Pater Familias » Politics

ARE PEOPLE LESS VIOLENT? (COMMENT).

Philip — Sun, 05 Feb 2012 03:00:00 +0000

ARE PEOPLE LESS VIOLENT? (COMMENT). Both Dick Weisfelder and Nick commented on my most recent post on concussions in football, each expressing the thought that people today are more concerned about injuries in sporting event than in the days of gladiatorial combats and bare knuckle fighting—that, as Nick put it, in many ways society is more “civilized”. They are raising issues which have been raised by a new book by Steven Pinker, the cognitive psychologist: THE BETTER ANGELS OF OUR NATURE: THE DECLINE OF VIOLENCE IN HISTORY AND ITS CAUSES. The book is considered important and controversial—so much so that it was chosen to lead off a new feature in the Guardian (the “Reading room”) devoted to discussions with readers to “explore major new works by contemporary thinkers.” This article by Pinker from 2007 in The Edge website seems to be a good introduction to the book. One sentence which bears on the comments from Dick Weisfelder and Nick: “Violence has been in decline over long stretches of history, and today we are probably living in the most peaceful moment of our species’ time on earth.’

GREECE’S ADVANTAGE IN THE CHICKEN GAME.

Philip — Wed, 01 Feb 2012 21:00:18 +0000

GREECE’S ADVANTAGE IN THE CHICKEN GAME. One advantage that Greece has in the negotiations with respect to a possible Greek default is that Greece’s moves will not be required until after the deadline. The deadline for the funding from other insitutions that is needed to prevent a default on Greek debt is in March. The spending and other economic reforms that Greece is being asked to make would be made in the future. Thus far, in previous bailout negotiations, the Greeks have promised reforms, but haven’t made them. Now, with very little time to go before the deadline, as this AP article reports, Germany is asking Greece to “temporarily cede sovereignty over tax and spending decisions to a powerful eurozone budget commissioner before it can secure further bailouts, an official in Berlin said Saturday.” The impetus for the German demand is that: “During every verification mission last year, the troika found huge implementation shortfalls….”

WINNING WITH FEWER VOTES—IOWA AND NEW HAMPSHIRE.

Philip — Fri, 06 Jan 2012 00:13:11 +0000

WINNING WITH FEWER VOTES—IOWA AND NEW HAMPSHIRE. It is bizarre that two small states have such a large role in choosing the major party candidates for President. Kids, the way that journalists have determined which candidates have “won” each in those states is even more bizarre. This article by George E. Condon, Jr., has a good description of how the press has reported on the “winners” in Iowa since 1976. One of the examples in the article is 1984, when Walter Mondale got 48.9% of the vote and Gary Hart finished second with 16.5%. The positive media response to Hart’s showing gave a huge boost to his candidacy. The history of the New Hampshire primary has been the same. The process has often been described as being about “managing expectations”. The press has tended to declare the winner to be the candidate who most exceeded what had been expected. If you are a political adviser to a candidate, the challenge is to convince voters that your candidate will do well enough so a vote for the candidate will not be wasted, but to set the bar low enough so that your candidate can exceed it convincingly.

WHY SUNK COSTS SHOULD BE IGNORED.

Philip — Mon, 02 Jan 2012 18:16:05 +0000

WHY SUNK COSTS SHOULD BE IGNORED. Kids, you have probably encountered the the economic argument that it is a fallacy to take sunk costs into consideration in making a decision (“sunk costs” are defined in this wikipedia article as “retrospective (past) costs that have already been incurred and cannot be recovered.” My post here provides an example of an economist who rigorously refuses to take sunk costs into effect in reading books: “Tyler Cowen in DISCOVER YOUR INNER ECONOMIST says that you should always be willing to treat ‘sunk costs as sunk’, to ‘let bygones be bygones.’ He says he follows this precept by finishing only one out of every ten books he starts.”

The wikipedia article points out that although economic theory says that it is irrational to consider sunk costs in making decisions, evidence from behavioral economics shows that: “Sunk costs greatly affect actors’ decisions, because many humans are loss-averse and thus normally act irrationally when making economic decisions.” An article in the American Economic Journal Microeconomics (November 2011) by Sandeep Baliga and Jeffrey C. Ely—”Mnemonomics: The Sunk Cost Fallacy as a Memory Kludge”—gives the example that: “France and Britain continued to invest in the Concorde supersonic jet after it was known that it was going to be unprofitable.” Nick can sympathize with another example: if a baseball team takes on a very expensive contract with an outfielder who is not good enough to play, it would be rational to release the outfielder and move on.

PLAYING WITH MATCHES NEAR A GASOLINE TANK.

Philip — Sun, 18 Dec 2011 21:11:58 +0000

PLAYING WITH MATCHES NEAR A GASOLINE TANK. Here is a Guardian summary of events on Friday December 16 relating to the Eurozone crisis. If you scroll through you will see that it was a hectic day. At 5:50 p.m. Fitch rating agency put six Eurozone countries—Belgium, Spain, Slovenia, Italy, Ireland and Cyprus—on rating watch negative. At 9:46 p.m. Moody’s rating agency cut Belgium’s credit rating by two notches. The Guardian was following minute by minute whether Standard and Poor’s rating agency would downgrade France. At 6:06 p.m. the Fitch rating agency announced that it has “reaffirmed France’s AAA rating, but lowered its outlook to negative.” At 11:05 p.m. the Guardian concluded that: “The French AAA rating lives to fight another day….”

In the midst of this excitement, France was casting doubt on Britain’s credit rating. At 1:09 p.m. the French foreign minister said that: “”It’s true that the economic situation in the UK is very worrying…. from an economic standpoint we prefer being French than British.” The Guardian also quotes the French prime minister as saying: “Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed.” And the head of the Bank of France, Christian Noyer, was quoted in the Guardian (December 15) as saying that the rating agencies “should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing…” The French attacks on the British credit standing seem extraordinary because a downgrade of Britain would seem to be bad for the credit of European Union countries generally, including France.

THE EUROZONE—A CHICKEN GAME WHERE EVERY MEMBER CAN BLOW IT UP?

Philip — Sat, 17 Dec 2011 21:05:16 +0000

THE EUROZONE—A CHICKEN GAME WHERE EVERY MEMBER CAN BLOW IT UP? I began a discussion of chicken games in connection with the debt ceiling negotiations (here is some of the discussion). Radek Sikorski, the Foreign Minister of Poland, gave a speech which has received a lot of attention. One of his points was: “The Euro zone crisis is a more dramatic manifestation of the European malaise because its founders created a system in which each of its members has the capacity to bring it down, with appalling costs to themselves and the entire neighborhood.” In other words, the Eurozone can be thought of as a chicken game in which any of 17 members can threaten to blow everything up.

PRICING FAT TAIL RISK.

Philip — Fri, 16 Dec 2011 03:26:36 +0000

PRICING FAT TAIL RISK. Kids, you will note that the “fat tail risks” that are currently being recognized by the crude oil markets—possible trouble in Russia or the Middle East, collapse of the eurozone— are also fat tail risks in the financial markets generally. We live in a fat tail world. Taleb says that we always did, that the markets simply didn’t recognize that we did. I posted here about how one of my first posts on this blog (some five years ago) reported that Professor Larry Summers was saying (before the beginning of the financial crisis) that “financial markets are pricing in an expectation of tranquillity as far as the eye can see.” They were not pricing in the fat tail risk that was there. Nassim Nicholas Taleb and Mark Blyth wrote in an article in Foreign Affairs this summer that: “Seeking to restrict variability seems to be good policy (who does not prefer stability to chaos?), so it is with very good intentions that policymakers unwittingly increase the risk of major blowups.” The title of the article was “THE BLACK SWAN OF CAIRO: How Suppressing Volatility Makes the World less Predictable and More Dangerous”. It is a good thing that, at least for a time, the markets are reflecting some of the fat tail risks that we face.

MY FIRST EXERCISE OF POWER.

Philip — Mon, 12 Dec 2011 22:05:26 +0000

MY FIRST EXERCISE OF POWER. I was reminiscing the other day, and Annalisa urged me to post the story. I thought about what the meaning of the story was, and it occurred to me that it was the first time in my life that I held a position of power. It was in kindergarten. A time was set aside each day in which we were supposed to nap. I can understand the reasoning behind this better now than I could see it then. I hated nap time. Sleeping was out of the question, and I had a hard time holding still, as the teacher reminded me from time to time. At the end of each nap time, one child was selected to be the “wake up fairy”, who would tap the children who had been quiet and good during nap time in the order of their quietness and goodness. This prolonged nap time for me. I was usually one of the last to be released, and it rankled. Then one day, after some months, I was given the power and responsibility of being the wake up fairy. I tapped my brother Elmer and two of our friends, and went off to play, leaving the other children to be quiet and good.

ARE THE IOWA CAUCUSES UNREPRESENTATIVE?

Philip — Tue, 29 Nov 2011 23:18:03 +0000

ARE THE IOWA CAUCUSES UNREPRESENTATIVE? Since the Iowa caucuses assumed enormous importance in 1972, they have been presented as examples of grassroots democracy and therefore worthy of their enormous importance. This interview with a “shrewdly cynical professional” presents a view of the caucuses that I have not seen before. Says the cynical professional: “You gotta have money to get the people out….It’s a muscle caucus, not a message place….You need money to hire the guys who are well connected to make sure the right people get to the caucus night. It’s not a vote; it’s a paid event.” John Batchelor, who posted about the interview, summarizes what he learned from the interview: “Iowa is not about polling, ads, or popularity; it’s about hiring agents for the long haul in order to corral caucus attenders for a bitter winter night.” In my post yesterday, I focused on some indications that a candidate could stay viable for a long time without a lot of money. The Iowa caucuses may be a reason that early money is needed to win a nomination.

THE NOMINATION PROCESS—THE PROGRESS SO FAR.

Philip — Mon, 28 Nov 2011 23:17:31 +0000

THE NOMINATION PROCESS—THE PROGRESS SO FAR. The 2012 nomination process got off to a bad start from my point of view when Governor Pawlenty withdrew in the middle of 2011 after having suffered a defeat in a straw poll in Iowa in which a very few voters took part. But I had lunch with some friends this week, and somebody asked how Rick Santorum was staying in the race. Somebody else answered that it is not that expensive now because the chief expense is the cost of appearing at all the debates. One change this year seems to be that the cable networks seem to find it profitable to broadcast debates so there are a lot of them. If so, this makes it possible for a candidate not to be eliminated early on by an inability to raise money. This year it seems that both Herman Cain and Newt Gingrich have been able to improve their positions to this point without raising much money. Perhaps they will serve as examples four years or eight years from now.

IS THERE HOPE FOR A BETTER NOMINATION PROCESS?

Philip — Sun, 27 Nov 2011 23:11:21 +0000

IS THERE HOPE FOR A BETTER NOMINATION PROCESS? Almost five years ago, I began a series of posts here, all of which expressed a hope for a better presidential nomination process. I had a quote from Michael Barone which summarized a number of my objections to the current system: “It starts too early, takes too long and ends too abruptly….It excludes many serious candidates….The process gives too much power to Iowa and New Hampshire.” I think that progress was made in 2008 because the theory that a party must choose its candidate early or be severely handicapped was dealt a blow. The contest between Hillary Clinton and Barrack Obama lasted a long time and gave people in most states a chance to vote. And I think the Democrats were helped by the opportunity to make their arguments. So I have been looking forward to further progress in 2012. My dream for down the road is that there would eventually (in 2020 perhaps) be several senators and several governors who remain in active consideration during an election year until most of the states have had a chance to vote. Which would mean that there would often be a contested convention.

HOW CAN LOG ROLLING BE UNWOUND? (COMMENT).

Philip — Thu, 29 Sep 2011 23:19:45 +0000

HOW CAN LOG ROLLING BE UNWOUND? (COMMENT). I posted several times about looking at the budget negotiations as a chicken game and Dick Weisfelder commented here about how the negotiations turned out. A 12 person super committee was appointed to make recommendations on a combination of measures, including expenditure cuts, to reduce the deficit. It occurs to me that the legislators have a lot of experience with log rolling—putting together a large number of programs and expenditures and other actions, each of which are highly valued to one or a few legislators, so as to pass a large complicated bill. A popular bill can be used as a “Christmas tree” on which various less popular provisions can be hung. Will this work in reverse? Here, on the whole, there are no popular provisions to carry along less popular ones. These are cuts which Congress does not want to make. How do you paste together coalitions in these circumstances?