NY Times Wrong on Iraqi Gun Ownership

In March, Neil MacFarquhar of the New York Times asserted that guns were easy and legal to obtain in Saddam Hussein’s Iraq. The NRA has long argued that guns are a bulwark against the police state so Slate’s Timothy Noah challenged the NRA to explain “how Iraq got to be, and remains, one of the world’s most repressive police states when just about everyone is packing heat.” Noah later rejected reader explanations of this apparent paradox, including the possibility that MacFarquhar was wrong, and “reluctantly” concluded that private gun ownership is not a bulwark against a police state.

Today, however, John Tierney of the New York Times reports that “Mr. Hussein, never one to tolerate competition, forbade private citizens to carry weapons, effectively outlawing the security industry.”

Clearly, the New York Times is wrong. But where does the truth lie?

Tortured Justice

I am angry. The lawyers will get $19 million, the plaintiffs have no damages and I have been involved in an abuse of justice. I received notice yesterday that I was a plaintiff in a class action lawsuit against Bridgestone/Firestone that is about to be settled. I was never injured by Firestone but that’s ok because injured people have their own lawsuit the one I am involved in is for people who were not injured. The lawsuit reads “Plaintiff Does Not Seek To Represent And This Litigation Does Not Involve Any Person Who Alleges That He or She Suffered Any Personal Injury or Property Damage Because Of A Failure Of One Of The Tires” (capitalization in original.) Bear in mind that Firestone has already replaced all four of my tires with a competitor’s brand for free and similarly for many of the other plaintiffs.

The settlement is simple, Firestone agrees to sell and advertise tires (as part of a safety awareness program). The plaintiffs get nothing except for the named plaintiff who gets $2500. The lawyers? “Plaintiff intends to seek, and Firestone will not object to, an award of $19 million for all fees, costs and and expenses…” Plantiff’s attorney Zona Jones says “The outcome is one that we believe is extremely positive.” Yeah, right.

Cases like this should be thrown out by judges. But that is not going to happen because the case was brought in Texas where judges are selected by partisan elections. My research (summary here) shows that awards against out-of-state defendants are much higher in states that select their judges using partisan elections compared to other states. I have little doubt that the plaintiff’s lawyers (or their firm) are big contributors to Judge Donald Floyd’s reelection campaign (this is neither illegal nor uncommon in Texas).

I do not blame Firestone for settling, they comment that they have done so only “to avoid further expense, burden, distraction, and inconvenience of litigation.” But I am outraged that against my will I have been made a party to extortion and am saddened that Firestone believes, probably correctly, that they risk more than 19 million dollars by letting this trashy lawsuit go to court.

Cannabis Emptor

When goods are prohibited, quality tends to fall because of lack of competition and legal recourse. Quality in illegal markets, however, may still beat that available from government production. Health Canada spends millions of dollars growing marijuana for distribution to patients with medical need. The government grown pot is so awful, however, that patients are returning their 30 gram bags and asking for refunds! The government certifies and advertises that their product contains 10.2% THC but independent labs report only 3% THC. Furthermore, the government pot is contaminated with lead and arsenic. “This particular product wouldn’t hold a candle to street-level cannabis,” said Philippe Lucas of Canadians for Safe Access, the group that sponsored the tests. Thanks to Eric Crampton for alerting us to this story.

The beast isn’t starving

I caught a lot of flak from conservatives when I wrote in an op-ed that the so-called Bush tax-cuts were a fraud. If spending isn’t cut then in the long run taxes can’t be cut either. Since spending has gone up under Bush, all he has done, I argued, is to raise our future taxes (at precisely the wrong time too given the coming fiscal problems created by demography) . Conservatives complained that I missed the strategic beauty of the Bush plan. A tax cut, they said, will keep spending down, it will “starve the beast.” Well Bush is now asking for another $87 billion to fight the war in Iraq, employment is down everywhere but in the federal government where it is higher than under Clinton, and Bush is already touting how his administration is responsible for the largest increase in Medicare in its 38 year history. Apparently, on the Bush diet you can eat all you want and still lose weight.

The Demise of Crypto Anarchy

Crypto anarchists and cyber-libertarians promised a new world of privacy and liberty built on the foundations of the internet and public key cryptography. As David Friedman memorably put it public key cryptograpy allows “anonymity with reputation” thus it becomes possible in theory to evade the taxman while still maintaining a public presence.

All of this now looks somewhat naive. Consider, for example, how internet gambling has been quashed. First, the credit card companies caved into government pressure and refused to process gambling related transactions. Initially, gamblers shrugged this off and routed their transactions through PayPal but a U.S District Attorney accused PayPal of violating the USA Patriot Act and to avoid charges PayPal was forced to pony up 10 million dollars. (Why am I not surprised that a law intended to go after terrorists has been used to most affect against peaceful gamblers?). Entrepreneurs have taken their online gambling sites to places where it is legal like Antigua and Costa Rica but don’t try coming home again. When Jay Cohen, founder of the World Sport Exchange, did that he was tried, convicted and jailed in a Federal prison.

The cyber-anarchists and libertarians were correct about the technology – public key cryptography can do what they say it can do – so where did the argument go wrong? In part, the cyber anarchists forgot that most of the value of cyberspace comes from its overlap with real space. I don’t blog anonymously because I want to be rewarded for my blogging with something that I can use to buy a car (ok, maybe a toaster is more realistic). Even if privacy is perfect in cyberspace the many margins of overlap with real space leave plenty of room for authority to insert its hooks especially when authority itself is technologically adept. Moreover, as Richard Posner has noted, the demand for privacy is more often than not a demand for control over the public presentation of self and cryptography does nothing to help and may even impede that demand.

The cyber-anarchist world works in a thought-experiment when everyone demands privacy and as a result the technology for getting privacy is built into all of our communications structures and used as a matter of routine. But that’s a description of an equilibrium and not a description of how to get there from here. At present, most people are not that bothered with privacy and so do not, for example, encrypt their email. As a result, privacy is not convenient even for those who want it. Indeed, someone who encrypts their email or phone conversations is probably calling more attention to themselves than they otherwise would.

The cyber anarchists may yet be proven right but today David Brin’s forecast of a Transparent Society in which no one has privacy, including authority, is looking far more realistic. Need I mention this as proof of Brin’s thesis?

Surprise! Fox News is Fair and Balanced!

Accusations of media bias are common but are typically based upon nothing more than subjective standards and anecdote. A brilliant new paper by Tim Groseclose (GSB Stanford, currently visiting GMU) and Jeff Milyo (U. Chicago, Harris School) pioneers a more promising approach. Since 1947, the interest group Americans for Democratic Action (ADA) has tracked how Senators and Represenatives vote on key issues and they have used these votes to rank politicians according to their liberalism. In the 2002 session, for example Ted Kennedy received an ADA score of 100 and Phil Gramm a score of 0. Political scientists are familiar with ADA scores and have come to rely on them as a measure of ideology.

Groseclose and Milyo have found a way to compute ADA scores for media outlets as if they were politicians. What they did was to examine the Congressional Record for every instance in which a politician cited a think tank. They then did the same thing for newspapers, network news shows and other media outlets. By matching newspapers with politicians who had similar citation records they can impute an ADA score for the media outlet. Joe Lieberman, for example, has an ADA score of 66.3. Suppose that in his speeches he cites the Brookings Institution twice as much as the Heritage Institute. If the New York Times has a similar citation style then the New York Times is assigned an ADA score of 66.3. (The method is slightly more complicated than this but this gives the right idea.) Note that Groseclose and Milyo do not have to determine whether the Brookings Institution is more liberal than the Heritage Institute all they need to know is that the Times has a similar citation style to Lieberman.

Ok, what were the results? It turns out that all of the major media outlets, with the exception of Fox News: Special Report are considerably more liberal than the median member of the House over the 1993-1999 period. Moreover, although Fox News: Special Report was to the right of the median house member it was closer to the median member than were most of the other media outlets. (Interestingly, all of the liberal media outlets were less liberal than the average Democrat and Fox News is less conservative than the average Republican – thus there is a sense in which all media outlets are less biased than is the typical politician.) Here are the ADA scores of various media outlets along with some comparable politicians.

Joe Lieberman (D-Ct.) 66.3
New York Times 64.6
CBS Evening News 64.5
USA Today 62.6
NBC Nightly News 62.5
Los Angeles Times 58.4
Ernst Hollings (D-SC) 56.1
ABC World News Tonight 54.8
Drudge Report 44.1
Arlen Spector (R-PA) 44.0
House Median 39.0
Senate Median 36.9
Olympia Snowe (R-Me) 36.0
Charlie Stenholm (D-Tex) 29.3
Fox News Special Report 26.4

Mars in the Balance?

According to an article in the 23 Aug. issue of New Scientist magazine (unfortunately not available online to non-subscribers) scientists have been “absolutely shocked” to find that glaciers in the south pole have been “eroding at a rate of 3 meters per year or more.” According to one scientist “all the visible ice, all the carbon dioxide that we see in the ‘permanent’ ice cap could be eroded in less than a century.”

The scientists agree that the only plausible explanation of what they are seeing is “climate change” but none of them think that humans are to blame. Why not? The scientists are talking about Mars. The article doesn’t make the connection but it seems to me that global warming on Mars raises the plausibility of claims by global warming skeptics that solar activity could be responsible for much climate change on Earth. Here is a picture from Friis-Christensen and Lassen’s 1991 paper on this issue in Science (link to JSTOR, click on the picture to expand).


If Shemekia were Sally would she earn more?

Steve Levitt, recenty profiled in the NYT Magazine has written another amazing and sure to be controversial paper. Levitt and co-author Roland Fryer begin The Causes and Consequences of Black Names with some startling statistics on the racial divide in names. For example, “more than forty percent of Black girls born in California in recent years received a name that not one of the roughly 100,000 white girls born in California in that year was given.” Blacks are more segregated by name than are other races – the majority of Asians, for example, choose from the same name-pool as do whites. Segregation by naming has also increased over time. Prior to the late 1960s, for example, blacks and whites chose from the same name-pool to much greater degree than they do today.

Other studies have shown that when sent resumes identical but for name, employers more frequently ask for follow-up interviews with applicants who have stereotypical white names. Levitt and Fryer respond to these studies in two ways. The first response I find unconvincing. They argue that it is unlikely that a black name could have a big impact on earnings because “Once an employer has met a candidate in person, race is directly observable. A person’s manner of speaking, dress, interview responses and on-the-job performance no doubt provide far better signals of productivity than a name.” No doubt – but this is a rather facile interpretation of the audit studies. The point of these studies was not the literal one that employers discriminate on the basis of a person’s name! The point is that if employers use names to discriminate on race at the resume stage then they probably discriminate on race at every other stage in ways that are harder to identify.

Levitt and Fry have a more convincing but sure to be controversial response to this larger issue. They find that black names signal a variety of other characteristics that could plausibly be connected with lower labor productivity. Here is a key quote:

a woman with a BNI equal to one (implying a name that no Whites have) is 10 percentage points more likely to have been born to a teenage mother and 9 percentage points more likely to have been born out-of-wedlock than a Black woman living in the same zip code with the same age and education, but carrying a name that is equally common among White and Blacks. The woman with a Black name is also more likely to have been born in a Black neighborhood and to herself be unmarried.

In other words, names carry information even after the typical information available on a resume has been taken into account and the information that especially black names carry plausibly suggests lower productivity. It’s papers like this that explain why professors need tenure.

Do scientists know what makes you happy?

Tyler disagrees (see his entry below for more information) with Loewenstein on the implications of happiness research. It’s evident that the key figures also come to different conclusions on even simple policy questions. Consider the following quotes from the NYT Magazine article (written by Jon Gertner):

One experiment of Gilbert’s had students in a photography class at Harvard choose two favorite pictures from among those they had just taken and then relinquish one to the teacher. Some students were told their choices were permanent; others were told they could exchange their prints after several days. As it turned out, those who had time to change their minds were less pleased with their decisions than those whose choices were irrevocable.

Yet just a few pages we are told that Daniel Kahneman, recent Nobel prize winner and another key player in this field, “sees a role for affective forecasting on consumer spending where a ‘cooling off’ period might remedy buyer’s remorse.”

Will Vouchers Split the Democratic Party?

The debate so far Tyler 1, Alex 1, Tyler 2.

Let me take Tyler’s weakest point first. He writes, “Imagine politicians upping the voucher amount and coverage to win votes each election cycle…” What like education spending is not a political issue today? In fact, over the past several decades we have doubled real per-capita spending on schooling with zero increase in productivity. It’s possible that government would set an education voucher at too high an amount (but let’s get it above zero before we worry about this!) but at least we will get something for our money.

Defining an acceptable school is a legitimate issue but one that we already face today with private schools, charter schools, and home schooling. I see no reason why private schools under a voucher system could not be regulated as private schools are today. Private schools do face some minimal regulations including hours and some content requirements but I don’t think these have been a significant constraint. Some private schools will undoubtedly teach nonsense but Tyler seems to forget that Ebonics, to give just one example, was a creature of the public schools not the private schools.

I will agree, however, that current voucher plans are typically terrible. Existing vouchers are often limited to poor students and sometimes just to poor students in “failing” schools, the voucher amounts are typically low and to add insult to injury it is often illegal to add-on to the voucher amount (a type of price control). Finally, nowhere near enough students are suported. The DC plan, for example, is aimed at some 2,000 students in a school system of 66,000.

I recommend John Merrifield’s School Choices: True and False as an antidote to this kind of limited thinking. Merrifield’s bottom line is that we need a system under which the government in no way discriminate against parents who send their children to private schools.

Long Live the Marginal Revolution!

It looks like our short-lived technical difficulties are over (cross fingers!). If all continues to be well we should now be available at our permanent address, www.MarginalRevolution.com which is easier to remember than http://MarginalRevolution.blogs.com (the old address will continue to work just fine of course as they map to the same place). I have a question for the techies. Do different browsers use different DNS servers? I was very puzzled to find that the new address worked from IE at least several minutes earlier (and perhaps longer) than from Mozilla. Email me if you know the answer.

Education Vouchers: The Lessons from Housing

Tyler is concerned that a voucher system for education might end up looking like our health care market – “a crazy-quilt mix of bad incentives, high costs, and increasing levels of intervention.” But our health care system is not a voucher system – much more relevant is the existing voucher system for housing. Public housing has been a disaster in this country, low quality, dangerous and expensive (to the taxpayer). The Section 8 voucher and similar certificate programs have been far superior on all measures. What would you rather have – an apartment in a public housing project, costing the taxpayer $1000 a month, or a voucher worth $500 a month that you could spend on private housing?

The economic studies on the superiority of vouchers are unanimous. Here is Ed Olsen, one of the country’s leading researchers:

Five major studies have estimated both the cost per unit and the mean market rent of units provided by housing certificates and vouchers and important production programs, namely Public Housing, Section 236, and Section 8 New Construction.1 These studies are based on data from a wide variety of housing markets and for projects built in many different years. Three were multi-million dollar studies conducted for HUD by respected research firms during the Nixon, Ford, Carter, and Reagan administrations. They are unanimous in finding that housing certificates and vouchers provide equally desirable housing at a much lower total cost than any project-based assistance that has been studied, even though all of these studies are biased in favor of project-based assistance to some extent by the omission of certain indirect costs.

As with housing, the market for education would be very competitive so we would not see price rises due to monopoly problems (as Tyler fears might be the case). There has been a big debate about whether private schools result in better outcomes that public schools. Put aside this debate and focus on what is undeniable – private schools have achieved at least as good outcomes as have public schools but at about half the cost (similar to the cost savings of vouchers over public housing). Thus we are starving the most productive sector of the educational market and throwing money at the least productive sector. Prices might rise in a voucher market but only as a rational response to the lower price of quality in private schools.

Galbraith II

James K. Galbraith (son of John K.) has a strange review of William Greider’s The Soul of Capitalism in today’s Washington Post. He doesn’t say much about Greider’s book but does offer the following:

More deeply, we may question the book’s premise. Has the United States really solved the scarcity problem? That may have been more true five decades ago when a tract called The Affluent Society first made the case. Then, the United States was the world’s dominant industrial power. Today, our material abundance rests on fragile strands: our military reach, the willingness of the world to export cheap goods to us and to lend us the means to pay for them.

In the past 50 years real GDP per-capita has almost tripled (and this doesn’t account for improvements in the quality of many goods and services) and yet it may have been more true 50 years ago that the scarcity problem was solved?!! This is taking family fealty too far. The explanations for our fragile abundance are not too convincing either. Put aside the fact that the US is less dependent on trade than most other industrial nations. More interesting is that Galbraith thinks that the hundreds of billions of dollars we are spending on military adventures in Iraq, Afghanistan and elsewhere are a net positive for the economy. Why? Later he suggests that the Iraq war is about a “tenacious drive for oil.” Where then is the oil dividend? Has Galbraith filled up at the pump recently? In truth, Empire rarely pays and whatever the political case for war it will never turn a profit.