Marginal Utility

by Tom Bozzo

The unpleasantness that's been limiting my blogging output (better known as "paid work") is soon to get back to normal, and what could be better than the end of an extended period of light blogging as an excuse to visit some subjects that you didn't read about here?

Conditions permitting, look for a drive-by retrospective on:

• The Stern Review on global climate change (where many of the worst habits of the economics profession have been on display)!
• Attacks of the killer Blue-Ribbon Commissions (SOX rollback edition)!
• Streetcars (or, Portland, Oregon is not North Haverbrook)!
• The failed market model for computer network security!
• The Fed's softness, and not-so-softness, on inflation!
• 'New Urbanism' vs. the Old Suburbanism!
• The Ongoing Joys of Air Travel!

Happy New Year!

by Ken Houghton

(following should be read in your best Deanna Troi voice, with a hat tip to the L&T Ms. McEwan.)

The Iraqi's long, national nightmare is over. Sure, it ended at 6 'N in the Mornin', and at the beginning of a LONG weekend so that there wouldn't be much U.S. press coverage. Sure, there is some sniveling about fair trials, but the Washington Post says only the verdict matters.

And, yes, the timing of the original verdict didn't have its intended result (I sense realism, not paranoia, in the phrase "the verdict in his trial gets timed to coincide with the US elections"). But that is all in the past.

Fortunately for the world, the Reagan and two Bush Administrations, and especially Donald Rumsfeld, the Sovereign nation of Iraq, acting in a completely independent way (independent of Libya and Yemen, at least), has made an independent, completely honest decision, and has carried through on its action without any U.S. activities or encouragement.

Only a cad could suggest that closure has not been achieved.

And now, since all is calm and peaceful now and forever in Iraq, where the independent, sovereign nation has complete control of all matters, I sense that closure has been completed for Iraqis. A Justice System with Washington Post approval is in place. And Chris Matthews suggestion for leader of Iraq is no more.

War is over. Time for Johnny to come marching home.

by Anonymous

In my never-ending effort to decrease the level of intellectual discourse on Tom's blog, here's a snippet from a CNN report on the best/worst of 2006.

"When asked to choose from a list of names, nearly three in 10 adults, or 29 percent, bestowed the honor of worst celebrity of the year on Spears.

The 25-year-old pop singer and mother of two young sons recently filed for divorce from Kevin Federline, her husband of two years. She then followed with highly publicized nights out with party girls Hilton and Lindsay Lohan, including photographic evidence of Spears wearing no underpants, which raised questions about her fitness as a parent."

Now, I don't know about you, but I don't see that there's a strong negative effect of, or even correlation between, wearing underpants and being fit to be a parent. (If you take the evolutionary view of fitness, if anything it's a positive correlation.)

In fact, in the greater scheme of things, I'd probably choose an underpants-less celebrity who leaves the kids home with a nanny while she goes out partying over a celebrity who bounces manically on couches and espouses the evils of antidepressants, or one who drives while three sheets to the wind and spouts off racial slurs.

Yet despite the fact that both Tom Cruise and Mel Gibson are fathers, in Tom Cruise's case of chilluns pretty close in age to Britney's and in Mel Gibson's case 7 and possibly 8 times over, I haven't seen much sign that anyone is questioning their fitness as parents based on their behavior. (Or at least that the mainstream media has picked up on the idea and deemed it worth repeating.)

Double standard? You make the call.

by Ken Houghton

Currently, the celebration in Washington, D.C. is scheduled for Tuesday, January 2nd.

However, that cannot be a national holiday without violating the one remaining tenet of Glass-Steagall: banks may not be closed for four consecutive calendar days.

UPDATE: The e-mail we got says that the Fed will be closed, but the regional banks will be open.

Instinctively, I would call this a recipe for disaster. No discount window, strange settlement practices (we got the e-mail after noon today, which may mean spot settlement was Tuesday but became Wednesday), even stranger Repo and derivative contract activities.

I couldn't work for this administration; I don't have the imagination to be able to create such a potential cf without worrying about it.

by Ken Houghton

NOTE: Since I only listed charities to which I give or have given below, I'm noting this one separately, with no other implication(s) intended.

The Studio 60 showing referenced below was (on further review) a benefit for Tipitina's Foundation, another worthy New Orleans charity that was working for music education long before the rebuilding effort was needed.

One way or another, it's a better use than your tax dollars have received.

by Ken Houghton

Los Angeles Times: 10 myths -- and 10 truths -- about atheism
Teaser:

SEVERAL POLLS indicate that the term "atheism" has acquired such an extraordinary stigma in the United States that being an atheist is now a perfect impediment to a career in politics (in a way that being black, Muslim or homosexual is not). According to a recent Newsweek poll, only 37% of Americans would vote for an otherwise qualified atheist for president.

Atheists are often imagined to be intolerant, immoral, depressed, blind to the beauty of nature and dogmatically closed to evidence of the supernatural.

Even John Locke, one of the great patriarchs of the Enlightenment, believed that atheism was "not at all to be tolerated" because, he said, "promises, covenants and oaths, which are the bonds of human societies, can have no hold upon an atheist."

Yes, that's Locke as in "the Declaration of Independence is almost pure Locke."

and the teaser from the comment at Bitch:

When scientists don't know something — like why the universe came into being or how the first self-replicating molecules formed — they admit it. Pretending to know things one doesn't know is a profound liability in science. And yet it is the life-blood of faith-based religion. One of the monumental ironies of religious discourse can be found in the frequency with which people of faith praise themselves for their humility, while claiming to know facts about cosmology, chemistry and biology that no scientist knows. When considering questions about the nature of the cosmos and our place within it, atheists tend to draw their opinions from science. This isn't arrogance; it is intellectual honesty.

by Ken Houghton

We're not poor by any stretch, but the last month especially has reminded us how much friends and neighbors help. (I want also to note the help we've received from members of Mothers & More, who provided multiple meals and support. A great support organization for women managing a career and a family.)

So, in honor of having made it to the 25th of December, a selection of charities to celebrate that Orthodox kid:

we can spread a smile of joy:

FINCA International

Throw your arms around the world/ at Xmastime.

UNICEF

But say a prayer

Vietnam Veterans of America

Pray for the other ones

The American Friends Services Committee

...There's a world outside you window

Community Foodbank of New Jersey (or pick your own local equivalent)

And it's a world of dread and fear

Heifer International

Where the only water flowing

WaterAid (US Site)

is the bitter sting of tears

American University of Beirut

And the Christmas bells that ring there/ are the clanging chimes of doom

Catholic Relief Services

Well tonight Thank G-d it's them/ instead of you!

City Harvest or your local equivalent

Feed the world

Oxfam America (or Oxfam International)

And, for Studio 60 fans (see snark at 10:56), via Bitch (who also has other suggestions at the link):

New Orleans Musicians Hurricane Relief Fund - ReNew Orleans - Do You Know What It Means?

by Ken Houghton

For those who wonder why my personal blog now has Eat Our Brains at the top of the Another Community List, Steve Gould explains the Goode news.

With a title to die for, no less.

Happy Christmas, indeed.

by Ken Houghton

I have been, as one might guess, dealing with multiple issues for the past several weeks: work (budget season), household duties, and school. (The latter suffered severely [see here and here], and it is only now that the former two resemble normalcy.)

Our Holiday Cards say "Happy New Year"; when I asked why, Shira noted that they won't be mailed until tomorrow at best.

So it is that now, as the Eighth and Final Day of Chanukkah approaches, that I give the one present I planned to deliver before this post went to his archives page. Max said:

My question about real business cycles goes to something basic. The idea in question is that "shocks" that cannot be anticipated push the employment level up, down and around. There isn't much role for government. It looks to me that these shocks are only recognized ex post as a deviation from trend. Then they are redefined as trend. Everything that transpires is preordained, although no RBC genius can ordain it. All they can do is rationalize after the fact. They can only predict the past. Color me unimpressed. Perhaps I am misinformed.

It is left to me to clear up this misinformation. Accordingly, a touch of economics history.

Lo, in the dark ages (1958, back when U.S. productivity was still high, before Viet Nam, oil shocks, and Reagan budgeting), there was an economist named Phillips who created the Phillips Curve, a theoretical trade off between inflation and unemployment that seemed to track with the U.K. economy. And in the early 1960s, the Phillips Curve also tracked well with the U.S. economy.

Edmund Phelps (along with Dr. Miltie) pointed out that this made no sense—or, more accurately, that the tracking must depend on the expectations of inflation matching the reality. (I know it seems mythical to some, but for a very long time, there was low, steady inflation in the United States without a major fooforah being made about its "Maestro.")

Emboldened by this success, Phelps went on to argue that there is a Real Business Cycle, in which people anticipate what will happen in the economy. But there is imperfect information, so sometimes, well, they guess WRONG. They overproduce, and they have to balance this by later underproducing. This is a "real business cycle" (RBC); as the result of imperfect information, businesses overproduce and then underproduce, the latter causing what we mortals call A Recession.

The cool thing about the phrase "imperfect information" is that it explains why a range of things are not going to help. In the case of RBC theory, this is the claim that monetary policy cannot prevent or shorten a recession.

Note, then, the two things Phelps has said:

1. With regard to the Phillips Curve, the "error" is that anticipation matched expectations (pi = , as it were), leaving a zero (0) term that Phillips neglected.
   
2. With respect to RBC
   
   1. an unanticipated change by the Fed will have no effect and
      
   2. doing nothing—which would be unexpected in the face of a slowdown—would not be unexpected either

To lesser mortals, such as Max, this may seem an internal contradiction. Surely, given Phelps's analysis of the Phillips Curve, one would expect that he would have a course of action to propose, some unexpected piece of shock and awe.

But to do so would be to forget the context. The reference above to isn't an idle one, as even RBC proponents acknowledge that is a factor in the real demand for money, which leads to the LM curve.

The level of output (and therefore employment) in the United States is therefore determined, per Macroeconomic Theory, as the intersection of the IS (Investment/Savings) and LM (Money Demand [L] / Money Supply [M]) curves. All of this, again, should be review for Max.

What is missing to make all clear is the context. As Charlie Cook notes, this was the mid- and late 1960s. The presidential cri de coeur of the day was:

yearning for the fabled "one-armed economist" that President Lyndon Johnson once desired as he tired of hearing the phrases, "On the one hand ..., but on the other hand..."

RBC Theory—which excludes the money portion of the problem from being part of the solution—was purely and simply an attempt to make President Johnson happy.

I hope this helps, Max.

by Ken Houghton

Unlike option 1, this one takes some conscious effort:

1. In preparing for Macroeconomics final, do not begin review in earnest until the day of the exam
   
2. At the start of the review, look at the 2003 Final Exam (as provided by the instructor), realise it is difficult, and set it aside, hoping 2006's form will be different
   
3. Receive 2006 exam that follows the form, though (obviously) not the content, of the 2003 exam perfectly.

by Ken Houghton

I've been thinking about doing a post on Harry Potter and the Order of the Phoenix, which I am currently reading to Valerie (we finished the previous four books of the series), and which is much less whiny when read aloud than it did on first read-through. (It still pales compared to the Sixth Book, Harry Potter and the Half-Blood Prince, which replaced the second as the Best of Series, and reminded me why Teresa Nielsen-Hayden once threatened to kill me if I told her that who died in HP and the Goblet of Fire.)

Not since finding Andy Serkis's Acceptance Speech in the Special Edition DVD of The Two Towers have the instructions for finding something been so interesting:

If you go to [Joanne Katherine Rowling's] home page, click on the eraser and you will be taken to a room -- you'll see a window, a door and a mirror.

In the mirror, you'll see a hallway. Click on the farthest doorknob and look for the Christmas tree. They click on the center of the door next to the mirror and a wreath appears. Then click on the top of the mirror and you'll see a garland.

Look for a cobweb next to the door. Click on it, and it will disappear. Now, look at the chimes in the window. Click on the second chime to the right, and hold it down. The chime will turn into the key, which opens the door. Click on the wrapped gift behind the door, then click on it again and figure out the title yourself by playing a game of hangman.

Or you can just take Scholastic's word for it.

You also need the current version of Flash; the rest of us will have to take Scholastic's word for it.

by Ken Houghton

Via Morgan Locke at Eat Our Brains, this proposal that we combat Global Warming by Terraforming the Earth.

Given the success of my last science post, I'll leave it to the article to explain itself:

In [Nobel laureate Paul] Crutzen's experiment, artificially enhancing earth's reflective powers would be achieved by carrying sulfur into the stratosphere on balloons, using artillery guns to release it. In contrast to the slowly developing effects of global warming associated with man-made carbon dioxide emissions, the climatic response of the albedo enhancement method could theoretically start taking effect within six months. The reflective particles could remain in the stratosphere for up to two years.

See the discussion at Eat Our Brains for more detail.

by Tom Bozzo

So an education "reform" panel suggests comprehensively privatizing school management as one of several means of aligning results with expenditures. While the panel is, naturally, "bipartisan," the commissioners' array of corporate connections (including, in a number of cases, seemingly to the nascent education-industrial complex) gives this a distinct whiff of foreordained conclusions.

Granted, discussing this is a waste of brainspace on my part, since I assume that implementing the recommendations from this report will be about as high on Nancy Pelosi's agenda as the tax reform commission's. Still, the report would be easier to take seriously were there not significant questions as to whether privatizing school management actually is effective. This had been hotly debated in the econoblogosphere a couple years ago, and key links (MaxSpeak from the left, Marginal Revolution from the right) still work! Take that, link-rot! Another working link that is the one really worth checking out is this one, to an American Prospect piece by EPI's Lawrence Mishel.

If you don't think there's a sales job on, the commission's homepage has a hold-on-to-your-wallet blurb:

“Anyone who hopes to hold a job in the next several decades should read—if not memorize—this extraordinary report.” —Norman R. Augustine, Retired Chairman and CEO, Lockheed Martin Corporation

'Cause doesn't the spectre of defense contractor involvement just say "cost effective" and "efficient" to you?

Meanwhile, I'd suspect you could make a good drinking game out of appearances of "competitiveness" and "entrepreneurial" in the report.

Districts, they said, should relinquish control to the most highly qualified contractors, who would be rewarded for successfully running schools -- or fired if student performance languishes.

Just like Halliburton!

The schools "would be like charter schools in one crucial respect: They would be highly entrepreneurial," said Marc Tucker, vice chairman of the commission and staff director and president of the National Center on Education and the Economy.

I'm sure the private managers would be highly "entrepreneurial" at keeping property tax dollars flowing to their top line.

The real question is whether lack of "entrepreneruship" in school management is the major problem facing public schools. The other real question is, just how inefficiently are school district and individual school administrations constituted relative to the private sector alternative? And if there are privatization-related economies, how long will that survive the private-sector administrators "benchmarking" themselves against executives of comparably big firms and/or the most extravagantly compenstated elite-private-school headmasters?

Snark aside, the efficiency question strikes me as open, and whether privatization would free up resources to be directed at the classroom (or returned to taxpayers, if you're so inclined) will depend a lot on what sort of firms took over the school administrations. One possibility is that many districts will become divisions of education megacorporations, which may be able to employ higher-level administrators than most districts, but will also have the inefficiencies of having highly-paid executives, making them fly private jets, hiring lobbyists, and the like. The other is that districts effectively fragment, in which case it's hard to see how the private arrangements will be efficient once all the entrepreneurs have earned their profits. Clearly, quality may vary (positively or negatively) by either model.

(Note: I attended Catholic schools that were light on administration and which served me just fine, but which didn't pretend to provide universal service.)

by Ken Houghton

The Easiest Way

1. Take Microeconomics Final
   
2. Forget to apply the Fundamental Theorem of Calculus

by Ken Houghton

UPDATE II: And sometimes, it really doesn't.

Wearing a light blue shirt under a dark pinstripe suit, Ms. Conner acknowledged drinking alcohol while under the legal age, but said that it would be "pushing" it to say that she had a drinking problem.

"I would not say that I am an alcoholic," she said, though at times, she said, she was unable to resist drinks offered free to her.

You're not an alcoholic if you don't pay for the drinks??

I know several people who, in their high school days, were in NYC bars. (Generally, places where a musical act—a jazz band, say, or Black 47—was playing.) And I have little doubt that they did or could have had a drink or three there with, as Tom notes, little fear from either the drinker or the proprietor.

Also, since my MBA and Valerie were conceived at almost the same time, I'm sympathetic to the idea of bringing a baby into a bar, no matter what Reese Witherspoon may have read.

But there are still times when the risk just doesn't come close to the reward. And while, say, Vanessa Williams recovered (with a boost from The Mouse), it's not so certain that the current Miss USA will be so lucky:

Internet gossip Web site TMZ.com reported that pageant officials and NBC met Tuesday to discuss [Miss USA Tara] Conner's alleged bad behavior, "including her conduct at New York City bars." The Web site did not name its sources.

Miss USA is considered a role model and must act accordingly, said Lark-Marie Anton, spokeswoman for the Miss Universe Organization, which produces the Miss USA pageant. Behavior such as underage drinking is clearly prohibited, she said. [emphasis mine]

Underage drinking in public is especially prohibited—and rather too easy to catch, especially if you have an 18-year-old companion.
It may be true that no publicity is bad publicity

Meanwhile, TMZ has learned that The Donald himself could have made a decision on Conner's future weeks ago, and allowed the matter to pass with a minimum of media attention. However, according to a well-placed insider, Trump has been relishing the publicity that the Conner situation has generated for his pageant and let the fiasco continue to play out.

Of course, as of today, Ms. Conner can drink wherever she wants. She just won't have Miss USA monies with which to do it. Those pre-21 drinks are getting to be very costly.

UPDATE: Duncan weighs in, not on the side of the angels or the temperance league.

by Tom Bozzo

Ralph's World at the High Noon Saloon: TEH BESTEST!!!


(Grown-up cups with Bell's Two-Hearted Ale; sippy cups with less potent potables.)

by Tom Bozzo

This blog may not be searchable by Google for some time while I try to figure out a solution to the Anne Hathaway-Google Image search hiccup (which, per the Site Meter, has sent an astonishing amount of traffic here over the last couple of months). In the unlikely event that you're looking for something in the archives and can't find it, feel free to e-mail me and I'll try to point you to the right place.

by Tom Bozzo

by Tom Bozzo

I don't know why it caught my eye as funny only yesterday, but nevertheless I had to laugh at the idea — implanted by a back-section-of-the-W$J ad — of someone buying the Cliff's Notes version of Jack and Suzy Welch's Winning because (a) they don't have the 90 minutes to read the real thing, or more like (b) they can't intuit the Welch Winning Way of "Have a compliant board, and don't be afraid to f*** people to get ahead." (*)

In fact, befitting a site whose solution to the problem of "so many great business books, so little time" is "read less, learn more" (**), the summaries themselves start out with executive summaries. Whether any meaning can be preserved in a summary of a summary of a popular business book is left as an exercise for the reader.

And now who says our executives are overpaid?

-----------------------

(*) "...But if you literally do it, for chrissakes keep it out of your divorce proceedings lest do-gooders make you give back some of your retirement perks." (***)

(**) Given the subject matter under consideration, I have no reason not to consider this to be true.

(***) Note that the summary promises that its readers will learn "How to find a job that you will love, get a promotion and manage a work-life balance."

by Ken Houghton

Via Mark Thoma comes one of those "yes, this is obvious, and we should talk about it" articles from the FRB Boston(PDF link here).

Related to these findings on motivation and incomplete contracts, it has also been shown that when prices are mentioned, individuals apply market norms, while when prices are not mentioned (that is, when the price is effectively zero), individuals apply social norms to determine their choices and effort (Heyman and Ariely, 2004). As an illustration of this idea, Ariely, Gneezy, and Haruvy (2005) have shown that when Starburst candy is offered at a cost of 1¢ per piece, an average MIT student is likely to take about four pieces, whereas when the price is zero, more students will take some, but almost no‐one will take more than one (effectively creating a decreased demand when prices are reduced).

One of the more facile arguments against economics-as-science is that "it doesn't work that way in the real world."* But what we have here is not so much a real-world failure as a failure of the presumption of monotonicity at or near p=0.

In science, it is relatively easy to revise the model, and so it is in economics. The difference may well be that the teaching doesn't change.

To be clear, one of the studies cited by Shampan’er and Ariely was used as the first chapter (iirc) of Freakonomics—charging a nominal amount for picking up children late caused more people to be late, since they placed more value on their time than the cost of the "late fee."

It is not difficult to make clear that the standard "Econ 101" models (e.g., the minimum wage will cause people to lose jobs if everyone has the same power—that is, there is not such thing as monopsony) have underlying assumptions, and that there are multiple known areas where the assumptions may not apply.

It's probably heresy to say it here, but economics won't be a science until we start teaching it like one. And declaring that there are areas where our underlying mathematical assumptions may not hold is a lot easier for people to believe than the idea that Starburst is a Giffen Good.

by Ken Houghton

Editorial by Fred Hiatt in the Washington Post (date tbd):

The death of James Earl Carter, Jr., yesterday reminds us of his greatest accomplishment: setting the stage for the following 20 years of economic prosperity. As we noted in 2006, rulers are responsible for the time after they leave office and until their death, not when they are actually shepherding the process. To slightly edit a paragraph from then:

In the 15 years [following Carter's presidency], [the U.S. stock market] grew [more than] twice that of the regional average, although its poverty rate increased and debt levels rose.

Mr. Carter was inspired to attempt "The Volcker Experiment," which ultimately changed the goals of the Fed from managing growth to maintaining the growing inequality. It was that growth of inequality that resulting in the booming capital markets of later eras, and it is high time that those who have claimed that growing inequality leads to inefficient use of capital admit they were wrong.

by Ken Houghton

On the shuttle from Grand Central to Times Square, a tall, well-dressed gentleman with hair greyer than mine, bearing a leather carrying case.

Said case was immaculate, save for a "bumper sticker" attributed to www.boomantribune.com and suggesting "frog marching."

Curiously, I can't find the phrase on the site, nor does Cafe Press offer the sticker.

Tell me again about how the public isn't ready for investigation and/or impeachment.

by Ken Houghton

I am perfectly willing to assume the following results from parental negligence:
My daughters have bonded on a television show. Not Sesame Street or Dora the Explorer or Wonder Pets or any of that type of show. A sitcom.

Two words: Full House.

Four more words: Mary Kate and Ashley.

Now, understand: Rosalyn watches the show for "the baby." (She has a baby obsession, having been or still being one herself.) So I haven't been able to send back Season 1 Disc 1 to Netflix yet. Which means we've seen the diaper-changing scene in the first episode almost as many times now as Harry Potter and the Prisoner of Azkaban. And it holds up; brilliant piece of physical comedy.

But it meant that I was checking about the cast members. Bob Saget, star of The Aristocrats, was easily recognizable, as was Pepper Dennis's ex-husband. Somewhat less recognizable were Valeri Bure's wife and the girl who did the most impressive piece of physical comedy in the first episode.

But Dave Coulier was unknown to me.

And what do we find in his bio?

First lover of Alanis Morissette - they met at a celebrity hockey game.

Let's ignore that she's just shy of 15 years his junior.

He has said he is the person Alanis Morissette is singing about in her song "You Ought to Know".

It becomes no longer possible to sit in the same room with the children when the show is on, as one does not want to try to explain the lyrics of "You Oughta Know" to a five-year-old.

by Tom Bozzo

Heaven help me for blogging more about the sad case of Lindsay Lohan (even as I'm trying to stanch the flow of Anne Hathaway searchers directed here by a Googleborg hiccup that is for no good reason associating this blog's main page with a picture of the lovely and talented Ms. Hathaway wearing the T-shirt of a good liberal), but The Onion once again gets to the heart of the issue:

Philip Morris: 'Please Talk To Your Cooler Children About Cigarettes'

For is not one corporation's PR nightmare another's free publicity — especially when some of the latter industry's profits depend on the Lindsay Lohans of the world to reinforce, in a roundabout way, to the false sense of invincibility among more-or-less 20-year-olds of the non-celebrity variety?

Call me cynical, but Madison is the poster city for the corporatist/law-enforcement state's come hither/go away mixed message on underage drinking. On football game days, ordinary business on Regent St. is displaced in favor of parking and sales of bad (but not, at prevailing prices, cheap) beer in depressing-looking plastic-netted holding pens whose police gatekeepers I'd often like to give a good talking to. Meanwhile, there are seemingly dozens of bars in the vicinity of campus and the surrounding student neighborhoods that would promptly go out of business were they actually limited to serving the 21-and-up crowd.

So an underage drinking ticket here, a liquor license violation citation there, and it maybe looks like something is being done, as long as that something doesn't really affect the bottom line of the beer-industrial complex.

by Ken Houghton

Without Alcoholics Anonymous, I (Ken) haven't had a drink in over three months. I didn't consider this a blogworthy accomplishment—it's the longest period of my adult life, yes, but not inherently worth celebrating—until I saw this CNN piece:

Lindsay Lohan says she's been going to Alcoholics Anonymous meetings for a year, but hasn't talked about it because "it's no one's business."

So far, so good.

"I just left an AA meeting," the 20-year-old actress tells People magazine in a story posted Tuesday on its Web site. [emphasis mine]

Hmmm. Anyone else noticing a problem here for the Disney-star-as-role-model machine?

But anyway, a year of AA should be doing wonders for her, no?

"I haven't had a drink in seven days. Or anything," she says.

Okay, so she's been going to AA for a year and she hasn't had a drink "or anything" in a week. They should make her their poster child, perhaps.

"I'm not even legal to, so why would I? I don't drink when I go to clubs. I drink with my friends at home, but there's no need to.

At least not for the last week. But it's nice to see that she points out that her drinking has been, among other deleterious things, illegal.

I feel better not drinking. It's more fun. I have Red Bull."

Well, I see the "Bull" part.

I wish Ms. Lohan all the best in her endeavors to stop drinking "or anything." But I can't say the piece speaks well of her, or inspires me to believe in Alcoholics Anonymous.

And if I can't be positive about it, what about the people who need to stop?

by Ken Houghton

The notable thing about the opening of this New York Times article on Global Warning, "The Cost of an Overheated Planet," is that the opening looks very familiar:

The iconic culprit in global warming is the coal-fired power plant. It burns the dirtiest, most carbon-laden of fuels, and its smokestacks belch millions of tons of carbon dioxide, the main global warming gas.

So it is something of a surprise that James E. Rogers, chief executive of Duke Energy, a coal-burning utility in the Midwest and the Southeast, has emerged as an unexpected advocate of federal regulation that would for the first time impose a cost for emitting carbon dioxide. But he has his reasons.

“Climate change is real, and we clearly believe we are on a route to mandatory controls on carbon dioxide,” Mr. Rogers said. “And we need to start now because the longer we wait, the more difficult and expensive this is going to be.”

Yes, the Energy Executive With a (money-run) Conscience who wants to do something now, before the costs are too high.

But we've seen Mr. Rogers's Neighborhood before, when he ran Cinergy, and Fortune carried his water in 2002 with "Stop Me Before I Pollute Again":

Jim Rogers is a 54-year-old Kentuckian with a friendly grin, a slow drawl, and a quirky way of introducing himself. It goes something like this: Hi, I'm Jim Rogers. I'm the CEO of Cinergy, an electric and gas supplier. I burn 30 million tons of coal a year, and I'm responsible for 1% of the world's man-made carbon dioxide. Now what was it you wanted to talk about?

Rogers has always been a maverick. He's been reaching out to green groups for more than a decade. Since 1998 he has used his position at the Edison Electric Institute, a power-company trade association, to argue that his fellow CEOs should begin talking about the once taboo subject of CO2. And--in a move that burns up many within his industry--he favors compromise with environmentalists on legislation that would require power companies to spend billions of dollars to sharply reduce emissions of greenhouse gases and pollutants.

There are two things that have happened in the interim: Duke Energy acquired Cinergy (now Duke Energy Ohio), and the Republican Congress has done nothing that Mr. Rogers asked for, even after their base got involved.

by Tom Bozzo

While I was in D.C. last week, I discussed a not-uncommon financing problem (use a standard auto loan or home equity credit to buy a car, the HELOC rate being a bit higher) with a friend of mine from grad school who works for Big Consulting Firm. The decision hinged on the tax treatment of the interest income; the combination of high (but not so high) income, absurdly expensive house in a close-in suburb, and two very cute and sweet young dependents put him in what was described as "AMT hell." As it turns out, this makes the financing decision in favor of the auto loan, since the interest on home-equity credit is not deductible when used for purposes other than home improvement.

When I got back, I popped some provisional 2006 tax data into a trusty spreadsheet to determine if we were going to enter the first circle of AMT hell ourselves — we've just missed it in recent years, but the crosshairs of the hidden Republican policy of soaking the not-quite-rich are squarely on us. It turns out that we will miss the opportunity to pay AMT again (yay!), but only because the AMT exemption amount was increased as part of the current stopgap fix to keep elements of the upper-middle-class pocketbook-vote from offering Republicans the cigarettes as anti-war and anti-stupidity voters line them up against the metaphorical wall.

One of the problems future Congresses will face is that the successive stopgap fixes to the AMT will cost progressively more in lost revenue, as its bracket-creep flaw was used as a feature in the design of the Bush tax "cuts" to make it look like they were blowing a smaller hole in the federal budget. So, as has been widely reported, AMT will gradually overtake the ordinary income tax system for the upper-middle and even middle classes.

The government needs the money to keep late Boomers and early Busters from eating cat food in the middle of the century, among many other things, and assuming Republicans aren't eager to raise the money from a simpler and fairer ordinary income tax, outright repeal of the AMT is not in the cards.

The question is, how to fix the AMT's major pathologies? Here are my suggestions:

1. The obvious one, index the AMT's "brackets" for inflation. This will, itself, go most of the way to arresting the problem of the AMT sneaking up on lower-upper-middle class and eventually middle-class taxpayers without stopgap interventions by Congress. This will eliminate a good bit of the AMT revenue stream, so:
2. Lower the AMT's exemption back to the $50,000 or so (for a family) that would prevail without the temporary fixes (it's $62,550 for 2006). To mitigate the effects on families who are on the bubble now:
3. Incorporate personal exemptions into the AMT. This would make the exemption change a wash for a family of four, and eliminate the AMT penalty for large families of modest means.
4. Currently, mortgage interest is AMT-deductible, while state and local taxes are not. Now, many economists will tell you that the tax subsidy of mortgage interest is unnecessary, while a common political justification for tax breaks that happen to benefit the very rich is that claimed double taxation is manifestly unfair. And, unlike some forms of capital income taxation, the AMT treatment of local taxes is manifestly double taxation. So the Tom Solution would reverse matters and allow AMT deductions of local taxes but not of mortgage interest. This, sneakily, would effectively retain the mortgage interest deduction for non-AMT payers while eliminating the subsidy for upper-income earners who've used easy mortgage credit to finance their exurban McMansions. As an added bonus for the new Congress, it would eliminate the tax-on-public-services part of the Blue State tax.
   
5. The AMT has two rates for income above the exclusion amount, 26 and 28 percent, which once represented relatively low rates on a broader income base. But now the lower rate is arguably too high, in the sense that it's now higher than the 25 percent ordinary income tax marginal rate paid by many upper-middle income taxpayers and so AMT dings you in part just for paying the ordinary amount of ordinary income tax without any advanced tax trickery. So that rate should be lowered, a point or two below 25 percent, and the top AMT rate should be raised to, for a round figure, 33 percent (applicable to incomes north of $200,000 or thereabouts)-- closer but not quite to the top ordinary income tax rate.
6. Additional political hardball bonus: the AMT is currently used as a blunt instrument for tort reform, as legal fees aren't AMT-deductible. This, David Cay Johnston documents in Perfectly Legal, has had the effect of socking rather grievously wronged individuals with huge tax bills. Such fees should be deductible. That's another obvious double-taxation case, since the fees are taxable as the attorneys' incomes
   

Of these, numbers 1-3 shouldn't really bother anyone — inflation indexing and eliminating the family penalty would be obvious targets for a permanent fix.

With number 4, I'm admittedly brandishing a long aluminum pole in the vicinity of overhead wires, if not quite sticking my tongue to the Third Rail. In large part, this is sticking it to conservatarian economists who decry pseudo-double-taxation of capital income while professing that real multiple taxation of wages and salaries is fine because it helps us all resent our local public services as if we were Stephen Moore.

Number 5 is simple reality — someone's tax rates will have to go up if the government's fiscal balance is to be kept even in the ballpark of a populist's moderate on-budget deficit. Call me crazy, but the taxes might as well be paid by people who can afford it.

by Ken Houghton

(I hasten to note upfront that Tina Kelley, one of the five "contributing" reporters on this story, is a friend, and her daughter is one of Valerie's best friends. I trust this will remain true after this blog post.)

UPDATE: Via PGL at AngryBear, I note that the Washington Post is doing the groundwork, without being so encouraging as the NYT.

Most of the time, I leave the science postings here to Tom and Drek. But there are times when competent science reporting is so absent that even I can notice it and describe it.

For instance, this NYT piece on the E. coli outbreak at Northeastern Taco Bells. Imagine a mystery novel where the death was by stabbing up through the rib cage, and the murderer at the end is paraplegic. Perhaps Ann Outhouse would find this credible, but most readers would not.

What, then, are we to say for an article that fulsomely praises the "detective work" that discovered that the E. coli outbreak was linked to some scallions—and never once mentions that scallions (like spinach before it) do not naturally carry E. coli bacteria

Given you a hint: the hint is runoff. Which one might miss once, but it would be hard to have forgotten the reality:

E. coli is found only in the intestines of cows, birds, pigs, and other warm-blooded animals.

E. coli does not grow on vegetables. The only way it can be on vegetables is if they are both exposed to intestinal flora and not cleaned well enough afterward.

Somehow, seven reporters—and presumably some editors, copyeditors, and proofreaders—managed to leave that detail out of the equation.

In short, Taco Bell's "prompt action" failed to address the root cause of the problem—either they or their supplier is not diligent in preparing the scallions. The real "gumshoe work" is still to be done.

But NYT readers won't find that in the article.

Tom adds: As Mrs. Coulter notes in the comments, misapplication of manure can lead to contamination that can't be washed away — the bacteria are taken up into the plants via the root system. It would remain a question as to whether the supplier's handling practices would help contain or propagate such contamination.

Going organic may help, as organic growing regulations only allow applications of composted manure within 120 days of harvest for vegetables whose edible parts directly contact the soil.

by Ken Houghton

Pictured below is Valerie's first lost tooth; bottom center, with the adult one well on its way up.



I feel old. Then again, I am old, so I guess that's appropriate.

by Tom Bozzo

Caught this at the gym earlier this evening:

He [Milton Friedman] was disappointed by developments after Reagan left office. He would have preferred Donald Rumsfeld, not George Bush senior, as Reagan's vice-president and successor. An appraisal of the Rumsfeld presidency must be left to counterfactual historians.

Hmm, President Rummy.

Let me think about that for a minute...

...

My counterfactual analysis of the Rumsfeld presidency: AIIIIEEEEEEE!!!!!11!!1!

That is all.

by Ken Houghton

Rutgers-Newark is featuring, through Saturday, "Hidden in the Pictures," by Aaron Sorkin as part of "The Directors' Project 2006: Student directed and designed short plays."

Given the state of the household, attending (and therefore liveblogging) will be eschewed.

Unfortunately, the answer is probably "Fort Wayne" (ancestral home of Charlton Heston, don't know about Mark Wahlberg.)

Maybe Ken Levine is still in NYC.

Or maybe it will just fade from view after Saturday without a major investment from General Electric/NBC.

by Tom Bozzo

Ben Brothers joins the Orson Scott Card fun:

The adults [in Ender's Game]... are preposterous figures without any apparent capacity for moral or intellectual thought, and in spite of this, Card is irritatingly self-congratulatory about the deep ethical dilemmas his (non-Ender) characters supposedly face...

This smugness is a bad habit even more visible in his later books... I’m inclined to see Ender’s Game as a one-hit wonder.

by Drek

Tom recently wrote a post over on my usual blog about the good folks on Uncommon Descent. For those who don't know, Uncommon Descent is the blog of Wild Bill Dembski and, as such, is a rather surreal place to spend time. In any case, Tom was commenting on a discussion about the possible "natural" virgin birth of Jesus Christ. So, you know, they were covering one of those critical issues in modern biology.

As a regular reader* of Uncommon Descent, I recently came across another gem of a post. In it the author, DaveScot, discusses the Harvard Origin of Life Project, which appears to be a scholarly effort to explain abiogenesis. The post in question reads a little something like this:**

In a nutshell they are setting out to demonstrate how DNA-based life could have originated from undirected interplay of chemicals.

If ID is true then it predicts the Harvard project will fail. This is based on the ID hypothesis that the complex patterns found in the basic machinery of life are too complex to come about without intelligent guidance.

Now if I may be so bold as to ask that ID theorists be allowed to make predictions based upon their own theory, and detractors are gracious enough to let us make our own predictions, then I don’t want to hear any more nonsense about ID making no predictions. This is a prediction. It will play out soon enough. Let the chips fall where they may.

I really have only two things I want to say to this.

The first is that, as predictions go, this one is fairly stupid. Essentially they are predicting that an effort to explain abiogenesis will fail because life is irreducibly complex. This is a valid theoretical claim, but really doesn't help the ID case much. The reason why is that there are other reasons why the Harvard project might fail aside from simply ID being correct. Specifically, the experimental apparatus may not be sufficient for the task or our theoretical understanding of how chemicals can spontaneously assemble may be flawed. As such, even if ID is wrong and it is possible to produce self-replicating molecules naturally, the Harvard project may still fail. Thus, if this project returns negative results it is a lack of support for naturalistic theories of abiogenesis, but not itself positive support for intelligent design. Contrary to the impression of many ID supporters there is a difference between the two. Particularly, there's a big difference between a lack of support for abiogenesis and falsifying evolutionary theory which, itself, makes no specific predictions about abiogenesis.

Consider, for a moment, what the world would be like if life did not originate on Earth. So, panspermia is correct. Consider, further, that the ultimate origins of life are unnatural- a god created and scattered primitive protolife in some corner of the universe and has been allowing it to spread naturally since then. That faux life reached Earth at some point in the past and has since diversified into all the forms we see today. In this case, an attempt to explain abiogenesis would fail because life is not natural. However, at the same time, intelligent design is still effectively wrong because the structures of life we see now are a product of natural selection and were not designed themselves. In such a universe abiogenesis is impossible even though evolution is still correct.

What ID needs to do is unveil a positive prediction- something that they argue will happen based on their theory and that is not predicted by anything else. Sadly, since they refuse to speculate on the nature of their "designer," the theory can make no such positive predictions. Think about it: how do we distinguish natural phenomena from designed artifacts when the designer's intentions, capabilities, and approaches are entirely unknown? She might be supernatural or completely natural, she might intend to build perfection or produce shoddy work, she might keep previous structures or always produce new ones. Given the diversity of characteristics she might or might not have, there's no way to distinguish artifice from evolution. And so, ID leaves itself without a valid way to produce hypotheses. Perhaps more critically, if there's no way to distinguish then parsimony virtually demands we go with the explanation that doesn't invoke an unobserved and supremely powerful being. Or maybe not supremely powerful. Who the hell knows? And we're back to the intellectual vacuity of Intelligent Design.

The second point I take issue with is the rather snide remark, "Now if I may be so bold as to ask that ID theorists be allowed to make predictions based upon their own theory, and detractors are gracious enough to let us make our own predictions..." Now, really, nobody is trying to prevent the ID folks from making predictions, most folks on the pro-science side seem to be begging for such a thing. Granted, they want positive testable predictions, but that isn't too much to ask from a supposedly scientific theory. The thing is, however, that once a theory is out there, pretty much anyone gets to use it to make whatever predictions they think they can. The whole point of a theory is that it's supposed to be a useful and accurate explanation for the world- and if it is, its implications and consequences should be consistent with that world. Thus, if your theory works, neither you nor your detractors should be able to make it produce bullshit. So, sorry DaveScot, you do indeed get to make predictions with your "theory" but you don't get to bitch when others do the same thing and find it lacking.

In sum: nice try, crazy ID folks, but the only people you're fooling with all this whining is yourselves.

So what else is new?


* That is to say, I read it on a daily basis until either I finish their posts, or become so bewildered by the idiocy that I have to stop. Sadly, it's more often the latter than the former.

** Exactly like this, actually. I reproduce it here because the Uncommon Descent folks have a habit of redacting their posts whenever they feel like it- most often to cover up when they've been embarrassed by something or other. I can actually scorn this since, as regular readers of my blog know, I often embarrass myself and yet do not remove the posts.

by Ken Houghton

As long as she's not hefty, dykey, or Jewish, that is.

Or this one or this one or especially this one.

And don't even get anyone started on Wanda Sykes.

by Anonymous

Via Crooked Timber, here's a working paper that outlines a game-theoretic approach to the social norm of putting the toilet seat down. The author concludes that putting the seat down is irrational.

In the photo on the right, Scylla demonstrates how game-theoretic models built on incomplete assumptions (in this case, of household composition) can result in misleading conclusions about rationally optimal behavior.

Tom adds: Any game theoretic analysis concluding that putting the toilet seat down is irrational contributes an observation towards the Daniel Davies-Folk Theorem, a.k.a., the November 2006 Quote of the Month:

[I]f we take strategic considerations into account, there is a game-theoretic rationale for practically fucking anything.

Kim's point regarding household composition is well-taken. I'd consider the payoff structure leading to the headline result to be Highly Suspect unless the household is composed like that of Mrs. McCave (who, as you may recall, had 23 sons and named them all Dave). I'd also add that if you've been trained to expect that the seat will be down and are surprised in the middle of the night, the disutility of getting an unexpected dip in the toilet bowl would offset the utility cost of many, many raisings and lowerings of the seat.

It might be asked whether there are other strategic benefits of irritating the female members of one's family. On that front, Davies (op. cit.) provided the other Quote of the Month candidate for your consideration:

It is certainly true that one of the benefits of doing something stupid is that it saves you from having to spend money on maintaining your reputation as an idiot. However, is the reputation of an idiot really worth having?

by Tom Bozzo

Thersites:

[J]ust because something obviously sucks and is obviously stupid is hardly a reason to dismiss it as not worth serious analysis: stupid sucky things have tremendous power in contemporary American culture.

This is from part I of a series on Orson Scott Card's Empire (part II is here).

It's a useful reminder that we do need to thank the Wingnut Watchers.

by Ken Houghton

There has been a lack of posts at this blog this week. The short version is that Drek is on the DL, Tom is working to keep the USPS safe for democracy, and I've been doing dual-parent duties for the past five days, as Shira has been flat on her back with an undiagnosed problem.

The latter gave us, Monday, an interesting examination of the health care system. Having treated health plan selection as an option problem, I elected (against the data presented by our plan's Cost Estimator) to select the most expensive plan my company offers. The reasoning was that anything Really Bad makes it worth while, and two forty-somethings with two pre-grade schoolers present a reasonable bet of Something Really Bad.

So when they only scheduled an X-Ray (likely to show nothing), I pushed for an MRI. Especially after the place that needed four days to schedule the X-Ray said they could do an MRI immediately after the X-Ray.

Our doctor's office said, "You need a preauthorization number."
Me: "No we don't. I haven't needed one before."

They wrote the scrip. Three hours later, the Imaging Center calls. "You need a preauthorization number."

A roundelay with our Insurance Carrier later, I re-call the doctor's office.

Me: "They're saying we need a preauthorization number."
Doctor's Office: "That's what I told you. And I'll warn you that it takes several days; they generally want to see the X-Ray results first."
Me: "So she'll be spending another four or five days before they can even do anything that might be useful?"
Doctor's Office: "That's generally the way it is."

By now, it's around 2:00pm Monday, with the exams scheduled for Tuesday.

3:00. Phone rings.
Doctor's Office: "I got the preauthorization number."

Apparently, the process has been so smooth for the past year that I hadn't even noticed that we need preauthorization, since it comes same day.

Apparently, the rule of health care in the United States is that the more you spend up front, the better you are treated. Is anyone surprised? And can anyone seriously describe such a system as optimal??

by Ken Houghton

If you watch the following video from about 0:40 to 0:51, you will see approximately $1,000,000 per second being transferred from New Brunswick, NJ, to Louisville, KY.

I hasten to note that I in no way hold #83 responsible for this. That Rutgers was in this position in the first place took a silly defensive penalty, a team collapse against the University of Cincinnati, and myriad other individual moments. The result will likely be the same as last year: losing money on playing in a bowl with a mere $1MM+ payoff.

On the positive note, Rutgers-Newark, previously noted here as "making" the Economics Departments's equivalent of the BCS, the finals of the Fed Challenge, finished third nationally. This was good for a few thousand dollars to the students, and a few thousand more to the severely-underbudgeted department.

The Rutgers-Newark Fed Challenge Team

However, I suspect Dr. Graham will not receive a raise, in any proportion, similar to that of Greg Schiano. Or even matching fullback Brian Leonard's post-graduate scholarship as the top college football scholar athlete.

P.S. I made a, er, catty comment about the loss to the University of Cincinnati making the Bearcats bowl-eligible. It appears the people at the International Bowl were listening; the 6-6 team that replaced lost its coach will play Western Michigan.

by Anonymous

I thought those of you who are in the throes of a winter storm might appreciate this picture, taken Sunday. Quinn's shorts and T-shirt were appropriate dress for the day. (The water, however, is colder than it looks.)'

by Ken Houghton

Brad DeLong (last seen getting battered and bruised here) shows why one must fight on as he gets into the details of Partha Dasgupta's discussion of the Stern report, which Arnold Kling (as usual) hacks into misinterpretation.

But it's getting interesting at DeLong's place, where Dasgupta has replied via e-mail (for the moment, his response is in two comments to the post).

The discussion dovetails well with the issue of How Economics is Taught, which has been danced around recently, and now addressed directly, at Mark Thoma's place.

Check out the links above; you won't be disappointed.