Category: Games
The next Fed nominee
1. Should have spent a lot of time talking to Republicans.
2. When meeting with Ron Paul, the following should come to his mind: “I have great respect for the proponents of hard money and I view them as one reason why America became great again, in the 1980s. I know you think the minimum wage is worse than we at the Fed do, so please let me bring one argument to your attention. Unemployment is very high now, perhaps in part because the minimum wage has raised forty percent in the midst of a downturn a few years ago. But those statists in Congress simply will not vote to lower or abolish the minimum wage, damn them. We can, however, surreptitiously lower the minimum wage in real terms with a bit of loose monetary policy. I know you are not with us on this monetary issue, but if you find yourself having to strike a compromise of some kind, at least rest assured that a budge from your side would be liberating millions of lower-income Americans from slavery. It could get us off the Road to Serfdom.”
The Fed governor doesn’t have to believe that, and may not wish to say exactly that, but a speech of that nature should come rather quickly to his or her mind. If not, he or she is probably not the right nominee in the first place. The Fed staff can figure out the rest.
Addendum: Matt Yglesias offers relevant comment. Alternatively, Felix Salmon may be correct that there is no deal to be made with the Republicans. In that case, a) Diamond would not have mattered anyway, and b) we still should base the choice upon the scenarios where the choice stands a chance of making a difference. Furthermore, the Republican reps. do not have the same incentives as the Presidential candidate, so a deal may be possible after all.
Glasgow markets in everything
A parking fine in Glasgow is £30 if paid promptly, £60 otherwise. Our entrepreneurs have other ideas. They’ll sell you a used parking ticket with a specific time on it for a tenner, which you can send to the council to “prove” that you were wrongly fined.
Here is more, pointer via Greg and also Yahel. The intro to the story is this:
If you park your car or walk through the Osborne St car park near my flat, you are quickly approached by one or more rough looking types asking if there is any time left on your parking ticket. They’re rude and slightly threatening, so most people give up their used ticket. If it’s valid for any significant amount of time (ie. you’ve paid for the whole day or a several hour stretch and there is time remaining) they will stand by the ticket machine and sell your ticket on to the next punter. They’re not the type of people you say no to so they no doubt do a roaring trade.
But that’s not all. If you protest that your parking ticket is about to expire and is therefore useless they’ll demand it anyway. Why? This is where it gets interesting.
When the parking inspectors come past the thugs keep a keen eye on which cars they catch. On a driver returning to their car and discovering that they’ve been fined the thugs move in.
Economist Alarm Clock
From Mashable, seems to be a concept only…such an alarm clock could be illegal.
Single serving levees, the modern medieval world
That is via Jason Kottke.
The Spencer Scholarship plan
For months, Fitzsimmons gave each of the women $200 weekly, promised to pay for their college tuition, treated them to lavish nights on the town and even bought one a car as part of his so-called Spencer Scholarship Plan. They were spanked if they violated rules, such as failing to call Fitzsimmons or drinking too much alcohol…
The Spencer Plan started in the 1930s as a form of “carefully regulated corporal punishment” between husband and wife. Couples agreed to a list of things the wife needed to change, such as not spending money frivolously. If the rules were broken, the husband punished her by spanking and it was put behind them. It has expanded through the years.
One 21-year-old woman testified Thursday that the day she joined the program in November, Fitzsimmons spanked her and gave her $300. He paid for her to live in an oceanfront suite and gave her a $200 weekly allowance. In return, she was required to walk 20 blocks each day, keep a log of her meals and spending and refrain from drugs. When she didn’t, she was spanked.
Fitzsimmons took it further, she said, when on three occasions he sexually assaulted her with a curtain rod, a hairbrush and a horse riding crop. When asked by attorneys why she allowed it to happen, she replied: “I’m not allowed to tell him no.”
I can’t bring myself to file this one under “Markets in Everything,” though read the last line of the piece. For the pointer I thank DL.
The wisdom of Josh Barro
Unfortunately, it’s also possible (as many other voices on Wall Street are warning) that a default would permanently raise Treasury spreads, drive investors to find alternative safe havens, cause a double-dip recession, and unleash various other evils. So, if they are willing to create the possibility of a default, Republicans in Congress are willing to expose America to severe downside risk.
It’s important to step back and consider the stakes here. Republicans say it is important, above all else, to rein in federal government spending. But the risk with excessive spending is not that government will literally become unaffordable or that we will be unable to service our debts. The United States has tremendous available fiscal capacity, as demonstrated by significantly higher tax burdens in most other first-world countries. The real risk of elevated spending is that we’ll adopt a permanently higher level of taxation.
That is a risk, but not a catastrophic one. While there is a link between government spending and economic growth, it is not as strong as conservatives like to believe. For example, Mueller and Stratmann find that a one percentage point rise in government spending as a share of GDP will tend to reduce annual GDP growth by a bit under one-twentieth of a percentage point. If we take Simpson-Bowles as an example of the sort of deficit deal that might be achieved in the medium term without the need to flirt with a bond default, then we’re talking about a difference of one to two points of GDP in government spending compared to an all-Republican plan.
There is also nothing special about government spending as a share of GDP as opposed to other determinants of economic growth, such as rule of law, freedom of contract, immigration policy, free trade and the structure of the tax code—not to mention policies on infrastructure, land use and education. Basically, we could make up a sub-0.1 percentage point hit to long term GDP growth with policy improvements elsewhere.
Which is to say, it does not make sense to create a risk that U.S. Treasuries will be dislodged as the world’s safe-haven investment as a strategy to shift the size of government by a percentage point of GDP or two. Winning this fight is not so important that it makes sense to throw caution to the wind, but that is what Republicans in Congress appear willing to do. The gamble looks even worse when you consider that a debt-limit-impasse-gone-wrong would not necessarily lead to Republicans getting their way on the long-term fiscal adjustment.
The full post is here.
Vance isn’t sure if this article is a parody or not
Emotions are running high in the Northbrae area of Berkeley, and the friendly spirit of the neighborhood is at stake, according to a number of small merchants who are afraid they will not survive in the wake of what is being perceived as aggressive marketing strategies at Monterey Market.
Several small businesses say the owners of Monterey Market have begun to deliberately stock items that they specialize in — including certain cheeses, wine and flowers — and they are selling them at predatory prices, which threatens the local merchants’ livelihoods.
A group of Northbrae neighbors has distributed a hand-out in support of the small local merchants in which it criticizes Monterey’s approach. ”We are making a moral and ethical appeal,” said Tom Meyer, speaking for the group. Signatories on the hand-out include Monterey Fish, Gioa Pizzeria, Hopkins Launderette, and Storey Framing. (See the hand-out here.)
…Meyer said that recently the group had been approached by a representative of Monterey Market to set up a meeting. “That discussion will determine where we go from here,” he said.
Asked what he expected from the Market, Meyer said: “They should talk to their fellow merchants about how they could all flourish.”
The story — if that’s what it is and I believe it is — is here. The caption on the photo reads: “Shirley Ng, owner of Country Cheese Coffee Market, says Monterey Market is under-cutting her prices.”
Kasparov on meta-rationality, the longer article is on Bobby Fischer
Many strong chess players go on to successful careers as currency and stock traders, so I suppose there is considerable crossover in the pattern-matching and intuitive calculation skills required. But the aptitude for playing chess is nothing more than that. My argument has always been that what you learn from using the skills you have—analyzing your strengths and weaknesses—is far more important. If you can program yourself to learn from your experiences by assiduously reviewing what worked and what did not, and why, success in chess can be very valuable indeed. In this way, the game has taught me a great deal about my own decision-making processes that is applicable in other areas, but that effort has little to do with natural gifts.
Read the whole thing. A related point is that chess players cannot make many excuses when they lose. “The sun got in my eyes” doesn’t cut it.
Morgan Kelly writes from Ireland
The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”
The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.
The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.
In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.
Here is much more, interesting throughout, essential reading I would say. By the way, here is the game theory if Ireland simply bails on some previous commitments to bank creditors:
At a stroke, the Irish Government can halve its debt to a survivable €110 billion. The ECB can do nothing to the Irish banks in retaliation without triggering a catastrophic panic in Spain and across the rest of Europe. The only way Europe can respond is by cutting off funding to the Irish Government.
Are you seeing a pattern emerge? I thank a loyal MR reader for the pointer.
Addendum: Good update on the euro gossip here.
Chess, a game of war from India/Afghanistan/Persia
A reader at Everyday, No Days Off sent in this picture of a chess set made by a US Marine deployed in Afghanistan. The kings and queens are .50 caliber cartridges and the rooks are 40 mm grenade cases.
For the pointer I thank Selena Miranjian.
Childhood memories
Alex’s post brought back some childhood memories. At school, in sixth and seventh grade, we played a game called “Bombardment,” where you wailed the ball at the other kid’s head, as hard as you could. If a kid shied away from the ball, the gym teacher laughed at him.
After school, there was a game called, appropriately, “Kill the guy”; now it’s an on-line game.
I played Little League for seven years. One day during practice I was in the outfield and I missed a catch and the ball smashed into my eye. It hurt! And it bruised. I sat down for a while but was back out on the field for the next session. I didn’t go home and no one called my mother. The coach asked “Are you OK?”
One day a poor girl in the Girl Scouts was walking around and selling cookies, when a young man lured her into his house and raped and killed her, a few blocks from our house in Hillsdale. They organized a Frankenstein-like village hunt, found the girl’s body, and traced it back to the guy, who was sent to jail and remains there to this day. This didn’t change any of the local norms.
Maybe it’s still all like this, I cannot say.
Words of wisdom
From Ross Douthat (1/20):
The only counter-argument here is the claim that the cost-cutting powers the White House wants to grant to IPAB (Medicare’s Independent Payment Advisory Board, that is) actually represents a courageous attempt to dramatically cut spending via the sustained rationing of care…The problem is that this isn’t how the President has sold the board to the public: Instead, he’s promised that it will only reduce “unnecessary spending,” which is basically the equivalent of a Republican promising to keep the entitlement system solvent by reducing Medicare fraud. (There is unnecessary spending in Medicare, certainly, but asking a 15-person board to distinguish the necessary from the unnecessary is a lot harder than many liberals seem to think.) There’s no Congressional Budget Office projection in which IPAB seriously closes the deficit, and no detail, from the White House or anyone, on what a successfully-IPABified Medicare would mean for seniors’ out-of-pocket costs.
Ahem, a lot of the spending cuts are frauds
Via the cool-minded Kevin Drum (I have added no extra indentation, it is Kevin and then the AP, and then Kevin again, not me):
Here’s AP reporter Andrew Taylor digging into the $38 billion in spending cuts that Republicans agreed to and finding that an awful lot of it is smoke and mirrors:
Instead, the cuts that actually will make it into law are far tamer, including […] $2.5 billion from the most recent renewal of highway programs that can’t be spent because of restrictions set by other legislation. Another $3.5 billion comes from unused spending authority from a program providing health care to children of lower-income families.
….The spending measure reaps $350 million by cutting a one-year program enacted in 2009 for dairy farmers then suffering from low milk prices. Another $650 million comes by not repeating a one-time infusion into highway programs passed that same year. And just last Friday, Congress approved Obama’s $1 billion request for high-speed rail grants — crediting themselves with $1.5 billion in savings relative to last year.
About $10 billion of the cuts comes from targeting appropriations accounts previously used by lawmakers for so-called earmarks….Republicans had already engineered a ban on earmarks when taking back the House this year.
Republicans also claimed $5 billion in savings by capping payments from a fund awarding compensation to crime victims. Under an arcane bookkeeping rule — used for years by appropriators — placing a cap on spending from the Justice Department crime victims fund allows lawmakers to claim the entire contents of the fund as budget savings. The savings are awarded year after year.
And this report from CBS News notes two other phantom cuts: $1.7 billion left over from the 2010 census and $2.2 billion in subsidies for health insurance co-ops that are going to be funded anyway via the healthcare reform bill. This stuff alone adds up to $27.4 billion, all of it money that wouldn’t have been spent anyway. I suppose you can argue that some of it might have gotten reallocated if it hadn’t been removed legislatively, but I doubt that the tea party true believers are in a mood to buy that. If these reports are correct, the bill contains only about $11 billion in hard cuts. Basically, it looks as if the tea partiers may have gotten snookered by their own side.
A Rubinstein bargaining model with a finite time horizon
Not something I’ve studied in any depth, but there is this paper by Randolph Sloof:
We characterize equilibrium behavior in a finite horizon multiple-pie alternating
offer bargaining game in which both agents have outside options and threat points. In contrast to the infinite horizon case the strength of the threat to delay agreement is non-stationary and decreases over time. Typically the delay threat determines proposals in early periods, while the threat to opt out characterizes those in later ones. Owing to this nonstationarity both threats may appear in the equilibrium shares agreed upon. When the threat to opt out is empty for both agents, the outcome corresponds exactly with the (generalized) Nash bargaining solution. The latter observation may prove useful for designing experiments that are meant to test economic models that include a bargaining stage.
In other words, I am not surprised they are on the verge of reaching a deal. The features determining behavior in the earlier periods are not the same as the features determining behavior toward the end. Low “delay costs” do not mean low “no deal at all” costs, especially for the Republicans.
Questions that are rarely asked
By email, from Joshua Miller:
Do you think there is an audience for a public policy game show? The idea would be to ask contestants to solve policy problems instead of asking them to navigate obstacle courses or eat spiders.
Much of my research is on deliberative democracy and civic engagement, but though Obama used that rhetoric in his campaign there haven’t been any major policy moves to increase civic engagement. So I wondered:
If you have any comments, I’d appreciate them. I don’t imagine this as some sort of televised town hall meeting; rather, I envision judging contestants’ policy choices according to realistic projections of their impact.
Here is Alex’s proposal for, So You Think You Can Be President?