Ben Muse

Economics and Alaska

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I'd wondered what the survival rate was

Brendan I. Koerner addresses the question, "Do Jet Stowaways Ever Survive?" in today's Slate.
    "For the second time in a week, police at New York's Kennedy Airport have discovered a body in the wheel well of an arriving jet. What are the hazards of traveling in an airplane's wheel well, and do any of these desperate stowaways ever survive?..."
P.S. 1-2-04 Stuart Buck asks about the security implications: "Flights"

"Source criticism" of the Lord of the Rings

Mark Shea traces the components of the Lord of the Rings back to their original sources, here: "The Lord of the Rings: A Source-Criticism Analysis". I learned about this from "".

NAFTA and Mexico

Tyler Cowen at Marginal Revolution notes that the 10th Anniversary of the North American Free Trade Area (NAFTA) is coming up, and marks the anniversary with a posting on the benefits of the agreement for Mexico, here: "10th anniversary for NAFTA".
    "...A recent World Bank report confirms this positive view [The view of NAFTA's impact on Mexico expressed by Cowen earlier in the post - Ben]: "without NAFTA Mexican exports would have been around 25 percent lower than the actual numbers, foreign direct investment would have been around 40 percent less and the country's per capita income in 2002 would have been up to 5 percent lower." Here is a summary of the report..."
Cowen's post links to the World Bank report.

World trade negotiations since Cancun

Peter Gallagher summarized developments in Doha Round world trade negotiations since the failure of the Cancun talks in this December 9 blog posting: "Limp in October, too late in December ". The Doha Round is important since it is aimed at world wide relaxation of trade restrictions - as opposed to the partial and fragmented approach represented by regional agreements like the Central American Free Trade Area). Gallagher's column doesn't address efforts to create these regional agreements.

Gallagher sees the U.S. and Europe missing an opportunity for exercising leadership to get talks back on track in October.
    "...There was a period, in early October, when it was clear that the consequences of their actions had started to dawn on the leadership of the African/Carribbean/Least-Developed group of countries who had pulled the plug at Cancún. They had given away their best opportunity to keep up the pressure on the EU over agricultural export subsidies and on the USA over domestic subsidies to e.g. Cotton farmers.

    The leadership of the G-21 group of developing country agricultural exporters (Brazil, Egypt, Argentina, South Africa ... although perhaps not India) were obviously shocked by the early termination of the Cancún meeting and were undoubtedly ready to re-engage on agriculture. They thought they had been close to a win at Cancún when the talks went belly-up over investment etc.

    Despite behind-the-scenes pressure from Cairns Group members including Australia, however, neither the EU nor the USA was willing to 'take charge' of the talks after the collapse by offering a new way forward on key problem areas such as agricultural subsidies or industrial tariffs. Both USTR Zoellick and EU Commissioner Lamy retired to lick their wounds over the failure of their pre-Cancún strategizing and to shield themselves from the inevitable recriminations..."
Gallagher doesn't see much scope for progress in the coming year. The U.S. will be preoccupied with national elections ("Although Bush has shown that there is no period in the US electoral cycle that need be free of protectionist log-rolling, the year or so leading to a Presidential election is traditionally the time when trade-demagogery is at it's worst."), and the E.U. with the introduction of 10 new member states.

Weakness in the current recovery

Paul Krugman points out that, while the economy has grown considerably recently, incomes from wages and salaries have lagged behind. When GDP grew at 8.2% in the third quarter, wage and salary income only grew by 0.8%. Job growth has also, so far, lagged behind "the roughly 150,000 jobs needed to keep up with a growing working-age population." Krugman's column in today's New York Times is here: "Our So-Called Boom".

Blinder, Yellen and Stiglitz

Yale Economist William Nordhaus reviews The Fabulous Decade: Macroeconomic Lessons from the 1990s by Alan S. Blinder and Janet L. Yellen, and The Roaring Nineties: A New History of the World's Most Prosperous Decade by Joseph E. Stiglitz in the New York Review of Books, here: "The Story of a Bubble". Both books are histories of Clinton era economic policy and performance.

I learned about this from Brad DeLong's web site. DeLong quotes from the article and provides some commentary, here: "The 1990s Boom". DeLong, in turn, learned about the article from Paul Kedrosky, here: "Economist vs. Economist: Dissecting the Roaring 90's".

Balance of Payments

Ed Lotterman introduces the concept of the "balance of payments," relates it to 19th Century U.S. growth, WWI finance, and the determinants of the Great Depression, and finally draws an implication for current U.S. policy - all in one newspaper column, here: "Real World Economics: Leaders need background in trade realities".

Trade protection can cost jobs

Daniel Drezner posts on a Chicago Tribune story about job losses in the U.S. hard candy industry caused by U.S. sugar import restrictions: "Protectionism never tasted so sour". The key point in the story: high U.S. sugar prices, associated with tariffs and quotas that keep U.S. sugar prices above world levels, are forcing U.S. hard candy producers to "outsource" production overseas.
    "...In the last three years, nearly half of all U.S. candy cane production has shifted to Mexico, industry experts say...

    But the story of the Mexican candy cane isn't your typical tale of American manufacturers chasing lower wages. It's more about the cost of sugar than the cost of labor...

    In Chicago, for example, Brach's Confections plans to shut its plant in 2004, forcing about 1,000 workers out of their jobs. The Chicago area, the center of the U.S. confection business, has lost an estimated 3,000 candy-related jobs since 1998..."
I've just finished reading Douglas Irwin's Free Trade Under Fire (Princeton University Press, 2002.) I'd strongly recommend it. Irwin makes the case for free trade, focusing especially on the issue of jobs. The second half of the book is on the history, political economy and law of U.S. trade policy.

Relevant here are some of Irwin's comments on sugar restrictions (and what we're getting for this sacrifice of candy jobs):
    "...As already noted, the United States assists the domestic sugar industry through price supports and import restrictions in the form of a tariff-rate quota. Under a tariff-rate quota, sugar-exporting countries are given a certain (small) quantity that they can sell in the United States at the regular tariff, and any exports beyond that specified quantity are subject to a tariff rate of nearly 150 percent. As already noted, the sugar import restrictions and price supports cost domestic users of sweeteners $1.9 billion in 1998. Domestic sugar beet and sugarcane producers reaped $1 billion as a result of these policies, with most of the benefit accruing to sugar beet growers. The net loss to the economy is $900 million annually, $500 million due to economic inefficiency bred by the policy and $400 million in the transfer of quota rents to foreign exporters." (page 59)
So, we are sending $400 million a year to foreign producers in order to engineer a transfer one billion dollars from consumers to domestic sugar producers (and to destroy an additional $500 in domestic wealth from the inefficiencies associated with the restrictions- this $500 million is in addition to the $400 we're giving to foreigners).
    "...Sugar imports are restricted to maintain domestic price supports for sugar beet and cane producers. The benefits of these restrictions are highly concentrated because Congress has not limited the amount of support that large farms can receive. For example, one farm received over $30 million in benefits from the sugar program in 1991, and just 0.2 percent of all sugarcane farms - thirty-three in total - received 34 percent of the entire program benefits. The family of Alfonso Fanjul single-handedly supplies the United States with about 15 percent of its sugarcane through its land holdings in south Florida and the Dominican Republic, collecting somewhere between $52 to $90 million in benefits from the price supports on U.S. production and the quota rents on Dominican sugar exports. Not surprisingly, the Fanjul family could afford to make nearly three hundred thousand dollars in campaign contributions in 1988..." (page 61)
Irwin is drawing on sources written in the early 1990s, so his numbers are 10 years old.

Drezner points to relaxed sugar restrictions in the new Central American Free Trade Agreement (CAFTA). Robert Tagorda links to Reuters stories which elaborate and discuss the domestic sugar producers' response and sources of influence: "Big Sugar".

Why are a small number of sugar producers able to get Americans to incur $900 million in expenses in order to transfer an additional one billion to them? Tagorda links to Josh Chafetz, who explains one theory: "THE COSTS OF PROTECTIONISM"

Sunset provisions

Chris Mooney, writing in the magazine Legal Affairs, traces the history of statutory sunset provisions, here: "A Short History of Sunsets".

Mooney says the modern debate over sunset provisions began in the late sixties with a proposal by political scientist Theodore Lowi to incorporate sunsets into laws creating new federal agencies. The idea was subsequently taken up by the government reform proponents in the 1970s. The hope was that sunset provisions would force people who favored programs and agencies to periodically bear the burden of proof of re-justification.

The sunset movement had more success in getting sunset provisions at the state than the federal level. However, sunset provisions did not generally have the results that had been expected by their proponents:
    "By setting a termination date on a particular law, a sunset provision is supposed to shift the burden of proof onto those seeking its extension. But once a law has been in effect for several years, it may come to have considerable staying power, as constituencies and interests dedicated to its continued existence develop. “In theory, sunset was sold as a process to terminate a board or agency unless the agency could demonstrate the need for regulation,” noted a 1981 report by the Council of State Governments. “In practice, . . . often the burden of proof has been on sunset audit agency staff to demonstrate that regulation was not necessary.”

    The threat of termination forced government bodies to analyze the effectiveness of their regulations, but agencies defended their turf fiercely against the sunset process. The more established the agency, the more powerful its inertia. Proving Lowi's original insight, special interests with an investment in the status quo worked to save the lives of benefactor agencies. Few state government bodies were actually sunsetted out of existence, and legislators viewed sunset reviews as one of their most demanding and least rewarding tasks.

    The results of the sunset process were, consequently, dismal...."
In the last half of his article, Mooney looks at the recent use of sunset provisions in the Patriot Act and in the two big Bush Administration tax cut bills.

Those interested in the history of sunset provisions might also be interested in this history of legislative riders: "Riders from Hell ".

I learned about the sunset article from Tyler Cowen at Marginal Revolution: "Against sunset laws".

King Island

King Island is a remote island in the northern Bering Sea. There used to be an Inupiat Eskimo village on it, Ukivok. Ukivok was perched precariously on a cliff overlooking the ocean. Ukivok was abandoned almost 40 years ago, but this picture from 1978 (some years after the village was abandoned) suggests what it was like:

Source: NOAA

Rie Munoz and her husband Juan went to King Island as teachers in 1951, apparently spending nine months. She's posted Juan's photos of life on the Island, here: "King Island".

During the winter the 150-200 residents of King Island were cut off from the rest of the world by sea ice. The year that Rie and her husband were on the island the last ship for the winter arrived, but was unable to drop off supplies and the priest for the Christmas celebration, because of the weather. The islanders carried a light boat made of walrus skin (an oomiak - see Juan's pictures) over the center of the island to the more protected side, in order to bring the priest and supplies in. Rie and Juneau author Jean Rogers later wrote and illustrated the story for a childrens' book: King Island Christmas. Subsequently the book was used as the basis for a musical play. The story behind the play may be found here: "How King Island Came to Be".

On Sunday the Juneau Empire carried an Associated Press story by Rachel D'Oro on an Oregon State University project to do archeological work on the island, and to collect oral history from people who used to live there: "Research team to study one of Alaska's ghost villages". How did people live on this island? Why did they leave? D'Oro says,
    "The island was named in 1778 by British explorer Capt. James Cook for James King, a member of his party. But it's unclear how long Inupiats lived there.

    A century ago, about 200 people dwelled in walrus-skin homes tacked to the face of the cliffs. They hunted walrus, seal and seabirds and collected berries and plants. Every summer, they traveled by kayak and skin boat to the mainland 40 miles to the east, camping near Nome, where they sold ivory carvings.

    Starting in the 1950s, fewer people returned to King Island. The 1960 U.S. Census counted only 49 residents. The 1970 census found none. King Island is among 16 federally recognized Native villages that were deserted or used as seasonal camps.

    Today, many former King Island residents and their descendants live in Nome.

    Kingston said several factors contributed to the demise of King Island. Pregnant women were choosing to stay in Nome, where there were doctors. Many of the men were drafted into the military during World War II. In the late 1940s and 1950s, tuberculosis killed some people and hospitalized others. And ultimately, as with other Alaska villages vacated in modern times, paying jobs were available in more accessible towns."
A nice story with details of life on the island that I haven't copied over here.

Medicare vote bribe accusation

Timothy Noah at Slate has been following the accusations that offers were made to bribe at least one congressman to vote for the recent Medicare legislation. His latest column (with a convenient set of links to earlier columns) is here: "Now It's a Scandal. New evidence that a House GOP leader offered a bribe.".

R. Jeffrey Smith also has a report in today's Washington Post, here: "GOP's Pressing Question on Medicare Vote. Did Some Go Too Far To Change a No to a Yes? ".

What to give for Christmas

Tyler Cowen's advice is based on the most up to date scientific results: "What are the best Christmas gifts?".

What's wrong with transparency?

Lawrence Solum explains "transparency" in this week's Legal Theory Lexicon: "Legal Theory Lexicon: Transparency". He explores, in a balanced way, the idea of transparency in politics, markets, and law. Because he is balanced, he explores both sides of the issue - and there are two sides of the issue. I just want to pull out one quote, because its something I've often thought as well. Transparency in government may be a good thing in general, but:
    "Transparency in government comes at a price. Transparent processes may be inefficient--what can be done in private in minutes may take hours in public. Transparent processes may also distort decision-making, forcing political actors to pander to public opinion at the expense of good policy.

As my wife says, "Men are easily distracted."

The Economist reports on research by Margo Wilson and Martin Daly at McMaster University in Canada suggesting that the extent to which men discount future income compared to current income can be manipulated by showing them pictures of pretty women: "Hey, big spender. Men lose their fiscal prudence in the presence of attractive women".
    "YOU already knew it, but now science has confirmed it: a glimpse of a beautiful woman can change the way a man thinks. Change him, in this case, from the kind of chap who prefers $100 a year hence to $25 tomorrow, into one who simply cannot wait the extra 364 days.

    Economists and psychologists have been exploring the notion of discounting the future for some time now. For most people, money today is worth more than the same amount in the future. But how about twice that in a few weeks' time? Or three times as much in a half year? It is already well-known that men discount the future more steeply than women and that certain types of people—addicts, for instance—discount more steeply than others. But it has mostly been taken for granted that the way a person discounts is a stable personality trait, and an arbitrary one....

The Economics of Christmas Lights

Virginia Postrel on the economics of Christmas lights, in this Reason Online column: "Light Unto the Wealth of Nations. How Christmas displays illuminate a strong economy ".

Water Privatization

Lynne Kiesling posted twice on water privatization earlier this month.

The first post ("Water Privatization I: Ownership and Operation") looks at the issues of "owning, building and operating water systems" (particularly issues of natural monopoly in infrastructure and common property in the resource in the ground).

The second ("Water Privatization II: Pricing Promotes Efficiency and Conservation") looks at the benefits of using prices to ration this scarce resource.

The "Starbucks vs Subway" discussion

Professor Bainbridge asks "why are Subway stores owned by franchisees, while Starbucks stores are owned by the corporation", and applies transactions cost analysis to the problem, here: "The Starbucks v. Subway Puzzle" (Dec 15).

Other bloggers picked up and commented on the post. Bainbridge links to the commentary, here: "Starbucks v. Subway: A Roundup" (Dec 17).

Are OMB's new "peer review" proposals meant to gum up the regulatory works?

The Office of Management and Budget has proposed new guidelines for "peer review" of the science underlying proposed regulations. I posted on December 5, linking to a post by Tyler Cowen and the proposed guidelines, here: "Peer review of the science underlying regulations".

Kevin Drum posts on the topic today, linking to a Dan Kohn story on the proposed guidelines in the Baltimore Sun, here: " "PEER" REVIEW....More on the Bush administration's new "peer review" proposals in the Baltimore Sun today". The Sun's story focuses on criticism of the proposed guidelines:
    "On its face, the idea sounds utterly unassailable: Who would oppose a government rule to increase expert discussion of key scientific research?

    But a new Bush administration proposal to increase peer review for many scientific studies has alarmed public health and environmental groups, as well as many scientists.

    They call it a back-door attempt to stifle new health and environmental regulations by burying them under mountains of discussion and analysis. Critics contend the process is also designed to produce conclusions slanted toward industry..."
It looks like Drum also posted on the proposals on December 8, here: "Conservative Lysenkosim". This post, which focuses on the Data Quality Act, links to a Boston Globe story and to posts by Chris Mooney.

It helps to have a Senator on the Appropriations Committee

A spate of news stories about Alaska's senior senator show the potential value to a state, when one of its Senators chairs the Appropriations Committee. Ted Stevens has been senator from Alaska since 1968, and Chair of the Senate Appropriations Committee since 1997. The stories come in two types: some point to Stevens' success in bringing federal dollars to Alaska, others point to Stevens' personal relationships with Alaska business figures.

Money for Alaska

Mike Doogan's column in the Anchorage Daily News on December 9 illustrates the first type of story: "Cash cow not likely to run dry".
    "...Stevens, who is chairman of the Senate Appropriations Committee, brings in so much money that the economic effect of his own efforts, beyond what Alaska might get in the normal course of events, have been given a name by economists: Stevens money.

    A new report by the University of Alaska's Institute for Social and Economic Research suggests that when Stevens is forced to give up his chairmanship at the end of next year, the amount of Stevens money could drop dramatically.

    There is plenty of reason to worry. Federal spending is the single most important element of Alaska's economy. The new study says that federal spending is high -- more than $11,700 per person -- and that it supports about one-third of all jobs in Alaska.

    According to a spending watchdog called the Tax Foundation, in the federal government's 2002 fiscal year, the average Alaskan received $1.91 in federal spending for every $1 in income taxes paid.

    "This 'bang-per-buck'," the university study says, "is nearly twice the national average..." "
Doogan's column is based on a recent University of Alaska, Anchorage study on federal spending in Alaska (by Scott Goldsmith and Eric Larson): "Federal Spending and Revenues In Alaska". What does Stevens' chairmanship of the Senate appropriations committee mean to Alaska?:
    "...Before Senator Stevens became chair in 1997, per capita federal spending going to Alaska was between 20% to 50% higher than the national average...Starting in 1999 (two years after Senator Stevens became chair) federal funding per capita going to Alaska increased from about 30% above the national average to over 70%
    above the per capita national average in 2002

    ...From 1997 to 2002 (when Senator Stevens was chair), project grants per capita going to Alaska increased from about 225% to over 500% above the national average... Much of this increase in funding to Alaska is for the Indian Health Services Management Development Program. When we excluded the funding for this particular project from the calculations, the per capita project grant funding to Alaska increased from about 225% above the national average in 1997 to over 300% above the national average in 2002..."
Goldsmith and Larson compare Alaska's experience with Stevens as Appropriations Committee Chair to that of other states with Appropriations Chairs: West Virginia (Byrd), Mississippi (Stennis) and Oregon (Hatfield). Surprisingly, Mississippi and Oregon don't seem to have benefited (in per capita terms) to the same extent as Alaska.

This Anchorage Daily News story by Liz Ruskin describes Stevens use of legislative riders: "Stevens' way of lawmaking draws fans, critics. RIDERS: Spending bills make Alaska senator a formidable power.". A second story by Ruskin, from yesterday's Daily News, suggests that the use of riders may have backfired this year, contributing to the failure to pass an important appropriations bill: "Alaska funds may die with spending bill NO GO: Stevens says votes aren't there for $820 billion measure.".

A new theme

Recently some articles have begun to point to Stevens' involvement (and his family's involvement) in business ventures with persons who stand to gain from actions Stevens takes as Appropriations Committee Chair.

Liz Ruskin covered Stevens' relationship with Anchorage real estate developer John Rubini in this August Anchorage Daily News story: "Financial wizard works magic for Stevens. RUBINI: Investing with property developer has turned the senator's financial fortunes around". I posted an excerpt from this story in August, here: "Business and Politics".

Today's Los Angeles Times has an extremely detailed story by Chuck Neubauer and Richard T. Cooper along the same lines: "Senator's Way to Wealth Was Paved With Favors".
    "He wielded extraordinary power in Washington for more than three decades, eventually holding sway over nearly $800 billion a year in federal spending.

    But outside the halls of the U.S. Senate, which is a world of personal wealth so rarified some call it "the Millionaires' Club," Sen. Ted Stevens (R-Alaska) had struggled financially.

    Then, in 1997, he got serious about making money. And in almost no time, he too was a millionaire - thanks to investments with businessmen who received government contracts or other benefits with his help.

    Added together, Stevens' new partnerships and investments provide a step-by-step guide to building a personal fortune - if you happen to be one of the country's most influential senators..."
P.S. December 18, 2003 The Anchorage Daily News picked up on the L.A. Times story today. Liz Ruskin reports: "Newspaper questions Stevens' ethics ACCUSATIONS: Los Angeles Times reports senator and his family have gained financially from his position.".
    "WASHINGTON -- The Los Angeles Times on Wednesday published a front-page story showing that Ted Stevens and family members have gained financially from business interests that Stevens has helped through his position as a powerful member of the U.S. Senate.

    The story, the Times reported, was the result of a six-month investigation into the Alaska Republican and illustrates "how lax ethics rules allow members of Congress and their families to profit from personal business dealings with special interests."

    As the Anchorage Daily News reported in August, Stevens struggled financially for years, but became rich by investing with Anchorage real estate developer John Rubini, who turned Stevens' $50,000 investment in 1997 into an asset worth at least $750,000.

    Both newspapers reported that while Rubini was multiplying Stevens' wealth, Stevens was helping Rubini secure a $450 million Defense Department contract to build and own housing on Elmendorf Air Force Base.

    But the Times story provided new details about the Stevens family finances:..."
The Fairbanks News Miner reprints the L.A. Times story: "Report targets Stevens' record". The Juneau Empire doesn't seem to have covered it today.

P.P.S The Juneau Empire repeated the L.A. Times story yesterday. Joel Gay reports Stevens' response in the Anchorage Daily News today: "Stevens calls investments ethical. RESPONSE: Senator asserts "I've never sought money from public office". Stevens' replied to the allegations before a press conference in Alaska. His argument is that, after 35 years in the Senate, he has had such a pervasive influence in the state that it would be difficult for him to invest in Alaska without doing business with someone affected by his actions.
    " "Stevens said it would be difficult for him to invest in Alaska businesses without intersecting with his own legislation. "If I want to invest at home, with the things I've done in 35 years, I'd have a conflict in anything that could be reportable," he said.

    "When (West Virginia Sen.) Jay Rockefeller votes on the floor of the Senate, he can't help but have some conflict with anything he votes on ... because he has such an enormous fortune. But that doesn't mean it's a conflict that violates the Senate ethics rules, or should even be something that we would worry about, in my opinion. And I didn't worry about my investment with John Rubini."

    Stevens scoffed at some of the Times' assertions, such as supporting oil drilling in the Arctic National Wildlife Refuge as a favor for the tenant of the building he owns a small portion of. He supports ANWR drilling because it's right for Alaska, he said, not because it was right for ASRC.

    "How can you get a person to represent this state who has no interest in the state for the future?" he asked. "They draw too thin a line on conflict of interest. That's why we have the disclosure, so people can see it and we can have stories like this and you can examine it yourself." "
P.P.P.S. 12-21-03 Mike Doogan, Anchorage Daily News columnist, offers a vigorous defense of Stevens today: "Stevens makes case on investing".

Sometimes it's not easy to be an economist

Alex Tabarrok reports on the difficulty of ignoring sunk costs: "Behaving like an economist". (Revised 12-16-03)

I'm back

Sorry for the lack of posts during the last week. I was in Anchorage on business and it was hard to find time to post. I'm back in Juneau now and I should start posting soon.

Pearl Harbor remembered

Pearl Harbor veteran Gilbert Goodwin shared his memories with social studies classes at the Dennis-Yarmouth Regional High School this past week. Marc Perry reports for the Cape Cod Times: "Pearl Harbor: Anguish lingers".
    "When the Japanese plane buzzed by his ship - "so close you could see the pilot in the cockpit" - he knew they were under attack.

    "You're in shock," Gilbert Goodwin said, describing that morning for a group of high school students in Yarmouth. "You tell yourself, 'My country doesn't let us get attacked like this.'"

    It's the first time he has publicly told the whole story. The story of what happened to him at Pearl Harbor. The entire attack as he fought it, saw 23 shipmates die in it, and survived it...

    When the bombs started falling, he said, he ran to a battle station way up on the port side of the bridge.

    He was angry, he said, his voice quickening. Angry at the higher-ups for letting this happen, angry at the Japanese, angry at his ammunition runner who lay down paralyzed with fear.

    He went to get the ammo himself. The box was locked. He broke the padlock, loaded the bullets and starting firing into the air.

    "I can't say to you that I shot down any planes," Goodwin said. "The history books say we shot them down. But with everyone firing, you can't see, you don't know."

    The firing continued, the shrapnel pouring down. Finally, it was quiet. They stayed at the guns all night.

    Goodwin ended by reminding the students that he was their age when all this happened.

    "I basically wanted to talk to you because you're 18 and you don't know what your destiny is," he said. "You hope it will be wonderful.

    "But life isn't easy. Life is not easy." "
The whole story is worth reading, but don't wait long because Times stories don't seem to remain up long.

Medicare bill arm twisting

Robert Tagorda relays an anecdote about freshman congressman Tom Feeney's pre-vote conversation with the President: "A Round of Applause for Congressman Tom Feeney".

Over at Slate, Timothy Noah has been trying to find out if someone (and if so, who) might have tried to bribe Representative Nick Smith for his vote on the Medicare bill: (1) "Who Tried To Bribe Rep. Smith? Stop protecting him, Congressman.", and (2) "Nick Smith Recants. Did the pressure get to him?", (3) "Why Smith Can't Recant. They've got him on tape.".

When it is "contingency planning," and when is it "fraud"

Scheherazade at Stay of Execution has been reporting from a conference on bankruptcy law this week. In this post she reports on the ethical dilemma facing a company planning for bankruptcy, but continuing to accept unsecured credit: "Fraud".

Peer reivew of the science underlying regulations

The Office of Management and Budget (OMB) is proposing guidelines for peer review of the science underlying federal rulemaking. The proposed guidelines were published in the Federal Register on September 15, and a comment period runs until December 15. The proposed guidelines may be found here: Federal Guidelines. (68 FR 54023; 9/15/03)

Tyler Cowen has some cogent comments on how reviewer incentives could undercut the intent of these guidelines, here: "Peer review for new regulations?".

Steel tariffs lifted

The Bush Administration lifted its special steel tariffs today. William Branigin reports in the Washington Post, here: "Bush Administration Lifts Steel Tariffs". Jonathan Weisman surveys reactions in this story from tomorrow's Post: "Bush Rescinds Tariffs on Steel. Trade War Averted; Industry Angry". The Economist reports here: "Scrapped"

This AP story from tomorrow's New York Times ("Bush Steel Tariffs Move Avoids Trade War") spends time on the politics of the decision. The reaction of a number of Democratic candidates was interesting:
    "Four Democratic presidential candidates -- Missouri Rep. Dick Gephardt, Connecticut Sen. Joe Lieberman, former Vermont Gov. Howard Dean and retired Gen. Wesley Clark -- accused Bush of abandoning steel producers without offering plans to retain jobs in the industry and other manufacturing sectors.

    Gephardt said that ``rather than bow to the pressure of our trading partners,'' Bush should have negotiated further with the WTO. Dean said the tariff repeal ``is just another example of this administration playing politics with peoples' lives.'' "
Peter Gallagher notes that this "is another victory for the multilateral system in the management of trade disputes...": "US steel safeguards gone: WTO survives!" (he also notes that we will still have tariffs on steel, just not these extra tariffs). David Sanger in a news analysis in tomorrow's New York Times argues that the decision strengthens the WTO: "Backing Down on Steel Tariffs, U.S. Strengthens Trade Group".
    "For the first time in his nearly three years in office, the president, who has often reveled in the exercise of American power, finally met an international organization that had figured out how to hit back at the administration where it would hurt. Employing relatively untested powers, the eight-year-old World Trade Organization authorized European and Asian nations to devise retaliatory tariffs against the United States, just 11 months before a presidential election. Not surprisingly, the Europeans pulled out an electoral map and proudly announced they would single out products made in the states Mr. Bush most needs to win a second term.

    In fact, what the W.T.O. accomplished when it forced the Bush White House into a rare 180-degree turn was exactly what its American champions envisioned and its opponents warned about during the first big globalization debates of the 1990's. Acting as the final arbiter of the world's trade rules, it reversed the politics of protectionism, making sure that nations that protect their markets — in the name of saving jobs — are forced to pay a steep price."
Maybe in the short run, but tomorrow's Weisman story in the Post has some disturbing quotes suggesting a different outcome is possible in the longer run:
    "Gary Clyde Hufbauer, an economist at the Institute for International Economics, expressed concern that Bush's actions may set back international trade liberalization by focusing so much political anger on the WTO. Republican tariff supporters did in fact avoid criticizing Bush, saving their denunciations for the world trade body.

    "I respect the president's decision to accommodate the ill-conceived WTO ruling against the safeguard measure and avoid stiff retaliatory tariffs," said Rep. Phil English (R-Pa). "However, this entire process reveals just how badly broken the WTO dispute-resolution mechanism really is." "
And note Gephardt's reaction in the AP story quoted above.

Brad DeLong focuses on the evolution of administration spin on the tariffs since the WTO decision, in a series of posts: (a) "The Evolution of Bush Steel PR"; (b) "Why Oh Why Can't We Have a Better Press Corps? Part CCCCLXXVIII" ;(c) "Why Can't the Bush Administration Ever Tell the Truth?".

The administration claimed it lifted the tariffs because they had done their job: "President's Statement on Steel" (which also links to the actual proclamation). DeLong claims that the administration is not telling the truth about the reason the tariffs are being lifted. I think he is right. On the other hand, the administration's proclamation isn't scapegoating foreign nations or the WTO. A nice contrast to Reps. Gephardt and English (above).

For background: I pulled together some links on the tariffs and the WTO decision in September, when the appeal was decided. The post is here: "What a revolting development this is!".

Where to get the best gossip

Kevin Drum at CalPundit says, for the best information, go to people at the top of the hierarchy, or the bottom. Don't go to people in the middle: "WHO TO LISTEN TO....".

Some notes on public choice

Tyler Cowen links to and comments on two related papers on public choice, here: "What do public choice economists believe?".

The first paper, by Jac Heckelman and Robert Whaples, reports on a survey of the opinions and conclusions of economists and political scientists specializing in public choice analysis.

The second paper, by Jun Ma surveys critiques of William Niskanen's theory of bureaucracy. Niskanen built a theory of bureaucratic behavior on the assumption that bureaucracies behaved as if they tried to maximize their budgets. Ma reviews the theory, and surveys theoretical critiques and empirical evidence.

Does it take more energy to make a gallon of ethanol than you get by burning it?

And does it really cost taxpayers $30 to generate each $1 of Archer Daniel Midlands ethanol profits? Cecil Adams looks at ethanol here: "What's the true story on ethanol?". I learned about this from Lynne Kiesling: "THE STRAIGHT DOPE ON ETHANOL". John Powers critiques assumptions underlying Adam's post in the comments to Kiesling's blog.

What does it mean: "to turn the other cheek"

Donald Sensing draws out some unexpected implications of Jesus' teaching, "Do not resist an evil person. If someone strikes you on the right cheek, turn to him the other also," here: "On turning the other cheek".

Is abortion an appropriate remedy for a cleft palate?

Colin Blackstock reports in the Guardian: "Curate's court action over abortion "
    "Joanna Jepson is taking Paul West, chief constable of West Mercia police, to court because she says he sanctioned an illegal abortion by failing to investigate a pregnancy termination after the six month legal limit.

    An unnamed woman chose to abort the foetus after finding out it would be born with a cleft lip and palate - although the pregnancy was past 24 weeks. After this time an abortion can only be carried out if there is a risk of serious handicap..."
I learned about this from Eric Rasmusen's Weblog:"Aborting a Baby with a Cleft Palate".

Tariffs on bras

The Progressive Policy Institute notes that tariffs on bras raised almost as much money for the federal government in September as tariffs on steel. The $150 million in bar tariff revenue each year are essentially a tax on U.S. citizens. "Bluntly put, for the government, bra tariffs amount to a tax of 50 cents per American breast." Here: "Bra Tariffs Are 17 Percent in the United States and 10 Percent in Bolivia".

Rubin's probabilistic thinking

Brad DeLong reviews Robert Rubin's new book, here: "Why Was Bob Rubin Such a Good Public Servant?". He approaches the book by looking for traits that made Rubin effective as a presidential economic advisor and Secretary of the Treasury. One of these is Rubin's "probabilistic" thinking:
    "The factor Rubin himself sees as most important is his habit of "probabilistic thinking": a willingness to always ask questions like "What else might happen?", "What if we're wrong?" [As Oliver Cromwell said, "I beseech you, in the bowels of Christ, think it possible you may be mistaken." - always good advice." - Ben], "What could happen next?", and to look at the full range of situations that might come to pass--and at their costs and benefits--rather than to assume that things will go as planned or as the fashionable ideology or favorite administration model would have predicted. For all forecasts turn out to be wrong along at least one important dimension. Pounding the table and talking more loudly does not make unwanted facts disappear. Rubin's recognition that the world is a complicated and poorly-understood place, where lots of unexpected and surprising things happen (as opposed to a place to which John Maynard Keynes or Milton Friedman or Irving Kristol has already drawn us an accurate map we need merely to consult), seems to have been the most powerful of his secret weapons."
For some people, this probabilistic approach could be a recipe for paralysis. It doesn't seem to be for Rubin. So what is the countervailing personal characteristic that prevents this?

Are computerized "touch-screen" voting machines tamper resistant?

Paul Krugman raises disturbing questions about computerized voting machines in his column in today's New York Times: "Hack the Vote". The machines depend on software, there may have been security breaches with the software that powers the machines of at least one firm, there are people out there with the skills and incentives to hack these machines.

How Scheherazade studied in law school

Scheherazade, at Stay of Execution describes her study methods in law school, here "Study Tips".

What's the appropriate level for punitive damages in a law suit?

Judge Posner describes an economic rationale for punitive damages in an 11 page Oct 21 decision. Alex Tabarrok has a link and brief commentary in this Marginal Revolution posting: "Don't let the bed bugs bite". (Owners of a hotel in downtown Chicago were sued for "willful and wanton conduct" by guests bitten by bedbugs in a $100/day room).