Definition of Irony

A Greenpeace representative just came to my door bundled up in gloves, beanie, down parka with fur-lined (fake, of course) hood, the works! He was gathering signatures for a petition for.......

You guessed it. Global warming!

I know, I know. This is hardly evidence against climate change. But you have to admit, it is....well, ironic.

It's always dangerous when I talk about health care

There's been a fascinating discussion going on at Megan McArdle's blog today about the connection between drug innovation and a free market health care system. To me, this is the absolute heart of this issue. When I look at health care, I think any system (public or private) should focus on the following:

1. Ensuring that everyone has access to a good standard of care, both emergency and preventative. As government resources are directly expended toward that end, they should go to the following: the poor and sick, the poor, the sick.
2. Ensuring a system where people are free to acquire a standard of care above the 'good' standard if they are able
3. Ensuring that medical advances are incentivized
4. Ensuring that important medical advances necessary for a good standard of care are available widely

There are 2 major problems (for me) with these priorities: what is a good standard of care? How do you balance medical innovations with affordability?

Personally, I don't care if we have a public system or not. It appears to me that a purely private system simply cannot meet conditions 1 and 4. It appears to me that a purely public system cannot meet conditions 2 and 3. Therefore it seems that either I need to pick among 2 pairs of optimal outcomes, or there needs to be an alternative system. So what is the alternative system? Is it possible to have a system like college? Bear with me a second, this just ocurred to me today, but if you were to ask me what is important about a high education system, I think I might say the following:

1. Ensure that everyone who wants it has access to some standard of higher education
2. Ensure that colleges and universities continue to make their faculty/school services better
3. Ensure that people should be able to get a higher level of higher education if they're able to do so

Admittedly, there is no corralary for my health care #4 point, but aside from that I think it tracks. The obvious difference is (I think) that risk/merit is much more easily signalled through fair methods in education and that there is an incentive for good colleges to take in students who cannot afford their tuition. There is no incentive for insurance companies to take in even really healthy people if they can't pay premiums. There are many other huge differences as well, but I do wonder if the higher education system in this country (which I believe is generally regarded as the finest in the world) might offer some suggestions as to how health care could be provided. Or is this the stupidest thought ever.

Degree of Stimulus

The Fed cut interest rates by 75 basis points last Wednesday. Around that time there was speculation that a single rogue trader from Societe Generale, a French bank, was responsible for market volatility immediately preceding the Fed rate cut (volatility starting Friday, into Monday and Tuesday, the rogue's losses were finally announced Thursday I think). But the Fed has had time to evaluate whether that factored into their decision, but rather than indicate that in any way, they have decided to lower rates by an additional 5o basis points.

Reducing rates by 1.25% over 8 days is unprecedented. And considering that the Fed is an independent agency of the government (not under the control of Congress or the President), it is highly unlikely that they are using monetary policy for any political goal. Is it possible that officials at the Federal Reserve are looking at data-- unavailable to the public-- that suggests that we are headed for a recession that looks a lot worse than we currently imagine?

Point of Order

The state governments of Michigan and Florida moved their primaries up to January, defying a Democratic rule that allowed only New Hampshire, Iowa, Nevada and South Carolina to vote in January. As a result,
Democratic candidates have been all but forbidden to campaign in these two states. Why?

I don't understand. It sounds as if the DNC is acting like a defied child, establishing useless rules. Are there stated reasons that it cites for allowing Iowa, New Hampshire, Nevada, and South Carolina to go first? It doesn't make a whole lot of sense.

Lamenting the never-ending campaign cycle some 16 years ago (when it was months shorter) a researcher at Harvard's Shorenstein Center on Press, Politics, and Public Policy suggested that we have a single, national primary day. Can someone tell me why this doesn't make a whole lot of sense? There are some really significant problems in this country that derive from placing states like Iowa on a pedestal (such as our fascination with ethanol). Why is the DNC standing behind such madness? Surely there is a good reason.

Giuliani to Concede?

I will sleep well tonight. I appreciate that he is on the liberal side of some social issues. But I also think he is just plain crazy.

Also-- it looks like John McCain has a hot daughter. Check out the link above.

Stimulus Dust-up at LAT

DRH and KLR had interesting posts recently about the stimulus package now being considered by the senate. Steven Landsburg of the University of Rochester and Jason Furman (of Brookings) have had a series of three debates about the stimulus concept this week in the LA Times (here, here, and here).

It has been fun to read, and it makes me proud to have Landsburg's Price Theory on my book shelf (thank you first to David Hunger for assigning it, and then to the GU bookstore for refusing to buy it back). I am very skeptical of the stimulus package for a couple of reasons, but primarily because it is deficit spending-- as KLR has said, it is nothing but a transfer of wealth from future generations. I found Furman's posts to be frustrating at points. He tried to manipulate Landsburg's arguments but only awkwardly bastardized them; he didn't actually make effective use of them to draw a compelling line of reasoning (example: his discussion of how Landsburg would respond to the multiple choice question).

Unsung Heros

Here is a fascinating post over at Café Hayek. It refers to an obituary of Viktor Schreckengost, a virtually unknown artist and capitalist. Russ Roberts salutes Mr. Schreckengost for doing more to improve the welfare of the average American—particularly lower income Americans—than any politician you can name.

I actually learned about Schreckengost in my Art 101 class at Oregon State. It is, perhaps, the only thing I retained from the course, which I earned a C in.

Roberts heralds the man as an unsung hero. Good for him, I say. But he is said to have contributed over $200 billion to the economy and I’m sure he was amply rewarded for his contributions. That’s the beauty of markets. Do something to help me and I will give you my money.

The politicians Roberts refers to, on the other hand, mostly lack the innovation to be successful in the economy so they must seek the fame, power and profits available in the political sphere. Do something to help me (or more often, just convince me that something you might do might help me) and I will give you my vote.

Which do you think are the more noble incentives?

I might be the most stupidest person with a college degree

I don't recall ever seeing the plural of Mr. in print before yesterday. WSJ has been using it a lot in reference to the pool of Republican presidential candidates. I think I read it twelve times in the last 24hrs before realizing it wasn't a crazy typo that kept getting repeated. I really thought I was a victim of some sort of conspiracy for awhile.

I am NOT smart. Please, someone take my diploma away before I hurt myself.

Where's the Beef?

I just want to point out this article in the NYT. I think some *interesting* points are made. But my favorite is when a better alternative to confined feeding operations—which the author very impartially refers to as “factory farms” who “grow” meat—is offered:

Longer term, it no longer seems lunacy to believe in the possibility of “meat without feet” — meat produced in vitro, by growing animal cells in a super-rich nutrient environment before being further manipulated into burgers and steaks.

Mmm. Mmm. Good.

I think our food supply is probably the single issue on which the average person--on both sides--is most blissfully ignorant and/or furiously delusional.

My Favorite Post- State of the Union Quotes

#1. Man on the aisle after the speech: “Mr. President, I just had one question. How do you give a rebate to someone who never put in a bate?”


#2. Kansas Governor Kathleen Sebelius giving the Democratic response: “In this time, normally reserved for the partisan response, I hope to offer you something more”….then proceeds to give an entirely partisan response.


#3. Mitt Romney: “Here is a President who served our country for seven years and can now speak from the heart without a thought about his political future.”

My roommate: “Yeah, he couldn’t even get elected to school board.”

My Second Animal-Related Post Today

Yeah. This one is worth a watch. Make sure you can hear it too. That's live TV for you.

Brazen Dumbasses

Two men in Florida were arrested for violating the Endangered Species Act. They were trying to fish for manatees. How were they caught? They posted a video of their adventure on MySpace.

A Quick Clarification

The media keeps referring to the economic growth plan as “a large tax cut”. Just to be clear, deficit spending is NOT a tax cut. It is a tax transfer from the present to the future. If I borrow $10 from a friend I don’t call it “income”.

Books that Make you Dumb

Here is a clever and entertaining idea--plotting the top 100 most popular books on facebook against SAT scores. Notice the smartest people read Atlas Shrugged and Freakonomics. Coincidence? I don't think so!

Who doesn't like a little stimulation?

I am going to attempt to answer DRH’s questions on the fiscal stimulus. I’m responding in a post rather than a comment because, well, comments are overrated.

Now, I’m no expert; my opinions are really just an aggregate of the blog personalities who I respect (mostly out of GMU) and my limited economic intuition. On the other hand, this blog is semi-anonymous so…f*ck it, I AM an expert!

Starting from the bottom. There are MANY reasons why food stamps are colossally bad policy on both ethical and efficacy grounds. The question posed, though, is: “Why are food stamps—intended to generate increased food purchase—an ineffective way to stimulate the economy?”

The point of long-term growth policy is to increase the productive capacity of the economy. The point of a fiscal stimulus is to increase consumer demand to utilize productive capacity that ALREADY exists, spurring increased output and more jobs. Megan McArdle is making the argument that, in the short-term, the ability to produce more food is limited. This is just the nature of agriculture production. If a food stamp goes to purchase a porkchop or loaf of bread, I can’t manufacture another pig or suddenly whip up a new bushel of wheat. This is what Megan means when she says purchases will just “draw down perishable stocks rather than generating new economic activity.” Of course, the economic activity will not be zero, but it will be lower than if the funds had gone toward some other good. Maybe food stamps are fungible and the spending WILL go toward other goods…but, then why the hell are we handing out food stamps in the first place?

Back to the original question: “Why is a fiscal stimulus bad if it is ineffective and pointless? Shouldn’t the government do SOMETHING?”

This seems like a very dangerous line of reasoning. Why NOT change the oil in my car every 500 miles? Why NOT water my lawn in the winter? The bigger picture answer is that resources are limited and seemingly harmless action can have unintended consequences.

But let’s assume for a minute that there is virtue in action just for sake of action. If that’s true, then why a $146 billion stimulus? Why not a $300 billion stimulus? Why not a $100 million stimulus? Why not do a rain dance and pray for economic recovery? My guess is your objections would be, respectively, (1) We can’t afford that large of a stimulus, (2) That small of a stimulus is the same as doing nothing, (3) You're being stupid.

Well, the first response demonstrates that a fiscal stimulus is not costless. A large deficit, bureaucratic leakage, and misguided distortion of an otherwise generally healthy economy are just a few of the costs. So, if doing SOMETHING is ineffective and costly, wouldn’t it be better to NOT do something?

Response #2 might actually be the best policy. If a stimulus is ineffective and costly, then why not do nothing, but convince the public that you are doing something. Some would argue that this is exactly what is going on--$146 billion just seemed like a convincing number. In fact, an even better policy might be to promise a large stimulus and then never send any checks. Politicians know best and people are stupid, no one will ever notice!

As for #3, well, it is SOMETHING and you asked the question.

This is all very facetious. I assume the real question is, “Isn’t it the job of the government to restore and maintain confidence in the economy.” This, I think, is an excellent point. Unfortunately, incentives in politics and the media guarantee that will never happen in an honest way. The media needs something to talk about during the troughs between celebrity drug overdoses. And politicians can’t lose! If there isn’t a severe recession, they can claim to have helped avoid catastrophe. If there is a recession, they can claim to have done everything they could and that it could have been much worse.

Ideally, politicians, wonks and the media should stop demagoguing the issue. The CBO and prediction markets are now anticipating a year of slow, but not negative growth (around 2%) and a small increase in unemployment (to about 5.1%). If this news made its way to the public, it would accomplish a great deal toward restoring consumer confidence and likely do more to stimulate the economy than any level of government spending. Delivering this news is the SOMETHING that should be done. We are not IN a recession and this economic downturn is likely to be mild.

If this were not an election year, the SOMETHING would be NOTHING. Sad and ridiculous.