Today’s NYT has an editorial by Todd G. Buchholz, a former economic advisor to the White House. He has the first well-reasoned critique of PAM and the “terrorist futures” market we’ve read thus far. Unlike the other analysis in these past two days, this is grounded in some solid thinking.
In short: the market is a fine idea, but won’t work because it must be “deep and liquid,” meaning that there must be a high transaction volume and many participants. There are also problems with the frequency of terrorist attacks: they’re so rare, that the market would have difficulty speculating on them. There are also unpleasant side-effects: if the payouts are too large, there’s incentive to fix the market. In his words, “market manipulation can show up not as a forged buy order but as a bullet.”
He also asserts that the market is, in fact, unnecessary. The existing financial markets already incorporate PAM-like analysis: South African instability, for instance, is reflected in the trading price of the rand. It seems that a more sophisticated analysis of the markets already in place would yield similar results, without the attendant problems.
Continue reading... (259 words, estimated 1:02 mins reading time)
Admiral Poindexter’s Office of Information Awareness is at it again. Fresh from the sound drubbing they received in Congress for their Orwellian information-collection program, they have a new tool they think will help predict terrorist events. Rather than collecting more information, which the intelligence agencies are already drowning in, this program intends to improve the analysis of that information — which is where the agencies have been failing.
The tool is the Policy Analysis Market. It’s a joint venture between the venerable Economist Intelligence Unit and the Defense Advanced Research Projects Agency (DARPA). This should be familiar to anyone who’s played the Hollywood Stock Exchange. It is a futures market for events in the Middle East. Traders place bets on when certain events occur, collecting money when they’re right and losing money when they fail. The idea is that markets can be excellent indicators for future events — each analyst’s individual opinion is aggregated with the others, creating a consensus which is represented by the price.
The OIA wants to harness the analytic power of this market by opening a seperate market for terrorism futures, alongside the markets for stability and military posture in Syria, Iran, and elsewhere.
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Wired New York, via No Data Source, has a running discussion on rent controls in New York. Briefly: New York’s rent controls are distorting the market. Single widows hold on to three bedroom apartments, causing artificial shortages. Apartments allowed to float must subsidize the rent-controlled units, creating exhorbitant rents. The example of Cambridge, Massachusetts is held up as an example of the healing power of the marketplace. An MIT study cited in almost every piece concludes that after deregulation, housing investment increased 20%.
The Cambridge model is presumably the best-case scenario. New York would lift all controls at once, and allow the market to sort itself out. Investment in new housing would increase 20%, with a commensurate increase in available units, driving down the price of apartments. Retired widowers would no longer knock around in three bedroom apartments. Everyone has presumably won: the construction industry is happy with the new investment, landlords now have the flexibility to respond to market pressures, and tenants benefit from new, cheaper apartments.
Floating the 1 million rent-controlled units would certainly eliminate distortions in the market, but is this really what we want? Markets are excellent for delivering the best price-point to the widest possible audience, but terrible at instituting social policy.
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From Monday, 14 July to Wednesday 16 July, residents of Manhattan will get a special treat: a complete sunset. On a typical evening in Manhattan, someone facing west on the east-west streets will see the sun set behind a building. On these special days, and their companion days in December, the sun will instead rise and set directly over the street, visible until it disappears over the horizon. The effect is astounding: shadows stretch to infinity, and the sun seems to descend on the street traffic just blocks away.
This magic is possible because the famous grid pattern of Manhattan’s streets is oriented 29.5 degrees off-center, keyed off of Amersterdam Avenue. On the special days, the sun also rises and sets on this same line, creating a perfect alignment.
You’ll read about this effect in the local papers. Unfortunately, there’s no name for this phenomena, making it awkward to talk about. If the Manhattan streets ran perfectly east-west, we could use the handy summer equinox or winter equinox. Alas, John Randel had different ideas. So, it needs a name. We suggest: the Manhattan Equinox. Lovely, yes?
There’s apparently a problem with medical malpractice insurance. It has become so expensive to get malpractice insurance that some doctors are being forced to move their practices elsewhere. The medical associations blame exhorbitant jury awards. The trial lawyer associations say the awards are fair — after all, they’re decided by a jury and judge.
Republicans are eager for tort reform in general, and medical malpractice reform is to be a big part of that. That might explain why Majority Leader Bill Frist is introducing a Republican plan into the Senate, even though he doesn’t have the 60 votes he needs avoid a filibuster.
The Republicans want to put a $250,000 cap on punitive damages in malpractice cases. We’ve written about that before. Almost as soon as that solution was introduced, young Jésica Santilàn was given a heart and lung transplant with organs of the wrong blood type. You couldn’t script it better. Opponents of the Republican proposal jumped all over it. The proposal was immediately retooled to allow exemptions for catastrophic injury.
Democrats, by contrast, are proposing a number of alternative measures. Some would like to give doctors tax credit for the insurance premiums, which is supposed to ease the burden. Others would like to walk back the antitrust exemptions that the malpractice insurance industry enjoys.
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Slate’s Explainer has a great capsule history of Liberia. We’ve been reminded a little too often that it was founded by freed U.S. slaves. It’s much more complicated than that.
The Open Government project at MIT has an amazing resource: Government Information Awareness. It’s a massively hyperlinked list of user-contributed information on government officials in every branch, every department. It includes major donors, who made their appointment, and just about everything else you’d need to know. jwz put it best: “It’s IMDB for government!”
I'm the Chief Technology Strategist for the Red Hat US Public Sector group, an open source and free culture advocate, a picky drinker, an amateur aesthete, and a dog enthusiast.
