Asymmetrical Information

Apparently, I come from an exceptional family:

From the New York Times article on ageing:

At the National Institute on Aging, the question still hovers: Is it possible to find genetic determinants of exceptional health and longevity?

“If you could identify factors for exceptionally good health, that might allow people to avoid disease,” said Evan Hadley, director of the institute’s geriatrics and clinical gerontology program.

There are two methods to do this, Dr. Hadley said. One is to look at how the genes of centenarians differ from those of the rest of the population. But, he said, that requires that if longevity genes exist, they are common among centenarians. And, so far, such studies have not yielded much that has held up — with one well accepted exception: a gene for a cholesterol-carrying protein that affects risk for heart disease as well as Alzheimer’s disease. Those who have that gene have double the chances of living to 100. But that chance is not much anyway. Only about 2 percent of people born in 1910 could expect to reach 100. The second approach is to look for rare genes in unusually long-lived families. “If there is something in a family, it may be in only one or a few families,” Dr. Hadley said. But it may have a big effect.

So the National Institute on Aging is starting a research project with investigators at three United States medical centers and at Dr. Christensen’s center in Denmark. The plan is to find exceptional families, those in which there is a cluster of very old, closely related members — two sisters in their 90’s, for example — whose children, who would typically be in their 70’s, and grandchildren, can be studied too.

Two sisters in their 90's? My grandmother is 91, her older brother is 93, and her younger sisters are both in their late 80's. They have some serious health problems--Uncle Leon broke his hip at 92, and my grandmother and Aunt Helen both have macular degeneration, and Grandma's memory isn't what it used to be--but none of them appears to be at death's door.

Of course, the genes have had two generations to weaken, but still, I feel a little stirring of hope.

Perhaps Kevin would like to make that a really long term bet?

Best line of the day

From Tyler Cowen:

Translating good blog ideas into book format is best done by people who...have experience writing books, or who have journalistic experience, not by people who have large staplers.

How much more efficient is the private sector

Not very, if you listen to various advocacy groups, which are fond of promoting programmes they like by claiming that their administrative costs are much lower than those in the private sector. You often hear this comparison made between Medicare and private health insurance, with advocates claiming that Medicare only has administrative costs of 2%. Now Ampersand of Alas, a Blog, offers the same justification of government transfer programmes versus private charity.

Accounting is so boring no one wants to talk about it, and yet it's crucial to get it right. And in cases like these, the studies are generally getting it very wrong. Comparing government numbers to private sector numbers isn't even apples to oranges; it's apples to fruitflies.

For starters, the private sector--whether they be charities or corporations--has to collect and track the money they spend. So does the government--but unlike the private sector, that figure doesn't get charged off against, say, Medicare; it gets charged to the auditor's office, the IRS, the Treasury, the justice department, and so forth. (Social security does track the money you send them, but the IRS, not their legal department, is the enforcer.)

Also, it is often very, very hard to tell what something costs a government agency. They don't pay cash prices for a lot of the services they get, and they don't do normal corporate things like accruing their pension liabilities, so it's hard to know what their true compensation costs are.

Government agencies also--obviously--don't have big finance sections to tell them how much they need to pay in taxes. That doesn't mean they're more efficient at delivering services; it just means that they don't pay taxes. We could achieve the same "efficiency"--and many others besides--by eliminating the corporate income tax.

Apparently (I haven't read the studies myself) when you add in those sorts of costs, the government's administrative costs are higher than the private sector's.

That won't suprise anyone who's ever spent time in line at the DMV.

In which I emit a sigh of relief

Malcolm Gladwell doesn't hate me any more.

Meanwhile, one of his commenters has this to say:

My god, why are so many people here expecting this man to behave like he is Gandhi! Simply put, Galt was nasty about it and got a well deserved spanking (and it wasn't so hard that he left a welt!)

I can't shake the feeling that I've stumbled onto somebody's secret fantasy life . . .

I'll take that bet

Kevin Drum wants to bet that California's greenhouse trading initiative won't cost the state business:

I'll bet all comers that not only does it not have a negative impact on California's economy, it will have a noticeably positive impact. It will spur R&D in new technologies, it will motivate businesses to become more efficient, and it will make California a better place to live. And as for businesses moving out, I'll bet against that too. Moving heavy industrial plants to new states is a lot less appealing than it sounds, and if it does start to happen I'll bet other states will follow California's lead. After all, what state wants to be the dumping ground for all the poor corporate citizens who are moving out of California because they want to relocate somewhere that doesn't mind them belching tons of pollutants into the air?

Now, before I start, let me say that I have nothing against this initiative: longtime readers know that I am one of those improbable libertarians who worries about global warming. And like the economics journalist I am, I looooooove cap-and-trade systems. Sometimes, late at night, I drive past their houses just to see if they're home. And when they finally go to bed and turn out the light, I sneak up on the porch to leave little poems I composed myself, signed "Your secret admirer."

Ahem. As I was saying.

I like cap-and-trade systems, and I'm happy for California to try and implement one (of course, I don't live in California, or have a job in manufacturing, so I would be, wouldn't I?). But given the relative ease of moving one's factories across state lines, I find it unlikely in the extreme that manufacturers will not implement their own cap and trade system on doing business in California. Given a choice between implementing a permanent 25% cut in energy use, or moving my plant to Nevada, it wouldn't take me long to start pricing land in Reno. California is already an outrageously expensive place to do business; this will add to it considerably.

Nor do I think that other states will necessarily worry about importing pollution--we're talking about carbon dioxide, which you yourself emit in relatively large quantities, not mustard gas.

As for spurring more R&D, etc, California is already a very nice place to live, which is why no one I know can afford to live there. I fail to see how a (globally speaking) trivial reduction in carbon dioxide emissions will somehow transform it into an earthly paradise irresistible to business executives. And there are multiple problems with the R&D argument: one, that it is a fine example of the broken windows fallacy; and two, that there's no particular reason the R&D has to happen in California. To the extent that it does happen, it will probably take place wherever it is that they manufacture power turbines and flourescent light bulbs.

So if Kevin really is taking all comers, and can formulate a target we can both agree on, I've got a couple hundred I'd like to put down . . .

Anonymous group blog

A question came up over dinner last night: is there any such thing as a group blog in which the posters aren't just pseudonymous, but don't identify themselves at all? I couldn't think of one, but I'm hardly a statistical universe. What do y'all think?

Malcolm Gladwell hates me

This was probably not a good career move. It has generated a rather exasperated response from Mr Gladwell:

One of my frustrations with the blogosphere--as those of you who read this blog know--is that I think that the immediacy of web publishing makes some people lazy. They type faster than they think; or they believe that a reaction is the same thing as an argument.

Case in point. The blogger known as Jane Galt had the following criticisms of my "Risk Pool" piece:

For starters, [Gladwell] attributes Ireland's success as the "Celtic Tiger" to falling birthrates, which (temporarily) reduced the dependancy ratio. He utterly ignores a more parsimonious explanation, which is that Ireland slashed its marginal tax rates in 1987, including a cut in the corporate income tax to 10%, which turned it into Europe's first outsourcing destination. If you look at the handy spreadsheet I have uploaded, containing data on Irish growth from 1980-2005 obtained from the invaluable Economist Intelligence Unit, you will see that this fits the Celtic Tiger period much better than a 1979 relaxation of birth control restrictions. Moreover, since there is much evidence that economic growth causes falling birthrates by raising the opportunity cost of childrearing, even if there were a correlation it would be hard to say which way it ran. This also applies to his arguments about Asia and Africa.

Where to start? Let's ignore, for the moment, the quaint right-wing affectation of assuming that marginal tax rates are the most "parsimonius" explanation for all variety of complex human behaviors. Instead, let me make two small points.

1. "Gladwell" does not attribute Irish success to falling birth rates. David Bloom and David Canning do. Gladwell is a journalist. Bloom and Canning are two exceedingly prestigious economists at Harvard, who are considered world experts in the field of demography and economics. Gladwell was impressed by them. He talked to them. He read their work. He was convinced by them. But he didn't make this argument up on the back of his journalistic notepad. And to neglect the true source of this argument is to trivilize and demean it. This is not Gladwell v. Jane Galt; journalist v. blogger. It's world experts v. blogger. Just so we are clear on this. And acknowledging the origins of this idea means that you can't depose of the dependency ratio argument just by dismissing Gladwell. You may actually have to read Canning and Bloom.

2. Galt says that Gladwell neglects a more parsimonious explanation: Ireland's tax cuts. As we've seen, Gladwell did no such thing, because Gladwell didn't do an analysis of Ireland's economic growth. What about Bloom and Canning? Did they neglect the larger economic picture? Well, actually, no. In the "Celtic Tiger" paper, they construct a complex mathematical model to try and tease out the various factors that led to the Celtic miracle. They think that the opening up of Ireland's economy in the 1970's was very important. But the data, they argue, also suggest that the country's demographic transition played an important role as well. Bloom and Canning, apparently, are of the view that sometimes things that happen in the world happen for more than one reason.

All of this information is quite readily available in the "Celtic Tiger" paper, which is in turn quite readily available on a marvelous invention called the world wide web. The paper itself is just under twenty pages long. It can be read in under half an hour. It's not that hard. Trust Gladwell on this one.

Having started the snotty war, I am in no position to complain . . . but let me explain that I thought we were engaging in humorous, bitingly witty but essentially friendly literary exchange, not partisan slash and burn. I apologize if my post gave a different idea. Let me see if I can steer this debate into more congenial climes.

For starters, I can also see where Mr Gladwell--and I did call him Mr Gladwell, not "Gladwell", which I don't like--got the idea that I am a right-wing nut job who thinks that tax cuts solve everything. If you have a pen name like Jane Galt, you have to expect those things. No matter how often you explain that you are not an objectivist, your nom-de-blogue a mere historical accident, there will always be new readers coming in who naturally assume that you are, well, an objectivist.

Despite the moniker, I'm not even a supply-sider. I don't think that tax cuts are the parsimonious explanation for all, or even most, economic growth. I certainly don't believe that the trivial swings in tax rates that the United States has seen in the last few decades have much grown, or shrunk, the economy. I don't even think they're the explanation for most Irish growth: credit goes to many factors, among them a fierce state committment to education, an English-speaking population, ample ports, proximity to large markets, membership in the EU, huge remittances of capital (financial and human) from the diaspora in America, Australia and the UK, and undoubtedly changing demographics.

I took us to be having a debate, not about the causes of growth, which are many, but the timing. If you look at the spreadsheet I linked, the Irish economy takes off into the stratosphere right after it cuts its tax rates. I attribute this not to supply side magic, but to the fact that Ireland suddenly became a very attractive place for companies serving the European market to do business. And I'm not alone.

Mr Gladwell says that he is not making these claims; experts are; that this is not blogger v. journalist, but expert v. blogger.

Well, let me put on the journalist hat I wear during the day and dispute this. As a journalist, when I get behind a paper the way Mr Gladwell got behind this one, I feel that I am asserting its conclusions, not merely repeating what someone else said. When I wrote about bankruptcy, for example, I talked to a lot of people, all of them experts. Some of them said bankruptcy law should be tighter; some of them said it should be looser. I read a bunch of academic papers. And when I concluded that tightening bankruptcy laws was unncessary and could result in declining rates of entrepreneurship, that conclusion came from me, not the experts I interviewed. I feel my readers aren't paying for a synopsis of what other people say; they're paying for my best judgement about who is right. And so when I laud a paper, I'm standing behind it's conclusions, and prepared to argue about them with the world. If I'm not confident enough to do that, I try to make it clear.

That, of course, is not the idea that most American journalists have about their work; American journalists often believe that objectivity requires them to be vehicles, rather than judges. If I am mistaken about the kind of journalism Mr Gladwell is trying to do, I humbly retract my statement.

And now, arrogantly, I will arrogantly proceed to dispute with Messrs Bloom and Canning, wearing both my journalist toque and my jaunty blogger tam-o-shanter. I did read the paper, andI simply don't think that Bloom and Canning's findings are sufficiently robust. For starters, I get a strange crawling sensation on my spine when most of the citations at the start of the paper refer to other papers by the authors; sometimes this is necessary, but it can often signal that the authors are, so to speak, an Army of Two. Poking more deeply into it, there's a whole lot of variables floating around in there, with varying levels of controllability, and a lot of unspecified endogeneity--which was what I was trying to get at when I said that it's very difficult to sort out whether falling birth rates cause growth, or the other way around.

I don't like the very hazy mechanism posited for this growth, either. Especially do I not like the fact that growth in the labour force participation rate--the only mechanism by which I can see the dependancy ratio affecting growth--is negative or insignificant. Without that mechanism, I feel like we are left with either the trivial observation that if you increase the ratio of working to non-working capitas, per capita income goes up; or an underpants gnome theory of growth.

But Ireland's economic growth did not just take off on a per-capita basis; it started growing dramatically on an absolute basis, and kept doing so for just about two decades. If the cause is not increased labour force participation by women unshackled from caring for their big families, I just don't see how a drop in the number of children can explain such huge shifts in the underlying rate of economic growth. Ireland can't have diverted that many resources from nappies to nanotech research. And if it is increased labour force participation by women, we're back to the old problem: which way does the correlation run?

Now, I haven't interviewed Bloom or Canning, and Mr Gladwell has. But I have only Mr Gladwell's article, and the paper, to go on. They did not convince me. I still find the tax changes, including amnesty, more parsimonious as a driver of reverse migration and FDI, than demographic drops, in explaining the timing of the Celtic tiger's takeoff. Nor is the forward hypothesis easily testable; Messrs Bloom and Canning assert that demographic decline will cause the economy to grow more slowly. This is a fairly safe bet when you're talking about one of the richest (per capita) countries in the world.

It's not that I think they're wrong that the dependancy ratio matters; I'm sure it does. But I just can't believe that it's the dominant driver of change, which is what they assert.

And let me add, in closing, that I adore Mr Gladwell, the journalist, with a passion seldom found in one so young. It is my fondest dream that I might someday write with his insight, clarity, and style. My disagreement with the article is not an attack on its author, which I would never do because a) I hate nasty personal blog arguments b) I love Mr Gladwell's work and c) such an attack would be foolishly unproductive, and given our relative fame, possibly disastrous for me.

I don't retract my assertions, mind you . . . but I do issue this heartfelt cri de coeur to Mr Gladwell: can't we be friends anyway? After all, I'm so fond of you . . .

Now if you'll excuse me, I will retire to my bed with a pint of Ben and Jerry's and my moping robe.

Extra note Those who have heard me complaining about social security may be flabbergasted by my cavalier dismissal of dependancy ratios. It's confusing, I know. But to my mind, there's a difference between having more children, and having more old people. Old people are much, much more expensive than kids are; most of them insist on ordering from the adults menu and having their own house instead of sharing a room with their brother. And they spend a lot of time getting very expensive health care. Also, kids are workers-in-waiting; old people are planning to be consumers until they die. Children are an investment; old people are consumption.

Note that I think an increasing proportion of old people is a problem regardless of how pensions are financed; retirees living off dividends and capital gains are putting the same burden on the productive capacity of current workers as old people cashing government checks. The only difference is that private savings are allocated to investment, and that taxes have a deadweight loss; neither is trivial, but I haven't seen any evidence that the benefits of private savings are enough to overcome the dependancy problem. But I think that dependancy ratios are only a problem at the economy level, not the company level, where the problems are less predictible and more specific. And the article was about the benefits of falling birthrates, not the problems of an aging society.

Cui bono?

I am so last week. I've been trying to write a long piece on income inequality, in the tradition of my series on Healthcare and Abortion, but Real Life^TM has intervened. So I'm late to the party, as usual. Greg Mankiw, Alex Tabarrok, Andrew Samwick, and Brad De Long have already weighed in conclusively.

But if I let myself be discouraged by the fact that better minds than mine have already exhausted a topic, the only posts you'd get would be on the stubborn mildew strain currently affecting my bathroom grout.¹ So allow me to present my belated thoughts on the matter.

Most of the debate over the past week has been focused on a very narrow question: has government policy increased inequality? But it seems to me that there are much broader questions that people want the answers to. Unfortunately, I don't have the answers, just the questions:

1. What is inequality?

2. Is inequality increasing?

3. If inequality is increasing, how much is it increasing?

4. If inequality is increasing, why is it increasing?

5. Even if it is increasing, should we care?

6. If we do care, what can we, or should we, do about it?

Many of these questions have been implied in the debate--as have answers to those questions. Over the next few days, I'll offer my thoughts on the matter, and hopefully my ever-so-clever readers will weigh in.

¹ Alas, in the grand tradition of the punditariat, I have no solution for this problem . . . only an aching sense of the grander possibilities that Might Have Been.

Okay, so . . .

I've given up on a category cloud. I didn't really want one, anyway; what I wanted was something that took up less space than the current list on the sidebar. What I'd really like to do is collapse my category archive to the top level hierarchy, and have it expand when the reader mouses over it. Anyone out there know of an easy way to do this?

I promise, this is the end of the MT questions. And if you're getting annoyed, please remember . . . I'm doing it all for you.

Guestblogging

I have some friends who are thinking about dipping a toe into the blogging world. Since they happen to be knowlegeable finance/economics/business types, Mindles and Winterspeak and I have invited them to blog here for a while, to see how they like it. In keeping with our traditions, they have selected mysterious-yet-telling pseudonyms: Malletfinger, Ukeleleman, and Piers. Soon to be a thrilling motion picture from Warner Brothers . . .

Hope y'all will welcome them aboard.

What's the problem, again?

James Surowiecki says the car companies have only themselves to blame if they can't drop a brand: that's what you get for using franchises instead of company-owned dealers.

But the problem isn't really the franchise model, which does work better than company-owned. In the classic economic sense, it's win-win--the dealer makes money, and the company makes money too, because franchisees work harder and are better integrated into the local community.

The problem is that the franchisees have huge political power with state governments, which they have leveraged into a guarantee that everything will always be the same, forever and ever. Of course, whenever you take on a partner, you take on additional obligations; McDonalds can't just decide to become an upscale coffee shop. But car dealers are rather uniquely protected, perhaps because they have made such enormous rivers of money off their dealerships over the years.

Dealers are more useful to auto companies and consumers than they initially seem: auto plants, it turns out, have to run closer to full capacity to break even than most manufacturers, and so dealers provide a way to efficiently dispose of excess inventory. But they have been awarded economic power far in excess of their contribution by the intervention of friendly officials happy to stick it to auto companies that don't operate in the state. The problem isn't franchising; it's governments that have the power to give unearned goodies to their friends.

Of course, one might say that given the political realities, the automakers shouldn't have relied upon franchising. But anyone who made that decision is long dead; the franchise laws have, AFAIK, been in full force in most states since the early fifties. One could as well say that Polaroid deserves its fate because of its silly decision to manufacture film-based cameras.

Amusing side note to the New Yorker story

The New Yorker apparently thinks that tail-gating is some sort of exotic Duke ritual:

They were also known as enthusiastically social creatures, partyers of the very highest order, and prodigious drinkers, even within a culture inclined to intemperance. In this regard, their marquee setting (in public, at least) was the Saturday-morning football-season event known as Tailgate, a quasi-sanctioned school function held in a parking lot before football games.

Asking for trouble

I just read the New Yorker's account of the Duke Rape case:

Just after 1:30 A.M. on Tuesday, March 14th, a Durham police sergeant named John Shelton, responding to a 911 dispatch, pulled into the parking lot of a Kroger supermarket, about a mile from the Duke campus, where, according to his report, he encountered a black woman slumped in the passenger seat of a dark-colored Honda. “She’s just passed out drunk,” Shelton concluded. He popped open a capsule of ammonia, waved it under the woman’s nose, and tried pulling her from the car. The woman, rousing, grabbed hold of the car’s emergency brake, but she lost her grip and tumbled out into the parking lot. The Honda’s driver said that she had offered the woman a ride home, because she had seemed incapable of making it on her own. The subject had no identification. She was wearing a see-through red garment (with no underwear) and one white high-heeled shoe.

Shelton conferred with Officer Willie Barfield, who had just arrived. Without an address, the men couldn’t take the woman home, and Shelton considered her to be too intoxicated for a twenty-four-hour lockup. He decided on a county facility called Durham Center Access, a sort of halfway house/emergency room that helped indigents through substance-abuse and psychological crises. At the Center, Barfield and another officer stood by as a staff nurse went through the standard screening process with the distressed woman, assessing her for risk of suicide, danger to others, substance abuse, and victimization.

The nurse asked the woman if anything had happened to her.

“Yes.”

Had she been raped?

“Yes.”

Now, I'm no expert, but it seems to me to be lunatic to ask a severely intoxicated woman these sorts of questions. People impaired by chemical substances are very suggestible. Someone who is very drunk and has just been pulled into a scary institutional place by the cops should not have such possibilities suggested to them; they should be asked to describe how they got into that state. Otherwise, you have the possibility that someone who is not thinking straight (and may erroneously fear arrest) will put on their bad idea jeans and falsely tell you that they were raped. I've said stupider things under the influence. Heck, sometimes when I'm not really paying attention to the person I'm talking to, and they ask me if I've seen a movie or read a book, I belatedly wake up to the realization that I have just agreeably said "yes" when the correct answer is "no".

And faced with the choice of saying "I'm sorry, I have no idea why I just told you I'd read Look Homeward, Angel." or continuing the lie, I generally bullshit my way through a brief conversation about the book in question, while desperately hunting for a way to change the subject. I'm not saying I do this all the time, mind you, but it has happened. I can only imagine what I'd decide to do if I woke up the next day and found all these nice people being awfully kind to me because I'd told them I was raped.

Now, I'm not saying that this is what happened. The Duke rape case, to be sure, seems incredibly weak to me, and I think it rather troubling that it is the accuser, rather than the accused, who keeps changing her story in response to emerging new evidence. But I haven't really followed it closely enough to produce an opinion beyond that. I'm only saying that the Durham Center Access methodology seems guaranteed to produce false charges of rape, whatever the truth of these particular charges. And if they are false, it seems to me that the center may bear a good part of the blame.

New information on the CloudNine quest

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THis happens when I rebuild. Any ideas?

Help, PT II

I'm trying to use CloudNine, a plugin that generates category clouds. Unfortunately, instead of a nifty word cloud, it is arbitrarily setting ht efont weight of everything to zero. This makes it disappear in Mozilla, and turn into a series of lines in IE. Anyone have any idea what might be going on?

Help!

I tried to upgrade our Movable Type installation to 3.3, but something is desperately wrong:

Also, I tried to install CloudNine, which isn't working either.

Can anyone help this MT moron?

Greg Mankiw has the best blog ever

Another link to a great paper: "taller people earn more because they are smarter."

I don't want to brag or anything, but heightwise, I'm over four standard deviations from the mean. I'm just sayin'.

You heard it here first

Greg Mankiw points to a new paper indicating that 70% of the burden of the corporate income tax falls on employees.

I made this point long ago: for all that progressives wail about making corporations pay their "fair share", you can't tax a corporation; you can only tax that corporation's employees, shareholders, or customers:

As my favorite macroeconomics professor pointed out, it is impossible to tax a corporation because the corporation is just a fictional entity designed to pass profits back to its owners. When you say you're going to "tax a corporation", the corporation doesn't go to the money farm to harvest some more cash to give to the government so we can expand job training for unwed mothers -- some real person is going to pay that tax. When you put a tax on wages, such as social security or the unemployment tax, the employer doesn't say, "oh, well, profits dropped 15% this year; better tell Merrill Lynch to issue a 'sell' rating" -- they pay their employees less, both to lower the tax burden and to recover the lost profits. They hire fewer employees, because each employee is now more expensive. This costs real people money. When you up the corporate tax, either the employees pay, because the firm can't afford as many of them; the customers pay, because the firms have to raise their prices to cover the taxes; or the shareholders pay because dividends are lower and the company is worth less. And before you liberal types start rubbing your hands in glee at the thought of those pained shareholders, keep in mind that the largest shareholders in companies are insurance companies, which invest in stocks in order to make the money they need to pay off when your house burns down; and pension funds, making the money to take picketing US Steelworkers off the streets and put them into good homes. The other big holders are mutual funds, which is what most of us have our 401(k)'s in. So when you say "I want to tax corporate profits", try silently saying to yourself "so that Mom can sell the condo in Florida and move in with me."

While undoubtedly the discovery that most of the tax burden falls on employees will be for some a strike against the tax, and for others a sign that we need some stiff laws to force those corporations to place the burden elsewhere, it seems to me that this piece of information makes the corporate income tax no less attractive than it was before--which is to say, not at all. Levying a corporate income tax is a very inefficient way to do what we want, which is to redistribute money from the company's richer owners, customers, and managers to its poorer employees.

(All right, maybe we don't all want to do this; no doubt many of my readers are even now cringing in horror at the thought. But let us posit, for the sake of discussion, that we do want to do this, because that is at heart of all the arguments I have ever heard in favour of the corporate income tax, and even assuming the ends, the means make no sense.)

Let's say that 100% of the distribution fell on shareholders and executives. Would it make sense to tax the CEO of a small tool-and-die maker (assuming such things still exist) at the same 35% as Michael Eisner? Aunt Minnie's 100 shares of AT&T at the same rate as Bill Gates' Microsoft stock? We already have a very good means for taxing income derived from being an executive, or owning stock: it's a little thing I like to call "the progressive income tax".

Now, several of my interlocutors have argued that if we don't have a corporate income tax, people will shelter income in corporations, by (for example) incorporating themselves and charging their rent to the corporation. But people already have incentives to try these sorts of stunts, because corporations, unlike people, get to charge things like rent and interest on loans against their taxes. You can incorporate right now, funnel all your income into the corporation, and have the corporation pay all your bills. Say you make $100,000 a year, and pay roughly 30% of that in tax. Furhter assume that your expenses are $80,000 a year, and you save a thrifty 20% of your income. A corporation with your income and expenses would pay taxes only on the income in excess of expenses. .35 x .2 = an effective tax rate of only 7%.

Wow! Why isn't everyone pulling this dodge? Why, because the IRS has rules against it, that's why. Anything the corporation rents or buys for you is treated as income to you, which you are taxed on. There's no reason that would change just because we eliminate the corporate income tax. Yes, there are other ways to shelter your income within a corporation, but in general, I don't know of many which would be possible without the corporate tax that aren't possible--and attractive to those in high brackets--now. Others argue that untaxed corporations somehow allow people to accrue more financial power through their ownership, which makes no sense to me; Bill Gates is powerful because he controls a lot of Microsoft stock, not because most of his earnings on that stock are tax-deferred.

Impeach the corporate income tax. Impeach it now.

Courting cool

Timothy Burke has an excellent post on how to get a cool job, something that most liberal arts graduates have more than a little trouble with.

. . . just about every Cool Job that appeals to folks with interests in the humanities and social sciences seems completely impossible to obtain. When you quiz people you know who have Cool Jobs, they seem to have gotten them in ways that are utterly impossible to duplicate–they were in the right place at the right time, or had a good social/familial network, or had a mentor that they happened to click with. The stuff you see in the newspaper want ads, for the most part, is the Nasty Leftovers.

The bad news, and I’m not sure liberal arts institutions are always as forthright about saying this as they could be to their current undergraduates, is that the significant majority of immediately post-graduate employment experiences are going to suck. Dilbert’s office would be an improvement over quite a few of the ones I’ve heard about. I think my favorite job experience I’ve heard about in the last six years was the non-profit community group that paid $15,000 a year for a 55/hr week with no benefits or vacation time and was run by a near-psychotic incompetent. But there’s lots like that to go around. I do think we promise payoffs in the longer term from “critical thinking” and the like, so any student who’s listening carefully probably understands the implicit point being made when that’s said.

Thinking about people I know with Cool Jobs who are not academics, broadly speaking I can identify a couple of ways that they got there.

Route 1 to a Cool Job is applying to a Nasty Leftover job and then proving yourself with diligence and creativity to be a Cool Person and being promoted upwards to the stuff in the same workplace or organization that’s satisfying and interesting.

Route 2 to a Cool Job is going to graduate school but in a specific professional field, aimed at very specific technical proficiencies, skills and credentials, NOT a doctoral program aimed at becoming an academic. You’re looking for something that goes straight into a profession or field of employment outside of academia, preferably a program with a strong, proven track record of placing its graduates in employment. The shorter the program, the better.

Route 3 to a Cool Job is making a nuisance out of yourself in a way that feels very very difficult for a lot of folks (including myself)–basically exploiting your family and social networks, writing to strangers, showing up at lots of events and aggrandizing yourself in various ways, brownnosing if necessary, being gutsy and unafraid, jumping into strange situations without looking. The problem with this is not just that it is difficult to do, but that it takes a certain kind of personality and judicious ability to size up social situations to do it successfully. Somebody with the wrong personality or with a consistent inability to judge when and how the moment has arrived is going to do themselves way more harm than good following this strategy.

Route 4 is hanging out your own shingle in some fashion–if you’ve got a serious technical skill, some special area of knowledge, some ability to do creative writing, anything of that kind, you go into business or do consulting or sit down and write. Anything that either produces a concrete output (artwork, writing, programming, technology, a successful small business) or that serves as an effective entree to some larger institution by proving yourself is a good thing. That is, providing what you’re doing doesn’t suck–bad art, lame writing, or technically incompetent independent work isn’t going to help you any, and parasitic just-one-step-above-confidence-man kinds of consulting work may alienate rather than ingratiate. May require a significant other and/or parents you can sponge off of for a while.

Route 5 is basically paying lots and lots of dues, about ten to fifteen years of painfully bad or frustrating jobs where the next job is somewhat higher paying or more responsible than the last job, but not really a Cool Job or even a particularly good one–and then taking the accumulated reputational and professional capital from that and cashing it in to grab a Cool Job.

Since I have the ultimate cool job--every so often the colleague who sits next to me looks over and says "we have the coolest job in the whole world, don't we?" and I am compelled to agree.¹ So I thought I should weigh in.

My immediate post-graduate experience as an English major did indeed suck--at least, the jobs I had that didn't suck were whisked away almost immediately as the startups I worked for failed, leaving me once again slaving at some administrative job where the main skills required revolved around an intimate knowlege of the alphabet. I got out of this by learning to build computer networks, which had its moments, but also involved more repetition than I liked. I decided to go to business school after realizing that while I was out dancing on weekends, the guys I was competing with were home building computer networks in their spare time. Even then, I recognized comparitive advantage.

But that's not what you really want to know. What you want to know is how to get your super-cool dream job. And unfortunately, the only advice I can offer is "be truly, amazingly lucky." I started a blog that happened to take off, through which I met someone who worked at Economist.com, who forwarded me a job opening, for which I applied (along with 150 others). That I was plucked out of the field of 150 still seems to me to be a major miracle. That I should then have gotten two promotions which landed me in my current enviable position is really too incredible to happen anywhere outside of a trashy novel. But there you are--and here I am. Any of Mr Burke's routes seem infinitely more plausible than the one I took.

So really, this post contains no useful advice; I'm just gloating. Or to put it more kindly, marvelling at the excessively kind fate which has smiled upon me. And my early Labour Day wish for you all is that you, too, can someday enjoy such luck--and that if and when you do, you'll remember to enjoy it.

¹ Note to boss: this should not be taken into account when pay rises are handed out.

Bleg

A colleague of mine is writing a story about offshore tax havens, and would like to interview people on the topic. Any experts, academic or otherwise, out there, who want to be interviewed by The Economist? We're also accepting related areas of expertise, such as the effects of exit rights. Recommendations for books on the topic, other than the execrable Offshore, are also welcome. Put your info in the comments, or email me and I'll pass it on.

Career counseling

I might be a little distressed to read that no one should marry a career girl . . . had I not read Jack Shafer's deft rejoinder:

Before my female readers break their nails pounding out angry e-mails to me, they should consider the piece's fundamental weakness. Forbes' definition of a career woman is extraordinarily broad, including any woman who has a college education, works 35 hours a week, and makes more than $30,000. So, if you define non-career women as all the "undereducated" who work part-time and make less than $30K, it becomes painfully obvious why female careerists are more likely to divorce than non-careerists: They can better afford to get out of an unhappy marriage than their sisters.

That may be bad news for all the schmoes getting dumped, but it's great news for the gals. So, go ahead, young ladies. Get your degree. Even go to grad school. Gun for that corner office if you want to and get the guy. If you divorce, make sure to stick him with the shared subscription to Forbes.

Pension problems

Co-blogger Winterspeak had a post this week on his other blog about Malcolm Gladwell's latest article. Even if it weren't a very good post (but oh, it is) I would recommend you read it just to enjoy his use of the phrase "as mad as a box of mittens", which is, as far as I know, a first for economics writing. Days after first reading it, I am still rolling its verbal deliciousness around my mouth.

Now Malcolm Gladwell has responded:

One of the predictable responses to this is that this is the idea behind Social Security is--and look at the problem that program is in. I have to say, though, that what reading I have done into the Social Security issue hasn't convinced me that the program is in all that much trouble--that is, with a number of not entirely painless (but not debilitating) adjustments now, we can avoid a lot of the trouble down the line. Put it this way: would you rather, as a retiree, put your faith in the federal government or General Motors?

On that narrow question, Gladwell is right: it is better to have a government pension than a GM pension, because it is more likely that the government will be around in fifty years than GM (or any other company, no matter how good it looks today). Corporate pensions both have a higher failure rate, and are more volatile than goverenment pensions: Social Security will end up giving everyone a moderate haircut, where in the private system some people get a full pension and others get the scraps doleed out by the Pension Benefit Guarantee Corp.

But Mr Gladwell's article is flawed in a number of ways, some of which my co-blogger touched on. For starters, he attributes Ireland's success as the "Celtic Tiger" to falling birthrates, which (temporarily) reduced the dependancy ratio. He utterly ignores a more parsimonious explanation, which is that Ireland slashed its marginal tax rates in 1987, including a cut in the corporate income tax to 10%, which turned it into Europe's first outsourcing destination. If you look at the handy spreadsheet
I have uploaded, containing data on Irish growth from 1980-2005 obtained from the invaluable Economist Intelligence Unit, you will see that this fits the Celtic Tiger period much better than a 1979 relaxation of birth control restrictions. Moreover, since there is much evidence that economic growth causes falling birthrates by raising the opportunity cost of childrearing, even if there were a correlation it would be hard to say which way it ran. This also applies to his arguments about Asia and Africa.

Second of all, he attributes pension problems to higher productivity, which allows manufacturers to make more stuff with fewer people, and thereby increases their dependency ratio. This is daft. Increasing productivity also increases profits, allowing companies to pay more benefits using fewer workers; in fact, by decreasing fixed costs such as health care, it should make it easier to support retirees. GM's problem isn't that it's just too darn productive; it's that it's too darn unprofitable, thanks to foreign competition.

Many of his other assertions are equally weak. He implies that regional agreements, in which all the tool-and-die makers or auto plants in a given region, work better than company level agreements. But multi-company pensions such as these are creating huge problems: they drain capital from productive companies to prop up failing ones (see UPS), make it hard for new entrants to come in (because they have to take on gargantuan pension liabilities to do so), and ultimately make union shops uncompetitive. This is what is happening in the construction industry in New York, where open shop companies can offer lavish wages and 401Ks to their workers and still outbid union shops, because they don't have the extensive pension liabilities.

Nor does this make much sense:

Under the circumstances, one of the great mysteries of contemporary American politics is why Wagoner isn’t the nation’s leading proponent of universal health care and expanded social welfare. That’s the only way out of G.M.’s dilemma.

But we have nationalised health care for GM's retirees right now. Mr Gladwell may have heard of the programme: I believe it's called Medicare. This has done absolutely nothing for GM's dire fiscal situation, because GM's unions force it to offer benefits that are more lucrative than the national system. Unless we outlaw private insurance, as Canada does, it's hard to see how this would fix the problem.

I believe Mr Gladwell is right that our health insurance, our pensions, and our paychecks should not all come from the same place, particularly a corporation that may not be around when the bills come due. But that doesn't mean that they should come from the government; as P.J. O'Rourke once said "I mean, they can't even deliver our mail and it's got our address right on it and everything." The government solves the longevity problem by introducing huge problems of its own. Pay-as-you-go (PAYGO, in pension lingo) for starters: no private employer would today be allowed to get away with issuing its own corporate debt to its pension fund. Nor treating pension contributions as income without reducing that income by the amount of the accrued liability. Nor making promises without establishing assets to pay for them. Our government is encouraging the ignorant to save less than they will need for retirement. This is morally, if not legally, criminal.

I'll close with Winterspeak's response to Mr Gladwell's response:

Gladwell's first argument -- that it is betted to trust a government who will only renege slightly and shaft other people on your behalf rather than trust a company who will renege a lot and shaft you is true as far as it goes. It's also a weak position when there are perfectly good zero-shaft options out there (private accounts) which, if administered correctly, would have low operating costs and mandatory contributions.

The only dimension on which government pensions are better than private savings lies in the redistributionary potential of government programmes--which Winterspeak, and many of my readers, may think of as a bug rather than a feature. Personally, I think there are people in this country who are too poor to save, and I would like to see them taken care of in their old age. But that is an argument for a forced savings scheme coupled with a minimum, means tested pension--not this vast and crippled attempt by middle-class Americans to pick their own pockets. As Mickey Kaus says, "Sending checks to everyone is a nice thing to do. But we can't afford every nice thing to do."

Bleg

Is there a telephone headset that can also be used as PC headphones? Inquiring minds want to know.

Who pays for healthcare?

I found this paragraph on Kevin Drum's blog, but I'd wager something similar could be found on half the liberal blogs out there with a little bit of searching:

GM's management faces higher costs than its competitors in other countries because it has to pay its employees' healthcare costs and Toyota and Volkswagen don't. GM's workers are no better off: their pension benefits are at risk because their continued existence depends on the health of one company, rather than the health of an entire country. So who benefits from this lopsided system? No one except the insurance and financial services industries that administer these plans.

This is a persistent meme on liberal sites, and with good reason: the logic is compelling. The only problem--and it is a slight one--is that this meme is not true. In both Japan and Germany, workers at large corporations get their health insurance via joint contributions from employeer and employee, just as they do in the United States. Big corporations in both countries also have pension schemes, just as in the United States, and higher social security contributions.

To be sure, their health care costs are lower, in large part because they are administered by the government, which rations it more strictly than GE can. But their pension fund deficits are often worse than ours.

Where does this idea come from that the Japanese and German corporations don't have to pay any costs to cover their employees' health and retirement? And why hasn't anyone bothered to check it?

That's Stirling!

Tyler Cowen and Will Wilkinson have both recently linked to one of my favourite writers, Stirling Newberry, and so I thought this might be a good time to call attention to his underappreciated talents.

Mr Newberry's work first came to my attention on TPMCafe. Frequently on TPMCafe, I would read some piece of econoimc commentary so bizarre that it put me in mind of that famous quote about American diplomacy: "You Americans never do anything simply stupid. No, you only do enormously complex stupid things, that make the rest of us wonder if we might be missing something." Shortly, I began to notice that every time I read some perplexing bit of economic nonsense that fretted my brow with the elusive search for its meaning, the author turned out to be one Stirling Newberry.

Now, lots of economics writers, especially those found on political sites, make claims that are wildly exaggerated, misleading, or frankly untrue. But the errors are generally all of a piece: they distort reality in order to support their ideological biases. Not so Mr Newberry. He distorts reality for no apparent reason. His grandiose fantasies are Art for the sake of Art.

The essential insanity of the last decade has been this - by creating a vast dollar glut, the United States has managed to create an inflationary rev up of the world economy. By moving much farther up the curve of diminishing returns of oil production, it has manged to create a small amount of extra growth, and a great deal of extra profit and ownership for those involved in the oil production.

The back end of this is flooding the middle east with dollars, which allows theocratic, dictatorial and criminal regimes to fund various destabilizing activities. Both the US invasion of Iraq and the Israeli invasion of Lebanon were the second part of the insanity - that the brute military instrument could be used to deal with the second order effects of the dollar glut. The continuous failure of this policy benefits both extremes - both the oilarchies which can fund radicalism, the militarism of the right wing, and the conflict between the two which persuaded ordinary people that they must choose sides.

His writing calls to mind my very favourite piece of English literature: Mark Twain's A Cure for the Blues. Mr Twain's description of G. Ragsdale McClintock fits Stirling Newberry so perfectly that I half expected to find the ghost of Samuel Clemens breathing over my shoulder as I read, gathering notes to transmit, perhaps in a dream, to his younger self:

No one can take up this book and lay it down again unread. Whoever reads one line of it is caught, is chained; he has become the contented slave of its fascinations; and he will read and read, devour and devour, and will not let it go out of his hand till it is finished to the last line, though the house be on fire over his head. And after a first reading he will not throw it aside, but will keep it by him, with his Shakespeare and his Homer, and will take it up many and many a time, when the world is dark and his spirits are low, and be straightway cheered and refreshed. Yet this work has been allowed to lie wholly neglected, unmentioned, and apparently unregretted, for nearly half a century.

The reader must not imagine that he is to find in it wisdom, brilliancy, fertility of invention, ingenuity of construction,
excellence of form, purity of style, perfection of imagery, truth to nature, clearness of statement, humanly possible situations, humanly possible people, fluent narrative, connected sequence of events--or philosophy, or logic, or sense. No; the rich, deep, beguiling charm of the book lies in the total and miraculous ABSENCE from it of all these qualities--a charm which is completed and perfected by the evident fact that the author, whose naive innocence easily and surely wins our regard, and almost our worship, does not know that they are absent, does not even suspect that they are absent. When read by the light of these helps to an understanding of the situation, the book is delicious--profoundly and satisfyingly delicious.

. . . He liked words--big words, fine words, grand words, rumbling, thundering, reverberating words; with sense attaching if it could be got in without marring the sound, but not otherwise. He loved to stand up before a dazed world, and pour forth flame and smoke and lava and pumice-stone into the skies, and work his subterranean thunders, and shake himself with earthquakes, and stench himself with sulphur fumes. If he consumed his own fields and vineyards, that was a pity, yes; but he would have his eruption at any cost. Mr. McClintock's eloquence--
and he is always eloquent, his crater is always spouting--is of the pattern common to his day, but he departs from the custom of the time in one respect: his brethren allowed sense to intrude when it did not mar the sound, but he does not allow it to intrude at all.

Mr Newberry has so far been largely unheralded, and I gather, unrewarded, for his labours on our behalf. So let me be perhaps the first to say: bravo, sir! Well done! You will the world an infinitely richer place than you found it. And kudos to Josh Marshall, for having the courage to introduce some comic relief into economics coverage.

Department of very bad science

Consider this scary scenario from the New York TImes article on human growth hormone:

“My mother wanted to be healthy,” says Erick Schenkhuizen, a financial planner in San Diego, whose mother, Hanneke Hops, an avid tennis player and runner, began taking almost daily injections of H.G.H. in 2003, at 56. Her prescribed dose, like those for most patients at anti-aging clinics, was designed to raise the hormone level back to where it had been years earlier. She lost 16 pounds in two months and raved in The San Francisco Chronicle that the drug “makes me feel good.” Seven weeks later, she was diagnosed with multiple inoperable tumors in her liver, pancreas and ovaries, and seven weeks after that, she was dead. Was there a connection between the hormone injections and the cancer? “I don’t suppose we’ll ever know,” Schenkhuizen says. “But my mother questioned it. I question it.”

The reporter, of course, doesn't question it, which is a real pity, because the idea that someone developed inoperable cancer with widespread metastes in less than four months is--at least as far as my knowlege of cancer goes--completely idiotic. Cancer can be very fast moving, but it is not that fast moving. The reason people often die shortly after diagnosis is that some cancers, like ovarian and lung, generally don't make themselves known until they are just about to kill you.

Bleg

I'm pitching something on blogs--economics blogs, in particular--and so I'd like to do a (very) elementary and unrepresentative reader survey. Feel free to comment on any or all of the questions; if you don't feel comfortable posting comments online, please email them to me. If you so request, your email can be "off the record", journo speak for "I won't share it with anyone, not even anonymously". I'm just trying to get a sense of what y'all like in a blog, and what you think blogs are good for. I know what I think, but judging from my record on picking television shows, my tastes are not representative. At least, not until House and So You Think You Can Dance? came along.

1) Why do you read blogs?

2) Why do you read economics blogs, specifically?

3) What are your favourite economics blogs?

4) Even more specifically, why do you read this blog?

5) What are your favourite blog features?

6) What aspects of blogging annoy/repel you?

7) What would you like to see more of on economics blogs in general, and specifically on this one?

8) Are there things that aren't currently found on economics blogs that you would like to see?

9) If you were a vegetable, what vegetable would you be? This is our demographic control question.¹

¹ Kidding!

"Peace" keepers

Kevin Drum identifies Jacques Chirac as the wanker of the day:

Please. Chirac didn't realize before today that Hezbollah was unlikely to disarm voluntarily and might present a danger to troops that tried to force its hand?

Let's summarize: Chirac personally rammed through the ceasefire resolution; insisted that it call for a UN force; did everything he could to imply that France would contribute several thousand combat troops; but in the end is only willing to stand up a 200-man military engineering company. Because Hezbollah might shoot back. And yet he still wants France to command the overall force.

Give. Me. A. Break.

I'm having trouble wrapping my mind around the fact that apparently the most important criteria for deploying French troops, or for that matter UN peacekeepers in general, is that there cannot be any shooting involved, or even threatened. It seems the only place safe enough for either army these days is downtown Santa Monica in the tourist season. Perhaps they could be deployed in traditional national folk-dancing garb and carry little souvenir baskets of regional cheeses instead of rifles. For that matter, why call it an army? Wouldn't "Hospitality Squadron" be more in keeping with their modern mission?

Regardless of what you think of the French, or military interventions in the Middle East, this is actually a symptom of a much broader problem, which is that UN peacekeepers are pretty much completely useless, good only for dressing up a peace that both sides are already committed to. If and when the shooting starts, the blue berets refuse to get involved, because they don't want to get shot at. In the case of the Middle East, right-wing bloggers have interpreted their refusal to fire on terrorist groups as a symptom of anti-semitism, but in fact as I understand it the UN forces are equal opportunity equivocators, refusing to confront groups of any colour, creed, or historical enemy if they believe that doing so will put their troops in danger. See Rwanda for details.

They're peacekeepers, said an acquaintance indignantly, when I pointed this out. (Her hubby works for the UN) Well, yes, and so are the NYPD. Part of keeping the peace involves shooting, or threatening to shoot, people who refuse to be peacable. Driving around in trucks with your weapons held in a menacing manner is not sufficient. If we are not goint to make make a credible effort to maintain the peace by the strategic application of military force, then we should withdraw the troops and send the cheese baskets instead. Militia members can always use a good source of protein.

Do the right thing

Boy, did I get a lot of hostility when I suggested that travel probably brings more happiness, on average, than buying a more expensive car or television.

Now happiness hawk Will Wilkinson explains why a very similar argument from happiness guru Daniel Gilbert (whose book I highly recommend) is likely to be true:

Two points. (1) Market egalitarianism. Qualitiative differences between cheap and expensive consumer goods is almost nil. There is almost no experiential difference between a cheap TV and a “nice” TV. If Deadwood is good on a $2000 plasma screen on HBO, it’s 98% as good on your sister’s giveaway used 19″, a $35 DVD player, and Netflix. The extra expenditure buys almost nothing in terms of the quality of experience. Same with the music. For $4.95 a month, I can get I’m guessing 75% of of [your] CD collection on Yahoo. Capitalism make money worth much less when it comes to manufactured non-positional goods. (2) Adaptation. The mind is a novelty whore — a change detector. Consciousness loses its grip on the added quality of a premium picture, sound system, etc., very fast. The cheap, almost perfect substitute for an expensive stereo is a cheap stereo. The cheap substitute for an exquisite meal at the best restaurant in Paris is… what? IHOP in Arlington? A great memory and a great story is an ongoing flow of positive experience. Gilbert is right.

Oh dear

Oh dear, oh dear, oh dear:

As everyone knows, Northwest is in quite a bit of trouble, and its bankruptcy restructuring has been far from smooth. Every other day there's a hint of a possible strike. Realistically, they should probably just pull the plug on the company, though we thought that about half of the airlines that are now profitable. So as the company is set to make major layoffs, it kindly handed out a booklet telling employees how to deal with being laid off (their version of severance). For some reason, people didn't take kindly to this tip: "Don't be shy about pulling something you like out of the trash."

The Market for Professors, 2

A while ago I took exception with the notion that leftist academic thought produced leftist popular sentiment because I took exception with the notion that academic thought had much impact at all.

Let me be clear, I don't think this is a bad outcome. A university is a wonderful place for a Marxist, certainly much better than Government, and if the Academy has decided to be the mechanism by which these folks are kept of the streets and given warm, happy homes, that's fine by me.

Bryan Caplan asks: "What would happen to policy if the average academic were as libertarian as the average GMU economist?" He answers that in the short term -- nothing, but in the longer term, the better libertarian ideas would be adopted and they would be left with pushing their worst ideas (just as leftists in academic do now).

Maybe, but the data (lousy as it is) says otherwise. As Bryan points out, we have "progressive income taxes, Social Security, Medicare, discrimination laws, etc." which are the major left wing ideas. But last I checked, Social Security began in 1935, Medicare and Medicaid in 1965, the Civil Rights Act in 1964. Most people claim that the Academy turned left in the 60s as well, which would argue that whatever broader cultural forces that produced Medicare, Medicaid, and Civil Rights *also* put leftist professers in power, not that leftist professors gained ascendency and *then* produced Bryan's list of leftist policy.

If you want to see why people think leftist policies are a good idea I would not bother with schools or universities, I would simply look at home. My mother taught me that it was good to share, and to look out for those less fortunate than me.

Why do conservatives win elections?

Tyler Cowen links to a paper suggesting that it's because they appeal to a broad range of moral intuitions.

And Ross Douthat makes an excellent point about the Reagan revolution--and current analyses thereof:

So apart from foreign policy, we have right-wing racism and left-wing identity politics, problems in the economy, and the generalized "decline of the FDR coalition" offered as explanations for the breakdown of the Democratic majority. Of course all of these were important factors, but do you notice anything missing here? Like, say, the explosion in the crime rate during that era, and the utter failure of the liberal governing class to figure out how to deal with it?

I don't mean to single out Matt or Drum here, but the more I read about the period, the more convinced I become that the collapse in public order that began in the early sixties and continued all the way through to the 1990s is the single largest factor in explaining the breakdown of the New Deal-through-LBJ Democratic coalition. And yet in nearly every liberal account of the period, the stunning crime wave tends to be glossed over in favor of talk about the GOP's racial strategies (which were real enough, but mainly piggybacked on perfectly-justified fears about rising crime), or the failure of the Scoop Jackson Democrats to keep their party hawkish, or the slowing economy, or what-have-you.

In part, I think, this reflects the fact that people who write books about history and government and politics tend to be more interested in foreign policy than in crime statistics, so when they reach the early 1970s they're more likely to take up liberalism's hawks-versus-doves debate than liberalism's inability to keep America's street and homes safe from a spiraling wave of killings, thefts, rapes, and burglaries. In part, it reflects the fact that the hawks-versus-doves debate is still with us, whereas conservatives more or less routed liberals on the question of whether, say, building more prisons might be a good way to go about combating a sudden spike in the murder rate. (Answer: it is, though it has some pretty awful side effects.) And some of it reflects the fact that, then as now, liberals are more comfortable attacking conservative racists, real and imaginary, than they are talking about the actual irruption of lawlessness that made Nixon and Reagan so appealing to the working-class Americans who actually had to live in failing neighborhoods and unsafe streets.

Anyway, I don't actually have a huge point here, except that the explosion in crime was really quite amazingly bad - worse, I think, than many people today (particular the upper-middle-class people who write books and articles and blog posts) seem to remember - and the response from the liberal governing class was quite amazingly incompetent. (Between 1960 and 1970, for instance, the crime rate doubled, but the total number of incarcerated lawbreakers actually fell. You know, because we were going to tackle all those root causes instead . . .) And in a certain sense, given that preserving public order is such a basic function of government, it's remarkable that the Republicans of that era weren't able to make more hay out of the issue than they did.

Certainly, I have to work hard to remember just how bad things were when I was growing up in Manhattan. I was mugged for my lunch money in the girl's bathroom of my public grammar school (one of the best in the city!) There were prostitutes in my middle class neighbourhood on the Upper West Side. I wasn't allowed to take the subway at night--something I routinely do now, without me or my parents worrying. When I think of my early childhood, I remember a tableaux from the intro to Good Times--everything gritty, hopeless, and covered in grafitti. Some of this is projecting back the images from the movies onto a decade I don't remember too well. But those movies were reflecting something real: a collapse in public order that turned Bernard Goetz into a folk hero.

The Market for Professors

Miron asks

why is liberal dominance of academia a problem given that it represents a market outcome? That is, if liberal academics are so bad, why does the market support so many of them? Why is there not a demand for conservative universities? If one believes markets do things right, in what sense is the liberalism in academia excessive?

But strangely, Miron doesn't consider the answer that flows directly from his blog's inaugural premise. Namely: Leftist professors promote leftist policies, leftist policies are largely contrary to libertarianism, and are therefore socially harmful.

While I acknowledge that left-wingers are overrepresentation in academia, I think this is an efficient market outcome and I think that Bryan's claims of the harm from leftist policies is overblown.

This is not because I think leftist policies aren't harmful, but because the idea that we would all live life in the best libertarian traditions if only those evil professors had not brainwashed us with Marxist propaganda is plainly nonsense.

Firstly, academics are broadly ignored (ask any academic) so it does not matter what they say at all. Occasionally the marginal idea escapes the academy and has an impact, but by and large students just want to graduate, academics just want to be insulated from the real world, and the real world wants to be isolated from loonies who go on about how great Che Guevara was. In this light, the Academy is a very efficient mechanism, creating surplus for all.

Secondly, I don't know why people like to ascribe the ills of the world to left-wing ideology, right-wing ideology, or any kind of ideology at all. It's not like humans weren't making dumb and violent decisions long before "ideology" was invented, or that humans will not make dumb and violent decisions if ideology was magically erased. The issue here is that humans intrinsically do dumb and violent things, and the notion that this is somehow driven by ideas cooked up by some guys sitting in an Ivory Tower, writing papers that no one else reads, is bogus. Primitive tribes in the Amazon regularly slaughtered significant %s of neighboring tribes, and they didn't even have paper.

A long time ago I read a fat book detailing the history of philosophic thought, and how the prevailing ideas of the times (detailed in books written by academics) played out in the real world. I always thought they got their causality backwards. Academics read things by other academics, so they assume that other people do too.

Free the verbs!

One of my favourite things about the Spanish language is that practically nobody ever does anything bad. If your roommate breaks your hairdryer, she'll use the reflexive "Se rompio", which literally translates as "it broke itself". I'm sure the extensive use of the passive voice could function as some sort of meta cultural commentary . . . if I were cultured.

In Irish, the passive formulation are called "free verbs", and Language Log has a great post on them:

. . . the term "free verb" has a lot of potential. Almost all the common "free" terms have positive lexical associations, even when their referents are controversial: "free enterprise", "free jazz", "free love", "free market", "free software", "free speech", "freestyle", "free thinker", "free verse", "free will", "free world". The only (partial) exceptions that come to mind are "free loader", "free lunch", "free radical" and "free ride". And the trail to "free" renaming has been blazed by "liberty cabbage" and "freedom fries". The direct and vigorous free verb. Liberated from the accusative tyranny of the object. I like it.

Words just want to be free, man . . .

New York, meet your next governor

Professor Bainbridge has the lowdown.

Byran Caplan says it all

If he weren't happily married, I would have a huge blog crush on Bryan Caplan, who is really, really clever. For example, he points out the underlying flaw in Jeffrey Alan Miron's question:

The facts raise an interesting question, however, and one that should trouble right-wing critics of the current situation: why is liberal dominance of academia a problem given that it represents a market outcome? That is, if liberal academics are so bad, why does the market support so many of them? Why is there not a demand for conservative universities? If one believes markets do things right, in what sense is the liberalism in academia excessive?

Bryan wisely replies:

But strangely, Miron doesn't consider the answer that flows directly from his blog's inaugural premise. Namely: Leftist professors promote leftist policies, leftist policies are largely contrary to libertarianism, and are therefore socially harmful.

The problem isn't that the market has failed for college students or their parents. They're basically shopping for a higher salary after graduation, and they typically get what they pay for. No, the problem is that - as a side effect of their main function - universities pollute the intellectual culture for everyone, leading to worse policies.

The broader lesson is that libertarian reformers - or at least consequential libertarian reformers like Miron - have to believe that the market for ideas is somehow inefficient. If it isn't, what are they complaining about?

That was just what I was going to write if I hadn't been busy helping my Dad move into his new apartment. No, seriously. I'm smart too, you know. Why, sometimes in my spare time I prove Riemann's hypothesis, just for fun. I just haven't had time to blog the answer yet.

LIBERTARIANS ON IRAQ: One of the more interesting and lively debates on Iraq I've read in a long time.

A LITTLE WHILE BACK the Department of Education produced a study indicating that private schools don't do much better than public schools at educating kids. Many people took this as a sign that vouchers won't do much good. Stuart Buck points out the problem with this:

The Department of Education study -- at most -- tells us what the nationwide average is. It tells us that if you average together the best and worst private schools (from the $20,000-a-year boarding school to the fly-by-night operation that just opened up), and the best and worst public schools (from the toniest suburb in Connecticut to the worst inner-city school in Detroit), the nationwide average is roughly similar.

But children who are likely to be eligible for vouchers do not attend schools that equal the nationwide average. To the contrary, as of the 2006 edition of The Education Gap, by William Howell and Paul Peterson, every publicly-funded voucher program in the country was aimed at 1) students from low-income families, or 2) students who attend "failing" public schools, or 3) students who have no public school in their community. [One sometimes comes across people who believe that vouchers are intended to help rich white people pay for expensive private schools. Nothing could be further from the truth.]

So: In a typical case, a poor black student attending a failing inner-city school with a 50% drop-out rate is offered a voucher. Is it any use to that student to be told that she should be satisfied with this failing public school, because, after all, if her school's performance was averaged with that of a public school in a ritzy white suburb of New York City, it would then be similar to the nationwide average of private schools? How on earth is that message relevant to her situation? The fact is, her local public school is failing her needs, and a private school (such as a Catholic school or something like this) may be far better for her.

The voucher opponents might respond that those poor inner city kids are more likely to end up at a fly-by-night shop than the expensive prep school I attended. The problem with this argument is that vouchers aren't mandatory; if the only private schools available are worse, then the kid can stay right there in their public school.

Ignorant parents are a problem, of course--but the dirty little secret of urban public schools is that kids attending public school are just as shortchanged by having ignorant or uninvolved parents as kids attending private school; perhaps more so, because parents who have to hand a check to the school, even a government check, have more incentive to shop around. The New York City school system works very well for the small minority of middle-class parents who have the time and knowlege to secure resources for their kids. The poorer and darker skinned are left with the dregs.

At least vouchers offer the possibility that some unlucky kids might end up with a decent education. The public school system, which transfers teachers out of poor schools into more desireable ones in wealthier neighbourhoods as soon as they are dry behind the ears, certainly isn't doing it.