Mexico to try again to decriminalize drug possession

Mexico's President Felipe Calderon has sent a proposal to Congress to decriminalize possession of small amounts of heroin, methamphetamine, opium, and marijuana for personal use. This is similar to a proposal that actually passed Congress in 2006 which then-president Vicente Fox said he would sign, but then backed down from after pressure from the United States.

The purpose is to free up police and court resources to go after the major drug gangs, which it would certainly do.

Barney Frank and the financial crisis

The New York Times, September 11, 2003:

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'" said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

The Washington Post, November 7, 2003:

Rep. Barney Frank (D-Mass.), the ranking Democrat on the House Financial Services Committee, said the administration's position is driven by concerns about the financial safety and soundness of the companies "to the exclusion of concern about housing." Committee members were ready to support legislation that would give the Treasury Department oversight of Fannie and Freddie, as the administration has sought, Frank said, not power over the companies' housing activities, which are regulated by the Department of Housing and Urban Development.

Now he seems to have forgotten what he said back then, and the fact that he was encouraging the moral hazard created by the GSEs encouraging and buying up bad loans.

UPDATE: A friend points out this post at the Big Picture blog by Barry Ritholtz arguing that the Community Reinvestment Act and GSEs had nothing to do with the housing bubble. While I think Ritholtz makes some excellent points that demonstrate there were other factors, he doesn't really address the GSE moral hazard issue and he makes this statement that seems to me to offer a striking disconnect from reality:

"The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvestment Act ?" All of those cities have very large non-affluent minority populations. I'm most familiar with Phoenix, where the housing bubble was marked by expansion of housing into South Phoenix (where I live), Gilbert, Mesa, Queen Creek, Surprise, and other outlying areas around Phoenix which have very large Hispanic populations. Also see my comment below about mortgage broker telemarketing targeting low-income areas of town with minority majorities.

He wants to place the blame on deregulation, but if you need to find a single cause, I think the Fed keeping interest rates too low is a better root cause. My own experience regarding telemarketing showed that there existed regulations that could have been applied to the sleazy telemarketers that simply weren't being enforced. When you have an enforcement problem, all the regulations in the world won't help, in fact adding more regulations is likely to increase the severity of your enforcement problem.


UPDATE (November 21, 2011): Barry Ritholtz argues persuasively that the Community Reinvestment Act had nothing to do with the housing bubble.  He also downplays the role for the GSEs, though I think they had a contributory role (which is also what the Financial Crisis Inquiry Commission concluded) to play in increasing the size of the bubble--they purchased half of the U.S. mortgage market by 2008, $5.1T in loans, including $90B-$175B/year in subprime and Alt-A between 2002 and 2006.  But the above analysis overlooks other important factors including the repeal of Glass-Steagall, the 2004 SEC decision to reduce capitalization requirements on investment banks, the Commodity Futures Modernization Act of 2000 which allowed credit default swaps with little regulatory oversight, and inaccurate credit ratings from the Nationally Recognized Statistical Rating Organizations.  Wikipedia's entry on "Subprime mortgage crisis" has a good referenced list.

FutureKind CD release show

If Einzige and I were not going to be in Pasadena for the Skeptics Society conference, we would be attending the CD release show for FutureKind's "Surround," Friday, October 3 at the Last Exit Bar and Grill, 1425 W. Southern Ave., Tempe, AZ 85282. There's a $5 cover charge and it's a 21 and over show, and other bands performing are DJ Seduce, Human Mirror, Talk Fiction, and Random Karma.

Here's FutureKind's video for their song "Hideaway," the first song on the new CD:



UPDATE (October 6, 2008): The show apparently went well, and I agree with the New Times reviewer that Thalia's singing is sometimes reminiscent of Björk.

Another military religious freedom case

Dustin Chalker, stationed at Ft. Riley, Kansas, has filed a lawsuit about being forced to attend Christian proselytization events in the military, including a presentation which claimed that Christianity and creationism give life meaning, while evolution and atheism remove hope. The complaint describes this event, which took place at a U.S. military base in England, delivered by Chaplain Christian Biscotti (!) and was approved by Lt. Gen. Rod Bishop (!) who spoke afterward:

Another slide titled "Contrasting Theories of Hope, Ultimate Theories Explaining Our Existence," has two columns, the first titled "Chance," and the second "Design," comparing Charles Darwin, creationism, and religion are also part of a chart comparing the former Soviet Union to the United States, concluding that "Naturalism/Evolution/Atheism" leads to people being "in bondage" and having "no hope," while theism leads to "People of Freedom" and "People of hope/destiny." After several more slides like these, the presentation continues with a slide titled "Christian's Message," and a slide with an image of a man looking upwards with his hands outstretched and the caption "Please open up both of your hands to receive this powerful tool."

This lawsuit, like that of Jeremy Hall, was filed by the Military Religious Freedom Foundation.

Chaplain Biscotti is a real person, currently stationed at the Joint Warfare Centre in Stavanger, Norway.

(Via Dispatches from the Culture Wars.)

UPDATE (October 18, 2008): Jeremy Hall has withdrawn his lawsuit on the grounds that he will soon be out of the military and suspects the case will be dismissed for lack of standing once he's out. Chalker's case continues.

UPDATE (January 7, 2009): Chalker's suit has been updated and expanded to add further examples of "the noxiously unconstitutional pattern and practice of fundamentalist
Christian oppression" in the military, including the Air Force sponsoring "Team Faith" motocross stunt shows, promoting attempts to convert Muslims in Iraq and Afghanistan to Christianity, and the Army's 2008 manual on suicide prevention, which promotes "religiosity" as a necessary component.

ApostAZ podcast #9

ApostAZ podcast #9 is out, and it's something new and different--atheists Brad and Shannon in conversation and debate with evangelical Christian hip-hop artist Vocab Malone and Omri Miles.

Episode 009 Atheism and Evangelism in Phoenix! Go to atheists.meetup.com/157 for group events! What can be euphemistically termed a conversation between two non-believers, an evangelist, and a non-denominational Christian. Guests Vocab Malone and Omri Miles. How long can a civil conversation last? Brad's brain turns to mush (even more than usual)!
Additional info from Susan Jacoby's History of American Secularism (great book, buy it!)

There's an interesting followup exchange between Vocab and Brad at the Phoenix Atheists Meetup Group forum.

The ApostAZ podcast is also now available through iTunes.

I'm looking forward to listening to this one, and may add some commentary here and at the Phoenix Atheists Meetup Group forum when I do.

Google to close Arizona office

Google is closing its office in Tempe, Arizona on November 21. It's also closing offices in Denver and Dallas.

Alan Eustace, SVP of Engineering & Research, writes at Google's blog:

At Google, engineering is everything - no great engineers, no life enhancing products, no happy users. So we've spent a lot of time structuring our engineering operations to make the most of the exceptional talent that's available across America - developing local centers that give engineers the autonomy and opportunity to be truly innovative. These principles have served us well as we've grown, so when the model fails, it's doubly disappointing.

We opened our Phoenix office in 2006 and hoped that it would develop to support many of our internal engineering projects, the systems that make Google, well, Google. But we've found that despite everyone's best efforts, the projects our engineers have been working on in Arizona have been, and remain, highly fragmented. So after a lot of soul searching we have decided to incorporate work on these projects into teams elsewhere at Google. We will therefore be closing our Arizona office on November 21, 2008.

We'd like to thank everyone involved in this project for their energy and enthusiasm: our engineers; the engineering community in Arizona; Arizona State University; the city of Tempe; and the greater Phoenix area. We are now working with the Phoenix Googlers to transition them to other locations, or to identify other opportunities for them at Google.

I've been expecting to see Google start cutting back on expenses in various ways, as it seems to me that their model of business, with huge per-employee expenses, isn't sustainable for the long term. Apparently it's also the case that it's not cost-effective to put separate engineering centers in many locations--they probably need a critical mass of engineers and profitable projects that they didn't get here. This is probably good news for other high-tech companies and startups in Phoenix, as those Googlers who wish to stay in the Valley become available talent.

Comparing Obama's and McCain's economic advisors

McCain's economic advisors:

Doug Holtz-Eakin source
Holtz-Eakin is a formerly respected academic and government economist who has been reduced to making distortionary arguments to paper over the massive deficit black hole McCain's tax cuts would create.

Arthur Laffer source
Laffer is the originator of the Laffer curve, the fringe view that claims government revenue increases when tax rates are lowered. There is zero empirical evidence this is true at current tax rates. McCain has repeatedly said that he believes this foolishness, but Holtz-Eakin has said (also repeatedly) that McCain does not.

Phil Gramm source
Gramm is a lobbyist who was vice president of one of the investment houses most heavily implicated in the mortage industry scandal. As a senator he pushed for the banking deregulation that contributed to the current crisis. See more here.

Kevin Hassett source
Hassett has been widely ridiculed for writing the book Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market in 1999, predicting that the Dow would hit 36,000 within five years, if not sooner.

Donald Luskin source
Luskin has been repeatedly named the Stupidest Man Alive by Brad Delong. See here for an example. I can attest based on my own interaction with him a few years back that in addition to being not the sharpest tack in the box, he is also an extremely unpleasant person.

Nancy Pfotenhauer source
Pfotenhauer is a pure distilled product of Koch Industries, an oil company which funds much of the right wing message machine. See here for details.

Carly Fiorina source
Fiorina was spectacularly fired from her previous job as CEO of HP. According to the Times,

... Republicans say Ms. Fiorina is using the McCain campaign to rebuild her image after her explosive tenure at Hewlett-Packard. They also say it is hard to see why a woman widely criticized for mismanaging one of Silicon Valley’s legendary companies is advising and representing a candidate who acknowledged last year that he did not understand the economy as well as he should.

Regarding Fiorina, Jeffrey Sonnenfeld, the senior associate dean for executive programs at the Yale School of Management, says "What a blind spot this is in the McCain campaign to have elevated her stature and centrality in this way. You couldn’t pick a worse, non-imprisoned C.E.O. to be your standard-bearer.”

Obama's economic advisors:

Jason Furman (director of economy policy) source bio
Austan Goolsbee (senior economic policy advisor), University of Chicago tax policy expert source Wikipedia website
Karen Kornbluh (policy director) source bio Wikipedia
David Cutler, Harvard health policy expert source Wikipedia website
Jeff Liebman, Harvard welfare expert source Wikipedia website
Michael Froman, Citigroup executive source bio
Daniel Tarullo, Georgetown law professor source bio
David Romer, Berkeley macroeconomist source website
Christina Romer, Berkeley economic historian source website
Richard Thaler, University of Chicago behavioral finance expert source Wikipedia

Robert Rubin, former Treasury Secretary source Wikipedia bio
Larry Summers, former Treasury Secretary source Wikipedia bio
Alan Blinder, former Vice-chairman of the Federal Reserve source Wikipedia bio website
Jared Bernstein, Economic Policy Institute labor economist source bio
James Galbraith, University of Texas macroeconomist source Wikipedia website

Paul Volcker, Chairman of the Federal Reserve 1979-1987 source Wikipedia
Laura Tyson, Berkeley international economist, Bill Clinton economic adviser source Wikipedia
Robert Reich, Berkeley public policy professor, former Secretary of Labor source Wikipedia weblog
Peter Henry, Stanford international economist source website
Gene Sperling, former White House economic adviser source Wikipedia

My comment on the Laffer curve--Laffer's basic point is obviously correct, that there are points at which raising taxes further would cause revenues to decline and points where lowering taxes further would cause revenues to increase (most obviously at a 100% tax rate), but to the best of my knowledge he never did any empirical or mathematical work to show what the Laffer curve actually looks like and what factors play into it. If you don't know the shape of the curve or where we currently fall on it, you don't know without testing that raising taxes will reduce revenue or lowering taxes will increase revenue. Factcheck.org looks at the actual effects of some U.S. tax cuts in this regard.

I do think that we can speculate that reducing U.S. corporate taxes (currently the highest in the OECD with the exception of Japan) could increase corporate tax revenue, given Ireland's experience with just that happening. Multinational companies will do their best to book their profits in the countries with the lowest corporate tax rates, thus increasing the tax revenue in those countries. Of course, there are other factors, such as regulatory environment, cost of labor, risk of litigation, etc.

Sam Harris on Sarah Palin and elitism

Sam Harris has a great op-ed piece at Newsweek:

The problem, as far as our political process is concerned, is that half the electorate revels in Palin's lack of intellectual qualifications. When it comes to politics, there is a mad love of mediocrity in this country. "They think they're better than you!" is the refrain that (highly competent and cynical) Republican strategists have set loose among the crowd, and the crowd has grown drunk on it once again. "Sarah Palin is an ordinary person!" Yes, all too ordinary.

We have all now witnessed apparently sentient human beings, once provoked by a reporter's microphone, saying things like, "I'm voting for Sarah because she's a mom. She knows what it's like to be a mom." Such sentiments suggest an uncanny (and, one fears, especially American) detachment from the real problems of today. The next administration must immediately confront issues like nuclear proliferation, ongoing wars in Iraq and Afghanistan (and covert wars elsewhere), global climate change, a convulsing economy, Russian belligerence, the rise of China, emerging epidemics, Islamism on a hundred fronts, a defunct United Nations, the deterioration of American schools, failures of energy, infrastructure and Internet security … the list is long, and Sarah Palin does not seem competent even to rank these items in order of importance, much less address any one of them.

...

What doesn't she know about financial markets, Islam, the history of the Middle East, the cold war, modern weapons systems, medical research, environmental science or emerging technology? Her relative ignorance is guaranteed on these fronts and most others, not because she was put on the spot, or got nervous, or just happened to miss the newspaper on any given morning. Sarah Palin's ignorance is guaranteed because of how she has spent the past 44 years on earth.

...

What is so unnerving about the candidacy of Sarah Palin is the degree to which she represents—and her supporters celebrate—the joyful marriage of confidence and ignorance. Watching her deny to Gibson that she had ever harbored the slightest doubt about her readiness to take command of the world's only superpower, one got the feeling that Palin would gladly assume any responsibility on earth:

"Governor Palin, are you ready at this moment to perform surgery on this child's brain?"

"Of course, Charlie. I have several boys of my own, and I'm an avid hunter."

"But governor, this is neurosurgery, and you have no training as a surgeon of any kind."

"That's just the point, Charlie. The American people want change in how we make medical decisions in this country. And when faced with a challenge, you cannot blink."

Read the rest at Newsweek.

UPDATE: A letter written to The Economist (September 20, 2008, p. 26) from Sue Crane of Johns Creek, Georgia, expresses the anti-elitist pride in ignorance Harris condemns, when she writes:

Sir - Lexington (September 6) lapsed into the same mode of thinking that exists in the powdered-wig political salons and among the media twitterati in his assessment of Sarah Palin, which stopped him from understanding why she strikes a chord with America's heartland. Mrs. Palin connects with voters because she is one of us, not some elite politician entrenched in Washington's ways. John McCain had a problem with energising the Republican base, hence his choice of Mrs. Palin. I, along with many other Republicans, was prepared to sit this contest out had he chosen either Joe Lieberman or Tom Ridge.

This contrasts with a letter on the same page from Michael Golay, professor of nuclear science and engineering at MIT, who writes:

Sir - Alaska is very different from the rest of the United States, and this difference affects the fitness of Mrs Palin to be vice-president. Fundamentally, Alaska is a pre-modern welfare state, where the economy is almost purely extractive (with the exception of defense and tourism). If you don't kill it, dig it or cut it down you don't get it. From that perspective "bridges to nowhere" are simply further extractions, or tokens for transfer payments from the rest of us, as are the annual payments to residents from North Slope oil revenues.

Not surprisingly Alaska is largely an innovation-free zone. It is also the only world that Mrs Palin has known. Along with her chronological and career inexperience this background renders her unprepared to lead the country.

In the same issue of The Economist, the Lexington column, "Richard Milhous McCain," points out that the McCain strategy in selecting Palin "is perfectly designed to create a cycle of accusation and counter-accusation. The 'liberal media' cannot do its job without questioning Mrs Palin's qualifications, which are astonishingly thin; but they cannot question her qualifications without confirming the Republican suspicion that they are looking down on ordinary Americans." It attributes this strategy to Richard Nixon, who "recognised that the Republicans stood to gain from 'positive polarisation': dividing the electorate over values."

Largest corporate bankruptcies in U.S. history

At Trading Markets is a story about the largest corporate bankruptcies in U.S. history, with the recent Chapter 11 filing of Lehman Brothers Holdings Inc. at the top of the list.

At #9 on the list is my employer, Global Crossing Ltd., about which the article says:

Hurt by a sluggish demand and declining prices for bandwidth capacity, and burdened by a heavy debt load, telecom company Global Crossing Ltd. filed for Chapter 11 bankruptcy on January 28, 2002. At the time of filing, Global Crossing had $30 billion in assets and $12 billion in debts.

In December 2003, Singapore Technologies Telemedia acquired a 61.5% equity share in Global Crossing for $250 million, paving way for the troubled telecom company to exit Chapter 11. In addition, Singapore Technologies Telemedia agreed to purchase $200 million in senior secured notes that were meant to be distributed to former creditors. Global Crossing used the $200 million cash to pay off its creditors.

The company emerged from bankruptcy on December 9, 2003. By the time, Global Crossing exited bankruptcy, its debt was reduced to a mere $200 million from $11 billion at the end of 2001, including $1 billion of Asia Global Crossing debt. As of the most-recent quarter ended June 30, 2008, Global Crossing's total debt was $1.45 billion and for the past 52-weeks, the shares have been trading in the range of $14.54 - $24.75.

There's much more that could be said about that. For some of the other companies, the article reports on employee layoffs. Global Crossing went from a peak of nearly 15,000 employees down to just above 3,000, a process that was painful for both those who were laid off and those who remained and had to pick up the slack. The process was much-needed, however, and forced consolidation of acquired assets that had been operating in separate silos with separate management structures, eliminated many middle management positions, saw the departures of almost all senior management, and resulted in improved network performance and customer satisfaction ratings and subsequent growth in number of customers and customer traffic on the network. Global Crossing remained a tier 1 network provider through the bankruptcy, and is now #3 on Renesys' list of the top 25 Internet service providers by customer base.

John Morris exposes his ignorance about horse fossils

Troy Britain gives John Morris of the Institute for Creation Research a thorough debunking regarding his article in the September 2008 issue of the ICR's Acts & Facts, demonstrating that Morris really has no idea what he's talking about.