Sunday, December 09, 2007

The Effect of the Drug War

Increasingly, the young murder suspects coming to the station for questioning seem to lack basic morality, said Sgt. Tim Nolan, who has been investigating Oakland homicides for 17 years.

"There are more and more families where there's less and less structure," he said. "Talking to these suspects day in and out, there's a higher percentage today with no sense of right and wrong. It's frightening, but we are creating super-criminals."

- http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/MNS1RBLQ5.DTL

Morality is woven into the fabric of a society, creating a structure of normative rules. Morality is functional. When society changes, those rules change, within range of certain biological limits...

Saturday, December 08, 2007

Traveler's Dilemma

The Traveler's Dilemma, unless I'm missing something, is another example of Ivory Tower logic gone too far in the wrong direction.

UPDATE: Really, the Traveler's Dilemma could be viewed as a good critique of Nash equilibrium, and for that it works well.

Thursday, November 29, 2007

Citing Sources & the Coase theorem

Why the hell do scholars (and organizations) make it so hard to cite their work properly? Just put the information up in the standard author-date format and save people the annoyance of (n.d.) or (volume, page, ect. unknown).

The paper which motivated this is an old economics classic: Coase's paper on social costs which resulted in the famous Coase theorem. It is published on a website, and there's not enough on the PDF to source it properly.

The paper is well-worth reading, anyway, as it is a landmark in the study of welfare economics and externalities. It's at the bottom of the Wikipedia link: (another disadvantage of PDFs: they are hard to link - link goes to the PDF).

The point he raises is a valid one. Simply cutting off an activity which imposes externalities could just reverse the externalities, as it would put, say, factoryworkers out of work and leave the owner of the factory screwed. That's why people cognizant of externalities do not advocate simple shutdowns: they advocate taxes and payments to the people who are being affected. If the activity can't afford to pay the social cost that its private activity generates, then it should be shut down, because that activity imposes net costs on society.

Coase's argument is that in a system with well-defined property rights, two people will work out externalities through bargaining. His greatest assumption, however, is information. Imperfect information, as always, prevents the "free-market" from working efficiently. Imperfect information is further complicated when the externalities are distributed over a wide range of people (say, the population of the world), and the effects are long-term (global warming, water shortages, ecosystem collapse).

Friday, November 16, 2007

Citing Sources

It's high time that newspapers, blogs, and everyone else began citing sources. Footnotes need to be integrated into all of their word-processing softwares, and the use of them should be required. Footnotes are much more efficient in a digital world than parenthetical citations; within 5 years every source could be digital and immediately verifiable.

Would the newspaper which began really citing its sources have a competitive edge? I think so. Why hasn't one appeared? Another interesting case of market failure. Maybe I should start one.

Tuesday, October 16, 2007

Notes on Uranium Weapons and Kitsch

I read this essay by George Gessert recently. If I could find a free link, I would use it, but I can't. I just hope a fair amount of that money is going to George. I liked the essay. I recommend looking it up through some sort of library database and reading it. It was well-written.

While in class, I tried to attack it by pointing out that even if "kitsch" (and I see that George uses kitsch in a somewhat different way than Wikipedia describes) allows atrocities to happen, does that really place the blame more on the American people, who are distracted by kitsch, than it does on the people actually behind the atrocities? Can we really blame either one? The American people are ignorant dupes, sure, but the leaders of America are basically sociopaths. Neither one has the moral sense of a philosopher, so why does it make any sense to judge them as if they were philosophers? Humans are what they are. That doesn't mean we can't try to change it, though, or point out where humans go wrong. Thus my critique is not really a very good critique -- it's perfectly reasonable and indeed important to point out that Americans live in a fake world of art while much of the rest of the world struggles to survive (hoping to live like Americans do -- in dreamworld).

After leaving the classroom I figured out what I'd really wanted to say: that most art is kitsch, and academic "high" art no less than others. I wish I could respect academics. I like them -- the faculty at my school couldn't be nicer -- but they are too narrow-minded, weak, and specialized to really respect or take seriously. They don't institute change, so why should they complain when the American people don't? They don't necessarily know good policy, and even if they do, they don't run for office to implement it. They think they're smart, but for all their intelligence they can't rise to the top. Or maybe they are at the top, and they're just fucking everything up. Or maybe I'm just an idiot and all my favored policy solutions wouldn't work.

If you know how to fix something, does that give you a moral obligation to try to fix it? If that "moral obligation" doesn't exist, then maybe it should. But I'm betting some "ethicist" will remind me that yes, of course it does, though it exists only because some ethicist feels it should -- it "feels" right. But didn't I just say that such an obligation should exist? Hmm.

Monday, October 15, 2007

Diminishing Marginal Returns and Academia

Academics specialize. It's what they do. Hell, it's probably more accurate to say that all humans specialize -- just that some of us specialize in rather mundane tasks. There are good economic reasons for that: specialization and comparative advantage allows for more and better work to get done.

Yet there are diminishing marginal returns to specialization, and an academic (especially in the social sciences and humanities) who knows nothing outside her field will generally not produce work as full as someone who is broadly trained. There will always be gaps obvious to those trained in other fields. The irony is that learning the other fields' perspectives can be so simple. After taking one class in Sociology I had the tools and perspectives: structural functionalism, conflict theory, and symbolic interactionism. Now, I may have relatively crude conceptions of these theories, but the rational theory behind them has served me well nonetheless in philosophy and daily life. Similarly, all it takes to absorb the most integral concepts of economics such as opportunity cost, diminishing marginal returns, comparative advantage, and externalities is one easy class! The rest of the classes mainly just teach you other applications of these tools!

By the way, I've found that many faculty members at my school have never heard of an externality. If you haven't taken an intro economics or sociology class, you should!

The same applies to a lesser degree in mathematics and the sciences. Everyone should do at least Integral Calculus. And the reason most people don't has nothing to do with intelligence -- it has to do with willpower, interest, and teaching styles.

The most important reason for someone to be broadly trained is that these people make better citizens. And when I mean broadly trained I mean, of course, trained in economics at least. ;)

Sunday, October 14, 2007

Fighting the Good Fight

Lucian Bebchuck is one of the seemingly few economists who can see what appears obvious to those of us who trade stocks: executive compensation is out of control, and its robbing shareholders. I'm reading his Executive Compensation As An Agency Problem [PDF] and in the second page he notes that "shareholders could try to challenge pay arrangements in court [but] ... corporate law rules effectively prevent courts from reviewing compensation decisions."

He has quite a vitae. Obviously one major step towards fixing this problem is changing corporate law. The next step is to require cumulative voting rather than slate voting -- or at least some alternative to slate voting. While the Wikipedia [WP] article notes that cumulative voting is required for corporations in many states, it neglects to point out that 50% of public companies are incorporated in Delaware (60% of Fortune 500 companies). Most of the remainder are incorporated in Nevada!

As with most major problems, there are simple and easy ways to at least partially remedy the problem. The inherent barrier is simply ignorance and perhaps deceit. I don't have time to research this issue thoroughly, but I will post if I find more simple solutions. Here is Bebchuck's solution.

UPDATE: Why Incorporate in Nevada?

2. Your Officers and Directors Can Be Indemnified.

In 1987, the Nevada Legislature passed a revolutionary law that permits corporations to place provisions in their articles of incorporation that eliminate the personal liability of officers and directors to the stockholders of Nevada Corporations.

This is one of the main reasons large companies like Citibank are domiciled in Nevada. Delaware and a few other states soon adopted lesser versions of this law, but Nevada's law remains among the most thorough and comprehensive in the country.

Monday, October 01, 2007

Industrial Ecology

When I first heard the term industrial ecology I didn't think much of it. But this story has perked my interest:
    At the center of the Kalundborg industrial park is a large, coal-fired electrical power-generating station. Waste steam from the power plant runs a pharmaceutical plant and an oil refinery. Waste heat is piped to houses in the nearby town, replacing 3,500 household oil heaters. Waste water from the oil refinery goes back to the power plant, in place of fresh water that had previously been pumped from nearby Lake Tisso. Waste gas from the refinery runs a factory making gypsum wallboard, which also uses gypsum extracted from the power plant's wastes. Sulfur, a byproduct of the oil refinery, becomes sulfuric acid at yet another plant. Fly ash, left over from the power plant, is made into cement. The sludge from the pharmaceutical plant's yeast-based processes fertilizes farmers' fields. Like symbiosis between plants or animals, what one partner excretes the other needs. One industry's trash is another's treasure.


It seems that there's huge potential to be had in connecting the industrial dots. This also reminds me a book I've always wanted to read, Cradle to Cradle.

Monday, August 20, 2007

Testosterone Under Attack

Here is a good article on a strange phenomenon: the decline in testosterone levels.
    The 60-year-old in 2003 had about 15 percent less testosterone than the 60-year-old in 1988, according to Thomas G. Travison, Ph.D., lead author of the testosterone study. Sixty was looking like the new 70. Had something happened? Could we be in the middle of some broad biological or environmental change affecting all men simultaneously?
    ...
    Then in the summer of 2006, Travison attended an Endocrine Society meeting where another researcher, Antti Perheentupa M.D., Ph.D., from the University of Turku, in Finland, presented evidence of a similar decline. The Finnish results suggested the change was happening among younger men, too. A man born in 1970 had about 20 percent less testosterone at age 35 than a man of his father's generation at the same age. "When I saw another group reproducing our results," says Travison, "that was convincing to me that we were seeing a true biological change over time, as opposed to just some measurement error."

Possible causes include obesity and heavy prescription drug use, but there's other interesting stuff going on:
    Increasing numbers of boys are being born with genital abnormalities, including undescended testicles, and urethras that exit in odd places along the penis. In Denmark, 40 percent of young men have a subnormal sperm count, and the rate of testicular cancer is among the highest in the world. In the United States testicular cancer has recently become the most common malignancy among Caucasian men ages 15 to 35. Some researchers have grouped these developments together as "testicular dysgenesis syndrome," or TDS, with "dysgenesis" meaning abnormal development of the male organ.

    Mitch Harman M.D., Ph.D., an endocrinologist at the University of Arizona college of medicine and the director of the Kronos Longevity Research Institute, sees the shadow of Silent Spring. Back in 1962, when Rachel Carson published her environmental classic, estrogen-like substances in the insecticide DDT were making eggshells so thin that they were crushed by nesting parents; populations of eagles and other large birds plummeted. And today? Dr. Harman says, "I'm concerned that we're just pouring chemicals out into our environment that are endocrine-suppressing, estrogen-like compounds," possibly causing similar disruptions in human reproduction. The authors of a recent article in the Medical Journal of Australia likewise suggest that from early fetal life onward, male hormonal and reproductive functions are under "xenobiotic attack," meaning chemicals not naturally found in the body appear to be disrupting normal biological development.

    For instance, 90 percent of American men have evidence of chlorpyrifos in their urine. This shouldn't be surprising, since up to 19 million pounds of the stuff was distributed across the United States in 1999 alone, much of it in household products like tick-and-flea powder for pets, lawn treatments, and common insecticides. Though residential use is now restricted, chlorpyrifos is still common in agriculture, as well as in some professional applications; for most people, diet is now the main source of exposure. In a recent Harvard study, men with the highest chlorpyrifos exposure typically had 20 percent less testosterone than those with the lowest exposure.

I'll let you read the article if this has piqued your curiosity -- which it should, male or female.

Philanthropy, Gates Style

I liked this article even though I think one of its main arguments is nonsense: that investing in "damaging countries" by purchasing their common stock causes damage. Note that it is written by a Ph.D. geneticist / biophysicist, who rightly attacks the Green Revolution / Monsanto subsidy push.

Socially Responsible Investing (SRI) is nonsense. Someone will always buy the stock of a company that's doing well and sell the stock of a company that's doing badly. If anything it's better if socially responsible people reap the benefits from owning corrupt companies because they'll put the money to better use -- if they ignore the "irresponsible" opportunities, they make these opportunities all the more lucrative for the "irresponsible" investors. Furthermore, investing in corrupt companies gives you some power over their decisions. The article touches on this, but not firmly enough when it notes that "nearly one-third of philanthropic foundations take part in shareholder initiatives, voting their proxies to influence corporate behaviour. The Nathan Cummings Foundation, with an endowment of $481 million, has sponsored proxies to force corporations to address environmental sustainability and political transparency. Shouldn’t the Gates Foundation do the same?"

So the article could have cut out all that nonsense and focused on what is really wrong with the Gates Foundation: its focus on long-shot, ineffective cures; its big-business promotions and subsidization; the brain-drain it causes in Africa, and the lack of focus it puts on policy and infrastructure. The whole foundation is a huge waste of money, and it leads me to believe that it's either a publicity stunt or Gates / Buffett don't have a clue. (George Soros, on the other hand, does -- and he recently invested in Halliburton.)

Takeback Laws

From a decent article in The Economist on recycling:
    Europe and Japan have initiated “take back” laws that require electronics manufacturers to recycle their products. But in America only a handful of states have passed such legislation. That has caused problems for companies that specialise in recycling plastics from complex waste streams and depend on take-back laws for getting the necessary feedstock. Michael Biddle, the boss of MBA Polymers, says the lack of such laws is one of the reasons why his company operates only a pilot plant in America and has its main facilities in China and Austria.

Yet another area for the US to improve upon.

People Are Evil

There is a troubling fact of reality you and I must deal with. Historical inductive evidence and present experience point to something: people are evil and must be, by default, regarded with suspicion. History shows us that people will use power to take advantage of other people, whether it's through brute enslavement, peasantry, servitude, monopoly businesses or media brainwashing. I'm not here to make a judgment on that fact -- I'm just throwing it out there. It's too easy for people to forget the past 5000 years of man's past. The very good, principled man is an exception rather than the rule -- and could be a myth. We walk around with myths in our head which are not reflected in reality. Many of the good feel that way because they haven't really examined their actions and alternatives.

Six Existential Thinkers

I just finished reading one of the most arcane books ever - Six Existential Thinkers by H.J. Blackham. Wikipedia says it "became a popular university textbook" -- and I must say I pity those students who had to read it. Only 160 pages but it felt like it took me a lifetime because, for the life of me, I could not understand a thing that was being said in many places. It felt to me that he was constantly trying to be intelligent by repeating the same thing over and over. For example, the Preface:
    The purpose of this book is exposition, not criticism nor advocacy.

I hadn't even meant to use this part of the Preface, but look at the first sentence of the entire book!

Next:
    There have been enough popular accounts of the general ideas of existentialists. It is time to discriminate between these thinkers; they are not exponents of of a school, and yet not the least impressive thing ... is the interrelatedness of their thinking: they lead into each other; they form a natural family; each throws light on the others, and together they develop the content of certain common themes.
And:
    Finally, the general reader who is interested enough to want to acquaint himself with existentialism should be told at the outset that there is nothing in this book which he cannot understand if he really wants to. There are difficulties, but they are not technical, and they are likely to oppress the philosopher even more than the general reader.

Does that make me a philosopher? I don't think so.

The second word of the book is "pertinaciously". I had to look it up.

To be fair, the Kierkegaard, Nietzsche, and to some extent Jaspers sections are readable. The middle section, Marcel, is OK, but the last two sections on Heidegger and Sartre are likely the most opaque things I have ever read...

Sunday, August 19, 2007

Speculative Bubbles

In a world where many academic (Chicago School) economists believe that markets are "perfectly efficient", (makes you wonder what high-level mathematics does to one's brain), there was at least one voice of "rationality" -- "an obscure economist"...

Saturday, August 18, 2007

Crazy Love

Puppy Love Makes Teenagers Lose The Plot

"Love: A temporary insanity curable by marriage or by the removal of the patient from the influences under which he incurred the disorder. This disease, like caries and many other ailments, is prevalent only among civilized races living under artificial conditions; barbarous nations breathing pure air and eating simple food enjoy immunity from its ravages. It is sometimes fatal, but more frequently to the physician than to the patient." - Ambrose Bierce, The Devil's Dictionary

What is the undergroundman?

Notes from Underground: A book about a man constantly battling himself -- and losing.

He falls into a small set of people who always know how they should act, but do not periodically act in that way. This distinction between knowledge and action is said to produce free will, and those people who know right but act wrong are thought to be morally responsible for their actions.

"If I know what is right, I can act right is" is apparently the syllogism with which which we judge people daily. In other words, all people who know what is right can act right. But doesn't that fly in the face of all empirics or logical sense? (By the way, I say only those who know -- what of sociopaths? Do they know the sin of murder any better than a cat knows the sin of murdering a mouse? What if a sociopath's brain is significantly different, as it likely is?)

Thursday, August 16, 2007

The Trouble With Rational Choice Economics

Again and again, people will choose short-term benefits in exchange for long-term pain. While strict rationalists will admit vaguely that people do not act rationally all the time, their theoristic "rationalism" underpins many of their other theories, leading them to believe that the freedom of the market is more effective in preventing crises and getting things done that it really is. Markets need to be regulated because people are stupid and greedy.

Piling On

This is some great advice for handling people from Jack Welch in Straight From The Gut, the former CEO of General Electric:
When people make mistakes, the last thing they need is discipline. It's time for encouragement and confidence-building. The job at this point is to restore self-confidence. I think "piling on" when someone is down is one of the worst things any of us can do. It's a standard joke during GE operating reviews that if one of the business CEOs is getting heat and someone in the room jumps on the bandwagon, the staff team will typically pull out the white handkerchief, toss it in the air, and flag the person for piling.

For people (at least those like me, who become embarrassed) the mistake is punishment enough, and people realize that if they continue to make mistakes, something has to happen -- needling people is unnecessary.

Friday, August 10, 2007

Close-Minded Fanatics Win Over Theorists

Throughout history the close-minded have always ruled over the open-minded -- in large part because the close-minded can easily act. They have their minds made up and they know what the right policy is. Their assurance is reassuring to the masses, and the masses themselves are foolishly confident in their close-minded opinions.

Today I was reading about the French Revolution, an event which ended in a pivotal disaster and set back human progress immeasurably. The Girondists, which included high-minded intellectual theorists such as Marqis de Condorcet, who came up with the lamentably unknown Condorcet Method, and a host of other intellectuals such as Thomas Paine. Condorcet, like many other Girondists, were driven to death by suspicious circumstances (as is the case of Condorcet, who was found dead in his cell) or by outright execution by the ruling Montagnards and their leader Robespierre.

If the Girondists had kept power throughout the French Revolution, Napoleon would never have come to power. Instead we might have seen a prefential voting system in France, and a meritocratic, well-ruled government.

In the US we were more lucky in our beginning, but intellectuals haven't had real power in Washington since the Founding Fathers, although we've had a very small handful of genuinely smart Presidents (Teddy Roosevelt and Grover Cleveland).

Saturday, August 04, 2007

The End of the Chinese Miracle?

Good article on the problems facing China as it continues to push for double-digit GDP growth. Environmental costs are not factored into the GDP, just like the external cost which businesses impose upon society is not factored into their costs of producing. While Jagdish Bhagwati would like you to believe that environmental damage is negligible and overblown, the exact opposite is likely more true.

The good news is that concern for the environment rises with GDP per capita - as people have more material wealth, they begin to value their health and environmental beauty, which is relatively scarce, more. Thus, you're seeing a lot more environmental concern in China right now. The Chinese government, paradoxically, seems perhaps more economically aware than the US government, and they are working to slow down environmental damage. With their power they can do a lot. One might think that with China's authoritarian regime, it could stop environmental damage faster than the US -- but that's probably not true. The best policy will always be subsidies for clean energy and energy conservation and taxes on pollution.

For those looking to cash in on the possible clean-energy boom, the solar stocks are definitely worth watching: JASO (a favorite of mine), FSLR, SPWR, STP, and even little DLSL, which does solar water heaters -- possibly the most cost-efficient solar if subsidies are eliminated. These stocks are down on speculation that Germany, the main purchaser of solar power, will cut subsidies. Right now it's risky to hold them, as any day Germany could cut subsidies and you'd see a severe drop in them...that could be buying time. I expect JASO and others to jump on earnings, although it's hard to say.

PUDC washes coking coal and FTEK provides a fuel additive which reduces nitrous oxide pollution (N2Ox) among other things.

Disclosure: Long JASO for a trade.

Badscience.net author on accessing science

Here is an interesting little blurb by a scientist on the absurdity of scientific access -- he has an Athens account (/envy), but he can't access the latest research (funded by the Department of Health), which is being written about by journalists across the world, because it hasn't actually been published yet.

This means that the media – of all people - are a class privileged over academia, doctors and the public when it comes to access to the data; that for the whole of the media storm across Friday and Saturday, no interested academic, or member of the public, or blogger could participate, unless they were part of the chosen set, because they simply couldn’t see the paper.

...

Time and again we’ve covered the venality and incompetence of the media: and yet laughably the popular debate on this publicly funded academic work is conducted exclusively behind closed doors - by oldmedia employees - in a privileged world from which you, all doctors, and all academics are deliberately excluded.


The often scientifically confused journalists of the mainstream media are the people targeted in his blog -- and yet they have exclusive access to the latest research which is making headlines. Bit strange.

The paper in question, by the way, is on the correlation between marijuana and psychosis, specifically (I believe) schizophrenia. While the risk of schizophrenia may be increased by marijuana (I read it may cause an extra 600 cases in Britain, a country of 60 million), the prohibition of it has clearly been a failure.

It's important to note (as some journalists have, but as the Guardian article here does not) that correlation does not mean causation. The researchers noted that there is a distinct possibility that marijuana use and schizophrenia are driven by a third variable -- that is, people who use marijuana could be less mentally stable, use other drugs more, or could be driven by their psychoses to self-medicate. There's any number of things.

See Also:

http://en.wikipedia.org/wiki/Correlation_causation

http://en.wikipedia.org/wiki/Post_hoc_ergo_propter_hoc

Media Confuses Percentages Again and Again

"There is a large growth in shopping in December, followed by Christmas. Therefore growth in shopping causes Christmas."

Thursday, July 19, 2007

Seeing Through Ron Paul

The "libertarian" who "would have" voted for Defense of Marriage Act? See here.

Anecdotes from Moore's Sicko

I just saw these on Wikipedia's entry. For those too lazy to check the link:

1. Rick, who accidentally sawed off the tops of his middle and ring fingers on one hand while working at home. He had no insurance and limited funds at his disposal, so he was asked by the hospital to choose whether to have the end of his middle finger reattached for $60,000 or the end of his ring finger for $12,000. He chose the ring finger.[6]

2.
Doug Noe. Noe's insurance provider, Cigna Healthcare, approved a cochlear ear implant for only the left ear of Noe's toddler daughter, Annette, who was born with an acute hearing disability. Cigna argued that a two-ear operation was "experimental." After Noe alerted Cigna that Moore was making a movie about the US Healthcare system, and that Noe's case would be featured in it, Noe was contacted by Cigna, and they agreed to approve the second implant.[7] This occurred before Moore had actually heard of Noe's case, so Noe acted independently of Moore.

Cigna, incidentally, is a publicly traded company (NYSE:CI). Stock is up nearly 60% for the year.

3. A woman gets stuck with the ambulance bill after a car accident because she didn't clear the charge with her insurer before requesting the ambulance; the accident had immediately rendered her unconscious and unable to request approval.[6]

4.
Tracy Pierce died from kidney cancer after his insurer denied numerous treatments recommended by his doctor, including a possibly life-saving bone-marrow transplant.[6]

5.
One woman's insurance provider denied coverage after an operation, because she didn't mention a minor, previous yeast infection on her application; they retroactively cancelled her coverage on that basis. [6]

6.
Accounts of four fully-insured American women being denied crucial specialist referrals, diagnostic and therapeutic procedures. Two of the women died of cancer as a result, and one eventually sued her HMO after the diagnosis of her brain tumour in Japan (her American HMO told her the tumour doesn't exist). A footage of the director of her HMO testifying is shown.

7. Homeless dumping. Homeless patients, still in hospital gowns and some with IV tubes in their arms, were abandoned at homeless shelters by Los Angeles hospitals after they had received incomplete medical treatment.[8][9] Mike Huffman is seen in the film describing the dumping of a woman at the Union Rescue Mission in Los Angeles' Skid Row.

So, for those naive optimists who think that bad things don't happen, especially in America -- there you go. You're full of shit, as usual. It's like the attack on conspiracy theorists: "people are too good for that" or "it's too hard to keep secrets". Yeah, right. Your average American doesn't know the difference between Sunnis and Shiites and thinks microwaves cause cancer. Morons have no sense for what is plausible and what isn't.

Wednesday, July 18, 2007

UnitedHealth tries to rate doctors

When I read the summary of this article I was annoyed, but as I read it I realized that the attorney general made a very good call. UnitedHealth has a conflict of interest rating doctors.

UnitedHealth is No.21 on the Fortune 500. They stand to profit nicely if Hillary Clinton mandates that everyone receive private health insurance -- please God let's hope that doesn't happen.

Polling Economists

I've read a few of these, but they've been in (closed -- of course) scientific journals, so I couldn't exactly link to them for discussion. This one is pretty basic, with a very small sample size of 81.

Notice that a fairly significant portion (40-45%) is consistently liberal -- that's not uncommon among academic economists. Universal healthcare in the US receives an agreement of 44.7%, with 15.7% neutral. Most of these economists are probably thinking of the conventional single-payer system rather than a government-funded HSA system, as I've discussed here and which Adam Rawlings describeshere, because the idea of a government-funded HSA + a high-deductible health insurance and coverage for the chronically ill hasn't caught fire with too many economists yet. It also gets a bad rap because conservatives are trying to spin it as a solution without government subsidy, which probably won't work.

Things which receive Doomsday attention like the Social Security crisis among the media have a simple solution among economists: 77.2% would simply raise the retirement age.

35.7% of economists also opposed Bush's proposal to partly change Social Security into a mandated retirement account which is invested in the market. Some of that may be attributed to the wording of the statement which says that "the best way to deal with the Social Security long-term funding gap is mandatory personal accounts." There's no way that it is a solution to the funding gap. In the long-run it would be beneficial, but in the short-run it would cause a budget shortfall which would have to covered by the youth. It runs the risk of giving idiots too much freedom, I suppose, and those idiots who lost all their money would have to be covered by the government -- but it could be run like a state pension system, which allows you to invest in certain areas (smallcap, growth, value) but doesn't allow you to pick individual stocks on your own.

Anyway, check it out and check out some of the other Berkeley Electronic press articles as well -- they are fairly open access.

Floating Ideas

I've had a few ideas for posts floating around:
  1. An examination of the real economic value of things - beyond just its exchange value.
  2. The valuable functions that investing in equities performs (or does not).
  3. How much I despise G.E. Moore's "naturalistic fallacy".
  4. Hillary Clinton sucks.
  5. I love Mike Gravel. Visit gravel2008.com to figure out why.
Instead I've been lazily researching stocks and tooling around on Reddit, trying to educate people in economics and promote Mike Gravel under my new alias, censored. So far I've been moderately successful, but I'm about ready to give up. I find it depressing that Conde Nast(y) has already bought Reddit, which is much nicer than Digg.

Coming up with usernames is perhaps the biggest hurdle I have to overcome when getting involved with websites -- I'm still not very involved with Wikipedia because I don't have a good username. (I have several, none of which I like.) That's probably a good thing because I am an expert in nothing, and Wikipedia should get the attention of experts -- meh, that's a dumb excuse. Wikipedia needs my help.

Sunday, July 15, 2007

An Important Paradox

Sometimes it seems like philosophy is, or at least has been, largely a study of intractable paradoxes. The greatest of these is certainly not the paradox of God -- that is a paradox based upon a fictional, contradictory concept, so it's no surprise that it is paradoxical.

A more important paradox is the illusion of free will in a deterministic world. Yet at a closer glance this does not seem to be a real paradox either -- it is based upon another fiction; that is, that people have free will. People can "choose" on a whim to act a certain way.

I haven't heard any convincing arguments resolving this paradox. There is no easy answer. Compatibilism essentially says that lack of ultimate freedom to choose "doesn't matter", but clearly when you are morally blaming people for actions which they were completely compelled to do, it does matter. It's hard to understand why the compulsion of a gun to the head is more meaningful than the compulsion of Hard determinists hit closest to the truth -- and the main argument against them is seemingly that they are "too pessimistic".

People should be held morally responsible for their underlying nature (perhaps genes) rather than their actions because their genetics are at the core of who they are. That means that those who are by their nature criminal (that is, genetically) are more blameworthy than those who are driven into criminal behavior through environmental pressures, such as, perhaps, child molesters. Neither should be regarded as "evil" -- both are "bad" from the perspective of the . They should be regarded with pity. The former is a flawed human being from the start while the latter's potential has been (seemingly irrecoverably) destroyed. If their guilt was sufficiently proven (that is, zero doubt) I would have zero trouble with their execution.

The the perpetual "free will" illusion has a pragmatic, self-fulfilling - when everyone believes that everyone has free will and that people who commit wrong acts do that willfully, it imposes a deterrence on immoral and criminal acts. Lifting the veil could potentially revoke that deterrence and allow people to act even worse than they currently do, if you can imagine that. But is that really likely? I don't think so. The deterrence does not seem to be very effective. The veil, as an obvious fiction, is already under subtle attack and has been since the beginning of human history. The distorted view of responsibility confuses people. The first step to recovery is to stop denying.

Some people may think Social Darwinism when I say genetics. While that may be a concern twenty or thirty years down the road, I don't mean to endorse that view at all. The study of how genes affect behavior seems like it always be an imperfect science because of all the variables. Furthermore, if someone is told that they are genetically dishonest or sociopathic -- is it possible for them to then consciously overcome that? I don't know.

Some may notice that this argument is essentially just a secular repacking of Calvinism. Just as Calvinists felt heavy pressure to prove themselves as God's chosen, so people today may feel the pressure to prove themselves as good genetically.

Saturday, July 14, 2007

Enlightenment

Enlightenment is seeing your self (and the world) with all its absurd flaws and loving it anyway. Amor fati.

Friday, July 13, 2007

Spending By Executive Office of President

This has to been seen to be believed. The budget for the office of the President rose by an astounding 768% in 2004, and then by another 100% in the next year. Discovered this via Digg here.

I'd seen the outlays by function before, but missed the outlays by agency (actually, it's still on my desktop in Excel format)... going to try to look up the primary source for this right now.

UPDATE: The US government has a shoddy website, but I found the budget without too much trouble. Here is the budget, but you won't find that table there. If you click on the Executive Office of the President you can see a (very limited) breakdown of where his money went for the year 2008, and it seems, surprise, that the Iraq war gobbled most of it.

Scroll to the bottom of that page. and you can list all spreadsheets, where, at Section 4, you'll find Outlays by Agency. I'm looking at it and that picture is correct. The budget for the Executive Office of the President went from far below .05% in 2003 to .1% in 2004, and then up to .3% in 2005.

It's hard to know for sure what's going on with these spreadsheets because there is no legend. In the President Office budget the total BA (Budget Allocated?) is only 341 million but the "outlays" (expenditures) are 5379. Ditto for the next two years. What's going on? How is the White House able to overspend by so much? It reminds me of the extension of some law (Parkinson's, maybe) which states that spending will always exceed income.

Need it be said that the Republicans' rhetoric has never matched their record? They are the War and Business Handout Party, not the Small Government Party -- in contrast, the Democrats are the Farm-Labor Handout Party (in the forms of tariffs, often).

Sunday, July 08, 2007

The Crisis of Scientific Journals

Some people think I'm crazy or overly demanding for desiring and expecting scientific research to be free and openly available for all to read and discuss, but this mathematician John Baez of MIT doesn't. He describes the high (and rising) price of academic journals as a crisis and calls for a boycott of the especially ravenous public company and media conglomerate Reed Elsevier (who's databases, as I commented earlier on, pretty much suck). He notes that Reed Elsevier's operating margin was 22%. It was a good year for the stock, rising 30% over the past year according to Google Finance. I first encountered Reed Elsevier when researching the publisher of New Scientist, a magazine which I thoroughly enjoy.

The good news is that in time Elsevier's hegemonic control over scientific publishing will eventually fall, as people such as Baez are outright boycotting the ridiculous restricted-access journals and the publishing companies which collect from them. The bad news is that it is taking longer than I would like, and there is still no good open-access source for economic and social science articles. For other disciplines the resources are much greater - see BiomedCentral, PLoS, Mathworld, and arXiv. The economists (along with all the other social scientists), those paradoxical profit-seeking academics and government workers, are behind the curve, but I doubt it's because they actually profit from journal revenues. The Directory of Open Access Journals lists some Social Sciences, but they are mainly either foreign or unprestigious.

Here the creator Mathworld recounts the story of how he published a book with CRC Press based on a website of his (the early Mathworld) only to be sued later when he didn't remove much of the content from open accessibility. He didn't win the suit - actually, he surrendered early and gave up all the money he'd made from the book.

Economists (and many others e.g. Cato) like to glorify corporations, and certainly they provide valuable services and offer some external benefits to society. Conservatives claim that corporations are unjustly criticized, with a few bad apples and incidents overshadowing the good. While I consider that view to be naive, it could be true. I am well aware that a corporation is in theory only as evil as its members. Yet in practice it is so easy for corporations to slip into an "evil" mindset, beset as they are by the everpresent shadow of the profit motive, share price, and bureaucratic management. In many ways they epitomize the banality of evil.

Eric, the Mathworld creator, says this:
I have had to conclude, to my sorrow, that CRC--perhaps like many other publishers in our era of wild corporate acquisitions and conglomerations--is no longer managed by people who understand and love books, authors, and readers.

The parent company of CRC, Information Holdings Inc., appears unashamed to treat information as a commodity to be exploited for short-term, bottom-line cash with no concern for long-term, strategic planning. The goal of the CRC representatives seemed to be monomaniacal: to squeeze from Wolfram Research and from me as much instant and short-term cash as possible, using the lawsuit as a lever.

How self-defeating in an era of rapid technological change! Apparently uninterested in looking forward and building good future business strategies, here are publishers focusing instead on how to squeeze greater quantities of immediate cash from old "properties."

I have come to realize how unusual it is to be working for a company that is run by people who still enjoy the core activities for which the company was founded. Very early in the lawsuit, a Wolfram Research response to the lawsuit mentioned that Wolfram Research has chosen to remain privately held in order to be free from the obligation to outside stockholders, who appear so often to focus corporations inordinately on short-term financial results. Wolfram Research's principals believe that they can take the long and broad view of the corporation's mission, as they could not if they had to satisfy stock analysts and uninvolved stockholders.


Information Holdings was, of course, publically listed on the NYSE - and no, they didn't go out of business (what large companies do these days?). They merged with The Thomson Corporation in 2003, a company which is now planning to buy Reuters. The Thomson family, which is Canadian, owns 70% of the company and also owns 40% of CTVglobemedia.

Saturday, July 07, 2007

Decreasing Marginal Costs Empirically

In my last post I linked to Debunking Economics: The Naked Emperor of the Social Sciences. When I first encountered the book I hadn't taken a class on economics. I glanced through the book, noticed the models, and tossed it aside - I don't like studying models unless I have to. But now I know that I will have to check it out next time I'm at my school's library.

Anyway, the AmazonConnect author's blog is very interesting. His latest post claims that the empirical reality of the firm doesn't match up with the theory. He reports that firms face decreasing marginal costs rather than the standard "always increasing" marginal costs. That hugely invalidates theory, yet, as I commented it makes no sense. A firm producing with fixed capital assets can only produce so much before they are constrained by their limited fixed capital - thus driving the price up. When the fixed costs are increased, the marginal costs fall to a workable level again. Instead I think he may be confusing average and marginal cost. As firms increase production without increasing fixed costs they will spread the fixed costs out. Most people have heard of this: it is called economies of scale and it is a huge force at work in industries today ranging from semiconductors, cars, pharmaceuticals and even software production (wherein the fixed cost is the initial time/money spent on the program and MC is the cost of replicating the software for sale -- essentially just packaging costs). Economics of scale will sometimes produce a natural monopoly.

It wouldn't surprise me if most firms faced fairly constant marginal costs up to a threshold level (that level being the capacity of a plant or the capacity of a firm to provide services without hiring more employees). At a certain point one's employees and one's factory becomes overextended. One has to work people overtime and run the machines overtime. Ultimately marginal cost must increase if fixed costs remain fixed. Correct me if I'm wrong.

However, empirically most businesses will fluidly increase their "fixed" costs as MC begins to increase, so businesses wouldn't notice increasing marginal costs. But they certainly notice decreasing average costs.

Friday, July 06, 2007

In Defense Of Globalization

In Defense of Globalization was written by Jagdesh Bhagwati, an acclaimed international trade economist and *cue spooky music* Council On Foreign Relations Fellow. The inside cover even claims that this is a "Council On Foreign Relations" book. It's no surprise that I picked it up, then.

What struck me the most early on in the book was the language barrier: Bhagwati's first language is clearly not English. It is hard to hold that against him, but the crudeness of some of his writing is painfully obvious. The book rambles absentmindedly, touching upon economic issues in one paragraph, moral issues in the next, and rants the next. The disorganized, muddled structure of the writing cannot be blamed on the language barrier. Strangely enough, this strange, circumlocutious writing style is common among economists, who seem uncomfortable when not doing equations.

Chapter 1 - Anti-Globalization: Why?

Bhagwati makes the fair case that most of the anti-globalization movement has not done the research on globalization and does not understand economics. They are often young people who "see capitalism asa system that cannot meaningfully address questions of social justice." He laments that the view of capitalism as a "system that can paradoxically destroy privilege and open up economic opportunity to the many " is still uncommon, and points out that "by replacing markets systemwide with bureaucratically determined rations ... worsened rather than improved unequal access."

Already I am suspicious and irritated - there is no mention of the financial power which can accompany capitalism and has meddled in American government for so many years. Sure, it's easy to make "capitalism" sound good when you compare to "socialism" a la a centrally planned economy. But where is the mention of welfare capitalism? What about the more legitimate argument that the globalization has thus far allowed corporations to consolidate too much centralized power and market share themselves? Nowhere in the entire book do I recall Bhagwati making an informed criticism of multinational corporations and unchecked capitalism despite its many abuses.

Another interesting drive which pushes young people to protest globalization is "the dissonance that now exists between empathy for others elsewhere for their misery and the inadequate intellectual grasp of what can be done to ameloriate that distress." He does not add that few of these empathic young people are willing to sacrifice their dollars to help - that may be an unfair criticism, considering how little dollars most of them have. He references the empirical ethics of Hume and Smith, noting that while humans feel under "Hume's concentric circles of reducing loyalty and empathy ... the Internet and CNN have [taken] Hume's outermost circle and turn it into the innermost." When we see and hear the cries of the poor and weak, they become more real to us. On the other hand TV and the Internet have "[shifted] us steadily out of civic participation, so that the innermost circle has become an outermost one."


This book is rich and full of ideas, even if they are spread fairly haphazardly throughout the book. It would be impossible for me go through all of them.


For all this, the book received high praise; for example:

"This book will make history. It will also be a blockbuster, not only because of the depth of Bhagwati's powerful argument backed by extensive research, but also because it is immensely readable and surely the most humorous piece of economics ever written."
-- Hernando De Soto

Humorous? While I respect De Soto, I wonder whether we both read the same book. Econ humor? Here's a joke:

I recall particularly the Cambridge Union Debate, where, astonished that free trade being blamed for environmental problems and other ills in the world, I replied to Teddy Goldsmith by recalling Balzac's 1831 novella ... "Mr. Goldsmith", I added, "you seem to have with you a similar monocle, except that when you use it and see us wonderful free-traders, you find us turned into ugly monsters, our halos turning into devil's horns!"



Hahaha - I see! Free-traders are angels and all of us who see a potential danger of to the environment from free-trade are somehow deceived? Then show us how we are wrong. Bhagwati's environmental chapter seems focused mainly not on environmental harms but rather on the ethical question of how we should value the environment.

Chapter 11 - Environment In Peril?

Of course, increased GDP per capita strongly correlates with reduced outputs of certain pollutants (everything but CO2 and garbage), and that free trade increases GDP growth. But what about corporations outsourcing work to places with lower standards? What about those nations (of which there are plenty) which will increase their pollution with increased production? How bad is the problem, and what can we do to alleviate it? Bhagwati answers none of the questions. Instead, here are his words: "Even God does not know what sustainable development means". He compares it to socialism - as if it was so hard to understand the eminently reasonable and doable concept of Cradle To The Grave.

Chapter 12 - Corporations: Predatory or Beneficial?

Bhagwati spends a fair amount of time claiming that "anti-corporation arguments are not supported by the facts" but not all that much time showing it. He introduces the topic by referring to an old Woody Allen joke:
    There's an old joke... two elderly women are at a Catskill mountain resort, and one of 'em says, "Boy, the food at this place is really terrible." The other one says, "Yeah, I know; and such small portions." Well, that's essentially how I feel about life — full of loneliness, and misery, and suffering, and unhappiness — and it's all over much too quickly.
But does he have a point? Yes, corporations cause problems, but let's be realistic: they are the only force in the world capable of increasing GDP growth. Let's not pretend foreign aid to corrupt governments is useful. Corporations are often a necessary evil. They will always try to extract as many profits as possible, imposing external harms in the form of pollution while they do; they will use the means of lowest cost possible in many cases at the cost of their workers. Sometimes they will use the government to help them form a monopoly, as Telmex in Mexico has done. The main question, then, is to what degree can we get away with regulating corporations to keep them in line, and to what degree this will be efficient -- to what degree it will be on net beneficial to society and the environment. But Bhagwati does little real in-depth analysis of corporations. His one big point (and it is a big one, I suppose) is that corporations pay a "wage premium": they pay an average wage that exceeds the going rate, mostly up to 10 percent and exceeding it in some cases ... from 40 to 100 percent." This is fairly powerful.

We don't have the power to tighten the noose on corporations globally - increased regulations in a developing country could discourage corporations from coming to that country. Bhagwati claims that the effect is not significant empirically, but provides no numbers. Instead he references an economist who simply says that "regulations do not matter to site choice." (Should be "for site choice" - the constant little grammatical mistakes of these economists is annoying.) He points out that multiplant firms "invest in different locations, as multinationals often do, they tend to work uniformly witht he most stringent standards they face among these locations ... simply put, it is more cost-effective to run all of their plants with the same basic technology, so we get a race to the top."

Chapter 13 - The Perils of Gung-ho International Capitalism

This is the one area where Bhagwati criticizes the status-quo and ironically enough decries the "Wall Street-Treasury Complex." He says the East Asian Financial Crisis was caused by a lack of controls on the flow of capital. I'm not very well-educated on this stuff and I'm getting very tired of typing so I think I'm about done.

Conclusion

Unfortunately I've tired myself out and can't write a decent conclusion. When I began writing I wanted to end on a very critical note. In large part I was frustrated by Bhagwati's terrible grammatical style, rambling paragraphs, and lack of hard data. He doesn't get in deep and analyze actual policy, nor does he recommend any improvements. He points out flaws in our current system only in very general terms, or with convoluted logic and unexplained acronyms. This book was billed as a masterpiece but it is thoroughly second-rate. If this is the best defense that a star economist can do then perhaps we shouldn't be trusting them on their data. The interesting thing about economic science is that it sometimes seems as if the only people who really understand and follow it are the economists. Sometimes one has to wonder whether the Emperor Really Does Wear No Clothes. Shamefully written; I would give it two out of five stars or so. The ideas and the arguments are OK - good, even, but the presentation and the flippant, casual manner in which the arguments are made pulls the quality down. Concerns and examples which many of us know happened are not mentioned, which leaves me suspicious as to what else is being left out. There is a good review on Amazon expressing the same sentiments.

Thursday, July 05, 2007

Flag Burning - A letter to my Senator

Hi,

One thing that really made me angry was the attempt to ban flag burning, which nearly succeeded. That would have been a sad day in our nation's history. Today I finally looked up who had voted for it. According to Wikipedia. only 3 Republicans voted against the amendment.

I don't think I should have to explain why the amendment was so foolhardy. It would have certainly been the most petty amendment in our nation's history. Burning the flag is an important and often warranted expression of disgust at what our country's government (and perhaps people) has become.

You may disagree with that opinion, but that doesn't give you the right to force your opinion of what flag-burning means on me.

I would love to hear a reply on this issue and hope that you think carefully about the issue if it comes up again. The Supreme Court has ruled that it is protected speech not once but twice. I see no reason to override that. Perhaps the most interesting fact is that flag-burning is not common and causes few people real trouble, which leads one to believe that the entire movement was a disheartening political ploy.

Again, I would greatly appreciate a reply. I've noticed that I receive replies when I send letters in print, but electronic emails should be treated exactly the same.

Thank you,
***

-------------------------

It's old news, of course, but the Constitutional Amendment lost by a single vote. 3 Republicans voted against and 14 Democrats voted for. It makes me sick that it was so close.

Sourcewatch: Flag Burning Amendment

Wednesday, July 04, 2007

Not So Obvious To Adobe

I made the mistake of switching back to Adobe from Foxit a couple weeks ago. I shot off a couple emails to Adobe a second ago:

Hi,

I've had a frequent problem with your AdobeUpdater.exe - I think that's what it's called. Whenever I open a PDF, it automatically opens the Updater and never shuts it down. I don't think it needs to be said that an Updater should not run continuously in the background. It should check to see if there's an update - if there isn't, it should close out immediately. Perhaps the best thing would be to simply schedule a time to look up an update, as Apple does.

Suffice it to say that this has been extremely frustrating - I'm not even able to kill the task. In the end I've had to reboot the computer to get rid of the problem, which severely slows down my medium-speed laptop (1.3 Ghz, 512 MB of RAM).

I've uninstalled your program and won't be coming back to it (or any other program of yours) unless I get a reply on your thoughts about this problem. I'm sure others have similar problems. Updaters should not just run in the background.

Thanks,
*****

After loading up Adobe Reader 8 for another quick glance, I sent another one:



One more thing. Your Adobe Reader is one of the few programs which doesn't have general options under the Tools tab - where I would hope that I could find a way to adjust the Updater. I wish you would put those options back.

Anyway, now that I've pursued all my options, I'm done with this program. Hope you can get back to me on the deal and what you were thinking.

---------------------------------------

An updater which quits if there are no updates? A general options area for the program? ARE THESE NOT OBVIOUS? And yet Adobe has a 23.94 BILLION market cap? (I know, I know. They don't care about the free programs. Yet people know them by their free programs.)

UPDATE: It's not uninstalling. Great... did I mention that it's 267 MB?

Tuesday, July 03, 2007

C.P Snow and Scientific Illiteracy

I heard this man's name and checked out his Wikipedia entry to find this:
Snow is most noted for his lectures and books regarding his concept of "The Two Cultures", as developed in The Two Cultures and the Scientific Revolution (1959). Here he notes that the breakdown of communication between the sciences and the humanities is a major hindrance to solving the world's problems.

In particular, Snow argues that the quality of education in the world is on the decline. For example, many scientists have never read Charles Dickens, but artistic intellectuals are equally non-conversant with science. He wrote:

    A good many times I have been present at gatherings of people who, by the standards of the traditional culture, are thought highly educated and who have with considerable gusto been expressing their incredulity at the illiteracy of scientists. Once or twice I have been provoked and have asked the company how many of them could describe the Second Law of Thermodynamics, the law of entropy. The response was cold: it was also negative. Yet I was asking something which is about the scientific equivalent of: 'Have you read a work of Shakespeare's?'


I now believe that if I had asked an even simpler question — such as, What do you mean by mass, or acceleration, which is the scientific equivalent of saying, 'Can you read?' — not more than one in ten of the highly educated would have felt that I was speaking the same language. So the great edifice of modern physics goes up, and the majority of the cleverest people in the western world have about as much insight into it as their Neolithic ancestors would have had.


This is perhaps even a greater problem today, and can be generalized further - people are most comfortable studying their field, despite the obvious fact that there are diminishing marginal returns when studying a field intensely. Once one has studied literature or philosophy for a few years, one knows the basic concepts. Further work simply supplements those concepts. Real progress may be extremely difficult. On the other hand, learning the introductory basic concepts of another field is very easy and extremely useful.

Saturday, June 30, 2007

Human Life

Human life revolves around a misty mythos of the "typical you" - the idea of you imposed upon yourself in the environment. This drives personal habits (often inherited from the local family), ultimate goals and self-image (culturally driven), values, and expected behavior in every day life. This can explain the wide and powerful difference between cultures. Of course, the overriding human urge is simply powerful self-interest - and most habits of human beings will be similar as they all exist in the same natural world with the same basic features. But some cultures will, by chance, learn to adapt and perhaps even

Friday, June 29, 2007

SS2BM Means Ebay Sucks

For some reason I began investigating eBay an hour or so ago after reading a comment . What I've found is a fascinating example of monopolistic business behavior (with its usual despotic psychological overtones). I've been hearing about the borderling illegal tactics of eBay through Paypal (eBay's subsidiary - www.paypalsucks.com) for years now - suspending people's accounts and refusing to let them transfer money. People who tried to resell PS3s or Xbox 360s ran into this problem. Why eBay cracks down on people like this is somewhat puzzling, but it will drive their sellers (and eventually their customers) away. When unhappy eBayers protest eBay fee increases and attempt to point people to better alternatives they are silenced. A community has grown up around eBay alternatives at the Pheebay forum.

The good news is that there are alternatives. eCrater is completely free, so avoid the fees and head on over there when you're looking to bid for something! Why should a customer avoid fees? Economists have been telling people forever that fees are ultimately passed on to the consumers, and there is no better example of this than online auction sites. eCrater will certainly be cheaper than eBay. Let's hope eBay doesn't buy their competitors just as they are starting to take off - though I'm sure eBay will try. The big new thing is for companies to buy competitors and shut them down, which is what eBay did with Paypal competitors.

eBay is currently facing a class action antitrust lawsuit. Paypal settled one class-action lawsuit in 2004 and lost another one more recently.

eBay has a network monopoly. In the days of the internet these monopolies are ubiquitous. Myspace/Facebook, Digg, Microsoft, and even these Wiki sites are protected by network monopolies.

As some economists forget, the goal is always social good - and when market failure happens, social good isn't maximized. That justifies intervention in the market. On the other hand, should the government legislate that eBay stop it's oppressive tactics? At this point, I think not. Instead, let them keep angering their customers - that gives people the incentive to seek a newer, better alternative - in this case, eCrater: a completely free auction site.

Saturday, June 09, 2007

Economics student

A decent economics student (or philosopher of economics, at least, lacking deep mathematical tools) looks at objects around him and thinks, "I wonder what the supply and demand for that object is." And when he looks at people he thinks, "I wonder what desires for objects drives their actions." Yet does he ever look deeper than that? Is happiness or sadness; harm or benefit not an object? But people don't respond to happiness, you think, or sadness, or else they would always act smarter, more rational, more harm-avoidant. Or could pain cause benefit for people? Do they desire pain for a reason? One time, years ago, a pathetic female friend of mine said, "People desire pain. It makes them feel distinguished." Somehow I'd thought the same thing, and nodded without saying much. Why could we desire pain?

Broken Contract: A Memoir of Harvard Law School

I'm in the middle of this book right now, and it's really pretty good. The guy is more leftist than I have ever been (or ever will be), but at the same time he has some common sense stemming from consistent principles and an ability to understand economics; he recognizes the contradictions and ugliness of standard leftism. He is very similar to Sidney Rittenberg who's book The Man Who Stayed Behind I just finished. Sidney's story is a classic example of propoganda and idealism fooling an intelligent person (with a Bachelor's in Philosophy) to the point that he supports a despotic totalitarian Chinese government. He joins their inner Communist circle, then is imprisoned for six years. When he leaves prison he becomes a propogandist; a man who spends his every day deliberately twisting real information into complete falsehoods. Then, after speaking out in favor of democracy, he is imprisoned for another ten years. Even then he doesn't repudiate Communism until he's finally seen how much damage it caused to the Chinese economy.

Kahlenberg, the author the Broken Contract, comments on the Law & Economics group at Harvard Law School:
steve Shavell, a bespectacled economist, gave an abstract, conservative, and, at times, nasty lecture. In the specific case we were studying, Shavell argued that a judge should not order a landlord to improve living conditions, because it would be more "efficient" for government to aid in the redistribution of wealth and let the tenants decide for themselves whether they wanted to use the money to move to better housing or for something else. The argument, of course, completely ignored the political reality that a direct cash payment to the poor lacks a powerful constituency; programs need corporate beneficiaries, farmers in the case of food stamps, developers in the case of housing.


I don't know whether direct cash in this case is appropriate. It doesn't seem easily workable (cash transfers to all renters?), but he raises a decent objection. The problem is not necessarily that it lacks a constituency (renters are a fairly powerful constituency, as rent controls attest); it's more that a direct cash payment to renters (not "the poor" -- renters in general are what we are talking about, and some of them are definitely middle-class) seems like welfare while a requirement that landlords keep up their apartments seems like fairness. HSAs have the same problem - monthly HSA deposits to the poor seems like welfare, where universal healthcare at least seems "fair" in that everyone stands in line. Yet does that justify the latter policy over the former? Not at all, especially when the latter likely would cause more harm than good.

He first mentions his disagreement with the left on the area of civil rights; he believes in harsh punishments because crime disproportionately hurts the poor. So far he's mentioned two areas of left ridiculous. The first has to do with his female "Critial Legal Studies" professor who doesn't get tenure, Clare Dalton:
In the late spring, my displeasure with the left at Harvard increased as I watched it react to Clare Dalton's tenure battle. Dalton my second-semester Contracts professor, a crit, and the worst teacher I ever had. In class, she would move from case to case, failing to tie them together or distill any broader meaning from them. She tried to employ deconstructionist analysis and critical legal theory, but her methods were never convincing. The level of noise in our classroom was embarrassing evidence of how little respect she commanded ... Even she could not have known how her case ... would become the cause celebre among the liberal community in Cambridge. Favorable pieces appeared in the media, petitions circulated, and rallies were held. At graduation, students wore yellow armbands, and one group of graduates raised letters spelling TENURE DALTON ...

To make the story short, she didn't get tenure - but she did assign the following exam:
Dalton's eight-hour take-home Contracts exam was an outrage. It contained two questions, one of which involved a hypothetical professor, Joe Levin, who was sueing the "Nameless School of Law" for denial of tenure. His case was based on "ideological discrimination" and "denial of academic freedom" ... the case was clearly not his but hers, which was disturbing and detracting for a few reasons. First, you felt that if your exam made powerful arguments on the university's behalf ... Dalton ... would have trouble grading objectively ... second, there was a sense ... that you were being used to as a source of theories and ideas upon which Dalton could base her own case ... she should have been sensitive to the perception that she was exploiting us just as surely as the worst capitalist exploits his workers. Illegitimate hierarchy, indeed.

Looks like Harvard Law School (or Northeastern Law, where she now teaches) aren't always what they're cracked up to be - that test question is indeed astonishing. To me, adopting the legal positivism that I usually dislike, the case is clear: universities go through their process and grant tenture based on what their board decides. There's no reason to judge differently.

The second example is more interesting and far-reaching; in fact, it stretches back to Sidney Rittenberg and his work in propaganda. Words and information are strange things; they have the power to subvert, destroy order, spread untruth or, most significantly, cause moral dissolution. In some cases the line can be drawn between clear truth and untruth, but on philosophical or moral/ethical topics that line is not so clear (Social Darwinism is an easy example of a perspective that one could easily justify suppressing even if its scientifically correct). Here is what happened:
I read a story in The New York Times headlined CONTRA LEADER"S HARVARD APPEARANCE DISRUPTED ... Adolf Calero ... had been prevented from delivering his speech at HLS when he was attacked by a Tufts University senior shouting, "Death to the contras" ... dozens of students in the audience clapped ... the left's negative response in this instance was as shortsighted and unprincipled as its positive response to Clare Dalton had been ... Didn't Kimball realize that his statements pushed liberals like me to the right? That he actually made a figure like Calero look victimized and sympathetic? Not only was the left's position tactically stupid, it was also intellectually arrogant. Who was Kimball to decide for the entire university that Calero was not fit to speak? Who gave him veto power?

This idea is surprisingly common among the left (as well as, of course, the fascist right). It is not common among classical liberals, but perilously few of us are politicians. In this case the left was motivated by anger, but in many cases the left is motivated by fear. Their fear is that the right will justify its position with something that makes sense, and weaken the left's position. This was the basis of the massive propaganda in Communist China. Literally all information in China was propaganda. Only insider news executives such as Sidney Rittenberg were allowed access to anything resembling real news, and even Rittenberg was never told about the tens of millions of peasants starving to death during The Great Leap Forward. Liberal elitists (which all leftists ultimately are) believe that the masses are not responsible enough to handle information on their own, or that offering good information to the masses is not beneficial to society.

This sort of belief manifests itself, for example, in Adam Rawling's argument that scientific research (both social and physical) should be restricted only to those who "are willing to push past barriers to access it", despite the obvious benefits of free information which is easily referenced, discussed, and examined. Imagine a Wikipedia which referenced a list of all scientific articles covering a particular issue, free for anyone to examine and critique individually.

The Council on Foreign Relations is a foreboding example of liberal elitism, with its penchant for surreptitiously advancing elitist "liberalism" and internationalism through unconstitutional and illegal means, if necessary (see FDR, his National Recovery Administration, and his attempt to pack the Supreme Court. The CFR's strongest supporters were Democrats such as FDR, Dean Acheson, George Marshall, and David Rockefeller. Some of these people found their way into Sidney Rittenberg's story: at one point a Communist says that Mao Zedong appreciates "deeply respects Dean Acheson and George Marshall." Later, after Senator McCarthy finally started to figure things out, economist Frank Coe (Soviet spy) is banished to Communist China to smoke cigars and live the easy life. Coincidentally, he was a high-ranking official in the Department of the Treasury, the, United Nations and the International Monetary Fund. Sol Adler was another Marxist spy and Department of the Treasury official who ended up in China working for Mao Zedong. Coincidentally, he worked for the CFR and Rockefeller funded Institute of Pacific Relations, the CFR's sister agency.

For those of you who feel the knee-jerk reaction to demonize McCarthy (spare me the standard rhetoric and offer me some history) - think about why. Do you really know what happened then? McCarthy was elected in 1946, but he didn't begin his attack on Communism until 1950. Meanwhile, the House Un-American Activities Committee was founded in 1947 and blacklisted Hollywood employees. McCarthy, in the Senate, was uninvolved with that effort. McCarthy's focus was on the State Department, and his attacks were largely ineffective. Read those Wikipedia articles on them for a decent little summary. It may also be of note that Communists in general supported an ideology which supported totalitarian control over information and people.

If I had the Shadows of Power book handy I could into the CFR at incriminating length, but I'm forced to transcribe the information, which is time-consuming. Nevertheless, trust me - it is damning. Some might say "well, if these guys were Communists, then why is Communism dead?" Well, who knows if they actually believed in Communism - if they believed in it as an idealistic tool towards peace and prosperity, then perhaps they came to their senses. If they believed in it as a tool towards power, then obviously they found that their strategy must change - and it obviously has changed. There are still people seeking to consolidate their already significant power in the world, but today one might find them in the Bilderberg Club. Not that the CFR isn't powerful - today, they happen to have Peter Peterson (don't recognize the name? Do you recognize the name Blackstone Group?) as their Chairmain, and one of the members, Fouad Ajami, just so happens to be one of the few Middle Eastern scholars who believes strongly in the Iraq War. I ought to check the early editions of Foreign Affairs.

Now I need to finish this book. Incidentally, it seems that Richard D. Kahlenberg (the author of Broken Contract has written several ostensibly favorable books on school vouchers, and another arguing against Affirmative Action in favor an economically-based affirmative action program.

Thursday, June 07, 2007

Autistic Economics

I've been browsing last few issues of The American Economic Review and it's making me feel duller than usual. Sometimes I can really relate to Nietzsche's disgust with myopic "deductive" logic.

Then again, perhaps what's most striking is how many articles point out that consumers are not rational and that markets are not always efficient.

Here is the abstract of an interesting (and less jargon-strewn) article from the AER Vol. 96, No. 3, 2006:
Long-Term Educational Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia
Joshua Angrist, Eric Bettinger and Michael Kremer

Abstract
Colombia's PACES program provided over 125,000 poor children with vouchers that covered the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, program effects can reliably be assessed by comparing lottery winners and losers. Estimates using administrative records suggest the PACES program increases secondary school completion rates by 15 to 20 percent. Correcting for the greater percentage of lottery winners taking college admissions tests, the program increased test scores by two-tenths of a standard deviation in the distribution of potential test scores. (JEL: I21, J12, I28)


Could the free market be the solution to education woes? I think so.

Thursday, May 31, 2007

SIRC and Arpad Pusztai

When I searched for Arpad Pusztai to do some more research I quickly stumbled on this article: Pusztai Published!. It comes from the Social Issues Research Centre, which sort of sounds like an academic, unbiased source. Here is their page on GM foods. Here is their page on funding.

It's interesting to note that while they are a non-profit organization, they still have clients such as "Masterfoods", "GSK" (GlaxoSmithKline), and other very biased organizations. One must be very careful not to confuse "non-profit" with "non-biased". (In fact, most of the lobbying groups are "non-profit", because the individuals inside the group keep all the profits to themselves.) I doubt you will ever hear SIRC referring to the GM pea which caused allergic damage to mice or refuting Pusztai's claim as of 2001 that "no peer-reviewed publications of clinical studies on the human health effects exist". Anyone disagree with me there?

What it comes down to is the science, and notably SIRC doesn't spend much time talking about the science. Then again, neither do I. Neither of us really know biochemistry all that well. You might break us into people who believe that the risks are worth mentioning and the people who think that the risks aren't worth mentioning, because they "scare people." Or perhaps people who wish to present all possibilities and people who don't. All of their stories make the same essential points, using very few citations or empirical facts. They are a typical special interest group.

Sourcewatch has a good page on them. It covers one shady campaign where they were hired by a lobby group to campaign for an estrogen for postmenopausal women -- their coverage of the treatment didn't include the pharmaceutical funding.

What's scary is that this group "has played a central role in advising the government on the development of a "Code of Practice on Science and Health Communication" for communication science issues to the media."

Some economists like to believe that we can outsource lots of knowledge-gathering activities. People are "rationally ignorant". I don't think the average citizen can afford to be rationally ignorant -- there are too many people spinning half-truths in all areas. People who have something to hide will try to make things either overly complicated or overly simple, when the truth is probably somewhere in between, and likely accessible. (SIRC: "a GM tomato is just a tomato" - no, a GM tomato could have genes which are not even in the same genus as a normal tomato, which is impossible to attain through cross-breeding.)

At the very least, if these people are interested in helping consumers, then they should increase the amount of information available to consumers and support the labeling of GM products. Currently we don't even have that, and I see no reason why -- except that it could potentially hurt the profits a biotech company.

Reply To a "Science Debunker"

I wrote this as a comment in reply to this post. It really irritated me, especially with all the posts expressing vacuous agreement.

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You'd get along well with Steven Milloy (the founder of junkscience.com) -- in fact, I wonder if you've been influenced by him.

Check him out: http://en.wikipedia.org/wiki/Stephen_Milloy

A choice quote:

"In 1993, Milloy dismissed an Environmental Protection Agency report linking secondhand tobacco smoke to cancer as "a joke". When the British Medical Journal published a similar study in 1997, Milloy said, "it remains a joke today." When another researcher published a study linking secondhand smoke to cancer, Milloy wrote that she, "…must have pictures of journal editors in compromising positions with farm animals. How else can you explain her studies seeing the light of day?"[4] While at FoxNews.com, Milloy continued to attack research on the harms of secondhand smoke.[5]

During the time that Milloy was attacking the credibility of secondhand-smoke research, his junkscience.com website was receiving editorial oversight and content directly from the R. J. Reynolds Tobacco Company.[6] Milloy's supposedly independent organization TASSC was funded and coordinated by Philip Morris[7] with the goal of "utilizing TASSC as a tool in targeted legislative battles."[8] A confidential 1994 Philip Morris memo listed Milloy's organization under "PM Tools to Affect Legislative Decisions".[9] Milloy himself was listed on Philip Morris' payroll, being budgeted over $180,000 in payments in the years 2000 and 2001.[10]

On June 27, 2006, summarizing over 10 years of scientific research, the United States Surgeon General issued a comprehensive scientific report concluding that secondhand smoke is a carcinogen with no risk-free level of exposure, refuting Milloy's claims.[11] The Surgeon General's report also stated that secondhand smoke exposure is a known cause of sudden infant death syndrome (SIDS), respiratory problems, ear infections, and asthma attacks in infants and children.[11]"

There are plenty of other similar examples. You would also be a global warming denier, I'm betting, who believes that the synthetic chemicals pervading our environment are getting a bad rap and hurting business.

Mind pointing out some real examples besides alluding to some book with a flashy name?

What's interesting is that in the past "science" (influenced by government) scammed the public into believing things like something like marijuana is harmful and things like DDT are not. Today we've got scientists telling us the opposite.

Today we also have the irrational Christians on the defensive. Coincidence? I think not.

When you discount the danger of synthetic chemicals (enjoy your Teflon fumes and volatile plasticizers with a good dose of cadmium, I'm guessing?) and drugs you serve as a corporate apologist, just like Milloy.

Today health problems are rampant among the masses, yet people who cook their own meals and avoid chemicals tend to go to the doctor sparingly, if at all. That should be encouraged. Many of the chemicals we use today are not actually very necessary, and the more information that people have about their risks the better.

Health effects is one of those areas that we say in economics is dominated by imperfect information, which leads people to make bad choices. If you care more about your health, choose juice instead of soda. The only people you'll be hurting really is the soda companies.

Parkinson's has been linked to pesticides. This is simply a strong statistical correlation. Take of it what you want.

Genetically engineered foods pose significant health risks. Many people are unaware of that, and at first glance it would seem that genetically engineered foods pose little risk. After all, genetic changes happen naturally. But these major changes can produce unexpected side affects. The most blatantly unhealthy modifications get caught in the lab (GM peas cause allergic lung damage in rice), but the others can have slower, long-term, insidious effects, as the researcher Arpad Pusztai has shown.

In conclusion, you are very wrong. The new millennium calls for a different kind of science - but that science should be more cautious, not less, when it comes to potential health effects. After all, what do we have to lose? A few less cans of soda, or rice with human proteins in it?

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I'll add something that isn't on the comment: of course, there is potentially more to lose than the lost opportunity to taste human-rice. There is an argument that GM (genetically modified) foods are necessary to food the world's growing population. I think that's false; we can obviously more than feed the world right now. The poor in developing nations right now don't even accept GM foods (they refuse to take much of that food anyway), and when they do accept GM foods, their farmers are forced to pay pharmaceutical companies. The poor need money and livelihoods. That would be best served by helping them sell their own food; that means we need to reduce trade barriers and food subsidies in the US, as well as do what we can to build basic infrastructure (water and energy) and put pressure on despotic governments.