Category: Current Affairs

The 11th edition of Merriam-Webster’s Collegiate Dictionary, published in June, defines a “McJob” as “a low-paying job that requires little skill and provides little opportunity for advancement.”

Merriam-Webster’s announced yesterday, much to the chagrin of McDonald’s, that they would not revise this definition.

Here is a more balanced perspective:

McDonald’s is paying considerably higher than the minimum wage in most regions, and many franchises are now offering health and dental benefits. The average manager in a company-owned McDonald’s starts in the mid 30s. As for dead-end jobs, with one-eighth of the American work force having worked for a McDonald’s at some point, the company has rightly been called America’s best job-training program. Young people are taught cleanliness, punctuality, and basic business skills. Over half of the company’s middle and senior management started as hourly workers.

My take: Right now 12 million people work in the restaurant industry, many of them in the fast food sector. So many people work for McDonald’s because the company, adjusting for all relevant factors, offers them a higher wage than is available elsewhere.

Confounding President Bush’s pledges to rein in government growth, federal discretionary spending expanded by 12.5 percent in the fiscal year that ended Sept. 30, capping a two-year bulge that saw the government grow by more than 27 percent, according to preliminary spending figures from congressional budget panels.

And no, it is not just the war against terrorism:

Much of the increase was driven by war in Afghanistan and Iraq, as well as homeland security spending after the attacks of Sept. 11, 2001. But spending has risen on domestic programs such as transportation and agriculture, as well. Total federal spending — including non-discretionary entitlement programs such as Social Security, Medicare and Medicaid — reached $2.16 trillion in 2003, a 7.3 percent boost, according to the Congressional Budget Office.

Here is the full and sad story. You would think that with a (quarterly) growth rate of 7.2 percent, the rate of growth of major spending categories would be lower than that figure, but alas not.

Substitutes are everywhere, and the do-not-call list appears to be reviving door-to-door salesmen:

“I think companies are looking for new distribution channels for their products,” said Amy Robinson, a spokeswoman for the Direct Selling Association, a Washington, D.C.-based trade group. “Direct selling has traditionally been undervalued by Wall Street, but many realize its strength. It’s a niche market, but $28.7 billion in sales last year make it nothing to scoff at.”

Here is the full story. No, there does not appear to be a one-for-one substitution, but I’ll take an unwanted phone call over a knock on the door anyday. Let’s also not forget about spam, which threatens to cripple the use of email, as an additional unwanted substitute.

Tomorrow (Tuesday) Kasparov plays his first match game against X3DFritz, another chess-playing computer. The four-game match will be covered by ESPN television; chess has not received this much media attention since Fischer-Spassky in 1972.

The betting odds make Kasparov a slight favorite. Humans have perhaps the best chance in a short match. They do not lose their stamina, and can play to draw, hoping to elicit positional mistakes from the machine. Humans, of course, cannot beat the machines when it comes to computation and pure tactics.

Man vs. machine games often run a typical course. The human grandmaster carries a significant advantage out of the opening or early middle game, where it is harder for the machine to calculate all relevant possibilities and positional judgment is at a premium. But as the game progresses, the machine plays perfect defense and the human cannot convert the advantage into a win. If any tactics arise at all, the human usually is doomed. So it often feels as if the humans are “blundering” and letting advantages slip mysteriously away. The reality is that it is hard to beat a perfect opponent, once the early positional mistakes are over.

I was surprised to see Kasparov favored. Once he lost to Deep Blue, the last big match (Kramnik vs. Deep Fritz) was a draw. I know it is not as simple as Moore’s Law, but hey, don’t these machines improve their game more rapidly than the human players do? Stay tuned for more.

Why do people put their houses in the path of so many fires? Matt Welch at Reason.com suggests an answer:

“The frequency and the intensity of the forest fires in the Southern California chaparral are the greatest in the United States, with the possible exception of the wildfires of the New Jersey Pine Barrens,” wrote environmental essayist John McPhee, in his marvelous “Los Angeles Against the Mountains” section of The Control of Nature. “It burns as if it were soaked with gasoline… The canyons serve as chimneys, and in minutes whole mountains are aflame, resembling volcanoes, emitting high columns of fire and smoke.”

Of course, those canyons–at least the ones not owned by the state or federal government–also serve as glorious, high-end residential real estate, eligible for the state-mandated, below-market FAIR insurance. According to Kiplinger’s, the average FAIR policy here costs $350. Part of the reason for the low price is that FAIR plans don’t generally cover theft or personal liability. But another is that there is a two-fisted downward pressure on prices–political desire to keep rates affordable, and the massive disincentive for any private insurers to compete against the heavily backed, low-priced plans.

The bottom line: These people are not paying the full social costs of their real estate decisions. In response we are offering welfare for the wealthy.

Thanks to Instapundit for the pointer, see also his commentary.

Six percent. Much better than expected. Here is a brief Fox News Bulletin.

Tom Bell suggests the following on today’s Techcentralstation.com:

…we need to spur white-hat security hackers with the prospect of profit and to guide their efforts into safe and useful channels. We need, in other words, to set up a bounty program that will reward both pretend terrorism and real security. Program participants who successfully hack the U.S. air security system would win money for their efforts. Unsuccessful hackers would have to pay the guards who catch them.

Here are my worries:

1. It will, in the long run, lead to the discovery of knowledge that is used by terrorists (Bell does discuss this, see the link).

2. Public anxiety, one of the biggest costs of terrorism, would rise appreciably. We would be constantly aware of our own vulnerability and we would become increasingly insecure. Isn’t that what the terrorists want? Terrorism as a phenomenon would receive more attention, perhaps to the benefit of terrorists. The 20-year-old who cracked security with box-cutters made the front pages.

3. Let’s say it worked. Would net terrorism decline? I’ve always wondered why terrorists have this obsession with planes, rather than stadiums, which would appear more vulnerable. Of course we could use the idea with stadiums as well, but overall substitutability may be high. And yes, this argument could be used against any safety measure (why not allow box-cutters again?), but still I think we are using up a good deal of society’s “ability to tolerate anxiety” on a single and not our only vulnerable spot.

4. Something else I can’t quite put my finger on. It relates to why it is so hard to use incentives successfully within a bureaucracy. And yes, the white-hat hackers would need to be embedded in a highly regulated and ordered bureaucracy, whether we like it or not. But can you imagine the FBI or CIA pulling this off successfully?

Still, ideas like this are worth thinking about. I certainly don’t have better proposals, and it is hard to believe that pecuniary incentives should have as low a role, in fighting terrorism, as they do today.

Leszek Kolakowski just won a new prize, the Kluge Prize, which is worth $1 million.

This is the nature of the prize:

The prize…is meant to highlight fields of study as varied as anthropology, history, philosophy, sociology and religion for which there is no major international award. It was conceived by the librarian of Congress, James H. Billington, and financed by the philanthropist John W. Kluge, who had no say in selecting the winner, library officials said.

In other words, it is intended to supplement the Nobel Prize. Kolakowski, a brilliant author, polymath, and critic of Marxism, is more than deserving. See also Jacob Levy’s excellent post on the matter, rebutting the charge that the award was politically motivated by “right-wing” considerations. After all, Kolakowski teaches at Oxford, hardly a hotbed of radical right sentiment.

In general we would expect that new prizes are awarded to the relatively old; Kolakowski is 76. Remember Cato’s Milton Friedman Prize of last year? It was awarded to the 85-year-old Lord Bauer, who died right before the award ceremony.

Presumably a new prize is seeking to build up its reputation, so its first few awards should be sterling in quality, not very controversial, and designed to generate maximum publicity. Once a prize is more established, the prize givers can take more chances, or use the prize to certify the quality of younger achievers, or use the prize to spur greater achievement.

Robin Hanson wonders why we don’t use more prizes today, in lieu of grants, to encourage science. In the eighteenth century, prizes not grants were the dominant means of encouraging science. One drawback of prizes is that they tend to be awarded in the interests of the prizegiver, and not necessarily to stimulate maximum scientific output. Arguably prizes should be awarded when people are younger, not older, if only for incentive reasons. Still, prizes make the most sense when you cannot predict where new innovation is coming from, and thus you do not know who should get the grants. As our world becomes more complex, less hierarchical, and more decentralized, I predict a greater reliance on prizes to stimulate science.

Sony and BMG might merge, bringing together the world’s second and fifth largest music companies. That would pair Tori Amos and Michael Jackson (Sony) with Outkast (BMG). The resulting firm, supposedly designed to cut common administrative costs, would be almost as large as the industry leader, Universal. Here is the full story.

My take: Regulatory approval is not certain, arguably unlikely, but regulators should not worry about market power issues. This is a desperation merger in a fading industry. The real “industry sector” includes file sharing, once you count that, and the accompanying zero price, the concentration issues do not look so bad. On the other hand, shareholders should not worry if they don’t get regulatory approval. I would expect a mess more than any significant cost savings, as the merger does not address the underlying problems faced by either company.

After years of whiling away wasted hours, Ecuadoran businesses and civic groups have launched a campaign to force people accustomed to habitually missing appointments and deadlines to start showing up on time.

“Symptoms: Rarely meets obligations on time, wastes people’s time, leaves things to the last minute, no respect for others,” reads a poster that has been appearing around the country, dealing with chronic lateness syndrome as if it were a disease.

“Treatment: Inject yourself each morning with a dose of responsibility, respect and discipline. Recommendation: Plan, organize activities and repair your watches.”

This is the new campaign in Ecuador, which aims to encourage timeliness. It is organized and funded by the private sector. And who, pray tell, are the biggest offenders when it comes to tardiness?

The most flagrantly late are public functionaries and military officials, Ecuadorans agree, and their president has been steeped in both cultures.

The program even includes incentives. If you are on time for a meeting, you are greeted with a pleasant sign telling you to come on in. The red flip side of the sign reads: “Do not enter, the meeting started on time.” N.B.: I want one of these.

Ecuadoreans are notorious for their lateness; for dinners scheduled for 8, people start assembling at about 10:30.

The private sector in the United States also has tried to combat tardiness, although the initial problem is less severe. Note, however, that CEOs are more often late for meetings than not, 60 percent of the time. Here is one attempt to reign in abuses:

A popular solution is charging $1 to $5 a minute to anyone who arrives late [for a meeting]. The money can be donated to charity, or saved toward an office party. Nielsen says ISD has tried late fees. They work for a while, but enforcement usually falls by the wayside after a couple of months, he says.

Such solutions won’t work on CEO offenders with big egos, Mina says. Locking the door after the meeting starts, or telling the CEO that a 2 p.m. meeting starts at 1:45 can be “career-limiting moves,” he says.

One source mentions a European study finding that the French are especially late. The Japanese have a reputation for being very punctual.

LeBron James, basketball player for the Cleveland Cavaliers, and just out of high school, signed a $90 million contract to promote Nike shoes. Given his debut performances, this now appears to be a bargain.

Consider the following facts, taken from yesterday’s Financial Times (registration and subscription required):

1. The U.S. market for branded athletic shoes is about $7.8 billion a year.

2. Nike commands 39 percent of this market, although this is down from 48 percent in 1997.

3. The older Air Jordan shoes sold for $175 a pair, but are now unacceptably out of date. Jordan, of course, has retired, and for the third and probably final time in his career.

4. Market competition is growing. Brands such as New Balance emphasize the substance of the shoe, rather than any famous endorser. Nike requires some means of product differentiation.

5. Kobe Bryant, another Nike endorser, has seen his star fall as of late.

6. LeBron has played only a few games, but so far his performance is far ahead of other basketball high school phenoms, such as Kevin Garnett or Kobe Bryant. Cleveland has been one of the worst teams in recent basketball history, but most NBA teams are including Cleveland, that is LeBron, in their specialty packages of the best games of the season.

7. The deal itself has generated enormous publicity for Nike, it is mentioned in most articles about James.

Nike pays LeBron only $10 million upfront, the rest comes over seven years. Right now, Nike appears to have made a steal. And remember, they laughed when Nike paid Michael Jordan $2.5 million in 1985.