Recognize the Author?

Ever seen this?

Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.

That would be Robert Lucas, The Industrial Revolution: Past and Future, 2004. (Nod to Neanderbill for the cite).

I just finished reading Joyce Appleby's The Relentless Revolution, a history of capitalism. After the first 100 pages, I thought it was one of the best books I had ever seen on the subject. After 150 pages, and from then on, I wanted to through it against the wall. Prof. Appleby has some overt Marxist assumptions, with some stubborn libertarianism underneath them. So she firmly believes that capitalism is necessary for wealth to develop. But then she favors statism and powerful labor unions.

She really makes an effort to be "fair" to statist regimes. For example, on p. 267, Prof. Appleby says, "The USSR startled the world [in the Revolution]. During the seventy-two years, of its existence, the USSR repeatedly affronted the Western world with its flaunting of its indifference to property rights and free enterprise."

Um...Ma'am, excuse me, but the USSR also affronted the Western world with its murder of millions of its citizens and the denial of basic human rights and political freedoms to the wretched population of an area that was nearly 1/5 of the entire habitable land surface of the world.

Still, an interesting book. Her discussion of the direction of China and India are both detailed and insightful, though again she shies away from any kind of critique of the repressive anti-labor policies of the Chinese, after having bludgeoned (with some cause, of course) the repressive anti-union thuggery of the US in the first half of the 20th century.

Worth reading.

Lithuanian Mayor Deals With Illegal Parking

Visit msnbc.com for breaking news, world news, and news about the economy

Ya know, if the Bishop had had a big snow sled like this, he might have done the same thing in Providence, UT.

Mr. Gov: Do you mind if I work, please?

Only one in 20 workers needed the government's permission to pursue their chosen occupation in the 1950s, notes University of Minnesota Prof. Morris Kleiner. Today that figure is nearly one in three...To work as a manicurist requires only about 12 hours worth of training in Alaska and 40 in Iowa, but 600 hours in Oregon and 700 in Alabama. Does anyone believe consumers in Oregon and Alabama are in need of that much more protection from unsafe manicurists? Or that there is much difference as far as consumer complaints are concerned? Mr. Kleiner compared consumer complaints between Minnesota and Wisconsin in certain health-care occupations and found no differences in the number of complaints between tightly regulated Wisconsin and less-regulated Minnesota. [Chip Mellor & Dick Carpenter, WSJ op-ed]

Damon Root elaborates...

(Nod to Kevin Lewis)

Uncle Sugar

Sometimes I say that great videos are the reason the interwebs were created.

This video is NOT the reason the interwebs were created. Still, it is so bad it is good.

Uncle Sugar!

Some Thoughts on the Deal

Some Duke profs professed about the deal.

No one is impressed. But they are unimpressed for different reasons than P-kroog and bed-wetters are unimpressed.

Euro?

LeBron on the Euro. Interesting.

Euro has been rising against the dollar, in the "who can be a bigger fiscal idiot?" contest.

Reminds me of the story about the bear.

LAGNIAPPE, courtesy of Amar Bhide: Egypt turns down IMF loans, calling them "tainted." I had an old Econ prof at Davidson who said, at least once a week, that "The only taint in money is the kind t'aint in your pocket." And then he would chuckle, all alone.

Environmental Preferences: An Innie or an Outie?

So, it turns out that your views on the environment depend on whether you have an innie or an outie.

Sex and Environmental Policy in the U.S. House of Representatives; Per Fredriksson & Le Wang, Economics Letters, forthcoming

Abstract: Using LCV score data, we find that female legislators favor stricter environmental policies than do their male counterparts. Moreover, gender- corrected estimates suggest that voters do not push environmental policy towards the middle, but rather select the ideologically closest candidate.

"Gender corrected?" Is that one of those operations they do in Sweden?
----------------------
Cool dudes: The denial of climate change among conservative white males in the United States; Aaron McCright & Riley Dunlap, Global Environmental Change, forthcoming

Abstract: We examine whether conservative white males are more likely than are other
adults in the U.S. general public to endorse climate change denial. We draw theoretical and analytical guidance from the identity-protective cognition thesis explaining the white male effect and from recent political psychology scholarship documenting the heightened system-justification tendencies of political conservatives. We utilize public opinion data from ten Gallup surveys from 2001 to 2010, focusing specifically on five indicators of climate change denial. We find that conservative white males are significantly more likely than are other Americans to endorse denialist views on all five items, and that these differences are even greater for those conservative white males who self-report understanding global warming very well. Furthermore, the results of our multivariate logistic regression models reveal that the conservative white male effect remains significant when controlling for the direct effects of political ideology, race, and gender as well as the effects of nine control variables. We thus conclude that the unique views of conservative white males contribute significantly to the high level of climate change denial in the United States.

In other words, conservatives are more likely to be conservative? Since the only conservatives who are NOT male are presumably female (unless they have been "gender corrected?"), not clear how you separate out the effects of political ideology from gender. These bozos just ran regressions with some fuzzy, general proxies for overall ideology, and then found that a dummy variable for gender (I bet they used 1 for male and 0 for female, to symbolize the outie and the innie, respectively) was still significant. This article is a truly remarkable "magic bullet" study: conservative white males are evil. I know all you lefties THOUGHT that, but is it really worth running fake regressions to "prove" it?

(Nod to Kevin Lewis)

PS: I thought I was going to be able to resist this, but I'm much too juvenile. The second author of the first paper... "Le Wang" ... is that French for the reason half our population is stupid on environmental policy? Parce qu'ils possèdent "le wang"?

Snake on a Car

It's just a snake. I have picked up copperheads in our yard, put them in a bucket, and taken them down the hill to a swamp and let them go. This was just a non-poisonous snake. I would have pulled over, taken it off, and let it go. Why kill the poor thing?

Sure, I'd be startled at first. But it's dangerous to drive if you are that distracted, and the driver behind you would likely swerve.

(Nod to the Blonde, who would probably have been firing her sidearm through the windshield)

Rhetoric vs. Reality

Or, the progressives who cried wolf.

Here's Krugman:

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Now DeLong:

Let me reserve judgment until the surrender-and-visit-to-the-cleaners is actually set out, but I suspect that come Tuesday I will be forecasting a double-dip. Horrible for the economy. Horrible for America. Horrible for the world. And horrible for Obama's aspirations for a second term as well.

And then we see exactly what they are getting all worked up about (hat tip to Tyler for posting a re-scaled graph):

That is a graph of discretionary Federal spending after the "cuts". Yes, it's going up (though note that the data are not inflation adjusted). Doesn't seem much like a disaster, does it?

Here's more from the OG (original graphmaker):

The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.

No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.

The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.

Bam! The Tea Party just hit America with a steel garbage can! Sproing! America is bleeding profusly. Zoink! the EMTs are coming to take America out on a stretcher. Oh the humanity.

Somewhere, Killer Grease Mungowitz is smiling.

Was Schumpeter a Marxist?

Was Schumpeter a Marxihttp://www.blogger.com/img/blank.gifst?

Nathan Rosenberg
Industrial and Corporate Change, August 2011, Pages 1215-1222

Abstract: This article explores the degree to which Joseph Schumpeter may be regarded as a follower of Karl Marx. It argues that Schumpeter and Marx shared a common vision, including agreement on the growth in the size of the firm and in industrial concentration, the inherent instability of capitalism and the inevitability of "crises", and the eventual destruction of capitalist institutions and the arrival of a socialist form of economic organization as a result of the working out of the internal logic of capitalist evolution. Schumpeter's main qualification is his insistence upon the importance of temporal lags, i.e., social forms that persist after they have lost their economic rationale, and he suggests that the essence of capitalism lies in the inevitable tendency of that system to depart from equilibrium. The article emphasizes the continuing importance of economic history for economics.

(Nod to Kevin Lewis)

The Hobbesian State of Weddings in Kabul

"The Law on Prevention of Extravagance in Wedding Ceremonies [in Afghanistan] would limit the number of wedding guests to 300 and the amount spent to around $7 per guest...'Why should the government tell people how to spend their money?' said Mohammed Salam Baraki, the owner of Uranuse. 'If they pass this law, it will only facilitate corruption. I’ll have to pay off the inspector to allow more guests in.'" [WaPo]

Interesting prisoner's dilemma. Everyone wants to spend less, AND wants to have the nicest wedding in town.

(Nod to Kevin Lewis)

What in the world?

Let's do a visual version of the Grand Game. Write a caption for this photo:
I'll take a shot: "Boca! Mouth! Boca! Now you say it..."

I also very much like the background, with subliminal messages. Unless that's the teleprompter, and it's just turned around.

It's the final countdown!

The fake vote will take place on the fake deal at 6:45 EDT.

For some reason, made me think of this video, which is also pretty fake. Superhair Supergroup Europe lays down some synthetic music.

CFLs and CAFE

PREFACE: COOL! I'M AN IDIOT. HOW HARD IS IT TO READ BY-LINES? I'LL LEAVE THIS AS I WROTE IT, BUT OF COURSE WILL W DID NOT EVEN WRITE THE POST I AM REFERRING TO....

Will Wilkinson is a bit like Andrew Sullivan. No, not THAT way (not that there is anything wrong with that).

What I mean is that if you know Will is writing on an issue, you have to read him to figure out what he thinks is the right answer. His views are complex, and tend to be derived from specific principles rather than broad ideological doctrines.

About 75% of the time, I think he is spot on. And the rest... well, here is an example. (NO! NOT AN EXAMPLE. WILL W DID NOT WRITE THAT POST. I ALWAYS WONDER HOW PEOPLE CAN GET ANGUS AND ME CONFUSED. BUT...ANYWAY, NOT WILL!)

He seems to take the libertarian paternalist line on CFLs. He appears to support "the Energy Independence and Security Act of 2007, which if allowed to go into effect next year would force Americans to pay less for the same amount of illumination, while starving the atmosphere of greenhouse gases. Patriots like Michele Bachmann and Rick Perry have stood up for the same principles."

Um...isn't it true that if CFLs really cost less for the same amount of illumination, no law would be necessary? (Full disclosure: I think CFLs actually DO cost less for the same amount of illumination, taking into account electricity, and buying and changing bulbs frequently. So every bulb in our house is a CFL or LED. The LEDs especially are great, 1.5 watts and cool to the touch, but the same light as a 25 watt incandescent). The point is that people must disagree about this. And to be fair we have NOT solved the CFL disposal problem, with a lot hazardous waste in the form of mercury. So it is not clear to me that adding light bulbs to the list along with crystal meth as banned substances is really in the service of any principle of liberty.

But then Will goes off on CAFE. (Again, full disclosure: I worked on CAFE for the Federal Trade Commission in the Reagan Administration, and have kept track of it since). I just don't see any principled defense of CAFE, on ANY grounds whatsoever. If you want European size cars and fuel efficiency, then you need a big tax on gas, and then let consumers make their own choices. Since the price of petrol is 1.5 Euros / liter in much of Europe, we are talking prices that are $8/gallon or more in US terms, double our current prices. We can agree or disagree that this would be a good thing, but if you want fuel efficiency that is what you would have to do.

Instead, we have CAFE. CAFE requires that each manufacturer calculate the harmonic mean, weighted by sales of different models, for everything it sells.

EXCEPT....except that there is a dispensation for trucks, including "light" trucks. We now call those SUVs. CAFE is their daddy.

So, to oversimplify only slightly, US car companies did not stop producing small cars in spite of CAFE; they did it BECAUSE of CAFE. CAFE, with its bizarre Jesuitical list of requirements and exemptions, made it impossible to sell full sized station wagons, but actually subsidized giant SUVs that got much worse gas mileage. The best selling American "car" has been the Ford F-150 pickup, for a long time.

And if you think that Americans, in 2006, say, actually wanted little tiny cars but were forced by creepy manufacturers to buy big ass urban assault vehicles, you are just wrong. US automakers conceded the small car market to foreign companies, but the reason is that those companies could take advantage of economies of scale in their home markets because of much, much higher fuel prices.

You really only have to know one thing: Toyota (TOYOTA!) makes a truck (originally the T150, a feckless ploy to copy the F150) that has a 282 hp engine, is five inches longer than a Ford F-150 double cab, and gets 18 miles per gallon. This truck is not sold in Europe or Japan, but the Tundra has been very successful in the US. It's huge!

There are two reasons. 1. Our gas prices are 1/2, or less, those of Japan or Europe. 2. CAFE creates a huge benefit to producing large, fuel-inefficient trucks and truck-like vehicles. It is possible that American consumers actually want station wagons or something in between, but CAFE effectively outlaws them.

So, when Will W says:

Mandatory energy-efficiency standards are a bit of a conundrum for a liberal outfit like The Economist. On the one hand, they clearly are an intrusion into the workings of the free market. On the other, they work. No one beyond the libertarian fringe seems to mind very much, they save us money that we would otherwise be too lazy or short-sighted to save for ourselves, and they’re normally designed in such a way that manufacturers manage to meet them without too much grief.

then he is just mistaken. CAFE has not worked. CAFE has made the problem much, much worse, in effect LOWERING the fuel economy of fleet of vehicles on American roads by forcing manufacturers to make heavy, inefficient trucks instead of station wagons and the cars that would have been purchased without CAFE.

Now, Will might well respond, "But you admit it is the EXEMPTION from CAFE that was the problem that distorted toward trucks!"

Isn't that always the way? When you try to restrict private choices, given incentives (in this case, artificially low gas prices), it takes a proliferating series of new, improved regulations because the problem keeps evolving.

We need a $4 per gallon tax on gas. We are paying huge costs, in terms of wars and hamstrung foreign policy, for our dependence on the Middle East. But we are in effect subsidizing the cost of gas to keep it low. As a result, people want cars that are inappropriately large. And then Will wants to use CAFE to solve the problem created by the subsidy. Then Will wants to extend CAFE to solve the problems created by CAFE.

Suck it up, charge the tax, and let people make their own choices. I'm pretty sure we'll see a lot more Ford Fiestas and fewer F-150s. Even in Iowa.

A GREAT New Idea! Get 'Em at Their Wedding!

So....an idea that our own Homerland Securitation folks can use.

Just "receive" (or fabricate) a totally baseless anonymous tip that a wedding is a "sham." You can easily tell a sham wedding, I suppose, because there will be no large gathering of friends and family from around the world; too expensive.

Of course, when it turns out that there IS a large gathering of friends and family from around the world...no biggie! It means you can strip search all the guests and demand "yo papiss, plis!" If there are 100 or so of those nasty, dusky slant-eyed furriners there, surely a few won't have the proper documentation. Hand-cuff 'em, hold them indefinitely, and then deport them! It's fun, and your prison-industrial complex can hire up those surplus unemployed union members as guards. Everybody wins.

And then the police can go back to their nice white guy houses, secure in the knowledge that they have put the hammer down on some brown/yellow/who-knows-what-if- you-don't-strip-search-them, aliens.

(Nod to Anonyman)

Gmail Man

An ad. Not really an ad, but rather an internal Microsoft communication.

Some background...

Jumping the Krugman

P-kroog wants to avoid the mistakes of 1937-8... by making the same mistakes the government made in 1937-8. In a lesser man, I would say he is just wrong, or suffering from epistemic closure in his world view.

But in the case of P-kroog, it's just his way of asserting the fact that he is no longer bound by earthly conventions of logic or evidence. He has, after all, evolved by now into pure energy, and has no corporeal form at all.

Waiting For It To Drop

This is a picture of our government, waiting for someone to do something.

Can I have a deal now? Now? How about NOW?

(UPDATE: Not yet! Repubs just blocked a vote in the Senate)

Lavish links

1. A wonderful send off for the space shuttle and a glorious F. U. to NASA.

2. 13's digital nips (hat tip to Tyler).

3. Bryan Caplan loses an argument.....with HIMSELF!!

4. The curse of the Jonah Brothers.

The Town

A couple of folks sent the link to Jon Stewart's bit on the motivating tactics of the Repubs. Pretty funny. And a solid bashing of Chuckie Schumer at the end.

The Daily Show - Republicans Watch "The Town"
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

The culture that is China: Ip Man edition

or MAN!, the Chinese still really hate the Japanese.

Mrs. A and I watched the "bio-pic" Ip Man over the weekend. I really liked the film, great fighting and decent acting.

However, it's more propaganda than bio.

In the movie, Ip Man (who ended up being Bruce Lee's master) is driven out of China to Hong Kong by the sadistic Japanese military after crunching a ton of Japanese martial artists.

In reality, Ip Man was driven out of China to Hong Kong by Mao and his minions who were not happy with how rich Ip's family was.

Ooops.

Good luck getting THAT movie made or shown in China.

Has Government Grown?

So, I had a little fuss with my good friend, the ever reasonable and painfully earnest Dr. Brendan Nyhan, @brendannyhan

Brendan tweeted: Big government! "the number of govt. jobs has fallen 2.2 percent" since 6/09. never happened in postwar recovery before (LINK)
I responded: Um...right. The number of gov't jobs NEVER falls, always grows. Why is that inconsistent with "big gov"?

Brendan responded: People think Obama had presided over massive government expansion and it's just not true.
I responded: Check gov as % of GDP! Massive spending increase equals bigger gov, no matter how much u love it

Brendan responded: most of that is denominator shrinking due to recession plus automatic spending in recession
I responded: most but not all. Gov has grown; there may be good reasons...

So, here's the question: NOT is bigger government better, that is a matter of ideological taste. The question is: Has government grown? What measure of "government" should we pick?

Employment: Here is total government employment, from 1960 to the most recent available, June 2011, by five year increments until recently (in millions of workers):

1960 8.7 1965 10.2
1970 12.7 1975 14.8
1980 16.4 1985 16.5
1990 18.4 1995 19.4
2000 20.8 2005 21.8
2008 22.509 2009 22.505
2010 22.730 2011 22.064 (June)

(From Census and BLS data)
I should note that the apparent Obama increase 2009-2010 was at least in part due to 225,000 or more temporary census workers. But then the decline in 2010-2011 has the same cause. Thus, the number of government employees, total is basically flat since 2008. Still these are totals; what about federal government employees?

2009: Total gov workers--22.505 Fed gov workers--2.820 State gov workers--5.330
2011: Total gov workers--22.064 Fed gov workers--2.830 State gov workers--5.091

In other words, federal employees have stayed level, and the states have gotten rid of 250,000 workers. The residual, local governments, must have gotten rid of about 200,000 workers.

Growth of Government? Not really. Government employment has been essentially flat since 2005. In spite of the rhetoric about "an army of new IRS agents," and other fears, government employment grew faster under GW Bush than under Obama, at least so far.

Budget: Has government spending increased? I computed the numbers and summarized them in this table.



Wow. If there was a spending increase, it was the last year of Bush, 2008-9. On the other hand, that was supposed to be one time emergency stuff, TARP and Porkulus.

The table shows that the size of federal spending has increased, controlling for inflation, by fully 25% since 2008. And it is not going back down. The "emergency" is permanent, I guess.

Government Growth? Yes, but less than I expected, and much of it in the 2008-2009 budget year, for which only Bush can be blamed. I guess it depends what your baseline is. If spending should have gone back down, and it hasn't, we can blame Pres. Obama. But the war and the recession... Obama didn't start the fire. Not sure why he would claim credit for throwing gas on it, though.

Scope and Intrusiveness of Regulation: This is mostly perception, I suppose. Not sure that the ranting about big business and the health care rules are really worse than the Patriot Act, Gitmo, and National Security Letters.

Deficit: Fuggettaboutit. Huge increase, much of it under Obama.

So, okay Brendan. Pres. Obama is no worse than GW Bush on making government grow. But Bush was the WORST PRESIDENT in 100 years or more. Is that all you've got for a slogan?

BH Obama: He is STILL not GW Bush.

Dr. Newmark: Incentives

KPC pal Craig Newmark notes that jail, or rather the threat of it, might improve the process of budgeting and governing.

Actually, he cites two interesting sources that make that argument. But they have his endorsement.

(Yes! The inventor of "Craig's List." Not.)

Milwaukee: Famous

Spent some time with Tofe and Koopa this week, in Brew-town. (Koopa's eyes don't always stick out of his head like that. I blame the Red Bull, honestly. Of course, I'm the idiot with the blue pencil in his hand, taking the picture; nice photography).

Went to the ballpark, and I had a man-salad in the Stadium Club (major props to Koopa, there). Yes, that is spinach, beets, green beans, a half pound of cheese, and a half pound of spicy sausage. MAN salad, my friends.
Got to sit in the dugout, before the game, and walk aroung on the field.

Later, stopped in at Hayek's Drug for some homage.
And, the Brew Crew stomped the stinkin' Cubbies three games, sweeping them back to the next games they will lose, down at Busch Stadium. I have the score cards and beer receipts to prove it! (Sure, yes, as a Cards fan I should root against the Brew Crew. But they are so cute and furry; we saw Braun hit a homer, and Fielder hit an opposite field, 450 foot shot to the upper deck!!! I bet HE eats man salads, though I guess he is now a vegetarian, right?)

Thanks to Tofe and Koopa. Major good time.

What? WHAT?

We are through the looking glass.

Fears of a default have caused the prices of US Treasury bills to skyrocket.

No, wait, you are not paying attention, look at that again: P*R*I*C*E*S*. Not yields. If prices go way up, yields go way down (though not below zero, really).

So, the market is still predicting zero chance of a default on t-bonds. All the market is predicting is that there will be a shortage of new t-bonds after we hit the debt ceiling. The anticipated shortage is driving prices up.

If we expected a default, or inflation there would be a sharply rising term structure in t-bonds. But if anything the terms structure is falling and getting flatter.

Check this out:

What kind of world do we live in? Nobody in the financial world is worried that the US will not pay its t-bonds. They are only worried that, if we hit the debt ceiling, there won't be enough new debt manufactured by our government to meet demand. Debt is our chief export, the only thing that balances our trade balance with China.

Professional wrestling, by comparison, has some elements of realism. NO ONE BELIEVES DEFAULT IS POSSIBLE.

(nod to @tylercowen , who tweeted the link)

Grand Game, Judge Judy Edition

This is actually pretty disturbing...



Is it racist? Should the guy really get the money for "being me"? On the other hand, if he qualifies, why is he doing anything wrong? He didn't make the rules...

Got My Hands on Everything, Like Dominique Strauss-Kahn

Pretty funny, some good lines.



There is even a Congressional hearing....hey, didn't Russ patent that?

Hey, yo, we straight out of twenties!

A big nod to my PiKA brother, John Donato!

Show me your O face!

Clic the pic for a more glorious image or go here for individual photos.

Dang those danglers!

Florida has had problems with those bull ball danglers, which we described here at KPC three years ago.

A new incident: The Five Oh in SC is actually writing tickets!

(Nod to the Blonde, who being pure and innocent is easily shocked)

The Takeaway

Got to be on The Takeaway this morning.

Are new jobs numbers good news? Not so fast, there, Dusty!

Will Wilkinson: Democracy in America

Will Wilkinson from his blog at The Economist. He substantially improves the argument about indulgences that I made a few days ago. (Link to my op ed)

What we need to recognize is that prosperity needs stability, predictability, and optimism. But political success requires chaos, confusion, and fear.

Right now, the Republicans seem to be winning parts of the "You should be afraid! Very, very afraid!" race.

But BOTH sides win from telling you, "We can save you! Send money!"

Bricks in St Loo Taken By the Truckload

Nod to the Blonde

"Outlandishly Subsidized" Is Not the Same as Cheap

There is an old claim that cookie crumbs have no calories. Furthermore, dessert bites a woman takes off her date's/husband's plate are not fattening. That's why so often women say, "I don't want any dessert," and then will eat more than half of yours. (Plus, I *pity* the fool man who doesn't order dessert. Your woman does not want to be the sort of woman who orders dessert, so you have to do it. Just STFU and order...)

Okay, that's funny and all. But the Germans think of solar power the same way. They have these enormous, utterly irrational subsidies for solar everything, and houses all over that dark, cloudy country have hugely expensive solar panels. (Interesting, and surprisingly harsh, story in Spiegel).

But they say "it's cheap!" because the cost is subsidized by a fictional entity called, "The State." It doesn't actually exist, and the cost is being picked up taxpayers, which of course are the very people touching themselves and squealing with joy at how "cheap" the subsidized solar panels are.

Germans: if you want dessert, just order it. Don't pick off taxpayers' plates.

(nod to the Blonde)

Church! Congress Must Stop Selling Indulgences

We need a Reformation....or perhaps a different church?

My column in today's Durham Herald Sun

Fire 'Em!

Usefulness of Dismissing and Changing the Coach in Professional Soccer

Andreas Heuer et al.
PLoS ONE, March 2011, e17664

Abstract: Whether a coach dismissal during the mid-season has an impact on the
subsequent team performance has long been a subject of controversial scientific discussion. Here we find a clear-cut answer to this question by using a recently developed statistical framework for the team fitness and by analyzing the first two moments of the effect of a coach dismissal. We can show with an unprecedented small statistical error for the German soccer league that dismissing the coach within the season has basically no effect on the subsequent performance of a team. Changing the coach between two seasons has no effect either. Furthermore, an upper bound for the actual influence of the coach on the team fitness can be estimated. Beyond the immediate relevance of this result, this study may lead the way to analogous studies for exploring the effect of managerial changes, e.g., in economic terms.

Wow. I'm not sure I have ever seen quite so many endogeneity problems in one study. If changing the coach mattered, teams would do it, and keep doing it, until it doesn't matter.

(Nod to Kevin Lewis)

The (tea) party's over

The head tea-partier in charge, Mark Meckler, is a scary dude. Check out this snippet from a Q&A with him:


Is there any scenario where you think it would be OK to raise the debt ceiling?

"No".

What do you think is the ideal solution to this impasse right now?

"The ideal solution is to cut spending so that we stop spending beyond our means. The ideal solution is what you would have to do if you were in the same situation personally that the country is in. The ideal solution is what each of us as citizens have to do when we get in financial trouble personally or what companies have to do, or what states have to do or what cities have to do. Frankly, the only entity in our nation that continues to defy reality is the federal government. It’s just time to pay the piper".

So, Mr. Meckler is advocating a 1.6 trillion dollar cut in spending THIS YEAR out of a 3.8 trillion dollar budget? In other words around a 40% reduction in Federal spending this year?

That's really his solution to the issue?

Nowhere in the interview does Meckler say what he would cut to hit this kind of target. Those pesky details are left as an exercise for the reader I guess.

What a freakin' moron.

People, I am a big fan of small government and low taxes. I would welcome Federal spending being capped at say, no more than 20% of GDP (perhaps as an average over each presidential term). But you can't get from where we are to where I'd like us to be in one year. No way, no how.

This Meckler guy is a clown.

Hot Dogs: As Dangerous As Cigarettes?

Here we are told that hot dogs are as dangerous as cigarettes.

Well, maybe, if you have a two pack a day hot dog habit...

Here's my question: There are two different information campaigns going on here. One is the campaign to put pictures and warning labels on cigarettes....and now hot dogs.

And there is a campaign to ensure women who are going to have abortions have to see the ultrasound of their fetus. Other people are trying to display photos of aborted fetuses.

The question: why is that all the bed wetters who want to force us to see cigarette- damaged lungs fiercely oppose the idea of displaying abortion-damaged fetuses?

I'm a libertarian; I think people can get their own info. But you lefties, who think everyone (except you) is an idiot....why no on the fetus thing? Why aren't you consistent?

(nod to the Blonde)

Educated Leaders, More Growth?

Do Educated Leaders Matter?

Timothy Besley, Jose Montalvo & Marta Reynal-Querol
Economic Journal, August 2011, Pages F205–227

Abstract: This article uses data on more than 1,000 political leaders between 1875 and
2004 to investigate whether having a more educated leader affects the rate of economic growth. We use an expanded set of random leadership transitions because of natural death or terminal illness to show, following an earlier paper by Jones and Olken (2005), that leaders matter for growth. We then provide evidence supporting the view that heterogeneity among leaders’ educational attainment is important with growth being higher by having leaders who are more highly educated.

(Nod to Kevin Lewis)

Clouded Memory

Google Effects on Memory: Cognitive Consequences of Having Information at
Our Fingertips

Betsy Sparrow, Jenny Liu & Daniel Wegner
Science, forthcoming

Abstract: The advent of the Internet, with sophisticated algorithmic search engines,
has made accessing information as easy as lifting a finger. No longer do we have to make costly efforts to find the things we want. We can "Google" the old classmate, find articles online, or look up the actor who was on the tip of our tongue. The results of four studies suggest that when faced with difficult questions, people are primed to think about computers and that when people expect to have future access to information, they have lower rates of recall of the information itself and enhanced recall instead for where to access it. The Internet has become a primary form of external or transactive memory, where information is stored collectively outside ourselves.

(Nod to Kevin Lewis)

Linkulus Maximus

Some links:

1. Organic food is okay, but it's not that great.

2. Boogity, boogity, Amen.

3. We are just not that into him. And yet we are still getting screwed.

4. Sell, baby, sell!

5. Will the Greens be on the ballot in NC? If the NC Senate, controlled by the Repubs, has any sense they will. If this passes, I will personally be out on the street corner, hawking signatures to get our Green bros and sisters onto their rightful place.

(Nod to the Blonde)

Who killed Col. Mustard?

It was Laureate Stiglitz, in the park, with a microphone

(clic the pic for a more glorious image)

The spending cuts in the budget deal are a pitiful joke

A trillion dollars sounds like a lot of money, doesn't it? Well when it's (A) over 10 years and (B) from a spending level that is around 3.8 trillion for the current year, it's ez to see that a trillion dollars of cuts is a joke. Pro-rated, that's $100,000,000,000 cut each year from a level of $4,800,000,000,000. Which is 2% and change. Which is pitiful.

Plus, the cuts aren't cuts. Here's Ezra Klein on Harry Reid's cuts:

Reid’s plan includes $100 billion in savings from so-called “mandatory spending” like Fannie Mae and agricultural subsidies, $1 trillion in savings from winding down the wars, and $400 billion in reduced interest payments from cutting more than $200 billion in spending.

So a mere $10,000,000 per year of actual spending cuts while the rest comes from "winding down the wars" and reduced interest payments from winding down the wars.

Sweet baby Jeebus!

Ain't that just like a boss to totally fudge the numbers and con the shareholders?

Mungowitz is right. This is pro wrestling.

Markets in Everything: Snacks for Zombies Edition

(clic the pic for a more glorious image)

And here's a bonus MIE: Personal Hygiene Edition:

Maybe This Time

Usually, when I think something is a turning point, it turns out to be a high water mark. Sort of like how Woodstock was not a fundamental step forward in hippie culture, but its never-to-be-repeated apotheosis, after which a lot of boomers starting to go bald (even the women) and get jobs as I-bankers and stockbrokers.

So, with that caveat, let me offer this piece by KPC pal Dave Weigel as a turning point, something we may look back and remember as a start, not an end.

This rant was the start, in some ways, of the organized Tea Party movement. This article by Weigel was basically the end of my campaign, though that wasn't Dave's fault. Beginnings or ends... who can tell, at the time?

Thus it is with the #FuckYouWashington hashtag, and American Elect. The question is whether the idea for a "real" third party (LP is apparently chopped liver?) will catch on. Dave is absolutely right, of course, that electing a President would do very little. Except that it would do a lot. Veto points only work if MCs have the juevos to block stuff. And pretty much none of the MCs have juevos.

(Nod to Brendan Nyhan, or rather @brendannyhan, for the link)

Speech in Indy

My speech in Indianapolis, for the LPIN. (It's long, 52 mins...)

with a Greece-y spoon

Wow. Version N minus k of the Greek bailout has arrived (where k is a positive integer). You can read the full text here.

I want to talk about the losers in this process.

The biggest loser is JC Trichet and the ECB. Man they really had to eat it. JC thundered "no default ever" to whoever would stick a microphone in front of him and threatened that in the event of a default, the ECB couldn't hold Greek debt. Well, now we (a) have a default and (b) the ECB will continue to hold, and add to its holdings of Greek debt. By acting like he was large and in charge when he was not, JCT has made himself look like a clown and damaged whatever positive reputation the ECB still had.

The next big loser is the sovereign CDS market. We have an obvious default, that according to my understanding (and that of the WSJ), will somehow NOT be creating a credit event. That is, holders of CDSs on Greek debt will NOT be getting payouts. In other words, the sovereign CDS market has been revealed to be a mug's game and may find it hard to survive. Governments may think they have won against the evil speculators, but all this victory will really do is drive up interest rates on sovereign debt (ceteris paribus, y'all).

The next loser is the German taxpayer, especially if the Eurolords actually follow through with their threat of a "Marshall plan for Greece".

Hey Angus! How about a word or two on the winners.

Well, Ireland and Portugal are big winners as they got the interest rates on their bailout loans cut dramatically without having to make any additional changes to policies. A good deal for them.

I also think holders of Greek debt are winners here, as they can lock in a decent return on their holdings for a not too bad haircut. I would take one of the deals.

Any other losers?

Finally and amazingly, Greece itself is again a loser in its own bailout. Some things never change I guess. They still have a mountain of debt, they still face prolonged austerity and God help them if the Eurolords follow through with their politically correct, bureaucratically bungled, economically useless version of a Marshall plan for that beleaguered island.

This is why Lefties say "It's ALL Luck!"

Social Insurance and Income Redistribution in a Laboratory Experiment

Justin Esarey, Timothy Salmon & Charles Barrilleaux
Political Research Quarterly, forthcoming

Abstract: Why do some voters support income redistribution while others do not? Public assistance programs have two entangled effects on society: they equalize wealth, but they also cushion people against random catastrophes (like natural disasters). The authors conduct a laboratory experiment to determine how individuals' responses to the environment are related to their self-expressed political ideology and their self-interest. The findings support the hypothesis that ideology is associated with a person's willingness to use redistribution to reduce income inequality that is caused by luck, but it is not related to preferences for inequality that are not related to luck.

(Nod to Kevin Lewis)

Resisting Arrest

This man is going to jail for resisting arrest.

Some neighbor called the police, said "a black man" was entering the house.

Of course, it was his house, if that matters.

Nope, it doesn't matter. Off to jail with you, amigo!

This is Why We Need the Interwebs

In several forums I have argued that the contribution of blogs and the interwebs to our knowledge of the "truth" in news is one-sided: We don't so much learn about definitive truth as we get decisive and embarrassing corrections of bullshit masquerading as news reporting. The idea that there is "truth" is shaky; the idea that there is demonstrably false crap is where bloggers come in.

A fine example of this genre is KPC pal M.G.'s piece on shale oil. I'm pretty sure this would embarrass the Times reporter, if the Times reporter were capable of embarrassment (meaning, he couldn't be a Times reporter, I guess). The Times keeps firing its "public editor," who is supposed to be their conscience. I don't think the current public editor is long for this world, if he is going to commit actual journalism like this.

Don't Want Those Third Parties "Spoiling" Elections!

Utah may decide to go with IRV to avoid "spoiling" elections.

Really.

(Nod to the Bishop, who has spoiled a lot of elections all by himself)

I don't fault the police, 'cause the people that run 'em, got 'em on a short leash

The strange thing is that people want to blame the police for this. Cops shut down a lemonade stand being run by 10 year old girls. Excerpt:

“They told us to shut it down [and we didn't know why],” 10-year-old Skylar Roberts said.

“We had told them, we understand you guys are young, but still, you’re breaking the law, and we can’t let you do it anymore. The law is the law, and we have to be consistent with how we enforce the laws,” Midway Police Chief Kelly Morningstar said.

By a city ordinance, the girls must have a business license, peddler’s permit, and food permit to set up shop, even on residential property. The permits cost $50 a day and a total of $180 per year. City officials said it’s their job to keep everyone safe and healthy, and there can be no exceptions to the rules.

“We were not aware of how the lemonade was made, who made the lemonade, of what the lemonade was made with, so we acted accordingly by city ordinance,” Chief Morningstar said.

“It’s almost like they don’t have anything better to do. I’m going to let it go. I’m trying to teach them good. I don’t think if I keep on, it’ll teach them a good thing,” Amy Roberts said.

So the law wins, and what started out as three girls’ dream of a fun summer business is now just a piece of plywood.

This REALLY makes me mad. All you folks who constantly want more rules, more laws, more government intrusion in our lives are the first say, "Awwww, that's not right!" when the police actually try to enforce the law. In fact, the reporter actually says, "So the law wins..." Um...that's what the law DOES, ma'am. The political law of the U.S. is a set of arbitrary, intrusive rules backed by overwhelming, irresistible physical force. It is the unavoidable implication of the corrupt bargain made by those who think the alternative to coercive law is the Hobbesian state of nature. Letting people make their own choices is just not an option to you folks. So enjoy your police state, and STFU.

Look, as I have written before, Chief Morningstar is right: she can't just suspend the law. The thing, the thing itself is the abuse. People who try, like this goofball, to blame the police are just mistaken. Police do not have, and should not have, discretion. It's a violation of equal protection, and in fact a violation of the very idea of rule of law, for the police to say "The law applies to you, but not to you over there."

Then what IS the solution? Get rid of about 3/4 of the stupid rules on the books. These licenses, fees, and paperwork are an important cause of extended unemployment problems.

Corporate Avenger has this pretty much right, I think. I don't fault the police. 'Cause the people that run 'em got 'em on a short leash. (Definitely NSFW, and extremely harsh. Don't watch it if you are a pussweiler)


The money quote from the video:

A society that incarcerates its own population for any minor infraction where there is 100's upon 1000's of pages and pages of laws and reason for the district attorney and the local jurisdiction and the justice system to put its entire force to removing an individual from his family connection...
Enforce rules made by fools
Violence and fear their tools,
They dress to impress thinking fear is respect
And they leave us powerless.

So don't fault the police, folks.

(Nod to Tommy the Brit)

UPDATE: Don't hate the DA, hate the game.

.

Does Where You Start Determine Where You End Up?

Sources of Lifetime Inequality

Mark Huggett, Gustavo Ventura & Amir Yaron
American Economic Review, forthcoming

Abstract: Is lifetime inequality mainly due to differences across people established
early in life or to differences in luck experienced over the working lifetime? We answer this question within a model that features idiosyncratic shocks to human capital, estimated directly from data, as well as heterogeneity in ability to learn, initial human capital, and initial wealth. We find that, as of age 23, differences in initial conditions account for more of the variation in lifetime earnings, lifetime wealth and lifetime utility than do differences in shocks received over the working lifetime.

(Nod to Kevin Lewis)

The culture that is Germany: Naturist Edition

The quantity theory of nudity may be holding in Germany. It appears that perhaps the same amount of skin is being shown by nude sunbathers; it's just been redistributed. Now there's a lot more skin on each of the much fewer naked bodies.

Or, as Reuters puts it, "Fatter & Fewer German Nudists as Numbers Dwindle"

Kurt Fisher, the head of the German Nudist Association, thinks he knows why the numbers are dwindling. Immigrants! Or more specifically, the wrong kind of immigrants:

""Germany is relying more and more on immigrants to keep the population steady. But many come from countries with strong religious beliefs." Immigrants who arrive from cultures where headscarves are common will not usually be interested in becoming naturists in Germany, he said."

Don't you just hate it when that happens?

Lost Interest

Institutions, the Rise of Commerce and the Persistence of Laws: Interest Restrictions in Islam and Christianity

Jared Rubin
Economic Journal, forthcoming

Abstract: Why was economic development retarded in the Middle East relative to Western Europe, despite the Middle East being far ahead for centuries? A theoretical model inspired and substantiated by the history of interest restrictions suggests that this outcome emanates in part from the greater degree to which early Islamic political authorities derived legitimacy from religious authorities. This entailed a feedback mechanism in Europe in which the rise of commerce led to the relaxation of interest restrictions while also diminishing the Church’s ability to legitimise political authorities. These interactions did not occur in the Islamic world despite equally amenable economic conditions.

(Nod to Kevin Lewis, who never loses interest)

Glorious

What Really Happened During the Glorious Revolution?

Steven Pincus & James Robinson
NBER Working Paper, July 2011

Abstract: The English Glorious Revolution of 1688-89 is one of the most famous instances of ‘institutional’ change in world history which has fascinated scholars because of the role it may have played in creating an environment conducive to making England the first industrial nation. This claim was most forcefully advanced by North and Weingast yet the existing literature in history and economic history dismisses their arguments. In this paper we argue that North and Weingast were entirely correct in arguing that the Glorious Revolution represented a critical change in institutions. In addition, and contrary to the claims of many historians, most of the things they claimed happened, for example parliamentary sovereignty, did happen. However, we argue that they happened for reasons different from those put forward by North and Weingast. We show that rather than being an instance of a de jure ‘re-writing the rules’, as North and Weingast argued, the Glorious Revolution was actually an interlinked series of de facto institutional changes which came from a change in the balance of power and authority and was part of a broader reorientation in the political equilibrium of England. Moreover, it was significant for the economy not because it solved a problem of credible commitment, but for two other reasons. First, because the institutional changes it led to meant that party political ministries, rather than the king’s private advisors, now initiated policy. Second, because these ministries were dominated by Whigs with a specific program of economic modernization.

(Nod to Kevin Lewis)

Lavish Links

1. The wit and wisdom of Larry Summers

2. Andrew Gelman lays a smackdown on "pop economists"

3. Are you geographically literate enough to be a 12th grader?

4. Don't let the door hit you in the butt on the way out!

Lil Bautista eat your heart out

Cause here's Lil Herschel, and he's packing a lot more than a sharpie goatee.

Check his moves:

Check his workout:

More here.

Dick Cheney's Erdos number

Yes, he has one, and it's probably lower than yours my friend:

"Cheney's Erdos number is no more than seven. He wrote his American Political Science Review article with Aage Clausen, who has coauthored with Greg Caldeira, who has co-authored with me, who has co-authored with Keith Krebiel, who has co-authored with John Ferejohn, who has co-authored with Peter Fishburn, who has co-authored with Erdos."

The "me" in the above quote is Tim Groseclose, one of the greatest Okies ever, and the quote comes from his awesome new book: "Left Turn: How Liberal Media Bias Distorts the American Mind" which drops tomorrow from St. Martin's press. The book is, as Tyler likes to say, self-recommending.

I could have had an Erdos of five, but I was such a crappy co-author that Tim kicked me off the project.

Update: Tim informs me that I'm not kicked off the project, it's just "indefinitely on hold".

Getting the incentives right

I can understand Chavez getting his medical treatment in Cuba. After all, the Castro brothers have the most to lose if Chavez is not longer in power. Cuba gets $3 billion plus in annual subsidies from Venezuela.

One Venezuelan blogger considers his country to be a Cuban colony:

"Cuba is very worried about its colonial outpost in South America. Things are not going well there. The Viceroy is ailing just as the province is having serious difficulties in providing the monthly stipends due to the imperial metropolis, Havana. Thus measures had to be taken before the natives become more restless than what they already are."

More here.

Copyrights be damned!

Some context is provided here.

"They call you PIGS but they don't understand"

Tea Party Hero: Bill Clinton

My good friend Bill Chafe (yes, one of the 88; deal with it) wrote a piece for the N&O this morn. And he's basically right. So I sent him this note:

Dear Bill:

I enjoyed your article in the N&O this morning.

Thought I would share a table I made up for an article I just wrote for CRITICAL REVIEW. This is total government spending per capita, in real (2010 constant) dollars, by decade:

Table: U.S. Nominal and Real (2010$) Federal Spending Per Capita
Year...NomG/Cap...RealG/Cap
1970...$1,000.... $5,500
1980...$2,600.... $6,800
1990.. $5,100.... $8,300
2000.. $6,500.... $8,300
2010.. $12,300... $12,300

(Sources: Budgetof the US Government: Historical Tables 3.2 and 7.1, and StatisticalAbstract of the United States)

So ignoring the fact that Republicans are hopeless hypocrites about tax cuts, it is pretty clear that Republicans presidents are also the cause of spending increases! That's mostly, but not exclusively, because of idiotic military spending, but that hardly matters.

The usual story about how Clinton balanced the budget was that he had huge tax increases to cover his big spending growth. Well, thanks for playing, but no.

Constant dollar Gov't spending per person was $8,300 in 1900, and was still $8,300 in 2000 when "conservative" GWB took over.

We have had exactly one president who embodied the "keep spending low, balance the budget" conservative principles of the Tea Party since 1970, and his name was... Clinton.

So, goodONya, sir. Hope to see you sometime.

Mike

What if....

What if they had an election and nobody ran?

Let's hope this movement spreads....

The culture that is Scotland

"I've been a police officer in Greenock for 20 years and so I've seen a lot of wedding parties turn nasty, but this was something else".

And that's putting it mildly. Story is here.

Lounge Chairs = Lebensraum?

This video is tremendous.

I like the tiny German swim briefs. That is what KPC pal Martin wears, though he prefers brighter colors. I still have nightmares about it.

(Nod to Tommy the Brit, who looks pretty good in German swim briefs)

Cut cut cut, cut cut defense

I don't see how anyone could look at this chart and not see an easy $2 trillion in budget cuts over the next 10 years ($200 billion per year for 10 years).

To paraphrase / update some long dead white dude: "$500 billion for defense and $200 billion back in our pockets!!"

PS: OMG, Shrub was such a bad bad bad president. And to follow him, the GOP wanted us to go with this guy:

Facial expressions entirely appropriate for these troubled times

Sausage the riot dog says "F*** tha Po-lice"

Wow, Loukanikos (Sausage) may be the most badass dog ever. He hangs out on the front lines of the Greek protests/riots. Mrs. Angus saw a post about him on the Animal Planet website, and I assumed that the pics were photoshopped. Not so.

Here is a video homage to Luke:

Good boy!!!!

Lavish links

1. The wonder that is Ron Artest (this is a must read).

2. Edwin Edwards wants a reality show.

3. Barry Eichengreen jumps the shark. He wants the "Marshall plan for Greece" to finance (and I quote) "building new solar and wind power-generating facilities, in order to turn Greece into a major energy exporter."

Hat tips to Tyler C, Keith G, and ironically, Barry E's own Twitter feed.

Should we allow insider trading?

"Insider Trading" sounds like something that should obviously be illegal.

The problem is that outlawing IT and enforcing the law rigorously ensures that share prices (or whatever the asset is) do NOT...repeat NOT...reflect all the information available about their future profitability. This argument is quite persuasive to me. Our man Don Boudreaux podcastrates the ideas pretty well.

Besides, the law now is unenforceable.

LeBron is not so sure.

Now, this study. Interesting.

Bubbles and Information: An Experiment

Matthias Sutter, Jürgen Huber & Michael Kirchler
Management Science, forthcoming

Abstract: Asymmetric distribution of information, although omnipresent in real
markets, is rarely considered in experimental economics. We study whether information about imminent future dividends can abate bubbles in experimental asset markets. We find that markets with asymmetrically informed traders have significantly smaller bubbles than markets with symmetrically informed or uninformed traders. Hence, fundamental values are better reflected in market prices — implying higher market efficiency — when some traders know more than others about future dividends. This suggests that bubbles are abated when traders know that a subset of them have an edge (in information) over others.

Sounds to me like an argument for allowing at least limited insider trading. Of course, fraud and deception (rumors and lies) would still be just as illegal, and common, as before.

(Nod to Kevin Lewis, who has been an insider for years)

Debt ceiling blues

Ok people, we are now, what, like 2 weeks away from Armageddon? Pretty impressive.

I thought I'd offer some thoughts.

First off, there shouldn't be a debt ceiling. Looking at US debt experience in WWI and WWII should be enough to convince one of that. Maybe some kind of conditional ceiling, like 70% of GDP with a suspension for declared wars and a provision to get back to 70% within 5 years of the cessation of hostilities.

Second, I am actually with the Republicans here on the no taxes part of the negotiations. Look, we already have substantial tax increases baked into the next few years. Expiration of the Bush tax cuts and a host of new taxes and fees to finance Obamacare. Absent a Republican sweep in 2012, taxes are already going up a lot in the near future. If anything, I would cut taxes now.

Third, I believe that we need to cut spending soon. I am not a fan of Federal spending being at 25% of GDP and rising, but there are better places to start than social security. How about starting with the ridiculous subsidies we give farmers and big business that distort and cause harm around the world. Stop the Ethanol madness, the sugar subsidies, the cotton subsidies, the "green jobs" subsidies. Then turn to the Pentagon. People, defense is a public good. My consumption of it does not reduce the quantity available for your consumption. Thus, there is no reason for defense spending to rise continually with population/GDP. Get the hell out of Iraq and Afghanistan. Get out of Germany and Japan. WWII ended more that 50 years ago. Oh, and get out of Greece too (yes we have soldiers in Greece!). Cut defense spending by 25% at a minimum. Oh and let's eliminate NASA too while we are at it.

Fourth, I really admire Obama's spin job on the negotiations. First he wants a "clean" raising of the debt ceiling, then he demands that taxes have to rise in order to raise the debt ceiling, and he is getting a lot of buying that it's the Republicans who are recklessly killing the debt ceiling increase

This can't be right....

This can't be right, can it?

Of course, if it were right, it might be useful. You wouldn't need to take
specific things along, you could just fabricate what you need when you get there.

The LMM is wondering if it can replicate a husband that picks up wet towels. I said no, it only makes actual copies. So the LMM is now wondering if it can make George Clooney.

The WMOE Talks About Price Controls

The Whitest Man on Earth dishes on price controls, in Forbes.

Pretty cool.

Takeaway

Unemployment benefits expiring? Please.

Wake me up when three things happen:

1. Social security/medicare/entitlement reform. Raise ages, means test, raise maximum payroll before taxes go to zero.

2. Cut DOD and other defense related spending by at least 15%. More is better, but no less.

3. Reform taxes along lines suggested by Bowles-Simpson budget commission proposal.

Everything else is bullshit. And I got to say so on the Takeaway this morn. (7 am is early for a radio show...ugh)

Self Serve Line

Masturbation may be adaptive.

Plus, there's a video of an elephant doing it. Not safe for work, or for avoiding nightmares.

The Tripod: It Lives

Hadn't been to the tripod for quite a while. Top of mountain above Park City, Utah. Pretty darned high, as Jayme is thinking in this photo... Anna the Intrepid snapped these pix, and I am reproducing them here, with all proper respect to her. (Thanks, Anna!) This was taken April 23. But still deep snow on the snowcat trail, where it got packed down all winter. That's the famed David Schmidtz wearing the long pants, with me and the Bishop guarding the rear flank in case of a follow ambush.
Once we got up, the Bishop and I conferred on strategy. (it's 3k meters. "Can you breathe yet?" "Nope, you?" "Nope.")
The obligatory triumph at the tripod shot. That's Anna the photographer (except this shot, obviously) in the pink standing to my left.

Five seconds after this shot was taken, mocking my timid old man descent in three feet of snow, Anna fell flat on her boom-boom. Bicycle shorts and snow...yeehah!

The tripod is one of my very favorite places in the world. For those who got to share it this year...thanks!

Eye Troubles

Damn, damn, thrice damn.

Trouble seeing, left eye hurting. Dr. Gupta says "macular edema," which just means its swollen. Scar tissue on retina, though it's the clear kind of scar tissue not the thick PVR kind, which is some good news.

I get two prescriptions. One is for Nevanac. 3 ml: $350. At 20 drops/ml, that almost $6 per drop. Now, we have excellent insurance, so it much less than that to me. But $6/drop? Wow.

Worrisome. If this doesn't take down the swelling, I go back under the knife for surgery to remove the scar tissue. Firetruck.

Bhide - Phelps on IMF

KPC pal Amar Bhide has a nice piece in Newsweek (with Edmund Phelps) about the IMF. Clear and useful.

Excerpt:

The Greek debacle and the North African drama raise existential questions about the IMF. Responsible governments have no business borrowing vast sums from abroad, rather than from domestic sources. That’s what tinpot regimes do. And lending even more to borrowers who can’t pay what they already owe? That’s what loan sharks and mafiosi do.

The IMF’s business model sabotages properly functioning capitalism, victimizing ordinary people while benefiting the elites. Do we need international agencies to enable irresponsible—verging on immoral—borrowing and lending? Instead of dreaming up too-clever-by-half schemes to stumble through crises after they happen, why not just stop imprudent banks from accommodating foreign borrowing by feckless governments?

Dance band on the Titanic

Oh my. Yet another story about economists behaving badly. This time it's Bruno and the Frey-ettes. Multiple self-plagiarism plus possible more traditional plagiarism or at the least incredibly sloppy literature checking.

Olaf has the full story here.

The cliff notes version is that Frey et. al basically published the same paper 4 times in different journals without any of the 4 referencing or making note of the existence of the others.

Further, there are multiple previous papers that use the same data, similar techniques and draw similar conclusions. None of them are cited in any of the Frey et. al papers.

The econ job rumors site has a huge thread on the Frey affair as well.

Not the Onion

The mind boggles.

The housing crisis/sub-prime debacle was caused by government complicity in enabling fake mortgage originators to write loans and then turn around and sell them immediately to dupes (i.e., da Fanny and da Fred). The Dems voted down an amendment that would have required a 5% down payment to meet the "qualifying restriction." So, yes, the Chris Dodd quote, "this is biased! it would restrict home ownership only to those who can afford it!" is fake (this is the satirical source of that fake quote). But the Dems acted as if that was exactly what they believed, and voted down even a 5% down payment as being racist and biased. Seriously, they did that. Really.

Okay, but surely we learned something, right?

No, to the contrary. The Justice Department is trying to hunt down banks that resist making loans to people who have zero chance of paying them back. It doesn't seem possible, but it's true.

So now we know why the Dems voted down the Corker Amendment. They actually want to force banks to make zero down payment loans to people whose only income is public assistance. We are NOT DOING ANY FAVORS to poor people if we saddle them with loans they cannot pay back. Holder and his thugs at Justice are taking another step and blaming the banks for enforcing any down payment rule (the norm used to be 20%! But now 5% is too high! Yikes! YIKES!)

The Obama administration seems genuinely surprised at employment declines and the lack of growth. If you constantly abuse financial instituions, they are not going to loan that money. And if you try to force them to loan it, the money will disappear. The Roosevelt administration tried several of the same tactics in 1935-6, and the result was a second dip, with employment crashing.

As we say a lot here at KPC: Business needs certainty. But politicians like uncertainty, and fear, creating dependency. Okay, but if you make that play, Mr. Obama, Mr. Dodd, and Mr. Holder, you can't seriously expect to see economic growth. If you pursue Peronista policies, you will get Peronista results. Go ahead and cry for us. The U.S. is becoming Argentina.

I wish this were the Onion, but it's real.

(Nod to the Blonde)