Tuesday, January 30, 2007


Yesterday's news contained two tech stories.

The first was a diss by Verizon on the new Apple-Cingular deal. Verizon said that they passed on the deal that Apple offered (Verizon produced their results yesterday and had a down quarter save their wireless division - a 38% drop in profits while adding to their customer base in wireless). Who knows whether it is true or whether this was a smokescreen to cover the lousy results And more importantly, who cares? WIreless services are pretty much the same - although since I have been a Cingular customer I have been impressed with their depth of coverage (I really have noticed fewer dropped calls than when I was with T-Mobile or Verizon). But I am also a Verizon data customer (their Express card is pretty good) and I have found that to be a reliable service. But Verizon's announcement was almost school yard.

The second was the five year delayed release of Vista the new operating system for Windows based computers was done in the dark of night, last night. From one press report, the (small) lines at one store were based more on the doorbuster deals in the particular store on other technology than on the buzz of this software upgrade. (But wait, it is probably not for most Windows based computers because most current Windows users will need to upgrade either their memory or more likely their computer). (And but wait, most of the chatter on the street has been that Vista is Mac OSX - Tiger - lite. There is also some chatter among the technoranti that Vista has not really done much to plug the security holes in Windows.) Much of the look and feel of the "new" software is what Mac users have had for more than a year. Most of the analysts have said wait for Leopard - the new version of the Mac OS to see interesting bells and whistles. At one point, Windows users could claim that if you wanted some obscure program that counted the droppings of Yaks in Asia that it would only run on Windows - but of course with two programs (Boot Camp and Parallel) any Mac user can run Windows effortlessly. I have not ever put up the Windows features because I am not really that interested in Yak droppings or any of the other obscure programs that only run on Windows.

Monday, January 29, 2007

Smith and Oil and Corn

As noted earlier, I am re-reading The Wealth of Nations. One of the interesting discussions is Smith's discussions of the relative values of land and other capital. Smith spends a lot of space in looking at the comparative advantage of various employments of land and capital - the differences between values of oats and corn or butcher's meat and corn or gold and silver and coal or coal and wood. His fundamental conclusions involve the relative benefits of exchange (people benefit from specialization) and the benefits of translating values into specie (or money).

But as you look at stories today, Smith comes back to explain a lot of things that are going on in the economic world today.

Witness the following stories -

George Bush proposes an increasing commitment to ethanol to reduce our commitment to oil. That supposedly helps our balance of payments problems (because we grow our own energy) and potentially help in global warming - but the price of corn (because of the increased demand) will go up - and that will have consequences too.

In recent months, Oil goes to close to $50 per barrel. And corn prices, in part, because of the commitments that the president has made to alternative fuels, increase.

Mexicans are grumpy because the cost of tortillas (mostly made of corn not flour) have increased and are now asking the Mexican government to subsidize the price.

And Tyson's food (a large poultry processor) says the price of food will go up as a result of the rising price of corn (poultry get fed a lot of corn before going to market).

And the Iranians, with $50 oil have a much harder time of funding their nuclear program. (and Hugo Chavez has a much harder time of hiding his financial mismangement of Venezuela).

And the Saudis need to think about how much $50 oil they want to sell into the world market. More means they sell their declining resource at a relatively discounted price - less means the price will go up but induce ill humor in the oil consuming nations. The Saudis understand the balancing tradeoffs of those differences.

All of those things fit together - and the balance among the prices of corn (which induce the grumpiness in Mexico on the price of tortillas and make US corn farmers happy and Tyson grumpy) to Oil prices (higher prices work somewhat, although not entirely in the opposite direction of the price of corn).

Do you have it straight? See why Smith is interesting?

Sunday, January 28, 2007

Speaking Truth to Power - Annotated

In an article on the demonstrations in DC over the weekend, the NYT covered comments from several participants. The NYT thought they spoke for themselves, I thought to improve what the Times was trying to say (in who they chose from this august crowd) they should be annotated.

Barbara Abrams, 78, Catholic worker from Rochester, N.Y. (Top RIGHT)
"I think we should pull out of Iraq. I think the 20,000 soldiers should be sent, with all the money, to New Orleans." Indeed, Ms. Abrams there are a lot of terrorists in New Orleans. Perhaps the alternative would have been to draft the Mayor and the Governor and send them to Iraq - it would certainly improve the disaster relief efforts in Louisiana.
Mark Ballard, 30, of New York(TOP Left - with the Helmet)
"I don't do much protesting. I guess I came to this one because I've been complaining for four years. It's time to sacrifice a Saturday." Wow!!, A whole Saturday, now that is commitment.
Chris Dols, 24, senior at the University of Wisconsin (Second Left)
"I hope that some enlisted person sees this protest on TV and has the courage to stand up and resist deployment to this awful war. That's the only way it's going to end. Earth to Chris - the enlisted persons are volunteers. But they also have a pretty good idea of what is at stake. You and Mark seem to have spent your six years as an undergraduate productively - evidently avoided the logic courses though.
James Fiorentino, 25, senior at the University of Massachussetts(Second Right)
"We're here to say that without us, without the young people, they can't fight this war. They ripped our history away from us, but we will take it back." James, evidently you did not get to take any English at U Mass - who is the they there - the terrorists or the brave young Americans who are resisting their efforts to bring us back to the 13th century. I guess you three students are going to open a firm together.
Memphis Rudder, 21, organizer for World Can't Wait from Paragold, Ark.(Third Right - with Tattoos and Piercings)
"We are trying to get Bush impeached so that every president after this will not think it's okay to commit war crimes. ... It's going to take a massive upheaval from the bottom to make this happen." Memphis, so what part of reality have you participated in in the last decade?
Cindy Price, 44, of Washington (Third Left - Sunglasses)
"I very much support our armed forces. It breaks my heart to see these people coming home dismembered and disabled, or in body bags and caskets. I'm opposed to people dying, Americans and Iraqis." Say Carol, how do you feel about the thousands of Americans who were killed by terrorists? Just how do you support them?
Hillary Clinton (59- Washington DC) Actually Hillary was in Iowa trying to convince Iowans that she would make a good president and also trying to avoid the history that she voted to authorize the current engagement in Iraq - this will be the best chance to see twist and shout in the 2008 campaign.... (Fourth Right)
the Bush administration plan to invade Iraq in 2003 was “the height of irresponsibility” she (Hillary) allowed “the president to go to war,” and asked for specific steps she would take to end the war and withdraw the troops. The senator replied with her familiar talking points: She said she did not see her vote as one “for pre-emptive war,” but rather as leverage for the president to work diplomatic channels. (I guess she did not bother to read the authorizing resolution.
“If we had known then what we know now, there never would have been a vote and I never would have voted to give the president the authority,” (Six months from now she will have constructed a way to explain how her vote for was not a vote to authorize it - this will be better than losing papers in the White House for a year or so.

The NYT story was very circumspect about the crowd estimate. I remember the Vietnam mobilizations where all of the mall was filled with people. The President's plans should be discussed and thought about by all Americans but if this is thought we need to crank it up a bit.

Two Movies in Spanish that Everyone Should See

The last two movies I have seen are both in Spanish. The first called the Fawn's Labyrinth is a story about a young girl in Fascist Spain, during the civil war. The movie is from a Mexican director, Guillermo del Toro, who I had not heard of before. When I first heard about it I thought it was a strange mix, a fantasy that is rated R.

A young girl and her mother come to an outpost of Franco's army, because the mother has taken up with the commander of the outpost. She is an intense reader and she especially likes fantasy. As the story develops the commander turns out to be violent and cruel and the young girl increasingly gets brought into a fantasy community which is lodged in a tree near the house they are staying in. She is identified as the princess of fantasy land and will be allowed to return if she completes three tasks. The characters are all quite interesting. In the fantasy world they are unique - quite different, some repulsive, but all interesting. In the real world - again they are all drawn out well. The commander is especially clearly established - consistently violent and cruel - bent on control. The partisans, who eventually overrun the outpost, are a study in contrast to the commander but not drawn as especially nobel. This is not a children's movie.

Volver (to return) is a movie by Pedro Almodavar. It is a story about two families of women, men are only incidental to the plot. It begins with a scene of a group of women busily tending to their family graves. This is a movie that is a mix of comedy and drama. The basic plot revolves around the death of an aunt of Penolope Cruz and her sister. The two women's mother reappears, although both had thought she had been killed in a fire. As the story develops, the mother's return, whcih is first thought to be a spirit, is quite real. It turns out that the woman who was killed in the fire is the mother of a close friend who was having an affair with the sister's father. At the same time, Cruz's daughter, kills her father when he tries to attack her and Cruz has to deal with the body.

Both movies were a great way to spend a couple of hours - the stories are captivating, the characters are well developed and work well together and the cinematography is excellent. Fawn's Labyrinth was nominated for Best Foreign Film in this year's Oscars.

Friday, January 26, 2007

Congratulations to Brandeis

Earlier in the week Brandeis University finally got former President Jimmy Carter to speak to students and faculty about his book. Carter's handlers refused to allow Jonathan Demme to film the appearance and also refused to appear in a debate format. But Brandeis went ahead, accomodated to Carter's wishes and then, in great academic fashion convened a second speech with Alan Dershowitz to discuss Carter's book. The University should be applauded for getting this to come off. Carter's odd and incendiary rhetoric has created a justifiable firestorm.

The highlight of Carter's remarks came when he said “This is the first time that I’ve ever been called a liar and a bigot and an anti-Semite and a coward and a plagiarist,...This is hurting me.” Technically his statement is true. All of the charges have not been put together at once but beginning before his first presidential campaign Saint Jimmy has been shown to be a serial prevaricator. For example in his first presidential campaign Carter made a series of claims about his experience and background. For example, he claimed to be a "nuclear physicist and peanut farmer" (he has a BA from Annapolis and owned a peanut warehouse); he claimed to have left Georgia with a $200 million surplus (actually his predecessor left the state with a surplus of just under $100 million which Carter reduced by more than half). Stephen Brill in a March 1976 article in Harpers titled "Jimmy Carter's Pathetic Lies" (No question about what Brill thought of his veracity.) wrote about the numerous misstatements and lies in his career. But Carter's record is not static. The most recent example I could find of his odd sense of the truth was when he met with a group of Rabbis in Phoenix in December to discuss their concerns about his book and claimed to have ended the meeting with a prayer of reconciliation. (All of the press accounts suggested that the prayer was actually simply a closing prayer for the meeting.) But sources as diverse as Evans and Novak, the Village Voice, and Jack Germond have all written about how the BA graduate from Annapolis and peanut warehouse owner has stretched the the truth for years.

Carter also refused to respond directly to questions and severely limited the types of responses. So much for his support of intelligent dialogue. If Carter had any integrity, or even the courage of his convictions, he would have agreed to engage with Derschowitz. Regardless, Brandeis did a service to its students and faculty in bringing him on campus and allowing him to speak. For that we should be grateful. But we will also be grateful when this guy finally gets off his pulpit and quits trying to paint himself as anything but what he is; a failed politician whose prescriptions while in office were as bad as the ones he has offered since he was banished from the presidency.

History Luddites

The history faculty at Middlebury have banned Wikipedia. I think that is a bit odd.

Inside Higher Education, which is fast growing into the source of information on higher education news,had one person commenting “College students shouldn’t be citing encyclopedias in their papers,” he said. “That’s not what college is about. They either should be using primary sources or serious secondary sources.”

Yet the Middlebury faculty singled out Wikipedia. As the commentator above said - serious scholarship requires serious tools - but to focus only on one of those derivative sources and to suggest that it is somehow inferior to other sources at its level is absurd. The obvious benefits of the WIKI format, including the ability to self correct and the significantly greater ability to cover a broad range of subjects should not be lost. One wonders how many of these professors have ever taken the professional responsibility to help edit a Wikipedia entry in their area of specialization.

Autumn Leaves and Leopards

This morning's papers had two stories of seeming conversions, this time of GOP members of Congress.

The Washington Post highlighted Nebraska Chuck Hagel with the following headline - Hagel Ponders White House Run As War Criticism Raises His Profile. After the headline there are several graphs about how the "career maverick" has worked in Congress. The story (puff piece) goes on to suggest that "Hagel is acting like a politician who believes his stock is climbing." At least with the left - his standing in his own party is in very low numbers. In the article Hagel "also floated the possibility of joining a bipartisan unity ticket with a Democrat -- with his name first, of course." Gee, that is a surprise! The post quotes public scold Robert Scheer who comments "Chuck Hagel for president! If it ever narrows down to a choice between him and some Democratic hack who hasn't the guts to fundamentally challenge the president on Iraq, then the conservative Republican from Nebraska will have my vote," The chances of Scheer ever voting for a Republican are about as good as the chances that Hagel won't run for president. The Post notes with some approbation that while he voted for the original authorizing resolution for our actions in Iraq he has been trying to attone for it ever since. The Post notes he "eschews consultants and other trappings of political ambition -- although he is a regular on political talk shows." Does that mean he is a ruthless self-promoter? The Post's headline merely had it backwards - As War Criticism Raises His Profile,Hagel Ponders White House Run--- But then you should not be surprised at this kind of "news" coverage from the Post.

Then there is the Sacramento Bee article on local congressman John Doolittle. In some ways Doolittle and Hagel are soulmates. Doolittle has had a long career running against "career politicians." At one time when I had the misfortune to be his constituent he actually sent out a franked newsletter (that is at our expense) a tirade against "career politicians" and how the idea of term limits (except of course for him) was a good idea. For a lot of reasons he almost lost reelection in one of the safest seats for the GOP in Congress. We covered his churlish comments on election night when he whimpered that being in the minority in Congress was going to be no fun. His hijinks over his career have been amazing to watch. Doolittle drips of sanctmony but that has not prevented him from cutting deals with the democrats in redistricting to assure a safe seat for him. Nor has it prevented him from raking 15% off the top of all the political contributions he received in the last cycle for his personal use with the ruse that his wife was his campaign consultant. He now claims he will stop that, at least for his own campaign committee. Doolittle's legislative career has been noticeable for its lack of substance. It is impossible to find one idea he has championed in Congress - save self promotion. He is that classic insider who revels in the politics of the moment. Yet in this morning's coverage of his meeting with the Bee editorial board he wished for a kinder, gentler Congress. Now that he is in the minority party. He will now actually deign to meet with constituents and has scheduled a series of town hall meetings throughout the district. Whoopdie Frickin Doo!!! Evidently the Congressman does not have enough boodle to be able to retire yet.

Both the Senator and the Congressman are evidences of the worst kinds of personal ambition in many politicians. Leopards don't change their spots and it is a bit late for autumn leaves to change their colors.

Wednesday, January 24, 2007

I am not making this up.

Two recent stories from the New York Times -

"The full Senate is poised to consider the nonbinding, yet strongly symbolic, repudiation of Mr. Bush as early as Wednesday. Democratic leaders agreed to tone down the language in the resolution, hoping to make it more acceptable to Republicans in an effort to send a strong, bipartisan rebuke to the White House."

“This is not designed to say, ‘Mr. President, ah-ha, you’re wrong,’ ” said Senator Joseph R. Biden Jr., a Delaware Democrat and chairman of the committee. “This is designed to say, ‘Mr. President, please don’t go do this.’ ” You will remember that this Senator Biden is the same one who last summer was seen on video commenting in a re-election fundraiser that you could not "go to a Dunkin Donuts or 7-11 without a slight Indian accent". And that was an attempt to endear himself to the constituent.

Were the Senate, the greatest deliberative body in the world (as it claims to be), it would take a real action but instead Biden and crew (In addition to his Dunkin Donut remarks, this guy was the one who thought it OK when running for president to simply lift full speeches from other politicians - most notably Neal Kinnock, the British MP. There were also questions about whether this light of reasoned principle plagarized in his legal writing class.) simply want to take a "strongly symbolic" action. This is not Biden's action alone - the full Foreign Relations committee participated in this farce.

Two points should be mentioned - first, I would disagree with this action were it symbolic or not. And I also recognize there is also a delicate balance between the President and the Senate on these types of matters - but this "strongly symbolic" action is simply nonsense. It shows how low the state of legislative debate has sunk.

and then there was this surprise ---- John Kerry, confirmed the obvious, he has finally figured out he will not be candidate for president in 2008 -

“We came close, certainly close enough to be tempted to try again, there are powerful reasons to want to follow that fight now,” (most of them based on the raw personal ambition that I have exercised over the last thirty years of my career) Mr. Kerry said, invoking his 2004 race, at the conclusion of a 30-minute speech attacking Mr. Bush’s Iraq policy on the floor of the United States Senate.“I’ve concluded that this isn’t the time for me to mount a presidential campaign. It is the time to put my energy to work as part of the majority of the Senate and do all I can to end the war.” Oh, by the way, the Formerly French Mr. Kerry did not say that polls put him down to levels where he would have to gain three points to get to a positive number. Kerry has been a fraud since the early 1970s when he stayed in the Watergate hotel while his "troops" in the VVAW bivouaced in mud in the shadow of the Washington Monument. The reason he is not running for president is obvious to all but him.

Monday, January 22, 2007

A Happy Anniversary

A friend of mine in Mexico started a restaurant in the city of Xalapa. The place is a small and wonderful restaurant. The owner has done a careful job in creating a menu with some very innovative dishes including a wonderful shrimp dish that combines bacon and a ginger, lemon sauce. One of his desserts is a combination of balsamic vinegar and pears with onions. His attention to detail in the menu shows throughout.

His attempt, which is very successful, is to blend flavors from all over the world in new ways. On Thursday, his restaurant, Kukiaio, will celebrate is first anniversary. (the website is at Kukiaio ) That is a major milestone for any restaurant. I am sorry I will not be there to help celebrate. But if you are in Xalapa, it is a great place for a meal. If you can't be there soon, check out the menu - but be warned it start your tastebuds tingling.

Perhaps they protesteth a bit too much

A recent report by the American Federation of Teachers called The "Faculty Bias" Studies - Science or Propaganda (I did not put a link to it because I am not sure it is worth the read) attempts to throw down the myth of a liberal faculty in academe. The opening of the report states -"Several research publications have presented evidence purporting to show that higher education in the United States displays a systematic liberal bent. This, in the opinion of critics, marginalizes conservative voices on the faculty and results in political views being presented in the classroom and shaping a research agenca that is shaped by liberal priorities. These critics also suggest that students with conservative views are at a minimum uncomfortable in this environment and at worst may be punished with lower grades."

The report then judges eight studies against five supposedly standard criteria to judge their worth. A quick read of the report this morning left me with two questions. First, who is the audience? The political attitudes of parts of segments of the faculty are well demonstrated in the research literature. Some of that research has come from decidedly conservative quarters but a good deal of it has come from polling data as a part of either national polls or from specific polls commissioned to discover the political attitudes of faculty. There is according to that polling a higher propensity of faculty to vote for liberal candidates, especially in the social sciences. With that data, who is the report trying to convince, the outside world or to reinforce the faculty that they are not biased?

Second, if those propensities are well known, can it be demonstrated that faculty in recent years have shown a bent toward all of the perils described in the introduction? There the evidence is a bit more inferential. But the evidence is there nonetheless. How many decidedly liberal speakers have been prevented from speaking at graduations or in major university convocations in the last decade? There are tons of examples where one or another faculty threw a temper tantrum against a distinguished conservative speaker. That rejection is clearly not a comment on the speaking style of the person - rather is is a rant against their message. Do the speech codes on campus, purportedly designed to enhance speech, inhibit of encourage free dialogue? The codes grew up in the late 1980s and 1990s. Many are downright disrespectful of what most people would consider the rights of discourse. Why did those codes develop? What is not clear is whether all of this "bias" has any long term effects. Certainly conservative commentators have argued that it does. I am not so sure. But I am genuinely not sure. There is some evidence that conservative students on campus simply conceal their opinions until they get their degree. But evidence from national student surveys also suggest that college makes changes in students that move them to be more supportive of governmental interventions in our lives.

When I was in my first undergraduate year in 1964 I was also a county youth chairman for Barry Goldwater. I had a Western Civilization professor who stopped his lectures about three weeks before the election to take up his time with an absurd paper arguing that Goldwaterism was a cousin of fascism. That was absurd on its face - the National Socialists in all countries where they operated wanted more government involvement not less. After about half an hour of this nonsense I ventured a question. We engaged in a debate which lasted over the next several class sessions. My performance may or may not have resulted in a lower grade at the semester. But the energy with which this professor wanted to inject current politics into his class left an impression that continues today. Admittedly, that is not a scientific study. But in the forty plus years since then, I have been in a lot of other classrooms and in a lot of discussions with faculty on a lot of campuses and found the same ideological commitment to the left.

There is an old adage among lawyers that when you have them argue the facts, when you don't argue the law. Evidently among social science researchers the adage would read something like when you have the facts argue them, when you do not argue methodology.

Sunday, January 21, 2007

The Current State of Affairs (no pun intended)

For those of you that were not paying attention, Hillary Clinton, who now occupies the Senate seat once held by Roscoe Conklin, announced that she will be willing to run for president. Whoopdie frickin doo. Everyone with a brain much larger than a pin has known since 1992 (or earlier) that she would run.

But running and winning are two different things. Clinton is a known quantity. With six years as a US Senator and her previous experience in designing the most absurd healthcare plan ever and then multiple years in losing documents, falsifying records, and making questionable commodity trades - she seems like the perfect candidate. The picture by the way is from a friend (not of Hillary's). My suspicion is she will be every bit as successful as Massachusetts Senior Driver.

That does not mean I have found a candidate that I would even consider. Most on both sides are either too green or absurd or simply so filled with wrong headed ideas that they should never be president. I think the American people are in the same dilemma on all sides of the aisle. There is a growing skepticism about either of the parties. Neither side has much of substance to offer but soundbites. Unfortunately, a lot of the candidates, including Hillary, want to package themselves for something they are not. I think the people will discover those frauds rather quickly. Hope springs eternal in a politician's breast and now is the time that begins to happen.


In this morning's Sacramento Bee the following letter to the editor was reprinted -

Hey, iPhone users, get a life
Re "Apple's iPhone talk of the town," Jan. 10: Apple's iPhone is a technical marvel, but it is also a crippling advance in diffraction of meaningful human intercourse. The eye has been described as the window of the soul: The iPhone closes that window, and, according to Steve Jobs, "it is like having your whole life in your pocket." What kind of a life is that? While it may facilitate superficial communication, it will, in fact, increase our isolation from each other as we ignore those around us in order to talk, listen and see through this electronic marvel. Is this really a good thing?
- Kathleen Wright, Chico

One wonders what would prompt such a letter. Perhaps this is a new Vista (the rather pale update of Windows announced this week that requires people who want it to supply tons of new memory and probably a new computer) user. Perhaps, cellular coverage in Chico (known more for a CSU campus that was once called the party campus in the country) is not good in her area. Perhaps she has a thing about Apple as a company and cannot resist those wonderful products but knows she should. One wonders.

What is even more amazing is that someone would comment on such a letter!

Thursday, January 18, 2007

Sleazy Harry Loses One

The Senate today missed a bad one today proposed by the majority leader of the Senate. Reid in his own exceptional way is trying to clean up Washington by doing lobby reform. (You will remember that Roscoe Conkling argued that reform was a sanctuary for scalawags and scofflaws.) But Reid's definition of reform stomps all over the First Amendment. Among other things Reid's proposal would have included bloggers under the definitions of who is covered under lobbying reform. What Nonsense! Reid's biography in Wikipedia reads more like a rap sheet - with all of his ties to discredited lobbyists and tons of appearances of impropriety. Conkling was a New York senator who resigned when the Pendleton Act was adopted. (He complained about not enough patronage after the idea of civil service was adopted.) Thankfully, Reid's subtrefuge was rejected. There were six democrats (Baucus, Bayh, Conrad, Dorgan, Landrieu, Nelson (NEB), Salazar) who voted to stop an absurd part of Reid's plan. Unfortunately, both of California's senators voted the wrong way.

$50 oil and the Axis of Evil

The financial markets have dealt oil a pretty serious blow - moving this morning to around $50. At the end of 2006 the spot price for light sweet crude was well over $70 per barrel. Today it is flirting with a price below $50, or a drop of more than 28%. As I have watched that change I have wondered how that drop will affect the ability of Venezuela's Hugo Chavez and Iran's leadership to wage their ideological wars. The chart shows the long term trend in oil prices.

Hugo Chavez of Venezuela has done all sorts of things using oil - including offering to sell oil to poor people in the US at a discounted rate. For the country oil amounts to about a third of the GDP and about 80% of their export volume. Oil influences about half of the governmental revenue. So a 28% drop has some deep effects.

Iran is about 15% of the middle east's exports in oil (the Saudis have just under half). What is most interesting is that from published data, even before the price drop, Iran was spending beyond its means in pretty substantial proportions. For example,in the last quarter of the year Iranian President Mahmoud Ahmadinejad had to ask his parliament to augment his budget because they so chronically overspend their resources. That was before this most recent market decline.

Neither country's oil industry is robust. So the ability to react positively to this market decline is quite limited. Light sweet crude dropped 4% today (about $2 per barrel) but one wonders whether even this economic reality check will influence either Ahmadinejad or Chavez to rethink their agendas.

Tuesday, January 16, 2007

Two Possible Explanations Why Bowling Alone Was So Wrong

I am reading a new book by Arthur C. Brooks, who is a professor at the Maxwell School at Syracuse. Maxwell is always ranked among the best schools of public policy in the country. About six years ago Robert Putnam wrote a book called Bowling Alone which argued that all of the hustle and bustle of our daily lives was a contributor to our decline in civic participation. I've always thought it was an odd book because when the book came out there were so many indicators of upticks in civic participation in the country that I found it hard to believe his assertions. True, civic clubs and other twentieth century manifestations of civic activity were declining but there were all sorts of new activities taking their place - kids soccer leagues, various electronic communities and all kinds of other indicators that seemed to have disproved his ideas.

Brooks book Who Really Cares: America's Charity Divide- Who Gives, Who Doesn't and Why it Matters) is an interesting study of the state of charity in the country. Among the findings Brooks argues that secular liberals (those with a liberal philosophy and no significant religious convictions are
"less likely than religious conservatives to belong to college or professional fraternities (in spite of having a higher level of college attendance), and less likely to participate in sports,cultivate a hobby,or join a book club. However, they are more likely to belong to an association for which they only pay a fee (such as the Sierra Club or the National Organization for Women)."

The Putnam thesis was in part conditioned on survey research but a lot of it was based on observation. In this case he could simply have observed too narrow a group. It could also have been written in much that same way (because a lot of the tone is similar) to Malthus' Second Treatise - which was also a book of gloom. You will remember that Malthus argued that our propensity as human beings to procreate will always (or at least in Malthus' vision) trump our ability to innovate - thus leading to the potential for starvation in the world. In Malthus' case he used lousy data (actually according to one author the data set upon which he based his projections had tons of immigrants and thus an abnormally high rate of population growth) and failed to anticipate things like the steel plow. (Which revolutionized agricultural production.) It could be argued that in Putnam's case had he written it a few years later he might have been cognizant of the community building of blogs and blackberries and Match.com.

Monday, January 15, 2007

Sense and Nonsense

Since the President's speech on Iraq I have been bothered by the attempts, especially in the Senate to craft a non-response. Several opponents of the President's proposal are unwilling to cut off funding for the war efforts but are willing to do what John McCain calls "emotional withdrawal" by suggesting a "Sense of the Senate" resolution which has not authority but to make the author feel good. On the Sunday shows some members of the press (including people like Wolf Blitzer) were unwilling to let this sham continue without a question. These kind of non-responses should be highlighted for what they are. I think about immediate withdrawal in the same way that Senator Lieberman does - there are two exit strategies - victory and defeat and with defeat the forces we have been contending against will bring it back to us. But in any event the opponents of the President's policy should not be given a free pass.

These Modern Times

This morning I dropped my friend from Mexico off at the airport and American was having a problem in DFW, thus he had to wait in line. American had decided to cancel flights to Dallas and so there was a very long line of people to get their reservations redone. DFW is a major hub for American and one of the most important destinations for travelers from Sacramento. Like Denver and Chicago for United - DFW is a key point for American flyers. Until we got through line the departure board simply said that the flight was delayed not cancelled - although the flight had been cancelled.

As we waited in line for more than an hour, about 20 times, a frustrated person would come up to the electronic checkin kiosk. They would insert their card and then go through a sequence of entering their confirmation number or some other thing to receive their information. What interested me is that in each instance the person would be forced to go through two or three steps and then receive a slip of paper and then get back into line. I wondered what was happening - each time a flyer would go up, go through the steps, then generate the slip, express frustration and return to line.

Finally, I got one of the slips. It simply said "We cannot help you on this system, take this information card to an agent for assistance." If I were trying to lower the level of frustration with American, I might put a note on the screen of the Kiosk which said something like check with your ticket agent. These slips were only making people madder.

Sunday, January 14, 2007

Helping a friend form a dissertation proposal

This weekend we had a friend visit from Mexico City. He is the dean of a law school there. But he is also working on a doctorate and like many students at this point in a doctoral program - he is stuck. He is concerned about "legitimacy" in government. But as I listened to him talk about his ideas, I thought they were not very well formed. He has had a very busy and unsettling year - so that is not entirely unexpected. His dissertation is being written in a faculty of economics. Thus, as we discussed his ideas, we looked at the recent Mexican election but from the focus of a field called Public Choice.

He did his undergraduate degree in Law and so we talked about a 16th Century writer named Hugo Grotius. (His image is in this post). Grotius is generally conceded as the writer of one of the first books on international law. When I read his De jure belli ac pacis as an undergraduate (which is The Law of War and Peace) he explained something called Pacta sunt servanda (promises must be kept - in essence the standards of the pact should not be violated). Its opposing term is rebis sic stantibus (things thus standing) means that the conditions which brought the original agreement have changed. He wondered whether that concept could be applied to the US election of 2000 and the Mexican election of 2006. In both cases the losing candidate tried dilligently to change the rules of the game, after the election had been held.

Public Choice Economics has done a lot of work on constitutional systems and also on the theory of rent seeking. There is a rich body of literature in Public Choice which should help him build a model. It is interesting that in both countries there is an earlier example of a candidate losing a very close election where the candidate did not contest the results. In 1960 Nixon lost an election under what some observers called questionable circumstances from results in Ilinois. But he chose not to contest the results from Ilinois. The fact that the Mayor of Chicago was one of the first guests in the White House after Kennedy was inaugurated, is probably just a coincidence.

In the 1988 Mexican election, Cuauhtémoc Cárdenas was in the lead as results were being presented live to the Mexican people. The IBM computer system that was producing the results all of a sudden failed(under questionable circumstances) and when the computer was restored Carlos Salinas was declared the winner. Cárdenas chose not to contest the election and Salinas served for six years - in what was the beginning of the changes in Mexico's political system. The 1994 and 2000 elections did not have the same kind of hijinks that put Salinas in office.

But in both the 2000 US election and the 2006 Mexican election the loser of the campaign chose question the legitimacy of the election. The supporters of Vice President Gore choose to question the integrity of the Florida electoral process, with some probable cause. But as the story developed Gore's supporters increased the range and depth of their claims against the process of the election - ultimately their cause became to count every vote. In Mexico the laws setting up the IFE also established a series of procedural guarantees that attempted to assure the integrity of the process. But as it became clear that Andres Manuel Lopez Obrador lost the election, they also began to claim that every vote should be counted - vota por vota. Ultimately both made the claim that somehow the system was denying their voters the right to be counted. In one sense the chaotic environment in Florida added to the confusion but there is little question that the process in Mexico was almost the mark of orderliness.

My friend's dissertation will use the analytical techniques of Public Choice theory to attempt to explain why losing candidates are more ready to not only contest the election but to question the very legitimacy of the system. I will look forward to see what his research will come up with. If he does a great job, it could be a very interesting paper.

If you have comments about the proposal, post a comment and I will pass it on to him.

Saturday, January 13, 2007

One way to look at it - but not mine

This week KFBK afternoon host Tom Sullivan had Phil Angelides on his radio show. Sullivan is a very skilled interviewer. Before I explain what Angelides said it would be worthwhile to remind you that he lost by almost 1.3 million votes. (or 17%)

Angelides claimed that he believed that at least four major public policies were adopted in the state because of the influence of his campaign. He claimed that the increase in the minimum wage, the adoption of a major new initiative on greenhouse gasses, and the freeze on college tuition rates were directly adopted because of his influence. Further he claimed that the state's current discussion about universal health care was also a result of his campaign.

There are a couple of things wrong with his claims. First, any reasonable person might first raise whether each of those policy changes made any political sense. The one I know the best is the freeze on tuition. What is the evidence on this change? First, California has a well developed tradition of holding fees constant in good times and moving them up quickly in bad. In the long term that makes it impossible for families to plan and makes college affordability a crapshoot. At the same time reducing fee revenue for UC, CSU and the Community Colleges may actually put pressure on quality in each of the public sector institutions. Clearly, at least for the issue I know the best a lot of other politicians moved forward on the issue without any reference or care about the Treasurer's campaign.

A reasonable observer might question whether the public policy result of each of these changes made California a better or worse place. For example, when the reduction in Community College fees was proposed in the Assembly, every expert in the room pointed out to the chair of the committee that reducing fees would actually hurt low income students and would aid high income ones (California fees are already so low for community colleges that a reduction actually reduces eligibility for Pell grants for those students).

But the second point is more important. Over the course of the fall, I cannot tell you how many active democrats expressed to me in private (some even made public comments) about how disappointed they were with their nominee. In my own circle many simply refused to vote for him in the general election. If you want to know why he lost, a major point was defections by his own party members. A good many people who are active democrats repeatedly told me how venally political Angelides can be. Many mentioned his savage and unprincipled attack on his opponent when he first ran for Treasurer. He attacked a Catholic former leader of the Senate for his religious beliefs on abortion. Many democrats claimed that Angelides would do or say anything to advance himself. One other example would suggest the type of politician Angelides was. Early in his career as State Treasurer, Angelides wanted to get some publicity for his new position and so he demanded that every investment banker doing business with the state certify that they had not participated in any effort to steal assets from the Jews during the holocaust. Among the firms that he asked for such a declaration was a small botique firm that started after 1987, and whose managing director lost family in one of the Nazi camps. My friend was offended that this politician was using this for a publicity stunt.

I was also struck with Mr. Angelides' attempt to paint his career in the best light possible. I have known him since he was an Assembly intern. His description of what he did for a living early in his career was a lot different than I remember - but politicians always try to guild the lilly. Angelides said near the end of the interview that he had not ruled out running for political office again. From my perception, although it is a good rule of thumb to never say never, I believe the voters pretty well decided whether he will have another shot at statewide elective office.

Make it three steps not one

Mike Nifong, the DA in Durham NC asked the State Attorney General to clean up his mess yesterday and asked the Attorney General to appoint a prosecutor to finish what he started. According to the papers, the defense team welcomed the move. Since the initial accusation, which came at a time when Nifong was running for re-election, his alleged victim has recanted parts of her story a couple of times. The Washington Post calls this a "troubled prosecution" - that is kind; incompetent and malicious are more apt. The case is a prime example of prosecutorial misbehavior. From the initial review of the evidence through all of the process that has played out since then, Nifong has bumbled evidence, ignored fundamental principles of law and generally tried to whip up the crowd in a way that is grossly inappropriate. In one point of evidence a director of a DNA laboratory admitted that he an Nifong deliberately withheld exculpatory evidence. Yesterday in the WSJ Dorothy Rabinowitz compared his actions to the kinds of excesses evidenced in some of the child endangerment prosecutions that DAs in Florida, California and Massachusetts engaged in a couple of decades ago. An African American Law Professor described Nifong's care with the case thusly, he "prejudged the case and injected inflammatory opinions that it was racially motivated... but he had not done the investigation, so he had no idea what happened." So bad was his conduct in this case that within three days of its initial development the North Carolina Bar opened an investigation of his conduct.

A bar complaint has been filed against Nifong which says in part that Nifong engaged in "dishonesty, fraud, deceit or misrepresentation" and that as an officer of the court in his pretrial activity he attempted "public condemnation of the accused."

The best thing for this sorry affair is to move the remaining "case" to the AG, where it is simply likely to be dropped. But then NIfong should be disbarred and if there is any justice in North Carolina, the Duke students should go after whatever financial assets he has in a civil action, where they will undoubtedly win. That is strong stuff but Nifong deserves all the humiliation that society can muster, at least equal to what he put these students through.

Thursday, January 11, 2007


The largest tradeshow for Macintosh devotees is held during this week in San Francisco and so I went. (I was an original Macintosh Evangelista and so go every year.) This year's show was a bit of an anti-climax. There were two new products (discussed below). One thing seems to have changed - a lot of the product booths did a web fulfillment process - so to get the deal from the show you log into a website - that is smart. I did not see anything outside of the iPhone that was a must although I did get a new program which allows you to take PDF documents back into another format. That software which is called PDF office (from a company called Recosoft which is an Osaka company) is simple and really does what it says it will - which is to allow a person to translate back an Adobe Portable Document Format document back to another form. That is very useful in a lot of ways. For me, that was the killer application of the show.

In Steve Jobs' Keynote address on Tuesday he released the long anticipated iPhone (Name subject to lawsuit from Cisco) and something called Apple TV. If you watch Jobs for for any amount of time you understand how much of a showman he is but in this case the sizzle and the substance were both there.

Apple TV is a 40 Gig hard drive with wireless to allow you to integrate all of your digital content through your TV. It is pretty neat although I might have wanted something like this to have a larger storage capacity - the integration with wireless may actually solve that problem - available in February.

The real news-story was the iPhone. The device integrates a phone with an iPod and a real web browser. I have resisted getting a crackberry because I do not like the way it does email - but since the Apple Newton I have wanted something which was light and useful and this seems to be the device. The Crackberries and the Treos both have tiny little keyboards that seem clumsy to me. The iPhone is cool - integrating a series of functions that I am surprised no other phone maker has done. You can dial easily. You can conference in a snap. It integrates all of your contacts and a bunch of other functions like calendar. And it does not use a stylus - which my current Palm TX does. As they keep repeating the pointer you use is the one you have with you always - your finger.

I think I probably will not use the iPod part of the phone - I carry an iPod with me so this will be a phone for me and as a personal data manager but its integration of real web-browsing with things like Google maps and linkages to the phone is wonderful. As you would expect from Apple it has the functions a phone needs - GSM (quad band so usable anywhere), bluetooth and WIFI (including the new N standard). They say this has a 5 hour talk time - which I hope is accurate. This is Apple's usual mix of form and function (great engineering and cool looking design).

The phone is integrated into Cingular- which is my current carrier, and I have found them to be very reliable. This new phone will be ready in June and I have already tried to get into the queue for it. By linking to Edge, it will mean I will have to carry one less device.

Smith's Paradox of Wages and Profits

One of the most important issues in the Wealth of Nations is Smith's treatment of profits and wages. Initially he looks at three components of a nation's wealth - wages, profits and rents. But his treatment of wages and profits, is at first glance somewhat counterintuitive. At some point I will also deal with his differentiation between exchange values and useful values. But for this second post on the WoN, I want to briefly discuss how he deals with these two elements. In a free market, workers are encouraged to sell their wages for the highest price. At the same time, those who own firms, as competition increases are expected to reduce their profits. A fundamental principle that goes throughout the WoN is Smith's understanding that economic transactions are positive and not zero sum activities. If you take the colluding elements out of a market, which Smith argues businesses will often try to implement either through what Hayek calls law (informal) or legislation (enactments of government), you will get gains to the society.

A real life example might help. When programmers are in high demand, their relative wages increase. Thus, those who do the real thinking about computers including programmers are paid very well. On the other hand as you look at very competitive industries, groceries for example, profit margins are reduced because of the immediate ability of shoppers to find an alternative. Both things result in benefits to individuals.

Smith is often seen as a raw supporter of unbridled free markets but he always keeps an idea of equity in mind.

Ranking Universities

This is the first of a couple of posts. In the Governor's State of the State earlier in the week, Schwarzenneger commented that California has three of the top universities in the world. Indeed, by most measures that is an understatement. For example, in the Shanghai Jiao Tong survey, which is cited by the Economist, the state has two of the top five (Stanford at 3 and Berkeley at 4) or three of the top ten (add Caltech at 6). The Newsweek indicators rank Stanford (2), Caltech (4), Berkeley (5) and UCSF(9). Webometrics ranks Berkeley (1) and Stanford (4) in the top ten. What is more striking about the US and the California record is a bit farther down the list. In the top 25 of Jiao Tong only six (Cambridge (2), Oxford (10), Tokyo (19), Kyoto(22) and Imperial (23) and Toronto (24) are not US universities. In the Newsweek rankings that number is also nineteen but a different set. In the Webometric rankings only two non US universities break into the top 25 (Cambridge and Oxford). The Times of London rankings are a bit kinder to British universities putting three UK universities in the top twenty and five more non-US universities in the top twenty.

So what does this all mean? First, it suggests that the state has an enormous investment in cutting edge research in a variety of campuses. Among top ranked universities Massachusetts always has two (Harvard and MIT) while California, when you go down a short way on any list, has a bunch (in addition to the ones listed in every list USC, UCLA, Davis, UCSF, San Diego) and a set of comers (most of the rest of the University of California campuses. Second, the synergies in California between top flight research universities and commerce are hard to miss. The Silicon Valley is between Berkeley and Stanford. At one point the Center for the Study of the California Economy suggested that of our five fastest growing sectors (Computers, Biotechnology, Foreign Trade, Entertainment and Professional Services) all start from a base of a well educated population. The investments that the state has made in public and private universities has paid substantial dividends.

In the next couple I will discuss some research about productivity in universities that should give all of the boosters some concern and then look at some California numbers on how we compete compared to other states. Both of those issues should raise some concern for the long term health of the state.

Saturday, January 06, 2007

Who's on First? - A Continuing Political Question

Polling has begun to look at the 2008 Presidential race - and while I think most normal people are not interested at this point there are some interesting trends. I will admit that it is always dangerous to make much of polling a year before the campaigning begins in earnest. A recent poll looked at major and minor candidates for both parties and their favorable and unfavorable ratings as well as their undecided percentages. The chart shows those numbers. It also includes two other statistics. The first gives a ratio of the negatives to positives. The second, gives an estimation of how much flexibility the candidate has in making up their deficit in popularity (i.e. of the remaining undecideds how many would the candidate have to capture to erase the negative?). A candidate with high negatives but low recognition has the chance to change perceptions for Gore, Kerry and Clinton, public perceptions are pretty well set in the negative and and it would be surprising to see them change. In the 1968 election Nixon had some relatively high negatives and overcame it, in part because voters were very grumpy about LBJ. But I am reasonably convinced that the negatives of Clinton are not likely to be reversed. And in spite of the hype from his silly movie, I do not think Gore is likely to become real in the total electorate. That does not mean that either party might choose a candidate who cannot win in the general - 1972 and 1984 suggest that parties can make silly mistakes (one could also argue that the 1992 GOP primary is another example of that same trend - POTUS 41 was clearly not excited about running for re-election). One other preliminary point. With the exception of Obama, any candidate with more than 50% unknown suggests a pretty unreliable polling subject. (The public perceptions are simply not yet well defined.) At the same time, it is possible that a candidate like Gore with high negatives and low flexibility could turn the situation around - but the chances are pretty small.

For the dems there seem to be two problems. First, those who are well known have high negatives. The average negative for the leading dems is twice that for the leading GOP candidates. Obama, at this point is the great unknown for the dems - not a surprise. But the flexibility that Clinton, Gore and Kerry have in trying to make up their negatives is non-existent. For the GOP candidates their negatives are a lot lower and at the same time their flexibility is considerably greater. For the newer candidates I have not calculated their flex scores, it's probably not a reasonable number.

What does all this say two years before the election? First, depending on what happens to Obama in the next few months, I would expect the democratic race to be more interesting. The three "front runners" if you can call them that are likely to falter and if they do not will have a very tough time getting through a general election. I would expect these kinds of numbers to draw some more democrats into the race. That does not mean candidates like Biden are likely to strengthen. When he announces people will begin to remember his last run - and that may slow him down a lot. Second, Romney seems a lot like Obama although I suspect his negatives are a bit better known at this point, even though he is not well known by the electorate. Third, it is hard to imagine the fervent GOP accepting any of the three front runners - so there is a good chance that in that primary there will be a developing free-for-all. This could be a very interesting 12 months for political junkies.

Attempting to start a trend

In the New Republic there is an article by Rick Perlstein about Ronald Reagan's "secret" ideological mentor - one Lemuel Ricketts Boulware, who was a VP for corporate and community affairs at GE. Perstein sets his premise up thusly -

"Labor historians, but few others, know what "Boulwarism" is. In 1946, the passing of unions' wartime no-strike pledge ushered in the greatest wave of walkouts in history. General Electric suffered terribly. But, when not a single one of G.E.'s subsidiary manufacturing companies struck, G.E. brass promoted the obscure marketing executive in charge of them, Lem Boulware, to vice president for employee relations. Boulware arranged for his title be changed to "vice president for public and community relations." It spoke to his vision of labor relations as guerrilla warfare. "Boulwarism," one labor relations text defined it, was the "attempt to win and hold the loyalty of the workers so as to counter-balance the power of the union." That is a bit over the top as to what Boulwarism was, both in terms of negotiations theory and also in terms of the theory of corporate PR. Boulware seems to have figured out that the two fields were related. But he was not the only one.

Perlstein was a political correspondent for the Village Voice and has written extensively on politics. He wrote a biography of Goldwater and also is working on a political history of the Nixon era (Nixonland: The Politics and Culture of the American Berserk, 1965-1972). He also wrote a book about the seeming paradoxes of American public opinion.

Perlstein's article was generated from the publication of a book by Columbia University Press - Thomas Evans's "The Education of Ronald Reagan: The General Electric Years and the Untold Story of His Conversion to Conservatism" which in turn seems to have been influenced in part by a paper from a faculty member from Columbia who presented a paper in 2003 USCB conference on Capitalism and Its Culture: Rethinking Mid-20th Century American Thought titled "Boulwarism: The First Stage of Reaganism" which argued that the economic ideas of Friedrich Hayek, Ludvig von Mises, Henry Hazlitt and even Milton Friedman played an important role in the world-view and anti-union politics of these business leaders. The paper was presented as a part of a panel called "Rightwing political thought" - which gives you an idea of the objectivity of the whole enterprise.

Perlstein presents the revelations about Boulware as some sort of revelation. I have two takes on this issue. First, I first encountered references to Boulware when I was learning negotiations strategies. Before Roger Fisher's ideas about principled negotiations Boulware's ideas were important in transforming how companies dealt with unions. For the most part his ideas in this area are a backwater. As Perlstein pointed out, post-WWII labor relations were contentious. The Wagner Act and Taft Hartley were bookends of one era of US labor history. Boulware was hardly unique in his thinking about how to deal with unions.

But the other part of the issue is whether Boulware served in what Perlstein and Evans seem to think was an incidious way - transforming Reagan the soft headed lefty into Reagan the led around reactionary that the left loves to portray Reagan as. Let me say first that I do not believe that Reagan was the dunce that the left portrays him as. Perlstein's speculation is mostly unsatisfying. Lou Cannon and other Reagan biographers portray Reagan's transformation in much less excited terms. Cannon argues that the time at GE did two things - it offered Reagan a consistent salary and it brought him into contact with people in the corporate community. One should not forget that Reagan had other mentors also. Any reasonable interpretation of history would suggest that the changes in his thinking came about over time and from a variety of people. The left would like to portray Reagan as a pawn in all of this, who was somehow led astray by these forces. It simply is not that simple. Reagan had a strong set of values, which adjusted over time. But the claim that Boulware was the linchpin in this transformation is ludicrous.

There is a final issue that concerns me about Perlstein's article. Reagan's transformation was not a solitary one, it involved a large part of society. Intellectual movements develop from a variety of sources and over a period of time. Hayek's debates in the thirties with Keynes had a lasting effect on economic and political thought. As Keynes became more mainstream in the US, the presence of von Mises and Hayek acted as a counterpoint to the then developing set of ideas. Reagan was heavily influenced by the writings of Bastiat and other classical economists while he was at Eureka College. Boulware, to the extent that he really had influence on Reagan's thinking, seems to have come at a time when Reagan was rethinking his approach. I believe the more conventional explanation - i.e. Reagan was turned off by the communists in Hollywood; he began to hang around with a variety of corporate types (Boulware included but also a lot of the economic powers of Southern California) and he came back to the thinking about economics that he had been influenced by in his early life.

It will be interesting to me to see how this evolves in the world of Google. At this point when you google Boulware you get a limited number of responses, as befits a minor figure in the fifties. Will Perlstein's absurd explanation of the influence of Boulware on Reagan become one of those urban myths? Or is his commentary merely meant to reinforce the view that is held by so many on the left?

Friday, January 05, 2007

Educational Ludditelike Mercantilists

In the early 1800s there were movements in both England and France that tried to turn back the progress offered by technology. In England the Luddites, supposedly led by one Ned Ludd actively tried to destroy new machines that were making woven goods much cheaper and which the Luddites thought would cause all sorts of calamities. In France, some workers actually took their wooden shoes and threw them into the machines, damaging the machines and forestalling, albeit very temporarily, industrial progress. That act of throwing their "sabots" into the machines brought us the word "sabotage." But a good part of the century before was taken up with debates about the mercantilists who argued that wealth was created by forcing consumers to use home prepared goods.

I can't decide whether two midwestern governors are luddites or mercantilists

Jim Doyle and Mitch Daniels are intelligent governors. But both are considering a way to reduce the "brain drain" from their respective states - Wisconsin and Indiana. “If we can’t lure them here, let’s tether them here,” - so says a member of the Wisconsin governor's commission that is exploring ways to improve the commitment of college educated people to stay in the state. The ways both states have thought about it is to create a "groan or a lant" (a program that switches an award from a grant to a loan - or moves a loan to a forgivable loan if the person does the right thing). Thus, both governors are considering a program which would offer students loan forgiveness to those who are educated and then stay in the state.

An expert who has looked at this set of policies is pretty clear about how well these kinds of programs work. “I don’t think there’s any evidence to suggest that these policies have been effective,” said Bruce Vandal, director of the Postsecondary Education and Workforce Development Institute for the Education Commission of the States. So these kinds of protectionist proposals are likely to be expensive and ultimately unsuccessful.

Perhaps these governors would be better off to think about two alternative policy approaches. The first comes from a classic work by an economic geographer named Charles Tiebout. Tiebout's 1956 article "A pure theory of local expenditure" suggests that people select their locations ultimately by judgments about ambience. People chose their locations on a whole series of issues including the availability of work opportunities and things like livability of the city. I am not a big fan of cold weather but a lot of other people are. A lot of people who now look at where I live don't want to be saddled with a monstrous mortgage. Neither Wisconsin nor Indiana have those problems for now.

The second thing both governors should look at is the work of Joel Kotkin. I am a particular fan of Kotkin's because he seems to be able to think out trends long before most people recognize them. In his influential book called The New Geography Kotkin argued that with the wide availability of broadband people have a significantly greater flexibility in choosing where they want to live than they did in the past. A financial whiz once had to live in New York City - no longer. Kotkin also found that people with like interests tend to congregate (or to use the more common term) cluster. So find a niche and encourage it, and the brain drain problem will disappear a lot quicker than with tethers.

Thursday, January 04, 2007

Adam Smith Redux

I decided over the holidays to re-read The Wealth of Nations. When I last read it I think I was in the University of the Pacific but one of the real plusses of the book is that many of its insights are independent of when you read it. As I go back through this marvelous book I expect to make some more comments. This first one is about the teacher who was Smith. He is a key part of the Scottish Entitlement who studied and then taught at the University of Glasgow. His university was a place where professors earned their keep by putting out their hat. Indeed, Edward Gibbon (The History of the Decline and Fall of the Roman Empire) joked that the dons in English Universities, who were salaried, were less prepared for real scholarly work because they were not forced as the Scottish professors were to "sing for their supper." Smith would literally stand at the back of the classroom hat in hand and students would pay a tuition to their instructor.

The Scottish Enlightenment philosophers were heavy influencers of the American Revolution. They laid a groundwork on individual rights. But they mixed a good deal of normative thinking into their descriptive narratives. One of the early presidents of the College of New Jersey (now Princeton) John Witherspoon was a strong influence on James Madison. Witherspoon was attracted to Princeton by some somewhat false promises but then built the place quickly. Madison stayed a year longer after his undergraduate because a) he could not decide about what he wanted to do for a living and b) because Witherspoon offered him the opportunity to study. Witherspoon did a series of lectures over the time of his presidency for key students. They were compiled in a dissertation at Claremont Graduate University by a California State Senator named Jack Scott.

Smith wrote the Wealth of Nations about the same time as the American Revolution. His earlier major work was called The Theory of Moral Sentiments. It was an explanation of the motives and nature of morality. Smith was a moral philosopher and some of the loonies on the right who quote Smith approvingly don't seem to understand that his underlying philosophy was based on a clearly defined set of ethics. Some economists quip that the Wealth of Nations is one of the most quoted and least read works in the field.

To understand the book, many argue that one must know something about the Act of Union which brought Scotland into the United Kingdom a decade and a half before Smith was born. In exchange for integration the Scots were able to break down the tariff barriers that the Scots had had to live with up until then. That represented a significant positive for Scotland and in part Smith's argument in the Wealth were based on an understanding of the extension of the benefits of the more open trade area that came from the Act of Union to a broader universe.

A key point of the Wealth of Nations is his inherent assumption that given the opportunity business people will collude to lessen the effects of competition. At some point in this series, I will write about how clear the examples of the efforts by the entertainment industry's efforts to control digital technology is an example of this kind of collusion.

Wednesday, January 03, 2007

What a difference a day makes...

Several papers this morning highlighted the remarks of the new Secretary General of the UN about the execution of Saddam Hussein. While the new SG did not express an opinion on the execution, he commented "the issue of capital punishment is for each and every member state to decide. At the same time I would hope that the international member states would pay due regard to all aspects of international humanitarian laws."

Mr. Ki-Moon also commented that Hussein "was responsible for committing heinous crimes and unspeakable atrocities against the Iraqui people. We should never forget the victims of his crimes." The LA Times framed this story as "His UN honeymoon is short-lived." I would frame it in a different way. Something like "What a welcome relief."

Think of what the new Secretary General said. He, as opposed to his kleptocratic predecessor, understood both the rule of law in each country as well as the broader, albeit less enforceable concepts of human rights. Part of those rights were the ones so consistently violated by Mr. Hussein.

One of Mr. Ki-Moon's aides said soon after "The UN policy still remains that the organization is not for capital punishment." Fine. But in this case a legally constituted government took action it deemed appropriate against a brutal former violater of human rights. In the end, I think Mr. Ki-Moon's remarks were quite fine by themselves. It is refreshing to see the new leader understand the appropriate role of the UN and not try to step in where no final concensus on issues among the nations exists. If this is the way he will work, he could help to restore the vibrancy of the organization very quickly from the prior disaster that was Annan.

Tuesday, January 02, 2007

More on the BS of the BCS

Yesterday's victory in the Rose Bowl was a wonderful end to the USC season. I look mostly at the Pac 10 to see how well they did. It has been a long time held belief that the ranking systems underrate western teams. The problem is that there are so many bowls now that counting the real ones versus the "I don't care bowl" is tough - 30 + this year. It is impossible to make sense of them all. In this year - Oregon (with a losing Pac 10 season and barely winning season) got cleaned by BYU (who was ranked) in the Las Vegas Bowl; Arizona State (with a similar record to Oregon's) got cleaned by Hawaii (great season, second in the WAC) in the Hawaii Bowl, Florida State (saved a winning season by winning the Emerald Bowl against UCLA - is SF always trying to catch up with LA?); Cal (who had a strong season) cleaned Texas A&M (who was ranked one higher) in the Holiday Bowl at San Diego; Oregon State (24 - who had a pretty good season) beat unranked Missouri in the Sun Bowl; and USC (who won the Pac 10 but still managed to lose two games in the conference) drilled Michigan (who until then was ranked #3 to USC's #8).

The point is how do you rank all these teams, fairly? The Ohio State and Michigan game, which set up the National Championship and the Rose Bowl was a three point victory for Ohio State - yet USC fairly easily beat Michigan. A couple of the teams simply did not perform up to their rankings. Arguably, even though UCLA beat USC and Cal did not, Cal's ranking might have been justifiably a bit higher (UCLA was unranked, as was Oregon State - the two USC losses). One of the attractions of college football is that on a given day any strong team can defeat any other strong team.

Of the remaining games, in the Sugar Bowl Notre Dame and LSU should be a good game. LSU and Ohio State are both favored by similar margins (one touchdown and a couple of points).

So how do you sort this out? I think there are a couple of responses. First, as many have suggested you have a playoff system where the top sixteen ranked teams playoff similar to March Madness for basketball. There are two problems with that - first, it might well curtail the season unless scheduled correctly. But second, the ranking system still has a bias toward southern teams - the computer is a it better than the sportswriters poll. The alternative would be to go back before the BCS and get rid of all that hoopla. Of the two, the playoff system seems more realistic. (Perhaps there could be a third, continue to BCS which gives lots of fans lots to talk about - but that seems the worst of all.)

In the end what worries me is the idea of college sports that seems to be lost. Athletic scholarships were initiated at the University of Chicago where Amos Alonzo Stagg wanted to equalize the cost to needy students. It has grown up into a semi-monster. Most college football coaches make more than the president of the university. While that pay system may be appropriate in some cases, the purpose of college athletics is not as a cheap feeder system for the few who will actually make it to the pros but to give these young athletes an education. When it comes down to it, most of the players you see in bowl games will be playing, as seniors, their last football games. We need to keep that in perspective. Too often the promise of an education is shallow.

Two final comments - Boise State barely survived against Oklahoma (ranked #9 and #7 respectively) certainly silencing the claims by Boise State that they had a legitimate claim to the national title in the Fiesta Bowl. Boise State had a pathetic 4-14 third down efficiency and had two fumbles and one interception thrown against a team that was a shadow of its 2005 Orange Bowl ranking. Ok they won with some great plays in overtime - but Oklahoma was not the team of a couple of years ago. And second, Hugh Hewitt lost his bet to Congressman John Campbell on the Rose Bowl. Hewitt had tried to weasel out on the wager last week by claiming that the three touchdown margin he was claiming Michigan would win by was 18 not 21 points - which his listeners would not let him get away with. I wonder whether Campbell is entitled to double down on the bet since Hewitt not only lost the bet but SC won by close to the margin he claimed that Michigan would win by.

Monday, January 01, 2007

Year End Tax Strategies - one day too late

TaxProf Blog is in my opinion the best tax blog on the net. But I was confused by a poll response run on the blog of the top year end tax strategy. The top strategies, which are lists in this post have a couple of problems. First, I am pretty sure that they are not in the right order. The first strategy, would always be to reduce one's income - i.e. to max your contribution to a retirement plan. Some of the others in the list are subject to the Alternative Minimum Tax and thus would not be as good in terms of an overall strategy. Others are special situations where the strategy might not work for a majority of taxpayers.

The retirement contribution strategy works for every taxpayer and with the current standards, especially if you are over 50, those strategies are both timely and good long term ideas. Several, including the mortgage payment and property tax strategies (although I would admit I used both) are narcotic like - once done, if you then fail to do them the next year, your tax liability increases.

It is an interesting problem, none-the-less. One wonders what the new congress will have in store for us in the coming year relating to taxes. It is likely that they will not do much to encourage capital formation and that is one of those long term issues that is a lot more important than individual strategies. I am sure I will be talking a lot about that in the coming year.

Numbers do count

This morning's papers contained stories about the US total number of casualties in the war in Iraq exceeding 3000. That is at least a psychological milestone. But one wonders why the stories, like the one in the Sacramento Bee (Grim tally of the dead), covered the total in the way that they did. (NYT - 3000 dead in Iraq, countless tears at home; Washington Post - US Toll in Iraq reaches 3000 - in an increasingly violent conflict; The LA Times described it as a "grim milestone") This is not in any way to diminish the real sacrifice that American troops have made to date. The volunteers who are serving our country are heroic.

There are two important facts that should go into this discussion. The first, cited by a lot of supporters of the war, is that casualties in this war are small compared to others in our history. Indeed the numbers in Iraq a dwarfed by other major conflicts. The two American conflicts where the US had fewer casualties than the current war were the Gulf War (760 and 148 killed in action) and the Spanish American War (where we had 4108 casualties but 385 killed in action). There are a lot of problems with trying to compare casualties between wars. Casualties to disease was a major portion of total deaths on the battlefield in our early history and the technology of war has changed in significant ways. Indeed, this is one of our longest wars (Depending on when you date our involvement, Vietnam was longer) so comparisons are even less appropriate. Added to that is a little noticed story about rates of casualties. December was a terrible month for US forces, but the trendline in this conflict is down not up. In 2006 we had something less than 30 fewer casualties than we did in 2005. The major papers failed to cover that.

What bothers me about these stories is their failure to put the issues of this war into a broader context. The Bush administration has portrayed this war as an attempt to curtail terrorist activities in a broad scale. In essence they believe that by defeating the insurgents in Iraq that the causes of terrorists will be mitigated significantly if not defeated. The opponents look at this only in the context of this conflict. They believe we should not have gone into Iraq. But if one listens carefully to most of them, they also probably have no long term policy context for their pronouncements save the political ones. There are good reasons to discuss whether the broader goals of the Bush policies are appropriate or realistic. As the posthumous interview of President Ford suggested, there are several thoughtful individuals who believed that we should have finished the campaign in Afghanistan before moving on to other areas. But the papers concentrate on details without context.

There are some thoughtful observers who have suggested that in order to make the best policy on Iraq that we will need some additional troops for a limited period of time. Those suggestions may not be considered carefully enough because of the constant commentary about the number of battle deaths out of context. I am by nature naturally skeptical of many military assessments. I remember too clearly the pronouncements by Westmorland and others about how to win the war in Vietnam. At the same time I am also skeptical of political pronouncements - one could have looked at the members of the Baker Commission and come up with their conclusions before their first meeting. So context here is not only important, it is critical. The crux of the discussion here should be on reliable alternatives.

Democratic systems always have a problem in dealing with a war, no matter how good the cause. The constant harping on our battlefield losses does not improve our ability to make the right judgments about where we should go.