Tipping is mostly price discrimination and status

I don't really like the US "tipping culture", but I think that's just because I'm a minimalist geek who wants everything to be as simple as possible. Tell me how much something costs up front and I'll pay it.

But I don't think tipping is evil corporations trying to rip off hourly wage workers, and more tipping might actually be a net positive for the world. I responded recently to this post on X:

Tipping used to be a reward for exceptional sit-down restaurant service. In 2026, you turn around a self-checkout screen at a self-service kiosk to buy a pre-packaged $6 bottle of water, and the software defaults to asking for a 22% tip. Corporations aren't using point-of-sale tipping systems to reward staff…..they’re using customer guilt to subsidize low hourly wages without raising their base pay.

I said:

Tipping is a way to get rich people to pay more so poorer people can pay less. Or, cynically, a way for wealthier people to feel superior to the losers who poke the zero button.

Maybe when tipping started it was a reward for exceptional service, although I kinda think that's probably just what the rich people that did the tipping back then told themselves when it was really about demonstrating their good breeding and high status.

Today I think tipping is mostly a painless way for companies to implement price discrimination -- a way to charge a higher price to people who are willing to pay more. People who can pay more often do pay more because humans are status-conscious primates.

People usually have a very negative reaction to price discrimination; it tickles the unfairness detector in our brains when a person or company figures out we're rich and decides to charge us more, even if that means less well-off people are charged less (which is what happens in a competitive market; greedy corporations can't overcharge or a competitor will drive them out of business). Tipping makes the price discrimination voluntary and invisible.

It's doing that thing again...

Every few years I think to myself: here we go again: Bitcoin is doing that thing where the price goes up, news stories get written about how the Bitcoin price is at an all-time high, more people get excited about it because the price is going up, driving it even higher, making more people excited...

... until something bad happens or speculators get bored and decide to cash out and buy something else they think will be The Thing.

I'm thinking that's happening right now. And I think it will happen again in a few years; I'm not sure the Bitcoin price will ever be stable if it just functions as a place to park I-don't-know-what-to-spend-it-on-right-now wealth.

Thirteen years ago, when one BTC was selling for under a dollar, I said:

"There's a small possibility that in 50 years Bitcoin replaces the dollar as the world's reserve currency."

Today I think I'd say "significant possibility." And I think there is a pretty high chance some cryptocurrency or basket of cryptocurrencies replaces the US dollar as the world's reserve currency in the next forty years.

It is time to smile

For the first time in several years I dipped my toe into Amherst politics. I zoomed into the February meeting of the Health Board, to encourage them to drop the indoor mask mandate.

And part of what I said ended up in the local newspaper. I don't want anybody to think just because I think the costs of the current mask mandate outweigh the benefits that I'm anti-vax or that personal freedom always trumps public health, so here's more of what I think.

I wrote this email to the Amherst public health director a few weeks ago:

The Omicron wave of the pandemic is cresting (and has already peaked in many parts of the world), and happily we haven't seen our health systems overwhelmed-- it seems clear now that Omicron is less severe than previous variants, especially for people like me who are fully boosted.

Amherst was early to impose masking and other mandates, and that was the right thing to do at the time. I'm writing to encourage you to be early again-- it is time to eliminate all of the "non-pharmaceutical intervention" mandates, as has been done recently in the Netherlands, Denmark, and the UK.

I think the message to the public should now be: get vaccinated and boosted. Wear a mask if you have symptoms (masks help prevent colds and flu, too!). But otherwise get on with your life-- smile and hug and go out to dinner.

Thanks for all your work during the pandemic, I hope that your jobs get a lot easier in the next few months as the pandemic turns into an endemic disease we learn to live with and (hopefully!) life gets closer to normal.

...and got a very nice response, encouraging me to comment at the Health Board meeting.

I'll expand on the point I made at that meeting: I think there are several things the health department and board of health should consider doing (and I apologize in advance if I'm mansplaining stuff that y'all have already considered in previous meetings over the last couple of years).

Indoor air quality is something we take for granted, but shouldn't. Masking rules for restaurants where patrons sit down and then eat without a mask are just plain "pandemic theater," at best giving people a false sense of security. Fresh air (or HEPA filtration) mandates would be more effective, less onerous, and probably less controversial, and could be enforced via monitoring with an inexpensive CO2-level monitor (CO2 levels are a good proxy for air quality in indoor spaces).

High-quality (N95-or-better) mask mandates make a lot of sense in places where there are lots of vulnerable people, like nursing homes or hospitals. They probably make sense every winter, when diseases like the flu or pneumonia are common.

My son's college implemented wastewater monitoring for COVID for the wastewater coming out of every dorm on campus. When a dorm turned positive, they started testing everybody in the dorm and were very effective at controlling outbreaks. I could imagine a similar program for Amherst, with wastewater monitoring of different neighborhoods and notification of residents when communicable diseases (maybe note just COVID) are detected. "We have detected high levels of the Zetacron COVID variant in your neighborhood, we encourage you to zap yourself with a Zetacron booster nasal spray if you haven't boosted yourself in the last few months" would be a spiffy use of my tax money.

Dancing Outside

There is a small-ish group of older people near me who are getting together outside to dance for a couple of hours. They stay at least six feet apart, but most of them don't wear masks.

My initial reaction is: are they insane? Don't they know there is a pandemic going on??????

But maybe they're not insane; maybe the exercise and mental health benefits outweigh the risk. A few days ago I stumbled across some tools that let me do a rough back-of-the-envelope on the size of the risks, and I think we should encourage a lot more physically-distanced outdoor dancing (and singing and yoga and drumming and whatever else makes people happy).

Here's how I figure it:

If there are twenty people getting together to dance, there is about a one percent chance one or more of them have COVID-19 and are infectious but don't have symptoms. That's based the current infection rate of Hampshire County, Massachusetts (where I live) and calculated by this Coronavirus Risk tool.

If somebody is infected, what are the chances they'll spread it to somebody else in the group?

Assuming they all stay at least six feet apart so they're not breathing directly on each other (no large-droplet transmission of the virus), I can use a handy spreadsheet created by a chemistry professor who is an expert on air pollution to get an order-of-magnitude estimate for that risk. That is another one percent chance.

So the chances that somebody in the group catches COVID is the one percent chance somebody is infected, multiplied by the one-percent chance the infection spreads. Or a one in ten-thousand chance for somebody in the group to catch it, or one-in-190,000 individual chance.

Those are very small risks. To put those numbers in perspective, the average 75-year-old male in the US has about a one in ten-thousand chance of dying on any given day.

If you live in a county with a high infection rate... the risk will be much higher (e.g. in George County Mississippi right now the risk would be 1-in-300 somebody in the group would get infected). If you live in Mississippi, you should stay home as much as possible until infection rates fall.

If it is a larger group getting together... the risk would be much higher. Smaller group, much smaller risk.

Dance inside... higher risk, depending on the size of the space and how much fresh or sanitized air flows through it.

So, unless you live in a place where the virus is raging: go outside. Do something with a few other people; keep your distance, and be happy.

Tax Big Spenders

The US federal tax system is terrible. It is inefficient, complicated and unfair.

How about we replace it all with something simple and fair, like this:

Impose a national luxury tax on all goods and services that cost more than $100. Define "luxury" as "costs more than the median sales price of similar goods or services," and calculate the tax based on the difference in the sales price and that median price.

For example, according to Google the median new car price in the US is $37,876. Let say the national luxury tax was 20% and you buy a new car that cost $35,000. You'd owe nothing.

Your rich cousin Betty buys a loaded Range Rover for $137,876? she'd owe $20,000 in luxury taxes (twenty percent of $100,000).

Want to avoid paying taxes? Easy, don't spend your money on expensive stuff. Drive a reliable car, don't spend money on fancy jewelry or 80-year-old scotch or extravagant vacations.

Taxing higher-than-normal spending seems to me to be the least offensive form of taxation. We would be encouraging people to live more frugally, and discouraging them from playing expensive, wasteful status-seeking games. I'm not naive-- rich people would still buy vacation houses and million-dollar supercars to show off their wealth, and plenty of middle-class people would occasionally buy their spouses a fancy diamond necklace for Christmas. They'd just have to pay extra.

Businesses would have to calculate and collect the tax, but that shouldn't be terribly difficult. State sales taxes already require that businesses figure out if what they are selling is taxable or not; asking them to report on what they're selling, for how much (to establish the list of median prices and make sure they're collecting the right amount of tax) isn't much of a stretch. And we already have extensive lists of product categories that are used to assess tariffs when products are imported.

It seems to me both people on the left and people on the right might go for this kind of tax. Lefties should like that it is progressive-- poor people don't buy fancy stuff, so they should end up paying no taxes. Righties should like that it is simple and transparent; the amount you pay will be right there in plain sight when you buy something. No sneaky payroll tax deductions, filling out forms on April 15th or huge IRS bureaucracy interpreting thousands of pages of tax law.

Maybe handle death taxes the same way; if you leave more than the median inheritance to your children, tax the amount over the median. Yes, I know that could be double taxation (the kids might pay again if they spend the money on expensive crap), but it seems fair to me. I'm not a fan of spoiled rich kids who never have to work because their great-grandfather was a brilliant businessman.

Big Picture Fed-onomics

The Federal Reserve and US Treasury have been busy this year creating US dollars out of thin air. Trillions of them.

More money, less stuff to buy because of the pandemic should equal higher prices as those dollars chase stuff to buy, right?

Well... that is exactly what the Fed hopes will happen. It hasn't happened yet because the "velocity of money" (how quickly money gets spent again after it is received) fell off a cliff, as people went into lockdown, lost their jobs, and try to make whatever money they have last until things get back to normal. Money is being shoveled into the system... and is piling up as bank reserves:

That trillion dollar spike at the end is March and April.

Can dollars pile up someplace other than bank accounts? I dunno-- if you know, please leave a comment. I'm writing this blog post to organize my thoughts and so you can tell me what I'm getting wrong.

Here is my incomplete mental model of how the money creation machine works; for example,  for a 'helicopter drop' :

Congress decides everybody gets $1,200. The US Treasury gets the dollars by trading promises to pay the money back in the future (treasury bonds). Who is lending their hard-earned dollars to the US government in exchange for a really low interest rate? Mostly it is the Federal Reserve, "lending" brand new dollars created out of thin air:

4 trillion in March, April, May

So, the Fed creates dollars, exchanges them for Treasury bonds, the Treasury sends dollars to people in lockdown, and they "save them in their bank accounts" -- which really means they exchange the dollars for a promise from the bank that they can withdraw them later.

Normally the bank turns around and lends out most of those dollars so they can be spent again (increasing monetary velocity) but right now they are piling up as 'excess reserves'. The Fed pays 0.1% interest on reserves; I dunno why, I guess to make bankers even richer than they already are? (That's a cheap shot on my part; if inflation is 0.3%, they're actually losing 0.2% a year on those reserves). Banks could lend it all out; the reserve requirement was dropped to zero percent, which seems insane to me but I'm a programmer and not a monetary expert.

So inflation is low right now. Probably. It is hard to measure accurately in normal times, but really hard right now because everything changed in mid-March. People suddenly stopped buying bowling shoes and started buying a lot more face masks, so the typical 'basket of goods' economists use to measure price inflation suddenly isn't actually what the typical person is buying.

But what happens when we conquer (or learn to live with) the virus and people spend more and banks go back to lending? Will we get super high inflation then?

I dunno. The Fed can slow down bank lending by requiring them to hold more reserves. Although I gather a lot of lending is happening in the "shadow banking system" which doesn't have reserve requirements, so maybe that would just move a lot of activity out of traditional banks.

If inflation ramps up the Fed could directly drain trillions of dollars out of the system by selling the "securities held outright"-- mostly Treasury bonds, with some mortgage-backed securities leftover from the 2008 financial crisis. That is 6 trillion dollars at current market prices.

Higher inflation means the price of those low-interest-rate securities has to go down, and selling them will even further depress the price. Somebody smarter than me has probably estimated how many dollars the Fed can actually destroy by trading all that stuff (and making the dollars they get disappear), but maybe those trillions won't be enough to keep inflation in check.

Higher inflation, plus the Fed selling all those old Treasury Bonds at a discount should mean the Treasury will have to offer higher interest rates on new bonds, meaning more of the budget goes to paying interest on the debt.

Which politicians won't like. Maybe the Feds lose their minds, bow to political pressure and keep buying bonds, "sterilizing" the debt, leading to more inflation (and eventually hyperinflation if the cycle isn't broken). I don't think that is likely to happen in the US, but I'm a programmer, not a monetary expert. I'm hedging my bets and keeping my wealth mostly in inflation-immune assets, like bowling shoes and hand sanitizer.

Five 2030 Predictions

I think all of these have a more-than-50%-chance of happening, but I am probably overconfident:

1. COVID-19 will kill more than 25 million people worldwide by 2030. I really hope I'm wrong and an effective, cheap vaccine is available soon.
2.  More than one US state will default on their public employee pension obligations by 2030. Underfunded pensions are a chronic problem; I might be wrong and strong economic growth might push the day of reckoning past 2030. Or maybe COVID-19 will kill enough retirees to make the accounting work out (but I doubt it; the cost of dealing with lots of sick people is likely to strain government budgets at all levels).
3. Polyamory and a push for state-sanctioned polyamorous marriage will be a big "culture war" issue during the 2020s.
4. At least one country's central bank will issue a blockchain-based digital currency that will have a 'market cap' of more than 100 billion dollars by 2030.
5. A woman will be US president before 2030.

UPDATE: I asked my Twitter followers what they thought; here are the poll results:

1. 27% agreed with me(2,121 votes)
2. 76% agreed (487 votes)
3. 31% agreed (1,000 votes)
4. 72% agreed (1,227 votes)
5. 43% agreed (877 votes)

If my Twitter followers are right, I'll get two of five right.

Can we stop with the nit-picking?

I made the mistake of checking Facebook this Monday morning, so I feel like ranting a tiny bit:

Hey liberals, can you please stop nit-picking Fox News? Yes, somebody screwed up and put up a graphic for a little while saying "Three Mexican Countries" when they meant "Three South American Countries."

Hey conservatives, can you please stop nit-picking Alexandria Ocasio-Cortez? Yes, she seemed to get the timing of FDR's death and the passing of the 22nd amendment (limiting presidents to two terms) wrong.

I'm starting to consciously use reactions to little nit-picky stuff like this as yet another litmus test for people or news sources I should ignore.

All Fools have still an Itching to deride

-- Alexander Pope, An Essay on Criticism

Precautionary Principle Problems

Google gives a good definition of the precautionary principle:

pre·cau·tion·ar·y prin·ci·ple noun 

The principle that the introduction of a new product or process whose ultimate effects are disputed or unknown should be resisted. It has mainly been used to prohibit the importation of genetically modified organisms and food.

It is easy to imagine Very Bad Things that might happen if we ignore the precautionary principle. For example, what if somebody uses gene-editing technology to produce a super-virus that wipes out all human life?

What if genetically modified corn runs amok and spreads uncontrollably? Or maybe GMO foods cause cancer and we just haven't noticed yet.

How about machine learning: what if future super-smart machines decide us humans are unnecessary and decide it is logical to get rid of us?

Scary! Why not be safe and just ban all that research until we understand the possible consequences better?

Well... because Very Bad Things might happen if we do that.

What if an incredibly deadly variation of the Spanish Flu wipes out 99% of human life, but researchers could have saved us if they had more advanced gene-editing techniques?

What if we all starve to death because climate change wipes out all our crops, but researchers could have saved us with geo-engineering or climate-change-resistant GMO crops?

Or maybe super-smart machines will save us (and them) from some world-ending disaster we aren't smart enough to see coming-- asteroids or angry aliens or albino alligator attacks (that's just the a's!).

I don't know how to evaluate the far-future likelihood of machine intelligence or CRISPR destroying everything we value, versus the likelihood they save us from destruction. I don't think anybody knows. Maybe hyper-intelligent man/machine cyborgs will eventually be smart enough to run the numbers and figure it out, but until then I'm going to ignore people who use one side of the precautionary principle to argue against technologies they oppose.

Politics and traditional public schools are inseparable

Here in Amherst there are two education-related questions on the ballot.

The first is a state-wide question on whether or not to allow more charter schools. If I were to believe my Facebook feed, if it passes it would mean the End of Public Schools As We Know Them. My Facebook feed is wrong; allowing more charter schools will have a tiny short-term effect on the public education system. It might have a big long-term effect, but I bet parents will make much bigger changes to the way their kids get educated long before then. The second question on the Amherst ballot is a plan to replace two of our public elementary schools with one brand-new building. Judging from the lawn signs in my neighborhood, there is a lot of controversy over that plan, and I doubt it will pass.

I have sympathy for the school committee; no matter what plan they propose, they won't please everybody. The only way to please everybody would be to have half a dozen different, mostly independent schools in town and let parents and kids and teachers decide on which was best for them.

... which, from a ten-thousand-foot level, looks a lot like public charter schools ...

This is where somebody on the school committee or school administration tells me that's completely unworkable, because busing and six different principals and special education and duplicate facilities and administration.

And how our local public school system really isn't one-size-fits-all, there's a diversity of educational opportunities available inside the public school system (and I should know that-- I've got two kids at Amherst Regional High School).

And how the Massachusetts school system is one of the best in the world-- and Amherst is one of the best in the state. Why mess with a great thing, or question the judgement of people who have done such a great job so far?

Here's where I get philosophical. It seems to me there are two ways we can get what we want from other people in this world:

1) Competition. We can "vote with our feet" -- every time I choose which restaurant to eat at or which shoes to buy I'm casting a vote.

2) Politics. We can vote for or against things we like or don't like, and can try to convince a majority of our neighbors to vote with us.

Traditional public schools force us into politics-- we vote for who we want on the school committee, and vote on big decisions like how we're going to replace our old, obsolete school buildings.

Maybe there are good reasons to keep doing things that way, or maybe we're just stuck with the system we have because changing from a politics-driven system to a competition-driven system would be too disruptive and painful.

But if you're part of the traditional, politics-driven system, you shouldn't complain about passionate public debates or imply that everybody should just trust you because you're the experts (or are listening to the experts). That's just the way majority-wins systems work.

I like competition-driven systems better, maybe because I like to avoid unnecessary conflict. I'm a live-and-let-live kind of guy, if you want to send your kids to "West Point Prep" because you think the discipline will be good for them, more power to you.

How much recreation is too much?

On monday night Town Meeting decided to amend the budget to double the recreation subsidy given to low income families, from about $100,000 per year to $200,000 per year. Apparently, funds were running out half-way through the year. There are roughly 1,000 low-income kids in Amherst, so if they all participate in LSSE programs we'll be giving each $200 worth of swimming or sports or after-school-programs.

I don't know how to think about that. Is $200-per-kid-per-year enough? Too much? Just right? I'm sure there are families that can't afford even a heavily subsidized rec fee. And there are probably families too proud to accept a subsidy; maybe LSSE programs for kids should be free to everybody, so nobody need feel embarrassed asking for the subsidy.

And how should Town Meeting members weigh spending $200,000 per year on increasing recreational opportunities versus fixing potholes or hiring more police?

If we gave lower-income families a choice between getting either a $200 subsidy for LSSE programs or getting $200 in cash, I think most would take the cash. There is probably some Massachusetts law preventing Towns from giving people cash grants, but it seems to me it would be better to empower parents to make decisions like "should I spend money on a math tutor or swim lessons or brake pads for the car."

A lot of our social safety net seems like micromanagement to me. I wonder if that is mostly due to progressives who think of the State as a "nurturing mother" with a duty to take care of each of her children's needs ("gotta be sure to provide environmentally friendly housing and nutritious food and liberal education and healthy recreation and...").

Or if it is due to conservatives who think of the State as a "strict father" with a duty to prevent or punish his children's bad decisions ("can't just give cash, they might spend it on Bad Things").

Probably both. So I expect I'll spend a lot more time sitting in Town Meeting listening to heartfelt appeals to increase recreation opportunities for children by increase subsidies for LSSE or increase safety for children by hiring more police or firefighters or increase education for children by hiring more teachers or increase the health of children by giving benefits to part-time Town employees.

In the grand scheme of things, I suppose that's not so bad-- it would be worse if Amherst was spending money to bomb someplace far away "to benefit future generations of children."

Are kids really safer in schools?

A couple of comments on my last post challenge my assertion that "Kids are much safer in school than any other place."

I admit, I was lazy, I didn't do any research to back up that statement; I'm parroting Lenore at Free Range Kids, who I trust because I've followed her blog for years and she is always rational and data-driven. And maybe "much safer" and "any other place" are exaggerations; probably kids are just as safe or maybe even safer when they're at home, sleeping in their beds at night (or maybe not, because I'm pretty sure domestic violence is a lot more common than school violence).

But it got me to thinking: how would I go about proving or disproving that kids are safer in school than anyplace else?

I'm a skeptic, and I'm very aware of all the ways we can fool ourselves into "proving" something that we already believe. So if I had the time to research safety in schools, here's how I'd go about it:

First, I'd try to get more specific about what I mean by "safe" -- really, I mean "safe from physical harm." I'm not going to wade into a debate about whether our kids are being developmentally stunted or mentally harmed in school.

Then, I'd find a data source (or, ideally, two or three) that I trust that tracks statistics on deaths or injuries. I'm sure there are databases that keep track of emergency room admissions by age, time, etc.

Before I looked at any of the data, I'd decide what to look for. Any large dataset can be sliced and diced a million ways, and 5% of those ways will give you statistically significant (but meaningless) results.

In the "are schools the safest place for kids to be" case, I'd look at the injury/death rate for school-aged kids during school hours, and compare it against the injury/death rate at other times: weekdays during non-school hours, and weekends.

But that's not quite enough-- maybe the middle-of-the-day school hours are just safer in general. So I'd also look at injury/death rates for kids who are too young for school, to try to isolate the "in school" versus "not in school" factor.

To really do it right, I'd hire a statistician to run a regression over the data (or would take that statistics class I'm always thinking I should get around to taking...). But before doing all that, I'd run a Google Scholar search to see if anybody's already done the hard work.

A couple of minutes of searching "school safety" turned up a bunch of studies that focus JUST on violence in schools, but also "The Inherent Limits of Predicting School Violence"which says:

... violent deaths are a rare event, with less than 1% of the homicides and suicides among school-age children occurring in or around school grounds (Kachur et al., 1996). Moreover, the rate of violent crimes committed by juveniles remains low during the school day, but it spikes at the close of the school day and declines throughout the evening hours (Snyder and Sickmund, 1999), indicating that school hours are probably the safest time of the day for adolescents.

I didn't find any contradictory evidence, so short of crunching the numbers myself (which I'm not going to take the time to do), I'm going to stick with "kids are safer in school."

Stop with the lockdowns already...

When I was in school, the Big Bad Boogey-Man was Russia, and we were afraid of nuclear war.

I remember "duck and cover" drills in school, in case of nuclear attack.

Looking back, wasn't that unnecessary fear-mongering? And not just because there didn't happen to be a nuclear war. But because if there WAS a nuclear war, getting cut by flying glass because you didn't hide under your desk when the air raid sirens went off would be the least of your worries.

Today's Big Bad Boogey-Man are strangers in schools. We've had two incidents in Amherst this week where schools went into "lockdown" -- one ridiculous false alarm, and one genuine "somebody creepy and probably mentally unbalanced."

Which makes my skeptical mind wonder: is that just unnecessary fear-mongering? How many times has a school going into "lockdown" saved lives or injury? Can anybody point me to even one story of "Thank God we went into lockdown, that homicidal maniac found the doors locked and just gave up!"

Kids are much safer in school than any other place, despite the high-profile, tragic, terrible incidents that happen somewhere in the world once or twice a year. Kids in US schools are much safer overall than they have ever been.

And it's not because we're locking down our schools; adults in the US are much safer from violence than they've ever been.

I also remember learning to sing about how we're supposed to be living in "the land of the free, and the home of the brave." Locking our kids in their classrooms because we're so afraid of strangers in our schools is teaching them exactly the opposite.

OPEB funding

OPEB is bureaucrat-ese for "Other Post-Employment Benefits."

We'll be hearing about it more and more in Amherst Town Meeting, because "we" (past Town Meetings / Select Boards) have promised more than 90 million dollars in benefits that "we" didn't put aside money to pay.

Oops. That is more than the Town's total yearly budget.

Promised-to-pay benefits are a huge problem at the local, state, national, and international level. I don't know enough about politics to figure out what is likely to happen, and I suspect we'll see different towns/states/countries try different things-- some will bend or break their past promises, some will plug the hole by taking wealth from people they think can afford it (or who aren't politically powerful enough to complain much), and maybe some will figure out a way to grow their way out of the problem (millions of young immigrant workers paying taxes could push the problem another 40 years into the future).

What should Amherst do?

It is awfully tempting to do nothing. After all, every city and town in Massachusetts is facing a similar problem. It seems very likely that, at some point, either the State or Federal government will step in and fund some sort of bailout, wiping away Town debts by some combination of "breaking promises" and "redirecting wealth." They'll use lots of nicer sounding words, of course; it won't be a local/state government bailout, it will be "Medicare for All" or "Universal Health Security Accounts" or something.

If the Town of Amherst is responsible and tries to pay off those promises itself (which we've started doing, in a very small-so-far way) then we might just end up benefiting less from that future bailout.

Maybe the most responsible thing to do is to be irresponsible.

High Symbolism, Low Substance debate

Arnold Kling concisely expresses something I've been thinking about a lot lately:

The minimum wage issue is high on symbolism and low on substance.

It feels to me like 98% of the political debate I see is over issues that, in the grand scheme of things, don't really matter.

There are issues that people really, truly, care deeply about. That they get emotional about. That they organize around and march on Washington and make demands.

Abortion. Minimum Wage. Legalizing Marijuana. Children Being Abducted By Strangers. Student loans. Global warming. Peak Oil. Gay marriage. Israel. The Terrorist Threat.

All high symbolism, low substance.

Or, to put it another way: 100% solve any of those issues (in whatever direction your political leanings say they should be solved) and I think the world would look pretty much like it does now.  Slightly better, but not a lot better.

Immigration. Disease. Empowering Individuals / Disempowering Despots. Better Governance ("It's The System, Stupid"). Tolerance.

High substance, often low symbolism. I wish we spent more time talking about things that, if fixed, would make the world much better.

Fiscal Cliff: meh

Russ Roberts has had several thought-provoking tweets recently (he's @EconTalker on twitter).

Professor Roberts was my favorite economist even before he invited me to be on his podcast, because he is always rational and skeptical, especially about data or ideas that reinforce his own biases. Listen to a few episodes of EconTalk to hear what I mean.

Interesting tweet #1:

Fiscal cliff will lower federal spending from $3.8 trillion to $3.7 trillion. Oh the horror!

A 100-billion-dollar fiscal cliff sounds like disaster. 3.8 to 3.7... meh.  Lets see, the last time the Federal budget was 3.7 trillion dollars was... umm... well, according to the budget office, Federal spending this year is about 3.6 trillion dollars. So if we go over the Fiscal Cliff, the Federal government will be spending a bit more next year than this year.

Thought-provoking tweets numbers 2, 3, and 4:

A tax cut without a spending cut is not a tax cut. A tax increase with a spending cut is a tax cut.

Spending must be covered by either taxes today or taxes tomorrow (borrowing). So a tax cut w/o cutting spending is not a tax cut...

Spending is paid by taxes today or taxes tomorrow (debt). So a tax increase coupled w/spending cut is a tax cut. 

Politicians of both parties love to promise free lunches for everybody. ObamaCare will save us money! Taxpayers will make money on the auto and Wall Street bailouts! Tax cuts pay for themselves! Interest rates are Historically Low, so now is the time to borrow and spend even more!

I hate sounding like a grumpy old curmudgeon, but none of that is true. I still think:

...the best the government can do is create policies that will encourage and reward productive behavior, and then stand back and get out of the way. 

Amherst Homeowners: Mad as Hell!

This is the first house we owned, in Palo Alto, California.

It was tiny. 900 square feet and shaped like a bowling alley.

Taking a virtual walk down the street with Google Street View, I see that the house two doors down is much, much bigger than it used to be.

Which doesn't surprise me; while we were living there several little houses in the neighborhood were torn down and replaced by big, multi-million-dollar properties. Heck, according to zillow.com, that little 900 square foot house is worth just a little less than a million dollars today.

I wonder if Amherst will be like that in 20 years.

Today, the hot-button issue in Amherst isn't cute little cottages getting torn down and being replaced by McMansions, it is big old single-family houses getting turned into rentals for college students. Homeowners in neighborhoods near UMass are upset that their quiet family-friendly neighborhoods are slowly turning into absentee landlord slums.

Part of me wants to just say "I told you so." This is what you get when you do stupid stuff like refuse to allow high-density student rental housing to be built anywhere near anybody. Amherst Town Meeting members have been pretending that the students don't exist and that there is no shortage of rental housing in town for over 40 years.

Fall Town Meeting will debate several zoning articles that are meant to stop single-family homes from becoming multi-person rentals. I think they would be effective-- if a property management company needs to get a Special Permit to turn a single-family home into a multi-person rental then they won't bother buying any more single-family homes.

I don't know where the students would go; apartment complexes in Hadley or Sunderland or even further away, I suppose. Hopefully they'll be riding buses or driving non-polluting self-driving electric cars so we won't see more pollution or traffic accidents. And hopefully they'll stop and do a bit of shopping or eating once in a while, so fewer people living near downtown doesn't mean a less vibrant Town Center.

In the very short-term, I'd expect housing prices to go down a little bit, since property management companies won't be competing for houses any more. Less demand means lower prices.

But if I'm right, and if stricter zoning and rental regulations are effective in driving students out of residential neighborhoods, I think prices for properties near downtown and UMass will eventually rise, because it will make those neighborhoods a more pleasant place to live.

That neighborhood in Palo Alto is right next to Stanford University, and it was a great place to live, if you could afford it. Amherst is not the same, of course-- the main reason that little house is now worth a million dollars is because Google and Facebook and a gazillion other successful high-tech companies are nearby.

But I wouldn't be at all surprised to see Town Meeting debating regulations to limit an epidemic of "tear-down sales" 20 years from now.

One quarter of a micromort

Belated thanks to Roger Browne who responded to my last blog post and pointed out that there already is a standard unit of risk-- the micromort, which measures a one-in-a-million probability of death.

In the time it takes me to write this blog post, I've got something like a quarter of a micromort risk of dying from all causes. The average person racks up about 40 micromorts per day.

That's a pretty good benchmark! My little brain can understand numbers like one-quarter or 40.

There a great list of relative risks for various things on the wikipedia page for micromort. I've always wondered just how dangerous skydiving really is, and it isn't as dangerous as I thought. My risk of dying if I ever decided to jump out of an airplane (7 micromorts) would be about the same risk as sitting on the couch and watching TV for 4 hours.

Since I wrote my last blog post, we've had a hard frost, so my risk of dying from an Eastern Equine Encephalitis-infected mosquito is now zero micromorts.

I'm not sure what to think of the fact that while we were being warned about mosquitos here in Massachusetts, dying from fungus-tainted steroid shots manufactured here and administered by our doctors turned out to be a much higher risk. How much higher? I dunno. But I would if health officials and reporters started telling us how many micromorts of risk we're getting when we go outside for an hour during mosquito season or get a tainted injection from our doctor...

Standard unit of risk

The Massachusetts Department of Public Health has determined that Amherst is at "High" risk of mosquito-borne illnesses, and recommends that we all stay inside at dusk.

Yeah... but I like going outside at dusk.

The incentives for the Health Department are to exaggerate the risks, because when somebody gets Eastern Equine Encephalitis and dies they can (correctly) point to their High Risk Warning and say "not our fault, we told you so."

But maybe the risk really is high, and we ought to slather ourselves with DEET before walking downtown for dessert.

I wish there was a standard, easy-to-understand unit of risk, so the Heath Department could say something like "We estimate spending an evening in downtown Amherst with no mosquito repellant is 4-10 RUs (risk units)."

Where 1 risk unit is something we can all understand-- maybe "the risk associated with driving 100 miles on the highway."

Or "1 risk unit is the overall risk of dying in an accident in any given year."

I don't know what the right baseline would be; it doesn't really matter what is chosen, what matters is making it easy to compare the risks of things relative to each other.  The Health Department says we're at High risk... but High compared to what?

Self-driving cars

Sunset in Wyoming

I hate driving.

Not because I'm bad at it; like the vast majority of Americans, my driving skills are far above average. I just find it tedious and boring.

This summer we went on a bike trip in Colorado, and then did a big, 2,500-mile car trip through Utah, Idaho, Washington and Wyoming.

Some of that driving was interesting, with stunning scenery zooming by. But most of it was tedious and boring. We did it partly because I think long, boring car trips are a rite of passage for kids; I certainly remember being eleven years old, stuck in the back seat of the cars for hours on end, driving into the night and then staying in a boring hotel room.

My grandkids might never have the experience of being bored in the backseat of a car and having to deal with a tired and grumpy parent that has driven ten hours since breakfast. It looks like self-driving cars will happen in the next ten or twenty years.

I want to rent a self-driving RV for my next big road trip. I'd start my trip after dinnertime, tell it where I want to eat breakfast, and then sleep through all the boring, tedious driving.

I think self-driving cars will have big, unintended consequences. Maybe multi-hour commutes will be no big deal, and suburbs even farther away from city centers will be common.

Maybe weekend homes 8 or 10 hours away will become a lot more popular; sleep on the way there Friday night, sleep on the way home Sunday night.

They should be really bad news for airlines and high-speed rail, especially if special, "robot driver only" very-high-speed highways are built. If they make people fly less, they should be good for the environment-- although I expect the fuel saved from less flying will be balanced out by people travelling more overall.

Maybe we'll see lots of retired people becoming nomads, spending their money on gasoline instead of hotel rooms, spending nights in their Robobagos on the road, driving at 42 miles an hour in huge groups to get better gas mileage...

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PS: the driving-skills-above-average sentence is just there to catch people who post snarky comments before reading to the end of the post (yes, I know that sentence cannot be true).