Monday, March 31, 2008

It's not thermal probe Mother Nature

They sink a probe into Mother Earth, and the town sinks.

A spokesman for Staufen council said: "The community was so proud of the environmentally-friendly geothermal energy project that it would be a painful irony if that was the cause for this incredible occurrence."

It's only an irony if you think that "green energy" is always cheaper, regardless of the cost. Otherwise, it is an "idiocy."

Look, we don't know much about what causes changes in the environment, or about how "alternative" energy sources work. That's why they are alternative.

Thinking that it's all easy, and the only reason we aren't all "green" is that greedy people are blocking the progress is...well, those people deserve a big old probe of their own. A red hot one.

Nod to Anonyman...

(Title credit, btw:

Great Questions in Poli Sci

Real stories from the front (and not from Duke, by the way):

American politics class. Students studying for exam. Two nights before the exam, prof receives following email:

"We were studying for the test, and came up with this question for you. Do we have to know the order in which the Federalist papers were written? And, if so, how can we find that out?"

My advice: If you get an email like this, go for a walk. Don't answer it right away.

Still no official results in the Zimbabwe Election

People, a presidential election occurred Saturday in Bobby Mugabe's Zimbabwe. The results were supposed to be reported this morning, but so far no complete results have been forthcoming. The main opposition party, the M.D.C. is claiming they've won a majority (there are three candidates, Mugabe, Tsvangirai of the M.D.C. and Simba Makoni). As of last night the NY Times was quoting an anonymous "independent observer" saying the tallies were Tsvangirai 58%, Mugabe 37%, and Makoni 5%.

However, the delay in announcing full results and the staging of the partial results are causing concern. The results announced so far show Mugabe's party and the M.D.C tied in the number of seats won for Parliment, and the fear is that Mugabe trying to steal the election and get a result announced of him winning 52% of the vote and his party holding a 1 seat majority in Congress.

Hmmm, I wonder what Ray Fair's economic model of the incumbent's share of the vote would predict when you plug in an unemployment rate of 80% and an inflation rate of 100,000%?

Sunday, March 30, 2008

No country for old milkmen

Did you know that in 1947 the Indian state of Maharashtra "nationalized" its milk industry? It's true! This lasted until 2001. Can you guess what happened then?

Private carriers with higher quality milk swiftly won customers by delivering milk to doorsteps. The government milkmen have always been restricted to delivering mostly to curbside milk stalls so they could cover a greater area.

Customers swiftly deserted. Many switched to heat-treated milk in sealed packages that resist spoiling. Some ditched the government's former best sellers of sweet Pineapple milk and spicy Masala milk for Coca-Cola and Sprite as Indian tastes westernized. Others never found the milk stands appealing -- they can be dingy and the milk sometimes bad.

Sandra Melwani, a 42-year-old food writer who lives near the Worli Dairy, grew up on government milk but now buys sealed packs of Nestle skim milk from the new neighborhood grocery store. "Even as a kid I used to cringe when I looked at the government booths," she says.

Amazingly though, the WSJ asks us to feel sorry for, not the millions of Indian consumers to had to put up with crappy milk in nasty shops for 55 years, but rather for the government milkmen who are still being paid, but have no work to do because the "firm" has no business.

Once respected civil servants, Mr. Walkar and his 300-odd fellow drivers have been left in a strange limbo. Milk sales at their dairy have plummeted as the state government lost its monopoly on milk and consumer tastes changed. But because Indian work rules strictly protect government workers from layoffs, the delivery men show up for work each morning for eight-hour shifts, as they always did, then proceed to do nothing all day. They rarely, if ever, leave the plant.

All around the milkmen are reminders of their lost prestige. The Worli Dairy's entrance is adorned with a huge mosaic of milk bottling machines, a chandelier of milk bottles and plaques marking visits from top politicians.

In the good old days, the dairy threw big events with dancing, live bands, food, photographers and boxes full of sweets to take home. Now, there are only small gatherings to observe religious holidays and to congratulate another retiree. After a hiring freeze of two decades, the average age of employees is close to 50. The ceiling of the rest area where the drivers spend their days is covered with strings of frayed flags put up for a party long ago.

Hey Eric Bellman! Are you freakin' kidding me? The consumers of India got the shaft for 55 years and still are paying the wages of these guys. Not just them either, in Maharashtra alone there are over 25,000 such workers (employed and paid by state owned firms that now do little to no business now that Indian consumers have been given a choice). And your take is that the tragedy is how these guys have lost their "prestige" and have no future? Holy Crap, dude.

Alan Meltzer gets it right

...and of course by getting it right I mean "agrees with me". I've been posting (see here and here) that while I applaud the recent "lender of last resort" actions by the Fed, that driving short term real rates negative is bad monetary policy.

Here is Alan Meltzer this past week:

Monetary policy is too lax at present. The Fed has done too much to prevent a possible recession and too little to prevent another round of inflation. Its mistake comes from responding to pressure from Congress and the financial markets. The Fed has sacrificed its independence by yielding to that pressure. As a result, real short-term interest rates are negative. Borrowers are being paid to borrow. Negative real rates were a cause of the current problem; they are not a cure. The Fed must raise interest rates in order to prevent inflation.

On the other hand, the Fed’s credit policy has been good. It has been alert to problems in the payment and settlement system. Banks and financial institutions are uncertain about the solvency of other institutions, so they prefer to hold cash rather than to lend it. The traditional way to solve problems of this kind is to provide as much cash as the market wants. And indeed, the Fed has invented new ways of pumping reserves and liquid assets (Treasury bills) into the market. This has helped to prevent a genuine market crisis—at least so far. The Fed did not “bail out” Bear Stearns. It arranged a sale that wiped out the equity and replaced the management without closing the firm.

The Fed’s only mistake was to guarantee $30 billion of Bear’s portfolio. This action transferred potential losses from the market to the taxpayers. I do not believe the present system can remain if the bankers make the profits and the taxpayers share the losses.

Mungowitz: can I get a Amen?

Saturday, March 29, 2008

There's no Debatin' these Socialist Calculations!!

Apparently Salvadore Allende didn't get the memo that Lange & Lerner lost the calculation debates. Allende's government (while it lasted) was attempting to implement a plan to "manage Chile’s economy using a clunky mainframe computer and a network of telex machines."

The project, called Cybersyn, was the brainchild of A. Stafford Beer...who employed his “cybernetic” concepts to help Mr. Allende find an alternative to the planned economies of Cuba and the Soviet Union.....

A Star Trek-like chair with controls in the armrests was a replica of those in a prototype operations room. Mr. Beer planned for the room to receive computer reports based on data flowing from telex machines connected to factories up and down this 2,700-mile-long country. Managers were to sit in seven of the contoured chairs and make critical decisions about the reports displayed on projection screens.

While the operations room never became fully operational, Cybersyn gained stature within the Allende government for helping to outmaneuver striking workers in October 1972. That helped planners realize — as the pioneers of the modern-day Internet did — that the communications network was more important than computing power, which Chile did not have much of, anyway. A single I.B.M. 360/50 mainframe, which had less storage capacity than most flash drives today, processed the factories’ data, with a Burroughs 3500 later filling in.

(the program was intended) to use the telex communications system — a network of teletypewriters — to gather data from factories on variables like daily output, energy use and labor “in real time,” and then use a computer to filter out the important pieces of economic information the government needed to make decisions.

Sweet! Here's more from Wikipedia:

There were 500 unused telex machines bought by the previous government, each was put into one factory. In the control center in Santiago, each day data coming from each factory (several numbers, such as raw material input, production output and number of absentees) were put into a computer, which made short-term predictions and necessary adjustments. There were four levels of control (firm, branch, sector, total), with
algedonic feedback (if lower level of control didn't remedy a problem in a certain interval, the higher level was notified). The results were discussed in the operations room and the top-level plan was made. The software for Cybersyn was called Cyberstride, and it used Bayesian filtering and Bayesian control. It was written by Chilean engineers in consultation with a team of 12 British programmers.

Move over Von Mises! It looks like maybe it was Augustin Pinochet who actually won the calculation debate!

Hat tip to Mrs. Angus

Friday, March 28, 2008

Pangea 3000 presents the Beatles Block on WP3K

John, Paul, George and Ringo! All in the same band!! How is that even possible??

Gott in Himmel!

Oh, my. Mike Gravel decides he is a Libertarian. Check the new, spiffed-out web site.

A campaign video, from the Gravel campaign:

Yes, that is a campaign video. Don't blame me.

This one is even better.

if the 1s just hold their place the 0s make a smiley face

The NY Times has launched a new blog called "Measure for Measure", on songwriting and music! There are 4 bloggers, Andrew Bird, Roseanne Cash, Susanne Vega and some guy named Darrell Brown. The inaugural post by Bird is terrific, as is his music. If you are not yet a fan I highly recommend starting with "The Mysterious Production of Eggs" from which the title of this post is taken. I also really like Roseanne Cash. My alltime favorite song of hers is "Seven Year Ache"

Save Us From Wal-Mart

It irritates many rich people that poor people need to shop at Wal-Mart.

Chicago is taking action to end this irritation.

Earth to homeowners: time to move on

Last September I blogged that the house across the street from us had been for sale (well, had a for sale sign in the yard and a listing in the MLS) for 18 months. Well now it's the end of March and the sign is still there, so we are marking the 2 year anniversary of this neighborhood tomfoolery.

Coincidentally Dave Leonhart has a piece in the NY times on problems that homeowners have accepting reality. He cites an LA realtor claiming that "he has recently been saying no to almost half the sellers who have asked him to represent them. Their initial asking price is just too unrealistic."

Besides the obvious costs these folk are imposing on themselves, there is also an external cost here, isn't there? Aren't we waiting to see where housing ends up being priced so that we can resolve uncertainty and get back to the great business of America, getting in early on the next bubble with borrowed money?

So come on you would be sellers, suck it up and mark it down! Take one for the team; Team America!

Thursday, March 27, 2008

You won't believe this. I don't believe it, but it's true

So, my son Kevin is applying to colleges.

He filled out this federal form for financial aid. We live in North Carolina, and said so on the form.

So....we just got this letter, from the state of "Rhode Island and Providence Plantations."

That's pretty small so let me summarize.

1. The state of RI & PP takes it upon itself to file EVERY application for federal aid as an application for aid in the state of RI.
2. Then, they send out letters to everyone NOT from RI, telling them that they were turned down for aid.
3. The reason is that....YOU DON'T LIVE IN RI & PP!

This was an actual letter, sent in an envelope, with a stamp. Rhode Island turned us down for aid we didn't apply for, based on a residence that we never claimed, for a set of colleges my son didn't even apply to.

Your government, at work.

Munger Girls

Munger girls.

Laugh About It, Talk About It, When You've Got to Choose

Video of the candidate forum.

Interesting contrasts.

And, major props to Bill Holman for playing this straight. I appreciate it.

Family values

In an audience with then World Bank president James Wolfenson in 1996, Indonesian president/dictator Suharto reportedly said "What you regard as corruption... we regard as family values", one of the greatest lines ever(reported by Sebastian Mallaby in his excellent book "The World's Banker", p. 179).

Now it appears that things might work the same way in Hugo Chavez's Venezuela.

Hugo's dad is the governor of a state, his older brother is the federal education minister, and two of his younger brothers are accused (to be fair, by a political rival to his father) of buying a string of 17 ranches using fronts to hide their identity.

Excerpts from the article:

Venezuela's National Assembly opened an investigation Wednesday into a congressman's accusations that two of President Hugo Chavez's brothers acquired 17 ranches in recent years — if true a potential stain on the image of Chavez's socialist movement. Lawmaker Wilmer Azuaje detailed his allegations in a closed-door committee session, presenting documents that he says show how an assortment of ranch lands were obtained by Chavez's brothers Argenis and Narciso. Azuaje said afterward that he asked the congressional audit commission to visit the haciendas for an inspection and to summon those who sold the properties for questioning. Azuaje, of the president's socialist party, said the ranches are all located in Chavez's home state of Barinas, where the president's father is governor. Asked if the accusations are linked to his own campaign for governor in Barinas, Azuaje said Chavez and his party "demand that we denounce... acts of corruption (and) incapacity." There was no immediate reaction from Chavez's younger brothers or the president, who was traveling in Brazil. The lawmaker told the Venezuelan television channel Globovision on Tuesday that he has documents indicating Chavez's brothers acquired 17 ranches through front men who carried out the transactions on their behalf. Azuaje said he decided to call for the investigation because he feels the land acquisitions harm the image of Chavez's socialist movement. He said he also has asked prosecutors to open a separate investigation.

One step closer

David Stern was in town (OKC that is) this week with a sub-committee of the NBA owners' relocation committee. OU did its part by sending Bob Stoops to be part of the OKC welcoming delegation: Gov. Brad Henry, Oklahoma football coach Bob Stoops and numerous other representatives of the city, state and sports community came out to welcome Stern, New Jersey Nets owner Lewis Katz, Indiana Pacers owner Herb Simon and Los Angeles Lakers vice president Jeanie Buss as Oklahoma City brought out fancy cars and hard facts to woo its first major-league sports franchise (Wow Stoops is slipping. Second billing behind the Gov.? He needs to win him some bowl games).

After the presentation, Stern indicated that the sub-committee was going to recommend allowing the move: "It was a pretty full presentation and pretty much a tour de force on behalf of Oklahoma that I'd say impressed the members of the committee greatly," Stern said.

Stern also smacked down the late Seattle bid by Steve Balmer to buy the Sonics back from Clay Bennett and pay for half of renovating the Key Arena:

When asked about a group of Seattle businessmen who have offered to fund half of a $300 million renovation at KeyArena, the Sonics' current home, Stern rejected the option.

"The reason that this journey began was because KeyArena was not an adequate arena going forward and there were a lot of recommendations made for another arena ... but the tax revenues and the various contributions weren't forthcoming," Stern said.

Only one little hurdle left: Busdriver, BREAK THAT LEASE!!!

Wednesday, March 26, 2008

John McCain: Pure Evil

I must publicly break with my pal Angus, on the McCain question. From my Reason homeboy Matt Welch, in the NYT:

BEHIND any successful politician lies a usable contradiction, and John McCain’s is this: We love him (and occasionally hate him) for his stubborn individualism, yet his politics are best understood as a decade-long attack on the individual.

The presumptive presidential nominee of the Republican Party has seduced the press and the public with frank confessions of his failings, from his hard-living flyboy days to his adulterous first marriage to the Keating Five scandal. But in both legislation and rhetoric, Mr. McCain has consistently sought to restrict the very freedoms he once exercised, in the common national enterprise of “serving a cause greater than self-interest.”

Such sentiment can sound stirring coming from a lone citizen freely choosing public service. But from a potential president, Mr. McCain’s exaltation of sacrifice over the private pursuit of happiness — “I did it out of patriotism, not for profit,” he snarled to Mitt Romney during the final Republican presidential debate — reflects a worryingly militaristic view of citizenship.

More Reason: Be Afraid of President McCain

Have you heard about the new Argentine diet plan?

Recently elected Argentine President Christina Fernandez is facing the first big crisis of her administration over the government's inceased tax rates on some agricultural export crops, chiefly soybeans. Argentina has been growing rapidly since 2003 though with higher and higher inflation, now estimated to be between 20 and 30 percent, and higher and higher government spending. The government raised export tariff rates on March 11 and farmers went "on strike" with roadblocks, protests, and a cessation of delivering agricultural products either for export or for domestic consumption. Farmers vow to continue striking indefinitely and Fernandez vows not to give in to extortion.

From the FT story:

Agriculture is the backbone of the Argentine economy and high international prices for commodities, especially soya, have translated into booming exports.

The government’s new tariff regime replaces a 35 per cent levy on soya sales, with charges of up to 95 per cent if prices rise to $600 (€380, £300) a tonne.

Other crops are similarly affected, but soya is Argentina’s agricultural star commodity. Cattle farmers and other producers have been switching to the grain en masse, attracted by high profitability.

Under the new tariff scheme, farmers pay 44 per cent on exports at prices of about $465 a tonne. Added to income tax and provincial levies, this results in a total tax burden on farmers of 73 per cent, according to the Argentine Agrarian Federation, one of the four main producers’ associations.

The government argues that higher tariffs are needed to share out more fairly the windfall from exceptional commodities prices, and that the sliding scale benefits farmers more than a straight increase.

But the agriculture sector feels it is being squeezed to provide funds for a spendthrift government to fuel what critics say are unsustainable subsidies. Farmers say that the new tariff regime, coming just four months after the last increase in export tariffs on grains and cereals, was the last straw.

The government could close down meat exports in an effort to stave off shortages. It has requisitioned cattle owned by the armed forces for slaughter. But farmers say that is a drop in the ocean. Meanwhile, no trucks have entered the port of Rosario, Argentina’s grains export centre, for four days; eight ships have been diverted for lack of cargoes in Argentina and 15 are stuck in Rosario awaiting loading, according to the Agrarian Federation.

While I get a kick out of seeing farmers taxed instead of subsidized, them are some pretty steep tariffs. Note that when prices go up, tariff revenues rise with a constant tariff rate; what is going on here is that the tariff rate is also rising. I'm guessing the Argentine farm lobby screwed up and didn't put enough pesos into the Kircher-Fernandez political organization.

Mungers in Lugano?

Jason C, my homeslice from Austin, writes with this picture from his trip to Lugano, Switzerland:

Hi Mike,
Apparently, some of your relatives own a pasticceria in Lugano, Switzerland.

Is Brad DeLong right about China?

In one of the most curious defenses of free trade ever, DeLong argues that we should continue to trade freely with and embrace China so that their children will think fondly of us when they are our new overlords. Really! I am not making this up.

Some quotes:

if possible, the current superpower should embrace its possible successor. It should bind it as closely as possible with ties of blood, commerce, and culture--so that should the emerging superpower come to its full strength, it will to as great an extent possible share the world view of and regard itself as part of the same civilization as its predecessor: Romans to their Greeks.

There is a good chance that China is now on the same path to world preeminence that America walked 130 years ago. Come 2047 and again in 2071 and in the years after 2075, America is going to need China. There is nothing more dangerous for America's future national security, nothing more destructive to America's future prosperity, than for Chinese schoolchildren to be taught in 2047 and 2071 and in the years after 2075 that America tried to keep the Chinese as poor as possible for as long as possible.

I am just not so sure about this. First China is still a very poor country, and we recently found out it's even poorer than we thought. Second, though still very poor, China already has a very very serious pollution problem. Third, none of the east Asian miracle countries have caught up to the US (nor does it look like they will). Singapore and Hong Kong are indeed quite rich but they are cities, not countries. In per capita terms, Japan, South Korea, Taiwan, Thailand all grew rapidly relative to the US for a while but plateaued well short of US income levels. Fourth, China has serious governance problems. I do not foresee a totalitarian government reaching US-EU levels of wealth, and I do not foresee a change of government in China that would be anything close to smooth.

So, free trade with China? Sure, I'm for free trade with everybody. Trying to please our new overlords in advance? If they turn out to be so, I don't think what we do now will matter much, but I also wouldn't hold my breath waiting for the takeover.

Tuesday, March 25, 2008

A Suggestion for a PLANK!

Dirty Davey suggests a platform plank, in an email:

A campaign suggestion--commit to a full-term moratorium on rhyming programs.

"Booze it and Lose it", "Click it or Ticket", "Learn and Earn"--we poor
citizens are a bit jaded by the poetry of the state.

So, I guess I'll throw out that stuff on "Never too Masticate!" stuff I was working on. Free dentures for everyone over 110 years old.

Sitting on a sofa on a Tuesday afternoon: Going to the candidates' debate.....

Water issues today.

An actual debate. With me, Richard Moore, Bev Purdue, and Robert Orr.

Well attended. And fun.

I think they are going up put a link. I'll post it, if so.

Munger Goes for Reverend Wright Award

Okay, so maybe this was a little intemperate.

Munger, who is the chairman of Duke’s political-science department, has never run for public office, and his ideology is difficult to pin down. He has been a Republican most of his life, and he said he expects to take votes away from the Republican candidate. But his support of same-sex marriage and a moratorium on the death penalty would appeal to many liberals.

“The Democrats in North Carolina are what the Republicans usually are, and the Republicans are the Taliban,” Munger said, with characteristic brashness. “They look to scripture to decide what their positions should be.”

Okay, that may have been unfortunate. The "Taliban" reference is a bit over the top. No point insulting people's religious beliefs.

One of the commenters on the article wondered if "Monger" was trying to one-up Rev. Wright.

RCHS Triumphant, for the Sixth Straight Year

Why does North Carolina continue to have a cap on charter schools? RCHS operates at 2/3 the cost per student of an average high school, and 1/4 the cost of NCSSM. Pharaoh, let my charters go!


The Raleigh Charter Quiz Bowl Team sent 16 students to the NCOAST (North Carolina Open Academic State Tournament) in Hickory Ridge on Saturday, March 15. This tournament serves as North Carolina's state championship. Congratulations to the varsity team of K. Munger (Captain), P. Schultz, J. Hanna, and J. Vandezande who won the tournament by defeating the team from North Carolina School of Science and Math (NCSSM). NCSSM had defeated our Varsity B team of B. Rubin, S. Stroud, K. Boyina, and C. Holgate in the semifinals. Both the A and B teams were undefeated after the preliminary matches

RCHS fielded two junior varsity teams as well. Our A team of D. Smith, O. Marschall, M. Lochbaum, and R. Austin won the JV section of the tournament, defeating our B team made up of S. Marivada, S. Challener, D. Rao, and C. Brown.

This is the sixth year in a row that RCHS has won both the Varsity and JV championships in this state tournament. Congratulations to both teams.

This tournament effectively ends the quiz bowl season, although we will still compete in the Knowledge Master Open (an international computer-based quiz) in April, and we have a berth at a national tournament in May. A special thanks goes out to all who helped in the training of our players and supported the team this year.

How not to retract something: Hillary edition

Regarding the difference between her verbal account and the film of her arriving in Bosnia, Hillary graciously said this morning:

"I went to 80 countries, you know. I gave contemporaneous accounts, I wrote about a lot of this in my book. You know, I think that, a minor blip, you know, if I said something that, you know, I say a lot of things — millions of words a day — so if I misspoke, that was just a misstatement,"

By the way, if we assume she sleeps 6 hours a night, that leaves 18 hours, or 1080 minutes to talk. According to Wikipedia, "conversations are maintained at 200 words per minute". Lets recognize Hill's prodigious skills and allow 500 wpm for her. This gives us a figure of 540,000 words a day.


and a side of Rice.....

I have a bad confession to make. I read the New Yorker every week. Pretty much cover to cover. Sorry.

Anyway, in last week's issue I found an intriguing idea: Condi Rice for the second spot on the Republican ticket.

an excerpt:

To deal first with the obvious: Rice may be “only” the second woman and the second African-American to be Secretary of State, but she is indisputably the highest-ranking black female official ever to have served in any branch of the United States government. Her nomination to a constitutional executive office would cost McCain the votes of his party’s hardened racists and incorrigible misogynists. They are surely fewer in number, though, than the people who would like to participate in breaking the glass ceiling of race or gender but, given the choice, would rather do so in a more timid way, and/or without abandoning their party. And with Rice on the ticket the Republicans could attack Clinton or Obama with far less restraint.

By choosing Rice, McCain would shackle himself anew to Bush’s Iraq war. But it’s hard to see how those chains could get much tighter than he has already made them. Rice would fit nicely into McCain’s view of the war as worth fighting but, until Donald Rumsfeld’s exit from the Pentagon, fought clumsily. And it would be fairly easy to establish a story line that would cast Rice as having been less Bush’s enabler than a loyal subordinate who nevertheless pushed gently from within for a more reasonable, more diplomatic approach.

Rice is already fourth in line for the Presidency, and getting bumped up three places would be a shorter leap than any of the three Presidential candidates propose to make. It’s true that her record in office has been one of failure, from downgrading terrorism as a priority before 9/11 to ignoring the Israel-Palestine problem until (almost certainly) too late. But this does not seem to have done much damage to her popularity. In a Washington Post-ABC News poll taken when opposition to the Iraq war was approaching its height, she enjoyed a “favorable-unfavorable” rating of nearly two to one. The conservative rank and file likes her.

Does anybody besides me think this is a great idea? Or are y'all hankering for flip-flop Mitt?

Monday, March 24, 2008

TV Story: In the News

A tv story, uncut, unfiltered, ripped from the headlines.

Well: a tv story, anyway.

My bracket is shot....

As El Zorno says...."In the spirit of the season."

My bracket is shot.

Subsidies: For You Podcastrians

For you podcastrians out there.....

Subsidies, Russ Roberts with very special guest me.

If not NOTA, then NOHA

The Libertarians want, as a matter of policy, to have "NOTA" as a choice on ballots.

NOTA, as in None Of The Above.

I will certainly be voting NOHA: "None of Hillary, Always!"

Check this:

"We need a president who is ready on day one to be commander in chief of our
economy." [Clinton, in speech today]

"...Mrs. Clinton's approach to [civil liberties] is that of a top-down
progressive. Her speeches about privacy suggest that she has boundless faith in the power of experts, judges and ultimately herself to strike the correct balance between privacy and security.

Moreover, the core constituency that cares intensely about civil liberties is a distinct minority — some polls estimate it as around 20 percent of the electorate. A polarizing president, who played primarily to the Democratic base and refused to reach out to conservative libertarians, would have no hope of striking a sensible balance between privacy and security." [Rosen, NYT op-ed]

WTF? Is she going to say, "Oil prices, down! Now! Housing prices, up, up sharply, restore equity! I am the commander in chief of the economy!"

And, on the civil liberties concern: That sounds just like...well....GW Bush. "No hope of striking a sensible balance between privacy and security." Been there, done that.

(Nod to KL)

They slipped up and said it out loud, Minnesota edition

For the original edition of this title see here.

From King at SCSU comes the tale of Minnesota State Senator Larry Pogemiller, who in his enlightened wisdom said:

"I think it's simplistic and naive to say people can spend their money better than the government."and he went on to include... "The notion that everybody can individually spend their money better than government I, I just think is trite, wrongheaded and anti-democratic."

I am loving this trend of our "leaders" coming out and finally saying what they really think. Getting all the cards on the table, so to speak.

King, I know what we'd do with such a fellow here in Oklahomie, but what will happen up north? Is he your next Governor?

Evo-nomics in Action

There is a very old joke about the businessperson to whom it was pointed out that their company was selling their product at less than cost and thus going to make a loss. The owner replied something like, "that's ok, we'll make it up on volume".

The above is a fairly accurate summary of energy policy in Evo's Bolivia. The price of oil there is set by government decree at $27.11 (the oil and gas industries were nationalized by Evo in 2006).

Amazingly this has caused two things (1) a lot of smuggling and (2) domestic demand now outstrips domestic supply by around 30%. This gap is made up by the government buying oil on international markets and then re-selling it to its citizens at the $27.11 price (making it up on volume, just like Walmart)!

From the linked article:

"The Bolivian state is turning into a protectionist one, fixing oil prices that do not match international market prices," said Carlos Toranzo, an economist at the Latin American Institute of Social Research in La Paz.

"Smuggling is a national habit, but we are going to suffer from it as long as we keep prices artificial," he said.

Sunday, March 23, 2008

Frankly Dumb

[Robert Frank, Journal of Public Economics, forthcoming:]

"A positional externality occurs when new purchases alter the relevant context within which an existing positional good is evaluated. For example, if some job candidates begin wearing expensive custom-tailored suits, a side effect of their action is that other candidates become less likely to make favorable impressions on interviewers. From any individual job seeker's point of view, the best response might be to match the higher expenditures of others, lest her chances of landing the job fall. But this outcome may be inefficient, since when all spend more, each candidate's probability of success remains unchanged. All may agree that some form of collective restraint on expenditure would be useful. In such cases, however, it is often impractical to negotiate private solutions. Do positional externalities then become legitimate objects of public policy concern? In attempting to answer this question, I employ the classical libertarian criterion put forth by John Stuart Mill, who wrote the state may not legitimately constrain any citizen's freedom of action except to prevent harm to others. I argue that many positional externalities appear to meet Mill's test, causing not just negative feelings but also large and tangible economic costs to others who are ill-equipped to avoid them...Those conditions are precisely analogous to the ones that make military arms races between equally matched rival nations wasteful...No libertarian would think to object to a military arms control agreement on the grounds that it limited each side's freedom to spend as much as it pleased on arms. Since that was precisely the objective each sought by entering into the agreement, such an objection would be absurd on its face...I have argued elsewhere that a simpler, more promising, approach would be to abandon the current progressive income tax in favor of a more steeply progressive general consumption tax...Taxpayers would report their incomes to the tax authorities just as they do now. They would also report how much they had saved during the year, much as they do now in order to exempt money deposited in retirement accounts. People would then pay tax on their 'taxable consumption,' which is just the difference between their income and their annual savings, less a standard deduction. Rates at the margin would rise with taxable consumption. If the tax were revenue neutral, marginal rates at the top would be significantly higher than current marginal tax rates on income...Proposals to generate additional income tax revenue by raising top marginal rates invariably summon concern about possible negative effects on the incentive to save and invest. Under a progressive consumption tax, by contrast, people's incentives would be to save and invest more, even if top marginal tax rates on consumption were extremely would lower the marginal costs of self-insuring against lost earning power and of leaving bequests...And given the apparent importance of context, the indirect effects of a progressive consumption tax promise to be considerably larger than the direct effects. Thus, for example, if people at the top save more and spend less on mansions, that will shift the frame of reference that influences the housing expenditures of those just below the top. So they, too, will spend less on housing, and so on all the way down the income ladder...Liberals and conservatives alike agree that our failure to save has had damaging macroeconomic consequences, that we would all be better off if we all spent less and saved and invested more. But no individual has the power to alter the aggregate savings rates...In the absence of detailed empirical evidence, a plausible conjecture is that the first expenditures that high-end consumers would reduce in response to a steeply progressive consumption tax are the same ones they have recently been increasing in response to their growing incomes. In the US, some of the most spectacular increases in high-end consumption in recent years have occurred in housing and the events families use to mark special occasions. By all accounts, such expenditures are hyper-positional."

Good lord. Robert Frank has "discovered" rent-seeking. Many of the signals that people give in interviews (arriving on time, dressing well, etc.) are not purely wasteful. They are signals of unobservable features correlated with likely performance.

But, if lazy folks could form a lobby, and lobby for the benefits inherent in BLOCKING smart, energetic people from being able to work hard to give good signals, how much would that be worth? A lot! So, even lazy people might work on that. Or pay somebody to work on it for them.

The problem is that EVERYTHING Frank points out as a cost is FAR less costly than the rent-seeking orgy he wants to start instead. Giving out the bennies he thinks are "good public policy" would cause a riot of rent-seekers. "Make smart people talk slower." "Yeah, and they don't get to wash their hair. I don't wash my hair, so people who DO wash their hair have an unfair advantage. Legislate that away!"

Rent-seeking is what people do to obtain favorable regulation. The competition for the kind of benefits Frank wants to give out would DWARF, in terms of costs, the tiny effects he claims to be worried about.

And he doesn't even realize that Tullock and Krueger pointed all this out 40 years ago. Yeesh.

As Kashdan and Klein say: "Assume the positional!" And give us taxpayers a little KY first.

(nod to KL, who likes to assume the positional, or so I hear)

All Sing

Thanks to Angus for the props.

Now, every body sing!

For most of you, the ones who can read, the words are written there in the video. For you folks from Michigan State, just hum.

Sinbad was right!

"I remember landing under sniper fire. There was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base."
--Hillary Clinton, speech at George Washington University, March 17, 2008.

Of course, the picture above is of Hill's landing in Bosnia. At least she does have her "head down".

My goodness people, I think she's a bigger and more shameless liar than Bill. Can it be??

Now Mungowitz can die happy

Duke is out and Davidson is in. Mungowitz must be completely delirious (as opposed to his usual level of partial delirium). Lil Davidson has their first postseason wins in over 30 years and has beaten Gonzaga (a 7 seed) and Georgetown (a 2 seed) to make the so called sweet 16.

For those who haven't yet read Mungowitz's autobiography "You can't touch this", Mungo went to Davidson and, because of his UNC roots (man crush on Dean Smith), hates his employer's main fundraising tool, Coach K's Blue Devils.

I say "so called" sweet 16 because from a quality of ball point of view, college basketball is an abomination. There are only maybe 10-20 college players that are any good at all, tops. NCAA hoops quality is at an all time low, though crazy stuff like this Davidson run and my ex-employer George Mason's run a couple years ago will keep the fanatics happy.

Congrats Mungowitz on the best Easter ever!

Markets in Everything?? Rampant Art Fraud

Everyone with a genuine Miro or Picasso print take a step forward. Not so fast, buddy!!

A ring of art counterfeiters has sold thousands of prints since 1999 bearing the forged signatures of Picasso, Miro, Dali and other famous artists to buyers around the world.

"Thousands of people will learn they ... bought a fake," said Chicago-based U.S. Attorney Patrick Fitzgerald, who announced indictments on Wednesday charging two Americans, a Spaniard from Barcelona, and two Italians from Milan and Monsummano with multiple counts of fraud.

U.S. authorities will seek to extradite the Europeans.

Sale prices ranged up to $50,000 for counterfeit prints that came with forged artists' signatures and fake certificates of authenticity that were sold in galleries, at art shows and through Internet auction site eBay, Fitzgerald said.

The counterfeits were produced in Spain and Italy, with the volume of fakes such that two of the alleged conspirators warned another one not to flood the market.

I am pretty sure that Picasso and Miro fakes have been abundant well before 1999, both because they are in high demand and because they are so easy to fake!! My advice is to collect original art by up and coming people and leave the famous artist print market to the crowds. Mrs. Angus and I started out in prints but have been moving more and more toward originals. Anybody want to buy a nice pair of Howard Hodgkin prints?

An Easter PSA from Mungowitz and Angus

Saturday, March 22, 2008

Happiness: yer doin' it wrong!

At least if you're running Bhutan you are. The impoverished Himalayan nation's king has been promoting the importance of Gross National Happiness as a goal of the nation. So far the only concrete policy steps taken to raise it are (1) a smoking ban, (2) a dress code, and (3) setting limits of how much of the country can be developed.

But now the king wants to take it to the next level. How? Well he's appointed a "happiness commissioner" and the country is being surveyed about their level of happiness with an instrument "comprised of nearly 300 questions" that "take(s) several hours to complete."

Aaargh!! I'm from the government and I'm here to help you!! Run!!!

Here's some excerpts from the WSJ article linked above:

Developed in the 1980s by Bhutan's fourth king, Gross National Happiness, or GNH, is a Bhutanese twist on Gross Domestic Product. Up till now, it has not represented an actual dollar figure, but rather, a fuzzy set of principles on the environment and culture. It has produced unique policies, such as a smoking ban, strict limits on deforestation and a dress code....
its leaders want to prove that they can achieve economic growth while maintaining good governance, protecting the environment and preserving an ancient culture. To do that, they've decided to start calculating GNH. It means coming up with an actual happiness index that can be tracked over time.

"We are in the midst of great changes," Mr. Tshiteem says in an interview. The Happiness commissioner wears a red checkered Bhutanese robe, called a gho, and munches on betel nut as he looks ahead to his country's collision with the modern world. "If we are going to manage this change, we have to be able to measure it," he says.

Being right next to India, Mr. Tshiteem has developed negative views toward industries that could help soak up Bhutan's young, unskilled workers and fuel growth. On outsourcing, he says: "Stay up all night, sleep all day, I wouldn't want to see my kids in a job like that."

And on fast food and McDonald's, he wonders whether possible health problems and the impact on Bhutan's culture would outweigh the benefits of job creation and potentially higher prices for farmers. "Maybe," ventures the Happiness commissioner, "Bhutan can be a small island, free from the golden arches."

OUCH! Dude, that hurt.

The Nuge Comes Up Big

Ted Nugent on gun rights.

(Nod to AH)

Nature or Nurture in Cooperation/Defection

Heritability of cooperative behavior in the trust game

David Cesarini, Christopher Dawes, James Fowler, Magnus Johannesson, Paul
Lichtenstein & Björn Wallace
Proceedings of the National Academy of Sciences, 11 March 2008, Pages

Although laboratory experiments document cooperative behavior in humans, little is known about the extent to which individual differences in cooperativeness result from genetic and environmental variation. In this article, we report the results of two independently conceived and executed studies of monozygotic and dizygotic twins, one in Sweden and one in the United States. The results from these studies suggest that humans are endowed with genetic variation that influences the decision to invest, and to reciprocate investment, in the classic trust game. Based on these findings, we urge social scientists to take seriously the idea that differences in peer and parental socialization are not the only forces that influence variation in cooperative behavior.

(Nod to KL, who cooperates)

Friday, March 21, 2008

Check this, but don't blame me

(Disclaimer: I didn't make this up. And nobody is my home boy).

Don't hate me because I'm Munger.

Actually, that's Munger, Michigan. Another reason not to hate me. Or blame me.

There Ought to Be a Law.....

A California woman was shot to death as she pleaded with emergency dispatchers to come and help her. Her death will not make the network news programs this evening, but this is the latest reminder that we must take responsibility for our own safety and not rely on the police. ATSRTWT

That is just wrong. We need a law against burglary! Oh, wait, that is against the law. We need a law against murder. Oh, that's against the law, too.

I know, we need a law that would keep honest citizens from having a gun, to defend themselves against people who break the law. That's a law we could enforce.

But....hmmmmmm....hard to say why that would help. Why would taking a gun away from ME take away the guns from the hands of people who we already know ignore the laws? It's just a non sequitur. If that woman had had a gun, she wouldn't have been on the phone, begging for help that didn't come. A republican citizenry has an obligation to participate in their own self-defense, and a free people have a right to do so.

Are we a free republican people, or not?

(nod to Instapundit, via AH)

Opera can be hazardous to your health

Performing opera, that is. But at least you get to dress up and canoodle with hot chicks:

Friday roundup

1. Bill Clinton ruined his superbowl for nothing.

“I believe he is the kind of once-in-a-lifetime leader that can bring our nation together and restore America’s moral leadership in the world,” Mr. Richardson said in the statement, provided by the Obama campaign early Friday morning.

2. An opposition politician breaks down Mugabe-omics in the WSJ.

Economic mismanagement by Mr. Mugabe's government is an even more serious problem. Zimbabwe's inflation and unemployment rates are 150,000% and 80% respectively. Infrastructure is crumbling, and education and health-care systems have collapsed. Life expectancy is now among the lowest in the world, having declined, since 1994, to 34 years from 57 years for women, and to 37 years from 54 for men. Some four million of my fellow citizens have fled the country, taking with them both human and financial capital.

3. Chavez goes after another opposition TV station in Venezuela as his popularity falls.

The tension between the news station and Chávez comes as the leftist president has lost popular support.

The polling firm Datos, in a quarterly survey of 2,000 Venezuelans last month, found that 34 percent said they support Chávez's government, down from a high of 67 percent in early 2005, and the lowest level since 2003, The Associated Press reported.

Another survey, by Venezuelan pollster Alfredo Keller, found that 37 percent of Venezuelans questioned identified themselves as Chávez supporters in February, down from 50 percent in mid-2007, the AP reported.

Thursday, March 20, 2008

...As Though They Were Adults

John Stewart's take on Obama.

I can't imagine the hate mail HE will get.

(nod to SdM)

Thug Life in Michigan Local Politics

State-owned thuggery in Redford, Michigan, a western suburb of Detroit.

A website devoted to identifying Dillon's thugs. Pretty impressive that all of them are taking "vacation days" to spend their time blocking and harassing petitioners.

These are state employees, mind you. I recognize they get a LOT of vacation time. But they must be getting one day vacation for every day they work, to be able to pop up that quickly to surround any petitioner who dares ask for signatures.

A news story for background.

This is pretty mean stuff. I wish that Dillon's state thugs would take a page from the Detroit mayor's book. Then, it would be workers getting screwed, not the taxpayers.

Is the Fed targeting the Stock Market?

Well, if so, they might be "doin' it rong!". On September 4th 2007 the Dow stood at 13,400 and the Funds target was 5.25. On March 19, 2008 (yesterday) the Dow kneeled at 12,099 and the Funds target was 2.25. The raw correlation between the Funds target and the Dow from 8/15/07 - 3/19/08 is .75!!

It could just be the Fed is cutting for whatever reason and that's driving the market down. Which would be weird but not a case of the Fed targeting the Dow. However, if the market declines are driving the Fed to cut, that would be targeting. Note that these are not mutually exclusive hypotheses.

To sort them out, lets turn to our friend, the Granger causality test!!

At short lags (2, 3 or 4 days), changes in the funds target Granger cause the Dow (to go down!!!) but changes in the Dow do not Granger cause the funds rate (so no targeting). However at longer lags (which kind of make sense for the stock market feeding into monetary policy) the story changes. At lags of 5, 6, or 7 days each series Granger causes the other! And at lags of 8 or 9 days, the Dow Granger causes the funds target but the target does not Granger cause the Dow (I am using a 10% significance level here, but the results are broadly similar at 5%).

So yes, there is some very crude evidence that the Fed is targeting the Stock Market when looking at lags of between 5-9 days. Of course they are totally failing in these efforts as their cuts are "causing" the market to fall further.

If I've left out another relevant variable, then my tests are misspecified and biased. Also, to match up the interest rate data to the Dow data requires adjusting for the fact that the Dow data is on a 5 day week along with a few holidays missing, and Fred II reports the Funds target on a 7 day week basis. I filled in the holidays for the Dow by repeating the previous days close and matched the 5 day week to the 7 day week by hand.

Here is a graph of the Dow with vertical lines marking the dates of rate cuts:

Clinton is as Clinton does

In the Ohio primary, Obama and Hill were competing to see who could be more anti-trade, specifically anti-NAFTA. Obama suggested that Hillary was initially for NAFTA and was changing her view only now for political expediency (wherever could he have gotten that idea??).
Hill as is her wont, took great umbrage at an Obama mailer suggesting that she had been a NAFTA supporter. Here, let CNN remind you:

"Sen. Clinton has been going to great lengths on the campaign trail to distance herself from NAFTA," Obama said Sunday in Lorain, Ohio. "In her own book, Sen. Clinton called NAFTA one of 'Bill's successes' and 'legislative victories.' " "One million jobs have been lost because of NAFTA, including nearly 50,000 jobs here in Ohio. And yet, 10 years after NAFTA passed, Sen. Clinton said it was good for America. Well, I don't think NAFTA has been good for America -- and I never have," he said. The weekend feud kicked off when Clinton blasted recent mailings from the Obama camp, telling a crowd in Cincinnati, Ohio, an Obama mailing spread lies about her positions NAFTA.

The mailer says Clinton was a "champion" for NAFTA while first lady, but now opposes it. NAFTA was negotiated by the first President Bush and signed into law by President Bill Clinton.

Citing a 2006 issue of New York Newsday, the mailer says Clinton thought NAFTA was a "boon" to the economy. The term "boon" was actually the paper's characterization of Clinton's stance, and not a quote from her.

"Bad trade deals like NAFTA hit Ohio harder than other states. Only Barack Obama consistently opposed NAFTA," the mailer says.

A visibly angry Clinton lashed out Saturday at Obama over the campaign literature that she said he knows is "blatantly false."

"Shame on you, Barack Obama," she said, adding that she is fighting to change NAFTA.

Well imagine my surprise to read yesterday that, according to her recently released records, Hill was indeed a NAFTA champion.

Shame on who, exactly?

Wednesday, March 19, 2008

My Life: A pictoral essay

Sunday March 16:

Monday March 17 - Sunday March 23

Monday March 24th

Bring the Violence, It's Significant--To the Wife

My dear wife sends me the following email:

Menopause Jewelry

My husband, being unhappy with my mood swings, bought me a mood ring the other day so he would be able to monitor my moods.

We've discovered that when I'm in a good mood, it turns green.

When I'm in a bad mood, it leaves a big freaking red mark on his forehead.

Maybe next time he'll buy me a diamond. Dumb ass.

Wow. Her birthday is coming up. I think I'll take back the mood ring I bought her,
and get a diamond.

(props to Disturbed, for the title)

hat tip: LOLst Breakfast of Academic Losers

Earlier, I argued that coffee, a muffin, and the NYT spelled failure in academics.

But it turns out I was wrong. The problem is: Beer.

(Nod to Bayou Jack, who asks: "Mungowitz, does this mean you plagiarized all your papers and books? 'Cause, looking at that gut, you have been DOIN' some beer." Thanks, Jack. I meant what I said about your mom.)

My Bad. This is MUCH More Offensive

My bad.

Apparently, the psycho "Stop, or I'll call you a racist" guy who sent me that email yesterday was reacting to something else.

Time Magazine picked up my entire quote, on Obama's speech:

Michael Munger
Political Science Professor
Duke University

Obama's speech was brave. He is trying to take an actual position, rather than just distance himself from the Rev. Wright, who is clearly a political liability. But I think he is being naive. There are just too many easy attack ads, piling up in the Republican library. (Michelle Obama: "For the first time in my adult life, I'm proud of my country." Rev. Wright: "God DAMN America.") Maybe it's a shame that you have to try to exhibit a treacly, shallow patriotism to be President. But John Kerry got hammered just for protesting the Vietnam War, a war that George W. Bush ducked. A black candidate named Barack Hussein Obama can't have questions about his patriotism, and commitment to America, not if he is going to beat a genuine war hero. I think Obama is unelectable. He had to distance himself far from Wright. Instead, he was brave.

Okay, NOW I see why he compared me to the KKK boys from Pulaski, TN. Wait. No, I don't.

Bayou Jack Sends Pictures of his Mom

Bayou Jack writes, sending some family pictures, with a description.

Here, for example is his mom, and younger brother.

Seriously, quite a father and son team. Notice that they are from my hometown area, in rural central FLA. Bayou Jack and Dutch Boy come from the same roots. Little surprise I think the kid on the right was our high school valedictorian.

Mungowitz Inaugural Party: NC Statehouse, 2009

It doesn't add up

The Fed struck again yesterday afternoon with another .75 percentage point haircut for the Fed funds rate. Since August, this rate has fallen from 5.25 to 2.25 while inflation has risen from 2.5% to well over 4%.

Mungowitz will probably kick me off this blog for beating this particular horse so often, but I think this is bad policy. The only thing I think these rate cuts have done is reduce the greatly feared ARM re-sets that were on the near horizon. However, we now pretty much know that the real problem for homeowners is not payment re-sets, but that home prices have fallen (or stopped rising) enough to make their positions negative. We have too much housing still at too high a price and the price re-set is slow. One thing that would help would be to stimulate the demand for housing with lower long term interest rates, but the current Fed policy of allowing inflation to rise has 30 year mortgage rates "stuck" well above 6%.

In sum, while I applaud the lender of last resort actions the Fed has been taking, I see little good and a lot of ill coming from these unrelenting Fed fund rate cuts. They won't stave off a possible recession, nor will they solve or notably improve the housing crisis. They will push up inflation and keep long term rates higher.

Tuesday, March 18, 2008

Mungowitz Called NAMES (sniffle)

Wow. So I gave a comment on Obama's speech. It was brief, pretty tepid. I underlined the quote from me, so it is easy to pick out:

The big question is whether Obama's speech Tuesday did enough to quell some of the negative impacts on his campaign.

"I don't know whether it will be sufficient to stem a racial backlash against his candidacy," said Thomas Mann at the Brookings Institution.

"But he clearly demonstrated his capacity to lead public opinion and not simply be a slave to it. Indeed, I would say he appeared wise beyond his years and genuinely presidential."

Michael Munger at Duke University called it a "brave" speech. "He is trying to take an actual position rather than just distance himself from the Rev. Wright."

Some analysts say it's much better for Obama to confront explosive race issues now because they were bound to become front and centre at some point.

"If he has to confront racial division in October in a major way, he will lose the election," said Larry Sabato at the University of Virginia.

"By October, he needs to have the media and voters say: 'We've already finished with this subject. What about Iraq. What about the economy?"'


Almost immediately after, I got this email.

date Tue, Mar 18, 2008 at 8:30 PM
Mike, your analysis of Mr. Obama speech was laughable. You were evidently dismissive with your unrestrained candor of Mr. Obama's chances of winning a general election.

if I didn't know better, I would think you have been spending your weekends organizing fundraisers for the boys back in Pulaski, TN.

FYI, my Munger, which I assume is shorthand for War Monger!

My parting gift is again to remind you that before too long, most of our future leaders will be of a darker hue! And that my friend is just plain fact, based solely on the demographic trends of the great United States.

I will even go as far as to say that there is a greater chance of these next few elections, four to five at most, can, and will be seen as the twilight of an ill conceived era. Again, I will say, 250 years at most!

um....okay. I guess you win, pumpkin. I'm no match for you. The whole "War Monger" should write for Leno.

All Hail Mungowitz!

Chillipunk'd no more, Mungowitz will stride the stage like a colossus at the final NC Gubernatorial debate this October. This is huge, people. We will see things we have never seen before. My advice? Get your tickets early!

Angus: Repent!

They slipped up and said it out loud

Judge Walter Croskey 2nd district court of appeals in the decision to ban home schooling in California unless the home schooler has a teaching credential:

“A primary purpose of the educational system is to train school children in good citizenship, patriotism and loyalty to the state and the nation as a means of protecting the public welfare.”

Holy crap people! Did he really write that? Loyalty to the State??

You know, suddenly home schooling doesn't seem so creepy to me anymore.

Here is an essay on the ruling. Here is David Friedman on the quotation.

A policy puzzler

The Fed is so screwed. Economic growth has slowed to a crawl at best, housing prices are taking forever to adjust down after the bubble, credit markets are panicky like Mungowitz when there is only one six pack left in the fridge, and inflation is on the rise.

Now it seems clear, given that markets are expecting a 3/4 to 1 percentage point cut in the Fed Funds rate later today, that the consensus opinion is that the Fed is committed fighting recession and ignoring inflation risks.

On the one hand, this makes sense because a recession is probably more painful than some extra inflation (which presumably the Fed would slowly bring down after the crisis has passed). On the other hand though, it doesn't make sense because the Fed can actually control inflation and its main policy tool, the rate cut, stands little chance of averting a recession especially compared to its chances for further aggravating inflation.

Now Mrs. Angus and I both have tenure (and university enrollments are still booming for the time being) and we are planning a foreign vacation this summer, so maybe my views are totally skewed by my own self-interest here, but I think the Fed is making a mistake. They can pursue their lender of last resort function (which I think is good policy given our credit market panic) without also pursuing their panderer of first resort path of continuing to cut the funds rate.

People, we had a huge asset bubble burst and the asset in question (housing) has slow price adjustment. Cutting the Funds rate won't change this.

Hilllary: Strong Woman, or "Rhymes with Stitch"

Social Desirability Effects and Support for a Female American President

Matthew Streb, Barbara Burrell, Brian Frederick & Michael Genovese
Public Opinion Quarterly, Spring 2008, Pages 76-89

Public opinion polls show consistently that a substantial portion of the American public would vote for a qualified female presidential candidate. Because of the controversial nature of such questions, however, the responses may suffer from social desirability effects. In other words, respondents may be purposely giving false answers as not to violate societal norms. Using an unobtrusive measure called the "list experiment," we find that public opinion polls are indeed exaggerating support for a female president. Roughly 26 percent of the public is "angry or upset" about the prospect of a female president. Moreover, this level of dissatisfaction is constant across several demographic groups.


Selective Attention to Signs of Success: Social Dominance and Early Stage
Interpersonal Perception

Jon Maner, Nathan DeWall & Matthew Gailliot
Personality and Social Psychology Bulletin, April 2008, Pages 488-501

Results from two experiments suggest that observers selectively attend to male, but not female, targets displaying signs of social dominance. Participants overestimated the frequency of dominant men in rapidly presented stimulus arrays (Study 1) and visually fixated on dominant men in an eyetracking experiment (Study 2). When viewing female targets, participants attended to signs of physical attractiveness rather than social dominance. Findings fit with evolutionary models of mating, which imply that dominance and physical attractiveness sometimes tend to be prioritized preferentially in judgments of men versus women, respectively. Findings suggest that sex differences in human mating are observed not only at the level of overt mating preferences and choices but also at early stages of interpersonal perception. This research demonstrates the utility of examining early-in-the-stream social cognition through the functionalist lens of adaptationist thinking.

Here's what I think. Humans are sexually dimorphic, and muscle tone and mass also differ. Dominance hierarchies are based in part of objective dominance potential, and in the absence of other information a lot of that comes down to visual correlates of size and strength. If a man the size of my wife (5'3", 95 pounds) tried to give signals of dominance, he would get the hell beat out of him. Man strive for dominance, and won't concede to a tiny man without evidence.

So, these studies should control for size and strength. If you were comparing two people of the same potential dominance, in physical terms, I bet most of the "gender" difference would disappear.

I am 6'1", 250 pounds, can bench press my weight, and look like I can bench press my weight. Dominance signals from me may not be welcome, but they are not embarrassing. People think, "well, he's a big guy."

Dominance signals from a tiny person are going to be resented, and perhaps openly mocked.

Now, dominance hierarchies can be malleable, of course, when you have more information than just size. In my house, there is no question but that my wife occupies a higher position than I do. I am obedient and respectful, at all times, knowing that to act otherwise would bring me certain death.

(nod to KL for the references)

Look at ME! Look at ME!

A competition between the Govs of Penna and NY, on who was the biggest sex sleaze.

David Paterson, the NEW gov of NY, admits to his own sexual infidelities. (He's blind, so I think that means he could go with cheaper hookers, right?)

Still, McGreevey may win. Having your driver help you make a sandwich, with your wife being the

(Nod to KH)

Monday, March 17, 2008

It's The Apocalypse: The NY Times has it right

I am no fan of the NY Times. The hatchet job those folks did, in editorials and largely fictional "news" of the Duke non-rape, non-assault case was appalling.

But, they have it right, right now.

First, on the Bear-Stearns bailout. Are you KIDDING me? I remember in the late 1980s when all my cheeKAHgo boy friends who worked in Chile were telling me confidently that the regime meant it, it really did. No bailouts. Oh, until some banks failed, banks owned by the pro-regime elite. 1983, and again in 1989. Turned out that free-market principles don't extend to letting your pals go bankrupt, even if they deserve it. In 1989 Chile passed the "Law Establishing the Central Bank of Chile, Law No. 18840." To make these bailoutsofourrichfriends easier. Bye, bye, now, cheeKAHgos.

Second, Stanley Fish (Stanley FREAKING Fish, of Duke Psychotic English Department fame!) totally nails the issues, the analysis, and logic of the superdelegate "crisis."

The PRD still belongs to AMLO

Andrés Manuel López Obrador, (AMLO), aka el Peje has kind of pulled a Putin with "his" party, the PRD. After his incredibly narrow loss to Calderón in the 2006 presidential election, Peje refused to accept defeat, set up a shadow government and generally alienated even his intellectual allies on the Mexican left. However, he has re-gained some traction (or suction as they call it on "the wire") with his opposition to any move to allow privatizing part of Mexico's petroleum industry and his criticism of Calderón ally and interior minister, Juan Camilo Mouriño, who "has been accused of steering lucrative contracts with the state oil monopoly to his family trucking business when he was the chairman of the energy committee in the lower house of Congress and, later, an assistant secretary of energy."

AMLO has been making political hay and re-gaining popularity. At the same time the PRD was undergoing a campaign and vote for a new party leader. Yesterday, Alejandro Encinas won the post in an election. Encinas is a close ally of AMLO and the WSJ opined last week that, "Mr. Encinas, a former member of the defunct Mexican Communist Party, vows to stick with Mr. López Obrador and take a hard line against Mr. Calderón's government. If he wins, Mr. Encinas will likely throw the entire party machinery behind Mr. López Obrador for another run at the presidency in 2012."

Here is a link to a spanish language story on the election outcome and it's significance for AMLO (Peje).

Bald don't lie

I am not a big fan of costume dramas, but I gotta say the first episode of "John Adams" on HBO last night was pretty terrific. Amazingly, Paul Giamotti is actually too handsome to give a true to life portrayal of good old JA, but when he got up in the pulpit and speechified about natural rights and liberties I actually got choked up a bit.

Laura Linney seems like she's going to be good as Abigail. Linney gave a great performance in "The Savages" last year opposite Phillip Seymor Hoffman.

There's a long way to go, and the other characters so far (Sam Adams, John Hancock, the Attorney General) are just crude caricatures, but I think the whole thing might be good.

Feast your eyes on the real McCoy people; some forefathers eye-candy for ya:

Saturday, March 15, 2008

Literature Update: Planning, Pricing, and Pissing Off

Do people plan?

John Bone, John Hey & John Suckling
Experimental Economics, forthcoming

We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making-namely, that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy dominance, we can infer whether subjects are planning or not. We implement three sets of experiments: the first two (the Individual Treatments) in which the same player takes decisions both in the present and the future; and the third (the Pairs Treatment) in which different players take decisions at different times. The two Individual treatments differed in that, in one, the subjects played sequentially, while, in the other, the subjects had to pre-commit to their future move. In all contexts, according to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over half the participants in all three experimental treatments do not appear to be planning ahead; moreover, their ability to plan ahead does not improve with experience, except possibly when we force subjects to pre-commit to their future decision. These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.


Zero as a special price: The true value of free products

Kristina Shampan'er, Nina Mazar, & Dan Ariely
Marketing Science, forthcoming

When faced with a choice of selecting one of several available products (or possibly buying nothing), according to standard theoretical perspectives, people will choose the option with the highest cost-benefit difference. However, we propose that decisions about free (zero price) products differ, in that people do not simply subtract costs from benefits and perceive the benefits associated with free products as higher. We test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods, but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price. In contrast with a standard cost-benefit perspective, in the zero price
condition, dramatically more participants choose the cheaper option, whereas
dramatically fewer participants choose the more expensive option. Thus, people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits. After documenting this basic effect, we propose and test several psychological antecedents of the effect, including social norms, mapping difficulty, and affect. Affect emerges as the most likely account for the effect.


Thinking Straight While Seeing Red: The Influence of Anger on Information

Wesley Moons & Diane Mackie
Personality and Social Psychology Bulletin, May 2007, Pages 706-720

Because angry people apparently rely on heuristic cues when making
judgments, anger has been claimed to trigger superficial, nonanalytic
information processing. In three studies, the authors found that induced
anger promoted analytic processing. Experiment 1 showed that angry
participants were more likely to discriminate between weak and strong
arguments than participants in neutral moods. Experiment 2 demonstrated that
anger overrode dispositional preferences not to process, causing even those
low in need for cognition to process analytically. Experiment 3 reconciled
these findings with previous work by showing that angry people used
accessible, valid, and relevant heuristics but otherwise processed
analytically, as indicated by attitude change and elaboration data.
Together, these experiments showed that angry people can have both the
capacity and motivation to process and that their selective use of
heuristics reflects the cue's perceived validity and not the failure to
process analytically.


Can an Angry Woman Get Ahead? Status Conferral, Gender, and Expression of
Emotion in the Workplace

Victoria Brescoll & Eric Luis Uhlmann
Psychological Science, March 2008, Pages 268-275

Three studies examined the relationships among anger, gender, and status conferral. As in prior research, men who expressed anger in a professional context were conferred higher status than men who expressed sadness. However, both male and female evaluators conferred lower status on angry female professionals than on angry male professionals. This was the case regardless of the actual occupational rank of the target, such that both a female trainee and a female CEO were given lower status if they expressed anger than if they did not. Whereas women's emotional reactions were
attributed to internal characteristics (e.g., "she is an angry person," "she is out of control"), men's emotional reactions were attributed to external circumstances. Providing an external attribution for the target person's anger eliminated the gender bias. Theoretical implications and practical applications are discussed.


Three comments: a shame that John Hey is a co-author on the first paper. I would love to cite the "Bone-Suckling paper." It would clearly be semenal. (Okay, I'm already sorry I said that. You won't tell anyone, right? That was just juvenile.)

Second: On the "free" paper: The point is that people underestimate the true costs of "free" stuff. And that's interesting. But I think it is safe to say that Elliott Spitzer would have been MUCH better off with what he was getting for free, from his wife, instead of what he was paying for, from Kristen.
In that case, at least, free really, really is better.

Third, Dan Ariely is a colleague of mine here at Duke. And he is doing some of the coolest stuff around.

(Nod to KL)