The Long Run Catches Up With Minnesota

My streak of being right seems to be continuing. In 2013 I disputed Matt Yglesias’s argument that high local taxes are not an obstacle to economic growth, and that cutting taxes is not a good way to attract development to your jurisdiction. Among other things, I argued that a snapshot of laws and development at any given point don’t account for the destructive effects of bad policy over time – a rich jurisdiction will still look good for a while after adopting bad policy, even if the policy destroys opportunity in the long run. I argued that California and New York have bad policies that take advantage of their unique assets like Hollywood and New York City, and said

The counterpoint is Minnesota, a high-wage, high-tax jurisdiction without unique assets. Let’s see how they hold up in the long run.

It seems like the long run has been catching up with Minnesota:

The state has lost residents every year since 2002, with young adults most eager to leave. About 9,300 18- to 24-year-olds move out annually, according to the Minnesota State Demographic Center. …By 2020, the state is forecast to have a shortage of more than 100,000 workers.

It looks like Minnesota’s particular mix of policy is not that great at creating opportunities for its young people. This makes sense: raising taxes or other costs won’t drive all business away (as many have invested in their location and will profit more from staying than moving) but it is much more effective at preventing new business from being created. For example, raising the minimum wage won’t drive your fast food restaurants out of business, but it will give those who would open a restaurant an incentive to go to a lower cost jurisdiction. These opportunities are now being created outside of Minnesota, and the young people know it.

Who’s Confirming Me Now?

1. A while back I wrote:

Cats are widely acknowledged to have won the internet over dogs, which has prompted a lot of explanations as to why. This recent Australian piece argues that lower costs of producing and disseminating cat videos have resulted in a spike of such videos. … This cat lover invokes the cat lovers’ craving of community, humans’ innate tendency to like cats, and a jealousy of their lazy, independent lifestyles. … There are thousands of other articles, each presenting some version of the theories above. I’ve looked around a bit, but I haven’t seen my own theory:

Dog lovers are outside throwing sticks and frisbees. Cat lovers are at home, filming their cats.

On CNN, they advance the same theory:

And that might be the ultimate explanation for why cats are so big on the Web. As enigmatic, homebound individuals with unconventional obsessions, unusual interests and limited social skills, “They have a lot in common with the people who spend the most time on the Internet,” says Joshua Green, vice president of digital strategy at Arnold Worldwide. “The centrality of cats to the digital world is because they have a cultural connection to the people who live there. The fact is, cats are just better nerd pets.”

2. I also wrote:

It is BECAUSE it’s sold that clean water is plentiful: someone makes money collecting dirty water, purifying it, bottling it, and delivering it to your local supermarket where you can pick up a refrigerated bottle for 99 cents. The only reason some people don’t have clean water is because they don’t have money to buy it. To fix the problem of access to clean water, the only workable solution is to make everyone rich enough to buy it at market prices.

Blog-favorite Megan McArdle, writing about the drought in California, agrees:

California’s proposal is far too heavy on top-down regulatory management, and far too light on pricing. … California’s problem is … that its population uses more water than it has to. And the reason people do this is that water in California is seriously underpriced.

Her piece is actually worth reading in its entirety, especially if you think water is the next scarce resource.

Allstate Defends Female Drivers By Showing Women Are Bad At Math

This Allstate commercial has been airing for a while and I’ve been meaning to call it out for being very stupid:

Rough transcript of the relevant part:

Woman: Remember when you said men are superior drivers?
Man: Yeah?
Woman: Yeah. Then how’d I get this Allstate safe driving bonus check? So weird, right?

Do you see the error? Of course you do. You read this blog. If not, try this instead:

Woman: Remember when you said men are taller than women?
Man: Yeah?
Woman: Yeah. Then how is it that I’m tall? So weird, right?

You see it now, right? Men can be better drivers EVEN IF this particular woman is also a good driver. Stats about populations are true on average, not literally true of every person in each population. It’s basic statistics and common sense, both of which this female character doesn’t seem to know or have.

(Re the underlying question: Freakonomics has a comprehensive review that shows that women get into more accidents per mile driven but men’s accidents tend to be more serious.)

Words Have (Politically Convenient) Meanings, Part 2

This Wednesday, the US Supreme Court heard oral arguments in the case of King v. Burwell, where the court must decide whether the words “Exchanges established by the State under Section 1311″ mean “Exchanges established by the State under Section 1311″ or not. I’m not going to get into the merits of the case (The Volokh Conspiracy does a fine job) but I will comment on the setup that got us here, and how stupid it is.

The reason that case is before the court, ultimately, is that Congress is just terrible at drafting law, even with two centuries of precedent. It’s not like we don’t know how to write exactly what we want into a law when we want to. Of course, Congress usually doesn’t want to be that clear, to the extent a group can even have a consensus. By saving statutes that are so terribly written – and the Obamacare statute is nonsensical under EITHER interpretation of the phrase above – courts are saving Congress from the consequences of being very bad at what it’s supposed to do.

The proper way for the court to resolve it is to say that Congress meant what it wrote and it needs to deal with that. Of course, politics get in the way – the Republican Congress wouldn’t be kind to Obamacare – but all that would happen if the court gives in is that we get to deal with something like this forevermore.

Words have meanings. Actions should have consequences.

Words Have (Politically Convenient) Meanings, Part 1

It gives me no small pleasure that in the past few weeks the headlines have included several separate nationwide discussions about what words mean. As I’ve always maintained, words have meanings and we need to keep those meanings clear and stable as much as possible.  A couple of related questions have recently arisen that bear that out:

1. Is the “Islamic State of Iraq and Syria” Islamic?
2. Is Barack Obama a Christian?

The answer to both questions, of course, is yes and no.

Is ISIS Islamic? No, in the sense that across the world of Islam, from Indonesia to West Africa, ISIS is a huge and clear outlier – hell, al-Qaeda found them too extreme! That said, ISIS considers themselves Islamic, and with enough creative interpretation of Islamic writings, they could probably find some legitimation. There’s obviously a limit to this – if ISIS claimed they were Islamic minus the part where “there is no god but Allah and Muhammad is his prophet,” it’d be difficult to still concede their claim.

Similarly, it’s likely that Obama believes himself to be a Christian, though he’s vastly more secular than the median person who so claims. And if you’re one of these less secular Christians who strongly disagrees that Obama’s actions are consistent with being a Christian, you would not consider him one.

Islam and Christianity are such broad terms encompassing a multitude of concepts that a variety of behaviors and beliefs are covered, and you’re not going to get a clear answer when you ask a yes-or-no question about them. What you’ll get is a politically convenient answer, as we usually do in the cases above.

In Which I Avenge Myself On A Nobel Prize Winner

I’ve mentioned this before, but former economist and current Democratic hack Paul Krugman once called my senior thesis “modest but not surprising.” As a result, I pick on him whenever I can. Fortunately, he makes it easy. After Wal-Mart announced raises for its employees, PK couldn’t contain his glee at what he considers vindication:

Walmart is ready to raise wages…. And its justification for the move echoes what critics of its low-wage policy have been saying for years: Paying workers better will lead to reduced turnover, better morale and higher productivity. What this means, in turn, is that engineering a significant pay raise for tens of millions of Americans would almost surely be much easier than conventional wisdom suggests. Raise minimum wages by a substantial amount; make it easier for workers to organize, increasing their bargaining power; direct monetary and fiscal policy toward full employment, as opposed to keeping the economy depressed out of fear that we’ll suddenly turn into Weimar Germany. It’s not a hard list to implement — and if we did these things we could make major strides back toward the kind of society most of us want to live in.

The emphasis is mine, because that’s where the error is. Krugman is correct that “paying workers better will lead to reduced turnover, better morale and higher productivity,” but only because Wal-Mart is doing it and most firms are not. If Wal-Mart pays more than comparable competitors, current employees will work harder to keep their jobs because losing a Wal-Mart job means settling for a lesser-paying job elsewhere. This reduces turnover (as fewer people leave), higher productivity (as employees get more experienced and also try harder), and better morale. Wal-Mart also gets to pick better candidates from the hiring pool because it pays better, giving them higher productivity still. However, if Wal-Mart’s competitors pay the same, all of these gains go away. You can slack a little more at work because if Wal-Mart lets you go, Kroger pays comparable wages – why try harder?

Basically, what’s a smart move for Wal-Mart isn’t necessarily a great move for the entire economy. What Krugman is really saying is that he’d really like for employers to pay low-skilled employees more. I do, too. But that’s not something you can dictate.

You’d think a Nobel Prize winner would know that.

Book Review: Wild Fire

Wild Fire, by Nelson DeMille

I read a page of this book on someone else’s Kindle on a flight a few weeks ago and was intrigued enough by the premise that I bought and read it fairly quickly. Ultimately, that intriguing premise is all the book has to offer, unless you read a book for unfunny dialogue, a grating protagonist, and a cartoonish villain. (Notice I didn’t say a plot, of which there is little.)

The novel, published in 2006, is set in 2002, just after 9/11. The premise – and I’m not giving away much here – involves a secret government protocol called Wild Fire established in the 1980s to deal with the nascent threat of Islamic terrorism. If a weapon of mass destruction is used on American soil by Islamic terrorists, an automated response rains down nuclear weapons on the major cities and other key sites of the Muslim world, killing hundreds of millions. The governments of those states are aware of the protocol and have kept their terror groups in check as a result. Enter Bain Madox, American oil billionaire and Bond villain, played in my mind by Sam Elliott. Madox, angered by 9/11, wants to activate Wild Fire by detonating nuclear weapons on American soil. Certain elements in the federal government have assured him that the government tacitly approves and wouldn’t stop the automated response if it came to that.

I’m not giving much away here – Madox tells this entire story to Harry Muller, a federal agent he captures on his property in the first 30 pages. (Exposition makes for awesome reading.) Harry’s disappearance triggers an investigation by the protagonist John Corey (apparently this is his fourth appearance in DeMille’s books) and his wife Kate Mansfield. Mansfield is just perfect enough to be boring – a FBI agent and a lawyer, she’s sexy, smart, and level-headed. Corey, a former NYPD cop now working for the Anti-Terrorism Task Force, is none of those things except boring. A classic “I don’t play by the rules” tough guy, Corey is a caricature who tells awful jokes every time he opens his mouth and resists authority for no good reason. I don’t need characters to be likable for a book to be good, but Corey is actively grating.

Corey and Mansfield investigate Muller’s disappearance and face off with Madox more than you’d think would happen in a criminal investigation. I really get the feeling that DeMille loved these characters* and thought it was thrilling to have them talk face-to-face a la the aforementioned Bond and his evil counterparts. Unfortunately, he ends up forcing one-dimensional stereotypes into mostly boring conversations. The characters also make some silly choices, and there is ultimately almost no tension in the book’s 519 pages (200 without Corey’s awful jokes). The plot is virtually non-existent – a hard feat given that nuclear war is imminent.

*In the preface, DeMille says he believes Madox is the “best villain” DeMille ever created, and “certainly … the smartest and most interesting bad guy to come out of some scary place” in DeMille’s psyche. If true, don’t read anything by DeMille.

A lazy and ultimately boring effort. Not recommended.

Recommended For Cuba

Cuba is going to be free.

If you’re a fan of human flourishing, this is a good thing. The loosening of the US embargo is on net a very good thing, but the final nail in the coffin of tyranny is going to be a relatively little-noticed development: the availability of NetFlix in Cuba. The company announced today that it will sell subscriptions to Cuban residents, although given the pricing (same as in the US), spotty internet access in Cuba, and the need for a non-Cuban electronic method of payment will probably limit the audience at first. In the long run, though, it may be one of the biggest contributors to Cuban freedom.

I’m not exaggerating for effect here. There is a reason why countries like Cuba or (worst of all) North Korea exclude outside information: it makes it impossible to avoid change. A dictatorship, of course, doesn’t want change – they have everything to lose and little to gain. (On the other end, a well-functioning democracy is the institutionalization of constant change.) That’s why repressive regimes have to keep out new ideas, and that’s why NetFlix is so important. TV and movies are, at their core, reflection of ideas.

It’s not even important what the intended idea of a movie or TV show is. What’s important is the setting which in the West mostly reflects freedom of some kind – on any given TV show, women are relatively equal, free speech is exercised, etc. This has worked before:

In the last decade, cable television has arrived in remote Indian villages, bringing with it commercial television programming heavy on game shows and Indian soap operas. Before you laugh—a feminist Days of Our Lives?—consider that the most popular Indian series take place in urban settings. Their emancipated female characters are well-educated, work outside the home, control their own money, and have fewer children than rural women. So, Jensen and Oster asked, does the arrival of these shows change attitudes in ways that improve women’s lives?…

What’s the effect? In the places that didn’t get cable by 2003, and in the places that already had it at the beginning of the period studied, attitudes concerning women remained relatively stable. (They were more pro-women in places that already had cable.) But in the 21 villages that got cable between 2001 and 2003, women’s attitudes changed quickly and substantially.

After a village got cable, women’s preference for male children fell by 12 percentage points. The average number of situations in which women said that wife beating is acceptable fell by about 10 percent. And the authors’ composite autonomy index jumped substantially, by an amount equivalent to the attitude difference associated with 5.5 years of additional education.

TV got Indian women more cultural acceptance and more freedom. Just wait until NetFlix (and everything else) enters Cuba. It won’t be a panacea – nothing is – but the flow of ideas can’t be stopped.

This is a good thing.

Blog Note

My resolution for February is to fix the script that is supposed to autopost my backlogged articles while I am away for work. In the meantime, I’ll clear the backlog manually when I get a chance. Apologies for the long radio silence, but I’m alive and well.

NFL 2014 Postseason Predictions

AFC Wild Card

Colts over Bengals. Can’t count on Andy Dalton here.
Steelers over Ravens. Should be a physical battle that the home team wins.

NFC Wild Card

Panthers over Cardinals.  Would have loved to see Logan Thomas get a short for the Cardinals.
Cowboys over Lions. Could be a shootout.

AFC Divisional

Patriots over Colts. As shown earlier this year, the Patriots are still too strong for Luck.
Broncos over Steelers. Broncos didn’t struggle as much you think they have.

NFC Divisional

Seahawks over Panthers. Just don’t see the Panthers scoring enough.
Packers over Cowboys. There could easily be an upset here, but there probably won’t be.

Conference Championship

Patriots over Broncos. Happened earlier this year and will repeat.
Seahawks over Packers. Boring, I know but Seattle is at home.

Super Bowl

Patriots over Seahawks. Trusting the NE flexibility over SEA talent.

Thoughts on law, economics, sports, food, and pop culture. Not necessarily in that order.