Asymmetrical Information

From the desk of Jane Galt:

Up in Smoke

Well, it looks like New York City's ban on smoking in restaurants and bars will go into effect on March 30.

The libertarian in me mourns the abrogation of property rights. But the asthmatic in me is grateful that I don't have to pay for every night out with friends with a couple days of breathing trouble.

From the desk of Jane Galt:

The news isn't all bad

This year murders in Manhattan dipped to the lowest level since the 19th Century.

From the desk of Jane Galt:

Krugmanwatch

Paul Krugman has a dismal column on the prospects for the economy in the coming year. One may hope that this is a variant of Irwin Fisher's permanently high plateau, but not too hard, since things don't look too good right now.

But one of the things I really hate about Krugman's New York Times columns is that in an effort to simplify things, he says things that may have a correct, more sophisticated basis, but for which the alleged evidence is insufficient. For example, he claims that states are going to have to raise regressive tax rates in order to meet the latest crisis:

Finally, there's the desperate plight of the states. New estimates by the Center on Budget and Policy Priorities show that state governments are facing their worst fiscal crisis since the 1930's. Since Washington shows no interest in helping, states will be forced into desperate expedients. Taxes, mainly taxes that fall most heavily on the poor and the middle class, will go up. Spending on education and, especially, health care will be slashed, with the heaviest toll falling on struggling low-wage workers and their children. (Leave no child behind!)

First of all, the states got into this mess by spending the bejeesus out of capital gains income as if it would last forever; it's hard to feel to sorry for them.

More importantly, I know of no reason to think that tax measures are likely to be sharply regressive. (There may be one I don't know of.) Some states do get a significant portion of their funding from the sales tax, which is regressive. But more get them from income taxes, business taxes, and property taxes, most of which are definitely not regressive. And the more likely a state is to be in trouble, it seems to me, the more likely it is to be a rich old state, and thus to rely on non-regressive measures like income taxes, which are based on the (extremely progressive) federal tax code.

Now, it may be that there's some sort of data on this. But if there is, I wish he'd tell us rather than just asserting it.

From the desk of Jane Galt:

Pledge Update

Incidentally, thanks to everyone who donated. By my count, we're now 43% of the way to a new computer, and just in time, since the old one has taken to randomly turning itself off.

From the desk of Jane Galt:

Making Poor Countries Rich

The Elusive Quest for Growth

by William Easterly

To read this book is to exult and despair. Exult because it's a fascinating look at all the ways that we have tried to animate growth in the Third World; despair because none of them worked.

The book is terrific -- well written, interesting, and informative on a topic that most of us find pretty compelling. If it has a flaw, it is that it's a little light on data (though extensively footnoted), but I suspect that for most people, that's a feature not a bug. I raced through it over Christmas, enjoying every word.

Then I finished the book and was mightily depressed.

Easterly is an economist with the World Bank and he outlines in painstaking detail why the various theories of development aid, from closing the "investment gap" to building infrastructure, failed so miserably: incentives. No matter how much money you pour into a country, if local conditions make it unprofitable to build, trade, or invest, people will not do it. And the Third World countries that are mired in unpayable debt and abject poverty are a showcase of bad incentives. Property rights are ill-defined, so people will not build or invest; kleptocrats steal anything you do manage to make, so why bother? Short-sighted policies designed to shore up political support destroy or expropriate successful businesses -- why risk it? In those countries it's a better investment to buy a sinecure in a kleptocratic regime, or a gun to start your own free-lance kleptocracy, and that's what people do. And ship any money you make out of the country, where the locals can't inflate, tax, or steal it away.

And that's why it's so depressing. For the people currently in power in many of those countries, the incentives are to keep on with the failed structures of the past, either because they are making more money stealing than they could in private enterprise, or because the electorate is angry and desperate after years of stupid policies, and unwilling to bear further pain. Or they are mired in debt from previous kleptocratic regimes. Often all three.

The World Bank and associated organizations might be able to change those incentives, but while Easterly takes a half-hearted stab at making recommendations, it's clear even he doesn't really believe that these things will happen. The World Bank and the IMF lack the political or institutional will to simply cut off failing countries until they get their act together. And indeed, when tough love means, temporarily, more starving babies, it's hard to get enthusiastic. But unless they do, they are providing the incentive for the bad policies to continue.

One of the most interesting sections of the book discusses the question "What makes people poor", and argues that questioners have got it exactly backwards: the question should be "What makes people rich?" Poverty is freely available, and it's easy to produce; if you destroy the incentives for people to engage in wealth-building activities, such activities will cease. To make people rich, on the other hand, all sorts of things have to line up right: government, institutions, market systems. So perhaps one of the best things about this book is that in reading it, one appreciates just what a miracle our prosperity is.

From the desk of Jane Galt:

I've written that I didn't think the AOL/Time Warner merger was going to amount to much. But that was all theoretical stuff. Now Michael Wolff tells us the real reason.

From the desk of Jane Galt:

More On Lighthouses

Zimran Ahmed, who is closer to Chicago than I am, and thus more likely to be under the spell of their Evil Free Market Brain Wave Control Machine, has a much better post on lighthouses than I wrote.

To me this seems to fit perfectly well within the neo-classical economics systems. Chicago school economics is not against government regulation per se, it just feels that governments should support markets and let individuals sort it out from there, and that governments should not engage in social engineering. In the lighthouse example, private parties (the sailors) needed a two-part tariff system to create a market for a good they needed but would not otherwise be provided (lighthouses). They contracted with other private parties (ports) to arrange this, and the government supplied the legal infrastructure needed to support that market (making paying the tax mandatory).

Samuelson's public good argument had the entire population paying taxes to support lighthouses only used by sailors (which seems strange) and after 1836, the government itself started to operate lighthouses (which seems even stranger since private individuals were already doing that just fine). And perhaps most bizarrely, Daniel notes "...there are numerous accounts of "rent-seeking" behavior in lighthouses, whereby lighthouse entrepreneurs with good political connections sought to build unnecessary lighthouses in anticipation of the stream of light duties they would be allowed to extract" as if this refutes the neo-classical interpretation of what would happen in the market and seems to deny that exactly the same sort of rent-seeking would go on if the government ran lighthouses itself. Note how, in the US, states lobby for all kinds of unnecessary pork-barrel public works projects that seek only to transfer wealth from other states to their own.

I'll will also note that in 1995 in Britain, there were 56 automated lighthouses, 11 staffed lighthouses, 10 automated lightvessels, 2 automated lightfloats, 2 large automatic navigation buoys (lanbys), 414 buoys (of which 94 were unlit), 26 beacons, 62 radar or radio beacons, and 11 Decca Navigator stations. All in an age where a GPS system costs about $100. I'm not saying there would be more or less of these things if the government was not in the business of lighthouse provision and therefore had a bureaucracy invested in lighthouses, I'm just sayin'.

Which is not only decisive and succinct, but makes an important point: Chicago school economics is not, as its more ignorant critics believe, a faith in the simplistic perfect competition model you learned in Micro 101. Many, many (Lord, how many!) of the emails I get triumphantly present me with some market failure that has been well known to economists for fifty or so years, discussed, analyzed, and modeled. That's the gist of this stupid speech by Eliot Spitzer. Chicago school economics can most easily be summed up by saying "Incentives matter. . . and while markets may fail, government fails worse." Government provides perverse incentives, for example to make money by lobbying the government to take it from someone else rather than make or do something that other people want to buy.

It also, as the example of lighthouses in an age of GPS illustrates, is extremely unresponsive to change. Eventually, GPS will replace lighthouses. (I don't know if the technology is there yet.) But it will take a lot longer than in the free market, because those lighthouses have voters who work there, and Societies for the Preservation of Lighthouses, and ignorant editorialists who will declaim the need for safety long after lighthouses are necessary, and important bureaucrats with pals in the right places who will fight hard against having their agency disbanded. It is possible that lighthouses were best provided by the government (I'm still not prepared to argue that point right now.) But government services are very rigid. It's much easier to get the government to do something than to get it to stop.

That's sort of how I feel about SEC regulation. Perhaps Glass-Steagall was a model of financial brilliance. Now, however, I'd argue that it forms a barrier to entry for financial firms which has kept fees in the securities listing market outrageously, mind-bogglingly, ridiculously high -- I'm running out of adjectives for how outlandish I think investment banking compensation is, and I still can't express it. It's legalized robbery, abetted by the SEC. Undoubtedly the SEC does good things. But it also does bad things, and not just because it's underfunded or whatever the argument of the week is. I blame the SEC for the diseased culture that prevailed in parts of the industry that encouraged record IPO pops for special friends, analysts touting dog stocks, and all the rest of it. Mind you, being a Chicago gal, I think there would still be chicanery; I don't believe in the perfectability of markets or human nature. But I think that the SEC was what allowed many of these practices to become institutionalized, because it prevented newcomers from competing away the enormous financial incentives to cheat. That's why I have to laugh when people write me to tell me [insert financial regulation aimed at executive compensation, company disclosure, or what have you] must be correct and reasonable -- even John Corzine supports it! John Corzine made all of his money helping businesses comply with SEC regulations in raising money or structuring deals. Of course he's in favor of more regulation. More regulation means more little bankers beavering away earning him dividends on his Goldman stock. Not that this means he's necessarily dishonest. Curiously, almost all of us can generate a compelling belief in the truth, beauty, and good of the regulatory structures that make us lots of money. If you want a stirring speech, find a farmer and ask him to tell you how farm subsidies benefit the rest of us. If you aren't wiping away a tear or two at the end, you have no heart.

But the heart of Glass Steagall -- that we need a lot of intensely regulated firms providing us special financial services -- is not going away, even as surface forms change. Even though I haven't noticed any shortage of bad stock tips and horrible financial advice emanating from said firms, there is no significant move to change the structure, find out what rules don't work, or otherwise mess with the perogatives of the bankers and their regulators. Almost any regulation, to be removed, has to be truly dreadful, or have a wealthier and louder constituency advocating its removal than those behind it. The impetus of any agency is to do ever-more, not less. I've yet to see any regulator say "stick a fork in it -- we're done."

So there's your little dose of free market religion for the day. Tomorrow: why Jesus loves an appropriately diversified portfolio.

From the desk of Jane Galt:

Mark Kleiman follows up on my earlier post on charity by asking why we want to have engineers doing charity work -- isn't it more efficient to have such things done by professionals? It's a good question, but I think there are some problems with the "professional" model.

First of all, it assumes that professionals are competent, which is not necessarily the case. I invite anyone who doubts me to go work in the government office of their choosing and calculate the ratio of dedicated professionals to chair-warmers trying to rack up their 25 and get home to the barcalounger. Social workers can be talented dedicated professionals, but they can also be aimless 22-year olds who didn't know what they were getting into, or tired forty-five year olds who hate their clients but can't find anything that pays better.

Second of all, institutional services are very bad at doing a lot of the things that the clients we worked with seemed to need most. For example, a kid who has the potential to be an engineer needs someone to provide the roadmap to get there, constant feedback, encouragement when he encounters setbacks -- the things his parents can't provide because his Dad's not there and no one in his mother's family has held a long-term job in recent memory. The social worker has perhaps thirty families to work with, many of whom have active pathologies such as drug use, violence, etc. The gifted ones fall through the cracks (and yes, you could increase funding, but you're talking about an unrealistic increase in welfare spending, since to get more qualified caseworkers you'd have to drastically raise their salaries.) Also, the social worker doesn't really know how to get to be an engineer. The social worker has an entirely different life history and basket of skills. At best, she can refer him to someone who knows how to be an engineer -- who is not likely to be a professional social worker. Like, oh, say, you.

Private individuals are better at many kinds of charity for the same reason that individual parents, even no very good ones, are better than orphanages. People are very complicated, and they require a complicated response, not the kind of cookie-cutter programs that government, by its nature, churns out.

Now, there are some problems that the government can solve. If you're hungry it can buy you food. If you need clothes, it can buy them for you. If you have nowhere to stay, it can build you shelter. But I would argue that these are not, by and large, the problems of today's poor.

Today's poor are more likely to be overnourished than to go hungry (and the ones who are undernourished are the ones who do not or cannot apply for government assistance.)

Today's poor have somewhere to stay. Contrary to popular belief, there is almsot no such animal as the "homeless family" in the way advocates want you to picture it -- women and their children living on the streets. There are families who have no where of their own to live, but the government does not let them stay on the streets. They are put in various sorts of temporary living arrangements while the state seeks permanent shelter and a variety of complementary services for them. The people on the street are generally the severely dysfunctional: people who cannot or will not live by the rules of the shelters, either because they are violent, steal, or abuse drugs and alchohol. Or they are mentally ill, off their meds, and choosing, insofar as a delusional schizophrenic can be said to choose, to stay on the streets.

Today's poor have clothes. What they suffer is a lack of status clothes; their clothes are out of date, cheap, and serviceable. But you can buy the poor anything you want and those with a little more money will find a way to differentiate themselves. You can provide adequate covering to someone who is cold; you cannot eliminate the pecking order of the primate family.

What don't the poor have? They have no control over their lives; they exist at the sufferance of the government agencies who provide their support. They have horrible housing made horrible by other poor people, antisocial ones, who trash it, and who must be allowed to live there because the government is not a private landlord and cannot differentiate between tenants. They have no hope. Their schools suck, their job opportunities suck, and they don't know how to make better opportunities for themselves. They lack job skills. They have trouble reading. They lack the accumulated social capital that was transmitted to you by parents and peers, you lucky middle class dog, you. Institutions are just awful at remedying these deficits. Often they are the cause of them.

What volunteer work does, I think, is integrate into the web of prosperous middle class society the people who have fallen out of it. The government can't do that by giving money because, among other things, work is one of the core features of middle class American life; and also because it's trying to hit a moving target: as long as we maintain our primate heritage, and the ability to differentiate, there will be a bottom quintile as well as a top quintile, and raising up the bottom won't erase the distinction, which is really what most people want to get rid of. Perhaps it's good for the person doing the volunteering, but I don't really care; I think it's better for the needy to be treated like fellow human beings than cases to be "managed".

From the desk of Jane Galt:

Homicide Rates Redux

Dr. Weevil has a nice follow-up post on the effect of medical care on homicide rates.

From the desk of Jane Galt:

Public Service Announcement

This year, I am not going to be irritated by snotty comments.

And the reason I'm not going to be irritated by them is that I'm going to delete them.

I don't really moderate the comments, because my feeling is that if I start editing them, the temptation will be to edit out the stuff that puts me in a bad light, and that sorta damages the whole point of the blog. I mostly edit for repetition or profanity.

But then there are those very special people. You know who you are. You don't like me, and you don't like my site, and it just makes you mad that I'm around. This raises some disturbing questions about the sheer amount of time you spend poring over my driveling idiocy -- I hate to say get a hobby, but my sweet, someone has to.

It's a hard life you live, isn't it? You know deep in your heart how much cleverer you are than I am, and funnier, and how much better you write, and how much more you know about everything, and you long to prove that by. . . well, apparently by writing in the patronizing tones adopted by insecure fifth graders, calling me names, or inserting sarcastic comments. When I respond to you, you ignore the substance in order to make hysterical accusations about my motivation, personal habits, or erudition. You are abnormally fixated on my degree. You display a less than touching concern with my dating life, especially when it is not the topic under discussion. When you want to come up with a really devastating rejoinder, you rack your memories for the snappy comments that served you so well in eighth grade.

It is a great consolation to me that you don't annoy me half as much as I apparently annoy you. And the good news is that you're not going to annoy me at all, because comments that have an excessively nasty tone will henceforth be deleted on my threads. That will save us the boredom of reading them, and you the trouble of composing them. I might add that since I'm already deleting the emails with headings like "You're a [expletive deleted] idiot.", you'll be getting a lot of rest for those little fingers. It'll be good for you, really. Repetitive stress injuries are no joke, you know. Besides, if your mother didn't warn you, your face can freeze that way and then where will you be? Probably home composing aimless rants to right-wing bloggers. And really, there has to be something more interesting with which to fill your otherwise empty weekend nights.

No, don't thank me. I'm a giver.

From the desk of Jane Galt:

Coase Uncovered?

Daniel Davies goes the extra mile to debunk Ronald Coase's claim, in a public argument with Paul Samuelson, that lighthouses were, in fact, provided by private enterprise before the government got involved. Mark Kleiman sums it up best:

Daniel Davies of the D-Squared Digest reviews the bidding on the economic history of lighthouses and the famous Coase/Samuelson controversy about public goods. Yes, lighthouses were provided by private entrepreneurs, not by public agencies. But the payments from shipowners were imposed by law, not negotiated, and the system didn't work very well. Score one for the interventionist side.

I'm not going to comment on the core argument, because I haven't followed the argument that closely. But Davies is a smart fellow and seems to be honest enough, so you can decide for yourself. Myself, I think it's entirely possible that lighthouses are public goods, but don't particularly care, and I still like Coase's work. So I'm not making any substantive arguments, just quibbling, which is really what I do best.

Anyway, there are a couple of problems with this. Davies argues first, that lighthouses were really a government intervention project, because they operated under government warrants. If this is true, they operate under a form of taxation that is generally held in higher regard by libertarians than the pernicious general tax: usage fees. Such fees include the tolls you pay for your roads that cover general upkeep. There is theoretically no reason that a private market structure couldn't mimic this with roads, and some other services, although in the case of the ports they would have to operate under a cartel that wouldn't be much more attractive than the government (and might be less so) in order to ensure that fees were applied to all necessary lighthouses. On the plus side, it would align the incentives correctly: the port owners want to maximize traffic.

For remember, governments don't necessarily, which is a problem with Davies other main argument: that Samuelson was claiming, not that private enterprise couldn't provide lighthouses, but that it couldn't provide them at an optimal level. This assumes that governments want to provide them at a utility maximizing level, which is not true. Smugglers, for example, may wish to use some of your lighthouses. The government will not place them, even though it would maximize net utility. Or the government may wish to see ships crash. Crazy? Not necessarily. If you're a government of a small country near a large country, you could conceivably up your GDP by steering a small fraction of ships bound for their ports onto your shoals for looting. Indeed, it was common practice in the eighteenth and nineteenth century for private enterprise to provide this service: hobble a mule and tie a lantern to it, then walk it up and down the beach. The motion mimicked that of a safety buoy, and ships steered to their doom. As I recall, the Isle of Man, which Davies mentioned, was known for this. If they'd had their own government, one wonders what the lighthouse configuration might have looked like.

I don't know that this is the case, although I seem to recall there were some countries which practiced this sort of subterfuge to enrich the crown. But even if they didn't, Davies argument is hardly a testimony to the wonders of government intervention. If he is correct, and the lighthouses were provided before by government intervention, and that the provision was suboptimal, then all it seems to prove is that government is as likely as not to get it wrong. There's no reason that I know to think that any of the government provisions of what they call public goods are at anything resembling an optimal level, and this example seems to illustrate that precept beautifully. Not a sterling recommendation for the wonders of the Visible Hand.

From the desk of Jane Galt:

Charity Begins at Home

I part company with libertarians who think we can get government out of the charity business. Advocates often seem so infatuated with the free market that they believe it applies everywhere, which is silly; there's no equilibriating mechanism I can see to ensure that the demand for charity equals the supply. So, given that most of us feel a genuine obligation to help the genuinely needy -- those whose physical or intellectual endowments are insufficient for them to earn a decent living -- the government will, at the very least, have to be the charity provider of last resort.

That view is not incompatible with the belief that private charity does a better job, on average, than government charity. Not always or in every case, of course. But government charity is, by its nature, one size fits all. It is also, by its nature, generally designed to eliminate false negatives, at the risk of creating false positives.

One of the central problems with charity is that Americans by and large wish to help the deserving -- those who are doing their best and just can't make it, for some reason -- but not the undeserving. The problem is that there is not now, nor ever will be, a perfect mechanism for separating the deserving from those looking to get a free ride. If you focus on excluding the undeserving, you will probably miss some deserving cases; if you focus on including every deserving case, you will include some who do not deserve your help. The larger and broader the program, the worse this problem becomes, because the criteria necessarily become very crude, and because government, by its structure and for some very good reasons, relies on rules over individual judgement for the awarding of charity.

If the number is small, this is not much of an issue. But the effects of welfare reform seem to indicate that the number was not small, and probably is still not small in states that are gutting work requirements or time limits. And giving money to people who don't need it is a violation of the wishes of the voters who pay for it. It also creates a great deal of social pathology.

In Europe, I gather from my friends, the idea is that it's all right to pay people to stay in their houses staring at the walls all day because they're just human cattle (I mean, they don't put it that way, but that's the gist), and they're not going to have any sort of a worthwhile life anyway, so who cares if they're stuck in a council flat with no hope of anything better. But Americans don't think that way. It's not just resentment at paying taxes. It's a recognition that most of us are not so motivated as to achieve without the impetus of need riding hard behind us, and that if benefits are sufficiently generous, there are a lot of people who could be working who won't.

Is public charity degrading? I don't know, is it degrading to expect to subsist without effort, as many of our clients did until someone kicked their ass for them? As most people do, until their parents throw them out into the world? It's not degrading to expect it, I suppose, but the yankee in me feels there's something degrading in living that way.

Don't get me wrong; I've worked for a public service provider. I am not under the impression, apparently common in some of our more callous suburbs, that welfare benefits are the key to a life of plenty and leisure. Welfare benefits leave damn little money for fun. But relative to the immediate choice of working at some crappy job for not so much money, it's not that bad. There are also interesting questions of the marginal tax rates imposed by benefit cuts, but that's another post. Anyway, the point is that welfare recipients, especially and the long term, pathological welfare recipients we worked with, are making a logical choice between staying home and getting crappy money, or going to work and getting nearly as crappy money. You'd stay home too, if you didn't have parents who made you get a job or get out of the house.

Personally, I needed my crappy jobs to teach me to show up on time every single time, to organize things, to be nice to customers who were nasty, to do stupid unnecessary things just because my boss wanted them, to budget my time, and all the other unlovely skills we must acquire in order to get a better job. And indeed, much of our experience with welfare recipients was that they were willing to work -- just not at the entry level jobs they needed to take in order to gain experience to get a better one.

[Yes, I know that not everyone gets a better job. But sure as hell no one's going to hire them until they get that first job stocking shelves or mopping floors].

Private charity is better at dealing with these things than we were. But they were better at it because they risked creating false negatives: they kicked out people who, in their judgement, weren't trying hard enough. Government programs, or programs that take Uncle Sam's money, can't do that. You can kick them out for using drugs or violating a number of very specific rules, but you can't kick them out because the social worker thinks they're deliberately spiking their job interviews, or starting fights with their boss so they can get fired and go back on the dole. Yes, people do do that, and don't send me the emails telling me I wouldn't say that if I'd ever been poor. Sanctifying the poor into a bunch of people who would never, ever do wrong is no more illuminating than deciding they're all a bunch of lazy good-for-nothings trying to leech off the body politic. And for reference, I have known a number of middle class children who pulled similar stunts as long as the parental dole was still paying out.

The taxpayers who are paying for the programs don't want to support the people who are able, but unwilling to work, just as they do want to support those who are willing, but unable. And supporting the former group has consequences for the rest of us. It takes people out of the workforce, for one thing. For example, one of my statistics professors averred that the most effective way to reduce repetitive stress injuries and back pain in the United States was to reduce the workmen's comp for them, since there is a nearly 1-to-1 relationship between changes in the level of compensation for those sorts of injuries, and the number of them reported by doctors.

[Other studies apparently suggest that the pain is psychosomatic, not faked. In which case, we really might be doing the recipients a favor. But I'm not a doctor, nor a statistician. I'm just repeating what I'm told.]

But that does not imply that private charity is perfect. Mark Kleiman points to a post by Jeanne D'Arc that points up all the problems with private charity, starting with the people who donate the stuff. Listen up: I too have given into the temptation to clean out my stock of unwanted canned goods at the annual Thanksgiving drive. But there is a difference between realizing that you're never going to eat those seventeen cans of Dole Peaches in Light Syrup you bought because you made the mistake of shopping when you were hungry and canned fruit was on special, and hauling out the ten-year old can of -- er, something -- with the dents and the label ripped off so you can give the very special gift of botulism to some needy family this holiday season. And the needy are not needy enough to require your old gym socks. IF you want to give underwear, for gosh sakes go down to Wal-Mart and pick up a shiny new six pack of Jockeys. Sheesh.

Nor is charity an excuse for parading how gosh darned good you are to all and sundry. I used to mentor a little boy at one of our facilities, and half the people there seemed to expect to be beatified for the incredible sacrifice of two hours every Thursday making crayon drawings and doing math homework. I'm sorry, but what with Tivo and all, I find it hard to imagine what's so gosh darned important that you can't spare a couple hours a week. Charity is about the people who need help, not about you. I mean, it is a bonus if you enjoy crayoning, but that's not the point of the thing. Just as with your own children, one must crayon and do math homework even when you have much more interesting possibilities.

Ultra-libertarians are on the wrong side of the question of whether a decent society lets the helpless fend for themselves. Conservatives in general may be too optimistic about the possibilities of private charity. Certainly volunteers on the right and left are prone to putting the focus on themselves, instead of the people they're supposed to be happening. But deciding that government charity is superior is not the answer either, not only because its sorting method is very poor, but also because what the poor lack now is generally not money, but the social network that helps out the rest of us in innumerable ways in times of trouble. There are far, far too many liberals of my acquaintance who are willing to pay tax dollars, but not to get in there and actually work with the poor. They don't have time, they don't want to be bothered, (my favorite) they "wouldn't be any good at it" . . . well, I'm sure there's something you're good at. Other than making excuses. The poor have reached the limits of what tax money can buy them. Their problems are more complicated than hunger or lack of shelter, and that means they need real live people helping them out. That means you, "but I voted for the Senator who wanted to increase the budget for food stamps!" It's time for people to realize that nothing is a panacea, and that while we all need a little safety net, it's a lot better to help people to walk the tightrope than to catch them when they fall.

From the desk of Jane Galt:

Attack of the Clones

I'm too lazy to find out if I'm the eighth, or the eighty-millionth, to use that particular headline.

At any rate, it seems that a religious sect which believes all life on earth is descended from aliens who created it 25,000 years ago via genetic engineering, are claiming they've created and birthed the first human clone.

(And how few of you will appreciate the heroic effort it took me to write that sentence without once using the word "nutjob" anywhere. Greatness has its price.)

Here's the thing: I can't for the life of me figure out why I'm supposed to care. It's a baby. It's got the same genetic material as someone else, which is also true any time identical twins are born.

I mean, I can see problems with it. For one thing, they created and killed a lot of embryos to get one live baby; if you're pro-life, that's pretty disturbing. For another, our experience with animal clones seems to indicate that the child may well have premature aging or other genetic problems. It seems a lot of effort to go through to produce a sickly child, when you can get a (probably) healthy one with a lot less effort and a lot more fun. And this really seems to cross the line into human experimentation -- but is it really crossing a new line? The procedure is probably less intrusive and dangerous than what we did to get the first test tube babies, or for that matter, what goes on in your average fertility clinic today.

But my sister, the social conservative, seems to think that it's just a short step to Dr. Mengele's laboratory, and they've got talking heads on all the cable networks who seem genuinely convinced that we've just opened an era of human enslavement undreamt of outside of SF novels. Myself, I don't see it. The most frightening thing I can think of is that if it got safe and cheap, people who don't understand that their clone won't actually be them will deplete our genetic diversity by trying to convert the species to asexual reproduction.

But to be honest, I just don't think asexual reproduction's going to catch on any time soon.

From the desk of Jane Galt:

Question for the Day

It is common, at least in certain circles, to refer to the stalwarts of the left as "Reds", and their slightly more moderate brethren as "Pinkos".

What color, then, are their compatriots on the right? (Answers involving the Confederate flag will, thank you my little rabble-rousers, be discarded)

They don't really seem to have a color -- why?

And why did the networks make the Democrats, historically closer to the pinkos, blue, while making the Republicans red?

Are conservatives now "Pinkos" and "Reds", and if so, what color are the liberals?

Except, as the networks seem to have predicted, awfully blue?

From the desk of Jane Galt:

Thought for the Day

This one's for all you students out there; a helpful hint from the Cranky Prof before he heads off for sunny Italy and ceases, we assume, to crank.

From the desk of Mindles H. Dreck:

Christmas Eve Poem

A correspondent sent this along, and I rather like it.

The Oxen by Thomas Hardy

Christmas Eve and twelve of the clock,
"Now they are all on their knees",
An elder said as we sat in a flock
By the embers in hearthside ease.

We pictured the meek mild creatures where
They dwelt in their strawy pen,
Nor did it occur to one of us there
To doubt they were kneeling then.

So fair a fancy few would weave
In these years! Yet, I feel,
If someone said on Christmas Eve,
"Come; see the oxen kneel

In the lonely barton by yonder coomb
Our childhood used to know",
I should go with him in the gloom,
Hoping it might be so.

Merry Christmas my blogging friends! Three little Dreck children snooze lightly in anticipation of tomorrow, and I, briefly an impostor in my own house, am off to eat cookies, nibble on carrots and place a few footprints with fireplace soot.

From the desk of Jane Galt:

Well, I'm sitting here in the charming public library of Newark, New York, Jewel of the Finger Lakes, ancestral home of the Jane Galt Line. I appear to have stepped back through a time warp -- not only is my access to the internet practically non-existant (The snakes! The snakes!), but also, I have been entirely preoccupied with the sort of antediluvian baking frenzy normally associated with Very Special Christmas Movies set in the 19th century. If there is anything more disturbing than a vegetarian putting together the pre-Christmas ham, I am hard put to think of it.

(Incidentally, if you want a great glazed ham take a box of brown sugar, a tablespoon or so of hot dry mustard, and mix in enough scotch to make the entire thing the consistency of damp sand. Slap it on the ham along with any cloves or sundries you like early in the morning. A couple hours before dinner, pop it in the oven for an hour and a half at 400, until the glaze is shiny. Guaranteed delicious. If you eat meat. Me, I just watch.)

So far I have produced three sorts of cookies, banana bread, a glazed ham, ham and cheese rolls, assorted vegetables and desserts, and I've batted backup on sundries like scalloped potatoes and sour cherry pie. I've been busy. I'm also afraid I may not fit in the car to go back to New York.

But there are compensations. We've had snow, and the dog is in seventh heaven. Also, my grandparents, who are delightfully Victorian, make me feel re-connected with my roots. Favorite quote of the week:

Grandpa: So I couldn't find the cane at the DAR house, and I thought she might have left it at the United Methodist, but when I went over there the darn church was locked up tight. . .

Grandma: George! (Shocked) You hadn't ought to have said "darn" in front of the girls.

Of course, it's a little sad, too. My grandparents grew up on farms in small town America back when small town America was a world nearly as alien to the city as Afghanistan is to us. My mother lived off the farm, but grew up in a small town. I know what it was like through their memories, but my children won't really, and probably they'll never visit enough to remember it. And their children. . . seeing how old my grandparents are reminds me how much of our history we are always losing, irreplaceably, as the people who remember it pass.

But this Christmas is good. We're having an enormous dinner for an enormous number of relatives, and if it has been a bad year for everyone, enough of my relatives lived through the Depression that we can't really take it too seriously. And it's good to be all together again.

I won't be able to blog much this week, but I hope that all of you are having as nice a Christmas as I am.

Merry Christmas to all, and to all a good night.

From the desk of Jane Galt:

A very merry Christmas

You guys are awesome. Did I mention that I love you all? As of this morning we are 20% of the way to our goal of replacing the 5 year old Dell I'm currently working on with something a little more modern. In which category, one might include an abacus, but never mind.

Anyway, to all those who contributed, thanks. I hope this means you enjoy the site and want to keep reading it. To all those who didn't -- I hope you're enjoying the site too. Believe me, we at Asymmetrical Information understand the concept of tight budgets this year.

Speaking of which, I should have told you -- I meant to -- that none of the money you donate goes to Mindles. Not because I'm greedy; fair's fair, and he certainly earns half of it. But his company won't let him take it. So when you click through to buy a book, or merchandise, or donate, the money goes to me. If you didn't understand that, and want your money back, I'd be happy to refund it -- just shoot me an email with the date, time, and amount of your contribution. Don't be embarassed; the error is mine.

Anyway, thanks so much to everyone for helping me make the site the success it is. I'm off now to Upstate New York, but never fear! I have my sister's laptop, and will still be blogging periodically. Merry New Year and Happy Holidays to everyone.

From the desk of Jane Galt:

Rod Dreher, a Southernor, thinks racism is dying in the South too.

From the desk of Jane Galt:

Useful Idiots

The American Mind has this completely idiotic quote from some well meaning fool in the heartland:

I don't think we respond to the horrors of Sept. 11 with more violence. [T]hen Osama Bin Laden has already won.

Why, yes, of course. Once we've blown him up, killed his followers, destroyed his terror network, put the fear of God into any countries that might consider harboring or assisting his merry band of murderers, wiped him and his buddies clean off the face of the planet. . . why, Osama will have gotten exactly what he wanted. And to think we almost walked right into that diabolically clever trap!

From the desk of Jane Galt:

Lott Delenda Est

So Trent Lott has declared he's stepping down.

It's a good thing for the party, and it's a good thing for Lott, ultimately; he'll have a soft landing and wind up an elder statesman.

I think what we just witnessed is the spine of the Democrat's base cracking. And possibly the spine of the Republicans' much derided Southern strategy, though as a Northerner born and bread, I don't know how much of that is race and how much culture and religion. One can argue the extent to which Democratic policy agendas are driven by race, but it's hard to deny that, at least on the coasts, a very large portion of their get-out-vote efforts are predicated on some version of "The other guys are a bunch of racist, sexist bastards. You'd better vote for us or they'll bring back the Klan."

But whether or not this is true of the party elders, that is the party's past, not it's futures. The younger generation, say those who came of age after the convulsions that petered out in the late seventies, doesn't think blacks are inferior. They don't feel guilty about race, or responsible for discrimination, the way their parents did, which undercuts some of the support for policies like affirmative action among whites. And the expansion of opportunities for minorities will erode the beleaguered fortress mentality that lets parties "own" ethnic groups; historically the more ethnic groups have have advanced economically, the less they have felt they needed one party to provide patronage and fight for opportunity. The only notable exception is Jewish voters, but they remain abnormally concentrated on the coasts, and also, the Democrats may be losing them over Israel and the war.

That's why I was so interested in Judis and Teixera's book,
The Emerging Democratic Majority
. I haven't read the book yet; only the article they drew from it. But what struck me was that while their discussion of the demographic changes they expected to form that majority might be sound, they were making unwarranted assumptions about the import of those changes. To wit, they were assuming that the traditional allegiance of the growing ethnic groups to the liberal wing of the Democratic Party would remain. But historically, that has not been the case. Until the 60's, the Irish and the Italians were the backbone of the Democratic Party; now that connection fades more every year. The alignment of, for example, blacks and the Democrats, is much less long-standing. If my cousins and I an contemplate leaving The Party, then the next generation of African Americans can too.

That of course does not mean that the Democratic Party is doomed; I think the two party system will be with us for some time to come. But of course, current people don't merely want the Democratic Party to stay around; they want it to move left, right, or in a few cases, stay right where it is. I think the decline of race also means the decline of some important Democratic policy priorities, many of which are predicated on the idea that poor people are poor because of external, immovable oppression. As race declines in the popular consciosness, so does the belief in a fixed wall of poverty. The issues that are likely to receive the most focus are not ones where Democrats are strongly positioned; education, the most likely candidate, will hurt them because of their base in local school boards and the strong influence of the teachers unions, which will prevent the party from proposing strong policy changes.

I'm sure this means changes for the Republicans as well. But overall, I think this helps them. Over the last several years, they've proved that when their politicians make errors, they clean house -- a cudgel they can use to beat the Democrats in their own circles. Anyway, they've certainly proved one thing; whatever may have happened in the past, the Republicans are intent on regaining the mantle of the Party of Lincoln.

From the desk of Jane Galt:

Holy dinero, batman!

If Andrew Sullivan can raise $80,000 from his readers, surely the Asymmetrical Information readers can come through with a new computer to replace the sad, limping computer that their favorite female economics-and-bullmastiff blogger in the over-six-foot category has to make do with? I mean, I hate to appeal to pity, but we are unemployed. . . and the computer's about an inch away from dying. . . and we don't have a computer at work like other bloggers, so if this one goes, so does the blogging. . . and we don't like to say it, but we've felt for a long while that you loved other bloggers better. . . when we're so fond of you. We stay up at nights worrying about you. . . what you like to read, what you do with your spare time, whether you're remembering to put your thermals on and button up tight before you head out in the cold to shovel the driveway. We care. And if you care too, we invite you to say it the old fashioned way. . . with cash. Because we love you. And we're going to get up and say it to each of you, personally, with a hug and a nice note on our very own stationery.

Just as soon as we get the computer fixed, that is.

We now return you to your regularly scheduled programming.

From the desk of Jane Galt:

Love this line from a Slate article about gun litigation:

That's how McDermott realized that if he could force cheap gun-makers—who nearly all had either no insurance or Holladay's sleazy insurance—into getting legitimate insurance, he would effectively end their racket of dumping millions of unreliable handguns on the poor. Since these companies made riskier products, their rates would become much higher than the legitimate companies—if any insurer would touch them at all.

Reading that, you'd think that the lawsuits were product liability suits designed to protect consumers from malfunctioning guns. But the lawsuits are actually about products that functioned perfectly -- when their owner made a decision to pick the gun up and shoot someone. The liability suits assign the majority of the liability to the companies, despite the fact that there seems to be no characteristic of the gun that causes its owner to shoot people. There is no defect of design that makes the owner decide to commit murder, that can distinguish the "malfunctioning" gun from the majority of such guns which were sold to people who did not use them to murder someone. The only difference lies in the owner -- yet the suits blame the gun.

This is our old friend paternalism. We have to outlaw cheap guns because poor people are scary, and while they may have rights, they can only have them in a limited, protected way. They're like children, you see. And like children, they can't be trusted, so we have to keep grownup things away from them, whatever the cost to their liberty -- and ours.

From the desk of Jane Galt:

Economics in One Lesson

Economics in One Lesson: 50th Anniversary Edition

By Henry Hazlitt

I get a fair number of emails asking me to recommend books about economics. You can't do better than this one.

One of the hardest things about learning economics is learning to look beyond your first order intuitions to second order effects. A classic example of this is supply side arguments for tax cuts. Supply siders say that tax cuts increase the incentive to work, by allowing workers to keep more of their money, and thereby grow the economy. Intuitively, this makes sense. Yet, surprisingly, there is little empirical evidence for this proposition. This starts to make sense if you add in other, slightly less obvious intuitions about our demand for work vs. leisure, a detailed explanation of which can be found here.

Hazlitt does an excellent job of puncturing common economic fallacies by leading the reader, in simple, easy-to-understand language, through the second order effects.

It's also a fascinating read for the historically minded. Some of the fallacies he punctures are no longer in common currency, but a surprising number of them are, such as the belief that tax cuts targeted at lower income brackets are magically better for the economy because, the advocates tell us, the poor spend their money, while the rich save it; or the idea that the government can grow the economy over the long term by running a deficit, which is used by both right and left to justify their pet policy boondoggles.

The book is not flawless. Hazlitt is a strict classical economist, which makes him rather more rigid on some topics than is current in economic thought. His discussion on money, in particular, leaves something to be desired; he uses a model of money that's far too simple, and this makes him an inflation hawk to put the Bundesbank to shame. On the other hand, one has to remember that Hazlitt was a practicing economist from World War II to the late seventies, the heydey of well-meaning idiots who wanted to print their way to prosperity. When inflation is in the double digits, it's better to be hawkish than lax -- but the reader would be well advised to remember that money is a very, very complex topic, and he's not necessarily giving you the whole story.

Nonetheless, the beginning amateur economist can't do better for a useful, simple primer. It's sufficiently broad to help you understand many of the policy topics of hte day, yet sufficiently simple that you can read and understand it in your spare time. Take it with you through the newspaper and see if it doesn't help you figure out what all those talking heads are blathering about.

From the desk of Jane Galt:

Guns don't kill people, idiots do.

Rob Lyman writes a compelling piece on newbie shooters, arguing persuasively that the problem is not the guns, but the fact that people who are forbidden to have guns tend to act like jerks when they finally get their hands on one.

Which, unsurprisingly, reminds me of a story.

I used to be a pretty decent rifle shot when I was at camp. So my last year there, because there were so many kids who wanted to shoot, I got to be one of the deputy instructors who reviewed the rules of range safety and demonstrated the basics of loading and firing the rifles.

We had there a kid we'll call James. James was actually my age, but didn't act it. He saw that the .22's he'd been given to shoot were much less powerful than the guns the more experienced shots were using; I, for example, was trying to master the kick of a .30-06. (Don't laugh at me; in high school I was 6'2 and weighed 115. It was a miracle I could hold a .22 still, 'kay?) James wanted to shoot a more powerful gun. He whined and whined until the instructor, who should have known better, told me to give him my .30-06. I confess I was glad to do it; my shoulder and arms felt like someone had taken a truncheon to them.

Did I mention it was loaded? I did to James, several times. "It's loaded," I told him, when I handed it to him. "Don't forget, it's loaded," I told him again, when he started to toy with it. "Careful, it's loaded," I said, when the instructor was called over to deal with a problem down the line and told everyone to put their guns down.

To round out the story, James had a friend named Alex, who was learning to use a .22 bolt action like everyone else. They were bored, waiting there on the firing platforms for the instructor to come back. They started chucking rocks at prairie dogs, which we called "pickup hens".

I think you can see where this is going. Just one more detail: while the firing range was set up so that there was about a five-mile clear run beyond the target area to the next human habitation, we weren't all that far from the buildings; they were maybe a hundred yards or so off to our right.

Have you ever seen something happen too late to stop it, but not too late to appreciate the horror of what is about to take place? I saw James and Alex pick up their guns, but didn't even have time to shout "No!" before James had swung his gun up. He didn't jam it against his shoulder, but held it loosely in general shoulder area while he aimed at a prairie dog and fired in the direction of the buildings a hundred yards away.

The non-shooters among you may not be sufficiently horrified by that. It's like. . . a non-Catholic taking communion at the Vatican. Making a bonfire out of Old Masters. Selling your own child to white slavers. It's unthinkable. Unless you are a soldier, you never, ever fire a rifle in the direction of a large group of people. Any rifle fired at a distance that short can easily kill someone.

Luckily, his didn't. But of course we didn't know that, yet, and the instructor, a fellow with sufficient power and temper that I once saw him punch a horse we were having difficulty breaking to saddle -- and the horse went down. He made a beeline for James, swearing at the top of his lungs, his face a color purple that made me genuinely fear for James' life. He stopped short, however, when we saw that there was no need to punish James, because James had taken care of that for us. In neglecting to put the stock firmly against his shoulder, James had given the gun's recoil permission to send that stock in any direction it pleased. Which direction had put it directly in the path of James' nose. It was streaming blood and cocked at an angle that told everyone watching it was broken.

Did I mention that we were two and a half hours from the nearest town with a hospital, almost all of that over pitted gravel roads?

James didn't improve with age; I've seen him several times since, and he remains a twit. But one likes to think that if he'd encountered guns at an age before impulse and defiance join to make boys very, very dangerous, he might not have been a twit who could have killed someone.

From the desk of Mindles H. Dreck:

Misanthropic Snobbery

I abhor comments like this:

"Obviously the public finds amusement in emotional exploitation of people," said Peter Soderling, a technical architect, who prefers The Osbournes brand of reality TV. "It's sad and shows that our society doesn't have a lot of value or depth in their own lives."

To turn that comment around - I always suspect that a broad condemnation of society's choice of entertainment accompanies deep unhappiness with one's own life. Such snobbery is usually a vain effort to make the mirror to one's own soul reflect something more satisfying.

Another interpretation is that the individual quoted thinks the masses need someone to show them how to use their freedom. Who likes that kind of patronizing offal? This form of cultural reactionaryism (yep, that's in the dictionary), available on both the Left (Quindlen) and the Right (Sunstein, perhaps?), is cheap, pernicious and revolting.

Article via Rachel Lucas.

Huh. How about that? My Sunstein rant was exactly one year ago today.

From the desk of Mindles H. Dreck:

Guns and Baywatch

I've not been able to get worked up about gun control. I learned how to shoot a rifle as a kid, but I don't own a gun now. Guns actually worry me less than large ktichen knives. It's harder to keep the latter away from your kids and still make them accessible for cooking.

It's clear that control advocates often use ridiculous utopian/authoritarian arguments about the potential benefits of gun control. On the other hand, it's difficult to see the right to owning guns as having a meaning even remotely similar to the significance it enjoyed in the 18th century. Would a gun in every household really stop a modern military totalitarian state?

Perhaps I need to think more about it.This is an interesting post by Rachel Lucas and one of her readers.

Here's my favorite line:

Our grandparents walked on the moon, man! And why is it that of all we produce and all we exult, the only things that seem to have caught on in Europe are McDonald's and Baywatch?

He forgot David Hasselhof's song library. Oh yeah - they didn't get that from us.

From the desk of Mindles H. Dreck:

White Men Can't Supervise

Today I took a securities "continuing education" exam. As I am a supervisor (Series 8), it focused on office/branch supervisory issues. The new format of these tests is a presentation of video vignettes, showing brokers, supervisors and clients interacting. There are even filed documents to review in each case. It is all held together with a little graphic "city" where you click on different buildings to start different cases. I'm not sure why the "city" thing, since you have no choice as to what the next case will be. There is the appearance of choice, but no real choice, which is somehow appropriate.

There is also the appearance of "a test" but no real test. If you get something wrong, the computer tells you to try again. So it's more of an educational video game session than a test. I think if you really stink up the place they send a note to your compliance officer. You can't be a potted plant and "pass", but a lobotomy wouldn't be a serious obstacle - as long as you can find your way to the testing center.

I've been taking these sorts of exams (including the original ones that actually require correct answers and a passing grade) for many years, so there are a few important rules of acknowledging the bureacracy's omniscience. When in doubt:

1. "report it to the compliance department" is always a good answer
   
2. likewise, so is "investigate further"
   
3. Any answer suggesting you "assume" any knowledge is wrong
   
4. if the question allows more than one right answer, click everything that doesn't sound downright silly
   
most important- there are never exceptions. Never.

In this new age of aggressively multicultural video vignettes, there are a few new and annoying rules:

• Brokers that are recognizable minorities don't do anything wrong
  
• Older white men are poor and lazy supervisors - criticize their actions with abandon in your answers! They tolerate not only aggressive brokers with criminal clients, but now drunks and serial sexual harassers.
  
• Young white men and women are overly aggressive with their clients. A really good-looking white woman is trouble. Fire her. It's only a matter of time before you find out what secrets she's hiding behind her devilishly attractive facade.
  
• click on all the answers, they love that. About 40% of my questions today were correct with every single answer checked.
  

It's not, of course, that I think the test-writers have it out for white people, it's just that they know they will get endless crap if they make a minority a "bad guy". Nonetheless, as an approaching-old white guy, it wears on you after a while.

By my count, one African-American supervisor received criticism once in the course of my test. "How could this conversation have gone better"? we are asked, after a client who has been trading on insider information gets offended at the supervisor's suggestion that he has been...trading on insider information.

There is a new section on hiring practices. I found myself resenting it because it incorporated diversity hiring into it's "correct" answers (something that's morally correct isn't necessarily legally or factually correct, folks). One of the answers I got wrong suggested I should inquire into an applicant's ethnic background. If you should ever be interviewed by me, you will not be asked this question. But all of that is irrelevant - hiring practices, beyond the basics that allow or deny a securities registration, are not a matter of securities regulation and did not belong on this test at all. I don't need a test to tell me not to hire a drunk or a womanizer. You can still vote for one, of course.

Anyway, this is all funded through levies on firms and trading activity, so ultimately you pay for it. I thought you might want to see how your money works for you.

One of the points emphasized today was that office managers should contact the clients of the brokers they supervise. I've had an account with another broker (I'm a money manager by trade, not a broker) for 13 years, and I've never once spoken with the office/branch manager. I bet I'm the rule, not the exception. Have any of you been contacted?

From the desk of Jane Galt:

Deficit Spending

These guys say that an increase in the projected long-term budget deficit of 1% of GDP increases the long-term interest rate by 50 to 100 basis points (between 0.5 and 1%).

That implies, among other things, that our failure to deal with Social Security and Medicare is costing us money, since they're the largest component of long-term projections (yes, mis amigos rosados, they dwarf even The Evil Bush Tax Cut For the Rich).

From the desk of Jane Galt:

How boring am I?

Remember My Tivo Thinks I'm Gay? Tonight I found out that my TiVo thinks I want it to record the channel that tells you what's on. Presumably I'm so dull that I will enjoy, hours later, scrolling for hours through what I might have been watching if I'd been home.

From the desk of Mindles H. Dreck:

Flexible Criticism

'Theodore Dalrymple' decries the rise of violent crime in Britain in the Wall Street Journal:

Britain is now the world leader in very little, with the single possible exception of crime.

Recent figures published by the U.N. show that Britain is now among the most crime-ridden countries in the world: Its citizens are much more likely to be attacked or robbed on the street, or have their houses burgled, than their counterparts in, say, Russia or South Africa, let alone the U.S. Everyday experience in Britain is quite sufficient to establish that we now live in a deeply criminalized society.

He goes on to describe the problem in terms that have a certain...universal ring, I think:

In the war against civility, the savages have it all their own way....

...The response of the British liberal intelligentsia and the political class to the crime wave that has engulfed our society makes a jellyfish look solid. Witness the British middle class in full retreat. Every conceivable argument has been used to avoid acknowledging the painful reality of what we have so heedlessly wrought over so short a period. Some try to suggest that crime hasn't really increased, but that it is just more fully reported now than ever before. Others venture that there is more theft because people have more possessions (the first time wealth rather than poverty has been blamed for crime). And so on, ad infinitum.

As the politicians dither and bicker, I am reminded of the Romanian peasant proverb: The whole village is on fire, but grandmother wants to finish combing her hair.

At the root of the British inability to confront the problem is snobbery. There is a reluctance on the part of the upper echelons of society to believe that the lower echelons are fully human, and therefore responsible for their own acts and decisions. No discussion with a British liberal about the growing incivility, criminality and violence of British life is complete without reference to Hogarth's Gin Lane, the implication being that 'twas ever thus. This, of course, is nonsense. But it does establish that the British liberal intelligentsia believes the lower classes are genetically and irredeemably, utter scum.

To coin a phrase, indeed.

From the desk of Jane Galt:

Time to Go

Seems Link Chafee is calling for Lott to resign. And y'all wanted to kick him out of your party.

Meanwhile, Whitlock's got the complete summary of events and commentary up to now. Funniest thing I've read all day.

From the desk of Jane Galt:

Brave New World

Richard Bennett ably demonstrates why you have to take millenial-type technology blather with a grain of salt.

Sometimes technology really is transformational in unimaginable ways: in 1910, or even 1920, could you have imagined the revolution the automobile would bring about in mating rituals, family relations, consumer habits -- without even touching on the industrial and military revolutions it precipitated?

On the other hand, for every automobile there's a helicopter or videophone that didn't meet its early promise. Or a Thomas Watson who misses the trend. This feature from Newsday shows just how dangerous -- to one's reputation -- predicting the future can be.

From the desk of Jane Galt:

Are Republicans Racist?

That seems to be the conclusion of the left half of the Punditariat. It also seems to be, tenatively, the line they've decided to take in policy battles over the next year. (Thanks, Trent!) Personally, I think it's a political loser. All their arguments, Trent Lott and the execrable Bob Jones excepted, seem to be based on one of two no-very-compelling strategies:

a) Drag out things that happened 20 years ago and wave them around like a golden retriever with a dead fish in its mouth.

As I believe I've mentioned, I happen to be related to The Swing Voter. Specifically, she is my mother, whose vote has predicted nearly every election I can remember.

The Swing Voter thinks this sounds like my younger sister bringing up the horrendous things I did to her when I was seven -- not very relevant to making judgements about today. The Swing Voter also notes that the Democrats, whose memories of 20 years ago are so fresh, seem unable to recall 35 years ago, when members of their party were rioting to keep blacks out of their schools.

Neither argument is going to win an election.

b) Argue that certain policy items are racist because the black caucus does not like them.

Probably 90% of Jewish groups in this country support increased military funding for Israel. Is opposing that anti-semitic? Of course not, though I'm sure you can find some bunch of idiots who will make the argument. And no doubt some of the people who oppose military aid to Israel are anti-Semitic; that doesn't tell you anything about the validity of the idea. Which brings up variation b1):

Racists are in favor of [Insert policy idea]; therefore people who are in favor of it are racists.

Memo to Democrats: you need to stop this before someone points out that many of your policy ideas were big favorites with Hitler.

Which leads to corollary b2):

You can't claim your policy helps minorities unless the only reason you are in favor of it is to help minorities

Which I think means the Democrats are out of luck on Affirmative Action, since they keep telling us that it benefits all students, of whatever race, by providing diversity.

and b3):

Any Republican policy idea shall be judged by its most repugnant adherents.

Another Memo to Democrats: the Swing Voter, as I mentioned, has children. This sort of argument gets routed to the same part of the neural cortex as "Of course I can't invite Cousin Mandy -- she's in the chess club!" "but all my friends get to lick electrical sockets!" and "If I don't get to die my hair pink, my life will be ruined!"

On the excellent CalPundit, Kevin Drum says that Bryan Preston is out on a limb claiming that the Republicans can be proud of their record on race. Now, I'm not an enormous fan of this sort of article, although to be fair the Democrats have been calling Republicans racists for so long that its possible some of them need a little rallying. But Kevin's criticism misses some important points.

On the military, Kevin summarizes Preston's argument thus:

In addition to its main mission of protecting the United States and projecting its power globally, the U.S. military is one of our society's great equalizers. Anyone of any race can volunteer for service, and entering the services brings many privileges and responsibilities.

Uh huh. African-Americans are allowed to join the army, Republicans support the army, therefore Republicans support racial equality. Right.

Actually, the military has been one of the most important vehicles of integration. For a couple of generations now it has taken poor black and hispanic kids, taught them a skill, given them the opportunity for an education, and made them a hell of a lot more marketable than they otherwise would have been. Unlike the Democratic favorite, affirmative action, the military benefits the poor and disadvantaged, rather than the primarily middle- and upper-class kids who reap the rewards of college admissions preferences. Since it is precisely those disadvantaged kids who affirmative action is supposed to be helping in the minds of the public, this is not a strong talking point for the Democrats.

Inside the military, the committment to advancing minorities through the traditionally Republican goals of pushing, rather than pulling (a pull strategy would be affirmative action; a push strategy would be Prep for Prep), and a relentless hounding of those who practice racial discrimination that would probably be unconstitutional in civilian life. That's why we had a black joint chief of staff before we had a black Fortune 500 CEO. Let's be frank: the majority of the Democratic leadership doesn't like the military, except when it lands bases in their district. So the Republicans can claim some street cred for supporting one of the largest integration programs in the country.

Kevin Drum also says the Republicans can't take credit for vouchers because it started in the Christian movement:

Now, I'm not a die-hard opponent of vouchers, but the history of vouchers is clearly not based on any kind of commitment to racial justice. Republican conservatives began fighting for them two decades ago, and the fight was led primarily by members of the Christian right, who wanted public funding for Christian schools. Then, sometime in the mid-90s, after it became clear that this argument wasn't resonating with enough people, the GOP hit on a new argument: vouchers are good for black people!

It's possible that they are. But it's also clear that Republican support of vouchers has nothing to do with concern for blacks. It's just a good argument to gain support for something they already wanted.

This, then, is why blacks don't trust the Republican party. Occasionally, and mostly by coincidence, they support things that the African-American community wants, but they never actually support the African-American community itself. If they ever want to earn their trust, they will need to support something — anything — that has racial equality as its primary purpose, not just as an afterthought.

How do you support a community? "I'm in favor of Irish People!" "Vote yes on Greeks!" "I stand for motherhood, Apple pie, and Latvian-Americans!"

You support a community by being in favor of the things they're in favor of. When African Americans are polled on the particulars of affirmative action -- a 200 point preference on the SAT's, for example -- they poll against. And when they're polled on vouchers, no matter how you massage the question to make vouchers sound awful, they're for. Is there an issue more important to the african-american community -- or any community -- than the education of its children?

And contrary to Kevin's assertions, most Republicans are not in favor of vouchers because they support Christian schools, because most voucher supporters aren't evangelicals. It is precisely those inner city blacks most voucher supporters are thinking of, the ones held hostage in useless schools by the educational establishment. The evangelical schooling movement is tiny, not enough to swing a Republican primary, much less an election.

If you want to demonize an idea by who it's associated with, try this one: opposition to vouchers comes largely from two groups of people. Teacher's unions, who are afraid of being shown up; and homeowners in good school districts, who don't want to lose the price premium their house commands due to their superior school.

And of course, Democratic politicians who fear the teachers unions more than they fear losing the black vote.

From the desk of Jane Galt:

Take That Luddites!

Who says that cold technology can't give you a heartwarming Christmas miracle?

From the desk of Jane Galt:

Hmmm. . .

TalkLeft links to a study arguing that the murder rate has fallen because of better access to medical care. It's one of those unobvious intuitions that make you smack yourself in the head and go "Duh!"

On the other hand, I doubt it accounts for all the variance, since other violent crime has also dropped. But I would find it interesting to know whether Britain's smaller size accounts for the difference in their crime rates, since per capita they outstrip us in everything but murder, which is also the only crime judged on the health outcome. If their victims are closer to hospitals, and thus don't die en route, that might account for it.

From the desk of Jane Galt:

Can It Be True?

Somehow, one always felt it would come to this.

(via Radley Balko)

From the desk of Mindles H. Dreck:

Mirror Mirror on The Wall

Orrin Judd thinks conservatives risk lazy overconfidence and intellectual decline.

....conservatives of D'Souza's age--which is mine, and I've been watching them since we were in college--are generationally in the same position as liberals of (Lionel) Trilling's or Arthur Schlesinger Jr.'s.

Imagine that.

UPDATE: These are not Orrin's words, as noted in the comments, but those of George Packer in The Nation in a lengthy excerpt. In any event, tt was the extraordinary possibility of comparing D'Souza to Schlesinger Jr. that struck me, as well as the continuing meme of strong ideological movements needing deep intellectual opposition to avoid "triumphalism".

From the desk of Jane Galt:

Ever Wondered. . .

What Christmas would be like if it was a Jewish holiday? Frankly, no. But luckily, someone took the time to think out what the halakha might look like:

3. DURING THE SHMITTA YEAR, A JEW MAY NOT CUT THE TREE DOWN, BUT IT SHOULD BE DONE BY A GENTILE. HOWEVER, SINCE THE TREE IS INEDIBLE, THE PROBLEMS OF "KEDUSHAS SHVIIS" WHICH APPLY TO THE ESROG DO NOT APPLY TO THE XMAS TREE.

4. THE TREE MUST BE BRIGHT GREEN. BRIGHT RED, or a mixture of green and red, IS ALSO ACCEPTABLE FOR A XMAS TREE,11 BUT BROWN IS NOT. THERE MAY BE ONE BROWN SPOT NEAR THE BOTTOM OF THE TREE,12 BUT IN THE TOP HALF OF THE TREE, EVEN ONE BROWN SPOT WILL INVALIDATE THE TREE. A TRULY PIOUS PERSON WILL MAKE SURE TO BRING ALONG A XMAS TREE EXPERT WHEN HE GOES TO LOOK FOR HIS TREE.13

11 Because such trees do not grow red naturally, many Sefaradim adorn the tree with red poinsettia flowers. Ashkenazim prefer poinsettas.
12 Or even two, provided they are on opposite sides so they cannot be both seen at the same time.
13 But it is more macho to pretend to be an expert and pick the tree out himself.

Tee-hee! Go read the rest.

(Via Plum Crazy)

From the desk of Jane Galt:

Goodness!

I'm blushing.

From the desk of Jane Galt:

Strike!

So it looks like the transit union may walk.

It's not immediately obvious why. The state's Taylor Law is pretty draconian; striking workers not only lose two days pay for every day they strike, but also (I'm told), the union loses the right to automatic deduction of their dues.

Nor is it likely that they will get what they want, for several reasons. First of all, Toussaint has challenged Bloomberg publicly; if Bloomberg caves, his administration is done. Second, as I've said, the MTA does not cover its expenses out of its own revenues; the "surplus" the union keeps agitating about was a one-time gift from Pataki last year to keep the agency from raising fares before the election. There can be no repeat this year because the city and state budgets are both deep in deficit.

Most interesting is the inter-union warfare. After last year's record raises to 1199 (the healthcare union), the other public unions are looking to get theirs. The city cannot afford to let a raise go through for the TWU, because if it does, the police and firefighters will demand even more lavish payouts. The size of those departments, and those payrolls, dwarfs the city's contribution to the MTA. Bloomberg needs to draw the line here.

If Toussaint strikes, he'll certainly cost his unions something. But a one or two day strike, while a mild inconvenience, will not force the City to concessions, and will be a public relations disaster for the union. A longer strike would be a public relations catastrophe -- and a financial catastrophe for the workers, who we keep hearing from the union are practically on the edge of starvation.

So, why would he strike against the interests of his workers? Well, just as boards and managers do not always act in the interests of their shareholders, unions do not always act in the interest of their membership. For example, it's very common for unions to resist plans to reduce the workforce through attrition when productivity improvements reduce the number of workers needed in a given job. Even in cases where the workforce reduction won't hurt any of the current membership, the union will often make pay and benefit concessions in order to implement featherbedding rules that increase future membership at the expense of current members. This does not benefit the current members -- to whom, remember, the union leadership has a fiduciary relationship as binding as that of boards to shareholders -- but it does benefit the union leadership, by giving them a larger, more powerful organization.

Toussaint is a new president. If he takes down Bloomberg, he will be a hero to his members, and his union will grow in power. Even if his membership ends up little better off -- and remember, strikers who only work 40 hours a week will lose a full days pay every day the union is out, a net loss of 5 weeks pay in two weeks -- he could end up better off. But given the unlikelihood of a favorable settlement, it's hard to see how his members will be.

As of this writing, they're still talking. That's a very good sign, as these things usually go pretty close to the wire. If not -- well, I'll be walking the three miles to work in the rain tomorrow. I try to look at it as an opportunity to get a little closer to our pioneer ancestors.

Update Reader emails to say that there will be livery cars picking up at the bus stops. Actually, I don't mind walking unless the weather's really vicious, and I can certainly use the excercise after the holiday festivities. I may take a livery car if there isn't a lot of demand, but for any youngish, fit-ish New Yorkers out there -- try to remember that there are probably a lot of people who need to get around who can't walk as far as they need to go. If there's a long line at the bus stops, why not stretch your legs a little?

Update II The union just blinked.

From the desk of Mindles H. Dreck:

Have Your Peace-Pipe and Smoke it Too!

Well, now that a variety of hollywood celebrities, including the guy who plays the President on TV and former cast-members of Benson and Dino de Laurentiis' version of King Kong have come out against a possible war on Iraq I am forced to reconsider my position.

In other news, dental surgery, hair replacement and breast implants increase reasoning ability.

The full-page ad placed by these folks in the New York Times today stated that "Iraq can be disarmed peacefully."

"We've got the United Nations doing exactly what they were designed to do -- what we want them to do," said Carroll, who also signed the letter. "For God's sake, let's take 'yes' for an answer and end this march to war."

I am amazed that anybody can just ignore how we got here. Forswear war if you like, but don't fool yourself with the fantasy that pacifism might actually be more effective in disarming Saddam than the threat of force. Only serious threats brought the inspectors back to Iraq in the first place.

To be fair, one of the celebs makes a passing reference to reality - Here's self-deluding pacifist and milquetoast M*A*S*H star Mike Farrell:

Mike Farrell, a longtime liberal activist, said U.S. threats to go to war if necessary to disarm Iraq may have been necessary to get Iraq to allow U.N. weapons inspectors to resume, but are now undercutting the inspectors' chances of success.

Force only worked in the past. Two months ago, that is.

Apparently these folks can't make sense without a script. If we take their advice and publicly indicate our unwillingness to go to war, Saddam kicks the inspectors out. So then what? Make him watch their re-runs until he gives up the nukes? What "process" will be left to work?

Pretending that the threats implicit in our Iraq policy are ineffective sabre-rattling is having your cake and eating it too. The celebrities get to cleanse their conscience of the ugly business of projecting power against a violent thugocracy yet still claim credit for any positive results! Tastes great, less troubling!

Saddam Hussein has never paid attention to anything but the barrel of a gun and his own sick appetites. No amount of simple-minded faith will change that.

Oh, and Saddam has no connections with terrorism either.

From the desk of Mindles H. Dreck:

Free-Breathing Bloggers

Funny that Jane should write about albuterol and asthma. I did not realize we had the affliction in common.

As a child my asthma was quite serious. I was hospitalized several times, and asthma and fear of asthma interfered with many activities.

The letter Jane reminds me of the bad old days. As a kid in the '70s, most of the "controller" therapies were not available at all in the U.S., so we relied on bronchodilators such as albuterol. Incidentaly, albuterol was not available until about 1976 and is far superior to its predecessors (theophylin and isopreterenol-based, if I remember) in terms of side effects such as jitters and stomach discomfort.

I believe the only "controller" available in the U.S. in the early 1970s was Cromolyn Sodium ("Intal"). Intal works primarily to prevent the histamine reaction by coating the mast cells. Intal was helpful for allergic asthma, but it was no panacea. One of its additional drawbacks back then was it could not be atomized (Cromolyn and its successors are atomized now). In order to get it into your lungs, you had to use a spinhaler. A Spinhaler consists of a propeller mounted in a special sleeve. You place a capsule full of powder in the windward side of the propeller, slide the sleeve down to puncture holes in the side of the capsule, then suck hard through the sleeve. Centrifugal force brings the powder out of the capsule where it is sucked through the propeller into your lungs. It was both uncomfortable, awkward and conspicuous, as Spinhalers make noise like a Rock'em Sock'em Robot losing its head.

The asthmatic's saviour is inhaled steroids. Nothing keeps the airwaves quite so smooth as a regular application of cortisone or Fluticosone. Interestingly, while I was stuck with my Intal turbo-prop, Canada had approved steroid sprays for prescription use. In 1977 we began to smuggle in Vanceril, one of the first formulations. That was the beginning of the end of my asthma problems. Of course it was many years before we could subscribe it in the U.S. Since about 1984, these medications (Flovent being the most common) are ubiquitous, and form the backbone of almost any asthma treatment.

Oral steroids (pills) are likewise an incredibly powerful means of calming a severe attack, although they are not fast-acting. In today's emergency rooms the standard procedure is to administer steroids in liquid suspension and give the patient bronchodilators via nebulizer.

But that's a recent development. When I was hospitalized in the late '70s and early '80s, they just kept pumping me full of Epinephrine and Aminophyllin, which caused a racing heart beats and heightened anxiety. These side effects actually aggravated the asthma attack to some degree. Doctors in the U.S. had a real problem with the potential side effects of steroids. My specialist had to argue with my school physicians and hospital attendings endlessly to get me treated with oral and spray steroids as appropriate. These medical professionals always seemed to be worried about side effects, such as sterility, that are associated with anabolic steroids (and see Dayn Perry in Reason for some skepticism on the other effects). They also seemed to react very defensively to specialist advice.

I am still an asthmatic, but today's medications (such as Advair)make it easy to control with minimal effort. I even run middle and long-distances now, which continues to amaze me. I took a few lessons from my experience:

• The lifestyle benefits of modern medicine are priceless. I would be dead without them. Medicine may be getting more expensive, but we are getting infinitely more for our money.
  
• Doctors, while men/women of science, are often married to the science they were taught in medical school. As they get older, they often become reactionary and close-minded. (incidentally, my father, brother, father-in-law and sister-in-law are doctors)
  
• The FDA is too damn slow approving new medications. I've got the unpleasant experiences and permanent lung-scarring to prove it.
  

Incidentally, Jane's writer is correct. We would be better off getting Flovent available over the counter than giving everyone albuterol. While it is possible to take too much topical steroid and damage your lungs, it is unclear why anyone would do so.

Bronchodilators are much more tempting to overdose, as athletes use them and they come to hand in periods of high stress, as they did to Jane. Too high a dose of common bronchodilators can actually make asthma worse, and an overdose can kill you. It happened to a model some years ago, but I forget her name.

Asthma has apparently become a serious problem in inner-city areas. My doctor tells me there are some recent studies indicating a correlation between the incidence of childhood asthma and the concentration of atomized tire-rubber in air samples. Then again..

I'm obviously not a doctor or medically trained. I just play one when I medicate myself...

From the desk of Jane Galt:

Can the West Seduce the Arab World with Our Dating Culture?

For no apparent reason, today I was thinking about the assertion I've seen, on blogs and elsewhere (and yes, you may assume this means I'm too lazy to go find the links) that all we need to do is wave the prospect of actually marrying someone you choose yourself at the young people in the Arab/Muslim world, and they'll jump ship for our obviously superior system. This rests on an extremely flawed analysis which considers the decision to marry as largely separated from questions other than the romantic interest between the two people. This is based on the Western, especially the American, view of marriage, which is both itself far too simplistic, and simply inapplicable to a wide swath of the world's people in their current condition.

Don't get me wrong -- despite the fact that studies have repeatedly shown that people in arranged marriages are about as happy as people in marriages where they choose their own spouse, I'm a big fan of romantic marriage. But marriage as an institution takes place within a whole web of social and economic connections, and you can't just consider a society's rules about marriage in isolation. Arabs don't have arranged marriages just because they're mean, sexist bastards; there are reasons that they arrange things the way that they do.

Specifically, arranged marriages take place in societies where the extended family is both the basic social unit, and the basic economic unit, (and often the basic political unit) of the culture. A Saudi girl will, after her marriage, socialize exclusively with her family and (mostly) her husband's. Those families will provide her with the economic support for herself and her children. The dowry so often decried by feminists usually actually belongs to the woman, and is used to support her in the event of death or divorce. The arrangements that are usually derided here as primitive and cruel are in fact a complex system designed to ensure that women and children are supported. (I wouldn't want to live in the system. Perhaps many of those living in it wouldn't either, though I haven't talked to any and thus couldn't say. But you can't change one part of a system without examining the systemic effects of that change.)

In the case of those who assume that choosing your own spouse is an unalloyed good, they are failing to understand the complex system of obligations that accompanies marriage in a society where extended families form the primary economic and social support. The obligations that a marriage in America conveys upon the parents-in-law are not trivial, but they are nowhere near as binding as the obligations that not only parents, but also the entire extended family, takes on to the new spouse, and often their extended family, in traditional societies. Ever wonder why so many plays and novels prior to the twentieth century feature families having, er, violent reactions to their children's choice of spouse? Well, before the industrial revolution (and after it for some time, due to cultural lag), a poorly chosen spouse conferred all sorts of potential trouble on the family. Their debts could be settled upon the family in many places; their actions could dishonor the family. In earlier times, your family might be expected to provide money, or even go to war, to support theirs. Well into the twentieth century, you would expect to be saddled with your child and any of their children if the spouse turned out to be a rotter.

In that context, it doesn't make sense to let the children choose their own spouses. Would you want to be settled with legal and social liability for the actions of whoever your child thought was nifty at the tender age of, say, seventeen? This is why, well into the twentieth century, most parents expected to have a little say about who their daughters married.

The response of those who favor a transactional model of marriage is to get rid of these clearly inferior institutions. They extravagently impair individual liberty -- who needs it?

Well, in cultures that practice these kinds of extended family relations, the answer is usually "everyone". Extended families perform a lot of highly necessary functions, such as social insurance, emergency health and child care, employment agent, and a hundred others. In countries with low per-capita incomes, especially countries where government corruption is high, it is not possible for the government to provide all of these services at adequate levels for several reasons. Government services have enormously higher transaction costs than family-provided services, because of poor feedback mechanisms and misaligned incentives. Also, until people are pretty well off, they are unwilling or unable to pay taxes for the support of people with whom they lack genetic affinity.

Even in the West, however, the libertarian/left idea of marriage is excessively transactional. No matter how appealing the idea, it really isn't possible to separate any decision this major from its cultural and economic repercussions.

Take, for example, the indisputably private decision to bear children. Private and personal though it may be, it has large public effects. In Japan, where a large number of individuals are individually deciding not to have children, the aggregate effect is to create a demographic crisis, as fewer and fewer workers have to support more and more people out of the workforce. This is a vicious circle, because the higher the economic burden of caring for the pensioners, the more people are likely to curtail childbearing.

Now, many will argue that the problem is the social security system, but this is not true. While badly designed pension systems can indeed have undesireable effects on pensions, productivity, childbearing, working decisions, and so on, the problem of demographic crisis is substantially the same whether the system is public or private. Whether they are drawing their money from a government check or a dividend check, the essential issue is the same: a smaller number of workers trying to produce enough things for a larger number of non-workers. A private pension scheme would probably increase productivity, and thus the standard of living at which the extra non-workers could be supported, over what would be made available by a public system, but there's no particular reason to believe that with demographic decline like Japan's, realistic productivity improvements could even maintain current standard of living, much less improve them.

And why the demographic decline? I don't know that much about Japan, but I'm told that it's because, institutionally, Japanese marriage is inappropriate to their modern economy. Japanese men work and socialize almost exclusively with other men, leaving their wives home with the children and often, his mother, to take care of. Young women are looking at this and saying "no thanks!"; they're staying single and spending their disposable income on themselves. In an economic system in which women's labor is sufficiently productive for them to adequately support themselves outside of the home, and a legal system in which Japanese women cannot be forced to marry by their families (thanks, MacArthur!), Japanese marriages offer insufficient incentives to induce sufficient numbers of women to enter into them.

So decisions about childbearing and marriage are not made in isolation, nor changes to the structure of the associated institutions, although to Westerners they appear to be. They can have very large economic and political effects on everyone else: witness the ten-year recession in which Japan's demographic crisis seems to be the starring player (with able assistance by the banking crisis and status-quo ruling party).

Note that this is not necessarily an argument for some sort of government intervention. There's no particular reason to think that governments would make good decisions about people's marriage and childrearing. It is merely to point out that marriage and childrearing are not merely lifestyle choices. They fundamentally alter the character of the society in which everyone else lives. As such, they can have large negative externalities.

To return to the question of whether Arabs can, willy-nilly, abandon arranged marriage, the answer is, not without getting rich enough to abandon the extended family as the major socioeconomic unit. And they can't do that without altering the governments that so dramatically misalign incentives, and thus stifle growth, or seize the bulk of the nation's wealth for kleptocrats. The idea that we'll seduce them by dating forgets that for a young person in Syria, dating may be all very well, but if he marries without his parents permission, he'll have no job or home, no one to take care of him if he's sick, etc. Most of his friends are probably also relatives. It's much more complicated than I think most Westerners are assuming.

I think they're putting the cart before the horse. First get rid of the governments so they can get rich. The social stuff will take care of itself.

From the desk of Jane Galt:

Cranberry Fruit Bread

I'm not a big fan of fruitcake; candied fruit is not my thing. But even you candied fruit haters out there should give this a try -- there's something about this bread, with its big chunks of cranberry, that's really special. It's not like your normal cranberry bread, which is really orange bread with a few cranberries thrown in. In this one, the cranberries are the main event.

You will need:

4 cups of flour
3 cups of sugar
1 Tablespoon of baking powder
1 teaspoon of baking soda
2 teaspoons of salt
2 oranges
1/4 cup + 2 tablespoons butter
3/4 cup of water
1 cup chopped nuts
2 eggs
1 lb cranberries
1/2 cup seedless raisins
1/2 cup chopped citron
1/2 cup mixed candied fruits

Bowls of various sizes
2 small saucepans
Sifter
2 full-sized loaf pans or 4 smaller ones

1. First things first: turn the oven on to 375 degrees.

2. Put your 3/4 cup of water on the stove to boil. In a different pan, put 1/4 cup of butter (1 stick) over low heat to melt.

3. Wash the oranges in very hot water. (Some oranges are coated in wax; this removes it.) Grate the zest -- the orange part of the skin -- off the orange with the finest section of your grater. As soon as the white shows through on a section you're grating, you're done with that section and it's time to turn the orange.

4. Once you've grated the oranges, cut them in half and squeeze the juice out. If you don't have a juicer, you can purchase plastic manual models for a buck and change at the supermarket, and it makes a nice brunch accessory.

5. Combine the melted butter, boiling water, juice, and zest and set aside to cool.

6. Sift together the flour, sugar, baking powder, baking soda, and salt. Set aside

7. Chop the cranberries into coarse pieces, perhaps 1/6 of a cranberry.

8. Chop the citron and nuts, if you did not buy them pre-chopped.

9. In a large mixing bowl, beat the eggs with a whisk or fork until lemon-yellow and foamy.

10. Add the warm orange mixture to the eggs.

11. Add everything else to the bowl. Mix with your hands (I know, but it's really better. Trust me.) just until everything's damp.

12. Butter your loaf pans with the remaining butter.

13. Pour the mixture in and let stand for 20 minutes

14. Bake at 375 degrees 1 to 1.5 hours.

From the desk of Jane Galt:

Should Albuterol be Decontrolled?

So right after I graduated from business school, I almost died.

It was incredibly stupid. I'd run out of albuterol and when I went to the pharmacy to get a new one, I found out my scrip had run out. I kept meaning to call the doctor to get a new one, but I forgot. (I probably have to use a rescue inhaler once a week during my good periods. I was in a good period. Or so I thought.)

So I went to a mexican restaurant with a friend to suck down margaritas. We were waiting for someone else, so I didn't eat much, and between the margaritas and the lack of food -- let's just say my judgement was impaired.

A couple at the table behind us was smoking up a storm and it kept drifting over me. I guess I noticed that I was getting a little wheezy, but I was tipsy, so I didn't think about it. Then my friend went to the bathroom and I noticed it was getting very hard to breathe. I stood up and walked around to get away from the smoke, and the rate of increase slowed down, but it was still getting progressively harder to breathe.

Did I go home and call my doctor? No I did not. I was still tipsy and not thinking very clearly. I saw my friend and went back to our table.

Next thing I knew, my airway had pretty much closed. I was sucking desperately to get a little air in, while people all around me phone 9-11.

Now, our table was outside. Just then a perfect stranger stopped and asked my friend whether I had asthma. She said yes, and he whipped out the albuterol inhaler I should have had. It took about seven sessions to get enough down my lungs to open them up again, but the result was instant, total relief.

If there is anything good about asthma, it is that the rest of you have no idea just how magnificent a thing breathing clearly is.

The moral of the story being, first, never leave the house without your inhaler; second, never think that because your asthma hasn't bothered you lately, it's fine; and third, never discount the amazing kindness of strangers. I never even got this guy's name -- by the time I was put-together enough to say thank you, he'd walked away. But I'm pretty sure that without him I would have died. At the rate my airway was closing up, I never would have gotten to a hospital in time. I'd never had an episode like that before or since; my asthma's very mild. But if you are by some chance reading this, inhaler person, I'm eternally in your debt.

Anyway, the entire point of this long story is that I have long suspected there was a fourth moral to the story: albuterol should be sold over the counter. But this email I got from a pulmonologist on the subject has made me rethink that:

I'm a pulmonary doc from the University of Chicago.

About albuterol -- please, please don't make it available over the counter. Why? It will worsen asthma care substantially. According to published data, only about 30% of patients with persistent asthma take a controller medication (inhaled corticosteroid or leukotriene modifier, from the Asthma in America study, and also from the NHLBI National Asthma Education Program, see also Milgrom, J Allergy Clin Immunol, 1996). Many of the patients not on controllers over-use albuterol, with the result of unabated, persistent airway inflammation. This leads to continued poor control of asthma over time. That in turn increases substantially the risk of death (Suissa, NEJM, 343:332, 2000), decreases future responsiveness to controller therapy (Haahtela, NEJM, 331:700, 1994), and increases the risk of being hospitalized for asthma (Donahue, JAMA, 227:887, 1997).

One of my colleagues at the U of C. has been examined public-aid health data in Chicago to look at albuterol over-use. He's examined public aid pharmacy claims databases for albuterol and controller prescriptions by zip code in Chicago. If you're properly treated, you should have (on average) one controller prescription per month, and at most, one albuterol prescription. If the albuterol:controller ratio is higher than that, it suggests that asthmatics in that zip code aren't properly controlled and are over-relying on rescue inhalers. In about 3/4 of the zip code regions, the albuterol:controller ratio exceeds 4. In none of the zip codes is the ratio less than 2. Either 1) asthmatics are using their inhaled steroid but still taking about 16 puffs of albuterol a day, or 2) you have a large number of asthmatics who are taking albuterol but no controller. Since the proportion of patients with intermittent asthma (no need for controllers) is only about 20% of all asthmatics, this suggests that we're doing a poor job of treating the persistent asthmatics.

The reasons why asthmatics are over-relying on rescue inhalers are many, from family and social disintegration, lack of access to medical care, apathy and acquiescence of chronic illness on the part of patients, poorly educated primary care providers (sorry, I'm a pulmonologist and I see this every day), insurance policies that force changes in medication based on preferred pricing for them which leads to confusion on the part of patients, and so on.

If you make albuterol over the counter, the temptation is for an asthmatic to just buy it and skip seeing the doctor. That's the point of over-the-counter claritin, after all -- just take it and don't bug the doctor with your hay fever. In this way asthma remains poorly controlled, and we docs never see them to address it. Asthma control in the community is poor enough as it is, and I'm afraid this would just make it worse.

From the desk of Jane Galt:

I'm reading up on United Airlines, and I came across this article quoting from a pilot saying it wasn't the employees fault (employees own 55% of the company) -- it's those jerks in management!

Captain Duane Woerth, president of the Air Line Pilots Association International, which represents 66,000 airline pilots, blamed last year's terror attacks and U.S. policy for United's current troubles.

"I don't think the structure of the ESOP was flawed. I think management got lazy and drifted and lost focus," Woerth said.

Umm. . . y'all are the owners. When management gets lazy and loses focus, you're supposed to fire them before they drive you into bankruptcy.

From the desk of Jane Galt:

Say What?

I was reading Sydney Smith's excellent critique of this NY Times article on birth control, in which she points out that the reason we don't have many new kinds of birth control is not (as the article argues) our "Puritan ethic" but the fact that the ones we have work pretty well.

Then I clicked through the article and this caught my eye:

Efforts are also under way to make emergency birth control available over the counter. High-dose birth control pills, sold under the names Preven and Plan B, offer immediate backup for women who have had unprotected sex. As an interim measure, Dr. Finer said, California, Washington and Alaska already allow pharmacists to provide the pills to women without a prescription.

So I can't get an albuterol inhaler, which I have to carry at all times, without a prescription -- but I should be able to induce an abortion without consulting a doctor?

From the desk of Jane Galt:

Mark Steyn wrote the funniest thing I've read all week:

[Warning: Do not drink milk while reading!!!]

And this is where the hair comes in. A lot of solemn Democratic operatives have deplored the Beltway obsession with Mr. Kerry's $75 hair care: it's much nothing about a 'do, they say; just another of the media's Drudge-fueled descents into gossip and trivia. True, and that's good enough for me. But, if I have to come up with a highfalutin gloss to justify the story, I'd say it's this: The haircut catches the fancy because it seems to cut to the essence of the Kerry candidacy, whose problem as a whole is that it's over-styled. Platform-wise, every strand feels as if it's been exquisitely combed and parted to the finest calibration. The senator's opposed to the death penalty. Fair enough. A lot of folks have a visceral revulsion at the principle of state execution. But whoa, hang on, no, that's not it. He's not some milksop Dukakis type. Mr. Kerry's opposed to the death penalty because it's too wimpy. "Putting somebody to sleep on a gurney" isn't cruel enough for Mr. Kerry's tastes. Keep him in jail watching cable TV decade after decade. "That is tough, my friend," says Mr. Kerry, not like dying, which -- in case he hasn't mentioned it this soundbite -- is something he knows a lot about: Only gutless pansy types let these killers off easy by sending 'em to Old Sparky. This is Mr. Kerry's answer to compassionate conservatism: sadistic liberalism.

From the desk of Jane Galt:

Incidentally, if you live in a Republican senator's state, and you want Lott gone, take ten minutes and phone your senator to let him know. Don't email or fax -- call. It carries more weight.

From the desk of Jane Galt:

How to Deal with Political Figures that Err

I have to say this: the Republican senators seem to be AWOL, though having watched politics enough it seems more likely to me that they're hunkering down and trying to figure out how big this really is, than that they've already decided to give Lott a pass. But the conservative pundits and the base, it seems to me, are offering a valuable object lesson to the Democrats in how you deal with one of your guys when he does something you have previously argued is very wrong: you do not seek rationalizations because he's your guy and you are unable to admit that your guy could have done something wrong. You quickly and publicly recognize that even if it was an innocent mistake, his credibility is now so damaged that he can no longer help the party by remaining in the leadership. You call for him to go.

This is how Clinton should have been handled by his party. If he had been, Al Gore would be in the White House now, and everyone who's been whining that it's just not fair that Bush got the war all to himself would have been able to find out whether their knight-in-shining was a Churchill or a Chamberlain.

Problem is, past history seems to indicate that if it was the latter, many would still be defending him.

From the desk of Mindles H. Dreck:

How to Say You're Sorry

John DiIulio Jr. on apologizing:

My dad died in my arms in August after a three-year battle with illness. I thought mainly of him on Monday. He always taught me that when you apologize to people, you apologize "with no half-smile, with all your heart, and on your knees, or not at all."

In other words, whether completely culpable or not, and whether there are complicated mitigating if not exonerating motivations and circumstances or not, you do not express honest, heartfelt remorse for wrong by quibbling over how the wronged person or persons characterize it. In this case, my cultural-paternal conditioning, plus my Catholic self-examination of conscience, accounts for my repeat of Mr. Fleisher's words.

Calling Mr. Lott...

From the desk of Jane Galt:

Krugmanwatch

I don't normally post on Paul Krugman these days, and my blood pressure is the better for it. But this response to Daniel Drezner's extremely civil - and in my opinion, insightful -- post on Krugman makes the Professor look like the jerk Drezner didn't accuse him of being:

Memo to Mr. Drezner: if you want to accuse me of being shrill, a link to Andrew Sullivan, of all people, doesn't exactly make the case.

Drezner doesn't link him in the post -- Sullivan's on his blogroll. Seems like Krugman endorses the Rittenhouse Review school of dissent -- and the vindictive academic school of receiving construcive criticism.

Update Kevin Drum points out I'm wrong; he does link him in the post, and I somehow missed it.

Still think it makes him sound whiny and, well, jerkish.

From the desk of Jane Galt:

Arguendo Ad Crowium

Mark Kleiman says that you shouldn't apply legal protections developed for Civil Rights to anti-abortion protestors, specifically the Nuremberg Files. Call me a first-amendment purist, but I strongly disagree, both on principal and on the substance of his arguments.

He tries to draw a distinction that I believe is factually in error:

(There's a substantive difference between threats of violence backed by occasional window-breaking and threats of violence backed by systematic property destruction and occasional murder, but it's not obviously a legally congnizable difference.)

As I recall, the Claiborne Hardware case involved credible threats of death and physical harm to boycott violators, not property damage. The court ruled that this was protected.

But it's his main argument -- that Civil Rights is a special case -- with which I most disagree.

But it's also true that desperate circumstances call for desperate measures, and it's wrong to then try to re-import the standards of desperation into ordinary activity. Michael Walzer once said that "You can prove anything using Hitler": i.e., since virtually any tactic would have been justified to defeat Hitler, it's possible to argue that no tactic should be ruled out absolutely. But, as Walzer said, that proves too much: unless we're actually confronting Hitler, arguments about what would be justified if we did confront Hitler lose their force. The same applies to arguments from things Lincoln did -- such as arresting the majority of the Maryland Legislature -- to win the Civil War.

The system of racial subjugation that prevailed in the American South between the end of the First Reconstruction in the great sellout of 1876 and the Second Reconstruction that started in the late 1940s was truly a desperate circumstance. It was maintained both by law and in defiance of law (both the ordinary criminal laws and the Constitution). Since it involved the illegal denial of the right to vote, recourse was not available through the ballot box. Since the local judiciary was largely complicit, recourse was not available through the courts. There was no reason to think that the white majority could be persuaded to give up its caste privileges.

It was a circumstance that, by the standards enunciated by Locke and Paine, would have fully justified armed revolution. But armed revolution, too, was infeasible, even if it had been desirable. (Which, because of the other virtues of the American Republic, it would not have been.) So the civil rights movement mounted an unarmed, predominantly non-violent, revolution, which was largely successful. Its goal was not to overthrow governments, but to overthrow the system of subjugation. In the course of that revolution, many things were done that would have been intolerable in the context of ordinary democratic politics and ordinary civil life. Violence was threatened, and sometimes used (though of course the violence on the other side was incomparably more pervasive and more deadly). Property was destroyed, and property-owners intimidated. Parts of the Federal judiciary, including the Supreme Court, became "result-oriented," and stretched the judicial function, and various other statutory and Constitutional provisions, to or beyond the tearing point in trying to finally put the Reconstruction Amendments into practice.

I'm glad that happened: not glad that otherwise improper means were required, but glad that, given their necessity, they were used, and used successfully, by an interracial coalition. But, now that the revolutionary phase of the struggle is behind us, I see no reason to pretend that those means were, in themselves, other than improper. Everything William F. Buckley said about the tactics of the civil rights movement, how lawbreaking for political ends sets a bad precedent, was true. All the falsehood was in what he and his friends didn't say: what Mark Twain, writing about slavery, called "the silent lie."

So I see no reason to extend any license to use such tactics to anti-abortionists, animal rightsers, deep ecologists, or opponents of the coming war with Iraq. There is no general right of civil disobedience, and no general legitimacy to its use as a political tactic. If Operation Rescue and Earth First! want to act like racketeers, punish them as racketeers. (Though I'd be open to the argument that the RICO statute, passed in the face of the war waged by the Mafia against the wider society, was another a measure of temporary necessity that should now be abandoned.)

But, I hear you say, the people who believe that abortion is murder face a situation quite as desperate as the one that confronted the civil rights movement. That.s right. If you really, truly believe that abortion is murder, then you have good reason, from your perspective, to threaten or use violence to stop it, or to mount a revolution if you can. Since I don't believe that abortion is murder, I have no good reason, from my perspective, to tolerate such actions. Bracketing can only carry you so far; eventually you're forced to take a stand on the substantive moral questions.

There are 1.5 million abortions every year -- more people than were born to slavery, or (doing some quick arithmetic in my head) to Jim Crow. If you accept the premise that this is the murder of innocent babies, this is not merely comparable to Jim Crow -- it dwarfs it. It is the systematic extermination of one class of people (the fetuses) for the convenience of another (the mothers).

I am not going to comment on my beliefs, because I lack the emotional strength for that argument. But it simply won't wash to say "Well, I think they're wrong, so screw 'em."

Kleiman goes on to say

You can prove anything with the civil rights movement. But not everything so proved is true. Put me down as an advocate of law and order.

We're all prone to be advocates of law and order when doing so calls the law down on the opposing side. This says nothing except that he is willing for the law to enforce restrictions on causes he doesn't believe in that he would not accept on causes he considers worthy. While hardly an uncommon opinion, it is not a very useful framework for formulating the law, or a legal principal. Accepting this as a legal philosophy would mean accepting the politics of raw power -- if I can get enough people to say that your cause is sufficiently important, I can violate your civil rights. This is neither worthy, nor in the tradition of the Civil Rights movement.

But, you say, he's not really advocating that. Except that by accepting the philosophical principal that it should be legally all right, in certain cases, to have special exceptions granted (or special restrictions applied), you are advocating this. The legal process becomes less a matter of principal than of arguing how special your particular pet cause is. Such a framework offers us little guidance for the resolution of important disputes like abortion, or race, or animal rights, other than how much power you can accrue through elections, lobbying, or packing the courts.

If you want to be practical, think of the impact of such a decision. Like the special RICO exception for abortion clinic protesters, telling them that their speech is less protected than that of favored groups sends the message to the pro-life folks that they can't hope to resolve their issue peacefully, since the equal protection of the legal system is denied them. Sounds to me like a recipe not merely for ethical issues and feelings of government illegitimacy, but for increasing violence as protesters increasingly turn from recourse to the law, or even to threats. As appalling as they may be, threats are better than the violence that might ensue when the threats stop.

The Nuremberg case should be decided on principal: does the site constitute protected speech? If it is time to revisit Claiborne Hardware, then so be it. But unless we make the system for resolving such issues as content-neutral as possible, we will spin further into particularism and conflict, and the ideals of the Republic that still hold us together to a surprising extent will be done grievous harm.

From the desk of Mindles H. Dreck:

Criticizing Science Without Logic

Alicia Colon recycled this old column in the New York Sun today (the current version is not available on-line).

Basically her argument is that:

1. there has been one disastrous experiment in using fetal stem cells to treat Parkinson's
   
2. donor embryos are likely to be diseased (she even uses the same reporter example in today's column)
   
3. the press is under-reporting lots of other good medical breakthroughs not involving stem cells,
   
4. you should sign your organ donor card
   

In the Sun column she also throws in a gratuitous ad Hitlerum remark about how Dr. Mengele would be at home in today's stem cell researchers' labs.

None of these arguments make a logical case against stem cell research. The fact that other research is progressing is encouraging, but certainly makes no logical argument for discontinuing stem cell research. One never knows where the breakthrough will come. As for the incredible media bias in favor of stem cell research...that speaks for itself.

I expect my acquaintance Lee Silver would find the Mengele comment ridiculously over the top, as I did. Over to you, Virginia Postrel.

See Silver's comments on embryos here.

From the desk of Jane Galt:

Let's hear it for public transportation

So it looks like we're going to have a transit strike here in New York City -- Asymmetrical Information's secret sources estimate the probability of a strike around 80%. Liberals who wax lyrical about the twin joys of public sector unions and public transportation take note: if the happens, the entire city will be shut down. Particularly hard hit will be the poor. (I love public transportation, mind you. But it's not all up side.)

What is the editorial position of Asymmetrical Information? Though I haven't consulted my co-editor, I feel confident stating that we think it's completely outrageous.

People who have not lived in New York or Washington probably don't understand the importance of this. It is simply not possible for New York to operate on even a limited basis without its transit workers. Traffic in the business district is so slow that when, in a moment of madness, I decided to take a cab across 34th street today, it took me half an hour to go roughly 3/4 of a mile. Yes, I could have walked faster. No, I don't know what I was thinking.

There is no room to pick up any of the slack with cars. And walking or biking, which is what I'm planning to do, is fine for the young and strong. But it will hardly fly if it rains or snows. And there's not really room for bikes either, what with the extra cars on the road.

Susanna Cornett correctly points out that Mayor Bloomberg's suggestions for dealing with a strike are -- ahem -- a tad unrealistic. But to be fair to him, it's not like he has much choice. He can neither keep them from striking, nor accede to the union's demands.

Now, New York City is facing a $6 billion budget deficit. New York State, which provides the other half of the MTA's subsidy, is facing an even bigger deficit. Unemployment in this city is well -- well -- over the national 6% average, as your correspondant can testify personally. We went to temporary agencies today to be told that they are overflowing with folks who can build a network, put together documents and graphics packages, provide PC support, or even just type 80 wpm. The devastation of the financial industry is affecting everyone. At this delicate juncture, many companies are deciding whether or not to locate in the city. And those companies, and us citizens, are going to have to pay higher taxes and accept less services in order to close the budget gap.

In the midst of all of this, the transit workers are demanding a better benefits package and a 24% pay raise over 3 years. Roughly 8% a year. Keep in mind that inflation is near zero, and in the New York City area the cost of living is dropping as the financial services sector enters a deep slump.

The gridlock and clogged streets caused by a transit strike could well double response time for ambulances and fire trucks," he said.

The plans call for the Fire Department to use reserve fire trucks as a backup should response times slow dangerously because of traffic. They also include a moratorium on all nonemergency roadwork, suspension of alternate-side-of-the-street parking and street cleaning regulations, and a prohibition on truck deliveries in Manhattan south of 96th Street from 6 a.m. to 10 a.m.

Mr. Bloomberg said that the city would lose about $5 million a day in tax revenues and spend about $10 million daily on police overtime and other contingency personnel. He said lowered attendance could reduce state school aid by $6 million daily.

The transit workers have safe jobs. They have a most generous benefits package. There are a lot of people in this city right now who would be quite happy to take the transit workers' current salary package. And it's horrifically selfish to strike when doing so could permanently chase a whole lot of jobs -- and with them the tax dollars that pay their salaries -- out of the city. Not to mention cost the city and state millions of dollars in lost tax revenue that they can ill-afford to lose, as the city grinds to a halt. This is why I'm against public sector unions. . . the ability to completely shut down the largest city in the country at a moment's notice should not be in the hands of any group.

Why are they doing it? Partly because they can. And partly because one of the consequences of unionization is a structural rigidity that is turning out to be disastrous in this case. Union salaries are negotiated in multi-year contracts, usually 3 or 5. Right now, the city and state are projecting deficits as far as the eye can see. They can't negotiate a generous package, even in out years, because there's no guarantee they'll be able to pay. But the union can't rely on getting a raise when things get better; they have to negotiate the raise up front.

But the strike is ludicrous because the city can't pay. With the financial industry in meltdown there's simply no money. Shutting down the trains is likely to make the tax pool from which their salaries are paid smaller, thus making the problem worse.

Bloomberg's a Republican, I hear you cry; why can't he just pull a Ronald Reagan/Air Traffic Controllers moment? Partly because no one gets elected in New York by pissing off the public sector unions, but mostly because there's no one to replace them. Reagan used military air-traffic controllers and supervisors to step in until more controllers could be trained. Unfortunately, there's no such thing as a non-union train driver. And because the New York City mayor with the guts to really stand up to a municipal union has not yet been born. And because it's the governor who has the ultimate responsibility for negotiating, leaving Bloomberg in the unenviable position of lacking both carrot and stick.

It's a mess. Our best hope may be that unemployed New Yorkers take to hunting down transit workers and pounding some sense into them.

On the bright side, New York area bloggers should have a lot of time for blogging next week.

From the desk of Jane Galt:

These Young Whippersnappers

Among the many things that have gone downhill since my days at the Socialist Union is, apparently, protesting. These kids today seem to be as incompetent at this as they are at economics. Hey, at least we had an excuse: George Bush was busy spreading AIDS and murdering innocent Iraqi civilians! Plus, drugs are purer now, so they shouldn't be suffering from the nasty tremors that make it hard to spell "Divestment" and similar big words.

Well, the older generation has stepped in to rectify this abysmal ignorance with these handy, simple-to-follow guidelines for would be protestors from Happy Fun Pundit:

- WOULD YOU LIKE FRIES WITH YOUR BLOOD FOR OIL? Spend a few bucks on your public address system. You will not persuade anyone of anything when you sound like the kid at the drive-through, even though I'm quite certain it's a role many of you grew comfortable with after finishing your Masters in Diversity Studies.

- EET MOR BLUD 4 OIL! Spellcheck those protest signs, kids.

- HELL NO, WE WON'T --- er, line? Most people associate chanting with children and religious cults. I'm jes' sayin', is all.

- EARN YOUR BLOOD MONEY, PIG! Look, your goal is holler and disrupt for as long as possible, right? Did you ever stop to consider that sitting in aisle seats (which all three groups at the Wolfowitz speech did) makes it a lot easier for the cops to reach you? Middle of the row, people, middle of the row. Besides, it's just common courtesy to leave the more comfortable seats for people who are going to stay for the whole event.

- COUNTDOWN TO DUMB In the same vein, giving the police several seconds' warning that you're about to do something obnoxious is just not a good tactic. We appreciate that you put in a lot of crayon time writing on your t-shirt, but if you sit there displaying it for several seconds before beginning your chant, that cuts down on the amount of time we have to admire your calligraphy.

- STUPID IS AS STUPID DOES Practice with your banner before the actual event. You look really, really stupid when you can't unroll a simple banner within a few seconds. Also, be aware that if you ever unroll a banner in front of my face at an engagement for which I've paid good money, rest assured that the situation will end badly for you and your banner.

I have only one thing to add: despite what many of your comrades believe, showering is not just a middle class affectation.

From the desk of Jane Galt:

What happened last week?

I'm not going to say much about the O'Neill and Lindsay firings except to note that most of the people I have seen professing outraged shock at the treatment they received are the same people I have seen:

1) Calling for the heads of O'Neill and Lindsay, or at the very least saying they were bad at their jobs and didn't belong there.

2) Defending the much worse savagings the Clinton Administration inflicted on people who made them look bad.

From the desk of Mindles H. Dreck:

B.S. From Connecticut

Joe Lieberman and Al Gore were working overtime trying to spin the news about Bush's economic team. Unfortunately, Lieberman put the B.S.-meter in the red zone:

"Our economy is in trouble," Lieberman, D-Conn., said on "Fox News Sunday." He said that more than 1 million people have fallen into poverty and business investment during the administration has been at a 50-year low. "The economy needs something different from what President Bush has given it."

The 50-year claim is pretty laughable. Business investment (NIPA's private investment less residential investment) was about $32 billion in 1951. It has run flat through the last four quarters at just under $1.2 Trillion annualized.

If you give him the benefit of the doubt and say he means the change in business investment he's merely exaggerating badly. 2001 saw a 5% year-over-year decrease in business investment. In 1958 there was a 10% decrease. As indicated above, investment has been flat through 2002.

The capital spending bust began in the third quarter of 2000 and tipped us into recession in 2001. It continues to be primarily a result of the bubble hangover in the "Equipment and Software" category.

Meanwhile, Gore had this to say:

Gore, meantime, also discussed his preference for "single-payer" national health coverage, which would require a massive change in the insurance system. Money to pay for health care — such as insurance premiums and tax dollars — would be collected by a single agency, which would then pay for comprehensive coverage for all citizens.

Gore, pressed to say what such a plan would mean higher taxes, said he did not think "new revenues necessarily are required."

In fact, he suggested "it may mean fewer taxes. ... I think it would mean less expense overall because of all the money that's wasted now."

"With the same revenue that we have now, we can do a much better job if we don't waste one out of every three dollars" on paperwork. More details of his idea will come early in 2003, Gore said.

Somebody had that job in the Clinton administration. He went on Letterman and broke an ashtray....I just can't remember his name.

UPDATE: Here's a nice profile of Lieberman from The New Yorker. I don't object to him myself, but the article seems to suggest that nobody does, and that is precisely his critical flaw.

From the desk of Jane Galt:

Thoughts on Affirmative Action

James McWhorter seems to agree with me that significantly lower standards is a recipe for underachievement, not justice.

The Center for Individual Rights, which has brought two suits against the University of Michigan -- one against the law school, the other concerning undergraduate admissions -- has found that minority students were on average 234 times more likely to be admitted to the law school than white students with the same credentials. The past several years have seen similar quota systems uncovered at many other universities around the country.

Of course, many people argue that standards must be different for disadvantaged students. But to justify racial preferences on the basis of this alone implies that most black people are poor. That was true once -- in 1960. But in 2002, fewer than a quarter of black families are below the poverty line, and there are more middle-class black families in America than poor ones. And because few poor people have the opportunity to attend selective universities, most black students at such schools are middle-class.

So: Despite college administrators' scripted denials, racial preferences since 1978 have meant admitting middle-class black students under much lower standards than the ones set for whites. The assumption that the typical black applicant grew up in the 'hood is long outdated.

The question we need to ask, then, is why schools must lower standards to have a decent number of middle-class black students on campus. Over the past few years, a study by the Minority Student Achievement Network of 15 middle-class school districts has shown that black students tend to lag severely even in well-heeled suburbs, despite mentoring programs and well-sensitized teachers.

From the desk of Jane Galt:

New Kid on the Block

I've just had the Capitalist Chicks Web Forum brought to my attention. As a capitalist chick myself, I urge you to check it out.

From the desk of Jane Galt:

Fast Food Nation

A reader emails to note that my Salon article on the fast food lawsuits was just quoted by the National Post. The Post article starts off with a man who is suing casinos for failing to keep him out, despite the fact that at one point he used a disguise to enter. (!) Robert Fulford, the author, closes with a paragraph I wish I'd written:

This new form of lawsuit redefines the citizen as a helpless, brainwashed consumer, a feather floating on waves of impulse and advertising. It denies the autonomy and dignity of the individual, and degrades everyone it touches -- judges who permit it, lawyers who encourage it and profit by it, and the pathetic plaintiffs who seek justice under a new slogan: "Save me from myself or I'll sue you."

Interestingly, my article was written before the suits were actually filed, and seems to have been the first long piece written on the subject, so I guess that was my first journalistic coup -- a feat I owe entirely to Andrew Leonard, the editor, who picked up on an offhand comment I'd made on the blog and asked me if I'd like to follow up.

Walking down memory lane, I came across the letters written in response. If you enjoyed the article, don't miss the letters, where the opposition side was disappointingly represented from a logical view, but whose missives were nonetheless entertaining, since most of them seemed to center around an offhand remark I made about California's proposed 2-cent tax on soft drinks. Others chastised me for not consulting public health experts (I not only consulted them; I quoted one in the article); not explaining the entire social, biological, and political history of obesity; or just basically being a right wing shill:

Megan McArdle, it seems to me, has an ax to grind. A right-wing ax, I think.

In her piece, she throws herself into hysterics about the tidal wave of litigation that will -- just any day now! -- come washing over us as suit-happy lawyers start hauling Burger King and Jack in the Box into court because burgers and fries are fatty.

My tidal waves of hysterics consisted of saying that it wasn't outside the realm of possibility that such suits would be brought (a prediction in which it turns out I was correct) and that I thought it would be a pretty bad idea, given what it would mean for general liability law if such suits were successful.

Say ... does she get her story ideas from Salon's editors, or the Republican Party? I mean, after all, it's the GOP and various right-wing "think tanks" that have been for years beating this drum about litigation run amok, screaming "crisis" over and over again.

Really, McArdle's bias is pretty blatant. Consider this lovely little example:

Companies manage risk by weighing the probability of a given event ... against the money to be gained or lost. Such calculations tend to break down, however, when a single event is both unpredictable and catastrophic; that's why frightened insurance companies stopped offering terrorism coverage in the wake of 9/11. That's also why tobacco companies seem to have decided to settle. With lawsuits piling up and no end in sight, they had to face the risk that, even though the law was on their side, a jury might return a verdict that would bankrupt them.

Spoken like a true corporate shill on loan from the Heritage Foundation. (I especially like that neat little juxtapositioning of the legal attacks on Big Tobacco with the terrorist attacks of 9/11. One can already hear the new slogan: "Lawyers ... America's Homegrown Terrorists!").

It never entered my mind that in explaining the difficulties inherent in planning around non-quantifiable risks, I was also sending the message that fast food lawsuits would be just like having terrorists kill thousands of people. I apologize for any inadvertent hysteria I may have caused. Fast food lawsuits will probably not involve terrorists, and almost certainly will not kill thousands of people.

Say, Megan, did it ever occur to you that the tobacco industry began settling lawsuits because (a) they were starting to lose them, (b) the law was not on their side, and (c) the law was really not on their side once discovery motions had finally kicked out truckloads of incriminating documents that proved how tobacco executives had lied and lied and lied and lied for decades?

No, because (a) they weren't losing on appeal (b) all the experts I talked to, none of whom were right-wing shills, said the law was on their side and (c) they weren't on trial for having incriminating documents, they were on trial for allegedly having deceived smokers who claimed that despite the big warnings on the side of their cigarette packages telling them cigarettes caused cancer, they either didn't believe that it caused cancer, or were so hostage to Demon Tobacco that they were physically unable to quite even knowing that it would kill them.

Another thing you've got to love about McArdle's piece is her ever so clever use of weasel words and phrases. She says the tobacco industry "seems" to have decided to settle because things were getting unpredictable. "Seems"? Either you know or you don't know, Megan. If you do know, please let us know how you know. Prove it.

I was quoting an expert on mass torts. No one knows why the tobacco companies settled, because the tobacco companies aren't saying. Thus, we have to guess at their motives. Hence the use of the word "seems".

And while you're at it, please prove how the law was on Big Tobacco's side. But good luck. Sure, there are some legal scholars who say that. But it "seems" to me I could find a few scholars and lawyers and judges -- oh, enough, say, to fill either a small city or a large football stadium -- who'd cheerfully dispute your claim.

I think you would be hard put to find legal scholars who will tell you that the tobacco suits were on solid legal ground. The only one I found was Banzhaf, who has made a career out of generating public health mass torts. The weight of opinion was against the suits, because it was black letter law: cigarettes were cited repeatedly in many opinions as examples of products that, even though they were harmful, did not create liability for their manufacturers.

Personally, I strongly doubt that any litigation crisis is about to befall the fast-food industry. There may be a few areas of "legal exposure," but I doubt they are very big.

But what I don't doubt is that this is just another example of corporate propaganda trying to pawn itself off as news.

Really, the best revenge against statements like this is the pleasure of being right.

From the desk of Jane Galt:

Pandora's Box

If this ever becomes widespread, we're looking at the end of free television.

This sentence is absolutely typical of the elegies to file sharing:

But Newmark didn't buy the ReplayTV as part of a grand scheme to engage in unlawful conduct. He bought his first PVR because he liked the concept, he says, and when he tried it, he was instantly hooked. It's a feeling that many PVR owners report; you don't realize how under the thumb of network executives your life has been until you've been freed by a PVR, until you no longer need to live by a prepackaged schedule stuffed with stupid ads.

Morality aside, those stupid ads are what pay for the television shows. If you don't watch the ads, the advertisers won't just keep buying them out of the goodness of their hearts.

Oh, I know what you're going to say: they said the same thing about VCRs. But VCR's are annoying, slow, hard to program, and the quality of a tape is markedly worse than the quality of a broadcast. TiVo recordings, on the other hand, are indistinguishable from broadcasts. In the same way that cassettes aren't really a good predictor of MP3's because the nature of the medium was

1) Time consuming
2) Self-limiting
3) Of inferior quality

VCR's don't make all that compelling a proxy for DVR's.

Mind you, I love my TiVo. And I think that fast-forwarding through the ads is probably Fair Use, although I would also argue that Replay TV's program to automatically zap them is probably not. But as a practical matter, I don't see how free television could possibly survive the onset of widespread digital recording.

Nor is it obvious where the replacement will come from. Sure, the networks are losing share. But cable doesn't seem to do all that well at generating its own programming; seems to me that most of the content is derived either from Hollywood or the Networks, or in some cases, PBS. And sure, most of what the networks produce is crap. But HBO only has to produce two or three shows a week; ABC has to fill four hours a night, whether or not they have anything compelling to put up there. And let us not forget the news programs we're all addicted to, which are going to be tough to finance without ads.

Unless, of course, someone wants to argue that the television shows will make up their losses on copying with live performances?

From the desk of Mindles H. Dreck:

Misplaced Priorities

Well, perhaps the post-Zinmeister Euro-bashing was a but much, but surely this is the sign of a civilization in decline:

Nearly 80 percent of British smokers, almost 70 percent in the Netherlands, France and Germany and more than 55 percent in the Belgium and Spain would forgo sex rather than live without cigarettes for a month.

That utility curve (Nicotine and carcinogens for sex) certainly explains the demographics.

From the desk of Mindles H. Dreck:

Power of the Blogosphere?

As I was driving into the city to work yesterday (grr.), I listened to On the Media. I was more than a little surprised that it featured both reserved criticism of the NY Times Augusta Project and a severe posterior fact-checking of Michael Moore. (both of the segments above don't work properly right now, but promise to be up soon. You can listen to the whole show here.)

I don't normally listen to On The Media, but I wonder if NPR is picking up on the Blogosphere zeitgeist.

UPDATE:
Moore Takedown Transcript ("More Accurately")

"Grey Lady hits a Grey Area" Transcript

From the desk of Mindles H. Dreck:

Moving Day

Well, here it is moving day. In the last 3 days I've moved my office and now my blog.

Hmmm. It's a bit green in here, but as long as I can have my La-Z-Boy and hold the remote most of the time we'll get along just fine.

I have yet to weigh in on Paul O'Neill's resignation. Caroline Baum beat me to it by reminding us that a "gaffe" is when a politician unintentionally speaks the truth:

What O'Neill did was speak the truth, in essence saying the U.S. has no dollar policy -- neither strong nor weak. The value of the dollar is set in the foreign exchange market, not in Washington.

Instead of getting kudos for stating the obvious, O'Neill was chastised for his failure to act as the defender of the U.S.'s strong dollar policy.

As a former CEO of Alcoa, Inc., the world's largest aluminum maker, O'Neill was unsympathetic to the plaintive cries from U.S. manufacturers for a weaker dollar. He thought companies should sell their products abroad the old-fashioned way: by making them better and more efficiently....

....He decried the fact that it took the Treasury weeks to close its books for the year and pared the time to three days.

He was not afraid to disagree with the president on specific issues -- the imposition of steel tariffs, for example.

He preferred unscripted speeches to prepared texts...

.....Unknowingly O'Neill wrote his own epitaph when he said in September: "It's so much more useful to tell the truth.''

Then there was that picture with Bono with the guy in the background thinking "Are you guys gonna buy something or just stand around?"

From the desk of Jane Galt:

Announcement

I began writing this post two days ago and it has been sitting on my hard drive since then, mostly gathering dust, though every now and again I have retrieved it, reread it, made some minor edits, and then returned it to storage, uncertain whether it should be published.

Now, however, I have decided it is time to make my feelings known to the world.

Though I know that I have derided such behavior in others, I find that the time has come when despite my previous statements, I have to make a bold move. Though I have in the past greatly enjoyed his blog, and have frequently linked to his pithy, insightful posts, I will not be linking to Mindles H. Dreck any more.

It is not without regretful thoughts of earlier days that I take this position. I am normally a passionate advocate of promiscuous linking in the service of the free marketplace of ideas, not to mention the traffic driven through reciprocal link obligations.

However, given the events of the past few days, I find that it will be impossible, or at least unethical, for me to continue to link to his posts. I do not take this step lightly. But perhaps, looking back, it had long since become inevitable.

I understand that my readers will wish to know the reason for my taking this drastic action. And I believe that once I have explained my reasoning to you, you will understand why I want to -- why I need to -- take this step.

I will be unable to link to his posts any more because he will be making them on this blog.

Yes, you read me right. After over a year of operating as a single proprietorship, Asymmetrical Information is diversifying.

Mindles not only grills a mean steak, but also operates a sterling blog, one of the first ones I click to every morning in the hope that he's written something more. Since both of us are experiencing difficulty providing as much material as we'd like to, we're combining forces to make sure you'll always have something new to read. And speaking for myself, I'm pretty sure that you'll find quality as well as quantity will be markedly increased with Mindles aboard.

Anyway, I hope you'll give Mindles a big Asymmetrical Information welcome. I'm awfully pleased to have him aboard.

From the desk of Jane Galt:

Recipe File: Homemade Macaroni and Cheese

I promised to put this up for the bloggers I met last night at Paul Frankenstein's charming poker gathering, at which your correspondant brought home a tidy 7.5% return on her initial investment of $20. Since we were there for just over four hours, this is an annualized return of 16,425%, suggesting that perhaps we should leave off blogging and take up gambling for a living.

Anyway, it occurs to me that many, not to say most, of my readers know only the ersatz petroleum-based product marketed by Kraft, or the horrible creations turned out by beknighted relatives who believe that the dish is produced by pouring together some milk, cheese, and macaroni and seeing what happens. So I thought it would be instructive for everyone to learn how easy, and tasty, homemade mac 'n cheese can be. Aside from an extra couple of minutes shopping, and a half hour spent pleasantly sipping your beverage of choice while you wait for this to cook, you really shouldn't spend any more time on this than you do on the box version.

You will need:

1 box of macaroni (elbows are traditional, but anything will do, even spaghetti)
9 tablespoons of butter
6 tablespoons of flour
4 cups of whole milk. (buy a quart, okay? Milk is good for you)
2 cups of cheddar cheese, shredded
2 cups of monterey jack, shredded
(while in general, better ingredients make a better dish, I'm afraid that in this case, the processed Kraft stuff does quite well. We've tried complicated gruyere-and-brie mixtures, and such, yet we keep coming back to this one. If you are truly lazy, and flush, buy two bags of the pre-shredded Monterey Jack and Cheddar mixture, or one back of pre-shredded Jack, and one bag of pre-shredded Cheddar)
Lots of salt
Somewhat less pepper
(At this juncture, I feel I should tell you that you really ought to buy a pepper grinder. They cost practically nothing, and peppercorns are cheap, and fresh ground pepper tastes so much better)
1/4 teaspoon of paprika (don't worry; you'll use it again when I teach you how to make deviled eggs)
Worstershire sauce

An oven and a stove.
A large (13x9) baking dish
A medium saucepan
A small saucepan
A grater, unless you bought pre-shredded cheese
Assorted random small dishes for you to measure things into, like grated cheese and flour. It does not matter what size these are.

All right, first thing's first: turn the oven on to 350.

Bring the water to a boil. While you are waiting for it to boil, shred your cheese and start your white sauce:

Melt 6 tablespoons of the butter in a large saucepan over medium heat. That's 3/4 of a stick of butter, for those who are not up on these things. Do not use margarine; this is not a dish that is going to make you any friends in your arteries. As well to be hung for a sheep as a lamb.

Measuring out 6 tablespoons of flour into a small dish. You do have a dishwasher, right? Flour should be measured by the dip-level-pour method: you dip the tablespoon or measuring cup into the flour, you run the flat side of a knife along the top so that the surface of the flour is level with the edges of the spoon, and then you pour the flour you've measured into the little dish we just talked about.

Meanwhile, take a medium saucepan, put your milk in it, and put it on to heat over medium-low heat. If it starts to bubble over, the heat is too high. Turn it down.

When the water is boiling, put several tablespoons of salt in before you add the pasta. Unsalted pasta is an abomination in the eyes of God. Note the cooking time on the side of the box and set your oven timer or mental clock to the lower number.

Your butter should be melted now. Dump in the flour and stir it around until it's mixed in. Now leave it on the heat. In a minute it will start to bubble. When you see it bubble, let it bubble for one minute more. It would be a good idea to use your watch or clock rather than relying on your judgement of how long a minute is.

While you are letting it bubble, take a tablespoon of the remaining butter and rub it around the inside of the pan until it is covered with butter. This is known as "buttering the dish". The downside is that your hands will also end up covered with butter, but thankfully they're washable.

When the butter-and-flour-mixture in the pan has bubbled for a minute, dump in your now-hot milk. Stir. It's important to stir fairly constantly, scraping the bottom so all the gook you just bubbled gets blended in. That gook is known as a "roux", and as soon as it thickens up, the sauce you are working on will be known as a "bechamel sauce". Congratulations. You just did your first fancy French cooking.

For a streaming video of how to make a white sauce, for anyone who is confused, click here.

This sauce is also the base for any number of things, from creamed chicken to chicken-pot-pie to the ever popular chipped beef on toast.

Anyway. Stir the sauce until it stops thickening. By the time your sauce has thickened up, your pasta should be done. It might be done before that. Don't worry about leaving the sauce while you drain the pasta. It will survive.

Run the pasta under cold water and set aside.

Add the cheese to your bechamel sauce and stir it until it's melted. Now add the paprika, a teaspoon of worstershire, and grind in some salt and pepper. Be conservative with the salt; easier to put more in than to take it out. Keep adding salt and pepper in small amounts until you like the taste. If you want to add more worstershire, you can also do that. This is your macaroni and cheese. Own it.

Once the taste suits you, put it into your covered dish. Cut up the remaining butter into little pieces about the size of a baby pea and sprinkle them over the top. Don't obsess about the size of the butter too much. It's not that important.

Bake at 350 for 40 minutes. Take out. Eat. Enjoy. This makes a beautiful, puffy, not-overpowering mac-and-cheese.

As you can see, this requires about ten minutes of constant work, versus opening a box. But I guarantee you'll like this better. Plus, this makes an enormous amount, so you'll have more leftovers. And overall it's cheaper.

If you don't need quite that much, you can cut the recipe in half. Or you can make it and freeze it instead of baking it.

To review:

The separate pieces are
a) Preheat oven
b) Butter pan
c) Shred cheese
d) Make pasta
e) Make white sauce
f) Add cheese and spices to white sauce
g) Put in pan and bake.

Variations

Before putting the macaroni and cheese into the pan, try lining the bottom with:

Ham mixed with shredded cheese
Sliced mushrooms sauted in garlic
A can of chopped, spiced tomatoes
Frozen boil-in-bag broccoli
Cooked, canned, or frozen asparagus
Sauted onions

Or try topping with these old favorites:
2 cups of breadcrumbs mixed with 1 cup cheese and 2 tablespoons of softened butter
Crushed crackers
Potato chips

If you like your mac-and-cheese creamier, halve the amount of white sauce and add a container of sour cream.

From the desk of Jane Galt:

What does Asymmetrical Information think about the Trent Lott debacle? Well, having read his statement, we are forced to agree with Mr. Lott:

“Speaking Thursday at a 100th birthday party and retirement celebration for Sen. Thurmond (R-S.C.) in the Dirksen Senate Office Building, Lott said, ‘I want to say this about my state: When Strom Thurmond ran for president, we voted for him. We're proud of it. And if the rest of the country had followed our lead, we wouldn't have had all these problems over all these years, either.’”

If Strom Thurmond had won in 1948, we wouldn't have had all the problems we've had over all these years. . . we would have had an entirely different set of problems. Larger, more difficult, more appalling problems, to be sure, but certainly it's hard to argue that they wouldn't have been different.

In seriousness, I think it's possible that he didn't mean it the way it sounded; I think we've all had the experience of saying something accidentally that appeared to have an unequivocal horrifying meaning which was not at all what we had meant to say. It's entirely possible that he wasn't thinking of civil rights, but of the growth of government or some other "might have been".

But it doesn't really matter, does it? In politics we go by what they say, not what they wanted to say.

I can't believe how little play this is getting in the media. I think if the Republicans are smart, they'll engineer a quiet resignation to head this one off at the pass. . . but who knows? They may know more than I do about how this is going to be covered. Or they may not be able to do any quiet engineering. We shall see.

And please, though I know your fingers are already itching, do not email me to tell me that this is evidence of conservative media bias. The New York Times is not covering this. And if you want to argue that the New York Times is part of the right-wing spin machine. . . well, crush a little foil on the antenna, my sweet, because there's something wrong with your reception.

From the desk of Jane Galt:

Department of Bad Ideas

Daniel Gross points out another area in which banks were apparently using low margin business to sell high-margin investment banking businss: commercial loans. This has JP Morgan/Chase in a bit of a bind:

As the once-gentlemanly business of providing revolving credit lines evolved into a sharp-elbowed competition to provide investment banking services, Chase embraced the new aggressive tactics. Frequently, loans were seen as a lever to gain more highly profitable investment banking business.

In the late '90s, the most needy borrowers, not coincidentally, also provided the most lucrative investment banking opportunities. Deal-junkie energy traders (Enron), telecommunications infrastructure giants (WorldCom, Global Crossing), and serial acquirers like Tyco—Chase lent to them all with abandon. Of course, anybody who has applied for a line of credit knows that bankers routinely turn down opportunities to lend money. Increasingly, however, Chase abandoned the risk-averse posture of a commercial banker for the transaction-driven mania of an investment banker. Shying away from risky deals would have meant forfeiting lucrative fees and market share to Citigroup, as well as Merrill Lynch and Goldman Sachs.

Now Chase is paying the price for letting investment banking imperatives overwhelm sound lending judgment. Today Chase, with a market cap of $49 billion, is a mere shadow of Citigroup, which is worth $191 billion. As Chase retrenches, slashing jobs and exiting businesses, Citigroup continues to expand through acquisitions. Indeed, despite all the reputational damage it has suffered, much of Citigroup's core business is sound. The same can't be said for Chase. And it's easier to make over an image than a balance sheet.

During the late 90's, Chase was on a desperate quest to build themselves an investment bank. The reason was the incredible margins on investment banking business. With fees at 7% of an IPO no matter how little work you put in, the temptation was irresistable. Unfortunately, most of the top-notch houses had already been snapped up (Citigroup owns Saloman Smith Barney), so Chase ended up acquiring H&Q, a good, but very small, equity boutique. Having done so, it was apparently an equally irresistable temptation to use those boring old commercial loans to goose the exciting new banking business.

The fat margins in the banking business seem to have made everyone in the financial sector either irresponsible or insane. Why was this so?

Well, the margins are awfully fat. An IPO involves maybe a couple of hundred or thousand hours of work on the part of the bankers. Yet fees start around $5 million for that work. Conservativel, that's an hourly rate of $2500. And while it doesn't take that much more work to do a $1 billion IPO than to do one for $10 million, the fees are the same: 7% of the proceeds. (Not to mention any money banks make by giving underpriced IPO's to their special friends, who immediately flip it and thereby generate nice commissions for the bank).

Why are they so fat? Say it with me now: regulation. The SEC has kept the shape of the market essentially unchanged for 80 years, without which the business of listing a security would probably be but a shadow of its former self. Also, because only certain people can do IPO and merger work, the SEC forms a barrier to entry into the business. So there are sufficiently few banks for tacit price collusion to be possible. (It's not as bad as it sounds. Tacit price collusion just means no one lowers their price, because the other banks would retaliate. It's not just in banks, either; it's the reason all American cars at a given level have roughly the same price, and all the toothpaste in the store costs about the same.) The fees are 7% because the financial community is sufficiently incestuous to make sure that no one drops their fees to 6.5% to win more business. And because CFO's and CEO's aren't really very price sensitive. It's much more important to them to do an IPO with a big bank and impress the shareholders than to squeeze out ever last drop of price concessions, because after all, it's not their money they're giving away.

But that's not the only reason, because fees have been 7% for a long time, and the insane subversion of other business lines to the will of the investment banking juggernaut is recent. The other thing you have to remember is the bubble. The bubble made that 7% a lot bigger. And made it ever easier to get other business by giving special treats to their friends.

Well, they're paying the price now. But they won't learn from it, because Wall Street is a very young business, and thrives on the influx of young aggressive men who don't remember the last crisis. Sigh. On the other hand, I think JP Margan/Chase is going to change its name to JP MOrgan some time in the not-to-distant future, and it will be nice to have the House of Morgan back again. In name if not in spirit.

From the desk of Mindles H. Dreck:

Going Wobbly

The Third and final part of the series is up.

From the desk of Jane Galt:

Cui Bono?

Michael Kinsley's column makes an interesting point, one that had occurred to me: most of the people suing the schools probably wouldn't have gotten in even if there were no affirmative action.

Kinsley seems to think that this is fatal. I think it's pretty damning, since the students suing would have certainly been admitted if they were minorities, which kind of erodes the "one factor among many" argument. And claims about diversity and injustice get a little tenuous by the time you get to law school; if affirmative action is supposed to remedy discrimination, how come the affirmative action practiced by the undergrad institution didn't do its job?

But even more basically, this mistakes the argument. These students are arguing that they were denied equal protection because of their race; they were held to a higher standard because they were white, in the same way that blacks were held to a higher standard on, say, literacy tests for voting, because they were black. (I'm not trying to posit moral equivalence here; only legal and logical.) It's a matter of how you look at it. There is no logical reason to define the standard for whites and asians as "The Standard" from which minorities deviate; it is just as reasonable to define the standard for minorities as the basic standard, and the standard for whites and asians as an unconstitutional special barrier established for the purpose of discriminating against them by race. Which, in fact, it is; whites are held to a higher standard so that there will be fewer of them, and thus, more room for protected races.

To have standing to sue, Grutter et. al. don't need to prove that they would have been admitted had there been no double standard; only that the double standard materially harmed them, which it did by lowering their chance of admission. At which point, they have every right to invoke the equal protection standard.

We could get into all sorts of arguments about cosmic justice, but the legal point is sound. And if you want to argue cosmic justice, does it really matter whether Grutter was the white student who wasn't admitted? Someone who would have gotten in had to give up their place because we wanted to remedy past discrimination. That someone has a right to cry foul, which is what Grutter is doing.

From the desk of Jane Galt:

Food for Thought

Doug Turnbull's got some very good questions.

From the desk of Jane Galt:

Why Do We Have Affirmative Action?

It's awfully hard to talk about affirmative action, isn't it?

I got into oh-so-much trouble for saying that I felt that black students, as a group, would continue to be underprepared for college as long as affirmative action is in place.

Racist! My interlocutors cried.

Oh, please, exactly the opposite. What kind of racism is it to embody black kids with the unique saintliness to do more than is required to get themselves into college? How many white kids did you know who spent their after school hours in the library, learning nuclear physics or Russian just for the sheer joy of learning? There were some, of course. As it happens, the most notable overachiever in my high school, Mr. Double-800-and-Straight-A's-And-Have-I-Shown-You-The-Solar-Car-I-Built-Last-Weekend? was black. So I have empirical evidence that there are, in fact, black kids who do more than they have to to get into college.

But large numbers? No more than any other group of kids. People mostly do the minimum necessary to get them what they want. Teenagers, not noted for their long-term thinking, do what they need to do to get themselves into the college they want to go to, or at least one they find acceptable. They do not think to themselves -- or at least I didn't -- gee, I'll really need to do well in algebra if I want the quantitative skills to get myself a high-paying job in ten years.

Based upon my extensive knowlege of teens, acquired by spending 8 years living as one of the tribe, I feel fairly confident in saying that as long as the bar is set lower for black kids, black kids, like all other kids, will mostly do as little as they need to to clear that hurdle.

Why is that hard to say? Is it racist? Am I saying that blacks are somehow inferior to whites? No, I'm saying they're pretty much the same, and boy did I get some angry emails for that.

That doesn't mean that the only obstacle facing blacks in education is the lower bar they face. A lot of black kids in this country are going to incredibly inferior schools. That is un-[expletive deleted]-fair, and it's a national disgrace. It's a national disgrace that any children have to attend the kind of day-care-centers-cum-war-zones that many public high schools in this country have become.

Here's the problem: affirmative action doesn't just benefit those kids. It also benefited the rich black kids I went to high school with, the ones whose parents were professionals and who spent their vacations in Nice and Gstaad. Those kids were not, in any meaningful way, discriminated against. I mean, they may have felt isolated because of their race, but I bet they felt less isolated than the fat girl with the lisp who had to sit alone at a lunch table for twelve years. If my experience at Penn is anything to go by, the top universities are admitting a lot more middle- and upper-class kids under affirmative action than they are kids who have had their lives materially impaired by racism.

So ultimately the argument for affirmative action has a hard time standing on fairness grounds, when more and more it seems to kick out white lower-middle-class kids to make room for black upper-middle-class kids. At the individual level that is. Personally, I have heard very few good arguments for the mechanism by which racism prevents black middle-class children at adequate schools from mastering algebra at the same level as the whites. If it were the racist teachers, one would expect to see test scores for black students sharply higher than grades; the truth is the reverse. On the other hand, if living in a racist society is such a handicap that the majority of black students are simply unable to cope with academics. . . well, how does passing them on to college or law school help? Isn't rather more drastic intervention called for? And is pretending that students who haven't learned algebra, have, really either decent or fair?

Instead, proponents argue that fairness for the group demands it: blacks have a right to have the same percentage of Harvard graduates as whites, irrespective of the individuals involved. Often this is connected to a sense that the only way to end racism is to make sure we have as many black Ivy-leaguers (or UC'ers, or whatever the bar you set is) as we do white ones.

It is not an uncompelling argument. We all know that discrimination lingers, even though it flies under the radar of most white people. I was shocked to find out that one of my dear friends, the most straightlaced, not to say uptight, people you can imagine, is routinely followed around stores from the time she enters until the time she leaves. Fine, I'm naive. I am not trying to deny the reality, or the pain, of racism. And if getting rid of the blot on our society that remains from the overrepresentation of blacks among the disadvantaged, and underrepresentation among the advantaged. . . well, it's tempting to say, what the hell, it's only temporary.

There are several problems with it, even beyond the natural distaste Americans have for being treated not as individuals, but only as members of some group.

The first is, of course, that it is unfair. From what little I've seen of the documents on the Michigan case, these aren't judgement calls we're talking about, where applicants got a little extra credit for being born with a disadvantage. There are a large number of applicants who never could have been admitted had they been white. That means that someone who would have been admitted, wasn't. Necessary to remedy past discrimination? Possibly. So how come we picked these thousand people and told them that they got to remedy past discrimination for the rest of us?

Affirmative action advocates often sound a little confused on this point; on one hand they argue that it's not a big deal for the disallowed white or asian, who will just go to another school. On the other hand, they argue that being barred from attendance at the University of Michigan would constitute irreparable harm for a black student.

The second is that is isn't really temporary, is it? Bakke was decided in the 1970's. Three Fortune 500 companies are now headed by blacks, which is probably close to proportional to the number of black men with the right credentials in the age cohort of CEO's, and I have yet to see a single college with a deadline for their affirmative action program to expire.

The third is (and I'm wandering out on to shaky ground: this is based on my possibly flawed understanding of the Bakke case) that while remedying disparate representation in the upper income strata is a more compelling case than remedying past slavery, or the poorly-conceived "diversity" argument, this one's illegal.

I was watching a law professor on the Jim Lehrer News Hour talk about this case last night, and I found it fascinating. Bakke (I believe) specifically disallowed affirmative action to remedy racism, and especially disfavored quotas. It did, however, permit schools to use race as a small "plus factor" in order to achieve "diversity". So while the law professor clearly wanted to say that we need affirmative action because Americans have been, and still are, a bunch of racist bastards, he danced right up to the line and then danced right back to diversity, because he knew that his real reason for championing affirmative action had been disallowed by the Court.

Of course, it wouldn't be the first time we used a legal pretext for doing what we thought was right. In general, however, I'm wary of such things. Remember it was the not-unreasonable literacy tests and poll taxes that the South used to keep blacks disenfranchised for so many years. If you establish that this sort of thing is acceptable, you may be disenchanted when your opponents find their own laws to twist to their ends, but you can't really argue that it's wrong.

The fourth problem is that it may not, in the long run, help the kids. I find it hard to believe that setting such a drastically lower bar does not result in kids putting in less effort; that simply doesn't square with anything I know about human natures. Then there is the pain of having people think that you aren't as qualified as the whites there. Probably people do think that, but arguing they shouldn't is trying to have your cake and eat it too. You can't lower the requirements for a group of people and then demand that everyone else act like they don't know it. We certainly didn't extend any such kindness to the various idiot children of powerful alums at Penn. There are legitimate questions over the costs and benefits of affirmative action to the people it is supposed to be helping.

The problem for conservatives who are against affirmative action is, as Kevin Drum points out, the dearth of alternatives.

It's not that they don't have ideas; they've got loads of them. But they have a snowball's chance in hell of being enacted.

The teacher's unions, for example, are not going to allow you to abridge the seniority system that transfers teachers out of inner-city schools as soon as they've dried out behind the ears. Hell, that's just the start of it. City schools are screwed up eight ways from Sunday but the problems are so immense -- and every problem has so many powerful constituencies demanding to leave things just the way they are -- that it seems to be impossible to enact real educational reform. Oh, we're inching in that direction. But that's not really good enough for a generation of kids left in horrible schools.

Incidentally, if you look at my blogads over there at the right, there's a link to the Children's Scholarship Fund, which can, and does, do something for those kids. How about giving some kid who deserves better a Merry Christmas?

Intensive programs like Prep-for-Prep work great. But they work first, by cherry picking motivated students; second, by spending a hell of a lot of money, and third, by getting said students to spend an enormous amount of their free time in school. They're also private. Anything nationwide would end up being run by the same horrible school systems that are failing kids now.

We could try a little harder not to be racist. But we are trying a little harder. The idea that my generation is little different from Bull Connor's is ludicrous -- yet that's what Jesse Jackson and Al Sharpton seem to be saying.

Really, the best argument against affirmative action is that it's divisive as hell. Yet in eliminating it, we're asking a group with legitimate historical grievances to lean into the strike zone and take one for the team. But of course we're currently asking another group that hasn't had it so good -- lower middle class whites -- to do the same. The fairest thing would seem to be to get rid of affirmative action and instead put intensive efforts into preparing minorities for college. But any effective effort at doing this is likely to be a non-starter with one of the most powerful Democratic interest groups.

The editorial position of Asymmetrical Information? I'll tell you this, folks; it's a big goddamn mess.

From the desk of Jane Galt:

The Dog is Dead, but the Tail Still Wags

The famously wacky ninth circuit just issued an opinion that the second amendment doesn't protect an individual right.

Footnote 1 cites Michael Bellesiles.

From the desk of Jane Galt:

Who Knew?

MS. has a blog. Somehow, I don't think I'm going to make their list of favorite female bloggers.

The blog itself seems to be pretty good. . . at least, it found this hilarious article on merino sweaters. Men, just say no.

From the desk of Jane Galt:

Evil Empire

No, it's not the US. . . it's not even Microsoft. Steven Den Beste explains who the real evil empire is.

From the desk of Jane Galt:

The True Size of Government

This post by Mindles H. Dreck, econoblogger extraordinaire, is so good that I don't know where to start. Just go read it now, and maybe tomorrow I'll have some comments.

From the desk of Mindles H. Dreck:

Looking for No-Growth in All The Wrong Places

Calpundit purports to bust the "myth" of "runaway government" in a post showing the level-seeming proportion of GDP made up by the federal government. The exhibits presented (here are alternatives from the CBO)are familiar to those of us who've seen them in other contexts (for instance to show that tax cuts have not eaten into tax revenue the way static analysis suggests).

I don't know about the "runaway" strawman, but if Kevin is attempting to show that government's share of and impact on the economy hasn't expanded he's way off-base. It's worth reviewing, as the numbers in his post fail to reveal the magnitude of change:

1. He chooses a convenient time frame. As an alternative, from 1947 to the present, the federal government has grown from 16% to today's low-20%'s of GDP (same data source that he uses, the BEA/NIPA tables). He does so to "assume away" the growth in entitlements in the late 1940s. I don't know why they should be exempted.

2. He acknowledges that he ignores state and local government, which has nearly tripled from 6 to 16% of GDP in the post war era (also available from BEA/NIPA). In his relative analysis there is no allowance for the fact that states here cover education while that is a national budget item in many of the comparison economies. Furthermore, anyone who's heard the term "unfunded mandate" knows how States have been put in the position of assuming new responsibilities so the Federal government could stay within the range shown.

3. He makes no allowance for the massive off-budget liabilities assumed by our government. Most financial statements estimate the costs of assumed future liabilities. Certainly GAAP, Statutory Accounting (insurance) and Pension regulations require as much. If you are the U.S. government, however, you do not have to account for them. The U.S. takes advantage of its loose accounting requirements to commit liability-hiding that makes Enron look like a three-card monte dealer:
   
   
   
   • If social security were a corporate pension, it would likely be $3.2 Trillion underfunded. That's about 30% of GDP and the underfunding didn't exist (actuarially speaking) in 1983.
     
   • Other national insurance programs are also under-reported. The National Flood Program, which subsidizes its policies between 22% and 75%, most of which would be expenses in a reserve in a commercial company but does not appear in the federal budget. If global warming predictions are correct, this could turn out to be one of government's largest liabilities in the future
     
   • Guarantees and unfunded capital provided to the IMF, World Bank, OPIC, Ex-Im bank, etc. The unfunded capital to the World bank is about $30 billion (around 0.3% of GDP). Propping up many IMF and World Bank borrowers can resemble a Japanese Bank throwing money at insolvent clients in order to not recognize a bad loan. As bankers like to say about contingent liabilities, "a letter of credit is a bad loan waiting to happen".
     
   
   
4. He fails to consider the impact of regulations and risk-shifting that impose a burden on the private sector but have little budget impact. For instance, in the 1980's government actions led to Phase I audits and environmental impact assessments being conducted on all transacted and improved industrial property starting at about $20,000. Desirable or not, this is a cost imposed on the private sector, and it certainly didn't exist before. There are literally thousands of examples on this point, ranging from the added complexity of tax returns to the enormous compliance burden of financial institutions that are essentially deputized by government to track international funds flows to and from terrorists, drug dealers and tax evaders.
   

I have been reading a book by David Moss called "When All Else Fails - Government as the Ultimate Risk Manager", which tends toward defending the growth in government programs to transfer and assume risk (which, as noted above, happens largely outside the current budget). While I am sympathetic with some of Moss' arguments that these programs have largely benefited our economy, it is unambiguous that government is much larger for having done so. And since we are relatively new to this role, it will surely bite us hard at some point. One could argue that the WTC settlement fund's appearance in the budget is a quick preview for the alert to the potential budget effects of government assuming more and more risk.

Finally, it is not at all clear to me, examining Kevin's premise, that it is all fine for government to maintain its share of a growing economy. It seems to me that even an ardent defender of the welfare state might suggest government shrink as standards of living and payroll employment increase.

From direct federal and state spending to retirement funding to welfare to medicaid to worker's compensation to "risk management", government has grown much larger over the post-war period and even in the last two decades. This is reflected both in the combined government outlays measured by Calpundit and in the contingent and unreserved liabilities we have too lightly assumed. Unfortunately, it will be difficult to get a handle on how large until the contingent chickens have come home to roost.

As an aside, I would be interested to see a follow-up to Moss' book that analyzes how the "crowding out" effect of risk assumption differs from that of traditional government programs. That strikes me as a difficult bit of economic analysis.

Also, this post is relevant to John Quiggin's comments here.

UPDATE: I haven't been checking my referrer logs. I did not realize that Calpundit had responded to my original short post in the left column on this. Where is this discrepancy in state spending between Calpundit and Hodges? I fear it shall have to wait. I must to work now.

Obviously, this is a complex subject. Nonetheless, my objections to big government relate to its crowding out more efficient allocation of capital in the private sector and its taking of money earned in the private sector. Current government spending, using flawed government accounting, substantially understates that impact. So I suggest that "runaway government" has not been myth-busted.

UPDATE AGAIN: Here's the state & Local Data straight from NIPA using current expenditures. Looks like it's grown a bit to me. More than Kevin says, less than Michael Hodges graphs. Natch.

From the desk of Jane Galt:

A Short Look into the Future

It is inspiring indeed:

A HUNDRED YEARS FROM NOW, everyone will have a George Foreman Grill. (It's almost that way now) Indeed, the generic name for "grill" will be "George Foreman," and people will comparison shop George Foremans (As in, "I just love my Britney Spears Jr. Fat-Reducing George Foreman. It's the best George Foreman on the market!"). The fact that George Foreman was a boxer will be a trivia question. In Britain, by then officially an international park serving American and Chinese tourists, locals will develop clever abbreviations to the delight of Futuro-Anglophiles everywhere: "I have to use the W.C., can you watch the G.F.?" And back in the U.S., "George Foreman" will even be made into a verb, replacing "grilling" -- as in, "C'mon over, we'll George Foreman up some steaks, have some beers, and watch the futuristic ninja-sport that is popular in the future."

From the desk of Jane Galt:

The Source for Open Information

I've been blogging about what I think will be the deleterious effects on the creation of new intellectual property should file sharing become (as I think it will) really widespread.

Perhaps I was a little cranky. I'm not a big fan of the record companies, but the arguments made about how "my illegal use of intellectual property is based on cosmic principals of justice" make me cringe. Such arguments seem to me very childish. We are not talking about taking the food to feed your family; we are talking about enjoying music which someone else paid to create, because you want to. Look deep in your heart. Would you be defending this practice if it involved something you didn't want, like, say, research articles on athropodic skin diseases? C'mon, there's no one here but us chickens. Be honest.

Ultimately, all property is secured by the fiat of the state, not just intellectual property, and if you don't believe me, get out your deed and read it. All sorts of different kinds of property are treated differently by the law, not just intellectual property. You can't drive your automobile on public roads unless the State says so. You can't, in many communities, build any old thing on your land, or paint your house in candy stripes, or even in many places keep trespassers from walking through your side yard to reach the beach. More importantly, the rights you do have over your property are granted by the state's ability to use force to enforce them.

So why, then, do we grant intellectual property rights? For the same reason we grant all other property rights -- because they confer the dignity of ownership on our citizens for the works they possess, and because they maximize social utility by helping to ensure that items are created, and put to their highest value use.

I focused on the creation of new works, but Robert Musil points out that old works are also vulnerable when IP rights are not enforced:

Ms. Galt considers the effects of the Tragedy on the source production of new materials. Another consequence of the Tragedy is degradation through overexploitation of existing materials. For example, the estate of Cole Porter once licensed the wonderful song "I've Got You Under My Skin" to a third party without sufficient license terms limiting the expolitation of the song. The result was a toilet bowl cleaner commercial with the jingle "I've Got You Under My Rim." That was a disaster for the Porter estate, which recieved the seriously damaged song back from the licensee. With the toilet association established, the use of the song, say, at wedding receptions, in movies and in other classy Cole-Porteresque environments was obviously impaired, but the licensee didn't care that the damage done exceeded the value obtained by the licensee from the commercial. Media companies stuggle mightily to ensure that their works acquire only "desirable" (that is, profitable) associations in the public mind. Free copying makes that control impossible - and would lead to lots of uses like toilet bowl commericals for, say, Mickey Mouse.

File sharing essentially destroys the property right. Just as your land title is meaningless if the state simultaneously grants everyone in the country the right to use your land, file sharing makes property rights meaningless, because it destroys the ability of the putative owner to control the property's use.

Now, it is possible that I am wrong. There are many theories that make perfect sense, yet don't pan out empirically, and there's no way to know without waiting and seeing. But it is my considered opinion that the current limitations on file sharing have more to do with limitations of storage, broadband, and technological proficiency of consumers, than with any third factor that might make swapping MP3's complementary with, rather than substitutable for, music sales. As the current generation over 40, which is both less tech-savvy and more used to spending a lot of money on music, ages out and is replaced with the kids who buy very little music today, and as storage and broadband expand, I think that MP3's will largely replace music sales, and the music industry will collapse. But I could be wrong. Some technology might come along to prevent sharing. People could continue paying for things they can get, with little effort, for free. (I find this unlikely) A new business model could emerge that rewards recording. I don't know what will happen; I am just saying that to me the most likely scenario appears to be what I have described above. But in 1989, the most likely scenario was that Japan would buy us all lock, stock, and barrel. Prediction is a lousy business.

So leaving aside the moral dimension, which seems to make some people quite emotional, and leaving aside the demands for empirical evidence, which I freely confess I can't provide because it's too soon to do a controlled study, I am stating what I believe will happen. I could be wrong. But I find the opposing proposals extremely unconvincing: "The artists will step into the place of the recording studios"; "People will still buy CD's"; "The reason sales are declining is that the product is crap". These statements are no more empirically verifiable than my assertion, and I see no logical reason that they should be true, based on my knowlege of markets and human behavior.

But that's just my opinion. I could be wrong.

From the desk of Jane Galt:

Quel Surprise

Today's Marxists are a little out of touch with, y'know, Marx.

I find this article very interesting, because it explains to me where the Marxists and fellow-travelers I knew in college got the idea that Third World poverty was caused by colonial exploitation, even when they'd been to said Third World nations and were perfectly able to see that Third World poverty was a combination of the poverty the Third Worlders, and indeed most of the human race, had been living in for many millenia; or horrible governments and/or guerillas that stole everything that wasn't nailed down, and some things that were.

From the desk of Jane Galt:

My Goodness

Are there really people in the world who need to be told not to get blind drunk and criticize the boss's politics and/or fashion choices at the company Christmas party?

On second thought, I've been to any number of holiday parties, and, why, yes, there certainly are. Favorite company Christmas party rule comes from my old company, and was based on long experience: No punching the clients.

From the desk of Jane Galt:

Just 23 Shopping Days 'Til Christmas

If you're going to buy a blog gift for your loved ones. . . why not the Who is Jane Galt baby-doll T? The Jane Galt graphic super-sized coffee mug? The stylish Live from the WTC boxer shorts (limited edition -- buy yours today!) Don't forget the mousepad, the microfiber baseball cap. . . why, you can deck yourself or that very special someone head to toe with stylish and affordable Jane Galt merchandise! What better way to let the world know that you're a hep cat. . . and let that special someone know just how much you care? Remember, supplies are limited, so order now!

We now return to your regularly scheduled programming.

From the desk of Mindles H. Dreck:

In Dinosaurs We Trust

Steven Den Beste has prompted dialogue from various corners of the Blogosphere about the competitiveness of Europe. This is one of the nice things about the blog world - Steven discusses technology competitiveness, Derek Lowe chimes in about Life Sciences, one of Steven's readers writes in about manufacturing, etc. If the meme continues, we'll have an interesting cross-section of working experience reflecting on the topic.

My own experience with European vs. U.S. business competitiveness comes from two sources: Earlier in my life I worked with a number of buyout groups. Two of these groups had European funding and sought to make investments in Europe as well as North America. This was the heyday of LBOs in the United States. While both groups recorded mixed results on their buyouts here, not one European investment (covering primarily France and Germany) survived. In every case, the group sought to restructure the underlying company but was unable to do so because of local labor laws. They simply couldn't replace any employees, and they found they had little ability to obtain permits for capital improvements without actually worsening the employment problem. I spoke to one of these old clients recently, and they have narrowed their focus to Switzerland.

Working in financial services, I am also struck by the acquisitions European companies have made in the industry that somehow have not been additive. It's interesting just to list the predecessor organizations included in a few European-owned behemoths:

Deutsche Bank:

• Bankers Trust
  
• Scudder Investment Management
  
• Kemper Investment Management
  
• Alex Brown
  
• C.J. Lawrence
  
• Morgan Grenfell
  
• James D. Wolfensohn
  

UBS:

• S.G. Warburg
  
• Dillon Read
  
• Swiss Bank
  
• Paine Webber
  
• Global Asset Management
  
• Brinson Asset Management
  

What strikes me looking over these two lists is the number of formerly significant competitors among them - Scudder, BT, Alex Brown, Dillon Read and Brinson could all lay claim, at one point or another, to being among the most productive and profitable in their market segments. The merged institutions don't even approach the sum of the former market presence of the individual acquirees. "Two dinosaurs mating doesn't make a gazelle", goes the old saying about mergers. It's also pretty clear that when a Dinosaur eats a gazelle it's still a dinosaur.

There is a simple repeating pattern on Wall Street. Innovative finance minds build up a reputation and a franchise. (see Eric Gleacher, Bruce Wasserstein, etc.) and sell it to a large institution. These buyers have been Japanese (Nomura), American commercial banks (Nationsbank/BofA) and, of course European (Deutsche and UBS, as well as Credit Suisse). The real talent usually leaves and does it again somewhere else.

What these new firms have is Capital. Gobs and gobs of it. That's typical of the European presence on Wall Street. They tend to be most competitive where large amounts of capital make a difference. This is partly because they appear to demand a lower return on that capital, probably due to a less demanding shareholder base.

In all the cases above, both the aquiree and local management of the acquiror are largely American. I tend to take this as a lesson about size rather than nationality. Very few large institutions generate exceptional profits. Typically, the smaller shops such as the old Wasserstein Perella, Dillon Read, James D. Wolfensohn and Alex Brown generate most of the exceptional profitability. But this in itself appears to be a difference in outlook. Europeans (British possibly accepted) seem to take great comfort in the size of an institution. These larger entities take are often viewed as a public trust, a phrase viewed with less suspicion elsewhere around the globe.

Public trusts have lots of capital, but they keep getting taken by the entrepreneurs.

From the desk of Mindles H. Dreck:

Just a Thought

Many of you know Dreck attended Yale. Yale is the home of the notorious Skull & Bones Senior/Secret Society.

When I was there, there was at least one strange, but largely successful avenue for getting into Skull & Bones:

Every year, in the months leading up to the choosing of a new crop of seniors for the societies, the Yale Daily News would editorialize loudly about the outrage of the exclusively male secret societies (Skull & Bones, Scroll & Key and Wolf's Head). For at least a few weeks, the topic would receive saturation coverage, then fade away. Then at least one of the secret societies would offer a coveted slot to the Editor of the Daily News.

I know this is a long shot, but is Howell Raines a golfer?

I know he fly fishes. Although he's even partisan when he does that.

From the desk of Jane Galt:

Explanation Time

I'm interested in the number of people who have emailed me to tell me that it's okay to steal the intellectual property of the record companies because they charge too much for CD's.

So there I am sitting with a sarcastic smirk on my face saying in my head "You do realize that the more file sharing there is, the higher the price of CD's will be, don't you?"

But then, maybe you don't.

The post below touches on this, but let's think about the economics of the record industry.

The main product, CD's, has a high fixed cost, which is to say, the amount of money that must be spent to produce even one CD. That includes overhead, promotions, voice coaches, money on little spandex outfits, etc. As well as the money actually spent to produce the CD.

The product also has a very low marginal cost, which is to say, the cost of producing each additional CD.

What does that mean? It means that the industry has to earn a certain number of dollars to recover their fixed costs, and everything on top of that is gravy.

Let's say that the industry has ridiculously high margins - say, 20%. That means that 80% of the CD's sold are necessary just to cover the fixed costs.

If file reduces the number of CD's sold by, say, 25%, that means prices are going to rise, not fall. Interlocutors will argue that this is self defeating, since this will just push more people into file sharing. This may well be true, but it's irrelevant. The labels can't keep selling the damn things at a loss. Sure, they can cut some costs (although artists who whine about record labels should remember that one of the first costs to get cut is going to be bands that don't earn back the money laid out on their albums), but it's unlikely that their excessive costs run to 10%. Prices will have to rise. This will, of course, push down volume, forcing prices to rise further. . .

So file sharers should remember that they're not just sticking it to the record companies; they're sticking it to the folks who actually buy their music.

Update Zimran Ahmed, fellow Chicago GSB alum, disagrees. He makes several good points.

Once record companies have promoted and packaged a CD, the fixed cost of creating the CD is what's known as a sunk cost: money you've spent that you have no way of recovering. In good business decisionmaking, once costs are sunk, you effectively write them off; you should make decisions as if that money had not been spent. In other words, "we need to spend 3 trillion dollars on this project with a low chance of success because we've already spent 6 trillion, and if we don't spend more money we'll never get our 6 trillion back" is not good decisionmaking.

Similarly, record companies should not price to recover their average costs; they should price to maximize profit. So if the record labels have spent 200 million making a Brittany CD, and file sharing drops the number of CD's they sell, they shouldn't necessarily raise prices to cover the lost revenue if that would cost them further sales. Rather, they should ignore the money they've already spent, and set their prices to sell the number of units that gets them the greatest profit. In the case of CD's, which have a tiny cost of production, that will involve maximizing volume, rather than price. File sharing might well push prices of existing CD's down if the price is very elastic. (I'll let you go over to Zimran's site to read about price elasticity of demand, or you can click here to read my explanation.)

That applies to CD's that have already been created. In the future, however, the record labels need to plan on pricing to recover that average cost -- or they won't make the records. So you need a more sophisticated model to predict what the record companies will do going forward. But still, it's a very important explanation and you should read it now.

From the desk of Jane Galt:

Is the Recording Industry Viable

Sob. Everyone says I'm being cranky.

I should point out that I am no more immune to the blandishments of expensive jewelry than other women. I'm not laughing at those commercials, I'm . . . watching goggle-eyed while I wonder how come all I got for Christmas was a financial calculator and a book on managing your 401(k).

Equally, I'm not some sort of scrooge yelling at people for their file downloads. I think file downloading will put the record companies out of business. And it is instructive that the people who think this is a good idea are artists and artistic types. The reason is that these people are good at artistic things and bad at economics, which is the reason they are not economists.

Just to get one misconception out of the way, getting rid of the record labels does not mean that their market power will accrue to the artists, my children. There are a lot of players in the music industry, and pretty much all of them have more power than the artists. Currently, the record labels step on the venue owners, the equipment suppliers, the DJ's, and what have you. If the record companies get out of the way, it is those people -- the people sitting on the valuable and scarce capital goods -- who will reap the market power, not the artists. There are a lot more people who want the world to listen to them sing than there are, for example, live music venues. Artists have always starved, and will continue to do so, the wishful musings of artistic types notwithstanding.

This article, for example, argues that the record and publishing industry are doomed because it is now possible to do high-quality home recording. Well, yes, that's true. And the reason that it is now possible to do high-quality home recording is that the enormous financial capital of the recording industry has made possible the advances in technology that have enabled the software and equipment manufacturers to offer stripped-down versions of their equipment to the home audience. The artists who protest the iniquities of the record labels, and the home-recorders who brag that they can do it every bit as good as the record companies seem to imagine that these things spring full-grown from the head of zeus, as it were, independent of those nasty record labels. I am not an expert on the recording supplier industry, but what little I know indicates that the fabulous advances in home technology consist of companies reaping extra profits on expensive R&D for products sold to the record labels by stripping them down and selling them retail.

File sharing doesn't just destroy the record companies; it destroys the primary source of capital in the industry. Revenue from CD's is high-fixed cost, low marginal cost; the record companies lay out a lot on promotion, recording, making music videos, and such, but once they've sold sufficient CD's to recoup that cost, everything above it is gravy. Concerts, on the other hand, have a high marginal cost; each concert costs an enormous amount to put together, and that cost doesn't decline significantly no matter how many concerts you put on.

It is no accident that industries with high fixed costs and low marginal costs are characterized by high rates of technological innovation: pharmaceuticals and software, to name the most well known. That is not of course to say that it is impossible to have high rates of technological innovation in industries with other cost structures, but it is fair to say that such structures are highly conducive to technological development. An all-file-sharing environment would eviscerate the capital resources that make the technological development possible, and probably drive up the average cost to home-recorders considerably.

Concerts and recordings are different products, and not really very substitutable; there is thus no reason to think that concert tickets are not already fully priced. File sharing will thus remove the major source of income for capital formation without offering any venue to replace it.

It's also likely to cut, rather than raise, revenue to the artists. First of all, there's no way for the artists to make any more money than the record labels. It would be nice if we all generously donated to the artists we liked, but as my tip jar attests, a very small percentage of consumers voluntarily do so.

Incidentally, the tip jar is right over there at the right. It's very convenient, and just takes a minute to donate. Just in case you hadn't noticed.

Second of all, as mentioned above, market power currently wielded by the record labels will switch to the venue owners, promoters, DJ's, etc. But with the record labels, there's only one hand in your pocket, and the record labels are thus incented to maximize overall revenue in order to maximize their share. When there are multiple players all trying to maximize their personal revenue, the artist often gets squeezed out altogether. A venue owner, for example, doesn't care if you make more money for everyone by playing five nights in a row at a low overhead and selling a lot of t-shirts and albums; he makes more money by showcasing you once and charging a higher cover. And so on down the line.

Third of all, without the promotion machine of the record companies, artists currently supporting themselves would have a much harder time getting the kind of radio and venue play necessary to make concerts a sustainable income stream. Personally, I wouldn't mourn the demise of the Top 40 format, but it is that format that makes the nationwide concert tour possible. It is the rarity of a national name concert that lets concert promoters fill a stadium at $75 per; regional players with good name recognition, or out-of-towners without, can fill only a much smaller venue at much lower rates, most of which go to the venue owner in the form of concessions, rather than the artist. If you want to see the future of music without record labels, see how many bluegrass musicians can support themselves on their music earnings. That's the revenue stream without the capital financing and promotional machine of the labels.

Which brings us to the question of supply. One of the interesting things about the article I linked above is that the author argues that while the recording and publishing industries will disappear, the movie industry won't because there is no way to make a cheap, good movie.

This is confusing cause and effect. The fact that widespread file-sharing would destroy the source of the files that are shared does not mean that the file-sharers won't go right ahead and destroy it. What's stopping them right now isn't goodwill, but insufficient broadband, and the absence of relatively simple equipment for playing the files on television. There's an economic term for this: The Tragedy of the Commons. Initially it referred to the overgrazing of common land by villagers; since no one had any rights to graze, it behooved everyone to graze their sheep as much as possible, to get the grass before their neighbor did. The result was that overgrazing destroyed the common for everyone.

The Tragedy of the Commons is seen where property rights are eroded or non-existant. No one has an incentive to preserve the public good, so everyone takes as much as possible while the getting is good.

In the case of intellectual property, widespread copying essentially destroys the property right. There is no incentive for any one person to preserve the revenue stream that makes the IP good possible, because their selfish neighbors will destroy it anyway. Everyone copies instead of paying $10 to see the movie, or $18 to buy the CD. Even if they know that they are ensuring that there will be no more feature films, or money to develop new recording technology or promote bands, everyone will still copy except for oddballs with strict ideas about respecting ownership.

I think the assumption that if there were no labels, we would see the concert revenue structure unchanged is extremely naive. I think it rather more likely that we would see a flattening of the structure. Amateur bands that currently get no play would get a little more airtime. But the current professionals would get less, and the promotion machine that supports them would collapse, lowering the price they are able to charge for their tickets. We'd see a flattening of income, with the lower tier rising a little and the upper tier falling a lot -- something akin to the income structure that prevailed in the last pre-recording music industry, vaudeville.

What does that do to supply?

It cuts the supply of the best music, and raises the supply of the lower quality music, of course.

I know, artists hate the gatekeeper function of publishing houses and record companies. Undoubtedly they miss some great talent. But they also keep the rest of us from listening to an enormous amount of crap. I worked in publishing briefly, and you would not believe the incredible amount of really atrocious writing that comes across the desk of your average editor. Among my favorites were a man with an appallingly spelled novel about an angel coming to a garage in New Jersey, who felt compelled to tell me in his cover letter "This is NOT a TRUE STORY"; and a chap who had written an entire novel based around -- I swear I am not making this up -- Microsoft Word 6.0 clip art. I suppose in our brave new world DJ's take over this function. That means each DJ has to listen to approximately 8 zillion tons of crap to find a few decent recordings. . . or our artist who has been complaining about the indifference of the record companies faces an even more daunting enemy -- the insularity of DJ's who play each other's favorite live acts over and over rather than listening to one more Led Zep cover band's rendition of Sweet Home Alabama. Only this time, she won't have a CD-funded promotion machine to break her into the playlist.

But I digress. Giving the top musicians less money means that some of them are going to have to get day jobs. Which means they'll have less time to record.

If text copying follows a similar path, writers will have the same problem. We all love blogs, but let's face it; there's a lot of extraordinarily bad writing out there. Editors do serve a purpose. They make sure the "facts" are at least sorta true. They make sure the prose is readable. They make sure that authors don't go totally off the deep end. It is a truism in publishing that you can trace the decline of an author's work to the date when he or she gets enough market power to hand over his MS and say "This is my deathless prose. You will publish it as it is." Who will pay for that function if e-books decimate the revenue stream?

It's instructive to look at post-revolutionary France, which eliminated copyrights. Did a thousand literary flowers bloom? No, writers stopped writing because they couldn't get paid for it. Publishers took to reprinting famous works, along with crap they'd written themselves because, well, they could. There was no sense in paying a writer to write something when if it was any good, the guy across the rue would be printing it tomorrow.

So when I said that I thought the file sharers would put the industries whose files they are copying out of business, and would regret it, that's why. I think artists will lose revenue. I think consumers will lose quality, as well as the enjoyment that the average consumer appears to derive from being able to go to any bar in the country and hear the same damn songs.

[Yes, I know you, the music afficionado, hate that conformity. But the average consumer seems to like it.]

I think the hobbyists will find that the innovation in equipment and software will cease, and that without the record industry to fund the majority of the suppliers' costs, the stuff that has turned them into their very own home recording studio will get a lot more expensive.

That doesn't mean I like the record companies. I think they fumbled the Napster issue badly; only Bertelsmann seemed to understand it needed to co-opt the movement instead of making futile attempts to strangle it. I think they're doomed. And honestly, I'm such an idiot about music that I probably won't care much.

But I think the kids sharing the files will.

From the desk of Jane Galt:

It ain't easy being green. . .

CPO Sparkey demonstrates why it's not as easy as it looks to "cut the fat" out of military spending.

From the desk of Jane Galt:

It's not theft, it's Socialism!

It's impossible for me to read this with anymore seriousness than the "Property is theft" blather from the squatters I used to hang out with back in my socialist days:

Students often aren't convinced. In a dorm room at Pitzer one recent night, Whippy and other students tried to justify their downloading: It stimulates concert-going, one said. It helps fledgling bands by introducing their music to a wider audience, another offered.

And the bottom line: Music is far too expensive anyway, and the only ones who really profit are greedy big-name artists and record companies.

Whippy said she hadn't bought a new CD in at least four years. Turzo added: "I can't shell out that kind of money. I think I've developed a complex about buying CDs at this point."

Evan Doty, a junior majoring in organizational studies, said he has his own electronic code of ethics. He downloads music, television shows and software all the time, but also tries to support musicians he likes by buying their CDs. He showed off a fat CD wallet stuffed with discs.

"All purchased," he said proudly.

The students spoke of friends in the dorm last year who provided downloaded movies for sale, with a list of about 400 titles taped to their door for friends to peruse. Dorm mates would make their pick, plunk down $1 and a blank CD — or $3 if they didn't have one handy — and wait a few minutes while their copy of the movie was burned.

I think file sharers are going to put the record companies out of business. And I think that once they have, they're going to whine about all the amenities that go with them.

From the desk of Jane Galt:

Are Diamonds A Girl's Best Friend

I enjoyed Stuart Banner's post about those jewelry commercials:

I REALLY REALLY LOVE HIM! December is the season for jewelry advertisements. A typical TV commercial involves a woman who loves a man, but in a tentative, wishy-washy sort of way, until he gives her very expensive jewelry. Now she really loves him, all because of that diamond.

Intellectuals often exaggerate the power of advertisers to shape consumer preferences. From what little I know of the advertising business, it's all about figuring out what consumers want and then giving it to them. So there must be plenty of people out there who find the message of these commercials persuasive -- women who believe that the size of the diamond is an indicator of how much they should love the guy who gives it, and men who, understandably, strategize accordingly. How utterly pathetic.

It's not too hard to come up with a functional explanation, in which the size of the diamond is a signal of either the man's level of commitment or the standard of living the woman can expect after marriage. But diamond size doesn't seem an especially good signal of either, particularly if (as in the commercials) the man and woman are already in the midst of a long-term relationship, in which both of the qualities the diamond ostensibly signals can be directly observed. And if a signal is needed, why jewelry? Why not, say, lavish parties for the woman's blood relatives, or the ceremonial burning of currency? These human beings -- they sure can be hard to figure out.

Those commercials speak to the fantasy, just like those J. Crew catalogues, which promise those of us in a certain demographic that with the right accessories, we too can join that magical world where it is always a sunny Friday afternoon the weekend of the Princeton game. In the case of the diamond commercials, it resurrects for women the fairy tale world of our childhood romantic imaginations, where we are clad in beautiful dresses and a but-hazily-seen Prince Charming showers us with pretty baubles. On another level, it creates the fantasy of a man who loves you so much that he will sacrifice outrageous sums of money merely to buy you an object of absolutely no intrinsic utility whatsoever, and of which he himself takes no enjoyment outside of yours.

Such commercials are particularly appealing if you're in a long term relationship, when the initial ardor has faded, and the gent in your life is more likely to come home with a brand new garbage disposal than some useless piece of compressed carbon.

Of course, if he did, reality might intrude. These days, when both people work, and both people pay the bills, it's considerably less romantic to be handed a $10,000 rock, when half of the labor that went into earning that rock was, technically, yours. Those commercials are drawn from a 50's world, when he brought home the bacon, and he got to decide how it was spent, so more diamond for you ment less golf clubs and sports car for him. Of course, that's where most little girls get their fantasy romances, even in this enlightened age. It's also most likely to still be true in the upper income brackets, where many investment-banker and corporate-lawyer wives have ripped out any personality or ambition in order to turn their lives into an altar to their husbands. . . and the husbands bring home expensive jewelry in return.

From the desk of Jane Galt:

Department of Irrational Rationalizations

So Tim Noah tells us that it's okay for Al Gore to call conservative media a "fifth column", but not for Andrew Sullivan to say the same about far-left journos, because. . . well, I'll let him speak for himself:

As one who criticized Sullivan for slinging the term "fifth column," Chatterbox will gladly explain: It's the context, stupid.

"Fifth columnist" means "traitor." (For a fuller definition, click here.) When Sullivan (in an essay that appeared in the Sept. 16, 2001 Sunday Times of London) used the term "fifth column," he used it in the context of imminent war:

The middle part of the country—the great red zone that voted for Bush—is clearly ready for war. The decadent Left in its enclaves on the coasts is not dead—and may well mount what amounts to a fifth column.

Reading this as the United States prepared to invade Afghanistan, it was impossible to avoid the literal reading that Sullivan believed anti-war dissenters were morally indistinguishable from traitors. . .

There isn't a rational soul on earth who would interpret Gore's remarks as suggesting that Roger Ailes, Wes Pruden, or Rush Limbaugh were in any way sympathetic to, let alone collaborating with, any foreign enemy. Rather, Gore was suggesting that these men, and the institutions they work for, were traitors to the journalist's creed that news organizations should not serve any one political party.

My Aunt Fanny he was accusing them of being a traitor to the journalists credo. Al Gore wasn't discussing some theoretical violations of some trumped-up canon; he was accusing the Republican media bias of keeping him from winning the election -- in other words, of subverting American democracy.

But Mr. Gore has a bone to pick with his critics: namely, he says, that a systematically orchestrated bias in the media makes it impossible for him and his fellow Democrats to get a fair shake. "Something will start at the Republican National Committee, inside the building, and it will explode the next day on the right-wing talk-show network and on Fox News and in the newspapers that play this game, The Washington Times and the others. And then they’ll create a little echo chamber, and pretty soon they’ll start baiting the mainstream media for allegedly ignoring the story they’ve pushed into the zeitgeist. And then pretty soon the mainstream media goes out and disingenuously takes a so-called objective sampling, and lo and behold, these R.N.C. talking points are woven into the fabric of the zeitgeist."

Whatever he was accusing them of being a traitor to, it was of something a lot more important than the trade of journalism, which is, after all, the trade that gave us the National Enquirer and A Current Affair.

General rule for the political pundit: when your guy says something stupid and offensive. . . something inexplicably dumb. . . don't volunteer to defend it. That just makes you look like an idiot too.

From the desk of Jane Galt:

It's True!

There had been rumors, but it turns out it's true. Mark Steyn has a website! Now all he needs is a blog. . .

From the desk of Jane Galt:

Interesting Point

John Weidner's Krugmanwatch has an interesting point about the infamous spoils system:

Here is Krugman's reasoning. Andrew Jackson, way back in the 1830s, supposedly began what had become known at the time as the "spoils system" under which federal jobs were reserved for political supporters. It was replaced by the federal civil service which was intended to correct such abuses. Krugman, however, laments that the Bush administration has found a way around those constraints on political hirings and firings by way of privitization. .

. . . [But his logic is] flawed. The spoils system didn't really end with the federal civil service. By the 1930s it was alive and well again and safely housed within the Democratic party. Today the Democrats' largest and most powerful constituencies are public employee unions. When the Democrats win; they win. Government expands, jobs are created and bureaucracy becomes more intrenched. This is what "spoils" means.

From the desk of Jane Galt:

Tim Blair, my Hero

Not only did he come up with these hilarious follow-ons to the What Would Jesus Drive campaign:

Why would Jesus drive?
a) To get out of the house for a while
b) To spread the holy word
c) To test newly-installed aftermarket cams, valves, and nitrous kit

Where would Jesus drive?
a) Along a scenic coastal road
b) On the path to righteousness
c) Anywhere with lots of exits so he can ditch the cops

How would Jesus drive?
a) At a speed commensurate with prevailing light and road conditions
b) With pureness of spirit
c) Threshold-braking deep into corners, nailing every apex, power sliding out of hairpins, and only changing up once He's hit the rev limiter

What would Jesus drive over?
a) Only animals already killed
b) A celestial carpet of unimaginable grace
c) Romans

What driving music would Jesus choose?
a) Adult contemporary
b) Heavenly choir
c) Zeppelin, early Stones, maybe that latest Garbage CD

How would Jesus counter persistent high-speed understeer?
a) By consulting a mechanic who specialises in handling problems
b) Through the power of prayer
c) Increasing roll stiffness, dialling in two turns

But also, teise lines about the Australian nuclear reactor:

AUSTRALIA HAS only one nuclear reactor, despite this country possessing the world's most sparkly and powertastic uranium. It's a tiny plant, relative to big electricity-generating reactors in the US and Europe, and exists mainly as a medical research site. Of course, the Greens and others want it closed down.

Sanity has defeated them, and the reactor is now undergoing a $320 million upgrade. A competition is being held to find a name for this radioactive wonderland.

My suggestion: Isotopia.

Memo to Tim: I fed you filet mignon. Must you persist in making the rest of us look bad?