Interventionist Romance

by Chidem Kurdas

 

James Galbraith puts a dramatic spin on recent history in his new book, “The Predator State.” He argues that the American government was used to plunder public resources for private gain. That certainly rings true, one obvious new example being the pork projects added by Congress to the financial bailout bill. You might think Mr. Galbraith favors limits on the state. 

 

No such thing. He calls for more government with nary a mention of restraint. The twist is that he attributes the looting of the Republic almost exclusively to Republicans.

 

“Today, in the great policy house of the conservatives, there are only lobbyists and the politicians who do their bidding. There are slogans and sloganeers. There are cronies and careerists,” he writes.

Another side of Mumbai

by Sandy Ikeda

Because of their location, Dharavi’s residents have been locked for years in a tug of war with government officials who look hungrily at such choice land and dream their own dreams of reincarnation.  If the officials get their way, the slum will be demolished and reborn as a gleaming collection of high-rise apartments, office towers and manicured parks. Residents who arrived before 2000 would be re-housed elsewhere in Dharavi in small flats of 225 square feet – smaller than a suburban American garage – while an influx of richer folk and big companies would turn the area into one of Mumbai’s fashionable addresses.

But many who live here take fierce pride in a community that they and their families built, for some over several generations, with little help from the state. They refuse to be uprooted without a fight.

This is from an article published last September 8th in the Los Angeles Times called “Dharavi, India’s largest slum, eyed by Mumbai developers” about the ethnically and religiously diverse community in the heart of Mumbai (formerly Bombay), the site of terrible violence today.

See “How to Improve Forensic Science” Live on the Internet

by Roger Koppl

On December 4^th BrightTalk is running a “Forensic Science and Law Summit.”  I’ll be giving a talk at 1:15 p.m. Eastern time.  I’ll be using the slides from my presentation to the National Academy of Sciences committee on “Identifying the Needs of the Forensic Science Community.”  It’s free and you can type in questions in real time as I present.  I will discuss a suite of reforms that would break the fornsic science monopoly.

I don’t expect to discuss the fingerprint scandal in Los Angeles in my BrightTalk presentation.  But I would like to talk about it here.  In October of this year an internal audit revealed problems with fingerprint identifications in Los Angeles.  The report, says the LATimes, “highlighted two cases in which criminal defendants had charges against them dropped after problems with the fingerprint analysis were exposed.”  These two were cases that were caught in time to avoid a false conviction. 

How many cases are we really talking about? 

Let the Housing Market Collapse — Fast

by Mario J. Rizzo

 

Today CNN reports that there has been a record decline of housing prices. The Case-Schiller Index showed a decline of 16.6% for the third quarter compared with the same period a year ago. This is important and good news.

 

For those who believe that all downward adjustments in prices are indications of dangerous deflation this is unnerving. However, most commentators are wont to play up the aggregate aspects of the current financial situation to the neglect of the relative price disequilibrium. The core of the current problems lies in the housing bubble. Mortgage-backed securities are of uncertain value and thus the private market has dried up. What would help clarify the situation is for the underlying housing prices to reach their bottom. (This could be much lower.) It would also help if those who are about to foreclose or restructure would do so quickly. (Of course, it doesn’t help that the various arms of the government are toying with plans that prevent or slow down this adjustment.)

 

The faster the adjustments take place the better off we shall all be. The slowness of adjustment creates uncertainty, financial instability and reluctance to invest on the part of the private sector.

Josh Hendrickson on the bailout

by Roger Koppl

Over at The Everday Economist Josh Hendrickson has a nice post using the theory of Big Players to help explain why the bailout has done little but stir up market volatility.  He puts his finger on something important.  When a crisis hits, the authorities improvise.  The sudden jump in Big Player influence increases uncertainty and herding, thus making the crisis worse and encouraging, perhaps, another increase in Big Player influence. 

Josh concludes, “the government really wants to help, they can start by setting the rules now and following through on their promises.  So long as they continue to change the rules on a daily basis, uncertainty will prevail, the stock market will remain volatile, and the credit markets will remain frozen.” 

Once again, be careful what you wish for

by Sandy Ikeda

I’d wager that many of us who’ve lectured to our classes on environmental economics have at some point suggested that one way to eliminate pollution is to stop all forms of energy-consuming and pollution-generating production.  That would kill most of the human (and a lot of the non-human) inhabitants on earth, but it would probably preserve the natural environment (in the long-run, that is, after all those nasty carcasses get washed away).  The point being, of course, that there’s such a thing as having too little pollution, and that there are better and worse ways to lower pollution.

Next time, you might want to use this article from the latest (November 22, 2008) The Economist.  Thanks to skyrocketing gas prices (at least until lately), the housing collapse, and the impending recession, Californians may actually come close to hitting the ambitious targets for renewable energy and greenhouse-gas emissions mandated by Governor Arnold Schwartzenegger for 2020.

Truth-challenged police forensics in Baltimore

by Roger Koppl

Most people think DNA evidence is bulletproof.  Molecular biologist and forensic scientist Dan Krane has very nice presentation on some of the problems that can arise in this area.  When the biological sample is mixed, degraded, or small, the evidence can be ambiguous, which allows subjective judgment to enter.  Recent events in Baltimore point to another problem that has nothing to do with such ambiguity.

On September 27^th, the Baltimore Sun reported, “In at least nine homicide, sex assault and burglary cases, Baltimore police detectives instructed crime lab technicians not to follow up on convicted criminals’ DNA found on evidence at crime scenes because they determined it was not relevant to their investigations.”  The police have a plausible explanation.  “Police spokesman Sterling Clifford played down the significance of the discovery, saying detectives routinely make judgment calls on evidence.”  Moreover, says Clifford, “Very often those crime scenes are enormous, sometimes covering entire city blocks.” 

The Blackened Swan

by Gene Callahan

I am now on my second review of Nicholas Nassim Taleb’s The Black Swan, the first of which will appear in The Review of Austrian Economics soon, and the second of which, an essay length review, is due out in a forthcoming issue of Critical Review. I have very mixed feelings about this book — Taleb is very good in his areas of expertise, but apparently feels that his skill in those domains makes him emminently qualified to propound on any damned thing that comes into his head. I wanted to share with ThinkMarkets readers a little excerpt from my upcoming CR review:

Truth-Market Failure

by Roger Koppl

 

 

A friend of mine is a public defender in the Midwest.  These days she is working on a murder case.  The county medical examiner (ME) testified for the prosecution in the case.  The defense called in an ME from a neighboring county to testify for the defense.  The two MEs have opposite opinions in the trial.   To an academic, it’s normal for two experts to disagree.  But to a prosecutor it can seem outrageous that someone on “his team” would testify for the defense, even if in a different jurisiction. 

 

 

The district attorney (DA) in the county where the defense ME works fired off an email protesting “the testimony of you or a member of your office as a defense expert in a prosecution being conducted by one of my colleagues.”  Notice that this objection is not coming from the prosecutor in the case.  It comes from the prosecutor in the county where the defense ME works.  One of his MEs has the gall to go and testify for the defense in a nearby jurisdiction.  Unthinkable!

Welcome Richard Epstein

by Mario Rizzo

 

Those of us at ThinkMarkets are very happy that Richard Epstein will be teaching at the NYU School of Law on a long-term basis beginning in 2010. He has been visiting NYU for a few years now during the Fall semester. Just yesterday he spoke at our colloquium: The Colloquium on Market Institutions and Economic Processes. He will be a great asset to the University.