An interesting thought

Via Megan McArdle - I'm not for this, but it would solve the problem.

My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can't afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:

1. No tax on the forgiven loan

2. No black mark on the credit record. The bank marks the loan as fully satisfied.

Of course, if we decide to actually "fix" the problem we should loosen immigration and get people actually in the vacant houses.

Line of the day

Via Megan McArdle "History may not repeat itself, but it stutters like hell."

Turning Japanese

We're officially in a recession - and for the first time in living memory American household debt shrinks! Americans really will do the right thing once all other options have been tried!

Another from MR

From Marginal Revolution comes this adage

It is through exchange that difference becomes a blessing, not a curse.

The post of the day

From Marginal Revolution

Thanks goodness we bailed out Bear Stearns back in March if we hadn't we might have lost Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch and who knows what else. Oh wait...

Sunday reading

• Cities and Ambition -

  "A friend who moved to Silicon Valley in the late 90s said the worst thing about living there was the low quality of the eavesdropping."

  I've always judged cities by the quality of the homeless and convenience stores, but there's all sorts of different metrics I suppose.
• What if politicians pandered to economists?
• The AJC now has foreclosure listings

John Robb's annoying moments

On the whole, I like John Robb, his book Brave New War was thought provoking, and his upcoming book on Resilient Communities looks to be good as well.

But then posts like this one anger me to no end. He goes over current world trends in apocolyptic tones and then closes with

Except for the fanatical optimists, market mystics (the divine invisible hand), and the naive/uninformed, the debates over these trends are over.

He always mentions the broad trends with no real mention of where economics might shift the current, instead he just brushes that off with the thesis (this is what I gather from reading him anyway) that practically all of the benevolent inputs are dynamic, whereas the benevolent inputs are static.

This is no ordinary Tuesday

My predictions are Obama and Huckabee here in GA. On a related note, I met my first Ron Paul door to door guy on Saturday, he seemed very nice. He gave me a bumper sticker too.

Before I go vote, here are some links that caught my eye:

• Barstool Economics
• Leading denominations by location
• Your tax dollars by at work - Atlanta cop and Duluth cop in shoot out
  

Quote of the moment

I was perusing Marginal Revolution (about vouchers) and came across this comment

In other words, even if a child’s chance of going to the state university is not increased by his new school, the kid’s chance of ending up in the state penitentiary is radically decreased. This consideration might not be of primary concern to many who support vouchers, but to those who live in the ghetto, it is of PRIMARY concern. Schools, more than anything, breed gangs. Like the projects of old, when you are FORCED to a geographical location, you make gang recruiting easier - and your kids chances of entering the prison system that much greater.

I saw a lecture by Nobel Laureate James Buchanan many years ago and before he veered off into pure math he said that there were three types of social organization, which he dubbed (something like this anyway), the closed circle, the open circle, and the broken circle. The closed circle is a prison, the open is free association, specifically where members have the right to exit and the right to exile rouge members and the broken circle, which is no association at all.

The Buchanan point came to mind...

Throwing stuff to the wall

Via Marginal Revolution, here comes today's quote of the day

Trying stuff is cheaper than deciding whether to try it. (Compare the cost of paying and feeding someone to do a few weeks of [Perl or PHP] hacking to the full cost of the meetings that went into a big company decision.) Don't overplan something. Just do it half-assed to start with, then throw more people at it to fix it if it works.

The market is a discover process after all.

Tuesday link roundup

• Advice from your public defender (best of Craig's List)
  
• Why we should hang out: a mathematical proof, this sounds like something I would do actually
• Interesting post on academic taboos from David Friedman
• Another blog post about Sarah Stever, from one of my realtors actually
• Ron Paul Facts, my favorite -

  Ron Paul has been shot at more than a dozen times, but the
  

  "pro- 2nd Amendment" bullets refuse to harm him.

The market has spoken

This editorial from the AJC is an annoying example of the current hysteria about subprime loans

Describing the wreckage of the subprime mortgage collapse as part of the normal business cycle is akin to characterizing the devastation of New Orleans as the aftermath of a seasonal downpour.

In both disasters, human blunders and government inattention played pivotal roles. And the market can no more be counted on to fix the subprime mess than Mother Nature could be trusted to fix up the mess after Hurricane Katrina.

Government must intervene quickly and firmly in the subprime fiasco, in helping desperate borrowers keep their homes if possible and, more important, in ending abusive lending practices that contributed to the national leap in mortgage defaults and foreclosures.

New federal and state laws must couple strong prohibitions against abusive lending with equally strong enforcement and consequences. The pain must be felt by the duplicitous mortgage brokers who talked the homeowners on Elm Street into loans with hidden brokerage fees and unnecessarily high interest rates all the way up to the investors on Wall Street who profited from the bundling and selling of these subprime loans.

The article then goes on to describe several cases of fraud that happened in the Atlanta area, fraud as everyone knows is already illegal. Foreclosure and the denial of credit IS the marketing working, mainly in stopping people from buying homes they can't afford. Absent fraud, no one is forced into a mortgage, and everyone knows how much they'll be paying.

I suppose I'm more sensitive to this now (having just bought a house) than most times, but it's quite maddening.

Shock Doctrine reviews

This is a week or two late, but anyway, check out Tyler Cowen's review of Naomi Klein's Shock Doctrine. You should also read this interview with her and Alan Greenspan.

Klein is the current favorite of the anti-globalization left. If after reading the articles you feel like cursing the fire department for making your house all damp and soggy after a fire, then you understand her quite well.

This is funny

I forget how I came across this, but check out Why Marrying For Money is Never a Good Idea.

Tuesday night rapid fire

• Robert Kaplan on private military contractors
• John Robb on private military contractors - one thing he doesn't mention (and I don't think he has mentioned it before) is that there could be many, many problems with highly trained combat forces under no particular command, they would make quiet a crime crew. It's unlikely with the current stock of PMCs, but it might be with the next generation.
  
• Solar Power is becoming a vested interest
• For some reason validator callout extenders won't work with a custom validator with the standard Visual Studio code, but it works with this code.
• Nazi War Criminal was found in Metro Atlanta. Why must events like these be the only time Atlanta makes national news?
• Building a tree fort as an exercise in project management
• DNI on leaving Iraq
• A client of mine was in the AJC today, I did the Atlanta Arrangements site late last year.
• Secret Geek has a nice post on the Principles of Scale
• Tyler Cowen on income inequality. I wonder if anyone is actually worried about this. No one seems to be, but everyone thinks everyone else is scared stiff. One thing to bear in mind is that the bottom is fixed at zero
  

Economics for five year olds

Arnold Kling has a great post on explaining economic development to five year olds, with the hope that journalists understand it. The version he came up with was this

There are lots of people in the world who will give us things that we want, as long as we give them something they want in return. This is called trading. Some of the things we trade are hard to see--they are like nice thoughts. Other people keep thinking up nicer things to trade with us, and we keep thinking up nicer things to trade with them. We keep trading nicer and nicer things. Many years ago, people had not thought up all of these nice things, so they did not have as much to trade as we do. That is why people who lived back then were poor, and we are not.

Now if he'll only do one for deadweight loss.

A civics quiz

I got this from Megan McArdle, it's the Civic Literacy Quiz!

I scored 57 out of 60 correctly — 95.00 %!

How about y'all?

Greespan

Alan Greenspan impressed me on the Daily Show last night.

One minor thing, they ran out of time before Greenspan could fully respond to Jon Stewart's question of "Why do we favor investment over work?". The question was in response to the stock market jumping in response than a greater than expected prime rate cut. The question does demand a long answer, and the part Greenspan didn't have time to get to was

"The tax code is used to incentivize investment and work (a very approximate answer, it does that whether we want it to or not). The role of the Federal Reserve is to regulate the money supply and ensure that a dollar a year from now buys about as much as a dollar today."

Shock Doctrine

A well done piece of propaganda is Naomi Klein's Shock Doctrine, available on MySpace TV. It's another attempt to get everyone riled up about income disparity, which no one seems to mind. Unmentioned is the fact that it is an indie film, being released on a social networking site, and being given away. Hardly something that would happen in a poor society.

Maybe countries are in the Gap for a reason...

From the Economist Blog

Why would anyone with a robust sense of reality simply assume that each national jurisdiction contains the seeds of a viable economy? If we insist on thinking of development as a matter of national growth, we may well consign most of the bottom billion, and their children and their grandchildren, to unrelenting poverty trapped within their UN-recognised national prisons. Our real moral concern should not be the Central African Republic, but its unfortunate denizens. The best thing for their prospects may simply be to get out--to leave for a place where growth has already commenced. The West's many attempts to jumpstart growth where the world's poorest already reside has yet to work. So why does the international community insist on betting the poor's lives on the gamble that it will, finally, some day?

While development has worked in some places, South Korea and Taiwan come to mind, there is little compelling evidence that a society locked into antiquated social capital can shift to a modern one absent the destruction of the existing social capital. The shocks would be a significant war, or a tyrannical government (i.e. China) willing to uproot society.

Its food for thought anyway.

Monday morning roundup

My apologies for the light blogging, work has been a frenzy lately. You should all read

• The Buy Vs Rent Calculator on the NYT
• HDR in Photoshop CS3
• The coolest Silverlight application to date
• Will Wilkerson makes an excellent point on the current supply-side forforah going on these days.
  

Quick links while uploading

An assortment of things I've read while I've been uploading things today

• The golden age of Chicago prostitution - The Everleigh sisters are respoinsible for the term "get laid". An interesting read - the more things change...
• Rifle Robots!
• John Allen Paulos has a new book out soon, I think it's going to a more civil (and knowing Paulos well written and interesting) version of the recent Richard Dawkins screed. My favorite blurb from the Amazon page "A Lifelong Unbeliever Finds No Reason to Change His Mind"
• How to build your business without quitting your day job
• Firefox tune-ups
• Conan O'Brian hates my homeland - favorites

  Brazil
  Home to more than 800 species of unregulated breast implants.
  
  Burkina Faso
  In the traditional tribal language, that's Burkina for "land of" and Faso for "people who want to get the hell out of Burkina Faso."
  
  Colombia
  You'll come for the enticing beauty of the Caribbean Sea. You'll stay because you've been kidnapped and locked in the trunk of a Dodge Dart.
  
  East Timor
  It takes a lot to admit you live on the bad side of Timor.

Another interview worth reading

In this case, with industrialist Charles Koch. It's seems that most interviews on the internet are with either celebrities or analysts, and seldom anyone who has taken his own risks and created his own empire.

Saturday link roundup

• A nice how-to on HDR photography
• Survivorman is blogging again!
• The greatest living American you've never heard of.
• The world's stupidest Fatwas, my favorite -

  Many Muslims believe that unmarried men and women should not work alone together—a stricture that can pose problems in today’s global economy. So one Islamic scholar came up with a novel solution: If a woman were to breast-feed her male colleague five times, the two could safely be alone together.

  The injuction against the Polio vaccine is scary though.
• It seems that tires will outlive us all
• More on the Kathryn Johnson case
• A Slate article on the ethanol haters, of which I am one. He leaves out the fact that creating ethanol takes more energy than it produces.
  

Friday in appreciation, volume II

The In Appreciation for this week goes not to a person, but to the economic force known as Capital Flight. Wikipedia defines it accurately as

when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength. This leads to a disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country (devaluation).

Modern technology makes it easy to move money from one country to another; giving an immediate cost to bone headed economic decisions and plundering. For examples, think of governments defaulting on debts and anything that has happened in Zimbabwe over the past few years.

So Capital Flight, for enforcing some degree of fiscal and monetary responsibility on the governments for the world, you get my second Friday In Appreciation.

Finally, a problem we can blame on the Mexicans

It's not a major problem, but from some reason they (Mexicans) bicycle approaching traffic, which is the way it's done in Mexico, but not in America. This endangers the cyclist as the amount of time between perception and action is dramatically reduced for both parties, which means that they have less time to avoid each other. It's particularly bad at night. Also the Tullock Effect is reduced as avoidance is not the clear responsibility of either party.

I saw three people doing it yesterday.

New Jersey outlaws sale of many bikes

Read this post on Asymmetrical Information. It would seem to outlaw both of quite a few bikes no matter how you read the law.

You would think that not having the wheel fly off is incentive enough to secure it properly, but if someone says "it's for the children" then it must be a good idea.

Wednesday link roundup

• An interesting post on autism and vaccines
  
• This post from EconLog

  Back in 1980, State correctional facilities had 9 violent criminals for every drug offender. By 2003, that ratio was 2.6:1.

• DOD Braces for a fight with Pelosi

  Pentagon officials are bracing for a fight with House Speaker Nancy Pelosi (D-Calif.) over her desire to allow lawmakers’ adult children to tag along on taxpayer-funded travel for free.
  
  Pelosi wants them to be able to fill the role of lawmakers’ spouses when the latter are unable to make a trip because of health issues or work commitments.

  The shameful part is that they can say all that with a straight face. "Fill the role of Lawmaker's spouses", ridiculous.

Monday link roundup

• Popular Science has a predictions market
• Global Warming makes you fat! Really! Or so say the environmentalists. For some reason we treat a virgin birth as a matter of faith, but the weather in thirty years is a scientific fact.
• Safari is now available on Windows, I'm not sure why.
• An-arrgh-chy - The economics of Pirates. HT: ZenPundit
  

The good side of ethanol

It would seem that the viability of ethanol is finally being questioned in the environmental movement. About time too.

A good post on immigration

From Kerry Howley in Reason

The greatest distortion for Chadian farmers is not American cotton subsidies, writes Pritchett, but that “farmers from Chad have to farm in Chad—and not farm in France, Poland, or Canada.”

Line of the moment

I came across this podcast of Steven Landsburg, author of More Sex Is Safer Sex: The Unconventional Wisdom of Economics and found it quite entertaining. I thoroughly enjoyed his earlier works, especially The Armchair Economist (much better than Freakonomics). In the excerpt it has this bit:

...If your common sense tells you otherwise, remember that common sense also tells you the earth is flat.

First thoughts on Brave New War

I just finished reading John Robb's Brave New War and I'm struck by how similar his vision of the future was to David Friedman's Machinery of Freedom.

I'll have my review of the book later. On the whole I liked it a lot.

The mother of all abortion posts

Glen Whitman has pretty much all of the abortion analogies (all five of them) that enter the logical debate about the topic.

It's an odd thing. I used to debate him quite frequently on a now-defunct website, and he caused me to change my position on what the legality of early-term abortion should be with analogy number five

The Negligent Driver. When you negligently or deliberately cause harm to another person, the law requires you to provide compensation, either with money or some kind of action. If your negligent driving puts a pedestrian in the hospital, you are liable for his medical bills. Likewise, one might argue, your sexual behavior creates the risk of placing a fetus in a very precarious situation. If so, you are liable for the fetus’s care during that time. This analogy emphasizes the responsibility of people for the risks they create, thereby dodging the previous analogy’s “no invitation” problem. The difficulty with this analogy comes from the definition of “harm.” Harm doesn’t mean being in a difficult situation – it means being in a worse situation than you would have been otherwise. Were it not for your reckless driving, the pedestrian would (in all likelihood) still be walking around, safe and sound. Were it not for the act of sex, the fetus would not exist at all. To sustain the claim that the act of sex creates a risk of harm to the fetus, you have to insist that existence in a dependent state is worse than sheer non-existence. If the act of sex constitutes a tort, it is the only tort I can think of that creates the very person it victimizes.

I'm the only person I know of who changes his mind on abortion due to a logical argument.

Thursday rapid fire

• In camera photo tricks that get you around Photoshop
• Business 2.0 magazine fails to back things up with disastrous consequeces
• Getting fat can mean that men are committed to a relationship, among many other things
  

More wisdom from my old econ professors

The same professor mentioned in the previous post said that it is the natural order of things for

"Those who study the very big see the study of the very small as true, but not relevant. Those who study the very small see the study of the very big as relevant, but not true".

As gun control is the abstract topic of the week

Megan McArdle (in the Atlantic) has some interesting thoughts and graphs on the subject.

More Friedman

While looking over David Friedman's blog today, I came across this article on "The Economics of War". It's an interesting read. Here is another one I haven't read in ten years or so, Paying for Crime Prevention it winds up being a partial defense of the system we have in America where the government is not liable if a defendent is acquitted at trial. To wit:

The outcome of a criminal case depends, among other things, on decisions made by police and prosecutors. Consider a situation where, at some point in the proceedings, the police begin to suspect that they may have the wrong man. Suspicion is not certainty; they can choose to ignore the evidence that their suspect is innocent or someone else is guilty. They can also choose to do their best to keep such evidence out of sight of the defense. How likely they are to do so depends in part on the cost to them of being proven wrong. Under a legal system in which acquitting the defendant, or dropping charges after he has been imprisoned for some time, results in sizable cash penalties against the police department or its individual officers, the police have a strong incentive to repress their doubts and push for a conviction.

How serious this problem is depends on a variety of factors. If there is a substantial chance that the conviction of an innocent will eventually be discovered and reversed, a police department that suppresses such evidence risks having to pay for years in jail instead of months. If, on the other hand, such a reversal is unlikely, suppressing evidence may be an attractive gamble.

I suppose that is another variant of the Gandhi game, or turning the other cheek as it's less tactically known.

Schelling points

I refered to these in an earlier post, so I figure a definition is in order. I originally came across it in David Friedman's ruminations on the origins of Natural Rights theory. He defines it broadly as "a possible solution to the problem of coordination without communication".

"Communication" might be better defined as meaningful communication. He lists many examples in the essay where no communication is possible, as well as zero-sum conflict where communication would not be believed.

The functional definition (i.e. the way I use the term) is that a Schelling Point is a point or marker that is obvious to both sides without explanation, and could also mark some point of principal to one of the sides, which would cause that side to expend more effort defending it than the point might seem to be worth.

The usual example of a Schelling Point is a river (flowing North to South in this example), with an opposing tribe on each side who need to set a border. There is no significant difference difference in land between using the river as the border, and using the river plus five feet West of the border. However, the river itself will always be chosen as the border because A)it's obvious, and B) one tribe could very well attach special meaning to the river above and beyond the land itself, i.e. the Western Tribe shall not stain the ground made holy by the River God (or something like that).

The other example is abortion. The two popular Schelling Points at which "life begins" are considered to be either at conception (by the pro-lifers) and birth (by the pro-choicers). Both of these points are trivial in a lot of ways; the components are largely the same as they were before each event (differing in union in one way, in location and dependence the next). But, both of them are obvious to both sides in the dispute and both can be plausibly seen as having special meaning to either side (Ensoulment in one case, no physical attachment to the mother in the other).

In looking over this, I see I've called birth "trivial". Oh well, the point still stands.

Pithy post on tortue

Tdaxp has an interesting post on the government use of torture here, to wit

My reply back to him mainly concerned, the subtile, which is The inside story of how the interrogators of Task Force 145 cracked Abu Musab al-Zarqawi’s inner circle—without resorting to torture—and hunted down al-Qaeda’s man in Iraq. The title's odd in that it is both boring and inflammatory.

The boredom first. I can imagine an article subtitled The inside story of how programmers at Microsoft Corporation released SQL Server 2008 on time -- and without using hash tables.

I've always found the specific opposition to torture strange. We're willing to jail people for the rest of their lives, hold them without trial, and bomb various countries which involves inherent civilian death and maiming. Drawing a line at torture seems odd to say the least. I suppose to some people it is a categorical difference in government action, and not an incremental difference in human suffering.

Now that I think about it, it does make for a good Schelling Point. It is objectionable to differing degree to both sides of the argument, as well as obvious to both. It is also seen as a categorical tactic (though not strategy) by both. Hmmm....

European vs American Talents

From Marginal Revolution

Because European government works better, Europeans demand more of it and get more of it. American liberals look at Europe and see (sometimes) better results per dollar spent. They then conclude that America should be more like Europe, whereas in reality America would end up spending more to get more bad American government.

It's a very nice argument against moving towards European style nationalized health care, to wit, we would not get the same results as they do. Instead we would probably just magnify existing problems.

Sunday round up

• A good read on economics and statistics
• Islam and Christianity - IBM and Microsoft - Embrace and Extend
• Resiliancy, and how to measure it
  

A rogue Core

Subadei has some interesting thoughts on the possibility of a new and hostile Core (shortly defined as a group of connected, interdependent nations) involving Iran, Venezuela. However, I think there is not much to be worried about. Assuming they do create/evolve into a second core, they would have enough incentives/core-like attributes not to do so.

I guess that raises the question, can there be two Cores? Wouldn't the opportunity cost of maintaining the divide between the two Cores? Wouldn't the opportunity cost of maintaining the divide between the two Cores become too costly for the divide to be sustainable?

Update:Edited for clarity

A vanishing meme

One pleasantly departed meme is "War is good for the economy". While never true (you can't destroy human and physical capital and have a net increase in the economy) I haven't heard it that much in the past few years.

A useful axiom

In my first advanced macroeconomics class my professor defined truth as "The consensus of informed opinion". I remembered that for some reason today.

Friday rapid fire

• A quick review of video hosting services
• DIY public hotspot
• SQL Refactoring and formatting - a bit pricey, but it seems interesting
  
• Yet another electric car - due sometime next year
• Revealed: Why understanding economics is hard
• What economists agree on
  

Deepthink of the moment

From the ever interesting Jane Galt about child rearing and careers

I'm not sure. If childrearing is a) necessary and b) as tedious as everyone assures me, then it strikes me that whatever feminine thrill women get out of doing it probably increases the happiness associated with the activity. And, based only on my own previous relationship experience, I'd imagine that socialization which reduces the number of areas that have to be negotiated probably, on net, makes marriages happier.

That would go a long way to explaining why opposites attract, if in fact they do.

RIP Milton Friedman

Instapundit has a good collection of links on his life and legacy. He was the first to think of many, many things in economics that seem blindingly obvious now but were heretical at the time. One of the larger intellectual giants of the past 100 years, on a purely technical level, outside of the politics (which I agree with).

Quick Monday rapid fire - fun addition

• On the matter of remittances by immigrants to foreign countries

  Moreover, remittances are far more likely to make their way to people who actually need them. American aid tends to be received by governments, which in most third world countries are not especially honest. So the majority of American foreign aid never makes it to actual poor people in the developing world. In contrast, Latino immigrants are wiring money directly to their mothers. They know exactly who’s getting the money, and they’d hear about it if the government stole it from them. It probably even has foreign policy benefits, as the remitters are likely to have a generally positive impression of America and to transmit that impression along with their remittances.

  And the best part about all this is that it doesn’t cost us a dime! All we have to do is let them scrub our toilets and pick our strawberries. We get lower prices on the goods and services we buy and we get the warm, fuzzy feeling of knowing we’re helping to alleviate Latin American poverty. It’s such an incredible win-win arrangement that I find it rather depressing that it’s considered controversial in American politics. Increased immigration is a cause that should unite liberals (with their concern for social justice) and conservatives (with their belief in hard work and entrepreneurship. Unfortunately, that’s not how the issue has played out in the real world.

  Very well put.
  

• Gun toting robots!
• From the mouths of ad executives
• An original knife holder
• Easily the best use of Flash I've seen in months
• Quotes from Jim Webb, the Marine veteran and aspiring Democratic Senator from Virginia. Though nothing beats him saying "I wouldn't walk across the street to watch Jane Fonda slash her wrists."
• A FoxNews empolyee gets waterboarded, sadly it's not their web designers (their site gets worse by the day, though, still no Lou Dobbs, happily)
• Iron Man is about to be real!
• This looks quite interesting
  

Two things

Whilst listening to left wing radio today I heard two notable things, which struck me as totally wrong.

• The claim that over 50% of all discretionary government spending is spent on the military. While true, the weaselly use of the "discretionary" modifier makes it meaningless. To declare that some percent of the budget "must" be spent on programs, when they have the full power to change any law making them spend it on said programs is downright silly.
• The left wing (usually uttered by baby boomer types) screed that it is wrong not to show caskets of dead soldiers and marines as they arrive back in the states. This is usually followed by something like "if we could only see the human pain of this war, we wouldn't be there at all." Then it occurred to me that we all watched 9-11 happen and then three weeks later we were bombing Afghanistan, and 18 months later we invaded Iraq. The sight of dead Americans seems to make us more aggressive, not less.
  

Still uploading

Pesky large files. Anyway, here is some lovely reading material for you.

• This is the strangest article you will read this week. By a lot.
• Profanity across languages- the Dutch "May you get the measles" is my favorite
• Deadweight Loss / Excess Burden - if more people understood this, the world would be improved remarkably. Short version, it's a cost to someone with no benefit to anyone.
• Human Powered Vehicles - a bike that goes over 40 miles per hour

Why is Lou Dobbs taken seriously?

His latest CNN.com column is the best example. His latest bloviations about our "shrinking manufacturing base" are dispensed with quite handily in every Econ 101 class. There's some apt criticism of American fiscal policy there but overall it's quite silly.

Monday rapid fire

• The best use of graphic thumbnails I've seen
• Calculate your Body Mass Index. This seems a tad unrealistic, and if this is what people are using to measure America's obesity "Epidemic" I'm much less impressed. It seems over broad and crappy. For instance, my ideal weight range is between 137 and 183, a difference of 46 pounds.
• Stirling Engines!
• Kurdistan, the other Iraq, it's where all of the American troops will be should a full fledged civil war break out. Described my Michael Totten as "a Muslim Utah". Shoul Iraq break up, this will be the country we subsidize most, besides Israel.
  
• $10 Panoramic Tripod Head - I need one of these.
  
• Apex Predators
• How much is inside....
• Cheap Handlebar mounts - something else I need.
• Milton Friedman TV!
  

Saturday round up

• Magnificent photography from Afghanistan
• A guide to chopping foods
• Race, Advertising and the Sony Playstation.
• Big Brother mixes with the cast of Friends to create Dodgeball
• An insightful post on Energy from the Winds of Change; it starts

  An optimist says the glass is half full, the pessimist says the glass is half empty and the engineer says the glass is the wrong size.

  Read the whole thing.
  
• Some quite impressive numbers you're not likely to hear about.

  In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy, and much larger than the total economic size of nations like India, Mexico, Ireland, and Belgium.

  I think Iraq is keeping the political class occupied, much like the Clinton scandals did in the late 90s, and saving us from grand new ideas.

Abortion and immigration

A long one.

I predict that soon someone will make some correlation between legal abortion and increased illegal immigration, similar to Steven Levitt's abortion-crime idea as told in his book Freakonomics.

For those of you who haven't read the book it spends a lot of time explaining his theory that abortions are disproportionately had by women who would otherwise bear criminal children (to put it bluntly). Those children are never born, which reduces the number of criminals, which reduces crime rates. He has a large amount of documentation and math to support this idea. Bear in mind that the 80-20 rule applies here, something like 20% of the women who get abortions have 80% of all abortions.

A similar idea (unique to me so far) is that were there no abortion, there would be many more children who would grow up to be low-skilled, low wage workers. That creates an artificial void on the bottom of the income ladder, which the Mexicans and other illegals fill.

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I've been thinking about this quite a bit lately, and it's all part of my emerging theory on open-source eugenics and artificial evolution, which I'll explain more when I flesh it out.

---

On a related note, the pro-choice argument and the usual nativist argument are essentially the same. There is ownership in a country, as there is in one's body. It is up to the owner; the citizens of the country collectively or the individual woman to determine who can be there (to put it crassly). Every child is a wanted child, and every immigrant, is a legal immigrant.

Or that's what I think right now anyway. Thoughts anyone?

Yet another good one from Jane Galt

It's about conflict between working and stay at home moms. It goes into it in ways I've never thought of before.

China

Tyler Cowen shares my concerns about China, namely that they can't take a punch, or in this case, an economic downturn.

If you are not convinced, raise your right hand and repeat after me: "China in the 20th century had two major revolutions, a civil war, a World War, The Great Leap Forward [sic], mass starvation, the Cultural Revolution, arguably the most tyrannical dictator ever and he didn't even brush his teeth, and now they will go from rags to riches without even a business cycle burp."

It's worth reading the whole thing.

Christmas a day early

David Friedman is now blogging! Now if we can only round up Michael Sheaur we'd have a very thought provoking internet.

It's as if the internet is all about Nick

I cruise on over to Marginal Revolution, and I see Why people don't like Wikipedia (and blogs) which references The Probabalistic Age over on The Long Tail

When professionals--editors, academics, journalists--are running the show, we at least know that it's someone's job to look out for such things as accuracy. But now we're depending more and more on systems where nobody's in charge; the intelligence is simply emergent. These probabilistic systems aren't perfect, but they are statistically optimized to excel over time and large numbers. They're designed to scale, and to improve with size. And a little slop at the microscale is the price of such efficiency at the macroscale.

But how can that be right when it feels so wrong?

There's the rub. This tradeoff is just hard for people to wrap their heads around. There's a reason why we're still debating Darwin. And why Jim Suroweicki's book on Adam Smith's invisible hand is still surprising (and still needed to be written) more than 200 years after the great Scotsman's death. Both market economics and evolution are probabilistic systems, which are simply counterintuitive to our mammalian brains. The fact that a few smart humans figured this out and used that insight to build the foundations of our modern economy, from the stock market to Google, is just evidence that our mental software has evolved faster than our hardware.

RTWT

Economic illiteracy

For the last time (though not anyone in particular, I've just heard this twice today from random people):

Software piracy does not raise prices, it lowers them by adding substitutes, namely pirated copies of the software. It DOES prevent software from being profitable, and hence, created by making it unfeasible to create the software.

Well put from Landsburg

I finally get around to reading his New Orleans column, and he makes a very good point in favor of cash payouts. Money quote:

The specific flood-related policy question is this: Given the population of poor people, do we make them, on net, better or worse off when we give them disaster relief (which is good) and simultaneously raise their housing costs (which is bad)? The refusal to engage that question is, it seems to me, nothing short of a declaration of indifference to what actually benefits the poor.

You might say that what we really owe the poor is disaster assistance and affordable housing. You might as well say that we owe them all magical pink unicorns that produce an unlimited supply of milk. It is quite simply impossible to guarantee assistance to people living on a flood plain without affecting their housing costs. And it is quite simply unserious to declare your commitment to poor people without pausing to ask whether your pet program does poor people more harm than good.

Two from Dreck

Specifically this post.

The first link is to a post containing a proposed national anthem

The Scotsman is mean, as we're all well aware
And bony and blotchy and covered with hair
He eats salty porridge, he works all the day
And he hasn't got bishops to show him the way!

and

And crossing the Channel, one cannot say much
Of French and the Spanish, the Danish or Dutch
The Germans are German, the Russians are red,
And the Greeks and Italians eat garlic in bed!

The Germans are German is a lovely insulting tautology.

And speaking of the Scots, this article Taller women are more career-driven - that's the long and the short of it is well worth a read. I have no idea if it's true or not, but any article that seems to use "homely" as a technical term must be interesting.

Casinos

Ray Nagin now wants casino gambling in New Orleans, which seems to be a better idea than most. While that's the best idea for revitalization to come along so far, it still does nothing about the fact that NOLA is between a lake, a river, and an ocean, which will forever make it geographically unsafe, no matter how many levees are in place.

I went back to Marginal Revolution, and came across this post, The Unreported Mexican Immigration Story which makes the point that Mexican immigration increases as Mexicans get rich enough to leave. Well worth reading.

Watch the math sparks fly

The best commentary on the Bill Bennett comments have come from the Freakonomics guys, who did seem to start the entire thing.

Bennett's offensive commentary

CALLER: I noticed the national media, you know, they talk a lot about the loss of revenue, or the inability of the government to fund Social Security, and I was curious, and I've read articles in recent months here, that the abortions that have happened since Roe v. Wade, the lost revenue from the people who have been aborted in the last 30-something years, could fund Social Security as we know it today. And the media just doesn't -- never touches this at all.

BENNETT: Assuming they're all productive citizens?

CALLER: Assuming that they are. Even if only a portion of them were, it would be an enormous amount of revenue.

BENNETT: Maybe, maybe, but we don't know what the costs would be, too. I think as -- abortion disproportionately occur among single women? No.

CALLER: I don't know the exact statistics, but quite a bit are, yeah.

BENNETT: All right, well, I mean, I just don't know. I would not argue for the pro-life position based on this, because you don't know. I mean, it cuts both -- you know, one of the arguments in this book Freakonomics that they make is that the declining crime rate, you know, they deal with this hypothesis, that one of the reasons crime is down is that abortion is up. Well --

CALLER: Well, I don't think that statistic is accurate.

BENNETT: Well, I don't think it is either, I don't think it is either, because first of all, there is just too much that you don't know. But I do know that it's true that if you wanted to reduce crime, you could -- if that were your sole purpose, you could abort every black baby in this country, and your crime rate would go down. That would be an impossible, ridiculous, and morally reprehensible thing to do, but your crime rate would go down. So these far-out, these far-reaching, extensive extrapolations are, I think, tricky.

Now mind you, nowhere does he point out the obvious point that even if we did successfully prohibit abortions in this country we would only move the bankruptcy date of Social Security back a few years, having not changed the pay-in to pay-out ration that much.

One point that Leavitt makes is quite interesting, to wit:

4) When a woman gets an abortion, for the most part it is not changing the total number of children she has; rather, it is shifting the timing so those births come later in life. This is an important fact to remember. One in four pregnancies ends in abortion and this has been true for 30 years in the U.S. But the impact of abortion on the overall birth rate has been quite small.

This is unsourced and I would like to see some data and theory on the matter.

Beyond that, it's amazing how large the indignation industry is in this country. Here was a statement which, true or false, kind-hearted or malicious, did not kill or hurt anyone, and left no one richer or poorer. The fact that many people got exorcised about this empirically meaningless statement is amazing. It says a lot about the wealth we have as a society when we can afford the endless chattering classes.

Jane Galt at her best

From one of several posts recently about poverty and culture

In other words, middle class culture is such that bad long-term decision making also has painful short-term consequences. This does not, obviously, stop many middle class people from becoming addicted to drugs, flagrantly screwing up at work, having children they can't take care of, and so forth. But on the margin, it prevents a lot of people from taking steps that might lead to bankruptcy and deprivation. We like to think that it's just us being the intrinsically worthy humans that we are, but honestly, how many of my nice middle class readers had the courage to drop out of high school and steal cars for a living?

I'm not really kidding. I mean, I don't know about the rest of you, but when I was eighteen, if my peer group had taken up swallowing razor blades I would have been happily killed myself trying to set a world record. And if they had thought school was for losers and the cool thing to do was to hang out all day listening to music and running dime bags for the local narcotics emporium, I would have been right there with them. Lucky for me, my peer group thought that the most important thing in the entire world was to get an ivy league diploma, so I went to Penn and ended up shilling for drug companies on my blog.

Back in a bit

I'm off to the old country. Expect lots of photos.

Update: I've added word verification for commenting. Everyone keep following the saga of DirectNic vs Katrina.

And before you complain about "gouging" please read this post from Jane Galt..

A fine post from Steve Levitt

Solid work explaing why the "Peak Oil" notion is wrong, a summary quote.

So why do I compare peak oil to shark attacks? It is because shark attacks mostly stay about constant, but fear of them goes up sharply when the media decides to report on them. The same thing, I bet, will now happen with peak oil. I expect tons of copycat journalism stoking the fears of consumers about oil induced catastrophe, even though nothing fundamental has changed in the oil outlook in the last decade.

Curiously unmentioned is that oil demand usually peaks in the month of August (it's lowest in February). I actually read all of the comments thread, which wasn't terribly illuminating. Few addressed the point in the post. It was surprising how attached people are to particular doomsday scenarios.

Yet more things that annoy me

I was listening the ever earnest radio program Democracy Now on the way from my the guitar lesson and I heard for the third time today the phrase "Oil driven inflation".

Inflation is a general rise in prices, which is the same thing as a decline in the purchasing power of the dollar (or whatever currency). A rise in the price of oil does not cause this. If it did then wages would be increasing due to the oil price increase as well. It is a transfer of wealth from oil-consumer to oil-producer, which is not inflation.

More on the magic car

Asymetrical Information has an average post (which for them is of high quality) on the article on hybrid cars I mentioned yesterday. However the really interesting part is in the comments. That site really does have the best and most reasoned commenters.

One thing the blogosphere has left unsaid so far is: What changes can we expect with a year or two of gasoline at $2.50 a gallon? Presumably it won't stay that high for much longer, but if it did, how much more bottom-up innovation becomes feasible?

They said it

From Paul Krugman's latest column, where insists that there is a housing bubble, albeit not in areas with better geography

Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.

The bubble (construct that it is) pops and prices still increase? We have such happy problems in this country, it reminds me of our obesity "epidemic". It reminds me of the old adage "Economists have predicted 14 of the last 5 recessions".

Podcasting

As some of my few readers know, I'm lukewarm on the notion of Podcasting. Then along comes this post from Marginal Revolution on the Economics of Podcasting. Good stuff.

Perfectly put (again)

By the wonderful Dr Sowell.

Many people are so preoccupied with the notion that their own knowledge exceeds the average knowledge of millions of other people that they overlook the more important fact that their knowledge is not even one-tenth of the total knowledge of those millions. That is the crucial fallacy behind the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less knowledge and more presumption.

The Wall Street Journal echoes me

While reading the diary of Eric Hoffer I came across his account of talking an old Russian emigre who claimed that the long-term effects of Communism in Russia was biological. To wit all of the people who were naturally talented farmers, managers and such were sent to die in Siberian labor camps.

The authors of Freakonomics make a similar point when discussing abortion and the dramatic drop in crime since the early 90's. Their argument: unwanted pregnancies become unwanted children who are far more likely to commit crimes. Seems pretty believable.

I hadn't thought of the crime angle but I had thought that the long term effect, or the Roe Effect would be, to quote the Jargon Database

An up and coming term; is the tendency of the "pro-life" people to have more children than "pro-choice" people. Since pro-lifers tend to be politically more conservative and they pass this political outlook on to their children. There are fewer corresponding pro-choice children to acquire pro-choice (an other) values.

Rather, legalized abortion will produce people who don't support it. It is not an Evolutionary Stable Strategy.

James Taranto in the Wall Street Journal reaches my same conclusion before I write about it. Oh well.

LA Times echoes A-Sides

From Max Boot in the LA Times

In the last 50 years, $2.3 trillion has been spent to help poor countries. Yet Africans' income and life expectancy have gone down, not up, during that period, while South Korea, Singapore and other Asian nations that received little if any assistance have moved from African-level poverty to European-level prosperity thanks to their superior economic policies.

and

Any real solution to Africa's problems must focus on the root causes of poverty — mainly misgovernment. Instead of pouring billions more down the same old rat holes, maybe the Live 8 crew should promote a more innovative approach: Use the G-8's jillions 2 hire mercenaries 4 the overthrow of the 6 most thuggish regimes in Africa. That would do more to help ordinary Africans than any number of musical extravaganzas.

Oddly enough, Adam expressed the same idea, in nearly the same words last Sunday. Strange.

And as I do a spell check of this post, It tags "misgovernment" as a misspelling, and wants to replace it with "McGovern".

Live 8

A very good post from the Agitator about this current foolishness

It's all the more perverse when you consider that corporate farms in Europe, Japan, and the U.S. are a big reason why Africa remains so poor. In heavily subsidized crops like cotton and corn, farmers in these countries can sell their crop on the international market for less than what it costs them to grow it. There's simply no way poor farmers in emerging economies can compete with that. So lavish subsidies in rich countries keep poor countries from competing, which in turn keeps them poor. The rich countries feel guilty, so they sap taxpayers to come up with aid projects that don't work, and really only benefit the exact same industries that benefit from the subsidies. All the while, each time public aid does fail, it makes private donors think Africa's a lost cause, and therefore makes them less likely to give. Which is tragic, because private aid does seem to work. It's more likely to find its way around the corruption, and hit the people who need it.

Which brings us back to Live 8. The whole purpose of the event, Geldoff kept telling us, was not to raise private funds for Africa. Rather, it was to encourage the citizens of developed countries to lobby their governments for more public aid. Oh, and also to make spoiled rock stars feel better about their respective social consciences.

There is also this very good post from Josh Trevino who's reporting on the G-8 protesters

But the true believers exist, and they are capable of organizing themselves. A counterintuitive thing, one would think, but the anarchist/hard left capacity for assembling at set times and doing set things is a well-proven one. Just like libertarians availing themselves of public services, the contraindicating intersection of reality and ideology is often employed, but never acknowledged. As at Seattle, DC, and Genoa, so too Edinburgh: the city is overrun in a well-planned influx from across the developed, Western, wealthy world to protest developed, Western, wealthy things.

Oil

I came across an interesting article by Alan Reynolds on the Cato site:

We import nearly 58 percent of all petroleum, yet only 45 percent of each barrel is used to produce gasoline, and a significant portion of that gasoline is used in delivery vans and taxis. Commuter and leisure driving accounts for little more than 40 percent of the oil we consume -- far less than the amount we import. The rest of each barrel of crude is used for heating oil and diesel fuel for trucks, busses, farm machinery and ships (23 percent), petrochemicals (17 percent), jet fuel (9 percent), asphalt (4 percent) and propane (4 percent).

...

The U.S. index of industrial production peaked at 116.4 in June 2000 and then fell to 109.1 by December 2001; the price of West Texas crude simultaneously fell from $32 to $19. U.S. Industrial demand for petrochemicals declined, and so did the related need for fuel used to transport industrial supplies and products.

Similar effects were magnified worldwide. Falling industrial production in any region has the same effect on oil prices, so crude fell from $25 to $12 in the wake of the Asian currency crisis of 1997-98.

and

Nobody in Washington shows the slightest awareness of the global nature of the oil market, of the fact that industrial damage from high oil prices has nothing to do with whether a country imports or exports oil, or even the fact that there is a crucial two-way linkage between worldwide industrial production and worldwide oil prices. When it comes to causes and effects of high oil prices, nobody in Washington shows much interest in logic or facts. It might be sad if it wasn't so pathologically pathetic.

RTWT.

Rapid fire Friday

• Tupac Shakur arts center opens - and so very close to me. Meanwhile the guy who created the first schools for blacks in this state can't even get an elementary school named after him.
  
  
• Poll: In wake of Iraq war, allies prefer China to U.S. - To thine own self be true America. If all of the aid we donated both publicly and privately in the wake of the Tsunami didn't help anything in these countries, then not much will. Immigration is a much better metric than polls anyway.
  
  
• The One Campaign - solve Extreme Poverty and Global Aids (why are they extreme and global?) via nagging and fashionable wristbands. It's so cool, after all Bono and Angelina Jolie are for it. Brought to you by people who don't understand the difference between stock and flow.
  
  
• Palestinian Woman Heading for Treatment at Israeli Hospital Caught Carrying Explosives - really! To Quote:
  

  At the Shikma Prison in Israel's Negev Desert, where the Shin Bet security service allowed Israeli TV reporters to interview her, al-Biss said she was determined to carry out a suicide attack against Israel because of its occupation of the West Bank and Gaza.

  "My dream was to be a martyr," she said, adding that she was recruited by the Al Aqsa Martyrs Brigades, a violent offshoot of Palestinian leader Mahmoud Abbas' Fatah movement. "I believe in death."

  Sitting calmly across from an Israeli TV interviewer, the young woman with large brown eyes and curly dark hair pulled back in a ponytail said her decision had nothing to do with her disfigurement, which might make her less desirable as a bride.

  "Don't think that because of how I look I wanted to carry out an attack," said al-Biss. "Since I was a little girl I wanted to carry out an attack."

  RTWT. She takes a bit of it all back, worth reading.
  
  
• The Two Blogospheres - an interesting article by Mathew Yglesias
  
  
• ScriptCenter: ATM for Drugs - much more on this later, but definitely a step in the right direction.
  
  

Ideas to elaborate on later

Here are ideas and historical (no emotional connection to me) events that have fundamentally affected my outlook.

In no particular order

• Pareto Optimality
• Coase Theorem
• Hayek and Sowell on the limits and costs of knowledge
• Gresham's law
• Napoleon's invasion of Russia
• Dominant Strategies
  
• Schelling Points (as elaborated on by David Friedman)
• The seatbelts kill theory of Steven Landsburg (though the theory might actually originate with George Stigler)
  
• The diaries of Eric Hoffer (and his books, they're fairly similar) as they deal with mass movements
  
• Network effects
• Robert Nozick's notion of morality as a time saving device (morality is used very broadly) as explained in the Examined Life
• The defensive boxing style of Pernell Whitaker
  

I'll have more detail on what they are and how they are all used later.

Bolshevism and Islam

As an amplification of my earlier post about Saudi influence on modern Islamic culture. Throw in a bit of Bryan Caplan and Eric Hoffer, and I'm closer having better thoughts on the subject.

To wit, the problem is the merging of state, society, economy and religion into a single unit. The most obvious parallel is pre-revolution Russia, with the Saudi royal family playing the Romanovs, and bin Laden playing Lenin.

After Ivan the Terrible essentially annexed the Russian orthodox church and installed the Czar as head of the church (or maybe that was Peter the Great, I can't remember), all authority, be it economic, political, or religious in Russia became ever more centralized in the person of the Czar. When Lenin seized power in 1917 he merely continued this process, finally culminating in Stalin.

All of this centralization basically discards useful information as revealed in action and prices per Hayek in the Fatal Conceit. One man does the thinking for millions, and the society is one millionth as smart as it could be. Could this be what is happening in the Arab world right now? Is the problem just lack of knowledge and power distribution, as it was in the Soviet era, and current North Korea?

As I read over this post I see it is very jumbled and unclear. I'll explore more on this topic later.

Perfectly put

From Will Wilkinson's blog

Should we expect less bottom to top, number one with a bullet, mobility as an economy grows wealthier overall?

Yes. People are constantly confused by the growing gap between the rich and poor. This is good thing, not a bad thing. If the bottom is fixed, at zero income, and the top keeps going higher, you've got a bigger gap. But lots of people are better off and nobody is worse off. Similarly, if the lowest quintile is anchored by a fixed bottom, and the top is untethered and rising, the distance from the bottom to the top will increase. The distance from the bottom to the middle will increase. So it will take longer to get there. If today's middle is equivalent in real terms to yesteryear's top, people who are going from the bottom to the middle are doing no worse than people of yore who went from the bottom to the top (even if we assume, counterfactually, that there has been no change in quality of life for people at the bottom.)

We should be AIMING at a system where the middle of the middle is, say $500,000 per annum, and so the trip from the bottom of the bottom to the top of the bottom, much less to the middle of middle, is a VERY BIG trip indeed.

The original post is here. I wonder why I've never heard that arguement put that way before. It's the standard economic reasoning for a positive sum game, but that line is the best you're going to see in terms of delivery.

Funny

This article details the trials and travails of unions facing layoffs. The most interesting parts were

Cochran said the MNEA gave its MPSO members a paid work day Aug. 28 to work on the issues as a union.

and

Cochran said the current employee benefits package includes up to 25 vacation days, 25 compensation days, five personal days, religious and bereavement leave and up to an $80,000 salary.

Cochran said she believed the employees receive a good contract. She added that half of the MPSO members are at the top of the MNEA's salary schedule.

which seems like quite a bit of money to jeopardize by striking.