Asymmetrical Information

From the desk of Mindles H. Dreck:

A new plan for the WTC

This plan would be an improvement for my neighborhood. Certainly compared to what it looks like now. Courtesy of Libertarian Rant.

From the desk of Jane Galt:

The Only New York Times

The Only New York Times Editorial Today I Agree WIth

The Times says that analysts were the accomplices in Enron's rise and fall. The analysis is dead on -- talking to classmates about their experience with research analysts shows clearly that the fox is guarding the henhouse.

I think the problem isn't so much that the banks sold their analysts verdicts in order to get IPO and M&A business -- although I think it's pretty clear that they did. The editorial points out that banks who wanted to do business with Enron had it made clear to them that they'd better not probe too deeply into the financial statements. I'm sure that the banks will pay in plaintiff's verdicts and legal fees for their decision to go along.

Even if this weren't the case, however, the analysts would STILL be ridiculously optimistic about companies, because their stock in trade is information on those firms -- and if they aren't optimistic, they don't get access. Buy side is probably better in this regard -- but not too much better, because the companies can always cut off the flow, and the analysts know it. If you're specializing in an industry, you can't afford to piss off a major player, buy side or sell side.

Personally, I think the whole process of banks selling research reports should be abolished (although this would put a number of close friends out of work). The chinese wall has not only been breached, but has a welcome mat in front of the opening, and those who don't know better take the reports seriously. The final point made by this editorial is that while banks feel bad now, what is truly remarkable about the big banks is that they never learn from the past. Sure as the sun rises tomorrow, when the market rises again, there will be Abby Cohens and Mary Meekers ready to help us believe that there really IS a Santa Claus, one that dispenses money without requiring effort or thought to earn it. WHile I am generally not a fan of government regulation, I think that in this case, we must change the system or be doomed to repeat its mistakes. Either keep the big boys from rooking the little old lady in Paducah with phony reports -- or make them print "Caveat Emptor" on the cover.

From the desk of Jane Galt:

Home for the Holidays This

Home for the Holidays

This editorial in the New York Post points out that our boys & girls overseas won't be home for Christmas, and urges us to write postcards for them. A good idea, and I'm certainly going to try to make the time.

I don't know why I pointed this out, except that it put me in mind of Bing Crosby's song "I'll Be Home for Christmas" -- and I realized for the first time, what it meant to a nation of people who were missing large chunks of their family during the holiday season. After all this, World War II nostalgia is simultaneously less romantic and more moving.

From the desk of Jane Galt:

WTC Tidbit of the Day

WTC Tidbit of the Day

The other day as I was driving one of the senior guys around the site in a gator, the subject of the weather came up. It has been unseasonably warm here, and those of us who will be suffering in a trailer this winter (especially those of us who are sitting directly beneath the outtake duct, and are thus chilled by the draft even on relatively warm days) are extremely grateful for the respite.

"You know, Meg, I'm not really a religious man," he said (He DID! I know it sounds like something from a Reader's Digest anectdote, but there you are, he said it. And it sounded, coming from him, not at all hokey.) "I wish I were. But I can't help but thinking that after everything -- the disaster, and the plane crash [a large number of people here live in Rockaway; a majority have relatives there. This man's son was among the police stationed here, and then in Rockaway when it happened. He's seen more bodies in the last months than anyone should. So the plane crash, for us, feels very close.] -- I can't help but think that God's giving us a break when we need it."

The same thought had passed through my mind several times, although I, like he, am not as religious as I could be. A priest once told me that "God never gives any of us a cross larger than we can bear." Right now I am agreed that the cross was almost larger than any of us could bear, together -- and that feeling the sun on your face at the beginning of December feels even to this agnostic, like a little bit of God's grace.

From the desk of Mindles H. Dreck:

Fewer civil liberties = lazy law enforcement

Alex Knapp has some interesting commentary about civil liberties and law enforcement on his site Heretical Ideas. It's good, provocative stuff, even though it was apparently written at 2:48AM. Go read it, but here's an excerpt:

It's not just that denying civil liberties is wrong. Denying civil liberties doesn't stop terrorism. In fact, the opposite is true. As the government adopts more oppressive policies, more people are likely to be made angry enough to want to commit acts of terrorism. Moreover, denying civil liberties makes law enforcement lazy Face it, it's a lot easier to detain someone because of their last name and an expired visa than it is to actually do the investigative work needed to infiltrate and/or monitor terrorist cells It's a lot easier to tap everyone's email than it is to sift through countless numbers of leads and evidence. It's a lot easier to conduct random searches and confiscate toenail clippers than it is to track down stolen blueprints. But when law enforcement is allowed to take the easy way out, being human, they will. And as law enforcement gets lazier, it becomes easier for criminals to commit crimes and for terrorists to cause terror.

Here's the bottom line, and feel free to quote me on this: Freedom is not only moral, but practical. When law enforcement officials are prohibited from violating individual liberty, crime is lower, because resources are channeled solely towards the capture of criminals or the prevention of criminal acts. When those protections begin to disappear, law enforcement activity gets channeled into unproductive areas that do nothing to catch the real bad guys.

I am always intrigued by counterintuitive logic of incentives like the "fewer civil liberties = lazy policing" suggestion above. Many businesspeople will tell you that if you want to get something done, give it to a busy person. Scarcity begets abundance. Sometimes tools are incentives, people who do more, do more and vice versa.

We have to think hard about where to draw the line on this, and Alex has given us another aspect of the debate to mull over. Vive le blog!.

From the desk of Mindles H. Dreck:

Bush approval ratings; the "third rail"; career opportunities for bisexual Sicilian gigolos

A trial balloon on social security privatization appears in the news today. Reductions in benefits appear to be on the table:

"We're talking about as of 2009 beginning to hinge or index the growth of the initial benefit, the benefit that you start off with when you retire, to a price inflation index as opposed to a wage index," said Commission Co-chairman Richard Parsons of CNN's parent company, AOL-Time Warner. "So that means that as we go forward, under that particular option, the rate at which Social Security benefits would grow over time, once you initially retire, would slow."

Prices generally rise much more slowly than wages.

Generally, but not always (1973-1981?). Should we assume inflation risk in the plan? Many have argued that inflation-linked Treasury Bonds were an entitlement. We should be careful about exchanging risks.

The reason it is only realistic now to examine changes in benefits is because of serious design flaws in the original Social Security Act. SSA never contemplated our impending demographics (workers to retirees). Perhaps that should serve as a warning about government's ability to design things that work flawlessly thirty years from now. Nonetheless, it is interesting to see some sparks flying from the third rail. More to come, I'm sure.

Incidentally, our projected worker-to-retiree ratio in the future is bad (2025 = 2.5:1, 2050 2.3:1 vs. 4:1 now), but Spain, Italy and Japan have it dramatically worse, with projected 2050 ratios of of LESS THAN 1:1 (ugh). More intriguing, and less known, is the comparison of pension promises to funded plans, which is a true reflection of each economy's ability to pay its retirees comfortably:

The U.S. promises 40% of final pay, on average, for retirement. Funded pension assets as a % of GDP are 82%
Spain promises 82% of final pay, on average, for retirement. Funded pension assets as a % of GDP are about 2% of GDP
Italy: 80% vs. 7%
U.K.: 42% vs. 94%
France: 70% vs. 5%
Canada: 34% vs. 52%
Japan: 60% vs. 35%

What you see above is no less than the potential implosion of the promises of the welfare state in France, Italy and Spain. They'll adapt, but it will be gutwrenching. The figures above come from SED inc. They have a nice chart, but its a proprietary pdf, so I can't give it to you. Woody Brock's comment on the above figures is:

The future politics of hope and despair. Better a future career as a Sicilian bisexual Gigolo than as a continental European Prime Minister trying to please the voters!

Who says economists don't have a sense of humour.

Note: interesting to see CNN quote its parent company executive. Well, he is co-chairman of the commission.

From the desk of Mindles H. Dreck:

The Missing Links

MTZ makes its debut on Dynamist today, an honor indeed. I have also had a look at Liberty Blog by Christopher Pellerito, which looks interesting. Chris was also..er..moved by Quindlen's anti-consumerism, calling it the first Bah Humbug column of the season. Damn, wish I'd thought of that.

From the desk of Mindles H. Dreck:

It's still dark outside, but here comes the sun...

How good a day can it be when you wake up to hear about the death of George Harrison? Of all the Beatles, Harrison and Lennon had the most "restless minds".* Popular music needs more, not less, of those. Sleep well, George.

*Phrase courtesy of SDB

From the desk of Mindles H. Dreck:

Anna Quindlen would find this depressing...

But Afghans are getting their TVs and satellite dishes back into working order (tsk, tsk. They should be reading!) CNN has some cheerful streaming content of Afghans watching what appears to be Cleopatra and dusting off boxed TV sets. The footage is on CNN's home page in the "video" section. Anyone know how to link these directly?

Just for the record, I still think it's great.

From the desk of Mindles H. Dreck:

Trouble in pre-paradise?

This circulated to me by email, provenance unknown. Reading about Tora Bora made me think of it again:

From: Bin Laden, Usama
Sent: Monday, October 22, 2001 8:17 AM
To: Cavemates
Subject: The Cave

Hi guys:

We've all been putting in long hours but we've really come together as a group and I love that. Big thanks to Omar for putting up the poster that says "There is no I in team" as well as the one that says "Hang In There, Baby." That cat is hilarious. However, while we are fighting a jihad, we can't forget to take care of the cave. And frankly I have a few concerns.

First of all, while it's good to be concerned about cruise missiles, we should be even more concerned about the scorpions in our cave. Hey, you don't want to be stung and neither do I so we need to sweep the cave daily. I've posted a sign up sheet near the main cave opening.

Second, it's not often I make a video address but when I do, I'm trying to scare the most powerful country on earth, okay? That means that while we're taping, please do not ride your razor scooter in the background. Just while we're taping. Thanks.

Third point, and this is a touchy one. As you know, by edict, we're not supposed to shave our beards. But I need everyone to just think hygiene, especially after mealtime. We're all in this together.

Fourth: food. I bought a box of Cheez-Its recently,clearly wrote "Osama" on the front, Consideration. That's all I'm saying.

Finally, we've heard that there may be American soldiers in disguise trying to infiltrate our ranks. I want to set up patrols to look for them. First patrol will be Omar, Muhammed, Abdul, Akbar, and Richard.

Love you lots,

Usama

From the desk of Jane Galt:

Just talked to one of

Just talked to one of my friends from school, who has unfortunately shared my fate with DiamondCluster.

It seems that Merril Lynch has laid off a considerable portion of their associate class, including the entire telecom group. I don't know how many of my friends and schoolmates are affected yet, but I'm sure quite a number. Considering the motto that it is a recession when your brother-in-law gets laid off, a depression when you are, this is a Great Depression.

From the desk of Mindles H. Dreck:

Huge traffic day for MTZ

A new record, over 2000 visitors today by 4:30 pm. I am honored that you enjoy my scribblings. Thank you. And thanks to Matt Welch and Glenn Reynolds. The Quindlen piece is about four posts down, here.

From the desk of Mindles H. Dreck:

What is a burqette?

I have two buttons programmed on my car radio dial. In the morning I switch between NPR news and Howard Stern. Some kind of media bipolar disorder. Anyway, Howard Stern featured a guest today by the name of Theodore Green, who claims to be a tenured professor of anthropology at a California university. A little googling, along with what he said, suggests he's not.

Green said the "Taliban sent us a message from God by bombing the World Trade Center". He believes we "over-celebrate the female form or disparage it" and we are being warned. Furthermore, he's designing a line of clothing (!) based on Burqas (sp?) but "not just in blue". He said they weren't too different from Mu-Mus. Except for the head covering I suppose.

Funniest thing this loony said? He is also designing a "Burqette". Talk about a self-negating concept. The Burqa is designed to cover from head to toe. How could it be made diminutive (-ette)? What on earth could a burqette be?

From the desk of Mindles H. Dreck:

More on Bjorn-hate

Nice article by Ron Bailey. (from Andrew Sullivan). Boy, the facts-be-damned coalition of the left is scared of him. One supposed reason not to cite his book?

As part of that campaign, the WWF and WRI have sent a joint press release to every member of the Society of Environmental Journalists warning them “to exercise caution in reporting on Bjorn Lomborg’s new book.” Why? Among other reasons, the book “has been heavily publicized and championed by conservatives.”

Oh dear. Of course we "conservatives" (I reject that label, I'm a liberal in the classic sense of liberalism - free markets free people, not welfare state) cite Christopher Hitchens all the time...gleefully!

From the desk of Mindles H. Dreck:

Microsoft settlement another bad precedent

Chester Finn writes about the three "dubious features" of the planned Microsoft class action settlement today (no link - on the site for subscribers only). The settlement involves Microsoft providing over a billion dollars of free software and reconditioned computers to schools

1) It "clothes that ignoble species known as the plaintiffs bar lawyer in the spiffy garb of socially conscious policy activists" by turning a class action into a school fundraiser, he means.

2) Schools are Apple's dominant market, and this is sure to give Windows products a natural toehold - in a sense it is "dumping"

3) Computers won't necessarily improve schools

I'm sympathetic to the second and third arguments. There's a lady across the street from me who turned down a job teaching in the Trenton schools. She said she wasn't energized to deal with the screwed-up school system there. Her example was that they were giving away iMacs to the students, but couldn't get the parents to come pick them up! School improvement will come from innovation in HOW they do things more than with how much resources they do the same things. And let's face it, the schools that get the free Windows stuff will become Windows users.

But one of the real issue in this settlement for me, above and beyond the "dressing up" of the plaintiffs bar, is the way it perpetuates the awful shakedown racket that our civil courts have become. Torts are intended to compensate VICTIMS. In the class action business, the awards (after expenses) are often very small per claimant, as they are in this case. So the claimants don't bother to do the paperwork to claim the award. By the way, guess where a lot of that unclaimed money goes? Into the coffers of Consumers Union/Consumer Reports. As I have said in other posts, people do what they are incentivized to do..including rolling over SUVs if it pays the bills.

This developed and profitable industrry of using legal action to redistribute money to someone other than the victim, for whatever purpose, is a complete bastardization of the Tort idea.

From the desk of Mindles H. Dreck:

In Brazil, this is what they think we are teaching in junior high?

We have a wonderful Brazilian exchange student/Au Pair living with us. She received this image of a supposed junior high text book page. It's circulating by email. Take a look at it - it says some really offensive things while talking about rainforest preservation. It also says them in less than perfect English so it's surely a hoax. It seems her friends all believe it is real. Have any of you seen it? Supposedly Introduction to Geography by David Norman. An excerpt:

..it (FINRAF)was part of eight countries which were, in the majority of cases, kingdoms of violence, drug trade, illiteracy and a unintelligent (sic)and primitive people....the possession of these valuable lands to such primitive cultures and peoples should condemn the lungs of the world to disappearance and full destroying (sic) in few years (sic again)

What evil moron created this? Please let me know if you have any input.

From the desk of Mindles H. Dreck:

What Anna Quindlen and Jerry Falwell have in common

"Honestly - you shouldn't have" is the title of Anna Quindlen's toxic "The Last Word" column in Newsweek, which reads more like an entry in the "elitist killjoy of the month" contest. Since I'm writing this on a plane, I have no idea whether my kindred spirits have blogged this to death as they did David Brooks' piece condescending to Afghan cinema-goers. This article is cut from the same cloth. It sanctimoniously criticizes the consumerism of U.S. culture and gives the feeling the author is trying desperately to feel better about herself. I have enjoyed other things Quindlen wrote, so I was doubly frustrated to plow through this. Quindlen believes we shop too much. OK, but then she launches in with the self important condescension:

Uncontrollable consumerism is the watch word of our culture despite regular and compelling calls for its end….Americans spend more time shopping than reading.

There it is, the intellectual swipe. Not only is she inventing "regular and compelling calls for the end of consumerism" (notably her own, I suppose), but she has an important alternative for everyone. Well I like to read, but I'm not so high and mighty I’m going to tell other folks to do so. Especially since their consumerism is what provides income with which I buy books by…people like Anna Quindlen. Well, I'm so pleased to hear Anna's joined her growing chorus of cultural nabobs. She's got interesting company (more on that later).

Put in the context of current events, how depressing was it to see Afghan citizens celebrating the end of tyranny by buying consumer electronics?

NOT AT ALL DEPRESSING!! It was wonderful. It was GREAT! The whole point of ending tyranny is so that you can experience some personal freedom and opportunity. Do what you individually want to do as long as it doesn't involve oppressing each other brutally or blowing up thousands of office workers. Does she not remember that the Taliban had their own version of how people should be spending time? What is so morally inferior about Afghans consuming video media relative to, say, curling up with an Anna Quindlen bestseller? Eeyuck. I suppose in the 1780s she would have called Paul Revere's return to silversmithing "depressing".

The notion that we should show the terrorists who's boss by supporting this shaky shantytown of automatic-pilot consumption is as suspect as bailing out the airline industry, a business that was legendarily inept long before September 11. If the economy is built on persuading people to buy pillow shams (pun intended) or to replace the three-disc CD player with a six-disc version, then it’s the system, not the shopper, that's to blame in the event of a collapse.

The implications of this human-hating logic are so extraordinary I don't know where to start. First, she compares our general economy to the airline industry. She's right that the airline industry sucks up capital and leaves shareholders and employees with little -although it provides jobs. Because it doesn't please consumers. But the US and other free-market economies in general, which provide all these geegaws that Anna hates, have just handed us a century of progress in human welfare unlike any other; this economy has provided increases in the duration and quality of human life that would have seemed unimaginable at its beginning (Boy, I link that article a lot). And the core principle has been markets made up of actors purchasing and selling what they like. Including the awful six-disc CD player.

So apparently, Anna Quindlen thinks we DESERVE a recession for our sinful consumerism. Well, well, that's not going as far as, say, Jerry Falwell and saying we deserved to be incinerated for being unholy, but it is up there on the human-hating meter. I suppose Anna's got some cash tucked away from best-selling novels, so a recession just makes it easier for her to get a cab. For the rest of us recessions SUCK. Does she think we feel better that its "the system that's to blame". Who is the system? It's us! The system pays her salary and improves health and welfare for hundreds of millions of people. Right now, people are getting laid off around me, and its miserable for them. That's what happens in recessions, people lose jobs, break the poverty line, etc. So it may not feel good for Anna to buy a few things to keep that mall employee working, but I am going for it.

Quindlen dilutes her hatred by calling for giving money to charities instead, and then delivers the irrational conclusion:

Especially this year. You know that if those people whose family members died on September 11 could have them back for Christmas, the last thing on their minds would be a sweater or a tie. The truth is, those lost left a bittersweet Christmas gift, an indelible lesson in what really matters. If we spend our Saturdays staggering under the weight of shopping bags, we’re not honoring them, or doing the bad guys one better, no matter how much it may pump up the bottom line. We’re showing that we didn’t learn a thing, that at heart we are a marked-down nation.

In one breath she decries the argument that we are "doing in the terrorists by shopping" and then immediately argues we are "honoring the victims by not shopping." I've never seen someone reverse their logic so fast. As far as giving to charity, where does the money for charity come from, Anna? Where did Ted Turner get $1 billion for the U.N.? How did Bill and Melinda Gates create their foundation? Who are the biggest funders of relief charities? Corporate owners and stockholders. They do it with the money they make from…our rampant consumerism. And they give less when they make less, when people aren't buying. In addition to funding charities, Ms. Quindlen, these corporations provide jobs. I'm all for handouts, but jobs are better. Relief is that lump-sum transfer that her ideological soulmate Paul Krugman hates. Give a man a fish vs. teach a man to fish.

Finally, As Bernard Lewis pointed out in his prescient book (yeah, I read AND I just bought a new cool Visor Edge), it is our secularism and our materialism that islamic extremists hate. Why should I "learn" something from their actions and capitulate by withdrawing my buying power, such as it is, from the market?

As I said, its doubly infuriating hearing this sanctimonious claptrap from someone I have enjoyed reading in the past. At least this column gave me enough anger to stay distracted from my new fears about flying today, so thanks for that. But, all in all, Anna, you shouldn't have. Honestly.

From the desk of Mindles H. Dreck:

Not the grinch

It occurred to me that the prior post makes me look a bit more grinchy than intended. This is no doubt a side effect of budgeting and compensation planning, which, this year more than ever, leaves one with a grumpy kind of "now how did he do that loaves and fishes thing?" feeling. So allow me to clarify:

Like Peter Drucker, I can imagine a world where the non-profit sector is growing rapidly and is in the vanguard of productivity in the world economy. My point is that before we can enter that world of throwing good money after good, the incentive structure of governmental and quasi-governmental agencies needs to be addressed.

A free private sector has its incentives clearly aligned with maximizing profit. Profits are the lifeblood of economic growth. Economic growth, new to the world in the last 150 years, is what has created the unfathomable increases in life quality for the world. Read the links in one of my prior posts on this, particularly this article. The trouble with the private sector is that it is practically amoral. Which is why we have laws that prevent destructive behavior in the pursuit of profit. Companies that are unsuccessful in producing profit (and thus promoting the general welfare) shrink and die, which improves the productivity of our growth engine over the long run - this is what Schumpeter called "creative destruction", or what I called "humility" below.

Like the private sector, the public and non-profit sectors are dogged in the pursuit of their goals. Like the private sector, they are bureaucracies which, all else being equal, seek to be larger. Charities, if deemed unsuccessful, will dry up. Unsuccesful public agencies and NGOs will not. Unfortunately, there is no profit governor to perform the necessary creative destruction. In the perverse logic of government, a decrease in growth is considered a cut. The mere acknowledgement of a problem (as opposed to a solution) justifies permanent funding.

The agencies I question in the post below have, at least on occasion, acted as if they a) value distributing aid themselves over having it distributed at all, b) value self-promoting sensationalism over general welfare and c) value their own models and systems over general welfare improvements. I argue that these actions indicate the incentive problems of the government and NGO sectors. Which are worth examining.

From the desk of Jane Galt:

Newsflash: More Police Means Fewer

Newsflash: More Police Means Fewer Criminals

An editorial in the New York Post points out the surge in crime in New York since the September 11th attacks. No, this isn't due to the trauma of the disaster forcing otherwise law-abiding citizens to commit armed robbery in order to work off a little existential angst; the Post's (plausible) argument is that crime has dropped because the police are off hunting terrorists or working security details instead of fighting ordinary crime, and the criminals know it.

One of the hardest problems for those arguing that Giuliani (and the style of policing that his commissioners favored) was actually responsible for the drop in crime that has fostered the resurgance of New York. There were always other factors -- demographics, for example (a drop in the number of teenage boys) that his detractors dragged out, with some justification.

Now we have what amounts to a controlled experiment. We had a lot of police, now we don't. Crime has gone up. Surprise, surprise -- enforcement really does matter.

But we paid a terrible price to learn it.

From the desk of Mindles H. Dreck:

I'll have an international do-gooder bureaucracy with a side of humility.

Whenever we attempt to tame complex systems and events with contrived man-made solutions, our early attempts usually disappoint. The brilliance of the free marketplace is that we either adapt our solutions or fail ("creative destruction", as Schumpeter first said). Those individual failures can be painful. The problem with public and quasi-public agencies is these initial failures are perpetuated, sometimes endlessly, and sometimes with tragic results that go far beyond individual marketplace failures. There is so much evidence around us of bureaucracies that fail to learn from their own mistakes. It seems to be the occupational failing of such organizations to confuse intentions with results and/or accuracy.

I thought about this reading this article by Edward Luttwak (linked by Instapundit) pointing out the tendency of relief agencies to become the tool of the local warlord or corrupt regime:

That is what aid organisations do: to follow the television cameras inside conflicted countries, to obtain the publicity that keeps contribution flowing and the aid organisations in business, they pay off local warlords and mere gang leaders in transactions thinly masked as "escort fees", while feeding their warriors.

When unarmed aid operatives are handing out food and other help, men in arms are bound to be the first claimants on anything going. Aid organisations, in the odour of sanctity, thus serve as the quartermasters of civil war, as they did in Somalia most notoriously.

Pungent phrase, that, "the odour of sanctity". Kind of like the U.N. Relief agencies and global socialism proponents that were shrill critics of both the food packages and the bombing.

Luttwak's comments remind me of the ideas presented in gory detail in books I have read recently. Bjorn Lomborg points out in The Skeptical Environmentalist that the shoreline clean-up after the Exxon Valdez appears to have done more damage than good:

Pressure-washing the coast, however, killed much of the marine life. By way of experiment, some stretches of beach were left uncleaned, and it transpired that life there returned after just 18 months, whereas it did not do so to the cleaned beaches for three to four years (footnote). The oil experts had siad this would be the case time and time again during the first few months of the cleanup - but in vain, as this did not harmonize with the public view of things, i.e. that c acleanup had to be better for the animals. As Scientific American wrote, "the public wants the animals saved - at $80,000 per otter and $10,000 per eagle - even if the stress of their salvation kills them." (footnote)

As Lomborg points out in many other chapters, most notably the one on Global Warming, it goes beyond "the public wants" to "the model says". Bureaucies construct enormously complicated models to predict the behaviour of yet more complicated systems, and then believe that their intentions make their models correct. Therefore, spending billions and billions of dollars that might otherwise have been invested in creating mundane jobs is worthwhile for greenhouse gas reduction. Yet it is clear, according to Lomborg, that global warming models may not be accurate enough to justify the enormous investments demanded by the most shrill advocates. Then he goes on, at length, to show that even taking the most credible models at face value, the cost of the Kyoto protocol may still not be justified against the impact on global GDP.

William Easterly spends the entirety of The Elusive Quest for Growth (there's that misplaced modifier again) showing how the World Bank and IMF have granted enormous amounts of loans and aid to various countries with no significant growth explained by their own policies. The basic model used by the World Bank for most of the postwar period is one of "capital fundamentalism" which suggests that the proper mix of labor and capital inputs can be divined (by the World Bank of course) and plugged with aid:

Many times over the past fifty years, we economists thought we had found the right answer to economic growth. It started with foreign aid to fill the gap between "necessary" investment and saving. Even after some of us abandoned the rigiditiy of the "necessary" investment idea, we still thought investment in machines was the key to growth. Supplementing this idea was the notion that education was a form of accumulating "human machinery" that would bring growth. Next, concerned about how "excess" population might overwhelm the productive capacity of the economy, we promoted population control. Then, when we realized that government policies hindered growth, we promoted official loans to induce countries to do policy reforms. Finally , when countries had trouble repaying the loans they incurred to do policy reforms, we offered debt forgiveness....

The facts contradict the capital fundamentalists....If transitional capital accumulation were the main source of growth differences, then countries should have very high rates of return to capital at the beginning. They do not. If transitional capital accumulation were the main source of growth differences, we would expect the poor, capital-scarce countries to grow faster than the rich as they respond to these high returns to capital. They do not. If transitional capital accumulation were the main source of growth differences we would expect capital accumulation to explain a lot of the cross-country differences in growth. It does not. Trying to grow by capital alone was another useless panacea.

These expenditures as well are dictated by models built by bureaucrats, who then slavishly stick to them even as they are proven wrong. NGOs fall into a similar trap from the relief agencies criticized by Edward Luttwak above. They become part of the problem, supporting corrupt thugocracies instead of promoting the welfare of the citizenry. Easterly points out, similarly to Luttwak, that Petty dictators need hordes of starving people to show to the international financial organizations in order to justify...more loans and aid. The fungibility of money allows the government to put the money to other illegitimate uses.

The theme of Easterly's book is "people respond to incentives" - people do what they are paid to do. If you become proportionately more famous by suggesting a global calamity with a high degree of certainty, do it. If dispensing ever larger dollar amounts of aid and plastering your annual report with pictures of starving children put on parade by third world despots just for you allows your agency to grow - do it. If you are judged by the amount of food delivered across a border, deliver it regardless of how you are used in the process. If your benchmark is the amount of people you feed, as opposed to the amount of total hunger where you are operating, then the general level of welfare is immaterial. If your museum gets more government funding based on the number of visitors, bait Rudolph Giuliani into some free publicity by featuring a poop-smeared Madonna.

Bureaucratic elites pursuing altruistic goals have a mixed track record, simply because they often end up pursuing their own interests. Ironically, we have found that some of the most effective institutions and traditions of the world, such as the markets and democratic government, are sustained by many actors independently pursuing their own self-interest with little "odour of sanctity". This is because when you pursue your own self interest, you check to see if its working every now and then. Then, displaying your human ingenuity, you adapt until you either a) your interests are at last advanced or b) you fail beyond recovery.

I argue not that these agencies should be abolished, but that we radically change the way they are judged and funded. In my professional community (investment managers) there is ample evidence of our failures to model and anticipate complex markets. We receive a dose of humility almost daily. And our customers stand ready to deliver a report card on our results. The markets themselves almost always work. Adam Smith called it the "Invisible Hand". I think George H.W. Bush was trying to apply that idea of accountability to a market of actors to the non-profit world when he debuted his much-ridiculed "thousand points of light" idea. He was right, a little more market-like results-based humility would serve the world of government and NGO bureaucracies well.

To come back to the warblogging theme, let the NGOs always ask themselves, how many, in total, could feed themselves or be fed before? How many, in total, can feed themselves or be fed now? And in each case, at what expense to their freedom and personal safety did they obtain this food? Surely, now that women are allowed to work, more can feed themselves. And what sort of threat is posed by the regime implicitly supported by such aid? Can aid be distributed more effectively by the U.S. military which can airdrop into remote areas and provide its own protection? If freedom spawns growth and growth feeds more mouths, shouldn't we work towards greater freedom?

Well, perhaps that last one is too much to ask...

From the desk of Jane Galt:

Gray Lady Watch Here's a

Gray Lady Watch

Here's a fascinating experiment: what do you get when you search The New York Times for Michael Bellesiles (author of the widely-lauded and now apparently thoroughly debunked book on gun ownership in early America which purported to prove that the "gun culture" didn't emerge until the Civil War)?

A list of positive reviews, is what, with no mention of the fact that the Boston Globe and other media outlets have offered convincing evidence that Bellesiles deliberately misrepresented facts (to put it mildly) in order to support his thesis. Nine positive reviews, no mention of the criticism. I've mentioned before that I think the Times is spending the principal, so to speak, of its reputation in order to push an increasingly obvious political agenda. So no surprise here -- but nonetheless, it makes me sad.

From the desk of Jane Galt:

The New York Post reports

The New York Post reports that the terrorists on Flight 93 deliberately crashed the plane when it became clear that they weren't going to make their objective.

Profanity is too weak.

I suppose I must have known this, somehow, and objectively there's no reason that crashing the plane into the ground is worse than crashing it into the White House -- except that it's so futile. When they crashed the plane, even in their own minds, they weren't freedom fighters trying to stage a vivid demonstration -- they were just trying to kill a lot of people because they could.

The biblical sense of justice in me says that the appropriate response is to take their families, stick them in a plane, and crash it. I have no doubt that this would effectively end terrorism against the US.

But the civilized part of me (which I hope is much harder) recoils in horror from the innocent wife or child of a terrorist experiencing what our people did. Which is why we can never do it. Because we are civilized. Because we are civilized, we don't even entertain the notion in any serious way.

I get nearly as much of a sense of biblical justice from the fact that although our civilized nature is what made it easy to hit us, it is also what will allow us to prevail against barbarians hiding in caves.

From the desk of Jane Galt:

Semiconductors poised to take off?

Semiconductors poised to take off?

Another from the WSJ: STMicroelectronics Economist Predicts Semiconductor Industry Growth in 2002. I don't buy it. According to him, growth is going to follow the classic 90's cycle:

Mr. Dauvin sees an exit to the current slump through a pickup in business spending on technology, among other things. He said companies' desire for higher productivity combined with low interest rates that encourage capital expenditures mean companies will invest in new high-tech equipment that uses semiconductors.

I think he's missing an important point: the ROI on semiconductor technology for companies has decreased. I don't know anything about the manufacturing sector, where there may be incipient demand if capital costs fall low enough. But I worked in the networking and telecomm area before I went to b-school, and my considered opinion is that there is little demand for new networking equipment or PC/Server equipment at any price. There is little added business value to speeding up your network at this point -- streaming video is more likely to decrease productivity than increase it. Ditto improving the speed of the PC's on peoples' desks -- there just isn't THAT much benefit to improving from a P-200 or PII-300 to the latest processor, while there was huge added value in switching from 486 or low-end Pentium machines to newer models. Applications will continue to be added, and will require servers -- but I don't see it happening at the pace of the nineties. Given that the semiconductor industry hasn't really shed much capacity, I don't see how the sector can pick up.

From the desk of Jane Galt:

Consulting Slowdown hits the Big

Consulting Slowdown hits the Big Three

According to the Wall Street Journal, Mckinsey is laying off support staff. No consultants as of yet, leaving the Big Three still the only firms that haven't cut professionals.

Perhaps the recession is bottoming, as people say -- but to me, consulting and banking is the canary in the mine. As long as no one's financing growth or looking for help to manage it, in my view we've still got a long way to go.

From the desk of Mindles H. Dreck:

Aaah, bandwidth, now here's an inte...

Well, I'm back in the land of DSL. I was just settling down to move some electrons when the power went out. Pathetic, really, only a little rain. PSE&G estimated over the phone it would be back at 12:30 AM. Thankfully, they padded their estimate and it's back just now, but I have some budgets, etc. that need attention before I resume my blogging pace.

Incidentally, I mentioned Bill Charlap in my gift suggestions. Some short audio samples can be found in a variety of formats on CDNow. They are too short to do his trio justice, though.

From the desk of Mindles H. Dreck:

Historical hyperbole

Krugman weighs in with a comparison of the current environment in the U.S. to that between World War I and II. Seth Sandrosky draws on the same time period - but compares us to Nazi Germany. According to Maureen Dowd, The Economist has compared the "Ashcroft Era" to England in the time of Cromwell. And, of course, Barbara Kingsolver has weighed in with her latest screed looking at the past through Roosevelt-coloured glasses while staring at the present with....no glasses at all. And she obviously can't see a thing without 'em.

All of these analogies are hopelessly strained, and serve only to make the phenomena criticized by the observer appear to be more alarming. These are straw men to bash at when you can't think of something useful or sufficiently hysterical to say. Even if the administration were to demand greater sacrifices of individual liberties, and even if there use of their new powers were to extend to more U.S. citizens than non-U.S. belligerents, we still live in a time when individual rights are more honored in jurisprudence than ever before. Next November, we get to vote a whole bunch of congresspeople out if we don't like it.

Sandrosky's argument is particularly ridiculous, claiming that this is the final gasp of fascism before we finally evolve into socialists. Funny that he should compare us to Nazi Germany then, as the Nazis were by-the-book socialists.

Krugman also steps in his own paper trail:

So it tells you something when Congress votes $15 billion in aid and loan guarantees for airline companies but not a penny for laid-off airline workers. It tells you even more when the House passes a "stimulus" bill that contains almost nothing for the unemployed but includes $25 billion in retroactive corporate tax cuts — that is, pure lump-sum transfers to corporations, most of them highly profitable.

But Krugman has already come out in favor of one-time tax rebates, which are also lump-sum transfers. And, surely, subsidizing the airline was intended to keep some people working. There's plenty to criticize about these policies, but Krugman can't seem to do it without getting his logical legs crossed. Of course, he is, as always, capable of divining intentions as well:

As Jonathan Chait points out, there used to be some question about the true motives of people like Dick Armey and Tom DeLay. Did they really believe in free markets, or did they just want to take from the poor and give to the rich? Now we know.

These folks want to make this administration look evil one way or the other. Given the legitimate material provided by Ashcroft et. al. these last weeks, its funny how their biases have prevented them from doing a decent job of it.

From the desk of Mindles H. Dreck:

A friend remembered

The New York Times published its "Portrait of Grief" on one of the WTC victims I knew fairly well, Andrew Marshall King (p. B9). You can't get it on the web, but another remembrance is here. Every time you saw Andrew he had something good to say about you or your family.

Andrew was last heard from on the roof, standing next to a friend who was talking to his own family on a cellphone.

UPDATE (7/2002) - here is a site dedicated to Andrew. Other details can be found in the comment from Andy's brother Spencer below.

From the desk of Jane Galt:

Newsflash: Environmental laws have costs,

Newsflash: Environmental laws have costs, just like everything else

This article suggests that the reason the WTC collapsed was that the columns were constructed without asbestos, due to new environmental regulations in effect at the time of construction.

While the article has a "see? Environmental laws are stupid!" tone that makes me wince a little, its facts sound plausible. The more interesting point to me is that I would bet that no one ever heard a public debate on whether it was better to have asbestos columns or the risk of collapse. My guess is that the answer would be "risk of collapse" -- no, don't shoot me, but at the time the building was built a fire fueled by that much avgas was an extremely unlikely (somewhere to the right of six sigma range, I'd guess) event, while asbestosis was a clear and present danger. Just as it is very possible that if we had a public debate about higher fuel efficiency vs. auto safety (increasing the mpg of cars results in a significant increase in auto deaths because they have to make the cars lighter, and therefore unable to sustain as much damage without injury to the occupant) we would come out on the side of fuel efficiency. My problem is that we never do have that debate -- whether because the auto makers are incompetent at PR, or because the media finds it easier to write stories from an "evil big corporation does it again" viewpoint, I do not know.

From the desk of Jane Galt:

Back to God? Another interesting

Back to God?

Another interesting tidbit from the Weekly Standard(subscription may be required): the author says that there is a resurgance of religious orthodoxyamong young people going back at least five years. Basically it attributes the decline in mainline protestantism and the rise in evangelical/orthodox faiths of all stripes to the same feeling I noticed among my mainline classmates: why bother going to a church that rehashes what you heard in sociology class last week, with a dash of feel-good movie of the week flavor to make it go down easier? The kind of religion that strives to incude all possible viewpoints cannot help but be reduced to platitudes that engage no one.

That said, MY classmates (class of 1994) seemed more likely to turn to SD&R than their rosaries. The article seemed somewhat anecdotal to me, but it's based on a longer book that may sport the data. Still, a very interesting read.

From the desk of Jane Galt:

ANOTHER DREAM SHATTERED Perusing the

ANOTHER DREAM SHATTERED

Perusing the new Weekly Standard, I came across an item in their scrapbook (subscription may be required; I have one, so I can't tell what's subscriber material & what's not). Don Rumsfeld announced that they aren't parachuting horses into Afghanistan because they get enough broken ankles with people.

I adore roller coasters with a passion seldom found in one so young, and have wanted to try skydiving for a long time. I was held back because my ankles are weaker than Bill Clinton's excuses for the Rich pardon. I have sprained my ankle walking along perfectly level surfaces. However, two friends who tried it swore up and down that you couldn't break your ankles because the jump boots are so stiff. I think I'll believe Rumsfeld over people who took a three hour class at a suburban airport, thank you. So no skydiving for Megan.

From the desk of Jane Galt:

We went to friends for

We went to friends for Thanksgiving, so on Friday, my mother cooked a whole new turkey just so we could have leftovers. Stuffed myself AGAIN.

Interesting discussion at the table about the meaning of the word "speculation" as applied to investments. My feeling is that any stock that's purchased with the expectation that some other idiot will buy it from you at a higher price is speculative. Basically, there are two different ways that stocks can be valued: either they are valued based on the cash that they will eventually return to their owners, either through dividends or through the company (or an aquisitor) repurchasing the stock; or they are valued based on the expectation that someone will pay a higher price for the stock later. This latter is called "the Greater Fool Theory".

So in other words, when you buy a stock, you are either betting on your ability to correctly evaluate a company's balance sheet and future growth potential, or you are betting that there is another, greater fool out there, and that you can correctly evaluate his psychology in order to sell at the right moment. That's why its speculative -- because unless you are PT Barnum, few of us have any idea which way the suckers are going to jump.

I think that we are still in the throes of the great idiot boom of the late nineties. Valuations seem to me, by any mathematical metric, to be insane -- no one could possibly think they're going to get that kind of money back out of these companies. But it's like the end of a relationship. We just can't believe it's over. We go out to dinner to see how things are going, and the next thing you know, we're giving it one more try. The rising market -- hey, it's just like it was a couple of years ago. Maybe this can work. We all know how this ends up -- you, a bottle of whiskey, and a lost weekend, followed by months trying to recollect that tattered shreds of your dignity.

To sum up -- THIS MARKET IS INSANE. Where is the good news coming from -- other than a relentless will to believe -- that would justify the resurgance of the Dow?

Interesting side note -- most people believe that the down bottomed out during the crash of '29. Actually, it bottomed out two years later, after several tenative rises. A warning light goes on in my head.

From the desk of Jane Galt:

ON A LIGHER NOTE Just

ON A LIGHER NOTE

Just got this in from Jeff Otto. Found it hilarious.

To: Cavemates
Subject: The Cave
Hi guys. We've all been putting in long hours but we've really come together
as a group and I love that. Big thanks to Omar for putting up the poster
that says "There is no I in team" as well as the one that says "Hang In
There, Baby." That cat is hilarious. However, while we are fighting a
jihad, we can't forget to take care of the cave. And frankly I have a few
concerns.

First of all, while it's good to be concerned about cruise missiles, we
should be even more concerned about the scorpions in our cave. Hey, you
don't want to be stung and neither do I, so we need to sweep the cave daily.
I've posted a sign-up sheet near the main cave opening.

Second, it's not often I make a video address but when I do, I'm trying to
scare the most powerful country on earth, okay? That means that while we're
taping, please do not ride your razor scooter in the background. Just while
we're taping. Thanks.

Third point, and this is a touchy one. As you know, by edict, we're not
supposed to shave our beards. But I need everyone to just think hygiene,
especially after mealtime. We're all in this together.

Fourth: food. I bought a box of Cheez-Its recently, clearly wrote "Osama" on
the front, and put it on the top shelf. Today, my Cheez-Its were gone.
Consideration. That's all I'm saying.

Finally, we've heard that there may be American soldiers in disguise trying
to infiltrate our ranks. I want to set up patrols to look for them. First
patrol will be Omar, Muhammed, Abdul, Akbar, and Richard.

Love you lots,
Osama

I think it's amazing (not to mention a cheering sign of a basically healthy nation) that the flood of Osama jokes continues. The reason I like this one so much is that I could email it to my grandmother, if she knew how to operate a computer.

From the desk of Mindles H. Dreck:

North Pole cited as hostile workplace

I watched Rudolph with the kids tonight as the official kick-off of the Christmas season. Burl Ives, clumsy stop-action, reindeer fur that looks like Dr. Scholl's moleskin, the whole bit. When I translated the production date from Roman numerals, my eldest pointed out that this production is "almost as old as me". From now on, Son, you won't be allowed to watch any of my antique TV shows.

What's the best line in Rudolph? Put me in for "Your beak is blinkin' like a blinkin' beacon". Runners up: "You don't mind my red nose?".."not if you don't mind my being a dentist" and the classic "even among misfits you're misfits". That North Pole. Not friendly to nonconformists.

A few questions have always irked me: If you can fly, why run from the abominable snowman? And how, exactly, did the Island of misfit toys escape Santa's notice? Why does Fireball (remember him - the young reindeer whose pupils constrict like he's on speed) have a patch of blond hair? Finally, why doesn't Yukon Cornelius' tongue stick to his pickaxe when he licks it? These are important unresolved issues.

Speaking of Christmas, I recommend Flanders & Swann recordings and Eddie Izzard videotapes as gifts. I absolutely treasure mine. The Izzard link preceding is to "Glorious". If you can get your hands on "Dress to Kill" it's far better - the best stand-up ever, in my opinion. I taped it off HBO, but purchase availability of the videotape is spotty to (now) nonexistent for some reason. His site offers a US-compatible ("NTSC") version, but we are warned it is not the same as the incredible HBO special. Same tour, different show. Izzard improvises a lot, so it could be quite different. I may buy it and see.

For classical music buffs, check out recordings on the Hyperion and Chandos' labels. For Jazz, try Bill Charlap. Charlap is the best jazz pianist since Bill Evans. And I'm saying that even though his sister Cathy repeatedly broke my besotted heart in my younger, more vulnerable years. I bet a few representative tracks, such as The Heather on the Hill or My Shining Hour from the Album Distant Star, can be obtained through Gnutella-based sharing, but I wouldn't know such things.

From the desk of Mindles H. Dreck:

A picture is worth a thousand words

And Dropscan's growing photo page is worth multiple visits. This is the picture that fascinated me:

Those are the air-drop food packages, now recycled as schoolbags for these girls.

From the desk of Mindles H. Dreck:

As if you didn't know

Dial-up and AOL suck. If this were my only means of surfing I'd just read the paper.

From the desk of Mindles H. Dreck:

Well..he was in Deuce Bigalow

Some female crew members on the U.S.S. Roosevelt were nonplussed by an Armed Forces Entertainment show featuring six Dallas Cowboys Cheerleaders (thanks to Opinionjournal for picking up the story). Apparently, the cheerleaders get the guys a little worked up, and besides, where's the beefcake for the ladies? Responding to the latter, legitimate point -

Air Force Col. Rod Hottle, the director of Armed Forces Entertainment, who accompanied the cheerleaders to the ship, said he already has lined up some male actors for future trips to the theater of war, including Rob Schneider.

You mean the Robster? Rob-a-roni? Visitin' the ladies on the aircraft carrier! Hold on there Colonel, don't want the ladies to get out of control.

From the desk of Jane Galt:

The Wall Street Journal has

The Wall Street Journal has an article on Anthrax cases that seems to weaken the argument in favor of domestic terrorism. Apparently a letter sent to Chile from Switzerland tested positive for anthrax -- a letter identified as suspicious because while it was postmarked Switzerland, it had a return address in Florida. From what I've seen of the domestic crazies, they have neither the resources nor the inclination to zip merrily around the globe, mailing letters hither and thither. On the other hand, it is only one letter, and there is no word on whether the Chilean strain matches ours, so perhaps it's a wash.

From the desk of Jane Galt:

DEPARTMENT OF POINTLESS ARTICLES The

DEPARTMENT OF POINTLESS ARTICLES

The New York Times has an editorial saying that official residences (governors, mayors, presidents) are going out of style and losing their utility, except in places where they aren't which seems to include everywhere except New York. Aside from showcasing how parochial the Gray Lady has become, the article seems to be entirely without purpose. Writer's block, or unseemly arrogance? You decide.

On a related note, I really do think that this war has cost the Times its place as the paper of record. The increasingly editorial tone of its articles -- and its refusal, with rare exceptions such as Virginia Postrel, to put intelligent conservatives on its editorial pages -- were already costing it credibility outside of the New York/Washington media cocktail circuit and the groves of academe. My classmates from business school, unlike their elders at the banks and consultancies, didn't even bother getting subscriptions when they moved to New York. The coverage of the war, however, was the nail in the coffin. While the Washington Post was offering a range of viewpoints, the New York Times was accentuating the negative. We couldn't win. Even if it might temporarily look like we were winning, we actually weren't. The Taliban might be on the endangered species list, but there are a lot more where they came from. Etc. My (admittedly somewhat cynical ears) detected a distinct note of glee in all of this. IMHO, there are two reasons for this:

1) Bush is president, and he's actually doing a pretty OK job.
2) The New York Times would rather cover a disaster than a victory because
a) A disaster lasts longer
b) It feels more exciting and important to describe a disaster than to discuss the floats at a victory parade
c) They like being the Voice of Doom. I myself am not immune to the seductive joys of raining on someone else's parade. (pardon the repitition; I couldn't think of another metaphor.)

Anyway, I think that they badly miscalculated, mostly because (as I am far from the first to point out) Punch Salzberger has surrounded himself entirely with people who agree with him. Personally, I think the Post will emerge as the paper of record on the policy side, the Journal on the New York/Business side. But we shall see.

From the desk of Jane Galt:

WATCH ME MAKE MY FIRST

WATCH ME MAKE MY FIRST HYPERLINK
City Journal, a quasi-libertarian quarterly dedicated (as far as I can tell -- I've never read their mission statement) to the conservative take on urban issues, has a proposed design for the WTC site. Looks pretty good to me, but then, I'm not an architect, nor a city planner -- something in me feels that it should be an enormous memorial, even though I know that this would devastate lower Manhattan.

From the desk of Jane Galt:

WHAT I'M READING THIS WEEK

WHAT I'M READING THIS WEEK

World War II Nostalgia
The Corps series, by WEB Griffin. The books are somewhat cartoonish (does every Marine meet good looking women who fall into bed with them five hours after they meet?), but very amusing and offer interesting historical tidbits. For those of us who find the present a little frightening, it's a pleasant escape, especially since it makes you realize that it wasn't a very sure thing that we would win the war, way back then.

Could This Be Another Great Depression?
Once in Golconda by John Brooks. It's not quite up to the incomparable The Great Crash by John Kenneth Galbraith, but it's an interesting picture of the period between 1920-1940, and is blissfully free of Galbraith's obvious (if sometimes accurate) editorial bias.

How Should the Nation React to a New Security Threat
The Rosenberg File by Ronald Radosh. Yes, indeed, they were communist spies. The book is thorough, but lacks direction -- there is a mountain of evidence, but the straight chronological recount, without the framework of conclusions that could or should be drawn from it, makes it feel rather meandering. If all you want is the facts, its a useful compendium -- but since I was born in 1973, I wanted a little more context.

Where's the Light at the End of the Tunnel
When God Doesn't Make Sense by James Dobson. Yes, the Family Research Council. It was given to me free by the Salvation Army (funny, I never thought about the Salvation component until I got down here -- where they are doing a superb job, by the way), and takes about two hours to read. While I have a little trouble with the author's biblical literalism (I just can't believe that there are demons hovering around trying to do me in) it has some surprisingly insightful, and incisive, things to say about the anger one feels when things don't go according to plan.

Just for Fun
My Name is Asher Lev by Chaim Potok. I'm afraid that for me, nothing he writes has ever lived up to The Chosen and The Promise. But still excellent by any other standards.

From the desk of Jane Galt:

Issue resolved. Now to introduce

Issue resolved. Now to introduce myself. I am, it seems, the epitome of our new century. I'm 28, just graduated from one of the top business schools in the world, and just had my job offer rescinded by a management consulting firm. In the interim, I have obtained a job with a construction company working on the WTC disaster recovery site. No, I don't work on "the pile" (as it is known here, despite the fact that they are already working below ground level) -- I work in a trailer across the street, doing everything from handing out security passes, to database design, to typing letters. Unfortunately, I can't offer any great insights, or even good gossip, about the site -- first, because they don't tell me anything, and second, because relating what I do hear could cost me my job.

So no great insights. But possibly interesting trivia. Such as -- the police, fire, and construction workers are whizzing around the streets of lower Manhattan in cunning little golf-cart type vehicles (with more power and usually 4WD, but without, alas, the cupholders). It is probably the only time in my life that I shall be able to go the wrong way on a one way street with cops nodding at me as I pass them. The World War II air prevails. It is unbearably awful to see the destruction, especially when they find bodies. Yet as long as we are here, and busy, it is easier to bear it all than it would be to be working somewhere else, and worrying, and unable to do anything about it. The people around you here have a reverence for their work that is absent almost anywhere else -- most people, most of the time, try to do the right thing just because they should.

Off the site, on the other hand, it is more like the Great Depression. One of the guys told me that three weeks after the Day, when he had been working all that time without a break (I got lost in that clause somewhere, and can't seem to get back on the right track. So I shall abandon it to its fate) he decided to get drunk. The whole time he'd been here, seeing body parts and terrible destruction, he had been able to handle it -- and this had made him think that perhaps there was something wrong with him, that he didn't break down. As soon as he sat down in a nice warm bar, in clean clothes, with a stiff drink in his hand, he began to cry. And couldn't stop. Similarly, I was fine until I left the site in search of office supplies. Passing through Union Square, I saw the thousands -- THOUSANDS -- of fliers posted by families missing loved ones. Seeing two or three on the television was sad, of course -- but seeing thousands of photographs, every single one of them of some cherished happy memory, was too much. One of them in particular sticks with me still. It was a snapshot of two friends, both Cantor Fitzgerald traders. They were in a hallway, obviously at a party, and one of them had the other in a headlock. Most people my age have an identical snapshot somewhere in their albums. And I thought, it could have been any of us holding the camera. I cried. Not a few little tears delicately overflowing my eyes, but huge, racking sobs that attracted the stares of passersby.

So that is the more-solemn-than-I-had-intended introduction to my blog. There will be lighter items on fascinating topics such as how much weight everyone's gained since 9-11 (last night, someone told me that the average American has gained 20 POUNDS since the Day -- as if most of us needed an excuse), and why I think that this recession actually is very similar to the Great Depression. Not to mention my no-more-ignorant-than-anyone-else's opinion on current politics, etc.

From the desk of Mindles H. Dreck:

I haven't disappeared

..I'm just over the river and through the woods in a land of poor connections and low bandwidth (Litchfield County, CT). Saw Harry Potter last night, buried my cat (had him since 1985, put him down in January) and put in the most comfortable long mileage of the season.

I'm working on a follow up to Fredrik Norman's comments about Norway. Right now it is entitled "Scandinaïve". I'm also reading Easterly's "The Elusive Quest for growth". Great book, except for the title. It seems to me it's growth that can be elusive, not the quest for it.

From the desk of Jane Galt:

I seem to be posting

I seem to be posting on West Coast time, despite the fact that, as my heading reveals, I am about as far east as you can get without a wetsuit and flippers. Must investigate this.

From the desk of Jane Galt:

Skipping the customary opening remarks

Skipping the customary opening remarks about my intentions in beginning this blog (which generally put me in mind of Robert Benchley's statement that he found bookshelves mightily depressing because he could too readily see behind each forgotten volume an author signing his name to a finished manuscript and saying to himself "there! Now I've secured the immortality of my name." So I shall say only that I am writing this in the confident expectation that no one will read it, but still with the faint hope that somebody might. . .

From the desk of Mindles H. Dreck:

A Thanksgiving Toast: To Accurate History and Inspiring Myth

Today I read the Thanksgiving chapter of Lies my Teacher Told Me by James Loewen. This book takes history textbooks to task for innacuracy and a variety of other sins. Loewen has multiple agendas, not all of which I support, but this chapter is worth a read. He and my wife, who has an American History background, are my sources for most of the material here.

Like most born skeptics, I had a sense that the whole "Thanksgiving Story" was a crock even before I was given any alternative versions. The friendly "Indian meets Pilgrim and shares corn" story we acted out in elementary school was a little too neatly wrapped. I remember I played Peter Pan the same year, and I certainly didn't take that as fact either. Nor do I relish the memory of jumping around in a green skirt with dyed green Hanes, but that's another story.

The real story of the settlers in Plymouth is a doozy. It is, as Loewen suggests, unlikely that the Plymouth settlers, or the Jamestown settlers before them, would have survived if it were not for the agricultural innovations and infrastructure of the Indian settlements they essentially swallowed. In return, they (as well as the Jamestown settlers) brought smallpox and a variety of other diseases to a healthy and non-resistant native population. There is substantial evidence to suggest that the native American settlements near Jamestown and Plymouth (Patuxet) were wiped out by diseases from this European vector. Of course, there is also lots of evidence that the Indian tribes made frequent war upon each other, and their alliance with some European settlers was merely a matter of attempting to gain a brutal military advantage. As the book title says, Guns, Germs and Steel. Like the rest of the world, Massachusetts in the 17the century was a brutal place. The story of Squanto is particularly interesting:

What do the books leave out about Squanto? First, how he learned English. According to Ferdinando Gorges, around 1605 a British captain stole Squanto, who was then still a boy, along with four Penobscots, and took them to England. There Squanto spent nine years, three in the employ of Gorges. At length, Gorges helped Squanto arrange passage back to Massachusetts. Some historians doubt that Squanto was among the five Indians stolen in 1605. All sources agree, however, that in 1614 a British slave raider seized Squanto and two dozen fellow Indians and sold them into slavery in Malaga Spain. What happened next makes Ulysses look like a homebody. Squanto escaped from slavery, escaped from Spain, and made his way back to England. After trying to get home via Newfoundland, in 1619 he talked Thomas Dermer into taking him along on his next trip to Cape Cod....Squanto set foot again on Massachusetts soil and walked to his home village of Patuxet, only to make the horrifying discovery that he was the sole member of his village still alive. All the others had perished in the epidemic two years before. No wonder Squanto threw in his lot with the Pilgrims.

Thanksgiving was not an annual holiday until Lincoln declared it one in 1863. In fact, the word "Pilgrim" did not come into use until around that time. This holiday did not yet have its association with the Plymouth Rock settlers. Prior to Lincoln, presidents commonly called one-time national days of thanksgiving. The evolution of the holiday as we have come to know it occurred between the end of the Civil War and World War I. It appears to have been an outgrowth of the "Colonial Revival" movement in which American culture reacted to the post Civil War period and the industrial revolution by harkening back to the country's more simple roots.

The Thanksgiving story is not history, and, since it is not really rooted in that time, may not even be Legend (link on this). It is a myth or "sacred history" that recasts our origins into an inspirational guidepost for the future. It is a story told to represent an ideal America in which cultures exchange to mutual benefit. It speaks of refugees from religious oppression bravely striking out to a new land and joining together with the vastly different native Americans to thank God for the tremendous bounty of what is now our United States. It is about the common pursuit of happiness. As Loewen points out, some textbooks need to define it as myth more clearly. It isn't a historical record, but it is historical in the sense that it describes Twentieth Century American ideals.

It speaks volumes about the U.S., and other countries that value liberty and democracy, that we can tell the difference between history and myth, and that we constantly seek to understand, criticize and improve on that history. We can celebrate this story's ideals, while simultaneously discussing how we did not live up to them at the time. We take the same attitude towards religion. We accept the stories of the Bible, or the Koran as similar belief systems. They are instructive about our ideals and aspirations. They require interpretation beyond the literal. They are not an instruction book for living - insert tab B in slot A and you will go to heaven. More importantly, they are not codified into State or Law. This is what distinguishes us from fanatics such as crusaders, Nazis or Militant Islamic fundamentalists like the Taliban, who insist on incorporating myths and beliefs into a structure for oppressing mankind and extinguishing the unbelievers or unchosen.

Perhaps there will be a holiday in Afghanistan in the future, and the stories told on that holiday will include a woman burning her burqa, a child flying a kite, perhaps even American and Afghan soldiers riding together on horseback. Perhaps those stories will speak to our common knowledge of the strength of the human desire for liberty, and a better relationship with a developing country emerging from decades of punishing war and occupation. Such stories would gloss over the gruesome realities of the war and omit the horrible choices made in wartime between relative evils. They would be far from an official history of the war, but they would represent a better future for Afghans.

Let the myths be made. Let the history also be debated there as lively a fashion as here in our newspaper editorials, classrooms, discussion threads and, of course, weblogs. May there be as much to be thankful for in Afghanistan as there is here.

I am so thankful for my intelligent and insightful new friends and discussion partners in this international "blogging" community who are part of this tradition. On Thursday I will raise my virtual glass to you and wish you and your families a very happy Thanksgiving.

'Mindles'.

From the desk of Mindles H. Dreck:

Compensation Culture

Reader and fellow blogger Iain Murray writes me to explain the "compensation culture" in Britain that leads to the type of payments described in the post immediately below. This is apparently the truth - you get money for watching your relatives expire on television. Murray discusses this in some of the posts on his site, and It sounds a bit like a nationalized version of our tort bar. Perhaps the awards are more proportional. I like the English and/or British version of most things better, but the "compensation culture" is no more appealing wrapped in a Union Jack.

Speaking of our colonial masters, here is a gentle song of modest Anglophilia:

The rottenest bits of these islands of ours We've left in the hands of three unfriendly powers Examine your Irishman, Welshman or Scot You'll find he's a stinker as likely as not

The English the English the English are best
I wouldn't give tuppence for all of the rest

The Scotsman is mean as we're all well aware
And bony and blotchy and covered with hair;
He eats salty porridge, he works all the day
And he hasn't got Bishops to show him the way.

The English are noble, the English are nice
And worth any other at double the price

And crossing the Channel one cannot say much
For the French or the Spanish the Danish or Dutch
The Germans are German, the Russians are Red
And the Greeks and Italians eat garlic in bed

The English are moral, the English are good
And clever and modest and misunderstood

-Flanders & Swann, A Song of Patriotic Prejudice

From the desk of Mindles H. Dreck:

Extra for watching on television?

Extra for watching on television?
Britain to compensate attack victims' relatives who were traumatized by TV coverage :

LONDON (November 19, 2001 5:54 p.m. EST) - Britons whose relatives died in the terror attack on the World Trade Center are eligible for financial compensation if they were traumatized by watching television coverage of the catastrophe, officials said Monday.

The British Criminal Injuries Compensation Authority said people who suffered in this way could receive up to $38,600.

Previously, the commission paid only for incidents that occurred in Britain, aboard a British-registered ship or in the undersea Channel Tunnel between Britain and France.

"This is a recognition that the scheme has moved with the times," said a commission spokesman, speaking on condition of anonymity. "It takes into account advances in technology and that traumatic events can unfold before the victim's eyes.

I understand the Trauma of losing a loved one. I understand the trauma of watching it on TV. I do not understand the financial advantages of the latter, or how providing such "stands with the Americans". This is just a quick post - am I misreading this article?

From the desk of Mindles H. Dreck:

African rebel throws peanut shells at the European Commission

An elephant in a Portuguese zoo rings a bell when you give him an escudo. He is, of course, being retrained for the Euro changeover.

Unfortunately, the Elephant is out of compliance. Most countries will be requiring dual currency operations at least until February. The Zoological Gardens of Lisbon's contingency plans are unknown.

The Elephant is named after UNITA rebel leader Jonas Savimbi. This is a good name for an elephant.

Savimbi's talents involve finding US Dollars in Washington.

What are you looking at me for? I don't know. Move along, blog's over.

From the desk of Mindles H. Dreck:

Champagne and Raspberries

CHAMPAGNE: The internet taxation ban has been extended for two more years. Bush goes on record saying he wanted longer.

RASPBERRIES:Meanwhile, Saudi Arabia is bidding out its version of parental state controls over the internet:

"The Internet is a frightening place to some people," said Mr. Holt, who oversees sales operations in the Middle East for Secure Computing. "The government feels the need to intervene."

Saudi security agencies identify the political Web sites that are considered for inclusion on the blacklist. Among the banned sites are the Committee for the Defense of Human Rights in the Arabian Peninsula (www.cdrhap.com) and the Movement for Islamic Reform in Arabia (www.islah.org). Even some less politically charged sites, including ones that recount the history of Saudi Arabia, are blocked.

In response to Internet filtering, many Saudis either dial up foreign Internet service providers, use Web sites that protect the user's identity or engage in a cat-and-mouse game with Web sites that frequently change their addresses to elude filters. (For such sites, like the one operated by Islah.org, would-be visitors send e-mail to a fixed address and receive the new Web address.)

How many times, do you suppose, do stasists like Saudi Arabia need to see the overwhelming power of mankind's desire for individual liberty before they stop these tragi-comic, self-defeating policies?

From the desk of Mindles H. Dreck:

The "bubble-up" theory of taxation

Virginia Postrel debunks soft drink critics. Meanwhile, Mexico takes a page from the U.S. stance on tobacco and proposes turning soft drinks into a permanent revenue stream:

The idea is to slap a 20% tax on soda, on top of the 15% value added tax which already applies to such beverages.

Interestingly, Vicente Fox is a former Coca-Cola executive. He's plundering his old stomping grounds to pay for an ambitious program of government spending. In other words, he's retreating to the tactics of his predecessors.

As we've learned from Tobacco, you can make a lot of money this way. Nothing like a regressive tax on a habit-forming product popular with the masses. The Mexican congress is also still debating making food and medicine subject to the VAT. This is a poor substitute for low tax rates combined with better compliance in a country where only 8% of the population pays taxes.

From the desk of Mindles H. Dreck:

Afghanistan is a quagmire

A graveyard for foreign occupying armies that seek to impose their totalitarian views on Afghan citizens.

Those words were correct. They just forgot to specify the occupying army - the one made up of totalitarian theocrats.

To be fair, all these links are from the New York Times, which offers some great coverage today. Now if they could just get a better handle on the basics of macroeconomics, as I pointed out on October 3rd..

From the desk of Mindles H. Dreck:

Tell that to the warbloggers...

"They are only human beings whose power has been exaggerated because of their huge media and the control they exert over the world's media." -- Mohammed Atef on the United States, in an interview

I took a quick look for the interview itself but came up emptyhanded. Anyone find it?

From the desk of Mindles H. Dreck:

This is me not feeling sorry for murderous fundamentalist mercenaries (2)

Dropscan points us to this teary article about a Pakistani who claims he was on a walking tour..with three days of military training.

And here is the Edge of England's Sword with another:

Al-Qa'eda massacre Taliban, reports the Sunday Telegraph. Oh dear. When "Bomber" Harris announced the massive bombing of German civilian targets to the British people he said, "They have sown the wind. Now they shall reap the whirlwind." Amen.

From the desk of Mindles H. Dreck:

Another tortured line of reasoning

In an email, second hand, I heard another interesting defeatist line of argument, How can we get aid to Afghanistan if we bomb their infrastructure? Hmmm, a while ago one of the reasons not to bomb was that there was no infrastructure. There was some truth to the claim that we were making the rubble bounce. Well, now there are a bunch of military engineers and heavy equipment to make the roads, bridges and airports hum (at least relatively). Seems to me Taliban-controlled infrastructure wasn't much use in getting aid through. Wasn't it just recently we heard about that infamous $43 million?

From the desk of Mindles H. Dreck:

Hey, nice blog

Moira Breen takes apart the indignant-about-dissenters-against-dissent Mark Lawson. Read for yourself. Via Instapundit.

From the desk of Mindles H. Dreck:

Don't touch that dial...

MTZ referral stats indicate that the number of my readers linking to my blogs on economics is roughly equivalent to the number that like to cuddle up with a nice Barbara Kingsolver novel at 9:00PM. Like me, when they get the paper, they head for the handwringers on the editorial page first.

P.G. Wodehouse once described one of his characters as having the "furtive air of an Englishman who is about to speak French". Well, I speak to you with the furtive and overly serious air of a warblogger addressing Economics. But I ask my new friends (Matt, Steven, Shiloh, Stuart "are you there?" Buck), should we not demand the same factual standards and accountability in coverage of other areas as well?

The New York Times covers the new tax cut proposals with its usual one-sidedness and broad statements that "assume away" opposing viewpoints. The gist of the article is that corporations are bellying up to the trough for tax cuts. That much is undoubtedly true. Nonetheless, the Times conveniently forgets that taxes come out of corporate profits, comparing tax cuts to direct subsidies in the very first paragraph:

In recent weeks, a steady parade of executives from industries like airlines and insurance companies, hotels and pharmaceutical companies, has trooped to Washington for handouts. Some have walked away with billions in aid. But those pleas pale when compared with the all-out lobbying push now under way — a fight for broad and deep corporate tax cuts that are being measured in the hundreds of billions of dollars.

The only third party experts quoted are from Citizens for Tax Justice and the Progress and Freedom Foundation, well known critics of tax cutting and business in general. The big chart estimating the costs? Its from The Center on Budget and Policy Priorities, which claims to be non-partisan, but a few clicks through the website and an inspection of its board will tell you it has a definite perspective.

The quote from Citizens for Tax Justice is the big laugher:

Robert McIntyre, director of Citizens for Tax Justice, an advocacy group that is critical of tax breaks, said he had not seen anything like it since 1981, when Ronald Reagan became president. "Basically they want to take us back to the 1980's, when half of the companies in the country were not paying any taxes," he said.

Quick fact check: Taxes paid by corporations, in inflation-adjusted 1982 dollars, decreased from 86 billion dollars (51 billion 1975 dollars) to $63 billion dollars in 1982. Taxes paid by corporations in 1989 dollars increased from 79.5 billion dollars (again, 63 billion 1982 dollars) to 141.5 billion dollars in 1989. If you want, get the nominal amounts for any year here. Do the inflation math here. Point? Corporations as a whole paid substantially more taxes over the course of the 1980s, so the tax relief they may have experienced could even have been productive. So why act like the opposite has been conclusively shown? Furthermore, CTJ seems to lose sight of the fact that corporations are made up of shareholders who are individuals, pension funds and other corporations. Income from your stock investments is taxed substantially more than your salary. Corporate taxes are a second layer of taxation on individuals, the opposite of a tax shelter.

I recognize that this CTJ blather is a quote. But these two tax-cut critics are the only people quoted in the article that actually address the revenue or stimulus effects of corporate tax cuts. And, of course, the reporter doesn't challenge them. This just isn't balanced. Shocker, right?

Just for the record, my point of view is that marginal rate cuts, not retroactive givebacks, are an important stimulus for corporations, especially small companies, where most of the job growth comes from. For an elegant analysis of how this worked from 1985 to 1988 (those horrible 1980s again), you could buy the paper abstracted here.

Moving right along, the body of the article lets the following breezy pseudo-factoid go by:

The provisions likely to be successful include faster write-offs on new capital investments, more liberal use of tax losses and some changes in the alternative minimum tax, which requires that all corporations pay at least some taxes to the government each year.

Not exactly. The Alternative minimum tax excludes many legitimate deductions and assures that corporations pay a minimum rate on taxable income. This is very different from suggesting that somehow the AMT is like the ante in a poker game. Of course citizens for tax justice thinks differently, but their website indicates they don't know the difference between GAAP accounting and tax accounting, mistaking the "effective" tax rate for the statutory tax rate. If they would like the government to adapt GAAP accounting, be my guest. Price Waterhouse, I believe, used to occasionally take a shot at recasting government accounts in GAAP, which recognizes liabilities as they occur, instead of as they are paid. As I recall GAAP accounting suggests that the biggest increase in the deficit occurred in the Carter years, not Reagan.

And then the next not-so-subtle juxtaposition:

After the terrorist attacks, the president and Congressional leaders quickly agreed to the broad outlines of a one-year economic stimulus plan of $50 billion to $75 billion to help those hurt most by the attacks and the economic downturn. In principle, it was to be a stimulus package with heavy emphasis on economic recovery and on increasing consumer confidence.

Since then, the plan has turned into a tax-cutting vehicle. The stimulus package passed by the House consists largely of tax cuts, with more than 70 percent of them going to corporations.

The assumption underneath this article, superficially about corporate lobbying, is that anything that allows companies to keep their profits has nothing to do with the economy, and that anything a sleazy lobbyist works for must be bad policy. Again, the Times offers no guidance on whether corporate tax cuts are a stimulus or not, and offers only bias on the "fairness" of corporate taxation. The private sector (namely corporations) has provided substantially all our economic growth in the last twenty years. The $272 billion in corporate taxes paid in 2000, even as we entered our first capital spending bust in years, deserves more evenhanded treatment.

Guys. We love to shoot the Common Dreams/Indymedia fish in a barrel. If, in the happy event of a major decrease in threats, there is less warblogging to do, I hope you will join me in applying the same scrutiny to the media's coverage of other important matters.

From the desk of Mindles H. Dreck:

He's gone - no he's not - which one's better?

While all the defeatists here think bin Laden is long gone, the Taliban is insisting he's still in Afghanistan. It's funny to watch everybody assert facts to suit their view or support their P.R. objectives.

Hey, just 'cause you say it with conviction don't make it mean shit.

From the desk of Mindles H. Dreck:

Bienvenue...enfin

As Eddie Izzard says "killing other people's citizens by the thousands....after two or three years we won't have any more of that!". The French have announced they will bomb Al Qaeda..in a week or two.

For Izzard fans, let's hope the Frenc