I'm not sure why y'all bother coming here; you might as well just go see the Volokh brothers, since I send you there every three posts anyway. But -- sigh -- go check out this terrific piece on employment at will. Tasty snippet:
This reasoning is, I think, quite sound, up to a point; indeed, as a matter both of kindness and good business planning, an employer should cut more slack to an employee who had done a great job for years. But the point of my original post was that not all unfair behavior is illegal, in the employment relationship or outside it.
I say it again: Not all unfair behavior is illegal. And our economy would be in real trouble if it was, because making unfair behavior illegal means making illegal any behavior that some jury will eventually find to be unfair. That would be some jury composed more of employees than employers, and some jury that -- because of basic human nature -- will sympathize more with the visible plaintiff who lost her job than with the coworkers or customers or stockholders who might be hurt by the plaintiff's (or other employees') lack of skill.
Meanwhile, Steve Chapman does a lovely job shredding Bush's mental health grandstanding:
Never mind his party affiliation. On this issue, Bush sounds like an old-fashioned Democrat, acting as though a pure heart is all you need to understand the wisdom of a bigger government role. "Americans with mental illness deserve our understanding, and they deserve excellent care," he declared.
It's fun to give people what they deserve if you don't have to pay for it. Many people run for office so they can play Santa Claus year-round with someone else's money. Regrettably, someone does have to bear the cost of more generous health insurance. The Bush plan is vintage Clinton: Give Washington the credit for doing good, but send the private sector the bill, and let someone else worry about the consequences.
Bush hasn't spelled out all the details of his approach, but the White House said his goal is "maximum parity" between coverage for mental and physical illnesses. The chief bill on Capitol Hill, sponsored by Sens. Pete Domenici (R-N.M.) and Paul Wellstone (D-Minn.), would compel equal coverage for all mental illnesses. Bush may not go that far, but he apparently will demand equal insurance at least for the most serious disorders.
Supporters of the tougher mandates assure us that the cost will be trivial--increasing current premiums by no more than 1 percent. But that still amounts to some $23 billion a year, and if there is any iron law in Washington, it's that health-care benefits always end up costing more than we are told by the politicians who approve them.
What the advocates fail to explain is why American businesses would refuse to provide something that is so cheap and yet so valuable. Employers don't have to provide any health insurance at all, and those that do are not acting entirely out of the kindness of their hearts. Most do it because they have to compete to attract and keep good workers. If mental-health coverage were something treasured by employees and easy to afford, you can be sure that businesses would be knocking each other down to provide it.
In fact, companies are not only declining to offer such broad coverage but resisting congressional efforts to force it down their throats. That suggests they don't believe mental- health "parity" is quite the free lunch it pretends to be.
Now whom should we believe: Managers whose company health and survival depend on their ability to tell the difference between money-losing and money-making ventures? Or politicians who can call on the Treasury to cover their every whim? In the end, the president and Congress don't worry too much about the cost--because they won't be paying it.
RETIREMENT INSECURITY. Seniors are headed for serious trouble. The Times reports that corporations that used to provide generous health benefits for retirees are cutting back dramatically. This follows a study released last week by the Economic Policy Institute showing that despite the recent unprecedented stock market boom and proliferation of 401(k) retirement plans, typical Americans now facing retirement will have to tighten their belts harder than previous retirees. More findings: More than 40 percent of households headed by someone between the ages of 47 and 64 will not be able to replace even half of their pre-retirement income once they stop working. Nearly 20 percent will have retirement income below the poverty line. How will they be able to afford health insurance? Do tell.
Well, if the retirees are over 65, they're getting it from Medicare. Or is it also our civic duty to fund early retirement for those who desire it?
Seriously, this is a big issue, though Tapped misses the story, which is this: there will soon be fewer than 2 workers in the work force for each retiree. No matter what law we pass against it, unless we radically increase either our birthrate or immigration (or implement a radically stepped up drive for euthanasia), we're going to have to cope with this sooner rather than later. Because simple math tells us that 2 workers cannot support retirees in the same lavish style as 3 workers currently do, unless those two workers are willing to curtail their own lifestyle -- or productivity takes a radical leap.
Privatisation, I hear you cry? Well, it's sure better than what we've got. Giving money to government destroys productivity; the bigger the share of your economy the government has, the slower your GDP grows. (Per-worker productivity in the EU is often higher than ours, but this is not because the government is efficient; it is because the government has made it uneconomical to employ lower-productivity workers, who are instead on the dole. The overall economy is still less productive.)
Investing money in the private sector, on the other hand, increases productivity (on average; not in every single instance. Take your silly inummerate arguments elsewhere, please). But that doesn't mean that if we invest more money in the private sector, we'll produce enough productivity to support retirees in the style to which they've become accustomed. And it doesn't matter whether that support comes from social security, bond interest, or dividends; retirees are using more goods and services than they're creating. It's a net loss to the economy.
What do we do about this? You know the answer. We're not going to get to retire, folks. We'll be working until we drop dead in the traces. So find something you like to do, baby, because you're going to be at it a loooooooong time.
Juan Gato is assembling a list of gun-rights editorials that all seem to be working from the same cheat sheet. Well, he can add one more: The Philadelphia Inquirer. And I think this is the cheat sheet.
A letter on the Second Amendment from the LA Times:
Thank you for printing the text of the 2nd Amendment, a careful reading of which resolves all controversy as to its meaning. Atty. Gen. John Ashcroft's interpretation mistakenly focuses solely on the second half of the amendment ("the right of the people to keep and bear arms shall not be infringed") and completely ignores the first half, which sets a clear condition upon that right ("A well regulated militia being necessary to the security of a free State").
The structure of the complete amendment makes clear that if the condition that is set out first is not met, then the consequent right has no foundation and ceases to exist; otherwise, why refer to a militia at all? Today, that condition is not met: a "well regulated militia" is no longer "necessary to the security" of a state, as we have a professional standing army. Since the amendment's "right of the people to keep and bear arms" is conditioned upon the need for a militia to maintain security, the fact that no such need any longer exists means that the right of the people to bear arms no longer exists, either.
I'm sure the NRA won't be persuaded; but then I'd like to know why its members believe the authors of the amendment commenced it with that reference to a militia "being necessary," instead of going straight to the right itself? Sloppy writing?
The writer, one Michael Hinckley, is both lexically and grammatically challenged. If we're going to deconstruct the text, we must first look at what the militia is. He's absolutely wrong that we no longer have one; the 1956 militia act says that we do, and we (at least those of us under 46) are it.
(Side note: could we take guns away from people over 50 based on this reading? Professor? Professor?)
He's also wrong about the text. The main clause of the text is "the right of the people to bear arms, shall not be infringed" (-2 for the unnecessary comma, Mr. Founding Father, and if I see an error like that again, you'll be spending two free periods a week over at the Reading Center).
Anyway. "A well regulated militia being necessary. . . " is a clause. It is not the main purpose of the sentence. Nor is it a conditional or subjunctive clause, which would imply that it restricts the action in body of the main clause. Mr. Hinckley states that it is a condition, but it is not; conditions are properly demarked with conditional statements, usually prepositional phrases, such as "in the event that" or "as long as", or simply "if". No conditional markers, no condition. The clause in question is a simple modifier of the main clause. Those against the Second Amendment always say, "well, if the Founding Fathers had wanted individual people to have guns, why didn't they make it explicit?" The answer being that they thought they did: the People are the entity that is not the state. Even if you wanted to talk about only letting the militia have guns, that militia would not be subject to state control; the States are a separate entity by the lexical logic of the constitution. But anyway (all right, all right, -1 to me for starting the sentence with a conjunction) I'm pretty sure that the Founding Fathers did know what a conditional phrase looked like, and could have used one if they'd chosen to. They didn't. Random speculation about all the things the Founding Fathers could have done, but didn't, is now over.
Now, I know that lawyers make more sophisticated readings of the text based on original intent and all that. That's not my territory. But when you begin to talk about English grammar, you'd better be prepared to defend your assertion. Mr. Hinckley falls far short of the mark.
But given that Mr. Michael Hinckley apparently has to wait for the LA Times to print the text of the Second Amendment, because he is unable to find a copy of it in the approximately 8 zillion locations in which such a thing is available, I was probably expecting too much from the letter in the first place.
Okay, the archives are getting ridiculous. Can someone tell me how to make each file go on one line? and while you're at it, how do I make my columns line up with my banner? I should probably note that I can't pay for this information with anything except my eternal gratitude, so unless it's an easy fix, don't stretch yourself.
I very much enjoyed this headline/blurb from the New York Times:
Two Paths for Khost: Warlord or Professor By BARRY BEARAK A battle of will between a warlord accused of killing 36 people and a sociology professor has emerged as an early test of Afghanistan's nationhood.
All right, I'm not saying I'd want to eat at the same lunch counter with one, and I sure as heck wouldn't want my sister marrying one of 'em. But If you prick a sociology professor, does he not bleed? If you tickle him, does he not laugh? If you poison him, does he not die? And if you are a warlord and you kill him, is he not just as dead as the other 36 people you killed?
An old joke: A farmer hears suspicious noises in his henhouse. "Who's there?" he calls out. "Nobody here but us chickens," replies the thief. Satisfied, the farmer goes back to bed.
That about sums up the behavior of federal regulators during California's electricity crisis. As I've been pointing out for more than a year, there is powerful circumstantial evidence that market manipulation played a key role in that crisis. Energy companies had the motive, the means and the opportunity to drive prices sky-high. And the crisis exhibited exactly the features you would expect if market manipulation was playing a big role: much of the state's generating capacity stood idle even as wholesale electricity prices went to 50 times normal levels.
An old joke: an engineer, a chemist, and an economist are stranded on a desert island with no food source but the ton of canned goods sitting on the beach. (Where'd it come from? I don't know. Doesn't matter to the story.) They are trying to figure out how to open it using only the sparse vegetation found around the island.
The engineer gets to work making a complicated catapault device to burst the cans on impact with the sagebrush.
The chemist gets to work trying to extract acid from the local plants.
The economist, meanwhile, sits on the beach. When the other two ask him what he's doing, he says. "The problem's very simple. First, we assume a can opener. . . "
That about sums up Paul Krugman's behavior in the California energy crisis. He's assuming the Bush Administration is guilty. He'll get around to finding the actual proof some other time.
"Energy companies had the motive, the means and the opportunity to drive prices sky-high"? This is evidence? Paul Krugman had the means, the motive, and the opportunity to plot the assasination of Andrew Sullivan, but I misdoubt he's put them into action. As for that idle capacity, unless I missed a memo, I'm assuming he's referring to the plants that went down for routine maintenance. Probably that generators were not particularly eager to get that capacity back online; I'm sure that they weren't after the state refused to pay. But the maintenance, was, in fact utterly neccessary; as the internet boom fueled consumption, the generators had run their plants flat out the previous summer without breaking for routine maintenance. Or so I'm told by people who ought to know. I'm also told that to the extent that plants were held idle, it was because there was insufficient transmission capacity for the power they could have generated. It was not part of some vast conspiracy to defraud the public -- if refusing to sell people something they want at the price they want to pay can be called "fraud".
Yet federal officials, from George W. Bush on down, offered California nothing but sermons on the virtues of the free market. The Federal Energy Regulatory Commission, which is supposed to police these things, found no evidence of foul play. Essentially, FERC asked energy companies whether they were manipulating the market. "Who, us?" they replied — and that was that. My favorite FERC study found that power companies had the ability to exercise "market power," and that it would have been profitable for them to do so, but that there was no evidence that they actually had. Those power executives must be swell guys!
Amusingly, Krugman fails to mention that there's nothing FERC could have done, because all of this was legal. At least I'm amused.
The significance of the "smoking gun" Enron memos that came to light a few days ago is that they show exactly how swell those power executives really were. It turns out that Enron was indeed rigging the markets, with schemes that had smart-alecky nicknames like Fat Boy, Death Star and Get Shorty. Who said business isn't fun?
So the big problem with all this is that traders are wiseasses. If they'd just named their trading strategies after the 12 apostles, we could live with it, but movie titles -- can we give them the death penalty for transgressing on the sacred name of Tarantino?
These memos came to light despite FERC's evident determination to see no evil. (We now know that the Bush administration in effect allowed Enron to choose the commission's members.) As one California official put it: "FERC is like a parent who doesn't want to believe their teenager has gone bad. The memos are significant because they are like finding a diary in the kid's backpack saying, `I robbed the liquor store.' "
Physical reality: Ken Lay threatened one guy, who was subsequently axed. This guy was the head of the body. While this looks bad, I'm also seen enough firings to know that often what seems like a smoking gun is just a coincidence inflamed by an acrimonious imagination. What woman hasn't had at least one female colleague tell them that the reason she got the axe was clearly sexual discrimination -- rather than the gross incompetence we knew to be the actual cause?
Krugman Reality Lite (1/3 less facts than regular reality): Enron was allowed to choose the staff of the entire regulatory body, which we may infer was staffed entirely by the layabout cousins, ex-drug-dealing buddies, and third grade Sunday school teachers of Ken Lay.
The great risk now is that this will be treated purely as an Enron story.
. . . because though the New York Times staff has said Enron and Bush together so many times that they now sound like one word when they say it at cocktail parties, people seem to be curiously stubborn about waiting for evidence before they indict Bush along with Ken Lay.
That's wrong; Enron was mainly a trader rather than a power producer, and as such could have only limited impact on electricity prices. The bigger story involves market manipulation by a number of producers. The circumstantial evidence for that manipulation is overwhelming. And if no smoking-gun memos have yet come to light, what do you expect? The Enron story shows just how easy it is for companies to cover their tracks, especially when the regulators are in their corner. If Enron hadn't lost its clout by going bankrupt, you can be sure that we would never have heard about Fat Boy and Death Star.
What's the circumstantial evidence? That prices went high, even as capacity was offline. Well, a shrinkage in the supply would naturally cause a rise in price. . . oh, he means that the generators were manipulating things? But I thought this article was about how we should indict the traders, who had little generating capacity. . . Tarzan confused. Should we indict the traders because the generators took their capacity offline, and is making up obnoxious nicknames a felony or a misdemeanor? Or should we indict the generators because utility expert Paul Krugman thinks that their maintenance took too long?
But he does make a point I've been screaming about for days: Enron may have profited from the shortage of supply in the energy market, but they didn't raise prices (they conspired to sell above the price caps on in-state power, raising total cost, but not the actual price) and they didn't cut supply. That was due to a number of factors, all, I argue below, due to government's thinking it was smarter than the free market.
There is, however, one specific Enron angle here. I may have done Thomas White, secretary of the Army, an injustice. He ran Enron Energy Services, a division that — or so I thought — was mainly used as a way to generate phony profits, inflating Enron's stock price. But the division turns out to have had another role: to create phony energy transactions, inflating Enron's actual profits at the expense of the state of California. Why, exactly, is Mr. White still in office?
No idea, but to be honest, I'm not really that concerned that he's going to start arbitrage operations with the 7th cavalry.
What really annoys me in this story, however, isn't the behavior of the energy companies. It isn't even the behavior of the Bush administration — though the administration not only stood idly by while California was robbed of around $30 billion, it also shamelessly exploited the state's misery to promote its own, utterly irrelevant energy plan. (Now, of course, that same energy plan is essential to the war on terrorism.)
After reading Paul Krugman's column for months, his psychic powers are rubbing off on me. To wit: after I read the first paragraph, I knew that somehow, this was all going to be the fault of the Bush administration. I didn't know how, exactly: whether we'd find that George Bush was sneaking out of the White House at night to throw wrenches in the turbines down at Calpine, or whether maybe he and Ken had come up with the Nicknames of Evil while they were taking a break from figuring out how to run Enron into the ground. Of course, back then, at the beginning of the article, I couldn't have known how shamelessly evil the Bush Administration would turn out to be, shamelessly refusing to force other states in the area to sell power they needed for their own citizens to California, or nationalize the power companies. But I knew it was somehow the fault of the Bush administration.
No, what bothers me is the position taken by so many business and political commentators: that the California catastrophe says nothing about the risks of deregulation and the dangers of loving free markets too much. It was California's own fault, they say, for creating a "flawed" system — a wonderfully vague term that evades the necessity of explaining what really happened. In fact, the main flaw was that the system contained no safeguards against market-rigging.
And I'm sure that there will be a determined effort to ignore even these latest revelations. After all, why let facts get in the way of a beautiful, and politically convenient, theory?
It certainly says something about the risks of deregulation. It says that if people want to imagine that they can get something for free, they'll be in for a rude shock somewhere down the line.
Paul Krugman has railed against the "spot market". I assume he is not, in fact, proposing eliminating the spot market, as that would make the system -- well, let's just say, unless he's got an innovative plan I don't know about it, it would eliminate liquidity and make the system highly unstable. But the madhouse plan to buy all power on the spot market was the brainchild of the de-regulators, and Governor Davis could have eliminated the problem any time he chose by permitting long-term contracts. But no, Davis had to step in and do it himself, and being totally clueless about how to negotiate a power contract, stuck the state with permanently higher prices. California's woes are due to grandstanding, not the traders.
But what about the memos? Arnold Kling has actually read them, which is more than 99% of the people yelling about them have bothered to do. (Note for a later rant: my experience in actually reading The Bell Curve and then having long arguments about it with people who hadn't read the book.) And if you actually read them, he says, what they describe is rather commonplace arbitrage operations with rather lurid names.
Certainly, Enron profited from California; all the traders did. But the power suppliers, you notice, went broke, not the people of California who are still, last time I looked, refusing to pay for all the power they used. And though the market structure was brutally flawed, that says more about government than it does about Enron. Which is to say, that when government has the power to hand out goodies or declare what companies live or die, those companies will invariably try to influence the process in their favor.
Nor would you really want it any other way. If you're a responsible citizen who actually knows how a business works (and doesn't, let's not forget that; corporations are finely tuned machines only in comparison to their governmental alternative) you know that to actually let the labor, environmental, and consumer groups that want to set the rules for business to make those rules without any input from the firms involved would be a total disaster. So you have to let both sides be involved.
But we are not a perfect species. Think of all the different businesses that every state legislator is expected to know how to run: bakeries, foundries, steel makers, technology firms, gas stations, beauty salons, nightclubs, construction companies, car rental firms, oil refineries, insurance companies, chemical manufacturers, doctors, lawyers, dentists, airlines. . . and that's just a small fraction of highly regulated businesses that came to my head. Your legislator is expected to divine what regulations will work and which will be disastrous, and to know exactly how every line of the law he just wrote will be executed in practice. It's not possible. Sometimes he errs in favor of the activist groups; sometimes in favor of the business groups. But no matter how well intentioned he is he won't get it right every time, because that's not in human nature.
So you can't take the business influence out of making laws, you say; that's why we have regulatory agencies.
But regulatory agencies are no less prone to corruption than lawmakers. Look at where regulators go when they aren't being regulators any more: they go to work for the companies they regulate. This is utterly natural; if you've just spent 10 years being a utility regulator, that's what you know. It's go to work for the companies, or apply to air-conditioner repair school, and those schools often have waiting lists.
I had an interesting correspondance about this with one of my left-leaning readers. So make it illegal to work for those companies, said he.
I think that a permanent ban would violate the constitution, I pointed out. But anyway, if you did this, then no one but incompetents will work for the state; regulatory jobs don't pay well enough to attract top flight talent without the access to the private sector.
So raise the salaries, he said.
But most regulatory employees are civil service, I pointed out. You can't raise their salaries without raising the salaries of every other employee at their level in the state. And the ones that aren't would have to make more than the Governor to compete with private sector salaries. It would never get passed.
His response: change the civil service rules. And (I am not making this up) put the corrupt or incompetent regulators in place and then hope that at some undefined point in the future, the public would realize that they need to pay their regulators more to get good ones.
He's well meaning. But he's gotten so focused on his goal that he's ignoring all the other costs. If you know anything about government, you know that ripping out the civil service structure would be more expensive than giving everyone in the state their own generator and unlimited diesel to fuel it. And if you know that the regime you're proposing is going to be corrupt or incompetent, but you propose it anyway because of a dogmatic desire for regulation, how can we take that seriously?
Now, to be fair, Paul Krugman isn't a regulatory specialist and I'm not either; what I know I know through my dad, who deals with such issues as part of his job. And Paul Krugman certainly has better access to all sorts of journals and documents written by top-flight economists that I can't afford and don't have time to go to the library to look up. So there may be better economic arguments against deregulation than he's making. But that's my point: he's not making them. He's using scary names like Fat Boy and what have you. He occasionally throws in a technical term. But he doesn't actually explain the underlying economics. I know (Lord how I know) how hard it is to explain even basic concepts to a general audience. Nonetheless, this is inadequate. I was looking for the underlying facts on which he bases his argument; I found one. The capacity was idle while prices were high. Which has an explanation, the credibility of which neither I nor Krugman are qualified to check. He offers no other backup, such as statistical analysis, on which he would be qualified to comment. If he wants to hang this scandal on Bush, Enron, or the free market, where's the beef?
On the other hand, deregulation can work; Pennsylvania's is. So he clearly cannot say, unless he offers proof that the people in Pennsylvania are wrong and their deregulation isn't working, that it just doesn't work. California's was clearly FUBAR, but that would seem to me an opportunity to learn what doesn't work than to declare that deregulation is a failure. That's the whole point of de-regulation: you experiment, and then when you get it wrong, you do something better.
And at root, in my eyes, that was where California had a disaster, rather than a bump in the road to free markets. They thought they could get something for free. There were three basic ingredients for California's crisis which could have caused the crisis all by themselves, even if the traders hadn't profited, and they were all due to California's abandonning the principles of TANSTAAFL.
First, inadequate generating capacity. California is a huge importer of power, much of it from Canada (oops, Paul Krugman forgot to go after the evil Chretien administration for not stepping in to help California). California's peak loads are very close to total generating capacity in the area; if something goes wrong, (like the low reservoir levels that resulted in inadequate hydro supply in the Northwest) they are vulnerable. This insufficient redundancy has not been resolved, and long term contracts or no, if California doesn't get more capacity in the area, it will continue to be vulnerable to blackouts.
Second, consumer price caps. Electricity is inelastic, but not that inelastic. San Diego saw a nice decrease in power usage because they raised the price to consumers. Remember, power is priced on marginal cost: the cost of the last (most expensive) unit generated to cover demand. Lowering demand even slightly can lower price greatly because the power company doesn't have to buy any more from the very high cost emergency sources they use to cover excess demand. In the rest of the state, meanwhile, people continued to run their air conditioners until the power went off. Why? It's the tragedy of the commons. If you don't run your air conditioner, and everyone else does, you're hot and miserable and the power still goes off. That's why the price signal is vital. But Gray Davis didn't want that price signal to go out -- so consumers got blackouts instead.
Incidentally, perhaps you should meditate on the fact that Krugman disbelieves every word from the energy traders and generators, while simultaneously swallowing everything said by the people from the Davis administration, who are every bit as desperate, if not more, to cover their asses.
And third, the insane plan to buy everything on the spot market. Why is this there? At the behest of the evil Enron lobbyists? Gosh, I have no idea -- I don't work for a California state legislator, and am not privy to their gossip. But Krugman doesn't know either. And I do know enough about government to know that if the legislators who passed the bill had had any inkling about what was going to happen, they wouldn't have passed it; they aren't that venal, and even if they were, they have a keen eye to their own interest, which does not include being ridden out of town on a rail by a crowd of angry power users. I know why they thought it would work: because they thought that power prices would continue to fall, even though they didn't understand too clearly the market forces that had made it fall in the first place, and could certainly have looked around and noticed that all the environmental and consumer regulations they were busy passing had left the state a little short on generating capacity. They wanted to make sure that the utilities would keep getting the best price; hence, the spot market, where the price would always be the freshest on the market. In other words, they thought they knew better than the free market, where no company tries to meet its full demand for any vital commodity on the spot market.
Blaming deregulation for California's woes is like blaming painting for Thomas Kincade. The way in which the deregulation was done was faulty; it allowed interest seeking traders to take advantage to their own profit. But if you think that the state will find a way to outlaw people and businesses seeking their own interest -- well, I refer you to every single worker's paradise. The best we can hope for is to harness that interest, and the best way we know how to do that is, yes, the free market. To paraphrase a famous quote: in California, deregulation was not tried and found wanting; it was found unpopular and left untried.
Update If you want to hear what a regulatory economist does have to say about California, check out testimony from Bill Hogan, who designed the Pennsylvania/Maryland/New Jersey scheme.
So I'm reading this Washington Post Editorial on "Justice and Guns" -- justice being the Department, rather than the concept, the statue, or the baseball player, any of which would probably made a more interesting editorial. But anyway. This phrase caught my eye:
The Justice Department traditionally errs on the other side -- arguing for constitutional interpretations that increase congressional flexibility and law enforcement policy options. The great weight of judicial precedent holds that there is no fundamental individual right to own a gun. Staking out a contrary position may help ingratiate the Bush administration to the gun lobby. But it greatly disserves the interests of the United States.
How delightful. May we assume now that the Washington Post will come out full force behind the traditional law enforcement activity of seeking to narrow Fourth Amendment rights in order to "increase congressional flexibility and law enforcement policy options"? Mmmm? Or argue that the "great weight of judicial precedent" in favor of separate but equal should have restrained Bobby Kennedy from pushing those nasty de-segregation cases?
Didn't think so. Of course the policy conforms to the administration's position on gun control (a position I, and a growing number of constitutional scholars, happen to think is the right one). But it's more than hypocritical, it's down right ridiculous, for the Post to chastise Ashcroft merely for choosing to have the organization he heads support stricter interpretations of some amendments than others, when in order to even make the argument, the WaPo has to do exactly the same thing.
There are some things that, in their own little way, give you a peek inside the life that someone else is living. For example, you can go to this website and realize that there are people who are genuinely filled with excitement to learn that the ACI 318-02 Structural Concrete standard is here at last!
KrugmanWatch teaser: this study finds that Paul Krugman effortlessly cruises to the top of the list for partisanship -- this from the business editorialist at Tom Brokaw's "centrist" Times. Tune in for the complete coverage later.
Professor Tinkler says that most people in America don't need a college education: we're using it to make up for the shameful holes in their secondary education. And, I might add, to give them four years to spend drinking and necking in a responsibility-free zone. But that's another rant.
Doug Turnbull doesn't post often enough, but when he does, it's gold -- like this post on game theory and the Palestinian strategy. Here's a taste:
the Palestinian strategy of maximizing the number of attacks also illustrated a failure of strategic thinking, because it assumed that the past form of the game (terrorist attacks followed by limited Israeli attacks) was the only form it could take. They didn’t see that Israel had a second option open to it, which was the large scale military assault on the territories. And the Palestinians foolishly escalated their attacks to the point that, even in a short term analysis, it was less costly to the Israelis to mount a full scale assault than it was for them to maintain the status quo.
I don’t have the numbers in front of me, but during the weeks of the recent Israeli military action, I think they lost something on the order of 50 soldiers killed, with only one smaller terrorist attack occurring during this period. In contrast, in the weeks leading up to the assault, the Israelis were suffering a deadly terrorist attack almost every day. So, amazingly, the Israelis were actually suffering fewer casualties during a full scale assault on well armed guerillas operating in fortified and booby trapped urban terrain than they were by remaining on the defensive. And this is just looking at it from the short term and ignoring the hoped for disruption of the Palestinians ability to plan and execute attacks in the future.
So where does this all lead? I’m not sure, because for game theory to have any predictive power, the players have to behave in a rational manner. And there’s pretty strong evidence that the Palestinians are no longer behaving rationally. Their goal is no longer to maximize their own utility, but instead to inflict maximum damage on the Jews, regardless of the cost. What started out as a possibly rational, if evil, strategy of terrorist attacks, has devolved. The ends that were being pursued (a Palestinian state) have been lost, and the means to achieve that end have become elevated into ends in themselves. The terrorism now serves no outside purpose—it has become its own justification.
Addendum: The above analysis becomes more complicated when you factor in the idea of information transfer and signaling of intentions--actions have value not just in their direct payoff, but also in their ability to influece the other player by showing them your intentions, in this case your willingness to pay a high price for victory. But that's not worth getting into right now.
The main problem with game theory is that it presumes largely rational players. The problem, I think, is that the internal politics of the Palestinians have rendered the conflict irrational -- a losing situation for everyone.
Will the people who ordered gear from my CafePress store please email me when you get it to let me know how it turns out? My baby doll t-shirt is on the way, but I want to know how people fared with the other logos.
The Wall Street Journal is reporting to day that the White House is proposing a major overhaul of the tax code.
My readers to the left of Joe Lieberman can pour themselves a cocktail and relax. Take heart, my rosy chums; this is not a sneaky way to get another tax cut. The proposal is touted as revenue neutral, meaning that it collects neither more or less money in taxes. Presumably, it will also leave the progressivity of the tax code mostly untouched; we won't suddenly try to get the nation's burger-flippers and nursing-home aides to stump up the entire multi-trillion dollar budget, nor attempt to hand the entire bill to Warren Buffet and Bill Gates. While individuals in a given income bracket may pay more or less, the overall structure should remain basically unchanged.
What they are proposing to do is radically simplify the tax code. If they can do it, bravo! The complexity of our tax code costs the people of this country a lot of money, while producing no more tax revenue to fund worthy projects such as paving over the Grand Canyon and turning it into a parking lot named after Robert Byrd. While most of these are outlined in the brilliant screed on abolishing the corporate tax that catapaulted Live from the WTC to fame and fortune in the blogosphere, I will outline a few of them here:
Costs of complianceBecause the tax code is so complicated, we have to hire accountants to tell us whether that trip to Bermuda was a legitimate business expense if we got a lot of good information for an op-ed on those little drink umbrellas that can accidentally stab you in the eye if your inebriated companions aren't careful. This accountant produces nothing of real economic value; his fees are a cost we pay because the tax code is complex. If we simplified, we wouldn't need to pay someone to tell us that you can't deduct the vacation until you actually write the Op-Ed, and the accountant could get a job doing something productive, like inventing a safety device for those little drink umbrellas.
Cost of avoidancePeople and corporations do a lot of things for no other real purpose than avoiding taxes. They pay people, who could otherwise be engaged in productive labor, to tell them how to do these things to avoid the most taxes, and they divert assets from productive uses to set up entities that meet obscure criteria. If we didn't have deductions for things like Qualifying Small Business Owned by Green-Haired Disabled Vet, we wouldn't have all this useless activity and we could all get back to our drinks.
Cost of litigationTaxpayers, intentionally or not, often interpret rules differently from the way the IRS does. When this happens, the dispute often ends up in court, which is extremely costly to society, what with lawyers, your lost wages, the expenses of running the courtroom, and the wages of the judge, bailiffs, court reporter, court clerk, and the reporter from your hometown newspaper hoping to snap a picture of you being hauled off to jail. The fewer rules, the less time we, as a society, spend arguing whether a lemonade stand on the front lawn is really a Qualifying Small Business, or your teal hair dye meets the statutory definition of "Green".
As you can see, simplifying the tax code is somthing we can all get behind. Except that we can't. I'll be awfully surprised if they manage it.
Why not? Look in the mirror, bud. Me? I hear you cry. I'm not a tax leech!
Hmm? What about that student loan deduction? How about your relocation expenses from last year? And the mortgage interest tax deduction you take year after year after year?
But those are good things, you're thinking, not like all those other, ridiculous deductions.
You're fading out. I guarantee that every single deduction, from farm credits to child care, has some solid citizens who firmly believe that it is only right and just that they receive a deduction for all the extra value they are providing for society by doing whatever it is the tax code is paying them to do. And don't try to distract me with tales of obscure deductions for running a copper mine in a federal economic disaster zone, or whatever; the more obscure and unjustifiable the deduction, the less it's costing us in terms of money and associated indirect costs. It's the big ones, like the mortgage interest deduction that causes Americans to buy bigger houses while producing pretty much the same home-ownership rate as Canada (and to be honest, I'm doing okay without owning a home; I'm not sure why I should be subsidizing the rest of you) that produces massive, and massively costly, structural and financial shifts in the economy.
Incidentally, I also guarantee that this post will generate a flood of emails from people receiving the three deductions I singled out, explaining why I'm wrong about this deduction, and why it, unlike the deductions the writers don't take, is utterly necessary to Our Future as a Democratic Nation. Which is the reason that the tax code won't be simplified. Any congressman who proposing cutting any of these deductions will get not only emails, but letters, candygrams, and irate phone calls from citizens who will make two things crystal clear:
1) [Insert favorite boondoggle deduction here] is vital to Our Future as a Democratic Nation. 2) Any congressman or senator who votes against [boondoggle deduction] should not expect the votes of Concerned Citizens for Subsidizing Boondoggles next election.
And the deduction will be left in. Pretty soon the "simplification" will succeed in removing one subsidy from some group whose members are all too sick to get to the phone, and it will fade into well-deserved obscurity. Or so I glumly foresee. But who knows? Maybe Bush, riding the tide of the Iraqi invasion, can pull it off. Maybe this time will be different.
Mamma's off; for those of you who pray, toss a couple my grandfather's way.
He's a truly amazing man. He grew up on a dirt farm in a little town in Upstate New York, with no electricity or indoor plumbing. He had to leave high school to help his father on the farm, but went back when he was nineteen to finish, which for the time was quite an accomplishment. He finished high school in the depths of the Great Depression, and with too many sons and not enough farm, considered himself very lucky to get a job as a grocery boy. He had that job until he was 26 years old, and supported my grandmother on it, though I can't imagine how. At 26, he turned around a money losing gas station owned by his boss in 3 months, then bought it from him a year later and never looked back.
But he's better known in the little town they live in for his unbelievable generosity of spirit. When my mother went back to her 25th reunion, the house was crowded with classmates who wanted to see Grandpa, who they remembered for always loaning them $5 of gas or a coke when they were short, and driving out to lonely country roads to repair a car when they needed it without asking how they were going to pay. He's 87 and still working at the station -- for free -- to help the fellow he sold it to get the business on its feet, and every winter you'll find him out there in the icy winds of the Rochester area, ringing a bell for the Salvation Army. My grandparents can still be found holding hands, and the only fight I've ever heard them have was over who was going to take the bed, and who the trundle, when they stayed with us; they were both trying to make the other one take t
