voluntaryXchange

More Evidence of Neolithic Tsunamis

This time, there is evidence of a tsunami in the eastern Mediterranean about 6,000 B.C.E.

The timing and size are consistent with the rapid abandonment of a neolithic settlement on the coast of what is now Israel. The scale of the tsunami was small there - only a meter or two at the most, but that is in the range of what we saw in Thailand 2 years ago.

Democratic Cheap Talk

Some nice legwork by Tim Worstall to show that Barrack Obama's throwaway phrase:

You gotta pay your workers enough that they can actually not only shop at Wal-Mart, but ultimately send their kids to college and save for retirement” says Senator Barack Obama.

actually imples a before-tax minimum wage of $18 per hour. That's considerably over the average wage in the U.S.

Talk is cheap. Thinking is hard ...

That Didn't Take Long

One of the dimensions along which Republicans blew it in Congress was in not overhauling intelligence appropriations.

Democrats promised to take care of this within their first 100 hours in power. But ... they've already caved and decided not to do this either.

The change in question was recommended by the 9/11 commission as:

So long as oversight is governed by current congressional rules and resolutions, we believe the American people will not get the security they want and need.

The problem is twofold; one part about Congressional organization, and the other about the politics of the party in control.

First, Congressional intelligence committees are supposed to oversee intelligence agencies whose budgets are determined by other committees. You tell me who you'd respond to?

Secondly, intelligence committees were updated a few years ago so that the member with the longest tenure on the committee would chair it. But, this isn't going to happen either. Apparently we're going to get a third stringer in charge of intelligence in the House.

Party politics is the reason.

Pelosi's buddy Murtha was voted down as the # 2 guy in the House. His consolation prize is the Defense Appropriations Sub-Committee. A small fraction of this committee's job is the control of intelligence spending, but not intelligence oversight.

Then there is Harman, Pelosi's nemesis. Harman has the most tenure on intelligence, but in not on Pelosi's A-list, so out she goes. Hastings is next in tenure, but he is disgraced.

The bottom line is that the Democrats aren't going to do what they promised (no surprise there), they aren't going to fix one of the legitimate problems with how the Republicans ran the place, and they're going to put a nobody with no power in charge of intelligence.

Teenagers Need More to Lose

One of the great things about economics is that it can quickly highlight where the clear thinking of others has stopped too soon.

Psychologists have established that adolescents actually overestimate the risks of their activities. (This is similar to earlier studies showing that smokers understand their risks adequately too.)

Adolescents feel invulnerable ... and drastically underestimate risks ...

Except that they don't.

For 40 years both popular and scholarly wisdom have held that the reason adolescents court risk is twofold: They believe danger bounces off them and they low-ball the chances that it will bring harmful consequences. They have weighed the risk (low), taken stock of their resilience or skill or smarts (excellent) and made the "rational" decision to drag-race down Main Street while inebriated. This explanation implies that when teens do stupid things, it is for rational reasons.

There is a problem with this explanation. "Adolescents don't tend to underestimate the probability of major risks, nor [do they generally have] feelings of invulnerability," argues Keith Stanovich of the University of Toronto in the new issue of Psychological Science in the Public Interest.

That is bad news for parents and schools that try to reduce teens' risk-taking with a rational, fact-based approach.

The evidence they offer, from 300 studies on adolescent risk-taking, strongly undercuts the conventional wisdom. National surveys show that adolescents typically overestimate risks of contracting HIV and lung cancer, of dying in a hurricane or earthquake, and every other risk they were asked to assess. Their guesstimate of the odds that they will die from crime, illness or accident in the next year or by age 20 is much higher than reality. In short, they don't see themselves as invulnerable, but "as more vulnerable than adults do," says Prof. Reyna.

Here's the rub: Teens tend to underestimate the bad consequences of risky behavior. They think, yeah, smoking will give me cancer ...  or unprotected sex will give me a sexually transmitted disease. But how bad can that be -- especially compared with the benefits of smoking or sex?

Social acceptance and the allure of rebellion right now outweigh the costs later. (Even adults, not to mention financiers, prefer immediate benefits to future ones.) Teaching teens to assess risks accurately won't decrease stupid behavior -- they're already pretty accurate at gauging the consequences. They just aren't much bothered by them. [emphasis added]

Time to put on the economist's tinfoil cap.

The emphasized text should make clear that what the psychologists have found is that the expected marginal costs of certain activities are low even when their probabilities err on the high side. Clearly, this is because what is being lost with unusually high probability is not something of large value.

How can this be?

Why wouldn't a teenager be worried about the value that might be lost to a smoking induced cancer, or an STD, when there is in fact something valuable that may be lost?

To me, this smacks of a house money fallacy.

Go on ... go ask a teenager if they think their life and their future are their own or their parents. The ones who say the latter are your risktakers. They engage in these behaviors because they don't feel like they are gambling with their own life.

In case you haven't noticed, our prisons are not filled up with people moaning about how they have screwed up their life. Rather, the residents' pathologies focus on how external forces - family, peers, drugs, crime, "the man" - have controlled their outcomes.

The same argument follows, along a lesser scale, for the kid in the principal's office, the one that just totalled a car, or the girl who regrets her last indiscretion.

If I'm correct, the prescription for addressing this is to be less domineering over our kids. Give them more control over the gains they can make from their decisions, and they'll be more likely to pay attention to the consequences of loss.

Read the whole thing, entitled "You Might Help a Teen Avoid Dumb Behavior By Nurturing Intuition", in the November 3 issue of The Wall Street Journal.

 

Litvinenko's Significance

Alexander Litvinenko died last week, and a lot of people don't seem to get the significance.

Let me spell it out for you: this is a crime against humanity.

Litvinenko accused, with some credence, elements of the Russian government directed by Putin of murdering him. They had motive and malice aforethought.

To clarify what's going on here, let me delineate six cases:

1. Individuals kill other individuals (i.e., murder)
2. Individuals kill (members of) another government (i.e., revolution)
3. Individuals kill citizens of another government (i.e., terrorism)
4. (Members of a) government kill (members of) another government (i.e., war)
5. (Members of a) government kill citizens of their own country
6. (Members of a) government kill citizens of another country

Americans tend to have a poor understanding of # 5. It isn't nice, and we occasionally respond militarily or diplomatically. The reason for this is sovereignty: the idea, going back to the Treaty of Westphalia, that a government can (within reason) do whatever it wants within its borders. It's also why the death penalty is not subject to international law.

The Litvinenko case falls under #6. Loosely, these can be called assassinations.

Governments have sometimes employed this as a policy tool. They don't do this very often because it is a violation of sovereignty: if you whack some country's leader, they have motive to take potshots back at you.

America has even been guilty of this, although not recently. The only justification for something like this that reasonable people could even debate is that the target can command enough might to threaten the lives of citizens of the country ordering the assassination.

The point I am making is that there might be some cause for tolerable assassination analogous to police actions in hostage situations: if someone has the means, ability, willingness and opportunity to harm innocents, then it is OK to take your best shot.

The Litvinenko case is not like this at all. Litvinenko did not pose a physical threat to Russia. Litvinenko had left Russia to avoid confrontation.

Politics is bad enough, but Russia appears to be practicing politics by murder.

The point is even sharper: Litvinenko was granted asylum and citizenship by the United Kingdom.

That's right: they said "you're one of ours now", and "you'll be safe here". I don't think this was a decision they took lightly.

I know how the U.K. would have responded to this a century ago, but my guess is that they'll just let it slide this time.

That is, of course, an invitation for darker minds to do this again.

Again, the naive may wonder how often that really happens. Well ... Syria has done this twice in the last 2 years. Where do you think they got the idea they could get away with it?

Breaking News

Traces of radiation have been found on British Airways that recently ran the London-Moscow route.

Of course, the Russian excuse that they didn't poison Litvinenko with polonium-210 was already tenuous at best ...

FWIW: polonium-210 is 250 billion times as poisonous as cyanide, although it takes about a month to work. Oh ... and ... it's extremely uncommon outside of military establishments because it is used to make triggers for atomic bombs. I've eaten some pretty weird stuff in sushi, but I just don't think the place Litvinenko last ate at was serving this wittingly.

P.S. Here is Tim Worstall on the subject. Tim is a great blogger but his day job is trading his own dime for rare metals:

Po 210 isn't an easy thing to get hold of. Not an easy thing to find at all.

Technical Difficulties

Sorry about the double post below. The top one is the final version.

UPDATE: Looks like SixApart fixed the problem.

Who Got the Seigneurage?

Seigneurage is the value the government gets from the difference between the value of new currency and the cost of creating it.

In macroeconomics, it's well understood that inflation is a form of tax: it diminishes the value of money held by the public and transfers that value - as seigneurage - to the government.

Yesterday, a Federal judge ruled that U.S. currency must be replaced because it discriminates against the blind. This isn't officially going to happen just yet.

The thing is, rational expectations tells us that this doesn't matter. It might become official, therefore it will be priced in the market, and it has already created seignurage!

Here's what's going to happen. A lot of U.S. currency is held outside the U.S. Any attempt to replace/improve our currency domestically to aid the blind will be incompletely applied to this pool of external currency. Not surprisingly, the new currency will be more highly valued than the old, since the latter will be more difficult to use for transactions.

Some might call that crazy ... except that Kash over at The Street Light has already noted that U.S. currency of different vintages already trades at different values outside the U.S (see The Amateur Economist and Curmudgeon, Fairly Obvious Observations,  Giorgia Danette, too).

Here's the thing: rational expectations tells us that because greenbacks might not be legal tender someplace at some time in the future, a decline in their value will have begun with the judge's announcement. And the rub is that the decline in value will occur in all currently circulating dollars, not just the ones held outside the country.

So, analogous to the inflation tax argument, there is already seigneurage.

But, I'm not sure who gets it - this is just too weird. My suspicion is that our government gets it initially, and that it will be transferred to the blind in the implicit value of having currency that is easier to use.

Our Discriminatory Currency

So ... a judge has ruled that our currency needs to be changed because the similar size and shape of bills discriminates against the blind.

Let's put on our economics-in-one-lesson hats and figure out what the unintended consequence of this is going to turn out to be.

Assuming this goes through, the biggest problem with this is that it is going to double the troubles of the blind.

The reason is the huge amount of U.S. currency held outside the country. Admittedly, a lot of this does not circulate back into the country, but some of it does. And, no doubt it will be the job of banks to exchange the old currency for the new.

But ... it's foolish to think that this pool of greenbacks will be eliminated.

Which means we will have new currency and a certain amount of old currency fluctuating simultaneously. Bad luck for the blind.

Of course, people will claim that the government could void the old bills as legal tender. People with faith in the exaggerated abilities of the control freaks in D.C. will buy into this argument. The problem with it is that this has only ever worked in situations where the currency was geographically contained and held by cooperative people, like say within the EU a few years ago. People along the border can also confirm that  just because the Canadian dollar isn't legal tender in the U.S., that isn't sufficient to keep people from using them.

Clearly, U.S. currency is neither geographically contained or held primarily by folks who are going to cooperate with a judge's order. So, if a new line of currency is created, we are going to see both of them circulating simultaneously, as in post-invasion Iraq.

Concert Vault

If you enjoy free recordings of live music you should check out Concert Vault. This is a new service of Wolfgang's Vault, already known for Vault Radio (which is now accessed from the Concert Vault page).

Concert Vault offers streaming audio of complete live concerts from venues run by Bill Graham, as well as the old King Biscuit Flower Hour radio shows, and the Silver Eagle Cross Country radio shows. The backstory is here. Vault Radio still offers individual songs from a variety of concerts.

Concert Vault now hosts 300 concerts from over 100 artists.

Gotta go ... Bob Marley and the Wailers are loaded and ready to play.