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Archive for July, 2011

I’ll be on a Boat

I’m going on a cruise to the caribbean till August 8th. If the American economy is ruined on August 2nd maybe I’ll just stay down there and bartend on some beach for the rest of my life. Here’s some reading to keep you busy while I’m away.

(thanks John for uploading)

Categories: Blogging

Question Answered

Questioning a claim is often the best way to establish its truth. Arnold Kling thinks this David Leonhardt claim is a sentence that should be questioned.

we know that a market economy with a significant government role is the only proven model of success

So what’s the counterexample that Kling advances?

The internet. Now, I know I sometimes feel like I live online, but if a computer network is the best counterexample of a successful market economy without “a significant government role” you may have just proven Leonhardt’s point.

Why Conservatives Have Inflation and Climate Change Backwards

          

Libertarian writer, Timothy Lee, asks why conservatives and libertarians often worry about climbing inflation even though there is no evidence for it. Lee also worried 2 years ago and became aggravated at progressives that mocked inflation criers. Today we still don’t have much inflation, yet too many that share his politics aren’t adapting to reality. He puts forward 2 explanations of why this might be including this:

Another likely factor is that American conservatism is a fundamentally populist movement, and the inflation hawks’ position has a simplicity that makes it intuitively appealing, especially to a movement that tends to see all policy issues in terms of virtue. Rhetoric about “printing money,” “debasing the currency,” and so forth are not only intuitively appealing, they also dovetail nicely with broader conservative themes of thrift and self-control. The arguments of inflation doves are more subtle and lack the same kind intuitive appeal.

His other is that conservative and libertarian thinkers are intellectually stuck in a 1970s mindset when inflation was a problem. Similarly, I’ve always wondered why conservatives and libertarians often resist the fact that the planet is warming and the overwhelming evidence that mankind is contributing to climate change. Many conservatives have strong religious convictions that lead them to believe that God would never allow global warming, but that can’t explain all of the stubbornness.

Lee leaves out one potential answer on inflation. The Right generally looks out for the interests of the rich and even though inflation could alleviate unemployment it would hurt the wealthy. It’s not that hard to believe that many conservatives don’t “believe” in global warming because corporate backers like oil companies don’t want them to “believe” in it. Yet, I still don’t think that explains the whole story. I have no doubt the the Koch brothers, for example, frequently influence politicians and think tanks that take their money, but not every libertarian or conservative is a corporate hack. Progressives shouldn’t act as if that’s the case.

Just as low inflation causes cognitive dissonance for conservatives’ ideological commitment to “virtue” and “thrift,” solving global warming challenges anti-government dogma. Libertarian and conservative ideology demands that government can’t solve problems and market forces can. A huge negative externality such as climate change requires government intervention. As easy as it may be for many right-wing pundits to refuse to be bought, it is much more difficult to accept reality when it means changing one’s mind.

It’s not as if I switched the labels on the graphs at the top of this post; we all can look at the same facts. But it’s easier to deny the world than it is to alter a worldview.

(CPI/Global Temp)

Heritage Foundation’s Misleading Chart

July 21, 2011 24 comments

In my ongoing (and largely empty) search to find empirical evidence for the role “policy uncertainty” in slowing hiring, a reader challenged me by sending me this link to a Heritage Foundation report. It was fairly shocking at first how clearly it seemed to show that the passage of Obamacare coincided with the economic recovery “stalling.”

James Sherk writes,

Within two months of Obamacare’s passing, the recovery stalled. Figure 1 shows net private-sector job creation from January 2009 onward. The red line shows the trend in job creation before and after April 2010. Private-sector job creation improved by an average of 67,600 jobs per month before April 2010. That month, private-sector employers added 229,000 net jobs.

As Sherk admits, this is only a correlation not causation but, he writes, “the fact does lend strong weight to the voices of businesses who say that the law is preventing hiring.” It seemed to be at least suggestive evidence of the “policy uncertainty” theory. Yet, my skepticism led me to think about this graph a bit further.

Notice that before around January of 2010 the line graph dips below 0. Although the “trend in job creation” is upward, what that graph actually shows is the economy is losing private sector jobs just at a slower rate from earlier months. Former Bush advisor, Keith Hennessy, had previously criticized Austan Goolsbee for a similar tactic with arrows. (I discuss that video here) The Heritage Foundation even approvingly links that video so they understand what they’re doing.

If you instead look at this bar graph of private sector job creation you can see more clearly what’s going on.

I’ve added in an arrow for April – the month that supposedly shows the beginning of the lower trend for job creation due to Obamacare. But now we see that after Obamacare passed we were gaining jobs while before it we were losing jobs. I’m certainly not claiming causation. I’m merely pointing out the obvious fraud that James Sherk and The Heritage Foundation are trying to get away with here.

[update July 22]: A few other bloggers have noticed them same thing I did about Heritage’s deceitful report. Their pieces are worth reading too. Funny enough, I actually checked all these blogs when I was first sent the Heritage link. Glad they joined the party to expose the propaganda.

Modeled Behavior   Kevin Drum   Matt Yglesias

[update September 13]: I’m happy to see that this post has been cited frequently in numerous online forums. Unfortunately, I’ve noticed that some confusion continues around the change in “trend” in private sector employment before and after the passage of Obamacare. The trend cited by Heritage is purposefully misleading; we were not gaining an average 67,600 before April and then 6,400 afterwards. Repeat: Net change in jobs is not the same thing as job growth. I looked up the private sector job numbers for the dates in the graphs (Jan ’09 – Jun’11) and calculated the average monthly change in private sector employment before and after Obamacare, which is what everyone seems to think the Heritage graph shows.

Before Obamacare the monthly change in private sector employment was an average of about -326,000 jobs a month. That’s NEGATIVE 326 thousand.

After Obamacare the monthly change was an average of +114,000 jobs a month. That’s POSITIVE 114 thousand.

How’s that for a changing trend?

Testing Uncertainty

July 18, 2011 11 comments

Steven Davis, economics professor at the University of Chicago, writes in Bloomberg why he thinks “Employers Are Slow to Fill Jobs.” Davis goes through a number of different theories and all probably play some role, but this paragraph caught my attention.

Another part of the explanation involves broader economic conditions. The same concerns about weak sales and an uncertain economic outlook that depress job creation also undercut the desire to fill openings. We live in a time of extraordinary uncertainty about government policy with respect to taxes, health care, financial regulation, monetary issues, environmental regulation, and other areas. The political impasse over the federal debt ceiling further muddles the outlook. Policy uncertainty discourages investment, job creation and hiring.

As I’ve discussed, most of the evidence seems to point to “weak sales” as the most direct reason businesses aren’t hiring more workers. But, we keep seeing this focus on “policy uncertainty” from right of center commentators – a topic I’ve discussed frequently. Tying political uncertainty to the debt ceiling is interesting for this ongoing argument for a number of reasons.

  • It provides a seemingly clear and dramatic case of policy uncertainty, but if the debt ceiling is raised we’ll have a distinct before-and-after. Are proponents of the political uncertainty argument willing to predict how big an effect this will have on job creation? I’m not willing to say it’s zero, but if I had to guess it’s probably very low at best. If they’re not willing to forecast a noticeable upward shift in the trend of hiring after this uncertainty is resolved, why do they continue to devote so much energy to the argument?
  • It demonstrates the emptiness of Republican lawmakers that pushed the “policy uncertainty” theory. If they really believed their claim, why would they be so willing to create more uncertainty?
  • I realize I may be contradicting my first point a bit, but what counts as evidence for policy uncertainty? Proponents of this theory love to claim that employers are deterred by uncertainty, but the bond markets haven’t even begun showing signs of concern. If investors aren’t changing their activity much, what makes anyone think employers are?

It’d be easy for me to use Davis’s argument to hammer the GOP as harming job creation by causing uncertainty over the debt ceiling, but I don’t see any evidence for it. The real danger is what happens if the debt ceiling isn’t raised, when policy uncertainty turns into market panic. Once that happens we won’t be talking about why business are slow to fill jobs, but how stupid we were to push ourselves back into recession.

Electing Happiness

There is so much to say about the continuing research into happiness and other indicators of wellbeing. I’m so excited that smart economists like Justin Wolfers and Robert Frank are devoting time to it. Over at the Aspen Ideas Festival they have a must-watch discussion on the latest data. Wolfers collapsed any remaining support for the “Easterlin paradox” and provided completely compelling evidence for a correlation between raising income and rising happiness/life satisfaction. Here’s a graph the New York Times made using Wolfers’ and Stevenson’s research.

Given that high correlation of happiness and rising wealth along with the fairly strong predictive power of the change real disposable income for presidential vote percentage I couldn’t help but wonder if the rate of change in happiness would be even more predictive of presidential elections.

It’s plausible to think that an individual’s change in life satisfaction would be even more highly correlated than income changes since it picks up more factors that might influence someone’s vote. I’m skeptical of any single metric to predict an election, but think my hypothesis has potential to have a higher correlation than many other measures. In contrast, the unemployment rate and change in gross federal debt presumably don’t necessarily have an obvious and direct effect on a particular voter. What could be more direct and encompassing of how issues effect voters than change in subjective wellbeing?

It’s important to look at the change in happiness for voters, not, for example, average happiness. If you look at page 57/figure 20 of Happiness and Income over Time in the United States (average happiness) we see a slightly downward sloping line, but that’s most likely due to the fact that income gains haven’t spread evenly. Similarly, I imagine that’s why GDP growth isn’t as predictive as some might expect.

I don’t have enough data myself to test my hypothesis, but I’d be very curious of the results if any interested political scientist wants a project. Any readers have any thoughts or critiques?

[update: July 18th]: John Sides of The Monkey Cage helpfully clears up some of my questions on this topic. Here’s his email response to me in full:

Dan,

The challenge is that, as far as I know, there aren’t good indicators of happiness going back very far.  A typical economic forecasting model for presidential elections will start in 1952 or so.  The Stevenson-Wolfers paper reports on a handful of early studies, but most of the data is much more recent.  The General Social Survey goes back to 1972, so encompasses 10 elections — still relatively few on which to base inferences.  (This is Silver’s critique of the forecasting models, obviously.)

In general, though, I am sympathetic to the notion that subjective well-being might tap some politically relevant feelings that aren’t captured by GDP or income growth.

Best,
John

I suspected that might be a problem; we’ll have to wait for more data to see if my hypothesis is confirmed. It has some potential though. More frequent measures of subjective satisfaction may be necessary as well.

I strongly recommend everyone to read John Sides and the other contributors at The Monkey Cage - an essential resource for anyone interested in political science.

Extreme Environmentalists Responsible

‘If “extreme environmentalists” were not successful in prohibiting land based oil drilling in the United States, then companies like BP would not have to resort to looking for oil in the deep oceans. -Sarah Palin on the BP oil spill

Now that ExxonMobile has spilled an estimated 42,000 gallons of oil into the Yellowstone River, I wonder how Palin and friends will blame environmentalists. I’m waiting till they claim that the “speed” of mitigating this disaster proves that we should open up more pristine environments to oil companies.

(photo credit: FR170447 AP)

GTSCW: Budget Edition

July 7, 2011 5 comments
Ezra Klein asked the Center on Budget and Policy Priorities to help him with the numbers for this graph. As you can see, Obama is engaged in obvious class warfare… the President should be more like Reagan.

The Downside of Decriminalization

Maybe it’s too cute to point out the major thing that is down due to drug decriminalization is addiction. Portugal decriminalized all drugs and treated users instead of jailing them:

“There is no doubt that the phenomenon of addiction is in decline in Portugal,” said Joao Goulao, President of the Institute of Drugs and Drugs Addiction, a press conference to mark the 10th anniversary of the law.

The number of addicts considered “problematic” — those who repeatedly use “hard” drugs and intravenous users — had fallen by half since the early 1990s, when the figure was estimated at around 100,000 people, Goulao said.

“Problematic” users and addiction to drugs are real problems and reducing the number of abusers qualifies as a good thing. By this standard, Portugal’s decriminalization experiment proved a success that underscores the failure of drug warrior tactics. Yet the achievement of decriminalization may haze over the potential of legalization. Diminishing abuse is desirable, but could increasing safe use of some drugs be beneficial?

New research shows that using psilocybin (“shrooms”) can safely improve people’s lives.

Most volunteers (89 percent) also reported positive changes in their behaviors, and those reports were corroborated by family members or others, the researchers say. The behavior changes most frequently cited were improved relationships with family and others, increased physical and psychological self-care, and increased devotion to spiritual practice.

[...]

One month after sessions at either or both the two highest dose sessions, 94% of volunteers endorsed that the experience increased their sense of well-being or life satisfaction moderately or very much, and 89% rated moderate or higher changes in positive behavior. At the 14-month follow-up, these ratings remained high. The types of behavior change most frequently cited by volunteers were better social relationships with family and others, increased physical and psychological self-care, and increased spiritual practice (Table 6). Ratings by community observers before and after the study as well as ratings by study monitors after the study were consistent with the persisting positive changes in behavior and attitudes claimed by the volunteers.

This seems to be in harmony with Sam Harris’s understanding and experience.

Many people don’t realize that all psychoactive drugs modulate the existing neurochemistry of the brain—either by mimicking specific neurotransmitters or by causing the neurotransmitters themselves to be more active. There is nothing that one can experience on a drug that is not, at some level, an expression of the brain’s potential. Hence, whatever one has experienced after ingesting a drug like LSD is likely to have been experienced, by someone, somewhere, without it.

However, it cannot be denied that psychedelics are a uniquely potent means of altering consciousness. If a person learns to meditate, pray, chant, do yoga, etc., there is no guarantee that anything will happen. Depending on his aptitude, interest, etc., boredom could be the only reward for his efforts. If, however, a person ingests 100 micrograms of LSD, whatwill happen next will depend on a variety of factors, but there is absolutely no question that something will happen. And boredom is simply not in the cards. Within the hour, the significance of his existence will bear down upon our hero like an avalanche.

[...]

These chemicals disclose layers of beauty that art is powerless to capture and for which the beauty of Nature herself is a mere simulacrum. It is one thing to be awestruck by the sight of a giant redwood and to be amazed at the details of its history and underlying biology. It is quite another to spend an apparent eternity in egoless communion with it. Positive psychedelic experiences often reveal how wondrously at ease in the universe a human being can be—and for most of us, normal waking consciousness does not offer so much as a glimmer of these deeper possibilities.

Altering our consciousness by drugs can be dangerous, but the hazards are increased by prohibition. Legalization could also expand our choice to safer and more tailored substances. Imagine designer drugs that alter our consciousness in ever more imaginative and customized ways with less risk of a “bad trip.” Limiting the number of abusers doesn’t mean we have to limit our perceptions.

(photo by acukur)

Categories: Mind Tags: ,

Grey, Not Blacklist

As the trustworthiness of Dominique Strauss-Kahn’s accuser disintegrates, I wonder if Kevin Drum is reconsidering his case for hotels blacklisting accused flashers and other “pervs.”

In other words, if we’re willing to take housekeeper reports of perv activity seriously — and we should be — there’s a pretty slim chance of blacklisting an innocent man. Still, it’s true: mistakes can happen.

After considering Megan McArdle’s objections, Drum hedges from his “zero-tolerance” stance:

So how about this instead: Get reported once and you’re given a warning. My guess is that if you just forgot to deadbolt the door, you’ll never forget again after that. Do it again and you’re blacklisted for a couple of years. After all, everyone deserves a chance to turn over a new leaf. So let them back in after two years, but tell them that a third strike means they’re banned for good.

For the record, I’m not commenting on whether I think DSK is likely to be actually guilty or innocent – I have no idea. I’m not even sure I disagree with Drum’s second proposal in light of the possibility that DSK is innocent. But this extreme case underscores the potential concerns with that type of policy. Hotel chains have a duty to protect their workers but need to ensure that their guests aren’t unjustly banned by and saddled with such a serious charge. Should they adopt a blacklisting policy?

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