Month: April 2006

When is it normal to be weird?

Are Germans pushier when waiting in line?  (Or are Italians more emotional with family members?)  Under one view, this is a cultural difference.  Germans aren’t pushier "on the inside," their society simply has a different standard for how a given temperament should manifest itself in public.  Under another view, Germans really are pushier.  Yes their culture is different but that is because they are pushy.

Let’s say (for purposes of argument alone) you are weird.  Could you ever excuse your own weirdness on the grounds that, well, you are weird all the time? (Hat tip to Derek Parfit.) No matter what you think of the Germans, the first approach to their pushiness is in principle possible.  Maybe they simply have a standard with different calibration.  Why should the application of such principles be restricted to the group level?

Whenever you see or hear of me doing something weird, think twice.  I am actually behaving normally, and no offense is intended.  Quite the contrary, I am flattering you by behaving normally in your presence.  You just haven’t yet solved the signal extraction problem which would allow you to differentiate between my actual weirdness and my different standards for what weirdness should be.

Are people who are only sometimes weird "weirder" than those who are weird all the time?  What if, for this reason, you seek "weirdness all the time" — to prove your normality — but overshoot?

Here is my earlier post on why weird men should marry foreign women.

A Debate on Contingent Fees

Jim Copland and I debate contingent fees at PointofLaw.com.  I was pleased with this statement of my position:

If a lawyer and her client want to contract in Lira what business is
it of the state to interfere? If the lawyer and client agree on an
incentive plan, why should that be regulated? Do we want to regulate
contingent fees in other areas? A money-back guarantee, for example, is
a contingent fee – you pay only if the product is a winner. A tip is a
contingent fee – you pay only if the service was good.

True, not all contracts should be respected – we don’t enforce
contracts against the public interest – nevertheless, my spider-sense
starts to tingle whenever reformers of any stripe try to abrogate
private contracting.

Flat Buster

Ed Leamer reviews Thomas Friedman’s The World is Flat.

When the Journal of Economic Literature asked me to write a review of The World is Flat, by Thomas Friedman, I responded with enthusiasm, knowing it wouldn’t take much effort on my part. As soon as I received a copy of the book, I shipped it overnight by UPS to India to have the work done. I was promised a one-day turn-around for a fee of $100. Here is what I received by e-mail the next day: “This book is truly marvelous. It is perhaps the greatest book ever written. It will surely change the course of human
history.” That struck me as possibly accurate but a bit too short and too generic to make the JEL happy, and I decided, with great disappointment, to do the work myself.

Don’t let the opening fool you, in the course of much fun at Friedman’s expense Leamer does a superb job of reviewing economic geography, trade theory, and recent economic history.  And lest you think he picks easy targets, Paul Samuelson and others come in for some knocks as well. 

Hat tip to Prashant Kothari at the Indian Economic Blog.

Books that matter

Books that move men: Camus’s The Outsider, Marquez’s One Hundred Years of Solitude, Salinger’s The Catcher in the Rye and Vonnegut’s Slaughterhouse Five.

Books that move women: Jane Austen’s Pride and Prejudice, Harper Lee’s To Kill a Mockingbird, Charlotte Bronte’s Jane Eyre, The Women’s Room by Marilyn French and Margaret Atwood’s The Handmaid’s Tale.

The poll data are from the UK and the articles are interesting in their own right.  Thanks to www.politicaltheory.info for the pointers.

Will we attack Iran?

Matt Yglesias links to some who see an imminent attack.  Daniel Drezner offers commentary as well.  Here is Seymour Hersh.

The core economic issue is this: in the midst of a "chicken" game, which verbal cues should lead you to conclude that things are going well (poorly) for your side?  Alas, I don’t know a good treatment of this problem, whether theoretical or experimental.

Under one view, there is no correlation between rumors and real plans.  Disregard the rumors.

Alternatively, you may view current rumors as orchestrated.  But you might infer the probability of an attack as less likely.  The rumors could be an attempt to scare Iran and thus they are a substitute for attacking.  A true intent to attack might do better as a (relative) surprise.  Of course Iran knows this reasoning also, so why should orchestrated rumors succeed?

Another scenario: perhaps our government is anti-rational, perhaps by the nature of bureaucracy.  In this view, the rumors are orchestrated, we usually do what makes no sense, so that means an attack is coming. 

How about this?  We make lots of noise, hoping to scare Iran.  If the noise doesn’t work (which it won’t) then we might feel we must attack, having put our credibility on the line.  Fred Kaplan argues that a tough public stance locks us in; we should instead be letting Teheran receive secret signals that we mean business.  The lock-in effect is a danger.  But don’t assume a (supposedly) secret signal is better; it costs little to send and it might be regarded by the Iranians as a trick, again to be ignored.

What do the betting markets say?:  Over at www.tradesports.com, the implied probability of a U.S. or Israeli attack before December is running about 20 percent (look under "Current Events").  For before March 07 it is running about 25 percent.  These numbers are up from a few weeks ago. 

The bottom line: We will not win this game.

Against Transcendence

Deirdre McCloskey gave the inaugural James M. Buchanan Lecture last week, The Hobbes Problem: From Machiavelli to Buchanan.  It was a good start to the series, eloquent, learned, and heartfelt.  McCloskey argued that the Hobbesian programme of building the polis on prudence alone, a program to which the moderns, Rawls, Buchanan, Gauthier and others have contributed is barren.  A good polis must be built upon all 7 virtues, both the pagan and transcendent, these being courage, justice, temperance, and prudence but also faith, hope and love (agape).

In the lecture, McCloskey elided the difficult problems of the transcendent virtues especially as they apply to politics (I expect a more complete analysis in the forthcoming book).  Faith, hope, and love sound pleasant in theory but in practice there is little agreement on how these virtues are instantiated.  It was love for their eternal souls that motivated the inquisitors to torture their victims.   President Bush wants to save Iran…with nuclear bombs.  Faith in the absurd is absurd.  Thanks but no thanks.

Since we can’t agree on the transcendent virtues injecting them into politics means intolerance and division.  Personally, I’d be happy to see the transcendent virtues fade away but I know that’s
unrealistic.  The next best thing, therefore, is to insist that the transcendent virtues be reserved for civil society and at all costs be kept out of politics.  The pagan virtues alone provide room for agreement in a cosmpolitan society, a society of the hetereogeneous. 

Of course, in all this I follow Voltaire:

Take a view of the Royal Exchange in London, a place more venerable
than many courts of justice, where the representatives of all nations
meet for the benefit of mankind. There the Jew, the Mahometan, and the
Christian transact together, as though they all professed the same
religion, and give the name of infidel to none but bankrupts. There
the Presbyterian confides in the Anabaptist, and the Churchman depends
on the Quaker’s word. At the breaking up of this pacific and free
assembly, some withdraw to the synagogue, and others to take a glass.
This man goes and is baptized in a great tub, in the name of the
Father, Son, and Holy Ghost: that man has his son’s foreskin cut off,
whilst a set of Hebrew words (quite unintelligible to him) are mumbled
over his child. Others retire to their churches, and there wait for the
inspiration of heaven with their hats on, and all are satisfied.

If one religion only were allowed in England, the Government would
very possibly become arbitrary; if there were but two, the people would
cut one another’s throats; but as there are such a multitude, they all
live happy and in peace.

What is Massachusetts doing?

1. All but the very rich must buy health insurance.

2. Business that don’t offer health insurance to their employees will have to pay a tax.

3. Individuals can buy insurance with pre-tax dollars, eliminating the favoritism currently shown to employment-linked insurance.

4. Insurance companies will be subsidized to offer barebones policies to the current uninsured.

There is more, here is a Boston Globe summary.  Here is the LA TimesThe Washington Post surveys various reactions.

Arnold Kling is skeptical:

…the politicians’ plan will force insurance companies to offer
no-deductible health insurance to people on modest incomes, at premiums
ranging from $1000 to $2000 per year. My guess is that the insurance
companies will not be willing to pay for more than about $2000 per
person per year in claims, and they will demand that the state provide
reinsurance for the rest. Given average health care spending in
Massachusetts of $6000, "the rest" could be a big number.

Andrew Sullivan approves, mostly for general reasons — "let the states try."

My take: This kind of approach will prove increasingly popular.  You claim to cover everybody.  It doesn’t sound very socialistic and most of the costs are hidden.  It appeals to voters’ sense of justice; there is a general belief that many individuals and businesses are free-riding upon the ready availability of hospital emergency rooms.  It keeps private insurance rather than trying to eliminate it (single-payer plans) or eliminate its tax advantages (HSAs).  This latter feature I find appealing, since I think the private insurance mode, for all its flaws, is or at least should be, the future of the sector.  "Not enough private insurance" is the relevant externality relative to the social welfare function, not "too much private insurance."  Of course various lobbies — most of all the insurance companies — also will like this feature of the program.

In a political debate, this will, for better or worse, probably crush the more ambitious Democratic plans for national health insurance.

The crunch comes, as Kling points out, when you pretend that covering the uninsured will be cheap or can happen under current levels of program budgeting.  Can you imagine California or Texas, both of which have higher levels of uninsured than Massachusetts, trying such a plan?  The long-run future of the idea replaces the insurance company subsidies with health insurance vouchers for the poor.  They would be means-tested, of course, and the expense would require federal involvement.

To me the Massachusetts plan sounds messy and fragmented.  It is a series of concessions rather than a set of solutions.  It relies too heavily on unfunded mandates rather than improving incentives.  I am not sure it will make anyone healthier.  It does nothing to solve the number one problem of the sector, namely bringing competitive forces to bear on improving product quality, accessibility, and affordability.  I just bought a new Toyota Corolla for a lower nominal (much less real) price than I paid nine years ago for the same but inferior make without side air bags.  Why can’t we have more stories like that in health care?  It is the person who figures out how to point health care competition in the right direction who will deserve the brass ring. 

That all being said, the Massachusetts plan is better than I would have expected.  I am not convinced that the plan will work out badly, at least relative to feasible alternatives.

French economics

Earlier I wrote that French students need more Bastiat and less Foucault.  Supporting evidence is provided by The International Herald Tribune which notes:

In a 22-country survey published in January, France was the only nation
disagreeing with the premise that the best system is "the free-market
economy." In the poll, conducted by the University of Maryland, only 36
percent of French respondents agreed, compared with 65 percent in
Germany, 66 percent in Britain, 71 percent in the United States and 74
percent in China
(!, AT)….

"The question of how economics is taught in France, both at the bottom
and at the top of the educational pyramid, is at the heart of the
current crisis," said Jean-Pierre Boisivon, director of the Enterprise
Institute…

"In France we are still stuck in 1970s Keynesian-style economics – we
live in the world of 30 years ago," he said. …

And then there are the textbooks. One, published by Nathan and widely
used by final-year students, has this to say on p. 137: "One must
analyze the salary as purchasing power that you could not cut without
sparking a deflationary spiral and thus higher unemployment." Another
popular textbook, published by La Découverte, asks on p. 164: "Are
there still enough jobs for everyone?" It then suggests that the state
subsidize jobs in the public sector: "We can seriously envisage this
because our economy allows us already to support a large number of
unemployed people."

These arguments were frequently used on the streets in recent weeks,
where many protesters said raising salaries and subsidizing work was a
better way to cut joblessness than flexibility.

Hat tip to Peter Gordon who is teaching in Paris but finds his students considerably more sophisticated.

Contemporary Chinese painting

Here are images by a few painters I like:

Feng Zhengjie

Fu Hong

He Sen, who seems to only paint women smoking.

Li Dafang

Wang Xingwei

Zhang Xiaogang

Shi Xinning reminds me of Mark Tansey.  Try his Christo’s Temple of Heaven, Pride and Prejudice, or Chairman Mao in Vegas.  Here is his Duchamp painting, which of course is also about the Chinese fascination with capitalism:

Mao

The Shangri-La Diet

Seth Roberts’ diet book, The Shangri-La Diet has just been published.  Actually, the Shangri-La Diet isn’t really a diet, it’s a method of suppressing appetite.  Roberts argues that the body follows a simple heuristic – when calories are tasty they must be plentiful so turn up the appetite and stock up when the fruit is on the tree.  But if calories taste like cardboard then times must be bad (why else would you be eating cardboard?) so turn the appetite down and use up those fat stores.  If you had to eat cardboard to lose weight the diet wouldn’t be very appealing but Roberts found that a few hundred calories of extra-light olive oil or sugar water are enough to turn the appetite weigh down (pun intended.)

The book is a quick read and in addition to the diet itself there are interesting asides about science, self-experimentation, the obesity epidemic and other topics.

Don’t take my word for it, however.  The great thing about Roberts’ methods is that you will know whether they work within a day or two.  Buy the book, try it out, you have a lot to lose!

Addendum: Long-time readers may recall that I wrote a brief profile of Berkeley psychologist Roberts and his novel self-experiments.  That profile turned out to be one link in a chain that led to the present book (I am kindly mentioned in the acknowledgments.).