Mt. Hood Almost Claims Another Casualty

Check out this video of a skier doing a basejump on Oregon's Mount Hood. Pretty Ballsy. Go to 1:30 or 2:30 into the video for the best clips.

Aiming for His (and Her) Foot

I must admit, I will be delighted if the recent rhetoric on NAFTA comes back to bite some politicians in the ass.

Don't hate the CEO, hate the game

Megan McArdle says,

Some CEOs really are nearly that brilliant; it's not an exaggeration to say that without Steve Jobs, Apple would currently be a not-very-profitable division of Xerox. Some are really dreadful, driving their companies into the ground while collecting a ton of money from the shareholders.

In other words, adverse selection means many a CEO is grossly underpaid.

Doing my part to cheer MCC up regarding graduation

This from Hal Varian via Freakonomics via Econlog:

If you are looking for a career where your services will be in high demand, you should find something where you provide a scarce, complementary service to something that is getting ubiquitous and cheap. So what’s getting ubiquitous and cheap? Data. And what is complementary to data? Analysis. So my recommendation is to take lots of courses about how to manipulate and analyze data: databases, machine learning, econometrics, statistics, visualization, and so on.

Varian wrote my undergraduate intermediate microtheory text. I still use it regularly and maintain that he has one of the most badass names ever.

On Gangs, Drugs, Crime and Poverty

Here is an incredibly interesting article from the Times on the experience of a former foster child and gang member who escaped her situation to eventually graduate college and become an author, a homeowner and a mother. And all the while staying intimately connected with her former life and helping others in similar unfortunate circumstances. The article alone, with no additional commentary, is well worth a read.

Explaining to her daughter why her “uncle”, a gang leader in the Bloods, was in prison, the woman said the following:

“I told her, don’t worry about it, he didn’t do anything bad. He just got caught up selling drugs.”

On the surface this seems like an alarmingly blase description of drug dealing. But is it? Americans have an unusual propensity to label any sort of drug related activity as reprehensible. The consequences of this anti-drug obsession has been pretty unambiguously negative in terms of fostering a subculture of drug sellers and users; thereby creating a breeding ground for crime, poverty, addiction and so on.

I am by no means the first to make the argument, but I support near universal drug legalization. I cannot think of a single public policy effort that would be as effective at delivering such a sweeping blow to crime, poverty and every other related plight disproportionately effecting minorities and inner-city poor.

First of all, in terms of adverse effects and cost, are prescription painkillers and other legalized, but regulated drugs really all that distinguishable from illicit drugs? It is not remotely inconceivable that the private market with some government control could more safely and effectively manage drug trade.

Secondly, there is no reason to think that by legalizing drugs you are endorsing more heavy drug use. It is not at all clear to me that more people will use drugs once they are legalized. The cost of illicit drugs now is primarily the risk of incarceration and violence. It is possible to eliminate those negative costs which have serious externalities and feedback effects and replace them with a tax that will price drugs at a level where demand is relatively the same or lower than under current conditions. Revenue and money saved in the justice system can then be invested toward addressing the issues of addiction, health, poverty, etc. In other words, we could spend money helping people with drug problems rather than throwing them in prison or condemning them to a life of crime and degeneracy.

I’ve never really explicitly make this argument before. What am I missing?

Update: Check out this video by Jeff Miron (HT: Mankiw)

This isn't kindergarten... does anyone actually care?

I am seriously considering not taking part in this ridiculous exercise. It's a song and dance and I think people are beginning to take it a little too seriously. Please.

Dear Graduating MPM and MPP Students:

Please read this entire email. It contains very important graduation information.

Please note that all graduates participating in the May 2008 Tropaia Ceremony and/or Graduate School Commencement Ceremony are required to wear academic costume, including appropriate caps, gowns, and hoods.

Candidates who have not already obtained caps, gowns, and hoods MUST purchase their academic regalia in the Georgetown University Bookstore during Commencement Week, May 12-16, 2008. The prices for basic regalia for the complete Master's outfit have not been given to us by the Graduate School. As soon as they do, we will pass this information along.

Special order fine-quality academic regalia may be purchased through Jostens (http://www.jostens.com) by calling (800) 854-7464. Please note that these types of academic regalia orders typically take 8-10 weeks to order, so you must order soon!

Caps, gowns, and hoods are boxed well in advance of Commencement. It is recommended, therefore, that the academic costume be obtained as early as possible and hung on a hanger, so that any wrinkles may hang out.

We are currently in the process of putting the Graduation Announcements in your mailboxes. If you have not received your announcements yet, please be patient with us. We are working on getting more announcements from the graduate school and we will put them in your boxes as soon as we can.

Consolation Prize

Most commentators called last night’s Ohio debate in favor of Clinton or, at best, ruled it a draw. Perhaps I had tuned into the wrong channel?!? Having watched it in its entirety, I can’t conceive of anyone handing the blue ribbon to Hillary. And she certainly wouldn’t win “most congenial”. Not “most improved” either (as coveted as the title may be)—she was perhaps at her worst of the recent debates I’ve seen. The only way I can reconcile the post-debate analyses is that everyone was feeling sorry after MSNBC aired several clips on the campaign trail after Texas where she shrilled some incoherent blather about Obama using unfair tactics. I was embarrassed for her. There is only one way to describe her in these clips, but I will refrain from gender based name-calling. (Wait. No I won’t. She sounded like a HUGE bitch and that’s the most PC description I can muster.)

On top of this she began her opening statement by accusing the moderators of always asking her the first question. Honey, the victim card has not played well in the past. Suck it up, sport. Presidents don’t get to whine about tough questions. Refuse to answer them, maybe. Bitch and moan, nope.

From there the debate quickly eroded into what minutia of my health care plan which will never get implemented in its original form is different than my opponents. Granted I think mandates illuminate a critical difference between the candidates’ philosophies, democrats ultimately aren’t buying what they see in the showroom.

Then it was on to NAFTA bashing and who hates free trade more. It went something like this (my translation):

BO: NAFTA came from your co-Clinton administration and you said during your NY senate campaign you DID appreciate the benefits of trade. What gives?

HC: No, I have always been ignorant to economic policy. I am willing to pander to any crowd, but I have been a consistent xenophobe and protectionist.

BO: Well, I have a clear record of hating developing countries, punishing consumers and propping up uncompetitive industries while I was not actually in a decision-making capacity. So, there should be no dispute that I am the more economically ignorant, anti-growth candidate.

I find this recent emphasis on trade fascinating. There is no possible way the candidates are actually getting these talking points from their economic or policy advisors. This is either pure idiocy or blatant pandering. Do they have that little respect for the electorate? Are you telling me that you can’t sell a free-trade message that includes transition assistance to ease adjustment from competition? Democrats should love that; it includes more bureacracy and government dependency.

I leave you with Free Exchange's lucid post on this tidbit of utter campaign ridiculousness:

An honest discussion of trade should discuss trade-offs, but that did not happen last night. Ohio job loss is a serious matter to many households, but it begins to look much more manageable when set against the global gains from trade. Journalists and economists should force the candidates to be explicit about the costs of their trade proposals. If Mr Obama and Ms Clinton wish to roll back trade, or take a "time out," they should have to acknowledge the higher consumer prices, slower growth in American export economies, and continued poverty in developing nations that would result.

Yeah, but he probably gets beat up on the playground!

In case you aren't already feeling like your thesis is turning into a totally worthless piece of *#$% parading as legitimate statistical research...here is an eighth grade science project.

I guarantee I didn't know what an R-squared was when I was 13. I wonder how many GPPI grads still don't.

Of course, this is should not necessarily be interpreted...

...to mean the other candidates are a better alternative. But the evidence is starting to pile up.

"Barack Obama, the likely Democratic presidential candidate, has proposed tax breaks for US corporations that invest at home rather than abroad. This column argues that his proposal is protectionist, reactionary, and economically unsound."

Notice to fellow graduate students:

I have created a RED reference binder for all fellow graduate students. Inside this binder you will find "solutions" to everyday problems. If you are having problems with the photocopier, difficulty dealing with professors, having computer problems, undergraduate students, personal problems, or any kind of problem, please come and get the red binder and it will help you through your issue.

The photos will help direct you to the location of the binder.

Wait! Statisticians AND Statistics Lie

William Briggs

Generating these spurious models is effortless. I didn’t go through 100s of simulations to find one that looked especially misleading. I did just one simulation. Using this stepwise procedure practically guarantees that you will find a “statistically significant” yet spurious model.

Megan McArdle

This sort of thing is why we're barraged with studies showing that almost everything will kill you--no, wait! they'll make you live forever!

Living with the Mek

I'm a big fan of the Travel Channel. My new favorite is "Living with the Mek." Essentially two pretty regular white dudes live for three months with a completely isolated, undisturbed tribe somewhere in Papau. The show is shocking, interesting, and really well produced.

Anyway, the show is great. I recommend it...and not just for the tribal nudity. Not surprisingly, penis jokes are the one thing that's guaranteed to translate to any culture.

Two Freakin' Minutes

I stopped by the store to get a couple pencils today. A pack of five run-of-the-mill mechanical pencils ran me $2.49 before tax—about $0.50 a piece. Let’s assume, conservatively, my time is worth $15/hour (I hope I’m worth slightly more than that by now). That means it takes me two minutes to “manufacture” a pencil for myself under the current arrangement.

Two freakin’ minutes!

How long do you think it would take if I tried to actually manufacture a pencil entirely (*ENTIRELY*) on my own? Five years? A decade? Likely much longer given I have no experience mining graphite or polymerizing plastic. (Realistically, I would probably give up after a week or two and resort to finger painting.) Of course, there would be an upside: guaranteed employment. With the potential for indefinite job security at my finger tips it might surprise you to discover that I am perfectly willing to outsource this task to Bic in order to use my time more productively.

Hmmm. It seems everyone else I know has made the same decision. Why then, are so many people distraught over losing manufacturing jobs to China and India? Maybe they just haven’t realized how badly Bic and Sharpie are exploiting them!!!

Best Statement Today

Some people like to think of health care and education as basic human rights. Maybe they are. But they are also normal goods. That is, the income elasticity of demand is positive. It is hard to escape the conclusion that the right cost-benefit calculation for providing the good depends on the income of the consumer. Achieving both efficiency and equality in the provision of these goods is impossible.

In the context of stories circulating about UK patients being denied medical treatment they are willing to pay for out-of-pocket. And the question, "would you deny a parent the right to hirer an after-school tutor?"

Assuming cases like this won't arise under nationalized healthcare is extreme wishful thinking. They will.

If you REALLY want nationalized healthcare, I suggest you take Michael Moore's advice and move to Cuba. It might be much easier to make the trip soon.

Have Your Cake and Eat it Too

The Laissez Faire Welfare State

My Neurons are Frozen

I'm attempting to study from home today. Unfortunately, it is so f-ing cold I can't concentrate.

Of course, it might get warmer if my roommates and I fixed the broken window in our dining room. Sadly, recognition of the broken window fallacy prevents us from doing anything. We know that's not the road to prosperity. We are three smart fellas!

Random Thought Experiment

Suppose there are two people in your community who are not covered by health insurance. They are the two poorest households in your community and they are living under identical conditions—same age, same income, same consumption bundles. As a benevolent community leader you decide that they lack the financial means to purchase health insurance. So, you go to the community coffers and write each of them a check for $10,000.

The first individual immediately uses the $10,000 to purchase a standard health insurance package. The second individual chooses to remain uninsured and instead spends the money on XYZ.

Have you solved the identified health insurance problem in the community?

Was the second $10,000 a poor use of public resources?

An Atypical Ethical Dilemma

Many people risk getting in a serious accident if they get behind the wheel of a car that has more power than they can control. Take on more responsibility than you can handle and all your obligations suffer. Overindulgence in food, exercise, shopping, etcetera can have severe consequences. It’s easy to lose perspective or neglect other priorities after becoming passionate or infatuated with something.

There are myriad examples of too much of a good thing. (No, I’m not thinking that I waste too much time blogging. That has already been confirmed.) My question is: to what degree is gluttony a problem in education? Or, more specifically, with the acquisition of specialized knowledge?

It seems to me that overconsumption of knowledge can have at least four counterproductive—even dangerous—consequences. All related.

1. Specialized knowledge is a complementary good. The more you know about a particular discipline, the more it is helpful to have a broader understanding of interrelated disciplines. Intuition tells us to trust experts, but often expert analysis alone loses the context.
2. Specialization, passion and commitment to a subject-area are endogenously related and existence of one tends to exponentiate the effect of the others. This can lead to a bias toward results over truth.
3. Relative expertise can be wielded like a weapon with the result—intended or not—of intimidating, terrorizing and coercing non-experts. This is especially dangerous when it is unintentional and well-meaning or if an individual is unaware of her authority or influence.
4. Relative expertise and authority can be like an addictive drug, leading to self-delusion and self-destructive behavior.

I’m quite aware these points seem extreme. I’m thinking of them in the most subtle form. They seem most obvious when an individual first starts a profession or begins to focus her efforts. But they are encountered daily in the media, among peers, from leadership, teachers….

Of course, alternatively, knowledge is just unambiguously good.

Cost of Being Uninsured

A friend emails me this article on health insurance and diagnosis of cancer. From the article:

A nationwide study has found that the uninsured and those covered by Medicaid are more likely than those with private insurance to receive a diagnosis of cancer in late stages, often diminishing their chances of survival.

The study’s authors concluded that “individuals without private insurance are not receiving optimum care in terms of cancer screening or timely diagnosis and follow-up with health care providers.”

My thoughts are, "no shit, people!" Individuals without renter's insurance likely suffer more in the event of a break-in, fire, flood, etc. Does this imply that it is ALWAYS rational to get renter's insurance or that government should provide renter's insurance or subsidize its purchase or, in the extreme, that we should mandate that EVERYONE purchase insurance on their rental.

Certainly, this is a valuable study in that it helps to identify and quantify the cost of being uninsured. It is not, however, particularly illuminating in the discussion of what government's role should be in the provision of health insurance.

Obama Blasphemy

David Brooks, who usually is quite annoying, actually displayed a little wit today in diagnosing "Obama Comedown Syndrome" in the NYTimes. If looking for a chuckle, I suggest having a read.

Race to the Bottom: Trade Edition

Via Greg Mankiw, Clinton and Obama think NAFTA is sending jobs south and tanking our economy. They appear to be competing for the position of candidate who hates trade most.

There are two possible explanations for this rhetoric:

1. These two democrats actually believe this.
2. They know this to be false and are intentionally pandering to voters' economic illiteracy and xenophobia.

So, either the two candidates are intellectually or morally bankrupt. I'm not sure which story I prefer to believe.

Best Proposal Ever

You may have seen this before, but even if you have, the prank is worth another watch.

Tragedy in Illinois

A student just shot 4 classmates and then himself at Northern Illinois University. This is obviously a terrible tragedy and shouldn't be considered as a political expedient, but I am hopeful that this and other events like it (such as the unspeakable day at Va. Tech. only months ago) will begin a dialogue within the national leadership about guns.

The violence was, after all, the fourth shooting at a U.S. school in the last week.

From NYTimes:

On Feb. 8, a woman shot two fellow students to death before committing suicide at Louisiana Technical College in Baton Rouge. In Memphis, Tenn., a 17-year-old is accused of shooting and critically wounding a fellow student Monday during a high school gym class, and the 15-year-old victim of a shooting at an Oxnard, Calif., junior high school has been declared brain dead.

Do people know of good resources where I can learn about the pro-gun lobby? What are the contemporary rational arguments-- aside from the 2nd Amendment-- that people make for allowing private gun ownership as it is in the US today?

As for the Constitutional argument: I think it's time we get serious about an amendment. Four school shootings in the last week!

I don't care who you are. That's funny.

Skepticism aside, you have to admit this is funny:

The recent cold wave sweeping across Mumbai and other parts of India could be attributed to global warming, experts said Tuesday here at an environmental conference.

Kruti Parekh, India's first test tube baby and youngest magician presented a magic show to spread awareness about global warming.

Hello. Hello? Is this thing on?!?

Don't like the Patriot Act? How about the Patriot Tax!?!?

Granted I am not a historian of absurd legislation, but this has to make the top ten list of ridiculous proposed laws. And it comes from the same lawmakers who cried foul for being labeled unpatriotic. Awesome!

My view that Obama couldn't do much damage is fast eroding. His recent comments on NAFTA are, well, just sad. My opinion of which political party demonstrates the most pathetically conservative (in a classical sense) ideals is also waffling.

(HT: Coyote Blog who, by the way, has some excellent YouTube videos on the science of climate change--if you're into hashing it out, that is. He is also great on the virtues of tax versus cap and trade.)

JDB Donates a Great Idea

Former guest contributor and lifelong Coarse Evaluations fan JDB makes a great observation regarding charity fundraising.

After class this morning, I walked to the book store to pick up a couple of case studies. On my way there, I noticed five fraternity members collecting donations for a South American charity. They had big empty water jugs for people to slip their spare coins and cash into. I wondered if their time could be better spent.

How much do you think they collect per hour? In other words, what are they getting paid per hour? I started to think that, if their ultimate goal is to raise the maximum amount possible for the charities, there has to be better alternatives. For example, I suggest they donate a couple of work hours to the cause. Instead of standing in the cold for 3 hours, they could ask their boss to pay the charity for three hours of their work. This would be a tax benefit for the employer (less payroll, less corporate tax) and the charity would be getting more money since the money is coming from the individual before it is taxed for FICA etc. Would five fraternity members earn more money for the charity by working their jobs for 3 hours or standing on the sidewalk?

I honestly don’t know what the numbers would say. I hypothesize that working their jobs (donating the money that would have been earned for those hours) would make more money for charity. If my hypothesis is correct, knowing that we live in a rational world, why are fraternity members still standing on sidewalks instead of going to their jobs?

Some initial ideas—

1. They get a good feeling from raising money for a charity in a very visible way, in the public eye. Do I even need to state that this is definitely worth something?
   
2. They know the payoff by going to work. They don’t know the payoff of standing on the sidewalk, although. There is chance that they could strike it big with a large donation. Since they do not assume any personal risk of loss for standing on the sidewalk, it is easy to take that risk.
   
3. Fraternity members hate their jobs and would rather collect donations.
   
4. Maximizing donations for the charity does not carry enough weight to trump other goals of the charity drive, ie—promoting the fraternity, building the brotherhood bonds, etc.

Does JD’s analysis get it right? For individuals, I think the warm glow of (1) is especially strong. I also suspect that (3) is an important motivator—hanging out, bullshatting with your buddies is a lot more fun than yard work. For organizations, I think it would be easy to underestimate the value of (4)--especially for nonprofits the publicity and potential to attract long-term donors likely provides the greater return.

I would also add that many charity solicitation efforts demonstrate an utter lack of creativity. Standing around outside the mall is just lazy. Perhaps this illuminates (2). Often the goal is not necessarily to maximize donations; it is to just do *something.*

Personally, I believe donations are optimally solicited in exchange for some small service. Carwashes, raking leaves and other activities are likely the most efficient and welfare maximizing means of fundraising. This general idea also inspires my response to the homeless and to street performers. I have some opinions about Girl Scout Cookies too. Come to think of it, those Thin Mints should be here any day.

Thanks JD!

A Simple Sorry

I couldn't let a such momentus event in Australasia go down without a quick word. The Prime Minister of Australia Kevin Rudd today apologized on behalf of the Government for the way that generations of aborigines have been treated in the golden land. In his words:

"We apologize for the laws and policies of successive parliaments and governments that have inflicted profound grief, suffering and loss on these our fellow Australians... For the pain, suffering and hurt of these Stolen Generations, their descendants and for their families left behind, we say sorry... And for the indignity and degradation thus inflicted on a proud people and a proud culture, we say sorry."

I like this guy. First he ratifies Kyoto, then he reaches out in an effort to improve race relations (which appear to need some work in Aussie). The Sydney Morning Herald has some good coverage of the apology here

Quant 3 applied to real life?!?!?

Reading this paper from AER is interesting for 2 reasons:

1. It is basically our entire Quant 3 course condensed into one paper; and
2. It is about a very real child welfare issue (that my division does a lot of work with)

It is the 2nd of these I want to spend a few minutes on. The issue, greatly simplified is this:

Research indicates that borderline children put in out-of-home placements(ie foster care), on average, have worse long term outcomes than those who remain in home environments that are abusive or otherwise unhealthy. This paper concludes:

(There are) better outcomes when children on the margin (of getting an out-of-home placement) remain at home

So as a policymaker, what do you do with this? I think you continue to put kids in out-of-home placements, but I'm not at all sure. The reason for my opinion is because it seems to me that policy is faced with 2 propositions:

• Remove the kid from home and there is a 99% chance he/she lives to see adulthood, but a 50% chance they'll be involved with the criminal justice system/homeless/subtance abusers
• Keep the kid in their home and there's a 30% chance of bad outcomes, but only an 85% they survive childhood.

Now obviously my numbers are total crap, but you get the point. To me this gets to the ultimate question of: what is the government's primary responsibility to at risk children? Is it to ensure they live to see adulthood, or is it to maximize their chances to have a productive adulthood?

In this case, at least, those policy outcomes may be mutually exclusive.

Bad News for Benji

Here is an interesting thought:

Which do you think takes a bigger toll on the environment, owning a dog, or owning an SUV? My bet would be on the dog. I'm thinking of all of the resources that go into dog food.

I personally have nothing against dogs. But it does seem to me that environmentalism inevitably points toward a policy of extermination of pet dogs. Unless environmentalism is simply hatred of industry.

Blissfully Conservative

Washington Post asks, “Why are Republicans so darn happy?”

A 2006 Pew Research poll found that 45 percent of Republicans describe themselves as "very happy," compared with only 30 percent of Democrats (and 29 percent of independents). This is a sizable gap and a remarkably consistent one, too. Republicans have been happier than Democrats every year since the General Social Survey, conducted biannually by the National Opinion Research Center at the University of Chicago, began asking about happiness in 1972.

What to make of this finding? Is there something about being a card-carrying member of the GOP that induces a warm, fuzzy feeling, a sort of political Prozac? Or does the river of causality flow in the other direction: Are happy people more likely to become Republicans than Democrats? Or maybe neither explanation holds water and it only appears as if Republicans are happier than Democrats.

You can practically hear the researchers at Pew scratching their liberal heads. They put the findings through a rigorous process called multiple-regression analysis in an attempt to isolate the relevant variables. But try as they might, they could not wash that Republican happiness out of their hair.

You may recall our earlier bloviating on this topic here and here.

(HT: Greg Mankiw)

Vote for a Loser

David Brooks compares the voting booth to the produce aisle:

Educated people get all emotional when they shop and vote. They want an uplifting experience so they can persuade themselves that they’re not engaging in a grubby self-interested transaction. They fall for all that zero-carbon footprint, locally grown, community-enhancing Third Place hype. They want cultural signifiers that enrich their lives with meaning.

I would emphasize that there is a great deal of social capital at stake when chosing what to purchase and who to vote for. With voting, the cost of casting your particular vote for the candidate whose policies don't support your interests is infinitesimal. Meanwhile, individuals have a lot to gain from voting with their own social herd. Taking it a step further, I would suggest that the most rational vote is for a candidate who you know will lose. Then you have all the benefits of signaling intellectual and valient political preferences and you incur none of the costs of associating yourself with any specific administration or policy outcomes.

Market Failure in Healthcare

A friend emails me this article from the New England Journal of Medicine on market failure in healthcare. I offered this brief response:

I think this is wrong on many levels. His diagnosis is market failure and he seeks to cure it with....introducing more market failure. He is correct that corporations have undue influence in commercialized medicine...which is a direct result of too much government intervention, not too little. The incentives of government means that politically controlled institutions will inevitably be captured by special and business interests. This is true for ALL major government programs and it's particularly bad in healthcare, pharma, etc. The problem he is identifying is not one of market failure...it's government induced market failure. MORE transparancy and competition would offer considerable, albeit imperfect, progress.

Update: Here is an interesting article. But, of course, how dare we allow a company like Walmart deliver healthcare! They don't have the best interest of consumers in mind; they're only after profits! The fact that they will provide low-cost, competitive services...well, that's just a coincidence. People lining up in droves to get medical services?? I'm sure those people don't know what's best for themselves.

Sigh!

You can almost hear Arnold Kling's sigh of exasperation in his latest article:

None of the leading contenders for President in 2008 has the humility factor going for them. You just have to close your eyes and hope that whoever we elect does only minimal damage.

The Myth of Social Responsibility

So. This debate got me thinking about incentives and unintended consequences and social responsibility. Bear with me while I pooh pooh Ben and Jerry’s for a minute. All of the following quotes are taken directly from Ben and Jerry’s webpage, titled “Leading with Progressive Values across Our Business.”

Ben and Jerry’s “strives to create economic opportunities for those who have been denied them.” Their strategy for accomplishing this is primarily through higher wages and benefits for their employees. But higher paying jobs compete with other higher paying jobs. If I am paying someone $20/hour, they wouldn’t otherwise be working for $10/hour; they would be working in a comparable $20/hour job. I’m not claiming that job creation isn’t good or that higher paying jobs aren’t better. One more job is one more job. But it is a complete fallacy to assume high paying jobs employ low-skilled workers. They do not.

Ben and Jerry’s “strives to minimize our negative impact on the environment.” I have no doubt that many of the company's environmentally conscious practices lead to some positive results. But as noted elsewhere, they only buy milk from cows not supplemented with artificial growth hormone. BGH increases milk production by 10%. That means that it takes 10% more cows to produce Ben and Jerry’s products and 10% more arable land to feed those cows. Changing their policy on BGH alone would likely reduce the company’s environmental impact more than all other efforts combined. This, of course, would be difficult to print on their labels and to advertise to their consumers. Striving to minimize environmental impact? Not quite.

All of Ben and Jerry’s progressive practices do accomplish one thing. They cause prices to go up. Evidently, the company’s “new model for economic justice” doesn’t include making products as affordable as possible. The same people who Ben and Jerry’s think have been left behind by the “gap” created by “capitalism and the wealth it provides” are sadly left behind to eat generic ice cream. Economic justice, indeed.

Ben and Jerry’s sell a product. Just like any other profit seeking capitalist. Their product just happens to be a bundle of ice cream AND a warm fuzzy feeling. Good for Ben and Jerry’s. They have found a market and they are successfully serving a demand. I support that. All the better if they and their consumer can engage in a transaction while under the complete delusion that they are somehow being socially responsible. I encourage anyone to patronize Ben and Jerry’s. They make some delicious freakin’ ice cream. But don’t be fooled by smoke and mirrors. Give other businesses that safely and efficiently produce high quality, low cost products without all the frills their due credit—that’s real social responsibility.


Addendum: William Easterly in the WSJ today says, “History has shown that profit-motivated capitalism is still the best hope for the poor.”

Sad....tear, tear

So it looks like neither race will be ending anytime soon. All the candidates, with the possible exception of Mitt Romney, leave Super Tuesday with something to hang their hat on and keep their campaign on life support into the near future. This is sad. Huckabee should stop embarrassing himself, Romney should stop spending his kids inheritance (or rather, future government revenue...thanks estate tax!), Democrats should make up their damn minds and get behind a candidate before they bruise each other badly enough to kill the momentum they could have going into the fall, and the sooner both parties pick a candidate the more likely we are to get a brief reprieve before having to listen to the eventual nominees in the general election. If Hillary is going to be my President, I'm going to need a little "me time" before she takes office. McCain, too.



There is much talk on the internet about Obama's YouTube music video. Have you seen this? (If not, I'm too lazy to find the link right now...you'll find it.) For all its hype, the video is really not that good, and kind of unsettling. The deification of leaders creeps me out. I don't think that's what America is about. Also, Scarlett Johansson, you poor thing...please stay out of politics.

Fair Logic, Bad Policy

From Larry Summers and Brad DeLong. As much as I respect these guys, the "let's just do something" theory of economic governance just doesn't resonate with me.

Reply: (Domestic) Trade Protectionism

In the overwhelming majority of all cases I would agree with MCC on the grounds that it makes no sense to restrict consumer choice. I prefer cheap products, but if others want to pay a premium for peace of mind…then be my guest.

But I think we *may* have an exception here. BGH is a naturally occurring hormone; however, many farmers give cows FDA-approved BGH supplements to increase milk production. So it is IMPOSSIBLE to drink milk without BGH. Labeling a milk product as “hormone-free” is udderly false. It’s comparable to baseball players claiming to be “testosterone free”. It is just false. Moreover, because BGH is naturally occurring it fosters unjustified consumer fear for a product for which there is no evidence of harm.

There are already labeling options like “natural”, “organic”, etc. to distinguish the farming practices used in raising milk products. These are not well-defined and there is a great deal of consumer misconception about what exactly the labels mean—both in terms of health benefits and production practices. (That is to say, there is significant room for improvement.)

Keep in mind incentives always run both ways. Ben & Jerry’s wants to label their products as “hormone-free” to capitalize on consumer fear without going the extra step to purchase the more expensive “natural” or “organic” milk products which are more clearly defined and actually provide the substantive difference that *some* consumers demand.

The NYTimes has an excellent Op-Ed on “Food Politics” today that calls for a little moderation in the whole debate.

(Domestic) Trade Protectionism

DEB recently introduced me to Dean Baker's Beat the Press. I'm not sold on the blog yet, but there is a post today about Monsanto and food labeling that I found interesting. I come down on the side of Ben & Jerry's here. Here is a link to the original AP article.




Unrelated and obnoxious language pet peeve: I don't like it when people use the word 'if' when they should say 'whether.' The AP reporter got it wrong in my humble and potentially erroneous opinion: "there is no test to determine if the hormone was used."

2 Girls, 1 Cup & a Scream of Agony

I haven't watched the video (truthfully, I hope never watch it), but I know BCJ has talked about it (kind of a lot recently). Slate has a new article about the Youtube-posted reactions to the original-- it's really funny to watch some of the reactions. And sickening to even read about the real thing.

Microsoft Wants to Yahoo!

Microsoft would not be bidding for Yahoo! unless they thought they could do something profitable with it. Which means compete with Google. Which means offer products or services better than Google. What that might be is beyond my imagination. Much of innovation is inconceivable, but that doesn't make it any less inevitable. Evidently, Google agrees.

Update: Alex Tabbarok makes a similar observation.

Update: Clinton offers her own directions.

Daily Ramble

I really should stick to things I know something about, but then I would never have anything to say...

A great post titled Climate Change, Cumulative Evidence, and Ideology via Marginal Revolution.

My take-aways:

1. Climate change aside, water is likely to be the most important and controversial environmental issue in the future.
2. Some action on the environment makes sense regardless of the existence of anthropogenic climate change. This is where I think the debate should be held.
3. There are some crazy-ass people on both sides of this issue, but Jonathan Adler is not one of them.

For me, the most interesting thing about this and other issues is that we really are witnessing some pretty historical events. People hold some very strong opinions about global warming and not everyone can be right. People hold some very strong opinions about what will come out of this war in Iraq. Some of those people are certainly wrong. And the policies we chose will have major consequences. I don't know who will enjoy the greatest amount of vindication at the end of the day, but someone will. I plan to be alive in 50 years (global warming and terrorism be damned) and it will be fascinating to look back and say "yeah, those people were right" or "wow, that's not even an issue anymore". Only time will tell and it's pretty cool to have a seat in the bleachers.

Honest Altruism

A post at Free Exchange tackles an interesting question on the ethics of capitalism, redistribution, and poverty. Referring to Gates and Buffet, FE says:

Men this fabulously wealthy have little to fear but the resentment of a public that comes to see such vast holdings as dangerous and illegitimate. And they have little left to gain but even more exalted status. The impulse to quell natural egalitarian suspicions and lock down the people's high esteem through impressive displays of altruistic care and self-sacrificing magnanimity must be irresistible to the rich and famous. And given our primate psychology, it is hard to help finding this admirable.

But if our chief concern is human welfare, and especially that of the poor, we should be willing to ask whether we should find this kind of thing so admirable. Our instincts may not always be reliable. Does the altruistic-egalitarian signaling game actually improve welfare or not? If the cultural side-effect of such displays by prominent men is to reinforce that the only legitimate wealth is shared (or partly wasted) wealth, will the supply of motivation to create, to innovate, be diminished? I don't know the answer, but it is a hard question decent people must take seriously.

FE goes on to praise Gates, saying his creative capitalism “can do a great service by helping us better understand the already creative and humanitarian thrust of capitalism, to encourage a culture of energetic entrepreneurship, and to emphasise the importance of establishing in poor countries the well-ordered institutions of capitalism known to produce health and wealth.”

Warren Buffet doesn’t get off so easy though.

In contrast, the Warren Buffet approach, which encourages the false belief that the redistributive functions of the state are the key to well-being, is almost certain to do little good.

It is always refreshing to hear people who are compassionate AND sensible. Thanks FE!

Maybe it just used to be a duck...

So when I first read the DeLong quote a few months ago, it troubled me. As KLR points out, the man is one of THE Democrat economists and has no apparent reason to be less than honest in his assessment of Hillary (well, that's not totally true. If he is one of THE Democrat economists and supports Obama, he has a big reason to be unkind to Hillary, but that didn't occur to me at the time). Anyways, I pondered what he wrote for a little while, but in the end (and this is where I get crazy) I took it as a good thing. Why, you ask? Well, I'll tell you.

Prior to the 1992 election, the Clinton's had been big fish in a small Arkansan pond. They had absolutely no experience in DC politics and (to put it nicely) it showed. Clinton immediately bit off more than he could chew and (like Jimmy Carter before him) assumed that Congress would somehow be shamed into going along with him on BIG TICKET items, because he thought it was the right thing to do. With her role in the health care debacle, Hillary was right along with him.

But here's the thing, you read about Bill Clinton and they always say that his first 2 years in office taught him some incredibly valuable lessons about working in Washington. He was embarassed by the '94 election. After that, he changed tactics and went on to have a (I think) very successful presidency. In short, the Clinton moral (or at least THIS Clinton moral) is: young hotshot got humbled, took his shots, learned to play with the big boys and ended up succeeding.

So why can't that be the moral for Hillary too? 1994 was 14 years ago. For more than half of the time since then she has been a Senator for a very important state. One of the things that made the DeLong quote first stick out is (as far as the policy savvy part goes) it simply doesn't jive with what we've heard about her in the last 8 years. I agree that the quote is very much food for thought. I guess I just think that the health care debacle may be important for the way it helped shape her, rather than how it defines her.

Still, I do think the story is important for pointing out that people with 2-4 years of DC experience who seem to think that force of will is enough to bring Washington to its knees should be treated with skepticism. Don't you think so, Senator Obama?

If it looks like a duck and quacks like a duck...

I realize many people who frequent this blog will read this directly from the source, but I just wanted to highlight this. I suggest reading the link to Brad DeLong’s 2003 quote. You could argue that BL has some sort of vindictive motivation, but he is generally a faithful Democratic economist and not really known for his spite. I see no reason to doubt his observations. I like to think you shouldn’t judge a book by its cover, but in this case it seems Hillary Clinton’s cold, calculating demeanor might be rather illuminating.

Unga-Bunga

Suppose you are travelling through the jungle and you come across a fork in the trail where two tribes have their village. You need help with directions to a location that is deep in the jungle and incredibly difficult to find...and you need to get there fast. Each tribe claims to know the way and wishes to provide you with a guide. Unfortunately, the two tribes disagree on the route you should take.

The first tribe is known to be incredibly altruistic. Members are always honest and have nothing but the interest of others in mind. As a result, their society is the picture of equality. Everyone does their best and enjoys equal footing in the tribe. After escorting you the guide from this tribe will happily return to his previous comfort and security.

The second tribe is notoriously selfish. Society is incredibly meritocratic—every member is entirely self-interested and strives to achieve the highest rank within the tribe. The guide escorting you from this tribe will be well rewarded if he is successful—he will gain immense status in tribe, a larger hut, more plentiful food, and many beautiful wives. However, if he is unsuccessful his standing in the tribe will fall considerably. If he fails badly enough, he will be entirely banished from the village. This tradition is strictly enforced.

Which guide do you chose?


Now suppose on returning from your journey you are bitten by a deadly jungle snake. Each tribe claims to have the only (but different) anti-venom to help you survive?

Do you trust the first tribe or the second tribe? Oh, and suppose you’ve discovered that the tribes are equally self-serving, they have just set up entirely different institutions.

(Inspired by this article.)

Do Not Pass Go, Do Not Smoke, Do Not Collect $200

So I was driving a lovely young lady to the airport this morning and I was listening to the radio on the way back. First, I don’t know how low your IQ has to be to qualify you to be a radio disc jockey, but these folks were certainly no Marilyn Vos Savant. To give a brief example, they were amazed (AMAZED) to have found a version of Monopoly on the internet that used Euros. This is NOT amazing. Not even remotely. In fact, what IS amazing is that anyone would be surprised by the fact.

The Neanderthals with headsets next reported on the DC smoking ban; which brings me to my main point.

Evidently, if a business can show a profit loss of at least 15% as a result of the smoking ban they will be able to reintroduce smoking in their establishment. Why 15%? What about the businesses who lose 14%? Or 10%? Or even 5%? It’s not like any of these businesses were exploiting people. Smoking is legal and you never HAVE to go to a particular bar or restaurant. Implicit in this policy I see the assumption that most establishments will actually gain (or at least not lose any) business from the ban. This is no surprise. I would expect there to be a demand for strictly nonsmoking bars. So why not just let businesses decide which consumers to serve? The likely answer is we tried that and all bars ended up being smoking. But this only leads to two conclusions, either (1) people actually don’t care enough about smoking to demand nonsmoking bars, or (2) smokers are that much more fun to hangout with that people don’t want to make the choice—they would rather force the fun smokers to hangout in their boring bars.

There is an optimal level of smoking in bars and it certainly is not zero. I propose issuing smoking licenses similar to liquor licenses to any bar that wants to allow smoking. This will be a Pigouvian tax in effect and the revenue can be used for whatever the nanny-staters want. Any guesses as to why this isn’t being adopted around the country?

And in other news: George Clooney has been named UN "Messenger of Peace”. Our troubles are over!