Relevant and even prescient commentary on news, politics and the economy.

In Related News, Lee Papa Will Be Selling Obscenity Insurance

Via Lindsay Beyerstein on Twitter, The Onion should now go out of business:

AIG knows a thing or two about bad publicity. Now, a subsidiary of the bailed-out insurer is offering a new type of coverage to defray the cost of bringing in outside experts when a company faces a potential public-relations crisis.

That’s right. AIG is selling “reputation insurance.”

And the best thing about it? All of those links, except Lindsay’s, are at least a week old! Talk about Stealth Marketing!

Maybe they have something to hide?

(For anyone who puzzled for a moment over the title of this post, here’s Lee Papa on Herman Cain. Which turned out to be even truer than he knew.)

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Links Worth Rants

Busy day on several fronts, but these should be discussed and I’ve already posted one rant this week, so a riff on the second piece would be overkill. Sort of an Open Thread, with four topics.

  1. Tyler Cowen argues that, instead of giving out stimulus monies, the government should just hire people directly. No, really:

    Let’s say seventy percent of the stimulus gets spent on labor at all, and only forty-two percent of that gets spent on unemployed labor….That’s less than thirty percent of the initial expenditure being spent on unemployed labor and that is before any other problems with the expenditures kick in. It’s hard for me to see that as a triumph of the program (NB: we are only talking about one part of ARRA here); would direct government employment have overhead costs that high?


    UPDATE: Matt Yglesias comes the same conclusion I did: that the Jones and Rothschild study advocates “a targeted make-work program for unemployed people.” And Mike Konczal does the definitive takedown of pretending the study reads as anything other than that ARRA was successful and too small.

  2. Anyone who thinks that S&P will be in business five years from now should read this piece. Not even the market is stupid enough to believe that house prices cannot decline 5%, or that the costs of payment delays and the like will not eat the “value” of these securities. That’s not unique; what has changed is that investors are saying so.
  3. Marshall Auerback suggests that Germany may be preparing to exit the Euro. My rough sketches suggest that’s a bad idea for their banks, but it might do their companies some good. As he notes, “[his] view, which was once considered borderline crazy, is now getting more serious consideration.”
  4. Everyone who claimed that Jon Huntsman is a “sensible, sane Republican” owes the rest of us a sackcloth-and-ashes level apology. Anyone who still does it is a pawn or an idiot.

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UC-Berkeley Law School Degrades Itself Even More

No wonder Brad DeLong has had no luck persuading Christopher Edley to get rid of the malfeasant John Yoo. As Bob Somersby observes:

Christopher Edley thinks he’s one of your “betters.” It’s hard to believe, but that’s the exceptionally low-IQ framework this self-proclaimed member of the elite enunciated in Sunday’s piece. According to Edley, rubes like us should want our “betters” in important posts, like the post in which Kagan will serve:

EDLEY: The tension between elitism and populism is embedded in our national DNA because America rejected the model of a monarch ruling by divine right in favor of an iffy experiment in democratic self-governance. So now you are responsible for choosing your leader. Do you want someone like you or someone better than you?

What an astonishing framework! But so it goes when people like Edley spends decades inside institutions like Harvard, convincing themselves that they and their peers are “better” than all the rest of us rubes. [formatting in original]

Kagan, like Yoo, “has excelled in a meritocratic system, one that is selective yet far more open than in generations past.”

Bonus quote from Edley:

The gatekeeper power of such institutions is why it was so important to desegregate them (using affirmative action, among other tools) and why virtually all leaders of great universities talk about diversity and access.

Yep. Elena Kagan is All About Diversity.

At least Edley is consistent:

Dean Edley rolls embarrassingly off the tracks.

Read the whole thing.

Full disclosure: My wife’s cousin is working at Berkeley now. Fortunately, she’s not at the Law School, or I would worry for her reputation.

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Reasons Market Share Declines

Michael Swanwick explains how a monopoly can destroy itself:

Nowadays, times are much easier but a lot scammier. Last week I had to buy a new palmbook/laptop. Which, I discovered on my first and only day of possession, was preloaded with Windows 7 Starter, a not-fully-functional OS. When I tried to change the image on my desktop, I learned that doing so required that I go online and buy Windows 7 Home Premier. After getting my refund, I talked to salesfolk at various stores and learned that all the new palmtops have the cut-down version because they don’t have memory enough to run W7HP.

Well, each new version of Windows is written far too memory-hoggish for the current hardware. So it only makes sense that the new OS would have fewer features. Still, it was pretty cheeky of them to have it automatically try to sell me an OS that my device couldn’t run.

Apple doesn’t play that kind of game, so if I’d been willing to wait for the iPad to come available, I probably would’ve spent the extra money for it. But I have work to do, so I scrounged around until I found one of the dwindling number of netbooks still running on XP.

As I’ve noted before, they did this on laptops with Vista as well. There is no better way to destroy your reputation that to put out something that doesn’t work.

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More on Dubner and Levitt II

It has long been a standard claim of economics—iirc, Robert Lucas was the first to say it aloud, though it may have been Gary Becker*—that a man who marries his housekeeper lowers GDP.

Apparently, Dubner and Levitt have taken this claim—along with their Rick James title**—to heart. Echidne has the details. A short sample:

There is one labour market women have always dominated: prostitution. Its business model is built upon a simple premise. Since time immemorial and all over the world, men have wanted more sex than they could get for free. So what inevitably emerges is a supply of women who, for the right price, are willing to satisfy this demand. But what is the right price?…

It turns out that the typical street prostitute in Chicago works 13 hours a week, performing 10 sex acts during that period, and earns an hourly wage of approximately $27. So her weekly take-home pay is roughly $350. This includes an average of $20 that a prostitute steals from her customers and drugs accepted in lieu of cash.

If I didn’t know that Levitt has done some research on prostitution, I would think he left this section solely to Dubner. As it is, the skewed perspective (supply-side only) wouldn’t even pass muster in a basic neoclassical labor market model, and that the authors are trying to sell this as “economics” is, to extend a recent note from Brad DeLong that “Levitt and Dubner today appear to no longer be thinking like economists”, going to do Levitt much more harm than good.

Perhaps the difference between prostitutes and economists is that only the former have to worry about their reputation.

*Google indicates that the source is Pigou (1932). Does this explain the popularity of the Pigou Club?

**At this point, I’m betting they chose the title because of Abigail Breslin.

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Clearly a Commie-Symp Terrorist

Who said:

The United States participated actively and effectively in the negotiation of the [1984 UN Convention on Torture] . It marks a significant step in the development during this century of international measures against torture and other inhuman treatment or punishment. Ratification of the Convention by the United States will clearly express United States opposition to torture, an abhorrent practice unfortunately still prevalent in the world today.

The core provisions of the Convention establish a regime for international cooperation in the criminal prosecution of torturers relying on so-called ‘universal jurisdiction.’ Each State Party is required either to prosecute torturers who are found in its territory or to extradite them to other countries for prosecution.

Answer here. Is he rolling over in his grave?

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I Wish I TA’ed Monopolistic Competition instead of Economic Development

Everyone should read Joe Wilcox’s update, based on the release of more court docs, on the ongoing saga of Why Vista Sucked on Release. (Short version: because Intel asked.)

Teaser quote, which would look fine in Mankiw or Krugman’s next Macro text:

Based on the available information, I come to an easy conclusion: One monopoly colluded with another for economic gain—and in this instance causing harm to Microsoft, its partners and customers. Matters were even worse than intended, because Microsoft delayed Vista:

  1. Vista-inferior chip sets stayed in market longer than they otherwise should have.
  2. More consumers bought PCs incapable of fully running Aero Glass.
  3. Notebooks were disproportionately affected, because the state of the art was even lower than for desktops.

So if the guys at Compaq wonder why I will never buy one of their products again, they may have a legitimate argument that it wasn’t all their fault. But it doesn’t change the reality—or, if you prefer, the Externality.

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Blind-Reference of the Week

Late to the party, but FelixMatthew Malone (via The Divine Bess) quotes from Andrew Lahde’s good-bye letter, the follow-up to the one in which he noted that he only plays fair games, and the Fed is currently rigging the roulette wheel, so he’s taking his 800%+ return from last year and going home.

This ‘graf in particular caught my eye, since it is Subtil as a Flying Mallet:

I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

Mr. Lahde appears to be betting that this man’s father won’t hold a grudge. That has never been true before.

(Spelling of Mr. Lahde’s name corrected 31 Dec due to correct rendering in this post.)

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The NBER ‘Family Members’ who are part of the McCain ‘100’

Because Hilzoy asked, and I agree with Brad DeLong that it’s not an unreasonable question.

No guarantee the 11 are on this list, of course. This is a simple cross-reference of “The McCain ‘100’” and “NBER Family Members.” There are 14 Faculty Research Fellows, 13 Research Associates, and 2 OLs on this list.*

*I can’t find any indication on the NBER website what an “OL” is; most of the people so desginated have a c.v. that shows them as being or having been a Research Associate only. Also, while some of the Research Associates (RA) were surveyed, no inference that the people listed above are the ones who returned their surveys should necessarily be made.

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