Later On

A blog written for those whose interests more or less match mine.

Archive for December 6th, 2008

Civic literacy quiz

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It’s short (fewer than 40 questions). I missed one.

Written by LeisureGuy

6 December 2008 at 2:30 pm

Posted in Daily life, Government

We will always have financial bubbles

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It’s the way our mind works. Virginia Postrel explains in the new issue of the Atlantic Monthly:

In these uncertain economic times, we’d all like a guaranteed investment. Here’s one: it pays a 24-cent dividend every four weeks for 60 weeks, 15 dividends in all. Then it disappears. Unlike a bond, this security has no redemption value. It simply provides guaranteed dividends. It involves no tricky derivatives or unknown risks. And it carries absolutely no danger of default. What would you pay for it?

Before financially sophisticated readers drag out their calculators, look up interest rates, and compute the present value of those future payments, I have a confession to make. You can’t buy this security, and it doesn’t really pay dividends every four weeks. It pays every four minutes, in a computer lab, to volunteers in economic experiments.

For more than two decades, economists have been running versions of the same experiment. They take a bunch of volunteers, usually undergraduates but sometimes businesspeople or graduate students; divide them into experimental groups of roughly a dozen; give each person money and shares to trade with; and pay dividends of 24 cents at the end of each of 15 rounds, each lasting a few minutes. (Sometimes the 24 cents is a flat amount; more often there’s an equal chance of getting 0, 8, 28, or 60 cents, which averages out to 24 cents.) All participants are given the same information, but they can’t talk to one another and they interact only through their trading screens. Then the researchers watch what happens, repeating the same experiment with different small groups to get a larger picture.

The great thing about a laboratory experiment is that you can control the environment. Wall Street securities carry uncertainties—more, lately, than many people expected—but this experimental security is a sure thing. “The fundamental value is unambiguously defined,” says the economist Charles Noussair, a professor at Tilburg University, in the Netherlands, who has run many of these experiments. “It’s the expected value of the future dividend stream at any given time”: 15 times 24 cents, or $3.60 at the end of the first round; 14 times 24 cents, or $3.36 at the end of the second; $3.12 at the end of the third; and so on down to zero. Participants don’t even have to do the math. They can see the total expected dividends on their computer screens.

Here, finally, is a security with security—no doubt about its true value, no hidden risks, no crazy ups and downs, no bubbles and panics. The trading price should stick close to the expected value.

At least that’s what economists would have thought before Vernon Smith, who won a 2002 Nobel Prize for developing experimental economics, first ran the test in the mid-1980s. But  …

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Written by LeisureGuy

6 December 2008 at 12:57 pm

Posted in Business, Daily life

The sadness of the urban rooster

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No one wants him.

Written by LeisureGuy

6 December 2008 at 12:53 pm

Posted in Daily life

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Mukasey trying to prevent investigations

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Mukasey has been (in my view) a dismal failure as Attorney General (thanks, Sens. Schumer and Feinstein)—better, perhaps, than Alberto Gonzales, but then so is my cat Megs. And now Mukasey is doing his damndest to prevent investigations. (Thanks to Liz for the pointer.) The story begins:

Since he replaced disgraced Attorney General Alberto Gonzales last year, Michael Mukasey has stonewalled every attempt made by Congress to investigate the Bush administration’s most controversial policies related to the so-called global war on terror.

Now Mukasey is taking his loyalty to President George W. Bush even further: by publicly declaring there is no legal basis to prosecute current and former administration officials for authorizing torture, domestic surveillance, and certainly no reason for President George W. Bush to issue blanket pardons when he leaves the White House in January to the individuals who implemented those policies.

“There is absolutely no evidence that anybody who rendered a legal opinion, either with respect to surveillance or with respect to interrogation policies, did so for any reason other than to protect the security in the country and in the belief that he or she was doing something lawful,” Mukasey said during a roundtable discussion with reporters Wednesday. “In those circumstances, there is no occasion to consider prosecution and there is no occasion to consider pardon.

“If the word goes out to the contrary, then people are going to get the message, which is that if you come up with an answer that is not considered desirable in the future you might face prosecution, and that creates an incentive not to give an honest answer but to give an answer that may be acceptable in the future. It also creates some incentive in people not to ask in the first place.”

That statement appears to be a thinly veiled warning to the incoming Obama administration to steer clear of pursuing Bush administration or Justice Department officials who may have committed crimes related to the administration’s decision to approve torture and domestic surveillance.

But Rep. John Conyers, the chairman of the House Judiciary Committee, immediately took issue with the “breadth” of Mukasey’s statement “and the blanket conclusion that everyone involved in approving these policies believed they were acting within the law.”

Conyers sent Mukasey …

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Written by LeisureGuy

6 December 2008 at 12:48 pm

Automakers and bailout conditions

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Mike Lillis has an interesting piece in the Washington Independent:

Sen. Bill Nelson (D-Fla.) offers a new angle today on the Detroit bailout, saying that he’ll support the plan only if the automakers stop trying to kill states’ efforts to tighten emission standards.

California has famously applied for an Environmental Protection Agency waiver forcing emission reductions of 30 percent by 2016. But the automakers claim the change would threaten the industry by forcing it to produce two sets of vehicles: one catering to the national standard and another to the stricter standards of California.

Defending the carmakers, the EPA rejected California’s waiver last December.

The EPA denial has only fueled the debate, and more than a dozen other states have signed on to the California proposal. Florida is the latest to move in that direction, after a state panel endorsed the plan just this week. Daniel Becker, who heads the Safe Climate Campaign, said the participating states represent enough of the new car market that the automakers would be forced to make just one set of vehicles complying to California’s stricter standard.

In a Dec. 4 letter to the heads of the Big Three, Florida’s Nelson urges the begging CEOs to quit stonewalling the state waivers:

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Written by LeisureGuy

6 December 2008 at 10:51 am

Testimony regarding torture suppressed

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Daphne Eviatar again:

Hey, this is going to come as a big shock, but it turns out that some Guantanamo Bay prisoners on trial for plotting Sept. 11 are actually claiming they’ve been tortured in prison.

What, you already knew that? Well, yeah, just about everyone else in the world did, too. Still, the U.S. government, when broadcasting the military commission trials on a video monitor to the select group of people the government has allowed to see them, have apparently been cutting off the audio feed whenever a detainee testifies that he was abused by CIA agents in custody.

Today, the American Civil Liberties Union filed a legal brief before the military commission asking the court to require the complete trial to be broadcast. It also wants the government to release transcripts of past proceedings in which the audio was turned off.

Under the law, even the military commissions are supposed to be open to the public – though so far, the government has been able to pick and choose who in the public gets to see them.

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Written by LeisureGuy

6 December 2008 at 10:48 am

What will happen with the Al-Marri case?

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Daphne Eviatar explains in the Washington Independent:

By now you’ve probably heard that the Supreme Court has decided to hear the case of the sole legal U.S. resident detained indefinitely — yes, that means potentially forever — without charges, right here on U.S. soil.  All because President Bush decided on his own authority, that this 28-year-old father of five, who was then living quietly in Peoria, Ill., was a dangerous associate of Al Qaeda. No proof required, and none has been offered in any court of law.

As Matthew DeLong noted earlier, the Supreme Court on Friday agreed to hear Ali Saleh Kahlah al-Marri’s appeal, which questions whether the president really has the authority to hold U.S. residents indefinitely without charge. Al-Marri has been detained, mostly in solitary confinement, at a Navy brig in South Carolina since June 2003.

But there’s a good chance that the Supreme Court will never get to hear al-Marri’s appeal and rule on this critical constitutional question.  That’s because, as George Washington University law professor Jonathan Turley explained on MSNBC’s “The Rachel Maddow Show” Friday, the Bush administration may decide to transfer al-Marri to a regular prison and charge him as a criminal — purely to keep the issue from reaching the Supreme Court, where the Bush administration may well lose the case.

That’s what the Bush administration did in the case of Jose Padilla, a U.S. citizen also classified as an “enemy combatant,” who was transferred to the criminal justice system so no court could rule on the legality of the administration’s actions.

The other likely scenario is that a new Obama administration, which will presumably be gung-ho about preserving civil liberties, will take over in January and reverse the government’s position in the case and decide that al-Marri cannot be held indefinitely as an enemy combatant without charges after all. The Supreme Court probably wouldn’t hear oral arguments in this case until spring, and it’s hard to imagine that the new Justice Department, under Attorney General-nominee Eric Holder — who has  made strong statements about the illegality of Bush’s detention policies — is going to defend President Bush’s executive decision to hold al-Marri indefinitely.

While that would be a good outcome for al-Marri, it could be a loss for civil libertarians, who are hoping that the U.S. Supreme Court will rule definitively that the president of the United States does not have the authority to detain a U.S. resident in a U.S. prison indefinitely without charge, without having to prove to some federal judge somewhere that he poses a real danger.

Written by LeisureGuy

6 December 2008 at 10:42 am

More interesting posts from Peter Gray

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6 December 2008 at 10:40 am

Explaining climate change

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An excellent post for helping people understand (if they want to understand).

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6 December 2008 at 10:39 am

Krugman talks

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6 December 2008 at 10:12 am

Posted in Business, Daily life, Government

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Union intimidation: doesn’t happen

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Well, it doesn’t happen in the context of card checks. Kevin Drum:

Unions support card check legislation because they think it will make it easier to organize new industries. Business leaders dislike card check for the same reason. But what they say is that card check is bad because it allows union organizers to intimidate workers into signing cards. Now, business leaders are well-known for their tender sensibilities toward worker rights, but Jonathan Zasloff decided to check up on the intimidation story anyway:

For 50 years, from the 40’s to the 90’s. the province of Ontario had a card-check organizing system….So what was the record there?

I used advanced research techniques unknown to many reporters, and called up Harry Arthurs of York University, Canada’s pre-eminent labour law scholar. Arthurs literally wrote the book on this stuff. And I asked him: what does the evidence show?

Arthurs answered that in all of his research about labour law complaints under card check, he could not find a single case where the employer complained of a union intimidating workers to unionize when they didn’t want to.

That’s right: zero. Zilch. Nada. Efes. Rien.

….This isn’t some obscure jurisdiction. It’s Ontario, the largest and richest province in the country. 50 years. A half a century. Zero.

Look: unions aren’t perfect. Nothing is perfect. The financial industry, just to pick an example out of my hat, is obviously wildly imperfect, but that doesn’t mean we should get rid of the private financial industry. It just means we should regulate it to avoid some of its worst pathologies.

Ditto for unions. If anyone has a better mechanism for giving workers more bargaining clout and therefore higher wages, I’m all ears. Anyone who thinks collective bargaining is a good idea but believes we ought to reform the Wagner Act, I’ll listen to them too. But the evidence of the past 30 years makes it pretty clear that productivity growth and improved education aren’t nearly enough on their own to keep median wages growing. Neither is unionization, for that matter. But at least it pushes in the right direction. If card check helps that along, I’m all for it.

Written by LeisureGuy

6 December 2008 at 10:07 am

Posted in Business, Daily life, Government

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Daily routines

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Via an article in Slate, the blog Daily Routines lists the routines of various writers and other famous people.

My routine includes coffee and blogging in the morning, reading and movies in the afternoon and evening, with time out for cooking and eating.

Written by LeisureGuy

6 December 2008 at 9:36 am

Posted in Daily life

More on Keynes

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Via Brad DeLong’s blog, this interesting article in Forbes by Bruce Bartlett. It begins:

Every day that goes by makes clearer the parallels between the current financial crisis and the one that led to the Great Depression. Then, as now, the core problem was one of deflation, or falling prices. But fixing it will require more than just low interest rates. This was the key insight of British economist John Maynard Keynes, whose theories finally explained how to end the Great Depression. They may be the key to solving today’s crisis as well.

The Great Depression was so deep and prolonged for many reasons. Herbert Hoover stupidly signed the Smoot-Hawley Tariff, which crippled international trade and finance, and imposed one of the largest tax increases in American history in 1932, which was exactly the wrong medicine at the wrong time. Franklin D. Roosevelt at least understood that deflation was at the root of the problem, but he thought artificially raising the price of gold and preventing businesses from cutting prices and wages by law was the solution. In fact, it prevented the economy from adjusting, which made the situation worse.

What few people understood at the time was that the Federal Reserve was primarily responsible for the deflation and the only institution that could have done anything about it. As we now know, the Fed’s tight monetary policy brought on a financial crisis that began with the stock market crash in 1929. Smoot-Hawley was also a factor, but it wouldn’t have been capable of inducing such a crisis if Fed policy hadn’t already put financial markets in a fragile condition.

In its initial stages, the Fed might have been able to prevent a full-blown depression by being a lender of last resort. It should have been aggressive about buying every financial asset it could lay its hands on and created as much money as necessary to do so. But it didn’t. Instead, it was passive and, as the value of financial assets collapsed, banks closed and vast amounts of wealth simply vanished.

The money simply disappeared, because there was no federal deposit insurance in those days. According to research by economists Milton Friedman and Anna Schwartz, the nation’s money supply fell by one-third between 1929 and 1933, which induced a 25% fall in price levels over that period.

As prices fell, businesses were forced to sell goods for less than they cost to produce. They couldn’t cut costs easily because that meant reducing wages, which workers naturally resisted. Layoffs were the only way to cut costs, but this meant workers didn’t have any income with which to buy goods, since there was no unemployment compensation either. This created a downward spiral that proved very difficult to stop.

The decline in wealth also …

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Written by LeisureGuy

6 December 2008 at 9:29 am

Posted in Business, Daily life, Government

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Your Keynes reading list

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I still have not located that post that so clearly explained the different rules for micro- vs. macroeconomics, but I did find this useful post by economist Brad DeLong:

Tyler Cowen writes:

Marginal Revolution: New MR book club – Keynes’s General Theory: I will go through the book [Keynes’s General Theory], chapter by chapter, with an eye toward a deeper understanding of what Keynes wrote and why it is, as Greg says, so important.  I’m not yet sure what kind of pace I can maintain but order your copy here, now.  The Kindle version is only $3.96.  We’ll do chapters 1 and 2 by next Monday, eight days from now.

The Marxists.org version of the General Theory is free: http://www.marxists.org/reference/subject/economics/keynes/general-theory/

I am of a different view than Tyler. I think that the most important things by Keynes to read do not include the General Theory. My list of General Theory-length reading from Keynes is this:

and I am tremendously annoyed at the absence of etext versions of the Tract on Monetary Reform and Essays in Persuasion.


Special bonus:

Written by LeisureGuy

6 December 2008 at 9:15 am

Posted in Books, Daily life, Education

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Why Geithner hates Bair

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This post by Ian Walsh is well worth reading. It begins:

This just keeps getting more and more surreal.  Yesterday we heard that Geithner wanted Bair out of her FDIC post because she wasn’t a team player. Today we find out what specifically she wasn’t a team player on.  First, the Citigroup takeover of Wachovia: …

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6 December 2008 at 8:40 am

Did the credit collapse do in the auto industry?

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6 December 2008 at 8:38 am

Posted in Business

Spider silks: fascinating stuff

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“Silks” (plural) because spiders make different kinds of silk for different purposes. An article by Rachel Ehrenberg in Science News has a lot of intriguing information. From the article, this snippet:

… [S]piders are silk virtuosos. A true spider—a member of the 39,000-species–strong order Araneae—makes up to five kinds of silk fibers. Multiple abdominal glands, the shape and number of which vary across species, allow spiders to produce more than one kind of silk at a time—and mixing threads and proteins from different glands is not uncommon, says Catherine Craig of Harvard University’s Museum of Comparative Zoology.

Spiders make egg-case silk, prey-wrapping silk and of course web silk, which comes in several varieties, such as scaffolding, sticky or structural. (The more ancient tarantulas, which do not construct elaborate webs but do use silk to wrap their eggs and line their burrows, were recently shown to produce silk from spigots on their feet. This finding raised the possibility that abdominal-gland silk is a more recent evolutionary invention and that feet spigots came first.)

Spiders have been silking it up for more than 350 million years—a skill that was probably instrumental in their diversification, Craig says. Spiders rank seventh among all animal species in global diversity, beat only by certain insect orders and the mites and ticks.

The most studied spider silks come from the golden silk spider, Nephila clavipes, and the European garden spider, Araneus diadematus. Dragline silk, which these orb-spiders use in the outer rims of their webs and as a safety bungee when dropping or falling from high, has been investigated the most. It is both superstrong—meaning it can support tremendous weight—and supertough—meaning it can absorb a lot of kinetic energy before breaking. An inch-diameter fiber made of dragline spider silk could reel a 747 from the sky, Lewis says. The silk isn’t just tougher than Kevlar or as strong as steel; it is also light, and thus an excellent material for things like body armor and parachute cords, or for tethering planes to an aircraft carrier.

Spider silks also seem to be friendly inside the human body. Studies suggest that spider threads don’t elicit an angry response from the immune system, says Tuft University’s Kaplan, who published a review of spider silk applications in the May Trends in Biotechnology. Kaplan cites experiments with ultrathin films made of spider dragline silk, which could be used for wound dressings.

Spider silk is also being used to make porous gels and sponges, which can be seeded with tissue or bone cells that grow around a silk lattice that gradually biodegrades. Researchers have had success growing the nerve cells known as Schwann cells on spider-silk threads, pointing to the possibility of artificial nerve grafts. Scientists have also had recent success engineering tiny capsules with spider silk. The capsules can be broken down by specific enzymes, which would allow doctors to precisely control the release of drugs within the body, the researchers reported last year in Advanced Materials.

While spider silks hold promise in numerous applications, …

Written by LeisureGuy

6 December 2008 at 8:14 am

Movies report

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I’ve been watching lots of movies lately, though only occasionally one worth noting.

One exceptional movie I recently saw is based on the book by Lt.Col. Harold Moore and Joe Galloway, We Were Soldiers Once… And Young: Ia Drang–The Battle That Changed The War In Vietnam (and you can easily find secondhand copies). The movie—titled We Were Soldiers and starring Mel Gibson—was, I thought, exceptional for a war movie: it seemed very realistic and the action made sense (in that you could follow what was happening, although it happened fast). Not a movie for kids: the violence is what you would expect in a battle. But definitely a movie to see. In fact, I’m now going to read the book.

I also saw 12 Angry Men for the first time. It was Sidney Lumet’s first movie as a director, and it moves right along. Another exceptional movie that one should surely see. I don’t know why it took me so long to get around to seeing it, but I do highly recommend it if you haven’t already seen it. It has aged well.

Joseph Sweeney, BTW, looked exactly like Hume Cronyn in this movie—at least to me.

Written by LeisureGuy

6 December 2008 at 7:56 am

Posted in Books, Movies & TV

Arlington and Shark

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Extremely nice shave today. D.R. Harris Arlington shaving soap produced the  usual great D.R. Harris lather, using the Rooney Style 3 Size 1 Super brush. The razor looks somewhat like the Gillette Rocket, the UK version of the Super Speed (only heavier and better made), but note the rectangular (instead of diamond shaped) platform support. The handle is also not so hefty as the Rocket. I believe that this is an Aristocrat Junior. The blade, from Razor and Brush, is the Shark, which I dug out after reading this post.

The Shark blade did a very nice job. And the Arlington aftershave provided a fragrant finish.

Written by LeisureGuy

6 December 2008 at 7:45 am

Posted in Daily life, Shaving

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