Jaguars Suffer Existential Meltdown

From the Onion: "Unless someone can convince the Jags that existence has meaning Peyton Manning can rest easy."

Epic


Pre-Game Coin Toss Makes Jacksonville Jaguars Realize Randomness Of Life

I've Come to the End of Me

On December 15th, the Economist's Blog 'Certain Ideas of Europe' ended. I'm not sure where I will now read about Walloon-Flemish bickering and the impending collapse of Belgium - probably just the print edition. Although not as frequently updated as I would like, this was one of my favorites and it's a shame to see it go.

Now in a move that may scare Europeans, I will replace the CIE link on this blog with a link to James Fallows Beijing-based Atlantic blog. I can only emphasize that if Europe had followed the Economist's frequent recommendations to liberalize continental labour markets this may not have happened.

The Do-Nothing Senate

I generally am a fan of the Senate, the filibuster, and other techniques that slow down legislation. While the 2/3 majority necessary for a budget in California is too far, in general I am biased in favor of restrictions on making major changes to long-term establish laws. In Washington, the House may be reactionary, but the Senate is set up to be sensitive to the long-run and thus more cautious. It is difficult to get controversial pieces of legislation through the Senate, and Senators’ terms make them think about the effects 6 years down the road (i.e. the long tem). Thus, the Senate is generally a body that increases the stability and predictability of government, and I think there is a good deal of benefit to society from having these things.

When there is uncertainty over whether the rules of the game will change, it becomes more difficult to do long-run planning, hurting investment, and so the economy and society. When the future is more predictable one is better able and more likely to set long-term plans. So (perhaps this is the Tory conservative in me coming out) I think it’s very necessary to have significant pressures against sudden changes.

In its recent article titled ‘The trouble with the Senate’, the Economist makes this point more anonymously than I can:‘When the House passes a bill in hotheaded haste, the Senate cools it down. In a country as vast and diverse as America, there is something to be said for making it hard for the central government to impose sudden, radical change on everyone. And the excruciating difficulty of getting anything controversial through the Senate forces lawmakers to sit down and take account of opposing views. On December 11th, for example, Senate Republicans blocked a bail-out for Detroit’s carmakers. This thwarted the clearly expressed will of majorities in both the House and the Senate. But it was the right thing to do. A bail-out would either delay inevitable restructuring or (worse) put Congress in charge of it. The bail-out’s advocates will try again. But they will have to come up with a more plausible plan.’

The Economist makes an interesting point in its article, that in the United States “The biggest and best reforms of the past have usually been bipartisan—think of the Civil Rights Act in 1964 or welfare reform in 1996.” I would add the 1986 Tax Reform to this list of perhaps the most successful pieces of major legislation of the last half century. All were passed with broad bipartisan support. I think it’s more difficult to point to overwhelmingly successful pieces of legislation that were passes narrowly, although some tax cuts and trade deals may count.

Don Young Loses Ranking Member Position

As corrupt Democrats are being pushed from office, it's nice to see the Republicans make moves to marginalize some of their blatantly corrupt members.

Thailand's Government Has Fallen

Being outlawed by the Supreme Court will do that http://news.BBC.co.uk/2/hi/Asia-pacific/7760592.stm

Hold on Hope

Here are a few of my must-reads from the last week:

William Easterly reviews Paul Collier’s ‘The Bottom Billion’. I would say self-recommending, but before completing this post, I see Tyler Cowen already has.

Alex Tabarrok proposed the federal; government sell off the trillions of dollars worth of Western land it owns to fund the Federal government in the short-term, buy additional parkland in the Plains, and create a ‘Buffalo Commons’.

Peter Klein denounces the price gougers who have driven the price of gasoline down by $2 per gallon.

Arnold Kling says it unfair for those of us who’ve seen our 401ks drop to pay for the unrealistic fixed benefit pension plans of the auto-industry, I agree.

Tyler Cowen points out that the popular view that the Great Depression was ended by World War II is pretty much a myth.

Megan McArdle shreds the idea of a bailout for GM, Chrysler, and Ford this week. I’m not sure how one can justify subsidizing only this aging cartel, without taking into account their political strength.

Matt Yglesias delivers a strong criticism of libertarianism – that without unions and other institutions that leftists favor, there is no way to prevent government from being controlled by corporate special interests. Will Wilkinson and Tyler Cowen respond.

Megan McArdle and Freddie touch on the Forgotten Man.

Alan Jacobs on the origions of some popular history myths.

Pelosi on the Minimum Wage

Nancy Pelosi always seemed to be a bit of an empty suit to me (empty pant-suit?) She must be pretty smart to rise up in the Democratic Party, but… In this clip, Jan Helfeld basically ambushes her on the minimum wage, and Pelosi has a great deal of difficulty coming up with a coherent answer.

Pelosi cannot justify paying her interns below minimum wage, while at the same time insisting that no one should have to work for so little per hour. …I think what she is trying to eventually say is that there are benefits of working for a Congresswoman that are not captured in salary. It is great for a resume and builds connections. So, this should make it exempt from minimum wage laws.

Of course, there are benefits from every job that are not included in wages. Even the worst jobs offer people, if not the possibility to move up, at least the chance to prove their work ethic and thus improve their market value as a worker. So, a $5.15 per hour job is generally worth quite a bit more than $5.15 per hour. There are some people who are not employable for minimum wage because of their apparent skills and history. Increasing minimum wages gives fewer employers an ability to rationally hire marginal workers, thus harming their ability to move up, and creating an underclass.

I think the minimum wage is a product of a common thread in a certain left-wing views, which goes something like this: A. It is awful that some people are disadvantaged so that their best option is X. B. X is awful. C. We should ban X. It’s a bit Underpants Gnome-ish, and quite hard to justify once you think about it.

What to Do Now

One thing that made Barack Obama so appealing as a candidate was the ambiguity of his message. He favors Hope, Change, and ‘Yes, we can’. Those things sound good; I suppose I favor them as well. Policy was less prominent in the Obama campaign, which allowed different people to project their own views the candidate. He sounded the usual noise about impracticable tax cuts, ending dependence on foreign oil, and anti-Chinese sentiments. These statements are safely ignored but some of his rhetoric such as opposition to trade and liberal labor markets could possibly be more worrying. But, while Obama campaigned with some rather backwards populist positions, he surrounded himself with high quality advisors. Thus, it is possible for some, like the editors of The Economist, to speculate that he doesn’t really mean any of that rhetoric, and that it is only the necessary noise of the campaign. I hope that this is true, but it’s also possible that having been dependent on them for his election, Obama will be beholden to the reactionary elements he has stirred up.

That said, this is what I am hoping for from an Obama Presidency:
- His support for Eliminate Right-to-Work laws and instituting ‘Cardcheck’ (which would eliminate the secret ballot in Union organizing), will be forgotten or safely blocked by Republicans in the Senate.

- The noise about renegotiating NAFTA and CAFTA, and halting new trade deals should only be noise. He can just say ‘I have assured that they have adequate protections for American workers’, ‘Columbian union organizers’, or whatever such nonsense.

- Plans to government control of healthcare ‘to hold down prices’ should also be blocked by the Republicans. The Democrats can campaign on this one for another 50 years.

- Obama should work with the Bush Administration to have consistent policy for the financial crises. Support the bailout, but wind down government intervention in the system. Barack Obama should not allow any extreme interventions in the market such as using government funds to buy individual mortgages or declare a mortgage foreclosure. Ideally, the Obama Administration would break up Freddie and Fannie, repeal the CRA, and eliminate the tax deductibility of mortgage interest – I put the probabilities of these things happening at 10%, 2%, and 0.1%.

- Plans for bizarre government interventions into the economy like bailing out the Auto-Industry and a ‘Windfall Profits’ tax on oil companies should quietly disappear.

- He should and probably will basically continue Bush’s 2nd term mainstream foreign policy. Increase attention to Afghanistan and Pakistan, and don’t withdraw suddenly from Iraq. This is what Obama says he will do, although he doesn’t cite Bush. I expect Obama to be a very successful President in the world policy arena, due to his international popularity. Someone like Hugo Chavez gets less traction railing against a United States led by Barack Obama, and countries like Germany would be more willing to help with say Afghanistan.

- Also, increasing spending on infrastructure wouldn’t be a bad thing.

Doing just these things, would make for a fine Presidency in my opinion. One gets the impression that Obama is inherently a cautious man. That’s an excellent temperament for shaping policy.

Update: Greg Mankiw and Will Wilkinson both have excellent advice for the President-elect.

Reach Into Your Bag of Tricks and Pull Another One

That Offspring song is still in my head, and it still seems appropriate for the week. Here are a few pieces I stared in my Google Reader this week. All must reads (or listens):

Johan Rossouw explains the worrisome instability of South Africa. (HT Foreign Policy)
Alex Tabarrok discusses the fight over measuring unemployment during ht depression within the Great Depression, 1938.
Will Wilkinson agrees with Virginia Postrel. I agree as well.
Bryan Caplan says immigration foes should support a tax on immigrants rather than ban. It's a definite improvement. I don’t see this position ever being popular, because the anti-immigration crowd would prefer the costs that their views impose on others be unseen.
Free Exchange wants Obama and Bush to work together.
Fabio Rojas has a piece titled ‘Why I Admire the Obama I Know and Fear for the Obama that is to Come’. Quite interesting.
Eliezer Yudkowsky on Capitalist Values.
Foreign Policy has twenty questions for Barack Obama. The President-elect is encouraged to answer in the comments.
Richard Esptein discusses the relationship between happiness and wealth on Econtalk.
Greg Mankiw says economists should unite in opposition to Barack Obama's plan for mandatory community service as they did for the military draft. This mandatory national service program is a McCain-like idea that made me hesitant voting for him. My hope has faded a little...
Clive Crook One more excellent Obama post. Crook compares contrasts Barack Obama's situation with FDRs. BTW, I view FDR as a well-intentioned 'bungler who trashed the constitution and prolonged the Depression', who very often took one step forward, two steps back.

Meet the New Boss

I watched the election returns come in with some friends at a local bar. It was a short night as expected, although it looks like the Republicans did a little better in the Senate than expected. ...The bar was about 60/40 divided between jubilant Obama supports and gloomy McCain backers. After Obama's speech, some of the Obamiacs played R.E.M's "It's the End of the World as We Know It" on the Jukebox. I responded by spending a buck on a couple songs. Surprisingly a few on the Left correctly interpreted my message - that I haven't drank the Koolaid - and I received some limited hostile feedback. Please enjoy my picks:

Today is Election Day

Vote or die? What does that even mean?

As you've reached this blog somehow, you're probably in the top 5% or so of voters.So, it would probably be best if you voted. The lower that average intelligence/knowledge of the electorate, the more likely we are to have elections featuring unsanitary food and cleanliness products.

Whoever Wins, Must We Lose?

That title paraphrases tagline of the film Alien v Preditor. ...I've been busy at work and consequentially have neglected this blog in the last few months. However, I think it would be down right negligent to not announce a candidate endorsement for the Presidential Election. I have been back and forth about who I will vote for, and have only made what I believe to be my final decision within the last week...

I consider myself a classic liberal. I’m not an anarchist, but from where we stand now, I basically favor expanding liberty in all directions. Practically, the top things I would be looking for in the next American President would be: Promote free trade, open borders, globalization, international cooperation, and liberalization of labor markets. I would like more transparency in Congress, especially in the corrupt earmark process. I would like the United States government to move towards private accounts for Social Security (which have been a success pretty much everywhere they are tried) and towards a more liberal Healthcare system where the tax-code advantage for employer provided care in broken. Furthermore, I want the President to stand up for the poor and disadvantaged people in the world, be they in Georgia, the Middle-East or Africa.

Those are my issues, and on all of them I think one would have to say that John McCain has the better more liberal position. Nonetheless, I am not sure about my vote. Of course, McCain has run basically a disgraceful campaign, and Barack Obama has run a slightly less so one. This is not such a big deal to me, because I don’t look for wisdom or even intelligent debate from politicians, nor can it reasonably be expected with the incentives that they face (This is a shame, but limiting the franchise to those of a certain IQ who can pass a basic Civics and current events test is quite problematic as well).

The reason I’m not certain about voting for John McCain is the shear amateurness of his campaign. The fact that Obama has run such a more effective campaign makes me think he is a more capable governor (and hopefully not just at extracting resources to hand to his cronies). His Harvard/Chicago background leads me to view Barack Obama as a first class intellect. I do not get this impression from McCain, Biden …or Palin. I’m not so much worried about experience, because both Presidential candidates are knowledgeable about the world, and will have aids with all the minute details. I’m more interested in the intelligence and thought process of the candidate. In this, I think Barack Obama is the most impressive candidate I have ever seen. Also, it must be said that Barack Obama's race and unique background says something positive about America. It says that the United States is a country where your background does not prevent you from succeeding, and I expect will give us more credibility in the international human rights scene.

My concern about electing Barack Obama is the amount of damage the Democratic Party will be able to do to the American economy with the Presidency and large majorities in both chambers. Many Congressional Democrats, who get the political benefits of handing our benefits to their cronies (Dodd and Frank) and apparently see no consequences from the political failure of their policies, have some pretty radical and destructive views on reshaping the U.S. economy, Wall street, and Healthcare. Barack Obama has shown no interest in standing up to radicals and demagogues on this own side even when they’re obviously quite wrong – Reverend Wright being the most extreme example. Should we expect him to start once in his first executive position? Maybe. Also, Obama has espoused some rather backwards views on union organizing and trade, and has often blamed American’s problems on the outside world (or rather the “CEOs who get taxbreaks to outsource jobs”). I think most of Obama’s intellectual supports assume this is just the noise of the campaign and will have no effect on his governing. Even if he recognizes the danger of implementing the rhetoric, will he still beholden to the reactionary elements he has stirred up? We will likely see. (For now, see Greg’ Mankiw’s citing of How Obama is viewed from India).

At least domestically, a McCain presidency will likely be gridlock. No much will get done, but maybe we’ll have some drawn-out fights over appointments. McCain is competent on foreign policy, and certainly not as extreme as Obama has tried to paint him in the debates. The only obvious worry, in my opinion, is that he could possibly have health problems. Unlikely, but possible. McCain is the safe status-quo pick, although not as much so as he was a few months ago.

My first choice would be for a Barack Obama presidency, a Republican Congress, and gridlock. But seeing as I must aim for the best of all possible, not all conceivable worlds, I will say that John McCain is probably the better pick. There’s a lot of uncertainty and quite a bit to like and dislike about both candidates. But, I endorse McCain. So, you can blame me when you wake up Wednesday morning in the dawn of the McCain era.

Who's at fault for Fannie & Freddie?

Too simple, but largely true.

Biden Pessimistic About November

April 29th, 2007

Tim Russert
"You interested in being vice president?"

Joe Biden
"No, I will not be vice president under any circumstances."

Avoid absolutes...

(HT: Passport)

Friday Playlist

This is my second playlist. It's mostly mildy obscure (None of these songs would be played on the radio in my area), some tracks are political, but all songs are pretty amazing. Also, I'm still a little cover-happy.

I have the whole playlist in youtube now, which should allow for easy viewing/listening. Enjoy:

1. The New Pornographers - Use It
2. Okkervil River - A Girl in Port
3. The Decemberists - O Valencia
4. Billy Bragg & Wilco - California Stars
5. The Wrens - Everyone Choose Sides
6. The Flying Burrito Brothers - Wild Horses
7. The Kinks - Muswell Hillbilly
8. Nirvana - The Man Who Sold The World
9. Billy Idol - Plastic Jesus
10. Guided By Voices - Teenage FBI
11. The Distillers - City of Angels
12. The Foo Fighters - Baker Street

Pindyck on Candidates' Energy Policies

Mark Thoma directs us to an interview with MIT Economics and Finance Professor Robert Pindyck. Pindyck gives some excellent commentary on the most recent economic proposals of the two main Presidential candidates. The prospects for a carbon tax look pretty dim.

Candidates' energy policies fuel economist's commentary
A Q&A with MIT
Professor Robert Pindyck
Stephanie Schorow, News Office
Correspondent
August 19, 2008

...

Q: Would either candidate's energy proposals make much impact on energy costs in the short term?

A: Neither of the candidate's plans would have any impact. The one exception would be McCain's proposal to eliminate tariffs on the importation of Brazilian ethanol. It would immediately reduce the cost of ethanol.

Q: How so?

A: We have a tariff on imported ethanol from Brazil, which is made from sugar cane. Ethanol here is usually made from corn. Sugar cane ethanol is about eight times more efficient than that made from corn. By removing the tariff, Brazilian ethanol becomes cheaper and will make ethanol-gasoline blends cheaper. It will reduce the use of corn ethanol, which would reduce the demand for corn, which would make corn prices drop slightly. There are many places where gasoline is blended with 10 percent ethanol. It would have a small impact, maybe a few cents, on the cost of blended gasoline.

Q: Is there anything in either candidate's proposal that would be particularly bad for holding down energy costs?

A: Most of the proposals are political and they involve subsidies to alternative energy sources. A lot of those subsidies are just ways of providing pork for different groups.

Q: It sounds like you are not impressed, to put it bluntly.

A: Look, what are going to be needed ultimately is a tax on carbon and a tax on gasoline -- a large one. Another way to have a tax on carbon is to have a cap-and-trade system so you only allow a certain amount of carbon dioxide to be emitted. That will raise the cost of carbon. A gasoline tax would greatly reduce gasoline use. It would create the incentives we need for other energy sources, including conservation.

No candidate is willing to get up and say, "We need a to have a high tax on gasoline." In fact, McCain wants to suspend the federal tax on gasoline for the summer and Obama didn't. Nobody is going to say, "We want to make sure we have a tax in place so gasoline prices are always going to be high." That encourages people to drive smaller cars and to conserve and that brings about investments in new technology. When people know that gas prices and fuel prices will stay high because of taxes, it means they have incentive to develop alternative energy supplies.

The question is will the candidates, nonetheless, do something when elected. Who knows?

Q: What do you think about Bush's recent decision to lift the longstanding executive ban on offshore drilling, which McCain and Obama support in some manner?

A: Offshore drilling is a tradeoff between pollution and producing oil. We've had the federal ban in place because we worry about oil spills. You could say: Why don't states make their own decisions? The reason is that if one state allows offshore drilling and there's a spill, the oil moves to the neighboring state. So whether we do that is how we trade off the environment with greater ability to produce oil domestically. And there's no right and wrong about that. What is clear is that even if we opened up offshore land for leasing and drilling, it's not going to result in any more oil production for five, six years.

The Housing Crisis is Andrew Cuomo's Fault!

Monday, Arnold Kling pointed to an article from the Village Voice which puts much of the blame for the Subprime Crisis on the HUD.

Clinton HUD Sectary Andrew Cuomo comes in for a beating in this piece:

In 2000, Cuomo required a quantum leap in the number of affordable, low-to-moderate-income loans that the two mortgage banks—known collectively as Government Sponsored Enterprises—would have to buy. The GSEs don't actually sell mortgages to borrowers. They buy them from banks and mortgage companies, allowing lenders to replenish their capital and make more loans. They also purchase mortgage-backed securities, which are pools of mortgages regularly acquired by the GSEs from investment firms. The government chartered these banks to pump money into the mortgage market and, while they did it, to make a strong enough profit to attract shareholders. That created a tug-of-war between their efforts to maximize shareholder value, which drove them toward high-end mortgages, and their congressionally mandated obligation to finance loans for those who needed help. The 1992 law required HUD's secretary to make sure housing goals were being met and, every four years, set new goals for Fannie and Freddie.

Cuomo's predecessor, Henry Cisneros, did that for the first time in December 1995, taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the "very-low-income." Part of the pitch was racial, with Cuomo contending that Fannie and Freddie weren't granting mortgages to minorities at the same rate as the private market. William Apgar, Cuomo's top aide, told The Washington Post: "We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible."

It’s interesting to me that for a long time, the populist criticism of banks was that they did not give out enough loans to poorer people. Now, the criticism of banks is that they gave out too many loans to poor people ("loans the banks knew could not be repaid").

Generally, on the subprime crisis, I tend to agree with John Taylor’s comment on EconTalk this week:

I think people are looking for problems with the markets when frequently it's
problems with people. It's dysfunctional people really who haven't don't the
right job. You have that when your have markets or don't have markets. I think
they (markets) have worked very well over this crisis.

Private markets have issues but generally they work. …I can’t help but think this situation would be much improved if the government didn’t try to manipulate the housing market to serve political purposes.

Name Change

I looked at moving the site to Wordpress, but didn't like their features (or rather didn't want to pay for them).

The Liberal Evolution continues, but this blog is now renamed 'A Positive Externality'. Among other things, I got a little tired of the Evolution name as evolution is a more brutal and slow process than hopefully the continued liberal revolution will be.

The Parties of Low-Information Voters

In his August 7th commentary, New York Times columnist and sometimes excellent economist, Paul Krugman blast the Republicans plan to increase offshore drilling, calling them ‘the party of stupid’. I’m generally sympathetic to criticizing politicians for pushing stupid ideas, and Krugman is generally critical of Republicans for doing so. Here is his broadly correct attack on the simple arguments Republicans in Congress, who are

…Pretending that more drilling would produce fast relief at the gas pump. In fact, earlier this week Republicans in Congress actually claimed credit for the recent fall in oil prices: “The market is responding to the fact that we are here talking,” said Representative John Shadegg… What about the experts at the Department of Energy who say that it would take years before offshore drilling would yield any oil at all, and that even then the effect on prices at the pump would be “insignificant”? Presumably they’re just a bunch of wimps, probably Democrats.

Krugman is right to infer that offshore oil drilling is quite unlikely to have much effect on crude prices in the short-term (Oil prices have fallen, but few analysts are saying it's because of the huge supplies expected to come from future American drilling). Republicans are wrong to take credit for falling gas prices, and I don’t think they are getting credit. However, Krugman should admit that at some margin, offshore drilling would exert downward pressure on oil prices. This probably will not much, but possibly a sizable amount. Something will be pumped that would not otherwise and as long as the laws of supply and demand still hold, that will have an effect. I would think that just because this would not happen until a few years down the road, Krugman would not oppose this policy. This seems like a policy that will be mildly helpful, and if nothing else, is not an extremely misguided like, say, our current ethanol policy ...Incidentally, I don’t recall seeing Paul Krugman criticize the profoundly wrong and economically nonsensical positions of Democrats such as Hillary Clinton and Barack Obama on ethanol. Although, Krugman agrees with approximately 100% of economists who don’t work for Archer Daniels Midland.

Also, a little further down the piece, Krugman criticizes the cult of personality around George W. Bush. This is an odd criticism for someone who now supports Obama, but I’m pretty sure Krugman’s definition of rigorousness dictates only opposing cults of personality around Republicans. But, perhaps I'm being excessive in my criticism... Anyway, Democracy in America points us to an opportunity for equal treatment. The Obama campaign has a new anti-foreigner ad blaming John McCain for the closure of an Ohio shipping hub, stating:

But there’s something John McCain's not telling you: It was McCain who used his influence in the Senate to help foreign-owned DHL buy a U.S. company and gain control over the jobs that are now on the chopping block in Ohio.

And that's not all: McCain's campaign manager was the top lobbyist for the DHL deal...helped push it through. His firm was paid $185,000 to lobby McCain and other Senators.

Now 8,200 Ohioans are facing layoffs, and foreign-owned DHL doesn't care.

Here’s the Economist’s take:

This is dubious on multiple levels. It is true, to be sure, that Mr McCain's campaign manager, Rick Davis, lobbied to allow the American parcel delivery firm to merge with the German company Deutche Post. But the reason the DHL jobs existed in the first instance was that the merger allowed the company to launch a $1.2 billion expansion in America that, among other things, built up the Wilmington Air Park.

Perhaps more to the point, the company's decision to let competitor UPS handle its airborne traffic was surely dictated not by some stony Saxon indifference to the plight of the American worker, but by perfectly cosmopolitan economic considerations. Even if the Ohio jobs would have existed without the post-merger expansion, is there some compelling reason to think that an American-owned company would have made a different decision, foregoing cost savings as some sort of patriotic duty? If not, this just seems like a nasty bit of xenophobia.

I agree unfortunately, that the Republicans advertise to ‘low-information’ voters. Perhaps you could call them ‘the party of stupid’. What would you then label the party that puts this out, in addition to pushing through ethanol subsidies? …It’s unfortunate.

The Georgian War

Robert Farley and Jacob Heilbrunn have an excellent (and quite well named) discussion on Bloggingheads about the fighting between Russia and Georgia. Highly Recommended

Also, I promise to get back to regular full length posts later this week.

Reason For Optimism in Detroit

It's nice to see a politician who is so ridiculously incompetent and and obviously corrupt finally go to jail. Most countries would benefit from more accountability from elected officials and higher costs to misgoverning. More of this type thing would not be bad for U.S. Politics.

Economic Scorecare for Presidential Candidates

It’s often stated that economists agree about the majority of issues. In that spirit, Greg Mankiw had a recent piece titled What If Candidates Pandered to Economists? These are the issue he came up with that a large majority of economists would agree (without ‘Raise Funds For Economic Research’ which I’m not sure about): Support Free Trade, Oppose Farm Subsidies, Leave Oil companies and Speculators Alone, Tax the Use of Energy, Raise the Retirement Age, Invite More Skilled Immigrants, and Liberalize Drug Policy. I’d like to add three more to that list: Oppose Ethanol Subsidies, Liberalize Labor Laws, and Ensure Central Bank Independence.

I have been toying with the idea creating an economic scorecard to measure the candidates and hopefully this gives my chosen issues a bit more weight. Economists have well developed opposing arguments about Healthcare, Income Taxes, Entitlement Spending, and School Spending. Those are complex issues that there can be quite a bit of reasonable disagreement on. This post does not attempt to judge the candidates based on the merits of there positions on those issues. Instead, I am judging candidates based on issues where economists know with I would estimate greater than 80% confidence what is the correct stance.

I give each candidate a score of 0-10. 10 being straight from Mankiw’s principles, 0 probably being whatever Lou Dobbs says. The Format is Obama's score first, McCain's second:
- Support Free Trade 5- 9 - McCain strongly does, Obama probably secretly does.
- Oppose Farm Subsidies 3 - 8
- Leave Oil companies and Speculators Alone 3 - 3
- Tax the Use of Energy 8 - 4 - McCain wants to get rid of the gas tax, Obama would keep it. Both want some sort of cap-and-trade system, although McCain sometimes doesn't seem to understand it.
- Raise the Retirement Age 3 - 5
- Invite More Skilled Immigrants 5 - 5 - I cannot find a policy difference
- Liberalize Drug Policy 4 - 0
- Oppose Ethanol Subsidies 1 - 8
- Liberalize Labor Laws 3 - 6
- Ensure Central Bank Independence 5 - 5 - Sadly I cannot find positions for either candidate...
Bottom Line: Obama 40 - McCain 53

Based on this not at all scientific analysis, John McCain is 33% better than Barack Obama on these issues with pure economic answers. There’s a fair degree of art in these scores. For example, I assume Barack Obama will be a more free-trade oriented President than he claims he will be (Austin Goolsbee gets him a couple points on the scorecard). I did not give Obama points for the fact that he will likely be more able to push trade deals through Congress than McCain, if he chooses to do so. McCain scores better than I would have expected. However, I did not have any category for his arguing that further tax cuts will raise revenue – the dubious claim for which he is so often blasted on the econ-blogosphere.

So, McCain wins. However, this is not an endorsement. Perhaps the most important issues are not addressed in this comparison – Foreign Policy, Taxes, Social Security, and Health Care. I have my views on those issues but they’re lower-confidence stances and I won’t go into them in this post. Furthermore, both McCain and Obama’s campaigns center on personal qualities beyond the issues as the main reasons they should be President. McCain promotes his honor and experience. Obama is promoted as a smart internationalist who has the potential to be a uniting figure both domestically and internationally. So, this chart may only amount to 1/3 of what makes up my voting decision. However, it does say something about the candidates that they probably know the right answers to these issues, but they have chosen to take some different positions.

Barack Obama Distances Himself from Hyper-Literate Progressive-Rockers

I fear Barack Obama may be losing his grip on the all important hyper-literate progressive-rocker demographic. According to a recent interview, Brent Scowcroft will be a major influence on the foreign policy of an Obama Administration. Scowcroft, as readers of this blog would know, was the basis for the villain in the Decemberists music video for 'Sixteen Military Wives'. In that video, 'Henry Stowcroft' , a composite character based on Henry Kissinger and Scowcroft, attempts to take over the model UN at his elite private school with amoral tactics. Eventually he gets what's coming to him, as the France-led international community turns against him, in this brilliant Wes Andersonesque music video.



Until recently, the Decemberists have played at some Obama events in the Pacific Northwest. ...The Decemberists are also known to open their shows with the Soviet National Anthem (No evidence that they support class and race-based genocide however). Obama distancing himself from the vanguard of the hyper-literate indie rock scene is clearly a post-primary move to the center.

It's a hot story. Check back at this blog regularly for updates, as it develops. Obama's fiery rhetoric towards Luxembourg will be reported here first.

Barack Obama Opposed to Satire

If you haven’t seen already, the most recent issue of The New Yorker features a cover cartoon that has the Obama and McCain campaigns ‘outraged’. The cover features the caricatures of the Obamas as they must be imagined by readers of the most radical reactionary anti-Obama scare emails. Among other things, Barack Obama is not wearing an American flag lapel pin and not saying the pledge of allegiance. I think it’s a mildly funny satirical carton that shows how crazy these criticisms of Obama are. Even though The New Yorker has no direct interest in this, it is a public service to bring this craziness to the forefront and expose how stupid it is.

But, as is often the case, mine is not the only opinion. Team Obama portrays the cartoon as a mean-spirited hate piece. It appears to the darker angels of our nature and adds weight to the crazy scare emails about Obama. Barack Obama is deeply offended (He may actually be offended, but he has chosen to be publicly offended).

The Obama campaign’s reaction to this cartoon strikes me as a significant blunder. By complaining loudly about the cartoon (and allowing John McCain to also publicly denounce the piece) Obama is making it a bigger story. In fact, the biggest story right now is that Barack Obama is upset about a cartoon in The ‘right-wing’ New Yorker. While this seems trivial and strange, it also makes him look defensive and and not very confident. It makes marginal voters wonder why he is protesting so much. Is he not really ‘one of us’? as Hillary Clinton would constantly ask, but of course never ask... This question is pretty ridiculous, but it’s also the type of question that determines who gets to be President in a democracy (Remember Thomas Dewey couldn’t be President because he had a mustache).

Full Disclosure: I voted for Barack Obama in my primary. He got my vote mainly because I thought he represented a more internationalist streak in the Democratic Party, whereas Hillary Clinton represented a mean-spirited streak.

Obama Bribes Clinton For Support

This is public knowledge, but it seems a little odd to me that there isn't more criticism... When she suspended her runf for the Presidency, Hillary Clinton's campaign had about $21 million in debt. $11.4 m of this debt is to herself. Part of the agreement when Clinton dropped out to support Barack Obama was that he would help pay off her campaign debt. Consequentially, at all of his events, Obama reads a few lines about the importance of donating to the Clinton campaign to help with the debt.

This strikes me an awful lot like a bribe. Clinton has said she does not expect to repaid her money, although she certainly wouldn't reject the return of her 11.5 mil... Of course, while she might not her her money back the Clinton '12 Campaign would certainly at least benefit from starting out with good credit. That's less direct, but is still a bribe.

Anyway, the other day, Obama forgot to read these lines at an event in New York. So, he had to jumpy back on the stage and cut the music to say "This is not the speech part, but it is important... Sen. Clinton still has some debt, and I could have had some debt if I hadn't won. So I know the drill... It's very important to us, and obviously Sen. Clinton will be grateful as well."

Fortunately, this effort to raise money for Hillary has been incredibly unsuccessful. Thus far , Obama has not yet raised $100,000 thousand for Clinton. And $4,6000 of that amount is from Barack and Michelle.

Urban Public v Private Mass Transit

Mike Munger had a pretty interesting podcast on Econtalk this week about mass transit in Santiago, Chile. An thus Russ Robert's program has inspired another one of my posts...

The case for a public light-rail or subway system is reasonable enough to me. In New York or London, with the tremendous amount of commuters in a dense area, the financials probably make sense. It makes sense for the government to do this, because eminent domain may be necessary to build a connected rail system, and competing rail lines across the city may be inefficient (although, I am a little skeptical of this second argument).

However, I think the case for a government run bus system is quite hard to make. The major American cities all started with private transport systems that were eventually pretty much all taken over by the government by the mid 20th century. So, we do not have much experience in the United States with private mass transit. However, I do not see much advantage to the government running our bus systems. The government has no particular advantage over private companies in running bus transport.

Presumably, you would get the best bus service by allowing private companies to compete as the bus companies would be directly responsible to their customers rather than indirectly to voters who make their decisions in the booth based on mass-transit. Under a private system, the price system should cause the best routes to win out, there will be differentiated service based on needs, and efficient number of buses on the streets, and the best most cost-efficient buses and systems will win out. A government monopoly would have the same problems that government monopolies have. The public system is not directly responsible to it's customers, does not set prices based on the market, has centrally created routes without competition, and would most likely be run at a loss at the public's expense. It has the problems of a government run institution and of a monopoly. There may be advantages to having one system connect across a city. I'm skeptical of this, but one winner would quickly arise in a competitive system if this were true.

There is one good argument I can think of for public involvement in the buses, and that is to ensure service to poor neighborhoods. Now a government bus system could be designed to make certain that the poor have service. To the extent that this would not happen in a purely competitive system, these routes would be a subsidy to the poor. Why not go around this and offer incentives to bus private companies that give rides to the poor? This would be more transparent and also more efficient at making sure the subsidy goes to the right group of people. Also, I would expect that an incentivized private system would do a better job at servicing the favored poor than a public system that does not have to compete for their business, and also deals with a lot of other bizarre incentives.

A private bus system with subsidies to strikes me as a Pareto improvement. I can think of no strong arguments against this idea. If you can, please post.

Best Films Since 1983

Inspired by Entertainment Weekly (as I often am) and Ross Douthat I came up with my own list of the Top 50 movies since 1983. They did Top 100, so I had to cut quite a few movies, although many of them would not be in my own 100 best. Also, I didn’t list any films from E’s list that I haven’t seen (Oddly, most of them I have no interest in seeing).

I disagree with Entertainment Weekly a good deal, and 21 of my 50 are not on their 100 (My additions are shown with asterisks). I have noticed that compared with their list, I have a few tendencies/biases: I definitely have a bias in favor of foreign films compared to E. I tend to rank violent mafia, gangster, and war movies higher. Also, anything that deals with government and corrupt gets a boost. I noticed I have a fairly strong pro Martin Scorsese/Wes Anderson/Clint Eastwood/Coen Brothers/Quinton Tarentino bias. Also, I think movies have gotten a lot better over the last 8 years or so, and also that the late 1980s was a particularly bad era for film.

When you know that, you can probably guess my list. But just to make it official, here is the correct list of the Top 50 movies since 1983.

Top 50 (in order, additions with asterisk):
1. GoodFellas (1990)
2. The Lives of Others (2006)
3. No Country For Old Men (2007)
4. Pulp Fiction (1994)
5. Fargo (1996)
6. Unforgiven (1992)
7. *Reservoir Dogs (1992)
8. Rushmore (1998)
9. Saving Private Ryan (1998)
10. There Will Be Blood (2007)
11. *The Usual Suspects (1996)
12. This Is Spinal Tap (1984)
13. *Pan’s Labyrinth (2007)
14. *City of God (2001)
15. Broadcast News (1987)
16. *The Royal Tennenbaums (2002)
17. *Blood Diamond (2007)
18. Scarface (1983)
19. Fight Club (1999)
20. *Adaptation (2003)
21. The Sixth Sense (1999)
22. *Million Dollar Baby (2003)
23. Schindler's List (1993)
24. Gladiator (2000)
25. *American Beauty (1999) – Apologies to Ross Douthat
26. Rain Man (1988)
27. The Naked Gun: From the Files of Police Squad (1988)
28. *Knocked Up (2007)
29. The Matrix (1999)
30. There’s Something About Mary (1998)
31. *Gangs of New York (2003)
32. L.A. Confidential (1997)
33. Boogie Nights (1997)
34. *Scent of a Woman (1990)
35. Office Space (1999)
36. The Departed (2006))
37. * Leaving Las Vegas (1995)
38. *The Big Lebowski (1999)
39. Sideways (2004)
40. *Casino (1995)
41. *Best in Show (2000)
42. Full Metal Jacket (1987)
43. *Downfall (2004)
44. *Rudy (1994)
45. The 40 Year-Old Virgin (2005)
46. *Autofocus (2003)
47. *Batman Begins (2005)
48. *The Spanish Apartment (2002)
49. Swingers (1996)
50.* Braveheart (1995)

Not in the Top 50 (in approximate order):
Casino Royale (2006) Waiting for Guffman (1996) Glory (1989) Natural Born Killers (1994) Terminator 2: Judgment Day (1991) Speed (1994) Spider-Man 2 (2004) The Truman Show (1998) Austin Powers: International Man of Mystery (1997) Napoleon Dynamite (2004) Back to the Future (1985) South Park: Bigger Longer & Uncut (1999) The Lord of the Rings trilogy (2001-03) Titanic (1997) Toy Story (1995) The Silence of the Lambs (1991) The Lion King (1994) Ghostbusters (1984) Jerry Maguire (1996) Dazed and Confused (1993) Beverly Hills Cop (1984) Men in Black (1997) Clueless (1995) Do the Right Thing (1989) Shrek (2001)

Have not Seen:
Breaking the Waves (1996) Crouching Tiger, Hidden Dragon (2000) The Piano (1993) The Breakfast Club (1985) Children of Men (2006) The Player (1992) Pretty Woman (1990) Eternal Sunshine of the Spotless Mind (2004) The Incredibles (2004) Menace II Society (1993) Ed Wood (1994) In the Mood for Love (2001) Far From Heaven (2002) The Talented Mr. Ripley (1999) The Blair Witch Project (1999) Y Tu Mamá También (2002) Michael Clayton (2007) Moonstruck (1987) Lost in Translation (2003) Evil Dead 2: Dead by Dawn (1987) Drugstore Cowboy (1989) Out of Africa (1985) Thelma & Louise (1991) Sid and Nancy (1986 Donnie Brasco (1997) Witness (1985) All About My Mother (1999) Dirty Dancing (1987 sex, lies and videotape (1989) Big (1988) Scream (1996) Memento (2001) A Room With a View (1986) Blue Velvet (1986) Hannah and Her Sisters (1986) Die Hard (1988) Moulin Rouge (2001) Crumb (1995) Edward Scissorhands (1990) Hoop Dreams (1994) Aliens (1986) Wings of Desire (1988) The Bourne Supremacy (2004) When Harry Met Sally... (1989) Brokeback Mountain (2005) Fatal Attraction (1987) Risky Business (1983)

Report: Biofuels Policy Completely Backfires

The Guardian tells us:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report... The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises.

..."Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam. "It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."

Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".

President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases."

... it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices. Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

If only we had experts to explain to politicians and the public the effects of a policy like Ethanol subsidies. Otherwise this could have been avoided and Americans, Europeans and the worlds poor would be better off. Sad, but what I will find most interesting is when and what goverments will start to reverse themselves if any.

(HT: Tyler Cowen)

Jesse Helms

Five-term Senator from North Carolina Jesse Helms died yesterday. You can't say anything bad about him now, so he is getting some positive obituaries.

But, I can. Generally, I think Democrats are being misguided conspiracy theorists when they talk about the racial undertones of the Republicans message. They want to claim the moral high ground, but any honest Democrat would see the same thing if they looked deeply at what Democratic candidates say (Or not too deeply at Hillary Clinton's comments). But, Jesse Helms is an exceptionm and by all evidence a genuinely nasty racist man. He started out a populist reactionary Democrat, but found he could be elected as a populist reactionary Republican. He promoted reactionary and thinly-veiled bigoted views throughout his many terms in the Senate.

For some reason, very election Jesse Helms ran as strictly opposed to affirmative action (See the famous ad at the bottom). He had made some explicit and very racist statements while a Democrat earlier in his career (Wikipedia provides a good enoguh overview). Unlike Robert Byrd, Al Gore, Strom Thurman (worse than Strom Thurman!) and many other old Southern Democrats I find no evidence of him distancing himself at all from his explicity racist history. And he acted a lot like we would expect a bigot to act in Congress. There were reasonable arguments to oppose making Martin Luther King's birthday a Holiday (King did have connections with some communists and his foreign policy views seem quite reactionary, but Washington and Lincoln had some serious issues themselves... I don't really like holidays dedicated to people, but that's for another blog post). However, I view Helm's opposition to the Holiday as more than coincidental. Helms was strictly opposed most of Israel's actions for mysterious reasons. He was also quite protectionist in his trade views. He seemed opposed to anything that dealt with people who were different than him.

Helms was a cold warrior in a sense, and he did support Ronald Reagan. Those aren't good enough reasons to fondly remember him. I'm an apologist for a lot of the things Goldwater and Reagan did and said, but not this guy. Good bye Jesse.

A Splendid Exchange

William Bernstein’s wise decision to appear on EconTalk to appeal to the all-important ‘Joe’ demographic has paid off. I just last week finished his book, A Splendid Exchange: How Trade Shaped the World. The book is a discussion of the history of trade since the beginning of human history. Many of us free traders base our support on our understanding of the increasing benefits to exchange of expanding the market. Bigger markets and increased trade are almost always good. In this book Bernstein shows how markets actually expanded, connected, and have been controlled, and tells us about the great innovators and innovations in trade throughout history that contributed to these processes.

International trade is quite ancient. Indian trading partners has embassies in Augustus’s Rome. Much of the history of trade is a history of the different groups who were able to control the chokepoints. There’s quite an advantage to monopolizing trade routes, but fortunately this has become increasingly difficult to do. When Muslim Arabs conquered the Middle East, they cut off Europe from the East, and controlled that trade. The group to finally break that dominance was the Portuguese, who attempted to establish their own monopoly of the East-West trade. I find the Portugese quite intresting as they were quite unlikey for this role; Bernstein calls them ‘the dog who caught the car’. Coming out of the Middle Ages, Portugal had a population of one million, primitive capital markets, and a limited understanding of the outside world (Portugal wanted to conquer the Sahara as a route to India, and explore to find a mysterious Eastern Christian kingdom that could help in further Crusades). Despite their limitations, in the years after Vasco de Gama rounded Africa, Portugal was the main power on the seas especially in the Indian Ocean. They did this with the help of the plague (which devastated the other fleets of the India Ocean), brutality, and by militarily taking control of the major check points.

Unfortunately for them, Portugal’s larger and more advanced Europeans rivals soon became jealous and there was a competition to control these routes which the Portuguese could not win. Portugal was surpassed by the Dutch, who in turn were eclipsed by the British after the Glorious Revolution. Fortunately now, international trade is largely free trade, and it is more important to keep open routes than to dominate them. Bernstein discusses this transition and the politics of trade. Smith, Ricardo, and Cobden all make appearances in the book as do some lesser know theorists that Bernstein revives. Perhaps more interesting, and unknown to me, were the internal politics of China. The kingdom's insular rulers kept the biggest power largely away from an active role in international trade for most of its history.

Bernstein, a neurologist by day, is more of a popularizer than a leading edge researcher. Although people thought I was crazy carrying it by the pool, I considered this book a sort of light read. Nonetheless, I thoroughly enjoyed it. Enough in fact, to put it on my Amazon recommendations list! (On the right side of this blog)

9/10

The Battle for Spain

Since the 1990s. Anthony Beevor has made a living as an expert at uncovering new information from the Soviet archives. His recent book ‘The Battle for Spain: The Spanish Civil War 1936-1939’ is a rewrite of his 25-year-old history of the Spanish Civil War, filled in with new information from the now opened archives.

This is a topic I have long had a peripheral interest in, but this is the first full book I have read on the Spanish Civil War. One particularly sad part of the war is that it’s really hard to root for anyone. So, you’re just on the side of the victims. The fascists, communists, as well as most of the other factions are deeply flawed. Both sides had their share of pretty awful atrocities. Beevor estimates the Nationalists killed about 200,000 people, while the Republicans killed about 40,000. So the Nationalists killed more, but he argues with two warring vicious groups, the victors will just have more opportunities to commit atrocities.

Franco’s ‘Nationalist’ group (which he was not the top leader of at the start of the revolt) consisted of fascist Falangists, Carlists, Alphonsists, Catholic fundamentalists, and Anti-Masonists (not of the 1840s American variety). Their uniting cause was hatred of communism, although from a traditional rather than liberal perspective. They viewed the war as a crusade – a Second Reconquista. Franco, one of the few somewhat competent generals in the war, was fortunate to receive German support and also in that his major rivals for power died early in the conflict.

To most Westerners, the ‘Republicans’ were a more appealing group. That label contained trade-unionists, Anarchists, Stalinists, ‘Trotskyites’, some Liberals and Social Democrats. They wanted to overhaul Spanish society. To what is unclear, but a form of communism would be likely (The term ‘liquidating the bourgeoisie as in Russia’ occurs a few times). Certainly neither side promoted liberal democracy. Although the Republicans attempted to portray themselves internationally as the legitimate government and relatively moderate democrats, they became increasingly undemocratic and dominated by Stalinists. The Republicans did have leftist intellectuals on their side and they also better understood how to communicate with Western audiences. However, the Nationalists benefited from some well placed allies and lobbying. Nationalist aristocrats did an excellent job of appealing to the English elite, while German pressure kept the French from heavy involvement, and the Kennedy-led Catholic lobby in the United States prevented American aid to the Republicans.

The interesting counter-factual question is how things would have ended up if the Republicans had won. Franco’s group had some terrible qualities and Franco initial policies weren’t so different from the controlled economy communists wanted. But, besides his traditionalism, Franco didn’t have that strongly of held beliefs about organizing the country. And pressure from Western economics forces caused some moderation and liberalism in the country starting in the 1950s. As Beevor points out, by the late 1960s, Spain was a changed country – a tourist destination for the British rather than the bizarre Falangist utopia Franco envisioned in the post-war years. Eventually, after Franco died the country turned out alright, and today is definitely a prosperous Western European nation. Franco probably headed off a communist takeover, and Beevor points out Spain is much better off than any of the former Warsaw Pact nations of Eastern Europe. I attribute that to Spain’s proximately to wealth and access to trading lanes as much as Franco. It’s uncertain what the Republicans would have done if they had won the war and carried out their revolution. It probably wouldn’t have been good. It probably would have been better than the tyranny of the early Nationalist years, but a Spain closely linked to the Soviet Union would be destabilizing for Europe. After WWII, if would have been a beechhead in Western Europe for the Soviets and likely would have isolated the Spanish people from largely benevolent Western influences. So, like all good counterfactuals is unanswerable.

I don’t want to sound like I’m demonizing the actors in this conflict. Most were not evil, they were human extremists… Driven to their views by the extreme circumstances and with their worldviews much seemingly terrible behavior becomes permissible to ensure victory. For me, it’s a highly-regrettable toss-up. Franco was terrible, most of the communists were terrible. Weirdly everything turned out okay in the long-run for those who lived… But we would have been better off if Hemingway and Orwell had won the war.

As for the book, rather than the war, generally Beevor is informative and quite readable (although some of the sentences are worded like strained translations) But my biggest criticism of the book is the maps. For battles it very much helps to understand what’s going on when you have a map. All the maps of battles were in the front of the book which made fore a lot of flipping. Also, many of the important battles were not shown in maps. In addition, Beevor expects the reader to bring a knowledge of Spanish geography to the book, which I do not posses. Many of the towns and river he mentions are no where on any of the maps, which makes it a little more difficult to see what is going on. Nonetheless, overall I enjoyed. It was a good read on the plane ride to Spain. Of course, no one there wanted to speak about it.

7/10

Triumphant Return

I am back from my exciting vacation.

One observation from my trip. In Spain and Italy, just about everywhere you go, there are plenty of signs in English. However, in Marseilles, France it is impossible to find any public signs or monument blurbs in English. There is one place you see lots of English in France: the giftshops.

Vacation

I'm leaving on a ten day vacation today. So, as to not let this feed go dry, I lined up a series of guest bloggers: Tony Schwartz, Tim Russert, and Harvey Korman. They were going to help take this blog in a more aggressive political advertising, interrogation style political interview, and classic although dated comedy direction. It was going to be a great ten days for this blog, but it was not to be...

Instead, I leave you with this.


I will tastefully return in about ten days.

Che Guevara Fashion

Chris Blattman recently had a piece about the fashion trend of Che Guevara clothing items and posters. I don’t have a knee-jerk negative reaction to seeing a Che Guevara decorated shirt. I think that shot of him in black and red that you usually see is a pretty cool looking image. Generally the people who display it will say it stands for some form of idealism and rebellion, which I am sympathetic to. I think it does stand for that to them and to most people, and that’s how I interpret it when I see it.

However, when you invest some thought in Che Guevara, I think it quickly becomes untenable to hold him up as an icon. He’s basically a fashionable Stalinist. I’m not an expert on the history of the Cuban Revolution, Castro’s Cuba, and Che’s adventures in Latin America. However, there seems to be a consensus that Che led death squads, imprisoned dissidents, prosecuted homosexuals, and executed many innocent people in Castro’s quest to create the Cuban "new man." This column by Paul Berman at the time of The Motorcycle Diaries gives a good overview of his regrettable actions.

If most of them knew all the facts, and saw Guevara as I and many other do, they would run from using his image. While we are living through this Che Guevara phase, we don’t see how ridiculous it should be. I think this is something that will eventually die out and then we’ll all be disgusted in how it was able to persist for so long. I view it as somewhat like wearing Confederate flags, which fortunately has become much less acceptable in the last ten years. But a flag is generally more vague; I think this is more like a fad of wearing Nathan Bedford Forrest shirts.

Again, I don’t think that people who wear Guevara’s image are hateful (only a very small percentage). But I do think that everyone should definitely stop doing it.

Starving the Democrats

The United States’ first Treasury Secretary, Alexander Hamilton said that under the right circumstances a national debt could be a national blessing. At the time, he probably did not have the ‘Starve the Beast’ theory in mind. However, I did when I read columnist/economist Paul Krugman’s piece today in the New York Times. The gist of Krugman’s column is that George Bush’s tax cuts have made it very difficult to reasonably pass any major increases in government spending on health insurance. This has had an effect in limiting what both candidates are promising during this election. Krugman doesn’t mention Bush’s sizable spending increases for wars and prescription drug coverage. But, that’s the other (worse) part of the math for Bush’s “poison pill”.

I am not sure I want to sound cavalier about debt. Ideally, I would favor limited debts to sponsor corresponding long-run projects and larger debts for use in a national emergency. If we were governed by angels or libertarians, the cynical view of roundabout ways of restricting government spending would be ridiculous. However, we are government by politicians with their politically popular ideas. My view is that it is best that it be obvious to politicians (or at least their advisors) and hopefully the public that grand new spending proposals are impractical.

The ‘success story’ for starving the beast is the Reagan presidency. Reagan’s terms saw significant cuts in income taxes and increasing spending on defense. This left his successors, H.W. Bush and Clinton, with quite sizable national debts compared to the historical average. One of the effects of this was that those two presidents were quite constrained on their policy options. Bill Clinton would have needed much larger, and probably politically unpalatable, tax increases in 1993 to pass a national government health insurance bill. So, he ended up pursuing a moderate economic path, even in his first years with sizable Democratic majorities in both houses on Congress. Economically, this turned out quite well in the 1990s. George W. Bush has set the next President up for a similar situation to Reagan’s successors (although without the 1980s boom or the end of history).

Could this lead to the future redemption of the Bush presidency? I think not, he needs Iraq to turn into Germany in five years. But perhaps this is a silver lining. I’d be quite content with President Obama as a Bill Clinton who improves our standing abroad. I would like Democrats who didn't spend money, I would also like Republicans who didn't...

(H.T. Greg Mankiw)

Idiocracy

If you haven't seen Idiocracy you probably shouldn't. However, I just did this weekend and it does have some politcal-economic themes in it.

In the film, Luke Wilson and Maya Rudolph are frozen for a military experiment and awake in the year 2505. In the future, the stupid have so far outbred the intelligent, Luke and Maya arrive as the smartest living people in the world. Eventually, the President who is also a porn star and wrestler puts Luke Wilson's character (Joe) in charge of solving the agriculture crisis one of the many major problems that has been caused by the dumbing of the population. Joe learns that water has largely been replaced by 'Brawndo: The Thirst Mutilator', a Gatoraid-like drink advertised as rich in electrolytes. One of the many uses of Brawndo is crop irrigation. Over time, the sugar from Brawndo accumulated in the soil, killing the crops and causing the food shortage.

Joe proposes uses water for irrigation which is seemingly laughable as water is only used in toilets. Fortunately, Joe is able to get the transfer from Brawndo to water enacted. However, the reaction from the unenlightened entrenched interests comes quickly. Joe is harshly criticized for harming the sports-drink industry, in which a large fraction of the population appears to be employed. His policy is criticized for causing unemployment and destroying the economy, with little evidence about the overall economic situation other than Brawndo being upset. After being verbally attacked by the management of Brawndo, Joe is physically attacked by an angry mob of now unemployed sports-drink workers. He is soon removed from his office and sentenced to 'rehabilitation' which is a lot like a futuristic feeding to the lions.

...I thought about creating a Luddite Fallacy tag for this brief piece, but I think I'm just going to go with more Creative Destruction.

Robin Hanson on Health Care

Here is a great youtube clip of a Robin Hanson interview, where he mentions of some of the biases that affect our Healthcare decisions and gives an overview of signaling theory. I subscribe to Overcoming Bias and I don't recall this interview being mentioned there at any point, so I will mention it here.

Hanson is a GMU economists and one of the most interesting guests on EconTalk. He's done two podcasts, both of which anyone who finds this clip interesting will enjoy very much. His blog Overcoming Bias is a much read, although I must warn some of Eliezer Yudkowsky's posts can be a little intense for the casually rational reader. Near the end of his recent EconTalk interview, Russ Roberts asks Hanson the reason for wanting to overcome all of our biases if those who are most successful act according to all the signals and seemingly irrational behavior our society rewards. I liked Hanson's response: "If you want understand the world and you don't understand this you will miss a lot... Some of us just want to look the world straight in the eye, see what it is, and even if it isn't a pleasant sight we just want to see." ...So maybe it's fun, but perhaps it's irrational to overcome our biases? Or rather, it's interesting to understand our biases, but generally it's best to act biased anyway. Curious.

Updated My attempt to embed did not work, so just click on the link.

The Reaction in Ohio

The return of medieval usury laws is another worrying signal of the reactionary turn politics have taken in the state of Ohio. I view the dominant economic and political trends in the state to be main causes of this turn. Those trends are decline of traditional manufacturing industries and the strength of entrenched interested in the major political parties.

The state Democratic Party appears to be controlled by Unions and anti-market religious types – They are the main cause of the anti-market climate in the state, which is the principle reason that business is leaving for better run areas of the country. Conversely, the Republican Party seems to be controlled by rent-seeking businessmen and religious types – who when in government appear to steal and increase taxes. There aren’t many good options right now. What the state needs to do is restrict the excessive power of Unions, become a right to work state, rationalize regulations, lower and rationalize the tax system, and it would be nice if the state government set a progressive/liberal tone.

As a result, the state’s political discourse is dominated anti-lending laws, anti-gay marriage laws, anti-illegal immigrant crackdowns, and anti-trade rhetoric.* So, Ohio is turning into France. The state needs a rupture. Unfortunately, I see no reason to think Ohio will be shocked out of its descending path anytime soon as 1970s Britain, post-Katrina Louisiana, and a few others have been. Perhaps someone like Rob Portman could shake up the state in 2010, but that’s unlikely, and in the near future it appears the reactionaries have the upper hand.

*See Benjamin Friedman’s ‘The Moral Consequences of Economic Growth’

The Return of Usury Laws

Democratic Governor/Baptist Minister Ted Strickland along with the Republican state legislature has banned “Payday lending” in the state of Ohio. They have done this by capping the interest rate that may be charged at an annual rate of 26%. The effect will be that no one will be able to lend short-term money to risky borrowers (ie. Pay day lending). Previous borrowers (generally the relatively less well off) are thus banned from borrowing short-term.

I have never taken out a Payday loan, but I know people who claim to have. These people don’t seem to think they were scammed, although they still don’t like the high rates. They wouldn’t have used payday lending if they had preferable alternatives. So, they paid the high rate – not the end of the world. Payday loans generally aren’t pleasant, but there is a service being provided here – making high risk loans. High risk loans necessitate high rates. But, now they are illegal. Some of this lending will no doubt go underground (remember loan sharks). Also, this will no doubt be a boon another form of credit for high risk borrowers, Pawn shops (Until they are also banned).

When I see market transactions that I don’t view as pleasant, my first instinct (like Tyler Cowen’s) is not necessarily to ban them. But many people do have that instinct, often on religious or pseudo-moral grounds. My feeling is that part of the dislike of Payday lending is aesthetic – the dislike of bad neighborhoods. The middle and upper classes don’t really like poorer neighborhoods, which are often full of Pay-day lenders, which are often full of poorer people. There is certainly a tendency of moral crusaders in society to take away unbeautiful options from those who are not rich. The institution of government mandated wage floors, the bizarre campaign against Wal-Mart, and usury laws are three prominent examples of this trend. Although on the surface morally-inspired, I think this is a mean-spirited and anti-liberal trend. I find it worrying.

Subsidies v. Windfall Profit Tax for Agriculture

The U.S. Congress recently passed a $307 billion agriculture subsidy bill. This subsidy passed both chambers of Congress by a large margin despite the fact that U.S. Agriculture is already making very healthy profits (Up about 60% in two years), at least partially due to another subsidy – American Ethanol policy.

It’s not clear to me why the government should be subsidizing farmers (although it’s clear why certain politicians favor subsidies*). The default and correct position of the government is generally not to subsidize an industry. It doesn’t really seem fair to take money from some and give it to certain businesses, generally it’s not productive, and it causes political economic problems. So, we generally need a compelling reason why we have a special case necessitating subsidies. However, it isn’t a strategic policy to protect our food supplies, as United States has abundant food and is a net exporter. The United States has about the best farm land in the world and will always have a vibrant agriculture sector (baring the worst global warming predictions coming true).

One reason some could offer to protect farmers is to protect them from the ups and downs of commodity prices. We see no reason to protect other industries from these pressures. In fact, populist politicians want to punish oil companies for the rising price of crude. I don’t recall hearing much talk about instituting a “windfall profit” tax on farmers. Even though, unlike U.S. oil companies, American farmers are definitely using the government to manipulate prices and cause an artificial shortage. The agriculture lobby’s manipulation of the market has far worse effects than high gas prices - it causes people to starve (but people in the 3rd world who have little say in U.S. policy).

So, we’re spending a lot of money to further enrich American farmers and kill people in the Third World (And not even for freedom). I say stop it. I reluctantly give Bush credit for his veto. John McCain gets credit for taking a strong stand against the bill in the Senate. Barack Obama, who says he will fight the special interests, supported this incredibly regressive policy just as he did the 2005 energy handout – He loses credit.

*Subsidies go to the organized special interests with the most political power. Agriculture is a well definite sector that is easy to organize into an effective lobby, and has some broad-based appeal (protect the vaunted family farm, right?). More importantly, states with large agriculture lobbies are vastly overrepresented in Senate and also have a disproportionate role in choosing the President (via the Electoral College and the Iowa Caucus).