Monday, December 14, 2009

Hate Crimes

Sudhir Venkatesh reviews the latest statistics on hate-crimes over at Freakonomics. According to Wikipedia, hate crimes "occur when a perpetrator targets a victim because of his or her perceived membership in a certain social group, usually defined by racial group, religion, sexual orientation, disability, ethnicity, nationality, age, gender, gender identity or political affiliation." Phew.

Are these laws necessary? This summer, before the passing of the new hate-crimes bill that expanded the definition to include the sexual orientation, gender, and gender identity, Lexington argued they are not. His argument centered around a man from Texas who received 75 years in prison for a violent assault of a gay man. Surely, Lexington says, if juries in Texas are being sensitive to such issues, there is no need for a special distinction for these crimes. I tend to see the passing of these stricter sentencing guidelines as a signaling measure from legislators that they are committed to protect those who are usually discriminated against. This is a good signal to send, but whether or not these laws accomplish that goal, well, they jury is still out.

Saturday, December 12, 2009

Sumner on Macro Double Standards

Scott Sumner, who has quickly filled the void left by Willem Buiter as my favorite macro blogger, is angry about the terms in which the economics community has been framing the potential benefits of monetary and fiscal policies. The idea here is that no one (until lately) has seriously considered the potential for expansionary monetary policy. This is largely due to the fact that the Fed has had interest rates near the zero bound. I don't follow all of Sumner's views, such as his insistence that the Fed target NGDP, but the idea that monetary policy has no potential seems spurious. As Sumner points out, long as interest is being charged on deposits at the central bank, there is still some wiggle-room. Charging negative interest on these deposits is a start.

I find the left's attraction to a second fiscal stimulus weird. I recently read (I think on Delong's blog, of all places) that only about 50% of the previous stimulus' funds have been spent. Wait it out! I'm no deficit hawk, but more fiscal expansion when the first fiscal stimulus hasn't totally worn off is too much of a good thing. I hope that Sumner's ideas get even more momentum and that monetary ease is strongly considered.

Friday, December 11, 2009

Economics and Physics

I have had an ongoing debate with one of my smartest friends about whether or not economics should be considered a "science" on par with the natural sciences. Tangentially relevant to this discussion is this guest post at Aid Watch which starts by comparing economics to physics:

"The laws of economics are more powerful than the laws of physics. I once saw Deirdre McCloskey illustrate this by placing a $100 bill on the table. The laws of physics, she reminded the class, dictate that an object at rest tends to stay at rest. Economics tells us that errant $100 bills laying out in the open do not remain unattended for long. She assured the students that, were she to leave the room for several hours, economics would better predict Mr. Franklin’s fate."

What is Going on with the FT Website?

The Financial Times' website is an incomprehensible mess. Just yesterday, I was looking for a phone number and found two separate places to get a one year print subscription: one cost $99 and the other was $398. Felix Salmon has already discussed their strategy with's managing director almost a year ago, and at that time it seemed as though paywalls and truncated rss feeds would be the norm. Now, it appears that some things may be gradually changing.
A few days ago they rolled out a new blogger, Banquo. Though it's early to get the tone of the blog, he appears to be sop to the zero hedge crowd: an"insider" who hates the system and holds radical views that are so controversial he can't use his own name. Though the blog may be lame, there is one plus: a full rss feed. I quickly checked Alphaville and Gideon Rachman to see if this has become the new norm, but unfortunately this development is limited to Banquo.
(Sidenote: yesterday I saw a USA Today lying on someone's lawn. That's right, someone actually subscribes to USA Today! I thought people only read it because they were forced to in hotels.)

A Cold Game

An interesting strategic situation arose yesterday. A local bookstore is running a promotion in which it gives away iPhones, which they scatter at different local businesses. It gives clues about the location of the phones, and whoever finds them first wins. I have an old Nokia and I'm exasperated with its spontaneous vibrations, small screen, and inability to access the internet. I thought this iPhone promotion would be a good way to update cheaply.
The phone to be given away yesterday was at a store on campus called the Safe Sex Store. The store opens at noon, and whoever was the first person to enter and ask the person at the register for the prize would win. All throughout the morning, I debated my strategy and consulted with one of my professors. His first response was that I should "just go buy one yourself!", but after an explanation of my budget constraint, this is what we came up with.
  • The first person to arrive should never leave. As tempting as it may be to go across the street and enjoy a hot coffee in the -4 windchill temperatures, the chance that someone else comes and takes the top spot is too great to risk. Leaving the position of control would be a bad choice: if you get there first you should be there for the long haul.
  • The second arriver should stay and wait behind the first arriver. There is a nontrivial probability that the first arriver chickens out and leaves, gets distracted and leaves his spot open, or that the store owner will randomly select the winner from all those who are waiting. Of course, if the latter is the best possibility, the second arriver should probably leave the line as it gets longer, then show up at the very end. A line with ten people creates an expected value (assuming random selection) of only $20, an amount that most would not want to wait for. The second arriver could also attempt to pay the first arriver for his rights to the first spot.
  • A third arriver should not stay in line at all and only appear a little before noon in hopes that random selection will take place.
And what happened? I arrived at the store at 10:30, a time which I though would be more than sufficient. To my dismay, I was the second arriver. The first arriver was ridiculously bundled up and looked like he would not be deterred from his prize. Although there was probably a nontrivial probability of random selection, I did not choose to stick around: after one thirty mile-per-hour gust of wind, I was out of there.

Thursday, December 10, 2009

Guantanamo Mystery

Democracy in America discusses a report about the three mysterious deaths at Guantanamo Bay. A sampling from the report:

"There is no explanation of how three bodies could have hung in cells for at least two hours while the cells were under constant supervision, both by video camera and by guards continually walking the corridors guarding only 28 detainees."

And things only get weirder from there. Still, no direct evidence seems to link any guards or third parties to the deaths. This will be interesting to follow.

Wednesday, December 9, 2009

The First and Last Post About Tiger Woods

I am a golf nerd. I worked at a golf course throughout middle school and high school and played almost every day during most summers. I wake up early and watch the European tour, and stay up late to watch events in Asia. Golf has been a refuge from the idiocy of American culture. And then, last week happened.

Every media outlet rabidly pursued this “story” and people cannot get enough. Why? I think it has a lot to do with what Brian Eno describes as “the firehose mentality” of American journalism. Public attention is constantly whipped up in a delusional frenzy and pointed by the media towards the next relevant target. One target can’t last long, though, otherwise the mania might calm down a bit, hurting ratings and page hits. We can’t keep talking about health care: too old! Don’t print a story about the greedheads in the financial sector looting the Treasury: too depressing! And Dubai? Too hard to understand! How about a guy who may have cheated on his wife and then got into a car accident, the cause of which is unclear? Just right.

The Tragedy of Higher Education

This report on the unsavory dealings of for-profit colleges came to my attention via Mike Konczal, who, for the last few months, has hosted a very interesting discussion of consumer finance issues. Like anyone who has watched more than ten minutes of daytime television recently, I had seen a lot of advertisements for for-profit schools. According to The Washington Monthly:

In the 1980s and early ’90s, it came to light that hundreds of fly-by-night schools had been set up solely to reap profits from the federal student loan programs, in part by preying on poor people and minorities. The most unscrupulous of them enrolled people straight off the welfare lines, and got them to sign up for the maximum amount of federal student loans available—sometimes without their knowledge or consent.

The idea was to get everyone they could into their schools, get them signed up for federal loans, and collect for as long as the student could handle the work. The students would often leave with a large amount of debt but no degree, while the colleges made out like bandits. This party didn’t last long and the government set some reasonable rules.

Under the new rules, for-profit colleges had to get at least 15 percent of their tuition money from sources other than federal loans and financial aid. Also, if more than a quarter of a school’s students consistently defaulted on their loans within two years of graduating or dropping out, the school could be barred from participating in federal financial aid programs. The idea was to get rid of those schools that were set up solely to feed on federal funds and didn’t provide the meaningful training students needed to get jobs and pay off their debt. As a result, during the 1990s more than 1,500 proprietary schools were either kicked out of the government’s financial aid programs altogether or withdrew voluntarily. In an effort to rein in abusive recruiting tactics, in 1992 Congress also barred schools from compensating recruiters based on the number of students they brought in.

Everything’s fine now, right? No. As with most government regulation, the companies that were supposed to reform instead worked at getting around the rules set for them. To deal with the 15 percent rule, they pressured students to take out private student loans usually intended for law and medical students, and have worked to extend lines of credit to students in danger of a quick default so that they will not default within two years of graduation. The colleges evaded the regulations by pushing their students even more indebted. How thoughtful.

Even though they were not functioning as intended, the regulations themselves became less stringent in the early part of this decade.

In his first term, Bush packed the Department of Education with allies of the proprietary colleges. Before becoming the assistant secretary for post-secondary education, for example, Sally Stroup worked as a lobbyist for the University of Phoenix. Under her leadership, the agency took the teeth out of regulations that were designed to rein in abuses of the 1990s, including the incentive-compensation ban for recruiters.

I hate to play the blame-Bush game, but loading the Department of Education with for-profit school lackeys is like puttingRick James in charge of the “War on Drugs.”

At this point, banning for-profit universities seems to throw the baby out with the bath water. Ostensibly, these colleges do help someone. But is that someone a person who can't be helped by a legitimate Community College? I don't know, but what I do know is that Community Colleges are not dependent on subprime loans. Widespread attraction to Community Colleges is unfeasible, however, since they don't offer the same, minimally-demanding job training programs as for-profits like Everest Institute. For people that have to take care of kids and pay bills, the time and money needed to take basic coursework required by Community Colleges are a large deterrent. Perhaps a more optimal outcome would be for Community Colleges to offer a wide(r) array of job training programs.

The Real Price of Everything

This begins an experiment that I've considered for quite a while. After two years of being tied to my Google Reader (at the expense of my studies), I've decided to try to set out on my own. I am an undergraduate economics student with an intense interest in econometrics, program evaluation, monetary policy, crime, and, of course, the current financial crisis. I'm not sure how this blog will evolve. My intention is to use this blog as a learning tool: I always do better when I think things out and put them into my own words. I hope to use what I've learned in my coursework and outside reading to better engage with current issues. If you have some help to offer, I would more than appreciate it.

And the blog's name?

"The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and the trouble of acquiring it." - Adam Smith, The Wealth of Nations