The latest This American Life is bananas

See here.

I’d like to call out a couple things:

  1. What the guy says about the plane arriving to rescue them: “In my head … you wanna start singing the national anthem … corniness aside, this is awesome: we live in a country that can do this.” I couldn’t help it: I was patriotically moved. Looking at it in a more wonky way, you can think of a society as an insurance policy; the Coast Guard here is insurance against getting hurt at sea. (Lane Kenworthy goes into this in Social Democratic America.) I like to think of my society insuring me in all kinds of ways. And I love living in a country that can do that.
  2. The entire Alan Simpson thing. I won’t spoil it by explaining any of what goes on. You can listen to Act 2 if you’d like. It’s just bananas.

The McDonald’s coffee case

The New York Times returns to the famous McDonald’s coffee case, and explains why it’s been massively misunderstood. The trouble is that, as a self-contained argument, I don’t find this Times redux all that convincing, either. Let me put a few words of preface here:

  1. As a general matter, I will almost always defer to juries. I will certainly defer to them when it’s a choice between deferring to them and deferring to the public rumor mill. Whom do you trust more: a group of people who have sat before the evidence for seven days, then spent four hours arguing over the verdict, or people like you or me who only know what we read in the papers?

    So it says a lot to me that the McDonald’s jury ruled unanimously in Ms. Liebeck’s favor. On that basis alone, I would defer to them and question my own ability to infer that this was “a runaway jury” or what have you.

  2. This case seems to have turned into a shibboleth for liberals, just as much as for conservatives. If you suggest that as an argument, you’re not convinced that McDonald’s did anything wrong, you are immediately put in the bucket with those people — the people who believe that corporations are people, say. The same thing has happened with abortion: claim for a moment that you have any ethical troubles with it, but that even still it must remain legal, and you’re immediately in a bucket with the bad guys over there who probably want women to go back to coat-hanger abortions in back alleys. It happens all over the place in American culture. I don’t know if that’s at all new, but in any case: we’re dichotomized even when there is obvious territory for agreement.

    Let me be clear, then, about my ideological priors. When it comes to a choice between a corporation and an individual, I err on the side of the individual — just as, when it comes to a fight between labor and management, I err on the side of labor.

My claim here is simply that, on the basis of that video, viewed on its own as an argument, I am not convinced that Ms. Liebeck deserved a large monetary reward. Maybe the way to approach this is to abstract away from the issue of McDonald’s; that company’s presence in the argument is going to pull in all kinds of other heated beliefs. So suppose you come over to my house and I make you a cup of coffee. [1] I heat up the water in my Cuisinart kettle. Here’s what the kettle’s temperature-control panel says:

160-degree water for 'delicate' beverages, 175 for green tea, 185 for white, 190 for oolong, 200 for French press, 'boil' for black tea.

I make all my coffee these days in a French press, so I follow Cuisinart’s instructions –helpfully laid out on the button — and use 200-degree Fahrenheit water. Or maybe I follow George Orwell’s advice — consistent with the black-tea button on the Cuisinart kettle — and I ensure that “The water should be actually boiling at the moment of impact, which means that one should keep it on the flame while one pours”. So the first thing to note, in contrast to the video: it’s not at all clear that very hot water — indeed, water even hotter than what McDonald’s used — is uncommon. [2]

So suppose I make you a cup of coffee using very hot water, you accidentally spill it in your lap, you get third-degree burns, you go to the hospital, they charge you $10,000, you’re there for a week, and I offer you an insultingly low amount of money to cover your costs. Am I now liable for your injuries?

I can see a good argument that abstracting away from McDonald’s actually loses a valuable piece of information here. If I pay a lot of money to make you whole, the court will not have made life better for a large number of people; it will have made life better only for the small number of people for whom I make coffee. Whereas if McDonald’s lowers the temperature of its coffee, the evidence laid out in the video says that that would save hundreds of people pain and suffering.

So instead, perhaps you should be suing Cuisinart: if they lower their recommended water temperature for coffee and tea, perhaps thousands of people will be made better off. Do you think that Cuisinart deserves to be sued here? Do I deserve to be sued?

Or maybe the callousness of my response is more the issue than the coffee as such. Had I offered you the full $10,000 to pay off your medical bill, along with money to compensate you for the time you spent away from work and so forth, maybe that would have solved it. Is it mostly the callousness of the response that inspired such a large award from the McDonald’s jury?

On a society-wide level, I wonder if this would be handled better or worse by insurers. McDonald’s would carry liability insurance, and everyone would carry health insurance. If people spilled coffee on themselves and incurred medical expenses, the health insurer would try to make itself whole for the hundreds of burn cases it had paid for; to do so, it might raise premiums on everyone, or it might choose to sue McDonald’s liability insurer. I’m really not sure whether this would be better or worse: would the health insurer not do enough to inflict punitive damages, or damages for pain and suffering, on McDonald’s? Or would the damages it chose to pursue be in some sense optimal?

Gentle reader: am I missing any obvious parts of this case? Am I giving short shrift to any important parts of the argument from the video? If I am, I’d love to hear it.

P.S.: I recall reading somewhere that Milton Friedman believed tort law, and tort lawyers, were the saviors of capitalism. As a general rule, my sense is that libertarians and anarcho-capitalists are fans of the common law over statutory law, because the former is much “closer to the action” than the latter. And in particular, an idealized anarcho-capitalist — one who isn’t just working for the czar — is going to allow the distributed intelligence of the market economy work its magic: if we’re going to neuter the regulators, we’re going to empower the juries. So it makes a lot of sense to me that a self-consistent libertarian will fight for an unlimited right to sue companies when they do something that harms the public. That is, sure, we’ll eliminate the FDA, but people will then be able to sue food companies whenever they put dangerous chemicals in their products.

I think this suffers from some realism issues, however. First, “weaken the regulators and strengthen the juries” might be sensible as a matter of theory, but it’s hard to envision that the society in which regulation is gutted is the same society in which juries are empowered. I’m curious if those two conditions have ever existed alongside one another. Second, this is of course an iterated game. First I sue you for putting chemicals in your food; next, you fight like hell to hide the ingredients in your food so that no one can know that they should sue you. And by stipulation, there’s no regulation left to step in here, so you’re not required to put ingredients on your packages, and I can’t sue you when you fail to advertise the presence of horse meat; what’s my cause of action?

So as a matter of practical living within an actual society, it’s hard to picture this libertarian paradise existing. Nonetheless: can anyone point me to a place where Friedman argues this? … Ah: here (via Krugman, via Marginal Revolution).

ROBINSON So your view is abolish the FDA..

FRIEDMAN Absolutely [ROBINSON And what comes up in its place?] what comes up? It’s in the self-interest of pharmaceutical companies not to have these bad things. Do you think the manufacturer of Thalidomide made a profit out of Thalidomide or lost? [ROBINSON I see, ok.] And you have to have..people should be responsible for harm that they do. It should’ve been possible…[ROBINSON So tort law takes care of a lot of this.] Absolutely, absolutely..

I would like to see Friedman expand more on the lawsuit side of this. I understand as a matter of theory that he’s arguing “self-interest guarantees that the right outcome will obtain.” But one needs to unpack that. “Self-interest” could mean many things. In an iterated game, perhaps you’ll produce clean food because you want me to come back tomorrow. And “self-interest encourages you to do x” means specifically that more good than harm will come from your doing x. But that’s an empirical claim, and it depends upon the structure of tort law. The fundamental theorems of welfare economics only hold if all externalities are internalized — that is, if I pay the full costs of everything bad I do, and obtain all the benefits of everything good I do. Ensuring that all externalities are internalized requires an awful lot of institutions. We can’t just tap-dance over this problem; exactly how externalities will be internalized is essential to justifying the libertarian state.

[1] – It will likely be made, these days, with Equal Exchange Mind, Body and Soul beans. I actually get it by subscription, in the mail, every month from Amazon. That’s pretty convenient, you guys.

[2] – I’m leaving out a bit of technical detail here. After you pour water on the leaves or grounds, you usually leave them to steep for a few minutes. So even if the water was boiling at the moment of contact with the leaves, it wouldn’t be when steeping was done. I don’t know whether that means, in particular, that the water is in the safe zone by the time the coffee’s done steeping. That may be relevant here.

The weakness of retrospective conservatism

I don’t know why I made the mistake of reading David Brooks. This is a mistake that I’ve avoided making for so long. Why must I make it now?

Anyway, I’ll be quick. Brooks’s point is basically that people expect their government to do massive social engineering and do it well, and that they should rather expect it to fail: the systems government is engineering are just too massive to engineer them well. This is by way of telling us that government isn’t going to get us out of this recession, and that it’s foolhardy to expect that.

Let’s imagine it had gone the other way: Alan Greenspan had jacked up interest rates to prick the housing bubble a few years back, or any number of regulatory steps had been taken to tighten lending standards. Then Brooks would have nothing to talk about today.

Or go back to Hurricane Katrina. There were various conservative pundits, solemnly averring that the government’s disastrous response was just proof that central planning never works, and that people should never expect to get any help from anyone but themselves and their families. But had the government — at all levels — done its job, we never would have heard them claiming that this was proof of the government’s wisdom.

If we want to talk about the failures of central planning, let’s talk about war, or the DoD. There could be nothing more centralized, more hierarchical, or more literally regimented than the U.S. military — yet this is supposed to be why conservatives are all about the military. It’s a killing machine precisely because it is focused, like a massive machine, on the task of destroying other militaries.

So do we see David Brooks shaking his head from side to side as he sighs, telling us that war is not the answer because central planning never works? The closest we get to that is an apology, after the fact, for having supported the invasion of Iraq.

The best we can say, then, is that Brooks has learned his lesson, and will never again support conservative-friendly centralized government projects; he’ll be just as intolerant of conservative government causes as he is of liberal ones. We’ll just see about that.

George Will thinks high-speed trains are a collectivist plot to control your brain

See Grist, Krugman, Yglesias. The money quote:

So why is America’s “win the future” administration so fixated on railroads, a technology that was the future two centuries ago? Because progressivism’s aim is the modification of (other people’s) behavior.

Forever seeking Archimedean levers for prying the world in directions they prefer, progressives say they embrace high-speed rail for many reasons — to improve the climate, increase competitiveness, enhance national security, reduce congestion, and rationalize land use. The length of the list of reasons, and the flimsiness of each, points to this conclusion: the real reason for progressives’ passion for trains is their goal of diminishing Americans’ individualism in order to make them more amenable to collectivism.

There are many obvious things to say about this, and many good things that the esteemed gentlemen above have written. Here’s what I’ll add: the problem with cars is that they offer the illusion of freedom even while they demonstrate collective insanity. They are a perfect illustration of what can go wrong in markets.

Obvious observation: what does a traffic jam have to do with freedom? You and a few hundred of your closest friends, each in your automobile, are each enjoying your own freedom, sitting in traffic for hours at a time. I hope you enjoy that freedom.

The point that Yglesias has been making forever is that, if we watched a video of Soviet citizens lining up for their free bread, the shelves empty and the lines stretching for blocks, we would know right away what the problem is: the price of bread has been set incorrectly. We see — we live! — traffic jams and we don’t immediately think, “pricing problem,” when that’s precisely what we should think.

Driving imposes costs on others around us. Think of your decision to drive into Manhattan at rush hour: your extra car makes traffic just a little bit worse for everyone around you. In particular, one fellow estimates that each additional car on a weekday imposes a total of more than 3 hours of delays on everyone else.

From here, George Will then has two options available: either 1) insist that car drivers be made to pay the full cost of their effects on those around them, both in terms of ecological damage (the smoke that belches into the atmosphere while you’re idling in traffic) and in terms of time wasted by others, or 2) somehow insist that people have a right to impose costs on others for free.

Republicans’ habitual support for option 2) has mystified Yglesias for a long time. By what libertarian theory do people have a right not to pay for the damage that they cause?

One potential response is that we cannot trust the state to properly estimate the damage we cause others. And even assuming we can trust the state to do that, we cannot trust it to tax the people properly. Maybe the state will have every incentive to overtax, for instance. Or maybe the state will cater to certain interest groups: focus on the needs of train riders or car drivers to the exclusion of everyone else, for instance.

That’s just the point: the state already massively favors car drivers, for the reasons listed in my review of Triumph of the City. If George Will wants to get into a debate about the proper role of the state, I’d be happy to do that; but his first step will have to be answering the question: do people have a right to cause harm to those around them without paying for it? His second step will have to be to admit that the state already plays a massive role in Americans’ use of automobiles. The first is a principle that I hope everyone can agree on; the second is a blindingly obvious observation about the world around us. If he’s not willing to do these things, then it’s not a good-faith debate.

It’s perfectly legitimate to ask why we should want state involvement in transportation policy at all, given what a hash the government has made of things already. Gas taxes are perennially off the table, because politicians expect that they won’t sell; why should we expect that the government will ever properly tax people for the damage they do to the people and environment around them?

Again, this is a fine, legitimate question, and I’d be glad to discuss this with George Will. In particular, I’m more than willing to ask him if he has a free-market solution to the problem of people imposing costs on those around them. If there is such a solution, I’d love to hear it. But Will should know that the idea of taxing people for the damage they cause has been utterly mainstream in economics since the early part of the 20th century.

It feels a little silly to treat Will’s ideas with this sort of respect, and to invite him into a polite debate. Will’s job is to carry water for the Republican Party. He wears a bowtie and has a Ph.D. in political science; he’s the intellectually respectable face of the party, even when what he writes (as in this case) is utter garbage. I’m not going to be intellectually generous or gracious to Will; for whatever reason, he’s chosen not to offer that kind of generosity to my side.

To the contrary. What I’m arguing is that, if we actually had a fair debate, Will would be forced — this is not controversial in the least — to start from some premises about state intervention that he would hate. State intervention in the market is inevitable, if people are going to pay for the messes they make. Will wants that, doesn’t he?

I really resent John McCain

Without John McCain, Sarah Palin would still be several thousand miles away from my consciousness.

Without John McCain, the media would not be required to grant Palin even a modicum of respect. Her vapid utterances would be vapid utterances, and that would be that. Her book would not currently be #1 on Amazon.

Without John McCain, I would not know that there is a person named Levi Johnson.

Without John McCain, I would not know that Levi Johnson is posing for Playgirl.

Without John McCain, no friends of mine would have bothered to ask — as one did today — whether Johnson carries a tattoo with his own name.

I want to step back and observe the lunacy — the sheer unholy raving madness — of this. Levi Johnson is the father of the grandchild of a defeated former presidential candidate’s running mate. And vital neurons of mine — neurons that could have been spent understanding the non-commutativity of certain quantum-mechanical linear operators in an infinite-dimensional linear vector space, for instance — now have been stamped indelibly with certain facts about this human being. I resent this more deeply than I can convey. The bile is burning my keyboard.

Some of the books I review, I got for free from the publishers

There’s a reasonable chance, as Henry at Crooked Timber notes, and as On The Media reported recently [1], that bloggers may soon be required to tell the world if they receive free products. It’s not clear to me whether they want us to announce only if we’ve been paid to shill for their company, or whether even review copies of books count.

Well, I receive review copies every now and again. Of the books I’ve read so far this year — which non-RSS readers can see listed in the right column — I’ve received review copies of two, namely Codes of the Underworld and The Myth of the Rational Market. I’ve not reviewed CotU yet, but it’s going to get a favorable review when I do. As you can see from the review, I really adored The Myth of the Rational Market.

As those of you who read my reviews regularly know, I quite often do not like the books that I read. Whether or not I like them, I make it a point to send the authors a link to my review — especially if they were gracious enough to send me a review copy, and in that case especially if I disliked the review. It’s a point of pride with me: if I don’t send a negative review to an author, then I’m a coward.

Sending reviews to the books’ authors has, perhaps, softened my reviews somewhat, but I count this as a good thing. Quite often, communication on the web takes place behind a veil of anonymity: people say things that they would never, ever say to someone else’s face. Knowing that the author himself will eventually be reading my review, I tone it down to be, at the least, civil. Those of you who’ve been reading this blog for a while may have noted — I, at least, certainly have noted — that I’m less of a bloviating jerk than I used to be. I consider this an improvement.

But to return to the topic at hand, I need to be emphatic: I would never, ever convert a negative review to a positive one just because someone gave me a free copy of a book. Also, no one ever has paid or ever will pay me to write a favorable review.

Finally, let’s be clear on the scope of my importance. My subscriber count has hovered around 130 for at least a year. I am not exactly the New York Times Book Review. It’s easy to avoid corruption when no one cares what you think.

[1] – Thanks to Adam for pointing me to that OTM story.

Medicare "insolvency"

This makes me want to scream, because I see it so much and it misses the point in so many ways:

[“Centrist” Democrat Mary] Landrieu [of Louisiana] says it makes no sense to create a third government health care program when Medicare and Medicaid are already headed for insolvency.

Here’s why that’s wrong and misses the point:

  1. The entire U.S. health-care system is growing unsustainably. Medicare’s costs are growing more slowly than the health-care system’s costs as a whole. So if Medicare is pushing toward insolvency, so is the whole U.S. health system.
  2. The private health-insurance system has, to some extent, been able to avoid obviously falling apart by throwing people off its rolls. If private insurers were required to accept all comers, its problems would be even more manifest.
  3. In any case, Medicare is “headed for insolvency” because it works off a fixed budget. Well, Part A (hospital insurance) does. Parts B (reimbursing doctors), C (Medicare Advantage), and D (the drug benefit) are funded out of general revenues, so they can only go insolvent when the U.S. government goes insolvent. Medicare Part A is forced to be responsible in a way that the rest of the U.S. government is not. Why does no one ever talk about the Department of Defense being “headed for insolvency”? If Landrieu is so concerned about the public fisc, why doesn’t she push for the DoD to be funded out of a dedicated payroll tax? Then every few years, we could go through a public rending-of-garments ritual over the DoD’s impending bankruptcy. I would enjoy this very much. At least then we’d have parity: conservative Republicans shedding crocodile tears over how Medicare will have to be cut to keep it afloat, and my party doing the same for the military.

I wonder if it’s fair to label Landrieu’s words here “lying.” I wonder if she’s aware of the ways in which she’s perverted the debate. In fact, I wonder if the journalist who interviewed her is aware of her errors of fact.

A “debate” over health care would be nice, but first everyone has to understand the way the world works.

Ian Frazier travels in Siberia

This week’s New Yorker is worth the price if only for Ian Frazier’s travelogue from Siberia. I only discovered when I got to the very end that it’s only the first part of the diary — which makes sense, given that by the time we’re done we’ve only passed through the western-Siberian city of Ykaterinburg, and Frazier seems to be aiming for Kamchatka. I can’t wait to read the rest.

That Frazier link brings you to a paywalled article, unfortunately. To read the whole thing, you need to either get access to the online archive or subscribe to the print edition.

You really ought to be subscribing to it anyway. For one thing, the design is just unbeatable; it is a pleasure to read every word in The New Yorker.

Better yet, I can even prove that you should subscribe using maths:

  • It is rational to subscribe to The New Yorker if the cost of subscribing is less than the newsstand cost of buying all the New Yorkers that contain interesting articles.
  • The newsstand price is $5.
  • The subscription price is on the order of $25.
  • There are at least six editions of The New Yorker that come out every year (it’s a weekly magazine) which merit being read cover to cover.
  • Therefore it is rational to subscribe to The New Yorker. ■

You’ll thank me later for my unfailing rationality.