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Tag: Politics

American Politics’ Obsession with College

A few months ago, Republican presidential hopeful Rick Santorum attacked Barack Obama’s stated desire to have more Americans pursue higher education. Santorum’s reasons for doing this were fundamentally political: he wanted to portray Obama as a snobby liberal against the image he was hoping to convey of himself as a down-to-earth practical guy who doesn’t want to see money wasted on liberal indoctrination (or whatever it is Santorum thinks happens in colleges…)

While I’m no fan of Santorum’s hypocritical intentions there (anyone else notice how he neglected to mention his own college degree – let alone his MBA and JD?), I do think its worth considering the skeptical view towards American politics’ fixation (dare I say obsession?) with driving up college attendance.

shutterstock_50212558300x450This skeptical view came to me one day when I posed myself the following question: if the goal is to  get more Americans to go to college, why don’t we just make high school last eight years rather than four?

That scenario is not exactly what people think of when they think of driving up college admissions but keep in mind, if we were to somehow able to achieve 100% (or even something like 60-70%) college admissions, an extended high school education (where the last four years might be more advanced and based on applications to different institutions) is basically what you would be creating.

If we think of getting the majority of kids into college in that sense, it begs the question: What would a world like that look like? I’m going to gaze into my imperfect crystal ball and make two guesses:

  • First, the costs would be enormous. Even today, with many colleges being independent of the government and with many students bearing the brunt of the cost of college directly, there is huge government involvement with financing. An “eight year high school system”, even if we assumed miraculous levels of efficiency and public-private partnership never before seen in the education system and government, would likely require a huge amount of dollars spent by the taxpayer and by students – if only to provide the financial support lower-income families would need to attend higher education.
  • Second, I believe you would see the number of people going into advanced degrees (Masters, PhD’s, MBA’s, JD’s, MD’s, MPH’s, etc) would skyrocket. The reason for that is simple: if everyone goes to college – then its the same as if nobody went to college: the mark of attending college ceases to have any value in setting yourself apart from other people in the eyes of an employer. The funny thing is – one of the reasons I chose the “eight year high school” analogy is precisely because of the analogy that results: that college grads would became the equivalent of today’s high school grads: in the same trouble in terms of competing in the workforce and finding themselves needing to go to “college” (in this case getting an advanced degree).

Its hard to know for sure, and one might even argue that a much more educated workforce is worth the cost but what I think this little thought experiment shows is that just extending high school by four years (the logical equivalent of getting much higher rates of college admissions) is not the obvious universal good that most politicians seem to suggest it is. The fact that students need to go to college at all to participate effectively in the workforce, in my opinion, says more about the lack of effectiveness of our K-12 system than about the value of college.

I think a more meaningful (and time-and-cost-effective) solution to our education system’s woes would actually be to address what I perceive to be the real problems: (1) how students seem to not get enough out of K-12 to contribute to the workforce and (2) how students are forced to pursue expensive degrees just to compete.

  1. Bring K-12 quality up to what is needed for people to succeed in today’s workforce. I think this means investing in early education – study after study shows that some of the most effective education investments are those made in pre-kindergarten Head Start programs – embracing new technology-enabled approaches like Sal Khan’s brilliant Khan Academy, changing how we train and compensate teachers, and doubling down on training employable skills (like some of the ones I mentioned here). None of these are that controversial (although the devil is in the details) – what matters is being committed to the notion of increasing the value of K-12 rather than the just the years kids spend in school.
  2. Build an actually meaningful system of educational accreditation. Today, one of the most important ways to signal to employers that you can be a decent worker is a piece of paper that costs some $100,000+ called a college diploma. That piece of paper is not only extremely expensive, it also does a terrible job of elaborating what a person is good at (forcing many people to pursue further degrees). This system of accreditation really only serves colleges and the companies/people who make money off of them (i.e., admissions counselors/prep services, etc). This is just my hypothesis but I believe that an accreditation system which actually meaningfully communicated what people’s talents were (i.e. this person is extremely good at math, even though he did not major in math at a top 50 college; or this person is really good at machinework, even though she spent most of her last job planning events, etc) would be beneficial for both employers — who now have a better sense of who they are hiring — and workers — who can now be more discriminating about the value of their education and not needlessly participate in the rat race of tallying up schools/programs which only serve as a rubber stamp on your ability to pay expensive tuition.
I have no illusion that these are quick-and-easy fixes: they are after all major changes to how people/politicians view the world and require not only resources but some very slow-moving institutions to change how they think and operate, but it makes a lot more sense to me than continuing a very dumb piece of dogma about how education should work, rather than taking a hard look at the real underlying issues.

(Image credit – SFGate/The Mommy Files)

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Vader for President

Four years ago, I made the case for Victor von Doom for President. Today, Darth Vader makes a similar claim:

Darth Vader: Why I am running for President of the United States of America

People of Earth,

Your current Presidential candidates have failed me for the last time. Newt Gingrich is promising you a Moon Base by 2020, rather than a moon-sized laser that can destroy planets. Mitt Romney has vowed not to “light his hair on fire” just to rally the conservative base, whilst I have actually been on fire. In lava. Rick Santorum’s campaign has shown a“darker” side recently with his ‘Obamaville’ apocalypse advert, whereas I have actually gone to the Dark Side and authorised the apocalypse of Alderaan. And the less said about Obama’s failure to “change” America into a country that proudly builds AT-ATs the better. I have no choice. As of today, I am announcing my candidacy for the Presidency of the United States of America. I AM your future President.
When elected President, I guarantee the following:

An end to “big” government. Politicians exist largely to represent different perspectives on how your country should be governed. When you carry a lightsaber and have the ability to magically choke people from a great distance with the power of your mind, very few people tend to adopt a perspective different to your own.

100% employment. Under my “No body left behind” policy, you will never again be forced to suffer the indignity and hardship of unemployment. Every person, regardless of sex, race, political affiliation or religious belief will be assured a job they can be proud of: building 100% Earth-made Stormtrooper blasters, Star Destroyers and Death Stars.

Greater fiscal responsibility. Under my reign, there will be no frivolous governmental spending on things like “universal health care”, “tertiary education”, or the “judicial system”. All public spending will be funnelled into glorious largescale projects for the betterment of all of mankind (building AT-ATs, Death Stars, etc).

I’ll bring the troops home. The ability to destroy a planet is insignificant next to the power of the Force, unless the planet in question is yours. With the Death Star and/or various Star Destroyers orbiting your planet at all times, there will be no more warfare. All of your soldiers will be far too busy manufacturing weapons of mass destruction (see above).

I’ll put families first. As a widower and single father of two troubled teenagers, I know what it’s like trying to raise a family in the modern era of Facebook, drugs and intergalactic Rebellions. Between my Imperial spies, probe droids and Stormtrooper-imposed military curfews, you will know where your children are and what they are doing at all times.

Why should you elect me (assuming you have a choice)?

I’m an everyman, just like you. I’m not some privileged Ivy League billionaire who grew up with a silver spoon in their mouth. I was born in a slum on a desert planet. I was raised by a single mother forced into slavery just to make ends meet. I never knew my deadbeat father because I was conceived by the Force, or midi-chlorians, or something (I’ll admit I’m hazy on the details, that movie was an embarrassing time in my life). I left home at a very young age and took a trade as a warrior space monk. I married the first girl I ever fell in love with. I was betrayed by my best friend, who cut off my arms and legs and left me to die in lava. Just like you.

I’m a war veteran. As a decorated veteran of the Clone, and assorted other Star, wars, I have seen active combat on countless worlds. I work well as part of a team (my Master and I took over an entire galaxy by ourselves) and independently. I can and will make the hard life-and-death (okay, mostly death) decisions under intense pressure.

I know what it’s like to face challenges. Speaking as someone who’s: been called “Annie” as a little boy; had four limbs amputated by lightsaber (three by my “best friend”); been thrown into lava; been forced to live in a life-sustaining cyborg body suit; and suffered from severe asthma and the social stigma of heavy breathing, I understand more than anybody that life isn’t always easy. You will face obstacles (such as Jedi, Rebel scum, etc) on your path to greatness/your destiny as The Chosen One/the Dark Side but you can overcome.

I will secure the popular vote. Did somebody say, “Name recognition?” As the star of six autobiographical feature films, an animated television series and innumerable books, graphic novels, amusement park rides, toy and clothing merchandise, etc, I am a household name throughout the galaxy. Kids love me. Parents get me. My peers respect me (or get Force choked). With that level of popularity, there’ll be nothing to stop us this time.

I am a man of faith. It saddens me that Earth does not yet KNOW the POWER of the Dark Side. In fact, the Force is not with you most of you at all. You labour under the mistaken belief that the Star Wars saga is “just a movie”. I find your planet’s lack of faith disturbing. A few Force chokes and the odd lightsaber throw and this will be fixed very quickly.

I hate whoever you hate. Pick a minority group: happily married straight people, gay people who would like to be happily married, people with beards, pretty much any people with four fully functioning limbs. When you hate everybody like I do, the chances are we are going to agree on people we don’t like. Release your anger, America.

I have prior experience. As the second-in-charge of the Galactic Empire, I have plenty of job experience running totalitarian regimes. Running a country will be all too easy by comparison.

I’m harsh but fair. Like most parents, I have dreams for my children (co-ruling the galaxy as father and son). Like most parents, I have personally experienced the pain of my children metaphorically (and literally) cutting off my hand after I offer them those dreams on a silver platter. But like most parents, I also understand that it’s your moral responsibility to do what you know is right for the future of your children, even if it sometimes means you have to chop off one of their limbs to do it. I promise to treat you, America, as if you were my own child (the boy, not the Princess one, she’s too lippy).

Don’t listen to what other people say. Make up your own mind. Just for once, America… look at me with your own eyes. Join me and together we can rule the Galaxy.

Yours Sithcerely,
Darth Vader.

Brought to you by the “Vader 2012″ and “Vote Vader” campaigns.

Its as if millions of voices were crying out in (electoral) terror and were suddenly silenced by the righteousness of Vader for President…

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Solyndra and the Role of VCs and Government in Cleantech

Because of the subject matter here, I’ll re-emphasize the disclaimer that you can read on my About page: The views expressed in this blog are mine and mine alone and do not necessarily reflect the views of my current (or past) employers, their employees, partners, clients, and portfolio companies.

Solyndra-logo

If you’ve been following either the cleantech world or politics, you’ll have heard about the recent collapse of Solyndra, the solar company the Obama administration touted as a shining example of cleantech innovation in America. Solyndra, like a few other “lucky” cleantech companies, received loan guarantees from the Department of Energy (like having Uncle Sam co-sign its loans), and is now embroiled in a political controversy over whether or not the administration acted improperly and whether or not the government should be involved in providing such support for cleantech companies.

Given my vantage point from the venture capital space evaluating cleantech companies, I thought I would weigh in with a few thoughts:

  • The failure of one solar company is hardly a reason to doubt cleantech as an enterprise. In every entrepreneurial industry where lots of bold, unproven ideas are being tested, you will see high failure rates. And, therein lies one of the beauties of a market economy – what the famous economist Joseph Schumpeter called “creative destruction.” That a large solar company like Solyndra failed is not a failing of the industry – if anything it’s a good thing. It means that one unproven idea/business model (Solyndra’s) was pushed out in favor of something better (in this case, more advanced crystalline silicon technologies and new thin film solar technologies) which means the employees/customers of Solyndra can now move on to more productive pastures (possibly another cleantech company which has a better shot at success).
  • The failure of Solyndra is hardly a reason to doubt the importance of government support for the cleantech industry. I believe that a strong “cleantech” industry is a good thing for the world and for the United States. Its good for the world in that it represents new, more efficient methods of harnessing, moving, and using energy and is a non-political (and, so, less controversial to implement) approach to addressing the problems of man-made climate change. Its good for the United States in that it represents a major new driver of market demand that the US is particularly well-suited to addressing because of its leadership in technology & innovation at a time when the US is struggling with job loss/economic decline/competition abroad. Or, to put it in a more economic way, what makes cleantech a worthy sector for government support is its strategic importance in the future growth of the global economy (potentially like a new semiconductor/software industry which drove much of the technology sector over the past two decades), the likelihood that the private sector will underinvest due to not correctly valuing the positive externalities (social good), and the fact that…
  • Private sector investors cannot do it all when it comes to supporting cleantech. One of the criticisms I’ve heard following the Solyndra debacle is that the government should not leave the support of industries like cleantech to the private sector. While I’m sympathetic to that argument, my experience in the venture investing world is that many private investors are not well equipped to providing all the levels of support that the industry would need. Private investors, for instance, are very bad at (and tend to shy away from) providing basic sciences R&D support – that’s research which is not directly linked to the bottom line (and so is outside of what a private company is good at managing) and, in fact, should be conducted by academics who collaborate openly across the research community. Venture capital investors are also not that well-suited to supporting cleantech pilots/deployments – those checks are very large and difficult to finance. These are two large examples of areas where private investors are unlikely to be able to provide all the support that the industry will need to advance and areas where there is a strong role for the government to play.
  • With all that said, I think there are far better ways for the government to go about supporting its domestic cleantech industry. Knowing a certain industry is strategic and difficult for the private sector to support completely is one thing – effectively supporting it is another. In this case, I have major qualms about how the Department of Energy is choosing to spend its time. The loan guarantee program not only puts taxpayer dollars at risk directly, it also picks winners and losers– something that industrial policy should try very hard not to do. Anytime you have the ability to pick winners and losers, you will create situations where the selection of winners and losers could be motivated by cronyism/favoritism. It also exposes the government to a very real criticism: shouldn’t a private sector investor like a venture capitalist do the picking? Its one thing when these are small prize grants for projects – its another when its large sums of taxpayer dollars at risk. Better, in my humble opinion, to find other ways to support the industry like:
    • Sponsoring basic R&D to help the industry with the research it needs to break past the next hurdles
    • Facilitating more dialogue between research and industry: the government is in a unique position to encourage more collaboration between researchers, between industry, between researchers AND industry, and across borders. Helping to set up more “meetings of the minds” is a great, relatively low-cost way of helping push an industry forward.
    • Issuing H1B visas for smart immigrants who want to stay and create/work for the next cleantech startup: I remain flabbergasted that there are countless intelligent individuals who want to do research/work/start companies in the US that we don’t let in.
    • Subsidizing cleantech project/manufacturing line finance: It may be possible for the government to use tax law or direct subsidies to help companies lower their effective interest payments on financing pilot line/project buildouts. Obviously, doing this would be difficult as we would want to avoid supporting the financing of companies which could fail, but it strikes me that this would be easier to “get right” than putting large swaths of taxpayer money at risk in loan guarantees.
    • Taxing carbon/water/pollution:  If there’s one thing the government can do to drive research and demand for “green products” is to issue a tax which makes the consequences of inefficiency obvious. Economists call this a Pigovian tax and the idea is that there is no better way to get people to save energy/water and embrace cleaner energy than by making them. (Note: for those of you worried about higher taxes, the tax can be balanced out by tax cuts/rebates so as to not raise the total tax burden on the US, only shift that burden towards things like pollution/excess energy consumption)

    This is not a complete list (nor is it intended to be one), but its definitely a set of options which are supportive of the cleantech industry, avoid the pitfall of picking winners and losers in a situation where the market should be doing that, and, except for the last, should not be super-controversial to implement.

Sadly, despite the abundance of interesting ideas and the steady pace of innovation/business model innovation, Solyndra seems to have turned investors and the public more sour towards solar and cleantech more broadly. Hopefully, we get past this rough patch soon and find a way to more effectively channel the government’s energies and funds to bolstering the cleantech industry in its quest for clean energy and greater efficiency.

(Image credit)

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Raise the Debt Ceiling, Stupid

Up until now, I haven’t felt like it was important to comment on the situation with the US debt ceiling. My understanding had been that the entire thing was just political theater and that both parties would eventually shut up, realize that they all had too much to lose, that there were too many interests in the country which needed the issue to be resolved, and do the right thing.

While I’d still bet money that this whole thing eventually resolves itself, I find the fact that I need to reconsider that at all appalling. Let’s review:

  • This is not about spending/debt. I am a big believer that the US government needs fundamental tax and spending reform and a big dose of efficiency. But that is not what is at issue here. Don’t let anyone fool you – the money that the Treasury is asking for is not the federal government’s way of trying to spend more money without getting proper permission. The permission has already been given. The spending has already been approved by Congress. This is the logical equivalent of your boss ordering you to buy something but not giving you the company credit card to do it – i.e., so stupid its not worth arguing about. It even begs the question: why, other than petty politics, do we have a debt ceiling?
  • The results of not raising the debt ceiling could be catastrophic. Don’t listen to anyone who says that not raising the debt ceiling in time would be minor: the truth is nobody knows what could happen. But here is what we do know: much of global finance/economics is tied to the strength and reliability of the US dollar and the US government’s willingness and ability to pay off its debts. If there is a disruption in that, even if only temporarily, there could be enormous short-term consequences as interest rates and global exchange rates if those assumptions fall apart, and there could be even more disastrous long-term consequences for the US when lenders realize that petty politics can push the US into breaking its promises and require much higher interest rates and much more onerous terms the next time the US needs to borrow money or is looking to do any sort of arrangement.

A country’s debts and promises are a matter of its reputation and trustworthiness and, in my opinion for a democracy, a reflection of the moral character of its citizenry. I am disgusted that there are Republicans who want to lay on conditions for doing what is best for the US’s reputation and for doing what is best to avoid a potential financial catastrophe in the middle of a slow economic recovery. And, I am disappointed that the Obama Administration played along by entering into such negotiations.

We have turned what should have been a quick and obvious decision into another forum for political grandstanding and posturing, and I hope the politicians in Congress hear me when I say, “Raise the Debt Ceiling, Stupid!”

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Lets hear it for Mike

I’ve known Mike Lee since we were both in high school doing debate. He’s a great guy, and I’ve enjoyed talking to him over the years about comic books, science, religion, and politics. He and I don’t always see eye-to-eye (translation: sometimes I think he’s nuts – come on, Mike, Kyle Rayner as the greatest Green Lantern ever?), but he’s one of the most thoughtful and intellectually humble guys I know.

So, when I found out he wrote a paper which happened to be one of the Top 10 downloads on the Social Sciences Research Network about healthcare policy, I knew I had to recommend it to all my blog subscribers.

Oh and, the fact that I made it to his list of acknowledgements has, of course, no bearing at all on my recommending the piece :-).

In all seriousness, give it a read. I haven’t finished it yet, but if it comes from Mike, I know its definitely worth perusing.

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Education bubble?

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One of my favorite RSS feeds is Business Insider’s Chart of the Day. This chart came up a few weeks ago and made me think. It’s quite staggering to imagine that college tuition has outpaced inflation as rapidly as it has (~10x vs. ~4x over 30 years). The graph made me think: Has the value of a college education increased 2.5x? If it has, then there isn’t necessarily a bubble. There are three ways to think about the value of a college education to evaluate this question.

  1. The most obvious is the average income comparison between an average high school graduate (only) and an average college graduate (only). Using US government statistics, we find that in 1978, a college-educated graduate made ~55% more than an individual with only a high school education. In 2008 (the last year I have data for), a college educated graduate made ~87% more – which amounts to a 60% increase in the gap. Now there are obviously nuances in that figure (which I’ll let the policy experts correct in the comments if they choose), but this 60% figure is a decent order-of-magnitude impact (and even holds true if I adjust for the change in disposable income using the individual, under-65 poverty line as the base level of expenditure), and barely covers the 2.5x increase in tuition costs over inflation.
  2. Related to the above are the other effects of college education on lifetime income. It’s been demonstrated that college educated individuals live longer than those who don’t, and its commonly understood that college is a prerequisite for other income-boosting opportunities like graduate school. One’s lifetime income is also much more likely to trend upwards in life with a college education than with only a high school diploma. But there’s an interesting wrinkle here: does college education make you live longer and get promoted, or is it just an indirect way of finding individuals who tend to be wealthier and more intelligent? I unfortunately don’t have the data (or the time 🙂 — this is a casual blog post after all!) to run all the calculations needed to understand the impact, but I would hazard a guess that it’s probably overly-aggressive to assume that these second-order lifetime income benefits can close the gap between tuition costs and inflation.
  3. The last “source of value” for a college education is the subjective value of meeting lifelong friends, having new experiences, and expanding your intellectual horizons. Just because its last and extremely intangible, doesn’t mean there’s not enormous value here. But, the question to ask here is not whether or not college has large intangible value (of course it does), but whether or not you believe that intangible value to have increased significantly (by over 2.5x as we’ve concluded the increase in lifetime income likely isn’t enough to explain the 2.5x increase in tuition cost relative to inflation) since 1978. I personally think that’s being overly aggressive.

I can’t pretend to be the expert on this, but at this point, I’d conclude that whereas the value of a college education has increased dramatically (maybe even by as much as 75-100%), it hasn’t gone up enough to justify a 2.5x increase relative to inflation. If you accept my conclusion then the obvious question is what is causing tuition to increase so much? Two possible explanations jumped out at me:

  • Tuitions haven’t caught up with the value of a college education: While my conclusion above was that the value of a college education hasn’t increased 2.5x from 1978 until today, one possible explanation of tuition price is that the value of a college education is still higher than what students pay for it, and, if that were true, we would expect tuitions to continue to increase.
  • Tuitions are higher than the value of a college education and are being propped up by a combination of two things:
    1. Tuitions are being boosted by a subsidy cycle: Free money from the government is one of the easiest ways to get price increases. While we often think of the US government’s subsidized loans and tax writeoffs for college tuition as a means to help more people attend college, an equivalent way of thinking about it is that it gives colleges free rein to increase prices without worrying about reducing the number of people who enter. In a “normal” market, this would be the end of it (slightly higher prices, but more people entering college), but because college education has become such a political affair (every family always thinks its “too expensive”, and every politician promises to make it cheaper), we always get more subsidies from more politicians which feeds back into the original problem.
    2. Families have bad expectations around the value of a college education: One explanation, which is making the rounds of the policy wonk blogosphere, is that this is all a big bubble. In the same way that people felt tech stocks in the late 90s and real estate in the 2000s were a good buy, its entirely possible that families have uninformed expectations about the value of a college education and thus believe the higher tuitions are worth it. If this is true, then we could be on a collision course with a generation of families (like in the 80s) suddenly realizing “the emperor (of college tuition) has no clothes!” (which might be precipitated by a long stagnation/decline in the wages of college educated individuals) followed by a potential crash in tuitions.

What should be done? Truthfully, it depends on which of these conclusions is correct. If its just that tuitions haven’t caught up with the value of a college education, then it makes sense that tuitions are increasing, and it may even make sense to increase tuition grants/subsidized loans (as it likely means not enough people are getting a college education because they couldn’t get access to the capital to pay for it). However, if tuitions are over-valued, then it would be advisable to end the college tuition subsidy cycle and implement policies which potentially “soften the blow” of the coming college education value and tuition crash.

But to make the right policy decisions and tradeoffs, its important to first understand which of the two explanations is correct. And that’s a whole ‘nother set of data and analyses…

(Image credit – Chart of the Day)

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Sins of the Voter

A picture is (almost) worth $1.9 trillion.image

Why so big? I trace it to three things:

  • No politician ever wants to raise taxes. When’s the last time voters wanted to pay more in taxes? This is the most basic pitfall of liberal politics and politicians who have to find ways to defend or structure their tax proposals as “falling only on the rich/companies/lawyers/bad doctors/immigrants/[some other unpopular target group]”.
  • No politician ever wants to cut programs. After all, every program/spending outlay has at least one big, well-funded fan. This is the most basic pitfall of conservative politics and politicians who have resorted to arguing that some programs are “wasteful” or “expensive or “bureaucratic” or “unnecessary”.
  • Politicians aren’t rewarded for the state of the government years after their term. You don’t ever see a politician seriously campaigning on “I know my proposals are hurting your wallet today, but I swear, in 20 years, the economy and the budget will be awesome.”

So, liberal politicians fight a little less hard when Congress/the President/local governments cut/stem the rise in taxes, and conservative politicians fight a little less hard when Congress/the President/local governments spend more money on new programs, resulting in a (generally) growing budget deficit (depending on the rate of economic growth). And, depending on who controls the Executive/Legislative branches, one party will complain a little more loudly about the national budget deficit – at least until the parties switch positions of authority.

After all, does anyone remember when the Democratic Party (accurately) accused the Bush administration/Republican Party for causing record-high budget deficits, and the Republicans argued that budget deficits were necessary during a recession and could be controlled in the future? Funny how that’s changed more recently…

elephant and donkeyNow, before someone gets angry at me for attacking their favorite politician/policy proposal/political party, let me make it clear that this is not meant to criticize a particular politician or policy proposal. This is a criticism of a democracy where voters don’t want to engage in actual policy debate and are content with “debates” which amount to little more than liberals hurling “why do you hate the poor/minorities/the environment/healthcare” insults at conservatives and conservatives hurling “why do you love hurting businesses/taxing the American people/wasting taxpayer dollars” insults at liberals. This is a “debate” which has no purpose from an “intellectual” perspective (do you learn anything from hearing two politicians rip into each other with three-second soundbytes?) or from the perspective that a democracy ought to be formulating the best policy by combining the best ideas from the people (so if liberals love wasting taxpayer dollars and conservatives hate healthcare, what does that mean we do about expanding healthcare coverage?).

It is not sufficient to hear “this bill will give every American healthcare”. We must aspire to hear “this bill which costs $XX billion aims to give every American healthcare; it does so by doing A, which impacts proposals B and C, and limits our ability to spend money on the War on [Drugs/Terror/Juvenile Delinquency/Swine Flu]”. And until the public hears that type of information from policymakers, they are merely blind passengers on a car that someone else is driving.

So where does that leave us? I see three ways forward:

  1. The public needs to demand more from their politicians and the press. Mainly, less soundbytes/talking points, more discussion of tradeoffs, numbers, and consequences.
  2. Education in statistics and basic policy analysis needs to be introduced in high school. Governments lie, numbers don’t. But you can’t have a government by the people when said people have no idea how to look at numbers.
  3. People should capitalize on the fact that policy wonk/wonk-lites of all political persuasions now blog and use the internet as a medium to engage in much more productive debate and discussion than traditional media outlets allow. People like Megan McArdle, Ezra Klein, Nate Silver, Gary Becker & Richard Posner, and Tyler Cowen (among many others) maintain blogs which provide insightful commentary on the big policy debates/discussions of the day. They, of course, each have their own biases and perspectives to sort out (and what better way than to read other bloggers with dissenting opinions?), but the point is there is a way to get better information and insight than what the media currently provides and the public would be remiss to not use it.

Here’s hoping for that day when political soundbytes become a thing of the past…

(Chart credit) (Image credit)

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Comic book characters choose

The informed voter uncovers all they can about the political candidates’ views and backgrounds and performs an objective and methodical comparison which results in the selection of a particular candidate.

That is, of course, difficult and requires that the voter is actually smart enough to figure out the nuances and economic/social consequences of each candidate’s positions.

Much easier to simply ask – who would my favorite comic book character vote for? (HT: JZG, note: the “Comic Compass” is a play on the Political Compass test where the vertical axis charts how “socially” liberal or conservative you are, and the horizontal axis charts how “economically” liberal or conservative you are; so Ralph Nader is in the lower-left, Mao Ze Dong is in the upper-left, George W. Bush is in the upper-right, and Ayn Rand and her ilk are in the lower-right)

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I had no idea that Apocalypse (Marvel) was more economically liberal than Darkseid – dark God of Apokolips (DC), but comparable in economic views to the Hulk (Marvel).

(Source)

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In Doom we trust

With all the discussion about who would make a better President, Barack Obama or John McCain, one obvious candidate has been ignored — one who rises above them all. Who is this dark horse candidate who has proven himself to be the most deserving of the title of Commander-in-Chief? I’m speaking of none other than Victor von Doom — the one they call Dr. Doom.

What qualifications does he have?

  1. Experience – McCain likes to tout his experience in politics, pointing to critical pieces of legislation which he’s been instrumental in writing and passing. Obama, on the other hand, points to his former life as a community organizer, helping to drive grassroots level change as an important type of experience for a leader. But, honestly, how many of them have actually taken a war-torn, starving third-world country like Latveria and, through sheer ingenuity and force of will, turned it into a peaceful, prosperous, and one of the most technologically advanced nations in the world? None but Dr. Doom. Advantage: Doom.
  2. Strength in the face of adversity – McCain has the obvious upper hand here — a POW who survived brutal torture in an enemy prison camp. Yet, that pales in comparison to the trials and tribulations of Doom. McCain may talk about how being in a Viet Cong prison was like hell. Doom was actually cast into Hell and yet he still managed to claw his way out through nothing but tenacity and intellect, despite his mortal enemies attempting to trap him there. Advantage: Doom.
  3. Technology – Many have proclaimed Obama to be a true technological pioneer, embracing social networking and iPhone applications to spread his message of hope. Pathetic. Victor von Doom is an expert in every known technological field and science — having invented a time machine, a device which can control mutant/metahuman powers, forcefields, and portals to other dimensions. Obama and McCain talk about researching new alternative energy technology. Bah! Doom can give every worthy citizen a garbage-powered jetpack. Advantage: Doom
  4. Terrorism – Much has been made about the Bush administration’s inability to capture Osama bin Laden and about the Democratic Party’s supposed inability to face terrorist threats. These are all mere side issues. No terrorist would dare attack a country run by Victor von Doom, for there is no place in the universe that is out of the reach of Doom. Doom has traversed the cosmos, traveled through time to even conduct an affair with the sorceress Morgaine le Fay, and has even descended into the pits of Hell. Suicide bombers? Inconsequential — for no suicide bomber would dare attack when the risk of failure would be a visit to Doom’s “re-education” chambers. McCain and Obama can talk all they want about military response, but Doom is the only one with the teeth and the record of hunting down all offenders. Advantage: Doom
  5. Law Enforcement – Obama may talk about his experiences in the rough side of Chicago as giving him authority to discuss law enforcement and crime, but I dare say — who can administer civil justice better than Doom? There is no crime in Latveria, and there aren’t even superheroes to help maintain that order. All is simply maintained out of the citizenry’s love and … respect — yes that would be the best word to describe the bone-chilling paralysis that the citizenry feel in Doom’s presence — for Doom. Contrast that to most inner-cities, where there is no respect, let alone love, for the law. Advantage: Doom
  6. Secret Service – Obama may be an athlete and McCain may be a good ol’ fashioned tough guy, but only Doom can dispense with the need for the public to worry about assassination attempts. Not only would terrorists and criminals be completely dissuaded of attacking one such as Doom, if they were to try, they would certainly fail. Doom’s armor is made from some of the most sophisticated technology, allowing him to stand in physical combat against beings such as the Hulk and even demons from Hell. Even if an attack were sufficiently strong to defeat Doom’s armor, one must always be wary of the fact that Dr. Doom uses Doombots — perfect robotic copies of himself such that the real Victor von Doom is never truly threatened. Advantage: Doom

Surely, at this point, there is no doubt in your mind who is the most competent and qualified man of the hour. So this November, go to the ballot and cast your vote for the one man who can bring America to greatness. And may Doom bless you all.

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A Business Way to Look at "the Surge"

If you were to ask a Democrat about the success of President Bush’s “surge” in US troops, she’d (probably) tell you the Surge was a failure. If you ask a Republican, she’d (probably) tell you the Surge was a success. Both sides can cite valid statistics which seem to tell contradictory messages. Yes, civilian casualties are down without an enormous increase in soldier death, and yes, some progress has been made in training and in other areas. But, at the same time, there seems to be no significant improvement in the prospect that the violence will one day end, nor does there seem to be much improvement in the prospect that the Iraqi government will soon be able to take over the security and finances of the country.

How do you determine which side is right?

First, you have to ask yourself what constitutes success. Lets just say (since this seems to be the general consensus) that the end goal of the War in Iraq is a stable Iraqi government. If one exists, then the War was a success. If one doesn’t, then the War was a failure. Therefore, the Surge is a success if it contributes towards establishing a stable Iraqi government, and the surge is a failure if it is not contributing (and a particularly bad failure if it is making it less likely) to that goal.

So, is the Surge a success? How do you find out? You could ask the politicians to debate, or you could ask a political expert/pundit — but, generally, pundits and politicians seem more interested in sounding right rather than being right.

Luckily, there is an easier and more impartial way to determine this. Every government running a deficit issues government bonds. These bonds, for those who don’t know, pay an interest rate to whoever is willing to loan the government money. After a bond is sold, the interest rate is effectively set in stone. If the payor of the bond suddenly seems much less likely to pay off the loan, the value of the bond drops (because the interest rate isn’t going to move, who wants to hold onto a bond that pays the same but is a lot less likely to pay out?). If the payor of the bond suddenly seems more likely, the value of the bond increases (more people would love to get their hands on that bond).

So, one way to tell if the Surge was a success or a failure is to check the price of Iraqi government bonds before the Surge and after. If the price drops, the Surge has been deemed by the market to have not contributed to stabilizing the Iraqi government. If the price goes up, the market perceives that it has.

Why is this true? It’s the profit motive of the investors involved. Yes, an investor may be Republican or Democrat, but if a bond is worth more than it should, then someone is going to sell. If a bond is worth less than it should, then people are going to buy (and bid up its price) — and you can count on this aggregate group of investors doing their best and spending their time and effort on figuring out the right answer.

And this is precisely what a paper by Michael Greenstone seeks to do. From the abstract:

“This paper shows how data from world financial markets can be used to shed light on the central question of whether the Surge has increased or diminished the prospect of today’s Iraq surviving into the future. In particular, I examine the price of Iraqi state bonds, which the Iraqi government is currently servicing, on world financial markets. After the Surge, there is a sharp decline in the price of those bonds, relative to alternative bonds. The decline signaled a 40% increase in the market’s expectation that Iraq will default. This finding suggests that to date the Surge is failing to pave the way toward a stable Iraq and may in fact be undermining it.”

This is the essence behind prediction markets, which use the profit motive coupled with human knowledge and reasoning to aggregate the collective wisdom of many people. This isn’t to say that these markets are necessarily correct or that they can pinpoint exactly what will happen (the answer above is a risk assessment), but this is about as unbiased and accurate a method as any to figuring this out.

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To the Right… to the Right…

For Lisa:

A Ec10 (Intro Ec) student asks Greg Mankiw, “Does Econ Make People More Conservative?”

The student asks:

My school offers two main elective history courses for seniors: Government and Economics. Due to scheduling limitations, not many kids are able to take both. I’ve noticed something interesting as the year has progressed. The students who are taking the government course are increasingly endorsing leftist ideologies while the economics students are becoming increasingly right wing. For instance, my school’s paper recently ran an editorial that ‘complained’ that too many of Lawrenceville’s finest were going into investment banking, and not into seemingly ‘socially beneficial’ careers. What is your view on government intervention on economic equality and the like? Do all economics students show republican (or right of center) tendencies?

To my surprise, Mankiw actually says “I believe the answer is, to some degree, yes.” (I thought he would reject it immediately and point to the fact that there are tons of economists who are left-leaning).

But, he does outline three reasons:

First, in some cases, students start off with utopian views of public policy, where a benevolent government can fix all problems. One of the first lessons of economics is that life is full of tradeoffs. That insight, completely absorbed, makes many utopian visions less attractive. Once you recognize, for example, that there is a tradeoff between equality and efficiency, as economist Arthur Okun famously noted, many public policy decisions become harder.

Second, some of the striking insights of economics make one more respectful of the market as a mechanism for coordinating a society. Because market participants are motivated by self-interest, a person might naturally be suspect of market-based societies. But after learning about the gains from trade, the invisible hand, and the efficiency of market equilibrium, one starts to approach the market with a degree of admiration and, indeed, awe.

Third, the study of actual public policy makes students recognize that political reality often deviates from their idealistic hopes. Much income redistribution, for example, is aimed not toward the needy but toward those with political clout.

And of course:

Nonetheless, studying economics does not by itself determine one’s political ideology. I know good economists who are distinctly right of center and good economists who are distinctly left of center. In my department at Harvard, I would guess that Democrats outnumber Republicans among the faculty (although there is surely more political balance in the economics department than in most other departments at the university).

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Irony of Ironies

Let’s say you’re responsible for building a fence across the US-Mexico border. Why do you do it? Well, maybe you’re concerned about maintaining national security and demanding that all people within the borders obey the law. Maybe you want to prevent “the jobs of hard-working Americans from going to illegals”? Regardless of your reasons, you’d assume that the fence-building operation is a strictly anti-immigrant one — after all, the purpose is to keep those illegals on the other side.

Lo’ and behold, a Border Fence Firm Snared for Hiring Illegal Workers.

And what does the lawyer, have to say? NPR news quotes:

Golden State Fence’s attorney, Richard Hirsch, admits his client broke the law. But he says the case proves that construction companies need a guest-worker program.

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Conquering Cancer with Private Medicine

Conquering Cancer with Private Medicine
by Michael D. TannerFew things in life are as terrifying as a diagnosis of cancer. But for millions in the United States, the news just got a little bit better. Death rates for those suffering from cancer are actually beginning to drop. In particular, death rates have declined for the four most common forms of cancer: lung, colorectal, prostate and female breast cancers. Overall, fewer U.S. citizens died of cancer than at anytime in the past 70 years.

While there are many reasons for this welcome trend, one reason is the much-maligned U.S. free-market health care system.

The one common characteristic of all national health care systems, including Canada’s, is that they ration care. Sometimes, they ration it explicitly, denying certain types of treatment altogether. More often, they ration indirectly, imposing global budgets that limit the availability of high-tech medical equipment, or which require long waits for patients seeking treatment.

In the United States, by contrast, there are no such limits, meaning that the most advanced treatment options are far more available. This translates directly into saved lives.

Take prostate cancer, for example. Even though U.S. men are more likely to be diagnosed with prostate cancer than their counterparts in other countries, they are less likely to die from the disease. Less than one out of five American men with prostate cancer will die from it, but 57% of British men and nearly half of French and German men will. Even in Canada, a quarter of men diagnosed with prostate cancer, die from the disease.

That is, in part, because in most countries with national health insurance, the preferred treatment for prostate cancer is … to do nothing. Prostate cancer is a slow disease. Most patients are older and will live for several years after diagnosis. Therefore, it is not cost-effective in a world of socialized medicine to treat the disease aggressively. The approach saves money, but comes at a human cost.

Similar results can be found for other forms of cancer. For instance, just 30% of U.S. citizens diagnosed with colon cancer die from it, compared to 74% in Britain, 62% in New Zealand, 58% in France, 57% in Germany, 53% in Australia, and 36% in Canada.

Even when there is a desire to provide treatment, national health care systems often lack the resources to provide it. In Britain, for example, roughly 40% of cancer patients never get to see an oncology specialist. Delays in receiving treatment under Britain’s national health service are often so long that nearly 20% of colon cancer cases considered treatable when first diagnosed are incurable by the time treatment is finally offered.

Canada has its own problems. For example, the Canadian Society of Surgical Oncology recommends that cancer surgery take place within two weeks of preoperative tests. Yet one study indicates that median waiting time for cancer surgery in Canada ranged from 29 days for colorectal cancer to more than two months for urinary cancers. Radiation treatment and new therapies, such as brachytherapy, are also less available than in the United States. Consider this: Seven out of ten Canadian provinces report sending prostate cancer patients to the United States for radiation treatment

But the advantages of free-market health care go beyond an absence of rationing. With no price controls, free-market U.S. medicine provides the incentives that lead to innovation breakthroughs in new drugs and other medical technologies. U.S. companies have developed half of all the major new medicines introduced worldwide over the past 20 years. In fact, Americans played a key role in 80% of the most important medical advances of the past 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here.

Obviously, there are problems with the U.S health care system. Too many Americans lack health insurance, or are unable to afford the type of care they want. But it is important to understand that, for all its faults and all the criticism that it has received, the United States’ free market health care system has made it the place you want to be if you have a serious illness. Millions of cancer patients have discovered that. And much of the rest of the world might be able to learn something from it as well.

This article appeared in the National Post on March 16, 2006.

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