Friday, December 31, 2010

December and Year-End Cycling Wrap-Up

The best thing I can say about this December is that it ended well, with a nice 30-mile ride with the guys (David, Karl, Brian R., and Jonas). The wind from the South was pretty fierce, gusting up over 20 mph, but the expected rain held off, and the temperature rose to a balmy 60 degrees. Unfortunately, it was my first and only outdoor ride in December, which, as anyone who lives in Indianapolis knows, has been a terrible month for cycling. Winter weather came several weeks early this year and did not let up until literally the last day of the month. Total mileage for the month, included indoor rides, was only 120 miles, in part because left knee pain kept me off the bike for a couple of weeks. Total mileage for the year is 4700 miles, down substantially from last year. My crash in early August probably cost me 800-1,000 miles.

My goal for 2011 is to ride longer but not necessarily faster. I enjoy less and less killing myself to keep up with the group going 23-27 mph. I'd rather ride farther and easier. So, I hope to get back above 5,000 miles next year, and maybe closer to 6,000.

See you all on the roads in 2011!

2010: Year in (Concise) Review

As my father might say, "Another year shot to hell."

On This Date

On December 31, 1759, Arthur Guinness signed a 9,000 year lease (that's right, a lease for 9 thousand years) on the St. Jame's Gate Brewery in Dublin, Ireland and began brewing beer. It is no exaggeration to say that it is among the most important events in the history of western civilization.

Thursday, December 30, 2010

What I'm Reading Now

Edmund Morris, Colonel Roosevelt (Random House 2010). I found this third and final volume of Morris's magisterial biography of one of our greatest presidents, and one of the most interesting personalities of the twentieth century, under the Christmas tree (or, as I call it, the Hannukah bush). Morris writes with a literary flair that other biographers must envy.

Thomas Mann, Doctor Faustus (Vintage 1999 [1947]). It is a special pleasure of the winter break period to re-read great masterworks. Nearly all of Mann's works would qualify in that category. He is my favorite novelist of any time and place, even though I cannot (I am sorry to say) read him in the original German. This book, which he wrote while in exile (in the US) during World War II, displays Mann's remarkable ability to become truly expert in, and write fluently about, highly technical fields - in this case, musical composition - far removed from his own training and experiences. My version of the book is not that pictured on the left. I have an old, dog-eared edition of the original English translation by H.T. Lowe-Porter.

Bravo Ross Anderson!

Ross Anderson is a Professor of Security Engineering at the University of Cambridge. His student, Omar Choudary, completed a Master's thesis, published (like all other student theses) here at the website of the Cambridge Computer Laboratory. UK banks are unhappy about the public availability of Coundary's thesis because it describes how criminals could foil bank security measures by manufacturing new pin numbers for stolen bank cards. They are demanding that the thesis be removed from university's website on the grounds that its publication exceeds the limits of "responsible disclosure."

To his everlasting credit, Professor Anderson has refused to bow to the dictates of creeping corporatism, writing with great eloquence that the banks "seem to think we might censor a student's thesis, which is lawful and already in the public domain, simply because a powerful interest finds it inconvenient. This shows a deep misconception of what universities are and how we work. Cambridge is the University of Erasmus, of Newton and of Darwin; censoring writings that offend the powerful is offensive to our deepest values."

Chalk up one small victory for freedom of academic expression against the inflated claims of state and corporate security.

The Guardian has the full story here.

On This Date

On December 30, 1853, the US completed the "Gadsden Purchase" of nearly 30,000 square miles of land (about the size of Scotland) in what is now Southern Arizona and Southwestern New Mexico from the Mexican government. It was the final piece of land acquisition in the contiguous United States. Congress ratified the treaty in April 1854.

Wednesday, December 29, 2010

Wigan 2 - Arsenal 2

Arsene Wenger made 8 changes in the Arsenal side that defeated Chelsea on Monday. That was probably a mistake, as a sloppy, incohesive Arsenal side gave up a late game-tying goal to 10-man Wigan (after N'Zogbia was sent off for head-butting Jack Wilshire). Wigan took an early lead in the match on a questionable penalty call. But Arsenal fought back to take a 2-1 halftime lead. Arsenal's first goal came on an exquisite bicycle kick by the otherwise out-of-form Andrei Arshavin. Arsenal midfielder Denilson, inserted in the starting line-up in place of Monday's man-of-the-match Alex Song, had a very poor match. He was spraying bad passes all over the field, did not work back hard enough on defense. Indeed, his matador-like  defensive technique opened up the Arsenal defense for Wigan's game-tying goal. Squillace also continues to look a very weak link in the center of Arsenal's defense. On the other side of the coin, I thought Rosicky (taking Fabregas's place), Chamakh and Bendtner, all had very good games today. Bendtner scored Arsenal's second goal.

Today's result is a tremendous disappointment after Arsenal's big win on Monday. They had an opportunity to go joint top of the table with Man U and Man City.

Recursive and Self-Correcting Processes in Science

The gang over at Real Climate have posted an instructive piece (here) on how science and scientific publishing work, with special relevance to various climate science controversies and faux controversiesThe blog post infers a set of "lessons" from the controversy that recently erupted over preliminary research, published in the journal Science, claiming, contrary to the conventional scientific wisdom, that arsenic can provide a basis for life. The lessons include the following: 

  • "Major funding agencies willingly back studies challenging scientific consensus."
  • "Most everyone would be thrilled to overturn the consensus. Doing so successfully can be a career-making result. Journals such as Science and Nature are more than willing to publish results that overturn scientific consensus, even if the data are preliminary - and funding agencies are willing to promote these results."
  • "Scientists offer opinions based on their scientific knowledge and a critical interpretation of data. Scientists willingly critique what they think might be flawed or unsubstantiated science, because their credibility - not their funding - is on the line.
The last bullet point is the "key lesson..., and it applies to all scientific disciplines: peer-review continues after publication. Challenges to consensus are seriously entertained - and are accepted when supported by rigorous data. Poorly substantiated studies may inspire further study, but will be scientifically criticized without concern for funding opportunities. Scientists are not 'afraid to lose their grant money.'"

Changing the Norms of Energy Consumption in the US

An interesting article in Scientific American (here) tells about ongoing research at the Lawrence Berkeley National Laboratory to assess how social norms relating to energy consumption might successfully be altered to mitigate greenhouse gas emissions. Starting with past success stories of positive norm changes, the researchers hope to identify how hurdles might be avoided and incentives created by policies to alter energy use by individuals. Those past success stories include massive reductions in tobacco use (in 1965, 44% percent of Californians smoked; today only 9.3% smoke) and increased use of seat belts by drivers (see here).

What lessons might those success stories provide for changing norms with regard to energy use? We probably should not be too optimistic. Smoking norms were altered by a massive government information campaign, but that campaigned was facilitated by the large, internal costs of smoking. The increased use of seat belts was spurred, in significant part, by laws prohibiting driving without wearing them. Compliance with those laws was surely facilitated, however, by the internal costs of driving without them. In other words, individual smokers and drivers had substantial personal incentive to stop smoking and to wear seat belts. The same cannot really be said with respect to individual energy consumption. While energy prices obviously create some incentive to conserve, individuals typically do not get sick or die from leaving the lights on. This  is not to say the research efforts are necessarily a waste of time or money. It just means that altering social norms of energy consumption is likely to be more difficult and complicated than getting people to stop smoking or to buckle up in their cars.

How important is increasing energy efficiency to mitigating greenhouse gas emissions and stabilizing the global climate? The answer to that question is somewhat complicated. Simon Dietz of Michigan State University is quoted in the Scientific American story as claiming that, on conservative estimates, decreased energy consumption by American households could result in a 7 percent reduction in total US greenhouse gas emissions, which translates to 1.5 percent of total global emissions. However, Bjorn Lomborg, citing studies of the so-called "rebound effect," notes (here) that energy efficiency improvements do not necessarily lead to nominal reductions in energy use. The economic logic is simple: as energy efficiency increases, the price of energy drops, leading (all else being equal) to increased energy demand. Thus, the key for climate policy is not just to increase the efficiency of energy production or supply, but to actually reduce total energy consumption.

Happy 100th Birthday Ronald Coase

I've recently started noting historical events instead of celebrating birthdays, but I had to make an exception for Professor Coase, especially on his 100th birthday. His birthday is, in reality, an important historical event because of Coase's stature in both economics and legal studies. Two of his seminal articles - "The Nature of the Firm" (1937) and "The Problem of Social Cost" (1960) are among the most widely cited works in both fields. Unfortunately, the later article is too more often cited for the wrong reasons, as both economists and legal scholars continue to misunderstand not only Coase's intention but his analysis (do not read the Wikipedia entry about Coase, unless you want a complete misunderstanding of his work).

Coase was and remains the central figure in the modern Law & Economics movement because he explained why legal rules are such an important component of the economy. The law would not matter if it were costless to use the price system, that is, if transaction costs were zero, because individuals would simply bargain their way around all disputes over entitlements to resources. The reason the law does matter for  economic exchange is that transacting in the market is not costless. Transaction costs are always positive and often quite high. This central insight, while lost on many self-proclaimed "Coasians," who continually cite the "Coase theorem" (so named by George Stigler) and refer to "Coasian bargaining," was the most important combined legal and economic insight of the 20th century.

By the way, the 100-year-old Coase has a new book coming out (co-authored) by Ning Wang, entitled How China Became Capitalist. It will be published by Palgrave Macmillan in June 2011. I wonder how many centenarians have ever published new books?

Tuesday, December 28, 2010

Private Property Claims in Parking Spaces on Public Streets

The New York Times has the story (here) of how residents who go through the trouble of clearing snow from parking spaces claim a labor-based, temporary "right" to those spaces, which they mark with orange cones, potted plants, lawn furniture, or just about anything else imaginable. The purpose of the scare quotes in the last sentence is to indicate that the term "right" is being used in a very loose sense; it is not at all clear what party, if any, has an enforceable "duty" not to take the parking space. The "rights" at issue are really in the nature of extra-legal claims based on presumed social norms (or even, dare I say it, natural law).

Are such claims enforceable? Well, according to the New York Times story, in South Boston such claims are legally authorized for up to 48 hours after a snow storm. But it's not clear how strictly that limitation is enforced. In any case, it's doubtful that the claimed right to a parking space could be enforced in a court of law. But such rights often are self-enforced by the claimants, e.g., with threats of slashed tires, broken mirrors, or other acts of retribution, which themselves may be technically illegal, if difficult to enforce. One problem of self-enforcement, of course, is the heightened risk of conflict escalation including the potential for violence.

I don't know of any empirical studies that have investigated the prevalence of temporary private property claims in public parking spaces after snowstorms. Certainly, they have become a normal feature in various neighborhoods in many cities subject to significant snowstorms. It would be interesting to learn just how prevalent the norms are, how they are similar or differ in structure and enforceability from one city (or neighborhood) to another, and what legal acceptance, if any, they have attained in various jurisdictions.  

Arsenal 3 - Chelsea 1

I apologize for not posting this yesterday.

This was a game Arsenal really needed to win - at home to a major league rival - and they did. After a nervous-looking first 15 minutes, Arsenal grabbed the lion's share of possession and were rewarded just before half-time, when Alex Song netted a ball that was deflected in the box after a nice Arsenal move. That goal seemed to give the Gunners more self-belief, and in the first 10 minutes of the second half, they tripled their lead, thanks in part to some poor Chelsea defending. Given that Chelsea have allowed the fewest goals in the Premiership this season, credit must go to Arsenal's offensive pressure for unsettling the usually reliable Chelsea back four. The Gunners two second half goals were scored by Cesc Fabregas (from Theo Walcott) and Theo Walcott (from Cesc Fabregas). Even after Chelsea pulled back a goal from a set piece, Arsenal never looked flustered. They outworked Chelsea, out-muscled Chelsea, and out-played Chelsea.

This could be a real turning point for the current Arsenal line-up, if they build on it and turn out consistent efforts in the coming two weeks, which features tough matches away at Birmingham City and home to Manchester City.

On This Date

On December 28, 1973, President Richard M. Nixon signed into law the Endangered Species Act. As originally enacted, the ESA sought to protect the existence of endangered and threatened animal and plant species for their own sakes, that is, regardless of their utility to humans and regardless of cost. Though the Act was subsequently watered down to permit the extinction of species in cases where the cost of preservation is deemed too high (by the Endangered Species Committee or "God Squad"), the Act remains a rare example of true environmental legislation (in contrast, for example, to most pollution-control laws, such as the Clean Air Act and the Clean Water Act, which are primarily public health statutes).

Monday, December 27, 2010

On This Date

On December 27, 1831, the Royal Navy's HMS Beagle left anchorage and headed out of Plymouth Sound on a nearly 5-year journey to survey South America and return via New Zealand and Australia. The ship's captain Robert Fitzroy had her extensively and expensively refitted for the voyage. Having failed to find a friend to accompany him on the trip, Fitzroy asked a fellow captain, Francis Beaufort, to identify a naturalist who might join the venture at his own expense. A young man preparing for the clergy named Charles Darwin filled that role. His  voyage on the Beagle altered his way of thinking about nature and the natural sciences as we know them today (although the later would have changed regardless based on the contemporaneous work of Alfred Russel Wallace and subsequent naturalists).

Sunday, December 26, 2010

On This Date

On December 26, 1776, the US Army won the Battle of Trenton after the daring crossing of the Delaware River in bad weather the night before (see the famous painting below). Two of Washington's detachments failed to make the crossing, but he led the 2,400 soldiers who did make it across on a 9-mile march south to Trenton, where they surprised the mostly sleeping Hessian soldiers. Nearly two-thirds of the (mostly sleeping) 1,400 Hessians were captured, with hardly any losses on the American side. In  numbers, the battle was small, but its importance for the US Army was almost immeasurable. Moral and public support had both been flagging after a series of losses. The victory at Trenton provided a much needed boost to Washington's efforts at recruitment and retention of soldiers.

Saturday, December 25, 2010

Revised Report on Principles & Standards for Benefit-Cost Analysis

Richard Zerbe (Evans School, Washington) has published a revised draft of "Toward Principles and Standards in the Use of Benefit-Cost Analysis." The most significant alteration in this draft, prepared on behalf of the Benefit-Cost Analysis Center at the University of Washington, with funding from the MacArthur Foundation, is that, at my request, my name has been removed from the list of members of the Scientific Committee, who commented on early drafts of sections of the report. I wanted my name removed because, as noted in previous blog posts (here and here), the Scientific Committee did not get to see or comment on the report's recommendations for social discounting prior to publication. Those recommendations struck me as much higher than warranted by the literature, including the various white papers Professor Zerbe commissioned for this project.

All of the white papers can all be viewed here. None of them focuses predominantly on the issue of social discounting; only three of the papers even discuss social discount rates. Importantly, not one of those three papers supports the high discount rates recommended in Professor Zerbe's report. Joseph H. Cook's white paper "On Principles and Standards for Benefit-cost Analysis of Public Health Preparedness and Pandemic Mitigation Policies" finds "considerable agreement in the health evaluation field to use a real discount rate of 3%, and this rate has been codified in several cost-effectiveness guidelines" (p. 20). Lynn A. Karoly's white paper "On Principles and Standards for Benefit-cost Analysis of Early Childhood Interventions," observes the use of discount rates from 3 to 4 percent (p. 27). Finally, the white paper on "Behavioral Economics and Benefit-Cost Analysis" by Lisa A. Robinson and James K. Hammitt recommends hyperbolic discounting, with discount rates that decline over time, in stark contrast to the final report's recommendation of a single, high discount rate.

On This Date

In 1866, in a small manger in South London, the Arsenal Football Club was born. The club joined the Football League in 1893. Since then, the Gunners have won 13 League and Premiership titles and 10 FA Cup championships. They hold the record for the longest consecutive stint in the top flight; and they are the only Premier League team ever to finish an entire season undefeated. Along with Barcelona, Arsenal play the most attractive brand of attacking football - based on close control, passing, and movement - to be seen in the world.

Friday, December 24, 2010

I Support the Cyclists' Boycott of Vail, Colorado has the story (here and here), which sheds an interesting light on the values and decision-making of Eagle County District Attorney Mark Hulbert, who declined to seek a felony conviction against a wealthy Smith Barney financial manager, after he drove off the road and hit a cyclist, causing serious injuries (including bleeding from the brain and a broken spinal cord), and then fled the scene, leaving the cyclist for dead. DA Hulbert allowed the driver to plead to a misdemeanor involving no jail time, allegedly out of concern that a felony conviction might have serious employment consequences for the driver. Very touching, Mr. Hulbert's solicitude for the driver.

In a previous case, the same District Attorney had diligently pursued a felony conviction for "criminal impersonation" against a woman mountain biker for competing in the Leadville 100 bike race on someone else's entry. That woman subsequently lost her job as a school teacher.

The next person who should lose his job is District Attorney Mark Hulbert for making an ass of the law in Eagle County, Colorado.

On This Date

On December 24, 1851, a fire at the Library of Congress building destroyed most of the book collection, including, tragically, two-thirds of Thomas Jefferson's private library of nearly 6,500 books, which Jefferson had sold to Congress in 1815 (for about $24,000) after the library's original collection of 3,000 books was destroyed in a fire started in 1814 by the British army during the War of 1812.

Thursday, December 23, 2010

Greenhouse Gas Mitigation Could Still Save Polar Bears

A new study published in the journal Nature (here) reports that the disappearance of polar bears in their natural range is not yet a foregone conclusion. Under business-as-usual models (i.e., no change in greenhouse gas emissions trends), two-thirds of polar bears are expected to disappear by mid-century. However, the authors find that the bears could still be saved by mitigation policies. However, the required mitigation would be substantial and would have to start very, very soon in order to limit global mean temperature increase to 1.25 degrees (Celsius) by 2150.

Given the almost non-existent progress (so far) on mitigation, there is little reason for optimism in the authors'  findings. Indeed, it may take something like the disappearance of the polar bear in its natural range to generate  sufficient political will to start mitigating greenhouse gas emissions.

On This Date...

On December 23, 1919, Parliament in the United Kingdom enacted the Sex Disqualification (Removal) Act, which removed all legal obstacles to women, single or married, from holding civil service offices, becoming solicitors (attorneys), or participating in any other civil profession or vocation.Women had previously been given limited voting rights and been allowed to stand for Parliament.

Wednesday, December 22, 2010

Wagner, Fisher and Pascual on the Use of Models in Environmental Policy

Liz Fisher (Oxford), Wendy Wagner (Texas), and Pasky Pascual (US EPA) have recently published two articles on the use and abuse of scientific and social-scientific models in environmental policy.

E. Fisher, P. Pascual, and W. Wagner, "Understanding Environmental Models in Their Legal and Regulatory Context," Journal of Environmental Law 22(2):251-283 (2010).
Environmental models are playing an increasingly important role in most jurisdictions and giving rise to disputes. Despite this fact, lawyers and policy-makers have overlooked models and not engaged critically with them. This is a problematic state of affairs. Modelling is a semi-autonomous, interdisciplinary activity concerned with developing representations of systems and is used to evaluate regulatory behaviour to ensure it is legitimate. Models are thus relevant to lawyers and policy-makers but need to be engaged with critically due to technical, institutional, interdisciplinary, and evaluative complexities in their operation. Lawyers and policy-makers must thus think more carefully about models and in doing so reflect on the nature of their own disciplines and fields.
W. Wagner, E. Fischer and P. Pascual, "Misunderstanding Models in Environmental and Public Health Regulation," N.Y.U. Environmental Law Journal 18:293-356 (2010).
Computational models are fundamental to environmental regulation, yet their capabilities tend to be misunderstood by policymakers. Rather than rely on models to illuminate dynamic and uncertain relationships in natural settings, policymakers too often use models as "answer machines." This fundamental misperception that models can generate decisive facts leads to a perverse negative feedback loop that begins with policymaking itself and radiates into the science of modeling and into regulatory deliberations where participants can exploit the misunderstanding in strategic ways. This paper documents the pervasive misperception of models as truth machines in U.S. regulation and the multi-layered problems that result from this misunderstanding. The paper concludes with a series of proposals for making better use of models in environmental policy analysis.
These two excellent articles underscore a point that I have been arguing for a long time: legal scholars and lawyers must approach law-making and law-enforcement processes more like social scientists. This is true not only for administrative processes, such as environmental law-making, but for constitutional interpretation and common-law judging as well. Judges (as judges) rarely, if ever, engage in formal model-building as they seek to "discover" common-law rules and decide cases, but that hardly means they work without models, which, sometimes at least, can be inferred from their decisions. Ultimately, to understand the law, one must try, at least, to understand the models (formal or informal, shared or idiosyncratic) of the participants in law-making and law-enforcement processes.

So Many Books, Too Little Time

There are too many interesting-looking new books on offer, and I have too little time to read them all. I'm sure this is a problem familiar to many scholars and avid readers. Just now, for example, I want to read:

Pauline Maier, Ratification: The People Debate the Constitution, 1787-1788 (Simon & Schuster 2010)

Edmund Morris, Colonel Roosevelt (Random House 2010)

Autobiography of Mark Twain, Vol I. (Univ. of California Press 2010)

Paul D. Halliday, Habeas Corpus: From England to Empire (Harvard 2010)

Mary Warnock, Dishonest to God: On Keeping Religion out of Politics (Continuum 2010)

Howard Jacobson, The Finkler Question (Bloomsbury USA 2010)

Laura Hillenbrand, Unbroken: A World War II Story (Random House 2010)

John Heilbron, Galileo (Oxford 2010)

I'm sure there are others I'm forgetting. It all makes me want to stop writing and just read.

Thatcherism on Steroids in the UK

I previously posted (here) about the Tory/Lib Dem Coalition's plan to privatize some of the UK's national forest reserve in order to help bring down the public debt. Today's The Guardian reports (here) that the privatization might well include all state-owned English trees. Not even Baroness Thatcher ever contemplated such a thing. I don't know whether Terry Anderson and other "free-market environmentalists" are advising the current UK government, but the idea is a bad one for a whole hosts of reasons, only some of which are addressed in the article.

The article's author John Vidal expresses concern that foreign interests might buy up all the state timberlands and clearcut them for use as renewable energy or to exploit subsurface resources, including coal. At first glance, this seems far-fetched. After all, economic theory suggests that private woodland owners should conserve (not preserve) timber resources to maximize their long-rune economic value. However, as the Canadian economist and mathematician Colin Clark demonstrated in a couple of articles he published in 1973, complete exploitation of a scarce resources might be an optimal strategy under some circumstances. And there is a good deal of empirical evidence, from both the UK and the US, of private timber owners doing exactly what most economists say they would never do. Indeed, the UK's Forestry Commission was founded in 1919 precisely because timber harvesting on private lands was close to denuding Britain of trees.

The forests of largest concern, when it comes to privatization, are those with the greatest public values attached to them, which would surely include ancient woodlands and sites of special scientific interest. For those sites in particular, privatization would likely be a disaster because, even if private owners can be expected to engage in conservation, their conservation decisions will seek to maximize their private utility, not public welfare.

One way that at least some of these concerns might be ameliorated is for the government to issue new regulations on harvesting privately owned timber. However, such regulations would reduce the market value of the timberlands at auction by some uncertain amount, which would be contrary to the government's expressed concern with paying down the debt.

Public opposition to the wholesale privatization of forest reserves is growing. And politics rather than economics will, as always, have the final say. I remain cautiously optimistic that this short-sighted plan to privatize - corporatize would probably be a better word - the UK's entire woodland patrimony will be aborted.

Happy 64th Birthday Rick Nielson

The legendary song-writer and guitarist for Cheap Trick. Anyone who was a teenager in the 1970s on the North Shore of Chicago and had an interest in music followed the trajectory of Cheap Trick's career from the clubs in northern Illinois and southern Wisconsin all the way to the world's biggest concert venues.

Instead of showing a  video of a Cheap Trick performance (I highly recommend the series of videos from their Music for Hangovers DVD, available on YouTube), the video below is a little more personal for me. It shows Rick sitting in and playing his song "Downed" with a band led by a guy I knew growing up, Nick Tremulus. At the start of the video, Nick tells a story about one of the best friends I ever had, the late-lamented Kevin Kelly, who was also friends with the guys in Cheap Trick. Nick joined Kevin's band, Rock Service, just after John Osmon and I had left it (John for the Navy, me for college in LA).

Monday, December 20, 2010

Another Reason I Should Live in London

To hear Alfred Brendel. Even though he has (unfortunately) retired from performing, Brendel still gives the occasional lecture. See here.

It Takes Two to Fight a Class War

Those who seek to change rules to redistribute wealth from richer to poorer are often said to be engaging in "class warfare." Such allegations were frequent in the recent fight over extending the Bush tax cuts for the wealthiest Americans (see, e.g., here and here). But isn't it equally class warfare when the wealthy seek changes in the rules to redistribute income to themselves, e.g., through government bail-outs, tax deductions and loopholes, corporate subsidies, lower marginal tax rates, etc?

As Tyler Cowen explained in his recent column in The American Interest (here), income inequality has increased dramatically in the US over the past 30 or so years. The top 0.01 percent of Americans (about 15,000 families) took less than 1 percent of national income in 1974, but 6 percent in 2007. The top 1 percent of earners increased their share of national income, over that same period, from 8 percent to 18 percent. This trend, which has continued through both Democratic and Republican administrations, may be due primarily to market forces as Tyler suggests, but there's no reason to doubt that the wealthiest Americans have both the motivation and the means to fight for institutions ("rules of the game") that promote their own well-being. After all, class warfare is not a one-way fight.

By the way, I'm not convinced that either the increasing income disparities of the last 30+ years or failed efforts to curtail the Bush tax cuts on top income earners really constituted "class warfare," which is really just  a convenient and ideologically-loaded label that substitutes for merit-based arguments about policy choices.

UPDATE: Apropos of the issues I raised, I just came across an interesting column in the New York Times (here), which wonders (implicitly) whether Senator Bernie Sanders, a self-labeled socialist, is more socialistic than the Federal Reserve.

Happy 53d Birthday Billy Bragg

How fitting that Billy's birthday comes just a day after that of Phil Ochs. Both are part of a long folk-music tradition of great songwriters, singers, and political activists. Although I do not share Billy's socialist idealism (I've spent too much time studying real socialist systems to have any idealism about socialism), I admire him greatly as a man and as a musician. Billy is also an occasional columnist for The Guardian. Here is a column he wrote last week in praise of the student protests in UK against tuition increases. Below is the wonderful, sad song "Tank Park Salute" from his 1991 album Don't Try This at Home:

Sunday, December 19, 2010

Happy Birthday Phil Ochs (1940-1976)

A great folk music composer and singer, who died way too young.

Here is one of his beautiful songs, Flower Lady:

Saturday, December 18, 2010

Mueller and Stewart on the Real Risk of Death from Terrorism

Here, in Foreign Affairs. Excellent stuff. I particularly like the table below, which ranks annual risks of death from various causes, including terrorism.

Butler 83 - Stanford 50

I had never seen a Butler game at home at the Hinkle Fieldhouse, one of the great old college arenas still in use. A friend gave me his tickets for this afternoon's game against Stanford, an alma mater of mine. So, I put on my old, grungy Stanford sweatshirt and headed to the game. I didn't really know what to expect. I had seen a little of Butler this season, enough to know that they have had a bit of a rough start to the season after last year's run to the NCAA final. Stanford I knew even less about, other than the team's 6-2 record, which, given what I saw this afternoon, must have been compiled against a group of high schools. By the middle of the first half, Butler was on top and running away from a Stanford side that was porous on defense and uncoordinated on offense. They seemed poorly coached (with all due respect to Johnny Dawkins). I can't say much about the second half because I left after only 4 minutes of it had passed, when Stanford had not yet scored a point, and Butler extended it's lead to 30 (9 points more than Stanford had scored in the game to that point).

As someone who usually supports Butler as a home-town team, I want to thank the Butler fans for not throwing things at me despite being the only one in the building wearing a Stanford sweatshirt. One of my colleagues who attended the game, who is also a Stanford grad, wore a Stanford hat at the start of the game but replaced it before the end of the first half with a Butler hat. He likes a front-runner.

Happy Birthday Paul Klee (1879-1940)

A great Swiss painter, whose work is easily identifiable, even though it varied from abstract expressionism, to surrealism and cubism. Klee was also a art theorist, who published on the theory of color, and a teacher at the Bauhaus in Weimar.

Here is Klee's delightful "The Twittering Machine":

Friday, December 17, 2010

Preliminary Program of the Allied Social Science Associations Annual Meeting

You can view it here. The agenda contains hyperlinks to a fair number of the papers, including this excellent paper by Scott Farrow and Kip Viscusi, which provides a superior starting point for any serious effort to identify "best-practice" standards for Cost-Benefit Analysis.

The Economist on Coase's Theory of the Firm

The Economist, in recognition of Ronald Coase's 100th birthday on December 29th, has published a nice encomium of Coase's revelatory transaction-cost theory of the firm (here). That theory, which went largely unnoticed when Coase first published "The Nature of the Firm" in 1937, eventually gave rise to the modern Law & Economics movement and the development of a New Institutional Economics.

Arsenal v. Barca

Arsenal have drawn Barcelona in the first knock-out stage of the Champions League. Predicting based on recent form alone, this should be a walk-over for Barca. Arsenal's defense is outmatched by Lionel Messi by himself, let alone the likes of Xavi and Iniesta. While any sensible prognosticator would predict an early exit for the Gunners, the matches should at least be entertaining, featuring two of the world's best, most technically astute footballing clubs.

Happy Birthday Mary Cartwright (1900-1998)

One of the twentieth century's greatest mathematical minds, Mary Cartwright was the first woman mathematician elected as a Fellow of the Royal Society (in 1947), the first woman to serve on that august body's Council, the first woman to receive the Sylvester Medal from the Society for her mathematical research, and the first woman President of the London Mathematical Society (1961-2). She was also Mistress of Girton College, Cambridge from 1949-1968.

Thursday, December 16, 2010

Happy Birthday Ludwig van Beethoven (1770-1827)

No introduction necessary, though people sometimes forget just how revolutionary was Beethoven's work - especially his later work. Audiences in the early 19th century had as much trouble understanding him as audiences 100 years later had understanding Mahler.

Here is my favorite living pianist, Alfred Brendel, and one of my favorite living conductors, Claudio Abbado, in a performance of Beethoven's Third Piano Concerto:

Wednesday, December 15, 2010

I Prefer OMB's Current Approach to Discounting

Under current rules, the President's Office of Management and Budget (OMB) requires federal agencies to discount streams of future costs and benefits of regulations at alternative 7% and 3% discount rates. The reason for this is made clear in Circular A-4 (see here):
As a default position, OMB Circular A-94 states that a real discount rate of 7 percent should be used as a base-case for regulatory analysis. The 7 percent rate is an estimate of the average before-tax rate of return to private capital in the U.S. economy. It is a broad measure that reflects the returns to real estate and small business capital as well as corporate capital. It approximates the opportunity cost of capital, and it is the appropriate discount rate whenever the main effect of a regulation is to displace or alter the use of capital in the private sector. OMB revised Circular A-94 in 1992 after extensive internal review and public comment. In a recent analysis, OMB found that the average rate of return to capital remains near the 7 percent rate estimated in 1992. Circular A-94 also recommends using other discount rates to show the sensitivity of the estimates to the discount rate assumption.

                                                       *     *     *

The effects of regulation do not always fall exclusively or primarily on the allocation of capital. When regulation primarily and directly affects private consumption (e.g., through higher consumer prices for goods and services), a lower discount rate is appropriate. The alternative most often used is sometimes called the "social rate of time preference." This simply means the rate at which "society" discounts future consumption flows to their present value. If we take the rate that the average saver uses to discount future consumption as our measure of the social rate of time preference, then the real rate of return on long-term government debt may provide a fair approximation. Over the last thirty years, this rate has averaged around 3 percent in real terms on a pre-tax basis. For example, the yield on 10-year Treasury notes has averaged 8.1 percent since 1973 while the average annual rate of change in the CPI over this period has been 5.0 percent, implying a real 10-year rate of 3.1 percent.

For regulatory analysis, you should provide estimates of net benefits using both 3 percent and 7 percent.
New recommendations (here) from the Benefit-Cost Analysis Center at the University of Washington, sponsored by the MacArthur Foundation and authored by Professor Richard Zerbe, make the requirements of Circular A-4  seem almost liberal (something OMB critics could hardly imagine). Professor Zerbe validates  OMB's 7% base discount rate; as noted in a previous blog post (here), he recommends a range of discount rates from 6% to 9% (coming close to OMB's old baseline discount rate of 10%). However, Professor Zerbe recommends using only a single discount rate in any BCA, without the flexibility currently provided in Circular A-4 for alternative calculations using 3% discount rates in cases where the opportunity-cost of capital is less of an issue than present-versus-future rates of consumption.

In Professor Zerbe's view, the opportunity-cost-of-capital approach to discounting is the only correct approach, despite recent work by many other economists supporting consumption-based discounting (which generally implies lower social discount rates).

We can only hope that the MacArthur/Benefit-Cost Analysis Center recommendations on discounting do not influence OMB policy (or policies of similar state-level agencies). Otherwise, the consequences for socially beneficial environmental, health and safety regulations could be severe.

What I'm Reading

Adam Smith, Lectures in Jurisprudence (R.L. Meek, D.D. Raphael and P.G. Stein, eds, Clarendon Press 1978) (now available from the Liberty Fund).

This is not a book by Smith per se, but aggregated and reconciled reports on (or notes of) Smith's lectures delivered in 1972-4 at the University of Glasgow. They are nonetheless very interesting for revealing that Smith was as great a legal scholar as he was an economist. It is a pity that he did not live long enough to write a planned book on the theory and history of law and government, which he mentioned in a 1785 letter to the Duc de La Rochefoucald.

Kaushik Basu, Prelude to Political Economy: A Study of the Social and Political Foundations of Economics (Oxford 2000).

Basu, an economics professor at Cornell, provides an inclusive approach to institutions and the state by using game theory to embed economic theory in politics and society, with important implications for law, social norms, and theories of the state. It is not a simple book, but one that repays careful reading and thought. Fortunately, Basu writes so clearly and engagingly that the reader wants to do the  work.

Chris Wold, David Hunter and Melissa Powers, Climate Change and the Law (LexisNexis 2009). To be honest, this is a book I have to read for class. I'm teaching Climate Law & Policy next semester for the first time, and this is the main course book I've chosen. However, I am enjoying reading it. The economic readings and analysis in Chapter 2 are not as good as they might be, and I will certainly have to update and revise with hand-outs, but the book provides a well-balanced treatment of the issues, and I agree with the vast majority of the editors' organizational and editorial decisions.

Congratulations Samir Nasri

For being named French Footballer of the Year (see here). The Arsenal midfielder has been in excellent form all season for the Gunners, and looks to be in contention for player-of-the-year honors in the Premiership as well.

Mathematical Models vs. the World

Maybe it's just my own math-phobia, but I become immediately suspicious when I see a paper that purports to explain an actual, functioning set of institutions in the world in purely mathematical terms (e.g., on a general equilibrium analysis). My experience is that the elegant modeling misses much of the really important stuff.

Happy Birthday Gustave Eiffel (1832-1923)

A towering figure among French architects. Among his many projects aside from the tower that bears his name in Paris, Eiffel designed the internal, structural elements of the Statue of Liberty.

Tuesday, December 14, 2010

The Most Clear-Sighted Assessment of Rising Income Inequality in the US

From Tyler Cowen. Here.

I Dissent

As a charter member of the Society for Benefit-Cost Analysis (SBCA), I presented a paper at the Society's very first meeting (subsequently published here), in which I recommended that responsibility for instituting principles and best-practice standards for benefit-cost analysis (BCA) should be removed from the agencies who produce and consume them. It would be better, I thought, if principles and standards were established outside the beltway by a group of independent economists, policy analysts, and even legal scholars.

Over the past few years, the SBCA, led by my friend Richard Zerbe of the University of Washington, has taken up the mantle, with financial support from the MacArthur Foundation. This week, Professor Zerbe has published a final report, "Toward Principles and Standards in the Use of Benefit-Cost Analysis: A Summary of Work." I was a member of the Scientific Committee and reviewed the report in draft, which did not at that point include a specific recommendation on the social discount rate.

While there is much to admire in the final report, I am dismayed at the section on discounting, which recommends the use of a single social discount rate of 6%-9%, validating the OMB's current baseline discount rate of 7%. Until I read the final report, I did not believe any serious economist outside of OMB or industry still believed that 7% is an appropriate rate at which to discount the future streams of benefits and costs of environmental, health and safety regulations. Moreover, I don't believe the analysis presented in the report is nearly sufficient to support that recommendation. Therefore, I strongly dissent.

In my view, the social discount rate for assessing the future costs and benefits of environmental, health and safety regulations should be half or less of Professor Zerbe's recommended 6%-9% rate. My view is consistent with the UK Treasury's schedule of discount rates (here), Marty Weitzman's findings in his article, Gamma Discounting (here), and recent recommendations to the Canadian government by Anthony E. Boardman, Mark A. Moore, and Aidan R. Vining (here).

Stanley Fish on the Economic Threat to Higher Education

Here. The threat is not just in decreased government funding but in a mindset that views the sole purpose of higher education as narrowly vocational.

Orentlicher on Virginia v. Sebelius

Today's New York Times features a series of comments on yesterday's federal district court decision in Virginia v. Sebelius, striking down the insurance mandate of the Health Care Act. I blogged about the case here yesterday. Among the esteemed panel of commentators in the Times today is my colleague David Orentlicher, who makes a strong argument on both legal and policy grounds against the court's ruling (here).

Happy 90th Birthday Clark Terry

If, like me, you prefer the mellower, fuller sound of the fluegelhorn, then, like me, you naturally prefer Clark Terry. Truly, one of the greats.

Monday, December 13, 2010

Manchester United 1 - Arsenal 0

Arsenal came to Old Trafford in first place, and left in second place. But they are far from truly being in contention for the Premiership title. The entire team played nervous and sloppy today, spraying balls all over the field and rarely holding possession for any length of time. The Gunners looked like a mid-table team, more interested in fouling United players than in trying to outplay them. Arsenal's offense hardly gave United goalie Edwin van der Sar reason to break a sweat. The only saving grace was that Manchester United wasted a number of opportunities - including a terrible penalty miss by Wayne Rooney, after an equally terrible penalty call by the linesman - so that the final scoreline actually flattered Arsenal.

It seems is years since Arsenal were able to contend with the likes of Man U and Chelsea on the field, and today's game brought home the fact that the current Gunners side are still not prepared to go toe-to-toe with the top teams in the league. Aside from the usual culprits (Arshavin, Rosicki, and Squillaci), Alex Song seemed a step slow all game, and Cesc Fabregas looked far from fit when he replaced the ineffective Rosicki with a half hour to go. The only name worth mentioning in a positive vein for the Gunners is young Wojciech Szczesny, who looked competent in Arsenal's goal, making a fine save on an audacious chip by Wayne Rooney late in the game. He needs to work on his outlet passing, however.

If Arsenal still find themselves within shouting distance of the top of the table after the busy holiday schedule of fixtures, then Wenger had better reverse his earlier decision and open the wallet to bring in some support, especially in defense and defensive midfield. It's also past time to get Theo Walcott into the starting line-up ahead of the quickly aging Arshavin.

The Health Insurance Mandate in the Courts

As all the news outlets are reporting (e.g., here), a Virgina court today invalidated the Health Care Law's insurance mandate. Judge Henry E. Hudson's ruling in Virgina v. Sibelius can be read here. Importantly, the judge declined to stay implementation of the law while his decision is appealed.

I am not a constitutional commerce-clause expert, but I have previously blogged (here) about my belief that the insurance mandate is constitutional because the government, as long ago as the Second Militia Act of 1792, signed into law by President George Washington, required citizens to supply their own muskets and other equipment. Judge Hudson neglects this history.

The law blogs are all abuzz about Judge Hudson's decision. I am persuaded by a couple of negative reviews from  relatively conservative (but eminently fair-minded) commentators, including my colleague Gerard Magliocca (at writing at Concurring Opinions here) and George Washington University Law Professor Orin Kerr (writing at The Volokh Conspiracy here), each of whom finds Judge Hudson's ruling to contain important legal errors.

Today's decision was the third federal district court ruling on the constitutionality of the Health Care Act, and the first to rule against any provision of the statute. Interestingly, the first two federal judges who upheld the statute were both Clinton appointees. Judge Hudson is an appointee of George W. Bush. Do you suppose  ideology/party affiliation have anything to do with the respective outcomes?

UPDATE: According to reports (e.g., here), Judge Hudson, who ruled against the Health Care Act today, holds a stake of between $15,000 and $50,000 in a Republican consulting firm that lobbied against the Act's passage in Congress. This is reminiscent of BP oil spill case, where judges with substantial financial stakes in the gulf oil industry ruled against the Obama Administration's moratorium on deep-sea exploration and drilling (see here and here).

"Bad Metaphors Make for Bad Policy"

That's the quote of the day, and it comes from Paul Krugman (here) in the New York Times. 

Krugman was arguing that the stimulative effect of the Obama-Republican tax deal is unlikely to be sufficient to rescue the economy from its current malaise. The economy is not like a stalled car that just needs a "jump-start." Nor is it like an invalid who "just needs some rest." Rather, according to Krugman, our economic woes require long-term, "well-designed, sustained support." Whether or not you agree with Krugman about that, the quote is excellent.

In Defense of Behavioral Law & Economics

Last week's symposium on behavioral law and economics at the Truth on the Market blog (here), about which I blogged here, was more of an attack on behavioralism than a balanced account of its value, influence, and limitations. Perhaps for that reason, Truth on the Market belatedly invited behavioral economist Richard Thaler to provide a rejoinder to what were, in his view, some over-statements, inaccuracies, and knee-jerk responses from the symposium contributers. Thaler's excellent rejoinder is here.

(As Josh Wright comments below, Thaler was among the first scholars invited to participate in the symposium, but he was only available to comment after the fact.)

Experiments with Law

An interesting article in today's Boston Globe (here) promotes Yale Law Professor Ian Ayre's idea to test laws experimentally on a randomized sample population to gauge the effects prior to applying them to the broader population. Doing so would almost certainly result in the improvement of legal rules (except for the many occasions when legislators enact laws as signaling devices with little concern for actual legal outcomes).

The article addresses some of the interesting and important questions raised by Ayre's suggestion, including how such a social-scientific approach to law-making would comport with the Due Process and Equal Protection Clauses of the 14th Amendment to the Constitution. If an individual is selected to participate in a random sample of the population to pay a tax rate higher than other, similarly situated individuals are required to pay, would that not be unconstitutional?

Special 1 TV - Dec. 10, 2010

Snow Day

I was supposed to drive to Bloomington early this morning for the "mini-conference" at the Workshop, where I was to present a paper and chair a panel. Unfortunately, 3-5 inches of snow and high winds have made the drive too treacherous, and I've decided to stay home. I hate disappointing my friends and colleagues at the Workshop, but I think my informal risk assessment was a good one. I've sent my PowerPoint slides to someone who is intimately familiar with the work I was to present; he will probably do a better job than I could have done anyway; and nearly anyone present can serve as a fill-in chair for the other panel.

Overall, I'd say missing the mini-conference because of bad weather is less disappointing than the last conference I was forced to miss because bad weather in another city severely disrupted my travel plans: that conference was in Aix-en-Provence, and the bad weather that prevented me getting there was in Philadelphia.

I will take the snow-day opportunity to start grading exams and do some prep for next semester's Climate Law & Policy course.

Happy 68th Birthday Fergie Jenkins

One of the all-time great Cubs, and a Hall of Fame pitcher.

Sunday, December 12, 2010

Goldsmith on the Wikileaks Controversy

Former Bush Administration Legal Counsel and Harvard Law Professor Jack Goldsmith makes some really good points about the Wikileaks "dump" and whether Julian Assange violated US law (here).

Hat tip: Frank Pasquale at Concurring Opinions.

The Best TV Show Now on the Web

Special 1 TV is the best show currently on television on any continent. Unfortunately, to understand why, one must closely follow European and especially English soccer. The show started on the now-defunct Setanta Sports several years ago. Last year, BBC3 picked it up, and is now streaming episodes on YouTube (here). Here is the latest episode, recorded after the "Special 1's" Real Madrid side lost 5-0 at Barcelona:

Was Adam Smith a Legal Positivist?

From his Lectures in Jurisprudence (R.L. Meek, D.D. Raphael and P.G. Stein, eds, Oxford 1978):
[T]he age of shepherds is where government first commences. Property makes it absolutely necessary. When once it has been agreed that a cow or a sheep shall belong to a certain person not only when actually in his possession but where ever it may have strayed, it is absolutely necessary that the hand of government should be continually held up and the community assert their power to preserve the property of the individualls.
This seems awfully close to Bentham's argument that legal rights cannot exist in the absence of government.

What am I Doing Writing Blog Posts at 4 am?

Good question.

The "Cancun Agreements"

The roving global cocktail party known as the Conference of the Parties to the United Nation's Framework Convention on Climate Change (UNFCCC) has declared success at the end of two weeks of meetings in Cancun, Mexico. The UNFCCC has issued a press release (here) touting all of the achievements of the conference. There's no particular reason to read it, however, as it's just more of the same: more payments from rich countries to poor ones for not cutting down trees; promises of technology transfers from rich countries to poor ones; yet another attempt to create and finance a "Green Climate Fund" to transfer yet more money from rich countries to poor ones. Most importantly, the parties made no progress on realistic and significant targets for mitigating greenhouse gas emissions.

I don't see much progress from the last year's Copenhagen Accords, which were widely perceived as a failure. I suppose the parties are claiming that this year's conference is, relatively speaking, a success because everyone (Bolivia excepted) played nicely together. To my mind, that is not an appropriate  measure of success.

Perhaps it is time to bifurcate the policy process. The UN process seems primarily structured to move dollars from north to south, from developed to less-developed countries. That is a potentially useful mechanism for dealing with adaptation-related issues; but it gets us nowhere on mitigation, which realistically implicates the interests of fewer than a dozen major emitting countries. President Bush may have been correct (no kidding) when he argued that mitigation negotiations should be removed from the UN process in favor of smaller-scale, direct, multi-lateral negotiations among the major emitting countries. A new "club" of major emitting countries should be established to facilitate those negotiations.

Finally, the best thing about the end of the UNFCCC conference in Cancun is that I will know longer receive several dozen e-mails each day inviting me to side-events sponsored by the myriad non-governmental organizations from around the globe who seem to believe that greater public participation in the treaty-writing process will lead to better treaties (evidence to the contrary from California's referendum process notwithstanding). In my view, the interests of NGOs might be better served if they kept their distance from the negotiations and criticized the roving global cocktail party, instead of participating actively in it.

Happy Birthday Tony Williams (1945-1997)

An amazing musician. Along with Keith Moon, he has always been my favorite drummer (interestingly, Moon was also William's favorite drummer, see here). Here is Tony, at age 22, driving with beautiful ferocity one of the greatest groupings of musicians ever assembled: the Miles Davis Quintet featuring Wayne Shorter, Ron Carter and Herbie Hancock. The first time I heard this, I was completely blown away.

Saturday, December 11, 2010

Happy 72d Birthday McCoy Tyner

One of the most influential jazz pianists of the 20th century.

Friday, December 10, 2010

Happy Birthday Olivier Messiaen (1908-1992)

One of the greatest composers of the 20th century, Messiaen used complex rhythms borrowed from ancient Greek and Asian sources and complex melodic structures based on his theory of "modes of limited transposition" Messiaen's music is considered by many listeners to be "difficult," but others (myself included) find it intellectually stimulating and emotionally exciting.

Here is an excerpt from his "Oiseaux Exotiques," conducted by his student Pierre Boulez (one of the greatest living conductors and a fine composer in his own right).

Thursday, December 9, 2010

A Visual Demonstration of Improvements in Per Capita Income and Public Health Over 200 Years

Public Health expert Hans Rosling, on the BBC program "Joy of Stats," provides a stunning visual depiction of how public health has improved along with per capita income (in virtually all countries) over the past 200 years.

Hat tip: Bob Kleinops and

Happy 68th Birthday Dick Butkus

I've seen a lot of great football players. Dick Butkus is the greatest football player I've ever seen (regardless of position).

Wednesday, December 8, 2010

Arsenal 3 - Partizan 1

Arsenal go through to the knock-out stage of the Champions League with a 3-1 victory at home to Partizan Belgrade. The team's performance was pedestrian, but improved after Andrei Arshavin was withdrawn for the last third of the match in favor of Theo Walcott, with the match tied at 1. Partizan simply could not cope with Walcott's pace. He scored a terrific goal for the Gunners, controlling the ball off his chest in the box, and volleying it with the outside side of his boot passed the goalkeeper. The irrepressible Samir Nasri made it 3-1, finishing  a nice team move that featured some beautiful footwork just outside the box by Alex Song. Unfortunately, defender Bacary Sagna was shown a red card for a somewhat lazy challenge on a Partizan forward late in the game; the referee had judged Sagna to be the last defender preventing a clear goal-scoring opportunity. This will hurt Arsenal as they progress into the next round.

"The Catbird Seat"

I would be remiss for not remarking that it is James Thurber's birthday today. In honor of the day, I re-read one of his most famous short stories, "The Catbird Seat" (which can be read here). Wonderful stuff.

Decisions, Decisions

I will likely have exams to grade by Friday. In the meantime, I can either do some research and writing on my climate policy book or start prepping (really, reading) for my new Climate Law & Policy course next semester. It's a tough choice; I'll probably do neither.

UPDATE: I just remembered, I need to present and comment on a graduate student's paper at the Workshop's end-of-semester "mini-conference" on Monday. That goes to the top of the to-do list.

What Happens to an Island State under International Law When the Island Sinks?

If your country disappears, so that your entire population is forced to resettle in some other existing polity, do you remain a nation with a seat at the United Nations? This is a problem that some low-lying Pacific Island nations, including the Tuvalu and the Marshall Islands, already are confronting. Here is an interesting article about the problem.

Happy 88th Birthday Lucian Freud

One of the great portraitists of the last century, whose works are so arresting, sometimes grotesque, it is impossible to pass them by  without looking closely.

Here is his The Painter Surprised by a Naked Admirer (2004-2005).

Tuesday, December 7, 2010

Behavioral Law and Economics Symposium

Truth on the Market, a law and economics blog, is hosting a symposium called "Free to Choose? A Symposium on Behavioral Law and Economics." Contributors to the symposium include Richard Epstein, Claire Hill, David Friedman, Larry Ribstein, Henry Manne, Geoffrey Manne, and several other notable scholars. The contributions are thought-provoking and quite useful for anyone interested in the subject. You can read all of them here.

Several of the contributors have noted, quite rightly, that behavior law and economics so far lacks a sufficient theoretical basis for displacing conventional approaches to law and economics. This is a point Richard Posner noted in a 1998 article in the Stanford Law Review ("Rational Choice, Behavioral Economics, and the Law"). However, I think such complaints miss the point of behavioral law and economic studies, which is not so much to displace conventional theories and assumptions of rationality but to enrich and improve them. As Cass Sunstein (currently head of the Office of Information and Regulatory Affairs in the President's Office of Management and Budget) observed in a 1999 article in the American Law & Economics Review ("Behavioral Law and Economics: A Progress Report"):
[I]t is unproductive to see a general struggle between economic analysis of law and behavioral law and economics. The question is what kinds of assumptions produce good predictions about the effects of law, and this will vary with context. Sometimes the simple assumptions of conventional analysis will work entirely well; sometimes it is necessary to introduce complications by, for example, saying a bit more about what is counted in the utility function (such as a desire to be treated fairly, and willingness to punish those who act unfairly), or incorporating bounded rationality.
Sunstein's reference to "bounded rationality" is a useful reminder that the challenge to the conventional rational actor model is not a new one. The Nobel laureate Herbert Simon coined that phrase back in the 1950s. Since then, progress has been made, particularly by the likes of Daniel Kahnemann, Amos Tversky, Richard Thaler, and Sunstein himself, in defining and assessing various ways in which individuals regularly and often predictably deviate from the standard rationality assumption in decision making. But their work may be less of a threat to conventional economic theories than is often supposed. No one is arguing, for instance, that incentives (including prices) do not matter.

What I Like About President Obama's Deal with the Republicans

What the Republicans get: tax cuts extended for everyone and a lower estate tax, with an exemption for the first $5 million and a top rate of 35%. What the Democrats get: a 13-month extension of jobless benefits, a 2% reduction in Social Security payroll taxes on all wage-earners for one year, and a continuation of the college-tuition tax credit for some families (see here).

While I still don't understand the political calculus (see here) - why should tax cuts for the richest Americans be a necessary trade-off for expanding jobless benefits at a time when the unemployment rate is approaching 10%? - I support the deal on its merits because the overall effect will be at least marginally more stimulative of the economy at a time when many inside and outside of Washington are calling for budget austerity to reduce the deficit. I continue to believe that unemployment, not the debt, is public enemy #1. 

Happy 90th Birthday Fiorenzo Magni

A great Italian cyclist who won the Giro d'Italia 3 times, the Italian Road Race Championship 4 times, the Ronde de Vlanderen 3 times in a row (1949-1951). No mean achievements at any time, but it's worth remembering that Magni had to beat the likes of Fausto Coppi and Gino Bartali for his wins in Italy!

Monday, December 6, 2010

Compromise or Blackmail?

President Obama reportedly is in the process of working out a deal with Republican House and Senate leaders to extend the Bush tax cuts for the highest income earners in exchange for an extension of unemployment benefits (see here). The Obama Administration sees this as necessary compromise to protect the middle class tax cuts and help those who have lost jobs in the depression, which is what Richard Posner insists (here) is the right word for the economic downturn from which we are trying to extricate ourselves.

Where the Obama Administration sees compromise, Paul Krugman, writing (here) in today's New York Times, sees capitulation to blackmail. Krugman says that it would be better - for both the country and the President's political future - to let all the tax cuts expire, rather than to give in to Republican demands that the tax cuts must be preserved for the wealthiest of the wealthy.

As I have noted in a previous posting (here), I'm not sure of the Republican's political calculus. But I must confess that it seems to be working (and that is, after all, the ultimate test of a political strategy). However, I'm  inclined to agree with Krugman and other critics that the President is too quick to compromise, and it will cost him down the road. After all, once you pay the blackmailer, he is likely to come back for more.

The broader problem, it seems to me, is that the President has failed to articulate and stick to a principled position on policies for (a) recovering from the depression and (b) reducing long-term structural deficits. He is not leading but reacting, seemingly from a weak position. Occasionally, he calls on Congress to enact some policy without providing either strong leadership or consistent support. Sometimes, he appoints powerless bipartisan commissions, led by ex-politicos, to make recommendations that no one likes or abides. He has yet to advance and consistently push a broad economic agenda (such as Joe Stiglitz recommended earlier today, here) for solving the large-scale problems the country faces. Perhaps he's so busy meeting with his various advisers, debating ad nauseum the academic intricacies of policy alternatives, that he cannot actually settle on and stick to a course of action.

My concern is that, for fear of his enemies, Obama is acting in ways that are likely to cost him the support of too many of his friends.

Arrow, Dasgupta, Goulder, Mumford, and Oleson on "Sustainability and the Measurement of Wealth"

Kenneth Arrow et al. have a new paper that looks, at first glance, to be potentially very useful. It attempts to offer "a fully consistent theoretical framework that offers a clear criterion of sustainable development" and "yields an empirically implementable measure of whether a given national economy is following a sustainable path." The authors apply their model to five countries, including the US, China, Brazil, India and Venezuela. Of those five, only Venezuela is not on a sustainable path (Brazil's growth path is only barely sustainable).

This work constitutes an important contribution in the quest for the wholly grail of environmental economics, which is an agreed-upon model and measure of sustainability. There will no doubt be critics who will gripe about factors the Arrow et al. model includes and excludes. The authors themselves note the paucity of data needed to be collected and plugged into the model. However, it represents one of the first truly meaningful steps forward since Sir John Hicks first defined real economic growth more than a half-century ago as social revenues minus social costs, including losses to capital stocks (which can be defined to include stocks of natural resources).

The full paper can be read here.

Supreme Court Grants Certiorari in AEP v. Connecticut

Ann Carlson has the story here at Legal Planet. The case involves a claim by state and private plaintiffs that power plant emissions of carbon dioxide and other greenhouse gases constitute a federal common-law public nuisance. Among the numerous interesting issues in the case are whether the plaintiffs have standing to sue, whether the common-law claims are preempted by the Clean Air Act. I agree with Ann that the Court is likely to rule against the plaintiffs on both counts.

Joseph Stiglitz Offers a Better Economic Policy

Here at Project Syndicate. I don't see it as political feasible in the current corporatist culture that grips Washington (including not only Congress and the White House but the Supreme Court as well), but I agree entirely with his assessment of the economic issues and proposed solutions.

Happy 90th Birthday Dave Brubeck

A legendary jazz pianist and composer, who innovated the use of different time signatures in his music and incorporated modern classical sensibilities into his playing. Here he is with what was probably the greatest version of his quartet (Paul Desmond on alto sax, Eugene Wright on bass, and Joe Morello on drums) playing "40 days."

Sunday, December 5, 2010

Happy Birthday Jozef Pilsudski (1867-1935)

When Poland regained independence following World War II, after more than a century of being partitioned by other European powers, Marshall Pilsudski preserved its independence and its constitutional democracy against invasion by Soviet Russia. In the "Miracle on the Vistula," Pilsudski pushed back the Russian forces, nearly halfway to Moscow. Although Pilsudski was in spirit something of a liberal democrat, as economic and political conditions in post-War Poland deteriorated, Pilsudski staged a coup d'etat in 1926, leading a governing regime that grew increasingly authoritarian. The 1921 Constitution was amended to authorize President Pilsudski to issue decrees when parliament was not in session. Finally, in 1935 the 1921 constitution was replaced by an entirely new constitution, which declared that "the one and undivided power of the state was concentrated in the person of the President of the Republic," and all other political institutions of the state were "subordinate to him." Ironically, Pilsudski died just three weeks after the new constitution - tailor-made for him - was enacted. But he was the only man in Poland who was popular and charismatic enough to have any legitimacy as president. In his place sat a collection of colonels, who ruled Poland by martial committee. Their infighting and lack of popular legitimacy left the Polish state and economy adrift in the final years before Poland was partitioned yet again, this time by the Molotov-Ribbentrop Pact of 1939. Historians disagree about Pilsudski's place in Poland's political history, but he is undeniably among the greatest figures in Polish political and military history, and he led  Poland's Second Republic during an increasingly difficult period of economic instability and existential threats.

Saturday, December 4, 2010

Arsenal 2 - Fulham 1

Samir Nasri has been outstanding all season. Today, in the absence of Cesc Fabregas, Nasri showed that he just might be the best player in the Premier League this season. He scored both goals, the second of which is a goal-of-the-year candidate, in a hard-fought 2-1 win at home to Fulham. For the first 20 minutes, the match looked to be a walk in the park for the Gunners, as Fulham were not in the game at all. But things changed dramatically when, against the run of play, Fulham scored to tie the match at 1. After that, the Gunners were on the back foot for the rest of the first half.

From the start of the second half, the Gunners slowly regained their form, though they never dominated possession as they had in the first part of the first half. They always seemed fragile on defense. After Nasri scored his second, with about 12 minutes remaining, Fulham threw everything they had to score an equalizer, but Arsenal hung on for the victory.

Could Wikileaks Have Helped to Avoid the Iraq War?

Wikileaks is currently under fire for causing embarrassment to diplomats by its latest "dump" of diplomatic messages. I am willing to assume that the criticisms are, in this case, justified; perhaps Wikileaks even violated federal espionage laws. But we should all beware of casually accepting government claims that every state secret ought to remain secret. Sometimes, at least, publicity really is the best disinfectant.

Wikileaks was founded in 2006, three years after the George W. Bush Administration misled Congress and the entire country into invading Iraq on phony premises. Had it existed in 2003, it is worth wondering whether Wikileaks might have successfully undermined the Bush Administration's campaign of deception and prevented a war that has cost hundreds of thousands of lives, countless other casualties, many billions of dollars, and massive loss of US credibility around the globe.

Bruce Schneier Makes a Compelling Case for Closing the Washington Monument


Hat tip: Marginal Revolution.

Happy Birthday Rainer Maria Rilke (1875-1926)

An Austrian poet and novelist, probably best known for his two poem series Duino Elegies (1922) and Sonnets to Orpheus (1922) (of which I particularly like the 21st), as well as his novel The Notebook of Malte Laurids Brigge (1910). My favorite of his works, though, is his early collection, Stories of God (1900), especially the story "How Old Timofei Died Singing."

Friday, December 3, 2010

RIP: Ron Santo (1940-2010)

It is a very sad morning for all Cubs fans (whether born with the curse or infected during life). Ron Santo was simply a legend. I cannot sum up what he meant to Chicago, the Cubs organization, and millions of fans any better than the Chicago Tribune has done here.

Happy 64th Birthday Joop Zoetemelk

A Dutch cyclist (living in France) who rode and finished the Tour de France an amazing 16 times (still a record). He won the General Classification once (in 1980) and came in second five times. He also won the Vuelta a Espana in 1979, either years after winning the King of the Mountains title in the same event. Zoetemelk won Paris-Nice three times, Paris-Tours twice, and the Dutch National Road Race Championship (in 1973), and the World Championship (1985).