Thursday, February 28, 2013

Women Don't Have to Do Everything Before They Can Say Anything

By Sarah M.

After seeing that Kathryn Bigelow was up for Best Picture at the Academy Awards this year, I asked my husband if he had any interest in adding Zero Dark Thirty to our queue. He declined, citing our mutual disinterest in military films ever since we both served in the enlisted military -- lawyers probably don't get a thrill from Law and Order, doctors and nurses might avoid Grey's Anatomy, etc. But something about my own antipathy unsettled me: more than a passive indifference, I realized that I really did not want to see a Bigelow film, even though the Hurt Locker won Best Picture four years ago.

                                                                        Courtesy Michael Caulfield/Getty Images

I felt some unidentified discomfort. As far as I could tell, my preference was based on nothing. I decided to look up Kathryn Bigelow. Her Wikipedia bio prompted the completely unworthy notion that she is a former Gap model MFA ex-wife of James Cameron, a princess of privilege who slides so naturally into the red carpet pose that I could never see her as anything but a Hollywood automaton, someone without the least right to appropriate military storytelling. Of course I don't want to see her movies, right?

I realized instantly that I've never had that thought or any similar thought about a male director in charge of Saving Private Ryan, Black Hawk Down, the Hunt for Red October, Starship Troopers... You know, any of the classics.

I had no preconceived expectations about either of Kathryn Bigelow's two major blockbusters, and I have no excuse. Her bio only affirmed what I already wanted to think. I will make a point to see her films now that I have identified this internalized sexism. I questioned her authority to tell the stories; it wasn't about her talent. I questioned her in a way that has never occurred to me to question a male director's authority to tell a military story, and I am a female Marine. Embarrassing. 

Recent controversy surrounding Yahoo CEO Marissa Mayer and Facebook COO Sheryl Sandberg makes me think that I'm not alone in this attitude. Those are two links to major publications; feel free to search for blog posts and op-eds on these two women as well -- there's no shortage. The gist is that Marissa Mayer terminated flex time at Yahoo, a measure which may be temporary, and she only took two weeks of maternity leave. Sheryl Sandberg wants women to "lean in" and commit fully to their workplaces. She gave a popular TED Talk in 2010 about the reality facing women who wish to pursue leadership roles.

Sheryl Sandberg and Marissa Mayer, courtesy Business Insider

Complaints vary. Either they have no right to speak for every woman, or they coldly disregard work-life balance because they're ambitious, or they're too rich to understand how most households operate.

Sheryl Sandberg and Marissa Mayer are not speaking for every woman, they are telling us what worked for them. Do we ever seek clarification on this point when the average male executive publishes his book? I understand the urge to identify with these women, just as I tried to identify with Kathryn Bigelow and ended up rejecting her films because of it. We each want an outlet to assert our social needs, and we have so few powerful women in the public eye that we have no choice but to respond to these few as if it is their job to address our concerns. This is not a reasonable burden to place on them.

Marissa Mayer froze flex time at Yahoo. The company does not publicly discuss internal policies, so the reasoning and duration of the decision are up for debate. Instead of focusing on her role as CEO, much of the criticism facing the policy focuses on how un-motherly she is, how she only took two weeks of maternity leave. There is a nasty undercurrent of "unnatural woman" here. I've seen many comments that a woman who takes only two weeks of maternity leave should not have had children. Meanwhile, we mourn that women still only hold around 15 percent of executive positions at Fortune 500 companies. Perhaps we should thank Marissa Mayer for her personal sacrifice that led to one small inroad into this statistic. Who are we to say she wouldn't have stayed home longer if the timing had worked out? 

As for the flex time itself, oh my the flex time, I can't help but notice that the writers, bloggers, and business-people who call Marissa Mayer out of touch also seem to think that flex time is a normal and expected aspect of American life. I was a service member, and the adults in my family often work retail, maintenance, or as temps, paid by the hour. Try to see this situation in that light. Please don't get me wrong, I would love some flex time when I get into my second career (Yes, please!); but for the time being, the fact that one group of rich Americans is telling a group of richer Americans that they're out of touch because the average hardworking family needs flex time to get by is pure undiluted absurdity.

It's true, they are rich. So what? I loved Sheryl Sandberg's TED Talk. Again, many of these flex time advocates are fabulously wealthy in the eyes of millions of Americans. Does that mean lower income families have the right to shut them down? The only other option is that we are equally entitled to give an opinion. If a rich person says something truly insane, that's one thing, but there's nothing wrong with a wealthy woman telling us how she got there. Some people also want to get there, so that is a nice thing she's doing.

I am in no way advocating for the continuation of the current work-family system in its entirety, for the record. Maternity leave options in the U.S. should be extended and accepted as a building block of healthy families and society as a whole, without consequence to a woman's career. However, I am a mother of two, and I consider it a misinterpretation of maternity leave that it's in place for the mother's sake. Maternity leave addresses the needs of the child, not the mother. Moms are tough, we do not need a soft cradle to land in after giving birth. We need some time to bond with and nourish new babies. Thanks to modern tools and committed partners, if we're lucky, how much time may finally be at our personal discretion. I'd prefer that we never feel at liberty to criticize the choices of other mothers, unless of course we want to be jerks that nobody likes.

I evaluated Kathryn Bigelow along the same inflexible lines that these two business leaders are being evaluated. The onslaught of that realization felt like I'd hit myself in the face. I see the parallel between my disregard of Bigelow's authority as a director, and this trend of disregard for Mayer and Sandberg's authority as executives. If you take one thing from this wordy blog post, please make it this: Quit hitting yourself.

Monday, February 25, 2013

Nick Barberis: Why Investors Make Mistakes

By Charlie Clarke

I've been coordinating with Nick Barberis of Yale University about his visit this Friday to the University of Connecticut as part of the PhD Student Speaker Series.  Nick is a leader in Behavioral Finance research, and I plan to be blogging more about his work.  Here is a video of Nick in class explaining common biases in investing.

Saturday, February 23, 2013

Working for the Mandarin

By Robert H.

Oh boy, more misuse of historical analogy:

But I think that we are looking at something even deeper than that: the Mandarinization of America.  The Chinese imperial bureaucracy was immensely powerful. Entrance was theoretically open to anyone, from any walk of society—as long as they could pass a very tough examination. The number of passes was tightly restricted to keep the bureaucracy at optimal size.  Passing the tests and becoming a “scholar official” was a ticket to a very good, very secure life. And there is something to like about a system like this ... especially if you happen to be good at exams. Of course, once you gave the imperial bureaucracy a lot of power, and made entrance into said bureaucracy conditional on passing a tough exam, what you have is ... a country run by people who think that being good at exams is the most important thing on earth. Sound familiar?The people who pass these sorts of admissions tests are very clever. But they're also, as time goes on, increasingly narrow. The way to pass a series of highly competitive exams is to focus every fiber of your being on learning what the authorities want, and giving it to them. To the extent that the "Tiger Mom" phenomenon is actually real, it's arguably the cultural legacy of the Mandarin system.

To the state the obvious, there is a big difference between the ancient Chinese system, where the government selects elites by examination, and the American system, where the government and free market actors select elites by examination.  Most journalists are employeed by for profit organizations.  If all those organizations are hiring driven, smart grads from top universities, maybe those people make good employees.

Two caveats:

1.  Yes, via occupational licensing the government often requires that people have certain educational requirements, and that probably leads to over investment in education.  Maybe less than you would think, though: even in states that offer the traditional "go get on the job training" route to becoming a lawyer (California, for example), top law jobs are still staffed by top graduates from top schools.

2.  The basic point of that article is right, it *is* a real concern that low income children have difficulty cultivating the habits and resources needed to excel at these institutions.  But the solution is to subsidize and help them, not rail against institutions that seem to be providing an important market service.    Investing in future generations based on which children rich people love is a market failure, hiring Harvard grads is not.  Articles like this, which pretend that elite education is a scam foisted on America to create a ruling class, are stupid.

P.S.  Hat tip to Arnold Kling for the links.
P.P.S. Note that the second article exists firmly in the "we are obviously right, but we keep losing elections, therefor democracy is flawed" school of libertarian discourse.  It rails against one man one vote and, at the same time claims, our system is too oligarchic.  Awesome!  Fascist libertarians for the win!

Friday, February 22, 2013

A Banner Day

One of our readers (HT: PharaohBender) noticed that the banner to this site is cropped from a Nazi propaganda poster (this one).  I've always liked that poster because it is so hilariously stupid in a way only dictatorship propaganda can be (it simultaneously makes fun of us for being racists (it mocks the Klan) and for tolerating the presence of Jews and African Americans, for example), because I think the Amerikkka monster creature is sort of cool looking and imaginative (if horribly offensive, obviously), and because I think the bottom part of the picture is actually an evocative depiction of what aerial bombardment must feel like.  I wanted the name "bad outcomes" to evoke impending doom despite anyones best efforts to resist it, and to me the bottom of that picture does that.  Also, you know, I'm pretty sure treasonous Propaganda is public domain or fair use or something.

Anyways, that's the explanation for that.  If anyone finds it offensive (including my co-bloggers!) drop me a line and I will (probably) change it.

Wednesday, February 20, 2013

Who Owns the Air?

By Charlie Clarke

Here is a letter I wrote to Greg Mankiw in March of 2009.  Robert's comment on my last post about giving the poor gobs of free money reminded me of it.  The main idea is that redistributing revenue from the use of a public good is in some sense assigning property rights to that good.

Dear Greg,

    I admire your professional work and your blog, and as you have spoken out frequently on pigou taxes I would love to understand our differences on a subject.  I find that the Obama administration would like to follow something close to my ideal pigouvian tax scheme.  Given that the tax will be collected as cap-and-trade (rather than carbon tax), it appeals to my intuitive sense of fairness that the revenue from such a tax be distributed lump-sum to each citizen (total revenue / citizen = payment to each).  My reasoning is that everyone has an equal right to public goods like air (or the right to pollute air), if this were a more perfect world, I would be able to sell my air rights to the highest bidder as would everyone else.  It seems my system closely mimics that outcome with heavy polluters compensating light polluters.

   I understand that your position is that revenue from pigouvian taxation should be used to offset income taxes.  I understand that my plan creates more deadweight loss than your plan, but to me, your plan asserts that productive people should have more property rights to pollute air than less productive people.  So my question is, why should this be so?  How do you view the world differently than me that leads you to believe that your ideal is more correct than my ideal?

   I would like to close by saying I'm not sure that my intuition is correct.  In all my economics classes, I have received no training on how to think about distributional issues.  My goal is to open a real dialog, not because I think I have found some sort of trump card.  I read your paper about the optimal taxation of height, and it makes me think that you too might like to see economics open a dialog about philosophical issues of fairness.

 Charlie Clarke

Tuesday, February 19, 2013

Why I Think About Libertarianism So Much

By Robert H.

I am not a Libertarian, but I devote a lot of time to thinking about libertarianism and reading libertarians.  Why?  Well, the answer to that question depends a lot on the libertarians I am thinking or reading about.  I divide libertarians into three sorts:

1. Marginal Libertarians: For most policies, these people think the next policy step should be in a libertarian direction, but they don't necessarily want a libertarian state.  So of all the realistic policies we might adopt towards health care, the marginal libertarian wants the one that has less government intervention in the  marketplace, less government subsidies, etc.  Maybe he likes Paul Ryan's plan.  But, unlike a traditional libertarian, he doesn't necessarily want government OUT of healthcare.  At the margin he prefers libertarian policies, but going all the way to a minimalist state scares him.

Obviously more people are *mostly* marginal libertarians, than are *completely* marginal libertarians, since it is more a coincidental or attitudinal thing ("hey, look at that!  Most of the policies I like involve less government!") than a real ideology.  Greg Mankiw is an example of a marginal libertarian.  Or Tyler Cowen.

2. Consequentialist Libertarians: Consequentialist libertarians think the marginal policy move should be in a more libertarian direction, but they also think that those policy moves should go all the way, and we should have a night-watchman state, or anarcho-syndicalism, or whatever.  They want this because they think those kind of states are simply the best way to arrange public affairs, IE that adopting a minarchy has better consequences than adopting other forms of government.  They aren't much interested in libertarianism as a philosphy, they see it as a practical and superior form of government.

I tend to think of Scott Sumner as a consequentialist Libertarian, though he may be more of a marginal libertarian. In general I think very few people fall into this category, and I don't spend much time thinking about it.

3. Philosophical Libertarians: Philosophical libertarians think a libertarian state would have good consequences, but they also think it is philosophically mandatory.  They think government simply has no right to engage in redistribution, for example, and that this is as much a moral evil as theft.  Or maybe they don't go that far, but on some level they think there is a *moral*, as well as a practical case to be made for minimal government.

I am just going to pick the obvious example and say Robert Nozick was this kind of libertarian.  Or at least, was when he wrote Anarchy, State, and Utopia.  But this category obviously includes people with muddier thinking. Ron Paul, say.


So why do I care about libertarianism?  Because I am close to 1 and detest 3.  In terms of category 1, I've been convinced on the merits that a lot of policy should move in a more libertarian direction.  I am for free trade, open borders, less local regulation of property (IE, "zoning," height restrictions, etc), less incarceration  etc.  I still have big soft fuzzy liberal notions that keep me from identifying as a libertarian (hooray obamacare!), but I can read Tyler Cowen's blog and "right on" more than I "tsk tsk."  So I tend to enjoy reading and thinking about consequentialist libertarians, even when they disagree with me.

In terms of category 3, I pay attention because a lot of philosophical libertarians are, to me, terrifyingly counter-majoritarian , rejecting the basic

Democratic Focused, Rights Focused, Rule of Law Focused Cultural Norms + Democracy + Rights as Side Constraints = Sound Government 

formula that worked increasingly well over the 20th century.  So, for example, here's a law profesor, Glenn Reynolds, who came on Russ Robert's show to talk about all the ways he would like to change the constitution in order to ensure that his policies always win.  His proposals run the gamut of ways you can fail to respect modern democracy,  from changing long established process rules to make the outcomes you want more likely (IE, fiddling with term limits, which he wants to do), to constitutionally forbidding democratic outcomes simply because you don't like them on policy grounds (IE, instituting a balanced budget amendment, which he does not oppose and only does not support because he thinks it won't be stringent enough), to undermining human rights when you find them inconvenient (IE, he wants a constitutionally mandatory poll tax, currently forbidden by the 24th amendment and probably by Article 25 of the ICCPR, an international human rights treaty we have ratified).

That's modern philosophical libertarianism: "We are clearly right as a philosophical and policy matter, but modern democratic government keeps not doing what we want.  Therefor, democracy is flawed and the government is only failing to recognize our obvious rightness because it is in thrall to special interests.  Therefor, we should limit democracy not just when it steps on human rights, but more generally whenever it fails to enact the policies we want.  Convincing people to vote libertarian is all well and good, but most important is to take away or limit their ability to vote for non-libertarian outcomes."  The US constitution's model, limited powers for federal government to guard against tyranny, but broad powers for state government to empower the people, has been turned into a radical new model: limited power for all government, not for the purpose of preserving democracy, but in order to make sure all our preferred policies win.  It's a sickening rejection of majoritarian rule.

Add the distrust of democracy in with the utopianism, the blind conviction in an over-simplified philosophical position, the bad economics, the confident predictions of imminent doom for western democracies (doom that will conveniently reveal the status quo to have been flawed and libertarians right all along), the revolutionary rhetoric, and the on-campus appeal and you get a movement that reminds me uncomfortably of American communism in the 20th century.  I'm not sure if movement libertarianism has the potential to actually be as dangerous or global as communism was, but I don't think it's worth finding out.  Philosophical libertarians, from Ron Paul to law professors on Econtalk, have terrible ideas.  Those ideas have to be engaged.  Doubly so since so many of their policy positions coincide with my own, and since it worries me when my beliefs about, say, ending the drug war get lumped in with the beliefs of someone who wants a constitutionally mandated gold standard, or something.

So, that's why I spend a lot of time thinking about philosophical libertarianism.

Obviously, not all philosophical libertarians fit the description I just painted (most don't, probably.  The most wrong voices are probably the ones I am most likely to remember), and I try to be charitable to the best arguments philosophical libertarianism can present (which are pretty good!).  Just as obviously, plenty of people who hold a few views I find objectionable are probably smart people with lots of other good views (I am sure Reynolds, the law professor I talked about above, is smarter than me and has better ideas than me about most things, he just has really bad ideas about whether the constitution should be amended).  I am trying to demonize ideas, not people.

Monday, February 18, 2013

In Response to Rolling Stone, "Inside the Military's 'Giant Rape Cult'"

Rolling Stone published an article in the print version of their magazine called "Inside the military’s 'giant rape cult'” by Sabrina Rubin Erdely, available online at Salon. The article's appearance on the web is credited to AlterNet, whose format loses me, but that's probably the original online version so here is their mention in fairness and accurate sourcing.

I hate to hear the military called a rape cult. I know many veterans must feel the same way about this incendiary term. Acknowledging that frustration, I'll also point out that the sadness of these assaults takes so much precedence over a perceived insult, any focus misdirected toward language will disappoint and disgust me. I will not spare another word of this blog post for angst over mean words.

This article is not about members of the military who feel involved because someone's called us a rape cult. We owe survivors of military sexual assault a conversation that addresses the needs of those who have come forward with their stories, those who have not, and how we can fix our culture.

The Rolling Stone article describes a powerful individual account, as well as a selection of horrifying statistics, but what struck a particular chord with me was the frank, accurate representation of the day-to-day effects of hierarchical customs. Until our conditioning is outlined in unrelenting terms, hung as a backdrop to sexual assault, military customs are hard to fault. Like the article says, weakness is unacceptable. To question our culture could only mean an inability to perform, a personal failing.

I wrote an early post for Unicorn in Uniform on the 5 Densest Dismissals of Sexual Harassment in the Military. Undesirable aspects of our culture shine through with a little introspection, experiences that seemed universal and inconsequential at the time. As I think back to rumors and observations I disregarded for lack of context, I wonder how culpable I was in the misery of how many others. Obviously it got very bad for some young women, so where were we? From the ranks of junior enlisted, their peers, to so-called mentors and supervisors, where exactly were we? Playing along in a culture of "strength?" Who the fuck were we kidding?

There is one positive note in this whole mess. From the article:
Ironically, I think in some ways the military could be better equipped to get a handle on rape because it is such a closed society. This could become an asset. It is an organization that regulates behavior, so maybe they can regulate this. If sexual assault is a priority, they could turn that around. And if they do get their house in order, civil society might learn from them how better to deal with rape.
We're not hopeless, we actually have an advantage. Service members commit to prevailing attitudes; we absorb the ideology from the first moment our toes touch the yellow footprints. If we regulate sexual harassment and assault with half of the tenacity we used to cancel hazing traditions, we could rectify this disgrace and stop hurting our own.

Sunday, February 17, 2013

Econ 101 and the Minimum Wage

Charlie Clarke

    Lots of work done on the minimum wage over the last 20 years, since this paper by Card and Krueger have argued that at low levels the minimum wage doesn't lead to increased unemployment.  I thought a lot of this work was based on publication bias -- the desire of the profession to publish interesting and counter-intuitive results--until I geeked out on it a little last year and the results are much more robust than I thought.  This guest post on Mike Konczal's blog provides a nice review (and much more info than anything I've seen in the recent blogosphere debates).

     Interestingly, this view has become so mainstream that it is Econ 101.  In fact, the event leading me down a nerd hole of research was over hearing Jonathon Gruber's Principles of Micro MIT opencourseware course.  He taught a Monopsony version of the minimum wage market, where low income employers (McDonald's, Wal-Mart...) have some market power and thus a minimum wage may increase employment.  Then at the end, summarized the balance of the evidence as pointing to the monopsony model.  I couldn't believe it, but he was right.  So, at least at MIT, possibly the best place to get an undergraduate education in economics, the mainstream view has shifted quite a bit.

    That said, I'm quite skeptical at the current liberal enthusiasm for the President's plan to raise the minimum wage.  None of this research focused on minimum wages when the economy was suffering from a shortfall of aggregate demand.  Just as, fiscal multiplier research may have little bearing on fiscal multipliers during a liquidity trap (self-imposed or otherwise), the distortion of a minimum wage may be quite a bit more severe under current circumstances.  

Monday, February 11, 2013

PopeHat Turns Crazy

--By Robert H.

So this is offensive.  Basically it's a Popehat author pointing out meaningless comparisons between Obama and the crazy LAPD dude running around killing people.  They are both for gun control!  They both like his wife!  The worst kind of association fallacy.  The point (?) is that Obama's targeted killings of US citizens is just as bad as anything crazy cop man is doing.

Drone Strikes

So all those other comparisons (they both think Obama did OK in his first term!) could be ignored as stupid window dressing, but in the comments the author takes things a step further, arguing that it's all a fair comparison   He thinks being for gun control, liking the welfare state, and being a murderer is all sort of part in parcel, implying a fundamental disrespect for law or a desire for unbounded government control of our lives or something.  His co-bloggers also basically support the post in the comments.  So, yeah, offensive.  Which leaves me having to debate whether Pope Hat's authors are so crazy (IE, "liking welfare state = fascist = murderer" crazy) that I have to invoke my "it's not worth reading crazy people" rule and take them off my RSS feed.  Not something I expected from a usually excellent blog.

But that's not why I'm writing this!  I'm writing this post to point out that the basic underlying comparison is stupid too, not just the "they both like gun control democrats are killers" stuff.  And it is a stupid mistake I see a lot of liberals AND conservatives make, namely the idea that drone-strikes are basically murder, impeach obama, freedom FTW.

Here's why that doesn't work: LAPD dude has no colorable legal theory for why he should get to murder the people he murders.  Whatever moral theory he has is strained.  But the president, while his drone strikes may be unlawful,  does at lest have a real theory for why he has the authority kill a minority ("US citizen" works better than "minority," but isn't an NWA lyric):

1. In congressionally authorized military actions the soldiers we are fighting don't get due process.  We kill them.  We assassinate them.  That's that.  The executive branch handles all of this.  This makes sense: we wouldn't be able to defend ourselves if, say, we couldn't launch an attack in WWII save with a judicially authorized warrant.  The way war works (should work) is: congress gives the broad go ahead, President goes kill people.
2. Historically, sensibly, and constitutionally, this also applies to US citizens fighting the US.  Or see here.
3. Use of force against al quaeda and it's affiliates is congressionally authorized.
4. Between the authorization for the use of military force, the fact that this sort of thing (flying around the world blowing up terrorists in a protracted fight with Al Qaeda)  is probably exactly what congress envisioned when it passed the AUMF, Al Quaeda's proven ability to attack the American homeland, the time-sensitive nature of a lot of our decisions to assassinate Al Quaeda operatives, and Al Quaeda engaging us militarily in Afganistan and Iraq, it is fitting and proper to analogize our fight with Al Quaeda to a military, not a law enforcement action.
5. Therefor, prez can assassinate members of Al Quaeda.

Not a fully convincing argument!  People who oppose drone strikes would be quick to point out that a lot of them are deliberative, slow decisions, with plenty of time for judicial oversight.  They'll point out that military killings are traditionally limited to the battlefield, and it isn't satisfying to say "in the modern world, the battlefield is everywhere."  They'll point out that an open-ended AUMF, already 11 years old, is a weak perch to hang your hat on.  They'll point out how easily this system could be abused.  The bolder ones argue that the founders misinterpreted the founders when the founders launched the quasi war, and that foundational intent was, unbeknownst to the founders, for congress to only be able to launch military action with a formal deceleration of war.

And good for them!  Most of those arguments aren't stupid!  But if people who oppose drone strikes are honest, they will admit that the President's position is not lawless vigilantism.  At the margin, the line between law enforcement and war is not a clear one -- both can consist of congress authorizing the use of force against bad actors who seek to harm Americans.  But the line between murdering people with no colorable legal justification and not doing that is crystal clear.  People who cross that line are psychopaths.  Presidents, on the other hand, are mostly just a**holes.

Sunday, February 10, 2013

What Magic Tricks do People Actually Use Smoke and Mirrors For?

by Robert H.

The Washington Post declares that much of 2011's austerity was "not real," simple budgeting tricks, mostly consisting of programs that were already scheduled to be cancelled anyway.  Tyler Cowen, who is fond of being pessimistic when it comes to balancing budgets, exults.

Sorry, deficit scolds, but you don't get to have it both ways on this.  If a department is only helping balance the budget on paper, not making "real" cuts, I can think of two ways to think about it:

1. It is real deficit reduction.  Spending less money is spending less money, it doesn't "not count" because the decision to do so was already in the pipeline.  Just so, congress letting programs die and not routing their funds to new programs is a significant political victory, and a blow to people who claim that bureaucracies never shrink and congress is never responsible for public choice reasons.
2. It is gimmicks, but that's good.  Much of the deficit was caused by smoke and mirrors and/or bad accounting, so we can get rid of it with smoke and mirrors and/or good accounting.   Turns out the deficit wasn't as bad as we thought, we just needed some better accounting practices.

Deficit scolds seem to want to reject one but not fully think through two.  If I can reduce our deficit with an accounting trick, it means that part of the deficit was the result of dumb accounting.  Whoever drew up the baseline didn't realize that that program was slated to be cancelled anyway, so I get to make a reduction vs the baseline just by letting a program that was going to die die.  And that is just as good of news as actually enacting austerity, because it has the same basic result: we are closer to balancing the budget.   Basically the lesson here is either "the deficit wasn't as bad as we thought, some of it was mostly the result of poor accounting and we've cleaned that up" or "hooray, congress was able to exercise real restraint and reduce the deficit!"  Neither result is "fake," it's either a political victory or accounting innovations getting us meaningfully closer to a balanced budget than we thought we were.

Now a deficit scold can respond with, "Maybe, but this is still low hanging fruit.  There won't be many more accounting innovations that will reveal the budget situation to be better than we thought, and/or there won't be many more ways congress can save money just by letting programs die."  And I agree!  But did anyone on earth think the first round of deficit reduction wouldn't go after low hanging fruit?

Saturday, February 9, 2013

Troop Bickering Paradox

I'd like to enthusiastically follow my new co-blogger's suggestion and bicker with the troops as much as possible.  As I consider a well-researched screed into all the reasons we should not argue with the troops, I realize I cannot launch into said screed now without arguing with the troops.  Alas, I am beaten before I begin.  Check-mate.  Quite a gambit.

The best I can do is offer this instructional video on bickering that others may succeed where I have failed:

Welcome to blog Sarah. 

Friday, February 8, 2013

Support the People who are Troops, but also Argue with Them a Little

It's me, the new co-blogger announced a couple of weeks ago! I am at least four posts overdue... Midterms, I apologize.

I may as well jump in with a topic that spanned Bad Outcomes and my previous blog, Unicorn in Uniform, a project that I put together for a class but have abandoned because I couldn't resist a blog featuring a lawyer, an economist, and a Marine. It seems like a good, "walks into a bar," joke.

Now for the actual topic of this post: I wrote something entitled Hyper-support of troops is worse than Lindsey Stone’s dumb joke, to which wophugus responded with Support the People who are Troops, not the "Troops." The gist of my post was that a pair of young women shouldn't lose their jobs over an ill-considered prank photo, but we have established such an overzealous Support Our Troops (or Else) culture that we leave no room for error or apology.

                                                                    Image courtesy MSN

Robert H. elaborated on the difference between supporting the troops and supporting the military, including military spending, without question. If you read one post today, read that one. Go ahead and close this tab, I'll understand.

Now I'd like to take this theme a step further.

Let's disregard these effects that we've already covered. Ignore the non-military Americans who stumble into patriotic backlash, ignore the propaganda-laced disincentive to turn a critical eye on the Department of Defense. How does "Support Our Troops" culture affect the troops themselves?

We do not have a problem with respect for the military. The average community wants to do everything in its power to honor veterans. Yet I see a downside: because ardent troop-support has taken such a firm hold, veterans may now make up their minds about any military issue, and face little opposition or criticism. Who wants to bicker with a veteran? Who would, knowing how serious the consequences might become if public perception follows similar lines to Lindsey Stone's joke? Unless a person has military credentials of their own, arguing with a veteran about military issues seems to be in poor taste.

There's only one problem with that: troops are human. Not just human, young human, and not big on studying. We aren't required to learn anything outside of our occupational specialties; we do not read, take college courses, or learn to identify and evaluate reputable sources and research, except potentially on our own time. Members of the military are encouraged to rely on our instincts, on our gut. Until I took a few classes, I had no idea how wrong we were to form opinions that way. Trusting your gut is the first rule of terrible decision-making.

Our fourteen leadership traits in the Marine Corps are justice, judgment, decisiveness, integrity, dependability, tact, initiative, enthusiasm, bearing, unselfishness, courage, knowledge, loyalty, and endurance.

Knowledge is one of fourteen. You might call "judgment" an intellectual exercise, but bracketed by decisiveness, initiative, and enthusiasm, judgment becomes an exercise in making up our minds without seeking input.

I know this circuitous deference isn't restricted to military points of interest, but I care very much about the potential of young service members. For their sake, please,

Bicker with the Troops.

                                                      Image courtesy Harmonist

Chat. Ask questions. Make them defend their reasoning. When the next controversial order or repeal is handed down, ask them to explain their bitter Facebook statuses. Prepare them for the real world after their enlistments end, when the only opinions that count will be based on facts, assigned probabilities, and closely followed by value-added observable outcomes.

Seventy to eighty percent of junior Marines leave the military each year (PDF), and that's before the massive upcoming deficit reductions take effect. Success in the civilian world depends on a healthy critical eye and the ability to accept and adjust in the face of constructive criticism. Not just from drill instructors, but from regular people who have never spent a day in uniform. The troops can't afford to be venerated.

Thursday, February 7, 2013

The Housing Bubble that Wasn't

We had a lot of fun doing a back and forth with imminent economist John Quiggin when we first started the blog (here, here and here).  John is adamantly opposed the the Efficient Markets Hypothesis.  An argument commonly featured in his book is that some asset will go up and then go down, which we in retrospect call an asset price bubble.  For instance, the Tech bubble boom and burst and the recent housing bubble boom and burst in the U.S.  What would be more impressive for John to do (and more lucrative for the reader), would be for John to have written a book predicting large asset bubble crashes, and then he could publish a second book to gloat.

Fortunately, we have the next best thing, which is blogging.  And Quiggin has made some predictions on his blog, for instance, this post called "The Housing Bubble" on Australian housing (Aug. 2003):
All of these factors have combined to produce a bubble in the residential housing market that can fairly be described as unprecedented. As measured by the REIA median house price series, average house prices nearly doubled in most Australian cities between 1997 and 2003...
There can be little doubt that the prices of houses and urban land have reached unsustainable levels, and that they must decline in real terms. The main concerns for economic management relate to the speed and extent of this decline. If prices fall 40 per cent over one or two years, which would only bring them back to the levels prevailing in 2000, widespread financial distress is certain and a recession highly probable.

Thanks to some nifty work by the economist and a hat tip to Scott Sumner, we can look back and see how valid Prof. Quiggin's bubble seeing glasses were: 


Turns out the bubble didn't pop.  So if it doesn't pop, is it really a bubble?  If we can only recognize bubbles after they've popped, then the term bubble really has no meaning at all.  Unpredictable falls in the prices of assets certainly doesn't violate the EMH.  

Wednesday, February 6, 2013

Constitution Class Posting

My favorite podcast, econtalk, delved into con law this week, and boy was it a confused conversation!

Basically a law professor, Louis Michael Siedman, raised some objections to the constitution that lawyers have known about for a while.  Then Russ Roberts, who is a smart economist but doesn't really follow constitutional law, tried to single handily invent all the responses to those arguments.  But there's no need to do that, because people have been thinking about this stuff for a while!

I don't remember all the ins and outs, but this is basically how I think the debate should go:

Should this still be law?

I. Constitutional problem
A. Siedman: sees two big difficulties with the constitution.

i.. The inter-temporal difficulty.  Why should past people get to bind present people?  The foundational generation wasn't smarter or wiser, it was, if anything smaller and less informed. Why is the vote of some dude who has been dead for 200 years more important than my vote?

ii.. The counter-majoritarian difficulty.  Democracy is good, right?  Why does the minority of white, propertied males in the late 1780's get to make the rules?  Why do they override a current majority?

B. Responses

i. Pre-commitment is important for the part of the constitution that deals with PROCESS.  What day you hold an election, how many congressmen there will be, how long they serve, etc are all questions that 1. don't really have super important right answers over the long term, and 2. in the here and now can have huge effects.  If you say "you know what, senators can now serve for EIGHT years" you lock in the current democratic majority.  But what effect that will have 200 years from now is harder to say.  So, rather than put all that process stuff up for big huge political fights in the now, we just let people in the deep dark past pre-commit us to a certain political process.

ii. We don't want to expose to majoritarian outcomes certain RIGHTS.  There are lots of reasons we should adopt a pre-commitment strategy with rights.  For example, these could be things we are pretty confident people get right most of the time, but where there might be pressure in certain situations to get it wrong.   We can just sort of airily commit to stuff like, "yeah, free speech is great!" in the here and now, effectively constraining us when we the pro-baby-rape nazi starts spouting his nonsense.

iii. The founders *were* smarter because they lived in a CONSTITUTIONAL MOMENT.  At certain times the whole of the body public is moved to engage in and change our most basic laws.  The 1780's.  The 1860's.  The 1930's.  The people are thinking more clearly about this stuff in constitutional moments, and we should make some things only changeable when they can be changed with the sort of super majority you get during those special times.

iv. We don't trust democracy because we FEAR THE MOB.  Or ARE FASCISTS.  Or whatever.  The basic structure of Siedman's constitutional problem is, "we all agree in majority rule, why depart from it?"  The answer here is, "because I don't agree with majority rule!  The majority sucks!  We should pre-commit to my policies because my policies are right and the people will probably f*** it up."  This was something Russ, a libertarian skeptical that government will stay limited in a purely-majoritarian state, was trying to articulate.

v. TRADITION.  Laws work in large part because of cultural norms.  This by necessity makes people in the past more important than modern people for governing how modern people behave (they set the norms!) and gives a reason we shouldn't blindly try to chart our own course in everything.  Norms make society work, lets not start questioning and rehashing them just because they are in the constitution!  This is something Siedman was very strongly fighting against.

vi. No one wants to rename the USS CONSTITUTION, the oldest commissioned warship in the world.

The USS Non-Binding Norms Subject to Majoritarian Outcomes under sail

II. The legal problem.

A. Siedman also says that the Supreme Court isn't really following the constitution and should fess up to it.  He's less calling for us to ignore the constitution and more calling for us to be honest about ignoring the constitution. This isn't really a constitutional argument, it is a broader legal argument rooted in the INDETERMINACY DEBATE.  To what extent is the law determinant?  That is, to what extent do those little rules and cases on sheets of paper determine actual outcomes in courts and legislatures?

B.  I don't really want to debate this because it's a huge question in the law, just sort of point out how inferior Siedman's argument is.  Basically he says "here are some examples of people explicitly not following the constitution, even by their own lights.  Therefor people should just admit that the constitution doesn't do anything important and no one follows it."  But the mere fact that the constitution didn't bind some people in some cases doesn't prove it is all a sham.  Obviously there is ground between "people always follow the constitution and it determines everything" and "people never give up their policy goals because they think they are unconstitutional and the constitution effectively does nothing."  The Supreme court can be hypocrites only some of the time, and the rest of the time the constitution is guiding their decisions and doing real work.  So a few specific examples of hypocrisy doesn't prove the constitution a sham.

C. As a side point, observe that if this is true and the constitution doesn't bind or limit us, the inter-temporal and counte-rmajoritarian difficulties go away.

Tuesday, February 5, 2013

The Worst Pun

Arnold Kling (man, how many posts have I written commenting on something he's said?  I have no defense other than that he is thought-provoking and smart, while having views that differ from mine just enough to fuel posting) has a post on the riddle of social security.  Why do we subsidize retirements?

If it's a riddle, it's a very old one.  Bismark invented the welfare state in the 1880's, and the third major law he passed, in 1889, was The Old Age and Disability Bill.  Enter social security insurance on the world stage.  The fact that old age is linked with disability in that legislation tells the whole tale: in this crazy modern world in which we live in, for some people retirement is what happens when you decide to stop working and play golf.    But for most people in history (and now?) old age isn't dominated by leisure so much as it is dominated by having a crappy body.  In 1880's Germany, being an old person is basically the same thing as being a disabled person -- you physically can't work for a decent wage.  So Otto says,

„[...] the actual complaint of the worker is the insecurity of his existence; he is unsure if he will always have work, he is unsure if he will always be healthy and he can predict that he will reach old age and be unable to work. If he falls into poverty, and be that only through prolonged illness, he will find himself totally helpless being on his own, and society currently does not accept any responsibility towards him beyond the usual provisions for the poor, even if he has been working all the time ever so diligently and faithfully. The ordinary provisions for the poor, however, leaves a lot to be desired [...].“

Auto Van Biz-Mart

For a lot of Americans, there is still some truth in the idea that old age leaves people less able to support themselves and is a form of disability (IE, if they had a very physically active line of work or if they are low skill and mostly sell their manual labor).  But in a white collar world with age discrimination laws that is increasingly not true (or at least, the wage hit old people take is more marginal), and I think you are increasingly seeing a new justification for SSI.  There is an element of hope to it.  Lots of people have to work shit jobs they hate their entire life.  Subsidizing retirement is a way to give those people meaningful hope -- there's gold at the end of the crap rainbow! -- which both makes the working people happy in its own right (lives with hope are better!) and probably gets people to buy into society more (remember, Bismark didn't implement the welfare state because he believed in it, he implemented the welfare state to keep social order in a world increasingly dominated by class struggle).  I think this is what people talk about when they talk about lives deserving "dignified retirements" -- everyone deserves a little hope at the end.

But those two things have different policy implications.  If we feel bad for old people because "old" is a form of disability and the elderly can't work, we feel bad for all old people.  But if we want to give working people an element of happiness and dignity to look forward to at the end of their lives, we can means test SSI.  Rich people can buy their own dignified retirement just fine, thank you. I suspect that, as the justification for the program increasingly moves from the first to the second thing, the system will start to look (and be) more explicitly redistributive.

John Cochrane on New Keynesian Models

John Cochrane wrote a wonderful post on thinking his way through New Keynesian models.  Its quite wonkish, but it is great insight into how a top economist thinks about the world and models.  Also, I thought Karl Smith gave a thoughtful rebuttal.

Feel free to get deep in the weeds of both posts, but essentially John lays out a simplified world as a New Keynesian might see it, and a simplified world as a New Classical, John Cochrane type might see it and related each to why consumption is low and growing slowly, which lead me to comment:
This is a great, great post.
Under the PIH view, why is the nominal rate zero and the real rate negative 2 percent? The marginal product of capital is negative? Preference shifts lead to value future consumption more than the present? Bad regulation today is just a portent of worse regulation to come?
It sure *looks* like we are at the ZLB. When inflation expectations rise, short term nominal rates don't move and short term real rates become more negative.
I'd love to here how PIH/neoclassical/neo-Cochrane? view explains that.
Essentially, I'm asking how does John Cochrane's preferred model explain the zero lower bound and negative interest rates.  I've argued, before that, specifically in John's narratives the zero lower bound seems like a coincident.  For instance, he argues more expansionary monetary policy is neither like to help or hurt, which with the fed funds rate constrained at zero seems remarkably coincidental.  I was surprised by how hard he bit down on that bullet, in direct response to my comment:
It doesn't. We are at the ZLB, and the real interest rate on government bonds is negative. (Private parties borrow at higher rates, and risk premia are much more important than most macro says.)
The question is, how relevant is this fact for understanding the level of consumption. The PIH is not "the" model. As I wrote to the point of ridiculous repetition, it is a grossly oversimplified model, useful (maybe) for digesting one part of what's going on. It does not say WHY income fell, and in the big picture it alludes to, understanding the wedges in the economy's prodcutive capacity is key. 
So, at this level of abstraction, the question is, does it really matter that we are at the ZLB and real interest rates on government bonds are -2%, not the usual +1%? Is that the key most important fact and distortion causing our doldrums? Or is that a fact, an interesting, fact, but a secondary epicycle, that we don't really need for reducing the big picture down to one equation in a blog post? 
The art of economic modeling includes a lot of throwing out "realism" so you can get the important big picture. 
Does he seem annoyed?  I hope not, and not just because he could squash my future career like a bug, but because he's one of my favorite economists.

I think the key is this, "a secondary epicycle, that we don't really need for reducing the big picture down to one equation in a blog post?"  To John, the Zero Lower Bound, the negative interest rates are a side show.  There might be an interesting "epicycle" to explain it, but basically understanding the slow recovery is the same at a 4% nominal rate as a 0% nominal rate.  To me, the puzzles must be linked.  The market for risk free capital isn't clearing and conventional monetary policy is impotent.  We had a great recession, and now the recovery is incredibly slow.  My intuition suggests that those facts are central to any story that tries to understand the economy.  John thinks the ZLB is quite possibly just a distraction from what is really goin on.

Saturday, February 2, 2013

Debaters of the Lost Minarchs

Arnold Kling has capped off a great conversation with Michael Humer and Bryan Caplan about why non-libertarians reject libertarianism (you can follow links back through Kling's various posts). Kling ultimately comes to the conclusion that the moral case for libertarianism isn't appealing to lots of people and the consequentialist case should be emphasized. As someone who has rejected the moral case for libertarianism but been persuaded to support a lot of libertarian policies on consequentialist grounds, that sounds about right to me.

But that still leaves the question, why *do* people reject the moral case for libertarianism, rooted in freedom and the harm principle? I've been thinking about why I reject it, and this is what I've come up with:

1. It doesn't accord with my every-day reality. In our society, only bad people live according to the harm principle (IE, the ability to use force to defend yourself and your property is heavily limited.  You can't use force to retrieve stolen property or property owed to you, can't use lethal force to protect property, can't use force to protect yourself from a non-imminent but very real threat, etc.  The state can do all these things).  It seems weird to take behavior that is illegal and immoral in the context of our society and then say everyone has a natural right to do it.

2. It's not simple. Take a basic statement of the harm principle, "the only purpose for which power can be
rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." That is, on its face, not a libertarian statement. Taking money from person A and giving it to starving person B arguably prevents harm from happening to B.  

To get to libertarianism, you have to start with a more complex harm principle, something like, "the only justifiable use of force is to protect people and their property from the force of others."  But now we have to come up with an argument for how materials in nature can morally be converted to property, what other ways I can morally acquire property, the extent of my property rights, define "uses of force" (IE, is a harmless trespass on your property really a use of force?  Is conversion by fraud?  Many thieves do not use coercion or the threat of coercion, they are just sneaky), explain how we can enforce contracts (are contracts really just a subset of property rights?), etc.  Nozick got this: it is hard to prove that people should adopt a minarchy from first principles.  He was constantly being forced to make subtle distinctions, to paper over whole genres of argument, to say "we need to think harder about this," etc.  I'll keep re-reading Nozick and keep reading others, but the moral argument for libertarianism is complex, has to answer lots of questions, and, to my mind, has not done so satisfactorily in a number of instances.  I suppose I'll keep blogging about what all those are in future posts.

3.  Libertarians seem to miss a lot of basic moral impulses.  People like fair shakes, like equality of opportunity,  dislike gross inequality in results, abhor human suffering, and are willing to tolerate, praise, and even force redistribution as a result.  There are a lot of contradictory impulses that animate our intuitive moral senses, and "enforce the harm principle" is only one of them. Robin Hood isn't a hero because he fights taxes, he's a hero because he fights unjust taxes and because he redistributes wealth. 

4. Once you get away from talking about the harm principle and start talking about maximizing freedom and minimizing coercion, it's not clear to me from first principles that libertarian states do that.  On the one hand, "freedom" and "coercion" have dimensions beyond "freedom from state coercion." On the other, it's not clear to me that a minarchy would actually coerce people less than a state with more powers.

5. Libertarians don't seem to pay much attention to culture and how government interacts with culture.  I once said on this blog that when a big man with a club meets a little man with a prosperous farm in the state of nature, a conservative worries the barbaric big man will kill and loot the little man, the liberal worries the brutish big man will enslave and rule over the little man, and the libertarian thinks they'll work out a contract by which the little man pays the big man for defense.  In point of fact we don't know what would happen, because it would depend entirely on the cultures, dispositions, and circumstances of the two dudes.  Same tribe?  Different tribes?  Warring tribes?  No tribes?  Ingrained cultural norms about hospitality?  Etc.  Libertarians seem to me to have a one-size-fits-all solution, when it seems to me that a minarchy (and certainly anarcho-syndicalism) could only work under a limited, some-what fantastical and a-historical set of cultural norms.  To a large extent this is a consequentialist critique, but it bleeds over into a philosophical one -- the philosophical libertarian argument would be stronger if it addressed a variety of societies full of a variety of people, rather than limiting itself (mostly) to state-of-nature societies full of pretty rational people.  

6. While we are on the subject, it is not obvious to me that state of nature analysis beats veil of ignorance analysis, or why either is better than using the real world as a starting point.

7. To be clear, I don't think anyone has made a first-principles case for why the state should have lots of power either.  Again, to me it comes down to consequentialism. 

8. My consequentialist analysis heavily tinges all this.  I think a minarchy, much less anarcho-syndicalism, would suck.