Disney to buy comic book powerhouse Marvel for $4B

Monday, August 31st, 2009

Disney to buy comic book powerhouse Marvel for $4B in cash and stock:

Disney said Marvel shareholders will receive $30 per share in cash, plus 0.745 Disney shares for every Marvel share they own. That values each Marvel share at $50 based on Friday’s closing stock prices.

Marvel shares jumped $10.17, or 26 percent, to $48.82 shortly after the market opened. Disney shares fell 47 cents, or 1.8 percent, to $26.37.

It doesn’t look like the market thinks Disney is going to see too many “positive synergies” from adding Spider-Man and Iron Man to Mickey Mouse and Donald Duck.

What 10 books to assign?

Monday, August 31st, 2009

Arnold Kling tries to decide on what 10 books to assign for a first-year economics seminar:

  1. Animal Spirits by Akerlof and Shiller
  2. The Price of Everything by Russ Roberts
  3. The Wordly Philosophers, by Heilbroner. Also on Mankiw’s list.
  4. The Mind and the Market, by Jerry Muller. Another history of economic thought, more difficult than Heilbroner.
  5. A Random Walk Down Wall Street, by Burt Malkiel. Mankiw is also a Malkiel fan, although Malkiel does not make his list.
  6. The Power of Productivity, by William Lewis
  7. Poverty and Discrimination, by Kevin Lang
  8. Manias, Panics, and Crashes, by Charles Kindleberger
  9. Fool’s Gold, by Gillian Tett
  10. Farewell to Alms, by Gregory Clark

I’ve read shockingly few of those.

Practical Implications of Governance By the Power-Hungry

Monday, August 31st, 2009

We’re fated to be ruled by the sort of people who are really desperate to cling to power, Will Wilkinson notes, and Matt Yglesias responds:

I know some people are inclined to respond to these facts by saying “and so you see, that’s why we should believe in small government and limit the power of politicians” but I don’t really understand how to operationalize that idea.

The only practical alternative to rule by politicians is rule by dictators, which seems to work out well in Singapore but not elsewhere, and the election of politicians who profess belief in small government has, in practice, brought the United States illegal surveillance, torture, indefinite detention, aggressive war, a boondogglish drug benefit for senior citizens, and then on the small government side of the ledger cuts in the very inoffensive Section 8 housing voucher program.

I can understand his doubts about “operationalizing” the idea of small government. After all, a couple hundred years ago, the Founding Fathers designed what appeared to be a very libertarian government, and that didn’t last long at all.

And he’s right that “politicians who profess belief in small government” rarely act on those professed beliefs when in power. (This surprises some people.)

On the other hand, I wouldn’t call rule by dictators the only alternative to rule by democratically elected politicians. (In fact, they’re not necessarily even alternatives.)

I also disagree with Yglesias’s mostly progressive commenters, who draw the wrong conclusion from the right idea:

The other problem with small government is that if you take power out of the political system and put it somewhere else, power-hungry people will go to the somewhere else. Right now that’s corporations, but wherever you hide the power in your society, that’s where the power-hungry people are going to go to get it.

For example, power-hungry people used to go into the Church, when the Church had tremendous power. Churches do still have some power, and some power-hungry people do go into them, but not like they used to. But I don’t think churches fully appreciate that it is *because* they have less power today that they have fewer problems with power-hungry people trying to take them over.

Governments are pretty much in the business of having and using power. But even if you were to somehow get them out of that business, it wouldn’t solve the general problem of power-hungry people — it would just push it somewhere else. Therefore, the existence of power-hungry people is an argument for scrutinizing powerholders, but not an argument for taking power out of government (or any other particular institution).

Yes, power-hungry people would simply go someplace else, but they would cause much less harm someplace else, because they wouldn’t have the coercive power of the state to serve their power-hungry ends. A power-hungry CEO only has power over his own employees, whom he’s paying, and who can leave to work elsewhere, and he only has that power as long as the board, representing the shareholders, leaves him in power. If he exercises his power profitably, he stays in power; if he fails, he loses power.

This is where Dan Kervick misses the point:

This is what puzzles me so much about libertarians. They get all bent out of shape by the requirement that they should follow some piddly regulation written by the Minister of Money, who at least might be forced to work under some measure of democratic accountability, but they profess to have no problem about being bought, sold and dominated by the men who actually own most of the money. Why do they only care about some of their liberty and not all of it? Why do they take the “private” realm to be less in need of institutionalized checks and balances than the “public” realm? How can they understand liberty if they don’t understand power?

Democratic accountability is not much in the way of accountability — especially as a state grows in size and complexity — and there’s a fundamental distinction between public and private actors and their need for such accountability: public actors aren’t spending their own money or trying to maximize a clear bottom line on behalf of shareholders. There’s already accountability built into any decent private system, because it’s entirely voluntary with clear ownership.

As I said over at Aretae‘s blog, most examples of corporations misusing their power are examples of corporations misusing political power:

A Progressive sees corporations buy political power and concludes that corporations are corrupt.

A Libertarian sees corporations buy political power and concludes that politics is corrupt.

Mencius Moldbug, Sighted but Uncited

Monday, August 31st, 2009

Arnold Kling shares a bit of a paper by Edward Stringham on vertically integrated proprietary communities that provide law — which he calls Mencius Moldbug, sighted but uncited. What would Moldbug say? This:

The only possible answer is “nothing bad, I should hope!” — since I started blogging in 2007, and Stringham’s paper is dated 2006. Fortunately, since I am not actually a professor, my corpse is not good eating.

Of course, as Stringham discusses, many people have had this basic idea in the modern era, most famously Nozick. This is because it’s basically a good idea. Of course, it is not a new invention at all. It is simply a recovery from a dark age in which everyone was browbeaten into thinking, that Plato, Aristotle and Socrates were morons. Thus it is directly accessible to anyone — especially in the era of Google Books.

What this modern political-science tradition has mostly avoided, whether through ignorance or discretion, is the eerie resemblance of their discoveries to the classical or pre-democratic law of nations — eg, as laid down by, say, Vattel. And also well-known as the antique jus gentium. What is a “proprietary community?” L’état, c’est moi. (You can see that in Stringham’s case it is discretion, because surely he has read Hans-Hermann Hoppe. But does he cite Hoppe? Nooo…)

For example, what is the economic policy you’d expect a sovereign run on the profit motive to adopt? A: mercantilism. Look at how the early free-traders scoffed at their Colbertian predecessors for amassing huge reserves of gold and silver. Wall Street has another name for this: “retained earnings.”

For extra credit: in the ’30s, what economic policy was most dramatically effective in restoring commerce and ending unemployment? In what country was this policy most conspicuously practiced? Hint: its leader wore a mustache shorter than his lip.

So this great herd of professors has come around, painfully and quantitatively, to what Robert Filmer knew in 1680. Presumably once they realize the political implications and translate them into Anglo-American history, they will all be Jacobites like me. Prince Alois to the throne! Gentlemen, it is not too late.

Reliability Theory

Monday, August 31st, 2009

Robin Hanson demonstrates a concept from reliability theory with a figure of a platform supported by three columns — in various states of disrepair:

The top diagram shows the system built exactly according to its design. Every such system should give pretty much the same pattern of support. The second diagram shows the columns having fallen over, but still intact. Different ways the columns could have fallen should lead to very different patterns of support for the platform. The third and fourth diagrams shows the columns breaking into increasingly smaller pieces. The smaller the pieces of rubble, the more predictably even is the support this rubble gives the platform. The support capability is less, as the platform is lower to the ground and more disruptable via shaking. But that lower capability is still more predictable.

Why Democrats Tend to be More Socially Liberal

Sunday, August 30th, 2009

Eric Falkenstein, who is socially liberal and fiscally conservative — that is, libertarian — offers a tenuous explanation for why Democrats tend to be more socially liberal, given their high-tax ways:

Before the modern personal income tax in 1913, liquor taxes accounted for about a third of federal revenues. Then came the income tax in 1914 and, on its heels, America’s entry into World War I. During the war federal revenues received through income taxation for the first time exceeded those from any other single source. By fall of 1917 Congress saw the income tax as its chief source of revenue, reducing the cost of voting for Prohibition in December 1917.

The Great Depression severely depressed incomes and tax revenues correspondingly plunged beginning in 1931. By 1932 federal income-tax receipts fell by well over a third from their level in 1931 and to almost half their 1930 level. Prohibition’s repeal in 1933 generated a big jump in revenues. As a percentage of federal government revenues, liquor taxes jumped from 2 percent in 1933 to 9 percent in 1934 to 13 percent in 1936.

Big government fans need money, and income tax revenues do face a Laffer curve effect at some rate. In this context, taxing underground activities is a no-brainer for most Liberals, and so big-government types are in favor of legalizing activities that conservatives think are best kept underground.

It looks like there’s a lot of money in legalizing marijuana.

A Life of Power

Sunday, August 30th, 2009

While Ted Kennedy didn’t choose a life of ease, Don Boudreaux notes, he did something much worse: he chose a life of power:

That choice satisfied an appetite that is far grosser, baser, and more anti-social than are any of the more private appetites that many rich people often choose to satisfy.

Americans would have been much better off had Ted Kennedy spent his wealth exclusively, say, on the pursuit of sexual experiences and the building of palatial private homes in which to cavort, or to take drugs, or to engage in whatever private dissipations his wealth afforded him.

Instead, Mr. Kennedy spent much of his wealth and time pursuing power over others (and of the garish ‘glory’ that accompanies such power). He did waste his life satisfying unsavory appetites; unfortunately, the appetites he satisfied were satisfied not only at his expense, but at the expense of the rest of us. Mr. Kennedy’s constant feeding of his appetite for power wasted away other people’s prosperity and liberties.

As one commenter added, all of the glowing references to Ted Kennedy’s great magnimity fail to note that he was only so generous with other people’s money.

The Law of Unintended Consequences

Saturday, August 29th, 2009

Eric Falkenstein shares some examples of The Law of Unintended Consequences:

Solar Panels: Just yesterday I read about nitrogen trifluoride, one of several gases used during the manufacture thin-film photovoltaic cells and flat screen TVs. Many industries have used the gas in recent years as an alternative to fluorocarbons, and of course building photovoltaic cells is part of solar energy. Unfortunately, the gas is 17,000 times more potent as a global warming agent than a similar mass of carbon dioxide. It survives in the atmosphere about five times longer than carbon dioxide. The net result, in other words, is more greenhouse gas than using standard fluorocarbons.

Pesticides: Plants have many natural toxins designed to protect themselves against herbivores. Celery defends itself by producing psoralen, a toxin that can damage DNA and tissue and also causes extreme sensitivity to sunlight in humans. People who handle celery professionally often develop skin issues: if it were man-made, it would be banned. Celery psoralen production is highest when it feels under attack, as bruised stalks of celery can have 100 times the amount of psoralen of untouched stocks. Farmers who use synthetic pesticides, while creating other problems, are protecting plants from attack. Organic farmers don’t use pesticides, but this leads to stalks becoming vulnerable to attack by insect and fungi, and when those stalk are munched on by the little critters they respond by producing massive amounts of psoralen. Pick your poison.

Saving the S&Ls in 1982: When interest rates were 18% in the early 1980′s, most S&L’s were insolvent, so a simple off-balance-sheet solution was to give these highly regulated institutions more powers (Garn-St.Germain) and increase the amount of deposit insurance from the Federal Government. Only six years later, there was a Savings and Loan crisis, the failure of 2412 S&Ls in the United States. The ultimate cost of the crisis is estimated to have totaled around $560 billion, about $320 billion of which was directly paid for by the U.S. government. This is the archetype of ‘moral hazard’, because those depositors who might have monitored these risky actions had no incentive, and the managers basically had a free option to swing for the fences, which they did.

I fully expect the latest legislation to create a disaster in 5-10 years.

Annotated Walking Dead Google Map

Saturday, August 29th, 2009

I was mildly disappointed by the Walking Dead compilation I read, but I’m still intrigued by this annotated Google map that shows the real-life locations of the fictional events that take place throughout the zombie apocalypse.

(Hat tip to Boing Boing.)

Why ‘Leaders’ Aren’t Smart

Friday, August 28th, 2009

When she was on Letterman, Tina Fey diplomatically questioned Sarah Palin’s intelligence:

I see her and think she’s as smart as I am. I want someone smarter than that in the White House.

Eric Falkenstein considers it naive to expect smart leaders:

If you have an IQ above, say, 130, you can’t mouth the inconsistent platitudes with sufficient sincerity to be elected leader. That is, a really smart person can’t in good conscience say that ‘giving to the United Way is the most important thing we do here at Amalgamated Financial’, or that you listen to each customer suggestion on various product releases. It’s BS, but the troops need to hear it, so they get the only people who actually can champion such inconsistent policies. Both Obama and McCain are overselling a load of policies that won’t change much, except for the new government bureacrats in charge (as opposed to the people they are supposed to help), but that ‘not-so-bright’ mindset was necessary to win their party’s nomination. Someone with a painful sense of the obvious and inconsistent, would be seen as not sufficiently inspiring to the masses, as I’m sure he would not be. So we give the people what they want, good and hard.

Humans live in a ‘reverse dominance hierarchy’, so that a leader too dominant, not sufficiently deferential, will not be chosen to lead. Humans hate hubris in their leaders more than anything else, and so a smart guy, who can’t fake appreciating the vastly more numerous pedestrian managers out there, will not get enough support. Anyone with a sufficiently high IQ, to be consciously faking there enthusiasm for the pap they are pushing, is so evil they are much worse. Thus, be happy with the stupid 125 IQ guys, it’s as good as it’s gonna get. The exceptions you see, mainly, are really smart founders who often created their product.

Mike Judge on Extract

Friday, August 28th, 2009

Terry Gross of NPR’s Fresh Air interviews Mike Judge on Extract, his new movie starring Arrested Development‘s Jason Bateman — who plays the head of a vanilla-extract company.

This inverts the point of view of Judge’s early cult-hit, Office Space, which is from the hapless employees’ point of view. Only after Office Space and after Beavis and Butthead had grown did Judge understand the plight of the hapless employer.

He also discusses Idiocracy. I was hoping he’d mention Cyril M. Kornbluth’s The Marching Morons, from 1951 — which I recently read, in The Science Fiction Hall of Fame, Volume Two — because it is clearly the basis for his movie.

Through the interview I found out that King of the Hill is only now coming to a close — and The Goode Family has already been cancelled. Sigh. At least I got to listen to an NPR host ask Judge about the show — delightfully awkward.

Kill Adolf

Friday, August 28th, 2009

Steve Sailer suggests that Quentin Tarantino’s gifts may be better suited to a different career:

Surely, for example, Tarantino would have made an ideal Artistic Director of the Roman Colosseum during its heyday under the Emperor Commodus. “I’ve got it! We’ll start with a Mexican standoff among three gladiators, 27 Christians, two Nile crocodiles, and a giant squid. They eyeball each other tensely… suddenly, all hell breaks loose!”

He would also have served admirably as the Idea Man in the Ministry of Truth’s Fiction Department. Here’s an extract from Winston Smith’s diary that’s Tarantinoesque avant la lettre:

April 4th, 1984. Last night to the flicks. All war films. One very good one of a ship full of refugees being bombed somewhere in the Mediterranean. Audience much amused by shots of a great huge fat man trying to swim away with a helicopter after him. First you saw him wallowing along in the water like a porpoise, then he was full of holes and the sea round him turned pink and he sank as suddenly as though the holes had let in the water. Audience shouting with laughter when he sank.

Granted, if Tarantino worked for Minitrue, this bit of action would have been preceded by 17 minutes of exhaustively clever dialogue riffing on sinking ship scenes from old movies, famous and obscure. The default trajectory of Tarantino’s screenwriting is to dissipate momentum until the story lies dead in the water, only to desperately jolt it back to life via carnage.

When land-use regulations make sense

Friday, August 28th, 2009

Richard Epstein recently visited the Norwegian city of Bergen and came away with an insight into when land-use regulations make sense:

Medieval Bergen was built on a sliver of land hemmed in by the mountains to the east and an inlet from the North Sea to the west. The city was an early trading center, which took in stockfish from the north, which was then shipped out in exchange for grain from the south. From about 1360 to 1550 Bergen was a commercial outpost of the German Hanseatic League. Space was at a premium. Stone was not available for construction, except at a prohibitive price. The tightly packed structures were all made of all-too-flammable wood. Major fires ravaged Bergen from the 11th century onward. No structures today date from before the huge fire of 1702, which destroyed the city.

Risks this large required firm collective action. From earliest times, Bergen was subject to strong laws that regulated every aspect of its operation. The most obvious laws were those which specified what kinds of wood and other materials should be used in construction of roofs and walls. Those rules were not enough. Other regulations dug far more deeply. Most strikingly, the risk of fire forced a mandated partial conversion from private to common ownership. Kitchens were much too dangerous to have in large numbers, so all the cooking was concentrated in a single communal location, tightly watched and inspected. Other heating was concentrated in large assembly rooms. Lamps were forbidden in dark corridors during long and cold winters. Certain businesses, like gold smelting were only allowed on dirt floors in order to further minimize the risks of combustion.

And it all made sense. One prediction of modern economic theory is that ex ante regulations against compensable losses will be less pervasive in circumstances where ex post compensation is possible through the tort system. But the tort law — even the criminal law — could not provide deterrence equal to the risk at hand. Who knew who started a fire, or who contributed to its acceleration? Even if the wrongdoer could be identified, he could not pay for the losses imposed, assuming he survived the catastrophe.

Similarly, a fire insurance market was not viable because the high correlation of risk negated any possibility of loss spreading. The only legal rule that had real traction was the rule of public necessity that required the compensation of anyone whose home was consciously burned to protect the other properties from destruction. And that rule was only applied when the other homes were saved, where the limited burden was divided among others. But for the most part, it was either land-use regulation or nothing.

People don’t make the same “sensible” conclusion Epstein makes:

The sensible normative conclusion is that as crowding declines, as building materials and sanitation improve, the case for extensive land use planning gets weaker than it was nearly 1,000 years ago. But alas, we do not see less land planning. We see more, by huge amounts. We just redefine externalities to include everything from neighbors with the wrong color doors on their houses, to the wrong type of people living and working behind those doors.

(Hat tip to Mike Gibson, who’s more interested in futuristic seasteading than medieval cities.)

Half of health workers reject swine flu shot

Friday, August 28th, 2009

About half of Hong Kong’s health workers would refuse the swine flu vaccine:

In a study that polled 2,255 Hong Kong health workers this year, researchers found even during the height of global swine flu panic in May, less than half were willing to get vaccinated.

Most said they would pass on the swine flu shot, which is not yet available, because they were afraid of side effects and doubted how safe and effective it would be.

Doctors and nurses are on the swine flu front lines — and if they become infected, they may not only spread the disease to patients, but their absence from work could cripple health systems.

Health workers aren’t much better informed than the public:

So far, officials say that among the few thousand people who got the injections no one has reported anything more serious than a sore or swollen arm.

It is unlikely any rare side effects will pop up until the vaccine is given to millions. That might include things like Guillain-Barre syndrome, a temporary paralyzing disorder, which was seen after the 1976 swine flu vaccination campaign, and happens fewer than once every 1 million vaccinations.

GRE v. GMAT: Battle of the B-School Gatekeepers

Friday, August 28th, 2009

Until recently, the GMAT exam had a virtual monopoly over business school standardized exams:

That all changed on Jan. 1, 2006, when GMAC cut its ties with the Educational Testing Service (ETS), with whom it had a decades-long partnership to develop and deliver the GMAT exam, moving instead to a new testing administrator, Pearson VUE. The severing of ties meant that ETS no longer had to abide by a noncompete clause with GMAC, giving it the green light to court business school admissions officers and promote the GRE as an alternative exam. Under the previous agreement between ETS and GMAC, this type of activity was forbidden.

“Once they ended the contract with us, we were able to move into this market,” says David Payne, head of the GRE program for ETS.

To capitalize on the opportunity, ETS has been aggressively marketing the GRE to B-school admissions officers in recent months, placing advertising campaigns in key business publications, paying visits to business schools admissions teams, and developing new testing tools that it hopes will convince more schools to use the GRE, says Payne. ETS has also been promoting the exam as a more affordable option for students; it costs $150 to take the GRE, versus $250 for the GMAT.