Tuesday, January 29, 2013

A revisionist view of the Hostess bankruptcy

Apparently, Hostess is close to selling off its venerable Twinkie brand to one of two investment firms. You may remember that Hostess filed for bankruptcy last fall, after it was unable to come to terms with the baker's union. ...

The baker's union took a lot of heat for refusing to renegotiate its contracts, even as the company was obviously teetering. Even the teamster's union complained that they were being unreasonable, which seemed to many--including me--like prima facie evidence that they must have lost their mind.

But a few months later, I got to talk to someone who has a lot of experience in labor negotations. They viewed the Hostess story entirely differently from the way that we in the press did: not as a fight between management and their crazy union, but as an internicene dispute between the unions. In this telling, the teamsters had an unreasonably sweet deal, one that was killing the company. And the bakers declined to take cuts in order to keep the teamsters sugared up. They were betting that whoever bought the company would still need the bakers, but not the insane distribution contracts that the teamsters had enjoyed for years.

... as Holman Jenkins of the Wall Street Journal explained:
... Under pressure on Monday from Judge Robert Drain to back down from their strike aimed at forcing the company to liquidate, the bakers themselves pointed to "what everyone in the baking industry knew: Hostess's production costs were neither excessive nor out of line with the market but its distribution costs were—to the tune of between $80 million and $130 million annually."
--Megan McArdle, Daily Beast, on who really killed Hostess

Monday, January 28, 2013

Bicycles in a post-apocalyptic world

Hey disaster novelists: Remember bicycles, skate boards, roller skates, and push scooters.

I'm reading some after-the-electromagnetic pulse disaster novels where the electric grid has collapsed. Lots of people walking home or fleeing home on foot. In the vast majority of these novels there is no mention of any means of human transportation between a car and walking. So some guy has to walk home hundreds or thousands of miles across a post-apocalyptic landscape to get back to his family. Every person he comes across either is on foot or has some Mad Max truck fuel. What's with that?

Is this bias by the authors due to a total lack of bicycles, skate boards, roller skates, and push scooters in their rural or suburban neighborhoods? Am I so out of touch with life in some American states that I'm mistaken in thinking that large areas have no bikes? I do not think so. In the United States annual bicycle sales at 20" wheel size and above run at 11 to 14 million per year. If we suddenly couldn't get any gasoline easily tens of millions could bicycle and maybe well over a third the population. Throw in skate boards, roller skates, and other smaller stuff and 3 mph travel seems avoidable.

What's even weirder: post-plague novels have this problem. So, fine, most people do not own a bicycle. But if 99+% of the population has just died surely there is a bicycle for each and every person still alive. Hiking is really optional in such a scenario. The average travel speed should be above 10 mph if almost everyone dies.
--Randall Parker, FuturePundit, on technological substitution possibilities. HT: Megan McArdle

Wednesday, January 23, 2013

What Wall Street sold

On March 16, 2007, Morgan Stanley employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members’ suggestions: “Subprime Meltdown,” “Hitman,” “Nuclear Holocaust” and “Mike Tyson’s Punchout,” as well a simple yet direct reference to a bag of excrement.

Ha ha. Those hilarious investment bankers.

Then they gave it its real name and sold it to a Chinese bank. ...

Morgan Stanley doesn’t see the narrative as the plaintiffs do. The firm is fighting the lawsuit, contending that the buyers were sophisticated clients and could have known what was going on in the subprime market. The C.D.O. documents disclosed, albeit obliquely, that Morgan Stanley might bet against the securities, a strategy known as shorting. The firm did not pick the assets going into the deal (though it was able to veto any assets). And any shorting of the deal was part of a larger array of trades, both long and short. Indeed, Morgan Stanley owned a big piece of Stack, in addition to its short bet.

Regarding the profane naming contest, Morgan Stanley said in a statement: “While the e-mail in question contains inappropriate language and reflects a poor attempt at humor, the Morgan Stanley employee who wrote it was responsible for documenting transactions. It was not his job or within his skill set to assess the state of the market or the credit quality of the transaction being discussed.”

Philip Blumberg, the Morgan Stanley lawyer who composed most of the names, meet the underside of a bus, courtesy of your employer. ...

In the end, of the $500 million of assets backing the deal, $415 million ended up worthless.
--Jesse Eisinger, ProPublica, on caveat emptor

The squeeze in top economics journals

In Card and DellaVigna (2013), we present a descriptive overview of trends among the papers published in the 'top five' economics journals: The American Economic Review (AER), Econometrica (EMA), the Journal of Political Economy (JPE), The Quarterly Journal of Economics (QJE), and The Review of Economic Studies (RES). ...

First, as Figure 1 shows, the number of yearly submissions to the five top journals nearly doubled from 1990 to 2012. The increases are especially large for QJE and RES, but are clearly present for all the journals except JPE, which received about the same number of submissions in 2011 as in 1987-1989. It is also interesting to note that most of the secular increase in submissions documented in the figure has occurred since the year 2000.

Second, as Figure 2 shows, the total number of articles published in the top journals declined from about 400 per year in the late 1970s to around 300 per year in 2010-12. The combination of rising submissions and falling publications led to a sharp fall in the aggregate acceptance rate, from around 15% in 1980 to 6% today.

Over time, and especially during the last 15 years, it has become increasingly difficult to publish in the top five journals. Other things equal, this suggests that hiring and promotion benchmarks based on top-five publications (e.g., “at least one top-five publication for tenure”) are significantly harder to reach.
--David Card and Stefano DellaVigna, Vox, on less publishing, more perishing

Monday, January 21, 2013

The surprisingly mild effects of Chernobyl on wildlife

The explosion and fire [around Chernobyl] spewed the equivalent of at least 20 Hiroshima bombs’ worth of radiation, mostly within about 25 miles of the reactor building. The most radioactive isotopes have long since decayed, and rain has washed the rest into the soil and the food chain. Two of the most persistent isotopes are cesium-137, which chemically mimics potassium, and strontium-90, which imitates calcium in living things. As these isotopes have been taken up by plants, animals, fungi, and bacteria, radioactivity is no longer on the zone, but of it. ...

Roe deer and wild boar caught here in the early 1990s packed more than 2,000 times the safety norms for cesium-137 in meat. Though internal radiation levels have since dropped dramatically, some animals recently tested in Belarus still exceeded safe levels by dozens of times.

But in a surprise to just about everyone, the animals all looked physically normal. The same was true of other species tested—radioactive but normal-looking. The few known exceptions include albino spots and some deformities in barn swallows. ...

Actually, in the early years, when contaminated dust coated everything, researchers found countless examples of the monstrous mutations imagined in 1950s horror movies: malformations, dwarfism, gigantism, strange growths, and, yes, even some glowing.

But those effects were seen only in plants. While Attack of the Giant Leaves doesn’t seem as horrible as the Creature With the Atom Brain, no one has ever found seriously deformed wild animals (or zombies) after the Chernobyl accident. Mutant animals born in the wild die or get eaten before they can be discovered. Whatever the biological costs of radiation to individuals, the fittest survived.

Chernobyl’s abundant and surprisingly normal-looking wildlife has shaken up how biologists think about the environmental effects of radioactivity. The idea that the world’s biggest radioactive wasteland could become Europe’s largest wildlife sanctuary is completely counterintuitive for anyone raised on nuclear dystopias.
--Mary Mycio, Slate, on the post-apocalyptic scene

Friday, January 18, 2013

Your early 20s are particularly memorable

The basic finding is this: We remember more events from late adolescence and early adulthood than from any other stage of our lives. This phenomenon is called the reminiscence bump. ...

Autobiographical memories are not distributed equally across the lifespan. Instead, people tend to experience a period of childhood amnesia between birth and age 5, a reminiscence bump between age 10 and age 30 (with a particular concentration of memories in the early 20s), and at any age, a vivid period of recency from the present waning back to the end of the reminiscence bump. ...

...scientists also noted that the brain transcribes novel experiences more readily than mundane ones... Might the reminiscence bump reflect the fact that late adolescence and early adulthood are suffused with “firsts” (first relationship, first time leaving home, first job, first marriage, first child)? ...

Yet the cognitive account of the reminiscence bump leaves many questions unanswered. It doesn’t explain why only a small portion of the memories that constitute the bump relate to novel experiences. Nor can a hypothesis grounded in mnemonic processes say much about the results of a 2010 study by Annette Bohn and Dorthe Berntsen, who created a form of reminiscence bump in schoolchildren without asking them to remember a thing. They asked a large group of students, aged 10 to 14, to write their life stories. Most of the future events the kids dreamed up clustered around young adulthood. If the reminiscence bump were merely an offshoot of how our brains store memories, the researchers argued, the children wouldn’t have also privileged their 20s when projecting ahead.

Such findings lend credence to an alternate theory about the bump, one soaked in what’s become known as the “narrative perspective.” This approach focuses not on the mechanics of memory but on its underlying motivational factors. It suggests that we organize remembered events in ways that help us understand who we are.
--Katy Waldman, Slate, on the decade that isn't a blur

The weakness of Advanced Placement courses

Concerned that Advanced Placement courses are not as rigorous as college courses, Dartmouth has announced that it will no longer give college credits for good A.P. scores, starting with the class of 2018. ...

“The psychology department got more and more suspicious about how good an indicator a 5 on the A.P. psych exam was for academic success,” said Hakan Tell, a classics professor who heads Dartmouth’s Committee on Instruction, so the department decided to give a condensed version of the Psych 1 final to incoming students instead of giving them credits.

Of more than 100 students who had scored a 5 on the A.P. exam, 90 percent failed the Dartmouth test. ...

A follow-up effort produced even worse results, Professor Tell said. “We looked at the students who failed our on-campus exam but decided to enroll in Psych 1, to see whether they did any better than students who had never taken the Advanced Placement class, and we couldn’t detect any difference whatsoever,” he said.
--Tamar Lewin, NYT, on the myth of AP college-level equivalence

Thursday, January 17, 2013

How Dutch cuisine died

The Netherlands, as these questions suggest, has never been known as a culinary destination. Actually, that’s an understatement. For years, the gastronomy of this country has lagged woefully behind many of its European neighbors (think Denmark, for one). Which is puzzling, given that the Dutch once dominated the world’s spice trade. And nowhere is this puzzle more obvious than in Amsterdam, a city of beguiling streetscapes, gorgeous canals and really lousy restaurants. ...

It wasn’t always so, writes Karin Engelbrecht, a restaurant critic for Time Out Amsterdam. The Dutch, she explains, cooked with élan until the start of the 19th century, and you can tell from still-life paintings of the era, which showed off tables piled high with delectables. A peek at cookbooks dating back a few hundred years reveals dishes like mussels with saffron and ginger, and roast goose with turmeric root. Meals were lavish, multicourse affairs that started with leafy greens and ended with pastries and hippocras, a wine sweetened with cinnamon and served warm.

Then, as the Dutch started to lose their colonies — mostly to the British — and population growth started to strain resources, the country’s golden age ended and a new frugality took hold. But what really set Dutch kitchens on a path toward stodgy was the popularity, starting in the late 19th century, of huishoudschool. A type of domestic-science school, it taught girls to ditch the herbs and spices and produce meals that favored nutrition and cheapness over flavor and pizazz. ...

That keep-it-basic approach endures. One of the more ubiquitous dinners here is stamppot, which is potatoes and vegetables, mashed and boiled in a pot, with some kind of meat tossed in. And that is sumptuous compared with a typical lunch. “I work with small Internet start-up companies,” Mr. Schiefelbein said, “and when lunchtime comes, somebody goes around and collects a few coins and somebody heads to the supermarket around the corner and gets some slices of cheese and sliced bread. That’s what people have for lunch.”
--David Segal, NYT, on where not to go for food tourism

The cost of busing a child to school in New York City

The day before the start of New York City’s first school bus strike in 34 years, a long yellow bus pulled up at Public School 282 in Park Slope, Brooklyn, and the little bodies that popped out could be counted on one hand: Three. The big bus had dropped off part of its cargo earlier, at another school, but in all, 10 children had ridden on a bus fit for about 60. ...

The strike that began Wednesday, which idled more than half of the city’s school buses and forced about 113,000 children to find new ways to school, was prompted by a fight over union jobs. But its true roots are in an attempt to reform one of the most inefficient transportation systems in the country, one that costs almost $7,000 a year for each passenger, an amount so high that many of those children could hire a livery cab for about the same price. By comparison with the next three largest school districts, Los Angeles spends about $3,200, Chicago about $5,000, and Miami, $1,000.

For decades, the city has embraced anticompetitive measures and carried on business relations with an array of bus companies, including some that have been implicated in bribery, been under the sway of organized crime and, in one case, run by a man who displayed a pistol at a negotiating session.

Both union leaders and city employees have gone to prison for shaking down bus companies, offering in return labor peace, advance notice of inspections or approval of lucrative extra routes.
--Al Baker, NYT, on the NYC school bus mess

Thursday, January 10, 2013

Poorly understood facts about the debt ceiling

Contrary to White House claims, Congress's refusal to permit new borrowing by raising the debt ceiling limit will not trigger a default on America's outstanding public debt, with calamitous consequences for our credit rating and the world's financial system. Section 4 of the 14th Amendment provides that "the validity of the public debt of the United States, authorized by law . . . shall not be questioned"; this prevents Congress from repudiating the federal government's lawfully incurred debts. ...

This means that a failure to raise the debt ceiling—to prevent new borrowing—does not and cannot put America's current creditors at risk. ...

...the federal government's roughly $200 billion in tax revenue per month is more than sufficient to service existing debts. ...

Second, despite White House claims that Congress must raise the debt ceiling to pay the bills it has incurred, the obligations protected as "debts" by the 14th Amendment do not include entitlement programs such as Medicare and Social Security. ...

This fundamental and vital distinction is clear from both the text and the drafting history of the 14th Amendment's Section 4. The wording of the section was revised before its enactment and ratification to replace the term federal "obligations" with that of "debts," a far more narrow (and manageable) category.

The distinction was recognized by the Supreme Court in Flemming v. Nestor (1960), which involved the power of Congress to modify Social Security benefits. ...

Congress can reduce a wide range of payments to various beneficiaries at any time by amending the statutes that authorize them or simply by failing to appropriate sufficient funds to pay for them. Nor does Congress have any legal or constitutional obligation to borrow money to pay for entitlements.

Third, assertions, most recently made by Nancy Pelosi, that the president can rely on Section 4 as a pretext for raising the debt ceiling by himself are manifestly incorrect and constitutionally dangerous. Section 4 grants no power whatsoever to the president—instead, the 14th Amendment grants Congress the "power to enforce, by appropriate legislation, the provisions of this article." ...

In particular, Article I, Section 2, grants to Congress the power "to borrow money on the credit of the United States." There is no similar grant to the president. Any effort by the chief executive to borrow money without congressional action would be every bit as injurious to our constitutional system as presidentially ordered taxation. ...

Once these false arguments are cleared away, the real issue in the debt-ceiling debate becomes clear: the proper level of federal spending. Should Congress fail to increase the debt ceiling as much as the president wants, the effective result would be major government spending cuts, with payments on public debt excluded.
--David Rivkin Jr. and Lee Casey, WSJ, on why failing to raise the debt ceiling is a somewhat credible threat. Yale Law professor Bruce Ackerman agrees on the safety of U.S. creditors' claims.

Tuesday, January 8, 2013

Virtual assassins as a cure for video game addiction

Sick and tired of his son playing video games and not listening to him, a father in China decided to take matters into his own hands... well, sort of. Instead of sending his son off to addiction camp or stripping him of internet and gaming rights, Mr. Feng (冯先生) chose to hire an online "hitman" to school his son. ...

Unhappy with his son not finding a job, Feng decided to hire players in his son's favorite online games to hunt down Xiao Feng. It is unknown where or how Feng found the in-game assassins—every one of the players he hired were stronger and higher leveled than Xiao Feng. Feng's idea was that his son would get bored of playing games if he was killed every time he logged on, and that he would start putting more effort into getting a job.

Despite being sick of getting killed every time, Xiao Feng decided to stick up to his father and tell him how he felt. He was quoted as saying, "I can play or I can not play, it doesn't bother me. I'm not looking for any job—I want to take some time to find one that suits me."

Hearing his son's earnest plea, Feng said that he was "relieved". It's unsure if Feng has called off his assassins or if Xiao Feng has found a job.
--Eric Jou, Kotaku, on the virtual efficacy of a virtual cure. HT: Slate

Monday, January 7, 2013

French firms with exactly 9 or 49 employees

In many countries, small firms face lighter regulation than large firms. Regulation, broadly defined, takes many forms, from hygiene and safety rules, to mandatory elections of employee representatives, to larger payroll taxes. The rationale for exempting small firms from some regulations is that the compliance cost is too high relative to their sales. A necessary consequence, however, is that regulations are phased in as the firm grows, generating an implicit marginal tax. ...[I]n the case of France, a first important set of regulations applies to firms with more than 10 employees, and a second important set of regulations applies to firms with more than 50 employees. As a result, the firm size distribution is distorted, with few firms with exactly 10 (or 50) employees and a large number of firms with 9 (or 49) employees.
--François Gourio and Nicolas Roys, "Size-dependent regulations, firm size distribution, and reallocation," on regulatory constraints on firm growth

Sunday, January 6, 2013

Why Ben Johnson got the shaft at the 1988 Olympics

But [Ben] Johnson’s vilification detracted from — perhaps even camouflaged — the wider story, and the bigger scandal. He was not the only cheat in Seoul. Six of the eight finalists from the men’s 100m would eventually be implicated in doping scandals. They included [Carl] Lewis, who tested positive for stimulants at the US Olympic trials. He was exonerated — as were many others in the 1980s — by the US Olympic Committee.

There remains another mystery about what happened in Seoul. That Johnson cheated is not in question — he later admitted he had used steroids for seven years. But the fact that Johnson had been using drugs, and passing tests, for so many years raises another question. Why was he caught in Seoul?

He maintains to this day that he was sabotaged; that a ‘mystery man’ sat beside him in the anti-doping room in Seoul; that this man was connected to the Lewis camp; and that he spiked his drink.

It sounds unlikely. And yet, when I interviewed Joe Douglas, Lewis’s old manager, he admitted he did indeed arrange for this mystery man to sit with Johnson in the anti-doping room. ‘We wanted to make sure that he didn’t take . . . any . . . masking agents,’ Douglas told me. ‘That everything was done legal and fair. That he was gonna be tested, etc.’

How did Douglas manage to plant this man in the supposedly secure anti-doping room? ‘I played some games,’ he smiled.

I tracked down, and spoke to, the mystery man. He is Andre Jackson, a diamond executive in Angola who is also chairman of the African Diamond Council and African Diamond Producers Association. I invited him to set the record straight. He could state, once and for all, that Johnson’s allegation that he spiked his drink is untrue.

‘Of course I can say I didn’t,’ he replied. ‘But I can also say I did, too. What’s the benefit?’
--Richard Moore, Daily Mail, on a story I was led to by a great 30 for 30 ESPN documentary, "9.79*"

What I like about 9.79* can be summed up by a quote from The Wire: “They flipped it.” My favorite 30 for 30s have us root for the villain and hate the hero.* In this case, I felt bad for Johnson, the admitted cheater who seemed the most truthful out of all the runners interviewed.** Every other runner said they never doped but another interviewee said at least 80% of the Olympians did. With those conflicting testimonials, Johnson is the only one we can truly believe. ...

And if Johnson was the sympathetic villain, Carl Lewis gets to play the role of the hero we learn to hate. ...

Despite no real proof that Lewis had ever cheated, Gordon takes subtle digs at him throughout the film. At one point, a doctor says that athletes who are wearing braces in their adult years are almost certainly doping. Ten minutes later we catch glimpses of Lewis in interviews in the '80s, flashing those tinsel teeth.
--Will Eidam, Austin Chronicle, on the greatness of "9.79*"

Thursday, January 3, 2013

The scant benefits of regular health checkups

A recent analysis from The Cochrane Collaboration, an international group that reviews scientific evidence, concluded that general health checkups for adults did not help patients live longer or healthier lives. ...

The study was a meta-analysis, in which the authors scoured the literature and came up with 16 randomized trials in which one group of patients had general checkups and the other group did not. Two-thirds of the trials, covering more than 150,000 patients, followed the patients long enough — nearly a decade — to track actual death rates.

Patients in the checkup group received many more new diagnoses; one trial found a 20 percent increase. But they did not live longer. They died from cancer and heart disease at the same rates as their peers who did not have checkups.
--Danielle Ofri, NYT, on yet another preventive health behavior that can be skipped

Wednesday, January 2, 2013

The 22-year-old Constitution writer

Beate Sirota Gordon, the daughter of Russian Jewish parents who at 22 almost single-handedly wrote women’s rights into the Constitution of modern Japan, and then kept silent about it for decades, only to become a feminist heroine there in recent years, died on Sunday at her home in Manhattan. She was 89. ...

She went to Washington, where she secured a job as an interpreter on General MacArthur’s staff. ...

One of MacArthur’s first priorities was drafting a constitution for postwar Japan, a top-secret assignment, begun in February 1946, that had to be finished in just seven days. As the only woman assigned to his constitutional committee, along with two dozen men, young Beate Sirota was deputized to compose the section on women’s rights.

She had seen women’s lives firsthand during the 10 years she lived in Japan, and urgently wanted to improve their status.

Commandeering a jeep at the start of that week in February, she visited the libraries in Tokyo that were still standing, borrowing copies of as many different countries’ constitutions as she could. She steeped herself in them and, after seven days of little sleep, wound up drafting two articles of the proposed Japanese Constitution.
--Margalit Fox, NYT, on a nice first job out of college

Tuesday, January 1, 2013

Against playing solo classical music from memory

We are celebrating Liszt's 200th birthday this year [2011] and, amongst many other innovations, we have him to thank for the invention of the piano recital – the evening-long stretch when one person sits at that large box of strings and hammers in profile to a concentrated, silent audience. ...

But we also have Liszt to thank for the unwritten but firmly-held rule that the pianist must play that recital without any score in front of him or her. Chopin would not have approved; he chastised a pupil once for playing a piece from memory, accusing him of arrogance. In the days when every pianist was also a composer, to play without a score would usually have meant that you were improvising. To play a Chopin ballade from memory might have seemed as if you were trying to pass off that masterpiece as your own. No wonder Chopin went on the attack. But from the late-19th century onwards, as non-composing pianists gradually became the norm, to use a score implied that you didn't know the piece properly and began to suggest a lack of professionalism. ...

The title of this blog post ["Liszt: the man who invented stage fright"] is, of course, deliberately provocative; there are many issues involved in nervousness in front of an audience, not just memory. But if you get a performer talking in a rare moment of complete honesty one of the principal reasons you will hear over and over again for stage fright is the fear of forgetting. The terror of suddenly not knowing where you are, an obvious wrong entry, that blackout, the orchestra and you in a train wreck of harmonic collision and confusion. It is one of the reasons some pianists start to conduct; it is one of the reasons others choose to focus on chamber music or accompaniment, when the use of a score is acceptable; it is one of the reasons still others go into early retirement and start to teach; it is one of the reasons some artists play the same repertoire season after season; and I often wonder whether Glenn Gould's premature move away from the concert stage to the recording studio had something to do with a gradually failing memory. Ironically it may have been one of the reasons Liszt himself retired from active concert life. ...

I think all pianists need to learn how to memorize and to play from memory. ... But I do think there comes a point (and not just extreme old-age) when we should feel free to play with a score without censure or comment. The only guideline should be the quality of the interpretation.
--Stephen Hough, The Telegraph, on the case for using the score