Friday, May 28, 2010


AidWatch sums up a cool episode of This American Life which follows an NGO trying to help Haitian mango farmers sell more fruit by using plastic milk crates. It's harder than it sounds.

Thursday, May 27, 2010

Even Worse on Health

Obama has done a terrible job attempting / failing / pretending to reform the U.S. health entitlement system. Now he's put the worst man possible in a key job. Michael Tanner from the Cato Institute has the rundown:
Obama’s pick, Dr. Donald Berwick, is an outspoken admirer of the British National Health Service and its rationing arm, the National Institute for Clinical Effectiveness (NICE)...

The one thing the NHS is good at is saving money. After all, it is far cheaper to let the sick die than to provide care. At the forefront of this cost-based rationing is NICE... With the creation of NICE, the U.K. government has effectively put a dollar amount to how much a citizen’s life is worth. To be exact, each year of added life is worth approximately $44,305 (£30,000)...

To Dr. Berwick , this is exactly how it should be. “NICE is not just a national treasure,” he says, “it is a global treasure.”
I can stomach someone who believes that NICE is a necessary evil, or part of a larger scheme working for the good. But to consider "a treasure" a body whose core work is to remove the power of life and death from doctors and patients and give it to bureaucrats... scary!

See earlier post for more on NICE and its prescient double in literature.

Wednesday, May 26, 2010

Oil & Hypocrisy

Gov. Bobby Jindal (R-LA) and other Republicans shrilly blaming the Federal government for its slothful response to the Deepwater Horizon oil spill are accused by big-government proponents as hypocrites. You've spent your career calling for smaller government, and now you want the government to act for you? On the right, Jindal and others take flak for being sharply critical of BP. Don't criticize Big Oil, they're on "our side"! You're becoming a lefty.

But Jindal is exactly right. There's a massive environmental disaster going on, and he's calling to account those who had responsibility for the spill. Dealing with the consequences of ones own actions is the heart of conservatism, no? Perhaps offshore oil drilling regulation ought to devolve from the Department of the Interior to the states, but that's a matter for the future. As it is now, MMS employees were "captured" by the companies they were supposed to regulate. They and their bosses ought to face blame and take responsibility.

Even more so, BP should be fully accountable and should fully pay for this error. Every last cent of the cleanup should be billed to the company. After all, they kept all the profits when the well was pumping black gold up from the ocean floor, right? Conservatism defends the right to turn a profit, but it must also defend society against absorbing mistakes made by businesses. Bailing out Freddie, Fanny, Wall Street, Detroit, and now potentially BP (a foreign firm!) grates against the conscience of any true conservative.

If BP fails to pay for the cleanup from this disaster, it should be barred from doing business in the United States until its debt is paid. This isn't an anti-business stance, it's a pro-business stance. The long-term viability of capitalism depends on rights to property and responsibility.

Likewise, calling government to account for its responsibilities is a key aspect of small-government conservatism. There's a pragmatism behind small government: nobody is good at doing a little bit of everything. Better for Washington to do its core missions well than to do some of everything (sell cars, educate children, rebuild Afghanistan, etc) poorly. Regulating the competitive marketplace to prevent monopoly and to enforce contracts is a fundamental mission of national government. Holding bureaucrats, regulators, and politicians accountable for the "public service" they were hired to do is right in line with small-government beliefs.

Monday, May 24, 2010

U.S. Airways Sucks

In related news, I drove to Ithaca last night to pick up my wife at the airport at 11pm. And yeah, I know, Ithaca has an airport!

US Airways is a full-price, unionized carrier. But they cancelled not just my wife's departing flight from Rochester (delaying her 3 hours) but also her return flight! The excuse? There were not enough passengers. So I'm sure she'll fly US Airways again, but only on the comp tickets they give us to make up for this sham of a travesty.

Also in related news, I <3 Rt. 96A.

Tuesday, May 18, 2010

An Accidental Blueprint

The New York Times magazine has a heady article about education reform in the Obama Administration. It presents the "Race to the Top" program as a huge success in using just $4 billion in federal funds to create massive reform throughout the states.
By late March, when the first round of the Race ended, it was clear that [reformist advisor Jon] Schnur’s spin had worked “better than any of us imagined,” he says. Thousands of local news stories across the country speculated about how particular states were faring, some of them breathlessly referring to the “March Madness” as governors, state legislators and bureaucrats rushed to consider reforms that might improve their chances. Forty states and the District of Columbia entered the first round. Fifteen, including such union strongholds as California, Ohio and Michigan, passed laws or revised regulations aimed at boosting their chances. Before Duncan had dispensed a nickel, the country had seen more school reform than it had in decades. And still more is being debated as the deadline for a second round of proposals looms next week and states, including New York, Connecticut and New Jersey, hustle to do more to boost their scores.
Just as labor market competition makes better teachers, interstate competition creates better institutions. Governor Chris Christie convinced voters that New Jersey had become uncompetitive and was losing out to its neighbors. He's focused on reforming New Jersey's institutions.

At the Federal level, Schnur and Arne Duncan's "Race to the Top" has accidentally shown how powerful Federal dollars can be - if they are deployed competitively. Right now, earmarked projects for states are doled out on the basis of seniority and influence of each state's representatives. That's promotes incumbency and cronyism. Suppose comprehensive earmark reform took place. Federal projects would still need to take place somewhere, and it's not inconceivable that bids to host expanded Federal installations could be evaluated rigorously according to a formula that takes reforms and improvements into account and pushes states to adopt better institutions.

Of course, this approach could be abused: Federal power is only as incorrupt as those wielding it. The amazing results of Race to the Top really speak to the qualities of Schnur, Duncan at all, which the Times Magazine article is right to focus on. The best institutional approach would be to kick more and more aspects of government back down from the Federal to the State level, where they belong. That should start with earmark reform.

Friday, May 14, 2010


The GOP has long accused the Democrats of making America "more like Europe". In their more candid moments (typically involving Duvel or a Beaujolais), Democrats respond "Good! We ought to be more like Europe."

There's a real argument here, but politically, it's time for Republicans to make hay. The argument writes itself: Why not build a Euro-entitlement system? Because (a) you have to pay for it even in tight times and (b) people will burn down their own cities rather than accept cuts.

Some heads-up Republicans are seizing the opportunity. Rep Mike Pence (R-IN) headlines a crowd pushing to keep U.S. funding out of the IMF bailout of Greece and co. Democrats would be wise to agree. We have our own debt problems; why should we go further into debt to help bail out Greece, Portugal, and Spain?

Thursday, May 13, 2010

Mortgage-Backed Securities and Risk Magnification

Friend Andrew linked to an amazing Marginal Revolution article about how risk works in the creation of mortgage-backed securities. As Andrew said, this is mandatory reading. Here's the punchline:
Suppose that...we later discover the true probability [of a single mortgage defaulting] is not .05 but .06. In terms of our original mortgages the true default rate is 20 percent higher than we thought--not good but not deadly either. However, with this small error, the probability of default in the 10 tranche jumps from p=.0282 to p=.0775, a 175% increase. Moreover, the probability of default of the CDO jumps from p=.0005 to p=.247, a 45,000% increase!
The article links to the underlying math, but it's mindblowing just how sensitive these "low-risk" instruments are to the estimation of the underlying risk.

Wednesday, May 12, 2010


President Obama was never going to appoint a Supreme Court justice in the Thomas-Alito mold, or even in the Kennedy-O'Connor style. Given that he's a liberal president, Elena Kagan is, on most counts, a laudable choice. She's got a pragmatic reputation, and has shown respect for conservative viewpoints. On substance, she's probably a loyal liberal, especially taking a leftist view of equal protection. But she seems more likely to make middle-of-the-court deals and less likely to hold out for extreme judgements or alienate average Americans with solicitude toward "protected" groups.

The one strike against Ms. Kagan is that she has never served as a judge at any level. Her legal expertise is beyond questioning, but jurists have been known to metamorphosize upon appointment to the high court (see: Souter, David) and those with short records are especially risky in that regard.

Republicans should give her a rigorous and respectful hearing, and make her go on record on the key procedural issues of the role of the high court. But using the filibuster or fulminating publicly about Kagan would merely show Obama that compromise and conciliation are worthless.

Tuesday, May 11, 2010

Economists Consistent, But Not Krugman

BOTWT calls it "Bottom Story of the Day". But this study has shown that of eighteen economists who commented publicly on budget deficits, most were politically even-handed: they had the same thing to say whether a Republican or Democrat was in the White House. Not so Paul Krugman. When Democrats run deficits, it's good, when Republicans do, it's bad. He's the only one in the study who is what Adam Smith would call "a party man".

That's not news (although I'm glad somebody did the research on Krug). But it is cheering that of the 17 others, only 6 were found to have "minor" bias, whatever that means.

Tuesday, May 4, 2010

The Pipeline

James Kwak joins a fascinating conversation begun by Ezra Klein on why so many Ivy League liberal-arts majors end up on Wall Street. They use words like "seduction" and "easy" to describe how Goldman Sachs convinces idealistic young liberals to go work for the man. Kwak says, The main pitch is, 'Do this for two years, and afterward you can do anything.' Of course, most of the recruits stay on Wall St because they can't leave the luxurious lifestyle they've strayed into.
You internalize the rationalizations for the work you are doing. It’s easier to think that underwriting new debt offerings really is saving the world than to think that you are underwriting new debt offerings, because of the money, instead of saving the world. And this goes for many walks of life. It’s easier for college professors to think that, by training the next generation of young minds (or, even more improbably, writing papers on esoteric subjects), they are changing the world than to think that they are teaching and researching instead of changing the world.
This is a particularly poignant for Christians, since we have a divine mandate to do something meaningful with our lives, not just a hunch that we ought to. If we turn our backs on self-sacrificing lifestyle choices, we're writing off far more than youthful ideals.

Hat tip to Thesus.

Monday, May 3, 2010

One Child Policy

Pennsylvania's DHS is instituting its own one-child policy for teens in the state foster system. This was discovered by the Daily News when a social worker was fired for refusing to take a girl to get an abortion in New Jersey - an abortion (at 24 weeks) that is illegal under Penna state law. The DHS had coerced the girl into agreeing to the abortion by threatening to take away either the new baby or her toddler if she chose to keep the baby. That's what I call being anti-choice!

Hopefully, figurative heads will roll, and literal ones will stop rolling.

Daily Show Best

Randomly watched last night, a Daily Show episode from April 28 turned out to be some of Jon Stewart's finest work ever. Millions of dollars in sales could hinge on his plea to Apple and rant against AT&T. And he gave an amazing "extra time" offer to conservative author Ken Blackwell to spend more time discussing the latter's controversial book on Obama. This is the type of episode that explains why Stewart - a comic - is the most respected man on television today.