chrismealy

The market is always right

2011-08-24T20:02:00.000-07:00

Cosma Shalizi said ...
Some economist decreed that the people
had lost the market's confidence
and could only regain it with redoubled effort.
If that is the case, would it not be be simpler,
If the market simply dissolved the people
And purchased another?

(with apologies to Brecht)

Macroeconomics in one paragraph

2011-06-09T22:28:00.000-07:00

Andy Harless:

There can be excess demand for safe assets, because one of those assets is money, and the market for money, traded against goods and services, is not continuously clearing. (In fact, it’s usually not clearing at all: it almost always easier to purchase goods and services with money than to sell goods and services for money.) Ordinarily, when the risk-free rate is positive, money is, on the margin, more-or-less dominated by other safe assets, and it is only used for transaction purposes, and under those circumstances you can say that “supply and demand are equated by price” because the relevant price is the interest rate, and money only represents a standard of value and a convenience for transactions. But when the risk-free rate is zero — which happens when the demand for safe assets gets sufficiently high — money becomes just like other safe assets. Money is no longer just a standard of value and a convenience for transactions; it is an asset like any other. And in that case, there is an excess demand for safe assets. The only way to cure that excess demand is for the general price level (i.e. the price of goods and services traded against safe assets) to fall, but prices (and, probably more importantly, wages) are sticky. So the price level doesn’t fall, and you get a depression instead.

underbelly: What is Living and What is Dead in MPT

2011-04-12T21:30:00.000-07:00

What is Living and What is Dead in MPT:

MPT 20 years later:

Markowitz diversification: Still largely true, made into a Godzilla by securitization but then completely undercut by tranching.

Sharpe Beta: Dead, and getting deader, except perhaps in old-fashioned textbooks and in the training manuals of second-tier salesmen.

Tobin separation: Actually, still alive and healthy insofar as it underlies index funds and such, but everyone has pretty much forgotten the name.

Fama ECMH.: Oh dear. Nobody believes Fama ECMH any more, not even Fama. It tells you nothing about bubbles and crashes, and it doesn't alert you to the notion that we may all be irrational in systematic or predictable ways. Yet it's still true that the market is not for amateurs, and that if you go into a strange poker game, you look around for the sucker and if you don't see him, you get out because you're it.

Black Scholes Option Pricing: This may be a two parter. Black Scholes taught everybody that options traffic in risk, and that you can slice and dice risk into a million pieces (and no, don't pretend you knew that all along). But Black Scholes was more or less vaguely based on the notion that outcome distributions are "normal" and we have learned to our dismay that they are nothing of the sort.

Modigliani Miller Leveage Irrelevance: Knda sorta true, as we come to grasp that there is no clear line between debt and equity, between "owners" and "lenders;" all are just claimants against the asset pool.

Modigliani Miller dividend irrelevance: True if you believe that managers maximize shareholder value. And that pigs will fly.

If I remember correctly the Fisher Black bio says that Black Scholes wasn't as good as what traders were doing before, but after a while it caught on and Black Scholes became a self-fulfilling prophesy. You know, an engine not a camera.

The one thing I've never understood (and I got an A+ in finance) is how anyone ever thought variance was a good measure of risk, or why anyone would ever think beta in the past would tell you anything about the future.

Merijn Knibbe on barter

2011-04-10T10:43:00.000-07:00

Merijn Knibbe on barter:

Barter economies do not exist. Never have, never will. Barter does exist, but has always been a rather insignificant side show. Coordination problems in non-monetary economies are solved, but not by trade. They are solved by division of labor and production based upon age, gender, caste, whatever (just like we still do, to a large extent, in a monetary economy). And upon 'parties'. In many economies, weddings, funerals, 'the Potlatch' and the like are a non insignificant way to distribute goods (and prestige, and connections, well, the whole gift exchange thing). In present day South Africa, your funeral may very well be the largest expenditure of your entire life.

If you think about this, the 'mutual coincidence of wants' is not a problem of non-montary economies. These economies have solved this problem (see above). It's a problem of monetary economies. This problem sometimes shows as a liquidity problem. You want to buy a house, you have the income, but you don't have the money. A mortgage solves this liquidity problem. It sometimes shows as a search problem. Habits and instititions and the like have, of course, solved much of that problem (the monthly pay check, pension funds, the grocery store, the entire theory of 'whole sale' is in effect based upon they way in which this solves parts of the problem). Farmers do not stand along the road - they have established routines to sell their products. Even then, these solutions are weridly expensive. Banks, insurance companies, grocery stores, malls, cash registers, whatever. Together, the macro costs of markets and the macro costs of money will easily ben 15% of GDP

And if you think even deeper, it turns out that the essence of prices is stickyness. If they weren't sticky (sometimes only for a minute, sometimes for fifteen years like my mortgage interest rate), they would not exist, in a market economy. In a market economy, you agree upon a price - which is impossible without stickyness (and indeed, in my definition of a market, post transaction 'shadow prices' which can only be known 'the morning after' are anathema to real market behavior: the very essence of a market is that people know about prices (or at least about the algorithm used to define a price) before making a transaction. And that's why money exist. It's the sticky price par excellence.

Wonks, neoliberalism, etc

2011-03-22T00:17:00.000-07:00

(an old comment I posted at rortybomb regarding Freddie de Boer)
I’d be happier if Ezra Klein threw at the batter’s head once in a while too (We have Atrios for that). It doesn’t take 3700 words to get that across.

Freddie’s been complaining about the neoliberal left for a while now, but in all the blogging and commenting he’s done over the last couple of years I haven’t seen anything resembling the hint of a political vision. It seems that he wants a vigorous hard left but he wants somebody else to work out what feasible socialism is. I want it too but I can hardly complain if I can’t figure it out myself (Since 1990 I’ve been trying to imagine a concrete political agenda that matches the emotional force of Billy Bragg’s first two albums and I’ve got next to nothing. I think I’m going to settle on making everybody get off their fat asses and ride bikes).

But I kind of see where Freddie’s coming from. I dropped Matt Yglesias from my rss reader a couple of days ago. I read pretty much every word the guy wrote from 2004-2010, including his book, but he’s actually pretty boring, and I’m tired of his dialogues with libertarianism (With Ezra Klein and him it’s not so much neoliberalism as it is Tyler Cowanism). I even agree with most of his zoning stuff but he’s only about an inch deep with it. It’s not great.

Freddie has it exactly backwards. We don’t need fewer wonks and more utopian reveries. We need harder wonks and a lot more of them. (Maybe then somebody could tell me if the MMT crowd are cranks or not.) Matt’s problem is that he’s soft-serve. Even EK should step up his game. There are better wonks around now and these guys are getting left behind.

Money is weird

2010-11-15T17:56:00.000-08:00

Nick Rowe freaks me out:

Suppose Fred decides he wants to save more.

Barter economy: the onus is on Fred to induce someone to borrow from Fred, by offering favourable enough terms that someone wants to borrow from Fred. If Fred can't find someone willing to borrow from him, he can't save (unless of course he directly invests himself in real assets).

Monetary exchange economy. Fred just stops spending, and starts to hoard cash. He can save without needing to induce someone to borrow from him. The central bank has to increase the supply of cash to prevent a recession. The onus is on the central bank to induce someone to borrow from it. The central bank has to find someone willing to borrow from it (unless of course the central bank itself, or it's owner the government, directly invests in real assets).

Metaphor: in a monetary exchange economy, the central bank is Fred's loan placement officer, that is forced to find a willing borrower for Fred to lend to. ...

Take an extreme case: suppose nobody wanted to borrow from Fred? In a barter economy, Fred would be unable to lend. In a monetary exchange economy, Fred would always be able to lend. The central bank is forced to borrow from him, and then pass that loan on to someone else.

Money is weird.

"Money: Whence It Came, Where It Went" by John Kenneth Galbraith

2010-10-24T16:37:00.000-07:00

A while ago libertarians were talking about how the late 1800s was the golden age of freedom in America, which is odd considering that was before women's suffrage and during Jim Crow. JKG's "Money" illustrates what they must like about that time:

There can never have been a time when it was as good to be rich as in the late years of the last century. There was no income tax ... There was the rewarding contrast with the vast majority which was still poor. ... In 1900 prices had been generally falling since the end of the Civil War ... Men of substance could reasonably expect to gain in wealth not only from accumulation of money but from a continuing increase in the purchasing power of what they had. ...

The ability of the rich and their acolytes to see social virtue in what serves their interest and convenience and to depict as ridiculous or foolish what does not was never better manifested than in their support of gold and their condemnation of paper money. The parallel tendency of economists to find virtue in what the reputable and affluent applaud was similarly evident.

Financialization and Joe the Plumber

2010-10-24T15:41:00.000-07:00

Everybody's talking about financialization, the idea that the productive capacity of society is being shifted away from wages and to profits. Bill Mitchell and Steve Keen have great posts on it but are slightly over my head. Michael Perelman did a video (I forget where it is) about how by some process whereby the financial sector slowly eats up the industrial sector. They all sound good but I can't tell if they're wrong or not. More homework for me.

Anyway financialization talk reminds me of what Obama told Joe the Plumber:

It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance at success, too… My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. If you’ve got a plumbing business, you’re gonna be better off [...] if you’ve got a whole bunch of customers who can afford to hire you, and right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody

It probably would have happened anyway but I think this is the moment when the "Obama equals Socialist" deal took off. As if that would be a bad thing.

Hoisted from Brad DeLong's comments

2010-10-02T16:29:00.000-07:00

Hoisted from Brad DeLong's comments, RW (Robert Waldmann?) writes

In his last book, The First Man (published posthumously), Albert Camus writes of his anger and sadness at his mother’s inability to provide any details concerning his long-dead father: "Poor people’s memory is less nourished than that of the rich. It has fewer landmarks in space because they seldom leave the place where they live, and fewer reference points in time throughout lives that are gray and featureless. Of course there is the memory of the heart that they say is the surest kind, but the heart wears out with sorrow and labor, it forgets sooner under the weight of fatigue. Remembrance of things past is just for the rich. For the poor it only marks the faint traces along the path to death."

Theory of Change 2010

2010-09-28T23:02:00.000-07:00

I'm one of those people who sent around Mark Schmitt's article, The "Theory of Change" Primary, back in early 2008. I think Schmitt was right then and I think he still right:

The reason the conservative power structure has been so dangerous, and is especially dangerous in opposition, is that it can operate almost entirely on bad faith. It thrives on protest, complaint, fear: higher taxes, you won't be able to choose your doctor, liberals coddle terrorists, etc. One way to deal with that kind of bad-faith opposition is to draw the person in, treat them as if they were operating in good faith, and draw them into a conversation about how they actually would solve the problem. If they have nothing, it shows.

I'm upset because Obama, who won the primary largely because he understood where delegates come from better than Clinton, has had absolutely no response to the predictable obstruction from the Republicans. Where's the jujitsu? Where's the counterattack? Where's the constitutional hardball to get around the insanity of the Senate rules?

Right now the Democrats are campaigning on "Give us two more years of saying 'we can't do anything because of the filibuster.'" No climate bill, no immigration bill, no education bill, nothing. Maybe Obama's strategy is to lose this election, wait fot the Republicans go apeshit in 2011 and remind America how insane they are, and come back strong in 2012. If so I wish he'd tell me. Then I wouldn't feel back about not giving Democrats any more money this year.

Boring banking and bookies yes. Wall St no

2010-04-17T21:22:00.000-07:00

Anybody who gives their money to super-profitable Wall St firms is crazy. If those firms were such great investors they wouldn't share their good ideas and the profits with their dumb customers. They'd keep it all for themselves. If they're taking your money you can be pretty sure they're just taking your money and bleeding you with fees. What were people investing with Goldman Sachs thinking? They're famous for being ruthless killing machines! Fancy money managers aren't any smarter than anybody else, they're just good at separating rich people from their money. Just like casinos. Except casinos don't blow up the whole economy every ten years.

Why was it so important to bail these fuckers out again? Because somehow their antics intersected with the real economy. Because Lehman and Bear and Goldman somehow are vital to boring banking, boring stuff like short-term credit for boring businesses like print shops and grocery stores, and if we didn't bail the fuckers out nobody in America could get paid and we'd be using canned beans for money. Boring banking is boring because there's no money in it. That's the beauty of capitalism after all. If something is boring and old-fashioned competition squeezes all the profit out of it. But old-fashioned unprofitable things can be pretty damn important for the system work, like water and power utilities. So maybe it'd be a good idea to sever that link to Wall St then. Let Las Vegas handle the boring banking instead (bookies seem to understand vigorish a lot better than Wall St), and let Wall St be the place were moronic rich people blow their savings.

Fear of emancipation from the fear-regime

2010-03-08T13:14:00.000-08:00

William James's "The Moral Equivalent of War" holds up.

Why isn't Obama panicking!!!!!1!1!!11!

2010-02-05T14:31:00.000-08:00

The regulars (Chait, Yglesias, Ezra Klein, Krugman, etc) want Obama to show some urgency and lead the charge to pass health care. I want him to get the damned bill passed too. But if his game is to slow it down right now and actually win the argument then he's probably on the right track. It's not enough to just pass the damn bill. The Medicare Catastrophic Coverage Act was passed in 1998 (signed by Reagan!) only to be repealed a year later. If you don't win the argument you can't make it stick.

The Canned Food Standard

2010-01-25T12:54:00.000-08:00

While I was trying to sort out if chartalists and circuitists are cranks or not I came across Perry Mehrling's "The Monetary Economics of Benjamin Graham." That's Graham of Graham & Dodd's "Security Analysis" and the Graham that the young Warren Buffett idolized. From Mehrling's article:

It’s a long strange trip from Henry George to Friedrich von Hayek, but the link is clear. Both men were fundamentally concerned about the problem of the world of money getting disconnected from the world of goods. For Henry George, the problem came from the speculations of the private sector while for Hayek it came more from the fiscal ambitions of the state sector. For Graham himself, the disconnect between the world of money and the world of goods was fundamentally a source of macroeconomic investment risk that could upset any amount of careful security selection by the conservative value investor. Graham wanted a money that would remove uncertainty about the value of money from the investment decision by aligning the price of money with its intrinsic value.

Graham's solution was to make money convertible into a bundle of commodities (wheat, barley, cocoa, corn, cottonseed oil, oats, rye, sugar, cotton, silk, wool, flaxseeds, rubber, cottonseed, tobacco, coffee, tallow, copper, lead, tin, zinc, and petroleum). This reminded me of Daniel Davies semi-joking post about the risk-free interest rate, and how the only risk-free investment is canned food.

Graham's plan got the attention of both Hayek and Keynes, and he'd hoped to see it advanced at Bretton Woods, but it fizzled out and was forgotten.

Depressions follow wars

2009-11-25T17:21:00.000-08:00

Seeing dsquared giving Felix Salmon a hard time about hot money flowing into emerging markets reminded me of Paul Davidson's international money clearing unit proposal. I googled imcu and came across an article from Davidson that included this interesting historical note:

While exchange rates were fixed under the Bretton Woods Agreement, in the early years after the second world war the United States avoided amassing surplus international reserves by providing grants to the war torn nations, initially via the Marshall Plan and then via other foreign aid programs. In essence, the United States accepted the Keynes Plan suggestion that it is in the best interest of all nations if the major creditor nation bear the major burden of reducing trade imbalances and international payments adjustments. As a result of the Marshall Plan, for the first time in modern history, a post war depression was avoided. The U.S. and its major trading partners experienced unprecedented long run rates of real economic growth from the end of the second World War until the early 1970s.

I hadn't made that connection before. So I googled "depressions follow wars". Only one hit:

In 1945, Wood, by then chairman of Sears, did it again. He saw pentup consumer demands from the war years fueling a post-war economic boom. He wanted Sears to beneﬁt and began an aggressive, nationwide store-building campaign. Sears sales grew exponentially as a result.

Where was Montgomery Ward during all this? Largely out of the game: its top leadership had a different theory of the post-war situation. As Montgomery Ward CEO Sewell Avery saw it, depressions follow wars. Avery had studied history, and had charts in his office tracing commodity prices from the time of Napoleon. The smart thing to do, Avery believed, was to keep Montgomery Ward’s cash in the bank to weather the inevitable economic downturn. He refused to expand the company and enjoyed thinking about his competitors spending themselves into bankruptcy. But the depression never came, and Montgomery Ward sat out one of the largest consumer spending sprees in modern history.

Can't really blame the guy. How was he supposed to know what Marshall was up to?

Coincidentally, David Brin posted about America's counter-mercantilist policy just an hour ago:

there has been only one top-nation that ever avoided the addiction to imperial mercantilism, and that was the United States of America. Upon finding itself the overwhelmingly dominant power, at the end of World War II, the U.S. had ample opportunity to impose its own vision upon the system of international trade. And it did. Only, at this crucial moment, something special happened.

At the behest of Marshall and his advisors. America became the first pax-power in history to deliberately establish counter-mercantilist commerce flows. A trade regime that favored the manufactures of many foreign/poor countries over those in the homeland. Nations crippled by war, or by millennia of mismanagement, were allowed to maintain high tariffs, keeping out American manufactures, while sending shiploads from their own factories to the U.S., almost duty free.

Let's hope it doesn't take another world war to sort out international monetary issues.

All About the 60

2009-11-20T17:31:00.000-08:00

A Senate Democratic Chief of Staff chimes in ...

There is a lot of misplaced anger coming from many of our fellow progressives about Senate Democrats (which often is just shortened to "The Democrats") inability to pass a robust healthcare reform bill, climate change, etc.
However, I believe it's worth reminding folks that--as long as the Republican Senators hold together--we have to hold EVERY single Democratic Senator, including folks like Joe Lieberman and Ben Nelson, which is usually impossible unless the legislation in question gets substantially watered down.
So, what we might end up with is a Senate Democratic Caucus that holds 98% of its members but still fails to pass healthcare reform, AND a mob of angry progressives who are screaming for the heads of "the Democrats." This isn't fair, but more importantly, it's self-defeating. If progressives REALLY want to transform America, they'll make an issue of the anti-democratic rules of the Senate which make real change virtually impossible. Blasting their elected Democratic officials, the vast majority of whom will vote for the Senate bill (and would also support a more robust public option if we didn't need 60 votes to achieve cloture), may make folks feel good, but is both short-sighted and stupid.

You know guys, don't complain about us complaining about your problems with procedure. Fix your fucking problems with procedure, enact your fucking platform, and we'll stop complaining.

Blogs that should be more popular: Gordon's Notes

2009-11-12T20:16:00.000-08:00

I can't remember how I can across one of my favorite blogs, Gordon's Notes. Probably a link from Brad DeLong, or maybe I was searching for some complexity/emergence stuff. I've only been reading it since this spring. It moved into my A-list folder in Google Reader in no time. The author, John Gordon, writes about almost all of my favorite topics: politics, economics, science, technology, and emergence. He's easy to like because I agree with everything he writes! I especially enjoy his tech writing. (His affection for Macs is receding and ardor for the Google cloud is increasing. Same as me.)

But agreement is shallow basis for praise. It's his keen insight that counts. For example, great posts on the declining quality of toasters, the hidden inflation of declining quality, emergent fraud, and why we need crummy health care. He was onto Google's "Chromestellation" strategy way back in 2005. His posts on politics and economics are sharp. All that and he's a real-life M.D. with a big heart.

Oh who am I kidding, I like anybody who makes fun of libertarians.

Cliff Mass on Seattle biking and weather

2009-10-13T23:18:00.000-07:00

Good stuff on bikes and weather in Seattle from Cliff Mass.

Bike helmets versus euro snottiness

2009-08-24T20:31:00.000-07:00

This is going too far:

Cycle helmets are the most visible and potent symbol of all that’s wrong with Britain’s (anti-) cycling culture. Cycle helmets say we cannot cycle without the right precautions, the right equipment, the right infrastructure, the right training. Cycle helmets say there must be more to cycling than a person, two wheels and the surface of the Earth. Cycle helmets say that cycling is more dangerous than not cycling. Let’s ban them now before it’s too late. Let’s lock up all the people who buy them, who sell them, who use them. Let’s drag them off to jail in handcuffs, in tears.

Copenhagen and just about everywhere in Holland have worked hard to become bike paradises. I think you probably can bike safely without a helmet in those places. Stylish European cyclists (as Copenhagen Cycle Chic will tell you ad nauseum) hardly ever work up a sweat. They're ambling along at 8 mph. However, even if there were no cars at all, in a city with hills I really think you're better off with a helmet. It's not hard to go 15-25 mph if you're going down a hill. With Seattle's monster hills it's hard not to go that fast. If you go off your bike at 8 mph you're probably falling over sideways, maybe bumping your knee on the frame and looking silly. At 15-25 mph you're going headfirst over the handlebars. In Seattle unless you're just riding your bike from one end of 15th Ave E to the other you need a helmet.

View Larger Map

Update: the antihelmet activists tell me that helmets don't work at speeds over 12 mph. So I guess you should never ride down hills, helmets or not. So no bikes in Seattle. Oh well!

Name that country

2009-08-21T09:05:00.000-07:00

Why is health care so bad?

The reasons are a mix of (1) a lack of public support for a strong publicly-provided health care system (such a lack of support is often the case in highly unequal societies where the middle class prefer to have recourse to the private sector rather that subsidizing a publicly-provided system) and, to a lesser extent (2) the presence of strong private lobbies whose personal interests lies in a weak public health system.

Answer.

Burgerville: Bikes now welcome in all drive-thrus

2009-08-14T16:50:00.000-07:00

Burgerville: Bikes now welcome in all drive-thrus: "Burgerville: Bikes now welcome in all drive-thrus"

The 39 location Burgerville chain announced today that people on bicycles are now allowed to order and pick up food through the drive-thru (which they now also refer to as a “cycle-thru”!). The company — whose major marketing hook is its earth-friendly practices — is billing this as their “latest sustainability innovation”.

Portland continues to impress.

Is Ezra Klein turning into the William Saletan of food?

2009-08-12T10:09:00.001-07:00

Is Ezra Klein turning into the William Saletan of food? No, that's crazy talk, but he has had two bad posts in two days. Yesterday it was on the recent organic vs non-organic food report:

Philpott has a couple of problems with this. He notes that the Organic Center -- an outlet funded by organic food companies -- has published studies coming to a different result. He also notes that they published a critique of the British survey. Among their criticisms was that "the [British] team did not include total antioxidant capacity among the nutrients studied," which makes me pretty suspicious, given the wealth of studies showing that antioxidants do not appear to reduce the risk of cancer or heart disease or anything else.

Obviously, neither Philpott nor I are epidemiologists. We're not nutritional scientists. I won't pretend to be able to fully evaluate the worth of competing studies on these matters. Philpott also makes a circumstantial argument about nitrates that is plausible, but hasn't been studied. I'm skeptical, as a lot of these connections fall apart when studied. But you should check it out for yourself and decide.

That first antioxidant study EK linked to was about supplements. Supplements aren't food. The FSA didn't find that organic and non-organic were exactly the same, they just decided that organic wasn't significantly better. That depends on your definition of significant. They reported the organics on average had more of the following nutrients:

Protein 12.7%
Beta-carotene 53.6%
Flavonoids 38.4%
Copper 8.3%
Magnesium 7.1%
Phosphorous 6%
Potassium 2.5%
Sodium 8.7%
Sulphur 10.5%
Zinc 11.3%
Phenolic compounds 13.2%

That looks better to me! This sounds like one of those deals where the government agency can present all the facts but is too scared to draw the difficult conclusions, like how the FDA is afraid to tell you to lay off the meat and dairy and eat more veggies. But the big picture here is that reducing our view of food to a handful of macronutrients and micronutrients, what Michael Pollan and others call nutritionism, might not be the right way to think about our health and what to eat. The FSA report also sets aside pesticides and phytochemicals, which again aren't absolutely 100% proved to be relevant to how to eat, but considering that none of these issues even existed 100 years ago the burden of proof has got to be on the non-organics.

Today's not-so-great post is on heirlooms. Ezra and the writer he linked don't mention that the great thing about heirloom varieties is that they predate our modern varieties that have been bred for high yield/high response to synthetic nitrogen fertilizer. Modern varieties have more carbs and less of everything else that probably are what makes veggies good for you. This is called the dilution effect. From "Declining Fruit and Vegetable Nutrient
Composition: What Is the Evidence?:

Recent studies of historical nutrient content data for fruits and vegetables spanning 50 to 70 years show apparent median declines of 5% to 40% or more in minerals, vitamins, and protein in groups of foods, especially in vegetables. ...

In fruits, vegetables, and grains, usually 80% to 90% of the dry weight yield is carbohydrate. Thus, when breeders select for high yield, they are, in effect, selecting mostly for high carbohydrate with no assurance that dozens of other nutrients and thousands of phytochemicals will all increase in proportion to yield. Thus, genetic dilution effects seem unsurprising.

Contested Exchange

2009-08-11T23:24:00.000-07:00

Mike Konczal asks:

What happens if poor credit is no longer a negotiation strategy between a creditor and a lender, but instead a more general form of social control?

Bowles and Gintis have a generalized approach they call “contested exchange” that works like the labor discipline deal. The basic idea is to introduce the concept of power into economic exchange. The power comes from one side’s power to stop trading (contingent renewal). You only get that power by overpaying (enforcement rent). You need that power to enforce contracts when enforcement isn’t costless (and it rarely is). That also means markets don’t clear (take that, Walras). One nice feature of the contested exchange approach is that if you dial down the enforcement costs to zero you get the regular general equilibrium model back. Anyway, the model applies all kinds of contracts: laborer/employer, borrower/lender, consumer/producer, etc. And to come back around, the ubiquitous power dynamics across all markets in shapes the preferences and norms of individuals and society.

They’ve written it up in a dozen different places. This isn’t the best version, but it’s free: The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy

As for applying that to the original question, beats me. I’m not that smart. I think I'm in the ballpark though.

Altruistic punishment in action

2009-08-10T13:02:00.000-07:00

Elderly man in Lanzhou vandalizes 30 cars that run through red lights

“You look - the 6 people who died on zebra crossings in Lanzhou in the past half year didn’t make major news. Yet when I smash cars, it becomes huge news. Is this because the lives of those six people are not as significant as me smashing cars?”

Real return on stocks

2009-08-08T17:39:00.000-07:00

What's the real return on stocks? What, don't you know? Don't you think it's important to know? I mean, what are you putting all that cash in your 401k for?

6% if you're lucky, assuming the past is like the future. Nobody really knows.

Good luck!

Wealth-Consumption Ratio

2009-08-04T12:32:00.000-07:00

Could this be true? From "The Wealth-Consumption Ratio":

We ﬁnd that the average household’s wealth portfolio is more like a long-maturity real bond than like equity, for two reasons. First, the total wealth portfolio earns a low risk premium of around 2.2% per year, compared to a much higher equity risk premium of 6.9%. As a result, the wealth-consumption ratio is much higher, 87 on average, than the price-dividend ratio on equity, 27 on average. Second, the wealth-consumption (wc) ratio is less volatile than the price-dividend ratio: its standard deviation is 17% versus 27%. The return on total wealth has a volatility that is 9.8% per year, compared to 16.7% for equity returns. ... We ﬁnd that most of the variation in future total wealth returns is variation in future risk-free rates, and not variation in future excess returns. In contrast, the price-dividend ratio on equity mostly predicts future excess equity returns. ...

The low consumption risk premium and the associated high wealth-consumption ratio imply that US households have more wealth than one might think. Our estimates imply that the average household had $3 million of total wealth in 2006. The dynamics of the wealth-consumption ratio are largely driven by the dynamics of real bond yields. As a result, we ﬁnd that between 1979 and 1981 when real interest rates rose, $533,000 of per capita wealth (in 2006 dollars) was destroyed. Afterwards, as real yields fell, real per capita wealth increased without interruption from $790,000 in 1981 to $3 million in 2006. We note that the timing of the 1979-81 wealth destruction did not coincide with the stock market crash of 1973-74. Likewise, total wealth was hardly aﬀected by the spectacular decline in the stock market that started in 1999.

McArdle vs the world

2009-07-31T22:56:00.000-07:00

Who has the best rejoinder to McArdle's piece on health care sort of not really?

Tom Levinson, Why Andrew Sullivan is right about Megan McArdle, but not in the way he thinks:

Seriously: McArdle writes what she wants to be true. She is wrong on all significant points in this post. The second half is, if anything, even more ludicrously miswrought than the section I’ve focused on here. She objects to public health research, in a nutshell, because it might produce findings that encourage changes in behavior. ...

This is just crazy birtherism for the gliterate crowd. ...

The proposition with which this post began was that McArdle knows nothing of economics or political economy, beyond that minimum of jargon needed to cloak her adolescent Randian delusions in the veneer of policy knowledge. In this post, her manifesto on why she opposed national health care, she demonstrates the arguing skills of a six year old (that conclusion contained within an assumption not in evidence); the reportorial effort and acuity formerly celebrated in The National Enquirer (the too-good-to-check school of journalism), and an understanding of modern biomedical research exceeded by the potted plants in Building 68 at MIT.

Ezra Klein, Megan McArdle's Case Against National Health Insurance. Sort of.

In my chat today, a reader asked me to respond to Megan McArdle's lengthy case against national health insurance. The problem is that, well, there's not a lot to specifically respond to. In 1,600 words, she doesn't muster a single link to a study or argument, nor a single number that she didn't make up (what numbers do exist come in the form of thought experiments and assumptions). Megan's argument against national health insurance boils down to a visceral hatred of the government. Which is fine. Megan is a libertarian. That's, like, her journey, man. But her attack on national health insurance seems a lot more about libertarianism than it is about national health insurance. ...

Eventually, she stops saying that wealthy whites will simply sneer at poor blacks and decides that national health insurance is one-stop before fascism. We learn, for instance, that a national health insurance program will lead to the government deciding we can't eat a second chocolate eclair. It's like she totally forgot that France existed.

But I don't believe Megan is unaware of France or Medicare. I don't believe she is incapable of understanding why people care about chronic disease or think obesity is a problem. I haven't seen any evidence that she's interested in medical innovation for its own sake or has thought hard about how to maximize it. As such, I don't really think Megan's post is an argument against national health insurance. It's not even really about national health insurance. It's about the government as it appears to a libertarian, if not to the rest of us.

Ben Domenech, How Medical Breakthroughs Happen: A Response to Megan McArdle

“McArdle clearly doesn’t understand what she’s writing about,” one former NIH colleague said today. “Where does she think Nobel prize winners in biomedical research originate, academic researchers or in Pharma? Our academic researchers run clinical trials and develop drugs. I’m not trying to talk down Pharma, which I’m a big fan of, but I don’t think anyone in the field could read what she wrote without laughing.”

Mr. Awesome, Tripping the McArdleverse:

The real issue is the effect on future lives, and future freedom. And in my opinion, they way (sic) in overwhelmingly on the side of stopping further government encroachments into health care provision.
This argument about health care is a scrapbook of other arguments — pharmaceutical regulation, research funding systems, and so on, then propped up by a flimsy assertion. She tags "This is about health care" up top, then just rambles crap she misremembers, thinks she knows, and misunderstands. Maybe she is honest, to a point. Maybe she is a sincere believer that this mishmash of broken, scrambled factoids is an actual train of thought, and that this train actually does connect at the health care station. Maybe she's not, and she's trying to trick people, giggling that anyone in the world would buy this, literally or figuratively. This is the classic case of giving a doofus the undeserved credit of being a mastermind: The Mr. Bean fallacy.

My vote's for EK.

Charlie Stross on Space

2009-07-29T09:18:00.000-07:00

Discussing people who freak out when you explain why colonizing outer space is basically impossible:

I am forming another, still inchoate, hypothesis about why some people seem to respond to an enumeration of facts based on observation as if I'd told them Santa Claus was a lie, Bambi was dead, and the Baby Jesus wouldn't cry if they had a furtive hand-job.

In a nutshell: this is fairly clearly a quasi-religious belief, and people tend to respond emotionally and angrily to having their religious beliefs mocked.

More to the point, the libertarian/conservative nexus (that I didn't spend enough time taking the piss out of -- you can take my comments on the lack of cost-effectiveness of space colonization as being ironic sneering at the inconsistency of their world-view, if you like) is interesting. I note that there is no corresponding Christianist/space colonist nexus; however, fundamentalist protestantism and conservativism seem to go hand-in-glove in US politics this decade.

Working hypothesis: take Americans raised in a conservative/religious tradition. Some of them start to question elements of their world view, notably the existence of the Invisible Sky Daddy; but they subconsciously feel the need for an ideological focus that provides a long-term teleological goal to replace joining their father in heaven. Space colonization pushes all the right emotional buttons -- it's a long term abstract goal, it's open ended, it's unfalsifiable, and there's scope for gaining personal kudos by advancing the crusade, and personal emotional fulfillment in daydreaming about it. So it coexists uneasily in the minds of conservatives and libertarians who've taken a first step towards distancing themselves from their formative environment, but who feel the chill empty wind of eternity blowing down their necks when they contemplate a purposeless universe.

In other words, it's a nascent secular religion.

(It also appeals to unsocialized ass-hats who attribute their personal problems to the existence of people who are Not Like Us, and who think that distance-enforced apartheid would be a good way to cope -- but that's another matter entirely, and rather sad.)

I Can't Find My Money

2009-07-26T23:37:00.000-07:00

Felix Salmon links to Zweig citing Dimson on the lack of correlation between gdp growth and stock market returns. This is actually pretty old news. A paper from 2004, "Economic Growth and Equity Returns" (citing the same Dimson et al) shows this in an easy to read chart:

What's going on? From the conclusion:

... in a competitive economy technological change largely benefits consumers through a higher standard of living, rather than benefiting the owners of capital. And if individuals save more and invest their savings, the increased amount of capital per worker will result in higher real wage rates, which is of no benefit to the owners of shares in existing corporations. The point is that economic growth does result in a higher standard of living for consumers, but it doesn’t necessarily translate into a higher present value of dividends per share for the owners of the existing capital stock. Thus, whether future economic growth is high or low in a given country has little to do with future equity returns in that country.

That's nice for the workers, but it doesn't explain what's the matter with Belgium!

Mirowski on Hayek

2009-06-23T19:24:00.000-07:00

Hayek was a romantic writer, which is why he appeals so very much to our fin de siècle sensibilities after languishing so long amongst a small coterie of Austrian economists and conservative politicians. His entire oeuvre can be compared to a roman à clef which looks very much like Mary Shelley’s Frankenstein. There is a mad scientist, and a monster, and a “constructivist” project which is bound to fail because no one can fully encompass the unintended consequences of trespassing where angels fear to tread. It all is set in a castle somewhere in Eastern Europe, though the hero is British. The moral of the story is that there is knowledge which is intrinsically forbidden fruit; there are things which are better left unknown. The whole thing turns Gothic when we realize that there is plenty of room here for any number of sequels, all with roughly the same plot.

Economics, Science, and Knowledge: Polanyi vs. Hayek

Yahoo Pipes - New Create RSS and RSS Item Builder Modules

2009-06-10T16:12:00.000-07:00

Yahoo Pipes is coming along. Check it out if you haven't already: Pipes Blog - New Create RSS and RSS Item Builder Modules

Hayek On Urban Planning

2009-05-06T21:11:00.000-07:00

Hayek in Individualism and Economic Order:

We need only turn to the problems which arise in connection with land, particularly with regard to urban land in modern large towns, in order to realize that a conception of property which is based on the assumption that the use of a particular item of property affects only the interests of its owner breaks down. There can be no doubt that a good many, at least, of the problems with which the modern town planner is concerned are genuine problems with which governments or local authorities are bound to concern themselves. Unless we can provide some guidance in fields like this about what are legitimate or necessary government activities and what are its limits, we must not complain if our views are not taken seriously when we oppose other kinds of less justified "planning."

Epimedium x warleyense

2009-05-04T23:30:00.001-07:00

Epimedium x warleyense, originally uploaded by chrismealy.

Say's Law Definition

2009-05-03T23:22:00.000-07:00

What's the definition of Say's Law?

Supply creates its own demand

If you believe that then you think demand can never be too low and that Keynes is all wet.

Like a lot of famous one-liners in economics, it turns out Say never actually said that. So what do people say that Say said? The great economist William Baumol (who has his own law, Baumol's disease) counted Say's (at least) eight laws (later he checked his list and only found seven). One of them is closest to contemporary definitions:

Any glut in the market for a good must involve relative underproduction of some other commodity, or commodities, and the mobility of capital out of the area with excess supply and into industries whose products are insufﬁcient to meet demand will tend rapidly to eliminate the overproduction

I suppose "rapidly" is true if you're comparing markets to glaciers. But there's another problem: money. Going back as far as Mill people figured out that you could sell your goods, keep the cash, and not buy anything else. Further, Steve Keen observes that the entire point of being a capitalist isn't to consume your profits, but to accumulating more capital [pdf]. So unless you've got a barter economy, Say's Law doesn't really apply. Even then I imagine you could fill your root cellar with potatoes.

Whatever point you're trying to make it's probably best to leave Say out of it.

School of Athens

2009-05-02T17:21:00.000-07:00

James Fallows is looking for art-historical connections to this photo:

It reminded me of the main part of "The School of Athens":

It's okay, but I think there's got to be a better match.

A Proposal to Make Politics More Concrete

2009-05-01T11:38:00.000-07:00

An easy test: which major sports are these scores from?

7-3
24-17
95-83

If you're an American this is really obvious: baseball, football, and basketball. However, when it comes to the government people are completely in the dark. That’s how you get people saying we should slash foreign aid way down to a level that’s actually five times higher than it actually is.

Talk of taxes and spending being too high make no sense without numbers, but considering that 79% of Americans don't know what a trillion is, using absolute dollar numbers just makes it easier to confuse people. Besides, huge numbers are tough to work with. I know what a trillion is, but I can't divide 200 billion by 10 trillion without thinking more than I'd like. Better just to use % of GDP.

So I propose we start using a few stats with the way average sports fans use stats like RBI or ERA. A stat like federal revenue being 22% of gdp is easy to remember. "22% of GDP" isn't as punchy as batting average or OBP. It could be shortened to something like 22 %GDP or 22 pgdp or simply 22 PG. It looks dumb now but you'd get used to it. Instead of debating in deliberately vague terms like "more" or "less" taxes we could talk about 22 PG versus 20 PG. It turns out a lot of debates sound pretty small when put into real numbers.

This would especially help with historical comparisons. You often hear stuff like "the biggest tax hike in history" or "the most expensive war since WW2." Everything is going to be the biggest ever considering the growth of the economy and inflation. Using PG just cancels that out.

Most programs are less than 1%, so maybe you'd want something like basis points in finance (1/100 of a percent, or 1/10,000 of the total). Maybe call that pgp (lowercase to remind you that it's smaller than PG). As in, 1 PG = 100 pgp.

So 1 PG is:
$13 trillion / 100 = $130 billion

and 1 pgp is:
$13 trillion / 100 / 100 = $1.3 billion

For example, the defense budget is about $600 billion, so that's:
$600 billion / $13 trillion = 4.6 PG

while the Coast Guard budget is only $8 billion, so it's:
$8 billion / $13 trillion = 0.061 PG = 6.1 pgp

I'm totally serious about this. Now that people like Peter Orszag and Nate Silver are stars everybody's got to step up. It fits into 140 chars better anyway.

+"what's the matter with kansas" +"paul veyne"

2009-04-28T09:44:00.001-07:00

I'm surprised there are no hits for that.

"Socialism" is the new "liberal"

2009-02-05T15:58:00.001-08:00

Liberals stopping being afraid of being called liberal, so now the fuckers go on and on about socialism. Fine with me. Let's see how that works out for the wingnuts.

David Hembrow is the best blogger ever

2009-02-04T18:08:00.000-08:00

Look, we all know we're going to have to give up cars. It's going to happen. We'll run out oil, or we'll get serious about climate change, or maybe we'll be smart and give up the cars before we have to. If you're James Howard Kunstler it's the end of the world. But I think we can adapt, and be better off for it.

Lucky for us the Dutch and the Danes have a head start on us. And also lucky for us, David Hembrow is sharing with the English-speaking world what your average Netherlander already knows: how life on a bike is better than life sitting in traffic. It's all on his blog, A view from the cycle path. Hembrow writes against the myths and confusions about biking. He also makes terrific short films of real people, wearing normal clothes, biking just because it's the best way to get around:

Here are a few of his posts that I especially liked: Three types of safety, Anatomy of a reliable, everyday bicycle, and School buses.

In America when people talk about bikes they get deadlocked into grim positions about whether people should bike in traffic or in the sidewalk, whether they need to wear special defensive equipment, whether it's safe or not (in America, it's not), etc. Most people won't put up with that, and as a result, most cyclists in America are daring men under 35. It's hard to imagine an environment where everybody, male and female, young and old would feel safe cycling. But after reading Hembrow's blog and watching his videos, it all seems so obvious.

What Apple?

2009-01-31T10:00:00.000-08:00

What apple is best in oatmeal? My rankings:

Honeycrisp
Pinova
Pink Lady
Gala

The following are worse than nothing in oatmeal:

Matsu

Shovel-ready, from 1921

2009-01-29T19:57:00.000-08:00

Over at the RBC:

Finally, thirty-five years ago it was common parlance among economists that there should be a list of government projects fully designed and ready to go ("shovel ready" in today's terms) to aid in macroeconomic management. How fast you can spend money is not a physics constant, it's a result of policy. The Bush administration has prepared for the current recession about as effectively as it dealt with Katrina.

A few months ago while poking around on Google Books I came across an article from 1921 about a proposal for the government to keep a plans ready at all times for infrastructure projects, so when there's a downturn and high unemployment we're all set to go. The American Labor Legislation Review noted:

Plan to Combat Unemployment by Reserving Public Works

"To prepare for future cyclical periods of depression and unemployment by systems of public works," That is the stated purpose of Senate Bill No 2,749 introduced in the United States Senate November 16, 1921, by Mr. Kenyon. The bill affirms that -

"A sound economic policy requires that a larger percentage of the public works and projects of the United States be undertaken and prosecuted during a period of major industrial depression and unemployment, when labor and capital are not fully employed in private industry, that a smaller percentage of such works and projects should be undertaken and prosecuted during a period when private industry is active and competing for the same men and material with resulting business strain and over extension, and that the prosecution of such works and projects should be utilized as a stabilizing force during a period of over expansion as well as during a period of depression."

It seems to have died in committee. Now, 88 years later, a National Infrastructure Reinvestment Bank is in the works. Better late than never!

Some quotes

2009-01-04T17:07:00.000-08:00

Every once in a while I'm reminded of one of these, and since the author is all over the place, they can be a pain to track down.

People seem to be faintly drawn to the idea that there might be more political dimensions than just "left" and "right". Bullshit. Being in favour of allowing other people to take drugs, shag each other or read what they want isn't a political position; it's what we call "manners", "civilisation" or "humanity", depending on the calibre of yokel you're trying to educate. The political question of interest splits fair and square down a Left/Right axis: either you think that it is more important to provide a decent life for everyone in the world, or you think it is more important to preserve the rights of people who own property. You can hum and haw as much as you like about whether the two are necessarily incompatible, or whether the one is instrumental to the other, or what constitutes a "decent life" anyway, but when you've finished humming and hawing, I'm still gonna be asking you the question, and your answer to it will determine whether or not we're gonna have an argument.
... the single most sensible thing said in political philosophy in the twentieth century was JK Galbraith's aphorism that the quest of conservative thought throughout the ages has been "the search for a higher moral justification for selfishness". Some rightwingers are not hypocrites because they admit that their basic moral principle is "what I have, I keep". Some rightwingers are hypocrites because they pretend that "what I have, I keep" is always and everywhere the best way to express a general unparticularised love for all sentient things. Then there are the tricky cases where the rightwingers happen to be on the right side because we haven't yet discovered a better form of social organisation than private property for solving several important classes of optimisation problem. But at base, the test of someone's politics is simple; if their political aim is to advance all of humanity, they're on our side, while if they have an overriding constraint that the current owners of property must always be satisfied first, they're playing for the opposition. Hypocrisy doesn't really enter into the equation with rightwing politics; you don't (or shouldn't) get any extra points for being sincere about being selfish.
the tragedy of this is that there is, within the bloated corpus of economics, a perfectly nice slimmed-down little science struggling to get out. It’s a branch of control engineering; specifically it’s the branch of control engineering that deals with the control of recursive systems that can change their outputs in response to their local state. The trouble is that at some stage in its development, this harmless and beneficial branch of engineering got caught up in 18th and 19th century politics and philosophy and developed all manner of strange idiosyncracies (including a lot of fundamental assumptions about human psychology which clearly don’t belong there), coupled with a wildly inflated idea of its station in life.

It’s rather as if physicists believed in an actual, physical (or metaphysical) Maxwell’s Demon and furthermore thought that the Demon most likely voted Republican. If Fritjof Capra had the status of Albert Einstein, physics would be in about the shape that economics is in fact in.
Public choice theory I think it’s difficult to blame economists for - a couple of economics Nobel prizes got awarded for it, but it’s not really part of economics. It’s basically just right-wing prejudice turned into a theory - the entire intellectual content is in the initial assumption “1. We assume that all public officials are venial and self-seeking”, and thence to derive the entire right-wing worldview.

Game theory I think you have a lot more of a point with. Phil Mirowski’s book “Machine Dreams” is very good on the development of game theory. He raises the of-course-very-unserious-who-would-possibly-be-so-uncouth point that a) the key game theory concepts like Nash equilibrium describe the reasoning of a paranoid schizophrenic a lot better than that of a normal person and b) a surprisingly high proportion of the key figures in the development of game theory suffered from mental illnesses, and Nash himself was of course an actual paranoid schizophrenic.

Game theory is actually very good in predicting the outcomes of things like telecom spectrum auctions, which of course really means that it is a good way of predicting the behaviour of game theorists employed to solve game theory problems.

In the spring of the following year he fulminated against hats

2008-12-07T20:24:00.000-08:00

The Dictionary of National Biography from the earliest times to 1900 By Leslie Stephen, Sidney Lee, Robert Blake, Christine Stephanie Nicholls

Mmmm, Ambergris

2008-12-02T21:01:00.000-08:00

A General View of the Writings of Linnæus, By Richard Pulteney, Carl Troilius, William George Maton, Carl von Linné, Joseph Mawman

Mara Liasson

2008-12-02T17:37:00.000-08:00

What is the deal with Mara Liasson? She's on NPR and FOX News. She's irritating on both, but I can't tell you why. I can't put my finger on it.

How to Buy Wine

2008-11-08T18:43:00.000-08:00

How to buy wine, from Alexander McCall Smith's Corduroy Mansions:

The late-afternoon customers sometimes sought his advice not only on what wine to choose but as to whether or not to take a bottle to their hosts at all. The issue was a delicate one, and William had toyed with the idea of printing a small leaflet that would explain the etiquette of such matters – at least as he understood it.

"The most important thing," he would say, "is to do whatever you do with good grace. If you take a bottle with you, never present it apologetically. There is nothing worse than people who hand over a bottle of wine to their hosts with a look bordering on resentment – as if they were paying the taxman his dues.

"But, of course," he would go on, "the real issue is whether you have to take a bottle of wine with you or not. There is no strict ruling on this matter – as indeed on any issue of etiquette; what counts is attitude. The most terrible apparent breach of etiquette can be carried off by one who means well and is charming about it. But for most of us, charm will not suffice – in that we don’t have enough of it – and we therefore need rules. Here are some: "If you are a student and you are invited to a meal or a party at another student’s flat, there is absolutely no doubt that you must take a bottle of wine with you. If you do not do so, then the host is perfectly within his or her rights not to let you in. This is an absolute rule and cannot be avoided by saying that your friend, who is coming later, will be bringing a bottle for you. Most hosts have heard that line before and will not believe you.

"Students should not bring good quality wine with them as to do so will be seen as elitist and arrogant, and will imply that you do not approve of whatever your host will provide. This rule does not apply if you can explain that you took the wine in question from your parents’ stocks while they were away. That is perfectly acceptable in today’s dishonest climate.

"In my own day, the correct thing for students to take to a party was a cheap Spanish wine or, if flush with funds, Mateus Rosé, distinguished by its squat oval bottle, which can later be turned into a lamp stand or candleholder. This wine can occasionally be found in the back of parental cupboards and may be circulated at dinner parties without ever being drunk, in the same way as boxes of out-of-date After Eights do the rounds, like bankers’ negotiable instruments never presented for payment.

"If you are no longer a student, you should nevertheless continue to take a bottle of wine when invited for dinner unless the invitation comes from people who are much older than you. As far as friends of equal age are concerned, you should take a bottle of wine with you until you have all celebrated your fortieth birthday. After that, you must assume that your hosts will be in a position to entertain you without assistance.

"It is never wrong to take a bottle of champagne, even to a host who is well off. If the host is not on the breadline, this should be in a presentation case; it should never be taken chilled, as that implies that his own supplies of champagne will be exhausted and recourse may need to be made to the bottle you brought with you.

"In no circumstances is it polite to take away with you the bottle that you brought if it has not been consumed at the table. It is also impolite to say at the end of a meal, ‘I hope that you enjoy the wine we brought.’ That is not a friendly comment, and will be interpreted accordingly. Nor, as a host, is it polite to examine the label of a bottle brought by your guests. If you do, always misread the vintage, saying, for example, of a 2007 Bordeaux, ‘Ah, 2001. What a treat.’"

McCain Attacks Michelle Obama

2008-10-10T14:19:00.000-07:00

TPM Election Central | Talking Points Memo | McCain Campaign Now Attacks Michelle Obama Over Ayers: "The McCain campaign is now broadening their attack on Obama's past association with William Ayers to include Michelle Obama -- even though McCain has repeatedly said spouses should be off limits during the campaign.

The attack? Bernardine Dohrn, Ayers' wife and fellow former Weatherman, went to work in 1984 for the major Chicago-based national law firm of Sidley & Austin, and three years later, Michelle joined the mega-firm as well.

That's the entire attack. We wish we were joking. But we aren't."

I don't get it. Does McCain think this is going to help him get elected?

CEO pay matters

2008-09-21T11:28:00.000-07:00

There's a link between executive compensation and the financial system blowing up. CEO pay is structured so that if the company does well, they become insanely rich, and if the company blows up, they walk away with whatever money they made. So you'd think their incentive would be to run the company well and get rich. But running a compnay well is difficult, and profits aren't easy to come by, because you're also competing with a bunch of other guys who are trying to get rich.

So instead of doing the hard thing -- running the company well -- you can take lots of risks, get lucky for a couple of years, cash out $100 million in appreciated stock options, and walk away when the company blows up. A little creative accounting (Enron) or playing dumb and mispricing your assets (Wall St) makes this even easier. And if everybody else on Wall St. is doing it, which they were, you'd be stupid not to. That's exactly what's happened. That's why every firm on Wall St. seems so stupid. But if you were the CEO, you weren't being stupid at all. You got rich.

Brad DeLong had a post about this back in 2002: Options Make Executives Long Volatility

If shareholders and boards had any sense (and they don't), they would recognize this, and hire people who were idealistic about their company's mission and deliberately underpay them. You can find boring, competent, sober people who will settle for only $1 million/year. You might also not want to have your CEO based in NYC, where they'll feel poor if all they can only afford is a $5,000,000 apartment (boohoo).

Richard Cohen joins the reality-based community

2008-09-15T21:44:00.000-07:00

Richard Cohen, September 18, 2007: "After Petraeus Is Slimed, Spineless Silence"

Whatever the case, using "betray" -- a word associated with treason -- recalls the ugly McCarthy era, when for too many Republicans dissent corresponded with disloyalty. MoveOn.org and the late senator from Wisconsin share a certain fondness for the low blow.

Richard Cohen, September 17, 2008: "The Ugly New McCain"

McCain has soiled all that. His opportunistic and irresponsible choice of Sarah Palin as his political heir -- the person in whose hands he would leave the country -- is a form of personal treason, a betrayal of all he once stood for. Palin, no matter what her other attributes, is shockingly unprepared to become president. McCain knows that. He means to win, which is all right; he means to win at all costs, which is not.

Fancy diving

2008-08-29T12:47:00.000-07:00

Mark Schmitt

2008-08-28T20:22:00.000-07:00

TAPPED Archive | The American Prospect: "But there's another lesson in George W. Bush's 2004 victory over Kerry by demolishing Kerry's personal reputation: It left Kerry's agenda untouched. As Bush discovered from the day after his 2005 inauguration, he had no mandate for conservative policies such as Social Security privatization because he had not run on them.

But if it succeeds, it will have the effect of giving the next president exactly what George W. Bush didn't have: A mandate. The voters will have rejected not just McCain, but the entire economic and foreign policy agenda of conservatism. And that's as important as winning the election, perhaps more important. (If McCain picks Mitt Romney, who is basically an automaton with the Republican platform loaded into him in Cobol, the campaign-against-conservatism will be even more likely to be effective.)"

I love you America

2008-08-28T20:12:00.000-07:00

Don't break my heart again. At least not this year.

Google LatLong: More streets in more places

2008-08-04T15:51:00.000-07:00

Google LatLong: More streets in more places

Still no Seattle. Come on Google! Seattle!

Hullabaloo

2008-07-22T18:55:00.000-07:00

Hullabaloo:

This is a clear choice that the American people have. I had the courage and the judgment to say I would rather lose a political campaign than lose a war. It seems to me that Obama would rather lose a war in order to win a political campaign.

Whatever you do, don't impugn this man's character. He did something worthy 40 years ago which allows him to say any nasty thing he pleases and then lead the entire political establishment in a group whine if anyone calls him on it.

And let's hear no more about how modest the maverick is. When's the last time you heard a candidate, much less a certified, unassailable hero, bragging about how courageous he is?"

Insurance Company Rules

2008-07-22T12:16:00.000-07:00

Norman Thomas

2008-07-21T22:36:00.001-07:00

I'm so into Rick Perlstein I'm going to read three biographies of Norman Thomas.

Well, not really.

When?

2008-07-09T12:06:00.000-07:00

Nice touch with the music. I've never heard something that was sinister, halting, and in 6/8 time before.

Hendrik Hertzberg on McCain

2008-07-06T17:02:00.000-07:00

Hendrik Hertzberg: Online Only: The New Yorker:

McCain wants to stay in Iraq until no more Americans are getting killed, no matter how long it takes and how many Americans get killed achieving that goal—that is, the goal of not getting any more Americans killed. And once that goal is achieved, we’ll stay.

Sunny bed

2008-07-04T20:51:00.001-07:00

Sunny bed, originally uploaded by chrismealy.

The gaura is just starting to bloom. The sage is now blooming in white instead of red.

I planted a tiny serviceberry (Amelanchier alnifolia). To its right (out of the picture) I planted some shrubby natives: twinberry, mock orange; red, evergreen, and mountain huckleberries. The hairy honeysuckle (Lonicera hispidula) finally found a home there too, after sitting in a pot for a year, and even propagating itself.

Streetsblog � Contented Streets: Why Copenhagen Is the World’s Happiest Capital

2008-07-03T10:09:00.000-07:00

Streetsblog - Contented Streets: Why Copenhagen Is the World’s Happiest Capital:

"'if you don't have enough nice spaces, you can see these [become] overcrowded spaces. Then you should just make more spaces.'"

Lordamighty

2008-07-01T21:28:00.000-07:00

An Expert Reveals Chinese Origins of Interrogation Techniques at Guantanamo - NYTimes.com:

"What the trainers did not say, and may not have known, was that their chart had been copied verbatim from a 1957 Air Force study of Chinese Communist techniques used during the Korean War to obtain confessions, many of them false, from American prisoners.

The recycled chart is the latest and most vivid evidence of the way Communist interrogation methods that the United States long described as torture became the basis for interrogations both by the military at the base at Guantanamo Bay, Cuba, and by the Central Intelligence Agency."

Sunny bed

2008-06-11T23:03:00.001-07:00

Sunny bed, originally uploaded by chrismealy.

What the hell?! What does Google have against Seattle?

2008-06-10T11:05:00.000-07:00

Still no Seattle street view.

What Could Clinton Say?

2008-06-07T14:37:00.000-07:00

FiveThirtyEight.com: Electoral Projections Done Right: Rehabilitation for Herself: What Could Clinton Say?:

Richard Mellon Scaife, godfather of the 'vast right-wing conspiracy,' spent hundreds of millions of dollars to attack this woman, to produce writings and videos and fund the rise of individually groomed attack pundits whose #1 task was to aim at Hillary Rodham Clinton. Richard Mellon Scaife formed an entire cottage industry around smears, lies and hatred toward this woman. It was sick, it was out of proportion, it was offensive in the extreme.

During this campaign, Hillary Rodham Clinton went to Richard Mellon Scaife's little shitburg newspaper board and made friends with him in order to slam a fellow Democrat.

I will not be able to wrap my mind around that, for the rest of my life. It's the most breathtakingly cynical moment in this campaign season.

The answer is still no

2008-06-02T18:19:00.000-07:00

When the Tom Edsall non-story about Barack Obama paying off Hillary Clinton's campaign debt came out I sent a note asking them to shoot it down. I had talked some friends into donating and hated the idea that I'd made suckers out of them. Sanity prevailed and the story died down.

Today the Obama campaign wrote back:

Dear Friend,

Thank you for contacting us about assisting other Democrats to settle their campaign debts. The competition for the Democratic nomination continues and while there has been a lot of media-driven speculation about the possibility of Senator Obama helping to retire Senator Clinton’s debt, we have not had any discussions with the Clinton campaign about debt retirement.

We value each and every contribution and work hard to spend it wisely on building this movement and getting out our message of hope and change. We thank you for your support and look forward to uniting and growing our Party as we finish the primary season and head toward November.

Thank you again for contacting us.

Sincerely,

Obama for America

So the answer is still no. I'm glad.

Barack Obama on Iraq in Rapid City, SD

2008-06-02T14:38:00.000-07:00

Obama can make the obvious sound tough.

Tom Friedman: "Suck On This"

2008-05-30T09:02:00.000-07:00

Five years later (ten FUs!) Tom Friedman is still an idiot.

How will Obama end the war on drugs?

2008-05-16T19:32:00.000-07:00

So Barack Obama's favorite tv show is The Wire. He was a community organizer in Chicago in the 1980s. And he's black. So it's a safe bet that he thinks the war on drugs is bad policy. But what is President Obama going to do about it? My guess is he's got a brilliant triple bank shot plan that will end it without anyone knowing it. Maybe it'll be some provision tied to health care reform. I don't know what he'll try but
I'm 100% sure he won't chicken out.

In Defense of Arugula

2008-05-11T09:37:00.000-07:00

So Newsweek had a moronic cover about Obama, beer, and arugula last week. Okay, it wasn't really about beer or arugula. Or Obama really. It was about the media, and how the media are all a bunch of idiots. They convinced me.

Anyway, arugula is delicious. I prefer it to spinach for salads. It's great instead of lettuce on a sandwich. In Britain they call it rocket. And it goes great with a nice beer.

The Bugle Made Me Famous

2008-03-28T18:32:00.000-07:00

Oh boy, John Oliver read my email on my favorite podcast, The Bugle (iTunes).

For the curious, the theme is called "Tide of Empire" and I think it was written by George Chase for a stock music library. According to this source it was the theme for "TV-8 Reports" on KFMB-TV Channel 8 (CBS) in San Diego, circa 1970. It's sort of available from a company called Valentino, but it's a music licensing company and, probably sanely, doesn't expect people to buy their music for listening pleasure.

Chase's music also appeared in Plan 9 from Outer Space and The Adventures of Superman.

New Malkmus

2008-03-12T20:16:00.000-07:00

I haven't liked any Pavement/Stephen Malkmus record this much since Slanted and Enchanted. Okay, maybe Crooked Rain.

All About Eve

2008-01-28T19:55:00.000-08:00

What a movie!

squywinniken

2008-01-19T16:23:00.000-08:00

Suffolk Words and Phrases: Or, An Attempt to Collect the Lingual Localisms ... By Edward Moor

"I know you didn't do this for me"

2008-01-03T20:30:00.000-08:00

Barack Obama had a great line in his victory speech in Iowa tonight: "I know you didn't do this for me."

Also: Chuck Norris's teeth are far whiter than Mike Huckabee's.

Aquilegia canadensis

2008-01-01T22:53:00.000-08:00

The Botanical Magazine, Or, Flower-garden Displayed By William Curtis

The British Flower Garden

2008-01-01T21:50:00.000-08:00

The British Flower Garden, Containing Coloured Figures and Descriptions of the Most Ornamental and Curious Hardy Flowering Plants, Including Annuals, Biennials, Perennials, and Flowering Shrubs; with Their Scientific and English Names; Best Method of Cultivation and Propagation.

Cyclamen hederifolium

2007-12-18T14:05:00.001-08:00

Cyclamen hederifolium?, originally uploaded by chrismealy.

I found it in the woods growing wild. I'm guessing my mom and tossed an old pot out and it settled in on its out.

Flickr

2007-12-18T14:03:00.001-08:00

This is a test post from , a fancy photo sharing thing.

"The End of Kings: A History of Republics and Republicans"

2007-09-20T22:43:00.000-07:00

The End of Kings: A History of Republics and Republicans by William R. Everdell.

I've been trying to remember what led me to read this. After spending half an hour messing around with Google I think it's because Everdell reviewed A Struggle for Power: The American Revolution, which I read earlier this summer, so maybe that's how I made the connection. But I've also been also working my way to reading Bounding Power: Republican Security Theory from the Polis to the Global Village because I heard a conversation between its author Daniel Deudney and Michael Lind, and it cites the Everdell book. It's strange to not know why I reserved a book from the library and read it, but there you have it.

Anyway, what did I learn from The End of Kings? Where to start! Plenty! Before if I thought of it all, I'd trace democracy from Athens, maybe Rome, to the Magna Carta, and then the Declaration of Independence. But there have been plenty of Republics before America's: Switzerland, Florence and other Italian cities, John Calvin's Geneva, the United Provinces of the Dutch republic, Cromwell's Commonwealth, and a few others. But more than that there's been a tradition of republican thinking since antiquity. America's founders had all read Plutarch's Lives and Machiavelli's Discourses on Livy and a whole bunch of other books nobody hears about anymore.

"Legacy of Ashes: The History of the CIA"

2007-09-19T12:00:00.000-07:00

Legacy of Ashes: The History of the CIA by Tim Weiner

Have you ever worked for a big horrible bureaucratic company? Maybe a big company that couldn't do anything right and was slowly going out of business? That's the CIA. If it wasn't for the cold war and 9/11 it would have gone out of business. And business is that? Toppling governments. Off the top of my head, in these countries: Japan, France, Italy, South Korea, Iran, Guatemala, Cuba, South Vietnam, Nicaragua, Congo, Chile ... and that's without looking. There are others. Not that they ever had any idea that their new government would be better. CIA has been blundering about from the start, half the time driving America's foreign policy and forcing our elected government to deal with the mess. So presidents have come and gone, and aside from George HW Bush every one of them from Truman on has alternated between trusting the CIA too much and ignoring them completely.

The book is a hoot, and since I don't really know much about the period from 1945 to 1988 it sure filled in a lot of the gaps.

The Cake of Custom

2007-09-06T11:49:00.000-07:00

What you find messing around with Google Books.

Physics and Politics, Or, Thoughts on the Application of the Principles of ... By Walter Bagehot:

Hello, World!

2006-09-01T16:01:00.000-07:00