Kids Prefer Cheese
Credibly promising to be irresponsible...since 2004!
Saturday, March 13, 2010
Buchanan Blvd : Four Years Ago Tonight....
My pal Bob Lee writes a retrospective on the N&O and coverage of Duke Lacrosse.
The article by Ruth Sheehan (can't find a link, may be in gated archives) started like this:
Members of the Duke men’s lacrosse team: You know.
We know you know.
Whatever happened in the bathroom at the stripper party gone terribly terribly bad, you know who was involved. Every one of you does.
And one of you needs to come forward and tell the police.
Do not be afraid of retribution on the team. Do not be persuaded that somehow this “happened” to one or more “good guys.”
If what the strippers say is true — that one of them was raped, sodomized, beaten and strangled — the guys responsible are not “good.”
She does say "if," but she means "since." Because "we know you know."
Her later thoughts. And, as Bob Lee says, fair enough. A commentator comments. Sometimes s/he will get it wrong. When they get it wrong, they apologize.
When you remember, remember the biggest idiot in the world, Nancy Grace. No apology from Nancy Grace. What an idiot.
The Grand Game: Show Me State Edition
Wow. This guy is quite a piece of work. Nice article.
People depend on government assistance, subsidies and protection. Business depends on the flow of funds from food stamps, rent subsidies, Medicaid and other government cash. The local grocery store, paving contractor, property management firm, nursing home, hospital and many other businesses rely on the government to provide a fair market and a dependable customer base.
... our society has evolved a successful symbiotic relationship between people, private business and government. It is not the way it was, it is the way it grows; it is a work in progress. But it works -- business thrives, people are better off and freedom triumphs.
Government is the goose that lays golden eggs. We can choose to nurture the goose or starve it. I am patriotic. I am willing to make the sacrifice and fight to sustain and even improve our government.
"Government assistance"? Just change that to "heroin" in the above, and it changes his point.... not at all. Getting citizens addicted to government-provided heroin would have all the same effects he is claiming for welfare. Increased sales for business, subsidies, protection...
This fellow doesn't want freedom. He is very clear: His vision of America is one where every citizen is dependent on something called "government." What he means is "politicians," of course. He wants all of us to be dependent on politicians for our daily bread, not on our own efforts or talents. And once we are hooked, the politicians will come around with their heroin-welfare to keep us hooked.
It's the Grand Game! Please discuss....
Labels: The Grand Game
Friday, March 12, 2010
Longtime KPC friend JS writes:
Many Transportation planners are bemoaning the lack of increase in the federal gas tax for the past 15 years, and the infrastructure industry has said it is doubly bad because not only do we have inflation, but we now have electric vehicles/hybrids and in general more fuel efficient vehicles. The planners add on observations the new steep decline in driving shown on page 9 of the VMT trends. Therefore the Transportation/ Industrial complex is banging their chest for new funding.
I have been reading the New Geography blog with Wendell Cox as a major contributor, HT to the Reason Foundation Out of control blog. New Geography published this Hampton Roads Lightrail blog where Cox cites:
“Tide” light rail line has now escalated to nearly $340 million. This is up nearly one-half from the estimates made when the project was approved by the Federal Transit Administration. According to federal documentation, the line will carry 7,100 daily passengers in 2030. This means that the capital cost alone will amount to an annual subsidy of approximately $6,500 per daily passenger (using Office of Management and Budget discount rates), plus an unknown additional operating subsidy.
Translating $6,500 into per trip and generously applying the full trip length that results into 365 days and the full 7.4 mile rail corridor yields, a $17.64 per rider and $2.40 mile for just the capital cost, compared to the $1.50 proposed fare per trip. It would seem that this huge market distortion cannot be increasing welfare when taking into account taxes or monetary devaluation needed to pay for this monument.
So my point? The payers into the highway trust fund must notice the numerous diversions that are changing the “user fee” into “general tax” distributed by the politician. The road users are also asking themselves each day if they think that an increase in user fees will change their driving experience. Transportation planners need to look more at the markets than the micro mechanisms that are failing their current product lines.
Labels: We get letters
Cows With Guns
Thursday, March 11, 2010
Fair Trade Coffee? No, Thanks!
Chicago just passed a stupid law.
Article on why it was stupid, according to me.
The City of Chicago passed a resolution this month supporting fair trade efforts in the city, but critics say there’s more to the fair trade story than most consumers realize.
Mike Munger, chair of the political science department at Duke University, said the concept of fair trade – which certifies businesses for paying workers a living wage and observing social and environmental criteria -- isn’t always successful. “It probably succeeds close to half the time,” he said.
People don’t want to hear that because they want to feel better about themselves, Munger said. “It’s just not true, the premise is not true.”
One problem is an imbalance when too many companies go for certification in one product – say, coffee – and that drops the price and also keeps farmers from growing other crops.
Another problem is where the money goes.
Several studies demonstrate that a middle man may be the real winner, Munger said. Consumers are paying middle men more, not the worker. The money can be dissipated somewhere before it gets to the worker, he said, possibly in paying bribes for certification.
Obtaining fair trade certification is expensive, and there’s no way to prove that the workers are the ones reaping the benefits of the premium prices the consumers are paying, Munger said.
Check this. Unbelievable.
A podcast on Fair Trade
An article in England, with a remarkably self-hating man commenting.
A guest blog post, and also my best shot at explaining why Fair Trade is idiotic.
"Fair trade" raises costs to consumers. Worse, it enslaves the people it claims to help, with the invisible chains of artificial subsidy, and arrested economic development. If it pleases you to think of happy natives, living primitive lives, just go rent a BBC documentary, and let the market work.
Labels: Fair Trade
A few years ago, sufjan Stevens promised 50 albums for the 50 states but quit after Michigan and Illinois. Now with the publication of his latest book, it appears that Paul collier has taken up a similar challenge. He's got B and P covered so let's help him out people! How about "Dithering Democracies"? Or "Failed Fatwas"?
Call me at the station, the lines are open.
Angus (on the lam)
Wednesday, March 10, 2010
How Much Does It Cost to be TBTF?
How Much Did Banks Pay to Become Too-Big-To-Fail and to Become Systemically
Julapa Jagtiani & Elijah Brewer
Federal Reserve Bank Working Paper, December 2009
Abstract: This paper estimates the value of the too-big-to-fail (TBTF) subsidy. Using
data from the merger boom of 1991-2004, we find that banking organizations were willing to pay an added premium for mergers that would put them over the asset sizes that are commonly viewed as the thresholds for being TBTF. We estimate at least $14 billion in added premiums for the eight merger deals that brought the organizations to over $100 billion in assets. In addition, we find that both the stock and bond markets reacted positively to these deals. Our estimated TBTF subsidy is large enough to create serious concern, since recent assisted mergers have allowed TBTF organizations to become even bigger and for nonbanks to become part of TBTF banking organizations, thus extending the TBTF subsidy beyond banking.
(Nod to Kevin L)
Sweet Strange Stories
What I like about these stories is not that they are so strange (though they are), but rather that they are so sweet.
Since he was reported to be 8 feet, 4 inches tall, everybody looked up to Al Tomaini – especially his wife, Jeanie, who measured 2 feet, 6 inches. She was born with no legs.
The Half Lady and The Giant met and fell in love in 1936 when their separate shows chanced upon each other in the same place. Six months later the couple eloped, believe it or not, in Ripley, N.Y. The Tomainis went on to work with Ringling Bros. and eventually ran their own sideshow.
In 1950, the couple settled in Gibsonton, Fla., where they raised a family and opened the Giant's Camp restaurant and fishing camp. Al also organized the town's first fire department and served as its chief.
The Giant passed away on Aug. 30, 1962. Jeanie continued to operate the Giant's Camp for decades, living there until she died on Aug. 10, 1999, just weeks before her 83rd birthday.
Their adopted daughter, Judy Rock, never thought there was anything unusual about her parents. "Our home life was wonderful," she remembered. "It was what everybody wishes theirs was: no talk of divorce, no big fights, no drinking, no smoking. Just a family."
(Nod to Angry Alex)
Tuesday, March 09, 2010
Consensus, or Census-Con?
Remarkable. You can't make this stuff up....
A Georgia man accused of killing two people used an innovative legal strategy Monday in an attempt to get his murder charges dismissed. Call it the Census defense.
Floyd Wayne Williams Jr. wants the charges dropped — or at least his trial delayed — until the 2010 Census is done so that a jury more accurately reflecting the county's racial makeup can be chosen. Williams, who is black, is to be tried in the south Atlanta's Clayton County, which has seen a surge in African-American residents since the 2000 Census.
Jury pools in Clayton County, like many other jurisdictions, are drawn from voter registration lists, driver's license data and utility records. The list is then balanced by race and gender from the Census to reflect a cross-section of the population.
(nod to the LMM)
Tracked it down....
I have been told several times an anecdote about Marx despairing of ever seeing a revolution in Germany. He supposedly recalled an incident where German workers failed to attend a demonstration because they had trouble with their tickets.
The joke being, if you are going to start a revolution against capitalism, WE DON'T NEED NO STINKIN' TICKETS!
Well, I tracked down the reference. It was STALIN, not Marx, in an interview with an unctuous German writer in 1931. Here is the money quote:
Ludwig: Do you not think that among the Germans as a nation love of order is more highly developed than love of freedom?
Stalin: There was a time when people in Germany did indeed show great respect for the law. In 1907, when I happened to spend two or three months in Berlin, we Russian Bolsheviks often used to laugh at some of our German friends on account of their respect for the law. There was, for example, a story in circulation about an occasion when the Berlin Social-Democratic Executive fixed a definite day and hour for a demonstration that was to be attended by the members of all the suburban organizations. A group of about 200 from one of the suburbs arrived in the city punctually at the hour appointed, but failed to appear at the demonstration, the reason being that they had waited two hours on the station platform because the ticket collector at the exit had failed to make his appearance and there had been nobody to give their tickets to. It used to be said in jest that it took a Russian comrade to show the Germans a simple way out of their fix: to leave the platform without giving up their tickets.... But is there anything like that in Germany now? Is there respect for the law in Germany today? What about the National Socialists, who one would think ought to be the first to stand guard over bourgeois legality? Do they not break the law, wreck workers' clubs and assassinate workers with impunity? I make no mention of the workers, who, it seems to me, long ago lost all respect for bourgeois legality. Yes, the Germans have changed quite a bit lately.
Nic Tideman and I are working on our Public Choice paper, and are writing about meta-rules. And this passage is interesting, because it shows that the same group of people can be constrained, and not constrained. It's all about the meta-rules.
Old School Reference: J. V. Stalin, Talk With the German Author Emil Ludwig, December 13, 1931. First Published: Bolshevik, April 30, 1932, No. 8. Source: Works, J.V. Stalin, Foreign Languages Publishing House, Moscow, 1955, Volume 13, pp. 106-25.
Monday, March 08, 2010
Is the Census Mandatory? And is THAT constitutional?
A letter from a reader:
I've been getting a lot of questions on this subject from fellow students.
As both a Libertarian and a military veteran, I find the numerous, intrusive questions asked by the Census greatly disturbing. Are the questions, besides the ones directly related to the number of people in your household, unconstitutional? Personally, I believe that they are. If I refuse to answer questions other than those pertaining to the size of my household, what, if any, legal consequences could I face? I ask because I can't seem to find any concrete information on the subject. Also, if I may ask, how do you all plan on approaching the Census?
Dear Reader: Yes, I happen to know the answer to that.
The American Community Survey is conducted under the authority of Title 13, United States Code, Sections 141 and 193, and response is mandatory. According to Section 221, persons who do not respond shall be fined not more than $100. Title 18 U.S.C. Section 3571 and Section 3559, in effect amends Title 13 U.S.C. Section 221 by changing the fine for anyone over 18 years old who refuses or willfully neglects to complete the questionnaire or answer questions posed by census takers from a fine of not more than $100 to not more than $5,000. The U.S. Census Bureau may use this information only for statistical purposes. We can assure you that your confidentiality is protected. Title 13 requires the Census Bureau to keep all information about you and all other respondents strictly confidential. Any Census Bureau employee who violates these provisions is subject to a fine of up to $250,000 or a prison sentence of up to five years, or both.
Here is the reference for Title 13, if you want to read it
Now, you asked if the law making responses mandatory is constitutional. You could mean, "where is it in the Constitution?" The fact is that there is SOMETHING there, about the Census, but of course not the intrusive questions. But Article I, Section 2, Clause 3 does have a provision that a counting be done, "in such manner as [Congress] may direct."
Or you could mean, "What Supreme Court case contains the decision that justifies the law?" In that case, here is a legal history
Labels: We get letters
Hons Dons and Two MA Smoking Oxons
Virginia is NOT for Lovers
Virginia is only for STRAIGHT lovers, it appears.
(Nod to Ed Cone As Ed notes, "Old times there are not forgotten." Old times like Leviticus....Leviticus 18:6 reads: "You shall not lie with a male as one lies with a female. It is an abomination." A similar verse occurs two chapters later, in Leviticus 20:13: "A man who sleeps with another man is an abomination and should be executed." Of course there is also DEUTERONOMY 22:13-21--"If it is discovered that a bride is not a virgin, then she must be executed by stoning immediately." I think perhaps we SHOULD forget old times.)
Mrs. Munger's Class: "Passed What?"
Nemo to world: Greece WILL default
"The only questions are (a) when and (b) who will be left holding the bag."
Greatest Comparativist in History
On the scabrous PSJR site, the questions was raised, "Greatest Comparativist Ever? Living or Dead?"
Usual names. Someone suggested Marx. My response is here:
Marx is plausible as an answer to the "Best Comparativist."
But he was a student of Aristotle. And, Aristotle's work on comparatie constitutions is still widely cited.
I think you have to go with Aristotle, then. The problem is that none of his work was refereed, and even his books were not published by major presses. That may be why he didn't get tenure, after Plato deeded the Academy over to his nephew Speusippus. Of course, Ari had to go look for another job, even though he had great teaching evaluations and had been doing all the busy work for Plato for years.
Fortunately, having ivy league background gave Ari a leg up when he moved to Asia Minor, but who wants to have to teach in one of those "directional countries"? Ari ended up hiring out to teach some rich brat, who left to fight wars before they got to the more advanced stuff.
Ari went back to Athens, but got snubbed AGAIN for the TT job at the Academy. That brown-noser Xenocrates got the job, leave Ari to work as a VAP. Ari started his own school, the Lyceum, and did some of his best work, including two big NSF grants and attracting some excellent grad students. (And I mean, EXCELLENT. I think one of Michael Ting's ancestors thought about going to the Lyceum, but ended up staying at Columbia)
But then there were student riots after Alexander the Great died. The students were pissed off about core requirements, and of course the hegemony of "dead Macedonians" in the curriculum. Ari was accused of impiety, and loudly making that motorboat sound whenever he saw a hot undergraduate wearing a low-cut peplos. Some deans threatened to put a committee together to study some of the contingencies of toughening their rhetoric, and Ari had to go live with his mom on the island of Euboea.
Moral of the story: Publish in refereed journals, and get a tenure-track job. Otherwise, even if you are the greatest comparativist who EVER lived, you may have to go live with your mom. Oh, and don't make that motorboat sound.
Bad news for Everyone
Mark Linkous, AKA Sparklehorse is dead by his own hand. Here is the story from Pitchfork, and here is another from Rolling Stone.
Sunday, March 07, 2010
Underground hotel: Not Much of a View, but Quiet
You Think Joe Stiglitz is Funny? NYT is funny, too!
The New York Times, apparently now the "Pay Lady of News," is busy whoring out to the "don't worry, be happy!" crowd.
Check this article....
The concern, of course, is that one day rates will inevitably go up, which means interest payments will too. According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a very long time, which in turn means that our debts — however big — can be managed.
Indeed, though eliminating deficits might seem wise, it could actually be fatal to future prosperity. China is spending hundreds of billions of dollars on infrastructure, while America can hardly repair its bridges. The U.S. has to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end — provided Washington shows it can effectively channel that money.
(See the best business deals of 2009.)
Like home mortgages, much of the debt never has to be paid down. Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public. Because of the unique role of the dollar as the global reserve currency, the debt the government owes itself can simply be rolled over endlessly. Only the interest payments are a must. As long as the dollar remains central to the global system — and there is little chance of that changing in the next decade — the U.S. will have the latitude to borrow more than most other countries.
Worrying about debt is like gaining too much weight and worrying about the size of your clothing.
Okay...first, it's NOT "like gaining too much weight and worrying about the size of your clothing." The US debt is like gaining too much weight and saying it's okay to gain more weight.
Second, if you want to make that bizarre analogy work, you would have to say, "Eating 5,000 calories a day would be okay if you are training for a marathon. But if you are sitting around watching curling, eating 5,000 calories a day is disastrous."
I accept, as Angus did before, that debt might be okay if we were investing it. But we are not. We are using debt to fund pet projects that have no purpose other than re-electing Senators, or paying to put more people on the public employment roles so they will reliably vote Democrat.
Third, the dude actually says, "According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places." That's not a school of thought, that's accounting physics. Further, if either the Eurozone or Chinese get their act together, our complacency ("sure we suck, but they suck worse! Eat that pie!") will be hammered.
Yes, I realize that the author is in fact some shill, not the NYT ed page itself. Still, this is pretty funny. Almost as funny as Joe Stiglitz.
(Nod to Kesav)
Bondage dungeon in Devon.
One guy showed up during the search. He was questioned. But he claimed, "But I have an appointment!" Perhaps he thought all the burly men in police uniforms were a new wrinkle in the show?
And check this list of contraband:
The sex dungeon was then found in a converted room filled with "hundreds" of items including whips, gas masks, wooden bats, handcuffs, clothes pegs and shackles.
Police also discovered bondage chairs with straps, straight jackets, sex toys, gimp masks, S&M outfits, shackles, cattle prods and car batteries used to power the toys.
Um, that's "straitjacket," please, unless you are some illiterate product of the failed British school system.
(Nod to Tommy the Brit.)
Labels: England is screwed
Joe Stiglitz is a funny dude
He says we shouldn't worry about the deficit because of all the valuable assets we are acquiring by spending the money!
"Most economists also agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial sector hawks who are raising alarms about government spending. After all, even deficit hawks acknowledge that we should be focusing not on today’s deficit, but on the long-term national debt. Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long-term deficits."
My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!
"For centuries, historians, political theorists, anthropologists, and the public at large have tended to think about empires in such cyclical and gradual terms... Yet it is possible that this whole conceptual framework is, in fact, flawed... Great powers and empires are, I would suggest, complex systems, made up of a very large number of interacting components ... somewhere between order and disorder -- on 'the edge of chaos'...A very small trigger can set off a 'phase transition' from a benign equilibrium to a crisis...Not long after such crises happen, historians arrive on the scene. They are the scholars who specialize in the study of 'fat tail' events -- the low-frequency, high-impact moments that inhabit the tails of probability distributions, such as wars, revolutions, financial crashes, and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in The Black Swan as 'the narrative fallacy': the construction of psychologically satisfying stories on the principle of post hoc, ergo propter hoc...Perhaps the most famous story of imperial decline is that of ancient Rome...But what if fourth-century Rome was simply functioning normally as a complex adaptive system, with political strife, barbarian migration, and imperial rivalry all just integral features of late antiquity? Through this lens, Rome's fall was sudden and dramatic -- just as one would expect when such a system goes critical...What is most striking about this history is the speed of the Roman Empire's collapse. In just five decades, the population of Rome itself fell by three-quarters.
Archaeological evidence from the late fifth century -- inferior housing, more primitive pottery, fewer coins, smaller cattle -- shows that the benign influence of Rome diminished rapidly in the rest of western Europe...Other great empires have suffered comparably swift collapses...Ming China was the world's most sophisticated civilization by almost any measure...The transition from Confucian equipoise to anarchy took little more than a decade. In much the same way, the Bourbon monarchy in France passed from triumph to terror with astonishing rapidity...The sun set on the British Empire almost as suddenly...the United Kingdom's age of hegemony was effectively over less than a dozen years after its victories over Germany and Japan. The most recent and familiar example of precipitous decline is, of course, the collapse of the Soviet Union...In imperial crises, it is not the material underpinnings of power that really matter but expectations about future power."
[Niall Ferguson, Foreign Affars, ATSRTWT] [LA Times excerpt]
(Nod to Kevin L, who ill NEVER fall)
Icelanders: "No way, We won't pay!" Hey, We Don't WE Get to Vote on the Bailout?
So a bunch of goofballs in Europe put their money in a phony bank in Iceland, and lost a lot of Euros.
Then the European "We passed a law against risk" doofuses, (okay, the Brits and the Dutch) decided that making citizens take responsibility for being goofballs is just too harsh, and used taxes raised at gunpoint from non-goofball citizens to pay off the goofballs.
Not surprisingly, the non-goofballs were miffed about this. Though I think in Britain and Nederlands there are laws against independent thought.... still, some people said, "why?"
So, the European government thugs decided to use extortion: Iceland, you can't play in our EU sandbox until you tax YOUR citizens to pay back OUR non-goofballs for having bailed out OUR goofballs who should never have invested in YOUR fake bank in the first place.
The Iceland government agreed, of course. It's not their money. The money belongs to the citizens of Iceland, who already took a giant hit because (as far as I can tell) every citizen of Iceland is a giant goofball in his/her own right.
But losing money because YOU are a goofball makes sense. Having to pay other people because THEY are goofballs....I don't see that. The Telfarssons and Helgotsdottirs of Iceland appear to agree, voting "NO" quite emphatically.
On the plus side, at least Icelanders get to VOTE on their dumb bailout. In the US, we are even worse: we don't have votes, just back room deals and payoffs to Democratic senators.
(Nod to Anonyman)
Hang up your cell phone, and drive a Toyota
People are going nuts over how dangerous Toyotas are.
And I suppose that it would be a bad experience to have your accelerator stuck. ("If your accelerator gets stuck for more than four hours, seek medical attention...")
But as Prof. Fischbeck points out, it is FAR (FAAAAAR) more dangerous to go for a walk, or to speak ("Hey, gurl! Watchoodoin'? Nothing, I'm jes drivin'...")
Saturday, March 06, 2010
Congress tries a hostile takeover of Obama Motors!
Friday, March 05, 2010
She Wanted to Be "Ready" For the Visit
As authorities nationwide warn motorists of the dangers of driving while texting, Florida Keys law enforcement officers add a new caution: Don't try to shave your privates, either.
Florida Highway Patrol troopers say a two-vehicle crash Tuesday at Mile Marker 21 on Cudjoe Key was caused by a 37-year-old woman driver who was shaving her bikini area while her ex-husband took the wheel from the passenger seat.
"She said she was meeting her boyfriend in Key West and wanted to be ready for the visit," Trooper Gary Dunick said.
The whole story is worth reading. My home state....
There are many things I like about the story. But the best parts, for my money, are that she was getting her ex-husband to drive from the passenger seat. While she sat in the driver's seat (why?), shaving her tingly bits. To be "ready" for her boyfriend. With a suspended license. In an illegal car.
(Nod to LS)
Good news for people who love bad news
Yes, the economy lost more jobs last month, and yes the unemployment rate is still 9.7%, but in some sense this is what qualifies as "good news" these days. Job losses were predicted to be higher and the unemployment rate was predicted to rise, so this qualifies as a "better than expected" jobs report.
Must be the capitalism!
African Poverty is Falling...Much Faster than You Think!
Xavier Sala-i-Martin & Maxim Pinkovskiy
NBER Working Paper, February 2010
Abstract: The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
(Nod to Kevin L)
Thursday, March 04, 2010
Striking a little too close to home....
How Will The End Of Print Journalism Affect Old Loons Who Hoard Newspapers?
No Way to Go
Man electrocuted urinating on live 2400V power line.
That's "no way to go."
Owie owie owie.
(Nod to Angry Alex)
Marking down the mark up
Potentially very cool new NBER working paper by Cúrdia and Reiss (ungated version here) argues that once you allow the exogenous shocks in DSGE models to be correlated, fluctuations in the mark up become less important in explaining business cycles.
The dynamic stochastic general equilibrium (DSGE) models that are used to study business cycles typically assume that exogenous disturbances are independent autoregressions of order one. This paper relaxes this tight and arbitrary restriction, by allowing for disturbances that have a rich contemporaneous and dynamic correlation structure. Our first contribution is a new Bayesian econometric method that uses conjugate conditionals to make the estimation of DSGE models with correlated disturbances feasible and quick. Our second contribution is a re-examination of U.S. business cycles. We find that allowing for correlated disturbances resolves some conflicts between estimates from DSGE models and those from vector autoregressions, and that a key missing ingredient in the models is countercyclical fiscal policy. According to our estimates, government spending and technology disturbances play a larger role in the business cycle than previously ascribed, while changes in markups are less important.
Wednesday, March 03, 2010
Another Earthquake in Chile
Huge Aftershocks in Chile
Mungowitz's shocking secret revealed!
People, legal newsline has broken this story wide open. I just can't believe it, but there it is in black and white.
"Munger earned his master's degree in economics at Washington University in St. Louis and worked as a staff economist at the Federal Trade Commission. A Libertarian who received 3 percent of the 2008 vote for governor, Munger is also the head of the political science department at Duke."
Tuesday, March 02, 2010
Barney Frank and Andrew Cuomo.... Great Americans
Immanentize the Eschaton? No, But Days Are Shorter
The Grand Game, Handgun Edition
This editorial is remarkably confused, even for the New York Times, which is way out front on muddling.
As far as I can tell, the structure of the "argument" is this:
1. DC v. Heller was wrongly decided, and 2nd Amendment should not apply to states or cities. Only the federal government, and DC, are prevented by banning guns outright.
2. All of the Bill of Rights should apply to states and cities.
3. There is a Constitutional right for some people to be able to prevent other people from exercising Constitutional rights. In particular, the last sentence says: "There is another right, however, that should not get lost: the right of people, through their elected representatives, to adopt carefully drawn laws that protect them against other people’s guns."
Now, #2 directly contradicts #1. And #3...WTF? There ARE laws, against assault with a gun, murder with a gun, robbery with a gun, that sort of thing. No one is saying that we should get rid of laws that punish misuse of guns.
For those so impressed with laws, let me ask this: Why don't those laws "protect us against other people's guns?" Doesn't that mean that the police CANNOT PROTECT US! If the police can't protect us, then shouldn't we be able to protect ourselves, in our own homes, with legally purchased firearms? And wasn't just that the basis of the Heller decision in the first place? I'm SO confused.
The NYTimes has discovered a new constitutional principle: "selective incorpodumbassicity." This means that the stupidity of some voters is incorporated, using a fabricated interpretation of the 14th Amendment, to rewrite the 2nd Amendment so that legitimate gun ownership, by responsible law-abiding citizens, is treated exactly the same way as if you robbed a bank.
Please discuss, in comments.
(Nod to The Chelsea)
Another big police chase on I-40 this morning in Raleigh.
The guy was sure he could escape the cops. I'm guessing that drugs were involved, since.... well, look at the car:The PERFECT getaway car! No one will ever notice me in this baby. It's like camouflage.... if you were driving through a giant herd of flamingos.
Nancy Pelosi, meet Robin Hanson!
Radio from yesterday
Monday, March 01, 2010
A Piece of Terrifying History
The venue where I gave my talk today in Wheeling (thanks, Erik R! You are the BEST!) turns out to have been home to an actual famous speech, almost exactly 60 years ago.
The text of the speech, given by Senator "Tailgunner Joe" McCarthy, can be found here. In that speech, the Senator claimed to have a list of 57 proven Communists in the US State Department, waving some blank papers as if that were the "list." That was Feb 9, 1950.
I feel...weird. I was there, on that podium. And from the sounds of the heating unit, it is original also.
(UPDATE: In this article from the Wheeling Intelligencer, it seems that the speech was given at the Hotel McLure, down the street, though MacCarthy did work on the speech at the Fort Henry Club. This book says that, too, on p. 182....)
Sam Presti apparently knows more about basketball than I do
I know, I know it's hard to believe. But I think it's true.
Presti picked Russell Westbrook very high in the draft and projected him to be a point guard. Throughout Russ's rookie season, I would occasionally gripe about his (a) taking too many shots and (b) not taking care of the ball.
But wow, look at him now. He should be the Western Conference player of the month for February.
Over 11 games, he has averaged 18.8 points on 46% shooting, 6.6 rebounds, 10 assists and only 2.3 turnovers while playing about 36 minutes.
That is big time point guarding my friends.
Refugees Flee Tyranny of German Consensus
Interesting story in Times.... German family was granted amnesty in the US to escape state schools.
Among European countries, Germany is nearly alone in requiring, and enforcing, attendance of children at an officially recognized school. The school can be private or religious, but it must be a school. Exceptions can be made for health reasons but not for principled objections.
But the Romeikes, who are devout Christians, said they wanted their children to learn in a different environment. Mr. Romeike (pronounced ro-MY-kuh), 38, a soft-spoken piano teacher whose young children greet strangers at the front door with a startlingly grown-up politeness, said the unruly behavior of students that was allowed by many teachers had kept his children from learning. The stories in German readers, in which devils, witches and disobedient children are often portrayed as heroes, set bad examples, he said.
“I don’t expect the school to teach about the Bible,” he said, but “part of education should be character-building.”
In Germany, he said, home-schoolers are seen as “fundamentalist religious nuts who don’t want their children to get to know what is going on in the world, who want to protect them from everything.”
“In fact,” he said, sitting on his sofa as his three older children wrote in workbooks at the dining table, “I want my children to learn the truth and to learn about what’s going on in the world so that they can deal with it.”
The reasoning behind the German law, cited by officials and in court cases, is to foster social integration, ensure exposure to people from different backgrounds and prevent what some call “parallel societies.”
“We have had this legal basis ever since the state was founded,” said Thomas Hilsenbeck, a spokesman for the Ministry for Culture, Youth and Sport in the Romeikes’ state, Baden-Württemberg. “This is broadly accepted among the general public.”
The family has been here for some time, having left Germany in 2008. But it was not until Jan. 26 that a federal immigration judge in Memphis granted them political asylum, ruling that they had a reasonable fear of persecution for their beliefs if they returned.
In a harshly worded decision, the judge, Lawrence O. Burman, denounced the German policy, calling it “utterly repellent to everything we believe as Americans,” and expressed shock at the heavy fines and other penalties the government has levied on home-schooling parents, including taking custody of their children.
The soulless, sheep-like docility of Germans is remarkable. I heard that "broadly accepted among the general public" explanation over and over again, in a very condescending tone. Look, suppose we were talking about slavery, or genocide. The fact that is "broadly accepted" among those who favor tyranny is irrelevant. The fact that one of the tyrants would even say it is remarkable.
Now, I am NOT comparing public schools to slavery or genocide. My point is that "broadly accepted" is irrelevant to "right thing to do." Broadly accepted can't be the standard, in a civilized nation, of the set of the things citizens can be forced to do at gunpoint.
The YYM spent some time at German schools, and saw both chaos and teacher indifference up close. Sure, those things happen in the US also, quite possibly worse. But why would have to send your child there to be bored and corrupted by state-sponsored indoctrination?
Here's my question: will we need a new "German Wall," to prevent freedom-loving Germans from trying to flee the "tyranny of broadly accepted," and escape to the US?
(Nod to Anonyman)
UPDATE: One of KPC's smart and attractive readers, in comments, toward the Volokh Conspiracy's excoriation of the judge. And rightly so. While I agree that the decision of the judge is a bit silly, so are our immigration laws. Stupid law requires silly judges. And stupid law comes first, and is causal.
Sunday, February 28, 2010
How interesting. Restaurant refuses to serve customer because customer does not tip.
1. If a tip is required, is it a tip?
2. Can restaurants refuse to serve someone, based on the refusal to pay a voluntary gratuity? After all, the restaurant could add 18% to its price, and give the extra money to the servers/table chef (it's one of those "Japanese Steakhouse" places with a mostly Latino staff).
3. Isn't a petition, and public scorning, the right thing for the customer to do, if she disagrees.
2. Yes, but then I think a private restaurant can refuse to serve anyone, at any time, for any reason. What part of "private" don't you understand?
(Nod to Anonyman, who even tips at Locopop, because he is washed in the milk of human kindness, even though that took a LOT of milk)
Pay the Pfand, Lower Crime Rates!
Externalities from Recycling Laws: Evidence from Crime Rates
American Law and Economics Review, forthcoming
Abstract: This paper tests whether laws that encourage bottle recycling and also increase the labor incomes of low-wage workers have the additional effect of reducing petty crime rates. A simple choice theory model of crime participation and labor supply suggests that low-wage workers may substitute time and effort away from illegal activity to legal and remunerative recycling activity. Between 1973 and 2001, eleven states and one city enacted bottle recycling laws, and this paper exploits the variation in the year of implementation of the bottle laws to measure and test for any reduction in crime rates. The results show that city-level petty crime rates in bottle law states are on average 11% lower than city-level petty crime rates in non-bottle law states. Although the primary positive benefits of recycling income go to low-income individuals, the unexpected secondary benefit of lower crime rates affects both high- and low-income individuals.
It is important to allow everyone to share the religious experience of recycling. Except during "quiet time."
(Nod to Kevin L)
Labels: articles to read
Nolan Chart, Conservatives, Vegans, and Cheeseburgers
Angry Alex, on the Nolan Chart:
It says I'm a Libertarian. *Stands up in a room full of people and says 'My name is Alex and I'm a Libertarian and a recovering NeoCon.' I then duck a bottle chucked at me by Mike Huckabee.
Listening to Mike Huckabee preach the merits of conservatism is like hearing someone preach the virtues of a vegetarian diet while stuffing down a bacon double cheeseburger. Just sayin'
Labels: We get letters
Saturday, February 27, 2010
Starbury is gettin' it done in China
I really didn't think he'd stick it out, but Stephon Marbury is tearing up the CBA (Chinese Basketball Association), with as much passion as David Stern is showing tearing up his CBA (collective bargaining agreement).
Friday, February 26, 2010
Glenn Beck--NOLAN CHART GOD
OMG, OMFG! Glenn Beck actually did the Nolan Chart on the air.
I was riding an exercise bike at the gym, and saw it up on one of the screens. I started pointing and grunting loudly. No one noticed, though, because I often do this.
But, this time....how cool! (EXCEPT THAT IT CRASHED THE SERVER. YOU CAN'T GET IN TO THE NOLAN CHART SITE).
Try this, instead.
Labels: Libertarian Party
Bob Lee's Account
My man Bob Lee gives his account of the "meeting" we had with Erskine Bowles.
I pass it on without comment, except to say that it's all true.
There are two short movies attached to this post, one to document my big self sitting next to Erskine (which no doubt means that he has no future in electoral politics, in spite of his considerable talent as a finance and budgets guy), and the other to document the young lovelies in whom Bob Lee expressed a paternal interest (a health concern, since they had all had navelectomies). As for me, I never noticed the cheerleaders, being so horrified by the uniforms of the (so-called) players out on the floor for UNC.
Oh, yes, and there was a game.....
Thursday, February 25, 2010
"You have the charisma of a damp rag, and the appearance of a low-grade bank clark."
Nobody can ream you a new one like a Brit MP. Even a Brit MEP.
Well played, sir.
(Thanks to Tommy the Gotta Be Brit)
Dan Lee: Mixed Martial Artist
Where to put your money, non-Mungowitz edition
Wednesday, February 24, 2010
The End of Rickrolling?
At first, it appeared that Rickrolling was going to be harder.
But, as the update at bottom points out:
UPDATE: Rejoice! Google says that the Rickroll was flagged mistakenly: "With 20 hours of video uploaded every minute to YouTube, we count on our community members to know our Community Guidelines and to flag content they believe violates them," a statement from the company read. "We review all flagged content quickly, and if we find that a video does violate the guidelines, we remove it, on average in under an hour. We also have a team that is dedicated to identifying and removing spam from YouTube. Occasionally, a video flagged by users or identified by our spam team is mistakenly taken down. When this is brought to our attention, we review the content and take appropriate action, including restoring video or videos that had been removed."
That's pretty plausible. With all the annoyances of the Rickroll prank, I bet more than a few people flag it as spam every day.
So, if you have never been Rickrolled....here. Turn it up.
And if you want to Rickroll Like Teen Spirit.....it's your lucky day.
(Nod to Angry Alex, who probably is angry because he got Rickrolled once too often. A man can only take so much....)
Giving a talk in Denver on Friday. Working on polishing my presentation, but it will probably turn out like this:
YIKES! Run while you can.
Tomorrow night, Thursday, at 10:30 pm EST, the clock will go below 3,000!
That is, I will have less than 3,000 hours of remaining Chairitude.
Please do raise a glass of your favorite adult beverage, even if it is milk, and remember back with Oliver Wendell Holmes: Three terms of an imbecile is enough.
Markets in everything: How to laugh in Oklahoma edition
Oklahoma now has our very own "laughter coach"; an individual named Tyler Slater.
Labels: H. L. Menken was right
Bumper Sticker Rorschach Test
Leonardo da Vinci and Sandro Botticelli are said to have used “ambiguous designs” to test the creativity of art students by asking the student to describe what they saw. Swiss psychologist Hermann Rorschach used symmetric ink blots to reveal subjects’ unguarded thoughts.
We have a bumper sticker on the Lincoln that seems to be a Rorschach test, also.
What I mean is that each person's reaction to the bumper sticker actually reveals more about that person than anything else.
Last night, the LMM went to the grocery. Came home, and we found this tucked under the windshield wiper. Now, we appreciate the sentiment. And it's nice it's written in purple crayon, on the back of fast food restaurant "color me" sheet; clearly the writer is a mom, with a young child. Thanks, ma'am. We are glad we are not alone!
But.... It should be noted that the bumper sticker was put on that car in 2004, and the bumper sticker refers to the Patriot Act, the federalized War on Drugs, the War in Iraq, and so on. It is quite true that the bumper sticker applies equally to the Obama administration. But I'm not sure we would get the "great american" moniker if our fan knew the actual origins of the sentiment expressed.
Dr. Rohrschach would be proud.
Tuesday, February 23, 2010
Tommy the Driving Brit Visits Stata
College Stata-tion may never be the same....
Labels: people and places
Fat, Populist, and Stupid is No Way to Go Through Politics, Son
For some blue-state conservatives who honed their political skills by continuously debating liberal peers, mingling with attendees presented unique challenges. Jesse Eiseman and Tyler Trumbach, who came from Columbia University to attend the conference, interrupted a spirited debate over the fall of the Roman Empire to complain to The Daily Beast about the anti-intellectual bent of fellow conservatives at CPAC. 'They have an opinion, but they don't give evidence to back it up, they don't use logic,' Trumbach said. Eiseman added, 'In a lot of ways I feel closer to left-wing intellectuals...I love the populists, I agree with them on many things, but I am scared of what happens when people stop thinking.' The two quickly took to hiding their name badges showing their college in order to avoid ridicule after speakers trashed academic elites onstage. 'There are a lot of anti-Ivy Leaguers around,' Eiseman said....For all the differences between them, however, most attendees said they felt little tension with their fellow conservatives on a personal level.
“We respect each other's viewpoints,” Travis Korson, a George Washington University student, said. “You just don't talk about things you disagree [about].”
[Benjamin Sarlin, The Daily Beast]
If having been to college is embarrassing, the "movement" has a problem. (Nod to Kevin L)
Monday, February 22, 2010
Exteme Home Makeover, Okie style
Sunday, February 21, 2010
Repeat after me: Opportunity Cost
Holy half-wit, Batman! This person has zero concept of opportunity cost.
Hard to tell, exactly, but I think the implied value of this person's time is about $6 per hour. So, if you are making minimum wage, by all means take his advice.
Otherwise, read this, and stop shopping once you have to make a new reservation for $1 decrements in plane fare.
Markets in everything: Lactation edition
People, meet Freda Rosenfeld, the "breast whisperer".
Saturday, February 20, 2010
Video on Cit United V FEC: Munger v. Nichol
This is so great in so many ways. Thank you Mr. Reuters!
"How does Germany have the cheek to denounce us over our finances when it has still not paid compensation for Greece's war victims?" Margaritis Tzimas, of the main opposition New Democracy party, told parliament. "There are still Greeks weeping for their lost brothers".
So, I am sure you don't need any help in breaking this down, but seriously, WTF???
Greek public finances are shot because of the lost interest on German reparations?
But the very best part of all this is that Germany HAS ALREADY PAID REPARATIONS to Greece!
From the same article:
In 1960, Germany paid Greece about 115 million deutschemarks to compensate victims of Nazi persecution.
Oh, Greece, is there anything you won't stoop to?
Can You Judge a Sleaze Book by Its Title?
The Texas billionaire’s pregnant bride: An evolutionary interpretation of
romance fiction titles
Anthony Cox & Maryanne Fisher, Journal of Social, Evolutionary, and Cultural Psychology, December 2009, Pages 386-401
Abstract: In this paper, we focus on the titles of popular modern romance novels,
published by Harlequin Enterprises, in order to ascertain whether these books pertain to women’s sexspecific mating interests. Presumably, market demands have shaped the titles of Harlequins, such that books with titles that reflect topics of interest to women will sell the best. Two forms of analysis were undertaken to investigate whether the titles are in agreement with predictions informed by evolutionary psychology. First, we identified the most frequently occurring words to determine the most prevalent issues addressed by titles. Second, we performed a qualitative analysis to identify the most popular, recurring themes that appear in the titles. Our results indicate that Harlequin romance novel titles are congruent with women’s sex-specific mating strategies, which is surmised to be the reason for their continued international success.
(Nod to Kevin L)
Friday, February 19, 2010
Econ Karma gonna get you.
Wow, talk about bad timing. People could the entire Euro sovereign debt crisis be the universe's way of sticking up for its most favored sons and daughters (economists)?
Thursday, February 18, 2010
The Duke Lacrosse case gets a new twist
The accuser in the case, Crystal Mangum, was arrested in Durham last night:
Police charged her with attempted first-degree murder, five counts of arson, assault and battery, communicating threats, three counts of misdemeanor child abuse, injury to personal property, identity theft and resisting a public officer.
A judge set her bond at $1 million during a Thursday morning court appearance.
This seems like a bit of overkill, as no one was actually harmed, the "arson" is from burning her significant other's clothes in the bathtub, and the "identity theft" is from giving the police a false name when they arrived at the scene. The child abuse is because there were three children in the house at the time of the domestic dispute.
Oh, Durham PD, will you ever do anything right?
I can tell you this right now, If a Durham cop ever tries to arrest me, I will resist to the best of my abilities!
Just What I Needed
Anonyman writes that the CORRECT answer for investment, and monetary policy, in my Fox Business fiasco, would have been something like this. So, let me address the gold / silver / fiat money question.
I have just never understood why there is so much concern over currency, as if this were the number one problem. No question that a fiat money does in fact give the government enormous power. But the currency is more a reflection of power the state already has, rather than a cause of it. Three short points:
1. If the currency is "backed," or convertible, then the government has to store a gigantic amount of physical bullion as a reserve. But then the government can easily devalue the currency by changing the official, as opposed to black market, exchange rate of dollars for gold. There is no protection there, none. And you can't fix the exchange rate, because the value of gold as a commodity and investment in its own right fluctuates, a lot. That means the actual value of dollars would fluctuate with a commodity. That's not stability, that's giving government more power than it had before.
2. If the currency is actually made up of a certain amount of gold or silver alloy, then again its value would fluctuate with the price of the commodity. Worse, it would be heavy, inconvenient, and would wear out over time, wasting tons of gold each year rubbed off on the inside pockets of consumers. How would credit cards work? Very little of our money is currency. You can't possibly have real metal money, because that would (again) be more of a restriction on liberty than the current system.
3. We could get rid of fiat money altogether. Just private money. But the transactions costs of doing that, worrying about inflation and fluctuating exchange rates between different private currencies, would be enormous.
Here's the thing: the government doesn't control the money supply NOW. If you have a credit card, or several, you can create large amounts of new money, all by yourself. Anytime you secure a new line of credit, and actually spend it.... there goes the money supply. And if the government buys bonds, in "open market operations," that doesn't mean that banks will lend. The velocity of money is endogenous, as we have seen recently as credit dried up and people (and banks) held much larger cash balances in the forms of savings and reserves.
Again, I'm not denying that a fiat money creates enormous power for the state. Of course it does. But the war on drugs, the war in Iraq, the Patriot Act, restrictions on the right to marry, restrictions on hiring, regulations and taxes on small business, involuntary annexation....I could go on. Why would you start with money, as the number one problem?
And if you DO think that money is the problem, why not work on fractional reserve banking, derivatives, restrictions on competition in insurance, and so on? The obsession with the currency.... I don't get it.
More on Google case
More info on Google case, dismissed for lack of standing.....
The decision itself
Box Cutter Didn't Help Much
Robber with box cutter found hiding inside a box.
They'll never think of looking for me here!
Bad Day on TV
I have blogged before about television. It's a bad gig. Don't like it, and clearly not good at it.
But, got the call from FOX: come on the show, and talk about Greece. So I gave my thoughts on the situation in Greece. (Okay, these are likely Angus's thoughts, but I may have gotten them right. I tried to listen carefully.)
1. People are fleeing the Euro, which makes the fall self-perpetuating. But Euro seemed stable just last summer, as recently as September, in fact rose against dollar all summer. Does instability matter, within such a large area? After all, within EU everything is in Euros. That's the advantage of a currency union. (Answer: Yes, it matters. EU depends on imports of most raw materials, especially petroleum. If the Euro falls, it will actually help German economy, and France to lesser extent. But the problem is not a decline in the Euro, but rather break-up of the currency union. The main problem is POLITICAL, not ECONOMIC. The only way to save the PIGS (Portugal, Ireland, Greece, Spain) is to take actual money away from the larger nations and prop up the financial systems. Technically possible, but what is in it for the big players, France, Germany, not clear why they would pay for bad policies in PIGS. Greece is small, and could be propped up. A welfare state to pay for poor folks is one thing. But paying for the lies and fake accounting of the Greek government, in the aftermath of the Olympic fiasco, is quite another.)
2. Could this kind of meltdown happen in US? (Answer: Strangely, less likely now, though US is sucking pretty hard. The only main rivals for international currency of choice are the dollar and euro. Dollar is in trouble, because of huge deficits, accumulated debt. US may lose its credit rating, as threat of default becomes real. Problem is that the debt, denominated in dollars, can really only be exchanged for euros, or euro-denominated assets of some kind, if you want to sell dollars, or dollar-denominated assets, on secondary markets. Amazingly, it is STILL better to park your funds in dollars, and US government bonds, than in most other places, especially (post-Greece) in Euros. Problem is that there are huge, truly huge, amounts of cash on the sidelines. People are looking for a safe haven, and also for some kind of return. US rates are so low that investors are getting no return. But the Euro collapse on markets, and political instability in Europe, actually mean that US is somewhat protected in the short run. BUT IT WON'T LAST. Level of US debt is not a problem, but the rate of increase IS a problem. If Asian countries sitting on cash mountain get out of dollars, the effects would be catastrophic. We could see large inflation, and high real interest rates, within three years. In the best case scenario, by 2020 80% of US federal budget will be spent on entitlements and debt service. We have given up all our room for maneuver. One more crisis, and the US might default on its debt. Combined with EU problems, could actually cause worldwide financial meltdown. We are looking at 1932, not 2009, as the worst case scenario.)
Anyway, I hear back from the producer. Neil Cavuto, host at FOX, is interested in hearing how the US might turn out like Greece, not how Greece going down saves the US bacon in the short run. (Here's Neil, in action on Fox)
Sure, I can do that. There are parallels, absolutely, and the fact that US has an independent monetary authority could make things more dangerous. After all, Greece can't devalue the drachma, because they use euros. Their "sovereign" (as if you can call the Greek government anything but a kleptocracy) debt would normally be devalued by one of the two big economic oxidizers, currency devaluation or inflation (one is an exchange rate change, the other is increase in money supply, but their effects are identical). Greece can't do either, and so the pressure builds.... Anyway, the parallel is an easy story to tell.
1. US is on path to fundamental change in the size and role of government. It has ALREADY HAPPENED. By 2020, under the best circumstances, 80% of federal budget will be service on debt and entitlement payments. We have built a fiscal straitjacket. Let me emphasize: it's true NOW, already. (This is more or less straight Angus, plagiarized, or as we say when we look at my c.v., "coauthored.")
2. There are two options available to the US that is not available to PIGS: Monetary inflation, and currency devaluation. PIGS are members of EU, and so have no independent monetary policy. Problem is that if US inflates, that is de facto default on debt. Catastrophic for world economy. We could bankrupt ourselves, ending ability to borrow, by inflating. Result would be double digit interest rates for years, with real rates on the order of three percent, in order to service new debt. We can't inflate our way out of all of it. But given that our annual deficits are now 10% of GDP, inflation may start to seem attractive.
3. Alternative: Look at Greece, because that is our future. Explosion in euro-denominated debt, strikes, high unemployment, and government increasingly controlling financial and investment decisions of private firms. We think it can't happen, but we are on the steep part of a slippery slope. US debt/GDP ratio will approach 1. Our bonds have shaky ratings. And our taxes are going to go mostly to finance pensions, bailouts, and deficits. Instead of investing in the young, and the talented, we are going to invest in the old, and the bankrupt. Don't be smug, because not only could the Greek nightmare happen here--unless something changes, it will, within the next decade. Look at it this way: The EU limit for annual deficit as a percent of GDP? 3%, no more. Current level in Greece, so large that people are going nuts? 11% What about the US? Last year 9%, this year and for the next five years: 10%+.
Anyway, I do the interview. We go in order: Donald Trump, John Sununu, Mike Munger (one of these things is not like the other song) Neil is kind enough to let me answer the question, at length, drawing out the parallels between Greece and US deficits, and consequences. I do get to use my one prepared zinger: We used to make cars, and other things people wanted to buy. But right now, the only export keeping the US alive is.... debt! Our number one export is debt. If people stop buying that, we are hammered.
So, Neil asks, "But isn't the fact that Greece is pulling down the Euro actually HELPING the US? I mean, the only choices for currencies are euros or dollars, right?"
Since this had been my original claim, the one the producer had said not to make, I was somewhat stumped. Neil went on to ask about where to put money, where to invest, if my claims were true. The one thing I know for certain is that I am not qualified to give investment advice. So I filibustered, Neil got pissed, interrupted, and repeated his question: "Professor, professor, you didn't understand my question. I said, where should we invest? If you know so much, what is the solution?" That's pretty much where things ended.
I am going to go hide in the bathtub. I hate television.