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...

---

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).

Is Store of Value enough?

I'm still deep down the Bitcoin rabbit hole, and I've been thinking about its "store of value" and "means of exchange" properties.

I wonder: if Bitcoin is used as just a store of value and nothing more, could that be enough?

Imagine it is years in the future, when the generation of new bitcoins has slowed to a trickle.

As a pure store of value, bitcoins would function as I-owe-you tokens. People who wanted to store value would buy bitcoins from people who were done using them to store value and needed some cash to buy something.

The value of a bitcoin would be a function of how many people wanted to store versus spend. If everybody decided at once they wanted to spend their money instead of saving it they would find no buyers and the price would drop to zero.

If lots of people had lots of extra money that they wanted to store (and they decided bitcoins were a good place to store it) the price of bitcoin would go up.

I'm not an economist, but I would guess that the desire for a good place to store value is pretty steady. I base that on the recent behavior of US Treasuries; people want a safe place to park their money so much that they have actually driven the inflation-adjusted interest rate on many Treasuries negative ("investors" are paying the US government to hold their money for them).

Bitcoins are a pretty darn good store of value; they don't take up any space, you can back them up, you can protect them with a password, you can split them up and store them in a lot of different places, and when you want to spend them you can do it from the comfort of your barcalounger using your cell phone.

You can even store them in your brain if you want (my brain is too flaky, I try not to store valuable things in there).

I can imagine that once they grow up bitcoins could have a lot of value purely as a store of value, even if they never take off as a currency used for everyday purchases.

I'm sure the overall demand for "store of value" goes up and down, but it looks to me like it is counter-cyclical-- when the economy is bad, people take money out of things like the stock market and put it into things like T-Bills or gold.

If bitcoins are used only as a store of value in the future, then we should see their value going up during recessions and down during boom times.

If they're used only as a means of exchange then we should see the opposite.

I hope they'll be used for both so they'll have a mostly steady value regardless of what the economy is doing.

DISCLAIMER: I've been saying this for a couple of years now, but it is still mostly true:  Bitcoin is an experiment-- only invest time or money in it that you can afford to lose!

Paper/Plastic/Cloth

There was a discussion on the Amherst Town Meeting mailing list a while ago about paper versus plastic versus cloth grocery bags, which poked my "skeptical" and "libertarian" buttons.

"Skeptical" because I think much of the debate over paper versus plastic is driven by the "natural must be better" fallacy.  Plastic comes from nasty, icky oil, and so must be worse for the environment than paper, which comes from beautiful, majestic trees.  Cutting down beautiful, majestic trees to make paper is evil, too, of course, so we should all re-use organic hemp shopping bags.

"Libertarian" because the idea of Town Meeting deciding what the best way of bringing my groceries home just rubs me the wrong way; we'll all have different opinions on how much we value saving the environment, convenience, hygiene, cost, and signaling our environmental bona-fides by schlepping around filthy, tattered, disease-ridden reusable bags.  (I'm skeptical of the idea that reusable bags are dangerous due to germs, but I respect that some people are genuinely worried about that)

So I was please to run across this thorough, data-driven study of plastic versus paper versus cloth bags on the environment:
  http://www.biodeg.org/files/uploaded/Carrier_Bags_Report_EA.pdf



As far as I can tell, it's not a fluff piece sponsored by the Plastic Bag Council of Wales-- the study was sponsored by the Environment Agency, "a British non-departmental public body of the Department for Environment, Food and Rural Affairs and an Assembly Government Sponsored Body of the Welsh Government that serves England and Wales."

Looks like if you use your cotton bags more than 130 times, and you just throw out your plastic shopping bags, then cloth is better than plastic. I use ours probably twice a week, and they seem to last 3 or 4 years (about 300 or 400 re-uses), so definitely in the better-for-the-environment category.

So policy-wise, a disposable-bag-tax to encourage use of re-usable bags would be the smart thing to do.

Unless that means more people drive a little farther to Stop and Shop in Hadley instead of Big Y in Amherst, of course. I'd bet gasoline usage getting to the store is hundreds of times more damaging to the environment than what kind of bag you use. Charging 25cents for parking at the grocery store would probably be even better public policy.

PS: I generally don't like collecting things, but make an exception for reusable bags-- we've been collecting them from trips overseas. The little cloth bag we got from our stay in Yungaburra is my favorite, although the big re-usable plastic bag from Paris is probably the most functional. Travelling by airplane is absolutely terrible for the environment, though...

Big Picture Demographics

What is really happening when we "save for retirement"?

Well, it means you don't spend money you've earned right now, and, instead, do something else with it. Either you invest it (give it to somebody else, hope they do something productive with it, and share the gains with you) or you convert it into some asset (cash, gold, rare paintings) that you hope will keep its value.

Investing is great for the world; old cranky people lending their money to young, not-yet-cranky people to encourage them invent new and wonderful stuff makes the world a better place. "We" should do more to encourage it.

Saving cash under your mattress or storing gold or paintings in a vault increases the price of those things in the short run and might encourage governments to print more money, gold miners to dig up more gold, or painters to produce more Collection-Worthy artworks. None of which makes the world a better place (well, not for me, anyway, I'm a cretin who doesn't appreciate Fine Art).

And, of course, if the trend reverses and lots of people are try to sell that stuff to pay their grocery bills the price will fall. "Saving money" this way is a Ponzi scheme; you've got to assume that there will be enough people in the future who will be willing to work for you if you give them pieces of paper (or metal or canvas and paint) that you were willing to work for years ago.

I wonder how much of the global financial crisis and economic doldrums is driven by simple demographics-- by older people in developed countries (or their pension fund managers) deciding that they will save money for retirement in "safe" investments like government bonds or gold rather than "risky" investments like the stock market. I'm pretty sure I remember reading that we get more risk-averse as we get older, and the financial crisis seems worse in places where the population is aging most (Japan, Europe, the U.S.).

Unfortunately, the worse the economy gets the more likely we are to collectively "take fewer risks" and do really stupid-for-long-term-growth things like pay interest to banks on the cash they park at the Federal Reserve.

If I believed our governments were capable of making smart investment decisions maybe I'd agree with the Keynesians and be cheerleading for another big Stimulus-- "You're collectively getting older and stingier, so We will just do what we know is best for you and take that money you're sitting on and invest it in make-the-world-a-better-place stuff.  Trust us, we pinky-swear we won't waste it on unproductive projects that make our political constituents and donors happy."

Is anybody happy with how that worked out last time around?

So: if big-picture demographics is a big part of what is driving economies into the ground, what should be done?

Seems to me an easy answer would be to convert Social Security into a system that actually invests the tax receipts in some productive, economy-expanding activity (bonds, the stock market, venture capital, whatever) instead of the government writing IOU's to itself and sticking them in a drawer somewhere. I'm a "wisdom of crowds" type of guy, so I'd prefer that individuals make the investment decisions (or decide who gets to make the decisions for them).

But I'd settle for an appointed or elected Panel of Experts investing the money and getting paid oodles of money based on how well or poorly their recommendations did after a decade or two.

Health Care Predictions

Yesterday the Supreme Court upheld the Affordable Care Act.

On a meta-level, the decision made me happy-- it shows that at least one of the Supreme Court justices thinks for himself and doesn't always fit into the "Conservative" pigeon-hole that the media likes to put people into.

And I think the decision makes sense on a common-sense level; if it looks like a tax, smells like a tax, and sounds like a tax... then it is a tax.  Even if they decide to avoid the "t-word" and call it a "mandate."

But... I don't think the Affordable Care Act will succeed in making health care more affordable.

If you've read this blog for a while you know I like to calibrate my thinking by making testable predictions. I have a terrible memory, and by writing down what I think will happen then comparing it to what actually happens I teach myself that I'm not as smart as I think.

So besides not making health care more affordable, what do I think will happen in the next 10 years?

Well, I don't think the Republicans will actually repeal the Affordable Care Act, no matter what they say right now.  If Romney becomes president (I'm not even going to try to predict that, I have no clue) they'll repeal some little part of it and declare victory.  If he loses then there will be a huge, noisy debate in Congress that ultimately accomplishes nothing.

After 2014 I predict a whole lot of healthy people will figure out that dropping their insurance coverage and paying the no-insurance-penalty (tax!) is, financially, the best thing to do. After all, if you get seriously sick you can always buy insurance then (no denying coverage for pre-existing conditions, remember?).

If nothing changes, I'd expect a year or two after that lots of small employers decide that paying the penalty to their healthy employees and dropping their coverage is also the smart thing to do.

So in 2018 or so I'd expect there to be a health insurance industry crisis that, in typical Washington "We need Another Law to Fix This Law that We Passed Back Then" fashion, prompts Congress to first try to make it illegal for employers to drop health plans and increase employee's compensation.

When that doesn't work, they'll increase the no-health-insurance-tax so it is more expensive than the least expensive health plan you can buy.

But health insurance costs will continue to ratchet up every year, the IRS will spend ever-increasing money tracking down people who cheat on their no-insurance taxes (there will be laws passed requiring health insurers to report on who has purchased insurance, so the IRS doesn't have to rely on possibly forged documents from taxpayers), and the whole cobbled-together system will be obviously falling apart again in 10 years.

What happens then, I have no idea.  If the Democrats are in power, maybe we'll get a "Medicare for All" single-payer system.

If the Republicans are in power.... I have no idea what they'll do, they don't seem to have a coherent vision for what to do.

If I were King, I'd implement something like this for a national health care plan (inspired by a Megan McArdle proposal that I can't find right now):

1. De-regulate medicine as much as possible. At the very least, make doctor's and nurse's licenses portable across state and national lines and allow nurses to do much more routine health care. If I really were King I'd replace government medical licensing with private licensing, and give people the freedom to legally visit really crappy unlicensed doctors if they were willing to take the risk.

2. Eliminate tax breaks for the World-War-II-wage-controls-inspired "your employee buys your health insurance for you" system that most people are using now to get coverage. Every economist in the world agrees it is a stupid way to pay for health care.

3. Phase out Medicaid and Medicare. Replace them with a single, national, means-tested catastrophic health insurance plan that is simply something like "The US government pays for any health care costs that exceed X% of your adjusted gross income.

We could argue about what X is-- I don't think it should be zero because then people have no incentive to shop around for health care or weigh the costs and benefits of visiting the chiropractor twice a week (that's my problem with single-payer solutions).  Somewhere around 10% feels right to me; you pay out-of-pocket for day-to-day health care expenses, but if you are unlucky and get seriously sick and either lose your job  or have huge medical bills then we'll all chip in and pay for it.  (this is where my libertarian friends disown me as a rotten-stinking Statist)

A system like that should have the right incentives to actually make health care more affordable.

CoinLab and Bitcoin

A friend sent me a link to a GeekWire article about Seattle Bitcoin startup CoinLab raising half a million dollars and asked "is that a good or bad thing?"

It's a good thing!

The long-term vision for the Bitcoin economy is a closed loop-- people earn and spend bitcoins, instead of exchanging bitcoins for some other currency.

Since most people get most of the earnings in the form of a salary, and since I think it will take a very long time (if ever!) before a typical company considers paying employees in Bitcoin, the 'earning' side of the equation worries me most.

That's why I created the Bitcoin Faucet, and that's why I like to see projects like ForBitcoin or FeedZeBirds that give people all of the world ways to earn a little coin. They give anybody with an internet connection and some extra time, anywhere in the world, a way to put their time to productive use.  That's a very good thing.

CoinLab's idea is to let game companies "earn profit from idle users with a custom-branded coin client." The users run a little program and are awarded with in-game items or power-ups. The game companies get dollars.  And CoinLab makes it all work by doing a bunch of behind-the-scenes infrastructure, exchanging the bitcoins that the users create for dollars.

I think CoinLab is being smart by not asking the game companies or users to deal with bitcoins, but instead having them deal with what they're already comfortable with (dollars and in-game commodities).

But eliminating the exchange and paying the gamers and/or the game developers directly in bitcoin would be more efficient, and is an obvious, easy-to-implement feature. Bit-Pay is doing something similar for merchants, depositing dollars or bitcoins or both in their accounts when they receive bitcoin payments.

I think the biggest market for a service like CoinLab will be younger gamers. If you're 15 years old and don't pay rent or electricity then leaving your computer running overnight to earn some in-game currency will be pretty darn appealing. If a whole generation of video-game-playing kids grows up with Bitcoin then the future for Bitcoin will be very bright.

Theoretically it even makes sense if you are paying for the electricity, because CoinLab is essentially outsourcing all of the billing and payment and collection infrastructure to the local electric company. And utility companies are pretty darn good at getting their customers to pay their bills; that translates into a more efficient payment system and lower costs for users.

But... but... what about the environment? What about all those gamers using all that extra electricity to create bitcoins?  THINK ABOUT THE POLAR BEARS!

Big-picture economics lesson: more efficient == better.  Better for people, better for the environment.

Think about the unseen-- if people are (indirectly) using electricity to pay for in-game items instead of using their credit-cards or buying 'game cards' in stores, where does the cost-savings coming from?

That's easy to think about for physical game cards-- there will be fewer produced, which means less plastic manufactured, fewer trucks shipping them from some factory to stores, and fewer car trips to the mall so teenagers can spend a little cash to get their Farmville fix.

It's harder to think about for credit cards, because the costs are really well-hidden. A lot of effort is put into collecting bad debts. I'm sure credit card companies and debt collection agencies spend a lot of money on electricity for their call centers, but most of the cost savings will be fewer people trying to get deadbeats to pay their bills.

That would be a good thing, too! Collecting debts doesn't make the world a better place, and the out-of-work debt collectors will find something more productive to do. Maybe they'll go work for the game company who has a little extra cash and can afford to pay for another customer support person. Maybe they'll go work in a Sierra Club call center, convincing gamers who have a little extra cash (because they paid $10 on their electricity bill for some game stuff instead of paying $10.05 to a credit card company) to contribute to programs that help polar bears...

The People, United, Will Never...

This year's slam-dunk, gonna-pass-with-an-overwhelming-voice-vote article on the Town Meeting warrant is Article 28: "Reversing Citizen's United v. Federal Election Commission."

I'm trying to decide whether or not it is worth my time or the risk of being a pariah to speak against it at Town Meeting. I don't like Town Meeting taking up national issues in the first place; I understand it is a grand tradition, but it seems to me if the people of Amherst feel strongly about a National issue then they should contact their congresscritters about it.

Or maybe if they don't agree with their congresscritter they should form an organization to pool their efforts and try to amplify their voice... like the Citizen's United organization.

I don't like Article 28 from it's very first sentence, which says:

Whereas: the First Amendment to the United States Constitution was designed to protect the free speech rights of people, not Corporations;

Since corporations didn't exist in the US as legal entities until 1811 that's true. Although I'm not sure that is relevant; the First Amendment doesn't give a lot of wiggle-room when it comes to free speech rights:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech...

Seems pretty clear to me; there's no exception for "... except if the speech happens to be a TV commercial about a political candidate, paid for by an organization instead of an individual, aired just before an election." There's no way to be sure, but I imagine if TVs had existed back in the 1700's our Founding Fathers would have been producing and distributing revolutionary videos in addition to pamphlets and broadsides. They might have even funded that activity using money from their businesses.

If you read the actual text of the Supreme Court decision (available online), they cite an interesting precedent for "Corporations do have a right to free speech" that I haven't seen mentioned at all-- NAACP v. Button, a 1961 civil rights case where the state of Virginia had passed laws making it hard for the NAACP to find disaffected people and file civil rights suits on their behalf. The NAACP is a corporation, not a person, so I suppose you could argue that the Supreme Court was wrong back then, too-- that the Virginia legislature aught to be able to do whatever it likes to the NAACP because corporations have no rights. Newspapers are corporations these days, too; maybe that means that other pesky part of the First Amendment about freedom of the press doesn't apply, either. Right?

I do agree with parts of Article 28; I think there is too much money in politics. But I don't think passing a constitutional amendment and then making it illegal for corporations and unions to make TV commercials or movies for or against candidates or issues that they care about would change that at all; they would just Find Another Way. If they can't fund a TV commercial, maybe they'll find a celebrity sympathetic to their cause and get that celebrity to promote the cause (and maybe the corporation will make an extra generous donation to that celebrity's favorite charity...).

I'd like to shrink government to lower the stakes; if there weren't millions of dollars in subsidies at stake I'm pretty sure the American Beet Grower's association wouldn't spend hundreds of thousands of dollars every year on lobbying. And if the Federal Government wasn't spending billions of dollars on education I'm pretty sure the teacher's union wouldn't spend tens of millions of dollars a year lobbying the Federal Government.  They'd spend all that money lobbying at the state and local level instead, which seems like the Left aught to support as a political version of "Buy Local."

---

Update: passed after zero discussion and a unanimous voice vote.  I abstained.

Election Time!

All two-hundred-and-forty Amherst Town Meeting seats are up for re-election this year; I'm one of 41 candidates running for election in Precinct 9 (the top 24! vote-getters will be elected).

Yes, it is kind of a crazy way to run a Town; I've never bothered to see if there's been any serious research into whether the form of Town government actually makes a difference to their success. I suppose even defining "success" would be hard; New York City is arguably the most successful US city, but I wouldn't live there if you paid me to.

If you're an Amherst voter, go to the Sustainable Amherst website, print out their handy 2012 election guide, and then go vote on Tuesday.

Bully Petition

I can't help it; it seems like I always look at things a little sideways.

Case in point: the petition to get the MPAA to give the movie "Bully" a PG-13 rating.

The argument is:

Because of the R rating, most kids won’t get to see this film. No one under 17 will be allowed to see the movie, and the film won’t be allowed to be screened in American middle schools or high schools.

My first thought is "Darn Right! Bullying is bad! Where do I sign?"

But then I start to wonder: is that true? Does an R rating really mean it won't be allowed to be shown in schools?

Maybe the real problem is inflexible school policies that rely exclusively on MPAA ratings instead of letting teachers decide whether or not their classes are mature enough to hear the "f-word."

So I sent an email to the Amherst schools administration and got a very helpful response:

Teachers are asked to check in with their principals before showing a movie that has not been shown in the past as part of a unit of study. You can go to the arps website under school committee policy manual to read them.

And, indeed, the policy for Amherst Schools has nothing to do with MPAA ratings. Bravo! I'm glad we don't have one-size-fits-all policies.

Of course my third thought on all of this is:  I wonder if showing movies about the bad effects of bullying is an effective way to decrease bullying. It sure seems like it should, but without data from a controlled experiment, I wouldn't bet that it does.

Are Red-Staters Stupid?

Imagine there's a Federal Government program that is designed to help people... oh, I don't know, let's say help people lose weight.

The Program chugs along for years, and then an economist notices a funny thing: the states that get the most money for The Program are full of people who hate The Program. And those same states have the highest rates of obesity!

I see two likely explanations:

1) The Program is doing what it is supposed to do, and putting more resources in the states with the biggest problem. It's not the government's fault that the ingrates in those states don't know what's good for them.

2) The Program is having an unintended negative effect and is somehow making people fatter. The people know this, and that's why they don't like The Program.

Personally, I'd lean towards explanation number 2, but that's because I'm biased towards bottom-up rather than top-down solutions. To actually figure out which explanation was more correct would take some careful analysis.

The above thought experiment was inspired by Paul Krugman's column last week "Moochers for Self-Reliance," where he talks about the fact that Red States get more money per-capita from the Federal Government than Blue States. Because they're fatter poorer.

The possibility that more government spending could make everybody poorer doesn't seem to ever enter Professor Krugman's mind. Which is odd, because he's written quite eloquently about how the Soviets managed to bankrupt their economy by spending lots of money.