30 September 2010

The Real Dude and the Screen Dude agree — cui bono

NYTimes: Opinionator | Timothy Egan | Reefer Gladness

It was early still, and daylight, so when I called up The Dude to get his take on new polls showing California on the verge of becoming the first state to legalize, tax and regulate recreational use of marijuana, I knew he wouldn’t be, um, distracted. Not just yet.

“I only smoke a little pot at night — never in the day — and I prefer brownies,” said Jeff Dowd, who is best known as the inspiration for the other Dude, the laconically mystical character played by Jeff Bridges in the Coen brothers movie “The Big Lebowski.” I’ve known The Dude for years, and the Coens got him mostly right, except for the White Russians. Jack Daniels is his drink. [...]

And on Proposition 19, The Dude speaks truth to power. We talked about the opposition to legalizing pot — the alcohol industry and people currently making the most money off California’s nutty medicinal marijuana retail scheme. [...]

He was echoing, in his way, an old truth of politics: that the best way to judge what’s really at stake in an election is to follow the money. And the source of the funds being used to dissuade Californians from legalizing pot says a lot about the end-stage hypocrisies of the arthritic war on drugs.
Uhhhh... life imitates art imitating life?
The Dude: It's like what Lenin said... you look for the person who will benefit, and, uh, uh...

Donny: I am the walrus.

The Dude: You know what I'm trying to say...

Walter Sobchak: That fu**ing bitch...

Donny: I am the walrus.

Walter Sobchak: Shut the fu** up, Donny! V.I. Lenin! Vladimir Ilich Ulyanov!
Hat tip to my buddy J.P.C. for pointing me to this.

"Something About Tax Cuts Or Earnings Or Money Or Something In Recent Economic News"

The Onion | Something About Tax Cuts Or Earnings Or Money Or Something In Recent Economic News

WASHINGTON—Some sort of tax cut or earnings or money or something was reported in economic news this week in further evidence that a lot of financial- related things have been going on lately.

According to numerous articles and economics segments from major media outlets, experts on banks and such have become increasingly concerned over a new extension or rates or a proposal or compromise that could signal fewer investments, and dollars, and so on. [...]

According to a recent issue of The Wall Street Journal, there are currently a bunch of columns filled with a wide variety of numbers, letters, and symbols.
This is a must-read article. How many thousands of time was a variation on this printed in the last two years?

Much thanks to my friend M.K. for brining it to my attention.

Audio questions

Frequent readers might have noticed that I am an obsessive podcast listener.

About a year or so ago Apple upgraded the software on my iPod to enable me to listen to podcasts and audiobooks at double and half playback speeds.   I really like this feature, since I can absorb twice the information in the same amount of time.  However, I have two questions.  The first is rather mundane and the second I find more intriguing more interesting.

Question One: Why can I only do this directly through the iPod and not when listening through iTunes?  Or am I missing this feature?  The button to enable this mode is very prominent on the iPod, but I have not seen one in iTunes.

Question Two:  I usually use double speed playback mode when listening to podcasts, especially interviews, since they are typically more slowly paced than programs which are pre-scripted.  When I play back at high speed while listening through headphones I have little trouble keeping up.  But when I play the same file back at the same speed through speakers, either on my desk or in my car, I have to really concentrate to be able to keep pace.  Why would there be a difference between headphones and speakers?


Ireland is as austere as it is full of Lucky Charms addicted cartoon leprechauns

Which is to say, not at all. Was that subject line too opaque? I'm too distracted right now to be able to tell. This is what I'm trying to get at:
Marginal Revolution | Tyler Cowen | Further update on Irish austerity
The bail-out costs will lift the fiscal deficit from the planned 11.75 per cent of gross domestic product in 2010 to 32 per cent.
The FT article is here. Is it really Irish "austerity" that the market has been punishing?

29 September 2010

lifted from the comments

So on my both-parties-are-anti-science post, Jim left the following comment. I started responding, but then decided It would be easier to just respond up here.
I fully agree with this, and after having read Traffic by Tom Vanderbilt I was ready for this specific result to come down the pike.

But isn't at least very slightly different that Team Red is denying several decades of empirical environmental science with potentially catastrophic repercussions and Team Blue is ignoring slightly less than a handful of actuarial charts with a potential harm of a few thousand deaths each year?

I'm not trying to be snarky here; I've just barely dipped my toes into statistics, regressions and econometrics. Not nearly enough to comment with anything resembling authority.
First of all, I was really looking forward to reading Traffic when it came out, and then I got it from the library, and then I had to return it before I got a chance to read it, and then I never got around to checking it out again. So sad.

Anyway, here's my actual response:

I don't think I would make this traffic analysis the linchpin of my "Democrats also ignore science" argument, but's it's a nice bite-sized piece.

If I absolutely had to put one of the two major parties in charge of science policy, I'd probably even chose the Democrats.  That's mostly because of the difference in rhetoric though.  Democrats seem to ignore science despite what they claim to think, while the Republicans seem to really revel in ignoring it.

So yes, I think there's a difference between this issue and the GOP's position on climate change. But what about all the other issues?

I'll add in anti-evolution foolishness for the Red Team, but in the Blue Team's column I'd add opposition to GM agriculture, opposition to genetic screening and testing of humans in various forms, the brouhaha last year from women's groups about mammograms, the similar stink from similar groups in the 90's about breast implants, the ends-justify-the-means exaggerations when it comes to second- and even third-hand smoking, similar exaggerations regarding trans-fat and salt and other dietary issues, campaigns against plastic bags, anti-trade policies,* and so on. Then there are things that aren't really partisan positions but I have a sort of vague notion of being associated with liberals, like anti-vaccine and anti-germ theory positions, and sundry flakiness about autism.**

(I feel like I could put together a similarly lengthy list of nonsense for people on the right, but I don't feel like I need to convince anyone that they aren't consistently science-friendly.)

Put it all together and I contend you have two parties both of which are pretty hostile to science when they feel it suits them.

* This last one is assuming we consider economics a science, which I think on this issue at least we can since there's such strong agreement in the profession for freer trade.

** I don't have any evidence supporting by view that more people on the left support these positions than do people on the right, but I'd love to see some numbers either way. I can tell you Bill Mahar believes both of the first two, but that's only a single data point.

Another development link

Hey, wait, here's one other think I can link to add some value to that post about Bono and his foolish aid advocacy.
Tim Harford | The hidden histories that shape the way we live now

The largest silver mines in the Spanish empire were the Potosí mines, discovered in 1545 in what is now Bolivia. Exploiting the mines was dangerous, and in the late 16th century, the Spanish introduced the mita system of forced labour. Villages near Potosí were obliged to provide one-seventh of their adult male population to work the mines, and the mita system continued until its abolition in 1812.

That is history. This is not: the former mita districts are 25 per cent poorer than apparently identical districts on the other side of a boundary that ceased to mean anything 198 years ago. A long-abolished colonial system has somehow shaped the modern world.

The discovery, by a young economist at MIT named Melissa Dell, is one of many made recently which show that economic development has a long memory. [...]

Dell shows that areas outside the mita system were more likely to have large farms; the owners of such haciendas were politically influential and were able to campaign for public goods such as better roads. [...]

All this suggests a fatalistic conclusion about economic development: if today’s economic outcomes are influenced by institutions shaped centuries ago, there is reason to be pessimistic that we can do much to help now. That would be going too far, because history is not the only thing that matters. But matter it does.
And Daron Acemoglu, Simon Johnson and James Robinson showed that the reason tropical diseases are strongly correlated with underdevelopment is less for the obvious reason – that malaria is bad for the economy – and more because such diseases killed large numbers of settlers, who lacked any resistance to them. This encouraged colonial powers to grab gold, ivory and slaves rather than settling the countries and establishing decent institutions.
What do we do about this?  Beats me.  "Concentrate on building institutions" would be the facile answer, but how do you do that?  Charter cities or some other form of distributed government come to mind, but I really have no idea.  I do know we shouldn't commit to a development strategy without having some sort of answer to the kinds of path dependencies that Harford talks about.


The Guardian: Lost in Show Biz Blog | Marina Hyde | Bono: the celebrity who just keeps giving

Forgive the reheating of old chestnuts, but it seems appropriate to begin with a classic urban myth starring Bono, recently described with due reverence by Viz as "the little twat with a big heart". The apocryphal story finds our hero on stage between songs, intriguing his audience by repeatedly clapping his hands together. "Every time I clap my hands," he finally intones, "a child in Africa dies."

At which point someone in the crowd shouts: "Then stop f***ing clapping!"

As I say, it's an old favourite, but it was called to mind this week by news that Bono's ONE campaign had blitzed the New York media with fancy gift boxes. These contained several items, from designer water bottles to $15 bags of Starbucks coffee, as well as information explaining that poverty-stricken African children live on less than $1.25 a day – "about the cost of the cookie in this box".

To which the only reasonable rejoinder would seem to be: "Then stop spending your money on biscuits for journalists."

But let's not be facetious. Naturally, naturally, the business of activism is more complicated than that, and indeed, ONE has since been forced to remind confused civilians that it is an advocacy organisation and not a grant-making organisation. This became necessary after the New York Post revealed that in 2008, the most recent year for which tax records are available, ONE took $14,993,873 in donations from philanthropists, of which a thrifty $184,732 was distributed to charity. More than $8m was spent on executive and employee salaries.
(Via Mike Munger)

I don't have anything to add to this either, I just had to repost it since I can't stand Bono.

Okay, okay I feel lazy just reposting without adding anything to the mix, so here's a fairly related episode from the Cato Daily Podcast today, featuring Ann Bernstein. Let it serve as a reminder that there is a real dispute about the basic method of helping undeveloped countries: it's not just a matter of Bono-and-other-altruistic-do-gooders vs greedy-people-who-don't-give-a-shit.


dispatches from TJICistan | tjic | science vs. law

Just two days before a texting-while-driving ban takes effect in Massachusetts, a new study being released today says that similar bans in other states have not reduced automobile accidents.
This will have no effect on our legislature, of course.

For all that Dems like to deride Reps as being anti-science, neither one of them really lets science influence their policy.
I don't have anything to add to this, but I felt compelled to repost it since I like being I scientist, and I despise both the Red Team and the Blue Team, so it always grinds my gears to be told that one of those teams is "the party of science" or "reality-based" or whatever. They both selectively ignore whatever makes their job easier.

Over the line

ProfessorBainbridge.com | Stephen Bainbridge | If I went to the AALS meeting, would I cross the picket line?

OTOH, even the politically correct get it right occasionally. If I were going to the annual [American Association of Law Schools] meeting, which I'm not, I would try very hard to avoid crossing the picket line. Why? I explained that preference in a very early post, which summarized the argument as follows:
First, I come from a long line of union members. Second, Catholic Social Teaching emphasizes that workers have a natural right both to form unions and to strike. As I read the relevant encyclicals and pastoral letters, this teaching is not a matter of prudential judgment, but rather an authoritative teaching to which faithful Catholics must give religious assent. Finally, unions potentially are an important way of minimizing transaction costs.
The post goes on to develop the final argument at some length. It also explains why a rule of thumb of not crossing any picket line is a useful decision-making heuristic: It saves me the time and effort necessary to figure out whether a given strike is morally and economically justified.
This strikes me as ... odd.

1.  I come from a long line of people who are not union members.  Does this ancestry mean I have justification for crossing a picket line?  Surely not.

2.  Bainbridge has far more knowledge of the relevant theology than I do, but I'm not sure how we get from accepting that people have the right to form unions and strike to the point at which I must endorse that strike by not doing business with their employers.  Surely Il Papa would have me treat striking workers with charity and fraternity, but don't I owe the same love to scabs and blacklegs, and indeed, even management and owners?  Unions exist to serve their members.  This often comes at the expense of the interests of "capital," but it also often comes at the expense of customers.  Why do I have an obligation to support a set of workers at the expense of my brothers and sisters who are not union members?  Doesn't an obligation to throw my moral wight behind a striking union presume that they are morally in the right and their employers wrong?  Theologians: what am I missing here?

Digression: is there theology relating specifically to public employee unions?  I have been coming to the conclusion that they are very different beasts than those of private sector employees.
3.  Yes, unions and collective bargaining are an important way to reduce transaction costs.  But they can just as easily reduce efficiency.  I can not begin to count the number of times that unions have fought against productivity increases and hampered markets.  The net effect of the trade-unionism, as it exists in America today, is an empirical rather than moral question.

4.  This part is especially weak to me:
It also explains why a rule of thumb of not crossing any picket line is a useful decision-making heuristic: It saves me the time and effort necessary to figure out whether a given strike is morally and economically justified.
So if I adopted the heuristic of always ignoring picket lines I would be equally justified in this respect.  Bainbridge seems to admit as much in the earlier post he links.

28 September 2010

I think this is what all the fancy kids at SAIS call a "failed state"

Fred On Everything | Fred Reed | Big Doin's in Juarez: Why We Ought to Think, but Won't

It is getting out of hand. The killing of policemen, judges, and mayors is now common. Journalists die in droves. After the murder of another of its reporters, El Diario, the major paper of Ciudad Juarez, published the following editorial, addressed to the drug lords:
“We bring to your attention that we are communicators, not mind-readers. Therefore, as workers in information, we want you to explain to us what you want of us, what you want us to publish or stop publishing, what we must do for our security.

“These days, you are the de facto authority in the city, because the legally instituted authorities have been able to do nothing to keep our co-workers from continuing to fall, although we have repeatedly asked this of you. Consequently, facing this undeniable fact, we direct ourselves to you, because the last thing we want is that you shoot to death another of our colleagues.”
This is astonishing. It is worse. A blue whale singing Aida would be merely astonishing, but here we have the editors of the major newspaper of a substantial city stating candidly, with perfect clarity, that the narcotraficantes, not the national government, exercise sovereignty over the city. The federal government understandably denounced the editorial. No capital wants to be told that it does not control its territory. But this is exactly what the paper said.
That subject line isn't just a quip: I mean that. I refer you to the Wikipedia article on failed states:
In order to make this definition [of a failed state] more precise, the following attributes, proposed by the Fund for Peace, are often used to characterize a failed state:

1. loss of physical control of its territory, or of the monopoly on the legitimate use of physical force therein
Sounds like Juarez to me.

Reed is right that this is the direct result of the War on Drug Users.  You can't drive such a valuable commodity into the black market and then act shocked when ugly things happen in the shadows.

(Via Brian Dunbar)

PS This is a pretty object demonstration that the real governing authority of any territory is the guy with the guns and the will to use them.  I sincerely wish it were otherwise, but when rubber hits roads it's the dude with the capability and inclination to get ugly that's going to rule.  "Yeah, sure," you're thinking, "maybe in Mexico, but not here.  Our rulers would never use force to establish their authority."  Okay.  Whatever you say.

Lotteries and odd charity projects

bng bng | Mark Frauenfelder | Incredibly depressing Mega Millions Lottery simulator

Rob Cockerham of Cockeyed.com created the "incredibly depressing Mega Millions Lottery simulator." He says, "You'll be able to try the same numbers over and over, simulating playing twice a week for a year or 10. You'll never win."
In the 191,904 times this simulation has run, players have won $19,126. And by won I mean they have won back $19,126 of the $191,904 they spent (9%).
I played 1040 games of Mega Millions. I spent $1040. I won $117.
I took a spin on this thing too. Never won back more than $10, and less than $100 in total, out of the $1040 spent.

Every state lottery should be required to have one of these online. Fat chance of that though. Easy for the state to require more and more warnings on food and drink and medicine, but look how small the warnings get on a "vice" they sell. Maybe someone needs to fund such an endeavor as a charitable project.

(Diversion: I have very mixed feelings about lotteries.  One the one hand I feel bad that I (and other citizens) are benefitting on the delusions and ignorance of others.  When I'm in less generous moods, I start to think that if someone is going to pay for government, why not the deluded and ignorant?  Regardless, I find it shameful that states outlaw or tightly control other forms of gambling while granting themselves a monopoly in the form of state-run lotteries.)

Speaking of weird charity projects...
EconLog | Arnold Kling | Funding Dis-Education

Mike Gibson points me to this story.
[Peter] Thiel is starting a new initiative that will offer grants of up to $100,000 for kids to drop out of school.
His goal is to get college students to work in business start-ups rather than waste time in college accumulating debt.
Sounds insane, but if you think too many people are being pushed convinced to go to college as the only option after high school — which a lot of people do — and you think that college is a poor investment for many people — which is also not that far out — then this is a perfectly reasonable thing to do.

This is my idea of an athletic competition


Minimum wage arguments, immigration, some other stuff

EconLog | David Henderson | Caplan On Immigration

I pointed out here that ironically, the way the minimum wage law is enforced is what gives illegal immigrants (who would no longer be illegal under Bryan's preferred policy) an advantage in the competition for jobs. Illegal immigrants can credibly commit not to turning in a minimum wage violating employer. Legal immigrants can't credibly commit.
For evidence:
Marginal Revolution | Tyler Cowen | The high rate of employment for Mexicans in New York
In a time of widespread joblessness, Mexicans in New York have proved unusually adept at finding and keeping work. Of the city’s 10 largest immigrant groups, they have the highest rate of employment and are more likely to hold a job than New York’s native-born population, according to an analysis of the most recently available census data. They are even employed at a greater rate than Mexicans nationwide.

And as they have filled the city’s restaurant kitchens and building sites, they have acquired a reputation for an extraordinary work ethic.
There is more here. There are interesting implications for whether current unemployment is all about demand and whether marginal productivities justify the expected costs of hiring (some groups of) non-Mexicans:
One reason Mexicans have found work in such numbers, experts say, is that many are illegal immigrants, and less likely to report workplace abuses to the authorities for fear of deportation.

“Illegal immigrants are very convenient,” said Demetrios Papademetriou, president of the Migration Policy Institute, a nonpartisan research group in Washington. “Employers are quite interested in employing people who are willing to work and to overlook some labor laws.”

...Across the country, immigrants in general are more likely to be employed than the American-born. They tend to be more willing to move in pursuit of jobs and to take any job they can find, especially if they lack access to unemployment benefits.
Note there is also some self-selection going on here.  Only those most willing to work will bother to uproot themselves.

As well as:
Marginal Revolution | Alex Tabarrok | Structural Unemployment in South Africa

Unemployment in South Africa is now running at 24% overall with significantly higher rates for blacks. A shift away from low-skill labor combined with minimum wages and strong trade unions, however, has meant that it is very difficult to lower wages and reduce unemployment. From a very good piece in the NYTimes:
The sheriff arrived at the factory here to shut it down, part of a national enforcement drive against clothing manufacturers who violate the minimum wage. But women working on the factory floor — the supposed beneficiaries of the crackdown — clambered atop cutting tables and ironing boards to raise anguished cries against it...
Finally, you can also consult Jacob Grier's post today about minimum wage and other labor laws as they relate to service workers in Oregon and DC.

Getting back to Henderson's post:
Bryan's other error is to suggest that enforcing a minimum for native-born people but not for immigrants would help the native-born. No way. Would United Airlines want a pricing restriction that doesn't let it cut fares but lets Southwest do so?
I think this is correct, but irrelevant. Almost no voters think of the minimum wage as a floor on the price they get to charge for their services. I wish they would, because that's obviously what it is. But no one thinks of a minimum wage law as a prohibition on discounting their own labor.

Where's your change, now, you whores?

Sorry for the rude title, but Jesus wept! this is some hardcore bullshit.  Where's the outrage I was seeing before the Barack the Golden Boy got elevated to higher office?
The Spectator Blogs | Alex Massie | Obama's Hit Squad: Above and Beyond the Law

I think it's reasonable to say that those Americans who hoped for some improvement - even if only of the marginal variety - from Barack Obama on the civil liberties front have often been pretty disappointed. But because American conservatives - at least those conservatives gathered in the Republican party - have no interest in these quaint notions either it's not something that's become a dominant theme of his presidency. [...] Nevertheless there are limits. So even if you're one of those who find Glenn Greenwald an acquired taste best enjoyed in moderation, acknowledge that he's quite right here:
I didn't believe it was possible, but the Obama administration has just reached an all-new low in its abysmal civil liberties record. In response to the lawsuit filed by Anwar Awlaki's father asking a court to enjoin the President from assassinating his son, a U.S. citizen, without any due process, the administration late last night, according to The Washington Post, filed a brief asking the court to dismiss the lawsuit without hearing the merits of the claims. That's not surprising: both the Bush and Obama administrations have repeatedly insisted that their secret conduct is legal but nonetheless urge courts not to even rule on its legality. But what's most notable here is that one of the arguments the Obama DOJ raises to demand dismissal of this lawsuit is "state secrets": in other words, not only does the President have the right to sentence Americans to death with no due process or charges of any kind, but his decisions as to who will be killed and why he wants them dead are "state secrets," and thus no court may adjudicate their legality.
Yes. Apparently so. The President is, if I understand this argument properly, entirely above and beyond the law. As Greenwald puts it:
If the President has the power to order American citizens killed with no due process, and to do so in such complete secrecy that no courts can even review his decisions, then what doesn't he have the power to do?
Very little, I suspect. [...]

It's true that many more people would be jumping up and down if this sort of thing were happening under President George W Bush. Indeed, you can make an argument that Obama's actions are worse than Bush's since a) he wasn't charged with cobbling together a security framework in the confused, panicked aftermath of 9/11 and b) he actually, you know, once campaigned against quite a lot of this stuff. Then again, he's maintained perhaps 80% of the Bush architecture (and expanded some other parts) so even if you were prepared to give the President a pass it remains the case that there is little reason to do so.
~ ~ ~
The Agitator | Radley Balko | Tyranny

If there’s more tyrannical power a president could possibly claim than the power to execute the citizens of his country at his sole discretion, with no oversight, no due process, and no ability for anyone to question the execution even after the fact . . . I can’t think of it.

This is horrifying.
~ ~ ~
Marginal Revolution | Tyler Cowen | In case you have not been paying attention

Here is a tidbit from today's news:
Among other policies, the Obama team has also placed a United States citizen on a targeted-killings list without a trial, blocked efforts by detainees in Afghanistan to bring habeas-corpus lawsuits challenging their indefinite imprisonment, and continued the C.I.A. rendition program – though the administration says it now takes greater safeguards to prevent detainees from being mistreated.
I wish to commend Kevin Drum in particular for continuing to draw our attention to these policies.
~ ~ ~
Marginal Revolution | Tyler Cowen | Scary sentences

It seems the Obama administration is looking for any possible argument to justify its policy of assassinating U.S. citizens without legal restraint. But that's not always easy to manage:
“The more forcefully the administration urges a court to stay out because this is warfare, the more it puts itself in the uncomfortable position of arguing we’re at war even in Yemen,”
The administration doesn't want any possibility of judicial review:
...they are seeking to have the lawsuit dismissed without discussing its merits. For example, officials say, the brief is virtually certain to argue that Mr. Awlaki’s father has no legal standing to file a lawsuit on behalf of his son.
Is the administration trying to figure out the law, and then follow it, or to simply push through whatever it wants to do?
~ ~ ~

In less explicitly outrageous, but still disturbing, news from today:
bng bng | Xeni Jardin | Obama administration wants encryption backdoors for domestic surveillance

In a New York Times article today by Charlie Savage, news that the Obama administration is proposing new legislation that would provide the U.S. Government with direct access to all forms of digital communication, "including encrypted e-mail transmitters like BlackBerry, social networking Web sites like Facebook and software that allows direct 'peer to peer' messaging like Skype." [...]

And [read] this CNET piece by Declan McCullagh, who's been covering this beat for longer than anyone I know, is an equally essential read. Snip:
Vice President Joe Biden proposed something quite similar in the 1990s. As I wrote in an earlier article, when Biden was chairman of the Senate Judiciary Committee, Biden introduced an anti-encryption bill called the Comprehensive Counter-Terrorism Act. It said: "It is the sense of Congress that providers of electronic communications services and manufacturers of electronic communications service equipment shall ensure that communications systems permit the government to obtain the plain text contents of voice, data, and other communications when appropriately authorized by law." It was Biden's bill--and the eventual threat of encryption being outlawed--that Phil Zimmermann said at the time "led me to publish PGP electronically for free that year."
~ ~ ~

Hurrah for revolution and cannon come again! The beggars have changed places, but the lash goes on.

27 September 2010

L'affaire Henderson

[Woops, forgot to hit "publish" on this guy last week when this Henderson business was still a hot topic.]

That's what Bainbridge is calling it anyway.  I think it's catchy.

Anyway, he reblogged a Larry Ribstein post, now disappeared from the net, which I liked:
A week ago my co-blogger Todd Henderson had some thoughts about the Obama plan to raise taxes for the “rich” — over-$250,000 earners:
If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.
In later posts [Ribstein] added:
As marginal taxes rise, so does the disincentive to work. * * * This is a losing proposition from a social welfare perspective* * *
1. Todd’s posts are not about whether he is or deserves to be rich or to be taxed more. It was about the real incentives he faces if his taxes go up — incentives to cut back on spending and engage in less socially productive activities.

2. However, instead of having a debate about the economics of raising taxes on >$250k earners, or about the profligate spending that has brought us to these difficult choices, what we got was very nasty class sniping and an attack on the messenger.

3. This is exactly the sort of debate the President wanted to have when he decided to tax the “rich” and not the “middle class.” Certainly not about how the tradeoffs between increased taxes and reduced government spending as ways of addressing our current economic problems. Not about how to construct the tax so that it has the least harmful effect on economic activity. No, let’s pit rich against poor. Let’s exploit resentment for political gain.

4. Exploiting resentment — is that what hope and change was supposed to be about?
I think these are good points. I think Henderson argued his position a inelegantly, but they're not prima facie ridiculous. His piece got interpreted by many (including, to a degree, myself) as "waahhh! I have only a few hundred dollars a month in pocket money after I buy all my expensive stuff." But underneath that there was a good point about the knock-on economic effects of upping his taxes.  That's what's worth talking about.

Regarding number 3, I'll repeat/clarify my point that there are few arguments for raising taxes on the $250,000 level that you couldn't just as easily apply to someone earning $125,000 or $62,500. There are still tons of people out there who would love to move on up to that tax bracket.

Bainbridge finishes his post with this:
The rhetoric we're seeing as the left side of the blogosphere weighs in on Todd Henderson's post is a classic example of how they--not unlike Obama himself--use Saul Alinsky's Rule # 12: "Pick the target, freeze it, personalize it, and polarize it. Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions."

Public force

National Review Online | Kevin D Williamson | Exchequer vs. Economist

If you’re not willing to have somebody hauled off at gunpoint over the project, then it’s probably not a legitimate concern of the state.
This post, and especially this sentence, has been making the rounds today. I agree completely with this sentiment, though I might go a step further: since you don't draw a gun on somebody unless you're prepared to shoot them, you really ought to phrase this as "If you're not willing to shoot somebody over the project..."

Before you pass a law, ask yourself what you would be willing to do to someone who broke it.  Would you fine them?  What if they didn't pay?  Would you arrest them, and imprison them?  What if they attempted to leave?  Would you have somebody shot over this?

Like Williamson, I do not think this is merely a rhetorical question.  We'd all be better off if people like Bukharin had realized that you can't collectivize agriculture without being willing to starve and murder people.  He only found that out after it was too late.

I also liked this passage:
This is the sort of talk that gives the (always well informed, excruciatingly sober, generally sensible) folks at The Economist the howling fantods, inasmuch as they seem to operate under a kind of distributed version of the divine right of kings — always asking whether the rulers rule wisely, seldom asking whether they have the right to rule at all, and never asking whether and how much we actually need them.
I liked Williamson's opening less:
Some fellow at The Economist has taken me to task for my description of socialism and communism: “The difference between communism and socialism: Under communism, politics begins with a gun in your face; under socialism, politics ends with a gun in your face.”
This is a poor description by Williamson's own standards. It's not socialism that ends with a gun in your face, it's government. He even says:
Socialist or otherwise, all states finally rest on force: You decline to participate in whatever is the Netherlands’ version of serving the community through the instrument of the state long enough, they send a guy to your house with a gun to seize your stuff or haul you off to jail; resist and there will be violence. That’s what states do, and it is not necessarily illegitimate.
So the error he makes isn't that he gave a poor description of socialism, it's that he let all non-socialist governments off the hook.

~ ~ ~

Public force is the life and soul of every state: not merely army and police but prisons, judges, tax collectors, every conceivable repression. The state is an organization of violence, a monopoly in what it is pleased to call legitimate violence.

— John Gardner, Grendel

How segregated is a city?

Time Newsfeed | Nate Jones | What Are America’s Most Segregated Cities?

Digital cartographer Eric Fischer, the man behind those cool tourist vs. locals maps from a few months ago, is at it again. Using data from the 2000 census, Fischer has made color-coded maps of the racial divisions in more than 100 American cities. (Each dot represents 25 people: red is White, blue is Black, green is Asian, orange is Hispanic and gray is Other.)

We know that drawing conclusions based on these maps is faulty: the data are 10 years old, and the scale is so high that any conclusions we do draw will almost certainly be reached by jumping. However, this is the sort of thing that we can't help but analyze:
Fischer's maps are pretty cool. I think I actually linked them in the sidebar a few days ago.

None the less I was really hoping for more when I saw that headline than "whoah, that city looks segregated." I was hoping for something quantifiable and objective.

I've actually struggled with the problem of defining a scalar variable to judge how much intermingling there is on maps, though I was dealing with Kohonen Self Organizing Maps, a form of artificial neural network, and topographic cortical maps. But still... same concept.

So... how would you quantify the segregation seen in the maps? The first thing that comes to mind would be to calculate the k nearest neighbors of every point on the map and then count how many of those k were in the same group as the central point.  You could get an interesting scalar statistic from the distribution of those values.  With the right data structure that probably wouldn't be too intractable.  However you may (will?) get similar results from a city with lots of small homogenous pockets as you would from one that is more evenly intermingled.

Below is Fisher's Washington, by the way.  My subjective comment is that Washington's segregation seems to spill out into the counties more than most other cities.  It's very radial, rather than being "blue dots in the city center, red dots further out."

Important sentences: assumptions

Will Wilkinson | The Indeterminacy of Income Growth

Economics can be pretty precise, once you settle on all your big assumptions. But they way economists actually settle on their big assumptions is by philosophizing, often badly.
This is very worth keeping in mind. I have no problem with making assumptions, even large and unsupported ones. This is convenient and often necessary. What I dislike is making assumptions and not admitting you're making assumptions.

This is one reason I like the idea of teaching computer programming to everybody. Good programming makes all assumptions explicit. The art of debugging is very much about discovering assumptions you did not know were hidden in your code.

The rest of Wilkinson's post about different inflation rates for rich and poor consumers is worth a read.

Things to come

Tyler Cowen offers some predictions, including:
3. Social Security won't much change, keeping in mind that the number of elderly voters is growing larger every day. Given all their elderly white voters, the Republicans are already "the party of Medicare." The Democrats have become "the party of Medicaid." That locks three major programs into place, more or less. I don't hear serious talk of major cuts in defense spending.

4. Taxes won't be raised much (do the Dems seem to have great love for reversing the Bush tax cuts?), spending won't be cut enough (the recent Republican document is extremely weak), and within twenty years we will have a sovereign debt crisis in the United States, as one day a Treasury auction won't go well. I'll predict, but not favor, the emergency passage of a VAT, a' la TARP, which will restore fiscal stability but lower the long-term rate of growth. When that time comes, the VAT will indeed be necessary, though ex ante I would opt for less social protection and a higher rate of economic growth.

11. People will write profound books and papers on how and why 'status quo bias' has strengthened, and then one day some new technological development will change everything. It's an open question whether this will happen before or after the sovereign debt crisis.
I am interested, and a bit scared, to see predictions of a sovereign debt crisis coming from someone smart and level-headed like Cowen. I do not see many such predictions from people who do not have an axe to grind about current debt levels. (Even though I think that's one thing worth grinding.)

Number 11 interests me the most. Long-time readers may recognize that I subscribe to the Patri Friedman position that big societal changes come about when we invent new technology, not when we change minds. It appears Cowen agrees.

I have many friends and acquaintances who genuinely wish to reform and improve society. I can not think of one of them who is interested in doing so through invention and technology.

Go short

Conor Friedersdorf's has a good critique of the contemporary American conservative establishment that's  based around a comparison to Michael Lewis' The Big Short.

This was an interesting paragraph:
I mean, I want to be short [on the conservative establishment]! In my Inbox, I’ve recently gotten some delicious “you were right about Mark Levin all along” emails from folks that surprised me by coming around, and I wish like hell I could’ve bought credit default swaps on his professional reputation, rather than merely being rhetorically short. But maybe that was just a lucky pick, and I’m wrong about the larger system being corrupt.
I have this same thought about so many things. I wish there was a way to invest in distrusting the received wisdom. I suppose betting markets take us a little in that direction, but they're still too thin or nonexistent in all but the most obvious propositions.  Then there are the things I'd like to bet against that you could never right a contract for, like the popularity of skinny jeans or the wisdom of giving kids tens of thousands of dollars in college loans to study Spanish poetry.

How science is reported

io9 | Tim Barribeau | Breakthrough in understanding primate vision could help create robots who recognize you

We know that a dog is a dog, regardless of whether it's sitting, running, or trying to comprehend escalators. But one of the tricky parts of designing an artificial vision system for a computer is getting it to recognize that an object is the same, regardless of perspective, position, ambient lighting, and a whole slew of other factors that our brains process easily.

If an object we already recognize moves, whether it changes position or size due to perspective, our brains perceive that it's probably the same thing we were looking at a half second before. This is scientists call "temporal contiguity," and it's believed that by learning to associate images that appear in rapid succession, we understand that they're the same thing, regardless of movement.

To test this, researchers at MIT's McGovern Institute for Brain Research, set up a visual display that broke "temporal contiguity" as we're used to it. The display would show an object decreasing or increasing in size — mimicking either approaching or receding from the screen — and then would swap it out for a different object. So a dog would change into a rhino, or something similar. They recorded the brain activity in the inferior temporal cortex (the part of the brain thought to handle object recognition) of a group of monkeys while exposing them to these images.

What they found is that the monkey's sense of recognition of the object began to change, and that some would begin to link together the two different animals as one and the same, essentially turning "dog" into "dogrhino."

This provides the clearest evidence to date that "temporal contiguity" plays a major part in how we learn to recognize objects, and could theoretically be used for training robots to recognize objects, regardless of angle and size.

Research published in Neuron.
People have actually tried similar techniques for training computer object recognition systems already, but the number of different images you can create from the same object is uncountably vast.*  The puzzle is that it takes thousands of training instances for many (most?) neural computer vision systems to achieve scale and rotation invariance, but it takes humans no more than a couple of views at an object to have a pretty good chance of recognizing it from a different angle or a different scale.

(* Not actually infinite, because of minimal discernible differences, but still effectively unlimited.)

I haven't read Li & DiCarlo's Neuron paper, so don't take this as a criticism of their work.  It sounds interesting.  I'm just perpetually amused by the way the press interprets scientific papers.  For instance, judging just from the abstract, it seems like this is more confirmatory than a "breakthrough."  Is it that shocking that the inferior temporal cortex uses unsupervised learning to achieve rotation and scale invariance?  That's a legit question: I haven't read much on the IT, but most of the neural functions I have studied have been unsupervised, or at most semi-supervised.  Again, I'm not criticizing Li and DiCarlo.  Their paper piques my interest, especially the bit about the relationship between position and size processing plasticity.  I'm just not sure how we get from this paper to "new way to train robots to recognize you!"

Speaking of the way research gets reported, you must read this Martin Robbins description of every science article ever published in the popular press. Here's the beginning.

This is a news website article about a scientific paper

In the standfirst I will make a fairly obvious pun about the subject matter before posing an inane question I have no intention of really answering: is this an important scientific finding?

In this paragraph I will state the main claim that the research makes, making appropriate use of "scare quotes" to ensure that it's clear that I have no opinion about this research whatsoever.

In this paragraph I will briefly (because no paragraph should be more than one line) state which existing scientific ideas this new research "challenges".

If the research is about a potential cure, or a solution to a problem, this paragraph will describe how it will raise hopes for a group of sufferers or victims.

This paragraph elaborates on the claim, adding weasel-words like "the scientists say" to shift responsibility for establishing the likely truth or accuracy of the research findings on to absolutely anybody else but me, the journalist.

In this paragraph I will state in which journal the research will be published. I won't provide a link because either a) the concept of adding links to web pages is alien to the editors, b) I can't be bothered, or c) the journal inexplicably set the embargo on the press release to expire before the paper was actually published.

"Basically, this is a brief soundbite," the scientist will say, from a department and university that I will give brief credit to. "The existing science is a bit dodgy, whereas my conclusion seems bang on" she or he will continue.

I will then briefly state how many years the scientist spent leading the study, to reinforce the fact that this is a serious study and worthy of being published by the BBC the website.
Don't miss the rest.

(Via Alex Massie)

23 September 2010

Primacy of Reputation

An important sentence from Bryan Caplan:
I'd rather deal with a reputable firm I couldn't sue than a crooked firm I could.
I find reputation extremely important. I think many of the problems in our society can be at least partially explained by the lack of knowledge we have about other people's reputations when we must live in a group of hundreds of millions of people. (For instance, employers resorting to using FICO scores when hiring.) This is why I oppose all attempts to limit the flow of information that can be used to judge reputation (e.g. my defense of Unvarnished).

Edited to add — 23 Sep 2010: in a similar vein...
bng bng | Cory Doctorow | Brighton, England town council says that councillor is violating copyright law by youtubing the council meetings

Jason Kitcat, a town councillor in Brighton, England, faces suspension from the council for posting clips of town meetings to YouTube. The council says that his attempt to "hold the administration politically to account" by trying "to highlight what the he believed were the administration's deficiencies" constitutes a political use of the council's "intellectual property." This is prohibited.
This is an attempt by the council to prevent the formation of a robust reputation system as applied to politicians.

Oh, hell, one more chart about college costs

This one from the Census Bureaue, by way of M.McArdle

I really wish I had more data on this, because I'd love to see the breakdown by what people get their doctorates in. Maybe this is just me building a wall of psychological defenses since I'm in grad school, but I desperately want to believe that the bar at the top is dragged down by people in humanities and other things I'm not studying.

Anyway, she has worthwhile commentary on the tuition and student loan situation, including this: if a college degree causes your lifetime earnings to go up by a $X, and the net present value of X is Y, then colleges can get away with charging $Y-k, with k << Y.  This is only true as long as there is some way for students to get their hands on $Y-k right now, which is where loans come in.  Go read her post for a better explanation.

Reading list

Steven Landsburg's tax parables are not to be missed. "Self-recommending," as the cool kids are saying these days.  (For values of "cool kids" equal to "people who read econblogs written by GMU faculty.)
~ ~ ~

Also worth reading, Landsburg on utility and egalitarianism and the morality of that which is seen and that which is unseen:
~ ~ ~

Scott Sumner on taxation — an excellent companion to Landsburg. I hope to be able to say more about this quite soon.
If I could make a deal with the universe that would allow either Sumner or Landsburg to single-handedly construct the American tax code I would gladly accept whatever their ex cathedra pronouncements would be even if it resulted in much higher taxes for me personally.

~ ~ ~

LabRat on Sherlock Holmes adaptations

I've not read the originals (though Mrs SB7 has recently launched into the complete annotated collection we have and I can't wait to join her) but I really liked the three-part series the BBC produced this summer.  From Mrs SB7's initial reactions, it seems quite faithful to the canon.  Our chief complaint is that they only made three of them and that we will likely have to wait until next autumn for three more.  Boooo.

~ ~ ~

Since we're talking about telly, NPR's Linda Holmes on whither good tv.

~ ~ ~

John C Wright on what makes for good evil in sci-fi and fantasy.

~ ~ ~

Braak about the future of publishing companies, and authors exploiting personal brands to become publishers the way music stars become producers.

~ ~ ~

Back into the serious territory, and also self-recommending, Michael Lewis on Greek finance

~ ~ ~

Warren Meyer on a union firing on of their office employee for trying to unionize fellow workers. A good companion to the video from the Daily Show that's been making the rounds.

~ ~ ~

Finally, I may have linked this before in passing, but check out Nick Gillespie on Bush's spending binge

22 September 2010

Go and boil your bottoms, you sons of silly persons

The Atlantic | Megan McArlde | What Do Americans Want?

Matthew Yglesias writes
In an excellent column, Stan Collender makes the point that it does no good to talk about cutting spending in pure numerical terms. If you don't spell out which actual things you want the government to do less of then you're not really doing anything. [...]
This is, of course, equally true on the other side: people don't want to pay more taxes for all the services they say they want, and which will indisputably require more taxes to provide. [...]

I'm not sure what this proves except that Americans have a very fuzzy conception of how the government raises and spends money, and that poll questions asked in isolation (asking people whether they support programs, without informing them about relative costs) gives you responses that aren't very useful.
(Emph. mine.)

(1) Check out the discussion on polling at the beginning of this EconTalk episode Russ Roberts did with David Brody.  He discusses a poll on health care reform in which people were asked what their income was, allowing the pollsters to estimate their tax levels.  Then they can ask questions like, "would you support program X if your taxes would be increased $Y?"

(2) Americans have a fuzzy set of ideas about a whole big heap of things. It shouldn't really surprise us that there are voters out there you think if the Pentagon just spent less on hammers and we stopped giving money to Swaziland they wouldn't have to pay any taxes at all.  Americans are very fuzzy on government revenue and spending, but what aren't they very fuzzy on?

This is why I like The Customer is Not Always Right. In addition to being one of the funniest sites I read, it also throws a ton of light on how silly and uninformed and illogical and entitled we can be. Some of the people are just being stupid. (What? Fish need to eat food?!) But a lot of them are very deeply confused about how the world works, and others display really distrubing moral judgements about what people owe them and how the world needs to conform to their ideas rather than changing their ideas to conform to facts.

It's this last that I find most disturbing: too many people expect the world to adapt to their mental model of it, rather than going through the cognitive effort of admitting their model was wrong and updating it.  If they do that with regards to routine retail transactions I can only imagine how cognitively obstinant they could be about major political or economic issues.

(BTW I pulled those links to Not Always Right only from the last week or so of their posts.  There are many more egregious ones.)

Interesting correlations: Tuition

I got some traction with the graph I posted yesterday from Political Calculations reducing the 2010 elections to the single most salient chart.

Might as well also post their follow up, which is just as interesting:
Political Calculations | Ironman | Who's Behind the U.S. Higher Education Bubble?

We didn't set out to go looking for it, but we couldn't help but notice what would appear to be a really unique correlation between the average annual tuition at a four-year higher education institution in the United States and the total amount of money the U.S. federal government spends every year.

[...] Changes in the average cost of college tuition closely pace the growth of total U.S. federal spending, and has done so almost perfectly since 1998.

This correlation suggests that the U.S. federal government is directly behind the bubble we observe to exist in the cost of U.S. higher education, with federal spending during years of recession effectively insulating U.S. colleges and universities from the nation's economic circumstances by subsidizing their operations.

These subsidies, delivered at times of recession, free U.S. higher education institutions to set the price of their tuition independently of their students' ability to pay based upon their or their family's current household income. [...]

Emphasis mine.

I've said before that I think you can't find "the" cause of price increases in higher ed. There are too many factors at work. Nonetheless, the cause identified in these charts has got to be put on the short list of causes, and high up the list at that.

In my previous post on college costs I said that one of the causes is that parents and students don't really do a cost/benefit analysis when choosing what their price point for college will be.  It's more like what people were described as doing with housing during the boom: buy as much house as your mortgage lender will let you get away with.  I think don't pay what they think a degree is worth, they pay as much as they think they can get away with paying.  That quantity of "what they think they can get away with paying" is going to go all screwy during recessions, especially when that number is based largely on what FAFSA forms tell you and when it's compared to median family income.

[Edited to add — 23 Sep '10: Political calculations has another post about this today, including the following chart.]

I will never get tired of stories like this

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Working Stiffed
Daily Show Full EpisodesPolitical HumorTea Party

Via Mungowitz

21 September 2010

One Wall Bad. Two Walls Better.

Two Weeks Notice | Greg Weeks | Mexico's wall

Mexico is building a wall along part of its border with Guatemala. From IPS:

According to the head of customs for Mexico's tax administration, Raúl Díaz, in order to stop boats carrying contraband, the southern Mexican state of Chiapas is building a wall along the border river Suchiate, similar to the one the United States is building along its southern border with Mexico.

"It could also prevent the free passage of illegal immigrants," admitted the Mexican official.
The irony here should be obvious.
Hahahahaha. Sometimes I love how absurd the world is.  Of course sometimes it makes me cry, but you know, strikes and gutters...

I envision a whole series of parallel walls, stretching down to Tierra del Fuego. Defense in Depth!  And why stop there? Surely there are some northerners who would like to see a wall across the Mason-Dixon. And of course many Red Sox fans who would like to throw up a barricade across 95 between them and New York.

(Via Kids Prefer Cheese)

2010 Politics in One Chart

Political Calculations | Ironman | The Biggest Issue of 2010, In One Chart

If you were asked to produce a single chart illustrating the biggest single political issue in America today, what would it look like?

We're taking on that challenge today. Here's what we came up with:

In this chart, where we've graphed the trajectory of the total spending of the federal government with respect to the median household income in the U.S. for the years from 1967 through 2009, we see that the U.S. federal government's spending today has decoupled from the primary source of income that is required to sustain it.

Worse, it has literally "gone vertical" during the last two years. [...]

In practical terms, that means government spending has become completely disconnected from the ability of the typical American household to support it.
Well done. Well done indeed.

As always I will caution that looking at median household income over time is tricky business because the size of households has changed and there are non-negligible effects from immigration. There's also danger trying to suss out long-term trends from this chart because it doesn't account for population size, or better yet number of working age residents. These pitfalls at not as significant over short time periods.

All in all, I think this is a fantastic answer to the challenge of finding a single chart to sum up this election cycle.

Bonus points: focus is on spending, not deficits/debt.

Another BS chart

MSNBC | Rachel Maddow Show | Chart: National debt, by president

Rick Seaman of Portland, Oregon, made this chart from data he found on TreasuryDirect.gov.

"If voters don't understand this, the media has failed them," Seaman writes.
Now hold on one hot minute there. You say two thirds of the debt is from the last three Republican administrations Okay. That's two terms of Reagan, one of GHWB, and two of GWB. That's five terms. In that time period we've also had two Clinton terms, and about half a term of Obama.

So the GOP can be blamed for two thirds of the debt. And they've held power for... two thirds of the years! SHOCKING!

On a practical level I don't see how continuing to run from the "Blame it all on Bush" playbook is going to play out well for the Dems.  I don't pay much attention to the horse-race type political maneuvering coverage, but I don't see how after years of Congress and the White House and hyping on about how they had a mandate for Change and they were going to invent a whole new political process and whatnot that the Dems can convince Sammy Swingvoter that it's not their fault because the last guy left things too messy.  I don't see how much mileage you can get out of "Things are broken; we're going to fix it," followed a few years later by "Not our fault things are broken: it was like that when we got here."

I can't close this post without making it absolutely clear that Obama has run up this much debt in under half a term. He's managing to make even the profligate GWB look stingy. Look at that: both Red Team and Blue Team love spending other people's money, and writing checks they can't cover. Keep that in mind when you get all psyched up about trying to fix things by electing the other batch of bandits.

Finally, another reminder: stop getting so worked up about deficits and debts.  Debt is not the problem. Spending is the problem.  Spending is the problem. Spending. Is. The. Problem.

cultural correlations

Dead Man Dance | bluesun | Oberon Design Kindle cases--don' no whut tuh say abot that...

Been looking around at my options for a case for the kindle. AAARRGHHH!!! Why is it that it seems that nearly every company that makes cases for these things are "environmentally conscious" and "donates to buy land that is environmentally threatened" and makes the case out of "hemp and spun gypsy monkey turds?" Is there some sort of a prerequisite that I missed somewhere, that to own an e-reader you have to be a concerned hippie, who's sole motivation for buying one is to prevent trees from being hurt? Is there no room in the demographic for an conservative-minded engineer who simply appreciates neat technology (and books that are out of copyright)?
I've been running into similar problems myself. Not for Kindle cases specifically, but just the general presumption among a lot of design and style and art and craft sources that I must share the same outlook they do with regards to sustainability, international trade, localism, etc. I've quit following a number of interesting blogs and web video series and such because I found it very rude that they assumed I agreed on a range ancillary political and aesthetic questions. If I just want to learn how to screen print a tee shirt I don't want to be hit over the head with how awesome it is that the shirt you're printing on was made by American union labor from organic cotton. Not only is there rarely an acknowledgement that reasonable people can disagree about the benefits of those things, they're entirely unrelated to the topic at hand.

(Via View from the Porch)


Dispatches from TJICistan | TJIC | what makes us unique – culinary BDSM edition


“There is not a single animal that likes hot pepper,” Dr. Rozin said. Or as Paul Bloom, a Yale psychologist, puts it, “Philosophers have often looked for the defining feature of humans â?? language, rationality, culture and so on. Iâ??d stick with this: Man is the only animal that likes Tabasco sauce.”
Huh indeed.

British Tax Proposal Postscript

(Part 1)

I just re-read the CNBC post, and what is striking to me is that the objections raised in the article seem to be either that a new system for collecting taxes would be expensive and hard to get right, and that the revenue service would need access to everyone bank account and they have a bad history with keeping databases private.

They gloss over the fact that letting a government ministry decide how much of your own salary you get to have and when IS COMPLETELY INSANE.

20 September 2010

All your salary are belong to Her Majesty's Revenue and Customs

EconLog | David Henderson | Not From the Onion

UK Proposes All Paychecks Go to the State First

That's the headline on a CNBC story and these are the first two paragraphs:
The UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty's Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.
Cameron's first order of business tomorrow should be to fire whoever proposed this.

HT to Tom Palmer and Gary Chartier.
Wow.  Just... wow.

What's more shocking: the audacity of this proposal, or the fact that California hasn't tried it already?

PS Don't miss Coyote Blog's post about how the tax collectors in Florida failed to complete his business' sales tax audit within the statute of limitations, and then decided to hit him with a $40,000 tax lien just in case they ended up deciding later that he owed them money.  They sort of relented, giving him one day to prove he didn't owe them money after sitting on their hands for two years and failing to prove that he did owe the money.  If all your salary went through the tax man first there's no doubt that sort of thing wouldn't end up happening to citizens all the time.

I can understand leftists who think tax rates ought to be higher, even much higher.  I don't agree, but I can see where they're coming from.  I can not understand how anyone would think that the State ought to get first crack at citizens earnings, only disbursing to people what the State thinks they deserve.  I don't think I can even have a fruitful debate with people who think that.

Greatest consumer surplus?

Marginal Revolution | Tyler Cowen | Paul Langley asks about consumer surplus
What non-subsidized common products and services do you think have the highest average consumer surplus? Cell phones? Shampoo? Antibiotics? Just wondering.
Obviously it depends what margin you are at; for many people antibiotics or pharmaceuticals mean the difference for life or death but right now they do not for me. And surely we cannot answer with "all food" or "all water." For average value, I'll go with antibiotics, but a separate question is about median value.

I'm not sure cell phones have a positive marginal utility for a lot of people. I would be happy with an email-only iPhone and I know people -- close to us all right now -- who don't even own a cell phone.

How about a toothbrush? Eyeglasses? The median adult wears them. Often it's a car, though in the longer run you can adjust by moving to a walkable city. A properly functioning toilet and waste disposal system? Television? Painkillers?

I thank the lunch group for a useful conversation on this topic.
Great question.

I think the eyeglasses answer is a very good one, especially if you buy discount glasses online like I do. I used to pay several hundred dollars per pair and still felt like I was benefitting, so now that I only pay a dozen dollars I must have a consumer surplus of a couple thousand percent.

I also like the toothbrush guess.

Cell-phones are no where near the top of my list.  I'm not sure the benefit to me is even positive.  I think the benefits of my having one accrue disproportionally to other people.  (People I care about, but other people nonetheless.)

I don't use a dedicated shampoo, so that's definitely off my list.  (Yes, I wash my hair. But I use Dr. Bronner's for both hair and body.  (Mrs. SB7 is probably mortified that I am admitting that in public.))

How about condoms?  Plenty of consumer surplus there.  (What's that I hear?  Is it that sound of Mrs. SB7 being mortified AGAIN?)

How do you calculate the consumer surplus on a public library membership?  The benefit to me is huge, but the true cost is too occulted to calculate my surplus.

Non-penicillin antibiotics already saved my life once when I had pneumonia as a child, so the benefit of those to me has got to be infinite even if I never got to use them again.

Limiting myself to everyday items my answer would have to be in the realm of utilities. A couple of lengthy* stretches in the last two summers without power and water have thrown stark contrast on life with and without modern utilities. I call it a tie between running water and refrigeration.

(* Where "lengthy" is a few days, which is not lengthy at all in the grand scheme, but quite lengthy in the context of a non-disaster area in the first world.)

The consumer surplus to an internet connection is also astounding. I could get pretty much all of my entertainment and a great portion of my education for free online. I'll throw net connectivity into the "utilities" bucket.  In addition it multiplies my surplus for many other goods and services, e.g. eyeglasses as mentioned above.

Thoughts on the Richness of Todd Henderson

Via Prof Bainbridge:
Truth on the Market | Todd Henderson | We are the Super Rich

The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t.
I have some mixed feeling about this piece, but it's definitely worth reading.

Some thoughts:

0.  I would not characterize our situation as Obama "planning" an expansion of government.  Saying it is being planned implies that it will be happening in the future, when it is actually in full swing now, and indeed has been since Bush's first term.  See Nick Gillespie:  Why is everyone picking on the Bush "tax cuts" rather than the Bush "spending increases"?

1.  At it's heart, Henderson is getting at the distinction between high-wealth and high-income, and I like that.  We think of "the rich" as people who have a lot of money, but our tax code is based on people who are making a lot of money.  We don't tax richness, we tax the first derivative of richness. The Hendersons make about a third of a million dollars, pre-tax, each year and owe about a third of a million in student debt alone.  Between that and a mortgage they probably have a negative net worth.  Are they "rich?"  Yes, in a way.  But also no, in a way.  Our arguments about taxes are always going to be a mess as long as the answer to that question is both yes and no.  This is why I wish we would not calculate taxes in such a myopic, one-year-at-a-time way.

2.  Henderson talks about how after all their family expenses they're left with a few hundred dollars of disposable income each month.  I understand that these expenses are largely fixed and not easy to cut, but they're also entirely voluntary.  I'm not not going to let the financial commitments he made to private school tuition or mortgaging a property in an expensive neighborhood influence my judgement on this sort of matter.  It's a choice he might now be stuck with, but it's also a choice.  How flexible he is after making those choices has bearing on what we think the practical results of tax changes are, with respect to aggregate demand, etc., but they don't have much bearing on the morality of taxation.

3. This line bugs me specifically:
Since we care the education of our three children, this means we also have to pay to send them to private school.
All parents care. Okay, not the psychopathically selfish ones, but in general all of them care.  Henderson happens to care enough to spend ~10% of his pre-tax income (I'm ball-parking here) on private school tuition.  But you can't simultaneously tell me you care so much that you sacrifice other spending for their education and also claim that your hands are tied because that money is spoken for.  If you care so much that you're willing to sacrifice then you can't treat that spending as inviolable.  It has to be voluntary to be  a sacrifice.

When you make a decision you can't claim all the upside as a voluntary and noble choice you've made, but then turn around and claim the downside as suffering that's been thrust upon you.

Henderson is concurrently telling me "I care so much that I've made choice X" and "I don't have the money, my hands are tied, it's not a choice."

It's another aspect of this situation:
The Atlantic | Megan McArdle | The Heroic 'Sacrifice' of Underpaid Elites

Conor Friedersdorf recently posted this thought:
Though it isn't defensible, it is unsurprising that a lot of people who eschew offers to work at these firms, favoring public sector work instead, imagine that they are making an enormous personal sacrifice by taking government work. The palpable sense of entitlement some of these public sector folks exude is owed partly to how few of 'our best and brightest' do eschew the big firm route (due partly to increasing debt levels among today's graduates, no doubt).

Speaking as someone who attended one of these lustrous graduate institutions that allegedly produce our "best and brightest", I'd like to say . . . knock it off. Stop patting yourself on the back. You can seriously damage the ligaments in your shoulder that way, as I discovered when pursuing an ill-placed mosquito bite too vigorously.

You know how much credit I deserve for giving up highly paid professional work in order to spend my days boring the hell out of you all with my breezy explanations of present value calculations? None. Am I performing a public service? I hope so. I take my profession seriously, and like to think that I am adding something to the public understanding. But that was my choice. I knew what I was giving up when I made it, and I also knew what I was getting. Which is to say, a job that I absolutely love more than anything I've ever done, a chance to speak to interesting people and see amazing things all the time.

Getting to do those things involved a tradeoff. [...]

I took the job because I think this is a great tradeoff. My classmates who went to banks and consultancies mortgaged their late twenties and early thirties doing work I would have found much less rewarding; they are enjoying the payoff now--at least the ones who didn't simply lose everything when Lehman and Bear went down. I don't want to say they "deserve" it, because almost anyone in that sort of position has had an enormous amount of luck along with their hard work, starting with being born to the right family. But I don't begrudge it to them. I think I got the better end of the deal.

And so do the folks who took jobs in government or academia or the non-profit sector. Maybe a few of them really "made a sacrifice" for some obscure reason involving widowed mothers and villanous landlords with a penchant for late-night visits to the railroad tracks, but most of them took the job because they thought they'd like it better. The kind of people who are actually willing to make the sacrifice of doing something they hate in the name of the greater good tend to join monestaries or the army, not the Political Science department at Penn State.
In both of these situations people "made a sacrifice" compared to the situation in which they get to eat cake and also have cake. But if you think the certain mix of benefits from your job is the best one for you, or the mix of educational quality and cost is the best one for your kid, you're not making a sacrifice, you're just choosing the option you like the best among several choices.

4. Ultimately I think this kind of "'the rich' can afford it"/"no we (or they) can't" business is a waste of time. At the end of the day I end up standing with the people in Henderson's "no they can't" corner — though I think a lot of people in that camp overblow how bad it's going to be. But like I said I think it's missing the point.
Kids Prefer Cheese | Angus | Missing the Point

The sometimes reasonable Matt Yglesias tweets that "we can incentivize savings without huge giveaways to rich people". Over at Slate, the rarely reliable Dan Gross opines that people making over $250K can afford a tax hike. Over at Econospeak the title is "Tax increases on the rich will not greatly reduce aggregate demand".

All of this is so strange. How is not raising someone's taxes a "huge giveaway"? Who is "we" exactly? Since when is whether someone can afford it the rule for choosing how much to tax (well, I'm given to believe that's how taxes were collected back in the middle ages)? How is the fact that a person may not do exactly what 1960s Keynesian economics wants them to do with their money grounds for taking their money?
It really creeps me out when people start talking about what taxes "we" can impose, as if the primary consideration is one of capability. (1) There is no "we" and (2) it's not about whether the state can get away with it, in terms of macroeconomic, electoral or other consequences.

As soon as we start talking about whether some person can get by if the government allowed them to keep less of their stuff we obscure the ugly fact that the government is taking that guy's stuff. Some of that taking may be necessary for all of the goodies people want from the state, but let's not forget that we're talking about taking people's stuff.

I'm willing to accept taxes as the "price we pay for civilization." (As I've mentioned before I think this view is mistaken, but it's also useful.)  I can accept, rhetorically at least, that taxes are the cost of hiring a state to impose order on society. And because of coordinated action problems, etc. we need to do the necessary evil thing of knocking on people's doors and demanding they hand over some lucre to make the gears turn. I can live with saying "someone needs to give up their money to pay these bills, and we might as well make that someone be people who will suffer the least from having less."

Where I get very uncomfortable is when we move from talking about taxes as something we have to do to people to something we get to do to people. As soon as the conversation shifts to what taxes we can impose then taxes are being viewed not as the payment we require for government but as a punishment we're imposing on people we don't like.  Now we're saying "ewwww, I don't like how much money that guy has; I don't think he deserves it; let's take some away."

Taxes are a necessarily evil way to keep the wheels in motion, not an method of expressing your envy or punishing people you don't like.

5.  I'll echo Tyler Cowen's point: a lot of people are saying that Henderson has no business complaining because he's already so much better off than so many others.  By this same logic though the lower middle class worker has no right to complain if we raised his taxes, because he's still better off than so many others.  By this train of thinking you have no grounds to complain unless you are the least well-off person in the country.  The "shut up, things could be worse" arguments is never, ever applied consistently.

Cowen also links to this envious troglodyte, who is exactly the kind of person I mention getting freaked out about in point #4.  Taxes should be imposed with contrition, not glee.

6.  A lot of people in my end of ideologyspace worry about top marginal rates of taxation discouraging people from being successful.  I think these worries are worth considering, but typically overblown at current US rates.  What I do worry about though is the disincentive from a society-wide attitude that assumes being rich is undeserved and looks at high-income earners as milk cows.  I think that kind of attitude will sink in and discourage achievement much more than a couple point bump either way in marginal tax rates.