Bad math at Fox News

The other day I was working out and flipping channels, and I saw Fox News folks commenting about a recent poll that showed support for the public option in the health care debate. What struck me was that they were latching on to the fact that more of the respondents to the poll identified themselves as Democrats than as Republicans, and they claimed that this made the poll flawed. In fact, they specifically said that the poll should have sampled an equal number of Democrats and Republicans.

Nice sentiment, but bad math. The point of a poll is to figure out the popularity of an issue among the general population (or a specific subset of that population such as voting adults, or seniors, or such if that is the specific goal of the poll). If you believe that the poll should equally sample Democrats and Republicans, that is basically assuming that the percentages of Democrats and Republicans are equal, which they are not. Rather, the ratio in the poll of Democrats and Republicans, if done correctly, should approximately match the ratio in the target population, and this almost certainly is not 1:1, as the Fox commentators seemed to think.

I do not know whether the ratio reported in the poll does match the broader population; if it was off by a meaningful amount, then that would have been a sign of a potential flaw in the poll. But alas, Fox did not report this information, so I find myself strangely uninformed by their broadcast.

Obama wins the Nobel Peace Prize

This was a dumb decision by the Nobel committee. Really bad. It will only confirm the worst cynical accusations of political bias by the committee.

Don't get me wrong, I have nothing against Obama, and there are many things I like about him. But the fact is that he has not yet had any meaningful "peace" accomplishments. He's changed the tone of the debate, he's had great rhetoric, that's all well and good and in the right direction, but that's only a prelude to accomplishment, not an accomplishment itself.

I don't know if the committee was trying to reward those gestures - in which case it is premature and can be legitimately accused of fawning over the young presidency. Or perhaps it is trying to influence decisions such as how to proceed in Afghanistan, in which case it is truly political.

But without any concrete accomplishments to cite - just "hope" and "tone" - this debases the value of the peace prize as a neutral reward for making the world a better place. I really hate to say this, but this decision demonstrates the peace prize committee (physics/chemistry/medicine, so far, still appear untainted) to be far more politically oriented than they are supposed to be.

The smart thing here would be for Obama to turn down the prize, pointing out that he has not had any success yet that would warrant it. That would gently, gracefully (and diplomatically) chide the committee and I think Obama would actually earn a lot of credit for doing so. I'm not optimistic he will do so, though.

Health Care Debate

I've resisted weighing in on the health care debate because it's a super complicated issue about which I don't know a lot. But I've been listening and learning, and I have reached some conclusions, more about the debate itself than about any specific policy within it.

The first issue, I think, is how we characterize the problem. I don't generally quote communists or Chinese leaders, but Deng Xiaoping is widely credited with the quote "I don't care if it's a white cat or a black cat. It's a good cat so long as it catches mice." While the quote probably predates him, the point is good: we should not be caught up in ideological purity, we should worry about whether a given proposal "catches mice." Labeling the various proposals "socialist" is not helpful. Whether or not the proposals meet the bar of being "socialist," the label is an emotionally charged one and it puts the recipient on the defensive at a personal level, which eliminates any chance of a productive discussion on the issues.

Even the implied personal insult of "socialist", we forget that the reason that we typically do not like "socialist" things in this country is not because they are "socialist" per se, but rather because most socialist solutions to problems are far worse at "catching mice" than free-market/private enterprise-based alternatives, and usually with other negative consequences (such as government control of decisions that we view as our own.)

These are good reasons to be exceptionally skeptical of "socialist" programs. We should, however, remember two things. First, we have had a number of generally accepted "socialist" programs for decades already - social security and medicare come to mind as two prominent examples - and they haven't destroyed our country (their biggest problem, I would assert, is that they are huge and growing budget items). The second thing to remember is that these two "socialist" programs are also hugely popular, and that politicians view them as 3rd rails. Funny thing: as a country we hate socialism but love socialist programs.

But there's a third reason we should take the word "socialist" out of the debate. As I said above, when comparing socialist solutions to market-based solutions, market-based almost always perform markedly better, which is why "socialist" has become a shorthand for "grossly inferior to market based solutions." But alas, in healthcare the "free market" is quite distorted in many significant and fundamental ways, so it is not at all obvious that "socialist" would be worse the way it would be in other similar situations.

Anyhow, my point above is NOT to defend socialist solutions to our healthcare problems (heck, if we can find a way to fix the market, that strikes me as vastly preferable.) Rather, it is simply to argue that the name calling is not helpful, and far better would be to judge whether one model "catches mice" better than another model.

Alas, this leads to the next question: what does it mean to "catch mice?" I think a huge part of the gap between our leaders is that there is no real agreement on the problems to solve, on what "success" looks like. Broadly speaking (and at the risk of stating the obvious), many Republicans believe that the system is basically sound, but needs incremental improvements such as malpractice reform, better use of information technology, and such. And obviously, they want as little governmental role as possible. Many Democrats believe that the system is fundamentally broken and needs more structural changes, including a stronger role for government.

Since there isn't agreement on the problem, we're unlikely to find agreement on solutions.

My personal view, as is often the case, is somewhere in between - we need to fix what's broken, but I don't see any reason to upend the pieces of the system that do work. I think there are areas, such as uniform insurance regulations or requirements for everyone to have some sort of insurance, or portability, can only be done by the federal government. But I also do not welcome a huge new government bureaucracy managing health care, even if such a thing already exists with Medicare.

Many on the right have spent all their time trashing the various Democratic plans, which is a shame because frankly I'd like to better understand their own definition of the problem and their proposed solution. I suppose such is the lot of being in the minority.

But there are quite a few for whom it seems the best solution is "do nothing." I cannot support that position. We do have very good healthcare in this country, but it is not demonstrably better than in other countries, and yet we pay more per capita than other nations. This strongly suggests that something is wrong, and it shouldn't surprise anybody. Healthcare, after all, is a highly distorted market:

• Consumers (patients) do not weigh cost/benefits (as they would in any functioning market), and have no incentive to do so. (This is not necessarily a bad thing, after all - we want people to get the care they need.) If they have insurance, then that will pay for everything after a duductible or co-pay. And with or without insurance, this is people's health so they will make decisions not on the economic inputs but on whether they can get well.
  
• Doctors have few incentives to contain costs. First of all, most doctors are fee for service, so they get paid for doing more, not less procedures. But more to the point, our litigious environment strongly encourages the doctor to do everything possible to ensure that nothing gets missed.
• People without insurance make disproportionate use of emergency rooms, which is one of the most expensive ways to provide health care. People don't get denied care here, even if uninsured, so this cost gets absorbed into the system and ultimately gets paid for by insurance premiums of covered people.
  

(NPR's Planet Money podcast, by the way, has done some great stories recently specifically explaining the economics and incentive structure in our current healthcare system.)

As a result, nobody should be surprised that insurance rates have doubled in just a few years or that insurance companies deny coverage to customers that could cost them money. In fact, I believe that we should be seeking universal coverage not because it's a wonderful lofty "human right" goal as the left often portrays it (that's not a sufficient reason, laudable though it may be), but rather because (a) we're paying it anyway by covering the uninsured in emergency rooms, and (b) we're paying higher rates than we would need to if everyone - including healthy people who don't use a lot of services - is paying into the system. That's the purpose of insurance, after all, is to spread the risk around. (I've blogged about this previously.)

So we have a pseudo-free-market system. Once can try to remove these distortions and let the markets do their gloriously efficient thing. Or we can say that it's fundamentally not a market system and try government. My instincts are to try the former and only go to the latter as a last resort, but I reach the limits of my competency in this space when I try to suggest my own solutions, so I can only use these guidelines to judge proposals made by others.

I have come to a few conclusions, though:

• The status-quo is going to become ever more expensive. So while I cringe when I hear the huge price tags associated with the various proposals in congress, I remind myself that the right metric is NOT what the cost of the program is. Rather, the metric is how that cost compares with the cost to the economy of doing nothing.
• The "Rationing" scare is a red-herring. The fact is that we have rationing today, based on economic situation (which is acceptable in a functioning market, which is not what we have) and by insurance company bureaucrats. People are concerned about government bureaucrats making health care decisions based on cost, but does it really make any difference if that bureaucrat is paid by the government or by an insurance company? Black cat/white cat. In any case, unless one supports the idea that everybody should have unlimited access to unlimited healthcare regardless of cost (which I presume nobody actually supports), then one necessarily accepts "rationing" of some sort or another. So the question is not whether there is rationing, it's a question of finding the best mechanisms for doing that rationing.
  
• The fundamental issue is that treatment is and always will be more expensive than healthy maintenance. The best thing that we can do to lower the cost and improve the quality of health care in this country is to provide incentives for healthy living and disincentives for unhealthy living. Obviously someone falling and breaking an arm, or suffering from a genetic disease are not the results of lifestyle choices and thus it is not fair to penalize people for this. But when lifestyle choices - smoking and obesity are two obvious examples - put a burden on the system that do not come with corresponding economic consequences, there is yet another market distortion to correct. And correcting that can lead to vastly more efficient (by which I mean "high quality at low cost") health care.
  

Joe Wilson Racist?

So now even Jimmy Carter is spouting off that Joe Wilson's "You Lie!" outburst was racially motivated. C'mon, people, this is ridiculous speculation. There's no way to prove that it wasn't racially motivated, and there's only one way to prove that it was (namely Mr. Wilson coming out and saying it was racially motivated, which I'm not expecting him to do), so it's pure hypothetical speculation of the form "it could be true and it can't be proven false, so it must be true." Never mind that there is plenty of evidence to suggest that the true motivation for the outburst was (gasp!) political.

This is frankly a waste of everyone's time to debate such issues.

Racism is a real problem and it exists in many places, sometimes openly, sometimes subtly. But it is counterproductive to the goal of eliminating racism when we make it up where it doesn't exist. Let's get angry about real instances of racism. And it is especially counterproductive to useful debate when people who disagree (even rudely, as Wilson did) politically with a black president are labeled a racist or "uncomfortable with a black president."

And another good post on global warming

With all the "heat" (pardon the pun) around global warming, local meteorologist Cliff Mass has a good comment about the recent heatwave in the Pacific Northwest and what it means in the bigger picture of "climate change."

I don't know if I could have said it better myself.

A great post on TechDirt about how media companies are taking entirely the wrong approach to their customers. I've blogged before about how various industries (airlines and the recording industries in particular) seem to hate their customers, and this Techddirt post does a great job of making my point for me, both from the business model perspective and from the legal perspective.

Quit calling it a "tax"

The Waxman-Markey bill, which would establish a cap-and-trade system for carbon emissions, is making its way through congress. While I do favor the establishment of a cap-and-trade system, my purpose in this post is not to debate the merits of such a system in general or of Waxman-Markey in particular, but rather to focus on one part of the debate over the bill which I think is disingenuous: calling it a tax.

Cap-and-trade is fundamentally different from a tax in just about every sense of the word, especially so if the carbon emission credits are initially given away (and in Waxman-Markey as it currently stands, 85% are given away).

So why is this different from a tax? I see at least 4 reasons:

• Other than the initial auctioned permits, the government is not receiving revenue from the cost of carbon permits. Taxes are levies where the money goes to the government. In a cap and trade system, most of the money is going into the secondary markets. And the initial auction permits are no more a tax any more than the government selling radio spectrum could be called a "radio tax." If the government has a valuable resource owned by the people (such as radio spectrum or the right to pollute), it is quite reasonable to get compensation for letting individual people or companies use that shared resource; this is a permit, not a tax. Any amount that individuals pay on the energy bills is not going to the government, which makes it difficult to call it a tax.
  
• Tax rates are set by governments, not by markets. In a cap and trade system, markets set the price for carbon emissions. If the price goes up, the government does not make any more money. If the price goes down, the government does not lose any more money (again, excluding any initial sales of auctions).
• Taxes cannot go to zero by the behavior of the people being taxed. But under cap and trade, if the economy produces less total carbon than the cap allows, then the price of carbon can go to $0. This would actually be a good thing (though I don't expect it will actually happen).
• You're not allowed to offset your taxes, but you can in cap and trade. If I go into a high tax bracket, I can't average my salary with a homeless person's salary to get a lower tax rate. If I buy a house, I have to pay taxes on the land even if I give land away somewhere else. True carbon taxes have also been proposed, where the emitter would pay a price (probably set by the government) for each ton of emissions, regardless of how many trees they plant or how much they reduce carbon elsewhere. But with cap and trade, if I raise my carbon here and lower it there, I have no need for more permits and thus pay no more.

I'm not trying to argue that cap-and-trade systems have no cost (they certainly do), or that this particular bill is either a good implementation of cap-and-trade or effective at fighting climate change (I actually don't know enough to answer that, although my inclination is "yes" if only because it establishes a price for carbon, which currently has a rather arbitrary - and almost certainly incorrect - price of $0.) I'm sure there are lots of valid arguments against this bill, or against the timing (although I'm getting somewhat tired of the weak arguments that we shouldn't do anything at all, especially the arguments that climate change is a "hoax" or has no manmade cause).

Rather, I just want to make sure that we're calling this for what it is: it is an attempt to put a price on carbon, which is currently unaccounted for in our economic activity. This is a fundamentally different thing than a "tax."

The US position on the Iran elections

There's been a bunch of consternation over the past week over whether or not Obama has taken a tough enough stand on Iran's elections. He resisted for a while and finally gave in to the pressure, condemning the violence and repression of the demonstrations, while not directly saying that the election was a fraud. This I think was an appropriately tough stance.

Last week, Congress voted overwhelmingly to condemn Iran. I think this was a mistake.

Shouldn't we be supporting democracy and human rights around the world? Of course we can. The problem with the congressional vote and with a stronger statement from Obama is simply that it is counterproductive.

Look, everyone knows that the Iranian election was stolen. Saying so only gives the regime an excuse to say that the opposition is a puppet of the Americans, and as such actually hurts the cause of democracy. (Never mind that Mousavi isn't exactly our dream candidate). Pointing out that the election was a sham won't get them to change it and simply gives them an excuse for a crackdown. We should just be quiet on this point.

Focusing on the repression of demonstrators (rather than the election itself) makes much more sense, for the simple reason that it is not a direct commentary on a political process, and that beating up civilians is a much less tenable position than claiming that a rigged election is legitimate.

Dumb application of copyright law

Once again we have various content organizations misapplying copyright law. First, the usual caveat that I am not a lawyer, I'm approaching this from a layman's point of view regarding what the purpose of the law is, and what constitutes reasonable application thereof. Now we have ASCAP claiming that ringtones should be subject to a royalty each time they are played, claiming that it amounts to a "public performance."

An analysis based on the law is here, which reaches the conclusion that this is an untenable position to take, but I'll provide my own reductionist reasoning to prove that ASCAP is being ridiculous.

In fact, I have created my own ringtones out of music that I have legally purchased. The copyright holders for that music would probably believe that I need a separate license to use the music as a ringtone, but I believe that this is an unsupportable position.

I'll do this step by step. Please stop me (especially if there are any lawyers reading this!) at the point that I cross a legal or ethical line.

1. I purchase a song from Amazon. Technically, I have purchased a license to play a song and the MP3 file representing that song, but I do not have rights to "public performance," I do not have rights to resell it or sublicense it, etc. Since Amazon has not been sued for the MP3 business, I will assume that this is entirely kosher.
   
2. I put the music on my iPhone. It's an MP3 player, it seems hare to argue that putting MP3 files on an MP3 player is problematic.
3. I put my iPhone into a docking station with speakers to listen to it. This is where ASCAP is making the dubious claim that a "public performance" is taking place because others could walk by and hear the music. But that claim is ridiculous because people have been able to listen to music on boom boxes in public for decades and nobody has ever claimed that this crosses some "public performance" line unless the music is clearly there with a purpose of entertaining other people. I.e., if I own a bar, then I may need to pay royalties for playing music for my customers. But a private party is OK because it's private, and if I go to the park and listen to the music while I lie in the sun but other people passing by can hear it that's also OK because I'm not doing it for their benefit - I'm still enjoying music that I have every right to listen to.
4. Now I decide I like this song so much I'm going to play it over and over again. No violation here - that's something I'm allowed to do. I could do it with records, with tapes, with CDs, an MP3 is just a different medium.
5. In fact, it's actually just the first 30 seconds of the song that I really like, so every time the song gets 30 seconds in, I rewind it and start over. Again, something I could do with all previous media, and nobody ever claimed that I am somehow legally or ethically required to listen to the full song.
   
6. I get so tired of selecting the song, playing it for 30 seconds, and rewinding it to play it again that I program my iPhone to play that song whenever I press a button, wait 30 seconds, and then stop it. I haven't changed anything here but the means of activation, which clearly is not covered by copyright law. I.e., copyright law covers the rights to the music, not the user interface for the player of that music.
   
7. I decide that a physical button is too much work and instead decide to hook up the button to an electronic signal that is triggered whenever somebody calls me. Again, I have simply changed the activation method.

Presto, in seven perfectly acceptable steps I have a ringtone. Of course, the copyright holders and/or Apple would far prefer that I purchase a ringtone from them, and that's fine. (In fact, on my iPhone, I have to go through a few contortions to do the above process - they've deliberately made it obscure how to do this precisely to support purchase of ringtones rather than do-it-your-self.) But they cross the line when they demand that I do so or claim that somehow I am unethical or breaking a law when I do so. As long as I have purchased the MP3 and did not explicitly agree to additional contract terms (i.e., beyond simple copyright), I am entirely within my rights to do so (and even then, if I violate the contract then I have not broken copyright law but rather have broken a contract - a civil matter). And if the phone rings where other people can hear it, oh well. It's simply not a public performance anymore than playing a legally purchased CD on my boom box where others can hear it is.

This seems to be a specific application of a more troubling broader trend by content holders. The purpose of copyright is to protect content owners from the stealing of their intellectual property; this is a perfectly reasonable goal. When you buy an album or a movie you are really not buying the content per-se, but rather buying a license to consume it. (This is why you cannot legally make copies and redistribute it; that is beyond your licensed right.) But over the past ten years or so, we are seeing more and more attempts to control the exercise of that right, not just the granting thereof. The DMCA, for example, makes it illegal to copy a DVD to your computer's hard drive (because doing so requires bypassing the anti-piracy encryption on the DVD), even though the specific medium (DVD or hard drive) is immaterial to one's right to watch a movie. The ASCAP claims are another example of not only controlling whether you can consume their content (which is reasonable) but to also control the where/when/how of that consumption, which is a disturbing trend and which should not be enshrined in law.

More homegrown terrorism

The shooting at the Holocaust museum in Washington DC earlier this week reminds us that the threat of terrorism is not confined to foreigners or to followers of any particular religion. And yes, it is terrorism: the shooter targeted innocent, non-combatant civilians in order to make a broader political point. If that isn't terrorism than I don't know what is.

This is why we must go beyond basic profiling or bureaucratic mechanical charades that value appearance over actual provision of security. Terrorists can be hard to identify (although it seems that in this case, von Brunn, the accused shooter, had a long and public history of indications that he could do something like this), and neither removal of shoes at airports or the closing off of public areas do anything meaningful to help identify them. It takes intelligence and behavioral observations - tasks which are less easy to farm out to $10/hr unionized rent-a-mall cops, but which ultimately yield much greater bang for the buck in terms of actual security.