Sunday, November 30, 2008

The inanity of mandates

The Washington Post last week had an interested article about a congressional mandate for federal agencies to buy ever-increasing amounts of vehicles capable of running on alternative fuels, such as ethanol, propane, and compressed natural gas. The only problem is that while there was a mandate in place to buy flex-fuel vehicles, there was no corresponding mandate to use the supposedly "green" capabilities of these cars, and as a result, "more than 92 percent of the fuel used in the government's alternative-fuel fleet continues to be standard gasoline." (And obviously mandating that government or private agencies build vast distribution networks is entirely unfeasible, and in the case of ethanol, we know in retrospect that it wouldn't have been a good idea, anyway). The Postal Service – an agency that you'd think, because of its large car and truck fleets, would be in a good position to demand and use alternative fuels, failed just as badly (if not worse) than other agencies:

The Postal Service illustrates the problem. It estimates that its 37,000 newer alternative-fuel delivery vans, which can run on high-grade ethanol, consumed 1.5 million additional gallons of gasoline last fiscal year because of the larger engines.

These alternative fuel vehicles tend to have larger engines than the sorts of cars and trucks that these agencies would purchase without the mandate, and so in the end, these mandates have had a negative environmental impact, not to mention costing federal agencies more money:

"They were bigger, they ran on gas, and they weren't fuel-efficient,'' said Mark Gaffigan, director of natural resources and environment with the Government Accountability Office, which completed a program audit last month. "If they had just bought regular vehicles that were more fuel-efficient, they would be better off."

It's scary to think of all of the ways that environmentalism could go wrong again during the coming years. I discussed the potentially disastrous consequences of non-food biofuels two weeks again.

Monday, November 24, 2008

Markets without regulators

Anyone who tries to tell you that markets aren't possible or efficient without the government to set the rules has clearly never tried to buy stolen credit card numbers online. From Wired:

In recent years, law enforcement groups have gotten craftier at infiltrating and taking down web forums. High-profile takedowns include DarkMarket and ShadowCrew. While those sites increase the risk of infiltration by law enforcement, they reduce the risk of being ripped off by a seller or buyer – thanks to reputation ratings not unlike those found on eBay.

Friday, November 21, 2008

Democrats gloats, say stupid things

Over at Talking Points Memo, John Marshall publishes an e-mail in which a fellow Democrat pontificates on the fall of the Republicans from electoral grace, and the letter ends with the line: "Voters have little patience for politicians who seem blind to their own mistakes," to which John Marshall responds "True," without qualifications.

Seriously?! The median voter has very little actual understanding of the economy. They might have little patience for people they perceive as blind to their mistakes, but to say something that implies that voters don't tolerate bad governance is just laughable from their elected officials is just ridiculous.

The FSB accused yet again of being behind Beslan

Just two weeks ago, I wrote about Alexander Litvinenko's accusations that the Beslan school hostage taking was orchestrated by the Russian secret services. Now, today, I read (via translation) that Ella Kesayeva – co-chair of the persecuted Voice of Beslan group – has alleged, too, that Russian secret services were behind the incident. She wrote yesterday Novaya Gazeta (in Russia, which I can't read, but the translation isn't too bad), in which she outlines the suspicious history of many of the terrorists: all of them had at one point been in FSB and UBOP custody, and many were suspiciously released from government custody right before the incident, with their criminal proceedings having been mysteriously terminated without explanation. Kesayeva concludes that the only explanation for what appears to be widespread negligence on the part of Russia's security services is that they themselves were behind the attacks.

While it's good to see someone continuing on with Politkovskaya and Litvinenko's crusade, Novaya Gazeta's article and Kesayeva's statement are more formalizing and publicizing the things that Litvinenko (who had inside information on the workings of the FSB) has already stated. But we still don't know what Anna Politkovskaya had discovered about Beslan that led to her being killed, and next time Putin orchestrates a false flag attack to justify a power grab, neither Politkovskaya nor Litvinenko will be there to tell us about it.

A note about sources: both of these news organizations ( and Novaya Gazeta) are highly credible. One measures of credibility of oppositional media in Russia is the extent to which a given organization is persecuted, and by that measure, is as credible as the New York Times – its founder, Magomed Yevloyev, was shot and killed while in police custody just a few months ago, and his website was chased off the Runet. Novaya Gazeta is a very famous dissident newspaper, and was the employer of über-investigative report Anna Politkovskaya, before she was assassinated (likely for coming to the same conclusion that still-alive Kesayeva has just expressed).

A note about translation: I used a translation from a blog, but if you use any online translation site, you can see for yourself what the Russian-language sources say. Google has a surprisingly good Russian translator.

A further note about translation: Problem solved! Dave Essel at La Russophobe has made a high-quality English translation of the original Novaya Gazeta article.

The FHA tries to reinflate the housing bubble

Throughout this whole real estate bubble-induced economic disaster, the most shocking thing to hear has got to be the idea that we need to stop housing prices from falling. Fortunately, you aren't likely to hear it from any economist or anyone with passing knowledge of the matter. But unfortunately, the people who run the American government (both elected and unelected, it seems) don't seem to have caught on to the fact that the answer to the real estate bubble popping is not to pump air (money) back into the balloon (hole).

BusinessWeek reports on a downright stupid new trend in mortgage lending: subprime lenders metamorphizing into Federal Housing Administration loan purveyors. These lenders are substituting the implicit guarantee of the Fannie, Freddie, and the mortgage market in general and low interest rates of a bubble at its height with the artificially low interest rates that come with the explicit government guarantee of the FHA.

The scale of lending backed by the FHA has grown rapidly in the wake of the meltdown. BusinessWeek reports that "[b]y fall 2008, FHA loans accounted for 26% of all new mortgages being issued nationwide, up from only 4% a year earlier." Part of that is due to the fact that lending is down generally, but that's not the whole story: the FHA approved 140,000 new loans in September of this year, compared to 60,000 just eight months prior. The number of lenders "approved to market federally insured home loans" is up 140% since December 2006, as subprime lenders are driven by market incentives out o the subprime market, and by government incentives into the government housing sector. Financial heavyweights like Goldman Sachs have been cashing in on the government guarantees by buying subprimes and refinancing them as FHA-backed loans, reaping the rewards of arbitraging between the market rate and the subsidized rate.

The scope of the problem is much narrower than the interventions in the housing market that created the bubble in the first place, as the FHA only guarantees about half a billion dollars in single-family home loans. But it is nevertheless disturbing that lawmakers are still so eager to promote and subsidize personal home ownership after the most recent meltdown.

Thursday, November 20, 2008

The political economy of cucumber curvature

A lot of people have heard about the EU's ridiculous restrictions on selling misshapen fruits and vegetables, recently in the news because many of the rules were relaxed. But just today, after years of having read probably a dozen stories on the matter, I finally found the first real analysis of why the rules were enacted in the first place. The Christian Science Monitor reports:

Farmers in sun-challenged Britain and other growers across northern Europe have protested for years against the regulations, claiming the standards force them to waste more than 20 percent of their crops. [...]

The decision to relax most of the rules drew strong criticism from farmers in Spain and Italy, who, with help from the Mediterranean sun, pride themselves on the production of the continent's most geometrically perfect fruits and vegetables. The farmers fear the change opens the door to competition from less scrupulous growers outside Europe, namely places where labor is cheap.

That 20% figure seems suspiciously high, though I'm not an agronomist – but if it's true, then that's a serious trade barrier that's just been lifted. It's ironic (but all too predictable) that the EU, an organization designed primarily to foster free trade among members, would foist this protectionist regulation on members whose national legislatures had not adopted it.

Wednesday, November 19, 2008

Obama's FCC guy is big on open spectrum

Today I read perhaps the most positive thing about Obama as I've read in a long time: one of the two people heading his "FCC transition team" is a vocal proponent of open spectrum. His name is Kevin Werbach, and he's written the most complete and compelling open spectrum manifesto that I've ever read (despite the fact that it's six years old). He veers off into silly analogies (the highway analogy halfway through irked me a lot) that muddle his point more than anything, so skip those, but other than that, highly recommended. However, it's really, really, really long, so I've just excerpted some of the best parts.

First, a great two-sentence summary of open spectrum:

The assumptions underlying the dominant paradigm for spectrum management no longer hold. Today’s digital technologies are smart enough to distinguish between signals, allowing users to share the airwaves without exclusive licensing.

And here, an explanation of what interference is, and why it's all relative:

“Interference” is thus highly contingent on real-world factors. Again, this shouldn’t be surprising. Put two television sets next to one another, and you may get a sharp picture on one but a fuzzy image on the other. The difference is that one set has a better tuner. Do we register “interference” when it shows up on one set, or both? Should the most poorly designed set define the requirements for everyone else? What if there is no set in the room but a hypothetical set with certain characteristics might experience a degraded picture there? Under current spectrum policy, such hypothetical “interference” prevents frequency sharing.

Whatever rules we set will influence behavior. If “interference” is defined with reference to a dumb receiver, vendors will try to save money and make receivers as dumb as possible. If, on the other hand, manufacturers have no guarantee of spectrum exclusivity, they will have the opposite incentive. They will build devices robust enough to deal with a variety of situations...

...and this is something I had know idea about: the sinking of the Titanic set the precedence for the laws that still regulate our spectrum. Imagine that...the fate of the Titanic had profound consequences for the telecommunications industry for almost a century!

Here he explains that all of the "science" that current spectrum regulation is based on is flat-out wrong, and we don't even know enough today to say how much we can really jam into the thing (though this question is mostly theoretical...the limit is definitely very high):

Nonetheless, the licensed spectrum model has been the dominant paradigm for so long that there is a surprising amount we simply don’t know about how radios work. For example, we don’t know as a theoretical matter what the maximum capacity is of a geographically defined system filled with randomly distributed radios.

We do know that many of our intuitions are wrong. Research has shown that many factors we believe should decrease the capacity of a system—adding more transmitters, creating more alternative paths for signals to travel, or putting receivers in motion, for example—can actually increase capacity. This occurs because the more data a smart receiver has about the surrounding environment, the better it can do in distinguishing the desired signal.

The commercial viability of any system using these techniques will depend on business conditions.

I'll stop there, because there's just so much in it to quote that I don't even know how to excerpt it all. But if there's one tech-related thing you read this year, it should be this. Let's just hope this guy's thoughts are actually borne out during Obama's presidency.

Tuesday, November 18, 2008

Free market solution vs. state solution: Somali piracy

In an article on Somali piracy, the Washington Post has this to say about the recent move that shippers have made from using the Suez Canal (which involves passing the pirate-infested Somali waters) to sending their ships southwards down to the Cape of Good Hope:

Experts say the much longer journey adds 12 to 15 days to a tanker's trip, at a cost of between $20,000-$30,000 a day.

So essentially, the shipping companies are taking a hit of $240,000–$450,000 in order to avoid Somali pirates. The question almost asks itself: they can't hire someone for the few days (surely shorter than 12 days) to protect the oil tankers while they pass by the parts of East Africa where pirates prey?

One possible answer is that shippers have traditionally depended on governments' militaries to subsidize them in the form of providing protection on the high seas, and assuming responsibility for protecting themselves in Somalia might open the Pandora's box of having to defend themselves elsewhere. Another explanation is that the subsidized protection has meant that the companies simply have never had to do it before, and they're not likely to have to do it much in the future – as the article notes, governments around the world are already getting together to protect the area at no cost to the shippers.

Monday, November 17, 2008

Somali pirates in the news again

Yet again, Somali pirates deliver a valuable lesson in political economy. The price of oil spiked this morning after the news broke that Somali pirates off the coast of Kenya had taken an oil supertanker ferrying 2 million barrels of oil through the treacherous waters. This is an excellent illustration of what a free market in oil (and, more importantly, sea transport) would look like: securing ships traveling across the globe is expensive. As it stands now, the US government (and governments around the world) effectively subsidizes the industry with their navies, ensuring safety for ships on the high seas. But this protection isn't free, and should be rightly counted as a subsidy for goods shipping internationally (such as crude oil).

For more on Somali piracy and what it can teach us about the world, see here. And for all my posts on Somalia (there's more than you'd think), click here.

Obama to possibly pick anti-medical marijuana congressman as drug czar

In May, an Obama spokesman said that were Obama to become president, he would "end U.S. Drug Enforcement Administration raids on medical marijuana suppliers in states with their own laws." Now, we hear from an anonymous Democratic congressman, that Obama is considering picking Rep. Jim Ramstad as drug czar (officially the head of the White House Office of National Drug Control Policy). According to Politico:

Ramstad has consistently voted against medical marijuana in Congress, opposing an effort to prevent the federal government from raiding or arresting medical marijuana clubs in states where it is legal.

And what's worse than a drug warrior? A self-righteous former addict drug warrior. Politico describes Ramstad as a "recovering person" who's "[suffered] the ravages of chemical addiction." According to an unsourced Wikipedia section, Ramstad was an alcoholic. Funny that in all of his zeal to eradicate illegal drugs, he hasn't proposed prohibiting alcohol – his old drug of choice.

Could Obama's energy plan destroy the environment?

Wired has a headline story today about about a biofuel start-up, and while the article is generally pretty disappointing (nothing about whether or not this company is receiving – or looking for – subsidies?), it's got an absolutely horrifying caveat at the end that some environmentalists think that a biofuel-based energy industry could spell environmental disaster. The article (.pdf) cites a report by the ETC Group, an environmental organization, which warns that even if our economy comes to depend on biofuels not made from food, there is still the risk that the land needs of whatever biomass we end up using will become untenable, and the impact on global food prices could be analogous to what happened with ethanol and food prices in 2007-08.

They term this a "sugar economy," and by sugar they mean carbohydrates in general – foods like corn, but also just generally anything that has ever been living (switchgrass, trees, leaves, etc.). These environmentalists worry that the Economist was being naïve when it said "there's plenty of biomass to go around," and that the poor of the global South will be the ones who end up yielding their cropland to the production of biomass to be liquified for use as America's fuel. The parallel with one form of biofuel – ethanol – is striking. The US government recently believed (ridiculously enough) that ethanol would be an effective and environmentally-friendly way of weening the US off of oil. As it turns out, ethanol is both environmentally deleterious and was responsible for the vast majority of the recent spike in global food prices, which hit developing countries especially hard.

Ethanol's rise began when the government started subsidizing it, and the ETC Group's conclusions would suggest that Obama's promise to subsidize biofuel research and production could lead to similar problems, as biofuel production crowds out the marketplace for food and land in general. What's even more jarring, though, is that Obama's energy plans are much more ambitious than America's recent corn ethanol subsidies, which barely made a dent in the market for fuel in the US. The world's big biggest rent-seekers feel the subsidies about to stream in, and have begun partnering with biofuel startups – the list (36-37 of the report) is a who's-who of America's greatest rent-seeking corporations, with ADM, DuPont, GM, and literally every major pharmaceutical and oil company looking to get in on Obama's promised subsidy binge.

As for the veracity of ETC's claims, it all depends on a) the efficiency that biofuel producers can achieve; and b) whether or not they receive the subsidies that Obama promises, and on what basis he chooses to allocate them. I guess we'll see in the coming months and years how serious Obama is about creating a new government-dependent energy industry, and how firms react to the incentives of his policy.

Edit: More on potential ecological destruction caused by non-food biofuels.

Saturday, November 15, 2008

The NYT on the black vs. African-American debate

The NYT usually, as far as I can tell, uses the term "black" instead of "African-American." The latter sounds a bit self-conscious and overly PC these days, with the former seeming to win over among blacks themselves. But I found this excerpt from an article about the riveting (not) discussion of which private elite school the Obamas will send their kids to, where the Times goes totally schizoid:

Washington is typically a socially segregated city, but the schools the Obamas are considering appeal to the elite across color lines. (Mr. Holder and Ms. Rice, the two Obama advisers, are African-American.)

Sidwell administrators say its student body is 13 percent black. Georgetown Day and Maret officials say their schools are 20 percent African-American. (Officials at the Laboratory Schools in Chicago say the population there is about 10 percent black.)

And for many black parents and students, the buzz has been thrilling. Dylan McAfee, an African-American girl in second grade at Georgetown Day, met Mrs. Obama last Monday and has been star-struck ever since. “I touched her hand and she smelled like cherries,” she said.

The pattern we have here is African-American/black/African-American/black/black/African-American. I know what the idea is – to avoid word mirrors by not repeating the same word so many times – but it's just a little jarring to see two words repeated so often that are usually mutually exclusive in a given text.

A war deadlier than the war in Iraq is about to end

Just two days ago I wrote about the imminent demise of the US- and Ethiopian-backed Transitional Federal Government of Somalia at the hands of Islamist rebel forces, but the post sort of rambled and didn't explain very well the significance of the event. The Somali Mogadishu politicians are squabbling over cabinet positions while rebels are "within a few kilometers of the city," playing Nero while Rome burns, and a little-known, but very bloody chapter in the war on terror is about to come to a close.

While no American troops were involved, money and training were provided by the US to Ethiopia in order to fight the recently-established Islamists in Somalia, and the public blessing of Ethiopia's mission by the State Department probably didn't hurt. The Bush administration viewed it as another front on the global war on terror, and took advantage of Ethiopia's presence in Somalia during the war to attack al-Qaeda leaders by air and ground.

The American financial obligation of $20 million might have paled in comparison to the trillions spent in Iraq, the rate of civilian deaths has been much higher. In total, about 10,000 civilians have been killed since Ethiopia invaded a little over two years ago and 1.9 million displaced, among a population of less than 4 million (60% of Somalia's 10 million official inhabitants live in breakaway unrecognized states that weren't threatened by the Ethiopian invasion). This compares to 100,000 civilians dead in Iraq since early 2003 and 4.7 million displaced among a population of 23 million (I excluded the 7 million Iraqis who live in Kurdistan, which the war has barely touched in terms of civilian deaths). In Afghanistan, there have been about 7,000 direct civilian deaths in seven years among a population of 32 million. That means that the per capita civilian death rate of the war in Somalia is higher than that of the Iraq war by about a third, and it beats out the Afghan war by at least an order of magnitude. And if what will be the sixth battle for Mogadishu is drawn out and deadly, this ratio could rise.

Like what is bound to happen in Afghanistan and Iraq, the proxy invasion of Somalia will have been an abject failure. The same Islamists that the Ethiopians chased out two years ago will be returning to power, but this time bringing along with them another possible civil war among the different Islamic factions to be fought before one of them emerges on top.

Update: The death toll appears to have surpassed 16,000 according to another report.

Thursday, November 13, 2008

Why did the ratings agencies fail so badly?

Credit ratings agencies have taken a lot of heat for the subprime meltdown, with the apparently true accusation leveled against them that their ratings were optimistically and unrealistically high for traded derivatives based on subprime mortgage loans. But according to economist Charles Calomiris, the regulatory framework unintentionally rewarded what were essentially fake ratings. The excerpt of the article where he discusses the four regulatory signals to the agencies to lie is very long, so I've stitched together the four main points. Since it's highly redacted, I'm not going to indicate where the cuts are, but you can find the text on pages 31–36:

  1. Insurance companies, pension funds, mutual funds, and banks all face regulations that limit their ability to hold low-rated debts, and the Basel I and II capital requirements for banks also place a great deal of weight on rating agency ratings. By granting enormous regulatory power to rating agencies, the government encouraged rating agencies to compete in relaxing the cost of regulation (through lax standards). Rating agencies that (in absence of regulatory reliance on ratings) saw their job as providing conservative and consistent opinions for investors changed their behavior as the result of the regulatory use of ratings, and realized huge profits from the fees that they could earn from underestimating risk (and in the process provided institutional investors with plausible deniability).

  2. Unbelievably, Congress and the SEC were sending strong signals to the rating agencies in 2005 and 2006 to encourage greater ratings inflation in subprime-related CDOs! In a little known subplot to the ratings-inflation story, the SEC proposed “anti-notching” regulations to implement Congress’s mandate to avoid anti-competitive behavior in the ratings industry (Calomiris 2007a). The proposed prohibitions of notching were directed primarily at the rating of CDOs, and reflected lobbying pressure from ratings agencies that catered most to ratings shoppers.

    This effectively would have further emboldened the most lenient rating agencies to be even more lenient to ratings shoppers, since it effectively would have required the relatively conservative agencies (e.g., Moody’s) to accept the ratings of other agencies in repackaging securities rated by others. Unbelievably, the SEC agreed that notching was anti-competitive and proposed to prohibit notching. In light of the CDO debacle, and a flood of criticism from academics (including myself), the SEC quietly withdrew this proposed anti-notching regulation (at least for the time being). But it still contributed to the subprime rating problem. In the face of the threatened anti-notching rule, the likely response by the relatively conservative rating agencies was to loosen their ratings standards on subprime MBS and CDOs.

  3. Changes in prudential bank capital regulation introduced several years ago relating to securitization discouraged banks from retaining junior tranches in securitizations that they originated, and gave them an excuse for doing so. This exacerbated agency problems by reducing sponsors’ loss exposures. The regulatory changes relating to securitization raised minimum capital requirements for originators retaining junior stakes in securitizations. Sponsors that used to retain large junior positions (which in theory should have helped to align origination incentives) no longer had to worry about losses from following the earlier practice of retaining junior stakes. Indeed, one can imagine sponsors explaining to potential buyers of those junior claims that the desire to sell them was driven not by any change in credit standards or higher prospective losses, but rather by a change in regulatory practice – a change that offered sponsors a plausible explanation for reducing their pool exposures.

    More fundamentally, the prudential regulatory regime lacked any device for ensuring that bank risk would be adequately measured or that capital would be commensurate with risk. As Adrian and Shin (2008) show, both risk and leverage increased during the subprime boom, which provides prima facie evidence of the regulatory failure to measure risk and budget capital accordingly. Interestingly, Calomiris and Wilson (2004) show that in the 1920s this was not the case. During that lending boom, as banks’ risks increased, market discipline forced banks to reduce their leverage in order to limit the riskiness of their deposits. In the presence of deposit insurance and anticipated too-big-to-fail protection, however, debt market discipline is now lacking. If prudential regulation fails to limit risks, banks may fail to maintain adequate capital cushions. The recent failure of banks to maintain adequate capital in the face of rising risk suggests a need for fundamental reform of prudential regulation, which is explored in detail in Section III.

  4. The regulation of compensation practices in asset management likely played an important role in the willingness of institutional investors to invest their clients’ money so imprudently in subprime mortgage-related securities. Casual empiricism suggests that hedge funds (where bonus compensation helps to align incentives and mitigate agency) have fared relatively well during the turmoil, compared to other institutional investors, and this likely reflects differences in incentives of hedge fund managers, whose incentives are much more closely aligned with their clients.

    The typical hedge fund compensation structure is not permissible for some other, regulated, asset managers. Mutual fund managers must share symmetrically in portfolio gains and losses; if they were to keep 20% of the upside, they would have to also absorb 20% of the downside. Since risk-averse fund managers would not be willing to expose themselves to such loss, mutual fund managers typically charge fees as a proportion of assets managed and do not share in profits. This is a direct consequence of the regulation of compensation, and arguably has been a source of great harm to investors, since it encourages asset managers to maximize the size of the funds that they manage, rather than the value of those funds. Managers who gain from the size of their portfolios rather than the profitability of their investments will face strong incentives not to inform investors of deteriorating opportunities in the marketplace, and not to return funds to investors when the return relative to risk of their asset class deteriorates.

Did you catch that part in the third point about federal deposit insurance creating a moral hazard that exacerbated the crisis in a way that didn't happen in the run-up to the Great Depression? Also, though I didn't excerpt it, in the section right before this one, the author argues pretty convincingly that the big institutional investors using the ratings agencies were aware of the unrealistic assumptions that the ratings were based on (i.e., an eternally appreciating housing market). This has all convinced me that the ratings agencies' optimistic ratings were a symptom of the problem, and not a cause of the crisis brought on by lack of regulation of the agencies.

(HT: Institutional Economics)

Matt Yglesias fails to make the right case against highways

Matt Yglesias is one of the best mainstream bloggers on land use/transportation that I know of, and, as one blogger who I don't recall right now once said, his urban planning and transportation posts could be blogs in their own right. However, it's puzzling that in an article for Cato Unbound, he comes up with such a pathetic rejoinder to the O'Toole/Cox/Poole vulgar libertarian transportation cabal, who don't seem to have ever met a road they didn't like:

Or consider the fact that Randall [sic] O’Toole is indignant about the prospect of public expenditures on mass transit systems, but appears to have little to say about public funding of highways. This, too, looks more like a case of narrow business interests than sterling free market principles.

While Yglesias' instincts are right – current transportation markets in America are highly distorted – the reason they're distorted has little to do with the ways highways are financed. Based on some basic figures, Randal O'Toole concludes that the vast majority of road funding – over 80% – comes out of user fees. Now, of course there're still some subsidies there, but it's really nothing compared to the subsidies that mass transit systems receive, which in America never even come close to covering operating costs, nevermind capital expenditures. Now, there are some problems with the 80% number, such as the government's favorable access to bond markets and the legacy of infrastructure that wasn't paid for with user fees, but all in all, it's hard to argue that roads have a subsidy advantage over mass transit.

However, that's not to say that Yglesias doesn't have a point when he says that libertarians and conservatives have blind spots when it comes to how they see transportation. But the real government benefit that the road/car system has over mass transit is density: there are innumerable regulations at every level of government in the United States which favor low-density, single-family detached housing over the denser forms that dominated non-rural areas before the 20th century. Successful roads as we have in America require this low density to remain (almost) financially solvent – it would be very difficult to cope with people's road needs if they were allowed to build as densely as they would without maximum density zoning rules and minimum parking regulations.

As a thought experiment, imagine your local town/neighborhood with twice the density. Chances are, the roads would quickly become very congested. They would have to be widened, which would require money, and even more money than normal, because the government would have to purchase valuable land next to existing roads. (That is, assuming that eminent domain is not used.) The gas tax would have to be raised, and soon the costs would get out of hand. On the other hand, mass transit would become more profitable rather than less, because much less track needs to be laid to satisfy the same demand, and mass transit systems have much more excess capacity than roads. If densities are limited, though, then this alleviates both stress on roads that go through valuable urban property (which are expensive and difficult to widen) and forces people to drive farther, thus paying more in user fees.

There's a legitimate case to be made against American transportation and land use policy, but condemning highway subsidies ain't it.

US/Ethiopian coalition in Somalia fails, Islamists advance

Somalia, yet again, is in turmoil. This time, the Islamists are advancing against Somalia's weak central government, the Transition Federal Government. And far from being a complicated and inexplicable basket case, the story of Somalia actually holds some pretty simple and important lessons: foreign governments cause problems and terrible regimes, while the international community's neglect allows capitalism to bring Somalis' living standards up.

The TFG was created in the mid-2000s as a response to Ethiopia's fear of any coherent state at all in Somalia, and the West's fear of radical Islam. At the time, the Islamic Courts Union was sweeping through the southern half of the country, and damn near took over the parts that hadn't already seceded. (Somaliland and Putland are de facto independent governments, and aren't at risk of collapse from the ICU, though they aren't the most stable regimes.) Ethiopia was understandably worried about Somali revanchism, as it won the Ogaden region from Somalia in a war of that same name in the late '70s, along with the four million Somalis on it that didn't flee into Somalia proper. The West had its own well-being in mind: it was afraid of Somalia becoming a hub for al-Qaeda and Islamic terrorism.

So as a result, the corrupt and ineffective TFG came into being. From what I understand, by now it doesn't have power at all outside of Mogadishu, and the Islamists are currently preparing for a battle there. The general objection to the Islamists is their strictness: the NYT cites the example of a teenager being stoned to death for adultery for reporting a rape. But this rigid interpretation of sharia is alien to most Somalis, especially the vast population of pastoralists who have very tight family and clan-based governance structures. Given the Somalis' distaste for non-autochthonous government (Michael van Notten wrote a fascinating book about the indigenous Somali law system), and the foreignness of Wahhabi Islam, it's unlikely that the Islamists could stay in power long without adapting. But anyway, we'll see now how long the Islamists last, as it looks like the Ethiopian- and American-backed TFG is about to crumble. It just would have been nicer if this were allowed to happen years ago, so that we could have avoided the intervening war.

This pattern of foreign intervention trying to create a state begetting horrific results in Somalia is not limited to the last decade. As early as the colonial period, the imperialists had a very difficult time getting Somalis to register and interact with the state, as their isolated pastoral culture kept them out of coastal towns for the most part. The brief democratic post-colonial period was a failure, because even though it was Somali in its conception, it was the conception of the Westernized Somali diaspora and elite, not of the prevailing Somali culture. The descent into dictatorship and the horrific experiment with Siad Barre's "scientific socialism" again can be seen as a result of foreign powers interfering, with Somalia being a pawn in the proxy war between America and the Soviet Union. First by the USSR, and then to some extent by the US (though not really), Siad Barre was allowed to go on with his destructive domestic policy. Luckily, détente eroded his power and the collapse of the Soviet Union ended the nightmare, as the government collapsed for good. A brutal civil war broke out, and when Barre was finally deposed, a power vacuum led to a nasty competition over who would be heir to the Somali state. The US and international community got involved in 1992 but failed miserably, and only prolonged the civil war. This conflict was rooted in Barre's discriminatory policy towards other clans – it was a war that was destined to be fought.

From then up until the early 2000s, vast expanses of Somalia were more or less stateless. And yet, in many ways its people fared better than those in neighboring African states that had governments, as well as doing better than during the Barre state. The best thing for the West to do right now would be to vow not to interfere anymore in Somalia, and promise to stand by idly if the country is broken up into even smaller factions. Dictators and would-be governments are only egged on by the prevailing nation state norm, and know that if they can establish themselves in power, the international community will help them stay there. But the West should make sure to get out of the mindset that a stable central government is necessary for peace and economic development in Somalia.

The roots of the Ingush-Ossetian terrorism feud

As a follow-up to a post I made last week about a recent bombing in Vladikavkaz, the capital of North Ossetia, I found an article from Radio Free Europe that touches on the roots of the recent Ingush-Ossetian conflict:

Since the election in the spring of 2002 of Zyazikov as Ingushetia's president, the republic has degenerated from a peaceful if impoverished backwater to the most unstable of the North Caucasus republics, with drive-by shootings and car-bombings occurring almost on a daily basis.

The catalyst for that escalating violence was a spate of abductions of young Ingush men, which many Ingush are convinced are the work of security organs in neighboring North Ossetia.

Since then, attacks by Ingush on Ossetians (as was the case with the November 6 bombing in Vladikavkaz) have been seen as retaliation for these original kidnappings.

So, I decided to dig a litter deeper into the kidnappings. And what I found is that two years before her death, Anna Politkovskaya interviewed an official who confirmed suspicions that the kidnappings were carried out by government forces:

At about the same time, Abubakar Kostoyev, who at the time was the Interior Minister of Ingushetia, confirmed in an interview with “Novaya Gazeta” correspondent Anna Politkovskaya that forced disappearances (abductions) are conducted by special services military men, who call these operations ‘special activities’. In most cases they come from Chechnya, and if they have a ‘special coupon’ (i.e. special pass), the Ingush militia has cannot [sic] examine their cars. As indicated by a Federal Interior Ministry order, the Ingush militia should not obstruct these ‘special activities’ in any way.

At all checkpoints the military men from these cars identify themselves as FSB officers, and if the militia tries to prevent such a vehicle from passing to the Ingush territory, the men refer to an agreement with the Head of the FSB Administration in Ingushetia, General Sergey Koryakov.

By "Federal Interior Ministry order," what they mean is the MVD (МВД), which is an elite counter-terrorism branch of the Russian secret services. There is no way that an operation involving them could have been hatched solely in the Caucasus: this is definitely a high-level decision emanating from Moscow.

Last week, I noted the similarities between the attack in Beslan and the Vladikavkaz suicide bombing. Now, I find another incident that seems to be of the same conflict. Both Beslan and the Ingush kidnappings have been tied to the Russian government by well-known assassinated muckrakers (Alexander Litvinenko and Anna Politkovskaya, respectively). I wonder how long it will take for someone to blame the Vladikavkaz attack on security forces...

Tuesday, November 11, 2008

Subsidized corn = subsidized fast food

Wired has a front-page article that states something that I've long suspected: one of the main reasons fast food is so cheap is because of subsidized corn:

Chemical analysis from restaurants across the United States shows that nearly every cow or chicken used in fast food is raised on a diet of corn, prompting fresh criticism of the government's role in subsidizing poor eating habits. [...]

Corn is central to agriculture in the United States, where it is grown in greater volumes and receives more government subsidies than any other crop. Between 1995 and 2006 corn growers received $56 billion in federal subsidies, and the annual figure may soon hit $10 billion.

In addition to encouraging unhealthy fast food consumption beyond the free market equilibrium, cheap corn also contributes to fertilizer and antibiotic use, as well as food poisoning:

But in recent years, environmentalists have branded corn as an icon of unsustainable agriculture. It requires large amounts of fertilizer and pesticides, both of which require large amounts of fossil fuel to manufacture.

Most of the resulting corn is fed to livestock who didn't evolve to subsist entirely on corn. In cattle, eating corn increases flatulence emissions of methane — a potent greenhouse gas — and creates an intestinal environment rich in e. coli, a common cause of food poisoning. That necessitates mixing cow feed with antibiotics, in turn producing antibiotic-resistant disease strains.

Though Obama has paid lip service to reform, he still supported the most recent farm bill. His only misgivings about the bill, at least during the campaign season, came in the form of anti-agribusiness populism, though he never acknowledged that it's the fundamental distortionary effects of the farm bill that are the problem. McCain, for all his economic ignorance, agreed with the majority of economists in opposing the farm bill, though he didn't seem to care enough to show up to vote on it this time around (though neither did any of the other presidential candidates).

Unfortunately, the farm bill is only seriously renegotiated every five years, and the most recent one just passed a few months ago. So even if President Obama would have been more intelligent and sincere on agricultural policy than wannabe President Obama, it's really too late now to matter.

Monday, November 10, 2008

The NYT rehabilitates the payday lender

The New York Times Magazine has a fascinating and uncharacteristically libertarian feature called "Check Cashing, Redeemed" – pretty self-explanatory. In it, Douglas McGray traces the history of Nix Check Cashing – a "ghettoized" bank that's become the biggest in Southern California. "Ghettoized financial services," as one expert calls it, is an $11 billion industry in America. Through the story of Nix, the author discovers that the appeal of check cashing is the simplicity of the transactions. Traditional banks are seen as tricky and unreliable:

But he pays a fee to cash his paychecks. Then he pays even more to send a Moneygram to his wife. There’s a bank, just down the street, that could do those things free. I asked him why he didn’t take his business there.

“Oh, man, I won’t work with them no more,” Enriquez explained. “They’re not truthful.”

Two years ago, Enriquez opened his first bank account. “I said I wanted to start a savings account,” he said. He thought the account was free, until he got his first statement. “They were charging me for checks!” he said, still upset about it. “I didn’t want checks. They’re always charging you fees. For a while, I didn’t use the bank at all, they charged like $100 in fees.” Even studying his monthly statements, he couldn’t always figure out why they charged what they charged. Nix is almost certainly more expensive, but it’s also more predictable and transparent, and that was a big deal to Enriquez.

Marlo Lopez had no broad gripe with banks, but his experience was similar. He moved to the United States from Peru a couple of years ago (with a visa) and got a job as a mechanic at a food-processing plant. Lopez opened his first bank account last summer. A couple of months later, out for dinner, he overdrew his account by 18 cents and got hit with a $35 penalty. It was his fault, he said; he thought he had more in the account than he did. Still, losing that money all at once unsettled him. He kept the account but returned to cashing his checks at Nix.

Check cashers benefit from their smaller scale and lack of bureaucracy that keeps banks from adapting to the needs of the poor:

Nix’s cashiers also try to never say no. Take photo identification. A lot of customers don’t have a driver’s license. Nix stores have accepted high-school yearbooks. They’ve been known to cash a McDonald’s paycheck if someone comes in wearing a McDonald’s uniform. They even have a phone in the lobby, so a cashier can call a customer’s job site and then patch the customer in, listen to him talk to his supervisor and decide if they sound like a legitimate boss and employee. Nix says he loses as much as 5 percent of his check-cashing revenue on bad checks, but it’s worth it, he says, to be known as a place that says yes.

And at least some of the customers use the high-interest loans in financially sound ways, in order to avoid even higher fees for nonpayment of debts. Nix explains why he went from check cashing to the more villified payday lending:

In the late 1980s, when a few check cashers started to accept postdated personal checks and advance cash for a fee, Nix thought it was a sleazy scheme. He thought so even after California legalized the practice in 1997. “I didn’t want to be a loan shark,” he told me. “But the reality is, customers wanted it.”

He told Lagomarsino why. A bounced check, a fee to reconnect a utility, a late-payment fee on your credit card, or an underground loan, any of those things can cost more than a payday loan. And then there are overdraft charges. “Banks, credit unions, we’ve been doing payday loans, we just call it something different,” Lagomarsino says. “When it starts to get used like a payday loan, it’s worse.”

The spread of Nix has challenged payday lenders, check cashers, credit unions, and other "ghettoized finance" outlets to lower their rates, and seems to have energized the industry:

Kinecta’s executives decided to keep the payday loan and change the terms. Starting with three stores in the spring, and eventually across the entire chain, Nix is increasing the maximum loan from $255 to $400. They are dropping the fee from 18 percent ($45 for a two-week $255 loan) to 15 percent ($60 for a two-week $400 loan). And they will rebate a third more ($20, in the case of a $400 loan) into a savings account, after six months, if you pay your loans back and don’t bounce any checks. People get payday loans because they have no savings, Lagomarsino explained. After six months, heavy payday borrowers will accumulate a small balance. Enough, she and Nix say they hope, to convince them they can afford to save more. Later, they say, they intend to drop fees further for borrowers who always pay back on time.

Once Kinecta finishes rolling out its new payday loans, Lagomarsino has promised to open Nix’s books to outside researchers and publish data on its profits and losses. In the meantime, Kinecta will be under enormous scrutiny. “Some people said, ‘Why does it have to be so visible?’ ” Lagomarsino told me, and laughed. “One or two branches wouldn’t make a difference. This is the beauty of buying Nix. They were the largest alternative financial-services company in Southern California. If they change their fee structure, everyone has to change.”

The Wikipedia article has an interesting comparison of payday loans to different forms of late payment fees.

Seymour Hersh on the January 20th revelations

Über-investigative reporter Seymour Hersh had the following to say in an interview with the Guardian:

You cannot believe how many people have told me to call them on 20 January [the date of the next president's inauguration],' he says, with relish. '[They say:] "You wanna know about abuses and violations? Call me then." So that is what I'll do, so long as nothing awful happens before the inauguration.'

John Steward made a joke that sounded eerily similar to that the other night. The article was published a few weeks ago, so maybe it was his inspiration?

The infinite monkey theorem in action, or: Naomi Klein almost gets it

Naomi Klein has got to be my favorite liberal commentator to read. Not because she's got any clue about what she's saying, but because she has an amazing ability to gather tons of fascinating and relevant facts and come to all the wrong conclusions, and every once in a while she'll say something brilliant that effectively debunks all the wrong things she'd said up until then. Radley Balko notes this same tendency, with her book The Shock Doctrine coming "dangerously close to making a Higgs-ian point about the growth of government at the expense of civil liberties in times of crisis."

Up until now (from what I can tell), Klein's interpretation of the recent financial meltdown has been the standard progressive party line – a mixture of sudden-outbreak-of-greed and deregulation. But about two weeks ago in the Nation, she published an article where she basically tows the libertarian line. The idea of the piece is that the Bush administration is being "like the Portuguese in Mozambique in the mid-1970s, [pouring] concrete down the elevator shafts" and running off with as much money as possible. Well, not him specifically – I guess we're meant to assume that he derives his pleasure from the well-being of the general "big business" community.

So, in the midst of this condemnation, she explains why the bailout is so insidious: it's not necessarily the money itself, but rather the signal that it's sending to the market – that "big business" has the backing of the US federal government. Very astute point, Naomi! But then she stumbles upon an even more fundamental point about the root of the crisis:

Interestingly, Fannie Mae and Freddie Mac both enjoyed this kind of unspoken guarantee. For decades the market understood that, since these private players were enmeshed with the government, Uncle Sam would always save the day. It was the worst of all worlds. Not only were profits privatized while risks were socialized but the implicit government backing created powerful incentives for reckless investments.

Now, with the new equity purchase program, Paulson has taken the discredited Fannie and Freddie model and applied it to a huge swath of the private banking industry. And once again, there is no reason to shy away from risky bets--especially since Treasury has not required the banks to give up high-risk financial instruments in exchange for taxpayer dollars.

In isolation, that's got to be one of the best analyses of the subprime crisis that I've ever seen. She says outright that the government's backing of the GSEs played at least some part in the meltdown. About a month and a half ago, Klein was of the opinion that "deregulation and privatization" were the culprits.

Unfortunately, in typical Naomi Klein fashion, the moment of clarity is brief, and her ultimate conclusion misses the point. She calls on the next president to stop the bailout, but instead of just leaving it at that, she says that: "All deals should be renegotiated immediately, this time with the public getting the guarantees." So, basically, while she concludes that private rewards/public losses was a bad model, rather than returning to private rewards/private loses, we ought to go to move to public rewards/public losses (i.e., nationalization). Damnit – she was so close to sounding like a libertarian!

Saturday, November 8, 2008

Will Russia invade Crimea?

France's foreign minister accused Moscow recently of handing out Russian passports to Ukrainian citizens living in the Crimean peninsula. Crimea has a Russian majority, ethnically-speaking, and many (including prominent Russian politicians) have speculated that it could be reincorporated back into Russia. The peninsula has strategic importance in that it's home to the naval base of Russia's large Black Sea Fleet – an arrangement that Ukraine has recently begun to oppose. The handing out of passports is a threatening gesture, as protecting newly-minted Russian citizens was Russia's justification for invading South Ossetia and Abkhazia this summer. Foreign Minister Kouchner notes the obvious: that a "danger exists" that Russia will use these new citizens as a pretext to occupy Crimea and eastern Ukraine – but he also says that he doubts Russia will go through with it. Of course, he'd say that no matter what the truth were, but in this case, I'm inclined to believe him.

The threat to the Ukrainian government that these new Russian citizens on Ukrainian territory pose is useful in and of itself as Russia vies for control of Ukraine's top politicians. And though Russia handed out passports in South Ossetia and later invaded, residents of Transnistria (a pro-Russian break-away province in northern Moldova) already have Russian passports, and an explicit Russian occupation of Transnistria looks unlikely. Ultimately, I think that invading Crimea – which shares no border with the Russian Federation – would be too blatant of a move for Russia. For now, it looks like Russia is using the passports as leverage against Ukraine's leaders – but if the Ukrainians fail to yield to Russia, an invasion would be more likely. But I doubt that Russia will fail in co-opting such a weak political establishment as Ukraine's.

Friday, November 7, 2008

Was the Russian government behind today's suicide bombing Vladikavkaz?

A suicide bomber blew herself up yesterday at a bus stop in the North Ossetian capital of Vladikavkaz, killing at least ten people and wounding another forty. The style of the attack is unmistakably Chechen, and it recalls another attack by Chechens in South Ossetia: the Beslan hostage crisis.

But there's something interesting about both Beslan and this recent attack: though supposedly committed by Chechens and directed at the Russian government as a continuation of the rebels' struggle for nationhood, these attacks were committed in South Ossetia and directed against civilian non-Russian targets. Basayev's excuse for taking a school hostage in Beslan was that it was simply cheaper – that he'd intended to carry out the attack in Russia proper, but that they'd simply "[run] out of money," That excuse doesn't make sense in this case, as the attack was much simpler than Beslan, and could easily have been committed in Moscow or St. Petersburg.

A more cynical, yet unfortunately more realistic explanation is that the attacks were directed by the Russian secret services, and meant expressly to discredit the Chechens, and stoke ethnic tensions between the Chechens and Ossetians. The attacks in Beslan, according to assassinated Russian defector Alexander Litvinenko, must have been carried out with the consent of the Russian secret services, as many of the hostage takers had previously been in Russian prisons. Being in a Russian prison for terrorism means two things: that they were likely released because they agreed to become Russian agents, and that even if they hadn't been compromised, they would have been subject to intensive surveillance and "control" for decades after their release. Fellow assassinated journalist Anna Politkovskaya was very likely murdered for her investigations into what happened in Beslan, and right before her death had discovered something about the incident that was "embarrassing to the Kremlin." At the time and up until today, the truth about Beslan has been obscured in countless ways by the Kremlin, and it's quite obvious that there's something that they wanted very much to cover up, even in the very early days of the crisis.

The Russians have strong motives in organizing Beslan and the most recent attack. First of all, the attacks reflect very poorly on the Chechens, and by extension Chechen aspirations for nationhood independent of Russia. Secondly, they reinforce the idea that the Caucasian people are naturally warlike and cannot be trusted to independently govern themselves. Keeping the northern Caucasus within Russia's grasp is important, as independent nations in the northern Caucasus would – like in the independent southern Caucasian republics – be an alternative for energy transit westwards. As we've seen with Russia's recent annexation of South Ossetia, securing control of the Caucasus has proved to be one of Russia dearest wishes.

Thursday, November 6, 2008

Immigration raid stiffles Kosher food market

In May, immigration authorities conducted a raid on a kosher meat processing plant in Iowa, and ended up arresting hundreds of illegal immigrants (or half the plant's workforce). The owners of the plant were charged with hiring illegal immigrant labor and employing under-age workers. In the wake of the raid, the parent company has shut down. Normally this would be neither interesting nor particularly telling – in competitive markets, you can't identify a shortage caused by one firm's bankruptcy, and it could be plausibly argued that the market has picked up the slack and consumers are being catered to just as before. But in this case, with such a niche product (kosher meat), the plant's closure has led to "a significant void in the market that cannot easily be reproduced," according to an authority on the kosher food, and supermarkets and butcher shops are reporting "shortages of kosher meat this week."

Now, let's examine the two laws that were broken that led to this market disruption. The first is immigration law – but clearly the plant couldn't operate without these illegal immigrants and their willingness to work for relatively low wages, so it's difficult to argue that the immigrants were being employed in jobs that Americans would have worked in otherwise. And then second is underage labor laws, but given that these "children" (the article doesn't say, but I'd guess they're probably 17, or maybe 16 at the youngest) came from Guatemala and knowingly came to a country where they'd have to work to survive, it's hard to argue that in the absence of this law, these children would be in school. Certainly they wouldn't otherwise be in American schools, and given the risk and effort they put into coming to America, it's not reasonable to expect that they would otherwise have simply stayed in school at home.

So, it's obvious that the Kosher-eating community, the town, and the immigrants themselves are worse off for this action. But what of the US government? In addition to forgoing taxes that would have otherwise been paid by the plant's owners and the workers themselves (who pay into Social Security but receive nothing in return), it looks like the government had to foot the bill to imprison and expel these hundreds of Guatemalans:

About 300 illegal immigrant workers, most of them from Guatemala, were convicted on federal charges after the raid. Most served five months in prison and were deported.

Wednesday, November 5, 2008

Russia and the Caspian

In the far-off niche land of Caspian energy politics, Russia has struck a huge blow to the West in winning more control and leverage over a key oil pipeline originating in Kazakhstan, and eventually delivering crude oil to Europe. Stratfor reports that Russia bought the Omani government's stake in the Caspian Pipeline Consortium, and upped its share in the project from 24 to 31 percent. Crossing the 25 percent threshold is significant in that it gives Russia the power to veto decisions by the consortium's management, effectively giving it operational control of the pipeline.

The analysts at Stratfor seem to think that China is the next target, as its the only country outside the region with its own access to the Caspian region's energy riches, bypassing Russia. This, they argue, is problematic for Russia, as Russia needs these resources in order to gain influence over Europe:

The last thing Russia wants to see is some 2 million bpd of crude and 70 billion cubic meters of natural gas per year diverted away from Russian-controlled energy networks. Not only would such an outcome deal a heavy blow to the Russian economy, it would also constrain Russia in supplying European energy contracts — an area key to Russia’s ability to bully Europe on political matters — and seriously undermine Russia’s influence in Central Asia.

FCC frees (some of) the spectrum

Amidst the hullaballoo of the presidential election, it's easy to miss a piece of news that is potentially more important: the FCC has freed the "white space" of the electromagnetic spectrum for unlicensed use, à la wi-fi. The parts of the spectrum that they've released were formerly used for padding in between television stations and in niche wireless microphone devices, but advances in technology have allowed these pieces of the spectrum to be used without interfering with traditional broadcasts.

Like wi-fi, these portions of the spectrum will be free for all to use (I expect with some minor restrictions), and won't be monopolized like the current bandwidths used by cell phone carriers. But unlike wi-fi, these spectrum ranges allow signals to travel "two to three times farther than WiFi signals can today, including through obstacles." While this isn't far enough to allow potential carriers to set up a single antenna and serve a large area like with current cell phones, it is possible to have ubiquitous connection through the use of mesh networks.

It's difficult to know today exactly how these spectrum ranges will be used in the future, but it strikes hard at the heart of traditional cell phone carriers' business models, and has the potential to introduce desperately-needed competition into the wireless data industry. For past posts on the spectrum, check out the open spectrum archive.

One black man vs. hundreds of thousands of gay couples

Radley Balko at Reason's blog has an interesting post up about the paradox of last night's elections: while blacks helped Obama become the first black president in US history, they also happen to have been far more bigoted than whites when it came to gay rights. Though a single black man might have become president, hundreds of thousands (millions?) of gay Californians lost rights, likely because of the historic turnout by black Americans. Radley Balko sums it up:

In California, the Proposition 8 ban on gay marriage actually failed among white voters, 51-49. It was the 70 percent support from black voters that put the measure over the top.

Florida's ban would have passed among white voters 60-40. But it passed among blacks 71-29. [...]

Kind of a sad irony if in helping achieve one civil rights milestone, last night's historical black turnout also helped perpetuate state-sanctioned discrimination against gay couples who wish to marry.

Edit: It turns out, this is actually not the case – despite blacks being by far the most likely minority to vote yes on Prop 8, it seems that at 10% of California's population, there weren't enough of them to have matter. Were blacks to vote in the same proportions as the rest of Californians, the outcome still would have been the same.

Obama's not-so-green wartime mobilization plan

Reason's got an article about president-elect Obama's green energy plans, and takes it to task for being overly optimistic with the cost projections, as well as making the mistake of thinking that wartime-like mobilization is a good thing for the economy. But something they don't touch on is that when you mandate technologies, there's a good chance that some of them simply won't work. Among technologies that Obama's touted (and would presumably subsidize) that have recently fallen on their face are ethanol, clean coal, and certain types of windmills. Ethanol has shown itself to be an unmitigated disaster, being both energetically inefficient and driving up food prices for the world's poor. Clean coal was never that clean to begin with, and his pandering reminds me of this Onion video where Obama promises to keep America's "shitty jobs" at home. And then there's wind, which the NYT has found is highly inefficient in urban settings – and it's not hard to imagine an Obama energy plan that subsidizes small turbines, regardless of whether or not they generate more energy than it took to build them.

Now, we can hope that all of this rhetoric was just election-season pandering. With clean coal and ethanol (which he's quietly stepped back from) I'd guess that's the case. But given that his green energy goals seem more about creating jobs with Keynesian countercyclical government spending than genuinely addressing climate change, I wouldn't count on the subsidized industries he supports being very green.

Tuesday, November 4, 2008

Public ranting sessions in NYC

The NYT has a funny and interesting article on a peculiar New York City custom: allowing any and all citizens to have their say about a law at its signing. In this case, Mayor Bloomberg had to endure four hours of public comments by people supporting and opposing (apparently in equal measure numerically, but I'm not sure about time-wise) the City Council's recent vote to give Bloomberg a shot at a third term. This goes against the result of referenda in 1993 and 1996, when New Yorkers voted to impose the current limits, though Bloomberg argued (and a bare majority of the City Council agreed) that the financial crisis obliges him to seek another term in office. The Times has a little history on the city's practice:

The tradition of allowing the public to speak before a bill is signed dates back at least as far as the 19th century, and has been known to sway a mayor. Once, after hearing hours of fiery testimony in 1897, Mayor William L. Strong vetoed a bill regulating sidewalk vendors.

I like the example they chose, and I think the practice would be particularly useful with regards to those sorts of anti-libertarian laws that largely affect individuals, small businesses, and generally groups without access to lobbyists. Maybe it would have stopped Los Angeles from passing this law affecting food vendors in that city.

Then again, maybe not – I imagine that if there were any modern instances of mayors or council members changing their minds after hearing public comments, the Times would have mentioned them.

Monday, November 3, 2008

It's not you, it's me

Sorry for the hiatus. I've been sort of preoccupied, but I can pretend it's because of the election devouring any opportunity to have original thoughts. Blogging to continue...soon?