Monday, November 30, 2009

The Jail Cell and the Gun

Government has grown so much during the past 100 years in part because it is taking on more and more roles. Essentially, society is using government, instead of other means or institutions, to do more of the things that society wants to do.  There is a good reason for this, and that is that government is powerful and can get the job done, whatever the job is. However, as a Libertarian I am suspicious of this approach, and of the growth of the influence and power of government.

Society is using government to do more things because government is powerful. Why is government powerful? Because it has the legal use of force at its command. At the bottom of it, there is one major distinction between government and all other institutions: government has the force of a jail cell and a gun backing its policies. This power is what makes government able to perform many of the roles it is called upon to perform. This power makes it possible to apprehend criminals, to collect taxes, to settle disputes, and to conduct war. However, this power is also employed explicitly or implicitly in every governmental undertaking, no matter how liberally intentioned.

The purpose of democracy is to tame the power of government, precisely because government has the power of the jail cell and the gun. By making government accountable to at least a large percentage of the people (rather than a tiny group of elites), the odds are more favorable that individual people will be treated with fairness. This is a good system, but it may be due for an upgrade. Perhaps the next generation of democracy will limit government to functions those that need the power of the jail cell and the gun to back them up. Maybe our society can benefit from greater exploration of the use of nongovernmental institutions to accomplish many of society’s goals. What do you think?

Wednesday, November 25, 2009

Growth of Govt.

Just a few quick graphs that illustrate how things have changed in a hundred years or so. How did we ever get by back then?

More info here.

Tuesday, November 24, 2009

China is Subsidizing America's Standard of Living

Gary Becker does a good job summarizing the argument against trying to convince China to let the yuan fall against the dollar. Basically it goes like this: We want to buy Chinese goods, but Chinese goods can only be purchased with Chinese currency, so we give dollars to the Chinese central bank in exchange for yuan. But the Chinese government has this policy where they always give us more yuan than our dollars are really worth. So it's a good deal for us, and a bad deal for them. Why do they do that?

Even more relevant to Americans is the question, why is Obama trying to convince the Chinese to STOP doing that?

The comments on Becker's blog aren't working, but here's what I tried to post in reply:

Can it really be sheer foolishness on the parts of both the Chinese and American governments? What can their respective motives be? 

In America there has been a long term advertising campaign against any trade deficit, and many American voters have been persuaded to embrace a cause (make imports more expensive) that is likely not in their own interest. Have unions and export businesses so completely captured trade policy in the US? 

Is there a similar explanation for the Chinese policy?

Facing Fears

Brian Caplan discusses Exposure Therapy.

The exposure therapy approach to dealing with fears makes a lot of sense to me. As a matter of fact, I think people are wired to do this (to some extent) automatically. One example is dreaming repeatedly about a traumatic event. Another is obsession with a worry.

Monday, November 23, 2009

Political Spectrum

In a high school political science class I was taught that the political spectrum extends from communism on the far left to fascism on the far right, with Democrats and Republicans more or less in the center. Even back then this seemed stupid to me because in practice both communism and fascism are most strongly characterized by the subjugation of the individual and the community to the state. I asked my teacher where anarchy fit into this spectrum and bizarrely he suggested that it should be even further out to the right, past fascism.

There are many ways to chart political systems and philosophies relative to one another. Why do so many people consider to use and reference the Left vs. Right model? What do ‘leftness’ and ‘rightness’ indicate? For example, was my teacher correct to place anarchy on the far right? And if so, what essential characteristic is common between fascism and anarchy so that they end up on the same end of the spectrum?

Numerous other methodologies have been suggested for depicting the relative similarities and differences between various political systems and philosophies. The Nolan chart, for example, puts economic freedom on one axis, and personal freedom on another. Useful, perhaps, for explaining the Libertarian worldview, but rather limited in its ability to describe other political philosophies in their own language. For example, where precisely would Progressives place themselves on such a chart? I suggest that they would be apt to claim that the chart needed to be redrawn with different axes, perhaps one of which would be rationality in policy.

How would you draw a chart of all political systems/philosophies? How many axes would you need to describe the most important characteristics of each system? Below are some suggestions for possible axes:

Practical regulation ßà Moral regulation

Coercive ßà Free to opt out

Provides many public goods (roads, schools, etc.) ßà Provides few public goods

Focus on individual rights ßà Focus on community rights

More regulation of business ßà Less regulation of business

More regulation of personal activity (what I do in private) ßà Less regulation of personal activity

More regulation (in total) ßà More freedom

Governmental powers highly consolidated ßà Governmental powers very distributed (checks and balances)

Government captive to the people (officials easily removed from office by popular demand) ßà People captive to the government (individuals easily killed or imprisoned by officials)


Our Interesting Relationship With the Gulf States

The National is reporting that the strong US military presence in the Persian Gulf is acting as a disincentive to many gulf states to invest in defense, because these states believe that US interest in regional stability is all the defense they need.

The UAE is investing in America's THAAD missile defense system, and had previously suggested that a coalition of gulf states could fund a regional defense system. Apparently, some gulf states are hoping that US deployment of the sea-based Aegis system to defend carrier groups in the gulf will effectively protect their borders as well.

Saturday, November 21, 2009

Components of "Smart"

I think that "smart" is one of those terms that people believe they understand, but is in fact so poorly defined that it risks uselessness as a descriptor. IQ is better defined because it refers to a score received on a test (or actually one of several tests, so some serious ambiguity remains). However, there are questions about what is actually being measured by IQ testing, so practical usefulness is limited here as well.

Measurement may be a problem, but definition need not be. There's no need to continue conflating multiple different characteristics and abilities under the term "smart", or even "intelligent".

Knowledge - This is accessible stored information. It grows with experience and study, but different people have differing abilities to absorb and retain information. There is the additional complication that possessing existing knowledge makes it easier to add and retain new knowledge, because retention is tied to the ability to index new information to information that has already been assimilated.

Processing Routines - These are sets of sequential operations that have been "burned in" to the brain by repetitive use. They can be simple or complex. Examples range from calculating multiplication tables to riding a bike. As with knowledge, different people have different abilities to create, maintain, and use these routines.

Concept Synthesis - This is the creation of a substantively novel concept through the blending of two or more existing concepts. This is probably what is most often referred to as "creative thinking". It is genuinely creative. It is the ability to recognize that many elements together don't just form a group, they form a pattern.

Relational Analysis - This is closely related to the ideas of Knowledge and Concept Synthesis. It is the ability to find or create links between distinct concepts. It reinforces Knowledge retention by increasing indexing between pieces of information. It supports Concept Synthesis by suggesting which concepts may have useful synergies.

I'm sure there's more than this. What are some other ways of looking at what it is to be smart?

Thursday, November 19, 2009

Out of the Office...

I'm in training out of town this week and I'm find it practically impossible to keep up with posts, so hopefully starting Saturday I can get back in the groove. Talk to you then.

Wednesday, November 18, 2009

Effect of Children on Happiness

Interesting post by Brian Caplan. Seems much more intuitively correct than the other research he cites that suggests that children hurt overall happiness.

Tuesday, November 17, 2009

Benevolent Dictators

I previously blogged about Musharraf Pervez, the former president of Pakistan who rose to power during a bloodless coup, and I presented his administration as possessing a mixture of conflicting traits. Was Musharraf a benevolent dictator, compelled by circumstances to impose martial law and suspend the judiciary? Or was he personally corrupt, and did he institute political reforms and combat corruption only because he was compelled to? To what extent do the policies of heads of state reflect their personal values?

Bruce Bueno De Mesquita argues compellingly that policies most closely reflect the nature and structure of political institutions, not the characters of politicians.

All political leaders achieve and maintain power through the help of a winning coalition. This is simply a group of people who together have sufficient power and influence to seize control of the political apparatus, either through legal or extralegal means. The term ‘dictator’ grossly oversimplifies the system of corruption and patronage that binds the winning coalition together. Robert Bolt characterized this relationship between a leader and his allies when he depicted Henry VIII as declaring, “…there are those like Master Cromwell who follow me because they are jackals with sharp teeth and I am their lion.” The members of the winning coalition maintain the dictator in power because he dispenses patronage in the form of wealth, political appointment, and advantage in business.

It is just as true for democratically elected leaders as it is for dictators that they must appease the winning coalition that maintains them in power. The difference is in the composition of the winning coalition in democratic political systems vs. dictatorial political systems. Under feudalism the winning coalition consists of a group of regional war lords who control land and armies. Henry VIII’s winning coalition included reformation-minded clergy and an emerging merchant class, as well as the sons of the “blood-witted barons” of feudal times. In democratic societies, a winning coalition must include a large chunk of the voting population, so naturally the dynamics of that coalition are different from the dynamics of a coalition of a few powerful warlords.

 In all cases, the Leader must provide patronage to the members of the winning coalition in order to retain their support. Under democracy this means broad-based programs of social welfare. Consequently, even the the most savage-minded politician must spend heavily on public programs if he wishes to retain office in a democratic system. Conversely, in political systems where power is concentrated into a small number of hands the Leader must spend heavily to pay off those few powerful people who constitute a winning coalition. In such systems even the most fair-minded politician must rule in corruption, or be deposed.

 Don't forget: the people who succeed in politics are those who are willing to do what is necessary to succeed.

But are heads of state fully captured by their respective winning coalitions? What good then is it to be a president or a king? In truth, they are not fully captive. Leaders have a certain amount of political capital left over after they have paid off their coalition. It is the choices they make with this discretionary political capital that reveals their true nature. Ferdinand and Imelda Marcos used their discretionary political capital to rob the public coffers, while Mao engaged in massive social experiments. Arguably, Mao did more harm to more people, but his motives were perhaps purer.

An example to summarize with: what made the difference between Leopold II's benevolent rule in Belgium and his murderous rule in the Congo? The political institutions in place in each country. In Belgium, Leopold instituted classically liberal policies because his winning coalition was very large and could only be kept content with broad spending on social programs. In the Congo Leopold's power base was very small, essentially just a handful of warlords exactly equivalent to the blood-witted barons of feudalism. Consequently, his administration there was suitably medieval.

Peak Uranium

Just a quick post. Coal looks even more attractive than usual in light of the fact that uranium is currently being consumed faster than it is being dug out of the ground.

Monday, November 16, 2009

Philosophy of Identity and Daily Living

This is something I once wrote up for my wife, in response to a particular situation she was dealing with. Though it was specific to that time, I think it's a pretty good representation of my general philosophy.

Daily Philosophy

  • My well-being is important
  • It is fair to share the load
  • I don't do my part well when:
    • I'm sick
    • I'm tired
    • I'm stressed out
    • I haven't addressed my daily needs (physical, social, mental, etc)
  • When I don't do my part well, my family suffers
  • If I don't address my daily needs, I can't do my part well
  • If I'm not happy, I can't do my part well
  • I'm not happy when:
    • I haven't addressed my daily needs
    • I have to hide myself instead of being myself
    • I'm living in a hostile environment
      • Not enough acceptance of who I really am
      • Not enough security
      • Too much work / too little rest
  • If I'm not happy then my family suffers, and so do I
  • When I'm not happy I can become happy by:
    • Addressing my daily needs
    • Being myself with someone who accepts me
    • Getting help with the hostile environment (help with work, listening to me talk about myself, etc)

Philosophy of Identity

  • My identity is permanent and unchangeable
    • I am the same me that I was as a child, and will be when I am old
  • My identity cannot be seen directly by anyone but me
    • I can choose to reveal myself or hide myself at will
    • Even when I reveal myself, others might not be able to see me
      • This is their limitation, not mine
  • My identity is divine
    • My identity is love
    • I know myself, because I know that I love
  • My actions are not part of my identity
  • My body is not part of my identity
  • My brain is part of my body, and is not part of my identity
  • My knowledge is not part of my identity
  • My skills are not part of my identity
  • My past is not part of my identity
  • My mistakes are not part of my identity
  • My accomplishments are not part of my identity
  • Other people's opinions are not part of my identity
  • What other people do to me does not change my identity
    • It can hurt me and make me want to hide, but I am still me no matter what
  • Other people often don't know who I am
  • Even people who know me well don't know everything about me
  • Some people say they love me, but I know that some of them don't really know who I am
  • Some people say they love me, but I know that they don't know themselves well, and don't really understand what love is
  • Some people say they love me, and they really do, but they only love the little part of me that I have shown to them
  • Some people say they love me, and I know that they do, but I don't know why they know who I am, because I never told them. But they just seem to know.
  • Some people who are close to me should love me, but don't have much love to give. When I think about it I might feel hurt, but I might also see that they are afraid and don't know much about their own identity.

Sunday, November 15, 2009

Sunday Links

Alex Tabarrok points to a man who paints himself invisible. (Marginal Revolution)

And speaking of optical illusions, tilt-shift photography continues to fascinate me. (Instant Shift) 
And here. (Wehr in the World)

Scott Adams has a great post about turning advertising around. I really, really hope this takes the place of 'push' advertising. (Dilbert Blog)

This scares me... (Philip Greenspun)

All this discussion of health care spending makes now a really good time to think about the meaning of the large numbers that are being kicked around. (Wehr in the World)

My family plays a game a lot like this. Never thought that it could be useful for more than entertainment. (Wehr in the World)

In case you don't already know, NASA's Earth Observatory page has some striking photos and interesting information. Regularly updated. (Earth Observatory)

Saturday, November 14, 2009

Replace Eminent Domain

Let me preface this post by saying that the following ideas are not well thought through. This is my attempt at a creative solution to some of the problems of eminent domain, and I rely on you, dear reader, to help me see where I'm going wrong.

The use of eminent domain is justified by the argument that it is a practical necessity for the completion of certain kinds of land-intensive projects with value to the larger community. It is commonly used in highway construction projects, rezoning, and urban renewal.

Problems with eminent domain include that it can be abusive (especially due to ties between would-be developers and local government), that it is conceptually incompatible with property rights, that it introduces regime uncertainty, and that because it doesn't rely on market clearing prices (it doesn't have to because it is coercive) it is virtually guaranteed that there will be a mismatch between what is paid to a property owner whose land is condemned and the value of the land to that owner.

I have a pretty strong bias toward market solutions for problems, and so while thinking about eminent domain I wondered whether the concept of property rights can be reformulated in a way that makes eminent domain obsolete. Any such reformulation should accomplish two objectives:

1) It should use prices to clear the market. This matters because voluntary transactions that rely on the price mechanism (as opposed to coercive methods like eminent domain) guarantee that wealth is being created, not destroyed, by the accomplishment of the transaction. It also removes politicking and power from the equation.

2) It should eliminate the 'hold out' problem. The hold out problem is a problem of monopoly power - power held by property owners because their individual plots are EACH uniquely valuable to the project (whatever the project is - say a road building project). Hold outs are engaging in rent seeking behavior at a cost to everyone else in the community who could benefit from the project.

I propose that property rights could be reformulated along lines similar to partner ownership of a firm. Instead of individual, singly owned plots being the basis for property ownership, entire neighborhoods could be owned jointly with individual plots standing in for discrete shares. In this model, buying a house would be better characterized as becoming a partner in a neighborhood. Neighborhoods could be administered by professional managers, by committees,  by elected representatives, or by whatever other means seemed right to the neighborhood partners.

In a world where property rights were so formulated, eminent domain may be considerably less necessary. Rather than needing to negotiate individually with plot owners, it would only be necessary to negotiate with the managers of each neighborhood. Neighborhoods may desire to compete for the 'business' of selling rights-of-way through their boundaries, or to attract value-enhancing development.

To most hobby economists (and real economists) it should be pretty obvious where I'm going with this. It's a pretty comprehensive change to the concept of real property ownership, and I'm sure it has problems, unintended consequences, and unrecognized complexities. I'd appreciate it if you'd take a few minutes to point them out to me!

Children are People

This quote is from David Balan at Less Wrong:

" I've even heard parents go so far as to say things like: "it's not your room, it's the room inmy house that I allow you to live in." This attitude makes little sense on its own terms, as it suggests that parents would have no legitimate authority over, say, a famous child actor whose earnings paid for the house. Worse, it's a relatively minor manifestation of the broader notion that the child has a fundamentally lower status in the family just for being a child, that they deserve less weight in the family's utility function."

This really strikes a nerve in me. I remember as a teenager being told by my stepfather and mother that no one else (other adults with homes) would be willing to take me in and deal with me, so I should just be glad that they didn't throw me out. I knew that they couldn't legally turn me out on the street, but that fact wasn't much comfort. 

Growing up, I accepted that children counted less than adults - I heard it so often opined that I didn't think to question it. When I look at my two daughters now, I am outraged by the notion.

Friday, November 13, 2009

Conscious and Subconscious

The mind has two kinds of process: processes that we are directly aware of and can observe (conscious), and processes that we are not directly aware of and cannot observe (subconscious). The vast majority of the work that the mind does is invisible to us, or subconscious, but it can be observed indirectly.

The subconscious mind is very fast. Think of how quickly you blink if something suddenly moves near your face.
The conscious mind is slow.

The subconscious mind does parallel processing, and works with many variables simultaneously. After all, it has to coordinate complex motion in tens of muscles just so you can stand up.
The conscious mind does serial processing, and handles no more than a handful of variables at once.

Subconscious processes are automatic.
Conscious processes are deliberate.

The subconscious mind ‘speaks’ to the conscious mind through emotions. The best example I can think of for this is how I feel when I sense that I am being lied to. Usually I don’t even know right at first how I know that I’m being lied to. At first I just feel it. That’s my subconscious telling my conscious to look out.
The conscious mind ‘speaks’ to the subconscious through decision making – literally rewriting the programming that the subconscious is executing.

The subconscious mind runs according to a preexisting program (it’s not writing the logic as it goes, the logic is already there). However, this can get complicated, because one of the things the subconscious can be programmed to do is to look for insights and solutions to problems.
The conscious mind is writing its own program as it goes along.

The subconscious comes preloaded with software – but that software can be rewritten.
The conscious mind comes nearly without software, but it has the ability to start writing its own software immediately.
From these observations I suggest a model of the mind that describes the subconscious mind as procedural and operational, while the conscious mind is programming space. When I say that the subconscious is procedural, I mean that it follows a deterministic instruction set. When I say that it is operational, I mean that it is the part of the mind that is actually executing nearly all actions. I believe this is consistent with the work of Benjamin Libet.

Thursday, November 12, 2009

Arguments For and Against Redistribution

Arguments Against
  • It is unfair to take my property and give it to others
  • Is a disincentive to be productive due to marginal tax.
  • Is a disincentive to be productive due to free riding.
  • Hurts productivity by taking resources from the most productive people and giving them to the least productive people.
  • Reward merit – hard work, intelligence.

Arguments For
  • It's unfair to have so much inequality.
  • Increase the total value to society (taking a dollar from a rich person and giving it to a poor person hurts the rich person less than it helps the poor person, and so is a net gain to society).
  • Prevent/undo accumulation of wealth and power into the hands of the few.
  • Undo the effects of unequal starting points (born into wealth vs. born into poverty).
  • Increase market representation of the poor (democracy of capitalism – vote with your dollars for what goods and service should be produced. The rich have more votes.)
  • Don’t reward based on chance – birth circumstances, chance opportunity, the genetic lottery.

What is Redistribution of Wealth?

It is:
and many, many other activities of government.

Wednesday, November 11, 2009

Heroes: Part II

Sexual reproduction is a curious evolutionary adaptation. It reshuffles the genes of the current generation, guaranteeing that the next generation is similar to, but distinct from, its parents. Why do this? If a particular set of genes has been successful, why not reuse them as they are, rather than risking passing on a worse combination?

The answer is flexibility. The environment (and, indeed, the competitive environment) is not static, so a static genetic mix will not serve for long. The ideal system is one that passes nearly all of the most successful traits to the next generation, with a very small percentage of novelty thrown in. The novel genes are an insurance policy against change.

Societies use this strategy as well.

Conventionalists are society's standard gene load out - the tried and the true. Even Romantic Conventionalists, who oppose the prevailing the culture, are part of the standard genetic material. Because they pull directly against the tide of the society they prevent accelerating groupthink. They anchor the society against drift.

Fundamentalists are the novel genetic material. Their commitment to their ideas, rather than to society itself, means that they are forever moving in a completely independent direction. Sometimes they can be a cancer, like the thinkers who produced eugenics. Sometimes they can provide the adaptation that takes the society in a new evolutionary direction, as did the men who dreamed of a purer democracy, without royalty. Most often they are interesting, but harmless, with no strong effect on anyone but themselves (let me again refer you to Eric Falkenstein's brilliant post on how unusual ideas are one of the penalties of being intelligent).


Having heroes is a form of study. You can see it in the rooms of teenagers who have decorated their walls with posters of musicians, or other popular figures. The posters, quotes, and facts about the person of renown are used by the teenager to try to understand what it is in this person that has made him/her great. Teenagers emulate the behaviors, language, dress, political outlooks, etc. of their heroes because they are searching out the combination of qualities and actions that constitute greatness.

The process doesn’t end with the teenage years.

It may be a false dichotomy, but it seems to me that heroes get evaluated either in terms of popular reaction to their exploits (either epic or romantic), or less commonly, against an objective set of criteria established only in the mind of the devotee.  The difference is significant. It tells us something, not about the hero, but about the person who is aspiring to heroism.

If my definition of heroism depends upon either embracing or bucking popular values, then I am a Conventionalist. I define myself entirely in relation to other people, and to the prevailing culture.

If my definition of heroism depends upon a set of principles and beliefs that I accept for their own sake, without dependence upon the opinion of my society, then I am a Fundamentalist. Ironically, many heroic figures may themselves be Fundamentalists, while gaining a vast following of Conventionalists who wish to emulate them.

It is my experience that there are very many more Conventionalists than Fundamentalists in the population, though it is not always easy to distinguish who is who.  Fundamentalists often possess values that are largely in harmony with their culture. Romantic Conventionalists take positions in opposition to the prevailing culture, and so may appear Fundamentalist, but actually are not, because they define themselves relative to the culture, not based on independent values or beliefs.

Eric Falkenstein relates intelligence to having unusual ideas. This is a related but distinct concept.

Tuesday, November 10, 2009

Gandhi: Reverse Terrorist

Listening to a free lecture from UC Berkeley this morning, I heard a definition for terrorism that included the idea that the victims of terrorism are not necessarily the targeted audience for the terrorist act. That got me thinking about Gandhi.

Gandhi was a reverse terrorist. He provoked acts of violence against himself to highlight the cruelty and injustice in colonial imperialism. His demonstrations were designed to provoke a reaction in his intended audience, which included citizens of the British empire as well as the people of India. Specifically, he provoked the moral outrage of the British people against their own methods and institutions in India. The British people soon found that they were unable to rest peacefully, knowing that their soldiers were beating and imprisoning an old man for such acts as boiling sea water to make salt.

William Vollman, in his book Rising Up and Rising Down argues that the revolutionary, the terrorist, and the practitioner of civil disobedience must give up outside commitments in favor of their cause. Gandhi clearly understood this.

Technical Difficulties

My computer gave up the ghost. My posting will probably continue to be spotty for the next few days.

Saturday, November 7, 2009

And Now for Something Completely Controversial

The above picture is of a proxy marriage being conducted in Normandy.

Proxy marriages are illegal in all but five US states. To me the illegality of proxy marriages is symptomatic of a problem in our legal system. Other symptoms of the same problem are the bans on plural and homosexual marriage, the marriage tax penalty (and the former marriage tax advantage), non-recognition by some states of some marriages that were formalized in other states, and inconsistent laws about qualifications that must be met before marriage.

The civil right vs erosion of values debate over gay marriage is a good place to start because it's such a hot issue. My question is, why does it need to be an issue at all? If social conservatives don't want to be forced to recognize gay marriage as being on equal footing with hetero marriage, they shouldn't be! If gays wish to form marriages, they shouldn't be denied the right! Why is there a controversy here at all?

Well, the obvious answer is that there is a controversy because the state is involved. The state regulates marriage, and decides who gets to marry and who doesn't. Because of this, marriages are made official in a way that makes me accept your marriage. Hence the controversy over gay marriage.

But it is ridiculous. Few other contracts require state intervention. In most cases, if I wish to make an agreement with you, we need have nothing more than a "meeting of the minds" (that's a legal term that just means we both understood what we were agreeing to in the same way). Why is marriage different? What valid interest does the state possess that justifies regulating marriage at all?

At this point in the conversation people usually start talking about hospital visitation, protecting children, alimony in the case of divorce, and a whole host of related items. My answer to most of these is that having marriage formalized by the state doesn't actually make any difference. Take hospital visitation. Hospitals are free to form whatever visitation policies they like. They can base visitation on marriage, kinship, longstanding relationship, patient preference, or anything else that seems right. It's not actually a legal issue at all. So why should state regulation of marriage matter?

What about protection of children? The courts handle that as well as they are able with very little attention paid to the marital status of the couple who produced the children. Of course, this is the result of necessity as so many children are conceived extra-maritally. In any case, state regulation of marriage just isn't important to the issue.

Alimony? Similar to above. An award of alimony is typically dependent upon living circumstances, not matrimony. When the fact of marriage becomes involved it is only relevant as a means of showing that there had been an agreement between the two parties about who should be responsible for what. Such an agreement should certainly be able to be written and signed without the consent of the state, as is so common in business agreements.

So what interest does the state have in regulating marriage? I'm seriously asking, because I can't think of one.

So, what would happen if marriage was deregulated to the point where it was simply another private contract between individuals? What if everyone started treating marriage however seemed right to them? Would our culture unravel? Would more children be left uncared for? Would the county offices have to reduce staff?

I think the answer in all cases is 'no'. I think that what would happen is that religious marriages would become more religiously-oriented thanks to the omission of the state from the marriage. I think that secular marriages would largely remain a mixture of private and public elements, a mixture of personal commitment and legal contract. I think that it is likely that the legal contract part of marriage will be given more thought by those considering marriage, as they will no longer assume that the state has standardized it for them. The ease with which one leaves a marriage will depend on how the marriage contract was written, instead of depending on the particular social experiment being legally enforced in your state of residence (see 'types of divorce'). Care of children will still be enforced by courts in precisely the same way as now - without regard to marital status. Gays will  marry. Social conservatives will refuse to countenance gay marriage. Both parties will be better off.

I've bounced this line of reasoning off of a few people with completely consistent results: No one likes it. But truly, I don't see what's not to like. If I'm overlooking something important I genuinely would appreciate having it pointed out to me.

Friday, November 6, 2009

Organ Donor

xkcd hits it hard, again.

Awhile back I had a friendly online debate about the important parts of human experience that are difficult to rationalize. At one point I said:

"I guess what I really believe is that "shoulds" are real, and that internal experience (unreliable as it is) is all we have to work with if we want to get to the "shoulds". I realize that many people won't see it this way, and I realize how many pitfalls there are on the path I've chosen (there's a long history of murder and evil justified by "shoulds"), but it's the best I can do. I'm willing to hear arguments for another way, but it will be hard for me to accept anything as sterile as: Just do what's in your own best interest, everything else is nonesense."

To be perfectly honest, that discussion and some since then has eroded my faith in the 'shoulds', and even made me question the belief most central to my philosophy of life - that humans possess divine identity. (Please don't understand that too quickly. Just because I said 'divine', it doesn't necessarily follow that I'm talking about a relationship with God, Christian or otherwise.) This is demoralizing to me. I don't want it to be true that people disappear when they die.

The poet said, "We live as dream - alone."

Thursday, November 5, 2009

Science Ruckus

Quick post: there's a commotion going on in the comments over at ThinkMarkets. Do you have an opinion about what counts as Science?

Wednesday, November 4, 2009

The Non-Obvious Path to Well-Being

Hot shot researcher Justin Wehr applies what he knows about analyzing data to his everyday life. He is recording numerous variables, some that are driven and some that are drivers, and using regression to find non-obvious correlations.

What a great way to optimize your efforts for maximum positive effect in your life! Want to know if the latest fad diet works better than the previous fad diet? You can! Want to figure out whether video game abuse is ruining your life? No problem!

Of course there are also the added benefits of daily feedback. In organizational management there is a saying that 'you get what you measure'. Want to watch less TV each week? Keeping a daily record of your habits can raise your awareness, and help you form concrete mini-goals to achieve each day.

To me, though, the really interesting part is the possibility of discovering a combination of small tweaks to your daily routines that could have a large impact on your sense of well-being. Who knows how much happier you could be?

Theory of Political Power

Pervez Musharraf is the former dictator of Pakistan. He ascended to the position of Chief Executive during a coup in 1999. Shortly afterward he issued an order to Pakistani judges requiring them to swear allegiance to military rule. In 2007 he suspended the constitution and dismissed the chief justice of Pakistan's Supreme Court. He was forced from power under allegations of "misconduct, subversion of the Constitution, imposition of emergency, attack on judiciary, missing persons, the Lal Masjid operation, corruption in the funds received from the US for supporting the war against terror, killing of Baloch leader Nawab Akbar Bugti and detention of hundreds of youths in Balochistan without trial." (link)

Musharraf was also extremely popular during most of his administration. He led Pakistan through political and economic reforms that have increased the freedom and prosperity of average Pakistanis. He firmly declared his opposition to violent radicalism, and was an ally to the US in the war against the Taliban. His party won fair elections in 2002 and 2004. Musharraf reduced poverty, established many new universities that achieved international standards, signed into law bills that increased legal protections for women and tripled the number of seats reserved for women in the national assembly, and instituted reforms directed at increasing protection of religious minorities.

Is Musharraf a basically good person who has been forced to take questionable actions due to circumstances? Or is he an example of a corrupt dictator who was (mostly) successfully restrained by political institutions?

Bruce Bueno De Mesquita offers a theory of political power that provides a framework for understanding why some essentially good leaders have engaged in corruption, while other truly black-hearted villains have spent heavily on broad-based social welfare.

Bueno De Mesquita is an interesting fellow with many ideas. I will discuss some of his other work in later posts.

Medical Fees Charts

I used this link in yesterday's post, but I want to make sure that no one misses it. These charts may influence your thinking on the cost of medical care in the US.

Tuesday, November 3, 2009

Cost of Health Care

Why is the cost of health care so high? There are a number of therories.

*Not enough competition in the market for insurance (insurers are taking us for a ride). One explanation for why this might be true is that regulation prevents competition across state boundaries, and that health insurance companies enjoy an exemption from anti-trust policy. This has been the focus of Obama's health care reform argument. Scott Harrington discusses the angle here.

*Not enough competition in the market for care (health care providers are taking us for a ride). The argument here is that health care is an inherently local market, which can result in natural monopolies. This explanation seems to work best for care that is provided through hospitals, and less well for care provided through small clinics. Ezra Klein has some interesting charts to support this argument.

*Medical technology is highly valuable, and highly expensive (the best care doesn't come cheap). This idea can get very complicated very quickly. Patents on drugs and devices, the costs of R&D and FDA evaluation, the relative benefits (if any) of the latest technology over standard technology, the carrying costs of an expensive new machine that will only be used by a small number of patients each year versus the need to provide state of the art care, all play into this argument. Tyler Cowen links to some evidence that the health care system in the US is providing substantial benefits.

*Medical technology companies use monopoly power to inflate prices (drug and medical device companies are taking us for a ride). Similar to above, but with more emphasis on price, and less on value. Robert Reich notes how the whole issue is politically charged. Ira Glass discusses some ways in which drug companies extract inflated profits from insurers in this episode of This American Life.

*The incentive to over-consume health care (patients are taking us for a ride). Because copays are low, the argument goes, too many people visit their doctor for every minor head cold. Arnold Kling makes the argument here, and disambiguates this hypothesis from some of the others. Don Boudreaux makes essentially the same argument in more aggressive terms here.

*Costs of the uninsured (the poor/unemployed/illegal immigrants are taking us for a ride). The argument is that the uninsured are free-riding on the policies of the insured. Whether this is a good thing or a bad thing depends on who you ask. Whose fault it is is also up for debate. (More here.)

*Costs of the underfunding of Medicare (the government is taking us for a ride). That's right! Because the government is the government, it can require hospitals and doctors to treat Medicare patients, but not pay the going rate for their care. So who pays the difference? Well, the story is that health care providers make it up by charging privately insured patients more. So, potentially this practice could cost the health care provider some profit margin, or it could cost the insurer some profit margin, or it could come out of the pockets of privately insured individuals in the form of higher premiums (or some combination of the three). Uwe Reinhardt rebuts this argument, but to my mind his rebuttal lacks nuance on the question of who makes the price in each market. Remember that the market for health care for Medicare recipients is different from the market for health care for privately insured people (because the rules are different for each of these markets), and that the market for health insurance is a separate market still. In each of these three markets different players hold relative market power, and so have differing abilities to make prices. What I'm getting at is that maybe it IS true that the government sets the price in the first market, the hospital sets the price in the second market, and the insurer sets the price in the third market, with the end result being that the costs are shifted from market to another.

*Insufficient supply of doctors/surgeons/specialists (doctors are taking us for a ride). Regulation and licensing of health care professionals creates a barrier to entry to the health care provider market, keeping salaries artificially inflated, and thereby inflating costs of care. So do Doctors earn too much? Doctors say no. Alex Berenson says yes, as does Ezra Klein. In any case, greater utilization of Physician Assistants could help, especially in routine care where all that specialized training may be under used.

So, what do I think? I think costs are the symptom, not the problem. If the symptoms threaten the patient, then please treat the symptoms! But eventually the underlying illness has to be addressed. More on that in a later post.

Monday, November 2, 2009

Survival of the Most Fit

I know that it's not an original observation, but Too Big to Fail and similar policies to protect people and businesses who do a poor job are seriously interfering with the basic premise of a market economy.

James Kwak has written a post about how Citigroup CEO Vikram Pandit seems unable to present a meaningful description of his business strategy.

It's not uncommon to witness top business leadership governing on ego or otherwise failing to understand the limits of their firm's competency, and value in the market. One of my favorite examples is Daimler Benz CEO Jurgen Schrempp's famously bad decision to acquire Chrysler. The evidence suggests that Daimler's management team had no workable strategy for how to make use of their purchase or how to integrate it into their organization. No meaningful synergies were ever anticipated, nor did any emerge - as was practically guaranteed by leadership's policy against platform and technology sharing between Chrysler and Mercedes. In the end Schrempp was fired and Daimler paid Cerberus to take Chrysler off its hands.

This story perfectly illustrates how a competitive market is supposed to function, with severe chastening for incompetence. Interference in this process, even for the best reasons, will introduce pernicious effects.

Moral Hazard - Moral Hazard is a technical term that means that the risks of my actions are borne by others, not by myself. Moral Hazard explains why innovations in automobile safety systems, like airbags and seat belts, has resulted in increasing risk to pedestrians. It also explains why beach homes continue to be built in locations that put them at risk in the event of a hurricane (because the government has historically bailed out the wealthy owners of these sometimes non-insurable properties).

Picking Winners - When an incompetently managed firm shrinks or dies, an opportunity opens for the most efficient competitors to take market share. Bailing out large incumbent firms that perform badly interferes with the success of other, better run companies who are then forced to compete without the benefit of government backing. It also tends to strangle small upstarts who are bringing new value and innovation to the market. How do you think the founders of Tesla feel about GM being propped up by the government?

Regime Uncertainty - Perhaps most pernicious of all is the effect of Regime Uncertainty. This is a reluctance on the part of investors to put their money into markets, industries, or countries where the rules are not clear, or could change at any moment. Why has sub-Saharan Africa failed to develop? Well, one reason is because people are reluctant to build businesses in a region that suffers from frequent civil war and political tumult. If I build a factory in Tanzania today, will it be destroyed or seized by government tomorrow? Similarly, how willing am I to try to operate a business in any market where the government is making up the rules of competition and ownership day by day? Consider how the government chose to take money from GM's bond holders and transfer it to the UAW.

Systemic risk is a matter of incentives. Too Big to Fail is magnifying the wrong incentives.