Thursday, July 29, 2010


People sometimes mistake me for a libertarian. This is not the case. Like libertarians I value individual freedom. So in cases where increasing individual freedom does not impose unreasonable costs I will tend to agree with the libertarian position. However I am more likely than libertarians to see trade offs between individual freedom and other values. Both because I give greater weight to other values (such as order) and because I have a different (and in my view more realistic) picture of how the world works. So I don't oppose all restrictions on the market. As I indicated here I don't believe people have some sort of natural right to prey upon the stupid and I support reasonable measures to prevent them from doing so.

These thoughts were prompted in part by this post by Tyler Cowen in which he compares restrictions on high interest lending to restrictions on gay sex. In my view this is an example of the folly to which excessive devotion to libertarian principles can lead. There are in fact good reasons for regulating business transactions more heavily than the same actions in a non-commercial setting. And in fact we ban commercial gay sex (prostitution) entirely.

So I don't think loose usury limits are a major imposition on my freedom. And if they prevent some bad credit risks from getting loans? Well if I recall correctly Adam Smith thought this was a feature not a bug and I am not convinced he was wrong.

Wednesday, July 28, 2010

NYT AIDS story

I think the New York Times is a pretty good newspaper in general but this story on an AIDS prevention gel for women is just dreadful. It starts:

The best AIDS-prevention news in years was released here last week at a world conference on the disease: a vaginal gel, called a microbicide, that can be used without a man knowing it, gave women a 39 percent chance of avoiding infection with the deadly virus.

Thirty-nine percent is, obviously, not perfect, though the women in the South African trial who used the gel most faithfully did better, achieving 54 percent protection.

It is completely unclear what the 39% and 54% are referring to and this is not explained in the remainder of the story. I suspect this is because the reporter had no clue. But if he can't explain what these numbers mean they shouldn't be in the story.

Sunday, July 25, 2010

Missing the point

James Webb, a somewhat atypical Democratic Senator, recently argued that affirmative action should be limited to African Americans. Kevin Drum manages to completely miss Webb's point and responds by calling for replacing race based affirmative action with class based affirmative action. Whatever the merits of this position it is more or less the opposite of what Webb is arguing for. Webb is not objecting to race based affirmative action for blacks which he believes can justified on the basis of the injury slavery and its legacy did to blacks. Webb is objecting to extending affirmative action to groups with no comparable moral claim both because this is unfair to the groups not included and because it reduces the benefit to blacks. Drum's proposal would further remove affirmative action from what Webb believes is its only legitimate purpose and moral basis, alleviating the harm done by slavery.

Sunday, July 18, 2010

Progressive consumption taxes

According to Matthew Yglesias:

In terms of reform it, the frustrating thing is that everyone agrees that it would be better to have a progressive consumption tax than a progressive income tax. And yet, nobody does this and there’s no sign of a political move to do it. So if there were to be a major political push toward reforming the tax code, why not reform it all the way?

This sounds good (and would benefit misers like me greatly) but there is a problem. There is a quite plausible case that the root cause of our current difficulties is that people are trying to save too much. This can cause cuts in production (and layoffs) because people do not want to currently consume all that the economy is capable of producing. Or it can cause asset price bubbles and bad loans as the amount of savings exceeds the amount of worthwhile investment opportunities. If so a progressive consumption tax would just make things worse.

Saturday, July 10, 2010

Free money

A lot of people, some of whom should know better, seem to think that a low interest loan is the same as free money. Here Ezra Klein argues that the US government should take advantage of the current low interest rates to borrow a lot of money. This is not a good reason for individuals to borrow money and it isn't a good reason for the government to borrow money. If the money is going to wasted, as I expect most of it would be, a low interest rate doesn't help a lot.

Tuesday, July 6, 2010

Rounding error

Here is an easy math puzzle. Suppose we have 3 random variables a,b and c with c=a+b. We round a to A, b to B and c to C and want to know the chances that C=A+B. We need some more information for an unique answer. So for definiteness let a and b be random real variables uniformly distributed between 0 and 50. Let c=a+b and let A,B and C be a,b and c rounded to the nearest integer (it won't matter how .5 cases are rounded). Then we ask what is the probability that C=A+B?

This problem was inspired by the recent furor regarding the Research 2000 polling operation in which it has been suggested that Research 2000 was saving money by making up its poll results. However it is unclear if the above problem actually has any connection to the anomalies that have been found in the Research 2000 results.

Monday, July 5, 2010

Oil and Obama

I haven't been too critical of Obama's somewhat floundering response to the Gulf oil spill because in truth it hasn't seemed that there was really that much to be done. However one thing he (or his appointees) could do is make sure the cleanup effort is not being needlessly obstructed by government regulations and red tape. This story suggests this is not being done.

The Americans don’t have spill response vessels with skimmers because their environment regulations do not allow it. With the Dutch method seawater is sucked up with the oil by the skimmer. The oil is stored in the tanker and the superfluous water is pumped overboard. But the water does contain some oil residue, and that is too much according to US environment regulations.

In my opinion this regulation (intended to prevent pollution from ships flushing out their fuel tanks with water and the like) shouldn't apply to skimmers which are discharging cleaner water than they took in. It clearly doesn't make any sense for the current spill where the alternative to removing 99% of the oil is removing 0% of the oil. Apparently the Dutch skimmers have now been approved for use in the Gulf after a long delay. Hopefully this sort of thing is not actually a significant problem. However I have seen a number of claims to the contrary (most admittedly by people with axes to grind).