99% Leftist

When Mr Hayes says that "very powerful interests will brand this as 'left' rather than 99%", he is right, if by "very powerful interests" he means "all the Americans who recognise that the 99%-er message is coming almost entirely from the left". This is certainly a large and powerful group, commonly knows as "Republicans".

While on the topic of the 1%, it is interesting to know that the level of wealth (as opposed to income) controlled by the 1% is actually still significantly below levels in the 1920's and early 1930's.


Assorted links

1. Well, maybe this will help the unemployment problem among some lawyers... (HT: MR)

2. Fisher explains his dissent in the recent FOMC vote. He starts with a joke tying a sign at a Norwegian military base to monetary policy...

“Theory is when you understand everything, but nothing works.”

“Practice is when everything works, but nobody understands why.”

“At this station, theory and practice are united, so nothing works and nobody understands why.”

3. Should utilitarians promote utilitarianism

"They found a strong link between utilitarian answers to moral dilemmas (push the fat guy off the bridge) and personalities that were psychopathic, Machiavellian or tended to view life as meaningless."

4. Eurozone timeline. What could possibly go wrong?

Assorted Links - Europe and nukes

1. A 1998 economist article on German Unions. They seem to have acted rationally in the face of globalization. Can anyone imagine labor unions in the United States being this cooperative?

2. The shaky relationship that European leaders have with the truth, from the mouth of the Euro Group President himself:

"SPIEGEL: Are you familiar with the Eighth Commandment?

Juncker: Of course. Thou shalt not bear false witness against thy neighbour.

SPIEGEL: Apparently you don't take it very seriously. More than two weeks ago, you denied a report

 by SPIEGEL ONLINE about a secret meeting of several European Union finance ministers to discuss the situation in Greece, even though the official limousines were already pulling up in Luxembourg.
Juncker: The most important commandment is not to inflict harm on others. Although it isn't stated quite that way in the Ten Commandments, it follows from them. The finance ministers of several Euro Group nations had agreed to meet on Friday with the president of the European Central Bank (ECB), Jean-Claude Trichet. Because the financial markets in Europe were still open and trading was still underway on Wall Street, we had to deny the existence of the meeting. Otherwise the course of the euro against the dollar, which had already fallen as a result of your report, would have plunged disastrously."

The key takeaway here is that there is a subset of people running Europe who are dedicated to preventing harm and are unlikely to tell the truth.

3. Thomas Schelling on the lack of nuclear terrorism. (HT: MR) Other evidence might be inferred from the lack of a real coordinated terrorist attack in recent years since Sept 11. Perhaps there are very few people intelligent enough to pull off an operation on a large scale in the developed world who become terrorists, or maybe the people with the necessary human capital and the desire to cause harm to innocents are very wary of working with anyone else (think of lone terrorists like the Unabomber), suspecting that their potential allies are more likely to be undercover operatives.

Strange promises

Apparently Michele Bachmann is promising that she'll send the world economy into a massive depression if she is elected president.  That's the only way that I can interpret this promise to get gas back to $2 a gallon.

Patents no longer measure innovation

A lot of studies have used patents as a proxy for innovation. In a lot of ways that makes sense, because the basic idea of patents is to give the inventor intellectual property for an invention.

However, patents are no longer a measure of advanced technology. When Google tried to buy Nortel's patent portfolio for pi billion dollars it wasn't interested in the new ideas. They wanted weapons to use against Apple in a legal patent war. Apple isn't going directly after Google, but is indirectly attacking them by suing Android based mobile phone manufacturers such as HTC.

Unfortunately for Google, those patents were won by a coalition of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony which spent over $4.5 billion dollars on them. In the 1990's, Microsoft was the top tech company and its competitors used anti-trust laws because they weren't able to compete against them in the market place. Today, Google is the top tech company* and its competitors are using intellectual property laws to contain its growth. 

Microsoft become much more involved with D.C. after it had to deal with anti-trust issues. If Google decides to put some of that pi-billion towards stepping up its lobbying spending then maybe it can help reform a broken system while protecting itself from businesses who are abusing the patent system because they are being beaten in the marketplace. 

Regardless of what happens, now that the role of patents have changed people should stop pointing to increasing patent issuance as evidence of innovation.  It is evidence that more roadblocks are being put up against innovation. Economists looking to do studies should think about alternative metrics. Tyler Cowen likes to use studies about how the first invention (patent - there is difference, now more than ever) is happening at older ages and it means that the low hanging technological fruit has been picked. But it doesn't mean that it is harder for young people to think up new ideas, it is more likely that it means that patent generation has become a more bureaucratic aspect of business which is undertaken by older non-inventors. 

*Apple may have over 160 billion dollars more market cap than Google, but they are still running scared. 

Where the bias is in the innovation debate

Robin Hansen made a point (in a debate on AI) that people who are thinking about the progress of innovation should take to heart.

"The literature on economic, technical, and other innovation says most value comes from many small innovations – more useful and wider scope innovations are rarer, and usually require many small supporting innovations."

People who are skeptical that there has been much innovation recently should realize that in many cases they are missing real improvements not because they aren't happening, but because they are occurring in small amounts over many different areas. Sure, they don't have flying cars*, but different processes are being optimized by engineers everyday.  There are people who blindly trust that society will keep innovating, and in some areas the institutions that typically drive innovation might be sufficiently broken that this blind trust is incorrect. However, those who believe that people will keep figuring out ways to make their lives better are more right than wrong.

*Incidentally, many of the people who use "Where are the flying cars that we imagined we'd have in the future?" as a rhetorical point about innovation in our society would also be quick to dismiss flying cars as a true technological innovation if they were actually common. After all, as the rhetoric goes, they aren't a new technology, just a combination of two existing technologies that have been around for a long time.

Important Links

1. Seth Roberts on healthcare stagnation. Life expectancy dropped by 0.1 years in the US from 2007 to 2008, and no one seems to care. This is less of a statistical fluke than people would like to think and therefore it is more important. This is especially important because demographic trends mean that healthcare spending is going to increase regardless of the spending's actual impact. HT: MR

2. An interesting perspective on Greece's economy. The discrepancy where civil workers are paid much more than private sector workers is very damaging to an economy in the long run. HT: Fistful of Euros

3.  The jobs picture is unlikely to return to the previous peak if the current expansion is the average 59 months. This isn't even accounting for the increasing population. The employment to population ratio is not quite returning to the levels it was at before women entered the workforce en masse, but it is getting close.

4. Perhaps just as important: Using the right bike seat. I've been told that being able to grip the seat with the thighs while going down bumpy hills is important, but the potential side effects of the normal bike seat are a large price to pay.

Republican Presidential Probabilities

Prediction markets are useful. They give us a way to determine what the market is pricing in about any number of events. With the 2012 campaign starting, it will be one of the easiest ways for a casual observer to avoid the noise and see who people think is actually going to win.  Intrade is pricing in a victory for the democrats in 2012 at 60%, and for Republicans at 38%.  They are also pricing in a 1.5% chance of another party winning, which considering which party is more likely to fracture may partially explain why the chances for Republicans are so low. 

More interesting than the broad probabilities is what you get when you combine the probabilities relating to individual candidates.  The three categories of "Republican primary presidential candidate," "Republican party wins the presidency" and "Individual wins the presidency" has an interesting relationship.  If every candidate has the same probability of winning the presidency after winning the primary, P(Primary winner)*P(Republican wins) = P(Individual Winner).  However, this isn't always the case and the chance that a specific Republican will win can be priced in from the other two contracts..

That table shows the probabilities for different Republican candidates and the implied probability of their chance of winning the election if they win the the primary.  The data should be taken with a grain of salt.  Ron Paul enthusiasts bidding up his contract are probably responsible for his seemingly high chances of winning a general election. Wider bid/ask spreads and illiquid markets also mean that fast moving markets such as Rick Perry's probably won't yield an accurate market view. Still, it is interesting that Sarah Palin and Michele Bachmann are priced in at levels where they would hurt the Republican's chances to win the presidency while Jon Huntsman and Rick Perry are priced at levels where they give the Republicans a better chance of winning while the rest of the candidates are clustered right around 40%.

The "chance of winning" is something people talk about during the primaries so it is nice to have a market mechanism that provides these numbers. However, if it gets too popular as a measure without the market getting more liquid then the market might end up with numbers as skewed as Ron Paul's.