You've got yourselves an identification problem

PRESIDENT BUSH AND SENATOR KERRY BOTH WENT TO YALE, AND BOTH WERE MEMBERS OF SKULL AND BONES. IS AMERICAN POLITICS BECOMING MORE ELITIST?

No. Skull and Bones is becoming less elitist.

This is William Buckley, who died two days ago. This was his sin.

The central question that emerges--and it is not a parliamentary question or a question that is answered by meerely consulting a catalog of the rights of American citizens, born Equal--is whether the White community in the South is entitled to take such measures as are necessary to prevail, politically and culturally, in areas in which it does not predominate numerically? The sobering answer is Yes--the White community is so entitled because, for the time being, it is the advanced ace. It is not easy, and it is unpleasant, to adduce statistics evidencing the median cultural superiority of White over Negro: but it is fact that obtrudes, one that cannot be hidden by ever-so-busy egalitarians and anthropologists.

A short story

A father lays in his deathbed. He had a long and productive life; having started out with nothing, he managed to amass a fortune of mythical proportions.

Not so much the gold, or the land that stretches far beyond anyone's eye could see. His fortune lay in his wisdom: through toil, wits and luck he found a way to plough the land so that instead of one it can feed a million people, he discovered how to mix herbs to heal the wounds, and he uncovered the secrets of flying in the skies.

His two sons are by his side. The one on his right is strong, clever and hard-working, the one on the left a bit less so - although some say his misfortunes are due to his bad luck.

The cruel father utters these last words: 'May my land and my diamonds go to the strongest one; and as for my most expensive treasure, the knowledge I have developed, may that be free for both of you to use'. And as he closes his eyes, the strong son goes on to cultivate his father's lands, and to apply his father's knowledge and develop it even further; the weak son goes on living on the breadcrumbs that fall from the strong son's table.

But the good father utters these last words: 'My two sons, one of you is strong and the other weak. Yet, my strong son, no matter how you claim your wealth is all of your own making, you would never be able to get rich without my knowledge, without the foundations I built. Most of what you produce is not of yours, but of my making.

I love you both the same, and this holds true of your children and of your children's children that I will never meet. So, I will grant you each half of the rights to my knowledge - call it a patent if you wish. Should one of you utilise this knowledge to create wealth for himself, he should compensate the other for using his half of the rights to the knowledge that I, your father, bequethed you. Never forget, you are standing on the shoulders of giants, and the giants have no reason to love either one of you more than another.'

Which father is the fairer of the two? What would your father be more likely to do? If you are confused, it may all become clearer if you remember Will giving me a hard time.

What do you owe the world, and what does the world owe you?

This post is long-ish and quite out of character, but do read on it should be worth the while.

Landsburg, Harford, Rodrik, Cowen. The nominal subject is whether *we* should be compensating the losers from trade; here's the conversation:

Landsburg: Hey, without trade we'd still be jumping from branch to branch, banana in hand. Trade brought economic prosperity and got everyone rich in the first place - now why are the losers complaining?

Harford: Don't really know, but people who lose out from trade shouldn't receive better treatment than people who lost out due to other causes.

Rodrik: The idea of compensating those who lose out because of globalisation is not absurd, and in any case economists are not the people to ask - our tools are only helpful for positive, not normative, analysis.

Cowen: As economists and policy advisors we have a responsibility to think about ethics deeply. No, I don't think that an economist's core education covers these issues, but other disciplines do and economists have an obligation to study those too.

And your host:

I'm not so interested in trade itself or other stuff that create economic 'losers', my interest lies in fairness. Just two remarks in passing:
a) indeed, from a 'positive ethics' point of view, compensating losers from trade differently than you would losers from technological growth (etc, etc) does not really make sense.
b) where do we owe the immense wealth we enjoy today? Mostly economic/ technological growth, for which we have our ancestors to thank (whether that's Einstein or the guy who first thought of wearing shoes). Very little of these guys' social contribution was captured as private rents passed on to their children; for most part, they were scantily compensated for their efforts. These guys are dead now; it would only be right if we spread the wealth we inherited from them equally. Given our current level of wealth, everyone should be able to go through life without ever having to work to meet basic (and some not-so-basic) needs; those who wish to expend effort and take the whole enterprise further should only be rewarded at a level over and above that.

To the point now. Fairness is important because it is an integral part of politics. Not only the capital P variety but the small p too: without group ('social') notions of fairness very little mutual co-operation could ever ensue, and our civilisation could never have existed in the first place. There are too many prisoner dilemmas in any real-life group to allow an agent economicus to survive as a species for long (no, repeated games can only account for some of the observed co-operation).

By the way, maybe we need the concept of evolution-consistent rationality to be introduced to economics? In other words, individuals can only be as rational as would be consistent with survival.

Your homo economicus would struggle to coexist in a group and survive in modern day New York (or for that matter the Savanna) for a day, let alone deliver you the truly amazing world we enjoy. Message for economists: why don't we apply the trusted *positive* tools we have to analysing and predicting society's *normative* preferences? Come on, economics needn't refuse to dwelve into the origins of preferences (especially social preferences), don't be such cowards.

Are we worth our salt as policy advisors when we have not tried to predict in any systematic way which policies are 'fair' and popular? (no, asking people whether they are pro-trade doesn't cut it, I want a theory, I want to know why. I want a systematic approach to this dammit)

Think of Becker's model of crime and Acemoglu's work on the political process. Modelling perceptions of fairness (yes, there's no such thing as fairness, only perceptions of it) as a way of supporting survival-consistent equilibria should be extremely rewarding (and while I'm at it, don't forget to throw a bit of information modelling in there; group notions of fairness are nothing if not efficiency-improving informational shortcuts).

I've been planning to have a go at a formal model of perceptions of fairness myself and will be doing so soon; stay tuned.

Thoughts on ownership

Forrest emails me with a comment on this amazing story:

These parents in the Czech Republic found out they had been given the wrong baby 9 months after the birth and switched back.

This got me thinking. I guess that if you find out pretty quickly (say after a day) that you have taken the wrong baby home, you’ll switch back. I also guess that if you don’t find out until the kid is 18, you probably won’t. So what do you reckon the tipping point is here?

Addendum: This story reminded me of one of my most cold-hearted posts on Bluematter.

Paul Krugman explains why I can't stand political reporting

Think about what passes for a “tough” question on the Sunday talk shows. It’s not “Senator Bomfog — you say X, but the statistics show that it’s actually Y. How can you explain this discrepancy?” In fact, I’ve never seen that happen. In political reporting, being wrong means, at most, that your claims are “in dispute.”

The excerpt is from his NYT blog, via Economist's view.

Paul is spot on. For some reason (misguided notions of unbiasedness? journalists and politicians that don't know their left hand from their right?) bringing reality to a political discussion is bad manners. Everyone is entitled to their own preferences and opinions, and their own facts too.

Monkeys and fairness

Two researchers at the Yerkes National Primate Research Center have found that brown capuchin monkeys have a sense of fairness and will reject inequitable rewards, much as humans do.

Frans de Waal, C.H. Candler professor of primate behavior, said his work with Georgia State University professor Sarah Brosnan was based on a study they did in 2003. In that experiment, monkeys responded negatively when a partner received a superior reward for completing the same task, retrieving a pebble and placing it the researcher’s hand.

“As soon as the partner’s getting something better, like grapes, they don’t want to do it any more,” de Waal said. “They throw the food out of the cage sometimes.”

Brosnan and de Waal conducted a follow-up study to rule out alternative explanations for why monkeys would reject slices of cucumber, a previously acceptable reward.

“The most important one was you could argue that the monkeys reject the cucumber pieces because they see grapes and they want grapes,” de Waal said. “We would show them grapes, but we would put them away, and showing them the grapes didn’t make a difference in our test. It had to do with what partner was getting.”

Brosnan and de Waal also varied the amount of effort required to complete the task to see its effect on the monkeys’ reactions.

They found that when monkeys had to expend more effort, they were more sensitive to inequity and less likely to accept cucumber slices when partners had received grapes for equal or less work. But both would accept grapes even if they completed tasks at different levels of difficulty, de Waal said.

“If you gave them grapes, they were not sensitive to effort,” he said. “The grape is such a good reward that they would do whatever to get the grape.”

De Waal said similar behavior has been shown in chimps, and he “wouldn’t be surprised” if other species, like dogs, would react the same way to inequitable rewards.

According to de Waal, the research illustrates inequity aversion, a concept from the field of behavioral economics, which applies behavioral psychology to economic interactions. Like the monkeys in de Waal’s study, humans do not always act as rational profit maximizers and sometimes turn down good offers if someone else is getting a better deal.

“For a monkey to refuse a perfectly fine food like cucumber just because somebody else is getting something better is an irrational reaction,” de Waal said. “Profit maximizing requires that whenever you can get something you take it.”

Some scholars, however, argue that reactions like the monkeys’ make sense in a social context. The capuchins’ sense of fairness has “evolved within the context of cooperation,” de Waal said, because capuchins live in groups and sometimes hunt squirrels together.

“If you don’t get in accordance to your effort, you should be sensitive to that, or everyone will take advantage of you,” he said. “It’s actually a rational response to make sure you get the right rewards for the right amount of work.”

From Emorywheel.

England's suppresed religion

It is the fourth largest religion in the country, and by some accounts the fastest growing one, with 400,000 recorded believers. Yet there is no temple, no priests, no government funding; politicians and unbelievers dismiss it as foolish and irrelevant.

Stop the injustice now. Give the Jedi the respect they deserve.

Thanks to the England Expects blog for the statistics, from a post on the European Commission's desire to find out when you first got laid.

My favourite Capricho

The Sleep of Reason Produces Monsters

Text caption from the "Prado" etching version:

"Fantasy abandoned by reason produces impossible monsters: united with her, she is the mother of the arts and the origin of their marvels."

More here.

The right to have sex with a bike

From BBC News:

A man caught trying to have sex with his bicycle has been sentenced to three years on probation. Robert Stewart, 51, admitted a sexually aggravated breach of the peace by conducting himself in a disorderly manner and simulating sex. Sheriff Colin Miller also placed Stewart on the Sex Offenders Register for three years.

Mr Stewart was caught in the act with his bicycle by cleaners in his bedroom at the Aberley House Hostel in Ayr. Gail Davidson, prosecuting, told Ayr Sheriff Court: "They knocked on the door several times and there was no reply. "They used a master key to unlock the door and they then observed the accused wearing only a white t-shirt, naked from the waist down.

"The accused was holding the bike and moving his hips back and forth as if to simulate sex." Both cleaners, who were "extremely shocked", told the hostel manager who called police.

Sheriff Colin Miller told Stewart: "In almost four decades in the law I thought I had come across every perversion known to mankind, but this is a new one on me. I have never heard of a 'cycle-sexualist'."

I find this case very distrurbing. Since when is it illegal to have sex with an object in the privacy of your own home? Robert Stewart was sentented to three years on probation and put on the the Sex Offenders' Register (a list usually reserved for people raping or sexually harassing someone), when his only crime was masturbating in a way that is not to the taste of some. This is a gross miscarriage of justice, and one that has to be put right.

UPDATE: I am not alone.

Why do people hate the market?

Stardom sent me this clip about Seva Cafe, a restaurant operating the Radiohead business model: eat first, then pay whatever you feel like.

Instead of a warm glow, I feel depressed. Why are projects such as Seva Cafe so loved? Why is someone volunteering to do social service more respected than, say, an industrialist that creates tons and tons of consumer surplus? What is wrong with commercialism? Why do people hate prices, money, and the market mechanism itself?

One potential reason behind the markets' bad reputation is their worrying tendency to generate inequality when left unchecked. Most people, however, are not simply against free-market libertarian societies; they are suspicious of markets at the micro level, even when these operate within reach of the redistributionist arm of the state.

My feeling is that people suspect markets because the incentives of the seller are diametrically opposed to those of the buyer: the former wants the price to be high, the latter low (with the opposite going for quality); furthermore, and perhaps more crucially, the parties in the transaction are usually better off concealing information from each other, or communicating outright misleading information (seen any ads recently?). This is not a problem in the textbook model of perfect competition, but real-world markets can generate a lot of ill feeling amongst participants. Information is gold, and it's often hard work. In contrast, in a perfectly altruistic 'giving' economy, the incentives of the giver ('supplier') are fully aligned to the incentives of the receiver ('the buyer'): the former is better off the happier he makes the latter. I'm way more confident in the quality of the food my mom serves me than that of my local chinese. I feel way more comfortable with a friend that 'cares for me' than with an explicitly selfish business associate. I prefer a partner who loves me to paid-for company.

One problem with this is that altruism exists in very small amounts, and it tends to constitute a very unstable equilibrium (a few people deviating is usually enough to bring to whole edifice crumbling down). And even if that wasn't a problem and the objective was to organise an economy of angels, there is no technology that is nearly as good as markets in determining the relative value of goods. An 'altruistic' model can work - often very well - only at the most micro of levels (e.g. in the case of Seva Cafe) where the lack of information can be brushed aside and gross inefficiency can be 'subsidised' from outside the system. But it is no way to run a full-blown economy. Alas, this is not immediately obvious.

The implications of the public's mistrust of markets are profound. Simply put, it's the resource allocation equivalent of having invented the chainsaw and insisting on using your nails to cut down trees. What can be done to change public perceptions of markets?

Corporate Social Responsibility: hijacking democracy?

Robert Reich at the Economist Free Exchange revisits an argument I first heard from David Henderson almost a decade ago:

THE current tempest over whether Toyota is hypocritical in selling the Prius while at the same time signing up with Ford, GM, and Chrysler in opposing a Senate bill mandating higher fuel mileage standards illustrates the dilemma of so-called "corporate social responsibility." Toyota isn't being hypocritical at all. Toyota isn't even a person. The company exists to maximize shareholder value [...]

Presumably Toyota invented the Prius to fulfill an important and potentially growing market niche in cars that consumed less energy. As such, it was being neither socially responsible nor irresponsible; it was simply responding to market demands. In making a political decision to join with the Big Three in opposing higher fuel standards, Toyota was also acting as a profit-maximiser [...]

The problem is that Toyota, and other companies that venture into politics, are undermining the democratic process. Most people are not just consumers and investors. They're also citizens, who have citizen values—including saving the planet from global warming. Toyota has every right to respond to the part of our heads that correspond to consumer and investor values, but companies have no ethical grounds for entering into the democratic realm which should be reserved for citizen values. If corporate social responsibility means anything at all, it should mean refraining from corrupting the political process.

There are three issues here:

1) Given that they are the shareholders's agents, are CEOs justified in straying from the goal of profit maximisation?

2) Companies (and the rich in general) have a much louder 'voice' (through their ability to fund political campaigns, control of the media, better information and contacts etc) when it comes to government policy and setting social priorities. Where should we draw the line? Would it be acceptable, say, for the big auto-makers to collude to decrease emissions? Do companies have the right to have their own social policies when they do not have a democratic mandate?

3) What is the effect of corporate social responsibility and related activities (e.g. charity) on the equilibrium level of public good provision? In other words, and to turn the question as it is usually posed on its head, does private giving crowd out public spending?

My answer on this last one is most probably yes; more here.

Nobel laureates behaving badly

James Watson (discoverer, with Francis Crick, of the double helix structure of DNA) comments on development policy. From the Independent:

One of the world's most eminent scientists was embroiled in an extraordinary row last night after he claimed that black people were less intelligent than white people and the idea that "equal powers of reason" were shared across racial groups was a delusion.

James Watson, a Nobel Prize winner for his part in the unravelling of DNA who now runs one of America's leading scientific research institutions, drew widespread condemnation for comments he made ahead of his arrival in Britain today for a speaking tour at venues including the Science Museum in London.

The 79-year-old geneticist reopened the explosive debate about race and science in a newspaper interview in which he said Western policies towards African countries were wrongly based on an assumption that black people were as clever as their white counterparts when "testing" suggested the contrary. He claimed genes responsible for creating differences in human intelligence could be found within a decade.

Dr Watson told The Sunday Times that he was "inherently gloomy about the prospect of Africa" because "all our social policies are based on the fact that their intelligence is the same as ours – whereas all the testing says not really". He said there was a natural desire that all human beings should be equal but "people who have to deal with black employees find this not true".

I won't comment on the thing that most needs commenting on (I may return on this tomorrow, and I'm sure there is going to be ample talk elsewhere on the blogosphere), but I can't help but notice that his words show a deep appreciation for economists. Assume you drop a 'dump' bomb on Cameroon or Belgium and everyone's IQ falls by 20 points. As an economic adviser to Cameroon or one of the countries that want to see Cameroon become rich, how on earth would you change your tune to reflect that? Are 'good economics' different for clever and for dumb nations? Politician: 'Hey, I have new data here, average IQ fell from 124 to 104. What should we do to maximise our growth prospects? Economic Adviser: 'Gosh, I had given you the right policy prescription for clever people. For dumb people, you need to raise the marginal rate of income tax to 30%, impose tarrifs on imported goods and start subsidising your farmers.'

(I am not saying that there are clever and dumb nations, so don't attack me in the comments for that. I know, the post does not deal with the important aspect of the matter here, but hey, that's what I felt like commenting on)

Postscript: Oh no, not again - a book is behind this too?

His views are also reflected in a book published next week.

The irrelevance of motive to the moral content of an action

Or, whether Bush invaded Iraq because of oil is of no relevance to assessing the morality, or for that matter the wisdom, of going to war.

I see this preoccupation with motive as one of the most significant biases in current political and moral discourse.

Spare me the moralising

I am having trouble deciding who irritates me the most, fanatics on the right or fanatics on the left (extremists, on the other hand, I like a lot). Today it's the left, and Nobel Laureate Joseph Stiglitz no less (hat tip Mark Thoma):

There are times when being proven right brings no pleasure. For several years, I argued that America's economy was being supported by a housing bubble that had replaced the stock market bubble of the 1990's. But no bubble can expand forever. With middle-class incomes in the United States stagnating, Americans could not afford ever more expensive homes. [...]

[...] Record-low interest rates in 2001, 2002 and 2003 did not lead Americans to invest more - there was already excess capacity. Instead, easy money stimulated the economy by inducing households to refinance their mortgages, and to spend some of their capital.

It is one thing to borrow to make an investment, which strengthens balance sheets; it is another thing to borrow to finance a vacation or a consumption binge. But this is what Alan Greenspan encouraged Americans to do. When normal mortgages did not prime the pump enough, he encouraged them to take out variable-rate mortgages - at a time when interest rates had nowhere to go but up.

Predatory lenders went further, offering negative amortisation loans, so the amount owed went up year after year. Sometime in the future, payments would rise, but borrowers were told, again, not to worry: house prices would rise faster, making it easy to refinance with another negative amortisation loan. The only way (in this view) not to win was to sit on the sidelines. All of this amounted to a human and economic disaster in the making. Now reality has hit: newspapers report cases of borrowers whose mortgage payments exceed their entire income. [...]

But lower short-term interest rates have led to higher medium-term interest rates, which are more relevant for the mortgage market, perhaps because of increasing worries about inflationary pressures. It may make sense for central banks (or Fannie Mae, America's major government-sponsored mortgage company) to buy mortgage-backed securities in order to help provide market liquidity. But those from whom they buy them should provide a guarantee, so the public does not have to pay the price for their bad investment decisions. Equity owners in banks should not get a free ride. [...]

It is the victims of predatory lenders who need government help. With mortgages amounting to 95% or more of the value of the house, debt restructuring will not be easy. What is required is to give individuals with excessive indebtedness an expedited way to a fresh start - for example, a special bankruptcy provision allowing them to recover, say, 75% of the equity they originally put into the house, with the lenders bearing the cost.

So, let me get this straight. People took on massive variable-rate mortgages (rather than the more expensive fixed rate ones that offer protection against the risk of rising interest rates) because the lenders said that house prices can only go up. Furthermore, Alan Greenspan apparently told them 'to borrow to finance a vacation or a consumption binge'. And, even more to the point, a lot of people took on those big bad mortgages*. Hence, there is a strong moral case that the government should arrange for them to be compensated.

I'm not against bail-outs in general, because politics and economic policy should be guided by practical considerations, not by a desire to be 'fair' in each situation. I am not dismissive (or supportive) of Stiglitz's case that government should give some money to these people to avoid 'a human and economic disaster in the making'. But to argue that the people that invested in housing do not bear any responsibility for their actions and are somehow entitled to compensation on moral grounds is simply ridiculous.

*the number of affected individuals is central to Stiglitz's argument. If you borrow money to start a company and the company fails, too bad. But if you and a lot of other people borrow to invest in the housing market the moral calculus is completely transformed.

Is alcohol too cheap?

Cheshire Police Chief Constable Peter Fahy hit quite a few headlines last week remarking that "Alcohol is too cheap, too readily available and too strong. Young people cannot handle it". Age decrying youth is nothing new and in the middle of August these kind of stories tend to get more mileage than they would otherwise. Still, he has a point. Price and age restrictions are doing little to restrict the supply of alcohol to those under 18 who are determined to get hold of it. And many of those of us old enough to purchase as much as we like drink too much.

So how should a society tackle problems caused by alcohol? "Negative externalities" (such as long-term health effects of alcohol consumption or environmental pollution) can be ameliorated by, say, banning alcohol or imposing quotas on pollution-producing activities. However economists generally prefer Pigouvian taxes. These impose a cost on the producer of the externality in order to discourage their behaviour and (at least in theory) the revenue raised can be used to compensate those who suffer. They also avoid the criminality and avoidance issues created by bans and quotas - think of Prohibition in the US. So a properly-levied tax on alcohol could both discourage consumption and be used to pay for the healthcare of those who over-consume.

Fahy suggests that drink is too cheap, so is raising the price of alcohol the answer? In fact it's already quite highly taxed compared to other food and drink. All alcohol sold in the UK faces VAT at 17.5%. Excise duty is also levied and is more tightly targeted to discourage consumption It's payable on the volume of alcohol rather than the value of the product. Rates of excise duty also reflects conventional beliefs about what problem drinkers drink. Excise duty on cider is almost double that on beer, so for a 5%-strength pint 75p is payable on the cider and only 39p on the beer. High prices isn't the only way governments round the world try to restrict problem drinking, there's high age limits (United States), a moratorium on the issuing of licences (Ireland) and a government monopoly on off-sales (Norway).

But Pigouvian taxes are most efficient when levied on activities which produce identical externalities whoever engages in them. A tonne of carbon produces the same effect whoever emits it and there's a broadly linear relationship between every extra cigarette smoked and the effect on your future health. So is the current excise duty regime the best way to deter problem drinking? Probably not. The marginal impact of that extra pint varies hugely if consumed by a moderate or a heavy drinker. Also, tastes are heterogeneous and the price elasticity of demand varies hugely across consumers. Problem drinkers are the ones least sensitive to changes in price. Moderate drinkers (who value alcohol consumption far less) are much more likely to reduce their consumption in response to upward price movements. So a well-intentioned tax hike targets precisely the wrong people.

Taxes on betting display the same problem. It's clear that problem gambling has an effect on individuals and particularly their families, hence winnings are taxed to discourage it. But unlike carbon emission the negative externality varies hugely from gambler to gambler. Is it either equitable or efficient that the occasional gambler or drinker faces the same tax rate as the full-blown addict?

Is there a better system out there? Probably. I propose a kind of tax-free allowance for drinkers so that everyone can purchase a reasonable amount of alcohol free of excise duty per month (say up to the recommended limit). After you've drunk your allowance you pay a price for alcohol at a pretty punitive rate. In practise this could be done with some kind of PIN-based card issued to all adults who apply for one. Once you've purchased your allowance you simply buy as much alcohol as you like at the higher price level, without the card. Unlike the current system this pricing regime would recognise that the marginal impact of alcohol varies hugely as consumption increases. Heavy drinkers and alcoholics pay the price for their activity while the rest of us aren't taxed for their sins.

Would this system be free of abuse? Not completely, but less than you would think. No one wants to be perceived as a heavy drinker and people would be reluctant to ask their friends to make trips to the bar to make use of their unused allowance. Anyway, friends would probably want to keep their allowance for themselves in case they need it. The system would also prevent the problem mentioned by Fahy of adults purchasing drink for under-18s. Smuggling is unlikely to be an issue either. Alcohol is heavy and bulky and contraband is already tiny compared to that other Pigouvian-taxed product, cigarettes. However the cost of installing and maintaining this kind of allowance-based system in pubs and shops would be large and would be greeted by predictable squeals from retailers and pub-owners. Yet there is a growing recognition that alcohol-related problems are a serious societal problem and neither the current pricing or sales regime is doing much to solve it.

God and Maths - I kid you not

This is not an education, it's a disgrace. From the maths curriculum of an American religious college:

CALCULUS
Students will examine the nature of God as they progress in their understanding of mathematics. Students will understand the absolute consistency of mathematical principles and know that God was the inventor of that consistency. Mathematical study will result in a greater appreciation of God and His works in creation. The students will understand the basic ideas of both differential and integral calculus and its importance and historical applications. The students will recognize that God created our minds to be able to see that the universe can be calculated by mental methods.

Via Ars Mathematica. There are few things that scare me more than the rise of religious America, and things seem to be getting worse. Somebody stop these nutters before its too late.

Good Math, Bad Math has more, and a commenter links to this 'Professor of Mathematics' with 'devotionals connected to mathematical content'. A selection:

Devotional Title

Course Topic

Scripture References

Does God Change?

Development of the Derivative

Ps 11:3, Ps. 107:1, Ps 118:1, Ps. 117:2, Lam 5:19, Dan 4:34

In the Eigenspace of Christ

Eigenspaces

2 Corin 3:7-18

God's Zero Tolerance for Error

Numerical Integration and Error Bounds

Philippians 3:1--9

And a couple of topics in statistics:

Success in God's Eyes	Binomial Distribution	Luke 18:9-14, Mark 9:33-35
Was Jesus Average?	Normal Distribution	Isaiah 53:1-6

Renegade Dog

Andrew Luster had it all, a multi-million dollar trust fund, good looks, and a bachelor pad just off the beach in Mussel Shoals, California. Luster, the great-grandson of cosmetics legend Max Factor, spent his days surfing and cruising the clubs.

When the first woman alleged rape, Luster claimed mutual consent but the videotapes that the police discovered when they searched his home told a different story. Eventually more than ten women came forward and Luster was convicted of twenty counts of rape and sentenced to 124 years in prison. There was only one problem. Luster could not be found.

But Luster was brought to justice - by a dog. Duane Chapman, now known by the title of his television show, Dog: The Bounty Hunter, had been tracking Luster for months.

Finally, a tip from someone who had seen Dog on television brought Dog to a small town in Mexico with great surfing. Days later Dog spotted Luster at a taco stand and made the arrest.

Unfortunately for Dog, bounty hunting is illegal in Mexico and the US authorities, who in my opinion are embarrassed by their failure to capture Luster, haven't tried to intervene with the Mexican government to let the charges drop in the interests of justice.

This is Alex Tabarrok. Why am I posting this? To start with, entertainment value: a rich heir, a mysterious disappearance, a bounty hunter who won't quit and a raging international legal drama. That's the stuff that'll bring them in!

Secondly, 'to let the charges drop in the interests of justice'? Man goes to foreign country, breaks law of foreign country - and we are not talking been found holding a can of beer here - and justice is somehow served by allowing the man to walk free? Since when has American law been elevated to some sort of 'natural' law?

Thirdly, I get the opportunity to link to this thought-provoking paper by Alex and Eric Helland:

[Our] findings indicate that bond dealers and bail enforcement agents (bounty hunters) are effective at discouraging flight and at recapturing defendants. Bounty hunters, not public police, appear to be the true long arms of the law.

Being European, and putting effectiveness aside for a minute, I don't feel very comfortable with the concept of bounty hunters. At the same time, I can't think of a single reason why the institution is a bad idea. At the end of the day, we are not talking private justice here: the bounty hunters serve the simple administrative function of tracking down people already wanted by the police and handing them to the courts. Comments are open, and I would really appreciate any insight readers have to offer on this one.

Postscript: Yes, the title is a reference to Lorenzo Lamas.

403 years later, a Counterblaste to Tobacco

England introduces a smoking ban in all enclosed 'public' places today, and I have a special post for the occassion. Here's 'A Counterblaste to Tobacco', authored by James VI of Scotland and I of England in 1604:

Have you not reason then to bee ashamed, and to forbeare this filthie noveltie, so basely grounded, so foolishly received and so grossely mistaken in the right use thereof? In your abuse thereof sinning against God, harming your selves both in persons and goods, and raking also thereby the markes and notes of vanitie upon you: by the custome thereof making your selves to be wondered at by all forraine civil Nations, and by all strangers that come among you, to be scorned and contemned. A custome lothsome to the eye, hatefull to the Nose, harmefull to the braine, dangerous to the Lungs, and in the blacke stinking fume thereof, neerest resembling the horrible Stigian smoke of the pit that is bottomelesse.

For those of you looking for something more current, here's some smoking statistics from the BBC.

Is the smoking ban based on bad economics?

Tim Harford, writing for the FT, thinks so:

England’s smokers are about to be banned from lighting up in pubs, restaurants and offices. [...] The smoking ban is justified using fancy-sounding economic arguments about the ”externalities” of smoking. [...] An ”externality” seems a simple enough concept: it’s a harm suffered or benefit enjoyed by some third party that isn’t reflected in a market transaction. Pollution is the classic example.

Yet the only credible arguments for restricting smoking have nothing to do with economics. The damage caused by second-hand smoke in pubs is not an externality. Neither is the cost to the National Health Service of treating smokers. An ”externality” is not just any old cost or benefit; it has to lie outside a market transaction.

In the case of pubs and restaurants, the market could hardly be more obvious. The landlord wants to attract customers, both smokers and non-smokers, and he’ll do that by giving them the ambience they want. [...] The smoking ban is usually phrased as a ban on smoking in ”enclosed public spaces”. Of course, a restaurant or pub is not a public space: it’s a private space in which the public gather. (If you think a restaurant is a public space, try bringing a picnic along to one.)

Those who argue that smoking should be restricted because of the costs to the National Health Service are on even thinner ice. If I offered to pay for your private medical insurance out of the goodness of my heart, you would be unimpressed, and rightly so, if I then turned round and claimed that your smoking was now costing me money and so I had the right to hide your cigarettes. Similarly, the UK’s decision to fund healthcare from tax revenues does not thereby give the government the right to restrict our freedom to take personal risks. [...] Economic arguments can be double-edged; sometimes they are best not wielded.

Tim has a point when he is saying that 'an ”externality” is not just any old cost or benefit; it has to lie outside a market transaction'. What he misses, however, is the all important concept of property rights and who holds them. Pollution is an externality if the atmosphere is owned by the public; if for some reason the air belongs to the polluting businessman, an externality there is not.

Like Tim, I believe that the smoking ban is a bad policy that rests on dubious economic morality. In fact, I am a smoker with no intention to quit anytime soon, so the ban also harms me directly. Where I disagree with Tim is that, unfortunately, any argument against the smoking ban has to be based on normative (what should be), not positive economics (what is).

The property rights to a pub's air should belong to the landlord, and the property rights to my health should belong to me. In a democratic state with a flexible constitution such as England, however, this is not the case. Property rights are defined by the government as the government sees fit. With the state reserving (or re-claiming) the right to a pub's air or to a citizen's health, the analysis of the smoking ban as correcting an externality stands perfectly well.

That's a shame: the air of my pub should belong to me, and my own body even more so. But don't blame the government for bad economics; blame the morality behind the allocation mechanism of property rights.

Tim Worstall is spot on

Tim Worstall has excellent commentary on the Insane Sir Salman Rushdie post of the day (courtesy of the UK Daily Pundit). Here's the UKDP:

Maybe someone should set up a petition insisting that supporters of Rushdie pay for his 24 hour police protection. Although I suspect that's one bandwagon Pinko Finko and the chatterati won't be so quick to jump on.

And here's Tim's outstanding reply:

The first duty of the State is to protect its citizens from violence from abroad. You know, keep Johnny Foreigner at bay. The second to protect them from violence at home. 

That's why we have the damned institution, dipstick.

I would not have made the distinction between 'violence from abroad' and 'at home', and I would have probably used somewhat longer words. But any elaboration would have spoiled it. 'That's why we have the damned institution, dipstick' sums up my thoughts perfectly.

Postscript: For those who haven't been following the story, BBC News has the background (here and here)