J. Bradford DeLong's Blog, page 2105

Why Friends Really Don't Let Friends Support the Republican Party

Jonathan Chait:

Huckabee Opposes Middle East Peace: Mike Huckabee has a peace deal for the Palestinians -- nothing:

JERUSALEM (AP) — Potential 2012 U.S. presidential candidate Mike Huckabee said Tuesday that if Palestinians want an independent state, they should seek it from Arabs — not Israel. The evangelical minister and Fox News host said Jews should be allowed to settle anywhere throughout the biblical Land of Israel — an area that includes the West Bank and east Jerusalem. He called the demand on Israel to give up land for peace an "unrealistic, unworkable and unreachable goal."

Note that not even the Likud government opposes a Palestinian state in principle. If Huckabee sets the pace for defining what constitutes "pro-Israel" in the 2012 GOP primary, we could be in for a race to the bottom.

Randall Morck and Bernard Yeung: Economics, History, and Causation

RM & BY:

Economics, History, and Causation: Economics and history both strive to understand causation: economics using instrumental variables econometrics and history by weighing the plausibility of alternative narratives. Instrumental variables can lose value with repeated use because of an econometric tragedy of the commons bias: each successful use of an instrument potentially creates an additional latent variable bias problem for all other uses of that instrument – past and future. Economists should therefore consider historians’ approach to inferring causality from detailed context, the plausibility of alternative narratives, external consistency, and recognition that free will makes human decisions intrinsically exogenous.

The How-To of Fascism: A Guide for Aspiring Dictators

Daniel Davies:

D-squared Digest -- FOR bigger pies and shorter hours and AGAINST more or less everything else: Even a tank[1] is surprisingly little protection once it has stopped moving[2] and is surrounded by a mob. I saw pictures on the news yesterday of a tank crew sitting around at the edge of a square in Cairo - I have never in my life seen the crew of a tank looking so small and vulnerable. People are still talking about the army as if it was in control of the situation and for the moment at least, it just isn't.

And so that brings me to a useful piece of advice for any readers who are aspiring dictators, one that the Communists knew, Suharto knew, but that some modern day tyrants seem to have forgotten. There is always a level of civil unrest that outstrips the capability of even the most loyal and largest regular armed forces to deal with. In all likelihood, as a medium sized emerging market, you will have a capital city with a population of about five or six million, meaning potentially as many as three million adults on the streets in the worst case. Your total active-duty armed forces are unlikely to be a tenth of that. When it becomes a numbers game, there is only one thing that can save you.

And that is, a reactionary citizens' militia, to combat the revolutionary citizens' militia. Former socialist republics always used to be fond of buses full of coal miners from way out the back of beyond, but the Iranian basijis are the same sort of thing. Basically, what you need is a large population who are a few rungs up from the bottom of society, who aren't interested in freedom and who hate young people. In other words, arseholes. Arseholes, considered as a strategic entity, have the one useful characteristic that is the only useful characteristic in the context of an Egyptian-style popular uprising - there are f---ing millions of them.

This is my advice to any aspiring dictator; early on in your career, identify and inventory all the self-pitying, bullying shitheads your country has to offer. Anyone with a grievance, a beer belly and enough strength to swing a pickaxe handle will do. You don't need to bother with military training or discipline because they're hopefully never going to be used as a proper military force - just concentrate on nurturing their sense that they, despite appearances, are the backbone of the country, and allowing them to understand that although rules are rules, there are some people who just need a slap. The bigger and burlier the better, but when the time comes they'll be fighting in groups against people weaker than themselves, often under cover of darkness, so numbers are more important than anything else. The extractive industries are indeed often a good source, as are demobbed veterans (Zimbabwe) or the laity of an established religion.

I think this is my new rule for assessing the stability of any dictatorship around the world, and I am on the lookout for any Francis Fukuyama-style book contracts. The key factor in determining the survival of repressive regimes isn't economics, religion or military success. It's arseholes.

[1] Can I make it clear at this stage that if it turns out to be the case that the vehicle in question (a Warrior) is not technically a "tank" for some obscure reason of military terminology, any attempt to explain this to me will be resisted viciously with the comment delete button. It has tracks and a fucking gun.

[2] If you are sitting around on a street corner in Cairo in your tank, you have to open the hatches or you will get too hot; even the minority of tanks which have air conditioning systems will run out of fuel to run them eventually. If you open the hatches, you are no longer in a heavily armoured and invulnerable battle vehicle - you are a bloke sitting on top of a van.

The Duty to Bear Arms and Buy Health Insurance

Jack Balkin:

Balkinization: The Civic Republican Roots of the Individual Mandate: As a protest against the individual mandate, several South Dakota legislators have introduced a bill requiring citizens to purchase a gun for self-defense.

Rep. Hal Wick, R-Sioux Falls, is sponsoring the bill and knows it will be killed. But he said he is introducing it to prove a point that the federal health care reform mandate passed last year is unconstitutional.

“Do I or the other cosponsors believe that the State of South Dakota can require citizens to buy firearms? Of course not. But at the same time, we do not believe the federal government can order every citizen to buy health insurance,” he said.

The irony, of course, is that this is an example of what the federal government could require citizens to do at the founding. All able bodied male citizens were part of the militia, and therefore were required to bear arms in defense of the state. In fact, the federal government passed a militia act in 1792 that required that every citizen purchase a weapon and ammunition.

Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, That each and every free able-bodied white male citizen of the respective States, resident therein, who is or shall be of age of eighteen years, and under the age of forty-five years (except as is herein after excepted) shall severally and respectively be enrolled in the militia . . . That every citizen, so enrolled and notified, shall, within six months thereafter, provide himself with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein, to contain not less than twenty four cartridges, suited to the bore of his musket or firelock, each cartridge to contain a proper quantity of powder and ball; or with a good rifle, knapsack, shot-pouch, and powder-horn, twenty balls suited to the bore of his rifle, and a quarter of a pound of powder; and shall appear so armed, accoutred and provided, when called out to exercise or into service . . . .

The requirement to join the militia (and purchase arms for the defense of the state) was an aspect of civic republicanism-- the political idea that citizens had a duty to work toward the public good and make sacrifices on behalf of their fellow citizens and the republic (the res publica, or public thing). Hence citizens were automatically made part of the militia, and this mean that they might be called upon to lay down their lives for their fellow citizens and the republic. The country was founded on this civil republican ideal as well as a belief in individual liberty and democratic self government.

What is lost in the debate over the individual mandate is that the point of the individual mandate is also civic republican in nature. It requires citizens to make a far less significant but also public-spirited sacrifice on behalf of other Americans who cannot afford health insurance. Individuals must join health insurance risk pools to make health care affordable for more of their fellow citizens. This is a very modest request that individuals not be entirely selfish and that they contribute to the public good in a small way by helping to make health care accessible and affordable for all Americans. Indeed, under the terms of the Affordable Care Act, one doesn't even have to purchase insurance; one can simply pay a small tax instead. And one doesn't have to pay at all if one is too poor to do so or has a religious objection.

The notion that being asked to either buy health insurance and make health care accessible for one's fellow citizens--or to pay a small tax-- is a form of tyranny akin to George III's regime is simply bizarre: it shows how perverted and twisted public discourse has become in the United States. The assault on the individual mandate is really an assault on the public duty to assist other Americans in need, and in particular, an assault on the legal obligation to pay taxes to contribute to the general welfare. The assault on the health care bill is not a defense of liberty. It is a defense of selfishness.

John Quiggin Outs Himself as a Fukuyamaite

JQ:

Crooked Timber: how is Fukuyama’s view of the end of history looking? As far as the dominance of representative democracy is concerned, pretty good. Given a decade or two to establish itself, representative democracy has proved to be a remarkably stable system.... First, the representative system solves the succession/dismissal problem.... Second, democracy ensures that everyone has a say. Not, of course, an equal say, but, for everyone outside the ruling elite, more of a say than they would get under any alternative system....

The real threat, as Hidari observes in a footnote, is that democracy can be subverted from within, by charismatic/authoritarian leaders like Berlusconi and Putin.... In my view, the logic of representative democracy will ultimately prevail. If these guys hang around long enough, they will mess things up and be thrown out (as happened to Joh). If they last to retirement age, they will have no power to designate a successor.

The second part of the “end of history” thesis is, in essence, the theory of democratic peace.... I think this is broadly correct, but the thesis is undermined by the existence of nuclear weapons. Even if democratic peace is 99 per cent right, a low-probability nuclear war (between say, democratic Pakistan and democratic India) would be a cataclysm....

I’ll turn now to the last part of Fukuyama’s thesis that the “end of history” entails the triumph of liberal capitalism. Here, I think, Fukuyama is engaged in a bait and switch that is almost universal among American commentators. On the one hand, the triumph of capitalism is proved by the fact that capitalism, in forms ranging from Hong Kong-style free markets to Scandinavian social democracy is universal). On the other hand, since the US is assumed to be the archetype of capitalism, this proof is taken to show that US-style liberal capitalism must prevail. This is a spurious argument by definition.

Overall, though, the startling events in North Africa have undercut the recently popular criticism of the Fukuyama thesis, based on the temporary successes of Putin and the Chinese oligarchs. There is no reason to think that the rule of Putin, or of the Communist Party of China, will outlast the next economic downturn, or even slowdown, any more than Ben Ali or Mubarak.

FRBSF Economic Letter: Estimating the Macroeconomic Effects of the Fed's Asset Purchases

Hess Chung, Jean-Philippe Laforte, David Reifschneider, and John C. Williams:

FRBSF Economic Letter: Estimating the Macroeconomic Effects of the Fed's Asset Purchases (2011-03, 1/31/2011): An analysis shows that the Federal Reserve's large-scale asset purchases have been effective at reducing the economic costs of the zero lower bound on interest rates. Model simulations indicate that, by 2012, the past and projected expansion of the Fed's securities holdings since late 2008 will lower the unemployment rate by 1½ percentage points relative to what it would have been absent the purchases. The asset purchases also have probably prevented the U.S. economy from falling into deflation.

Deriving Their Just Powers from the Consent of the Governed...

With respect to whether Ayn Rand's receiving more in Medicare services (a lot more!) than she paid into the system was honorable, Alex Tabarrok asks:

Alex Tabarrok Asks a Question... - Grasping Reality with Eight Tentacles: Libertarians of Weak Principles: Regarding Rand, so it was hypocritical for Karl Marx to buy vegetables at the market?

I answered:

Yes, it was. On Marx's principles, he had a moral duty to find those whose surplus value was extracted and who were thus underpaid for their labor on the commodities he consumed, and compensate them.

You can sleep easy if you play by the rules even if you think the rules are non-optimal, as long as you point that out. That's Milton Friedman.

You cannot sleep easy if you play by the rules if you think the rules give you a license to steal. That's Robert Nozick, Robert Bork, and Ayn Rand.

That's the difference between utilitarian and deontological theories. Deontology is a bitch.

Alex Tabarrok replies:

A fair and very interesting answer. I expected you to say something like DSquared which would let Marx off the hook but Rand also.

In your view, a non-hypocritical moral philosophers must bears a huge burden to live in a world not of his or her making, perhaps only Jesus and Peter Singer can apply and I'm not even sure about Jesus.

I think I want to revise and extend my remarks. The distinction I see is not quite deontology/utilitarian--although it is related.

The best place to start on this, I think, is with TJ:

We hold these truths to be self-evident:

that all men are created equal

that they are endowed by their Creator with certain unalienable Rights

that among these are Life, Liberty and the pursuit of Happiness

hat to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed...

Start with this.

One stand you can then take is to say that the government's powers are just--for I have consented to the procedures by which the laws are made, and I participate in making the laws to which I then subject myself. You can then go on to say that the rules of the economic game we have set up using the government as our collective instrumentality are non-optimal because they do not lead to the greatest good of the greatest number. And you can argue that we should change the rules of the economic game.

In this case, there is no dishonor in playing by the rules of the economic game as they have been established by us through the instrumentality of our government

The other stand you can take--the stand that Ayn Rand, Robert Nozick, Robert Bork, and Karl Marx take--is to say that you don't care whether or not people have consented to these procedures. You then go on to say that the rules of the economic game are illegitimate. You say that the government's just powers do not extend to establishing legitimate rules of the economic game that tax me to pay for medical care for parasites, restrict the rent Eric Segal can charge me for living in his apartment, allow the filing of frivolous slip-and-fall lawsuits, or force proletarians to sell their labor-power for less than the value of their labor. And you say that those who play by the rules of the game are thieves.

In that case you do not merely assert that the rules of the economic game as set up are unwise but go further and say that they are illegitimate. And then you do have a duty not to be a thief--even under color of law.

And so:

if you are Ayn Rand you cannot honorably receive more in Medicare services than you paid into the system,

if you are Robert Nozick you cannot honorably use the Cambridge Rent Control Board to perform an action you would characterize as theft from Eric Segal,

if you are Robert Bork you cannot honorably perform an action that you would characterize as extorting a tort settlement from the Yale Club of New York, and

if you are Karl Marx you cannot honorably monetize a bourgeois's extraction of surplus value from a proletarian.

I am not sure where Peter Singer falls on this issue. I have never been sure to what extent he is a performance artist. I have never been sure to what degree the modality of his philosophy is an "ought" and to what degree it is a "must."

IAS 107: Intermediate Macro: 20110201 Lecture: Convergence and Divergence

20110201_ias 107 upload.pdf

Open publication - Free publishing - More macroeconomics

Dropbox on Quora

Best answers so far:

(15) Dropbox: Why is Dropbox more popular than other tools with similar functionality?

Michael Wolfe:

Well, let's take a step back and think about the sync problem and what the ideal solution for it would do:

There would be a folder.
You'd put your stuff in it.
It would sync.

They built that.

Why didn't anyone else build that?  I have no idea.

"But," you may ask, "so much more you could do!  What about task management, calendaring, customized dashboards, virtual white boarding.  More than just folders and files!"

No, shut up.  People don't use that crap.  They just want a folder.  A folder that syncs.

"But," you may say, "this is valuable data...certainly users will feel more comfortable tying their data to Windows Live, Apple Mobile Me, or a name they already know."

No, shut up.  Not a single person on Earth wakes up in the morning worried about deriving more value from their Windows Live login.  People already trust folders.  And Dropbox looks just like a folder.  One that syncs.

"But," you may say, "folders are so 1995.  why not leverage the full power of the web?  With HTML 5 you can drag and drop files, you can build intergalactic dashboards of stats showing how much storage you are using, you can publish your files as RSS feeds and tweets, and you can add your company logo!"

No, shut up.  Most of the world doesn't sit in front of their browser all day.   If they do, it is IE 6 at work that they are not allowed to upgrade.  Browsers suck for these kinds of things.  Their stuff is already in folders.  They just want a folder.  That syncs.

That is what it does.

Isaac Hall:

As a co-founder of Syncplicity, a service that competes with Dropbox, this question has been on my mind for years. We launched within a few weeks of Dropbox, we had multi-folder synchronization & read-only sync, and we were a few years older than the Dropbox kids. I'm very proud of the service we put together and am happy to see the service shift towards businesses, yet Dropbox kicked butt. Here's why:

Before launching their service, Dropbox created a video that had tons of geeky references. It showed off a product that wasn't finished and had a few flaws. It showed a binary diff sync of an image... binary diff is great, but it only works if the file isn't compressed. So, it only works on bitmaps and who the heck is sync'ing bitmaps? The video spread quickly and got their name out before anyone heard of our company. Instead of making our own video, we were upset that binary diff wouldn't do anything for JPEGs or other compressed formats that consumers tended to use. Who the heck is sync'ing images saved from Microsoft Paint?

Next, we had issues getting the press excited at launch. We built a fantastic Windows client. 3 years ago, everyone was running Windows. (Actually, I had a Mac and wrote all my code in a Parallels VM on my Mac. It always made me a little sad that we didn't have a native Mac client for a long time. Thankfully, the company has a Mac client today.) We were so excited to show the press, yet they all had Macs. Walt Mossberg wouldn't write about our product because it was PC only. Months after we hired our PR agency, we found out that they had never even used our product... because they too only had Macs. It's pretty hard to pitch a service when you haven't used it.

For a while, we couldn't believe Dropbox was so viral while we weren't. We opened our beta so anyone could sign up while people had to beg for a Dropbox invite. The closed beta worked incredibly well for Dropbox. We opened up our beta at the insistence of our PR agency -- "No way the New York Times will write about you if you have a closed beta". (It turned out that the NYT also doesn't write about you if you're PC only.) If your service is really popular, having a closed beta helps you create pent up demand and control the number of users joining on a regular basis so you can scale the backend appropriately.

In the end, it really came down to one incredibly genius idea: Dropbox limited its feature set on purpose. It had one folder and that folder always synced without any issues -- it was magic. Syncplicity could sync every folder on your computer until you hit our quota. (Unfortunately, that feature was used to synchronize C:\Windows\ for dozens of users -- doh!) Our company had too many features and this created confusion amongst our customer base. This in turn led to enough customer support issues that we couldn't innovate on the product, we were too busy fixing things.

After I left Syncplicity, I ran into the CEO of Dropbox and asked him my burning question: "Why don't you support multi-folder synchronization?" His answer was classic Dropbox. They built multi-folder support early on and did limited beta testing with it, but they couldn't get the UI right. It confused people and created too many questions. It was too hard for the average consumer to setup. So it got shelved.

If you're starting a new company, the best thing you can do is keep your feature set small and focused. Do one thing as best as you possibly can. Your users will beg and beg for more functionality. They will tell you their problems and ask you to fix it. My philosophy is that they're right if their feature request is right only if it works for 80% of your customers. Until you have a lot of resources, stay focused on your core competency.

The best part about having a simple product is that it's easy to sell & easy to support. If your product is too complicated, you'll spend all day on customer support & bug fixing. I've been there -- it's no fun.

In closing, I want to give props to my previous Syncplicity co-workers. They worked their butts off competing against Dropbox. They're crazy smart and we built a great service together. They're still working on it and they've got a great business solution. As for Dropbox... Drew, Arash and the rest of the team are absolutely brilliant. Their success is no accident. File synchronization is incredibly difficult. Building a product that millions of consumers can easily understand without RTFM is even more challenging. They're my inspiration for my current company.

If you want to understand more, read everything you can about the lean startup movement. And have at least one seriously amazing product person on your staff if that's not you.

DeLong Smackdown Watch: Dennis Kucinich Edition

Michael Froomkin writes:

Dennis Kucinich Appears to Have Lost His Mind: Yes, this is a silly suit for a politician to bring because he will be ridiculed by bloggers.

But on the merits I think you have missed two things. First, it is plausible to say that restaurants have duty to serve sandwiches without dangerous hard things in them. It is not reasonable to put the burden on the consumer because that would require that the consumer have a duty to take the sandwich apart to examine its safety. That makes a mess and destroys the sandwich. The least cost avoider here may well be the maker of sandwich, who can look over the material as they put it together, or even do it en mass before doling it out in servings. This sort of suit may actually preserve incentives leading to an efficient result.

Second, since we lack a decent health system, the tort system is in effect how we socialize certain medical costs. It undoubtedly is a hideously inefficient way of spreading losses, but it's how we do it. In that context, this suit is much less unreasonable than you suggest.

Biting an olive pit rarely leads to breaking a tooth. Breaking a tooth rarely leads to a fortune in dental bills--especially if when you bit an olive pit and suffer excruciating pain, you then go to the dentist and don't "shake it off and go right back to work."

Dennis Kucinich:

This injury required nearly two years, three dental surgeries, and a substantial amount of money to rectify. The legal action you have heard about was filed due to the severity, expense and duration of the dental injury, the complications which followed and which still persist.... When I bit into the olive pit, (unbeknown to me at the time), upon impact the tooth split in half, vertically through the crown and the tooth, below the level of the bone.... The internal structure of the tooth was rendered nonrestorable. Although the pain was excruciating, I shook it off and I went right back to work. This tooth is a key tooth which anchored my upper bridgework. The injured tooth and the bone above it became infected. I took a course of antibiotics for the infection, had an adverse reaction to the antibiotics which caused me to have an intestinal obstruction and emergency medical intervention. Later, my dentist referred me to a specialist who informed me that the damaged tooth had to be removed. A third dentist removed the tooth and I was fitted for a temporary partial. I waited for the bone to heal. An implant was placed, but it failed. Many months later still a second implant succeeded. My bridgework had to be completely reconfigured, a new partial was designed, so this injury did not affect only one tooth, but rather involved six (6) replacement teeth as well. A new crown with a new precision attachment was engineered and put in place. To clarify, no dental expenses were covered by any health plan, nor did I have dental insurance that covered the injury, which, until it was resolved, affected my ability to chew food properly...

Seems to me that the least-cost risk avoider here is Dennis Kucinich: when you suffer excruciating pain in a tooth, you should go to the dentist. The second lowest-cost risk avoider is the dentist who prescribed the wrong antibiotic. The third lowest-cost risk avoider is the dental surgeon who did the failed implant.

None of these are the sandwich maker. Strict liability for sandwich makers really does not seem the way to go here.