salient condition or the control condition. Five of the sentences unscrambled by religion-salient subjects contain religious content. These five sentences are: “she felt the spirit,” “the dessert was divine,” “give thanks to God,” “the book was sacred,” and “prophets reveal the future.” None of the control subjects’ sentences contain religious content.

How valid is this instrument? One worrying result is that the authors fail to replicate an experiment done by the originator of this particular priming instrument. So Caveat lector, but still, interesting results and approach.

And realizes that we should fear contact with other life in the Universe.

We only have to look at ourselves to see how intelligent life might develop into something we wouldn’t want to meet. I imagine they might exist in massive ships, having used up all the resources from their home planet. Such advanced aliens would perhaps become nomads, looking to conquer and colonise whatever planets they can reach.

I don’t know about the Nomad concept but I do know that it is in the rational self-interest of any intelligent life that meets humans to destroy us.  If for no other reason than simply because there exists a non-trivial probability that we will attempt to destroy them, whether through fear, misunderstanding or our own rational self-interest.

Thus, the best shot we have is to shut down any attempts to contact extraterrestrials and shut them down now! No contact is the best contact.

Update: Adam got there first and as usual, funnier. But my point stands.

Yes, Kent, I would. Or at least Steven Hawking would. In a new documentary for the Discovery channel, he makes the worrying argument that

…extraterrestrials are almost certain to exist — but that instead of seeking them out, humanity should be doing all it that can to avoid any contact…

He suggests that aliens might simply raid Earth for its resources and then move on: “We only have to look at ourselves to see how intelligent life might develop into something we wouldn’t want to meet. I imagine they might exist in massive ships, having used up all the resources from their home planet. Such advanced aliens would perhaps become nomads, looking to conquer and colonise whatever planets they can reach.”

He concludes that trying to make contact with alien races is “a little too risky”. He said: “If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn’t turn out very well for the Native Americans.”

Things to worry about: What kinds of defenses can we use against non-carbon based life forms? What moral codes might aliens abide by? What are the rules of engagement for alien war? Are we obliged to abide by the Geneva conventions for alien prisoners of war?

I believe the appropriate response to this is for Obama to create a cabinet level position focused entirely on these issues; perhaps the Secretary of Alien Strategies. The question then is who do we put in charge of worrying about very unlikely, seemingly absurd, and yet potentially disastrous alien scenarios? What marginally sane person would be willing to dedicate their time and energy to constantly thinking about issues which will only matter with a vanishingly small probability?

The movement towards legalizing marijuana in California is promising and should make those who favor legalization optimistic. If you think most popular reasons people oppose legalization are misconceptions about the negative consequences that will arise, then by example California should be able to change popular opinion in favor of legalization fairly quickly. One note of pessimism, however, is to watch for instances of Bruce Yandle’s famous Bootleggers and Baptists. This is when regulation is supported both by those who want to restrict trade for moral or safety reasons (baptists), and those who want to do so to create or preserve profitable “bootlegging” opportunities. For marijuana, this would be existing pot growers opposing legalization in order to protect their large black market profits from the competition that complete legalization would allow.

One countervailing force with respect to marijuana is that some proprietors probably have an idealistic dedication to the “cause” of legalization, which will temper their bootlegger motivations. Even those who don’t feel that way may be tempered by the bad P.R. among their customers that would result from outright opposition. The thing to watch for here is more subtle moves by current proprietors. This, for instance, raises tbe B&B alarm:

The for-profit company is made up of four proprietors of nonprofit dispensaries and their lawyer. Mr. DeAngelo calls them an “A-team of cannabis professionals.”

In late March, it helped lobby the City Council in San Jose, the nation’s 10th-largest city, to pass ordinances regulating dispensaries, a crucial step toward a legitimate industry.

If B&B is correct, then the regulation of dispensaries that the “cannabis professionals” pushed for would amount to increasing barriers to entry and other anti-competitive policies designed to increase their profits. In fact, this is exactly what it was:

The San Jose City Council on Tuesday approved drawing up guidelines for the operation of medical marijuana collectives as a way to regulate the businesses and possibly bring in much-needed revenue to the nation’s 10th largest city…. [C]ity leaders voted to draft an ordinance that would likely limit the number of pot clubs, control where they operate and tax them.

Now cue the bootleggers:

“Our desire is to be good citizens, to pay our taxes and play by the rules,” said Steve DeAngelo, operator of the Harborside collective, which is part of a group of 16 collectives that recently formed a coalition to advocate for increased oversight.

And cue the baptists:

“The only way to ensure medical marijuana collectivesfollow the rules is to regulate them, and I can’t say we’re doing that today,” said councilman Pierliugi Oliverio, who introduced the motion.

It is probably the case that the only way legalization is going to occur is with the political support of those that will profit by it. The downside to this is that they will be able to influence the rules, and will do so in a way that maximizes their profits at the expense of the consumer, and at the expense of competition.

A manager in the Personalized Plates Work Center reads through every application, putting any suspicious combination of letters and numbers into a computer program that analyzes the potential plate for hidden meaning. Questionable messages go to a 20-person Word Committee for review and a vote. Among the few printable examples of rejected license plates, according to Melanie Stokes, a member of the Word Committee, are “JERKA55,” “IPOOPD,” and “HORNI1.”

The 20 person committee certainly seems like an overkill. Even with all that though, as the rest of the article shows, identifying offensive plates can be tricky. Are vanity plates actually profitable for states?

In a Utah courtroom Friday, 25 years after he was sentenced to death for killing a man during an escape attempt, he declared his preference to the judge: “I would like the firing squad, please.”…

This is from a surprising story in the New York Times today about a man opting for the firing squad rather than lethal injection because “It’s so much easier … and there’s no mistakes.”

According to Wikipedia of the 1,028 executions in this country from 1976 to 2010, only 2 were by firing squad. An additional 3 were by hanging, 11 by gas chamber, and 157 by electrocution. These four alternative methods to lethal injection are still allowed in some states today.

I had just always presumed that people would prefer lethal injection. But the fact that some prisoners prefer different methods begs the question of whether prisoners should have free choice of their death penalty method. If we are going to take someone’s life away, letting them choose how seems to be the least we can do for them. Should there be limits though? Should a prisoner be granted a request to be drawn and quartered? To most libertarians the primary goal is eliminating capital punishment altogether, but should some energy should be spent on fighting for death penalty choice?

Niklas responds to a broad based grassroots campaign. The results do not disappoint.

 

Bryan Caplan and his cloned son.

David Boaz posts some interesting comments from a libertarian email list which discuss his article on whether a golden age of liberty ever existed. Here are a few worthwhile excerpts:

Glenn Reynolds: …If your narrative is one in which freedoms are always shrinking, and government always growing, it may tend to discourage people from working to make things better. I see a lot of that kind of thing from people on the Right, and it irritates me no end. I remember when the passage of the assault weapons ban was presented as just another downward ratchet in freedom, and yet now the gun issue is such that even lefty Dems are for the most part unwilling to touch it. That, it seems to me, is an example of how freedom can expand even in the comparatively short term.

Steven Horwitz: …One way to put it is… even if it’s true that we are collectively (per capita) more free, those gains have come at the weakening of the sacredness of certain principles that affect everyone’s freedom, especially in the long run. I too share the concern that the last two years have accelerated that process in very problematic ways.

Brad Smith: Even as we have expanded the blessings of freedom to more people, society’s concept of freedom seems to have narrowed tremendously, to where even many self described libertarians seem to think a 39% income tax bracket is pretty darn acceptable. The boundaries of what it means to be free seem to have retreated, and to have retreated enormously. Thus, even as more people have benefited from freedom, the long term outlook for freedom seems in many ways much more grim.

I think Brad elucidates the most sensible objection to Boaz’ piece and defense of the notion that we were freer in the past, and Horwitz highlights why that is such a concern going forward. On the other side of the ledger, Reynold’s response illustrates something that I think is a common cause of the visceral dislike of libertarians and libertarianism that otherwise moderate people have. In the end Steve Horwitz I think sums up the issue:

Steve Horwitz: I do think part of what’s going on here are two cross-cutting conversations. Or at least two distinct claims.

1. “Americans, on the whole, are freer than they were, say, 150 years ago.”

2. “Government is more obtrusive in a moment-to-moment or day-to-day way than 150 years ago.”

…We are collectively more free, I would argue, even though the underlying principles that assured the freedom of those who had such freedom 150 years ago have broken down significantly.

The trick then, as several discussants point out, is how do you aggregate the two points and decide whether the result is more or less net freedom? To me, the answer is commonsense that the universality of freedom outweighs the increasing day-to-day intrusiveness of government. Can you imagine the horror of what the laws of 1880 would look like imposed on today’s society? (I can guarantee that your freedom to not have to listen to protesters demanding a larger government would be severely restricted.) This is particularly true if you belief, as I do, that a bunch of the daily intrusiveness of today’s government is actually a legitimate provision of desirable public goods.

H/T Will Wilkinson

A friend writes:

I’m really glad you posted that piece on paternalism and salt in food. This strikes a personal chord with me, as you could imagine. Especially as someone who consumes pickles as much as most people consume cereal and bread, and as someone who regularly eats anchovies and puts mustard on potato chips. I could go on.

A friend from college recently posted a facebook message saying something to the effect of “about time!” in support of mandating a reduction in salt in food. Earlier this year he posted something about the dangers of vaccines.  I think he might be my greatest enemy.

I have personally witnessed him eat handfuls of cold meat at probably every single hour of the day, so I can vouch for the fact that salt regulations would disproportionately affect him.

I am sure some of my readers are far more familiar with Patri Freidman (grandson of Milton) and his Seasteading movement than I am, but we have a diverse readership and for some this is probably the most libertarian leaning blog they read.

So, I encourage those readers to suspend disbelief for a moment and give Patri’s stuff a read. While the concept sounds wild the underlying motivation is has some compelling elements.

Seasteading is creating permanent dwellings on the ocean – homesteading the high seas. A seastead, like in the picture to the right, is a structure meant for permanent occupation on the ocean.

Why would you want to do that?

Because the world needs a new frontier, a place where those who wish to experiment with building new societies can go to test out their ideas. Unfortunately, all land is already claimed. Enabling the ocean to be the next frontier, allows for startup societies to bring experimentation and innovation to political, legal, and social systems.

As a young libertarian I often assumed that the government, without proper incentives and the information signals of the market, was incompetent. The more I became involved with policy work I came to see that this was grossly wrong. Indeed, in select areas the competence of government officials vastly outdistances what you are likely to see in all but the most elite private sector organizations.

So why isn’t government any better. The answer that is most satisfying to me today is that governments, for the most part, don’t go bankrupt. Or at least going bankrupt is a big deal. As a result bad ideas and bad practices get ingrained.

We see the same phenomenon in US mega companies that have ridden for too long on a brilliant innovation or idea. GM was the conical example and I have a sense that Wal-Mart will be there in a generation.

 

Patri’s concept can be summed up as competitive governance. A system where governments have a chance to fail and then to be reorganized without the bloodletting that typically comes from struggles over land. It disentangles the notion of government as an organization of citizens from government as the sovereign authority over a piece of land.

That underlying motivation is intriguing and efforts to pursue it should be followed more closely.

The ongoing debate at Cato Unbound on soft paternalism has focused a lot on the issue of slippery slopes. There are two directions one can slide down a slippery slope: an increasing scope of paternalism, and an increasing degree of paternalism. The danger of the former is captured in Glen Whitman’s example of smoking. First they banned it on airplanes, then it was bars and restaurants, and now it is increasingly in all public places.

The other slippery slope occurs when the presence of paternalism in area A makes it more likely in area B. This type of slippery slope is evident in the spread of regulation from sugar, which is becoming more popular, to salt, which is on the horizon:

Citing 40 years of failed efforts to voluntarily reduce the amount of salt in food, an advisory panel Tuesday recommended that the government regulate sodium for the first time… The proposals outlined by the Institute of Medicine envision step-by-step efforts that would both ratchet back Americans’ desire for salt and mandate the maximum amount that could be added to various types of foods.

The proposed policy is for the FDA to begin setting a gradually decreasing maximum amount of sodium that could be legally added to foods and beverages. The level of regulation and control of individual choices that proponents sound comfortable with is really ridiculous to me:

“It must be done very thoughtfully,” said panel chair Henney, a former FDA commissioner and now a medical professor at the University of Cincinnati. Pickles, for instance, “are very high in salt content but are not eaten that often,” she said, “so what you get with pickles might be quite different than something that is eaten more frequently, like bread, or cereal.”

Can I please spend a month with this woman first, checking the label of everything she eats and granting or denying her permission to eat it? Seriously though, if this is not evidence that there is a slippery slope out there begging for us to slide down it, then I don’t know what is.

I hope that most people would consider the letting the FDA deciding how much salt we can have an egregious encroachment into personal freedom, but I fear that the growing presence of sugar taxes has warmed people up for this. The general unpopularity of the proposed Philadelphia sugary drink tax, however, does provide me with some optimism.

Overall, I’m really curious to see what the next absurd thing will be that someone tries regulate. Food spiciness? Temperature? How many people suffer from a burned mouth every year? It’s clearly market failure and information problem, as well as evidence of consumer irrationality and potentially time varying preferences, as surely nobody would choose to burn their mouths. And can we do something about the scourge of brain freeze the nation is facing? I’d like to see a minimum temperature and size of milk shakes. Or maybe we can just provide a “nudge” by mandating narrower straws. Or on the more deadly side, how many people are killed by tired drivers every year? Can we get a mandatory nap-time policy to fix this?

This video from the American Statistical Association shows you what exploratory data analysis looked like in 1973. It stars John Tukey, Jerry Friedman, and the PRIM-9 machine. What they had was pretty astounding given that it was 1973. To put that in perspective, keep in mind that Pong was only released in 1972.

Allow me to offer two teasers to tempt you to click through and watch the video, the first is the legendary John Tukey and his trusty PRIM-9, the second is stone cold Jerry Friedman:

The funny thing is, unless I’m mistaken, I don’t think you can manually rotate a 3d scatter plot in Stata today.

Bryan Caplan wants to clone himself and raise the baby as his son.

Now that I’m finishing up Selfish Reasons to Have More Kids, another controversial passage is on the chopping block.  In the current draft, this paragraph concludes my discussion of cloning:

I confess that I take anti-cloning arguments personally. Not only do they insult the identical twin sons I already have; they insult a son I hope I live to meet. Yes, I wish to clone myself and raise the baby as my son. Seriously. I want to experience the sublime bond I’m sure we’d share. I’m confident that he’d be delighted, too, because I would loveto be raised by me. I’m not pushing others to clone themselves. I’m not asking anyone else to pay for my dream. I just want government to leave me and the cloning business alone. Is that too much to ask?

 

Paging Niklas Blanchard.

Paul Ryan was on CNBC pushing a Zingales and Hart type solution to the financial crisis

The essence of Zingales and Hart is that if CDS spreads on an institution become too wide regulators swoop in to stress test the institution. If an institution fails the stress test it is put into receivership.

The idea has some cute features and I encourage you to read the National Affairs piece in which they lay out there case. The central problem that I see, with market based and transparent triggers, is that they force runs.

Suppose, that the trigger level is set 100 basis points. If on Monday, the CDS contract on XYZ bank closes at 93 basis points then tomorrow the next thing I am going to do is close-out any outstand positions I have with XYZ. However, I know that everyone else is going to do this. So I need to protect myself from being late in line. How do I do this? By buying CDS on XYZ bank and further driving up the spread.

In this way a run on the bank itself will be replaced by a run on the banks CDS which itself may trigger a receivership that otherwise would not have taken place. Allowing these types of market signals is asking for more runs. That’s why the best way is to just show up with the regulators and seize the institution day-of.

 

The second issue is that Ryan and to a lesser extent Zingales and Hart seem to view “Too Big to Fail” as a policy or attitude. Too Big to Fail is a state of nature. It is a real thing that exists. Even if we lived in an anarchocapitalist state with no government whatsoever some institutions would be Too Big to Fail. That is, it would be in the collective interest of the population to prop up the bank rather than deal with the fallout of its collapse.

Credible threats to be irrational are hard to make. That is if everyone knows its in your best interest to do something it is hard to assure them that you will not do it anyway. Thus unless you set up some arrangement that makes it rational to hang a big bank out to dry the market is going to assume that you will not do so.

 

Third, Ryan, Zingales and Hart all seem to be under the impression that borrowers have limited downside risk because of implicit government garuntees. Again, this is a fundamental position that borrowers have. You cannot get blood from a turnip. You cannot collect money that people do not have. And, you cannot loose more than everything you have a stake.

Borrowers always face unlimited upside and limited downside. That is what makes borrowing such a good idea and why institution have to reject some borrowers who are willing to pay market rates. In how many markets do you reject paying customers? Borrowing is special, precisely because of the limited downside risk and unlimited upside.

You might argue that without a government guarantee lenders will be more cautious. However, history doesn’t seem to bear that out. Why this happens is complex and seems to have to do with some essential issue with liquidity risk. That is, the riskiness of lending to XYZ bank depends crucially on what other people think the riskiness of lending to XYZ bank is. If everyone thinks XYZ is a good bet then that really, factually, does make XYZ bank a better bet. Its not just mass misperception.

Reality is influenced by the ability to raise money and the ability to raise money depends on perceptions. Thus we have the very weird and hard to deal with situation where reality depends crucially on perception.

Korby Kummer tells of his experience with horse meat:

…very much like lean beef or bison but with an almost candied overtone that is somehow disturbing, probably because you know you’re eating something your friends and cousins (or you) likes to ride and pet–the shibboleth against eating animals with names.

Gallup has a new poll out showing that the nation is divided over placing new regulations on banks and large financial institutions. Wall Street on the other hand, they say should get the shaft.

Support for Banking and Wall Street Reform

Taubes fans will be happy.

The added sugars in prepared and processed foods are threatening Americans’cardiovascular health, lowering levels of protective HDL cholesterol, raising levels of potentially dangerous triglcerides and possibly making people fatter, a new study finds.

from Health.comBob Lustig is smiling as well.

After watching 85 hours of LOST over the last six years, how much would someone have to pay you to not watch the series finale? Take that amount, subtract what you’re paying to watch it (zero dollars for most, and a max of two or three), and that’s your consumer surplus you lucky S.O.B.

In his oft-cited book The Economics of Price Discrimination Louis Phlips wrote that “the more one thinks about price discrimination, the harder it is to define”. I tend to agree with him. Reading reactions around the blogosphere to Spirit Airlines recent decision to begin charging for carry-on bags I’ve begun to realize that there is lack of a clear understanding about what price discrimination is and what it isn’t. I have up until today been focused on the theoretical implication of price discrimination given that there is price discrimination, rather than bothering to think hard about whether or not price discrimination was occurring. But the more I think about this the more I’ve come to the realization that charging for carry-on bags is not price discrimination per se, and that whether or not it is price discrimination depends on the details.

A simple definition of discrimination is when people pay different prices for the same good. A more nuanced definition is offered by Phlips, who says that price discrimination is when:

…two varieties of the same commodity are sold (by the same seller) to two buyers at different net prices, the net price being the price (paid by the buyer) corrected for the cost associated with the product differentiation…. My criterion clearly refers to a cost associated with a change in the characteristics content of a product. Transportation and storage costs are examples that readily come to mind. Costs of product design and of changes in specifications and of services offered by distributers are perhaps less obvious examples.

In this example, carry-on bags might be considered storage costs, or an additional service. The question then seems to be, does the price reflect the additional cost, or is the price differential unjustifiably large and thus an attempt to extract surplus from a segment of the market that has a higher willingness to play for plane tickets? The answer to this is not obvious to me.

Offering some guidance, Phlips gives a similar example that he identifies as price discrimination:

Discrimination is revealed, for example, when people flying tourist class discover that first-class passengers enjoy a service (perhaps champagne or caviar) that is much better than is justified by the difference between tourist and first-class fares, that is the service has a higher “worth per dollar.”

Another comparable scenario is my example of movie popcorn that Matt Yglesias cited. The reason that price discrimination is occurring here is that the price charged for the popcorn in a movie theater is obviously higher than the for popcorn outside of a movie theater, thus price discrimination. The difference in the baggage example is that we don’t have some other market where we can observe comparable prices for carry-ons to determine whether the $30 to $40 Spirit is charging is reflective of the cost. In short, you can’t buy carry-on service outside of an airplane.

Part of the challenge is to determine what should you consider the cost of supplying carry-on space. If the flight is not full and there is plenty of unused carry-on space, then the price might be zero. In contrast, if there would be shortage of carry-on space if it were free, then one could consider the cost to be the opportunity cost of the scarce resource. One rough estimate of this might be to imagine that carry-on space were auctioned before each flight and ask what would prices end up at. Would it be more than or less than $30 to $40?

If someone else has a better definition or understanding of price discrimination and can offer a more decisive analysis I’d be glad to hear it.

Marc Ambinder outlines his ten steps to preventing obesity and asks what ideas we have.

1) Give me the funding and legal authority to conduct the following experiments and the journals the cover to print the results when I am done

I want to travel to remote Indian, China and Central Africa and find 1000s of young people (but over 18) who are by and large non-obese. Recruit them for a fattening experiment. 

Then I want to divide them into subgroups and introduce to each group an eliminate of Western society blamed for obesity. We’ll feed some of them high fructose corn syrup. We’ll feed others high fat / high meat. Others pasta. Some we will injection will dust mite extract. Others, cockroach extract. We’ll expose still others to BPA heavy drinking containers. Others will drink only milk produced with bovine growth hormone. Some will be given a stipend and an Xbox. Others will be kept up late watching TV.

However, in each group we simulate one or only a few of the western “bad habits” and we see how long it takes for obesity in the groups to rise above control.

We establish which factors, at a least at baseline, seem to contribute and which don’t.

2) When then attempt to modify the factors which appeared relevant in a Western Population.

 

Now I don’t expect much support for this plan. But, I don’t expect easy policy solutions for obesity either.

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