Friday, August 29, 2008

The Dangers of a "Surprise Pick"

Palin is definitely a "surprise pick" by McCain. The McCain campaign is clearly hoping that such an outside-the-box pick will generate a huge amount of media attention, as the press starts to inform viewers about Palin's background for the first time. But with Palin, there's also the danger that the press quickly settles on a "too inexperienced to be president" narrative, and spends the next few days talking about what a bad choice McCain made. I think a good deal of the time the media spend talking about Palin in the next few days will, in fact, be dedicated to laughing at the Palin pick and discussing why McCain made such a poor decision.

$130 billion per year, according to MIT health economist Jonathan Gruber.

Monday, August 25, 2008

Why I'M not a fan of Cass Sunstein

Before taking issue with Kathy G's specific attack on Cass Sunstein, I noted that I'm also not a fan of Sunstein. I guess I should explain why. Sunstein is an excellent administrative law scholar (which is where he made his name), and a decent, if somewhat inconsistent, constitutional law scholar. My problem is with Sunstein's law and economics work. He's prolific in the law and economics field, where he's considered one of the leading "liberal" scholars. As I've noted before, the large majority of law and economics scholarship is pure Hackonomics, and is basically worthless even for theoretical purposes. Instead of teaching the basic neoclassical model as the building block of economic analysis, to be refined and adjusted, sometimes dramatically, based on the specific context, law and economics teaches the basic neoclassical model as the final product of economics—apply basic model to area of law; get answer; repeat as necessary. Sunstein seems to have only two ways of reaching his so-called "liberal" conclusions in his law and economics work: he either plugs the findings of behavioral economics into the basic law and economics model, or he mangles basic economic analysis (as John Quiggin caught him doing yet again). Either way, he accepts that the absurdly simplistic and reductionist law and economics model is the appropriate model, with the only assumption potentially in need of tweaking being perfect rationality. Believe it or not, you don't have to be a behavioral economist to reject the Chicago School, or its even-more-simplistic cousin, law and economics. Behavioral economics is a useful field, but its central findings are far from the only, or even most effective, attacks on the law and economics model. Many of the same "liberal" conclusions could reached through a proper application of economics, rather than the Happy Meal version used by most law and economics scholars. As the estimable Dani Rodrik puts it:

[T]he tendency of many economists to offer advice based on simple rules of thumb, regardless of context (privatize this, liberalize that), is a dergoation rather than a proper application of neoclassical economic principles.
Sadly, as much as law and economics scholars bother me, most of them are actually better at economic analysis than Sunstein....and that's saying something! And this just reinforces the belief in the law and economics field that economic analysis doesn't generally support liberal positions. (To be fair, not all law and economics scholars are disingenuous armchair economists, and done correctly, law and economics scholarship can be very intellectually stimulating. Ian Ayres and Lee Anne Fennell are a cut above everyone else; their work is tremendous. Bob Ellickson is also very good. I don't know what everyone sees in Henry E. Smith's work though.)

Sunday, August 24, 2008

The Drunkard's Walk

I just finished Leonard Mlodinow's new book The Drunkard's Walk: How Randomness Rules Our Lives. It was very interesting, though not really what I expected. I expected a sort of Freakonomics for probability and statistics, and to a certain extent it was. But it was very historical. Mlodinow discusses how each of the concepts was originally discovered, and by whom, in some detail. This was a pleasant surprise, because while I didn't learn any new concepts (nor was I expecting to), I didn't know much at all about the history of probability and statistics. Overall, it was highly entertaining, and one of the problems actually tripped me up the first time I read it (the same "girl named Florida" problem that intruiged Alex Tabarrok). I'm always a little weirded out after I read a book by a probabilist, like Normal Accidents, or Struck by Lightning: The Curious World of Probabilities, or even Fooled by Randomness. I've always been acutely aware of the powerful role played by randomness and chance, but the probabilistic world view assigns an uncomfortably large role to chance. No serious person actually thinks that markets are perfect, but probabilists tend to almost categorically reject that market outcomes are indicative of anything. For example, Mlodinow implicitly takes aim at markets:

The cord that tethers ability to success is both loose and elastic. . . . It is easy to believe that ideas that worked were good ideas, that plans that succeeded were well designed, and that ideas and plans that did not were ill conceived. And it is easy to make heroes out of the most successful and to glance with disdain at the least. But ability does not guarantee achievement, nor is achievement proportional to ability. And so it is important to always keep in mind the other term in the equation — the role of chance. ... It is a tragedy when a belief in the judgment of experts or the marketplace rather than a belief in ourselves causes us to give up.
People routinely make determinations that have market consequences based on way too few data points, and that obviously leads to significant inefficiencies (the less talented employee getting the promotion, the less efficient company winning the contract, etc.). But I think competition does a pretty good job of diminishing the effects of randomness as much as possible. Chance is extremely important, but not overwhelming.

Larry Summers writes in the FT:

It is now recognised that meaningful efforts to address climate change require a framework that induces China and other emerging markets to co-operate.
No, what's recognized is that addressing climate change requires a framework that induces the U.S. and China to both co-operate. The quality of Summers' op-eds continues to slowly deteriorate.

Saturday, August 23, 2008

Thoughts on Obama's Law Review Article

So Politico finally managed to find Obama's law review case comment, and the Obama campaign has confirmed his authorship. It's a six-page summary of Stallman v. Youngquist, an Illinois Supreme Court case holding that a fetus does not have the right to sue its mother for unintentional infliction of prenatal injuries. Overall, the article is quite good. It provides a nice summary of the Court's opinion, and the discussion is even-handed for a case comment. Obama concludes that the Court was right to refuse to recognize a fetus' right to sue its mother for unintentional infliction of prenatal injuries. However, Obama's editorial commentary is narrow—he declines to say whether a fetus should have the right to sue its mother for intentional or reckless prenatal injuries, issues the Court didn't address. I'm impressed that Obama actually limited his discussion to the issues addressed by the Court; they're called "case comments" for a reason, which is something that eludes most student editors. The Politico article says that "unlike many student authors[, Obama] dived eagerly into the policy implications of the court decision." Surely you jest. Anonymous case comments by student editors in the Harvard Law Review are notoriously sanctimonious and eager to dive into policy implications. For example, this is from a 2007 case comment:

The history of the Fourteenth Amendment is one of hierarchy and capitalism. ... One small child dies of starvation every five seconds. ... We must understand and confront the powerful psychological forces that allow us to put the face of [a starving] child out of our minds when we interpret constitutional language that purports to bind us to thinking seriously about life and liberty. Yet we live with this world, and we live with this Amendment. And we violate it every five seconds.
Case comments in the HLR have long been the subject of frequent mockery, because they're often just 25-year-old 2Ls (who've been repeatedly told that they're the Smartest People on Earth) trying to teach their Mere Readers an important lesson. Obama's case comment was admirably restrained, which shows a great deal of maturity.

I'm perfectly content with an Obama-Biden ticket. The best take on the Biden choice is this one by the TPM crew. However, as I've indicated, I'm worried that Biden's foreign policy credentials, which are taken as a given by the DC pundit class, won't impress voters much. Thirty-five years on Senate Foreign Relations is only impressive when you know what being on Senate Foreign Relations means, and when you care about committee assignments. Also, as a one-time opposition researcher myself, Biden scares me a bit. But the Obama campaign no doubt had their oppo researchers scour Biden's record before the pick was made, and if they're satisfied that there are no game-changers waiting to be unearthed, then they're probably right.

Hans Gersbach has an interesting proposal ($) for how to overcome the international collective action problems of the Kyoto accord:

Imagine that the twenty largest industrial countries would be able to coordinate and agree to put a significant, though not extraordinary, amount of money into a fund, the Global Climate Fund. Then, the countries agree to a constitution by which money will be paid out according to reductions in emissions: the Global Refunding System (GRS). If the system is set up properly, no further coordination is required, except in administering the system, measuring reductions and distributing money. ... The rules are simple. Each nation can choose what tax rates to set to reduce its emissions. Tax revenues go into the Global Fund, and each year (or a longer period), refunds are distributed to each nation in proportion to that nations’ emission reductions relative to the prior year divided by the sum of all nations’ reductions.
It's an interesting idea, and a Global Refunding System could work well if established, but as Gersbach readily admits, it rests on the assumption that the 20 largest industrial countries can and do coordinate to establish the GRS in the first place. In other words, we have to overcome an international collective action problem in order to set up a system that overcomes an international collective action problem. Here's how Gersbach proposes to clear the first hurdle (i.e., establishing the GRS):
[A]bout twenty nations must meet and agree to a treaty that fails if any of them defect. They must be stubborn and believe that the others will be stubborn and insist on full participation before moving forward. Such a procedure is common in international agreements and has worked before in some cases.
The problem with this is that it ignores the inevitable holdout problem. I know very little about international agreements of this sort, so it's possible that procedures exist that can effectively deter holdouts in these settings, as Gersbach seems to suggest. But the WTO uses a similar procedure in its negotiations—and how did that work out for the Doha Round again? So I'm not overly optimistic.

Friday, August 22, 2008

VP Predictions

Just to get them on the record, here are my VP predictions: Democratic: Tim Kaine Republican: Tim Pawlenty I know some journalists are reporting that McCain picked Romney and Obama picked Biden, but only a handful of people in each campaign actually know who the VP picks are, and none of those people would leak it to journalists. The journalists may end up being right, but if so, then only by chance. Obama will go with Kaine because he's a white male, and a popular southern governor from an important swing state. Obama has a good personal relationship with Kaine, so trust isn't an issue. Perhaps most importantly, Kaine isn't a Washington insider (having never even worked in the federal government), which will hammer home Obama's "change" theme. McCain will go with Pawlenty because they have a close personal relationship, and because Pawlenty is a young, fresh face who can balance out McCain's "Grandpa Simpson" image. Romney is seen as the "safe" choice by political journalists because of his economic credentials, but thrusting the Mormonism issue back into the national spotlight is the opposite of safe. Romney just has too much baggage. Oh yeah, and McCain reportedly hates Romney personally.

Thursday, August 21, 2008

Leonhardt Article on Obamanomics

David Leonhardt has a lengthy and very good New York Times Magazine piece on Obama's views on economics. (Leonhardt should be required to write every NYT article on economic issues.) The piece includes many new and interesting nuggets on "Obamanomics" from Obama's friends/advisers and from Obama himself. The most interesting and illuminating part is this quote from Obama:

"I think I can tell a pretty simple story. Ronald Reagan ushered in an era that reasserted the marketplace and freedom. He made people aware of the cost involved of government regulation or at least a command-and-control-style regulation regime. Bill Clinton to some extent continued that pattern, although he may have smoothed out the edges of it. And George Bush took Ronald Reagan's insight and ran it over a cliff. And so I think the simple way of telling the story is that when Bill Clinton said the era of big government is over, he wasn't arguing for an era of no government. So what we need to bring about is the end of the era of unresponsive and inefficient government and short-term thinking in government, so that the government is laying the groundwork, the framework, the foundation for the market to operate effectively and for every single individual to be able to be connected with that market and to succeed in that market. And it's now a global marketplace. "Now, that's the story. Now, telling it elegantly — 'low taxes, smaller government' — the way the Republicans have, I think is more of a challenge."
That's quite a revealing quote, and probably indicates what an Obama administration's economic policies would look like better than anything. Most people want to know what Obama's personal economic ideology is, not just the economic story his campaign is trying to tell. But Obama's inner-most feelings on economics couldn't matter less—what actually matters is the story he's trying to sell. Big legislative packages are crafted to win the same public support as campaign messages. So if this is the economic story Obama is selling to win over the majority of voters, then his economic policies will reflect that story. We've heard this before, but this aspect of Obama continues to be very encouraging:
As anyone who has spent time with Obama knows, he likes experts, and his choice of advisers stems in part from his interest in empirical research. (James Heckman, a Nobel laureate who critiqued the campaign's education plan at Goolsbee's request, said, "I've never worked with a campaign that was more interested in what the research shows.")
Also, I really hope the "University of Chicago Democrat" label for Obamanomics that Cass Sunstein suggests in the article doesn't stick. Too many Democrats, especially on the far-left, will take that to mean that Obama subscribes to the Chicago School of economics (which he obviously does not), and the ensuing stupidity on the blogs and op-ed pages will be mind-numbing. Why can't people just say that Obama subscribes to the MIT School of economics? It happens to be true, and it's not as misleading or needlessly confusing as "University of Chicago Democrat." Contrary to popular belief, the University of Chicago isn't the only place where economists "respect the power of markets."

Tuesday, August 19, 2008

Maureen Dowd: A Sad, Sad Person

Oh god. Maureen Dowd is back to writing fictional stories as her entire column. Only this time around, instead of writing about fictional conversations that Al Gore had with his reflection in the mirror, Dowd is writing about made-up clandestine meetings between Hillary and McCain, in which they conspire to smear Obama and make sure he loses the election. Maureen Dowd is probably the most atrocious columnist at a major newspaper in the past 25 years. Her clinical obsession with Hillary will eventually become too embarrassing for the New York Times to put up with, right? At the very least, the NYT would fire her before she's admitted to a mental institution. That's an extremely low bar, but judging by today's column, we're getting pretty close to clearing that bar now.

Government data collection is tremendously important—the limits of government data sometimes dictate the limits of our knowledge. Not surprisingly, though, government data collection is consistently overlooked. Here's a very rough idea for how to improve government data collection: If a group of private citizens is willing to pay for a reasonable addition to the government's data collection, the group should be able to compel the government to make the addition to its data collection. Here's how it would work. The Consumer Expenditure Survey (CES) reports the amount consumers spend on "apparel and services," but doesn't break down consumers' spending on apparel any further. Suppose a handful of economists are studying the use of t-shirts, and they really wish the CES broke down consumer spending on apparel into spending on t-shirts vs. pants. If it would cost the Bureau of Labor Statistics an additional $50,000 to collect the data on consumer spending on t-shirts vs. pants, and the economists are willing to pay the BLS for the increased costs, then the economists should be able to compel the BLS to break down spending on apparel into spending on t-shirts vs. pants. Obviously, the government would have to set limits on the kinds of additions to its data collection practices that it's willing to make. For example, a private group couldn't pay the government to include on the Time Use Survey a question about the respondent's sexual encounters. But if it would be appropriate for the government to make a particular addition completely voluntarily, then private groups should be able to pay the government to make the addition. A lot of data collection can be done privately, of course. But there are economies of scale in data collection that make it more efficient for the government to collect certain additional data. Moreover, accuracy concerns tilt the scales in favor of having the government collect certain additional data. As long as the government deems the additional data collection appropriate, then why shouldn't private groups be able to pay the government to conduct the additional data collection? I don't know how you would solve the collective action problem—that is, how to stop one of the economists studying t-shirts from refusing to help pay for the addition to the CES but then using the addition in his research. The idea of granting the paying parties a temporary monopoly on the use of the additional data, like in intellectual property, makes me very uneasy. Even with the collective action problem, though, I think my plan would improve government data collection at no (monetary) cost to the taxpayer. This is an incomplete thought, so feel free to offer your input.

Monday, August 18, 2008

The Newspaper Industry

David Warsh has an interesting article on the role of newspapers in society, and he has a unique take on what newspapers should do to keep pace:

They must keep their paper editions strong. ... Those enormous rolls of newsprint, tank-cars of ink, long lines of presses and fleets of delivery vans are the newspaper industry’s best friends. Among business strategists, they are known as barriers to entry. The capacity to print and deliver the paper product from cities around the world is what makes newspapers different from everything and everyone else in this media-sodden world.
The standard argument is that to keep pace in an increasingly web-based world, newspapers must embrace and shift more of their attention to the Internet. Newspapers shouldn't cling to a dying medium, the argument goes. Warsh's argument that newspapers should focus more on improving their print editions is refreshing. Personally, I have no opinion on what newspapers should do to keep pace, or on the (tired) debate over what the decline of the newspaper industry means for society. I've never worked at a newspaper (or any similar publication), so I have no special insight into that industry, or how the massive cutbacks will affect the quality of reporting. I still get the Financial Times delivered every day, even though I get most of my news from the Internet. I like reading print editions of newspapers because it allows me to stumble on interesting stories I would have never read online. The FT only has 2 regular sections—although most days it has a "special" section dedicated to a discrete topic as well—so it's small enough that I can at least browse through the whole paper most mornings. And, of course, quality-wise the FT is far and away the best newspaper in the world. The only drawback to the FT is that you're constantly having to answer the question, "Why is your newspaper pink?" My standard answer to that question used to be, "It's just their signature," but that drew too many follow-up questions. Now my standard answer is, "It's a London paper." For whatever reason, everyone seems satisfied with that explanation.

This story in the NYT describes a textbook property rights conflict that communities face every day. The state of New York wants wind power to be able to compete with power produced from coal or natural gas, so the state offered subsidies to wind companies. The wind companies need to build their wind towers somewhere, so they started buying up property and, more importantly, easements—which are essentially use rights in other people's property. Some landowners are willing to let wind companies build towers on their property (for a price, of course). However, other landowners not only don't want to sell the right to build wind towers on their property to the wind companies, but also don't want their neighbors to allow towers on their property. Wind towers are a major eyesore, and I imagine they make noise. So building a wind tower on your property probably interferes with your neighbor's right to use his property in certain ways (e.g., his right to use his property for a scenic view, or for activities that require peace and quiet). It's your property, but if you sell an easement (use rights in your property) to a wind company to build a wind tower, you may be interfering with your neighbor's use rights in his own property. Land use regulations are intended to resolve these types of disputes—if they're not resolved privately, that is. For example, the local government could enact a zoning regulation prohibiting wind towers in the entire residential neighborhood. But as the NYT article shows, local government officials are notoriously susceptible to capture. Almost counterintuitively, though, local government officials are much more susceptible to capture by homeowners, not businesses or owners of vacant property (who usually want to sell to businesses). Homeowners vote, and vote reliably; businesses and vacant property owners don't vote. The battle described in the NYT article seems to be between homeowners, but I imagine the vast majority of homeowners are on the side that's opposed to the wind towers. The NYT article alleges that the local governments in upstate New York have been captured by the wind companies—and I'm sure they have to a certain extent, since there appears to have been some corruption on the wind companies' part. But without knowing more about the specific circumstances (which probably differ from community to community), I'd venture that it's probably not as clear-cut an issue as the NYT article suggests. What's interesting is that there is no mention of eminent domain in the article. That suggests that it's not a matter of simple land assembly—rather, it suggests a piecemeal collection of properties and easements that don't have to be adjoining to be useful to the wind companies. If that's the case, then those communities can expect contentious battles like these for years to come. Also, I love how the NYT framed this part:

There is no state law governing where wind turbines can be built or how big they can be. That leaves it up to town officials, working part time and on advice from outside lawyers, some of whom may have conflicts of their own. [Memo to NYT: lawyers' conflicts of interest are heavily regulated by states' legal ethics codes.]
Outside lawyers! (Cue scary music.) Advising mere "part time" local officials!! NOOO!!!

Sunday, August 17, 2008

Joe Biden: Foreign Policy Heavyweight?

Conventional wisdom has it that Joe Biden is a foreign policy heavyweight whose presence on the Democratic ticket would help compensate for Obama's relative inexperience in foreign policy. Marc Ambinder even called Biden "Obama's foreign policy arm-candy." I have to wonder though: does Biden really have the foreign policy credentials to be considered a "foreign policy heavyweight" by the public? He has been on the Senate Foreign Relations Committee for 35 years, chairing the committee for 5 years and serving as ranking member for 4 years. He was also instrumental (and prominent) in handling the Bosnia situation in the '90s. But that's it. He never served in the diplomatic corps, or in any other capacity at the State Department. Most importantly from the public's perspective, he never served in the military—the general public has always conflated military experience with foreign policy experience (see: McCain, John). I'm not sure Biden's long-time position on Senate Foreign Relations is enough, by itself, to convince voters that he's a true foreign policy heavyweight. The general public doesn't know what committees do, nor do they particularly care. The McCain campaign would definitely push the fact that Biden never served in the military, and would try to frame him as an armchair diplomat who never leaves the Beltway. To be clear, Biden's reputation as a serious foreign policy expert is absolutely justified, and his 35 years on Senate Foreign Relations is very significant experience. I'm just not sure the Obama campaign can convince voters of this much. Of the potential running-mates still in consideration, Biden is my first choice for Vice President, but Tim Kaine is my first choice for Vice Presidential nominee (followed closely by Jack Reed). Biden's just too risky on the campaign trail.

George Will identifies the Fairness Doctrine as one of the standard "Democratic priorities" in his column today. From a constitutional standpoint, the Fairness Doctrine (FD) is a loathesome rule, so it's kind of embarrassing that some Democrats want to reinstate the FD. From a political standpoint, though, reinstating the FD makes perfect sense if you're a Democrat: conservatives dominate talk-radio, and the FD would reduce the conservatives' talk-radio advantage. I'm quite confident that the Supreme Court, if presented with another First Amendment challenge to the FD, would strike down the FD as unconstitutional this time (in light of the huge technological advances over the past 40 years). So when it comes down to it, I really don't care that some Democrats want to reinstate the Fairness Doctrine. The annoying thing about the Fairness Doctrine being labeled a standard Democratic priority, though, is that it allows Republicans to play the role of Noble Defenders of the First Amendment. Anyone who has paid the slightest attention to politics in the last 15 years (at least) knows that the Republicans would be huge fans of the Fairness Doctrine if liberals were the ones dominating talk-radio. So before we let blowhards like Sen. James Inhofe and Rush Limbaugh feign fealty to First Amendment principles, it's worth reminding people that Red Lion Broadcasting Co. v. FCC (1969)—the Supreme Court case upholding the constitutionality of the Fairness Doctrine—was a unanimous decision. That decision garnered the support not only of conservatives Potter Stewart and John Harlan, but also of Hugo Black, the famous First Amendment absolutist. In fact, the opinion was written by none other than Justice Byron White, who today would be the Republicans' dream justice—White dissented in Roe, upheld an anti-sodomy law in Bowers, and was the most vocal advocate of so-called "judicial restraint." (On a side note, Justice White probably has the most impressive resumé ever...literally. He's a member of the College Football Hall of Fame; was the 4th overall pick in the NFL Draft; played in the NFL for 3 years, leading the NFL in rushing for 2 of those years; was a Rhodes Scholar; finished 1st in his class at Yale Law School; served in the Navy during WWII; clerked for Chief Justice Vinson; served as the Deputy Attorney General; and finally, was appointed to the U.S. Supreme Court. That's an incredible resumé.)

Ronald Dworkin's essay on Boumediene v. Bush in the New York Review of Books is so confusing and logically inconsistent that I don't know what to make of it. At one point, Dworkin declares that not only is it immoral for the U.S. to deny any foreigners rights against unjust imprisonment, but it's also unconstitutional:

America owes its duty to respect fundamental human rights, including the right not to be imprisoned unjustly, to all people who come under its authority; and there can be no moral justification for discriminating against foreigners either in the definition or the enforcement of those rights. The Constitution's text suggests that this moral principle is a constitutional principle as well, because it declares that all "persons" are owed due process.
By this logic, the statutory scheme that Dworkin later advocates is both unconstitutional and morally unjustifiable, because:
[The proposed statutory scheme] must permit the government, at least for some specified period, to prevent truly dangerous terrorists who cannot be prosecuted from carrying out more attacks.
Dworkin also mocks the idea that Congress or the Executive should have a hand in defining the scope of foreigners' habeas rights:
As Kennedy said, "The test for determining the scope of this provision must not be subject to manipulation by those whose power it is designed to restrain." Scalia's historical reading demeans the Constitution and insults those who made it. It is absurd to translate their clear declaration of principle into a rule pointlessly limiting prisoners' rights to those enjoyed at some fixed and essentially arbitrary date.
But again, by this logic, Dworkin's proposed statutory scheme is unconstitutional, because it allows Congress—whose power is necessarily being restrained by the constitutional principle Dworkin extolls—to define the length of the "specified period" during which foreigners are stripped of their right against unjust imprisonment:
It would therefore be necessary for any statute enacting this scheme to provide some time limit for this detention that Congress could, of course, later extend if it deemed necessary.
I agree that Boumediene was a landmark opinion that was (thankfully) decided correctly. It's too bad this essay does such a poor job articulating that view. Dworkin was actually a professor of mine in law school. My then-girlfriend (and now-wife) somehow tricked me into taking Dworkin's legal philosophy class with her. Much to my surprise, though, I very much enjoyed the class. Don't get me wrong, I completely disagree with his various philosophies (which are hard to actually pin down). His flip dismissal of the entire field of economics was particularly puzzling to me—if I remember correctly, he argued that economics was fundamentally flawed because in economics, someone's claim to his share of resources is subject to the preferences of others (if other people are willing to pay more for the resource, then you get less of it). In other words, he rejected economic analysis because it recognizes the irrefutable fact that resources are often scarce! I guess he preferred assuming that resources are endless, because without that assumption, a person's claim to his share of resources will always be subject to the preferences of others. Despite my objections to his philosophies, his class was supremely entertaining. Dworkin's public persona is as a prominent and hard-core lefty (probably due to his heavy emphasis on equality), so his class attracted the most left-wing students at the law school. I'm not talking about liberal or even populist economist-types; I'm talking about seriously left-wing egalitarians, in the Naomi Klein mold. Unfortunately for these students, Dworkin wasn't nearly as left-wing as they originally thought, and he seemed to really enjoy knocking down the arguments of uncompromising egalitarians. As a result of their obvious disappointment, the in-class debates were more emotionally charged than any other debates I saw in law school. I don't think he won many converts to his "interpretivist" philosophy of law. That may not sound very entertaining, but believe me, by law school standards, it was high comedy.

Saturday, August 16, 2008

Worst Timing Ever

I took a vacation with the wife (sans Blackberry and everything!), expecting the news to be slow like every August, except for the Olympics. But what happens? As Jon Stewart so aptly put it: a news-plosion! Russia and Georgia go to war over South Ossetia; Russia seizes both South Ossetia and Abkhazia, and occupies Gori and Poti; the U.S. and Russia engage in a little Cold War-style brinksmanship; inflation hits a 17-year high; the Treasury Department hires Morgan Stanley to advise it on the Fannie and Freddie bailout; and oh yeah, the Beijing Olympics has been sensational. As a news junkie of the highest order, spending last week in News Purgatory was awful. I had to get all my news through—gasp!—cable TV. And our resort didn't even have Bloomberg TV! It was excruciating. Great vacation, terrible timing. Thank god I'm back.

Thursday, August 7, 2008

The Anticommons: So Hot Right Now

Michael Heller's new book, The Gridlock Economy, is suddenly the book du jour. The book is about the tragedy of the anticommons, which occurs when too many people own property rights in a particular resource. James Surowieki describes the essence of the anticommons problem succinctly: "If too many people own individual parts of a valuable asset, it’s easy to end up with gridlock, since any one person can simply veto the use of the asset." Heller coined the term "anticommons" in a famous 1998 Harvard Law Review article. Since more people are likely to become interested in the anticommons in the next few weeks, they should probably know where to go to learn more about the anticommons. Heller's Harvard Law Review article is of course a good resource, but far and away the best article on the anticommons is Common Interest Tragedies, by University of Chicago law professor Lee Anne Fennell. The depth of analysis is unmatched in the anticommons literature. Fennell is, in my mind, the smartest law professor in the country, bar none. (Contrary to popular belief in law schools, Heller didn't "discover" the anticommons in his Harvard Law Review paper; the prototypical example of an anticommons is really just a regular commons with prohibitively high transaction costs. I think the anticommons is an incredibly useful framework that rightly puts transaction costs at its center, but it wasn't really a breakthrough in economic thought or anything. Someone needs to tell this to Larry Lessig, who pushes the limits of hyperbole when he writes that Heller's anticommons idea will "reorient many fields. . . . Paradigms will shift. Many of them." Easy there Lessig. Why don't you sit the next one out, okay champ?)

Wednesday, August 6, 2008

Glaeser vs. Ehrenhalt

The New Republic has two long pieces on urban economics this week. One is by Ed Glaeser; it's nominally a review of Traffic, by Tom Vanderbilt (a tremendous book), but Glaeser also uses his platform to discuss urban issues more generally. The second—this week's cover story—is by Alan Ehrenhalt, an editor of Governing magazine and a frequent commentator on urban issues. The two articles are not necessarily compatible. Glaeser dismisses the commentators who claim that we're on the brink of a radical shift in the urban landscape:

The housing stock is durable and valuable, and all those shiny new homes on the edges of Atlanta and Phoenix are not going to be abandoned anytime soon. As long as those homes are occupied, the people living in them will drive. They have to drive. Attempts to service these low-density areas with rail are enormously expensive undertakings that can never be justified on the basis of ridership.
Ehrenhalt seems to be one of the commentators Glaeser is dismissing. Ehrenhalt's thesis is that:
[W]e are living at a moment in which the massive outward migration of the affluent that characterized the second half of the twentieth century is coming to an end. ... As [the affluent move to central cities], others will find themselves forced to live in less desirable places—now defined as those further from the center of the metropolis. And, as this happens, suburbs that never dreamed of being entry points for immigrants will have to cope with new realities.
g As I've noted before, the idea that the rich and the poor are going to switch places is stupid. The problem is, I'm not really sure Ehrenhalt believes his own thesis. He concedes so many points and offers so may qualifiers that his argument basically boils down to the claim that Chicago is undergoing a "demographic inversion," even though most other cities aren't. For example, Ehrenhalt concedes:
We are not witnessing the abandonment of the suburbs or a movement of millions of people back to the city all at once.
He also concedes that "[i]n most metropolitan areas, in the first few years of the twenty-first century, many more people have moved to the suburbs than have moved downtown." Most importantly, he admits that "[t]he bulk of the married-with-children middle-class has not only been living in the suburbs, it has been moving to the suburbs." Ehrenhalt is completely oblivious to the fact that residential preferences are dynamic. So when he sees that young people want to live in cities more than the suburbs, he interprets this as a generational change in attitudes that will have far-reaching ramifications. Yes, it's true that young people view cities as cool places to live; but then they grow older, get married, and have kids. This completely changes their prefereces, because now the most important factors are very likely to be school quality and crime. Ehrenhalt notes that crime rates have fallen in central cities, but for the purposes of housing decisions, what matters is relative crime rates. And urban crime rates are still higher than suburban crime rates. I very much disagree with Ehrenralt's thesis, but overall his piece wasn't actually that bad. He just forces a thesis that's unsupported by his own arguments and data. It's certainly much better than his previous ad hominem attacks on economists (not just one economist, all economists in general), that's for sure.

Oh, Bob Herbert. He devotes a good chunk of his column to praising California's energy policies during the 1970s, including (wait for it) . . . "when the state established building standards that required greater efficiency with regard to heating and cooling." Wow. Anyone who thinks California's draconian building code revisions in the '70s were a net benefit needs to immediately report back to elementary school. Demanding that all newly-constructed housing meet the state's standards for energy efficiency raises the costs of construction, which raises housing prices. Guess which kind of housing consumers are least able to afford these price increases? That's right: low-income families. It's universally acknowledged that the land use regulations enacted across California in the name of the environment in the '70s were basically an unmitigated disaster. It was one of our great learning experiences: it taught us how to artificially inflate housing costs—and particularly low-income housing costs—across an entire state, making unsubsidized housing almost completely unaffordable to the poor. If Bob Herbert doesn't know this, then I can only conclude that he knows very little about affordable housing policy. Does Herbert think about policy ideas for more than 10 minutes before putting them in his column? Suggesting that we should repeat California's horrific mistakes is like suggesting that we should aggressively deregulate the financial sector again.

Friday, August 1, 2008

The Internet Trolls

Mattahias Schwartz's piece on the culture of internet trolls in the New York Times Magazine is fascinating. What's interesting, though not really surprising once you think about it, is the sense of intellectual superiority that many trolls possess. One of the superstars in the troll world that Schwartz profiles, a 20-something kid who goes by "Weev," even fancies himself a great philosopher:

As we walked through Fullerton’s downtown, Weev told me about his day — he'd lost $10,000 on the commodities market, he claimed — and summarized his philosophy of "global ruin." "We are headed for a Malthusian crisis," he said, with professorial confidence. "Plankton levels are dropping. Bees are dying. There are tortilla riots in Mexico, the highest wheat prices in 30-odd years." He paused. "The question we have to answer is: How do we kill four of the world's six billion people in the most just way possible?" He seemed excited to have said this aloud.
In a follow-up post on a NYT blog, Schwartz noted that Weev has responded to the article on his LiveJournal site. Weev apparently thought the NYT article was going to describe his "global ruin" philosophy in detail, so his response is a longer explanation of his conspiracy theory philosophy. As you can imagine, it's off the charts on the unintentional-comedy scale. My favorite part is this:
There was a strategic decision to bleed the middle east dry of oil long ago. We still have plenty of shit we can drill elsewhere. America's deserts have plenty of light sweet crude, I assure you.
Internet trolls are like the college sophomore who, after taking his second philosophy class, is convinced that he has a Grand Theory that has unlocked the Secret Universal Truth and, convinced of his greatness, smugly mocks anyone and everyone. Usually this mentality goes away when they read a bit more, and realize that someone else has already thought of their Grand Theory, and it has already been roundly rejected. Ah, youth.