Pur Autre Vie

I'm not wrong, I'm just an asshole

Saturday, April 29, 2006

Why Do We Need Nonprofits?

We live in a world that could, with a fraction of its resources, provide clothing, food, clean water, and basic medical and educational services to everyone. In this post I want to examine the mix of institutions that can provide these things, and show why nonprofits are an essential piece of the puzzle.

Most goods and services are provided by the market or the government. With some exceptions, these institutions are very good at what they do. Markets are ruthlessly efficient, and governments can mobilize massive resources, coordinate large projects, and provide services to their citizens without discrimination. Still, these institutions have their limits and their failures, and once this is understood it becomes clear why we need nonprofits.

You can get almost anything on the market, subject to one constraint. That constraint is the ability to pay. It's important to understand that even the best market simply isn't meant to provide things to people who can't afford them. The market will solve many things, but it will not solve poverty unless poor people have something to sell.

Healthy adults can generally sell their labor. Dirt poor Americans have done quite well in the past simply by working hard and investing the proceeds wisely. Where there are good labor markets, then, healthy adults usually won't need much help. Anyone who can't (or shouldn't) sell labor, though, can't rely on the market for their needs (unless they have adequate savings). I say shouldn't sell labor, because while some people could make money selling sex, we don't always approve of this choice, particularly for children. Usually, though, children can rely on their families and, indirectly, on the market for their needs.

Labor markets can fail, for our purposes, in two ways. First, they can fail by not existing, perhaps because of political instability, discrimination, or bad or nonexistent laws. Second, they can fail because labor simply doesn't command a high enough price for workers to live dignified lives. Most of the labor markets we consider functional are actually mixed labor and capital markets, which is to say, human capital is part of the bargain. An illiterate, inexperienced worker often can't provide much value, and can't expect the market to provide much in return (the US was historically different because of its high ratio of natural resources to willing laborers). Recall that markets, at their best, allocate resources according to ability to pay. If all you have to sell is manual labor, you might not be able to pay for very much at all.

Governments can theoretically step in where markets fail. Education is a good example: even the poorest children in the US can attend school free of charge. Sadly, good government is elusive. Democracy isn't enough. According to the Wall Street Journal, local (elected) governments across South America are reaping big royalties from natural resource extraction (the commodities market is booming). Many are spending the money on vanity projects like bullfighting rings, despite a need for clean water and other basic infrastructure. Solving the governance problem would do more good for the world than almost any other project I can think of, but I don't see it happening anytime soon.

In the face of government failure and market indifference, nonprofits are the only alternative. Still, we can see from the preceding discussion that nonprofits shouldn't ignore other institutions. In fact, I would go so far as to say that nonprofits should first work to establish functioning markets and governments, and then try to fill in the remaining gaps.

One final note: I've been a bit imprecise in this post. When I say nonprofit spending, I mean to include foreign aid, which can serve many of the same purposes. In fact, nonprofit work and diplomacy can be highly complementary. Ideally we would use our diplomatic resources to promote democracy and free markets, and then step in with nonprofit spending and foreign aid to supplement these efforts and plug any remaining gaps. Things haven't always worked out this way, but at times our approach has worked along these lines.

Poverty: Nonprofits

The first set of institutions I want to examine is the nonprofit sector. I will make a few points about how ours works, but mostly my conclusion is that nonprofits are insufficient for the task at hand.

The relevant parties, it seems to me, are the religious, educational, and explicitly poverty-oriented nonprofits. I won't deal with environmental and health groups separately for now, but they function along the same lines as the poverty-oriented nonprofits.

Starting with religious spending, the basic problem is that it's not clear that it is beneficial on net. Such charity often comes along with a religious message. I suppose that's not objectionable in the abstract, but in reality people die when, for instance, they forego condoms because Catholics tell them that condoms cause HIV. I shouldn't just pick on Catholics: Muslim and Hindu charities have been known to fund schools that teach hate and intolerance. Charity like that we can live without.

Educational nonprofits come in two varieties. One kind is well-funded, mostly secular, and highly effective. This is higher education in the United States. The other kind is poorly funded, often religious in nature, and wholly inadequate to its task. These charities strive to improve primary and secondary education in the US.

Thanks to generous alums and government money, American higher education is the best in the world, and it's increasingly accessible to bright students of all backgrounds. The problem is that by the time students are old enough for college, most of the effects of poverty have taken their toll. It's a meritocracy in the sense that smart kids from stable, supportive families with enough resources to make it through high school are all treated basically alike. For everyone else, the system is horribly unfair.

I don't know the answer here, so I'll just note the disparity and come back to the issue when I consider education in general. My basic point is that primary and secondary education are awful most places in the world, and not nearly as good as they could be in the US.

Finally we have the big boys. Oxfam, UNICEF, the Gates Foundation, etc. These guys do excellent work, for the most part. Occasionally they get political and express anti-market sentiments (more on that later), but these charities are unambiguously good for the world (unless you're trying to maximize the number of souls in heaven or something, in which case by all means keep lying to people about HIV).

The main problem is that they simply can't mobilize the resources to complete their jobs. This may change in the future. Asian economies are growing very quickly, so it's conceivable that in a few decades severe poverty will be relegated to Africa and a few other tough areas. For now, though, we can't even provide everyone with the very basics: clean water, adequate nutrition, protection from easily preventable diseases.

I say we can't provide these things, and yet manifestly we can. Our global economy is easily productive enough to give everyone the basics. This brings me to the second problem with the big global nonprofits: they have to function against a background of inept, corrupt, and downright evil governments. Some, like India, turn down foreign aid while their citizens starve. Others oppress their own people, or fail to provide the security necessary for nonprofits to operate.

All of this makes it dangerous and expensive to get the job done. The already insufficient funds available to charities are stretched even further, and here we are. This post is already too long, so I'll address the precise role of global nonprofits in my next post.

Friday, April 28, 2006

More Fun with Idiots

So, earlier I noted that the calculator over at Make Work Pay (which calculates how long it would take a CEO to earn your salary) is a little less than trustworthy. I tried again, this time entering 11.3 million, which they claim is the average annual CEO compensation. It turns out it takes the average CEO 505.37 days to earn the average annual compensation. So not only do CEOs earn more, they get longer years! The unfairness is palpable.

Also, these guys have been placing ads on liberal blogs, claiming that Comedy Central refuses to run their TV spots ("Too Controversial for the Daily Show?" they ask). That made me sympathetic to them, especially when I saw one of their spots. They're pretty well done! Then it hit me: I saw their damn spot while watching the Daily Show. They kept running the internet ads for a while after that, though. I guess it's effective to claim that you're being shut out by the media, even when it's not true.

I can't really comment on the merit of their position, since I haven't bothered to read about it. Certainly their presentation makes me think that they are a bunch of clowns.

Gas Prices

So Brad DeLong has a post up about Democratic posturing on the gas issue. I basically agree with him, but I think a distinction needs to be made.

Gas prices can be high because of the balance of supply and demand, or they can be high because of taxes. The main difference is that when gas prices are high because of taxes, a lot of money is flowing into government coffers and incentives for production and consumption are lower than they would otherwise be.

I think it's right for Democrats to say that gas prices should be high because of taxes. This reflects the negative externalities associated with driving, emitting pollution, and burning fossil fuels. On the other hand, when prices are high simply because demand has increased, producers respond by extracting oil even when the environmental costs of doing so are very high (see Canada). So I think Democrats shouldn't really have a position on the absolute price of gasoline. Rather, they should have a position on the gap between the cost of producing it and the cost of consuming it. This is to say, Democrats should favor gas taxes, but they shouldn't blindly favor high gas prices.

None of this is to say that their recent political posturing is well-advised. Ideally Democrats would explain that the price you pay at the pump is just one of the costs of gasoline consumption. Then they should say that the focus of policy is cost reduction, not price reduction, and that the federal tax on gas is too low. Democrats have to get elected, though, and I don't think it's fair to label them the party of high gas prices. That only gets it half right.

Thursday, April 27, 2006

The Limits of Computation

So computational power has increased dramatically in the US over the last several decades. We still haven't "made it," though, as demonstrated by the CEO pay calculater over at Make Work Pay. You enter the amount you make, and then the calculator tells you how long it takes the average CEO to make that much. I started out with my actual projected salary, and it was a bit disappointing. I entered the most recent profits-per-partner at the firm I'm going to work at, and it was still disappointing.

Then I entered the profits-per-partner at Kirkland and Ellis, an elite law firm in Chicago. The most recent data I have put it at $1.9 million. To my chagrin, the average CEO apparently makes that amount in 2.79 seconds.

So I guess my response is, either our technology leaves a lot to be desired, or fuck it, I'm going to b-school. If I made $1.9 million in 2.79 seconds, I could work for a few minutes and have more than enough money for the rest of my life. I could work for a year (at 8 hours a day, 300 work days a year) and make $5,883,870,967,742. And that's the average CEO!

Wednesday, April 26, 2006

Cheap Prices on Krugman

So I was doing a little research for my series on poverty, and I searched Fortune magazine's archives for "krugman." These were among the "sponsored" results:

Cheap Prices on Krugman and Millions of Other Products at Calibex. Compare Prices, Brands, Sellers, Tax and Shipping, and More for Bargain Deals.

Compare Bargain Krugman Prices and Read Reviews at NexTag. Find Deals on Millions of Products by Comparing Store Ratings, User Reviews, Price History, and Tax and Shipping.

In general you can have a lot of fun with these search engines. Ebay has offered me low prices on narcotics, for instance. I await Google's inevitable problem-solving application.

Credit Where Due

This Slate piece on Caitlin Flanagan is right on the money. I saw her on the Colbert Report, and her condescension was intolerable. I picture people like her as perfect candidates for Hollywood-style enlightenment, waking up one day and having to see life through someone else's eyes. Of course, all too often people of one book don't grow up, they just switch books. Thus you have resolute Marxists becoming fervent neocons, as if the only real value is the avoidance of complexity. This reminds me of another classic Slate piece on Susan Estrich, remarkable for her ability to change her opinion without changing her confidence that her opinions are always right.

[UPDATE: My criticism of Estrich (which I haven't modified) is overly harsh. Having re-read the Slate piece, all I can say is that academics, particularly in politicized subject areas, seem to have a strong incentive to overstate their case. Estrich is guilty, but less so than many others.]

The Noble Mansion

I've been thinking about poverty and inequality lately. I'll write a series of posts discussing the issue. I might even bring in a guest blogger or two.

We are all social engineers. This thought is both exhilirating and scary, but in a democracy like ours it's a fact of life. Where we part ways is the degree to which different institutions should participate in the engineering process. Liberals traditionally rely more on the government, while conservatives rely heavily on the church, the market, and the family. I don't mean that conservatives are family-friendly, merely that they rely on families to do a lot of the work of society. Universal public education, provided by the government, is something more highly valued by liberals than by conservatives. Very few people are at the extremes: conservatives acknowledge some core government functions, and liberals want to preserve some private orderings (in fact, in some respects the two ideologies trade places when security is the issue).

In deciding on the mix of institutions that we rely on, we have to consider their respective areas of competence. Unfortunately, we face difficult tradeoffs. In all likelihood, families have the most competence at child-rearing. If we leave this entirely up to families, though, we condemn at least half the population (traditionally the female half) to housework and in all likelihood we exacerbate social and economic inequality. More on this topic later.

We also have to decide how to divide the tasks of production and distribution of goods and services (the traditional economic questions). Again, conservatives and liberals differ. Conservatives almost pathologically hate government control, while liberals can be equally paranoid about corporate power. Once again, though, the relevant question is the competence of each of these institutions in different areas.

So my first goal is to identify the characteristics of these institutions and examine the consequences of the balance we strike. After that I'll turn to more specific questions about poverty and economic policy.

Saturday, April 22, 2006

The Cutest Fu&%ing Thing I Ever Saw

So I was watching a Sox game tonight (Sox won, 9-2), and I saw the cutest fucking thing. Jermaine Dye hit a pop-fly that fell near a cameraman. He tossed the ball to a little Sox fan, probably about 7 years old (I'm no good at guessing ages). That kid gave the ball to another kid (I assume his little brother), who was maybe 3. That, for starters, is pretty damn cute. At that age, I would have kept the ball and taunted my brother.

Then the 3-year-old, not quite comprehending the situation, enthusiastically tried to throw the ball back onto the field. I'd like to think his logic was, "They need the ball to keep playing the game." Either way, his parents tried to stop him and the ball didn't get very far. I really hope he ended up with the ball. It'll make a great memento, complete with a cute story.

[UPDATE: fixed typo]

Friday, April 21, 2006

Preposition Joke

My last post reminds me of a classic joke. An Arkansan shows up at Harvard to study. He asks a lady, "Excuse me, where is the library at?"

Shocked, she replies, "Don't you know anything? Never end a sentence with a preposition!"

The Arkansan pauses for a moment and then says, "Okay... where is the library at, bitch?"

Flirting with Disaster

So there was a flirting workshop here at the U of C. The workshop was run by a north side sex shop called Early to Bed. It was called "Flirting for Nerds," and needless to say I attended.

The idea of flirting brings up an interesting question. On the rare weekends when I don't succeed in finding a sexual partner, is it because of how I flirt (procedure) or who I am (substance)? I'll excerpt a few lines from my real-life flirting and let you be the judge.

Her: So what are you studying?
Me: I'm a law student.
Her: Oh that must be interesting, how do you like it?
Me: I hate it. I am here by default, since I'd rather waste my parents' money than bus tables.
Her: Haha!
Me: ....

Her: So, what are your hobbies?
Me: Well, I used to enjoy reading. These days I find that I'd rather watch TV for hours every day.
Her: Oh... what is your favorite book?
Me: Catch-22. Have you read it?
Her: No.
Me: What are you, some kind of idiot?

Her: How are you doing?
Me: I'm okay, but I'd be even better if you agreed to have coffee with me sometime this week.
Her: Ummmmmmm...
Me: Think about your answer, because your tip is riding on it.

Me: Knock knock.
Her: Who's there?
Me: You caught your cold from.
Her: You caught your cold from who?
Me: You caught your cold from whom, bitch.

Me: Hey baby! You want to ride the James Rocket?
Her: That sounds lovely.
Me: Yeah, don't take my word for it, ask your mom!
Her: That joke wasn't very funny, but I'd still like to ride the James Rocket.
Me: Haha! Yeah baby!
Her: No, really.
Me: Really?
Her: Yeah.
Me: Ummm...
Her: Do you want to go to my place?
Me: Sure, but I mean... okay...
Me: I'm really sorry.
Her: No, it happens to everyone. You'll last longer next time.
Me: You think so?
Her: Well, we can at least have some fun finding out. Would you like to watch "Law & Order" in the meantime?
Me: That sounds great.
Her: What channel is it on?
Me: Don't end a sentence in a preposition, bitch.

Monday, April 17, 2006

Time Travel is Here

So for a while early in the month, Brad DeLong's blog got a bit stale, i.e., he didn't post for a while. In fact, it was even worse than it appeared. His latest post during this period was dated April 7, even though (if memory serves) he posted it on April 5 at the latest. Generally economists are very bad at predicting the future. Thus, Brad DeLong appears to have what we like to call a comparative advantage. A pretty damn big one.

The Wall Street Journal, on the other hand, is stuck in the past. Today (April 17th), on its website, one of the top stories is "The Week Ahead: What's ahead for the week of April 10 to April 15." I guess that's one way to make sure your predictions are accurate.

Recycled Post

So a while back I argued that recycling is overrated. The basic point was that disposal space is cheap and recycling is expensive. We should only take measures to protect the environment if A) they really protect the environment and B) they are cost justified.

Recycling sometimes creates toxic by-products, which undermines A), and then my point about prices tended to undercut B).

Well, I recently read that recycled paper is in high demand, with the high price making municipal recycling programs profitable. This is a new development, apparently. China and India demand lots of fiber because they are deforested. Tentatively, then, we can assume that paper recycling is efficient, along with glass and metal. That's a lot of stuff that's worth recycling, so I'm going to endorse recycling as a good policy. It's unclear that the government needs to be involved, but so long as it's efficient I don't see a problem.

[UPDATE: My source is an article from the April 12 WSJ: U.S. Paper Recycling Hits Record
As Fiber Needs Grow, by Jim Carlton. See also this John Tierney article on recycling from 1996. I wrote both posts before reading the article, which anticipated many of my arguments.]

Saturday, April 15, 2006

Demand Better Journalism

So something has been annoying me for a while. News articles will bemoan the shortage of affordable this or that. "There is a huge demand for cheap housing that simply isn't being met," the reports will go. Now, there is some sliver of merit to this concept (see below), but for the most part it's bullshit.

The main reason it's bullshit is that "demand" isn't meant as a synonym of "desire." Sure, we all want the things we buy to be cheaper. That's not news. Demand isn't what we want, though, it's a function of our willingness to pay. At any given price, a certain number of people will be willing to buy a certain amount of the product. Generally, the lower the price, the more will be demanded.

Now, a lot more people want most products than are willing to pay for them. On what grounds do we say that it's a good thing these people don't get the goods? The answer is that it's not worth it for society to produce the extra goods. Say someone is willing to pay $10,000 for a Civic, and it costs $12,000 to build one (just making up these numbers). We could spend $12,000 worth of resources and then turn over a car that is valued at $10,000. The net loss to society is $2,000. That's why we only want to give goods to people when they value them at least as much as the cost of producing them.

And that brings us to the one glimmer of truth in the idea of demand for affordable housing. In some parts of the country, the supply has been artificially restricted for various reasons. In some NYC suburbs, there's a minimum lot size because the residents don't want to live near poor people. As a result, I read in the NY Times, it's very difficult to hire firefighters for these suburbs (they have to be close to their jobs, I guess). Technically demand isn't going unmet, but
that's because prices have been inflated to the point that many working-class people aren't willing or able to pay. Fucking suburbs.


So I'm making a request for advice. Some people call this a bleg (blog + beg). Other people aren't retarded.

So my problem is, I want to listen to NPR on the way to work over the summer. The subway is above ground some of the way, but much of the time I'll be beneath the ground. Steve suggested getting an MP3 player and downloading a podcast of Morning Edition each morning. This idea is excellent, but I'm not sure how to implement it.

Many people have told me to get an iPod. I'm inclined to get something a bit less expensive and annoying, but I might have to capitulate. Any advice?

More importantly, though, how do I get the Morning Edition podcast? I can't find it on the NPR website. Is it available from iTunes? Would I have to pay money for it, or for iTunes access? Can I play iTunes on something other than an iPod (I suspect not)?

I'm well aware that NPR has lots of available podcasts, but Morning Edition doesn't seem to be among them. Leave a comment or e-mail me.

Cindarella Story... Outta Nowhere...

So, I'll be working at Cadwalader this summer. By all appearances it's a great place to work for lots of reasons, but one thing stands out: its name practically invites the nickname "the Caddyshack."

Why is that important? Because "Caddyshack" is the source of innumerable quotations that are, without more, hilarious. Instead of straining to make a joke, just insert a line from "Caddyshack" or its brethren, "Usual Suspects" and "Big Lebowski." Instant amusement.

For instance, the title of my last post is a reference to a line delivered by Judge Smails (played by Ted Knight): "Bushwood? A dump?" The title of this post refers, of course, to one of the top 100 movie quotes of all time, delivered by Bill Murray in "Caddyshack."

Now, it does take a little creativity. If someone says, "I spent all week working on a memo," you could respond, "So let's dance!" (Caddyshack), but it would be much better to answer, "That must be exhausting." (Big Lebowski) Here are some more examples (setup in regular type, response in italics):

I tried to find a case that was on point, but the best I could do was Ohio v. Kovacs. Is that the one about the hooker with the dysentery? (Usual Suspects) (credit: Steve)

Hey, James, what are you going to do after work? Fuck your father in the shower and have a snack. (Usual Suspects)

I'm studying philosophy of science at UCSD. I still jerk off manually. (Big Lebowski)

Bushwick, a Dump?

So I'll be living in Bushwick this summer. It's a neighborhood in Brooklyn that has been described as "up and coming." I live in an "up and coming" neighborhood right now, which apparently means that shootings only happen at night, so I don't think I'll have much trouble adjusting. I also won't be far from the subway.

Anyway, the reason all of this matters is that Bushwick is going to be the place to be on early Sunday afternoons. Why? Brunch.

More specifically, bloody Mary's (the drink, not the sex act) (unless you're into that kind of thing). One problem for summer associates at big New York law firms is that there aren't enough opportunities to drink large quantities of alcohol. I'll whip up some of my famous apple-oatmeal-brown sugar muffins, or maybe the peach-cinnamon ones. Then we'll lounge in the yard drinking bloody Mary's and gossiping.

You're Welcome, MADD

I've come up with the next TV ad for Mothers Against Drunk Driving. The premise is, what do you say to your friend when he's had too much to drink and wants to drive home? Cut to the lineup scene of Usual Suspects, with each character saying, "Hand me the keys, you fucking cocksucker." Fade to black, then a tagline appears: "If you've been drinking, use New York's finest taxi service."