i feel like...
for the type of wedding i want to have...
the only way i could achieve it...
is to have a destination wedding.
i want...
just a few close friends...
and a few close family members...
by my side when i say i do.
but would it be selfish...
to leave out those who'd want to be there...
and defy all that is my mom's wish...
to make sure that i'm completely surrounded.
hm.
perhaps i should wait...
until i'm engaged...
to even start thinking about this.
blah.
who am i kidding...
i will keep thinking about it...
while i eat my chocolate.
Sunday, September 30, 2007
Finding the Right Precedent
Harold James, the financial historian, looks back for historical parallels to the current financial turmoil. His bottom line:
James, incidentally, once coauthored work on financial crises with some guy named Ben Bernanke.If today�s credit crunch has historical parallels, they are closer to nineteenth-century �normal crises� like 1837, 1847, or 1857. In those panics, financial innovation caused uncertainty and nervousness, but also induced an important and beneficial learning process. The financial institutions that survived the crises went on to play a crucial role in pushing further development, and they had enhanced reputations because they withstood a crisis.
Sometimes monetary and fiscal authorities have an obligation to ignore the wilder historical parallels and look at a broader picture. Sometimes, too, the best response to a crisis is this: don�t just do something; stand there and do nothing.
The Rationality of Harry Markowitz
A cute story about a great financial economist:
There is a story in the book about Harry Markowitz,� Mr. Zweig said the other day. He was referring to Harry M. Markowitz, the renowned economist who shared a Nobel for helping found modern portfolio theory � and proving the importance of diversification. It�s a story that says everything about how most of us act when it comes to investing. Mr. Markowitz was then working at the RAND Corporation and trying to figure out how to allocate his retirement account. He knew what he should do: �I should have computed the historical co-variances of the asset classes and drawn an efficient frontier.� (That�s efficient-market talk for draining as much risk as possible out of his portfolio.)
But, he said, �I visualized my grief if the stock market went way up and I wasn�t in it � or if it went way down and I was completely in it. So I split my contributions 50/50 between stocks and bonds.� As Mr. Zweig notes dryly, Mr. Markowitz had proved �incapable of applying� his breakthrough theory to his own money. Economists in his day believed powerfully in the concept of �economic man�� the theory that people always acted in their own best self-interest. Yet Mr. Markowitz, famous economist though he was, was clearly not an example of economic man.
I don't claim to be any better at asset allocation than Markowitz was. I take some comfort in the fact that I am not too far from the recommendations of David Swensen.
Saturday, September 29, 2007
On the Ethics of Advising
A book review in the NY Times contains this thought-provoking passage on Milton Friedman:
Here is the basic problem. You are an expert working at an American university. A dictator calls you up, says his nation is facing a problem, and wants your help solving it. Many people, not just the dictator, are suffering because of this problem. What do you do? Does it matter whether the problem is an economic problem or a medical problem? If so, why? (If you want my opinion, here it is: I have no idea. Fortunately, I have never gotten any calls from dictators.)
[As an update, let me be more pointed: You are a professor at Harvard Medical School and the world's expert of deadly disease X. The head of a nation experiencing an epidemic of a new disease similar to X calls you for advice. You know how to make a cheap vaccine for this new disease, and you are the only person in the world with this knowledge. Do you offer the secret recipe unconditionally? If not, what conditions have to be met? If the nation head is a tyrannical dictator, would you refuse to help, knowing that letting the epidemic run its course might cause more suffering than the dictator ever did?]
Similar, but somewhat less emotionally charged, ethical issues arise in the context of advising democratically elected leaders. For two years, I worked as an adviser to George Bush. Now I am an occasional, unpaid adviser to Mitt Romney. To my constant surprise, some letter writers and some commenters on this blog presume that I must agree with, or be responsible for, every position they take. That is a deeply silly assumption.
Presidents and candidates have to make decisions on a multitude of issues. It is unreasonable to expect any adviser to agree on every single issue. Indeed, politicians listen to many advisers with different points of view. An adviser cannot resign in protest every time a decision fails to go the way he advised. The system could not function if people acted in such a self-centered way.
Consider: Should an economist who believes abortion is murder refuse to advise Barack Obama on tax reform? If this economist chooses to become an Obama adviser and Obama wins, is she then complicit in all the abortions that result from President Obama's pro-choice policies? If her advice on tax reform is only partially followed, should she resign her position as adviser? If she continues as an Obama adviser, is she then responsible for all policy positions that Obama takes? Is she even responsible for Obama's tax-reform proposal?
My answers are NO, NO, NO, NO, and NO. In my view, the adviser is responsible for the advice she gives, and Obama is responsible for the positions he takes.
Maybe I am being too easy on economic advisers, like Milton Friedman, myself, and my hypothetical Obama adviser. But I worry about what happens when sanctimony leads people to put too high of a moral "tax" on advisers from academia. Most academics avoid politics altogether, preferring the relative comfort and better compensation of life in the ivory tower. The uglier the world of politics becomes, the fewer academics will venture forth with their input, and the poorer everyone will be as a result.
Friedman�s association with Gen. Augusto Pinochet, the Chilean dictator, was indeed the worst stain on his career. His defense that his economic advice to Pinochet was no different from what a doctor might give a government on how to deal with an outbreak of AIDS is not very persuasive.The problem is that the reviewer fails to then explain why it's not persuasive. He seems to assume that the explanation is obvious. But to me, it is not obvious at all.
Here is the basic problem. You are an expert working at an American university. A dictator calls you up, says his nation is facing a problem, and wants your help solving it. Many people, not just the dictator, are suffering because of this problem. What do you do? Does it matter whether the problem is an economic problem or a medical problem? If so, why? (If you want my opinion, here it is: I have no idea. Fortunately, I have never gotten any calls from dictators.)
[As an update, let me be more pointed: You are a professor at Harvard Medical School and the world's expert of deadly disease X. The head of a nation experiencing an epidemic of a new disease similar to X calls you for advice. You know how to make a cheap vaccine for this new disease, and you are the only person in the world with this knowledge. Do you offer the secret recipe unconditionally? If not, what conditions have to be met? If the nation head is a tyrannical dictator, would you refuse to help, knowing that letting the epidemic run its course might cause more suffering than the dictator ever did?]
Similar, but somewhat less emotionally charged, ethical issues arise in the context of advising democratically elected leaders. For two years, I worked as an adviser to George Bush. Now I am an occasional, unpaid adviser to Mitt Romney. To my constant surprise, some letter writers and some commenters on this blog presume that I must agree with, or be responsible for, every position they take. That is a deeply silly assumption.
Presidents and candidates have to make decisions on a multitude of issues. It is unreasonable to expect any adviser to agree on every single issue. Indeed, politicians listen to many advisers with different points of view. An adviser cannot resign in protest every time a decision fails to go the way he advised. The system could not function if people acted in such a self-centered way.
Consider: Should an economist who believes abortion is murder refuse to advise Barack Obama on tax reform? If this economist chooses to become an Obama adviser and Obama wins, is she then complicit in all the abortions that result from President Obama's pro-choice policies? If her advice on tax reform is only partially followed, should she resign her position as adviser? If she continues as an Obama adviser, is she then responsible for all policy positions that Obama takes? Is she even responsible for Obama's tax-reform proposal?
My answers are NO, NO, NO, NO, and NO. In my view, the adviser is responsible for the advice she gives, and Obama is responsible for the positions he takes.
Maybe I am being too easy on economic advisers, like Milton Friedman, myself, and my hypothetical Obama adviser. But I worry about what happens when sanctimony leads people to put too high of a moral "tax" on advisers from academia. Most academics avoid politics altogether, preferring the relative comfort and better compensation of life in the ivory tower. The uglier the world of politics becomes, the fewer academics will venture forth with their input, and the poorer everyone will be as a result.
Good News about Marriage
In today's NY Times, economists Betsey Stevenson and Justin Wolfers correct the record:
This seems to be an example of what Bryan Caplan calls " the pessimistic bias, a tendency to overestimate the severity of economic problems and underestimate the economy�s performance in the recent past, the present, and the future."THE great myth about divorce is that marital breakup is an increasing threat to American families, with each generation finding their marriages less stable than those of their parents....The story of ever-increasing divorce is a powerful narrative. It is also wrong. In fact, the divorce rate has been falling continuously over the past quarter-century, and is now at its lowest level since 1970....
Why were so many analysts led astray by the recent data? Understanding this puzzle requires digging deeper into some rather complex statistics.
The Census Bureau reported that slightly more than half of all marriages occurring between 1975 and 1979 had not made it to their 25th anniversary.... But here�s the rub: The census data come from a survey conducted in mid-2004, and at that time, it had not yet been 25 years since the wedding day of around 1 in 10 of those whose marriages they surveyed....
The narrative of rising divorce is also completely at odds with counts of divorce certificates, which show the divorce rate as having peaked at 22.8 divorces per 1,000 married couples in 1979 and to have fallen by 2005 to 16.7.
Why has the great divorce myth persisted so powerfully? Reporting on our families is a lot like reporting on the economy: statistical tales of woe provide the foundation for reform proposals.
Behavioral Macroeconomics
The Boston Federal Reserve Bank is aiming to become the regional Fed that emphasizes behavioral economics (the oddly named subfield that emphasizes the intersection of economics and psychology). This past week, I attended a conference there on the topic.
Here is Janet Yellen's talk at the conference on "Implications of Behavioral Economics for Monetary Policy." (Thanks to Mark Thoma for the link.)
Here is Janet Yellen's talk at the conference on "Implications of Behavioral Economics for Monetary Policy." (Thanks to Mark Thoma for the link.)
COLETTE EXHIBITION
If you are in Paris this coming month, between Le Louvre and Centre Pompidou, don't forget to visit Colette.
With "From the Street to the Night", the famous Parisian boutique is presenting the first global exhibition about street style and party pictures blog culture. Do you check these photographs everyday online? Enjoy to see them hanging on a wall for once...
With "From the Street to the Night", the famous Parisian boutique is presenting the first global exhibition about street style and party pictures blog culture. Do you check these photographs everyday online? Enjoy to see them hanging on a wall for once...
Friday, September 28, 2007
A New Entitlement?
The big problem with U.S. fiscal policy is that, over the years, politicians of both parties have voted for unfunded entitlements for the elderly, which will (unless scaled back) result in substantially higher taxes on future generations. Click here for my views on the problem.
Today, Hillary Clinton floated a new idea: an entitlement for future generations. Here is the story:
If any of my economist friends involved in the Clinton campaign wants to email me the answer and, more generally, the rationale for this idea, I will gladly post it for my readers.
Today, Hillary Clinton floated a new idea: an entitlement for future generations. Here is the story:
How might this be funded? There are only three groups that could be asked to pay for the new entitlement with higher taxes (or lower benefits): the current elderly, those currently of working age, or the same future generations who are getting the new benefit and are slated to pay for existing unfunded entitlements. Which group do you think Senator Clinton has in mind?Clinton: $5,000 for Every U.S. Baby
Democratic presidential candidate Hillary Rodham Clinton said Friday that every child born in the United States should get a $5,000 "baby bond" from the government to help pay for future costs of college or buying a home.
Clinton, her party's front-runner in the 2008 race, made the suggestion during a forum hosted by the Congressional Black Caucus.
"I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home," she said.
The New York senator did not offer any estimate of the total cost of such a program or how she would pay for it. Approximately 4 million babies are born each year in the United States.
If any of my economist friends involved in the Clinton campaign wants to email me the answer and, more generally, the rationale for this idea, I will gladly post it for my readers.
OCTOBER is gonna be SO COOL!
Here's my freezing line-up for the next weeks:
Paris (Women Ready-to-Wear SS 08 Fashion Week): Sep. 30 - Oct. 8
aka the biggest gathering of profesionnal fashionistas on Earth.
Stockholm ( & 1 day in G�teborg): Oct. 9-14
i.e. let's see what kind of clothes the Swedes are wearing for the Fall 07.
Reykjavik (Iceland Airwaves): Oct. 17-21
aka the "ultra-hip" music festival at the end of the World.
See you around.
Paris (Women Ready-to-Wear SS 08 Fashion Week): Sep. 30 - Oct. 8
aka the biggest gathering of profesionnal fashionistas on Earth.
Stockholm ( & 1 day in G�teborg): Oct. 9-14
i.e. let's see what kind of clothes the Swedes are wearing for the Fall 07.
Reykjavik (Iceland Airwaves): Oct. 17-21
aka the "ultra-hip" music festival at the end of the World.
See you around.
How the Rich Got Rich
While there are 74 Forbes 400 members who inherited their entire fortune, 270 members are entirely self-made.Source.
A Healthcare Quiz
The political issue of the hour is the debate over expanding SCHIP, the State Children's Health Insurance Program. The Washington Post calls it "the biggest domestic policy clash" of the Bush presidency.
As a bit of factual background, here is a quick quiz:
Update: David Brooks on the SCHIP debate.
As a bit of factual background, here is a quick quiz:
With medical costs skyrocketing, the middle class struggling, and heartless Republicans running the government, what has happened to the percentage of children without health insurance over the past seven years?Find the answer here. Scroll down to Figure 1. Thanks to reader John Dewey for the link.
Update: David Brooks on the SCHIP debate.
Thursday, September 27, 2007
unlesssomeonelikeyou redux: more poster invites
wedding poster -- fall
i love how different these are without being ostentatious -- simple, informal, well-designed (don't agree with all the font combinations, but diff'rent strokes will move the world) and (for the portrait ones) intensely personal. yes, most are hipster-y, but if you're contemplating a poster invite you're likely not the blush-and-bash traditional type anyway. here's another:
wedding poster
this one's more on the precious side, yet froufilly retro-modern. the beauty of it is you get to work with a real human being to custom-design something friendly and fun -- unlesssomeonelikeyou's low-key samples have charm to spare. i like the idea of them as 5x7s as well (11x17 posters are a bit grand, though they'd make a big splash) -- *and* check out the new line of baby announcements. a brilliant bit of savvy. more from chicago at unlesssomeonelikeyou.etsy.com
#187: thanks j.lo!
from dmitriy pavlov.
(as for the title of the post, you KNOW she had at least a little something to do with the great big gold comeback.)
how's that fantastically carved gold piece for a wedding band? i'm more and more inclined to mr. t it and wear my bling on the left and a separate wedding band on the right. after all, we do have two ring fingers...
#185: carts carts carts.
push cart parties has all of these. the most appealing to me are the hot dog and pretzel (snacks to feed your dancing!) and ice cream carts (to cool you off while you're dancing!...er, see a theme here?). great favor replacement.
Beer Pushcart
Beverage Pushcart
Candy Cart
Chestnut Pushcart
Chicken Pushcart
Chinese Food Pushcart
Coffee & Tea Pushcart
Cold "Specialty" Pushcart
Cotton Candy Pushcart
Hot Dog Pushcart
Hot "Specialty" Pushcart
Ice Cream Pushcart
Italian Ice Pushcart
Mexican Food Pushcart
Nacho Pushcart
NY Egg Cream Pushcart
Peanut Pushcart
Popcorn Pushcart
Pretzel Pushcart
Soda Pop Pushcart
Sno Cone Pushcart
Frozen Drink Machine
#184: brilliant ideas.
from brides.
the ones that tingle my interest:
Honor loved ones by displaying wedding photos of important couples in your life. For an antique feel, place them in vintage-looking frames.
Unusual vessels, such as conch shells, wooden boxes or silver chalices, bring a fresh twist to tables.
Think beyond paper. Consider having your invitations printed on squares of colored glass, ceramic tile or pretty fabric.
In lieu of a traditional guest book, pick out a pretty planner or date book and ask guests to sign on their birthday page. You'll learn who among your friends and family shares a special day�and have a future record too!
Give a casual rehearsal dinner some spunk by renting a pushcart or two to dispense nachos, peanuts, hot dogs, beer, egg rolls...pushcartparties.com. (DUDE! what about for the reception? get ready for post #186!)
Nothing breaks the air of formality (the bad kind) like a butlered tray of mini pigs-in-a-blanket, teeny cheeseburgers or shot glasses filled with mac and cheese.
If you're not a sweets lovers, think about replacing the traditional wedding cake with several wheels of cheese piled atop one another; you can use a cake knife to make the ceremonial first slice.
the ones that tingle my interest:
Honor loved ones by displaying wedding photos of important couples in your life. For an antique feel, place them in vintage-looking frames.
Unusual vessels, such as conch shells, wooden boxes or silver chalices, bring a fresh twist to tables.
Think beyond paper. Consider having your invitations printed on squares of colored glass, ceramic tile or pretty fabric.
In lieu of a traditional guest book, pick out a pretty planner or date book and ask guests to sign on their birthday page. You'll learn who among your friends and family shares a special day�and have a future record too!
Give a casual rehearsal dinner some spunk by renting a pushcart or two to dispense nachos, peanuts, hot dogs, beer, egg rolls...pushcartparties.com. (DUDE! what about for the reception? get ready for post #186!)
Nothing breaks the air of formality (the bad kind) like a butlered tray of mini pigs-in-a-blanket, teeny cheeseburgers or shot glasses filled with mac and cheese.
If you're not a sweets lovers, think about replacing the traditional wedding cake with several wheels of cheese piled atop one another; you can use a cake knife to make the ceremonial first slice.
Goodbye for Now
Well, I have just been at a loss these last few weeks to share inspiration to you preppy brides-to-be. Maybe my vacation/work trip to NYC will help clear my head a bit?!
I'll be gone until next Friday, but I'll try to post once I am in Manhattan. Cross your fingers that I get a good celebrity sighting this time around.
Oh - one small thing to share with y'all. My friend passed on this list of the best "ivy league" preppy baby names. Don't worry, I'm not pregnant. Since my family and friends read the blog - I repeat - I am NOT PREGNANT. Just thought it was cute and wanted to share.
Have a fabulous weekend everybody!!
I'll be gone until next Friday, but I'll try to post once I am in Manhattan. Cross your fingers that I get a good celebrity sighting this time around.
Oh - one small thing to share with y'all. My friend passed on this list of the best "ivy league" preppy baby names. Don't worry, I'm not pregnant. Since my family and friends read the blog - I repeat - I am NOT PREGNANT. Just thought it was cute and wanted to share.
Have a fabulous weekend everybody!!
Economic Misconceptions
GMU economist Bryan Caplan summarizes The Four Boneheaded Biases of Stupid Voters.
Wednesday, September 26, 2007
How big a problem is lack of health insurance?
Dick Morris has a question for Hillary Clinton:
You base your healthcare proposal on the need to cover 47 million "uninsured Americans." Since about a third of them are illegal immigrants and another third are eligible for Medicaid right now and just don't apply for it, aren't you overstating the problem?
His one-third figures seem a bit high to me, but he is right that 47 million substantially overestimates the magnitude of the problem. A serious estimate would take out both illegal immigrants and those who are eligible for Medicaid but have not applied. Those eligible for Medicaid can always enroll once they need significant medical care.
In addition, I would exclude those who were offered employer-provided health insurance but declined coverage, and those that are healthy and making more than, say, $50,000 a year. These two groups are choosing to roll the dice. According to estimates I have seen, they make up more than a quarter of the uninsured.*
What is the right figure for the number of Americans who do not have access to health insurance? I don't know, but it is much less than 47 million. If anyone knows of a reliable estimate, let me know.
* See the Economic Report of the President, 2004, page 197.
Plosser: Inflation Hawk
It sounds like Philadelphia Fed President Charlie Plosser is not inclined to cut rates much further.
He�s Happier, She�s Less So
David Leonhardt describes the latest in happiness research from economists Alan Krueger, Betsey Stevenson, and Justin Wolfers (all of whom have PhDs from the Harvard economics department).
Tuesday, September 25, 2007
A Jump in Expected Inflation
Jim Hamilton, one of the most astute macroeconomist-bloggers, provides this great graphic. It shows forward inflation compensation during the market trading of Tuesday last week. This measure is based on the spread between nominal bond yields and real (inflation-protected) bond yields. It reflects the market's expectation of future inflation--to be precise, the expectation of the average five-year inflation rate starting five years from now. Click through to the Hamilton link for more details if you are not familiar with this sort of data.The jump upward at 2 pm occurred just after the Fed's announcement of a surprisingly large cut in its target interest rate. The apparent change in expected inflation is not large--about 5 basis points--but it is striking nonetheless. It shows clearly how easier monetary policy raises expected inflation.
Obama on Social Security
Barack Obama suggests a plan to fix Social Security:
Under this plan, the top marginal tax rate (including federal income and payroll taxes, but not state taxes) would rise from 37.9 to 50.3 percent.
Correction: The first comment points out that my calculation was not quite right:
I do not want to cut benefits or raise the retirement age. I believe there are a number of ways we can make Social Security solvent that do not involve placing these added burdens on our seniors. One possible option, for example, is to raise the cap on the amount of income subject to the Social Security tax. If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97,500, we could virtually eliminate the entire Social Security shortfall.This seems to be a shift from his past statements and puts him closer to Senator Clinton.
Under this plan, the top marginal tax rate (including federal income and payroll taxes, but not state taxes) would rise from 37.9 to 50.3 percent.
Correction: The first comment points out that my calculation was not quite right:
To correctly count the employer's 7.65% of payroll taxes as a marginal tax (and it is), we have to also include it as income. Thus, for someone in the 35% tax bracket who earns an extra $1 in income, pays 7.65% in payroll taxes and whose employer pays 7.65% in payroll taxes, the true marginal tax rate is:(.35 + .0765 +.0765)/(1+.0765) = 46.7. I wouldn't want to pay 46.7% or 50.3% as a marginal tax, but we need to be honest on this issue.
The Social Security Challenge
The U.S. Treasury released a report yesterday called Social Security Reform: The Nature of the Problem. Here is the summary:
- Social Security faces a shortfall over the indefinite future of $13.6 trillion in present value terms, an amount equal to 3.5 percent of future taxable payrolls. Looking at the gap over a shorter horizon provides only limited information on the financial status of the program.
- Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues. Other changes to the program might be desirable, but only these changes can restore solvency permanently.
- Delaying changes to Social Security reduces the number of cohorts over which the burden of reform can be spread. Not taking action is thus unfair to future generations. This is a significant cost of delay.
- By itself, faster economic growth will not solve Social Security�s financial imbalance�realistically, there is no way to �grow out of the problem.�
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