Wednesday, June 30, 2010

Difference Between Humans and Animals, Part VIII

Pointed out by Tyler Cowen, I've come across not another difference, but a similarity. This comes from David Hume, an 18th century Scottish philosopher in his Treatise of Human Nature:
It is plain, that almost in every species of creatures, but especially of the nobler kind, there are many evident marks of pride and humility. The very port and gait of a swan, or turkey, or peacock show the high idea he has entertained of himself, and his contempt of all others. This is the more remarkable, that in the two last species of animals, the pride always attends the beauty, and is discovered in the male only. The vanity and emulation of nightingales in singing have been commonly remarked; as likewise that of horses in swiftness, of hounds in sagacity and smell, of the bull and cock in strength, and of every other animal in his particular excellency. Add to this, that every species of creatures, which approach so often to man, as to familiarize themselves with him, show an evident pride in his approbation, and are pleased with his praises and caresses, independent of every other consideration. Nor are they the caresses of every one without distinction, which give them this vanity, but those principally of the persons they know and love; in the same manner as that passion is excited in mankind. All these are evident proofs, that pride and humility are not merely human passions, but extend themselves over the whole animal creation.
Here's part one, two, three, four, five, six, and seven of this continuing series.

Tuesday, June 29, 2010

Takeaways from Madison's Montpelier, Part II

This is the second post in a series about my experience at the Center to for the Constitution which is located on the grounds of President James Madison home. The first post in the series can be found here. I should remind you, these are my thoughts on the week, not necessarily those of the center. That said, here is part two of my takeaways:

Education is not about making students more like the teacher. Instead, it's about bring out what is already inside the student.

One way to win a debate is the control what is debated. James Madison was an expert in this. Not only did he write George Washington's inaugural address, he also wrote the House of Representatives' reply and then wrote Washington's reply to that.

Every revolutionary wants to be the last one you ever need. For that reason they are establishment oriented. In fact, they may even be the next opposition to the next revolution.

You should have the social freedom to not be passionate.

You should feel the personal freedom to not know if you're right.

Republics should not be concerned with what the majority want. Americans today don't understand this.

Believe it or not, it was generally accepted at the conference that George H. W. Bush was the most Constitutional president of recent history. Meaning that he allowed Congress to make law while he enforced it.

Politicians who run on an anti-government platform will probably not be able to effective use the position.

Maybe the most important question for a potential president: how do you interpret Article 2 of the Constitution? That is, what do you think your job is?

People who don't know their job, start to do other people's job, all the while neglecting theirs. This is true for presidents and principals.

One speaker stated that "the opposite of slavery is not freedom, it's citizenship". I haven't decided if I agree.

Constitutional citizenship has a very Old Testament covenant feel. Americans/Christians are people of the book.

Almost all Americans are mostly unfamiliar with what the Constitution says, even me.

Madison's original plan for the Constitution was much more like a parliamentary system.

We should not pledge allegiance to the flag. We should pledge allegiance to the Constitution. For me that is better, but I'm still uncomfortable. Is there anything worth pledging your allegiance to? God? Family? Community?

Government will always be bound by, and must work within, human nature. This is why I am weary about governmental action, it is very unnatural (in the biological sense of the word).

Patriotism is something I only vaguely understand. No matter what most people say, I think that is true of them as well.

Five out of the first six presidents were from Virginia, partially due to the 3/5ths Compromise.

To James Madison the Bill of Rights were not needed because the government was already limited from taking those specific rights. In fact, he worried that by listing them future generations would assume those were the only rights specifically protected.

The role of the government is to provide "comfortable preservation" for its people. Nothing else.

If I asked you where you were from what would you say? Most likely you'd name the state where you live. That's American states' rights culture at work.

Habits are simultaneously one of man's greatest weaknesses and strengths.

In a meeting, the most prepared get their way.

Frederick Douglass on education: "Once you learn to read, you will be forever free."

South Carolina, Case Study for Democracy's Failure

I've always been clear about my lack of faith in the power of democracy to create desirable government. Whether it's celebrating political apathy and the benefit it brings or explaining the less than honorable reasons why I or the millions of other people voted, I'm clearly not a fan. Recently, my home state of South Carolina presented us with a real world example of the main problem with democracy.

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Alvin Greene Wins South Carolina Primary

In case you didn't figure it out, the problem with democracy is the voters.

Monday, June 28, 2010

Takeaways from Madison's Montpelier, Part I

I spent last week in the foothills of Virginia at James Madison's home, Montpelier. I attended a tour and lecture series, along with forty other social studies teachers from around the country, on "James Madison and Constitutional Citizenship". I should preface with a reminder that these are my reflections on the week, not those endorsed by the center. That said, here's the first part of my takeaways:

 Because the trip was paid for by the National Endowment for the Humanities (am I a hypocrite?), we were reminded that we were here "in the interest of the American people, at the expense of the American people". Now if we can just get our students to believe that.

Answering the wrong question with the right answer is still wrong. Figure out what needs to be figured out.

Government is not oppressive, the people are.

All learning is counterintuitive, if it wasn't you'd already know it.

Ignorance in the mind is tyranny in the state.

The US Constitution is written in the present tense. We are "We the People". Or as Jefferson put it "the earth belongs to the living".

It makes much more sense for the president to take his oath of office on the Constitution than the Bible.

James Madison, unlike his more famous counterpart Thomas Jefferson, was a powerful speaker not because he was overly emotional or great with language, but because we was well read, well prepared, and well respected.

If you are considering a law, first ask yourself: "is the problem worth coercion". Sometimes it is, sometimes it isn't.

James Madison, "the father of the Constitution", did not want the rhetoric of the original drafters of the Constitution to be used to interpret it in the future. He wanted the Constitution to be interpreted by each successive generation. This really calls into question the phrase "strict constructionist". This can be seen in how Madison deals with the National Bank over time.

Who benefits from complicated constantly changing law? Lawyers.

We discern truth by holding it up to every argument. We then are the jury.

Madison is America's best pragmatic reformer. Guess who's second best?

There is value to be found in the gray. Black and white issues are easy, embrace the complicated.

"Common sense" comes from our common heritage.

Though the founding fathers did not free slaves, it was probably politically impossible, they made sure not to protect its future. In fact, the 5th Amendment even applied to slaves.

When Madison speaks about tyranny he knows what he's talking about. On slave holding Montpelier, he is a tyrant.

To Madison, prudence is the most important characteristic of a good citizen. Mine would probably be indifference toward issues that don't concern you.

Not only was it legal, but also possible that Marquis De Lafayette, a french born American citizen could have been president. Here's Article II, Section 1, Clause 5: "No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution".

The Tea Act, which eventually led to the Boston Tea Party, actually made tea cheaper to the colonists. It was the smugglers that would be hurt by it.

In nature we are all equal. We must agree on that before we create a political system.

One speaker asked this question: "Do you love your ideology more than you love your country?" I'm not sure what my answer would be.

The point of being a representative republic was to prevent mob rule. In the 1700's the mob was the lower class.

One of the most unique things about America is that we made ourselves.

The Constitution is the past restraining the present from harming the future.

Monday, June 21, 2010

High-Frequency Trading is Good

A couple of years ago I called into a local radio station to defend oil speculators. Today it's high-frequency traders:
Every innovation of this type makes the market more efficient. ... The faster we trade, and the more people you have trading, any aberrations that exist in the market are taken out of the market really really quickly, which makes for a fairer market for all participants ... Those prices are about as fair as they could be.
Here's a good video description of what exactly what HFT is.

Sunday, June 20, 2010

Emptying the Bottle: Late-June '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
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Saturday, June 19, 2010

Moral Reasons for Immigration

I recently a list of legitimate concerns about increasing immigration into the United States. Here's where those same reasons are used to convince America to bear those costs:
The argument I want to raise today is that even if you're among the net losers, you have a moral imperative to favor permitting lots of new immigrants to enter America legally, because at some point in the past, your ancestors arrived here from somewhere, and on doing so they imposed costs on the people already here. It is hardly fair, now that you've reaped the benefits of past immigration, to restrict others from doing the same.

This argument is particularly compelling because odds are when your ancestors came to this country, the burdens their arrival imposed on the folks already here was many times greater than anything you'll face today. The Europeans who initially came to this continent spread diseases that wiped out Native American populations -- and the ones who survived disease were often kicked off their land or even brutally killed. Folks of Irish ancestry who complain that their cities are overcrowded today should read about New York City tenements during the biggest wave of immigration from Ireland. Are you worried about immigrant gangs like MS13? So am I, but it's doubtful that any imported criminal organization will prove more burdensome than the Italian mafia or the organized crime families that exist in many other ethnic groups that immigrated to the United States.

Name any problem associated with immigration today, and odds are it was much worse at some point in the American past -- and our ancestors grappled with those problems despite living in a country many times poorer than the America of today. Unless you're a Native American, fairness would seem to demand that you don't favor restrictionist immigration policies that, were they in place when your ancestors came, would've prevented their arrival and your status as an American today.

Friday, June 18, 2010

Costs of the Financial Crisis

Are not as much as you might think:
Are financial crises costly? To answer this question, one should not look at the cost of a bailout, a drop in GDP or missing tax revenue, but at what people care about: consumption. In this regard, the current crisis is too young to be analyzed, but other ones are available. Two recent papers look at this for Japan and Norway.

Yasuyuki Sawada, Kazumitsu Nawata, Masako Ii and Mark Lee use panel data from Japan that spans over the 1997 banking crisis and estimate Euler equation that allow for credit constraints. While in normal times, 7.82% of households are credit constraint, this increases only to 8.44% during the credit crunch. In other words, the ability for households to smooth out consumption was only negligibly affected.

Eilev Jansen studies Norway, but prefers a VAR approach linking current wealth and income to consumption, which appears to work better than Euler equation approaches for the recent years. But again, the impact of the crisis on consumption is negligible: the elasticity of equity income on consumption is 2%.
Like Bernie Madoff scandal, perhaps financial crises may be more about transferring or delaying wealth than an actual destruction of wealth. There's even some evidence that recessions are good for filtering out inefficient businesses and growing those that survive.

Thursday, June 17, 2010

Difference Between Humans and Animals, Part VII

In the first post of this series I suggested that trade, maybe I was right. From the Economist Magazine:
humans are the only species capable of innovation. Other animals use tools, and some ants, for example, do specialise at certain tasks. But these skills are not cumulative, and the animals in question do not improve their technologies from generation to generation. Only man innovates continuously.

But what makes us unique?

Some have suggested that perhaps it is the chemistry of big brains that leads us to tinker. Others that man’s mastery of language or his capacity for imitation and social learning hold the key. Mr Ridley, a zoologist by training, weighs up these arguments but insists, in the end, that the explanation lies not within man’s brain but outside: innovation is a collective phenomenon. The way man’s collective brain grows, he says cheekily, is by “ideas having sex”.

His own theory is, in a way, the glorious offspring that would result if Charles Darwin’s ideas were mated with those of Adam Smith. Trade, Mr Ridley insists, is the spark that lit the fire of human imagination, as it made possible not only the exchange of goods, but also the exchange of ideas. Trade also encouraged specialisation, since it rewarded individuals and communities who focus on areas of comparative advantage. Such specialists, in contrast with their generalist rivals or ancestors, had the time and the incentive to develop better methods and technologies to do their tasks.
Not only is our ability to hold this new information increasing, but the internet allows the storage and dispersion like never before. Here's part one, two, three, four, five, and six of this continuing series.

Wednesday, June 16, 2010

Learning by Teaching: AP US Essays

After my AP US Exam was given, we had about a month left before taking the state exams. So I assigned some research papers. Here are some things I learned while grading them:

Tuesday, June 15, 2010

How Superstitions Begin

In a famous experiment with pigeons, an automatic feed is set to release at regular intervals with no relation to behavior. This resulted in tricking the birds into repeating the action they did when food is first released:
One bird was conditioned to turn counter-clockwise about the cage, making two or three turns between reinforcements. Another repeatedly thrust its head into one of the upper corners of the cage. A third developed a 'tossing' response, as if placing its head beneath an invisible bar and lifting it repeatedly.
This has got me wondering not only what my superstitions are, but what first caused them. Here's a 10 year old girl that refuses to let a shark bite make her superstitious. Just as interesting, apparently luck helps when you believe it. Also related, here's a TED talk by the publisher of Skeptic Magazine on why we believe strange things.

Monday, June 14, 2010

Embracing Mistakes

Though I'm not normally a sports fan, it's been hard to avoid the attention of the World Cup. One of the biggest stories comes from America's tie with England, mostly thanks to a missed block by English goalie Robert Green (video here). He has been getting flack from announcers and fans alike. Even traditional sports like baseball and football can become intense in America, but the World Cup seems to be more like the Olympics than anything else. It's a rare combination of athletics and national patriotism. Mistakes not only let your team down, they let your nation down.

The pressure of professional sports is one of thrilling parts of watching, but it is also a good picture of what the real world is like. This Nike commercial does a great job of showing the short and long term international reactions to World Cup matches. Make a mistake and often you are ridiculed by all. Whether it was careless or intentional, it's often treated the same. To admit you're wrong may even make things worse. There is evidence many women prefer arrogant men.

In a recent article in the Boston Globe, the author describes that our mistakes are actually a result of our greatest strength, inductive reasoning. In any given situation, we can determine not just a possible answer, but a probable one. For example when a student stares at their belly button in class, I infer they are texting. In most cases I am right. Every so often I'm wrong. It is our focus on the wrongs that make us less likely to take the chance. Saving face trumps getting it right.

Here is another real life example from soccer (football). Statistically speaking a goalie is more likely to block a penalty kick if they stay in the middle of the goal. However, it is better for a goalie's reputation to fail while diving to block than to fail standing still. So they dive, either right or left. Similarly, it is optimal for the penalty kicker to aim for the upper third of the goal. Though it is more likely to miss the net completely, it is much less likely to be stopped by a diving goalie. Again, most players avoid this strategy because being blocked by a goalie is more honorable than missing completely.

Placing such a higher weight on failures compared to successes greatly decreases the number of successes. Understanding and accepting that our inductive reasonings skills are mostly right can have huge societal benefits. It helps us understand our own failings and be patient with others' failings. Hopefully it will also help us be weary of those who seem to be absent these mistakes, namely celebrities and politicians.

Sunday, June 13, 2010

Breakfast Reminds Us We're Rich

As I've said before, if you're reading this, you're rich. But how do you convince your brain? According to a sleep expert, it's breakfast:
But it's more crucial that you eat breakfast first thing in the morning, in what I call a 'metabolic window'. It's a timeframe in which you can give your body an important message. It tells it that in your world there is an adequate supply of food, it can relax, and that it can fall into sleep mode when it needs to.
The whole article is full of practical advice on good sleep.

Saturday, June 12, 2010

School Teaches Students to Accept Inequality

I give a test every Friday. According to economist Robin Hanson, I'm teaching my students a valuable lesson:
At school, our kids are rated and ranked far more often than most adults will tolerate, even though this actually slows their learning! It seems that modern schools function in part to help humans overcome their (genetically and culturally) inherited aversions to hierarchy and dominance.
Here's how much it changes student perception (links added):
The large majority of 5th graders were strict egalitarians (link), and, remarkably, there were almost no meritocrats (link) at this grade level. In contrast, meritocratism was the dominant position in late adolescence, and the share of strict egalitarians fell dramatically.
I wonder, is this lesson on net good or bad, especially when grading could have a negative impact on learning?

Friday, June 11, 2010

Economics of Happiness

I regularly try to remind my readers (and myself) that life is good:
Individual and societal wealth has increased dramatically over the past 50 years. In the United States, for example, real per capita income doubled between 1970 and 2000.
So why do we have to be reminded so often?
Life on the Hedonic Treadmill leaves us unfulfilled because it does not address the three consistent challenges to contentment: constant change, competing priorities for our time, and financial uncertainty. Constant change presents evolving views of our present and our future which challenge our view of what is important. We ask: What is important to me? We face many competing priorities for the use of our time and the expectation to produce more in less. We ask: How should I be spending my time? Financial uncertainty presented by job worries, market ups and downs and uncertainty about our life in retirement, drive us to greater levels of concern about both our present financial lives and our long-term financial future. We ask: How should I be dealing with money?

The lack of answers provided by life on the Hedonic Treadmill leaves us vulnerable to suggestion, manipulation and misdirection. Many today feel this lack of direction in symptoms ranging from constant, low-level anxiety to a desire to escape to a completely different life. It is no surprise that the lack of fulfillment in our collective lives on the Hedonic Treadmill has produced record levels of depression, obesity and personal bankruptcy.
The solution wise suggested by the author is that you should get off the treadmill and create your own path to your own goals. That way you can see your progress and be satisfied.

Do Economic Sanctions Work?

Just this week the United States government was able to convince the UN Security Council increase economic sanctions on Iran over its nuclear program. As scary as a nuclear Iran can be, there's a lot of evidence that economic sanctions do not have that high a success rate. Here's a chart from a paper from the Peterson Institute for International Economics:

Even getting modest policy changes happen 51% of the time. This is important when you consider just how many nations the US currently has sanctions on. I'm not suggesting sanctions never work, clearly that's not the case. I am suggesting there is a better way, the opposite of sanctions, trade. As I've mentioned before, trading with other nations is more likely to make us allies. Compare our relationships with Cuba and China. The one we have opened trade with has Westernized their economy, and in some ways their culture, radically in the last 15 years. The other is still one of the few remaining completely communist nations. Bad for Americans (cigars and beaches) and bad for Cubans (poverty and tyranny). Sanctions inherently hurt the poor working citizen, where as the political elite, who are actually those we seek to impact, can easily weather financial hardship. You are unlikely to shame them into submission. In fact, economic sanctions may actually be increasing support for those you wish to exert pressure on.

Thursday, June 10, 2010

Emptying the Bottle: Mid-June '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
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Wednesday, June 09, 2010

Practical Reasons to Have Kids

Children are a financial, time, and emotional drain. So why have them? That's a conversation I've been having with my brother-in-law and new daddy, Stephen Jones. I understand having a baby is not a one person decision and sometimes it's not even something two people can easily do. However, I think the non-emotional benefits of having children are underestimated. So here's a list inspired by the discussion:

1) Because of gains from trade, more people is always better.

2) It's a useful tool for retirement.

3) Underpopulation will a bigger problem than overpopulation.

4) Dedication to a child can increase dedication to others.

5) I'm glad I'm born, so I assume my children will feel the same.

6) Parenting doesn't have to be overly exhausting.

7) You get to pass on your genes.

8) It's a regular reminder that the world doesn't revolve around me.

9) Can increase your social connects, which is essential.

10) You get to pass on your last name.

11) Someone you can raise to think like you.

12) You can teach them to love the things you love (and hate).

13) Children will give you the most honest self-reflection you can get.

14) It will speed your own personal growth.

15) It will create a type of friendship that can't exist otherwise.

16) You get to relive your childhood (books, sports, etc).

17) More people regret not having children than having children.

18) It transforms a couple into a family.

19) An perfect excuse for any unwanted social commitment.

20) You can take personal days even if you personally are not sick.

21) You will stay current with culture.

22) Make you more involved with your community.

23) God says you should.

24) Here's one straight from the mouth a new father: "He smiled at me the other day and it felt like everything was right with the world."

25) Sometimes a story is better than facts. So here's a thousand word story:

my new nephew

Tuesday, June 08, 2010

South Carolina Politics in a Single Sentence

Whether it's trying to nullify federal law in the 1830's or Mark Sanford's recent "hiking trip", my home state is rarely seen as a hotbed for mainstream political debate. The most recent controversy is the GOP gubernatorial primary featuring an up and coming, Sarah Palin endorsed, already accused adulteress, Nikki Haley. This article describing the ugly primary quotes from an old state legislator who perfectly describes politics in the palmetto state:
South Carolina is too small to be a republic and too large to be an insane asylum.

Audio Made Visual

Floating around the blogosphere recently is the RSA animation series. Here are a couple of my favorites, with short summaries of each:

Dan Pink: Drive: Humans can sometimes have counterintuitive responses to incentives. Higher incentives can sometimes leads to worse performance when complicated cognitive skills are required. You should pay people just enough to where the issue of money is taken off the table. Is this why I've learned so much blogging compared to my formal education?

Barbara Ehrenreich: Smile or Die: There is a darker side to positive thinking, for example, the sub-prime problems. Also, it's cruel to tell unhappy people it's all in their heads and that they just need an attitude change. Optimism can take away people's initiative to improve things. The speaker doesn't want pessimism, just realism. But isn't that what all pessimists say?

Philip Zimbardo: The Secret Powers of Time
There are three main ways of looking at the world. Through the past (nostalgic), through the present (enjoying the fate you've been given), and through the future (plan so you can succeed later in life or in the afterlife). The more future oriented you are, the harder you work and the wealthier you are (for individuals and nations). One thing school tries to do is teach students to become more future oriented.

Here is a blog that has the other audio talks made visual, like one on altruism and another on empathy.

Monday, June 07, 2010

Honest Concerns About Immigration

I am unapologetically in favor of increased immigration into the United States. Of course I prefer it to be done legally, but when that option is unnecessarily difficult, I sympathize with illegal immigration. It is one of the primary reasons the American culture and economy are great. However, an important part of political debate is presenting the benefits and being honest about the costs. So here is a list of some real flaws with increased immigration:

1) If all limitations to immigration are done away with we could theoretically have billions of immigrants. Why be a poor farmer in India when you be a rich (comparably) dishwasher in America. This would very likely drive down wages for some, especially unskilled, workers. After all the only difference between unskilled Americans and the rest of the world is location. Unskilled Americans benefit that there are some jobs that have to be done domestically.

2) This would shift the world's vast inequality to America's shore. The average wage in America would go from $48,000 to $9,000, though most at the bottom would be new immigrants who would be making more than before. The evidence is unclear, but there is a real safety concern that comes with extreme rich and poor living in close quarters. Also, it's not something the poor want (since comparative wealth is what most people care about). Nor is it what the rich want (since seeing the poor is burdensome).

3) There would be an unequal amount of  one race/nationality, namely Mexico. Because of its relatively close location to America's border and it has relative poverty, there would be (and is) a disproportionate amount of Hispanic immigration. This could lead to a strong division in America. Most immigrants to America assimilate quickly because there are huge benefits to doing so. But if the numbers are large enough and your homeland is close enough, there's a chance the transition would take longer.

4) If Mexican immigrants become a significant portion of the American population, it's feasible that they would  see themselves as more Mexican than American. That is what happened 150 years ago when Mexico liberalized its immigration policy to Texas, something it later regretted. It not only creates political tension, but also racial tension. For better or worse, people prefer to be around people who are like them. Worst case scenario is somewhere between a civil war and Mexican terrorists.

5) There would be an increase cost to social programs compared to the increase in taxpayer money. Most immigrants would be poor, so they would likely take more than they give to the government. Everything from the cost of having more poor (Medicaid, food stamps, unemployment insurance, etc) to bilingual education. In a nation where we want basic necessities to be had by all, this is a real concern.

Like most political changes increased immigration would not be a complete improvement in the lives of all people at all times. Anyone telling you otherwise is being disingenuous. There would be a transfer of wealth from the American uneducated and poor to the world's uneducated and poor. However, I'm confident the benefits to both current and future American citizens would be well worth the previously described costs. Our world is changing faster than it ever has before and that means more improvement, but it also means more painful transition.

Sunday, June 06, 2010

Importance of Secular Counseling

Pastor Ted Haggard is well known for his scandal with a male prostitute. He is less well known for his humble and honest personal response to situation. Even going as far to publicly call himself a "a deceiver and a liar". He says he struggled for years, with small bouts of "freedom" every so often, but no real relief. In an interview he wisely describes one of his biggest mistakes:
Spiritual problems can be solved spiritually and physical problems need to be solved physically. Spirituality gives us power to address different issues but if you need an appendectomy you need to go to the hospital. If you need counseling, you need to go to a counselor... I needed counseling and I tried to pray about it and it didn't work. Counseling helped me accept me for who I am so I could get my life in order.
His counselors were professionals who happened to be Christians, not the other way around. There is a negative connotation to the going to therapy that even I have had. My wife and I had premarital counseling and I'm sure we will go to counseling in the future. Not because we have marriage-threatening problems, but because we don't want them.

Related: Ted Haggard is starting a new church, with a tithing lottery.

Saturday, June 05, 2010

Red States vs. Red States

The usual mantras of the America's two major political parties are as follows: Republicans want a smaller, less intrusive government and Democrats want a bigger, more helpful government. These generalizations hold even more true when you look at rhetoric, especially economic rhetoric. But apparently it doesn't exactly hold up to the real world:

That is a map of the United States where red states represent those that get more from the federal government than they give. Blue states are the opposite. Now here's a map of the 2008 presidential election:

Apparently both red and blue states act politically opposite of their economic interests.

Friday, June 04, 2010

Takeaways from The Big Kahuna

I was recently encouraged to watch the a movie The Big Kahuna, staring Kevin Spacey and Danny DeVito. Not only was the film entertaining, it was full of interesting advice. Here are my takeaways:

Don't qualify compliments. Put yourself out there and vulnerably compliment others.

The world is full of clocks, there are really few reasons to wear a watch.

It's never too early to start thinking about where you're going to end up.

People who look very official while doing their job do so because they don't actually know what they're doing. If you know what you're doing, you don't have to look like you know what you're doing.

Great men aren't those who do no wrong, they are those that can take criticism with gratitude.

Sometimes you have to chew your leg off to get out of life's traps.

Sometimes "principled" people marry another "principled" person only to find out it was their principles that married.

Love has a lot of counterfeits.

The only reason people order sophisticated drinks is to look sophisticated.

God created wives so that they could show men when their being assholes.

A man doesn't know what his soul looks like until he gazes into the eyes of his wife. If he's a decent human being he cries his eyes out, because no man should be comfortable with what he sees.

There are a lot of things in this world that are good for you, even if they're not pleasant.

There is a delicate balance between preaching the gospel and selling Jesus as a product. This is discussed wonderfully here.

When you start steering a conversation you cease being a person and become a marketing rep.

There's a difference between being honest and being blunt.

You gain character by recognizing regret. Not because you've done something worth regretting, but because you recognize you already have plenty of things to regret.

The world will spin without you.

Say I love you to people you love.

As the credits role the famous late 90's song "Wear Sunscreen" plays, which itself is full of good advice. Here is its:

One final thing I take away from this movie is that is was originally a play. I've always been skeptical of the value of live drama compared to those on the silver screen, but I'm sure the dialogue would have been more real in person. My wife and I are taking an anniversary trip to New York City this summer, what should we see?

Thursday, June 03, 2010

Reader Request: Should We Boycott BP?

In the past I've been less than optimistic about the individual's ability to directly influence big institutions, be it big government or big business. Instead I've suggested the market, as a collection of individuals, is better at giving you want. So when an old college friend Lindsay, emailed me* this question, I couldn't resist:
Why are people still shopping at bp gas stations? And would it make any difference at all if everyone went some where else?
A great question. Not only for this disaster, but for any time we see corporations misbehaving. There's been examples of boycotts leading to huge social change. America's most famous protest The Boston Tea Party was the culmination of a boycott on British tea by the colonists. The Montgomery Bus Boycott of the 1950's not only gave rise to the Civil Rights Movement's greatest leader, Martin Luther King, it also ended legal support for racial segregation on public transportation. However in both situations it was government, not business that was primarily responsible.

A less famous, but more similar example is the grape boycott of the 1960's led by the César Chávez in a fight over worker compensation. Here's a summary video I show in my own US History class on the boycott. In  the video a vineyard owner very clearly states he changed his labor negotiations exclusively because of the boycott. So, with strong worker and consumer support, boycotts can work as a way to punish companies into doing what you want. That support is hard to gain and maybe more important, keep up. Within a decade of Chávez's grape success, the union he created all but disappeared along with the labor negations. This is not because of weakness on the part of boycotter's, but because of the intense strength of the market. It was always going to push toward equilibrium, no matter how hard the workers pushed back. Luckily the market is doesn't just reward good business, it punishes bad ones as well. Here's what is happening to BP's stock:

BP's stock has lost nearly a quarter of its value since the spill, totaling around $44 billion. This is some knee jerk response. If you look closely the large drop didn't happen when the spill started, but instead when the initial attempts failed. My guess is that when ever the market stabilizes, the amount lost will be fairly close to the costs incurred by BP. The market will punish BP for their huge loss of product and their clean up cost. One concern of victims and taxpayers is that the oil company may not be forced to incur the full cost. The lesson from the Exxon Valdez spill wasn't how to prevent spills, but that we should not allow politicians on the payroll of oil companies to limit their risk. I'm unsure whether the current setup does that or not:
While BP is on the hook for the clean up costs, there is a $75 million cap on an oil company's liability for economic damages, or other damages claimed by individuals or government, under the Oil Spill Liability Trust Fund law. That law also established a government reserve funded through taxes on oil companies, as well as fines and penalties in the case of oil spills, to pay for cases like the current oil spill. There is currently $1.6 billion in the reserve, and this disaster could use up to $1 billion of its funds
This fund could be a quasi-efficient way to keep bankrupted companies from leaving the spill clean up to taxpayers. It could also be a way for these companies to get others to foot the bill. It's obvious that BP will suffer a lot because of this spill, whether they will suffer enough is unclear. Instead of boycotting the company, it may be a better use of your time and money to lobby politicians who hold the keys, preferably through a handwritten letter.

*If you ever have a question or suggestion please feel free to comment or contact me privately.

Wednesday, June 02, 2010

Costs of Economic Productivity

One is less help for strangers:
Independent field experiments in 23 large cities around the world measured three types of spontaneous, nonemergency helping: alerting a pedestrian who dropped a pen, offering help to a pedestrian with a hurt leg trying to reach a pile of dropped magazines, and assisting a blind person cross the street. The results indicated that a city’s helping rate was relatively stable across the three measures, suggesting that helping of strangers is a cross-culturally meaningful characteristic of a place; large cross-cultural variation in helping emerged, ranging from an overall rate of 93% in Rio de Janeiro, Brazil, to 40% in Kuala Lampur, Malaysia. Overall helping across cultures was inversely related to a country’s economic productivity
This could be a result of the increased opportunity cost of time that comes with economic growth. It could also be the increased autonomy. Individual independence not only leads to to less empathy for strangers, but also the break down of the traditional family:
It means it's more technically feasible for men and women to live alone. That alone has reduced the marriage rate and increased the divorce rate. It also means wives have had the time to enter the workforce. That's led to more affairs - as men and women meet more often away from their spouses eyes at the workplace. And in giving women an income outside marriage, it's increased their ability to divorce their hubbies.

This, though, is not the only way in which divorce has risen, and marriage fallen, because women no longer need a meal ticket. One feature of economic growth is a decline in relative demand for physical strength and increased demand for intellectual or social skills. This too has led to increased numbers of women workers - and the more skilled among them are not marrying and having children.

A third mechanism is creative destruction. Economic growth is - in the long-run - often fastest where job destruction rates are high, as this frees up resources for more productive uses. But job loss leads to more divorce (pdf), not least because it signals to people that their spouse is no longer the meal ticket they thought.

Also, economic growth is associated (the causality goes both ways) with social and geographical mobility. This means people are less likely to meet like-minded others. That means less chance of marriage, and possibly more chance of bad marriages that don't last.
I don't believe these outweigh the huge benefits of economic growth (long life, better health, increased minority/women's rights, more leisure, etc), but helpful nonetheless.

Tuesday, June 01, 2010

Emptying the Bottle: Early-June '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
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