More PBR

May 24, 2012

Aretae thinks that my take on regulation is wrong. Here’s his argument:

  1. Ideal regulatory systems can be modeled as games.
  2. Regulators *try* to solve problem by creating regulations.
  3. The regulated participants *try* to circumvent regulations by following the letter of the law, avoiding the intent.
  4. In any system where there is enough money involved, there is no contest…the regulated participants necessarily win.
  5. Letter-of-the-law regulation is therefore *guaranteed* to fail in high $ industries like finance.
  6. This is a big problem, insofar as we can agree that an unregulated finance industry is undesireable.

As he seems to know, the biggest problem with this line of reasoning is point #2. There’s no reason to believe that regulators try to solve problems by creating regulations. Kling knows this, see here, for an example of regulators openly supporting (and endorsing!) their own rules being arbitraged. Giving regulators scope to make rules more flexible exacerbates this problem.

Point #4, therefore, also makes no sense. The contest isn’t necessarily between regulated vs regulator. Regulator and regulatee are often on the same side, as Kling has pointed out.

Point #5 is problematic, since “letter-of-the-law” regulation doesn’t exist in the modern government. Again, when legislative and executive and judicial powers are combined in the same entity, it’s meaningless to speak of letter of the law regulation. One entity is judge, jury and executioner (and law-maker and policeman) – and they’re essentially unaccountable to anything. If your theory of regulation misses these points, it doesn’t get off the ground.

My take is that arguing about “forms” of regulation misses the point. The regulatory structure is so far removed from what most people assume that their suggestions just don’t make sense. You need to work with the existing structure (i.e. make regulators accountable for specific failures) or blow up the structure. Everything else misses the point.

It’s also worth pointing out that PBR isn’t a new idea. It was all the rage in the UK before the crisis. If you want to know how that worked out, ask Northern Rock.



May 23, 2012

Nydwracu on the Clementi case

– thrasymachus reviews Bobos in Paradise, which I recently reviewed

This is really funny:

In the Yglesian worldview, all these legally nonwhite people are just supposed to give up their legal privileges on their own accord, so there’s no need to worry about, you know, policy.

– A majority of the unemployed have attended college.

Principles based regulation

May 23, 2012

Arnold Kling believes that we should move to principles based regulation (PBR), which Sonic Charmer correctly dubs Yglesiocracy.

Kling’s mistake should be evident immediately to careful readers of this blog. Here’s his explanation of PBR:

With PBR, legislation would lay out broad but well-defined principles that businesses are expected to follow. Administrative agencies would audit businesses to identify strengths and weaknesses in their systems for applying those principles, and they would punish weaknesses by imposing fines. Finally, the Department of Justice would prosecute corporate leaders who flagrantly violate principles or who are negligent in ensuring compliance with those principles.

Where would this "legislation" he speaks of come from?

If you answer from the "administrative agencies" that would provide the judicial and executive functions as well, consider yourself educated on the workings of modern government.

(The Department of Justice is a canard in this argument, if regulated entities violate regulations, regulators have no need of assistance from DOJ to enforce their own regulations).

In a sense, all modern laws are principles-based, in that agencies now act as de facto judiciary, executive and legislator. When you write laws, interpret those laws, and enforce those laws, your whims are basically the laws. Specific conditions that are written into "laws" (i.e. regulations) are actually the only things that bind regulators.

Kling is attempting to solve an important problem (at least I think he is based on other things he’s written) – the problem of regulatory arbitrage. In modern government, regulatory arbitrage arises only when regulators are sympathetic to those they regulate. In other words, there are situations in which regulators want to be arbitraged. However, giving more flexibility to regulators via PBR isn’t going to solve the problem, it’s going to make it worse.

Zimmerman and the media

May 23, 2012

Noah Millman has bravely taken up the cause of . . . defending the mainstream media in it’s handling of the Zimmerman case. His bravery appears, however, to know no bounds – he’s also courageous to criticize Pat Buchanan’s views of the case. I hope he has bodyguards following him around.

Do they give Pulitzer Prizes for blog posts? They may have to start.

Anyway, let’s take a look at his argument:

The reason we have a criminal justice system is precisely to remove the felt need for private justice – for revenge, personal and collective. Where individuals or distinct groups become convinced that the justice system does not provide adequate recourse, the desire for private vengeance increases. In some cases, that desire boils over into violent action. Such action is unjustified, but that doesn’t mean it is incomprehensible, or that it won’t happen.

That doesn’t mean it will, though, either. It behooves the authorities not to presume too much – or too little. The right answer to perceptions of unfairness is conspicuous fairness, not retribution. If the standard of “justice” is conviction of acquittal, we’ve already lost; there is no chance for peace. A fair trial is the answer, regardless of the verdict – and the government, at the highest levels, should say so, and well in advance of a verdict. That communications campaign is as important as any preparation that local police departments might make.

And here’s the thing. To be able to conduct that communications campaign effectively, the government has to sound credible. Which means understanding why so many people were upset that Zimmerman wasn’t taken in in the first place.

In doing that job, Buchanan’s attempt – and he isn’t alone – to turn Zimmerman into a folk hero has been completely counter-productive. Assuming the goal is to increase confidence in the integrity of the trial, acquitting Zimmerman in the media is just as bad as convicting him. And if that isn’t the goal, then Buchanan has no business criticizing people who fanned the flames.

What happened in this case, is that the authorities looked into matter and decided not to arrest Zimmerman. There is no reason to believe that this earlier, unbiased conclusion was not the just conclusion.

Following racial agitation, from the race hustling lobby, the authorities charged Zimmerman with second degree murder. The point is that absent the need for a "communications campaign" (i.e. propaganda) a fair conclusion was reached by the authorities. No evidence has ever been presented to call this fact into question. Some people didn’t like the result, but that is always the case with a just outcome.

Millman claims that a "fair trial is the answer," but there’s absolutely no evidence that Zimmerman committed second degree murder – the charge on which a trial (though not a fair one) will be conducted. I think there’s an argument to be made – following Millman’s logic – that a fair trial on manslaughter could be valuable. But that’s not in the cards.

Instead, we’re seeing a politically motivated show trial.

If a member of the press isn’t right to criticize that, what is the press for?

Gay marriage

May 23, 2012

I suppose I should say a few words about gay marriage, since I have a blog and everyone else has already said something.

The topic came up because North Carolina became the latest state to constitutionally prohibit gay marriage.

It’s going to be pretty entertaining in a few years when lots of gay people are married in all these states in which gay marriage is "constitutionally" barred. After all, it’s increasingly clear that the Constitution allows gay marriage. Lots of people think the Civil War was fought to free the slaves, but it was really fought so that women could abort their children and dudes could get married to other dudes.

I propose that those of us on the reactionary right make a deal with the homos now. We will support their "right" to get married if they’ll give up status as a "victims" group.

I have no problems with gay people – I lived in one of the top 15 gayest zip codes according to this list. I have friends that are gay, but I should be able to make fun of them (and I do) without being sued by leftist "victims" groups. They’re free to make fun of me as well. Let’s just be grown-ups about it.


May 21, 2012

– More on the death of god

– The US is a Puritan, Progressive country

– A paleo gin and tonic

– An interview about Alger Hiss. (Thanks to the reader that sent this link)

– Chuck is reading The Bonfire of the Vanities. So am I.

– What if someone did this on a national scale? Couldn’t happen, right? (Thanks to the reader that sent this link)

Divorce rates and hours worked.

DC is getting much whiter

Randoms from OneSTDV

Rethinking colonialism

C. Northcote Parkinson

May 21, 2012

A while back, a reader (I forget who) recommended a set of interviews with C. Northcote Parkinson (here and here).

They are well worth your time (if only for his awesomely aristocratic accent).

It’s amazing how much our knowledge of government has declined over time. Particularly, our understanding of democracy has deteriorated at an incredibly rapid rate. Parkinson says all sorts of (formerly) common sense things about democracy that sound crazy to a modern ear.

So much for advancement.

Evidence against Zimmerman

May 21, 2012

I was watching CNN on Saturday morning (long story) and some talking heads were discussing the latest evidence in the Zimmerman/Martin case.

A summary of this evidence is as follows:

– Basically all physical and eyewitness and circumstantial evidence supports (or doesn’t contradict) Zimmerman’s story, but . . .

– Zimmerman might be racist.

According to the legal experts on CNN, it would seem that if the latter point is true, the former point is moot and Zimmerman is guilty of whatever he’s been charged with.

Others would seem to think that the evidence should be the only thing that matters. Apparently Dershowitz needs some sensitivity training.

The facts don’t matter – neither does being right.

Regardless of the evidence, I bet we can predict the actual breakdown of votes by the jury based solely on the race of the jurors. Welcome to "justice" in a diverse society.

HBD investing

May 21, 2012

A while back I wrote that everybody believes in HBD because it’s impossible for those of us who believe in HBD to make money from our beliefs.

Houses in safe neighborhood with good schools (i.e. in areas with lots of white people) are more expensive than houses in crappy neighborhoods, for example. People may hate what John Derbyshire says, but they spend their money as if they believe every word of it and then some.

I have only come up with one exception to my theory – invest in Japan.

By all actual measure of credit quality, Japan is in a world of hurt. They have more debt than crappy Mediterranean countries, for example. In short, if any country has debt problems, it’s Japan – at least by all objective financial measures.

Lots of people – most notably Kyle Bass – have been betting heavily against Japan. It hasn’t been going well for him.

I think the reason is that the Japanese are not like the Italians, the Greeks or the Spaniards. If they need to suck it up to pay off their debts, the Japanese will do so. They’ll do it quietly, efficiently and without too much complaining. They are a nation in the way that few remaining countries are a nation. And they’re smart.

So, I would argue that this is one case where there might be some room to make some money from your beliefs. Japan won’t default. At least that’s my guess.

Place your bets at your own risk.

Inter-racial friendships

May 21, 2012

Auster asks if friendships between blacks and whites are possible. I’m friends with a bunch of people who are "black."

When you look closely though, it’s not quite that simple. Most of my black friends have at least two white grandparents. A couple others are African, but they’re North African of various types, and don’t really look black.

I’m not sure what that means, but it seemed like it was worth noting.