Fox News

I happened to flip over to Fox News when I was finishing my time on the elliptical machine in the living room.

They had an interview with some schmoe, talking about S. Palin's book, GOING ROGUE.

Only they had it spelled, GOING ROUGE. I think would have been a better title for the book, frankly. She uses quite a bit of make-up.

Lateness

A little piece on lateness, for the Chronicle of Higher Education.

My favorite part is the reactions. Check this exchange, from the Chronicle comments section:

6. ridicula - November 16, 2009 at 11:31 am Mr Munger and referee101--who died and made you the gods of punctuality? When you obsess over and enrage yourselves over such things, you create an ugly work environment.
I suppose you both live in perfect worlds where nothing ever transpires to make you late, that you've had all bodily orifices sealed, have no family, no material reality to deal with whatsoever. You've never had a pimple or cut yourself shaving. You never speak to strangers. In fact, you must live in a space-time loophole from which you magically emerge whenever you have an appointment, spending the rest of your time in a state of suspended animation.

7. _perplexed_ - November 16, 2009 at 12:10 pm --hope I'm never on a committee with ridicula...

8. ridicula - November 16, 2009 at 12:34 pm --as I, in turn, hope I'm never on a committee

9. superdude - November 16, 2009 at 12:40 pm --Ridicula: No, an ugly work environment is caused by selfish people and one key sign of selfishness is being late. Late people have no concept of the value of everyone else's time and are by definition not team players.

As Head, I have strong expectations regarding punctuality. If I schedule a meeting for 3pm, it STARTS at 3pm, which means you need to have your butt in a chair BEFORE 3pm. I refuse to have a committee held hostage to someone who is late.

My own thoughts, for "ridicula":

1. Nice name. It fits.
2. As I read and reread your comment, trying to figure out what it means...I fail. I haven't obsessed over lateness, but I do find it amusing.
3. Because you see, it is easy to overcome all of the problems you list. Just leave earlier. That's it. The solution to being late is to leave earlier. Then even if you do have to go potty, you'll have time. And I'm pretty confident that you are not, in fact, busier than I am. You aren't busy at all. You are a crackpot.
4. To be fair, I see your game, though, Ridicula. It is to shirk and misbehave so badly as to avoid, as you admit freely, ever having to serve on a committee. And though I don't know you well, what I can see makes me think that having you NOT be in a position to impose your judgment on others is a nice equilibrium.

Ezra Klein is a tease

I saw the headline of his article, "The $900 Billion Mistake" and I thought to myself, right on dude! You have come to your senses. Of course I shoulda knowed better; the mistake the article laments is limiting the cost of health insurance reform to only $900 billion!

Yes, according to Ezra:

"The problem is that the number, which was chosen at a point of political weakness for health-care reform and the Obama administration, is too low. Most experts think you need closer to $1.1 trillion for a truly affordable plan. Limiting yourself to $900 billion ensures that the subsidies won't be quite where you need them to be..."

Now I am just a dumb Okie, but that is not my understanding of what the word "affordable" means. I never knew it could mean "more expensive"

My nomination for Law Enforcement Officer of the Year!

Money quote: "time is going really really slowly!"

On political competition

Tyler had a interesting post yesterday about how increasing political competition via increasing the number of political parties is unlikely to bring about the same kind of improvements that increasing competition in the economic realm does.

I think he is right on the mark here.

However, there is another important dimension to political competition; viz polities compete with each other. 

In the US, States implicitly are competing against each other for residents, businesses, jobs, etc. 

In fact, if there is one thing Mark Crain taught me, it is that the States are hothouses of political innovations that often catch on and diffuse across the country.

Having our political system less centralized would allow inter-state competition to produce potential innovations in more spheres of policy.  

In a way, devolving more functions of  governance to the states increases competition over those functions in a way that is at least somewhat analogous to increasing competition in the economic realm.

Reading

Some books I have read recently.

Charles Euchner, THE LAST NINE INNINGS. My bud Russ Roberts sent me this, and it was great. The last game of the 2001 World Series, where the Yankees LOST (HA!). Divided up into different parts of the game, at a micro-level. Excellent. But then I went back and reread another book that has some of the same approach, George Will, MEN AT WORK. The stuff on Tony LaRussa, I had forgotten, very interesting.

Rose George, THE BIG NECESSITY: THE UNMENTIONABLE WORLD OF HUMAN WASTE AND WHY IT MATTERS. Terrific, interesting book. Core questions--why do we take many streams of wastewater, combine them, and then try to clean them? In fact, why so much emphasis on water-borne sanitation? Finally, why so much emphasis on "clean water" when the real problem is "handle poop better"? (well, not "handle," exactly, but manage). A very interesting and useful book.

Amity Shlaes, THE FORGOTTEN MAN: A NEW HISTORY OF THE GREAT DEPRESSION. Well written, interesting, and an entirely different view of the motives, methods, and effects of the "New Deal." Read it to see where we may be headed, again.

James Protzman, JESUS SWEPT. An odd book, local fiction about Jesus returning to Earth as an itinerant sweeper. Yep, sounds bizarre, and it is, but it works pretty well. I liked it a lot. Very quirky.

Hunter Thompson, FEAR AND LOATHING IN LAS VEGAS. I hadn't read it in years. It holds up pretty well.

How Many Citizens Does It Take to Choose a Lightbulb?

Trick question: you don't GET to choose your own light bulb.

Interesting story. Just gets better and better, as it develops.

As the story concludes....

Call your senators and your congressional representative instead. Tell them you've had enough of command-economy enviro-thuggery. And invite them to put cap-and-trade in a place where a solar array would be both impractical and painful.

(Nod to North Ohio Boy)

Sumner and Krugman are both wrong

Or at the least way overoptimistic about what monetary policy can accomplish.

Tyler has been cooling lately in his ardor for the monetary views of Scott Sumner (here is an historical compendium), though he cites Krugman's latest piece as an "Answer to Scott".

In that piece, Paul avers that the first best monetary policy would be a Sumnerian "credible commitment to higher inflation". Why? "In order to reduce real interest rates".

People, it is just not clear that is possible, or if possible, it may be so in only a very limited sense. 

Can the Fed set the real interest rate at whatever value it wants? I don't think so. 

Do you think they could simultaneously credibly commit to say 10% inflation and successfully hold the nominal interest rate at zero? Me neither. 

What about the simultaneous achievement of 5% expected inflation and a zero nominal interest rate? Doubtful at best.

The bottom line is that Fed can target the nominal rate or the inflation rate, but they simply cannot have independent targets for each. That is a basic message of the huge "instruments & targets" policymaking literature that appears to be lost in the current debate.

Drive Your iCar with your iPhone

(Nod to Angry Alex)

Lock the Barnes Door--Blue Heaven!

Harrison Barnes does the right thing, and heads for Carolina. I have seen him listed anywhere from 6'6" to 6'8", but no matter what he is mighty.

Ol' Roy has, again, the best recruiting class in the ACC, and top 3 in the nation.

Three years from now, you'll see Harrison Barnes and my Carolinas in the Final Four again. This year could be sketchy, unless Ginyard and Davis really come up big. But three years from now....

Mark it down.

(Cute story, about Barnes' mom taping Michael Jordan, before Harrison was even born.)

An Important Announcement

Remarkably, a large number of folks in North Carolina have gotten big headlines, simply by announcing that each of them is NOT going to seek the Democratic nomination to run against US Senator Richard Burr, R-NC. Most recently, Rep. Bob Ethridge got big coverage for this staged non-announcement.

Well, okay, here goes. A press release.

RALEIGH: Dr. Michael Munger, Chair of Political Science at Duke and former (2008) candidate for North Carolina Governor, made an important announcement today.

"After thinking it over, and talking to my wife and family, I have decided NOT to seek the Democratic nomination for Senator. There were many considerations, not the least of which is that I am not a registered Democrat, and therefore am ineligible to run. But I am also hoping to spend more time at home now, and having to live in Washington as a Senator would get in the way of all that."

Munger has agreed that he will not endorse anyone in the Democratic primary, after thinking it over for about 3 seconds. "They are all crooks, why would I endorse one of them?" he asked.

(UPDATE: Note--the above was edited to acknowledge reader suggestions...)

Spitzer's Raincoat is to Spitzer as NYC Condom is to....

When I first heard of the "NYC Condom," I thought it was just a metaphor for Eliot Spitzer's trenchcoat.

But apparently they are real. And, the subject of research.... The NYC Condom: Use and Acceptability of New York City's Branded Condom

Ryan Burke, Juliet Wilson, Kyle Bernstein, Nicholas Grosskopf, Christopher
Murrill, Blayne Cutler, Monica Sweeney & Elizabeth Begier
American Journal of Public Health, forthcoming

Abstract: We assessed awareness and experience with the NYC Condom via surveys at 7 public events targeting priority condom distribution populations during 2007. Most respondents (76%) were aware of NYC Condoms. Of those that had obtained them, 69% had used them. Most (80%) wanted alternative condoms offered for free: 22% wanted ultra-thin, 18% extra-strength, and 14% larger-size. Six months after the NYC Condom launch, we found high levels of awareness and use. Because many wanted alternative condoms, the Department of Health and Mental Hygiene began distributing the 3 most-requested alternatives.

No Money for Nothing, And Your Chicks For Free

This woman lives without money.

If everyone in Germany tried this the welfare state would collapse, since it is much harder for the state to expropriate in a barter economy.

So, while this woman seems very proud of herself, all this really is is a big tax evasion scheme.

To which I say: YOU GO, GIRL! Bring down the German government!

There Are No Atheists in Foxholes, Or Singles Bars

It is said that there are no atheists in foxholes.

There are apparently no atheists in singles bars, either.

Mating Competitors Increase Religious Beliefs

Yexin Jessica Li, Adam Cohen, Jason Weeden & Douglas Kenrick. Journal of Experimental Social Psychology, forthcoming

Abstract: It has been presumed that religiosity has an influence on mating behavior, but here we experimentally investigate the possibility that mating behavior might also influence religiosity. In Experiment 1, people reported higher religiosity after looking at mating pools consisting of attractive people of their own sex compared to attractive opposite sex targets. Experiment 2 replicated the effect with an added control group, and suggested that both men and women become more religious when seeing same sex competitors. We discuss several possible explanations for these effects. Most broadly, the findings contribute to an emerging literature on how cultural phenomena such as religiosity respond to ecological cues in potentially functional ways.

(Nod to Kevin L, who could be an atheist anywhere, he's that brave)

Round up the usual suspects!

I pretty much laughed out loud when I saw the title of this piece from the Atlantic:

"Did Christianity cause the Crash?"

As ridiculous as the premise is, the article itself is actually pretty interesting.

Kung Fu Polars

Donorcycles

Here is another reason we should get rid of motorcycle helmet laws:

MORE. ORGAN. DONATIONS! (Really)

The point is that while it is true that helmets may reduce DEATHS, they increase total costs. If you have a bad motorcycle accident, wearing a helmet means (a) the casket can be open, because your face is still all pretty, or (b) you are a paraplegic, and a permanent tax on society. Helmets don't protect from spinal injuries or broken necks. And bad accidents are nearly always going to result in spinal injuries or broken necks. So the cost of wearing helmets is enormous, unless you really value the lives of people who can only communicate by blinking.

Worse, wearing a helmet likely causes more accidents, by increasing risk taking behavior. (I can hit a truck when I am driving 150 km/hr on my donorcycle, because I am wearing a HELMET!)...

(Nod to the Bishop. The Bishop also thinks "get 'em out of the gene pool" is a legitimate argument against helmets. Bad, bad Bishop!)

Unsafe Deposit Box

Why does anyone live in California?

This story is remarkable.

New York 23

Interesting post from my wife's paisan, Roy Cordato.

He writes about the strangeness of the NY 23 ballot. Very cool, very interesting. Excerpt:

Here is what the voter saw when he or she went in to the voting booth.

Democrat--Owens
Republican--Scozzafava
Independence--Scozzafava
Conservative--Hoffman
Working Families--Owens
My guess is that this peculiarity alone could account for the fact that Scozzafava received over 5 percent of the vote, more than the margin of difference between Owens and Hoffman.

Remember, Scozzafava had DROPPED OUT of the race, but her name is listed twice on the ballot, because of New York's "fusion" laws.

Do Colleges Favor Male Applicants?

A typically overwrought NPR story, about colleges "favoring" male applicants.

Here's the deal: if you went simply by SAT scores and grades, and proportions of applicants, women would be 62%, or even as high as 65%, in many colleges. (Would I mind going to such a college, were I 18? No, I would not mind. But try to focus, here).

So, it may well be true that, at the margin, colleges are taking some men over women with slightly higher scores and grades. But only at the margin. The colleges have long argued, and I agree, that a diverse class, on every dimension, is a worthy goal.

But now that diversity means "admit males," apparently some of the folks down at the Womens Studies Dept have their big supportive Sears catalog-style undies in a slipknot.

Discrimination would mean that the colleges systematically choose men over women. Diversity means that the last few choices, at the margin, are made based on an eye toward the overall composition of the class.

Let there be no mistake: I would make the same argument (and have) for women, African-Americans, region of the US, and economic background. Student learn from each other, and having a diverse class is a perfectly legitimate goal for a private college to pursue. It improves the educational atmosphere for everybody.

As Anonyman put it, in an email this morning, "Colleges discriminate against women because NOT all college students are women." Yep, hard to say that women, who constitute 55% to 65% of these classes, are being discriminated against, isn't it?

Electoral Politics in Colleges

(source: xkcd)
As I have said, students from the left should sue colleges for nonperformance on the contract. All they learn is the ideological equivalent of one move chess openings.

(Nod to MDW)

It's a groovy way to go

Last week, Mrs. Angus and I visited the shores of Hudson Bay in Manitoba to try and see polar bears. We were successful (click on pic to see a larger image)!



We also saw several arctic foxes



We stayed in a strange hostel on wheels called the Tundra Buggy Lodge right out on the edge of the bay!



We were there for three days and saw between 12 and 30 bears per day!





We also spent a bit of time in the town of Churchill and in Winnepeg. My impression of Manitoba is that it is caught in a time warp. It's still 1977 there. Three or four locals actually said "right on!" to me without any trace of irony.

Buried in BS

People, it seems that it now takes 1000+ pages to write a piece of legislation!  

The stimulus bill? Check. 

The House's health care bill? Check. 

And now, Chris Dodd's overhaul of bank supervision bill? Check mate! It weighs in at 1100+ pages.

Is it too late to buy stock in paper, ink and printer companies?

And, does anyone beside me think it's funny that "friend of Angelo" Chris Dodd, who should probably be in jail for financial irregularities, is in charge of bank oversight reform?

YIKES!

Deer Me!

Game Bill writes:

The WaPo runs this story reporting that a whitetail deer wandered into the Washington D.C. zoo and made the very unfortunate decision to jump into what turned out to be the lion park.

There links to three short videos shot by onlookers.

In the first, one of the lions jumps into the moat to go after the deer but the lion quickly drags itself back onto the dry bank. An onlooker comments, "that's one wet p**sy."

In the second, one of the lions has captured the deer on dry land and is playing with it like a cat with a mouse. But the deer makes a second valiant escape to the moat.

In the third, zoo officials try to wave off both the spectators and the lions.

Glen Beck has a doppelganger

Jon Stewart shows some talent as a mimic.

Seasonality....

Anonyman asks, do you understand this econ adjustment thingy? maybe you can explain it on yer blog...

He is referring to this article in the NYTimes...

Why, yes, yes I can. Suppose I go outside here in North Carolina on a day in January, and it's 65 degrees and sunny. I might say to the LMM, "Gosh, it's warm! This is the warmest day I can remember."

Now, suppose I go outside on a day in August. It's 68 degrees and sunny. I might tell the LMM, "Gosh, it's so cool today. This the coolest day I can remember!"

Why would I call a 65 degree day "warm" and a 68 degree day "cool"? It's obvious, almost silly: 65 degrees is a warm day in winter, and 68 degrees is cool day in summer.

But, in some absolute sense, 68 is warmer than 65. Yet was not the knight foresworn! (From "As You Like It," see below). Because the 65 is unusual warm direction compared to the mean temp in January, while 68 is unusual in the cool direction compared to the mean temp is August.

The point being that seasonality adjustments (to over-simplify) are calculated as deviations from the (monthly, seasonal, whatever) mean. In fact, the actual data are "adjusted" to ensure universal comparability, after taking seasonality out of the numbers. What THAT means is that you can get apparent gibberish like the lead 'graf in the Times article:

The economic reactions over the weekend to Friday’s employment report all started from the assumption that things grew much worse in October. The unemployment rate leaped to 10.2 percent from 9.8 percent. Another 190,000 jobs vanished. Actually, none of that happened.

In reality, the government report says unemployment rates remained steady at 9.5 percent. And the number of jobs actually rose, by 80,000. And the number of jobs for college-educated Americans rose more than in any month in the last six years....

So why is this the first time you’ve seen those better-looking numbers? It is because the government adjusted them before they were released. The adjustments are for seasonality. For some reason, October is the month with the largest seasonal adjustment down in jobs. So the increase in the unemployment rate does not reflect people actually losing jobs. It reflects the belief that seasonal factors should have added more jobs than they did.

One more shot at explanation: suppose the high temp in NC for each day in January stuck at 56 degrees. And suppose it stayed at 56 degrees for the daily high all through the summer. Would you say that the climate stayed the same? No, you would say that the climate cooled, dramatically, because you mentally "seasonally adjust" the numbers for ...well...seasons. Same with economics: what seems like good news in October is not good news because it takes great news in October to be good.

Finally, for the explanation of the Shakespeare reference:

AS YOU LIKE IT, Act I, Sc. II

TOUCHSTONE: Of a certain knight that swore by his honour they
were good pancakes and swore by his honour the
mustard was naught: now I'll stand to it, the
pancakes were naught and the mustard was good, and
yet was not the knight forsworn.

CELIA: How prove you that, in the great heap of your
knowledge?

ROSALIND: Ay, marry, now unmuzzle your wisdom.

TOUCHSTONE: Stand you both forth now: stroke your chins, and
swear by your beards that I am a knave.

CELIA: By our beards, if we had them, thou art.

TOUCHSTONE: By my knavery, if I had it, then I were; but if you
swear by that that is not, you are not forsworn: no
more was this knight swearing by his honour, for he
never had any; or if he had, he had sworn it away
before ever he saw those pancakes or that mustard.

So, maybe the answer is that the economists swear by their honor, though they never had any, and that's why seasonality makes sense!

There are no "Banned Images"

So, I was one of the signatories on the "statement of principle" regarding the newly published book, "Muhammed: The 'Banned' Images." (The book)

Eugene Volokh announced it, and rightly so.

Here is the "Statement of Principle," excerpted:

A number of recent incidents suggest that our long-standing commitment to the free exchange of ideas is in peril of falling victim to a spreading fear of violence. Not only have exhibitions been closed and performances cancelled in response to real threats, but the mere possibility that someone, somewhere, might respond with violence has been advanced to justify suppressing words and images, as in the recent decision of Yale University to remove all images of Muhammad from Jytte Klausen's book, The Cartoons that Shook the World.

Violence against those who create and disseminate controversial words and images is a staple of human history. But in the recent past, at least in Western liberal democracies, commitment to free speech has usually trumped fears of violence. Indeed, as late as 1989, Salman Rushdie's Satanic Verses continued to be published, sold, and read in the face of a fatwa against its author and in the face of the murder and attempted murder of its translators and publishers. In 1998, the Manhattan Theater Club received threats protesting the production of Terrence McNally's play Corpus Christi, on the ground that it was offensive to Catholics. After initially canceling the play, MTC reversed its decision in response to widespread concerns about free speech, and the play was performed without incident.

There are signs, however, that the commitment to free speech has become eroded by fears of violence. Historical events, especially the attacks of September 2001 and subsequent bombings in Madrid and London, have contributed to this process by bringing terrorist violence to the heart of liberal democracies. Other events, like the 2004 murder of Dutch film director Theo Van Gogh in apparent protest against his film Submission, and the threats against Hirsi Ali, who wrote the script and provided the voice-over for the film, demonstrated how vulnerable artists and intellectuals can be just for voicing controversial ideas. Under such threats, the resolve to uphold freedom of speech has proved to be lamentably weak: in the same year as Van Gogh's murder, Behzti, a play written by a British Sikh playwright, was cancelled days after violence erupted among protesters in Birmingham, England on opening night.

...The failure to stand up for free expression emboldens those who would attack and undermine it. It is time for colleges and universities in particular to exercise moral and intellectual leadership. It is incumbent on those responsible for the education of the next generation of leaders to stand up for certain basic principles: that the free exchange of ideas is essential to liberal democracy; that each person is entitled to hold and express his or her own views without fear of bodily harm; and that the suppression of ideas is a form of repression used by authoritarian regimes around the world to control and dehumanize their citizens and squelch opposition.

To paraphrase Ben Franklin, those who would give up essential liberty to purchase a little temporary safety, will get neither liberty nor safety.


Discuss. (I'll go first: I have never co-signed anything with the head of FIRE, IJ, and the head of the AAUP. A first...)

(UPDATE: FIRE posts.)

(UPDATE II: Already, some confusion. I do not endorse the publication or contents of the book. The whole point is that the publisher does not NEED endorsement, or permission. If the book were a collection of cartoons blaspheming Jesus (yes, I'm Catholic), I would still have signed the SoP.)

The real reason the wall came down

Here at KPC, we do honor and celebrate the end of the Berlin Wall. Bad, bad craziness.

But it is important to remember that a big reason for the fall of the wall was one of the core problems with socialism (and the Obama health plan): GDR didn't do anyting because everybody was in a meeting!

Soon, you will be, too....

Andre knocks one out of the park

From his new book "Open":

— On Chang: “He thanks God—credits God—for the win, which offends me. That God should take sides in a tennis match, that God should side against me, that God should be in Chang’s box, feels ludicrous and insulting. I beat Chang and savor every blasphemous stroke.” When Chang wins the 1989 French Open, Agassi thinks, “I feel sickened. How could Chang, of all people, have won a slam before me?”

Now he's the Answer to the wrong question

People, I am OLD. I have followed Allen Iverson's career since he was a high school phenom in Virginia.

He pretty much has no one to blame but himself, but it is really kind of sad to see him end up this way. After being injured at the beginning of the season, he has played 3 games off the bench for the Grizz and seems to be saying "no mas":

Iverson debuted for the Grizzlies on Monday in Sacramento after missing all the preseason and the season’s first three games with a hamstring injury. The Grizzlies lost to the Kings in overtime, and Iverson immediately questioned his limited role after the game. He also criticized his teammates for not noticing he was open on the final possession of regulation.

“I’m not a reserve basketball player,” Iverson said. “I’ve never been a reserve all my life and I’m not going to start looking at myself as a reserve.”

Iverson made similar comments two nights later after the Grizzlies lost to the Golden State Warriors.

and now?

A frustrated Allen Iverson has left the Memphis Grizzlies and is not expected to return anytime soon, if at all, a source close to the situation told Yahoo! Sports on Saturday.

The Grizzlies granted Iverson a leave of absence to allow him to return to his offseason home in Atlanta. The source said Iverson wants to clear his head and is extremely unhappy about the lack of communication with Grizzlies coach Lionel Hollins over his playing time and role with the team. Team sources told Yahoo! Sports that Iverson did not ask the Grizzlies to waive him, but there was no timetable for his return.

Still, Iverson has done nothing to hide his frustration after he returned from a hamstring injury this week and was relegated to coming off the bench. A source with knowledge of Iverson’s thinking said he “probably wasn’t coming back.”

The crazy thing is, he could be a valuable reserve player, getting say 18-22 minutes per game on a contending team with unlimited chucking privileges, but I guess he can't somehow get over the "insult" that would be. 

To me the only thing stranger than Iverson's fierce pride is the fact that the Grizz signed him to begin with.

I'll Huffington, and Puffington, and I'll Promote Your Book!

Friends de Marchi and Hamilton have a new book out this week.

Interesting book.

Already promoted at Huffington Post. And reviewed here.

Colber Repor can't be far behind, right?

The Week in PRE-view

It's Saturday! Time for the Week in Preview. Here is what is going to happen....

1. "Men Who Stare at Goats" tanks, but the program it is based on is real. Interestingly, the hottest toy this xmas season will also be a "mind flex" concept.

Interestingly, the actual program for the Clooney, et al. cine-bomb had this goal (really, I'm not making it up!): "One suggested application is a conception of the 'First Earth Battalion,' made up of 'warrior monks,' who will have mastered almost all the techniques under consideration by the committee, including the use of ESP, leaving their bodies at will, levitating, psychic healing, and walking through walls." YOUR. TAX. DOLLARS. AT. WORK!

2. HR 3962, the revised version of HR 3200, will not be voted on. Again. Even though it has been breathlessly scheduled for a vote every week for the past three. (To be fair, HR3962 itself is only about a week old. Here are the actions taken so far on 3962:

Oct 29th Introduced in House
Oct 29th Referred to House Natural Resources
Oct 29th Referred to House Rules
Oct 29th Referred to House Budget
Oct 29th Referred to House Oversight and Government Reform
Oct 29th Referred to House Judiciary
Oct 29th Referred to House Education and Labor
Oct 29th Referred to House Energy and Commerce
Oct 29th Referred to the Committee on Energy and Commerce, and in addition to the Committees on Education and Labor, Ways and Means, Oversight and Government Reform, the Budget, Rules, Natural Resources, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

That's a lot of referring! No one has read it, but they refer it a lot)

(UPDATE: This prediction is ALREADY wrong. They voted, 220-215 to pass it...)

3. The House Ways and Means Committee will continue to sit on its own thumb, instead of voting on the Fair Tax. The form of the Fair Tax being considered in the 111th Congress is HR 25. How do I know it WON'T be voted on? Two words, the name of the chair of Ways and Means: Charles Rangel.

4. Tuesday, the 10th will be a big day in Washington, DC.
-Labor Department releases job openings and labor turnover survey for September, 10 a.m.;
-Senate Budget Committee hearing on bipartisan proposals for long-term fiscal stability;
-Senate Energy and Natural Resources Committee hearing on reducing greenhouse gas emissions;
-Senate Finance Committee hearing on climate change legislation and jobs;
-Senate Health, Education, Labor and Pensions subcommittee hearing on swine flu and paid sick days;
-Senate Banking, Housing and Urban Affairs Committee hearing on bank overdraft fees legislation.

The interesting event will be the Labor Department JOLTS report. Monthly job openings have been stuck at 2.4 million for a couple of months. That is about half, or less, the number you would expect even in bad times. As recently as January 2008 the number was 4.3 million. Nobody is hiring. If the number on the JOLTS report is not up from 2.4 million for September, Wall Street may catch cold.

And remember, you heard it here FIRST! KPC, your source for fabricated news.

Why Are People Opposed to Dem's Health Care Plan?

A. First, and most importantly, not everyone IS opposed. At least 40%, and maybe more, support the Dem plan, with a "public option." So there is quite a bit of support.

B. Second, it could be racism:

Racial Prejudice Predicts Opposition to Obama and his Health Care Reform Plan

Eric Knowles, Brian Lowery & Rebecca Schaumberg, Journal of Experimental Social Psychology, forthcoming

Abstract: The present study examines the relationship between racial prejudice and reactions to President Barack Obama and his policies. Before the 2008 election, participants' levels of implicit and explicit anti-Black prejudice were measured. Over the following days and months, voting behavior, attitudes toward Obama, and attitudes toward Obama's health care reform plan were assessed. Controlling for explicit prejudice, implicit prejudice predicted a reluctance to vote for Obama, opposition to his health care reform plan, and endorsement of specific concerns about the plan. In an experiment, the association between implicit prejudice and opposition to health care reform replicated when the plan was attributed to Obama, but not to Bill Clinton-suggesting that individuals high in anti-Black prejudice tended to oppose Obama at least in part because they dislike him as a Black person. In sum, our data support the notion that racial prejudice is one factor driving opposition to Obama and his policies.

So, to review: Measure people's level of racism. Check back, and find that racists are likely to oppose President Obama, because of his race. (In other words, people who don't like black people, actually don't like black people. Any other finding would have raised pretty serious questions about the construct validity of the first wave of surveys, I think). Then, go on to conclude that since racists don't like President Obama, then anyone who doesn't like President Obama must be a racist. Anyone who doesn't like Nancy Pelosi is a misogynist. Anyone who doesn't like Harry Reid hates Mormons. And anyone who doesn't like VP Biden probably has a valid reason. To conclude: I eat bread. Catfish eat bread. I am therefore a catfish.

C. Third, they could be "morally disengaged." (NOTE: I think "morally disengaged" means that you disagree with me, and I want to call you a poopie-head, but instead I call you "morally disengaged" instead, since no moral person could possibly disagree with me). (Notice that the definition below involves the "withholding of government assistance," not "taking money at gunpoint from people who earned it, and giving it to other people who did NOT earn, but who happen to have powerful political friends." If that be moral disengagement, give me more of it!)

Moral disengagement and tolerance for health care inequality in Texas

Alfred McAlister, Mind & Society, forthcoming

Abstract: Societies vary in their levels of social inequality and in the degree of popular support for policies that reduce disparities within them. Survey research in Texas, where levels of disparity in health and medical care are relatively high, studied how psychological mechanisms of moral disengagement relate to public support for expanding access to government- subsidized health care. Telephone interviews (N = 1,063) measured agreement with statements expressing tendencies to minimize the effects of inequality, blame its victims and morally justify limits on government help. The interviews also assessed support for general and specific policies to reduce inequality, e.g., through state-subsidized health care for lower income groups, as well as political party affiliation, ideological orientation, gender, age, education and income. Agreement with beliefs expressing moral disengagement was associated with opposition to governmental policies to reduce inequality in children's health care. Beliefs that justify the withholding of government assistance, blame the victims of societal inequality, and minimize perceptions of their suffering were strongly related to variation between and within groups in support for governmental action to reduce inequality.

This is a truly amazing frame for a so-called "study," remarkable. The author...well check him out.

D. Finally, people could think that the health care plan is a bad idea, on the merits. Too expensive, too restrictive on basic freedoms, and likely to reduce, rather than increased, the quality of health care delivery for many people. The problem is that most people, more than 2/3, are pretty happy with their existing coverage. They are not convinced that the alternatives presented to them will be both better and cheaper, and in fact may be NEITHER better NOR cheaper.

My own answer is D, bad idea. What's yours?

(Nod to Kevin L, who never withholds assistance)

Chilipunk'd in Honduras

Wow, it appears that Marvelous Mel Zelaya has once again gotten outfoxed by the Micheletti folks (the first time being when they loaded him up on a plane and shipped him out of the country). 

Last Friday, there was a supposed deal between the two sides to form a unity government and have the Congress vote on whether or not Zelaya would be allowed to serve out the rest of his term.

Apparently lost on the Zelaya team was the fact that while there was a deadline for forming the new government (yesterday), there was no deadline for taking the vote and the Congress was not a signatory to the deal.

Plus, it appears that the Obama administration now considers the signing of the agreement to be sufficient for recognizing the winner of the election scheduled for later this month as legitimate, rather than the re-instatement of Zelaya as was previously thought.

If true, that was actually a slick move by the US, allowing them to keep the status quo more or less in place while seeming to be against allowing the status quo to stay in place.

One thing is for sure here; Zelaya is a dope, who is still stuck inside the Brazilian embassy.

 

Oklahoma: Where amazing happens!

I swear I am not making any of this up!

Car Sideswipes Elephant In Enid

ENID, Okla. --Enid police are investigating a crash between a car and an elephant.Officers said a couple was driving home from church when it side-swiped a bull elephant near 4200 N. Van Buren Bypass. The elephant had escaped from a circus at the Garfield County Fairgrounds and was roaming along U.S. 81.Investigators said the elephant did not appear to be seriously injured. It did suffer a broken tusk and bruises.The elephant was chained in a field after the crash while workers prepared to tranquilize him and load him up.The couple was not injured and their car was not heavily damaged.


The moral of the story: Never go to church?

We Get Letters: Confidence in Men

I have this friend, a young woman who graduated from Duke years ago, and now works in a large city in the Northeast. She sometimes tells me of her dating disasters, laughing ruefully at the latest apocalypse.

Here is a g-chat exchange we had, some months ago:

A: I'm afraid I go for the arrogant type
like that awful guy I told you about.
me: you think you can TAME them?
A: i dont want to;
at a certain point it's not worth it
me: how's that brilliant plan working out
A: not working out at ALL
me: so, what about the NICE guys, the quiet
A: they love me
and i dont give them a chance
it's bad
lots of them
me: well, yes, exactly.
A: oy.
you sound like my mother
i wish i could be attracted to them
i literally cant
it's a huge problem
me: can't fake it. not worth trying
A: you cant fake attraction
what's the point?
it is or it isn't
it's biological, chemical

Well, anyway, it struck me that there is an obvious explanation for why men are arrogant jerks. Women prefer men who are arrogant jerks. Women say they don't (though A, above, is honest enough to admit that she DOES prefer arrogant jerks), but they do.

So, the reason boys are more confident than girls is that girls want them to be, and choose mating partners based on confidence. Boys do NOT choose girls on this basis.

The point is that, as usual, women are in charge here. Don't blame the boys, we are just trying to please you ladies.

What Explains Boys’ Stronger Confidence in their Intelligence?

Ricarda Steinmayr & Birgit Spinath
Sex Roles, November 2009, Pages 736-749

Abstract:
This study investigated whether boys’ stronger confidence in their intelligence is explained by gender differences in measured intelligence and gender-stereotypical parental perceptions of their children’s intelligence. Verbal, numeric, figural, and reasoning intelligence and corresponding self-ratings were assessed for 496 German 11th and 12th graders (284 girls; age: M = 16.95). Parents also rated their children’s intelligence (339 parents; 205 mothers; age: M  = 46.66). With and without controlling for intelligence, boys rated their numerical, figural, and reasoning abilities higher than girls. The same pattern appeared in parental intelligence perceptions. Boys even judged themselves as more intelligent controlling for both measured intelligence and parental intelligence estimates. Thus, neither intelligence nor gender-stereotypical parental perceptions totally explains boys’ stronger confidence in their intelligence.

----------------------

The Evolution of Overconfidence

Dominic Johnson & James Fowler
University of California Working Paper, September 2009

Abstract:
Confidence is an essential ingredient of success in a wide range of domains including job performance, mental health, sports, business, and combat. Many authors have suggested that overconfidence -- defined here as believing you are better than you are in reality -- is advantageous because it serves to increase ambition, resolve, morale, persistence, and/or the bluffing of opponents. However, too much overconfidence can cause arrogance, market bubbles, financial collapses, policy failures, disasters, and wars, so it remains a puzzle how such a false belief could evolve or remain stable in a population of competing accurate beliefs. Here, we present an evolutionary model that shows overconfidence actually maximizes individual fitness and populations will tend to become overconfident, as long as the resources at stake during conflicts exceed twice the cost of competition. This is because overconfident individuals make more challenges when there is uncertainty about the strength of opponents (and thus the outcome of conflicts), while less confident individuals shy away from many conflicts they would win. Where the value of a prize is at least twice the cost of trying, overconfidence is the best strategy. The model suggests that the conditions under which humans would have evolved to have a "rational" unbiased view of their own capabilities are exceedingly rare, and it helps to explain why resource-rich environments can paradoxically create more conflict. Moreover, the fact that overconfident populations are evolutionarily stable may be one reason why overconfidence persists today in politics, business, and finance, even if it causes occasional disasters.

(Nod to Kevin L, who is very confident, for the article references)

(I couldn't find a video of Jack Palance saying, "Confidence is very sexy, don't you think?" But I wanted to)

(UPDATE: Commenter Adam Dynes comes up big. He's WAAAAY ahead of me. Check this out....)

More on the multiplier

In a new NBER working paper (ungated version here) Valerie Ramey provides some new evidence on the effects of government spending on consumption and the size of the government spending multiplier:

"Do shocks to government spending raise or lower consumption and real wages? Standard VAR identification approaches show a rise in these variables, whereas the Ramey-Shapiro narrative identification approach finds a fall. I show that a key difference in the approaches is the timing. Both professional forecasts and the narrative approach shocks Granger-cause the VAR shocks, implying that the VAR shocks are missing the timing of the news. Simulations from a standard neoclassical model in which government spending is anticipated by several quarters demonstrate that VARs estimated with faulty timing can produce a rise in consumption even when it decreases in the model. Motivated by the importance of measuring anticipations, I construct two new variables that measure anticipations. The first is based on narrative evidence that is much richer than the Ramey-Shapiro military dates and covers 1939 to 2008. The second is from the Survey of Professional Forecasters, and covers the period 1969 to 2008. All news measures suggest that most components of consumption fall after a positive shock to government spending. The implied government spending multipliers range from 0.6 to 1.1. "


Shout it from the rooftops!

ChiliPunk'd?

Is is just me, or did Mr. Karzai totally chilipunk Obama? He loads up his government with bad guys as part of his re-election strategy, engages in sufficient electoral fraud that the US "forces" him to recant his majority win and agree to a runoff, then his opponent in the runoff drops out, Karzai is President again anyway, and our political masters now seem A-OK with this outcome.

Do y'all think Barack even got the license plate of that bus?

O Minimum Wage, Thy Name is Discrimination!

In my recent podcast with Russ ("DJ Yiddisher Kop" is his rap name) Roberts, we discussed the problems caused by minimum wage. In particular, economic theory would clearly imply that forcing a higher than equilibrium wage would allow, in fact encourage, employers to take it out on employees on other margins. Abuse, discrimination in hiring, overwork, bad scheduling, etc.

And...well, what do you know?

Discrimination in a Low-Wage Labor Market: A Field Experiment

Devah Pager, Bart Bonikowski & Bruce Western
American Sociological Review, October 2009, Pages 777-799

Abstract:
Decades of racial progress have led some researchers and policymakers to doubt that discrimination remains an important cause of economic inequality. To study contemporary discrimination, we conducted a field experiment in the low-wage labor market of New York City, recruiting white, black, and Latino job applicants who were matched on demographic characteristics and interpersonal skills. These applicants were given equivalent résumés and sent to apply in tandem for hundreds of entry-level jobs. Our results show that black applicants were half as likely as equally qualified whites to receive a callback or job offer. In fact, black and Latino applicants with clean backgrounds fared no better than white applicants just released from prison. Additional qualitative evidence from our applicants' experiences further illustrates the multiple points at which employment trajectories can be deflected by various forms of racial bias. These results point to the subtle yet systematic forms of discrimination that continue to shape employment opportunities for low-wage workers.

Now, it's the ASR, so they would never make the connection. But discrimination and abuse is caused by the minimum wage. At the competitive wage, there would be NO economic space for discrimination. But the minimum wage creates a space for discretion.

The usual story is this: sure, MW may cause some unemployment, but the people who have jobs, they are better off, right?

Um, no. Back to school. Back to Econ 101.

A journey to the past

My favorite things Canadian are arctic foxes, Neil Young, polar bears, Daniel Negraneau, and sled dogs! Here is a shot of a very cosmopolitan sled dog we met outside of Churchill last week:

I Must Be Just About the Most Handsome Guy Around!

When they are behind, "out" parties choose candidates with higher quality faces.

Mr. De Mille, I am ready for my close up!

Candidate Faces and Election Outcomes: Is the Face-Vote Correlation Caused by Candidate Selection?

Matthew Atkinson, Ryan Enos & Seth Hill
Quarterly Journal of Political Science, October 2009, Pages 229-249

Abstract: We estimate the effect of candidate appearance on vote choice in congressional elections using an original survey instrument. Based on estimates of the facial competence of 972 congressional candidates, we show that in more competitive races the out-party tends to run candidates with higher quality faces. We estimate the direct effect of face on vote choice
when controlling for the competitiveness of the contest and for individual partisanship. Combining survey data with our facial quality scores and a measure of contest comp- etitiveness, we find a face quality effect for Senate challengers of about 4 points for independent voters and 1-3 points for partisans. While we estimate face effects that could potentially matter in close elections, we find that the challenging candidate's face is never the
difference between a challenger and incumbent victory in all 99 Senate elections in our study.

(Nod to Kevin L, who has excellent face quality)

Mother of All Carry Trades....

My friend Roger Congleton at GMU Econ sends the following link:

Nouriel Roubini, "Mother of all carry trades faces an inevitable bust"
(Financial Times, Nov 1 2009)

An excerpt:
...while the US and global economy have begun a modest recovery, asset prices have gone through the roof since March in a major and synchronised rally. While asset prices were falling sharply in 2008, when the dollar was rallying, they have recovered sharply since March while the dollar is tanking. Risky asset prices have risen too much, too soon and too fast compared with macroeconomic fundamentals.

So what is behind this massive rally? Certainly it has been helped by a wave of liquidity from near-zero interest rates and quantitative easing. But a more important factor fuelling this asset bubble is the weakness of the US dollar, driven by the mother of all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates – as low as negative 10 or 20 per cent annualised – as the fall in the US dollar leads to massive capital gains on short dollar positions.

The problem, as Roubini notes, is that at some point the dollar will stop falling. People will actually have to buy dollars, or take it right in their shorts (a finance pun, sorry). And THEN the dollar might even appreciate, and the bubble will burst, and down will come baby, cradle and all.

The LMM and I have a considerable, though hardly huge, position in Euros in an account at Sparkasse in Erlangen. And, through dumb luck, we have made a nice piece of change. Holding Euros is a bet that the dollar depreciates, but in a covered way, because we actually own the cute little buggers. To understand why the above is a problem, consider the following two definitions:

Short Position: In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as he will pay less to buy the assets than he received on selling them. Conversely, the short seller will incur a loss if the price of the assets rises. Other costs of shorting may include a fee for borrowing the assets and payment of any dividends paid on the borrowed assets. Shorting and going short also refer to entering into any derivative or other contract under which the investor profits from a fall in the value of an asset.

Carry Trade: The term carry trade without further modification refers to currency carry trade: investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. It tends to correlate with global financial and exchange rate stability, and retracts in use during global liquidity shortages.
The risk in carry trading is that foreign exchange rates may change to the effect that the investor would have to pay back more expensive currency with less valuable currency. In theory, according to uncovered interest rate parity, carry trades should not yield a predictable profit because the difference in interest rates between two countries should equal the rate at which investors expect the low-interest-rate currency to rise against the high-interest-rate one. However, carry trades weaken the currency that is borrowed, because investors sell the borrowed money by converting it to other currencies.

This Could Be True....But What About Joe Morgan?

Sports Commentators and Source Credibility: Do Those Who Can’t Play...Commentate?

Justin Robert Keene & Glenn Cummins
Journal of Sports Media, Fall 2009, Pages 57-83

Abstract:
Although research has examined how commentators shape perceptions of mediated sports, the area of commentator credibility remains unexplored. Using an experimental design, this study examined the effects of commentators’ previous athletic experience on the perceived credibility of sports broadcasters and viewers’ evaluations of game play. Results showed that experience impacts viewers’ perceptions of credibility such that commentators without experience were viewed as least credible and their games were rated as less exciting and enjoyable.

Bacon Echoes

I swear this could be Herbert Elmer Munger, speaking from beyond the grave.

Herb and I never got along that well. But towards the end of his life, we got a lot closer. One of my fondest memories, when he was 83 (he died at 85, of congestive heart failure), was the day I broke him out for breakfast at Denny's.

He was nearly blind, but he could smell things. And when his wife would drive him to the doctor's or somewhere, he would smell the bacon at the Denny's.

And then fuss about it for three days. He wanted pancakes, he wanted REAL butter, he wanted 6 or 8 slices of REAL bacon, and he wanted real, caffeinated coffee. He got none of these things at the retirement home (he lived at Meadowood, in Bloomington, a very very very nice place). His wife insisted that he should eat oatmeal, no butter, no sugar.

And, of course, she was right. Except that he was freakin' 83, and he wanted BACON. When you are 48, sure, avoid bacon. When you are 83, go for it.

Well, I was visiting, and he was up early. Like, 5:45 am. I heard him pawing around in the kitchen, I got up, put on my clothes. I said, "Dad, let's go to Denny's."

Him: "Oh....oh, yes."

Me: "We can do this. Get dressed."

Him: "I'll hurry."

We snuck out like we were behind enemy lines. Giggling, actually giggling.

Once we got to Denny's, we got the coffee and water, ordered big stacks o'cakes with bacon (I gave him mine). When the order came, he piled about 3 or 4 tablespoons of whipped butter on his 'cakes. Then, syrup tsunami. Then cut the 'cakes into tiny pieces to maximize surface area. Incredibly, at this point more syrup was required.

He couldn't quite finish the big stack of pancakes, but he did finish all the bacon. And had at least six cups of real coffee.

One of the very best mornings of my life. And Elaine just laughed when we got back to the house; I think she recognized the importance of bacon, every now and then. She even called him "Bacon breath" for about an hour. But he was nappin' in the big chair, a picture of contentment.

Anyway, those twitters, from that guy? Those could be my dad, easy.

(Nod to AH for the Twitter link)

An Obvious Auction Possibility?

Yeon-Koo Che & Terrence Hendershott
Economists’ Voice, October 2009
The NFL Should Auction Possession in Overtime Games

"[NFL] overtimes can ruin great games, because, with all too high probability, whichever team gets the ball first wins. Instead of one of the best, the game might have been remembered as dubious, maybe even ignominious, with many ‘what ifs.’ We propose an auction method to eliminate the coin flip’s randomness by letting the teams bid to determine the initial possession...To minimize the impact of luck, it must be the case that the team that receives the opening possession has no real advantage. To accomplish this: Why not let the teams trade on who receives the opening possession with the starting position used as currency?"

(Nod to Kevin L)

Your Tax Dollars at Work

(Article, and source credit for video)

I can't wait until the government is also in charge of health care.

(Nod to Anonyman)

(UPDATE: For you relatives of Dan Quayle out there, note the spelling of "Reagan" on the sign. That's the point of the video.)

The Week in PRE-view

The Week in PRE-view

Forget those wimps who talk about the week that WAS. Given our nearly divine prescience here at KPC, we can review the week in advance. Here's what to watch for:

1. The election in New Jersey: Chris Christie loses, in a close race, to the most corrupt incumbent governor in the U.S., Jon Corzine. And the reason that Christie will lose is widespread vote fraud. As the Democrats all know, "In counting, there is strength."

2. The election in Virginia: McDonnell beats Deeds. As Rasmussen puts it, Republican Robert F. McDonnell opened a 13-point lead over Democrat R. Creigh Deeds this week – in a survey taken the evening after the president made a campaign appearance for Deeds in the state. I assume that AFTER the visit by BHO, Deeds spoke even louder, and led by 15%.

3. The announcement by President "Fullness of Time" Obama, who is cravenly waiting until Wednesday to announce that he is, in fact, going to send 20,000 troops to Afghanistan. These troops will be fewer than needed, if you believe we can win. And they will be far more than we should send if you believe (as I do) we can't win. And he is waiting until Wednesday to announce so that he can avoid making the left mad for sending so MANY troops, and the right mad for sending so FEW. And waiting until after the elections (#1 and #2, above) to make the announcement is pretty transparent. Sure, the Repubs would do it, also, but....)

4. Nancy Pelosi kills and eats Jim Matheson (D-Utah), a "blue dog" Democrat who was waffling on voting "yes" in the secret "caucus of death" meetings held by party leaders. Says Pelosi, "The important thing is that we get a health care bill passed. If we have to lose 20 seats to do it, it will still be worth it. And besides, moderates make for excellent sashimi plates." Interestingly, it turns out that after eating a moderate, Pelosi's testosterone level was very high, according to Duke University researchers.

You'll thank me. And remember, you heard it first on KPC, your source for fabricated news stories.

Yeah, it's funky like that

People, I submit that this is an almost perfect metaphor for our Congress, except it should be the blue half that is bigger!

If you have a job STFU about unemployment??

Is the only valid opinion one that comes from personal experience? Do study and research and human capital mean nothing unless one has personally experienced the phenomenon? I ask because of the following, which appeared on a blog called Econospeak:

Some Questions on Unemployment for Economists

by Tom Walker

1. Over the last decade, in how many months have you a) had no income from employment? and b) were unsure how long it would be before you would again receive a paycheck?

2. How many times in your working life have you had to "change careers" because there were meager prospects in the field of work you had become proficient at?

3. How likely do you believe it is that you will be laid off as a professor in a) the next six months? b) the next year? c) the next five years?

4. How many of your fellow tenured economics professors do you know of who are currently laid off from their positions?

5. What do you think of the Pope's views on birth control?

EconoSpeak readers, please contribute your suggestions to this list of questions for economists on unemployment.


Here are my answers: (1) none, (2) never, (3) a: 0%, b: 10%, c: 20%, (4) If furloughs count as layoffs, hundreds, otherwise very few. (5) I disagree with the Pope's views on birth control, but NOT BECAUSE HE ALLEGEDLY IS CELIBATE!!!!!

If we extend this "logic":

Only the uninsured should have a voice in the health care debate.

Only soldiers should make our military decisions.

I can't tell if the post is supposed to be funny or if the guy thinks he is making some kind of point.

OMG! It's GDP!

So, I was on a radio show, "The Takeaway," this morning at 7 am and 9 am, over at the Duke ISDN studios. (Had to leave home at 6:10 am; kind of groggy).

(Podcast of shows here, or soon will be...)

Anyway, it turns out that GDP is up 3.5%.

It ALSO turns out that that number is almost totally fake, in the sense that it does not reflect real growth. Much of it is the "my cash for your clunker" program. Cash for Clunkers was a pretty dumb program; Edmunds estimated that the program cost taxpayers $24,000 for every car sold, over and above the cars that would have been sold anyway. (Here are the Edmunds numbers....)

And the "First time homebuyers" fraud...um... program? Don't get me started.

GDP is C + I + G. Spelled out, that means that Gross (total, before exports) Domestic (what we do in the US) Product (aggregate economic activity)

equals the sum of: Consumption by consumers (C)
plus
Investment by business (I)
plus
Spending by government (G)

So, the total went up by 3.5%, and that seems like growth.

But all the increase is in G, financed by the increased deficit. It's fake. It's not real growth. It's just shifting money from taxpayers tomorrow into Obama's approval rating today.

Seriously, all we did was blow up G like a giant helium flying saucer, with no balloon boy in it. The 3.5% "growth" is fake. It's all G. Ask yourself: why is this a "jobless recovery?" Why aren't consumers going back to the stores, if this is a real recovery? Answer: it is NOT a real recovery.

Check this quote from Christina Romer:

“Data released today by the Commerce Department show that real GDP grew at an annual rate of 3.5 percent in the third quarter of the year. This is in stark contrast to the decline of 6.4 percent annual rate just two quarters ago. Indeed, the two-quarter swing in the rate of growth of 9.9 percentage points was the largest since 1980. Analysis by both the Council of Economic Advisers and a wide range of private and public-sector forecasters indicates that the American Recovery and Reinvestment Act of 2009 contributed between 3 and 4 percentage points to real GDP growth in the third quarter. This suggests that in the absence of the Recovery Act, real GDP would have risen little, if at all, this past quarter.”

Right. Without the increase in G, there would be no increase. BUT EVERY DOLLAR WE SPEND ON G IS BORROWED FROM OUR CHILDREN!!!! Keynes said that we should pay people to go out and bury jars full of money, so that other people would have "jobs" digging up the jars. No. No, no, no.

UPDATE/EXPANSION:

Simple answer: this is the Keynesian fallacy.

If I buy a refrigerator, that is a real transaction. And it counts toward C (consumption)

If I own a business, and I buy a new machine tool, or fork lift, that is real, also. It counts toward I (investment).

Real recoveries are led by C + I

The Keynesian fallacy, based on the "multiplier" theory, is that government spending causes growth. And it COULD, if the money is spent on infrastructure, keeping us safe, etc. But then the growth that it causes come from the consequent, LATER increases in C and I. (And, the multiplier is NOT 4; it's more like 0.8 to 1.1, at best. It may be negative!)

THIS growth, this GDP number today, is just an accounting trick: Suppose I borrowed $10,000 on my credit card, and then told my wife, "Look, here's the $10,000, our income has gone up by $10,000!" Then I go out and spend the "income" on a new bass fishing boat.

She would hit me with a chair! Borrowing money and spending it is NOT increased income.

Well, the income of the nation is GDP. But we are borrowing money (the deficit) to finance increased spending in G (government).

So, an accountant might say that C + I + G is going up. But if the increase is all G, and it's borrowed, then that is not real growth.

Meet the new Raj, Same as the old Raj?

In a new NBER working paper (ungated version here) Alfaro and Chari ask the question, "India Transformed?" and their answer goes something like this:

Using firm-level data this paper analyzes the transformation of India’s economic structure following the implementation of economic reforms. The focus of the study is on publicly-listed and unlisted firms in manufacturing and services industries. Detailed balance sheet and ownership information permit an investigation of a range of variables. We analyze firm characteristics shown by industry before and after liberalization and investigate how industrial concentration, number, and size of firms evolved between 1988 and 2005. We find great dynamism displayed by foreign and private firms as reflected in the growth in their numbers, assets, sales and profits. Yet, closer scrutiny reveals no dramatic transformation in the wake of liberalization. The story rather is one of an economy still dominated by the incumbents (state-owned firms) and to a lesser extent, traditional private firms (firms incorporated before 1985). Sectors dominated by state-owned and traditional private firms before 1988-1990, with assets, sales and profits representing shares higher than 50%, generally remained so in 2005. The exception to this broad pattern is the growing importance of new private firms in the services sector. Rates of return also have remained stable over time and show low dispersion across sectors and across ownership groups within sectors.

I think this post's title is a pithier abstract, but then I don't work at the Harvard B-School, do I?

LeBron is Le-Gone

Wow! Did any of you catch the season opening Celts - Cavs game last night?

LeBron had 38 points on 22 shots, but the poor guy had to play 45 minutes! Shaq had 10 and 10 in 29 minutes and nobody else did nuttin'!!!!

Boston's bench outscored the Cav's bench by 26-10. All the Celtics reserves were at least +5 in the plus minus stat, all the Cav's reserves were negative.

Cleveland had trouble defending the break (except for Lebron's chase down blocks) and the pick and roll.

The bottom line is this:  

Cleveland ain't winning no title and LeBron is going to greener pastures.

Busted

I like very much the original intent of the enterprise we now call DSGE modelling. Build a model from first principles wherein we can identify the deep parameters and do real policy analysis.

Two things though have always bothered me in the actual practice of DSGE modelling.

The first is the use of the "Calvo rule" for modelling how firms change their prices. This method assumes that firms have a constant probability of changing their price and that said probability does not vary with how long it has been since they last changed their price (i.e. it has a constant hazard).  

The second is the increasing number of ad-hoc "real rigidities" that are routinely added to the models to help them fit the data. Things like adjustment costs for capital, labor, and leisure, among others. They are not derived from theory, their correct functional forms are far from obvious, and in my view, they make the claim that we can do real counterfactual policy analysis with the models fairly suspect.

I have been told by practitioners that the Calvo rule is innocuous. They say that is a literally false assumption that is convenient, yet does not play a major role in the models' dynamics.

Two new papers show that, at least in some cases, this is not correct.  In "The cost of tractability and the Calvo pricing assumption" (available here), Fang Yao shows that, in the model he studies, replacing the Calvo rule with a price adjustment rule where the hazard function is increasing, makes the inflation dynamics of the model fit the data better without incorporating real rigidities! He also shows that money shocks have a bigger impact with the increasing hazard price adjustment rule.

In other words, in his model, the Calvo rule is not innocuous and replacing it with a more realistic rule lessens the need for incorporating real rigidities into the model and changes conclusion about the importance of nominal shocks for explaining model dynamics. Two birds with one stone!

Another recent paper, "Heterogeneous price setting behavior and aggregate dynamics" (available here) by Carvalho and Schwartzman not only allows for non-constant hazards but allows more than one type of price adjustment rule to be followed in the economy. They find that allowing such heterogeneity in price adjustments has large effects on model dynamics, specifically that it creates larger amounts of monetary non-neutrality.

Shout it from the rooftops!

Hat tip to Gabriel M

Governor Terminator Sends Message to Legislature

Governor A. Schwarzenegger sends message to Cal Assembly.

(Nod to Tommy the Brit)

Cruel but usual punishment

Ah Reuters, you know what I want and you always deliver:

A Sicilian builder transferred from prison to house arrest tried to get himself locked up again to escape arguments with his wife at home, Italian media reported Thursday.

Santo Gambino, 30, did time for dumping hazardous waste before being moved to house arrest in Villabate, outside the Sicilian capital, Palermo, Italian news agencies reported.

Gambino went to the police station and asked to be put away again to avoid arguing with his wife, who accused him of failing to pay for the upkeep of their two children.

Police charged him with violating the conditions of his sentence and made him go home and patch things up with his wife.

Man those cops are brutal! Sending him back to his wife after she knows that he went to them and asked for jail? Better keep your nose clean while visiting Sicily.

Norman loses an icon

No, not Sam Bradford, E.Z. Million.

Yes, Elmer Zen Million passed away last weekend at the age of 68. In the last Mayoral race here, he ran against a political science professor and a real estate developer. In other words, despite his reputation for goofiness, he was the most qualified and best candidate (by the way, the professor won).

One EZ Million fact that I didn't know until his obituary is that he had a great uncle named Tennyson Million who went by Ten Million and signed his name as 10,000,000!

That is one great family.

Hat tip to Mr. Norman, Ben Keen.

Defending China

Some random thoughts about the exchange rate hysteria gripping our country's punditry:

How can China's exchange rate peg be "currency manipulation"? Of course literally it is, as is any peg, because you have to undertake policies to keep your currency at the target value. People, this is exactly how the Bretton Woods system worked for the entire Western world and it is how the Gold Standard worked as well.

Is that what we want to mean by "manipulation"?

China is not out there devaluing their currency. They are just pegged to us and we do the devaluing for them (with respect to the rest of the world).

Many US economists are pleased that we have a lower dollar to promote exports. Why is that not OK for China too? Yes I understand that we are a deficit country and China is surplus country, but I would be way more concerned about getting China to open its markets to a much greater extent than I would be about the nominal exchange rate between the US and China.

As alluded to above, the Chinese peg fixes the nominal exchange rate, but the key price for trade is the real exchange rate, which is not under Chinese control. 

I have not seen any analyses of the bilateral RER between China and the US, but I think Chinese inflation is higher than US inflation so that under the recent peg, there have been RER movements actually making the Chinese currency less competitive.

All this fussin' and feudin' isn't good for the international trading system. We slap anti-dumping on Chinese tires, they react against US nylon, other countries take note and get into the act (I think India has like 30 anti-dumping cases against China), and the whole system suffers.

The Chinese peg to the dollar is not cause of all our problems, nor is the floating Yuan the solution to our problems.

because there ain't no fours!

The title of this post is what Antoine Walker (forever known around chez Angus as "big head") answered when a reporter asked him why he took so many three point shots.

As the NBA season starts up, Antoine has no team, no contract and is barely staying out of jail for unpaid debts. Despite earning $110 million dollars in his career and only being 33 years old,  'Toine is busted and the bills are coming due:

And he faces a host of other claims. This summer J.P. Morgan Chase Bank, Wachovia Bank, and American Express Centurion Bank won decisions against Walker. He was ordered to pay J.P. Morgan Chase $1,571,771.47 and Wachovia $1,540,929.14 - both for failing to pay off sizeable promissory notes. From court documents, the loans appear originally related to Walker’s nonbasketball business endeavors.

A default was entered in the American Express case with $53,321.71 in overdue credit card charges at stake, including some that fit the picture of a free-spending star - an $1,843.45 dinner, with a $350 tip, for instance. Or, two nights at the Mandarin Oriental in Miami for $2,198.04. And Walker, remarkably, appears to have authorized five people to make charges on his card, not a strategy most personal finance professionals would recommend. Many of the charges appear to have been rung up by another individual, but Walker is on the hook.

Additionally, in March, an arbitrator ruled that Walker owed his former agent, Mark Bartelstein, more than $450,000 in unpaid fees. Bartelstein declined to comment about the matter.

Antoine liked to live large:

Walker turned the pavement surrounding his home into a virtual luxury car lot - two Bentleys, two Mercedes, a Range Rover, a Cadillac Escalade, a bright red Hummer. Often, the vehicles were tricked out with custom paint jobs, rims, and sound systems at considerable added expense. He also collected top-line watches - Rolexes and diamond-encrusted Cartiers.

One person who doesn't think Walker has a problem? His Moms:

“Antoine doesn’t owe anybody any explanation,’’ said Diane Walker. “He’s not out here hurting anybody. He’s trying to live his life peacefully. That’s all he’s doing . . . My son is young. Why can’t he just enjoy life, go where he wants to go?’’

“Antoine is doing great,’’ said Diane. “I have my home. He has his home. If he’s doing so bad, then how could we still be here?’’

We at KPC sincerely hope it doesn't come to that, but it's looking like it well might.