The Final Piece of the Third Edition of Machinery

The Poverty of Our Circumstances

 In sharp edged lands where many dwell

All things are true or false, and if you try,

A little thought will be enough to tell

My truth from your illusion or your lie.

From which it follows, as the night the day,

Since all of us have use of reason’s tools

That all who disagree with what I say

With certainty are either rogues or fools.

I have not found it so; the world I see

Has honest men with minds as good as mine;

I can find reasons that seem good to me

But proofs beyond dispute are hard to find.

Warning to Travelocity Customers

Recently I went to my Travelocity account to check the details of reservations I had made for a trip to the east coast in a few weeks and was disturbed to be told by the web page that I had no future reservations. I called their help number, eventually got through the phone tree, and was told that the reservations existed but that because they were changing computer systems they did not show up when I did a search for them on the web page. I suggested to the agent that they ought to have a warning on the page used to search for reservations that the results were not at the moment reliable. She seemed uninterested. I asked her to connect me with her supervisor. She said she would do so—and sent me back to the beginning of the phone tree.

Since that was not working, I sent them an email pointing out that they were giving customers frightening false information by telling them that reservations they had made did not exist, and suggested that they add a warning to the web page. I got back a canned response that showed no evidence that anyone had read my email, along with a phone number—which, when I tried it, put me back at the beginning of their phone tree. I responded to that, got back a response apologizing for the difficulty due to the changing computer system and suggesting that I call an agent to get the information on my reservations. The same number. No evidence that anyone had actually read my email or that anything was going to be done about it.

Hence this post. Travelocity customers should be warned that, as of yesterday, the part of their computer system used to tell you what reservations you have does not work and may tell you that reservations you have do not exist. If that happens, you can get information on your reservation by calling their help number, navigating the phone tree, and eventually reaching an agent who can look up your reservation for you.

P.S. a few days later. I received another email, saying that "Your e-mail will be forwarded to our Product Development team for their review and consideration." So it's possible something will be done. Or not.

Me vs Mankiw on Global Warming

A commenter on a old post of mine about global warming points at a response by Greg Mankiw. Both are from 2007. The issues have not changed since then and, while I responded to Mankiw at length by email, I do not think I ever did so publicly.

Mankiw supports a carbon tax. I argued that while a carbon tax might make sense as the answer to the question "what is the best policy for dealing with negative externalities due to global warming," it did not make sense as the answer to the question "what policy should economists support to deal with global warming" since there was no good reason to believe that, if a carbon tax was implemented, it would take the form economists would recommend. Interested readers should probably read both my post and Mankiw's before going on to my response below, which I have copied from my email correspondence with him.

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It seems to me that you are making the error that was the norm in textbooks and the profession fifty years ago, before public choice theory. You are evaluating proposals for government policy on the basis of what they could do if optimally implemented not on what one can expect them to do given the incentives of the people making the decisions—what used to be referred to as the philosopher king model of government. It makes no more sense than evaluating the market alternative on the assumption that all the decision makers in that case will act to maximize social welfare rather than in their own interest. The question is not whether an optimal carbon tax designed and enforced by wise and benevolent economists would produce net benefits—very likely it would. It's whether passing a carbon tax designed and implemented as we can best expect it to be would produce net benefits.

Two further points with regard to your original blog post:

1. I wasn't making a slippery slope argument. If I had been, I would have argued that carbon taxes would initially be a good thing but would set the precedent for other bad things. In fact I argued that, as implemented, they would probably be a bad thing. As I made explicit in my post, it was a public choice argument—completely ignored in your response. I plan to send in my complaints to the Society for the Protection of Straw Men just as soon as I can find their email address.

2. My argument is  consistent with my father's views. For evidence, take a look at the discussion of professional licensing in Capitalism and Freedom. The argument is not that professional licensing, applied by wise and benevolent officials, could do no good. It is that we can expect, on grounds of both theory and evidence, that professional licensing will usually be controlled by the profession and used to restrict entry and raise prices.

If you look again at the quote from him you link to, he isn't saying that one should recommend policies independent of how one thinks they will be implemented—consider the "in light of what can be done." Professional licensing that isn't captured can't be done, or at least not reliably done, on the evidence. He is saying that one shouldn't refrain from making a proposal merely because you think it can't be passed.

In this context, the implication is that one might argue that a specified form of carbon tax would be a good thing and simultaneously that any carbon tax that could be passed would be a bad thing. I don't believe that is your position.

And, again:

Can you see any hint of evidence that the people proposing cap and trade have made any effort to estimate marginal cost of reduction of carbon dioxide, optimal level of emission, or any of the information necessary for a scheme designed to actually produce net benefits?

Isn't that question relevant to how one can expect a carbon tax (or cap and trade) to be implemented, and isn't that relevant to whether one ought to be in favor of it?

Is (insert name of newspaper/blog/TV channel) Biased?

I recently came across a post with the title "Is the New York Times Biased?" My immediate reaction was to ask not what the answer was but what the question meant. There are a lot of stories out there and no newspaper can cover all of them, so how do we judge the selection of what to cover?

One basis for deciding what to cover, common to practically all news sources, is what you think your readers will find interesting, but that was probably not what the author of the post was thinking of. Another is what you see as important and informative. That will, inevitably, depend on your view of the world. If you believe that a lot of policemen are irresponsibly violent, go around smashing down doors, shooting dogs with no good reason and beating unarmed victims to death, you will see an example of such behavior as important—this is a big problem people need to know about—and informative, since it teaches a lesson about the world that you think is true. If you believe that policemen are generally responsible and restrained in their use of force, you may see the same incident as experimental error rather than data, an exception due to a single bad apple—assuming you believe it at all. Probably not worth covering.

Suppose you do cover the incident. You are likely to look for, believe, and report evidence that fits your prior views, be skeptical of evidence that does not. If you are sufficiently honest to report the latter, you will do so only after going to a good deal of trouble to make sure it is true, more trouble than you go to with regard to evidence that supports your beliefs. The result will be a pattern of coverage that tends to support what you already believe.

In order to conclude that the New York Times' selection of stories to cover is biased, I need to compare it with how many stories on each side are out there to be covered and how important and informative they are. My view of that will reflect my own view of the world. In my case, not only does the selection of stories by the New York Times strike me as obviously biased against free markets, so does the selection of stories by the Wall Street Journal. The Journal is more favorable to the market than the Times but not nearly as much more as I am. I conclude that to describe a news source as biased says little more than that its view of the world is substantially different from mine. 

There are two other criteria for judging news sources that are, in my view, both more objective and more useful: honesty and competence. For an example of the first, consider the Huffington Post. Some years back when I was following news stories about how nutty various Tea Party candidates were said to be, one of them dealt with a candidate claimed to be opposed to the separation of church and state. I found a story on him on the Post website. It included a video of the talk the claim was based on from which it was clear that he supported the separation but disagreed with some interpretations of what it implied, and the story was consistent with that. I concluded that while the Post might have a strong left wing bias, it was also honest.

For an example of the other criterion, consider a story I read years ago in the Wall Street Journal dealing with the adoption market. It was described as a situation where the free market did not work, since there was a shortage of babies to be adopted. The article never mentioned that this was a market with price control at a price of zero, it being illegal to pay a mother for permission to adopt her child. It is possible that that occurred to the authors and they decided not to mention it, in which case the article was dishonest. But I think it more likely that, because the authors were not accustomed to thinking like economists, the role of price in equalizing supply to demand simply never occurred to them. In which case the article was incompetent but not dishonest.

To control for bias, get your information from a range of sources. If you want it to be reliable information, try to find sources that are, so far as you can tell, both honest and competent.

Bogus Title, Good Story

The title is "How a Math Genius Hacked OK Cupid to Find True Love." There is no evidence in the story that the protagonist is a math genius, merely a doctoral candidate in math at UCLA. But it does describe, in reasonable detail, how he first data mined OK Cupid, a large dating site, and then used statistical techniques to analyze the data in order to figure out how to construct a profile that would attract women he was likely to find of interest—and do it without lying.

It took more than fifty dates to find one that worked. They are now engaged.

More Chapters for the Third Edition of _Machinery_

I have just webbed two more drafts of chapters for the third edition, along with the appendix, which benefited from suggestions made in comments to an earlier post. More comments are welcome. In particular:

Have I left anything out of the appendix that should be there? For the most part I do not include books I have not read, with a few exceptions.

In the second edition, I included addresses for magazines and organizations. This time I replaced them with URL's. Is there any good reason to have both?

A few items in the appendix are shown crossed out, magazines or organizations that I think, but am not certain, no longer exist. Let me know if I am wrong.

Don't bother to tell me that I am inconsistent about the punctuation for article titles, sometimes using single quotes and sometimes double quotes. The previous edition used single quotes, double quotes seem more natural to me, I changed a few then stopped on the theory that my publisher will tell me their style preferences.

Are there any topics I should cover in the new chapters and don't? They should probably be topics I have written on in the past, here or elsewhere. There are a great many other subjects worth discussing, but this is a book, not a library.

The Solution to Credit Card Data Theft

There have been a number of recent stories about mass thefts of credit card data, most notably one at Target that may have involved more than a hundred million customers. An obvious response for customers is to pay with cash, but that is inconvenient for large purchases and unworkable online.

A better solution, especially for online purchases, would be some form of ecash, some digital equivalent of currency. The only such currently available is Bitcoin, which is not yet widely accepted by merchants, although that may change—Overstock.com recently announced that it would accept bitcoins. It is not an anonymous currency—I have described it, I think correctly, as the least anonymous currency ever invented—although there are mechanisms that have been proposed to change that. But if your worry is not that other people will know what you are buying but that they will get access to your credit or bank account, Bitcoin looks like a workable solution. 

An alternative, already well established, is Paypal. That does not entirely solve the problem, since Paypal itself has your credit information, but using Paypal for your payments means relying on the security precautions of one firm rather than every firm you deal with. 

A  better solution would be an anonymous digital currency along the lines proposed many years ago by David Chaum, ideally one denominated in dollars—the market value of bitcoins fluctuates widely, which some users would find inconvenient. The disadvantage of that mechanism, in contrast to Bitcoin, is that it require an issuer, a bank that users of the money are willing to trust to redeem it. That probably means a bank in a reasonably stable first world country. The governments of such countries are not eager to permit a form of currency that would make money laundering laws unenforceable. 

But perhaps, if enough people get sufficiently worried about having their credit information stolen, there will be enough political pressure to get some country to either issue its own ecash or allow a bank to do so under its jurisdiction. Alternatively, perhaps some government strapped for cash will decide that issuing the world's first anonymous ecash looks like a good solution to the problem of raising revenue without raising taxes.

It does, of course, have to be a government that people elsewhere will trust not to take the money and run.