Different Responses to the Same Exposure to Risk

This story is from last week, but it’s too useful to ignore:

As the wildfires that ravaged Southern California for five days lost momentum yesterday, representatives of the insurance industry said the estimated $1 billion in fire damage would have little if any impact on homeowners’ rates in California or the rest of the nation.

“It’s well within the range of losses we expect to see in California every few years,” said economist Robert Hartwig, president of the Insurance Information Institute. “That means the rate in this area is already reflected with the risk associated with wildfires.”

Private businesses have an incentive to plan for the possibility that risk will turn into reality. This should not shock anyone, yet we constantly hear calls for government interference. Generally it’s because people are too immature to pay the full cost of their risky decisions, but the next line of the article offers another complaint.

After Hurricane Katrina and the Florida hurricanes in 2004 and 2005, insurance premiums in the Gulf area and parts of Florida doubled over three years, according to institute records. When 2006 turned out to be relatively hurricane-free, the higher premiums contributed to record insurance-industry profits.

Nowhere in the article does it indicate the likelihood those “record” profits will be later offset by record losses if another Hurricane Katrina occurs. Nor is there mention that the chance of such extreme devastation occurring again is increased by the political insistence on subsidizing the higher risk of living in an area like New Orleans to avoid asking some voters to pay for their own life choices.

It’s not someone else’s fault if you’re a bad businessman.

Right, Apple is the problem:

NBC Universal topper Jeff Zucker warned Monday that new digital business models are turning media revenues “from dollars into pennies” and revealed that NBC U booked just $15 million in revenue during the last year of its deal with Apple’s iTunes.

“Apple sold millions of dollars worth of hardware off the back of our content, and made a lot of money,” Zucker said. “They did not want to share in what they were making off the hardware or allow us to adjust pricing.”

So many points. Without Apple’s hardware, NBC likely would’ve made significantly less than the small revenue stream it saw.

Spare the story of oppresion, too. I doubt seriously anyone from Apple held a gun to Zucker’s head and demanded its content. NBC had to mutually agree with Apple for Apple to offer the video.

NBC seems to have expected an ability to adjust prices upward after customers became comfortable with downloading legal video. But in its woe-is-me tale of how Apple isn’t being fair, NBC also tries to discredit Apple by saying that the product that customers will pay 50% more than they’re now willing to pay didn’t sell well. Which is it?

Link via Wired.

On Shaky Ground on Economics

It doesn’t really matter the subject (irresponsible home building/buying in California, in this case) , Harold Meyerson can always be counted on to blame the wrong person:

Half a century ago, Californians understood what it took to create a great state. Taxpayers funded the nation’s best highway network, water system and public universities. The state’s population exploded in the greatest home-construction boom in history, under a system of mortgages that the federal government tightly regulated. A sustainable California will require a return to the policies of public investment and financial regulation that built the postwar paradise between the Sierras and the sea.

In other words, Californians have tried that whole free-market thing, but it didn’t work out. It’s about time they started instituting just a little government control over something, rather than the chaos currently permitted by California’s lax control over the lives of its citizens.

Trying to Win Versus Trying to Embarrass

Radley Balko on the Patriots thumping the Redskins today:

So did the cheating Patriots really just go for it on 4th and 1 with a 38-point lead halfway through the fourth quarter? And did they really just throw deep while up 45-0?

Is there anyone outside of Boston who will be rooting for these asshats next week?

I will not.

I have no problem accepting or acknowledging that the Patriots kicked our asses. Seriously, the game wasn’t as close as the score indicates, which is ridiculous since the final was 52-7. I don’t even have a problem with scoring when winning 45-0. If the defense can’t stop you, that’s just the way it is. But in the scenario Mr. Balko mentions, the only reasonable action is to kick the field goal. That’s playing the game. Going for it? That’s running up the score.

If I had a Jerk of the Day award, Patriots coach Bill Belichick would win in a landslide.

Federalism can’t dismiss the Ninth Amendment.

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Via Hit & Run, this Ron Hart column discusses federalism:

My solution to the unworkable yet appealing idea of secession is to devolve more powers to the states and fewer to Washington. It is what our Founding Fathers intended. And if you read the Federalist Papers, you will realize that they never intended our central government in Washington to be this expansive and overbearing.

So far, I’m on board. Unfortunately, Mr. Hart succumbs to the same mistake that too many libertarians make, including me.

If you want an abortion, then move to a state that allows it. If you want to smoke weed, then go to California. If you think that we should pay for everything a lazy welfare person demands, then go to a state that gives them flat-screen TVs and, instead of government cheese, offers an assortment of French cheeses that are both delicious and presented in a pleasing manner.

The basic reason that we fought for our independence is to do what we damn well please as long as it does not harm others. …

We would all need to move to a city bordering several states so that we could partake of a range of freedoms. Not the range, of course, because this view leaves plenty of space for naked majoritarianism.

I live in Northern Virginia, where D.C., Maryland, and West Virginia can be reached in roughly an hour (if D.C. traffic magically disappears). Under this view of federalism, if I want to smoke marijuana, play blackjack, buy porn, and enter a same-sex marriage contract, I’m positioned well, as long as each state/district offers one of the four. I’d better keep my car gassed up and my appointment book clear, lest I not have the capacity to drive all over the mid-Atlantic region to exercise my inherent liberties in a place where everyone has agreed that I may exercise them.

Kip offered the necessary summation to this ridiculous view in the comments to the entry I referenced above, which I believe (hope) was the last time I made this mistake:

…”federalism” does not mean that it’s any better to have one’s liberties infringed at the state level than at the federal level.

Exactly. Small-l libertarianism is about liberty, not blind hatred of the federal government or the silly belief that local is better.

Trying to reduce your party is an interesting tactic for electoral success.

Harold Meyerson does not want you to see that there are (at least) two parties in every transaction.

The problem is that the drift of much of Wall Street toward the Democrats on noneconomic issues coincides with Wall Street’s creation of inscrutable and unregulated investment devices that imperil the entire economy, as the current mortgage crisis makes painfully clear.

It’s exclusively Wall Street’s fault for creating a new financial product with contractual terms that new home buyers willingly agreed to pay? Interesting theory, but what about the portions of Wall Street that entered these crisis-inducing contracts? Are they feeling no pain? On the probably unlikely chance that they are, might that act as an incentive to better think through future innovations? (Excuse me, inscrutable and unregulated investment devices.) At a minimum, might those home buyers now feeling the pain of their financial mistake learn something useful for making the economy work better in the future?

In the context of the essay, which discusses the looming Democratic choice to nominate two SEC commissioners, Meyerson concludes with this:

If the financial industry prevails, it will also leave the Democrats having to answer an awkward question going into the 2008 elections: Why does America need two parties that represent Wall Street?

Probably because all Americans benefit from the economic success created through increased efficiency and innovation offered by Wall Street.

Insert random, relevant Orwell reference here.

It’s a fairly effective standard by now that I’m against whatever the Wall Street Journal’s editorial board agitates in favor of. I’d never surrender critical thinking and dismiss its essays without reading the arguments. But if I did, I’d be wrong less often than I’d be right.

For example:

As the Bush Administration winds down, one of its main tasks is preserving Presidential war-fighting powers against poaching by a hostile Congress and expansive judiciary. On this score, last week’s Senate “compromise” on warrantless wiretaps is at best a mixed achievement. In return for Congress’s blessing to continue this surveillance, the White House is ceding some of its Constitutional authority to unelected, unaccountable judges.

Presidential war-fighting powers apparently include the ability to ignore the Fourth Amendment. I missed that in the text of the Constitution, but I’m sure it’s there. Maybe it’s in the Ninth Amendment. Oh, wait…

I do love the mention of unelected, unaccountable judges. Anyone who supports President Bush in his quest for a dictatorial reading of the Constitution has no business challenging anyone as unaccountable, but set that point aside. Judges are certainly accountable to the Congress. And should they really be elected? Opening the rule of law to politics isn’t a particularly conservative position. Of course, the Journal’s editors aren’t really conservatives, in the limited government sense, so the talking point in place of an argument is unsurprising.

On the topic of telecom companies complying with warrantless government requests for information:

The larger principle is whether private individuals or companies should be punished for doing their patriotic duty when requested to do so by the government.

And we’ve reached the point where I stop taking them seriously. We all have a patriotic duty to serve our government. I can’t imagine a more un-American concept.

In the wake of 9/11, President Bush and the Attorney General asked the telecom companies to cooperate in what they told the companies was a legal program.

September 11th? Check. Blind faith in the benevolence of President Bush? Check. Government is always right? Check.

For centuries, the common law presumption has been that private parties should have legal immunity if they comply with such requests.

This sounds suspect, but I’m not an attorney. Wouldn’t companies have attorneys smart enough to request warrants? If they don’t know or ask, they should be immune simply because the government asks? This doesn’t sound correct.

In the absence of evidence that the government’s request is illegal, private actors should be given the benefit of the doubt for cooperating.

Again, obedience should be the default. It’s interesting that the government should always be presumed innocent until proven guilty. Don’t we have our republic specifically because we figured out that such an assumption was foolish?

Of course, if we’re using the preposterously low “in the absence of evidence” as our guide, shouldn’t the telecoms have asked the government to produce a warrant? Wouldn’t the absence of a warrant (“Don’t you worry about that”) be the absence of “the absence of evidence” that the government was engaging in shenanigans?

Imagine a society in which everyone refused such requests for fear of being sued: No airplane passenger would dare point out suspicious behavior by another passenger, and no subway rider would speak up about a suspicious package.

I wonder what they’ve named their straw man. They have to have named him by now, because I’m sure he’ll be around for a long time. It would be tedious to constantly say “hey, you, straw man”.

The airline passenger should and would point out suspicious behavior, but how did that get involved here? The issue is whether the government may instigate – without a warrant – an investigative search of data for alleged suspicious behavior. Set the scenario honestly. The government is going to the individual/company, not the other way around.

[The bill] includes a six-year sunset provision, which makes no sense against a terror threat that is likely to continue for decades.

A decades-long war. Hmm, why would anyone be concerned about setting aside a key Constitutional amendment to give the president broad powers? Gosh, I’m confused.

The great irony here is that, in the name of checking “secret” Presidential power, Congress is giving enormous authority to judges who will also make decisions in secret and never have to answer to the voters.

Unchecked, the president (in general, but President Bush, definitely) would make this decision in secret. When would he answer to voters for his secret exercise of this alleged power? I’m supposed to feel better with less oversight, as long as the kept-in-the-dark voting public can vote with information it doesn’t have? The Constitution is up for a vote?

Yet if the President won’t protect the Presidency, who will?

If the president won’t protect civil liberties, who will? If the Congress won’t protect civil liberties, who will? If the courts won’t protect civil liberties, who will?

The Constitution is wonderful. Politicians should read it.

George Will destroys the argument that the Constitution needs line-item veto authority for the president to make Congress behave.

But were a president empowered to cancel provisions of legislation, what he would be doing would be indistinguishable from legislating. He would be making, rather than executing, laws, and the separation of powers would be violated.

But Mr. Will demonstrates how presidents would misbehave:

And the line-item veto might result in increased spending. Legislators would have even less conscience about packing the budget with pork, because they could get credit for putting in what presidents would be responsible for taking out. Presidents, however, might use the pork for bargaining, saying to individual legislators: If you support me on this and that, I will not veto the bike path you named for your Aunt Emma.

Indeed. It’s the same basic argument as the one given for tax cuts instead of spending cuts. On spending, we’ve already learned that Congress is content to spend future tax receipts if it can’t get them today. Why should we expect future presidents – like members of Congress, politicians every one of them – to find religion on the line-item veto? We may not accurately predict the unintended consequences, but we should be smart enough to know they will occur.

A principled president would simply veto any and all appropriations bills until the Congress can a) trim it down to its legitimate essentials or b) override the veto.

Reason is quite informative.

The Blowfish Blog makes several excellent points while discussing circumcision. (Link/site probably NSFW by most office standards.) While I reject any notion that something other than immediate medical need justifies child circumcision (whether religious, cultural, or potential benefits), I particularly like that the author, Rebekah Skoor, has the sense to write this:

I’ve always been a fan of waiting until my kids were old enough to make their own bodily decisions before asking if they wanted to get circumcised. I ran this idea by the boys and they looked aghast, as if I had just taken away their new Prada shoes and replaced them with Tevas. “Oh HELL no!” they shrieked. Apparently no one in their right mind would volunteer for a circumcision when they were old enough to remember it.

Isn’t that telling parents something, though? If you won’t submit your penis to Mr. Knife when you are old enough to remember it, wouldn’t it reason that these babies are lying in their cribs thinking, “Just what the hell do you think you are gonna do with THAT?”

Of course babies don’t want unnecessary circumcision. And all evidence demonstrates that the overwhelming majority of men left intact never choose (or need) circumcision. Logic and data suggest only one course of non-action.

Contrast that with the interviewer who couldn’t reason through a question about a choice unbiased by having been surgically altered at birth with unnecessary circumcision.

Effective HIV prevention does not involve distorting facts.

I saw this Richard Holbrooke essay on HIV when it appeared a few weeks ago. Nothing in it warranted¹ specific comment from a circumcision perspective that hasn’t been said repeatedly. This is all he offered:

A viable prevention strategy would encompass education and counseling, free condoms, female empowerment, more male circumcision, and abstinence.

Implement four of those five suggestions and number four becomes irrelevant. Or, if you’re in an intelligent mood, replace more male circumcision with more personal responsibility. Life has consequences, even with circumcision. (At the very least, insert voluntary adult between more and male.)

Today, thanks to Daniel Halperin and his essay in today’s Washington Post, I must reference Mr. Holbrooke. Halperin opens with praise for Holbrooke’s stance that we need to reduce the number of new infections before we can suggest any progress. Fair enough, with quibbles, but it’s stunning how quickly Halperin will abandon the logic he demonstrates here:

The most rigorous study yet conducted, a randomized trial from Zimbabwe published last month in the journal AIDS, found an increased rate of HIV after people underwent testing and counseling compared with those who did not, though the increase was not quite statistically significant. The London-based researchers noted that some other studies similarly have found “disinhibition,” or a worsening of behavior, among people who learned they were not infected. While it might seem intuitive that knowing one’s HIV status and, ideally, receiving good counseling would lead to behavior change and reduced risk, the real-world evidence for this conventional wisdom is still unclear, especially for the large majority who test negative.

With what other strategy might disinhibition be a problem?

As Holbrooke noted, circumcision has indisputably been proven to prevent HIV. It reduces the risk of male infection during intercourse by at least 60 percent and, unlike a condom, cannot be forgotten during a moment of passion. Nearly all of 15 studies conducted throughout Africa found that most uncircumcised [sic] men would want the service if it were affordable and safe, and even more women prefer it for their partners and children.

Holbrooke did not state in his essay that circumcision prevents HIV. If he had he’d be spreading untruths, but he chose not to, speaking of ways to reduce the transmission. To be fair, I suspect prevent is a fill-in as a less awkward way for Halperin to say reduced risk. This distinction is important, though, because prevent has stronger implications. Only abstinence prevents sexually-transmitted HIV. Because there are lives involved, this topic deserves more care with words.

It appears – not indisputably, when looking at all data – that (voluntary adult) male circumcision reduces the risk of female-to-male² transmission by up to 60 percent³, not at least. Why the distortion, if not to promote a preferred solution?

Returning to the potential problem of disinhibition in HIV, the real-world consequences of our actions should never be dismissed as a factor the way they are in the circumcision debate. But circumcision advocates already dismiss that in their rush to portray adult males as too irresponsible, so better to address Halperin’s statement in his own context. A condom can be forgotten. True. But it can also be intentionally abandoned because (voluntary adult) male circumcision “prevents” HIV. (See how important words can be in this topic?) Could that possibly lead to disinhibition? Does Halperin believe that circumcised men can engage in unprotected sex and not become HIV infected if they skip a condom only once?

Time to revisit Halperin’s next sentence and put the emphasis where it should be:

Nearly all of 15 studies conducted throughout Africa found that most uncircumcised [sic] men would want the service…

Which studies contradict the belief that men want circumcision? Of those men who do not want it, is it reasonable to assume that some of the infants now being circumcised would not want it?

Remind me again how only people who believe that males (and females) should be protected from medically unnecessary surgery are passionate – in the frothy, derogatory sense – about circumcision. Lying and selective omission of data are the actions of a passionate circumcision advocate.

¹ Also from the Holbrooke essay:

… Anthony Fauci, the famed director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, has stated the case in dramatic terms. Speaking in July at an international conference, Fauci said: “For every one person that you put in therapy, six new people get infected. So we’re losing that game.” He went on to say, “Clearly, prevention must be addressed in a very forceful way.”

Draw from that what you will, but the evidence suggests what kind of force too many people prefer to “prevent” HIV.

² Notice how Halperin wrote “male infection”, not “female-to-male infection”. The latter is correct, as no study has shown that (voluntary adult) male circumcision reduces male-to-male infection. He’s speaking of Africa, where heterosexual transmission appears to be the primary route of infection, but public health advocates like Halperin are rather quick to justify routine infant circumcision for potential benefits it has not been demonstrated to potentially offer. Unfortunately, male-to-male is the primary transmission method in the United States, not female-to-male. But promoting circumcision conforms to our cultural obsession, so it allegedly passes such semantic omissions.

³ The reduction in risk appears to be up to 60 percent when studies on long-term transmission risk are ended early. There is a lag between infection and testing positive. This period is also the most infectious for HIV transmission. Halperin acknowledges this. Might this matter, especially in light of disinhibition?