Deinonychus antirrhopus

Kevin Drum Rates Bush

Kevin has a long post where he rates Bush on a number of issues ranging from the economy to education to policy in Afghanistan. What caught my, naturally, eye was the economics rating. Here is how Kevin rated Bush,

Economic policy: I have no idea what he thinks he's doing here. I really don't. So score this as a major vote for incompetence, 0 points out of 10.

Complete incompetence? While I am not thrilled with Bush's fiscal spending, I think it is ridiculous to say that Bush is completely incompetent. For this criticism to have any weight at all (and given Kevin's past econoblogging his comments along these lines only have weight with those who have a pathological hatred of Bush). The tax cuts probably came right at a time to provide some stimulus to the economy. There were no serious country offers for the most part. There was lots of bleating about deficits, but running deficits is considered normal counter cyclical economic policy. There was lots of bleating that the tax cuts went to the rich, but there just isn't much the federal government can cut there anymore. Most of the federal taxes in this country are paid by those who are considered to be rich. The only alternative that comes to mind was Robert Reich's plan to cut the Social Security payroll tax. The problem is that this would have been a small tax cut and would have only brought forward the day the Social Security Trust Fund goes belly-up.

Now you can argue taht the tax cuts should not be permanent, the steel tariffs were a mistake, but to call the policies the product of complete incompetence is just silly. The counter proposals on the other hand from most on the left end of the spectrum have been mind numbling idiotic. Lots of rambling about deficits. Well, there are three ways to reduce a deficit.

• cut spending
• raise taxes
• a combination of raising taxes and spending cuts.

I don't think there were any serious proposals to cut any spending. In fact, for the most part no Democrat has actually complained about the spending increases. So that leave only raising taxes. Raising taxes in the middle of a recession is moronic.

Further, when you look at the Knucklehead Nine all of them want to do two things:

1. Repeal the Bush tax cuts.
2. Spend that revenue someplace else.

The last one points out to what dishonest knaves the Knucklehead Nine are (and their sycophants). Deficits bad...except when Democrats run them up.

Now the only other thing I can see somebody pointing a finger at and saying, "That right there is a serious problem," is the employment/unemployment number. The problem is that it looks like even that is about to turn. Sure, unemployment is not going to get back down to the 4.0-3.9% range, but that level of unemployment is exceptionally low. Using that as your baseline is like calling your child an abject failure for not bringing home all A's on his report card. Even President Clinton stayed in that range of unemployment for a short time (about 15 months). Further, in looking at many indicators for the employment/unemployment situation things look to be getting better. The civillian non-farm payroll has been rising for three months in a row. There are now more people employed than at the start of the recession (137,648,000 in February of 2001 vs. 138,014,000 for October of 2003). Jobless claims have been coming lower in several of the past few months. Corporate profits are up, GDP is way up (yes, it isn't sustainable). All these things suggest thet employment situation will soon be changing.

Lets also throw in the fact that the NY Times has gone on record indicating that the big issue for the next election could very well be inflation. You don't typically get problems with inflation during a recession. You usually run into problems with inflation when the economy is growing and unemployment is low. It is these two things that can induce the Federal Reserve to raise interest rates. Why is the NY Times suggesting such a strategy if Bush and his team of economic advisors are complete dunderheads?

Giving Bush a zero here is indicative of somebody who can't or wont take their ideological blinders off.

The Canadian Health Care System

I was cruising through the Debunkers site and found an interesting thread on one person's take on the Canadian health care system. Now keep in mind this is just one incident, but I think it does highlight one of the things I have been discussing lately (click here and here) Namely that it is easy to "contain costs" when you look only at the dollars and cents and have a government run system. The government can simply mandate that costs will increase by only a given percent. This will indeed solve the problem. Further, if the government has enough control of the economy they might set limits on the wages of health care professionals as well.

Of course, the downside to this method of keeping the costs down are highlighted, IMO, in that thread. Longer wait times for non-life threatening injuries. Also, fewere medical care resources. Canada is notorious for having only a few MRI machines in the entire country (for those looking for an alternate link, click here). Also, look at the median waiting time of 12 weeks (about 3 months). I'm sure when there is a serious problem the wait time is small, but to pretend this does not impose costs on others is indicative of the flawed thinking that is present on health care issues.

Knucklehead Nine React to Bush's Trip

Well, it didn't take long for the "yeah, but"'s to come out. Bush gets flak for visit to Iraq [note to headline writer -- nice rhyme]

Wesley Clark spokesperson:
"The trip highlights how insecure Iraq is and shows how we need to get our allies in to get the American face off the occupation,"

Howard Dean spokesperson:
"The president did the right thing by visiting the troops yesterday, but this visit won't change the fact that those brave men and women should never have been fighting in Iraq in the first place,"

John Kerry:
"The president's trip to Baghdad was the right thing to do for our country. ... But, when Thanksgiving is over, I hope the president will take the time to correct his failed policy in Iraq that has placed our soldiers in a shooting gallery." [interesting side note: John Kerry served in Vietnam]

John Edwards:
"[The trip] was a nice thing to do, but unless this visit is followed by a change in policy that brings in our allies and truly internationalizes the effort, our mission is not going to be successful."

And in the category of "sealing the coffin lid with a pneumatic nail gun" we have this from Joe Lieberman:
"I don't have anything political or partisan to say about it.... There are days when you have to say, we're not Republicans, we're not Democrats. We are Americans."

Wanna See an Idiot?

Then click here

Amazing isn't it. That is one of the commentators over at the Daily Kos.

First off, I actually know the guy who runs the section of BEA that calculates the GDP number, Brent Moulton. Brent is a student of Arnold Zellner from the University of Chicago. I also happen to know their Chief Statistician, Dennis Fixler. Dennis recieved his PhD from Purdue University. Both are extremely intelligent and they know alot about the economy and economics.

I also love the bit how this dimwit announces they don't know anything about the real world economy, then launches into his own (completely silly) theoretical ramblings.

Turkey Results

Well the brined turkey turned out really well. It wasn't salty at all, and the breast meat was juicy and tender. I also covered the breast of the turkey with an aluminum foil breast plate (shiny side up) to deflect the heat. This allowed the dark meat to reach a higher temp., while not drying out the breasts.

In comments to the earlier post some have suggested steaming the bird to keep it moist. That would probably work, but one concern is the skin. I like the crispy skin of a baked turkey. So, I'll probably stick with this method. Others inject a marinade into their turkey, and that can work as well. My father used to use this trick (prior to switching to brining) and he had pretty good results.

I also made my own cranberry sauce this year too. It was actually very easy and quite quick. The cranberry sauce was better than anything I have had that was store bought and I think I'll do this every year from now on.

The really great news is that I'll have plenty of left over turkey and cranberry sauce for sandwiches!

Daily Kos on GOP Arm Twisting

Daily Kos highlights a Robert Novak column about Republican arm twisting over the Medicare prescription drug plan. Kos asks,

Could you see Clinton or Pelosi doing something like this? Doesn't seem to be a good way to engender loyalty. Then again, their caucus is a lot more cohesive than ours. They vote en masse better than we can ever hope to achieve.

Yes I can. And of course there was no arm twisting with the Democrats to keep heavy weight Democrats from challenging Davis.

Of course, the problem is that these kind of strong arm tactics are rather deplorable. But it is indicative of somebody with huge ideological blinders on to not realize both sides do it.

Personal Income Increased

Personal incomes have been increasing since June of 2003.

	June	July	August	September	October
Personal Income	0.4	0.3	0.3	0.3	0.4
Disposable Personal Income	0.2	1.5	0.7	-1.2	0.4
Personal Consumption Expenditures	0.5	0.7	0.8	-0.6	0.0

Wage and salary disbursements were also up $8 billion for October. Don't anybody go telling this to the guys at Daily Kos, it'd probably ruin their Thanksgiving.

ECRI's Weekly Leading Economic Indicator

ECRI's weekly leading economic indicator is up.

The growth rate for the indicator is also up, at 12% vs. 11% last week.

Happy Thanksgiving to the Troops!

Wow, I about drove off the road when I heard this one on the radio. Bush Makes Surprise Thanksgiving Visit to Iraq.

In a stunning mission conducted under enormous secrecy, President Bush flew into Baghdad today aboard Air Force One to have dinner with United States officials and a group of astonished American troops.

His trip _ the first ever to Iraq by an American president _ had been kept a matter of absolute secrecy by the White House, which had said that he would be spending the Thanksgiving weekend at his ranch outside Crawford, Tex.

Wow, what a stunningly wonderful surprise for the troops, and I'm amazed that they could pull it off without anyone finding out ahead of time.

Reaction from the loony left at the DU is, well, loony as usual. It's all about Hillary!

PaDUer:
You know he went there because Hillary is there..What a puke!

Terwilliger:
It's nothing but a 4th Quarter desperation play trying to stay equal with Hillary...what a fucking maroon Bush is[.]

Frances:
Very unlikely that Hillary knew he was going there. MUCH more likely that Rove planned this trip AFTER learning that Hillary would be in Iraq[.]

Neecy:
A campaign stunt, nothing more. A pathetic hanger-on because Hillary is over there. Just nauseating.

white_rider:
Bush has been out-Clintoned ... and now needs to save face! Hah! What the Democratic leadership should do is now forced Bush to make appearances everywhere. Take Bush off the campaign trail. Make him cancel fund-raising. Put well-known Democrats in photo-ops shots that will drive Rove crazy!

Are we seeing the birth of a new meme? Or just more DU goofiness?

Master/Slave Rename Suggestion

I'm sure most people have heard of the issue in L.A. about renaming computer equipment currently designated as master/slave as something else. Frankly, I agree. We do need to rename these things. My suggestion is

Pimp/'Ho

.
Seems to be more in line with the current vernacular.

Turkey Preperation...

Well I have now started preparing my Thanksgiving dinner. My turkey is sitting in a cooler of 38 degree brine (salt water). I have found this to be a reliable method for ensuring a nice moist turkey.

Two things to keep in mind when cooking your turkey. Stuffing is evil. Stuffing increases the amount of time to cook the bird, which can dry it out. Basting is evil. Basting does nothing for ensuring a moist bird. Why? The skin. Skin keeps things out. Also, basting means you open the oven letting the heat out. This means it'll take longer to cook which can mean a dry bird. So, to recap

• Basting is evil.
• Stuffing is evil.

Oh, and if you must have "stuffing" (a.k.a. dressing), prepare it in a dish with either drippings from the bird or using chicken stock. Seal your cassarole dish with tinfoil first, then put the lid on to help ensure your dressing is moist.

I hope everybody has a safe and happy Thanksgiving.

Economic Stupidity

Well, it seems the Los Angeles City Council has decided to be stupid. With the on-going grocery clerk/cashier strike hitting three major grocery stores, the L.A. City Council has decided to take a hand. They have decided that they will solve the problem by effectively enacting a living wage ordance.

You see, the grocery stores are very worried that when Wal-Mart opens its super-stores that have groceries they will be forced out of the market. Wal-Mart does not have a closed/union shop and as such pays its employees much less in terms of wages and benefits than the other major grocery stores. So to pre-empt this problem and to help bring about an end to the strike, the L.A. City Council wants to introduce an ordance that will force Wal-Mart and any other firm to pay a "comparable wage".

The problem is that this basically prevents entry into the market by the lower cost firms. This in turn results in higher prices for the consumer. So while there will undoubtedly be an increase/no decrease in the welfare for grocery store clerks it comes at the expense of lower/preventing an increase in welfare for consumers. On top of it, there are all the people who would have gotten jobs at the Wal-Mart stores, but teh wont be able too if Wal-Mart decides not to open the super-stores. Granted these jobs do not pay as much as the current grocery store jobs, but it is still a loss in welfare for those people who would have taken those jobs.

I have noted before that the actions of government can result in less competition and market power for firms in a given market. This is an excellent example. Basically the effect of this to homogenize the cost structures of firms. The implication of this is to prevent the low cost firms from entering a market, charging a lower price and still earning a profit. This results in higher cost firms leaving the market and the price in general to come down. The lower price makes consumers better off.

Now this does mean that people will be unemployed, but you know what, people don't stay unemployed forever. Further, it doesn't necessarily mean they have to take a lower paying job, or stay with a lower paying job. If this were the case then eventually the number of unemployed/under-employed people would be huge. This simply is not the case (and if you think it is, shut up and show me the data).

Sheesh....

For months I hardly get close to my bandwidth limit. Then I get several links from InstaPundit in a short period of time and bam, the bandwidth limit rises up like a great brick wall. Well, I've upgraded my hosting plan to double my bandwidth.

Daily Kos: Still Bearish

Daily Kos' poster Meteor Blades is hoping the economy goes south. After noting my post on the revised GDP numbers, the increase in corporate profits, and the increase in consumer confidence, Daily Kos' conclusion,

But, as I’ve noted previously, GDP is only one measure of economic well-being, one quarter is just one quarter, and my neighbor's unemployment benefits expired four-and-one-third quarters ago.

Quite right, but lets look again at the number of things I looked at in my post:

1. GDP
2. Corporate Profits
3. Consumer Confidence

Let me see...1, 2,...yes 3 things. I do believe that I have mastered the art of higher mathematics (counting to 3) while Meteor Blades is still mired in the basics like learning that 1 and 3 are not the same.

Further, these are not the only indicators that are looking better. Unemployment is looking better. So is the index for leading economic indicators compiled by the Conference Board.

Do these guys know what google.com is? Can't they find these sites and look at the data too? Sure the recovery isn't going great guns, but I'd like to remind people like Meteor Blade that the last recovery/expansion that went 10 years was a slow starter as well. It started in March of 1991 and really didn't get going until 1993. If this recovery/expansion last as long it'll be a long time till the Democrats see whe inside of the White House (barring some catastrophe such as complete failure in Iraq).

I love this bit,

In other words, consumer spending can’t outpace consumer income forever. Without a far greater increase in employment, consumer demand will fall because it must.

Of course, nobody is saying the economy is going to keep growing at a rate of 8.2%. That kind of growth is completely unsustainable, but if we see growth at half that level by the time the election rolls around unemployment will be down quite a bit.

Quite a pathetic showing from a poster at the Daily Kos.

Health Care: A Follow Up

After a bit of thought about my last post I thought a follow up would be good. Part of my problem with people like Matthew Yglesias is that they think only in very rigid ways. They approach the issue of costs of health care from purely a dollar and cents point of view. There is absolutely no thought about other non-monetary costs (i.e. opportunity costs).

What are opportunity costs? Those benefits that are forgone when you choose a specific action. Suppose you have an hour of free time. You could read a book, watch television, or take a nap. You decide to read a book. The costs of reading a book are not taking a nap or not watching television.

How does this relate to health care issues? Simple, if you want to control for the dollar expenditures you can increase the opportunity costs. Triple the wait times. Will you want to go see the doctor when you think you have bronchitis if it means a 2.25 hour wait vs. a 3/4 hour wait? I bet lots of people might just decide to wait and see if they get worse before waiting that length time. This will save you money in the end. You aren't expending health care resources on that individual who just walked out of the waiting room who did not see a doctor, have his blood pressure taken, his weight recorded, and so forth. Further, he is not going home with a prescription. All these things will save you money.

The other thing you can do is restrict how much your pay health care professionals. But what happens when the wage rate in a given sector falls and other wage rates do not? People leave that sector. So now doctors might decide to go into other high paying professions. Conversely they might worke fewer hours. Fewer hourse mean less patients treated. Again this will all save you money. But it is also reducing the amount of health care that society is consuming.

Ultimately what this boils down to is that, those who see the percentage of GDP going to health care as being too high as wanting society to consume less health care, and to make everybody equals in the overall reduced consumption. We'll have fewer resources dedicated to health care, and at the same time increase the number of people who can lay claim on those resources.

The other option is that they don't really care about controlling costs and are using it as a means to achieve and alternate end such as having the government allocate health care resources. This if fine if that is what you like, but if this is the case then the idea that there will be costs savings is false. In this scenario costs will probably increase and at a faster rate than they are now.

Now some might note what appears to be a paradox. That paradox is that even though health care resources are decreasing, infant mortality is also declining which on the surface appears to be a paradox. There does not have to be a paradox. One way out of this problem is for the government to simply allocate more resources towards lowering the infant mortality rate and under the non-command & control system. For there to be a paradox the amount of medical resources allocated towards infanats would have to decline and infnat mortality would also have to decline. That is the beauty of command-and-control systems. You want a result and don't care what the costs are you can get that result.

What is the Problem Here?

Brian Weatherson has looked at the OECD data and did some simple correlations to see what relationships there are between things like the percentage of health care that is funded by the government and its effect on things like life expectancy, medical expenditures share of GDP, etc. So, what is the problem? The problem is that he is trying to draw conclusions about fundamentally different systems.

You have on one hand the systems where the bulk of the systems have the government spending most of the money on health care, vs. the U.S. which tends not to do this (at this time). The problem is that this is an example of misleading with numbers (as opposed to lying with numbers--i.e., I think this example is unintentional). So why is this a problem?

It is a problem because in a system where you have more of a market influence people have more freedom of choice. That is if I want to go to the doctor I go (although it is best to call up and make an appointment). This is not necessarily the case with a government run system. There the costs can be contained by government fiat. We don't want health care expenditures to be more than x% of GDP therefore it is not going to be more than x% of GDP because we are only going to budget $y which will amount to about x%. A very big difference that can result in misleading statistics.

Further, the U.S., Mexico and Korea are also outliers in that they each have less than 50% of their health expenditures coming from the government. When we calculate the correlation coefficient between % of health care expenditures from the government and the % of GDP for health care expenditures is quite strongly negative, -0.41. At first this looks like it is making the case that government health care is more efficient, but is it?

For the hypothesis that government run health care to be more efficient you'd have to argue that people are getting the exact same level of care that they would be getting with a more market oriented system. The data do not show this to be the case. The differences in life expectancy is quite small and it is not clear if it is due to differences in life styles (for example Americans are supposedly quite fat, but then again smoking is more tolerated in other countries...net effect? Unclear, without more data). The only place there is a clear cut difference is in infant mortality. After removing Turkey from the data set (it is an outlier, no doubt about it) you get a life expectancy of about 5 vs. 7 for the U.S. Here, the correlation coefficient between Infant Mortality and Gov. Health Expenditures is a -0.15.

Another problem is that people are using these results erroneously. Matthew Yglesias is one such person who has used these numbers incorrectly not once, but twice (click here and here). Matthew has also slipped in an unstated assumption. He has slipped in the notion that government provided health care is more efficient in terms of overhead than private firms. Yes, the people who broght you the $600 hammer, and $2,000 toilet seat do things faster, cheaper, and better. Those lines you stand in at the DMV are actually highly efficient methods of processing applicants for driver's licenses. Note that Brian Weatherson does not make this assumption, one of his final comments is that the results are neutral on the issue of public vs. private (too bad Matthew didn't read to the end of the post).

Matthew then cites Milton Friedman for support, but a close reading of that long article gives some support for the points I have noted above,

Our mixed system has many advantages in accessibility and quality of medical care, but it has produced a higher level of cost than would result from either wholly individual choice or wholly collective choice.

And this,

In terms of holding down cost, one-payer directly administered government systems, such as exist in Canada and Great Britain, have a real advantage over our mixed system. As the direct purchaser of all or nearly all medical services, they are in a monopoly position in hiring physicians and can hold down their remuneration, so that physicians earn much less in those countries than in the United States. In addition, they can ration care more directly - at the cost of long waiting lists and much dissatisfaction.

Brian Weatherson's analysis is somewhat misleading, Matthew Yglesias' interpretation is outright deceptive and intentionally so.

Steve Antler Catches Krugman Misrepresenting Again

Big shock there. Of course, Antler is right, there are those economists who subscribe to the Real Business Cycle theory. There are also Austrians who take a dim view of the Federal Reserve Board and the lowering of interest rates.

I have been avoiding Krugman the past few weeks. I find that it does wonders to reduce the frustration level.

Limbaugh on Gay Marriage

I heard some comments by Rush Limbaugh yesterday regarding gay marriage that stuck with me. Luckily, he has a transcript.

Now, if heterosexual marriage is weakened as an institution already, is it wise to weaken it more? Or maybe we would want to strengthen it?

Now, some elements of the equal-rights movement is very noble. But however noble the equal-rights-for-all argument is, there's something deeply troubling about undercutting marriage and undercutting the Boy Scouts in order to get to some notion of equal rights. There's something just doesn't follow there. In order to get to equal rights we've got to undercut marriage and we've got to undercut the Boy Scouts and who knows what else. And, by the way, if an institution works as it is, we've go to weaken it, we've got to undercut it in the name of equal rights.

Rush is engaging in the old logical fallacy of Begging the Question. He blithely assumes that gay marriages will somehow undercut heterosexual marriage as an institution. In my humble opinion, that’s a premise that the opponents of gay marriage are obligated to prove before they can use it as a rationale for denying marriage to gay couples.

That’s not a simple proposition, to be sure. For one thing, how do you measure changes in the “strength” of marriage?

I’m open to being proved wrong. If someone can point me towards a logical support for the contention that gay marriages weaken the institution of marriage for heterosexuals, I’ll look at it. So far, all the arguments I’ve seen have either been based on religious beliefs or simple “it does!” assertions.

Revised Third Quarter GDP Numbers

Well the news just keeps getting better. The revised GDP numbers are even higher than anticipated, clocking in at 8.2% for last quarter.

Corporate profits are also up $105.5 billion for the third quarter vs. an increase of $80.6 billion in the second quarter. This will likely translate into some good news for the jobs market as firms will see the increasing profits as justification for hiring more workers.

Consumer confidence is also up for the third month in a row. Furthere this latest increase is substantial, in that it is the largest of the increases and the index has hit a high for the last year.

"Consumer confidence is now at its highest level since the Fall of 2002," says Lynn Franco, Director of The Conference Board’s Consumer Research Center. "The improvement in the Present Situation Index, especially in the jobs component, suggests that consumers believe a slow but sure labor market turnaround is underway. The rise in expectations is a signal that consumers will end this year much more upbeat than when the year began."

Bush has got to be happy about this. It looks like he'll be avoiding the problem his father had when facing Clinton.

Update: Visitors from the Daily Kos might also want to see this post. Yes, indeed GDP is but one indicator, but note my post covers three things. Somebody over at Daily Kos should tell Meteor Blade that 3 is greater than 1.

Bush and Spending

Daniel Drezner has a link filled post on Bush's Budget. Daniel rightly notes that Bush is spending alot, in alot of different areas. When you break the numbers down on a per household basis you get the following numbers

• The federal government is spending $20,000 per household.
• The federal government in taking in $17,000 in taxes per household.

It seems pretty obvious that Bush is using the Treasury to try and buy the next election.

Steve Antler at EconoPundit has a post on this too, but I think he is missing the point to some extent. He points to an article by Joe Klein and then segways into his project about modelling the effects of repealing Bush's tax break. Uh? I'm not arguing a repeal of Bush's tax cuts, neither, do I think, is Daniel Drezner or Andrew Sullivan. Nor for that matter is Joe Klein. If anything it is the opposite when Klein writes the following,

The Medicare bill contains large gifts to pharmaceutical manufacturers; the energy bill is a $23.5 billion bequest to traditional-energy producers, with additional billions worth of free-range pork tossed in. "This is classic machine politics, the sort of thing we used to do," said a prominent Democrat. Hence the Wall Street Journal's opposition to both bills. After all, Bush is running such huge deficits that they might imperil the prospect of endless tax cuts—and even "increase pressure to raise taxes to pay for" these new programs, the editors noted.

Okay, he's quoting the WSJ and the above may not be his actual feelings on the issue, but going from the spending profligacy to repealing the Bush tax cuts isn't what this is about. Fine, leave the tax cuts, but don't go tossing the all the pork around.

And I am not complaining about the increases in defense spending either. Yes I know there is a war. Yes I know military spending goes up in such situations. Yes I support the War on Terror and yes I want things to work out in Iraq. So fine, increase military spending. But some of these other increases are simply staggering. Education has gone up (depending on how you measure it) 25-30% in the last 3 years! Now we have the pork laden energy bill, the pork rich Medicare Bill which will bring about Medicare insolvency much sooner. Just wait till those Baby Boomers start to retire! This program is going to cost far more than $400 billion in its first 10 years, trust me.

Naturally Bush wants to win again and stay in the Oval Office. So he is using the Treasurey to buy off votes. The truly sad thing is may not work. Just because he tossed this nice pork covered bone to the elderly does not mean they have to vote Republican. Now wouldn't that be a pisser. Bush gets this damn bill passed, then loses the election. We get Dean in office who yanks the troops out of Iraq, and Saddam or his near twin takes power in Iraq, or even worse, Iraq becomes like Afghanistan and the new home for terrorist organizations. On top of it we have a bill that brings even closer the day that Medicare/Social Security go insolvent and these two programs start eating up more of the budget, and/or taxes have to be raised to pay for these money sucking programs.

Professor Bainbridge On Rumsfield's Management Style

Prof. Bainbridge notes that Secretary Rumsfield is trying to bring some of the notions of management school into the DoD. The key phrase seems to be continuous improvment. That is you have a process where you are continually looking at ways to improve your "research, design, production, and marketing, with continuous interaction among each function, so as to improve quality and customer satisfaction," when the Hell are you going to actually have time to do the acutal job?

The key paragraph (although the whole post is very good, so make sure to read it) is this one (in my opinion):

As we have seen, workers with a taste for formalization and hierarchy do not respond well to the demands of continuous improvement. Instead, workplaces dominated by such cultures tend to respond better to the management equivalents of Stephen Jay Gould's theory of punctuated equilibrium - such as management by exception. Under such approaches, periodic reviews are undertaken when circumstances have changed dramatically. These reviews result in adoption of new sets of rules. The review is then followed by a period of stability in which the rules are, at most, tweaked ever so slightly. Instead of continuous improvement, we see episodic improvement, which is less threatening to workers with a strong taste for fomalization and hierarchy.

Now the typical response is that with the end of the Cold War and 9/11 and the War on Terror there has to be a change in the military. Fine, that sounds perfectly reasonable. But it does not mean that you go from a formal and heirarchical structure to a "loosey-goosey" one. That strikes me as being something that will piss off everybody in the military from the guy peeling potatoes right up to the top.

Update: In thinking about this as well, the other thing about this TQM stuff is that it is geared towards making a product and enhancing customer satisfaction. That is not the military's job. They don't make anything, they break things. I don't want a military that can make a better widget and make consumers of widgets happy, I want a military that'll kick the crap out of the enemy then kick the crap out of them some more.

Besides, I hate the name, Total Quality Management. How idiotic is that? No thanks I want Total Crap Managment. How about the idea that sometimes the best quality management isn't one that has continuous improvement? Maybe in some instances it is inapprorpriate?

Update II: Arnold Kling in comments writes:

but..but..but Rumsfeld used the words "continuously" and "improve" in the same sentence, and all of a suddent we are talking about Continuous Improvement(TM). I feel like Professor Bainbridge has been channeling Emily Litella (the SNL newscaster who would go on a rant because she mis-heard something, and end by saying "never mind.")

Bureaucracies are great at avoiding errors of commission while missing key changes in the environment. Rumsfeld may feel he has little to lose by trying to shake things up a bit.

And Robert Crawford also suggests in comments that there might be places where new management styles might work, just not in all aspects of the DoD.

Regulatory Spending Soars in 2003

Yes, another example of how George W. Bush loves to spend, spend, spend. According the Mercatus Center regulatory spending by 2004 will have increased 14.9% since 2002. Now defenders of the Administration on this issue might point out that part of this is due to increased concerns for homeland security. And yes, that is indeed part of the problem,

"Spending for regulatory activities in the FY2004 Budget reflects national concerns about homeland security, particularly as it relates to the transportation infrastructure, and the highly publicized securities and accounting scandals of the last few years," said Susan Dudley, senior research fellow in the Regulatory Studies Program at the Mercatus Center and a study co-author. "Budget expenditures directed toward regulatory activities represented 1.4 percent of the total federal budget in 2003, the highest percentage since 1980."

My problem is, do we need increases in spending or do we need to make sure that the agencies responsible for homeland security are actually doing their job. I am not terribly interested in assigning blame for 9/11, but I am interested in making sure that whatever mistakes, oversights and blunders where made are not repeated. I don't see that spending more money will ensure this.

Similarly with the secruities/corporate scandals that hit back in late 2001 and 2002. Enforce the existing laws and work towards making things more easily understood, vs. increasing the amount of red tape and byzantine nature of regulation. If anything adding more regulation will probably make it harder for people to figure out if a corporation is on the up-an-up.

Now there is a tiny bit of good news, spending is slated to be decreasing in 2004. The decrease isn't all that spectacular though, clocking in at about 4%.

There is an additional point here as well that is related to my post on fiscal mismanagement. One thing politicians love to do is tell prospective voters what they have done. A great way to do that is tell them how much money you have spent on an issue. Gov. Davis did that during the recall election. Instead of bragging about how much students improved in California he bragged about how much he increased spending. The response from the crowd was tumultuous.

Thinking of a Hybrid Electric Car?

Well you might want to do some rethinking. It seems that the cars only really start to show their superior MPG when you get pas the 5 mile mark. So if you have a long commute (say 15 or more miles) you'll see a big improvement in your MPG.

The End of the Energy Bill?

Looks that way. There is currently some discussion of removing one of the (many) offending issues with the bill, MTBE a gasoline addative. The bill would reportedly give the producers of MTBE some legal protection.

Carnival of the Capitalists

Kevin's Carnival post is up, and it is chock full of blogging goodness. For example, the first post I plan on reading is "the ultimate free-market anarchy" by Jonathan Wilde at Catallarcy. And I'm going to read Lynne Kiesling's post on over fishing. After that, I'm sure I'll find another post to read. If these choices don't interest you then my question is, why are you reading this and not over at Kevin's site looking over the long list of topics/posts?

The main page for the Carnival of the Capitalists has information on where to send your entries (capitalists -at- elhide.com), where to direct e-mails if you want to be a host (jaysolo -at- elhide.com). Next week the Carnival will move on to HobbsOnline A.M.

Fiscal Mismanagement

In an article over at the von Mises Institute the case is made that the main reason we have fiscal mismanagement is due to a lack of defined objective for the government.

For a firm, the typical objective is to maximize profits. For a firm that is producing the profit maximizing level of output, it is also minimizing costs. The argument continues that firms respond to price signals. If the price for a good drops then the firm will allocate fewer resources towards the production of that good. If the situation turns out that the price drops below avarge cost then the firm may even shut down. Furhter it doesn't stop there, if the price of one of the resources increase then the firm will respond to that price signal as well and will reduce demand for that input and when possible substitute into other inputs.

With government there is not this kind of responsivness to price signals. If the price of one of the inputs increases, it does not necessarily follow that less of that input will be used or that there will be substitution effect. Also, if there is no price for whatever good or service the bureaucracy is providing. This latter fact means that there is not going to be any response by the bureaucracy when people's preferences for the good or service change, at least not right away.

So why is it that there should always be a tendency towards over-spedning instead of underspending? Well on possible explanation is the Niskanen theory of bureaucracy. This theory holds that the objective of government bureaucracies is to actually maximize the size of its budgets. This in turn will allow the bureaucracy to maximize its power, the income of its members, and even improve the prestige of the top bureaucrats. Further, the bureaucracies know what their cost functions are (or at least know them better than the legislators) and the legislators don't so the bureaucrats can increase the size of their budget by lying about their budgets and what can be produced with a given budget.

Another problem is rent seeking. In this case various corporations, business groups, consumer groups, labor groups, and so on, will want special favors, benefits, and deals from the government. Perhaps a subsidy, or a target tax cut, or some such. This to can have an effect where the government runs a deficit. Senator A wants some sort of pork, but Senator B can block it. So Senator A agrees to help out Senator B with another issue. In end, two nice yummy bills with pork pass.

We can also bring in Mancur Olson's logic on collective action. Groups that want to obtain a benefit from the government are going to be more motivated than the vast number of tax payers. For example, suppose there is a piece of legislation that will pay a group of say 100, $10,000. This will be funded by increasing the taxes on the 1,000,000 tax payers (by $1). Now if you are already paying taxes, you might not be all that motivated to figure out why our taxes went up $1. So the recipients are going to much more motivated to secure the benefit than those funding the benefit are to learn about it, let alone fight against it.

So in the end, there is going to be tremendous pressure to spend more and more money. The way in which this is controlled is clumsy and infrequent at best. So you find that budget deficits are far more common than surpluses.

Energy Bill Dead?

The Republicans failed to get the necessary votes to end a Democrat led filibuster. Joining the Democrats were six Republicans.

Domenici decided to throw out some ridiculous rhetoric about blackouts.

Energy Committee Chairman Sen. Pete Domenici (R-N.M.) said that the bill's opponents have made future blackouts, like the kind the Northeast suffered over the summer, more likely.

"The blackouts in America will remain alive and possible because we will have thrown out the window the reliability standards that are in this bill because some want to make the case on an issue like MTBE or the like," said Domenici. "If you like blackouts, then you vote to kill this bill."

So....is the chairmen of the Senate Energy Committee an ingorant buffoon and unaware that the blackout was due to preventable reasons, or is he just being opportunistic and engaging in some mendaciousness to try and scare people into supporting the bill? My guess is the latter.

"You can't claim to be a fiscal conservative and support the profligate spending and corporate welfare in this bill," said Sen. John McCain (R-Ariz.). He called the bill a "twelve hundred page monstrosity chock full of special interest giveaways."

I disagree with Sen. McCain, you don't have to be a conservative to object to this kind of pork.

Hopefully this bill will die.

Via Tyler Cowen at Marginal Revolution.

Unemployment Insurance Claims

Last weeks unemployment insurance claims decreased 15,000 to 355,000 from last weeks 370,000.

In the week ending Nov. 15, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 15,000 from the previous week's revised figure of 370,000. The 4-week moving average was 367,250, a decrease of 9,000 from the previous week's revised average of 376,250.

Typically this is a preliminary number and lately it has been typically revised upwards about 5,000. Still this is good news in that it will still mean a decline of 10,000.

Add in the increase in 6 out of 10 leading indicators (of which claims for unemployment is one), and it is looking more and more like the sluggish recovery is about to take off.

"The latest economic data point to continued economic growth in the next year," said Conference Board Economist Ken Goldstein. "Creation of 250,000 new jobs in September and October demonstrates that the labor market is starting to stir."

There also appears to be some good news on business investment, which has been quite weak.

Goldstein said the economy continues to be helped by consumer spending and home buying, while there appears to be a strong recovery in business investment in equipment and software.

I feel sorry for Krugman's cat.

With Friends Like the Saudi's...

"President Bush May Get Killed for the Heck of It", is the conclusion of an article in the Saudi paper, The Saudi Gazette. Some other choice gems are,

"4. Israel, famous for assassinating politicians, civilians, anyone at any age, may kill Bush in case Blair explains to him the similarities between how America made history and how the Palestinians are making it today.

Gee, with friends like that....

Generalissmo Franco is...Still Dead

And the Austrian's are still upset that there is a Federal Reserve and Greenspan is in charge.

In other news, Micheal Jackson is sexually attracted to young boys, Paris Hilton is in yet another sex video, and John Kerry served in Vietnam.

Send Rush Limbaugh To Jail

Or so says the Ranting Rationalist. I have to admit he does something of a point. Rush has been very harsh on drug users. Techinically Rush is now one of these people who should recieve the harsh treatment he has advocated being used for people such as himself.

I think that the only principled step for him to take is to get his attorney, go to the law, and demand that the book be thrown at him. Any attempt for him to get out of a single day of jailtime is hypocritical and lame.

I think this is true. Either that or Rush needs to admit that his prior views were wrongheaded. That just because a person uses drugs does not make them bad or that they have to be incarcerated. For years Rush moved through society without anybody being the wiser that he was an addict himself. He did his job, paid his taxes, and was basically an upstanding citizens and a drug addict. Incarcerating him would be stupid...just like Rush's ideas about incarcerating drug addicts in general are stupid.

The Sonnenschein-Debreu-Mantel Theorem

In light of the response to my post on Arrow's Impossibility Theorem I decided to post on this and see what the reaction would be.

In general equilibirium theory there is a result called the Second Fundamental Welfare Theorem (SFWT). The SFWT holds that for the right price vector and the right redistribution of income any pareto optimal outcome can be supported as a competitive equilibrium. Many view this as support for intervention in the economy to obtain a desired outcome (say for equity reasons). In 1972 Sonnenschein noted that what this implied was that not only is a competitive equilibirium stable, but that the dynamics in going from the initial equilibrium to the desired equilibrium is stable. So he set out to verify this and got a negative result. The dynamics in general are anything but stable. Debreu, one of the early big researchers in general equilibrium theory, worked on it as well and extended Sonnenschein's results. Mantel also extended the results to being quite general and basically killed general equilibrium (GE) theory in a certain sense.

General equilibrium theory had made siginificant inroads into macroeconomic theory. The idea was to build microfoundations into macroeconomic models. The idea was that at the micro level we have well defined/behaved demand curves for individuals, and in aggregate we have well defined/behaved demand curves, then the Sonnenschein-Debreu-Mantel theorem came along. Those demand curves are not well defined/behaved at the aggregate level and the dynamics are anything but stable (save by luck or in specific special cases). In other words, rationality at the individual level did not translate into rationality at an aggregated level. So even this ideal economy--i.e., one without information assymetries, externalities, public goods, etc.--was not reasonable. The dynamics of the economy were unstable.

So why work on adding general equilibrium theory to your models when in the end the dynamics aren't going to be helpful? Afterall, that is where alot of interest is. What happens when something changes and the economy goes from one outcome to the next?

Mini-Nukes, Preemption, Proliferation and Deterrence

An interesting paper by Charles Pena of the Cato Institute. There are some who are advocating using mini-nukes for bunker busters, to bust hardened targets where conventional bunker busters fail. The problem, Pena argues, is that this could make it more likely that countries will want to pursue whatever WMDs options are available to them with renewed vigor. If they feel they are going to be attacked and avoiding that attack is not possible and that the U.S. will likely use these kinds of nuclear weapons the only defense is to have their own stockpile of WMDs. Further, that countries that lack the capabilities of attacking the U.S. directly might become more likely to forge ties with terrorist organizations that could deliver WMDs surreptitiously.

Here is a link to the full analysis.

Personally I'm not sure if the analysis is right or not. It sounds pretty good, but the critical point seems to be the condition that there be a leader who feels he is going to be attacked no matter what, so he'd better attack with WMDs first. Seems to me that such a leader would have to be completely insane, because then I don't think the U.S. would respond with mini-nukes busting a few underground bunkers, but with some of its ICBMs and turn the country into a giant sheet of glass. But, then again national security issues are not my specialty.

A Most Amusing Parable

Follow the adventures of Jerry, Sarah and their children, and David and Professor Mercantilio, and the country known as Lost Valley.

When I read it I kept thinking about all the hand wring about the lost manufacturing jobs, and other jobs that are being lost overseas.

The Blackout and NY Times AP Reporting

FirstEnergy and the Midwestern Independent System Operator were deemed to be at fault for the Blackout in August. Basically, the initiating event was one of FirstEnergy generation units tripping, then several 345 kv lines tripping (the lines came into contact with trees). These two events overloaded surrounding lines which led to the cascade and 50 million people without power for a few days.

MISO's failure was that one of its evaluation methods was not working properly so that MISO was not aware of the problem.

Interestingly the New York Times Associated Press article only focuses on the trees and omits the tripping of a generation station. Typical.

New Blogroll Entry

Slartibartfast. A great blog and a great commenter. I highly recommend him.

Spend, Spend, Spend

Bush loves to spend money.

Confounding President Bush's pledges to rein in government growth, federal discretionary spending expanded by 12.5 percent in the fiscal year that ended Sept. 30, capping a two-year bulge that saw the government grow by more than 27 percent, according to preliminary spending figures from congressional budget panels.

I gotta admit I'm impressed. I'm impresseed that a candidate who said he'd rein in government spending has increased government spending at a faster rate than the last candidate. I think it might be fair to consider changing the meme from Democrats being in favor of big government spending to Republicans being in favor of big government spending.

Update: Some commenters have claimed that part of the increase in spending has been in defense spending, and this is true. However, Bush is also a big spender in other areas, despite what the hack David Corn writes (click here and here) Bush has increased spending in non-defense...alot. His increases in educational spending have been immense. While it is debatable as to whether there are externalities and/or a public good aspect to education, increasing spending by around 30% in 4 years is simply staggering.

Dean: Small Government Guy in Disguise?

Forget about it. Dean is an old style, bigger government is better government and good for everybody else too.

After years of government deregulation of energy markets, telecommunications, the airlines and other major industries, Democratic presidential candidate Howard Dean is proposing a significant reversal: a comprehensive "re-regulation" of U.S. businesses.

Great, just great. I figured this would be the possible reaction to the California Energy crisis. Never mind that the roots of the crisis are to be found in the blundering and ineptitude of government.

Re-regulation would reduce competition, increase prices, and reduce overall economic efficiency. Regulations can and often do act as a barrier to entry into a market. This gives those firms that are already in the market more market power. Firms always use their market power to increase prices and profits. Current regulations need to be looked at and if they are deemed to impose costs in excess of their benefits then they need to be changed or removed. This is good for consumers. And like an idiot Dean has failed to realize that workers are also consumers.

Also, you don't judge the effects of de-regulation when you are half-way through the process. For example, in the electricity industry the regulations are the product about 100 years of regulation. You aren't going to get rid of a system like that over night.

Link via Tyler Cowen at Marginal Revolution, who is likewise disappointed.

Update: Dean (a commenter...not the candidate...geez this could get confusing) pointed to Gov. Dean's completely idiotic comments on the energy crisis.

"California is proving it does not work," he said. "I think the reason the grid failed is because of utility deregulation."

I wasn't going to get into this...but since Dean brings it up. Gov. Dean's comment indicate either that he is all to willing to talk about something that he doesn't know jack shit about, or he is a lying sack of crap. There is not a damn problem with the grid in California. There haven't been any major power outages in CA for some time. The problem was with the disconnect between the wholesale markets and retail markets. Deregulation may have had an impact on the grid, but if it has it isn't that noticable. The grid is more than sufficient to meet even extremely high levels of demand. The only potential problem is that there are some problems with transmission congestion. However, this was not the cause of the energy crisis although it did play a role in how generators abused the system. The grid never "failed" in California, even during the height of the crisis.

Update II: Rob over at BusinessPundit writes the following,

Re-regulation. Good grief. Could there be a worse idea? There are two purposes for government regulation of business. The first is to address negative externalities that aren't reflected in market prices. The second is to enhance the transfer of information to all parties involved in economic transactions, so that capitalism can function more effectively. Dean thinks deregulation is to blame for California's energy crisis, but I think fraud and market manipulation are the real culprits.

Exactly! Very, very well put. Anything else is political pandering.

Update III: Professor Bainbridge has a good post on this. He notes that virtually every industry has firms that rely on stock options. Hence Dean's quip about regulating such companies means regulating almost the entire economy. In comments here, Dean (no, not the candidate) noted something similar.

Prof. Bainbridge also has this quote from Joe Lieberman,

"[Dean] would give us a treacherous trifecta of policies that turn back the economic clock: new trade barriers, a larger tax burden on our middle class and now bigger bureaucracy," Sen. Joseph I. Lieberman (Conn.) said in a statement. "Either he doesn't know how to turn the economy around, or this is another reckless mistake."

Right.

Somebody Buy Kevin a Thesarus

Kevin has a post on Dick Cheney's odious energy bill...odious? Well, the bill does look pretty bad. Like a gigantic barrel of pork, but odious? Hateful, abhorrent, evil? Sheeesh.

Anyhow, to a degree I agree with Kevin. It looks like this huge bill is basically a giant porker of a bill. Lots of pork for everybody. The best round up of links on this I have seen so far is by Lynne Kiesling.

It is a bad bill and should be killed, thus it'll probably pass and we'll all be worse off because of it.

Cato on the Prescription Drug Plan for Seniors

The Cato Institute has a news release about the Prescription Drug Plan for Seniors. Needless to say it is quite critical of the program.

I agree with the notion that the this plan is going to be hugely expensive. Programs of this nature are always given a price tag that is typically woefully low. I would not in fact be surprised to find out that when all is said and done the program costs $1 trillion dollars after 10 years vs. the projected $400 billion. This is usually what happens. For example, Medicare. The initial cost projections put the cost of medicare at $9 billion in 1990. In reality, Medicare cost $67 billion, an error of about 800%. Moreover, Medicare will be underfunded by a trillion dollars within the next 35-40 years.

Further, throwing in this kind of a program into Medicare will only hasten the day that Medicare will go bankrupt. Further, it will likely make drugs more expensive for the rest of us. Subsidizing the consumption of drugs is a good way to increase the demand. Just as a tax is like shifting the demand curve inwards, a subsidy has the effect of shifting it outwards. This means that prices will have to increase unless the supply curve is perfectly elastic.

Oh My...

I found the Ranting Rationalist blog via Ricky West.

University of Michigan sophomore Nelly Highbottom had her summer semester unexpectedly enriched when she spotted a black person across the quad on Monday. "I originally assumed that it was just a visitor to campus or even a worker from the physical plant", Highbottom told reporters, "but when I asked around, I found out this black person was, in fact, a student just like me. I was shocked. I know I don't even have to tell you how much this black-person sighting has meant to my overall educational experience." (link)

And it gets even more snarky.

When asked for their opinion on being used as curiosities on campus for the enrichment of white students, several black students spoke very highly of the plan. "I think it's great", said high-pigment, diverse student Darius White. "There's nothing I like more than being employed as a patronizing means to an offensive end. I came to Michigan precisely in order to advance the cause of relieving the festering guilt of white academia. In many ways, my own educational enrichment is not even a priority of mine."

Arrow's Impossibility Theorem

Back in 1951 Kenneth Arrow proved a theorem that had surprising results. Up until that time, and even afterward, it was not uncommon for economists to invoke the concept of a Social Welfare function. That is an individual would make decisions about various goods and services to arrive at a socially optimal (in the sense of Pareto) outcome.

Arrow's theorem on the other hand demonstrated that if we wanted a Social Welfare function that satisfied several desirable conditions that such a Social Welfare function would have to be dictatorial.

The conditions laid out by Arrow are¹

• Universal Domain (UD),
• the Pareto Principle (PP),
• Independence of Irrelevant Alternatives (IIA), and
• non-dictatorship.

The UD assumption does not allow restrictions to be place on individual prefernces. In other words, we don't want a Social Welfare function that works for just a specific type of preference ordering, but any and all preference ordering.

The PP condition means that if social state a₁ is preferred by everyone to social state a₂ then the Social Welfare function ranks a₁ above a₂.

The IIA condition precludes intensity of individual preferences.

So, any Social Welfare function that satisfies these conditions must also be dictatorial. Now the typical reaction might be, "So frigging what? Sounds like a lot of mumbo jumbo to me." Well, what this means in more simple terms is that any method of aggregating preferences is going to violate at least one of the above conditions. What are methods of aggregating preferences? How about voting. Yes, majority voting rules are a method for aggregating preferences. This means that majority voting is going to violate one of the above properties. Actually, the condition that gets violated is the notion of transitivity. That is preferences are transitive when the following holds

grapes P oranges P bananas, then grapes P bananas.

This type of relationship does not have to hold with majority voting. This problem is also known as cycling. So what does this mean? Well it means that it is impossible to come up with a way of aggregating preferences so that Society can evaluate and rank various outcomes in terms of most preferred to least preferred. You cannot say in general, for Society this outcome is definitively better than that outcome.²

The next step in trying to aggregate preferences was to weaken the requirements. The typical place to attack is transitivity, and replace it with acyclicity. What this reduces is cycling in various aggregation procedures. The problem is that you end up with results where you have oligarchies, agents with veto power, or too much indiffernece.

Now most people might be saying, "Gee Steve this is totally obvious." No kidding. But what it also says is that government is basically going to be a shitty allocator of resources. It is just not going to do a good job; especially when the resources pertain to private goods (as opposed to public goods). Yet, this is precisely what we see more and more of; government allocating resources. Right now, the Bush Administration is working on a Prescription Drug Plan for senior citizens. The government has interferred in the allocation of medical goods and services via Medicare and Medicaid. While many point to externalities, public goods, and imperfect information as ways that the market can fail (and I'm one who has pointed to these things as well), this result points, IMO, to the failure of government. Government is going to do a bad job, even if you forget about waste, fraud and abuse, and problems with information as well. Yes, the problem of incomplete information is a problem for government too. For me, this is why government shouldn't be large and involved a great deal in the economy. It should only be intervening in cases where intervention can do some good. Interestingly enough, this view was also one put forward to some extent by the Clinton Administration.

Federal agencies should promulgate only such regulations as are required by law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well being of the American people. In deciding whether and how to regulate, agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.--Source (emphasis added)

_____ ¹Two additional conditions are that the number of people involved is greater than two and the number of outcomes/actions is greater than or equal to 3. ²Well, you can make such statements if everybody has identical preferences for example. If everybody likes having peas, and vote for peas as being the main source of nourishment, then that outcome is definitely the best. Of course, this is unlikely to be the case.

Massachusetts Supreme Court on Gay Marriage

Mass. Court Strikes Down Gay-Marriage Ban.

Massachusetts' highest court ruled 4-3 Tuesday that the state's ban on same-sex marriage is unconstitutional and gave lawmakers 180 days to fix the problem.

{snip}

The Supreme Judicial Court left the details of the same-sex marriage issue to the Legislature.

Here is the ruling. From the unofficial summary:

The court rejected the Commonwealth's claim that the primary purpose of marriage was procreation. Rather, the history of the marriage laws in the Commonwealth demonstrates that "it is the exclusive and permanent commitment of the marriage partners to one another, not the begetting of children, that is the sine qua non of marriage."

The court remarked that its decision "does not disturb the fundamental value of marriage in our society." "That same-sex couples are willing to embrace marriage's solemn obligations of exclusivity, mutual support, and commitment to one another is a testament to the enduring place of marriage in our laws and in the human spirit," the court stated.

From the actual ruling, this paragraph lept out at me:

Whether the Commonwealth may use its formidable regulatory authority to bar same-sex couples from civil marriage is a question not previously addressed by a Massachusetts appellate court. [FN3] It is a question the United States Supreme Court left open as a matter of Federal law in Lawrence, supra at 2484, where it was not an issue. There, the Court affirmed that the core concept of common human dignity protected by the Fourteenth Amendment to the United States Constitution precludes government intrusion into the deeply personal realms of consensual adult expressions of intimacy and one's choice of an intimate partner. The Court also reaffirmed the central role that decisions whether to marry or have children bear in shaping one's identity. Id. at 2481. The Massachusetts Constitution is, if anything, more protective of individual liberty and equality than the Federal Constitution; it may demand broader protection for fundamental rights; and it is less tolerant of government intrusion into the protected spheres of private life. [emphasis added]

They cite the Lawrence decision in several places, but it appears to me that the MA court is basing its ruling on the MA consititution, not some penumbra intrepretation of the 14th Amendment.

I'm still reading the document, but it appears to me that the court has used some of my arguments about gay marriages simplifying inheritance laws, etc.:

The benefits accessible only by way of a marriage license are enormous, touching nearly every aspect of life and death. The department states that "hundreds of statutes" are related to marriage and to marital benefits. With no attempt to be comprehensive, we note that some of the statutory benefits conferred by the Legislature on those who enter into civil marriage include, as to property: joint Massachusetts income tax filing (G.L. c. 62C, § 6); tenancy by the entirety (a form of ownership that provides certain protections against creditors and allows for the automatic descent of property to the surviving spouse without probate) (G.L. c. 184, § 7); extension of the benefit of the homestead protection (securing up to $300,000 in equity from creditors) to one's spouse and children (G.L. c. 188, § 1); automatic rights to inherit the property of a deceased spouse who does not leave a will (G.L. c. 190, § 1); the rights of elective share and of dower (which allow surviving spouses certain property rights where the decedent spouse has not made adequate provision for the survivor in a will) (G.L. c. 191, § 15, and G.L. c. 189); entitlement to wages owed to a deceased employee (G.L. c. 149, § 178A [general] and G.L. c. 149, § 178C [public employees] ...[etc. despite saying they won't be comprehensive, it's a long list]

Exclusive marital benefits that are not directly tied to property rights include the presumptions of legitimacy and parentage of children born to a married couple (G.L. c. 209C, § 6, and G.L. c. 46, § 4B); and evidentiary rights, such as the prohibition against spouses testifying against one another about their private conversations, applicable in both civil and criminal cases (G.L. c. 233, § 20). Other statutory benefits of a personal nature available only to married individuals include qualification for bereavement or medical leave to care for individuals related by blood or marriage (G.L. c. 149, § 52D); an automatic "family member" preference to make medical decisions for an incompetent or disabled spouse who does not have a contrary health care proxy, see Shine v. Vega, 429 Mass. 456, 466 (1999); the application of predictable rules of child custody, visitation, support, and removal out-of-State when married parents divorce (e.g., G.L. c. 208, § 19 [temporary custody], § 20 [temporary support], § 28 [custody and support on judgment of divorce], § 30 [removal from Commonwealth],... [etc.]

My only quibble is that it's another instance of judicial fiat, and will probably produce a backlash. I would much prefer that legalized gay marriages come from the legislatures, not the courts.

Eugene Volokh takes on the concurring opinion, saying that opponents of the ERA were precient.

Update Looks like Steve beat me to it. That's what I get for spending the time reading the whole opinion.

Gay Marriage

Well, looks like the Massachusetts Supreme Court has ruled that gay marriage is constitutionally protected. I suppose the more conservative social conservatives will be a bit upset by this. Me, I personally don't really care (I do blog about it because so many do seem to care). Marry whomever you think will make you happy (well, okay no marriage with minors and family members).

Here is another link on this. Here is a quote from the majority decision

"Whether and whom to marry, how to express sexual intimacy, and whether and how to establish a family these are among the most basic of every individual's liberty and due process rights," the majority opinion said. "And central to personal freedom and security is the assurance that the laws will apply equally to persons in similar situations."

Here is a link to the decision.

Via InstaPundit.

The Prisoner's Dilemma & the Folk Theorem

This game is one of the standard games examined in a course on game theory. It was made famous by two competitions by Robert Axelrod. The reduced form of the game is actually pretty simple.

	Player One
Player Two		Don't Confess	Confess
	Don't Confess	(-1,-1)	(0,-5)
	Confess	(-5,0)	(-3,-3)

The game in when played as a single shot game is pretty easy to solve. To solve the game assume that player one is play confess. What is the best strategy for player two? Confess. If player one is playing don't confess, what is the best strategy for player two? Confess. In the reduced form payoff matrix Player two's best responses are shown shown thusly

	Player One
Player Two		Don't Confess	Confess
	Don't Confess	(-1,-1)	(0,-5)
	Confess	(-5,0)	(-3,-3)

Now, given the symmetry of the payoffs, we can conclude by similar reasoning that player one will also chose similar strategies so the reduced form game now looks like,

	Player One
Player Two		Don't Confess	Confess
	Don't Confess	(-1,-1)	(0,-5)
	Confess	(-5,0)	(-3,-3)

Note that only Confess/Confess is not crossed off. That is the only strategy that is stable. In fact, this is called a dominant strategy, in that Confess is always a best response irrespective of what the other player is doing. Another interesting thing is that this strategy is also a Nash strategy. A Nash strategy is what results when each player is playing his best response. This is slightly different than a dominant strategy. A dominant strategy is the best response no matter what the other player does. A Nash strategy is the best response given what the other player is doing. When both players are playing a Nash strategy, you get a Nash equilibrium, which is what we have here.¹

Now, this has been pretty simple and perhaps even obvious. However, what can make a game such as this much more interesting is when the game is played an infinite number of times. Now, an infinite horizon game does not mean the game has to literally be played for ever. Instead, the last stage of the game simply has to be unknown. For example, suppose that after each round of play a 10 sided die is roled to see if you play again; if a 1 comes up you stop, otherwise keep playing.² In this catagory is where you can get to bring the result known as the folk theorem.³ The folk theorem basically allows for a much larger set of possible equilibria. So now it is possible to get away from the Confess/Confess dominated equilibrium. There are a wide array of strategies that one can implement. One famous and well known one is the tit-for-tat strategy. Basically you play start out playing Don't Confess, and then play whatever you opponent played in the last turn. So if, your opponent starts out with Confess, you play Confess on the second turn. If he then plays Don't Confess on the second turn, you play that on the third turn. Hopefully, he'll get the picture and synchronize with you and you'll enjoy a long string of Don't Confess/Don't Confess payoffs.

The problem with the folk theorem is that it doesn't say you have to wind up with tit-for-tat. For example, there is the grim strategy, which means you play Don't Confess the first time, and as soon as the other guy plays Confess you play Confess from that point onwards, never returning to Don't Confess. This too is a viable Nash equilibrium. And these are not the only two possible strategies. In fact, while the folk theorem allows for cooperation it does not ensure it, as Confess/Confess is also a Nash equilibrium in the (infinitely) repeated game as well. The folk theorem is both a good thing, and a bad thing. It now allows for more desirable outcomes, but it doesn't tell you which of the very large (often infinite) number of equilibria the players will settle upon.

So now you are saying, "Uhhh, gee Steve that is really fascinating, but what good does knowing this do for me?" Well, game theory is often a very useful tool when analyzing non-cooperative situations. One such example is voting. On one hand you have the politician who wants to satisfy his own wants and needs (which don't necessarily coincide with his constituents' wants and needs), and on the other you have the voters, who want their wants and needs satisfied (which don't necessarily coincide with the politician's wants and needs). So in a sense we have a strategic situation here. Politicians take various actions (i.e., propose legislation, vote on legislation, etc.) that can have a potential impact on their constiuents. Voters either vote for the politician or the alternative candidate. So in this game we could put forward the notion that a politician will select a position in the space of all policies that will ensure his re-election (i.e., that at least a majority of voters will vote for him).

This hypothesis has a couple of nice features.

1. It explains the high re-election rate.
2. It explains why politicians are seldom different in terms of their overall policies.

The first one should be obvious. The second a bit less so. You have an incumbent politician, and he knows what spot in the space of policies will get him re-elected. The challenger knowing this will try to position himself near to that spot to capture the same number of votes.

What we basically have here is a kind of tit-for-tat situation. So long as the politician brings home the bacon (literally) the voters will re-elect him. The challenger provides only a credible threat to the politician against defecting from this strategy.

Now, how can we test this theory? Well here are a couple of tests. Look at candidates who do not face a challenger in an election. Does the incumbent candidate vote on less legislation and introduce less legislation?

Another is to look at elected officials who have term limits. In this game the last stage of play is known with certainty, as noted above this could cause early defections from what would be a better long term strategy. So you could look at state assemblymen and senators in a state like California and see if legislators in their last term are less likely to introduce/vote on legislation. Also, you could look to see if there is a higher rate of turn over prior to the final term compared to states with no such term limit laws. For example, in California if Assemblymen can serve for say 4 terms is the rate of voting out Assemblymen in terms 1, 2, and 3 higher than in states without term limit laws.

Basically, the problem with term limits is that it makes it much harder to implement a tit-for-tat strategy which weakens the control voters have over politicians. Further, I think a case can be made that it reduces the level of human capital for politicians. Putting in brand new politicians who are unfamiliar with all the rules and rigors of being a legislator means politicians have to learn such knowledge all over again. Imagine being a factory owner and having to retain your entire workforce every 8 years or something like that.
_____
¹There is also a Nash equilibirum if we were to used mixed strategies. That is we assign a probability distribution to the action and then look for the equilibrium in terms of expected payoffs.
²If the final stage is known with certainty the whole sequence of games becomes solvable via backwards induction. That is start in the last turn and figure out how you'll play. Then proceed to the next to last turn, and figure out how you'll play knowing the outcome from the last turn. And keep going back to the first turn. With the Prisoner's Dilemma the result of a finite number of turns known with certainty means you play Confess/Confess in every turn.
³The folk theorem is called the folk theorem because it it belongs to the "folklore" of game theory, i.e, it is an old and well known result that nobody really can lay credit too. Some people have solved different versions of it, but unlike other important theorems (e.g. the Lebesgue Dominated Convergence Theorem) they don't put their name on it.

Nuclear Energy: Wave of the Future?

Michael Kantor at the Calico Cat posts that he thinks nuclear energy is going to be the energy source of the future. Maybe, but probably not for the next 100 years. Nuclear energy is just too damned expensive right now due to all the regulatory costs. Right now in California, the nuclear plants are slated to be decommisioned, and there are no plans to build more.

Granted nuclear power does not emit greenhouse gases, but trying to get environmentalists to see that nuclear power is a good alternative is like pissing into a strong wind.

The Impact of the California Car Tax

Speaking of Michael Williams, he has a very good post on the impact of the tripling of the California registration fee for cars. Bottom line, car sales have dropped a whopping 35% so far. Michael nots that part of that drop might be due to Gov. Schwarzzenegger's vow to repeal the tax. The impact of such a statement would induce people to hold off on buying cars until the VLF is reduced.

Further, Michael notes that this impact will likely have an adverse impact on the state's finances. Lets run through an example, suppose the price of a widget is $110 (with $10 for a tax) and at that price demand is for 100 units. Now if the tax increases from $10 to $30, what happens? We just don't say the price is $130. We need to factor in the effect of demand on the price. Basically we need to know the price elasticity (i.e., the responsiveness of demand to changes in price). Still, I bet that the tripling of the VLF wont have as much of a positive impact as many might be hoping. This is especially true if the forecasters for state tax revenue were complete blithering morons and assumed there would be no impact due to the tax. Which seems to be the case according the Michael,

The plunge in car sales will likely hurt the state's budget situation in two ways. First, state forecasters had assumed car sales would continue at a normal rate, meaning that the state is taking in less revenue than it expected from the vehicle license fee increase. How much less will depend on how long the sales decline lasts.

If they really did this they should be summarily fired. No two weeks, no severance, simply booted out the door. That is incomptence on a grand scale.

Michael correctly notes that the increase could have a serious long term impact. If you do buy a car under the tripled VLF, you might go for a cheaper car. Since the VLF is calculated on the value of the car, cheaper cars will mean lower revenue for years to come.

Overall, the impact of the tax is probably going to provide a much, much lower boost for state tax revenues than expected.

LOL

I found this over at Michael Williams site.

Carnival of the Capitalists is Up

At Professor Bainbridge's site. There are bunch of good links over there, so head over and start reading (as I'm going to be doing shortly).

Next week's host will be at Truck & Barter so send your entries for next week to either capitalists -at- elhide.com or directly to Kevin at kbrancat -at- gmu.edu. Kevin requests that people put CotC in the subject of entries sent to him for next week's Carnival.

For a list of future hosts, click here.

Louisiana Election Prediction

It looks like Democrat Kathleen Blanco beat Repubilcan Bobby Jindal in the runoff election for governor of Louisiana.

Expected Democrat spinning: This is the election that shows Democrats are gaining momentum and will sweep to power on 2004. Nevermind the lost elections in Mississippi, Kentucky and California, this is the one that matters.

Interested About the Infotel Issue?

Then click here to read up on it. Bottom line, when answering questions from telemarketers never answer "yes," instead say something like, "the information you have sounds correct." Sheesh.

Update: Wow, I bet Infotel is starting to wonder about the wisdom of sending a threatening letter to Justene at CalBlog. BlogoSFERICS has a huge roundup of links (be sure to check the trackbacks and comments).

The comments here have been rather amusing as well.

I favor "That information is classified."--Kevin Murphy

I respectfully decline to answer on advice of counsel...--Triticale

(with these Infotel guys, no kidding.)

My favorite answer is NOYFB. If they ask what it stands for, the F stands for "fantastic." I still get junk mail to Xrlq, Vice President of NOYFB, Inc.--Xrlq

you talk to telemarketers?

hello, is mr. x there?

click.... no carrier--hey

Or, how about ... "Will you hold?" then go on about your business.--Kevin Murphy again.

"E.T. want to phone ho-o-ome! So get off the dagnab line, you idiot!"

I once told a telemarketer for a portrait studio, "I don't show up on film," and hung up on him.

Witnesses were highly amused.--McGhee

Another Update: Pathetic Earthlings points out that in aggregate people are usually smarter than at the individual level in some regards. I'm sure a blog about these types of scams would be very popular. Of course, I imagine such a blog would be a target for lawsuits by companies engaged in such scams. So such a blog would have to be run rather carefully I imagine.

Uhh?

Okay, I think Mark Kleiman is more than a bit off.

So while you can reasonably disagree with Clark when he says that those assets would have been better left in place to finish off al-Qaeda, Sullivan is calling him "crazy" for asserting something that is demostrably correct. The mission of deposing Saddam Hussein conflicted with the mission of demolishing al-Qaeda. One cost of the war in Iraq was decreased attention to the bin Laden hunt.--emphasis added

Demonstrably correct? The 3rd I.D. and the 4th I.D. were hunting down Osama bin Laden? Sorry, but no. The 101st Air Assualt Division was deployed in Afghanistan, but their mission was not to hunt for Osama bin Laden, but to secure Kandahar airport. If this claim is demostrably true, then Mark Kleiman should be able to demostrate it and not simply claim it is true. What units were hunting for Osama bin Laden that were pulled off that mission and deployed to Iraq?

In this post I am simply amazed at Mark's naivete. First, you call him a politician. Second, yes, to solve the budget problems of the future both Social Security and Medicare will have to be butchered. A quick read of the tables in the Social Security Trustees Report shows that doing nothing will result in massive deficits that will make people pine for the fiscal restraint of the Reagan era. Here is a table of how bad things will be:

Combined OASDI and HI Short Fall
	As a % of GDP
Year	Total Cost	Short Fall	Dollars (Billions)
2045	9.90	-3.43	-2,711
2050	10.17	-3.73	-3,684
2055	10.47	-4.08	-5,031
2060	10.78	-4.44	-6,840
2065	11.10	-4.81	-9,255
2070	11.47	-5.22	-12,536
2075	11.85	-5.65	-16,921
2080	12.24	-6.09	-22,735

Clearly keeping Social Security and Medicare as we know it is not feasible (yes, Social Security & Medicare will be short by over $2 Trillion in 2045). Yes, it will cost money to solve this problem. Yes it isn't going to be painless. You can't just say, "Oh well put Social Security and Medicare surpluses into the stock market to get higher growth and have the problem go away." I don't think tweaking the taxes is going to solve it either. If Mark wanted to be accurate he'd call both Democrats and Republicans liars. But Mark is a partisan hack.

Condoleezza Rice is a Murderer

So says Aaron McGruder. The problem is that the reasoning McGruder uses means that just about any National Security Advisor is a murderer. For that matter so is Bill Clinton and all other Presidents who have had to authorize the use of lethal force.

VodkaPundit has a nice discussion going on, on this. Dean Esmay claims the following,

Black America is never going to be really healthy until it learns how to deal with people who don't toe the party line with a little respect.

No kidding. It seems if you are black and don't support the Democrats your a traitor to your race.

Henry Hanks found the initial link on this.