Half Sigma

Transit Worker's Union wins

According to the NY Times, the Transit Worker's Union was the big winner in the strike.

... a day after details of an agreement between the transit workers and the Metropolitan Transportation Authority were spelled out, Roger Toussaint, the union's president, seems to have emerged in a far better position than seemed likely just a few days ago.

Once again, the taxpayer is screwed over by wimpy politicians who are too chicken to stand up to the unions.

More women than men in college

There is a Weekly Standard article about the lack of male college students. By 2010 there will be 60 female graduates for every 40 male graduates, a pretty skewed ratio.

Now on the one hand, one can easily get outraged by the lack of outrage. When men outnumbered women in college, the feminists were up in arms. Stuff had to be done to fix the gender imbalance! But when the gender imbalance favors women, no one seems too concerned.

But I would like to look at the issue more deeply and ask if this really matters. One problem mentioned in the article is that educated women won't be able to find educated men to mate with. This seems like a non-problem. When more men than women attended college, this wasn't such a big deal, so I doubt it will be a big deal with the gender ratios reversed.

Those who read my blog regularly know that I believe that too many people are going to college. The changing gender ratio may simply reflect the fact that young males perceive correctly that college won't help them make more money. A job as a bus driver in New York City will pay a lot more money than the types of white collar jobs one would typically get with a college degree from a mediocre school.

This is a trend I've already observed in my days of working for the U.S. government. I saw many not very bright women with degrees from bogus schools like Northern Virginia Community College working at low paying dead end white collar jobs who were hooked up with non-college educated men with better paying blue collar jobs.

Blue collar men have it better than most college graduates. They have no student loans to pay off, they don't have to buy expensive clothes to wear to work, and generally they don't have to commute as far because the blue collar jobs are more often located closer to affordable housing.

Compare this to a guy with a law degree who has $100,000 of loans to pay off, has to buy expensive suits to wear to work, and has to pay high rent to live close to downtown where his office is. The blue collar guy actually has the higher standard of living.

Status is a negative-sum game

There is a fixed amount of status in any group, and the total amount is a function of the number of people in the group. One's status only rises at the expense of others. So money spent raising one's status is a classic example of negative sum rent seeking behavior. Society would be collectively better off if less money were spent on status seeking.

Yet Tyler Cowen of the blog Marginal Revolution doesn't quite get it. He creatively argues that status games are positive-sum because "status games encourage people to earn more income."

King Kong sucks

I guess I'm not a Peter Jackson fan. He took The Lord of the Rings, my favorite book from when I was a teenager, and turned it into three visually stunning but ultimately boring movies. And now he has made a really long and boring movie about King Kong, but one with great visuals and special effects.

I appreciate the look of a movie as much as the next guy, and even more so. I enjoyed looking at the movie's early scenes filmed in an amazingly recreated 1930s New York City, even though the story taking place was boring. But after an interminably long time passed and I still hadn't seen King Kong, I wanted to scream "enough is enough, show us the ape!"

The female lead, played by Naomi Watts, is pretty but stupid, exhibiting a classic case of Stockholm Syndrome. Some reviews praised Watts' acting, but I wasn't impressed.

The bad acting in general was probably a result of the bad script, because I thought Adrien Brody was fantastic in The Pianist, yet here you just wonder what this guy was doing in the movie in the first place.

Just as Yoda was the best actor in Star Wars Episode III, King Kong was the best actor in King Kong.

Defending Alito on Christmas Eve

The NY Times Christmas Eve anti-Alito editorial is a big vicious lie and a distortion of Alito’s record.

The take on the editorial is that Alito believes that Presidents have infinite power, and because of this you should be very afraid of him. This is utter bull. As a lawyer working for the executive branch, he did his job writing memos supporting the positions his superiors told him to. That’s what lawyers do, advocate for one side or another.

There is one particular case the NY Times editorial mentions, saying “The Supreme Court flatly rejected Judge Alito's view of the law. In a 1985 ruling, the court rightly concluded ...” The blog Confirm Them points out that in the case in question, the Supreme Court decision was 4-3, so Alito's memo could hardly be said to be out in left field.

The only specific judicial decision of Alito’s that the Times editorial comes up with to demonstrate its point is in the following quote:

In his judicial opinions, Judge Alito has shown a lack of respect for Congressional power - notably when he voted to strike down Congress's ban on machine guns as exceeding its constitutional authority.

The above decision points us to the opposite conclusion. As a judge, Alito believes the federal government has only limited powers, making him exactly the kind of justice that freedom loving Americans would want on the Court.

It sucks to be young

If my previous post about rising interest rates on student loans isn't bad enough, the WSJ also reports that "housing affordability" is at a 14 year low.

Why not at an all time low? Because affordability is affected by interest rates, so the low interest rates today make houses more affordable than they otherwise would be. But if interest rates rise and housing prices don't fall, houses will become even less affordable.

The same article reports that house ownership is at an all time high. Older people without student loan repayments own the homes, while young people with student loans are faced with unaffordable houses, as well as ever rising FICA taxes which represent yet another transfer of money from the young generation to the old generation.

Never in the history of the U.S. has the deck ever been so stacked against the young.

Interest rates to rise on student loans

Congress is reducing spending on student loans. (If you subscribe, the WSJ has a better article.) I'm opposed to student loans, but Congress is doing this backwards, making things worse instead of better.

The money savings come from raising interest rates on the loans. So young people will be burdened by even bigger debt repayments than they already are.

Congress should, instead, save money by lowering the amount of money that students can borrow. This would force colleges to cut costs and maybe discourage some students from unnecessarily attending college.

Unlike all other forms of debt, student loans cannot be discharged in bankruptcy. So student borrowers make a deal with the devil in which they can ruin their lives forever because they are never allowed a fresh start if they borrow beyond their ability to repay.

Longer transit strike post

The TWU paints this strike as an action by the underpaid workers against the Man. But that's not the case at all. Hell, if some union were striking against a big business, and the only thing involved was who gets the profits, then I'd just be enjoying the fight from the sidelines.

But this is not a strike against big business, it's a strike against the government which represents all of the people who live in NYC. Any money given to the transit workers comes from the tax dollars and the transit fares paid by the people of New York City. The MTA may have a billion dollar surplus, but it doesn't belong to the transit workers who are already overpaid compared to other blue collar jobs. That billion dollars belongs to taxpayers. The MTA is not a for profit business, it's a government service that's heavily subsized by tax dollars because the fares charged don't cover the costs of providing the service.

According to this Wikipedia article (which may or may not be true), the median household income in NYC is only $38,293. NYC isn't just a city of rich liberals. The majority of New Yorkers are poorer people earning a lot less than transit workers earn, and that doesn't even count the transit workers' super-generous benefits which no private workers get. It's these regular New Yorkers who are hurt worst by the strike. If they can't get to work they lose a day's pay, pay they can't afford to lose.

And of course the strike is costing the city a huge loss in tax dollars, that's money that will come out of every taxpayer's pockets.

The strike is illegal, and it's illegal for good reason. As we already touched on above, the strike imposes huge costs on the city because people can't get to work, children lose two hours of school, people can't get to their doctors, tax revenues are lost, delivery trucks are stuck in traffic, business owners lose customers, work isn't getting done.

The problem here is that Mayor Bloomberg needs to grow some balls. He should fire the transit workers pronto and replace them with people willing and able to work for less money. The transit workers should be financially punished to the fullest extent allowed by law. They should lose their fat pensions, which would save the taxpayers a huge amount of money. The strike is actually an opportunity to significantly lower MTA's costs, but Mayor Bloomberg has to seize the opportunity.

How to break the strike

It actually doesn't require too many workers to man the subways. It only takes one person to drive a nine car train. If you open the subways up for free so you don't need to have token clerks, with just the managers and supervisors you can probably get some subway lines running. And the city can rapidly hire scabs for less money than the current transit workers are being paid, and I bet all the subway lines could be back in operation in a few days.

It would take longer to get the buses running because there are a lot more bus drivers and they require more training (driving a huge bus through crowded Manhattan streets sure doesn't look easy). But with just the subways in operation, the city would be almost back to normal.

Bloomberg and Pataki need to get some cajones here.

More on unions

The Instapundit links to an anti-union post by Evan Coyne Maloney of Brain Terminal on unions (not fair that I never get linked to).

Evan writes, "I do not understand why unions aren't considered illegal cartels." People don't seem to understand that, just the opposite, unions are favored under the laws. Without federal pro-union laws making unions possible (dating back to FDR and the New Dea), unions would be powerless.

Unions are good for their members. The guys driving the NYC buses are getting far better wages and benefits than they otherwise would. I'm surprised that more workers don't unionize considering how easy the laws make it for unions to form. Unions are like a huge gift from the 1930s that today's low wage workers don't even bother to take advantage of.

Evan also writes:

It's too bad that neither Mayor Bloomberg nor Governor Pataki have the power or the backbone to do what President Reagan did when PATCO--the (former) air traffic controllers union--went on strike. If the transit workers don't want to show up and drive the trains, then the MTA should be free to hire people who do.

I have to agree that these guys have no backbone. The voters would enthusiastically endorse any get tough actions. Everyone in NYC, even super-left wing types, are pissed at the transit workers.

Where did all the cars go?

The streets of Midtown seem empty compared to a normal workday. This is great, you can walk to work without cars blocking all the intersections.

They should have transit strikes more often!

Peak of SUV sales

MSNBC asks Is the era of the oversized SUV near an end?

SUV sales have fallen by 2 or 3 percent in each of the last few years, hurt by changing tastes and a rise in smaller car-based crossover vehicles, or CUVs.

I wouldn't read too much into a few years of declining sales. SUVs have reached such a huge level of success that Americans have been buying less "passenger cars" each year than "light trucks" which is the category that includes SUVs.

Unless you were predicting the passenger car to completely fade away into oblivion and that everyone would drive only SUVs and other types of "light trucks," it was inevitable that there would be a sales peak.

Transit strikes and economic inefficiency

The New York City transit workers are threatening to strike again. It almost happened on Friday morning, but at the last minute they agreed to set a new deadline for Tuesdsay morning.

This demonstrates a significant inefficiency of public transportation. It's no wonder that all modern U.S. cities are car oriented. I'm sure the people who moved away from the New York City to live in places like Phoenix and Denver are glad they can drive to work and not deal with transit strikes.

No more student loans

I paid off all of my student loans yesterday. The burden has finally been lifted.

My advice is not to borrow money on such a bogus "investment" like education. If I had invested that money into the stock market instead, I'd be able to retire by now.

Buy OrthoLogic (OLGC)

I wrote a while back that I would write some useful posts. Today's useful post is a recommendation to buy OrthoLogic, ticker symbol OLGC. Right now it is trading at $4.19 per share.

I suspect that not a single person will buy any based on this blog post, but I will be able to refer back to it in the future to write that I told you all so.

I should mention that I used to work at OrthoLogic, but that was a long time ago when the company was a medical device company. Now it's a pure biotech company and I had nothing to do with any of the biotech stuff. I never even got to see the famous "rat lab." I have no current inside information about the company. 10% of my portfolio is currently invested in OLGC.

OrthoLogic's has completed a phase III clinical study on Chrysalin, a drug to be used to speed the healing of bone fractures. There are millions of fractures every year in the United States. It's a huge market, and the stock is severely undervalued with a market cap of approximately $160 million. OrthoLogic has a stockpile of approximately $80 million to continue funding its research. To find out more, view the webcast, but do it quickly becasue companies tend to take those things offline after a short perdiod of time.

Tooth brushing, class, and weight

Marginal Revolution informs us that children who brush their teeth more than once a day are less likely to be overweight.

At least the guy who write the quoted text was smart enough to realize that there's no direct connection.

I say it's a class issue. People from higher social classes are less likely to be overweight simply because it's seen as low class. And furthermore, people from higher social classes are also more health obsessed in general so are more likely to make sure their children brush.

Too many people going to college

With an article in today's NY Times titled What's the Return on Education?, I was hoping for a meaty examination of the issues, but instead it's all fluff.

So here is the much better Half Sigma explanation. First of all, we know that people with more years of post-secondary education have higher average salaries. But why? Here are the four factors that contribute:

(1) College students have higher IQs than non-college students. The SAT, which is basically an IQ test, is used to select people who are suitable for college study. The book The Bell Curve explained that IQ is positively correlated with income independent of education.

(2) College students come from wealthier families than non-college students. Wealthier families provide their children with industry contacts and other advatanges that help them earn more money independent of their degree.

(3) Credentialism: employers value the credential of the degree even though the degree holder doesn't have any job skills that the non-degree holder doesn't possess. Somem industries, such as law, are regulated so that only those with the credential are allowed to practice. Education for the sake of the credential imposes an externality on society. The person with the degree is getting a job opportunity over an equally qualified non-degree holder. Normally, the best public policy is to discourage activities with externalities, but U.S. policy of encouraging education is doing the opposite and thus making a bad situation worse.

(4) Students might actually be learning job skills that they wouldn't have otherwise been able to learn if they were not in college. This primarily applies to more vocational courses of study such as nursing or engineering.

I think that the economists in the NY Times article are ignoring factors (1) and (2), especially factor (1) because it's politically incorrect.

My conclusion is that America is overeducating its youth, and we should cut down on the number of people attending college. A good start in this direction would be for the government to stop funding higher education and to cut out the student loan program.

More on the trigger happy air marshal victim

In an article in Time magazine, eyewitnesses say they never heard him say anything about a bomb, and that he looked like a guy who was trying to run off the plane because he was having a panic attack.

Also, the air marshals were out of order pointing guns at passengers.

The evidence coming in indicates to me that air marshals are a greater threat to the safety of air travelers than terrorists. It's time to stop wasting taxpayer money on this program.

Out of control air marshals and the bloggers who love them

Yesterday, an airline passenger was shot and killed by an air marshal. The dead man shouldn't have gone on an airplane without his medication, but he doesn't deserve the death penalty for this oversight.

The blogosphere has been too quick to forgive the air marshal without really knowing the facts. Statements like "Now we know that the air marshal system worked, and the terrorists have to consider it." (Counterterrorism Blog)

Anyone smart enough to obtain a bomb and sneak it aboard a plane is smart enough not to run around the plane yelling "I have a bomb!" Compared to all the other crowded places in which I regularly find myself, such as subway stations, the Staten Island Ferry and movie theaters, an airplane is the least likely place in which someone would actually be carrying a bomb.

The air marshal shouldn't have shot a guy in this situation with a woman screaming that it's her husband and he didn't take his medication.

Is the Supreme Court pathetic?

Yes says Jason Mazzone:

Last term, the Supreme Court issued opinions in just 74 cases. That’s pretty pathetic. It means there are many areas of the law that are unsettled or unreviewed; many important issues in which the Supreme Court could helpfully weigh in but it doesn’t; many issues that, once decided, will not reach the Court again for decades, if ever.

A low number of cases does not, however, mean light reading. Many of these 74 cases produced multiple opinions by sub-groups of justices. It’s not hard to see why this is true. Divide 74 up among nine justices and 30-plus law clerks and the temptation to write separately is irresistible.

He also says:

Brown v. Board of Education (1954), one of the Court’s most important decisions ever, was unanimous and ran just seven pages.

Brown v Board of Education was an opinion that sucked for many reasons (and one day maybe I'll write about it), so that's a bad example.

However, I certainly do observe that over the course of two centuries, the trend with the Supreme Court has been towards ever longer cases with more dissents and concurring opinions. Once upon a time, dissents were rare, and there were many dissents that consisted entirely of "I respectfully dissent." Justices were loathe to write anything negative about their fellows.

My theory is that word processors have resulted in much longer court decisions. Writing used to be difficult when it had to be done with pen and paper, but now when it can be typed on a computer, the result is extremely long opinions.

However, these modern opinions are fun to read, especially the dissents which add much flavor to an otherwise dull subject. In law school, I always loved to read Scalia's brilliant wording and his attacks on fellow justices. Besides a few rare exceptions (such as the rarely read but frequently condemned Dred Scott case), old cases are pretty boring reads.

Spam update

Attempting to delete spam, I accidentally deleted a very cool legitimate comment about hobbits and their gift giving customs. I feel so bad about that. How I hate the spammers.

Addicted to shopping

According to today's Wall Street Journal, shopping is an addiction:

Science is now discovering what ... many consumers have known all along: Shopping makes you feel good. A growing body of brain research shows how shopping activates key areas of the brain, boosting our mood and making us feel better -- at least for a little while. Peering into a decorated holiday window or finding a hard-to-find toy appears to tap into the brain's reward center, triggering the release of brain chemicals that give you a "shopping high." Understanding the way your brain responds to shopping can help you make sense of the highs and lows of holiday shopping, avoid buyer's remorse and lower your risk for overspending.

Much of the joy of holiday shopping can be traced to the brain chemical dopamine. Dopamine plays a crucial role in our mental and physical health. The brains of people with Parkinson's disease, for instance, contain almost no dopamine. Dopamine also plays a role in drug use and other addictive behaviors. Dopamine is associated with feelings of pleasure and satisfaction, and it's released when we experience something new, exciting or challenging. And for many people, shopping is all those things.

The solution? I say we should legalize marijuana and make shopping illegal. Americans would save a lot more money that way.

I personally no longer enjoy shopping because I now think too logically about everything.

This research has important findings for economists, because it demonstrates again that people don't behave rationally when spending their money.

People who buy stuff they don't need and have to borrow money on their credit cards to afford it have a self control problem; unfortunately, society considers this problem to be normal so nothing is being done about it.

Spam attack

Half Sigma has been subject to a huge amount of comment spam during the last two days, so I turned on the Typekey authentication requirement. Sorry. I would rather people didn't have to sign in in order to leave a comment, but unfortunately for every legitimate comment I was deleting ten spam comments.

UPDATE: I turned authentication OFF now becaue I was unable to leave a comment on my own blog when it was turned on. I'll probably get spammed again now.