Saturday, November 19, 2011


To me, whether inequality is a problem/evil/worthy target of policy depends on how we reached that inequality.

For example, if the real incomes of bottom 20% were growing at 4% per year while the real incomes of the top 20% were growing at 6% per year, we would eventually arrive at a very unequal society. However, to my mind, it would not be a problem or a legitimate target of policy because the bottom quintile would be doing pretty well in an absolute sense.

Another way to say this is that I don't think policy in our current situation should be addressed at reducing inequality, I think it should be addressed at increasing opportunities for the group of people that are not doing well.

Another way to say this is that I'm not troubled by the super-rich, I'm troubled by the persistently high unemployment rates for people with limited education levels.

I could probably sign on to celebrate income inequality; but at the same time, I am very worried about the absolutely poor income trends for the bottom quintile.

It's just not obvious to me that taxing millionaires will help the job and earnings prospect of low skilled workers.

Friday, November 18, 2011

Room Assignment Puzzle

Question: Should Duke allow side payments in room assignment process?

Answer: why not?

Real answer: Nope, they do not allow it. And they are threateing "referrals." I don't know what that means, but it frightens me.

Big Day Tomorrow!

People, tomorrow is World Toilet Day (for realz)!

From the WTO (world toilet organization) website we are encouraged to:

"Join in the celebrations! Click around and find out how you can be part of World Toilet Day celebrations!"

How will you celebrate WTD?

Here is my fondest memory from WTD 2010.

So enjoy tomorrow, but don't be a turd burglar!

Hard Balls Banned In Toronto

As Jackie Blue notes, "Finally, the kids are safe."

Toronto bans balls of almost all kinds
(apparently really soft balls, like Nerf or Harry Reid's, are still okay).

This includes, remarkably, soccer balls. Yes it does.

State = Violence

I'm always surprised, and a little amazed, when my lefty bed-wetter friends say that there is no violence inherent in the state. People pay their taxes because they WANT to, don't you know. They keep quiet out of respect, not fear. In your mind, friends, that may be true.

In Portland, some cops just straight up pepper sprayed a girl in the face. (if this picture is real; can never know, of course).
(photo credit), click for a more burning image.

This video happened to be taken at about the same time. You can see some people trying to help the girl, on the right side of the view, as she screams and vomits.

The state IS violence. The state does not USE violence, it IS violence. Sure, maybe you think this girl had it coming. Or perhaps, to paraphrase Burke, you fall out with the abuses. The THING! The thing ITSELF is the abuses.

Thomas Hobbes had it right, and nothing has changed. It is not wisdom but authority that makes a political "law." Authority is power, backed by violence. And the reason the state exists is to be able to wield overwhelming, irresistible power, enough to "overawe" even the thought of resistance.

Now, mind you, I don't fault the police. This is dangerous work, the kids are breaking the law, and the kids are screaming vile things at the cops. The point is that all you lefties want a police state. How do you like it now?

Dems love welfare, Reps love corporations. Result?

Corporate welfare.

"The Occupy Wall Street protesters aren't good at articulating what they want, but one of their demands is 'end corporate welfare.' Well, welcome aboard... Republicans, for their part, favor handouts to the nuclear industry. Over the years the feds have provided billions of dollars in loan guarantees and cut-rate insurance to nuclear plants, though even nuclear-utility executives say new plants may not make economic sense in a world of cheap and abundant natural gas. Last month House Speaker John Boehner backed a $2 billion Energy Department loan guarantee sought by USEC Inc. for a uranium-enrichment plant in Piketon, Ohio...Yet the parade of subsidies gets longer each year, perhaps, as the old joke goes, because in Washington Republicans love corporations and Democrats love welfare. As House Budget Chairman Paul Ryan puts it: 'How can we save billions of dollars from unjustified subsidy and entitlement programs, if we can't get corporate America off the dole?'" (gated link to whole WSJ article)

(nod to Kevin Lewis)

Thursday, November 17, 2011

Your Euro Death Watch update

Spanish 10 year bond yields hit 6.975% today.


With no growth in sight for Greece Italy and Spain, high re-financing costs like this will make their debt ratios grow even if they manage to balance their budgets. Only large surpluses will stabilize those debt ratios if their cost of funds is 7% or above and economic growth is weak.

Good news, but will it last?

Jobless claims are down, industrial production is up, inflation is down, and consumer confidence is rising.


Now let's see what happens when the supercommittee debacle is fully revealed or one of the PIGS makes a break for it, Argentina style.

Wednesday, November 16, 2011

Things my Provost wants me to know

Apropos of absolutely nothing, the Provost's office emailed me this today:

"Pregnancy is not a disability under ADA unless there are medical complications. For OU employees we have to treat pregnancies in the same manner as we do other temporary ailments, i.e., broken leg or such."

1. I'm pretty sure that i.e. is not the correct pretentious concept here. I believe this is an e.g. situation.

2. pregnancy = broken leg? WTF? Does OU put body casts on all pregnant employees?

3. I need to know this today of all days exactly why?

Markets in everything: Dali Lama doody edition

yes, that is a statue of the Lama pooping! Caganers are Catalan Christmas favors. More here.

Aaron King: FInal Note

I got several "Why are you so mean to Aaron King?" emails.

Some context:

1. Aaron is one of our very best grad students. Hard-working, smart, lots of different projects started. He is going to be famous.
2. Aaron is irrepressible, one of those people who has to make a comment, start a conversation, create a controversy. I would never pick on most grad students this way. But you have to realize that Aaron needs to be the center of attention. (No, not as much as I need to be the center of attention. But NO ONE is as needy as I am.)
3. Aaron graduated from MSU years ago. Yet every day (EVERY. DAY.) he wears an MSU shirt, hoodie, and baseball cap. MSU is all he talks about (when he is not talking about work, which is what he mostly talks about).
4. Aaron does (as we say in the south) "favor" me. Except that he is better looking and more athletic, by a lot. So I think everyone understands that me comparing our looks is ridiculous. But Aaron's style of basketball play is quite similar to mine: neither of us really go around people, but rather we go through them.
5. Aaron's "rants" are famous, and about as sensitive as mine. An example. The Duke Parking office is a disgrace to pencil pushers everywhere. They are incompetent and a waste of a paycheck (that is larger than mine). I want to go to Subway for lunch, just so I can see some better service. Doesn't that sound like me?

My bottom line point is that, if you knew him, you would smack him, too.

Animal Cruelty

Angus sends this picture, outrageous on several grounds. Check it out:
First outrage: the animal cruelty. The poor dog has no idea of the humiliation it is suffering. Someone should shoot the poor dog.

And then shoot the person who did this: Aaron King. Years after leaving his undergraduate institution (MSU), he is still obsessed.

Okay, now the second outrage....Compare to THIS pic, of Angus and I watching the Cards get beat at Rangers park in Arlington.
Angus alleges that there are certain physical resemblances between Aaron and...well, me. The same stubby, thick legs, the same apologetic smile, the same bulbous head. This is outrageous because it is entirely correct.

Aaron and I have played basketball a few times, with him being "skins" and me... just being sweaty. The slapping and thwopping of wet skin, it sounded like a hippo wedding night. Oy.

To test the "look alike" thesis, Angus posed this question to Ms. Angus, showing her Aaron's picture: "Who is this?" Her answer, unequivocally: "That's Munger, when younger. But why would he humiliate that poor dog?"

Lagniappe: This all started when Aaron posted THIS on facebook: How long can I wander Duke's campus in an MSU shooting shirt without being heckled? Show some pride people! MSU would riot if a dookie was walking down Grand River....

To which I responded, in my measured, tempered way: For Aaron King: two things. No Duke student would think of making fun of an MSU fan. It's like making fun of Special Olympics kids, except that some Special Olympics kids can read. Second, good teams win. But a team need not be good to beat MSU. So, it's no offense to see an MSU logo, and no particular sense of accomplishment to beat MSU. The reverse? Where an MSU kid would be mad if he saw a Duke logo (assuming there was someone around to read it aloud to the MSU kid, so he would know what it said)? it's because Duke is something that's worth being upset about. Glad I could clear this up for you. It's the LACK of pride, and the presence of a justifiable inferiority complex, that would make it dangerous to wear Duke gear on Grand River.

lettuce spray

The only negotiations more screwed up than Hunter-Stern are those between the Dems and Reps on the (not so) Supercommittee on deficit reduction.

They are charged with producing $1.2 trillion in cuts and revenues over 10 years. That is $120 billion per year. Federal spending is running around $3.6 trillion PER YEAR. The deficit is over $1 trillion PER YEAR.

In other words, $1.2 trillion is peanuts.

We could take the full $1.2 trillion out of defense and never miss it. Defense spending is around $900 billion PER YEAR, so we'd be "crippling" the Pentagon by only giving it $780 billion PER YEAR.

The Canadians would probably pour over our border and conquer us at that point, eh? Well not really, because the cuts are not really cuts from today's levels but from a baseline of future increases. If sequester went into effect, the Pentagon budget would still grow over the next 10 years.

With Congress's deficit-reduction supercommittee barreling toward a deadline for striking a big budget deal, both parties are reaching for accounting gimmicks to help reach their target of $1.2 trillion in savings over 10 years.

Some tools are familiar to old Washington hands, such as massaging budget assumptions and painting rosy economic scenarios. Others include taking credit for "saving" money on wars that are ending and putting off until next year what lawmakers don't want to deal with now.

All told, none of these efforts make the fundamental policy changes needed for a long-term budget fix. "Suddenly everyone is talking not about deficit reduction but deficit-reduction gimmicks," said Stanley Collender, a budget expert and former congressional aide.

Give me that old time sequester, give me that old time sequester, give me that old time sequester, it's good enough for me. It was good enough for Gramm-Rudman, it was good enough for Gramm-Rudman, it was good enough for Gramm-Rudman and it's good enough for me.

Tuesday, November 15, 2011


I am often impressed by Keynes.
"the political problem of mankind: how to combine three things: economic efficiency, social justice and individual liberty" (Keynes, "Economic Possibilities for our Grandchildren")

Much less often am I impressed by Keynesians.

(Nod to Neanderbill)

Something Wrong With Any Man Who Wants to Work with Children?

David K writes:

Over the last week, I have heard a number of talking heads and sports radio types call for parents to be wary of men who want to be around boys. They say that we should err on the side of caution and question men who come into contact with youth. One lunatic in particular said there is "Something Wrong" with any older man who desired to commit his time and energy to being around youth.

I immediately recalled your article on this, and wondered what your thoughts were...

It seems to me that this kind of behavior could drive more men away from daycare and elementary school jobs as well as volunteer and charity related positions where they are sorely needed as role models for all children.

David, I don't have much to add. You said it better than I could have.

What We Have Here....Is a ComMUNicate.

Henry Olsen speaks a bitter truth.

I have been saying that BHO can't possibly lose in 2012, because he will be running against the idiot Republicans. Not the one chosen as Prez candidate, but the US House.

Repubs insist on making the same mistake over and over again. When the voters see what the Dems are actually like, the voters go "ewwwwww!" But that is NOT an endorsement of the bunch of whack jobs that the Repubs trot out, or the ideas they have for running our wars, our bedrooms, our borders, or our trade policies.

Anyway, I think O, Henry has this right.

The big question

Over at MR, Tyler pops it: "to what extent can a boost in nominal flow make up for a shortfall in wealth?"

The US economy suffered a severe real shock. Housing prices collapsed, equities fell. People discovered they were a lot poorer than they thought as 10s of trillions of wealth disappeared.

Individuals stopped spending and tried to start saving, cutting debt loads and re-building their balance sheets.

Meanwhile, our government has replaced the private debt binge with a public debt binge and "encouraged" saving by nailing interest rates to the floor.

These two moves are entirely incompatible with people's desires to rebuild their balance sheets.

Of course, the moves were undertaken to increase output and reduce unemployment. However, those results have been far short of overwhelming.

Many advocates of NGDP targeting argue that it works via an expectations channel. A rough version of the logic is, if real growth is low, the Fed will be creating inflation, which will erode the value of my money, so I better go spend it now!

I know I'm treading dangerously close to getting a Samuelsonian lecture on the paradox of thrift, but it's been three years now and the economy still stinks. I am not sure that this sad state of affairs is because we haven't punished savers enough.

Monday, November 14, 2011

Go Home! Beat It!

Skeptical that this is real.

But if Tommy the Brit sends it, can it be fake?

Penn State Football v. Duke Lacrosse

Okay, so I was gritting my teeth not to write this because ... well, because why make trouble, right?

But it has to be said.

In the late spring and summer of 2006, the New York Times and other media half-wits went looney tunes over the fact that the Duke administration did not do enough to punish, horsewhip, castrate, etc. the young men of the lacrosse team. Selena Roberts and Nancy Grace stand as having behaved in ways that were especially intemperate. (No really, just take a minute and watch the Nancy Grace thing. It's worth it).

But... our President said "whatever they did do, it was bad enough." Our coach was fired, and the season was ended. The team was humiliated, and subjected to a variety of threats and psychological harassment.

AND THEY HADN'T DONE ANYTHING! There is no evidence that they did anything at all, other than foster under-age drinking. (Hiring strippers is legal, no matter how much you might disapprove on hypocritical moral grounds.) (There may have been racial epithets, according to the woman who said she was raped but wasn't.)

No assault, even. More people died at Chappaquidick than at that house on Buchanan Ave. in Durham. More sexual assaults occurred in the Arkansas Gov's mansion in 1988 than at that house on Buchanan Ave. in Durham.

And now... well, now we are all hearing a little, pretty late, pretty little, outrage about Penn State. At Penn State there WAS a rape... of a child, by an adult. And the administrators did nothing. When finally Joe Pa was fired (unbelievably, his compromise was to finish out the season. nice.), the students actually rioted to protect him. No "castrate" signs.

So, if it's football, there is no race element, and the offender is a pedophile, we'll remain calm? Because it's okay to protect football coaches, because they are more important?

Okay, yes, I understand there has been no trial, no admission of guilt. But there appears to be an eyewitness, Mike McQueary. And he TOLD THE ADMINS, INCLUDING JOE PA, WHAT HE SAW! There was an obligation to go public immediately, and given what was known the coach had to be fired and turned over to the police. The defense "there has been no trial" is only true because Penn State systematically suppressed evidence and kept back information. We'd know by now, if the trial had gone forward, about guilt or innocence. I mean, even the devil was appalled.

Joe Pa, we hardly knew ye. How could you possibly have allowed this to go on? All you haters who were mad at Duke... are you proud, now? This is one hundred times worse on every dimension. Except on the guilt of the "bad guys" dimension, where it's infinitely worse, because there are actual bad guys.


We Get Letters! Euro-zone inflation...

Will C writes: I recently listened to a Russ Roberts podcast interview where you discussed inflation, among other things. I thought of your interview when I recently read that Italy was suffering from inflation. I wonder if you could answer a question - on your blog or whenever time permits - about Italy, the Euro, and inflation.

I figured that inflation would be about the same in all of the Euro countries since they have a common currency. If inflation is a monetary phenomenon how could Italy have inflation but Germany does not? Perhaps what I read is incorrect and Italy is not experiencing inflation.

The answer is not very interesting. Inflation rates do NOT differ much in the Eurozone. Maybe from a low in Germany of 1.4% to a high of 5% or 5.5% in Estonia. As for Italy? Not so much: Italian inflation is up to 3.5%, from 2.2%, but that's not really inflation.
(click for a more inflated image!)

The differences are changed in measured relative prices in the index calculated from a survey. The biggest components are housing, food, and clothing. These change at different rates (though not MUCH different) in different countries. Some of it depends on barriers to external trade, since there are no formal trade barriers within the EU.

Here is some info: In September 2011, the lowest annual rates were observed in Ireland (1.3%), Sweden (1.5%) and the Czech Republic (2.1%), and the highest in Estonia (5.4%) and Lithuania (4.7%). Compared with August 2011, annual inflation fell in seven Member States, remained stable in five and rose in fourteen.

So the "always and everwhere" bit is a matter of DEFINITION, not CAUSE. The claim is that inflation in the EU cannot be consistently greater than the rate of increase of the money supply (though as we see in the US, it can be less). But there can be changes in relative prices, which will affect measured inflation, sometimes quite sharply. Is that "real" inflation? As far as the people paying the higher prices, sure. But in terms of definition, I'd say no.

Malagasy Miracle?

In an article about South African led political negotiations in Madagascar, WSJ reporter Peter Wonacutt says a couple surprising things about Madagascar:

"Rich in vanilla, coffee, cocoa and minerals, Madagascar has long been an economic miracle waiting to materialize."

"the first since a military-led coup in 2009 upended one of Africa's most promising economies."

The article also shows a graph of the country's recent growth rates:

What the article doesn't show or discuss is Madagascar's demographics. Almost half of the population is below age 15. Population growth has averaged between 2.5 and 3 percent. Thus, per-capita GDP is not growing anything like what is shown in the graphic.

Mrs. Angus and I were in Madagascar for 3 weeks in 2008, before the coup. There was really only one good road in the entire country (from the Tana airport to the town to the Andasibe-Mantadia national park). Transportation infrastructure in the South and West was non-existent (We didn't visit the north).

Villages were filled with babies that had just had babies, and the country appeared not to have any old people at all. There was only one airline in the country and flights left whenever all the ticketholders arrived (this could be either substantially early or extremely late). One of the main occupations in rural areas was chopping down trees to make and sell charcoal.

Finally, exporting primary commodities has not proven to be a reliable path to achieving development.

Two caveats. First, I'm not a Madagascar specialist. But given my experiences in that country and knowledge of its demographics, I was stunned by the interpretation of its economy given in the article. Second, Mrs. Angus and I had a tremendous visit to the country. We thoroughly enjoyed it and would recommend such a trip to any semi-adventurous travelers.

Sunday, November 13, 2011

Tim Blair Rulz

You likely know this already. But Tim Blair rulz.

Satire? One hopes

Why would D. Kos give space to this.... writer? Check this out.

Money quote: "While Communists are certainly responsible for more deaths and misery than the Nazis could ever dream of, at least their intentions were good, so I'll give them a pass." Well. Well, well, well.

The Bishop Brings It!

A pleasure to hear the Bishop share so many truths.

He's not just another pretty face.... he's smart!

Economic Freedom Videos

These are well done. The first....
The second...

Markets in everything Sustaining the crunch edition


Yes, this is a real product, called Obol, available from Amazon.

Hat tip to Mrs. Angus who wants one real bad.

Dan Klein: I am wrong, and so are You

Interesting piece in the Atlantic by uber-mensch Dan Klein.

(Nod to Herr Fuchs)

Dog Pianista

hard to know if it's "real," but it's pretty funny.

Premise is that owner put up camera when away. Maybe...

(Nod to Shirley and the LMM)