GavinThink

2009 Predictions Revisited

2009-12-31T12:08:00.005-05:00

Prediction is very difficult, especially about the future.
-- Niels Bohr

It's that time of year again; time for me to give my predictions a reality check and to once again learn that I'm overconfident.

Jonathan scores me 2 out of 8; I think I deserve a score of 5.5 out of 10. Here's how I figure it:

I got 2 things 100% right:

6. General Motors will declare bankruptcy after getting billions more dollars of bailout money.

I wouldn't have predicted that we'd STILL be giving GM money AFTER they declared bankruptcy, but just today the news is that GMAC, the financing arm of GM, is getting $3.8billion more in bailout money.

9. Lance Armstrong will not win the Tour de France again.

Maybe he'll win the 2010 Tour.

Completely wrong about these 3:

1. Oil prices will continue to be wildly volatile; oil will cost more than $100 per barrel again on at least one day in 2009.

They were volatile, but didn't get much above $80 per barrel.

7. Now that Home Depot is open, Rocky's Ace Hardware in Hadley and Leader Home Center in Amherst will close in 2009.

Nope, both still open.

10. I'll only get 7 of these 10 predictions right.

By my count, if I'd got one more completely right, this one would've been correct, too. (I was really hoping to get exactly 7 of the other predictions right, in which case the tenth prediction would be neither right nor wrong, but would be a logical paradox).

Too soon to be sure, but I was probably wrong:

3. The economic recession will last through the entire year.

Unemployment is still high, and they keep revising the GDP numbers down, and the National Bureau of Economic Research hasn't yet said that the recession is over, but I predict that I'll be wrong on this one.

I'd give myself full credit for these three:

4. Conservatives will claim that the stimulus is causing the recession to last longer.
5. Progressives will claim that without the stimulus we'd be in the Second Great Depression.

Jonathan thinks those don't count as predictions, since that's what conservatives and progressives were saying BEFORE the stimulus passed.

8. Mark's Meadow school in Amherst will be closed.

I think I got this right; the school committee did vote to close the school, and it will, barring a miracle, be closed after the 2009-2010 school year ends.

Stuff I got half right:

2. Congress will pass, and Obama will sign, an economic stimulus package larger than $900 billion.

I think I should get half-credit for this one; the stimulus did pass, it was just 13% smaller than I expected ("only" 787 billion dollars).

What's going to happen in 2010? I dunno. My crystal ball isn't very reliable; I think I'll try reading tea leaves (organic, fair-trade, of course) this year.

The health insurance deal

2009-12-22T09:54:00.004-05:00

So the deal is roughly -- the government will guarantee that I can buy catastrophic coverage for my family for 2% of income with a annual deductible of 8% of income? I don't think that is anything close to what Democrats intended, but maybe that's not so bad. How far would that be, really, from the libertarian preference for catastrophic insurance combined without out-of-pocket payments for normal medical expenses? -- Slocum in the comments at Marginal Revolution

The press has been focusing on the details of the health care bill, and the political deal-making and drama. The emotional, moral side of me is angry that Nebraska gets a special sweetheart deal because one of it's senators was a key vote. The rational part of me knows that in the long run that type of thing doesn't really matter, and also knows that the only way to prevent that type of thing from happening is to change the incentives, which means changing the system.

If the health care bill makes it through the House/Senate reconciliation process and becomes law, what incentives will change?

Here's a thought experiment: imagine you're a self-employed person making $60,000 per year. Under the new health plan, if you don't buy health insurance you're fined 2% of your income-- $1,200 per year.

Since you can't buy health insurance for $1,200 per year, you don't -- instead you just pay the fine and pay for any minor health expenses as the come up.

If you get something serious, you sign up for health insurance and let your insurance company pay. They have to take you because they're not allowed to exclude people with pre-existing conditions.

So: what does that do to the overall cost of health care? I think it will actually push costs down. Lots of young, healthy people will all be paying for everything but catastrophic health care costs out-of-pocket. They'll be cost-conscious.

What will that do to the health insurance companies? It will drive up their costs; we'll end up with a weird system where healthy people pay 2% of their income plus actual medical costs. And sick people pay 8% of their income in health insurance premiums, with the government subsidizes costs above that. There will be an incentive for sick people to make as little income as possible ("do I want to pay 8% of $50,000 or 8% of nothing?"). And there will be some unintended consequences; I predict you'll see a lot more sick people getting divorced (or not getting married), so their spouse's income isn't counted.

Will it be better than the system we have now? I don't know. I think it depends on what happens to the majority of people who get their health insurance through their employer. I'd like to see more details on what the employer mandate looks like; if employers have to pay up to 8% of income for a young, healthy employee, but that same young, healthy employee would only have to pay 2% of income if they were on their own, then that's an incentive for young, healthy people to work for themselves.

Maybe we'll accidentally create a whole generation of entrepreneurs...

Kookaburra Copyright

2009-12-02T18:08:00.002-05:00

Kookaburra sits in the Old Gum Tree...

I'm playing with fire here; the Kookaburra song is still copyrighted. I'm pretty sure quoting the first line for non-commercial purposes would qualify as "Fair Use", but I woulda thunk that using it in a pop song was Fair Use, too.

Apparently, no. "Men At Work" are being sued, 28 years after putting half the Kookaburra song (just the tune, not the words) in the "Down Under" song. You know, the one with the line "She just smiled and gave me a vegemite sandwich."

Mmmmmm...... vegemite......

(Vegemite^® is a registered trademark of the Kraft Foods Corporation. All Rights Reserved.)

Anyway, the idea behind copyright is to encourage people to create stuff by giving them a monopoly on the right to that stuff. Copyright used to last 14 years, plus another 14 years if the creator was still alive and bothered to register an extension.

I think we'd be better off with that old law. Men At Work wouldn't be sued for using the Kookaburra song (which was written in 1934, so the copyright would've been long expired). In fact, the Down Under song would be in the public domain and a whole new generation of pop stars would be free to rework it to create something new.

I suppose the danger is that if everything created before 1981 was in the public domain we'd buy less new stuff and get more old music (or movies or books...) for free. But I don't think that would happen. I think we would get more old stuff, but we'd also spend exactly as much money as we do now on new stuff. And pop stars would end up a little bit richer, because they wouldn't have to quite as much money defending themselves from ridiculous copyright lawsuits.

What Happened to Tiger

2009-11-28T16:58:00.002-05:00

Tiger Woods crashed his car, and hasn't told us why.

Here's my completely made up hypothesis for what happened:

After spending a couple of weeks in Australia and China, his sleep schedule is all screwed up. So he was headed out at 2AM to find some lunch.

And because he'd done some driving on the wrong side of the road in Australia, he drifted way too far to the side of the road and clipped a fire hydrant.

We're heading home to Amherst about a week from now. I'm going to try hard not to "pull a Tiger"; I'll resist going on any middle-of-the-night why-can't-I-sleep Dorito runs.

Global warming is NOT killing turtles in Costa Rica

2009-11-22T18:54:00.008-05:00

I was browsing around the web looking into some of the Climategate accusations and responses, and I ran into this chart on the Wikipedia sea level rise page:
This isn't a Global-Warming-Denier chart: "This image, created with sea surface height data from the Topex/Poseidon and Jason-1 satellites, shows exactly where sea level has changed from 1993 to 2008 and how quickly these changes have occurred."

Costa Rica is down near the Panama Canal, at the skinniest bit between North and South America. The turtles that the New York Times claims are being threatened due to rising sea levels are on the West coast of Costa Rica. And, at least in the last 15 years (the Topex/Poseidon satellite was launched at the end of 1992, so 1993 is the first full year of data), sea levels there have NOT been rising.

Pledging Allegiance

2009-11-20T05:43:00.003-05:00

So I read in Catherine Sanderson's blog that it's illegal for Massachusetts schoolteachers not to lead their classes in the Pledge of Allegiance.

It's not WAY illegal-- the punishment is a fine "not more than $5." (makes me wonder: who sets the fine? Could Amherst decide to fine Pledge-negligent teachers a penny?)

Most of my elementary schools (I'd attended six by the time I was in sixth grade) started every morning with the Pledge, and I remember starting to be bothered by it when I was around 12 or 13 years old. I was born in Australia, was an Australian citizen living in America as a permanent resident.

So I stopped saying the words.

I wonder: do public schoolteachers in Massachusetts have to be US citizens?

I'm a US citizen now, but I'm still not gung-ho on the Pledge of Allegiance. Expecting kids to say words they're too young to understand year after year seems like a blatant attempt at brainwashing. The "Under God" part bothers me a little (it was added during the McCarthy era to help battle the Godless Communists). It kinda bothers me that it was written by a Socialist, and it amuses me that it used to be performed with a Heil-Hitler salute.

But in the grand scheme of things I don't think it matters much. It's about as relevant as prayer in schools. Robin and Will have two more weeks of school here in Australia, which means two more all-school assemblies where everybody stands up and sings "Advance Australia Fair." They don't have a Pledge here, but there's still plenty of Australian Patriotism. They'll also have two more religion classes in school (everybody gets to choose to go to Catholic, Protestant, or None of The Above every Wednesday), but I haven't noticed any more church attendance here than in the States.

Is Global Warming Killing Turtles?

2009-11-14T17:46:00.004-05:00

Image by Paul Mannix

"Turtles Are Casualties of Warming in Costa Rica" is the title of a recent New York Times article.

Reporters and environmentalists and climate-change-deniers all like to cherry-pick evidence to support their article or point of view. Hotter than average summer? Must be global warming! Cooler than average summer? Global warming must be bunk! Leatherback turtles dying? Global Warming! Atlantic turtles thriving? See! Not Global Warming!

They're all wrong, of course. Nature is usually complicated and messy.

Anyway, back to the turtles: as usual, the headline is more sensationalistic than the article. The article says:

...haphazard development, in tandem with warmer temperatures and rising seas that many scientists link to global warming, have vastly diminished the Pacific turtle population.

I agree that the headline "Turtles Are Casualties of Development and Maybe Warming" isn't as catchy. The article goes on to talk about how turtle nesting habitat is being destroyed by hotels and increasing population and how people used to freely dig up the nests and eat the eggs (and still do, illegally).

Maybe my contrarian-bias is shining through, but a little research into how global warming will affect leatherback turtle habitat made me more optimistic about the turtles' chances:

We used long-term satellite telemetry to define the habitat utilization of this species. We show that the northerly distribution limit of this species can essentially be encapsulated by the position of the 15°C isotherm and that the summer position of this isotherm has moved north by 330 km in the North Atlantic in the last 17 years. Consequently, conservation measures will need to operate over ever-widening areas to accommodate this range extension.
-- Thermal niche, large-scale movements and implications of climate change for a critically endangered marine vertebrate

It seems like the authors of this paper are taking a very positive piece of news (that global warming is expanding the range of an endangered sea turtle) and putting a negative spin on it (conservation efforts will have to be spread out over a larger area).

They probably didn't want the Wall Street Journal to run an article with the headline "Turtles Benefit from Global Warming."

Flu vaccine costs and benefits

2009-11-10T01:45:00.011-05:00

I was surprised to find out that getting a seasonal flu shot isn't the slam-dunk, you're-dumb-if-you-don't-do-it decision that I assumed it was.

I think I was confounding what I know about childhood vaccines (which are a don't-be-an-idiot-and-just-get-them kinda thing) with the flu vaccine. There are good discussions on the Overcoming Bias and Science-Based Medicine blogs, prompted by an article in Atlantic Magazine.

I'm not really concerned with the big public-policy debate over whether or not the H1N1 and/or seasonal flu vaccines save lives (or whether they save enough lives to justify the cost of a public vaccination program). For me, this was the key sentence in the Atlantic article:

Studies show that young, healthy people mount a glorious immune response to seasonal flu vaccine, and their response reduces their chances of getting the flu and may lessen the severity of symptoms if they do get it.

I HATE having the flu; I'd much rather spend 2 hours waiting in line than 2 hours of having the flu. In fact, I'd give it about a 3-to-1 ratio; I'd spend 3 hours waiting to get the flu shot to avoid 1 hour of being sick and miserable.

Now the flu vaccine isn't 100% effective. And I'm not 100% guaranteed to get it. So the cost/benefit calculations get a tiny bit tricky; here's what I figure, before factoring in my preference for waiting in the doctor's office to lying feverish in bed:

Cost of getting H1N1 : ~5 days (120 hours) of misery
Cost of getting vaccinated : 2 hours of my time
Chance of catching H1N1 : 20%
Effectiveness of vaccine: 50%
Cost/benefit ratio is : 2*(1/.5)*(1/.2) / 120 = 1 / 15

So the H1N1 vaccine is a clear winner from a cost/benefit point of view. The numbers for the normal seasonal flu are different:

Cost of getting season flu: 120 hours of misery
Cost of getting vaccinated: 1 hour
Chance of getting the seasonal flu: 2%
Effectiveness of vaccine: 20%
Cost/benefit: 1*(1/.02)*(1/.2) / 120 = 250 / 120 or about 2 / 1

Most years it is quicker to get a flu shot, and most years only about 1% of the population gets the flu (I doubled my chances because the kids pick up pretty much anything going around). But most years they have to guess about which strain of flu will be going around, and they often guess wrong.

The 2/1 cost/benefit result surprises me. If I valued an hour spent sick in bed the same as an hour waiting in a doctor's office then the seasonal flu shot probably doesn't pass the cost/benefit test. I'm going to keep getting seasonal flu shots because I'm a big baby and really don't like being sick.

I haven't factored in the fact that even if the flu shot doesn't prevent me from getting the flu, it might help me recover faster. Then again, I haven't factored in the fact that I might catch a cold or another virus from somebody waiting in line with me to get a flu shot...

Swap Houses and Profit!

2009-11-07T23:32:00.005-05:00

Can anybody point me to a respected economist (meaning one who isn't employed by the National Association of Realtors/Homebuilders) who thinks that extending the first-time-homebuyer tax credit is a good idea?

It's a bad idea on so many levels. Its regressive (homeowners are richer than the average taxpayer), its environmentally-unfriendly (homes are less efficient than apartments), and it does nothing but create artificial demand for a product that people have said they don't really want.

And in the latest incarnation it seems way too easy to game the system.

We've owned our house for more than five years, so if we sell it and buy another we'd qualify for the $6,500 existing homeowner tax credit.

It's awfully tempting to find somebody else who owns a similar house, and then swap houses. I sell to them, they sell to me, and we each pocket $6,500 dollars. If we were 100% honest (or worried about the IRS doing bed-checks) we'd actually pick up and move.

Maybe transaction costs on selling a house are high enough that this won't actually happen, or maybe the law is written so doing this is illegal.

But given the amount of fraud that happened the first time around, I bet there will be a lot of house swapping going on in the next year.

Stupid google

2009-11-04T06:24:00.005-05:00

The Happy Kamper points to a funny Slate article about Google's auto-suggest feature. Turns out if you talk pretty, you get fancy suggestions. And if you don't, you get suggestions about growing weed or Jon and Kate.

The phrase "stupid is as stupid does" immediately sprang to mind. Ask Mr. Google to suggest queries starting with "stupid is" and here's what you get:

I like the irony of people asking "stupid is as stupid does what does it mean" ...

Education Reform: Lessons from the UK

2009-11-01T22:46:00.003-05:00

The Center for American Progress (a lefty think tank) organized "an insightful conversation about the community schools strategy and how federal policy can encourage the growth of community schools across the country" a few days ago. You can watch the whole thing on their website (or you can get just the audio by subscribing to their events podcast, which is where I heard it).

If you have the time and you're interested in education policy I'd highly recommend watching or listening to the first 40 minutes or so where Tony Blair (former Prime Minister of the UK) describes how his administration successfully reformed the UK public school system. He says that we actually do know what needs to be done to make the education system better; it's just really hard to do. I agree.

I'm going to cherry-pick a few things that I didn't think I'd ever hear a leader of a center-left political party say; listen to his whole talk for the proper context:

The teacher's unions are a challenge; they must be a partner, but must not be given veto power over reforms.

Successful schools have an identity-- an "independent ethos" -- and everybody involved feels pride in the school. That requires strong leadership at the school. Academy schools (charter schools in the US) are one way to get that strong identity. Extended schools (community schools here) are another way; they become the hub for the whole community.

Bad teachers shouldn't be teaching. Fire them.

Bad schools shouldn't be tolerated. And "coasting" schools are a big problem, too. Track performance and act fast.

Structure matters; set up non-bureaucratic, decentralized structures and give them support, but throw the system open to new providers and new ideas.

Tony Blair may have been astoundingly wrong for supporting the US-led invasion of Iraq, but he is absolutely right about how to reform education.

Between 2001 and 2005 what Blair increasingly hankered after was a way of improving the education system that didn't need to be constantly driven by government. He wanted to develop self-sustaining, self-improving systems, and that led him to look into how to change not just the standards and the quality of teaching, but the structures and incentives. Essentially it's about creating different forms of a quasi-market in public services, exploiting the power of choice, competition, transparency and incentives, and that's really where the education debate is going now.
--Sir Michael Barber (this whole interview is interesting)

After Mr. Blair's talk he and Arne Duncan (current US Education Secretary) sat down and had a conversation about community schools. I'm cautiously optimistic that the Obama administration might actually implement some real, effective reforms, but real reform would require changes on the local, state and federal levels.

Unfortunately, I don't think the Center for American Progress gets it. They are very excited about the "community schools" concept (extending the school day to better serve students and parents and making the schools the center of delivery of all sorts of social services), but don't talk at all about avoiding heavy-handed central bureaucracies or allowing new providers to inject fresh ideas and energy into our 19'th century, designed-for-the-agrarian-economy public school system.

Article 14

2009-10-21T00:05:00.003-04:00

Should Amherst Town Meeting:

1) Urge Congress to repeal the ban on releasing cleared [Guantanamo] detainees into the United States and
2) Welcome such cleared detainees into our community as soon as the ban is lifted

I'd say No, and Yes.

"No" because I'm a big fan in individuals standing up for what they believe in. Not so much for a group of people to get together, vote, and then pretend that just because a majority of the people voted a certain way EVERYBODY agrees. Or, worse, that a whole town agrees.

Yeah, yeah, I know, it's a grand Town Meeting tradition going back hundreds of years to express collective opinions on all sorts of issues. There are lots of grand old traditions that I disagree with ("marriage is for a man and a woman," for example).

"Yes" because if they've done nothing illegal then they should be free. I might not invite them over to dinner, so "welcome" might not be exactly the right word, but there are lots of people who live in Amherst already that I wouldn't invite over to dinner-- religious zealots of all flavors, obnoxious frat boys and 9/11 truthers spring to mind.

I'll miss Zone-A-Palooza 2009

2009-10-20T22:44:00.003-04:00

Fall Town Meeting starts up in a couple of weeks, and I'll be unable to attend. I couldn't resist looking through the warrant, though.

There's a lot of stuff in there; 23 pages of mostly zoning changes. Lots of reasonable changes to Amherst's crazy zoning laws (including things that seem obvious to me, like saying that the surface area of a sign doesn't include the sticks you use to hold up the sign or that an office shared by two doctors is NOT the same as a "medical center").

I'm kinda bothered that the crazy zoning laws will get a little bit crazier; half of the warrant (12 pages) describes a brand-new zoning district ("Business-Neighborhood"). Do we really need another zoning district? We've got 15 already, including five different business districts. Maybe it's not completely crazy; Northampton's got 15 zoning districts, too; if the B-N zone passes, Amherst will be one better!

If I were at the TM vote on this, I'd probably abstain. I don't have any evidence that adding yet another zoning district would do any harm; maybe giving planners (and Town Meeting) lots of zoning options so they can pick exactly the right set of regulations for any given piece of land makes the Town a better place.

But I doubt it. I think making the zoning laws more complicated will just make lawyers richer and will decrease the number of people who understand what is allowed where. And will make Town Meeting even more annoying, as we all wonder "what's the difference between the B-N and B-VC districts?" for the seventeenth time.

Just because he's got a Nobel Prize...

2009-10-17T18:50:00.003-04:00

I've been reading Paul Krugman's blog for a couple of years now, but the more I read it the more skeptical I become of Professor Krugman's objectivity.

For example, on the topic of climate change he says:

We’re not talking about the ethics of sumo wrestling here; we’re talking, quite possibly, about the fate of civilization. It’s not a place to play snarky, contrarian games.

The fate of civilization? Really?

That's exactly the type of exaggerated rhetoric that makes my skeptical hackles rise.

Yes, global warming will likely disrupt the lives of millions of people around the world, and will likely cause local extinctions and permanent migrations. But saying that the "fate of civilization" is at stake makes about as much sense as neo-cons saying that terrorism is an "existential threat" to America.

It all makes perfect sense; the Right exaggerates the terrorism threat so we'll spend more money on the military (mission accomplished on that one!), and the left exaggerates the global warming threat so we'll spend more money on their favorite stuff.

Maybe Krugman doesn't even realize he is biased; in all the time I've read his blog he's certainly never even hinted that his political views might cause him to ignore opposing points of view, cherry-pick evidence or use rationalization to justify his beliefs.

Call 000! Wait, no, don't call 000!

2009-10-11T20:06:00.005-04:00

The US health system is screwed up because the incentives are screwed up. Doctors want to make as much money as possible. Insurance companies want to pay as little as possible. And patients want as much health care as possible.

The Australian health system is screwed up in pretty much the same way-- just replace "insurance companies" with "the government".

I see the evidence every day on TV here. The Queensland government is running public service announcements encouraging people think twice before calling 000 (the emergency services number in Australia):
Why? Because if you give people something for free some of them will abuse it. In college we had free rolls of toilet paper in the communal bathrooms, and people came up with all sorts of creative uses for them (computer monitor stand, toothbrush holder and, of course, halloween decorations). Give them free paramedic service:

Common minor complaints where QAS paramedics are called to attend
• minor cuts and abrasions
• tooth ache
• ear ache
• boils
• ant bite
• can’t sleep
• hungry
(source)

Does asking people nicely keep them from calling the paramedics when they're hungry? The ad campaign started in September of 2008, but they've got a funny way of figuring out whether or not it is effective:

The success of the campaign will be measured by Computer Aided Telephone Interviews (CATI) surveys conducted both pre and post campaign by Roy Morgan Research. The evaluation aims to measure shifts in attitudes towards calling Triple Zero (000) for an ambulance for non-serious issues.

Gee, wouldn't it be cheaper and more effective to just see if people call less? They're already measuring the number of non-urgent incidents per 1,000 population. Their target for June 2008-June 2009 was 51-53, which they missed-- actual was 56.

I bet the number next year is higher.

Defining away recession

2009-10-06T22:16:00.003-04:00

Back in December, I predicted that the recession would last all year.

I should have thought more deeply about what economists mean when they talk about "recession." The standard definition is "two down quarters of GDP."

I didn't think about the definition of GDP. According to wikipedia:

The most common approach to measuring and quantifying GDP is the expenditure method:
GDP = private consumption + gross investment + government spending + (exports − imports)

Raise government spending, you raise GDP (by definition, assuming you're not crowding out private investment), and voila-- the recession is over! It's simple!

The government has been spending lots and lots of money, and yet unemployment continues to rise. I think it's time to either redefine "recession" or come up with a more relevant measure of how the economy's doing; the current definition make it way too easy for governments to game the numbers and declare "Mission Accomplished, Economy Back On Track."

Unions aren't for Entrepreneurs

2009-09-26T23:22:00.007-04:00

My position at UMass is covered by a collective bargaining agreement, so I got to experience firsthand what it's like to work in a union.

The experience wasn't pleasant-- I quit at the end of August, mostly because I want to take bigger risks to get bigger potential rewards, but at least partly because of the rigid, one-size-fits-all, stuck-in-the-1950's nature of the union.

I'll admit I was vaguely cynical about unions before working under one. They seemed like "socialism lite" -- the idea being that if the Workers of the Company Unite, then they will get a More Fair Share of the wealth that their Hard Work creates for the Greedy Capitalists who own the company.

I'm not sure what the story would be for unions at UMass; maybe "Workers Unite So We Get A Bigger Share of Taxpayer's Money" ?

Anyway, I was cynical because I have faith that free-market competition keeps the Greedy Capitalists in check, and any increases in wages or benefits that the union wins are just passed along to consumers (who are, in a 100%-unionized society, those very same union members) in the form of higher prices.

But I was just vaguely cynical because I thought maybe there was some productivity benefit to being in a union; maybe having a union bargain on your behalf lets you concentrate on doing your job, so you don't have to worry about raises or benefits or any of that stuff.

I was naive. I am now thoroughly cynical about unions.

Maybe if I was the full-time primary-breadwinner and Michele was a traditional stay-at-home-mom I would appreciate the job security and health benefits of the unionized job.

But I wasn't. I was working 24 hours a week and was already covered under Michele's health insurance.

Unions are progressive, so I kind of expected that maybe the union would support somebody like me who chose to work less to spend more time with their kids.

Maybe they would pro-rate union dues so that part-time workers paid less than full-time workers. Or maybe they'd have progressive dues, so that higher-paid techies (like me) would pay more than lower-paid secretaries.

Well... no. Dues is dues, and everybody pays the same, regardless of how much they make or how many hours they work.

Or maybe they'd work out a deal with UMass so that people who have health care coverage through their spouses could forgo duplicate coverage and get a share of the savings.

Well... no.

Or maybe they'd bargain so that the people who were the most productive were paid the most, so I'd be rewarded for doing a good job.

Hell no! During the state budget process I received a barrage of emails from the union encouraging me to contact my representatives and complain about proposals to increase merit pay at UMass.

But the thing that bothered me the most was the letter I received a while ago demanding that I either pay the union "agency fee" or be fired.

You see, I decided when I was hired not to join the union (yes, they put me on their lobbying mailing list nonetheless). Then, after working a year, I get a rather threatening letter, saying that I owed PSUMTA money because I'd decided not to join their organization.

"That can't be right," I thought to myself-- I've never heard of an "agency fee" and there was nothing in the employment contract with UMass about being required to pay the union. "Ignorance of the law is No Excuse!" -- so I did some digging in the Massachusetts General Laws, and learned that yes, indeed, if I wanted to keep my job at UMass I had to pay up.

According to the law, I wasn't supposed to get just a nasty-gram in the mail-- they were also supposed to send me information on exactly what the agency fee was for (they're not allowed to charge for any lobbying or political stuff that they do) and how to appeal it.

Unions are supposed to be looking after worker's rights, so it struck me as highly hypocritical of them not to follow the law as they threatened to have me fired.

Individually I found everybody I communicated with in the PSUMTA organization to be pleasant and helpful.

But collectively... it was like communicating with any other large bureaucracy. "I'm sorry, that can't be changed, it's just the way it is and it's been done that way for a long time."

Which, to my ears, translates as "We are the Borg. You will be assimilated."

Florence Savings Bank Wins Again

2009-09-13T21:09:00.002-04:00

I didn't realize how much I take money for granted until coming here to Australia. A lot of economic concepts like exchange rates affecting imports and exports are suddenly very real; while we're here, we're importing Australian stuff and experiences into ourselves, and paying for it with US dollars.

I performed a little experiment the other day to get a handle on another economic concept that's affecting me personally: transaction costs. Every time I move money from the US to Australia transaction fees are tacked on, and it's not easy to figure out who's charging what. Sure, your credit card company will tell you about any fixed fees, but how do you know you're getting a good exchange rate?

So I stood at an ATM machine and withdrew $150 Australian dollars from my Florence Savings Bank checking account and got another $150AUD using my SchwabOne visa card. Then I went home and calculated how much it would've cost me to move money from my US PayPal account to my Australian PayPal account (yeah, they have PayPal and Eby here down under), and checked my statements to see how much that $150AUD cost me in US dollars. Results:

$150AUD cost me $123.23USD via Florence Savings
$150AUD cost me $125.29USD via Schwab
$150AUD would cost $129.61USD via PayPal

So, my little local bank wins!

I got the Schwab visa card just to come to Australia, because it has no foreign currency cash advance fee (most credit cards do).

I was surprised PayPal was the most expensive option; their transaction fee is low ($1.50AUD), but their exchange rate isn't very good (or at least wasn't very good on the day I did the experiment).

Now, if only the exchange rate would start heading in the right direction...

Medicine down under

2009-07-27T00:10:00.008-04:00

Australia has national health insurance (called "Medicare," but unlike US Medicare, it's for everybody, not just old folks).

Australia also has private healthcare and insurance; if you don't like the service you get from Medicare, and you've got the cash, then you can pay for treatment or private insurance. That's different from Canada, where doctors aren't allowed to accept payment from anybody besides the government.

How well does the Australian system work?

Well, if you believe the newspapers, not terribly well. I picked up a copy of "The Australian" newspaper today-- it's the equivalent of the New York Times down here. Headline on the front page: "After five visits to the hospital, family asks why did our little girl have to die?"

It's a heartbreaking story of a four-year-old girl who died in a tiny little town in North Australia. But maybe that was an unpreventable tragedy that even the most perfect health care system wouldn't have prevented.

Page 2 story: "Billions 'wasted' in health system"
If you've been listening to the debate over healthcare in America, then this will sound very familiar:

The commission... will warn that healthcare services, already under strain, will be swamped by the rising tide of chronic illness, an ageing population and costly new health technologies. ... The current system is "unlikely to be sustainable without reform"...

And on Page 4, on the same page as the continuation of the front-page, dead 4-year-old story: "Medicare system failing indigenous"
It the data-driven version of the "pulls at your heartstrings" front-page story: "In 2008-2009, less than $8 million out of a total Medicare budget of $14.3 billion went towards rebates specifically for indigenous people, who have shorter life spans and almost three times the infant mortality rate of other Australians."

Sigh. It's nice to think that if America just had "Medicare for All," it would correct longstanding social injustices, improve health outcomes for our minority populations, save us money, and prevent oodles of tragic deaths.

But politics, even honest, no-bribery-or-scandal politics, is a market. The rich, privileged majorities who elect the politicians have the most influence on policy, so guess who ends up getting the most from just about any political deal? If healthcare reform happens in America, the people most likely to benefit are people like you and me-- relatively well-off, well-educated people who don't really need any more government handouts (I still feel a little dirty over the 4.5% interest rate I got on my mortgage refinance a couple of months ago; thank you, I guess, Federal Reserve).

Which brings me to this Page 3 story: "Beautiful lure for tourists packages cosmetic surgery, IVF"

Cairns, the tourism hub of tropical north Queensland, is reinventing itself as the cosmetic surgery and IVF (in-vitro fertilization) mecca of Australia-- targeting US defence personell in Guam.

I can see the ads now: Cairns: not just Bikinis any more, now with affordable Babies and Boob Jobs!

South Mission Beach

2009-07-12T15:44:00.003-04:00

We're living in South Mission Beach, Australia for the next five months, and Michele and I and the kids will be writing about our experiences on our "Cassowary Tales" blog. I'll still be posting about non-Australia-related stuff here.

South Mission Beach is a little town on the tropical northeast coast of Australia, between Townsville and Cairns. And, marvel of marvels, they've got town-wide high-speed wireless internet. I believe the Australian government has been subsidizing the infrastructure, but the service isn't free-- $150 Australian dollars (AUD) for the USB modem doo-hickey, and then $100 AUD buys 6 gigabytes of data transfer. Even in South Mission Beach there are two wireless providers, competing against each other to keep prices low and service high. So far, at least, it seems to be working.

The US Stimulus contains billions of dollars for high-speed Internet. If we get a system like they have here in Australia, I won't complain.

Update 27 July: I'm not as happy with wireless internet as I was a week ago; it's kinda flaky. It would be more than fine if we were light Internet users; it's great for email and occasional web surfing, but it's not super reliable. So we're getting wired with DSL this week (which'll end up costing something like $3 per day).

Umass hotel taxes heading to Town Hall

2009-06-30T15:33:00.003-04:00

The line-item veto documents are on the web, and it looks like the hotel tax changes all made it through unscathed. So next time your annoying relatives are in town, put them up at the Campus Center Hotel.

Keep your fingers crossed...

2009-06-29T17:30:00.003-04:00

CC BY-NC-SA 2.0

So I grabbed the latest state budget document, mostly to see how the wording for the local-option meals tax ended up. Towns will have the option of adding an extra three-quarters of one percent tax on meals, with the money coming directly back to them.

Then I stumbled across this odd little bit of legalese:

SECTION 50. The first paragraph of section 2 of chapter 64G of the General Laws, as so appearing, is hereby amended by striking out clause (b) and inserting in place thereof the following clause:- (b) lodging accommodations, including dormitories, at religious, charitable, educational and philanthropic institutions; provided, however, that this exemption shall not apply to accommodations provided by any such institution at a hotel or motel operated by the institution.

Section 64G is the Hotel Tax law. It looks like the UMass hotel loophole is getting closed.

I wrote the above ten days ago, and have been sitting on this post since then, afraid that calling attention to the UMass hotel loophole might possibly mean that it wouldn't actually get closed. It still might not happen; I haven't seen the list of line-item vetoes in the budget that Patrick signed this afternoon.

Budget basics, Part 3 : Baumol's Cost Disease

2009-06-24T13:37:00.016-04:00

My friendly neighborhood economist (and fellow town meeting member) thinks my skepticism on "Level Services" budgets is unwarranted, and that using inflation-adjusted per-capita spending as a metric isn't fair.

Here's the rationale: Government suffers from "Baumol's Cost Disease" -- it has to pay ever-higher employee salaries to compete with private industry. Private industry pays higher salaries (relative to the overall cost of stuff) because innovations (especially in manufacturing) make their employees more productive.

The government, and other service industries (Baumol's original 1967 study was of orchestras), can't use technology to be more productive, so the costs of government rise faster than inflation over time.

I'm biased; I'm a high-tech software entrepreneur. It's hard for me to put aside my belief that competition and technology inevitably leads to higher productivity and lower costs.

And not all economists agree that Baumol's Cost Disease is at the heart of increased government spending:

The bottom line is that governments have grown in recent decades, that they did not do so earlier, and that economists do not really know why. -- Gordon Tullock

Then there's this widely cited 2002 research paper:

We find that labor productivity in services industries has grown as fast recently as it has in the rest of the economy, and that the major contributor was an unprecedented acceleration in multifactor productivity. Baumol’s Disease has been cured. -- Jack E. Triplett and Barry P. Bosworth

That paper notes that our biggest local expense, "education", bucks the overall trend (productivity for the education sector declined from 1995-2000).

So I'm not sure what to think. Did the information technology revolution leave teachers behind because that's just the nature of teaching? Or did lack of competition in the education market make them less innovative than (for example) lawyers? Did college education productivity (where there are lots of private schools) fall as much as primary education productivity (where the government has a near monopoly)? Do countries with a more competitive education market (like Sweden or Chile) also suffer from declining productivity over time?

And does any of this really matter for Amherst? We're stuck with the system we've got, and we compete for teachers (and firefighters and building inspectors...) with the rest of the towns and cities in New England. Maybe in a perfect world government spending wouldn't rise any faster than inflation. But we don't live in a perfect world.

The Spaghetti Didn't Stick

2009-06-18T09:36:00.002-04:00

Town Meeting last night was really painful.

We talked about potholes for a while. Whaddya know-- turns out people don't like them, but there's not enough money to fix them properly.

And then we talked about Pools. And recreation for poor kids. And how the Town should give money to private charities because that's just WHO WE ARE.

We saw barely-controlled outrage that closing War Memorial pool is basically a done-deal-- even if Town Meeting voted to keep it open, it's too late to repair it, hire lifeguards, and get it open for the summer. Fair enough, except that the outrage was directed at the Finance Committee, who were asked to do the impossible this year-- they had to come up with a budget when we have, even now, only a vague idea of how much funding we'll get from the State.

And then we got five different proposals to increase the Community Services budget from the Finance Committee / Select board recommendation (+$8,000, +$10,000, +$24,000, +$80,000, and +$175,000) and one to cut it in half. Talk about throwing spaghetti against the wall and hoping some of it sticks!

I don't know if all of the motions to increase were some kind of coordinated strategy or not. If it was a coordinated strategy, it didn't work-- Town Meeting (and I) voted 'No' to all the proposed increases and passed the FC/SB recommendation.

Coordinated or not, the end result was a lot of tired and grumpy Town Meeting members.

Some friendly advice to the well-intentioned people who spoke so passionately last night: spend your political capital more carefully next time.

Budget basics, Part 2

2009-06-15T13:33:00.004-04:00

Tonight is the start of Town Meeting Budget Bash, 2009 Edition. To prepare I've been looking at inflation-adjusted per-capita spending over the last five years (I haven't had time to go to the Jones library or Town Hall and dig out old financial statements).

Results are over there in the spreadsheet on the right. According to the audited year-end financial statements and the Census bureau's population estimates, between 2004 and 2008 the Town has increased real spending per resident about ~~$200~~$130. Spending has gone up a little bit every year, ~~even as the population in Amherst creeps down~~ a little faster than the population is increasing (we'll find out next year how accurate the Census Bureau's estimates are~~; the population decline doesn't affect the bottom line very much~~).

High on my TODO list: get budget numbers going back before Prop 2 1/2 was passed, and figure out how this year's proposed budget fits in; are we looking at cutting services back to a 2004 level or a 1984 level? And where is that extra $130 per person per year going-- salaries? Health insurance? More services? Pensions?

UPDATED 16 June: A few months ago the UMass Donahue Institute convinced the census bureau that they were underestimating Amherst's population.