21st Century Insurance - False Advertising?

I saw a commercial for a company called 21st Century Insurance that got my attention, and wanted to write a quick post about it.

In the commercial, a guy in a hard-hat tries to parallel-park a car and ends up causing damage to both of the surrounding vehicles.  The voiceover then says that every insurance company will cover this the same, so the only thing that’s important is who has the best price.  This, to me, borders on false advertising, because every company doesn’t cover accidents the same.

Yes, price is important when purchasing an auto insurance policy, but there are difference is quality and coverages from company to company.  Some companies are very quick to send a claims adjuster to assess the damage and write you a check, while others can take forever just to talk to you.  Some companies will only pay to replace your stuff with ‘after-market parts,’ and some will not pay to cover anything that’s been modified.  For example, if you’ve had a new paint job on your car and a bumper is damaged, some companies will not pay to replace that damaged bumper. 

So, for a company to say that basically, every company’s the same so you might as well go with the best price you can find, is a false statement.  It’s like their saying in the commercial, ‘we suck, but our prices are good, so use us.’  On top of that, they don’t even have very good prices.

Anyway, it just stood out to me as an interesting and flawed marketing plan that could possibly trick people into going with a sub-standard company.  I would recommend that you do your research, quote your insurance around, and get the best value for the money and coverages.  Do your homework, and don’t be sucked in by the “name your own price”, “every company’s the same” kind of advertising.  Talk to your friends, family, people who are in the business, and see what they say about a company, coverages, what you need and don’t need, etc…

One-night stands and consumption?

So it looks like there are even more reasons explaining why I've avoided that game. From Bakadesuyo (the highlights are his):

Throwing money around makes men more attractive to women who are interested in flings:

Conspicuous consumption is a form of economic behavior in which self-presentational concerns override desires to obtain goods at bargain prices. Showy spending may be a social signal directed at potential mates. We investigated such signals by examining (a) which individuals send them, (b) which contexts trigger them, and (c) how observers interpret them. Three experiments demonstrated that conspicuous consumption is driven by men who are following a lower investment (vs. higher investment) mating strategy and is triggered specifically by short-term (vs. long-term) mating motives. A fourth experiment showed that observers interpret such signals accurately, with women perceiving men who conspicuously consume as being interested in short-term mating. Furthermore, conspicuous purchasing enhanced men's desirability as a short-term (but not as a long-term) mate. Overall, these findings suggest that flaunting status-linked goods to potential mates is not simply about displaying economic resources. Instead, conspicuous consumption appears to be part of a more precise signaling system focused on short-term mating. These findings contribute to an emerging literature on human life-history strategies.

The Green Hornet: The most underrated movie of the year?

Why didn't more people like The Green Hornet?  When it came out earlier in the year, it was panned by critics and moviegoers, and flopped at the box office.  I don't understand why people don't appreciate this movie.  I have no knowledge of the source material, but I imagine that fans of the comic books weren't too happy with Seth Rogan's take (as well as casting him as the lead).  But as for everyone else, why didn't you like this movie? 

I just watched it yesterday, and I can't find anything not to like.  Seth Rogan and Jay Chou are great together as The Green Hornet/Britt Reid and Kato.  They have perfect chemistry and play off each other well.  The action scenes are great, the overall cast is solid, and the movie is hilarious.  Michel Gondry does a great job directing, especially since this genre is new territory to him.  The villain, played by Inglorious Bastard's Christoph Waltz, is probably the weakest part of the movie, but still does a good job. 

Maybe the problem is that everyone went in expecting a serious action movie and instead got a comedy that also had some action.  The movie is, essentially, a comedy, and a great one at that.  Everything works, particularly Reid treating Kato like garbage even though he is clearly the more important side of their partnership.  Kato builds the cars, weapons, develops their strategies, and is the better fighter.  But still Reid treats him like his butler. 

It could be that people are just sick of Seth Rogan.  After Knocked Up made him a star, he was in a string of hits that included Superbad and The Pineapple Express, which he also co-wrote with writing partner Evan Goldberg (they also collaborated on writing this movie).  People might have grown tired of him because he's in so many movies and plays a similar character in most of them.  But he's so good at playing the likable jerk, and he's never been better then displayed in this movie.

With The Green Hornet, Seth Rogan and Evan Goldberg solitify themselves as legitimate action/comedy writers, and prove that Superbad and The Pineapple Express weren't just flukes.  These guys are great writers, and Rogan is one of the best comedic actors of this generation.  If you haven't seen The Green Hornet, I strongly recommend you check it out.  Just make sure you go in expecting a comedy.

Is our healthcare system worse than Cuba's?

Watching the debate on Thursday, I was surprised how the candidates personal stories often got in the way of the facts. Take Herman Cain, for example. He told his story of overcoming cancer and flat out said that he would be dead if he had been sick under "Obamacare." The audience loved it. The implication, of course, is that government's involvement is healthcare slows things down and is an overall detriment to one's health. It's a convenient theory (considering his party), but it doesn't stand up to the facts.

I was told by a 9th grade science teacher once to keep it simple, stupid (KISS). We'll take his advice in evaluating Herman's claim. I can't think of a better way to evaluate this than looking at life expectancy in the US versus countries with more government-run health care (see the figure above). The numbers on the left are the country ranking and the numbers on the right are average life expectancy (in years) at birth. For reference, Japan is number 1 at 82.6 years. The US is tied at #36 with Cuba and Denmark. Canada, Italy, Switzerland, and France are all above us. You may say, "well, it's a cultural thing; Europeans have healthier diets and the lifestyle is different there." Looking close, however, also above us on the list are disparate countries such as South Korea, Chile, Costa Rica, Singapore, Israel, and Australia (who's citizens live on average almost 3 yrs longer than we do!). It appears that cultural factors can't easily explain away our #36 ranking in the above table. In short, and in general, Herman Cain would have been better off getting cancer in a host of other countries (just about all of which have more government intervention in their health care systems) than right here at home.

Okay, you say, but in America personal choice is paramount and people can often lengthen

(by their lifestyle) their life expectancy. That may be true in some cases, but if you look at the most vulnerable among us, new infants, we'll notice the US healthcare system failing on another front (i.e., infant mortality). This is shown in the table to the right. That's us at #46 in the world at 6.26 deaths (within their 1st year) for every 1000 live births. We are two spots behind Cuba. At #1 is Singapore at 2.3. If you haven't been born yet, you'd be more likely to survive your first year if you're born in Cuba than in the United States. That is a fact.

To put some of the related costs in perspective, in 2006 our country spent $6719 per citizen on health care (even with our supposedly private health care system) whereas Singapore spent $1536 per citizen (according to the WHO). Cuba? $674 per citizen. This is insane. Any politician who defends the current, private health care system in the US needs to have his head examined.

Thursday Night Comedy Recap (SPOILERS)

Last night was the season premier of NBC's Thursday night comedy lineup, which features Community, Parks & Recreation, The Office (sans Steve Carrell), and the new comedy Whitney. Having watched them all, I wanted to post some of my thoughts.

First off, Community, a show that has moments of brilliance, but is just 'okay' for the most part. Last night's episode was pretty good, which included Jeff getting kicked out of' Biology 101' and, therefore, the study group, causing him to lose it. The best moments of the episode featured Chang living in the school vents, and making him a security guard at the end of the episode was an especially nice touch that has some comedic potential. Chevy Chase, for once, was not super-annoying, and, as usual, Danny Pudi and Donald Glover's Aped and Troy had some great moments.  

Parks & Recreation, probably the most underrated Thursday night show, was the highlight of the night. Ron taking off into the woods and growing a full-fledged beard in about a day was one of the better moments. If you watched the show in season one and got turned off, it's time to give it another chance. It's basically a different show now, and is consistently one of the funniest shows on television.  

The Office proved that it doesn't need Steve Carrell for the show to work, although it was strange having a season premier without him. Ed Helms' Andy filled in nicely as the new regional manager (although it felt like they were still writing for Steve Carrell and just having Ed Helms read his lines), but James Spader as the new CEO was underwhelming. After his debut in last year's season finale, I was excited to see what they'd do with him this season. There's still plenty of time, but at least in last night's episode, he was underused. Hopefully they'll figure out how to make his character shine, as Spader is a great comedic actor and a great get for The Office.

Finally, the new show. Whitney is NBC's only Thursday night show to feature a 'laugh track,' which is fine except that it was overused. Hearing a studio audience laugh hysterically at things that, really, aren't at all funny can be distracting. The show actually had some pretty good moments, and Whitney is a really good lead. The rest of the cast, however, was not so good. Maulik Pancholy, who is hilarious as Jonathan on 30 Rock, was just not funny here. He played a similar character to 30 Rock's Jonathan, but wasn't given any funny lines or anything interesting to do. Whitney's boyfriend was 'okay,' and they had pretty good chemistry, but all of her friends were just dull.

In Whitney's defense, it was much better and has a lot more potential then NBC's other new comedy, Up all Night, which premiered last week. It's a shame because I like Will Arnett, but the show was boring and didn't even make me chuckle once. Will Arnett can, and should, do a lot better. Christina Applegate, as usual, just annoyed me. She always seems to be trying too hard, and it just doesn't work for me.

Hopefully 30 Rock will come back in early 2012 and replace whatever new show NBC decides to stick with. At that point, NBC will have the best Thursday night lineup since the Seinfeld days (still the best sitcom of all time). 30 Rock is the funniest show on television and can't come back soon enough. Community, Parks & Recreation, The Office, and 30 Rock are all solid, and at times brilliant, shows and having them all together on one night would truly make "must see TV" mean something again.

What did you think of the season premiers? Are you happy with NBC's current Thursday night lineup?


The verdict: Consume (put your kids to sleep, turn off your phones, turn off the baby monitor, stop working, stop living your life, and watch these shows. It's free, it's funny, and there's absolutely nothing more worthwhile you could be doing with your spare time.)

Poolside Chat, Part 4

Utah: still punching above its weight

Tacking a different tack, I thought I'd pull together some info on recreation opportunities for those of us in the western US. Growing up in Utah, I've often found it odd the way Americans view the state separately as either the odd-ball home of the LDS Church or an outdoor mecca. Traveling around down there and meeting gobs of Europeans and Asians, it seems most of the world has opted for the latter.

In this vein then, and for those who need a refresher, I'll explain some of the outdoor attractions all encompassed within a few hours of each other, snugly couched south of I-70 and east of I-15 in Utah's southern half. The ski opportunities in northern Utah separately deserve high praise, but we'll leave that to others. In terms of geographic context, as Utah sits in the middle of the Western US and Salt Lake's airport is a Delta hub, this region, while remote, is also fairly accessible.

To put the region in context, the US has set aside 58 national parks, and Utah, with only ~2% of the country's land area, has 5 such parks (more then any state save AK and CA); all of these are concentrated in the southern half of the state. The features here include Arches, Zion, Canyonlands, Capitol Reef, and Bryce Canyon National Parks; Grand Staircase-Escalante (which is larger than Delaware), Cedar Breaks, Hovenweep, and Natural Bridges National Monuments; Glen Canyon National Recreation area (over a million acres and encompassing Lake Powell); Dixie and Manti-La Sal National Forests; and Monument Valley (as featured in numerous films). There are also a number of state parks and for reference, Salt Lake City, in the north, is a 4-5 hr drive away.

What we have here is a lot of remote wilderness. A lot of rocks, crags, canyons, brush, trees, sand, animals, rivers, and mountains. There are also dark, dark skies. The kind of skies with stars such that, after a moment's glance, you feel as if you could fall into whatever's up there. Amazingly, a few million acres of this desolate earth--and it is desolate--has been preserved. Between the 5 national parks and the Grand Staircase-Escalante Natl Monument, there are about 2.7 million acres protected. Add in the other national monuments and state parks nearby and you nearly have a wild area the size of Connecticut available for your weekend's contemplation.

In terms of where you can settle in for the night, besides the hotels and campgrounds (including developed, primitive, and backcountry) in the vicinity of the various national parks, a couple western US oddities provide extra options. First, unbeknownst to most easterners, the Bureau of Land Management administers immense tracts of lands in the west. In Utah they hold some 22.9 million acres (42% of the state). One of the main benefits of this is that one can often take advantage of their friendly camping policies, which 1) limit you to 14 days at any one site, 2) ask you to pack out what you pack in (duh), 3) avoid camping within 200ft of any water source, and 4) bury human waste 6 to 12" deep well away from streams and campsites. They also tell you to not leave campfires unattended (again, duh), and to use firepans.

The other vast camping resource in the west are the national forests (including the Dixie and Manti-La Sal forests in southern Utah). While the Forest Service does have many designated campsites (see here for Utah's), they have similar dispersed camping policies as the BLM, and officially, what I found was the following: 1) limit your stay in one site to 16 days; 2) camp 100ft away from any stream or water source; 3) do not camp within 1mi of campgrounds (or in the vicinity of picnic areas or trailheads); 4) to prevent resource damage your keep campsite within 150ft of a roadway; and 5) bury feces 6" deep at least 100ft away from any water source. As always, avoid making extra fire pits and practice strict leave no trace policies. It'd be lovely if we could all enjoy these natural wonders in 50 years time.

Go out and enjoy, learn, and protect. Lord knows we, and the remaining wilderness, could use it. To sum up, I'll leave you with the words of Edward Abby, the wise, fierce, and loving defender of the American southwest:

May your trails be crooked, winding, lonesome, dangerous, leading to the most amazing view. May your mountains rise into and above the clouds. May your rivers flow without end, meandering through pastoral valleys tinkling with bells, past temples and castles and poets towers into a dark primeval forest where tigers belch and monkeys howl, through miasmal and mysterious swamps and down into a desert of red rock, blue mesas, domes and pinnacles and grottos of endless stone, and down again into a deep vast ancient unknown chasm where bars of sunlight blaze on profiled cliffs, where deer walk across the white sand beaches, where storms come and go as lightning clangs upon the high crags, where something strange and more beautiful and more full of wonder than your deepest dreams waits for you -- beyond that next turning of the canyon walls.

Productivity tip of the week

It's Monday morning again, and time for another booster shot. By small, frequent productivity gains, I hope to one day be able to maintain my current (low) standard of living on just a 5 hour work week, but I suspect that's at least a few decades away. Today's tip is from the always-worthwhile bakadesuyo.com:

My favorite tonic for procrastination—which I have mentioned in passing previously—is what I call a dash, which is simply a short burst of focused activity during which you force yourself to do nothing but work on the procrastinated item for a very short period of time—perhaps as little as just one minute. By breaking a few tiny pebbles off of your perceived monolith, you end up psyching yourself out of your stupor, as well as making much-needed progress on your overdue project. Neat, huh?

Why the Heck Should This Work?

By making even the most modest bit of progress on your hated task, you’ve done what once seemed impossible: you got started. When you realize how much of the anxiety you’d experienced was created in your head, you’ll experience huge relief and give yourself the jolt needed to get back on track.

Taking a wider view

When dealing with esoteric topics during the day at our jobs and reading narrowly focused books, blogs, and magazines in our free time, I often wonder how well our perceptions of large issues, and of the country in general, fit reality. Contemplating the benefits of a cheap currency in a comfortable den or university office has the tendency to drag one’s thoughts away from the plights facing most of the world’s inhabitants. In light of this, and where I live, I thought I’d first delve into some basic statistics regarding the finances of the average American. Although we’re poorer than we thought, the rest of the world should be so lucky.

To start, and I don’t think these figures get mentioned enough, the median American household income in 2010 was $49,445 (see the data here). Again, that's household income. Half of the households in America make less than that! And that’s with many households having two breadwinners. As scary as that is, the census bureau reports that since 1999 the median income has declined 7.1%. Notice the stagnant (and falling) wages over the last decade in the figure above. As much as our policymakers were concerned about not repeating Japan’s lost decade, it looks like it’s already happened.

In terms of the worst off, the official poverty rate in 2010 was 15.1%. To make it a bit less abstract, that’s 46.2 million people; see the accompanying figure. Poverty here is defined as a family of 4 living on less than $22,314 per year. 46 million Americans is about 10 million more than the entire population of California.

The last thing I’ll mention is that in 2010 there were 49.9 million Americans without health insurance. That’s about 1/6th of the country. Perhaps public policy in this country, and our behavior as citizens, would be a bit different if we kept some of these numbers in mind.

Weak dollar? Should the US prefer a weak anything?

I promise these posts will become less wonky and someday feature more exciting things, such as bears, but for now I'm trying to figure something out. So, the Republican line these days is to call for a stronger dollar. Sounds good, right? Stronger stuff is usually better, but not in terms of one's currency in times of domestic economic malaise. So, here's what we've got. When you convert your dollars into other currencies and buy stuff, a strong dollar obviously makes you very happy. Now, this doesn't just apply to people on vacation in Europe, it also applies to our buying things (such as cars, electronics, and widgets in general) from other countries that are consumed right here at home. Since a decent amount of the stuff we consume comes from abroad, a strong dollar seems to be beneficial.

But wait, the savvy Swiss have just taken drastic measures to weaken their currency, the Swiss Franc. Why? Their currency is seen as a safe haven and during the recent turmoil it has strengthened to the point where the central bank said that the massive overvaluation of the franc poses a threat to the development of the economy.” Because of this, the Swiss central bank subsequently expanded their money supply (explained here) and promised to keep the Euro above 1.20 Swiss Francs "with the utmost determination and is prepared to buy foreign currency in unlimited quantities." This announcement, incidentally, caused a 20 standard deviation event (not supposed to happen in the history of the universe) for the Franc, but that's worthy of later post. The basic lesson here though is that with a strong currency your exporters can't compete with those of other countries. See here for a description of how manufacturing in the US has recently been boosted by the weak dollar.

So, there's two sides of the coin. Our expense buying foreign goods and their expense buying ours. Why a weak dollar is a net positive now is because of weak domestic demand. Consumers in the US aren't really in a spending mood, and, as Ezra Klein put it, "in the short term, a stronger dollar is good for buying stuff and a weaker dollar is good for making stuff." A weak dollar now helps our economy substitute foreign demand for domestic demand. Since Europe seems to be on the brink, for the sake of our economy, let's hope someone out there has some money.

Perry and Bachmann's voodoo economics

I hadn't watched a debate in a long time, so when I sat down last night to hear what the candidates thought, the evening turned out to be more scary than informative. Rather than have a sober discussion of the facts as they relate to a country struggling with 26 million people un- (or under) employed (see the U-6 measure here), the debate consisted of bombast, gotchas, nationalism, and unimportant talk about vaccines in Texas; all-in-all it had a strange rally type atmosphere about it. Oh, and the audience, again, seemed insane. In the previous debate, the audience cheered Perry's record of having executed a couple hundred people during his tenure as governor. Last night's audience cheered when there was talk of letting people die if they can't afford health care. But anyway.

My main purpose in this post is to address the recent talk from the GOP about how a strong dollar would boost our economy. Last night this talk came mostly from Bachmann, Perry, and Ron Paul (if memory serves). I'm not sure how this thinking of theirs works, but the people I've asked seem to think that a weak dollar automatically creates inflation and that this is what's dooming our economy. Others simply won't explain. So, I've posted a figure (easily made at the amazing FRED site--go explore). The blue line represents the dollar's exchange rate versus other major currencies. The red line represents the rate of inflation. You'll notice them both trending down (in spurts) over the last 30 years. I just don't see why people think a weak dollar generates inflation (or hurts our economy in any fashion). What am I missing?

Productivity tip of the day

After the commemorative weekend (in which I enjoyed a particularly stirring three-verse version of the Star Spangled Banner from my congregation), I thought it would be appropriate to try and slough off some of the national discontent and self-doubt of the noughties, and, as one blog puts it, start taking small steps to a much better world. To start this off, we'll provide a classic productivity tip from Jerry Seinfeld. The lifehacker blog runs it down:

Years ago when Seinfeld was a new television show, Jerry Seinfeld was still a touring comic. At the time, I was hanging around clubs doing open mic nights and trying to learn the ropes. One night I was in the club where Seinfeld was working, and before he went on stage, I saw my chance. I had to ask Seinfeld if he had any tips for a young comic. What he told me was something that would benefit me a lifetime...

He said the way to be a better comic was to create better jokes and the way to create better jokes was to write every day. But his advice was better than that. He had a gem of a leverage technique he used on himself and you can use it to motivate yourself—even when you don't feel like it.

He revealed a unique calendar system he uses to pressure himself to write. Here's how it works.

He told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker.

He said for each day that I do my task of writing, I get to put a big red X over that day. "After a few days you'll have a chain. Just keep at it and the chain will grow longer every day. You'll like seeing that chain, especially when you get a few weeks under your belt. Your only job next is to not break the chain."

"Don't break the chain," he said again for emphasis.

Over the years I've used his technique in many different areas. I've used it for exercise, to learn programming, to learn network administration, to build successful websites and build successful businesses.

It works because it isn't the one-shot pushes that get us where we want to go, it is the consistent daily action that builds extraordinary outcomes. You may have heard "inch by inch anything's a cinch." Inch by inch does work if you can move an inch every day.

Daily action builds habits. It gives you practice and will make you an expert in a short time. If you don't break the chain, you'll start to spot opportunities you otherwise wouldn't. Small improvements accumulate into large improvements rapidly because daily action provides "compounding interest."

Skipping one day makes it easier to skip the next.

I've often said I'd rather have someone who will take action—even if small—every day as opposed to someone who swings hard once or twice a week. Seinfeld understands that daily action yields greater benefits than sitting down and trying to knock out 1000 jokes in one day.

Think for a moment about what action would make the most profound impact on your life if you worked it every day. That is the action I recommend you put on your Seinfeld calendar. Start today and earn your big red X. And from here on out...

Don't break the chain!

Obama's jobs plan

Lots of reaction coming in to Obama's jobs speech last night. People seem fairly pleased and it's good to see the debate shifting from debt reduction to how to put ~26 million people (see the U-6 measure here) back to work. Just to put that unemployment picture in context, 26 million people (and this measure includes those having to settle for part time work) is more than the entire population of all but the state of California; it's almost like the entire state of Texas needing work. So, it's great news that people are talking about how to solve the problem. In short, Obama wants to extend unemployment benefits, reduce payroll taxes, and build more infrastructure. I'll leave the analysis to the experts:

Greg Ip gives a fairly measured and detailed rundown at the Economist. Ryan Avent chimes in and says, "It's not a perfect plan, but nothing that emerges from Washington is. It's not going to magically generate strong growth; the Fed's upcoming meetings are more important. It is a package of sensible steps presented in a sensible way."

Felix Salmon doesn't like Obama's rhetorical style, but loves parts of the plan.

Paul Krugman says, "I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected."

Yglesias opines here. "I do wish the President had spent a bit more time focusing on the slightly wonky subject of bond yield rates..."

And more conservative reaction from David Frum here. "Qua speech, it was excellent – clear, focused, unrhetorical."

Will this make me happy when I'm 60?

In line with the title of the blog, I occasionally become obsessed about things I can do today that will make me happiest over the long run. It's difficult to keep some of these habits up for a sustained amount of time, but making an effort really helps me focus on what's important and where my time is best spent.

Lately, the big (non-work) project has been keeping the journal up to date. While I've written before (and especially on trips), since the start of this year I've made every effort to have something unique recorded about each day. While some say every day is nearly the same (and for some, perhaps that's sadly true), with a little effort you'll start to notice nuances and what you're most likely to want to remember later. I was partially motivated to undertake such a project because of a post I read on the bogleheads investing forum (weird, I know). In a thread about where you were on a certain date in 1997, the post goes like this:

My diary says that on this date in 1997 my 5th grader had his best friend spend the night. The next morning I fixed breakfast for the two of them and my 2 year old son (pancakes and sausage). When the 2 older boys left the table before my 2 year old was finished he threw a fit (and pancakes) then chased them thru the house. My wife later took the older boys to see Return of the Jedi while I stayed at home with the little feller.

The 5th grader is now 23 and working, recently graduated from Ball State University. The best friend is working on a PHD at Tulane University. The little fellow is a 6' (and growing) 8th grader. My wife, unfortunately is no longer with us (cancer, 2000).

My most prized possession is the collection of diaries from 1980 which records every day of my life and my family since that year.

I am in my same house, just the two of us and sometimes at night I look at the bookshelf containing those 29 volumes and wonder...where in the heck did the years go?

Time to write about today.

Book Review: Atlas Shrugged

While I bussed it to work (and back) over the summer I had the chance to slog through Atlas Shrugged (1957), my first taste of Ayn Rand. I would use a verb other than slog (I actually was anxious to keep reading), but at 1069 pages of small print, I don't know how else to describe it. First and foremost, it's a compelling story: by implementing uneconomic policies, Rand's USA slowly descends into poverty and anarchy. Late in the book I pressed on in morbid fashion, eager to see what destruction awaited. Ignoring her policy proposals and view of economics, I'd grade the novel as being worthy of immediate consumption. The characters are compelling; the writing is clear and not too flowery nor concerned with lengthy, but irrelevant detail; and the plot is original and well thought out. She does go overboard with repeated, and sometimes comically reverent asides about efficiency and how certain characters were or weren't contributing to society. In my daily tasks over the summer, I occasionally caught myself rating my efficiency and wondering how my particular scene would be narrated.

Over the last couple years many of the tea party have taken Rand as some sort of standard bearer. For those unfamiliar with Rand, she rails against the government's involvement in the economy and trumpets the free market, so she'd naturally be a tea party favorite. But rather than her current popularity signaling our countries slide into socialism, it's partially just the coincidence of a large recession (requiring increased government spending on social programs) occurring while a democratic president is in office. Tax rates are actually at their lowest levels in decades, for example. In terms of the economics in her book, Rand's ideology doesn't exactly look to be a roadmap back to a vibrant America.

For instance, take her views on taxes. In the book John Galt tells the government to take the tax rate down to 0%. What Galt and Rand forget is that the government could accurately be considered a large insurance company with an army. As the bulk of federal spending goes on Social Security, Medicare, and Medicaid, a tax rate of 0% would render most of the elderly and poor as destitute. Yeah, you could argue that these people would be able to invest the tax savings on their own and do better, but with the financial sector more interested in extracting rents than providing value these days, that doesn't look like it would happen. While, of course, private insurance companies are good at pooling risk, the recent health care debate has made it obvious that private health insurance often falls short (through fuzzy definitions, technicalities, and arcane rules) when people suffer a catastrophic illness. This isn't a health care post, but adverse selection also occurs in droves, as those who don't need the insurance (i.e., the healthy or young) don't buy it, thus driving up costs (in a spiral) for those who do.

In terms of monetary policy, Rand would prefer that the country have none. She was against the Federal Reserve and for the gold standard. We've discussed this elsewhere, but the gold standard would effectively give our country no monetary policy whatsoever, as the amount of currency in circulation would directly coincide with how much gold there is. As Matt Yglesias has said, this would effectively randomize the extent and timing of inflation: "Find a new gold mine somewhere: inflation. Aliens come to steal gold: deflation." It'd be like going back to the severe booms and busts of the 1800's (not that our recent situation has been all that great, but still).

Besides her specific proposals, the general relevance of Rand's work to our current situation is tenuous at best. Sure, the government (sadly) propped up the auto makers a year or two back, but the current debate over whether the government should enact further stimulus isn’t about protecting certain sectors or companies from competition. It’s about stimulating demand, by doing government-y things, like building infrastructure.

Read it because it’s a classic and a great story, not because you want to learn economics.

The US credit rating: could we default?

Back to our regularly scheduled program. As per request, in this post I'll briefly touch on the implications of S&P's downgrade of the US credit rating. So, what exactly happened is that after the debt ceiling debacle of early August, S&P (officially a "Nationally Recognized Statistical Rating Organization") downgraded their rating of US debt from AAA to AA-. You might remember S&P as one of the credit agencies that were rating subprime mortgage-backed securities as AAA in the years leading up to the crisis of 2008. Yup, just a few years ago they were saying that those bonds based on subprime borrowers were safer than the bonds currently issued by the US government. The chart above shows the interest rate we've paid on our 10 year debt over the last few decades. As of the close of the markets on Fri Sep 2nd, we are paying 1.99% on money we've borrowed for 10 years. Does that seem high to anyone? Anyone? That is the kind of risk the market is assigning to US debt. But then again, the markets occasionally go barking mad; just look at the 1990s tech bubble.

Are we really headed down the path of Greece and Portugal? In effect, no. One major difference between us and them is that our debt is issued in our own currency. And not only our own, but the world's reserve currency. While Greece is straightjacketed because it's in the Euro, the US can print more money at will. Such a country is not at risk of defaulting on its debt. Uncle Sam, need to pay more debt? Turn on the presses, Bernanke. Of course, resolving the debt issue in such fashion would lead to inflation, but the debts would nonetheless be paid. Inflation is a risk that nominal bondholders have to live with; inflation-indexed bonds are another story. Being the holders of the world's reserve currency also helps to ensure that when the world gets jittery, people pile into dollar-denominated assets, which often mean treasury bonds, thus driving down our country's borrowing costs just when world events would make our debt seem riskier. Over the last several years, whenever the markets were especially worried about the economic outlook, US borrowing costs (as measured by the interest on the 10 year note) tumbled. This has happened over the last month (see the large drop here).

So, if we can't really default on our debt, why the downgrade from S&P? Well, Felix Salmon thinks it's related to our dysfunctional political atmosphere:

Any student of sovereign default knows that it is born of precisely the kind of failures of governance that we saw during the debt-ceiling debate. That is why the US cannot hold a triple-A rating from S&P: the chance of having a dysfunctional Congress in future is 100%, and a dysfunctional Congress, armed with a statutory debt ceiling, is an extremely dangerous thing, and very far from risk-free.

Yes, there’s a lot of fiscal math in the S&P statement. But at heart, any sovereign ratings decision is political, not economic: the economics is there to provide a veneer of empirical respectability to what is fundamentally a value judgment. We saw the values of Congress during the debt-ceiling debate, including various members of the House who said with genuine sincerity that they’d actually welcome a default. In that context, S&P’s judgment is hard to fault.

Essentially, while the US could always pay its bills, as long as there are politicians insane enough to take the economy hostage in order to score political points, there is some risk of default in buying US debt. Even if recent events only raised the interest rate on US debt by 0.05% (which is probably an underestimate), with an outstanding debt of $14 trillion that would increase our borrowing costs by $7 billion per year (.0005 * 14 trillion). It’s quite an ironic result seeing as how the politicians who caused the debt ceiling debacle were worried about US budget problems. For those of you in debt: it doesn’t help for you to raise the interest rate on your debt.

Meet the Candidates--Project Runway Edition

Bryce Black, Age 26, Portland OR

Starting a new series, we'll I’d like to examine Project Runway designers to give you a chance to get to know them better and understand where they are coming from. Considering what the fashion world has been going through the last several years, picking a designer that understands how fashion and runways work is of the utmost importance. Sadly, things thus far have looked bleak.

This week we’ll start with Bryce Black, a young, hip designer from Portland Oregon. He got his start designing dresses for his sister’s barbies when he was a kid using toilet paper, old socks, and denim scraps. He trained at the Art Institute of Portland, graduating in March of 2011. He says that his fashion musts are jeans that fit well, an attractive handbag, and sexy heals. Bryce is great with fit and proportion, but is too much of a perfectionist. He is also excellent with mixing textures and colors, and creating exciting silhouettes.

His favorite musical artist is Lady Gaga. His favorite style icon is Lady Gaga. If he could design for one celebrity, it would be Lady Gaga. His favorite hobbies, besides designing, include internet-stalking Lady Gaga.

His supermodel muse is Andrej Pejic, who he says is “confusing straight men everywhere.”

As a child, Bryce was described as well-mannered and sweet, and how he is witty, creative, direct and loyal. He is the oldest of five children. He does not have any kids, but does have a cat named Patrick. His nickname is Brycey-poo.

His guiltiest pleasure is carbs.

On Project Runway’s website, so far only 4% of people have voted Bryce as their favorite, and I can see why. His designs are all over the place, and often a bit much. He is constantly on the brink of elimination, and I predict he won’t be around much longer.

Continue to check the blog regularly for more Project Runway designer bios.