Yeah, n = 1, but based on this sample, I can't see Groupon doing any targeting at all

After finishing the last post, I got to thinking about the emails I'd gotten from Groupon and I decided to go through them and try some back-of-the-envelope reverse engineering on their targeting methods. Obviously, I just had one account to look at but that's often enough to let me make an educated guess at things like what sort of data they might be looking at.

There was just one problem. In order to reverse engineer a model there has to be a model and I couldn't a trace of one. There was no indication that Groupon was using any information about me when they sent me an email. Here's an amusing but not unrepresentative example:

$125 for 24-Karat-Gold Specialty Facial and Chocolate Foot Scrub at Chocolat Day Spa in Arcadia ($260 Value)
$125 Value $260 Discount 52% You Save $135

The Company Chocolat Day Spa

Locations 107 S 1st Ave. Arcadia, California 91006 Get Directions

Of course, it's possible that I might give something like that as a gift (though I honestly don't think I know any women who would want a chocolate foot scrub -- the whole thing sounds disturbingly like a front for a fetish website), but when you have offers that the email recipient would never consider buying as anything but a gift, You can't really call it targeted marketing.

For further evidence that Groupon is not that sophisticated (or even that serious) about targeted marketing, check out the following:



The scary word here is "New." Did it really take over two years to add a feature that should have been fully operational the day the first website launched? Has Groupon actually neglected to gather rudimentary data on tens of millions of customers?

This might not be as bad as it looks (I don't see how it could be worse). Perhaps there's a level of sophistication that I'm missing. Unfortunately, as mentioned before, people who are betting on Groupon are assuming that the company will successfully pull off some extraordinarily difficult tricks with data. The apparent inability to manage simple tasks like gathering customer level demographics does not make these bets look all that smart.

p.s. Felix Salmon seems to mean something completely different by 'targeting' (though it's possible his definition is broad enough to include what I'm talking about here).

What's the best investment you can ever make? (another Groupon post)

Answer: a winning lottery ticket.

Just think about it for a moment. The returns are fantastic. There's almost no risk. The minimum investment is trivial. Your money is only tied up for a few days. You get your picture taken holding a big check. What's not to love?

Now, I can hear some of you negative types out there complaining about the difficulty of distinguishing between winning tickets and losing tickets (which are notoriously bad investments), but people routinely ignore these concerns when looking at the business plans behind IPOs. Why should you have a lower investing standard when dealing with your broker than you have at the 7 Eleven?

Take promises of targeted marketing. While it's true that almost all marketing is targeted to some extent and a few companies have been able to take that targeting to a relatively high level,* identifying customers who have a high likelihood (rather than a slightly higher likelihood) of buying something remains an extraordinarily challenging business problem. Most of the proposals you'll read that rely on solving that problem fall into the winning lottery ticket category.

Even with the recent explosion of consumer level data, the vast majority of plans to use targeted marketing run into one or both of the following problems: the lift provided by the selection method won't be large enough; the list produced won't be large enough.

Let's take the Groupon example. As pointed out here by Kaiser Fung, the merchants want new customers who are likely to become regulars. How would you go about targeting this segment? You might try matching the offer with the demographics of website the customers came in through, for instance, high end restaurants for people who came to Groupon through a New Yorker ad, but you'll still get lots responders who are already regular customers and more than a few bargain hunters (yes, even from the New Yorker). Or you could make offers only to people who have been identified as new to the area and are on the mailing lists of similar businesses in their old town, but I can tell you from experience, the number of names you'll get probably won't be large enough to bother with.

And Groupon has to thread an extraordinarily fine needle here. In most business situations, we might have a few customers who end up costing us a little money (for example, someone who just gets the loss leader at the drive-thru), but we're probably talking about fairly trivial amounts. In these cases, it's usually enough to build a model that distinguishes between responders and non-responder and fortunately, response is generally a quick and easy variable to measure reliably.

Groupon has to worry about non-responders (who are still associated with some costs), and about bargain hunters who use the offer then never come back (who cost Groupon's partners a substantial amount), and about regulars who use an offer for a visit they would have made anyway (who represent a double loss).

Separating all this chaff from the customers you want would be daunting even with the best of data and you will not have good data. How do I know? Because I've been there. I've dealt with third party data and I've written the hundreds of lines of SAS code needed to produce clean, usable data-sets. And I was only dealing with data from four or five sources, not trying to tease out a badly defined target variable from data collected from thousands of merchants. (remember, we're trying to identify customers who made their first visit using a Groupon offer and have since returned on their own dime.)

On top of all this, we're talking about a targeted marketing strategy that would have to work with everything from family pizza parlors to upscale wine bars, from pricey spas to summer camps, from teeth whitening to Scotchguarding (all of which have been recently offered by the company).

It's possible that Groupon will get around these problems but, until then, you might be better off with a scratcher-based portfolio.

* Of course, some people have proven pretty good at picking lottery tickets too.

More on Groupon

As a follow-up to Mark, the comment thread to this post is worth reading. One clever reader noted, in the S-1 groupon just filed:

Our merchant arrangements are generally structured such that we collect cash up front when our customers purchase Groupons and make payments to our merchants at a subsequent date. In North America, we typically pay our merchants in installments within sixty days after the Groupon is sold. In most of our International markets, merchants are not paid until the customer redeems the Groupon.

Now you match this up with this, admittedly anecdotal example:

A good mate who owns a restaurant and did one of these deals after said it was outright amazing - many people would come in and spend EXACTLY the amount of the coupon. They didn't want to go 50c under and heaven forbid they went 50c over and have to pay more at full price

Even worse, you seem to have to more effects. One is a priming effect. New customers assume your $30 entree is worth $15. That is poison. The second is that merchants have begun to do things like "Groupon lines" (rational from their point of view to focus on the full-paying customers first) that reduce the value of the service.

So the business model involves a slow reimbursement to the merchant (waiting for money is death in a small business where cash flow issues can be fatal), enormous discounts (typically 75% off, with the last 25% coming in slowly), and "bargain hunters" who are unlikely to become regular customers.

As a final point, consider:

Perhaps Groupon management thinks it is creating a sustainable Prisoner’s Dilemma, one that ultimately destroys value for the local merchant ecosystem but benefits Groupon. In other words, Groupon could grow so big that local merchants have to use it, even though it ultimately hurts them. In game theory terms, Groupon creates an equilibrium point at “All Local Merchants Defect,” and then, having forced merchants into this value-destroying equilibrium, takes a cut for having rigged the game. Obviously, Groupon couldn’t share this thinking publicly. They would just continue to use the attract-loyal-new-customers argument even though it no longer makes any sense for a ginormous Groupon.

This may sound cynical. But if this is Groupon’s game plan, it isn’t cynical. It’s naïve. Most local merchants simply don’t have enough value in their collective ecosystem to share anything remotely like this much value with Groupon. This isn’t a stable equilibrium, it’s a suicidal one. The local merchants will have to stop using Groupon en masse not long after they first start experimenting with it.

The only way this works is if process quadruple for restaurants (because everyone uses a groupon). Maybe more than quadruple because you replace cash in hand with a 60 day payment. Why would restaurants not break this equilibrium and offer 60% off if you show up without a groupon? Immediate cash in hand, much higher profits, the customer pays less and they don't have to buy a groupon in advance.

And if you don't get this type of prisoner's dilemma, then it is hard to see where the sustainable value is going to be in this business model when your clients will eventually hate you.

Salmon/Fung cage match -- Did Salmon use a representative example?

Felix Salmon is one of the sharpest business and finance bloggers out there but I've never quite shared his enthusiasm for the Groupon business model. Disagreeing with Salmon on business matters makes me a little nervous, so I feel a bit better to have Kaiser Fung on my side.

Fung (who shares my high opinion of Salmon's acumen) has a good take-down of Salmon's analysis. You should probably read the whole thing but there's one particular aspect that strikes me as requiring additional attention.

Here's Fung:

Let's start with [Salmon's] neighborhood restaurant example:

At Giorgio's, for instance, diners paid $15 for their Groupon -- which gave them $30 of food. But dinner for two at Giorgio's, with some kind of alcohol, can easily run to $100 or more. So even after knocking $22.50 off the bill (remember that Giorgio's kept $7.50 of the proceeds of Groupon), the restaurant would often still make money.

This is a bit complicated. We can trace how the cash flows. For Groupon, diners pay them $15, and they keep half of that, $7.50. For the diners, they paid Groupon $15 (now worth $30 spending), and so they pay Giorgio's $70; in other words, they paid $85 out of pocket for a meal worth $100 without Groupon. Giorgio's take in $70 from the diners plus $7.50 coming from Groupon for a meal worth $100.

...

So, I don't think the Groupon model is the kind of slam dunk Felix seems to think it is. Only if certain conditions are met will the merchants gain anything from Groupon:

• the value of the coupon has to be a fraction of the total spending at the merchant; in this example, the diners spent more than 3 times the face value of the coupon. What if the diners spend exactly $30? Then Giorgio’s loses $22.50 on each regular customer and earns $7.50 on each new customer, meaning that every 3 new customers pay for each regular’s discount. Not very attractive numbers at all.

Of course, that $7.50 doesn't take into account the cost to the restaurant of preparing and serving the meal (which would further help Fung's case), but putting that aside, how likely are customers to overshoot by a factor of three?

Looking at the offers currently on Groupon, I see three restaurants, Beto's Grill ($20 for $10), Stefano's Pizzeria ($20 for $10) and Henry's Hat ($35 for $15). Of the three, I'm only familiar with Henry's Hat (a game themed bar that, last time I was there, had Kruzno in its library), but, based on the information online, it would be fairly easy for two people to keep the tab down to close to the amount of the Groupon offer in all three.

Obviously, there are plenty of places in LA where you should plan on paying big money for your dinner, but I haven't noticed those places on Groupon. Instead I've seen a lot of moderately priced spots, and I doubt you've got a lot of couples running up a $60 dollar tab on three buck a slice pizza.

Apparently, journalists who work for Yahoo don't have access to the internet

Otherwise, they could easily have learned that that, rather than being in Little Rock, Russellville is about eighty miles to the west.

In Little Rock, Arkansas, for instance, the 2010-2011 yearbook at Russellville Middle School lists the "5 worst people of all time." Students listed former President George W. Bush and Bush's vice president, Dick Cheney, right after Adolph Hitler, Osama Bin Laden and Charles Manson.

Superintendent Randall Williams asked the yearbook printing company to cover the list with pieces of tape, but many parents aren't mollified.

"I think it's just hard to explain, and I've talked to the sponsor and she is very very very upset about it. That she didn't pay any attention to that particular part of that particular page," he told the local Fox affiliate. "I think she maybe just scanned the whole page and went on."

Friday afternoon data dump

Here are some more posts I should probably get around to one of these days:

There is nothing so distinctly middle-brow as the fear of being middle-brow -- yet another TNR edition.

In this excellent NPR piece, advocates claim this test can identify psychopaths but the researcher who developed the test isn't comfortable with the way it has been used. Lots of interesting stat questions here.

I always feel nervous when I disagree with Felix Salmon's analysis of a business model but Kaiser Fung made me feel a little better about this one.

Also from Gelman: If I can find the time, I'd like like to delve into this story about perennial nut-case Satoshi Kanazawa; I'd also like to join in the discussion of this Tyler Cowen post.

I wonder if this TNR writer knows that this practice goes back at least to Hearst (and was the basis for the Hitler allusion in Citizen Kane).

More reasons from Ebert to hate 3D.*

When a rocket scientist I know (this is LA, they're all over the place) heard an interview with James Surowiecki about the Wisdom of Crowds, he commented "wow, they've just discovered standard error." Perhaps now people are starting to realize some of the limitations. There's just not a lot of there there.

*update: Ebert has another post up on the search for the next big thing. His thoughts on the changing economics of the industry are particularly relevant.

Time will tell. What depresses me is that mainstream Hollywood seems to be experiencing a crisis of confidence. For decades there was the faith that if you released a good movie, people might very well buy tickets to it. The traditional pattern was to open it slowly, hope for good reviews, and then "roll it out" more widely.

The economics of television advertising put an end to the theory that an audience might find a movie. Now the movies must find an audience. Big new releases open everywhere at once, and everybody knows they will be available before long on DVD or On Demand . Theaters offer 3D as something you can't get at home (apart from "3D television," about which I am unpersuaded). Now we get rocking and rolling D-Box seats.

RIP: Joel Rosenberg

Noted Canadian science fiction author Joel Rosenberg has died.

It is a poorer world without him.

One more thought

Mark, Andrew Gelman and I have all weighed on on the article written by David Rubinstein. So I think the high points have been hit.

One thing that I think was interesting, though, was his decision to be defiant about his career. Comments like:

Why do I put “worked” in quotation marks? Because my main task as a university professor was self-cultivation: reading and writing about topics that interested me. Maybe this counts as work. But here I am today—like many of my retired colleagues—doing pretty much what I have done since the day I began graduate school, albeit with less intensity.

Seemed to me to be extremely revealing. I think that one possibility is one of culture. I grew up in a social democracy and I would feel shame if I thought I was "milking the system". My father used to explain the low Swedish unemployment rate to me as being a cultural phenomeon (in Sweden the shame of not working is high).

On the other hand, I occasionally see people bragging about how they bilked the system as if this is a point of pride and not deep humiliation. I wonder if there is a cultural divide here as I would find behavior to be shameful. Consider this statement:

Committee meetings were tedious but, except for the few good departmental citizens, most of us were able to avoid undue burdens.

Why would he not be ashmaed not to have been a good departmental citizen? I am always worried that I am not carrying enough administrative burden in my department and concerned when another faculty member is overloaded.

Or this comment:

To be sure, some of my colleagues were prodigious researchers, devoted teachers, and outstanding departmental, university, and professional citizens. But sociologists like to talk about what they call the “structural” constraints on behavior. While character and professional ethics can withstand the incentives to coast, the privileged position of a tenured professor guarantees that there will be slackers.

So why are character and professional ethics not valued? Why does an confession as to a lack of professional ethics sound like an attack on the profession and not an admission of a personal failing. Mark pointed out the comments on his teaching ability and I have to admit it sounds like he wasn't the most focused professor ever.

Or perhaps I misunderstand some parts of this situation??

University Professor Compensation -- Andrew and Joseph hit the big points but leave out the punch line

Both Andrew Gelman and my co-blogger Joseph take down David Rubinstein and his bizarre Weekly Standard piece, "Thank you, Illinois taxpayers, for my cushy life." Both posts do a good job showing how unrepresentative Rubinstein's case is and how flawed the conclusions he draws from it are, but to get to the really amusing part of the story you have to go into the comment section of Gelman's blog (always a good idea, by the way) where you'll find a link to Rubinstein's RateMyProfessors page. Here are some representative quotes:

got a B in his class. tests are all fill in the blank/short answer but you can use the book and your lecture notes. so you really have to come to lecture and take good notes. he is really disorganized and got off topic easily. i wouldn't recommend him.

DO NOT TAKE THIS CLASS W/HIM. Terrible teacher!! He is very frustrating and unclear. Nobody understands what he is talking about. Everyday he comes in with an empty coffee cup and takes sips throughout the class even though there is nothing in his cup!!! CRAZY. DO NOT TAKE SOC 100 WITH HIM! HE IS SO UNORGANIZED!!!

This class can sometimes be interesting, but mostly he just rambles about useless stuff that barely makes sense. He doesn't even write a real syllabus he's so disorganized. If you take his class, definitely go to lecture. You'll fail completely if you don't.

You'll have to go to the second page to find a 'good' rating (the rest were 'poor'):

i love this class. If you're right wing lol, i think you are going to like professor rubinstein

If you read between the lines, that review doesn't really contradict the others. Numerous students complained about the professor going off topic. Since it's hard to imagine a straightforward 'intro to sociology' lecture having a deeply right wing bent, it seems more likely that the good review was also a reaction to these tangents.

When Rubinstein talks about how overpaid he is, he's almost certainly right, not because the system is flawed (that point is certainly up for discussion) but because David Rubinstein appears to be an exceptionally bad teacher.

We may be seeing the beginning of a new journalistic genre: writers proudly basing arguments (implicitly or explicitly) on their own incompetence. First we got the "I'm too financially inept to support a family on $350,000 a year" stories (and the closely related "I'm too financially inept to support a family on just over a quarter of a million and too financially illiterate to grasp the concept of marginal tax rates"). Now we get Rubinstein. Can we expect some columnist to follow with a piece entitled "You shouldn't trust journalists because I'm a moron"?

(actually, I'd like to see that last one.)

University Professor Compensation

Andrew Gelman links to college professor David Rubinstein who makes a number of inflammatory comments under a headline that includes "Thank you, Illinois taxpayers, for my cushy life":

After 34 years of teaching sociology at the University of Illinois at Chicago, I [Rubinstein] recently retired at age 64 at 80 percent of my pay for life. . . . But that's not all: There's a generous health insurance plan, a guaranteed 3 percent annual cost of living increase, and a few other perquisites.

In my 34 years, just one professor in the sociology department resigned to take a nonacademic job. For open positions, there were always over 100 applicants, several of them outstanding. The rarity of quits and the abundance of applications is good evidence that the life of the college professor is indeed enviable.

Protests against efforts to reform pay scales, teaching loads, and retirement benefits employ a “solidarity forever, the union makes us strong” rhetoric. What these professors and other government workers do not understand is that they are not demanding a share of the profits from the fat-cat bourgeoisie. They are squeezing taxpayers—for whom the professors purport to advocate—whose lives are in most cases far harsher than their own.

I have a few comments to make about this particular issue. First of all, I notice that the professor in question is happy to brag about his success but is not proposing, for example, to stop accepting his pension. I am not sure why it makes sense to mock the people who support one's financial position. Is it considered good sense to mock customers in business?

Second, there are a lot of people in all fields of endeavor who do not earn their salary. What is it about academics that makes people think it might make sense to brag about being a poor performer?

Third, why is the focus on the cost to the taxpayer for academic pensions a focus? We subsidize a lot of activity -- for example, we tax hedge fund managers at captial gains tax rates. This is a very important subsidy on that activity but we do not hear comments about how hard it is for people in the working class to subsidize multi-billion dollar incomes.

I think Andrew Gelman makes the winning point here:

David Rubinstein appears to be somewhat of an extreme case of the underworked and overpaid professor: he taught at a low-ranked but high-paying institution, he got his Ph.D. at a time where they were giving out tenure-track slots like candy canes at Christmas, he (by his own admission) spends a total of less than one hour per week on class preparation, grading, and advising combined, and he got a contract in an era with generous retirement benefits.

It is unclear to me what action makes sense here, given these issues. Clearly, attacking current new professors does not seem to address the core issues (that David Rubinstein was hired in an exceptional era). It can only hurt people who have had to struggle up under much more difficult circumstances than he has. Which seems to be identical to his critique of academics in general (that they are priviledged and don't care about people who have had to deal with more difficult life circumstances).

I do know that my own experience of university life is completely different. I am in a resaerch position and I still spend a lot more time on teaching then he does, not to mention leading student research groups. My pension is defined contribution and my pay has just been cut as part of a state-wide austerity movement (after 1 year, that time when compounding means cuts hurt the most). It's hard work but I like the job. I do know that when I worked in industry, pay was higher and life was a lot less stressful.

It is a very odd article.

Tyler Cowen argues against more regulation with an example that calls for more regulation

Tyler Cowen has a piece in the New York Times on how regulation inhibits innovation in transportation using the example of driverless cars. I'm not sure he's made his general case (that's the subject for an upcoming post), but his specific case is particularly problematic.

In case you haven't been following this story, Google has been getting a lot of press for its experiments with self-driving cars, especially after statements like this from Stanford professor Sebastian Thrun:

"Think about the car as a medium of mass transit: So, what if our highway-train of the future meant you go on the highway, and there's a train of very close-driving cars with very low wind drag, fantastic capacity, is twice as efficient as possible as today, and so there is no congestion anymore?"

Cowen is clearly thinking along the same lines:

Furthermore, computer-driven cars could allow for tighter packing of vehicles on the road, which would speed traffic times and allow a given road or city to handle more cars. Trips to transport goods might dispense with drivers altogether, and rental cars could routinely pick up customers. And if you worry about the environmental consequences of packing our roads with cars, since we can’t do without them entirely, we still can make those we use as efficient — and as green — as possible.

Putting aside the question of the magnitude of these savings in time, road capacity and fuel effeiciency (which, given the level of technology we're talking about here, aren't that great), where exactly are these savings coming from?

Some can certainly be attributed to more optimal decision-making and near instantaneous reaction time, but that's not where the real pay-off is. To get the big savings, you need communication and cooperation. Your ideal driving strategy needs to take into account the destination, capabilities and strategies of all the vehicles around you. Every car on the road has got be talking with every other car on the road, all using the same language and rules of the road, to get anything near optimal results.

Throw just one vehicle that's not communicating (either because it has a human driver or because its communication system is down or is incompatible) into the mix and suddenly every other vehicle nearby will have to allow for unexpected acceleration and lane changes. Will driverless cars be able to deal with the challenge? Sure, but they will not be able to able to do it while achieving the results Thrun describes.

A large number of driverless cars might improve speed and congestion slightly, but getting to the packed, efficient roads that Cowen mentions would mean draconian regulations requiring highly specific attributes for all vehicles driving on a major freeway. The manufacture and modification of vehicles would have to be tightly controlled. Motorcycles would almost certainly have to be banned from major roads. Severe limits would have to be put on when a car or truck could be driven manually.

This would seem to be another case of a libertarian endorsing a technology with less than libertarian implications.

A couple of interesting stories on the business of gambling

American Public Media's Marketplace has a report on one of those you've-got-to-be-kidding business models. Not sleazy (the people behind it actually go out of their way not to take advantage of customers who might develop a serious problem), but this online casino is another example of people willingly paying money for something they can get for free.

By comparison, the AP has this account of a casino model that players have remarkably little interest in. Given the emergence of casinos in nearby states and the stagnant economy, the decline in Atlantic City isn't exactly unexpected, but this piece is still worth checking out and the title "Monopoly lost: Atlantic City's rise and fall" is definitely good for some bonus points.

A "how to lie with statistics" instant classic from the Wall Street Journal op-ed page

CJR's Ryan Chittum catches Stephen Moore doing his damnedest to mislead:

The question-as-headline is your second red flag that this just might be a deeply disingenuous op-ed (the first is that it’s on The Wall Street Journal op-ed page):

A 62% Top Tax Rate?

The top marginal tax rate is just 35 percent now, of course. So how does Moore come up with the idea that Obama and the Democrats are pitching a 62 percent tax rate for the rich? Disingenuously.

First, here’s a classic example of misleading readers with an apples and oranges comparison:

If the Democrats’ millionaire surtax were to happen—and were added to other tax increases already enacted last year and other leading tax hike ideas on the table this year—this could leave the U.S. with a combined federal and state top tax rate on earnings of 62%. That’s more than double the highest federal marginal rate of 28% when President Reagan left office in 1989. Welcome back to the 1970s.

For Moore’s headline purposes he includes state taxes to get to 62 percent, but when he compare it to rates under Reagan, he doesn’t include state taxes.

The comparison is much more misleading than that, really. Moore is also including things like payroll taxes to come up with his fake 62 percent number, while not including them in that 28 percent Reagan figure. You can’t do that, boss.

Moreover, to come up with that doozy of a number, Moore is adding in not only state and payroll taxes, but just about every possible tax hike being bandied about by Democrats. But Moore knows full well that even if they wanted to, which they don’t, the Dems wouldn’t be able to enact every one of these. But he acts like they’re all coming.

Those theoretical and far-from-likely tax hikes include a 3 percent surtax on incomes over a million bucks; Obama’s proposal to end the Bush tax cuts for the rich in 2013, which would return marginal rates to 39.5 percent at the top; 3.4 percent Medicare taxes (Moore includes the employer’s contribution here); and 10.1 percent in additional payroll taxes because “Several weeks ago, Mr. Obama raised the possibility of eliminating the income ceiling on the Social Security tax” (that includes the employers’ share, too, though Moore doesn’t say that).

There’s also this:

Today’s top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%.

It’s unclear how Moore gets to 41.5 percent here. Repealing the Bush tax cuts would return the top marginal rate to 39.5 percent. Deductions affect effective tax rates, which are far lower than marginal rates. Since he doesn’t explain it, and since the backdrop is the rest of this misleading piece, I’m going to assume that this 41.5 percent number is false (I believe Moore is talking about the PEP and Pease taxes, but those don’t apply to people making more than $525,000, so they can’t be included in a total tax rate that includes a millionaire’s surtax.)

To get to 62 percent, Moore also includes 4 percentage points for state taxes. It’s unclear why he didn’t include local taxes while he was at it. That would have got him another full point (it’s always worth noting that state and local taxes are extremely regressive, taking 11 percent of the income of the lowest quintile of earners, which is more than twice what the top 1 percent pays.)

All this allows Moore to plant the zombie lie that Democrats are “proposing rates like those under President Carter.” Even with all his hocus-pocus, that’s not true, either. The top marginal federal income tax rate under Carter was 70 percent, a full eight percentage points higher than Moore’s fake number. If you include all the state and payroll taxes he uses to get to Obama’s “62 percent” figure, which you have to to make the comparison, that Carter number would be closer to 80 percent.

And, as Andrew Sprung points out, that's still lower than the rate under Ike. It would be interesting to see how Moore reconciled the high taxes of the Postwar Era with its phenomenal growth.

Probably not informative, but interesting.

Metaphor of the day

From Merlin Mann via John D. Cook:

If a project doesn’t have an owner, it’s like a chainsaw on a rope swing. Why would anyone even go near that?

[Technically a simile, but do you really want to get technical here?]

More nails in the church door -- the case for the counter-reformation keeps getting stronger

The education reform movement is a strange beast. Its support is extensive and extraordinarily broad-based, bringing together players as diverse as Roger Ebert, the New Republic and Rick Scott (not that TNR is exactly proud of the commonalities -- check out how Kevin Carey manages to avoid Scott when discussing Republicans' reform positions, despite the Florida being the epicenter of the GOP's reform agenda).

Yet, despite this overwhelming consensus, it is a movement almost completely unsupported by solid, non-anecdotal evidence. I summarized some, but by no means all, of the cases where the data seemed to be running against the tenets of the movement in a post entitled: "Perhaps this is the time for a counter-reformation."

The following report (described here by the indispensable Dana Goldstein) undercuts the intellectual framework of the movement even further (though I would have liked to hear more about Canada which seems to be the more relevant example).

But what if the United States is doing teacher reform all wrong?

That’s the suggestion of a new report from the National Center on Education and the Economy, a think tank funded mostly by large corporations and their affiliated foundations. The report takes a close look at how the countries that are kicking our academic butts—Finland, China, and Canada—recruit, prepare, and evaluate teachers. What it finds are policy agendas vastly different from our own, in which prospective educators are expected to spend a long time preparing for the classroom and are then given significant autonomy in how to teach, with many fewer incentives and punishments tied to standardized tests.

Finland, for example, requires all teachers to hold a master’s degree in education and at least an undergraduate major in a subject such as math, science, or literature. Finnish teacher-education programs also include significant course work in pedagogy—exactly the sort of instruction former New York City schools chancellor Joel Klein recently called useless. All teacher candidates must write a research-based master’s dissertation on an issue in education policy or teaching practice, and will then spend a full-year as a student teacher reporting to an experienced mentor.

Shanghai takes a somewhat different approach; its teacher candidates take 90 percent of their college courses in the subject they will teach, and are expected to complete the same undergraduate programs as students who will go on to receive Ph.Ds in math or the sciences. As in Finland, however, a new teacher in Shanghai will spend the first year of his employment under the supervision of a mentor teacher, who is relieved of some of her own classroom duties in order to spend more time training the newbie.

You can see how these international examples cut against the grain of American education reform. Our approach has largely borrowed the Teach for America model. First, we attempt to bring more elite college graduates into the teaching profession by decreasing the credentialing necessary to become a teacher: no student-teaching year or education degree required, just a few weeks of summertime training are supposed to suffice. Then we expect teachers to spend much of their time preparing children for standardized tests, whose results, in turn, will be used to judge teachers’ competency.

The NCEE report makes a persuasive case that the Obama administration and its allies in the standards-and-accountability school reform movement have teaching policy exactly backward. The way to increase the prestige of the teaching profession is not to make it easier for elite people to do the job for a few years and then burn out, but to make it more challenging to earn a teaching credential, so that smart young people are attracted to the rigor of education programs. Within such a system, alternative credentialing programs for career changers could still play an important role. But alternative pathways will never have the capacity to provide the entire teacher corps.

Following this approach, Finland has been able to abolish test-score based accountability, finding that the folks who come through their challenging teacher professional development pipeline are well prepared to create their own curriculums and assessments. “It is essential for high-performing countries to trust its teachers, but it had better have teachers it can trust,” writes Marc Tucker, author of the NCEE report.

For the record, I don't believe in slavishly following international examples (even when they support my position), but when movement advocates like Klein and Rhee use these countries to bolster their arguments, they need to explain why we should pursue the opposite of these countries' policies.

Thought of the day

I was reading this statement (via a link from Felix Salmon):

Emergers also have a better chance of being part of the coveted 1% who control 40% of wealth in America someday.

It got me thinking again about precisely why we have low marginal tax rates on those who make above (for example) 500 thousand per year. Now, by low I mean low in comparison with other rates in the post-WWII era.

There seem to be two explanations: 1) competition for key talent and 2) incentive for performance.

The first seems unlikely. All US executives pay taxes in the same country so it just resets the baseline. Americans seem to be the best compensated class of business executives and stock traders so international competition can only matter so much.

The second is much clearer if we (following Linda McQuaig and Neil Brooks) look at sports stars. Did Babe Ruth or Lou Gehrig under-perform relative to Micheal Jordan due to low compensation? Do we really think that the overall quality of play would decline in some massive sense?

Now we might get fewer people wasting their lives trying to become a sports superstar if they paid more in marginal taxes, but is that really a shame?

Meanwhile, infrastructure, education and the rule of law all make economic activity possible. Is it not possible that these areas are under-invested in and could use some transfer of cash?

I do not know for sure, but it is worth thinking about.

3-day Weekend Blogging -- Junk Food edition

We've been robbed!

L.A. is unquestionably one of the world's great burger towns (and I have the only Pulitzer Prize winning food critic to back me up on this), so it's bad enough when Travel and Leisure omits us from its top ten list, but this is just adding insult to injury:

No. 2 Salt Lake City

Locals have lined up in droves ever since the streamlined burgers of In-N-Out have come to town, but otherwise the area's burger personality is quite a bit more decadent—as in, pastrami burgers. To try a quarter-pound patty piled high with more beef, check out Crown Burger, where they also add Thousand Island dressing, lettuce, onions, and cheese.

In-N-Out? Really?

Correlation is not causation . . .

. . . but this association is both alarming and worth a lot more study;

Plus, overall, people with long commutes are fatter, and national increases in commuting time are posited as one contributor to the obesity epidemic. Researchers at the University of California–Los Angeles, and Cal State–Long Beach, for instance, looked at the relationship between obesity and a number of lifestyle factors, such as physical activity. Vehicle-miles traveled had a stronger correlation with obesity than any other factor.

Unlike things like genetic factors (which tend to be reasonably stable within decades at the population level), the shift towards longer commutes has moved in parallel with increases in obesity. If the association persists at the individual level then it is a possible candidate for obesity prevention.

The problem, of course, is we continue to build low density, car centered cities which do not improve matters. It makes it hard to change average commutes on any sort of easy time scale. But a discovery that this association was causal would suggest all sorts of public health interventions.

Perhaps we were a bit too quick to dismiss the Jupiter effect

Consistency

I was looking at Andrew Gelman's blog and saw his discussion of Ray Fisman's piece on compensation. I was especially struck by this statement:

Yet this aversion to pay cuts isn't good for workers or the American economy more broadly. More people end up losing their jobs than if wages were more flexible, and there are serious long-term consequences for the workers who lose their monthly paychecks. The negative impact on a worker's earnings, health, and even the earning prospects of his children lasts decades beyond the pink slip's arrival. Creative solutions—like the furloughs that cut government salaries in California and elsewhere—might help to make lower pay more palatable, by presenting the cut as a temporary measure and by creating at least the illusion of a lower workload. If we can find other ways of overcoming the simmering resentment that naturally accompanies wage cuts, workers themselves will be better for it in the long run.

I wonder how this links with tax increases. Greg Mankiw seemed to be quite displeased by the prospect of tax increases (which are a form of reducing compensation).

If this relation works the same way, then there are two implications:

1) Tax cuts are a terrible idea as a way of providing economic stimulus as they will do little to increase output (3 hours according to Fisman's experiment) but will be greatly resented if they are rescinded

2) High taxes (like low pay) seems to have little effect on income so if you rise taxes then you should raise them by a lot so you only feel the pain of resentment once.

I am not sure that this position is correct, but it sure is thought provoking.

And NPR is probably the best of the bunch

Between poll numbers, town hall meetings and the special election in New York, the Ryan budget is starting to look like a tremendous political misstep for the GOP. To make matters worse, the pundits (who have gushed praise for Ryan in the past) seem to be increasingly open to Paul Krugman's take on the plan:

Anyway, the underlying premise behind statements like that is the assumption that the Ryan plan represents a serious effort to come to grip with America’s long-run fiscal problems. But what became clear soon after that plan was unveiled was that it was no such thing. In fact, it wasn’t really a deficit-reduction plan. Once you remove the absurd assumptions — discretionary spending, including defense, falling to Calvin Coolidge levels, and huge tax cuts for corporations and the rich, with no loss in revenue? — it’s highly questionable whether it would reduce the deficit at all.

Given all this and the fact that seniors are the Republicans' most important demographic, what were John Boehner and the rest of the house leadership thinking when they publicly came out for privatizing Medicare? Not being privy to their private conversations, we can only speculate, but I suspect that, in addition to fear of primary challenges, part of their rationale was the assumption that the Washington press corps would spin the story in a way that would minimize the damage.

To see how they might have made that assumption, check out this exchange between Neal Conan and NPR political editor, Ken Rudin:

CONAN: Another candidate who's been on the hustings in Iowa is Newt Gingrich, who's been saying, well, I'm the man that Washington has learned to hate.

Mr. NEWT GINGRICH (Republican Presidential Candidate): It is impossible to have watched television for the last week and not get the conclusion I am definitely not the candidate of the Washington insiders.

Everywhere I go across Iowa, or everywhere I see people randomly, they have figured out I'm the guy who wants to change Washington and they can tell it because the people they see on TV from Washington aren't happy with me.

CONAN: Well, not happy with him because, well, any variety of reasons.

RUDIN: Well, yes, and you know something, even - even when he said the thing about Paul Ryan, that it was a radical, it was social engineering...

CONAN: He now he says he would have voted for it.

RUDIN: Yes, but you know, when he said it at the time, of course everybody jumped on him, saying how dare you say that. But everybody said, well, that may be true. And we saw New York 26, and we'll talk about that later. That could very well have been the message that came out of it. So even when he says things that may very well be true, you know, we jump on him for saying that. And of course he went back on that word.

What amazes me about Rudin's comment is how, in less that two weeks, a senior political reporter can so completely revise his memories of an event. It's true that by now everybody has jumped on Gingrich at some point but the people who jumped when he criticized the Ryan plan were completely distinct from the people who jumped on him when he tried to walk it back. The story here isn't difficult to follow: Gingrich (probably assuming his conservative credentials were solid enough) tried to distance himself from Ryan's increasingly unpopular budget proposal; Conservatives were outraged and demanded a retraction; Gingrich clumsily backtracked, apologizing to Ryan and trying to suggest that he had misspoke partly because he wasn't expecting Meet the Press' 'gotcha' questions (despite having been on the show over thirty times).

Rudin has completely internalized the values of the Washington press corps, particularly "tell both sides of every issue" (even when there's only one side). He takes an account of a dislikeable politician's disastrous launch of a trial balloon and makes it into the story of a prophet without honor in D.C., not because he supports Gingrich (I very much doubt he does) but because he's more comfortable with the revised version.

When Paul Ryan and the Republicans put forward a plan to privatize Medicare immediately after a nominally pro-Medicare campaign, they were counting on reporters like Rudin to spin it as a serious response to a dire problem. Nor did Rdin disappoint, calling the plan "perhaps politically courageous, but maybe suicidal as well."

It's worth taking a minute to recall how common this initial response was. For at least a couple of days it looked like the press, which was deeply invested in the Ryan-as-fiscal-conscience meme, was going to converge on the interpretation that the Ryan budget, though certain not to become law, was an honest attempt to start the conversation by facing up to some hard truths (you could even find some Democrats falling in line). If this interpretation had held, the story would have probably dropped off the radar fairly quickly and the political landscape would look radically different now (insert "Sound of Thunder" reference here).

There's only one thing more annoying than the kind of post Mike Konczal just put up

You know know, the "What does [recent popular culture phenomena] tell us about [______ theory or principle]?" post. Whether it's an embarrassing reality show or a celebrity's public meltdown, someone on the internet will a pretentious excuse to talk about it.

But what's even more annoying is when someone like Mike Konczal not only writes one of these ("What can the movie Bridesmaids tell us about the Recession and Keynesian Economics?"), but actually makes it good enough that I feel compelled to quote it at length.

This is the one year forward survival rate for businesses that have launched in the previous year. So a business that launched between March 2008 and March 2009 has only a 76.3% chance of being around in March 2010. As you can see, it’s actually lower than that. It’s really hard to open a business in a recession.

This is an important point that goes against the “creative destruction” view of recessions. Those who believe that kind of classical theory think that the “work” of a recession is to let the economy recalculate what goods and services are needed going forward, while also letting the virtuous and hard working purge the incompetent and the lazy out of the system. But recessions are terrible for new entrants! Good ideas or bad ideas, who wants to launch a business in a climate with 10% unemployment? Even if you are the best manager, even if your idea is killer, if all your customers can barely pay their own bills it is unlikely that your work will pay off. The realization that this depressed state could perpetuate itself was an important breakthrough for macroeconomics. The government needs to step in to jump start the economy so that the normal trucking and bartering and allocation of a market economy can function.

If you’ve been paying attention to the headlines, you’ll note that the political economy is all wrong about what needs to be done to fix this. Most of the major discussions have been about how to make the established business community feel more encouraged. From writing regulatory rules to slashing the social safety net to extending high-end tax cuts, our hopes seem entirely to rest on whether or not we can get millionaires to work an additional 10 minutes and feel properly appreciated rather than having customers with money in their pockets available for new businesses.

The Polish economist Michal Kalecki wrote an excellent 1943 essay called Political Aspects of Full Employment that warned us about this problem. If during a recession and a weak economy the government doesn’t step up to ensure full employment, then suddenly the business community has powerful indirect control over the economy. Governments give credits and rebates for established companies to expand, businesses spend the money on M&A and consolidation and, most importantly, incumbents expand and entrench their powers. This kind of confidence building isn’t going to help a small bakery that’s trying to open.

More intellectual property silliness

From TPM:

The New York Stock Exchange now claims that you have to get their permission (express or implicit) before you use images connected to the New York Stock Exchange. So if you find a wire photo of the trading floor and use it to illustrate a story on Wall Street, you're violating the NYSE's trademark because they've trademarked the trading floor itself.

We found this out yesterday when we got a cease and desist letter from the NYSE based on an article published at TPM back in November. You can see the letter here.

TPM is represented on Media and IP matters by extremely capable specialist outside counsel. And we've been advised that the NYSE's claims are baseless and ridiculous on their face. But this is yet another example of how many large corporations have given way to IP-mania, trying to bully smaller companies into submission with inane and legally specious claims of intellectual property rights.

Well, TPM's small but we have big teeth. And we don't like being pushed around. So we're again posting the same picture as an illustration for this post. But really, what's next? Mayor Bloomberg trademarks his face and the city newspapers have to get his permission to publish photos of him so not to infringe the Bloomberg face trademark? Or more likely, the Empire State building trademark's the image of the Empire State building and demands a fee or bars photographs of the New York skyline.

...

So in the spirit of the moment I propose a contest. We know that NYSE now says you need their permission to show photographs of the Exchange in the context of news coverage. And if I understand their logic you'd actually need their permission to show a sketch you drew of the Exchange floor.

So here's the contest, what do you think NYSE's next preposterous claim of intellectual property rights will be? Can you say the words 'New York Stock Exchange' without their permission? Can you do a line drawing of the facade of the exchange without running it by the NYSE's lawyers?

As many have observed (including Thomas Jefferson who refused to patent any of his inventions), intellectual property laws are a necessary evil. They restrict the creation of new work in often onerous ways but they provide an increased incentive to create work that qualifies for protection. Even more importantly, they encourage dissemination of that work.

Over the past few decades, however, we've seen less interest in the necessity and more emphasis on the evil. The result is unfair, economically suboptimal, and undeniably silly.

[We've been down this rabbit before as you can see here.]

"Top Colleges, Largely for the Elite" -- no, really?

This David Leonhardt story has been getting a lot of attention, which is all for the good. It doesn't go very deep into the issue, but it unearths some revealing facts and makes some important points that are often left out of the discussion:

The truth is that many of the most capable low- and middle-income students attend community colleges or less selective four-year colleges close to their home. Doing so makes them less likely to graduate from college at all, research has shown. Incredibly, only 44 percent of low-income high school seniors with high standardized test scores enroll in a four-year college, according to a Century Foundation report

— compared with about 50 percent of high-income seniors who have average test scores.

“The extent of wasted human capital,” wrote the report’s authors, Anthony P. Carnevale and Jeff Strohl, “is phenomenal.”

This comparison understates the problem, too, because SAT scores are hardly a pure measure of merit. Well-off students often receive SAT coaching and take the test more than once, Mr. Marx notes, and top colleges reward them for doing both. Colleges also reward students for overseas travel and elaborate community service projects. “Colleges don’t recognize, in the same way, if you work at the neighborhood 7-Eleven to support your family,” he adds.

Several years ago, William Bowen, a former president of Princeton, and two other researchers found that top colleges gave no admissions advantage to low-income students, despite claims to the contrary. Children of alumni received an advantage. Minorities (except Asians) and athletes received an even bigger advantage. But all else equal, a low-income applicant was no more likely to get in than a high-income applicant with the same SAT score. It’s pretty hard to call that meritocracy.

Another data dump

So many links, so little time.

From Felix Salmon:

That's the kind of performance Bill Ackman can only dream of. In 2007 he raised $2 billion for a hedge fund, Pershing Square IV, dedicated to going long Target; today, in the wake of a 40% plunge in January, that fund has dwindled to just $210 million.

From Huffington Post:

"Hear yourself, ma'am. Hear yourself," Woodall told the woman. "You want the government to take care of you, because your employer decided not to take care of you. My question is, 'When do I decide I'm going to take care of me?'"

Large portions of the crowd responded enthusiastically to the congressman's barb, with some giving him a standing ovation, underscoring the fierce divisions within the electorate.

William Robert Woodall III, who goes by "Rob," doesn't appear to have been referring literally to himself, but rather speaking figuratively. It's a good thing, because financial records show the 41-year-old congressman has done very little to take care of himself in his retirement. Woodall's 2009 financial disclosure forms, filed with the House of Representatives, show that his two largest IRAs have between $15,000 and $50,000 worth of assets, hardly the type of nest egg that would be able to cover the health care costs associated with aging absent government health care.

Woodall was chief of staff to former Rep. John Linder (R-Ga.), a job taxpayers shelled out more than $100,000 a year for in 2002, rising to more than $150,000 in 2009, plus gold-plated health and retirement benefits. Woodall, who has taken his former boss's seat, now makes $174,000 a year with generous benefits.

From Yahoo:

While some NFL players are spending the enforced offseason in workouts with their teammates and others (like Minnesota's Ray Edwards(notes) and Baltimore's Tom Zbikowski(notes)) are spending it in the boxing ring, third-year safety David Bruton(notes) of the Denver Broncos has set himself on a different path — he's spending the lockout as a substitute teacher at his old high school in Ohio, teaching social studies and credit recovery (yes, they have those classes for teenagers now) for the not-so princely sum of $90 per day.

From WSJ:


Could someone please explain to business writers that hearing about a ten percent jump in ingredients doesn't mean anything to us unless you tell us how much of the retail price goes for ingredients (from Businessweek):

Surging ingredient costs are putting restaurant margins under increasing pressure. World food prices rose to almost a record in April as grain costs advanced, leading to price hikes for basics like eggs, meat and sugar. Dairy Queen, which also debuted a smaller milkshake this month, expects its ice cream costs to jump more than 10 percent this year.

Nathan Myhrvold: Egotistical patent troll, or the lowest form of life on Earth?

I am surprised Mark did not post this

But one of the blogs on our blogroll has a fun probability problem. It's fun to head on over and work it out!

Use it up, wear it out, make it do or do without

My parents used to recite that rhyme when describing their parents' and grand-parents' generations (making me think that the saying preceded the ad campaign that produced the magazine copy below). It always struck me as a dramatic example of how American values have changed.

Now Tim Duy has a great post up on this ad campaign comparing the economic contexts of two very different wars on inflation.

I can't cut-and-paste this New Yorker article, which is perhaps just as well

Nicholas Lemann's examination of the entry level culture at McKinsey (reached through a link from Felix Salmon) is one of those pieces that needs to be read in full if you want to understand the state of American business. The New Yorker apparently unlocked the story because McKinsey has been in the news lately, but I think the real importance here goes well beyond the scandals.

Would you rather have Jon Stewart or Felix Salmon gunning for you?

Either way it would certainly suck to have both on your case.

And while on the subject of Salmon, check out this fascinating piece on the attributes in online reviews that bring in customers (they aren't what you'd expect).

Dean Dad makes an essential point about the higher education debate

From Confessions of a Community College Dean:

My sense, very much like Tim Burke’s, is that a category like “higher education” obscures as much as it clarifies. Harvard, the University of Minnesota, the University of Phoenix, Philadelphia Bible College, and Bronx Community College all fall under the category of “higher education,” as different as they are. Popular discussions of, say, climbing walls as drivers of tuition increases are utterly irrelevant in most of the for-profit and community college worlds. Complaints about state budget cuts have a great deal of validity for state and community colleges, but are largely irrelevant to most of the private colleges. Sports may be a religion at Texas Tech; not so much at Cal Tech. (At Proprietary U, every year represented another undefeated season.) College may be a four-year party at some second-tier residential colleges; it absolutely is not at colleges with large numbers of adult students with jobs and kids. Even complaints about “administrative bloat” seem to have validity in much of the four-year sector, but are mostly misplaced in the community college world.

With that much variety, it’s entirely possible that someone who attends, say, a huge state university with a high-profile sports program chose it for precisely that reason. That person may resent invisible professors -- or may not care -- and not mind at all the four-year party. A working Mom who chooses a community college night program might find the entire discussion of the four-year party utterly alien.

With such disparities hidden under a single category, too literal a reading of poll results could lead to destructive conclusions. Yes, Rich Kid Private College may have a lavish student center; does that mean we should cut funding for community colleges? Yes, some for-profits took advantage of legal loopholes to exploit financial aid; does that mean we should layer new regulations on public colleges?

My sense of it is that the sector that’s in real trouble is the expensive-but-not-selective, “nothing special” private colleges. A pricey, tuition-driven college without distinction or a clear niche represents a weak value proposition in a tough market. That’s true whether the college is for-profit or not. A clear niche could mean exclusivity, or a specific programmatic strength, or a strong religious identity. Being okay at a whole lot of things doesn’t justify thirty thousand a year, especially when public options are available for a fraction of the cost.

Why restrict the types of NSAIDs used as active comparators?

I am always surprised when people do not include negative controls when there is a very obvious candidate to be used as such. Consider this article:

Chronic analgesic use with either COT or COX-2 was associated with an increased risk of cardiovascular outcomes. These findings suggest either a selection of high-risk patients to chronic analgesic treatment, coupled with unmeasured or residual confounding, or a potential cardiovascular effect of these medications. Further research is warranted to evaluate causes for this association.

Why did the researchers not use an active comparator that is known to be null (a negative control)? After all, the participants who are tkaing pain medication may be systematically different from those who do not. It is prescription claims data so it is unclear whether or not you can adjust for these kinds of differences.

So why would you not at least look at Naproxen and Ibuprofen users?

Yes, the categories were: Opioids, Rofecoxib, Celecoxib,Valdecoxib, and General population. Covariates were:

We derived variables representing demographics, medical history of angina, coronary heart disease (CHD), congestive heart failure, arrhythmias, ischemic stroke, transient cerebral ischemia, peripheral vascular disease, diabetes, hypertension, hyperlipidemia, hypercholesterolemia, smoking, and obesity; and dispensing of nitrates, anti-platelet agents, angiotensin-converting enzyme inhibitors, angiotensin II receptor blockers, beta-blockers, calcium channel blockers, and diuretics. Baseline history of chronic diseases of the musculoskeletal system, diseases of the esophagus, hyperthyroidism, medical care required for general ill-defined symptoms and respiratory or chest symptoms, including dyspnea and upper respiratory symptoms, were also included.

Now I have done a paper on the misclassification of ibuprofen and naproxen in claims data but the issue there was sensitivity and not specificity. There is no reason that naproxen or ibuprofen could not be negative controls (or that aspirin could not be a positive control). It would certainly make the unexpected results of this analysis easier to interpret!

Weekend Blogging -- technology edition

The following appeared under a slide show of dumb inventions, but they got me thinking about how thin the line between stupid and successful can be. Glowing tires fail but spinning rims make it big. People show no interest in a tiny TV screen in '66 but get excited about watching shows on their cell phones 45 years later.

Was the technology flawed in these inventions. Was it too expensive? Or have we just gotten better at selling stuff?

Libertarian dreams

From Jacob Weisberg:

Though I criticized Ryan for his unsupported rosy assumptions (shame on you, Heritage Foundation hacks), I reacted too quickly and didn't sort out just how laughable Ryan's long-term spending projections were. His plan projects an absurd future, according to the Congressional Budget Office, in which all discretionary spending, now around 12 percent of GDP, shrinks to 3 percent of GDP by 2050. Defense spending alone was 4.7 percent of GDP in 2009. With numbers like that, Ryan is more an anarchist-libertarian than honest conservative.

It is interesting to be reading this as I just finished the book the Moon is a Harsh Mistress by Robert Heinlein. What I found interesting about this book was the assumption that one could so easily eliminate all of the functions of government (and yet have highly patriotic individuals willing to die for this version of a state).

But what I found interesting is how these ideas of government cannot be easily reconciled with a strong military. In the novel, Heinlein has the settlers of the moon act as a voluntary militia that is able to hold off another power. But these ideas are simply incompatible with a role as a "global policeman".

So there is a tough decision to be made about the role and scope of the US government in international affairs, if we really are going to put serious libertarian ideas of the state into practice.

This is a big deal

California is considering a single payer health care system. Unlike Vermont, which is a small market, a successful single payer system in California would be strong evidence that the plan is viable in a broader US context.

In the long run, containing health care costs is a major issue. While I am sure that there are alternatives to the US and Canadian systems, it is hard to argue with the better outcomes and lower costs of a single payer system. I suspect that they are even more attractive to a state like California which has a long history of budget issues.

The end of the world as seen by Basil Wolverton

With another failed doomsday prediction in the news, I thought this might be appropriate.

To anyone over forty, Basil Wolverton was the artist behind those unforgettable comic caricatures that were featured on countless magazine covers and posters, drawn in what Wolverton himself called "spaghetti and meatballs style."





But Wolverton's favorite subjects were directly or indirectly biblical. As an elder in Herbert Armstrong's Radio Church of God, Wolverton was immersed both in scripture and in the apocalyptic conclusions Armstrong drew from it.

Wolverton produced a number of wonderful drawings based on Bible scenes. He also provided the amazing illustrations for Armstrong's pamphlet "1975 in Prophesy." Here are a couple of examples. (You can see more at Mippyville.)



p.s. Wolverton was also a huge (and acknowledged) influence on R. Crumb. This story has some particularly good examples of some similarities.

Weekend pop culture blogging -- comic strip edition

Monty by Jim Meddick.


Nice photomontage effect, by the way.

The headline alone makes it worth clicking the link

But if you have any interest in the rabbit hole of intellectual property law, you should read the post as well.

While you're there, check out this one as well.

Both from Dean Baker.

How to lie with statistics -- the category category

It's amazing the conclusions you can manage if you get to define your own categories.

From Krugman:

So it’s good to have Mike Konczal reminding us that Pinto’s definition of “subprime-like” mortgages is just something he made up — and that it turns out that his supposed high-risk categories weren’t that risky at all, that in fact they look more like traditional conforming mortgages than like true subprime:

Dana Goldstein actually visits LA

Which is a bigger deal than you might think. LA County is a huge (over 4,000 square miles) but most visiting journalists (and more than a few who actually take up residence) see only a tiny and highly unrepresentative sliver of the area.

Goldstein has actually made it out into the town and is getting a glimpse of LA the way most Angelenos see it.



Now if she just makes it to Al and Bea's.

Preblogging energy

James Kwak has a follow-up to his previously noted biomass post. I'll be referring to both in a post I'm working on:

Wow. Power plants have only a minuscule impact on emissions? In 2005, electricity generation was responsible for 73 percent of sulfur dioxide emissions, 21 percent of nitrogen oxides emissions, and 11 percent of fine particulate matter (PM2.5) emissions. And biomass plants are less efficient, per BTU, than plants that burn coal or natural gas.

I'll also be mentioning biochar. Here's a relevant passage from Wikipedia:

Biochar may be a substance mostly suited to severely weathered and deprived soils (low pH, absent potassium, low or no humus). Clearly, there is the real potential for carbon sequestration, simply because biochar is so stable and is not accessible to normal microbial decay. Soils require active carbon to maintain micro and macro populations, not the inactive form found in biochar. Biochar can prevent the leaching of nutrients out of the soil, partly because it absorbs and immobilizes certain amounts of nutrients, however, too much immobilization can be harmful. It has been reported to increase the available nutrients for plant growth, but also depress them increase water retention, and reduce the amount of fertilizer required. Additionally, it has been shown to decrease N2O (Nitrous oxide) and CH4 (methane) emissions from soil, thus further reducing GHG emissions. Although it is far from a perfect solution in all economies, biochar can be utilized in many applications as a replacement for or co-terminous strategy with other bioenergy production strategies.

If you're curious, you might also want to check out this this NPR story and this news release from Eurekalert.

Weekend Gaming -- that other chess set is just sitting there

Back at the turn of the millennium when I was wasting away in the suburban hell of [redacted], I found myself killing a lot of time at the Borders down the street. Most days there would be a old man sitting at one of the tables with two chess sets set up up side by side with the edges of the boards touching. At the side of the table was a hand lettered sign inviting people to try the new game, superchess.

I never had the heart to tell him that the game he invented had been around for decades. That's not to say chess with twice the pieces on an 8x16 board isn't a good idea. It's a simple but elegant variation on the game and since, unlike most fairy chess, almost all of the moves and rules are unchanged, it stays remarkably true to the original game.

You move your pieces just as you normally would, only over a board that's twice as wide. You can't castle but other than that the only difference is the objective. Here you have two choices. The more common seems to be where the winner is the first to capture both opposing kings but I prefer playing for first blood (first player to capture a king wins).

You can find a more detailed discussion here or you can just grab a couple of boards and jump right in. As a chess variant, it's not as interesting as hexagonal chess but it's still definitely worth a try.

"Economists are the rapiest profession going"

Jon Stewart vs. Ben Stein.

It's like Bambi vs. Godzilla would have been been if you came into it really disliking Bambi.

The Daily Show - La Cage Aux Fools
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Andrew Ross Sorkin is not helping

At least not with reporting like this:

Whatever the policy debates, households at President Obama’s dividing line might be wealthy, but that doesn’t mean they feel wealthy.

On a Yahoo message board, a poster named Mason, who lives in Manhattan with two young children, said his household income was $262,000. “I understand the need to raise taxes,” he wrote, “but I don’t understand why people like us are lumped in with millionaires and billionaires.”

Are we talking about taxable income here? The writing isn't very clear on this point and I couldn't get the link to work, so I would be inclined to assume that the phrase "household income" refers to the money coming into the household. If that's the case, then Obama's proposed tax increases wouldn't affect Mason at all.

But let's assume, just for the sake of argument, that we are talking about taxable income. Even if we make that assumption, the higher rate would only apply to twelve thousand dollars. Please check my math on this, but it looks like going from 33% to 39.6% would mean something around an eight hundred dollar increase.

Eight hundred dollars. Eight hundred dollars to someone who is probably bringing in close to three hundred thousand in gross income. Eight hundred dollars to someone living in a town where dinner for two at a nice restaurant can easily run you four hundred.

It's true that the writers and the editors of the NYT have always been deeply moved by the hardships of Manhattanites but even Sulzberger would draw the line at making this big of a deal over this small an amount of money. That's why Sorkin (in a story rich with specific figures) chose not to run this particular number.

Sorkin's "Rich and Sort of Rich" is standard NYT things-are-complex, both-sides-have-point, look-at-how-objective-I-am journalism, but if you actually clear away rather than add to the confusion about marginal rates and taxable income, the whole story collapses.

Sorkin is a smart and experienced financial journalist which makes this sort of shoddy reporting even less forgiveable.

[Joseph and I have been hacking away at this for a couple of days now. You can find the rest of the thread here, here and here.]