Letter to the Editor 1

https://www.usatoday.com/story/opinion/2020/02/26/across-country-rural-communities-secede-states-why-column/4851817002/

David Franks <davidfranks31415@gmail.com>	1:05 PM (2 minutes ago)
to letters

Reading his opinion, I could not decide whether Glenn was arguing in good faith and simply stupid, or whether he was arguing in bad faith and secretly yearned for tyranny.

Yes, tyranny. A strong word, but that seems to be the substance of the remedy he envisages. For all his hand-wringing talk of "tyranny of the majority" is to justify a system which would give more weight, power, and voice to a minority of the population, and thus institute a "tyranny of the minority" which is just tyranny of the ordinary sort.

For this end seems to be the only thread that hold his argument together. He begins by lamenting democracy, bemoaning that the principle of "one person, one vote" results in relatively less power in Statehouses for regions which are devoid of people. "It is not fair that our faction lost that election", they moan, "just because we had fewer votes!" 

And how does he propose to remedy this? By massively expanding the powers of Congress to micro-manage state governments - a de facto abolition of federalism. For, since it is the strictest laws that bind, saying that no law may be stricter than Federal law is akin to saying no law binds but federal law. Apparently, being governed by a representative statehouse you dislike is so intolerable that it would be better to give all power to Congress, which already massively over-represents rural people and their interests - a fact obvious to anyone with a passing familiarity with the Federal budget and its consistent and systematic transfers from urban areas to rural areas.

P.S.

I would just like to say how much I appreciate the work of USA Today, which I quite sincerely think is the finest newspaper in America, because it aims to speak the truth plainly to all Americans.

A Fine is Punishment, Not a Price

Yesterday Roger Stone was sentenced to 40 months in prison, followed by 2 years on probation, as well as mandatory drug testing, 250 hours of community service, and a $20,000 fine for lying to Congress and witness tampering. Crimes such as those strike at the load-bearing walls of our political system, and thus out to be taken seriously and punished severely. So which of these punishments is most severe?

It is rhetorical, Captain.

Prison, obviously. American prisons are terrible, and I can't imagine that even for a high-profile non-violent offender a stay at "Club Fed" will be pleasant experience.

Okay, but of the rest which is most severe? The fine? $20,000 is a lot of money, right?

Ehh, maybe not for Stone. Though at present his net worth stands at around $50,000, he was once a millionaire, and since he's been and will be a good little hack, I'm sure wingnut welfare will provide for him just as it has the likes of Dinesh D'Souza after he's served his time. Remember, (social) consequences are for little people. But if you're famous, they let you do it.

No, I imagine after prison itself the harshest punishment is the indignity of community service, of mandatory drug testing, of having to answer to a probation officer. Stone strikes me as a narcissist, and $20,000 dollars to a man who no doubt thinks of himself as a temporarily embarrassed millionaire. is far less precious to him defending the belief that he is special against all evidence to the contrary.

All of this brings me to the topic of punishment. Consider the rational-agent model of crime. I am aware of its limitations, but for a calculated, pre-meditated "white-collar" such as this I think it is quite appropriate. Anyways...

A rational agent decides to commit crimes when they judge the expected utility of committing the crime to be positive, that is (assuming punishments impose dissutility):

Probability(I get away with it) * Utility(Doing the crime)  - P(I get caught) * U(the punishment) > 0

From this we come to the conclusion that if you want people to not commit crimes (or at least white-collar crimes, which are from a dollar perspective more costly than blue-collar crimes) you need to either raise the probability of getting caught or raise the costs of of punishment (I suppose you could also lower the benefit of doing the crime, e.g. protecting yourself from theft by owning nothing worth stealing, but that seems like an unpopular option).

We create disutility by harming people. We harm their bodies (though this has largely gone out of fashion), we restrict their liberties, we impose social sanctions (whose costs are frequently overestimated. People often fear social death more than actual biological death - I know I do!), and of course we cause them material economic harm by taking away some money.

There is something profoundly egalitarian about the first three forms of punishment. Each of us has only one body to suffer in, to be caged, to be shunned. We all have, as an economist would say, equally endowments, and so with harms of that nature it is straight-forward (although perhaps not easy in practice) to harm people fairly, to ensure that the same hurts will always be inflicted in retribution for the same crimes.

Ahhhh, but money is different. We are not equally endowed with it. To fine a rich person $100 is a nuisance, the greatest part of the punishment is the nuisance in dealing with it. The same $100 fine could break a poor person.

And so at last we get to the title of this post:

A fine is a punishment, not a price. To function justly and effectively as punishment it must impose not the monetary cost on everyone but the same disutility, the same economic harm. Fixing this is an attainable goal. American governments - state, local, and federal - could simply copy the practice of scaling fines with income from, say, Switzerland.

There are, of course, arguments against this. Some of these will be empirical (given higher costs of fines, more people will contest - would this lead to a net cost for society), some the usual claptrap (I image the phrase "punishing success" will be used), and some of them will be solid, principled, reasons coming from those who never used them before when they could defend the poor (it creates perverse incentives to finance government through expropriatory fines rather than regularized taxation).

As this is a blog post, I can't address them here without making this longer than you'd care to read, so I won't. If you want more in this vein, you can always leave a comment.

Nice Polite Republicans

You can buy this at here, if you want to for some reason

NPR, like a lot of self-consciously "mainstream" media (*cough* New York Times *cough*) is by self-construction a centrist  organization. By that I mean they've decided that "objectivity" doesn't mean a rigorous and fearless pursuit of facts so much as always being in between the poles (i.e. the center) of political debate, reporting uncritically and at least pretending to take seriously the opinions and arguments of both sides, regardless of how transparently bullshit they are. This strategy might frustrate Zoroastrians and other honesty enthusiasts, but it appears to have worked somewhat; NPR is more trusted among conservatives than CNN, MSNBC, or the New York Times, even thought its trust among liberals is solidly middle-of the pack, and its overall trust. Opinions on NPR are the least divided of any of the news sources polled there and NPR is considered by most Americans (though crucially not Republicans) to be unbiased.

What's going on here? How is it that NPR can despite their best efforts, become as much a symbol of effete liberalism as yoga and lattes? Simple. NPR acquired a reputation in the fever-swamps of the right-wing imagination for being part of a biased "liberal media" because they have some kind of journalistic commitment to reporting  facts in a manner that isn't pure propaganda. With American conservatives it always seems to be Cooper Union one way or the other:

The question recurs, what will satisfy them? Simply this: We must not only let them alone, but we must somehow, convince them that we do let them alone. This, we know by experience, is no easy task. We have been so trying to convince them from the very beginning of our organization, but with no success. In all our platforms and speeches we have constantly protested our purpose to let them alone; but this has had no tendency to convince them. Alike unavailing to convince them, is the fact that they have never detected a man of us in any attempt to disturb them.

These natural, and apparently adequate means all failing, what will convince them? This, and this only: cease to call slavery wrong, and join them in calling it right. And this must be done thoroughly - done in acts as well as in words. Silence will not be tolerated - we must place ourselves avowedly with them. Senator Douglas' new sedition law must be enacted and enforced, suppressing all declarations that slavery is wrong, whether made in politics, in presses, in pulpits, or in private. We must arrest and return their fugitive slaves with greedy pleasure. We must pull down our Free State constitutions. The whole atmosphere must be disinfected from all taint of opposition to slavery, before they will cease to believe that all their troubles proceed from us.

But NPR does not understand this. Or, perhaps they do understand this, but can't act on this understanding without losing the o-so-precious hard-won "trust" of that endangered species, the moderate Republican. I suppose I could be more fair, and say that what the really prize is being in middle, and that broad perception of being unbiased.

But regardless their strategy of center-ism frustrates certain lefty corners of the internet, who joke that NPR stands for "Nice Polite Republicans". I don't think that's true, per se, but I think that it gets at an important point.

Partly its because they can sit down they sit down and have easy, breezy conversations with Republicans like David Brooks, who is is either profoundly stupid or totally full of shit (either he didn't understand the intellectual enterprise in which he was engaged his entire adult life, or he did understand and is lying about it now). And part of it is, I think, aesthetic; that smooth, unflappable "NPR voice" seems out of place in these very flapped times, calmly reporting today's horror, outrage, or scandal. But the last thing is that NPR seems to project an out-of-touchness, a lack of alarm that implies they just don't get post-2016 politics.

Which brings me to this fascinating 2018 interview of Kathleen Belew by Teri Gross. Teri is interviewing Kathleen about her book, Bring the War Home, a scholarly history of post-Vietnam white supremacist movement(s) in America. Listen to the whole thing, its great. But what jumped out to me was starting around the 25:30 mark, Teri asks Kathleen about the 14 words and Kathleen won't say them, and Teri just does not get why Kathleen won't utter a white supremacist slogan.

And not getting that, in these flapped-up times, seems somehow egregious.

The No-Trade Theorem and Misgovernment

 There is a in financial economics a theorem that goes like this:

Suppose that 1) markets are in an efficient equilibrium, 2) there are no idiot ("noise") traders, and 3) the structure of possessing private information is common knowledge. If that were true then there would be no trades whatsoever.

To quote Wikipedia:

The idea behind the proof of the no-trade theorem is that if there is common knowledge about the structure of a market, then any bid or offer (i.e. attempt to initiate a trade) will reveal the bidder's private knowledge and will be incorporated into market prices even before anyone accepts the bid or offer, so no profit will result. Another way to put it is: all the traders in the market are rational, and thus they know that all the prices are rational/efficient; therefore, anyone who makes an offer to them must have special knowledge, else why would they be making the offer? Accepting the offer would make them a loser. All the traders will reason the same way, and thus will not accept any offers.

Now since we know damn well that asset trading happens a lot we know that this isn't true in general. Further for  any trade to occur either 1) some or all of the assumptions of the theorem must be false for a trade to occur or 2) the parties have to have different risk or liquidity preferences.

Which naturally leads me to parking meters.

In 2009 Chicago leased the cities parking meters (and associated revenue stream) to a private company for a large cash payment. A transaction itself isn't of a remarkable sort -  exchanging streams of payments for lump sums is the most basic kind of finance there is.

What is remarkable is that it obviously never make any sense for the city. If both parties have the same liquidity preferences (risk is negligible here) then by the no-trade theorem the transaction shouldn't have taken place. If the meters were worth more than the asking price, then the city would be better off holding onto them, if they were worth less the company wouldn't buy, and if the values were equal then the city is no better off - but since transactions aren't totally cost-less, there would be no trade then either. Same sort of logic as the no-trade theorem.

Of course, its possible that the city has different liquidity preferences than the buying firm. But this seems unlikely, given that the city preferred more liquidity, since they can issue bonds, access the money market, and have fairly predictable expenses and revenues. Its possible that the city could be considered to have a lower discount rate than the buyer, but that a (responsible) government would be more present-oriented than a private firm seems implausible.

So given that the sale happened, which of theorem's assumptions were violated?

There's no market here to be efficient, but we're just valuing a stream of payments which is a trivial problem. How about the structure of information? Again, knowledge about the value of this asset is symmetrical, and both parties know it.

The best case scenario here is that the city was indifferent between buying and selling at the sale price. If you believe that, do you have a toll bridge for sale?

So what we're left with is 2 (plausible) explanations: an idiot trader or a government that's incredibly shortsighted.

Either way, the lesson here is to assume any sale of public revenue streams that has a buyer is be a bad deal until proven otherwise.

Why the Government's Budget Isn't Like Your Budget

It is popular to analogize the household budget the governments budget to your household budget. Now, I'm a big fan of analogies. They can explain complicated notions in simple terms that are, technically, inaccurate, but get "close enough" to how things work.

But the analogy has to work, the correspondences have to make sense. The "government budget as household budget" meme isn't like that. Rather, it is very dumb.

How is the government's budget not like your budget?

Well, how is the government not like you?

1) You will die. Governments live for an indefinite length. This means that while you might have trouble borrowing money to be paid back over 100 years, little Austria can sell 100-year bonds - and the market thinks it'll lend to Austria at 1.2% interest. You try borrowing money for 100 years, and let me know if anyone is foolish enough to lend to you.

This long life with low borrowing costs has other benefits. If the economy (and thus government tax revenue) grows at 2% a year, and the debt costs 1.2% a year, then as long as the borrowing isn't too big, the government can borrow money forever and keep paying it back. This might not be a prudent plan, but its an option that's open to governments that isn't open to

2) You cannot rob people. Fools like to say"taxation is theft". Why this is foolish is for another time, but it does cut to the heart of the matter. If you decide one day you want to make an extra $10,000 you can't just go to a bank and demand to be given that money. Governments can do that. Maybe you think they shouldn't but they can. Your promise to pay someone back is a promise that you'll earn the money to pay them back. The government's promise to pay someone back is a promise that they'll tax the money to pay them back.

3) When you print money, its counterfeiting. When the government prints money, its monetary sovereignty. The US government borrows US dollars. It also controls completely the supply of US dollars. The risk to lenders is not (barring an insane sovereign default) that the US won't pay you back, but that it will print too much money when it does so.

4) Your borrowing costs are higher. By which I mean, right now the US can borrow money for a month for about 2% APY, about a tenth of the costs for the average consumer credit card. This dramatically changes the picture in terms of what is and isn't "responsible" spending and borrowing. If  you could borrow money for that cheap, what would you do?

There is No Such Thing as Safety

There is no such thing as safety; only degrees of risk.

This can be a very hard thing to wrap your head around. People want to engage in dichotomous, black-and-white thinking, and while this is easy and useful and isn't always wrong, it often is.

Save vs. unsafe is one of those false dichotomies. Because the truth is that right now, whoever you are, wherever you are, whatever you are doing other than reading this, and whenever you are reading this, you are not safe. A previously undetected asteroid could be hurtling towards earth at this very moment, about to kill all life on earth, an undetected brain hemorrhage could kill you in the next minute, a gamma ray burst could be hurtling toward us the speed of light, about to microwave the Earth on "high" before we even have time to panic.

The thing about all of those things is that they are incredibly, vanishingly, unlikely. So we feel "safe" from those things even though they could, technically, in theory, happen. Thinking probabilistically is basically an unnatural contortion of normal human thought patterns, and people almost never really do it, because frankly they don't usually have to. So they round up to 100% or down to 0%, and maybe if they are feeling particularly uncertain they settle on 50%. Then they live their lives as if those numbers where, y'know, correct.

The heuristic reasoning part - cognitive corner-cutting often enable human flourishing and is unavoidable anyway. I know people make trade-offs against risk and reward in all sorts of ways, and have heterogeneous preferences, but this "feeling of safety" thing is just weird to me. The most dangerous thing most Americans do is drive. They drive to work and worship, to pick the kids up from school and to get groceries and visit Grandma, and when people do all of these things most of them are confident they're good drivers and feel pretty safe behind the wheel.  The most dangerous jobs in America involve working with heavy machinery and being far from medical attention,  heavy machinery like a car.

And people shrug their shoulders and just get on with their lives! Meanwhile they panic about crime, which has been basically falling my entire life, or fight tooth-and-nail against nuclear energy, which kills fewer people than any kind of fossil-fuel power. People's intuitive senses of danger and risk seem to be finely honed for avoiding tigers and poorly suited for managing the "invisible" risks of modernity.

All of this bothers me immensely. Not the heuristics or the rounding but the sheer inconsistency of it all. Because what I want to be able to to is say "okay, so your said this is what you have to get in time, money, or something in order to be willing run these risks" but it changes completely depending on the threat, as if it matters even though dead is dead. We'll ban shuriken but let any jackass with pulse buy a fucking gun. We'll ban weed but build whole social lives around alcohol. People are willing to make the trade-offs inherent with using cars, but lose their damned shit over scooters.

Instead its all "feeling safe" and "feeling unsafe" - and they expect politicians to fix this! How? When people's feelings are so inconsistent? Building invisible bridges over invisible rivers, I suppose. But what do I do, no, what do we do when the politicians are fear-mongering and quaking in their boots at that invisible river? You can't magic people better.

Look, my dream job is social planner, but how am supposed to fucking do that if y'all can't even give my a straight answer on the risks you're okay with running.

An Example of Why Bicameralism in State Governments is Dumb, Dumb, Dumb

There are 50 state legislatures in America and 99 state legislative chambers. Only Nebraska did the the smart thing and set up a unicameral legislature. The bicameralism of the rest is dumb, dumb, dumb.

Nebraska, Land of Unicameralism

Let me illustrate this with an example from Indiana, a state with which I am fairly familiar. The Indiana General Assembly consists of two chambers, a House and a Senate in a poorly-thought-out imitation of the US Congress. The House has 100 members elected to 2 year terms, the Senate 50 seats (from 50 districts) elected to staggered 4 year terms, i.e. 25 are up for election every 2 years.

Why is this dumb? Because the Indiana State Senate is pointless. It serves no purpose. It is redundant, surplus to requirements, excess, useless, frivolous, and unnecessary.

The US Congress has two chambers because those chambers are meant to represent two different constituencies on two different basis. The Senate was initially (prior to the 17th Amendment) intended to represent state governments, while the house was meant to represent the "the People" (initially defined to mean propertied white men, but nevermind that now). Thus, two chambers were created, whose members would be elected in different ways. Representatives are elected for two-year terms from districts of equal population, while each state sent (or now, directly elects) 2 Senators to serve for staggered six-year terms.

The Indiana General Assembly does not do that. It has one chamber which consists of representatives directly elected from equal population districts and another chamber that also consists of representatives elected from equal population districts. This is dumb.

Adding more chambers creates additional veto points in the political process, gumming up the works and making it harder to get anything done, and adding legislators means more people who want favors or other considerations for their support to which tends to increase wasteful "pork" spending. This is dumb.

Staggering elections makes sense if you're electing multiple representatives from the same district, but if the districts all  have only one representative and serve for 4 year terms then half of the State Senators will be arbitrarily and perpetually "on-cycle" with the Governor, and half off-cycle. This might be desirable, as it allows people could decide to punish a governor in mid-term elections. But since the entire lower house, not just half of it, stands for midterm elections as well as on-cycle gubernatorial elections, the Senate adds nothing in this regard, also. Dumb.

As the sea of stupidity is bottomless, I'm sure I'm missing other dumb arguments, but I feel I've made my case well enough.