Marginal Revolution

Should we apply a transactions tax to REPO?

Tyler Cowen

A number of readers wrote me this morning and asked what I thought of Paul Krugman's column today.  Krugman writes:

As Gary Gorton and Andrew Metrick of Yale have shown, by 2007 the United States banking system had become crucially dependent on “repo” transactions, in which financial institutions sell assets to investors while promising to buy them back after a short period — often a single day. Losses in subprime and other assets triggered a banking crisis because they undermined this system — there was a “run on repo.”

And a financial transactions tax, by discouraging reliance on ultra-short-run financing, would have made such a run much less likely. So contrary to what the skeptics say, such a tax would have helped prevent the current crisis — and could help us avoid a future replay.

My view is different.  I do favor such a tax in the following sense: capital requirements on financial institutions should rise with our best estimate of risky behavior and of course these capital requirements serve as a tax.  From this follows a few points:

1. The net tax applied, whether through capital requirements or a demand for a revenue payment, can only be so high.  I would prefer to "convert" all of the applied tax into the form of capital requirements.  Krugman doesn't call his idea "a proposal for lower capital requirements," but relative to the better and more politically feasible reform of higher capital requirements, that's what it is.  At the margin we have to choose between various forms of tax.

2. Is the quantity of short-term REPO, or other financial transactions, really the best measure of risky behavior?  I doubt it.  So we're taxing the wrong thing, relative to what we might do.

3. Taxing short-term credit means that firms will resort to long-term credit.  In most models longer-term credit increases moral hazard and excess risk, even if it does limit the short-term "runs" effect.  

A few broader points are relevant:

4. In many jurisdictions, REPOs are already taxed, as the "borrowed" security is counted for tax purposes as "owned" and the income from it is subject to tax.  Of course the tax could be higher, but is there evidence that the taxes to date have had beneficial effects on financial stability?

5. There are many substitutes for REPO -- virtually any transaction can include an implicit short-term credit component -- and I am skeptical of the ability of the regulators to catch them all and prevent destabilizing regulatory arbitrage.

6. There was a transactions tax on sale and transfers of stock before and during the Great Depression; it did not obviously help matters.

7. There will always be some untaxed network for speculators to trade in and a transactions tax would push them into such a network, probably in destabilizing fashion.  The fact that trading is relatively centralized now does not refute this effect.

Of these points, only #6 and #7 apply to the standard Tobin "currency tax."  No matter what you think of the Tobin tax, overall there is not sufficient logic or empirics to justify its extension to REPO and related short-term transactions.

Addendum: I am more in agreement with Krugman's post on Dubai.

A Fiscal Stimulus Turkey

Alex Tabarrok

From A Brief History of Black Friday:

In 1939, the Retail Dry Goods Association warned Franklin Roosevelt that if the holiday season wouldn't begin until after Americans celebrated Thanksgiving on the traditional final Thursday in November, retail sales would go in the tank. Ever the iconoclast, Roosevelt saw an easy solution to this problem: he moved Thanksgiving up by a week.

Roosevelt didn't make the announcement until late October, and by then most Americans had already made their holiday travel plans. Many rebelled and continued to celebrate Thanksgiving on its "real" date while derisively referring to the impostor holiday as "Franksgiving." State governments didn't know which Thanksgiving to observe, so some of them took both days off. In short, it was a bit of a mess.

Trying to increase spending by moving Thanksgiving up a week?  Dumb.  But really, is this so different than say cash for clunkers?  Hat tip: Boing Boing.

Best books of the year, with an eye toward Christmas gifts

Tyler Cowen

This year my three favorite books were:

1. The new Gabriel García Márquez biography.

2. Chris Wickham's The Inheritance of Rome, and

3. Orhan Pamuk, The Museum of Innocence, read it slowly in small bits.

A very good gift book is Eric Siblin's new The Cello Suites: J.S. Bach, Pablo Casals, and the Search for a Baroque Masterpiece.  It signals the sophistication of both the giver and receiver and yet it is short and entertaining enough to actually read.  Package it with the recent Queyras recording of the Suites, if need be.

My favorite classical recording this year was Alexandre Tharaud playing Satie for piano.

Assorted links

Tyler Cowen

1. How to visit the zoo.

2. Via Arnold Kling (do read his new book), Presidential cabinets: prior private sector experience.

3. Should LeBron sign for $1?

4. Via Bruce Bartlett, French government still paying off a 1738 annuity.

5. Conspicuous consumption in the Congo, here and here (click through).

6. The fifty most interesting Wikipedia articles?

7. The great Robert Trivers on self-deception (one hour lecture).

8. The periodic table of finance bloggers.

Just-in-time search

Tyler Cowen

The rhythm of the nation’s kitchens can also be parsed, on an hour-by-hour basis.

At Allrecipes.com, pie searches got the most action on Wednesday morning. But by 10 a.m., people began earnest hunts for sweet potato casserole and stuffing recipes. By noon, 100,000 people had searched for mashed potato recipes.

The real outlier is gravy. If this Thanksgiving Day is anything like last year’s, most searches will slow by 10 a.m. But not gravy. That vexing cook’s kryptonite should peak about 3 p.m.

Search data are also a way to track the Thanksgiving trends, which cycle through the years like hemlines. Curiosity about deep-fried turkey is growing faster than questions about brining, with Allrecipes.com reporting a 188 percent jump in people viewing information on the technique this year over 2008.

Here is much more information, interesting throughout.

We interrupt your regularly scheduled Thanksgiving

Tyler Cowen

Dubai World won't repay its debt on time and the government of Dubai won't pick up the bag, raising doubts about its credibility.  Who would bail out Dubai itself?  Maybe it will be an "interesting" weekend:

Banking stocks tumbled on concern about their potential exposure to Dubai. Indeed, the cost of insuring against default by the emirate jumped, with Reuters reporting the Dubai five-year credit default swap being quoted as high as 500-550 basis points. This means it would cost about $500,000 a year to insure $10m of Dubai’s debt. On Tuesday it would have cost about $360,000.

Funds are surging into Germany and Japan, etc.  For purposes of comparison, Dubai CDS contracts now cost more than for Iceland.

If you're feeling a little down today, and looking for something to be thankful for, be thankful you have not lent money to Dubai.  Unless, of course, you have lent money to Dubai.

Ariely on Thanksgiving

Alex Tabarrok

Ezra Klein asked Dan Ariely for Thanksgiving advice:

"Move to chopsticks!" he exclaimed, making bites smaller and harder to take. If the chopsticks are a bit extreme, smaller plates and utensils might work the same way. Study after study shows that people eat more when they have more in front of them. It's one of our predictable irrationalities: We judge portions by how much is left rather than how full we feel. Smaller portions lead us to eat less, even if we can refill the plate.

Speaking of which, Ariely suggests placing the food "far away." In this case, serve from the kitchen rather than the table. If people have to get up to add another scoop of mashed potatoes, they're less likely to take their fifth serving than if they simply have to reach in front of them.

"Start with a soup course," he says. That is what economists refer to as a default: Rather than putting everything on the table for people to choose, you begin by making the choice for your guests. If the first course is relatively filling and relatively low in calories, everyone will eat less during the rest of the meal.

Indeed, it's not a bad idea to limit the total number of courses. Variety stimulates appetite. As evidence, Ariely brings up a study conducted on mice. A male mouse and a female mouse will soon tire of mating with each other. But put new partners into the cage, and it turns out they weren't tired at all. They were just bored. So, too, with food. "Imagine you only had one dish," he says. "How much could you eat?"

What you eat, of course, is also important. Studies show that people aren't very consistent in the amount of calories they eat each day, but they're very consistent in the volume of food they eat each day. Thanksgiving is an exception to that consistency, but probably not to the underlying rule. Satisfaction doesn't depend on caloric intake; low-calorie, high-fiber foods and foods high in water content are filling. Thus, the more broccoli rabe there is at the table, the better.

Markets in everything, Thanksgiving day edition

Tyler Cowen

Get the dog involved in the festivities with Merrick Thanksgiving Day Dinner Dog Food! 12 cans for $21.99 on Amazon. The description: "The house is filled with love and the wonderful smells of Thanksgiving infiltrate the air. Could it get any better as you fill your plate with juicy slices of turkey and all the trimmings? We don't think Thanksgiving should come only once a year, so we created this meal for your dog to enjoy all year round."

The photos are here and I thank Courtney Knapp for the pointer.

Detroit fact of the day markets in everything

Tyler Cowen

Here's all you need to know about the real estate market in Michigan: The 80,000-seat enclosed Silverdome, built for $55.7 million in 1975 to house the Detroit Lions, has sold for $583,000.

And you thought your home had lost its value during this recession.

Think about it this way: $583,000 will get you a decent, but not terrific, house in a nice neighborhood in Northwest Washington.  [TC: will it?]

According to this story from the Detroit News, the Silverdome -- which is a bubble dome, pictures of which you can see here and here -- was hoped to fetch at least $1.3 million; maybe as much as $3 million. The dome comes with 27 acres.

The full story is here and I thank Greg Finley for the pointer.

Assorted links

Tyler Cowen

1. Reprogramming predators, and maybe a pan-species welfare state too.

2. The six great fantasy novels?

3. Forum on the new Robert Pozen book on the financial crisis.

4. Do you wish to hear the other side?  Here is George Selgin's case for deflation, now on-line and free.

5. Ezra and Mark Bittman, the behavioral economics of Thanksgiving.  And here, with Dan Ariely.

6. Pollution is moving to Asia; good maps.

6. Future deficits are worrisome.  James Hamilton: "Is it possible that some time within the next five years, the U.S. Treasury will run an auction in which there are not enough bids to roll over the debt? My answer is yes."

DNA for work and love

Alex Tabarrok

University of Akron demands DNA sample from faculty as condition of employment.

Dating sites use your DNA to find a perfect love match.

Hat tip to my true major histocompatibility complex match.

Who buys cosmetic surgery?

Tyler Cowen

Not just the rich:

...cosmetic surgery is now primarily consumed not by the rich, but by the working and lower-middle classes, sometimes even by the poor.  According to the American Society for Aesthetic Plastic Surgery (ASAPS), about 1/3 of cosmetic surgery is consumed by people who make less than $30,000 a year.  About 70% of it is consumed by people who make less than $60,000 a year. It is mostly women (90%) and mostly white, middle-aged women (80% and between 35-55 years old).

Here is a more complete account.  In the Reid bill there is a tax on cosmetic surgery.  In my view cosmetic surgery is not just a zero-sum game but rather it leads to better matches, more matches, and more people who are happy with their looks or with the looks of their partner(s).  It also leads to higher levels of trust. And it's a sector that has, overall, lowered costs over time.

For the pointer I thank Coates Bateman.

The Impact of No Child Left Behind on Student Achievement

Tyler Cowen

Preliminary results are in, and they suggest it has helped with math skills but not with reading achievement, as measured in the 4th and 8th grades.  Via Thomas Dee and Brian Jacob:

The No Child Left Behind (NCLB) Act compelled states to design school-accountability systems based on annual student assessments. The effect of this Federal legislation on the distribution of student achievement is a highly controversial but centrally important question. This study presents evidence on whether NCLB has influenced student achievement based on an analysis of state-level panel data on student test scores from the National Assessment of Educational Progress (NAEP). The impact of NCLB is identified using a comparative interrupted time series analysis that relies on comparisons of the test-score changes across states that already had school-accountability policies in place prior to NCLB and those that did not. Our results indicate that NCLB generated statistically significant increases in the average math performance of 4th graders (effect size = 0.22 by 2007) as well as improvements at the lower and top percentiles. There is also evidence of improvements in 8th grade math achievement, particularly among traditionally low-achieving groups and at the lower percentiles. However, we find no evidence that NCLB increased reading achievement in either 4th or 8th grade.

That is from an NBER paper, I do not yet see an ungated copy on-line.  To my skewed perspective, this is an intuitive result.  Math skills are more the result of drill, whereas you have to learn how to love to read and much of that happens within the family, not at school.  Math is therefore easier to "teach by central planning," so to speak.

Whale size, an interior solution

Tyler Cowen

How is this for a sentence to ponder?:

It’s a lot of water, the scientists have found: in one lunge, a fin whale can momentarily double its weight.

The full article is here and I'll peg it as one of the very best short pieces I've read this year.  Here is another stunning excerpt:

In order to make lunge-feeding work, you have to have a really big mouth to capture enough water in one gulp. But in order to have a big mouth, you need a big body. And in order to keep that big body running, you need to get a lot of food. And in the very act of getting that food–diving deep, lunging open-mouthed, and then pushing a school-bus-sized volume of water forwards–requires a lot of energy on its own.

Goldbogen and his colleagues wondered what sort of trade-off lunge-feeding whales faced between the costs and the benefits of eating like a parachute. To find out, they took advantage of measurements scientists made of hundreds of fin whales at whaling stations in the 1920s.

For the pointer I thank Carl Zimmer.  Herman Melville would have been proud.

Russ Roberts on "How Little We Know"

Tyler Cowen

The short essay on the financial crisis, and potential remedies, is here and it offers a Hayekian skepticism about many suggested solutions.  Excerpt:

Attempts to repair the system from the top-down will fail. We must find ways to let bottom-up solutions emerge.

Assorted links

Tyler Cowen

1. Audiobook version of David Hume's Treatise on Human Nature.

2. What some Iranians think of New Jersey.

3. Alan Lomax in Haiti.

4. James Wood tries to take down Paul Auster.

5. An unwanted kiss from a moral man.

6. What does the Miller-Moore amendment say?

The "paradox of choice" is not robust

Tyler Cowen

I missed this one while traveling, so I am grateful to the loyal MR reader who pointed it out to me:

... the psychological effect may not actually exist at all. It is hard to find much evidence that retailers are ferociously simplifying their offerings in an effort to boost sales. Starbucks boasts about its “87,000 drink combinations”; supermarkets are packed with options. This suggests that “choice demotivates” is not a universal human truth, but an effect that emerges under special circumstances.

Benjamin Scheibehenne, a psychologist at the University of Basel, was thinking along these lines when he decided (with Peter Todd and, later, Rainer Greifeneder) to design a range of experiments to figure out when choice demotivates, and when it does not.

But a curious thing happened almost immediately. They began by trying to replicate some classic experiments – such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect. Neither the original Lepper-Iyengar experiments nor the new study appears to be at fault: the results are just different and we don’t know why.

After designing 10 different experiments in which participants were asked to make a choice, and finding very little evidence that variety caused any problems, Scheibehenne and his colleagues tried to assemble all the studies, published and unpublished, of the effect.

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.”

That's by Tim Harford.  In my view, the so-called paradox of choice is one of the most overrated and incorrectly cited results in the social sciences.  The full account is here.

How worried should we be about the deficit?

Tyler Cowen

There have been many posts on this topic lately, start with Paul Krugman and Brad DeLong if you need to catch up.  Today I have a few simple points:

1. Even if "it is fine to borrow more" is the most likely scenario, it is not the only scenario.  Let's take a page from Marty Weitzman on climate change.  The worst-case scenarios matter too, because they can be very, very bad.  We need to think probabilistically about this issue.

2. Are there current intelligent discussions of the implied interest rate volatility embedded in current options prices?  If we are looking for market tests, why not start there?  Focusing on the point estimate of the market interest rate(s) discourages you from thinking probabilistically.

3. I know less about Belgium but I am not reassured by Krugman's point that "Italy can do it."  I and many other observers consider Italy's economy to be a basket case which will only get worse.  Nor is Japan in a satisfactory place, economically speaking.

4. Krugman writes: "Belgium is politically weak because of the linguistic divide; Italy is politically weak because it’s Italy. If these countries can run up debts of more than 100 percent of GDP without being destroyed by bond vigilantes, so can we."

I would interpret this evidence differently.  A high deficit often is an unfavorable symptom of bad politics, even if you think the high deficit is economically OK on its own terms.  It's a sign that you have dysfunctional institutions and decision-making procedures, as indeed they do in Belgium and Italy.  I believe that the not-always-swift American voter in fact understands high deficits -- correctly -- in this light.  They don't hold theories about "crowding out," rather they sense something in the house must be rotten.  And so they rail against deficits, as do some of their elected representatives.  It's a more justified reaction than the pure economics alone can illuminate.

When water regularly overflows from your toilet, you want the toilet fixed, whether or not the water is doing harm.

Sweet Trade

Alex Tabarrok

Here is a fun, easy and effective experiment that instructors can use to illustrate the gains from trade.  The instructor puts chocolate bars ("fun-size") or other candy in bags, one bag for each student. (Alternatively, you can use the type of small items that you can find at a dollar store.  Filling the bags is where the most work comes in especially if you have a large class). Students open the bag and are then asked to write down how much they would be willing to pay for the bag's contents.  But before snacking, students are allowed to trade.  After a few minutes of trade, ask the students to write down their valuation again.  Voila!  Gains from trade.  With a few numbers pulled at random from the students you can do a back of the envelope calculation for the total increase in value.  The experiment doesn't take long and the students will appreciate the candy!

A hat tip to Randy Simmons who first introduced this experiment to me.

Sentences to ponder

Tyler Cowen

Argentina is nearly the size of India, but with less than one-thirtieth India’s population.

The full story, which mostly covers dining in Buenos Aires, is here.

Markets in everything: department of yikes

Tyler Cowen

This possibility had never occurred to me:

Racial attacks like the ones behind the arrest of 32 suspects in Denver are part of a trend spreading across the country, gang experts said Saturday.

As part of the trend, black gang members videotape the assaults in trendy tourist districts and sell them on the underground market as entertainment.

"They knock a young white guy out with one blow to see if his knees will wobble and surround them and take their money," said the Rev. Leon Kelly, who runs a Denver gang-prevention program. "It's a joke."

Here is the full story and I thank new reader Mark for the pointer.  By the way, am I wrong in thinking it a bit unusual how the words "black" and "white" are thrown around so casually in this story?

The lessons of "Climategate"

Tyler Cowen

I've had many readers emailing me, asking what I think of the "trove" of emails unearthed from climate change researchers.  I'll admit I haven't read through the rather embarrassing revelations, I've only read a few media summaries and excerpts.  I see a few lessons:

1. Do not criticize other people in emails or assume that your emails will remain confidential, especially if you are working on a politically controversial topic.  Ask a lawyer about this, if need be.  "Duh," they will say to you.

2. The Jacksonian mode of discourse, or mode of conduct for that matter, can do harm to your cause, especially if you are otherwise trying to claim the scientific high ground.

The substantive issues remains as they were.  In Bayesian terms, if it turns out that many leading scientists do not practice numbers one and two, I am surprised that you are surprised.  It's very often that the scientific consensus "sounds that way."

In other words, I don't think there's much here, although the episode should remind us of some common yet easily forgotten lessons.

I should add that this episode will seem very important to you, if you conceive of the matter in terms of the moral qualities of "us vs. them."

Addendum: Robin Hanson offers a similar opinion.  I wrote my post before reading his, yet we come to the same conclusions I think.

On Bryan Caplan's ethical intuitionism

Tyler Cowen

Bryan offers the most extensive version of his view I've seen him blog.  On overall method and meta-ethics, I'm not so far from Bryan (and someday he will get a post in praise of him).  But I usually disagree with his applications of the method.  For instance he seems to argue that because employees are allowed to discriminate against employers, we should allow for a reciprocal right of employer discrimination.

My first objection is that we cannot judge an argument like this outside of a particular historical context.  In some cases employer discrimination rights may be fine, in others not.  I don't think ethical intuitionism, as could be represented by abstract reasoning from analogy. can do the hard work here.  Rather we must look to the history to understand the meaning and long-term effects of the discriminatory act under question.  In some cases the discrimination is effectively perpetuating a regime of evil and thus it is morally wrong.

Here is another part of Bryan's argument:

Suppose A and B be are dating.  A has an equally good outside option.  B can't bear to live without A.  A therefore has some bargaining power - vastly more than most employers, in fact.  Yet almost everyone thinks it would be wrong to force A to stay with B.

If there is one intuition that many reasonable people have, it is that family and personal relationships are not, in moral terms, exactly like commercial or work place relationships.  I get nervous when I see ethical intuitionists serve up simple analogies across these various realms.  (In general I think Bryan creates too much license for analogical reasoning of this kind.)  This is also why I am not convinced by all of the arguments in Steve Landsburg's Fair Play.

My overall view is that ethical intuitionism settles many fewer issues than most of its proponents like to think.  That said, there is often nowhere else to go.  We somehow need to come to terms with two propositions at the same time:

1. We need to think more rather than less ethically.

2. The content of ethical philosophy tells us less, in reliable terms, than most people would like to believe.

Facebook rescission?

Tyler Cowen

A Canadian woman on long-term sick leave for depression says she lost her benefits because her insurance agent found photos of her on Facebook in which she appeared to be having fun.

Nathalie Blanchard has been on leave from her job at IBM in Bromont, Quebec, for the last year.

The Canadian Broadcasting Corp. reported Saturday she was diagnosed with major depression and was receiving monthly sick-leave benefits from insurance giant Manulife.

...She said her insurance agent described several pictures Blanchard posted on Facebook, including ones showing her having a good time at a Chippendales bar show, at her birthday party and on a sun holiday.

The insurance company claims there is more to it than that.  Here is further information.

The practical value of economics as a science

Tyler Cowen

I know of three very good books on the actual (or sometimes hypothetical) application of economic ideas to real world problems:

1. Alex Tabarrok's Entrepreneurial Economics: Bright Ideas from the Dismal Science.

2. Some other book I haven't read and can no longer remember.

There is now a third:

3. Better Living Through Economics, edited by John J. Siegfried.  It covers emissions trading, the EITC, trade liberalization, welfare reform, the spectrum auction, airline deregulation, antitrust, the volunteer military, and Alvin Roth algorithms for deferred acceptance.  The contributions are uniformly excellent and written by top economists.

Assorted links

Tyler Cowen

1. Ben Casnocha reviews Kling and Schulz.

2. Are better-looking athletes more likely to win?

3. "Mozart was a Red" -- Murray Rothbard's satire of Rand, here is the full text.  It doesn't seem that funny to me.

4. Portrait of Durrr: an on-line poker player.

5. Seth Roberts interviews me.

Benton's smoky ham and bacon

Tyler Cowen

It's equal to the best I've had, including what I've sampled in Spain.  (I've also had especially fine ham in Slovenia.)  You can read about it and order it here.  It ships without incident or loss of value.  It's what David Chang uses in Momofuku and its affiliated restaurants, by the way.  It's not even very expensive.

Speaking of animal products, a few of you asked me a while ago how the eating of animals could possibly be morally justified.  My primary objection is to how we treat animals while they are alive, especially in factory farms.  The very rise and continuing existence of humanity is based on the widespread slaughter and extinction of other large mammals, not to mention other animals as well.  I'm not saying we should feel entirely comfortable with that, but rather a "non-aggression" stance toward other animals simply isn't possible, short of repudiating all of human civilization, even in its more primitive versions.  Everyone favors the murder of animals for human purposes, although different people draw the lines at different places.  I don't know of any good foundationalist approach to these issues, but at the very least we should be nicer to non-human animals at the margin and less willing to torture them.

At the policy level we should tax meat more heavily and regulate farms more strictly, for both environmental reasons and reasons of animal welfare.  I draw a line at where the life of the animal is "not worth living," but for me animal slaughter is not immoral per se. 

There are a few things you can do personally, including:

1. Buy less from factory farms.

2. Eat better meat and in turn eat less meat, substituting quality for quantity.  This is a common demographic pattern, so it shouldn't be too hard to mimic.

If you are a vegetarian, I think that is excellent.  If you're not, Benton's is a step toward both #1 and #2.

The culture that is Italy

Tyler Cowen

The new (old) labor market idea -- you can call it fifth best perhaps -- is hereditary jobs:

It is a problem many a company faces in these tough times: how to replace older – and costlier – workers with younger, cheaper ones.

A Rome bank has what it thinks is the solution: to make the jobs hereditary. Under a deal signed with unions this week, 76 employees of Banca di Credito Cooperativo di Roma (BCC di Roma) must take early retirement but they will get a choice: either take a payoff or leave your job to your son or daughter (or indeed any relative "up to the third degree", which would allow the post to be left even to great-nieces and nephews).

The full story is here and I thank The Browser for the pointer.

The corn genome

Tyler Cowen

I have many favorite topics which I don't blog much or at all.  One of these, taken from my time in Mexico, is the history of corn.  I very much enjoyed this recent article on the topic.  There is this good bit:

The sequencing revealed that an astonishing 85 percent of the corn genome is made up of "transposable elements" -- short stretches of DNA, some perhaps descended from viral invaders -- that show evidence of having moved around in corn's 10 chromosomes at some point in evolution. Their peregrinations provided the basis for new genes, or the on-and-off regulation of existing ones...

And this:

Corn's diversity of traits has been largely maintained, despite a century of intensive breeding. Modern corn produces cobs that range from the familiar farm-stand variety to lopsided baseballs and fat pencils and have a rainbow of kernel colors. Varieties of corn can have a greater genetic difference between them than what exists between human beings and chimpanzees.

And this:

Walbot, the Stanford geneticist, speculates that this unusual diversity survived because corn cultivation spread along a north-south axis. That exposed the species to a much greater variety of environmental conditions -- temperature, day length, rainfall, altitude -- than if it had spread along an east-west axis, as did wheat.

There is extraordinary genetic information and power in corn.  I am always willing to read another book on the history of corn and its breeding.

Is the Senate bill fiscally responsible?

Tyler Cowen

Matt Yglesias writes:

The bill contains provisions that have front-loaded positive impacts on the deficit and also have provisions that have back-loaded positive impacts on the deficit. The bill, rather intelligently, seems to balance this out well leading to net deficit reductions in the short-, medium-, and long-terms. The bill by no means solves the considerable long-term fiscal challenges to the United States, but it does improve the situation. If people want to say that on balance they think the bill is a bad idea, that’s fine, but to do so is to oppose what’s far-and-away the most politically realistic way to enact non-trivial long- and medium-term deficit reduction in the 111th Congress.

I should coin a new MR term: the retreat into the relative.  As I understand it, the apparently fiscally responsible portions of the bill come from a) eventual cuts in Medicare spending, and b) rising taxes on some health insurance plans and they come later of course.  Few Congressional representatives are willing to do these things today, so should we predict they will be done in the future?  (The same problem plagues Waxman-Markey, by the way, so these back and forth rhetorical debates are becoming quite common.)  In my view, policies structured in this manner are simply another way of doing deficit spending.

To quote Matt, he writes of: "the most politically realistic way...to enact...deficit reduction."  That sounds powerful.  and in fact I agree with his claim as it is worded.  But if all the politically realistic options make our fiscal position worse rather than better (Congress likes to spend money more than it likes to inflict pain on voters)...well, this bill still makes the deficit problem worse.  Even it is the best of the realistic worsening options.  We should be wary of the retreat into the relative because all the options may be bad.  Nor should the phrase "building a framework" be translated into anything but "we are unwilling to do this now or anytime soon and thus we are engaging in more de facto deficit spending."

The fact that Republicans can (correctly) be blamed for making the bill worse does not constitute an argument that the current bill will make things, in fiscal terms, better. 

Citing inconsistencies of bill opponents ("but he didn't scream loud enough about [fill in the blank] way back when") does not help on this score either.

Another argument I have seen in MR comments is: if we can't solve this health care costs problem it won't matter, therefore we can spend more without making the problem in net terms worse.  That's a fallacy and you would never apply such reasoning while driving over the speed limit ("I'll accelerate right now, after all at some point I've got to slow down anyway.")  Think of it as a kind of Zen-like, reverse Sorites ploy: "It is adding stones which takes a pile away."  Or "Let us add stones.  The pile must disappear in any case."

Here is a numerical style guide (SG) for identifying future arguments in these veins, because they will recur when you have an activist government which wants to be very popular, combined with an under-educated, short-term oriented citizenry:

SG1. The retreat into the relative: "All the other options are even worse."

SG2. Blame the Republicans: "They made the bill bad, not us."

SG3. The critic is evil or inconsistent: "Your views are inconsistent, or you are morally questionable, so I can dismiss your worries."

From now on in the MR comments section you can just cite the appropriate number and spare yourself carpal tunnel syndrome. 

Addendum: Megan McArdle adds relevant comments and also here.

Badges? We don't need no stinkin badges.

Alex Tabarrok

In pursuit of an Eagle Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours hours over several weeks to clear a walking path in an east Allentown park.

Little did the do-gooder know that his altruistic act would put him in the cross hairs of the city's largest municipal union.

Nick Balzano, president of the local Service Employees International Union, told Allentown City Council Tuesday that the union is considering filing a grievance against the city for allowing Anderson to clear a 1,000-foot walking and biking path at Kimmets Lock Park.

"We'll be looking into the Cub Scout or Boy Scout who did the trails," Balzano told the council.

Story here. Hat tip to Modeled Behavior.

Assorted links, second dose

Tyler Cowen

1. Air Genius Gary Leff is hailed by CNN.

2. Good post on interest rates (though I am not sure I agree with it).  Brad DeLong comments.  Critically important stuff and two of the best recent economics blog posts, in some time.

3. The world's first native Klingon speaker?

4. Spider silk tapestry.

5. Via Yana, France's hamster hotel, and here.