Hodak Value

The U.S. Election Assistance Commission had $3 billion to spend on improved voting processes. They released a report detailing the amount of spending so far by each state. This is a pretty straightforward report dutifully produced by an bureaucracy whose name certainly evokes the "we're here to help" joke. However, I think it's very interesting how the news outlets picked it up.

The Wall Street Journal noted that that "just 60% of the $3 billion" had been spent. "Just" sounds like "not enough." The AP, in a story picked up by the New York times and others, sported the headline, "Some States Slow to Spend Voting Aid." There is no mistaking the connotation of being "slow." This article's headline said that the states were "behind." Who wants to be behind on something?

But is it bad that the states have not yet spent 100 percent of these funds allocated to them? The press is clearly implying that these underspending states may not be living up to their responsibility to provide secure voting, possibly forcing us to relive the Florida 2000 debacle. But is that what is really happening? Or might it, perhaps, be a sign that some states are less deliberate or more spendthrift than others? Or that some states are merely more bureaucratic and indecisive?

Or, is it possible that the federal government somehow, perhaps, misallocated $3 billion of funds to the states?

Every accident, such as the horrific collapse of the highway bridge in Minneapolis, brings on six, predictable steps:

1) Shock - People react to devastation in a visceral way. For a fair percentage of people, the instant response is "OMG," "Wow," or even "Cool." It may take several beats, minutes, or hours before even those of us who exhibit a great deal of empathy in our personal and professional lives finally arrive at a genuine sense of dread about the matter. Just before that moment sets in is where local news is at its best, satisfying what is at this point an insatiable curiosity.

2) Grief - First from those directly affected, then from the rest of us witnessing them, in widening circles. Here, the news process rapidly goes downhill, chasing the "human story" in the form of cameras and mikes in the faces of the distraught, preferably as they are dragged from the river. It's not the media display of individual grief that is so unwholesome as much as the competition to display it sooner, oftener, and more graphically as the media swarm descends on the situation.

3) Political outrage - They can't help it. Politicians trade on outrage. Unlike the media coverage of grief, which only gets unseemly when it balloons into a competition of pain, political outrage is unseemly at the outset. Then, the competition begins. That escalating outrage is conveniently directed at the most politically vulnerable link in the chain of causation (or foreigners). Not to underestimate the depth of outrage a politician is capable of mustering, politicians can express it toward several politically vulnerable groups, opponents, and each other all at once. They're that good.

4) Blame - Any situation where people get hurt on a large scale, no matter how accidental, sooner or later generates a widespread sense that "someone" is at fault. In the case of engineering failure, there is almost never a single reason. Given how few bridges collapse in this country, the most likely cause is a whole chain of improbable decisions and events that, absent any other intervention, would be unlikely to recur in several decades. But the politicians will lead the hunt, with the media close behind, instinctively homing in one of several links in that chain as "the" cause.

5) The Memo - In the witch hunt that follows, eventually proof will show up that someone, somewhere, wrote a memo predicting that this would happen. Sort of. It will rarely be a definitive prediction, such as "Structural defect A will lead this bridge to fail in the next six-to-twelve months if we don't do anything." It will be a more general prediction like, "Deficiency A across our system of bridges may, if untreated, eventually lead to severe problems, or even catastrophic results." This memo will, of course, be indistinguishable from thousands of similar memos that predict disasters of indeterminate timing and consequence all over the nation all the time. But as far as the blame hunters are concerned, here is the smoking gun. Every can see the smoke with the perfect clarity of hindsight bias.

6) Prosecution - The person who ignored "the memo" becomes a useful scapegoat. And his boss. And their co-conspirators. The eventual trial is, of course, just another part of the show that this whole disaster becomes, the crescendo of blame and outrage, a chance for the people to march from the countryside with their torches through the public square...oh, wait, wrong century.

Not.

You'd like to think that a disaster, unfortunate as it is, can be used as a learning opportunity. If we never have an engineering failure, then things clearly have been over-engineered. After a failure, if the process is done right, everyone has the incentive to contribute information related to the chain of events so that resources can be focused on the weakest link.

Blame and outrage destroys that process. It forces everyone associated with the accident to hide the very information most closely related to the weakest link. At its worst, when bad judgment criminalized, the only people benefiting are those doing the punishing. The rest of society bears the cost of overreaction.

Anyway, that's the prediction here about how this accident will evolve into tragedy.

A former KGB officer suggests that international lack of regard for our president is merely a reflection of our own disrespect for him. He recollects for us a youthful impression:

My father spent most of his life working for General Motors in Romania and had a picture of President Truman in our house in Bucharest. While "America" was a vague place somewhere thousands of miles away, he was her tangible symbol. For us, it was he who had helped save civilization from the Nazi barbarians, and it was he who helped restore our freedom after the war -- if only for a brief while. We learned that America loved Truman, and we loved America. It was as simple as that.

Aside from the principled and consequentialist qualms I'd have about the level of propaganda that would be needed to make Americans feel good about someone like Bush (or any recent president, not to pick on W), I wonder about the value of doing so. Clearly, it helps to achieve "national" objectives for everyone to be behind a leader proposing them. But are national objectives all they're cracked up to be?

I'm also skeptical about the psychology of former-Soviets, even those of good will towards America. I have had many friends from the former Soviet Union. They have been uniformly smart people, some of them quite brilliant, but nearly all of them possessing a peculiar blind spot with regards to propaganda and the associated freedom of the press. I know that to them, my "knee-jerk" defense of an unfettered press, even one prone to printing lies, seemed equally peculiar. So, when I expressed my doubt about the long-run efficacy of propaganda, I would use my Russian friends themselves as Exhibit A: you won't find a more cynical people on earth than Russians, and I don't think it's genetic. Furthermore, no amount of propaganda got the Russians to forget about the Beatles or blue jeans. Decades of hero worship nurtured by propaganda did not prevent Lenin's statue from toppling all over the communist world, including in cities named after him. In the long run, I don't think W's image can be resurrected with fawning press coverage. If anything, presidents like Lincoln, FDR, Kennedy, and Reagan get far better press treatment today than they got in their own day.

The most disturbing thing about this Russian's nostalgic recollection, however, is his grown-up expression of a child's most collectivist impulse--hero worship. Our press already possesses the most annoying tendency to credit collective effort to a single individual, even as it subtly undermines the value of the individual in nearly every other way. They aggrandize individuals because their readers relate to individuals, not ephemeral forces. We buy celebrities, not concepts. The press certainly has an interest in selling us the notion that W's daily schedule is newsworthy, or that it matters why Brad broke up with Angelina. Even if idolatry is good business in catering to human nature, though, I really don't see the virtue of supporting it as a matter of public policy.

On my way home from a little camping trip with my sons, we stopped for gas. At the cashier's window was a sign, no doubt created by the good State of New York, warning that buying cigarettes for minors could get you into trouble. The tag line was:

Its not just wrong, it's illegal

What struck me about this sign was the implied hierarchy of authority. It appears to say that 'illegal' should outweigh 'immoral.' Try this in the context of a more extreme message: Killing someone is not just wrong; hey buddy, it could get you jail time!

Maybe it's because I believe that we should only have laws against activities that everyone unequivocally finds morally wrong that I feel that law should be the afterthought to moral repulse. To have enforcement rely with more weight on illegality than immorality says, to me, either:

A) Those of us subject to the laws but not making them are morally stunted compared to those making the laws (the "moral superiority" theory of law making)
B) Those making the law don't really believe or care so much about its moral weight (the "power trip" theory of law making)

A corollary to the second theory is (C) that the immorality of the law is inherently unclear to the broad citizenry, which for me raises the question if there should be a law about such a thing. (I don't believe this would apply to a ban on cigarettes sold to minors.)

Which theory do you think best explains such a sign? (Or, feel free to suggest another.)

CNN reports that U.S. life expectancy lags behind other countries'. This sounds like an article about a scientific health study, but it isn't. When one starts to read it, one quickly sees that this is a puff piece devoted to a particular policy perspective riding a thin surface of statistics.

The article starts with this paragon of objectivity:

"Something's wrong here when one of the richest countries in the world, the one that spends the most on health care, is not able to keep up with other countries," said Dr. Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington.

"The Institute will focus its competencies to pursue research, education, and evaluation across different topical areas."

"The Institute strives to be the lighthouse standard for high-quality information on health that is valid, comparable, comprehensible, and freely available in the public domain."

Given the way Dr. Murray is spouting off about policy, I doubt that his institute will contribute anything useful to the discourse on health care. For example, the highest life expectancies are to be found in places like Japan, Singapore, and the tiny countries of Andorra and San Marino. For anyone with a decent grasp of geography and demographics, these countries stand out as having relatively homogenous populations. Is it possible that demographic differences in diverse countries might have a material impact on aggregate results? A credible researcher would ask and answer that question before you could even raise it--certainly before speculating about policy differences at the root of aggregate results.

So, let's do what Dr. Murray wouldn't, and tease out a couple of facts. First, the article notes that blacks live shorter lives than whites*. The average U.S. longevity is, according to this article, 77.9 years, and the longevity of blacks is 73.3 years. From other sources, one would know that similar disparities exists between Hispanics and Native Americans, making up 15 percent of the population, versus the average American. Taking apart just these demographic pieces, what remains is an average longevity for mostly Asians and Whites that would easily place the U.S. in league with Japan and most of Western Europe.

So, I would like to see a report on how Americans fare by demographic type versus their cousins in ancestral lands. We know, for instance, that African Americans live far longer than Africans in Africa, even those nations not ravaged by AIDS. Mexican Americans almost certainly live longer than Mexicans in Mexico. Do French Americans live longer than the French in France? I"m not sure, but several of my French relatives in need of specialized care have come to the U.S. for treatments. That's at once telling, and a potential source of muddying the comparison. How about Japanese-Americans or German-Americans versus their native counterparts? Is it possible that the American cousins of Asians and Europeans actually live longer? If so, would all the people clamoring for socialized medicine in the U.S. begin clamoring for market-based health care in the rest of the World? None of us may live long enough to see that.

* see parenthetical comments below the fold

One of Rutger's nappy headed hos has filed a lawsuit against Imus.

"This is a lawsuit in order to restore the good name and reputation of my client, Kia Vaughn," said her attorney, Richard Ancowitz, exclusively to the ABC News Law & Justice Unit.

"Don Imus referred to my client as an unchaste woman. That was and is a lie."

His suit will have some shred of credibility if he can summon one, just one, witness who heard Imus's remarks and concluded, "Oh, the Rutgers women's basketball team must consist primarily of prostitutes." Of course, anyone who would testify such a thing should be easy to impeach as a witness on the grounds that some people are truly too stupid to be allowed to speak in public.

Vaughn's lawyer said that some of the money from any damages awarded in the lawsuit "would be used to create a scholarship program to study the effects of bigoted and misogynistic speech on society." I would like to use my winnings from this frivolous suit to study the chilling effect on speech of giving some government agent the right to determine which comments might be construed as bigoted or misogynistic, and what penalties one might suffer for actually having a sense of humor, even if in poor taste.

I would also like to study the incentives of trial lawyers who can talk an otherwise sympathetic college student-athlete into launching a suit guaranteed to bring ridicule and questions about her sanity before the public. Didn't your lawyer tell you, Ms.Vaughn, that most people, including Imus listeners, already love you and respect you for your talent and grace, and that this suit can only reduce the public's regard for you on every count?

So, the Fed is watching the meltdown in our credit markets, feverishly pumping billions into the economy to keep the dollar in the target range of their arbitrarily chosen prime rate, and now deciding to cut its discount rate on bank loans. Does this sound like the sober, measured response of a technician adjusting some dials--the image of the Fed we have all been led to believe?

To me, it looks like my kids reaction when they placed marshmallows in the microwave. It was cool when they put in one, and it swelled up. Then they put two. Then four. Finally, as the marshmallow mass expanded out of control, they were feverishly trying to manage it with the "Start/Stop" button to prevent it from either deflating into a crisp cube of sugar, or blowing up in a big mess. The incentives were pretty weak on this trade-off, considering who would actually be cleaning up any mess.

The story machines we call our newspapers are labeling this the "sub-prime" mess. For months now, when the market has gone down, the headlines have been, "Markets Weighed Down by Sub-Prime Woes." When markets went up, we'd read, "Markets Shrug Off Sub-prime Concerns." It's like the story-writer's union has decided that this whole market is about "sub-prime," and they created a serial based on that character to feed to AP, Reuters, etc.

For those of you who'd prefer financial news to financial entertainment, here's the scoop: It's not a "sub-prime" mess. It's not even a sub-prime mess "spreading" to other markets. It's a credit bubble that every banker and deal maker has seen slowly blowing up for the last four years. There was never any question in their minds about whether or not the thing would pop, only when and how bad. Well, when is now. How bad remains to be seen.

It never really mattered that the people over-borrowing were the folks in plaid shirts who couldn't afford the home (or second home) they were trying to buy, or LBO artists in $5000 suits with those wonderful track records, i.e., somehow managing to make gobs of money by leveraging up during the recent bull market. All that mattered were that those loans were ultimately all based on one key thing--the underlying asset values would keep going up.

Now that they have stopped going up, people are all surprised. The first assets to get hit were the most vulnerable--low-end housing--so the economic geniuses in press are reporting that is where the problem "started." (Have I complained enough about the lack of economic education among the press?) The problem of course started with the first marshmallows, in a world awash with sugar, blowing up nicely, and the kids trying the experiment getting a tasty treat.

Now, the Fedmeisters are standing in front a microwave that has been shoveled-pumped with marshmallows, and all they have is that "Start/Stop" switch to try to keep things puffed just the right amount. Good dad that I am, I'm putting on my gloves and getting out the cleaning fluids.

In three months, Max has gone from lofty, cum laude senior to lowly frosh having to prove himself all over again. Today we make the eight-hour drive down to his new school. We'd have flown him down, but he's got the accumulated STUFF of a post-industrial teen who happens to be both very athletic and crazy-smart with computing technology. Also, he's going away! By driving him down, I get a couple more days with him.

Many years ago, when the big guy was much smaller and more daddy-centered, and our worlds largely overlapped, the thought of this day would have inspired dread. Now that it's time to cut him loose, and for us to become visitors in each other's separate worlds, it's not as bad as I thought. First of all, it's not exactly a cold-turkey split. Max weaned us with a stint at boarding school these last couple of years. His school was only an hour away, so this still feels like a big step, but not nearly as big as "now-you-see-me-now-you-don't." Second, communications have changed a lot since the time of mini-Max; every kid now has a cell phone and Al Gore has invented the Internets!

I'll try to set a good example while I still have some parental influence, and not use my phone while driving.

Update: Eight hours turned out to be wishful thinking. Traffic was thick, even without the expected rains. Thank goodness, we'll only have to move his STUFF once in these next four years. At least the Internet is working down here.

Megan McArdle has really stepped into the collectivist swamp in her new gig at The Atlantic. Just check out the responses to her posts. Part of the problem is that she is speaking in a slightly different language from that of The Atlantic's normal readers. So, here are some basic definitions of certain terms that appear to be causing at least some of the confusion.

Self-interest: You doing what you want to do.
Enlightened self-interest: You doing what I want you to do.
Social contract: Those with political power telling everyone else what to do.

Contrast the last definition with this:

Brute-force collectivism: Those with political power telling everyone else what to do.

I hope that helps.

Actually, the quote was this:

As long as I am allowed to redistribute wealth from out-of-state companies to in-state plaintiffs, I shall continue to do so.

- Chief Justice Richard Neely, West Virginia Supreme Court

On the other hand, it would be difficult for someone with economic sense to not connect the dots between:

- hostility to outside capital
- outside investment in the state
- job and wealth creation in the state

So, it would not be surprising to someone with economic sense that WV's notable absence of the rule of law may somehow contribute to that state's ranking 49th in median household income.

One of the things I teach in my class is how corporate behavior is naturally and significantly regulated by repeat transactions. If you want to keep your customers, employees, vendors, and shareholders, you better take reasonable care of them--at least as good as the next guy. It's amazing to me how many elected officials ignore this fact of competition, as if the competition for capital weren't real. It's amazing until you see the incentives of the election process. Justice Neely, for instance, was elected by the citizens to whom he redistributed that wealth, and his campaigns were funded with the money from settlements that he delivered by the local lawyers who appeared in his court. Whether or not Neely believed in redistributive "justice," it's unlikely that the system would support someone in his position who didn't.

OK, let's take a look at the logical content of this statement:

My opinion is that when you plead guilty to a crime, you shouldn't serve. That's not a moral stand. That's not a holier-than-thou. It's just a factual situation.

Here is clue, John: Any statement that includes the word "should" (or "shouldn't") is a moral stand. "Should" statements are not factual. You should go back and get some education.

And, by the way, anyone who says their attitude is not "holier-than-thou" doth protesteth. But, apparently, they can still get lots of votes.

From this story, we see where a good education can get you:

Karsnia, 29, joined the airport police department just out of college in 2000 and was promoted to sergeant in 2005. Last year, he earned a master's degree in criminal justice, leadership and education.

He has arrested at least a dozen men in the airport's bathroom for sending signals he believed were aimed at initiating sex.

Of course, with leadership training, one might decide it's not enough to wait for the fly to come to the honey. If you're after gay men, how much does it take to reel them in? I mean, if gay men are as promiscuous as hetero men (maybe a gay commenter can fill me in on this one), then entrapment can't be very difficult. I know that if it were illegal to initiate a heterosexual encounter in a public place, it wouldn't take much for a cute female cop with "leadership" training to quickly net a horde of defendants.

Couldn't we have these people with master's degrees selling hot dogs, or washing windows, or cleaning gum off the sidewalk, or anything that actually improves our quality of life rather than adds to a climate of fear and mistrust?

The AP story begins with the silliest possible headline: "Stocks End Up on Bush, Bernanke Speeches."

Actually, stocks opened higher, well before either speech, and drifted sideways through the day. So, there is no basis for implying that the stocks were up because of the speeches, unless you assume that the market got copies of the speeches before they were actually given by Bernanke and Bush.

Even if that were true about the Bush speech, let's look at what he actually proposed to deal with mortgage problems:

1. Expanding FHA lending to a number of home-owners not previously covered
2. Supporting legislation to change tax law on forgiven debt
3. Strengthening lending standards for loans to low income individuals

Here is the translation:

1. Shifting more of the risk from private banks to the taxpayers
2. Inserting into our 67,000 page tax code another couple of lines that read like, "Enter on line 16g the total interest expense (including interest equivalents under Temporary Regulations section 1.861-9T(b)). Do not include interest directly allocable under Temporary Regulations section 1.861-10T to income from a specific property..."
3. Insuring that whatever steps the market would naturally take to prevent something like this from happening any time soon is associated with additional regulatory paperwork, risks, costs, and constraints so as to artificially depress the number of loans that will be available to the poor on any terms.

That's what the AP reporters thought the market was applauding?

Oh, we don't get far into this story before encountering this nugget: