Eric Rasmusen’s Weblog

Here are some recent posts at my other website,
http://www.rasmusen.org/x/ :

Measuring Inequality– Kaplow 2003 working paper

The Value of Information and Consumer Values

James Miller’s Game Theory at Work (McGraw Hill 2003)

Rebecca Blank and William McGurn’s Is the Market Moral?(Brookings 2004)

A bad back and access difficulties are slowing down my blogging, but I have gotten a bit more reading done. One stimulating paper is “Why MEasure Inequality?” by Louis Kaplow of Harvard Law. The theme is that standard measures of inequality in income distribution are flawed because they are not related to any purpose for which you would want such a measure. I’ve got lots of comments, enough of which are of general interest that I’ll write some of them up here.

First, of all, some numerical examples would be useful. Imagine the following income distributions.

A1: Andrew gets 10 dollars per hour. Belinda gets 10 also.

A2: Andrew gets 11 dollars per hour. Belinda gets 1000.

By any measure of inequality, A2 is “worse”. Yet most people would prefer society A2 to society A1. In particular, a utilitarian would say A2 is better, because everybody is better off, and a Rawlsian would say A2 is better, because Andrew, the poorest person, is better off in it.

It is true, though, that someone who values Utility and Equality as separate good things, and puts a very strong weight on Equality, would say that A1 is better. That would be true egalitarianism, which although it sounds silly to me, at least has logical consistency.

Most people, however, who say they think inequality is bad don’t really mean it. Instead, they are confused utilitarians, who do not mind inequality per se, but think it is inefficient for one person to have a lot more income than another because the rich person doesn’t get as much value from his last dollar as the poor person would.

If, however, you really do think inequality is unfair, you are on your way to preferring Society A1– you should be willing to make everybodypoorer if that will reduce unfairness, after all. If something is evil, it is worth everybody paying something to get rid of that evil.

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Captain’s Quarters has a good entry of numerical measurement of the media bias in the initial Joe Wilson IV story and the reporting of how it turned out to be based on lies. He describes a
Howard Kurtz story from the Washington Post.

This is another in my collection of stories on how the Washington Post beats out the NY Times and the TV networks as far as accuracy. (See my Sandy Burglar story of NY Times vs. Wash.Post.) This one has the nice feature that it originates with the Washington Post. That paper seems to be smart enough to realize that it could eliminate the NY Times as a rival if it shows liberals how much news they miss by reading the NY Times.

This difference came up in my 1999 web study,
“Broaddrick and Hemings” too. There, I do some numerical study of how newspapers reported on Clinton’s rape of Juanita Broaddrick compared to their treatment of the rumors about President Bush and some woman (*very* flimy rumors) and how they treated the misreporting of the story of Thomas Jefferson and the slave Sally Hemings (where the DNA discovery actually exonerated him more than anything else).

One research theme I’ve been pursuing is the implication of a consumer not knowing his own value for a good he might buy. This has well-known implications when the problem is of product quality, a dimension going from bad to good that is the same for everybody and that is known to the seller, if not the buyer. What I have looked at is the situation when what the buyer doesn’t know is a value *unique to himself*, or to the particular transaction. Here are summaries of the papers:

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This economist at Smith College was in tenure trouble because of his conservatism. His game theory book, one of the many competitors of my own book, looks pretty good, though so close in style to Dixit and Nalebuff, Dixit and Skeath, and Macmillan, good books all, that I wonder about the need for it– especially when Dixit, Nalebuff, and Macmillan are such big names. I was only bold enough to write the 1st edition of Games and Information as an assistant professor because in 1989 nobody else had written a book on game theory in the post-1975 style and everybody wanted to read such a book. I knew I’d have the best book simply because it would be the only book– though it wasn’t for long, it turned out.

Rebecca Blank and William McGurn’s Is the Market Moral?(Brookings 2004)

The Pew Forum and Brookings jointly commissioned this little book on what a Christian’s attitude towards the economy ought to be, by a liberal and a conservative. I found it a bit disappointing. Both authors are competent at economics, and both spend a lot of time talking about what economists know already– that markets work very well, that there is some market failure and some government failure, and that people claim to base some rather silly economic policy prescriptions on religion. Both, however, are very much establishment figures, if of different parties, and they are too respectful of each other and others. Since they both do know economics, it is quite clear that each could have said some very pointed things about the economic idiocies of their own groups– Blank about the Naderism of the Liberal Church, and McGurn about the Namby-Pamby Socialism of the Roman Catholic Church. And of course each could have gone after the other’s group.

Becky Blank points out one difference that is almost amusing stereotypical: she quotes the Bible a lot (which is actually pretty good for a liberal), but Mr. McGurn quotes Roman Catholic church documents. And it seems where they disagree is in that Blank thinks norms are important and a market economy relies on virtue, whereas McGurn thinks that somehow free markets create virtue. I’d give Blank a victory on points there. Adam Smith’s point is not that free markets make people virtuous, or that selfishness is what makes markets work, but that markets work well *even if* people are selfish and bad, so long as they at least keep their bargains and don’t steal from each other. If they are virtuous, that is all the better, but what is nice about markets is that they are more robust than socialism to the presence of rascals.

Neither author meets head on the hard questions for a Christian economist, most of which, I think, concern private behavior rather than government policy. Here are some I would have liked to have seen discussed more:

1. Ought a Christian to be rich?

2. Ought people to be encouraged to work hard by the use of material incentives? Such incentives are, of course, effective, but are they too corrupting?

3. Ought a Christian to force non-Christians to pay taxes to give to the poor?

4. What laws should a Christian use to restrain immorality?

5. Ought a Christian to use the law to restrain blasphemy?

6. Should Christians let the poor suffer if to help them would make them lazy or otherwise immoral?

7. Is it wrong for a Christian to put emphasis on the material well being of himself or others instead of on spiritual things?

8. What makes a Christian liberal different from an atheist liberal? What makes a Christian conservative different from an atheist conservative?

I suppose I ought to try answering these myself some day.

The book has a couple of websites on the back cover which I might visit– www.pewforum.org/dialogues and www.brookings.edu/religionandsociety.

Here are some more tidbits from Joe Wilson’s book, The Politics of Truth. These pertain to the Plame-Wilson scandal more directly than my earlier excerpts on Joe Wilson’s background.

First, on the question of who leaked Plame’s name to Novak we hear on page 345 (I deleted the page number by accident–it is 3 hundred something):

[Of Novak] “He cited not a CIA source, as he had indicated on the phone four days earlier, but rather two senior administration officials.”

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Instapundit
says that mention of Joe Wilson has been carefully excised from the Kerry for President website, though he still has a speaking spot at a Nation magazine panel at the Democratic Convention. I wonder if Sandy Berger mentions have been given the same treatment. It reminds me of a very good book, The Commissar Vanishes, about how Stalin kept having to change official documents as he kept on purging Old Bolsheviks. The book has wonderful before and after versions of Soviet pictures. I recall some story– it must have been just after Stalin died and Beria was killed in the succession fight– of how all the libraries were sent copies of a new,long, article on the Bering Strait that they were to use to replace the old article on Beria in their encyclopedias.

I’ve been hobbling around with two canes the past day as a result of a backache, and so missed blogging yesterday. But I got some reading done.

I decided if I was going to abuse Joe Wilson IV, I ought to buy his book, humorously titled, The Politics of Truth. I was happy to find evidence confirming my predictions about him. It must be kept in mind that he has no qualms about lying, but even liars slip up and let a lot of truth through. That is one reason why I think the lying-to-the-FBI law that caught Martha Stewart is a very bad law. That law says you need not talk to the FBI, but if you do, and lie, you go to jail. A beter law wouldsay that you *do* need to talk the FBI or you go to jail, but you are free to lie if it’s just the police and not a court. That way,the police, experts in detecting lying, would get a lot more information.

Anyway, here is noteworthy information from the Wilson book.
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It’s now 4 a.m. I was awakened by my 4-year-old’s crying over a bad dream or
something and can’t get back to sleep after calming her down, because I have
such exciting ideas about tax law stimulated by our
excellent weekly law-and-econ lunch from yesterday. Here’s a question that came
up that might be worth formal modelling.

Current U.S. tax law lets me itemize and deduct certain things only to the
extent that they exceed a threshold percentage of my adjusted gross income.
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In a
post on poor writing in the New York Times— “They have offered
theories about what that purpose may have been, like an effort to withhold
information…” — I wrote

In the old days, a Times
reporter would have written They have offered theories about
what that purpose may have been, such as an effort to withhold information
, to at least get the grammar correct, or They
say the purpose may have been to withhold information , to
make it less verbose and clearer.

A reader kindly commented:

I heartily approve of parsing text from the Times and the Post, but if you’re
nitpicking grammar, you might want to tidy up your own, “to at least get the
grammar right.” :-)

Juan non-Volokh at the Volokh conspiracy has a post on the question of whether the leaker of Valerie Plame’s employment at the CIA should be prosecuted. I had a thought on this and the Sandy Burglar case.

What cases should a prosecutor choose to prosecute? Two prime considerations are “1. Should the person whom I think did X really be punished, or is their conduct excusable, even if illegal?” and “2. Even if I think the person did X and should be punished, do I have enough evidence that I have a good chance of convincing a jury?”

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Via Instapundit, I discover that
Belgravia Dispatch
has a wonderful dissection of the amazingly biased New York Times
July 22 story on Sandy Berger. It is a good post to read for two reasons: (1)
To see how a journalist carefully twists facts, and (2) To see yet another
example of the liberal bias at the New York Times has wrecked the paper
while the liberal bias at the Washington Post has not stopped it from
being a reliable news source.

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Is Sandy Berger, Clinton’s National Security Advisor and until recently one of Kerry’s top security advisors, a bumbler, or is he a dangerous criminal? Those are our two choices, which does not say good things about Clinton and Kerry. All the evidence points to “dangerous criminal”, and what Berger himself has to say confirms it more than it refutes it.

Instapundit has a great post that shows the value of weblogs, in which he quotes emails from readers.

First, though, the story itself about Berger’s removal of classified documents. Here’s Byron York’s summary of the Berger affair:

First, Berger has reportedly conceded that he knowingly hid his handwritten notes in his jacket and pants in order to sneak them out of the Archives. Any notes made from classified material have to be cleared before they can be removed from the Archives — a common method of safeguarding classified information — and Berger’s admission that he hid the notes in his clothing is a clear sign of intent to conceal his actions.

Second, although Berger said he reviewed thousands of pages, he apparently homed in on a single document: the so-called “after-action report” on the Clinton administration’s handling of the millennium plot of 1999/2000. Berger is said to have taken multiple copies of the same paper. He is also said to have taken those copies on at least two different days. There have been no reports that he took any other documents, which suggests that his choice of papers was quite specific, and not the result of simple carelessness.

Third, it appears that Berger’s “inadvertent” actions clearly aroused the suspicion of the professional staff at the Archives. Staff members there are said to have seen Berger concealing the papers; they became so concerned that they set up what was in effect a small sting operation to catch him. And sure enough, Berger took some more. Those witnesses went to their superiors, who ultimately went to the Justice Department.

Instapundit, Glenn Reynolds, has a very good roundup of emails from his readers about whether what Berger did was common, sloppy practice in government circles, and whether government workers even know the rules about security. ( Jonah Goldberg at the NRO Corner says he’s gotten lots of them too, but, to my disappointment, he doesn’t bother to quote them.) To summarize: everybody knows the rules, they are taken very seriously, and Berger had to have known he was breaking the law in a serious way. Here’s one example of an email sent to Reynolds:

Just to back up some of your other correspondents. I spent 27 years total in the AF - with a Top Secret clearance. I had at times, specific appended code word clearances, which are controlled on a strict need-to-know basis - because they often involve sensitive sources (say, you are getting data from a mole in the Itanian Gov. - that particular data would be graded TS and then given a code word to further identify it as very sensitive and to restrict access from those with just general TS clearances). In a nutshell, the security system from least classified to most classified was: Confidential, Secret, Top Secret, Top Secret codeword). When we worked on Top Secret codeword (it might read something like Top Secret Fishhook), it was in a vault and our notes were put in burn bags. We were not allowed to take any notes out -period. We clearly understood that you didn’t screw around with Secret, much less TS or TS codeword. For us a slip-up meant the slammer. What Berger did is so far removed from accepted security procedure, that I can only see two possible explanations: dishonesty with an ulterior motive (political CYA, I would guess) Or he’s crazy. There is no way a veteran in the security business doesn’t understand the gravity of walking out with TS codeword data.

and here’s another:

I really do not see how the bumbler theory makes any sense, and I highly object to the idea that people who work with very highly classified information simply forget the rules. Only someone who DOES NOT work with very highly classified information could possibly make that charge.

A first advantage of weblogs is that they allow for instant response– news *and* commentary more quickly than the newspapers and TV can even manage news without commentary.

A second advantage is unbiasedness, in aggregate. There are so many weblogs and it is so easy to start one that the liberal establishment cannot suppress information. Even liberal weblogs will confront awkward facts, because otherwise the more intelligent of their readers will know it– competition is just too tight.

A third advantage is accuracy. Weblogs can publish corrections instantly,and they can document their claims by linking to other webpages. If they link, readers can check and do their own analysis of the raw data. If they don’t link, readers can know to be skeptical. Another part of this is that bloggers have personal reputations to protect. A journalist can jump from one newspaper to another after writing inaccurate stories, and his impact on the credibility of the entire newspaper is small anyway. Instapundit is one person. Moreover, that one person has a real job– as a law professor– and if he lies in his weblog it will hurt him in his real job too.

A fourth advantage– finally coming to the Instapundit-on-Berger example– is reader feedback. Readers who know more than the blogger can email him and give him information as yet unpublished. Sometimes this will be corrections, going back to my third advantage, but often it will be supplementary information such as the answer to the reasonable question, “Does everybody ignore the rules on removing classified documents, so Berger’s offense was not really serious?” Readers of weblogs will know the answer to this, based on convincing evidence from government employees who know what they’re talking about. Readers of newspapers will not. Even if a news story purports to answer it, readers will be properly skeptical of bias. In theory a newspaper could do the same thing as Instapundit and publish numerous quotes as evidence, but for some reason–space considerations perhaps– newspapers don’t.

Clayton Cramer notes

I discovered a few years ago, when I had a remarkably good year (thanks to
Nokia’s acquisition of my employer), that above about $130,000 gross income, you
start losing your charitable deductions. A person who makes $10,000,000 a year,
as near as I can tell, gets almost no more benefit on his taxes from giving
$1,000,000 to charity than giving $5,000. He might well give the extra money,
but it won’t lower his federal income taxes more than a couple bucks. (Talk
about a really stupid tax policy, if the goal is to encourage charitable
giving.)

If this is true, which I’m skeptical of, then the charitable deduction doesn’t exist for many (most?) of the people who would itemize donations. Charitable deductions do enter into the Alternative Minimum Tax, but I forget how, having only once been caught by AMT.

Mark Steyn
, as usual, writes a situation up with insight and style:

What do Joe Wilson’s lies mean? And what does it say about the Democrats and the
media that so many high-ranking figures took him at his word?

First, contrary to what Wilson wrote in the New York Times, Saddam Hussein was
trying to acquire uranium from Niger. In support of that proposition are a
Senate report in Washington, Lord Butler’s report in London, MI6, French
intelligence, other European agencies — and, as we now know, the CIA report,
based on Joe Wilson’s original briefing to them. Against that proposition is Joe
Wilson’s revised version of events for the Times.

From

World Magazine:

“We were used to such things in the communist days.”

Vaclav Klaus, president of the Czech Republic, after watching the Michael Moore
documentary Fahrenheit 9/11. He predicted that the film would have little impact
on public opinion in the nation: “Everybody has open eyes and can understand
that this is propaganda.”

George Neumayr > of The American Spectator
has a nice wrap-up of the numerous security breaches of the
Clintonites, exemplified best and most recently by former National Security
Advisor Sandy Berger’s theft of secret documents:

Linda Ronstadt says

• It’s a real conflict for me when I go to a concert and find out somebody in the audience is a Republican or fundamental Christian. It can cloud my enjoyment. I’d rather not know.”

This is a good example of an aspect of the “unconstrained vision” that Thomas Sowell noted long ago in A Conflict of Visions: a visceral hatred of opposing views and an unwillingness to tolerate the possibility that people might be wrong for innocent reasons. No conservative singer would say this about having Michael Moore socialists in his audience. He would expect there to be some, but would have the attitude that there are lots of stupid people in the world, many of them quite nice, and all of them worth singing songs for. Even a Communist has the right to live. But for Linda Ronstadt, it is one of the injustices of the world that she has to be in the same room as a Republican for an hour.