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Monday, April 26, 2010

Clinical Trials and Tribulations

The New York Times has an editorial about clinical trials of cancer treatments. This topic is not typically in the news, but it is important. They mainly report and endorse an institute of medicine study which argues that

...the testing operation is mired in bureaucracy and poorly coordinated. A typical trial must navigate past dozens of overlapping reviews by different boards and agencies that must approve the original concept for the trial and then the protocol that will govern how it is conducted before the investigators can start enrolling any patients.

The average time between developing the concept for a study and getting it started is about 2.5 years.

and proposes

It called for reducing and consolidating the number of cooperative groups, committees and reviews; increasing the money to support the trials; increasing the academic rewards to encourage researchers to run clinical trials; setting strict deadlines for each step in the process; and prioritizing the studies most likely to be successful.

My father has just received final approval for a phase 1 clinical cancer trial ! This was big news (he e-mailed me as soon as he got the news). I assure you that the testing operation is mired in bureacracy. I think this is a very important problem and it is important for the general public to get involved.

However, I can't help but suspect that the denounced fact that the concept must be approved before the protocol is considered is almost certainly the result of a past proposal in favor of "prioritizing the studies most likely to be successful."

Such prioritizing would be another step in addition to all existing steps. Yes it would be nice is if the most promising studies got priority. It is also nice that protocols are extremely carefully designed. Deciding which study is the most promising takes time. Setting up another committee is not a good way to consolidate and reduce bureacracy.

Saturday, April 24, 2010

Financial Times Huh ?

The Financial Times Lex team writes

"But the IMF puts the net fiscal cost of the last financial crisis to American taxpayers at 3.6 per cent of gross domestic product – some $513bn – as of end-2009."

Odd the US Treasury disagrees, or rather doesn't accept the end-2009 forecast as currently valid

WASHINGTON - Treasury Secretary Timothy Geithner is telling Congress that the administration believes the final cost of the government's heavily criticized financial bailout effort could be as low as $87 billion.

This is the whole bailout as indicated in the quoted text and the headline "Biggest losses due to government support of Fannie Mae, Freddie Mac."

I don't know exactly what the IMF as quoted (without a link) by The Financial Times claimed. I suppose the cost of the crisis would include the effects of the recession on tax revenues and maybe even the additional spending in the stimulus bill. It is also possible that the IMF predicts that the Federal Reserve Board with lose money and considers this a cost to taxpayers (as opposed to dollar holders via inflation or maybe inflation tax payers in the US and abroad are American taxpayers too I don't know). Anyway, there is no sign of increased inflation tax to put it very mildly.

I think the IMF was marking to market and ignoring the fact that risky assets are worth much more to the US Treasury than to the private sector.

Wait does that mean I'm saying Trillions of value would be created if the US Federal Government invested in common stock ? Yes of course I'm saying that. But but that would be socialism ?!? Yes. So ?

update: Oh noooo. I thought that the ap article ended when it was interrupted by an advertisement. Reading after the ad, I learn that Geithner's calculation includes the net cost gain of the Fed of $ 115 billion. The 87 billion is definitely including everything -- Fannie, Freddie, AIG, Generam Motors, Chyrstler and even homeowner mortgage relief.

The absurdly wrong $ 500 billion from the IMF was the estimate that the IMF got from the US Treasury based on the idea that assets are worth no more to the Treasury or the Fed than they are worth to the private sector.

The problem is that if you note that this assumption was off by over $ 400 billion, then you have to ask if maybe there are hundreds of billions (or trillions) just sitting on the sidewalk waiting to be picked up. They can't ask that question because the answer sounds like proof that socialism is more efficient than capitalism.

Friday, April 23, 2010

The A list

Clearly Republicans consider Alan Grayson to be the incarnation of the devil. They have recruited Senator Daniel Webster to run against him. I hope stochastic readers do remember "The Devil and Daniel Webster" .

Personally I have sympathy for the devil this time.

If Senator Daniel Webster can't do it, the Republicans will presumably recruit President Abraham Lincoln in 2012.
Why is the right wing noise machine so quiet on financial regulatory reform ?

Jonathan Chait and Kevin Drum are puzzled.

I have some thoughts

1) the proof that they are wrong is recent and dramatic.

Their claims about a) health care, b) climate change and c) taxes are disproven by data on a) health spending health and coverage b) global temperatures etc and c) Tax revenue changes following tax reforms. All of the proof is slow to accumulate, boring and not directly related to dramatic changes in ordinary people's experience. This time the proof that they are wrong was dramatic, recent and accutely painful. It's easy to convince people that global temperature hasn't risen (we aren't all over the globe). It's impossible to convince people that the deregulated financial system worked fine.

2a) Luntz. He is the intellectual leader of the Republican party and the conservative movement. He doesn't care about reality, policy or the issue being debated (he said "I'm a language person not a policy person" on TV). He finds out which claims convince focus groups with complete indifference as to whether they are true. The problem is that he also doesn't check if lies can be definitely proven to be lies. The claim that the resolution fund is a bailout fund is such a lie. Luntz let them down this time.

On health care reform they said "government takeover" again and again following his instructions to the letter (if my claim about what they said isn't what he instructed to the letter it's a typo). This time he handed them a pistol full of blanks.

2b) they showed their hand. People who follow politics knew that the Luntz talking point was "bailout bill." That includes the people writing the bill. They knew that their main goal had to be to make absolutely sure that the bill couldn't be described as a bailout bill. Hence the rules that the resolution authority must give nothing to shareholders and must fire top management. It is extremely bad strategy to criticize a bill before it is written. The bill was written to make it obvous that Luntzians are shameless liars.

3) there is a limit. Conservative policies have been a disaster, but none as dramatically as their approach to financial regulation (note I typed Republican and corrected it as Clinton signed the bills). Bankers who pay themselves huge bonuses and whine and complain after being rescued just can't be defended. The bankers are furious with Obama and Dodd and the claim that they are really on the same side is absurd. Sometimes reality is just to real to deny.

Thursday, April 22, 2010

"does Gallup read" ? Does Eric Boehlert ?

Eric Boehlert asks "does Gallup read its own polling results?"

He quotes the Gallup Polling agency on Gallup polls "President Barack Obama's 48.8% job approval average for his fifth quarter in office is down slightly from his prior quarter, and ranks among the lowest for elected presidents' fifth quarters since World War II."

(emphasis mine).

Then he writes

Because here is a sample of fifth quarter approval ratings for some presidents since World War II. After reading, tell me if you think Obama's current standing is in any way unusual or newsworthy:

Obama: 49%

Clinton: 52%

Reagan: 46%

Carter: 48%

Ford: 47%

Truman: 44%

Note that no one named "Ford" has ever been elected President of the USA. In fact no one named Ford has ever been elected vice President either. I don't think many people in the USA approve of my job performance either (or disapprove). I don't belong on that list and neither does Ford.

Among Presidents who were ever elected since WWII, the group discussed by Gallup, Obama's 5th quarter numbers are 8th of 11. That is technically among the 5 lowest. More importantly, the three with even lower ratings averaged 3% less than Obama. That is tiny compared to the variance across Presidents in 5th quarter average ratings.

If one limits attention to Presidents who were elected before first taking office, three Presidents are to be excluded -- Truman, Johnson and Bush Jr. They were re-elected but took office before winning a Presidential election (Supreme Court coups don't count).

That leaves 8 with Obama third from last and only 1% ahead of Carter. Only Reagan did more than 1.5% worse than Obama.

This is very newsworthy. It shows our countrymen are insane.

OK it shows I disagree with a plurality of my countryment, since I rate Obama first by a wide margin.

update: Now I will argue against Gallup. Their statement was true. Boehlert's counter argument was based on cherry picking. He ignored the word "elected" and decided that "among the lowest" doesn't mean "among the lowest." However, I can contest Gallup's interpretation of Gallup's data. This is not an argument that they didn't read their archives nor that their claim is "just dopey." I can't defend Boehlert, but I can argue with Gallup.

1973. Things changed during the Watergate hearings. People in the USA lost trust in a President and faith in the Presidency. They haven't regained such trust and give Presidents a much harder time than they did before 1973. So I split the sample. This is special pleading, but it is not just special pleading as the loss of trust was a cliché much promoted by Gallup among others.

OK so let's look at Presidents elected since 1973. Obama is 4th of 6 and only marginally behind Clinton. Since 1974, no President not named George Bush has had a 5th quarter average Gallup approval more than 3% higher than Obama's. Obama's ratings are not surprising. The loss of faith in the Presidency since 1973 is not new.

9/11 makes the case of George Bush Jr irrelevant (aside from the fact that he had not won a Presidential election yet). 1989 was not an average year either and the glow lasted well into 1990 and there was a rally round the flag effect before the US entered the Iraq Kuwait war.

Even more importantly the unemployment rate is 9.7%. It is very clear that approval of the President tracks the economy even if it is obvious that the trouble isn't the current President's fault. It isn't news that people don't approve of the President when the unemployment rate is over 9%.

But Boehlert is definitely totally wrong.

Wednesday, April 21, 2010

Why have financial sector profits increased ?

Kevin Drum looks at 4 possible explanations listed by James Crotty of the University of Massachussetts (who wrote specifically about commercial banks).

1. Rapid growth in the demand for financial products and services in the past quarter century.
2. Rising concentration in most major financial industries that makes what Schumpeter called “corespective” competition and the exercise of market power possible (thus raising the possibility that competition is not universally as intense as Volcker assumed).
3. Increased risk-taking among all the major financial market actors that has raised average profit rates.
4. Rapid financial innovation in over-the-counter derivatives that allows giant banks to create and trade complex products with high profit margins.

I'm not convinced that 3 is a source of profits separate from 1.

Consider 2 ways to bear more risk -- to increase leverage and to sell safe assets and buy riskier assets. I will discuss increasing leverage and then other ways of bearing more risk.

One way to increase leverage is to convert equity to debt (in an leverage buy out, a take over or a share repurchase). This reduces total measured profits as interest paid is counted as a cost and dividends paid aren't. Another way to increase leverage is to borrow and expand the scale of operations. Expanding the scale of operations is explanation 1. Increased leverage can't be an alternative or additional explanation of increased total financial sector profits.

How about shifting to more risky assets (OK and to risky liabilities too which means writing CDSs and is a very recent phenomenon) ? I consider bearing risk to be providing a financial service so if the banks bore more risk they provide more financial services. I will discuss financial services other than bearing risk below.

Assume efficient markets (a big assumption)

In that case there are two ways for the financial sector to bear more risk -- there is more total risk to bear or they leave less of it for the rest of the economy.

Now assume efficient risk sharing (a huge assumption I need complete markets too) Well with efficient risk sharing (a very big assumption) total risk is aggregate risk, the sum of risks. This doesn't seem to have increased, not even counting the latest recession. Certainly perceived aggregate risk decreased. Also there is much too little of it to justify financial sector profits.

But of course we don't have efficient risk sharing -- there are individual risks which average out and yet hurt individuals. The financial sector profits by helping us average such risks out. However, they don't have to bear risk to do this and, besides, that for sure is providing more financial services. Also it sure seems that everyone is bearing more individual risk. The shift from defined benefit pensions to 401(k) is a huge shift of risk to individuals. Assuming efficient markets, I just don't see how increased willingness to bear risk could increase total financial sector profits there has to be more undiversifiable risk to bear or less born by everyone else.

So much for the efficient markets hypothesis. Look it is already abandoned with the opaque instrument explanation 4. So let's assume that investors are irrational. Oh well then it is easy for their to be huge financial sector profits, a fool and his money are soon parted, and it is easy for financial sctor profits to change if other people become more irrational or become irrational in a way which makes it easier to take their money.

Let's imagine, just bear with me, that the average person thinks he is smarter than average. This means that the average investor might think he can beat the market. This means that people will trade actively and will pay fees. Also if professional traders are less irrational than amateur traders, they will make higher trading profits. Now I don't believe this so I am willing to stick to the explanation based on fees (counting bid ask spreads and such like). An increase in irrational over confidence or an increase in the convenience of trading can cause increased financial sector profits. This is really an explanation of the increased demand for financial services.

Some time ago, this friend of mine explained to me that it is possible for irrational investors to create risk and for rational traders to bear more risk because irrational investors are more numerous or more aggressive, but the root cause is the increased irrationality and not increased willingness to bear risk.

Tuesday, April 20, 2010

The Reich Stuff

Mitch McConnell lies a lot. It should be no surprise that, when he claimed that Robert Reich agreed with him, he was lying. However, the lie was much closer to the truth than I imagined.

I hand the mike over to Reich

I did write in one of my recent posts that the bill "preserves the possibility that the Fed could launch another bank bailout." That has nothing to do with the liquidation fund. It concerns a different provision of the Dodd bill that gives the Federal Reserve Board authority to open its discount window to healthy banks under its purview in order to protect taxpayers from loss during a major destabilizing event, like the popping of another large speculative bubble. Giving the Fed this authority is an open invitation to the biggest banks to create a destabilizing event in the first place, which is what Wall Street's giants did the last time when they created the giant speculative bubble in home mortgages and related derivatives.

I'd say Mr Reich has managed to reach an almost McConnellesque level of integrity. Look you can't give the Fed something which it already has. The Fed has pretty much unlimited authority to make loans in an emergency. Reich knows this, of course, that's why way back when he had some integrity he wrote "preserves" not "gives."

It is obvious that this is not a new power granted by the Dodd bill. The Fed used this authority in 2008. I mean it did loan quite a bit didn't it, and it loaned to Investment banks.

And what's this about "As long as the Fed can open its discount window only to the biggest Wall Street banks," ?!? What the hell is he typing about ? The only way it makes any sense is if Reich contrasts "the biggest Wall Street banks" with "smaller Wall Street banks:" The window is open for depositary institutions. I mean what the hell is a central bank discount window anyway ? The only thing that Reich might be thinking which isn't plainly absurd is that the window will not be open for small investment banks. Such as ? Last I heard, there were no investment banks left in the USA as both surviving investment banks reorganized themselves as bank holding companies so that they would have access to the Fed without a crisis.

Reich is denouncing the bill because it doesn't do something which he thinks it should do. Under current law, the Fed can do what it pleases in a crisis now. The bill doesn't put enough limits on the Fed. It surely removes no limits. There are no limits to remove.

Excuse my language but Robert Reich is like Jane Hamsher. He is ferociously attacking a bill because it doesn't go as far as he wants it to *and* he is endorsing Republican talking points to attack it. He did no harm this time, because McConnell is sloppy as well as dishonest and told a lie when the truth would have served his purposes. He just had to bring up Reich in the context of the bill as a whole not the liquidation fund.
McConnell has Officially Jumped the Shark

Brad DeLong is amazed that he went too far for Mark Halperin.

I see his Mark Halperin and raise him a Shaillah Murray plus a headline guy (the second is the really impressive one)

Finance bill's unlikely champion?
44 | After attacking bill as ticket to new taxpayer "bailouts," Sen. McConnell strikes different tone.

from the story

"After a week of attacking the pending legislation as a ticket to new taxpayer "bailouts," McConnell is striking a different tone. " OK the quotes around "bailouts" aren't purely exactly scare quotes as McConnell did use the word. However, it is very unusual to use quotation marks in the middle of a paraphrase and very very unusual to use them in a paraphrase in a headline. They are not just normal quotes but also scare quotes and if I were McConnell, I'd be scared.

McConnell has officially jumped the shark.

The Leopard doesn't lose its spots and Murray wrote "Unlike with the health-care reform bill, which McConnell sought to kill outright, the Republican leader is not calling for Democrats to return to the drawing board." This is true, the following sentence would also be true "Unlike last week, when he sought to kill the bill outright, this week McConnell is not calling for Democrats to return to the drawing board."

that would explain the headline of this Halperin article
"McConnell: "Back to the Drawing Board""

and how about this

Those articles reported that McConnell was refusing to consider the compromise which he is now considering. Murray gives it the old college try sending the day before yesterday's news down the memory hole. The memory hole is now known as "the google cache."

Of course I googled

I got

News results for mcconnell "drawing board" financial 44: McConnell softens tone on finance regulation bill‎ - 2 hours ago

And McConnell conceded, after being chastised by no less than President Obama in his ... leader is not calling for Democrats to return to the drawing board. ...
Washington Post - 66 related articles »

GOP leader: Take bank reform back to drawing board‎

Now that's quite a flip flop.
Partisan Give and Take on the $50 billion resolution trust fund

It is very simple. The Democrats propose that we take $50 billion from the banks. The Republicans say this means that the Democrats are planning to maybe in the future give money to banks. They are so partisan that they say taking is giving.

Orwell would be proud of his ability to forecast Republican rhetoric.
Hey we made the New York Times

“The competition was fierce, but collegial,” said Jonathan I. Lunine, a Cassini scientist and a professor of planetary science and physics at the University of Rome Tor Vergata.
Congratulations professor Lunine (and hey with a name like Jonathan where are you from ?).

Monday, April 19, 2010

Brad DeLong clears his throat. I throw a cow.

He wrote

The win-win benefits of trading money for money--where are they? It turns out that they are there. There are, actually, four:

1. Trading money now for money later: people who want to save now and spend later can make win-win trades with people who want to spend now and save later.
2. Risk: people who are unusually averse to risk in general can make win-win trades by trading off some of the risks that they are bearing to people who are unusually tolerant of risk in general.
3. Insurance: people who are holding a lot of one big risk can reduce the risk of catastrophic loss by paying a great many others to each take a small piece of that risk.
4. Information: people who have information that prices are going to rise can make win-win deals with people who have information that prices are going to fall--although here the win-win is not for the participants in the trade: for them it is zero-sum, and the winners are those others who observe the market price at which the trades occur.

I comment.

Ahem. Your fourth win-win "Information:" is not like the others. You redefined win-win to mean "socially desirable" and decide that, if a third party wins, it is a win-win. Also, as you understood when you were in high school and Grossman and Hart figured out when you were in college, information does not explain trading. If the only differences across people were that they had different information then trades couldn't be win-wins. If it were common knowledge that everyone is rational then trades couldn't occur. It is not unusual for someone in a type 4 trade to think they are in some other sort of trade. In *theory* there are no type 4 trades which are known to be type 4 trades. Obviously in reality there are such trades.

Now, obviously, trading volumes can not be explained by trades of types 1 through 3. Similarly the amount of CDSs written can't be explained that way, since it is vastly greater than the amount of assets on which CDSs were written.. I think actually that this is a highly relevant problem. I'm not sure that you can explain the existence synthetic CDOs without type 4 trading which is known to be type 4 trading.

Obviously not everyone is rational (who ever thought everyone was). In particular, there is a group which keeps writing papers which correspond to actual financial markets and keeps being ignored. I forget who they are, but they have created a subfield of Lake Wobegone finance in which everyone thinks they are relatively more informed than they are. Obviously this is what's normally happening -- traders think their trades are profitable, because they think the traders on the other side are irrational.

Goldman Sachs claim that people always know there is a short seller in "such trades" refers to synthetic CDOs not all CDOs. One case of someone with exposure to mortgage default risk who wants to shed it is that someone owns an RMBS and wants to insure it. That agent could just buy Treasuries and sell the RMBS to form a normal non synthetic CDO. I can imagine other people trying to shed a correlated risk -- construction firms and construction workers should have bought RMBS-CDSs to hedge against the bubble bursting -- but do you really think that ACA and the German bank thought their counterparties wore hard hats to work ? No they thought that their counterparties were irrational type 4 traders.

It is obvious that the synthetic CDO market was type 4 Wobegone finance. The Case-Shiller assets are better for hedging of all risk except specifically for RMBS default risk which can be completely hedged with only non-synthetic CDOs. Basically ACA had to know that their counterparties were someone like Paulson.

Now there was fraud all right. ACA didn't know that their counterparty was uhm helping them choose underlying assets for the synthetic CDO. However, if they thought they were selling insurance, then they were dangerous fools such that taking their money is a public service.

In fact, I think the fraud was a public service. If people who think they are smarter than average decide that maybe Goldman-Sachs is defrauding them, then there will be less speculation. I think that would be a very good thing. The reason is that I think type 4 trading reduces the valuable information in prices. The trades can't exist in Nash equilibrium. Therefore finance theorists assume that there are some irrational traders. Then finance theorists (except for DeLong et al) assume that the volume of irrational trade is exogenous. They conclude that anything which causes high trading volume causes prices to be closer to fundamental values. That's a pretty direct passage from an unjustified assumption to a conclusion. I think it is obvious that higher trading volume causes greater price volatility and that this volatility is always vastly greater than the volatility of fundamental values. So I think that, aside from not being an argument that type 4 trades are win-wins, your argument has it backwards. I think that real world type 4 trading reduces the information content of prices -- because it is fundamentally irrational. So less of it would be better.

Goldman Sachs has damaged its reputation as a fair broker with this scam. I think that is an excellent thing, because that reputation caused people to trade if they thought they were smarter than average. Fear of being cheated by Goldman Sachs makes up for irrational over confidence and will lead the economy towards where it would be if everyone were rational. To put it briefly, what's bad for Goldman Sachs is good for the world.
Paul Krugman gave a talk at the Levy Institute’s 19th annual Hyman P. Minsky Conference, held at the Ford Foundation. It includes

"As a commenter on my blog said, failure is not an option – it’s a CDS."

I am that commenter

Saturday, April 17, 2010

Robert Waldmann

Goldman Sachs accused of (Civil) Financial Arson.

I don't want to bore readers so I'll just mention, again, that this wouldn't have been possible if cash settlement CDS were not allowed. In all other cases it is not legal to insure against a risk that one doesn't bear. A simple law which says that Courts must consider all CDS contracts signed after May 1 2010 to be physical settlement CDS contracts if anyone seeks enforcement would eliminate the opportunity for the alleged fraud.

Thursday, April 15, 2010

Firedoglake what am I to think of Firedoglake.

It is an unusual site as I have donated money to Firedoglake. Also I am mad as hell at Jane Hamsher. Finally I have ordered Firedoglake to stop spamming my gmail inbox. They continue to spam me.

On the other hand I still read it, and think very highly of Tbogg, Attackerman and Emptywheel. I don't read the others except for Hamsher, who I consider to be an absurd person, and Jon Walker (see below). On the other other hand, I will *not* register there. So I will comment here.

Jon Walker writes about a poll. The poll is interesting. Walker ignores massive amounts of closely related polling data and proposes an non-sensical political strategy.

He notes that most US adults think that the amount they pay in taxes is fair. This is not a new result, although the latest poll shows a larger than usual majority and maybe Walker has somehow managed to avoid noticing this fact until now.

He concludes

"I know Republicans will run on taxes, because that is just what Republicans are, but to capitalize on it, they will probably need to spin tax cuts as somehow the best way to create jobs. Democrats, on the other hand, would be wise to depict Republicans’ inevitable call for tax cuts as a fiscally reckless move, unfit for the current economic problems, and likely to balloon the federal deficit even farther by helping the rich pay less in taxes. Either way, it is possible this election might be dominated by more serious concerns."

Holy mother courage. Did you get that ? Walker suggests that the Democrats make the really smart strategic move of equating "tax cuts" and "helping the rich pay less in taxes." His idea is that the Democrats should equate tax cuts and tax cuts for the rich. Well that worked for Reagan, but, see he was pro tax cuts. The only way the Republican party survives is by tricking people into thinking that tax cuts and tax cuts for the rich are the same thing.

Even if they thought it was true, why the hell should Democrats admit that tax cuts are "a fiscally reckless move, unfit for the current economic problems," after enacting a huge tax cut ? Couldn't they just save time by saying "The stimulus bill was largely 'a fiscally reckless move, unfit for the current economic problems'."
Yes that's the plan. They have to run on how the deficit is too high, because the deficit has nothing to do with them and their fiscal stimulus.

On policy, notice how Walker let's the best be the enemy of the good. I'm sure he thinks the economy could use a bit more fiscal stimulus right now. The unemployment rate is 9.7% and the yield curve on Treasury bills, notes and bonds ranges from about zero all the way up to 4%. However, he thinks a temporary spending increase is a better stimulus than a temporary tax cut. Therefore he argues against all tax cuts logically implying opposition to temporary tax cuts for the non rich.
I think that he has a tick such that whenever he has a nagging suspicion that "the best is the enemy of the good" might have something to do with what he's saying, he concludes "damn straight and that's why I'm for the best which is better than the good so I revile reject and denounce the good."

On politics, he might consider a second poll, and a third and dozens of polls which all show the same thing. US adults do not have a strong sense that the taxes they pay are unfair. However, a solid majority of US adults think that taxes that other people pay are unfair and, in particular, that the rich and corporations pay too little.

I know the data are hard to find. I went all the way over to and clicked on the word "taxes" now search for
"Gallup Poll. April 6-9"

"As I read off some different groups, please tell me if you think they are paying their fair share in federal taxes, paying too much, or paying too little. How about [see below]?"

Fair Share Too Much Too Little Unsure
% % % %
"Lower-income people"
Fair Share Too Much Too Little Unsure
4/6-9/09 41 39 16 4
4/6-9/08 32 51 13 4
4/2-5/07 34 45 17 4
4/10-13/06 36 46 12 6
4/4-7/05 36 51 10 3
4/5-8/04 35 49 12 4
4/03 36 49 12 3
4/99 34 51 11 4
4/96 40 48 9 3
4/94 43 42 12 3
3/93 37 51 9 3
3/92 32 57 8 3

"Middle-income people"
Fair Share Too Much Too Little Unsure
4/6-9/09 50 43 5 2
4/6-9/08 50 43 4 3
4/2-5/07 44 47 7 2
4/10-13/06 50 43 5 3
4/4-7/05 52 41 4 3
4/5-8/04 47 46 4 3
4/03 51 40 7 2
4/99 35 59 4 2
4/96 34 58 5 3
4/94 39 57 3 1
3/93 39 54 5 2
3/92 36 57 5 2

"Upper-income people"
Fair Share Too Much Too Little Unsure
4/6-9/09 23 13 60 3
4/6-9/08 24 9 63 4
4/2-5/07 21 9 66 4
4/10-13/06 21 8 67 4
4/4-7/05 22 7 68 3
4/5-8/04 24 9 63 4
4/03 24 10 63 3
4/99 19 10 66 5
4/96 19 9 68 4
4/94 20 10 68 2
3/93 16 5 77 2
3/92 16 4 77 3

Fair Share Too Much Too Little Unsure
4/6-9/09 18 8 67 6
4/6-9/08 15 6 73 6
4/2-5/07 19 5 71 5
4/10-13/06 18 5 70 7
4/4-7/05 21 4 69 6
4/5-8/04 19 5 69 7

So yes indeed, it sure is time for the Democrats to argue that taxes are fine the way they are. What the hell can Democrats do with people who want to shift income from the rich to the poor.

I have a familiar sense of frustration. Walker knows a lot about health care financing and the health care reform bills. He argued that the public option was vitally vitally important. He didn't ignore the arguments that other aspects of the bill were even more important. He just uhm I don't know how he gets to his conclusions. They just appear at some point.

Wednesday, April 14, 2010

I think Kevin Drum underestimates the horror of credit rating agencies.

He wrote

banks came to them with a swelling array of rocket-science securities and paid them to provide a rating. Because these structured securities were complex, the fees for figuring out the rating were high, and it turned into a lucrative source of business.

The conflict of interest is obvious: banks wanted high ratings and the agencies wanted lots of deal flow. That meant they were motivated to push the envelope in order to insure a steady stream of business. After all, if you get a little too picky about things, clients will just head across the street to see if a different agency might treat them a little better.

If only the ratings agencies had waited for financial firms to come through their doors bearing rocket science securities the conflict would have been less severe.

The ratings agencies decided to consult too (remember how well that worked out for Arthur D Anderson). So they charged large fees to help financial firms design financial instruments . This was a new practice and the blatant conflict of interest was obvious. It was so obvious that reckless SEC head Chris Cox was alarmed (you know the guy who decided to relax capital controls on investment banks). Nothing was done because of our friend Chuck Schumer (see your post below).

This created a huge problem totally aside from conflict of interest -- that is a problem which would have been huge if all ratings agency employees and shareholders were saints who were indifferent to money. Assume it was so. Even under that assumption, the agencies used the same models to design assets which they thought were safe and to evaluate whether those assets were safe.

These models turned out to be very bad approximations to reality. That happens (I'm an economist and boy do I know that). However, there was no second opinion. If sincere financiers had designed securities whose riskiness was then assessed by ratings agencies, there would have been two groups of modelers and a better chance that they wouldn't both be grossly wrong in the same direction.

On the conflict of interest, I don't think it is rating shopping. That would be easy to solve. Just define major ratings agency and say that if one wishes to claim that an instrument has been rated then one must have it rated by all of them (I think you can even name the major ratings agencies without it being a bill of attainder since this is good for them). No more shopping.

Getting a secret rating from just one would not be a tempting proposition ("it doesn't work if you keep it a secret --your not supposed to keep it a secret" -- Dr Strangelove).

However, I think the problem mostly remains. If all three of the ratings agencies had been tougher on new rocket science assets, the whole huge industry would never have existed and all of them would have been poorer. A reasonable rule would be that no asset gets AAA unless an asset which is identical except for maturity dates paid on time and in full in each of the past 3 recessions -- that is no AAA for new stuff for decades -- no exceptions. Obviously with or without agency shopping, they wouldn't have done that.
So I don't really have a solution.

OK I have an idea. A big bank (Goldman Sachs) writes a fixed premium CDS. These aren't auctioned. GS says we will sell you a CDS on this asset for this price. They have good reason to do research obviously -- their money is where their mouth is. Regulations refer to the price of the CDS not to the rating. I mean the requirement for transparent CDS pricing with a requirement that CDS are offered to the public at a price (like an IPO) could make ratings agencies obsolete. I think it would work in Nash equilibrium.
Diplomacy Desperately Needed

47 nations agreed on measures to reduce the risk that terrorists might get their hands on highly enriched Uranium. So what that's easy. A really difficult task would be to end the feud, now approaching open battle, between the Washington Post News and Opinion pages. headlines


On world stage, Obama at eas as seminar leader

President secures 47 nation pact


Obama shows some of the world's greatest dictators how to circumvent a free press.

Obama snubs an ally

The News articles report that the 47 nation agreement really only includes firm commitments from Ukraine, Mexico, Chile, Kazakhstan, Vietnam and Canada
which "agreed to dispose of hundreds of pounds of highly enriched uranium used in civilian facilities." Ho hum. US and Vietnam in perfect agreement. Nothing to see here.

They also include exstatic praise (I mean mancrush level) from diplomats from the UK (special relationship and all that) and France (Zut Alors !). Oh and even more star struck praise from a European diplomat who demanded anonymity (presumably to avoid alarming his or her spouse).

I forgot to mention "Chinese Vice Foreign Minister Cui Tiankai, speaking to reporters in Washington on Tuesday night, said that while China prefers a diplomatic solution, it is "open to ideas" on how to deal with Iran."

OK he's just the vice foreign minister, but this is a bit of a change.

On the other hand the pundits note that Obama did not invite the press to attend the actual international negotiation (since no one ever has before I don't see why that is controversial) and that the President of Georgia wasn't one of the 12 or 15 heads of state with whom Obama talked one to one (the two news articles have different numbers). What a slacker only 12 (or 15).

Is there any way to get Washington Post opinion writers to stop ignoring the reporters -- oh and reality, it would be nice if they cared about reality.
Still baby steps.

I propose a collection so they can subscribe to the Washington Post.

Tuesday, April 13, 2010

Bruce Webb has left a new comment on your post "Robert's List of Reasonable and Reasonably Honest ...":

Oh boy. Of the few on that list with whom I have had one on one interactions I would have to say they were agreeable in much the same way opposing counsel in a civil or even criminal trial are agreeable. And in most ways willing to fight pretty fair.

As long as you understand that many of them have their own agenda, as of course do I.

The problem with the whole concept of 'honest conservatism' is inherent in its origins. The philosophy and associated economics was formed in a time and place deeply hostile to the whole concept of democratic majoritarianism, which was associated (often rightly) with ideas about communitarianism and utilitarianism.

In the middle half of the twentieth century we saw the advance of the concept of one-man, one vote to the point that it seemed impossible to openly oppose. Which led 'honest Conservatives' to have to resort to tying themselves into rhetorical knot trying to advance a theory that had its roots in a non-majoritarian mileau.

In retrospect Supply Side came to be regarded as a failure not because it didn't work, because I would argue it worked splendidly from a traditional Conservative perspective, it maintained and intensified political and economic control in the hands of those that matter, primarily the controllers of capital and the managers of traditional societal structures. The massive concentration of wealth that came during and after the Reagan Revolution would not have shocked Pitt the Elder, or the Duke of Wellington while he was Prime Minister, or dare I say William McKinley, the acquisition and conservation of economic and political wealth was kind of the point.

Modern Conservatism seems to have found its own solution to existing in a political system fundamentally based on democratic majoritarianism, they simply brought into coalition people from traditions far removed from 19th century conservatism: populism, nativism, evangelical religions and tried to build majorities from the back end. But leaving their economists in a bind, because twist as they might there is nothing egalitarian in conservative economics, at best they can make gestures at a wholly theoretical "equality of opportunity", that never has existed, and to which when attempts are made to put it into place (affirmative action, contract set-asides), they react violently.

Which would lead me to add one name to your list. Though I consider him a total loon, there is no doubt that Bryan Caplan stumbled on the only possible solution to this Conservative conundrum: simply rule that people who don't agree with conservative economic theory are irrational and take away their vote. Simple, elegant, but really hard to sell to a democratic majority.

Monday, April 12, 2010

Changing the Subject

In the past 2 days I've noticed something very strange on the web 3 times (I can't find the third example now. It was written years ago by Orin Kerr and I happened to read it today).

update: found it. More updating below.

In each case a conservative raises an issue, a non-conservative shows that the conservatives argument is nonsense and a conservative objects that the non-conservatives insisted that the issue to be discussed was the one raised by the conservative.

1. Newt Gingrich and Sean Hannity lie about the text of the Obama administration's new nuclear posture. Jon Stewert presents proof. Mark Kleiman links to Stewert. A commenter writes

Thomas says:
April 10, 2010 at 7:52 am
Mark, you’re just confused. You and your comedian friend pretend that there’s no possible way to reasonably disagree with the changes in policy that Obama has made,

This is nonsense. Stewert didn't say anything about what the policy should be. He just noted that Gingrich and Hannity lied about what it was. Thomas insists that the fact that a lie was cablecast by the nations number one all news network is a matter of no interest to anyone -- that the real issue, the only possible real issue is Obama's nuclear policy and claims that to note a lie is to claim that no reasonable person could agree with the liars policy recommendation.

John Holbo (via Brad DeLong) comments on a debate among libertarians starting with a quote of Will Wilkinson

"1880’s America was a society in which well more than half the population was systematically and often brutally denied basic liberty rights. If that’s golden, I’d hate to see bronze."

Arnold Kling responded, in defense of Hornberger, making the same damn obvious mistake... a third time.... "[I]t’s a swindle to suggest that if we had a libertarian polity we would be back in the days of Jim Crow or women’s subservience...." To which Will [Wilkinson] makes the obvious rejoinder. The notion that the way things would be in an ideal libertarian polity constitutes some sort of defense of how things actually were in 1880 is... well, not to be made sense of.

Brad comments on the debate. Commenter Charlie has a question for Brad

" Does everyone that is concerned about higher taxes have to preface their commentary with an apology for past injustice?"

Huh. A group of people each of whom is concerned about higher taxes decided to discuss the USA in 1880 and somehow Charlie is convinced that someone made them do it. Holbo and DeLong obviously didn't choose that topic. No one forced the libertarians to discuss the past -- they just decided to discuss it.

Now an older example from a much more eminent source. Orin Kerr discussed Michael Mukassey's testimony during his confirmation hearings.

Now changing the subject is a very traditional debating trick. However, angrily asserting that someone else insists on discussing the original topic which they are only discussing in response to a third person (well the original person in one case) is very odd.

I assume that non-conservatives do this too (examples in comments please) and that people have been doing this for a long time (again examples please). I'm sure the cases aren't proof that the weight of evidence that they are totally wrong about everything has recently driven conservatives totally crazy.

update: Orin Kerr. The original topic was attorney general nominee Michael Mukassey's testimony at his confirmation hearing. The question would appear to be whether the senate should confirm him or, perhaps, what is a good attorney general.

At one point in a debate, Kerr demanded judicial restraint writing
"Maybe I'm missing something, but I thought the point of the thread is about the "strictly legal" question."

Very odd. The question of who is fit to serve in the cabinet is a political question according to the narrowest possible definition of the word. Judges should only discuss what the law says and not what it does say, however, Senators are not judges. They should not defer to the elected branches and should legislate from the legislature.

Kerr asserts that a question asked by a Senator is a strictly legal question if the witness chooses to interpret it that way. The witness was being considered for a political position where his legitimate role includes advising the Senate on possible legislative reform. If he thought there was any ambiguity in the law, given where he was and the job he sought, he should have advised the Senate to clarify the matter. Notably the attorney general is not supposed to meddle in the application of the law. This is a tradition not a provision of the constitution, but it is important. His proper role is administering, setting priorities and contributing to the debate about legislature. By tradition he is supposed to leave strictly legal issues to career prosecutors.

The point is that he wants to change the subject from whether Mukasey's testimony demonstrated that he is a depraved monster unfit to serve any role in the development of policy to whether the law as written clearly defines waterboarding as torture (as by the way, he now concedes). So Kerr accused Michael Drake of changing the subject for noting, in passing, that Kerr had changed the subject.

update II: Silly me. Mukasey's conduct would not have been acceptable in a judge either. Judges are not allowed to ignore precedent and merely note that a law isn't totally unambiguous. Stare decisis and all that. If the law has always and invariably been interpreted one way, a judge must argue that the interpretation is definitely inconsistent with the law or the constitution or accept it. US courts have never held that water boarding is not torture. US courts have convicted people of torture because they water boarded. One of those people was put to death.

Unless a judge is willing to claim that the definition of torture is absolutely inconsistent with the claim that waterboarding is torture can that judge properly overturn decades of precedent.

Of course Kerr understands perfectly well that, according to US law, water boarding is torture (the recent post quotes him writing just that). In 2007, He chose to lie to get to the conclusion he wanted.

And he was, until recently, on my very short list of reasonable and reasonably honest conservatives.

update II.

There are some wonderful cooment threads over at Crooked Timber. I will nutpick a stupid comment because it is a fourth example of the phenomenon I discuss in this post.

Michael Berube quotes Meghan McArdle suggesting that the low number of conservative academics is due to subtle discrimination. She (not he she) decided to make an analogy

I doubt many bank hiring committees in the fifties got together and voted not to hire any negro bank managers. Yet, somehow, they didn’t hire any negro bank managers.

Why not? Because things like social networks, subtle bias, and tacit norms about what constituted the boundaries of acceptable traits in bank managers did all the work for them. And I doubt they got many black applicants, because after all, why on earth would you bother? Better to try to start a small business, or get a job as a Pullman porter, where you had a realistic shot at making a decent income.

Berube suggests that the analogy is not exact since in the "fifties" (I use quotation marks because I am quoting a word that McArdle freely chose to type -- they are not "scare quotes") explicit racial discrimination was legal and common.

Commenter bjk writes

bjk 04.13.10 at 8:39 pm

Why is the left always refighting the civil rights movement? That was fifty years ago. You don’t get any credit for being on the right side fifty years later.


Why did the leftist McArdle decide to bring up race relations 50 to 60 years ago ? Or is he or she asking why Berube changed the subject from race relations 50 to 60 years ago to race relations 50 to 60 years ago ?

It's weird.

Sunday, April 11, 2010

Evidently Jerry Fodor and Massimo Piattelli-Palmarini have written a very silly book which contains the following key passage

" adaptationist theories ... are unable ... to do what they purport to do: explain the distribution of phenotypic traits in a population as a function of its history of selection for fitness."

I think blams for this unfortunate event must be assigned to Stephen Jay Gould and Richard Lewontin.

This comment will be long and confused and I am ignorant of evolutionary biology and of philosophy of science. In my ignorance I believe that Lewontin is one of the worlds top two evolutionary biologists (the other being Maynard Smith and I do know that Lewontin calls himself a population biologist (calls should be called if he is deceased)).

I think that Gould and Lewontin set up a straw man called "adaptationism". I am not convinced that anyone has ever been an adaptationist in the sense that they used the word. In short, I think they did exactly what Fodor and Piattelli-Palmarini did. As far as I can tell (in my ignorance) Fodor and Piattelli Palmarini are faithful popularizers of Gould and Lewontin.

I consider

" adaptationist theories ... are unable ... to do what they purport to do: explain the distribution of phenotypic traits in a population as a function of its history of selection for fitness."

Surely no one has ever made any such claim.

Consider the thought experiment.

I ask an adaptationist (as defined above) why I can't travel backwards in time ?

The adaptationist must think up a selective disadvantage of having precognition or abandone adaptationism.

The answer "because time travel is impossible so no organism to be selected has ever had the time travelling allele" would amount to "I hereby abjure reject and abandone adaptationism."

I am 100% sure that no person has ever corresponded to the adaptationist in my story.

Fodor and Piattelli Palmarini must present a citation of a self declared adaptationist for their claim about what adaptationsists claim. I believe that they can't due this, because no such adaptationists are fictional creations invented by Gould and Lewontin.

Saturday, April 10, 2010

A hint to Andrew Golis and Chris Lehman of "Yahoo News" -- there is this useful site called

You won't make total fools of yourselves if you use it.

Via Matt Yglesias I note that Andrew Golis and Chris Lehman to kick off their new Yahoo News venture with lame efforts at even-handedness kind of annoyed me:

Media Matters for America and Think Progress are dedicated to calling out bias in the media on popular websites with devoted followings. [...] And the paradox, of course, is that these new referees who once cried “bias!” are often far more biased than those they critiqued. All of which makes it next to impossible to figure out when their critique of the mainstream media is actually right.

Yglesias works for ThinProgress and handled that one. He also notes that MediaMatters does not cry "bias" much.

In fact almost all mediamatters posts make specific documented claims. Basically they not a contradiction between two assertions in the media. It is always clear that the author considers the older assertion to be the truth, but this is rarely stated -- rather it is the natural inference because the older claim is specific and mentions sources.

I have noticed the pattern that the newer claim is invariably something conservatives and Republicans would like us to believe. I infer that people who work there want to convince people that claims which might lead them to vote for Republicans are false. However this is an inference not an assertion that the media are biased if favor of Republicans. Off the top of my head, I did not recall any assertion that any news source is biased. Indeed I don't recall the posts asserting that the old claim proves that the new claim is false. It's just that the older statement is always detailed and well sourced so anyone who thinks that any facts can ever be determined via any medium is convinved that it is true.

Only from which of the reported statements is clearly true can one deduce that MediaMatters is left of center. Yet Golis and Lehman assert that mediamatters clearly asserts that the media are biased right and the truth of their claims is almost impossible to assess. They have it exactly backwards.

Since I am neither Andrew Golis nor Chris Lehman, but rather aim to be a serious amateur blogger, "off the top of my head" isn't good enough for me so I googled the word bias at

You will note that, like Golis and Lehman, many people who write at object to claims about bias. Four of the first 10 hits generally criticize claims that the media is biased (that is are just like Golis and Lehman's statement except that, as far as I checked, they criticize the claim when it is actually made and not when they guessed that it was made without checking). One more has "bias" in scare quotes, one is the title of the CNN program under discussion "no Bias, no Bull" one discusses "anit-gay bias" two quote others alleging media bias (one is a Republican senator accusing Fox of bias and one is a journalist accusing journalists of anti-Clinton bias).


OK so the top of my head was *not* good enough. The link leads to a pdf with the logos of Move on and the Center for American Progress. Still it seems to me that mediamatters endorsed the claim.

OK so they slipped up. However, no one who googled would claim that they mainly assert bias. They mainly make specific claims of fact based on solid sources.

Dear yahoo news Use the google.
Robert's List of Reasonable and Reasonably Honest Conservatives Update

Recall to avoid offending too many people, I restricted my list to bloggers, pundits and politicians. I count people who call themselves libertarians. I don't to list personal friends (friends -- I like to keep them).

Greg Mankiw
Tyler Cowen
Alex Tabbarock
Jim Henley
Orin Kerr
Bruce Bartlett
Eugene Volokh (not reasonable re appropriate punishment of an Iranian murderer)
David Brooks (not always honest)
Reihan Salaam
Arnold Kling (not really reasonable but very honest)
Richard Lugar
Charles Hagel
Olympia Snowe (not really conservative or honest but I'm getting desperate)
Mark McClellan
Scott McClellan (not really et. but gets extra points for near honesty in a press secretary)
Richard Clarke (oh you don't think he's conservative -- read "Against all Enemies")

Andrew Samwick
Julian Sanchez
Daniel Larison.

Friday, April 09, 2010

Noah Millman wrote an excellent essay which asks "Who closed the conservative mind"

However, he doesn't even consider the obvious candidate.

Ronald Reagan.

Ronald Reagan was very ignorant and confidently made claims (say about where we were on the Laffer curve) which have since been decisively refuted by the evidence (and in fact were inconsistent with evidence available when he first made them). However, one can not be considered a conservative if one criticizes Ronald Reagan. I think this means that all open minded people are excluded from the conservative movement.

In particular, the celebration of ignorance and the contempt for reality ,which are clearly common in the conservative movement, are directly and very very explicitly justified by references to Reagan. Consider Norman Podhoretz. He says he likes to torment conservative critics of Palin by noting that their criticisms of Palin sould just like their criticisms of Reagan in 1980. This is held to be proof that the criticisms are invalid.

No movement which places someone above criticism can be open minded. Nothing could be less plausibile than the idea that open mindedness might survive in a movement which places someone who was completely fact resistent above criticism.

Thursday, April 08, 2010

For all I know, Mr Hendrix sold his soul to the devil. If so, at least he didn't get cheated.

Coherent ? Huh ?!?!

Matthew Yglesias writes of the US left in contrast to the US right

"I think it would actually be beyond the intellectual powers of any one person to work all the sacred cows of all the different factions of the movement into a seamless and coherent whole."

I comment

Evidently, you think the US conservative world view is a seemless and coherent whole. Odd, coherent isn't the word that comes to my mind (or Sanchez's).

I am quite serious. It seems to me that the different ideologies of US conservatives are radically inconsistent, while disagreements on the left are comprehensible as different priorities with agreement on what things are good and disagreement on which is most important.

On the right, we have tea partiers who denounce Obama as the bankers' friend and the bankers. Religious fundamentalists and Randians. An Openent of government handouts who received on average $200,000 in farm subsidies per year. People who fear for our freedoms and think the constitution is under threat and think that Bush had the authority to lock Padilla up indefinitely without trial. People who are upset that everything sacred is profaned, all that is solid melts into air and who love creative destruction.

I'd say that US conservatism is completely incoherent. There is no logical way that one can be a pro-business populist or a pro-market traditionalist or a hawk oposed to government spending.

I think that once upon a time there was a coherent link between the radically different US conservative ideologies -- anti communism. The Communists were atheist anti business anti market super-power adversaries. The US right defined itself in opposition to them. Now they are mostly Chinese atheist pro-business financers of our budget deficit.

I'd say the loopiness of the US right is based on the extreme congnitive dissonance of building one's world view on opposition to something which no longer exists.

Wednesday, April 07, 2010

Below I mentioned that, since I am not in the USA, the fifth amendment doesn't protect me from being shot on site by employees of the US government (or by anything else). Similarly it doesn't protect me from arbitrary arrest or, as they call it here, sequestro di persone (kidnapping). This is not a theoretical issue as CIA employees grabbed someone in Italy and took him to Egypt where he was imprissoned and tortured.

Note that the Italian Republic didn't stop them or even inconvenience them much (except now they have to stay out of Europe where there is a warrant out for their arrest).

Similarly, neither FISA nor the 4th amendment offers me much in the way of protection from having my phone calls, e-mails and blog posts intercepted. Calls to the USA are only not protected because of Bush's criminal program which has now been legalized, but calls to anywhere else were and are totally fair game.

This is not a hypothetical risk. There is an NSA listening station in Italy. The NSA absolutely can listen in. No one is stopping them.

Now, you might ask if I am protected by Italian law. Yes, of course, just as I am protected by Santa Claus. The NSA's activities are clearly forbidden by Italian law, and Santa Claus doesn't like them either. I put more trust in Santa than in the Italian government (which pays my salary by the way).

So what do Italians say about the NSA listening station ? They say "I think it has something to do with air traffic control." And so we see we are all one under the skin. I remember back in the 70s riding in a car with my family (to Sugarloaf mountain no not the one near Rio). I saw a huge expanse of geodesic domes and asked my dad what it was. He said "I think it has something to do with air traffic control." My father has extraordinary intellectual integrity and some months (or years?) later he brought that day's copy of The Washington Post over to me and said "you know that thing I said had something to do with air traffic control ? Well it didn't". There was a large article which explained that that was the NSA's main listening station which had been secret until then. Somewhat later I read about how congress had passed a law called FISA.
Now I understand

Below I comment in Spencer Ackerman's thoughts on the fifth amendment. Seemed a bit "messed up" to me. Now I understand. He has a post on opium which concludes "Everyone take a deep breath."
Does anyone actually read the US Constitution ?

Spencer Ackerman pretends to quote it with this headline

"No American Citizen Can Be Deprived Of Life, Liberty Or Property Without Due Process Of Law"

He comments "But if citizenship means anything, it means that a citizen can’t be killed because the government uses secret evidence to say he or she is an intolerable threat."

If the plain text of the constitution means anything, this is equally true of non citizens. Ackerman is pretending to quote the fifth amendment.

Amendment 5
No person shall be held to answer for a capital, or otherwise infamous crime,
unless on a presentment or indictment of a Grand Jury, except in cases arising
in the land or naval forces, or in the Militia, when in actual service in time
of War or public danger; nor shall any person be subject for the same offense
to be twice put in jeopardy of life or limb; nor shall be compelled in any
criminal case to be a witness against himself, nor be deprived of life,
liberty, or property, without due process of law
; nor shall private property be
taken for public use, without just compensation.

which implies "No person shall be ... deprived of life ... without due process of law"

The right to not be killed without a trial is guaranteed to non citizens too. I mean which word in "no person" didn't Mr Ackerman understand ?

What gave him the idea that the bill of rights lists rights of US citizens ? Has he ever read the document ?


The US Supreme court clearly agrees that Obama has the authority to order the US military to try to kill Osama Bin Laden. How can this be reconciled with the text of the fifth amendment (my wife who is Italian asks) ? It is very simple. Based on nothing at all and certainly nothing in the text of the constitution, the Supreme Court has decided that the US Constitution only has force within the USA. Hence the fierce debate over whether Guantanamo is part of the USA. Thus the US government is perfectly free to kill people, including US citizens, abroad. Living in Italy, I don't like this (and if someone tells me that The Italian Constitution and the Italian Republic will protect me, I will laugh in their face and say no problem, the tooth fairy has already guaranteed my safety).

The only relevant point is that Obama's order to kill Anwar al-Awlaki on sight raises no new constitutional issues. US citizenship is totally irrelevant to the question of whether the President has the authority to off you. According to the nonsensical bad faith reading by the Supreme court, the only thing that matters is where you are.

Arrivederci in the US government hunting preserve.

So does the 5th amendment ban war ? In war people are killed and others are taken prisoner without due process of law. To me the answer is clear -- the 5th amendment obviously forbids war.

Now some might note that the constitution explicitly grants congress the authority
"To declare War, grant Letters of Marque and Reprisal, and make Rules concerning
Captures on Land and Water;"

Furthermore it declares that
"The President shall be Commander in Chief of the Army and Navy of the United
States, and of the Militia of the several States, when called into the actual
Service of the United States;"

Also it declares that "No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, But shall be delivered up on Claim of the Party to whom such Service or Labour may be due."


"No capitation, or other direct, Tax shall be laid, unless in Proportion to the
Census or Enumeration herein before directed to be taken."

The last two provisions were repealed, cancelled, nullified and rendered mere ink on parchment by the thirteenth and sixteenth amendments respectively. Similarly, anyone with basic reading comprehension must agree that the provisions which formerly authorized the US to make war were repealed, cancelled, nullified and rendered mere ink on parchment when the fifth amendment was ratified.

Now I am not arguing that the US government should not have the authority to make war. I only note that it clearly does not have the authority to make war. I propose a 29th amendment partially repealing the fifth amendment (oh and repealing the 2nd and tenth while we're at it).

However, the text of the main body of the constitution is clearly not satisfactory for such a 29th amendment. It doesn't put any limit on public violence in time of war. I think it is necessary to make it clear that, in declaring war, congress establishes a war zone where normal restrictions are suspended. This will give constitutional standing to safe havens for our adversaries, so, I would expect the zone to be changed, typically expanded during the war. However, I think each expansion should require a bill in congress.
Matthew Yglesias linked to an abstract. I read it and lost my cool. Abstract and rant below


In Praise of Realism (and Against 'Nonsense' Jurisprudence)

Brian Leiter
University of Chicago Law School

January 23, 2010

U of Texas Law, Public Law Research Paper No. 138

(This is a significantly revised version of a paper first posted in March 2008.)

Ronald Dworkin describes an approach to how courts should decide cases that he associates with Judge Richard Posner as a "Chicago School of anti-theoretical, no-nonsense jurisprudence." Since Professor Dworkin takes his own view of adjudication to be diametrically opposed to that of the Chicago School, it might seem fair, then, to describe Dworkin's own theory as an instance of pro-theoretical, nonsense jurisprudence. That characterization is not one, needless to say, that Professor Dworkin welcomes. Dworkin describes his preferred approach to jurisprudential questions, to be sure, as theoretical, in opposition to what he calls the practical orientation of the Chicago School. But while there is a real dispute between Dworkin and Posner, it is not one illuminated by the contrast between theory and practice. It is, rather a dispute about the kind of theory that is relevant and illuminating when it comes to law and adjudication. And the fault line marked by this dispute is profound indeed, one that extends far beyond Dworkin and Posner and has a venerable and ancient history that includes Thucydides and Plato, Nietzsche and Kant, Marx and Hegel, up to Geuss and Rawls in the present. I shall describe it, instead, as a dispute between Moralists and Realists, between those whose starting point is a theory of how things (morally) ought to be versus those who begin with a theory of how things really are. The essay endeavors to show that our contemporaries, Ronald Dworkin and Richard Posner, are reenacting a version of the dispute between the paradigmatic philosophical moralist Plato and the paradigmatic historical realist Thucydides. The paper concludes by connecting the Posner-Dworkin dispute with recent "realist" critiques of Rawlsian political philosophy, trying to clarify the grounds for skepticism about the practical relevance of such theorizing.

Keywords: jurisprudence, Thucydides, Plato, Dworkin, Posner, Realism, Llewellyn


I have read the abstract after the link "in praise of realism and against nonsense jurisprudence" and I am sincerely gobsmacked. I quote " those whose starting point is a theory of how things (morally) ought to be versus those who begin with a theory of how things really are. The essay endeavors to show that our contemporaries, Ronald Dworkin and Richard Posner." From context I infer that Brian Leiter considers Richard Posner someone who bases his thought on the way things really are. Leiter also accepts the idea that Posner is an anti theorist.

This makes me wonder if there are two different people named Richard Posner. The Posner I know had, at least until 2008, absolute faith in theory and frankly states that he is more interested in theory than in reality. I base my claims about Posner on the critical assessment of Posner pre 2008 due to Posner post 2008.

What is going on ? The problem I think isn't that there are two Posners but that there are different bodies of theory and Leitner assumes that everything which isn't part of one particular theoretical system (ethics) is therefore reality.

Another body of theory is, for example, Euclidean mathematics. It is exactly that theory which fascinated Plato. The hypothsis that Euclidean theory corresponds to anything that fits in this universe is no longer considered the best working hypothesis by Physicists. In any case, non Euclidean geometry is another body of theory and they can't both be reality. They are theory. They are not morality. It is possible to consider theory other than moral theory. Tehre are more things in our minds reality and morality.

Now Posner is not fascinated by Euclidean Geometry. However, he is fascinated by economic theory that was cutting edge 100 years ago. It is very different from Euclidean geometry. The hypothesis that Euclids axioms correspond to reality was ruthlessly tested for milennia and was contradicted by the data in the 20th century (if at all). The interaction of neoclassical economics and reality consists entirely of making predictions (using auxiliary hypotheses), finding they are false and arguing that this doesn't matter.

Posner definitely wrote that there are two definitions of economics -- one which defines it as the study of the economy and one which defines it as the set of implications of assumptions of rationality -- and that he always prefered the second. This is a frank declaration of Platonism.

Quite frankly, I think people at Chicago law have to talk to some economists who don't work at the Chicago economics department (they don't have to go far the business school is far enough). Otherwise, they will continue to make utter fools of themselves.

And now for something completely different. There is something else about the abstract which really bothers me. In this case I am puzzled. It seems to me that prof Leitner absolutely rejects the fact value distinction. He seems to think that some conclusions useful to judges can be reached by considering only the way things really are and not at all how they should be. My view is that no statement about what what we should do can follow from analysis of what is or would be if we did things. I consider my view to be totally conventional and, in particular, very much part of the Chicago Economics Department school of thought (start at the beginning with the introduction to "The Methodology of Positive Econimics" hell start with the
title). I don't see how an approach which begins by describing reality can end with anything but a description of reality.

Posner as presented by Leitner makes a much stronger claim than Dworkin. Dworkin says "If you agree with me that this is good, then you should agree with me that should be done." Posner as presented by Leitner says "If you face facts and don't deny reality then you should agree with me that this should be done." It certainly seems to me that the second is closer to Plato who definitely aimed for conclusions which didn't start with the Greek word for "if."

Finally, earlier Yglesias said that the meaning of "realism" in "legal realism" is the opposite of the meaning in other literatures. I think that Leitner is not referring to legal realism when he uses the word "realism."! I think he is using the word in its other sense and confusing the two diametrically opposite meanings for the word when used as a term of art in different arts.

Tuesday, April 06, 2010

Ultimate Ballance

I think I'm going to have to retire the word ballance. Not because it never caught on. Not even because I let Josh Marshall scoop me on the original Ballance article, but as a number is retired by a sports team.

I don't think that even Chris Cillizza will ever be able to surpass

The Fix: Does Ensign cloud GOP ethics argument?

The banner headline discusses alleged embezzlement from the RNC, but Cillizza doesn't even mention that story. Instead his line is that the very likely indictment of a US Senator will cause scandal balance.

I think that reaching that conclusion required great self discipline even for Cillizza. In the article he quotes Republican operatives ... only. Obviously they are willing to claim that the situation is balanced. So he just decided that no claims ty anyone but Republican operatives were to be noted at all. Also they were all granted anonymity. Cillizza doesn't say why he granted anonymity as required by the Washington Post Policy which is systematically ignored.
I have a near clinical level of Obamania, but even I can't completely overlook the DOJ.

If anyone argues that Obama has done all he can to reverse Bush's assault on justice I will just reply "U.S. attorney Leura Canary" note not "former U.S. attorney Leura Canary."

Monday, April 05, 2010

How long is Ezra Klein's well deserved vacation going to last ? I'm not sure I can stand this.

Michael Konczal wrote

Though Lehman had excellent capital ratios when it failed, half of its assets were very short-term, on the order of one week, and thus were subject to a crisis of confidence in the repo market, a bank run.

Lehman's problem was *not* that they had short term assets. I can't see how that could possibly be a problem.

The problem is that Lehman had massive short term liabilities.

I quote from the post to which he linked

Tier 1 FHC's overall liabilities. As of August 31, 2008, over half of Lehman's $211 billion tri-party repo book had a tenor of less than one week

Konczal wants us to believe he is an expert on finance. Mixing up "assets" and "liabilities" was not a good way to do this.
Department of Huh ?

OK I know it's at the Washington Post, but Ezra Klein's photo is right there.

Dylan Matthews writes

Even studies that warn about the contractionary effects of tax increases, such as this one (PDF) from Christina and David Romer, focus on how increases blunt growth by deterring savings and investment, which new consumption taxes would actually encourage.

I comment

Have you actually read the Romer and Romer study ? I haven't, but I know that David Romer called it "hyper Keynesian." OK a hint -- Keynes was not worried about excessive consumption.

The point of the Romer and Romer study is as close to the opposite of your claim as is possible. They conclude that tax cuts unaccmpanied by spending cuts cause increase demand and, in the short term, increased output. This happens according to R and R because they cause increased consumption, that is, reduced saving.

Note this view has been expressed as policy on the advice of C Romer -- Since she became chairwoman of the CEA there has been a huge gigantic tax cut (and various smaller ones). Taxes weren't cut in spite of the fact that the tax cut was expected to reduce saving rates. That was the point of the tax cut component of the stimulus bill.

The Romers definitely did not attempt to estimate the effects of increased taxes and spending with a constant deficit. That is the topic of the post. It has nothing to do with their analysis.

Don't mix up short term and long term. Don't mix up effects given historical monetary policy and effects given optimal monetary policy. Learn some basic Macroeconomics. Or how about reviewing economics 101.

Moving on to public finance 101, I note that a constant flat consumption tax should, in theory, have no effect on saving. That doesn't mean it wouldn't. The logic is that we save in order to spend in the future so we will pay the flat constant consumption tax sooner or later.

Theoretical predictions about the effect of a progressive consumption tax on saving are not at all clear.

Finally it is odd that Matthews doesn't note that his fellow Washington Post correspondents argue that the deficit can't be eliminated by raising taxes. This is odd, since the current huge recession is largely due to the recession and is 9% of GDP so according to their calculations it would be eliminated if the USA had OECD average tax rates.
The Great White Shark as a Model for Financial Regulation

Paul Krugman made an analogy between financial regulation and military tactics circa 100 BC. He said that the Dodd bill is like a Hellenic phalanx, designed to work optimally given optimal leadership, and what we need is something like a Roman, legion designed to get the job done with suboptimal leadership.

Nah. What we need is a Great White Shark. Notably great white sharks are very effective at getting the job done and have very very small brains given their size (even compared to other sharks skates and rays). This is odd, since they specialize in eating seals and sea lions as do Orcas which have huge gigantic brains and are spectacularly smart.

How odd. I think the explanation is simple. Great White Sharks don't stick to warm water (notably seals and sea lions don't). Nerve's work slowly when cool. A reflective shark would be lost in thought while the prey swam away. Orcas are warm blooded and can think fast enough even when its freazing.

There is a very general pattern that cold blooded animals have tiny brains given body size (low brainweight^3/weight^2). This is because the optimal brain is different if body temperature is constant or variable. A simple brain works better if it is often slowed by coolness.

What Krugman meant to say is that financial regulation should be like a great white shark and not like an Orca. Not optimal assuming the brain is working at maximum speed but optimal assuming it will be numb part of the time.

I mean he says we need financial regulation with teeth and which uses them reflexively.

Friday, April 02, 2010

April 2nd blogging

I am such a sucker. CNN had me going with that prank where they said they were hiring Erick Erickson.