Detailed Abstractions

Not that I expect much out of press unwilling to engage in critical thought on even the smallest of issues, but this tax debate and almost every press outlet’s discussion of it refuses to acknowledge even basic points in a logical way.

Fact – the real discussion is about extending the tax cuts passed in 2001 & 2003 during the Bush Administration (here); I.E. maintaining the status quo. 

The press?  [all emphasis added]

The AP reports  (here) :

WASHINGTON (AP) — The tax deal struck by President Barack Obama and congressional Republicans essentially gives Americans a pay raise.

WSJ (here):

Tax-cut optimism fueled a rise in short-term U.S. Treasury yields…

Kansas City Star (here):

This week’s tax-cut compromise would contribute almost $1 trillion to the nation’s federal budget deficit over the next two years and add sharply to the mounting national debt…

CNN (here):

News of a high-cost tax-cut deal between President Obama and the Republicans…

DesMoines Register (here):

Forget federal deficit: Tax cuts all around!

& these are just five examples in a long line of examples.  I could honestly publish ten more articles today alone about “tax-cut” idiocy, but won’t (maybe two more though).

Truth is, it’s frustrating to see professional writers who are unable to use language in any way consistent with reality, which I don’t think is asking too much.   

I’m certainly not asking for all writers to agree with me (that in itself might freak me out a little).  It’s their right, at the discretion of their employers, to write what they wish.  So they can and should write articles against the compromise or the extension of the tax cut policy in general if that’s what they believe.

I’ll still argue they’re wrong of course due solely to the economics of the situation, but here I’m wondering why we can’t at least expect the press to use terms like “cut” only when a true “cut” actually exists.

The logic is beyond simple – there are no tax cut proposals on the table.  None.   This is not about cutting anyone’s taxes.

Secondarily, this cannot increase the debt at all.  As logic dictates by not giving money to the government which they do not now have nor have they requested, you have in effect done absolutely nothing.

Makes me want to rob them, turn around later and give only half their stuff back…  When they looked frustrated and confused and finally asked with anger, “Where’s the rest?”

I’m simply reply, “It would cost me way too much to give you everything” and calmly walk away.

In an effort to score political points, while diminishing real atrocities, Senator Harry Reid today compared opponents to his version of health care reform to those who actively opposed the woman’s suffrage and the Civil Rights Act .  From USA Today:

Instead of joining us on the right side of history, all Republicans have come up with is this slow down, stop everything, let’s start over.

You think you’ve heard these same excuses before, you’re right. When this country belatedly recognized the wrongs of slavery, there were those who dug in their heels and said, slow down, it’s too early. Let’s wait. Things aren’t bad enough. When women spoke up for the right to speak up, they wanted to vote, some insisted slow down, there will be a better day to do that. The day isn’t quite right.When this body was on the verge of guaranteeing equal civil rights to everyone, regardless of the color of their skin, some senators resorted to the same filibuster threats that we hear today.

& herein lie’s one the most basic problems with politics today.  The willingness to diminish real accomplishments in the progression of human rights, by bringing down to the level of party politics.

I’m not saying that I’m surprised of that he went further out of line that politicians in the past, but this kind of sound bit “tit for tat” strategy works with voters.  Basically, his downside isn’t all that great.  He’s facing a tough re-election with or without stupid comments like this, but for the most part the people angry never liked him and the people defending him always will.

The odd thing is that additional inspection leads one to understand that even if you think that these comparisons are fair game in politics, the analogies themselves are flawed.  Even if we ignore the difference in degree, it should be obvious that protecting people against active discrimination is not the same thing as redistributing wealth through healthcare.

Regardless, so long as voters continue to elect Mr. Reid, they can expect him to continue down this path.  No matter how illogical the statement is or whether it diminishes true problems resolved, re-election will only strengthen his resolve through that simple act of positive reinforcement.

If people truly want real debates, on the issues, they will have to first stand up and use the main weapon at their disposal – their vote.

Weeks ago in a discussion with some colleagues, someone posed an interesting question:  “Do talk shows like Oprah’s have any real negative impacts?”

At first thought, I thought no.  Her ideas are mostly superficial and without critical thought, but is she really changing minds?  What we do know is that most of the people who watch these shows, or any other talk/political show, are generally seeking out information for which their beliefs already align.  Our tendency as humans is to do this – to seek out others who are similar in thought and background – to keep us comfortable with our thoughts & beliefs.

However, I don’t watch Oprah so I’m not familiar  with the consistency of her programming.  From that conversation I went to see what exactly Oprah does after book clubs and working out and found her anti-science stance can and does indeed harm others.

In a great article detailed by Newsweek, they demonstrated Oprah’s movement into the pseudo-medical realm with shows providing powerful anecdotes, while ignoring true scientific study to the contrary (whole thing here).  With the sub-headline of Wish Away Cancer! Get A Lunchtime Face-Lift! Eradicate Autism! Turn Back The Clock! Thin Your Thighs! Cure Menopause! Harness Positive Energy! Erase Wrinkles! Banish Obesity! Live Your Best Life Ever!, the document Oprah’s true harm to her audience.  First Suzanne Somers:

…Each morning, the 62-year-old actress and self-help author rubs a potent estrogen cream into the skin on her arm. She smears progesterone on her other arm two weeks a month.

…According to Somers, the hormones, which are synthesized from plants instead of the usual mare’s urine (disgusting but true), are all natural and, unlike conventional hormones, virtually risk-free (not even close to true, but we’ll get to that in a minute).

Next come the pills. She swallows 60 vitamins and other preparations every day….

…In addition, she wears “nanotechnology patches” to help her sleep, lose weight and promote “overall detoxification.” If she drinks wine, she goes to her doctor to rejuvenate her liver with an intravenous drip of vitamin C. If she’s exposed to cigarette smoke, she has her blood chemically cleaned with chelation therapy. In the time that’s left over, she eats right and exercises, and relieves stress by standing on her head. Somers makes astounding claims about the ability of hormones to treat almost anything that ails the female body. She believes they block disease and will double her life span. “I know I look like some kind of freak and fanatic,” she said. “But I want to be there until I’m 110, and I’m going to do what I have to do to get there.”…

For Oprah’s part, she did allow some doctors into the discussion, but severely limited their ability to affect the discussion:

That was apparently good enough for Oprah. “Many people write Suzanne off as a quackadoo,” she said. “But she just might be a pioneer.” Oprah acknowledged that Somers’s claims “have been met with relentless criticism” from doctors. Several times during the show she gave physicians an opportunity to dispute what Somers was saying. But it wasn’t quite a fair fight. The doctors who raised these concerns were seated down in the audience and had to wait to be called on. Somers sat onstage next to Oprah, who defended her from attack. “Suzanne swears by bioidenticals and refuses to keep quiet. She’ll take on anyone, including any doctor who questions her.”…

As with many of Oprah’s crusades, the anti-science crusade wasn’t just about hormone treatments which are proven harmful, but to give Jenny McCarthy a voice to go after vaccines, which are truly helpful:

…In 2007, Oprah invited Jenny McCarthy, the Playboy model and actress, to describe her struggle to find help for her young son. When he was 2½, Evan suffered a series of seizures. A neurologist told McCarthy he was autistic. “So what do you think triggered the autism?” Oprah asked McCarthy. “I know you have a theory.”

McCarthy is certain that her son contracted autism from the measles, mumps and rubella (MMR) vaccination he received as a baby. She told Oprah that the morning he went in for his checkup, her instincts told her not to allow the doctor to give him the vaccine. “I said to the doctor, I have a very bad feeling about this shot. This is the autism shot, isn’t it? And he said no, that is ridiculous; it is a mother’s desperate attempt to blame something on autism. And he swore at me.” The nurse gave Evan the shot. “And not soon thereafter,” McCarthy said, “boom, soul gone from his eyes.”…

Again, she’s follows the same modus operandi, lots of targeted emotional and anecdotal discussions (read: propaganda), followed up with very little in the way of scientific evidence:

…But back on the Oprah show, McCarthy’s charges went virtually unchallenged. Oprah praised McCarthy’s bravery and plugged her book, but did not invite a physician or scientist to explain to her audience the many studies that contradict the vaccines-autism link. Instead, Oprah read a brief statement from the Centers for Disease Control saying there was no science to prove a connection and that the government was continuing to study the problem. But McCarthy got the last word. “My science is named Evan, and he’s at home. That’s my science.”…

The question I think all this raises, is have we gone to a point where civility is seen as more important that truths.  You see, I think most of us would have a hard time going against Ms. McCarthy.  Due to her tragic circumstances, we can easily see in ourselves the need to find the answer which others can’t seem to find.  We want things to make sense, in a world with more randomness that we are willing to admit.

But should this civility prevent us from saying what’s true?  You might have strong beliefs about something, and you might even be able to bring self-serving anecdotal evidence to bear, but none of that matters.  In the long run, Ms. McCarthy’s beliefs are not only irrelevant, but should be generally dismissed as they come from an uneducated (on her topic of choice anyway) and grief stricken celebrity.

Instead of reason winning out however, the power of celebrity, combined with the power of wanting more concrete answers to life’s questions the crusade against life saving vaccinations continues forward.  From Wired:

To hear his enemies talk, you might think Paul Offit is the most hated man in America. A pediatrician in Philadelphia, he is the coinventor of a rotavirus vaccine that could save tens of thousands of lives every year. Yet environmental activist Robert F. Kennedy Jr. slams Offit as a “biostitute” who whores for the pharmaceutical industry. Actor Jim Carrey calls him a profiteer and distills the doctor’s attitude toward childhood vaccination down to this chilling mantra: “Grab ‘em and stab ‘em.” Recently, Carrey and his girlfriend, Jenny McCarthy, went on CNN’s Larry King Live and singled out Offit’s vaccine, RotaTeq, as one of many unnecessary vaccines, all administered, they said, for just one reason: “Greed.”

…So what has this award-winning 58-year-old scientist done to elicit such venom? He boldly states — in speeches, in journal articles, and in his 2008 book Autism’s False Prophets — that vaccines do not cause autism or autoimmune disease or any of the other chronic conditions that have been blamed on them. He supports this assertion with meticulous evidence. And he calls to account those who promote bogus treatments for autism — treatments that he says not only don’t work but often cause harm….

When reality demonstrates that many people ignore scientific evidence and their facts are replaced with celebrity hubris and propaganda, it should be a sign that all of us should take the time to understand where our true beliefs emanate.

Because please know, while many might read this and think, “that’s not me”, they mean that in a narrow sense as this is part of the human condition which we all share.  Only the truly arrogant among us can believe they can escape the human condition.

For those brave souls willing to go beyond our tendencies, I suggest we should all truly question our deepest beliefs in the face of new or competing information.  Anything less does a disservice to you, your family, and society at large.

With the recession ending (@MSNBC):

WASHINGTON – More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy….

Or maybe a double-dip (@Politico.com):

…All that’s enough to convince some observers that the economic recovery is faltering and could be heading for a “double dip” recession. And that would mean the recent green shoots of recovery turn out to be just a pause in a much longer economic slide….

& a stimulus which has saved jobs (@USA Today):

WASHINGTON — States have reported using stimulus money to create or save more than 388,000 jobs so far this year, buttressing the Obama administration’s claim that the $787 billion plan has had a significant impact on the economy….

Or maybe not (@WashingtonExaminer):

…Even if we take at face value the White House claim that it created or saved all these jobs with approximately $150 billion of the economic stimulus money, a little simple math shows the taxpayers aren’t getting any bargains here: $150 billion divided by 650,000 jobs equals $230,000 per job saved or created. Instead of taking all that time required to write the 1,588-page stimulus bill, Congress could have passed a one-pager saying the first 650,000 jobless persons to report for work at the White House will receive a voucher worth $230,000 redeemable at the university, community college or trade school of their choice. That would have been enough for a degree plus a hefty down payment on a mortgage….

Maybe some perspective is needed.  To truly put it in context, let’s look at the Great Depression (@Cato):

…According to most accounts, the stock market crash of October 1929 was the spark that sent the economy spiraling downward.

How could this be? After all, by November 1929, the stock market had started to recover, and by mid-April 1930, it had reached its pre-crash level. Contrary to the received wisdom, massive government failure — not the stock market crash — pushed the United States into the Great Depression….

As written here before (here, here & here), economic predictions are inherently tricky and the government does a very poor job because politics always gets in the way of objective truths.  NBER who is usually the group society follows for when a recession starts and ends told us in December of 2008 that December 2007 was the beginning of the dive demonstrating that most “objective” economic truths are only found in hindsight.

In fact, some brilliant legal minds have made just this point to contemplate delaying financial regulations intended to mitigate similar future scenarios in which we might find ourselves (here).  Richard Posner’s analysis:

The Report is premature in two respects. The first is that it advocates a specific course of treatment for a disease the cause or causes of which have not been determined. Now it is not always necessary to understand the cause of something you don’t like in order to be able to eliminate the effect. If you have typical allergy symptoms you may get complete relief by taking an antihistamine; it is not necessary to find out what you’re allergic to. But generally, and in the case of the current economic crisis, unless the causes of a problem are understood, it will be impossible to come up with a good solution. The causes of the crisis have not been studied systematically, and are not obvious though they are treated as such in the Report. (Remember, the Great Depression of the 1930s ended 68 years ago and economists are still debating its causes.)…

Note – this doesn’t mean that we don’t understand basic incentives and most likely results.  Like chaotic systems in which minor changes in the beginning state of a system can show drastic changes in the end results, our economic system is so complex as to defy attempts to model very specific changes.  Though with hindsight and true analysis, we can get to a point where we know with probabilities what has happened and what will likely happen given specific policies.

For instance, if we make houses cost less by giving tax breaks or whatever, sales will increase for the time that incentive exists.  If the incentive is timed, then some sales will just be premature sales and show corresponding decreases in future quarters.

Meaning, we can use a basic understanding of incentives in order to gauge most likely results, but today only with hindsight can we show real numbers on very specific things such as the stimulus bill’s impact on house sales or jobs.

& even then, given the inherent difficulty in defining a “saved” job and politicians willingness to ignore any data contrary to any rosy picture they wish to present, any economic predictions or numbers coming from politicians should be suspect by default.

Late last week, Michael F. Cannon @ Cato released a study entitled, Yes, Mr. President A Free Market Can Fix Health Care in response to a challenge made by President Obama in March 2009:

“If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.”

This is very much a presumption based question, like “When did you stop beating your wife?”  It holds within an assumption the only plausible answer is one which uses the power of the government to control the market, and by extension individual citizens, with complete skepticism about any power of the free market.

While this seems to be the default assumption of many of my fellow citizens these days, I don’t know that I’ll ever understand how an objective look at market success versus an objective look at governmental success would lead one to believe the government is capable of much more than simple, repetitive tasks.

Having said that and even knowing the Democratic leadership and the White House is likely to ignore the answer, Mr. Cannon presents a pretty convincing case about a market solution (@Cato).  He explains:

how Congress can remove the impediments that currently prevent markets from doing so:

Whole thing here.

If you’re anything like me, you too are getting nauseous about the “public option” in the health care debate.  One day it exists, the next day it will never exist.  The day after, it’s required…

Well, apparently legislators might have a compromise to pass a bill including an “opt-out public option” (@theHill.com):

Democratic senators continued to remain bullish on the chances of creating a government-run public option as part of health reform….

…Schumer echoed the calls of several senators who this week said that Democratic negotiators has garned the 60 votes necessary to invoke closure on the measure. Sen. Arlen Specter (D-Pa.) last week put it in even stronger terms, saying that Reid had 60 votes for a “robust” public option.

…According to Schumer, Reid “is leaning strongly” toward including a provision that would allow states to opt out of public health insurance if they want to keep private insurers.

Schumer added that the liberal senators are “able to live with” an opt-out public option under which states could decline to participate in a public program….

So there we are;  in a compromise between moderate and liberal Democrats only, a public option seems likely.  Not only has the White House and Democratic leadership dropped any pretense of working across the isle, but people at large seem unwilling to question the claims of their leaders.

One suc spurious claim, is that this option will result in increasing competition:

…”We need some competition for the insurance companies,” Schumer said on NBC’s “Meet the Press.” A government-run insurance plan would “have to play by the same rules as the insurance companies and it would negotiate rates with the providers,” Schumer said. Having a public option would bring competition to states that only have one or two insurance providers, Schumer said….

Proponents everywhere continue to take this stance, even though a public option is logically inconsistent with their stated goal of increase competition.

If Mr. Schumer and others truly wanted to add some competition for insurance companies, adding a new company would not be necessary.  In deed, removing the laws the disallow selling of insurance over state lines doesn’t cost the tax payers one single dime, yet increases competition dramatically, both in the total number of competitors and the speed at which they can begin competing.    Additionally, given the benefits a public option will have over its private competitors, this isn’t really competition.

As Michael Tanner wrote over @ Cato, this support for a public option isn’t likely what it seems (@Cato):

Cognitive dissonance is defined as holding two completely contradictory ideas at the same time.

That seems to be the case with the American public, with a new poll showing rising support for a so-called public option in health care, even as the public continues to oppose greater government control over the health care system….

All in all though, the Democrats hands seem to be very strong hand right now with recent polls showing 57% of the country expressing approval of a public option.   With uninformed voters, an uninformed and uninformative press, and politicians more worried about winning than engaging in honest debates, this compromise might soon become law.

That’s freedom for you – as unfortunate as it seems, whether most people truly understand what the public option entails is irrelevant.  So long as they are willing to approve things they know little about and skip any hard work necessary to critically analyze the problem and various solutions, this new government boondoggle will just continue going forward.

This morning, news outlets everywhere carried recent news out of the Treasury Department.  The Pay Czar, who is certainly living up to the moniker Czar, announced today (WallStreetJournal):

The U.S. pay czar will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, with the vast majority of salaries coming in under $500,000, according to people familiar with the government’s plans.

As expected, the biggest cut will be to salaries, which will drop by 90% on average. Kenneth Feinberg, the Treasury Department’s special master for compensation, also intends to demand a host of corporate governance changes at those firms….

Even without bothering with the fact that the government is not in any position to understand what kind of compensation any single employee should have, this is still a radical and arbitrary move that if continued can work to destabilize the economy.

Beyond that, this decision is an anathema to a free society breaking not only the contract rights of ordinary citizens, but also violating all individuals by pushing a blatant ex  post facto punishment.

In a free society, within reason, individuals should be able to contract for any reason they want.  In this case, you have employees who have privately contracted with their employers for certain remuneration based upon their perceived worth to the company.

I say perceived work, because obviously not all hiring decisions work out for the company even if the employee does very well at their job.  Personality conflicts, culture conflicts, and even performance problems are some of the reasons why a new hire might not work out as expected.  Unless specifically stated in the employment contract, even in these cases the employer’s general resource is firing, not taking back pay.

Adding to this is the simple, real, true fact that this is by its very nature an ex post facto punishment for perceived mismanagement.  It has been a legal tradition for centuries, a that passing laws, which retroactively punish people, is against a free in democratic society.

In fact it’s in the US Constitution and universally recognized by a number of treaties including Universal Declaration of Human Rights and American Declaration of the Rights and Duties of Man (from Wiki):

…no person be held guilty of any criminal law that did not exist at the time of offence nor suffer any penalty heavier than what existed at the time of offense. It does however permit application of either domestic or international law….

To be fair, there are some uses for ex post facto laws which have been recognized by our supreme court including allowing for Congress to grant administrative agencies the ability to do just this thing.  So legally speaking, this might be ok, however to anyone who proposes to value freedom, it should be obvious that even allowing administrative agencies this power was a massive failure of all branches of the government.  They are supposed to protect our freedoms, not remove them one at a time.

Either way – it’s intuitive that both contract rights & ex post facto laws are required for a free society.  If the government can interfere at will in private contracts and retroactively punish you for perceived wrongdoings, you have no ability to make relevant decisions for your life as you have no ability to be secure that those decisions will continue to hold true.

This insecurity is what creates instability in most third world countries today.  This lack of basic economic & legal foundation is what continues to plague most of the planet and yet we seem to be moving on the same path.

A week ago or so, a Democratic non-profit held a focus group of GOP members & Independents (here).  Among other interesting things they found, they noted how the GOP members opposed the President because they felt he was attempting to fundamentally move away from our founding principles.

They went further to note how this differed from Independents “underscoring the extreme disconnect of the conservative Republican base voters”.

I will say this move is absolute proof that the GOP members have it right.  If the administration allows this travesty, it is without a doubt a complete move away from not only our founding principles, but away from freedom in general.

NBER has recently produced a working paper titled Game Theory and Major League Sports asserting “Professionals Do Not Play Minimax: Evidence from Major League Baseball and the National Football League”.

By analyzing over 3 million baseball pitches & football over 125 thousand plays, they work to find out if the assumption of minimax holds true and if not, try be able to find any hidden strategies which are currently being used.  According to the research:

…Authors Kenneth Kovash and Steven Levitt find that: “Pitchers appear to throw too many fastballs; football teams pass less than they should.” They also find that the selection of pitches or plays is too predictable. The researchers conclude that “correcting these decisionmaking errors could be worth as many as two additional victories a year to a Major League Baseball franchise and more than a half win per season for a professional football team.”…

Minimax is an assumed strategy that rational players utilize when locked into a zero sum game.  It basically states that each player will attempt to minimize their loss.  For this research, baseball and football are zero sum games in that gaining yards or points, necessitates a loss on the other side (loss of an out or field position).

This might be seen as banal, even if interesting, but continued research using game theory will be able to provide insights into fundamental human behavior.  This additional understanding  has truly long range applications especially and hopefully in the dismal field which is economics.

Indeed one of the primary and justified criticisms of current economic policies as it relates to fat taxes and other things, is that it fails to deal with real world behavior.

For instance, from a straight economics standpoint, driving 30 miles to save $100 is a nobrainer regardless of the price of the item itself.    However in research, we find people would drive 30 miles to save that $100 on an item whose normal cost is $300, but almost no one is willing to travel the extra distance if the original price tag was $30,000.

This is the kind of real world actions that bug economists to no end.  Looking at the idea with only logic, it seems that driving 30 miles for $100 is a good idea based upon the $100 dollars, not the item being purchased.  However, intuitively we know that saving 1/3 of an item’s cost versus 1/3 of 1% has different values to the individual.

Why?  Well, the answer to this puzzle will differ greatly among individual economists, but the good news is the research itself.  The more science we can use to help strengthen our basic understanding of humans can lead us to policies more thoughtful and more likely to end in the intended results than past attempt.

At this point, I’d just be happy if the understanding we had was used to understand things such as “tax it more and they’ll use it less” isn’t a strategy to much of anything, but all things in time.