Ron Paul on the Colbert Report

Ron Paul was on the Colbert Report (a Comedy Central “news” show) on the 13th. I thought he did well.

Again with health care and socialists

I keep coming back to this topic, I guess because I keep seeing it in the news. My most recent post about Socialized Medicine was back in March, I think.

Anyway, last weekend the Wall Street Journal had a letter to the editor from Lehigh Economics Professor Stephen Snyder. Snyder was commenting on an earlier WSJ article comparing the market for veterinary services with the market for medical services. That article suggested some advantages to the veterinary system (which is capitalist) over our medical system (socialist).

Snyder criticizes this in a few ways:
1. Plenty of veterinary spending is not helpful and may be harmful
– Perhaps, but isn’t this true of our medical system as well?

2. Quality of veterinary care dubious in some situations
– Perhaps, but I’ve heard that about some human hospitals

3. A lot of animals get little or no care, and suffer and die as a result
– Isn’t this what we keep hearing about the uninsured in America?

4. The veterinary system has a safety valve the human system lacks; a pet can always be euthanized.
– Maybe we should apply that thinking to our current system. Maybe Medicaid shouldn’t pay for 400 pound smokers to get bypass surgery, but that doesn’t happen in a socialist system. I’m not saying we have to put anyone down involuntarily, but capitalism might force some rationality into decision making like that.

Ron Paul Winning on Compete.com

As a brief follow-up to my last post about Ron Paul winning on Alexa traffic over the last month, below is a graph of Ron Paul’s “velocity” (which generally refers to traffic growth), as compared to Hillary, BO, Romney and Rudy. In short, he’s crushing them.

Ron Paul Winning on Alexa

Ron Paul is winning the race for eyeballs on the web, according to data from Alexa.com on traffic rankings. See the image below for a graph from the Alexa site comparing Ron Paul with Hillary Clinton, Barack Obama, John McCain and Mitt Romney.

The Ron Paul campaign website, with an Alexa rank of 48,774, is trailing the sites for Clinton and Obama in that ranking. However, Paul’s traffic has climbed dramatically over the last three months, and he has dominated in total traffic over the last seven days. Mitt Romney is the only other candidate who seems to be picking up any steam in the last month.

Car Safety – a bit off theme, but …

One argument I read recently in defense of the war in Iraq was that the number of lives lost really isn’t that high. The author (I think it was a Wall Street Journal opinion piece) compared it to the number of lives lost in car accidents in the US. I guess it’s somewhere over 40,000 deaths a year in car accidents.

This prompted me to wonder about car safety. As a car accident lawyer, I do see a lot of injuries. Some are actually quite severe even in fairly minor accidents.

If you ever watch auto racing, you see some pretty spectacular crashes at ridiculous speeds, and the drivers are often unhurt or suffer only minor injuries. For an example, see this YouTube video of a 1975 Tom Sneva crash. Or you can look at the picture below:

There are more pictures at the Indy Speedway website.

I still remember that one, and if I remember correctly, Sneva was not hurt much if at all, suffering only minor burns. So these guys in these tiny cars have spectacular crashes and they generally do well in them. Why don’t our cars have the same technology? Shouldn’t we all be wearing 6-point harnesses and helmets when we drive?

I confess I occasionally think about getting my car equipped with a 6-point harness – it can be done but it’s not cheap. I also think about wearing a bicycle helmet in my car. Not the same as a race car helmet, but it still should help. I do wonder why a 6-point harness isn’t even an option in any cars – not even Volvo I think.

You can even take this to airline crashes. Maybe each seat should be equipped with a 6-point harness, with passengers having access to fireproof suits and helmets. Seems like some airline crashes have sufficient warning that the passengers would have time to put everything on.

Irrational Economists

I was reading an article in the June 2007 issue of Scientific American. The author, Kaushik Basu is a professor of economics at Cornell. The article is about game theory, which has always been one of my favorite topics.

Since I love the area, I was excited to see an article about it. I was disappointed with Basu’s analysis. He starts by describing a game called the Traveler’s Dilemma (TD), which is a variant (or perhaps a generalization) of the better known Prisoner’s Dilemma. Using some examples from experimental game theory to show how people are irrational, he comes to a rather strong conclusion. As he sets forth, his analysis “undermines both the libertarian idea that unrestrained selfishness is good for the economy and the game theoretic tenet that people will be selfish and rational.”

In one shockingly bad part of his article, he discusses an experiment where members of The Game Theory Society played a version of TD. To explain why he’s wrong, I first have to briefly explain the game. There are two players. Each chooses a number from 2 to 100. If each chooses the same number, then that’s what they get. But if they choose different numbers, then the person who chose the lower number (n) gets that amount plus 2 (n+2) while the other person gets n-2. So if each chooses 100, then each gets 100. If A chooses 100 and B chooses 99, then B gets 101 and A gets 97. In game theoretic analysis of this game, the “Nash Equilibrium” has both players choosing 2. In other words, game theory predicts that rational people playing the game would choose 2. The rationale is as follows: If A thinks B will choose 100, then A chooses 99 and gets 101 instead of 100. If B thinks A will choose 99, then B chooses 98. Yada yada yada, they end up at 2.

So, 51 members of The Game Theory Society play the game. Each chooses a number, and that number is played against the numbers of each of the other 50 players (I oversimplified this part a bit, but in a way that doesn’t matter). The person who gets the most points gets $20 times their average payoff. Only 3 chose 2, while most others chose a number from 95 to 100. Aha! They’re irrational. Even these sophisticated experts in game theory didn’t make the right choices.

Basu offers some explanations but misses the obvious one — A rational person playing in this experiment would not choose the number 2. It is reasonable to assume that at least one other player will choose a number higher than 2, and indeed that several players will choose numbers close to 100. If you choose 2, your average score will be somewhere between 2 and 4, and your payoff if you win will be between $40 and $80. If you choose 100, and you get it only three times out of 50, your average score will be 6 and if you win you’ll get $120. In the actual game the winner had an average score of 85, and earned $1700.

What really bothers me about the article is how Basu leaps from people not behaving “rationally” for a very unusual game to the conclusion that free markets don’t work. He ignores so many aspects of what economics understands as rational — he even asserts that altruism itself is irrational. Economics is broad enough to allow rational behavior to include altruism. Markets work even for people who aren’t motivated purely by greed. There has also been plenty of other work showing people do not always make the most rational decisions – Kahneman & Tversky come to mind.

I certainly agree that markets are imperfect. Some of my favorite bits in economics concern the concept of market failures, especially externalities (like pollution) and asymmetric information (such as Akerlof’s classic “Market for Lemons” paper). But the fact that markets are imperfect is well known in the field. Some economists have proposed solutions to some of the market imperfections, such as Pigouvian taxes for pollution (e.g. drivers do not bear the full cost of the pollution from their tailpipes, so gas taxes can be used to increase the cost of using gas to account for that).

Unfortunately, Basu fails to provide an alternative system that is better than markets. Socialists, communists, and others who want to intervene in markets can and probably will use analysis like Basu’s to attack free markets and free trade. They have an alternate approach in mind, and it is not something that will be good for the world – only for those who have power through the government. Yes, free markets may be imperfect, but they are far, far better than any alternative. As someone who purportedly understands all of this, Basu should be standing up and fighting for free markets, not providing ammunition to those who would replace them with government control.

Ron Paul, Iraq, Gladiator, and Fighting the Last War

Funny how seeing a movie can crystallize your thoughts. I’ve had the so-called “War on Terror” on my mind since a conversation last weekend with a cousin in California. I even made a note to myself to say something about it on this blog tonight. I was tired as I lay down in bed, thinking I would go to sleep. I turned on the TV and found Gladiator, one of my favorites. I watched the whole thing and that added to my thoughts and so I write (okay, type).

One aspect of the film that hit me stronger tonight was the tremendous sacrifice a soldier makes in war, along with the powerful impact of death on those who love the fallen.

I suppose that’s nothing new. What is striking today is how such loss occurs in futile endeavors. Did we learn nothing from the Vietnam War? Of course not. Our president and vice president both dodged the war. What would they know about such loss? I never served, so maybe I don’t know much about it either. I can only imagine, from seeing it in movies, from the loss of my brother many years ago, from the fear of losing my children, but none of that is the same as living it.

My cousin would be happy if we were to kill every Muslim on the planet. I have heard similar sentiments from much closer family members, and from friends as well. He spoke of how the Muslims all want to kill us. In his eyes (and he is far from alone) we must fight them everywhere, because if we do not, they will come here as they did on 9/11.

This is just another version of the Domino Theory that pitted us against the Communists across the world. In my admittedly limited understanding of recent history, it is that theory that got us into Vietnam and sustained our presence there for so long.

In our current context the irrationality is so blindingly obvious that most people seem unable to see it. The ego of modern America is part of what drives this. How many times have we heard politicians say that America is the greatest nation on earth, or some similar remark. Half of these idiots have never been anywhere else, except maybe on some taxpayer-financed congressional junkets where they spend all their time in high-end hotels and at tourist exhibits.

Try strapping on a backpack and staying at a campsite in southern France, or taking a local train along the Japan-Sea backside of Honshu, and then tell me you know something about the rest of the world. I’ve done both and realize I still know next to nothing about the world, certainly not enough to say we’re better than somewhere else. My experience does qualify me to say that Europe and Japan are wonderful places to live, filled with people who are mostly decent. That is not much different from my country.

But I digress (must be the insanity). The ego of modern America tells us that the bad guys, whoever they happen to be this week, are out to get us. The enemy is diabolical and will stop at nothing to destroy us because … well, because we’re the good guys and the bad guys always want to get the good guys.

Part of that ego-blindness is the incredible manner in which we ignore our own misdeeds. We had to support Somoza and the Shah, even though they were not terribly nice to their people, because that was part of our greater mission to save the world from itself. Sometimes the good guys have to allow bad things to happen, and work with unseemly sorts, but we have to because we have to fight those darn bad guys and that justifies everything. We even worked with Saddam Hussein and supported Osama bin Laden. Besides, the people oppressed by our flunkies don’t count – they don’t fit within our ego definition of who matters. The media consistently reports on the number of American soldiers killed. Does anyone count the Iraqis?

There is only one prominent voice (Ron Paul) who points out how this bit us in the ass on 9/11. Most of America cannot hear that voice because it doesn’t fit in the storyline we are fed by the mass media (pro-war Republicans vs. anti-war Democrats). Or maybe it’s because people don’t want to hear the truth because that would fundamentally shatter their entire world view. What happens if we’re not the good guy any more?

The alternate scenario is far more sensible. They hate us and attack us because we keep interfering in their world. I agree that many of our current enemies are evil. But if we stepped out of their world and focused on our own, they would not take that as a signal to come here. Evildoers look for a bogeyman. We are currently supplying that image for them. If we walk away, they will find another. It would be delicious irony if the Europeans, Russians and Chinese found themselves dealing with nuclear-armed North Korea and Iran, after they helped them acquire the weapons. But the ego does not allow us to think that way. My cousin completely rejected this idea. He cannot accept the notion that they might not be interested in us if we left them alone. Our ego makes us believe we are so important that they must focus on us in one way or another.

The other prominent parallel is how the “Best and the Brightest” led us into and kept us in Vietnam, and messed the whole thing up. Today’s leadership (including nearly all of Congress – and yes I am including the Democrats) boldly donned the attitude of the Best and the Brightest. There is a saying that the generals are always fighting the last war. I don’t know if that explains it, but we did not do whatever we should have done to win the Vietnam War, and we are not doing whatever we should to win the Iraq War either.

One of the problems with both Vietnam and Iraq is that the public was never willing to sacrifice what was required to win (if winning was ever possible). One of the failings of leadership was a failure to recognize that public support for the wars would not be sustained. We are battling people who are willing to strap a bomb to themselves in order to kill us, and yet we are unwilling to make even the slightest of sacrifices. We do not conserve energy, for example. If we really want to defeat the Muslims and/or Arabs, all we have to do is cut our oil consumption in half. This would decimate the Arab economies. That effort on our part would be nothing compared to the sacrifices our parents and grandparents made during World War II.

We will not make that effort. The easier thing to do, and a fairly wise thing as well, is to stop messing around with the rest of the world. In playing our role as the world’s “Good Guy,” we ignore the Golden Rule (aka the Ethic of Reciprocity). We do things to others that we would not want them to do to us.

If some other country decided that America was being led by religious fundamentalists bent on controlling the world (when I started typing that I meant it as a ridiculous example, but then again …), and attacked us to save the world from us, we would not be too pleased. So where do we get off attacking Iraq? Oops. I keep forgetting that we’re the good guys. Sorry about that. I’m probably just repeating something Chomsky said anyway.