The Criminalization of Poverty

Barbara Ehrenreich had an excellent article in yesterday’s New York Times on the many ways that being poor can land you in trouble with the law. One striking example:

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Name That Financial Debacle!

The following quotes are from a book describing a real set of events:

[The incident] is an extraordinary example of what happens when you get… a dozen people with an average IQ of 160… working in a field in which they collectively have 250 years of experience… employing a ton of leverage.

It’s hard to overstate the significance of a [government-led] rescues of a private [corporation].  If a [company], however large was too big to fail, then what large [company] would ever be allowed to collapse?  The government risked becoming the margin of safety.  No serious consequences had come about in the end from the… near-meltdown.

Was the incident:

a) The savings and loan scandal

b) The collapse of Enron

c) The sub-prime mortgage meltdown

d) none of the above

First correct answer gets to invest in an exciting new bridge project I’m involved with in New York!

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Should We Tax Poor Nutrition?

I just tweeted on a subject that I suspected would cause a stir, and so it has, I’m moving it here:

RafeFurst: I strongly support a soda tax! RT @mobilediner: check it out:  a Soda Tax? http://amplify.com/u/dvl

coelhobruno: @RafeFurst what about diet soda? Would it be exempt?

RafeFurst: @coelhobruno no diet soda would not b exempt from tax.  Tax should be inversely proportional to total nutritional content.  Spinach = no tax

Lauren Baldwin: I do as well … and while they are at it they should tax fake fruit juice too.

Kevin Dick: I think this would be an interesting experiment. I predict a tax does not cause any measurable decrease in BMI.

Kim Scheinberg: New York has had this under consideration for a year.  Perhaps surprisingly, I’m against it. In theory, people will drink less soda. In reality, it will just be another tax on people who can afford it the least.

Leaving aside the “rights” issues and just focusing on effectiveness, I guess we can look towards cigarette taxes and gasoline taxes and see what the lessons are.  What do these forebears suggest?

As an FYI, there is supposedly a new total nutritional score (zero to 100) that is to be mandated on all food in the U.S. by the FDA.  Can anyone corroborate this and its current status?  Presumably this would be the number to base a tax on.

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Paying Women to Not Get Pregnant

What’s fascinating to me about this is not that it works so well and or that there might actually be support in the Obama administration for doing it on a national scale, but rather that there has not been a backlash against it yet.  What are the odds that something like this will actually get implemented?  Is it actually a good thing?

hat tip: Annie Duke’s mom

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Fantastic Book on Terrorist Interrogation

Thanks to a pointer from Sandeep Baliga over at Cheap Talk, I recently Kindled Matthew Alexander’s How to Break a Terrorist. If this were a novel, it would be in the top 10% of thrillers I’ve read in the last 5 years.  But it’s a true story.

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More on the California State Budget

A number of people responded to my recent post on the California budget. So I thought I’d dig a little deeper into the issue. The three points I’d like to address at the moment are whether spending as a percentage of income is rising, where the extra spending is going, and whether the extra spending is beneficial.

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Is the ‘War on Drugs’ Ending?

A few short months ago, Hillary Clinton declared an end to the “war on terror.” Now, it appears as though the “war on drugs” is ending as well, or is it?

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Disgusted with the California Budget

First, let me apologize for the posting lull.  I’ve been busy with work and also struggling with a sinus issue that has sapped my discretionary intellectual energy.  But enough about me.

In honor of California’s special election on budget measures, I thought I’d shed a little light on the fundamental problem.  Contrary to what polticians are saying, the cause of the budget problem is not falling revenues in a recession. Rather, the cause is a dramatic increase in spending over the last 10 years.

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NIH Challenge Grants: Is Competition Bad?

As part of President Barack Obama’s stimulus package, NIH is awarding $200 million in “Challenge Grants.” But, according to Science Magazine, these grants are far more competitive than initially intended:

A frantic grant-writing effort that has consumed biomedical research scientists this spring came to an end last week, resulting in a huge pile of new applications—more than 10 times larger than expected—to be reviewed by the National Institutes of Health (NIH). After this enthusiastic response, there will be many disappointed applicants: The rejection rate could run as high as 97%.

Increased time cost spent not just applying for money but also reviewing applications to allocate the funds. Additionally, many qualified researchers chose not to apply for funding after hearing how competitive the grants were. Is this a good thing? Does this competition result in better science? Could there be a better way to allocate scientific funding?

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Drug Decriminalization: Portugal’s Experience

Portugal decriminalized all drugs in 2001 (yes that includes cocaine and heroin). And “ none of the nightmare scenarios touted by preenactment decriminalization opponents—from rampant increases in drug usage among the young to the transformation of Lisbon into a haven for “drug tourists”—has occurred.”

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Stability Through Instability

A friend pointed me to a doubly prescient talk given by George Soros in 1994 about his theory of reflexivity in the markets.  Essentially Soros notes that there’s feedback in terms of what agents believe about the market and how the market behaves.  Not groundbreaking, but he takes this thinking to some logical conclusions which are in contrast to standard economic theory:

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Unwinding Mortgage Backed Securities

One problem facing financial institutions is not knowing what the Mortgage Backed Securities they hold are worth. One problem facing homeowners is that the abandoned and unmaintained house beside them is dragging down the value of their property. An anecdotal story from Modesto, Ca has two neighbors getting together, purchasing the abandoned house and renting it out. One less eyesore on their block, one less eyesore mortgage on some bank’s books.

What if all financial institutions accepting federal aid were forced to list on E-Bay, sorted by zip code, every house on their books that is abandoned or in foreclosure?

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Physics.Cancer.GOV

Yesterday, from the Director of the National Cancer Institute, addressing one of the two largest cancer research conferences of the year:

NCI commenced a series of workshops that began to bring aspects of the physical sciences to the problem of cancer. We discussed how physical laws governing short-range and other forces, energy flows, gradients, mechanics, and thermodynamics affect cancer, and how the theories of Darwinian and somatic evolution can better help us understand and control cancer.

Read more on my Cancer Complexity Forum post.

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Crowdsourcing Election Verification, part 3

In part 1 I advocated photographing your completed ballot before submitting it and posting your photograph online.  Turns out that if you followed this piece of advice in Missouri, you might be in jail right now.  Oops!  Sorry :-)

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More Environmental Tradeoffs

The Corporate Average Fuel Economy (CAFE) standards will rise from 27.5 mpg to 35 mpg from now until 2020. That should decrease any pollutant associated with burning fossils fuels.  All good, right?  Wrong.

There is a trade off in safety.  You are much more likely to die in a small car. The WSJ Online reports on a recent Insurance Insititute for Highway Safety (IIHS) study that shows  small cars like the Honda Fit and Toyota Yaris fair very poorly in two-car frontal offset crash tests against the Honda Accord and Toyota Camry. This is against mid-sized cars from the same manufacturer, so a reasonable comparison.

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If Rafe Were In Charge: Major Medical Edition

Kevin started an interesting discussion that included a thoughtful proposal for the problem of major medical care costs risk mitigation.  You should read that here before reading my proposal below.

Part 1: Major Medical Annuities. Federally mandated/funded (similar to SSI/Medicare), with a specific initial lifetime value that is the same for everyone. The concept is that you pick a number slightly bigger than the average expected lifetime major medical bill and set aside that pot of money for everyone individually. At some point (e.g. 65) you can choose to start drawing down from your pot as taxable income. Prior to then, the only way the fund can be used is for major medical expenses not covered by other insurance you may have. Such payments go directly to providers and are tax-exempt. When you die, any leftover amount gets transferred to the MMA accounts of your heirs (per your desired breakdown, or according to probate law in the absence of a will).

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Leveraging Taxes for Civil Engagement

Dan Ariely had an interesting idea on NPR’s Marketplace today.  Here’s the audio of the segment.  The idea is to get tax payers thinking about how their tax dollars should be spent, thus getting them more civilly engaged.  His research and that of others suggests that such activity would reduce the propensity to cheat on one’s taxes, and may even get people to pay more than they would otherwise.

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Is the Party Over?

I don’t like the Republican or Libertarian parties. But I’m also no fan of the Democratic party. In fact, I dislike all political parties and think they should be done away with.  And while I’m not naive enough to think that this will happen, it makes me glad to see that the “post partisan” utopia is closer today than it was a year ago.

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Too Big to Fail = Too Big to Exist?

I asked this question on twitter/facebook and got a lot of variants of “I agree” and only one person who stated disagreement (but provided inadequate reason, IMO).  Jay Greenspan put it this way:

Interesting question this morning, and something I’ve been wondering about. I’ve yet to see anyone really argue that state of non-regulation we’ve been in for the last years has been a good idea.  I’ve heard some thoughtful conservatives talk about how their views have changed radically — coming to understand that forceful regulation is absolutely necessary.

The super-conservatives I’ve seen are talking more about taxes, avoiding the subject. I’d be very interested to see a credible argument for a hands-off approach.

So how about it, anyone game to take up a considered argument for not mandating that companies who get big enough to affect the global economy should be broken up or otherwise handicapped?

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3 Interesting Articles on The Economy

1) The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

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Explaining the Credit Crisis in 10 Minutes

Via my buddy Matt Watson, here is a really well done infographic explaining the credit crisis.  Merely entertaining for regular readers who’ve been following the crisis.  But quite informative for any of your friends who haven’t felt the need to wade through all the commentary.

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Victory Over “War on Terror”

For those of who understand the power of self-fulfilling prophecy, there’s some good news on the foreign policy front.  The Obama administration (thanks to Hillary Clinton) will not be using the phrase “war on terror” anymore, as it is widely deemed to be “overly militaristic and perhaps counterproductive.”  Amen!

hat tip: Daniel Horowitz

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Two Sociology Books You Should Read

As you’ve probably figured out by now, I prefer to base decisions on statistically significant evidence.  However, in order to gather such evidence, you must have hypotheses in the form of testable models.  If the models you try to test are divorced from reality on the ground, your results will be useless no matter how statistically significant.

Therefore, if you’re interested in issues of poverty and race in the US, here are two ethnographies you should read.  Gang Leader for a Day by Sudhir Venkatesh and Cop in the Hood by Peter Moskos.  As sociology PhD candidates, both went out and actually became actors in poor black neighborhoods.  Venkatesh hung out with a crack gang in a Chicago housing project and Moskos became a police officer in Baltimore’s roughest neighborhood.

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Brilliant or Crazy? I Really Don’t Know.

Apropos of Rafe’s last post on Complexity Economics, I ran across an economic stability proposal that is either brilliant or crazy. I both haven’t thought it over enough and am probably not qualified to determine which.

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American Recovery and Reinvestment Act of 2009

Has anyone read the entire text of the stimulus package?

The ambiguity of this question is intentional.

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I May Have Been Wrong About Macroeconomics

When I was an undergraduate studying macroeconomics, I came to the conclusion that it was pretty much total bullshit.  Because I was in a co-terminal masters program, I was also studying graduate level decision theory, game theory, microeconomics, behavioral economics, and dynamic systems. In comparison, it seemed clear to me that macroeconomics was not a coherent study of a complex system.

Lately, Arnold Kling’s blog posts have been reinforcing this belief. However, we may both be wrong.  Arnold studied and practiced macroeconomics in the late 1970s.   Given the delay in propagating knowledge to the undergraduate level, that’s probably also what was taught in my late 1980s undergraduate textbook. However, Will Ambrosini observes that Arnold’s views are outdated and this is a problem with non-macro economists in general. He points to this essay and I find myself convinced that modern macroeconomics is a coherent study of a complex system.

I thought this might provide you some measure of comfort.  If anyone wants me to summarize the particulars of why I changed my mind, let me know.

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Powerful Images

Click here to see the whole set.

hat tip: mom

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Global Economic Constitution?

Vodpod videos no longer available.

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U.S. Government is Open for Questions

Taking the cue from social software sites like Digg, the Obama transition team is leveraging the wisdom of your crowd to find out what the most important and relevant questions are that the public wants answered.  Judging from the top page of questions as voted by several hundred thousand people, the relevance/importance quotient is very high.  Below is the email that tipped me off to this latest development in “government 2.0”.

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Should We Hold the Bush Administration Accountable?

Paul Phillips’s blog entry quoting Greenwald on Bill Moyers sums up it up pretty well.  And I’ve wondered what the Obama administration is going to do about this and what they should do.  The arguments for not pursuing the Bush administration’s crimes are good ones.  We have such big fish to fry with the economy, climate and wars that it would be a huge distraction right now.  And secondarily, it would come off as divisiveness in a time when we need it least, not to mention that it was one of Obama’s main campaign promises change the culture of partisan politics that has plagued us for so long.

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Greening the Bailout

Vodpod videos no longer available.

He makes so much sense!  Kevin?

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Your Seat at the Table

The Obama Transition team wants your input on how to fix the country:

No, seriously.  Check out the various meetings they have upcoming and the comments sections that go with each.  Some topics like Health Care have lots of comments.  Others like the Humanitarian, Refugee, and Asylum Policy meeting currently have no comments, which means you could have quite a bit of influence by being the only one to spout your opinion…

So, what do you think?  Will Obama policy be shaped by this promising open forum with unprecedented input from the average citizen, or will this end up as just good PR?

p.s. is that Stephen Colbert looking askance at the bald dude?  :-)

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Response to “Superorganism Considered Harmful”

This is a response to Kevin’s post responding to my post.

Rafe makes an analogy to cells within a multicellular organism. How does this support the assertion that there will only be one superorganism and that we will need to subjugate our needs to its own?  Obviously, there are many multicellular organisms. Certainly, there are many single-celled organisms that exist outside of multicelluar control today.  So where is the evidence that there will be only one and that people won’t be able to opt out in a meaningful sense?

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What Stops Terrorism

40% percent of terrorist groups are defeated by police and intelligence operations.  43% percent end because they give up violence and join the political process.  Only 7% end as a result of military force.

This according to the research of Seth Jones, as reported in the 2008 Genius edition of Esquire Magazine.

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Obama’s Must Do List

Everybody has their wishlist and “must do” lists for the new President.  Back in March of 2007, the NY Times published this Op Ed piece that I personally believe is critical and outlines what needs to be done above all else.  The article goes into much more detail about specifics, but the overall thrust is threefold:

• Restore Habeas Corpus
• Stop Illegal Spying
• Ban Torture, Really

I’m curious to know though, what do you think the priorities should be for Obama’s presidency?

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Change.gov

Okay, Kev, here’s your chance on affecting climate policy, go crazy!

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Crowdsourcing Election Verification, part 2

Back in June, I suggested that public voting records would be healthy for our democracy if the populace were comfortable revealing their voting records.  There is now a movement* and new web site for this called Who Voted? though they are not going as far as I am in advocating for revealing your actual choices.

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Want to Influence Financial Crisis Policy Debate?

One of the talks at Pop!Tech this year sparked intense emotions regardless of whether people agreed with the premise or not:

Vodpod videos no longer available.

To address these intense feelings and the demand for public discussion, a wiki was created, in which you are invited to join the discussion.  This forum was designed as “a place for a rich, lively, respectful and facts-based dialog on what’s necessary to address the serious economic challenges confronting America today.”  Hope to see you there.

Click here to go to the policy debate.

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I May Be a Credit Crunch “Denier” Too

As most of you already know, I am an anthropogenic global warming skeptic, aka “denier”.  Well, a new paper by the Federal Reserve Bank of Minneapolis has turned me into a credit crunch skeptic too.

The maintstream narrative on why we need a bailout is that credit is “frozen”. We can’t just let the financial sector sort itself out because it provides the credit “grease” that lubricates the rest of the economy.  The graphs in this paper make it pretty clear that the wheels of Main Street have plenty of grease. So it looks to me like the bailout is corporate welfare plain and simple.  It also means that Paulson and Bernanke talking about how bad things are to justify the bailout may have actually exacerbated any real recession by magnifying the psychological salience of the crisis.

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Financial Crisis Act III: The Flailing Response

As we saw in Act I and Act II, the current financial crisis was enabled by government interference in the housing and mortgage markets, then initiated by Wall Street’s willful blindness to systematic risk in the MBS market. Now we are observing the government’s flailing response.

First they bail out Bear Stearns.  Then they let Lehman go bankrupt.  But AIG gets a lifeline. On to a $700B bailout intended to purchase toxic MBSs. And most recently forcing several probably healthy banks to absorb $250B in government investment. Along the way, there were a bunch of changes to FDIC regulations and a see-sawing stock market.

You might be asking yourself, what the heck is going on here? The reason for all the flailing is that the government is attempting to implement a command and control solution to an extremely distributed problem.

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Financial Crisis Act II: Wall Street Sharks

When the bailout passed, I first thought this post was moot.  But then I reconsidered.  There’s still plenty of time to affect the implementation and several lessons to be learned.  Also, when I’m pissed off, it’s nice to know that I have a good reason.

In Act I, we saw how government meddling overheated the housing and mortgage markets. Now we’ll see how Wall Street took advantage of this opportunity and also apportion some blame to ourselves.

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Financial Crisis Act I: Government Meddling

Let me start by saying that the financial crisis is a very complex situation.  I read several economics blogs every day and quite a few academic papers every month.  My semi-professional opinion is that no economist even comes close to fully understanding the financial system, let alone the complete macroeconomy.  Luckily, I haven’t seen any of them delusional enough to assert that they do in a professional forum. So when you hear a talking head spouting off about the crisis, take what he says with a grain of salt (this includes me, of course). At best, he only sort of knows what he’s talking about.

Because of the complexity, I think we should be very careful to take baby steps.  Going off half-cocked is much more likely to make things worse than better.  I think we need to do three things.  First, we need to understand the underlying causes of the mortgage meltdown that kicked off the cascade (not because I think fixing the cause will solve the problem, but because it will help us avoid making things worse).  Second, we need to examine how the cascade was magnified so we can hopefully install some breaks going forward. Third, we need to agree on the outcomes we most want to prevent as a society (as individuals, I’m sure we all want to keep our houses, jobs, and savings).

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Who’s Curious About the Financial Crisis?

So as not to waste my expensive schooling, I still keep up with economics as a hobby.  I don’t expect other people to generally share this interest, but it occurred to me that the current financial crisis is an excellent example of what happens when a complex adaptive system experiences a shock.  Is anybody curious to have us discuss this topic?  If so, what is specifically interesting to you?  My short answer is to read everything by Arnold Kling at EconLog.  Of course, I have a lot more thoughts if anyone wants to hear them.

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National Popular Vote

Yesterday I blogged about personal vote verification.  At the group level, I recommend supporting the National Popular Vote.  While most people (70%) favor a popular vote for president, the U.S. Constitution calls for an electoral college system.  The National Popular Vote movement is extremely clever in that it doesn’t require a constitutional change:

Under the U.S. Constitution, the states have exclusive and plenary (complete) power to allocate their electoral votes, and may change their state laws concerning the awarding of their electoral votes at any time. Under the National Popular Vote bill, all of the state’s electoral votes would be awarded to the presidential candidate who receives the most popular votes in all 50 states and the District of Columbia. The bill would take effect only when enacted, in identical form, by states possessing a majority of the electoral votes—that is, enough electoral votes to elect a President (270 of 538).

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Crowdsourcing Election Verification

I take it as accepted fact at this point that the 2004 U.S. Presidential Election would have gone to John Kerry if everyone who attempted to vote that day were able to and all the votes were counted correctly.  Here’s the the Wikipedia entry on the subject and here’s a documentary to get you started.

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Stray Thought About the Singularity

Rafe’s post on complex systems defending themselves randomly collided in my mind with this post and paper by Robin Hanson on the Singularity to spur a stray thought. What if the Singularity were catalyzed by changes in organizations rather than intelligence or manufacturing?

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Dangerous Media, part 2

I have talked about some of the dangerous aspects of main stream media in the past.  Recently I was reading The Black Swan, in which the author argues that watching TV news, listening to news on the radio, and even reading newspapers actually makes you less informed (and dangerously so) than if you were to tune out completely.

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Notes from TED

Here are some notes that I took at TED 2008.  I have a bunch more on each of the speakers individually which I may post as time permits.  Let me know if you want me to expand any of the notes below into a full post.

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Dangerous Media

With the massacre at Virginia Tech weighing on everyone’s mind, we must look at the causal role that society, especially mass media (including the internet) plays in such tragedies. Much is discussed about the personal influences of mass-murderers, what “lead” them to do horrific deeds. Was it their parents who abused them, the fellow students who harassed them, the lover who scorned them, or some chemical/psychological imbalance that caused them to go off the deep end? What about the easy access to weapons? Clearly all of these factors and more can, and do contribute. But the secret sauce in such recipes for disaster is mass media.

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Eliminating Political Parties

This is a repost from my MySpace blog, but it really belongs here.

Why Political Parties Exist, Why they are Bad, and How to Eliminate Them

Voting blocs are an emergent property of representative democracies wherein each new voting issue carries with it an automatic right for each representative to vote. In other words, when votes are treated like a continually renewable resource, there becomes incentive for each representative to give away votes on issues they care less about in exchange from something of greater value. When that thing of greater value is money we call it corruption. When the thing of greater value is a promise of future support from an outside agency, we call it lobbying. And when groups of representatives agree on an ongoing basis to trade away votes in exchange for membership, we call it a party.

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