The Wealth of Nations and Economic Growth

This is the name of one of the chapters of Tyler Cowen and Alex Tabarrok's new textbook, Modern Principles: Macroeconomics. It is an interesting read and a very clear, intuitive primer into the basics of economic growth, the factors that affect economic growth, the relationship between economic growth and the wealth of nations, and the various differences between richer and poorer nations. The chapter is available (temporarily I believe) online here.

Also, here is a post explaining the differences between this textbook and other Macroeconomics texts.

Staying Home From Work Easier Said Than Done

To combat the spread of the swine flu, Obama had advised workers to stay home if they were feeling ill. Seems simple and logical enough. Thing is: for many workers in this economic climate, missing a day of work is easier said than done. Here is the Economic Policy Institute in an article called "Sensible Approach to Flu Scare Makes No Sense for Many Working Americans."

Problem is, millions of Americans can’t just stay home because they’re under the weather. When EPI looked at corporate sick leave policies in 2007 it found that some 43% of all private-industry workers have no paid sick days. Rather than the common sense precaution the President advices, these workers have a more difficult choice of going to work sick or staying home without pay and risk losing their jobs. In this current climate of high unemployment and even higher job insecurity, workers without any formal sick leave are even less likely to risk taking a day off.

Even more problematic, access to time off for health reasons is especially rare in low-paying jobs. In a 2006 compensation survey, the Bureau of Labor Statistics found that 79% of those earning more than $29.47 per hour had sick time, but only 16% of those earning less than $7.38 an hour had the same benefit.

Universal Coverage, Public Health and Pandemics

Tyler Cowen has a post on how much we should worry about pandemics. In it, he writes:

I say think probabilistically, a concept not prominent in his piece. A one percent chance of one hundred million deaths is, in expected value terms, one million deaths and that is a big deal. Probably the United States is less vulnerable than it was in 1918, but how many people would die in China, India and many other locales? How much disruption to trade, travel, and the world economy would take place? Even in the United States, our public health systems would break down quickly and render many modern medical advances useless (e.g., when would the Tamiflu run out?). Having lots of living space is wonderful, but it pays off only if people stay home from work and that means dealing with massive absenteeism. Not pretty. Better safe than sorry.

I agree with this. Despite the fact that globalization has improved the flow of new medicines between countries and that medical technology is much more sophisticated (especially in wealthy countries) than it has been in decades (this, by the way, accounts for the majority of increases in annual health care expenditures), I do happen to think that investment in public health is a consistently important endeavor and, as Cowen writes, it is better to be safe than sorry.

However, then Tyler uses this point as a jumping off point for attacking universal health care:

The main thing we should do -- invest in public health infrastructure -- is in any case a good idea with many possible payoffs, whether a pandemic comes or not. It is a better investment of money than pursuing the ideal of universal health insurance coverage. I might add that one of the better arguments for universal coverage is simply that it could lead to better monitoring of some public health issues.

And there's where I disagree. As I said, public health is always a good investment. One of the most important investments for sure. Yet, we are not going to prevent the outbreak of new pandemics. Diseases mutate. There's a new strain of the flu every year. Having efficient awareness and technology to combat these manifestations is a big help, but so is having insurance to actually obtain treatment. Is it any surprise that there is a strong correlation between the sick and the uninsured? This is where universal coverage comes in and this is one of its better arguments -- not just to improve public health.

Is Rainwater a Public Good?

Maybe not in Colorado.

While laws about rainwater collection are often murky, Colorado's are quite clear: Homeowners do not own the rain that falls on their property. The Rocky Mountain state uses a convoluted mix of first-come, first-serve water rights, some of which date back to the 1850s, and riparian rights that belong to the owners of land lying adjacent to water. A single person catching rain wouldn't make a difference to water rights holders, according to Brian Werner of the Northern Colorado Water Conservancy District. But if everyone in Denver captured rain, he says, that would upset the state's 150-year-old water-allocation system. The Colorado Department of Natural Resources estimates that 86 percent of water deliveries go to agriculture, which is already stressed by dwindling supplies. And because 19 states and Mexico draw water from rivers that originate in the Colorado Rockies, backyard water harvesting can have widespread implications (of course, the same goes for water that comes from the tap in these regions).

Although it is explicitly stated that one person collecting rainwater probably would not make much of a difference, the implication here is that it is not technically a fully non-excludable, non-rival good.

Brad Delong on the Stimulus

A good read, I tell you.

BERKELEY - Of all the strange things that have happened this winter, perhaps the strangest has been the emergence of large-scale Republican Party opposition to the Obama administration's effort to keep American unemployment from jumping to 10% or higher. There is no doubt that had John McCain won the presidential election last November, a very similar deficit-spending stimulus package to the Obama plan - perhaps with more tax cuts and fewer spending increases would have moved through Congress with unanimous Republican support.

As N. Gregory Mankiw said of a stimulus package back in 2003, when he was President George W. Bush's chief economic advisor, this is not rocket science. Deficit spending in a recession, he said, "help[s] maintain the aggregate demand for goods and services. There is nothing novel about this. It is very conventional short-run stabilization policy: you can find it in all of the leading textbooks..."

I can understand (though I disagree with) opponents of the stimulus plan who believe that the situation is not that dire; that the government spending will be slow and wasteful (whereas properly targeted tax cuts would provide a more effective stimulus); and thus that it would have been better to defeat Obama's stimulus bill and try again in a couple of months.

I can also understand (though I disagree with) opponents who believe that the short-run stimulus effect of the plan will be small, while America's weak fiscal position implies a large long-run drag on the economy from the costs of servicing the resulting debt.

What I do not understand is opposition based on the claim that the stimulus package simply will not work: the government will spend its money, households will receive their tax rebates, and nothing will happen afterwards to boost employment and production. In fact, there is a surprisingly large current of thought that maintains that stimulus packages simply do not work, ever.

This opposition is not coming only from politicians who are calculating that opposition to whatever is proposed may yield electoral benefits; indeed, it does not even reflect any coherent right-wing or indeed left-wing political position. Root-and-branch stimulus opponents whose work has crossed my desk recently include efficient-markets fundamentalists like the University of Chicago's Eugene Fama, Marxists like CUNY's David Harvey, classical economists like Harvard's Robert Barro, gold bugs like the Council on Foreign Relation's Benn Steil, and a host of others.

I simply do not understand their arguments that government spending cannot boost the economy. As far as I can tell, they are simply burying their heads in the sand.

At the start of 1996, the US unemployment rate was 5.6%. Then America's businesses and investors discovered the Internet. Over the next four years, annual US spending on information technology equipment and software roared upward, from $281 billion to $446 billion, the US unemployment rate dropped from 5.6% to 4%, and the economy grew at a 4.3% real annual rate as the high-tech spending boom pulled extra workers out of unemployment and into jobs.

Back at the start of 2004, America's banks discovered that they could borrow money cheaply from Asia and lend it out in higher-yielding domestic mortgages while using sophisticated financial engineering to wall off and strictly control their risks - or so they thought. Over the next two years, annual US spending on residential construction roared upward, from $624 billion to $798 billion, the US unemployment rate dropped from 5.7% to 4.6%, and the economy grew at a 3.1% real annual rate.

In both of these cases, large groups of people in America decided to increase their spending. You can argue that neither group should have boosted its spending to such a degree that both were subject to "irrational exuberance" - and that someone should have taken away the punchbowl earlier. But you cannot argue that these groups did not increase their spending, and that their increased spending did not pull large numbers of Americans - roughly two million in each case - into productive and valued employment.

The government's money is as good as anybody else's. If businesses' enthusiasm for spending on high-tech gadgetry and new homeowners' enthusiasm for spending on three-bedroom houses can boost employment and production, then what argument can Harvey, Fama, Barro, Steil, and company make that government spending will not? I simply do not see it.

Font-tastic Inspiration

The battle for Comic Sans rages on and it is interesting to see where the inspiration for the font came from:

Mr. Connare says he pulled out the two comic books he had in his office, "The Dark Knight Returns" and "Watchmen," and got to work, inspired by the lettering and using his mouse to draw on a computer screen. Within a week, he had designed his legacy.

How sweet!

Rumors

Economics bloggers beware!  It seems that if you are  blogging out of South Korea your stinging criticism of national monetary policy or bailout plans can bring you to court!  In general though:

The government has denied wanting to suppress online freedom of expression, but it has long voiced concern about the influence of Internet rumors. Officials blamed online demagogues in part for huge protests last summer against U.S. beef imports that paralyzed the government for weeks.

I have no doubt that with the growing popularity of economics blogs and alternative opinion sources that some bloggers could become active forces in swaying public opinion, but is that a bad thing and should it be against the law to spread 'rumors' about the government? Luckily the court found the latter question's answer to be "no".

Not Without My Caviar

Just saw this in The New York Times this morning:

The poll found that 70 percent of respondents were very or somewhat concerned that someone in their household would be out of work and looking for a job in the next 12 months. Forty percent said they had cut spending on luxuries, and 10 percent said they had cut back on necessities; 31 percent said they had cut both.

Depressing stuff. But just tell me this: who is this 10 percent? I get having to cut luxuries. I even get that can things get so bad you have to cut both luxuries and necessities. But just necessities? When choosing both is an option on the survey? "Honey, we have to cut back to one sheet of toilet paper per day, but I'll go to hell and back before I sell my Fabergé eggs."

Andrew Leonard is Upset at Twitter-ers

Via Andrew Leonard:

Of course the G-20 summit meeting has a Twitter feed! Who can deny our desperate hunger for 140-character-long updates from a gathering of the leaders of the twenty most influential nations on the planet? When struggling with a global recession, the breakdown of modern finance, the resurgence of protectionism and the changing balance of power between the developed and the developing world, cryptic one-line telegraphic ejaculations are obviously the best way to convey complexity and nuance.

Can Transportation Investment Reduce Income Inequality

Interesting little article from the Economic Policy Institute about a potential effect of investing in transportation and infrastructure development in the American Recovery and Reinvestment Act of 2009. Namely, that it could reduce income inequality. Ethan Pollack explains:

According to research that will be presented at an upcoming EPI event, workers in jobs created or supported by these investments are less likely to have a college degree and more likely to be union members compared to workers in the overall economy. Despite employing workers with less education on average, fewer of these jobs are low-wage jobs. Green investments—including mass transit, but also energy efficiency, electric grid, etc.—result in very similar job characteristics and are thus equally effective at reducing wage inequality.

I don't really have more details than that. It would probably be a small effect. But interesting. Here is the graph, reprinted from the EPI:

Monster Employment Index Declines in March

What a misleading headline.

Who Wants to Bet on the Recession?

Earlier, I noted that Robert Reich predicts that we should see economic recovery by the second quarter of 2010.

Now, here is a poll taken by BBC/Globescan of people's expectations on the recession:



It's pretty even between those who think the recession will last for another two to three years (28%) and those who think it will end by the end of the year (26%).

By the way, Intrade has the likelihood of the United States reaching depression (defined as GDP declining by at least 10% from its peak value between Q4 2008 and Q4 2009) as 18%. The likelihood that the US will hit at least 9% unemployment rate, however, is a stunning 80%. (The current official unemployment rate was about 8.1% in February, according to the Bureau of Labor Statistics).

So again, who wants to take bets?

Money Matters

Surprise! The recession has diminished overall employee motivation and engagement. These days, you hear a lot about the importance of employee morale to the overall success of a business. Indeed, if you were to walk into the Business section of any popular book store, you will see entire shelves of books written by employers and CEOs, outlining critical techniques to boosting employee performance, and hence the overall productivity of the business. One big theory, which has come to be widely accepted, is that the more highly valued the employee feels, the better he or she will perform for his boss. This is why business have spent much time, energy and capital into developing programs and mechanisms towards making their employees feel valuable. Yet, how important are such techniques and how well do they fare in times of recession?

According to the Economist, not so well.

To test whether efforts to boost workers’ commitment were withstanding the recession, Quantum identified 210 companies whose workforces had responded to its surveys in the autumn of both 2007 and 2008. It found that 134 of those firms, or 64% of the total, had lower engagement scores in the second period than in the first. It said this was the first significant decline it had seen for many years.

This will come as a disappointment to some advocates of employee-engagement initiatives, who were convinced such efforts would be pretty much immune to the economic cycle. Such a belief was based on the assumption that people want much more out of a job than just money and other tangible benefits—or “extrinsic” incentives, in economists’ jargon. So in workplaces where employee-motivation schemes had been successfully implanted, cutting or freezing pay and conditions ought to have only a limited impact on job satisfaction.

Unfortunately, it seems as though such "tangible" benefits -- salary, health care, benefits, etc. -- still matter the most.

One reason the Economist offers for the decline in employee engagement (aside from the obvious) is that perhaps the recession hinders employer ability to initiate these sorts of motivation techniques that they would normally in times of economic stability. This makes a lot of sense to me, and intuitively should be a large contributing factor. Motivating employees requires capital. In times of recession, capital is scarce. Hence, employers cannot motivate as they normally would, and overall morale declines.

However, I would like to see a more extensive study that controls for these sorts of variables. I wonder if such a survey could be given to business strictly that are known not to have diminished staff motivation schemes in periods of economic turbulence. This might let us know how effective such schemes really are.

Will the Public Support Nationalization? (I'm Really Asking!)

So Chrysler needs a bailout and Obama has issued an ultimatum to them, along with GM, basically requiring they get their acts together if they wish to be eligible for government aid. But Andrew Leonard asks the question:

The real question is how can Obama say this:

Year after year, decade after decade, we have seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we have reached the end of that road. And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our problems head-on and do what's necessary to solve them....

And this:

It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts.

And not understand that Congress and the American public are sure to ask why Citigroup and Bank of America are not being held to the same standard. Treasury Secretary Tim Geithner's plan to create a market price for toxic assets has been widely lambasted as a scheme to paper over banking sector insolvency. If Obama can force Wagoner to resign, based on his record, then why haven't Citigroup's Vikram Pandit and Bank of America's Ken Lewis been forced to step down? If the White House can declare that GM's bondholders must accept they will not be repaid in full what they are owed, then why aren't Citigroup and Bank of America's debtholders being told the same thing?

Leonard goes on to propose two reasons: one being that Wall Street really runs everything and Obama is doing some pandering. The other is that the Geithner Plan (see previous posts here, here and here) is really just an intermediate step towards nationalization, which is the true goal of the Obama administration. In fact, Leonard argues for the latter, somewhat loftily stating:

Which of these scenarios is more likely to be true? Recent history is on the side of those who believe that Wall Street pulls the strings. Only the course of events over the next few months will tell us whether the alternative explanation holds water. But as I watched Obama speak, I could not shake the feeling that this was a trial run, rather than a sell-out, as preparation for the application of further strong medicine, rather than avoidance of the real problem. He's too smart, and his advisers are too smart, to think that he could go before the American public and criticize the "principle of endless bailouts" without knowing that he would be held to account for those words.

And let's remember that notwithstanding the huge size of GM is and its centrality to the economy of the United States, the logistical complexities and downstream impact of a GM bankruptcy restructuring likely pale against those involved with a Citigroup or a Bank of America. Telling the nation that GM will not survive in its present form has investors selling shares and workers in Michigan and Ohio angry. Telling the world that Citigroup is toast would drop an even bigger bomb.

I would love to believe this, and in fact still have not lost my faith in Obama. However, I hesitate to assert that behind everything that's going on in public, Obama secretly has a master plan free of all hypocricy and error, and that it will all come together in a glorifying moment when the American public realizes that everything was part of the plan. That's like saying we had planned to let the aliens take out New York, Los Angeles and Washington in the film, Indpendence Day, just so we could ultimately unite and beat them. It's entirely possible that Obama makes mistakes...though it's not to say that he did.

The other question, which Ezra Klein asks, is whether nationalization will even be politically possible given the failure of the Geithner plan. Will the American public be willing to support it as a measure of last resort, having exhausted all other feasible solutions? Or will they be so disillusioned by previous attempts at restoring bank assets that they will protest at the prosect of involving more taxpayer funds?

I am not embarassed to say that I simply don't know. I sure hope it's the former, and that there's a grand plan, and that we'll all unite and kill the alien mothership on the moon...

Will Legalizing Drugs Curb Violence?

Jeffrey A. Miron, a senior lecturer in economics at Harvard, thinks that the United States should legalize drugs (and hints also at gambling and prostitution). Many of you have already heard the big arguments for legalization (especially of Marijuana): the Federal government will save money spent on the drug war, collect new revenues from "sin" taxes imposed on drugs (much like tobacco and alcohol) in order to fund health care, education, etc., and possibly even reduce the incidence of drug use (we pursue that which we cannot have). But, Miron argues that a crucial benefit of legalizing drugs is that it could significantly reduce violent crime. Here is Miron:

Prohibition creates violence because it drives the drug market underground. This means buyers and sellers cannot resolve their disputes with lawsuits, arbitration or advertising, so they resort to violence instead.

Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after.

Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it's permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.

The only way to reduce violence, therefore, is to legalize drugs.

Miron then goes out and points out the other major reasons for legalization, most of which you have heard, including: minimizing corruption, enhancing civil liberties, improving national security and foreign relations (this is an interesting one), improving public health, and improving the economy.

Hat Tip: Gren Mankiw.

The Geithner Plan and Congressional Approval

Via the Economist's Free Exchange blog, we have Steve Waldman, who is upset about the Geithner plan's ability to circumvent congressional approval. Here is Mr. Waldman:

In my view, the Geithner's PPIP includes two mechanisms intended to ensure that "private investors" offer substantially inflated bids for "legacy" assets, and the net cost of the plan will be comparable to that of TARP. I might be wrong about that, but I might be right. Much of the risk will be due to loan guarantees offered by the FDIC. Is there any legal basis for using the FDIC this way? Aren't the laws describing how the FDIC is and is not supposed to behave?

And isn't Congress supposed to have the power of the purse? A loan guarantee is a contingent liability, a cost in real terms. Can the US Treasury spend money without Congressional approval, as long as it promises to spend only if a coin flip comes up heads? That's exactly what the Geithner plan (along with the scandalous but already active "Temporary Liquidity Guarantee Program" program) does. Is that even Constitutional?...

It seems to me that committing hundreds of billions of taxpayer dollars should still be considered a serious business. It seems to me that if Congress wouldn't approve the Geithner plan, in a democracy, that ought to have some meaning, and not just get written off as populist outrage and then extralegally ignored.

So I'll ask again, who passed the Geithner plan? What deliberative assembly gave the plan a pass? What's that you say? The stock market went up by nearly 500 points when it was announced on Monday? Oh. I guess the buys have it, then.

First of all, I'm curious as to why Waldman chose to put "private investors" in quotes in the first sentence. Is the implication here that they are not really private investors, which would be a ridiculous claim, or that the $35 billion that the private sector is kicking in for the bailout plan isn't enough, which would be equally ridiculous. I assume the latter is what Waldman is implying here, to which my reply is that I think any larger of a ratio would act as a disincentive for investors to buy up these assets at all, which would ruin the plan before it even started.

On to the main point about Congressional approval. Many folks have been throwing around the term "giveaway," which is understandeable, but there is a considerable difference between offering subsidies directly and offering them in the form of no-recourse loans, which is what's going on here. It is true that this could backfire if most of these assets turn out to be bad, in which case the loans would be forgiven and the government would lose lots of money. On the other hand, if these assets turn out to be good and rise in value, the investors profit, the government gets paid back with interest. This would be good.

Of course, Waldman's concern stems from the uncertainty. There has been considerable outcry from the left and right regarding the effectiveness of the Geithner bailout plan and it seems that the consensus (at least among mainstream pundistry) is that the plan will fail. See Paul Krugman, whose opposition is loud, proud and almost irritating (if not for the fact that the man has attained almost 'do-no-wrong status' in my eyes). So then why commit all of this money to a plan that may or may not work, at best? The reason is because we have to. First, let's recap why the plan is necessary (Congressional approval or not0. I have stated earlier that I think the Geithner plan is a necessary step, politically, in that considering the alternatives (nationalization or the original Paulson plan), it is the easiest to kick-start without causing massive social (and market) upheaval. See Mark Thoma and Brad Delong for more on this. In fact, let's throw in a quote from Thoma, just to drive the point home:

So I do not take a binary (or, I suppose, trinary), either/or approach to the proposals where I think one plan will work and the others will fail miserably. All three plans have their pluses and minuses. The politics of the Paulson plan make it a non-starter, I have no quarrel with the view that it constitutes a giveaway that is not justified, so the only way the Paulson plan will work is if we can convince people that equity stakes or some other mechanism makes the plan sufficiently equitable. I prefer nationalization because it provides a certainty in terms of what will happen that the other plans do not provide, the Geithner plan in particular, but it also appears to suffer from the political handicap of appearing (to some) to be "socialist," and there are arguments that the Geithner plan provides better economic incentives than nationalization (though not everyone agrees with this assertion).

More to the point now, what about Congressional approval? Mustn't the appropriation of all these funds for an iffy plan require a democratic approval process? Well, this is a tricky issue. One that Matt Yglesias actually wrote about several days ago, complaining that the no one addressed the topic. Here's Matt:

One aspect of the Geithner plan that I think people aren’t focusing enough attention on is that unlike the other main alternative approaches, it can be executed without further congressional approval. The reason is that there are federal agencies with a standing authority to make loans. And though the plan does have a potentially giveaway structure, technically what’s being offered aren’t subsidies but no recourse loans. Or to put it another way, the subsidies are in the form of no recourse loans rather than direct appropriations, so the government has the authority to move forward under existing TARP legislation and other laws. That, I think, clearly explains the somewhat byzantine structure of the plan’s operations and is also, if you’re sitting in the West Wing, a considerable advantage over a nationalization plan that would require large additional appropriations to cover the debts of nationalized institutions.

There is the legal side. Of course, as Yglesias notes later, this can be considered much too technical, and almost a cheap way of getting around legislation. However, I would like to argue that given the current economic and political climate, it is necessary to pass this as quickly as possible. As Krugman notes, "Every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost." Is this enough of a reason to warrant such actions by the Obama administration? One can at least argue the case.

Furthermore, and let me just say that the following is not an argument to side-step Congressional approval, but consider the historical use of "presidential prerogative," a term that should be prevalent by now; in the midst of impending crisis, the executive takes measures that often bypass boundaries set forth by the Constitution. Lincoln did it, Roosevelt did it, Bush did it (though the latter isn't the greatest example). Again, it is of course arguable whether such prerogatives are both a) applicable now, and b) whether they are merited at all, ever. Something to think about, though.

Watch Out For Your Pets (And Yourself)

From the WSJ Health Blog:

We found an item in this week’s CDC Morbidity and Mortality Weekly Report inexplicably fascinating: A detailed accounting of the ways Americans trip over their pets.

This is not, as it turns out, a trivial issue: More than 86,000 Americans wind up in the emergency room every year because of falls related to cats or dogs. That’s about 1% of all fall-related ER visits. Nearly 90% of the injuries were dog-related, and females were twice as likely as males to be injured. Here’s more:

Understanding the Banking Crisis and Geithner Plan

For those of you who need some clarification on what's going on in the economy right now, both Brad Delong and Mark Thoma have written some wonderful pieces illuminating the mechanics for the layperson. Delong's is in the form of an FAQ. Thoma compares the situation to purchasing a car under uncertainty. Highly recommended.

Robert Reich on Economic Recovery

Robert Reich says that the economy should see an economic upswing, if even a mild one, by the 2nd quarter of 2010. What's interesting is that his reasoning is predicated more on political cycles rather than economic theory. For example:

A president's party tends to lose seats in the first midterm elections, but Obama knows he can hold on to his majorities if he handles the economy well. Voters respond to economic trends more than to current levels -- to where the economy is heading rather than to where it is. Regardless of how the economy is doing in the months leading up to the midterm election in November 2010, voters will keep Democratic majorities in the House and Senate if they think the economy is on the mend.

That's why the $787 billion stimulus package was designed like a timed-release cold capsule. Stimulus spending will increase through to the end of 2009 and continue full blast in 2010. Although it's too small to restore the economy to full health by Election Day, the stimulus needs only to give the economy enough momentum by then to convince voters it's on the way to being restored.

Remember that Reich was one of those economists that actually warned us last March of recession. Can he do it again?

Let the betting begin. Where is the Intrade commodity market for this?

The Forensic Astrophysics of Superman

Built on Facts

Evolution of Numbers

Marcus du Sautoy has a nice article in the Guardian, offering a brief history of the usage of certain numbers. I found the story of "zero" to be particularly fascinating:

A relative newcomer on the mathematical scene, zero wasn't recognised as a number in its own right until the Indians started exploring its properties in the seventh century AD (they are also responsible for the other nine symbols we use for recording numbers, known as the Arabic-Hindu system). Zero was introduced to Europe by the Italian mathematician Fibonacci in the 12th century - and the authorities were so suspicious of it that in 1299 the government of Florence banned its use.

The Indians' invention of the number zero is directly related to their fascination with large numbers. The Sanskrit saga Lalitavistara gives an account of Gautama Buddha, who is asked at one point to name all of the numbers up to those with 421 zeros. A time-consuming task.

That's right. Zero was banned from use. It aroused suspicion. How badass is that?

Your Awwwww of the Day

From Yahoo News:

A Thai fireman turned superhero when he dressed up as comic-book character Spider-Man to coax a frightened eight-year-old from a balcony, police said Tuesday.

Teachers at a special needs school in Bangkok alerted authorities on Monday when an autistic pupil, scared of attending his first day at school, sat out on the third-floor ledge and refused to come inside, a police sergeant told AFP.

Despite teachers' efforts to beckon the boy inside, he refused to budge until his mother mentioned her son's love of superheroes, prompting fireman Sonchai Yoosabai to take a novel approach to the problem.

The rescuer dashed back to his fire station and made a quick change into a Spider-Man costume before returning to the boy, he said.

"I told him Spider-Man is here to rescue you, no monsters are going to attack you and I told him to walk slowly towards me as running could be dangerous," Somchai told local television.

The young boy immediately stood up and walked into his rescuer's arms, police said.

Somchai said he keeps the Spider-Man costume and an outfit of Japanese television character Ultraman at the station in order to liven up school fire drills.

Thoughts on the Geithner Plan

Paul Krugman is the most noted opponent of Timothy Geithner's "pubic-private partnership" plan to fix the problem of toxic assets. In fact, today he says:

It’s a bit disappointing to see the Obama administration engaging in this sort of market-worship — hailing markets as a Good Thing in themselves, rather than as an often but not always useful means to an end. But I have reason to think that unlike the Bushies, they don’t really believe it; it’s just politics. Which is actually better than having genuine market fanatics running things, I guess.

This recalls a question that our own SevenDollarPen had asked in an earlier post:

Maybe someone can explain this to me. Why does it make any sense for taxpayers to give billions (or more) to these banks and not own the banks? Why are profits privatized and losses nationalized?

Paul Krugman thinks it's all politics. Interestingly enough, despite the fact that I think this is true, I am not entirely opposed to it (though admittedly my knowledge of the situation is somewhat limited). This is a delicate situation that I feel requires a bit of politics. Geithner himself is in a very tight spot. Regardless of the action he takes, he is bound to face criticism from the left and the right. Consider the ramifications of announcing his current plan. People on the left, such as Krugman, fault Geithner--and the Obama administration--for pandering to Wall Street and not being bold enough to advocate a policy of nationalization and public ownership. And although Wall Street jumped with joy at the news, people on the right will still continue to accuse Geithner of supporting big-government. However, would the alternative have been a better direction to go? As Andrew Leonard writes:

On the other hand, just suppose Geithner had followed the Krugman plan, and announced the immediate nationalization of Citigroup and Bank of America on Monday morning. It's hardly a stretch to imagine an ensuing market crash as bad or even worse than what we have already witnessed. And market crashes don't just hurt the pocketbooks of the rich. They wipe out pensions and have an undeniable effect on consumer psychology.

If the stock market goes down, right-wing critics declare that Geithner (and by extension, the Obama presidency) is a failure because "the market" has lost confidence in the administration. But if the stock market goes up, the left wing suspects that's only due to the unfair funneling of taxpayer money to Wall Street. If one constituency is satisfied, the other is bound to be distraught.

Leonard actually goes on to argue that in this climate, it's silly to imagine a middle path that could please everybody. However, I don't think we should be so skeptical of the plan just yet. True, nationalization seems to be the most promising route, supported now by many economists besides Paul Krugman, including Doug Holtz-Eakin, who was McCain's economic advisor during his campaign. Yet, consider Mark Thoma's comments on the matter in a wonderfully informative post entitled "Which Bailout Plan is Best" (Thoma, by the way, is a supporter of nationalization):

I prefer nationalization because it provides a certainty in terms of what will happen that the other plans do not provide, the Geithner plan in particular, but it also appears to suffer from the political handicap of appearing (to some) to be "socialist," and there are arguments that the Geithner plan provides better economic incentives than nationalization (though not everyone agrees with this assertion). The Geithner plan also has its political problems, problems that will get much worse if the loans that are part of the proposal turn out to be bad as some, but not all, fear. So all three plans do the requisite things - get assets off the books and provide recapitalization - and each comes with its own set of political worries.

So I am not wedded to a particular plan, I think they all have good and bad points, and that (with the proper tweaks) each could work. Sure, some seem better than others, but none - to me - is so off the mark that I am filled with despair because we are following a particular course of action.

What do you--the readers--think about the plan? Comments are welcome! By the way, for a very clear analogy of the tenets of the Geithner plan as compared with other bailout proposals (i.e. nationalization and the old Paulson plan), read this post by Mark Thoma, which relates the current situation to cars in a lot.

Stem Cell Research to Produce Synthetic Blood for Tranfusions

Some of the benefits of allowing stem cell research:

Scientists in Britain plan to become the first in the world to produce unlimited amounts of synthetic human blood from embryonic stem cells for emergency infection-free transfusions.

A major research project is to be announced this week that will culminate in three years with the first transfusions into human volunteers of "synthetic" blood made from the stem cells of spare IVF embryos. It could help to save the lives of anyone from victims of traffic accidents to soldiers on a battlefield by revolutionising the vital blood transfusion services, which have to rely on a network of human donors to provide a constant supply of fresh blood.

And...

Scientists in other countries, notably Sweden, France and Australia, are also known to be working on the development of synthetic blood from embryonic stem cells. And last year, a team from a US biotechnology company, Advanced Cell Technology, announced that it has been able to produce billions of functioning red blood cells from embryonic stem cells. But the US work had been held up because of funding problems dating back to the ban on embryonic stem cell work under the Bush administration. President Barack Obama has since reversed that policy.

More Crazy Conservatism

It's actually becoming a bit unbelievable for me to see conservatives gradually being pushed more and more to the right--in the style of Rush Limbaugh. Of course, I've seen extremely right-wing arguments and contentions before, but does it seem to you that they are increasingly pronounced today? Is it because conservatives feel they have to be driven more to the extreme right of the political spectrum if they hope at all of rallying the troops against the new Democrat-run government? To me this seems like a fairly new phenomenon, i.e. a decade ago it seems as though the appropriate strategy at dealing with an opposition party was to pull your ideology closer to the center to attract more voters. Not away to the extremes. See the 2000 election beween George w. Bush and Al Gore for more examples of this.

This is a bit tangential. What I really want to draw attention to is this. Here is something I just stumbled upon over at Conservative Oasis, in a post titled, "Is Hypocritical Logic a Requirement to be a Liberal?":

This is the same logic behind the term “pro-choice”. We all know that one of the two choices is “kill the baby”, but that is too much truth for their purposes. It is unnerving to hear people talk about the right to choose, when it comes to a woman and abortion, then see them outside a prison protesting the death of a serial killer the next day.

First of all, I should note that this particular passage was not the subject of the article, but a mere snippet. Secondly, how could anyone reading this possibly not point out the fact that the same contention applies to conservative ideals as well--that is, how can conservatives claim to be pro-death penalty, but pro-life?

I don't want this to be a long, rambling post about the merits of pro-choice, the complete, utter uselessness of the death penalty, and the tremendous leaps of logic (and hypocritical logic!) that this author takes with this argument (maybe I'll do that later). I just wanted to point out the utter absurdity here.

Forget the Monsters in the Closet...

...this actually frightened me. Terrified, even.

On March 1, ThinkProgress picked up on a story by News Hounds, which noted that Fox News host Bill O’Reilly — who has made controversial comments about rape victims in the past — was slated to speak at a March 19 fundraiser for the Alexa Foundation. The group is committed to supporting rape survivors.

Our post — which never criticized the Alexa Foundation — highlighted the fact that in the past, O’Reilly has implied that women who dress in a certain way or consume too much alcohol should perhaps expect to be raped.

[...]

O’Reilly’s comments about Moore were part of a larger segment about the dangers of drunkenness. His other example was Mel Gibson going on a drunken tirade and yelling anti-Semitic comments. “I think it’s safe to say that if Mel Gibson didn’t get drunk, he wouldn’t be in this terrible situation he finds himself in,” said O’Reilly. “And if a young woman, 18-year-old Jennifer Moore of Harrington Park, NJ, didn’t get drunk, she’d be alive today.”

This weekend, while on vacation, I was ambushed by O’Reilly’s top hit man, producer Jesse Watters, who accosted me on the street and told me that because I highlighted O’Reilly’s comments, I was causing “pain and suffering” to rape victims and their families. He of course offered no proof to back up this claim, instead choosing to shout questions at me.

Read the rest here. Hat Tip to Ezra Klein.

The Real Batmobile

According to CNN (where the above photo was reproduced from), a new cop car prototype has been developed by Carbon Motors Corp, that is so high-tech and sophisticated that it comes equipped with:

300-horsepower clean diesel engine, flashing lights visible from all angles, an ergonomic cockpit, an onboard computer with voice command and instant license plate recognition, integrated shotgun mounts, and more. (Weapons of mass destruction detectors are available as an option -- seriously.)

FYI--the bolding in the passage above was my own doing. Integrated shotgun mounts? Weapons of Mass Destruction Detectors? (Insert obligatory joke about our history with WMD detection).

So, what are the projected costs for these year-3000 supercars? Apparently, they are projected at $50,000 per vehicle. Looks like police across the United States will be needing a bailout.

Hat Tip: Newsarama

Your Weidro News of the Day

I think that maybe this should become a recurring post topic. Take a gander at this:

The principal of South Oak Cliff High School, Donald Moten, was accused by several school employees of sanctioning the “cage fights” between students in a steel equipment enclosure in a boy’s locker room, where “troubled” youth fought while a security guard watched, according to the confidential March 2008 report first obtained by The Dallas Morning News.

Obama Listens to Complaints and Abandons Veterans Private Health Insurance Plan

Remember all that recent hullabaloo regarding Obama's proposal to require that Veterans use private health insurance to cover combat-related injuries, as opposed to the longstanding government insurance, Veterans' Administration, and VA hospitals? Well, it looks like after mounting concerns, letters to Obama from House members (Democrat and Republican) and meetings with veteran group representatives, the administration has decided to drop the plan.

Isn't it great that we have a leader that listenes to concerns of the parties and stakeholders of a particular policy proposal? And one that takes in opinions of all experts, regardless of party lines, before making a decision?

Insurance Fraud

From the Wall Street Journal's Health Blog:

Hospital execs pay kickbacks to middlemen who recruit homeless people for hospital stays that aren’t medically necessary. The hospital bills government insurance programs for the patients’ treatment. In a detail ready-made for film-noir treatment, the hospital is called “City of Angels.”

Dante Nicholson, a former senior vice president at City of Angels Medical Center, pleaded guilty yesterday to paying kickbacks to recruit patients from LA’s skid row as part of a scheme to defraud Medicare and Medi-Cal, California’s insurance program for the poor, the Los Angeles Times reports.

Are Criminals More Ugly?

A quick Freakonomics post points us to a study, which found that lenders might judge how creditworthy an individual is based on how trustworthy his or her appearance is. Though they did not specify which specific physical characteristics accompany being trustworthy, one can guess that it probably involves some sort of societal vision of attractiveness.

This reminds me of an anecdote in a book I am currently reading, called Why We Make Mistakes. The anecdote involved studies finding that, in general, criminals are uglier than the norm. Here is a passage:

Two professors [...] analyzed data from a federally sponsored survey of fifteen thousand high schoolers who were interviewed in 1994 and again in 1996 and 2002. One question asked interviewers to rate the physical appearance of the student on a five-point scale, ranging from "very attractive" to "very unattractive." The professors found that the long-term consequences of being young and ugly were small but consistent. "Unattractive individuals commit more crime in comparison to average-looking ones," they concluded, "and very attractive individuals commit less crime in comparison to those who are average-looking."

Perhaps then there is something to judging a book by its cover, as in the case with lenders. Maybe uglier people will commit more credit fraud. By the way, I have not committed any major felonies and consider myself to be very attractive.

Will the Stimulus Work?

I have no idea. However, there are two very interesting columns today over at Vox. One is by Richard Clarida of Columbia University, who argues that Obama's stimulus might not achieve its desired effect:

What is the source of this concern that the US fiscal package will not deliver a lot of ‘bang’ for the ‘bucks’ committed? Because of the severe damage to the system of credit intermediation through banks and securitisation, policy multipliers are likely to be disappointingly small compared with historical estimates of their importance. Recall the Econ 101 idea of the Keynesian multiplier – the impact traditional macro policies are ‘multiplied’ by boosting private consumption by households and capital investment by firms as they receive income from the initial round of stimulus. It important to remember why and how policy multipliers actually come about. Policy multipliers are greater than 1 to the extent the direct impact of the policy on GDP is multiplied as households and companies increase their spending from the increased income flow they earn from the debt-financed purchase of goods and services sold to meet the demand from the initial round of stimulus.

There is a second reason while the bang of the fiscal package will likely lag behind the bucks. Even if the global financial system soon restores some semblance of order and function, the collapse in global equity and housing market values has so impaired household wealth that private consumption (which represents 60% to 70% of GDP in G7 countries) is likely to lag – not lead – economic growth for some time, as households rebuild their balance sheets the old-fashioned way – by boosting their saving rates. Just in 2008 alone, I estimate that the net worth of US households fell by some 10 trillion dollars, with much of this concentrated in older demographic groups who, in our defined contribution world, must now be focused on building back up their wealth to finance retirement, which is not that far away. This means more saving, less consumption, and smaller multipliers.

Then there is Brad Delong of the University of California, Berkley, who posits that Americans need not fear greater stimulus measures to ease us out of recession:

If the stimulus is going to be ineffective because it generates bottleneck-driven inflation, we can identify that problem as the price or wage of the bottleneck good or service spikes. If the stimulus is going to fail because of capital flight-driven inflation, we will see the value of the dollar collapse as foreign-exchange speculators front-run the capital flight – and then we will see import prices spike and put upward pressure on prices in the rest of the economy. If the stimulus is going to fail by crowding out private investment, we first will see the medium-term corporate interest rates relevant to financing plant expansion spike. And if it is going to impose a crushing debt repayment burden, we will see long-term Treasury bond interest rates spike instead.

Right now, however, we see none of these things. No signs of bottleneck-driven or wage-push inflation gathering force. No signs of approaching rapid dollar depreciation. No signs that the stimulus is pushing up medium-term interest rates on corporate borrowing. No signs that the stimulus is pushing up long-term interest rates on government bonds.

If any of these start to materialise, expect me and a number of other stimulus advocates to start backpedalling rapidly. But so far, so good.

Both these columns are worth reading in full.

Wow

To reiterate: just wow. Here is Matt Yglesias transcribing an excerpt of a Glen Beck conversation:

There was a remarkable segment on Glen Beck’s show yesterday, thankfully captured by Matt Corley in which Beck was basically outlining his view that the reason you see spree killings like the one in Alabama is that conservatives are so deranged, and so racist, that when people point out that they’re being racist they can’t help but fly into a psychotic rage and commit multiple murders. Really:

BECK: But as I’m listening to him. I’m thinking about the American people that feel disenfranchised right now. That feel like nobody’s hearing their voice. The government isn’t hearing their voice. Even if you call, they don’t listen to you on both sides. If you’re a conservative, you’re called a racist. You want to starve children.

O’REILLY: Sure.

BECK: Yada yada yada. And every time they do speak out, they’re shut down by political correctness. How do you not have those people turn into that guy?

O’REILLY: Well, look, nobody, even if they’re frustrated, is going to hurt another human being unless they’re mentally ill. I think.

BECK: I think pushed to the wall, you don’t think people get pushed to the wall?

Dr. Mario on Universal Health Care

Could be one of the funniest things I've read in a while. From McSweeneys:

For nearly two decades, I have been a resident doctor at the Mushroom Kingdom Hospital, in the Division of Virus Research. Patients depend on my Megavitamins to eradicate a seemingly never-ending stream of horrible viruses. Under a microscope, the viruses appear multicolored, with gloved hands and feet. Sometimes, they appear to have demonic faces. In my nightmares, they laugh at me.

The other day, Nurse Toadstool and I talked in the break room over reheated mushroom casserole. She appeared sad. She mentioned turning a Goomba away because his health insurance wouldn't give him enough gold coins for treatment. Then I realized why the same viruses continue to appear again and again. Each time we turn a patient away for financial reasons, not only are we denying care to the poorest creatures, who often need it the most, but we're putting the disease back into the world, where it continues to spread. Furthermore, the patients I do treat get hooked on my expensive medicine. Mushroom Kingdom's health-care system has turned into a sick, addictive game.

Are we under one of Bowser's spells? A basic human need like health care should not be monetized. Even our pack dinosaurs and humanoid mushrooms deserve coverage—a healthy workforce generates more points and 1-ups, increasing the chances of long-term gameplay for everyone. Clearly, a forward-thinking health-care plan, as seen in other gaming systems, some of which I will outline below, is the right choice. Yet even Princess Peach is full of disinformation on the subject. Why? It's me, Dr. Mario. Fueled by my own self-interest, I prescribed my medication, wrote articles promoting it in respected publications, and played right into the HMOs' greedy hands. Here are some of the myths I shamefully propagated.

MYTH ONE

Mushroom Kingdom has the besthealth care of any gaming world

Consider the hostile planet Zebes, which the female warrior Samus liberated many years ago. The Metroid viruses native to that planet are as nefarious as they are diverse. Among the viruses cataloged are Side Hoppers, Geegas, and fire-generating Gerutas. But Zebes, a planet larger than the Mushroom Kingdom, has reformed its health system. Free help comes in the form of Chozo statues. Is there a waiting period to receive this help? Yes, and oftentimes one needs to fire a rocket at a red door just to get treatment. It's a small nuisance when you consider that you get an energy orb that grants full life. Not even my Megavitamins can make that claim.

MYTH TWO

Universal health care wouldcost us too many gold coins

In Sonic the Hedgehog's idyllic, vibrant landscape, all a patient needs for protection is one golden ring. If a patient has more gold rings, he gets more coverage. There are no hidden fees. At my hospital, the real cost is when the game is over. No one wants to play Dr. Mario's Paperwork Party, yet that's what I must occupy myself with when all the viruses have been killed. A study in Nintendo Monthly estimates that our administrative costs are three times higher than those in the most efficient worlds (i.e., World of Warcraft, Fallout, and SimCity). The single-payer multiplayer system would take care of these overheads.

MYTH THREE

A government-run plan soundsa lot like what Bowser wants

The king of all Koopas would love to take over every hospital in Mushroom Kingdom, to use them to extract Peach's DNA or create a horrific suit that looks like me to trick the princess. But government-funded doesn't mean government-run. I propose that we set up an oversight committee that would reside on Star World, a place linked to all of our lands. Its doings would be filmed by one of those Lakitu creatures, the sometimes-benevolent Koopas that fly in clouds. This committee would keep watch over the providers. It would see that free Megavitamins were distributed. Finally, it would research new health innovations, such as the powers of the rare Super Mushrooms.

- - - -

Hopefully, I have presented enough facts to explode these common myths. Time is running out, and we're far from a checkpoint. Every major video-game franchise except the Mushroom Kingdom has a system that guarantees health care to its citizens. It should be a major concern that strength in Super Mario Galaxy is gained through the collection of gold coins. We must have free Megavitamins, easier access to refills, and less-time-consuming ways to defeat the viruses. If we stay healthy, we can go on more adventures. And since staying healthy is the ultimate benefit of universal health care, I'll gladly give more of my tax money to the government. No cheat codes necessary.

What Exactly Will This Do?

Creating websites specifically for environmental initiatives doesn't seem like it will do anything productive but create more information to sift through on the big WWW. I can see it being a symbolic move to induce large companies to have an internet presence to their environmental initiatives, but even so this seems that the .eco sites will be a 'dump' to relegate public face programs as 'net service'.

Obama's Budget

Via Laura D'Andrea Tyson, writing for the WSJ:

Critics charge that President Obama's tax rates for high-income earners will strangle small business and stifle economic growth. Such claims are misguided or disingenuous. A full 97% of small businesses will see their rates unchanged or enjoy additional tax benefits under the Obama plan. And the strong expansion of the 1900s proves that the tax rates on income, capital gains and dividends in the Obama budget will support rapid economic growth and substantial income gains at the top. Moreover, the higher tax revenues resulting from these rates will reduce the deficit by about $750 billion, bringing it down to an average of 3.9% of GDP over the next 10 years and to 3.1% of GDP by the end of the decade. This compares to an average deficit of 3.6% of GDP between 1982 and 1997, when the Dow Jones Industrial Average increased by 835%.

In addition, the president proposes to limit the deductions for dependents, charitable contributions and other expenses to 28%, the top rate for such deductions under Ronald Reagan. Some critics claim this is class warfare. But why should a family in a higher tax bracket get a bigger break on expenses than a middle-class family? And restoring this limit to its Reagan level will raise enough revenue to cover about half of the $634 billion reserve President Obama needs to finance health-care reform with the other half coming from savings in health spending. These savings include competitive bidding in order to reduce Medicare payments to private insurance plans, increasing the Medicaid rebate for brand-name drugs, and strengthening Medicare pay-for-performance incentives for hospitals.

[...]

The president's budget is progressive and ambitious. It will not, however, explode the size of government as some critics warn. If the economy recovers as projected, over the next decade taxes as a share of GDP at around 19% will be lower than they were during the second half of the 1990s, government spending as a share of GDP at around 22.5% will be about where it was under Reagan, and nondefense discretionary spending at around 3.6% of GDP will fall to its lowest level since that data was first collected in 1962.

The Bright Side of the Recession

From "The Recession is Awesome!" via McSweeneys:

Mom and Dad keep talking about this recession and I gotta say: it's awesome! Yesterday, I ate pizza for breakfast, mac and cheese and hot-dog cubes for lunch, and then more pizza for dinner! Mom said that I could eat as much McDonald's as I want, and she even offered to leave me there in the ball pit for an entire day while she went and looked for new jobs! Awesome!

Every day after school, I used to go to violin lessons, but now Mom says I don't have to go anymore! This is so awesome because the violin was so boring and my teacher, Mrs. Calabrass, smelled like the attic and didn't let me drink soda! But now I don't have to deal with Mrs. Calabrass or listen to stupid Brahms with her! I hate the attic—but I love this recession!

We'd planned to go to France or something for our family vacation. But now, since it's the recession, we're all going to Gilbert's Goofy Park and playing minigolf and going on the go-karts! And even batting cages maybe, too! I don't think France has any batting cages or go-karts, so this is an amazing, amazing thing! I think if I'm good I can probably eat pizza at Gilbert's Goofy Park! I love pizza and I love this recession!

Dad's been home so much recently and it's been awesome! He just wears underpants and watches sports highlights and eats Cooler Ranch Doritos, which sounds super fun! I have to go to school, so I only get to see him when I get home, but yesterday Dad and I played Xbox together for six hours! He started off pretty good at the games, but each hour he got worse and worse, and soon he started making weird noises! He even started saying his words all slow and jumbled like a crazy man! He's really having a good time in this recession! So am I!

We used to have to drive like a gazillion hours in the car to get to Grandma's weird big blue house with no TV, but now Grandma drives her new house over to us in her new RV! It's amazing! I totally didn't know cars could also be houses and have stoves and have TVs, but they can! Grandma has it all thanks to the recession. And so do I!

Man, I hope this recession never ends. Me and my friends always high-five each other when we hear an older person say, "Not in this economy," because we know it always leads to something awesome for us! This is the best childhood ever! I could live like this for the rest of my life!
I love this recession!

Very Good Sentences

"There are obviously many things that do not kill or use guns and who are not Batman, ranging from other comic book characters, like Detective Chimp, to people, like Gandhi, to inanimate objects, like my stapler."

-Jason Southworth, "Batman's Identity Crisis and Wittgenstein's Family Resemblance, Batman and Philosophy: The Dark Knight of the Soul, 2008

Economics is Hip

Apparently economics is seeing a wave of new prospective students eager to be the next tenured econ-blogging superstar.

At Ohio's Oberlin College, registration in undergrad economics classes is up 25 percent this year, and the chair of the department says he's never seen anything like it. Host Robert Smith finds a similar surge in the classrooms of American University and across the country. So is undergraduate economics getting sexier? In a word: yes.

So when picking out that new grad school consider going into economics--everyone else is doing it.

(Fortunately, the loans you'll most probably be taking out will be payed off with stronger dollars once you get out of school and us all out of this recession with your economics know-how)

The Value of Education

It's pretty valuable.

But an undergraduate degree has become—and graduate degrees are becoming—an important qualification. Students obtain one, because without it they'll be unable to get an interview for most of the best jobs in the country. If everyone could spontaneously agree that students should attend school only up to the point at which the value of the actual knowledge gained exceeded the cost of tuition, then we could dispense with much of this unnecessary rigmarole. Since that's unlikely to happen, the optimal individual decision is to get the undergrad degree, and then often to get a graduate degree, as well.

And if you're going to go back to school, now is the time to do it. Not only is the opportunity cost of the time spent extremely low—wages aren't likely to rise any time soon, and there may not be a job available anyway—but so to is the opportunity cost of the money invested. What, you'd rather have that tuition sitting in the market right now? Or in a home?

Go to grad school, folks!

Do Security Cameras Deter Crime?

Apparently not, according to this latest study from NYU.

By looking at crime rates within the two complexes and in Manhattan’s 13th Precinct, which encircles them, two researchers said that their statistical calculations showed no persuasive evidence that the installation of cameras reduced the crime rate in Peter Cooper Village from 2002 to 2006. However, there was stronger evidence for a drop in minor crime at Stuyvesant Town. There was not meaningful enough information available on more serious crime in the complexes.

I always suspected that this would be the result. It seems to be that it is common knowledge now that security cameras in most stores do not really serve much of a purpose other than alerting prospective criminals that they are being watched. I think that several stores do not even record what the cameras are filming. I, for example, worked in retail for several years during high school and know that the store's security cameras, while relaying to a small television in the back office, did not actually tape anything. If it were recording, then perhaps the cameras could serve the dual purpose of deterrence and providing evidence to police should a crime occur in the store. Yet again, it seems many or most stores are not so interested in the latter.

I wonder what would happen if the sample were extended to a larger frame than just the two designated regions. I mean, I do not think that it is entirely unreasonable to assume that certain areas might consist of more individuals that commit more crimes out of necessity, who would be less willing to be deterred by the sight of a camera. But this is just speculation.

Fortune's Most Admired Companies

Fortune released its list of top 50 most admired companies. Apple being number one did not surprise me one bit, nor did Google being close to the top of the list. Still, it's an interesting list. I would have figured that AT&T would be higher than 48, with the boost associated witht he iPhone.

O Canada

From today's Economix:

If unemployment continues to rise over the next few months in the United States, as predicted, many families will lose their health insurance coverage or struggle to pay premiums they can ill afford. By contrast, increased unemployment won’t reduce Canadian access to health care.

As the economist (and fellow Economix blogger) Uwe Reinhardt explains, the single-payer Canadian health care system delivers very good results for about half the per-person cost of ours — with huge savings from reduced paperwork. Economic disparities in access to health care are significantly lower there.

and...

According to latest estimates from the Organization for Economic Cooperation and Development, a married worker earning the average wage, with two children, could expect 78 percent wage replacement in Canada, compared to 52 percent in the United States. The differences are even greater for those earning higher than average wages, because of low benefit ceilings.

The recently passed Economic Stimulus and Recovery Act offers incentives to states to expand unemployment provision to part-time workers and to those leaving jobs for “compelling family reasons.” The Canadian unemployment insurance system offers more comprehensive family benefits, including paid sick leave, paid compassionate care leave, and paid maternal and parental leaves of up to 50 weeks. Many American workers aren’t even eligible for the 12 weeks of unpaid family leave guaranteed by the Family and Medical Leave Act — although President Obama promises to change that.

Finally...

There’s no evidence that Canada’s public provision of health care and social benefits has reduced its economic growth, and the federal budget just presented is the first to show a deficit in 11 years.

What explains more support for public spending there? Slightly lower income inequality may encourage slightly more solidaristic policies. Such policies, in turn, reduce income inequality. The French social-democratic traditions of the province of Quebec exert a distinct influence. The Canadian political scientist Keith Banting argues that explicit efforts to develop a strong but multicultural national identity have strengthened norms of mutual support.

Bad Television Parenting

In a post entitled, "Why Are There No Good Parents on TV," Lisa Belkin of the NYTimes Magazine says the following:

Bad parenting, I can’t help noticing, is the only kind of parenting on television. An anthropologist with just our TV programs to go by would think that most of us at the turn of this century have no children, and that those we do have tend to go poof when they become complications (What happened to Molly in “Heroes”? Or JD’s son in “Scrubs”? Why doesn’t Chloe ever call the baby-sitter on “24″?) The smattering of kids allowed to stick around are being raised by self-involved, clueless, overly permissive (or overly militant), absent (or hovering) parents. This is true whether the characters are fictional (”Gossip Girl,” “Desperate Housewives”) or “real” (”WifeSwap,” “Jon and Kate Plus Eight”).

I certainly can’t claim to watch every show out there (and please send me examples of where you see this trend, or not) but from where I sit, it has been a while — since the days of The Bill Cosby Show, and One Day at a Time, and, before that, The Brady Bunch and the Partridge Family — since a parent on television spent much time actually being a parent. They might not have done it realistically back in those days, but at least they did something that resembled parenting.

I think that shows are simply different than they were ten or twenty years ago. Taking her own examples, what notable difference can you point out between shows such as "Scrubs," "Heroes," and "24" and shows like "The Bill Cosby Show," "The Brady Bunch," and "The Partridge Family?" Well, the former are clearly not shows about the daily lives of a typical (or in some cases, comedically eccentric) American family. "Scrubs" is about the life of several hospital employees, with the show's focus centered around the hospital and not the family unit; "Heroes" is about a group of ordinary citizens all over the world who cope dealing with superpowers (and speaking of which, I think that there are plenty examples of good parenting in this show--at least in the first season: think of Claire's mother and father, persistently trying to protect her from harm as she struggles with her newfound abilities); and "24" is...well you get the idea.

The point is that most television shows today (at least the popular ones) are less concerned about the every day trials of the family and more with bestowing upon their viewers elements of the fantastic or the unexpected. "House" is a great example of a show that takes elements from previous doctor/hospital stereotypes and flips it by marking the protagonist as a misanthropic, rude medical maverick--in many ways opposed to the expected archetype of the caring, nurturing healer. This is why most families you see on TV today are unusual and differ from the "good" parents of yore.

The question really is why the American public has grown so tired of seeing those American families in their daily lives. Is it simply that we've become oversaturated and bored with the same overt attempts at teaching us morality? Is it that storytelling has evolved to more creative, stimulating plateau? Or is it reflective of the fact that Americans are simply less concerned with family values than they were a decade ago. Personally, I think it's some combination of the first and the second.

Donorschoose.org

I'm sure this is old web news, but as someone who values education I wanted to post this so everyone could check out the program and possibly find a project that they would want to support.

Not only is this a brilliant example of using technology toward positive social change, by connecting donors with projects in need of funds it provides at least a glimmer of transparency and accountability in our education system--something not often found with programs that tend to dump money on schools instead of holding teachers accountable for results and ensuring quality educations. If there were a mechanism that could maintain the flow of funds to projects that needed through public channels more efficiently than at present, I would welcome it.  Far too often the stories of underfunded schools that deserve a chance and over funded administrative waste in others pervade our educational system. Until then, it is comforting to see highly motivated social capitalists and the programs that they build moving to fill in the gaps of our nation's state educational systems.

The bottom line: DonorsChoose it is great mechanism for change and should provide a boon to our country's needy schools.

A Rose By Any Other Name

Blackwater stresses that their recent name change is part of a reorganization of the umbrella company's priorities--a shift from direct armed engagement to training. The new conglomerate, Xe (zee) may have a new name, but must carry with it the burden of atrocity, stigma of being an accomplice to a misguided invasion and draconian methodology that (hopefully) lives in the history books.

More Phelps

If Michael Phelps were to have committed his egregious infraction in Newark, NJ later this year, he would've fallen under the jurisdiction of Mayor Cory Booker's community courts. These courts, the first of their kind in New Jersey, allow local residents to decide if low-level drug infractions warrant public community service.

Instead, South Carolina police are spending money, time and resources trying to put him in jail, where Phelps would be unnecessarily taking up more state money, time and resources.

Good News! Cancer Risk Assessment Is Here...

...but only if you're white of course. It looks like the National Cancer Institute released a snazzy, fancy online protocol that helps people identify their approximate risk for colon cancer. The catch?

The catch is that it only works for whites.

That’s too bad, since blacks are at higher risk than whites for colorectal cancer, developing it and dying of it at higher rates, and recent reports suggest the racial gap is widening.

The new screening tool, developed by the National Cancer Institute and available at www.cancer.gov/colorectalcancerrisk, asks roughly 20 questions, the first two about race and ethnic background.

If the user answers “Hispanic” or “Black or African-American,” a box of red text pops up that says, “At this time the risk calculations and results provided by this tool are only accurate for non-Hispanic white men and women ages 50 to 85.” The text refers readers to another Web site for more information.

Financial Incentives for Smoking Cessation

A new study published in the New England Journal of Medicine observes that when given a financial incentive, smokers are more likely to quit for a given period of time. In particular, smokers were three times more likely to quit for six months when given approximately up to $750.

This raises several questions regarding study methodology and psychology. The question that sprung quickly into mind was how the payment structure worked. Were study participants paid after completion? Were they paid in advance? Was the payment in the form of a monthly stipend pending proof of smoking cessation? Each of these structures, of course, would have a vastly different effect on the outcome and provide different inferences about the human condition. Surely, for example, if a person were to be paid upon completion of a study, he or she would be more likely to quit smoking. I know that this is not exactly the point of the study -- rather it is more of an economics question to see generally how large the incentive would have to be for smokers to temporarily cease their bad habit. Yet, I am actually fascinated by the psychology underpinning this issue.

I took a look at the source study in the NEJM (a note to readers: you may be able to only view the abstract of the study, as I have a subscrition to the Journal). As suspected, the study participants were periodically interviewed and paid part of the total reward during each interview if they had successfully stopped smoking (proved with a cotinine test) and the rest upon completion. This suggests that individuals would accept some form of reward (not necessarily financial) to temporarily relinquish a bad habit, but I wonder what would happen if the study were expanded for a significantly lengthier period. Suppose the investigators tracked participants for a decade, two decades, etc and offered a substantially larger reward for completion. What if these participants were paid a monthly stipend rather than a lump sum? Would smokers permanantly give it up?

My guess is not. In general, I think, individuals are willing to accept small probabilities of harm or death for small rewards (i.e. jaywalkers accept a small chance of getting killed by a car in order to save a few seconds of time). Conversely, individuals might be willing to accept small monetary rewards to spare some temporary pleasures (cigarette smoke), but are probably not as likely once the magnitude of the risks and rewards are increased.