Friday, June 29, 2012

Dallas Fed is making the same mistake Perry made

Last night - The Atlantic posted a short story about how Dallas Fed Chairman Richard Fisher was doing a bit of bragging about his region.

And rightly so! I mean, come on! Texas is destroying the rest of the nation when it comes to job growth. 

Here is some:
"We have the same monetary policy as the rest of the United States," he said. "Why are we outperforming the rest of the country?" He ticked off a number of qualities that make Texas stand out. "We have made ourselves more business friendly. We have no income tax. We have a regulatory environment that is more business and job friendly," he said. "I'm convinced since we all have the same monetary policy, if we had differentiation for pro-growth policies, we'd have more economic growth." 
This conversation sounds oddly familiar.

Back when Rick Perry was running for President, he said essentially the same thing about fiscal policy. Texas was growing under his policies as Governor - policies that are certainly different from Obama. And yet, many came forward (see here and here) to point out that Texas's success could also be attribute to plenty of other factors that have nothing to do with fiscal policy - i.e. immigration.

I'm going to take a wild guess that it's probably the same situation with monetary policy. So Mr. Fisher: The country is a big complicated place! But I understand how hard it is to think about the world outside of Texas.

Thursday, June 28, 2012

There's a problem

So let's say that the individual mandate gets overturned this morning, as well as other related provisions - but the rest of the law stays.

President Obama will be hard pressed to immediately wage a fierce campaign defending the remaining of the health care bill. Mitt Romney, on the other hand, won't (or shouldn't) lift a finger.

Apart from spending a few days mentioning that Obama spent a lion's share of his first term on a piece of legislation that got swept out from under it - Romney shouldn't harbor too much on the subject. For independents and conservatives, a Supreme Court ruling will simply codify their arguments (in their eyes), so what more needs to be said.

Two things can happen from there:

1.) Democrats and the press will want to know what Romney will do about health care - which will be an even more interesting (devastating) answer, considering the model of his own health care plan was deemed unconstitutional on the federal level. And I sure hope he doesn't think he can get away with avoiding policy positions forever...especially when the debates start up.

2.) Romney will gently say: "You see, this legislation went against the nation's constitution. But that's in the past. Now let me tell you more about jobs." If this is the case, and the Obama campaign (or at least Democrats in Congress) brings out its rage on the SC, then Romney will probably look like the higher figure.

But hey, who's to say.

Wednesday, June 27, 2012

Politics of the Eurocrisis

Not that anyone could have truly predicted where the Eurocrisis would be today - but was the idea of enhanced political consolidation really on the table?

It seemed like only a month ago everyone was saying that either the entire Euro system would unravel, or the "weakest links" would be booted out. And now, with the upcoming conference, there are plans to rework the entire system and bolster the fiscal union.

Though the plan is still being reworked, and it's unsure what consensus (if any) will come out of the conference, some of the new provisions include:

  • Giving EU institutions the ability to rewrite national budgets
  • Single European banking supervision and a common deposit insurance and resolution framework
  • More coordinated economic policy

The full document is here.

Of course, as pointed out in the FT article, this is a scaled back version of the original plan. There are no time tables or concrete provisions that explain what would happen on the bureaucratic level. We'll have to wait and see how it turns out.

Tuesday, June 26, 2012

Two graphs on how us youth spend our time

Good news: We don't watch (as much) TV!

Bad news: We don't read!


Forgot to give credit to Derek Thompson from The Atlantic for posting these.

Monday, June 25, 2012

Lock-In at Silicon Valley

Bill Davidow from The Atlantic has a great post on the new business model that defines many giants in Silicon Valley:
Facebook is a perfect example. You can spend a lot of time and energy learning the ins and outs of the site, and building your image on the site by posting pictures, videos, and messages. You spend a lot of time getting friends to pay attention to you, and you in turn spend a lot of time keeping track of them. If you leave Facebook, you leave both your virtual friends and your investment in the site behind.
The so called "lock-in" strategy that is pursued by Google, Twitter, Facebook, and others, is building an internet consumer culture that is limited by choice, and punished for pursuing other outlets.

You definitely see this happening in a number of places. Davidow points out that when it comes to listening to music - Apple blocks you in with it's technology (iPhones, iPads, iPods) and its software (iTunes).

But I think when it comes to social networking sites - something more is happening than an effective business strategy.

Let's look at Google+ and Facebook.

I wouldn't argue that the failure of Google+ is because of policies by Facebook. Google+ wasn't super successful because of the very nature of social media sites. Consumers want to tap into their network of friends, and the tighter and more interconnected their network is, the better. That's how Facebook beat out MySpace in the first place. We have a whole generation of people (of which I'm included) who literally can't be on the computer for more than 10 minutes without checking Facebook. And you know why? Because it's the closest thing we having to being a room with all your friends. You have a birds eye view of your entire social life That is pretty remarkable. 

It's kind of like this. I have a core group of friends. We hang out. We do things together. You get the picture. Isn't there a lock-in strategy there? It's more of a pain to explore new friends and social circles because you have to completely rebuild those friendships.

You could infer the same thing about Facebook, and other big internet companies. So why would we (as consumers) even lift a finger to look for substitutes, when it's all right there! 

I'm not saying that these companies actively pursue ways of keeping us on their websites, but it seems like a lot of the work is already done for them.  

Update on the ACA

So the ruling for the ACA won't come until Thursday (hopefully). Until then - I wanted to do a quick post on some alternatives to the individual mandate, in case the provision gets shot down while the rest of the law stays.

Thankfully, WonkBook, this morning, linked to a document by the Government Accountability Office that outlines some incentives to spur voluntary enrollment. 

Here's the list:
• Modify open enrollment periods and impose late enrollment penalties.
• Expand employers’ roles in autoenrolling and facilitating employees’ health
insurance enrollment.
• Conduct a public education and outreach campaign.
• Provide broad access to personalized assistance for health coverage
• Impose a tax to pay for uncompensated care.
• Allow greater variation in premium rates based on enrollee age.
• Condition the receipt of certain government services upon proof of health
insurance coverage.
• Use health insurance agents and brokers differently.
• Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.  
A public education and outreach campaign will have extremely limited success. I mean, come on, the Obama administration tried to have a education campaign on the ACA itself, and now everyone hates the law but loves the provisions...

Of course, if the individual mandate is knocked out, there is no way Congress will act on any of these provisions. Even if Democrats maintain a slight majority in the Senate, the desire to touch health care again will be minimal. 

Sunday, June 24, 2012

Cultural misunderstanding

I wanted to comment briefly on a post by Arnold King about the lack of high-skilled labor:
Perhaps the seemingly low "supply of high-skill" (aka highly-credentialed) workers is a reflection of low demand for the lifestyle of high-skilled workers. Maybe at the margin many people would prefer more leisure to higher cash incomes.
One of the first things that we learn in econ is that you can't demand things that you don't know are in existence. I'm not responsive to price changes of Australian candybars because I don't have the opportunity to consume them (assuming I can't order them over the Internet).

The same thing can be said about "foreign lifestyles" and being aware of how other people live. As an upper middle-class, white college student, I don't have a very good understanding of what a lower class lifestyle is like. Sure, I know what it entails, but I don't truly understand it. The same can be said for other cultures when they are observing my life. So all in all, it's hard to determine if you really want or don't want another lifestyle if your understanding of it is limited to what you see out of your windshield.

Perhaps our understanding of other cultures has increased over the decades, but we also seek out others who are similar to us, so it's hard to say.

I'm not saying that King is wrong - but that perhaps cultural misunderstanding may play into this debate somehow.

Fantastic quote on evolution

Understanding the fundamentals of evolution is key because we so often get it wrong. Think of Darwin's lament. Evolution is part of our everyday parlance, and even though the game of life is a fact of life, we intentionally and unintentionally misrepresent, steadily. We think, incorrectly, that individuals evolve, that individuals act for the good of the species, that some species are primitive and others are advanced, that a ladder of life describes descent with modification, and that evolution is always working to make species better. We incorrectly intuit that complexity is always more evolutionarily advanced than simplicity, that evolution is goal driven, that evolutionary change is linear and in one direction, that any anatomical structure evolved long ago for the function it fulfills today, and that humans aren't evolving anymore - wrong, wrong, wrong!
Jon Long
"Darwin's Devices"
Of course, I first heard about this book from Tyler Cowen (hat tip). It's a fantastic study of how we can use robots to better understand minut evolutionary changes.