Greg Sanders

CBO as Referee

Peter Suderman has a good piece up in Reason magazine about the CBO. I think he does a great job telling its story and describing the role it is playing in the current health care reform debate.  That said, I do disagree with the subhead describing the CBO as Obama-care’s chief obstacle (see comments).  Suderman was kind enough to respond to my questioning of that point:

But I think it’s a good enough subhead: part of the point of the piece (not the only point!) was that, during the summer, the bill lived and died by the CBO — it exercised a strong pass/fail authority over the bill’s life. And it proved a lot of trouble for Democrats. Indeed, if you look at where the debate’s at today, there’s still a lot of that going on — the sorta-kinda deal they put together last night is contingent upon the CBO’s analysis.

All true. That said, the chief obstacle is the fact that the filibuster has become a de facto 60 vote minimum on everything.  Absent that consideration, the CBO wouldn’t be playing nearly as prominent a role.  Moreover, having the CBO validate the public option as a deficit reducer didn’t bring any “fiscal hawks” around. 

As the title indicates, I think the CBO is best seen as a referee.  The President and Sen. Baucus both wanted to get to 60 votes by emphasizing deficit reduction, the CBO made the call as to whether they played fair while doing so according to its sometime idiosyncratic rules.  As Suderman notes, we do complain some about the calls, generally speaking, liberals argue that the CBO underestimates various saving measures and we have some cases to back us up.  That said, the CBO is also required to be credulous that Congress will implement certain provisions they consistently vote against, so the idiosyncratic bits can cut both ways. However, even if we don’t like some of the calls, playing with a referee is conducive to good policy.  I believe it is vital that we find ways to undermine the pernicious and unprecedented impact of the filibuster, but I think we should celebrate the prominence of actual accounting brought by the CBO even if it sometimes makes our lives hard.  After all, health care reform has gotten further under this set of conditions than it ever has before.

A defense of the fiscal responsibility of the Senate Health bill

Tyler Cowen attacks those of us who support the bill claiming we retreat into the relative.  In short, he doesn’t believe the various automatic cuts will happen and is unsatisfied with our defenses of those cuts.

This fight gets more into political science than economics as such.  The economics of the bill as written are covered by the CBO, the question is whether the politics of the bill are sustainable.

Here’s why I think they are:

1. Assuming no changes to the filibuster as implemented in the 21st century, post-passage it will be possible to defend the fiscal responsibility of the bill with 41 votes rather than the 60 votes otherwise required (or 51 votes and luck of the draw if using reconciliation).
2. People with expensive health plans are elite, but they lack the organizational infrastructure and natural ties held by the doctors and elderly who have blocked automatic Medicare cuts.  Their negotiating clout is undercut by the fact that the group contains natural enemies: union workers and corporate execs.  Further, their numbers will be decreased by many companies choosing to simply avoid the health care excise by giving more taxable income.
3. Democrats, under the prior Democratic president, managed to balance the budget.  The good economic times of the 90s were certainly critical to that happening, but we managed it nonetheless largely due to the revenue raising that helped lose us the Congress.  Why would we do it again after losing the Congress the last time?  I don’t believe in politician fiscal hawks, but I do believe that your average Democratic Representative and Senator faces more elite pressure to do something about the deficit than expand health benefits.  Universal Healthcare does address a core middle class concern, but things like the level of subsidies and the benefits of the bronze plan are going to be lower priority for Democratic leadership than being described by the media as fiscally responsible.  If this wasn’t the case, then why did the Reid bill come it at $856B rather than maxing out the $900B the President suggested.  Liberal bloggers, such as myself, won’t get their in a better world cost reductions but we also won’t get our better world benefits for the poor.
4. This will make it easier to raise the eligibility age for Medicare once universal healthcare is in place.  We can do something sensible like index it to the expected lifespan.  Obviously this will be grandfathered in due to the political clout of the elderly, but those who aren’t that near receiving benefits are a larger group that won’t be as motivated.
5. Some of the bloggers Tyler is critiquing are willing to say that the new mammogram guidelines could well be a good idea and that critics should provide counter arguments based on science.  There may well be strong counterarguments, I’d be curious if the false positive downsides still outweighed the detection upsides if we’re talking African American and/or lower income women, but I need to see that data before I go along with the critique. Furthermore, when it comes to things like mammograms, many people are averse to getting tests in the first place, stopping government encouragement for those under 50 without special risk factors, even if coverage is maintained, should make a difference in usage.  I will concede that this up roar and HHS concessions does bad for us, but the strength of the response on breast cancer is the exception as advocates for breast cancer patients are highly organized and feminist groups are on edge after being backstabbed in the House.  There was not a political response of the same magnitude of recommendations on prostate cancer screens.  Interestingly enough, the American Cancer Society didn’t object to those, so I think their critique on changing mammogram standards should certainly get a fair hearing.  Also, I’ll note the fact that the timing of this release shows the scientific independence of the review process, the timing was awful.

There are nearly 200,000 contractors in Iraq and Afghanistan but most aren't toting guns

There are presently more U.S. contractors than troops in Iraq and Afghanistan. James Glanz of the NY Times reported on this parity back in September citing data from March 2009 in a Congressional Research Service report by Moshe Schwartz.

I've seen the latest data and in June of 2009 the trend still held: there were 194,000 contractors in Iraq and Afghanistan and only 190,000 troops. This high ration had first occurred during the U.S. mission in Bosnia where concerns about the size and duration of the U.S. peacekeeping mission made sending large numbers of troops politically costly. Waging two wars at the same time further strained the personnel side of the U.S. military and contractors handling support functions proved easier than a massive increase in recruiting, let alone restoring the draft.

The key word in that last sentence is support. While armed private security contractors spawn many news stories but as of June 2009 only represent 11% of the contractors in Iraq and 7% of the contractors in Afghanistan. Thus the typical face of contracting in Iraq may well be an employee at a base Cinnabon and not a Blackwater security guard.

This post is also available at ameasureofsecurity.org.

Random health reform thought

One benefit of electronic records and the like is that we could begin to see the effectiveness of various forms of medical training.  One of the limits on the supply of doctors is that it’s hugely expensive and time intensive to get a degree.  Early work in hospitals practically seems to represent a form of hazing through long hours.  In some specialties, that may well just be necessary.  On the other hand, classically professional organizations often try to limit the incoming supply of people of the same profession to keep both the prestige and the wages up.

This is an area where conservatism is appropriate.  Medicine is an old high and a risk field.  That said, I expect there’s already a fair amount of variety in teaching methods in the U.S. let alone the world.  Monitoring physicians success rates after graduating and seeing how it compares between various programs may indicate what educational methods actually work fairly well.

When wandering hospitals, I’ve seen a fair number of ads for the number of years all their radiologists were trained.  I think it was something like thirteen.  I can accept that such training may be necessary, but it seems more like a lamentable fact rather than something worth crowing over if that’s the case.  I’m more inclined to be impressed by outcomes than inputs.

The fight to get America a decent health insurance system

The conventional wisdom and Nate Silver’s analysis seems to show that a public insurance option isn’t going to make it into the bill.  This is rightfully angering many liberals, but I am of the belief that we can live without it in this round.  Kevin Drum notes that world-wide universal health care tends to come incrementally rather than in one grand bargain.

This isn’t to say that liberals should top fighting for it.  Ezra Klein argues that attempts to compromise with all but a handful of Republicans are futile.  The incentives to cooperate just aren’t there.  It will likely be necessary to give up the public plan to get enough votes in the Senate, but giving it up preemptively will just result in a new set of lies about some other part of the proposal.  However, it’s vital that if we can get the principal of universal health care in place that we take a deal public option or no.  I tend to think, despite bluster, that most of the real liberal fighters understand this and I trust they know

What we need is reform such that insurance is available to all and will not abandon them when they need it most.  This is not the case with the present employer based system although many people don’t find that out until it is too late.  Yglesias has a helpful White House summary of the key reforms necessary to remove the worst dysfunction from the system. 

Ultimately, I think in the long term controlling costs probably will mean providing a system that makes more sense than employer based insurance.  I want a robust public option, if it out competes private and non-profit insurance that’s great, if not than so long as costs are contained I don’t really care.  Moreover, I have no desire to place any sort of cap on spending even under my ideal system, I’m happy to have people buy supplemental insurance or putting all their wealth into buying all the care or medical research they want.  There are exceptions but an aversion to caps is the standard American liberal view, let alone the view of Democrats that are electable outside of liberal enclaves.

Finally, for those of you already on board here’s a bit of catharsis via Yglesias who argues against defensive crouches and for hitting back fearlessly.  The level of aggression here is dang satisfying and probably often a good idea, but I think not showing fear is the key take-away.  I don’t think that’s actually a useful lesson in overall strategy, but it’s quite important in the specific instance of public speaking.

Is multiplayer the key to engaging serious games?

Last was week the Games for Change festival where designers of serious games got together to discuss their nascent industry. One regular topic for discussion at such gathering is whether serious games need to be fun and what fun even means. Michael Abbott of the Brainy Gamer summarizes the discussion:

Perhaps games, and the audience for games, would be better served by design that emphasizes values beyond fun, but it’s clearly a difficult assignment. A notable undercurrent at this year’s festival was a sense that the current crop of games for change aren’t reaching their intended audiences. Most of these games are perceived by players as preachy, and even their developers admit they often fail to match the engaging gameplay offered by commercial games.

He also casts doubt on the idea that a new generation that grew up on games would be more inclined to take games seriously given his experience with some freshmen regarding his class on video games. That said, Abbott found hope in the increasing awareness of the value of connections with commercial developers. From my experience with documentary films, I do think production values definitely matter. This doesn’t mean that serious games should be high budget, that’s impractical, but they should have a professional look.

On the fun breakdown, I’m inclined to think engaging is a better word. To find an audience beyond the equivalent of textbooks and corporate training videos people have to want to play serious games.

Making serious games engaging gets to the mention of multiplayer in my title. Economics and political science both heavily involve themselves in game theory with the classic example being the prisoner’s dilemma. The mechanics there are not particularly impressive, cooperate or betray, but I recall little grumbling when people paired up to experiment with it. I think that’s because the challenge and competition of playing with another person can up the engagement value substantially. This could even be faked I suspect, but probably only for one-off games.

The end of advertising as a cash cow?

James Fallows has been discussing the death of newspapers and today posted a piece by reader Hal on saying what was really at issue was the death of advertisement.  Essentially he argues that the internet has to proved amenable to advertising with the exception of Google’s tiny ads.  Hal ties that in to the ability to skip television ads and argues that the outlook is poor for the industry as a whole.   He name checks radio but I don’t think there’s that much evidence there, although digital radio might make it all the easier to just jump around to avoid ads and I do hear more solid music blocks these days.

I suspect that this is at least partially overblown, I’d like some revenue and profitability figures to say for sure.  However, assuming it is happening, this means we’re losing a major model for providing public goods.  Specifically, if you can’t make much (Newspapers) or (any) money off subscribers to your product, make the money selling access to your subscribers.  Newspapers probably weren’t a public good until the internet, but I think once some papers put their content online news collectively became a public good.  I think this would have happened even if the papers stayed offline, although it might have been slower.

I don’t buy the idea that newspapers are suffering under their old model because they’ve cut back on hard news and investigative reporting.  Another Fallows reader along with Ezra Klein has repeatedly made the point that the good coverage is typically a beneficial inefficiency under the traditional model.  This is why I, like Yglesias, oppose a monopoly exemption for newspapers, it’s not the classic profit model we’re trying to save, it’s the inefficiencies.  Non-profit status instead attempts to directly pay for the social good via donors who would get tax deductions.  This is where reprinting the arguments of both sides without fact checking or otherwise adding value will cost news sources money, why would people want to pay for that?  Of course sponsorship will be encouraging for more partisan news as people certainly are willing to pay for news that supports their biases.

For those wanting to stay in the profit sphere, I can’t find the source on this, but I’d read an interesting article on how the Wall Street Journal does it.  You don’t charge for breaking news or big stories.  Instead you charge for niche products of interest to few customers.  Your big news will get you the wide viewership and each of that population probably has niches they’re willing to pay dearly to get access to.

The end of credit cards as we know them?

So according to a Kevin Drum piece, credit card companies are actually the most hated industry in America and for good reason.  It appears reform might actually pass this year and there’s an interesting New York Times article by Andrew Martin up on what credit cards might look afterwards:

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems…”

For more information check out a 2005 GAO report that found that about 70% of Credit Card revenue came from interest charges with a growing 30% from fees to costumers and merchants.  Another aspect of the bill is that merchants would be allowed to pass those fees on to credit card users rather than splitting them among all customers.

I’ve enjoyed and exploited the long credit card free ride.  However, it was quite inegalitarian.  Those with less revenue are most likely to get stuck in debt spirals and hit by fees.  It’s particularly ridiculous that cash customers have to pay extra to subsidize those with credit.  This gets to a point discussed in a recent post by new graduate Jamelle and a terrific Washington Post article by DeNeen L. Brown: being poor is expensive.  Access to credit is an important tool to escape poverty, but as presently configured the lower classes subsidize the well-to-do.

Funny Numbers

Speaking for myself here.

William Wheeler goes to far in a Politico piece where he points out that the Department of Defense official numbers don't get to the entire budget (Hat tip, Ackerman).  That's true.

Here's his accounting:

• $534B - Topline
• $6B - Mandatory expenses for DoD
• $130B - War Supplemental

Those are all uncontroversial.  If someone doesn't at least reference the supplemental then they don't know the defense budget.  I haven't tracked the mandatory expenses in OMB before, I'll check that out.  [Here's what I find arguable:]

• $22B - DoE money for nuclear matters, selective service, and national defense stockpile.  Odd grouping there and I don't know the numbers off the top of my head, but it seems plausible.
• $106B - Department of Veterans Affairs.  Fair enough.  If we get universal health care than I might favor breaking up this number some, but until then the whole thing seems reasonable.
• $28B - Treasury Account to pay for military retirements.  Wasn't particularly aware of this.  Seems like a reasonable classification.

Here's the accounting I'm more dubious of:

• $43B - Homeland Security.
• $57B - Department of Defense's share of interest on the national debt.

We don't account for anything else by including its share of the debt.  Why should we do that with Defense spending?  Homeland security is arguable.  I could see counting the Coast Guard[, although it is more policing,] but I can't really see counting the Federal Emergency Management Agency.

Here's where I've got a major problem:

What about the military and economic aid to Iraq and Afghanistan, gifts and loans to Israel and others, U.N. peacekeeping costs, and all the rest from the State Department? Add $49 billion.What about the military and economic aid to Iraq and Afghanistan, gifts and loans to Israel and others, U.N. peacekeeping costs, and all the rest from the State Department? Add $49 billion.

The foreign military aid come to about $15B and some of that aid is already on the military books.  Economic aid to Iraq and Afghanistan via the State Department are civilian programs.  That I could see argument on, but what's crazy is he lumps in the entire State Department budget.  So all Foreign Policy is Defense Policy now?  Bull.  Look, the numbers above are already huge?  Why fudge them to sneak in an extra 5% or so?  The problem with this sort of tactic is that it throws his other numbers into doubt despite the fact that the base uncontroversial $670B number is already insanely high and is basis enough to argue for substantial cutbacks.  The only explaination I can see was that he really wanted to be able to justify rounding up to one trillion dollars.

That said, I agree with him on the F-22 and he makes a fair point critiquing the F-35.  It really isn't ready for a dramatic expansion.

Link round up 4-29-09

Culture

• N’Gai Croal finds a Maureen Dowd column amusing I do as well in this case, though she’s normally not my thing.
• Brainy Gamer discusses Mother 3 (earlier games in English went by Earthbound) The story sounds great and much of it involves one changing community rather than hopping around the world.  Sadly it isn’t officially available in English, but given the raves I might get a bootleg.

Political Economy

• The Monkey Cage notes that Democratic Senators are easy to herd after all and provides the data to back it up.  I think this phenomenon hasn’t been more noticed because as both parties get more unity each defection becomes more important.
• Emmanuel Saez won the Clark Medal for young economists and has done interesting work on equality.  The top 1% had hugely gained of late.  It’s well established that the top percentages tend to gain under Republicans, but I wonder whether that relationship goes both ways and they tend to win more thanks to a larger bankroll.  Such a phenomenon would still be contained by the inevitable crashes brought about by the excesses of inequality.

Rights

• Kevin Drum defends civilization against the torturers.  This might be my favorite tack combined with encouragement to have a stiff upper lip regarding terrorism which isn’t that big of a threat to the U.S. to begin with (See Cold War, WWII).  Manzi notes that countries that torture tend to be losers in their conflicts.
• Andrew Gelman explains that contradictory torture polling might be caused by the fact that people tend to make a lot of exceptions when you offer them specific scenarios.  Thus we probably do better in a big picture debate.
• Justine Fleichner discusses the risks to women from concessions to the Taliban.  I fear some concessions may prove necessary, but we should ensure that Afghan women are at the bargaining table to defend their interests.
• States with more men than women extended the franchise first in case you were wondering, why Wyoming took the lead.  I don’t think political violence was as much of an issue when it came to suffragettes, but we should still probably study our history to learn methods for dealing with Afghanistan.

Mutual funds losing to the market index funds

Ezra Klein explains:

Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most.

Full numbers here.

One commenter argued that these might be lower risk funds, but that doesn't really make sense to me.  Low risk funds should do better in 2008 as they should weather out the crash, right?

This fits with my personal experience.  I had some old mutual funds that got hit harder than the new index funds I'm putting my work retirment funds into.  I'm trying one socially responsible fund, it's doing pretty well, although I'm willing to take a slight hit on perfomance in an attempt to funnel more money towards green industries and such.  That said, I do think I should do some extra research and make sure that the fund is exploiting their stockholder voting power and such.

On a related note, I forget if I've mentioned this before, but I did learn an interesting financial company trick at an Edward Tufte class.  He used sparklines, a neat visualization tool, to show that many mutual funds basically followed the index funds, presumably these include the one that aren't underperforming.  Why might that be? Well, by shear luck a good percentage of fund managers should beat the market in any given year.  Over time, even with no special skill, some of those funds will get a good record.  You then drop all the funds that were underperforming (sometimes due just to bad luck) and keep the winners.  If you want to save staff time, you can switch a mutual fund over to just following the market.  The way Tufte described it, it sounds fairly malicious, certainly not what people are paying for.  However, given the perfomance numbers listed above, maybe everyone's better off that way.

FCS: Too big to succeed

The Future Combat System was the Army's attempt to buy the next generation of vehicles in a single project and by doing so to fully network them from the ground up.   According to numerous GAO reports, most recently on March 12, bthe program is failing due to its reliance on unproven technology (Here's the Army's response to the report).  Sec. Gates apparently found the GAO's case compelling and has recommended cutting and replanning the vehicle program of the FCS, effectively shattering the program.  With that summary completed, I'd like to take this moment to emphasize that I'm speaking for myself and not any institution that employs me.

Disclaimer out of the way, I'm with the summary of critics' views described by Noah Shachtman over at Wired: Danger Room:

When they first launched FCS six years ago, the Army's top generals made a bet — not just on the coming wars around the globe, but on the politics within the Beltway. Ordinarily, weapons systems are bought one class at a time: one particular tank, one particular network, a single model of a fighter jet. But in the 1990s and early 2000s, the Army saw several of its weapons programs killed off by the Pentagon brass. So the generals made a decision, to package what would ordinarily be dozens of programs — new vehicles, new robots, new networks — into a single effort called "Future Combat Systems." And they awarded the massive contract for the whole thing to a pair of companies, Boeing and SAIC. The executives and the generals said it was to make sure all the gear worked in concert. Critics countered that, by combining all those programs into one, it made FCS too bloated, too ungainly to ever work right. And by the way, they added, why was there so little government oversight of what Boeing and SAIC did?...

Bits of FCS will continue. Small ground robots and drones developed under the program will be "spun out" soon to the troops. But, if Gates has his way, the generals' original vision for Future Combat Systems is over. As one Capitol Hill source put it, "They wanted to make it too big to fail, and in the process, made it a failure."

To give the Army a little more credit, there's a reason to think that the networking would be easier if you're doing all the projects at once.  If you want a highly coupled network then the projects are by definition highly integrated.  However, while I can see the desirability of such a network, I think as presently conceived is far too complex to be achievable.   We do have a range of tools to deal with complexity, here's a series of workshops and reports from CSIS on the matter.  However, I'm skeptical of our ability to handle the ecosystem and emergent behavior of counterporary warfare via any  acquisition process, let alone a process as flawed as our present one.  I think instead we need to give warfighters robust tools and standards to mash-up loosely coupled systems.  In short, shoot for the internet and not for Windows Vista.

I thought I might disagree with the Armchair Generalist on this, but after a quick discussion in comments it appears that we're on the same page on complexity.  Instead, the Generalist's critique runs more towards Sec. Gates' emphasis on armored vehicles such as the MRAP:

I respect Gates' need to take charge of the FCS project and restructure it. I don't, however, believe he's thinking logically about the vehicle design. First of all, he's stated that at least 50% of the DOD programs are still oriented toward conventional warfare. Second, we've all seen the reports by people who've stated that the best way to avoid IEDs is to get OUT of the vehicles and walk around. Third, usually one accepts that there are tradeoffs between mission capability and protection. If Gates wants full protection, then the vehicle's going to weigh too much and cost too much. Not hard to figure out.

That makes sense to me, although I don't really have the relevant knowledge and experience to judget the mission capability and protection trade-offs that well.  I think it may be worth having vehicles that are so heavy that they take longer to get to the theater. On the other hand, some of our current vehicles are too heavy to operate in the challenging terrain of Afghanistan or to be able to manage some bridges in Iraq.  FCS attempted to maintain heavy armor survivability rates by striking first and via advances in armor technology.  That's not really going to work, lighter vehicles are going to take a survivability hit.  However, if this improves their ability to achieve their mission, then lives will be saved over the long term.

I actually only recently found the Armchair Generalist and Wired: Danger Room.  Still checking them out, but they both seem rather useful for information sources for my professional life.   If I'm still of that opinion in a week or two, I'll likely put them on the blog roll.

My position on relativism

Brad Delong has a fun not-Socratic dialog post.  Mainly he shows the implications of seeking Pareto optimality.   That sort of optimality is about seeking any change that leaves no one worse off and at least some people better off.  The criteria to leave no one worse off means that it automatically rejects any proposals with redistributional impacts.  I'm prone to agree with the critique, but I don't quite understand it well enough to properly summarize it.  [Update: Nic's explained it to me with formulas.  Quick summary: The marginal utility of money depends on how much money you have already.  $1 is worth more to a beggar than a millionaire.  So if all that matters is the total amount of money in the system then the millionaire has far more social value than the beggar.  If everyone has similar value, than more money to the beggar should matter more than more money to the millionaire.]

I particularly enjoyed the final bit:

Thrasymachus: "Ah. Marx thought unveiling was a good thing. I think it is neither good nor bad, for 'good' like 'justice' is really just another word for the interest of the stronger party."

Glaukon: "And we gave you tenure here at Berkeley?"

Thrasymachus: "Shhh! The humanities departments still think relativism is sexy. They haven't yet figured out that to assume a position of relativism--like the claim to be neutral on issues of distribution--is really a statement that you are on the side of the powerful."

Agathon: "And are you?"

Thrasymachus: "It is the just and the good--or, rather, the 'just' and the 'good'--thing to do.

Unpacking things a bit, if relativism just means taking the side of the powerful, why is it popular in some sections of the humanities?  The answer, I suspect, is that it is scene as an alternative to an absolutist scale established by the most powerful party.  Relativism can work like federalism, each local set of powers that be can have a different set of values.  The appeal of the more local setup is that the values will tend to reflect local conditions better than the set of values laid down by the hegemon.

However, I think it's ultimately just a cop out.  There's other ways to include local cultural conditions and sources of absolute values that aren't divine or simply based on the dictates of some other powerful actor.

What are the risks of counterinsurgency?

Some of the pushback against Gates' Defense proposal is that he's shifting too far from conventional warfare to counter-insurgency.  This is sometimes described as fighting the last war despite the fact that the wars are still ongoing and the programs being cut were made for the Cold War and thus even further out of date.  Regardless of what we need for counter-insurgency, we're overly invested in conventional warfare capability.  There is a risk in trying to make a force that can do both, better to split capabilities and allow specialization.

However, Michael Cohen does get to some of the real problems with counter-insurgency:

It is simply incorrect to say that only the Army can perform post-conflict reconstruction and I'm utterly unconvinced that its proper for the US military to be expanding its skill set to include aid and development functions. Isn't this why we have a civilian agency dedicated to aid and development?

Now as some of my friends at the Pentagon often remind me AID and State, as currently formulated, are not as well positioned as they should be to play these roles. But the solution is not to outsource this stuff to the military, it's to build up capacity at civilian agencies so they are better able to play their assigned roles! One of the reasons the military has taken on responsibilities that used to be restricted to civilian agencies is that they were given the responsibility at the outset of the Iraq War - and under the Bush Administration the capacity of our civilian agencies was allowed to diminish.

In the end, this is perhaps the greatest problem I have with counter-insurgency doctrine, and the most intractable divide between myself and COIN-danistas: embedding COIN in military doctrine is not a benign exercise. It risks shifting power dramatically and perhaps irreversibly toward the military and away from civilian agencies - and it provides a rationale for ever-expanding military budgets. Considering that the greatest security challenges facing the US in the future will come from non-state actors and transnational threats - and thus best confronted by the non-military elements of our national security toolbox -- the result could be a US national security and foreign policy apparatus that is ill-prepared and badly positioned to confront them.

So, ultimately, is the Gates budget spending too much on counter-insurgency?  The Sec. Def. estimated that 50% of the budget is conventional, 40% dual use, and 10% straight counter-insurgency.  That means between $50B and $70B that's completely counter-insurgency focused.  Given that we do have two wars going, that doesn't seem crazy.  However, it's also comparable to what we're spending overall on civilian foreign policy agencies.  That could give a rough rule of thumb, military counter-insurgency spending should not exceed civilian spending.

How do we get to wear a large scale civilian shift is possible?  I don't know.  However, until we find that political approach, I'm going to try to be careful not favor any interventions that, even if legitimate, the U.S. lacks the capability to successfully implement.

The European Dream

Ross Douthat has a post that concludes in a way that makes me glad he'll be one of the columnist I'll be arguing against over at the NY Times.  (For a far more critical take, check out Armanda Marcotte over at Pandagon or the critics Delong cites.  I think that social conservatives make up a large enough section of the country that there should be some place for them on op-ed pages.  That said, if there's one the critics find that's a better writer or more trustworthy than Douthat, then they should feel free to name said person.)

How much do you prize equality and ease of life? The more you do, the more you'll favor a European approach to the relationship between state and society. How much do you prize voluntarism, entrepreneurship, and the value of lives oriented around service to one's family, and to God? The more you do, the more you'll find to like in the American arrangement. Where this debate is concerned, I'm proud to stand with Charles Murray - but I don't think that we should labor under the false hope that scientific advances are going to tilt the argument dramatically in our direction.

I'd quibble a bit with the wording.  I personally would substitute "alleviation of suffering" for "ease of life."  I tend to think Americans could use more vacation time, but I think work itself is very important.  Below a certain number of hours, let's say 40 per week, including unpaid domestic work and volunteering, we'd be better off increasing the amount of satisfaction than further cutting back the time spent.  People tend to go a bit nuts when they're outright idle for prolonged periods.

Second I question the term voluntarism.  I think it should be qualified to resource voluntarism or something like that.  Economic necessity can be as great a compulsion as laws and taxes. Also, regulating sexual morality doesn't really seem to be consistent with general voluntarism.

The other principles could all use elaboration, but I think as is they describe things pretty well.

On this one, I proudly stand with the European approach.  I also think that Chait easily has the better argument than Charles Murray (here's one of many take downs of his Bell Curve book) for the degree that his favored policies are based on empiricism.  Last time I checked, the American approach just plunged the globe into a devastating recession and America continues to be the only OECD nation that doesn't manage to offer some form of universal health care.  It does come down to what you prefer at some point, but many of our policies are so bizarre and counter productive that there's nearly pareto optimal European alternatives available.

So why aren't we doing something that would benefit postively most everyone?  Because those it wouldn't benefit would be at the top and even if it doesn't hurt their income it would decrease their relative status.  Yglesias explains:

In the US and in Europe, income level is fairly predictive of voting behavior and this is neither a coincidence nor the reflection of an abstract disagreement about the value of “voluntarism.” It reflects the fact that politics is, among other things, a concrete contest over concrete economic interests. In a broad sense, both the American and European models work quite well compared to living standards enjoyed in other parts of the world. But in comparison, the models work differently for different kinds of people because different people have different interests. I don’t think, for example, that America’s high child poverty rate reflects American preference for “service to one’s family” over “ease of life.”

The rich, not the poor, are more likely to vote their values (see Red State, Blue State, Rich State, Poor State).  That holds with traditional religious stuff but I think it might also explain the fervor of some rich egalitarians.  But I think Douthat gets at some of the competing values that are being weighed by the upper middle class.  Note that he says "service to family" not "well being of the family."  There's a difference between the two.  If individuals have access to resources they need to survive without relying on the family, they're likely to value service to family lower, aren't they?  Strictly speaking, we're also talking service to traditional gender roles as well, I didn't quibble with that above because I think even in the defenders formulation we're obviously talking about patriarcy.  In any event, their offering a pattern of service, we're working towards results.  This strikes me as very favorable philisophical ground to argue on.

Random gaming thoughts

Inspired by this Yglesias post:

Dave Weigel has a neat piece on the “going Galt” fad currently reverberating through the loony-bin known as the conservative movement.

With all this Atlas Shrugged talked going around, Bioshock 2 is really going to be incredibly topical.  Here's hoping they can exploit it properly.

Giving up on an international financial regulator

One aspect of the present global crisis is the largely unregulated flow of global capital.  Yglesias just summed up the problem:

It’s not controversial, even among pretty serious free market types, that some kind of effective financial regulation is necessary. Nor is it controversial to observe that any given country could still be subjected to “systemic risk” emanating from a differently-regulated foreign country with which it has economic ties. Nor is it controversial to observe that firms actively seek to engage in “regulatory arbitrage,” i.e. take advantage of opportunities to dodge regulatory burdens by, among other things, taking advantage of nation-to-nation difference in regulation.

One solution might be a global regulator.  Yglesias notes that this is probably impossible but he also notes that this sort of debate is not his specialty.  So now let's go to Dani Rodrik who does this sort of thing for a living at Harvard.

That is absolutely right.  But Ken's preference for a "global financial regulator with real teeth" overlooks three major problems. Global financial regulation is a bad idea because it is neither desirable, nor prudent, nor feasible.  

It is not desirable because countries at different levels of development and with different national preferences with regard to how much risk they want to encourage as the price of financial innovation will want to select quite different national regulatory regimes.  There is a large element of a "local public good" in the financial system, and you need to recognize the heterogeneity of national preferences. 

It is not prudent, because a common global regulator will require global harmonization of rules. What if we converge on the wrong ones?  That was one of the points brought out by Katharina Pistor recently.   

Finally, it is not politically feasible because I just do not see that major countries will surrender national sovereignty to a global regulator with teeth. There is not enough political convergence globally for this to happen.  But the major principled objections are the previous two, rather than this one.

What is the alternative?  Ken is right that the only real alternative is a system of capital controls.  But viewed in the context of the arguments I just made, it is not at all clear that a system that allows and legitimizes capital-account management would not dominate a futile and undesirable effort to set up a global regulator.  In fact, the danger is that we will obsess on getting international regulation right with no plan B, and in doing so will simply prepare the groundwork for the next crisis.

But if we create a world of nationally segmented finance, won't we give up the benefits of global financial integration? Please.   

Capital controls in essence are national policies that control the flow of money in and out of a country.  Here he is going in more detail retorting common arguments against capital controls.   Paul Krugman hasn't actively been advocating for them, but he had reversed himself on the Asian financial crisis by noting that at very least temporary controls helped some economies, such as China's, weather the crisis.  That said, they're no panacea, China still has controls and is definitely suffering along with the rest of us.

I don't really have the expertise to go much more deeper than that, but I thought people might be interested in learning about those who could.  I'm only able to go this far thanks to Prof. Haider Khan at University of Denver whose class on globalization introduced me to many economist I still follow.  Thanks professor!

America's new shadow economy

Alex Tabarrok picks up an interesting post by Hernando de Soto:

....The enormous amount of derivatives that had poured into the market—there are close to $600 trillion of these papers around—are also not recorded in a global or centralized manner, or in a manner that allows you to begin to quantify them. [Former SEC Chairman Christopher] Cox thought that maybe the toxic part of all of these assets was $1 trillion to $2 trillion. [Treasury Secretary Timothy] Geithner told us there's maybe $3 trillion or $4 trillion. Nobody really knows, so in a way [they've created an] informal or shadow economy. This unidentified paper is the source of uncertainty and the credit contraction.

...That shadow hopefully is a temporary condition in the United States and in Western Europe. And it might pass in a year or 10 years, but it will pass. That passing condition that's occurring now in developed countries, that's a chronic condition in developing countries. We're always chronically in credit crunches—because you don't know who owns what, nobody dares lend to somebody else. Bringing the law to emerging markets is possibly the most important measure that can be taken to help these countries become rich. 

De Soto has been studying informal economies and arguing for a conversion to documented property for some time.  I can definitely see how it applies here and for me at least our economic troubles make developing world troubles a bit easier to understand.  The main critique I've seen of his approach is that just making arrangements official can just result in the poor being ripped off as property is developed.  That said, I do definitely believe the argument that this is really a necessary step.  I think the trick to do it right is to figure out what informal and political protections the participants in the informal economy now use and try to figure out how to maintain or improve upon those in the transition.  I'm sure de Soto is looking into those issues as well, I just don't want anyone thinking that this is a silver bullet.

What may be the most import story for feminism this year

Michelle Cottle analyzes a New York Times piece on the gender gap in layoffs.  82% of the job losses have hit men and women may soon be the majority of the workforce.  She raises a few possible implications, tense marriages resulting from a change in breadwinner?  Men being less likely to leave women because the men are economically dependent?  Smooth adjustment?

The article itself had a few other points of interest beyond the topline stats:

Women may be safer in their jobs, but tend to find it harder to support a family. For one thing, they work fewer overall hours than men. Women are much more likely to be in part-time jobs without health insurance or unemployment insurance. Even in full-time jobs, women earn 80 cents for each dollar of their male counterparts’ income, according to the government data.

Universal health care will help with the health insurance problem.  The others won’t have direct changes, but I expect increasing economic power of women will improve their bargaining position both economically and politically.  Since some of these male jobs probably aren’t going to be coming back, I don’t think the changes will be as easily rolled back as some were post WWII, the Times throws out one case study:

She switched from being a full-time homemaker to a full-time businesswoman when her husband was laid off previously. She says she unexpectedly discovered that she loves her job, even if it is demanding…

In any event, having more money will help with household bargaining and also working to get better benefits for part time workers.  However, women working in and of itself hasn’t been enough so far to entirely change the home:

On average, employed women devote much more time to child care and housework than employed men do, according to recent data from the government’s American Time Use Survey analyzed by two economists, Alan B. Krueger and Andreas Mueller.

I think the change there will probably be most notable in new relationships.  It gets easy to get in a status quo pattern, I know I still rely too much on my Mom’s housework when I’m at the old family home.  However, I don’t think change will necessarily be generational.  Men who can’t find jobs equivalent to their old ones and that are unwilling to contribute more around the house will be more likely to be dumped if the women can afford it.  Women dating men with weaker employment prospects will likely put more of a premium on home economics skills.    All and all, as money and power are redistributed social norms tend to follow.  The one substantial caveat I’d add is that we’re not talking about economic elites here, that makes a big difference for achieving political change.  (This paragraph is obviously fairly heteronormative, implications differ for those in same sex relationships.)

What’s up with the financial bailout?

There’s  a lot of confusion out there, I found Brad Delong’s explanation easiest to understand.  Worth reading the whole thing, but the very short version is that this is using the latter half of the TARP money, $350B, and trying to leverage it “via the FED and the private sector” to buy up as many of the toxic assets as possible.  In addition the banks will be “stress tested” to determine which of them would still be insolvent after the $350B is used.  The next step is not clearly delineated, but it doesn’t foreclose on the Swedish model, namely nationalization.

As a side note, this plan is being strongly associated with Geithner and not Obama.  If it fails badly, Geithner may not be the one to implement the next step.

I personally would tend to prefer a more transparent approach, but I’ll withhold judgment for now and hope that Sec. Geithner has made the right call.

Can an economist help balance an MMO?

Game balance is an eternal challenge in MMOs.  Inevitably some abilities or jobs will be higher performing than the alternatives.  Much as a banker who didn’t make risky loans might lose market share, a healer without the most efficient cure spell may have a harder time finding a party.  This can encourage a boring homogeneity and make the game less fun for those more interested in non-optimal abilities.

What MMO programmers do to help with this problem is ‘nerf’ the highly effective or ‘broken’ abilities.  Sometimes these broken abilities are a result of bad design decisions and other times players have just found clever ways to use them.  Similarly, players are always responsible for coming up with a reasonable effective character build, even in a well balanced decisions not all choices can or should have equal outcomes.  Making all possible designs equally effective would require making limiting variability and making things boring.

Regardless, balancing is hard work and requires a lot of information gathering.  It’s also controversial and can easily result in overcompensating in the other direction.  One way to smooth out this process could be a market inspired by the price of ‘When the Saints Go Marching In’ at Preservation Hall.  Saints is heinously over requested so they charge more to play it. 

In a game, the program could automatically survey to determine the most popular abilities on each server.  Then the numerical properties: damage, healing, likelihood of success could be adjusted from a 15% penalty to a 15% bonus based on popularity.  This would automatically reduce the effectiveness of ‘broken’ abilities while giving less popular abilities a new chance at life.  This information should be shared with the players although the pace and magnitude of updates should not be so drastic as to result in regular rebuilds.

Of course this raises the question, what if an ability is popular because it’s fun to use rather than particularly effective?  Well that’s where you still need the designers.  If an ability still isn’t popular with a 15% boost after a few months, then perhaps it should be dropped.  Similarly if an ability stays popular despite the 15% penalty then it could be split into two variants that both try to capture the core appeal of the ability.  Designer skill will still be required here, that can’t happen automatically, but when it’s a matter of numerical effectiveness and not fun than economics can help.

Update after running past friends: Note that this won’t end whining about gaming.  It’s just a way to move from occasional dramatic changes to more regular smaller ones.  Also had some interesting discussion of implementation that improved on a few of my starting ideas, but I’ll save those for comments as they’re kinda technical.

Photo by jasonrowland.org used under a Creative Commons license.

Rethinking the American Dream

Tyler Cowen argues that homeownership shouldn’t be subsidized.  First he quotes Eric Posner arguing that both Clinton and George W. Bush encouraged low-income people to make high risk investments which ultimately left some of them worse off.  Here’s Tyler’s extension of the argument:

You'll note that Henry Paulson has been calling for the mortgage agencies to be resurrected as "public utilities" of some sort.  I don't understand this path.  There is a very good (modern) liberal case against more home ownership: behavioral economics is true, people overestimate their prospects, poor people shouldn't take too much risk, and the natural market tendency is too much home ownership, not too little. That's without taking environmental issues into account.

Here is a recent Richmond Fed article, skeptical of the idea of homeownership subsidies.

For those who want a summary, the other modern liberal critiques are that subsidizing housing tends to lead to bigger houses for the rich and to crowd out affordable housing (both rental and owned).  In addition, homeownership rates tend to be highest in cities like Detroit, which discourages people from moving to cities where there are jobs.  I tend to think the marginal cost of middle class job creation is lower in cities that are booming than those that are depressed so redirecting funds to save towns with high home ownership isn’t really an effective full employment policy.

Anyhow, housing is a fundamental need, and I do support the approach of getting long-term itinerant people in secure housing rather than on the streets, though not concentrated facilities like public housing of old.  But once you’re dealing with people with jobs, some sort of housing subsidy might make sense, but it should apply just as well to renters as owners and should be capped in either case.

Follow-up to charitable comments

Got a few comments on my “more charitable” post. Since I’m content light, and I fell asleep before managing to reply, I’ll just address them in a new post.

First, my finacee helpfully pointed out that my linking scheme made it seem as if the book was titled: “"Who Really Cares, Here's Ezra Klein Summing Up the Results."  I actually wouldn’t be shocked to see a blogger book with a title like that, I’d be surprised to see it sell though.

On a more serious note, first Mecha quite effectively zings the blood comment: “I wonder what would happen to the ratio if, say, a certain class of people who just happened to trend liberal could not give blood. Like, say... people who have had gay male sex and are willing to admit it.”  Err… yes, I blame the influence of hospital prescribed narcotics for not thinking of that myself. 

I don’t know if it would be enough to sway things, but the Kristof article already mentioned that homosexuals ranked high in terms of giving, so they’d probably have a disproportionate impact and should certainly be mentioned when citing that factoid in any event.  I’m presently blood banned from surgeries and had been for a year because of visiting the province with Ping An village in China which is apparently a malaria risk.  But those, unlike the restrictions on gays, are fair enough.

Next point key line, summarizing a bit: “'Conservatives are more likely to be pushed to give money to their churches' as a metric of 'good', which certainly might want to be weighted against all of the bad things that societal pressure can cause.”  I’d acknowledge that but we’ve already won the ‘all in’ argument as it were.  More liberal counties, states, and countries are generally better places to live if you’re poor (albeit with serious affordable housing problems).  Going by charitable giving vs. charitable giving, liberals are taking on a tougher fight.  But I think it’s a worthwhile one to consider, if we can win this one, then we can completely destroy the argument that regardless of moral merit of the restrictions, traditional social controls lead to better behavior.

Last point: “Finally, on the religious point, charity is giving to others for their benefit, and not yours. Not, essentially, paying dues.”  I know I’ve given on occasion to non-religious causes I support with not so much a happy heart as one that just wants to pay my bit and have the fundraiser go away.  Similarly from personal observation I think that bigger regular donors to Churches often are not those motivated by fear of punishment or the like (Not sure if that’s true of massive one time gifts).  I would buy that probably those that put the most emphasis on tithe or go to hell are probably the least like to be charitable with intakes, but I’d generally just prefer to measure charitable output. 

s a person who generates because they love so much a better person than one who gives because they think what goes around comes around?  Probably, but I’m a bit too utilitarian to really care.  My ideal measure would be to see how much the charity directly helped people, but that’s pretty hard to judge, let alone across categories.  That said, it would be interesting to see some data on why people think they give and as you say to cross-reference motive with the output.

Image of offering tray by Daniel Hoye used under a Creative Commons license

Which side is more charitable?

The Arthur Brooks of AEI has a book called Who Really Cares, here’s Ezra Klein summing up the results:

[It] cites data showing that "households headed by conservatives give 30 percent more to charity than households headed by liberals." Every so often, his findings are trumpeted as proof that conservatives are more genuinely compassionate than liberals. And that's exactly what Nick Kristof did over the weekend.

But the difference can be explained in one word, and it's not "compassion." It's "religion." A recent survey from Google similarly found that self-identified conservatives gave more to charity than did self-identified liberals. But they also found that "if donations to all religious organizations are excluded, liberals give slightly more to charity than conservatives do."

If liberals give only slightly more after religious organizations are excluded, then I’m guessing liberals are giving less over all even after you account for the fact that a good percentage of religious donations essentially go to member services.  Ezra talks a bit about what really counts as charity, there’s a good argument that we’re overvaluing donations to the Ivies and that sort of thing.  They aren’t adding that many more students so better Ivies are not going to help the poor that much even if they do a good job of expanding need-based aid.

Anyhow, I think Ezra gets it wrong when he queries what really counts.  I think it is fair to exclude funding spent on overhead, fund-raising, and member services.  However beyond that we’re best off categorizing into the type of benefit provided rather than arguing what counts.

Beyond that, I think there’s a few ways to consider this:

1. Getting averaging the percentage given by household rather than dividing the amount given by the number of households.  Doing it the latter way emphasizes how much the rich give.
2. Beyond that, apply the Widow’s Mite principle.  Giving out of scarce funds counts more than giving of abundance.  Breaking down to compare similar income quartiles or perhaps by how household income compares to the poverty rate.
3. Include state and local taxes that get spend towards charitable ends.  We vote both with our ballots and our feet, choosing to live in a higher tax but better service providing community is a charitable choice.

Kristof does note that apparently conservatives give more blood, which is about as equitable of a measure as there is out there.  So I’m guessing that liberals won’t necessarily out perform conservatives even under some of these criteria.

I think I had that operation done in… 2002? Summer maybe? The name started with a V.

Ezra Klein provides a compelling parable:

If you walked into a bank and asked to open an account, and they opened a huge ledger book and began paging to your letter in the alphabet, you'd gape for a second, walk out, and call your friends. Or maybe you'd Twitter the experience. It is the 21st Century, after all. What you wouldn't do is use that bank.

But what we'd never allow with our money is constantly endured with our health.

I can personally testify to this.  I’ve spent a lot of time around hospitals this year and have often had to repeat information about what I’ve had done, including stuff that took place at that very hospital.  I found that some of my older records were even lost to the ages because the doctor didn’t retain them.  Particularly in the diagnostic phase, I spent much of my time recounting, with medium fidelity, my health history.  With the assistance of my parents, we have a pretty good file on me, this has got to really suck for those who aren’t good record-keepers or don’t have assistance from one. 

So far I’ve dealt with one of the 20% of the physicians that had extensive electronic records.  Took an extra hour or so the first time I saw him, but every subsequent time has been much faster and I haven’t had to pull open my datebook.

Electronic medical records are part of Obama’s stimulus package.  That makes sense, it will apparently cost about $50k per physician to implement it and that spending will probably be mostly in the U.S.  Happily, we should recoup that investment within two years:

[Duplicate paragraph deleted]

The evidence is clear on this score: Electronic health records not only save money, they save lives. The remarkable achievements of the Veteran's Health Administration are largely the work of VISTA, their electronic health records architecture. Indeed, the Commonwealth Fund found that the savings from EHRs are considerable:

This is basically a classic public goods problem.  The benefits are dispersed, costs are concentrated, and standards are needed.  Happily Obama is actually doing something about it.

Cable news, getting dumber

Disturbing news via Kevin Drum from CJR:

CNN, the Cable News Network, announced yesterday that it will cut its entire science, technology, and environment news staff, including Miles O’Brien, its chief technology and environment correspondent, as well as six executive producers. Mediabistro’s TVNewser broke the story.

24 hour news is really a medium that decreases the value of the information that flows through it.  I think the competition from the web has generally made this trend worse, not better. 

What we really need is a news station with an on demand model.  Users set their preferences and a default length and it selects the most recent coverage available on certain those topics.  Viewers could be pinged when there’s a new segment.  When news is actually breaking you can stream live segments.  Also, since the user is customizing what they get, you can better target adds and have more detailed viewership numbers.

I don’t think those better numbers would reveal a lot of pent up demand for good news.  People care a lot about stupid celebrity stuff.  But this model would let me get what I actually want from the news and let those who want celebrity news get it to.  Obviously the tech isn’t there for basic cable, but it’s certainly there for the net and it may be there for on-demand cable.

A non-profit future for journalism?

Joel Achenbach, great Washington Post journalist and often lonely defender of the current papers raises an interesting idea in his latest post.

"... no nonprofit -- and no for-profit -- news media organization in the U. S. today can match the audience growth of National Public Radio (NPR), which began in 1970 and now has thirty-six bureaus in the U.S. and worldwide and approximately thirty million weekly listeners, double what it had a decade ago. NPR news reaches audiences around the world through broadcast, satellite, and digital radio, as well as through online, mobile, and on-demand services. Today NPR has seven hundred employees and its programming is heard on more than eight hundred independent public radio stations nationwide; its flagship programs, Morning Edition and All Things Considered, are the top and fourth most listened-to radio programs in America. Thanks in substantial part to a huge bequest by Joan Kroc, NPR's operating budget is about $144 million today, with total assets exceeding $436 million. It is hard to believe that at the end of 1983, it had only about two million listeners and was $7 million in debt. In the late 1990s and again, especially after September 11, NPR turned some kind of significant corner, becoming a primary news source for millions of Americans."

Could the big papers become non-profits? That's way above my pay grade. But we need to do something -- before it's really over.

I think many periodicals already take this model.  I’m fairly certain the Washington Monthly, Mother Jones, and the Washington Independent are all non-profits; not sure about The New Republic.  Jack Shafer approached this idea from another angle: bashing the Newseum:

Of all the slow-moving targets that bleed profusely when you hit them, can there be a fatter, slower, juicier bull's-eye to sight your scope on than the $450 million Newseum, the four-years-in-the-building, seven-story, steel-and-glass monument to journalistic vanity just anine iron away from Washington, D.C.'s National Mall?

Avoid the gilded disaster that is the Newseum. Avoid paying the $20 they charge for admission. I want the Freedom Forum to sell off their monument valley installation and use the proceeds to actually support journalism. Like endowing a newspaper, for instance.

I think non-profits may be the future of many forms of journalism.  Does this mean the death of the daily print paper?  Perhaps, I don’t think I’ve seen any non-profits managing a daily print schedule and if as non-profits they can’t do nearly as many ads, I don’t see that changing.  Probably a few big good papers will be able to keep it up and a lot of smaller lame ones will as well.  For quality journalism not at one of the top 5 papers, you might have to go to the net, periodicals, or perhaps some sort of on-demand printing solution enabled by new tech.  E-book readers may be a bit help for this.

I hope Achenbach actually does put a good bit of thinking into what can and can’t be done on a non-profit model.  I’m sympathetic to some of the MSM bashing, but the Post won a lot of Pulitzers of late for good reason.  Because we need to figure this stuff out before some of the capacity is sold off or destroyed.

Two areas where I give libertarians some credit

First local housing regs.  Many of the things wrong with the suburbs and exurbs are not the result of free market forces so much as single-use zoning regs, minimum parking requirements, and uncapped mortgage tax deductions.  Communities that evolve more naturally are often walker friendly with a greater mix of shops and housing rather than just vast stretches of ‘burbs with occasional mini-malls.  On the micro level, the local governments sometimes make inexplicable decisions like Metro offering free parking on inauguration day.  That will obviously lead to even more demand for the lots and provide no incentive for those who live in walking distance to leave the car at home.  Oddly enough even people who oppose universal healthcare seem to believe in a right to free parking.  That said, I do tend to think that contracts can lead to neighborhoods with discriminatory policies even without any government policies.  I think such policies can slip in much the way anti-competitive cartels can.

The other area where I give them so credit is the war on drugs.  I’m perfectly happily with heavily regulated tobacco companies and even tougher regs, but I wouldn’t support a ban.  I do see Democratic candidates saying some good things about criminal justice reforms and focusing on harm minimization strategies, but at the national level we’ve been largely unwilling to take on the ‘war on drugs’ to the degree that we’ve been willing to take on the ‘war on terror’ (could have done more there too obviously).  Thus I’m a bit worried that the proposed Attorney General, Eric Holder, supported mandatory minimums for drugs.  Hopefully that’s not his current stance.

Blog roll addition: Haider Khan’s Globalization, Development and Democracy

I meant to add this a couple weeks ago but got distracted.  Prof. Khan had been one of my favorites in grad school, I first read Krugman’s and Rodrik’s books in his class.  I feel much better equipped to understand the current crisis and the net positive but mixed bag of globalization.  I think I would have had a rudimentary sense of many of these discussions from the news, but now I have some sense of the theory and the possible solutions.  As we as a nation debate what to do about the auto-industry or green infrastructure, I think Prof. Khan will continue to be a great resource.

His new blog covers the same issues I learned about in his class: globalization, development, and democracy.  He’s got one post up so far on whether Obama is going to be able to pull off his goals.  Here’s one point that’s of particular interest in my present line of work:

The good news is that the money spent on green development projects will create more jobs than other public investments. By using a social accounting matrix for the US, I estimated that more than 22 jobs will be created by spending an extra one million dollars on green public investment projects. By contrast, even progressive, non-military projects at best create approximately 15 new jobs per million dollar expenditure. Of course, military-industrial complex creates even fewer jobs; fewer than 10 for every million dollars of added expenditures.

I recommend the post if you want to get a better idea for some of our options and their likely effects.

My initials make the big leagues

Yglesias argues that we should consider using industrial policy to help build a green collar economy.   Industrial policy, that is having the government intervene in the economy to build or protect key manufacturing sectors.  This doesn’t make sense if you’re following a full free-trade model, but that model assumes no economics of scale among other things.    Industrial policy is hard but the countries that developed in the later half of the 20th century had such policies as did some that didn’t.  However, in some ways industrial policy might not be harder than other things that governments do.

In any event, Yglesias sited an article on how Defense Industrial Policy effectively props up the aviation and electronics sector.  The author, Steve Coll, went on to argue that it’s worth considering some such measures for the auto industry to further America’s energy interests.  He doesn’t necessarily endorse such a policy, but says that those favoring defense industrial policy can hardly dismiss such an idea on principle.  My contribution, which got me an initial credit (Yay!) was letting Yglesias know that industrial policy does indeed speak its name and even has an official Deputy Under Secretary.

So, is Coll right?  Yes with a few caveats.  Defense industrial policy tends to be concerned with having domestic sources in case conflict cuts off access to foreign supplies.  We’re probably a bit too concerned about that, I think we’d be better off making sure we don’t have to fight without our allies than making sure we can fight without them, but that’s a different topic.

So, in that sense, industrial policy doesn’t really apply outside of defense.  However, Industrial Policy also plays a role when we’re working with allies.  See the tanker example Cole mentions where Northrop is working with a European consortium.  The purpose there is to make sure that industry can support Defense Department needs even with support from allies.  Also, for better and worse Congress often treats defense industrial policy as a jobs program.  Whether guaranteeing supply or ensuring jobs, this mainly matters when we’re talking about industries with high barriers to entry and economics of scale.  That’s hardly a unique to the defense sector, so  I think Coll’s argument holds up.  If defense industrial policy, as commonly implemented in the U.S. makes sense at all, then it also makes sense for other sectors.

Photograph from DoD by Seaman James R. Evans.

Blogroll addition: United States of Jamerica

I'd been meaning to provide a blogroll link to the United States of Jamericapolicy blog for a bit, and the Dean post provided a useful reminder.  For a sample post, here's a recent entry on a statement by the Defense Business Board calling for cutbacks in wasteful programs.

Arguably, one of the largest obstacles to the progressive project (at least in the long term) is the sheer scale of military appropriations.  The Pentagon’s proposed budget for 2009 (not including spending on Iraq and Afghanistan) is $515 billion. That is a substantial increase over 2008’s budget, and the Joint Chiefs are proposing an additional $450 billion on top of that over the next five years.  As the Defense Business Board notes, a good deal of these spending increases are going towards wasteful — and in some cases, strategically unnecessary — development.

A simple ten percent cut in Pentagon funding would be more than enough (four times more, in fact) to both pay for a universal pre-K program (estimated $10 billion annually) and provide a needed 250 million mosquitonets worldwide (estimated $3 billion).  The latter of which would probably have more impact with regards to national security than spending $30 billion on the Joint Strike Fighter program.  But, as long as Pentagon spending is so ridiculously high, it will unfortunately crowd out spending for progressive domestic and foreign policies.

True enough.  Cutting programs is a complicated business.  There are fees for breaking contracts and depending on how we want to affect the size of the military, we’ll probably end up buying more of present day technology or pay for additional block upgrades to spiff up what we have now.  Of course many of these mega-programs have only begun to go over-budget, so the existing estimates may well prove optimistic.  I’ll probably post more on this later.

Curses, they've seen through my plan

As loyal readers may recall, I recently discussed how we could weaponize financial innovation by letting a lot of our financial wizards go overseas to new financial hubs to ruin their economies instead of ours.

According to the Ellen Knickmeyer of the Washington Post, this plan is already in motion as investment bankers from Europe and the US seek refuge from the financial crisis in more stable markets:

In a phrase often cited by British brokers and bankers, "it's Shanghai, Mumbai, Dubai, or goodbye."

Overcoming a long-held wariness by many Americans about living in the Middle East, growing numbers of U.S. investment bankers and other financial professionals are at least mulling moving their careers here, having lost their jobs or fearing they might.

Unfortunately, they seem wise to our game:

Many here are unhappy with U.S. financial and foreign policies, and dubious about what's still regarded as Americans' brasher way of doing business...

"So, you've managed to screw up your banks, and now you've come to screw up ours?" a Saudi investment executive in white robe and white-flecked beard said of the attitude toward job-seeking Americans.

Oh well, I do feel confident that Europeans are just as capable of causing things to go to hell in a poor regulated financial environment, so the end product may well be the same.

Who wants to read about contracting?

Federal contracting has been in the news some lately. Back during the first debate, Sen. McCain called for the elimination of cost-plus contracting because he thought it encouraged contractors to waste money. Cost-plus contracting, if not paired with proper incentives, doesn’t give much reason to save money. However, when you’re talking about R&D contracts, cost-plus can be the way to go because you might not have a firm idea of the difficulty of the project. However, as this two-pager shows, cost-plus is showing up in a lot of service contracts as well.

In other contracting news, just this morning the Carol D. Leonnig of the WPost published an article finding $5 billion dollars of contracts for supposedly being implemented by small businesses instead being held by the big boys. Some further research found that more than $600 million dollars explicitly set aside for small businesses apparently went to large companies.

The larger problem in contracting is pretty straight forward: there’s an imbalance between the burgeoning hundreds of billions the government pays to contractors and the relatively small contract management work force.

Economics of Conflict

I assume my readers are sufficiently cynical to realize that conflicts are often driven by economic factors. However, that still leaves the question of how those factors work.

Here’s some interesting new data from Dani Rodrik

One of my graduate students, Oeindrila Dube, has written a fascinating paper (jointly with Juan Vargas) on the determinants of Colombia’s civil war, and how world prices for its major exports (coffee and oil) affect the intensity of the conflict.

The central question is this: do higher world prices enhance or reduce the conflict? You could make arguments in both directions. Lower prices increase reduce incomes, and may make it less difficult for individuals to be recruited into guerilla or militia forces. On the other hand, lower prices make the underlying resource base less valuable and reduce the spoils over which the two sides can fight.

He links to a Slate article that provides a layman’s summary. The short version is that higher prices on labor intensive resources, like farm goods, reduce civil conflict because the wealth is spread around. For capital intensive products, like oil, the trend goes the opposite way in what’s called the resource curse.

Lucky Duckies

Post over at the Plank by Robert Gordon and James Kavaal describe separate fury-inducing statements by McCain and the WSJ.

McCain advisor Douglas Holtz-Eakin slammed Obama's tax plan today, saying, "Obama has proposed a ‘tax cut' for 95 percent of people when, literally, almost 40 percent pay no federal income taxes at all." He cited a recent New York Post editorial labeling Obama's tax cuts "welfare."

The 40% thing is likely true, but we're talking about workers who do get hit by regressive payroll and other taxes.  I'm not even going to bother arguing against this, it's enough to repeat the claim -- McCain's most (only?) reputable economic adviser thinks that cutting taxes to the bottom 40% of American taxpayers is a welfare payment."

As for the Journal:

But McCain is echoing Phil Gramm's and Newt Gingrich's old claim here that tax credits for low-income workers amount to welfare. The Wall Street Journal editorial page charmingly referred to people too poor to pay income taxes as "lucky duckies."

Tom the Dancing Bug satirizes this fairly regularly in his comics, but I always figured he came up with term.  I knew he was making fun of the WSJ's abominable editorial page, but I figured that bit was hyperbole.  Man.

We need to hit the bubbles before they hit us

Kevin drum comments on an interesting idea in bubble popping from Mark Thoma.  I'm trying to do more but shorter posts so I'll just give a quick summary.

Currently the Fed watches inflation and tends to raise the interest rate at which it lends to bank when inflation seems to be heading up.  However, assets like houses or stocks aren't included.  So those areas can overheat and the Fed, by default, won't take action.  Breaking that default requires predicting a bubble, which can be hard, do it too early and you'll miss out on productive growth.

So if we start having the Fed respond with higher interest in the case of increasing asset inflation then things will tend to cool down on likely bubbles, but in moderation.   Of course extensive judgment would still be required, but we'd have a common metric to argue about and a default course of action.

Photo by Isazappy used under a creative commons license.

Saw a wild PUMA in the neighborhood today

I always kind of thought they were a myth. But there was actually someone with a Hillary Clinton sticker on their back window with 2012 written underneath it. They also wrote out the URL for a Party Unity My Ass website. Frakking weird.

Bailout Backlash

From the round ups I’ve seen the bailout gives sweeping new powers to the Executive branch, won’t help homeowners, insures Wall Street against loss rather than against collapse, and thus, in short, is a bad idea. Criticism comes from liberals like Krugman, libertarians like Tyler Cowen, and even from the NRO. Why so much opposition: it gives a $700 billion dollar check to make purchases as he sees fit.

Treasury Sec. Paulson did not perform with distinction in the lead up to the crisis, let alone showing enough skill to have unfettered access to $700 billion. Fed chair Ben Bernanke merits more respect but it does seem clear that some sort of fiscal, not just monetary, intervention will be necessary; so we are going to need a different plan. Brad Delong offers an alternative of how to do this with oversight. Joel Achenbach, from whom this post title is stolen, suggest that there are seeds of populist opposition to the bailout. McCain is already critical of the plan, Obama and the Congressional Dems will be criticized if we pass it and if we fight for something better, so let’s take the hit and fight. Obama’s laying out some good principles, but first and foremost this is going to be a political fight, it’s not enough to have good dieas, they need to get implemented.

So what can we do? Let your member of Congress know that this idea makes you angry. Get them more scared of their constituents then of the financial crisis. Stoke the populist backlash. And do it by email or phone, a letter won’t get there in time.

Is Industrial Policy back?

Industrial policy is basically an attempt to intervene in the economy through government investment to create growth. Classically looked down upon by neoliberals, it was a part of the New Deal and part of the economic policies of the East Asian miracle economies. That said, it also has a history of failure and waste, one of the biggest problem is kill mechanisms, once you’ve got a bad subsidy or the like going it has a vehement constituency looking to protect their rents.

Anyhow Dani Rodrik has looked at a WSJ article on Obama’s economic policy and thinks it may be back. Specifically Obama is putting $15 [billion[ a year towards energy tech, funding an "infrastructure reinvestment bank to promote high speed rail, doubling research spending, supporting high speed networks, etc.

Rodrik is cautiously optimistic about what he sees:

Although it is difficult to be sure, Obama’s comments in the interview suggest that he has thought these issues through more carefully than we are accustomed to with politicians and presidential aspirants. I sense the outlines of a coherent and economically sensible strategy here.

My personal take is that if there was any reliable connection between industrial policy and growth, someone would likely have found it by now. So it’s probably a gamble in terms of growth. However, most of these initiatives sound worthwhile in their own right. Also, absent these sort of things, we might have a repeat of the 90s where the economy grew but the median wage stagnated as inequality continued to rise.

Also, I’ve got the perhaps naive hope that this might take some of the pressure off the one part of the U.S. government that does have an official industrial policy, namely the Department of Defense. I’d rather have members of Congress trying to funnel clean energy investment dollars to their district rather than building some Cold War weapon system not relevant to current or likely U.S. conflicts. Some level of pork is inevitable and perhaps even advantageous, but it needs to be channeled in productive ways.

The future of the Air Force

Not that long ago, Secretary of Defense Gates fired the military and civilian heads of the Air Force. This decision has been pretty popular on the blogs I read and among the people I talk to. Kevin Drum has a quick rundown of the reasons they were asked to resign.

Publicly, Defense Secretary Robert Gates says that his recent firings of the Air Force’s top civilian and military leaders was due to a couple of incidents of mishandling of nuclear components. But Noah Shachtman says Gates’s feud with the Air Force has roots that go back to his decision to prevent them from taking over almost all of the military’s big unmanned aircraft:

Things only got more tense when Gates said that the future of conflict is in small, "asymmetric" wars - wars in which the Air Force takes a back seat to ground forces. Then Gates noted that the Air Force’s most treasured piece of gear, the F-22 stealth fighter, basically has no role in the war on terror. And when a top Air Force general said the service was planning on buying twice as many of the jets - despite orders from Gates and the rest of the civilian leadership - he was rebuked for "borderline insubordination."

The next Air Force general, for the first time in 25 years, is not going to be a fighter pilot. Ben Friedman praises this idea hoping it will reduce the "threat inflation" of China and end the push for more F-22s. Yglesias also thinks this is a good idea, but notes that it doesn’t get to the core problem: we don’t need a separate Air Force.

My thoughts after the cut.

Freight vs. Passenger

Europe is well known for having excellent passenger train service while America’s trains typically run on track where freight has priority. Almost any regular Amtrak customer has had experiences where they have to weight for a freight train, which isn’t surprising as the freight companies own most of the tracks outside of the Northeast corridor. Interestingly, according to a recent Paul Krugman post, Europe may have the opposite problem.

I was a bit surprised early this week reading about the ferocity of fuel protests in Europe led by fisherman, truckers, and farmers. The farmers I expected, the fisherman were a bit of a surprise, but the relative strength of the truckers may have to do with the above graph. Regardless, goes to show that in our efforts to improve passenger rail in America we probably put some emphasis on new track rather than undercutting our relative strong (and quite energy efficient) freight rail system.

Image from Paul Krugman’s blog

Day in the life

Finally got my doctor’s appointment today. Looks like I’ve got a pinched L2 nerve alright but there may also be something else wrong with me. Anyways, we’re getting more tests and hopefully I’ll have some results by the end of the week.

It’s one of those situations where I do thank God I have healthcare. The costs of my appointments, of my tests, and of standard resulting treatments are all likely to be covered. This is basically what I want for all Americans and based on the experience in France and Germany it should be something we can afford without making a huge number of rationing sacrifices.

I know some of the privileges I enjoy are zero-sum. The fact that I get them means someone else doesn’t have them or has them to a lesser degree. But in many other areas, privileges can be positive sum. Far many more people could live a life that gives them multiple opportunities to pursue their dreams by reducing the amount of attention they need to pay to just scraping by. That’s the kind of world I’d like to build, because it’s one I’m very grateful to have lived in.

Good news on the food crisis

Apparently wheat prices have started to drop, although are still relatively high. Rice is still high, but we might start to see some relief in bread oriented parts of the world and some substitution elsewhere.

On the same topic, Tyler Cowen and Dani Rodrik disagree on many things but do agree that import protections in an attempt to build agricultural self-sufficiency is not the way to avoid this sort of problem. They may lead to more domestic production, but prices would be higher and there’d be less production in places where its more efficient. If the food crisis were driven by a breakdown in the transportation system, then I think you’d have an argument for self-sufficiency, but that doesn’t seem that likely of a problem.

They disagree on how to treat ideas like export taxes, that let countries keep their domestic food prices lower but adversely affect world supply, but that’s a topic I should discuss when I’m more with it.

In a world without...

I’m rather a fan of Battlestar Galatica and happily I’m finally catching up to the series itself. We’ve got three episodes of season three left and about four episodes of the new season. Then I’ll finally be able to do some concurrent show blogging. Anyways, here I’m going to discuss the premise of two episodes, I don’t think this will entail any spoilers, but fair warning anyhow.

The characters in Battlestar seem quite familiar with many military, political, and even some sociological issues. What they seem to lack is even a basic conception of capitalist economics. The fleet seems to be a command economy, supply chains controlled by the authority, currency of minimal value, and a military that doesn’t pay civilians for anything.

I base that analysis off a lot of things, but first and foremost episode 214, Blackmarket. That was a fairly weak episode, as Ron Moore admits in the podcast. Aside from being far too episodic one big weakness was that the writers weren’t quite able to work out why the black market where people barter was a problem and had to throw in some standard evil criminal signifiers to make it work at all.

In essence a black market is going to happen when you’re 1) trading in illegal goods or 2) trading in rationed or price controlled goods. If they’d simply shown the legal distribution venues at some point, which would be suffering from long lines and shortages (in part because of theft by blackmarketeers), then the episode premise would make sense.

Episode 315 Dirty Hands, looks at labor disputes and economic classes. It’s a substantially better episode than 214 and a strong one in the series overall. I think that’s because the writers do understand how labor disputes work and can do some Marxist class analysis as well. But bizarrely, paying people more when they have terrible jobs never comes up. I’d actually be willing to accept some argument like "we don’t even have a hundred thousand people, we don’t have a mint, setting up even a rudimentary economy is too hard" but they never even mentioned the idea. Haven’t played the podcast for that episode yet, so we’ll see if any insight comes from that.

So in character we can probably assume the BSG world wasn’t that capitalistic to begin with and that all the economists died in the initial onslaught. Also, probably the colonies didn’t have an Adam Smith. Out of character I hope the show either hires someone who knows economics or sticks with episodes like 315 that deal with economic issues that are politically rich enough or allow for Marxist class analysis. But no more episode 214s. Please.

No food for oil: End corn ethanol subsidies

Steven Mufson has a devastating piece in the Washington Post on how attempts to harvest corn-based ethanol are contributing to the world food crisis.

One quarter of U.S. corn production is now going into ethanol. At the same time farmers are shifting from other crops to grow corn so that percentage means more than it would have years ago. And for what? According to a recent study in Science magazine ethanol produces more CO2 than gasoline does. This isn’t a new idea, corn-based ethanol has always been a boondoggle. Without subsidizes this wouldn’t be happening because the process is unprofitable. Many defenders point out that corn grown for ethanol isn’t usable for food for humans, true enough, but the land could be used to crow crops that are edible.

For a long time, this sort of policy wasn’t worth that much political capital. Everyone knew it was a problem, but the U.S. system is heavily biased towards farm state Senators so fixing it was often thought to be more trouble than its worth. Ezra Klein cites a NY Times article by Andrew Martin where the International Food Policy Research Institute attributed a quarter to a third of the spike in commodity prices to biolfuels. The Food and Agriculture Organization at the UN predicted "predicted late last year that biofuel production, assuming that current mandates continue, would increase food costs by 10 to 15 percent."

Well now we’ve got a silent tsunami (via PCR) on our hands. The world food crisis could push 100 million people into absolute poverty.

No food for oil.

Economics confusion

Daniel Drezner has a new post up that confuses me. For some reason I can never get the comments on his site to work, so I’m posting my puzzlement here.

One of the more invidious comparisons analysts like to make is to compare the size of something with a country’s gross domestic product. An old warhorse of political economy/anti-corporate types, for example, is to say that the sales of multinational corporations exceeds many countries GDP. This is true but irrelevant -- GDP measures the value-added that an economy generates per year, so the proper and correct comparison is between a firm’s profits and GDP. When using that metric, corporations suddenly don’t look so big.

If I’m reading the make-up of GDP right, profits aren’t really a valid comparison either. Wouldn’t that be comparable to the net domestic product? Or am I missing something here?

Update: Kevin Drum also questions Drezner on this.

Why the good ones are always taken

Interesting Slate article that applies game theory to dating. Specifically the issue of a shortage of eligible bachelors:

The problem of the eligible bachelor is one of the great riddles of social life. Shouldn’t there be about as many highly eligible and appealing men as there are attractive, eligible women?

Actually, no—and here’s why. Consider the classic version of the marriage proposal: A woman makes it known that she is open to a proposal, the man proposes, and the woman chooses to say yes or no... A woman chooses to receive the question and chooses again once the question is asked.

At this point I’ve probably lost some of you, so let me elaborate a bit more. The idea of women being choosers is not inconsistent with the idea of classical marriage being patriarchal. Women had to choose carefully because they would be economically dependent on the man and the structure of society meant that once married he’d have considerable power over her. The one point in the process women could really apply their power was in the choosing and classical setups reflect this. So hopefully I’ve convinced you, why would this lead to an eligible bachelor glut?

You can think of this traditional concept of the search for marriage partners as a kind of an auction. In this auction, some women will be more confident of their prospects, others less so. In game-theory terms, you would call the first group "strong bidders" and the second
"weak bidders." Your first thought might be that the "strong bidders"—women who (whether because of looks, social ability, or any other reason) are conventionally deemed more of a catch—would consistently win this kind of auction.

But this is not true. In fact, game theory predicts, and empirical studies of auctions bear out, that auctions will often be won by "weak" bidders, who know that they can be outbid and so bid more aggressively, while the "strong" bidders will hold out for a really great deal. You can find a technical discussion of this here...

The pool of appealing men shrinks as many are married off and taken out of the game, leaving a disproportionate number of men who are notably imperfect (perhaps they are short, socially awkward, underemployed). And at the same time, you get a pool of women weighted toward the attractive, desirable "strong bidders."

This makes sense to me. That said, I think this will be a diminishing problem as we move from a classical division of labor model of marriage to a cooperative one. Under the division of labor model, there’s much more of a common pool of desirable picks. Under a cooperative one, the quality of the pairing and not just the groom becomes much more important.

At the same time, the breakdown in patriarcal norms mean that women are in a much better position to choose not to choose. They can get economic prosperity and sex without having to marry. That doesn’t mean that there aren’t advantages in long-term monogamous relationships, but it does mean that there are better alternatives to settling. This in turn should increase the quality of the male meat market. You’re less likely to get paired off by just because of the supply-demand imbalance. Instead men will have to work more to improve their attractiveness, sociability, and employment status, or more niche bonuses. So I expect in another generation or two, the eligible bachelor problem will be largely greatly diminished in the developed world.

Only 5% of Indians are fluent in English

From a Washington Post article by Rama Lakshmi:

India has a reputation as a nation of fluent English speakers, but by many estimates, only 5 percent of the population merits that description. Now, a five-year-long economic boom has triggered a rush to bring the reality into line with the lore. Once the preserve of big-city elites, English is spreading to the hinterlands.

So it sounds like that number will be going up but is still quite a bit lower than is commonly perceived. India still has a comparative advantage in training new English speakers, but I’m guessing that the present English fluent population of about 55 million is largely already using their talents.

Areas of my expertise professional experience

Lorelei Kelly had a great post on how we Spend More on Defense but Purchase less Security.

We’re spending upwards of 500 billion this year, more when you add in the war costs (then the numbers make my head explode Wheeeeeee!) A pittance of this money is dedicated to funding the direction that our whole ship of state needs to go (away from the bully principle and toward the
persuasion one) But the skeptic in me thinks that the USA never will right itself with all the gold-plated barnacles on its hull.

She throws out a few examples.

1. She pokes wholes in the idea of bribing Poland to take an unproven ground base missile defense base.
2. Kelly then attacks legislation that would pin the military budget to 4% of GDP. The legislation is a result of the fact that while we are spending more on defense the economy as a whole has generally managed to grow faster. That’s a good thing. National defense isn’t some video game where as you grow stronger all of your enemies get more challenging. Our spending should be based on the threats we face, not the size of our economy.
3. She points out that the airforce is falling apart. We rely heavily on older fighters but we can’t replace them at a 1:1 rate because all of our recent systems, the B-2, the F-22, the F-35, are basically luxury models. Famously Norm Augustine, onetime head of Lockheed Martin, has noted that if present trends continue the Air Force will eventually just be down to one uber-aircraft. I’d add to this that the Air Force has also had problems with its nuclear mission.

The general problem here is that in an environment of U.S. defense supremacy we have failed to make hard choices. As Kevin Drum notes in a review of Fred Kaplan’s new book there’s a philosophy that: "’the Pentagon should focus on weapons and strategies that would give the United States such overwhelming superiority that other countries wouldn’t even bother trying to compete.’ The goal wasn’t American power, it was uncontested American power."

Anyone familiar with the term asymmetrical warfare will of course realize that this is lunacy. Our power can always be contested, if our conventional military strength is practically invulnerable than foes will invest their efforts on finding unconventional weaknesses. At the same time, our other national interests e.g. climate change and disaster response will go begging.

Since the cold war, we’ve consistently been spending will beyond the point of diminishing returns on technological aspects of our conventional capacity. Not surprisingly, these programs face massive overruns and delays. At the same time, we’ve been unwilling to cut back the scope of other key missions, (do we even need fleets of nuclear bombers at this point?) and these overly ambitious missions are putting strain on our forces.

Defense reform efforts aimed at doing more with less or doing the same thing only better may result in short term improvements but are doomed to failure. We need to make hard choices about what we should be doing and do that right.

Data Link Round-Up

I’m giddy and tired after watching the first four episodes of BSG season 3. I’d been waiting for this part of the show since my friend Matt told me about it, and it was everything I hoped. But it seems silly to blog about it before I’ve caught up, so here’s a link round-up instead.

• Ray Fisman in Slate reports on findings that Three-Strike laws reduce recidivism but increase violent crime. I don’t feel like paying for the study and can’t tell from the data provided what the impact on the overall violent crime rate is. But based on that data alone, it does seem safe to conclude that three-strikes laws are an inefficient way to reduce recidivism.
• Shankar Vedantam reported on a study that found that people feel good when friends and lovers succeed, unless they’re in competition. Fortunately different specialties even within the same field can mitigate the problem.
• Ezra Klein cites an article on common misperceptions on the advantages of renting versus owning. In short, a house is an asset with a whole lot of constraints. Also the financial advantages don’t tend to take into account closing costs and property taxes.