Asymmetrical Information

From the desk of Jane Galt:

'Tis the season

My first gift recommendation is my absolutely amazing digital camera, which has allowed me to take pictures like these:

Bird nesting in cactus

Hidden Lizard

Late night at the housewarming

Finnegan begging

Me in a bridesmaid's dress

All were taken with my beloved digital camera, which my beloved father gave me last year, the Minolta G500. However, my coworker just bought the G600, which has 6 megapixels, and is correspondingly even more awesome, even though I doubted that my camera could get more awesome.

I just can't praise this camera highly enough. I'm no photographer, but the camera takes beautiful pictures despite my ineptness. Yet my colleague, who is an amateur photohound, has found all the features he needs to let him, say, take a night shot of a city skyline and have it turn out crystal clear and beautiful. From F-stops to color saturation, there are tons of things to play with. The camera is so cool, in fact, that when I was in Ireland this fall, my travelling companion and I had to force ourselves to stop taking pictures and start actually looking at the scenery around us. If you're looking for a nice mid-range camera, you just can't go wrong with this one.

From the desk of Jane Galt:

My dark love for Paul Krugman

Remember, Krugman haters, he used to write articles like this.

One of the highlights of the piece is the way he talks about models being the backbone of economics . . . because one of the things that Paul Krugman does really well is turn models into clear, if hardly luminous prose. That's a damn hard feat to accomplish. When I talk about the simple models in my repertoire, I rarely try to make the leap; I just run y'all through the model. But you can't do that for a magazine, and trying to render a model in 200 words is one of the world's most frustrating activities.

There's also a throwaway that I'd like to address. I had a discussion the other day with a friend who was frankly disbelieving that rising income inequality is due to rising wage inequality, rather than the rich getting richer off their investment income. But Mr Krugman's piece addresses this briefly, and devastatingly, as it pertains to free trade (where people argue that low-wage international competition is keeping the workers from getting their fair share of American growth):

Any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U.S. national income has been quite stable in recent decades, and actually rose slightly over the period Lind describes.

The share of labour's income in America has been remarkably stable over decades, varying by little more than a percentage point either way. Whatever the causes of increasing income inequality, whatever the fallout from trade, increasing the profits of greedy shareholders at the expense of workers is not among them.

From the desk of Jane Galt:

Shameless grifting

As you know, it's the time of year when we all like to shop. Hopefully, it's also the time of year when, moved by the holiday spirit, our readers say to themselves: "You know, Jane and Mindles sure work awfully hard on this blog that I read every day, and they deserve some financial reward for all that they've given us over the last year." Unfortunately, Mindles' job forbids him to accept compensation for his hard work, but my company's not so picky. No doubt the thought of me slaving away hour after hour, crafting my finely hewn entries as my back aches, my eyes burn and my fingers tremble from the effort of typing so much deathless prose in one sitting, moves you to tears. How can you help, you tearfully ask?

Well there are the fine sponsors of our blog ads -- how about clicking through and buying some of their products in order to encourage them to come back for more?

There's also the Amazon tip jar, down there on the toolbar. Donations are always greatly appreciated . . . my student loan officer is hungry. I'm talking MBA-level loans on a journalist's salary, my friends.

But if the grouch bag is a little too low to offer me monetary remuneration, you can still help us at absolutely no cost to yourselves. All you have to do is do your Amazon.com Christmas shopping through us. Just scroll down and look for the link on the left. There are suggested economics-types books, which I highly recommend . . . but once you've clicked through on the Amazon link, any shopping you do that session gets credited to my account, earning me a small commission at absolutely not cost to yourselves. Yes, you heard me right, just by clicking a link, you can help us get paid for something you were going to do anyway!

And if that's not enough, I'm going to be posting gift suggestions for all my favourite stuff, from digital cameras to the new meat thermometer we used at Thanksgiving, which everyone should own. As Jerry Maguire said, help me help you by working those Amazon links this holiday season!

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

From the desk of Jane Galt:

Factoid of the day

A colleague who is researching a story on New York has just informed me that the rumours I had heard about 1 in 5 New Yorkers being on Medicaid is untrue. The actual number is 1 in 3 New Yorkers, which goes a long way to explaining why the city is bankrupt.

New York is an interesting place. As you may or may not know, the states set the level of Medicaid spending, but the Feds match the states dollar for dollar. New York State decided that a good way to soak up extra Federal money was to require the local governments to match the state, dollar for dollar. Since the Feds match all state and local spending, this had the effect of doubling Medicare spending in the state of New York, at no cost to the state, other than the psychic anguish of its highly taxed citizens.

New York City is picking up 25% of the cost of each Medicaid recipient. By the end of 2004, the City Council expects Medicaid to cost the city $4 billion a year. That's $1650 per person, or a tax of over $200 on each non-Medicaid recipient to pay for their neighbor's healthcare. That's before they start paying for the rest of the city's lavish spending levels. Those billion dollar deficits seem a lot less surprising all of the sudden.

From the desk of Jane Galt:

Incentives matter

Glen Whitman has a modest proposal to align the government's incentives with the householder's in assessing property tax value.

From the desk of Jane Galt:

Income Inequality: Nature v. Nurture

Do parents really transmit their earning potential to kids? If they do, then there's a social argument for rather more draconian redistribution and other measures (since no one can really argue that anyone "deserves" to be born to certain parents) than if they don't.

Of course, the mechanism matters too. The ever-incisive Alex Tabarrok posts about a paper which seems to indicate that what wealthy parents transmit to their children is not "privilege" but genes with high income potential:

The graph shows how parent income at the time of adoption relates to child income for the adopted and "biological" (non-adopted) children. The income of biological children increases strongly with parental income but the income of adoptive children is flat in parent income. What does this mean?

The graph does not say that adopted children necessarily have low income. On the contrary, some have high and some have low income and the same is true of biological children. What the graph says is that higher parental income predicts higher child income but only for biological children and not for adoptees.

This would seem to track with recent research indicating that one of the most prominent symbols of affluent privilege--the Ivy League education--does not actually produce much economic success. Students who are accepted to top-ranked schools, but choose to go somewhere else, do just as well economically as the children who go through the high-priced, high status school; the secret of their success is not the expensive education, but whatever personal qualities permitted them to be admitted to Harvard. Business school recruiters, I quickly learned, care little about what you have studied; what they are interested in is the fact that you have what it took to be admitted to the University of Chicago, or another prestigious programme.

Mr Tabarrok points out that these results are not perfectly generalisable:

The other proviso is that the Holt experiment is only informative for the experimental variation in environment. In other words, we can tell from the Holt experiment that variation in parental income from around 25 thousand to 175 thousand doen't have much impact on variation in adopted child income but all these children are raised in the United States so culture and other variables are roughly similar. In other words, move a child from a poor country to a rich country and you would expect a much bigger treatment effect than moving a child from a poor family to a rich family.

I'd add that the sample undoubtedly excludes the United States' most dysfunctional families, those whose parents are trapped in the underclass, and its cycle of unemployment, poverty, drug/alchohol use, abuse, and so on. If one compares those families to middle class ones, one might see a very close correlation between parental income and child income. But once one has reached the minimum threshold necessary to reach the lower bounds of the working class, how much money one's parents make seems to matter very little independant of genetic heritage.

This raises some interesting philosophical issues. No one "deserves" a good genetic inheritance. On the other hand, your genes are, fundamentally, "who you are", and shouldn't our system reward people for being intelligent, well-behaved, and so forth, even if they didn't do much to get that way?

From the desk of Jane Galt:

The future will be blogged

Girl has her mother murdered, then blogs about it.

From the desk of Jane Galt:

Future shock

The idea that current price of an asset should equal the future price, discounted appropriately in order to represent the cost of tying up one's cash, seems to be one of the least intuitive out there. I had a conversation the other day with a hedge fund manager of my acquaintance, who knows his way around a balance sheet about eight zillion times better than me, and is cleverer in myriad other ways to boot. Said hedge fund manager offered the hoariest excuse known to man for doing a merger: because you want to gain control of an asset whose owner is (or might threaten to be) charging outlandishly high rents.

I myself offered such rationales for fashionable mergers, such as the AOL/Time Warner megadeal, when I was in business school. Then one of my favourite professors, a fellow by the name of Austan Goolsbee, disabused me of this notion by asking a simple question: What price will the owner be willing to sell the asset at?

The answer, of course, is that he will be willing to sell the asset for the present value of all the future exorbitant fees he's planning to charge you, less a discount because it's nicer to get all the money now in a big pile, rather than in dribs and drabs over the years.

Assuming that your discount rate is approximately the same as that of the asset's owner, you can easily see that it is impossible to make money off the transaction; you'll just be giving him the money now, rather than later. The discount you receive for your troubles will probably be about equal to your borrowing costs, plus the lower liquidity you get from owning, rather than renting, an asset.

In the real world, of course, it is not quite as clear-cut as in an economics class, since mergers often happen when the acquiring party has some overvalued asset, such as AOL stock in 2000, that it can pay with. But even such mergers don't really work as advertised: AOL didn't benefit from getting control over Time Warner's distribution network and content, which it has barely used, but from trading stock in a hideously overvalued business for stock in a more fairly valued one; the deal would have worked out quite as well for AOL shareholders had they traded their stock for shares in ConAgra (probably better, in fact, since little time would have been wasted on consultants trying to wring out "synergies" from the deal.)

But I digress. Back to future price = current price - discount. As in stock markets, so in money markets. Theoretically, we shouldn't have such a unanimous chorus of economists and financiers proclaiming that the dollar still has farther to fall; if the information which makes the dollar likely to fall is out there, traders should already have beaten the price down to where it is a good current and future bet. So why haven't they?

Brad DeLong hazards a guess:

I think I understand why the foreign exchange markets are not yet pricing the big dollar decline to come. As long as central banks are large actors in the market, the big foreign-exchange bets against the dollar undertaken by private businesses that are needed to drive the dollar down to medium-run equilibrium are very risky indeed. It's better for large private players (or they think it's better) to wait until it's clear that central banks are about to start dumping their dollar reserves for euros, yen, and renminbi before dumping their own dollar-denominated assets for euros, yen, and renminbi. Central banks are, after all, governments--and so private businesses think that it will be easy to anticipate what they are about to do and to front-run them when it's about to happen. Prematurely betting against the dollar takes on lots of risk for no real significant gain. That, at least, is how I think the big private players in foreign exchange are thinking.

He also has an interesting theory about the bond market:

I don't, however, understand the bond market. Do they expect the wage share to stay this low forever, and corporate profits are retained earnings to be abundant? Do they expect the capital inflow to continue forever? Do they expect the Bush administration to get serious about balancing the budget? None of these seem plausible as expectations, as modal scenarios, as central cases. But then why isn't the long bond market already pricing the supply-and-demand for loanable funds imbalance that seems inevitable in medium-run equilibrium? It's a mystery.

Perhaps it's as simple as this: in the 23 years since 1981, Ten-Year Treasury positions have yielded capital gains in 17 out of the 23 years averaging more than six percent per year. Those who are by nature likely to be short the long bond have presumably lost heavily over the past quarter century, and are no longer a significant part of the market. We may have selected for a group of long-bond traders and speculators who are powerfully overoptimistic, because optimism has been powerfully rewarded over the past quarter century.

That could also explain the stock market, which continues to be valued rather outlandishly, in my opinion.

From the desk of Mindles H. Dreck:

Data Mining Alert

In September, the New-York Historical Society projected 250,000 visitors to the Hamilton Exhibition by February. A recent count was 27,000, about a third of the projected pace. President Louise Mirrer spins the poor attendance furiously:

To the Editor:

Re "Big Hamilton Show Fails to Draw Crowds" (Arts pages, Nov. 22): I differ with your premise. Attendance at "Alexander Hamilton: The Man Who Made Modern America" has been record-breaking and has continued to grow since the opening on Sept. 10.

In just four weeks, in fact, we exceeded the total number of visitors from school groups (largely students from New York City public schools) for the entire previous year and consider this milestone to be paramount in measuring our success.

Louise Mirrer
President
New-York Historical Society
New York, Nov. 23, 2004

As a NYHS staffer just said to me, " 'school groups'? But they're....prisoners!"

From the desk of Jane Galt:

Mom's Pumpkin Pie

I can't tell you how different homemade pumpkin pie is from the awful stuff that gets served in restaurants and bakeries. I wouldn't use the latter for anything but emergency spackle, or checking erosion in a gully. My mother's pumpkin pie on the other hand, is sublime. And easy!

1 cup sugar
1 tsp cinnamon
1/2 tsp nutmeg
1/2 tsp ginger
1/2 tsp cloves
1/2 tsp salt

Combine all of the above and add 1 1/2 c pumpkin (one "one pie" can)

Mix in 1 beaten egg and a cup of milk

Put in an unbaked pie shell and bake at 400 for 10 minutes, then turn the oven down to 350 until done, about 1 hour, until a knife inserted in the center comes out clean.

From the desk of Jane Galt:

Deconstruct my discourse, darling!

Is there anything that Daniel Drezner can't do? Not satisfied with his triumphs in the areas of economics and political science, he has forayed into literature:

Diane had longed to bandwagon with Jack since their first year in grad school. In their own prisoner's dilemma, she now knew that she wanted more than just tit-for-tat -- she had to have Jack's grim trigger. This wasn't just a one-shot interaction for her. She wanted repeated play -- with very little discounting.

It was taboo as a realist not to prefer balancing. If word got out, her reputation among the guns & bombs crowd would be ruined. But Jack's social constructivism was too seductive for her feeble rationalist defenses.

"Oh... Jack," she whispered into his ear, "I give in -- reconstitute my identity!"

He smiled and slowly began his discourse....

Afterwards, she turned to him and purred, "Now that's what I call utility maximization." He laughed.

Then her tone changed. "Seriously, I've never had such a shared meaning with anyone before. It was so.... intersubjective."

From the desk of Jane Galt:

The long arm of the law

Stuart Buck shows us that the arm of Ashcroft is long indeed.

From the desk of Jane Galt:

Home for the holidays

So now is the time of year when I tell you what to do.

Nicely, of course. But firmly. After all, if you knew what was good for you, would you need to read this blog?

No, just kidding. I'm setting you up for a little recipe blogging, that's all.

First of all, if you haven't thought about making the Cranberry Bread I suggested last year, you really should. I know what you're thinking -- candied fruit? Why don't I just make myself vomit now and save the trouble of baking? But you're wrong. I normally don't like it either, but somehow in this bread, it's divine. This is, like, totally the best cranberry bread ever, and I'll cry if you don't make it.

And if you, like me, like your orange mashed vegetables sans marshmallows, why not try this simple butternut squash recipe:

Butternut Squash

Take two butternut squashes. Cut them into 2-inch slices, then carefully peel the slices with a paring knife and cut each slice into 2-inch pieces. Scrape off the seeds.

Put the pieces in a big stockpot with about 1/4 cup of water in the bottom, and put the pot, covered, over low heat. Cook for about 45 minutes, or until the squash is tender when pierced by a knife. (Tender means you don't really have to push at all to make the knife go through.) Make sure the water doesn't all boil off, as these suckers will scorch quickly.

Mash it with 2 or 3 tablespoons of butter, a tablespoon or so of maple syrup or brown sugar (to taste), and salt and pepper to taste. Can be made several days ahead and reheated on T-Day.

Meanwhile, you do know how to make delicious homemade cranberry sauce, don't you? Because it's just about the easiest thing in the entire world.

Cranberry Sauce

Bring 1 cup of orange juice and one cup of sugar to a boil.

Take a 12-oz bag of cranberries. Rinse the cranberries and pick out the stems.

Put the cranberries in the pan.

Turn the heat down to medium-low

Let it simmer for ten minutes.

Remove from heat. Can be made several days in advance. Looks extremely festive in the cut-glass dish that Aunt Mavis gave you (I think you'll find it's currently gathering dust in the dim recesses of your china cupboard).

And how about luscious garlic mashed potatoes this Thanksgiving? They're terribly easy:

Garlic Mashed Potatoes

1 head of garlic
1 fist-sized potato per person, plus one for the pot. Use boiling potatoes, such as the red ones, or Yukon Golds.
Heavy cream, half-and-half, or milk, depending on your cholesterol tolerance
Salt
Pepper
Butter

Cut 1/2 inch off the head of garlic, exposing the cloves. Rub all over with butter or olive oil, and salt and pepper, and wrap it in foil. Toss it in the oven with the turkey for an hour or so, until it's tender when pierced with a fork.

Meanwhile, peel your potatoes and cut into 1-inch pieces. (NOTE: Potatoes brown if they're exposed to oxygen, so put them in a bowl of cold water with a tablespoon of salt dissolved in it after you've peeled and sliced them). For utter neophytes, you peel potatoes using a potato peeler -- I'm extremely fond of my Oxo Goodgrips swivel peeler. Peel the potatoes until no brown shows anywhere.

Rinse the potatoes well (you don't want them to be salty) and put them in a pot, covered with cold water. Boil them over medium-high heat until they are tender when pierced with a fork. (Tender, as mentioned above, means that it takes practically no pressure to push the knife through the potato.)

Heat the cream until it's piping hot. Mash potatoes with lashings of cream and butter. (Start with about 1 tablespoon of cream per potato, mash thoroughly, and then add more liquid to taste. Remember, you can always put more in, but you can't take it out.)

For complete neophytes, you mash squash and potatoes with a potato masher. Grab the handle, and smush the potatoes with it until they're a uniform fine consistency.

Later: I give you my family's secret pumpkin pie recipe! Plus, I tell you what to buy for friends and family!

From the desk of Jane Galt:

Don't try this at home . . .

Who else but Jim Henley could make insuranceblogging interesting?

From the desk of Jane Galt:

What he said

From James Joyner:

While I sympathize with the ACLU on many issues, I continue to be baffled at some of the causes they champion. One would think that there are sufficient significant threats to our civil liberties to focus on without making, quite literally, a federal case out of such things as the Pledge of Allegiance and the Boy Scouts. By focusing on the trivial, they undermine their own cause.

I'd add only that this particular secular humanist New Yorker does feels that America will survive just fine even if the apparent epidemic of nativity scenes in small town public squares is allowed to grow unchecked.

From the desk of Jane Galt:

Markets in everything

Alex Tabarrok points out that while we seem to be willing to try anything to improve our education system, we haven't tried the most obvious thing: paying the kids to learn. Now that someone else has thought of it, it seems obvious to me that this will be highly effective, and indeed, early study results are very promising. As long as the positive externalities of a better-educated citizenry are high, this will even be cost effective. Politically, though, my gut tells me it won't go very far, though I find it hard to articulate exactly why.

From the desk of Jane Galt:

Department of Awful Statistics

There are a lot of awful statistics out there, but no place is such a gold mine as the Land of Abortion Figures.

Take the various people claiming that legalising abortion caused no increase in the number of abortions. This makes me suspicious; there are few activities for which demand is so inelastic that whether or not it is illegal makes no difference in whether people decide to do it. I went looking for the source of that assertion (which I made myself, many times, in the days of my pro-choice radicalism), and ultimately found that the source of that particular bad stat was a study which had estimated that the number of abortions in pre-Roe days was somewhere between 200,000 and 1.2 million per year. Some enterprising young pro-choicer took the upper bound of that study to claim that thus, the number of abortions hadn't increased--when the correct assessment would have been that the number of abortions has increased anywhere from slightly, to 700%, since Roe.

(To give the benefit of the doubt, it's more than possible that the statistic went through some intermediate stage, such as a writer claiming that "it seems very possible that abortion hasn't increased at all since Roe", with the people at each stage guilty only of standard moderate exaggeration, rather than outright lies.)

The problem, of course, is that there are no good numbers on how many abortions were had before Roe, since for some reason the illegal abortion providers were unwilling to provide the government with statistics. Add to this the fact that abortion is possibly the most political topic of our time, and that there is a lot more discretion on declaring causes of death when one of the factors is abortion than, say, when one of the factors is a flipped tanker truck full of nitroglycerine, and you'll see why there are so many awful numbers floating around.

Tom Maguire points out another one: the highly suspect allegation that the number of abortions has increased under Bush. Check it out.

From the desk of Jane Galt:

That didn't take long

THe most dangerous place in the world is not Baghdad, the Ivory Coast, or those deep sea caverns where only specially genetically engineered worms can live in the boiling water; it is, of course, between a politician and a camera. Thus I should have predicted, but somehow failed to, that the Senate would already be holding its first hearings on Vioxx.

From the desk of Jane Galt:

Those crazy Catholics

During the campaign, a lot of people seemed dumbfounded by the fact that the Catholic bishops chose to elevate abortion as an issue above other important Catholic issues like the death penalty and social justice. It didn't surprise me at all.

For one thing, there are categories of Catholic teachings, and some have more force than others: questions about which wars are just have answers that are a lot more hazy than those to questions like "When is it okay for me to have an adulterous affair?" or "Can I kill my mother if she's really, really mean to me?"

But even from a strictly utilitarian perspective, if you think that abortion is murder, as the Catholic Church does, then in America, it simply dwarfs every other possible issue. Every year in America, women have about 1.5 million abortions. The death penalty, on the other hand, killed 65 people last year. There is no social/legal issue in America that could even be remotely accused of killing so many people, year in and year out. Add that to the fact that aborted fetuses never get the opportunity to be baptised in Christ, and have, unlike everyone else that social policy is intended to address, absolutely no responsibility for their inconvenient situation, and abortion seems to me to be a logical slam dunk as Policy Issue #1.

(Note: this is, of course, provided that you believe abortion is murder. I think it's something less than murder, something more than "a bundle of cells". But if you accept the premise of the Catholic Church that abortion is murder, then I think that their current policy priorities are the only conscionable ordering.)

From the desk of Jane Galt:

Perish the poor

If you haven't read Jason DeParle's American Dream, I urge you to do so. It's simply outstanding. The book follows three welfare mothers through the welfare reform years. It gives you a gritty, and touching, picture of the utter chaos of their lives; walks you through the policy process that brought us welfare reform in the first place; and shows you how welfare reform did, and didn't, transform the world of welfare mothers. I simply cannot recommend it highly enough. If you're even tangentially interested in poverty and welfare policy, you must read this book. DeParle is a liberal who opposed welfare reform, but he fearlessly shows all the ways in which women on welfare screw up their own lives, as well as the ways in which they're buffeted by a cruel and capricious fate. I've recommended it to everyone I know, as well as to my employer's annual "best books" list--this is not an attempt to get you to enrich my Amazon Associates account. Hey, click over to some other blog you like more, click on their Associates link, and buy it there. Just buy the damn book, 'kay?.

But that's not all! This week, Slate is hosting Jonah Edelman, Mickey Kaus, and Ron Haskins (a lovely, and very smart, man at the Brookings Institute whom I recently interviewed, and who really, really cares about the poor, and about effective solutions for their problems) talking about DeParle's book. Check it out. But not until you've ordered the book!

(I also recommend The Working Poor by David Shipler. But it's not quite as good as DeParle's book -- a fair amount of liberal polemic slips in.)

My own thoughts on welfare reform: it's clear to me from the research I've done to write about poverty, and from reading books like DeParle's, that the poor suffer from three main problems: their own poor impulse control or decision making; a culture that encourages poor decision making; and limited means, which give them no buffer against the results of their poor decision making.

Liberals want to change the third variable, but this is somewhat recursive. As long as our society offers housing to everyone who needs it, the poor will be stuck living with people whose bad behaviour makes them impossible neighbours . . . so that even if the housing stock is physically perfect, crime and various other sorts of antisocial behavior that flourish in a world without evictions make the housing for the poor actually unbearable. Also, if people have very bad problems, such as mental illness or drug addiction, no reasonable amount of cash will improve their lot without adding things like forced institutionalisation. The people with those problems, unsurprisingly, are the overwhelming majority of the truly immiserated poor, who have rotting housing, insufficient caloric intake, and so forth.

Conservatives, by and large, want to change the first two variables, and there's a lot to this. There's simply no question that welfare enables women to make short term choices that are all right in the short term (dropping out of school, having a baby out of wedlock), but disastrous in the long term. Enabling women to make awful short term choices means enabling some proportion of them to ruin their lives.

But it's not enough to say to these women "Get married" or "Ignore your friends and pay attention to school". Some extraordinary people do, of course, but we all tend to overestimate how easy it is to be that extraordinary. Most of us reading this blog, after all, went to college and/or got nice steady jobs because we had enormous social and familial pressure on us to do so. How many of us were strong enough to overcome our environment, drop out of high school, and sell drugs?

I jest, of course, but not totally. The fact that every inner-city kid isn't a Horatio Alger story doesn't mean that inner city kids couldn't be, if their environment were more like the one I grew up in. After all, the girls in my high school didn't fail to have babies at 16 because they were more virtuous than the ones down the road at JFK High; they failed to have babies because they had a very clear idea that something better awaited them. How do we give those kids a more hopeful vision of their futures?

Part of the answer, I hope, is that by ceasing to enable those bad short-term decisions, the culture changes to focus more on the long term. Girls stop having babies at fifteen, and start demanding committment at 25--and they demand, too, that the boys stop selling drugs, because a husband in prison is one who can't provide for his family, and the government won't replace him any more. I doubt that's the whole answer, but I hope it's a big part of it.

I think withdrawing the cash may not be enough, because this generation, and part of the next one, lacks the tools to really support themselves, and the social network to fill in the gaps. Something that conservatives, and especially libertarians, have been slow to grapple with is that the more productive our society gets, the greater the possibility that some peoples' labour simply isn't productive enough to support them at a minimum level. Can we really tell former welfare mothers to go bunk ten to a room the way my Irish ancestors did? We're a pretty rich country. Are we comfortable telling people to live as if they're nineteenth century peasants, if their cognitive gifts, or education, won't stretch to more?

What we know is that this is going to be a long, painful process, and that part of the process is going to involve some people, including innocent children, getting hurt. The end state seems to be worth it--I see hopeful signs, like the continuing decline in out-of-wedlock and teenage births, and slight uptick in marriage, that change is already underway. But conservatives shouldn't let the end state blind them to the suffering here-and-now, and we should look as hard as we can for ways to mitigate it.

From the desk of Jane Galt:

When I read this post, I thought it sounded smart and plausible, but knowing as little as I do about matters military, I also thought it possible that it was 100% wrong. He takes a list of cities the insurgents claim to control-Fallujah, Samaraa, Qaem, Baaquba, Hawijah, Tallafar, Heet, Saqlawyia, Ramadi, Anah, Rawa, Haditha, Balad, Beiji, Bahraz, Baladruz, and other cities and towns of Iraq--and reasons as follows:

There are two factual nuggets in this screed. First, it gives us a map of the the towns which the enemy considers its bastions. Second, it hints of a fallback plan conceived before the launch of Operation Iraqi Freedom, a subject earlier discussed in War Plan Orange. By plotting the enemy strongholds on the map it is at once evident that they are coextensive with two pathways. The first goes northward along the Euphrates from western Baghdad, Fallujah, Ramadi, Hadithah, Anah and Qusabayah -- along the river and road from Baghdad to the Syrian border. The omission of Qusabayah from mention is very peculiar, since it has been the scene of battalion sized battles between infiltrators and Marines guarding the Syrian frontier since the earliest post-OIF days, but I include it here on that account. The second set of towns goes northeast along the Tigris towards Tikrit and parts of Kurdistan: Hawijah, Balad and Samarra. A spur runs off toward the Iranian border: Baqubah and Baladruz, on the road to the Iran. It is hard not to think that we are looking at their lines of communication.

The towns along these pathways are probably waystations where men and weapons can be smuggled by stages, a kind of Sunni Ho Chi Minh Trail. My own guess is they are probably superimposed on traditional smuggling routes from Syria and Iran which have now been converted to serve the enemy cause. I caution the reader that this is guesswork, but I think it is correct. The discovery of carbomb factories in Fallujah suggests that town was the easternmost terminus of a finger that extended straight from the Syrian border, a final launching pad where enemy delivery systems were "bombed up" for their sorties at US targets in the city or as convoys made their way along the highways west of Baghdad.

Taking Fallujah then, was not merely a symbolic political act to reduce a 'symbol of defiance', but a sound operational move. It interdicts the conveyor belt of destruction that flowed from the Syrian border towards Baghdad. The logical next step is to cut the line again near the Syrian border, perhaps at Anah, so that by taking out both ends the middle is left unsupported. Alternatively, the US could roll up the enemy line of communication going north by taking out Ramadi which would force the enemy to sortie from Haditha, a little ville a lot farther from Baghdad. Although this will not totally destroy the insurgency, it will throttle movement along their lines of communication considerably. Guerilla warfare, like all warfare, is logistics. It just takes different forms.

I've been following the news of the outbreaks around Iraq since the Fallujah operation, and they seem to back this theory up: except for Mosul, all the towns where violence has flared are on Wretchard's list.

What do my readers think?

From the desk of Jane Galt:

Question of the day

I've seen rather a lot of speculation that Condi Rice, or Colin Powell, or someone else will replace Dick Cheney within a couple of months/years, in order to line them up for the presidential run in 2008.

My understanding, though, is that it doesn't work that way. I believe there's a pretty clear line of succession to the presidency, and that if Dick Cheney dies or leaves office, the next person in line is the Speaker of the House, followed by various cabinet officers. That's how Gerald Ford got into office, I'm pretty sure.

Am I correct? If Dick Cheney leaves, can Bush appoint someone of his choosing to the vice presidency? Or is the speaker of the house automatically promoted?

From the desk of Jane Galt:

More social security myths

Kevin Drum responds to my post on Social Security. I haven't time to answer him now, but I was interested in something one of his commenters said: to wit, that Social Security was put in place to replace the retirement savings of people who were wiped out in the 1929 crash.

This is simply untrue. Even at the peak of the 1929 bubble, there were only around a million people invested in the stock market, out of a population of 124 million. Furthermore, there is no evidence I know of that there was any sort of demographic skew towards old people in the population. Old people hadn't lost their retirement savings; most of them didn't have any.

The reason social security was put in place, economically speaking, was that some of FDR's economists, staunch Keynsians all, thought that reducing the labor force would help unemployment. Social security was a way to take old people out of the labor force, most of whom had, before this time, worked until they keeled over. There was also a social insurance aspect that appealed to the progressives. It didn't work--the first woman to retire didn't start drawing her benecfits until 1940, at which point the buildup to World War II had already started reducing unemployment, which had been as high as 19% in 1939. But it had nothing to do with replacing retirement savings lost in the market.

From the desk of Jane Galt:

Well, it looks like I may have been wrong in thinking that George Bush wasn't serious about Social Security; he's made it, and tax reform, the top priorities of his campaign, God bless him. Anti-war libertarians who voted Kerry should be feeling a little better about the outcome; George Bush seems to be getting serious about shrinking government. Importantly, he 's getting serious about long term structural change to reduce the size of government, rather than expending his political capital to whack 3% off the Department of Education's budget for the next two years.

That's not to say that privatising social security is some sort of blessed panacea. Tyler Cowen, who is about a million times smarter than I am, and a professional economist, and a libertarian, writes against it in the Wall Street Journal (subscription required). While privatisation advocates are right to say that there is no long term cost to social security privatisation (we're paying up front to get rid of a long term liability), there's a whacking great short term cost that will have to be dealt with. Mr Cowen is also not happy with the forced savings aspect, which offers the unsightly prospect of the state getting involved in investment decisions.

But Ed Prescott, who is also about a million times smarter than I am, and has a Nobel prize to boot, writes in favor of it in the same paper. (Subscription required to both links). Alex Tabarrok has more about it here. Basically, Mr Prescott sidesteps the arguments made by Brad DeLong, which is that privatisation only makes sense if the equity premium (which is the mysterious extra return that you get on stocks over bonds) is the result of a market failure, rather than the extra risk in stocks. The equity premium has, in history, periodically been rediscovered by financial types, who often publish a book that helps send the stock market off into another bubble. The upshot of this discovery is that, over the long term, the S&P 500 index has averaged an 8% real return over the risk free rate (the return on US government debt). What economists want to know is, is the market systematically mispricing equities (in which case privatisation will give us nice high returns--about the closest thing one can get, economically, to a free lunch), or does the difference in returns reflect the premium that stock issuers have to pay for the added risk of their securities, whose returns are much less predictible--and much less assured--than the returns on debt. If it's the latter, than privatisation means getting people to assume a lot more risk, which is not a word we generally like to have associated with our nest egg. The quest for an answer is complicated by the fact that the information is somewhat recursive: if it's a market failure, and everyone discovers it an piles into equities, then it won't be a market failure any more, and stocks won't give us the nice, high returns that are the reason we piled into equities in the first place. This is one of hte reasons that no completely satisfactory answer to the question of the equity premium's origins has yet been advanced.

Mr Prescott neatly avoids this question by ignoring the returns to pensioners, and looking at the economic effects of social security reform. I wrote about this a while back:

For a minute, let's ignore cash flows -- hard though your payroll taxes may seem to ignore -- and just think about the limited supply of goods and services we, as a society, can produce. If we think about consumption, rather than cash, it doesn't matter whether wealthy retirees get their retirement money from a government check, or a dividend payment. Either way, they are expecting to live off the efforts of an ever-shrinking pool of workers. Just bouncing rich seniors off Social Security doesn't change the fact that they are consuming considerable quantities of goods and services, without producing any.

The main benefit of social security reform, economically speaking, is not that it finds some previously untapped well of cash from which we can pay for our oldsters' retirements. As I see it, the primary potential benefit is that we're diverting resources from an unproductive use--the government--to productive investments that will make it easier for a smaller number of workers to support us all in the style to which we'd like to become accustomed. Mr Prescott adds another good economic effect I hadn't thought of--the increase in the labor supply. As Mr Prescott puts it:

. . . any system that taxes people when they are young and gives it back when they are old will have a negative impact on labor supply. People will simply work less. Put another way: If people are in control of their own savings, and if their retirement is funded by savings rather than transfers, they will work more. And everyone is better off. These are the type of win-win situations that politicians and policy makers should be falling over themselves to accomplish.

But what about the cost! privatisation opponents scream.

Several answers to that. First of all, it is true that over the long run, there's no cost . . . and most of my newly budget-deficit-hating interlocutors are ostensibly concerned with the long run, not the next five years.

Second of all, it makes a currently invisible long-run cost tangible, and that's important. It encourages people who are young now to save for their retirement, by taking away the illusion of benefits the system won't be able to afford. And it removes the social security surpluses from our budget, allowing us to see the true, dire, picture. If you look at the most recent report of the Social Security trustees, you'll see that Medicare and Medicaid are providing a net subsidy to the budget of $164.7 billion dollars a year. If the government had been properly accruing the liabilities for social security along with the assets, Bill Clinton would never have run a budget surplus. A crutch that allows the government to spend more than it earns, while running up invisible liabilities to its retirees, is a crutch we don't need.

But should the government be getting involved in forcing us to save? What kind of libertarian am I?

Well, I'm a moderate one, trying to work within the framework of the government we actually have, rather than imagining my perfect state and then pushing the current government to adopt the policies that would work well in my Neverland. And the fact is, that within the governing framework that we have, and are likely to have during my lifetime, moral hazard is an enormous problem with retirement savings.

Saving is, after all, no fun. And in saving for retirement, each of us faces the risk that we will be delaying all that fun for nothing -- we could get hit by a truck at 45 and lose the lot. Inheritance mitigates this somewhat, but not entirely, as we're all pretty selfish, at bottom. So if your fellow citizens are willing to provide some minimum level of subsistence for you in retirement, the temptation grows to risk bankruptcy in retirment, either by blowing all your money on wine, women and song, or by making extra-risk investments in the hope of extra-juicy returns.

Also, many people aren't good at planning. A look at the current state of boomer finances, or my 401(k), would scare the hell out of you.

Given that we live in a society which will not let retirees starve, and given that retirees need a lot of moola to stay alive, forced savings is inevitable. I am worried about getting the government involved in the market. But not as worried as I am that I'll have to eat cat food if we do nothing, and the system blows up just as I'm hitting my golden years.

From the desk of Jane Galt:

Short time

I've been waiting for a while for the New York housing bubble to crash; prices seem to have lost all relation to reality.

Now might be a good time: Drudge reports that Michael Scheuer (a.k.a. Anonymous, the author of Imerial Hubris, is saying Osama Bin Laden has received religious approval to use a nuclear device.

"[The treatise] found that he was perfectly within his rights to use them. Muslims argue that the United States is responsible for millions of dead Muslims around the world, so reciprocity would mean you could kill millions of Americans," Scheuer tells Kroft.

Can anyone explain this? I mean, I understand that Muslims blame us for a lot of Muslim deaths, but millions? Put together the Palestinians, Lebanon, and both Iraq wars, and you still fall well short of millions. Where's that number coming from?

From the desk of Jane Galt:

Desperate measures

In today's Wall Street Journal, Maria Anastasia O'Grady has a great article on Castro's foriegn exchange shenanigans:

Castro has already cracked down on the nascent small-business community and on political dissent. This has helped squelch competition but it hasn't helped his pocketbook. That's where de-dollarization comes in. As any International Monetary Fund economist will advise, when a state is broke it can always get money from the population by manipulating foreign exchange. Latin central banks specialized in expropriation through devaluation during the latter half of the 20th century.

The new regulations do not so far make holding dollars illegal. Cubans may still withdraw dollars from bank accounts but they may not deposit them. Most importantly, the change means that dollars will no longer be accepted at stores selling imports. Instead Cubans who want to spend their remittances from the U.S. will have to exchange them at par for "convertible pesos."

Clearly, the one-to-one exchange by the government is a fraudulent claim. Castro gets a 10% surcharge for all conversions. Add to this the average 15% price increase at import stores in May, and you have the equivalent of a 25% devaluation of the purchasing power of dollar remittances in the past six months. Regular pesos, which are used to buy domestically produced goods like farm products, trade on the black market at 26 pesos to the dollar, which gives some idea of how Cubans get short-changed.

From the desk of Jane Galt:

War is hell, especially if you haven't been there

NPR is having an open call-in for veterans right now, in honour of Veteran's Day (Armistice Day, in other countries). They have a couple of vets on air taking the calls. Just now, a guy called in with one of those touching "veteran speaks out against the horrors of war" which is all very well, except that it was pretty clear that the guy was making it all up.

(I'm paraphrasing)

HOST: Hi caller
CALLER: Hi, I was in Afghanistan, and I saw how horrible it all was. I used to fly out of bases on the Adriatic.
HOST: From Yugoslavia?
CALLER: No.
HOST: No? Because Yugoslavia is what's on the Adriatic.
CALLER: We were on the other side of the Adriatic.
HOST: The other side?
CALLER: The western side (long pause) Italy.
HOST: You flew all the way from Italy to Afghanistan?
CALLER: Noooooooooo . . . .
HOST: Where did you fly to?
CALLER: Not Afghanistan.
HOST: Because you said Afghanistan.
CALLER: No, it was in the early nineties, we weren't in Afghanistan, we were in . . .
HOST: Kosovo?

[Note: Kosovo did not, AFAIR, take place in the early nineties]

CALLER: (Audibly relieved) Yes, that's right, Kosovo. Thank you. [Insert war is bad message here]

Now, I've never been in the military or anything, but I get the feeling that when you've been in a war, it's a kind of memorable thing. You don't forget the name, much less the continent, of the place where all those nasty people were shooting at you.

There's no particular lesson from this, just a little light amusement. The host appeared to realise that the guy was making it up, but was too polite to mention it. The other guest, on the other hand, took the caller at face value and began exchanging "war is hell" statements with him, which considerably reduced his credibility in my eyes.

From the desk of Jane Galt:

Deaffirming affirmative action

Over at Volokh, Rick Sander, a guest blogger has been running an outstanding series on affirmative action at law schools. Counterintuitive finding: it actually hurts black lawyers in the job market.

I know, we've heard it before from conservative commentators, but their evidence always seemed to me to be hodgepodge and anecdotal. This guy, on the other hand, has good credentials and has run, as far as I can tell, some very solid numbers showing that outside of the elite (top ten) law schools, your grades and class rank matter more than your school. He's also produced some good evidence that affirmative action beneficiaries really do do worse in school.

It also has implications for those of us who don't qualify for affirmative action: unless you're going to a very, very elite school, it is better to go to a school where you can excel than to go to one with a higher ranking. This is certainly a surprising result for me, raised as I was on the Upper West Side, where school prestige has replaced "survive and reproduce" as the Darwinian imperative.

What's amusing is that the hypocritical assertion that schools want "diversity" to benefit all the students may actually be true, though not in a sense that they would want: the affirmative action beneficiaries are providing a substantial class rank subsidy for the privileged white students at their schools. If further evidence continues to show that affirmative action does, in fact, provide considerable benefit to white students, will those same administrators actually be in favour of it?

From the desk of Mindles H. Dreck:

They can't find a cure for the common cold...

..but there's Crack Spackle.

Remember to play the game.

From the desk of Jane Galt:

Unmander that Gerry, you fiend!

Professor Bainbridge calles getting rid of gerrymandering the single most important electoral reform we could make. Hear, hear! I wrote about this over two years ago, and the problem has only gotten worse.

From the desk of Jane Galt:

Question of the Day

Why are the insurgents fighting in Fallujah at all?

The outcome was pretty much preordained, and even most of the insurgents had to know that. Even if you fantasise about dying gloriously for The Cause, surely you could be more effective by surprising a small cadre of marines than by taking on large battalions of American soldiers who came prepared to call down airstrikes on your snipers. So why didn't everyone melt off into other towns to try, try again, rather than just half of 'em? Inquiring minds want to know.

From the desk of Jane Galt:

Holy WMD, Batman!

NPR reports that US forces found forty vials of Sarin in Fallujah. Of course, the vials were labeled "sarin" in English, which makes one extremely suspicious that they're some kind of put-up job by the terrorists. But if this pans out, it will seem to support the idea that Saddam had at least some WMD kicking around, for where else could the insurgents have gotten it?

From the desk of Jane Galt:

Kerrycare RIP

TennCare is a state programme that looked a lot like John Kerry's health care plan in many respects, dramatically expanding Medicaid in order to cover the uninsured.

The result? After a few years, the governor is pulling the plug: the costs vastly exceeded projections, and the state can no longer afford it.

From the desk of Jane Galt:

I am officially old

Apparently a form of cheating my contemporaries never even dreamed of is now widespread: doping with stimulants to take standardised tests. I was completely unaware this was happening; indeed, I'd never heard of it until Mark Kleiman brought it up.

From the desk of Jane Galt:

Real research

It's commonplace among pharma-bashers to hear that drug companies don't really do any research at all -- they just swoop in to cash in on government-funded academic research. That's wrong in two ways. First of all, a lot of the R&D cost of a drug is taking it through clinical trials, which costs a lot of money, and isn't done by academia. And second of all, there's a big gulf between the kind of basic research that academics do, and the kind of applied research that's done in a pharma lab, as this post by Derek Lowe on a newly touted Alzheimer's candidate illustrates beautifully:

So. . .(and you knew that there was going to be a paragraph like this one coming). . .do we have a drug here? The authors suggest that "Analogs based on (this) model may have potential as therapeutics for Alzheimer's disease." I hate to say it, but I'd be very surprised if that were true. All the work in this paper was done in vitro, and it's a big leap into an animal. For one thing, I'm about ready to eat my own socks if this hybrid compound can cross the blood-brain barrier. Actually, I'm about ready to sit down for a plateful of hosiery if the compound even shows reasonable blood levels after oral dosing.

It's just too huge. Congo Red isn't a particularly small molecule, and by the time you add the linking group and the FKBP ligand end, the hybrid is a real whopper - two or three times the size of a reasonable drug candidate. The dye part of the structure has some very polar sulfonate groups on it, as many dyes do, and they're vital to the amyloid binding. But they're just the sort of thing you want to avoid when you need to get a compound into the brain. No, if this structure came up in a random screen in the drug industry, we'd have to be pretty desperate to use it as a starting point.

Science's commentary on the paper quotes a molecular biologist as saying that this approach shows how ". . .a small drug becomes a large drug that can push away the protein. . ." But that's wrong. You can tell he's from a university, just by that statement. I'm not trying to be offensive about it, but neither Congo Red nor the new hybrid molecule are drugs. Drugs are effective against a disease, and this molecule isn't going to work against Alzheimer's unless it's administered with a drill press. If that's a drug, then I must have single-handedly made a thousand of them. The distance between this thing and a drug is a good illustration of the distance between academia and industry.

From the desk of Jane Galt:

Market forces

Despite what you might think, I don't think that everything should be done for money rather than love, and I'm particularly unhappy about this

As John Leyden, a correspondent for the irreverent British information technology website The Register says: "Virus writers are pretty much typically teenage boys who write malicious code because it's basically an act of vandalism. Basically they're doing it for the personal vanity or as an experiment." But, he adds, "That has changed a lot this year." 2004 has seen the commercialization of online crime. Leyden says that unlike past viruses and worms, most of which either broadcast messages in third-grade English or commit wanton destruction, "the viruses that are coming into circulation do many things that are useful." Most often, these "useful" things include hijacking your computer or stealing your credit-card information. According to a September 2004 study by the antivirus firm Trend Micro, "malicious code" such as viruses and worms have increased sixfold since last year. Sixty-one percent of the malicious codes were "Trojan horse" programs--most of which are designed for committing fraud. One of the more dangerous--and more common--species is the "keylogger" Trojan horse; a typical example lies dormant until the victim accesses his or her online banking website, then records the user's login and password and e-mails them back to the perp. It's one of the most painless methods around for committing identity theft.

From the desk of Jane Galt:

Captured?

Xinhuanet is reporting that 35 US soldiers have been captured in Falluja.

From the desk of Jane Galt:

Head for the hills

This is not healthy. But it did make me snarf diet ginger ale all over my cool journalist LCD screen. Diet ginger ale is surprisingly light-distorting. Also, it is harder to get off of an LCD screen than you think. You should carefully swallow your diet ginger ale before you click the link.

(Note: diet ginger ale actually tastes better than regular ginger ale! It's more dry.)

From the desk of Jane Galt:

Channel that anger

On the other hand, this strikes me as basically healthy.

From the desk of Jane Galt:

Looney Tunes

Another Democrat who seems to have gone around the deep end since Bush was elected.

From the desk of Jane Galt:

Terror's little helpers

This month's Atlantic also has an article (subscription only) that highlights a real problem that the media has failed to grapple with:

When I started working as a newspaper reporter, thirty years ago, editors at least claimed to weigh the relative importance of a day's stories before deciding where to run them in the newspaper. Most sober papers, like The New York Times, prided themselves on resisting sensationalism. The steady erosion of this standard has long concerned traditionalists. In today's news world whatever grabs the most attention leads. In general I have no problem with this: people can usually sort out for themselves how the Scott Peterson murder trial stacks up against uranium enrichment in Iran, and nowadays they can readily get more information about either. What disturbs me is the way terrorists use sensationalism to vastly amplify their message. They know that horror and drama capture the media's attention, so they manufacture them. This is why instead of merely executing their victims, they cut off their heads on camera and broadcast the videos. When that gets old, which it will, they will come up with something even more awful.

Must we help them? Granted, the murder of a worker or a soldier allied with the American war effort in Iraq is newsworthy. It speaks to the danger of the place, and to the pain and difficulty of subduing the continuing insurgency. But the emphasis on the recent beheadings has largely been driven by the availability of appalling video. The news business is not a monolith (fortunately), and it has no governing body and no way of imposing or enforcing rules. But shouldn't editors and producers weigh the public interest along with news and shock value? Would some larger journalistic principle be lost if they decided to deny these killers center stage?

There are multiple reasons that the media hasn't addressed this: they don't want to be thought of as "helping" the Bush administration by playing down gory Iraq coverage; they are exquisitely sensitive to the perils of self-censorship; and, of course, they are highly competitive, and gore sells ads.

But it's a question we should be asking, publicly and frequently: to what extent do we become part of the problem when we cover certain stories? I remember thinking, as the media bemoaned the "epidemic" of school shootings during the 1990's, that there was one very effective way to treat the epidemic that no one had mentioned: stop printing the names of the perpetrators, or putting their pictures on television. My understanding is that a significant portion of the motivation was the adolescent desire to be superlative at anything, including evil, if nothing better was available. The boys wanted to be known far and wide as the worst $#@%!s on the planet, and the media co-operated. If the media had toned down the coverage of the shootings, and kept the perpetrators anonymous, those who were contemplating shootings would have a significant part of the payoff taken away.

But this solution was never considered. Partly because there is a competitive instinct in the media, and no one wanted to be the guy talking about housing policy while CNN poached their viewers with wall-to-wall school shooting coverage. Partly, I suspect, because the journalists and editors had other political agendas they wanted to push with this story, about adolescence and gun control. But mostly, I think, because media organisations are profoundly uncomfortable with the idea that they play a part in creating the spectacular violence they cover, and so no one brought it up.

But we should. I am foursquare against any sort of government regulation of the media, a fervent believer that a liberal society is the best way to sort out these questions. But I'm foursquare in favour of self-regulation, a technique that libertarians don't mention as much as we should when talking to the rest of the world. Journalists and editors can de-sensationalise the sorts of stories that, like school-shootings and terrorist beheadings, tend to generate more such stories to cover, without depriving society of anything of value.

From the desk of Jane Galt:

Overtaken By Events

OTBE is a journalist's worst nightmare, and it's on prominent display in this month's Atlantic letters section (subscription only), including back-to-back assertions that we haven't had a president win a majority of the popular vote since 1988, and that Osama is dead. It's a little guilt-free schadenfreude, if you've got a subscription (and if you don't, you should!)

From the desk of Jane Galt:

I am not gloating

I hate to run the list of looney left-wing comments about this election, because I really would like to see an abatement of the bitter atmosphere that prevails in government right now, and because I'm sure that if my side had lost, I'd be getting a plethora of emails pointing out the looney whinging of disappointed Republicans.

But every so often, one sees something so crazy, so utterly over the top, that one is too bewitched to do anything but pass it on. Such as a commenter who compares the American public selecting a candidate she doesn't like to domestic abuse. It's not only grossly hysterical, logic-deprived, and thoroughly risible, it also belies the claim that the commenter has worked in a domestic violence shelter, where she would have seen families in desperate fear for their lives, not their tax code or farm subsidies.

From the desk of Mindles H. Dreck:

Blog to Add

By the way, you should be reading Steve Sachs. For the words and the pictures. On to the blogroll, then.

Perhaps I'll catch him at Naples for a slice at reunion time.

From the desk of Mindles H. Dreck:

Divide and Conquer

On Andrew Sullivan's letters page today you will find a letter entitled "A Road Map". I'll let you read through it, but the author recommends a series of 'steps' ranging from 'understanding' to enrolling parents as spokesmen and then finally introducing gay marriage as a way to protect children.

Since the potential effect on this issue is one of the most regrettable aspects of my Republican vote, I feel duty bound to offer an alternative road map that might be more concrete and successful. I suggest attacking the individual components of marriage separately:

1. Tax status: ability to file jointly, dependent deductions, estate tax exemption
2. Entitlement Status: Social security spousal benefits, higher family eligibility thresholds
3. Marital Law impact: Child custody, adoption
4. Private sector recognition: hospital visitation, pension and other benefits
5. Government 'recognition'
6. UPDATE: Forgot one: the right to confer citizenship on others. This will be contentious!

As a libertarian, I attach zero value to 'government recognition'. Rationally, if equality in the first four components were achieved, I don't think gay marriage would be a huge issue. I'm aware that's not how everybody feels. But this is an advantage - I think more of the opposition to gay marriage may be based in this more symbolic area. I think that's why the marriage amendments passed so handily in so many states.

We should attack the first two items on the list directly through lobbying, congressional donations and letter-writing, as they are aspects of current federal law. The time is right, as tax reform appears to be part of the President's agenda. The third is often a matter of state law and should be addressed there. Given success on the first three components, I believe the private sector will follow.

"Tax and Entitlement Equality" should be the rallying cry of the gay rights movement. It will be painted as an attack on traditional marriage by some, but it will be much easier to marginalize this reaction as bigoted when the religious aspects of marriage are not front-and-center in the debate.

It is also deliciously ironic that eliminating the estate tax would eliminate a source of inequality between married hetero and gay couples.

I suppose this might be viewed as a retreat by some, since federal recognition would take care of most of these matters in one change. However, I think it's a realistic plan for success given the political and cultural environment. Once the first four pillars fall, the fifth won't mean much - except for those who think government recognition is the be-all and end-all.

Oh - and I will put my money where my mouth is - I will donate to groups that take this approach.

(By the way, this amounts to my second choice on this issue. The first - tossing all partnering subsidies - is unrealistic)

UPDATE: In response to some comments.

1. I surely need more education on what DOMA may or may not include, but here's a summary that suggests that only the words "marriage" and "spouse" are affected. The simple use of another word (or insertion of another) would circumvent DOMA more easily than having it declared unconstitutional.

Based on his reading of DOMA, and knowledge of its history, Kip suggests my approach has been tried and failed. The 104th Congress and Bill Clinton did indeed throw up some roadblocks. I hope he's not right, because the marriage redefinition clearly isn't happening at a federal level.

2. Joel objects to the fact that I make no reference to religion. That's right, because we're trying to change government, which is not supposed to do anything with religion except guaranty it's free practice. Joel thinks not addressing religion is divisive. Clearly I disagree - I think it's the word "marriage" connoting religion that is divisive. This is proven by later commenters.

3. I make no reference to 'tradition' either, which is picked up by 'parallel'. Parallel - I think that list makes up government's limited definition of marriage, not yours or mine. I think Parallel's last sentence is precisely why I wrote the post:

...since these benefits are *not* central to the concept of marriage, it is appropriate to consider if they should be extended to same sex couples and under what circumstances[?]

(insert "traditional" and/or "religious" before marriage, I think) Yes.

4. Ron asks what happens when a gay couple divorces and one marries a hetero. I don't even understand the question - the same thing as if they are straight! Of course the reverse happens quite a bit (without a subsequent gay marriage, of course). I sort of doubt we'll see Ron's example much.

From the desk of Mindles H. Dreck:

Confirmation Bias: Election edition

NOTE: Tried to post this earlier this AM, but you may have noticed we had a bandwidth problem. The last 6 days have tripled last month's volume. I'm working on it. Right now, comments appear to the problem: each of the posts uses more and more bandwidth because of the size of the comment section. We may need to limit comment length, or not include the comments with the post unless requested. Wouldn't it be nice if you could charge half a cent for each comment? They are indeed costing us money now.

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There's a first time for everything, and here's mine for quoting David Brooks:

Every election year, we in the commentariat come up with a story line to explain the result, and the story line has to have two features. First, it has to be completely wrong. Second, it has to reassure liberals that they are morally superior to the people who just defeated them.

In past years, the story line has involved Angry White Males, or Willie Horton-bashing racists. This year, the official story is that throngs of homophobic, Red America values-voters surged to the polls to put George Bush over the top.

This theory certainly flatters liberals, and it is certainly wrong.

Other useful refutations of this meme can be found by following these links (several of which you've already seen on Instapundit):

• Paul Freedman
  
• Eugene Volokh
  
• Joseph Knippenberg
  of the Ashbrook center
  
• email to Andrew Sullivan
  
  
• Beliefnet:

  Amusingly, the biggest improvement in Bush’s performance actually came from those who never go to church. He won 36% of this group compared to 32% last time.

  
  
• UPDATE: Gary Langer in the NYTimes
  

  Pre-election polls consistently found that voters were most concerned about three issues: Iraq, the economy and terrorism. When telephone surveys asked an open-ended issues question (impossible on an exit poll), answers that could sensibly be categorized as moral values were in the low single digits. In the exit poll, they drew 22 percent.

  Why the jump? One reason is that the phrase means different things to people. Moral values is a grab bag; it may appeal to people who oppose abortion, gay marriage and stem-cell research but, because it's so broadly defined, it pulls in others as well. Fifteen percent of non-churchgoers picked it, as did 12 percent of liberals.

  .....The makeup and views of the electorate in other measures provide some context for the moral values result. The number of conservative white Protestants or weekly churchgoing white Protestants voting (12 percent and 13 percent of voters, respectively) did not rise in 2004. Fifty-five percent of voters said abortion should be legal in all or most cases. Sixty percent said they supported either gay marriage (25 percent) or civil unions (an additional 35 percent).

  
  
• And this time series of voting issues, which Andrew Sullivan summarizes:
  

  The percentage of people who said in 2004 that their vote was determined by the issue of "moral values" was 22 percent. In 1992, if you add the issues of abortion and family values together, that percentage was 27 percent. In 1996, it was 49 percent. In 2000, it was 49 percent. So the domestic moral focus halved in 2004. Obviously, the war took precedence, especially if you combine the categories of the Iraq war and the war on terrorism more generally. Again: the Republicans should be wary of over-playing their hand. If they believe the entire country is the religious right, the backlash could begin very soon.
  

  
  
• John Hood in Reason Magazine:
  

  I found that the percentage of voters sampled who said they attended church at least weekly was the same—42 percent—in both 2000 and 2004. The percentage never attending church was also the same, at 15 percent. The middle group, those attending occasionally, was, you guessed it, 42 percent each time. Interestingly, while Bush slightly improved his standing among frequent churchgoers, by about a point in 2004, his support grew by 3 to 4 points among those attending seldom or never.

  Yep, it was the atheist vote that really put Bush over the top in 2004.

  ....Obviously, he didn't win by that much. He lost ground on economic issues, because of the recession. But without his edge on war on terrorism, Bush would have lost. And that proposition—unlike the "it's all about gay marriage meme"—is testable and fits the available data. Voters worried about partial-birth abortion, same-sex marriage, and other cultural issues are obviously an important constituency within the current GOP majority, but they are no more responsible for Bush's national victory on Tuesday than voters motivated by other issues to re-elect the president.

  
  

Religious affiliation doesn't explain the margin of victory; the presence of a gay marriage referendum doesn't appear to have made a huge difference; "moral values" means very different things to different people.

Brooks is right - these explanations betray a rather ugly confirmation bias.

From the desk of Mindles H. Dreck:

They were both poisoned

I'm reading Kaus' speculative discussion of exit polling conspiracies, and all I can think of is Iocaine powder:

Exit Poll Paranoia Special: Did the early exit polls showing Kerry ahead almost across the board actually spur pro-Bush voters to head to the polls? ... Note that, if this happened, it would undermine part of Slate's rationale for publishing the polls, which is that they don't affect the result (see., e.g., this Jack Shafer defense from 2000).** ... Did Slate (and all the other Web sites that posted exit results) help elect Bush? ... More: It's not clear whether the early exits polls falsely showed good Kerry news (e.g. because pro-Kerry voters were naturally more eager to talk to exit pollsters) or accurately reflected the vote at that point in the day (e.g. because Kerry voters were angrier and voted earlier). ... The most paranoid possibility is that the exit polls were somehow intentionally skewed to falsely show a pro-Kerry result, either because the media was in the tank to an a near-unbelievable degree (see Dick Morris for such insinuations; Powerline actually declares it "likely") or because Democratic operatives intentionally gamed the exit polls by having voters or pseudo-voters seek out the poll-takers (a possibility half-suggested by Mystery Pollster before the polls opened and occasionally discussed in the Dem primaries). If so, did the poll-rigging strategy backfire--because, instead of spurring a bandwagon, let's-have-a-landslide pro-Kerry effect, it prompted a determined pro-Bush evening backlash that tipped Florida and Ohio for the president? Just speculating! ...

Note that in 2000 Shafer cited a study showing that early election projections dissuaded "fewer than 3 percent of potential voters" from voting. Three percent--or even one percent--is not chopped liver in a 50-50 nation. ... Shafer could respond that it's different if, in 2004, exit poll leaks didn't discourage Kerry voters but rather encouraged Bush voters. It's OK, the argument would go, to affect the results by increasing turnout--spurring greater turnout for the candidate "losing" the exits--as opposed to by decreasing turnout--either by encouraging complacency on the part of the winning candidates' troops or (what doesn't seem to have happened Tuesday) demoralizing the exit losers. Under this theory, future elections will be more like a ball game--or a vote in Congress, with its running public tally. Exit polls would be made public immediately and voters would know that the candidate who is behind in the fourth inning might still come back to win. There would seem to be big transitional problems with this argument, however--this year a) the voters didn't know the exit polls could be inaccurate (indeed, despite all the disclaimers, the initial, near-universal assumption in the professional press was that they were accurate; even both candidates apparently believed them); and b) the supporters of the winning candidate in the exit polls (Kerry) didn't realize that even if the polls were accurate the supporters of the losing candidate in the exit polls (Bush) would learn about them and might stage a comeback. In 2008, they'll know. This year, the leaked exits may have helped Bush (and helped him in part by inducing some Kerry complacency compared with what would have happened in the evening vote if the leaked exits hadn't been so pro-Kerry). ...

Got it? Feel free to discuss when your eyes uncross.

From the desk of Jane Galt:

The labour department is reporting that job creation was much higher than expected: around 330,000. Unemployment has ticked up, however, to 5.5%. Both of these are good news.

It's obvious why we should be glad that jobs grew so robustly, well above expectations. But why should we be glad that unemployment is up? Well, because a lot of the fall in the unemployment rate in the last year has been from "discouraged workers" -- people who stopped looking for a job. If unemployment has gone up despite robust job growth, that means that our discouraged workers have gotten encouraged enough to start looking for work again. That's great news.

From the desk of Jane Galt:

Krugmanwatch

Newsflash: Bush didn't really win the election by 4 million votes. Voters were just befuddled by his secret 9/11 mind control rays. They actually hate everything he's doing, they just don't know it. Luckily, the Democrats have Paul Krugman to tell them the truth. Democrats should keep doing exactly what they've been doing for the last four years, except they aren't enraged enough. Those secret mind-control rays are powerful, but they have a very short duration.

From the desk of Jane Galt:

When the going gets tough, the tough get going . . .

Guess George Bush really is getting serious about taking on the school system.

From the desk of Jane Galt:

Another piece of CW falls

So much for the theory, popular last week, that oil prices were dropping because the market was anticipating a Kerry victory: oil prices are down, and stocks up for the second day running since the election.

Note to readers: remember, whenever you see a headline like "Dow falls on fears of terror attacK" that the headline writer did not actually personally survey the millions of people who traded Dow stocks that day; he called five traders he knows and asked them for a quick opinion. There's no particular reason to think that markets liked either candidate better. What markets like is certainty, and that's what we now have.

From the desk of Jane Galt:

Key question

John Ellis asks it: what the hell does Terry McAuliffe have to do to lose his job? Inquiring minds want to know!

From the desk of Jane Galt:

Latin lovers

I haven't seen a lot written about this, but the CNN exit poll contains some dreadful news for the Democrats, particularly the Emerging Democratic Majority types: latinos went 44% for Bush, up from the mid-thirties last election. If Democrats lose the latino vote, they're demographic toast for the foreseeable future.

From the desk of Jane Galt:

The sky is falling, special outsourcing edition

Have you ever heard those people claiming that pretty soon we'd have absolutely no good jobs left, because everything can be done cheaper in India? We'll all be reduced to penury, waiting on each other at Wal-Mart, while those Indians get fat an happy off the jobs that are our sacred birthright as Americans!

This is silly on a number of levels.

First, Indian labour productivity is lower than American labour productivity, which means that outsourcing to India isn't all gravy, though a simple wage comparison might make it so: employers pay $5 an hour instead of $40, but the workers are only a quarter as productive. (NOTE: THESE ARE MADE UP NUMBERS FOR EXAMPLE PURPOSES)

Second, in the immortal words of the late economist Herb Stein, "If something can't go on forever, it will stop." If we really don't make anything worth buying in America, why will the Indians keep sending us software programmes and taking our support calls? Dollars aren't pretty enough to become collector's items; we have to make something Indians can buy with them, or they'll stop working for them, and we can have all our old jobs back. Trendline extrapolation is a silly business in almost any economic situation, but never more so than where trade is concerned.

And third of all, India's a third world country, which presents some real limits to how many of our jobs it can absorb, as the brilliant Tyler Cowen observes in Bangalore:

The major culprit is congestion; a seven-kilom