A prettty picture

November 2nd, 2008 No comments
Categories: art, beauty Tags:

Live Birth Abortion

November 1st, 2008 No comments

Cranmer has a post on live-birth abortion, the kind Obama is notorious for supporting while an Illinois legislator.

It is a termination process which involves the birth of a live baby, the issuing of a birth certificate, the purposeful abandoning of the baby to a slow and tortuous death, and the callous issuing of a death certificate….

By law, if an aborted baby is born alive, both birth and death certificates must be issued. Ironically, the cause of death often listed for live aborted babies is ‘extreme prematurity’, which amount to a confession by doctors that they have caused this death. It is not uncommon for a live aborted baby to linger for an hour or two or even longer. One baby is reported to have lived for almost an entire eight-hour shift. Many of these babies are born completely healthy, for they are terminated at 40 weeks for the ‘health’ of the mother, and also in cases of rape or incest. Ever since Doe v Bolton (the companion case to Roe v Wade) the United States Supreme Court has adopted the definition of the World Health Organisation for ‘health’, defined as ‘any condition that might impact her physical, emotional, psychological or financial well being’.

So live birth abortion is permitted in many US states up to nine months for emotional (can’t cope), psychological (don’t want to cope) or financial (can’t afford it) reasons, effectively extending abortion to on demand.

Nov. 2. H.U. referred me to Robert George’s Obama’s Abortion Extremism. It’s a good summary of Obama’s positions, and also a good summary of various laws pertaining to abortion and embryonic research about which people disagree.

Categories: obama Tags:

Persimmons

October 30th, 2008 No comments

Yesterday I went jogging with L. and F. in the stroller and B. on his bike. We went to the persimmon tree on Sare Road. All the leaves but only a few fruit had fallen, and they were ripe and delicious. Persimmonpudding.com is a website devoted to persimmons.

Categories: food, nature Tags:

Subsidiarity and Hierarchies

October 26th, 2008 No comments

The idea of “subsidiarity” came up today at a church meeting. The idea is that affairs ought to be handled at the lowest, most decentralized level. An individual congregation, for example, and not the denomination ought to discipline church members. The term is a Roman Catholic one.

The discussion made me think of the following problem. Suppose we have a worker who is misbehaving. It makes sense for his immediate boss to discipline him, since the boss knows the situation best. His immediate boss, however, likes his employees and is reluctant to bear the emotional cost of intervening. Thus, it may actually work out better to have the top boss– or some central committee– begin the discipline process. Perhaps the immediate boss can then handle details, having been positioned as the friend of the worker rather than as the “tough guy”.

This reminds me of the style of hierarchy models in economics. I’m not sure whether modelling is useful here or not.

Categories: Economics, research Tags:

Hydrogen Bonds

October 25th, 2008 No comments

H. was asking me why ice floats in water– that is, why solid water is lighter than liquid water. The answer has to do with hydrogen bonds. When hydrogen and oxygen form a molecule together, the hydrogen’s lone electron is pulled toward the oxygen, so the other side of the hydrogen has a positive charge from its lone proton. This positive charge is attracted to the negative charge of another oxygen atom’s electrons, forming a hydrogen bond. Well, that’s my simple story.

The Edinformatics article on ice is good. It has pictures too. It explains that in ice, the hydrogen bonds hold the water molecules apart in a lattice with lots of space, but in water, the molecules do not have such orderly hydrogen bonds.

Here’s what Edinformatics’s article on hydrogen bonds says:

As the name “hydrogen bond” implies, one part of the bond involves a hydrogen atom. The hydrogen must be attached to a strongly electronegative heteroatom, such as oxygen, nitrogen or fluorine, which is called the hydrogen-bond donor. This electronegative element attracts the electron cloud from around the hydrogen nucleus and, by decentralizing the cloud, leaves the atom with a positive partial charge. Because of the small size of hydrogen relative to other atoms and molecules, the resulting charge, though only partial, nevertheless represents a large charge density. A hydrogen bond results when this strong positive charge density attracts a lone pair of electrons on another heteroatom, which becomes the hydrogen-bond acceptor.

and

In ice, the crystalline lattice is dominated by a regular array of hydrogen bonds which space the water molecules farther apart than they are in liquid water. This accounts for water’s decrease in density upon freezing. In other words, the presence of hydrogen bonds enables ice to float, because this spacing causes ice to be less dense than liquid water.

Someone else says:

The hydrogen bonds that form between water molecules account for some of the essential — and unique — properties of water.

* The attraction created by hydrogen bonds keeps water liquid over a wider range of temperature than is found for any other molecule its size.
* The energy required to break multiple hydrogen bonds causes water to have a high heat of vaporization; that is, a large amount of energy is needed to convert liquid water, where the molecules are attracted through their hydrogen bonds, to water vapor, where they are not.

Two outcomes of this:

* The evaporation of sweat, used by many mammals to cool themselves, achieves this by the large amount of heat needed to break the hydrogen bonds between water molecules.
* Moderating temperature shifts in the ecosystem (which is why the climate is more moderate near large bodies of water like the ocean)

Categories: science Tags:

The Risk of Common Investments

October 24th, 2008 No comments

I’m frustrated by how we economists have failed to incorporate most of wealth into our theory of asset pricing. The CAPM says that a stock needs a higher expected return if its return is more correlated with the return of the stock market as a whole. That’s a good start. It is true, too, that it is possible to hold a diversified portfolio of public stocks, whereas other assets such as private business stock can’t be held by everybody.

I worry about other assets. How about bonds? Surely they should be in the CAPM, since they are public and easily diversified into.

How about housing? That’s the asset most people hold. And it isn’t valued well by economists. It is a hedge against housing consumption risk. If rents rise, then if I own my house, I am insulated. But when I sell my house, I do face risk. Also, if rents rise, maybe I’d like to consume less housing. The optimal house ownership contract isn’t what we normally observe. It would involve some insurance against resale capital gains and losses, and adjustment for desired amount of house consumption.

How about labor income? Labor is our greatest wealth– human capital, and just plain labor endowment. It’s risky, and the risk is correlated with the stock market. I’d like a stock that does well when my salary goes down.

The Consumption CAPM is an advance. It notes that we want to have higher stock returns when we want higher consumption. That’s odd, though, because consumption is endogenous. Really, we ought to look for the correlation between a stock’s return and the return on wealth as a whole, which would be the ratio of GNP to wealth. We should look for the correlation between GNP and stock return, not consumption and stock return. But no, that’s not right. Ideally, we’d want the change in total wealth, including labor wealth, which is not the flow of GNP, but a change in a capitalized value of future GNP. I’d like a stock which is uncorrelated with other stocks, and uncorrelated with changes in the value of my labor.

There’s another problem. THe price of stocks is determined by the kind of people who buy them. Poor people don’t. The only labor wealth that matters to stock prices is that of the people who buy stocks. So what we want to measure is the value of public stocks, bonds, private companies, housing of people who hold stocks, and labor wealth of people who hold stocks.

Categories: Economics Tags:

Quasiconcavity

October 24th, 2008 No comments

Martin Osborne has some good notes on quasiconcavity. I’m still not satisfied, though. It’s a basic enough idea that I wish I had better intuition for it, and lots and lots of pictures of functions that are or are not quasiconcave.

October 25: Here are some key features of a quasiconcave function f(x).

  • It has convex upper level sets. The set of points x such that f(x) >= a is convex for any number a.
  • It has convex indifference curves if it is a utility function. If f(x) is strictly monotonically increasing, the function g(x) such that f(x)=a is a convex function.

Every concave function is quasiconcave, but some quasiconcave functions are not concave. A key feature of quasiconcavity that concavity doesn’t have is that if you do an increasing transformation of a qc function, it is still qc. I wonder if the following is true:

Conjecture: Iff function f(.) is quasiconcave, there exists an increasing transformation g(.) such that g(f(.)) is concave.

I’d start to prove the conjecture this way. Let x and y be points in the upper level set of f(.), which means f(x)>=a and f(y)>=a. Since f(.) is quasiconcave, the upper level set is convex, which means that f(mx+ (1-m)y) >=a too. What we need to show first is that there exists some increasing function g() such that
g(f(mx+ (1-m)y)) >= mg(f(x)) + (1-m)g(f(y)). I think we need to start by assuming that f(x) \neq f(y), and that they are both on the boundary of that convex upper level set. Then we can see how g has to affect those two levels of f differently.

If the conjecture is true, then maybe we can think of quasiconcavity as being the equivalent of concavity for functions that are just defined on ordinal, not cardinal spaces.

October 26. Why, though, do we worry about quasi-concavity at all in economics? Why not just assume that utility functions are concave? The conventional answer would be that utility is ordinal, not cardinal. That is a bad answer for three reasons. First, even if it is ordinal, we could say, “It’s only the ordinal properties of a utility function that affect decisions. Therefore, for convenience, let’s say that whatever function you start with, you have to use a monotonic transformation to make it concave before we start working with it.” Second, we might say, “Since only ordinal properties matter, let’s assume utility is concave for convenience.” Third, we might accept cardinality. Everybody uses von-Neumann Morgenstern cardinal utility in their models anyway, making only a brief nod, if any, to ordinality. But a risk-averse agent has concave utility. For these reasons, I wonder why it’s worth making our graduate students learn about quasi-concavity. The opportunity cost is that they’re not learning about something more useful such as the CAPM or the Coase Theorem.

Maybe quasi-concavity comes up in enough other contexts to be important. I know Rick Harbaugh has a paper on comparative cheap talk where it comes up. In Varian, it comes up first in production functions, where it allows you to have convex input sets for a given output without requiring diminishing returns to scale, as true concavity would.

October 27. Yet another thought. Margherita Cigola has done work on defining quasiconcavity in ordinal spaces, on lattices. Convexity has to be defined specially there. She uses a different (equivalent in R space) definition of quasiconcavity:
f(mx + (1-m)y) >= mf(x) + (1-m)f(y)

I like that because it is closer to the definition of concavity.

Or another, suitable when the function is differentiable: f is quasiconcave if whenever there is a maximum (i.e., the first derivatives are zero), the matrix of second derivatives is negative definite. MR suggested that, for the single-dimensional x case. I’m not sure it does generalize that way.

Categories: Economics, math Tags:

Significant Figures

October 21st, 2008 No comments

I haven’t used this idea since high school, really, but it comes up now and then, so I looked it up in Wikipedia. 100 has one significant figure, as do 20 and 23 and .0001, the article says. The number .00200, however, has three significant figures. The number 1.234 has 4 significant figures. Digits beyond accurate measurement don’t count as significant. There is ambiguity, however, in whether 100 feet really has just one significant figure. It may be that you have measured it to the nearest foot, in which case it really has three significant figures.

The real importance of significant figures comes in doing arithmetic. If you run 100 yards in 11.71 seconds, and the 100 has three significant figures, then the speed should be written with three significant figures as 8.54 yards per second, not as 8.53970965 yards per second.

Categories: math, science Tags:

Optical Illusions

October 20th, 2008 2 comments



U. of Washington has a good optical illusion-experiment site. It has the Muller-Lyon illusion below and lots more that[‘s harder to post in this blog.

Categories: science, thinking Tags:

Risky Borrowing

October 20th, 2008 No comments

When you save, you have a choice between investing in a risky asset like a stock or a safe asset like a bank account. When you borrow, there is much less choice. Usually, you just borrow at a nominal interest rate, paying back 10% regardless of the return on the stock market or the level of inflation. The only exception I can think of is the variable-rate mortgage, which at least varies with the nominal interest rate.

Why is that? We can imagine a person being able to borrow at a lower interest rate if he agrees to bear risk. His interest rate could be 20% minus the return on the stock market, for example. If the average stock market return is 6%, his average interest rate would be 14% then. Someone who wanted a safe interest rate could borrow at 16% instead.

Our borrower would be hedging someone else against stock market risk. This would be useful if the borrower were less risk averse than some saver.

Yet we don’t see that. Is it because borrowers are usually more risk averse than savers? Is it because borrowers are too likely to default if they have a risky payment to make?

October 21. At lunch I figured out a new twist. Suppose I want to borrow $100 for consumption, and I am risk-loving. I could borrow an extra $50, and invest it in the stock market. That way, I have to pay back $150 in cash, but my later wealth will be $(150-value of stocks I bought) lower as a result. Thus, even a poor person could take on risk if it weren’t for the possibility of going bankrupt.

Categories: Economics Tags:

Cygnus

October 18th, 2008 No comments

From the Wikipedia entry on the constellation Cygnus, the Northern Cross, one of the easiest to find this time of year:

The constellation also contains the X-ray source Cygnus X-1, which is now known to be caused by a black hole accreting matter in a binary star system. The system is located close to the star Eta Cygni on star charts.

Eta Cygni is in the long part of the neck of Cygnus, about halfway from the wings to the head. Cygnus X1 isn’t visible to the naked eye, though, and Eta Cygni is very faint.

Beta Cygni is Albireo, a double star, at the swan’s head. Alpha Cygni, the tail, is the brightest star, named Deneb.

Cygnus contains several variable stars too, as this website describes.

Categories: science Tags:

Wald, LR, and Score Tests

October 17th, 2008 No comments

From Cornell, “Econ 620: Three Classical Tests; Wald, LM(Score), and LR tests” is a good description of the Wald, likelihood ratio, and score tests. The Hausman test seems more like an LR test, since it estimates both the restricted and unrestricted equations. I found the statalist post below on the Wald test for exogeneity of regressors:

This test is mentioned along with the theory behind -ivprobit- in Wooldridge’s “Econometric Analysis of Cross Section and Panel Data” (2002, pp. 472-477).

For the maximum likelihood variant with a single endogenous variable, the test is simply a Wald test that the correlation parameter rho is equal to zero. That is, the test simply asks whether the error terms in the structural equation and the reduced-form equation for the endogenous variable are correlated. If there are multiple endogenous variables, then it is a joint test of the covariances between the k reduced form equations’ errors and the structural equation’s error.

In the two-step estimator, in the second stage we include the residuals from the first-stage OLS regression(s) as regressors. The Wald test is a test of significance on those residuals’ coefficients.

Categories: statistics Tags:

Learning Hebrew

October 15th, 2008 No comments

John Parsons has a good Biblical Hebrew site, Hebrew for Christians. The page I’ve linked has the ABCD song with Hebrew letters, nicely done, and if you click on the letters on that page, you get interesting tidbits of information

The Scriptures begin with the book of Genesis, but in Hebrew this book is named after its first word: [Hebrew omitted] (bereshit). The first letter of revelation from the LORD, then, was the Bet found in this word….

Note: The sole difference between the letter Bet and the letter Vet is the presence or absence of the dot in the middle of the letter (called a dagesh mark). When you see the dot in the middle of this letter, pronounce it as a “b”; otherwise, pronounce it as a “v.”

Categories: religion Tags:

October 13th, 2008 1 comment


M.R. sent me a link to a page describing a $125,000 bicycle. It looks like it lacks fenders or kickstand, so I’m not enthusiastic. My other question is this:

What kind of lock does it come with?

Categories: art Tags:

Conditional Logit

October 11th, 2008 1 comment

I was trying to understand how conditional logit and fixed effects in multinomial logit worked, to explain to someone who asked, and I failed. Greene’s text was not very helpful. The best thing I found was some notes from Penn: “Conditional Logistic Regression (CLR) for Matched or Stratified Data”. The bottom line seems to be that conditional logit (clogit in Stata) chooses its parameter estimates to maximize the likelihood of the variation we see within the strata, while ignoring variation across strata. Thus, if we have data on 30 people choosing to travel by either car or bus over 200 days, we could use 30 dummies for the people, but in conditional logit we don’t. Also, in conditional logit, unlike logit with dummies, if someone always travels by car instead of varying, that person is useless to the estimation.

Categories: statistics Tags:

Reuleaux Triangle

October 8th, 2008 No comments

This Reuleaux Triangle from Wolfram/Mathematica is a nice idea for a shape. It is the shape a Wankel engine takes, perhaps because you can rotate this triangle inside a square as shown at the Wolfram site.

Categories: art, math Tags:

Mortgage-backed Securities

October 7th, 2008 1 comment

Via Marginal Revolution, I found Gary Gorton’s The Panic of 2007, a long paper on the institutional details of the financial crisis. It gives particular examples of subprime mortgage bonds, tells how subprime mortgages work in detail, talks about the collateralized debt obligations that buy the bonds and issue their own securities, and so forth. It also talks about why there is a liquidity crisis. Prof. Gorton assigns blame entirely to subprime mortgages, because they are especially sensitive to housing prices (as opposed to interest rates). I only read a little of the article, and it makes difficult reading. The main impression I get is that these mortgage-backed assets are far more complicated than I had thought, and it is no wonder that they are hard to value. I’m also amazed anyone would buy them, for that very reason. It seems that they must just have trusted the rating agencies, which should not have assigned ratings to such complicated securities.

Categories: Economics Tags:

Fannie Mae and Freddie Mac Regulation

September 23rd, 2008 No comments

Charles Calomiris has a WSJ op-ed (with someone else) on Fannie Mae and Freddie Mac’s role in the subprime mortgage market and the Republicans’ attempt to stop them. The Democrats are squarely to blame, it seems. The op-ed also points out that deregulation has played no role in this crisis. The problem on Wall Street is that we’ve never regulated investment banks’ capital levels, not that we’ve deregulated them, and that financial innovations have created a need for regulation.

Categories: Economics, elections Tags:

Power Law– A New Gabaix Paper

September 22nd, 2008 No comments

Xavier Gabaix has a new paper, “Power Laws in Economics and Finance” that surveys research on when and why variables such as city size or executive pay follow the power law distribution. One gets a power law distribution if a city’s relative population (its population relative to the average city) grows proportionally to its relative population except for a small absolute increase that gives small cities a bit of an advantage. Even writing that first step is tricky, alas, and I don’t think I’ll be able to understand well enough to do research in the area. The reason the power law is useful seems to be that when it applies, the same laws are at work for big values and little values of variables, so, for example, one wouldn’t need a special theory of stock price plunges– it would just be a chance occurrence from the same distribution as small price declines.

Categories: Economics Tags:

Longer Sale Times in Depressed Housing Markets

September 15th, 2008 1 comment

Why should it take longer to sell a house in a depressed market? The answer may seem obvious– nobody wants to buy– but it is not. If the price fell enough, somebody would buy. The question is why the weak market is reflected in both lower prices and longer waiting times, rather than just lower prices.

I think there is a 1995 Jeremy Stein article on this where he thinks about the financing of housebuying. Christopher Mayer has some papers too. But I wonder whether the answer may not lie in transaction costs.

Suppose too many houses have been built by mistake. It will take a few years before population growth catches up. We can forecast the house price will recover by that date. We could sell now, though, and somebody now renting could live in the house until demand recovered. If transaction costs were zero, that is what would happen. The person would buy the house, live in it cheaply until demand recovered, and then move out when a house that size became expensive again. But if there is a fixed cost to moving in and out (or to arranging sale or rental) then that won’t happen.

This seems too obvious an explanation, but I haven’t heard it mentioned. It could be modelled by assuming that there are big houses and little houses, with two types of people who prefer each at their construction cost. Everyone prefers a big house, but poor people would prefer a small house if they must pay the cost of building a house. Population grows steadily, but then there is a shock and not enough rich people enter in one year. If there is no transaction cost, then some poor people move into big houses, and some small houses stay empty. If there is a big enough transaction cost, big house prices fall somewhat, but no poor people move into big houses. The best model might have a distribution of moving costs across people, so that there would be some poor people moving into big houses, but some big houses staying empty. Note that the price of small houses would fall too, because of poor people’s demand for them falling as some move into big houses.

Categories: research Tags:

Semi-elasticities in Regressions

September 10th, 2008 No comments

Suppose you have a log-linear regression like this:

log(y) = beta*x

The way to interpret beta is as the percentage change in y that we get from a 1 unit change in x. To see that note that the regression equatino is the same as y = exp(beta*x), in which case dy/dx = beta*exp(beta*x). Thus, the percentage change in y when x changes is (dy/dx)/y = (beta*exp(beta*x))/exp(beta*x) = beta.

This contrasts with the log-log form, log(y) = beta*log(x), in which case beta is the elasticity of y with respect to x, i.e., the percentage change in y that we get from a 1 percent change in x.

Categories: Uncategorized Tags:

Worth Its Weight in Gold?

August 28th, 2008 No comments

Via Marginal Revolution, Evil Mad Scientist Laboratories has a good article on “The Monetary Density of Things” . It’s about the value of things by weight. Rhodium and 50-dollar bills are worth more than their weight in gold, but marijuana and 2-dollar bills are worth less.

Categories: Economics Tags:

Science Fiction as Prior Art

August 25th, 2008 No comments

In 1934, Heinlein was discharged from the Navy due to pulmonary tuberculosis. During a lengthy hospitalization, he developed the concept of the waterbed, and his detailed descriptions of it in three of his books constituted sufficient prior art to prevent a US patent on water beds when they became common in the 1960s[9].

(from Wikipedia, Robert Heinlein. Footnote 9 is to a WSJ article)

Categories: law, writing Tags:

To Deprovincialize

August 25th, 2008 No comments

I am writing up my post-sabbatical report. Nobody will read it, but I can’t help but spend some time on it anyway, and I can combine the effort with the report for the donor of my research chair. I thought I might have come up with a new word, but I see it is already out there. I wrote, “exposure to lots of people from many universities is an important part of the “deprovincializing” purpose of a sabbatical.” It is the most important reason why those of us who go on sabbatical ought to be forced to move out of Bloomington during it rather than just treating it as a research period.

Deprovincialize
v. t. To divest of provincial quality or characteristics.
Webster’s Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.

(from http://dictionary.reference.com/browse/deprovincialize

Categories: words Tags:

Rick Warren

August 24th, 2008 1 comment

I blogged back in 2006 on Pastor Rick Warren, whose words range from pandering to liberals to the fatuous to the perceptive. He did a good job with the Saddleback interviews of Obama and McCain, I think, choosing some good questions for them. I came across something else to count in his favor in a 2008 New Republic article by Alan Wolfe (my boldfacing):

I have yet to let Jesus enter my life, but I admire Warren. We once appeared on a panel together along with Harvard’s Peter Gomes at the Aspen Ideas Festival. When it came time for questions, a woman stood up, proclaimed her Judaism, and asked Warren if she was going to burn in hell. He paused before responding–and then answered her question the only way it could be answered. Yes, he said to audible gasps. My reaction was that either you believe that Jesus is the savior or you do not, and I found myself impressed that Warren remained true to his convictions, knowing full well that the audience would not like what he said.

Categories: religion Tags:

New Zealand and Tort Law; Arbitration

August 21st, 2008 No comments

Over morning coffee I read Peter Schuck on tort law in New Zealand (hat-tip and link, Larry Solum). New Zealand has a no-fault system for personal injuries generally, and something similar for malpractice. Processing costs per case are of course low, but the system may illustrate a perverse effect: low transaction costs per case can lead to a high total amount of transaction costs because more claims are made. The paper doesn’t compare total transaction costs per capita in the US and New Zealand, but it says “In 2006-07, the ACC had pending 1.6 million claims, … this for a population of 4.3 million…”

I wonder what the total transaction costs are? Probably in New Zealand many claims are made that are either harder to prove fault in or too small to be worth hiring a lawyer in the US. Actually, we also need to figure in the insurance company transaction costs, since both in the US and New Zealand private insurance companies exist, although New Zealand has a much bigger free public medical care system than the US. (Another complication is that US medical care, “gold-plated”, is more expensive.) Anyway, is it good or bad that lesser claims get compensated in New Zealand? Is it better to just let losses lie for them, and avoid transaction costs altogether?

There are many ideas for tort reform. I wonder if any country uses government arbitration? Here’s my idea. After an accident, a policeman must be called in if there is to be compensation to anyone (the hospital or morgue will do it if the injury is severe enough). He writes a report and interviews witnesses. Each side then writes a report saying, under oath, what they claim happened. A government arbitrator looks at the reports, maybe interviews witnesses (without lawyers present), and assigns the case to one of three categories: X wins, Y wins, or Unclear. The government pays claims for Unclear cases; private insurance or the people themselves for others. Insurance companies are free to use the results for experience rating.

Categories: law Tags:

Obama and McCain on Evil

August 20th, 2008 No comments

Here’s more from the Saddleback Church interviews of McCain and Obama, on the question of evil. The transcript of the Obama interview says:

WARREN: … Does evil exist? And if it does, do we ignore it? Do we negotiate with it? Do we contain it? Do we defeat it?

OBAMA: Evil does exist. I mean, I think we see evil all the time. We see evil in Darfur. We see evil, sadly, on the streets of our cities. We see evil in parents who viciously abuse their children. I think it has to be confronted. It has to be confronted squarely, and one of the things that I strongly believe is that, now, we are not going to, as individuals, be able to erase evil from the world. That is God’s task, but we can be soldiers in that process, and we can confront it when we see it.

Now, the one thing that I think is very important is for to us have some humility in how we approach the issue of confronting evil, because a lot of evil’s been perpetrated based on the claim that we were trying to confront evil.

WARREN: In the name of good.

OBAMA: In the name of good, and I think, you know, one thing that’s very important is having some humility in recognizing that just because we think that our intentions are good, doesn’t always mean that we’re going to be doing good.

The transcript of the McCain interview says:

WARREN: … Does evil exist and, if so, should ignore it, negotiate it with it, contain it or defeat it?

MCCAIN: Defeat it. A couple of points. One, if I’m president of the United States, my friends, if I have to follow him to the gates of hell, I will get bin Laden and bring him to justice. I will do that. And I know how to do that. I will get that done. (APPLAUSE). No one, no one should be allowed to take thousands of American — innocent American lives.

Of course, evil must be defeated. My friends, we are facing the transcended challenge of the 21st century — radical Islamic extremism.

Not long ago in Baghdad, al Qaeda took two young women who were mentally disabled, and put suicide vests on them, sent them into a marketplace and, by remote control, detonated those suicide vests. If that isn’t evil, you have to tell me what is. And we’re going to defeat this evil. And the central battleground according to David Petraeus and Osama bin Laden is the battle, is Baghdad, Mosul, Basra and Iraq and we are winning and succeeding and our troops will come home with honor and with victory and not in defeat. And that’s what’s happening.

And we have — and we face this threat throughout the world. It’s not just in Iraq. It’s not just in Afghanistan. Our intelligence people tell us al Qaeda continues to try to establish cells here in the United States of America. My friends, we must face this challenge. We can face this challenge. And we must totally defeat it, and we’re in a long struggle. But when I’m around, the young men and women who are serving this nation in uniform, I have no doubt, none.

Obama’s position is correct. Evil exists, and we should confront it, we will not defeat it completely, and there is evil within us.

McCain, however, is right in saying that we should and will defeat evil. We will not defeat all evil, but we will defeat some of it. He does not address the problem of evil generally, only in one area of national policy.

McCain’s answer is more impressive than Obama’s because he is inspiring and specific. You can tell he really means it. He sees specific evil, and he has specific plans to defeat it.

Obama is vague in his examples of evil, and he doesn’t seem to have either much interest in defeating it or specific plans. Evil is seen “all the time”: “in Darfur”, “on the streets of our cities”, and “in parents who viciously abuse their children”. Obama sounds like a politician who makes excuses for defeat even before he starts, because he doesn’t really want to address the problems. He is going to “confront” evil, not “fight evil” or “defeat evil”. He is most concerned that in confronting these evils we will not perpetrate evil ourselves. “Let’s not be too hasty in trying to end evil” is his message.

THe next day. I should add another excerpt. It is from just before McCain is asked about evil. They are talking about abortion and stem-cell research. What is interesting about it is that when the topic shifted to Evil, McCain did not mention abortion, even though the topic had just come up.

WARREN: OK. (APPLAUSE). All right.

Another issue, stem cells. We’ve had the scientific break-through of
creating pluri-potent (ph) stem cells through adult stem cells.

MCCAIN: Yes.

WARREN: So would you favor or oppose the federal funding of embryonic
stem cell research since we had this other break-through?

MCCAIN: For those of us in the pro-life community this has been a
great struggle and a terrible dilemma because we’re also taught other
obligations that we have as well. I’ve come down on the side of stem
cell research. But I am wily optimistic that skin cell research, which
is coming more and more into focus and practicability, will make this
debate an academic one.

WARREN: How about the issue of evil. I asked this of your rival, in
the previous debate. Does evil exist and, if so, should ignore it,
negotiate it with it, contain it or defeat it?

MCCAIN: Defeat it. A couple of points. One, if I’m president of the
United States, my friends, if I have to follow him to the gates of
hell, I will get bin Laden and bring him to justice. I will do that.
And I know how to do that. I will get that done. (APPLAUSE). No one,
no one should be allowed to take thousands of American — innocent
American lives….

Categories: obama, religion Tags:

Optimal Gasoline Taxes, Given Externalities

August 20th, 2008 No comments

A good article on optimal gas taxes is “Does Britain or the United
States Have the Right Gasoline Tax?” Ian W. H. Parry and Kenneth A.
Small, The American Economic Review, Vol. 95, No. 4 (Sep.,
2005), pp. 1276-1289. In 2000, taxes were $2.80/gallon in the UK and
$.40/gallon in the USA. They should have been $1.34 and $1.01, in
light of congestion, accidents, and Ramsey taxation (with minor
contributions from pollution and CO2).

Wikipedia says
taxes are $5.20/gallon in the UK, $.47/gallon in the US, $7.61 in
Germany, It is important to include value-added tax, which is done in
those figures.

The Inst. for Fiscal
Studies,
more reliable, gives the fuel duty plus VAT per liter
in pence for different European countries as from 55 in the UK (the
highest) to 24 in Greece (the lowest). Germany is 40; France is 46
(second highest); Italy is 42; Spain is 28.

Thus, it seems Greece and Spain are about at the optimum and all the
other European countries are too high.

Curiously, Parry and Small do not mention one of the major arguments
for a fuel tax: paying for road construction and repair. I seem to
remember that the effect of cars on road deterioration is trivial
(it’s all due to trucks), but I might be wrong on that, and it seems
as if it has to be wrong for city streets.

Parry and Small point out that a gas tax is poorly designed for
controlling congestion and accidents, since it is lower for fuel-
efficient cars. Also, as implemented, it is invariant across
locations, which vary tremendously in the cost from congestion,
accidents, and pollution. They calculate the optimal per-mile tax,
which does better. That is hard to enforce, though, since if the tax
became high, odometer fraud would become common. (Maybe it could be
based on how many miles you live from work, though, and age and sex,
as insurance rates are.)

What might work better would be to increase the vehicle registation
tax, or to at least base the per-mile tax on where the vehicle is
registered. Or, we might combine a gasoline tax with a registration
fee based on the vehicle’s fuel-efficiency, fuel-efficient cars
paying a bigger registration fee since they pay a lower gasoline tax
per mile travelled.

In practice, I think, hybrids and suchlike are actually subsidized by
the government rather than taxed more heavily. What Parry and Small
show is that that hybrids would be driven too much, given that they
cause accidents just as much as other cars.

In view of the importance of accidents as an externality, I’d like to
see that explored more (maybe it is in the paper; I didn’t read
carefully). A big car is safer for the occupants, but more dangerous
to other cars. So it seems, since the effect on other cars is the
externality, that big cars should be taxed more.

Parry and Small find the optimal global warming tax to be very
small, even using liberal estimates of the effect on global warming
and the cost of it. It seems that European countries are emitting too
little CO2 from cars, not too much. That result should be publicized.
The conclusion is true even if other countries such as the US and
China are emitting too much CO2, I think. The cost estimates of the
Stern Report and others are based on “business as usual”, which means
that the marginal benefit to the world from the UK from increasing or
reducing emissions is based on other countries’ not changing their
current policies. Thus, from the point of view of treating all
countries neutrally rather than favoring some at the expense of
others, the UK ought to emit more carbon dioxide.

Categories: Economics, global warming Tags:

More’s Utopia

August 20th, 2008 No comments

I just skimmed through Thomas More’s Utopia. It’s better than I remembered, and has a lot of similarity to his friend Erasmus’s In Praise of Folly. Here are some observations.

1. At the start and the end of Raphael’s description of Utopia, the narrator says that what he is most dubious about is the abolition of private property. At the end, he says that the reason is that it deprives a state of magnificence.

2. The essence of Utopia is not really communism, but the restriction on what can be consumed. Since, for example, everybody wears simple clothing of one pattern and color, nobody is tempted to steal anybody else’s clothing or to take too much for himself from the warehouse. It follows that what goods are permitted are in overabundance and nobody wants to steal. One assumption is that if luxuries were not produced, wealth would be great enough for an overabundance of necessities even if everyone worked only six hours a day.

3. Utopia is a reformed monastery, with monks who marry and devote themselves to happiness and self-cultivation rather than prayer and worship.

4. The Republic starts with the City of Pigs, which Socrates says is ideal, but Glaucon complains that they have no luxuries there. Utopia is the City of Pigs fleshed out (no pun intended). The Republic’s second city, the Callipolis (Beautiful City) has luxuries, but is a feverish, diseased city.

5. Utopia, like the City of Pigs but unlike the Callipolis, has no Guardian class. The philosophers are not kings there. It is a democracy. In a sense, everybody is a philosopher, though.

6. Gallipoli was called Callipolis in ancient times.

7. In Book II More makes the argument that if the natives are underutilizing a country it is just to drive them out to make better use of the land.

Categories: philosophy, social regulation Tags:

Which Supreme Courts Justices Would You Not Have Nominated?

August 20th, 2008 1 comment

From the WSJ comes a good question asked by Pastor Warren:

Rev. Warren asked each candidate which Justices he would not have nominated. McCain, who interviewed after Obama, answered that, “with all due respect,” the four most liberal Justices.

For his part, Obama said, “that’s a good one,” and then explained: “I would not have nominated Clarence Thomas. I don’t think that he, I don’t think that he was a strong enough jurist or legal thinker at the time for that elevation. Setting aside the fact that I profoundly disagree with his interpretation of a lot of the Constitution.” Obama added that he wouldn’t have appointed Justice Scalia, and perhaps not John Roberts, either.

Here
is the transcript. It says:

Which existing Supreme Court Justices would you not have nominated?

MCCAIN: With all due respect, Justice Ginsburg, Justice Breyer, Justice Souter, and Justice Stephens.

WARREN: Why? Tell me why.

MCCAIN: Well, I think that the president of the United States has incredible responsibility in nominating people to the United States Supreme Court. They are lifetime positions, as well as the federal bench. There will be two or maybe three vacancies. This nomination should be based on the criteria of proven record, of strictly adhering to the Constitution of the United States of America and not legislating from the bench. Some of the worst damage has been done by legislating from the bench. (APPLAUSE).

And by the way, Justices Alito and Roberts are two of my most recent favorites, by the way. They really are. They are very fine. (LAUGHTER). And I’m proud of President Bush for nominating them.

Obama’s transcript is in a different file. [September 23: In light of the first comment below, I’ve deleted the excerpt from Obama’s transcript, as it might be misleading.]

Categories: judges, obama Tags:

Removing Duplicate Email Addresses in an Address Book

August 20th, 2008 No comments

[cross posted from the IU Computers Blog]

After searching for a free easy program to do this for me, a Mozilla Thunderbird user, I decided the best way is to use Excel, like this:

First, export the address book to *.csv comma-separated format.

From: http://office.microsoft.com/en-us/excel/HA010346261033.aspx

Open the file in Excel. Select all of it. Do DATA then FILTER, then ADVANCED FILTER, then check off UNIQUE RECORDS ONLY. That will show only the unique records. Then COPY what is showing to the clipboard. Go back to DATA then FILTER then ADVANCED FILTER then Do NOT check off UNIQUE RECORDS ONLY. Then the whole file will show. Press the DELETE key to delete all the rows. Then do CTRL-V to paste in the uniquely filtered rows. Then SAVE the file, and all the duplicates will be gone. Then import the *.cxv file back into the email address book.

There isn’t a way I know of to filter on just duplicates in one column and deleting all rows that have duplicates in that column even if they are different in other columns.

This and other Mozilla tips are at: http://rasmusen.org/a/mozilla-rasmusen.txt

Categories: computers Tags:

Al Somers’s Hair

August 13th, 2008 No comments

From the American Spectator comes an article by Emmett Tyrrell that confirms the soundness of Dr. Somers’s conservatism:

…my boycott has finally attracted the support of my old friend, the former Olympian, Alan Somers, who recently set a world record for the 3000-meter swim for men sixty and over. Al was a teammate of mine on the Indiana University swimming team in the early 1960s where many of our teammates were Olympians and world record holders. When I slapped my boycott on the Olympics he dissented. Worse, he chided me, attributing my boycott to sour grapes over never making the team.

Well, it is true that I never made an Olympic team but I never won a Rhodes Scholarship either, and I have never been critical of Rhodes Scholarships. Yet I accepted Al’s rebuke with my usual benignity, confident that as the Olympics lurched ever further from the Olympic ideal of amateurism and good sportsmanship Al would capitulate. It is immensely rewarding to have him on my side during this Olympiad. What is more, next week he will collaborate with me in this space when we shall deplore a particularly egregious excess in this year’s swimming competition.

For now Al, whose Olympiad was in 1960 in Rome, is at work reviewing David Maraniss’s confused book on those games Rome 1960: The Olympics That Changed The World. Among other deficiencies, Maraniss fails to report that the 1960s swimming competition was the first in which male swimmers shaved their body hair to improve their times. One of the great news stories of the games issued from one reactionary American’s refusal to follow the fad. Al was the reactionary. He gained instantaneous worldwide recognition after propelling his shaggy body to an Olympic record in the trials for the 400-meter freestyle. How he did in the finals I shall leave for Al to explain. He still denies shaving has anything to do with performance and in fact wore a mustache when he broke the world record in the 3000-meter swim.

Categories: conservatism Tags:

New Latex Commands

August 11th, 2008 No comments

I’ve gotten a couple of new Latex books (the typesetting language) and found a bunch of commands I didn’t know about. I’ve written them up at http://rasmusen.org/a/latex-rasmusen.txt and http://rasmusen.org/a/latex-rasmusen.pdf and http://rasmusen.org/a/latex-rasmusen.tex. An example is doing footnotes inside tables and math:

Use the \footnotemark command to insert the footnote number. To
insert the footnote itself, use

\addtocounter{footnote}{-1}\footnotetext{Here is my footnote}
\stepcounter{footnote}

outside the table or math but trying to be on the same page.

$$
x = y\footnotemark
$$

\addtocounter{footnote}{-1}\footnotetext{Except when $ x= 8$. }
\stepcounter{footnote}

\begin{tabular}{|l|l|r|l|}
\hline
lattice & $d$ & $q$ & last column\footnotemark \\
\hline
square & 2 & 4 & 1.763 \\
\hline
\end{tabular}

\addtocounter{footnote}{-1}\footnotetext{ That’s two words in that
entry. }
\stepcounter{footnote}

Categories: computers Tags:

The Philosopher King

August 11th, 2008 No comments

I just read Allan Bloom’s “Response to Hall”
Political Theory, Vol. 5, No. 3, (Aug., 1977), pp. 315-330
http://www.jstor.org/stable/190644 . It’s a great article which expands on his introductory essay in his translation Plato’s Republic. Here is the main argument:

Socrates never precisely shows Glaucon that justice as
Glaucon conceives it is good. Rather, in the course of founding a city
and, thus, learning the nature of justice, Socrates introduces, as a
political necessity, the philosophers. Glaucon learns that to be a ruler
in the city he has founded he must be a philosopher. Then, when he
is shown what philosophy is, he learns that it is the best life and is
essentially independent of political life. From the point of view of
philosophy-which Glaucon had not considered and, thus, had not
considered as a good thing-the city looks like a cave or a prison.

I perhaps should write up a different argument, extending Bloom’s: that Plato is showing not only that thinking is the highest activity rather than doing, but that philosophers become ridiculous when they become kings. The philosopher-king is *not* really the ideal, since the ideal state he comes up with is silly.

Categories: philosophy Tags:

A Word: CONCLUSORY

August 11th, 2008 No comments

Conclusory: relating to an assertion for which no
supporting evidence is offered (“a conclusory argument”).

Categories: words Tags:

Stern’s Ely Lecture on Climate Change and DIscounting

August 8th, 2008 No comments

I just finished reading Prof. Stern’s Ely Lecture ( Stern, Nicholas. 2008. “The Economics of Climate Change”, American Economic Review 98(2), pp. 1-37.). He is in favor of drastic measures to reduce CO2 emissions. Concentrations are now 430 ppm and he wants to stabilize them at 550 ppm. He is fearful of a 5 degree Centigrade temperature increase otherwise. Here are my notes.

1. He says the most recent warm period was around 3 million years ago. Really? There have been lots of ice ages and warmings.

2. He dismisses geoengineering in one paragraph with weak arguments.

3. His Figure 4 from McKinsey has lots of *negative* abatement costs– things such as insulation improvement, fuel-efficient commercial vehicles, water heating, etc. We can’t believe any of that. If it saves money, why isn’t it done already? Liquidity constraints?

4. (p. 13). He cites 1.5% as the indexed bonds rate of return on longterm government bonds, and 6-7 percent for private investments:

In the United Kingdom and United States, we find (relatively) “riskless,” indexed lending rates on government bonds centered around 1.5 percent over very long periods. For private very long-run rates of return on equities, we find rates centered around 6 or 7 percent (Rajnish Mehra and Edward C. Prescott 2003, 892; Kenneth J. Arrow et al. 2004, 156; Sree Kochugovindan and Roland Nilsson 2007a, 64; 2007b, 71).

He has a puzzling sentence about what discount rate to use:

Given that it is social discount rates that are at issue, and also that actions to reduce carbon are likely to be financed via the diversion of resources from consumption (via pricing) rather than from investment, it is the long-run riskless rates associated with consumer decisions that have more relevance than those for the investment-related equities.

This is a good question, but what is the implication? Consumers are willing to borrow at rates on the order of 10%, so is that the appropriate social discount rate?

He makes the point that environmental goods’ prices will change (though he does not point out that those goods are a tiny part of the consumption basket):

Suppose, however, that we persisted with the argument that it is better to invest at 6-7 percent and then spend money on overcoming the problems of climate change later rather than spending money now on these problems. The multi-good nature of the problem, together with the irreversibilities from GHG accumulation and climate change, tell us that we would be making an additional mistake. The price of environmental goods will likely have gone up very sharply, so that our returns from the standard types of investment will buy us much less in reducing environmental damage than resources allocated now (see also Section I on the costs of delay).12 This reflects the result that if environmental services are declining as stocks of the environment are depleted, then the SDR with that good as numeraire will be negative. On this, see the interesting work by Michael Hoel and Thomas Sterner (2007), Sterner and U. Martin Persson (2007) and Roger Guesnerie (2004), and also the Stern Review (Stern 2007, 60). Environmental services are also likely to be income elastic, which will further reduce the implied SDR.

He has some useful sources on the appropriate rate of pure utility time preference:

Indeed, the ethical proposition that delta should be very small or zero has appealed to a long line of illustrious economists including Frank P. Ramsey (1928, 543), Arthur Cecil Pigou (1932, 24–5), Roy F. Harrod (1948, 37–40), Robert M. Solow (1974, 9), James A. Mirrlees (Mirrlees and Stern 1972), and Amartya Sen (Sudhir Anand and Sen 2000). I have heard only one ethical argument for positive delta (Wilfred Beckerman and Hepburn 2007; Simon Dietz, Hepburn, and Stern 2008) that has some traction—namely a temporal interpretation of the idea that one will have stronger fellow feelings for those closer to us (such as family or clan) relative to those more distant.

When it came to choosing a social discount rate, Stern is opposed to using market interest rates. Later, though, when it comes to choosing the appropriate amount of equality and income redistribution, he slyly switches to favoring observed amounts:

Value judgements are, of course, precisely that and there will be many different positions. They will inevitably be important in this context— they must be discussed explicitly and the implications of different values should be examined. Examples follow of what we find when we turn to empirical evidence and try to obtain implied values (the “inverse optimum” approach). Empirical evidence can inform, but not settle, discussions about value judgements… The upshot is that empirical estimates of implied welfare weights can give a wide range of eta, including h below one and even as little as zero.

Here he is trying to squirm out of the powerful growing-income argument against a low social discount rate. The argument goes like this. Suppose we are considering taking $1,000 away from someone earning $40,000/year so we can give $1,600 to someone else earning $107,000/year. Should we do it? Despite the increase in social wealth, it seems unfair and not calculated to increase total happiness. Yet that is what happens when we require $1,000 in abatement costs in in 2008 because it has a 1%/year return in benefits obtained in 50 years, if incomes grow at 2%/year in the meantime. This argument is particularly powerful against liberals, though it works for conservatives too, and lays out starkly the forced transfers that libertarians hate.

There is a lot of posturing going on:

Costa Rica, New Zealand, and Norway, declared targets of 100 percent reductions by 2050, i.e., “going carbon-neutral.” … California has a target of 80 percent reductions by 2050. France has its “Facteur Quatre”: dividing by 4, or 75 percent reductions, by 2050 (Stern 2007, 516). The United Kingdom has a 60 percent target but the Prime Minister Gordon Brown indicated in November 2007 that this could be raised to 80 percent (Brown 2007). Australia, under the new government elected at the end of November 2007, has now signed Kyoto and has a target of 60 percent…

Costa Rica doesn’t matter of course, any more than the United Kingdom does, or anybody else but China and India:

Even with fairly conservative estimates, it is likely that, under BAU, China will reach current European per capita emissions levels within 20-25 years. With its very large population, over this time China under BAU will emit cumulatively more than the USA and Europe combined over the last 100 years.

“BAU” means “business as usual”.

Barack Obama’s Economic Policies

August 6th, 2008 2 comments

From Obama for
President
website, here are some of his economic policies, with my
commentary.

* Provide Additional Tax Rebates to American Workers: The economy
has continued to weaken significantly, despite congressional action to
provide immediate tax rebates to American consumers. Stimulus: $20
billion.

Good. Taxes are tending to increase, so cutting them is good, even if
the tax cut is called a rebate.

* Establish a $10 billion Foreclosure Prevention Fund: Given the
downturn in the economy, Obama is calling for immediate creation of
his Foreclosure Prevention Fund that will dramatically increase
emergency pre-foreclosure counseling, and will help families facing
foreclosure to responsibly refinance their mortgages or sell their
homes. Obama’s plan will not help speculators, people buying vacation
homes or people that falsely represented their incomes. It is meant to
help responsible homeowners through this difficult period. Stimulus:
$10 billion.

Bad. People who are overextended are given plenty of time by their
banks, who lose money from foreclosures. The industry of reckless
lending should not be subsidized this way.

* Provide $10 billion in Relief for State and Local Governments
Hardest-Hit by the Housing Crisis to Prevent Cuts in Vital Services:
Because of the housing crisis and the weakening economy, many state
and local governments are facing significant revenue shortfalls.
Barack Obama believes that in the areas hardest-hit by the housing
crisis we should provide immediate, temporary funding to state and
local governments so that the decline in property values does not
cause them to slash critical public services and cut vital
infrastructure spending. Stimulus: $10 billion.

Bad. Localities can raise their own taxes if they want to, rather
than using national taxes.

* Extend and Expand Unemployment Insurance: Barack Obama believes
we must extend and strengthen the Unemployment Insurance (UI) program
to address the needs of the long-term unemployed, who currently make
up nearly one-fifth of the unemployed and are often older workers who
have lost their jobs in manufacturing or other industries and have a
difficult time finding new employment. Expanding UI is one of the most
effective ways to combat economic turmoil; every dollar invested in UI
benefits results in $1.73 in economic output. Obama is calling for a
temporary expansion of the UI program for those who have exhausted
their current eligibility. Stimulus: $10 billion.

Bad. We shouldn’t encourage people to stay unemployed.

* Provide a Tax Cut for Working Families: Obama will restore
fairness to the tax code and provide 150 million workers the tax
relief they need. Obama will create a new “Making Work Pay” tax credit
of up to $500 per person, or $1,000 per working family. The “Making
Work Pay” tax credit will completely eliminate income taxes for 10
million Americans.

Bad. We’ve already done too much of this. It’s good for everyone to
contribute at least a little in income tax. Also, this plan does
exactly what the Earned Income Credit is supposed to be doing
already.

* Eliminate Income Taxes for Seniors Making Less than $50,000:
Barack Obama will eliminate all income taxation of seniors making less
than $50,000 per year. This proposal will eliminate income taxes for 7
million seniors and provide these seniors with an average savings of
$1,400 each year. Under the Obama plan, 27 million American seniors
will also not need to file an income tax return.

Bad. Why should old people get a special tax break?

* Simplify Tax Filings for Middle Class Americans: Obama will
dramatically simplify tax filings so that millions of Americans will
be able to do their taxes in less than five minutes. Obama will ensure
that the IRS uses the information it already gets from banks and
employers to give taxpayers the option of pre-filled tax forms to
verify, sign and return. Experts estimate that the Obama proposal will
save Americans up to 200 million total hours of work and aggravation
and up to $2 billion in tax preparer fees.

Good idea.

* Fight for Fair Trade: Obama will fight for a trade policy that
opens up foreign markets to support good American jobs. He will use
trade agreements to spread good labor and environmental standards
around the world and stand firm against agreements like the Central
American Free Trade Agreement that fail to live up to those important
benchmarks. Obama will also pressure the World Trade Organization to
enforce trade agreements and stop countries from continuing unfair
government subsidies to foreign exporters and nontariff barriers on
U.S. exports.

* Amend the North American Free Trade Agreement: Obama believes
that NAFTA and its potential were oversold to the American people.
Obama will work with the leaders of Canada and Mexico to fix NAFTA so
that it works for American workers.

Bad. He’s a protectionist.

* Improve Transition Assistance: To help all workers adapt to a
rapidly changing economy, Obama would update the existing system of
Trade Adjustment Assistance by extending it to service industries,
creating flexible education accounts to help workers retrain, and
providing retraining assistance for workers in sectors of the economy
vulnerable to dislocation before they lose their jobs.

Bad. Boondoggle spending.

* Invest in our Next Generation Innovators and Job Creators: Obama
will create an Advanced Manufacturing Fund to identify and invest in
the most compelling advanced manufacturing strategies. The Fund will
have a peer-review selection and award process based on the Michigan
21st Century Jobs Fund, a state-level initiative that has awarded over
$125 million to Michigan businesses with the most innovative proposals
to create new products and new jobs in the state.

* Double Funding for the Manufacturing Extension Partnership: The
Manufacturing Extension Partnership (MEP) works with manufacturers
across the country to improve efficiency, implement new technology and
strengthen company growth. This highly-successful program has engaged
in more than 350,000 projects across the country and in 2006 alone,
helped create and protect over 50,000 jobs. But despite this success,
funding for MEP has been slashed by the Bush administration. Barack
Obama will double funding for the MEP so its training centers can
continue to bolster the competitiveness of U.S. manufacturers.

Bad. This is fascist industrial policy, the kind that was widely
ridiculed in the 1980’s. The government shouldn’t be funding private
investment.

* Invest In A Clean Energy Economy And Create 5 Million New Green
Jobs: Obama will invest $150 billion over 10 years to advance the next
generation of biofuels and fuel infrastructure, accelerate the
commercialization of plug-in hybrids, promote development of
commercial scale renewable energy, invest in low emissions coal
plants, and begin transition to a new digital electricity grid. The
plan will also invest in America’s highly-skilled manufacturing
workforce and manufacturing centers to ensure that American workers
have the skills and tools they need to pioneer the first wave of green
technologies that will be in high demand throughout the world.

Okay.

* Create New Job Training Programs for Clean Technologies: The
Obama plan will increase funding for federal workforce training
programs and direct these programs to incorporate green technologies
training, such as advanced manufacturing and weatherization training,
into their efforts to help Americans find and retain stable, high-
paying jobs. Obama will also create an energy-focused youth jobs
program to invest in disconnected and disadvantaged youth.

Bad. Industrial policy again.

[To be continued]

* Boost the Renewable Energy Sector and Create New Jobs: The Obama
plan will create new federal policies, and expand existing ones, that
have been proven to create new American jobs. Obama will create a
federal Renewable Portfolio Standard (RPS) that will require 25
percent of American electricity be derived from renewable sources by
2025, which has the potential to create hundreds of thousands of new
jobs on its own. Obama will also extend the Production Tax Credit, a
credit used successfully by American farmers and investors to increase
renewable energy production and create new local jobs.

Terrible idea, and rotten economics.

Barack Obama believes that it is critically important for the United
States to rebuild its national transportation infrastructure – its
highways, bridges, roads, ports, air, and train systems – to
strengthen user safety, bolster our long-term competitiveness and
ensure our economy continues to grow.

* Create a National Infrastructure Reinvestment Bank: Barack Obama
will address the infrastructure challenge by creating a National
Infrastructure Reinvestment Bank to expand and enhance, not supplant,
existing federal transportation investments. This independent entity
will be directed to invest in our nation’s most challenging
transportation infrastructure needs. The Bank will receive an infusion
of federal money, $60 billion over 10 years, to provide financing to
transportation infrastructure projects across the nation. These
projects will create up to two million new direct and indirect jobs
per year and stimulate approximately $35 billion per year in new
economic activity.

Infrastructure is what a lot of our porkbarrel spending has been about. This Bank would have huge patronage power and would undoubtedly be corrupt, just like Democrat-led Fannie Mae and Freddie Mac.

* Invest in the Sciences: Barack Obama supports doubling federal
funding for basic research …

* Make the Research and Development Tax Credit Permanent: Barack
Obama wants investments in a skilled research and development
workforce and technology infrastructure to be supported here in
America so that American workers and communities will benefit. Obama
wants to make the Research and Development tax credit permanent so
that firms can rely on it when making decisions to invest in domestic
R&D over multi-year timeframes.

I do like that.

* Deploy Next-Generation Broadband: Barack Obama believes we can
get broadband to every community in America through a combination of
reform of the Universal Service Fund, better use of the nation’s
wireless spectrum, promotion of next-generation facilities,
technologies and applications, and new tax and loan incentives.

I don’t know much about that.

* Provide Tax Relief for Small Businesses and Start Up Companies:
Barack Obama will eliminate all capital gains taxes on start-up and
small businesses to encourage innovation and job creation. Obama will
also support small business owners by providing a $500 “Making Work
Pay” tax credit to almost every worker in America. Self-employed small
business owners pay both the employee and the employer side of the
payroll tax, and this measure will reduce the burdens of this double
taxation.

This sounds like a good tax cut.

* Create a National Network of Public-Private Business Incubators:
Barack Obama will support entrepreneurship and spur job growth by
creating a national network of public-private business incubators.
Business incubators facilitate the critical work of entrepreneurs in
creating start-up companies. Obama will invest $250 million per year
to increase the number and size of incubators in disadvantaged
communities throughout the country.

Sounds like pork to me.

Obama will strengthen the ability of workers to organize unions. He
will fight for passage of the Employee Free Choice Act. Obama will
ensure that his labor appointees support workers’ rights and will work
to ban the permanent replacement of striking workers. Obama will also
increase the minimum wage and index it to inflation to ensure it rises
every year.

All bad. He wants to support unionized workers at the expense of poor workers who might compete with them.

* Ensure Freedom to Unionize: Obama believes that workers should
have the freedom to choose whether to join a union without harassment
or intimidation from their employers. Obama cosponsored and is strong
advocate for the Employee Free Choice Act, a bipartisan effort to
assure that workers can exercise their right to organize. He will
continue to fight for EFCA’s passage and sign it into law.

I don’t know this bill, but unionizing already has lots of protection, since the 1930s.

* Fight Attacks on Workers’ Right to Organize: Obama has fought
the Bush National Labor Relations Board (NLRB) efforts to strip
workers of their right to organize. He is a cosponsor of legislation
to overturn the NLRB’s “Kentucky River” decisions classifying hundreds
of thousands of nurses, construction, and professional workers as
“supervisors” who are not protected by federal labor laws.

I don’t know this decision, but my guess is that he wants to force all these people to join unions against their will.

* Protect Striking Workers: Obama supports the right of workers to
bargain collectively and strike if necessary. He will work to ban the
permanent replacement of striking workers, so workers can stand up for
themselves without worrying about losing their livelihoods.

If a worker decides his employer is not paying him enough and goes on strike, why shouldn’t the employer be allowed to hire someone else who would be happy to get that wage?

* Raise the Minimum Wage: Barack Obama will raise the minimum
wage, index it to inflation and increase the Earned Income Tax Credit
to make sure that full-time workers earn a living wage that allows
them to raise their families and pay for basic needs.

Bad economics.What he really wants is to get those workers fired so union workers who pay him big campaign contributions will be hired instead.

* Create a New FHA Housing Security Program: Barack Obama strongly
supports the efforts of Senate Banking Committee Chair Chris Dodd
(D–CT) to create a new Federal Housing Administration (FHA) program
that will provide meaningful incentives for lenders to buy or
refinance existing mortgages and convert them into stable 30-year
fixed mortgages. This plan provides an important federal backstop –
not a bailout – to this growing national problem. Neither lenders nor
homeowners would receive a windfall from this plan.

I don’t know that bill.

* Create a Universal Mortgage Credit: Obama will create a 10
percent universal mortgage credit to provide homeowners who do not
itemize tax relief. This credit will provide an average of $500 to 10
million homeowners, the majority of whom earn less than $50,000 per
year.

* Ensure More Accountability in the Subprime Mortgage Industry:
Obama has been closely monitoring the subprime mortgage situation for
years, and introduced comprehensive legislation over a year ago to
fight mortgage fraud and protect consumers against abusive lending
practices. Obama’s STOP FRAUD Act provides the first federal
definition of mortgage fraud, increases funding for federal and state
law enforcement programs, creates new criminal penalties for mortgage
professionals found guilty of fraud, and requires industry insiders to
report suspicious activity.

* Mandate Accurate Loan Disclosure: Obama will create a Homeowner
Obligation Made Explicit (HOME) score, which will provide potential
borrowers with a simplified, standardized borrower metric (similar to
APR) for home mortgages. The HOME score will allow individuals to
easily compare various mortgage products and understand the full cost
of the loan.

* Create Fund to Help Homeowners Avoid Foreclosures: Obama will
create a fund to help people refinance their mortgages and provide
comprehensive supports to innocent homeowners. The fund will be
partially paid for by Obama’s increased penalties on lenders who act
irresponsibly and commit fraud.

* Close Bankruptcy Loophole for Mortgage Companies: Obama will
work to eliminate the provision that prevents bankruptcy courts from
modifying an individual’s mortgage payments. Obama believes that the
subprime mortgage industry, which has engaged in dangerous and
sometimes unscrupulous business practices, should not be shielded by
outdated federal law.

* Create a Credit Card Rating System to Improve Disclosure: Obama
will create a credit card rating system, modeled on five-star systems
used for other consumer products, to provide consumers an easily
identifiable ranking of credit cards, based on the card’s features.
Credit card companies will be required to display the rating on all
application and contract materials, enabling consumers to quickly
understand all of the major provisions of a credit card without having
to rely exclusively on fine print in lengthy documents.

* Establish a Credit Card Bill of Rights to Protect Consumers:
Obama will create a Credit Card Bill of Rights to protect consumers.
The Obama plan will:
o Ban Unilateral Changes
o Apply Interest Rate Increases Only to Future Debt
o Prohibit Interest on Fees
o Prohibit “Universal Defaults”
o Require Prompt and Fair Crediting of Cardholder Payments

* Cap Outlandish Interest Rates on Payday Loans and Improve
Disclosure: Obama supports extending a 36 percent interest cap to all
Americans. Obama will require lenders to provide clear and simplified
information about loan fees, payments and penalties, which is why
he’ll require lenders to provide this information during the
application process.

* Encourage Responsible Lending Institutions to Make Small
Consumer Loans: Obama will encourage banks, credit unions and
Community Development Financial Institutions to provide affordable
short-term and small-dollar loans and to drive unscrupulous lenders
out of business.

* Reform Bankruptcy Laws to Protect Families Facing a Medical
Crisis: Obama will create an exemption in bankruptcy law for
individuals who can prove they filed for bankruptcy because of medical
expenses. This exemption will create a process that forgives the debt
and lets the individuals get back on their feet.

* Expand the Family and Medical Leave Act: The FMLA covers only
certain employees of employers with 50 or more employees. Obama will
expand it to cover businesses with 25 or more employees. He will
expand the FMLA to cover more purposes as well, including allowing
workers to take leave for elder care needs; allowing parents up to 24
hours of leave each year to participate in their children’s academic
activities; and expanding FMLA to cover leave for employees to address
domestic violence.

* Encourage States to Adopt Paid Leave: As president, Obama will
initiate a strategy to encourage all 50 states to adopt paid-leave
systems. Obama will provide a $1.5 billion fund to assist states with
start-up costs and to help states offset the costs for employees and
employers.

* Expand High-Quality Afterschool Opportunities: Obama will double
funding for the main federal support for afterschool programs, the
21st Century Learning Centers program, to serve a million more
children. Obama will include measures to maximize performance and
effectiveness across grantees nationwide.

* Expand the Child and Dependent Care Tax Credit: The Child and
Dependent Care Tax Credit provides too little relief to families that
struggle to afford child care expenses. Obama will reform the Child
and Dependent Care Tax Credit by making it refundable and allowing
low-income families to receive up to a 50 percent credit for their
child care expenses.

* Protect Against Caregiver Discrimination: Workers with family
obligations often are discriminated against in the workplace. Obama
will enforce the recently-enacted Equal Employment Opportunity
Commission guidelines on caregiver discrimination.

* Expand Flexible Work Arrangements: Obama will create a program
to inform businesses about the benefits of flexible work schedules;
help businesses create flexible work opportunities; and increase
federal incentives for telecommuting. Obama will also make the federal
government a model employer in terms of adopting flexible work
schedules and permitting employees to request flexible arrangements.

* Housing: In the U.S. Senate, Obama introduced the STOP FRAUD Act
to increase penalties for mortgage fraud and provide more protections
for low-income homebuyers, well before the current subprime crisis
began.

* Predatory Lending: In the Illinois State Senate, Obama called
attention to predatory lending issues. Obama sponsored legislation to
combat predatory payday loans, and he also was credited with lobbying
the state to more closely regulate some of the most egregious
predatory lending practices.

* American Jobs: Barack Obama introduced the Patriot Employer Act
of 2007 to provide a tax credit to companies that maintain or increase
the number of full-time workers in America relative to those outside
the US; maintain their corporate headquarters in America; pay decent
wages; prepare workers for retirement; provide health insurance; and
support employees who serve in the military.

Categories: Economics, elections, obama Tags:

John McCain’s Economic Policies

August 6th, 2008 No comments

I’ve just been asked to sign an economists’ letter of support for John McCain’s economic plan. In general I don’t like that kind of letter unless it’s on some issue where pretty much all top economists can agree. Possibly there would be a consensus on the policy proposals mentioned in the letter itself, but McCain has some bad economic policy views not mentioned there.

First, what’s in the letter. I’ve omitted the first and last “puff” parts.

His plan would control government spending by vetoing every bill with earmarks, implementing a constitutionally valid line-item veto, pausing non-military discretionary government spending programs for one year to stop their explosive growth and place accountability on federal government agencies.

Vetoing every bill with earmarks is a bad idea. He thereby throws away his bargaining power with Congress, and his ability to buy votes for important national-interest policies. Often a president needs to buy support for his foreign policy or trade policy by using earmarks.

The line-item veto would be good.

Pausing spending is bad. I don’t know that most agencies’ budgets have been growing too fast– the big complaint is about earmarks.

His plan would keep taxes from rising, because higher tax rates are exactly the wrong policy to restore economic growth, especially at this time.

His plan would reduce tax rates by cutting the tax that corporations pay to 25 percent in line with other countries, by completely phasing out the alternative minimum tax, by increasing the exemption for dependents, by permitting the first-year expensing of new equipment and technology, and by making permanent a reformed tax credit for R&D.

That’s pretty good. I’m not sure about eliminating the AMT, though, because it’s a flat tax, which is a good thing.

His plan would also create a new and much simpler tax system and give Americans a free choice of whether to pay taxes under that simple system or the current complex and burdensome income tax.

That’s a good idea.

His plan would open new markets for American goods and services and thereby create additional jobs for Americans by supporting good free trade agreements, such as the one with Colombia, and working with leaders around the world to avoid isolationism and protectionism. His plan would also reform education, retraining, and other assistance programs so they better help those displaced by trade and other changes in the economy. His plan addresses problems in the financial markets and housing markets by calling for increased transparency and accountability, by targeted assistance to deserving homeowners to refinance their mortgages, and by opposing so-called reform plans which would raise the costs of home-ownership in the future.

Free trade is good. “Deserving homeowners” shouldn’t be bailed out. We DO need reforms to raise the cost of home ownership for the rich.

Now for some other things from the Issues section of his website (accessible via http://www.johnmccain.com/Issues/JobsforAmerica/energy.htm.

John McCain will put our country on track to construct 45 new nuclear power plants by 2030 with the ultimate goal of eventually constructing 100 new plants.

Very good.

John McCain will encourage the market for alternative, low carbon fuels such as wind, hydro and solar power. … John McCain believes in an even- handed system of tax credits that will remain in place until renewable energy has progressed to the point that it is competitive with conventional energy sources.

Bad.

John McCain will commit our country to expanding domestic oil and natural gas exploration. The current federal moratorium on drilling in the Outer Continental Shelf stands in the way of energy exploration and production. John McCain believes it is time for the federal government to lift these restrictions and work with states to put our own reserves to use.

Good.

For every automaker who can sell a zero-emissions car, John McCain will commit a $5,000 tax credit for each and every customer who buys that car. For other vehicles, whatever type they may be, the lower the carbon emissions, the higher the tax credit.

Bad.

John McCain has long supported CAFE standards – the mileage requirements that automobile manufacturers’ cars must meet. Some carmakers ignore these standards, pay a small financial penalty, and add it to the price of their cars. John McCain believes that the penalties for not following these standards must be effective enough to compel carmakers to produce fuel-efficient vehicles.

Bad.

John McCain will make greening the federal government a priority of his administration…. By applying a higher efficiency standard to new buildings leased or purchased and retrofitting existing buildings, we can save taxpayers money in energy costs, and move the construction market in the direction of green technology.

Bad

John McCain will lead the fight for medical liability reform that eliminates lawsuits directed at doctors who follow clinical guidelines and adhere to proven safety protocols.

Good.

… John McCain will give every family a refundable tax credit – cash towards insurance – of $5,000 (Individuals receive $2,500). Every family in America, regardless of the source of their insurance or how much they make will get the same help. Families will be able to stay with their current plan, or choose the insurance provider that suits them best and have the money sent directly to the insurance provider.

This sounds crazy, so it’s probably not quite as stated. As stated, a family already receiving $8000/year in employer-provided insurance could take the government’s $5000 and top up their insurance with superduper coverage–say, for plastic surgery, air fares to exotic hospitals, etc. Probably the plan is limited to basic health insurance, in which case it might not be so bad.

Americans need insurance that follows them from job to job. Too many job decisions today are controlled by a fear of losing health care. Americans want insurance that is still there if they retire early and does not change if they take a few years off to raise the children. John McCain will lead the reform for portable insurance.

I’m not sure about that one. It’s a good question as to what that will do to adverse selection.

[to be continued]

Categories: Economics, elections Tags:

A Good Sentence on Rescuing Banks

August 6th, 2008 No comments

I liked this sentence from Prof. Buiter’s blog, both in sound and sentiment:

I will refute his argument, focusing mainly on the case against bailing out Fannie Mae and Freddie Mac, unless this involves the euthanasia of the existing shareholders of the two GSEs and a material haircut for their creditors.

Categories: Economics, writing Tags: