Archives for July, 2008
Is the Stimulus Working?
The New York Times ominously reports that “G.D.P. Grows at Tepid 1.9% Pace Despite Stimulus”
A more accurate wording would be “G.D.P. Grows at Tepid 1.9% Pace Due in Part to Stimulus.”
CEI’s Wayne Crews shows why the stimulus package was doomed to fail in a recent CEI Issue Analysis, “Still Stimulating Like It’s 1999.” Worth reading.
The Near-Impossibility of Swing Voting (movie spoiler alert)
Last night I attended a preview of the new film Swing Vote, which is being released tomorrow. It revolves around one man, Bud Johnson (Kevin Costner), who through a series of odd events winds up getting to re-cast a botched ballot in a tied presidential election in the state whose electoral votes will tip the election to either candidate, New Mexico.
Such is the scenario often put forth by non-voters — given its extreme unlikelihood, the chances that your vote will make any difference in an election’s outcome are essentially nil. However, I doubt a discussion about the rationality of voting is what inspired the makers of Swing Vote.
The film moves toward a warm and fuzzy bipartisan ending that is intended to drive home the importance of voting — and becoming duly informed to do so — as a “civic duty.” Yet the movie’s premise is so outlandish that instead of a civics lesson, it rather reinforces the view of voting as irrational, an expenditure of effort toward no discernible effect (under normal circumstances, at least) — or, in other words, that there is no Bud Johnson.
Putting the Farm Bill in Perspective
Number of farms in the U.S. — about 2.1 million.
Cost of the 2008 farm bill — $300 billion over five years.
That’s nearly $150,000 per farm, at a time of high food prices.
Google Reveals More About Contextual Search
Last month, Google slightly improved the relevancy of the ads it displays when you search for something. In addition to taking your last search into account, Google now also factors in your immediately-previous search. Then, a couple of weeks ago, Google released more information about how it improves its search algorithm - notably, by collecting data on searches.
Today, Google has added a new feature that shows users how their results are customized, based on factors like location, recent searches, and a longer search history. CNET gives the example of a San Francisco user searching for “kiss fm” and finding the KISS-FM in San Francisco, not the KISS-FM in any other city, as her top result.
This customization is important for search. More relevant results are better results. With search competition increasing, Google needs personal data to keep its algorithm up-to-date. As Google pointed out in its comments to the FTC’s proposed behavioral ad rules, personal data of some form will have to be collected and used if the internet is ever going to improve. That means the government will have to stay out.
Public Safety: Give Us the D-Block
I reported here earlier on public safety agencies holding up spectrum owed to Sprint-Nextel. I also reported on repeated demands for even more spectrum, in spite of public safety agencies already being given an enormous chunk of the spectrum freed up by DTV.
Yesterday, a group of public safety officials met with FCC Commissioner Michael Copps and demanded even more. The public safety officials want the whole D-Block, the section of spectrum that was to be turned into a public-private venture, but failed to achieve its reserve price at auction due to extreme limitations on its use.
They should not get it. My colleague, Ryan Radia, has an upcoming On-Point detailing what is wrong with giving public safety agencies so much spectrum. Government agencies have no incentive to use spectrum efficiently, since they can just get more by demanding it. Privitization, however, would result in better public safety outcomes (not to mention opening up space for new technologies like WiMax) because private companies have an incentive to innovate and tailor their systems to the public safety agencies that would lease spectrum from them.
States Begin to Regulate Nano
So far, nanotech has been left blessingly unregulated by the feds. Nanotech has been responsible for the great advances in computer technology. It offers the possibility of cheap genome sequencing. And it generates new, better materials for everyday uses.
But now, states and locals are stepping in and beginning to regulate nanomaterials. The main concern is apparently toxicity. But nanomaterials are very safe and scientists are already examining their toxicity. Nothing is terribly unique about nanomaterials; we are already bombarded with objects on the same size scale. Given that no one has ever been harmed by nanomaterials, regulation seems a bit premature.
Further - and this is a lesson that bears repeating in other contexts - one has to keep in mind the potential harm done by slowing or stopping nanotech research. If nanomaterials will substantially improve medicine, then the costs of delay may be many lives. Even if the only victim is better sunscreen, regulations may put lives at risk. Over 10,000 preventable deaths in the US occur every year because of skin cancer. State and local regulators need to start looking at the unintended consequences of their actions before leaping ahead.
Egads. Physicists Debate Global Warming. Call Al Gore!
This can’t be. There apparently are PHYSICISTS who don’t believe the world is about to end due to climate change. They even disagree with the UN’s IPCC. My god! What further horrors await all true believers in the Goracle’s pronouncements??
Observes Jeffrey Marque, the editor of the Forum on Physics & Society:
With this issue of Physics & Society, we kick off a debate concerning one of the main conclusions of the International Panel on Climate Change (IPCC), the UN body which, together with Al Gore, recently won the Nobel Prize for its work concerning climate change research. There is a considerable presence within the scientific community of people who do not agree with the IPCC conclusion that anthropogenic CO2 emissions are very probably likely to be primarily responsible for the global warming that has occurred since the Industrial Revolution. Since the correctness or fallacy of that conclusion has immense implications for public policy and for the future of the biosphere, we thought it appropriate to present a debate within the pages of P&S concerning that conclusion. This editor (JJM) invited several people to contribute articles that were either pro or con. Christopher Monckton responded with this issue’s article that argues against the correctness of the IPCC conclusion, and a pair from Cal Poly San Luis Obispo, David Hafemeister and Peter Schwartz, responded with this issue’s article in favor of the IPCC conclusion. We, the editors of P&S, invite reasoned rebuttals from the authors as well as further contributions from the physics community. Please contact me (jjmarque@sbcglobal.net) if you wish to jump into this fray with comments or articles that are scientific in nature. However, we will not publish articles that are political or polemical in nature. Stick to the science! (JJM)
If the physicists can open up a genuine debate global warming, when might the politicians follow suit?
Bush Signs Blank Check for Costly Mortgage Bailout
Bush signed into law an enormously costly mortgage bailout today, turning a deaf ear to financial experts who warned about the bill’s dangers and risks, and choosing instead to spend untold billions of dollars (potentially up to $300 billion) to bail out government-backed mortgage giants Fannie Mae and Freddie Mac.
“David M. Walker, the former comptroller general of the United States and head of the Government Accountability Office . . . said that Mr. Bush might have been unwise to sign the measure. ‘Providing authority to the secretary of the Treasury to extend credit or to buy stock is one that will end up costing the taxpayers tens of billions of dollars.’ Mr. Walker noted that other government interventions in the private market, including a rescue of the Chrysler automobile company had provided an opportunity for taxpayers to profit. But when it comes to the mortgage giants, he said, there is no upside. ‘The way this is structured,’ he said. ‘It’s only a matter of how much the taxpayers are going to lose.’”
In signing the bill, Bush knuckled under to Congressional leaders like Barney Frank, Charles Schumer, and Chris Dodd, who used the bill to fund left-wing special interest groups that support them, and to further enrich the unaccountable government-backed mortgage giant Fannie Mae, which has long been run by liberal power-brokers, and which used massive accounting fraud to inflate its managers’ bonuses, even while helping spawn the mortgage crisis.
In the Wall Street Journal, Holman Jenkins describes how much of the mortgage crisis remains hidden, despite its enormous scale, in places like California. In the Washington Post, Robert Samuelson describes how the government’s “affordable housing” fetish contributed to the mortgage meltdown, and worries (as I have) that the mortgage bailout, by rewarding irresponsible lenders and borrowers, will encourage irresponsible behavior that may lead to recurring financial crises in the future. (Regulatory pressure on banks to promote “affordable housing” and “diversity” helped spawn the mortgage crisis).
Here’s an infuriating example of bias towards irresponsible people in press coverage of the mortgage crisis.
Google, Yahoo, and Federalism
In addition to massive federal probes of the deal, the nonexclusive Google-Yahoo ad pact is facing scrutiny from states as well. The California attorney general is being pushed to examine the advertising arrangement.
Why all this hubbub? As I’ve argued here before, the Google-Yahoo deal is fairly minor, not a merger, beneficial to consumers, and was initially thought not to even need approval.
One may particularly wonder why the states are getting involved. If there’s ever a fairly clear case for federal preemption, antitrust investigations of international companies would seem to be it. After all, isn’t it the federal government’s job to regulate interstate commerce?
While libertarians may in general be in favor of federalism, we should also recognize its limits. One big caveat is that there should be no situations where both the feds and the states are regulating something. Subjecting a voluntary, beneficial agreement to multiple levels of regulation is always worse than subjecting it to only one. Further, there are some issues where multiple regulatory jurisdictions are actually harmful. These are issues in which the most regulatory jurisdiction governs behavior, not the least.
Frank bill mandates credit rating agencies to repeat subprime mistakes
Due to their failures in the subprime mess, it has long been expected that Congress would take up regulation of the credit rating agencies to attempt to make the ratings stronger.
But the first rating agency bill to move forward — the Municipal Bond Fairness Act sponsored by House Financial Services Committee Chairman Barney Frank, D-Mass. — has the almost explicit goal of making the rating weaker for a certain type of security. Scheduled to be marked up in the financial services committee today, the bill would limit the risks agencies can look at in examiminig muinicipal bonds. It very purpose, according to a press release from Frank, is to “increase demand for certain municipal bonds and therefore lower borrowing costs for issuers.” It would limit municipal bond ratings to long-term default, overlooking issues such as short-term liquidity that turned out to be important overlooked risks for mortgage securities.
The bill also raises First Amendment issues, according to longtime media attorney Floyd Abrams, who defended the press in landmark free speech cases such as New York Times v. Sullivan. The credit rating agencies, Abrams argues and courts have apparently upheld, are a form of media so long as they aren’t structuring the security they rate.
The problem during the subprime mess was lack of competition and overreliance on rating agencies. The Securities and Exchange Commission, to its credit, has moved in the direction of recognizing more competitors and lifting requirements that financial instituions rely on the word of rating agencies.
As a recent op-ed in the Financial Times puts it: “The issues with credit ratings are not so much that they got their assumptions so wrong on a subset of US residential mortgage-backed securities. It is why the markets swallowed these assumptions apparently without challenge.”
Fruits and Nuts in California
I love California, but the fruits and nuts truly have taken control. The city of Los Angeles has initiated a moratorium on fast food restaurants–but only in poor neighborhoods–to iimprove the people’s health. Reports the Associated Press:
City officials are putting South Los Angeles on a diet.
The City Council voted unanimously Tuesday to place a moratorium on new fast food restaurants in an impoverished swath of the city with a proliferation of such eateries and above average rates of obesity.
The yearlong moratorium is intended to give the city time to attract restaurants that serve healthier food. The action, which the mayor must still sign into law, is believed to be the first of its kind by a major city to protect public health.
In the city council’s view, too many residents of South Los Angeles are fat. But if people there prefer junk food, why do the city fathers (and mothers) believe tofu bars are going to rush in? Unless I missed something, none of the fast food restaurants were forcing people to eat there at gun point. The restaurants came because people wanted their food.
Of course, it’s probably dangerous to point this out. The next step for Los Angeles may be forcible round-ups of fat people and incarceration in reeducation camps to teach the wonders of dressing-free salads. It is California, after all.
Doha Round stalled again — take 2
Today, as Ryan Young noted in his post, negotiations collapsed in the ninth day of talks to resuscitate the World Trade Organization’s Doha Round. Irreconcilable differences between the U.S. and India and China on what are called in trade-speak “special safeguard measures” are blamed for the bad ending to this session. SSMs are actions that developing countries can take to raise tariffs on agricultural goods when there in a surge in imports.
In a press statement, U.S. Trade Representative Susan Schwab said:
“Regrettably, our negotiations deadlocked on the scope of a safeguard mechanism to remedy surges in imported agricultural products.
“Any safeguard mechanism must distinguish between the legitimate need to address exceptional situations involving sudden and extreme import surges and a mechanism that can be abused.
“In the face of a global food price crisis, we simply could not agree to a result that would raise more barriers to world food trade.
Schwab said that the position of some of the members would have moved the WTO backwards instead of advancing more open trade.
Although some WTO members said the talks should begin again, WTO Director General Pascal Lamy said that the breakdown represents a serious setback. Trade analysts aren’t too sanguine about the chances of countries reaching final agreement before the U.S. presidential election. Time is short and the differences are great between powerhouse “developing countries” such as India, China, and Brazil, and the developed world, seeking to gain greater access to those markets.
MPAA to Make Site with Legit Movie Links
Rather than trying to fight individual violators of copyright, the MPAA is creating a website with links to legitimate movie sources, like local movie theaters, iTunes, Netflix, etc. It just goes to show Cord Blomquist’s point that copyright holders will need to move towards new models of distribution to adapt to changing technology.
Doha Round Stalled Again
Disagreements over farm subsidies have caused the current round of WTO negotiations to collapse. Developing countries are upset that subsidized farmers from rich countries are hard to compete against in the world market.
India’s proposed solution is to trigger a raise in their own farm subsidies if imports rise above a certain level. Other countries found this unacceptable, hence the current impasse.
Rather than fret about unfair competition, developing countries could just sit back and welcome imports from subsidized farmers. Consider it a gift from U.S. and EU taxpayers.
Or better yet, all nations rich and poor could drop their market-distorting subsidies altogether. In the long run, the way to freer trade — and fuller stomachs — is fewer subsidies, not more. All that’s in the way is political inertia.
Unfortunately, in politics as well as in physics, inertia always wins.
A Moderate Software Patent Policy
Ars has a good discussion of the US Patent and Trademark Office’s recent switch in policy towards software patents. Before, the USPTO would issue patents willy-nilly, causing massive lawsuits and stifling competition amongst software makers. Now, the USPTO is moving towards a more moderate policy, increasing scrutiny of patents to make sure they’re really original. The USPTO should be applauded for its attempt to strike a healthy balance between encouraging innovation and ensuring competition, not lamented.
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