Here’s how the SAT scores of Indiana’s undergraduates generally and business majors in particular compare to other universities with top undergraduate business programs. As you can see, Indiana is one of the few places where the business majors are the university’s elite— and our undergraduates are distinctly worse than our competitors’. That shows we have extremely high value-added.
Instapundit points us to yet another example of FBI incompetence,
this time in the area of
network-security.html">securing data in its computers. I was just
reading a bio of Hanssen, the spy. What he did was sneak a look at
lots of secret files he shouldn’t have been allowed to see on the FBI
computers, downloaded them, and gave them to the Russians. It sounds
like they haven’t improved since then.
The reason, I expect, is that in a civil service system nobody ever
gets fired. In our civil service system, I wouldn’t be surprised if
nobody ever gets demoted or even loses their grade’s pay increase
either. That’s a big advantage of academia. We don’t demote
professors, but we do give them tiny salary increases if they are
incompetent (secretaries, etc. are a different matter).
The major purpose of the civil service system– to prevent
experienced workers from being fired and replaced with party hacks–
would be served if we merely protected workers’ current salaries, and
allowed flexible pay and postings otherwise. Then the FBI computer
security man could be put to sweeping floors, though on his current
salary. This would, of course, allow for punishment of civil servants
who don’t do what the President (Attorney General, FBI director, etc.
) wants, but we *do* want that kind of punishment– the voters should
be in charge, not the bureaucracy. And when a new President came in,
he could grant the punished civil servant back pay if he thought it
was deserved.
Mark Gergen at Balkinization has a good comment on legal formalism: (more…)
I wonder how hospitals and doctors calculate their accounts for bad debts and for charity? If they do it the way I suspect, bad accounting is raising health care costs by discouraging out-of-pocket payment in favor of insurance. Here’s the reason.
Suppose a hospital provides a bypass operation as charity. The accounting question is how this affects income and costs. The way I suspect it is done is that the hospital reports 0 income and reports the list price of the operation as a cost. Thus, if the list price is $100,000, the operation has reduced the hospital’s profit by $100,000.
Slate has an article on state compensation to people wrongfully convicted who have served time in prison.
Only 21 states have compensation laws on the books, which spell out exactly how much you get for a wrongful conviction. Louisiana, for example, ponies up $15,000 for each year of incarceration, plus job training and help with college tuition. Alabama pays at least $50,000 a year, and California pays $100 per day. Meanwhile, the federal government forks over $50,000 for each year of incarceration for federal crimes, plus $50,000 for each year spent on death row.
In Connecticut, which is among the 29 states without compensation statutes, ex-prisoners must lobby the legislature to pass a private bill that grants compensation to a specific person. Here, the dollar amount loosely depends on what payments the state has made in the past. The number should account for the victim’s lost time, lost wages, and physical and mental suffering, as well as the effects on his or her family. Private bills are behind some of the multimillion-dollar rewards that make the headlines, but the payouts don’t always go off without a hitch. Florida, for instance, initially planned to award $1.25 million to Alan Crotzer for serving more than 24 years after being convicted of armed robbery and rape, but ultimately dropped the payment from its budget, instead giving $4.8 million to the parents of a teen who had died in juvie boot camp. (You can keep tabs on awards by reading Justice: Denied, “the magazine for the wrongly convicted.”)
At the law lunch today we discussed reasons for tenure. MA advanced this idea. Suppose that you need to invest X to become expert in research. If you do, you will be able to do research your entire life with probability .9, but with probability .1 you will be able to do it for 10 years and then lose the ability. This means that to get people to make this investment, we need to guarantee them a job even if they lose their ability, not because of risk aversion, but merely to make the investment profitable.
May 14 the World Bank posted its latest reports and annexes on the Wolfowitz kerfuffle. They include the report itself, lots of transcripts, and documents that Wolfowitz submitted. They do not include any other documents— the people attacking Wolfowitz rely on their word alone, though Xavier Coll does say he has personal notes that he was unwilling to make public. The documents support Wolfowitz, as always. I’d like to ask Coll why we can’t see his documents, and also ask him what kind of settlement for Shaha Riza he proposed, and why he has no record in writing of his proposal when he says he was taking such careful notes. We could ask much the same question of everyone else who is now criticizing Wolfowitz.
The report itself is audacious. It even criticizes Wolfowitz for responding to his critics, as thereby undermining the World Bank. The bureaucrats’ position now is that when the Ethics Committee told Wolfowitz, in writing, to “instruct” Coll on what to do with Riza, they meant for Wolfowitz to do whatever Coll thought should be done, and that when they told Wolfowitz to compensate Riza for the special hardship of having to leave the Bank’s normal promotion process, he wasn’t suppose to compensate her in any way out of the ordinary routine of promotion and salary increase. What weasels! If Wolfowitz does get fired, he’ll have a good lawsuit against the Bank.
May 18: Wolfowitz has now resigned, but in a compromise where the Board said,
“He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that.” He cannot bring a lawsuit, since he resigned and since the Board has said it does not think he acted unethically– in effect, rejecting the report I discuss above but saying Wolfowitz should leave anyway just to get the fuss over. Too bad.
I forget whose idea this is, but it is a good one. Suppose each of 9 jurors gets a signal of guilty or innocence. They must be unanimous to convict. I get a signal of INNOCENT. We will vote independently, without discussion. What should I do?
I should not vote INNOCENT in equilibrium. Rather, I will mix. That is because if I pick INNOCENT, maybe everybody else has GUILTY, and I will wreck everything and there will be acquittal. Thus, in equilibrium there will be some people with INNOCENT signals who will vote GUILTY anyway.
Listening to a presentation of Leigh Linden and Jonah Rockoff’s, “There Goes the Neighborhood? Estimates of the Impact of Crime Risk on Property Values from Megan’s Laws”, I thought of an idea for a commercial website. Some states have sites where you can look up an address and see how many child molesters live nearby. Sometimes the requirement for an ex-con to register ends after a certain number of years. A new private website could harvest the state data, or simply get it by Freedom-of-Info Act and keep it up forever. Information on other crimes committed by neighbors could also be included. The site could be funded by advertising directed at people buying new homes.
The NYT
had a long story on the Chinese cough syrup poisoning. Antifreeze was labelled as glycerine in China and used in cough medicine in Panama. This is a great example for my article on trust and trade with the Third World. It’s also a good warning. I think I’ll stop eating canned food from China. (more…)
One dimension of ecclesiology is whether to put power in individual congregations, groups of congregations, or th top of a hierarchy of the entire denomination. A separate one is whether to give laymen power. It seems that both presbyterians and episcopalians do this. It is one of the defining features of presbyterianism. Anglicans have the Sovereign at the top of the church, and at one time at least, had laymen (lords of the manor) appointing ministers. American Episcopalians have laymen on church committees that have power.
This last came up when a conservative candidate for a bishopric was denied the position by the veto of the laymen’s committees. Is it odd that he got past the liberal pastors but was stopped by the laymen? No. It makes sense that the lay leaders would be more extreme than the professionals. The professionals have made church leadership their career. They went into it influenced by career concerns, and their success in their careers is influenced by how much they make themselves disliked. Thus, both the carrot and the stick make them less likely to want to purge the church of what they view as heresy. Lay leaders, on the other hand, become lay leaders because they either don’t care at all but were asked, or because they are passionate in how the church should be run. And if they do make enemies, it doesn’t matter much, because they can turn to some other effort in life easily enough.
It is widely recognized that CEO’s, being rich, are expensive to motivate with money. What do they have in more limited quantities? The esteem of their peers. “Money is just a way to keep score”. This has at least two big implications:
1. Past and present CEO’s make good directors. If a CEO knows he will be scrutinized by them, he will be ashamed to do badly and eager to do well. A professor or a politician’s opinion matters less, partly because they are too easy to fool.
2. Formulaic pay and options are worse incentives than bonuses and increases in base salary. If the CEO gets high pay just because the Return on Equity is high this year, where is the glory? He’ll get the high pay even if the directors don’t notice the great job he did. If the CEO has high income just because the stock price rose and he could cash in his options for millions, where’s the glory? He could do that even if the directors thought he had done a bad job and just got lucky. A subjective bonus, on the other hand, freely given, shows appreciation. Moreover, a bonus can be based on something subtle, like the hiring of a new marketing head or the decision to pursue a new project, that has no current effect on profits and that is unappreciated by the market analysts.
Prof. Bainbridge reports on the self-destruction of Ave Maria Law School. A faculty letter of protest and explanation has been made public. Here are two comments from the Bainbridge site: (more…)
i was just reading a paper by Winston and Crandall on lawyer licensing. Here’s how I would model it.
Without regulation, a person would need to spend, say, 1 year of his time to become a lawyers. With regulation, he needs to spend 3 years, and he needs to pay the market price for tuition, P. That market price is determined by the marginal cost of the education and by the number of law schools operating. There is free entry into the law school business, but initially there are few enough law schools that P exceeds MC. We can assume constant MC and that MC=AC. Denote the pre- and post-regulation quantities y Q_0 and Q_1. What happens?
The Treasury, I read in Forbes recently, has proposed requiring businesses to report any purchases over $600, so the IRS can check that the seller reported the revenue. That is quite an administrative burden. What could we do instead?
How about saying that if a business reports a purchase to the IRS and it turns out that the seller didn’t report it, then the business gets a payment from the IRS for helping catch a tax cheat? We could at the same time use the stick as well as the carrot. If the IRS finds a tax cheat seller, and then finds that the purchaser did not report the purchase, then the purchaser is fined.
A good way to reform taxes would be to eliminate the tax deduction for donations of property to charities. This is much abused, and requires difficult record-keeping if the value is to be accurately determined. Instead, however, if I have property that I wish to donate, I should be allowed to sell it and then give the money to the charity without having to report the capital gains part of it as income. Here’s how it would work.
Under current law, if I buy a painting for $10,000 and its value rises to $15,000 and I donate it to a charity, I get a deduction of $15,000 from this year’s income. If, instead, I sold the painting for $15,000 and gave the money to the charity, I would still get the $15,000 deduction, but I would also have to report a $5,000 capital gain and pay tax on that. I would pay more tax than if I donated the painting directly, and I would have to show how much I paid for the painting, the basis, which can be awkward sometimes (suppose I had inherited it instead, or received it as a gift).
Under my proposal, if I donated the painting, I would get no deduction. If I sold it and gave the $15,000, though I would get the deduction for $15,000 without any need to report the $5,000 income or to find out what the tax basis was.
Of course, my proposal isn’t perfect. The person who wanted to give his painting away to his alma mater would be discouraged from doing so under it. Maybe some special provision could be made, some costly and conservative valuation process for property gifts– say, the requirement that $2,000 be paid to cover the cost of an IRS valuation, and no possibility of doing your own valuation.
The Kennedy opinion in the Carhart partial-birth abortion case is interesting because it uses an information-failure argument at one point (rather inaptly for the Carhart law, since it implies that the law could be fixed by requiring the doctor to explain to the mother the grisly details of what he is going to do to her baby). Here is what he says.
I haven’t been following the Duke lacrosse rape case, but apparently some students on the lacrosse team were falsely accused of raping a stripper and the county prosecutor disgraced himself by going after them purely for political gain. The website Durhamwonderland documents the history of the case.
What interests me most is the attitude of the university faculty. A group of 88 signed a public letter that some of them later backed away from. The letter did not actually say the lacrosse players were guilty; rather, it strongly implied it and questioned whether students on a team in a less upper-crust sport, or black students, would have been treated so gently as the signers seemed to think the lacrosse players were. It said that there was a severe problem with racism at Duke (meaning anti-black racism).
Three assistant professors did sign. 45 faculty total, 17 signed.
Did sign: 17. Including: Bollerslev, Weintraub,Grabowski.
Didn’t sign: 28. Including: Burmeister, Burnside, Lewis, McElroy, Tauchen, Vernon
I’ve blogged before about how the great heresy in liberal Episcopalianism (the only heresy?) is to try to divert money from the denomination. I read in Gary Fox’s book about the decline of the American Presbyterians 1860-1936 the same feature. The 1934 General Assembly declared (though it had given up defrocking ministers for doctrinal heresy years before) that a group of ministers who had organized a competing board for donations to foreign missions would be expelled if they didn’t stop diverting funds:
Missionary offerings are one of the ordinances enjoined in a particular church by the Constitution of the Presbyterian Church. The successive provisions of the Confession of Faith, the Form of Government, and the Directory for Worship, which have already been noted, make these missionary offerings just as really a part of the instituted worship of the Church as are prayer, preaching the Word of God, or the sacraments. A church member or an individual church that will not give to promote the officially authorized missionary program of the Presbyterian Church is in exactly the same position with reference to the Constitution of the Church as a church member or an individual church that would refuse to take part in the celebration of the Lord’s Supper or any other of the prescribed ordinances of the denomination as set forth in Article VII of the Form of Government.
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