You cannot Endure / Industrial Pesto!

Larry Hosken provided the winning caption to this photo (which was taken from here.)

Clementi's suicide

A freshman at Rutgers committed suicide shortly after his roommate secretly recorded him making out with another guy.

First, there's no question that this is a tragedy.

Further, what Ravi did is terrible: it's an invasion of privacy, and he deserves to be punished for that.

However, Clementi would probably have been less likely to commit suicide if society were more accepting of homosexuality. That Ravi watched Clementi himself may have indicated that Ravi was expressing reaction formation, a common behavior among people battling their homosexual feelings by acting very much against them. Further, he was not attacking Clementi directly; he was clearly doing and saying these things for his friends, probably in part to try to avoid rumors that he might be gay since he has a gay roommate (yes, rumors like this do spread in college dorms). This is unfortunate, but it happens because homosexuality is still socially taboo. Further, what Ravi did is still socially accepted in many social circles (take my highschool football team, whose members tormented gay students in my high school, or my parents and their friends, who make jokes about gay people. This phobia is common in much of America, suggesting that Ravi didn't realize that what he was doing was such a big deal.)

Governor Christie said he didn't see how Ravi and his friend could sleep at night "knowing that they contributed to driving that young man" to suicide. First, we all as a society contributed to this because we do not tolerate homosexuality. Second, such statements are overblown and cruel: suicide is a tragedy, but nobody should be made to feel guilty about something like this (I say this because someone close to me committed suicide, and it's confusing enough to cope with with these things without the guilt).

Ravi should be punished for invasion of privacy, but his punishments should match that for similar behavior, regardless of this death. To do otherwise would be finding a scapegoat for a problem (i.e., widespread homophobia) that we as a society are unwilling to accept responsibility for; instead, we should all admit a little bit of responsibility and try finding ways to improve society's view of gay people.

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In the comments section, add a caption to this image. The best caption gets to go here. The image is taken from this article.

Parroting of the Republican talking points

David Brooks over at the NYT is parroting the typical Republican talking points.

http://www.nytimes.com/2010/07/20/opinion/20brooks.html?hp

Here are some current typical Republican talking points he's squeezing in here, and why they're bad arguments:

1. "the middle is rising up in revolt in the tea party movement" (although he's careful not to mention the tea party) Where's your source, except for Glen Beck and Fox News? Sure, there's a tea party "movement", but it's still relatively small, and Obama's ratings are still relatively high.
2. "Obama and friends are arrogant and think they know everything with their technocratic analysis" Arrogance is a cute spin on obama's cabinet's credentials, but these people certainly don't think they know everything, and you can hardly blame them for using rigorous analysis to understand what's going on. More importantly, they also don't make things up when they don't know something, or when they don't have enough evidence to support their side, and they don't have a record of distorting science.
   
3. "there are sweeping changes going on that people don't agree with" There are always sweeping changes going on in government. There will always be things people don't agree with. But many people are also happy with the changes occurring. See the reader's comment below.
   

I'm not arguing that the Democrats are perfect. U.S. citizens have reasons to be angry at them, too. But these talking points -- outrageous as they are -- are not the right reasons. Instead, Republicans seem to think that real Americans are too dumb to understand more sophisticated arguments, or else that these reasons are not emotionally captivating enough for a broad audience.

In any case, one NYT reader points out in the column's comments that "Brooks only quotes Heritage Foundation and American Enterprise Institute studies".

Another NYT reader (Stefan Cover) makes a good point about how bureaucracy is not really the target of peoples' anger--

Come now - this is not about the role of government; this is about control. Most of the angry would be perfectly happy with lots of bureaucracy if they felt that it served their purposes and was controlled by those who shared their social and political views. Most of their anger is spawned by feelings of disenfranchisement, not by the proliferation of bureaucracy. You vastly overestimate the intelligence behind the backlash

The economics of trust

In this post, I'll explore interest rates with a focus on trust.

Earlier this year I was listening to the book-on-cd version of Alan Greenspan's Age of Turbulence. Greenspan's political views aside, it was an interesting biography which provides some important insight to a dabbler in economics.

One of the things mentioned by Greenspan was the importance of trust in a capitalist economy: Greenspan noted its importance multiple times, citing it as a reason for the problems with some of Russia's past failed attempts at capitalism. And, indeed, it seems that trust can be a useful lens through which to view much of our economy.

First, trust is behind any notion of financial credit (and the two are really synonymous): our own economy has been in dire straights recently because banks are less willing to lend to one another or to individuals. Normally this would drive interest rates up, if the government were not willing to subsidize the credit markets with its record-low federal funds rate. This subsidy of trust can sometimes do wonders to the system, with all sorts of second-order effects (these second-order effects include making safer investments less attractive, which leads investors to invest in more risky securities).

In addition, trust allows disparate groups to work together. Instead of spending economic resources competing, or spending these resources duplicating work, groups can turn attention to shared goals and exchange of legit promises.

Finally, trust improves personal responsibility, as individuals aim to improve their credibility in a system which rewards it.

Trust Bubbles

At other times, subsidized loans can inject too much trust into the economy, as happened originally when the interest rates were too low in the middle of the 2000-2010 decade. Here, market participants all over felt too much trust: mortgage lenders trusted that borrowers would pay back their loans (okay, sometimes this was not true). Both borrowers and lenders trusted that the houses being purchased would continue to be valuable. Once it was clear that these houses were not worth as much, owners began walking away. And those buying these mortgages from the lenders as mortgage-backed securities trusted that the mortgages were actually worth something.

Note that it's not clear whom these borrowers trusted -- there was a mutual trust shared by all market participants -- essentially a bubble. But none of this could have happened if people hadn't trusted one another so much. So how much trust is optimal? I'm not sure yet.

Trust in low-income populations

I'm convinced that improving trust can help certain low-income or historically oppressed populations in the U.S. improve their economic situation. Many of these populations have been found to have low interpersonal trust, and conspiracy theories are associated with lower income (these theories both feed off and encourage mistrust, although the object of this trust is unclear).

Perhaps there could be an effort to improve trust in these socioeconomic groups by subsidizing trust in them. We're already doing this to the larger economy with interest rates and with direct payments to other countries (take our subsidy of trust between the U.S. and Pakistan); it is only natural to improve trust in those parts of our population which need it most.

The advantages are clear: Sam will happily lend his paintbrush to Jonny next door because he knows Jonny will return it. Sam can trust that his neighbor Maggie will carefully watch his toddler while he's at work. And Maggie -- who still needs to support her family -- knows that Sam will pay her at the end of the month when he gets his paycheck. No need for Sam to waste money on payday loans. Jonny does not need to buy his own paintbrush. And Maggie's can make an income from watching Sam's kids. Everybody wins, because of shared trusts.

How can we provide these subsidies? Subsidized sub-prime lending has already been inadvertently tried and failed.

Here are some potential scenarios: the city offers low-income resident groups packages (i.e., money) up front to paint, clean, and maintain certain areas of the city. Once a project has been completed, a new package is offered. This would foster a better relationship between the city and residents, while also improving inter-resident relations and property values.

Another possibility: the city can help property owners to offer financial "options", or a share of any increase in home value, to renters. With an actual stake in the value of their homes, renters will have a clear incentive to improve and maintain their homes. Renter-tenant trust increases with the shared incentive.

Finally, a trust campaign might help. With modest funds from the city's stimulus money, the city can offer an advertising campaign, encouraging residents to trust one another.

These possibilities may or may not work. But if we are able to discern and define exactly the trust we should aim to improve, there must exist an appropriate subsidy.

Finally, the economic importance of trust extends to the city government. Only when the city has demonstrated that its interests lie first and foremost with Saginaw residents will the residents trust the city. And when they trust the city, everyone wins.

(This post is a bit scattered as-is. I may submit some polished version of this to the Saginaw News)

EU flights (including flights by US carriers to/from EU countries) must put you up when you're stranded

Flights by EU carriers and all flights to or from EU countries must put you up and pay for meals when you're stranded. They also must pay you a fee if it's their fault, and they need to reimburse you for cancelled flights.

From TFA:

The rules themselves are fairly simple. When a flight is canceled, regardless of the cause, a passenger can choose to get a refund for the unused portion of the ticket or be rerouted on another flight. If this results in an overnight stay, the airline has to pay for a hotel, meals and transportation between the hotel and the airport, even if the cancellation is due to weather or any other factor outside the airline’s control.

If the cancellation is considered within the airline’s control —such as when the plane has mechanical problems — the carrier must also pay each passenger between 125 and 600 euros, depending on the length of the flight and the delay.

Remember this next time you book a flight. It sounds like you might have to make a fuss, but I suspect they'll give in if make it clear that you'll speak up if they don't follow the law.

Recall also that the EU includes quite a few countries.

This is great if you're a EU carrier. I'm hugely in favor of laws like this in the U.S., but I'm also curious about whether such laws provide an incentive for risky flights when conditions are nasty? (Presumably flights are cancelled due to bad weather conditions by the FAA and its EU counterpart instead of by the carrier, mitigating such incentives?)

Knowing when you're in a bubble, case study: college degrees

As we'd seen in the middle of the past decade, knowing when you're in an asset bubble can be extremely difficult, often only obvious in retrospect.

So what are the current bubbles now? It's still hard to say, but I'll posit one bubble. Post a comment if there are other bubbles you see happening right now.

Bubble: The value of a college education. An education is definitely important, but only for certain things and certain people. With very low interest rates, student loans are available at an (apparent) low cost, and many adults dive into an education, with a focus more on the end degree than the actual education: many degrees are simply not marketable. For-profit schools are popping up all over, which means that the value of any degree is decreased, even if these schools are accredited, due to the clear conflict of interest.

And many of these institutions are not accredited at all, including legitimate-sounding names like "West Virginia State University". From Breyer State University:

Is Breyer State University accredited by an accreditor approved by the US Department of Education?

Response: Breyer State University is not accredited by an accreditation agency approved by the U.S. Department of Education. Such approval is a voluntary process, and in fact, the U.S. Department of Education states that accreditation itself is a voluntary process. There is no mandate by federal law for a School, College or University to be accredited. Many good schools are not accredited.

... Breyer State University is an accredited member of [a] private institution...

What they don't tell you is that non-accreditation will prevent many people from getting jobs: some states require job-seekers to divulge when a degree listed in their credentials is non-accredited. And their degrees generally aren't transferable to accredited institutions. That said, it's likely that many employers unknowingly hire people with non-accredited degrees.

I am not suggesting that people not go to college, or even that for-profit schools are inherently evil. But the glut of graduates due to a lower bar from massively available student loans, and due to graduates from non-accredited universities (250k to 500k, by one estimate), will make degrees less meaningful -- and, ultimately, less valuable to future generations. Does that mean fewer people will get degrees? Maybe. Maybe it will encourage more people to get degrees in the short run, since they need to compete somehow. But I suspect that people will gradually find that their investment in questionable degrees is not paying off, and enough people will find that it's more economically viable to skip the degree and make $35k/yr at Uncle Tony's Window Company.

How can you address this bubble? It's not clear how easy -- or ethical -- it would be to short student loans. My hunch (as a non-financial expert) is that there must be publicly traded securities that package up these loans, just like mortgage-backed securities. On the other hand, the federal guarantee of these loans makes them less risky, hence less attractive to short-sellers. So your best best may be to go after the non-accredited (and especially online) institutions that depend on these loans, and to find ways to short them. And remember that you're not attacking education. You're attacking fraudulent education.

Also, make sure the school you attend is a well-known school, that people will recognize. If you're staying local, a major state school or community college that people will recognize should be fine. If you're going national or abroad, try to pick a top-25 school. And, if you're hiring, be scrupulous about checking the accreditation of your newhires' schools.

Engineering life forms

Olivia Judson usually writes pretty interesting pieces for Science Times. Yesterday's article on engineering life forms was a great example (it doesn't present new, groundbreaking research; but you feel like you've learned a bunch after reading the article...

China [burns more coal] than the US, the EU, and China *combined*

Apparently either the US and the EU burn no coal, or China burns infinite coal:

China is the world’s largest consumer of coal, burning more than the United States, the European Union and China combined.

From this article about a freighter crashing into the Great Barrier Reef near Austrailia.

(Note: it looks like this typo has been fixed in the posted article.)

The new healthcare bill

Good news is already happening with the healthcare bill, as insurers are now agreeing to cover children with preexisting conditions. It's hard to believe denying them such coverage was legal before.

Prices will likely increase because of the bill. I'm not too familiar with the legislation, but mark my words: unless there is very close antitrust regulation and monitoring of pricing, insurers will gauge customers, because of either explicit collusion or the inability of customers to easily change insurers. Such collusion and resulting high prices would be an undeserved ticket for republicans to shout, "I told you so!"

I've heard about a marketplace for insurance contracts -- that might be one place to avoid collusion and unnecessary gauging; but it will need to happen very soon for the public to not regret passage of the legislation.

How Freeze-drying works

Probably about how you'd expect, given the name and the "light" texture of freeze-dried foods.

Basically, you need to freeze something to below water's ideal point, then reduce the pressure and add enough heat to make the water in the material sublimate (go from a solid directly to a gas).

This is apparently similar to a process by which natural mummification sometimes takes place in high altitudes. This is also reminiscent of the way cheerios are made.

Why have we not tried freeze-drying everything under the sun (well, figuratively), such as tofu and turkey?

http://en.wikipedia.org/wiki/Freeze_drying#Food_industry

Increasing right-wing extremism

About a year ago, the Department of Homeland Security warned of increased right-wing extremism. This is notable because it appears to be true. Since then, the Tea Party Movement, a wacky rightwing movement incubated by conservative organizations, has continued to gather increasing press. More recently, a man furious with the IRS crashed his airplane into an IRS building. And democrats have already received a number of threats over healthcare legislation.

The report (the text of which is available at the Huffington Post link above) notes that these right-wing groups are likely to capitalize on the economic downturn (as has happened in the past) and the election of the first African American president.

Interestingly, it also notes that conspiracy theorists who have anticipated a cataclysmic collapse of the American financial system will be egged on by the current financial crisis; it also notes other sources of paranoia for these extremists -- such as ammunition shortages and the rise of other world economies. Of concern, there has been an increase in stockpiling of ammunition among these groups, and the report notes that they are likely to recruit disgruntled returning war veterans.

Of course, we have an historic healthcare bill coming through congress; those legislators opposing it have reacted rather aggressively. I want to argue that republicans should think carefully before spewing paranoia-inducing rhetoric about healthcare legislation. On the other hand, I feel that arguments which use national security as a supporting argument are often suspect (this cynicism is due to coming of political age in the last 10 years).