City of Tiny Lights

Apocalypse Now, Apocalypse Then, Apocalypse Forever

2010-05-18T20:28:00.003-05:00

On June 28, 1914, the world ended.

On July 14, 1789, the world ended.

On January 31, 1649, the world ended.

On Easter Sunday, 1536, the world ended.

In times of revolution and drastic change, worlds end in a lot of ways. Whether that world is nineteenth century Europe, Old Regime France, Britain's monarchy or the world of Catholic England, it seemed to the people at those times that the world was indeed coming to an end.

Worlds, however, do not end in such great, cataclysmic moments. If we go by the meaning of the word, "apocalypse," which is the ancient Greek for "the lifting of the veil," we see that this seemingly revolutionary process is actually a lot more gradual than the big shocks of history that everyone remembers. What really happens is a "soft" form of apocalypse, a notion that worlds end at a slow pace and also that these changes have within them visions of the end of ends, of the "capital A" apocalypse.

Before that, though, a quick bash of teleology. All apocalyptic visions have a definite sense of teleology about them. Teleology is, broadly, the study of time, but of specific interest here is the teleological view of history. This view holds that history, all of human history through time, is driving at some goal. All human action, thought, effort, society, politics and culture are headed for…something.

What is that something? Well, that all depends on who you ask. Enlightenment philosophers like Condorcet and Kant said that the humankind was perfectible and that time led to this ultimate perfection of the species. Hegel said that the "end of history" was represented in the enlightened despotism of the Prussian state. Marx argued that the end of time is marked by the emergence, through revolutionary stages, of a stateless communist society. Francis Fukuyama, who got his Hegel second-hand, argued that it was in fact liberal democracy that typified the "end of history and the last man."

One important similarity between these views is their non-cyclical view of time. Time, for all these guys, has a beginning, middle and an end. Moreover, in these teleological views, it always seems that time has been leading to the particular moment in which the author was writing. In other words, and rather conveniently, the end times seem to be the present day or at least just around the teleological corner. To most teleological views, we seem to be at the tipping point, that we are (with apologies to Barry McGuire) on the eve of destruction.

Is this true? It might be. It might not be. What is certain is that it shows every age's predisposition to think that it is more important than it really is, to "privilege the present," as the historians (me included) might say. This is an interesting, yet misconceived, notion of history.

This also raises the question of human agency vis-à-vis the apocalypse, or to put it plainly, what role humans have to play in prophecies of the end. In lots of views, and Christianity is just one, humans have a very limited, proscribed role. In short, they cannot stop the end, but they can make sure they are on the winning team, such as it is. There is, therefore, inherent in these views little role for humans to play apart from as pawns in a much, much bigger game. Being aligned with the forces of "good," the "saved" rather than the "damned" stands at the core of the allure of eschatological ideas. Just believe and everything will be fine.

If there is any active role for humans to play in the end of days, it is usually a negative one. Whether by apostasy or polluting or building a nuclear arsenal or drinking at work or peeing in the pool, humans can't seem to hold off the apocalypse. In fact, they seem really good at bringing it closer to happening.

In this idea is arguably the great power of apocalyptic visions – their great rhetorical force. Want to argue that something is really, really, really bad? Say it will end the world. In fact, if someone says that something will end the world, start asking questions. If they are a "true believer," this exchange might prove scary and terribly amusing all at once.

Finally, let's assume for now that the world does indeed end, that an apocalypse/end of time sort of event will happen at some point. In a lot of apocalyptic visions, that is it. The world and everything in it ends. Forever. "Poof" and it's gone. In these formulations, there is no tomorrow, no world reborn anew. Incidentally, this is usually the end in scenarios where humans play a more active role in the proceedings.

In other apocalyptic visions, however, something does survive. The world is "perfected," however that might be defined. It is a time and a place where the "believers" are in control at last. Since this is the case in these notions, this new world and its inhabitants are a very specific group doing very specific things. In other words, it is less like the U.N. General Assembly, more like an Osmond Family variety show.

This presents another worrisome thing about apocalyptic visions and what comes after. Be wary of anyone who promises you heaven on earth. If you happen to believe in a particular vision of heaven, fine. Just don't expect to get it here. Humankind is just too troublesome of a lot for anything like this to get very far. Oh, and when this heaven on earth doesn't work out, the level of cognitive dissonance often leads to periods of extreme violence. So, look out for that.

In closing, what can be definitively said about visions of the apocalypse and the aftermath? There seem to be five broad facets of most of these notions:

A teleological view of history.
Lack of human agency.
Powerful rhetoric.
Specific, exclusive view of the aftermath.
Interesting viewpoint through which society, politics and culture can be considered.

What exactly is meant by a "soft" apocalypse, in view of this? It means that the world that we know and perceive, the world that we structure and that structures us, will end and will change. The past is a foreign country and our present may seem as remote and unfamiliar, even in our own lifetimes.

Ultimately, then, the apocalypse is what you make it.

Words to Ponder, What is Economics Edition

2010-05-18T15:36:00.002-05:00

"Economics is not about prices and money. Economics is about how to get the most out of life. To get the most out of life, you have to pay attention to costs and benefits. Everything has a price. Living life without taking account of the costs of what you do - the financial costs and the human costs, the costs you can measure and the costs you can only guess at - leaving those costs out of the picture is the sure way to lead a meaningless life."
--Russell Roberts, The Price of Everything: A Parable of Possibility and Prosperity (Princeton: Princeton University Press, 2009), p. 124.

Timeo Danaos Et Dona Ferentes

2010-04-30T14:00:00.003-05:00

Well, it seems that the only gifts the Greeks are bearing lately are crippling amounts of debt and a looming sovereign debt crisis that could really turn bad.

My thoughts (in no particular order):

Before confidence is restored in Greek government debt, a floor for the price of the bonds must be found. In my picking around, I would not be surprised if this low limit was between 30 and 40 cents on the dollar. Only at this level will people start to buy.
If the above is true, there will be problems for sure. I am mainly looking at the "PIIGS" countries (Portugal, Ireland, Italy, Greece and Spain). These are countries with a lot of sovereign debt and bailout-taxed public coffers. I think Portugal and Spain would be the first to experience similar problems to those of the Greeks.
If Portugal and Spain go south, look out. This could lead to a complete loss of confidence in the PIIGS countries to meet their debt obligations. This, to me, would signal a major defeat for the very idea of the euro as a currency.
Can the euro survive such a scenario? Possibly, if the "eurozone" is severely contracted. France, Germany and the Benelux countries might form a core of "strong" euro countries that might see the currency live yet.
I find the above situation rather unlikely or (more specifically) irrelevant, seeing as France, Germany and the Benelux countries already have such huge sway over ECB policy.
Another complicating factor is that we are seeing a sovereign debt crisis in the first real-world trial of an optimal currency area. There have been sovereign debt crises before (remember the "Asian congagion" in 1997, Russia in 1998 and Argentina in 1999-2002?), but never one with the potential for regional or global implications like this one.
This might be the tipping point for the "double-dip" recession, more specifically, the second of the dips. During the Great Depression, it seemed that the worst was over by mid 1930, but a spate of bank failures (starting with Austria) led to things getting a lot worse.
Would this have happened had the euro never existed? Yes and no. Yes, because Greece would have inflated the drachma (or Spain the peseta or Portugal the escudo) to get out of this. No, because in this case, the potential for systemic failure would have been lower.
Eurozone countries, and espeically the PIIGS countries, will continue to be hesitant to have a more American-style rating system for their government debt. It will limit their policy leeway in inflating/deflating the currency. On the other side, some fucking good it did us when it came to consumer mortgages.

Link Exchange

2010-04-30T00:45:00.002-05:00

Jeffrey Toobin on John Paul Stevens. Interesting throughout.
An entrepreneur rails against how minimum wages hurt small businesses and their employees.
A penetrating (pun most certainly intended) exploration of how the porn industry has always been on the cutting edge of the intersection of technology and commerce.
Russ Roberts dissects the financial crisis (very ably, as you might imagine). Arnold Kling comments and Roberts responds.
A new book on game theory and how it is still a valuable tool in examining human interaction.
Hand-drawn maps: better because they are task-specific. I see this as further confirmation that human beings are hard-wired to think cartographically.
Fascinating work on the macrohistory of debt.
The new $100 note is ugly. I will grudgingly accept them despite this aesthetic blunder.

Randy Marsh and the Paradox of Thrift

2010-04-20T13:24:00.004-05:00

A greatful world (myself included) has learned so much from South Park over its fourteen seasons and (now) 200 episodes. We have learned that: pig and elephant DNA just don't splice, the true nature of God, Canadians and their flappy heads are not to be trusted, the rainforest sucks, Bono is really a living piece of shit, Family Guy is really "written" by trained manatees, clouds of "smug" are far more dangerous than smog and that Kyle's mom is a big, fat, fucking bitch.

This is but a small sample of the lessons taught by Messrs. Marsh, Broflovsky, Cartman and McCormick and the other denizens of that hick-assed, redneck, white bread mountain town. South Park has really been a cultural touchstone, entering the debate on issues and ideas in a way that few other animated shows ever have.

So, when I saw the episode, "Margaritaville" last year (you can watch it here), I saw another "teachable moment" in their treatment of the economic crisis of 2007-whenever.

We educators love stuff like this, when pop culture intersects with academic topics. Is this just our lame attempt to "connect" with our students? I really don't care much. I thought it was funny and insightful, so in it goes.

Randy Marsh and Kyle the (Sort Of) Keynesian

Here's the story (for those who didn't watch it or forgot the particulars): Randy thinks that Stan should learn about saving his money. They go to a local bank and Stan deposits $100 in a mutual fund, which is immediately wiped out. Stan is understandibly pissed off.

At home, Randy tries to explain that the economy is so bad because people are spending their money on frivolous luxuries. Ironically, in the middle of this tirade about conspicuous consumption, Randy mixes himself a margarita in an expensive Margaritaville drinks blender, the sound of which ends up drowning out his voice.

The people of South Park are generally unhappy about the economy and are casting about, looking to place blame somewhere. Predictably, Cartman blames Kyle and the other Jews in town for hiding all the money in a secret "Jew cave." Randy, however has other ideas.

He claims that the economy is angry and to appease it, people should limit their spending to bare essentials. In typical South Park fashion, this gets blown way out of proportion, with people wearing bed sheets and riding llamas. This is all to try and appease the angry economy, so that it will treat the people better.

All the while, Kyle keeps insisting that the economy is just a construct, not a living, angry being. He says that, rather than saving their money, people should just have faith in the economy and spend their money. Randy and his followers then decide that they must kill Kyle and enlist the help of (who else?) Cartman, bribing him with a copy of Grand Theft Auto: Chinatown Wars.

Kyle then sacrifices himself for the town, paying everyone's bills with an American Express Platinum Card, Stan tries to return the Margaritaville mixer, only to find out that it has been bundled and sold to the Federal Reserve and is now worth $90 trillion. Stan breaks the mixer as the Fed officials decide on another bailout using a headless chicken. The economy recovers, but President Obama gets all the credit, not Kyle.

Great stuff, if you ask me.

Randy seems to be reacting rationally when he wants people to save their money in hard economic times. Kyle, however, presents the opposite perspective, and what might be explained as a Keynesian one.

The Paradox of Thrift Explained and Challenged

In times of economic hardship, Keynes and his followers advocate not less spending, but more, by individuals and government. Aggregate demand must rise, so the government must create more money, spend more of it and keep the "circular flow of capital" moving to stimulate the economy. Another part of this is lower interest rates, making money and credit easier and more accessable.

Keynesians argue that increased saving rates, while they might benefit the individual, hurt the economy in general. The government creates new money through inflationary policies, but that money is stuck in the banks through peoples' savings, thus creating a liquidity trap. This is the paradox of thrift, that saving can be detrimental to the general economic health of a system even while benefiting individuals.

So, then, Kyle was right. Have faith and get out there and spend your money, right? Or was he?

Randy Was Right...Kind Of

According to critics, Randy got the action right but the reason wildly wrong. According to these same critics, Kyle misunderstood how spending and saving influence the general health of the economy.

If more of us take Randy's advice and save money (not so much on the bedsheets and llamas bit), this will cause the amount of money in the coffers of banks to rise. This money represents real loanable funds for banks, will encourage the banks to lend and in time, bring interest rates down. So, to put it in other words, the less people spend on Margaritaville blenders, the more is available to lend.

In another sense, both Kyle and Randy got it wrong. If you consider prices and inflation being driven by the ratio of consumption to investment, all that the demand for money (or lack of demand) tells you is how much people prefer money over the goods and services that it can purchase. The market for money (and other goods) functions primarily as an informational system, transmitting peoples' preferences. If this sounds familiar, it comes from the ideas of this guy.

Consumers don't cause recessions. Misalignments in the complex web of monetary and industrial inputs and outputs cause recessions, and consumers have to adjust as these misalignments are, well, realigned. Consumers don't choose to spend or save. They really choose to spend now or spend in the future. They consider time in their spending decisions.

Changes in spending patterns are temporary; I think both consumers and producers understand this. This is why businesses expand even in times of economic contraction. If they do not expand capacity, they will not be able to handle demand when spending corrects and people want to buy again. It seems simple to me.

Here, Kyle misses the point. What we have to have faith in is that the cycle will come around again as surely as it tanked. We may decide to curb our spending now, but it is only to support our spending later.

Conclusion

In closing, I suppose the real point is that there really is no paradox to thrift. People convey information through their resource allocation decisions. This changes in the short term, but never for very long.

See? You can learn something watching cartoons.

Except Family Guy.

Words to Ponder: What is History Edition

2010-04-18T00:58:00.003-05:00

"History ought never to be confused with nostalgia. It's written not to revere the dead, but inspire the living. It's our cultural bloodstream, the secret of who we are, and it tells us to let go of the past even as we honor it, to lament what ought to be lamented, to celebrate what should be celebrated and, if in the end, that history turns out to reveal itself a patriot, well then, I don't think Churchill or Orwell would have minded very much, and as a matter of fact, neither do I."
--Simon Schama, A History of Britain (2000), Episode 15: "The Two Winstons."

Link Exchange

2010-04-14T15:09:00.002-05:00

Women who adopt their husband's surname might be punished in the job market. I know that perceptions are powerful, but I wonder how widely applicable this is. Ladies, any thoughts?
Diarmaid McCulloch has a new book about the history of Christianity. It looks interesting, well-written and an admirable attempt at a one volume treatment of such a huge subject.
Freakonomics Radio's latest edition, on "faking it." Can "faking it until you make it" be a good thing? I suspect that it can, but I think it depends a lot on the faker, not the subject faked.
Robin Hanson ponders why laws are always flexible, especially where the lawmakers and law enforcement are concerned.
Why are a lot of professors leftists? This article seems to argue that they have no other choice. I am not sure I agree.
I think this guy is just being Catholic out of spite for his ex.
The ups and downs of the traditional English breakfast.

The One with the Bow Tie Retires

2010-04-09T20:31:00.002-05:00

No, I am not talking about former Illinois Senator Paul Simon. He died in 2003. I am also not talking about Tucker Carlson, although I wish I were.

I AM talking about the news confirmed today that U.S. Supreme Court Associate Justice John Paul Stevens will retire in June.

Stevens has served on the SCOTUS since his appointment by Gerald Ford in 1975 and has among the longest tenures on America's highest court.

My thoughts on this development (in no particular order):

The "ideological balance," such as it is, on the SCOTUS will really not be effected by this news. Unless President Obama appoints a justice that ends up "going Souter" and changing sides, things will remain the same.
Don't expect any of the "conservative" justices (Scalia, Thomas, Roberts, Alito and sometimes Kennedy) to retire anytime soon. Especially Scalia - they will now have to drag Nino's body out of his office before he would retire.
The main issue, from the standpoint of dynamics on the court, remains the same: what to do about Anthony Kennedy? Stevens was good at building consensus or, if you like, getting Kennedy to agree with himself and the other "liberals." Without Stevens, Kennedy is still the justice to keep an eye on in close decisions.
The new nominee will face tougher scrutiny in the Senate Judiciary Committee and the Senate generally than (now) Associate Justice Sotomayor did last year. This is usually the case (Reagan with Scalia and Kennedy, G.W. Bush with Alito), except when it isn't (Clinton with Ginsburg).
Stevens is considered the dean of the "liberal" faction of the court, but despises this term himself. This shift has been gradual, but accellerated in the 1980's. Who takes over for the liberals on the court. Senority says Steven Breyer, but who knows?
It will be interesting to see how much "political capital" Obama is willing to spend on this process. The mid-term elections later this year are going to be rough and the confirmation hearings to replace Stevens might become the political story of the summer.
Also, I wonder if these elections, with conservatives worked up, looking to take the President and his party down, will influence Obama's pick to replace Stevens. It shouldn't, but the possibility cannot be ignored. After all, we are dealing with career politicians.
Stevens represents one of the last of a breed of federal jurists, it seems, for whom politics was a secondary concern. For his generation, the practice of the law was a noble one that carried majesty with it. That seems to be less and less the case.
Successors? The list seems short, the also-rans from Sotomayor's nomination: Elena Kagan (U.S. Solicitor General), Diane Wood and Merrick Garland (both appeals court judges). I won't get into why I think this here, but I think Obama will pick Kagan.

The Broken Window (or Side Mirror) Fallacy Explained

2010-04-07T20:03:00.003-05:00

It is great when life presents you with a perfect opportunity to illustrate the abstract with examples ripped from the headlines.

In this case, to be specific, the thing being ripped was a side mirror on a car and I think it presents me with a perfect "teachable moment," as it were, for an old (but deceptive) economic fallacy. That fallacy is the "broken window fallacy."

The inspiration? Again, it is my girlfriend/muse, and it arises from something unfortunate that happened to her.

The Story

Unable to find parking near her place of employment, she found a parking space some blocks away. She parked her car and made her way to work. There was one nagging thought on her mind, it seems. She had suffered misfortune (or, rather, her car had) on this particular street before when a side mirror had been knocked off a few years ago.

When she returned to her car, guess what happened again? Yep, side mirror dangling by the electrical wires, along with other collateral scraping and denting. To add insult to (mechanical) injury, the offender didn't even leave a note. Such is the cruelly competitive world of parking in a large city.

When she told me this story, my first reaction was naturally one of sympathy and understanding. I mean, it is bad enough to have to deal with unexpected car repairs, worse when the offender will not do the right thing and just own up to it.

Then, as ever, I got to thinking. I focused in on the "do the right thing" part. If this person had left a note, and had been honest enough to pay for the repair, the parallel I am about to draw would not work (at least not directly). Because they didn't, it does.

I will come back to the "do the right thing" bit in a moment, but first, the theory.

The Broken Window Fallacy Applied

We now have my girlfriend with a broken side mirror on her car. She is obviously not happy about this and the money that it will cost to repair. This much is clear. What is not so clear here is if anyone benefits from this situation.

It might be said that someone indeed does. My girlfriend will have to pay to have the mirror replaced, making herself less well-off (by the amount she has to pay for the repair). Who IS made better off, or so the first part of the fallacy goes, is the mechanic who does the repair.

He is made richer by the same amount that my girlfriend was made poorer, all the while providing productive work for a mechanic and the whole supply chain that put that mirror in the mechanic's hands.

So, according to this view, the asshole who did the damage was a public benefactor, creating work and profit where none might have happened before. Sounds sensible, no?

Well, no, it doesn't, actually. In fact, if you think about the broader implications, it seems downright foolish.

What the above view fails to take into account is that the money my girlfriend had to spend to get the mirror fixed is no longer available to her to put to another use. Let's say (for sake of example and because she just bought one) she wanted to buy an espresso/cappuccino maker before the mirror was broken. Now that it has to be repaired, she will not buy the cappuccino maker. This makes her one mirror and one cappuccino maker poorer.

So, as it happens, that asshole was just that and nothing more. He did not cause benefits; he cost people money. He was just an asshole.

Differing Interpretations and the Bigger Picture

Let's keep the theoretical disagreements simple: Keynesians would say that the asshole was a public benefactor because he helped to boost aggregate demand and stimulate the economy in a small way. Austrian school economists, and Frederick Bastiat (who first articulated the "broken window" idea in this essay in 1850) would argue that my girlfriend was made poorer and their might be other motivation behind the actions of the asshole (what if he was in collusion with local mechanics to cause damage?)

As for larger implications, well, think about large-scale calamities: war, terrorist attacks, natural disasters. Keynesians, or supporters of the asshole, would say that these things raise aggregate demand and can stimulate the economy in times of recession or depression. This is where the oft-repeated (and ultimately wrong) notion that WWII got us out of the Great Depression comes from.

What this view fails to see is that things like war, terrorist attacks and natural disasters are REALLY COSTLY TO BEGIN WITH! Yes, these calamities do raise demand for certain goods and services, but the opportunity cost (trade-offs) are usually not worth it.

Seeing something like World War II, the 9/11 attacks or Hurricane Katrina as ultimately beneficial to the economy is just plain naive. It is almost like the idea of burning the village in order to save it.

Conclusions

Causing damage and costing people money does not ultimately make people richer. It makes them poorer.
Actions often have consequences that are unintentional, but real nonetheless.
If you hit someone's car, be considerate of their property and just fess up. You are making people better off (mentally and economically) by doing so.
Did I imply that Keynesians are assholes? Sort of. Paul Krugman certainly is.
I again thank my girlfriend/muse for the inspiration. See the benefits of dating someone who lives the life of the mind? You never know what you'll inspire.

Link Exchange

2010-04-07T14:58:00.003-05:00

This American Life episodes in infographic form. These are good if, like me, you like the show but are occasionally annoyed by Ira Glass and his crew.
Want the streets to be safer for motorists and pedestrians? Remove all the signs. Let the order emerge from below, not be imposed from above.
Jodi Beggs searches for the elusive upward-sloping demand curve. The paradox of a Giffen good, a good that people consume more of when the price goes up, is an important implication of price theory.
Create a map of Michigan using just your own two hands. I have personally seen at least two native Michiganders do this very thing. They must teach it in schools up there.
Do unpaid internships violate minimum wage laws? Officials in California, Oregon, New York and elsewhere seem to think so. Don Boudreaux and John Stossel aren't so sure.
Robin Hanson on Matt Yglesias on political ideology. I agree that, in political debates and ideology formation, who gets respect is more important than abstract points of doctrine.
Want to pay more in taxes than you have to? Fine. Just don't force me to do the same.
Will Wilkinson on the "liberaltarian drift." I guess I agree that, tempermentally, lots of libertarians are close to liberals. For me, though, it comes down to the fundamental problem of modern libertarianism in America (as stated by Penn Gilette): the problem is getting the gun guys to agree with the drug guys.
When do professors get their politics, such as they are? Why are most professors and people in academia "liberal?" Read more here.

Two New Posts?

2010-04-02T22:40:00.004-05:00

Yes, there are two new posts here at COTL:

A Link Exchange that appears below. It involves breaking up banks, why the Post Office sucks, evolution and Victorians talking about sex (yes, they had it back then).
A post answering the question: "what is fascism?" Since I started it, wrote way too much and revised it, it appears a few days back. Look under the posts for March 30th for that one

As always, commenting is encouraged. So are ideas for what you might like to see here.

For the Christian and observant, have a good Easter Weekend. For the rest of us, well, it is a weekend nonetheless. Means a bit less when one is unemployed, but whatever.

Link Exchange

2010-04-02T21:21:00.002-05:00

Excellent piece on the "mystery of capitalism." The author argues that capitalism faces a lot of deep-seeded acrimony, resists telling its own story and has no great heroes. It is counterintuitive and that is perhaps what makes it all work. I agree.
Megan McArdle with further proof that the U.S. Postal Service, were it a private business, would go bust, like, yesterday.
Break up the big banks and have real competition instead of crony capitalism? Arnold Kling thinks we should. His case is a persuasive one.
John Maynard Keynes as "economic Impressionist," or if you like, the Seurat of economics? This, for me, raises the ever-wide gap between the elegance of a theory and the messy work of putting it into practice.
Long before Alfred Kinsey and longer before Masters and Johnson, a researcher at Stanford University questioned women about their sexual behavior and their views on sex. Interesting stuff, given what we think we know about attitudes towards sex in the early twentieth century. Read it here.
Reviews of three new important books about the Dreyfus Affair (click the link if you don't know what this is. No, it has nothing to do with this guy.) The Dreyfus affair raised questions of antisemitism, class, nationalism and whether the rule of law can be bent in times of crisis, real or imagined.
Evolution and the historians. The notion of culture being an adaptation of nature rather than an attempt to change it is an interesting (if debatable) one.

Rastafarian to Economics in Six Steps

2010-03-31T15:36:00.003-05:00

To quote that great American man of song Jack Black: "You can't manufacture Inspirado."

To put it another way, you never really know when the Owl of Minerva will swoop down and strafe your brain-banana.

Such a thing happened last night, and it all emerged from someone making fun of me. That someone was, as it happens, my girlfriend.

First, some background. This wonderful woman seems to take great joy at making fun of how nerdy I am. You know...all my maps and economic theory and historical ramblings. It seems to be one of her favorite indoor sports (though I get the sneaking suspicion that she actually likes it but would never admit it).

Anyway, I was going on about my post of a few days back, "Is Economics Dead?" She claimed that she was a loyal COTL reader and that she had read that post. I asked if there was anything in particular that she liked. She said some of the words were interesting.

When I asked which ones, she replied, "economics and Rastafarian." Now, I know that I didn't mention Rastafarianism in the post, so I know my chain was being yanked.

What did occur, though, was an interesting thought experiment: could I connect Rastafarianism and the academic study of economics in six steps? I told her this was great "blog fodder."

She asked if she was my muse. I answered that, in a way, I supposed she was.

So, without further ado, I attempt to connect...

Rastafarian to Economics in Six Steps

1. Rastafarianism is a monotheistic, new religious movement that emerged in a Christian culture (Jamaica) in the 1930's. Rastafarians believe in the Second Advent like Christians do, but they believe that it happened in the person of...

2. Emperor Haile Selassie I of Ethiopia, who denied that he was divine, but who did rule Ethiopia from 1930 to 1974. His reign was a long and eventful one, fighting a bloody, anti-colonial war against Benito Mussolini's Italy in 1935 and 1936. Domestically, though, Selassie's main problem was that of economic development. He knew that, to survive in the 20th century, his country would have to undergo...

3. Modernization, which is a contentious topic among historians, political scientists and other such eggheads. It basically studies the social factors and the ties an "underdeveloped" country has to "developed" countries and how these factors interact and can change to help a country modernize (whatever that might mean). These ideas about modernization have their roots in the Enlightenment with...

4. Marie Jean Antoine Nicholas de Caritat, marquis de Condorcet, who, in 1795, postulated that advances in technology and economic changes could change moral and cultural values. This notion, the Idea of Progress, became a cornerstone of Enlightenment thought and influenced liberal ideologies well into the twentieth century. These notions of progress were related, in Condorcet's mind, to democratic political institutions. Condorcet studied, in particular, voting in democratic systems and found a problem, known as Condorcet's paradox. This is basically the idea that majorities choices in any decision situation are intransitive and can conflict with each other. This paradox in decision making was further expanded upon and defined by...

5. Kenneth Arrow, who's "impossibility theorem" takes Condorcet's paradox to the next level. Arrow argued, in his Ph.D. thesis and later in his 1951 book Social Choice and Individual Values, that no voting system can translate the preferences of individuals into a group-wide preference without the system resorting to dictatorship. In other words, the rule of the majority can never really be achieved and not have a dictator. This work laid the foundation for social choice theory, which is an important theoretical framework in...

6. The Academic Study of Economics.

So, there we have it. From Jamaica in the 1930's, we went to Ethiopia, back to late eighteenth century France, forward to twentieth century America to arrive at our final destination, making several interesting discoveries along the way.

Oh, for my fellow documentary junkies, can you tell I was raised on a steady diet of James Burke?

I hope you found this thought experiment interesting, enlightening and further proof that everything is connected in one way or another.

Oh, and to my muse, a sincere thank you. I usually balk and get defensive when she pokes gentle fun at my preoccupations (I secretly like it, but I would never let on...)

The Chuckwagon: Shredded Beef Carnitas (Sort Of)

2010-03-31T15:12:00.002-05:00

The slow cooker is really the great tease of the food world. You gather your ingredients, put them all in the stoneware vessel, turn a knob and, well, wait. Usually for hours.

Meanwhile, ever so slowly, the wonderous smells of your food start to emerge and waft around you. As you go about your daily tasks, you are tempted and seduced by the ever-stronger aroma of food that you cannot have. It is a good exercise in forebearance and discipline.

This is not a problem if you are gone all day while it is cooking, but be ready for the big barrage when you open that door and are confronted by a wall of deliciousness. Even if you are in and out of the house all day, when you return, the aroma gets stronger; while you are away, it is at the back of your mind.

This is one of my favorite slow cooker recipes for a lot of reasons. Since it is ideal as a filling for tacos and such, it goes a long way. It can be adapted and added to, depending on your tastes and heat tolerance. Lastly, it freezes well and can be a real frozen "ace-in-the-hole" when the food stores are running low.

Oh, why the "Sort Of" in the title? Well, I know how real carnitas are made and they are really easy. I also know they are not done in a slow cooker. For a great, easy and tasty recipe that is closer to traditional carnitas, try this one by Mexican cuisine Renaissance man Rick Bayless.

Shredded Beef Carnitas (Sort Of)

Ingredients

2.5-3 lb. boneless chuck or rump roast
1 10oz. can of diced tomatoes with green chiles
1 c. beef broth
4-6 cloves of garlic, peeled and smashed
2-3 chipotle peppers plus 1 tbs. of the sauce from the can*
1 large onion, chopped
1 tbs. ground cumin
1 tbs. dried oregano
Salt and pepper to taste

* These particular chipotle peppers are sold in a can with an adobo sauce. They can be found with the Mexican foods in most grocery stores.

Method

Put roast in slow cooker.
Add (in this order) tomatoes/green chiles, broth, garlic, chipotles, sauce, onion, cumin, oregano, salt and pepper.
Turn slow cooker to "LOW," cover and cook for 4-6 hours. When done, the meat should be tender and falling apart.
Remove the beef from the liquid and reserve some of the liquid.
Let cool briefly.
Shred beef with two forks until, well, shredded enough for whatever you are using it for.
Moisten beef with some of the liquid until it is damp but not sopping wet.

Serve this with any/all of your favorite trimmings. I particularly like guacamole and a little lime juice on the beef, all wrapped up in a warm tortilla. This, as I said, can be used as a taco filling, served along side rice and beans by itself or however you want to enjoy this succulent, tasty roast.

So, gird up your discipline, get it all together and let 'er rip. On second thought, maybe plan to be out of the house all day so you are not tempted. Even if you are around, the pay-off is well worth it.

What is Fascism?

2010-03-30T23:12:00.005-05:00

(N.B. This post was going to be longer. A lot longer. It followed the upward and outward spiral a lot of my posts do. I have shortened it, plagiarized myself a lot and I think made it more acccessable. If anyone out there is interested in a more in-depth look at this, let me know.)

When groups of ideas are labelled, these labels can (and usually do) take on a life of their own. They change, mutate and often become so completely divorced from their original context that they are almost meaningless.

These labels, though seemingly meaningless, retain a great deal of rhetorical power, but rhetorical power of the "bash over the head" type, not the Oxford Debating Society type.

Such it is with fascism.

Fascism, or to call someone a fascist, has basically mutated into a term for anything or anybody that you hate or disagree with. It is a term that has such power while at the same time being so wildly understood as to be contradictory at best and laughable at worst.

I have personal experience with this. In teaching the history of Modern Europe, I lectured on the rise of fascism in Europe in the 1920's and 1930's. One of my express missions in doing so was to let the students know that this term refers to a specific group of political, economic and social policies that emerged from a specific place at a specific time.

I tried to impress upon them that fascism can be defined, but that these definitions are not, well, definite. To put it another way, it is hard to say which "fascist" regime in Europe was the archetype, the quintissential fascist polity and society.

The Rise of Fascism in Europe

Flip through the slides of this presentation, done for my History 120 class. I think it will provide definitions of fascism, examples of fascist regimes and some conclusions. This presentation on the rise of the Nazis in Germany might also be of interest.

Final Thoughts

"Fascist" as an epithet has, as terms often do, become completely divorced from its original meaning. It simply means, "someone I don't agree with" now.
There were several other regimes, like Franco's in Spain, that had the trappings of fascism, and were certainly authoritarian, but were not really fascist. Particularly notable here are Estado Novo in Portugal, the Fourth of August regime in Greece and the Iron Guard in Romania.
What was the closest regime to a "purely" fascist one? I would say Mussolini's Italy. Feel free to debate me on this one.

Link Exchange

2010-03-30T22:32:00.002-05:00

Margaret Atwood's take on Twitter.
Tyler Cowen explains the greatest flaw with the labor theory of value.
Land smugglers? Indonesia has them.
Apparently, the founders of the American Economic Association in the 1890's were progressive, scientifically minded and really into eugenics and race purity. In other words, they were absolutely typical of many intellectuals of their age.
Baffled by the whole "militia movement?" Robert Churchill's recent book is a good start.
Magnetic stimulation to certain parts of the brain can change moral judgements.
Peter Boettke wonders, "why is economic common sense so hard to communicate?" I wonder if, "economic common sense" *might* just be an oxymoron.
With talk of the 2010 Census in the air, check out this chart of the most populous US cities according to the first census in 1790. New York tops the list...with 33,131 people.
The allure of glamour.

Moving Thoughts

2010-03-27T23:12:00.003-05:00

(This whole post, in one way or another, is informed by George Carlin's classic routine, "A Place For My Stuff." Watch it here.)

I moved recently and, as those who have done this before know, it is never a cut-and-dried task. There are always things you forget, corners you forget to dust, boxes you didn't tape right, hitching a trailer in a blinding snow storm. That sort of thing.

I suppose as moves go, mine was relatively uneventful (apart from the fact that I did most of the work without my glasses, no mean feat). It went how most moves go, in stages:

Gather boxes, tape, labels, Sharpies, garbage bags and other vessels for stuff.
Let those things sit around for a week while you do absolutely nothing.
Realize the move date is coming up and frantically start to sift through your stuff.
Establish guidelines for what stays and what goes. The dusty, rarely-used, broken, stained, too-hard-to-clean, or about-to-collapse stuff goes.
Gather usable, but unwanted stuff, and donate it or give it away. Feel good about yourself and, as a reward, do absolutely nothing for another week.
Realize that the move is even closer now and start to jam stuff into aforementioned boxes, bags, pants with the legs tied off, whatever. This is the stuff, naturally, that made the cut and is not junk or potential home decor for some insufferable hipster.
Begin cleaning, realize the enormity of the task and then do absolutely nothing for a few more days.
Realize that you move in three days and turn into some hopped-up combination of a house-parlour maid and Bob Vila, cleaning and repairing (or masking) all your sins.
Realize that it is all done and then do nothing until the trailer is ready for pick-up.

That's about how it went.

The interesting thoughts, however, came about in Stage 9. There I was, clean apartment, everything packed and sitting neatly (?) in a pile in front of me.

First I thought, "sitting in front of me, in boxes saved by Yo La Tengo Shirt Guy at the corner store, is, well me. These are, as they say, all my earthly possessions. This is all I got. Everything I own in this world that is not my body is there in a pile. This thought depressed me, as you might imagine.

Can a life be reduced to this? Is this the sum-total of my estate? What does this pile of boxes and bags mean, exactly?

I then thought, "No. This is not me. I am me, and these are just material possessions. Why, I could get rid of all of this and still be me. I am not defined by my posessions anymore than I am defined by a job, nationality, religion, ethnicity or baseball team affiliation (well, maybe not so much that last one)."

Well, then, why do you keep any of it? Why not just hippie/Jesus out, dump it all and just live, man?

Like it or not, I then thought, I have grown attached to some of these things. Why?

Then, the real question hit me: why did you keep the particular things you did and get rid of the rest?

Some of it is personal, things that remind me of my past and the past of my family. These things are priceless (not in a literal sense, but you get my meaning). A lot of what I kept were books. As an academic, they are the tools of my trade and the medium through which I keep my mind active and discursive as ever. Movies and music also made it past the garbage/Goodwill stage. These things make me happy and give me perspective, so I kept those. Practical items, too, like clothes. Well, there are few who want to see a naked guy wandering around, and almost none who want to see a naked me, so I had better have those. Apart from my computer, that was about it.

What does any of this prove? I think it boils down to value. When asked to move, we take the path of least resistance. We want to move as little as possible as quick as possible. We must make some hard decisions about the material things around us. In the end, it shows what we really value most. I guess I value my memories, ideas and not being naked.

What I am perhaps getting at is that a move involves a certain value calculus, one that is different for everyone. This process of winnowing is different for everyone and I suppose the process says as much about the individual as the things processed. It is all signalling, to put it another way.

So, whether you are moving are not, take a look around your place, pick out a few things and ask yourself: "Why am I keeping this? What does this object mean to me? What does it say about me? What would I think if I never saw it again? Would I care?"

The answers might surprise you. I know they surprised me.

Link Exchange

2010-03-27T22:22:00.002-05:00

Annoying book review cliches. These are as plain as the nose on your face.
Great interview with econ Nobel Laureate Gary Becker. Becker is a living legend, and he is optimistic about the economy in general. I tend to agree.
Is curing dissociative identity disorder (multiple personalities) murder? Robin Hanson seems to suggest it is.
The connection between U.S. drug policy and the gang wars in Mexico. The "War on Drugs" causes violence rather than preventing it. Time to sue for peace.
Is it worth it for a city or country to host a large sporting event like the Olympics? Probably not.
Women in countries with healthier populations prefer more feminine-looking men. I think this is in line with the main thrust of understanding in evolutionary psychology.
David Cameron "rallies the base." Four months ago, the Tories had the election wrapped up. Now it will be a fight to the finish and (I think) a hung Parliament.

Is Economics Dead?

2010-03-26T19:33:00.003-05:00

In its current form as an academic discipline, David Brooks thinks so.

First, a caveat about me and my opinion of David Brooks. Sometimes I think he is right on the money, other times I think he is on some other planet. On this score, I tend toward the former.

Economics is considered one of the "social sciences," basically disciplines that attempt to explain human behavior (in one way or another) using empirical methodologies. These disciplines usually include political science, psychology, sociology and economics.

Brooks does not take issue with the "social" part. It is the "science" that he has a problem with. He basically argues that economics will, in the future, be more like history or philosophy. It will be a powerful voice in a chorus of voices trying to explain the human condition as it is, was or will be.

What he thinks is at an end, though, is economics as a science in the sense that it is meant to render definitive answers about certain questions, follow a method of experimentation, value the quantitative over the qualitative and (perhaps most importantly) make predictions about how people might behave in the future. He posits, in fact, that economics will become more like art than science.

I do agree with Brooks that human behavior is a slippery thing that is not easily explained by any of the social sciences. What's more, I also agree that any pretense that any of these things are close to the "hard" sciences like chemistry or physics or biology. These sciences can explain how people work. The social sciences attempt to explain why people work, and this is a much harder thing to do.

I disagree with Brooks in that I don't think it was the recent economic crisis that was the "tipping point" for this supposed change in economics. I think of it in a more positive manner. Interdisciplinarity has been a force in academia for some time now and I think economists are finally coming out from behind their figures and charts to realize that they can learn from their colleagues. I think that this is a good thing, in the main.

The question, as a bit of an aside, arises: well, can any discipline keep its integrity in such an environment? Yes, because there are certain sorts of questions that one discipline answers better than others. Want to know about the causes of schizophrenia? A historian might be able to tell you how this disease and the perception of it changed over time, but for the direct answer, best to ask a psychologist. I could go on, but I think you get the point.

Greg Mankiw offers a different take on this, disagreeing pretty much in whole with Brooks. He says that journalists fundamentally misunderstand changes in academia and does not realize that professional economists are not really in the business of predicting the future anyway.

He goes on to admit that, while certain changes do need to be made to basic econ courses, the breadth and depth of them are good for now. He admits he might be biased on this score, and he is right to do so. He is the author of damn near the most popular text for Microeconomics 101 classes today.

In the end, though, I think Brooks is on to something here. He is calling economists to remember that their roots are not in the sciences. The earliest people you could call economists came from other, older disciplines that probed the human mind and condition.

To take but one example: if you were to meet Adam Smith and call him an "economist," he would have no idea what you were talking about. He was really a moral philosopher, interested in how people can achieve happiness and live, well, the right way.

It was in this spirit that he wrote his first (under-read, in my opinion) book The Theory of Moral Sentiments in 1759. This book provides the moral and philosophical underpinnings for his later (more quoted, less read, even less understood) work The Wealth of Nations in 1776.

You would get the same quizzical looks from other early "economists" like David Ricardo, Francois Quesnay, Anne-Robert-Jacques Turgot and others. In fact, the first person you might be able to call an economist as they developed to the present day might be Alfred Marshall, leader of the "marginal revolution."

So, back to my original question: is economics dead. I think not, but the way the discipline looks at its problems and itself will, and should, change. Economics can be a powerful voice in explaining human behavior, motivation and action.

One voice, however, does not a chorus make.

Link Exchange

2010-03-26T18:19:00.002-05:00

Interesting article and book about an often-forgotten investment bubble of recent years: baseball cards. In the 1980's, baseball cards became seen as a viable investment, people rushed in, prices rose and the bubble burst in 1994 with the baseball strike. I was part of this bursting (in a minor way), and I suppose it was an early education in boom and bust.
Speaking of booms and busts, this is a super summary (in chart form) of US booms and busts (and other economic data) for the period 1775-1943. This, for me, is a real conversation starter.
Interactive diagram showing why general equilibrium analysis is no easy task.
I have seen this making the Internet rounds, an attempt to show that we depend heavily on that which is supplied by government. Here is the libertarian response. I guess it just goes to show that our society is really neither.
Should airlines pay you to check your bags, in interest of effeciency? Felix Salmon thinks so. His argument is a compelling one.
Engrossing discussion of positive vs. negative liberty at Cato Unbound. I, as you might imagine, come down on the negative liberty side.

Oh, No. Not Him Again.

2010-03-25T16:02:00.002-05:00

Yes, I am back in the blogging saddle.

It has been a tough few months, and in many ways, I have been incommunicado.

I intend to change this.

My schedule has opened up somewhat (well, I am unemployed), and might have some more time to write here.

So, read the below two posts and expect more in the future. More recipes, more links, more history, more econ.

In short, more of everything that makes you like (?) me and this site.

Greeks Begging for Gifts

2010-03-25T15:43:00.003-05:00

Greece is one of the worst governed countries in Europe, and certainly damn near the worst in the EU.

There. I said it.

Today, it was announced that the French and German governments have agreed, with help from the IMF, to bail out the Greek economy to prevent it from completely coming apart.

This move shows a few interesting things. To wit:

France and Germany "wear the pants" in the EU. Always have, always will.
Greece, as a country, was considered "too big to fail." Well, this is not literally true, but systemic risk is certainly an issue here.
This, for me, calls into question Europe as an optimum currency area (OCA). Now, I know that Europe is the first place this has really been tried, but I think, after the Euro conversion in 2002, something like this was bound to happen sooner or later.
The recent labor unrest in Greece is a reflection of the dire (to put it mildly) state of the Greek economy rather than its cause.
I think a lot of the blame for a lot of the current economic problems lie in the 1970's and former Prime Minister Andreas Papandreou and his Pan-Hellenic Socialist Party (PASOK). After the military junta was brought down in 1974, the right was discredited and the left took over in all levels of government. While this is not in and of itself bad, it did mean that there was no effective opposition and the PASOK and its allies proceeded to wreck the economy and create general malaise amongst the populace.
This might happen again. I am looking at you, Spain and Portugal.

Addendum: Will the US become the next Ireland, which supposedly serves as a model for recovery for the Greeks? Probably not.

Link Exchange

2010-03-25T13:50:00.003-05:00

Repeal the Sixteenth Amendment? It was passed in 1913 and gave the federal government the right to levy taxes. I like this idea.
Could the new health care legislation lead to more uninsured people? Arnold Kling thinks so.
Why Italian academia sucks. I think a lot of these criticisms can be applied to European academia more broadly. European academia, to my thinking, has a very perverse incentive scheme.
Don Boudreaux nicely summarizes the natural rights view of the crucial idea of "the rule of law."
Freakonomics Radio is now live! Go here for the podcast, RSS feed or to listen live. Russ Roberts is especially good. I would gladly live in a country run by that guy.
A business model for aspiring pirates.
There has always been a gulf between academia and the general public in the US. Is this changing (for better or worse)?
Jodi Beggs muses on game theory and splitting the check at a restaurant.
Corporate diversity training (apparently) does little good and makes people resentful.
Libertarians in Israel.

Addendum: I realize that the Sixteenth Amendment deals directly with the income tax and that Article I, Section 8 (Enumerated Powers of Congress) gives Congress the right to levy taxes. I apologise for the confusion.

The Chuckwagon: Baked Potatoes

2009-12-17T02:42:00.003-06:00

I know, I know, I know.

Who needs a recipe for a baked potato, right? Don't they serve those at Wendy's?

Well, I think there is a need. The perfect baked potato can be quite elusive, simple yet just out or reach.

I think of baked potatoes like I think about fries: so much potential, but so often overlooked.

Why care so much about potatoes? Is it because I (for better or worse) am of Irish extraction? Perhaps, but people the world over enjoy potatoes because they are cheap, filling and full of all the good stuff that we need. Why do you think that they became such a staple in the diets of people the world over?

Anyway, I have tinkered with a few methods for making baked potatoes, and this is my favorite:

Ingredients

2-4 medium to large Russet baking potatoes
Oil (olive, vegetable, canola, peanut, corn...anything but motor)
Salt (Kosher if you have it, table if you don't/don't care)

Method

Wash potatoes in cold water with a stiff bristled brush. Scrub them good, but don't strip the skins.
Take a fork and stab each potato deeply (really give those suckers a good jab) eight to twelve times, depending on the size of the spud. This helps steam to escape while cooking.
Dry the potatoes off
Coat each lightly in oil. The best way (but not the least messy) is to put some oil in your hand and rub them all over.
When each is oiled, place on an ungreased baking sheet
Salt the potatoes lightly
Bake at 350 degrees for 1-1.5 hours (for two potatoes, 1 hour 15 minutes seems about perfect - alter with oven and number of potatoes.
When done, they should be crispy on the outside, yet squeeze easily and be soft inside.
To open, take a fork and stab a dotted line across half of the potato's top. Squeeze at both ends and it should pop open.

At this point, the world is your oyster. You have a perfectly baked potato with a crispy, delicious skin and a smooth, creamy interior.

Top with, well, basically anything. Sour cream, chives, butter, salt, pepper, HP sauce, chili, tuna, baked beans, ketchup, mayonnaise...basically anything edible will taste good on top of this perfectly baked potato.

Oh, and if anyone asks you, you can tell them (not exactly a lie) it is the method of an Irish cook who tried hundreds of ways before getting it just perfect.

Will Is a Twit(ter)

2009-12-16T10:16:00.002-06:00

More substantial posting later (think baked potatoes and the Scottish Enlightenment).

I did want to mention here (if you didn't notice the box to the right under "Breaking News") that I have joined the world of Twitter.

Boy, I have gone from Luddite to aspiring social media whore in a comparatively short amount of time.

Anyway, to follow me on Twitter, just click my username to the right in the box thingy and go from there.

If you want the URL, it is here.

So, if my long boring musings here are not enough, maybe my short boring updates can fill the gaps.

Link Exchange

2009-12-15T02:48:00.002-06:00

Cabinet appointments and private sector experience, 1900-2008. It seems that Democrats hire less people with private sector experience than do Republicans. Wonder what that might mean?
Asteroid deflection as a public good.
Paul Samuelson, one of the most notable economists of the twentieth century, dies at 94. His textbook Economics was the standard for thirty years and he mentored no less than seven Nobel Memorial Prize in Economics Laureates (a prize he himself won in 1970).
Here is Peter Boettke on Samuelson, presenting the contrary view. I agree with him.
Robin Hanson on the dubious (in his estimation) link between smoking and death. I think he is right: the numbers, in many ways, just don't add up.
Resources, their use and Notre Dame's new coach.
John Perry Barlow (essayist, cyberlibertarian and lyricist for such Greatful Dead favorites as "Black-Throated Wind," "Mexicali Blues" and "Casssidy") in a 1994 classic about the internet and copyright protection. It is as relevant today as it was back then.
Should the "shotgun wedding" that has been Belgium since 1815 head for divorce?
Why the Bauhaus matters.

Television, History, Memory

2009-12-03T13:34:00.002-06:00

It is always funny what can trigger memories to come rushing back.

For me, one recent incidence was looking for an old, local commercial from Chicago television.

I found it, and saw that the clip seemed to be part of a much larger project. Indeed, it was.

The Museum of Classic Chicago Television is a completely online museum dedicated to preserving television clips from the Chicago area. I think just the premise is great. It is everything that a museum should be: interactive, well-organized and completely open to anyone.

In looking through their "exhibits," I was surprised at the wide array of television clips that they had. It was not just commercials (although this is a large part of what is there). They had newscasts, sports clips and everything else that makes up what a television station does.

As I paged through the clips of ads for Schmerler Ford, Polk Brothers and Linn Burton "For Certain," newscasts with Fahey Flynn, Walter Jacobsen and Joel Daly and all of the WTTW clips for Wild Chicago, Image Union, Doctor Who promos and Marty Robinson, something happened.

A lost world started to remake itself in my mind.

Instantly, I was a kid again, sitting there on Saturday morning, waiting for cartoons to come back on as that guy in the Victory Auto Wreckers commercial pulls the door off the car again. I was also there, in the kitchen with my mom after school, her making dinner, me talking about school, Joel Daly reading the news. I was there, too, on a Saturday night, waiting impatiently for Marty Robinson to announce this week's Doctor Who adventure.

It was a real nostalgia trip. Then, when I came back from that lost world, the academic began to think about what just happened.

Is this what defines my past? Is it disjointed clips of local media and ads for products that can trigger personal memories? Isn't this a bit crass? Shouldn't it be something more profound? Am I just proof that we are an over-commercialized society that watches too much television?

Before I reached peace with this, the historian in my mind reminded that these are artifacts of a lost age of broadcasting, before cable was ubiquitous, when the local affiliate station held a lot more sway in any given media market. I thanked him for the insight, but was still troubled a bit.

Then it hit me. It is not these flashes of Chicago's media past themselves that form my past. They merely serve as triggers.

They are not the lost world. My memories are.

These glimpses into the televised past of my hometown were merely the background noise to everything else that was going on, part of the soundtrack to what really was meaningful - growing up, sharing bonds with family, becoming who I am today.

I thought, furthermore, what does it matter if it was these things going on in the background and not the music of Brahams or Mozart, not the poetry of Keats or Tennyson? Those artifacts of "high culture" are as much a part of my memories as the "low culture" of Celozzi-Ettelson Chevrolet or Carson's Ribs.

To put it another way, "Beauty is truth, truth beauty" is as much a part of my mental landscape and past as, "...at York and Roosevelt Roads, where you always save more money!"

Does this make me a philistine who has flashes of "real" culture peppered in among the trash? Well, I think the high/low divide in culture is a false divide and has not really been meaningful for almost 200 years. So, no.

Does it bother me that my memories and personal past are made of such disparate elements? Not at all. It what helps make me (and everyone else) the unique and fascinating people that they are.

The whole is, as ever, more than the sum of its parts. So it is with me, I imagine.

Henry Kissinger was Right (About WWII, Anyway)

2009-12-01T23:28:00.003-06:00

I know, I know.

Dr. K is not only one the most important diplomats in American history, he is also an incredibly divisive figure. Opinions of him range from praise for beginning the end of the Cold War to wanting him convicted as a war criminal.

As a historian, though, many of his assessments were well-considered and show a deep understanding of motivation and geopolitics in the past.

I may talk about his ideas about the Congress of Vienna at a later date, but in preparing my lecture for the end of World War II and the coming of the Cold War, I re-read part of his 1994 book Diplomacy. There is much to recommend his reading of the situation immediately after the Second World War, especially from the standpoint of the three Allied leaders (Winston Churchill, Franklin D. Roosevelt and Josef Stalin).

First, I think he reads the diplomatic geneaology of FDR exactly right. He argues that FDR's vision of the world after WWII emerged from American exceptionalism, Wilsonian idealism and a unique understanding of the American psyche.

Great, what the hell does all that mean? Well, American exceptionalism is the idea that America is unique and has a singular role to play on the world stage. The US is special and has a special destiny because of its history and its ideas.

This is complimented by Wilsonian idealism, the vision of world politics that came from former President Woodrow Wilson at the close of the First World War. Wilson believed in the spread of democracy and national self-determination and that America had the central role to play in this.

Lastly, FDR understood the American proclivity to think in terms of universal ideas rather than the calculus of reward and punishment that seemed to govern diplomacy in years gone by.

I think this is right because it explains his actions in the waning months of the war. He believed Churchill and Britain could hold off the USSR while helping to rebuild Europe without American assistance. This belief is, knowing that Britain was economically destroyed and politically vulnerable, only explained by a deep ideological commitment to a certain vision of the world.

This was also helped by the fact that while FDR often distrusted Churchill's motives (especially where the British Empire was concerned), he believed Churchill's rhetoric that Britain was up to the task. This, incidentally, says as much about Churchill as it does about FDR.

Secondly, I think Kissinger was right in his assessment of Stalin as a blend of communist ideology and traditional Russian notions of statecraft. Stalin, according to Kissinger, distrusted fascism as much as he did capitalism. He hoped to use his alliances with Nazi Germany and then with the US and Great Britain to further territorial aims that could have come out of the old Russian imperial playbook.

Russia, for hundreds of years, has been concerned with gaining buffer territory along its vast borders. This, coupled with the centuries-old notion that Russia has to constantly allay its own feelings of inferiority, explains Stalin's policies during and after the war.

I think this is right, although I have a different take on the ideology bit and how it relates. While Stalin pursued communist policies at home, he had realized at least since the 1920's that the USSR must consolidate its position against possible rivals. This was a central factor in the disagreement between Stalin and Leon Trotsky.

So, in a way, I believe that Stalin saw communism and the Soviet system as means to an end, a way of establishing total control on a domestic level so that he could pursue fairly traditional foreign policy aims.

Expanding on Kissinger's arguments, I had to ask myself about why FDR and Churchill believed Stalin's overtures toward democracy and restraint. Also, why was it that Churchill portrayed Britain and its empire as equal to the task of rebuilding Europe and holding off the USSR when they were clearly in economic distress and the cracks in the empire were growing ever larger?

To the first question, I say that FDR believed Stalin because of his notions of international relations. If the postwar order was to look like a Wilsonian notion of perpetual peace based on harmony, FDR had to think that Stalin would be a willing participant in keeping the global peace after the war. Ideology stood in the way of reality and FDR really didn't plan for the eventuality (well, it's what happened) if Stalin didn't exactly play along.

To second, I say that Churchill knew exactly what he was doing. He was an ardent old imperialist, it's true. That's where the rhetoric comes from. He was not ignorant of the situation as it was, though. While Churchill believed that the Empire could be kept together (in one form or another), it was clear from the course of the war that Britain could no longer go it alone.

Churchill knew that Britain's only chance for survival was to cozy up to the US as much as possible so that the US would, in turn, see Britain as their main ally in Europe and also their main ally in forging the balance of power that would develop after the war. This balance of power was seen as natural by Churchill, but this is what FDR wanted to avoid.

So, it was basically Churchill's task to manuver between Stalin and FDR, usually giving into US demands while making it clear at every opportunity that Washington's strategic interests were also those of London. This was Churchill's great coup, and the birth of the so-called "special relationship," at least in any formal sense.

Why should we care about any of this? Well, it was in these notions of a postwar world that the world of the latter half of the twentieth century was born. The bipolar world of the US and its allies in NATO and elsewhere on one side and the USSR and the Warsaw Pact nations on the other were born in the minds and actions of FDR, Churchill and Stalin and their governments in the waning months of World War II.

It was these critical views and opinions that set the stage for the rest of the "short" twentieth century (1914-1992), and also presented the international situation that would persist until this bipolar world crumbled to the ground and the world we live in now was born.

So, Kissinger got it right (at least here), and I think the history of the period and the subsequent years bear him out. To what extent does his reading of history reflect his own actions as a diplomat?

That is a question for another time and another long, rambling post. Stay tuned.

Link Exchange: Making Holidays Less Fun Edition

2009-11-25T11:11:00.003-06:00

Whether railing against Thanksgiving as ritualized commodity fetishism or condeming the imposition of the Atlantic economy on a native population or questioning the motivation of the Protestant religious fanatics who landed on our shores in the seventeenth century, academics can even take the fun out of Thanksgiving. Oh, believe me, we've already done a number on Christmas, Easter, Mother's Day and the Fourth of July.

While I believe in being critical of tradition and trying to understand it in a certain context, I am perfectly capable of leaving that hat in the library or lecture hall, pulling up my sleeves, tucking into enough food to feed ten normal people and try to care about the Detroit Lions.

Economists, unlike historians or cultural critics or anthropologists or others, at least try to have a little fun with the holidays. The preachiness is more missing, and people are considered amorally (as in without moral judgement) for their choices and preferences. That is what draws me into economics as a field of interest.

Anyway, here are some economic takes on the coming holiday:

Ezra Klein on the behaviorial economics of thanksgiving. Here, Klein talks to NYT food columnist Mark Bittman about similar things.
How price discrimination explains "Black Friday" sales.
The "first" Thanksgiving as a victory for capitalism (or free choice of some sort). O.K., this one is a bit more polemical, but it fits the theme and I agree with it.

Enjoy the holiday.

The Chuckwagon: Chicken Adobo, Filipino Style

2009-11-24T01:06:00.004-06:00

When one is terminally short of cash, one is always on the lookout for cheaper ways to do things. Thus it is with cooking.

Being stony broke forces one to become rather creative when it comes to food. One must use cheaper cuts of meat, more spices and different cooking methods. I find it to be rather an interesting challenge.

Let's see how little I can spend and still eat well?

That's why I love when I come across recipes like this one. It is cheap (you probably have most of this stuff sitting around), flavorful, aromatic and easy to make.

You might think that adobo would be a dish from the Spanish speaking world, and you'd be sort of right. The Spanish ruled the Philippines for hundreds of years, so something was bound to rub off besides the love of plaster statues of saints.

Adobo, in the Filipino context, refers not so much do a dish but to a method of preparation, which you will see below.

As with any recipe, alter the amounts or ingredients to suit your tastes. Some might like it sweeter, others tangier, others with more, less or different vegetables or meats. It's all up to you. That's another great thing about this recipe: flexibility.

Ingredients

1/2 lb. boneless, skinless chicken thighs, cut into pieces
2-3 garlic cloves, minced
1/2 medium onion, sliced
1/4 c. soy sauce
1/3 c. vinegar
2 tsp. sugar
1 bay leaf
1 c. water
Black pepper to taste

Method

Mix all ingredients in medium-sized pot. Stir and let sit for 5-10 minutes
Cover and cook on medium heat for 30-40 minutes or until chicken is done
After about 20 minutes, check the level of liquid in the pot. Add more soy sauce or water as needed.
Great over white rice.

In A (Not So) Big Country

2009-11-20T14:25:00.003-06:00

People seem to love smaller versions of larger things. The human brain seems to be hard-wired to be drawn to the miniature. The examples are legion: babies, Matchbox cars, puppies, cocktail hot dogs, Danny DiVito.

For me, I have always been fascinated with small countries, formally known as microstates. Or, to put it in terms both crude and politically geographical, when it comes to countries, I am not a size queen.

I guess this fascination started by playing Where in the World is Carmen Sandiego? on our good, old Apple IIE (yes, they DID make something before the iPod) back in 1987. I could not believe that a places like San Marino or Andorra were real countries.

My fascination was fed by many early watchings of the great 1959 Peter Sellers movie The Mouse That Roared, that details the trials and tribulations of the microstate of Grand Fenwick.

I suppose it culminated with a visit to the 1994 American Numismatic Association convention where I actually shook the hand of an actual government official from a microstate (the director of the San Marino Monetary Authority).

Yes, if you were wondering, this whole being nerdy is far from being a new thing...

So, what is the draw of these places? Why are they at all interesting?

First off, the sheer lack of size in comparison is a good jumping off point. The entire country of San Marino has about as many residents as the Chicago suburb where I grew up. You could comfortably fit the entire country of Liechtenstein within the bounds of the City of Madison, WI.

Great, so what? These facts lead one to wonder: how did these tiny countries slip through the cracks? How did they remain independent even when their large, powerful neighbors fought bloody wars, shifted borders and coalesced into nation-states?

I think in a lot of cases, these places were just too small, remote and unimportant in the grand scheme for the great powers (such as they were) to expend the effort to crush and subdue them. They are not a threat, so why bother?

The flip-side of this is also interesting. The people of these microstates could have easily appealed to become parts of their larger neighbors, to grab the coat-tails of a European up-and-comer, to be a part of a unified, powerful nation. But they didn't. The spirit of independence, pride and sheer bloody-mindedness appeals to my political sensibilities.

These places are also pleasingly anachronistic in all the best ways. Because of their remotness and relative unimportance to wider political, economic and social forces, the past lives on in these places more than most.

Take San Marino, for example. They are probably the oldest constitutional democracy on Earth, having been so since 1243. Their military consists mainly of a corps of crossbowmen.

Or Andorra. Their government is a relic of a fight between Spanish and French nobles over a chunk of the Pyrenees in the thirteenth century. Andorra has two heads of state, descended from the successors to those noble claims: the Bishop of Urguell in Spain and the President of France.

In a larger sense, though, I must consider that I look at these places as a native of a "big country," one of the great powers. Some in this position might look at places like Monaco or Malta and think, "well, who dives a good goddamn about little, piss-ant countries that time forgot? What did they ever do for history. They are the places that don't matter."

Not me, however. I see these places as interesting experiments, tested by history. In isolation and ignorance of the powerful, these countries made it work. They kept their independence, ran their lives and moved at exactly the pace at which they felt comfortable, not driven forward by the inexorable forces of geopolitics through the ages.

They also provide interesting examples of how sovereignty can operate on a small scale and how democracy can function best when it functions smallest. What I mean is that when the government and politics of a place can be tailored closest to the needs and wants of the people who live there, things tend to work out better than national-level decision making.

As a libertarian with strong anarchist leanings, this notion appeals to me greatly. Think a small piece of territory cannot be sovereign and survive? Think again.

More than mere geographical or historical curiosities, the microstates of the world offer a window into a different way of life.

Maybe I believe, at least where governments are involved, that small is indeed beautiful.

Wait a Minute...Herman Who?

2009-11-19T23:49:00.003-06:00

Today, the news broke that the leaders of the twenty-seven EU member states selected the first full-time President of the European Council and the first permanent High Representative for foreign affairs.

If you are unclear about what these positions are, what they do and how the EU functions in general, well, join the club. But for a good introduction, click here.

Who are the lucky winners? Who are the latest unelected people to be chosen to influence policy and procedure in the EU, a regional alliance that has been growing in power and influence, most recently with the Lisbon Treaty?

Why, it was Belgian Prime Minister Herman van Rampuy and EU Trade Commissioner Baroness Catherine Ashton, of course.

Don't panic. I had never heard of either of them before today myself.

The big talk in the run-up to this decision, and the position taken by the British government, was that former British Prime Minister Tony Blair was all but a shoo-in for the job. Tony Blair...at least a guy that more people have heard of.

So, what happened? What led the leaders of the EU member states to choose two politicians who are virtual unknowns, who are thought to be "consensus builders," and neither of whom have much foreign policy experience?

Well, let's think about this.

It is no secret who are the "big dogs" when it comes to the member states of the EU. This position belongs to France and Germany, and most specifically, German Chancellor Angela Merkel and French President Nicholas Sarkozy. These states and their leaders stand at the center of the "European project."

Why? Well, it is simple (at least to me). They both realize that to consolidate their relative positions economically and politically on the Continent, they need each other to survive. Furthermore, they need the smaller states of the EU to consolidate this position through offering attractive incentives (development money, union-wide institutions that could save individual states money) in exchange for tacit leadership by the larger states in the union.

What about Britain, then? To put it simply, the French and Germans don't trust them. The reasons are historical and, well, sort of cultural. Historical because there had been an aversion among British politicians to join the union and the corresponding rejections of British membership led by Charles de Gaulle in the 1960's. Cultural because, more than any other people who are members of the EU, the British really don't (and never have) considered themselves Europeans. To paraphrase Winston Churchill, Britain is in Europe, but not of Europe.

So, back to today's decision (which was a unanimous one among the 27 member states). Merkel and Sarkozy knew that a big-name British politician like Tony Blair could prove to be much more of a problem than some Belgian guy and an EU commissioner who is a Brussels insider.

They also knew that in no way, shape or form do they have to give any part of a shit about what Gordon Brown, the current British PM, wants. It is pretty clear that Brown and his Labour Party will not be in power (or at least not in a majority in the House of Commons) for much longer. Brown pushed for his old boss Blair to get the job, but he really has no bargaining position.

What are the larger implications of this? For one, anyone who tries to tell you that the EU marks the end of old, nation-state based politics in Europe is just plain wrong. The EU is just another forum for the various states of Europe to seek their own interests. It doesn't get rid of the game; it just provides a different playing field.

Another larger point that this reinforces plays to the nature of the EU itself. I believe it is a fundamentally undemocratic institution and this decision just further proves that. This decision does nothing to make the EU's institutions more representative. All it does is preserve the status quo, mainly in favor of France and Germany.

Everything I say here is debatable, and I might well be wrong. What I do think I have right, though, is the notion that the states of Europe and their leaders will use international institutions to pursue the interests of their own states.

International relations theorists can say all they want about mid-level explanations of interstate relations, or cosmopolitanism, or cooperation. Perhaps I look at this with the jaundiced eye of the historian, but I just don't see that at work here. Feel free to prove me wrong.

Oh, and this destabilizes domestic politics in Belgium, but really, who gives a shit?

Link Exchange

2009-11-19T01:40:00.002-06:00

Only in economics are floors above ceilings.
John Stossel on the jiggery-pokery of stimulus.
In the nineteenth century, it turns out that the poets were the bad guys and the economists were the good guys. I find this argument compelling, given the societies and cultures that produced these ideas.
The always fascinating David Friedman on the ambiguity of utility.
Drill the Antarctic for scotch? Count me in.
The link between economic prosperity and religious liberty.
Neat chart of UK government salaries, from the boss lady on down.

The Lecturer as Rock Star?

2009-11-12T16:40:00.003-06:00

One thing I have never had a problem with is speaking in front of groups. I have always found it hard to believe that lots of people fear it more than death, but this seems to be the case. Jerry Seinfeld even joked about it: "At a funeral, most people would rather be in the casket than giving the eulogy."

So, in my current line of work, it has been helpful not being a glossophobe. In being a TA and now a lecturer, I have to be in front of people as the central part of my job. This will be the case for my entire career.

In addition to this, I have always been somewhat aware of the performative aspect of education. A successful lecture or discussion section is built as much on the presentation as on the content. I actually will paraphrase former president Ronald Reagan here when I say that I don't know how anyone could go into education without having acting experience.

I never really had this awareness of performance and education brought home or clarified, though, until a recent conversation with my brother. For those of you who don't know him, my brother has been a musician, in one way or another, since he was in the fifth grade. He has performed in school bands and orchestras, pit orchestras for the stage, heavy metal bands, jam bands, bar bands and impromptu jam sessions of all sorts. I (and I might be showing family bias here) think he is quite an accomplished performer.

Recently I was talking to him about my frustration at sometimes not being able to tell if my students are getting it. I was frustrated that the best that I can do is see if they are obviously asleep or obviously surfing the web on their laptops.

My brother then drew the paralell between teaching a class and performing live on stage. You need to feed off the audience, drawing your energy and directing your performance in the direction of the audience. You have to try to keep the "diehards" going strong while drawing in the people who seem not to care or not to notice that there is a performance even going on. You need to constantly relate to your audience, establishing this connection so that the exchange can be mutually beneficial.

I was taken aback. Hell, he's absolutely right. They ARE pretty similar.

I had to counter with something, so I pointed out that while you mostly play at bars and music clubs, the lecture hall is a much different forum. He admitted that this was true, but that they were still people and they still act the same when something is going on in front of them on a stage.

Additionally, he said that the fact that the crowds at the average gig might be intoxicated (in one way or another) might be a double-edged sword. It might make them more "in to" what you are doing, or it might make them more ignorant, and you can never really tell.

Nail on the head, I'd say. This was not really shocking, though. My brother is in front of crowds at least four times every week and has been for most of his adult life.

So, does this mean that I think that lecturers and rock stars are the same? Well, yes and no. Yes, in the fact that they are both performers of a sort that depend on audience reaction for the energy behind their performances. No, in the fact that rock stars' performances are in the "entertainment" part of one's life, lecturers much less so.

It is drawing these paralells between the linements of human endeavor that I think lead to the deepest understanding of human behavior and the human experience.

So, if you'll excuse me, I have finish getting ready to rock Humanities 1131 with a blistering set of culture in interwar Europe.

Or, if you like, less people yelling, "play 'Freebird!'" than yelling "show us how culture influenced and was influenced by the dissolution and horror following World War I!"

Rock on, indeed.

The Chuckwagon: Fried Rice

2009-11-11T21:06:00.002-06:00

Madison is a great eating town. For a city its size, the dining options are legion. Especially notable is the wide array of cuisine from cultures around the world that can be had in Wisconsin's second largest city. Peruse this website to get an idea of what I'm talking about.

There are two sorts of Americanized, bastardized ethnic foods, though, that Madison just can't seem to do right. These are standards in the American food pantheon, and I was surprised when I moved here that I could not find anything close to the standards that I was used to in the Chicago area.

I guess I am just an Americanized, bastardized ethnic food snob.

Oh, the two that I am talking about are pizza and what you might call American Chinese food.

Pizza is for another time, but suffice to say that Rosati's Pizza is just O.K. back in the Big Chi, but it is just about the best thing here.

I find it hard to believe that I cannot find take-out, white folded container, huge menu, kinda greasy Chinese food anywhere near the order of the places that I ate in the Chicago area. To put it in South Suburban terms, none of these places in Madison should be mentioned in the same sentence as Dragon Palace.

So, after a while of thrashing about, I decided to take matters into my own hands and make my own American Chinese favorites.

Fried rice is hearty, economical, a great way to use up leftovers, quick and tasty. This recipe is especially open to tinkering, so feel free.

Fried Rice

1-2 green onions
2 large eggs
1 tsp. salt
Black pepper to taste
Olive oil (or vegetable oil would work as well)
4 cups of cooked rice
Soy sauce to taste
Any sort of meaty add-ins: pork, chicken, shrimp, basically whatever you have

Wash and chop the green onions
Beat eggs with salt and pepper
Heat some oil (the two-times around the pan thing should be sufficient) in a large frying pan
When the oil is hot, add the eggs and lightly scramble
Remove eggs and set aside
Add more oil, rice, green onions, anything else and break up rice clumps with spoon
Add soy sauce to your taste
When heated through, add egg, mix and serve.

Link Exchange

2009-11-11T20:51:00.003-06:00

Fascinating developments in Detroit, alternately seen as an urban wasteland and the new frontier in urban design and planning.
How a recession helps to less burglaries.
Hate having to wash your hands or wear a seatbelt? Blame these guys.
Why are there so few women in philosophy? I agree with Wilkinson in the main, but would also say that while women might be less aggressive than men, I think they are no less competitive.
Are women picky? Interesting thoughts on speed dating, decision making and the differencec between the sexes.
Thoughts on this Armistice Day. Controversial line: "The names of Asquith, Bethmann-Hollweg, Berchtold and Poincare are barely remembered, yet on any reasonable accounting they belong among the great criminals of history." Wow.
Why Joseph Schumpeter is important. Think "creative destruction" here.
Interested in creative destruction? This book looks good.
Watch amazing color footage of London in 1927.
Rock music quality vs. oil production.

The Incentive's Always Waiting at the Liquor Store for Me

2009-11-10T00:02:00.004-06:00

Those who know me know that if I believe any one thing unshakably, it is that people respond to incentives. Incentives and people's choices when faced with them show their preferences, and these preferences are a window into the sort of person they are.

We make choices constantly. It seems that we are hard-wired to be decisionmakers. Just think for a moment how many choices you make before you leave the house for the morning, and you'll see what I mean.

I have long been fascinated (and even worked for a time) with people's behavior in retail outlets, especially grocery stores. Grocery stores are where most people have their longest contact with the economy, so it is a place where competing preferences and incentives are constantly in intricate interplay.

Now, there has been a lot of interesting work done on people's retail behavior, including (but not limited to): how to pick the fastest checkout lane, price discrimination (getting people to pay different prices for the same stuff), and the deadweight loss of Christmas.

One sector of retail behavior that has always fascinated me is people's behavior in liquor stores (or the liquor sections of grocery stores). I have been observing this behavior (and admittedly participating in it) for some time, and I wanted to offer a few observations.

First, I think there is a lot of signalling involved in buying liquor. The particular liquor one chooses conveys information about that person. The bunch of dudes with a cart full of thiry-packs of PBR is sending a different message than the old codger with a liter of bourbon or the couple with pretentious eyewear with the wine from somewhere foreign.

I think much of this has to do with brand image and how this relates to one's own image. It is the ultimate victory of the advertising industry, in my opinion. You don't want to send the wrong message, especially with a product that, in a lot of ways, sends negative messages anyway.

This is, of course, silly. A consumer product is an inanimate object, devoid of moral force. It is simply another commodity, and what it says about you should not be a factor in your incentive calculations. But, the problem is that, well, this seems to be true. We fall for it all the time and liquor is no different.

Second, the mantra, "incentives matter" plays out in interesting ways in the liquor store. I see this operating in two ways:

The person who seems to float between different sections and different potent potables, seemingly in a quest for the most "bang for the buck," as it were. These are incentives at their most pure: what am I getting for what I am giving up? To put it another way, what is the opportunity cost of going for a lot of cheap booze or a little better stuff? To put it yet another way (the way the most calculating and hardened drinkers think about it, I imagine) what is the highest alcohol content per volume that I can get at a certain price?
The items left in the liquor department of grocery stores often tell an interesting (and occasionally depressing) story about people and incentives. I've seen discarded packages of diapers, allergy medication, coloring books, contraceptives, bread, milk and motor oil in liquor departments. Liquor went up against all of these things and (seemingly) won out. This might say more about the person than their purchases, but that's the whole point. By making this choice, they convey information about themselves.

Lastly, it is fascinating to me to conjecture on how people change their liquor buying decisions based on external factors. Of course, there are the people who will buy the same thing no matter the time, place or company (people who respond to the whole brand image thing I talked about earlier).

I wonder, though, how people's liquor buying decisions are altered by the people around and the time of day and also the place itself. The crowd at the average liquor dispensary is very different on a Tuesday afternoon than it is on a Friday evening. To give but one possible scenario:

You are standing in front of the beer case at your favorite liquor emporium. You are ready to go the "most bang for buck" route and grab the one thirty-pack of PBR that those dudes left behind. All of a sudden, an attractive (depending on how you define this) person walks up next to you and appears to engage in the same behavior.

The question becomes: do you change your PBR decision and go for a twelve of Stella Artois? Or a local microbrew? Or an armful of forties of Steel Reserve? How does the presence of this other person influence your beer incentive scheme?

Well, enough of this talk. I am going to pour another beer from the $6.99 case that I bought this afternoon.

Go ahead. Pick out my signalling, analyize my decisions and figure out my incentive scheme.

You know you want to.

Oh, and cheers!

Link Exchange

2009-11-06T22:00:00.002-06:00

Don Boudreaux on why voting is unnecessary.
A great debate on how we became "modern." If we ever did, that is.
The history of money as the history of government extracting wealth from the population. I think they are on to something here...
Why pride should make you feel awkward. No, it has nothing to do with Cardinal Sins.
Economic stimulus by lotteries open to the unemployed. I personally think it is better NOT to inflate the currency further to encourage spending. Take that, Keynes.
NFL "power rankings" reconsidered.
Denver to Singapore and back again in five minutes.

The Chuckwagon: Guinness Beef Stew

2009-11-05T14:07:00.002-06:00

I have thought about this a lot, and I have concluded that I am much more a winter food person.

Now, before you throw your barbecue tools at me, hear me out. I would never turn my nose up at a brat, burger, ribs, chicken or a steak the size of a garbage can lid off the grill.

When it comes to variety, though, I have to say that once you cycle through all your grilling choices, you find your self repeating yourself repeatingly redundant.

Winter food, though, is a more open playing field. You could go a month and eat nothing but variations on the casserole. I don't recommend that you do this, but if you are from Minnesota, you probably do this anyway.

One of my favorite food categories with a million variations is the stew, otherwise know as soup's brawnier brother. It is the simplest of foods, invented by cultures the world over through the centuries. Meat, vegetables, liquid, heat. Everything else is completely up to you.

A favorite in the English-speaking world is beef stew. From Dinty Moore to the Lancashire hot pot, it never fails to deliver that stick-to-the-ribs warming feeling that is one of the reasons I like winter food.

This recipe is one of my favorites. I first ate it about a year ago, and have made it several times since. It is easy and delicious. In fact, when I served it at my St. Patrick's Day extravaganza last year, it was gone before the corned beef was.

You do need a CrockPot, but if you don't already have one, pony up and get one. It is well worth it.

So, here you go (with a tip of the tweed pinch cap to Julie Norkus).

Guinness Beef Stew

3 tbs. olive oil
3 tbs. flour
3 lbs. beef stew meat
1 medium bag of baby carrots
6 large potatoes, peeled and cubed
1 onion, cubed
4 cloves of garlic, smashed
2-3 cups of beef broth
1 7oz. can of tomato paste
16 oz. of Guinness
2 cups of green peas
thyme
oregano
parsley
salt and pepper

1. Thickly dredge beef in flour and fry in olive oil until brown

2. Put ingredients into CrockPot in this order: potatoes, carrots, onion, garlic, meat, Guinness, broth and tomato paste (mix together first), generous sprinkling of thyme, oregano and parsley

3. Cook on High for six hours.

4. With about an hour and a half to go, stir and add peas

5. Give yourself about forty-five minutes-hour leeway to make sure everything is done.

Oh, you might want to leave the house while this cooks...the smell of it all day will drive you mad with desire.

Link Exchange

2009-11-05T13:50:00.002-06:00

Bryan Caplan on libertarians quoting Trotsky. No, this is not fake.
Athletes, performance, signalling and "excessive celebration," from Robin Hanson.
In the next week, we celebrate twenty years since Die Berliner Mauerfall. Links, all good, from Cato@Liberty. I particularly like the one about "paradise imposed at gunpoint."
Interesting map of the Biblical flood that shows a lot about faith and science in the seventeenth century.
Exploring the pros and pitfalls of Wikipedia. I think the demographic data is particularly illuminating.

Ayn Rand, Ayn Rand, Everywhere

2009-11-05T13:04:00.002-06:00

With two new books out about her, sales of her books higher than ever, and new interest in her philosophy in the world's largest democracy growing, it might seem that we are living in a Randian moment.

Love her or hate her, it is hard to ignore her and her ideas, her strange personality, her evangelical followers (even though they would hate that phrase) and her vehement detractors.

I intend this post as a collection on some recent, useful writing on the subject for the curious. I have already made my opinions known here at COTL back in 2005. Read those here.

Now, the reading list (which is by no stretch of the imagination exhaustive). Oh, and if you don't throw up a little at the (thankfully fake) picture in the GQ article, you might not be human.

The Reason Foundation's "Rand-a-Palooza." You might expect Reason to be chest-thumpingly adulatory, but they do complicate this expected bias towards Rand and her ideas.
According to GQ, "The Bitch is Back," apparently. For some, she never left. More a personal reflection for, well, the sort of people who read GQ.
Alex Tabarrok of Marginal Revolution's take. I especially like his ideas about Rand and a modern virtue ethics.
Article in New York about Rand's personality and its relationship to her ideas. I particularly like the notion of the unreality of Objectivism.
NYT book review that details Rand's difficult relationship with conservatives. I would add that this difficulty extend to libertarians, liberals...pretty much everyone who didn't accept Objectivism whole and uncut.
A bit of humor mixed in with the criticism. Murray Rothbard's delightful one-act play entitled, "Mozart Was a Red." This zeroes in, with humor, on one of the things that I find most objectionable about her philosophy.

Vacation From The City Of Tiny Lights

2009-06-11T21:28:00.001-05:00

As you all can tell, I have decided to take a break.

I have a lot to do in the next few months and I figured I'd give the old electronic mouthpiece a rest.

The upshot of all this is that I will have a lot to talk about when I come back.

I intend to pick back up in July.

So, until then, keep your eyes open and ears to the ground.

Not, "Oh No, Not Again."

2009-04-28T20:54:00.002-05:00

Don't worry.

I have not disappeared as has become my custom in recent years.

Allow me to explain.

The post below, the first of my weekly features, turned into a beast. I had to tame it down a little and change focus.

Also, I have lost the wireless signal at home, leaving me dead in the water, Internet-wise. Expect another "crappy customer service" post if this does not work out well.

In partial penance for my disappearance, I have included a bonus post below on how to read a Supreme Court case. It will help the uninitiated wade through the sometimes inscrutable legalese.

Well, anyway, enjoy.

How To Read A Supreme Court Case

2009-04-28T20:38:00.002-05:00

For my lawyer friends, this post can easily be skipped. For others, read on...

Reading Supreme Court cases can be a bit bewildering if it is something that you have never done before. It can seem like, well, legal gibberish. You must forgive it for that; it WAS written by lawyers, after all. (Mark and Andy, don't be mad. You still are, right?)

Every case is different and the written opinions of the Supreme Court have changed dramatically. The court and its role was different in the 1790's and so are its opinions. The people are different, too.

Supreme Court majority opinions are assigned according to a rotating schedule and are therefore written by different people at different times. The personality and legal style of the authors come through in their opinions and dissents. This can be, as ever, very different for different justices.

There are four factors, however, that all Supreme Court cases have in common. Keep these in mind when reading the cases and my posts about them. They are:

A description of the facts of the case.
A carefully framed statement of the issue posed by the case.
The application of the relevant law and precedent to the issues and facts.
The conclusion or holding, which is just another way of saying the court's decision.

Written cases are usually in this order, usually with some mention of the arguments presented in court and the concurrences and dissents following after.

Concurrences and dissents, you ask? The majority opinion of the court is expressed by the aforementioned justice who's turn it is (really). This majority opinion can by joined or concurred with by the other justices. If they join it, they simply agree with the reasoning and conclusion presented by the justice who wrote the opinion. If they concur, they issue a separate statement whereby they usually agree with the conclusion but not the reasoning used to arrive at it.

Dissents are issued by justices who do not agree with the conclusion and see the application of the law and precedent to the facts of the case in a different way. Dissents can be joined by other justices just as majorities and concurrences can.

So, in reading a Supreme Court case for our purposes, don't read it like someone in law school. You are not trying to learn the law in order to apply it in any way. You are reading these cases (well, I am, anyway) for the interest in how the law has developed over time, the social and cultural impact of the decision, the changing nature of the court and the personalities involved in this branch of government.

So, with that in mind, dig into Miller v. California. As I said, it is not boring. The word "genitalia" is used a lot.

SCOTUS Wednesday: Miller v. California (1973)

2009-04-15T21:04:00.008-05:00

(NOTE: I realize this is being published on a Tuesday. If you read the posts above, the reason for that will become more clear.)

Click here for a synopsis of the case and audio of the oral arguments. Click here for the full text of the decision.

The Background

Marvin Miller, the appellant, was one of the largest dealers in "adult material" on the West Coast. He dealt mainly in explicit books and magazines. In an attempt to sell more of his products, he sent out a mass mailing advertising some of these illustrated, ahem, picture books. This advertising not only included detailed descriptions of the books, but also featured pictures of nude males and females, most including full frontal shots depicting genitalia. One of these advertisements found its way to a restaurant in Newport Beach, CA where it was opened by the restaurant owner and his mother. They were offended by the material, had not requested it and took Miller to court.

The California state court found Miller guilty of a misdemeanor charge of "distributing obscene material," and ordered him to be fined. Miller took the case to the California Court of Appeals and the decision of the lower court was upheld. Miller then decided that the California Penal Code section under which he was convicted conflicted with his rights to free speech, claiming that the materials that he distributed were covered under the First Amendment.

The Question

Is the sale and distribution of obscene materials by mail protected by the free speech guarantee in the First Amendment?

The Precedents

Before 1973, the prevailing test for obscenity was the court's decision in Roth v. United States (1957). In Roth, the Court repudiated the old Common Law standard for obscenity defined in the 1868 case of Hicklin v. Regina from Great Britain. The test for obscenity in Hicklin allowed material to be banned that tended to "deprave and corrupt those minds who are open to such influences."

In a 6-3 decision in Roth, the Court decided to further define the test for obscenity. In the majority opinion written by William J. Brennan, the Court defined as obscene any material whose "dominant theme taken as a whole appeals to the prurient interest to the average person applying contemporary community standards." Only material that meets this test could be banned as obscene.

Although this further defined material considered as obscene, Brennan reaffirmed that obscenity was not protected by the First Amendment and upheld the conviction of Roth that brought the case to the court. First Amendment "literalists" Hugo Blac k and William O. Douglas dissented in Roth, stating clearly that obscenity was protected speech.

What followed Roth were several decisions on which the Court could not conclusively decide on a further test for obscenity. 1964's Jacobellis v. Ohio found that a movie theater owner could not be held responsible for showing a movie that didn't quite meet the Roth test for obscenity. This case, by the way, also saw the coining of the most famous phrase in the history of American obscenity law. Potter Stewart, in his concurrence with the majority opinion, wrote:

"I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that (emphasis added)."

As if that was not ambiguous enough, in Memoirs v. Massachusetts (1966), the court ruled that a piece of literature (John Cleland's Fanny Hill, written in 1750) might be "patently offensive," but it was not completely without social value. This decision also showed how split the court was on obscenity, with four justices writing special concurrences because they could not unanimously agree with the majority opinion written by Brennan.

The Decision and Dissents

The court held that:

"Obscene materials are defined as those that the average person, applying contemporary community standards, find, taken as a whole, appeal to the prurient interest; that depict or describe, in a patently offensive way, sexual conduct specifically defined by applicable state law; and that, taken as a whole, lack serious literary, artistic, political, or scientific value."

O.K. So, what the hell does that mean in English? It basically means that the Roth test was overturned and a new definition was added to the old one to form a new federal test for obscenity. The "taken as a whole, lack serious literary, artistic, political or scientific value" part tries to further define the sort of works that can be deemed obscene and banned by the states.

The court split 5-4 in this decision with Chief Justice Warren Burger, Byron White, Harry Blackmun, Lewis Powell and William Rehnquist making up the majority and William O. Douglas, Brennan, Thurgood Marshall and Potter Stewart making up the dissenting side.

Chief Justice Warren Burger wrote the opinion for the majority. He had pushed during the deliberations for a "looser" definition of obscenity to open the door for more state-level prosecutions. His opinion is summarized by the above definition.

The dissents in this case were by William O. Douglas and Brennan. Douglas dissented on the basis of his belief in the absolute letter of the First Amendment (as he had done in Roth). Brennan, as you can see, had a change of heart since his opinion in Roth in 1957. He was now of the mind, similar to Douglas and Black, that all obscenity is protected speech unless it is distributed to minors or exposed offensively to adults without their consent.

The Significance

Miller is a landmark case in that it redefined the standard by which obscenity is judged. Most importantly, and worryingly, it further defined the community standards idea.

Why does this worry me? Well, think about it. This is saying that what is obscene in Massachusetts is different than what is obscene in, say, Utah. In a general sense, this might be true.

At a deeper level, however, I agree with Brennan and Douglas on this case. The First Amendment protection for free speech is as extensive as the many forms that speech itself takes. To say that "contemporary community standards" are to rule is to say that these standards are somehow agreed upon by all members of the community.

Now, how is this really possible? This applies a utilitarian notion of "greatest good for the greatest number" to an issue that, for me, is all about an individual right. I do agree that distribution of obscene materials to minors and showing them to unconsenting adults are not really defensible (although one can argue over whether our definition of "minor" is really a good one).

Apart from these groups, though, I am not sure how the state can have the power to regulate what sort of speech I create and to whom I deliver this speech in a media of one form or another. As Brennan argues, the First Amendment is there to protect the rights of individuals to have access to whatever forms of speech they'd like, regardless of their perceived "value."

In other words, I am not sure that the idea of "contemporary community standards" can ever be brought into line with the letter (or the spirit, come to it) of the First Amendment. Obscenity is a form of speech and I should not be limited in my consumption of it if I so choose.

So, the next time you hear swear words on television, buy porn or go to a strip club, think of yourself as a warrior in the battle for the First Amendment. To hell with your "community's standards." Seek out the speech you want and don't let anyone stand in your way.

It is our right and we need to use it everyday.

Because with rights, it's use 'em or lose 'em.

New Feature: The Results Are In...

2009-04-14T23:42:00.002-05:00

...and they're, well, inconclusive.

My poll last week asking for you good people to vote on a new feature for COTL attracted four votes. Thanks to the four who voted or the person who voted four times but for two different things or any combination of these.

It appears that the votes were evenly split between "Thrilling Tales of Europe's Past," and "Fun With Supreme Court Cases."

Seeing as there was equal interest between these two categories, I will compromise. I will switch off weeks between these two categories.

I also intend to broaden out the SCOTUS entries, focusing not just on cases, but on justices, ideas and the historical development of the Court from the 1790's to the present.

By the flip of a coin, the Supreme Court comes first.

So, sometime tomorrow, look for the first of my Wednesday history features.

We will get off to an exciting start, I assure you.

How?

It involves porn.

Northwest Airlines Sucks

2009-04-08T00:55:00.002-05:00

So, you thought that my bad travel experiences last month were and isolated incident, right?

Will couldn't POSSIBLY have ANOTHER bad trip so soon. Man, oh, man...no one is THAT unlucky, are they?

Well, folks, it happened again.

I was supposed to present at a conference at the University of Akron last weekend. I was flying out of Madison on a Northwest Airlines flight that was to leave at 7:00AM and arrive in Detroit at 9:34AM. I then had a lay-over in Detroit, boarding my connecting flight to the Akron-Canton Regional Airport at 11:04AM. I was supposed to arrive in Akron at 11:59AM, in plenty of time to check in at the hotel, slap on a tie and make it to the University of Akron for my panel at 5:00PM.

Everything went to plan that morning. I was packed, showered, in a new sportcoat and on my way to the Dane County Regional Airport by 5:15AM. I checked in and went through security without incident (the TSA staff in Madison was courteous, professional and quick...drive down to O'Hare and teach those assholes a lesson, why don't you?).

I got to my gate, sat down, drank a pop and read the paper. I even ran into someone I knew, so I would have someone to pass the time with on the plane. 6:45AM rolls around and they announce the pre-boarding call, so I get up and begin to make my way toward the gate (I was in Seat 6B, so I would get on first).

It was at this point when the suckitude began to ooze to the surface.

They announced that the plane was having "mechanical problems" and that we would be "slightly delayed." No problem, I thought, I had a sizeable lay over in Detroit, so this was just eating into the time I would have to kill in Detroit.

A half an hour passed (it was now 7:30AM) and the next announcement of dissapointment came. The plane required a part that they didn't have in Madison. It had to be flown in from Minneapolis on a flight that would arrive at 11:00AM. They were also having a mechanic drive in from Milwaukee to work on the plane in Madison with the part from Minneapolis.

Now, come on. Not only do you not have parts to fix the planes in service from Madison, you don't have a mechanic that can fix the plane? Isn't this an airport? Aren't you an airline? Isn't this, I don't know, what you fucking do?

It gets better (if by better you mean more suck-filled).

They announced because of their, ahem, maintenance arrangements, the flight would be further delayed. The flight to Detroit, originally scheduled to leave at 7:00AM was now going to leave at...wait for it...1:30PM - at the earliest.

Before, the delay was not a problem. Now it was a big, hairy, shambling, red-cheeked fucking problem.

I would now miss my connection for sure. I had to rebook, if necessary on a different airline. I called the airline and was immediately mired in what my dad appropriately calls, "automated attendant hell." I guess it is a different sort of hell than the people waiting in line at the gate. An entire plane of people being rebooked and rerouted by a grand total of two slow NWA employees.

When I finally reached a human being (or a reasonable facsimile thereof), I calmly described my problem and asked what could be done. I was brusquely asked if the flight was cancelled. I said that it was (people were to collect their baggage and make other plans). I was then all but accused of lying about the cancellation and asked again about the status of the flight.

Look, madam, you work for the airline. You have the schedules for flights of yours and other airlines a keystroke away. I'm stranded in a fucking airport. Who is in a better position to answer that question, asshole?

I then asked if there was any way, connecting through anywhere, that could get me to the Akron-Canton Airport by 3:00PM. After a short pause, the disembodied, snotty voice on the other end said, "not a chance."

Hey, I don't expect you to kiss my ass. I also don't expect a triumphant air of near joy in telling me that my travel plans are now ruined. You know who does things like that? Petty little shitheads with nothing to do in their lives except make other peoples' lives miserable.

I should have just accepted my refund there. But, no. I had to have the foresight of a back-up plan. I asked Her Assholiness if there was a way to get me to Cleveland sometime early this afternoon. I could fly to Cleveland, rent a car and drive to Akron (they are not at all far from each other).

After no pause at all (which tells me, dipshit, that I know you didn't check this out), I was informed, "Uhhhh, no."

Northwest Airlines and Their Unhelpful Employess and Bad Maintenance, 1: Will Shannon, 0.

I gave this woman my address to get my refund. She then had the audacity to ask me if I wanted it as a check or credit toward future travel. She opened the door and I walked through.

"Well, seeing as I never plan on flying your airline again," I declared, "I think I'll go for the check."

"Well, I'm sorry to hear that," she said, reading right from the goddamned script that these dipfucks are given.

"Are you?" I asked.

"Thank you for flying Northwest Airlines. Good bye," she said as she hung up.

I suppose she was interpreting the term "flying" rather loosely seeing as I NEVER LEFT THE FUCKING AIRPORT.

Well, I went home and have never felt as "dressed up with nowhere to go" in my life. I was in a sportcoat and tie, with a packed bag, standing in my apartment and it was 9:30 in the morning. I ended up having a topping day nonetheless. I played golf, took a nap and hit the town with the Shealy brothers. Thanks, Greg and Drew; you helped wash the Northwest Airlines shit taste out of my mouth. All the beer, whiskey and gyros helped.

I could go on about why I think airline service is so bad today (after deregulation in 1978, which was overall a good thing, airlines no longer had to compete on service at lower price points). I could lament the plight of the legacy carriers and their failure to adapt to a changing market.

But I won't. Don't want to spoil a good rant with any clear thinking. Not in this case, anyway.

So, to Northwest Airlines, I say your people are as bad as your service and you ruined a trip that I actually wanted to take. Your ill-mannered employees and shoddy ground procedures put me out and wasted my time and money. The next time I am presented with the choice of travel on your airline or walk there, I'm opting for the old Heel-Toe Express.

Oh, and the next time I want to get dressed up, spend a lot of money for nothing and get blue-balled, I'll try to go on a date.

At least then the woman rejecting me will be in person.

Assholes.

Multum In Parvo

2009-04-08T00:16:00.002-05:00

Many interesting pieces crossing the wires (so to speak) today...

Ed Glaeser on how entrepreneurship saved New York and damned Pittsburgh. Cities have to compete for scarce resources (residents and their money), too.
Fascinating work on the geography of personality. Find the full paper here. This is interdisciplinary social science at its best. It also shows the Midwest (at least the part I'm from) in a really good light.
Patri Friedman's exhortation to libertarians to quit whining and try to make a freer society actually happen. He makes a lot of sense, really.
Will Wilkinson on cooperation and civil society. His discussion of "higher-level" public goods relates closely to the issues I raised about the SSIP.
Gary Becker argues that the drop in housing prices has not influenced overall consumption very much. His argument about "wealth effects" and housing prices is especially compelling.
A fascinating interactive graph of shifting religious identification in the USA. Apparently, we are becoming less likely to identify as religious and the center of this population is shifting eastward. Read a decent article in Newsweek that relates to this notion here.
Richard Posner's review of this book on psychology and economics. I think this issue is critical to understanding not only the economic crisis but human behavior more generally.

Parades, Relaxation And A Poll

2009-04-02T02:54:00.002-05:00

Two new posts and a poll for you today.

The new posts discuss:

The problems involved at the heart of the SSIP, as I see them. Don't worry...I talk about fun stuff like beer, missiles and Snoop Dogg.
The soothing effect of a British weather forecast. Take a look; you might be surprised.

PLEASE, OH PLEASE vote in the poll below as well. I have wanted to have a weekly feature for a while. Jenks has a great Friday feature that teaches you Latin. Rachel has a great Monday feature that teaches you about British monarchs.

So, I figured I would have such a feature to educate and entertain that would happen each and every week. The poll below details what I thought would be good topics, and topics that interest me and that I know a lot about. There is also a chance to leave your own ideas. There is lastly a chance to tell me to shut the fuck up. Well, I know which one will get the most votes...

And now, the poll:

The SSIP, Public Goods And Free Riders

2009-04-02T01:51:00.002-05:00

I promised that I would discuss some of the problems behind an event like the recently-cancelled South Side Irish Parade. As I see it, the issues at stake here emerge from two separate but related concepts. Those concepts are the notion of public goods and the corresponding free-rider problem.

I intend to discuss these concepts and how they might relate to an event like the SSIP. In my final post, I will suggest some possible solutions derived from these concepts and the other (possible) issues related to the event.

Public Goods

Typically, when one asks how to define public goods, the answer usually involves the terms "non-rivaled" and "non-excludable." Blank stares usually follow.

Examples are the best way to get at this concept. Non-rivaled means that the consumption of the good by one person does not reduce the availability of the good for others. If I drink a case of beer, the result (apart from me talking really loud and then passing out) is that I make that case of beer unavailable for anyone else.

Non-excludable means, well, that the consumption of the good does not exclude others from consuming that good. Continuing the beer example, if I drink that case of beer, I exclude others from consuming it. This, in a way, slightly reduces the ability of others to consume that same good. I know that they could go and buy their own beer, but they are prevented from consuming the beer that I did.

That case of beer is, therefore, not a public good because it is rivaled and excludable.

Something like a parade is different. The consumption of the good (the events of the parade) by one person does not reduce the availability of the parade for other spectators. In the same way, the consumption of the parade by one person does not exclude others from consuming it.

Parades are, then, public goods. Other example of public goods are things like parks, sidewalks, fireworks displays (to an extent) and other goods that people can consume without competition or exclusion. "Public" events like sporting events, concerts and other performances are not actually public because people can be excluded by means of an entrance fee.

The provision of these goods leads to a problem...

The Free-Rider Problem

This problem could just as easily be called "the freeloader problem."

The free-rider problem arises when people enjoy the benefits of a good completely independent of whether they pay for it or not. Classic examples that are given for this are things like national defense. Whether I pay for it or not, I will be protected by the armed forces of my government. The cost of keeping me (and other free-riders) from being defended (or, in other words, consuming this particular public good) is prohibitive.

An example closer to home, for some of us, might also help define this concept. We all have that friend who is usually described as a "mooch," a "leech" or "that cheap fucker who never ponies up for anything."

Snoop Dogg once famously expressed this notion in song: "I got me some Seagram's Gin/everybody's got their cup but they ain't chipped in/this kind of shit happens all the time/you gotta get yours, fool, but I gotta get mine." Snoop intuitively understood the problem of free-riders.

So, suppose you and your friends are planning a party. You plan on splitting the price of the food, drink and other expenses. You, being the magnanimous people you surely are, extend a more-or-less open invitation to friends to come and bring whomever they like. If they are really your friends, and they value your expenditure on the event, will reciprocate in kind or in cash.

There's always That Guy (or Gal), though. They come along, eat your food, drink your booze, take up your space and time and contribute nothing (aren't these also always the people who pass out on your couch and you then have to deal with them the next day as well). The price of excluding these people is probably prohibitive (socially or otherwise) and getting them to pay is even harder.

Free-riders, then, are a real problem when it comes to public goods. In the case of a parade, they consume the resource without any intention of bearing the cost of the event.

Well, this is not completely true because they bear some cost if public resources are expended in putting on the event. They DO pay for anything that is supported with public funds (police, fire, sanitation and the like). This cost, though, is often small compared to the amount of the resources consumed.

The result of this is especially acute for a private body that produces a public good, a body like the committee that until recently organized the SSIP. The free-riders are so many and the expense is so great that the ability to produce this public good voluntarily becomes cost-prohibitive.

Conclusion and Preview

As you can see, the problems of the parade are characterized by the ideas of public goods and the related problem of free-riders. These are, naturally, not the only problems involved.

We will discuss these other issues next time and begin to offer some possible solutions to the issue based on these concepts and some good old-fashioned intuitive thinking.

We will also engage in some wild speculation (perhaps in a fourth parade-related post) about other reasons behind this event being cancelled. I must warn you, though. All of the above is based on solid foundations. These claims will have no such thing. They will involve clannish neighborhood empire buliders, Mayor Daley, thinly-veiled racism, the Chicago Police Department and the extremely cynical application of demographic data.

But that's for another time.

(NOTE: If you are interested in the above-discussed concepts, I would gladly provide a short reading list of articles and books that discuss these fascinating concepts. They are fascinating, right? Right?)

Media That Soothes

2009-04-02T01:25:00.002-05:00

There are any number of reasons that we consume the media that we do. We watch, read, attend and listen to things that inform, persuade, enrage, stimulate or bring us pleasure in one way or another.

As for me, I suppose I am not much different than most people in this.

I have noticed, however, that one piece of media that I enjoy has a different effect on me than the one intended. I would guess that you have some similar things in your life.

The media that I am talking about is the Shipping Forecast on BBC Radio 4.

You can listen to the Shipping Forecast here and get more information about it here. For the full experience, listen to the lead-in music used by Radio 4.

As you might imagine, the Shipping Forecast is given for informational purposes. It is to report the weather conditions off of the coast of the British Isles and to report the weather from coastal reporting stations.

For me, though, I find it extremely soothing. Even before I knew all the zones and locations or what the numbers meant, I found my self relaxing and just enjoying the experience.

I'm not sure what it is, exactly. It might be the cadence of the announcer. It might be the fact that it comes out (at least in its full form) right near when I usually go to bed.

What I think is the most relaxing, though, is the mental picture that I draw as I listen to the weather conditions for Fastnet, Irish Sea, German Bight, North and South Utsire and the rest.

I picture ships and boats being tossed on the dark sea, fighting the wind and waves off of the coast of the British Isles. I picture a sun-drenched afternoon's sailing in the Norfolk Broads or off the Isle of Wight. I see lonely coastal weather stations, faithfully reporting the local weather.

I know that seems like a lot to imagine out of a weather forecast, but I guess I have a rather active imagination.

Do give it a listen and let yourself get taken away, forming your own mental pictures. It is the cheapest vacation that I know of.

South Side Irish Parade: Developments Have Developed

2009-03-28T15:44:00.002-05:00

We will come back to the concepts underlying the parade, its dynamics and the problems therein next week.

For now, though, there are two news stories of interest that have arisen in the past few days:

Evergreen Park Mayor James Sexton has made noises that his suburb might want to host a St. Patrick's Day parade. This would be, if it was done right, a boon and a credit to the south suburbs.
One of the people arrested at the parade tells people not to blame him for killing the parade. To Mr. Vasquez, I say that punching a cop was probably a bad move, even if you considered it self defense (which it seems that it wasn't). To his larger point, of course one person cannot be blamed for the parade being cancelled. As we shall see, the problems inherent in the parade are not those of human frailty, but those of bad planning and organizers who failed to change their focus with the changing nature of the event.

South Side Irish Parade, 1979-2009

2009-03-25T23:17:00.004-05:00

I was surprised, shocked and quizzical upon hearing of the "suspension" of the South Side Irish Parade. Read the Sun-Times version here.

I will offer a more in-depth analysis of this event, the decision to suspend it and possible paths for the future in the coming days. Presently, I wanted to offer my reflections based on my own experience and also respond (in one way or another) to the commenters on this version of the story at chicagobreakingnews.com.

My Personal Parade Experiences
I have attended the parade for at least the last ten years. A close friend's family owns a business near 103rd and Western Avenue. I also have good friends who live in the neighborhood, several of whom host parties on the day of the parade.

I have always had a good time at the parade. For several years, we would even stay at a hotel near the parade site and take cabs or walk to the parade to be on the safe side. Most years, though, we would park behind my friend's shop and stand out front to enjoy the parade.

I would be lying if I said that my friends and I didn't drink during the parade. We did, and on the public thoroughfare (which is illegal in Chicago and most everywhere that isn't Las Vegas or New Orleans). We were always responsible about it, though. I have too much experience in my circle of friends with DUI and other legal complications. We always had a sober driver and always got back to the South Suburbs safe and sound.

Alternately, we would walk to a friend's house in the neighborhood, spend the rest of the day and night there and pick the car up in the morning.

We always respected the neighborhood, understanding that we would expect the same if people came to our neighborhood. I never peed in a lawn. I never threw my trash around. I never destroyed property. I never got in a fight or caused any sort of disturbance. I, furthermore, never saw any of my friends do any of these things. If they did, then I didn't see it.

I am not exaggerating any of this just to make myself look like a saint. I pride myself on being a responsible parade goer and one who knows his limits when it comes to alcohol. I have tested those limits in the past, but I am beyond that stage in my life. I know what I can handle and I don't go beyond.

To Those Who Say, "Good Riddance!"
...and at the above-linked article there were plenty of them. A lot of these people, furthermore, claim to be Beverly-Mt. Greenwood residents. I have no way of proving where these people are from, but there were several common themes in their comments.

I guess I can understand their joy at the parade's demise...to a point. Yes, I can understand that the mess and congestion and crowds and public drunkenness and destruction of property is out of line and can make life miserable. How could these things NOT be a nuisance?

I can also see the other side of the argument. Yes, these negatives are considerable, but there are positives. Apart from the huge influx of cash into the neighborhoood (which will be discussed at length in future posts...I wonder if it offsets the extra cost of police, fire and sanitation), this event has truly become one of national scope. It brings thousands of people into a unique and historical neighborhood of the city for a day of celebration. I have never lived in a place that anyone has given much of a shit about, so I could see where that might engender a sense of pride.

The numbers of arrests (which don't tell the whole story), furthermore, as compared to attendees (an estimated 300,000) is miniscule. While, as I alluded to, the arrest figures do not encapsulate the fullness of the unpleasntness (and might just say as much about the police as the parade goers), it IS only one day out of the year. To have your neighborhood host an event that brings joy to so many and have to be inconvienenced one day a year seems a small price to pay.

This does not mean, however, that I condone destruction of private property. Private property is sacrosanct. It is, as far as I am concerned, a fundamental human right (the protection of property, that is). This is wrong and takes some creative thinking to make it better (again, more on this later).

In summary, then, while I can see how some people (especially residents of the neighborhood) would be glad to see it go, I can also see how these same people might not be considering all of the facets of the issue.

To Those Who Say, "The Problem is Outsiders!"
Most of the people who said this seemed to be the above people who live in the neighborhood. They lament their neighborhood celebration becoming a magnet for people from "outside," who cause most of the trouble.

They also claim that it would be a good idea, not to mention feasable, to exclude people from outside the neighborhood. This, they state, would return the parade to what it once was - a celebration by the locals, for the locals.

This view is impractical and ill-informed. While most of the people arrested were not from the immediate area, this fact doesn't really mean that much. There were likely more people at the parade who didn't cause trouble (or whose troublemaking was not officially punished) from elsewhere.

The only way to make this happen is to check proof of residency for all parade attendees. The logistics of this would be nightmarish, to put it lightly.

To Those Who Say, "We Want Nothing to Change!"
Sorry, this seems unlikely. Such a decision, I would imagine, was not taken lightly.

To Those Who Say, "This is the Wrong Way to Celebrate Irishness!"
I understand that the stereotype of the Irish as being drunk and violent is one with a long and damaging history. You can say this of most stereotypes, really.

I also understand, however, that in a larger sense, this shows a short-sighted view of the subject. One of the cornerstones of the Irish character and culture is hospitality to one and all. Welcoming strangers into our homes and neighborhoods, encouraging all to eat, drink and be merry is simply part of what Irish people are. While I am not really Irish (I am an American of Irish ancestry), I take great pride in this aspect of my background.

If some American Irish people choose to celebrate their heritage by going to church, fine. If others choose to celebrate their heritage with their friends and a case of beer at a parade, fine. If they choose not to celebrate it at all, fine. If people who have no Irish background decide to join us in our celebration, fine.

What I object to is being told how to engage with my ethnic heritage. Ethnic hertiage can be as much a curse as a blessing, and it might leave one with mixed feelings (as it does for me). I choose, however, to celebrate the best parts of my heritage while not forgetting the negatives.

For Next Time
In my next post concerning the implications of the cancellation of the South Side Irish Parade and it's possible future, I hope to explore the nature of this sort of event, the problems inherent therein and possible suggestions of how the event could change.

To read up on this, you might want to consider the ideas of public goods, negative externalities and the free rider problem.

After doing this, we will consider other possible reasons behind this decision (non-rational maximizing ones) and where we go from here.

I think it is safe to say, however, that the South Side parade as we once knew it is dead and gone forever.

Is that good or bad?

We shall see.

TSA: Hassling The Handicapped, Taking My Pop And Fighting Terrorism

2009-03-24T21:24:00.002-05:00

I, like many people, traveled by airplane during my spring break this year.

I took two flights: one from Chicago-O'Hare to Pittsburgh and then the return flight from Pittsburgh to Chicago.

Overall, the travel part of my trip (taken with my dad) was uneventful. No delays or lost luggage or faulty rental cars or messed-up hotel reservations. No, all of the service providers that my dad and I dealt with were generally quick, professional and gave great value for money. This included two airlines, a rental car company, a hotel and a mobility equipment rental company.

There was one entity, though, that colored each travel experience, making it unpleasant, tense and nerve-wracking.

This entity was, as you might have guessed, the Transportation Security Administration (TSA).

You can choose your airline, rental car provider and hotel. You cannot pick to NOT deal with the TSA. If you want to fly inside or from the USA, you have to go through a TSA checkpoint at the airport.

I have had bad experiences before with the TSA and this trip was no different. The web is resplendent with TSA horror stories; just Google-search "TSA sucks" and see what you come up with.

At O'Hare, I had no trouble apart from having to remove my shoes and jacket (as I suspected I would have to). My dad was a different story.

He went through the checkpoint in a wheelchair. Apparently, this marks the person as an immediate threat and subject to additional search. They made my dad remove his shoes and belt, two things that are not easy for him (or anyone) to do while seated. He then was made to walk through the metal detector, trying to keep his pants up.

I guess they didn't realize that he was in a wheelchair for a reason. It was embarassing, demeaning and (seeing as they have hand-held metal detectors) seemingly unnecessary.

On our return trip, it was I who had problems with the TSA. My dad was taken into a side examination room where he didn't have to walk, holding his pants and trying to walk. That was the good part.

The confusing part came when I removed my shoes (not my jacket: apparently jackets are only dangerous when one departs from O'Hare, not when one arrives there), put my bag on the conveyor belt and walked through the metal detector.

I went to retrieve my bag and, well, reassemble myself, when a TSA screener picked up my bag, looked at me like Dirty Harry and turned the contents out on the table in front of him.

Now, just for the sake of completeness, I will recount the exact contents of the bag: A book, some crossword puzzles from the newspaper, a file folder containing documents pertaining to our trip, a package of Juicy Fruit gum and three sealed, bottled beverages (Diet Dr. Pepper and two bottles of spring water). Pretty dull stuff, right?

Wrong.

The TSA Charles Bronson wannabe gathered the bottles up, shook his head at me like one would at a dog who pissed on the carpet, put them behind his counter and shoved the contents of the bag back toward me. I gathered up my legal carry-on items and left the area before I said something stupid (which can be almost anything around TSA screeners).

Apparently, my non-alcoholic, non-combustible liquids were off limits. I was interested in why this was, so I went to the TSA website to their list entitled, "Prohibited Items." No, nothing even close there. Thankfully, I packed my nunchucks, cattleprods, starter pistols and cricket bats in my checked baggage.

I then checked the list entitled, "Food and Beverages." There, I found a stock photo of a burger and fries and nothing more than a vague statement about items purchased inside the airport terminal.

I came to the conclusion that my items were taken unfairly or at least without adequate explanation. Well, I am not sure what I expected. Power-tripping, government-backed, uniformed thugs are never good at putting things into words.

So, to conclude, I have something to say to the TSA agents who made our trip and then to the TSA more generally.

To the handicapped-hassling, beverage-confiscating, jackbooted, pushy, unhelpful, inhumane government stooges in Chicago and Pittsburgh, I hope your day was made by embarassing a handicapped man in public and taking items that may not have been illegal. I also hope you fucking rot in the lowest level of hell.

To the TSA generally, I say you are no more than security theater. You are not there to protect people. You are there to make people think that they are protected. The real failure of airport security on 9/11 (where all of this TSA shit started) was that it worked too well and the hijackers just gamed the system.

The TSA serves the purpose of eye-wash, the visible portion of a security apparatus whose scope and remit we cannot begin to understand. The TSA is a bloated, inefficent, unwieldly government bureaucracy that serves its own interests first and the interests of the people a distant second. The only thing that they protect are their positions and salaries, each person from the airport screeners to the Secretary of Homeland Security engaging not in security but bureaucratic empire-building.

So, TSA, you do not make me feel safer. You do not convince me that you could stop the ever-evolving terrorist threat to our transport system. You do nothing but use your power to inconvienece and hassle people.

In other words, you are no different from any other branch of the government.

I want my dad's dignity back. I want my fucking pop back. I want my privacy back.

Don't bother trying, though. I know you are capable of no such things.

Multum In Parvo, Spring Break Edition

2009-03-18T20:59:00.003-05:00

...no, not the sort of Spring Break that springs to mind: blaring crappy pop music out of a Days Inn window in Florida...drinking Keystone Light out of a McDonald's cup...syphilis.

Merely a few short items that combine some of my favorite things:

First, sports and economics. Use some economic thinking in making your NCAA Basketball picks.
Second, the Coase Theorem and reality (such as it is). See how this foundational idea of the relation between law and economics is playing out with a Las Vegas convienence store.
Lastly, booze and economics. Read Tim Harford's take on alcohol prices and their effect on consumption.

Sorry that there is nothing of substance this week (do read the above articles, though). I am away from Madison until the weekend. That and all the festivities for St. Patrick's Day, my dad's birthday and a trip to Pittsburgh.

I will need to get back to work to get some rest for a change.

Anyway, enjoy.

Read Up And Wither Labels?

2009-03-12T00:08:00.002-05:00

Yes, I know. Three posts in a week from a guy that used to disappear for four months. What can I say other than I have a lot to say.

First, please read the below three posts. They examine:

The situation in Northern Ireland.
Alan Greenspan's craven ass-coverning attempt.
Brokers jumping out of windows in 1929 (or not).

Second, I have added some more links to the blogroll and links list at your right. Check them out.

Third, I have been toying with the idea of putting labels on my posts. I did it for a while about a year and half ago, but then I stopped. I suppose that this would make accessing previous (somewhat) related posts easier.

What do you think? Leave your thoughts in the comments to this post (after reading the other posts, of course.)

The Plummeting Brokers of 1929: Popular Yet Wrong

2009-03-11T23:13:00.002-05:00

It is an image that is seared on the popular conscience in times of financial crisis.

It is October 29, 1929. Stock markets in the United States had lost $30 billion in the course of a week. This was more than ten times the federal budget at the time and far more than the U.S had spent fighting World War I. This would be roughly $363 billion today.

In response to this financial disaster, brokers in New York were despondent and broken. In their despair, they began to fling themselves from the windows of their buildings. The streets of Manhattan are littered with corpses that represented the broken financial dreams of a nation. Even Winston Churchill witnessed such a suicide with horror.

This image is very evocative, very well-known, very widely-quoted and very wrong.

For the straight dope, well, read it here at Straight Dope.

John Kenneth Galbraith, in his classic 1955 book The Great Crash (whose conclusions I reject, by the way), confronts this issue. Galbraith studied suicide statistics and, while the suicide rate did rise from 1928-1932, the figures show no acceleration in September and October of 1929.

I suspect that there were two reasons for the popularity of this image. First, as the Straight Dope article makes clear, there were several well-publicized suicides that were connected (sometimes tenuously) to the events of October, 1929.

Second, and more powerfully, people who were going through the effects of the crash wanted to believe this. They wanted to believe that the people who had manipulated the market and lost all their money would kill themselves in their shame and despair. People were unhappy and poor so this image, as violent as it was, was an understandibly popular one. It is through this, I suspect, that this myth entered the popular conciousness.

We, as a society, need to find an outlet for our frustrations. When they are financial in nature, the targets will naturally be people in finance. That is why, in my opinion, the media has latched on to (and people have readily consumed) the sordid tale of Bernie Madoff. The full resentment of people and their financial woes are given a face and a dastardly story.

This sublimation of fear and resentment directed toward Madoff (who is doubtless a criminal who deserves to go to jail) springs from the same source as the persistence of the 1929 broker suicide myth. People seem to find this act soothing, expiating, cathartic and worth their time.

My one fear in this, though, is that people will "get it out of their systems" without looking into the deeper implications of the event. They will be glad that the brokers killed themselves, glad that Madoff went to jail and be done with it.

Let's not be so hasty. Let's try to understand these things, though the process be difficult and long.

We will all gain a clearer picture and deeper understanding.

And THAT'S no myth.

Too Late To Cover Your Ass Now, Greenspan

2009-03-11T22:54:00.002-05:00

It seems that former Federal Reserve Chair Alan Greenspan is trying to deny that he played a part in causing our current financial malestrom.

Give me a fucking break.

The evidence is becoming more and more clear that allowing Lehman Brothers to fail in September of 2008 didn't freeze credit markets. For an excellent and readable empirical approach, read John Taylor's paper on the government response to the crisis (if you don't want to read the whole thing, check out the charts and skip to the last page and read the conclusions).

For regular readers of COTL, you will remember my discussion of this matter last fall. If not (or if you just want to relive those, ahem, thrilling moments, click here and here.

The problem was not the failure of Lehman Brothers. The problem was the ad hoc and uncoordinated reaction of the government to the situation. Short-term cash injections were not enough. Why? The problem was NOT liquidity. The problem was risk.

By propping up some companies and not others, the government caused the (now) fatal crisis of confidence among investors that made making any investment in fixed-income markets too risky. This caused the drop in the bond markets and thus the drying up of credit.

If we are taking a break from dealing with this situation to point fingers, let's make sure they are pointed in the right direction.

Same As It Ever Was?

2009-03-10T01:54:00.004-05:00

This was supposed to be over, right?

After the Good Friday Agreement, this was all to be part of the past, wasn't it?

With devolved government and a power sharing executive, the Unionist and Nationalist communities in Northern Ireland were supposed to put violence beyond their plans, weren't they?

Well, for the most part, it seems that they have.

The Real IRA's killing of two British soldiers in Antrim this weekend and the killing of a police officer in Craigavon (near Belfast) yesterday could not but send a shiver down the spine of those who have followed Northern Ireland's fitful path to peace and reconciliation.

The RIRA is a core of "true believers," made up mostly of former members of the Provos who reject the peace process and the perceived collusion of Republican leaders with the British government. Why did they do what they did? For the same reason that terrorists do anything: to bring attention to their beliefs by the use of politically-motivated violence.

What else might have provoked this violence? It could have been PSNI Chief Constable Sir Hugh Orde's decision to bring in British Army intelligence specialists to deal with a growing threat of Republican activity and violence. It seems, after the events of the past few days, that he might have been on to something.

Will these attacks derail the peace process? I sincerely hope not. That will all depend on how the leaders of the Unionist and Nationalist communities react to the situation and how dedicated they remain to making the peace process work.

It seems that this is what is being done...sort of. For the part of the Unionists, DUP Leader and Northern Ireland First Minister Peter Robinson has called for this matter to be left with the police and also for restraint on the part of Unionists to prevent recriminations and counter-violence in the wake of these attacks. British Northern Ireland Secretary Shaun Woodward has condemned the attacks and called for the people of the province to be united.

For the part of the Nationalists, Sinn Fein President Gerry Adams condemned the loss of life, but intimated that if Sir Hugh Orde had not called in British Army specialists, these attacks might not have taken place.

Why the hair-splitting on the part of Adams and Sinn Fein? I agree with Lord Paul Bew's assessment that Adams is facing a difficult position for himself and his party (click on the link and read the whole thing; Bew is a real expert and has an excellent read on the situation).

Reeling from an unexpected electoral defeat in 2007, the lack of support from the Republic of Ireland (they have their own problems) and the seeming waning of political engagement of some former Republican supporters, Adams is in a political conundrum and he, in reacting, tried to speak out of both side of his mouth. He wanted to show that he supports the police and the justice system to pursue the perpetrators of this violence, but also that he still has the fight to question the actions of the British government in Northern Ireland.

This is all well and good as far as the political leaders go. The real meaning of these events going forward, though, rests with the people of Northern Ireland. It seems that the people of Northern Ireland are, by and large, committed to the peace process and the devolved government as it has developed over the past eleven years. There are, and will in some measure always be, radical elements on both sides of the issue.

The key question is how much support, either direct or tacit, is offered to these elements. If it it is a lot of support, then the killings of this weekend will not be the last. Organizations like the RIRA need the support of people in the community to survive as much as they need the channels of international money and arms smuggling to continue their "military" campaign. The same, naturally, goes for their Unionist counterparts.

The people of Northern Ireland must show that they have the political will to resist the actions of those who would bring back the violence and uncertainty of the Troubles of the past forty years. They also must realize that their leaders, people like Adams, might need to change. I believe that it will take a generational shift in political leadership for real, lasting progress to take root.

The generation that fought the British government and those that were in control of that government need to go by the wayside. The generation that grew up with the beginnings of the peace process in the 1980's, who has known as many years of peace as of violence, is where the hope for the future should lie.

It is these people who will have the will and the ability to support the peace process and its institutions. It is these people who will have to resist the temptation to let frustration lead back to the violence of the past. It is these people that will forge ahead and either make or break Northern Ireland as we now know it.

Is this likely to happen? As a life-long student of Irish history, I surely hope so. I am not naive enough, though, to guarantee any such thing.

We, and the people of Northern Ireland, must hold our breath and wait.

Let's hope it is worth it.

Multum In Parvo

2009-03-04T01:07:00.002-06:00

Just a few short items of (possible) interest:

Los Angeles County has apparently banned swearing this week. The kid that proposed this said that he wanted people to be more civil to each other. What he forgets is that swear words are as much a part of our language as any other word and they indeed have their place. What he also forgets is that his idea would be accepted from the start...when have you ever known the government to turn down a chance to tell people how to behave? To gain some perspective, take a lesson from Professor Carlin. Don't agree with me and George? Well, fuck you.
New Illinois Governor Pat Quinn seems to have paid some of his own expenses when he was Lieutenat Governor. You know the political state of affairs is pretty sad when we are overjoyed that a guy paid for his own dinner from time to time.
Maureen Dowd on the Obama Administration's silence on pork in the bailout legislation. At least John McCain tried to say, "no se puede."
How low will stock markets finally go? Wall Street icon Henry Blodget thinks a lot lower. Steve Forbes is worried too. I tend to agree with them, though more with Blodget than Forbes. Look at the open interest in March SPX puts at the CBOE. Those numbers are too big to be an accident.
The White House contiunes its assault on CNBC, this time on Jim Cramer's charges of "wealth destruction." I find Jim Cramer to be smarmy, unseemly and just plain wrong a lot of the time. He did, in this famous blow-up, have things right on interest rates in 2007.

Roland W. Burris Will You Please Go Now!

2009-02-26T12:59:00.002-06:00

After being questioned by the FBI last weekend, the news that his son got a sweet patronage job and hearing the growing chorus calling for his hide, I hope Roland Burris listens and resigns soon. He won't, but one can hope...

Rather than express my feelings on this in prose, I thought I would attempt to make it entertaining.

So, here is my advice to Roland Burris (with apologies to Dr. Seuss for the content thef t and to Art Buchwald for the idea theft):

Roland W. Burris will you please go now!
The time has come.
The time has come.
The time is now.
Just go.
Go.
Go!

I don't care how.
You can go by foot.
You can go by cow.

Roland W. Burris will you please go now!
You can go on skates.
You can go on skis.
You can go in a hat.
But
Please go.
Please!

I don't care.
You can go
By bike.
You can go
On a Zike-Bike
If you like.
If you like
You can go
In an old blue shoe.
Just go, go, GO!
Please do, do, do, DO!
Roland W. Burris
I don't care how.
Roland W. Burris
Will you please
GO NOW!

You can go on stilts.
You can go by fish.
You can go in a Crunk-Car
If you wish.
If you wish
You may go
By lion's tale.
Or stamp yourself
And go by mail.

Roland W. Burris
Don't you know
The time has come
To go, go, GO!
Get on your way!
Please Roland B.!
You might like going in a Zumble-Zay.
You can go by balloon . . .
Or broomstick.

You can go by camel
In a bureau drawer.
You can go by bumble-boat
. . . or jet.
I don't care how you go.
Just get!
Roland W. Burris!
I don't care how.
Roland W. Burris
Will you please
GO NOW!
I said
GO
And
GO
I meant . . .
The time had come
So . . .
Roland WENT."

We can only hope.

"Losers" Was An Unfortunate Choice. But, Still...

2009-02-24T21:28:00.002-06:00

(This is in partial response to Josh's comments on my last post. I thank all of you who responded and who continue to read this space. I appreciate even more when I get to respond to criticisms of what is written here. It keeps me on my toes).

O.K., Rick Santelli should not have called people "losers." That was a bad choice.

I also realize that his lively personality is a mix of trading floor bluster and the sort of invective that makes for entertaining television. Bearing that in mind...

While I agree that the "American Dream" has, for some time now, included home ownership, I guess I see it a little differently.

I focus on the "Dream" part of it. It is an aspiration, something toward which people strive. It does not equal the right to own property. Property ownership should, naturally, be absolutely guaranteed by our laws. What they should not do, however, is guarantee property ownership to everyone.

Is there a component of home-ownership that goes beyond rational self-interest? Sure, I suppose there might be, something tied in with sense of home and place. This is surely, though, a higher-level concern when property is involved. At the base, a person's relationship to property is an economic one. People should be able to buy property if they can reasonably afford to do so.

At the core of this must be a frank honesty with oneself about one's limits and expectations. If we are honest about our financial situations and our likely prospects, the ability to own and maintain property should be clear. If we cannot afford it, we should not be blinded by some ideal vision of property ownership. It is this sort of thinking that led people into the difficult situations that we see today. At the heart of every forclosure is someone not willing to be honest with themselves.

While I also agree that the housing issue goes to larger issues of public safety, health and welfare, I cannot agree that these issues are dealt with merely through having a big house. There is plenty of housing stock available, older but serviceable homes and rental units that would be ideal for people starting out their lives or suffering some economic hardship.

This is not what people wanted during the housing boom. Against better judgement, people could borrow more so they did. Not being able to fight this urge, people took on more debt than they could reasonably handle. Thus the Santelli remarks of last week.

Another thing that I cannot forgive is anyone who thought that they were safe because the housing market would keep going up. Give me a break. You don't have to know much about finance or economics to realize that the value of anything is not stable - prices always fluctuate.

To the issue of people being thrown out of their houses and then showing up on the dole later, I say that I would rather pay for their unemployment and welfare benefits (which are temporary) than to pay off an underwater thirty-year mortgage. I have not run the numbers on this, but I suspect they may bear me out.

To the point on the government actually helping people take risks, there are two sides to this issue. In the short term, moves by the government might help to restore confidence and get those capital flows out there again. More generally, though, these moves by the government will hurt risk-taking and speculation.

How? By constantly changing the rules of the game, the government is making it hard for the investing public to say anything definitive about the direction of markets. One look at a one year chart for any market index shows the reactions of the market to this ever-changing landscape.

Oh, and one final thing about Frontline and Paulson. I think it was specious to suggest that the decision to let Lehman Brothers fail had anything to do with a personal vendetta of Paulson against Dick Fuld. Did the two guys hate each other? You bet your ass they do. Enough to do a thing like that? Please.

Thanks again, Josh. I hope that I have spoken to your objections and concerns. I appreciate anything that sparks discussion and keeps people talking. That's the only way we will come to figure these big things out.

Santelli Nails It Again

2009-02-21T00:50:00.002-06:00

In public life, you know you are doing something right when your actions are officially rebuked.

This is exactly what happened to CNBC's Rick Santelli today for his indignant invective against the Obama Administration's mortgage bail-out plan.

The rebuke came from White House Press Secretary Robert Gibbs, who offered to buy Santelli a cup of coffee...decaf. Cute. Really cute.

Well, I think we should all buy Santelli coffee, whiskey, Chianti, Upper 10 (remember that?) or whatever the hell he wants to drink. Why? Because he has continued his streak as probably the most on-the-money (pun intended) financial reporter out there.

He has had it right-on over issue after issue. To wit:

Santelli takes down the odious Jim Cramer over his market predictions in 2007.
Santelli speaks the truth about the bank bailouts.
Santelli calls it on the Fed and interest rates.
Santelli explains why speculation didn't cause high oil prices last year.

Now, I know that those clips were filled with financial jargon and guys in ties yelling at each other, but I hope you can forgive me for that...it's the world I used to live in.

He was right on those issues in the past, but his insight was more technical and based on his background. This background is what make me like him so much. He cut his teeth trading bond futures at the Chicago Board of Trade. To do that well, one needs an understanding of the wider economy and enough knowledge of the credit markets themselves to trade successfully. In other words, this guy paid his bills because of how well he knew credit markets.

This time, though, he is right because he simply states the idea of moral hazard. This idea basically says that people who are sheltered from a risk behave differently than those who are not. The hazard part comes in when the party doing the sheltering has to choose who to shelter and who to leave aside.

Put very simply, Santelli, myself and I suspect a lot of people don't want to pay for the mistakes of others. People took out mortgages at insane terms that they could never pay back? Too bad...that's their problem. Banks lent too much and leveraged themselves to a ridiculous level? Tough shit, that's the game.

Now, I know what you are thinking: "Will, you always jump in to defend the big capitalist interests against the little guy. Aren't you a little guy? You aren't one of these pirates in neckties on Wall Street, are you? Why the sympathy for them? They got their bailout, now why can't we get ours?"

Well, to that I say that, in this situation, neither big capitalist interests nor the little guy are blameless. In a perfect world, I would say that we bail neither of them out. This is not, however, possible.

Why? Systemic risk. Just how this was defined and implemented (remember all the talk about "too big to fail?) was a bit of a muddle and was charged into without any idea of a coordinated plan or a desired outcome. For a great telling of that tale and it's implications, watch this great episode of Frontline from this past week.

I just thought that Santelli was expressing the frustration of people caught up in this financial crisis and also expressing the idea that was leading to that frustration.

And for that, I say, "Amen and preach on, Brother Santelli!"

Misreading Darwin And The Most Important Box In The World

2009-02-13T14:36:00.003-06:00

...comprise the essence of today's two new posts. Check them out below.

What's that? How am I celebrating Valentine's Day?

Silly question. You should know by now that Valentine's Day is not a recognized observance in the City of Tiny Lights.

Is it because it is too commercial? No. Is it because I find the treacle and underlying message of the observance distasteful? That's closer to the truth.

Better yet, get the low-down from St. Valentine himself.

Following The Big Red Box

2009-02-13T14:04:00.002-06:00

Every now and then, an idea comes along that is novel, educational, profound and entertaining.

Such an idea is embodied by the BBC's Box Project.

In short, the BBC painted a shipping container with their logo and website. They attached a GPS tracking system. They then sent it in September of 2008 to Southampton where it entered the great, global pool of shipping containers owned by NYK Line. They then have proceeded to track its progress around the world.

It has carried Chivas Regal from Scotland to Shanghai, household goods and make-up from Shanghai to Pennsylvania via Los Angeles and household goods from Newark to Santos, Brazil.

You can get all the details (and follow the box yourself) at the above BBC Box Project link.

There are so many great things about this project. First, it pays tribute to one of the unsung heroes of the modern global economy: containerized shippin g. If you consume, well, nearly anything that you didn't grow or make yourself, there is about a 90% chance that that thing spent some time in a shipping container.

Goods in shipping containers get loaded and unloaded quicker which allows for a greater volume which, in turn, allows for lower prices for producers, shippers and consumers. Products get to their destinations quicker because shipping containers are intermodal, meaning that the containers can go from ship to rail or truck without being unpacked. Goods also pass through customs faster and there is little deadheading (empty containers...not at all related to Jerry and the boys). Shipments enter large container terminals and can be on the way to their final destinations within hours.

Think about the implications of all of this. This forty foot long metal box and how it is handled influences all aspects of your life every day and has done so for almost the last forty years.

To put it another way, and relate it to a previous post, it makes the idea of the "Iowa Car Crop" possible.

So, the next time you are driving down the highway (or stopped at a railroad crossing) and rusty metal boxes are whizzing past you, think of how they influence your life and how you live it on a daily basis.

The most profound notions often emerge from the simplest of things. I think this is a great example of just that.

The Survival Of Misunderstanding

2009-02-13T01:14:00.002-06:00

This post is, in a way, about something Charles Darwin said.

Mostly, though, it is about something Charles Darwin didn't say.

There were two important 200th birthdays yesterday: Abraham Lincoln and Charles Darwin. Both born on February 12, 1809, they had their bicentennials celebrated this week. In the USA, it seems that (perhaps understandibly) that the Lincoln celebrations overshadowed those for Shrewesbury's favorite son.

As for Lincoln, by the way, check out this balanced assessment of Lincoln's legacy and this book

that connects Darwin and Lincoln and their influence on the modern world.

The media coverage of Darwin this week (and any time that Darwin's name gets mentioned) always seemed to mention the two key phrases connected to Darwin and his ideas: "natural selection" and "survival of the fittest."

Well, that's what Darwin was all about, right?

Not exactly.

Darwin did use the phrase "natural selection." As for "survival of the fittest," it is more complicated.

Darwin DID use the phrase "survival of the fittest," but it didn't have the connotations that have become ascribed to this loaded concept. In Origin of Species, Darwin uses "survival of the fittest" as a metaphor for his idea of natural selection, not as a scientific concept or description.

The meaning of "survival of the fittest" as we have come to know it traces its origins to the British philosopher Herbert Spencer.

Spencer used the phrase in his 1864 book Principles of Biology after having read Darwin's work. He used the phrase as a characterization of Darwin's ideas. In fact, Spencer disagreed with Darwin's notions, preferring Lamarck's idea of use inheritance, which argues that the use or disuse of an organ or trait could be inherited by subsequent generations (Jenks, did I get that right?)

That's not the way, incidentally, that "survival of the fittest" is usually used, though. The more popular use is more polemical, incendiary and mistaken.

"Survival of the fittest" is bandied about as a catch-phrase for all that is wrong with society and all this wrong is blamed (mistakenly) on Darwin and (also mistakenly) on Spencer.

What is this great societal wrong, you ask? Well, social Darwinism, that's what.

Social Darwinism is often linked with the (perceived) evils of capitalism. This is done thusly: if capitalism is based on competition between competing parties in pursuing incentives, then it is no small step to see that those who are successful are in some way inherently better than those who are not. This means that capitalists believe that the poor are somehow inherently deficient and therefore lesser beings than the rich.

Spencer believed this. Francis Galton, the originator of the idea of eugenics, believed this. Thomas Malthus may have hinted at aspects of this.

But...is this connection appropriate?

While it is certain that Herbert Spencer thought that society was evolving toward greater freedom for individuals, it is less certain that he believed that he thought the poor were inherently inferior. Francis Galton, while he believed that "more fit" people should reproduce more, he certainly didn't advocate genocide on the poor. He merely wanted to reform morals so that the poor would (in his estimation) become more fit. Thomas Malthus, while related to these notions, was more concerned with food supply and land reform. In any event, furthermore, he might have been wrong.

These qualifications, while interesting, do not answer the above question. So, is capitalism inherently flawed and elitist?

The best answer to this (in this situation, anyway) comes from Ludwig von Mises, one of the leading lights of the Austrian school of economics.

Mises argued that social Darwinism fundamentally contradicts the classical liberal ideas that helped give birth to our modern notion of capitalism and competitive markets. He says this is the case because the traits that lend to social cooperation (rather than "natural" aggression) are those that lead to maximize offspring in a given environment.

So, great. Where does this leave us?

It leaves us with the idea that, before using a phrase as loaded as "social Darwinism," it would behoove all of us to understand what it means and that in reducing complex ideas to tag-lines, we often do those ideas a disservice and make them less (rather than more) clear.

So, keep it simple, stupid, but don't make it so simple that it becomes stupid, stupid.

And Now...Choice Of Reading At COTL

2009-02-05T23:13:00.002-06:00

Well, you have two bright, shiny, new posts today at COTL. They can be found below.

One concerns short pieces of brilliant writing and how I often fail in my aspiration to emulate them. The other is a collection of items about economic stimulus, "Buy American," the value of partisanship, the uselessness of the GRE, the new miracle drug "Stimulis" and much more.

I am planning longer examinations for the near future. Particularly, the parallels between themes in this and this and this intrigued me.

Barring that, I ask you, dear readers, is there anything you are dying to get my take on? Anything, large or small, that would benefit from the perspective of a grumpy libertarian barstool philosopher?

Or should I have a big plate of shut the hell up with mind your own business sauce served with a side of we don't give a shit?

What say you?

Brevity Is Indeed The Soul Of Wit

2009-02-05T22:51:00.004-06:00

I guess I could have retitled this post, "A Lesson Will Shannon Should Have Learned Long Ago."

Oh well, it might be too late for me...

Anyway, for any of you who have done any amount of writing, there is one piece of (seemingly)counterintuitive thinking that is absolutely spot-on.

This idea is the notion that it is harder to write a short piece than it is to write a long one.

It is much, much harder to write a short, well-argued piece of writing than it is to do the same in multiple times the space. Think you would have a tough time explaining something in fifty pages? Try doing it effectively in three. Hell, try doing it on one side of an index card.

I am reminded of this whenever the semester begins and my supervising professor and I try and impress this idea on a new group of students.

Let me tell you from experience: they never believe you. They also often never believe how low a grade they got.

So, whenever I run across a well-argued, clear, convincing, provocative, tight and compelling piece of writing, I think it is simply a joy to read.

I figured I would share two of my favorite examples of this with you:

David Friedman's "The Iowa Car Crop." It explains concepts like comparative advantage and trade theory in a clear, succinct and engaging manner. It is simply stupendous.
Steve Landsburg's "Why I Am Not An Environmentalist." I have never heard the case against environmentalism stated any better. My personal favorite line: "My county government never tried to send me a New Testament, but they did send me a recycling bin."

Anyone who writes or reads should appreciate the ability to express oneself in an engaging, succinct manner.

I aspire to this. This website shows that, on this score, I win some and I lose some.

Just how many W's and L's I have is really up to you.

I am a little bit afraid of what you think about this, but if you want, tell me anyway.

I can occasionally accept limited amounts of constructive criticism.

Multum In Parvo

2009-02-05T21:44:00.002-06:00

A few items of interest:

Bryan Caplan comments on the new edition of Henry Hazlitt's classic book Economics in One Lesson. Be sure to read his rebuttal of Brad De Long's "fears" about this book. It was this book that was partially to blame for my interest in economics. It is clear, elegant, well-written and convincingly argued. If you read one book on economics in your entire life, this would not be a bad choice.
Carmen Reinhart and Ken Rogoff's lessons from past financial crises. I mainly agree with them, especially in the phrase "prolonged slump." Think 1970's, not 1930's.
Martin Feldstein and Greg Mankiw on economic stimulus. I mostly agree with Feldstein, I agree less with Mankiw. I know Mankiw is a partisan of ideas like this and this, but I am more convinced with these critiques of those positions.
For a more, ahem, arousing take on stimulus, watch this hilarious video from reason.tv.
Burton Malkiel, author of a classic book on finance and investing, opposes the idea of "Buy American." So do I. It sounds too much like this to me.
A great piece at Cato Unbound on political parties, appreciation and the need for partisan organizations. Read responses here and here.
An English professor's tale of retaking the GRE. Not surprisingly, he did well. Not surprisingly (to me, at least), he found the test lacking.

Journey Into The Heart of (Leftist) Darkness

2009-02-01T00:09:00.002-06:00

Y'know, it's funny where you find yourself on some Saturday nights.

Last Saturday, I attended a discussion forum entitled "Obama and the Left," sponsored by a progressive publishing company.

Before you call the Mendota State Mental Hospital and get the commitment papers rolling, allow me to explain.

I attended this event with my good friends and intellectual fellow-travellers Greg, Rick and Jessica. Greg and Rick ran across the flyer, thought it was a "can't miss" sort of event and invited me along. As a grumpy libertarian, I thought it would be a frightfully good wheeze and besides, I hadn't been angried up in a while.

Before going, we steeled ourselves with shots and beers at the corner tavern near Greg and Rick's house. This being done, we descended upon downtown Madison to see what we could see.

The first thing that struck me, before the presentations even started, was the amount of people in attendance. I mean, think about it: they filled a 300+ seat theater to standing room only capacity on a Saturday night for a political discussion forum...only in Madison.

The other thing that struck me immediately was the smug, self-satisfied, humorless air of unbearable earnestness that permeated the attendees. Oh yeah, they laughed on cue at the appropriate forced jokes of the speakers, but it was more a cry of acclimation than a show of the common human emotion of joy. We were even told to be quiet by someone behind us. Honestly, what am I, a fucking five-year-old?

When the program began, it was obvious what we were in for that night. All of the preposterous remarks need not (and should not) be repeated here, but here are some highlights:

One speaker taking lines from FDR's inaugural address in 1933 as a great new rallying cry for the progressive movement. Specifically, he stressed the portion where FDR recounted the "chasing of the moneychangers from the temple" story from St. Matthew's Gospel. The speaker was obviously monumentally ignorant of the anti-Semitic overtones of FDR's usage of this story...or he was an anti-Semite himself and wanted to clothe his damnable beliefs in the mantle of progressive politics.
Another speaker reading loaded rhetoric about the United States and the Middle East that was shot through with half-truths, prevarications and outright lies. Her invective (if it could be called that) was made more odious by the fact that she read it out from a sheaf of paper without looking up. Lack of rhetorical force is hardly the term.
Yet another speaker calling for the impeachment of George W. Bush and Dick Cheney, seeming to forget that they are no longer in elective office...hell, the only thing that GWB is controlling now is a golf cart and a case of Lone Star Beer. This speaker also dragged Naomi Klein's awful book The Shock Doctrine into the discussion. This book, treated as scripture by the left, is filled with distortions, mischaracterizations and flat-out shoddy research into Milton Friedman's life and work. Click here and here for complete discreditings of Klein's shabby piece of lies and character assassination.
A member of the audience talking about a "warm, safe socialism" where everyone would (apparently) get everything for free and government would care about everyone and everything equally. Where the free stuff is to come from, who is to pay for it and how it is to be distributed were problems that were not addressed, oddly enough. Perhaps the idea of economies of scale has no place in a socialist utopia.
A veteran of the U.S. Army who, in giving a political speech wearing military insignia, was clearly breaking both Department of Defense and Army codes. Oddly, no one pointed this out to him. Hmmm...

I could go on, but you get the idea.

Greg, Rick, Jessica and myself had to retreat to the corner tavern and drink and eat pizza until things made sense again. Thanks again for everything, booze and food.

In general, the speakers and attendees dragged out the same old tired shibboleths of the left. Our new president, who at the time had been in the job for less than a week, was mentioned to call attention to his failures (in five days?) or to project their far-fetched and unworkable agenda onto the canvas of President Obama.

In a way, I feel sorry for all the people who are seeing Obama as a transformative figure and therefore projecting all of their desires and expectations onto the man. They seem to forget that he is, first and foremost, a politician. This means that nobody gets everything they want. Sorry, that's how it goes.

This event, furthermore, shows that the left's supposed tolerance and open-mindedness is a sham and a lie. They are tolerant of people who believe the same way they do. They cheer if you repeat the right slogans and curse the right (pun somewhat intended) targets. If you don't, then they cannot grasp the concept that someone might respectfully disagree with them, in whole or in part. Greg and Rick, for example, submitted questions (and good ones at that) that were ignored by the moderator. Where's your tolerance now?

They never compromise. They never listen to dissent. They won't admit to other views. They treat their opposition as stupid, backwards and ignorant...in a way, as lesser beings. They never feel the need to have their facts straight or to understand the basis of their arguments. They won't retreat even when they appear to have lost.

In a word, they are extremists. True-believers. Bigots.

My only comfort is in knowing that their brand of extremist nonsense is exactly that, and that I have faith that, given the choice of their ideas or those of others, the great American public would reject them soundly.

Do I reject their right to speak freely. Of course not. This does not mean, however, that I agree with their baseless claims, evangelical devotion to untruths, unrealistic expectations, shocking ingorance or outright intolerance.

I close with a quotation from South Park co-creator Matt Stone that pretty much sums up what I thought of the whole affair and its connotations:

"I hate conservatives, but I really fucking hate liberals."

Inaugural Leftovers

2009-01-23T15:06:00.002-06:00

Just a few interesting pieces in the aftermath of this week's ~~coronation~~ inauguration:

A supposedly easy question with an interesting answer: who was our first African-American president? Would you be surprised to know that it might have been Condoleeza Rice? Read here for more of this interesting (if somewhat far-fetched) argument.
Watching all of the inauguration hoopla, this question plagued me. Might there just be a hint of a double standard in American political discourse (that's a rhetorical question).
Barack Obama, Libertarian? His first few days on the job have been encouraging.
I am not afraid to admit that George F. Will nailed my take on the inaugural address. Not that I agree with the substance, but that is how I interpreted it.
A great piece on the drama of civil religion that are inaugurations. Another interesting article from the same site on the "Oprafying of Obama."

Did Blago Win?

2009-01-13T22:08:00.002-06:00

I happen to think that he won, lost and drew all in the same week. To wit:

Roland Burris: Blago's Win

I know I painted a bleak picture for Roland Burris's chance of being seated in the Senate.

I was wrong.

I will explain why below, when I talk about Blago's Draw.

Through a circuitous route, an unlikely (or not) roll-over by Senate Democratic leaders and a series of dramatic removals of Burris from the Senate precincts, it appears that he will be sworn in this week.

For Burris, these unlikely events must seem like walking out of the fog to find yourself somewhere new and wonderful. He pretends to be surprised, but as I will discuss below, I think he knows exactly how this all went down.

So, on the affair of Roland Burris (click here for Saturday Night Live's take), it seems that Blago won.

Something else happened to him, though...

Impeachment: Blago's Loss

Yes, this is a pretty BIG loss.

This week, Blago became the first Illinois governor ever to be impeached.

Seeing as all the members of the General Assembly save two voted to impeach, it seems like a pretty resounding message to Blago, even from scions of his own party.

The message: "Your ass is grass. Your career will soon be over. You might even go to jail."

The particulars of the trial are being worked out and the lawyers are being sized up.

One thing that you can be sure about, though, is that the Senate wants this over quick and they want the decision to be decisive. Keep an eye on that.

Blago's Draw: How The Deal Went Down

So, it seems that Blago won on Burris and lost on impeachment. How could he also draw.

Here is what I think happened (CAUTION: SPECULATION AHEAD).

All of the noise around Roland Burris and the Senate seat in Illinois grabbed national headlines along with the crimes (alleged, for now) of Blago. This all was happening at the same time that a new Democratic administration is taking over the White House, filled with no small count of people from Illinois.

The most important Prarie Stater there is, of course, President-Elect Obama. He saw that the Senate Democratic leadership, mainly Harry Reid and his former colleague from Illinois Dick Durbin, were holding Burris back. By doing this, Senate Democrats were keeping this story in the public eye for too long and questions were being asked about Democrats that Obama didn't like.

This situation was about to become Obama's problem, like it or not. He wanted it killed. Now.

So, I suspect that he went to Reid and Durbin and told them to seat Burris, stop holding this back and end the arguments over the wisdom of this political move. He also made them force Burris to agree to not seek re-election in 2010. Burris gets his two years in the Senate, that top line on his tombstone and all are happy. Illinois will have an election for a new senator in November of next year.

Do I think Obama talked to Blago through all of this? No, because Blago is a pariah at present and an imcoming president would do well to steer clear of him as much as possible. Obama could deal with it without having to talked to the doomed Blago.

So, Blago really drew on this whole thing and will most likely lose in the end. He got his guy into the Senate, he will most likely be impeached and Roland Burris will be more an interim senator than anything else.

As for the deal, I fully realize that this is a cynical view of The One, and how dare I say such things when we are on the verge of what is being hyped as the most important event in American history that has ever or will ever be.

Well, I cannot help but point out that Obama got his political education and his first political experience in Chicago and, in Chicago, that is how things often get done. Not through official channels, but through an unwritten "understanding" between people.

Let's just hope that this vaunted "change we can believe in" is not the nationalization of Chicago machine politics. I suspect it won't, but I don't think you can blame me for thinking about this more than a little.

So, Mr. Obama, keep a close eye on Springfield over the next few weeks. Hell, keep a picture of Blago in your wallet.

Look at it whenever you feel those old lessons from the wards of Chicago creeping into your mind.

Let's hope that the lesson of Blago is a lesson learned for our new president.

Multum In Parvo

2009-01-13T21:54:00.002-06:00

A few more items of interest, taken from the blogs listed on the left sidebar of this very site...

Arnold Kling and Michael Cannon's paper on why "corporate" medicine is a good thing.
Edward Glaeser's excellent article on the need for "small government egalitarianism."
Eugene Volokh's take on the curious move by a U.S. Representative to repeal the Twenty-Second Amendment.
Stephen Dubner's exploration of the effect of eliminating trays in college cafeterias.
Don Boudreaux and Brad DeLong duke it out over partisanship and economic stimulus. Richard Posner takes a different view.

Multum In Parvo

2009-01-09T03:18:00.002-06:00

Here are a few things of (possible) interest:

An interesting post from Tim Harford on becoming happy by association.
A very funny spoof on Blago's quoting of Kipling's "If."
Stephen Dubner's take on the cost of fearing strangers at Freakonomics.
Tyler Cowen's musings at Marginal Revolution on the geography of Johnny Cash songs.
Also at MR, Alex Tabarrok discusses historians, economists and the Great Depression.
A great essay by William Burns at Cato Unbound about terrorism and risk assessment.
David Friedman's ideas on using World of Warcraft to teach economics.
Yesterday was Elvis's birthday. Enjoy this clip from the '68 Comeback Special. You can get the whole thing at YouTube.

Happy Birthday, Mom

2009-01-03T02:35:00.002-06:00

Yesterday would have been my mom's fifty-eighth birthday.

As you might imagine, it was a day of mixed emotions for me.

My mom really never liked where her birthday fell on the calendar. She always said that it was after the holidays, people were hung-over and out of money and (a lot of times) had to go back to work after vacation. She always wanted to move it to the first week of May or June. The weather is better and people are usually in a better mood.

This week, however, has been a challenge to me for a while now, though. My grandparents, my mom's parents, both died on January 6, two years apart from each other. I never really got to know my dad's parents; I honestly cried more when my dog died than when my grandfather did. My mom's parents, however, were different.

They lived close to us and we saw them all the time. Especially my grandfather. He had raised five daughters proudly, but I was told he looked forward to having me as something close to a son. He taught me how to play golf, made everyone laugh all the time and was just a great guy to have as a grandfather. I still miss him and my grandmother.

Ever since my grandmother died in 2002 and then my grandfather in 2004, this was a really sad week for my mom, her sisters and the whole family. Me and my brother and my dad did our best to keep Mom's spirits up, but we knew that that only went so far. She was going to be sad and down and that was it. I now know how she felt.

We never, even before her parents died, did anything extravagant for my mom's birthday. We would go out to dinner, have some cake at the house and just talk. This fact, I think, says a lot about the sort of person that my mom was. Not fussy, not extravagant, just wanted her family around. My mom always prided herself on the fact that she was a "cheap date," although I'm sure my dad would have gladly spent his last dime on her if that's what she wanted. Her birthday was no different.

It was things like this that made my mom the special person that she was. History will not note nor long remember this one person, but I sure as hell will. On her birthday, she just wanted us to be there.

And, really, isn't that the best things about moms? They understand that the most important thing is being there.

Yesterday we went to the same place we always went, ordered from the same menu and had a good meal as always. It could not, however, have been more different. I get the feeling that we will continue to do this, but that it will never be the same.

So, Happy Birthday, Mom. I miss you and I will always love you.

That's something that will never change.

The Blago, Bobby and Roland Show

2008-12-30T21:50:00.004-06:00

What fresh hell is this? - Dorothy Parker

C'mon, Blago.

I mean, really, what were you thinking when you did this?

If you saw the press conference this afternoon, I sincerely hope that you first scratched your head and then threw something at the television.

Well, that's what I did.

Not, mind you, because this sort of political theater surprises me. No, it was because of the situations that now might arise because this unfit-to-serve governor persists in thinking that he still has some sort of de facto legitimacy.

Let's look at the three main players in the press conference one by one. This will, I think, make some things clear.

Roland Burris. He has indeed had a long career of public service in Illinois, serving three terms as the Comptroller and one as the Attorney-General among other positions over the past forty years. It is true, then, that he would be pretty well qualified for the job of fill-in senator.

What is unfortunate is that Burris did what he did and accepted the nomination from Blago. He is not, however, strategically innocent. A cynic, like myself, would say that Burris is at the end of his political life and figured, "why the hell not?" He is seventy-one years old and would most likely serve until 2010 and then bow out. He saw his last chance at a national political position and, seriously, what politician could resist?

Another part of Burris's decision, and one that relates to the most damnable of our three conferees today, is the fact that he happens to be an African-American. Now, this is more of a fact of the matter than a qualification, but the next person to be discussed did not see it this way.

Bobby Rush Here is where the political theater really comes into this. If you watch the aforementioned press conference, it seems that Congressman Bobby Rush (D-IL) seemed to appear out of nowhere to support this ill-timed and possibly untenable decision. If you look really close, though, it seems that it is more a case of he showed up accidentally on purpose.

And, oh, what he said when he got there.

Bobby Rush implored the press and their consumers not to "hang or lynch" Burris because of the allegations against Blago. He went on to say that since Barack Obama was the only African-American Senator, that it is only right that his successor be an African-American. He seemed to imply that this would be the right thing to do.

This is race-baiting of the worst kind. First, he uses a purposely loaded phrase like "lynch" in reference to a black man. This was, to my mind, a calculated move to make the press feel ashamed and perhaps lay off. This is a perverse use of the horrific history of lynching as a form of terrorist action against blacks in America. Rush should feel ashamed of dredging up this shameful chapter in our history to score cheap debating points.

He then went on to suggest that, simply because the Senator who vacated the seat in question was black, therefore his successor should also be black. This, for me, goes beyond suggesting that race is a qualification rather than a fact of the matter. This suggests that the whole process of appointing people to serve in what should be elected offices is not only permissable, but in some cases, it can be morally superior. I reject this idea completely.

The people of Illinois elected Barack Obama to serve as their Senator. The people of Illinois, therefore, should be allowed to choose his successor. Bobby Rush, I suspect, knows this and chooses to ignore it. Our third person, sadly, also seems to have a real thing for ignorance...

Blago What do today's events say about Blago that we don't already know? Well, he was as good as his word that he was not going to quit and that he retained all of the powers of the governor. He also seemed to be perfectly willing to nominated a candidate knowing that he will go to Washington with a cloud over his head and the prospect of not being seated by the Senate leadership.

This raises issues at the national level about the power of the Senate to refuse to seat an appointed replacement for a Senator. I imagine that the Constitutional nature of this power will be much discussed in days to come. Read the part of the Constitution in question here.

What Now? As far as Burris is concerned, he made his decision, he will go to Washington, he might not get seated and he better be prepared to be at the center of a constitutional battle.

Bobby Rush has shown his allegiances and seems, for now, to be in the Blago camp. He has also shown that he is not above dealing out a whole deck of race cards and using charged imagery to get what he wants. In other words, he is, and shall remain, a politician.

Blago seems capable of mind-boggling levels of self delusion. He is either an adept strategist trying to make the best of a career-ending crisis or he is actually delusional, as some have speculated. In a strange way, I hope it is the latter.

The anti-Blago forces are consolidating their position. Who are the key players? I'd say that the main forces against Blago at the state level are Lieutenant Governor Pat Quinn, Attorney-General Lisa Madigan, House Speaker Michael Madigan, Illinois Senate Majority Leader Emil Jones and Secretary of State Jesse White.

At the national level, this most recenty Blago move sets him against Illinois Senator Dick Durbin, Senate Majority Leader Harry Reid and (perhaps most powerfully) President-Elect Barack Obama.

So, good luck with all of that, Blago.

So, what do we have to look forward to in 2009? In the words of the great Kinky Friedman: "Smile. It only gets worse."

Echoes Of Holidays Past

2008-12-24T03:32:00.002-06:00

This is the first Christmas season that I am spending without my mom. Everyone told me it would be really hard on me. In a way, it really has. In another way, though, it hasn't.

It has been hard because this time of year seems to be one full of nostalgia, a time where the stories and memories of the past (holiday-related and otherwise) are very much at hand. It is no different for me. It does not help, therefore, that mose of these stories and memories involve my mom.

It has also been hard because, although we are doing much as we have in the past, it is simply not the same nor will it ever be, I imagine. We decided to go ahead with Christmas Eve at our house. The house is cleaned (almost), the food is all set, the guests are invited and everything seems to be in hand. Yet, in a really big way, it just does not feel right.

My mom coordinated these events in the best way possible - she made it look really easy. I guess in helping to spearhead the effort this year, I realize how much my mom did and it just makes me miss her all the more.

This point, though, relates to one way in which things have not been as hard as they could be. There is comfort in carrying on, in doing all of those things that we have always done. Getting out the same old decorations, setting up the same old tree, preparing the same old food - these actions give a sense of continuity, a feeling of connectedness with all those memories and stories that are so much a part of who I am.

As a historian, history and memory are my stock-in-trade (I happen to think they are very different from each other, but that is for another time). In my professional life, I (and other academic historians) treat the past as a subject of interest, a battleground for personal biases, a grand interpretive puzzle and a constant source of reconsideration and argumentation. I have been tempted to treat my own history in the same manner. I cannot, and especially not now, come to do this just yet. Perhaps I never will and perhaps this is for the best.

For now, I will allow the past to give me the comfort that it has done and continue to consider what role it will play in whatever normal life will be like from now on.

In closing, and in relation to these reflections, an excerpt from a short story has been much on my mind recently. These thoughts on the season and the past coupled with staring out at the weather we have had in Chicago to bring the last sentences of "The Dead" from James Joyce's The Dubliners very much into focus recently. I will leave you with that and my wish that you draw comfort and strength from your past this holiday season.

"A few light taps upon the pane made him turn to the window. It had begun to snow again. He watched sleepily the flakes, silver and dark, falling obliquely against the lamplight. The time had come for him to set out on his journey westward. Yes, the newspapers were right: snow was general all over Ireland. It was falling on every part of the dark central plain, on the treeless hills, falling softly upon the Bog of Allen and, farther westward, softly falling into the dark mutinous Shannon waves. It was falling, too, upon every part of the lonely churchyard on the hill where Michael Furey lay buried. It lay thickly drifted on the crooked crosses and headstones, on the spears of the little gate, on the barren thorns. His soul swooned slowly as he heard the snow falling faintly through the universe and faintly falling, like the descent of their last end, upon all the living and the dead."

Multum In Parvo

2008-12-18T11:50:00.002-06:00

(I intend posts with the above title to become a semi-regular feature here at COTL. I run across a lot of stuff in my reading, research and boredom that I think is interesting, but that may not need extended commentary on my part. There are also some things that I find funny, amusing or ironic that are in the same category. I want to share these with my readers (you are there, right?) and open them for comment and discussion. If discussion or interest seems to warrant it, I will comment at more length. In the meantime, you can rely on my regular extended commentary on, well, whatever the hell is bothering me at present. So, without further ado...)

An interesting article linking the Bernard Madoff debacle with the idea of affinity fraud. I wonder how much this had to do with the scope of Madoff's deception? Also, the term "Ponzi scheme" has been bandied about a lot without much explanation. Click here for that.
The latest person to jump on the "capitalism is dead" bandwagon? The guy who created Dilbert. Give me a break.
"I, Pencil" turns fifty years old. It is one of the clearest expositions of why and how free markets work. Read it here (don't worry - it is really short).
This year's version of America's Safest (and Most Dangerous) cities is out. Lists like this fascinate me, especially the criteria that they use.
One in-depth take on the relationship between Central Europe and Russia. I would be more worried about Central Asia and the Transcaucasus, though.
I cannot get this song out of my head for some reason. Read more about why people get songs stuck in their memories here and here.

Santa Claus Meets The Dismal Science

2008-12-16T12:54:00.002-06:00

You knew this post was coming, right?

You know, the one where Will drags boring crap like history and economics all over the clean, pristine rug that is the Christmas season.

Well, folks, I'm at the door and I am going to do a real number on that carpet, so hold on...

First, let us bypass the soundbyte-take on the economy and Christmas. In this view, for this year, they both suck and will do so for the forseeable future.

I want to delve deeper, to get at some of the basic motivations for why we behave the way we do between Thanksgiving and New Year's.

In this cause, I intend to focus on a few central questions: why do we give gifts? Why don't we just give everyone cash? What is the broader social function of gift-giving, especially around a holiday?

Why Do We Give Gifts?

In many rituals and customs for people around the globe and through time, the giving of gifts has been and remains central to the meaning and execution of those rituals. What makes a gift exchange a special sort of relationship? I believe it is two things: reciprocation and a different rendering of value.

First, I say "reciprocation," but I should really add the two words, "or not." One thing that is central to a market or barter economy is the fact that there is a quid pro quo, or if you give something, you expect to get something of value in return. In gift exchange, this is not really the case. There are some sorts of gift-giving where reciprocation may be implied, but not required. If reciprocation is required, and enforced by some sanction, then it is not truly a gift exchange.

Second, a different rendering of value. Some economists think that part of the value of a gift given to another is that you spent a lot of time making it or picking it out (to use the terminology, what are your sunk costs for this particular gift?) There is another side to this, courtesy of the always-brilliant David Friedman...more on him below.

All of these notions fall under the idea of a mixing of a gift economy with the market economy that usually governs our economic relationships.

Have I answered my original question? Well, as ever, yes and no. It seems that we give gifts to each other and these gifts are not necessarily reciprocal and they are not valued in the same way as other things. This is, to me, confusing.

Let's ask a more specific question that I think will clear up things a bit...

Why Don't We Just Give Cash?

This is the classic question concerning gifts for many economists. The answer that usually comes back, furthermore, interests a more general audience because of the seeming coldness and insensitivity of it.

Many economists believe that, to a greater or lesser extent, the only really acceptable gift in any situation is cash. What we should all do is just take the amount of money that we would have spend shopping, paying for and wrapping gifts and just hand it out to the intended recipient.

Let me guess. For many of you, this idea seems repellent, but you are not completely sure why.

On one level, it is a completely sensible idea. Money never spoils, is always the right color, shape and size, it is accepted for goods and services anywhere and it is exchangeable so that it can travel globally. Why do you buy the man who has everything? Nothing. Just hand over the cash.

For one such classic view, see this 1993 article by economist Joel Waldfogel. If you don't want to read it, Waldfogel's main point is that the deadweight loss for most individuals' holiday purchases is 18% higher than what it should be. In other words, people get an 18% better deal if they just spend money on themselves. A gift of cash would allow them to do this.

On another level, though, I am sure that this idea makes a lot of you squirm. Why? As I said before, it is hard to define, but there seems to be something, well, rather impersonal and cold about just cutting someone a check. We all do it in some situations, but why not in all situations?

This is when some thinking on the part of some sharp economic minds is in order.

Mankiw and Friedman on Gifts

In this excellent post from his always interesting blog, Greg Mankiw discusses gifts as a form of signalling. To boil it down, Mankiw argues that people know their own preferences better than those of others. If your boss decided to pay you in merchandise that he/she chose, you would probably complain. Why, then, is our reaction so different when someone we love does the same thing?

Mankiw goes on to say that it is also an asymmetric information problem and is related to signalling. If you are giving a gift to a loved one, you have information that they do not, namely, how much you love them. If you do love them, then you will spend the time to learn their preferences and pick out a good gift. This gift serves as a signal to the other person of your level of affections. Even if you pick out a bad gift, the reciepient still knows that you put effort and money into it, so the love must be there. If you give cash to loved ones, surmises Mankiw, you are signalling that you are not even willing to try.

David Friedman, on the other hand, argues in this post at his excellent blog that the best way to conceptualize it is having two individuals in one body. One is a short-term pleasure maximizer, the other a long-term utility maximizer. The short-term me is the me that always wants another beer, more gyros or an extra hour of sleep. The long-term me is the me that tries to hold off these short-term pleasures for a gain in the more distant future.

Friedman argues that buying gifts shows that both the long and short term me care about you. The short-term me cares because I am forgoing extra resources for me in order to buy a gift. Long-term me cares because I will have a few less dollars and a little less time when I retire. See, we BOTH love you!

Great, Will. So What?

I have never been someone to leave well enough alone. I cannot accept that we do things because we do them. What fun would life be then?

No, I have always been inclined to the sort of thinking we see above by Mankiw and Friedman. Take a behavior that we do and ask why we do it. Go on. Anything. This is the very basis of the social sciences which, to my estimation, are all behavioral sciences. Today, we have delved into why we pursue a certain sort of behavior at this time of year.

Does this mean that I will practice what I preach and just give cash? Well, if you think that, you sort of missed the point. Cash is an acceptable gift for some people and not for others. Why the distinction? Go back and read the previous section again.

Can't I just accept a gift, not ask why someone did it, cram some fruitcake in my gob and shut the hell up? No, sorry. I will take that gift, but wonder why we do this with each other. I will cram said fruitcake in said gob, but I will ask if this is a good deal for me and why. Oh, and I will ask why so many people hate fruitcake? Buy this fruitcake and thank me later.

So, I think that there is time in all situations to dig deeper, to demand more. That is why I am an academic and that is why I write this website. I hope you agree that these are worthy pursuits. I know I do.

Oh, and if you are intending to send a gift my way, let me deal with the asymmetric information problem for you.

Crisis and Turmoil: Take Your Pick

2008-12-10T14:49:00.002-06:00

They have nothing to do with each other, naturally.

I wrote two posts today and you can read them below.

They concern:

The constitutional crisis caused by the proroguing (don't worry...I define it) of the Parliament in Canada.
The constitutional crisis caused by the fact that Rod Blagojevich is the latest (and perhaps mose egregious) of a long line of corrupt scumbags to control my home state.

Check them out and let me know what you think.

I will warn you, though. I might be done with Canada; I am probably not done with Blago.

Blago's Downfall: Don't Act Surprised

2008-12-10T13:39:00.002-06:00

Just don't.

Not even if you don't care about politics in Illinois or anywhere else.

Nobody was shocked when they read this news yesterday.

Well, I can think of one resident of the northwest side of Chicago who might have been a *little* surprised.

This story is still developing, naturally. There is much to be said, though.

The Facts (Or Something Like Them) Let's get the facts (whatever the hell those are apart from the official complaint) out of the way first.

Blago was involved in a multi-year campaign of graft, kick-backs and pay-to-play politics. He won re-election in 2006 in a strong Democratic year versus ineffective Republican opposition by making the other side look worse than himself. Things started to get hairy for Blago more recently with the trial of political operative, fundraiser and fellow scumbag Tony Rezko. Read all about that here. Blago's name just kept coming up over and over again as using people like Rezko as his shake-down men for campaign contributions.

Rezko was not the entire story, though. In the most recent set of allegations, backed up by wiretaps of Blago and his flunkies, he continued his cash operation seeking money from people involved in a $1.8 billion dollar tollway deal. He offered $8 million in funding to Children's Memorial Hospital while seeking a $50,000 contribution from the president of that hospital. He diverted horse racing revenues into his coffers. Read more (if you are not pissed off enough) in the statement by federal prosecutor Patrick Fitzgerald here.

Most explosively, though, he seemed to offer the now-vacant U.S. Senate seat of now-President Elect Obama to whoever was willing to cough up the most money. Read about that here and the person who was supposedly willing to pony up here. Of course they all deny it. Never believe anything until it is officially denied.

Nobody should have been shocked because of the people involved and the political culture from which they emerged. Illinois state politics have been mired in sleaze for decades and this is just the latest chapter. Much has been written over the last day and a half about just why this is.

A Bit of Illinois Political History (Stick With It Here, Folks) Let me give it a go. We have a history in the last sixty years of corruption in Springfield and in Chicago that often feed each other. Three Illinois governors since 1945 have been convicted and sentenced to jail (those being Otto Kerner, Dan Walker, and most recently George Ryan). Chicago's corruption scandals are too numerous to mention here, but take a look at Operation Silver Shovel to get an idea of the more recent brand of Chicago corruption. Believe me, it goes back to the very beginning in the nineteenth century.

Why did this political culture develop in a place like Illinois? Well, I will make two main suggestions. First, look at the demographics in Illinois. Take a gander at this population density map of Illinois and I think you will immediately get what I am about to say. There is one part of the state that has always (and will always) have disproportionate influence and it ain't Peoria, Carbondale, East Saint Louis or even Springfield.

This means, to me, that the brand of politics that are the order of the day in Chicago will be the way that the state largely works. Also to be considered with this first point is the fact that there has often been tension between Chicago and Springfield. To soften this tension and get the wheels of government moving, certain things have happened in the past (and I ain't talking about having a nice chat over tea). To put it in the words of an old Chicago ward heeler, "I like a guy who takes cash...you always know where you stand."

What are the roots of this culture in Chicago? Well, you need look no further than the city's immigrant past. Waves of immigrants passed through and settled in Chicago beginning in the middle of the nineteenth century. They didn't always have access to the channels of power in the city because of poverty, bigotry, illiteracy and other factors that were common to immigrants from Europe to nineteenth century America.

They didn't stand for this situation for long. They began to organize in their neighborhoods and tie themselves to certain politicians who promised to help them in exchange for, ahem, some consideration. It also worked the other way, the politicos plying the masses with booze, food, women (remember only men could vote in most places until 1920) and all manner of vice to get their votes. It was through this cycle of pay-to-play politics (sound familiar, Blago?) that the city's political culture was born and raised. It gave rise to Carter Harrison, "Big" Bill Thompson, Anton Cermak, Richard J. Daley, Richard M. Daley and, yes, Blago.

Why did these immigrants do what they did? Mainly, well, because they had to. More speculatively, though, I have always wondered about the connection to politics in their countries of origin and how that played out on the streets of Chicago. Most came from non-democratic states where governments ranged from democracy-for-some and outright feudalism. These people, coming from such places, were already skilled at circumventing the system. They did it in (Poland, Ireland, Bavaria, Italy and a dozen other places). Why not do it here too?

How Do You Solve A Problem Like Blago? So, what happens next? The biggest concern seems to be who will choose Barack Obama's successor as Illinois's junior senator. Attorney General Lisa Madigan (who just happens to be the daughter of Illinois General Assembly Speaker Michael Madigan) seems to think that there is a constitutional provision to strip the governor of his power.

While this might (or might not) solve the problem of who should pick Obama's successor, there is still the larger problem of what to do with the Scumbag-in-Chief of the Land of Lincoln (who should be rolling over in his grave, apparently). There is a forced resignation, there is impeachment, there is perhaps state troopers who are a good shot who could keep their mouths shut. I am kidding on that last one. A little bit, anyway.

What will hopefull happen is that he will resign soon, handing power over to Lieutenant Governor Patrick Quinn. Quinn is not THAT corrupt and could be trusted to take advice in appointing a successor for Obama and carrying on the business of state government. Hell, all Blago did was find ways to feather his nest, so it couldn't be that hard. Then he should sit somewhere uncomfortable while his greedy, corrupt, profane, sullied, disgraced ass is dragged over the coals in Springfield during an impeachment trial.

The only problem there is how many of the denizens of the state capitol would have to recuse themselves for, ahem, conflicts of interest.

We shall see what Blago's fate is and if this has any long-term effect on the political culture of Illinois...or we can see this all happen again when the next group of lunatics gets to run the asylum.

I shudder at the answers to those questions.

Political Crisis...In Canada?

2008-12-10T12:35:00.003-06:00

Yes, you read the title right.

Probably had to look twice, though, didn't you?

It's just that those two ideas rarely appear together.

In the last few weeks, though, they have with some frequency.

You may have heard something about this. That is, you may have heard of it if you keep up with international news or happen to be Canadian. It is an interesting story nonetheless and one worthy of our attention.

A bit of background about the Canadian government might help clear things up. Canada's government is a parliamentary system very similar to the one in the United Kingdom (and many dominions and former colonies of the British as well as this map shows).

In systems such as the one in Canada, the "government" actually refers to the party with the most seats (most Members of Parliament or MPs) in the lower house of the Parliament. Canada's Parliament is composed of two houses, the Senate and the House of Commons and the Sovereign as represented by the Governor-General (more on this below). The Senate is largely appointed and need not concern us here.

One appointed official who DOES concern us here is the Governor-General. The Governor-General is an appointed representative of the head of state in Canada, who just happens to be this lady. The role of the Governor-General is largely ceremonial (as is the role of the Queen in Canada). One duty that is often just ceremonial is the calling and dissolving of parliament.

Now, in a parliamentary system, elections don't just happen every four years. What happens is that there is usually a time limit (which is five years in Canada) for any government in which they must call a general election. In Canada, they just held a general election on October 14 of this year. Read about it here. Before this can happen, though, the prime minister, who is currently Stephen Harper of Canada's Conservative Party must ask the Governor-General to dissolve the House of Commons and call for an election.

O.K., you say, that's great. Canada has a fascinating and British-esque form of government. "Where's the crisis you promised?" you ask, with a mixture of mild annoyance and strong boredom. Well, here it comes.

In the last election, Harper and the Conservatives didn't get a majority in the House of Commons. What this means is that they didn't win in enough ridings to gain complete control of the government. This leads to what is called a minority government, which often happens in systems where though two parties may dominate, there are other serious contenders for the votes of the electorate. In Canada, the two dominant parties are the Conservatives and the Liberals. The other parties that are represented in the House of Commons are the New Democratic Party, Bloc Quebecois and the Green Party.

Now, in a minority government, the party with a plurality forms the government, but the position of this government is never very secure because of the possibility of something called a no-confidence vote. A no-confidence vote is proposed in Parliament by the opposition to the government in an attempt to weaken a government or, in some cases, cause its downfall. If a government loses a no-confidence vote, it usually has to resign or call for a dissolution of parliament and a general election.

Back to our situation...it seems that Harper was on the verge of facing a no-confidence vote in the House of Commons. Instead of going through the vote, which it seems that Harper and the Conservatives figured they'd lose, Harper went to the Governor-General and asked that Parliament be prorogued. The Governor-General agreed.

Prorogued? What the hell does that mean? It means to suspend Parliament without dissolving it (and thus needing to call new elections). The power to prorogue the Parliament in Canada rests with the Governor-General. The power to ask for Parliament to be prorogued, furthermore, rests with the current Prime Minister.

What has come of this situation? Well, the Liberals have had a leadership change to professor-cum-politician Michael Ignatieff. What this will mean for the party going forward is anyone's guess, but he seems to be a bit stronger of a personality than former head Stephane Dion.

The intervening month, observed a Canadian friend of mine, will give a chance for some heads to cool and others to roll, as they already have. I suspect he is right.

(ADDENDUM: Why did I write all of this? First, I think political dynamics in parliamentary systems are interesting. Second, it is fun to talk about anything approaching political crisis when it involves a usually placid place like Canada. Third, I hadn't written a long post about a political situation in a non-sexy foreign country in a while. I'll bet you're glad THAT drought is over.)

Celebrate Repeal Day! Drink Alcohol Today!

2008-12-05T16:13:00.002-06:00

Today we celebrate a great moment in our national history. A day when it was realized that morality cannot be legislated without disasterous consequences. A day when a nation reeling from economic depression was at last given a (legal) release valve. A day when the forces of the nanny state were sent packing, or at least for a while.

For on this day seventy-five years ago, December 5, 1933, the Twenty-First Amendment was ratified, repealing the provisions of the Eighteenth Amendment. Our nation's dark period of Prohibition had ended. Americans could legally drink again.

HAPPY DAYS ARE HERE AGAIN!

Repeal Day, though always important to us in the drinking community, has languished as a broader national commemoration. This website, started by a bartender in Oregon, is a step to remedy that. More needs to be done, though.

Why was alcohol prohibition tried in the first place? It was a strange marriage between Progressives and Christian Evangelicals and others. Centrally, though, the Progressives thought that mankind could be made better if alcohol was unavailable. Evangelicals believed that alcohol was the root of what they saw as the moral degridation of humanity. Alcohol caused people to do wrong. God does not want us to do wrong. Alcohol, therefore, is an abomination of God. That is rather simplified, but you get the idea.

What did Prohibition accomplish? Well, a lot. A lot, however, that its supporters didn't expect. Click here for a great overview of the effects on Prohibition on crime, health, demand and prices. Generally, though, crime rose instead of fell, more people died of alcohol-related causes rather than less, demand and prices both increased (this rarely happens in a free market). Oh, and it gave rise to organized crime and all the spending and manpower needed to "fight" it. Click here for more on that aspect.

How did it get repealed? It became clearer and clearer to the American people that the Eighteenth Amendment was doing more harm than good. Women were espcially critical here. Just having been given the vote in 1920, women flexed their political muscle for repeal. People like Pauline Sabin and her Women's Organization for National Prohibition Reform were important in the groundswell for repeal.

Franklin D. Roosevelt and the Democrats ran with a Prohibition repeal plank in their 1932 platform. By "election season" in 1932, most Americans were ready to see Prohibition behind them and for this (and other reasons, naturally) FDR and the Democrats won in 1932.

It was on December 6, 1932 that Senator John J. Blaine of Wisconsin (we are really proud of this here), submitted a resolution to Congress proposing the submission to the states of the Twenty-First Amendment to the U.S. Constitution. It was finally ratified by the thirty-seventh state (Maine) seventy-five years ago today.

How should we celebrate? Purchase and consume alcohol. Simple as that. It can be a case of beer with your buddies, cocktails with your significant other or a bottle of scotch by yourself. It does not matter. Do it because you can. Do it because our forebears saw the error of social engineering and trying to limit the freedom of people to ingest anything they damn well please.

So, the idea of prohibition is ancient history, right? Wrong. I won't go into this at length here, but we still prohibit free individuals from access to certain substance. I am talking about what are now considered "illegal drugs." Read this interesting research report from the Cato Institute on the relation between alcohol and drug prohibition.

Where can I learn more? Click here for a great website at SUNY-Albany on the "Great Experiment," its times and (thankfully) its downfall.

CHEERS!

Celebrate Liberty...Dress Like A Slob

2008-12-02T15:37:00.005-06:00

(NB: This post was partially inspired by my first-and last-exposure to this television show. There was a marathon on, my bad ankle was acting up and the remote was across the room. I finally get around cable and this is what happens. It also has a lot of things that I have been thinking about for some time)

I have often heard it said that everyone develops their own sense of "style." I have never been sure what to make of this rather nebulous term. In other words, I do not know really what style means to me or to others.

I, furthermore, do not see my self really ever caring about this. If pressed with the question, "what sort of look were you going for there?," I would really not know what to say. I usually have some smart-assed remark ready to hurl like "annoyed middle-manager of a moderately successful mid-level corporation" or "annoyed mid-level bureaucrat in a non-sexy government department."

So, why do I dress the way that I do? Mostly practical concerns. I want to hide my nakedness (believe me, the world wants NO part of that). I am, at present and for some time now, usually stony broke. I have to comply with some vague, non-specified dress code for whatever job I have.

Do I care at all what my clothes look like? Well, yes and no. I want them to be clean and in reasonable repair. As for color, I shy away from anything bright or attention-getting. Frankly, if they sold buttoned-down collar shirts (in any pattern or sensible color) in a roll like paper towels, I would buy them in a second.

Why then, Will, are you writing about this? It comes from a connundrum that I had upon viewing the above-bookmarked television show.

On one hand, I believe that people should be able to spend their money on whatever consumer goods strike their fancy. This is why markets are the best and most fair way to allocate resources. People, making their individual decisions for selfish reasons, end up fulfilling the desires of all concerned. Sound familiar? It should.

On the other hand, and quite differently, I felt myself feeling that pursuing some sense of a "current style" went against the fundamental freedom of all people to allocate their resources as they see fit. In the past there were sumptuary laws that limited access to certain forms of consumption. The only barrier to individual consumption, the only fair barrier anyway, should be prices set in free and open markets.

Another source of my qualms has been some notion that people in other countries (particularly European ones) are thought (by themselves and us) to be "better dressers" than Americans. This is perhaps not the place to speculate on this score, but I would figure that this is a subset of the argument that Americans care about quantity over quality, breadth over depth and practicality over fashion. I am not sure why I felt this way, but I did and somewhat still do.

Why is this? I think it comes from the mere fact that in saying that someone looks "better" dressed a certain way, it makes a value judgement on that person's resource allocation decisions. It also makes a value judgement on the right of that individual to do exactly as he or she likes as long as that action does not harm other people.

I am not comfortable with either of these value judgements. If you want to spend all (or most or some) of your money on expensive garments, fine. Just don't judge me because I choose to allocate my scarce resources in a different manner. Don't hurl the epithet "slob" at me because I look like a pile of laundry with shoes under it. Just know that I make different decisions about opportunity cost. Don't make the call that, because I don't fit some certain mold of looking "put-together," that I am somehow defective in other ways.

The fundamental issue here is, therefore, that when value judgements enter decisions of resource allocation, problems arise.

What I am driving at, in the end, is that people should dress however the hell they damned well please. If that is a suit that costs what I make in a month, fine. If it is cut-off sweat pants and a BBQ sauce stained NASCAR shirt, fine. Anywhere in-between these gross stereotypes, fine.

But Will, you protest, what about decorum and dress in certain situations. I do realize that certain situations seem to call for certain modes of dress. Employers, schools, restaurants, cultural attractions and others have dress codes that must be followed or punishments can be meted out.

We must ask ourselves, though, why does it "seem" that these situations "call" for certain modes of covering one's nakedness? Why, furthermore, do dress codes exist? My short answer to both would be enforced conformity. My long answer? Perhaps for another day, that.

So, what say you, dear readers?

While you think that over, I am going to work on that "tear-off roll of shirts idea." I might be on to something there...

Quick And Dirty (Or Not)

2008-11-25T16:18:00.002-06:00

Just a few news items and other things of interest:

More bad news from a Nobel Economics laureate. I wonder, though, if Thomas Sowell has a point here (he usually does).
My take on bailing out the Big Three automakers? Too bad, so sad. You had your chances to change and you blew it. Apparently, Mitt Romney and Gary Becker agree.
Want a good explanation of the roots of the Great Depression? Click here. Want to get it pretty much all wrong? Click here.
My take on Hillary Clinton as Secretary of State? Bad move, Mr. President-Elect. You will live to regret this one. Let's hope she won't make it through the Senate. Apparently, Christopher Hitchens agrees.
I am rapidly coming to the conclusion that this is the civil rights issue of my generation.
I am not sure what to make of psychology sometimes. On one hand, psychological research occasionally produces interesting conclusions based on good research. On the other, psychologists say stuff like this that make me think it is a pseudoscience.

Enjoy and have a Happy Thanksgiving.

My Eternal Gratitude

2008-11-21T12:38:00.002-06:00

I would like to extend my sincerest, heartfelt thanks to all of you who have sent your kind thoughts and words to me and my family in this tough time.

I am still trying to come to terms with all of this. Something tells me that I never really will.

COTL will return to its regularly scheduled whining about (fill in the blank) next week. Do expect, however, that I will reflect a lot on my mom and what she meant to me and my family. I am not sure I have the words, but I sure will try. My mom always liked reading things that I wrote, and I will contiune on with all of that.

In closing, it is interesting what helps you through grief and sadness. It can be the kind words of friends, a song or the comforting feeling of familiar things. For me, this song has been much in my mind as of late. Click here to listen.

Thanks for your continued support. Goodness knows I need it right now.

Live Blog? D.O.A., I'm Afraid.

2008-11-06T14:54:00.002-06:00

I know, I know, I know.

I know what I said I would do. There is no need to remind me (why do people feel the need to do this, anyway)?

Yes, folks, there was no live blogging here on election night. Allow me to explain...

My reasons are twofold: practical/logistical and, well, something less practical or logistical.

Practical and logistical problems first. I shuttled between two locales on election night and was caught up in the public transit system for about a half an hour. This half an hour was at a crucial juncture in the evening, when the returns were coming in and (as it turns out) the election was being decided. I also, through no fault of my gracious hosts, didn't have access to the requisite technology to make it happen.

Other problems second. The unfolding of events on election night were, how shall I put this, rather dull. The whole thing was over and done with by around 9:30PM CST. The winner was declared, the victory seemed pretty decisive and (no surprise here) the talking heads kept on talking.

So, Will, how DID you spend the rest of the evening. Here are some sketches:

Red AND blue Jell-o shots.
Waiting for either Chris Matthews or Keith Olbermann to openly weep on air.
Listening to a fatter guy than myself (oh, they exist) ramble on about bingo, how cheap his fried chicken dinner was, the bus ride to bingo and how everyone from Texas is insane (I think).
Waiting for anyone to openly weep on television and trying to place money on this proposition. For this, I was called an asshole.
Missing Dan Rather and his penchant for, well, made-up idioms. I had to settle for Paul Begala saying "lights out, Cub Scout."
Hamm's, The Beer Born In The Land Of Sky-Blue Waters...and still represented by Norm Coleman, apparently.
Cheering when people DID openly weep on television. For this, I was called a heartless asshole.
Conjecturing that the Dow would drop at least 400 points the next day. I was pretty damned close.
Evan Williams Bourbon, It's What Clint Eastwood's Sweat Probably Tastes Like.
Listening to two of the finest political speeches that I have heard in some time. John McCain - why didn't you talk like this the whole time? It was the reason people (including myself) liked you at some point.
Having that feeling that I was all dressed up and had nowhere to go. In other words, I was blue-balled by the news media. Thanks for that, dickweeds.

Well, I did enjoy my evening immensely. For political hacks like myself, it is like four Super Bowls rolled into one.

What reflection on this presidential election that I will do will be short and will be soon so that we may move onto other topics including economics, Studs Terkel, Russia, UW Badgers Football (or lack thereof and others.

I leave you with a thought to ponder and a piece of advice for all of those candidates who won on Tuesday:

The state is not the society.

Shannon Makes The Call: The Presidential Race

2008-11-03T23:30:00.003-06:00

Click here for my map of the final electoral vote count.

If you don't want to do that, here is the summary of my prognostications:

GENERAL ELECTION, 11/4/08, PRESIDENT OF THE UNITED STATES

Total Electoral Vote Counts (270 Needed To Elect)

Obama/Biden = 338 McCain/Palin = 200

Tie-Breaker

Margin of victory in Ohio = 3%.

UPDATE: Eric Andersson has pointed out that my Electoral College map is identical to that of one of the supreme political operatives, image makers and glorious dirtbags of our time. Who, you ask? Click here to find out.

I am not sure how to take this news.

Shannon Makes The Call: Senate Races

2008-11-03T23:21:00.002-06:00

Here are my picks for what I and the aforementioned Andrew "Eric Andersson" Erickson thought were the more competitive/interesting Senate races.

NB: The winner's name appears in capital letters. The incumbent (if there is one) is marked with an "*" The party designations should be self-explanatory, as should the abbreviations for the states.

GENERAL ELECTION, 11/4/08, SELECT SENATE RACES

VA: WARNER (D) def. Gilmore (R)
NM: T. UDALL (D) def. Pearce (R)
AK: BEGICH (D) def. Stevens (R)*
CO: M. UDALL (D) def. Schaffer (R)
NH: SHAHEEN (D) def. Sununu (R)*
NC: HAGAN (D) def. Dole (R)*
OR: MERKELEY (D) def. Smith (R)*
MN: FRANKEN (D) def. Coleman (R)* and Barkley (I)
GA: CHAMBLISS (R)* def. Martin (D)
KY: MCCONNELL (R)* def. Lunsford (D)
MS: WICKER (R)* def. Musgrove (D)
LA: LANDRIEU (D)* def. Kennedy (R)
ME: COLLINS (R)* def. Allen (D)
TX: CORNYN (R)* def. Noriega (D)
NE: JOHANNS (R) def. Kleeb (D)

TIE-BREAKER

Margin of victory in GA Senate race = 1.5%

Shannon Makes The Call: House Races

2008-11-03T23:08:00.002-06:00

Here are my picks for what myself and an equally astute political hack (hat tip to Andrew "Eric Andersson" Erickson) thought were interesting races in the House.

NB: The winnners' names are capitalized. The incumbent (if there is one) is marked with an "*" The party designation should be self-explanatory. In each case, the state abbreviation is followed by the particular congressional district in question.

GENERAL ELECTION, 11/4/08, SELECT HOUSE OF REPRESENTATIVES RACES

AL-02: LOVE (R) def. Bright (D)
AL-05: GRIFFITH (D) def. Parker (R)
AK-AL: BERKOWITZ (D) def. Young (R)*
AZ-03: SHADEGG (R)* def. Lord (D)
AZ-05: MITCHELL (D)* def. Schweikert (R)
AZ-08: GIFFORDS (D)* def. Bee (R)
CO-04: MARKEY (D) def. Musgrave (R)*
CT-04: HIMES (D) def. Shays (R)*
FL-21: MARTINEZ (D) def. L. Diaz-Balart (R)*
FL-25: M. DIAZ-BALART (R)* def. Garcia (D)
GA-08: MARSHALL (D)* def. Goddard (R)
IL-10: SEALS (D) def. Kirk (R)*
IN-03: SOUDER (R)* def. Montagano (D)
KS-02: BOYDA (D)* def. Jenkins (R)
LA-06: CAZAYOUX (D)* def. Cassidy (R)
MI-09: PETERS (D) def. Knollenberg (R)*
MN-03: MADIA (D) def. Paulsen (R)
MN-06: TINKLENBERG (D) def. Bachmann (R)*
NV-03: TITUS (D) def. Porter (R)*
NJ-03: ADLER (D) def. Meyers (R)
NM-01: HEINRICH (D) def. White (R)
NM-02: TEAGUE (D) def. Tinsley (R)
NY-29: MASSA (D) def. Kuhl (R)*
OH-01: DRIEHAUS (D) def. Chabot (R)*
WA-08: BURNER (D) def. Reichert (R)*
WI-08: KAGEN (D)* def. Gard (R)
WY-AL: Lummis (R) def. Trauner (D)

TIE-BREAKER

New Dem/GOP split in House = 267/168.

Shannon Makes The Call: Governors

2008-11-03T23:00:00.002-06:00

Here are my picks for all of the governor's races to go off tomorrow.

NB: The winner's name is in capital letters. The incumbent (if there is one) is marked with an "*" The party designations should be self-explanatory, as should the abbreviations for the states.

GENERAL ELECTION, 11/4/08, GOVERNORS BY STATE

DE: MARKELL (D) def. Lee (R)
IN: DANIELS (R)* def. Long-Thompson (D)
MO: NIXON (D) def. Hulshof (R)
MT: SCHWEITZER (D)* def. Brown (R)
NH: LYNCH (D)* def. Kenney (R)
NC: PERDUE (D) def. McCrory (R)
ND: HOEVEN (R)* def. Mathern (D)
UT: HUNTSMAN (R)* def. Springmeyer (D)
VT: DOUGLAS (R)* def. Symington (D) and Mollina (I)
WA: GREGOIRE (D)* def. Rossi (R)
WV: MANCHIN (D)* def. Weeks (R)

TIE-BREAKER

Margin of victory in NC contest = 2%.

Watch This Space

2008-10-30T15:09:00.002-05:00

We will get back to our regularly scheduled (boring, long-winded) programming soon.

I wanted to let all of the readers of this space know that I have things in the works for election night.

Yes, I may be delving into the realm of live, real-time blogging.

It all depends on the computer hook-up wherever I am watching the election results.

If we go live, great. If not, I will let you know. I may set up a separate blog and link to it for election night purposes.

As you all know, however, I have expressed my opinions about voting and elections before. Why all the fuss on election night?

Think of the combination: I will be all boozed up, full of opinions and ichor and I will have an electronic mouthpiece.

Frankly, I don't see how you could miss it.

Stay tuned...

How Did We Get Here, Part 2

2008-10-24T13:08:00.003-05:00

After a little break, we can get back to our consideration of the very volatile financial situation that has recently developed. Today, we will bring the story up to the point of the crisis. Next time, we will see how it all unravelled and assign blame. I will close this series with considerations for the future.

(NOTE: I realize that this series is going on a bit long. Well, what can I say? The situation is complex. Given all of the bluster and spewing of the twenty-four hour news cycle, though, I think I am doing pretty fair, no? If no, let me know and I will change directions)

When we last left our story, there were loads of people clamoring for cheap credit in the form of residential mortgages. As with any resource, when it is cheap, people use more of it and the demand skyrockets. No problem...just supply the credit to the people who want it, all while making sure that they are a good risk and that you will get your money back, right?

Well, that's not exactly how it happened. Remember the stringent process for issuing home loans described last time? That didn't exactly hold up too well. Because all of the people who were qualified to get mortgages already had them, mortgage companies had to look for new customers. They found these new customers, all right, but to do so, they had to change the general profile of who they considered "mortgage-worthy."

This definition went from "person with good credit, assets and a job" to "pretty much fucking anybody." Why? The lenders, for their part, had to deal in volume because the margin of profits on their loans were so low in the interest rate regime that was in place between 2001 and 2007 (more on this later, in the blame section).

The borrowers, on the other hand, were motivated either by the potential for profit on their investment or the desire (NOT right...this will be important later) to own a home. This desire, it seems, outpaced the realistic expectation that these people would ever be able to pay the debt back. Already, I'm sure, you can see where problems might arise.

So, where are we? We have lots of unworthy people with loads of debt lent to them by people who were eager to lend to anybody who could reasonably operate a pen to sign the promissory note. How, you ask, did this situation lead to a financial crisis with global implications?

Well, the mortgage companies were not the only ones looking for a way to make a profit in a bad environment. The investment banks were out there as well, so to speak. They, too, had been hit by the bursting of the tech bubble in 2000-2001 and were searching around for somewhere to put the money they had (for themselves and their clients). They decided that residential mortgages were the way to go.

Now, this was not the first time that investment banks dabbled in mortgages. Far from it. Investment banks and their fixed-income (read=not stocks or commodities) trading departments had dabbled in mortgage debt since at least the 1970's. This is where mortgage-backed securities (MBS) come into the picture.

MBS are basically an investment vehicle that are composed of many individual mortages bundled together and traded as one unit. Like other forms of debt securities (bonds, mostly), they bore a period of maturity and an interest rate. When an MBS is sold, the buyer becomes the holder of the mortgage or, in other words, the receiver of the payments from the borrower. MBS's are attractive because they allow investment banks and financial institutions access to another credit market.

This form of debt, like all forms today, are rated by the major rating agencies (Standard and Poor's, Moody's and Fitch). These agencies assess the structure and composition of assets and issue ratings that tell anyone interested how "good" a particular debt is. Here, "good" is defined as "likely to be paid back with interest."

Sounds fine, right? The investment banks, paying attention to the rating agencies, would not take on bad debts and the rating agencies would not recommend unsound investments to their clients (that being the investing public as a whole).

Well, there was a problem. A big problem. The MBS that were being sold were more complex than anyone was willing to admit. Put simply, there were wolves among the sheep. Not all of the MBS were composed of the same classes of debt. They were, in large part, composed of some good debt, some moderate-risk debt and a lot of bad debt.

The problem came when the rating agencies rated these individual MBS highly, as all good debt, when they were anything but. These MBS, or a lot of them, contained ticking time bombs, thousands of mortgages that were risky (at best) and downright suicidal (at worst).

What's more, to further complicate the situation, the MBS were themselves pooled into collateralized debt obligations (CDO) and these were traded just like the MBS were. These CDO's are divided into "tranches," which is just the French word for slice. Each tranche is supposed to be made up of a certain class of debt, which makes managing the risk easier because the relative "goodness" of the debt is a known thing. But here, this was not necessarily so.

Risk has been mentioned before, but it is at this stage (right before we get to the meltdown...don't worry, it is coming) when the idea of risk management comes into the picture. Investment banks (and smart investors in general) never expose themselves to more risk than they feel they can handle.

To do this, they try and offset the risk with other financial instruments. In options trading (what I used to do for a living), for example, there are many spreading strategies to offset the risk of any one contract and insure a profit or at least limit a loss. Those of you who are familiar with the world of sports betting (which I am not...officially) will see some similarities here. In our present case, the buyers of MBS's and CDO's used credit-default swaps (CDS) to manage risk.

Here again, what was usually done does not apply here. CDS's, basically guarantees against another party defaulting on a loan, help to manage risk by passing it along, so to speak, to other parties until many people hold small parts of the risk and no one body is fully exposed. What was different with our persent case is that the investment banks and other entities bought these MBS's and CDO's on leverage (read=credit). So, basically, they were buying huge pools of debt by taking on huge amounts of debt themselves. This is what is called leverage.

With all of this complex debt, leverage, credit and the attempt to manage risk, it is not hard to imagine that something could happen that would destabilize this arrangement. This is so because so much of the arrangement was based on credit and promises, not on real assets and complete assessments of the risks involved.

This brings us to the so-called tipping point. Next time: the tipping, falling and blaming.

Gordon Brown, A Savior? Will Shannon, A Deadhead?

2008-10-14T15:13:00.003-05:00

A few short (perhaps) shocking revelations for you on this lovely Tuesday. By the way, we will be all ready to go with the financial meltdown blame game later in the week The rogue's gallery thus far includes: Alan Greenspan, the Clinton Administration, sleazy mortgage brokers, Alan Greenspan, pie-in-the-sky consumers who should know better, Alan Greenspan, questionable ideas about risk management and a widely held assumption that (wait for it) turned out to be completely wrong (and was promoted by Alan Greenspan).

Now, the shocking news:

Is British Prime Minister Gordon Brown the Allmighty, The Savior of World Finance? Recent Nobel Laureate Economist Paul Krugman seems to think so. I personally think this is a case of Krugman, swollen with victory and the notion that his view of the world is coming to pass, throwing kudos to Brown for something that, well, I guess he did. I actually think (along with this really smart guy) that the Irish Government strong-armed Europe into intervention and they, in turn, strong-armed the USA into following suit. Sort of a "play by the new rules or don't play at all" sort of thing. Will this help Brown's generally sinking political fortunes? For a time, maybe. Long-term? No.
Is Will Shannon a Deadhead? Well, yes, I am. I does not seem to fit with my business casual dress or my generally sour demeanor about the world or my on-and-off hatred of mirth, whimsy, wonder and that sort of rot. The fact remains, however, that I have been a fan of San Fransisco's eternal house band for some years. Maybe it is their lyrical intricacy (piloted mainly by Robert Hunter/Jerry Garcia and John Perry Barlow/Bob Weir). Maybe it is their jazz-like devotion to improvisation. Or maybe, just maybe, it is because they were not really political, prefering to leave the politics and shouting out and concentrate on the music. Well, the upshot of this revelation was a great piece in Reason from a few years back. Read it here. It brings together, in the form of a review of this book, a lot of what makes the Dead attractive to me. Boy, if anyone could make something like "hippie capitalism" work, it was them.

Actually, in closing and in considering the state of finance today, perhaps a quote from the Dead is apropos:

"The wheel is turning and you can't slow down,

You can't let go and you can't hold on,

You can't go back and you can't stand still,

If the thunder don't get you, then the lightning will."

If You Hate It, Send It Money

2008-10-08T13:00:00.002-05:00

We will return to our in-depth consideration of the current economic situation later in the week (I hope). Just as a preview, the next post will be the "finger-pointing-and-fist-waving" post where I lay blame where it is due (read = Greenspan, your ass is grass).

I wanted to post about and expound upon a fascinating idea in Tyler Cowen's great book Discover Your Inner Economist.

In this season of campaign donations and with the charitable onslaught of the holidays just around the corner, I got to thinking about the effect of charitable giving and what giving to charity means to people.

In a certain sense, charity is like any other sort of spending: resources are allocated to a particular purpose and in doing so, people show their preferences. There is more at work, it seems, when it comes to charity.

There is a moral dimension in giving to charity that is not present in other forms of exchange. When you buy (fill in your favorite good here), you are showing that you have a preference for that item at the price you paid for it and in the quantity you bought it in.

When you give to charity, you also do this, but you are trying to show that you are a certain sort of person...namely, the sort of person who gives to charity. It would seem that these sorts of people are good (or at least do one good thing) and that this is the sort of behavior that we all should engage in.

While I am not sure about making these moral judgements (I think that it is a strictly personal matter), I was curious about one assumption of everything said above. That is the assertion that all charity and donations should be given to someone or something that one supports.

Let's play the contrarian, I thought, and see where this goes...

Could there be value to giving to a cause or a person with whom you disagree? It seems at first blush to be, well, a really stupid idea. If I support gun control (which for the record, I don't; this is just an example), it would not seem to follow that I would donate money to the NRA.

Or does it?

Think about what happens when you send a donation to a charity or a political candidate. That entity takes your money, puts your name on a mailing list and proceeds to barrage you with direct mail solicitations. You showed your preference, all right. You let people who are asking for money know that you are the sort of person who gives it away.

The mail keeps pouring in and you begin to wonder about the prudence of your donation. Yeah, you are keen on nature, but c'mon Sierra Club...when does it end?

Have you figured it out yet? Has it dawned on you why "reverse charity" might be a good thing for you?

You gave a cause or person an amount of money. This action caused that party to send you, at their expense, more entreaties for cash. They put your name on a mailing list which may be exchanged with other groups, incurring more expense. It only seems when you have ignored them for a good long time that they finally get the hint.

Do you realize what you have just done? You have, though out of your best intentinos, made a cause that you wanted to support spend perhaps more than you gave. In other words, your donation made your charity of choice lose money.

You should realize what the next step is (and therefore the meaning of the title of this post).

Hate Barack Obama? Donate money to his campaign.

Think Greeenpeace nods at environmental terrorism? Cut them a check.

Think a particular charity/church/aid drive is particularly unseemly? Pass the plate and dig deep, brothers and sisters.

Your one-time donation, though it goes against your preferences (and thus could be called "strategic charity"), could end up helping you by weakening a cause or person with whom you disagree. Yes, it may feel off-putting holding these two contradictory ideas at once, but trust me: every time you get another piece of mail from your "target," consider it a small victory.

Have I ever actually done this? Yes, but it was without knowing the full implications of the situation. In college, we put one of our friends on this guy's mailing list and he got deliveries and calls for donations for years afterwards.

So go out there, think like a contrarian and show your enemies your contempt by showing your "support." While you are doing it, think about all the little interactions, exchanges and incentives that we respond to everyday and in turn show our preferences and, really, little pieces of ourselves.

It is fascinating ideas like these that make people (me included) think deeper and desire to know more about the world around them. I hope they make you think, too.

How Did We Get Here? Part 1

2008-09-30T16:14:00.004-05:00

Last week, we tackled the rather convoluted history of financial speculation, recessions, depressions, the business cycle and other background information.

Now, let's move on to the roots of the present financial situation.

Actually, if you want a great primer and clear explanation of these complex economic interactions, I found one at a somewhat unlikely source. On a May, 2008 episode of the usually gut-wrenchingly smug NPR program This American Life with Ira Glass entitled "Giant Pools of Money," an excellent summary and explanation of the roots of the crisis was given. Maybe it was so easy to understand and accessable because Glass had nothing to do with it. NPR's business and economic correspondent Adam Davidson and NPR producer Alex Blumberg teamed up for this piece. While there are a few liberal jabs at evil capitalists, it is no more than one would expect for NPR; furthermore, these do not detract from the sound analysis offered in the piece.

Listen to "Giant Pools of Money" here.

If you listen to that, you could probably skip everything that I say below and still have a good picture of the situation. If you desire some more detail, links to relevant information and my perspective, read on...

The current "subprime mortgage crisis" and subsequent "credit crunch" has its immediate roots about eight years ago. In 2000, the sexy investment of the day, high tech and Internet stocks, began to falter. Falter is perhaps too light a word. The train came off the fucking rails.

With nothing cool like pets.com to invest in, the investing community (which encompasses everyone from ordinary individuals to global investment banks to governments) executed a classic "flight-to-safety." They were all looking for a place to put their money that gave reliable returns and had some assurances all while sacrificing sexiness. In other words, people were looking for nice, boring investment vehicles.

The nicest and most boring of all investment vehicles are U.S Treasury Securities. These securities, which are basically loans to the U.S. Government, are not risky, have low rates of return and are backed by the full faith and credit of good ol' Uncle Sam. Sounds pretty good, right?

Well, for a short time, it was.

Then the events of September 11, 2001 happened.

The economic nosedive after 9/11 coupled with the then still unravelling tech bubble made these boring investments even more boring. They became downright dreadful.

Why? Well, basically, it was because of what happened to that low rate of return...it got even lower. So low that treasury securities were not an attractive investment for anyone. You see, the rate of return on treasury securities is tied directly to the interest rate at the time the bond is issued. The people who control the interest rate in the United States (the Chairman of the Federal Reserve and the Federal Open Market Committee) decided that with the attacks of 9/11 and the bad stock market, the economy needed a little boost.

So the Federal Reserve, led then by Alan Greenspan, lowered the interest rates (which are several different numbers actually, but we needn't discuss this here) and kept them low for quite a long time. In fact, the Fed kept the rates so low that, in effect, the boring treasury securities became even too boring for people who wanted something that was pretty boring.

What happened next? Well, investors are not a crowd to sit around and let their money sit idle (hell, that goes against the very idea of investment itself). They then began the search for something that would pay a decent return and they were beginning to run short of options. These investors will return later. Now, another part of the story...

Another effect of lower interest rates is cheap credit. If the interest rates are low, this also means that the cost of borrowing money is also low. This means that anything that people usually buy on credit was now available at almost-giving-it-away prices. In other words, people could almost borrow money for free.

If people can borrow money for free, the natural inclination (which would prove unnaturally disasterous later) is to borrow more. For most people, what is not only the most expensive thing that they will ever buy but also a thing (more likely than not) that is bought on credit?

That's right: a house (or real estate, more generally).

The type of legal/financial arrangement in the US that involves real estate is called a mortgage (I won't explain this here, but click the link for definitions). So, with cheap credit, anyone could get a mortgage, right?

Well, sort of...

You see, once upon a time (until quite recently, actually) getting a mortgage was not as ruinously easy as it became in the years after 2001. If you wanted a bank to lend you money to buy a house, you had to prove all sorts of things to them. You had to prove that you had a job, that you had some liquid assets, that you didn't have a really horrible credit history...generally, you had to prove that you were a good risk and that you would eventually pay the loan back in full.

In the early days of low interest rates in 2001 and into early 2002, these policies were still pretty standard fare. Yes, the credit was cheap, but you needed to show your financial responsibility before the bank would let you at all the lovely money.

This went on apace until we reached a point, most say sometime in 2002, that everyone who qualified for a mortgage and wanted one could get one. Fine, you say, responsible people should be able to have access to such arrangements.

Well, it turns out that lots of irresponsible people wanted access to this cheap credit and there were other irresponsible people who were all to ready to let them have at it...

For Next Time

We will contiue to follow this story and try to draw the connections that eventually led to the state we are in today. We will see how cheap credit, irresponsible borrowing and lending, possible fraud, financial ingenuity, government stubbornness and some really mistaken assumptions began to lead to real trouble.

Stay tuned...it only gets more interesting from here.

Have We Been Here Before?

2008-09-23T15:02:00.002-05:00

(Before we begin, I wanted to just make a few things clear. I will try and explain this extraordinarily complex financial situation as simply as possible. I will provide plentiful links to definitions of perhaps unfamiliar words and concepts. I will strive to be as simple but as thorough as I can be. Any topic that will be raised in these next few posts could be a topic of volumes of writing and hours of discussion. Please leave your comments/questions/disagreements. I would be very interested to hear what you think).

Have we been here before? "Here," naturally, meaning in a financial situation that started out bad and seems to keep getting worse by the day?

Well, the answer is the ever-unsatisfying "yes and no."

Let's start with the "yes" part first.

Panics, Recessions and Depressions of Yesteryear

There have been ups and downs in general economic performance and the fortunes of the financial system ever since people started trading what they had for what they needed. That is when the ideas of supply, demand and prices first hoved into the human economic conscious. We will not go back that far, though, as the roots of today's problems are much closer to our own time.

Recessions and depressions, while subject to some semantic wrangling, are fairly well-defined concepts and have happened at various times in the past. Their occurrence is usually seen as part of the business cycle, the normal expansion and contraction that is typical of any modern market economy.

These peaks and troughs in the overall performance of the economy have happened in somewhat predictable patterns beginning in roughly the middle of the nineteenth century when the integrated, global economy that we live in today had its birth. As you can see from looking at historical patterns of the business cycle in the US, recessions happen fairly frequently. Depressions, which are recessions that last longer, happen less frequently.

These expansions and contractions have happened throughout our history, and the reason for their onset is always a little different. The Panic of 1873, for example, was caused by the failure of the largest bank in the US, coupled with the collapse of the Vienna Stock Exchange, both of which burst the post American Civil War speculative bubble (more on these later). This panic led to a long, worldwide depression, lasting from 1873 to around 1896. The hardest hit was Great Britain, who lost much of the edge in industrial production that they had held since the end of the 18th Century.

This is not, however, the historical case that people have been bringing up over the last week. That case is, of course, the Great Depression of the 1930's. While a full discussion of the causes of the Great Depression (and why it lasted so long in the US) is beyond the scope of this post, let us consider some of the large factors at play. It seems that the following were at least, in part, responsible:

The decision of several European countries to return to the gold standard at pre-WWI rates of exchange.
The expansion of the money supply in the 1920's which led to a credit-fueled economic boom.
The mismanagement of the aforementioned money supply by the Federal Reserve Bank.
Policy blunders on the part of both the Hoover and Roosevelt administrations that contributed to the contraction.
Wage rates that were not allowed to rise and fall with inflation, unemployment and prices.

As I said, there are others, but the above mentioned causes should serve our purposes.

We will deal with the meaning of all of this to us today at the end of the post. Now, on to...

Manias, Speculation, Bubbles and the Aftermath

Just like depressions and recessions, there has been financial speculation as long as anyone has invested in anything. Speculation is basically the buying and selling of an asset to make a quick profit. Speculators play a key role in any asset market as they provide liquidity and price discovery for all other players in that market.

The history of speculation comes replete with many speculative "manias" for certain assets and their boom and bust is somewhat similar to the above mentioned business cycle. People have speculated on everything from tulip bulbs in 17th Century Holland, shares in the South Sea Company in 18th Century Britain, railroad stocks in 19th Century America (and Britain too), and all of the stock crazes of more recent years (biotech stocks in the 1980's and Internet stocks in the 1990's).

What happens when these speculative bubbles "burst?" Do they cause depressions and recessions? In my opinion, they do not. It seems that they are a necessary, but not sufficient condition for a recession. Did the stock market "crash" of 1929 cause the Great Depression? No, because it was one of many conditions that interacted to cause the economic contraction (and was preceded by conditions that helped to make its effect even worse).

Did the dot.com crash of 2000-2001 cause the current financial problems. Here again, no, but it was one of the factors at play in making today's situation what it is and what it will be.

What happens if these disruptions in the market economy are so bad that the whole complex web of economic interactions faces either partial or total failure? Well, usually the answer is that nothing is "so bad" that it cannot be eventually dealt with through the normal operation of the marketplace.

There have been times, though, where markets have turned outside themselves (or were set upon by outside forces) who felt that their failure was too dangerous to risk. In the last, oh, 100 years this has happened a few times.

The Panic of 1907, which saw declines in the stock market, contraction of credit and a profound loss of liquidity for banks was eventually dealt with when J.P. Morgan and a consortium of bankers backed losses, provided capital and saved the system from collapse.

The bail-out came in a different form during the Savings and Loan crisis of the 1980's. While not exactly a speculative bubble, the case of the bail-out is instructive. This time, it was the Federal Government who spearheaded the bailout of the S&L industry, primarily with the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Here, Uncle Sam created new deposit insurance, took on and disposed of the assets of failed S&L's and created greater oversight for thrifts and their lending procedures.

The case of Long-Term Capital Management is as complex as the trading algorithyms that they used. Read about it here. Basically, it was a case of highly-leveraged traders and mathematical whiz-kids who had a system that should have worked perfectly, but it didn't, they threw good money after bad and it all fell down. I may have more to say about this case later on.

Why We Haven't Been Here Before

I said a little earlier that while some of the instances of these financial collapses, panics and manias of the past may seem eerily like what is up these days, one should be careful before thinking that it is a case of history repeating itself.

The fact is that history never really does this. Oh yes, things that happen today may be similar to the past, but the conditions are different, the people involved are different and the world that they inhabit is different.

History is a great tool for understanding how factors interacted with each other in the past, how people reacted and how these broad developments helped to shape their world and (in time) ours. History is a poor tool for forcasting the future or trying to transfer occurrences of the past in whole cloth to the present day. History, in other words, is a good teacher but a bad prognosticator.

For Next Time

Now that we have a little historical perspective and some basic terminology down, we can proceed to picking apart the current financial situation (the Panic of 2008?) Much that we discussed today will be instructive in understanding our current woes. Many of the outcomes of the past helped to shape the financial system that gave birth to these problems. Actually, one of the key starting points for this came in the "bursting" of the aforementioned dot.com bubble in 2000-2001.

It is there that we will begin next time.

In the meantime, please do check out some of the links provided above. Additionally, I can recommend a few great sources on the history of bubbles and speculation. On bubbles, crazes and manias, there is still no better book than Charles Mackay's 1841 classic Extraordinary Popular Delusions and the Madness of Crowds. You can actually read the whole book here.

On the history of speculation in general, there is the very good and readable Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor. Also good here is Charles Kindleberger's 1978 (modern) classic Manias, Panics and Crashes.

Let's All Calm Down And Talk This Out

2008-09-19T13:10:00.003-05:00

I have some big pieces in the works on the current financial situation for next week (I wanted to let things settle a bit before addressing the situation), so I figured I would warn you of this. If this interests you, then you will be in for a (hopefully) thorough discussion and perhaps some lively argument. If not, well, I told you so.

In anticipation of this, you may want to read up on exactly what has been going on. For the background, or the "how-did-we-get-here," there are several good sources. This post by economist Arnold Kling lays out a thumbnail of the basics. The guys over at Marginal Revolution have also done many good background posts on the situation; just scroll down and read what sounds useful. Another great source is Real Clear Markets. There, you will find the gleaning of a lot of the best reportage and comment on finance and economics in general and the happenings of the last week (and its roots) in particular.

I would also especially invite Kevin (Molly, if you read this, nudge your husband and get him over to the computer) to comment, as he is a financial professional (while I am more of a former professional and amateur economist) and one really smart guy.

As you do this reading, keep in mind one of the favorite sayings of the old-timers on the trading floor where I used to work:

"The world only ends once, and this ain't it."

A Remembrance. A Tribute. An Honor, Really.

2008-09-10T14:03:00.004-05:00

Yesterday was my birthday and I extend my heartfelt thanks to all who helped me celebrate and who send their well-wishes.

I would like to point to one person in particular who did me the great honor of dedicating a blog post to me. That person is the inimitable M. Gordon Jenks. Read the post here.

What a joy to walk down those (booze-dimmed) paths of memory! If you read the post (and I hope you do), you get a pretty good picture of my college years and my relationship to a person who is the best of friends.

Oh, all that you read there is true. Absolutely true.

We had a lot of fun, ingested a lot of beverages, did a lot of really strange stuff and had a hell of a time. It was nigh on the perfect college experience and I wouldn't trade it for the world.

So, thanks, Jenksie. You brought a tear of joy to these thirty-one year-old bloodshot Irish eyes.

(Oh, if you need anything in Jenks's post explained, ask and we will do our best).

(Also, read the post below about remembrances of the past of a different nature).

Jolly Boating Weather, Or So They Thought

2008-09-10T13:50:00.002-05:00

In wading through the murky waters of days gone by, one sometimes hits upon a few words that really say much more than the obvious.

I recently ran across a quotation from George Orwell's autobiographical essay "Such, Such Were the Joys." Orwell wrote it in the 1940's about his childhood and his years at St. Cyprian's School and at Eton College. While I suspect these places were not the Home Counties gulag that Orwell describes, his reminiscences have a lot to say about coming of age for the middle classes in Edwardian Britain.

The one line that really stuck out for me was his description of the mood of the times in the years between the death of Queen Victoria (1901) and the outbreak of the Great War (1914).

Orwell wrote:

"From the whole decade before 1914 there seems to breathe forth a smell of the more vulgar, un-grown-up kind of luxury, a smell of brilliantine and crème-de-menthe and soft-centred chocolates — an atmosphere, as it were, of eating everlasting strawberry ices on green lawns to the tune of the Eton Boating Song."

In this time, Britain had passed her time at the height of world power. She was still one of the "great powers," but by no means dominant. Settling into the fading sunlight of her imperial afternoon, the Sceptered Isle was about to be irreversibly changed. For a brief moment, though, people either didn't know or didn't wish to acknowledge this fact.

Orwell's words give us an engaging portal into one of those days gone by.

It is for little reasons like this that I am a historian.

What should be the weekly feature at COTL?
	Fun With Economics
	Thrilling Tales of Europe's Past
	Thrilling Tales of Britain's Past
	Fun With Supreme Court Cases
	Something Else (Put suggestions in a comment)
	Shut The Fuck Up, Will. We Don't Care.

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