## November 30, 2004

### Judicial Supremacy: Review of Kramer 2004 Book

American Spectator review of The People Themselves: Popular Constitutionalism and Judicial Review ,"a comprehensive attack on the doctrine of judicial supremacy," by Larry D. Kramer, Dean of Stanford Law:
KRAMER ENDS THE BOOK with a call for ordinary citizens to "lay claim to the Constitution ourselves." He suggests that we must censure judges rather than submissively yielding to whatever the Supreme Court decides. As for more concrete actions, Kramer does note that judges can be impeached, the Court's budget cut, and the Court's jurisdiction curtailed. But, unfortunately, he spends little time developing these themes. For example, a more thorough discussion is warranted of Congress's power to impeach and why this power has become but a scarecrow. Also, Kramer never addresses whether "mobbing" -- or other such elements of 18th century political behavior -- should be revived as part of popular constitutionalism.

Despite these foibles, The People Themselves is a valuable addition to constitutional scholarship.

Nice to hear that someone else is thinking about solutions.

James D. Miller's ($) "The Patient's Right Not to Sue" from The Weekly Standard has a good idea captured in the first two paragraphs: I DON’T WANT THE ABILITY to sue my health insurance company. Lawyers are expensive, so if my insurance providers know that I might sue them, they’ll charge me more. Other people, in contrast, might want to pay for the ability to sue. A true patients’ bill of rights would give all of us the choice. Unfortunately, the congressional sponsors of the patients’ bill of rights now heading for a House-Senate conference this fall seem to have forgotten the difference between rights and obligations. They want to force everyone to pay higher health insurance premiums in return for the ability to sue. But if I hate broccoli, forcing me to buy it increases my obligations, not my rights. So many laws presented as giving people rights are, instead, taking them away-- the right to social security (meaning you have to pay payroll taxes) and medicare (ditto), or to an 8-hour day (meaning you have to accept that length of day) or to unionize (meaning, in many states, that if your company has a union, you must join it). Posted by erasmuse at 12:31 PM | Comments (0) | TrackBack ## November 29, 2004 ### New Paradigm Introduction: Biology and Economics I just heard a talk by Oliver Curry at the Workshop on evolutionary biologyand economics. Some of my notes might be worth putting up on my weblog. What matters, I think, is what questions evolutionary biology helps answer that economists cannot answer well now. It's hard when you're calling for a start to work, but if you can find just one or two examples of where biology helps, that would be a good invitation. Here's a way to approach it: Rather than say, "You need to learn a lot more complicated theory", say "Here are some exmaples where a simple addition to your theory explains something you couldn't explain before". "Why young men overestimate their ability" is one example. Most examples I can think of involve explaining tastes rather than thinking, but you could have examples both thinking and tastes. Economists *are* interested to some extent in explaining tastes. Note, though, that even the "Young men overestimate" idea doesn't need the gene-- it just uses evolution and the simpler idea of "organisms try to maximize reproductive fitness". The "invitation to learn a new tool" approach is why economics has been so successful in law. It has proven useful for explaining lots of things that didn't have good explanations before. Lawyers can bring it in for specific applications without having to use it for everything, though some then decided to learn it systematically and use it for everything. As opposed to behavioral economics, evolution adds an explanation for behavior rules, and a suggestion that the rule would be the same for all humans, as oppposed to history-dependent (culture-dependent). Thus, we avoid having a big collection of entirely unrelated rules. We could have a research rule of saying that you should always try to find an evolutionary explanation for a behavioral rule. Posted by erasmuse at 12:56 PM | Comments (0) | TrackBack ### The ACLU War Against the Boy Scouts The WSJ has a story on the continued attacks by the ACLU on the Boy Scouts. Interesting, isn't it, that attacking the Boy Scouts is so popular with liberals? (And that other evil, the Salvation Army?) The Boy Scouts are against homosexuality (in the mild sense of not wanting homosexuals to go camping with boys) and for religion. Those "bads" trump the good the organization does-- yet another example of how liberals, despite their protestations, really don't value children (a provocative statement, I know, but how many liberals like large families? How many bother to homeschool? How many think it is nobler for a woman to be a mother than an office worker?) Ever since the Supreme Court upheld the Scouts' First Amendment right to bar Scoutmasters who are openly gay, the ACLU has looked for softer targets. The suit against the military is one of a series aimed at getting communities to deny access to public facilities. The original lawsuit also challenged the city of Chicago's sponsorship of troops in public schools, another venue where sponsors aren't always easy to find. The city settled. In Connecticut the ACLU has succeeded in getting the state to remove the Scouts from the list of charitable institutions to which public employees may make voluntary contributions. And earlier this year it settled a suit against the city of San Diego, which agreed to evict the Scouts from a public park they have been using since 1918. The Scouts countersued, lost, and the case is now on appeal before the Ninth Circuit. The question no one seems to be asking is, who's better off as a result of these lawsuits? Surely not the 3.2 million Boy Scouts, whose venerable organization is part of the web of voluntary associations once considered the bedrock of American life. If anything, the purpose of the ACLU attacks is to paint Scouts as religious bigots. Other losers are communities themselves, which are forced to sever ties to an organization that helps to build character in young men. It's been 20 years since the ACLU brought its first suit against the Scouts. If there's one thing we've learned by now, it's that the ACLU offensive says more about the degraded status of the civil liberties group than it does about the Boy Scouts. Posted by erasmuse at 09:43 AM | Comments (0) | TrackBack ## November 28, 2004 ### Peculiar Peoples: Christians, Conservatives, Scholars The sermon today at ECC mentioned 1 Peter 2:9: But ye are a chosen generation, a royal priesthood, an holy nation, a peculiar people; that ye should shew forth the praises of him who hath called you out of darkness into his marvellous light: I realize I am a member of three "peculiar peoples": Christians, conservatives, and scholars. 1 Peter 2:9 is about Christians, the continuation of the Jews, who consider themselves special and chosen by God, and are considered, when they are serious, "peculiar" by the other peoples of the world. Christians are like the freed prisoners of Plato's Cave, who see the reality that casts the shadows seen by the prisoners as their only reality, but who cannot be understood well by the prisoners. Christians constantly face the temptation to pretend to still be prisoners, seeing the same things as everyone else. It is an insidious temptation, because the main thing it requires is silence, which comes easily to us anyway. Conservatives are another peculiar people, at least nowadays. The Left has largely won the Culture War. The preacher today said bravely that he was going to do something unusual and make a political statement in church: that he was against the state lottery. But that is not a political statement; it is a moral statement. He may be wrong, but the morality of gambling, and whether the state should promote it, is definitely a subject for discussion in the churches. But it is now framed as merely a political issue. On a number of topics, the conservative position, even if perhaps a majority position, has become marginalized, without outspoken support in the media or from politicians. But we wait, and remember the similar position of economic conservatives in 1960. And then there are the scholars. Even in universities, not everyone thinks that the life of the mind is important, or even is really conscious of it as a possibility. In business schools, CEO's are as admired as professors, and it is my impression that in the liberal arts TV anchormen are seen as people worthy of admiration. Are the sciences different? I hope so. The way to progress is to see the 1st-year graduate student as a being superior to the corporate lawyer and the cardiac surgeon, and infinitely superior to the sports hero. This is pride, of a sort, and hence for a Christian is dangerous ground, but I don't think it is pride of a bad sort. Anyone can, with God's grace, be a Christian, if he is willing to be despised by the world. Anyone can, even without God's grace, be a conservative. To be a successful scholar does require special talents, but mostly it requires an attitude, and even the aspirant is treated as more important than those who achieve success in mundane fields. So the pride is mostly that of being on the right side, a matter of personal choice, and not a choice you made for material gain or social acceptance. Posted by erasmuse at 09:06 PM | Comments (0) | TrackBack ## November 27, 2004 ### Sailer on the IQ's of Bush and Kerry Voters, Different States Steve Sailer's "The 2004 IQ Wars: So Much For The Candidates--What About The Voters?" is good. Exit polls are the standard way to check on the income and education of voters for particular candidates. As Sailer says, we have good reason now to mistrust the quality of the polls, but here is what they say: Income. Not surprisingly, given Bush’s tax-cut agenda, voters with incomes over$100,000 went for Bush over Kerry 58-41 .

Education. In 2000, the self-reported educational level of the average Bush and Gore voters was virtually identical. In the 2002 House races, Republican voters did quite a bit better with the well-educated, winning 58-40 among college graduates and even winning a majority among those who had undertaken some graduate study. (The latter's ranks are inflated by Democratic-voting public school teachers who have done post-grad work in the easy field of Education.) v But in 2004, as you may have noticed, Bush ran a pretty dumbscale campaign. The Democrats normally win by a landslide among high school dropouts. This time, however, Bush wrestled Kerry to a draw among that segment. Bush ended up with an average voter with only a month and a half less schooling overall than Kerry's typical supporter.

Sailer quotes Professor Lindgren on the interesting fact that General Social Survey data (the standard sociology dataset) shows that conservative Republicans and liberal Democrats are both above average in education and do better on short word tests compared to moderates.

I was struck by Sailer's observation that "people with some graduate work" really means "public schoolteachers". He's quite right. Their Master's and Doctoral degrees, despite meaning very little, are extremely numerous, swamping real advanced degrees. So it is not the liberal professors who are driving the liberalism of people who have done graduate work. In fact, the professors are probably swamped even by the MBA's and MD's.

Much of his article debunks the comparison of Bush states with Kerry states, making obvious points such as that in the South, Bush voters almost certainly have higher IQ's than Kerry voters. But he also raises a problem with the plausibility of the data we are told about.

Everyone familiar with IQ testing scoffed at the validity of the hoax data that claiming the average IQ in Connecticut was 113 and in Utah was 87. To see why, it's important to understand how IQ tests are scored.

The mean is typically set at 100 and the standard deviation is 15. This implies that Utah's average person would fall 26/15ths (or 1.73) standard deviations lower than the average person in Connecticut.

Using the Normdist function in Microsoft Excel, you can easily put this on a percentile basis. This hoax data therefore implies that a Utah resident of average intelligence (50th percentile) would be only at the 4th percentile in Connecticut. The average person in Connecticut (50th percentile) would suddenly be at the 96th percentile if he moved to Utah.

When phrased like that, the numbers appear obviously wrong.

## November 26, 2004

### Fall in Health Costs: Eye Laser Surgery, an Uninsured Item

Alex Tabarrok has a good post at Marginal Revolution on how one kind of health care cost has actually fallen:
Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and... laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is$1350, that's a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.

Why the price decline in this market and not others? Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated? Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases.

I don't know that there hasn't been decline in the price of other procedures-- or every procedure-- as they become better known, but this is still a striking example of how competition drives down price.

There is another example of falling health costs which is so obvious one might miss it: the fall in the price of drugs when their patents expire. One reason to be nervous about the Bush Medicare drugs bill is that pharmaceuticals have been such a successful part of health care.

## November 25, 2004

### Thanksgiving History, Proclamatinos

Today, I will just post what I posted last year at Thanksgiving. I think I ought to do more re-posting. Some weblogs are for journalism-- and beat the magazines at that-- but this one I think is better suited to items of permanent interst.

This website contains information about the Thanksgiving holiday. For some well- researched facts ( but undue hostility to the Colonial side in King Philip's War), see Karen Knelte's "History of the Modern American Thanksgiving", August 9, 2001 (viewed November 26, 2003).

Thanksgiving Proclamations Here are excerpts from some Thanksgiving proclamations from across American history. When a person is thankful, he is of course has to thanking someone---"to thank" is a transitive verb, requiring an object. Thanksgiving is a time to thank God, as the government proclamations traditionally say. These proclamations make nonsense of the claim that the American Constitution forbids a place for Christianity in public affairs, though it is noteworthy that Thomas Jefferson, unlike his two predecessors, refrained from issuing any Thanksgiving Proclamations.

The Council has thought meet to appoint and set apart the 29th day of this instant June, as a day of Solemn Thanksgiving and praise to God for such his Goodness and Favour, many Particulars of which mercy might be Instanced, but we doubt not those who are sensible of God's Afflictions, have been as diligent to espy him returning to us; and that the Lord may behold us as a People offering Praise and thereby glorifying Him; the Council doth commend it to the Respective Ministers, Elders and people of this Jurisdiction; Solemnly and seriously to keep the same Beseeching that being perswaded by the mercies of God we may all, even this whole people offer up our bodies and soulds as a living and acceptable Service unto God by Jesus Christ. (1676, Connecticut)

"Forasmuch as it is the indispensable Duty of all Men to adore the superintending providence of Almighty God; to acknowledge with Gratitude their Obligation to him for benefits received, and to implore such further Blessings as they stand in Need of: ...(1777, Continental Congress)

WHEREAS it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favour; and Whereas both Houfes of Congress have, by their joint committee, requefted me "to recommend to the people of the United States a DAY OF PUBLICK THANSGIVING and PRAYER, to be observed by acknowledging with grateful hearts the many and signal favors of Almighty God, especially by affording them an opportunity peaceably to eftablifh a form of government for their safety and happiness:... (1789, Washington)

Deeply penetrated with this sentiment, I, George Washington, President of the United States, do recommend to all religious societies and denominations, and to all persons whomsoever, within the United States to set apart and observe Thursday, the 19th day of February next as a day of public thanksgiving and prayer, and on that day to meet together and render their sincere and hearty thanks to the Great Ruler of Nations for the manifold and signal mercies which distinguish our lot as a nation,... (1795, Washington)

As the safety and prosperity of nations ultimately and essentially depend on the protection and the blessing of Almighty God, and the national acknowledgment of this truth is not only an indispensable duty which the people owe to Him, but a duty whose natural influence is favorable to the promotion of that morality and piety without which social happiness can not exist nor the blessings of a free government be enjoyed; and as this duty, at all times incumbent, is so especially in seasons of difficulty or of danger, when existing or threatening calamities, the just judgments of God against prevalent iniquity, are a loud call to repentance and reformation;... (1798, Adams)

As no truth is more clearly taught in the Volume of Inspiration , nor any more fully demonstrated by the experience of all ages, than that a deep sense and a due acknowledgment of the governing providence of a Supreme Being and of the accountableness of men to Him as the searcher of hearts and righteous distributer of rewards and punishments are conducive equally to the happiness and rectitude of individuals and to the well-being of communities;.. (1799, Adams)

I do therefore invite my fellow-citizens in every part of the United States, and also those who are in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise to our beneficent Father who dwelleth in the heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the imposition of the Almighty hand to heal the wounds of the nation and to restore it, as soon as may be consistent with the divine purpose, to the full enjoyment of peace, harmony, tranquillity, and union. (Lincoln, 1863)

Let us now, this Thanksgiving Day, reawaken ourselves and our neighbors and our communities to the genius of our founders in daring to build the world's first constitutional democracy on the foundation of trust and thanks to God. Out of our right and proper rejoicing on Thanksgiving Day, let us give our own thanks to God and reaffirm our love of family, neighbor, and community. (1996, Clinton)

Each year on Thanksgiving, we gather with family and friends to thank God for the many blessings He has given us, and we ask God to continue to guide and watch over our country. (2003, Bush)

From: Plimoth-on-Web Plimoth Plantation's Web Site (as of 2003 a dead link)
In 1777, the Continental Congress declared the first national American Thanksgiving following the providential victory at Saratoga. The 1777 Thanksgiving proclamation reveals its New England Puritan roots. The day was still officially a religious observance in recognition of God's Providence, and, as on the Sabbath, both work and amusements were forbidden. It does not resemble our idea of a Thanksgiving, with its emphasis on family dinners and popular recreation. Yet beneath these stern sentiments, the old Puritan fervor had declined to the extent that Thanksgiving was beginning to be less of a religious and more of a secular celebration. The focus was shifting from the religious service to the family gathering. Communities still dutifully went to church each Thanksgiving Day but the social and culinary attractions were increasing in importance.

A contemporary account of a wartime Thanksgiving provides us alternative testimony to the austere official proclamation. Juliana Smith's 1779 Massachusetts' Thanksgiving description, written in a letter to her friend Betsey Smith (and recorded in her diary as well) provides a good example of what the late 18th century celebration meant to the participants.

National Thanksgivings were proclaimed annually by Congress from 1777 to 1783 which, except for 1782, were all celebrated in December. After a five year hiatus, the practice was revived by President Washington in 1789 and 1795. John Adams declared Thanksgivings in 1798 and 1799, while James Madison declared the holiday twice in 1815; none of these were celebrated in the autumn. After 1815, there were no further national Thanksgivings until the Civil War. As sectional differences widened in the Antebellum period, it was impossible achieve the consensus to have a national Thanksgiving. The southern states were generally unreceptive to a "Yankee" custom being pressed on them by the federal government. If the federal government neglected the tradition, however, the individual states did not. The New England states continued to declare annual Thanksgivings (usually in November, although not always on the same day), and eventually most of the other states also had independent observations of the holiday. New Englanders were born proselyters and wherever they went during the great westward migration they introduced their favorite holiday. Thanksgiving was adopted first in the Northeast and in the Northwest Territory, then by the middle and western states. At mid-century even the southern states were celebrating their own Thanksgivings.

By the 1840s when the Puritan holy day had largely given way to the Yankee holiday, Thanksgiving was usually depicted in a family setting with dinner as the central event. The archetypal tradition of harvest celebration had weathered Puritan disapproval and quietly reasserted its influence. Newspapers and magazines helped popularize the holiday in its new guise as a secular autumn celebration featuring feasting, family reunions and charity to the poor. Thanksgiving became an important symbol of the new emphasis on home life and the necessity of enforcing family virtues against the coarse masculine style and cutthroat business practices of the day. This "cult of domesticity" found Thanksgiving a valuable element for promulgating the feminist goals of social reform and the role of the (extended) family as a bastion against the callous workaday world. The holiday focused on the home and hearth where it was hoped a revolution in manners would begin to restore the civilized virtues which had been lost in the new commercial and industrial society.

It is interesting that the same person who was a leading figure in the domesticity movement, Sarah Josepha Hale, also labored for decades to establish Thanksgiving as a national holiday. A New England author and editor of the influential Godey's Ladies Book, Hale lobbied for a return to the morality and simplicity of days gone by. Each November from 1846 until 1863 Mrs. Hale printed an editorial urging the federal government to establish Thanksgiving as a national holiday. She was finally gratified when Abraham Lincoln declared the first of our modern series of annual Thanksgiving holidays for the last Thursday in November, 1863. Lincoln had previously declared national Thanksgivings for April, 1862, and again for August 6, 1863, after the northern victory at Gettysburg. The southern states had independently declared Thanksgivings of their own, unsullied by Yankee influences, but would later resent the new national Thanksgiving holiday after the war.

Lincoln went on to declare a similar Thanksgiving observance in 1864, establishing a precedent that was followed by Andrew Johnson in 1865 and by every subsequent president. After a few deviations (December 7th in 1865, November 18th in 1869), the holiday came to rest on the last Thursday in November. However, Thanksgiving remained a custom unsanctified by law until 1941! In 1939 Franklin D. Roosevelt departed from tradition by declaring November 23, the next to the last Thursday that year, as Thanksgiving. Considerable controversy (mostly following political lines) arose around this outrage to custom, so that some Americans celebrated Thanksgiving on the 23rd and others on the 30th (including Plymouth, MA). In 1940, the country was once again divided over "Franksgiving" as the Thanksgiving declared for November 21st was called. Thanksgiving was declared for the earlier Thursday again in 1941, but Roosevelt admitted that the earlier date (which had not proven useful to the commercial interests) was a mistake. On November 26, 1941, he signed a bill that established the fourth Thursday in November as the national Thanksgiving holiday, which it has been ever since.

and
Both the North and South maintained the tradition of independent state Thanksgivings into the Civil War period. The Confederate Congress declared a Sunday thanksgiving service for July 28, 1861 after their victory at Bull Run, and another for Thursday, September 18, 1862, for the Second Battle at Bull Run. The first national Thanksgiving holiday to be declared by the U.S. government since 1815 occurred in 1862 when President Lincoln declared a Thanksgiving holiday for Sunday, April 13, following the Union victory at Shiloh. Lincoln declared another national Thanksgiving for August 6, 1863, in recognition of the victory at Gettysburg.

On October 3, 1863, President Lincoln declared a second national Thanksgiving that year for the last Thursday in November which followed the Yankee practice of a general November holiday giving thanks for "general causes" rather than "special providences" such as wartime victories. This Thanksgiving became the first in the unbroken series of our modern holiday tradition. Lincoln declared a national Thanksgiving for the last Thursday in November, 1864. Andrew Johnson followed with a Thanksgiving on December 7, 1865 (celebrating the Union victory), and each President since then has declared an annual national Thanksgiving.

It might also be noted that none of the presidential declarations of Thansgiving mention the Plymouth Pilgrims or the "First Thanksgiving" until Herbert Hoover's proclamation of 1931 (with the possible exception of Roosevelt's 1905 mention of the colonial custom).

## November 24, 2004

### Poverty and Government Aid: Facts and 90's Trends

I was wondering what had happened to welfare spending over time. The adjacent table from the 2003 Statistical Abstract shows changes in income-tested government transfers during the 1990's. Compare 1990 and 2000, in constant dollars. Federal and state medical benefits rose from 69 to 225 billion dollars per year. Cash payments went from 61 to 91, peaking at 109 in 1995. Food went from 29 to 34, peaking at 49 in 1994. Housing went from 21 to 34 billion, peaking at 36 in 1996.

AFDC, a cash benefits program, was reformed in 1996-- the well- known "welfare reform"-- but other programs were not. As a Heritage Foundation report says,

Only one federal welfare program--AFDC--was reformed in 1996. The other 69 major means-tested programs, including food stamps, housing, and Medicaid, were left largely unchanged with no requirements to be engaged in constructive activity, such as work or education, as a condition for receiving aid.

The rate of caseload decline varies enormously among the 50 states, which shows that welfare policies were the key factors behind falling dependence, not economic conditions. If economic conditions were the main factor driving down caseloads, the variation in state reduction rates would be linked to variation in state economic conditions. But the relative vigor of state economies had no statistically significant effect on caseload decline....

Another Heritage report, on poverty and inequality, has evidence on the peculiarity of the official definition of poverty:
Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio....

According to the Census Bureau and other various government reports, nearly three-quarters of poor households own a car; 30 percent own two or more cars...

Today, the typical American defined as poor by the government not only has a refrigerator, a stove, and a washing machine, but also has a car, air conditioning in his home, a microwave, a color TV, a VCR, and a stereo. His home is in good repair and is not over-crowded. He is able to obtain medical care. By his own report, his family is not hungry, and in the past year, he had sufficient funds to meet his essential needs.

While this individual's life is not opulent, it is equally far from the popular images of poverty conveyed by politicians, the press, and activists. Most of America's "poor" live in material conditions that would be judged as comfortable or well-off just a few generations ago. Today, the expenditures per person of the lowest-income one-fifth (or quintile) of households equal those of the median American household in the early 1970s, after adjusting for inflation.

## November 23, 2004

### Steel Tariffs; Appropriations vs. Entitlements

Remember the Bush steel tariffs? Here is the latest from the Washington Post.
The European Union has requested talks with the U.S. government over antidumping duties that have hit a British steel firm in the first step toward asking the World Trade Organization to condemn the U.S. tariffs, EU officials said Tuesday.

The EU maintains that the United States is breaching the rules of global commerce through its tariffs of almost 126 percent on imports of stainless steel bars made by Firth Rixson Special Steels Ltd.

Washington imposed the duties in March 2002, claiming the company was unfairly dumping cheap goods on the U.S. market....

Last year the Bush Administration removed "safeguard" duties imposed on imported steel to protect domestic producers after they were declared illegal by the WTO.

So we imposed extraordinary steel tariffs, waited for the WTO to declare them against WTO rules (which they obviously were) and then lifted them. We still, however, have some steel tariffs, through the ordinary process of having the U.S. International Trade Commission say that dumping (charging unfairly low prices) is going on.

There was much complaint about Bush's extraordinary steel tariffs, but little against the ordinary process. This illustrates a general point: what is most dangerous in government is not the special favors, but the routine ones. Special favors come and go; routine favors stay and stay. The same thing goes on with appropriations (porkbarrel spending on senior citizen centers, for example) and entitlements (Medicare). Appropriations get the attention, but entitlements are a bigger problem. Appropriations do go down sometimes; entitlements, almost never. The only example I can think of is the welfare reform of the 1990's, and I'm not sure that actually reduced spending.

This makes me more forgiving of the extraordinary steel tariffs and the rise in appropriations spending under Bush of which many people complain. If those payments are necessary to get support for more important things such as the war in Iraq or confirmation of judges who won't violate their oaths, they're worth it.

On the other hand, it makes me less forgiving of the Medicare drug benefits that Bush passed. Like the Americans with Disabilities Act that Dole helped pass, those drug benefits will be with us a long time, and with little political benefit.

## November 22, 2004

### Three Theories of International Trade;Hummels Paper

Professor Hummels visited here Friday and taught me a few things. Here are some notes from a paper of his, Hummels \& Klenow's "THE VARIETY AND QUALITY OF A NATION'S TRADE":

Gallup, Sachs and Mellinger (1998) find that a country's access to navigable waterways is strongly related to its trade and development. Gallup, Sachs and Mellinger (1998), "Geography and Economic Development," NBER Working Paper #6849, December.

Frankel and Romer (1999) find that distance from other economies is very negatively related to its trade and per capita income. Frankel, Jeffrey and David Romer (1999), "Does Trade Cause Growth?," American Economic Review 89(3), 379-399.

Professor Hummels gave a seminar here, and explained part of the paper to me. Suppose a large country expands its exports. Three things might happen:

1. Products are homogeneous, and each firm produces more. This reduces the price they can get on the world market. This is the traditional, 1960's trade model.

2. Products are differentiated horizontally-- by variety. When prices start to fall with increased output, it becomes more profitable to start producing new products. So prices don't fall- they stay the same. This is the Krugman-style, monopolistic competition model.

3. Products are differentiated vertically-- by quality. When prices start to fall with increased output, it becomes more profitable to start producing a higher-quality product. So prices don't fall- they rise (though costs rise too). This isthe model of Hummels and Klenow.

## November 21, 2004

### Law's Educational Purpose; The Source of Value

What is the purpose of law? To make people behave well. Under Holmes's "Bad Man" theory in "The Path of the Law", laws are for the men who will not do good without the threat of punishment. That, however, neglects other purposes of laws which are important if secondary. One is the "expressive" purpose-- that expressing that something is wrong is satisfing to the public. Related to that is the educational purpose of law. Even the good man does not know everything, and the law teaches him.

Psalm 119 says

97 MEM. O how love I thy law! it is my meditation all the day.

98 Thou through thy commandments hast made me wiser than mine enemies: for they are ever with me.

99 I have more understanding than all my teachers: for thy testimonies are my meditation.

...

104 Through thy precepts I get understanding: therefore I hate every false way.

But for the law to achieve this purpose, it must be a trustworthy guide. We must trust the lawgiver to be willing to learn from the law. God's law is trustworthy. If nothing else, it tells me what God wants, and that is important in itself. Human law is less reliable. If I see a law saying that it is illegal to perform haircuts without a license, I do not conclude that unlicensed haircuts are immoral, or even unsafe, because I think the legislature is wiser than I am. Rather, I conclude that either the legislature has been fooled, or they have been bribed by the barbers to restrict entry.

The Bible is a comfort to Christians because it is a reliable source of law. It still has many difficulties-- notably, knowing what law in the Old Testament is still applicable after the Resurrection-- but Christians at least have a basis for right and wrong beyond what their culture teaches them. Traditionalists are less grounded, but they at least can find grounding in the axiom that their tradition is reliable. Liberals, despite the confidence they commonly show, are more at sea. They cannot retreat to their culture, since it is a recent and ever-changing one. They are at risk trying to appeal to logical principles grounded in a few generally accepted axioms too, since they often profess a relativism which rules out logic. But that, I think, is what they commonly try to do anyway. John Stuart Mill is an example. He tried to ground morality on the rule of not hurting others, and that is common today too. But the rule turns out to be empty, since anything to which anybody objects hurts them and since it is by no means self-evident that we shouldn't hurt other people (think of the hurt caused by winning a contest with others, or by starting a new business in competition with them).

## November 20, 2004

### Reforms at the CIA; Tenet's Political Partisanship against Bush

I've commented before on the CIA's hostility to President Bush, here and on this good National Review article and in relation to the Plame-Wilson affair.. The Weekly Standard has a couple of good articles on what is happening now that Bush has replaced Director Tenet with Goss, who is already driving officials from the agency. From ""Anonymous" Names Names: Former CIA counterterrorism expert Michael Scheuer reveals who it was at the agency who gave him "carte blanche" to criticize President Bush":

Scheuer told reporters on Friday that, traditionally, he would have to arrange interviews through the CIA public affairs office. Each interview would have to be cleared before Scheuer was allowed to talk. With Imperial Hubris, however, that wasn't the case. The book's advance publicity had hyped the fact that a CIA officer was anonymously breaking with the administration's anti-terror strategy. Interview requests flooded in. But Scheuer said that Harlow told him, "We're giving you carte blanche." Harlow's condition? Scheuer was supposed to let the public affairs office know who he talked to--after the interview(s) had taken place.

"The book was misunderstood," Scheuer said on Friday. "It's a book about the failure of senior intelligence officers," not an ad hominem attack on the president. During his first round of publicity interviews, he tried to set the record straight. "Once I turned it around," however, "and talked about leadership in the intelligence community," Scheuer said, "well, that was the end of the day." Since Bush was no longer his target, Scheuer had been gagged.

Of course, one reporter asked, Harlow couldn't have made the decision to promote Scheuer's book alone. Scheuer nodded. He said that Harlow would've needed authorization from his superiors for such a move. Harlow's superior at the time? Former CIA director George Tenet.

The other article is about Goss's housecleaning, "Porter's House: CIA Director Porter Goss takes charge". Whether Goss was firing the right people or the wrong ones, we'd expect what we see-- charges that he was firing good people and criticism of him for being partisan. These things do, however, rule out the possibility that he is failing by doing nothing, so I take them as a good sign.

## November 19, 2004

### Michael Barone's Retrospective on his Almanac of American Politics Intros

Michael Barone's retrospectives on over thirty years of the Almanac of American Politics makes interesting reading. He goes over his analyses and predictions with the benefit of hindsight and the openness of someone whose wisdom is well enough established that he can admit to mistakes. Here's an example, on the 1982 almanac:
This Introduction includes summaries of the battles for the Democratic and Republican nominations which I think stand up very well. It has a neat summary of John Anderson's candidacy which also stands up well, but is a bit too snide; and it ends by noting that Anderson emerged with a mailing list three times larger than that of the Democratic party and that therefore "Anderson has the potential of reviving his candidacy in 1984 and may be an important political factor in the years in between." Nothing like that happened at all, and I should have had the good judgment to see that it wouldn't. The summary of the general election reads well, and I wouldn't change it today. The crux: "Voters wanted to reject Carter and were looking for reassurance that Reagan was acceptable. In the debate they got it. Reagan made no obvious mistakes; he stressed convincingly his desire for peace. He presented himself as an amiable and knowledgeable man, and one capable of inspiration." But I didn't mention his famous words, "Are you better off than you were four years ago" (they are mentioned later in the Introduction) and "There you go again."

## November 18, 2004

### A Lobbying Game-- All-Pay Auction with Free Riding

Yesterday I had my students play this lobbying game in class:
For this game, some of you will be Manufacturing firms and some Agricultural firms. The President is deciding between two policies. Free Trade will yield $10 million in benefit to each agricultural firm. Protectionism will yield$10 million in benefit to each manufacturing firm. In each year, each firm will write down its favored policy and its lobbying expenditure, amount X, on a notecard and hand it in. Whichever policy has the most lobbying wins. If your favored policy wins, your payoff is 10-X. If it loses, your payoff is -X.
In my class, which lasted 50 minutes, I had 11 Ag firms and 10 Manufacturing firms. I imposed a limit of X=10 for a firm's annual lobbying. The pattern of lobbying went like this:
Year  Protection  (Manufacturing)   Free Trade (Agriculture)

1                    49                       48
2                    48                       61
3                     0                       30
4                    52                       43
5                    21                       25
6                    56                       42

It's interesting that the total expenditure was often near the total value of the policy prize over all the firms--100 or 110. Note, too, that the lobbying swung from high to low a couple of times.

Within each industry, the amount of lobbying varied tremendously, with lots of zeroes. The student who had the highest payoff over all rounds had a payoff of 30, because his policy won three times and he never did any lobbying. We'd expect that-- the free rider always does best, even though if everyone free-rides, the industry does badly because it always loses the policy battle.

This game is variant on the "all-pay auction", with the twist that the prize is a public good, going to any firm in the industry rather than just the one that bids highest. Thus, it adds that free-riding element. The theoretical equilibrium is in mixed strategies-- carefully chosen randomizations each year.

My lobbying game scoresheet and overheads of lessons and caveats is up on the G202 course website. This is a good game for classroom use, not just for teaching about free riding but also because it is administratively easier than a lot of classroom games. The payoff structure is very simple. After explaining the game, I made each student a separate firm, and gave them each a notecard on which to write their lobbying expenditure. Each student brought up his notecard to me, except in the last round, when I allowed an industry rep to collect them all (which allows for enforcement of deals they might make to all lobby high). For the first few rounds, I did not allow talking, and then I did allow it. The students were eager to talk with each other, and seemed to enjoy the game.

## November 17, 2004

### Risk Aversion-- Gollier Table to Check Your Own Level

What percentage of your wealth would you give up to
eliminate a risk of losing 10% of your wealth? Less than
10%, of course, but how much less? The table below, from
Table 2.1 of Christian Gollier's The Economics of Risk
and Time
, says what your "relative risk aversion"
coefficient is if you have constant relative risk aversion
utility.

  Relative risk aversion    10% risk   30% risk
.5		               .3%       2.3%
1			       .5%       4.6%
4			      2%        16%
10			      4.4%      24.4%
40			      8.4%      28.7%


If you would give up 2% of your wealth to avoid a 50-50
risk of losing or gaining 10%, then you have a coefficient
of relative risk aversion of 4. That's about where I am, I
think, for the 10% risk. That implies, though, that I would
give up 16% of my wealth to avoid a 30% gamble, which I'm

One of the hard things in doing this kind of
introspection is that it matters how we define "wealth". It
matters whether it is lifetime wealth (including the value
of my human capital-- the wages I can earn) or just the
amount of wealth I have in hand right now. If I lost 30% of
my non-human capital this year, that would not be nearly so
serious as if I lost 30% of the value of my future wages.
The cleanest theoretical model is to think of lifetime
wealth, and we all make our investment decisions based on
that. But, knowing, for example, that we can fall back on
our wages, and that we can modify our investment policy in
case of disaster, we can look very risk-loving with respect
to our investments.

## November 16, 2004

### French-American Relations--Chirac Hostility to the Bush Administration

It is important for anyone who blames Bush for poor relations with France to remember not only France's past support for Saddam Hussein and profit from dealings with him, but also the harsh words France has for us. From the London Times

M Chirac, speaking to British journalists, including The Times, soon after General Powell’s announcement, revealed that he had urged Mr Blair to demand the relaunch of the Middle East peace process in return for backing the war.

"Well, Britain gave its support but I did not see anything in return. I’m not sure it is in the nature of our American friends at the moment to return favours systematically."

In other remarks that will sting the Bush Administration, he again outlined his vision of a "multipolar" world in which a
united Europe would be equal with the US, and mocked Donald
Rumsfeld, the US Defence Secretary, for his division of Europe into old and new.

M Chirac said that there would be no division between Britain and France.

"It is like that nice guy in America " what’s his name again? " who spoke about ‘old Europe’. It has no sense. It’s a lack of culture to imagine that. Imagining that there can be division between the British and French vision of Europe is as absurd as imagining that we are building Europe against the United States."

Surely it is well past time to stop thinking of France as being any more our ally (or enemy) than Russia is.

## November 15, 2004

### Franchising in Brazil

Update, Nov. 17: My old link to the quote went bad. I think this one is to the same report, in pdf: report on U.S. trade with Brazil:

I just came across the interesting fact that franchising has been highly successful in Brazil.

After nearly two decades of success in Brazil, the franchising system continues to boom. As of 2002 it accounted for 25% of the gross revenue in the retail segment with around 800 franchise chains and 56,000 franchise units, divided into approximately 30 business segments, generating over 350,000 jobs. ...

Between 2001 and 2002 the Brazilian franchising system boasted more than eight billion dollars in sales. According to ABF, the continued growth of franchising in this market has strengthened Brazil's franchising system to such that it is now one the world's third strongest, outranked only by the United States and Japan.

According to local sources, the continued success of the Brazilian franchising system is in part due to the increase in participation of already consolidated businesses exploring alternative avenues of expansion. Local Brazilian companies form the vast majority of franchises in Brazil (about 90%), however, foreign groups, particularly from the U.S., are making their way into the market too.

Strict regulations preventing foreign franchises from remitting royalties to their headquarters contributed to the dominance of Brazilian franchises over their foreign counterparts. However, the reform of the Franchising Law in 1994 has granted greater investing opportunities to foreign franchises. Foreign franchises are now allowed to remit royalties to their countries of origin. However, U.S. franchisors must adapt to meet required market norms and standards, invest in market research, test market receptivity through pilot projects and adjust their concepts to Brazilian business practices and consumer tastes. In Brazil, franchise consultants refer to this process as the "tropicalization" of the franchise.

This sounds like an opportunity for businesses in other Third World countries.

## November 14, 2004

### Man's Moral Predicament: Pope's Essay on Man, Posner on Liberal Education

Continuing my series of quotes from Alexander Pope's Essay on Man (here and here and here and there) is the first lines of Epistle 2:

Know, then, thyself, presume not God to scan;
The proper study of mankind is man.
Placed on this isthmus of a middle state,
A being darkly wise, and rudely great:
With too much knowledge for the sceptic side,
With too much weakness for the stoic's pride,
He hangs between; in doubt to act, or rest;
In doubt to deem himself a god, or beast;
In doubt his mind or body to prefer;
Born but to die, and reasoning but to err;
Alike in ignorance, his reason such,
Whether he thinks too little, or too much:

I certainly feel that way. The last two lines might be appropriate for my project on God concealing Himself. They also remind me of a conversation at Lily's First Birthday Party last night. We were discussing whether finding utilitarian reasons for ethical behavior was a worthwhile project, or whether it was better to take our gut moral feelings as reliable signs of what is moral and give up on explaining them more basically (all in the context of natural law rather than divine). One point I raised was a reason that someone-- I think Richard Posner-- gave for why we should not expect a liberal education to make people behave better. The uneducated person knows of no moral code expect what his parents taught him, and hence often faces a choice between behaving morally or behaving immorally. The educated person can pick and choose among moral theories, and has learned to rationalize and argue to himself very well, and so can always find a moral reason for whatever foul thing it is he wishes to do.

### The Homogenization of Everything

My wife commented recently that everything is getting blended together. Men and women, children and grown-ups, are dressing alike. Good and evil are mixed, and their difference denied. Honor and respect, which are based on difference, are dwindling away. What is left is celebrity-- the mere fact of being known to many people, for it matters not what. We eat foreign foods, and foreigners watch American TV. Aesthetically, the world is becoming a boring place.

### Latest MT developments--reinstallation

Well, I did reinstall Movable Type, and things seem to be working normally again. As in the previous two times I installed Movable Type, odd things happened in the installation process. This time, I smoothly Imported my old entries from an Export file, and I did not have to delete the old ones (I was afraid I migth end up with duplicate entries. The categories imported too. My old Movable Type installation is still up, so I could go there to get the templates to install.

Why "November" comes out as "Listopad" I don't know. Since nobody really cares for blog dates anyway, I am not too distressed.

## November 13, 2004

### Somehow my Movable Type is

Somehow my Movable Type is now working-- but erratically. It I'm not sure what I did to make it come back-- I was all set to delete the weblog and reinstall. Comments are working, too, though now my MT-Blacklist plug-in seems not to be working. It probably needs reinstalling... This makes me wonder whether I should return to my home-made HTML weblog. But I'll keep on with Movable Type for now.

### Cascades in Affirmative Action; Sander Data

Richard Sander of UCLA has written an article on the effects of affirmative action, and has posted his data on a webpage. It is an empirical article with an unusual angle, addressing the question of whether a student who is admitted to a school but knows he has gotten in by non-standard means and will be in the bottom 10% of the class should accept admission or go to a school where he would be average instead. This is a general point, whether a student gets special admission because of the color of his skin or because his father has political connections, but it is especially relevant to affirmative action because students admitted to it are so likely to be at the very bottom of their class.

Law schools are an especially good case to analyze, because law graduates go on to take the bar exam, so we have an independent measure of success. It has long been known in law school circles that many elite law schools have lower bar pass rates than average law schools, and that within an elite law school, law school grades are a good predictor of whether a student will pass the bar. A student at the bottom of his elite law school class will flunk the bar, where if that same student had gone to an average law school he would have passed it. That is because the elite law school teaches courses in a different style and to a different level, suited to their average or top students and not to their bottom students.

Anyway, Sander's article-- which I have not yet read, and post for reference-- looks at how many black students pass the bar exam now and how many would pass if there were no affirmative action programs. Without affirmative action programs, fewer black students would go to law school, but their chances of passing the bar would be better.

I've thought of trying to model the "cascade" effect which is part of this. If we had no affirmative action, black students would still go to law school-- they just would not go to as good law schools as they do now. The student who under affirmative action goes to Harvard would go to UCLA instead; the UCLA student would go to Iowa, and so forth. Thus, when Harvard started using affirmative action, that meant UCLA did not get as high-quality black students as it did before. If UCLA wanted even to maintain the number of black students it would have in a race-neutral world, it would have to use affirmative action, setting lower admission standards for blacks than for whites. This, in turn, would reduce the number of black students at Iowa, and the cascade would go down to the very bottom law school. If schools value having black students, affirmative action by a school imposes a negative externality on all the schools below it. (Though, on the other hand, a school that does not care about race gets a positive externality: Harvard's choice of the UCLA black student means some smarter white student has been denied admission by Harvard, and *that* student will go to UCLA.)

I think it could be the case that even if we accept that it is good for an individual school to have more black students, that every school but the very top one would be worse if schools are free to use affirmative action, because of this cascade effect. Every school would like to be the only one to use affirmative action, but when all do it, only the top school ends up better off. Probably the modelling result would be that in the affirmative-action equilibrium, every school but the top school has the same percentage of blacks but with lower ability than if racial discrimination were not practiced by anybody-- almost a Pareto-worsening from the point of view of the schools.

## November 12, 2004

### Marsh and McLennan Insurance Brokers: Common Agency

I gave my options paper at Georgia State this week at their
department of risk (a neat idea for a department!), and
talked with some people about the Marsh and McLennan scandal. Marsh is a very large
insurance broker, which companies such as Delta Airlines
hires to find the best insurance deal for them. Marsh was
engaged in fraud, it seems, but another practice, more
common and perhaps defensible, was that it took commissions
from both sides of the transaction-- from the client, Delta,
and from the insurance company that got Delta's business.
Moreover, the commission from the successful insurance
company was based on the ex post profitability of its
contract with Delta, I was told.

Could there be an efficiency reason for this "common
agency" problem-- in which the agent, Marsh, tries to
satisfy two principals, Delta and the insurance company?
Maybe. Our first thought is that this is simple corruption--
that Marsh is supposed to be acting just on behalf of Delta,
but secretly takes bribes from the insurance company. But
can we imagine a situation in which the "kickbacks" or
"commissions" to the insurance company are known to Delta,
but Delta still wants to hire Marsh?

Here is a possibility. Suppose Marsh's function is to
warrant that an insurance customer is a customer worth
having--that it has no hidden costs for the insurance
company. When Marsh says that a customer is a "good
customer", the insurance company gives the customer a low
price for insurance, but asks Marsh to back up its claim by
accepting a financial penalty if the customer turns out to
be a "bad customer", by agreeing to take 10% of the profits
from the insurance contract. If the customer is bad, that
10% amounts to nothing; if the customer is good, Marsh gets
some money. Marsh would then accept only good customers,
and good customers would agree to this, because it is a way
they can prove they are good to insurance companies.

I don't know enough about Marsh's particular situation
to know if this fits it, and formal modelling might show up
some inconsistency in my story, but it has at least slight
plausibility.

### Voting Cycles: A Game Theory Problem

I've just been inspired, on reading a draft chapter of Burt Monroe's Electoral Systems in Theory and Practice, to write up a long game theory problem for the next edition of Games and Information. It gets very technical, but I'll post it in case anybody might be interested.

Uno, Duo, and Tres are three people voting on whether the budget devoted to a project should be Increased, kept the Same, or Reduced. Their payoffs from the different outcomes, given below, are not monotonic in budget size. Uno thinks the project could be very profitable if its budget were increased, but will fail otherwise. Duo mildly wants a smaller budget. Tres likes the budget as it is now.


Uno       Duo   Tres

Increase         100         2     4
Same              3          6     9
Reduce            9          8     1


Each of the three voters writes down his first choice. If a policy gets a majority of the votes, it wins. Otherwise, Same is the chosen policy.

(a) Show that (Same, Same, Same) is a Nash equilibrium. Why does this equilibrium seem unreasonable to us?

... I continue to have severe Movable Type problems. I can't do Extended entries, so for more, go to Problem 4.7 in this page. When I've got time, I'll think about whether to switch weblog software.

November 14: Now maybe this will work:

ANSWER. The policy outcome is Same regardless of any one player's deviation. Thus, all three players are indifferent about their vote. This seems strange, though, because Uno is voting for his least-preferred alternative. Parts (c) and (d) formalize why this is implausible.

(b) Show that (Increase, Same, Same) is a Nash equilibrium.

ANSWER. The policy outcome is Same, but now only by a bare majority. If Uno deviates, his payoff remains 3, since he is not decisive. If Duo deviates to Increase,Increase wins and he reduces his payoff from 6 to 2; if Duo deviates to Reduce, each policy gets one vote and Same wins because of the tie, so his payoff remains 6. If Tres deviates to Increase, Increase wins and he reduces his payoff from 9 to 4; if Tres deviates to Reduce, each policy gets one vote and Same wins because of the tie, so his payoff remains 9.

(c) Show that if each player has an independent small probability epsilon of trembling'' and choosing each possible wrong action by mistake, (Same, Same, Same) and (Increase, Same, Same) are no longer equilibria.

ANSWER. Now there is positive probability that each player's vote is decisive. As a result, Uno deviates to Increase. Suppose Uno himself does not tremble. With probability epsilon (1-epsilon) Duo mistakenly chooses Increase while Tres chooses Same, in which case Uno's choice of Increase is decisive for Increase winning and will raise his payoff from 3 to 100. With the same probability, epsilon (1-epsilon), Tres mistakenly chooses Increase while Duo chooses Same. Again, Uno's choice of Increase is decisive for Increase winning. Thus, (Same, Same, Same) is no longer an equilibrium.

(With probability epsilon*epsilon, both Duo and Tres tremble and choose Increase by mistake. In that case, Uno's vote is not decisive; Increase wins even without his vote.)

How about (INCREASE, SAME, SAME)? First, note that a player cannot benefit by deviating to his least-preferred policy.

Could Uno benefit by deviating to Reduce, his second-preferred policy? No, because the probability of trembles that would make his vote for Reduce decisive is 2*epsilon (1-epsilon), as in the previous paragraph, and he would rather be decisive for Increase than for Reduce.

Could Duo benefit by deviating to Reduce, his most-preferred policy? If no other player trembles, that deviation would leave his payoff unchanged. If, however, one of the two other players trembles to Reduce and the other does not, which has probability 2*epsilon (1-epsilon). then Duo's voting for Reduce would be decisive and Reduce would win, raising Duo's payoff from 6 to 8. Thus, (Increase, Same, Same) is no longer an equilibrium.

Just for completeness, think about Tres's possible deviations. He has no reason to deviate from Same, since that is his most preferred policy. Reduce is his least-preferred policy, and if he deviates to Increase, Increase will win, in the absence of a tremble, and his payoff will fall from 9 to 4-- and since trembles have low probability, this reduction dominates any possibilities resulting from trembles.

(d) Show that (Reduce, Reduce, Same) is a Nash equilibrium that survives each player has an independent small probability epsilon of trembling'' and choosing each possible wrong action by mistake.

ANSWER. If Uno deviates to Increase or Same, the outcome will be Same and his payoff will fall from 9 to 3 If Duo deviates to Increase or Same, the outcome will be Same and his payoff will fall from 8 to 6. Tres's vote is not decisive, so his payoff will not change if he deviates. Thus, (Reduce, Reduce, Same) is a Nash equilibrium

How about trembles? The votes of both Uno and Duo are decisive in equilibrium, so if there are no trembles, they lose by deviating, and the probability of trembles is too small to make up for that. Tres is not decisive unless there is tremble. With probability 2*epsilon (1-epsilon) just one of the other players trembles and chooses Same, in which case Duo's vote for Same would be decisive; with probability 2*epsilon (1-epsilon) just one of the other players trembles and chooses Increase, in which case Duo's vote for Increase would be decisive. Since Tres's payoff from Same is bigger than his payoff from Increase, he will choose Same in the hopes of a tremble.

(e) Part (d) showed that if Uno and Duo are expected to choose Reduce, then Tres would choose Same if he could hope they might tremble-- not Increase. Suppose, instead, that Tres votes first, and publicly. Construct a subgame perfect equilibrium in which Tres chooses Increase. You need not worry about trembles now.

ANSWER. Tres's strategy is just an action, but Uno and Duo's strategies are actions conditional upon Tres's observed choice.

Tres: Increase
Uno: Increase|Increase;Reduce|Same, Reduce|Reduce
Duo: Reduce|Increase; Reduce|Same, Reduce|Reduce

Uno's equilibrium payoff is 100. If he deviated to Same|Increase and Tres chose Increase, his payoff would fall to 3; if he deviates to Reduce|Increase and Tres chose Increase, his payoff would fall to 9. Out of equilibrium, if Tres chose Same, Uno's payoff if he responds with Reduce is 9, but if he responds with Same it is 4. Out of equilibrium, if Tres chose Reduce, Uno's payoff is 9 regardless of his vote.

Duo's equilibrium payoff is 2. If Tres chooses Increase, Uno will choose Increase too and Duo's vote does not affect the outcome. If Tres chooses anything else, Uno will choose Reduce and Duo can achieve his most preferred outcome by choosing Reduce.

(f) Consider the following voting procedure. First, the three voters vote between Increase and Same. In the second round, they vote between the winning policy and Reduce. If, at that point, Increase is not the winning policy, the third vote is between Increase and whatever policy won in the second round.

What will happen? (watch out for the trick in this question!)

ANSWER. If the players are myopic, not looking ahead to future rounds, this is an illustration of the Condorcet paradox. In the first round, Same will beat Increase. In the second round, Reduce will beat Same. In the third round, Increase will be Reduce. The paradox is that the votes have cycled, and if we kept on holding votes, the process would never end.

The trick is that this procedure does not keep on going-- it only lasts three rounds. If the players look ahead, they will see that Increase will win if they behave myopically. That is fine with Uno, but Duo and Tres will look for a way out. They would both prefer Same to win. If the last round puts Same to a vote against Increase, Same will win. Thus, both Duo and Tres want Same to win the second round. In particular, Duo will {\it not} vote for Reduce in the second round, because he knows it would lose in the third round.

Rather, in the first round Duo and Tres will vote for Same against Increase; in the second round they will vote for Same against Reduce; and in the third round they will vote for Same against Increase again.

This is an example of how particular procedures make voting deterministic even if voting would cycle endlessly otherwise. It is a little bit like the T-period repeated game versus the infinitely repeated one; having a last round pins things down and lets the players find their optimal strategies by backwards induction.

Arrow's Impossibility Theorem says that social choice functions cannot be found that always reflect individual preferences and satisfy various other axioms. The axiom that fails in this example is that the procedure treat all policies symmetrically-- our voting procedure here prescribes a particular order for voting, and the outcome would be different under other orderings.

(g) Speculate about what would happen if the payoffs are in terms of dollar willingness to pay by each player and the players could make binding agreements to buy and sell votes. What, if anything, can you say about which policy would win, and what votes would be bought at what price?

ANSWER. Uno is willing to pay a lot more than the other two players to achieve his preferred outcome, He would be willing, to deviate from any equilibrium in which Increase would lose by offering to pay 20 for Duo's vote. Thus, we know Increase will win.

But Uno will not have to pay that much to get the vote. We have just shown that Increase will win. The only question is whether it is Duo or Tres that has his payoff increased by a vote payment from Uno. Duo and Tres are thus in a bidding war to sell their vote. Competition will drive the price down to zero! See Ramseyer & Rasmusen (1994).

This voting procedure, with vote purchases, also violates one of Arrow's Impossibility axioms-- his Independence of Irrelevant Alternatives'' rules out procedures that, like this one, rely on intensity of preferences.

## November 11, 2004

### Problems with Movable Type

I'm having problems with Movable Type. For some reason, I can't enter comments now, and even entering new posts requires an oblique procedure. I'm not sure why this problem suddenly started two days ago, so solving it may be difficult...

## November 10, 2004

### Who Paid the 9-11 Costs?

RiskProf reports on a RAND Corporation study of who paid compensation for 9-11 damages. Of th 38.1 billion dollars that they quantify, 51% was paid by insurance companies, 7% by charity, and 42% by government. An interesting question is whether the high amount of non-insurance compensation will cause people to rely less on insurance.

## November 08, 2004

Tom Veal's Stromata has a list of his favorite blogs that is worth noting. Here's a sampling, without his numbering:

• Hoystory -- This guy ought to have his own syndicated column.
• Iraq the Model --The antidote to the American media’s doom and gloom
• Nixatron Blog-Times -- Omnium gatherum of political news and opinion
• Armavirumque -- Group blog of The New Criterion, a great cultural magazine
• Cronaca -- Art, archeology, history, a dash of politics
• Bjørn Stærk Blog -- Imagine what it must be like to be a young, right- of-center pundit in Norway!
• Arthur Chrenkoff -- An Australian who is best known for publicizing the abundant good news from Iraq and Afghanistan.
• Right Wing News -- What the name implies, with a good sense of humor

## November 07, 2004

### Wesley's "I Want a Principle Within"; Sensitivity to Sin

We sang the Wesley hymn, "I Want a Principle Within," at church today. It's a good one, because its theme is that it is good for us to be sensitive to sin, not calloused. "I want a principle within of watchful, godly fear, a sensibility of sin, a pain to feel it near." A contrary desire is also common: to numb oneself to sin. Mark Twain had a funny story on this topic, "The Facts Concerning The Recent Carnival Of Crime In Connecticut," in which he meets and strangles his conscience, after making it heavy enough to sink to the floor and catch. But it is usually not so funny. We want to do evil, but we dislike guilt and shame.

There is another danger, too: losing sensitivity to sin in other people and in the world. I feel this loss keenly. I do not think I am a better person for having grown more calloused in my maturity, even though I am perhaps better able to deal with the world. I have grown much harder to shock. Perhaps my children will teach me how to again be sensitive.

I Want a Principle Within

Words: Charles Wesley, 1749
Music (via here: Louis Spohr, 1834; adapt. by J. Stimpson, but there's a better "Welsh melody" tune we sang at ECC)

I want a principle within
of watchful, godly fear,
a sensibility of sin,
a pain to feel it near.
I want the first approach to feel
of pride or wrong desire,
to catch the wandering of my will,
and quench the kindling fire.

From thee that I no more may stray,
no more thy goodness grieve,
grant me the filial awe, I pray,
the tender conscience give.
Quick as the apple of an eye,
O God, my conscience make;
awake my soul when sin is nigh,
and keep it still awake.

Almighty God of truth and love,
to me thy power impart;
the mountain from my soul remove,
the hardness from my heart.
O may the least omission pain
my reawakened soul,
and drive me to that blood again,
which makes the wounded whole.

I'll repeat a post from June 12, 2004 that is related.

06.12b. Pope: "Vice is a monster of so frightful mien". . Alexander Pope makes a good argument for not talking too much about vice, even to condemn it, as Pastor Timothy Bayly said to me at lunch yesterday at Noodle Town. From Essay on Man (ep. II, l. 217) (1733):

Vice is a monster of so frightful mien,
As to be hated need but to be seen;
Yet seen too oft, familiar with her face,
We first endure, then pity, then embrace.

### Prostitutution Enforcement Priority Propositions in Berkeley Defeated

Via Prof. Leitzel, the Oakland Tribune reports on the failure of a Berkeley ballot proposition to relax prostitution laws:

After receiving national attention, Measure Q, which would have made enforcing prostitution laws the police department's lowest priority, lost by a 63.9 to 36.1 percent margin. It needed a simple majority to pass.

This is interesting for several reasons. First, even leftwing Berkeley is unwilling to make prostitution easier. Second, this is the first time I've heard of a law that would rank law enforcement priorities. Ordinarily, that is up to the prosecutor and the police chief-- a huge and unnoticed power of those offices. I'm not sure how Measure Q would have been enforced if it had won, though one way is simply by declaring to the police chief, whose job is, I expect, ultimately up to the pleasure of the voters, what his masters' desires are.

### Unifying Ideas in Game Theory: Symmetric-Player Games vs. Principal-Agent Games

I'm trying to work on a 4th edition of http://www.rasmusen.org/GI/index.html, and thinking about big ideas.

There is one large class of games in which one player moves first to try to get another to do something-- the principal-agent games, broadly construed. These include games of boss and worker, voter and politician, customer and seller. The player in this first class of games are in asymmetric positions-- they choose different sorts of actions. In some of these games-- the "moral hazard" ones-- the problem is that the agent's action is unobserved. In others-- the "adverse selection" games-- the problem is that the agent has some information the principal does not know.

In a second large class of games-- shall I call them "symmetric player games"?-- the players are all in the same sort of position-- two countries at war, or five firms setting prices, or two politicians choosing campaign spending. The idea of strategic substitutes and complements applies to these games, and is a unifying idea I'd like to use more. The idea is that in some games, when the other player does more of his strategy, I want to do more of mine. If my competitor raises his price, I want to raise mine. If my rival for elected office spends more on advertising in Wisconsin, I want to spend more too. We call this a situation of "strategic complements". In other situations, when my rival does more of his strategy, I do *less* of mine. If the rival firm increases capacity, I reduce my capacity. If the other firm spends more on research, I give up on research altogether. This is a situation of "strategic substitutes"....

... I realize that my chapters on Bargaining and Auctions can be roughly differentiated in this way. The usual bargaining game is one of strategic substitutes. If my rival is tougher, I will be softer, lest the bargain fall through. The usual auction game is one of strategic complements. If my rival bids higher, I will bid higher too. This is true even though the auction game is a mixed principal-agent/symmetric-player game, the principal being the seller and the agents being the bidders.

This makes me wonder where I should put my Pricing chapter. Already, I've decided to carve up the Entry chapter and move its pieces to other chapters or delete them. Pricing is the lone remaining application-centered chapter. Maybe it should be carved up too.

Another dichotomy is between games in which players take the rules as given, and "mechanism design" games, or "contracting games", in which they start by trying to bind themselves to the rules that will incentivize their behavior later in the game. I am not sure how to incorporate that dichotomy. Contracting games obviously arise most in principal-agent games, with the boss designing a contract for a worker (which, usually but not always, must satisfy a "participation constraint" that the worker be willing to accept it instead of quitting the job), or voters designing a constitution for politicians. In other principal-agent games, however, there is no contracting. Signalling games are the most prominent of these: workers choose credentials to signal their ability, without any formal contract offer beforehand by firms.

But contracting arises in symmetric player games too. Classic mechanism design problems include a seller setting the rules for an auction for lots of symmetric bidders, or a boss setting the rules for promotion for workers in a tournament with each other. Those two examples are mixed principal-agent/symmetric-player games, but mechanism design can even arise in pure symmetric-player games: a cartel chooses rules for punishing members who cut prices, a team of workers agrees to a sharing rule for output, or a group of citizens agrees to a choice rule for choosing how much each person pays for a new streetlight and whether it is built based based on announced preferences.

## November 05, 2004

### County Level Election Maps 2000 and 2004, Vanderbei Purple America Maps

Robert J. Vanderbei of Princeton has
posted
county-level election maps, blending red
(Republican) and blue (Democrat). Of course the colors
should be the opposite, especially for 2000, when Yale Blue
Bush ran against Harvard Crimson Gore. The first maps are
for 2004. The second one has bumps for where the population
is greatest. The third one has just Red and Blue depending
on who got a majority in the
county.

The second set of maps are for 2000-- one of
Prof. Vanderbei's "Purple America" maps, and one that uses
just Red and Blue depending on who got a majority in the
county.

### Do Markets Cure Consumer Mistakes? Schwartz paper

Yesterday Alan Schwartz of Yale Law was here to give a talk.
His subject was a good one. People make dumb mistakes. They
are not always "rational" in the economic sense. Some of
these mistakes can be viewed as having poor information--
for example, buying astrology predictions even though they
won't come true. Other mistakes are in processing
that won't succeed, for example, because of the fallacy of
sunk cost. We have always known people make mistake, but
recent research, "behavioral economics", has focussed more
on the precise kinds of mistakes that get made.

But does the tendency to make this kind of mistake actually
result in bad decisions? The market has some tendency to
cure mistakes. If I put my antique chair up for auction, for
example, then even if my information as to its value is
poor, I will still get a price for it that reflects the good
information of other people. If I am buying things, then
sellers will endeavor to make sure I understand that the
apparently good offers of their competitors are actually bad
for me.

Schwartz's paper modelled this, in one particular way. He
used a search model, where some people shop and others just
look at one seller's offers, and where one product is best
for sophisticated people and another for mistake-prone
people. It is a tricky problem to get a handle on, though.

Another way to model the situation is with an advertising
model. Suppose no consumer searches, but sellers send them
but others are mistake-prone. Sellers will send three kinds
of messages. First, there will be offers aimed at the
sophisticated buyers. Second, there will be offers aimed to
fool the mistake-prone buyer. Third, there will be offers
offers. I'm afraid this model would get rather
complicated, since each seller would want his offer to be
just slightly better than what the buyer is likely to get
from some other seller. Also, someone may well have worked
out this idea years ago. But it has some realism to it, I
think.

## November 04, 2004

### 2000 Bush-Gore County Election Map

I've found this County Election map for 2000: Bush vs. Gore, but not for 2004 yet.

### "Recycling is garbage" by John Tierney (1996)

John Tierney's well-crafted Recycling Is Garbage," New York Times Magazine, June 30, 1996, states the case against recycling very well. Recycling can, of course, be a good idea, but only when it is profitable. City programs lose money, and when people spend time sorting garbage, it is a waste of resources, not thrift. If you simply throw all your recyclables in one garbage can and your other garbage in another, private labor costs are small, but the city still must pay extra. If you must sort carefully, home labor costs become the biggest part of the cost.

Here are extensive excerpts, reformatted by me and without ellipses, for the most part:

The simplest and cheapest option is usually to bury garbage in an environmentally safe landfill.

Since there's no shortage of landfill space there's no reason to make recycling a legal or moral imperative.

Mandatory recycling programs offer mainly short-term benefits to a few groups -- politicians, public relations consultants, environmental organizations, waste-handling corporations -- while diverting money from genuine social and environmental problems.

Recycling may be the most wasteful activity in modern America: a waste of time and money, a waste of human and natural resources.

[of Charles City Council, which imports New York City garbage to its landfill] ... thanks to its new landfill, the county has lower taxes, better-paid teachers and splendid schools. The landfill's private operator, the Chambers Development Company, pays Charles City County fees totaling $3 million a year -- as much as the county takes in from all its property taxes. The landfill has created jobs, as have the new businesses that were attracted by the lower taxes and new schools. The 80-acre public-school campus has three buildings with central air conditioning and fiber-optic cabling. The library has 10,000 books, laser disks and CD- ROM's; every classroom in the elementary school has a telephone and a computer. The new auditorium has been used by visiting orchestras and dance companies, which previously had no place to perform in the county. Why should New Yorkers spend extra money to recycle so they can avoid this mutually beneficial transaction? Why make harried parents feel guilty about takeout food? Why train children to be garbage-sorters? Why force the Bridges school to spend money on a recycling program when it still doesn't have a computer in the science classroom? Are reusable cups and plates better than disposables? A ceramic mug may seem a more virtuous choice than a cup made of polystyrene, the foam banned by ecologically conscious local governments. But it takes much more energy to manufacture the mug, and then each washing consumes more energy (not to mention water). According to calculations by Martin Hocking, a chemist at the University of Victoria in British Columbia, you would have to use the mug 1,000 times before its energy-consumption-per-use is equal to the cup. (If the mug breaks after your 900th coffee, you would have been better off using 900 polystyrene cups.) When consumers follow their preferences, they are guided by the simplest, and often the best, measure of a product's environmental impact: its price. Polystyrene cups are cheap because they require so little energy and material to manufacture -- without reading a chemist's analysis, you could deduce from the cup's low price that it's an efficient use of natural resources. Similarly, the prices paid for scrap materials are a measure of their environmental value as recyclables. Scrap aluminum fetches a high price because recycling it consumes so much less energy than manufacturing new aluminum. The low price paid for scrap tinted glass tells you that you won't be conserving valuable resources by recycling it. While price is hardly a perfect measure of environmental impact, especially in countries where manufacturers are free to pollute, an American product's price usually reflects the cost of complying with strict environmental regulations. Posted by erasmuse at 03:22 PM | Comments (2) | TrackBack ## November 03, 2004 ### Post-Election Thoughts 1. Bush has an actual majority of the popular vote, the first time this has happened since 1988. 2. My last-day electoral forecast is looking good. So far I've no states wrong, and it looks like I was right to call New Mexico for Bush. 3. As usual, almost all the incumbents were re-elected. Maybe we shouldn't be surprised. After all, we'd naturally find a close fit between a representative and his district-- that's why he was elected in the first place, and that's why he votes the way he does. 4. There was massive opposition to same-sex marriage in the ballot propositions. See Clayton Cramer on this. 5. Why don't we stamp people's hands with invisible, indelible ink, as in third-world countries? Maybe the cost isn't worth it. Or maybe live double-voting is not a problem. Absentee ballots are no doubt where the biggest fraud is. 6. I'm surprised that it was so close. Not only is Kerry the most leftwing Senator, with few accomplishments and a lot of votes he'd rather not have anybody remember, and not only is the economy in good shape, but there were at least four scandals in his campaign this summer: (a) Advisor Joe Wilson turned out to be lying about his mission to Niger. (b) Advisor Sandy Berger was caught stealing secret government documents. (c) Kerry himself was caught having very dubious grounds for the war medals he boasted so much about. (d) The Kerry campaign and CBS was caught using obviously forged documents to try to discredit Bush's war record. Add to this Kerry's refusal to release his war records (except selectively) and his wife's tax returns (except the first two pages). And what scandals came out about the Bush campaign? Nothing, despite intense attempts to find something damaging about his National Guard record or Swiftvets connections or Halliburton. There was constant abuse and insinuation, but nothing ever panned out. I think this shows the power of the mainstream media. They are growing ever more aggressive in their bias. Also, it may be that all the money flowing into the get-out-the-vote effort has paid off, and that the new voters don't really know anything about the candidates except that their recruiter has endorsed one of them. Posted by erasmuse at 02:59 PM | Comments (0) | TrackBack ## November 02, 2004 ### Bush: "if you have political capital, you should spend it" Update, November 4: Bush says: "I earned capital in the campaign - political capital - and now I intend to spend it," he said at a news conference 24 hours after securing his second term. The Wall Street Journal had an editorial yesterday,"The Bush Record: How much leadership do the voters want?" (R) . It made me think about use of political capital, and about whether we really do want principled leaders. Here is an excerpt: Of our handful of meetings with George W. Bush, the one that lingers as a harbinger of his Presidency is lunch in Austin, Texas, in late 1999. One of us asked the then-Governor what lesson he had learned from his father's White House experience. Without missing a beat, Mr. Bush replied that he'd learned that if you have political capital, you should spend it .... We also recognize that Mr. Bush has shown he is capable of some crass political retreats, notwithstanding his campaign theme as a leader who never bends a principle. Steel tariffs, McCain-Feingold, the farm bill, Medicare prescription drugs, and most recently his surrender on intelligence reform--these have not been profiles in political courage. Yet in the larger arc of the Bush Presidency, all of these are also of secondary importance. A leader's first priorities are peace and prosperity, which in our time mean keeping the U.S. economy competitive amid the emerging challenge from India and China, and of course the battle against terrorism. A frequent lament among journalists, and often voters, is that politicians always take the easy way out; they never risk their personal popularity or re-election chances for the sake of longer run gains in the national interest. In Iraq and the Middle East, Mr. Bush has done precisely that. Has he gauged it successfully or not? Actually, in his case, I don't think it was a case for close calculation. His big risks were in going into Afghanistan and into Iraq, and I think he would have taken those gambles out of responsibility even if political calculations were against them. Nonetheless, that initial quote is very good: "if you have political capital, you should spend it". In my 4 P's Theory of Motivation the motivations are Place, Pride, Policy, and Power. Bush is willing to give up Power, and maybe Place, for Policy. Of course, my hope if Kerry is elected President is that he will be completely interested in Place and Power, and will not use any of his political capital to achieve any of the things one might expect from the most left-wing member of the U.S. Senate. Clinton was a relief that way, though he started from pretending to be a centrist. It's interesting that in practice Americans seem to like their politicians to be unprincipled. Clinton did not lose much by his immorality; many, perhaps most people thought that it wasn't too important that the President had committed perjury and adultery or that he lied constantly. A man without principles is more dependable, in a sense-- he can be counted upon to do what other people want him to do. Posted by erasmuse at 07:57 PM | Comments (0) | TrackBack ## November 01, 2004 ### Bates College Students Buying Pollution Permits I'm teaching pollution control methods today, and came across this interesting story about Bates College econ students buying and retiring sulfur dioxide permits: In 2001, 2002 and 2003, at the rate of one permit per year, students in the "Environmental Economics" course at Bates bought and retired government permits for the atmospheric release of a pollutant that causes acid rain. This year, in one fell swoop, the 49 students in Econ 222 quadrupled the amount of sulfur dioxide (SO2) that Bates is keeping out of the nation's air. A$1,200 challenge grant from an environmental organization in Colorado spurred the students to submit winning bids for nine permits in the annual U.S. Environmental Protection Agency SO2-allowance auction....

...The Bates students bid $292 for each of the permits in this year's auction, held March 22.... "He asked if our class could match his$1,200 and buy a total of eight permits, as well as educate others about the program," Lewis explains. "My students designed informational fliers, sold T-shirts that they designed and had a booth in Commons," the college's dining hall.

Several campus organizations and many individuals at Bates contributed to the grant-matching drive. "We sold SO2 by the pound," Lewis says. "Five pounds for a buck -- you can't beat that!" In the end, the students even came up with enough money to top Udall's challenge by one permit.

I'm not sure that there is really that much social value to reducing sulfur dioxide pollution further, but I applaud the exercise in learning about property rights-- and in using your own money to control pollution rather than political power.

### Ellipses and Page Numbers for Web Quotes

I'm going to switch to using ellipses (...) in a more condensed way. I won't indicate whether I've omitted complete paragraphs or not. This will make my posts slightly shorter and more readable, I hope. It's interesting how proper documentation changes with the Web. Since I give you a link to easily get to the original document, the niceties of fomratting in quotation are less important.

The Web makes giving page numbers for quotes less important too, since the reader can go to the original document and do a search on one of the phrases in the quotation and get to it more quickly than if he had a page or line number. Were the canto and line numbers in my Sunday quote from Pope's Essay on Man necessary? I suppose not.

### Electoral College Prediction

I am usually too optimistic in elections. My September prediction was Bush 328, Kerry 210, based on polling history and voter misperception of Kerry's leftism. Below is an excellent analysis of the state-by-state vote by Joshua Davidson. I agree with him, except that I'd give Bush New Mexico-- the polls are in his favor there, after all, and Bush's hawkishness plays well with Western voters. That would make the vote Bush 279, Kerry 259, as in the map above. Here is the Davidson analysis (I've added some boldface):

Every four years I write my prediction for the presidential election. Usually I do so much sooner in the campaign but this year has been unbelievably close with polls conducted on the same day showing vastly different results.

Here is my track record: In 1992 I predicted Clinton over Bush 331-207; he won 370-168. In 1996, I predicted Clinton over Dole 312-226; he won 379-159. In 2000, I predicted Bush over Gore 290-248; he won 271-266. You will thus notice an overestimation of the Republican's chances. I don't claim not to be biased but that bodes ill for Bush.

A candidate needs 270 electoral votes to win.

Let's look at the states that are solidly for Bush: Alabama, Alaska, Arizona, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, North Carolina (Edwards no help here), North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia and Wyoming. That's 191.

Kerry's solid states are: California, Connecticut, Delaware, District of Columbia, Illinois, Maryland, Massachusetts, New York, Rhode Island, Vermont and Washington. That's 160.

States that I think are likely to go to Bush are: Arkansas (Bush leads in almost all polls, he won in 2000), Colorado (he leads in all polls, has gone Democrat only once since 1980 (1992) - and it doesn't seem the proposal to split the electoral votes is likely to pass), Missouri (he leads in all polls, he won in 2000, culturally conservative state), Nevada, and West Virginia. That's 36, which gives Bush 227.

States that I think are likely to go to Kerry are: Hawaii (usually an extremely Democrat state, Bush is doing unusually well at the polls, perhaps because Hawaii has a popular Republican (Jewish female) governor), Maine (without splitting the electoral vote, which can happen in Maine), Michigan (Kerry is ahead in most polls, union state with Democrat governor, hasn't voted Republican since 1988 - but could be close), New Jersey (you hear some talk how it is tighter than expected but I think Kerry will win big here), Oregon (Bush had high hopes here but isn't close), Pennsylvania (Kerry wins pretty much every poll, went for Gore in 2000). That's 68, which gives Kerry 228.

Now for the really close states:

New Mexico: The most Hispanic state in the nation, Clinton won it twice, Gore won by less than a thousand, but Bush ahead in most polls. But I am giving it to Kerry. Kerry now at 233.

Minnesota: Supposed to be real close, but hasn't voted Republican for President since Nixon (of course, Mondale was on the ballot twice). I think Minnesota will trend Republican (and it elected Norm Coleman over Mondale two years ago), but this year will more likely than not stay Democrat. Kerry now at 243.

Iowa: Kerry has done slightly better in the polls and Iowa is one of the most dovish states. It went for Dukakis in 1988 (Dukakis only won 10) and it went for Clinton over Dole in 1996, although you might have thought Mr. Ethanol could have taken that state). Therefore, I put Iowa in Kerry's camp. Kerry now at 250.

Florida: It will be close, but I think Bush will take the state. He has done slightly better in the polls; Jeb is popular and won handily 2 years ago, even though a lot of people thought the Republicans would pay for the 2000 fiasco. W got a lot of credit for timely assistance after the hurricanes. I think the Jews will be a little less supportive of the Democrat ticket this time (no Lieberman, Bush clearly the more pro-Israel candidate). The new generation of Cubans is less anti-communist and therefore more likely to support Democrats, but the Republican candidate for senator, Mel Martinez is Cuban, which might help Bush keep those younger Cubans. Bush now at 254.

New Hampshire: Bush did win this in 2000, but this state is in Kerry's backyard and Kerry leads in a majority of the polls. Therefore, I give it to Kerry. Kerry now at 254.

Wisconsin: Kerry is 8 points ahead in the latest Zogby poll although Bush was ahead in most polls a week ago. Wisconsin has seen movement toward the Republicans but I am not sure enough to give this state to Bush. Therefore I give it to Kerry. He is now at 264.

Ohio: Obviously, under my analysis, it is now down to Ohio which is really too close to call. The Realclearpolitics.com poll consensus is a dead tie. However, Bush has done better in the most recent polls (probably outdated by the time you read this). Bush won in 2000, not by much. The state has two Republican senators and a Republican governor and in recent years has only voted for Democrats when they are from the South (Carter, Clinton). When I am feeling optimistic, I give the state and thus the election to Bush; when I am feeling pessimistic, I give the state and thus the election to Kerry. I am going to give it to Bush, partly because I have given most of the really close states (Michigan, Pennsylvania, Wisconsin, New Hampshire, Iowa, New Mexico) to Kerry. If Bush loses Ohio, he can still win by winning either Michigan or Pennsylvania, or Wisconsin and Iowa or Wisconsin, New Hampshire and New Mexico. If Kerry loses here, he has lost (unless he wins Florida). A real possibility, however, is that Bush loses Ohio but wins Wisconsin and either New Mexico or New Hampshire, in which case we will have a 269-269 tie.

What happens in a tie: The correct question is what happens if no candidate gets a majority of electoral votes (cast by the electors - there is always the possibility of a "faithless elector", especially in a tie). In that case, the House of Representatives, voting by state, with each state getting one vote, decides among the top three vote-getters (thus, if there is one faithless elector who votes for McCain, for example, the House could choose him). How a state votes is dependent on how its representatives (the ones chosen in this election) vote. Right now the Republicans control a significant majority of the house delegations and we can assume that probably won't change. Thus, Bush would probably win if the House decided. The Senate would choose the Vice-President based on a majority vote of the new Senate - which could go either way. Theoretically, they could choose Edwards.

Obviously there are a lot of factors that I couldn't take into account (the effects of voter fraud (or intimidation), any event that occurs between now and election day, the inaccuracy of polls, weather, and most importantly, post-election litigation.