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Now Taking Requests
I haven't done much blog writing, or even much blog reading, because I've been too busy with work for the past week. Hard labor at the hafnium mines will really sap your energy. Anyway, I'm feeling a bit disconnected and want to get back in touch.
Instead of spending a bunch of time writing something, I'd like to try for some more direct interaction. I've never polled my readers about what sorts of things you enjoy reading, and it's about time that I did. What would you like me to write more about? Here are a few possibilities to whet your appetite:
Do any of these areas seem interesting? Let me know — please don't be shy. Feel free to make requests for particular topics, too, not just for general areas. Comments are open, and remember you can comment anonymously too.
Blu-Ray Will Fail
Sony's Blu-Ray video format will fail. This is all you need to know:
Haven't we been through this before? I seem to remember something else that started with 'B' and came from Sony and failed in the market because it wasn't porn-friendly…
Also, there's this:
(link NSFW) Pirates, you say? How did I not know about this film before!? And <gasp> it might actually be good — it won a bunch of adult film awards!
Why Can't Lawmakers Write?
Laws should be clear. Breaking the law can land you in jail, or mean a hefty fine, so people should be able to determine in advance whether something they're thinking of doing is legal or not. Laws can also create obligations, and these too should be clear so that the obligor and the obligee understand when the obligation has been met.
Actual laws fall well short of this commonsense goal. They're too hard to understand!
I don't think this is correct. Mind you, he is an actual practicing debt collection lawyer, and I'm just an unfrozen caveman lawyer on teh internets. But he didn't respond to my comment so I'm getting out my megaphone. :)
Let's have a look at the actual text of 15USC1692g(b):
If you read the paragraph closely you'll notice that it's a single gigantic run-on sentence. You'll also notice that it keeps weaving back and forth between two separate topics: disputing a debt, and obtaining the identity of the creditor. This is a recipe for confusion.
A further problem is that the FDCPA nowhere defines what "verification" means. Given the run-on sentence, I'm not at all surprised that someone might read it and believe that verification is the same as identifying the creditor. After all, this is the only nearby text that sets out any kind of definite requirements. So it's plausible that the lawyer is right. (And then there's the appeal to authority.)
But if he's right, I consider it a serious error caused by poor writing, one that should have been trivially avoided via an editor's pen.
I may not know the law, but I am literate, so let me add some color. I'll use red text to emphasize the "dispute" idea and purple text to emphasize the "creditor identity" idea:
The lawyer's statement that verification "simply means that the debt collector must send a written statement to the debtor with the name and address of the original creditor and the amount of the debt" means, if true (and we're assuming it is), that the debt collector may respond to the consumer's request for an apple by sending an eggplant instead. That doesn't seem right.
Curiously, the nearby text of 15USC1692g(a)(4) and (5) seems to support my position that these are two independent obligations, because (4) discusses only disputes and (5) discusses only the creditor's identity. This makes the sloppy text in 15USC1692g(b) all the more tragic, because a less confusing organization of these ideas was already present.
Why do lawmakers create laws that don't contain definitions of important terms? Why do lawmakers express their intent so poorly that a layman thinks the law means means something significantly different than an expert does?
Is there an organization that rates legislators based on the understandability of the laws they've proposed or endorsed? That's a score I'd be interested to know around election time. After all, a legislator's actual job is tending to the law, not grandstanding on C-Span.
My representative in Congress, David Wu, has apparently uncovered evidence of a sinister alien infiltration in the White House and gave a short speech about before Congress on Jan. 10th:
I would take this more seriously if it wasn't transparently an attempt to grab the coattails of Ted Stevens.
Book Review: The Great Risk Shift (part 2)
Hacker sees the Social Security system as a clear "win" in insulating people from risk. He describes it in glowing language (p41):
The "require" part bothers me tremendously. I want the freedom to choose the the level of risk I undertake. I am hostile to mandatory programs. Their common fault is that they actually harm some people. For some specific examples, see my sixteen reasons why people should be allowed to opt out of Social Security. To force people to participate in a program that they know harms them is absolutely wrong and should not be tolerated. To praise it is horrifying.
Imagine the ridiculousness of a national mandatory weight-loss campaign, with the stated goal of improving everyone's health, but that had no provision for the underweight to opt out. These people would be harmed by the program. It may sound silly to suggest that such a stupid program could be created, but Social Security has exactly this structure, in forcing everyone to save for retirement even if a person rationally expects to die before they could collect benefits. (This is the first of my sixteen reasons.)
Mandatory participation is a flaw, not a feature. For a solemn underscoring of this point, you should learn how Social Security affected the Amish. The story is horrifying to read, and the resulting public outcry actually created the (much too weak) freedom to opt out of Social Security on religious grounds.
I was troubled by a passage in the book (p48-50) describing the phenomenon of moral hazard in health insurance. The economic arguments are stated briefly and reasonably, but followed by this:
This amounts to an admission that "social insurance" is a misleading name. Hacker wants forced charity in the name of insurance. He spills no ink combating the moral hazard arguments, and I can only suppose from this that he accepts them as true but thinks they're unimportant. A pity.
There are more misleading statistics in a passage about unemployment (p73):
Firstly, it is a truism to say that "many of these potential workers would be in the labor force were the opportunities for them better."
Secondly, Hacker's comparison of the official unemployment rate in the early 1980s to the modern official unemployment rate plus the labor force "shortfall" is invalid. Unlike measures are incommensurable. To have a valid basis for comparison you must either include the "shortfall" in both time periods or exclude it in both. (Here's a chart of the unemployment rate from 1970 through 2006.)
I wonder about cherry-picked dates on p122:
Of course, 1983 was a year of major reforms to Social Security. These reforms were supposed to permanently save the system (heh). The reforms included benefit cuts, so I'm curious to know whether the early endpoint included the projected Social Security payments the government knew it wouldn't be able to make. It would be misleading to include the unaffordable projected benefits! Alas, there is no footnote in this section, so we'll just have to wonder.
There are more funny numbers on the same page:
A better measure of what's important is the median among account-holders nearing retirement. The balances of thirty-somethings certainly pull down the numbers if they're included; they haven't reached their peak earning, saving, and compounding years yet! Further, keep in mind that 401(k)s have only existed since 1978. They haven't been available for the whole working lives of people nearing retirement today, so have had limited time to grow.
A few pages later (p124-125) is a revealing example of myopic thinking. Hacker disapproves of people who take lump-sum distributions from their defined-contribution benefit plans without rolling the funds into another tax-advantaged retirement account. "They do not roll over the funds despite the fact that they must pay income taxes on all their benefits, as well as a penalty of 10 percent if they are younger than fifty-five." Hacker notes that in many cases people are using their retirement savings as a buffer against economic insecurity (relocation, caring for a family member) and concludes that this behavior "leaves families more vulnerable to one of the greatest risks of all: retiring without adequate income."
And what of the fates of people in these situations who have Hacker's favored defined-benefit pension plans? He says nothing, so I will. The pension is inflexible and does not buffer them from economic insecurity during their working years. What would people do? Rack up credit card debt? Go bankrupt? The consequences could be horrible, but surely Hacker could console them with the news that at least their sacred retirement income will be intact! Sure, they might object that the well-being of their family in the present day is more important than their retirement lifestyle. But Hacker believes that people would be better off trusting his judgement than their own, and believes it so strongly that he would use the government to compel it against their will.
Another curious item is on p133 in a discussion of Social Security individual accounts:
My head is spinning. "Even if"?!? How about "because"? Holding half your funds in bonds is not a growth strategy. An allocation like that may make sense for someone nearing retirement but not for the several decades leading up to it.
I appreciated the following comment on the failed Clinton health care reform on p148:
When a quasi-socialist (what else could a "top architect" of the Clinton plan be?) who shares the same policy goals as Hacker declares that Medicare is horrible, and Hacker meets it with the equivalent of "but it's popular!", I do not know whether to laugh or to scream. What the hell does popularity have to do with anything? Isn't it remarkable that someone ideologically predisposed to favor Medicare believes that its structure is flawed? This is another instance where I sorely miss a footnote; I would have liked to understand the concerns of the "top architect" — coming from a "Clinton top architect" they're probably politically bulletproof!
As I read the book I made approximately one hundred distinct notes on passages that struck me as biased, misleading, or just plain wrong. I simply do not have the endurance to present them all.
Reminding the Mint of Gresham's Law
On December 14th, the U.S. Mint issued a press release about a new rule to "prohibit, with certain exceptions, the melting or treatment of all one-cent and 5-cent coins." Nearly a week later, the rule itself was published in the December 20th Federal Register. (Both HTML and PDF formats of the relevant pages are available.)
Unlike the press release, the rule cites its legislative authority in 31USC5111(d)(1):
So, the Secretary does have this power. But for what purpose is it being invoked … and will it work? From the rule as published in the Federal Register:
It won't work. It can't work. This isn't merely an opinion; it's a straightforward application of economic law. And I'm going to educate the Mint. They ought to know it already — they went through it once before, in the transition away from silver coinage in the 1960s — but it's a lesson that bears repeating.
The following is a comment I'm submitting to the Mint:
This is a public comment on FR Doc. 06-9777, published Dec. 20, an interim rule titled "Prohibition on the Exportation, Melting, or Treatment of 5-Cent and One-Cent Coins."
I urge the Mint to withdraw this rule or allow it to expire. This rule will not achieve its stated purpose, "to avoid a shortage of these coins in circulation." Moreover, the rule is harmful to individual liberty and to the consumers of base metals.
This rule will be ineffective due to what economists call Gresham's Law, informally stated as "bad money drives good money out of circulation." The insight behind this economic law is that people prefer to hold money of high value and to spend money of low value. Until the recent rise in base metal prices, this law had no impact on circulating coins because all exchanges were at the legal tender value. A dollar was a dollar, and it didn't matter if it were in the form of 4 quarters or 20 nickels.
The rule correctly identifies that the situation has recently changed, and that now the use-value of the metal in the 5-cent and one-cent coins exceed their legal tender exchange-value as money. This creates the tension driving Gresham's Law. The 5-cent and one-cent coins have become "good money," more valuable than the other coins which are now comparatively "bad money."
The Mint understands the incentive to recycle 5-cent and one-cent coins, but underestimates the scope and power of Gresham's Law. The circulation of these coins will decline simply because they are "good money" — the actual recycling of the coins is unnecessary. History bears this out: When the United States abandoned silver coinage in the 1960s, the silver coins were removed from circulation. Even though it is no longer illegal to recycle them for their silver content, they have not all been recycled. In fact, they are readily available in large quantities from silver bullion dealers. These coins were hoarded, not recycled.
Silver recycling is not the reason that silver coins no longer circulate. Silver coins no longer circulate simply because their metal value exceeds their face value. That is all that was required for Gresham's Law to drive them out of circulation. The same will inevitably happen to 5-cent and one-cent coins, as people will be reluctant to spend these coins for less than they're worth. The laws of economics cannot be overridden by legislative or regulatory action any more successfully than the laws of physics could be. The rule prohibiting the exportation, melting, or treatment of these coins is futile. It cannot achieve its stated purpose of keeping these coins in circulation.
The rule is futile, but it is not harmless, and this is why I urge its withdrawal.
The rule is an infringement on individual property rights. A person has the right to use their property in whatever way they see fit, so long as this use does not infringe on another person's rights. A person's money is their property and they have the right to treat it as a raw material (for its metal content) if they judge that to be its best use. The only difference between a chunk of refined metal and a coin is that the latter has gone through your presses; an irrelevant distinction to someone who does not desire to use it as money.
The rule is also economically harmful to the consumers of base metals. To whatever extent the rule prevents metal recycling — and I stress that it could only prevent recycling, not hoarding — the supply of metals is correspondingly reduced. The effect of this supply reduction is base metal prices that are higher than they otherwise would have been. This increases the costs of base metal consumers and ironically strengthens the incentive to hoard the 5-cent and one-cent coins, removing them from circulation!
The rule won't achieve its purpose, is an infringement on individual property rights, and imposes higher costs on base metal consumers. By supporting the prices of base metals, the rule is actually counterproductive, hastening rather than slowing the removal of 5-cent and one-cent coins from circulation.
Please withdraw the rule.
There is still ample time before the deadline for public comments (Jan. 19th), so if you have suggestions on how I could improve this letter, please leave them in the comments or e-mail me.
How Comment Spammers Attack
When I turned comments on a week and a half ago, I left the captcha (that anti-spam code you have to type in) partially disabled. My system would accept comments if the captcha was entered correctly or if it was left completely blank. (Did anybody notice this?)
I've finally gotten some comment spam — all for pharmaceuticals, it turns out — and have learned a bit about how comment spammers operate. It's interesting, so I'm sharing what I learned.
The spammers downloaded my index page and searched for comment links. They processed each comment page in alphabetical order. Their downloads were very focused, never wasting time or bandwidth on images, style sheets, or any pages except the articles that allowed comments. They used a combination of several strategies to thwart spam detection schemes:
They used both HTML and UBB Code for their links — and each pointed to a different URL, perhaps not even in the same domain!
Unfortunately, when I deleted the spam I also accidentally changed the timestamps, so the access delays are no longer visible. (I changed the database so that field wouldn't automatically update anymore when I delete comments in the future…)
I added the
In other news, I've recently started having trouble with spammers spoofing e-mail from my domain. There's apparently some kind of conflict between my host's management tools and the SPF record I'd like to use to prevent spoofing. I am not happy about this.