Friday, February 24, 2012

Nothing about student loans makes sense to me

This interactive map of student loan debt demonstrates something that has always baffled me: the seeming lack of any real correlation between a student's willingness to pay high prices and take on massive debt for a post-secondary education, and the quality of that education.

Move the slider to the right, and you'll see what I mean. High amounts of student loan debt, in part, clump around large East Coast and West Coast cities, which makes sense, because the cost-of-living in these places is so high. But there are plenty of Podunk Us in the rural Midwest that are, apparently, forcing huge amounts of debt on to their students. Various art institutes seem to be particularly bad about this: by the time you've reached the upper tiers of the slider, about half the remaining dots seem to be some sort of art school.

It's truly something I don't understand. Of course, I don't think consumers make economically optimal decisions in all instances, and of course, the (at least initial) cheapness of student loans encourages people to take out more money than they probably should. But it defies reason that many thousands of people would be willing to go so enormously in debt to attend mediocre liberal arts colleges. And the apparent indebtedness of art students is even more bewildering. How, exactly, do they expect to ever pay those loans off?

Two competing explanations, I guess:

Major irrationality - Students really are just completely oblivious when it comes to purchasing college degrees, and the idea that different college degrees have different values is incomprehensible to large chunks of the population -- most of all, art-oriented students, a fact that art schools have happily taken advantage of.

Major rationality - Students are just reacting to non-dischargeable student loans. The potential of lenders to garnish wages and for debt to hobble a student for decades after graduation is of much less concern to students with little or no future earning potential (i.e., students at mediocre schools, and art students). Students at these schools are therefore more willing to load up on loans.

I don't really like either of these explanations, though. Someone throw me a bone and tell me what's happening here.

Tuesday, February 21, 2012

Solutions

It seems to me the most sensible solution to the Greek debt crises is for Germany to annex Greece. It would be an uncomfortable proposition for historical reasons but it seems like the right way to go.

Germany has a decent track record of integrating less productive economies into their own. Greece has a population about 1/8th the size of Germany so they would have a voice in the German government, but not enough to disrupt decision making or make things politically unmanageable. All of Greece's debt amounts to less than 10% of the German GDP. German debt already sits at 78.8% of their GDP so it's unlikely that another 10% would freak out bondholders.

For Greece it seems like a no-brainer. It's either join Germany, accept crushing austerity and a brutal recession, or stiff bondholders, leave the Euro and likely suffer really bad inflation and all sorts of capital flight problems.

There would be some language and culture problems and all that sort of stuff but computerized translators seem to be getting better by the day.

Bonus: fans of historical sovereign debt crises know that a situation like this lead to Newfoundland joining Canada.

Saturday, February 18, 2012

Oh, I feel better already

From a Times article about the proliferation of aerial drones comes the least reassuring defense of police surveillance ever:
Drone proponents say the privacy concerns are overblown. Randy McDaniel, chief deputy of the Montgomery County Sheriff’s Department in Conroe, Tex., near Houston, whose agency bought a drone to use for various law enforcement operations, dismissed worries about surveillance, saying everyone everywhere can be photographed with cellphone cameras anyway. “We don’t spy on people,” he said. “We worry about criminal elements.”
Whew! Previously, I thought the idea of robotic eyes in the sky, secretly photographing my every move, was just a little bit creepy. But since you're only targeting criminal elements, I guess it's okay. Also, cell phone cameras are a thing.

Monday, February 13, 2012

...or not

Scratch that last post. The new headline:



Now, the previous version wasn't without its flaws. (Namely, "to Spend on Jobs," which leaves open the somewhat important questions of "Which jobs? And how?") But pay attention to the way that the headline has evolved. The new version contains even less information than the first, eschewing any detail about the specifics of the budget. Worse, the information that's there is of the inside-baseball sort, less of interest to people who want to know the president's positions and more of interest to people who just want to follow the who's-up-who's-down of DC. And of course, there's the way the headline just states something incredibly obvious. The president uses the budget to set priorities? Who'd have thought?

I'd be curious to know the thought process was behind the switch. The new version does seem less biased -- horse-race coverage generally does appear more detached and neutral than substantive policy analysis -- and I'm sure that played a part.

Liberal media bias

Headlines don't get much more on-message than this:



I bet the administration wishes every person in America would visit nytimes.com today.

Saturday, February 11, 2012

Republicans have horrifyingly awful taste

Last summer, I went to Netroots Nation, which is essentially the left's version of CPAC, and while I certainly heard some questionable policy proposals and saw plenty of uncomfortably strident left-wing rhetoric, I don't think I ever saw anything half as bad as this:



The most appalling thing about this shirt is that the resurrection of "#winning" is only the second most appalling thing about this shirt.

More here and here.

Wednesday, February 8, 2012

Fail

Well, this post sure looks silly now.

I still don't see how anyone but Romney can win--money matters! And the party men are determined to destroy anyone who challenges him!--but Santorum is suddenly looking like a much stronger second place than Moonbase Gingrich.

Tuesday, February 7, 2012

FedEx, UPS, and market information

Great post from Yglesias about what he terms "halfway house" privatization:
Consider the U.S. Postal Service. This is, right now, a government agency. Something we could do with it is privatization. Repeal the law establishing the Universal Service Obligation and also repeal the law giving the USPS a monopoly on delivery of daily mail. Then put the USPS—its facilities, its cars, its real estate, its brand, the whole thing—on the auction block. That's privatization. Where once you had a state-owned firm, you now have privately owned assets.

A very different idea would be to shut the USPS down entirely while remaining committed to the idea that the United States ought to have a monopoly provider of daily mail delivery services who operates under a universal service obligation. With the USPS out of business, the federal government would then accept bids from Federal Express, UPS, and DHL to be the government's daily mail contractor. That's halfway house privatization. And it looks very different. In theory, our three parcel firms compete to offer the best service at the lowest price with all the ingenuity of the private sector applied to the problem.
In short, halfway house privatization retains some of the key features of the public sector--public funding, enforced monopolies, and universal provision of services--while attempting to streamline government "waste" by inserting a competitive element. Of course, it often doesn't work very well, because competition between a handful of megafirms is a very different beast than the efficiency-maximizing competition between theoretically infinite producers envisioned by microeconomic models.

But I want to focus on Yglesias's second point:
In practice, our three parcel firms compete to obtain maximum political clout. They lobby members of Congress and disperse their operations into key congressional districts. They buy ads in Roll Call and in D.C. Metro stations. You basically keep all the problems of politicized service provision that you have with a public agency, but you remove rules about transparency and lobbying and executive compensation that apply in the public sector.
This is true. Frankly, it's a lot cheaper for a firm to claw its way to the top of the political discussion than to claw its way to the top of the market. But it's also worth pointing out that the problem Matt has identified is hardly restricted to his "halfway house" firms. Congresspeople aren't the only people susceptible to informational market failures. It happens in truly private markets too. I mean, think closely: do you actually know which of the major private postal services is the best? Can you personally identify their relative strengths and weaknesses? Next time you have to choose between FedEx and UPS, will you judge them on the quality of their service or the quality of their advertisements? Even in the private sector, it's a lot cheaper and easier to convince people with words than with actions.

Sunday, February 5, 2012

What's Rick Santorum doing?

Does anyone else find it completely strange that Santorum is still in the primary?

He obviously has no hope of winning. He's very probably spending a ton of money to keep himself in the race. And in Nevada, he placed fourth, after Gingrich and even Paul. It's long past the point where any sane man would have taken his money and run.

So what's he doing?

If I were conspiratorially-minded, I'd say that the party leadership had convinced him to stay in the race as a sort of firewall against Gingrich. When Perry quit before South Carolina, most of his voters appeared to flee to Gingrich and helped kick-start the latter candidate's brief spurt of momentum in that state. Romney's margins in the last couple of states have been high, but not so high that Gingrich's backers, along with Santorum's, couldn't move Newt within striking distance. It seems to me that the party bigwigs would absolutely prefer Santorum to stay in the game until a Romney victory became truly inevitable.

So that's the exciting version. The less exciting -- but given that Santorum is a politician with presidential ambitions, far more plausible -- culprit is good, old-fashioned megalomania. Deep down, in the face of all the evidence to the contrary, Santorum still thinks he's a contender. After all, he won Iowa! Even if nobody knew it. There's still a chance!