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Posts Tagged ‘analysis’

Set aside 30 minutes today to watch this wonderful presentation by Bjorn Lomborg on global warming.

Lomborg is no libertarian — he is a liberal who favours a welfare state and strong redistribution through taxation — and  indeed, there is no mention of any intrinsic value of freedom and property rights in his presentation. His arguments are basically value-neutral and only rely on maximising efficiency. However, including an assignment of intrinsic value to liberty into our analysis (one corollary of that is, if the outcomes of two actions are similar, we should favor the less-coercive one) only strengthens Lomborg’s conclusions about a sane, scientific and non-reactionary approach to the problem of global warming.

It’s a great video and I am not saying that just because I agree with almost everything he says. And thanks Reason, for hosting this event and producing this video. I am glad I donate to you folks.

[Edit: Looking around the web, I find some who accuse Lomborg of cherry-picking, or at least under-stating facts to suit his views. I am a mathematician, not an expert on global warming, but I did go through those objections in detail and followed through to many of the cited papers. My opinion stated above about the essential correctness of Lomborg’s position is unchanged.]

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I have often expressed my admiration for Nate Silver’s wonderful polling aggregate/analysis website, 538. However, there are at least two other very popular sites which aggregate polls : Real Clear Politics and Pollster. How did Nate do in comparison to them?

First of all, all three sites were pretty good in calling the winner of each state. 538 only got Indiana — and possibly one of Nebraska’s congressional districts — wrong. Nate called these two slightly for McCain, and Obama won. RCP missed these two as well; they also got North Carolina wrong. Pollster missed both these as well as Missouri. However all these states were really close and it would be unfair to read too much into them.

Time for a more thorough analysis. I will do the following thing – list all the IMPORTANT states, see by how much 538, RCP and Pollster were off in their predicted margins, and calculate who made the least error.

I define an important state as any state in which the final actual margin was 15 points or less. Thus, this definition includes all the swing states as well many of the ‘safe’ states. The reason I only take these states is that it seems somewhat more important for a polling site to get these right. Besides, it saves me some labor.

State            EVs       Obama Margin       538 error      RCP error   Pollster error

AZ                10                      -8.6                  3.7               5.1               3.7

CO                 9                        7.8                  1.2               2.3                 .2

FL                 27                        2.5                   .8                 .7                 .8

GA                15                       -5.5                 1.8               1.5               2.6

IN                 11                          .9                 2.4               2.3                2.1

IA                   7                         9.3                 2.4               6.0               3.6

MN               10                       10.2                   .1                .4                2.2

MS                  6                       -13.8                 2.5             2.4               3.3

MO                 11                      -.2                     0                  .5               1.3

MT                  3                        -2.5                   .2                1.3               .3

NV                  5                        12.4                 7.5               5.9               5.3

NH                  3                         9.5                   .3                1.1              2.4

NJ                   15                      14.6                 .1                 .9                 .9

NM                  5                       14.7                 5.0                 7.4             5.8

NC                 15                          .4                  .6                  .8                0

ND(*)              3                        -8.6               5.9                9.6               9.3

OH                 20                         4                   .6                 1.5               .9

PA                  21                      10.3               2.2                 3.0               3.1

SC                  8                        -8.9                  .8                1.1                .4

SD                   3                       -8.5                  .2                 .2                 .5

TX                  34                     -11.7                 .9                1.3               1.4

VA                 13                          5.5                 .1                 1.1                .1

WV                  5                       -13.1              3.3                 4.1              1.7

WI                 10                         13.9              2.4                 2.9              1.9

Ok, so who is the winner?

One way to see that is to simply take the median error. Pollster has a median error of 1.8, while RCP gets a surprisingly good 1.5. But 538? It’s median error is an amazing 1.05.

A slightly different measure is to take the root-mean-square error. This number is 3.1 for Pollster and 3.58 for RCP. The clear winner, once again, is 538, with a root mean square error of only 2.71.

Other methods, such as weighting the errors by electoral votes, only increases 538’s advantage.

Nate Silver rocks.

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In an article published at Newsweek and Slate, Jacob Weisberg says the current crisis proves that “[libertarianism] makes no sense”. In fact he goes further than that:

Like other ideologues, libertarians react to the world’s failing to conform to their model by asking where the world went wrong. Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout.

Just In case you did not get his point, the article is titled “The end of libertarianism”.

The libertarian response has been swift and predictable. The Washington Post has an editorial today that makes several nice points:

The problem with the U.S. economy, more than lack of regulation, has been government’s failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

[…] Government must be more selective about manipulating markets; over the long term, business works best when it is subject to market discipline alone. In those cases — and there will and should be some — in which government intervenes on behalf of social goals, its support must be counterbalanced with taxpayer protections and regulation. Government-sponsored, upside-only capitalism is the kind that’s in crisis today, and we say: Good riddance.

Meanwhile Matt Welch over at Reason points out that the rational approach is to weigh things against the alternative:

I just think that, all things being equal, capitalism is vastly superior to socialism, government is by definition inefficient, and would be much better off focused on essential tasks, rather than, say, nationalizing hundred-billion-dollar chunks of the mortgage industry, or trying to guarantee that asset prices never depreciate. In my world, at least, not all regulation is automatically evil, just ripe for being gamed by the very interests being regulated, and so better when pruned back.

Ilya Somin’s rebuttal at Volokh has several nice points, including this one, which seems to echo Welch:

No ideology can be judged solely by its performance in one particular crisis. Any set of policies is imperfect and therefore may provide flawed answers in a particular situation. Here is where Weisberg’s analogy with communism circa 1989 breaks down. The problem with communism was not that communists had handled some one isolated crisis poorly. It is that communism’s overall record over many decades was one of repression, mass murder, and economic decline – all with few or no offsetting benefits. Economic liberalization over the last several decades, by contrast, has lifted millions out of poverty around the world and greatly increased both personal freedom and standards of living. As Gary Becker points out, the period of economic liberalization in the twenty years or so prior to Bush’s “big government conservatism” saw enormous economic gains. He suggests that if today’s crisis were indeed an inevitable result of that liberalization, the overall balance sheet (25 years of massive progress vs. 2-3 years of painful recession) might be worth it.

Others, such as Cato’s Brink Lindsey have taken Weisberg to task for his simplistic analysis:

So serious people will be debating what triggered the current crisis for a long time to come. I’ve been reading voraciously in recent weeks, trying to get some handle on what’s going on, and I can tell you that there is nothing like a consensus among scholars yet — and certainly not a consensus in favor of some simple, monocausal explanation.

With regard to government interventionism as a cause of the crisis, Charles Calomiris and Peter Wallison have marshalled strong evidence that Fannie and Freddie played a major role in inflating the real estate bubble. Despite the fact that these two gentlemen have forgotten more about financial markets than Weisberg will ever know, Weisberg dismisses their analysis as not only wrong, but risible.

Here’s what I think, at least at this point. I think the whole system failed. Without a doubt, private actors succumbed to bubble psychology and perverse incentives, and their risk-taking grew increasingly reckless. Yet Weisberg’s simplistic morality tale that good prudent liberals were foiled by go-go free-marketeers doesn’t come close to mapping reality accurately. When exactly did Democrats try to arrest and reverse the steady relaxation of lending standards? When did they try to rein in the GSEs? Meanwhile, European banks are being battered by this crisis as well. Does anybody really think that European financial regulators are closet libertarians?

Aristotle The Geek, on the other hand, says that utilitarian apologies for libertarianism are self-defeating — liberty must be defended on purely moral grounds:

I dislike (hate is a better word) utilitarianism and utilitarian defenses of liberty. Since a lot of liberals and weak kneed capitalists defended capitalism on utilitarian grounds and went on about how capitalism and free markets were good because they raised standards of living, brought about competition, etc, instead of saying that free markets are right because they are free, because freedom is right, because freedom is moral, these “defenders” find themselves unable to answer criticisms regarding “market failure”. Blaming bad laws and excessive regulation, though these are to blame, does not cut it.

I will not go into a detailed analysis on why the libertarians are right and Weisberg is wrong (or at least dishonest). The question I want to address in this post is of a different flavor:

What do Weisberg’s article and its libertarian rebuttals achieve?

Here’s my radical suggestion: They achieve nothing.

There are some features that are common to every article — by both sides — on this topic I have seen. They cherry-pick facts. They deflate the opponent’s views and inflate their own. Every sentence is intended to further their own cause. In short, they counter, not analyze.

I am not saying that both sides are wrong. I do happen to think my side has the better arguments. In sum though, we are approaching this whole issue as if it were a debate.

Now there is nothing wrong with a debate. The problem though is that we have seen all these points many many times. None of the articles I have quoted above contain any fundamentally new points of view. Basically, there has appeared a flood of arguments since this crisis started but little attempt at unbiased analysis. We are all guilty of this extreme partisanship — yes, I am too.

It’s like we are stuck in different ideological echo-chambers. And there are intelligent people on both sides. And you know what, none of them are changing their minds. Weisberg’s article is not going to convince anyone who is not already on his side. And the libertarians aren’t going to win any Weisberg types — or even any moderately liberal types — over with their responses.

So here’s my humble suggestion to everyone. Analyze rather than attack. It will be difficult, especially when you think that the other side is spouting nonsense. But bite the bullet and address your opponent’s strongest arguments. Do so logically, unbiasedly. Take the best arguments from both sides — if you feel the other side isn’t making its point correctly, try to help them — and the most accurate data available to you and reason as if there was nothing at stake, except rigor and accuracy. Get beyond bumper-sticker sloguns and into details. Ultimately your ideas and arguments must stand on their own. Do not be afraid of the possibility that they may lose, at least temporarily.

There is a word for this approach. It is called intellectual honesty. And it is our best bet at conversion.

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Neither of the major candidates of the upcoming US presidential election offers much hope to those who believe in individual liberty and limited government. In this post, I will outline the five things to fear most from each of them becoming President.

Five things to fear from an Obama presidency:

1. Card check. This ought to be one of the definitive issues of the election and it is worrisome that it is not. Obama supports the farcically named “Employee Free Choice Act“, which is basically a measure to drastically alter the process of forming labor unions. As of now, the decision to unionize is undertaken by the workers via the process of secret ballot. Under the proposed Act, this would be replaced by ‘card check’, that is, the signing of authorization cards. In theory this may appear fine, but in practice this will lead to illegal coercion. Basically, unionizors can keep browbeating a worker until he or she signs the card; and the moment there is a majority of signatures, unionization can take place. Not only is card check a terribly collectivist idea that will effectively allow workers to be harassed and ostracized by union leaders, it will also pave the way for the degeneration of the American labor force into militant socialism. As someone from the Indian state of West Bengal, where shut factories, labor troubles, strikes and violent unions are the norm, I can tell you that the future under this Act is bleak.

2. Fairness Doctrine. According to the fairness doctrine, broadcasters have to present issues in a balanced manner, such as by presenting equal amounts of liberal and conservative viewpoints on an issue. It is a terrible idea that rides roughshod over the basic principles of free speech and property rights. Also, as the internet era has aptly demonstrated, the free market of ideas is the best system (*). Forcibly attempting to remove perceived bias in the media does much harm and no good. Obama’s stand on the fairness doctrine has been ambivalent, and judging by his stand on other issues and the position of his Democratic friends like John Kerry (who thinks that the fairness doctrine ought to be there), there is reason to worry that this terrible law might be reinstated during his presidency.

3. Over-regulation. Obama has been long sympathetic to the idea that companies ought to be regulated more and laws such as antitrust ought to be enforced more strongly. It is a viewpoint that shows a lack of understanding of both property rights and the modern world. Much of the troubles with the global economy arise not from too little control but from too much. To give a simple example, Fannie Mae and Freddie Mac, the failed giants, were among the most regulated guys in the business. By contrast, relatively unregulated companies like Goldman Sachs are doing fine. As for antitrust laws, they have always done more harm than good. If history has taught us anything – if there is any lesson to be drawn from the emergence of Firefox, the toppling of the Detroit three by Toyota in US sales, the fairy-tale of Google and the ascendancy of Apple from nowhere to the pre-eminent position it is in today – it is that you cannot keep a good product down. In this age of instant dissemination of information, companies do not need the help of antitrust laws to rise to the top. And the consumer doesn’t either.

4. Broadening of hate crimes and anti-discrimination statutes. Regular readers of this blog are aware of my extreme distaste for hate speech laws and anti-discrimination statutes (when applied to private entities). They increase disharmony between communities, not bridge them. More pertinently, they violate all the fundamental freedoms of man — freedom of speech, freedom of association and property rights. As these works ([1], [2]) show, they also have other negative repurcussions. Obama wishes to expand the scope of such laws.

5. Mandatory national service. Obama’s idea of putting people to work attempts to reshape American society in a way they do not really understand, as Jim Lindgren notes here. On the surface there is nothing wrong with the proposal. Voluntary community service can be an enriching experience both for the child and the community. The trouble starts when the government steps in. The inevitable effect is the substitution of individual volunteerism by a huge bureaucratic machine that subsists on tax money. Like many bad proposals, the detrimental effects show up slowly, but when they do, they are hard to remove. Eventually, these kind of proposals convert non-governmental organizations that flourish on private philanthropy into inefficient arms of the government. Furthermore, as this article points out, those who lead these social-services groups tend to become advocates for government-funded solutions to social problems. The result is more social problems, not less. Volunteerism is a wonderful thing but to be truly voluntary and useful, it needs to be more than an arms length away from government control.

Five things to fear from a McCain presidency:

1. Country First. Don’t get me wrong, patriotism is a wonderful thing, but only when it is not forced down your throat. McCain’s entire philosophy of governance centers around the idea of a cause greater than yourself, which really means blind trust and servititude to the government of the day. McCain not only disrespects rugged individualism, he simply does not even consider it. His philosophy is a soldier’s, and God save the country which has to abide by it. As Reason pointed out once, [McCain] has lauded Teddy Roosevelt’s fight against the “unrestricted individualism” of the businessman who “injures the future of all of us for his own temporary and immediate profit.” He has long agitated for mandatory national service. His attitude toward individuals who choose paths he deems inappropriate is somewhere between inflexible and hostile. “In the Roosevelt code, the authentic meaning of freedom gave equal respect to serf-interest and common purpose, to rights and duties,” McCain writes. “And it absolutely required that every loyal citizen take risks for the country’s sake….”

2. Endless war. McCain is a warmonger if there ever was one. Much has been made of his “hundred years in Iraq” comment. More pertinently, he thinks it is entirely appropriate that the US spend millions of dollars in military bases abroad while the country suffers from financial crises at home and extreme ill-will abroad. He loves hard power but does not even understand the concept of soft power. And if he ever becomes president, a war with Iran appears certain.

3. Christianization of the US. If McCain wins, the evangelists will be the one who carry him over the top, and most certainly they will be rewarded. The Bush era has seen the reinvigoration of the obscenity law, and a ban on stem cell research. McCain will carry all these things forward. He is also likely to appoint judges who overturn Roe vs Wade (**). He will carry the war on victimless crimes forward and his VP will encourage the teaching of creationism and abstinence only sex education.

4.  Further weakening of civil liberties and the First Amendment. McCain does not respect the concept of free speech. To him, it comes with caveats and clauses, and is subservient to collectivist and national interests.  Here’s a real McCain quote: “I know that money corrupts…I would rather have a clean government than one where quote ‘First Amendment rights’ are being respected.” And here’s a statement from his campaign: “Neither the Administration nor the telecoms need apologize for actions that most people, except for the ACLU and the trial lawyers, understand were Constitutional and appropriate in the wake of the attacks on September 11, 2001.”

5. It’s the economy, stupid. Generally, Republicans are better at controlling spending and balancing the budget. But not the present-day ones. The national debt has grown tremendously during the Bush era, fuelled by wasteful spending and the war in Iraq. McCain does not even understand economics, as he has himself admitted. He is likely to continue spending on useless things like war in foreign countries and is going to continue the Bush tax cuts, which, while a good thing in principle, are incompatible with the spending he has in mind. His reaction to economic issues has been a bizarre mixture of soundbites against earmarks and populist drivel. In the last week, he has both supported and opposed government intervention, made irrelevant threats about sacking the SEC head, and called for salary-limits for CEOs. He is quite simply not the right guy to be in charge of the present crisis.

Notes:

(*) This quote by a Reason commenter may be pertinent:

Dear Senator Obama

Let me tell you about something called the Internet.

It is a medium where every sort of opinion – from far left to far right and way beyond either – gets aired. And thrashed.

It is a wide open, no holds barred, forum where anyone can speak his piece and find those who agree with him. Those who don’t agree are equally free to rebut, make counter-assertions, abuse or insult the first one. They, in turn, are subject to the same give-and-take. (Try googling “flame war”.)

The internet is almost unregulated (aside from a few asinine attempts by your fellow senators and their counterparts in other countries), yet still manages to achieve this remarkable fairness.

I humbly suggest that this example should persuade you that fairness will be best achieved if the regulation of media is decreased, not increased.

Yours truly,

Your neighbor, Aresen.

(**) Many libertarians, including many pro-choice ones, oppose Roe vs Wade and believe that the abortion issue should be decided by the state. I disagree. Some things are just too fundamental to be left to the states. The right to life is one of them. So is the right to sovereignty over one’s body. Such a right cannot be overturned by a state just as a state should not have the power to kill without cause or to make slavery legal.  A foetus is not a person — but even if it were, it does not deserve full human rights for the simple reason that it is a part of someone else’s body and thus any attempt to assign rights to it obviously contradict the more important rights of the host on which it is completely dependent.

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The exit polls have been pretty off the mark this election season but in a consistent manner. As Brendan Loy notes in this post, the polls have been typically off by 7-8 points in Obama’s direction. This pattern was repeated yesterday — Clinton won Pennsylvania by 9 points when the CNN exit polls earlier in the day predicted she should win by 2.

I guess this is due to a combination of two factors.

1) The pollsters are clueless about weighted sampling and ignorant about the demographics of this contest (or more likely, simply too lazy to implement them): Obama does much better among the young, the affluent, the urban and the educated. A polling strategy that picks up a disproportionate number of such individuals, as would happen, for instance, if the pollsters spent most of their time in the big cities or other easily accessible parts of a state, is bound to go wrong.

2) People are not truthful when asked who they voted for: It may be true that a lot of whites vote for Clinton, then lie that they voted for Obama (so as to not appear racist?)

 

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