Eric Busboom

After reading Charles Murray’s skepticism regarding a study of the Harlem Children Zone, I did a quick search for research about some of the programs he mentions in the article. These are some of the best known programs that attempted to improve the test scores and social skills of poor an under-preforming students:

• Harlem Children’s Zone
• Milwaukee Project
• Abecedarian Project
• Perry Preschool

The most complete summaries of these programs, including extensive bibliographies, come from the Coalition for Evidence-Based Policy, such as:

• Do Early Childhood Intervention Programs Really Work?
• Social Programs That Work

While the programs do report success in improving social outcomes, they don’t seems to do much with IQ over the long term, and even the social improvements appear to be moving the participants from the very lowest rung to the next highest rung, certainly not into the stable middle class. For instance, the improvements over the control group for the Perry Preschool Project include:

• 28% served prison time
• 57% out-of-wedlock births
• $1,856 median monthly income at age 40 ( 2006 or so )
• 65% graduated from high school

Yes, those are the stats for the improved group. The project reports that the intervention was a worthwhile expense for the reduction of social problems, but it also sets lower expectations for what interventionist compensatory education can reasonably achieve.

Eliot Spitzer has written a provocative article for Slate addressing the idea that high marginal tax rates reduce GDP. From the first two words — the title, Tax Fraud — we know how Spitzer feels about common arguments against higher or more progressive taxes.  He writes:

The result of sky-high marginal rates, this anecdote was supposed to prove, was declining productivity and economic growth. Is this true? Let’s look at a graph of the nominal top marginal tax rate in any given year and GDP growth in that year.

Then Spitzer shows the pretty graph, two squiggly lines that don’t seem to have much relationship to each other. Read the rest of this entry »

While updating my iPhone I found a peculiar application, Stand Up Take Action, which allows people to click a button and get counted to express their support for the United Nations Millennium Development Goals.  The application didn’t have any other purpose, like asking you to make a donation. So I went to their website,  which is entirely oriented around holding events where people literally stand up and get counted, and the count of participants is sent to SUTA headquarters.

Where in this process of raising awareness does a hungry or oppressed person get food or freedom? How does skipping a meal give food to the poor? Do the organizers think that the Third World can be lifted out of poverty with good thoughts? If these events result in nothing more than people spending an hour chanting and feeling good about themselves, they are worse than useless, because the participants have done nothing but express their expectation that someone else solve the problem.

When I am concerned about poverty I write a check to Heifer International, because people can eat cows, but they can’t eat awareness. If you actually care about poverty, skip the awareness building, accept that you can do something about the problem, and donate you money or time. If you do go to an awareness event, bring your checkbook and demand that your friends do the same.

A common argument against concealed carry weapons permits (CCW) is that it would result in more crime, often expressed hyperbolically as precursor to a bloodbath. With 48 states allowing some form of concealed carry, we should expect that there have been enough natural experiments to answer this assertion definitively.

My expectation is that the people who are likely to request a CCW are not likely to commit crimes. Criminals would carry regardless of a CCW permit, so allowing concealed carry in a state should not increase the number of criminals that have firearms.

Florida has issued over 1.6 million CCW permits since 1987 and only 167 have been revoked because the permit holder committed a crime with a firearm. That implies that only 0.01% of CCW permit holders commit firearm-related crimes. Florida revoked  0.3%  for all reasons combined. North Carolina reports 0.2% revocations for any reason.

Since most permit holders are male (85%) , and most crimes are committed by males (91% for weapons crimes), we can compare the revocation rates to male crime rates. There are about 300,000 assaults and robberies per year committed with firearms, and about 150M men, a whole-population rate of  commission of firearm-related crimes of 0.2%.

This suggests that CCW permit holders commit firearm related crime at a rate of about 1/20th of the rate of the general population. You should actually feel safer among CCW holders than the average population.

Robert Reich recently posted an article on Salon about why we should not worry about the US government debt, and why it should be even higher that it is now. Government spending, he says, got us out of the Great Depression, and it can get us out of the current recession. Reich’s dad though that it would take 60 years to pay of Roosevelt’s debt, and it only took 20, so why are we worried now? Here is a graph that illustrates Mr. Reich’s point:

As Reich claims, the debt was higher in the 40’s, as a percentage of GDP, and it was paid off ( to a pre-war level ) in about 20 years.

I’m still worried. We don’t know what the next 20 years will bring. If those years are as prosperous as 1945 to 1965, a larger debt, and associated spending, may be a net benefit to our economy, but there is a deeper problem. Here is a graph from the GAO report A Citizen’s Guide to the 2008 Financial Report of the U.S. Government that shows the sum of the US Government’s expenses, from 1970 to 2080:

That red bar is payments on the Government debt, and the black line is total revene, estimated to contine in the future at the historical 18% of GDP. Notice the expenses grow exponentially, and the revenues doesn’t change much at all. That situation is very bad.

The report says:

These large and growing deficits could increase Government debt levels as a percentage of GDP to unprecedented and unsustainable heights – from 170 percent by 2040 to over 600 percent by 2080 – far exceeding the historical high of 109 percent that occurred immediately following WWII and far exceeding the Government’s ability to fund program expenditures.

The problem isn’t just the payments on the debt, it is the debt plus all of the other mandatory government expenses. And, this report was written before the current health care debate, the resolution of which may increase mandatory expenditures even more. Our government has much higher expenses today than in 1945, and we can’t count on the next 20 years being as prosperous as the post war years.

The GAO offers a very direct instruction:

With respect to entitlement spending, the nation must change course before the deficit and debt reach unprecedented heights. The Government must act to bring social insurance expenses and resources in balance. Delays will increase the magnitude of the reforms needed and will place more of the burden on future generations.

Robert Reich’s dad was wrong about Roosevelt’s debt, and Reich is wrong about about today’s debt; it will be a burden to our grandchildren.

Interested in doing a science project, Max and I went to the alley to collect a 2 liter plastic bottle from the recyclables bin. I had put the bottle in the bin the day before but could not find it that day. I also noticed the beer and wine bottles were missing, but the paper and cardboard were still there.  The common factor in the missing items was the California Redemption Value tax, and the next day the mystery was completely solved, when I saw two people in the alley collecting bottles from the bins.

The California Redemption Value (CRV) like other deposit charges, and the Oregon Bottle Bill that preceded it, were largely intended to decrease roadside trash and increase recycling rates. They are very effective because of the economic principle that people respond to incentives. If there is enough of a benefit to either not throwing a bottle away, or picking it up after it has been discarded, the bottle will not end up in the trash or the roadside. The same thing happens on the beach, where bathers will intentionally leave aluminum cans behind because they know someone will pick them up. Read the rest of this entry »

A common argument against the current state of American health care is that the evil insurance companies make their obscene profits by denying claims. I don’t intend to tackle the question of the moral right of companies to make profits, or to defend the current state of American health care, but I do want to address the moral and economic issues of health care companies denying claims.

One of the important implications of the law of supply and demand is that when the price of something drops, demand increases, and if the price is zero, people will probably demand more than there is supply of the thing. If the thing is plentiful, like air, there isn’t much problem. For for everything else, a price of zero usually means lines, shortages or rationing. Imagine anytime a company like Starbucks or McDonalds gives it’s products away: the offer generates a crowd, and all the free stuff is gone before you get there, so you don’t get any. Read the rest of this entry »

There is always someone who will believe an incredible science or technology story, especially when the technology could save the planet, or is invented by a teen-ager, or comes from the third world. When the story has all three elements, the suckers get in line.

Today, the Daily Mail reports that an Indian teen-ager has created an inexpensive solar cell from human hair. It is an inspiring story about a plucky teen who will one day change the world.  The only way for it to be a better story would be for it to be true. I’d be happy if it just were not jibberish.

As with many hoaxes, there is an element of truth. Melanin,  a component of dark human hair, is a semiconductor and is photo-reactive, and you can use it to create a solar cell. However, these cells, like most solar cells made from organic semiconductors, are not very efficient, about 2.7%. Unless the cell is virtually free, 2.7% is not going to change the world. Read the rest of this entry »

The substrate  of the start up business plan is that the nascent business will reach $50 million revenues per year after 5 years. Venture Capitalists seem to expect that every pitch will have a revenue graph with a hockey-stick shaped revenue line that shows the business at $50M in 5 years. Naturally, this means that constructing a financial model for a startup involves tweaking the spreadsheet to get $50M in 5 years. All of the other predictions of the model are secondary.

When have we asked if this is a reasonable goal? Are any Entrepreneurs bold enough to ask VC how many of their portfolio companies have actually his $50M in 5 years? Read the rest of this entry »

In his Labor Day article in Salon.com,  Michael Lind satirizes free-market conservatives, who he claims believe that Laborers destroy wealth. In building that thesis, he presents a range of logical fallacies that are interesting to analyze.

Mr. Lind doesn’t daly. His opening sentence lays out his theme:

Today is Labor Day, when we celebrate the wealth destroyers – at least if the libertarian right is to be believed.

Read the rest of this entry »