If we don't know how many people, how do we know how many Congressmen we need

I frequently see advertisements on the television and outdoors for the census in the format, if we don't know how many people we have, how do we know how many x we need.
Where x is hospital beds, classroom, trains, buses, etc.
http://www.youtube.com/watch?v=OP2BGqnPQY4

"The census helps us know exactly what we need, so everyone can get their fair share of funding.”

I am disappointed that this appeals to so many people. Have we really moved towards a society where we fill out a survey so the government can calculate our needs?

Of course, the primary purpose of the census to apportion Congressional seats and Electoral College votes among the several states by population. I believe that is an important enough reason to mail it back. This representative form of government is at least as important as the government handing out goodies from the fraction of people that pay the bulk of the taxes to everyone else.

Speech in a Free Society

Everybody knows there is tons of money in politics. It is a natural consequence of the government regulating and controlling more parts of the economy. P.J. O'Rourke said, “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” I am not writing to defend or advocate a particular size and scope of government in general. There was a Supreme Court decision regarding political speech recently, FEC v. Citizens United.

Background

Citizens United produced “Hillary the Movie” that said she was a power-hungry viper unfit for the presidency. They wanted to make this available in theaters and through video on demand systems.

Analysis

You would think that they would be free to distribute this move however they saw fit in a free country. However, the Bipartisan Campaign Reform Act of 2002 did not permit “issue ads” 60 days before a general election and 30 days before a primary election. Issue ads simply take a position on some policy and typically associate a candidate for or against that policy. The law called for heavy fines and jail time for daring to speak out in a way that the law did not permit. So, basically this prohibited an organized group for people from making political statements.

In the recent case FEC v. Citizens United, the Supreme Court struck down major parts of BCPA. Anthony Kennedy in the majority opinion writes,

“Thus, the following acts would all be felonies under §441b: The Sierra Club runs an ad, within the crucial phase of 60 days before the general election, that exhorts the public to disapprove of a Congressman who favors logging in national forests; the National Rifle Association publishes a book urging the public to vote for the challenger because the incumbent U. S. Senator supports a handgun ban; and the American Civil Liberties Union creates a Web site telling the public to vote for a Presidential candidate in light of that candidate’s defense of free speech. These prohibitions are classic examples of censorship. “

While most have an idea that censorship is bad policy, he gives a great reason why we should not censor political speech, “speech is an essential mechanism of democracy, for it is means to hold officials accountable to the people.”

The content of the speech was not so much at issue as was when it was going to air and who sponsored it. I agree with the majority opinion that the identity of the speaker does not determine rights. Just because a group is too influential that is not a justification for withholding First Amendment rights.

Not everyone agreed with the outcome of this case, in fact it was a 5-4 decision. In a weekly radio address, President Obama said, “this ruling strikes at our democracy itself.” While some are worried about the outcome of this decision and perhaps justifiably so. However, a law cannot be upheld because it produced good outcomes or invalidated for bad outcomes. The Court rules on the law with the Constitution as the highest law in the land.

As a practical matter, political free speech is necessary for a functioning republic and it is exactly what was intended to be protected whether it's the ACLU arguing against the Patriot Act, the NRA advocating for less restrictions on guns, or a group advocating for or against abortion rights. And they need to be able to say whether candidate x is right or wrong on these policies whether they are a single person or an association. The life and death of the Republic depends on the freedom to make exactly this kind of speech.

The argument that we are treating corporations as people is a spurious distraction. We are simply saying that individuals are able to pool their resources and can speak in concert. Corporations are not people any more than your car or computer is a person, but the stockholders, directors, and others that control the corporation do have rights. Remember that while Hillary the Movie was funded by a corporation, people made the movie to express views that themselves and other people had. If we argue that corporations or other associations have no rights, do we then allow searches of corporate offices without warrant and cause or arbitrary expropriations without due process?

I believe that the dangers of this ruling are exaggerated. Big media big money speech is losing influence, not gaining influence. Grassroots efforts are being organized via Twitter. Bloggers and news aggregators run from the bottom up decide what is important, and I believe this trend will continue.

The solution to more corporate speech if that comes to pass is more speech from everyone rather than muzzling organized groups and chilling free speech.

Reality Still Matters

An exchange rate held to an unnatural level and prices restricted by government decree are a familiar tune. In Venezuela, some have bolivars and want to buy dollars for their imports. The government has tried to maintain a fictional exchange rate and has rationed dollars, but markets are what arise naturally whether you want them to or not.

Predictably, the Venezuelan government's restrictions on foreign exchange and price controls are not working and these controls are creating problems that they try to solve with yet more controls. More rules cannot repeal reality and they only serve to create corruption, discourage foreign and domestic investment, and slow production. The sellers of goods are understandably reacting to the reality of more bolivars in circulation by raising prices. You can tell people to ignore reality and sell at the old prices, but the historical record is that people are smarter than that and it never works.

Chavez accomplishes his objective of increasing government control exceptionally well. As he is moving so quickly and with quotes like this,“People, don’t let them rob you, denounce it, and I’m capable of taking over that business" it is obvious what he wanted all along. Perhaps the motives of politicians here are more pure, but if something like the Senate healthcare bill passes it will 'require' more controls to fix the problems it creates.

The American Dream

I have been thinking lately in the wake of this real estate bubble, why do people buy homes. Over the past few days, I wrote down a few reasons and some brief commentary.

• At a certain age or after a life event like marriage or the birth of a child, it’s time to buy a house.

Hard to argue with someone’s emotional connection to home ownership, except to say that it is not the way I think.

• Flexibility to remodel and get exactly what you want without consulting a landlord.

I do see a benefit here in being able to customize your living space. While custom build-outs are relatively common in commercial space, rented housing is whatever you can find on the market.

• A forced savings plan

Some people are not good at saving money, and since each month you pay some principal you are effectively saving. This reason does not hold any personal relevance to me as I do save. It is analogous to the person that deliberately seeks to get an income tax refund even though it is giving an interest free loan to the government.

• Pride of ownership

Again, hard to argue with someone’s emotional connection to home ownership, so I won’t.

• A good investment

This is really just speculation on price appreciation, not that there's anything wrong with that. The long term record of housing prices does not show that it is a great investment. Yale Economist Robert Shiller calculated an average of 0.4% / year price appreciation from 1890 to 2000. Mind you, this is for a very illiquid asset with an appreciable amount of volatility.

• Buy into the myth that rent is throwing money away

When you rent you are paying for a valuable service, the roof over your head, maintenance of the property, and often utilities. You’re not throwing money away for that service any more than any other service you buy. In some markets a couple years ago, buying was much more expensive than renting even over the whole term of the mortgage. As compared to buying where you “throw away” money on interest, property taxes, and repairs.

• The types of properties available to rent are less desirable than ones to buy

Varies. I have heard that there has been an increase in single family homes in the suburbs available for rent.

• Concerned about rent increases

A fixed rate mortgage will lock in some of the expenses for housing, but don’t forget about property taxes. Those can move upward quickly in some areas.

• Tax benefit for owner occupied property

The mortgage interest and property tax deductions can help make owner occupied property make economic sense. Remember, these are below-the-line deductions in lieu of the standard deduction. So, you can get a maximum benefit of your expenses * marginal rate.

Anything I missed, please comment.

45 Percent of the World's Wealth

When I think of wealth destruction, I think of fires, floods, wars, and hurricanes. Steven Scharzman of Blackstone said “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half." Given that you'd think a meteor struck Earth or something of that scale.

The most relevant concern is the real wealth that has been destroyed. Paul Graham tells us, "Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. " Nominal dollars are not irrelevant altogether. If you have a mortgage, it is still due on the nominal amount you agreed to pay. Negative equity may induce people to stop paying their mortgage and the property will have to be foreclosed upon. This situation can result in inefficiencies as a result the destruction of real wealth.

I agree that some real wealth could have declined through:

• Depreciation in excess of gross investment. Left alone, wealth will decay and continual investments must be made to maintain that wealth.
• Inefficiencies in the transfer process from debtor to creditor where the collateral is damaged through poor maintenance or malice.

I certainly agree that the pace of wealth creation is slowed and that there may even be some wealth destruction, but I doubt that it 45 percent of all wealth in the world.

The fact that people paid too much for assets a few years ago, and that now the assets are worth much less does not mean real wealth is reduced. I suspect this wealth that Schwarzman talks about is from on 1s and 0s on a computer system. Your house is not any less of a house now because it would sell for a third less dollars. The 3 bedrooms, 2000 square feet, 2 car garage, granite countertops, etc. are still there for your use.

I doubt that 45 percent of the world's wealth has been destroyed with most buildings still standing that were there 2 years ago, airplanes still taking you where you want to go, and your computer accessing a global network that is better than ever.

Is it too easy?

I am actually not too concerned over the sheer number of fulfilled requests by Sprint. It appears this is the number of data points retrieved through Sprint's systems for law enforcement. So, the actual number of people that were under surveillance was likely in the thousands. With tens of millions of subscribers, this is not too shocking.

The bigger issue here is the lack of accountability for the watchers. There are legitimate law enforcement uses for GPS information, text messaging, phone calls, etc. While I think there should be a procedure for the government to acquire this information, the lack of documentation and accountability is very troubling. The temptation to spy on political opponents that have done nothing wrong except disagree with you rises when the DOJ does not answer to anyone. It is not difficult to imagine that people in power that will spy for their own personal advantage. Even now, we cannot be assured that this is not already taking place.

Links - http://paranoia.dubfire.net/2009/12/8-million-reasons-for-real-surveillance.html

http://arstechnica.com/telecom/news/2009/12/sprint-fed-customer-gps-data-to-leos-over-8-million-times.ars

"The government routinely obtains customer records from ISPs detailing the telephone numbers dialed, text messages, emails and instant messages sent, web pages browsed, the queries submitted to search engines, and geolocation data, detailing exactly where an individual was located at a particular date and time."

"The fact that federal, state, and local law enforcement can obtain communications "metadata"—URLs of sites visited, e-mail message headers, numbers dialed, GPS locations, etc.—without any real oversight or reporting requirements should be shocking, but it isn't. ""Soghoian's lengthy post makes at least two important points, the first of which is that there are no reliable statistics on the real volume and scope of government surveillance because such numbers are either not published (sometimes in violation of the legally mandated reporting requirements) or they contain huge gaps. The second point is that the lack of reporting makes it difficult to determine just how involved the courts actually are in all of this, in terms of whether these requests are all backed by subpoenas."

"However, communications or customer records that are in storage by third parties, such as email messages, photos or other files maintained in the cloud by services like Google, Microsoft, Yahoo Facebook and MySpace are routinely disclosed to law enforcement, and there is no legal requirement that statistics on these kinds of requests be compiled or published. "

Some Game Theory

I am reminded of a counterintuitive result that more people nearby will result in less action. The typical example in a game theory course is a crime witnessed by n people. As n grows, the likelihood that the police will be called actually falls. While this phenomenon has been well documented, I have recently observed a case where this is not true. An email was sent out to a mistakenly listserv. The recipients hit reply to all to inform the sender. As a few emails were sent, this took on a life of its own. Between the initial emails, replies to those emails, and emails telling people not to reply to all there were about 50 emails in all.

A couple possibilities

1. The game theory result is still correct. Where n increases, the probability of any reply falls. However, if the first reply to all is sent everybody will jump on the bandwagon.
2. This situation calls for a different set of assumptions than the typical game theory situations of shared responsibility.