Deinonychus antirrhopus

Errr...What?

Or, are you kidding me? Kevin Drum puts forward a perposterous argument for why I. Lewis "Scooter" Libby is really guilty of outing Valerie Plame. The explanation can be summed up as:

Fitzgeral had the goods, but he just decided not to go after Libby on the actual reason he his current job.

Kevin then rightly realizes that this is just simply nonsense. But here is the kicker, it isn't nonsense because it sounds so blazingly stupid, but because Libby wasn't Novak's source. Further, this doesn't sit well with Kevin's early comments that Libby did blow the cover of a CIA agent. Talk about flip-flops.

The rest of the post is Kevin's attempt to try and infer what Fitzgerald is really thinking. It is really pretty amazing to watch such a...blinded thought process. Kevin's reasoning is that obviously Fitzgerald know's who leaked Plame's name. Further, that it is unlikely that Fitzgerald would let not the leaker off the hook, so therefore the only reasonable conclusion is that Fitzgerald didn't think he could win a case against the leaker. Nothing about disclosing Plame's name actually not being a crime, or that Fitzgerald doesn't know who did the leak.

The Democrats sure look like the Republicans back when Clinton was having his problems. I tell ya it if it wasn't so pathetic it'd be funny.

Lowest Wage Growth in 25 Years

According to the Labor Department wages grew at only 2.3% for the 12 months ending this past September. What makes this somewhat notable is that profits for corporations have been growing at a pretty substantial rate. Once inflation is factored in for wage growth real wages actually decline.

One of the big factors for the dismal growth rate of wages is the rapid growth in health care costs.

As health care costs have exploded, benefits paid to workers have accounted for a good portion of the growth in total compensation in recent years.

[...]

With their wages growing at an annual pace of 2.1 percent, union workers are barely keeping up with nonunion workers. The growth in benefit-spending for union workers snapped back to 4.1 percent in the past 12 months from 10.6 percent the year before.

One solution to this might appear to be some sort of government health care system such as Canada has. The problem is that while wages would likely rise (in competitive markets), those gains would likely be used to pay for increased taxes for the health program. Some have argued that there would be a substantial cost savings by such a switch, but I am far from convinced that such savings are possible while at the same time maintaining quality and quantity.

Simpson's Paradox

One of the things I mentioned to commenters in this post is that sometimes probability theory (and also statistics) can lead to counter-intuitive results. One example is Simpson's Paradox. Simpson's Paradox is when the reversal of direction of a comparison or an association when data from several groups are combined into one single group (source). So how does it work? Here is a simple example:

A firm has opened a new plant and needs to fill 455 jobs. There are 70 management job openings available and 385 blue collar job openings. 200 women apply for the management positions and 100 women apply for the blue collar positions. In each case 20% and 85% of the women who applied were hired. For management positions 200 men also applied, while for the blue collar position 400 men applied. For the men the respective hiring ratios are 15% and 75%. Looks pretty good from a diversity stand point, no?

Well it turns out that of the women applying for jobs at that plant a little over 58% of them were turned away. Whereas for the men only 45% were turned away. So clearly the company is discriminatory.

What is going on here is Simpson's Paradox. Because so many more men applied for the blue collar jobs the firm was pretty much going to come looking bad unless it did something like hired every woman applying for the blue collar job and hired women for 69% of its management positions. This is one reason why people have to be careful in looking at statistics. What looks good or bad at one level of aggregation can look change at another. Similar things have been found for women's salaries. We have all heard the phrase "lying with statistics" and so forth, well this is how it is often accomplished. This is why I like to get data in as disaggregated form as possible. So keep this in mind the next time you see comparisons made at higher levels of aggregation such as men's salaries vs. women's salaries.

(Source for the example above.)

ConocoPhillips Profits Up 89%

It has been a very good time for ConocoPhillips. The higher oil prices and the issue with oil refining here in the U.S. has resulted in an 89% increase in profits.

The Houston company's net profit in the third quarter rose to $3.8 billion, or $2.68 a share, compared with $2.01 billion, or $1.43 a share, a year earlier.

I'm not sure how much of those billions are in rents that are due to the environmental regulations regarding refineries and boutique blends of gasoline, but I bet it is pretty significant.

Evolution and Religion

One of the favorite tactics of anti-evolutionists is to argue that evolutionary theory is itself a relgion. There are numerious problems with this view point. Usually this view relies on the logical fallacies of equivocation, and the argument from ignorance.

Often times these arguments will note that scientists believe in evolutionary theory and that some people believe in religion. Hence both evolutionary theory and religion are "beliefs". Q.E.D, evolution is a religion. The problem is that belief is not so simple a word that it has only one meaning that is exactly the same in all cases. For example, I believe that if I drop a rock it will fall to the ground. Why do I believe this? I have witnessed it an untold number of times. I have seen rocks (and other objects) fall to the ground so many times and never once seen anything fall up into the sky, that I believe the theory of gravity. There is no religion here, no dogma and casting anybody who believes in gravity as some sort of religious gravitist is just silly.

A slightly different version will use the word "faith". They'll note that most scientists put a great deal of faith in the explanatory power of evolutionary theory. Then they'll note that religious people have faith in the existence of God. Evolutionary theory is religion, Q.E.D. Again, this is taking a word whose meaning is ambiguous and using that ambiguity to muddy the waters. I have faith the sun will rise tomorrow becuase I have a boat load of evidence that the sun rises everyday. In fact, I have over 13,505 observations that everyday the sun has risen and oddly enough not one where the sun has not come up. Then there are things like the theory that outlines the motion of the planets, astronauts going into space and observing the rotation of the earth, etc. All this evidence suggests that in probabilistic terms I'd be a fool to not expect the sun to rise tomorrow. Hence, I have faith that the sun will rise tomorrow. With regards to religion faith is different. You are to have faith in God without such cold hard evidence.

The other favorite tactic is to claim that there are gaps in the theory of evolution hence it is suspect and anybody who believes in eovlutionary theory must be dogmatic. This either is due a complete lack of understanding of the scientific process or a deliberate attempt to mislead those who don't understand the scientific process. Basically, we should believe any theory that has the highest probability of being true. Suppose we have two theories, X and Y. We also have evidence, E. Now, given E what is the probability that X and Y are true? Which ever probability is higher is the one we should go with. Now if it turns out that X has the higher probability then it is irrelevant if X has "holes" or "gaps". It is the best that we have now, and that is what we should go with. Does this mean that X is "True" in some universal sense? No. We should always be prepared to revise our probability of X being true as new evidence becomes available.

And that leads us to Intelligent Design (ID). ID has no evidence. Some might point to Irreducible Complexity (IC), but evolutionary theory can explain IC structures. Further, think about what ID gives us. ID posits and intelligent designer. Does ID tell us who the designer is? No. Does it tell us how the designer arrived at the design? Nope. Does it give any idea about future designs or changes in the current design? No again. What does ID tell us? Well besides there being an intelligent designer, nothing, nada, zip. As far as I can tell ID has no content.

In contrast we have evolutionary theory and science. Is evolutionary theory cast in stone? No. The current theory of evolution is very different than what Darwin posited. Now we have genetics, and genetic mutation, genetic drift. There is Margulis' symbiogenesis that argues that symbiotic fusion of genomes is a significant factor in inherited variation. Initially this view was seen as kooky and was vigorously opposed by mainstream biologists. But Margulis kept at it (in the lab unlike IDists who seem to spend most of their time in court or lecturing politicians) and provided the evidence for her "kooky" theory and it is now considered a significant step forward. Margulis theory is actually a challenge to neodarwinist thinking, but it is based on naturalism and does not invoke a supernatural being. Current evolutionary theory has adopted Margulis' work and keeps on going.

So is evolutionary theory a religion? No. Any attempt to argue the contrary is completely ridiculous. Are there gaps in the theory of evolution? Sure there are, but this is true for every theory out there. It is likely that some of most well understood and accepted theories in physics will be found to be wrong in some small detail? Should we thus conclude an intelligent designer is "filling" that gap? And yes, biologists and scientists have "faith" and "believe" in their theories and hypotheses. They have this belief and faith precisely because of the evidence they have in support of their theories and hypotheses. Religion on the other hand does not work in the same manner. As far as I know, there is no theory that lays out the exact limitations and abilities of God. But who knows, maybe this is what ID advocates are actually advocating, put limitations on God and telling him what exactly he can and can't do.

Ben Bernanke Named as Greenspan's Replacement

President Bush has named Ben Bernanke, the current chairman of the White House Council of Economic Advisors, to succeed Alan Greenspan as the head of the Federal Reserve.

While Mr Bernanke has differed slightly with Mr Greenspan in favouring more formal inflation targeting, the choice will maintain continuity after the departure of a chairman credited with deftly managing interest rate policy and leading the US to nearly two decades of robust, non-inflationary growth.

I'm not so sure about that. Bernanke is seen as being more moderate than Greenspan and that could be a bad thing. The appeal of Greenspan is that he was seen as an inflation hawk to the point that he'd bring about a recession to control inflation. A more moderate chairmen might be seen as being more willing to use monetary policy to affect the business cycle vs. simply wanting to reign in inflation.

Bernanke's academic credentials are about as good as one can find. Bernanke recieved his PhD in economics from MIT (one of the top institutions as far as economics is concerned) and is a professor at Princeton University (another top institution for economics). His curriculum vita is quite impressive with publications in top journals.

Following his nomination, Mr Bernanke said: "Our understanding of the best practice in monetary policy evolved during Alan Greenspan's tenure at the Fed, and it will continue to evolve in the future."

"However, if I am confirmed to this position my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years," he said.

Bernanke is trying to signal that things will remain the same after Greenspan leaves and (assuming he is confirmed) Bernanke takes over. The idea here is to keep markets and investors from becoming nervous.

The problem is that in the past the Fed and monetary policy have been used as a means to counter the business cycle. Via the Phillips Curve and the inflation-unemployment trade off. Inflation would be increased via monetary policy which would lower unemployment. The problem was that this ignored a basic tenet of microeconomic theory that people do not suffer from money illusion. If all prices and income increase by the same amount people do not change their behavior. Hence after using monetary policy to affect inflation the impact on inflation became less and less until it disappeared completely and one could get high unemployment and high inflation.

One of the ways to get out of this problem is to have a central banker (the Fed chairman) who has a reputation as being an inflation hawk. Volcker and then Greenspan managed to build this reputation and the impact of it can be seen in the article,

Mr Greenspan has been a highly successful Fed chairman, cementing the anti-inflation credibility of the Volcker-Fed. Both growth and consumer price inflation have averaged about 3 per cent per year during his 18 years in charge.--emphasis added

To preserve this credibility is probably what lead Senator John McCain to quip that if Greenspan were to die (while still serving as Fed chairman) he'd "prop him up and put dark glasses on him."

Update: Brad DeLong notes that Bernanke is a "demand sider and Phillips curver". While true to some extent even Brad is a wee bit misleading. Not very many people accept the initial version of the Phillips curve. Now the accepted version is the expectations augmmented Phillips Curve. Here, the slope of the Phillips curve depends on the expectations people have about inflation. If the expectations are that inflation is going to remain stable, then there could be some short term gains to be had by increasing in inflation rate as people's expectations would lead them to see wage increases as a reason to supply more labor. Of course, the more inflation is used to try and lower unemployment the faster people's expectations will adjust and soon there will be litte or no gain.

Mark Thoma over at An Economists View notes that Bernanke has a reputation for not being overly partisan. He points to an article from the New York Times

Mr. Bernanke built a sterling reputation while at Princeton, and has won widespread praise for his cogent analyses while at the Fed. But he has studiously avoided partisan political issues, at least in public. He has said little about issues at the top of Mr. Bush's agenda, like Social Security and tax cuts, and his economic writing betrays few hints of political ideology. "If you read anything he's written, you can't figure out which political party he's associated with," said Mark L. Gertler, a professor of economics at New York University who has written more than a dozen papers with Mr. Bernanke. Mr. Gertler, who said he did not know his close friend's political affiliation until relatively recently, added: "He's not ideological. I could imagine Ben working with economists in the Clinton administration." Alan S. Blinder, a longtime colleague at Princeton who has advised numerous Democratic presidential candidates, also said he had worked alongside Mr. Bernanke for years without having any sense of his political views. "We wrote articles together and sat at the same lunch table thousands of times before I knew he was a Republican," Mr. Blinder recalled. "We never talked politics." Mr. Bernanke enjoys enormous credibility among economists in academia as well as on Wall Street - an advantage for him that may also pay off for Mr. Bush.

Mark also notes that Bernanke is closer to the "rules" side in the "rules vs. discretion" debate than Greenspan was. For most of you that last will seem rather cryptic. In economics there is a debate over using things like monetary rules vs. discretionary policy. This issue first came up in the Time Inconsistency paper by Finn Kydland and Edward Prescott (which was one of the papers when Kydland and Prescott were awarded the Nobel in economics). The idea is that discretion leads to sub-optimal outcomes and rules might result in some what better outcomes.

Tyler Cowen also has a post on Bernanke and rates his for the job. The overall grade looks to be an A- with an Incomplete for "having that magic Greenspan touch". Tyler also has a post on Bernanke's contributions to economics as well.

Max Sawicky sees it as the best possible choice, but given Max's views of the other candidates (Feldstein and Hubbard) that isn't saying much.

Update II: As usual James beat me to the punch on this one and has lots of big media links that are worth checking out. And as James notes, this is not a Harriet Miers/crony appointment. Bernanke is extremely well qualified, well liked in the profession, and is not a complete unknown

Catching a Creationist Lying

Sometimes it is pretty easy. If your are dealing with Dr. Dino it isn't all that hard. However, the newest species of creationists, the Intelligent Design "theorist", is actually pretty slippery. This shouldn't be all that surprising because most of them have advanced degrees from mainstream institutions such as University of Chicago, University of Pennsylvania, and Cambridge University. These guys are smart and well educated, they are far more sophisticated that Dr. Dino.

However, they still mislead people, and given that they are smart and well educated the only conclusion is that they are misleading people purposefully--i.e., they are lying. Case in point is this article by Stephen C. Meyer where he gives some "advice to teachers". This note focuses on the issue that often times evolution is called a fact. Meyer gives us three definitions or usages for the word evolution.

1. That organisms change over time.
2. That organisms are all bound together by a common ancestor--common descent with modification.
3. That the diversity of life is due to random variation and natural selection.

Now, Meyer is correct that only the first one is really a fact. It is fact that at a genetic level organisms change via mutations (and no, most mutations are not fatal, most mutations are neutral). The other two are actually part of what I try to refer to as the Theory of Evolution, ToE for short.

The idea behind a theory (or even a hypothesis) is that it takes the observed facts and tries to formulate a coherent prinicple that explains the facts. For example, we might notice that as the price of goods go up that people tend to buy less and less of the good. From these initial observations we might formulate the hypothesis that demand for a good is a decreasing function of price. From there we'd go out and gather data and try to verify that the hypothesis actually holds. Even if the data confirms our hypothesis we should be reluctant to call the confirmed hypothesis a fact. Now in modern economic theory it is indeed quite possible that as price goes up demand increases...at least for some range of prices. This is the ever elusive Giffen good. As far as I know, nobody has actually found any evidence of a Giffen good, but there is indeed the possibility that one could be found someday. So we want to be careful with using terms like fact when applied to theories and hypotheses.

Where Meyer's goes badly off the rails though is in his attempt to protray the fact that all theories and hypotheses are tentative as meaning that a slight shift in our point of view a little bit and you get a completely different answer. While this is true in some cases it does not have to be true in all cases. In fact, when making inferences it is often a good idea to test your hypothesis/theory by changing your initial point of view. This is one of the nice features of the Bayesian approach to evaluating hypotheses and theories. With the Bayesian approach your initial point of view is basically your prior probability about the truth of the hypothesis/theory. Now, if you change that prior and it turns out that your conclusions change then you have a bit of a problem. On the other hand, if your result is consistent across different priors than you have a result that some would consider to be "robust".

But this isn't the only problem with Meyer's essay. The other problem is that many biologists and philosophers of science are aware of the distinction between the fact of evolution and the ToE. Meyer is committing a logical fallacy of a strawman by claiming that scientists are confusing the two to block of legitimate avenues of inquiry.

The last and final problem with this...screed is that it suggests that these issues are something to be discussed and brought up in a high school biology course. I remember my high school biology course very well. That isn't to say that I remember the lessons, but that there were aspects of that class that I am unlikely to ever forget, and they had damn little to do with DNA, mitochondria, or vacuoles. Now if the teacher were to try and get into things like how to evaluate one theory over another, making the heroic assumption here that the teacher actually had the educational background to understand it himself, I doubt it would be a good thing. Most students would grab onto the idea that the "competing" theory is a reason not to study too hard the dominant theory. Or to put it more simply, the number of high school students who have read Thomas Khun, Imre Lakatos or understand what it means to be a logical positivist or a Bayesian is probably vanishingly small.

So this is how the new creationist lies. They muddy the waters, don't provide all the information and/or facts. Then on top of this they want the reader to believe that there is a controversy that has been virtually untested in scientific terms (e.g. peer review publications, predictions, data, etc.; and while it is true that there have been one or two peer reviewed publications mentioning intelligent design they are far from sufficient to warrant including intelligent design in high school science classrooms). But, I think this is a good thing. As the Commissar points out, look at what the creationists have given up in the last 80 or so years. 80 years ago, teaching evolution was actually prohibited in some states. Then teaching evolution was made the norm throughout the country. Then the idea of "Creation Science" was rebuked by the courts forcing the creationists to...well..evolve into the Intelligent Design "theorist". Now, the IDers believe in an old earth (or they avoid the issue altogether), some even believe in common descent and "microevolution". IDers don't mention God and have now resorted to this enigmatic "intelligent designer". And now we have Kitmiller v. Dover, and by all appearances it looks like ID is going to suffer a major set back there. In short, despite all the misdirection, rhetoric and propaganda, they are losing.

Pork Busting Mania

Glenn Reynolds seems to be one of the big movers behind the recent craze in "pork busting". Frankly I see it as a big fat zero. Don't get me wrong, I'd love to see something come of this, but my gut feeling is that this is like most things these days, a flash in the pants. It is another Ashlee Simpson, and in a few more weeks nobody will care anymore as something else will have come up to distract everybody. Where was this kind of drive a year ago, or for that matter from the day Bush opened up the Federal coffers and started spending like a heroin junkie with a major jones? I'll tell you where, nowhere. Nobody cared. Nobody will care in a few more weeks. So all this pork busting blogging...color me unimpressed.

Krugman, Thoma and Environmental Regulations

There seems to be this bizarre compulsion amongst some (and I note frequently these people are on the Left side of the political spectrum) to insist that environmental regulations do not come with a cost...at all. Case in point, Paul Krugman and Mark Thoma,

Krugman notes that until recently, energy companies weren't interested in building refineries because there was no expected profit in doing so, not because of environmental regulations.

Lets think about this from a microeconomics stand point. What is one of the primary justifications for environmental regulations? To internalize external costs? Well that is one argument. If this is the case, then it stands to reason that environmental regulations by their very definition would raise costs, induce some firms to shut down, and prevent others from entering the market.

Now this isn't the only problem with trying to build a new oil refinery (or electricity generation plant). NIMBYism also plays a role, IMO. Between these two things (which in my view have a perverse symbiotic relationship at times) it can take years to build a plant. I am not familiar with building oil refineries, but I do know a little something about the electricity industry, especially in California. Here in CA it can take around 4 to 5 years to site, license and start construction on an electricity generation plant. The cost would likely run into the tens of millions of dollars. Are oil refineries any different? I doubt it.

So there you are, the CEO or an oil company and you have say...$20 million bucks lying around. Do you

1. invest in a new refinery and not see any return for several years and maybe none at all, or
2. invest in something else with a much better prospect of turning a profit sooner which affects your annual bonus?

I'm guessing that most CEOs are going to think (b) is really spiffy and (a) ain't so spiffy.

Still, what is it about this strange compulsion that we can have our cake and eat it too when it comes to environmental regulations? Beats me. I personally think they do impose costs. Of course, having cleaner air is a good thing and so the costs aren't necessarily bad.

The Natural Resource Defense Council Wants Higher Gasoline Prices

In typical fashion the Natural Resources Defense Council doesn't like anything in HR 3893. Apparently the Natural Resource Defense Council (NRCD) likes high gasoline prices. They don't like the reduction in the number of specialized blends of gasoline, they don't like streamlining the permitting policy by placing it under one agency, they can't seem to acknowledge the environmental policies come with trade offs.

The number of gasoline blends that are currently in existence takes what could be a national market and breaks it down into local markets. This means with an already tight refining capacity if only one or two refineries suffer some sort of temporary shut down prices can jump in some areas by quite a bit. By standardizing the gasoline blends this would be less of a problem. It wouldn't necessarily mean cheaper gasoline, but it would mean less volatility in gasoline prices.

I further find it amusing that the NRCD uses the "poor" as an example of those who would be harmed by this bill. Well, the very same thing can be said about the NRCD's stance in favor of the large number of gasoline blends. The people who are most harmed by the gasoline price volatility are the poor. How many poor families are hurt when gasoline prices go up making it harder for such families to make ends meet? Probably quite a few.

Now this doesn't meant that the problems caused by emissions/pollution aren't real or aren't serious. But it long past time for this kind of nonsense to come to an end. Many on the Left who support insitutions like the NRCD talk alot about "national debates" regarding energy policy. The only problem is that it is a bunch of dishonest rhetoric that is used only to score debating points or secure an advantage for the current election. A serious and rational discussion of energy and environmental policy is needed, but unfortunately those who are willing to have such discussions are usually side lined or ignored. Just remember, NRDC they stand for the status quo which is high energy prices.

A New Energy Bill...

...that, unlike its predecessor, may actually do some good.

HR 3893.

(1) REQUIREMENT.—Not later than 90 days after the date of enactment of this Act, the President shall designate sites on Federal lands, including closed military installations, that are appropriate for the purposes of siting a refinery.

Increasing refinery capacity should help somewhat in the case of disasters like hurricanes Katrina and Rita. It might also help with volatility to some extent in general as well, but without new firms entering the market the lack of competition likely wont help bring prices down.

Also the harmonizing of gasoline blends,

The Administrator, in coordination with the Secretary of Energy (hereinafter in this clause referred to as the ‘Secretary’), shall identify and publish in the Federal Register, within 12 months after the enactment of this subclause and after notice and opportunity for public comment, a list of 6 gasoline and diesel fuel blends to be used in States that have not received a waiver under section 209(b) of this Act or any State dependent on refineries in such State for gasoline or diesel fuel supplies.

This should also help alleviate problems due to unexpected shut downs of refineries and thus reduce the price volatitlity.

Somebody who was invovled in writing this is actually guilty of having a brain. The other parts of the bill that look at streamlining the process for licensing a refinery looks good, but I hold out less hope for this. CA made a big deal about doing the same thing and nothing at all came of it.

The subsidies to small refineries is nothing but pure pork. When one considers that the federal gov't is running large deficits now is not the time to throwing away money.

The price gouging parts are also stupid. I think we need to put in place price gouging laws on housing. Why should somebody be allowed to charge double for their house simply because they bought it 15 years ago?

And compare this lean 67 page legislation to the 1700+ page abomination from earlier this summer. Also somewhat impressive.

Now why couldn't something like this have been put into the energy pork fest this summer? Probably because the ideas in this legislation aren't half bad and the Bush administration can't do something that actually makes sense with regards to energy policy.

Hat tip: Econbrowser.

The Commissar Is Done With Bush

Stephen over at Politburo Diktat says he is done with, Bush. That he is going to be turning in the poms-poms and megaphone. Can't say as I blamed him. I didn't realize I was voting for the liberal, big government, protectionist candidate.

Bereger Back in Trouble With the Law

This time a speeding ticket for Sandy Berger. Berger was ticketed going 88 miles per hour in a 55 zone. Ammusingly he could end up spending time in federal lock up fro 3 to 9 months.