Belligerati

« January 2006 | Main | March 2006 »

February 28, 2006

Voting fraud isn't just for Floridians anymore

Abigale owns 100 shares of IBM. She's a long haul investor, but she wants to higher return fromt he money she's invested. So makes an agreement with Betty to lend Betty her shares. Betty puts down collateral for this loan, and she pays interest on it. Betty goes on to the New York Stock Exchange (NYSE) and sells the stock for $81, just about today's price, to Charles. Now she has $8100, and owes Abigale 100 shares of IBM. Eventually, Betty has to return the shares. If IBM costs less than $81 a bit less than 81 is the true break even because of interest) she makes money, otherwise she does not.

Who owns the stock, Charles, Abigale, or both?

You mighty be inclined to say Charles does, because Abigale lent out her stock. There are a couple of problems with that. First, it isn't treated as a sale by the tax code. No capital gains is triggered by this event, and, as we stipulated in the beginning, she didn't intend to sell the shares, she just wanted to lend them. Second, market convention is that she is stil collecting dividends, although not from the company, she collects them from Betty. So maybe Charles does not own them. But how could Charles know he was buying shorted shares and not real ones? All he did was buy ordinary shares though his broker from the NYSE. He certainly gets dividends, and has every reason to believe he is the true owner. For that matter, Abigale may have purchased her shares from someone else (say Zoe)!

You can't fix this by saying that you can't borrow the voting rights on the stock. If you want a functioning market for shorting shares (which is essential to the accurate pricing of other things, like stock options), they need to be totally fungible with other shares (including voting) that are obviously owned outright. But is it both? At first that seems attractive, but what about the matter of voting? What happens when both Abigale and Charles each try to vote their 100 shares? How could Abigale, Betty, and Charles together create additional shares without the permission of the other owners of the firm? We have a real problem here...

One of the major benefits of owning stock is participating in the oversight of the company by voting your shares.There are annual votes on major issues, like who should be on the board of directors, if you should buy another company, or accept an offer to be bought by another. Sometimes,these votes are close, often when they matter most, like when a great deal of money or numerous jobs are on the line. If you could alter the outcome by voting more shares than you have, then you might stand to make a great deal of money, prevent a takeover by another firm so your firm can sweep in and buy it on the cheap, or just keep your factory form closing. Enough power to alter the vote ensures you control the company.

This more than a theortical problem. The Securities Transfer Association

(a trade group for stock transfer agents) examined 341 shareholder votes in 2005 corporate matters. They found evidence of the submission of too many ballots every single one. Worse, some people are lending out shares without their knowledge. The documents used in opening accounts to allow buying on margin typically permit brokers to loan out their stocks for this purpose without informing the investors. Who is actually doing the double voting can be difficult to catch (although it must be taking place whenever votes exceed the number of shares), because not everyone vote their shares. Regulators can put a damper on this activity by counting the number of shares a broker has on record and making sure they don't submit more than that many votes. Deutsche Bank got in trouble for that a couple of weeks ago.

No obvious solution presents itself to me, but a very interesting problem. Check out a whole paper on the subject by Apfel et al.

Posted by OneEyedMan at 5:44 AM | Comments (0)

February 27, 2006

Presidents and the Jews

Professor Sherman L. Cohn of Georgetown University Law Center wrote the piece below on the relationships between US Presidents and the Jews.
There was something about it (and the fact my mom sent it to me) that made me feel like an anti-Bush comment was going to round the whole thing out. I wasn't disappointed as you'll see inside. Otherwise a fun and interesting peak at the long relationship between the Jews and the Federal government.

GEORGE WASHINGTON was the first President to> write to a synagogue. In 1790 he addressed separate letters to the Touro Synagogue in Newport, RI, to Mikveh Israel Congregation in Savannah, GA, and a joint letter to Congregation Beth Shalom, Richmond, VA, Mikveh Israel Philadelphia, Beth Elohim, Charleston, S. C., and Shearith Israel, New York. His letters are an eloquent _expression and hope for religious harmony and endure as indelible statements> of the most fundamental tenets of American democracy.

THOMAS JEFFERSON was the first President to appoint a Jew to a Federal post. In 1801 he named Reuben Etting of Baltimore as US Marshall for Maryland.

JAMES MADISON was the first President to appoint a Jew to a diplomatic post. He sent Mordecai M. Noah to Tunis from 1813 to 1816.

MARTIN VAN BUREN was the first President to order an American consul to intervene on behalf of Jews abroad. In 1840 he instructed the U.S. consul in Alexandria, Egypt to use his good offices to protect the Jews of Damascus who were under attack because of a false blood ritual accusation.

JOHN TYLER was the first President to nominate a U.S. consul to Palestine. Warder Cresson, a Quaker convert to Judaism who established a pioneer Zionist colony, received the appointment in 1844.

FRANKLIN PIERCE was the first and probably the only President whose name appears on the charter of a synagogue. Pierce signed the Act of Congress in 1857 that amended the laws of the District of Columbia to enable the incorporation of the city's first synagogue, the Washington Hebrew Congregation.

ABRAHAM LINCOLN was the first President to make it possible for rabbis to serve as military chaplains. He did this by signing the 1862 Act of Congress which changed the law that had previously barred all but Christian clergymen from the chaplaincy. Lincoln was also the first, and happily the only President who was called upon to revoke an official act of anti-Semitism by the U.S. government. It was Lincoln who canceled General Ulysses S Grant's "Order No. 11" expelling all Jews from Tennessee from the district controlled by his armies during the Civil War. Grant always denied personal responsibility for this act attributing it to his subordinate.

ULYSSES S. GRANT was the first President to attend a synagogue service while in office. When Adas Israel Congregation in Washington D.C. was dedicated in 1874, Grant and all members of his Cabinet were present.

RUTHERFORD B. HAYES was the first President to designate a Jewish ambassador for the stated purpose of fighting anti-Semitism. In 1870, he named Benjamin Peixotto Consul General to Romania. Hays also was the first President to assure a civil service employee her right to work for the Federal government and yet observe the Sabbath. He ordered the employment of a Jewish woman who had been denied a position in the Department of the Interior because of her refusal to work on Saturday.

THEODORE ROOSEVELT was the first President to appoint a Jew to a presidential cabinet. In 1906 he named Oscar S. Straus Secretary of Commerce and Labor. Theodore Roosevelt was also the firstPresident to contribute his own funds to a Jewish cause. In 1919, when he received the Nobel Peace Prize for his efforts while President to settle the Russo-Japanese War Roosevelt contributed part of his prize to the National Jewish Welfare Board .

WILLIAM HOWARD TAFT was the first President to attend a Seder while in office. In 1912, when he visited Providence, RI, he participated in the family Seder of Colonel Harry Cutler, first president of the National Jewish Welfare Board, in the Cutler home on Glenham Street.

WOODROW WILSON was the f irst President to nominate a Jew, Louis Dembitz Brandeis, to the United States Supreme Court. Standing firm against great pressure to withdraw the nomination, Wilson insisted that he knew no one better qualified by judicial temperament as well as legal and social understanding, confirmation was finally voted by the Senate on June 1, 1916. Wilson was also the first President to publicly endorse a national Jewish philanthropic campaign. In a letter to Jacob Schiff, on November 22, 1917, Wilson called for wide support of the United Jewish Relief Campaign which was raising funds for European War relief.

WARREN HARDING was the first President to sign a Joint Congressional Resolution endorsing the Balfour Declaration and the Palestine Mandate supporting the establishme nt in Palestine of a national Jewish home for the Jewish people. The resolution was signed September 22, 1922.

CALVIN COOLIDGE was the first President to participate in the dedication of a Jewish community institution that was not a house of worship. On May 3, 1925, he helped dedicate the cornerstone of the Washington, D.C. Jewish Community center.

FRANKLIN D. ROOSEVELT was the first President to be given a Torah as a gift. He received a miniature Torah from Young Israel and another that had been rescued from a burning synagogue in Czechoslovakia. Both are now in the Roosevelt Memorial Library in Hyde Park. The Roosevelt administration's fail ure to expand the existing refuge quota system, ensured that large numbers of Jews would ultimately become some of the Holocaust's six million victims. Fifty-six years after Roosevelt's death, the arguments continue over Roosevelt's response to the Holocaust.

HARRY S. TRUMAN, on May 14, 1948, just eleven minutes after Israel's proclamation of independence, was the first head of a government to announce to the press that "the United States recognizes the provisional government as the de facto authority of the new state of Israel." Truman was also the first U.S. President to receive a president of Israel at the White House, Chaim Weizman, in 1948 and an Ambassador from Israel , Eliahu Elat in 1948. With Israel staggering under the burdens of mass immigration in 1951-1952, President Truman obtained from Congress close to $140 million in loans and grants.

DWIGHT D. EISENHOWER was the first President to participate in a coast-to-coast TV program sponsored by a Jewish organization. It was a network show in 1954 celebrating the 300th anniversary of the American Jewish community. On this occasion he said that it was one of the enduring satisfactions of his life that he was privileged to lead the forces of the free world which finally crushed the brutal regime in Germany, freeing the remnant of Jews for a new life and hope in Israel.
JOHN F. KENNEDY named two Jews to his cabinet: Abraham Ribicoff as Secretary of Health, Education and Welfare, and Arthur Goldberg as Secretary of Labor. Kennedy was the only President for whom a national Jewish Award was named. The annual peace award of the Synagogue Council of America was re-named the John F. Kennedy Peace Award after his assassination in 1963

JIMMY CARTER in a number of impassioned speeches, stated his concern for human rights and stressed the right of Russian Jews to emigrate. He is credited with being the person responsible for the Camp David Accords.

GEORGE H.W. BUSH, in 1985 as Vice President, had played a personal role in "Operation Joshua," the airlift which brought 10,000 Jews out of Ethiopia directly to resettlement in Israel. Then, again in 1991, when Bush was Presi dent, American help played a critical role in "Operation Solomon," the escape of 14,000 more Ethiopian Jews. Most dramatically, Bush got to the U.N. to revoke its 1975 "Zionism is Racism" resolution.

BILL CLINTON appointed more Jews to his cabinet than all of the previous presidents combined and put Ruth Bader Ginsburg and Stephen Breyer, both first appointed to the federal bench by Jimmy Carter, on the Supreme Court.

GEORGE W. BUSH is the first president since Herbert Hoover who has no Jews in his cabinet at all and has appointed no Jews to the Federal bench.

Michael Chertoff, the Sec. of Homeland Security is Jewish, although this was likely written before his appointment on February 15, 2005.

Posted by OneEyedMan at 3:27 PM | Comments (0)

February 23, 2006

The clashing of civilizations is nothing new

Islam and the West have been at war on and off for the last 1400 or so years. We've been a bit distracted by the lull in hostilities between the end of WW I and the September 11, 2001, but this is a real conflict, not just a product of the Bush administration.

The Philadelphia Inquirer has review of a few recent books on this long conflict. A choice quote:
Islam, we're often reminded these days, means "submission" in Arabic. Enlightenment, we should equally remember, means replacing half-baked notions and myths with facts.

I love when a conflict can be solved peacefully, even more so when a win-win solution can be found. But sometimes your enemies don't want to negotiate, sometimes they want to destroy everything about you that you like about yourself. Then you have to use force. Sometimes there is no substitute for killing your enemies.

Remember my article about unemployment and terrorism? One thing that the Europeans should consider is cutting their benefits for non-citizens. Forced to integrate into society to make a living, they'd be more likely to learn the language of their hosts. The might pick up a bit of their values, and certainly would help with assimilation, If you need to add some carrot to the end of this, deport non-citizens who remain long term unemployed.

Posted by OneEyedMan at 3:39 PM | Comments (0)

February 22, 2006

Thanks Dilbert

This week's Dilbert comic makes fun of our silly attempts to reduce our dependence on foreign oil.

This nonsense also came up Bush's most recent State of the Union Address.

Lowering the demand for oil would lower the price for oil. This would encourage the highest cost producers to leave the market. We are not the low cost producers of oil, no Our allies, the peaceful, democratic, relatively well-behaved nations of the world.

The middle east has the lowest cost of oil extraction. Saudi Arabia can produce for as little as $1 per barrel. Another unfriendly petro-regime, Venezuela can extract for a mere $2 per barrel. US oil companies must make an average of $8.60 to cover the costs of extracting a barrel of oil.

Reducing our dependence on foreign oil would actually require policies that increase the price of oil, not lower it by decreasing demand. However, these reductions in consumption (and price) might still have a net benefit. By reducing the revenues of our enemies, even if we don't reduce their output we might weaken them. The only question is if we are doing greater damage to ourselves to archive it.

****State of the union link fixed to point to 2006 SOFU***

Posted by OneEyedMan at 4:13 PM | Comments (2)

February 21, 2006

Toilet Seats

Men and women have perennial arguments about leaving the toilet seat down (or not). Marginal Revolution has a small analysis on the game theory governing toilet seats, Essentially, they argue that woman generally have a much higher marginal demand than men do for leaving the toilet seat down, but since they have to use non-financial payments to convince their mates to leave the seat down, it becomes a broader proxy for commitment, thoughtfulness, and love of their mates.

Although I haven't had any takers on this issue, my proposal is just that everyone (men and women) should leave the seat and the lit down.
Since everyone has to change the toilet state to use it each time, it might be less efficient, but certainly more fair. Everyone has the exact same movement each time, and women also experience the inconvenience of moving the toilet seat for another. Not one can or will assume that anyone else will leave the toilet in a state usable by anyone else. At least one woman told me that this doesn't look at nice.

Some economic arguments: The average person urinates about 4 or 5 times per day. That's compared with about once per day for a bowel movement. Combine the urine and defecation trips, and you get that 60% of trips would be with the seat down. That suggests an efficiency gain from always leaving it in the down state.

Another is to consider who is the least cost provider of reducing the costs of a dirty bowl. Preventing a woman from falling in the the toilet (a "midnight surprises") and showing a dirty toilet are all costs from leaving the seat up. But if women value a clean toilet more (and one suspects they do), then having them clean it and always leave it in the up position will insure that the toilet is presentable and that they never fall in, as they will have to be in the habit of lowering the seat each time. If women value this significantly more than men do, this might be the low cost solution.

Posted by OneEyedMan at 12:39 PM | Comments (1)

February 17, 2006

Cheap and obvious, but still a great idea

What was the last thing you purchased that bought without knowing the price?

I bet I can guess: health care. I find heath care pricing opaque, capricious, and often announced after the care is delivered.

Dr Atlas has a simple proposal to help control costs of health care. Simply post prominently the 3-6 month average price charged to all customers for the 10-20 most common procedures. Obviously, this allows competition based on price, but it also keys the uninsured customer/patient into the actual price being charged, which is set by negotiations with insurance companies rather than whatever they think they can get out of the individual who foots his own bill.

Doctors: Post Your Prices
By SCOTT W. ATLAS
February 17, 2006; Page A12

If a goal of health-care reform is to empower the patient, why is there such a mystery about medical prices? Instead of allowing government to set them, which is essentially the case for the great majority of medical procedures, the role of the government should be to make transparent the pricing of these procedures.

In our current system, few patients are aware of the costs of their medical care, generally because patients have no reason to ask since it is paid for by third-party insurance programs. This has allowed hospitals and doctors to avoid public view. Patients, however, would greatly benefit if the government required that prices be posted for common medical procedures before the care is administered, in the same way that the government requires clear labeling of medicine and food and open disclosure of prices on gasoline and automobiles. When prices are openly stated and widely known, competition will ensue and prices will come down -- regardless of whether or not patients initially use that knowledge to make their "purchasing" decisions. This would allow the price mechanism to function again.

Where would the price data come from, and for what procedures should prices be known at the start? I propose we start with the 10 to 20 most common procedures in both outpatient and inpatient medicine, such as MRI scans, a surgeon's bill for rotator cuff repair, or an anesthesiologist's bill for a cardiac surgery procedure. Procedure-based prices are more appropriate, because diagnosis-based prices would likely be too complicated to calculate and contain too many variables. To pre-empt the claim that "price depends on individual situations," posted prices could be based on retrospective analysis of the provider's previous three or six months' average of charges.

How would the price data be posted? The patient needs to know upfront, not after the fact. One way would be at the time when patients are handed the "medical information materials," such as brochures describing procedures and consent forms. Another way is to post them in the clinic offices and hospital admitting rooms. A third would be to put them on the Internet.

The idea of informed consumers knowing prices and controlling their health-care dollar is an extremely powerful one. And in those few cases where patients have had to pay for procedures out-of-pocket, and have had information about price -- for example, whole-body CT screening -- the cost did indeed come down, rapidly and dramatically. The price of whole-body CT procedures declined by more than 75% in a few years!

Ultimately, no commodity, no service industry, sells to consumers without openly disclosing prices. Doctors and hospitals might be forced to rethink their prices if they knew those prices would become part of the public domain. There should be no mystery to patients about what their own health care will cost.

Mr. Atlas, a physician, is a senior fellow at the Hoover Institution and a professor at the Stanford University School of Medicine.

Posted by OneEyedMan at 10:32 AM | Comments (0)

February 16, 2006

The Parking Lot is Full

My favorite web comic of all time was The Parking Lot is Full.

A brilliant example of the traumatic, clever and insightful comics they drew was "Chicken", on the nature of language.
Enjoy.

Posted by OneEyedMan at 12:00 PM | Comments (0)

February 15, 2006

What we know that isn't so

Do all serious climate scientists believe that global warming is caused by people and getting worse?

It seems not...

The vast majority of the most respected environmental scientists from all over the world have sounded a clear and urgent alarm. …these scientists are telling the people of every nation that global warming caused by human activities is becoming a serious threat to our common future.
-- Al Gore, MoveOn.org, January 2004

As proof of their thesis Tolan and Harte referenced Naomi Oreskes. Last year Science Magazine published the results of a study by Ms. Oreskes. She concluded that there is a "unanimous, scientific consensus" on the anthropogenic (human-induced) causes of recent global warming. Oreskes analyzed 928 abstracts she found listed on a scientific database using the keywords "global climate change."

So what about this "consensus" among scientists. Is it really that broad?

Dr. Benny Peiser of England's John Moores University attempted to duplicate Oreskes' work. Peiser found 1,117 abstracts using the same search technique. Of these, only 13 explicitly endorsed the 'consensus view.' However, 34 of the abstracts rejected or questioned the view that human activities are the main driving force of "the observed warming over the last 50 years."

Posted by OneEyedMan at 1:18 PM | Comments (0)

February 14, 2006

Old but interesting

Landsburg (from the last article) has an amazing piece from 2000 that discussed the economics of marriage.

In the year following a divorce, women's living standards fall by 27 percent while men's living standards rise by 10 percent.

...there's a good reason, rooted in both economics and biology, why we should have expected this conclusion all along. A 30-year-old woman who wants a family is getting close to the point where she has to choose the best of her available suitors. A 30-year-old man can always choose to wait another five or 10 years till someone better comes along. In general, the longer you spend searching for something—be it a car, a house, or a life partner—the happier you're going to be with the one you end up with. So—again, with myriad exceptions—a woman's optimal strategy is to settle for an imperfect mate and then try to change him. A man's optimal strategy is to search until he finds someone close to perfect. It's therefore no surprise that women, more often than men, should end up regretting their choices.

But why do men and women get married at so similar an age if this is true?

Men get married on average at 25, women at 23, 5 years before precipitous drop in fertility among women. It could be that slope of the demand curve for marriage (for men) is steeper than the supply curve for women. This results in a low equilibrium price to men for getting married.

As Landsburg suggests, Women know that they aren't getting any younger, and since desirability declines and fertility problems mount with age, are inclined take a lower price to get married earlier. This suggest a flat supply curve. Men could search longer, so their demand curve is steeper. However, the women's curve is so steep that men can settle, they too would rather be getting the benefits of marriage sooner, so for the right price, they too will settle.

My guess it would look something like this:

Posted by OneEyedMan at 10:15 AM | Comments (0)

Have you heard of Tirhas Habtegiris?

Tirhas Habtegiris was 27 years old when she died from abdominal cancer.
Much like Terry Schiavo, there was little prospect of recovery, but unlike Terry Schiavo she lacked the money to pay for her own care. Although Ms. Habtegiris was not conscious at the time of her death, she was sometimes conscious during her stay at the hospital.

The hospital eventually turned off Habtegiris's life support because she wasn't going to get better and couldn't pay for it to continue. This was their right under Texas law. The medical care to extend her life cost at least $2,255 per day.

Dr. Steven Landsburg, an economist that writes for Slate, took a beating in the press for suggesting that this was the right thing to do. Essentially, his argument was that because she was young, before she got sick she could inexpensively have purchased insurance. The fact that she didn't is a reflection of the value she placed on her own life. Since she didn't value her life as much as consumption today, this should relieve society of the cost of caring for her. She didn't care, so why should we.

This was an interesting point, and it met with the following basic criticism (which I read in an article by Rob Frank in the NY Times, now in the archives). Moral emotions like sympathy and empathy have utilitarian value. The purpose of the economy is utility, not economic efficiency. Providing free health care to those who could afford insurance, but didn't, and now can't afford treatment seems to have more utilitarian benefits than the loss from the moral hazard of fewer people buying that insurance in the first place.

This moral valuation allows inconstant valuation of life to creep into the benefit-cost analysis. The fact that someone will die with certainty in a probabilistic sense can be valued less than someone dieing with certainty from deliberate action.

For example, let's say that NYC has 25 children who die a year in bike accidents that could be prevented by wearing helmets. NYC could give every child in NYC a free helmet for $25 million. Let's say they would wear them if they got them for free. That's $1MM per life saved with probabilistic certainty. If all lives are morally equivalent, then this should be preferred over saving $25 million to save 5 backpackers lost in the desert. If we value the probabilistically ccertain lives saved as worth less the actual lives saved, we can prefer to spend the money on the second choice.

But I'm not convinced that we should calmly accept that our morals are what they are and blindly follow them in determining how to allocate social resources. For example, Habtegiris was from sub-Saharan Africa. The cost of a single day of her treatment was equal to the annual per-capita income of four residents of that region.
A recent study of childhood disease intervention in Africa found that lives could be saved for $779. 29 children have died in Africa because money was allocated to keep Ms. Habtegiris alive instead for their vaccinations. The UN estimates that 5 - 6 million children died last year from starvation. They can be easily fed on $.17 a day or $62.05 a year. 362 could be fed for a year for the price of Ms. Habtegiris's treatment. Those aren't probabilistic deaths. We might not know their names, but there are real children out their dying for certain without very cheap food.

Why should we value their lives as worth a .25% as much as hers? If we really think that strangers have a moral claim on our income to save their lives, we should decide how big that claim is and allocate it in a fair way. That means that if two people are equally innocent of their distress, we save the cheaper one first.

Posted by OneEyedMan at 8:59 AM | Comments (0)

February 10, 2006

Neologisms

Reason wins a prize for the best name for the Danish cartoon mess:
The Intoonfada

Posted by OneEyedMan at 11:06 AM | Comments (0)

Blogs aren't growing but is anyone reading them?

Are blogs growing?

Sifry works for Technorati, a blog search engine and community site. Sifry's blog, Sifry's Alerts says that the number of blogs is doubling about every 5.5 months. He estimates that approximately 2.7 million bloggers post to their blogs once a week or more.

Mystery Pollster reports on a new Gallup poll that suggests that blog readership isn't growing at all. Just 9% of Internet users read blogs frequently, and 1/3rd ever. In contrast 67% send and read e-mail frequently, and 93% ever do so.

So what is going on?

All this suggests that an enormous percentage of blog readers are also blog writers. The real impact of blogs on modern culture we be felt after readership spreads beyond this hardened core or writer/readers.

Most blogs are boring, pointless, and/or wrong, so no wonder. Casual blog readers need reputation systems to know who to read and trust.
However, with millions of blogs, these reputation systems had better be automated. Right now these tools are in their infancy. A solid fix to the blogging and traceback spam, will go a long way to fixing the reputation problems of blogging. Extensive public interconnections between blogs is an essential a prerequisite to automated reputation systems like Technorati and Google. My guess is that this is going to take a lot longer than the leading bloggers think it will, perhaps even many years. But they are right about the trajectory, if not the delivery date. Given enough time the best bloggers are going to be as wildly ready and heavy in impact as the most wildly read projects from traditional media. But, in the process the two may synthesize. Major magazines like the Atlantic Monthly and Reason have formed their own blogs. So if a magazine updates as articles gets published and has tracebacks and comments, is it a blog? IF a blog has a professional editor, thousands of readers, and multiple authors, is it a magazine?

Posted by OneEyedMan at 10:19 AM | Comments (0)

A snowy rich man's playground

Amid the cartoon induced chaos roiling Europe the Italians are working hard to finish up for the Olympics. The opening ceremonies begin this Friday, and some 85 countries (43%) will be sending representatives of one variety or another. They won't be evenly distributed. Specific data on who is participating wasn't on the IOC website, but a safe bet is that Cuba won't be winning any metals.

In the history of the winter competition, dating from its inception in 1924, competitors from only six countries -- the Soviet Union/Russia, Germany (East, West and combined), Norway, the United States, Austria and Finland, in that order -- have won almost two-thirds of all the medals awarded. Only 17 countries have ever amassed more than 10 medals during the past 19 winter Olympiads. Only 38 countries have won even one medal.

Posted by OneEyedMan at 9:58 AM | Comments (0)

February 9, 2006

A bit pessimistic

Boing Boing has an entry on a piece of furniture that doubles as a day bed and a dining room table (like what my friend DS has). Cory has odd quote, "One prediction: devoting an entire room of your downsized home to a television is going to be as weird as devoting a whole room to storing coal."

This is highly unlikely.

Houses are getting bigger and bigger as societies get richer. The average home size in the United States is now 2,200 square feet, up from 1,400 square feet in 1970, according to the National Association of Home Builders. TV's may have a slightly shrinking portion of the family's entertainment time budget, but it is still the biggest item. Speaking of the biggest item, anyone who has been to a Best Buy in the last few years knows just how big TV's are getting. One of my coworkers just bought a 50" TV, trying hanging that in a room without it being a center of attention.

Posted by OneEyedMan at 12:01 PM | Comments (0)

Free booze as social policy

On a personal finance blog (of all places) I found a reference to a Canadian study on proving free alcohol to alcoholic homeless men and women.

It seems that "the number of times participants got in trouble with the law had fallen 51 percent from the three years before they joined the program, and hospital emergency room visits were down 36 percent."

Which makes it sound like it isn't alcohol doesn't make you do bad things, you do bad things to get alcohol. Which could go equally well for providing needles to junkies, clean scalpels to secret cutters, and free condoms to high STD risk populations. This amounts to a Pigovian subsidy of safer behaviors to avoid more dangerous ones.

Posted by OneEyedMan at 11:36 AM | Comments (0)

February 8, 2006

Limited Liability

Incorporated or limited liability corporations are fascinating beasts. Unlike a partnership or a sole proprietorship, they exist independent of their owners. They live beyond their owners deaths and have their own legal standing with rights and privileges.

Richard Booth, in his article THE MYTH OF LIMITED LIABILITY, argues that limited liability is no longer necessary to archive a functioning stock market. He claims that the prospect of suffering a loss beyond an initial investment is untenable without some ability to control the outcome.
He says:

That may once have been so. But today, most investors are well diversified. They can easily absorb losses from one portfolio company, because there will always be others that do better than expected. If we did away with limited liability for publicly traded companies it would not likely affect the market at all.

That speaks to my article on diversity and Enron from Monday. But my assumption in that analysis was that your liability in investing in Enron was limited to the initial investment. This is not so without limited liability.

Partnerships and single proprietorships (think of them as partnerships with one partner) are the dominant form of business organization without limited liability. Partnerships have joint Liability. This means that they share in the liability for the actions of the partnership. This would be for capital markets, but likley not fatal. In the event debt greatly exceeded the assets of the firm, individuals could be on the hook for substantial obligations. On the other hand, they'd owe it to banks, bond holders, and the like, so highly diversified investors could pay for their miniscule share of the debt out of their gains from other inevestments. In most circumstances of bankrupcy they would owe very little and if persuing individual investors would be costly, they'd get off scott free. On the other hand, if limited liability is truely ammoral, then maybe we should require even small investors to put money in escrow to cover their liabilities. Of course now we'd have to brace ourselves for all the resulting lawsuits about who really owns stock and when they owned it. Not a fatal change, but certainly an ugly one.

However, in many states partnerships also have joint and several liability. This includes, among others, New York, Deleware, and California. Navada, for example has only joint liability. That means that not only do the partners share in the liability, but if any one cannot pay, the others may be pursued for the entire amount. In this situation wealthy indivuals, big mutual funds, large private charities, and insurence companies would be hounded for the excess liabilities of the firms they own simply beacuse they have deep pockets. Diversification wouldn't help you here. Instead you'd encourage elaborate legal structures designed to mask stock ownership. You would also ensure that employees never wanted own their own firm's stock.

Posted by OneEyedMan at 1:51 PM | Comments (0)

February 7, 2006

More Abortion Regressions

MS writes in to comment on my analysis of abortion data.

Here's something else to consider in your blog article today -- the availability of abortions in red as compared to blue states. Something like 80% of counties in the US don't have abortion providers, and not surprisingly, the states with more restrictive laws have fewer providers compared to states with less restrictive laws. It could be that women in so-called red states have fewer abortions because the service is not available close to home, and travel would be expensive or impossible for logistical reasons. I think the distribution of providers is readily available information, and should perhaps be included in your regression.

Which could very well be true. Also, I realized in my last analysis that I assumed that the pregnancy rate was constant throughout the states, and there is no reason to believe that is the case. So I reran the regression with pregnancy rate information, as well as with the number of abortion clinics in the state divided by the states population. I called this "Clinic Density".

This isn't a perfect measure of clinic availability. A doctor can only perform so many abortions per year, and if the waiting list ever got long enough it would be as bad as not having a clinic in your area. But what about travel time? If you live in rural Alaska and the nearest clinic is in Anchorage, that doesn't do you a lot of good if you need an abortion.

I considered using the number of clinics divided by the size of the state. However, states vary massively in size, but and abortion clinics tend to be near where the people live anyway. With about 80% of Americans living in urban or suburban areas, I figured that the size of the state wouldn't matter nearly as much as the population. I hope it is a fair assumption that in states with more abortion clinics other doctors are more willing to perform them.

So my tested model was abortions per thousand women of child bearing age (abortions per TWCBA)= x0+x1(% of births to unmarried women)+x2(Clinic Density)+x3(Voted for Bush)+x4(Pregnancies)

The t statistic is a measure, that asks, if the data were random, how unlikely would we be to see this coefficient emerge. A value with a magnitude greater than two usually is interpreted (without slogging through all the particulars) that seeing a coefficient this unusual would happen less than 5% of the time. Notice that Clinic density only has a t statistic of 1.51.

Having found that if our model was accurate, clinic density wasn't statistically significant, I reran it without it.

Which is pretty amazing. We can predict 94% of the variation in abortion rates between the states with just the % of births to unmarried women (PBUW), knowing if they voted for Bush in 2004, and the pregnancy rate (pregnancy per TWCBA).

Findings:
1) The factor PBUW had a positive coefficient. It showed a 1% rise in PBUW was associated with .51 extra abortions per TWCBA.

2) The factor voting for Bush had a negative coefficient. A state that voted for Bush had 7.37 fewer abortions per TWCBA.

3) The factor pregnancies per TWCBA had a negative coefficient. It showed a 1% rise in pregnancies per TWCBA was associated with .46 extra abortions per TWCBA.

Here is the data I used:
Download file

Posted by OneEyedMan at 8:39 AM | Comments (0)

February 6, 2006

The Price of Owning Enron

The Quant has an interesting piece on the obligation of the financial adviser (and lack thereof) to educate their customers about diversification.

Which got me thinking, if you bought Enron as part of an market weighted portfolio (bigger companies make up more of the portfolio in proportion to how big they are) like the Russell 3000 on 9/19/01, when it hit an all time high of $107 per share, and held it a few years through all the chaos until it went to zero, I wonder how much you'd have lost. Try as I may, I couldn't find the percentage of the Russell 3000 made up by Enron (or anything else).

But let's assume that it was in the S&P 500 , which it wasn't, but bear with me. Back in 2001, General Electric was the biggest company in the S&P 500, making up about 4% of the total value. By September of that year, Enron was (at the peak) worth about $68 billion, while GE was worth about $370 billion. That means that your holds of Enron would be only 18% as large in the index. If you invested $100,000 in the index back in 9/2001 you'd have lost about $736 from Enron's collapse.

So diversify, worry less about the bad eggs in your portfolio, and make more return from a given level of risk. Is that counter intuitive? That's another article.

Posted by OneEyedMan at 9:16 AM | Comments (0)

February 4, 2006

The economics of abortion

Jane Galt, the writer over at Asymmetrical information, has a wonderful analysis of the economics of the decision to have an abortion. Let us say you agree with Clinton's famous position that abortions be safe, legal, and rare, but not as a family planning method. Instead, you would want couples to do their family planning with birth control, using abortion for its failures, as well as rape, incest, and say fatally disabled fetuses. Maybe you have a different standard, but bear with me. Let us also say you buy into price theory, that when the price of something goes down, mostly people consume more of it. You end up with a two-stage decision.

1) Should I use birth control during intercourse
2) Should I have an abortion if I conceive a fetus

One theory of why women have marginal abortions is that contraceptives are too expensive (financially, discomfort, or just too much work) or in or potential users are simply too stigmatized against and uneducated in their use. Under this theory, the major way to reduce the sort of abortions you prefer to avoid is to educated young people that intercourse with contraceptives is good as a moral matter, reasonable to expect from your partner and made affordable by free or discounted distribution by the state and charities.

If one accepts that the inclination to have sex is independent from the state you live in (not caused by it), we can see if red states (where presumably such things still have stigma, and contraceptives slightly less readily available) have abortion rates higher than the blue states (which have more permissive attitudes and wider distribution of contraceptives) do. It turns out that they do not. Nevertheless, read her article to see the full analysis.

A criticism of her work stems from her measurement of abortion frequency as abortions per 1,000 women of childbearing age. If the blue states have a radically different rate of sexual activity, say because people from the more traditional states avoid intercourse out of marriage, then this would understate the role of contraceptives in the low abortion rates of the red states. Instead, it should be the number of abortions per 1,000 sexually active women. A few quick looks on Google suggests this data is not readily available, but it might bias the whole analysis. If you what I could find, the births to unwed mothers as a proxy, But it turns out the states with the highest levels of abortion, in addition to being the most liberal) also have highest level of out of wedlock births. Which suggests that they also have the highest levels out-of-wedlock-sex, because they also have the highest abortion rates.

I ran a multiple regression, with % of births to unmarried women (PBUW)and voting for bush in 2004 as the independent variable, and abortion rate as the dependant variable. Both were statistically significant. The factor PBUW had a positive coefficient. It showed a 1% rise in PBUW was correlated with 1 extra abortion per thousand women of child bearing age (TWCBA). Voting for Bush had a negative coefficient. A state that voted for Bush had ten fewer abortions per TWCBA. This is consistent with the theory that premarital sexual activity drives abortions, and that whatever cultural values are associated with a propensity to vote for Bush, they are actually driving down abortion despite a lower presumed availability of contraceptives.

Posted by OneEyedMan at 4:08 PM | Comments (0)

February 3, 2006

What makes a computer fast?

I noticed today on techbargains that the discount computers only have about 25% faster processors and the same amount of standard memory, but likely with a faster clock. The hard drive is the same speed. How much faster do you think that computer is than mine is? I'm getting the impression that most of the performance gains in the last few years have been to video cards rather than anything else. Your thoughts?

Posted by OneEyedMan at 9:13 AM | Comments (1)

February 2, 2006

Could appeasement work?

From time to time I have a conversation with a friend or family member (usually after calling Bush a criminal and a liar) explains that if we just left the Middle East, stop supporting Israel, had $5 a gallon gas, and pulled our tgroups out of Saudi Arabia (which, incidentally, we've done) then Bin Laden and his ilk would leave us alone.

But then why do their requirements for peace keep expanding? It seems that Hamas is demanding parts of Spain be returned to Muslim rule.

Appeasement is gross. War is terrible, but sometimes there is no substitute. When your enemies despise the things about your culture that you most value, your religion, your freedom, and your system of government, you can't win by incrementally giving them what they want.

Still aren't convinced? Consider the Danish. Could they be more innocent of the hostility they've received from Muslim fundamentalists? Have any of you been following the controversy of the comics of Mohammad engaging in lewd acts that have caused a near complete capitulation of Danish society to self-censorship?

You can find the
cartoons over at Freedom Zone
.
Do we need their oil or airfields so badly that we'll abandon everything to get them? Here is my recipe for straightening this stuff out.

1) Kill terrorists who target your people
2) Deport those who preach violence (who aren't citizens) back to the hellholes they came from.
3) Leaders must stick up for freedom and its expressions
4) Remember that loss of irony is the first sign of a loss of rational thought. Retain your sense of humor to make sure we hear all the options.

Posted by OneEyedMan at 6:22 PM | Comments (0)

Oh yeah, this isn't the CEO's playground

General Electric (GE) is the world's largest corporation by the value of 348.69B worth of shares. Recently, like many other major and minor American companies, they have been engaging in greenwash. Greenwash
is disinformation disseminated by an organization so as to present an environmentally responsible public image." But beyond that, they've also been experimenting with voluntary participation in environmental protection activities, as well as lobbying for general environmental issues. But why? Are they doing this to make more money, to placate employees, to satisfy the whims of management, or just to be more popular at the country club?

Treehugger is reporting that a group of Libertarian (and pro-profit) shareholders of GE has created a shareholder resolution "asking GE to justify its support to curb greenhouse gas emissions." Which is good. Either the firm can provide some economic analysis that this is in the interest of shareholders by giving GE good PR, raising barriers to entry to competitors, and putting GE in place to get preferential access to patents, or they shouldn't do it. Being is business isn't a popularity content, and GE doesn't exist for any other purpose other than to maximize the net present value of its profits within the requirement of the law. Even if the law GE supports is good public policy, it should not be advocated by GE without it being good for GE's profits.

Posted by OneEyedMan at 12:55 PM | Comments (0)

February 1, 2006

Human Animal Hybridss

Bush is getting a ribbing over his mentioning Human-animal hybrids in his state of the union speech. But this isn't just the paranoid ramblings of a religious conservative. It is actually happening. Here is an example of Human genes added to pig sperm in organ transplants study. Then of course there is the mouse with the human ear on its back.
These chimeras (also called animal-human hybrids or transgenic animals) are a real development of modern biology.

Maybe we shouldn't care. Maybe a post human future is inevitable. Perhaps, organ farming human/pig chimeras (they are about the right size to share organs) is morally superior than allowing some humans to die for lack of a transplant. But it isn't as though he made it all up. Or maybe it is
an affront to human or even animal dignity. To save lives, like heart transplants, better insulin
, and the like, I'm on board, especially if we aren't dismembering human fetuses to make it happen. For human meat pork chops and cheaper beauty treatments it is not isn't worth it.

Chimeras are an animal from Greek mythology that have three heads- two large ones from a goat and a lion, and a third one as a tail from a serpent.

Chimera
Bronze statue, 4th century BC
Museo Archeologico, Florence

Posted by OneEyedMan at 11:45 AM | Comments (0)