Russ is wrong on rights

I don't know squat about economics. Especially not in comparison to someone like Russ Roberts, who's an econ professor at GMU. But I think he got this wrong in his latest entry on gouging:

By what right (asks the critic) can a gas station owner or the oil company charge so much more?

Right has nothing to do with it.

Whoops. I think right has everything to do with it. Property rights are what permit the gas station owner, or the oil company to charge whatever price that they want. Imagine I had a cherished family heirloom. I'm not willing to sell it except for ridiculous sums of money. Am I gouging? No, I'm exercising my property rights. So are the gas stations and oil companies.

Until you pay a mutually agreed price, it's not your gas. You have no right to it.

Missed an option....

I think this guy doesn't understand logic as much as he thinks. I can come up with at least a couple of different options that he left out:

• God does not always use natural or man-made catastrophes to punish people for moral failings. I don't know if Katrina was the wrath of God. But it's clear that God does not punish every moral failing with a natural disaster. Every human being on the face of the planet has experienced moral failing, yet the vast majority of us survived Katrina. Indeed, most of us survive any natural disaster. It seems pretty evident to me that it's a bad assumption that God always uses natural disasters to punish moral failings.
  
  
• Maybe God did use a natural disaster to destroy Bourbon St. Despite being relatively unscathed Bourbon St. is still in significant trouble. How many customers has it served in the last several days? How long do you think it will be before any of it's services are reopened? Even if this isn't physical destruction, the effects are the same.

The Social Institution of Marriage

This is a compelling argument. It definately moves me off of my "on the fence" stance w.r.t. what marriage means in a society.

The editors of the Nation, for instance, support gay marriage but do not usually defend the sanctity of contracts. This apparent paradox evaporates when we realize that the dissolution of marriage breaks the family into successively smaller units that are less able to sustain themselves without state assistance.

The basic idea here is that by dissolving marriage, it puts a greater dependancy on the state. Or put another way, if you want to create and support a large central government, one way to accomplish that is to dissolve any meaning behind marriage. The resulting society will be much more dependant on the state for resolution of even trivial disputes. Disputes that are less intrusively resolved in an organic marriage.

The modern claim that there need not be and should not be any social or legal preference among sexual or childrearing contexts is, by definition, the abolition of marriage as an institution. This will be a disaster for the cause of limited government. Disputes that could be settled by custom will have to be settled in court. Support that could be provided by a stable family must be provided by taxpayers. Standards of good conduct that could be enforced informally must be enforced by law.

This is a very interesting premise that the author (Jennifer Roback Morse) does a good job of explaining. I highly recommend reading the whole thing.

My vote for the most insiteful comment:

An appreciation of voluntary cooperation between men and women, young and old, weak and strong, so natural to libertarians and economists, is completely absent from this statist worldview.

This is why it is no accident that the advocates of sexual laissez-faire are the most vociferous opponents of economic laissez-faire.

Ideal Parents?

Jane Galt has an article on gay adoption. One of the comments made is this:

This is not in any way to say that gay adoption is a bad idea; the gay couples I know who have adopted are all ideal parents.

I'm so on the fence on this issue of gay marriage and gay adoption. On the one hand I don't undertand any reason why it ought to be wrong. But it still strikes me that it is. And, as a Christian, I believe in the veracity of a bible that says it is.

But ignoring the moral platitudes, how can gay parents be ideal parents? I've commentted on this before. How can two gay men be ideal parents for (e.g.) a heterosexual girl? Where is the role model that the child has in her life? Or where is the appropriate role model for the heterosexual son of a lesbian couple?

That being said, I'm sure that the exercise of effective parenting skills is not endemic to heterosexual parents. But I think it's a far stretch to say that a gay couple can be an "ideal" parent. Ideally, children have role models in their lives and it strikes me that gay couples are very likely to be less than ideal.

Economics and Parenting Cross Paths

Marginal Revolution has an entry about tantrums. The basic idea is that the tantrum is a status symbol. If you are able to have a tantrum, it means that you are in a higher social status than the rest of us.

CEOs throw more tantrums than mailboys. Similarly movie stars, sports stars, and politicians throw more tantrums than ordinary people in those industries. Also famous for their tantrums: spoiled young wives, bigshot patriarchs, elite travelers, and toddlers.

The last entrant may seem surprising, but...

Parents mostly serve toddlers, not the other way around.

What does this mean? It means that Foster Cline and Jim Fay are right. But it also means that they're more than just astute parents; they're astute economists. If you want to change the behavior of the toddlers, change the incentive structure.

Hammers

I've written in other places on the stupidity of municipal broadband. Russ Roberts has taken his shot. My favorite part:

If you only have a hammer, everything looks like a nail. Spending money is the hammer of politics.

Repeal the "Death" Tax? Phooey!

I'm not a big fan of political correctness. I don't like the idea of simply changing the name of something in order to give it a better spin. The problem with people who suffer from an ailment isn't in the name of the thing they suffer. It's the ailment itself. Telling someone that they're handicapped instead of crippled is not going to change their ailment. All that's going to happen is that the negative connotations of the old name will eventually transfer to the new name. Hence we now have "handicapable". I don't know what the next iteration will be, but I'm sure that it's coming.

So it's with a bit of trepidation that I criticize the name of something. But I personally can't stand the name "Death Tax". The people who make the argument that you're taxing death are as wrong headed as can be, and they've chosen a name that tries to convey something that isn't real. It's no more respectful to the dead to take their money than it is to leave it alone. The dead don't care anymore about their money: they're dead. The estate tax does NOT tax the dead. It taxes the living who inherit the estates.

But, unlike other taxes, it's acutely destructive. Other taxes, while being destructive, are much slower. A person who gives up 20% of their annual income loses a lot of money over their lifetime. But that destruction takes place only a little bit at a time. The estate tax, however, happens all at once: when a person dies. This has the impact of destroying, in one fell swoop, the thing that a lifetime had built up.

The effect of this destruction is most evident when you talk about how the estate tax impacts farmers. Farmers are small business owners. This particular small business requires an enormous amount of capital be effective. Land, machinery, storage facilities, processing facilities, etc. As a consequence, most of the wealth built into a farm is not in the form of liquid assets. When a farmer dies, the inheritors of that farm are suddenly subject to a huge tax burden. Most of the time, the inheritors do not have the cash assets to pay the tax. The only mechanism available is usually to change the non-liquid assets into cash by liquidating the assets. One person buys the land, someone else buys the equipment, etc. The resulting cash is then used to pay the tax. Even if the inheritors wanted to keep the business running, they usually can't.

The result of the tax is that a farm, which had been built up over a lifetime, is destroyed by tax policy. The estate tax is the easiest example of how tax policy destroys private property. If the government just took a bulldozer and razed 45% of the farm, we'd all be rightfully enraged with the government. We'd be calling for reforms and restrictions on the power of the government. Estate taxes do the exact same thing as bulldozering 45% of a farm, and we should be equally outraged and calling for restrictions on the power of the government, and an abolishment of such a destructive policy.

Unfortunately, farms are not the only private property destroyed by tax policy. And the estate tax is not the only tax policy that destroys private property. All taxation destroys private property. It's just that with the estate tax it's much easier to see the destruction. And lest you get too cozy with the destruction of private property, much rides on strong private property rights.

Does it pay to be a flirt?

According to CNN the answer is no. Unfortunately, that article doesn't give enough information to identify whether it's true or not. The only data cited in the article is this:

The respondents who said they never engaged in such activity earned an average of three promotions, versus two for the group that had employed sexuality. Those who said they never used sexuality were, on average, in the $75,000-$100,000 income range; the other group fell, on average, into the next range, $50,000 to $75,000.

That's way less than enough information to come up to this conclusion:

Women who cross their legs provocatively, wear short skirts or massage a man's shoulders at work get fewer pay raises and promotions

The appropropiate comparison isn't between women who flirt and women who don't flirt. You need to know how well the women who flirted would do if they didn't flirt. And you need to know how well the women who didn't flirt would do if they did. In other words, they haven't controlled for a variable. The explanation of the data may very well be that the women who didn't flirt didn't need to in order to advance their careers and the women who did flirt needed to.

Of course, I don't think that this type of behavior is appropriate at the office, but from the data presented, I don't think the conclusion can be drawn that it's ineffective. My problem is with the methodology of this study. I think they missed something. Or (hopefully) it was misreported.

My personal opinion is that it's likely that the conclusion of the story is true. If I'm a male manager concerned about profits, then I would think that a woman who feels the need to use sexual behavior is signaling her incompetance. In other words, if she uses this type of behavior it means she thinks its the only way to advance herself. In other words, she believes that her skills alone are insufficient to advance her careeer. On the other hand, she may be so convinced of sexism in the workplace. She may very well believe that her skills are sufficient, but that there's a glass ceiling for women and the only way to break it is to use sex. Personally, I don't know.

What I'm convinced of is that the article really sucks. There's not nearly enough information in it to even suggest the conclusion much less conclude it.

Update: The original article in USA Today is not much better. But it does have an interesting quote:

"Our story is really a feminist story, because we argue that there are negative consequences for women who use sexuality in the workplace," Brief says.

This strikes me as research with an agenda, but I'd like to read the entire paper before I decided that was true.

Income vs Expenses and Imports vs Exports

Russel Roberts of Cafe Hayek comments on CAFTA. In his comments, he mentions:

they falsely argue that the benefits of the agreement and the increase in exports to Central America and all the jobs that will be created. In this Alice-In-Wonderland world of pseudo-economics, exports are good and imports are bad... Presidents will find it hard to make the case for opening our borders unilaterally to foreign products—the educational well has been poisoned by all the previous mercantilist rhetoric that has argued that exports are good and imports are bad.

This reminded me of a commercial on the radio that I'd heard on the way to work this morning. In it, a state republican congressman was arguing for lower taxes (with which I agree) on the grounds that it would bring more business to our state resulting in more jobs. His argument basically was that a higher tax rate in this state, relative to the tax rates of neighboring states, encourages jobs to be created in those states. I must be starting to think like an economist because I was immediately puzzled by why I should care about whether or not a business comes to North or South Carolina. If I really want to work for the business in South Carolina, it's not hard. I just get a job and then move there. That's how I moved to North Carolina in the first place. Why should I care where that business locates itself. All I should care about is whether or not I want to work there for the salary that they offer me.

Which brings me to Professor Roberts comments about imports and exports. Imports are stuff that we as a nation buy. Exports are stuff that we as a nation sell. As an individual I also buy and sell stuff. Does the assumption that imports=bad and exports=good also apply to me as an indvidual? If so, then I should avoid imports, and try and increase exports. And in certain cases, I do avoid imports. For example, I don't import lawn mowing service. I do that myself. I earn roughly $25/week doing this by not having to pay someone else to do it. But I can't buy everything from myself and it's pointless to even try. The result is that I have trade defecits all over the place. I have an unbelievable trade defecit with the grocery store. I import all of their stuff and never export anything to them. Similarly my employer imports my services from me and I spend a tiny fraction of my salary on their products. This is an incredibly lopsided trade deficit for them in exactly the same way that I have a lopsided trade defecit with the grocery store.

Is this any cause for concern? Heck no! By buying my groceries I receive more benefit than just getting the groceries: I don't have to produce them. As I'm not very good at growing things (for example: my lawn), I get to take advantage of someone else's prodigious green thumb. Similarly, my employer doesn't have to learn certain technology skills; they simply hire me with my skills.

Imports aren't bad. Imports are good. Imports allow us to focus on the things that we do well, and let someone else who's figured out a better way to do things do them so that we can free up our labor efforts to focus on something that we do well. Exports aren't bad. Exports are good. They force us to create value for others when we work.

Neither imports nor exports are bad. Trade is good. Trade restrictions are bad.

Capital Freedom

This is a very good blog. Concise, intuitive, logical, and surprising (she comes up with conclusions that I didn't expect). I wish I could write like that. I wish I could think like that.

Equality in sports...

As someone who lives in NASCAR country, I've never been a big fan of Robbie Gordon. My children know this enough to be able to repeat my complaint. My 4 year old will, during a race, announce the following to whomever listens: "Robbie Gordon is a hothead". That being said, most of NASCAR is full of hotheads. I guess in a system where your own winning matters more than anything, you're not likely to see a lot of empathy or understanding for someone else's point of view. Too much empathy can have a negative impact on your ability to force someone else to lose.

But still, Robbie Gordon strikes me as even more hotheaded than average. And his latest complaint about today's Indianapolis 500 just seems really dumb to me. Basically, he's saying that Danica Patrick, a 100 lb woman, has an unfair advantage over the men in that sport who average 200 lbs. Doesn't an unempathetic hothead have an advantage over an empathetic competitor in NASCAR? Why is one advantage fair and the other not?

Personally, at 5'8" it doesn't matter how smooth my jump shot is, nor how well I can handle the ball. In a basketball game, I have a huge disadvantage against a 6'4" person with the same level of skills. Basketball is a tall person's game. Racing is to the swiftest. And that puts a premium on weight. Robbie Gordon should just get over it. And so should anyone else who happens to think that their particular advantages are fair, but someone else's advantage is not.

3 Little Words

It is impressive to me the difference that only 3 words can make on an entire essay. I read this article and was entirely on board for the entire thing up until the last 3 words.

I think that Adam Smith was onto something, but he miscalculated the origins of our deference.

The Highest Cost Producer

Starting with an article at Marginal Revolution, I read the earlier referenced article, and ended up reading this guy's article, which contained this comment:

Now what needs to be brought into the picture here is that the federal government is not like a big corporation. Governments don't go out of business. Governments don't experience unexpected new competition for their customers. Corporations can't just generate new revenues by taking a vote. And of course corporate managers are supposed to have a different attitude vis-à-vis their employees than elected representatives have vis-à-vis their constituents.

I'm struck by how the author of the comment thinks that all of these things actually support leaving social security as it is. Meanwhile, I see them as an argument for changing social security. Of course, I start from a basic distrust of any government program, mainly because they usually result in the highest costs of production.

Governments not going out of business and not experiencing new competition means that there's no incentive for a government to improve. Corporations not being able to generate new revenues by taking a vote means that they have to come by their revenues by efficiently making things that people actually want. And corporate managers view of their employees is generally better than the governments view of its constituents. Employees are the engine that makes production and profit possible. Citizens are the suckers from whom taxes are forcibly extracted. In other words there is more stability in entrusting investments to a diversity of corporations than entrusting it to a governments guaranteed inefficiency.

How are this guy's points at all useful to support the Social Security status quo?

The Yuk-Factor

This is an interesting quiz (thanks to MarginalRevolution for the pointer). I took it and got the following scores:

Your Moralising Quotient is: 0.40.
Your Interference Factor is: 0.00.
Your Universalising Factor is: 1.00.

Take it yourself and then come back here.

Ok. So you're back. Here's the thing that I wanted to comment on. After the quiz, they gave you some of what they're trying to get to and their rationale for the quiz. This I found interesting:

Nevertheless, it is probably right that we are suspicious of moral judgements which are rooted in the "yuk-factor". Steve Pinker, in The Blank Slate, puts it like this: "The difference between a defensible moral position and an atavistic gut feeling is that with the former we can give reasons why our conviction is valid. We can explain why torture and murder and rape are wrong, or why we should oppose discrimination and injustice. On the other hand, no good reasons can be produced to show why homosexuality should be suppressed or why the races should be segregated. And the good reasons for a moral position are not pulled out of thin air: they always have to do with what makes people better off or worse off, and are grounded in the logic that we have to treat other people in the way that we demand they treat us."

I find it interesting, because I think you could put forth the argument that says that everything, including those things listed, all fall back on some feeling of "Yuk, that's bad." CS Lewis made this argument in "Mere Christianity" when he tried to define the "Law of Human Nature". Even if we say that "harm is caused", on what basis of reason do we say that harm is inherently wrong? Don't we just feel that it's wrong? Perhaps it leads to uncomfortable consequences if pursued, but what makes uncomfortable any more inherently wrong than comfortable? They rely on the golden rule; what makes it any more inherently right than it's opposite?

Ultimately, I fall on the side of "there is unverisal right and wrong", which is demonstrated in my score. Our "feeling" of something being wrong, is part of our innate ability to sense those universal truths. That feeling is no less of a sense (IMHO) than the sense of touch or smell. And as such, I have little doubt that we can be confused by what we're sensing, and that we can perceive things individually that others cannot. That means that responding to that sense is no more or less rational than responding to something smelling bad or responding to being poked by someone else. It doesn't matter that no one else smelled that thing or felt the poke; responding to it is rational. In the same way, responding to the sense of "yuk, that's wrong" can be seen as equally rational.

In fact, it *should* be seen as rational. One of the lessons of Christianity is that much of the evil in the world is a result of our sense of wrong being dulled by sin. In other words, its the fact that we have irrationally ignored that sense that has lead to more wrong and more evil.

Count me on the side of the "Yuk-Factor".

When I'm wrong...

...I'm way wrong. Yet another blogger with substantially the same comment that I had.

Totally Free Market Employment?

Is it possible to be employed in a market that is completely free? I wonder about this because I read that Duke Energy (a local company) is merging with Cinergy. Initially I wondered, "Would I want to work for Duke? They're clearly a growing concern." And then I thought that I wouldn't because they are in a far too regulated market. I'd like to be focused on doing a job so good that customer satisfaction is what drives my profits. Of course, I'm after the profits, but I want to get there by being really good at what customers want. And in the energy market, where there are locally granted monopolies, the thing that motivates the organization isn't customer focus. I thought to myself, "Man am I glad I work for a company more governed by the free market. At least we're more responsive to our customers."

Except, I work for a bank. We're super regulated, too. And I witness this stuff every day when we've got internal auditors and corporate information security running around telling us to stop doing something that's beneficial to the customer and instead focus on something that makes our services more expensive for the customer. And they're doing it because they've got pressure from the above referenced regulators.

So it got me wondering. Is there any job I could take that's in a totally free market? Probably not, because no matter what job you do, you're regulated in how much you must pay people even if they're willing to work for less (minimum wage). What would a job in a completely free market look like? I don't even know what that job would look like, how do I know I'd want it?

Not alone...

In previous post, I lamented the feeling that I was alone in the beliefs that I espoused. Well I've since been proven wrong many times over. But here's a wonderful entry by the coyote blogger. Have I mentioned that I'm really starting to like this guy's stuff?

Ewww... taxes.

I'm really beginning to like Coyote Blog. Here's an example of why:

Many people have worked hard to pay off their mortgage, thinking they could settle down into their retirement in a paid off house. Unfortunately, they may find that their home has increased in value so much that their property taxes at retirement are actually much higher than their original payment on the house. Take the case of a couple who bought their house in an urban area for $25,000 and find its now worth $375,000 forty years later (this is an average urban price increase over the last 40 years). For simplicity, we will assume the effective tax rate has stayed at $1.50 per $100 for these forty years (though its more likely to have gone up). In 1965, they paid $375 a year in taxes. Today, they have to pay $5,625. In other words, their property taxes today are over 22.5% a year of the original price they paid for the house. Now, this is all fine if the couple strove to work up the corporate ladder and get promotions and grow their income proportionately. But what if they didn't want to? What if they just wanted to buy that house, pay it off, and live modestly selling driftwood sculptures at farmers markets, or whatever. The answer is, because of property taxes, they can't. Likely they will have to sell this house, give up the urban life they wanted, and either move to an urban dump they can afford the property taxes on, or they move out to the country... It is ironic that a tax initially invented for populist reasons to cut back on wealth accumulation hurts the lower income brackets and those trying to step off of the capitalist treadmill the most. In fact, it was the poor in the Great Depression who typically lobbied for laws to put moratoriums on property tax collections.

In other words, property taxes contribute to materialism. The only way to keep your lifestyle is to make sure that you're climbing the financial ladder. Thrift and simplicity won't scale in this environment.

Taxes, Bad!

Let's eat!

This is an interesting article. (Which came by way of Marginal Revolution. The part that I find most interesting is this quote:

The latest study had another surprising finding: People who are modestly overweight but not obese have a lower risk of death than people of normal weight. Indeed, the fewer deaths from being modestly overweight partially canceled out the deaths from obesity.

Whoa! Does that mean that the BMI scales are wrong? Does that mean that people who work are to get their BMI index down to w/in "normal" are actually lowering their overall health? For me to hit the upper limit of BMI requires that I lose approximately 20 lbs. I can't wait to tell my wife that it would be detrimental to my health if I did that!

Katherine Flegal, a CDC scientist who led work on the study while a visiting scholar at the UC Berkeley's Center for Weight and Health, said she hoped the findings don't take away from the importance of focusing on obesity as a public health problem.

"Our numbers suggest that weight-related mortality is not as great as previously thought," she said. "But our study just looks at part of the picture. We didn't look at issues such as quality of life. These results shouldn't be overinterpreted to mean that we can all rest easy."

Aw, crap!

FIGHT!

There's a battle royale between the two heavy weights that power Econlog. On the one side is Arnold Kling who favors behaviorism. On the other side is Bryan Caplan who believes that behaviorism is dead.

As someone who tends to think that actions speak louder than words, I tend to fall on the bahviorist side. At the same time, you can't discount the words of people to color their behavior. Unfortunately, I don't really understand the argument in the language of the two fighters. The third party commentary, however, is where I started to get a better understanding.

It comes down to this: do we believe what people actually do or do we believe what they say about what they do? And the example paradox is happiness research as related to salaries. There's lots of research that says that people who earn $50,000 per year are not much happier than those who earn $20,000 per year. Which means that the additional $30,000 doesn't provide much happiness. This is good news for a Christian. However, it conflicts with the fact that even though people say that the additional money doesn't provide much additional happiness, they universally seek it. If we're to believe what they say (that it won't provide much additional happiness) then why do they pursue it as if they think it will? Aren't they either lying or deluded? And if those are the only two choices, how much trust can you place on what people say in comparison to what they do?

That is, of course, the behaviorist argument. It's the only one that I understand. I'd like to present the other side, but I don't really understand it enough to present it. That being said, if the behaviorist argument is that you can *only* use behavior, then I'm not convinced. If the non-behaviorist argument tries to integrate what is said as data to color what is done, then I'd fall in the non-behaviorist camp. However, I'd need to understand what the rules are when words and actions conflict.

Just a question from an economics wannabe.

The 1st Rule of Double Standards

I get to have one and you don't.

Interesting blog entry on a woman's right to choose.

Free!

This is a great book. And now it's available online, in it's entirety, for free.

No more tomes?

Hah! I'm just into short and sweet today. This is a fantastic quote:

Wealth comes not from labor or capital or resources - wealth comes from the mind, and as such requires a rule of law where the mind is free not only to imagine new ideas but to pursue and reap the fruits of these ideas.
- Coyote Blog

Slow news day

What have we become when we're analyzing the president's playlist:

Also on the iPod is the 1979 song "My Sharona" by the Knack, about a man pursuing a much younger woman.

One of that song's lyrics, "Such a dirty mind. Always get it up for the touch of the younger kind," prompted Spin magazine editor Dave Itzkoff to comment: "This wouldn't be consistent with Bush's image as protector of conservative values."
- CNN

:rolleyes:

Terri Schiavo

Orson Scott Card is the author of one my favorite books: Ender's Game. He writes a regular column that I enjoy reading. In a recent entry, he worries about the impact that the Terri Schiavo story will have on us as a society.

The part of this whole story that has confused me the most is this: why, in the face of a family that is more than willing to care for her, would her husband refuse such care? In other words, I don't understand the position of Michael Schiavo. I understand if he's no longer willing or able to care for her. I understand if the toll of constantly caring for has brought him to the end of his rope and he wishes to be done with it. But that's not what he wanted. He didn't just want this particular part of his life to be over so that he can move on, he wanted her dead. And he got his wish. Steve Landsburg says something similar.

I find this to be truly distasteful. I find it refreshing to have read Orson Scott Card's view. My own view is that none of us should be playing God. It was not the responsibility of Michael Schiavo to determine when Terri's life should end. Nor, for that matter, was it the responsibility of Terri Schiavo to decide when her life was complete (*). That decision is for God alone, and when we pretend that we can make it, we are pretending to be God. This is the same reason I am opposed to abortion and the death penalty. I'd rather God's will be done. I'd rather that we all stop pretending to be God, and instead let God be God.

(*) That we can't effectively prevent someone from committing suicide does not mean that people are doing a God endorsed action when they commit it.

Is it just me?

I recommended an article that I really enjoyed to a friend of mine. Oil Econ 101 by Arnold Kling. I like this friend. He's a smart guy. And he hated the article. Not because he disagreed with the conclusion, but because he thought that the presentation of the argument was very imprecise. He specifically did not like the lack of mathematical precision that he likes. He has a Ph.D in math, so this isn't surprising. But he found that the argument was just muddled and invaluable.

What's surprising to me is that he found it so confusing while I found it to be crystal clear. And it makes me wonder if the reason I find it be clear is because I've been reading a lot of economics lately. Is it clear to me because I have started to build my background in econ? If so, then Arnold is in trouble. Because this is a chapter in his book Learning Economics. This is supposed to be a book that explains economics to the economically illiterate. But if it requires some base level of economic understanding in order to make sense, then it will struggle to achieve its goal.

Or maybe it's not me and my (ridiculously small) predisposition to economics that allows me to see clarity where my friend sees confusion. Maybe my friend is just easily confused. Or maybe he's got some other bias that makes it hard for him to perceive this clearly. Or maybe I've got a bias that allows me see clarity where there is actually none. I really hope that it's not the last part. But if it is, I also really hope that I can find someone to straighten me out.

Cringley at it again

Robert X is still concerned with VoIP and I'm still unconcerned. First, tunnelling data is NOT hard. It's trivially easy. In fact, an entire programming model has been built up around tunnelling data. Web Services is nothing more than programatic API's that can easily traverse firewalls... ok, it's quite a bit more than that, but it's that also. I simply do not see any way in which this problem can exist without it being a problem for every other (much higher) bandwidth user.

I'm also really surprised that Cringely is dissatisfied with 9.5Mbits/s of bandwidth. Personally, as someone who has used bittorrent to download content, I don't see it as much different than scheduling a show on my TiVo. If I schedule a show for two days from now on the TiVo, it's going to take 48 hours before the show is fully downloaded. If I start a bittorrent download, it will probably be finished much sooner. If I'm expecting to watch the program immediately, then of course, it's going to feel glacial if it takes 12 hours. So some level of expectation management needs to be met. In other words, distribution of content via bittorrent needs to be thought of exactly the same way as scheduling a recording a few days from now. If the mechanisms for dealing with this look the same, I suspect that will help manage the expectation of users.

The Good Old Days of VoIP

Cringely is worried that VoIP's days may be numbered. He expands on some of the criticisms in the 2nd half of this article.

I'm not convinced, although I'm fairly certain that he has a poor quality ISP. I'm unconvinced because VoIP's network requirements are not that demanding. If 3rd party VoIP is broken, then just about everything else should be broken, too. VoIP requires hardly any bandwidth at all. Vonage (at it's highest quality setting) requires a 90Kbits/s (11KBytes/s) connection. This is roughly twice the speed of the fastest telephone modems. Every single broadband internet provider advertises with much more bandwidth than that. The consequence of this is that if VoIP stops working well over broadband, then just about everything will stop working well over broadband. At which point, broadband providers are really high priced compared to cheap analog internet service.

Of course, the counter argument is that VoIP needs good latency, not high bandwidth. So it's not just how many packets you can receive at any one time, it's how long it took for specific packets to get to you. If this is not clear, the classic example that compares bandwidth to latency is a station wagon full of back up tapes versus a regular modem. The station wagon, filled with tapes, can transport terabytes of data. If it takes 1 hour to ship 10 TBytes using the station wagon, that's 277 MBytes/s of bandwidth. But the latency is 1 hour. If you're talking on the phone to someone on network that has one hour latency, it's going to take an hour after you say "Hello" before the other party hears you. At that point it doesn't matter how much bandwidth you have. What matters is the latency. In comparison to the station wagon, you might look at a regular computer modem, which only has 7KBytes/s (56Kbits/s) of bandwidth, but the latency is probably only about 30-40 milliseconds. The argument is that VoIP requires more bandwidth than a normal modem can provide, but a latency signature of about the same as a normal modem.

And this is where Cringley's argument starts to gain traction (only to eventually lose it). His argument is that the ISPs can easily manipulate the network to ensure that there's little or no latency for their VoIP offering and not give any latency guarantees to 3rd party VoIP (e.g. Vonage, Skype, Packet8, etc). By not giving latency guarantees to 3rd party VoIP, all of those packets get classified behind the ISP's VoIP. So it's possible that hundreds of ISP VoIP packets will get passed before a single 3rd party packet gets passed, dramatically increasing the latency of the 3rd party packet.

This argument loses traction because it assumes that the ISP packets will push out the 3rd party packets, which is true only if those packets exist AND if there isn't sufficient additional bandwidth to service those packets. Think of it this way. We're in line to get on the bus. Some customers have priority passes and get to go to the front of the line at any bus stop (these are the low latency customers). But I don't have this pass, so I have to hope that there's a seat available after they get on. If there is a seat available (e.g. there's enough bandwidth) then they get on the bus and I get on the bus and we both have the same latency to get to our destination. The only time this is a problem is if someone in front of me takes the last seat on the bus. At which point there isn't enough bandwidth to take me, and my latency is worse because I have to wait for the next bus.

This is the way it works with VoIP. In order for ISP VoIP to push out 3rd party VoIP, the available bandwidth has to be so low that we both can't use it at the same time. It also assumes that there are going to be lots and lots of high priority packets which will force 3rd party VoIP to the back of the line. This last part is dubious when you compare the price of cableco provided VoIP to 3rd party VoIP.

My local cableco VoIP offering is $39.99/mo. Compared to Vonage's equivalent offering of $24.99/mo, that makes Vonage nearly 40% cheaper! I don't see how the cableco is going to get enough customers to enable their VoIP offering to push out the 3rd parties. And even if they do get enough traffic to push me to the back of the line, they're going to have to lower their current bandwidth so that I'm not the only thing pushed to the back of the line - everything is. In which case they'll probably lose more broadband customers than they gain in VoIP customers.

I don't see this as a market that the cableco can force its way into by playing networking tricks... but I could be wrong. If I am let me know how.

I can't believe I'm going to blog on Social Security

But, apparently I am. I'm no expert in the field, by any stretch of the imagination. And, please gentle reader (all 1 of you), correct me if I start pretending to know more than what is actually true. But I haven't yet read anyone comment on this part of the deal, so I will. (UPDATE 3/28/05: Someone HAS commented on this, and expands much further than I did.)

Social Security is a problem today because, today, the surplus of collections is dwindling. This is because more people are retiring than entering the workforce. When a person retires, they stop paying into social security and start collecting from it. So in one step they decrease the amount of money put into social security and increase the amount that must be paid out. In order for the surplus to not be effected by this, someone must enter the work force and start paying the payroll taxes that were lost when the person retired, and someone must die to stop collecting the social security check that now goes to the newly retired person. If just one of those things doesn't happen, the surplus dwindles.

This aggravates congress and the president because, despite the fact that social security is supposed to be a trust fund, the surplus is not held in trust. Instead, the congress and the president spend it on the general budget in exchange for (essentially) a bunch of IOUs. So, when the social security surplus dwindles, funds available for spending in the general budget dwindle. Maybe this is why the senate voted unanimously to reform the program. There are three ways to resolve this problem:

1. Decrease spending on existing programs
   
2. Increase taxes
   
3. Spend on loan - e.g. increase the deficit
   

Not a single one of these options is palatable to someone trying to gain re-election. But, of course, with the right type of reform, we could take on some additional one time debt and get rid of long term perpetual debt.

In 2018, the surplus will have dwindled down to nothing, and the social security administration will have to start calling in those IOUs. At that point, not only will the congress and the president no longer have extra cash to spend, they'll have to pay back the cash that they spent. In other words, the general budget will be responsible for funding social security (see the above 3 ways that this can be accomplished). In 2042, the congress and the president will have paid back all of the IOUs, and the amount received in payroll taxes will be less than the social security payments, and the social security fund will be broke.

But there are clearly problems long before we ever get there. Justifying, I believe, the call to reform social security. I think it's clear that we need to get out of the "pay as you go" system. Its viability fluctuates with the size of the population, and it's too easy for congress and the president to appropriate any surpluses and spend them. I'd much rather see us use private accounts, even if this is done through forced savings. At the very least, this will prevent the congress and president from spending the surplus. They can't spend it because it's not their money.

Gay Marriage

I was listening to a local radio talk show this morning and they started debating gay marriage. On the one hand, there was the Duke University history professor. She was arguing the definition of what constitutes a marriage has changed over time. According to her, marriage should now be redefined to include same sex marriage in the same way that it was changed to include inter-racial marriage. On the other hand, you had the local call in listeners whose views ranged from irrational to insulting.

I find it difficult to disagree with the professor when you leave it in the context that she has it. Marriage has been reshaped over time. If gay marriage is another simple reshaping of marriage, then what is the precedent for preventing it?

But is that the only possible context? What about a different context? In this context, marriage serves to guard against the normal behavior of men. Without a legal binding and civil repercussions, men will be more likely to abandon the women with whom they have sex, and consequenlty abandon any children that result. But with marriage there is a legal binding and civil repurcussions if men skip town after sex. At the same time, if women restrict sex until marriage, then the only way that men can get sex is through marriage which binds them to provide for any possible children. In other words, the entire purpose of marriage is to bind children (the outcome of sex) to their fathers through an agreement with their mother. Marriage is the primary tool that protects against deadbeat dads being the societal norm.

In that context, marriage serves to protect and educate children. So how good of a job can same sex marriage do at this? Although same sex couples are not currently capable of reproducing, they can certainly acquire children through other means (e.g. adoption or sperm donation or egg donation + surrogacy). How good of a job will same sex parents do at protecting and educating their children?

One part of educating children is to provide them role models from which they learn appropriate life behaviors. In a same sex marriage, there is either no adult female figure or no adult male figure who lives with the children. Does this have a negative impact on children? The knee jerk reaction is to say that it does. But I think the answer is that it might not. If we assume that homosexuality is genetic (as most gay advocates seem to espouse) then if a lesbian couple has a lesbian daughter, they will be fully equipped to provide appropriate role models. The same thing is true if two gay men have a gay son.

Let's use some math to figure out how likely this scenario is: Take it for granted that there's a 50% chance of having a boy vs a girl. Also, assume that the 10% society is right, and that 10% of the people you encounter are gay. That would suggest that the genetic code that results in homosexuality is likely to occur 10% of the time.

This means that a gay couple will have a 10% chance of getting a gay child. And only half of the time, will that child be the same sex as they are. So they have a 5% chance of being able to provide an effective role model to that child. Meanwhile, a straight couple will have a 90% chance of having a straight child, and all of the time an adult role of the same sex will be part of the mix. So a straight couple will have a 90% chance of being able to provide an effective role model. In other words a straight couple is 18 times more likely to provide good role models than a gay couple.

Of course, that conclusion rests on an assumption that homosexuality is a genetic charateristic. What if it's not? What if homosexuality is not determined by genes, but influenced by the child's environment? In that case, we would expect that the child of a gay couple will be influenced towards homosexuality, and the child of a straight couple will be influenced towards heterosexuality. Anyone who is a parent knows that you can't always control every aspect of your child's environment. But if the 10% society is right, then roughly 10% of the time, a child will flip from the environment they were raised in. Which is to say that 90% of the time a gay couple will end up with a gay child, and 90% of the time a straight couple will end up with a straight child. In the straight couple's case, there will be an adult role model for that child 90% of the time. In the gay couple's case, there will be an adult role model for their child 45% of the time (i.e. when a lesbian couple has a daughter, but not when a lesbian couple has a son).

In this scenario, a straight couple is only twice as likely to provide the appropriate role model for their children in comparison to a gay couple. This is quite an improvement from the 18 fold difference if genetics are involved. Which leaves gay rights advocates with a Faustian bargain. Either:

1. they cling to their long held belief that homosexuality is genetic AND they have to admit that they're way less likely to be able to provide an appropriate role model for children, or
   
2. they improve their odds of being a good role model, but they have to admit that genetics doesn't play the role they think it does.
   

If you're a gay rights advocate, good luck with that decision.

Pre-defensive

I sang at church this weekend. In between services, I sat on the floor so that I could read Steven E. Landsburg's Fair Play. At some point, my pastor walked by and asked what I was reading. I showed him, and mentioned that, although I didn't agree with all of his conclusions, it was a really challenging book, which had a surprising amount to say about right and wrong and what's fair. I told him that it forced me to think about things differently than I'd expected. At which point he said, "It's by Landsburg?" This suggested to me that he might go and find a copy and read it.

My reaction to this is twofold. First, I'd really like for him to read it and give me his thoughts on it. Second, I'd really hate for him to read it and then give me his thoughts on it. In the first case, I'm hopeful that he'd engage in a conversation with me. In the second case, I'm fearful that the conversation would involve me trying to justify why I would read such a book as this. Intellectually, I don't think the second case is very likely - especially if you consider that he reads lots of non-Christian material. But that doesn't keep me from fearing it. So as long as I'm stuck with this fear, I might as well answer it.

I read this book, instead of an overtly Christian book because it challenges me. As a Christian who was formely an atheist, one of the biggest things I'm trying to learn is healthy humility. Basically the idea is this: where I used to think that I could know darn near everything (even though I didn't), I now realize that I can't know everything. I'm limited in my knowledge. I'm not God. Which means that I'm almost always going to be able to encounter someone who knows more than me. And when it comes to people who have actually spent the time and discipline to complete a book, that entire population is likely to know more than me. So I read because I know that I'm not God. I read because I want to grow my understanding of truth. I am drawn to this like almost nothing else in my life. Of course, since God is the author and creator of all truth, this is just one way of being drawn to God.

Up to this point, I have justified why I ought to read Christian books. But Landsburg (so far as I'm aware) is not a Christian author. He's certainly not overtly Christian. Why would I read his book? Because even if he doesn't acknowledge it, he lives under the gracious blessings of God. God may very well have granted Landburg the ability to see, understand and explain a particular truth. Whether Landsburg knows or acknowledges the source of this truth is irrelevant if God has so created a desire in Landsburg to deliver it and Landsburg has done so. As such, I'm compelled to listen to truth from whatever direction it comes. It must be tested against scripture, but if it's truth it's valuable to me.

This is what I think a healthy sense of humility entails. Pursuing the truth with no other agenda except ensuring that it's true. And as someone who struggles with pride, I have to open myself up to the possibility that the truth may come from a direction I don't expect. Which means non-Christian authors must be in the mix.

Lose weight or lose your job...

I saw this article on CNN Money. I can't decide if I like this or if I don't. I don't smoke and I'm only a little overweight. But how this would impact me is not the part that I'm curious about.

Generally speaking, I like the idea. It creates incentives for employees to consider the economic consequences of their lifestyle. By matching the incentives with the employees, the employees are the ones who can decide whether it's worth the cost. Some will lose weight and others won't. Those who don't will either have to pay more or find a new job. Either way it imposes the burden for the additional cost of their lifestyle directly on the employee instead of indirectly through the employer.

The problem with this idea isn't the incentives. It's how this guy's going to deal with labor. If the Angry Economist is right then we already have a high demand for labor, which is evidenced by the increasing cost of labor over time. If this guy is cutting off most of that labor supply, he's going to create an even greater demand for his specialized labor. In other words, he's restricting his supply beyond what's effective for doing the job. I suspect the result of this will be that he won't be able to find people to hire at his current costs. He's already cut off anyone who smokes. Exacerbating this problem could be his definition of "overweight". If he expects people to match their weight to something like Body Mass Index, then average Michigander probably isn't going to fit that bill. I'm assuming that the average Michigander - like the average American - is overweight. If true, this means that he's cutting down again on the number of people who are capable of working for him.

I suspect that the amount that he saves in health care costs, will have to be paid right back out in additional labor costs, since he's incredibly selective about his workforce. The smaller the supply, the higher the cost. This worked for smoking, because most American's don't smoke, while most American's are overweight.

But I hope I'm wrong. I think this is a cool idea. I'm glad he's experimenting with it. It may work out for him. I wonder how well it would work out if used more generally.

Internet Regulation

Econlog reflects on the resignation of Michael Powell from the FCC. One of the commenters said the following:

The Internet requires an International Cop to prosecute Crime--specifically Fraudulent practice. The FCC will retain power only so long as it integrates into a World Police net.

Wow, I hope he's wrong. But he might be right. I only hope because I see the Internet as a fantastic experiment. In this experiment, we're gathering data to see whether or not a medium that has no enforceable borders can effectively exist. This is compared with the real world, in which we do have borders and centralized planning and laws enforced within those borders. Can some semblance of order appear from the anarchy that is the Internet? If not, then it turns out that the central planning and law making model really we have in the real world is probably best. But if the Internet can develop without the need for government, and central planning and laws, then maybe that indicates that how we're doing it in the real world is less efficient than it could be.

Of course, the internet can't definitively answer this question. It can only add a single piece of data that runs counter to someone's argument. I hope that it's not my argument that loses this valuable data point.

A Eulogy for Grandma Tina

It doesn’t seem real. I mean, today is January 4. Only 7 days ago, I spoke with her on the phone. She called me at my home. She was worried about whether or not we’d received her Christmas card. We had received it that very day. The rest of the conversation was rote and we’d had it a thousand times before. The next thing that happened was she complained about something. The previous complaint was about not being able to drive. The new complaint was about being away from her home. Then, she would dote on my children. That was followed by her saying how much she missed me, and wishing that we lived closer. You could tell the conversation was coming to an end, when it got the point where I was giving her a quick rundown of the next time she’d see us. I promised her that she would see us this summer.

Unfortunately, I can no longer keep that promise.

Last night, at the funeral home, someone said that when they walked into Grandma’s house that the reality just struck them. I don’t want to go there. I’m not ready to face the reality that she’s not there. I don’t want to see the how empty that house will seem without her in it. Instead, I like the image in my head of having her there – possibly complaining about some family member not allowing her to get on a ladder anymore, or complaining about not being able to see. I like the image of her going through her daily routine of getting up at 4:30 in the morning and going to bed at 7pm. And, in between, calling someone and leaving a message on their answering machine (which she hated), and in the message saying how much she hated “this stupid machine”. And I like imagining her hanging up the phone, and sticking another log into the stove in order to heat the room a little more than the chilly 95 degrees it’s at. And her watching Days of our Lives. And anxiously anticipating the arrival of Christmas when all of the family will be there. Except every other year when my family spends Christmas with my wife’s parents, in South Carolina. As was the case this year.

I really I wish I could have known that this was to be Grandma Tina’s last Christmas.

But I don’t want to focus on that reality, yet. I want to remember another time. A time where I was awestruck by her wisdom. Yes, you heard me correctly. I said “wisdom”. Of course, we all know that Grandma Tina could be rather goofy on a fairly regular basis. For example, at my wedding. The video guy was walking around asking for people to leave messages to the bride and groom (my wife and me). Grandma took the microphone and held the round part, that you speak into, up to her ear as if the entire microphone was a telephone, and proceded to start talking into the wrong end. Char helped her figure out which end to talk into, and she left a message as if she were talking into an answering machine – which, of course, was a really short message because she hates those stupid machines.

In any case, I mentioned Grandma’s wisdom. Grandma Tina seemed to be a focal point for people to complain about family politics. For those of you outside our family, I’m sorry to have to break this to you. But we have family politics. I know that this is surprising given how reserved we are with our emotions and how careful we are with our tongues. In any case, this rare occasion took place, and someone wasn’t talking to someone else. (Of course, if the occasion really were that rare, I’d be able to remember the details, but I don’t.) What I do remember is what Grandma Tina said about the situation. Her solution to the problem was simple. She said, “You have to forgive. Life is all about forgiveness. You MUST forgive.” She repeated it over and over.

If there’s one thing completely unique to Christianity, it’s the teaching that it provides on forgiveness. It’s the only major religion that teaches how God loved us so much that he made a way that we can be forgiven. And having been forgiven be able to spend eternity with Him in Heaven. Islam, Hindu, Buddhism, and Judaism do not teach this.

This is why I can confidently say that I know where Grandma Tina is right now. She knew forgiveness and she knew it deeply and intensely, as if the truth of it were as obvious as reading the time off a clock. And it’s not because forgiveness came naturally to her. She could carry a grudge as well as anyone. But that day she was a conduit for God’s teaching. She allowed God to use her to teach a lesson in forgiveness. And that day, I was awestruck by her wisdom.

I don’t really know how to end this little talk of mine, except to say this. Grandma, I know that you’re in a better place now. I know that Heaven is greeting you with open arms, and I’d never be so selfish as to take you from it. But I miss you and I want to tell you I’m sorry. I’m sorry that I missed your last Christmas. I’m sorry that we live so far away that you didn’t get to spend more time with my family. I’m sorry that when we were here, that we didn’t spend more time with you. I'm sorry that I can't keep my promise to you. I know that God loves you and I know that he called you home. I also know that he loves me and all of us. And I know that in time, He’ll heal the part of me that misses you. But for today, I miss you. I’m wearing black as a way of saying that my world is a little darker without you in it.

I guess I should end my conversation with her in the same way we ended our phone calls.

I don’t know when I’ll get to see you again Grandma, but I look forward to it. I’d like to promise a time, but I can’t really say, because I don't know... I love you, Grandma Tina... Good bye.