2008 Predictions Revisited

Exactly one year ago I made eleven predictions. So it is time for me to face up to cold, hard reality and see how accurate I was:

Mitt Romney will be the Republican presidential nominee.

Oops. I thought McCain was too "maverick-y" for the Republicans.

Barack Obama will be the Democratic presidential nominee, and will be elected President.

Yay! I got these two right! A year ago it looked like Hillary would be the Democrat's choice, but I figured she wouldn't because as many people hated her as liked her.

Pro football will have a major "athletes taking performance-enhancing drugs" scandal.

Yup.

Oil prices will go over $100 per barrel at least twice.

Yup. I didn't expect them to stay above $100 per barrel for most of the year, though.

Troop levels in Iraq will go down until the November elections. Immediately after the elections, another troop surge will be proposed.

Yes, and No. Troop levels in Iraq have been slowly declining this year, but there's no talk of another surge in Iraq. I'm not even going to give myself half-credit for the talk of a "surge" in Afghanistan, because I had no idea that would happen (I thought the Iraq surge would be a failure, but it looks like it worked).

Around 200,000 people in Massachusetts will still not have health insurance at the end of 2008 (down from 500,000 without health insurance in 2006).

According to the Urban Institute, the number is about 170,000; I'm going to call that close enough (rounding to the nearest 100,000...).

The increase in the minimum wage will mean fewer teenagers working during the summer of 2008.

Yup, it looks like teen unemployment is way up, beyond the base level of unemployment being caused by the recession.

Inflation-adjusted "total compensation" (wages plus benefits) will be up more than 1% for all income brackets over the year.

The numbers aren't in yet, but it looks like I'll be wrong on this one. According to the Bureau of Labor Statistics, it looks like total compensation will be up something like 3% in 2008, which is less than inflation*. Interestingly, it looks like government workers are doing a little better (their total compensation will increase something like 4% in 2008).

And my wrongest prediction of 2008:

The New England Patriots will win the Super Bowl.

Go Giants?

So, overall I give myself a score of 7 out of 11 correct. Maybe I'll do better this year...

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* Update, 30 Jan 2009: The inflation numbers are in: "Core" inflation was just 2.2% last year-- overall inflation (including food and energy) was NEGATIVE last year. So if you didn't get fired, you're actually better off than you were a year ago (and my prediction that inflation-adjusted total compensation would be up was correct).

Pools and Unintended Consequences

Pools all across the country are being closed because of the Virginia Graeme Baker Pool and Spa Safety Act.

"Better safe than sorry," right? "If it saves even ONE child's life" then it's worth it?

Rationally evaluating risks is one of my hobbies. We're all (myself included) bad at estimating risk; situations or things that feel risky often aren't, and we can easily shoot ourselves in the foot by overreacting to small risks (the Iraq War being the largest recent example).

I can think of two ways this well-intentioned law will almost certainly end up killing more children than it saves.

First, if fewer children learn to swim because pools are closed, then more children might end up drowning over the next few years. I have no idea whether or not there will be a measurable increase; hopefully any change will be small enough to get lost in the statistical year-to-year noise.

Second, if a lot of money is spent fiddling with pool drains, then that makes us poorer overall. And, statistically speaking, poorer kids are more likely to get killed than richer kids. In the book Risk and Reason (very wonky; I've been slowly digesting it for a while now), Cass Sunstein cites economists who estimated that somewhere between $2 million and $10 million spent to comply with regulations costs about one life. The congressional budget office estimates that it will cost "less than" $40 million for state and local governments to comply.

The thought of Virginia Graeme Baker drowning at the bottom of a pool is horrible. It's a lot harder to imagine the children who might be saved because they learned to swim, or to image the handful of people who will die because we spent money on pool drains instead of programs to improve childhood nutrition or encourage immunizations or prevent kids from joining gangs or...

Refinancing through the Productivity Lens

I'm impressed, the Feds accomplished something they set out to do: they said they wanted mortgage rates to be lower, and now they're lower.

That means good news and bad news for me personally. The good news is that I can refinance my mortgage and pay less to live in my house (the phrase "the rich get richer" seems pretty relevant; I'm incredibly rich compared with most people in the world).

The bad news is that refinancing a mortgage is not a productive activity. I have better things to do with my time than talking to a loan officer, filling out paperwork, yada yada yada. And all the people who will be involved in the refinance (the appraiser, my lawyer, the loan officer) will be getting paid to do unproductive work, too.

I have no idea where the money to pay for all of that unproductive activity comes from. I suspect that we're in the middle of a really big inter-generational Ponzi scheme-- that the government is running up huge debts that will eventually be paid by my kids (or maybe their kids). And maybe that's OK, because our kids will be rich.

But I bet they could be even richer if we spent more of our time doing productive work to make the world a better place.

Why the Auto Bailout Won't Work

A quote from Steven Spear (Senior Lecturer at MIT, Senior Fellow at the Institute for Healthcare Improvement, Former assistant professor at Harvard Business School) in the December 15'th issue of Time Magazine caught my eye:

"...what's inherent about anything complex is that it becomes impossible. You can't design it perfectly," he says. What matters, he argues, is swarming problems from every direction to create high-speed, low-cost discovery and learning.
("Is This Detroit's Last Winter?")

Japan beat Detroit because the Japanese companies realized this, and abandoned (or never adopted) the top-down, central-control approach.

So now Congress wants to appoint a "Car Czar" to fix Detroit. And they want the automakers to present their five-year plans for restructuring.

Or, in other words, the companies are failing because they relied too much on top-down command and control. So Congress is planning on fixing them by adding even more top-down command and control.

Do politicians really believe that they have the power to Fix Things, or is it all just hot air to try to fool us into re-electing them?

Zoning Priorities

Image by Carol Esther via Flickr.

The Amherst Planning Board Zoning Subcommittee is going to meet today to get feedback on their list of priorities for next Town Meeting. Here's what I'm planning on saying:

Yay infill! Concentrating development where there is already existing infrastructure (roads, plumbing, transportation, businesses) should be a no-brainer; it's gentler on the environment and puts less stress on Town services.

Yay downtown/village center development! Putting businesses closer to where people live and work should also be a no-brainer.

Yay Mullin Rule! I had to look this one up-- the Mullin Rule makes it a little easier for projects to make their way through the permit approval process; if a board member misses a meeting, they can still vote on the approval as long as they promise that they thoroughly reviewed the meeting they missed. Making the permit approval process more predictable is a good thing.

Boo recreational facilities in residential development. The proposal was to require 1,000 square feet of "recreational space" per unit for developments that have more than four units (with a bunch of exceptions, and lots of verbiage defining "recreational"). This was referred back to the Planning Board last Town Meeting, and the more I think about it the less I like it. Why am I opposed? Let me count the ways:

1. It would encourage sprawl. I thought we were aiming for denser development in general, because that will mean less pressure to develop in outlying areas.
2. It will not solve the underlying problem. The real problem is a lack of competition in the Amherst rental market. Vacancy rates in Amherst are under 2%; a rental market with a healthy amount of competition should have a vacancy rate in the 6-8% range.
   With little competition landlords can keep rents high and improve their properties as little as possible. So we get expensive, run-down rentals with no recreation facilities.
3. If the recreational facility requirement is just a pro forma hoop that developers jump through to get a permit, then they'll do nothing to maintain them over time. Every development will end up with a sad, rusty swing set and a couple of weedy horseshoe pitching pits, put in just to satisfy the recreation requirement and then promptly forgotten.

Oh, and I'll probably mention my pet zoning peeve-- the silly, antiquated rules for home businesses, although it probably doesn't have much practical effect on life here in Amherst, and shouldn't be a high priority.

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Update after the meeting: I'm wrong about the recreational requirement increasing sprawl; apparently Amherst already requires un-built, un-paved space of at least 1,000 square feet per unit, so basically the change would require that some of that empty space be turned into "recreation" space. I still don't like it for the other two reasons, and because it goes against the KISS principle. Amherst zoning is way too byzantine already and needs an overhaul (as the head of Amherst's planning department, Mr. Tucker, mentioned at tonight's meeting).

Biofuel Doubts

I'm a biofuel skeptic.

It seems to me most biofuels are Rube Goldberg contraptions-- first you take plants that convert sunlight into glucose or cellulose or whatever, then you harvest them and run them through some process to convert them into fuel.

Why not just cut out the middleman and convert the sunlight directly to energy? Solar panels are a whole lot more efficient at converting sunlight into energy than plants. True, solar panels don't grow themselves (yet?), but you don't have to use tractors and huge factories to convert solar panels into usable energy.

I predict that in, oh, 25 years biofuels will be a niche energy technology, used only in places where there's an abundance of organic material available to process that would otherwise just be thrown away (maybe food processing factories will derive their energy from biofuels made from seeds and stalks and stems).

I wonder how much tax money will be sunk into subsidizing biofuels between now and then...

Fall Town Meeting

Fall Town Meeting is done after two three-hour-long meetings. I didn't do much homework beforehand, because I just didn't care terribly much about most of the articles-- there was the usual administrivia and then a few zoning tweaks which I thought would be uncontroversial.

I did do a little homework on the proposal to require 1,000 square feet of recreation space for new multi-unit developments. If people want recreation space, then they'll buy condos or rent apartments that provide it. This requirement may be well-intentioned, but it seems to me it would just have the unintended consequence of encouraging sprawl.

So I did a back-of-the-envelope calculation to see how much sprawl it might cause, worst case. Take the 10,000 or so households in Amherst, count each as a "dwelling unit", multiple by 1,000 square feet, and you get: about 230 acres. Which is just a little over 1% of the total acreage in Amherst.

Eh. Not enough to get worked up over. But I'm still glad this article didn't pass (see Clare's post for details).

I suppose one of these years I'll figure out that anything can be controversial here in Amherst. Two examples:

First, I thought the establishment of an Affordable Housing Trust Fund would sail through with little discussion. Who would vote against Affordable Housing, especially when it was unanimously supported by the Select Board, Finance Committee, and Fair Housing Committee?

Well... me and a majority of other Town Meeting members, it turns out. I voted against it for three reasons:
1. There were a couple of wording problems that made me think maybe nobody had really thought hard about what it really said. For example: "at least one [trustee] shall be the Town Manager..." Huh?
2. I didn't hear any compelling reasons why we need this right now. I heard "this will be another valuable tool in our arsenal..." I wanted to hear an example of something that would be difficult or impossible to do without a Trust Fund.
3. I'm pretty skeptical of most Affordable Housing Projects. If you want to make housing more affordable for everybody, then let developers BUILD MORE HOUSING.

Many of the arguments against this article were petty (there seemed to be a turf war going on, with Hwei-Ling trying to guarantee a trustee spot to a Homelessness Committed person and Vince seeming to argue that we don't need no stinking Trust because the Affordable Housing is the Community Preservation Act Committee's job...) or ridiculous (arguing that the Town might be legally liable for something the Trust does right after Town Counsel stands up and says the opposite is just blatant fear-mongering). Sigh.

The other Article that was surprisingly controversial was to allow "predominantly by appointment" visits to offices in the Light Industrial zoning district. Town Meeting approved a similar change for a bunch of other zoning districts last year, and Light Industrial was (I gather) accidentally left out. Amherst has just a teeny-tiny bit of land zoned LI, it's easy to miss.

It eventually passed, but man! It seemed to take forever! All to allow by-appointment-only visits, and only after getting a Special Permit from the Zoning Board of Appeals.

To get a little perspective: the Light Industrial zone is the only Zone in Amherst where "Storage and Processing of Radioactive Waste" is allowed-- by Special Permit, of course. If the article had failed, then Town Meeting would have essentially been saying that Radioactive Waste was less of a danger or nuisance than having people visit an office building by appointment.

Which, come to think of it, might actually be true-- a lot more people die every year in car accidents than die from radioactive waste...

Democrats Seek Help for Automakers

I stole the title of this blog post from this morning's New York Times. I don't get it-- we're going to send money to the same people who have consistently opposed higher fuel economy standards and decided to invest in lobbyists and building more SUVs and trucks instead? I thought the Democrats were AGAINST corporate welfare; maybe I'm misremembering.

No, here it is, in the official Democratic Party Platform, 2008 edition, page 25:

We have let the special interests put their thumbs on the economic scales. We do not believe that government should stand in the way of innovation, or turn back the clock to an older era of regulation. But we do believe that government has a role to play in advancing our common prosperity: by providing stable macroeconomic and financial conditions for sustained growth; by demanding transparency; and by ensuring fair competition in the marketplace. ...To make our communities stronger and more livable, and to meet the challenges of increasing global competitiveness, America will lead innovation in corporate responsibility to create jobs and leverage our private sector entrepreneurial leadership to help build a better world.

Giving billions of dollars to three big companies sure sounds like a special interest putting their thumbs on the economic scales.

As does propping up companies that have failed to match the innovation of their competitors. How is that "ensuring fair competition in the marketplace?"

As for corporate responsibility: we'll get responsible corporations when we require them to bear the cost of their failures. Let them go bankrupt.

Big Picture Economics

Politicians love to talk about how they're going to make us better off. They'll give the middle class a tax cut, or declare War on Poverty, or stimulate the economy or spend money and create jobs.

But most of what they do is just a shell game, moving money around. It's either Robin Hood (taking from the rich to give to the poor), Robber Baron (taking from the disenfranchised and giving to the powerful), or just plain robber (taking hard-earned money from people who earned it and giving it to lazy people who don't deserve it), depending on your point of view and whether or not you belong to the party that won the last election.

In the grand scheme of things, it's all about productivity. We are wealthier than our ancestors because our parents and grandparents figured out how to be more productive-- how to produce more with less. We produce more food on an acre of land, more cameras with less raw materials, and drive further using a gallon of gasoline than before.

Our environment is cleaner and healthier than it used to be, too, because they figured out cleaner, safer, more efficient ways of producing goods and energy and entertainment.

Whenever I think about what the government should be doing in the current financial and economic crisis, I try to see things through the "productivity lens"-- what policies will make us more productive?

Does increasing the minimum wage make us more productive? (no, it looks like it just raises teenage unemployment, and unemployment is bad for productivity.)

Does lengthening unemployment benefits increase productivity? (these researchers say yes, although these ones find that it is mostly wealthier people who take advantage of extended unemployment insurance-- and since everybody pays into the unemployment insurance system lengthening benefits might just end up being Yet Another Regressive Tax.)

Does spending money on public works projects make us more productive? (yes, if they're fulfilling an actual need and aren't just make-work projects or pork-barrel projects designed to make politically connected contractors rich.)

Is it better for productivity to tax when money is spent or earned, or does it not matter? (I don't know. I do know that a simpler tax system would make us all more productive, because we'd spend less time and money on the unproductive task of filling out forms to make the IRS happy.)

The economy is a huge, complex, chaotic system that nobody fully understands. I 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.

Vote for Aaron

When you're voting for Change on Tuesday, be sure to get a Special Town Election ballot (it's different from the ballot that has the presidential race and all the ballot questions on it) and vote for Aaron Hayden for Select Board.

He's smart, reasonable, consensus-builder who did a great job on the Planning Board and will make a great SelectPerson. Go to his website for more information.

(And just because I like to pretend I'm a psychic: I predict he'll win by a landslide; he'll get 70% of the vote, Mr. Morales will get 25%, and Mr. Brower and Mr. Keenan will split the rest)

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Post-election update: So, I once again prove that I am not psychic. Aaron won with a little over 50% of the vote.

So many questions... (on the ballot)

Here in Amherst we'll get to vote on six different ballot questions. The conversation at my son's soccer game went something like:

Dogs are number 3, I think-- does voting for it mean you're FOR or AGAINST the dogs?

Is marijuana question 2?

For the record, I'm going to vote No, Yes, No, No, No, and No. But I don't really feel very strongly about questions 3 through 6.

I'm going to vote No on question 1, because it would cause a lot of short-term chaos and pain to completely eliminate the state income tax. And I'd rather phase out regressive taxes like the sales tax first. I predict most people will agree with me and vote no.

I'm going to vote Yes on question 2, because I don't think it makes sense to throw people in jail for using marijuana. As long as you don't hurt anybody else, I think you should be free to do whatever you like to your own body (just don't come crying to me if you do something stupid). I have no idea how this will turn out; I've been surprised in the past at how much Puritanism there is left in various parts of this state.

Question 3 is to prohibit greyhound racing. I'm going to vote no, but it's a weak no-- I don't really care if there's greyhound racing in Massachusetts or not, and if we wait a while, it looks like greyhound racing will die a natural death. If dogs are being mistreated or abused, then it seems to me we need to strengthen our animal welfare laws. But I predict the combination of people who don't like gambling and people who like cute dogs will be enough to get this one passed.

Question 4 is to double the CPA surcharge here in Amherst. If it passes, my family will pay something like $50 or $100 more per year in property taxes-- not a big deal. I don't really feel strongly one way or the other, but I'm swayed by the argument that passing this may make it less likely that voters will agree to an override in the future.

Question 5 is about single-payer health insurance. I agree that our health care system is screwed up and needs some major fixing, but relying on government bureaucrats to decide what health care we all get for "free" seems like a really bad idea to me. I think the medical and drug company lobbyists are already too powerful; give them a single place to focus their efforts and they'll get even more powerful.

And question 6 asks the legislature to reduce greenhouse gas emissions by 80% in the next 12 years and promote local businesses doing green stuff. Umm, yeah:

More than half the energy-related emissions come from large sources such as power plants and factories, while about a third comes from transportation.

So if we close all our power plants and factories, and then drive one-tenth as much as we do now we'll reduce our greenhous gas emissions by 80%. I'm gonna vote no, because I don't believe in wishing for ponies.

Food Stamps, Public Grocery Stores and Schools...

Why don't we have public grocery stores where poor people can get food for free?

There are private food banks that give food to needy people, but no network of government-run grocery stores. Instead, we have the Food Stamps program, which gives something like $35 billion of food vouchers to low-income people.

What if we replaced Food Stamps with a nationwide network of government grocery stores? Grocery stores make about 6% profit on the stuff they sell; that's two billion dollars of Food Stamps profit we could save if we had all the poor people shop at government-run grocery stores!

Umm, yeah. Does anybody out there really believe that:
1. A government-run grocery store would be anywhere near as efficient as competing, private grocery stores?
2. That, given a choice, anybody would prefer to shop at a government-run grocery store?

We do have government-run grocery stores, by the way-- military base commissaries, where military families can get name-brand groceries less expensively than at regular grocery stores. But according to a 1997 congressional budget office report:

Active-duty families in the United States buy about 40 percent of their groceries in stores other than commissaries, which is evidence that the benefits of commissary shopping cannot be measured simply by savings on grocery bills.

Or, in other words, if you PAY people to shop at a government grocery store by subsidizing prices, they'll still decide to shop somewhere else 40% of the time. I haven't done the math, but I bet the Defense Commissary Agency is less efficient than private grocery stores; I bet they spends more than 6 cents per dollar in revenue running their stores.

Anyway, I'm pretty darn certain that it would be a bad idea to get the government more involved in the grocery store business.

Which makes me wonder: why is the government so dominant in the primary-school-education business? And why, if our food voucher program (food stamps) works so well, are so many people so vehemently opposed to education vouchers?

I think public education is a very, very good idea. Giving every child an equal opportunity to a great education is just simply the right thing to do (and benefits us all in the long run).

But I'm not such a big fan of the idea of public schools; despite spending ever-larger amounts of money, public schools in this country continue to do a mediocre job of educating our kids. IQ scores were up in the 80's and 90's, but test scores weren't-- what's up with that?

Of course, private schools haven't done a whole lot better than the government-run schools in improving student performance, but at least they have improved. If we had more private schools there's every reason to believe that the increased competition would increase quality.

The only argument for government-run schools that almost makes sense to me is that we need public schools because a system of private schools would fragment our society. If we're not mostly all taught the same stuff we'll grow up to be terrorists (or socialists or fascists or Baptists... or whatever you happen to find scary).

I don't know how to reconcile that argument with all the talk about the value of diversity. I like the fact that I can shop at the big, everything-to-everybody supermarket or shop at a little Asian market that has all sorts of interesting food that I don't know how to cook or buy a farm share and support a local farm.

Imagine if we paid for food like we pay for education. We'd all pay taxes, and then we'd all be able to get an amount and type of food, for "free", with the amount and type carefully determined by expert local and federal bureaucrats (oh, and with rigorous testing to ensure quality-- No Chicken Left Behind...), from public grocery stores. If we weren't happy with the quality or amount of food we got, and we were rich enough, then we could pay extra to private grocery stores or restaurants.

Does anybody out there believe we'd be better off in such a system? Why should paying for education be fundamentally different from paying for food?

Unlicensed plumbers! Horrors!

I gotta say, I laughed out loud when I read that "Joe the Plumber" isn't a legally licensed plumber.

I'll have a little more respect for McCain if he comes out and says that requiring plumbers to have state, city, and county licenses to fix people's toilets is bad for everybody except the United Association of Plumbers, Steamfitters, and Service Mechanics. But only a little; claiming that "plumbers like Joe" will pay more taxes under the Obama administration is just plain lying.

If you're not reading this on the website...

I subscribe to a bunch of blogs, and have decided to use Google Reader's "sharing" feature to comment on, or mark, posts that I find particularly interesting. That's easier than creating new blog posts here, and, I think, less annoying (I don't like blogs that are 90% recycled content).

Anyway, if you want to see a sample of the propaganda I feed myself, check out Gavin's shared items (if you're reading this on gavinthink.blogspot.com, you might have already noticed them in the top widget in the right-hand-column of the page...).

Wise and Powerful Leaders ?

The last time I got really worked up over a presidential election was 1984, when Ronald Reagan was re-elected president. I was a freshman in college, and completely, 100% convinced (along with a majority of my classmates) that Reagan was the dumbest, laziest, worst president in history. I was stunned on election night to see that the rest of America (except Minnesota and Washington, DC) disagreed.

My political views have changed a lot since then; mostly, I'm a lot more skeptical-- of the rhetoric from both Lefties and Righties, of course, but I'm also much more skeptical of the whole notion that our Wise and Benevolent Leaders will guide us safely through whatever crisis is currently worrying us.

Yes, it matters who we choose as president. But I believe it matters a whole lot less than we think.

We have a powerful need to feel like somebody is in control, and I think our pattern-matching brains are eager to congratulate or blame whoever happens to be "in charge" when good or bad things happen. God or the Devil. Reagan or Carter.

We're generally too busy or too lazy to figure out what our leaders actually do control, and we seem to be unwilling to admit that large parts of our lives are outside of anybody's control. So we continue to trust that we can build levees to protect our cities from mother nature and elect politicians who we trust will appoint wise bureaucrats who will keep our skies and borders and food safe. Elect the right people, we think, and everything will be perfect.

So: I'm not particularly worked up about this presidential election. I'm going to vote for Obama, because one of the things that the president certainly does control is the US military, and I think Barack will use the military more wisely than McCain. I hope that he will restore some of the checks and balances we've lost since the 9/11 tragedy; the real brilliance of our system of government isn't that we've had particularly Wise and Benevolent leaders; it's that we have a system that works pretty well even if the people in it are imperfect (as we all are).

Sudafed Security

Image by NicolasCo via Flickr.

I bought some psuedophedrine at the drugstore yesterday (I've got a nasty head cold that doesn't want to go away), which meant I had to have my driver's license scanned and sign a statement saying that I'm not going to turn it into Methamphetamine.

Which got me to wondering: have those new hoops had an effect? Are they effective, or just slightly annoying?

According to the Office of National Drug Control Policy, methamphetamine use is down about 50% since 2005. So it looks like it is working. Although the crackdown might be having some unintended consequences:

Over the last few years, the methamphetamine market has
moved from being a cottage-type industry (with many small-scale manufacturing operations) to more of a cocaine- or heroin-type market, characterized by a higher level of integration and involvement of organized crime groups that control the entire chain from the provision of precursors, to manufacture and trafficking of the end-product. For example, Asian organized crime groups operating in Canada reportedly receive significant precursor shipments from Asia, which are then manufactured into methamphetamine and ecstasy-group substances. These same criminal groups then reportedly smuggle the finished product into the USA but also to a growing international market outside of the region.

Source: Amphetamines and Ecstasy, 2008 Global ATS Assessment

Oh, and then there's this:

"Although some may conclude that there is a reduced availability for methamphetamine, the fact that our data show an increase in amphetamines suggests that some workers might be replacing one stimulant drug for another in the larger drug class of amphetamines," said Barry Sample, Ph.D., Director of Science and Technology for Quest Diagnostics' Employer Solutions division.

Or maybe they've been switching to oxycodone (the data shows that more people started using oxycodone in the last two years than stopped using meth).

So, if the Asian drug lords manage to ramp up production to replace all the out-of-business backyard meth labs, and meth use rises back up to pre-sudafed-security levels, do you think we'll be allowed to buy cold medicine without showing ID again?

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UPDATE: According to the data: it disrupted the supply... for about 18 months.

Even more inflation worries

In the debate last night, both candidates said that "we" need to "stabilize" housing prices.

And then this morning the Federal Reserve cut interest rates by half a percent. Which actually means that they're dumping money into our financial system (that's how they get interest rates to go down).

All of which reinforces my belief that they're going to inflate away the financial crisis; they'll raise the price of everything else so that it looks like home prices are stable. If I knew a whole lot more about macro-economics I'd try to figure out how high inflation might get, but I really have no idea. Inflation has lately been about 5% a year; I'd wouldn't be surprised to see double-digit inflation next year.

So, if you're sitting on some extra money, do not put it under your mattress; it will just sit there and lose value. Treasury Inflation-Protected Securities look pretty good to me right now...

Inflation worries

I've been thinking about what's likely to happen with this financial mess we're in, and I'm not very optimistic.

The root cause is over-inflated housing prices. Too many people bought too many houses for too little cash up front.

Possible solutions to the problem:
A. Keep housing prices high by increasing the demand for houses.
B. Keep housing prices high by decreasing the supply of houses.
C. Let housing prices keep falling until demand meets supply.
D. Ramp up inflation so that house prices stay stable (but the price of everything else goes up).

The bailout is plan "D". $700billion is going to magically appear and go into the financial system to prop up failing mortgages. A trillion or more is already committed to propping up Fannie and Freddie and AIG; all that money going into the system means more inflation.

The politicians would never choose options A, B, or C. "A" basically means you need more people here to buy houses, and I don't see any political will to adopt a more lenient immigration policy.

"B" would make for really bad PR-- "The department of Housing and Urban Development bulldozed 600 foreclosed homes in Detroit last month..." might be sound economic policy but it makes for heart-wrenching pictures on the TV news.

"C" means more foreclosures and middle-class people feeling poorer because their $350,000 home is suddenly worth only $200,000. That ain't gonna fly.

The beauty of plan "D" is that it's mostly painless for the politicians. The $340,000 6% mortgage on your $350,000 house will be worthless to the bank when inflation is at 10%, but it's a very good deal for the middle-class home-owning taxpayer. If wages don't keep up with inflation, or if taxes have to be increased to pay for all this, then they'll be worse off, but that's a problem the next administration can deal with.

I can't figure out how they're thinking they'll avoid more bank failures in a higher-inflation economy, though. I've got a 30-year fixed-rate mortgage with Florence Savings Bank at 6% interest that will be less than worthless to the bank (it's "net present value" will be negative) if inflation climbs above 6%. Do small banks hedge their inflation risk somehow?

On Rescuing the Economy

What's a skeptical person supposed to think about the proposed bailout/rescue?

I know I'm irrational; I have a bias against the investment bankers who made millions of dollars shuffling Other People's Money around. I know that modern finance can be a wonderful thing; hedging risks and investing money in productive activities are worthwhile activities, but I have no idea how much of what Wall Street has been doing is financial snake oil and how much is essential to a well-oiled economy.

I have a bias against people who run up their credit cards or max out their home equity lines of credit to live beyond their means. If no bailout means housing prices fall further and it's impossible to buy a car with no money down... OK.

I also have a bias against the idea that giving a government bureaucracy $700billion to play with will fix the problem. There's just too long a track record of bureaucratic bungling, corruption and outright lying to trust them.

For example, the bill that passed the Senate last night contains, among other things:

• Exempting children's wooden arrows from excise tax


• Income averaging for Exxon Valdez litigants for tax purposes

Set aside whether or not you think rewarding domestic wooden arrow manufacturers or oil companies is a good idea or not. The fact that these little "sweeteners" made it into the bill means that some congress-critter is thinking, "Gee, I don't think I should support this; I don't believe Bernanke and Paulson when they say that we'll have a financial meltdown if we don't do this. But you know, if it helps out good-ole Rose City Archery, I'll vote for it..."

Budget Choices...

Tomorrow evening (Thursday, October 2nd) there'll be a presentation by the "Facilitation of the Community Choices Committee," followed by comments.

Maybe it's just my head cold talking (I'm extra grumpy today, and also sad), but is there really much to say? Town expenses have been rising faster than revenues, and whether that means we need to cut "unnecessary" services or pass an override to make up the difference is a judgment call. One side will say that our children will be illiterate and our streets overrun with crime if we make cuts. The other side will say that we'll drive working class people into bankruptcy if we raise taxes even a little.

Maybe I'll be surprised and the public meetings will reach a grand compromise of some sort that makes everybody equally unhappy. We'll sell the golf course and privatize Leisure Services and pass an override to fix the potholes, fund the schools, and pay for a couple more police or firemen.

The all-or-nothing nature of the budget bothers me. Couldn't we just all vote and directly express our preferences on:
1. What the total budget aught to be
and
2. How the budget aught to be split up between the various Town functions

Tally up all the votes and there's the budget.

I know, I know, that's WAY too simple to possibly work...

Arnold Kling talks sense

Arnold Kling is an economist who used to work at the Fed and at Freddie Mac; I think he makes a lot of sense. For example:

Mortgage security trading was a major source of profits on Wall Street, and I know that a lot of Hank Paulson's crowd want to revive that industry. Instead, I'm ready to treat it like the parrot in the Monty Python pet shop sketch. The mortgage securitization model is dead. It is no more. It is deceased. Gone to meet its maker. It has ceased to be.

Visit EconLog for much more from somebody who actually knows what he's talking about.

Mister Chicken turns into Miss Saigon

Amherst has lots of restaurants (especially pizza places). It had one fewer over the summer-- "Mister Chicken" went out of business. No worries, though-- it's being replaced by "Miss Saigon."

I find that oddly amusing...

(and I wonder: will there be any controversy over the name? I just hope they have good Bánh chưng, a dish I haven't had since I lived in Palo Alto...)

On-street parking tradeoffs...

I'm still trying to decide what to think about the proposal to eliminate on-street parking from our residential street (High Street in Amherst). I'm concerned about safety. I don't really care about the parking; we never park on the street, and have plenty of parking for guests, except for the rare occasions we host a large party. If eliminating on-street parking makes the street significantly safer, then I think it's a good idea.

My bleg (that's the cutsie word for "blog-beg") asking if somebody would figure it out for me didn't work, so I found a nice meta-study published in the American Journal of Public Health that passes all of the skeptical tests for information quality-- it's a peer-reviewed scientifically rigorous study published in a respected journal.

What I've learned: it's complicated. Speed is the most important factor:

The British Department of Transport, for example, finds that the risk of pedestrian death in crashes rises from 5% at 20mph to 45% at 30mph and 85% at 40mph (source)

But visibility is also important-- children get killed when they dart out from behind parked cars and get hit by drivers who don't see them in time.

Sidewalks are also important-- they reduce accidents-- and High Street already has a sidewalk on the west side of the street, which is the same side of the street where parking is currently allowed.

If I was a traffic engineer, maybe I'd be able to dig up odds ratios for all the various factors and actually calculate the tradeoffs-- but I'm pretty sure, given all the traffic calming information I was able to dig up via google (see, for example, this paper), that eliminating parking on High Street will make it more dangerous.

Stimulating bad behavior

Congress is thinking about another "stimulus package" to "jump-start" the economy:

The shape of the stimulus package is still undecided, but proposals to repair roads, extend federal unemployment benefits, increase home energy subsidies, provide disaster assistance payments and provide aid to automakers are expected to be considered.
(source: Associated Press)

Umm, yeah. So the first stimulus package didn't work; Congress printed money and gave it out, and gee willikers! Surprise Surprise! We got higher inflation that wiped out any stimulating effect!

This time, they're not going to make the mistake of trusting you and me to spend the money they print; instead, they're going to spend it on Worthy Projects.

Like bailing out the US automakers. After all, how could they have known that making environmentally-unfriendly SUVs would someday become unprofitable?

Or encouraging homeowners to keep their energy-inefficient appliances and furnaces by increasing home energy subsidies. No, we mustn't let market forces push people into being more energy-efficient; that would be painful for all the existing businesses that make lots of money doing things the old-fashioned way (by lobbying Washington to prop up their dying industries).

I'm generally an optimist when it comes to prospects for our environment, economy, and community; I believe that, overall, we're getting healthier, wealthier and wiser, and we're paying more attention to the well-being of each other and the planet.

My big worry is that we've concentrated too much power into the hands of a small number of people, and that they'll manage to screw things up really badly all in the name of "helping" or "saving" or "stimulating."

Grading the States, and On-Street Parking...

I'm feeling lazy; anybody out there in blog-land feel like doing some research for me?

First: many months ago the Pew Center released it's "Grading the States" report, where it ranks the states on the "effectiveness" of state governments.

I think it would be interesting to see if there's any correlation between their rankings and economic growth. Or poverty rates. Or student performance on the NAEP tests. Does it really matter if state governments are "effective"?

Second: the Town wants to ban parking on our street (High Street). My gut reaction is "no way! People drive too fast down our street already..." I wanna know: does traffic really slow down on residential streets with on-street parking? Are there more or fewer accidents on streets without on-street parking? I bet the answers are somewhere on the NTSB web site, but, as I said, I'm feeling lazy...

Miles per Gallon on the Bus

A week or three ago I read that if you divide the number of passenger miles ridden by the number of gallons of fuel used by the public transportation systems of many cities, you end up with a pretty lousy number (see here for the full scoop). That makes sense if the public transportation system runs lots of mostly-empty, big, heavy, diesel-hungry buses or trains or ferry boats.

Which made me wonder: how does our local public transportation system fare?

The National Transit Database gave me the number of passenger miles ridden in 2006 for the entire PVTA system: about 31 million miles.

And an email to the nice folks at the PVTA got the number of gallons of fuel they used last year (2007): about 1.5 million gallons.

Divide miles by gallons and you get about 20 MPG (that's not quite right-- I should divide 2007 miles by 2007 gallons; I'll update this post when the 2007 ridership miles are available).

20 MPG is lousy. The CAFE mandated fuel efficiency for single-passenger vehicles is 27.5 MPG. Unless you own a gas-guzzler, and especially if you're going somewhere with a friend, then the raw data says driving will use less gas than riding the bus.

But that's not really right. The "marginal cost" of riding the bus is probably pretty close to zero; add another person to the bus and it's not going to use a whole lot more fuel. At least, until the bus gets too crowded and you need to buy and run another bus to fit everybody. Then the marginal cost of that one extra person is ginormous.

I think the lesson is that it is not as simple as "bus good, car bad." Running lots of empty or mostly empty buses is worse for the environment (and our economy) than running smaller, more fuel efficient private cars or taxis. If we really care about the environment, then the fuel efficiency standards that we set for cars should also be applied to public transportation. Why not tell PVTA: "You must be at least as fuel efficient, on a passenger-mile-per-gallon basis, as the CAFE standard for single passenger automobiles (27.5MPG)."

Pot Luck or Banquet?

I've been thinking a lot about central planning versus spontaneous order lately, and wondering if my personal preferences are clouding my thinking.

For example, I like the typical pot-luck dinner better than the typical catered banquet. I like not knowing exactly what will be there, and I like trying new things. I don't like the "would you like the beef, chicken, or vegetarian?" question; I always want to answer "give me a little of all three."

My political preferences match my culinary tastes. I don't want to choose between Democrat and Republican, I'd like to have a little of each, please. And I don't want the government to create a least-offensive solution for whatever problem I might face, whether it's what kind of school my kids attend or what type of health insurance I think is best for me. I'd rather have a gloriously chaotic array of choices that I can try or ignore.

I'm probably atypical-- I bet most people would choose a safe, boring catered meal over a riskier but more exciting pot luck. I can hear them now: "What if everybody decides to bring a lime Jello^® salad?" I suspect that the same type of irrational fear of the worst-case scenario drives a lot of government programs, policies and laws that I think we'd be better off without.

But maybe they're being perfectly rational, and they just value consistency and safety a lot more than I do. Either way, I kinda wish they'd stop making me pay for stuff I don't want...

The only thing we have to fear...

Sigh.

Mr. Weiss, Ms. Stein, and Ms. Awad are afraid.

They're afraid that a conversation held in private 35 years ago between a former select board member and a judge might inspire somebody to sue the Town for holding an election on the same day that the State holds elections.

So we'll elect somebody to replace Ms. Awad in November instead of September. Not a big deal, in the grand scheme of things, but it still bothers me.

It bothers me that they're second-guessing the opinion of the legal experts, who didn't see anything wrong with holding the election as planned.

It bothers me that this whole episode smells fishy. Changing the election date the day before nomination papers are due??? My spidey-sense is telling me that something beyond fear of a lawsuit is motivating at least some of the actors-- somebody wants the select board seat to remain empty a little longer, or wants a little more time to convince somebody to run for the open seat...

And it bothers me that it sets a bad precedent. What's to stop other former select board members from "remembering" agreements that they made in private with judges in the distant past, if the current select board makes a decision with which they don't agree? There are very good reasons meeting minutes and court records are public documents; our memories are fallible, even when we are honestly trying to remember accurately what happened.

Sigh.

Blink Be Gone

Some random geeky thoughts today: The software I'm working on uses blinking, red text for "server error" messages. I had forgotten how annoying that was; blinking text on the web has gone away.

WAAAY back in HTML 1.0 days, there was a lot of use of the infamous <blink> tag. Blinking text on a web site was a sure sign that it was designed by somebody who didn't know what they were doing.

It's yet another nice example of market forces creating spontaneous order, and creating "good enough" solutions. Firefox still support blink, but you almost never see it any more. I'm just surprised no congress-critter jumped on the bandwagon and introduced legislation to ban it (for safety-- apparently, too much blinking text can cause seizures in certain sensitive people).

Natural, but more deadly

Robin is going to the Hitchcock Center's nature camp this week. They spend a lot of time outside looking at plants and critters, so the camp registration materials suggest applying sunscreen and bug repellent to campers every morning.

They further recommend the use of non-DEET ("natural") products, "so we don't hurt the creatures we might pick up."

That got my skeptical hackles up. "Natural" doesn't mean "safe," or "good," or "effective," despite what many people seem to think. It's what drives the whole faith-based (oops, I mean "Complementary and Alternative") medicine industry.

So could DEET residue left on your hand hurt a froggie that you pick up?

I dunno. And that's not really the relevant question; the real question is "might DEET hurt the froggie any more than any of the other things that are likely to be found on a six-year-old's hands?"

Like, oh, maybe the citronella oil that is the active ingredient in a lot of "natural" bug repellents. Mr. Google knows everything, and it turns out both DEET and citronella oil have been tested for toxicity on wildlife:

DEET is slightly toxic to trout, with a Mean Toxic dose of about 70,000 parts per billion.
Citronella oil is also slightly toxic to trout, with a Mean Toxic dose of about 17,000 parts per billion.

I'm citing the figures for trout not because I like the word "trout" (mmm... trout...) but because that's the only species I could find that had been studied for toxicity to citronella oil.

So-- the "natural" products are four times as toxic. And they're less effective, so you have to use more.

They do smell a little bit better than DEET, and by using a 100% organic, all-natural, fair-trade-certified bug spray you're telling your eco-friendly friends that you really care about the environment and your kids' health. Which is why I spray the kids with DEET as they leave the house, but put "naturapel" in their backpacks to reapply at camp. I don't want the camp counselors to think I'm trying to kill their frogs.

My dissonant inbox

We humans have a tendency to seek out information that reinforces our pre-existing beliefs. I'm worried that I'm brainwashing myself by reading and listening to too much pro-free-market, anti-central-planning media, so I try to expose myself to progressive points of view on economic issues.

My email inbox this morning was particularly dissonant. I'm on the mailing lists for both the Center for Small Government, which is trying to repeal the Massachusetts income tax, and The Coalition for Our Communities, which is absolutely opposed to repealing the tax.

It seems to me the key questions are:

• What does Massachusetts state government spend it's money on? Bridges and roads? Health care? Police? Higher education? Programs to help the poor? (answers at: http://www.mass.gov/bb/gaa/fy2008/app08/ga08/hdefault.htm ).
• How much of the budget goes back to local communities (and do richer communities get less, per-capita, than poorer communities)? (I did some spot-checking for rich and poor communities, and it looks like state aid, chapter 70, and chapter 90 are nicely progressive).
• Does Beacon Hill spend more or less per-capita than other states? (the massbudget.org folks like to use "spending as a percentage of personal income", which seems like an odd measure to me-- do richer people need more government services than poorer people?)
• How fair is the income tax, compared to other taxes and fees the state collects? (pretty fair, as far as I can tell)

Unfortunately, both the pro- and con- websites aren't very good at answering those questions. The Vote NO website is using the Bush war-on-terror strategy-- scare tactics. Risk! Unsafe! Cuts! Fragile!

The anti-income-tax website is using a shotgun approach, appealing to idealism, putting up misleading statistics (like using non-inflation-adjusted budget numbers), and talking about how they're not fringe lunatics (... but it doesn't help that their home page looks a little bit like www.timecube.com-- lots of colors, really long, lots of subjects on One Big Page....).

Neither is very convincing. My gut feeling is that repealing the state income tax would be irresponsible, and if we're going to repeal a tax, it should be the sales tax; at least the income tax is reasonably progressive (whereas the sales tax is pretty darn regressive).

Both sides agree that the state budget should be even more transparent. One change I'd like to see, at the Local, State, and Federal levels, is to put budget numbers in perspective. For example, I have no idea whether or not $5,889,274,147 (almost six billion dollars) is the right amount of money to spend in Massachusetts on Health and Human Services. I have trouble imagining six billion dollars.

A billion is too big a number for my little brain to handle. Divide by either the state population, or divide by the number of people in the state below the poverty line, and I can begin to understand:

State Health and Human service spending per-capita per-year is about $900. About 10% of Massachusetts citizens have incomes below the poverty line ($11,000 per year), so if Health and Human Services spends all their money on those poorest people, that's $9,000 per poor-person per year, not counting education spending for poor kids, which is a different part of the budget. Oh, and not counting affordable housing. Or early education. Or labor and workforce development.

Sigh. I feel slightly better than I did three hours ago, when I started my state budget spelunking. But I also feel like I'll never really figure out whether or not our tax dollars are being spent wisely. I don't think anybody is smart enough to figure that out; that's why I believe in democracy and free markets and not benevolent dictators. There's gotta be a better way...

What can we learn from Chilean buses?

Foto tomada por Antoine.

The powers-that-be in Chile decided last year to get rid of the private bus system in Santiago and replace it with the government-run Transantiago, to better serve everybody (especially the poor).

Can you guess what happened?

Michael Munger explains on the latest EconTalk (listen here). As usual, it's funny (really!) and interesting and thought-provoking.

I'm a Professional Predictor!

I'm not a gadget geek. I don't have to have the latest&greatest cell phone or MP3 player. I don't like owning lots of stuff.

But I am a service slut. I try out all sorts of stuff; BookCrossing and Swaptree to recycle books, FreeCycle to give things away, and Prosper to lend money to strangers (I've been meaning to give Kiva a try; it's another way to lend money to strangers).

Lately, I've been having fun with Predictify:

Predictify is a web-based prediction platform where you can predict the outcome of real-world events, build a reputation based on your accuracy, and even get paid REAL MONEY when you're right! Best of all, it's free, no points or bets required.

I made an accurate prediction about drought conditions in California and made $10!

Of course, if I divided that $10 by the number of hours I've spent at predictify.com... well, I'm not going to quit my day job. I enjoy making predictions, and a website that keeps a running total of my prediction accuracy is a good reality check (we tend to remember when we were right, but forget when we were wrong).

I want a website that reads the news and the net, extracts predictions, automatically determines whether or not the predictions come true, and then gives pundits and bloggers a bullshit rating. With a browser plug-in, so when I came across anything from one of the idiots who said the Iraq war would be quick and cheap I'd get a great big "THIS PERSON IS AN IDIOT" splashed across the page.

Cap and Trade sounds nicer

I predict (with confidence of about 68.3%) that early next year Congress will vote to do something about global warming. As Bryan Caplan puts it:

Something must be done.
This is something.
Therefore, this must be done.

With both McCain and Obama proposing cap and trade systems, it looks like that's what we'll get.

I'd rather just have a straight greenhouse-gas-tax. It's too easy to cheat with cap&trade (as Europe seems to be finding out-- it looks like their system isn't working very well), and cap&trade creates more inertia-- everybody who makes money trading emission permits under a cap&trade system will lobby VERY hard against changing a system that pays their salary. If, 50 years from now, somebody figures out a clever way of either reversing global warming or if it turns out rising temperatures and ocean levels isn't as big a problem as we think, we'll be stuck with an antiquated system that just makes a few rich people richer.

A tax would be simpler and more transparent. Which, I think, is part of the reason it has no chance of being adopted.

I think the other part of the reason is because "tax" is a dirty word. Nobody likes taxes, and politicians bend over backwards to avoid using the "t" word ("It's not a tax, it's a user fee!").

But Cap and Trade has something for everybody! Lefties like the Cap part-- we'll Cap emissions and save the environment! And Righties like the Trade part-- we'll Trade our way to economic bliss!

My Most Absurd Belief

The economists at George Mason University take people to lunch and then ask them "What's your most absurd belief?"

What a great question! I think my most absurd economics-related belief is that we'd have just as much technology and entertainment if we got rid of patents and limited copyright to 20 years after publication...

Socialism, as a philosophy, appeals to me. Why couldn't we all just do our best, share with each other, and all be one big happy family?

Unfortunately, Socialism, as an economic or political system, just doesn't work.

But I've got this little nagging voice in my head that says that maybe the digital economy is different. The marginal cost of reproducing a song or software program or digital textbook is, approximately, zero. The laptop computer I'm writing this on contains my entire music collection; it would take me ten days, nine hours and forty-five minutes to listen to it all.

And I just realized that I'm sharing it with everybody else here at Cushman Market. Why not share? It would be extra work for me to remember to turn off sharing every time I disconnected my laptop from my home network; that's a waste of my time. It's more economical for me to be a digital socialist.

Before we know it, our laptops and iPods will be able to store every song and book ever published. We could make all of that information and entertainment available to everybody in the world; wouldn't that make the world a much better place?

But that's absurd. If artists can't sell their songs, or authors can't sell their books, then artists and authors will stop creating new stuff!

I dunno. I have no idea how, but I think it would actually all work out OK if we got rid of almost all of our current intellectual property protections. Maybe we'd have fewer artists and authors, but maybe that would turn out to be just fine. Maybe if people spent less time working to earn money to buy music and books they'd create more music and books themselves.

Uh-huh. And maybe we could get together to form sustainable local organizations of like-minded people and form an ideal society that's in complete harmony with nature.

(stupid hippies....)

New (for me) way of blowing off telemarketers...

May I speak to Mr. or Mrs. Anderson?

This is Mr. An DREE sen.

Oh, sorry about that. My name is blah, I'm calling on behalf of Comcast with a valuable offer for you, but first I need to ask you if it's all right if this call is recorded for quality assurance purposes.

Recorded? No.

May I ask why?

I just don't like being recorded.

At this point the telemarketer person (who sounds like a very pleasant young woman) seems a little stunned. I hate telemarketing calls, but I try not to be rude to telemarketers-- they're just ordinary people trying to make some money. So I tell her that I'd be happy to read about the wonderful offer if they sent me information in the mail, she directs me to the Comcast web site, and our little conversation ends.

I'm disappointed I couldn't think of a more creative reason for not wanting to be recorded. It would've been more fun to say something like:

I'm a pastafarian, and some of us believe that our souls are carried in our voices, and I don't want part of my soul imprisoned forever.

Or maybe:

Greedy corporations steal my labor, I'm not about to let them steal my words, too!

Maybe I'll go browse some tinfoil-wearing-hat websites later to get some more ideas...

Energy Efficient Construction

LEED gas station in Los Angeles.
Image by Omar Omar" on Flickr

Town Meeting voted to ask the Planning Board to create a law requiring that new buildings be "green" (energy-efficient and environmentally friendly and such).

Oh, except for single-family homes.

I think a reasonable argument can be made that there's a "market failure" when it comes to building energy-efficient, environmentally-friendly buildings. Most of us aren't well-equipped to figure out if it's worth spending $20,000 more up-front for a super-energy-efficient home that will save us $1,000 a year in energy costs, even if you are the type of person who drives a Prius. How can we possibly know? Maybe Global Warming will mean milder winters in 10 years, so we'll be spending less on heating. Or maybe oil prices will be double what they are today, so we'll be spending a lot more.

And I bet nobody really knows if it's better for the environment to buy a house made of cheap, commercially produced pine, sheetrock and fiberglass insulation or one made from engineered plywood created from bamboo, all-natural vermiculite and clay, and organic hemp fiber. (Note: I mostly made that up, I have no idea what is being touted as the most environmentally friendly building material these days...)

But if you believe that there's a market failure here, then it's really odd that single-family homes are exempt, for two reasons:

1. Single-family homes are the most energy inefficient form of housing. Multi-family dwellings tend to use less energy per person.

2. People buying single-family homes are most likely to be irrational when it comes to considering long-term costs. Businesses and landlords have to be at least reasonably good at weighing short-term costs against long-term benefits, or they'll go out of business.

It makes sense to ask that government buildings be energy efficient and environmentally friendly; the incentives for government-funded construction projects are to build as cheaply as possible-- after all, the laws require that the construction be done by the lowest bidder, and the long-term costs will probably be paid by some other administration (or the tenants if it's a public housing project).

But I think it would be really dumb to put more regulations on businesses and multi-family dwellings in Amherst, and not on single-family houses. I'm quite certain that turning Amherst into a bedroom community with nothing but open space and single-family houses, where everybody has to drive everywhere because businesses decided to relocate to nearby towns that don't make them jump through environmental certification hoops, would not be good for either the Town or the environment.

Can we help the truly poor?

Town Meeting finished early last night, so I had time to finish reading Paul Collier's book The Bottom Billion. I like reading books by people who really know a subject. Professor Collier is an expert on African economies who used to work for the World Bank, not a starry-eyed do-gooder who thinks if we all just tried harder (and donated more money) we could solve all the world's problems. And he's not a hard-hearted Social Darwinist who thinks foreign aid spending is always counterproductive.

He makes a lot of concrete recommendations that, unfortunately, are unlikely to be followed. For example, he points out that most aid organizations are helping out developing countries that probably don't need the help. Most of the world is doing just fine, thank you very much, with economies and standards of living rising.

They should be working on helping the bottom billion-- the countries that are going nowhere (or going backwards). But aid organizations aren't likely to do that, because:

• They are likely to fail
• It's dangerous and difficult to work in those countries
• Some of the policies that will help (free trade, military intervention in certain cases) are politically unpopular

The good news is that our government might be listening; the African Growth and Opportunity Act (passed by Congress and signed into law in 2000) is an example of the type of policy that should help the Bottom Billion. More good news: part of the solution is to make systems more transparent; it's hard to maintain high levels of government corruption in countries that have freedom of the press and freedom of speech. Despite the best efforts of despotic governments around the world, I believe technological innovation will help drive development and freedom, too.

Senate Lunch Ladies

It seems Amherst is not alone in struggling with outsourcing food service. The Senate recently voted to privatize it's cafeteria, but not before much hand-wringing:

"I know what happens with privatization. Workers lose jobs, and the next generation of workers make less in wages. These are some of the lowest-paid workers in our country, and I want to help them," Sen. Sherrod Brown (D-Ohio), a staunch labor union ally, said recently.

The House privatized years ago, and has better food at better prices (huh, imagine that...).

(Hat tip to the Marginal Revolution blog).

One step backwards, Three forward...

Spring Town Meeting is done, except for one little article about spending a hundred or two thousand dollars to buy a view of a Big Old House on Main Street. I'll probably vote against it, because I'm a cheapskate.

We rescinded a Town Bylaw! It turns out the Health Department has the authority (granted by the State) to regulate biotechnology stuff, so we don't need a town law that tries (badly) to do the same thing. One or two Town Meeting members (wearing belts and suspenders, if I recall) argued that we should keep the bylaw anyway, but the vote wasn't close to being close.

Jonathan O'Keeffe pointed out that we also passed three new bylaws, so, overall, we've got two more bylaws than when we started. D'oh!

And I voted for all three. Double-d'oh!

Two of the three (the nuisance house and false alarm bylaws) are meant to punish people for doing stupid things that cost the rest of us money. I'm a big believer in being responsible for your actions, and I trust that our Police department will be reasonably fair when deciding whether or not to apply these new laws, so I voted "Aye."

Not without some reservations, though. I'd rather we had a single bylaw that said something like "if you do something stupid that costs the Town money, then you gotta pay" (in proper legalese, of course). The tricky bit would be figuring out who decides what's "stupid" and what's an accident or honest mistake, but I think that's the kind of thing juries are meant to decide.

Image by
"nal from miami"

The third new bylaw is the "Right to Farm" bylaw. I voted for it because it strengthens property rights, basically saying that if you build your house next to a farm (or next to a big piece of land that might one day become a farm), you should expect to smell cow poop, hear tractors, and maybe even be woken up at 5AM every morning when the rooster crows.

Maybe it will make people more tolerant and less whiny. A boy can dream...

Weirdly Rational Real Estate

If you're up for some brain-stretching exercise, listen to Robin Hanson talk with Russ Roberts about signalling.

Our old house in Madison
(Image from Google Maps Street View)

I think I'm missing a signalling gene or two, or maybe that's just my excuse for being a socially inept, introverted doofus. In any case, I sometimes reason myself into doing things... uh, differently.

For example, when we were moving from Madison, Wisconsin I used an unconventional method to find a realtor to sell our house. I sat down and decided what I really wanted was somebody who was really effective at selling houses-- somebody who would sell our house quickly for a lot of money. So I created a little questionnaire:

1. How many listings are you currently handling as the seller's agent?
2. How many buyers are you representing right now?
3. For the last five homes you sold:
   1. How long were they on the market?
   2. What was their appraised price?
   3. What was the sale price?

... and then I visited open houses and gave it to the real estate agents, asking them to fill it out and mail it back to me.

According to the agent who we eventually picked, this didn't go over so well with many of their colleagues. Many were actually offended! We are supposed to find a realtor that we like personally, through word-of-mouth recommendations; somebody with whom we feel like we can develop a good relationship, somebody who we feel like we can trust.

In the language of Robin Hanson, somebody who gives us the right signals.

Especially in the case of realtors, this seems odd to me. I'm hiring somebody (for many thousands of dollars) to help complete a financial transaction; I don't care if I like the person, I just want them to do a good job. Heck, we were moving out of town, so it's not like we were going to be lifelong buddies with our realtor!

I distributed a dozen or so questionnaires, but only received 2 or 3 back. We picked the person with the best track record, and they sold our house very quickly (we had two offers within two weeks) for above our asking price. Yes, this was back in 1998, in the good-old-days of rising real estate prices, and yes, maybe we would have had the same good results if we'd picked any other real estate agent at random. The mystery is: why are we so reluctant to look at objective measures of effectiveness when choosing our realtors, doctors and school teachers?

Higher Cost almost always = Lower Demand

So far, I've been a dismal failure as a psychic; my predictions are about as reliable as a used Yugo. But it's looking good for this prediction:

The increase in the minimum wage will mean fewer teenagers working during the summer of 2008.

The headline from this morning's New York Times is "Toughest Summer Job This Year is Finding One."

I'm surprised that neither of the economists quoted in the article mentions the increase in the minimum wage as a possible cause; one of them says that there's really no problem, that fewer teens WANT low-paying summer jobs these days. The other blames a general economic slowdown.

It's probably a combination of factors; I wonder if somebody smarter than me will come up with a clever way of teasing out the effect of the minimum wage increase separately from all the other things going on in our economy...

The Radiation Monster

I've just finished reading "Power to Save the World," which is all about why using uranium to generate power is a really good idea.

The author is a lefty environmentalist and writer who became convinced (after talking with a bunch of nuclear scientists) that nuclear power is cleaner, cheaper, and safer than any of the current alternatives. I think she's right.

Perhaps the most surprising factoid I learned reading the book is that there's no evidence that exposure to small amounts of radiation causes cancer. The evidence that does exist seems to indicate that it doesn't-- below a certain dose, it looks like radiation exposure doesn't hurt us at all.

That makes sense, and the paranoia about radiation fits in with the more general paranoia surrounding very small doses of toxic substances. Like the current paranoia about prescription drugs showing up in our water supply; people just can't seem to grasp the idea that our bodies have evolved the ability to heal themselves and are pretty good at dealing with all sorts of nasty stuff, as long as there's not too much of it.

All of the estimates of "future cancer deaths" from the radiation released from Chernobyl and Three Mile Island assume that, if 100% of people die from a radiation dose of 1000, then 0.1% of people will die if they're exposed to a dose of 1.

That makes about as much sense as saying "if 100% of people die when hit in the head by a 10 pound block of concrete dropped from a height of 15 feet, then 1% will die if hit in the head by a two-ounce rock dropped from a height of 15 feet." Dosage matters. Just ask the good folks at the Dihydrogen Monoxide Research Division.

Socialism Doesn't Work (a Rant)

I spent half a day at a ONE Massachusetts seminar a couple of weeks ago.

I knew I was going to have some, uh, issues with their philosophy when, within the first five minutes, they presented their Collective Value Proposition:

We want—and recognize that all Massachusetts residents deserve—healthy lives; healthy families; quality education; safe, vibrant communities; and broadly shared prosperity in a thriving state.

Yes! Absolutely! Agree 100%! GO TEAM!

These are goals we cannot achieve alone and can best accomplish by working together...

Yes!

...through a participatory, democratic government.

Ummm... really?

The same participatory, democratic government that decided it would be a good idea to invade Iraq?

That has failed to win the War on Poverty, the War on Drugs, and the War on Terror?

The government that's spending about twice what was projected on "universal" health coverage that (oops) isn't actually covering everybody in Massachusetts and might be making health care here even more expensive?

The government that a lot of people believe is unfairly influenced by corporations and the rich (like the $250,000 loan to Sal DiMasi that's been in the news recently)?

It's the system, stupid. Power corrupts. Incentives matter. If we want healthy lives, quality education, and safe, vibrant communities then give the Power to the People, Man. Don't give more Power to the Man!

I suppose the "participatory" modifier is supposed to address that. But the goal of ONE Massachusetts is not to fix a broken system-- it's to "change public attitudes towards government by promoting a positive vision of government." The phrase "lipstick on a pig" comes to mind.

I feel a little guilty being critical; they did feed me lunch, showed lots of useful information on the state budget, and went over some "framing" techniques I could use to make an audience more likely to agree with me.

Maybe we need more Witch Doctors?

The more I learn about medicine, the less I trust doctors.

Don't get me wrong, I'm not about to start advocating homeopathy or acupuncture or herbal therapy or any of the other "alternatives" to modern medicine. They're almost 0% trustworthy; I think I'd give doctors and conventional medicine a solid "B"-- I probably trust them 85% of the time. And I'm probably overconfident.

Robin Hanson posted some fascinating observations today about our trust in doctors at his Overcoming Bias blog, and suggests that we'd be better off if we had more faith healers.

Not healthier-- but better off. Because instead of spending lots of money on conventional medical treatments that don't work, we'd instead spend less money on unconventional medical treatments (that also don't work).

Health and longevity correlate very strongly with your level of wealth, not your level of health care. Maybe having an inexpensive Witch Doctor as your primary care physician for any non-life-threatening illnesses isn't such a bad idea...

(Photo credit: Felix42 contra la censura on Flickr)

Deaf Kids and California Rocks

Michele is in California, on a field trip teaching deaf high school kids about geology. They've got a blog, of course-- check it out here.

Nudge

I just read "Nudge: Improving Decisions About Health, Wealth, and Happiness." It nicely combines two subjects I've been very interested in recently-- behavioral economics and public policy.

The basic idea is to use knowledge of our built-in biases to nudge us towards doing the right thing. For example, if you ask people to put 3% of their salary into a retirement plan today, most people will say no. But if you ask them if they're willing commit to putting 3% in the next time they get a raise, most people will say yes.

We value money or things that we own right now more than things we don't.

Another example they use: install a light that shows people how much energy your house is using (green for not much, red for a lot), and people use a lot less energy.

We're not very good at turning long-term goals into short-term actions, unless we get short-term reminders. New York city's recent requirement that chain restaurants post calorie counts alongside items in their menus will be a very interesting test of this-- will the short-term reminder help people eat less and get skinnier?

I really like the approach of encouraging people to do the right thing with "nudges" instead of trying to force them with mandates. Now, if I could just figure out a way of nudging people to be less verbose in Town Meeting...