Archive for the 'economics' Category


CAFOs and Democracy

Today I listend to a podcast about CAFOs (concentrated animal feeding operation). These are basically places that raise a lot of livestock. Today the issue was how CAFOs pollute the water supply.

Apparently, human shit is very closely regulated. Where it can and can’t be put, how it has to be cleaned etc. We’re particular about our own. But animal shit can go anywhere. Because some people realized that animal shit would help crops go, there seems to be unlimited regulatory latitude about where it can go. In fact, the animating issue of this entire podcast was that there is too much shit for it to used as fertilizer and so the excess just goes in waterways, which then causes enormous algal blooms where the nutrients are. The algal blooms in turn eat up the oxygen in the water causing everything else to die.

The ins and outs of this problem seemed complex, but I heard two things over and over.

1. There are laws against dumping this stuff into the water and about using too much of it on land, which then seeps into the groundwater and into rivers and lakes. However, no one brings enforcement actions because big agriculture is, well, big. And powerful. Or maybe the enforcement agencies are understaffed. They interviewed a few farmers from Wisconsin who said that there are just never any enforcement actions.

2. Random redirection of the question, and denials that anything is wrong.

2 gets so old so fast. It was standard redirection, non-answer type stuff. The science appeared to be overwhelming judging from the other guests.

1 made me even more upset, because I hear this line ALL THE TIME. Banks, pharma, military, etc. etc. The pattern of our government appears to be; there is a problem x that we have already addressed, but not really, since nothing that we actually make into law affects anything. This is incredibly aggravating and disconcerting.

What does it mean to have a law against dumping waste in the river if it is so non-enforced as to become a running joke of those people who are supposed to be obeying the law? It seems that it is not law at all. But worse than that, there is a legitimacy problem. If we are supposed to be getting together to make the laws, but then the interests that are meant to be regulated just make the rules themselves, then this is a disastrous state of affairs. This no different than a modern kind of feudalism in which some people get to set the rules for some people and can, in this instance, dump waste into the water of other people if they so choose.

It makes me think that a candidate who simply promised to enforce the laws as written would actually have a powerful philosophy, because even if a law were actually intolerable, it would at least spur people to actually change the laws, rather than let them linger on the books as they do now.


Bing It On

Bing should count it’s ad campaign as a massive success, because I actually got curious enough to see what was about.

I took the test. It’s set up well. 5 searches, and you decide for each one whether you liked the right or the left. I guess they vary which side google and bing are on.

Unfortunately for Bing, I chose 4 out 5 for google and for the fifth one, I chose a draw. I think it’s partially my style of search, which involves no “social” aspect and usually involves philosophical or psychological concepts. I tried to do a range of searches though and my search “restaurants in LA” was decisively won by google because they show you the map of things in the area, which also makes it really obvious that the side with the mapped options is the GOOGLE SIDE.

That said, the Bing pages are almost exactly like the google pages. There is almost no difference. This is bad news for google in one sense, because it shows that for most of our (my) searches, there’s not too much difference. This should help chip away at the idea that google’s algorithm is somehow special.

On the other hand, it’s pretty good news for google because Bing, even though it has basically cloned google’s product, is still seen as inferior.

As a smart bonus, Bing tries to hook you on their search by exclaiming at the bottom something about how searching with Bing has some reward system. I didn’t read the thing, so I’m not sure how it works, but at least they are trying to capitalize on the ad campaign that got me to their ridiculous challenge by trying to get more searches out of me. Too bad their product just got totally dominated.


Bailout stuff

I’ve been listening to a lot of chatter about bank stuff lately. It seems that again the narrative has been strengthened that we did nothing to make banks do anything to change their ways after 2009 and that our strategy with them going forward is still nonexistent. I heard on the radio the other day that the implicit guarantee of too-big-too-fail status gives large banks in the U.S. a .5% advantage on access to capital compared to smaller banks.

Here’s a new report from the auditing arm of TARP explaining how federal taxpayers are still on the hook for one part of the auto bailout with GMAC. Treasury never asked this entity to provide a plan for how it would pay loans back (as it did with Chrysler for example). Surprise surprise, they owe taxpayers about $14 billion and we own most of their garbage company.


What do people think about Alex Jones on Piers Morgan?

I’m really interested in what people think about this debate between Piers Morgan and Alex Jones.

I thought Piers Morgan was generally right in the sense that his DEMEANOR and COMPORTMENT were right. I thought he stayed calm and civil. That’s not easy to do and it’s a victory when one is interested in coming up with a good plan.

I do think it’s odd that Morgan decided to have Jones on his show. As far as I can tell, Jones is one hair away from being a lunatic. I’m not sure if it’s a gracious move to give a voice to someone with so little to say or if it’s foolhardy to invite someone without argument in to an arena that badly needs to be more thoughtful and more deliberative. Was Piers Morgan just looking for the worst representative of the pro-gun side?

I also think it was a little patronizing for Piers Morgan to claim that it was a debate that he wanted, but he wanted to just ask questions that were kind of leading. I think it would have been better if he had just tried to put out a positive view about why the gun control restrictions he supports would have merit.

Jones had a video after the interview talking about his harassment by various security personnel. If such things happened, it’s a shame. That’s just garbage. There’s no need for it.

I didn’t get much from the arguments though. “Gun violence is down” was the big statistic that Jones was pointing to, but that doesn’t really tell us anything, because the question is whether gun crime would go down further if intelligent laws were put in place. Also, the risk of tyranny or disarmament is hugely overblown. There are so many guns in America already that disarmament would fail, and the fact that so many people are worried about disarmament means that democratically, such a measure would be impossible, and it seems, dangerous to carry out. Thus, we’re at no risk of being prevented from resisting a Hitler state should it come about. Our choice now then is between keeping the status quo or adjusting it in some way.

Then again, Piers Morgan’s statistics weren’t really that helpful either. He never said why closing the gun show regulation or whatever would help.


unemployment numbers as a case study in the contradictions of american politics

I’ve been trying to learn enough about the employment numbers to get beyond the debate as I’ve seen it, which consists of one side showing one chart and then saying “see, no one’s employed,” or throwing out one chart and sneering “Obama has done better than Bush at creating jobs.”

It’s all more complex than anyone wants it to be though, and this post is what helped me open it all up.

One reason comparisons are tricky is that recessions don’t coincide neatly with presidential terms. Obama took office in the depths of a recession, but Bush was in office for a while before 9/11 happened (though the economy was soft before that). Another reason things are tricky is that one needs to distinguish between JOBS and PEOPLE EMPLOYED. The numbers are not the same. As quirk of the data, there are usually about 9M more people who are employed than their are jobs. This is a result of the methodology used in creating these numbers. Last, one needs to consider the category of employment being discussed. Seasonally adjusted or not, private sector or total jobs (private+public).

In short, one should consider:

1. timing

2. statistical methodology

3. statistical category

The post I cited above puts these together nicely.

The most interesting thing I learned is that Bush’s employment numbers were buoyed pretty significantly by public sector employment. For example, Obama created more JOBS than Bush had created by the same time in his presidency, but he has also created MANY MORE private sector JOBS.

I capitalized “jobs” in the preceding paragraph because things are different when one looks at “number of people employed.” Bush increased the NUMBER OF PEOPLE  EMPLOYED much more than Obama by this time in his term.

But again, comparing the same point in Obama and Bush’s first term isn’t that helpful. More instructive is to compare numbers from the same time after the “bottom” of the recession. Bush had created a good deal more JOBS 28 months after the worst of his recession hit. However, again, in keeping with the point about Bush’s reliance on public sector employment, he only created slightly more private sector jobs than Obama.

On the other hand, Obama has created slightly more EMPLOYED PERSONS in the 28 months since the big 2008 recession.

Now for a philosophical point. None of this matters as much as people says it does. People compare Bush and Obama as if it somehow settles an important political point. Obama supporters reason that if they can show that Obama has done better than Bush, than conservatives must “shut up” about the economy. But there is nothing that can be proven by these comparisons. The reason is that political choices are made in terms of comparisons. One might be happy with Bush’s performance due to believing that it’s better than Al Gore’s, and dissatisfied with Obama because of confidence that McCain would have been even better.

Or alternatively, a conservative who voted for Bush might think that Obama is doing better, but nonetheless believe that he’s doing badly in an absolute sense. This is not hypocritical. One’s preferences can change. One might have believed that Bush managing the economy well due to deception or just partisan fervor, but after seeing Obama do slightly better and still realizing that it’s not very good overall, reject both presidents as bad and vote for Mitt Romney.

What is actually important for voting in November is one’s relative confidence in Obama and Romney in the next four years. Unfortunately, this is exactly the sort of information that no voter has access to, mainly because we don’t really have any idea what either person will do if elected to the 2012-2016 presidential term. I mean, it’s shocking how little information is available to the average voter. Sure, one could look at Romney’s past policies, but how relevant are they to his presidency. And even Obama might try radically different policies depending on what Congress looks like.

The curse of American politics seems to be that voters are thrown irrelevant information because the information that would make a difference basically can’t be had.


Great writing on employment statistics

There is so much talk about employment numbers and there is SO MUCH deception and missed nuance. However, today I found this post and thought it was fantastically helpful. From other posts and comments you can tell this woman REALLY knows her stuff. Some flamer wrote a comment that was just partisan hackery, and she dropped the hammer. Was great to read.

(Philosophical aside: think of anything you do at a high level. How often to people get the details of your knowledge area right, even very informed lay people? In my experience, almost never, which leads me to believe that we all labor under significant deceptions for most of our lives, because its simply very hard to learn a body of knowledge or skill to the degree that one really can MANIPULATE and OWN the relevant complexities)


anchoring effects in the law

I’m working my way through Daniel Kahnemann’s book, Thinking, Fast and Slow, in which he sums up decades of his research on decision making. There are a bunch of examples in this book, and I like it because it has confirmed for me a division that I have always believed to exist, the division between deliberation and intuition. That is not, technically, the division that Kahnemann talks about, but it’s close enough. The point is that we have two ways of answering questions, one which is fast, effortless, and potentially very inaccurate, and a slower more effortful process that I think is fair to term “rational” because we are capable of entertaining deductive arguments within it.

I have to review the book before I can make any bigger points, but here is a smaller one.

Kahnemann notes that capping damage awards in certain types of lawsuits may have an anchoring effect. In other words, imposing a cap of $100,000  on damages may prevent people from imposing $120,000 in damages, but it may also move people closer to the anchored amount. In other words, the average juror has no idea how much damages will compensate for an acid spill of some magnitude or for damage to someone’s health in a botched surgery and so jurors will INVOLUNTARILY (confirmed in numerous experiments) latch on to the only number available — the anchor number and make damages closer to that number.

Absent a damage limitation amount, the jury may award $50,000 in damage, but if they are told the limit is $100,000 the same jury is much more likely to move to something higher and closer to the anchor, like $80,000.

Kahnemann goes on to make the smart point that big companies likely favor such caps for two reasons. First, it means that damages can’t get too onerous, but it also means that smaller competitors might face damages that are close to the damage limit and so threaten their survival.

What this suggests to me is that juries should not be told damage limitations up front. Rather, they should be allowed to pick a damage number. If the number is too high, they should be told that they must go lower. However, at no point should they be told the damage limitation number.

All of this course would be premised on the results of studies looking at whether the jury awards tend to over or undershoot the true economic cost of some damage (if it’s meaningful to measure “true” economic cost).