Economics for Jacques

Monetary Policy and the Wisdom of Learning to Swim

2015-11-18T05:39:00.000-08:00

Very Smart Scott Sumner: http://www.themoneyillusion.com/?p=31309

The high points:

1. Monetary policy is sufficiently complicated that it's hard to have a coherent discussion, since many people can't even agree on what "loose money" looks like. (eg, was money tight or loose in 2009?)
2. He defines "loose money" as causing the interest rate to fall faster (or below) the Wicksellian rate.
3. Claims too much focus on what to do if you're already on the zero lower bound, because we should be pursuing policy that avoids such an outcome: "I think that’s a really bad way of thinking about the problem, like discussing what to do if the bus is flying over the guardrail."
4. That's good as far as it goes, but, uh...

Or, to carry on the metaphor

Now that the bus is pretty much in the river, swimming lessons seem like a prudent idea.

Notes on having a large playful dog

2015-11-12T07:12:00.003-08:00

Mita wrote an email to somebody who will be dog sitting for us. Here are some choice excerpts. Note the emphasis on Rain eating everything and anything.

Krinkle's kennel should be kept between Rain and the bed, or else she'll find a way to eat the bed through her kennel. She's done it before...
Rain will eat ANYTHING. I mean ANYTHING. So when we're around the house, we keep the bedroom and bathroom doors shut. [...] She will eat/play with your socks, underwear, shirts, etc.
Krinkle ehhh...knows sit.
Kennel they both stay in the kennel when you're not in the house so they don't get bored and...eat through the couch.
[Krinkle is] Very sweet[, but] bad with other dogs. If you take him to the dog park, please hold him in your arms at all times or else he is likely to start fights he can't finish.

America First

2015-09-23T04:54:00.002-07:00

Trump doesn't want to accept Syrian refugees--he wants to "put Americans first"

I feel like I've heard that phrase before.

Seriously though... this guy, and his huge base of support, is terrifying.

Deadwood--a jolly show about a genocide

2015-09-11T06:36:00.001-07:00

From the "later" pile. That is to say, a post that I started months or years ago, and am editing and finishing now. Hence the bit about "shoveling snow." I guess I wrote this some time in February...
Also, fair warning, if reading about casual apologias for genocide has the potential to ruin your day, you should consider not reading this.

Shoveling snow turns out to be good for thinking. While shoveling out my car this morning, I finally put my finger on what's been bothering me about a show I was watching: Deadwood.

It's a western staring Timothy Olephant playing a burnt out law man who moves to a lawless camp of Deadwood South Dakota. The place is entirely law-free (for the whites) because it's on an Indian reservation, with the express goal of taking the land and gold deposits from the Indians living there. The show is, fundamentally, a light and enjoyable show about the experiences and exploits at the leading edge of a genocide.

After watching it, I'm left with the question: Can you tell the story of the perpetrators of a genocide, in a way that makes you sympathetic, and still fall within the bounds of decency?

My first thought was that it's a little like when Nabokov wrote about terrible people in a way that makes you sympathetic (eg. Humbert Humbert), but there you're supposed to feel bad because you're sympathetic. That's not what's happening here, they just tell the story straightforwardly--you're supposed to root for Olephant's character, and then when the show's over, finish your beer and go to bed, sleeping soundly because Olephant saved the day again.

My first reaction after thinking this through was to be horrified, but I also think there is value in remembering the banality of evil. Like virtually every other Jew I know, a significant part of my family was murdered in the 1930s or 1940s, and while I might be more comfortable thinking of this as an inhuman act of evil, it wasn't. It was a very human act of evil--some young man, almost certainly younger than me, actually did the deed, and he had hopes, dreams, a mothers and maybe a girlfriend.

Do I want to know his story? Are these stories that we need to tell? Do we need to tell stories like this to remind ourselves that normal people have the capacity to do great evil, or do we need to avoid stories like this, so we don't distract from the horror of a genocide? Is it better to highlight the inhumanity of the act, or the humanity of the actors? I don't know the answers here, just that the questions matter.

All that said, however--I'm pretty sure the writers didn't think this deeply. My guess is that they just wanted to write a western, and didn't even realize they'd written a happy little show set in the midst of a genocide.

**a somewhat relevant note on timing--the Holocaust was closer in time to the American genocide (aka "The Indian Wars") that inspired it than it is to present day. None of this is ancient history.

Language Matters (Slavery Edition)

2015-09-09T09:12:00.000-07:00

Much of the language we use to describe slavery and the civil war, even the language used by people who otherwise know better (myself included) perpetuates romanticized views of the era. Brought to my attention by @gaumwhat, this great article has a more detailed explanation, argument, and advice.

The distilled version, however is:

plantations ⇒ slave labor camps (“plantation” evokes a pleasant pastoral image)
slave owners ⇒ enslavers (you can’t own a person. even if the law says otherwise.)
Union Troops ⇒ United States troops (It was an insurrection, not a fight between two nations)
Compromise of 1850 ⇒ Appeasement of 1850 (enslavers made demands, the north gave in, then enslavers made more demands, and initiated the bloodiest war in history)

Some of this is clunky, so maybe there are better options, but it’s a good start for adjusting our language to avoid implicitly legitimating a horror that is literally beyond the comprehension of nearly everybody alive today.

Medicine as Information--some pretty wonderful policy implications

2015-08-31T06:44:00.001-07:00

Many medications should be viewed as information in pill form. One great example is Sofosbuvir, about which several things are true:

It cures hepatitis C pretty darn reliably
The company that developed it charges something like $100,000 for a treatment regimen.
All but about $300 of that cost goes to cover Research and Development costs, and profit for the company.

The important thing to see here is that the cost of curing one more person of Hep C is something like $300, but the cost to develop the drug was quite high, so if we don't let drug companies charge lots of money, nobody's going to develop a drug like this in the first place. Unfortunately, at $100,000 per cure, a lot of people are going to go un-cured.

Fortunately, there is a solution here that literally makes everybody happy. The government (the folks that pay for a TON of Hep C treatment already) offers the patent holder a big chunk of cash for the drug patent, and then immediately places it in the public domain. Here are the advantages:

The drug company is happy, because they get to take their profit for the drug right away.
Americans with Hepatitis are happy, because they no longer have Hepatitis.
Overall cost of healthcare in the country goes down, because fewer people have liver cancer and cirrhosis.

This is literally Econ 101, use of a two-part tariff to eliminate deadweight loss from a monopoly.

notes on the actual costs associated:

Total value of Gilead (owner of Sofosbuvir patents) ~150 Billion, as of this writing
They have a pretty big portfolio of drugs, so lets guess that the value of the sofosbuvir patents is about half their value as a company, or about 75 Billion.

Number of people with Hep C in the USA is roughly 2.7 Million

If the government paid 75 Billion to buy the patent and make it public domain, the cost works out to about $28,000 per cure.

Seriously, this is a no-brainer. We can more or less cure Hep C in America for $28,000 per cure, which doesn't even count the benefit of basically eliminating future infections. The only catch is that it requires big government intervention.

I don't get it

2013-12-18T10:18:00.003-08:00

Pretty frequently, you hear about cops (Chicago or LAPD, for instance) beating confessions out of suspects, and the news stories always seem to assume without question that the motivation is to get a confession.

It doesn't add up to me though. If you're a dirty cop looking to close the case by getting a confession, your options are either:

1) Beat the suspect until he confesses, and then testify at trial that the suspect confessed.
OR
2) Testify at trial that the suspect confessed.

Obviously there's no recording of the interrogation, since otherwise option 1 would be impractical, so there's really no practical reason for the beating most of the time. Either way, the cop comes out and lies about what happened, and the suspect goes to jail.

So is it just pure sadism, beating the hell out of some poor kid for the fun of it? Or does the cop tell himself that the kid wouldn't have confessed if he wasn't guilty, and thus the confession is true and the beating justified punishment?

Either way, I don't think I've seen that explored in news stories, which is funny since the link between the beating and closing the case is not immediately self-evident.

A Forgetful Elephant

2013-12-06T09:16:00.003-08:00

They say an elephant never forgets, but in 1986 Congress passed a bill to sanction South Africa for the continuation of Apartheid and ongoing imprisonment of, among others, Nelson Mandela, and the GOP seems to have forgotten some important players in that episode.

Obviously, we ought to start with the GOP Hero, Ronald Reagan, who vetoed the thing in the first place.

Then, in addition to the obvious opponents like Goldwater, Strom Thermond and Jessie Helms, the veto was also opposed by:

Robert Dole

Alan Simpson

Chuck Grassley

Orrin Hatch

Dick Cheney

So, if you hear any of these folks morning the passing of Nelson Mandela, remember, when they had the chance to vote on it, they voted against pressuring South Africa to free him. Unless it comes with a heartfelt apology, any statement from these men deserves laughter and scorn.

For more detailed viewing, here are the rollcall votes from the veto override.

https://www.dropbox.com/s/1blw3tti64h3kuj/congress_votes_99-1986_h829.csv

https://www.dropbox.com/s/azp9smfv93e8lhg/congress_votes_99-1986_s692.csv

Logistics post

2013-11-18T11:51:00.000-08:00

https://docs.google.com/presentation/d/1coPFXvmSzkCWtR7OMRo9Um7zu1J0HDgTIcLKYsf3TZQ/edit?usp=sharing

Guaranteed Minimum Income downsides

2013-11-18T09:18:00.001-08:00

Nohpinion has a bit of a discussion of the downsides of a guaranteed minimum income, and they basically are that people work 2-4 fewer weeks a year, and are more likely to get divorced.

I don't have a ton to say here, but my guess is the fewer working hours bit was mostly women staying home from shit jobs to care for children, and semi-disabled people choosing not to work through pain.

The higher divorce probably was just women leaving abusive relationships without fear of starving or being homeless.

Features, not bugs.

Texas and Massachusetts

2013-11-09T14:58:00.000-08:00

I'm still processing what I think about this, but here's a few facts that are borne out by the numbers (based, arbitrarily, on the 2009 8th grade math scores, because that's what I clicked first):

Texas and Massachusetts are tied for best education of Black students
Massachusetts is 1st, and Texas 4th, for best education of White students.
White students in West Virginia (worst outcomes) do almost exactly as well as Black students in Texas and Massachusetts.

I'm not sure how to reconcile this with my subjective experience of Texas as a miserable place, and Massachusetts as my civilized home. Perhaps I'm just a classist snob. Maybe rednecks just rub me the wrong way. Either way, Texas, the tight-fisted conservative paradise, does a better job teaching math to its black (and white) children than just about any other state in the country, and that's a fact that seriously challenges my worldview.

At minimum, I'm going to stop blindly arguing that education is a problem that we can solve by throwing money at.

Presentation for Metrics

2013-10-21T11:29:00.000-07:00

https://docs.google.com/presentation/d/1ZrIrbNeH4JOwxFu5nn51g8fl8t-OXj_dYSYm-FmFB1U/pub?start=false&loop=false&delayms=3000

"Non-Threatening"

2013-10-16T07:40:00.001-07:00

Not a lot to say here, partially because I'm up to my eyeballs in grading and thesis work, but it dawned on me that I'm frequently called "non-threatening" in the context of female acquaintances.

This means that it is sufficiently uncommon for women to NOT feel threatened in the presence of a man that it is worth commenting on. Probably a half dozen times in the last 10 months.

WTF. Shouldn't not making those around you feel threatened be a kind of bare-minimum requirement for being allowed out in public?

Breaking the Deal

2013-10-03T06:47:00.001-07:00

My blog feed is understandably full of discussion about how over the last 2 decades, 3 if you count Reagan, Republicans have been re-shaping the way we do politics, moving progressively towards a world where compromise and 'fair play' aren't part of the deal. And they're right--the Republicans are breaking the deal by holding the appropriations bill and the full faith and credit of the American government hostage.

But, in a larger sense, we broke the deal first. From the end of reconstruction to the civil rights act of 1964 the deal was that the northern progressives would make a better society, and they could count on the votes of southern racists. The New Deal passed because Roosevelt agreed to let it be better for Whites than Blacks, and up until the 1960s the Republicans really were the party of Lincoln.

The deal was that if they were allowed to be unmitigatedly racist in their own states, the elements that tore this country apart in 1861 would stay contained. For White America, this worked beautifully, but almost exactly a century after Gettysburg, Kennedy broke the deal by calling for a civil rights act, and a year later Johnson signed it into law.

I don't know if this is what they expected would happen, but in hindsight its unsurprising. The deal was tranquility in return for white control, and we broke that deal. Couldn't be prouder of my party for that one.

How we're saving about $1000 each year on our cell service

2013-06-23T09:59:00.000-07:00

My parents gave Mita and me iPhones as wedding presents, and with them they also promised us two years of iPhone service. As we are coming up on our two year wedding anniversary, and we also moved to a place with terrible cell reception, we've made some changes that are saving us a LOT of money.

The first problem we fixed was the cell service. Since Mita and I both have google voice accounts, we bought an OBITalk box for about $37 on amazon, and set it up with google voice, following the instructions on their website. The sound quality is FANTASTIC (I'm surprised by how much more I call my parents now that the phone connection is good), calls to the USA are free, and long distance is very cheap. I wish I'd done this years ago for the quality alone. I set up both of our numbers, and went a little ways into the "expert settings" to make it so when people call me it rings one way, and when they call her, it rings another way. Similarly, her number is set as the primary line to call out, so if you pick up the phone and call, the recipient's caller ID says her number, and if you press **1 and dial, it shows me.

The cellphones needed a little more creativity, but the savings are impressive. We have Verizon phones, so we decided to switch to PagePlus cellular's $12/month plan, which includes 250 minutes of talk, 250 texts, and 10 Mb of data. When we inevitably go over the data quota, it costs 10 cents per megabyte, which isn't cheap, but it still keeps the whole plan way cheaper than with Verizon. Using her cellular data conservatively (eg, maps and texting, but waiting for wifi to download music or reading material) she's on track to use about 60 Mb, which will bring her entire bill to still less than $20. One of the ways that we help keep data consumption under control is by using a FreedomPop mobile hot spot, which gives you 500Mb of free data a month, if you're in their coverage area. Boston is, Santa Cruz is not. More on that here.

There is, however, a catch here. Officially, PagePlus does not support iPhones. They are a re-seller of Verizon's network capacity, and Verizon wants to make people with iPhones buy their expensive plans, instead of this. What that means is, if somebody at Verizon gets overexcited, they could ask PagePlus to terminate service to all the iPhones that are signed on with them. This would not only be inconvenient, it would mean that I lose my phone number. This would be bad, since I've been giving out the same phone number for a decade now. The solution to this was google voice. By porting our numbers to google voice, I accomplished two goals:

If you call my phone number, the one I've had for the last 10 years, my cellphone rings, and so does my home phone. People only need one number for me, ever.
If something goes catastrophically wrong with PagePlus, the phone number that they nuke is not one that anybody has. That way it would still be an inconvenience, but I would not need to give a new phone number to everybody I know.

So far this has not been without minor hiccups, but Mita and I are both really happy with the results. Effectively we have a land-line and two cell phones, all for less than $40/month, with a total setup cost of about $100.

One last option that is also worth exploring, that we didn't end up using, but also like, is Republic Wireless. Essentially they automate the process of using wifi whenever you can (so that you don't burn through their data), and their service is $19/month, for unlimited everything. It's also a great deal, with it's own pros and cons, the biggest of which is phone selection. More on that here.

The cause of the Civil war, as told by South Carolina, Georgia, Texas and Mississippi

2013-05-01T10:25:00.000-07:00

I'm tired of arguing this. Maybe I've been taught wrong. Maybe the civil war really was about something other than slavery. If so, however, I'll have to look somewhere other than the declarations of secession from South Carolina, Georgia, Mississippi, and Texas, that's for sure.

I quote from the South Carolina Declaration of Succession, which mentions slavery 18 times:

A geographical line has been drawn across the Union, and all the States north of that line have united in the election of a man to the high office of President of the United States, whose opinions and purposes are hostile to slavery. He is to be entrusted with the administration of the common Government, because he has declared that that "Government cannot endure permanently half slave, half free," and that the public mind must rest in the belief that slavery is in the course of ultimate extinction.

Georgia (36 mentions):

The Presidential election of 1852 resulted in the total overthrow of the advocates of restriction and their party friends. Immediately after this result the anti-slavery portion of the defeated party resolved to unite all the elements in the North opposed to slavery and to stake their future political fortunes upon their hostility to slavery everywhere.

...

The prohibition of slavery in the Territories, hostility to it everywhere, the equality of the black and white races, disregard of all constitutional guarantees in its favor, were boldly proclaimed by its leaders and applauded by its followers.

Mississippi (8 mentions, but it's short):

Our position is thoroughly identified with the institution of slavery - the greatest material interest of the world.
...
a blow at slavery is a blow at commerce and civilization.
...
The hostility to this institution commenced before the adoption of the Constitution, and was manifested in the well-known Ordinance of 1787, in regard to the Northwestern Territory.
...
It has grown until it denies the right of property in slaves, and refuses protection to that right on the high seas, in the Territories, and wherever the government of the United States had jurisdiction.
It refuses the admission of new slave States into the Union, and seeks to extinguish it by confining it within its present limits, denying the power of expansion.

Texas (22 mentions):

For years past this abolition organization has been actively sowing the seeds of discord through the Union, and has rendered the federal congress the arena for spreading firebrands and hatred between the slave-holding and non-slaveholding States.

Quick link for myself

2012-12-02T19:26:00.001-08:00

https://docs.google.com/presentation/d/1HGvJcrKkNhS_y0A9ot3A1L9iZjTL_85KN5KdyVWnlD8/edit

I don't lose sleep wondering what a Romney presidency would look like

2012-11-08T21:13:00.001-08:00

And that really is awesome.

Nate Silver Continued

2012-11-03T12:24:00.002-07:00

The total furor over Nate Silver continues to stun me. I was surprised (though I shouldn't have been) that the red team would declare war on somebody with a message they didn't like ("For Obama to lose at this point, the polls have to be wrong"), but what has surprised me is the utter lack of comprehension of what he does.

From the left now we have Natalia Cecire, who seems to complain that Silver, well... I'm not sure:

The "Nate Silver phenomenon" is a perfect example of Second Gilded Age puerility, a form of political commentary that is concerned not with meaning or ethics but rather with phenomenality, especially as translated into abstract forms, chief among them numbers. When I use "puerility" in this way, I don't mean it pejoratively but literally: this is a form of boyishness, as boyishness has been constructed in U.S. history. It's concerned first and foremost with abstract play—even a certain virtuosity with play—and it is entirely bound up its own game. And it is a game that may be a little ruthless, a game that implicitly must be played by a white, boyish figure, a Tom Sawyer who insists on playing even when a slave's freedom is at stake.* Silver's Wunderkind image creates kind of persona from whom we are prepared to receive statistical models; it is entirely appropriate that his statistical forecasting began not in politics but in sports.

This is profoundly weird. Polling data gives information about the likely actions of voters, and when faced with this information, we need to know:

If the polls are not wrong in a systematic way (i.e. if they are only wrong in the way that comes from randomly calling a group of people that doesn't represent the actual electorate) what are the chances of Obama's re-election
What are the chances the polls are systematically wrong?

Silver throws in the assumption that polls are roughly as likely to be systematically wrong as they were in past elections, runs the math on item 1, and comes to the conclusion that the answer to the first question is "roughly 100%" and the answer to the second one is "roughly 18%."

In 2000 I recall a deep uncertainty, and in 2004 I remember having to figure out the answers to these questions myself. It was real work to stay on top of the simple objective facts of the polling landscape. Now, I look at http://fivethirtyeight.blogs.nytimes.com/ for 30 seconds, and have that work done for me, far better than I could have done it without making it into a full time job.

It's not a game, in that it's not useless or play, or irrelevant, or whatever Cecire seems to think is wrong with it (though if somebody reads her piece and can better understand what she's saying, please share), but it's also not even really punditry. What he does is statistical grunt work that anybody with a graduate level statistics class could do and get the same results. There is and never was supposed to be any "secret sauce" or prognostication, it's just an effort to wring all the available data out of the polls and present it in a useful format. Nate Silver provides a utility, and getting upset at him for what is and is not in his results is like getting upset at the electricity company because there's nothing on TV.

More Clowns

2012-11-02T06:52:00.001-07:00

Shorter David Frum: "The stimulus was crucial, I'm a fan of Obamacare, we need a carbon tax, and so I'm voting for Romney." I can't make this crap up.

Shorter Congressional Republicans: "If a government report shows that taxes on the rich aren't really hurting the economy, what we really need to make happen is have that report disappear entirely."

In other news, Boehner was asked his thoughts on Orwell, and his response was "George W gave me a collection of his works, and he really is brilliant Taught me everything I know about how to sell ideas to the public."

Okay, I made up the Boehner quote. But not the rest of this post.

Clowns being funny

2012-11-02T05:54:00.002-07:00

File this one under "funny" clowns. As I said when I was a kid: "no, that's how it doesn't go"

the absolute necessity for Romney to win the state if he wants to be president — leads us to move it back to the “tossup” category.

Clowns scare me

2012-11-01T09:51:00.001-07:00

I really should stop being surprised by these clowns, but the logical incoherence is stunning.
The two major threads in conservative wig-flipping around Nate Silver are:
1) he offers nothing new, it's just a souped up excel spreadsheet that re-packages the polls
2) he is unfairly making it look like Obama has a lead.

I honestly suspect they don't get how those two ideas contradict.
Brad Delong has details

Happy Wife, Happy Life

2012-11-01T08:44:00.004-07:00

Over at Marginal Revolution there is a brief but semi-formal discussion of game theory in marriages.

The bottom line, that I agree with, is that since marriage is a very long term game ('game' does not imply trivial--game theory covers thermonuclear war, too), the best move for each player (me, my wife) is to choose the option that maximizes total happiness, and assume that inequality will even out in the long run.

From the article

My own approach is to think of the Coase theorem. Assume that you can’t redistribute happiness or wealth within the marriage. If your spouse is unhappy you will be unhappy and if your spouse is happy you are likely to be happy; happy wife, happy life. If you can’t redistribute happiness the play to make is to maximize total happiness. Maximizing total happiness means accepting apparent reductions in happiness when those result in even larger increases in happiness for your spouse. If you maximize the total, however, there will be more to go around and the reductions will usually be temporary.

Mean Reversion

2012-10-31T07:24:00.001-07:00

I can't help looking at the polling averages and thinking that the race shows a tremendous amount of mean-reversion. Throughout the race, with the exception of the time between "47%" and Denver, It has been a roughly a 2 point race with Nate Silver giving it a 25/75 odds ratio on the "nowcast."

Also, one might ask why I only look at Nate Silver at FiveThirtyEight. The answer is simple: I chose him ex-ante as my poll aggregator based on the strengths of his methods and track record, and to consider other aggregators would simply be aggregating the aggregates, and add zero new data. What it would do, is let me try to pick and choose between different judgment calls and choose the one I like, which is serious methodological malpractice.

Politics is about Policy

2012-10-31T03:32:00.003-07:00

Somebody made a comment about how its funny that the hurricane ends up being about politics, but it's not funny, it's reality.

Politics isn't about two alpha males fighting, and it's not some human interest story. Its about big policy questions, like whether we want a federal government that provides disaster relief. I do, Chris Christie clearly does, Romney doesn't. Do you?