February 2004

The APA (American Philosophical Association) is looking for stories about how valuable philosophical training has been to people other than professional, full-time philosophers.

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The second-funniest thing I’ll see today, after the Guardian article from Brian’s post below, is TMFTML’s secret memo about the dirty director’s cut of “Hey Ya!”

However, it contains swear words, so please keep it away from Michael Powell.

And now for something completely different, The Guardian on what six to eight year olds think of classic rock. Here are some sample responses, but the whole thing is very amusing.

Smells Like Teen Spirit

It’s making me think about doing bad things like putting snowballs down my sister’s back.

Anarchy in the U.K.

He sounds like the baddie in Scooby Doo at the end.

As Daniel noted a while back on CT, the election markets that have opened so far aren’t efficient enough to prevent arbitrage opportunities. This point now seems to have been noticed by more mainstream commentators.

But whatever the reason, there is a significant pricing difference between these two markets [Tradesports and the IEM] — an arbitrage opportunity that you’d expect some savvy trader to take advantage of. Yes, the contracts are constructed a bit differently, but surely there’s a way to go long Bush on Iowa, short him on Tradesports, and make some surefire coin.

The pinko Money magazine attributes the inefficiency to sheer irrationality on the part of the traders in each market. If that’s right then the added evidential value of these markets is roughly the same as star charts.

If I were less tired, I would write a post exploring the applicability, in our post-WMD world, of The Five Standard Excuses for any Failed Government Project described by Sir Humphrey in Yes, Minister. I conjecture that some varietal of each of them will be found in talk about Iraq as prior certainties about Saddam’s monstrous armaments evaporate. The excuses are as follows:

1. There is a perfectly satisfactory explanation for everything but security prevents its disclosure. (The Anthony Blunt excuse.)
2. It has only gone wrong because of heavy cuts in staff and budget which have stretched supervisory resources beyond the limit.
3. It was a worthwhile experiment now abandoned, but not before it provided much valuable data and considerable employment. (The Concorde excuse.)
4. It occurred before certain important facts were known and could not happen again. (The Munich Agreement excuse.)
5. It was an unfortunate lapse by an individual now being dealt with under internal disciplinary procedures. (The Charge of the Light Brigade excuse.)

Some of these excuses have been employed by the U.S. government for some time, notably (1). A version of (2) is also becoming more popular with them. These excuses also do double-duty as rationales that _critics_ impute to the Bush administration. Many, for instance, will favor some version of (4) or (5) in an attempt to resist alternative theories involving vulgar phrases like “blithely imperialist” or “neoconservative maniacs,” simply because of the appalling vista suggested by the latter views. I personally find it worrying that the administration’s choices in domestic and foreign policy are starting to puzzle clever economists. These, after all, are people who by temperament and training will bend over backwards till their spines snap before saying the words, “Yeah, I guess you’d have to say that was pretty irrational.” If those guys give up on you, you’re really doing badly.

The New York Times Magazine had an excellent story this weekend on the fraud that brought the cable company Adelphia to bankruptcy. Most of the blame has to lie with the Rigas family, who managed to borrow three billion dollars, obligated the shareholders in their public company to cover it, and contrived to hide it from investors. They built a company with comically poor corporate governance- over half of the board were family members, and the audit committee may never have met.

Along the way, they had plenty of accomplices among the institutions that were supposed to be independent circuit breakers. Banks had no business lending other people’s money to the Rigases. Deloitte and Touche failed badly in their role as independent auditors. Despite the refusal of Adelphia management to disclose the loans, Deloitte still signed off on their 10-K. Adelphia attorneys did nothing to stop the loans, and most analysts did only a cursory job of inspecting the company’s structure.

In my mind, most of these problems don’t seem to be appropriate targets for public policy. No law can prevent incurious analysts, cowardly auditors, or shortsighted corporate management. (Conflicted auditors are another story, but that doesn’t appear to be a problem here.) I’d imagine that most laws that attempted to address these issues would do more harm than could.

But regarding banks, I’m not so sure. Specifically, I’m not sure about whether it was a good idea to overturn the Glass-Steagall Act, a Depression-era law prevented commercial banks from getting in the investment banking business until it was overturned in 1999 by the Financial Modernization Act. One of the concerns for the original lawmakers was that full-service banks would lower their standards for commercial loans in order to win lucrative underwriting contracts. According to the author, that’s exactly what happened in this case.

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I just noticed that John Quiggin’s post below was the thousandth post on Crooked Timber.

At this rate, we’ll catch up with Instapundit thirty years after he quits blogging. Go us.

Kieran’s piece on kids being driven to school reminded me of a post I’ve been planning for a while. One of the issues debated at length on my blog is that of speeding and law-enforcement measures such as speed cameras. I’ve argued against speeding and in favor of rigorous law-enforcement. Not surprisingly, and perhaps reflecting the fact that more than 80 per cent of drivers regard themselves as above-average, this has been very controversial. You can read some instalments in the debate here and here or use the search facility for “speeding”. Unfortunately most of the extensive and interesting comments were lost in a database failure.

In the course of this debate I discovered the fact, surprising to me, that, although the rate of road deaths per person in the United States is nearly twice that in Australia and the United Kingdom, much of this difference can be accounted for by the fact that distances travelled in the United States are a lot higher and are rising (there are problems with the numbers and biases in the measure, but I’ll leave that to one side for now). The differences between US and UK are plausible given differences in population density and well-developed public transport in London at least, but the differences between the US and Australia certainly surprised me. Australia is every bit as car-dependent as the US and has much lower population density.

All of this is a prelude to the fact that, in economic terms, time spent travelling is a really big deal. In their book Time for Life, based on the 1985 US Time Use Study, Robinson and Godbey estimate that the average adult American spends 30 hours a week in paid employment and 10 hours a week travelling (they also, controversially, argue that working time has been falling, not rising). It’s pretty clear that distances and times spent travelling have increased since 1985 in the US (in both the US and Australia, driving is by far the dominant mode of travel).

If, as I’ll argue below, most travel should be regarded as being in the same economic category as working and if, as the stats linked above imply, Americans spend about twice as much time travelling as Australians, then reducing travel times to the Australian level would be equivalent to a productivity improvement of between 12 and 15 per cent. As it happens, combined with the relatively small difference in hours of paid work, adjusting for hours of work and travel would just about eliminate the gap between Australian and US GDP per capita (about 20 per cent on standard PPP estimates).

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Via Lawrence Solum, I found this interesting post from Professor Bainbridge arguing that corporations should not be compelled to pay reparations for past wrongdoing (in this case, complicity in slavery). He says

Punish the wrongdoers, you say? Sorry, but the corporation’s legal personhood is a mere legal fiction. A corporation is not a moral actor. Edward, First Baron Thurlow, put it best: “Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and nobody to be kicked?” The corporation is simply a nexus of contracts between factors of production. As such, there is no moral basis for applying retributive justice to a corporation – there is nothing there to be punished.

So who do we punish when we force the corporation to pay reparations? Since the payment comes out of the corporation’s treasury, it reduces the value of the residual claim on the corporation’s assets and earnings. In other words, the shareholders pay. Not the directors and officers who actually committed the alleged wrongdoing (who in most of these cases are long dead anyway), but modern shareholders who did nothing wrong.

This seems plausible. On the other hand, the obvious implication (one that was clearly implicit in Thurlow’s original point) is that the principle of limited liability is untenable, at least in relation to civil and criminal penalties for corporate wrongdoing. The wrongdoers are, as Bainbridge says, the officers and shareholders at the time the wrong is committed, and they should be held personally liable. The law has moved a bit in this direction in recent years, but Bainbridge’s argument implies that it should go a long way further, restricting the principle of limited liability to the case of voluntarily contracted debts.

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Kevin Drum asks why kids don’t walk to school anymore:

according to the CDC, only 31% of children ages 5-15 who live within a mile of school walk or bike. That’s down from 90% in 1969.

But I still can’t figure out why. Why do parents ferry their kids around when there’s no reason for it? What’s the motivation?

There might be more than one initial impetus — irrational concerns about safety, heavier school backpacks making walking more difficult, busier parents using the commute as quality time, and the like. Once it gets moving, the phenomenon seems vulnerable to a self-reinforcing tipping phenomenon. By not letting your child walk to school because the streets aren’t safe, you take one more child off the sidewalks and incrementally exacerbate the problem of deserted streets.

Like the original Schelling tipping model of racial segregation , this explanation has some very attractive characteristics. It’s parsimonious, self-propelling and grounded in simple, disaggregated individual choices. It’s got all the desiderata of an elegant theory that satisfies the strictures of methodological individualism mentioned recently. It might be right. But there’s still a good chance that, empirically, it’s wrong.

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“Sasha Volokh”:http://volokh.com/2004_02_01_volokh_archive.html#107583183283237142 cries out for some intelligent Marxist analysis in the blogosphere – right on! However, he seems to be arguing that Marxism and the kinds of methodological individualism beloved of modern economists are antithetical to each other. This isn’t necessarily so at all. A big chunk of interesting contemporary work in Marxist theory starts from the premise of methodological individualism, and very frequently from the kinds of rational choice microfoundations that economists are attached to. Jon Elster’s work on Marx is an obvious starting point; Adam Przeworski’s _Capitalism and Social Democracy_ looks at exactly the relationship between class identity and collective action that Sasha is interested in, and how it shaped the turn to social democracy in the early decades of this century. I’m also very fond of John Bowman’s _Capitalist Collective Action_, which examines how capitalists have used trade unions in order to organize themselves collectively. While all Marxists haven’t become methodological individualists, a fair number of them have, and arguably have greatly improved the rigor and clarity of Marxist thinking by so doing.

A pub conversation about the current composition of the English Premier League led me to check the regional distribution of teams at the moment. The best represented region is Lancashire (historic boundaries) with 6 teams, followed by London with 5. The West Midlands has 3, the South of England 2, the North East 2, and the East Midland and Yorkshire one each. All of which raises an issue: if Leeds are relegated and Sheffield United are not promoted, will next season be the first season ever without a Yorkshire team in the top division of English football?

The National Review, one of America’s premiere journals of conservative opinion, has started publishing letters from anonymous readers who claim to have had unpleasant experiences with leading Democratic candidates. (Here’s one on Kerry and one on Clark.) If you possess an email address and an eye-opening story, you’ve passed the rigorous fact-checking that has made National Review and the Penthouse Forum world-famous.

In honor of this editorial decision, I would like to propose my first contest ever:

Punk the National Review

The rules are simple:

– Send the National Review an email with an imaginary story of your first-hand experience with a Democratic presidential candidate or elected official.

– Send it to me at the same time– I don’t want anyone to claim retrospective credit. (ted at crookedtimber.org) (UPDATE: Be sure to blind carbon copy, or send it separately- it’ll give the game away if it’s a regular CC.)

– Up to three readers who get a letter published in the National Review (either in the Corner or in a story) will get a $10 gift certificate for Amazon.com from me.

– The contest runs from right now until March 31. If more than one letter is published, I will let readers judge the most outrageous letter that hit the virtual pages of the National Review. The winner of this contest will receive a $20 Amazon gift certificate. If more than three letters are run, all published letters will be eligible for this prize.

Good luck to all of you.

“Daniel posted on Hutton”:https://www.crookedtimber.org/archives/001229.html the other day, and was gracious enough to say that the Blairites should enjoy their day in the sun (whatever else he said elsewhere in the post). During the inquiry, it looked to me as if Gilligan and the BBC were in deep trouble and “I posted back in August saying as much”:https://www.crookedtimber.org/archives/000381.html . Since the report journalists have been queuing up to denounce Hutton for coming to conclusions other than the ones they were all hoping for and using words like “whitewash”. Typical examples are Gilligan’s mate “Rod Liddle”:http://media.guardian.co.uk/huttoninquiry/story/0,13812,1133385,00.html (on whom see “Martin Kettle in today’s Guardian”:http://media.guardian.co.uk/huttoninquiry/story/0,13812,1137632,00.html ), “Simon Jenkins in the Times”:http://business.timesonline.co.uk/printFriendly/0,,2020-9076-983327,00.html and “Peter Oborne”:http://www.spectator.co.uk/article.php3?table=old&section=current&issue=2004-01-31&id=4227 in the Spectator (see also “Liddle”:http://www.spectator.co.uk/article.php3?table=old&section=current&issue=2004-01-31&id=4213 in the Spectator).

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