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This (via @mattyglesias) is a very cool, well-done website illustrating a simple toy model from the ’70s showing how slight bias can lead to segregation. It’s fun to play with, responsive, and the argument is extremely well-presented. I kind of love it.
Okay, that out of the way, let me get to the critique you knew was coming!
At the very top, it describes itself like this:
This is a story of how harmless choices can make a harmful world.
The harmless choice is a slight preference, regarding where to live, as follows:
I wanna move if less than 1/3 of my neighbors are like me.
The ‘harmful world’ is… Wait, where’s the harmful part exactly?
The tools are designed to show you that this seemingly-innocuous individual-actor preference leads to a lot of ‘segregation’ on a macro scale: blue-squares mostly live near blue-squares, and yellow-triangles mostly live near yellow-triangles. In the long-term equilibrium, whatever SEGREGATION statistic they’re using climbs and climbs above 50%. And so, uh, I guess that’s the ‘harmful’ part?
But why? By the parameters of the model setup, literally everyone is perfectly content in that equilibrium. So there’s no actual ‘harm’ to point to. Yeah, sure, there are visibly-disjoint yellow-triangle neighborhoods and blue-square neighborhoods. But so the hell what?
Actually, if you step back there is one actor who is unhappy in the equilibrium: the website author. In a more-complete picture of this simulation, she would be represented somewhere onscreen with a frowny-face. The cartoon would show those nearly-400 squares and triangles all perfectly fine with their situation, but a frowny-faced judgmental progressive lady somewhere over on the side frowning at them all. “You’re segregated and that’s bad! You should literally all change your preferences and do a bunch of stuff till you’re not!”, she declares.
So yeah, I guess I can’t rightfully claim that everyone is content. It’s not enough that literally everyone else is satisfied. We gotta make the progressive happy.
Why does the progressive find the outcome so harmful? Objectively, the only tangible explanation can be aesthetic: even though everyone’s happy, the progressive doesn’t like the blocky outcome, aesthetically. The neighborhoods are too uniform; there should be a sprinkling of ‘diversity’ everywhere; that’s better. This is (can only be) an aesthetic judgment because there’s no actual substance to it (or, for that matter, arguing with it): it’s bad because they don’t like it because it’s bad, so they don’t like it. ‘Diversity’ is gooder because they like it because it’s good. Note, we can’t even say such ‘diversity’ is good because it maximizes some utility-whatever based on the actors preferring it, because after all, in this simulation, they don’t; the whole argument is that people in the simulation should artificially change their preferences to want it, just so that it becomes a more-likely outcome, regardless of whether people want it…
But none of that is what the authors say, what they say (implicitly) is that the segregated outcome is bad because it’s not ‘equal’.
Equality [sic] is an unstable equilibrium. The smallest of bias can push a whole society past the tipping point.
But what ‘equality’ are they talking about? We have apparently jumped from the (correct) observation that the equilibrium involves everyone living in identifiable neighborhoods with similar neighbors, to a supposed lack of ‘equality’. That’s a logical leap that is unearned. And again, it violates the parameters of the very model being used. As far as I can see, under this setup, once everyone is happy/content, everything is pretty well ‘equal’. The model doesn’t really admit or allow for dimensions along which something is ‘unequal’. (If it did, I’d warrant that it wouldn’t show the straightforward result they want – nor would their preferred remedy be the necessary/only one.) Just look: everyone’s got their square. The squares are all indistinguishable (apart from neighbors). Everyone displays the same behaviors. And, again, they’re all content. Equal!
I don’t mean to be so harsh, really. The model does illustrate what it’s trying to illustrate. I get it. I don’t not get it or anything. And it’s a great site! I’m just saying that beyond finding this all interesting in a ‘huh, cool, interesting, yeah that makes sense’ kinda way, no one has any reason to really care about this unless they bring baggage to it, baggage which says: people must be mixed together in ways that please me.
Side note: interestingly, one way to get a truly desegregated outcome is to crank up the intolerance to a very high level. That way, at virtually every step, under most starting conditions, most people will be unhappy (too many of The Other are nearby), so they’ll jump/move randomly, and there’s not enough space for them all to start ghettos of their own, nor is there any mechanism for them to simultaneously form a ghetto, so they’ll mostly end up randomly jumping close to an Other, in the process making Others unhappy, who’ll have to jump next turn, etc., etc. Such a setup generates a nice entropic mixing that drives SEGREGATION down and down toward 0%, ushering in a perfect utopia in which the ‘harmful’ SEGREGATION is finally eliminated, at the low low cost of making almost everyone unhappy, almost all of the time.
But hey, it’s just a cute toy model, let’s not draw any conclusions from it or anything.
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The hot new talking point in response to Los Angeles or some such place raising their minimum-wage to $15 is that it’s gonna be a fun neat cool experiment. We’ll finally see! Get an ‘answer’! Once and for all!
Thus proving the old adage, Smart People love trying out volatile government policies on large populations without having a clear idea what the results will be (or rather, knowing full well, but pretending not to due to ideology), and just, like, seeing what happens, man. Ain’t it cool to experiment on people trying to plan things and live out their lives?
And yes, gentle readers, that’s what this is: a pure, controlled, #scientific test of the (not straw-man at all) null-hypothesis stupid righties like me have put forth, that Raising The Minimum Wage To $15 In Los Angeles Leads Inexorably To Apocalyptic Disaster. It either will or it won’t. We’ll see! (SPOILER ALERT: It won’t.)
That’s right, apparently to the surprise of my binary-thinking Smart People nemeses on the left, No I don’t actually think that $15 as a minimum-wage for Los Angeles is somehow above some magical critical-value that will lead to Los Angeles turning into a dystopia of the sort familiar from Hollywood nightmarescapes such as Blade Runner, Escape From L.A., or 1988’s The Night Before starring Lori Loughlin.
That’s not what the problem is. The problem is just that it’s a bad idea and a bad law and will do more harm than good. That’s it. That’s all. But c’mon guys, that should be enough!
The test of whether a policy is bad is not whether it Leads To Disaster Or Not for some binary, strict, visibly-obvious definition of ‘disaster’. The test is to what extent it has bad effects, and whether those bad effects outweigh whatever good ones it may have.
In short: this is just a very boringly typical case of Smart People trying rig the game in their favor by treating a ‘how much’ question as a ‘yes/no’ question. The simple steps: 1. Move the goalposts as far as possible by defining ‘good idea’ (for things they like) as Not Leading To Obvious Disaster. 2. Wait. 3. “See? No disaster. We have our answer. You must admit it’s a good idea now.”
Who will be fooled by this? Many people, sadly.
The other (maybe even bigger) problem is that this isn’t even anything resembling an ‘experiment’ in the first place. Los Angeles, whichever jurisdiction will be subject to this particular minimum-wage, isn’t hermetically-sealed off from its surroundings. You can’t just point to what happens ‘in Los Angeles’ as if that constitutes a full accounting of this policy, if that’s what the idea is gonna be. Los Angeles is connected to the broader economy of course. There can and will be movements of people and businesses. All of those dynamics will have been part of a true accounting of the effects of this policy. And I guarantee you, Smart People won’t count them (the ones that are bad).
Indeed, I will even go you one better and make a prediction here: in a year (or three, or six), somewhere in L.A., there will be a glossy magazine article writeup of some sort of ‘local renaissance’, and it will be credited to the minimum-wage increase, which Smart People will then point to as confirmation that it was a great idea. (In doing so, further exemplifying their utter, perhaps willful, economic illiteracy.)
What do I mean? To illustrate what I have in mind, we must imagine some run-down neighborhood somewhere, say it’s just north of the medium-sized artery Forgotten Caminito Boulevard. Maybe the residential areas there are ’30s-era bungalow houses, and the neighborhood is centered around (say) a tired run-down strip mall, with a gas station on the corner.
In the mall there is, oh, a nail salon, a comic-book and baseball-card shop well past its early-’90s prime, a (low-class, not trendy) pizza-slice-and-falafel diner, a thrift store (but not the cool crunchy kind, the kind that sells oversize ghetto jeans). In other words, businesses loosely belonging to that sector likely to employ, well, low- and often minimum-wage labor. The gas station looks sketchy (a front for something?) and does a slow-to-nonexistent business.
The minimum-wage inevitably, at some point, renders some or all of these businesses unviable. That’s the whole idea, after all!: “if you run a business [that] doesn’t work if you pay workers something approaching a living wage, it isn’t a viable business”. So now there are vacancies. The gas station is razed (environmental reg costs too high anyway). So far, not great, you say.
But suddenly! Who swoops in, but a small software company that makes ‘apps’. An expensive coffee shop run as a labor of love. A lady (one, or zero employees besides her) who makes custom cakes. An afterschool high-achiever kid-tutoring type place. A Chipotle. A commercial real-estate firm comes in to develop live-work town houses on the second floors. It’s live-work! You can live and work there. (Also: walkable.)
Hell, whatever, I don’t know, but you see what I’m saying: the businesses (out of necessity – because that’s who can afford to be there now) all get turned into businesses that are, well, SWPL. The place becomes SWPL. And as a result, people move in nearby, bid up those cheap bungalows to fix up, you know, thinking “this neighborhood looks kinda cool actually, I could deal”. Nearby some art-collective thing springs up in ex-warehouse space. Antique shops. Cupcakes (or whatever the 2018 equivalent of cupcakes turns out to be; artisanal Spaghetti-Os, maybe?). Rumors of a Whole Foods coming soon.
Again, I’m kinda the wrong person to ask on such things, but you see where all this is heading: “A Creative-Class Renaissance In NoFo”, says the glossy Sunday-magazine headline in 2019. Money quote: “And guess what? All these bustling new businesses pay well above the dreaded $15 minimum wage!” Kevin Drum** links to it, saying triumphantly: “remember how the cons told us the $15 minimum-wage would be a disaster?” **Kevin Drum is a very nice guy.
This is all pretty much guaranteed. You can see it coming even now. I mean if I can, surely you can. And that’s fine as far as it goes, I mean, I like cupcakes and whatnot ok. But this isn’t a real ‘experiment’. Nothing was actually tested.
I am saying nothing new here. These are all very, very old observations. That which is seen, and that which is not seen. What these supposedly econ-savvy (in some cases, actual economists!) are working themselves into giddy excitement about, and trying to fluff everyone up for, is merely what they anticipate…seeing, in Los Angeles, after the $15 minimum wage takes full effect.
Again: I bet there will have been a ‘renaissance’ somewhere! But just remember, that that will not constitute a real test of anything, let alone an argument for the minimum wage.
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NYT: Four Words That Imperil Health Care Law Were All A Mistake, Writers Now Say. (The URL suggests an earlier working-title of this piece may have been: “Contested Words In Affordable Care Act May Have Been Left By Mistake”, but who’s checking that.)
The real news value of this piece, surely, is that it’s going to interview the (and I quote) “writers” of the piece of legislation in question and reveal what they thought they were doing. You know, it’s going to have quotes from “Amy”. Right?
“I don’t ever recall any distinction between federal and state exchanges in terms of the availability of subsidies,” said Olympia J. Snowe, a former Republican senator from Maine who helped write the Finance Committee version of the bill. “It was never part of our conversations at any point,”
‘Helped write’? Show of hands, how many of you think that Senator Olympia Snowe opened up the ACA (2) (2) v2 (3) (2).doc Word doc on her IBM PS/2 and typed up some revisions. I’m pretty sure ‘helped write’ in this context means ‘sat on a committee where we talked about’. Which, rephrased slightly, means ‘didn’t write’. And her quote here means, literally, ‘I didn’t know what was actually written in this draft legislation that we talked about’.
The four words, she said, were perhaps “inadvertent language,” adding, “I don’t know how else to explain it.”
Okay. Such a helpful quote. She literally doesn’t know and has no light to shed on this issue. Thanks, first-quoted-person-in-the-article Senator Snowe!
The plaintiffs say the law allows subsidies only where marketplaces have been “established by the state.” It is a distinction that those who drafted the law say they did not intend to make.
Notice that second sentence is not in quotes, it’s from NYT. NYT says ‘those who drafted the law’ say they ‘did not intend’ the state-only interpretation. Again, a reasonable reader might assume NYT is – any moment now – going to quote one of ‘those who drafted the law’ to establish this, and then delve into why they wrote the words ‘they’ now allegedly ‘say they did not intend to’.
So, who drafted this part of the law? Two-thirds into the article, piecing together some deft circumlocution by NYT, we finally get an answer!
The words were written by professional drafters — skilled nonpartisan lawyers — from the office of the Senate legislative counsel, then James W. Fransen. It appears that the four words now being challenged were based on the initial premise and were carelessly left in place as the legislation evolved.
The language of the Finance Committee bill was written largely by Mr. Fransen and a tax expert, Mark J. Mathiesen
…the health committee measure clearly allowed subsidies in all states. The Finance Committee version was not so explicit.
Eureka! Our “Amy” finally has a name, and that name is James W. Fransen, as well as ‘a tax expert’ named Mark J. Mathiesen. They are the ones who originally wrote the ‘established by the state’ phrase, so they (not Olympia Snowe, not former Senator Jeff Bingaman) would be the ones positioned to declare that they, and/or the people who gave them their mandate, never ever at any point in time intended the carrot-stick strategy that is the King v. Burwell theory when they did so. Since this article’s title assures us that the law’s ‘Writers Now Say’ the four words ‘Were All a Mistake’, presumably these guys are the ones who will give us the money-quote.
Mr. Fransen did not respond to a message seeking comment, and other attempts to reach him were not successful.
Oh. Oh well. Oh well then. Nevermind then.
On close reading, the real substance of this piece is just a bunch of legislators declaring to reporters that they had no real idea what was in the actual text of the legislation they discussed and voted on. It’s quote after quote from Official Important DC Smart People Who Sat On Committees saying stuff like they ‘never discussed’ and ‘never talked about’ and ‘never considered’ the thing that is, alas, at the end of the day, nevertheless, when all is said and done, in the actual text of the law that was passed. Which I guess is interesting on account of what it tells you about what you should think of all these Important people.
It doesn’t tell you much about what’s in the law or how, in a just world with a rule of law, the King v. Burwell case should and would play out, however.
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Since I know that it’s an invaluable resource for my “blog” readership, I tried to go through and clean up my “blog” “roll” of dead links, redirects, spam, blogs that hadn’t been updated in four years, bloggers I used to link to/interact with who used to be on like Blogspot but have since gotten big-media gigs, etc. Will revisit in another four years, maybe.
Also added a few new “links” to the “blog” “roll” that may be of more recent vintage as regards my “blog” reading habits. (As a fun home party-game, see if you can spot them!)
I think you’ll find that this all shows how well-read I am and how many different “blog” points of view I keep up with in order to bring you, the readership, only the very best in “blogging”. Or maybe it’s just something I keep around for tongue-in-cheek nostalgia. Like a sullen teenager doing Civil War Re-Enactments, but making sure everyone understands he’s only doing it ironically.
I think next maybe I should start up a “blog ring”. Remember those? Email me if you want me to add your Xanga or Livejournal to my new “blog ring”.
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Actually, we know now. I’ll tell you the answer now. We know that it’s a bad idea now. No conceivable events or data gathered between now and 2020 can, even in principle, make a $15 minimum wage have been a good idea. (In fact, an $X minimum wage is a bad idea for all X.)
The ‘natural experiment’ of a city adopting this particular minimum wage will not tell us whether it’s a bad idea. (It is.) It might, at most, tell us how bad of an idea it is. Is it a marginally-bad idea, that in the event will end up having been dwarfed by, e.g., all the other bad things the government does (as well as by whatever natural disasters, geopolitical events, or for that matter unexpected technological advances might affect the economy)? Or is it a disastrously-bad idea whose bad effects dwarf other things to an extent that the idea’s badness will soon be undeniable by all but the hardcore ideologues?
That’s what we might learn ‘by 2020′. The ‘natural experiment’ only can tell, at most, how much damage the bad law caused – and maybe not even that (because you can never fully disentangle and isolate its effects). So even if, ‘by about 2020′, there are some Good Things to point to, that doesn’t (and can’t!) tell you that this minimum wage ‘was a good idea’. After all, you will not have access to the alternate-universe in which the minimum wage didn’t exist. There is no control group. You are not seeing the reference point. It’s not an actual experiment.
Now, the effect of this min. wage might indeed turn out to be only marginally-bad. Who knows. I get the impression that if it turns out to be marginally-bad, the Kevin Drums of the world will be out there calling that ‘good’. (After all, there’ll be some anecdotal people you can point to who will be making $15 at that time, and will prefer making $15 to making $9, so they will be happy.) But the main point of this post is just to emphasize that not-disastrously-bad (with an effect that a subset of people enjoy) is not the same as good.
A secondary point is just to, well, marvel at how retarded is the typical economic analysis we usually get in pro-minimum-wage arguments:
My own guess is that $15 is too high. I would have supported something in the $10-12 range for a city as large and basically prosperous as Los Angeles. But $15? There’s just too much uncertainty in a number that big
$10-12 is fine. $15 is ‘too big’.
Sorry but I know some things about maths and a teeny bit of econ and stuff and I just I well I’m sorry but I don’t get it.
Where/how did Kevin Drum calculate this magical transition-point between $10 and $15? Is there a spreadsheet he can link to? I just do not understand. Nor does he. It’s all completely made-up. $10 being fine and $15 being bad is completely pulled out of his butt. The above passage is as good as him having come out and stated that explicitly.
Which goes back to my point: it’s all bad. The minimum wage is bad. It is a bad idea and a bad law. It’s never a question of ‘whether’ it’s bad, just a question of how bad.
DISCLAIMER. Kevin Drum is a very nice guy.
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Lion says that people who don’t embrace his idea to ‘socialize financial services’ just lack ‘imagination’. Perhaps. And imagination is a beautiful thing. I like to imagine lots of things. Like I imagine I’m back in high school doing a big rock show in the quad at lunchtime and all the girls are
Wait. Where was I. Oh yes. That Lion post and ‘socializing financial services’. Ok you see, the problem here is that while I may lack imagination, Lion lacks knowledge. Of what he is talking about. I also lack knowledge of many/most things but it is, I dare say, a problem for someone who claims he knows ‘how to’ socialize financial services when he so apparently doesn’t know what he’s talking about.
Don’t believe me? Here’s one of his how-tos:
I think that a government-run bank could even make lending decisions.
Um. Could, and does, Mr. Lion.
Sorry to be the first to break it to you, but Fannie and Freddie are (in effect) government-run banks that make lending decisions! That is all that they do! They make decisions regarding which loans/borrowers are ‘conforming’, then they loan people money to buy houses as long as they meet those (blunt/dumb/easily-gamed) statistical criteria.
How did that work out, Mr. Lion? (Hint: they both declared bankruptcy in 2008 and were formally, as opposed to wink-wink kinda-sorta, taken over by the government. Now they are fully and officially on the government’s balance-sheet.)
Another government-run bank that makes lending decisions is called the FFB. A hint that this is a government-run bank is that FFB stands for ‘Federal Financing Bank’. This is the government-run bank that made that loan to Solyndra – you know, the stellar socialized lending decision to pour $500 million down the drain. Tell me more about how great it is when the federal government makes lending decisions Mr. Lion!
There’s yet another government-run bank you may have heard of, it’s called the Federal Reserve system (or, colloquially, our ‘central bank’ – another hint that the government runs banks). It makes loans to big institutions of its choosing and definition (also, perhaps confusingly, called ‘banks’, but whatever) by crediting them with ‘reserve’ balances (i.e. printing money) for those banks to then go out and do whatever (or, nothing) with. When things get rough, like there’s a The Financial Crisis™, in Smart Peoples’ view this government-run bank is also supposed to be the ‘lender of last resort’ – which, you might guess, also de facto means making a ‘lending decision’.
One of our newest government-run banks is called the Department of Education. What’s that, you didn’t realize that was a bank? But if you think about it they make tens of billions in, well, loans every year to teenagers and twentysomethings. This involves the highly-informed and quantitative-criteria-driven ‘lending decision’ which goes something like ‘oh you say you want to go to a thing that is, technically, a ‘college’ and you’re a person? ok great we shall lend you money just have the college or fake-college tell us how much’. I’m sure we all look forward to seeing how these lending decisions will have worked out in the next decade or two.
I’m sure there’s plenty more. Small-business loans, political-crony loans, loans for public works, loans for ‘green’ bullcrap. It’s not even limited to just loans; for example, the government has, on our national credit, sold super-senior synthetic-CDO tranche protection to health-insurance companies (perhaps without quite knowing it). The government runs, or tries to run, a giant pension system (you may have heard of ‘Social Security’). And, so forth.
At this time, and on an ongoing basis, and for many many many years, the government has been knee-deep in doing literally exactly what Lion boldly declares in May 2015 that the government ‘could even’ do. And I don’t know about you but I am less than impressed with the results. It would be interesting to hear if Lion has a different opinion of those results or whatever, like whether he thinks Fannie/Freddie and the FFB and the DoE and random Congressmen with cronies all do an awesome job of making lending decisions, but the problem is that he seems not to even be quite aware that all this lending even exists.
I don’t see why a credit analyst being by a government bank is suddenly going to become sores [sic; worse] at his job than the same credit analyst working at a private bank.
Um. What ‘credit analyst’, Lion? is one question that comes to mind here.
See how he doesn’t know what he’s talking about?
More ideas and how-tos:
Cashless payments: Why should American Express get 3.5% of every credit card transaction? This is surely something the government could do profitably with only a 0.5% fee. Simultaneously, they should pass a law which …
I guess. I got bored reading this. Somehow I’ve managed to find a way to avoid paying fees on electronic transactions without the government running the show. But, whatever, this one is fine I guess. Just boring
Investment banking: The government can create a website where issues of securities can get hooked up with investors.
Sounds neat and not fraught with risks at all. I wonder if they can hire the same contracting firm (for negligible cost, I’m sure) that made the Obamacare website to set this up.
Consumer credit: Consumer credit is generally a way that rich people rip off poor proles whose future time orientation is too low to realize that borrowing money to pay for an expensive car or vacation is in the long run a really bad deal. The government should put a stop to this.
Yes, it should be illegal to lend money to people who apparently have a need for it. That will solve lots of problems (?)
In any event, once again Lion appears unaware that there are in fact actual state-level usury laws, and that the government does indeed put a cap on interest rates and try to do ‘consumer protection’ cracking down on ‘exploiting’ borrowers and so forth. The new Elizabeth Warren agency (I forget its name) is hot on the case of exciting things like this and so far lots of lives have been changed. (I kid. Lots of government-jobs have been created, I mean.)
Anyway, it seems like his post of how-tos ended there. Odd. I guess in general if Lion is genuinely interested in this whole subject that’s cool and all, but he should probably read up on it or talk to people who know stuff about it or something. I have really only scratched the surface here.
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John Quiggin has a weird piece saying that the (purely mathematical) concept of Pareto-optimality is ‘misleading’ because, like, Pareto was a fascist (or something). Oh well read the whole thing I guess (I couldn’t) but this snark seemed worth highlighting:
The supposed constancy of income distribution implies that any attempt at redistribution must be essentially futile. Even [if] the aim is to benefit the poor at the expense of the rich, the effect will simply be to make some people newly rich at the expense of those who are currently rich. Pareto called this process ‘the circulation of elites’.
ZOMG so dumb. That idea sounds fascist frankly.
Hey, meanwhile, in other news, the Clintons (Bill and Hillary Clinton – two people of apparently modest intelligence who, like, got law degrees?) have something like 8 digits of net-worth. You know, for, uh, doing that stuff they do.