What To Learn About Next?

I’m planning to do some serious heavy reading, but I’m torn between several choices of what to study next.

After reading Radley Balko’s article using a police shooting video to illustrate the faulty nature of human memory, and stumbling across Nathan Burney’s comic book explanation of the neuroscience behind faulty memory, and seeing a Reason interview about evolutionary psychology, I’d like to learn more about the science of cognition. I’ve read a few popular books on the subject over the years, and I think I’m ready for something more serious, like a college textbook. I’m not sure whether I want to focus on cognitive psychology, which explores what our minds do, or cognitive neuroscience which explores the underlying neurological mechanisms. Textbooks are expensive, so I need to clarify that before buying anything.

Meanwhile, I’m trying to take my amateur economic studies in the direction of public choice theory, and toward that end I’ve been meaning to read Ronald Coase’s The Firm, the Market, and the Law. Coase was incredibly influential, and changed the way economists think about transactional and social costs. Normally I don’t try to read the great works in a field because great thinkers aren’t necessarily great explainers — nobody learns physics from Newton’s Philosophiæ Naturalis Principia Mathematica or evolution from Darwin’s Origin of Species. However, I’ve heard that The Firm, the Market, and the Law is quite readable for someone with a little basic knowledge of microeconomics.

On the other hand, I think I’d like to learn more about behavioral economics. The traditional microeconomic model of human decision making assumes that people are rational utility maximizers, meaning that they want to be happy, and that they work toward that goal as efficiently as possible in the face of scarce resources and uncertain outcomes. This absurdly simple model (a.k.a. homo economicus) is the economists’ equivalent of the physicist’s assumption that everything is spherical and frictionless — it’s not true, but it still gets you pretty far. Recently, economists have started trying to predict economic decision making using more sophisticated behavioral models that assume people make systematic errors that deviate from rational utility maximization. It’s an obvious point, but one that is hard to analyze rigorously. Again, I’m looking for some textbook-level reading in this area. I think there are a couple of books that might work.

Finally, I think I’d like to do some reading about attempts to use economic thinking on the subject of crime and punishment. Economists are pretty good at explaining some types of criminal activity — markets in illegal goods and services work a lot like any other markets — but not so good at addressing issues like the deterrent effects of punishment. Economists are pretty certain that criminals must respond to incentives like everyone else, but a lot of people who work with criminals are equally certain that punishment is rarely a deterrent. Some of the new behavioral economic models may resolve the discrepancy, and so I’d like to learn more about what the scientific literature says. The is not a well-defined field, however,  which probably means I’d have to read a lot of primary sources, and I’m not sure I want to get into it that much.

I’ll figure something out. The world is a fascinating place.

Some Questions to Ask About Those New York Nail Salons

The New York Times has a fascinating story by Sarah Maslin Nir about conditions in New York nail salons. According to her, thousands of immigrant nail technicians are being exploited by salon owners.

As if on cue, cavalcades of battered Ford Econoline vans grumble to the curbs, and the women jump in. It is the start of another workday for legions of New York City’s manicurists, who are hurtled to nail salons across three states. They will not return until late at night, after working 10- to 12-hour shifts, hunched over fingers and toes.

On a morning last May, Jing Ren, a 20-year-old who had recently arrived from China, stood among them for the first time, headed to a job at a salon in a Long Island strip mall. Her hair neat and glasses perpetually askew, she clutched her lunch and a packet of nail tools that manicurists must bring from job to job.

Tucked in her pocket was $100 in carefully folded bills for another expense: the fee the salon owner charges each new employee for her job. The deal was the same as it is for beginning manicurists in almost any salon in the New York area. She would work for no wages, subsisting on meager tips, until her boss decided she was skillful enough to merit a wage.

It would take nearly three months before her boss paid her. Thirty dollars a day.

It’s a well-reported, well-written story, and I have no doubt that there are some bad things going on in the nail salons. However, I think Nir is missing some important aspects to what’s going on in New York nail salons. When you encounter a tale of exploitation like this, there are some important questions you need to ask.

Probably the first of those question should be, If working in the nail salons is so awful, why don’t the women don’t just quit and get better jobs?

I’m sure just asking that question will make some readers want to tell me to “check my privilege,” but I think it’s important to think seriously about the answer. The news is full of complaints about McDonald’s and Walmart employees being paid only the minimum wage. That’s still more than these nail technicians are earning, so you’d think they would be applying for those jobs, offering to work for the same pay (but without protesting in the streets about it). So why don’t they? Why don’t they get better jobs?

Nir never address the issue directly, but she nevertheless supplies a few answers:

Almost all of the workers interviewed by The Times, like Ms. Ren, had limited English; many are in the country illegally. The combination leaves them vulnerable.

These workers are foreigners in this country illegally, so the biggest reason why these women can’t get better jobs is that the United States government doesn’t want them to work here at all. Most legitimate businesses, including major employers like McDonald’s and Walmart, are simply not allowed to hire them. They have to take what work they can get.

Also, they’re probably afraid to complain too much about working conditions because they fear they’ll be deported if they attract too much attention. My boss can only fire me, but Ms. Ren’s boss can get her thrown out of the country if she pisses him off.

Besides, even if their immigration status allowed them to work here legally, they still wouldn’t be allowed to work as nail technicians in New York because they haven’t met the state licensing requirements.

Between U.S. immigration law and New York State professional licensing requirements, government restrictions have robbed these women of much of their bargaining power.

The next question to ask is What do these women have to offer employers?

Not much, according the the facts in Nir’s story. Most of them don’t even know how to do the job yet, so they will have to be trained by whoever who hires them, and their inability to speak English means they can’t serve a customer without help.

In fact, their lack of English language skills severely limits the jobs they can do: Not only do they need to find a job where talking to English-speaking customers is not a requirement, they are also limited to seeking employment at businesses where the managers speak their language.

Another question to ask is What do these women get out of this?

The 20-year-old woman mentioned in the quote above, Jing Ren, starts out by paying $100 to get the nail salon job, and she works for almost three months for free, after which she earns $30/day for a 10-12 hour shift. Here’s the last report on how she’s doing:

She quit on March 8. Her boss said nothing; one colleague hugged her goodbye. After 10 months she had made about $10,000, she said.

Last month, she found a $65-a-day job at another nail salon.

Even if she only works an 8-hour day, that’s less than the New York minimum wage (but more than the minimum for tipped employees).

That doesn’t sound very good, but it does bring me to the next question. These workers certainly make less than regular American workers, but How do their wages compare to wages where they came from?

The Davos global wage calculator tells me that the average private sector wage in China is 32706 CNY, or about $5267. So Ms. Ren paid the equivalent of one week’s wages for the average Chinese worker to get her nail salon job, and worked for free for three months, and yet still managed to earn $10,000 that year. That means that at the age of 20 she is already earning the world average wage, or almost double the average wage in China. With her new $65-a-day job, she will be able to repeat that annual performance by working only three days a week. If she works a full five days a week, she will earn triple the average Chinese wage.

To put that in perspective, the equivalent for an American would be a 20-year-old without a college degree getting an offer to work overseas, paying an $800 fee to get into the program, working through a 3-month internship, and then going on to earn $80,000 the first year and $120,000 the next.

I’m not saying that all the nail salon owners are wonderful people — there’s way too much going on in that article (and its followup) to believe that. Nevertheless, that hasn’t stopped an ambitious, hard-working, risk-taking young immigrant like Ms. Ren from prospering. And as with most immigrants, if she has children, they will probably do even better.

(Obviously, I don’t know much about Ms. Ren’s specific circumstances, and I’m greatly simplifying things for purposes of this post, but I don’t think it invalidates the point that she seems to be doing pretty good compared to where she came from.)

The last question, and arguably the most important one, is What do these women want?

We can figure out what these women want by looking at the choices they make. Jing Ren chose to leave her home and cross the ocean to America to work as a nail technician in a string of seedy New York nail salons. And within a year, her mother came over to do the same. That tells us a lot.

Which brings me to my special bonus question: What happens next?

Well, the Governor has a (hastily pulled together) plan of sorts:

Gov. Andrew M. Cuomo ordered emergency measures on Sunday to combat the wage theft and health hazards faced by the thousands of people who work in New York State’s nail salon industry.

[…]

Nail salons that do not comply with orders to pay workers back wages, or are unlicensed, will be shut down.

In other words, if Cuomo’s task force finds workers who are being exploited, they will solve the problem by taking away their jobs? I understand that the goal here is to coerce nail salons into treating workers better by threatening to put them out of business, and it’s possible that this could have a net positive effect. But I guarantee that talk like this is scaring the crap out of all those workers Cuomo says he’s trying to protect. This could easily turn into a disaster that puts thousands of them out of a job. And if Cuomo thinks the nail salons are exploitative, he’s really going to hate some of the alternatives (NSFW).

“We will not stand idly by as workers are deprived of their hard-earned wages and robbed of their most basic rights.”

“Basic rights” like the right to work in a job they find acceptable for a wage they find acceptable?

Some of the proposed regulations seem like they might improve health and safety, but others show a real lack of understanding of the problem:

Salons will now be required to be bonded — which is intended to ensure, through a contract with a bonding agency, that workers can eventually be paid if salon owners are found to have underpaid the workers.

Yeah…salon owners employ illegal immigrants to do unlicensed work at illegal wages, but I’m sure they’ll get right on that bond thing…

The framework for the emergency measures began to take shape shortly after the first article was published on Thursday, according to Alphonso B. David, counsel for the governor. Staff members from several agencies reacted strongly, and began to call one another upon reading the findings, convening on Friday for hours of brainstorming sessions to hash out the plan. A decision was made to take emergency measures rather than go through the usual route by which policies are updated, which involve time-consuming steps like periods of public comment […]

I hear all the best government work begins that way. What could possibly go wrong?

Well, for one thing, the plan to force nail salons to pay their workers more might succeed. As Rich Lowry puts it in his wildly off-the-mark opinion piece,

Surely, one reason that salons can pay so poorly is that the supply of illegal workers is so plentiful.

And this supply of labor must, at least at the margins, crowd out workers already here who might consider working in salons if pay and conditions were better.

These immigrant women bring very little to the bargaining table except their willingness to work in unpleasant conditions for low pay. If you force the salon owners to spend more money on wages and equipment, they’re not going to stick with their unskilled labor force. They’re going to replace them with nail technicians who are already trained, who speak English, and who have the legal right to work here.

Apparently there’s also been a public backlash against low-cost nail salons in New York, with lots of middle class women saying they’ll stop using them. I think their hearts are in the right place, but a move like that that could put the cheap nail salons out of business, which would put immigrant workers like Ms. Ren out of a job.

I understand the desire to try to help, but it’s important to remember that these nail salon jobs (and other low-paying jobs like them all over the country) provide a path up out of poverty for thousands of people every year. The wrong response could shut that down and do a lot more harm than good.

Fifth Annual Windypundit Road Trip Coming Up

For the fifth year in a row, we’re planning a summer road trip. Unlike the previous four trips, we won’t be traveling to the east coast this time. Instead, we’re planning to stay a few days in each of Memphis and Nashville, and we’ll also be stopping in Louisville and St. Louis.

2015 Road Trip

Since I referred to the previous trips as the “Windypundit Coastal Dash”, I was trying to come up with a snappy name for this one. In keeping with the tone of this blog, I had pretty much settled on the “New Madrid Seismic Zone Excursion,” but since this trip is also sort of an early celebration our 25th wedding anniversary, I decided to go with something less darkly portentous.

As usual, it would be great to meet up with some friends of the blog along the way. So far I’ve managed to visit with Jennifer Abel, Jeff Gamso, Mirriam Seddiq, Norm Pattis, and Gideon, and it would be nice to meet a few more of you. So if you’re in one of the cities or on the route, let me know soon so we can plan.

A Rule Made To Be Broken

There’s an interesting bit of detail in this post about legal tech from Brian Tannebaum, talking about the policies governing electronic devices brought into the courtroom:

In the Southern District of New York, you can bring in one device, but if you are not a member of the SDNY Bar, you have to file a motion to bring in your one device. Pick your poison – cell phone, iPad, laptop. […] So decide what’s more important – keeping in touch with the office, witnesses, opposing counsel, clients, or having your documents available electronically and the ability to type.

Let’s get past the fact that the court doesn’t seem to realize that lawyers bring electronic devices into the courtroom because they need them to do their job and go right to the real question: Do lawyers in the Southern District of New York hire stooges to carry additional devices for them?

(My wife and do something like that at the grocery. If a sale item has a limit of one per person, we buy two of them by telling the cashier we’re paying for them separately. I’ll leave it as an exercise for the reader to figure out which one of us is the stooge.)

Actually, from a quick glance at the rules, it looks like only attorneys are allowed to bring in devices. This suggests to me that more than a few second or third chair lawyers aren’t really on the team because of their legal skills. In fact, this sounds like a perfect job for a law student: “Hey kid, you want to have front row seat at a federal trial? Great! Carry this.”

Granted, the rules do say that “The Personal Electronic Device may not be shared with any other person,” but these are lawyers we’re talking about. I’m sure they’ve figured out some way to game that rule by now.

It Helps To Get the Elementary Economics Right

One of the places I look for blog material is the Post Everything section at the Washington Post, and one of the regular contributors is Jared Bernstein, who bills himself as “former chief economist to Vice President Biden,” which doesn’t sound like the kind of employment you’d want to brag about.

Anyway, Bernstein has a post about the Trans-Pacific Partnership (TPP) trade agreement that is currently winding up negotiations, and which will soon be up for ratification by Congress. He criticizes supporters of the agreement for being too simplistic (emphasis mine):

Supporters of the Trans-Pacific Partnership (TPP), a trade agreement under negotiation between the United States and 11 other countries, make this case: Trade between countries is always good, and more trade with more countries is even better. Harvard economist Greg Mankiw goes further in a recent New York Times piece, arguing that anyone opposed to trade deals does not understand elementary economics.

Note the highlighted phrase. Because two paragraphs later, he writes this (emphasis mine again):

In the simple models of introductory textbooks, countries improve their respective economic outcomes by specializing in their “comparative advantage” — the goods they produce more efficiently than their trade partners — thereby increasing the supply of goods and lowering prices.

Actually, that’s not what comparative advantage is. In fact, it’s a common misunderstanding of comparative advantage. If Bernstein was an Economics 101 student, I think he’d lose a bunch of points for giving that definition in an exam.

Consider a pair of dentists, Alice and Bob, who make all of their money filling cavities and doing root canals. Patients needing a filling are willing to pay $100, and patients needing a root canal are willing to pay $200, and they arrive with equal probability.

Alice has years of experience and is very fast at everything. She can fill a cavity in 20 minutes and do a root canal in 30. Thus, in an 8-hour day she can serve an average of 9.6 patients of each type, earning an average of $960 for doing fillings and $1920 for doing root canals, for a total of $2880 per day.

Bob is a new dentist, and he’s a lot slower. It takes him 30 minutes to fill a cavity and 90 minutes to do a root canal. At that rate, he can only see an average of 4 patients of each type per 8-hour day, earning an average of $400 for doing fillings and $800 for doing root canals, for a total of $1200 per day.

Now suppose Alice and Bob combine their offices and share all their patients, splitting the work as efficiently as possible. In that case, Alice will do 16 straight root canals in each 8-hour day to earn $3200 per day, and Bob will do 16 straight fillings in each 8-hour day to earn $1600 per day.

Note that both Alice and Bob make more money by splitting the work. And note that it’s worth it for Alice to let Bob do some of the work even though she is better at everything than he is.

We can see why this works by looking at their respective opportunity costs for each procedure.

  • Alice earns $300/hour doing fillings and $400/hour doing root canal procedures, so she makes more money by doing root canal procedures. Looked at another way, every hour she has to spend filling cavities instead of doing root canals will cost her $100. Alice therefore prefers to do root canals.
  • Bob earns $200/hour doing fillings and $133/hour doing root canal procedures, so he actually makes more doing fillings. Looked at the other way, every hour he spends doing root canals instead of filling cavities will cost him $67. Bob therefore prefers to fill cavities.

Thus, even though Alice as an absolute advantage over Bob in everything, she’s still better off by letting him fill all the cavities so she can do all the root canal procedures because she has a comparative advantage in root canals and he has a comparative advantage in fillings.

Of course, Alice and Bob don’t have to merge offices to do this. They can simply refer patients to each other. It’s still better for both of them that way. And if Alice and Bob are in separate countries, then whenever Alice refers a patient to Bob, that would count as an import from Bob’s country to Alice’s country, and vice versa.

(I probably should have picked an example with transportable goods instead of services — maybe bakeries where one is more efficient at making cakes and the other is more efficient at making pies — but it works out the same. When you buy services from outside your country, such as staying overnight in a hotel as a tourist, it counts as an import in the national accounts, the same as if you’d imported a physical good.)

That’s comparative advantage. Bernstein defined it as applying to “the goods they produce more efficiently than their trade partners,” but even if a country doesn’t produce anything more efficiently than its trading partners, it will still make economic sense to concentrate on the things it does best and outsource production of the rest to other countries. Thus there’s always something for everyone to do, no matter how inefficiently they do it.

It doesn’t really make much of a difference in the rest of Bernstein’s article — he goes on to make a good point about the lack of transparency in TPP negotiations and a dubious point about currency manipulation — but if you’re going to argue that academic economists are using a theory that is too simplistic, it helps if you state the theory correctly.

Privacy Violators Reaping What They Sow

I don’t know anything else about Representative Ted Lieu, but I do like what he said after hearing law enforcement types testify that the American people not be allowed to use strong encryption:

It’s a fundamental misunderstanding of the problem. Why do you think Apple and Google are doing this? It’s because the public is demanding it. People like me: privacy advocates. A public does not want a an out of surveillance state. It is the public that is asking for this. Apple and Google didn’t do this because they thought they would make less money. This is a private sector response to government overreach.

I’ve made a similar point myself.

Then you make another statement that somehow these companies are not credible because they collect private data. Here’s the difference: Apple and Google don’t have coercive power. District attorneys do, the FBI does, the NSA does, and to me it’s very simple to draw a privacy balance when it comes to law enforcement and privacy: just follow the damn Constitution.

And because the NSA didn’t do that and other law enforcement agencies didn’t do that, you’re seeing a vast public reaction to this. Because the NSA, your colleagues, have essentially violated the Fourth Amendment rights of every American citizen for years by seizing all of our phone records, by collecting our Internet traffic, that is now spilling over to other aspects of law enforcement. And if you want to get this fixed, I suggest you write to NSA: the FBI should tell the NSA, stop violating our rights. And then maybe you might have much more of the public on the side of supporting what law enforcement is asking for.

More than that, you need to create an accountable process, and you need to create a credible deterrent to the misuse of surveillance powers. It has to be something more transparent and believable than the usual promises of internal safeguards that we have no way to evaluate. Monitor the process, report violations to Congress, send violators to Leavenworth. If you’re not willing to punish law enforcement officers for violating our privacy, then your claim to respect our privacy isn’t for real.

Then let me just conclude by saying I do agree with law enforcement that we live in a dangerous world. And that’s why our founders put in the Constitution of the United States—that’s why they put in the Fourth Amendment. Because they understand that an Orwellian overreaching federal government is one of the most dangerous things that this world can have.

Yup.

Kirsten Gillibrand Put a Kitten In A Blender

I have decided I can no longer remain silent, and it’s time to come forward with my story:

Last summer, on June 28th, I saw Arizona Congresswoman Kirsten Gillibrand place an 8-week old calico kitten in a DeWalt 5-quart blender and press the start button, killing it instantly. She then feasted hungrily on the bloody remains, consuming the poor creature, scales and all. It is the single most vile act of animal cruelty I have ever witnessed, and by coming forward now, I hope to put a spotlight on the problem of animal cruelty.

Update: It has come to my attention that Kirsten Gillibrand is actually a Senator. I regret the error, but I stand by the substance of my story, and by coming forward, I hope to put a spotlight on the problem of animal cruelty.

Update: A zoologist who reads my blog has pointed out that the material covering the skin of domestic cats is technically referred to as fur not scales. I acknowledge his superior grasp of feline anatomy and I regret my error, however I still stand by the substance of my story and I hope it will put a spotlight on the problem of cruelty to animals.

Update: Further research has revealed that Senator Gillibrand represents New York, not Arizona. I once witnessed Arizona Senator Tom Udall throw an armadillo in a wood chipper, and apparently in my emotional distress I had conflated the two incidents. I regret the error, but I stand by the substance of my story, which I hope to put a spotlight on the problem of mistreatment of animals.

Update: Friends have pointed out that on June 28th of last year I was actually in Kentucky attending the wedding of my cousin Margery. Still, I’m sure the incident must have been in June or early July. Maybe August. Anyway, I regret the error, but I stand by the substance of my story. And I hope this will put a spotlight on the problem of cruelty against animals.

Update: A spokesperson from the DeWalt corporation has apprised me of the fact that DeWalt is a manufacturer of portable power tools, not kitchen appliances. I once witnessed George Clooney cut the head off a goat with a reciprocating saw and I had conflated the two incidents. The implement used by Senator Gillibrand was actually a Hitachi blender. I apologize to the DeWalt corporation for my error, but I stand by the rest of my story, which I hope will put a spotlight on the problem of mistreatment of animals.

Update: Dearest visitors, loyal readers, it is with a heavy heart and a sorrowful soul that I put pen to paper to write this paragraph. After extensive consultation and prayer with my spiritual advisers, I have come to realize that I may have inadvertently posted a message earlier today that might have lead some readers to incorrectly conclude that I had seen New York Senator Kirsten Gillibrand kill a kitten in a blender and consume the entrails.

I apologize if any of you feel I may have mislead you, and while I regret the error, the issue of cruelty to animals is a serious one, so I hope it’s just putting more of a spotlight on the problem. I hope it’s not undermining our advocacy, because this is important.

I’m sure Senator Gillibrand will understand, because she expressed a similar sentiment when said she hopes the recent news coverage of the UVA campus rape hoax will put a spotlight on the problem of campus rape:

Update: I’m sorry. Every sane person knows that using false or highly suspect examples to support your argument is a good way to undermine the very cause you’re fighting for. I only wrote that earlier stuff because somebody gave me a bad batch of Flakka. I don’t know what Senator Gillibrand’s explanation is. Maybe she uses the same Flakka dealer.

(Hat tip: Simple Justice.)

Equal Pay Won’t Help GDP

I stumbled across an In These Times article by Amy Domini and Sofia Faruqi called “5 Ways To Reduce Inequality By Holding Corporations Responsible.” It’s pretty much the usual progressive game plan, but one particular sentence in the last proposal caught my eye (emphasis mine):

5. Help women to prosper: Women are twice as likely as men to work for minimum wage. The gender pay gap in the retail sector alone costs women $40 billion annually in lost wages. This wasn’t so bad in 1960 when only 11 percent of American households had a female head, but it’s dire today when women are the primary breadwinners in 40 percent of homes. Plus, it’s bad for the economy. Equal pay would raise American GDP by 2.9 percent, or $448 billion.

The numbers in that last sentence are stunning, but I couldn’t see how equal pay legislation could increase GDP.

Tracing the link in the original article leads to last year’s U.S. Senate Budget committee testimony by Heather Boushey, Executive Director and Chief Economist for the Washington Center for Equitable Growth. She in turn cites a 2014 briefing paper titled “How Equal Pay for Working Women would Reduce Poverty and Grow the American Economy” by Heidi Hartmann, Jeffrey Hayes, and Jennifer Clark of the Institute for Women’s Policy Research.

Here’s what that paper has to say in the summary of its findings. Notice the very careful phrasing (emphasis mine):

The U.S. economy would have produced additional income of $447.6 billion if women received equal pay; this represents 2.9 percent of 2012 gross domestic product (GDP).

The paper gets to those numbers by using data from the 2010-2012 Current Population Survey Annual Social and Economic Supplement to estimate the pay difference between men and women, controlled for age, education, annual hours of work, metropolitan residence, and region of the country. The authors then use those figures to project how much more money women would have made if they had been paid the same as men.

The authors calculated that women earned an average of $36,129 a year, and that their pay was 85% as much as men for the same work. So if women earned as much as men, they would be earning $42,380 per year. That’s an increase of $6,251 a year for all 71.6 million working women. Multiply it out, and you get $447.6 billion, which is 2.9% of GDP. (I get a slightly different figure when I do the math, but it’s close enough.)

Income and production are two sides of the same process: We earn our income by selling our production of goods and services, and we spend that income buying and consuming the same goods and services. So if our collective income increases, production must also have increased. Consequently, if women earn more money, and they do not do so at the expense of anyone else, then the additional income would have to increase gross domestic product.

(There are actually many variations on income and production figures, depending on which components and flows are included in the calculations, and care has to be taken to add and subtract the right components when transforming numbers between two national accounts. In the U.S. we calculate GDP from both production data and from income data. In theory, this is an accounting identity, but there are always data discrepancies that keep income and production figures from matching exactly.)

The point of the careful phrasing in the summary is that $447.6 billion is the estimated amount that GDP would have been higher if women had somehow earned at the same rate as men, all other things being equal. How exactly that could happen is carefully left unsaid. In particular, the study does not say that equal pay legislation would increase GDP by that amount.

If we just passed a law that forced employers to pay women 17% more for their work, that would increase women’s paychecks, which would increase the national income accounts…but not really.

For an economic story to make sense, it has to make sense when applied to the real economy of goods and services. So even though U.S. GDP is expressed in dollars, what really matters is the total amount of goods and services that are produced. So in order for GDP to increase by $447.6 billion, it’s not enough for paychecks to increase by $447.6 billion. Our economy must actually produce $447.6 billion worth of additional goods and services.

But by definition, the equal pay legislation is simply giving women more money for the work they are already doing, which means that the increase in paychecks is not accompanied by an increase in the production of real goods and services. We’d be paying more money for the exact same stuff.

When you pay more for the same thing, we call it inflation. The U.S. Bureau of Economic Analysis calculates both nominal GDP, which is inflated, and real GDP, measured in constant dollars adjusted for inflation. The increase in women’s nominal earnings would show up as inflation of nominal GDP, while real GDP would be unchanged.

Since we’re not raising men’s incomes, the inflation would actually eat away at their real earning power. So the benefits to women would come at the expense of men. Women would be getting a larger share of the pie, but the pie would still be the same size. The deadweight $447.6 billion gain to GDP that Domini and Faruqi envision from the simplistic IWPR calculation is a fantasy.

It Helps To Have an Argument

Somebody named Joe left a comment explaining that he didn’t like my post about New York rent control. I was going to reply in the comments, but my response got long enough that I decided to make it a post. Normally, I do that when a commenter brings up interesting points, but in this case I wanted to point out some particularly annoying argument tactics.

It’s sad that, as soon as the second paragraph, the writer here demonstrates the ignorance of rent regulation laws in New York City that advocates indicated exists on the panel. It’s almost as if advocates said, “beware if you write about rent regulation in NYC – because you probably do not understand it” and then the author proceeded to prove them right. Once you address this fundamental error in paragraph 2 I will read the rest of the article: “And apparently sets increases to the same amount for everyone, as if there was no variation in the housing market from one neighborhood to the next.”

I will not help you out by explaining how this is almost, but not quite completely, wrong. Please contact people at whatever organization offering expertise in this area and they will explain it to you. Until you do, writing about rent regulation in NYC should be in your “Let me wait and find out first” file (lol) and when this is corrected, I, for one, will be happy to read the rest of the article.

First of all, I don’t particularly care if Joe reads the rest of my post. (Or this one.) But he shouldn’t criticize it as broadly as he does later if he hasn’t actually read it. It’s like a reviewer who says he walked out of a movie and then complains about the ending.

Second, telling me I’m wrong and then not explaining why is a weak attempt to hide the lack of an argument. This isn’t Twitter, where space is limited. Joe could easily have written a brief argument or provided a few links.

Third, when you write “I will not help you out by explaining,” you’re not fooling anyone. We’ve all seen that trick before:

“Lots of zoologists will tell you that unicorns are real!”

“Like who?”

“You can find them if you know where to look.”

“Do you have any names? Or maybe a link?”

“I’m not going to do your work for you.”

Joe’s trying to spin his response as if he’s refusing to help a lazy writer like me find something obvious, in the hope that no one will notice that he hasn’t provided support for his argument.

Fourth, my main source for the assertion that rent control “…apparently sets increases to the same amount for everyone, as if there was no variation in the housing market from one neighborhood to the next” is Fraade’s own article, which describes a single 1% rate increase cap for all rent stabilized housing in the entire city of New York.

Fifth, a plain reading of the explanatory statement for most recent Apartment Order from the New York City Rent Guidelines lists a single rate for the entire city, as does the Apartment Order itself.

Sixth, I realize that there are differences between apartments based on the regulations they fall under, the year they were built, their individual rental history, and any improvements to the building or the individual units. But the 1% city-wide rent stabilization cap nevertheless implicitly assumes a certain unnatural sameness, regardless of changes in market value. I have yet to find anything that contradicts this.

Please don’t take that the wrong way – I’m not being arrogant about knowledge here; just insisting that you start off with an understanding of the rent regulation laws in NYC rather than letting your ideology guide you in discussing it. Look closely at the facts first (and get them right), do some research on the matter (your own research if you really want to impress your readers) and then construct an argument that gives us something to think about that is not talking points regurgitated from economics 101.

Suggesting I do research seems like a reasonable demand, but it’s actually another trick argument. It works like this:

“There are trolls living under our bridges!”

“I’ve never seen any.”

“Ah, then you must not be looking hard enough.”

If I say that I looked into it and can’t find anything wrong with what I said, he can respond that I’m just bad at research. Which is a lot easier than showing me his research that explains my error. I mean, it’s amusing that Joe’s advice on what I can do to impress my readers is to do research and construct an argument, since he does none of that in his comment.

(Seriously, the point about uniform rent increases is not actually a major part of the point I was making, but if anyone out there can show me where I got it wrong, I’d appreciate the correction.)

Further, Joe’s assertion that I shouldn’t let my ideology guide my discussion is just nuts. That’s what ideology is for. I swear, some people use “ideology” as a way to make having principles sound dirty. Joe doesn’t have to agree with my ideas, and Lord knows he’s welcome to dispute them, but to say I shouldn’t be bringing my ideas into an argument is just silly.

Joe tries the same trick again when he refers to my argument as “talking points.” Saying that you’ve heard my argument from someone else is not the same as proving me wrong. I have to admit though, while I’ve seen political pundits attacking each other for spouting Republican or Democratic talking points, I’ve never before seen someone refer to economics as talking points.

I guess maybe Joe’s tired of hearing opponents of rent control explain over and over that the problems of price controls are “basic Economics 101.” But that doesn’t change the fact that the problems of price control are basic Economics 101. Literally. As in, the effects of price caps on supply is covered in Chapter 6 of one of the most popular introductory economics textbooks. (If you don’t want to buy a whole textbook, this is quick summary of the effects of price controls, and this summary even uses New York rent control as an example.)

Economists disagree over a lot of things, but the awfulness of rent control is not one of them. Only 2% of the members of the IGM Experts Panel agreed with the statement that “Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.”

I mean, for God’s sake, economists as far apart as Paul Krugman and Thomas Sowell are both against rent control. Do you realize how crazy that is? The reason you keep hearing economics “talking points” about rent control is because the idea that rent controls reduce the quality and quantity of housing is arguably the most agreed-upon proposition in economics.

Clap If You Believe In Rent Control

While idling my brain on Twitter, I stumbled across Jordan Fraade promoting his Baffler article about how New York needs rent control. It’s a little like discovering a grown-up who believes in fairies.

For something that so deeply affects the workings of the city’s housing market, rent regulation in New York is widely misunderstood. At a recent event put on by the Pratt Institute and the NYC Planners Network, a group of progressive city-planning professionals, housing advocates on the panel spent as much time explaining how rent regulation works as they did explaining why we should keep it.

The only sensible response to rent control is to get rid of it. All of the discussion should be about how to phase out rent control in a way that doesn’t produce painful market shocks that devastate poor tenants.

Rent stabilization is less stringent; it covers multi-unit dwellings built between 1947 and 1974, and yearly rent increases are set by the Rent Guidelines Board (currently 1 percent, the lowest in fifty years).

A board that oversees pricing. And apparently sets increases to the same amount for everyone, as if there was no variation in the housing market from one neighborhood to the next. This is how the Soviets managed their economy, and look where it got them.

In rent stabilized apartments, tenants have the right to renew their leases, and have more leeway than market-rate tenants when pursuing legal remedies against their landlords if they are being mistreated. (Rent-stabilized tenants have historically and frequently been targets of landlord harassment.)

The linked story is about a building owner with a criminal history who is harassing tenants by degrading the quality of the building. This is to be expected under rent control.

Property owners want to earn a profit. That’s why they buy apartment buildings. When owners can’t increase their gross income by improving the building and raising the rent, their only choice is to cut costs by skimping on building maintenance and operation. They fire the doorman, let the carpets wear thin, and give tenants buckets to collect water when the roof leaks. They switch to lower wattage lights in all the public areas. They shut down the elevator, close the laundry room, and stop replacing busted security cameras. They let repairs go as long as possible, and they use substandard materials and unlicensed contractors. If anyone complains or makes trouble, they get harassed into leaving.

That’s a shitty way to run a building, and decent landlords will try not to run that kind of building. Of course, the easiest way to avoid being a shitty landlord is to not be a landlord at all. Thus rent control discourages good people from owning rental properties, pretty much guaranteeing that landlords are disproportionately likely to be shitty.

According to the panelists, renewing both these regulations is their first priority, simply because they affect so many people—2.5 million New Yorkers, living in about 45 percent of the city’s apartments.

This is why we can’t solve the rent control problem the easy way — by letting it expire. Disrupting the housing of 2.5 million people all at once would create havoc, with some tenants of formerly rent-controlled apartments being forced to seek housing in lower-cost neighborhoods, bidding up the rental prices there. Eventually some tenants will pay more, some tenants will leave, some landlords will lower their rents, and some developers will build new housing until the turmoil settles. But a good plan for getting rid of rent control would get the city to that same endpoint without all the disruption and pain in the middle.

And despite a media tendency to hold up middle-class Manhattanites as the face of rent control, rent-regulated tenants are disproportionately low-income people in low-income neighborhoods. This fact led Delsenia Glover of the Alliance for Tenant Power to make perhaps the most dramatic prediction of the night: if rent regulation is not renewed, low- and moderate-income people will be forced out of New York within a decade.

Either that or New York would have to come up with realistic housing policies. Which is what they do in the vast majority of the U.S. that doesn’t have rent control and yet still have low and middle-income residents living in apartments they can afford. It’s not like free-market housing is a wacky libertarian idea that’s never been tried.

The main problem with rent control in New York is that the system is administered in the clumsiest way possible.

No. The main problem with rent control in New York is the rent control.

Even worse, according to Harvey Epstein of the Urban Justice Center, 250,000 units have been removed from the rolls of rent-stabilized apartments over the years. This happens in a variety of ways, most notably through “vacancy decontrol,” which infamously allows landlords to make an apartment market-rate once the rent reaches $2,500 per month and the tenants move out (Mayor de Blasio has come out in favor of repealing this rule). No matter how it’s done, though, once an apartment becomes market-rate, it stays that way for good.

If you’ve been following along, New York rent control means that if you own apartments that rent for less than $2500 a month, your rent increase last year was capped at 1 percent. That’s less than the inflation rate of 1.6 percent, so your real income actually went down. On the other hand, if you own apartments that rent for more than $2500 a month, you can raise the rent as much as the market will bear.

That leads me to a question: All other things being equal, if you were investing in New York real estate, would you rather invest in units that rent for less than $2500 or more than $2500?

And then I have a followup question: Can you think of any reason why New York might be experiencing a shortage of affordable rental units?

Which leads us to…

The roots of 421a are in the distressed New York of the 1970s, when city leaders feared developers would never again build new housing. In some neighborhoods, 421a comes with no strings attached—if you build, you get a tax break. In other areas, developers can only take the tax break if they include 20 percent affordable housing in a project.

Either way, the result has been a bonanza for builders, allowing luxury towers like One57 to be built mostly tax-free. Williams estimated that the city loses $1.1 billion per year to 421a, and has only gained a measly 12,000 units in exchange. Most housing advocates in the city want the program to be significantly scaled back or scrapped altogether.

Having made the construction of affordable housing unprofitable because of rent control, the city then sets up a program to give away taxpayer money to developers. Through the miracle of regulatory capture, however, many of those developers aren’t actually using the money on projects that advance the affordable housing goals of the program. The programs do manage to further tie up the city’s housing stock in regulatory knots.

Which leads to…

Noting that 90 percent of all tenants in housing court appear pro se, Epstein said that New York’s current system for resolving housing disputes is “complaint-driven,” explaining that “we’ve set up a structure that prevents people from preserving affordable housing because no one’s looking over the landlord’s shoulder, and they know it.”

In a functioning free market, the people “looking over the landlord’s shoulder” are the tenants. If they don’t like the way their landlord is treating them, they can move out. If the vacated unit rents for a $1000-a-month, and it takes the landlord a month to get somebody in it, that’s equivalent to fining the landlord $1000 for mistreating the tenant. Landlords will work hard to avoid that, if not because they’re nice people, then because they like their money.

That incentive system breaks down under rent control. The threat to move out and stop paying rent is less effective when the rent is low because the landlord has less to lose. And if the tenant has locked in a good rate, the threat to leave isn’t very credible since it would mean moving someplace with higher rent. Actually, since decades of low rental rates have discouraged investment in rental properties, where would the tenant go? Tenants are stuck and the landlords know it, so they don’t have to try very hard to hang onto good tenants.

Without the discipline of the market, tenants’ rights advocates are stuck proposing layer after layer of regulations and procedures, each one trying to offset the perverse incentives of what came before.

There has been plenty of advocacy around the rights of rent-regulated tenants—like this spring’s battle to renew state rent laws, and last year’s unsuccessful fight to get a rent freeze. But there’s been little visible work done on behalf of tenants who are still a majority of the city’s renters: those who don’t live in rent-stabilized or public housing. I asked Williams after the panel what market-rate tenants might be able to expect after this spring’s battles, and she was blunt: “They’re screwed.”

I’d like to hear more of an explanation of why Williams thinks that. According to Landlord.com only four states have rent control — California, Maryland, New Jersey, and New York — along with the District of Columbia. The rest of us live without rent control, and we’re not exactly living in a hellscape. In fact, Googling around for the “Top 10 priciest U.S. cities to rent an apartment,” seven of them — San Diego, Oakland, San Jose, Los Angeles, Washington D.C., New York City, San Francisco — have some kind of rent control.

That doesn’t mean that rent control causes higher rents — the causality could go the other way, with high rents making it politically likely that a city will adopt rent control — but it does cast doubt on the long-term effectiveness of rent control.

Furthermore, some basic economics tells us that artificially capping the price of a good is likely to create a shortage. We had a spectacular example of this during the 1973 oil crisis, when the government respond to shocks in the oil market with price controls. As with New York real estate investors who stopped building rental units, oil companies stopped importing as much oil, and gas stations started running out of gas at the pumps. Even with alternate-day rationing, there were long lines for the gas stations, and fights would break out between people waiting in line. The trucking industry was especially hard hit by the high prices and shortages, and tensions rose to the point that there were shootings and bombings.

In the housing production chain, renting an apartment to a tenant is only the last step, and trying to force prices lower there is only going to work if the production process itself can actually be modified to operate less expensively. If New York isn’t producing enough affordable housing, they place to fix it is further back in the process. You have to figure out what barriers are keeping the market from producing the low-cost housing that is so clearly in demand.

We do this all the time with other products. Just in my lifetime we’ve figured out how to make lots of things less expensive — food, clothing, appliances, mobile phones, televisions. The most extreme example I can think of is computers. When the Cray 2 supercomputer was released in 1985 it cost $40 million in today’s dollars. Equivalent computing power costs maybe $800 today (and it’s more reliable and fits in your briefcase). But we didn’t hammer down the cost of computers by having an Alliance For Computer Users that pressured the Computer Pricing Guidelines Board into lowering the caps on computer prices.

And that won’t work for housing either.

A Few Words About the Memories Pizza Story

A few days ago, when I first decided to try to write something about the Religious Freedom Restoration Act in Indiana, I looked for a quote I could start with, and I found one about a small family-owned pizza joint called Memories Pizza in Walkerton, Indiana, where the owners were saying they won’t cater any gay weddings:

“If a gay couple came in and wanted us to provide pizzas for their wedding, we would have to say no,” Crystal O’Connor tells WBND-TV, adding, “We are a Christian establishment.”

Family members say they agree with Gov. Mike Pence that the bill does not encourage discrimination against gays and lesbians.

“We’re not discriminating against anyone, that’s just our belief and anyone has the right to believe in anything,” O’Connor told WBND.

Well, actually, refusing to cater their wedding pretty much is discrimination and…oh, never mind.

I got distracted before I could write any more, and meanwhile the outrage machine got rolling and soon everybody was talking about that little pizza joint. And eventually Memories Pizza closed because they were getting threats. Because there are assholes on all sides of this issue.

So now I find myself feeling uncomfortably sympathetic toward the Memories Pizza folks and the way they’ve been dragged through the media. Jack Marshall had this to say:

Announcing that the law would allow them to refuse to cater a gay wedding, they injected their biases into a debate they were neither legally, ethically, morally or intellectually equipped to participate in.

That’s not quite right. These folks didn’t go looking to make a statement to the world. They’re the local pizza joint in a small town surrounded by farmland and some damned TV reporter went into their place looking for a quote that she could turn into a story. And they were unfortunately nice enough to give her one. And all hell broke loose. By the time the story got to Huffington Post, it had turned into, “Indiana’s Memories Pizza Reportedly Becomes First Business To Reject Catering Gay Weddings.”

Because a digital media empire going after a small family-owned restaurant is really speaking truth to power.

I used to cover community police meetings for a little while as a volunteer reporter, and I remember that after one of them I got to chatting with one of the cops and he started grumbling about some commanders and the way they promoted their friends over more qualified candidates. Since I had already identified myself as a reporter, and we hadn’t gone off the record, there was nothing to stop me from turning this into a story:

CHICAGO — 16th District Police Commander Bob Jones on numerous occasions promoted friends over other more qualified candidates, according to Patrol Officer John Smith…

I didn’t write that story, because (1) it’s not fair to treat people who aren’t used to dealing with the media as if they were the White House Press Secretary, and (2) there really isn’t a lot of news value in reporting that some police officers don’t like their commanders’ decisions. “Man Strongly Disagrees With How His Boss Runs Things” sounds like an Onion headline.

The Memories Pizza story wasn’t quite that unfair — the owners pretty clearly knew they were being interviewed — but remember that this story wasn’t about anything that had actually happened to anyone. Reporter Alyssa Marino’s story was originally headlined, “RFRA: First Michiana business to publicly deny same-sex service,” which is misleading because no one at Memories Pizza had actually refused a request to cater a gay wedding. No gay couple had ever asked.

The headline has since been changed to the slightly better, “RFRA: Michiana business wouldn’t cater a gay wedding,” but that doesn’t save it from the basic problem that is apparent from a more honest headline such as “Owner of Small Town Pizza Joint Says He Would Refuse To Cater Gay Weddings If Anyone Ever Asked Him To.” It just isn’t much of a story. Or at least it shouldn’t be.

Gay marriage is still not acceptable to a lot of people. Heck, there must be thousands of small business owners in Indiana alone who oppose same-sex marriage. That doesn’t make it right, but there’s no reason to pick on these particular small business owners. This kind of journalism is one step more sophisticated than flying a news team down to Texas to do man-on-the-street interviews in the hope that someone with an amusing accent will say something bigoted on camera.

Windypundit Technical Review

In an earlier post, I wrote,

The whole point of a blog like this is to share everything on the site with literally anyone who wants to see it. In fact, I’ve gone through rather a lot of trouble to make sure that happens.

That got me thinking about all the bits of technology that it takes to put a blog like this on the web. I decided to make a list, and it turns out there are a lot of pieces. To start with, there’s the main WordPress installation:

  • WordPress — the blogging engine that powers it all.

The look and feel comes from the WordPress theme I use, which is made up of about four big pieces:

I’ve customized Skeleton to produce the theme I use for Windypundit. I use the SCSS preprocessor to do some of the math to make the look and feel more tunable.

Naturally, Windypundit uses a number of WordPress plugins:

  • Cookies for Comments — A simple anti-spam plugin that rejects some less intelligent spambots.
  • Google XML Sitemaps — Adds a sitemap for Google.
  • Growmap Anti Spambot Plugin — Another simple anti-spam plugin. This generates the “Confirm you are NOT a spammer” checkbox.
  • NextGEN — An image gallery management tool. I don’t use all the gallery features.
  • Search Regex — A potentially dangerous tool that allows me to search-and-replace regular expressions across all blog posts.
  • W3 Total Cache — Caching software, so pages can be served quickly without as many hits to the database.
  • WordPress HTTPS — Improves HTTPS support.
  • WordPress SEO — Makes pages a little more search-engine friendly. I only use a fraction of the features.
  • wp-jquery-lightbox — Displays photos bigger when you click on them. I use this instead of NextGEN’s viewer.
  • WP Widget Cache — Caches the widgets on pages so they can be served without re-querying the database.

I also wrote two small custom plugins:

  • Custom Dynamic Photo Resizer — A WordPress shortcode to generate resized photos for blog posts. If I want to change the size of all the photos in my layout, I just change the resizer implementation and all the images will be generated and served at the new size.
  • Custom Shortcodes — A variety of custom WordPress shortcodes to replace features I had in custom tags on Movable Type. Hardly ever used anymore.

I also make use of a bunch of web-based services which are integrated via WordPress plugins:

All advertising content on the site comes from

Windypundit is hosted on a smallish Virtual Private Server from the folks at A Small Orange. I use a VPS instead of shared hosting because I host a number of other websites and because I wanted to learn about running a website on a VPS.

The server is running a standard LAMP stack:

  • Linux — The operating system. It’s the CentOS distro.
  • Apache — The web server.
  • MySQL — The relational database that holds the WordPress content.
  • PHP — The scripting language that ties it all together. WordPress is written in PHP, along with all of its plugins.

A few other bits run on the server as well:

  • nginx — Running as a reverse proxy for improved caching.
  • cPanel/WHM — The web-based hosting management software.

As I said, it’s actually a virtual server, meaning that A Small Orange has carved out a couple of processor cores and some memory from a larger server. There’s also a SAN array for disk storage. All hosted sites are backed up nightly to Amazon S3 and then rolled over to Glacier.

The servers and disk arrays are located in (I think) TierPoint’s a 68,000 square foot data center in Dallas, Texas. The data center is SSAE 16 SOC 1 certified, with fully redundant HVAC and fully 2N redundant power, with six backup diesel generators fed from a 50,000 gallon fuel reserve. The facility is multi-homed and carrier neutral with connections to Level3, Abovenet, TimeWarner, Suddenlink, Cogent, Global Crossing, and IP Transit. I’m sure there are Fortune 500 companies hosted in the same data center.

Only the main HTML page of Windypundit comes from that server. All of the embedded static components — images, style sheets, Javascript — are served from cached copies in 31 data centers all over the world in the Cloudflare content distribution network so that pages load more quickly.

This is, beyond a doubt, an insane amount of technology for a humble little blog full of libertarian ranting and occasional cat pictures.

The thing is, none of this is particularly special. All of you who have WordPress blogs are using mostly the same technology. You might not have Cloudflare or some of the other layers of caching, and you’re using a different theme and a different selection of plugins, but the rest is basically the same. You might not be as interested in the technology as I am, but we’re all using WordPress, we’re all running on some variation of the LAMP stack, and we’re all hosted out of a ridiculously over-spec’d data center.

Denying Scarcity Is Not an Option

This post turns out to be one of my longer ones. The tl;dr is that (1) a good policy is one that makes lives better, (2) the best policy is the one that makes lives better the most, (3) even the best policy can’t give people everything they want, and (4) it’s unrealistic to deny point 3.

Greg Laden has a post criticizing Bjorn Lomborg’s position on the effects of sea level rise on Bangladesh. Lomborg is arguing that Bangladesh could adapt to changes in sea level with a system of protective dikes, similar to the Netherlands. Laden and commenters on his blog respond that sea protection in Bangladesh would be much more difficult because it’s low and flat, there’s much more water, a much larger area, and many times the population.

As I understand it, a certain amount of sea level rise is inevitable at this point. Historic evidence indicates that the equilibrium sea level for current CO2 levels is higher than the sea is now, which means it’s going to rise. Apparently, a good guess is that we’ll get three to six feet by the end of the century. According to Laden, that will inundate about 10,000 square miles of Bangladesh.

To prevent further losses from sea level rise in Bangladesh (and elsewhere) we can try to bring the Earth’s atmospheric CO2 under control. The obvious way to do that is to cut down on industrial CO2 emissions by switching our civilization to a clean energy source — something other than fossil fuels.

If I understand correctly from the Bjorn Lomborg interview, Bangladesh is planning to build clean energy generation plants, possibly with funding from the developed world. Lomborg is arguing that there are better ways to spend the money:

Focusing on global warming instead of focusing on getting nutrition to small kids is quite frankly I think almost immoral to small kids whom you could help so easily and cheaply. So my point here is again, yes there is a problem, yes we should tackle it smartly, but the way to typically do it, we end up spending lots of money badly, we end up polarising everyone and we forget about a lot of other things that could do much much good to these kids and pretty much everyone else.

Essentially, Lomborg is making the common argument that countries should prioritize their expenditures to maximize the welfare of their population. He’s also making the more controversial argument that the extra cost of switching to green energy is not welfare-maximizing for Bangladesh at this time. That is, they’d be better off focusing their efforts on something else.

Laden disputes this, arguing that Bangladesh is so helpless against a rising sea that even a small rise is a disaster. Laden also makes an argument about the historic sensitivity of sea level to CO2 levels. If we keep adding CO2 to the atmosphere, temperatures will keep rising, ice will keep melting, and the sea will keep rising. It will happen slowly over many years, but the longer we delay the transition away from fossil fuels, the worse the end state will be.

(From what I’ve read, even if we freeze CO2 at the current level, the sea level will continue to rise for centuries until it reached equilibrium at about 25 feet higher than it is today. And if we don’t stop dumping CO2 into the atmosphere, the planet will warm up enough to melt all the glaciers over the next thousand years or so, raising sea level by about 200 feet. It’s not Waterworld, but it’s enough to drown all the coastal cities. And it won’t be our only problem.)

Lomborg and Laden both seem to agree on the broad scope of global warming, but they differ on strategies for Bangladesh (and the world) over the near term. Lomborg says that reducing greenhouse gas emissions is not currently as important as other more urgent problems such as hunger, but Laden says the eventual cost of continued greenhouse gas emissions is so high that any delay has a huge cost.

I haven’t been following the climate change science very much, but the issues under dispute between Laden and Lomborg are fascinating and important. Unfortunately, Greg Laden ruined it by going a step too far:

In his interview, as well as in a brief Twitter exchange we had, Lomborg made another error, one we often seen made by lesser informed people engaged in the climate or energy conversations. Lomborg seems to think that there is a fixed amount and class of resources and that one problem must be addressed at a time. But that is not how it works.

Actually, that kinda is how it works. The problem isn’t that we have a fixed amount of resources. The problem is scarcity. Whatever amount of resources we have, it’s not enough: We can’t fulfill our limitless desires. We have to make choices. This is not a particularly controversial idea.

First, there are resources primarily available for one thing such as public health, while other resources may be more generally applied. Also, we can in fact address more than one problem at once.

It’s not literally one problem at a time, but there are always tradeoffs, and we make those tradeoffs at the margins. Whatever we’re spending our money on, there comes a time when we have to decide whether it’s time to do something else. That’s what Lomborg is talking about.

Imagine that you are lost in the desert. It’s been days, you’re all out of supplies, you’re thirsty, hungry, hot, and tired. Finally, you stumble on a well-supplied camp full of people. You quickly agree to do some work around the camp in exchange for which, at the end of every hour of work, they agree to let you have one of:

  • A glass of water.
  • A bowl of food.
  • A nap in the shade.

At the end of the first hour, recognizing that dehydration is the greatest danger to your health, you choose a glass of water. At the end of the second hour you’re still thirsty, so you have more water. By the end of the third hour, you’re no longer thirsty, but you want to make sure the thirst does not return, so you have one more glass of water.

After the fourth hour you figure you can do without water for a little while, so you have some food. The fifth hour is also food, and then because you’re kind of full but it’s been a while since you had a drink, you have water for the sixth hour. That gives the food time to go down, so you have another bite of food after the seventh hour. By the end of the eighth hour, you’re well fed and no longer thirsty, but you’re exhausted, so you decide to take a nap.

This is a very simple example of efficient decision making under scarcity — stripped of the complications of savings, investments, imports, exports, and innovation. Under this model, there are two rules to making good decisions: (1) Use your resources to solve the most important problem first, and (2) when you’ve made enough headway on the most serious problem that it stops being the most serious problem, switch your efforts to solving the new most important problem.

The goal is to always apply the next batch of resources where they will do the most good. In the terminology of economics, the goal is to always apply your resources in a way that maximizes their marginal utility.

I asked Professor Michael Mann, climate scientist, what he thought about Lomborg’s interview, and he told me, “Bjorn Lomborg is a master of the false choice, often claiming that dealing with climate change will somehow detract from our ability to deal with other societal problems. In reality, we can walk and chew gum at the same time. We can and must work on solving numerous societal problems. […]”

Sure, we want to work on solving numerous social problems, but we don’t have the resources to solve all social problems instantly. Given our limitations, we need to decide how hard to work on each problem. Often some problems will dominate, and others will have to be postponed, and it’s not inconceivable that climate change is one of the problems that can be postponed.

(Mann does go on to actually address Lomborg’s argument when he says, “[…] In reality, climate change exacerbates most of those problems. It is a threat multiplier. Lomborg conveniently ignores that!” That addresses the tradeoffs rather than pretending they don’t exist.)

Perhaps this seems a bit crazy to you. After all, in the real world governments work on multiple problems all the time. And even as individuals, all of us have more than one goal in life. How does this decision-making model apply to any of that?

On an individual level, even when we appear to be multitasking, it’s usually just one thing at a time. As I sit here typing this, I’m wrapping up dinner at Chipotle’s, and I’m thinking of refilling my Diet Coke, and I’ll go to the bathroom soon, and my wife and I have been discussing our plans for the rest of the evening. Eventually my thirst or my bladder will get the best of me, and my wife might interrupt me, and eventually we’ll leave to do something else. But for the moment, I’m just typing.

In a larger sense, when we see people working on multiple problems at the same time, there’s usually one of three things going on.

The best case is that we’re actually seeing the crossover between problems. Several problems are at the same level of urgency, so we’re essentially (at least in theory) switching back and forth between them.

In the desert camp, on an hour-by-hour basis, we started with the most important problem, thirst, and only after beating that back a bit did we start working on hunger. And not until both of those were abated did we move on to addressing the problem of needing sleep. On the other hand, if we look at the day as a whole, we worked on several serious problems at the same time.

This kind of rapid switching between problems is actually pretty common because of an interesting consequence of how the rules play out over time: If we keep grinding away on whatever problem sticks out the most, eventually all our problems will be ground down to about the same level of urgency. We still keep balancing between them, but no problem really seems more urgent than any other.

In the real world, this decision-making process is obscured. For one thing, we can anticipate how our problems will respond to future expenditures of resources, which allows us to anticipate our needs and stockpile resources. So instead of living hand-to-mouth and switching off constantly between problems, we work at jobs to earn money, and we plan our budget so we can fill our refrigerator with food and drink, and pay our monthly rent.

Furthermore, when we’re talking about an entire society it’s far more efficient to split the work between us. The underlying back-and-forth movement happens at the level of individual workers changing jobs or working on different projects, and specialization allows individuals to stay productive at tasks.

The underlying marginal decision-making nevertheless becomes visible again whenever our resources change enough to cause us to rethink our priorities. If our boss gives us a 10% raise, we have to decide whether to buy a new refrigerator, a new washing machine, or new tires for the car. On the other hand, if our boss cuts our work hours by 10%, we have to look at our budget and give up the least important thing we’re spending money on — buy canned vegetables instead of fresh, wear our clothes longer before replacing them, or move to an apartment with lower rent.

On the national scale, an unexpected war or a natural disaster can consume resources intended for other purposes and force a society to make tough decisions about how to allocate resources. Prosperity gives us easier decisions, but we still have to make decisions.

The worst case for doing many things at once is that we are confused about how the world works, or aren’t pursuing the goals we think we are. For example, someone trying to pay down loads of credit card debt may feel better when they see declining balances on all their credit cards. But it would be more efficient to send all available money to the card with the highest interest rate and make only minimum payments on the others.

When you see someone paying off more cards than they should, you might conclude that they’re confused about how credit cards work. But there’s another possibility. It could be that rather than trying to improve their personal finances, their true goal is to improve how they feel about their personal finances, and seeing all the balances go down makes them feel better.

The flip side of paying off the credit cards is making donations to more than one charity. If you’re truly trying to be as altruistic as possible with your money, your most efficient course of action is to pick the one charity that will do the most good and give them all the money you can. Why waste your money on second- and third-best charities when you know it would do the most good at the best charity? Giving to multiple charities is therefore a sign that you’re doing it for some other reason than pure altruism — perhaps because it makes you feel better, or because you’re using the donations to make a statement about what’s important.

It looks like the Bangladesh economy is growing about 6% per year, and now they’re trying to decide whether to use the additional resources to contribute more to the fight against climate change, or whether they should apply it all to fighting problems like childhood malnutrition. It might seem like a good idea to split it — 3% to fight hunger, 3% to fight climate change, say — but that’s only true if both problems just happen to be at a point where they benefit equally from the additional funding. Otherwise, it would be better to use all additional resources on whichever problem would benefit from them the most.

When entire societies split their efforts across multiple problems, it’s probably not because it’s most efficient or because people are confused. The middle ground between equilibrium and confusion is politics.

If one group wants to fight climate change and another wants to fight childhood malnutrition, the political process may resolve the conflict by doing a little of each. That doesn’t mean it’s the right solution — each faction would no doubt prefer that more attention be given to its own agenda — but it is the solution that is possible.

Perhaps this is what Laden and Mann have in mind. It’s not that they believe it’s a good idea to pursue both goals — or that the resources to do so will somehow magically appear — but that they are willing to split resources across both goals in order to make sure that green energy gets at least some of the resources. Could be, but it’s not quite what they’re saying.

Laden seems to have no trouble understanding scarcity when it suits his argument. For example, here he is explaining why the engineers who protect the Netherlands from the sea may not be able to help in Bangladesh:

In case it is not obvious, let me note that as sea level rise threatens Bangladesh, it also threatens The Netherlands, which might keep the Dutch rather busy in their own homelands.

And then why Bangladesh might have problems protecting themselves from the sea like the Dutch did:

During much of this time, The Netherlands was a major player in the European economic theater, acting as a center during the development of the world economic and colonial systems of the 17th and 18th centuries. To suggest that somehow Bangladesh can do what the Dutch did while the entire world is also busy adapting to sea level rise is absurd.

When it’s Bangladeshis choosing between feeding children and developing green energy, Laden thinks they could address more than one problem at once, but when it’s Dutch engineers choosing between building dikes in Bangladesh or maintaining their own, he understands that there are limitations. When it’s world-wide competition for sea protection, he understands that all the problems cannot be tackled at the same time.

The question we’re really trying to answer is, if Bangladesh is contemplating spending, say, $5 billion on green energy, is that the best way to use a $5 billion to improve the welfare of the Bangladeshi people?

There is a sense in which switching to green energy should almost never be a priority. Bangladesh has only about 2.5% of the world’s population, which means that in the long run (assuming all countries eventually reach the same levels of industry) they will only ever control about 2.5% of the Earth’s energy production.

If everyone else switches to green energy, and Bangladesh continues to burn fossil fuels for another century, it won’t make much difference in the long run for the planet. On the other hand, if Bangladesh switches to green energy, and no one else does, all the glaciers will melt, and Bangladesh’s green energy still won’t make a damned bit of difference. The benefits of green energy are spread out all over the world, and Bangladesh is only about 1/40th of the world.

The upshot is that Bangladesh’s decisions about green energy won’t have much effect on the welfare of Bangladeshis, and what payoff there is will be delayed for decades. On the other hand, using the money to feed children produces an immediate benefit, and all the benefits stay in Bangladesh. Unless spending $5 billion dollars on green energy pays off as well as spending $200 billion on food, Bangladesh would be better off doing something other than investing in green energy.

The problem with that argument is that it applies to every other country as well. The benefits of green energy (in terms of climate change) go to the world , but the costs are borne by whoever builds the green energy systems. So until green energy becomes cheaper than fossil fuels, there will always be pressure to do something else with the money. All of which goes a long way toward explaining why we’re in this predicament in the first place.

The only way we’ll avoid a more serious global warming disaster is by looking beyond our personal, local, and even national concerns and coming together for the good of all humanity.

That doesn’t really sound like us, does it?

HTTPS

Ever since Edward Snowden told us all about the NSA’s rampant spying on Americans, I’ve been meaning to convert Windypundit to an encrypted site, and I think I finally did it. If all is working, you should be seeing “https:” in front of “windypundit.com” up there in the address bar.

(You might not see the little lock symbol, however, depending on your browser. That’s because the images in my Amazon ads widget are being served unencrypted by Amazon. In theory, those images could be intercepted and altered in transit, so your browser is letting you know that you’re looking at mixed content, some of which is not strictly secure. Apparently Amazon ads are infamous for ruining secure pages this way.)

It’s not that I need the security. The whole point of a blog like this is to share everything on the site with literally anyone who wants to see it. In fact, I’ve gone through rather a lot of trouble to make sure that happens. Ask the server for a page, and ye shall receive it.

My reason for adding encryption is really just to make a small contribution toward gumming up the workings of the surveillance state. This page traveled to your browser as one more secure data stream on the net — random bits for all practical purposes, except to you and me. There’s nothing worth spying on here, but only you and I can be sure of that. It’s one more thing that intelligence and law enforcement agencies can’t read, one more thing to waste their time, one more thing to discourage them from trying.

Encryption disguises the internet’s valuable data in the hiss of (pseudo-) random noise. Spying on the internet takes work, and that work pays off because the data is there to find. But it doesn’t have to be that way. We can make it harder for them to spy on us, and that will make it less worthwhile for them to try.

Be the noise.

Ten Years of Fuckery

Someone named Payson just left a comment on a very old blog post. It starts this way:

Hello, happy 2015.

I have never heard of this website but out of rage I googled “sprint is a fucking piece of shit” and this came up. I don’t blog and I rarely leave comments on anything. However, that being said, Sprint has managed to fuel a fire deep within me that has caused this post…

Heh. I love that.

It’s been ten years since I ran into some difficulties trying to change my cellular phone plan with Sprint. In a fit of frustration, I lashed out the only way I could, by using this newfangled blog thing I was experimenting with to create what is arguably one of my most successful posts ever. It is lovingly titled “Fucking Sprint!!!

And for the ten years, angry Sprint customers like Payson have been venting their rage in the comments.

Given the relative insignificance of this blog, it’s kind of shocking how well that post does in search results. As I write this, Googling for “Fucking Sprint” will return it as the 3rd link. I’m a little disappointed that it’s fallen all the way down to #12 in a search for “Fuck Sprint,” but I’m happy to see that when I search for “Sprint fuckers” it comes up #1. (On Bing it comes up as #1, #1, and #2, respectively…not that anyone cares.)

Ten years ago, “social media” marketing wasn’t really a thing. But I’m sure that by now Sprint has some marketing people whose job it is to monitor their web reputation. Given the out-of-proportion prominence of that post, I figure someone at Sprint (Hi!) is probably aware that I’m pissed off.

I guess that will have to do.

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