A Matter of Life and Death

Here’s a purely hypothetical question for you. Let’s suppose you have a certain number of hospital beds and a certain number of ventilators and a certain number of medical staff. Further, let’s suppose that there are more sick people than there are beds, ventilators, and staff. The system has insufficient capacity to meet the need. Or, in economic terms, demand exceeds supply. How do you determine who receives help?

That question of triage, deciding who is to die, is a difficult moral calculus–for some people. For eugenicists or Nazis, it’s not: kill the old and feeble, the physically or mentally deranged, the scum; cull the weak from the herd and improve the species. Or, as Dominic Cummings, aide to Boris Johnson, Prime Minister of the United Kingdom of Great Britain and Northern Ireland, put it: “if that means some pensioners die, too bad.

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Each time the United States argues over a national health care system, someone attempts to assert that socialized medicine leads inevitably to death panels, as if rationing life by one’s ability to pay were more humane than a committee. The thought was that at some point the State would decide it’s just too expensive to keep Granny alive and she would be killed–completely ignoring the fact that Congress funds anything out of nothing more than desire.

Yet somehow refusing to order production of medical equipment or prepare for a pandemic does not rise to the same level of callousness. Somehow seeking to profit from the deaths of thousands is just good business. Those actions cause or exacerbate shortages which lead to deciding who will die.

The response to COVID-19 is in a very real sense a logistics problem, in terms of delivering care to the people who need it. But it’s also one of meeting demand. And in that respect economics can offer some ways to think about it, as the field is, after all, concerned with how finite resources are allocated–the case of surge pricing toilet paper to prevent hoarding comes to mind. Though it seems rather insane for the price of N95-rated masks to have jumped from $0.70 to $7.00 each over the past week, the prices reflect a case of insufficient supply available for the demand. Some people, such as New York’s Governor Andrew Cuomo, redirected existing labor to another task: making hand sanitizer. The Army Corps of Engineers are doing what they do. Others are simply volunteering to help, whether in 3-D printing a valve for a ventilator, or providing patent-free CAD designs, or manufacturing, or sewing.

The response to COVID-19 is also an ethical problem. Most people want to help; the rest are outside society.

R. R. Reno, the editor of First Things, has been on a tear recently. He’s very upset that Roman Catholic churches, among others, suspended public celebration of the Eucharist, and argues that the Church could find other ways of adjusting without shutting out the parishioners. (I suspect he might agree with me about locking the sanctuary doors.) There is something quite magical about gathering together, but expecting others to risk their lives so you can receive the Eucharist seems the opposite of courage in the face of death. Perhaps the Catholic churches could find ways to remain open, but they have decided to help prevent the spread of disease by asking their flock to worship at home, not unlike the early Christians. Some non-denominational churches, more arrogant, won’t raise no pansies.

Mr. Reno also worries about the shrinking of our social life:

[R]estrictions on public gatherings have paused institutional life. There are no Boy Scout meetings, no Little League practices, no Rotary Club or Alcoholics Anonymous meetings. Most book clubs are suspending their evening discussions, even though these small gatherings are permitted. Closed restaurants dissolve informal coffee klatches. Some institutions, organizations, and fellowships will rebound when the draconian limits on social life are lifted. But some will not. And the longer those limits last, the more will wither and fade away.

Questioning the Shutdown,” R. R. Reno
First Things, March 20, 2020

But over the past few weeks, I’ve seen many people whose first response to the pending isolation was not to buy more toilet paper but to reach out to their family, to their friends, to others they hadn’t spoken with recently; was not to hide under the covers with a flashlight but to arrange online substitutes for in-person discussions. AT&T thanks you. We are a gregarious species.

I am lucky enough to be salaried. I am lucky enough to already work from home. My routine is not disturbed one bit. Except the Spring soccer season is on hold.

Others are not so lucky. Staying home, or, more precisely, away from work, has immediate costs that they cannot recoup. They have no help. The financial situation of many households is precarious. The financial situation of many businesses is precarious, even larger businesses. We are, the bulk of us, over-extended, living hand to mouth. Cash money is, these days, what we need to live. We may adjust to having less. Or we may die.

The financial markets, despite their formerly rosy numbers, are an illusion. The real economy always involves real people, real joy and real suffering, real living and real dying. What are we doing for real people?

We are all looking for a middle ground here, between the Scylla of mass death and the Charybdis of economic apocalypse. At this stage of the crisis, it looks like there is no middle ground. This is an intolerable thing, but it might well be reality.

The Hard Road Ahead,” Rod Dreher,
The American Conservative, March 20, 2020

Where we devote our attention, where we give our time, and what we spend money on tells us a lot about our priorities. We have choices to make.

Meanwhile, it appears we won’t have to worry about missing Easter services. The President thinks we can open up for business in just a few days.


A Simple Rate Tweak Should Do It

Last week, the Federal Reserve and others lowered interest rates in an attempt to counteract the effects of COVID-19 on the economy. Also last week, The Economist optimistically wrote that a recession is unlikely but not impossible:

Yet there is an uneasy feeling that a flurry of rate cuts may not be the solution to this downturn. In part that reflects the fact that they are already so low.

Lowering the prime rate has no effect because it’s not the banks who don’t have enough money: it’s the people. Maybe rate changes would have an effect if the banks changed the interest rate on consumer credit from 25% to -25%, but they won’t. It’s thoroughly irritating how some commentators say there’s too much money in the system when the problem is not how much there is but who has it. We’ve needed a helicopter drop of cash or a debt jubilee for a decade, and a basic income for a century.

In the United States, “full” employment is not having an effect on wages because it’s not full. The labor market is global, or was until yesterday, and global unemployment is roughly 50%, so real wages are still going down. Because employment only counts paid labor–and bears only a passing relation to what work needs to be done–employment is constrained by employers. And there aren’t enough employers, again because of the distribution of money, but also because of a tendency to monopoly: how many paperclip maximizers do we really need? Meanwhile, none of that matters because the system isn’t designed for the public good–or, if you prefer, it’s not designed to maximize marginal benefit for all market participants. Finance capitalism thrives on greed: the world can go to Hell; I’ve got mine.

Besides, it’s not just households who are over-leveraged. Everyone is.

One way the virus hurts the economy is by disrupting the supply of labour, goods and services. People fall ill. Schools close, forcing parents to stay at home. Quarantines might force workplaces to shut entirely. This is accompanied by sizeable demand effects. Some are unavoidable: sick people go out less and buy fewer goods. Public-health measures, too, restrict economic activity. Putting more money into consumers’ hands will do little to offset this drag, unlike your garden-variety downturn. Activity will resume only once the outbreak runs its course.

Then there are nasty spillovers. Both companies and households will face a cash crunch. Consider a sample of 2,000-odd listed American firms. Imagine that their revenues dried up for three months but that they had to continue to pay their fixed costs, because they expected a sharp recovery. A quarter would not have enough spare cash to tide them over, and would have to try to borrow or retrench. Some might go bust. Researchers at the Bank for International Settlements, a club of central banks, find that over 12% of firms in the rich world generate too little income to cover their interest payments.

Many workers do not have big safety buffers either. They risk losing their incomes and their jobs while still having to make mortgage repayments and buy essential goods. More than one in ten American adults would be unable to meet a $400 unexpected expense, equivalent to about two days’ work at average earnings, according to a survey by the Federal Reserve. Fearing a hit to their pockets, people could start to hoard cash rather than spend, further worsening firms’ positions.

https://www.economist.com/finance-and-economics/2020/03/05/a-recession-is-unlikely-but-not-impossible

The Economist longs for Bretton Woods while they chart some of the attempted remedies. It’s quite possible, however, as some commentators have noted since at least the turn of the century, that the global economy is now too complexly intertwined to be centrally managed, if it ever could have been, or ever could be.

May you live in interesting times.

Living on Margin

Instant gratification is made possible by just-in-time delivery. What if just-in-time never arrives?

I have four eggs left in the refrigerator and half a gallon of milk, so if I want to make waffles over the weekend, I will need to purchase more. Assuming that I have money to buy more. Assuming that there are more to buy.

I know someone with chickens, so eggs might not be a problem if, for some reason, I have to beg favors, or the local grocery store closes, or a delivery can’t be made because all the drivers are ill or fuel is scare, or the farmers or their robots can’t milk the cattle or gather eggs from the chickens. But do I know anyone with a milk cow? It’s still Winter; do I know anyone with greenhouse? (Actually, I know several, but they’re in Virginia and Connecticut; I’m in New York.)

What will you eat when the world ends?

What is your margin of error?

Put the responsibility where it belongs: the manufacturer

Finally, someone bothering to talk about whose fault all this plastic crap is.

It’s not the consumer’s. It’s the producer’s.

Senator Tom Udall (D-NM) and Representative Alan Lowenthal (D-CA-47) have introduced legislation, the Break Free from Plastic Pollution Act (H. R. 5845, S.3263), to require producers of certain products to provide for their disposal. In economic jargon, producers will be required to accept some of the negative externalities of their products, rather than continuing to shift those costs to the public.

The horror.

The thought was so horrible that the beverage industry created an organization to convince the public that consumers bore all the responsibility for waste: Keep America Beautiful. If you’re of a certain age, you’ve seen their work.

In 1953, Vermont’s state legislature had a brain wave: beer companies start pollution, legislation can stop it. They passed a statute banning the sale of beer and ale in one-way bottles. … That October, Keep America Beautiful was born

The Crying Indian,” Ginger Strand, Orion Magazine (November 2008)

This is a fantastic piece, because nothing in it is objectionable or wrong. It’s so subtle; even the tagline is true. The campaign’s genius, however, is in the unasked question: where does all of that waste come from? The wrapper thrown out the car window wasn’t created, ex nihilo, by the car passenger. It was sold to him by someone else.

A New Kind of Credit Card?

A while back Apple announced plans to launch the Apple Card. It launched.

A new kind of credit card. Created by Apple, not a bank.

Issued by Goldman Sachs Bank USA, Salt Lake City Branch.

Apple Card completely rethinks everything about the credit card.

It represents all the things Apple stands for. Like simplicity, transparency, and privacy.

And it’s the first card that actually encourages you to pay less interest.

https://www.apple.com/apple-card/

What’s that again? Less interest? Tell me more!

Variable APRs range from 12.99% to 23.99% based on creditworthiness. Rates as of August 2, 2019.

https://www.apple.com/apple-card/#footnote-4

Weird. That sounds exactly like every other credit card I’ve ever had.

The Apple Card app in the Wallet does have some nifty features, such as math and pretty pictures, to help you estimate and plan payments on the card. This is novel. And the card itself is physically satisfying.

But the Apple Card feels like a missed opportunity to make a significantly different credit card. Like many decisions of the Tim Cook era this one is safely pretending to be radical. A truly new kind of credit card would have the following features

  • Low interest, such as one percentage point over the prime rate, for everybody.
  • Provide a ladder out of debt, not just a shovel to make the hole bigger.

I’m sure this card will be profitable.

Against Full-Day Kindergarten

The Common Core State Standards website asks,

Q: Why do we need educational standards?

A: We need standards to ensure that all students, no matter where they live, are prepared for success in postsecondary education and the workforce.

Let’s assume for a moment that that is the goal of primary and secondary education. (Let’s also ignore the missing hyphen between post and secondary.) Will full-day Kindergarten help in achieving this goal?

No.

Why not?

Because extreme differences in academic ability collapse by the fourth grade. All of us, including children, learn at different rates. In general, those differences disappear on average by the time we are about ten years old, or fourth grade. I understand the difficulty of scientific experiments on humans, but we do what we can; and what we can do shows that there’s no evidence that learning a subject earlier makes a difference.

So, what exactly is the point of full-day Kindergarten?

On the Arlington Central School District Budget (2012-2013)

Arlington Central School District budget planning for FY 2012-2013 has resulted in a fairly good budget. I particularly like the appendices that are included for the first time in this year’s budget book.

Budget creation is a bit of a balancing act. This year our district has done well in limiting the increase in costs — unlike the adjacent Wappingers Central School District which has chosen to add a potential long-term increase in costs in order to secure a one-time grant — so I will vote to approve the spending plan.

Late last year the Poughkeepsie Journal relayed the news that the district wanted public input prior to planning the 2012-2013 budget. I e-mailed the following:

By the time the budget discussions arrive, the costs are fixed in contracts, so staff reductions are the only option. It’s during contract negotiations that the board needs to consider the effect on the budget. If the budget is capped at a 2% annual increase, then don’t agree to contracts that will result in a 4.29% increase.

I should have written the costs the district controls are fixed in contracts. There are other costs imposed by the United States and New York State which can change the budget numbers significantly. These include, among other things, required administrative reporting changes, curriculum changes, and, most predictably, contributions to the pension funds. The U.S. and New York typically pass these costs on to the localities. It is reasonable for localities to support the cost of public education, but not when they have not been party to the decisions that have increased those costs.

But, as in previous years, Arlington has not yet confronted the need to project long-term budget impacts during contract negotiations, and will, once again, need to discover $4,000,000 in reserve funds, operating cost reductions, and a tax increase to cover an increase in labor costs. The district’s costs are primarily labor-related, so any persistent reduction in cost must consider labor. And if the district cannot reduce labor costs caused by Washington and Albany, then it must address those it can.

More information on the Arlington budget can be found at the district’s web site.

Ink

I just spent $80 on ink cartridges for my printer. The lad at CVS had to get a key from a locked drawer behind the counter in order to release them for me. I’ve had an easier time purchasing cigarettes.

Theft is a risk because there is excess demand unmet at the price asked.* Counterfeit goods are a risk for the same reason, and because the cost of manufacture and distribution is so much lower than the price asked that even at cheap street prices the product is still profitable.

The same applies to Coach bags, Guggi purses, Ford auto parts, and Rihanna’s latest hit single. It might apply to the Apple iPhone, but Samsung prices the Nexus as a premium product.

* if demand exceeds supply at the price offered, then there is unmet demand, and thus lost profit. Lower the price, let the supply meet the demand, and reap the benefits.

Comments on the Arlington Central School District Budget (2010-2011)

The Board of Education of the Arlington Central School District has made the difficult decision to close an elementary school in order to reduce the district’s budget.There are obviously consequences to this decision other than the money involved. Some are logistical, such as the effect on bus routes and the dispersion of the population to other buildings. Some are emotional; the school to be closed, Lagrange Elementary School, has been an integral part of that community since 1966.

My comments are not on those subjects, which made the decision difficult, but on the choices the Board has made in the overall budget, and particularly with regard to the closing of the school building.

A review of the school budget process in New York is in order. The Superintendent proposes a budget. The Board adopts the budget and submits it to the voters in the school district for approval. If the budget is not approved by the voters, then the Board may submit the same budget or a revised budget for a second vote, or adopt a contingency budget. If the budget is not approved in the second vote, then the Board must adopt the contingency budget. The contingency budget allows for certain expenditures, but not others, and will increase costs over last year’s budget. More details on the nature of contingency budgets are available from the New York State Department of Education.

Because of this need for voter approval, the Board finds it necessary to sell the budget to the voters, and is somewhat more circumspect than blunt when describing the decisions being made. In their brief description of the benefit of closing Lagrange Elementary School, the Board says this.

This reduces the budget by $1,109,160, bringing the budget to budget increase down to 1.7%.

That number is interesting because it comes directly from the Superintendent’s school closing report, page 5.

The elementary school model yielded the following estimates of cost savings for closing:

  1. Building not used and 0 regular teaching positions are eliminated: $1,292,160
  2. Building not used and 8 regular teaching positions are eliminated: 1,885,760
  3. Building used for other District purposes and 0 regular teaching
    positions are eliminated: 1,109,160
    [emphasis mine]
  4. Building used for other District purposes and 8 regular teaching positions are eliminated: 1,702,760

See Exhibit 3 on page 11 of the report. This shows how the cost savings is determined: by eliminating 26.8 positions associated exclusively with the school. Of particular interest is the decision not to eliminate any teaching positions as a result of closing the school. Not only are the students being re-assigned to other schools, but so are the teachers. This is perhaps kind to the students: if they are left back, then they might encounter a familiar teacher in the new school. However, if the eight average teaching positions used in the estimate were eliminated, the district would see an additional $600,000 in savings.

The Board has already made the tough decision to close a school. What happens if the voters think that small sacrifice isn’t enough, and require a contingency budget?

If the budget is defeated again, the District must adopt a “contingency budget.” This will require a further reduction of $1.6 million. In addition to the 25 positions eliminated by closing a school, the contingency budget would require that an additional 18.5 teachers lose their jobs. [emphasis mine]

But what, specifically, does the Board say would be cut?

The superintendent has recommended several cuts to core instructional programs. These include:

  • Reducing selected high school electives and AP courses
  • Eliminating fourth grade band and orchestra
  • Reducing the middle school and high school band, orchestra, and choral programs
  • Decreasing teaming for 6th grade students, which will significantly raise class size at this grade level.
  • Cutting high school sports
  • Eliminating all middle school competitive sports

This is where it gets really interesting, at least from a political or marketing perspective.

The District has been very helpful in posting which line items might be cut, and their descriptions so we can see for ourselves the numbers underlying the summary description of the cuts. Notice which of these particular line items, which I have helpfully marked in red, have been selected for inclusion in the summary.

Reference Number Item Description Est. Value Positions
58 Eliminate 0.5 credits art in either grades 7 or 8 100,170 1.5
59 Eliminate accelerated art in grade 8 29,702 0.4
60 Grade 6 teacher reconfiguration – reduce team from 5 teachers to 4 teachers 467,459 7.0
61 Increase elementary class sizes up to 29, 30 and 31 per ATA contract 1,703,060 25.5
62 Eliminate teaming Grades 7 & 8 all middle schools 534,240 8.0
64 Close one elementary school 1,109,160
65 Close one middle school 1,875,000 32.0
66 Reduce electives & advanced placement at AHS 267,120 4.0
68 This line intentionally left blank
70 Eliminate computer instruction classes in middle schools 238,000 4.6
71 Eliminate computer trainer 55,767 1.0
72 Eliminate instrumental instruction Grade 4 students or increase groups sizes 200,340 3.0
73 Reduce instrumental small group lessons in middle School to alternate weeks 267,120 4.0
74 Reduce small group instrumental lessons in high school to alternate weeks 200,340 3.0
75 Eliminate all instrumental lessons or band groups to alternate days gr. 6-8 267,120 4.0
76 Chorus to meet on alternate days in middle schools instead of daily 100,170 1.5
77 Reduce middle school hall monitors 42,745 1.5
79 Eliminate all sports program at middle schools 157,810
80 Eliminate all intramural program at middle schools 30,000
81 Reduce sports and co – curricular activities at high school 56,236
82 Reduce AHS house assistant principal work year from 12 to 10 months 65,582 partials
83 Eliminate two AHS house assistant principals 157,800 2.0
86 Eliminate one district supervisor 111,919 1.0
87 Teaching assistants Tier Three Gr. K-12 1,167,388 47.0
88 Eliminate all remaining busses after school grades 6-12 94,298 hours
New Equipment (required by State law) 107,754

This budget is being sold to the voters by targeting those items the voters actually care about: sports and music. NONE of the sports line items result in a staff reduction. These are stipends being paid to the teachers and coaches for their time. The coaches will still be employed. The music teachers on the other hand, will not be. A couple of years ago, the Mahopac School District was in a similar situation, and a second defeat at the polls resulted in cutting the sports programs. The Mahopac Sports Association picked up the cost. In the detailed description of the line item, the District notes:

The following criteria were used to establish these potential cuts …. Activities that have significant financial parental support which might be available to assist in funding recovery.

But of even more interest is that none of these cuts resulted in a reduction of administrative staff or salary.

The bulk of the cost of running a school is labor, primarily teachers but also administrative staff, cooks, mechanics, drivers, and custodians. The bulk of the cost is not textbooks. It is not sports equipment. It is not heating and cooling. It is salaries and benefits.

And the District, in comparison to others in New York, does fairly well at keeping those costs down. The challenge is in slowing or halting the rate of increase, and in doing so to find a way to avoid increasing taxes. Without understanding where the costs are, and without facing those costs head on, we will — as we have been for each year in recent memory — be faced once again with the same difficult choices year after year.

This year’s budget does not directly address these costs in a systematic fashion. It eliminates staff positions instead. That adjustment changes future budget projections, but only because those staff are no longer employed. The factors which caused this year’s budget to increase by $5 million are still there. Next year’s will as well.

To quote again from the Superintendent’s report,

The credibility and trustworthiness of the Superintendent of Schools and the Board of Education will hang in the balance and will impact the School District long into the future.


p.s. The district consistently uses the alternate spelling of buses, which drives me nuts.

Competitive Pricing of Substitutes in Transportation

Nate Silver has an interesting, if partial, analysis of statistics comparing modes of transportation based on the National Household Travel Survey. He wonders why Americans prefer to drive long distances than fly, and calculates the costs to be generally cheaper if one flies.

Today the Poughkeepsie Journal did the same thing for the costs of commuting by car or rail. (Unfortunately the website doesn’t include the charts.) Rail is cheaper, but the comparison leaves out the cost of time.

Both comparisons depend on a variety of factors, including, among other things, the number of passengers, the length of the trip, whether you’ll need a car to get around at your destination, the bulk and mass of your cargo, and so forth, none of which are really taken into account. For us, trips generally involve six passengers and gear. This rapidly decreases the value proposition of plane or train travel since we’re dividing the total cost by six, making our own personal mass transit more affordable.

It doesn’t help that Amtrak’s prices this year are the same as last year’s, while JetBlue’s have gone down.

Procrastination has its Virtues

I’m presently working on remodeling the upstairs bathroom, and have been for some time. In order to do this on the cheap, I planned to replace the doors and trim on the existing cabinets. However, the cabinets were not symmetrical. In order to fix that glaring flaw, I removed the cabinets, disassembled them, cut them to match, and then reassembled them. I waited until that was done before ordering the counter and the doors.

That procrastination seems to have paid off. When we went to place the order for the doors at Home Depot, we ran across vanity and top sets which cost less than ordering the doors and top, and would give us better-looking cabinets.

Now we just need to agree on which one.

Benefits

Health care as an employer-provided benefit arose in response to salary caps and payroll taxes [citation needed]. It was a way to compete for employees by increasing the employee’s effective salary without having to pay all of the cost. Employee benefits, as part of the total compensation package, are still used to compete for quality workers. Compare, for example, the descriptions of the benefits offered to work for these three companies. Two are fast-rising stars. Two are publicly-traded. One ranks seventh among the most profitable companies in America.

For which would you wish to work?

What Benefit are Wire Services in a Well-Connected World?

As a former employee of The Associated Press, it’s been somewhat embarrassing to watch their plodding attempts to control data which has already escaped from their control. I recall some discussions with graphics and photo editors in 1996 or so about the feasibility of preventing unauthorized copying of images, while still allowing authorized copies. We were in the business of distributing the news, after all. The discussion eventually shifted to watermarking in order to identify material from the A.P.

(While you can make copies extremely expensive to produce, that itself is expensive — and thus not feasible for most. In case anyone is still wondering, not only is it not feasible to prevent copies, it’s not possible.)

The Associated Press began in the cooperation of several publishers in the task of quickly delivering news dispatches from the Mexican War:

an 1846 arrangement whereby Mexican war reports arriving at Mobile, Ala., by boat were rushed by special pony express to Montgomery, then 700 miles by U.S. mail stagecoach to the southern terminus of the telegraph near Richmond, Va. That express gave the [New York] Sun an edge of 24 hours or more on papers using the regular mail.

But Moses Yale Beach relinquished that advantage by inviting other New York publishers to join the Sun in a cooperative venture. Five papers joined in the agreement: the Sun, the Journal of Commerce, the Courier and Enquirer, the Herald and the Express.

….

Moses Yale Beach’s decision to share news with rivals was “neither altruistic nor cost-driven,” but recognized that “nothing could compete with the telegraph for speed, and all newspapers, rich or poor, would now be on a par,” historian Menahem Blondheim [author of News Over the Wires: the telegraph and the flow of public information in America, 1844-1897] said. [emphasis mine]

There are two aspects to the A.P.: gathering the news, and distributing it. The gathering of news involves the collection and analysis of data as well as the direct observation of events. For example, election returns are publicly available, but broadly distributed, disjointed, and officially slow. After the news is gathered, it is distributed. News gathering can be done by everybody, but there’s some sifting to be done to separate the wheat from the chaff. It is distributing the news that is most disrupted by the Internet.

When you can go directly to the source, what need is there for someone to bring the news to you?

The advantage of wire services has been time. The speedy delivery of information to a third-party, whether television, radio, or print, who can then bring it to you. That advantage is lost when the whole world is connected.

When you can find out now, why wait until tomorrow?

The Internet shortens time and shrinks space. And in that environment, any business that relies on the scarcity of either must find some other means to survive.

It is not that the cooperative did not recognize the threat and the promise of the Internet. Many of us there did. But like many long-lived organizations, there’s an institutional bias in favor of the status quo. How would A.P. serve its member organizations if it adapted to the changed environment?

Now it seems that the Associated Press will fill the role for newspapers that the R.I.A.A. and the M.P.A.A. have for their respective industries. I do not wish them luck.

Statistical Enquiry of the Devil’s Playground

Certain laws and regulations, and policies related to those, have a non-trivial impact on statistics which are not normally thought of in concert with those laws. For example, mandatory sentencing increases incarceration rates, which in turn will decrease the employable population. Child labor laws directly impact the employable population, but so do mandatory attendance requirements for high school.

How does the unemployment rate of the United States compare to other nations when differences in incarceration rates and school attendance are taken into account?

Or, where do these people find the time to riot?

Deferred Consumption

I recently subscribed to a number of podcasts in an effort to drown out the unbearable background noise in the Fishkill office: Fox News. One of them was a program from WNYC and Public Radio International, The Takeaway. They’re running a series on debt. On November 17th (podcast, November 21, but hey) they interviewed Ronald Wilcox on the why Americans don’t save, and how we got to this predicament. The general explanation is that we’re optimists, and optimists, because they think tomorrow will be better, tend to live for today.

Savings is a somewhat interesting topic currently because we’re on the downturn of an business cycle because of a collapse in aggregate spending (because the cheap money has become more dear). So there was some discussion in the interview of whether or not saving helps or harms the economy. It was granted that in the short-term saving hurts, while in the long-term saving helps. That is, saving, or deferred consumption, reduces aggregate demand and thus causes an excess of supply, an excess of labor, and contraction in industry as workers are laid-off and factories closed in order to remove the excess, thus causing a decrease in aggregate demand which causes …. and so on.

Today there’s a story on a reduction in the amount of debt we hold: Saving Too Much (for once)?

(The take-away? The Takeaway needs transcripts.)

A Little Less Help, Please

For those of you not paying attention, fuel costs are up. This change in circumstances changes the calculation of which mode of operation is optimal. In the case of transportation, the cost of long-haul packet shipping over railroads has dropped below that of trucks.

Commenting on this drop, Matthew Yglesias remarks,

Clearly trucks have a massive inherent advantage as a method of doing the last-mile of shipping, but for long-haul stuff a more rational federal policy environment in terms of carbon pricing and road/rail funding balance would give further momentum to this boom.

I think anyone who has bought wheat recently might suggest that Federal subsidies perturb the market substantially, frequently with severe unintended consequences. I highly doubt that Congress expected the price of pizza to rise because they were throwing buckets of money at corn ethanol. In light of the all-too-frequent confirmation that government intervention is a crude implement, perhaps a rational Federal policy environment would stop poking the economy with that stick. Perhaps we might remove subsidies for both highways and railroads, instead of increasing funding for the latter.

Lesser of Two Evils

We live about five miles, 11 minutes, by car from the Kindergarten, but the Big Sister rides the bus for 30 minutes or more.

Last night residents in the Mahopac Central School District voted on a bond proposition. The question before the people was whether the district could raise funds to purchase six new buses by issuing a five-year bond not to exceed $500,000. The proposition was approved, by 502 to 309. The rest of the population abstained, and accepts the majority decision.

The Journal News asked a couple of voters what they thought.

Kevin Dunn, however, voted against the plan because he feels the cost of running the district has grown out of control.

“They need to cut, not increase spending,” said Dunn, a business analyst, whose three elder children graduated and whose youngest is a second-grader at Lakeview Elementary School. “I want to see cuts. They can do plenty on the administrative side, I’m sure.”

I voted for the proposition because it was the lesser of two evils. Were the bond to be denied, the district would have leased the same number of buses, and the tax burden would have been higher. We could not tell the district administration to find the money elsewhere, but only how much they could remove from our pockets. I expect the district to retire the oldest buses, those with less efficient engines and which generate more pollutants, and replace them with the new equipment. But I wouldn’t be surprised if they don’t.

If the citizens do not want to support a large fleet of buses, then school buildings need to be built near the students, and the towns must be laid out so that the children can safely walk to school.